Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 01, 2021 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 1-13653 | |
Entity Registrant Name | AMERICAN FINANCIAL GROUP, INC. | |
Entity Incorporation, State or Country Code | OH | |
Entity Tax Identification Number | 31-1544320 | |
Entity Central Index Key | 0001042046 | |
Entity Address, Address Line One | 301 East Fourth Street | |
Entity Address, City or Town | Cincinnati | |
Entity Address, State or Province | OH | |
Entity Address, Postal Zip Code | 45202 | |
City Area Code | 513 | |
Local Phone Number | 579-2121 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 84,807,882 | |
Entity Common Stock, Shares Outstanding Owned by Subsidiaries | 14,900,000 | |
Common stocks | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Common Stock | |
Trading Symbol | AFG | |
Security Exchange Name | NYSE | |
5.875% Subordinated Debentures due March 2059 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 5.875% Subordinated Debentures due March 30, 2059 | |
Trading Symbol | AFGB | |
Security Exchange Name | NYSE | |
5.625% Subordinated Debentures due June 2060 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 5.625% Subordinated Debentures due June 1, 2060 | |
Trading Symbol | AFGD | |
Security Exchange Name | NYSE | |
5.125% Subordinated Debentures due December 2059 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 5.125% Subordinated Debentures due December 15, 2059 | |
Trading Symbol | AFGC | |
Security Exchange Name | NYSE | |
4.50% Subordinated Debentures due September 2060 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 4.50% Subordinated Debentures due September 15, 2060 | |
Trading Symbol | AFGE | |
Security Exchange Name | NYSE |
Consolidated Balance Sheet (Una
Consolidated Balance Sheet (Unaudited) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Assets: | ||
Cash and cash equivalents | $ 2,833 | $ 1,665 |
Investments: | ||
Fixed maturities, available for sale at fair value (amortized cost — $10,211 and $8,812; allowance for expected credit losses of $9 and $12) | 10,427 | 9,084 |
Fixed maturities, trading at fair value | 29 | 24 |
Equity securities, at fair value | 993 | 889 |
Investments accounted for using the equity method | 1,407 | 1,235 |
Mortgage loans | 537 | 377 |
Real estate and other investments | 161 | 220 |
Total cash and investments | 16,387 | 13,494 |
Recoverables from reinsurers | 3,523 | 3,288 |
Prepaid reinsurance premiums | 1,028 | 768 |
Agents’ balances and premiums receivable | 1,492 | 1,229 |
Deferred policy acquisition costs | 262 | 244 |
Other receivables | 1,097 | 678 |
Other assets | 847 | 977 |
Goodwill | 176 | 176 |
Assets of discontinued annuity operations | 0 | 47,885 |
Total assets | 29,942 | 73,710 |
Liabilities and Equity: | ||
Unpaid losses and loss adjustment expenses | 10,991 | 10,392 |
Unearned premiums | 3,415 | 2,803 |
Payable to reinsurers | 1,146 | 807 |
Long-term debt | 1,964 | 1,963 |
Other liabilities | 2,152 | 1,584 |
Liabilities of discontinued annuity operations | 0 | 44,458 |
Total Liabilities | 24,702 | 66,921 |
Shareholders’ equity: | ||
Common Stock, no par value — 200,000,000 shares authorized — 84,795,008 and 86,345,246 shares outstanding | 85 | 86 |
Capital surplus | 1,315 | 1,281 |
Retained earnings | 3,680 | 4,149 |
Accumulated other comprehensive income, net of tax | 160 | 1,273 |
Total shareholders’ equity | 5,240 | 6,789 |
Noncontrolling interests | 0 | 0 |
Total equity | 5,240 | 6,789 |
Total liabilities and equity | 29,942 | 73,710 |
Variable interest entity, primary beneficiary | ||
Investments: | ||
Assets of managed investment entities | 5,130 | 4,971 |
Total assets | 5,130 | 4,971 |
Liabilities and Equity: | ||
Liabilities of managed investment entities | 5,034 | 4,914 |
Total Liabilities | $ 5,034 | $ 4,914 |
Consolidated Balance Sheet (U_2
Consolidated Balance Sheet (Unaudited) (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Fixed maturities, available for sale, amortized cost | $ 10,211 | $ 8,812 |
Fixed maturities, available for sale, allowance for expected credit losses | $ 9 | $ 12 |
Common Stock, par value (USD per share) | $ 0 | $ 0 |
Common Stock, shares authorized (shares) | 200,000,000 | 200,000,000 |
Common Stock, shares outstanding (shares) | 84,795,008 | 86,345,246 |
Consolidated Statement of Earni
Consolidated Statement of Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenues: | ||||
Property and casualty insurance net earned premiums | $ 1,529 | $ 1,381 | $ 3,952 | $ 3,774 |
Net investment income | 169 | 122 | 521 | 314 |
Realized gains (losses) on securities | (17) | 23 | 103 | (197) |
Realized gains (losses) on subsidiaries | 0 | (30) | 4 | (30) |
Income of managed investment entities: | ||||
Investment income | 45 | 46 | 135 | 154 |
Gain (loss) on change in fair value of assets/liabilities | 1 | (5) | 9 | (21) |
Other income | 27 | 19 | 70 | 62 |
Total revenues | 1,754 | 1,556 | 4,794 | 4,056 |
Costs and Expenses: | ||||
Losses and loss adjustment expenses | 954 | 963 | 2,335 | 2,441 |
Commissions and other underwriting expenses | 417 | 406 | 1,187 | 1,235 |
Interest charges on borrowed money | 24 | 24 | 71 | 64 |
Expenses of managed investment entities | 37 | 34 | 115 | 129 |
Other expenses | 55 | 89 | 196 | 192 |
Total costs and expenses | 1,487 | 1,516 | 3,904 | 4,061 |
Earnings (loss) from continuing operations before income taxes | 267 | 40 | 890 | (5) |
Provision (credit) for income taxes | 48 | (48) | 164 | (52) |
Net earnings from continuing operations, including noncontrolling interests | 219 | 88 | 726 | 47 |
Net earnings (loss) from discontinued operations | 0 | 76 | 914 | (20) |
Net earnings, including noncontrolling interests | 219 | 164 | 1,640 | 27 |
Less: Net earnings (loss) from continuing operations attributable to noncontrolling interests | 0 | 0 | 0 | (13) |
Net Earnings Attributable to Shareholders | $ 219 | $ 164 | $ 1,640 | $ 40 |
Earnings (Loss) Attributable to Shareholders per Basic Common Share from: | ||||
Basic (USD per share) from continuing operations | $ 2.57 | $ 1 | $ 8.52 | $ 0.67 |
Basic (USD per share) from discontinued operations | 0 | 0.86 | 10.72 | (0.22) |
Basic (USD per share) | 2.57 | 1.86 | 19.24 | 0.45 |
Earnings (Loss) Attributable to Shareholders per Diluted Common Share: | ||||
Diluted (USD per share) from continuing operations) | 2.56 | 1 | 8.45 | 0.66 |
Diluted (USD per share) from discontinued operations | 0 | 0.86 | 10.66 | (0.21) |
Diluted (USD per share) | $ 2.56 | $ 1.86 | $ 19.11 | $ 0.45 |
Average number of Common Shares: | ||||
Basic (shares) | 84.8 | 88.2 | 85.2 | 89.4 |
Diluted (shares) | 85.2 | 88.5 | 85.8 | 89.9 |
Consolidated Statement of Compr
Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings, including noncontrolling interests | $ 219 | $ 164 | $ 1,640 | $ 27 |
Net unrealized gains (losses) on securities: | ||||
Unrealized holding gains (losses) on securities arising during the period | (29) | 194 | (177) | 350 |
Reclassification adjustment for realized (gains) losses included in net earnings | 2 | (12) | (16) | 0 |
Reclassification adjustment for unrealized gains of subsidiaries sold | 0 | 0 | 884 | 0 |
Total net unrealized gains (losses) on securities | (27) | 182 | (1,077) | 350 |
Net unrealized gains (losses) on cash flow hedges: | ||||
Unrealized holding gains (losses) on cash flow hedges arising during the period | 0 | 1 | (1) | 49 |
Reclassification adjustment for investment income included in net earnings | 0 | (7) | (11) | (25) |
Reclassification adjustment for unrealized gains on cash flow hedges of subsidiaries sold | 0 | 0 | (29) | 0 |
Total net unrealized gains (losses) on cash flow hedges | 0 | (6) | (41) | 24 |
Foreign currency translation adjustments | (3) | 0 | (3) | (6) |
Pension and other postretirement plans adjustments (“OPRP”): | ||||
Unrealized holding losses on pension and OPRP arising during the period | 0 | 0 | (1) | 0 |
Reclassification adjustment for pension settlement loss included in net earnings | 0 | 0 | 9 | 0 |
Total pension and OPRP adjustments | 0 | 0 | 8 | 0 |
Other comprehensive income (loss), net of tax | (30) | 176 | (1,113) | 368 |
Total comprehensive income, net of tax | 189 | 340 | 527 | 395 |
Less: Comprehensive income (loss) attributable to noncontrolling interests | 0 | 0 | 0 | (11) |
Comprehensive income attributable to shareholders | $ 189 | $ 340 | $ 527 | $ 406 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Equity (Unaudited) - USD ($) $ in Millions | Total | Total | Common Shares | Common Stock and Capital Surplus | Retained Earnings | Accumulated Other Comp. Income | Noncontrolling interests | Cumulative effect adjustment in period of adoptionRetained Earnings |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative effect of accounting change | $ 6,269 | $ 6,269 | $ 1,397 | $ 4,009 | $ 863 | $ 0 | $ 7 | |
Beginning Balance, shares at Dec. 31, 2019 | 90,303,686 | |||||||
Beginning Balance at Dec. 31, 2019 | 6,269 | 6,269 | 1,397 | 4,009 | 863 | 0 | $ 7 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net earnings (losses) attributable to parent | 40 | 40 | 40 | |||||
Net earnings loss attributable to noncontrolling interests | (13) | |||||||
Net earnings, including noncontrolling interests | 27 | |||||||
Net earnings (losses) including portion attributable to nonredeemable noncontrolling interest | 40 | 0 | ||||||
Other comprehensive income (loss), attributable to parent | 366 | 366 | ||||||
Other comprehensive income (loss) including portion attributable to nonredeemable noncontrolling interest | 366 | |||||||
Dividends | (120) | (120) | (120) | |||||
Shares issued: | ||||||||
Exercise of stock options, shares | 229,208 | |||||||
Exercise of stock options | 10 | 10 | 10 | |||||
Restricted stock awards, shares | 227,867 | |||||||
Other benefit plans, shares | 105,318 | |||||||
Other benefit plans | 7 | 7 | 7 | |||||
Dividend reinvestment plan, shares | 7,251 | |||||||
Dividend reinvestment plan | 1 | 1 | 1 | |||||
Stock-based compensation expense | 15 | 15 | 15 | |||||
Shares acquired and retired, shares | (3,468,107) | |||||||
Shares acquired and retired | (233) | (233) | (54) | (179) | ||||
Shares exchanged — benefit plans, shares | (97,731) | |||||||
Shares exchanged — benefit plans | (11) | (11) | (2) | (9) | ||||
Forfeitures of restricted stock, shares | (40,910) | |||||||
Other | (11) | (11) | (4) | (11) | 4 | 0 | ||
Ending Balance, shares at Sep. 30, 2020 | 87,266,582 | |||||||
Ending Balance at Sep. 30, 2020 | 6,340 | 6,340 | 1,370 | 3,737 | 1,233 | 0 | ||
Beginning Balance, Redeemable Noncontrolling Interests at Dec. 31, 2019 | 0 | |||||||
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Abstract] | ||||||||
Net earnings attributable to redeemable noncontrolling interests | (13) | |||||||
Other comprehensive income (loss) attributable to redeemable noncontrolling interests | 2 | |||||||
Other | 11 | |||||||
Ending Balance, Redeemable Noncontrolling Interests at Sep. 30, 2020 | 0 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative effect of accounting change | 6,126 | 6,126 | 1,388 | 3,685 | 1,053 | 0 | ||
Beginning Balance, shares at Jun. 30, 2020 | 88,659,407 | |||||||
Beginning Balance at Jun. 30, 2020 | 6,126 | 6,126 | 1,388 | 3,685 | 1,053 | 0 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net earnings (losses) attributable to parent | 164 | 164 | 164 | |||||
Net earnings loss attributable to noncontrolling interests | 0 | |||||||
Net earnings, including noncontrolling interests | 164 | |||||||
Net earnings (losses) including portion attributable to nonredeemable noncontrolling interest | 164 | 0 | ||||||
Other comprehensive income (loss), attributable to parent | 176 | 176 | ||||||
Other comprehensive income (loss) including portion attributable to nonredeemable noncontrolling interest | 176 | |||||||
Dividends | (39) | (39) | (39) | |||||
Shares issued: | ||||||||
Exercise of stock options, shares | 19,865 | |||||||
Exercise of stock options | 1 | 1 | 1 | |||||
Restricted stock awards, shares | 0 | |||||||
Other benefit plans, shares | 38,822 | |||||||
Other benefit plans | 2 | 2 | 2 | |||||
Dividend reinvestment plan, shares | 2,901 | |||||||
Dividend reinvestment plan | 1 | 1 | 1 | |||||
Stock-based compensation expense | 5 | 5 | 5 | |||||
Shares acquired and retired, shares | (1,447,588) | |||||||
Shares acquired and retired | (96) | (96) | (23) | (73) | ||||
Shares exchanged — benefit plans, shares | (1,337) | |||||||
Shares exchanged — benefit plans | 0 | 0 | 0 | 0 | ||||
Forfeitures of restricted stock, shares | (5,488) | |||||||
Other, shares | 0 | |||||||
Other | 0 | (4) | 0 | 4 | 0 | |||
Ending Balance, shares at Sep. 30, 2020 | 87,266,582 | |||||||
Ending Balance at Sep. 30, 2020 | 6,340 | 6,340 | 1,370 | 3,737 | 1,233 | 0 | ||
Ending Balance, Redeemable Noncontrolling Interests at Sep. 30, 2020 | 0 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative effect of accounting change | 6,340 | 6,340 | 1,370 | 3,737 | 1,233 | 0 | ||
Cumulative effect of accounting change | $ 6,789 | 6,789 | 1,367 | 4,149 | 1,273 | 0 | ||
Beginning Balance, shares at Dec. 31, 2020 | 86,345,246 | 86,345,246 | ||||||
Beginning Balance at Dec. 31, 2020 | $ 6,789 | 6,789 | 1,367 | 4,149 | 1,273 | 0 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net earnings (losses) attributable to parent | 1,640 | 1,640 | 1,640 | |||||
Net earnings loss attributable to noncontrolling interests | 0 | 0 | ||||||
Net earnings, including noncontrolling interests | 1,640 | |||||||
Other comprehensive income (loss), attributable to parent | (1,113) | (1,113) | ||||||
Other comprehensive income (loss) including portion attributable to nonredeemable noncontrolling interest | (1,113) | |||||||
Dividends | (1,826) | (1,826) | (1,826) | |||||
Shares issued: | ||||||||
Exercise of stock options, shares | 1,118,586 | |||||||
Exercise of stock options | 55 | 55 | 55 | |||||
Restricted stock awards, shares | 207,020 | |||||||
Other benefit plans, shares | 60,494 | |||||||
Other benefit plans | 7 | 7 | 7 | |||||
Dividend reinvestment plan, shares | 42,926 | |||||||
Dividend reinvestment plan | 5 | 5 | 5 | |||||
Stock-based compensation expense | 11 | 11 | 11 | |||||
Shares acquired and retired, shares | (2,769,182) | |||||||
Shares acquired and retired | (318) | (318) | (44) | (274) | ||||
Shares exchanged — benefit plans, shares | (91,926) | |||||||
Shares exchanged — benefit plans | $ (10) | (10) | (1) | (9) | ||||
Forfeitures of restricted stock, shares | (118,156) | |||||||
Ending Balance, shares at Sep. 30, 2021 | 84,795,008 | 84,795,008 | ||||||
Ending Balance at Sep. 30, 2021 | $ 5,240 | 5,240 | 1,400 | 3,680 | 160 | 0 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative effect of accounting change | 5,601 | 5,601 | 1,388 | 4,023 | 190 | 0 | ||
Beginning Balance, shares at Jun. 30, 2021 | 84,713,927 | |||||||
Beginning Balance at Jun. 30, 2021 | 5,601 | 5,601 | 1,388 | 4,023 | 190 | 0 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net earnings (losses) attributable to parent | 219 | 219 | 219 | |||||
Net earnings loss attributable to noncontrolling interests | 0 | 0 | ||||||
Net earnings, including noncontrolling interests | 219 | |||||||
Other comprehensive income (loss), attributable to parent | (30) | (30) | ||||||
Other comprehensive income (loss) including portion attributable to nonredeemable noncontrolling interest | (30) | |||||||
Dividends | (551) | (551) | (551) | |||||
Shares issued: | ||||||||
Exercise of stock options, shares | 153,842 | |||||||
Exercise of stock options | 6 | 6 | 6 | |||||
Restricted stock awards, shares | 0 | |||||||
Other benefit plans, shares | 17,029 | |||||||
Other benefit plans | 2 | 2 | 2 | |||||
Dividend reinvestment plan, shares | 6,272 | |||||||
Dividend reinvestment plan | 1 | 1 | 1 | |||||
Stock-based compensation expense | 4 | 4 | 4 | |||||
Shares acquired and retired, shares | (94,960) | |||||||
Shares acquired and retired | (12) | (12) | (1) | (11) | ||||
Shares exchanged — benefit plans, shares | (562) | |||||||
Shares exchanged — benefit plans | $ 0 | 0 | 0 | 0 | ||||
Forfeitures of restricted stock, shares | (540) | |||||||
Ending Balance, shares at Sep. 30, 2021 | 84,795,008 | 84,795,008 | ||||||
Ending Balance at Sep. 30, 2021 | $ 5,240 | 5,240 | 1,400 | 3,680 | 160 | 0 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative effect of accounting change | $ 5,240 | $ 5,240 | $ 1,400 | $ 3,680 | $ 160 | $ 0 |
Consolidated Statement of Cha_2
Consolidated Statement of Changes in Equity (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends per Common Share (USD per share) | $ 6.50 | $ 0.45 | $ 21.50 | $ 1.35 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Operating Activities: | ||
Net earnings, including noncontrolling interests | $ 1,640 | $ 27 |
Adjustments: | ||
Depreciation and amortization | 160 | 248 |
Annuity benefits | 377 | 905 |
Realized (gains) losses on investing activities | (1,111) | 332 |
Net (purchases) sales of trading securities | (6) | 18 |
Deferred annuity and life policy acquisition costs | (98) | (112) |
Change in: | ||
Reinsurance and other receivables | (987) | (597) |
Other assets | 238 | 120 |
Insurance claims and reserves | 1,204 | 702 |
Payable to reinsurers | 339 | 163 |
Other liabilities | 88 | (220) |
Managed investment entities’ assets/liabilities | (78) | 99 |
Other operating activities, net | (341) | 11 |
Net cash provided by operating activities | 1,425 | 1,696 |
Investing Activities: | ||
Purchases of fixed maturities | (6,907) | (7,817) |
Purchases of equity securities | (110) | (354) |
Purchases of mortgage loans | (179) | (197) |
Purchases of equity index call options and other investments | (313) | (699) |
Purchases of real estate, property and equipment | (53) | (41) |
Proceeds from maturities and redemptions of fixed maturities | 4,075 | 4,114 |
Proceeds from repayments of mortgage loans | 27 | 48 |
Proceeds from sales of fixed maturities | 690 | 3,123 |
Proceeds from sales of equity securities | 462 | 421 |
Proceeds from sales and settlements of equity index call options and other investments | 562 | 673 |
Proceeds from sales of real estate, property and equipment | 25 | 7 |
Proceeds from sale of businesses | 3,547 | 0 |
Cash and cash equivalents of businesses sold | (2,060) | 0 |
Managed investment entities: | ||
Purchases of investments | (1,480) | (878) |
Proceeds from sales and redemptions of investments | 1,579 | 818 |
Other investing activities, net | 32 | 10 |
Net cash used in investing activities | (103) | (772) |
Financing Activities: | ||
Annuity receipts | 2,403 | 2,968 |
Ceded annuity receipts | (311) | (246) |
Annuity surrenders, benefits and withdrawals | (1,931) | (2,506) |
Ceded annuity surrenders, benefits and withdrawals | 282 | 0 |
Net transfers from variable annuity assets | 34 | 44 |
Additional long-term borrowings | 0 | 635 |
Issuances of managed investment entities’ liabilities | 1,665 | 30 |
Retirements of managed investment entities’ liabilities | (1,701) | (79) |
Issuances of Common Stock | 60 | 15 |
Repurchases of Common Stock | (318) | (233) |
Cash dividends paid on Common Stock | (1,482) | (119) |
Net cash provided by (used in) financing activities | (1,299) | 509 |
Net Change in Cash and Cash Equivalents | 23 | 1,433 |
Cash and cash equivalents at beginning of period | 2,810 | 2,314 |
Cash and cash equivalents at end of period | $ 2,833 | $ 3,747 |
Accounting Policies
Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Accounting Policies | Accounting Policies Basis of Presentation The accompanying consolidated financial statements for American Financial Group, Inc. and its subsidiaries (“AFG”) are unaudited; however, management believes that all adjustments (consisting only of normal recurring accruals unless otherwise disclosed herein) necessary for fair presentation have been made. The results of operations for interim periods are not necessarily indicative of results to be expected for the year. The financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary to be in conformity with U.S. generally accepted accounting principles (“GAAP”). Certain reclassifications have been made to prior periods to conform to the current year’s presentation including reclassifying the assets and liabilities of the Annuity subsidiaries sold in May 2021 to assets and liabilities of discontinued annuity operations and their earnings to net earnings (loss) from discontinued operations. See Note B — “Discontinued Operations.” All significant intercompany balances and transactions have been eliminated. The results of operations of companies since their formation or acquisition are included in the consolidated financial statements. Events or transactions occurring subsequent to September 30, 2021, and prior to the filing of this Form 10-Q, have been evaluated for potential recognition or disclosure herein. Unless otherwise stated, the information in the Notes to the Consolidated Financial Statements relates to AFG’s continuing operations. The preparation of the financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Changes in circumstances could cause actual results to differ materially from those estimates. Discontinued Operations Disposals of components of an entity that represent a strategic shift and that have a major effect on a reporting entity’s operations and financial results are reported as discontinued operations. Fair Value Measurements Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The standards establish a hierarchy of valuation techniques based on whether the assumptions that market participants would use in pricing the asset or liability (“inputs”) are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect AFG’s assumptions about the assumptions market participants would use in pricing the asset or liability. AFG did not have any material nonrecurring fair value measurements in the first nine months of 2021. Credit Losses on Financial Instruments On January 1, 2020, AFG adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments , which provides a new loss model for determining credit-related impairments for financial instruments measured at amortized cost (mortgage loans, premiums receivable and reinsurance recoverables) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses considers historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. Expected credit losses, and subsequent increases or decreases in such expected losses, are recorded immediately through net earnings as an allowance that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the balance sheet at the amount expected to be collected. At the date of adoption, the impact of adjusting AFG’s existing allowances for uncollectable mortgage loans, premiums receivable and reinsurance recoverables to the allowances calculated under the new guidance resulted in a reduction in the net allowance, which was recorded as the cumulative effect of an accounting change ($7 million increase in retained earnings at January 1, 2020). The updated guidance also amended the other-than-temporary impairment model for available for sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. Subsequent increases or decreases in expected credit losses are recorded immediately in net earnings through realized gains (losses). Investments Equity securities other than those accounted for under the equity method are reported at fair value with holding gains and losses generally recorded in realized gains (losses) on securities. However, AFG records holding gains and losses on securities classified as “trading” under previous guidance, its small portfolio of limited partnerships and similar investments carried at fair value and certain other securities classified at purchase as “fair value through net investment income” in net investment income. Fixed maturity securities classified as “available for sale” are reported at fair value with unrealized gains and losses included in accumulated other comprehensive income (“AOCI”) in AFG’s Balance Sheet. Fixed maturity securities classified as “trading” are reported at fair value with changes in unrealized holding gains or losses during the period included in net investment income. Mortgage loans (net of any allowance) are carried primarily at the aggregate unpaid balance. Premiums and discounts on fixed maturity securities are amortized using the effective interest method. Mortgage-backed securities (“MBS”) are amortized over a period based on estimated future principal payments, including prepayments. Prepayment assumptions are reviewed periodically and adjusted to reflect actual prepayments and changes in expectations. Limited partnerships and similar investments are generally accounted for using the equity method of accounting. Under the equity method, AFG records its share of the earnings or losses of the investee based on when it is reported by the investee in its financial statements rather than in the period in which the investee declares a dividend. AFG’s share of the earnings or losses from equity method investments is generally recorded on a quarter lag due to the timing of the receipt of the investee’s financial statements. AFG’s equity in the earnings (losses) of limited partnerships and similar investments is included in net investment income. Realized gains or losses on the disposal of fixed maturity securities are determined on the specific identification basis. When a decline in the value of an available for sale fixed maturity is considered to be other-than-temporary at the balance sheet date, an allowance for credit losses (impairment), including any write-off of accrued interest, is charged to earnings (included in realized gains (losses) on securities). If management can assert that it does not intend to sell the security and it is not more likely than not that it will have to sell it before recovery of its amortized cost basis (net of allowance), then the impairment is separated into two components: (i) the allowance related to credit losses (recorded in earnings) and (ii) the amount related to all other factors (recorded in other comprehensive income). The credit-related portion is measured by comparing a security’s amortized cost to the present value of its current expected cash flows discounted at its effective yield prior to the charge. If management intends to sell an impaired security, or it is more likely than not that it will be required to sell the security before recovery, an impairment is recorded in earnings to reduce the amortized cost (net of allowance) of that security to fair value. Goodwill Goodwill represents the excess of cost of subsidiaries over AFG’s equity in their underlying net assets at the date of acquisition. Goodwill is not amortized, but is subject to an impairment test at least annually. An entity is not required to complete the quantitative annual goodwill impairment test on a reporting unit if the entity elects to perform a qualitative analysis and determines that it is more likely than not that the reporting unit’s fair value exceeds its carrying amount. Reinsurance Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies. AFG reports as assets (i) the estimated reinsurance recoverable on paid and unpaid losses, including an estimate for losses incurred but not reported, and (ii) amounts paid or due to reinsurers applicable to the unexpired terms of policies in force. Payable to reinsurers includes ceded premiums due to reinsurers, as well as ceded premiums retained by AFG under contracts to fund ceded losses as they become due. AFG also assumes reinsurance from other companies. Earnings on reinsurance assumed is recognized based on information received from ceding companies. Deferred Policy Acquisition Costs (“DPAC”) Policy acquisition costs (principally commissions, premium taxes and certain underwriting and policy issuance costs) directly related to the successful acquisition or renewal of an insurance contract are deferred. DPAC is limited based upon recoverability without any consideration for anticipated investment income and is charged against income ratably over the terms of the related policies. A premium deficiency is recognized if the sum of expected claims costs, claims adjustment expenses and unamortized acquisition costs exceed the related unearned premiums. A premium deficiency is first recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. If the premium deficiency is greater than unamortized acquisition costs, a liability is accrued for the excess deficiency and reported with unpaid losses and loss adjustment expenses. Managed Investment Entities A company is considered the primary beneficiary of, and therefore must consolidate, a variable interest entity (“VIE”) based primarily on its ability to direct the activities of the VIE that most significantly impact that entity’s economic performance and the obligation to absorb losses of, or receive benefits from, the entity that could potentially be significant to the VIE. AFG manages, and has investments in, collateralized loan obligations (“CLOs”) that are VIEs (see Note G — “Managed Investment Entities” ). AFG has determined that it is the primary beneficiary of these CLOs because (i) its role as asset manager gives it the power to direct the activities that most significantly impact the economic performance of the CLOs and (ii) through its investment in the CLO debt tranches, it has exposure to CLO losses (limited to the amount AFG invested) and the right to receive CLO benefits that could potentially be significant to the CLOs. Because AFG has no right to use the CLO assets and no obligation to pay the CLO liabilities, the assets and liabilities of the CLOs are shown separately in AFG’s Balance Sheet. AFG has elected the fair value option for reporting on the CLO assets and liabilities to improve the transparency of financial reporting related to the CLOs. The net gain or loss from accounting for the CLO assets and liabilities at fair value is presented separately in AFG’s Statement of Earnings. The fair values of a CLO’s assets may differ from the separately measured fair values of its liabilities even though the CLO liabilities only have recourse to the CLO assets. AFG has set the carrying value of the CLO liabilities equal to the fair value of the CLO assets (which have more observable fair values) as an alternative to reporting those liabilities at a separately measured fair value. CLO earnings attributable to AFG’s shareholders are measured by the change in the fair value of AFG’s investments in the CLOs and management fees earned. At September 30, 2021, assets and liabilities of managed investment entities included $171 million in assets and $131 million in liabilities of a temporary warehousing entity that was established in connection with the formation of a new CLO that is expected to close in the fourth quarter of 2021. At closing, all warehoused assets will be transferred to the new CLO and the liabilities will be repaid. Unpaid Losses and Loss Adjustment Expenses The net liabilities stated for unpaid claims and for expenses of investigation and adjustment of unpaid claims represent management’s best estimate and are based upon (i) the accumulation of case estimates for losses reported prior to the close of the accounting period on direct business written; (ii) estimates received from ceding reinsurers and insurance pools and associations; (iii) estimates of unreported losses (including possible development on known claims) based on past experience; (iv) estimates based on experience of expenses for investigating and adjusting claims; and (v) the current state of the law and coverage litigation. Establishing reserves for asbestos, environmental and other mass tort claims involves considerably more judgment than other types of claims due to, among other things, inconsistent court decisions, an increase in bankruptcy filings as a result of asbestos-related liabilities, novel theories of coverage, and judicial interpretations that often expand theories of recovery and broaden the scope of coverage. Loss reserve liabilities are subject to the impact of changes in claim amounts and frequency and other factors. Changes in estimates of the liabilities for losses and loss adjustment expenses are reflected in the statement of earnings in the period in which determined. Despite the variability inherent in such estimates, management believes that the liabilities for unpaid losses and loss adjustment expenses are adequate. Debt Issuance Costs Debt issuance costs related to AFG’s outstanding debt are presented in its Balance Sheet as a direct reduction in the carrying value of long-term debt and are amortized over the life of the related debt using the effective interest method as a component of interest expense. Debt issuance costs related to AFG’s revolving credit facilities are included in other assets in AFG’s Balance Sheet. Leases Leases for terms of longer than one year are recognized as assets and liabilities for the rights and obligations created by those leases on the balance sheet based on the present value of contractual cash flows. At September 30, 2021 AFG has a $136 million lease liability included in other liabilities Noncontrolling Interests For balance sheet purposes, noncontrolling interests represent the interests of shareholders other than AFG in consolidated entities. In the statement of earnings, net earnings and losses attributable to noncontrolling interests represents such shareholders’ interest in the earnings and losses of those entities. Premium Recognition Property and casualty premiums are earned generally over the terms of the policies on a pro rata basis. Unearned premiums represent that portion of premiums written, which is applicable to the unexpired terms of policies in force. On reinsurance assumed from other insurance companies or written through various underwriting organizations, unearned premiums are based on information received from such companies and organizations. Income Taxes Deferred income taxes are calculated using the liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases and are measured using enacted tax rates. A valuation allowance is established to reduce total deferred tax assets to an amount that will more likely than not be realized. The effect of a change in tax rates on deferred tax assets and liabilities is recorded in net earnings in the period that includes the enactment date. AFG recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained under examination by the appropriate taxing authority. Interest and penalties on AFG’s reserve for uncertain tax positions are recognized as a component of tax expense. Stock-Based Compensation All share-based grants are recognized as compensation expense on a straight-line basis over their vesting periods based on their calculated fair value at the date of grant. AFG records excess tax benefits or deficiencies for share-based payments through income tax expense in the statement of earnings. In addition, AFG accounts for forfeitures of awards when they occur. Benefit Plans AFG provides retirement benefits to qualified employees of participating companies through the AFG 401(k) Retirement and Savings Plan, a defined contribution plan. AFG makes all contributions to the retirement fund portion of the plan and matches a percentage of employee contributions to the savings fund. Company contributions are expensed in the year for which they are declared. AFG and many of its subsidiaries provide health care and life insurance benefits to eligible retirees. AFG also provides postemployment benefits to former or inactive employees (primarily those on disability) who were not deemed retired under other company plans. The projected future cost of providing these benefits is expensed over the period employees earn such benefits. Earnings Per Share Although basic earnings per share only considers shares of common stock outstanding during the period, the calculation of diluted earnings per share includes the following adjustments to weighted average common shares related to stock-based compensation plans: third quarter of 2021 and 2020 — 0.4 million and 0.3 million; first nine months of 2021 and 2020 — 0.6 million and 0.5 million. There were no anti-dilutive potential common shares for the third quarter or the first nine months of 2021 or 2020. Statement of Cash Flows For cash flow purposes, “investing activities” are defined as making and collecting loans and acquiring and disposing of debt or equity instruments, property and equipment and businesses. “Financing activities” include obtaining resources from owners and providing them with a return on their investments, borrowing money and repaying amounts borrowed. All other activities are considered “operating.” Short-term investments having original maturities of three months or less when purchased are considered to be cash equivalents for purposes of the financial statements. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations Annuity Business On May 28, 2021, AFG completed the sale of its Annuity business to Massachusetts Mutual Life Insurance Company (“MassMutual”) with an effective date of May 31, 2021. MassMutual acquired Great American Life Insurance Company (“GALIC”) and its two insurance subsidiaries, Annuity Investors Life Insurance Company and Manhattan National Life Insurance Company. In addition to AFG’s annuity operations, these subsidiaries included AFG’s run-off life and long-term care operations. Proceeds from the sale were $3.57 billion (including $34 million in preliminary post-closing adjustments). AFG realized a $656 million net gain on the sale. The sale continues to be subject to tax-related post-closing adjustments, which are not expected to be material and are expected to be settled in 2022. Beginning with the first quarter of 2021, the results of the Annuity business sold were reported as discontinued operations in accordance with generally accepted accounting principles, which included adjusting prior period results to reflect these operations as discontinued. Prior to the sale, AFG acquired approximately $480 million in investments accounted for using the equity method and approximately $100 million of directly owned real estate from GALIC. Details of the assets and liabilities of the Annuity subsidiaries sold were as follows (in millions): May 31, 2021 December 31, 2020 Assets of businesses sold: Cash and cash equivalents $ 2,060 $ 1,145 Investments 38,323 38,011 Recoverables from reinsurers 6,748 6,804 Other assets 2,152 1,925 Total assets of discontinued annuity operations 49,283 47,885 Liabilities of businesses sold: Annuity benefits accumulated 43,690 42,573 Other liabilities 1,813 1,885 Total liabilities of discontinued annuity operations 45,503 44,458 Receivable from AFG for real estate-related investments — 537 Reclassify AOCI (913) (1,071) Net investment in annuity businesses sold, excluding AOCI $ 2,867 $ 2,893 Details of the results of operations for the discontinued annuity operations were (in millions): Three months ended September 30, Nine months ended September 30, 2021 2020 2021 (*) 2020 Net investment income $ — $ 459 $ 746 $ 1,256 Realized gains (losses) on securities — 22 112 (105) Other income — 26 52 91 Total revenues — 507 910 1,242 Annuity benefits — 203 377 905 Annuity and supplemental insurance acquisition expenses — 172 136 250 Other expenses — 38 73 118 Total costs and expenses — 413 586 1,273 Earnings (loss) before income taxes from discontinued operations — 94 324 (31) Provision (credit) for income taxes on operations — 18 66 (11) Net earnings (loss) from operations, net of tax — 76 258 (20) Gain on sale, net of tax — — 656 — Net earnings (loss) from discontinued operations $ — $ 76 $ 914 $ (20) (*) Results through the May 31, 2021 effective date of the sale. Net investment income in the table above excludes $10 million in the third quarter of 2020, and $51 million and $29 million in first nine months of 2021 and 2020, respectively, related to the real estate-related entities that AFG acquired from the discontinued annuity operations prior to the completion of the sale. The impact of the sale of the annuity business is shown below (in millions): May 31, 2021 Cash proceeds $ 3,537 Receivable from MassMutual 34 Sale related expenses (8) Total net proceeds 3,563 Net investment in annuity businesses sold, excluding AOCI 2,867 Reclassify net deferred tax asset (199) Pretax gain on sale 895 Income tax expense: Reclassify net deferred tax asset 199 Tax liabilities triggered by pending sale in the first quarter of 2021 41 Other (1) Total income tax expense 239 Net gain on sale $ 656 Summarized cash flows for the discontinued annuity operations were (in millions): Nine months ended September 30, 2021 2020 Net cash provided by operating activities $ 87 $ 904 Net cash used in investing activities (1,709) (440) Net cash provided by financing activities 477 260 Derivatives The vast majority of AFG’s derivatives were held by the sold annuity subsidiaries. The following table summarizes the gains (losses) included in net earnings (loss) from discontinued operations for changes in the fair value of derivatives that do not qualify for hedge accounting for the first nine months of 2021 and 2020 (in millions): Three months ended September 30, Nine months ended September 30, Derivative 2021 2020 2021 (*) 2020 MBS with embedded derivatives $ — $ (3) $ (1) $ 2 Fixed-indexed and variable-indexed annuities (embedded derivative) — (5) (222) 41 Equity index call options — 203 237 (42) Equity index put options — 2 5 1 Reinsurance contract (embedded derivative) — 1 1 — $ — $ 198 $ 20 $ 2 (*) Through the May 31, 2021 effective date of the sale. |
Sales of Businesses
Sales of Businesses | 9 Months Ended |
Sep. 30, 2021 | |
Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract] | |
Sales of Businesses | Sales of Businesses Annuity Operations See Note B — “Discontinued Operations,” for information on the sale of AFG’s annuity operations. Neon In December 2019, AFG initiated actions to exit the Lloyd’s of London insurance market, which included placing Neon Underwriting Ltd. and its other Lloyd’s subsidiaries in run-off. Neon and its predecessor, Marketform, failed to achieve AFG’s profitability objectives since AFG’s purchase of Marketform in 2008. In December 2020, AFG completed the sale of GAI Holding Bermuda and its subsidiaries, comprising the legal entities that own Neon, to RiverStone Holdings Limited for proceeds of $6 million. The sale completed AFG’s exit from the Lloyd’s of London insurance market. In the second quarter of 2021, AFG recognized a pretax gain on sale of a subsidiary of $4 million related to contingent consideration received on the sale of Neon. Under GAAP accounting guidance, only disposals of components of an entity that represent a strategic shift and that have a major effect on a reporting entity’s operations and financial results are reported as discontinued operations. Because AFG’s primary business continues to be commercial property and casualty insurance, as well as the immaterial expected impact on AFG’s ongoing results of operations, the sale of Neon was not reported as a discontinued operation. An estimated loss of $30 million on the sale of Neon was recorded in AFG’s financial statements as of September 30, 2020 as shown below (in millions): Estimated sale proceeds, net of expenses $ 4 Assets of businesses to be sold: Cash and investments $ 461 Recoverables from reinsurers 198 Prepaid reinsurance premiums 30 Agents’ balances and premiums receivable 48 Other assets 73 Total assets 810 Liabilities of businesses to be sold: Unpaid losses and loss adjustment expenses 598 Unearned premiums 83 Payable to reinsurers 39 Other liabilities 47 Total liabilities 767 Reclassify accumulated other comprehensive income (9) Net assets of businesses to be sold $ 34 Pretax loss on subsidiaries recorded in the third quarter of 2020 $ (30) Revenues, costs and expenses, and earnings before income taxes for the subsidiaries sold were (in millions): Three months ended Nine months ended September 30, 2020 September 30, 2020 Net earned premiums $ 42 $ 174 Loss and loss adjustment expenses 60 166 Commissions and other underwriting expenses 20 90 Underwriting loss (38) (82) Net investment income 1 (5) Other income and expenses, net (3) (5) Loss before income taxes and noncontrolling interests $ (40) $ (92) |
Segments of Operations
Segments of Operations | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Segments of Operations | Segments of Operations Subsequent to the sale of its annuity operations, see Note B — “Discontinued Operations,” AFG manages its business as two segments: Property and casualty insurance and Other, which includes holding company costs and operations attributable to the noncontrolling interests of the managed investment entities. AFG reports its property and casualty insurance business in the following Specialty sub-segments: (i) Property and transportation, which includes physical damage and liability coverage for buses and trucks, inland and ocean marine, agricultural-related products and other commercial property coverages, (ii) Specialty casualty, which includes primarily excess and surplus, executive and professional liability, general liability, umbrella and excess liability, specialty coverages in targeted markets, customized programs for small to mid-sized businesses and workers’ compensation insurance, and (iii) Specialty financial, which includes risk management insurance programs for lending and leasing institutions (including equipment leasing and collateral and lender-placed mortgage property insurance), fidelity and surety products and trade credit insurance. Premiums and underwriting profit included under Other specialty represent business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty sub-segments and amortization of deferred gains on retroactive reinsurance transactions related to the sales of businesses in prior years. AFG’s reportable segments and their components were determined based primarily upon similar economic characteristics, products and services. The following tables (in millions) show AFG’s revenues and earnings (loss) from continuing operations before income taxes by segment and sub-segment. Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Revenues Property and casualty insurance: Premiums earned: Specialty Property and transportation $ 700 $ 574 $ 1,547 $ 1,350 Specialty casualty 613 560 1,772 1,663 Specialty financial 163 155 477 455 Other specialty 53 50 156 132 Other lines (a) — 42 — 174 Total premiums earned 1,529 1,381 3,952 3,774 Net investment income (b) 165 112 467 277 Other income 4 — 9 8 Total property and casualty insurance 1,698 1,493 4,428 4,059 Other 73 60 208 195 Income on real estate-related entities (c) — 10 51 29 Total revenues before realized gains (losses) 1,771 1,563 4,687 4,283 Realized gains (losses) on securities (17) 23 103 (197) Realized gains (losses) on subsidiaries — (30) 4 (30) Total revenues $ 1,754 $ 1,556 $ 4,794 $ 4,056 (a) Represents premiums earned in the Neon exited lines (which were sold in December 2020) during the third quarter and first nine months of 2020. (b) Includes income of $1 million for the third quarter of 2020 and a loss of $5 million in the Neon exited lines in the first nine months of 2020 (primarily from the change in fair value of equity securities). (c) Represents investment income from real estate-related entities acquired from the discontinued annuity operations while they were held by those operations. Subsequent to the sale of the annuity group, this income is included in the segment of the acquirer. Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Earnings (Loss) From Continuing Operations Before Income Taxes Property and casualty insurance: Underwriting: Specialty Property and transportation $ 45 $ 47 $ 163 $ 107 Specialty casualty 110 53 237 132 Specialty financial 26 13 72 30 Other specialty (12) (9) (16) (22) Other lines (a) (1) (86) (2) (133) Total underwriting 168 18 454 114 Investment and other income, net (b) 161 100 451 249 Total property and casualty insurance 329 118 905 363 Other (c) (45) (74) (173) (152) Income on real estate-related entities (d) — 3 51 11 Total earnings from continuing operations before realized gains (losses) and income taxes 284 47 783 222 Realized gains (losses) on securities (17) 23 103 (197) Realized gains (losses) on subsidiaries — (30) 4 (30) Total earnings (loss) from continuing operations before income taxes $ 267 $ 40 $ 890 $ (5) (a) Includes an underwriting loss of $38 million in the third quarter of 2020 and $82 million in the first nine months of 2020 in the Neon exited lines. Also includes a special charge of $47 million in the third quarter of 2020 to increase asbestos and environmental (“A&E”) reserves. (b) Includes $2 million and $10 million in the third quarter and first nine months of 2020, respectively, in net expenses from the Neon exited lines, before noncontrolling interest. (c) Includes holding company interest and expenses, including a special charge of $21 million in the third quarter of 2020 to increase A&E reserves related to AFG’s former railroad and manufacturing operations. (d) Represents investment income (net of DAC) from real estate-related entities acquired from the discontinued annuity operations while they were held by those operations. Subsequent to the sale of the annuity group, this income is included in the segment of the acquirer. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Accounting standards for measuring fair value are based on inputs used in estimating fair value. The three levels of the hierarchy are as follows: Level 1 — Quoted prices for identical assets or liabilities in active markets (markets in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis). AFG’s Level 1 financial instruments consist primarily of publicly traded equity securities, highly liquid government bonds for which quoted market prices in active markets are available and short-term investments of managed investment entities. Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar assets or liabilities in inactive markets (markets in which there are few transactions, the prices are not current, price quotations vary substantially over time or among market makers, or in which little information is released publicly); and valuations based on other significant inputs that are observable in active markets. AFG’s Level 2 financial instruments include corporate and municipal fixed maturity securities, asset-backed securities (“ABS”), mortgage-backed securities (“MBS”), certain non-affiliated common stocks and investments of managed investment entities priced using observable inputs. Level 2 inputs include benchmark yields, reported trades, corroborated broker/dealer quotes, issuer spreads and benchmark securities. When non-binding broker quotes can be corroborated by comparison to similar securities priced using observable inputs, they are classified as Level 2. Level 3 — Valuations derived from market valuation techniques generally consistent with those used to estimate the fair values of Level 2 financial instruments in which one or more significant inputs are unobservable or when the market for a security exhibits significantly less liquidity relative to markets supporting Level 2 fair value measurements. The unobservable inputs may include management’s own assumptions about the assumptions market participants would use based on the best information available at the valuation date. Financial instruments whose fair value is estimated based on non-binding broker quotes or internally developed using significant inputs not based on, or corroborated by, observable market information are classified as Level 3. As discussed in Note A — “Accounting Policies — Managed Investment Entities,” AFG has set the carrying value of its CLO liabilities equal to the fair value of the CLO assets (which have more observable fair values) as an alternative to reporting those liabilities at separately measured fair values. As a result, the CLO liabilities are categorized within the fair value hierarchy on the same basis (proportionally) as the related CLO assets. Since the portion of the CLO liabilities allocated to Level 3 is derived from the fair value of the CLO assets, these amounts are excluded from the progression of Level 3 financial instruments. AFG’s management is responsible for the valuation process and uses data from outside sources (including nationally recognized pricing services and broker/dealers) in establishing fair value. AFG’s internal investment professionals are a group of approximately 20 investment professionals whose primary responsibility is to manage AFG’s investment portfolio. These professionals monitor individual investments as well as overall industries and are active in the financial markets on a daily basis. The group is led by AFG’s chief investment officer, who reports directly to one of AFG’s Co-CEOs. Valuation techniques utilized by pricing services and prices obtained from external sources are reviewed by AFG’s internal investment professionals who are familiar with the securities being priced and the markets in which they trade to ensure the fair value determination is representative of an exit price. To validate the appropriateness of the prices obtained, these investment managers consider widely published indices (as benchmarks), recent trades, changes in interest rates, general economic conditions and the credit quality of the specific issuers. In addition, the Company communicates directly with the pricing services regarding the methods and assumptions used in pricing, including verifying, on a test basis, the inputs used by the service to value specific securities. Assets and liabilities of continuing operations measured and carried at fair value in the financial statements are summarized below (in millions): Level 1 Level 2 Level 3 Total September 30, 2021 Assets: Available for sale (“AFS”) fixed maturities: U.S. Government and government agencies $ 217 $ 1 $ — $ 218 States, municipalities and political subdivisions — 1,884 42 1,926 Foreign government — 217 — 217 Residential MBS — 736 18 754 Commercial MBS — 113 — 113 Collateralized loan obligations — 1,828 1 1,829 Other asset-backed securities — 2,335 309 2,644 Corporate and other 15 2,463 248 2,726 Total AFS fixed maturities 232 9,577 618 10,427 Trading fixed maturities — 29 — 29 Equity securities 681 44 268 993 Assets of managed investment entities (“MIE”) 316 4,802 12 5,130 Total assets accounted for at fair value $ 1,229 $ 14,452 $ 898 $ 16,579 Liabilities: Liabilities of managed investment entities $ 310 $ 4,712 $ 12 $ 5,034 Total liabilities accounted for at fair value $ 310 $ 4,712 $ 12 $ 5,034 December 31, 2020 Assets: Available for sale fixed maturities: U.S. Government and government agencies $ 195 $ 3 $ — $ 198 States, municipalities and political subdivisions — 2,273 39 2,312 Foreign government — 176 — 176 Residential MBS — 877 38 915 Commercial MBS — 90 2 92 Collateralized loan obligations — 1,046 16 1,062 Other asset-backed securities — 1,742 305 2,047 Corporate and other 4 2,140 138 2,282 Total AFS fixed maturities 199 8,347 538 9,084 Trading fixed maturities — 24 — 24 Equity securities 665 48 176 889 Assets of managed investment entities 217 4,733 21 4,971 Total assets accounted for at fair value $ 1,081 $ 13,152 $ 735 $ 14,968 Liabilities: Liabilities of managed investment entities $ 215 $ 4,678 $ 21 $ 4,914 Total liabilities accounted for at fair value $ 215 $ 4,678 $ 21 $ 4,914 Approximately 5% of the total assets of continuing operations carried at fair value at September 30, 2021, were Level 3 assets. Approximately 17% ($150 million) of those Level 3 assets were priced using non-binding broker quotes, for which there is a lack of transparency as to the inputs used to determine fair value. Details as to the quantitative inputs are neither provided by the brokers nor otherwise reasonably obtainable by AFG. Approximately $61 million (7%) of the Level 3 assets were priced by pricing services where either a single price was not corroborated, prices varied enough among the providers, or other market factors led management to determine these securities be classified as Level 3 assets. Approximately 17% ($149 million) of the Level 3 assets were equity investments (that do not qualify for equity method accounting) in limited partnerships whose prices were determined based on financial information provided by the limited partnerships. Internally developed Level 3 asset fair values of continuing operations represent approximately $519 million (58%) of the total fair value of Level 3 assets at September 30, 2021. Internally priced fixed maturities are priced using a variety of inputs, including appropriate credit spreads over the treasury yield (of a similar duration), trade information and prices of comparable securities and other security specific features (such as optional early redemption). Internally developed prices for equity securities are based primarily on financial information of the entities invested in and sales of comparable companies. Since internally developed Level 3 asset fair values represent less than 10% of AFG’s Shareholders’ Equity, any justifiable changes in unobservable inputs used to determine internally developed fair values would not have a material impact on AFG’s financial position. Changes in balances of Level 3 financial assets and liabilities carried at fair value during the third quarter and first nine months of 2021 and 2020 are presented below (in millions). The transfers into and out of Level 3 were due to changes in the availability of market observable inputs. All transfers are reflected in the table at fair value as of the end of the reporting period. Total realized/unrealized Balance at June 30, 2021 Net OCI Purchases Sales and Transfer Transfer Balance at September 30, 2021 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 36 — — — — 8 (2) 42 Residential MBS 28 (1) — — (1) — (8) 18 Commercial MBS — — — — — — — — Collateralized loan obligations 6 — 1 — — — (6) 1 Other asset-backed securities 315 1 (1) 41 (38) — (9) 309 Corporate and other 220 — (1) 36 (9) 2 — 248 Total AFS fixed maturities 605 — (1) 77 (48) 10 (25) 618 Equity securities 245 7 — 20 (4) — — 268 Assets of MIE 15 (2) — 1 — — (2) 12 Total Level 3 assets $ 865 $ 5 $ (1) $ 98 $ (52) $ 10 $ (27) $ 898 Total realized/unrealized Balance at June 30, 2020 Net OCI Purchases Sales and Transfer Transfer Balance at September 30, 2020 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 41 — — — — — — 41 Residential MBS 42 (1) — — (3) 8 (1) 45 Commercial MBS 6 — — — — — (4) 2 Collateralized loan obligations 55 — 1 — — — — 56 Other asset-backed securities 293 (1) 2 8 (15) 14 (8) 293 Corporate and other 178 3 1 8 (28) 1 (26) 137 Total AFS fixed maturities 615 1 4 16 (46) 23 (39) 574 Equity securities 164 (5) — 5 — — (5) 159 Assets of MIE 17 (2) — — — — — 15 Assets of discontinued annuity operations 3,044 (7) 19 83 (113) 224 (193) 3,057 Total Level 3 assets $ 3,840 $ (13) $ 23 $ 104 $ (159) $ 247 $ (237) $ 3,805 Liabilities of discontinued annuity operations $ (3,675) $ (5) $ — $ (56) $ 79 $ — $ — $ (3,657) Total Level 3 liabilities $ (3,675) $ (5) $ — $ (56) $ 79 $ — $ — $ (3,657) Total realized/unrealized Balance at December 31, 2020 Net OCI Purchases Sales and Transfer Transfer Sale of annuity business Balance at September 30, 2021 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 39 — — — (3) 8 (2) — 42 Residential MBS 38 (4) — 6 (2) 6 (26) — 18 Commercial MBS 2 — — — — — (2) — — Collateralized loan obligations 16 1 — — (1) — (15) — 1 Other asset-backed securities 305 1 — 131 (110) 14 (32) — 309 Corporate and other 138 (1) (2) 142 (29) 5 (5) — 248 Total AFS fixed maturities 538 (3) (2) 279 (145) 33 (82) — 618 Equity securities 176 78 — 44 (23) — (7) — 268 Assets of MIE 21 1 — 3 — 1 (14) — 12 Assets of discontinued annuity operations 2,971 85 (21) 209 (328) 32 (229) (2,719) — Total Level 3 assets $ 3,706 $ 161 $ (23) $ 535 $ (496) $ 66 $ (332) $ (2,719) $ 898 Liabilities of discontinued annuity operations $ (3,933) $ (222) $ — $ (146) $ 158 $ — $ — $ 4,143 $ — Total Level 3 liabilities $ (3,933) $ (222) $ — $ (146) $ 158 $ — $ — $ 4,143 $ — Total realized/unrealized Balance at December 31, 2019 Net Other Purchases Sales and Transfer Transfer Balance at September 30, 2020 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 40 — 2 — (1) — — 41 Residential MBS 45 — (1) — (5) 9 (3) 45 Commercial MBS 6 — — — — — (4) 2 Collateralized loan obligations 1 (1) 4 — — 52 — 56 Other asset-backed securities 256 (6) 3 69 (62) 41 (8) 293 Corporate and other 223 2 — 40 (39) 3 (92) 137 Total AFS fixed maturities 571 (5) 8 109 (107) 105 (107) 574 Equity securities 161 (22) — 16 — 9 (5) 159 Assets of MIE 17 (4) — — — 2 — 15 Assets of discontinued annuity operations 3,092 (27) 39 444 (325) 482 (648) 3,057 Total Level 3 assets $ 3,841 $ (58) $ 47 $ 569 $ (432) $ 598 $ (760) $ 3,805 Liabilities of discontinued annuity operations $ (3,730) $ 41 $ — $ (180) $ 212 $ — $ — $ (3,657) Total Level 3 liabilities $ (3,730) $ 41 $ — $ (180) $ 212 $ — $ — $ (3,657) Fair Value of Financial Instruments The carrying value and fair value of financial instruments of continuing operations that are not carried at fair value in the financial statements are summarized below (in millions): Carrying Fair Value Value Total Level 1 Level 2 Level 3 September 30, 2021 Financial assets: Cash and cash equivalents $ 2,833 $ 2,833 $ 2,833 $ — $ — Mortgage loans 537 555 — — 555 Total financial assets not accounted for at fair value $ 3,370 $ 3,388 $ 2,833 $ — $ 555 Long-term debt $ 1,964 $ 2,295 $ — $ 2,292 $ 3 Total financial liabilities not accounted for at fair value $ 1,964 $ 2,295 $ — $ 2,292 $ 3 December 31, 2020 Financial assets: Cash and cash equivalents $ 1,665 $ 1,665 $ 1,665 $ — $ — Mortgage loans 377 382 — — 382 Total financial assets not accounted for at fair value $ 2,042 $ 2,047 $ 1,665 $ — $ 382 Long-term debt $ 1,963 $ 2,325 $ — $ 2,322 $ 3 Total financial liabilities not accounted for at fair value $ 1,963 $ 2,325 $ — $ 2,322 $ 3 |
Investments
Investments | 9 Months Ended |
Sep. 30, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Available for sale fixed maturities held by AFG’s continuing operations at September 30, 2021 and December 31, 2020, consisted of the following (in millions): Amortized Allowance for Expected Credit Losses Gross Unrealized Net Fair Gains Losses September 30, 2021 Fixed maturities: U.S. Government and government agencies $ 216 $ — $ 3 $ (1) $ 2 $ 218 States, municipalities and political subdivisions 1,849 — 77 — 77 1,926 Foreign government 216 — 2 (1) 1 217 Residential MBS 704 — 51 (1) 50 754 Commercial MBS 110 — 3 — 3 113 Collateralized loan obligations 1,827 1 5 (2) 3 1,829 Other asset-backed securities 2,631 7 25 (5) 20 2,644 Corporate and other 2,658 1 73 (4) 69 2,726 Total fixed maturities $ 10,211 $ 9 $ 239 $ (14) $ 225 $ 10,427 December 31, 2020 Fixed maturities: U.S. Government and government agencies $ 192 $ — $ 6 $ — $ 6 $ 198 States, municipalities and political subdivisions 2,196 — 116 — 116 2,312 Foreign government 172 — 4 — 4 176 Residential MBS 859 — 57 (1) 56 915 Commercial MBS 89 — 3 — 3 92 Collateralized loan obligations 1,065 3 4 (4) — 1,062 Other asset-backed securities 2,040 7 27 (13) 14 2,047 Corporate and other 2,199 2 88 (3) 85 2,282 Total fixed maturities $ 8,812 $ 12 $ 305 $ (21) $ 284 $ 9,084 Available for sale fixed maturities that are included in assets of discontinued annuity operations at December 31, 2020, consisted of the following (in millions): Amortized Allowance for Expected Credit Losses Gross Unrealized Net Fair Gains Losses December 31, 2020 Fixed maturities: U.S. Government and government agencies $ 39 $ — $ 5 $ — $ 5 $ 44 States, municipalities and political subdivisions 3,053 — 370 (2) 368 3,421 Foreign government 31 — 4 — 4 35 Residential MBS 1,953 3 194 (4) 190 2,140 Commercial MBS 659 — 40 (1) 39 698 Collateralized loan obligations 3,491 10 23 (13) 10 3,491 Other asset-backed securities 5,098 11 142 (53) 89 5,176 Corporate and other 17,272 4 1,874 (24) 1,850 19,118 Total fixed maturities $ 31,596 $ 28 $ 2,652 $ (97) $ 2,555 $ 34,123 Equity securities held by AFG’s continuing operations, which are reported at fair value with holding gains and losses recognized in net earnings, consisted of the following at September 30, 2021 and December 31, 2020 (in millions): September 30, 2021 December 31, 2020 Fair Value Fair Value Actual Cost over (under) Actual Cost over (under) Fair Value Cost Fair Value Cost Common stocks $ 464 $ 563 $ 99 $ 516 $ 510 $ (6) Perpetual preferred stocks 386 430 44 369 379 10 Total equity securities carried at fair value $ 850 $ 993 $ 143 $ 885 $ 889 $ 4 Investments accounted for using the equity method held by AFG’s continuing operations, by category, carrying value and net investment income are as follows (in millions): Carrying Value Net Investment Income September 30, 2021 December 31, 2020 Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Real estate-related investments (*) $ 1,024 $ 915 $ 52 $ 17 $ 151 $ 55 Private equity 336 266 21 21 66 4 Private debt 47 54 — (2) 5 (6) Total investments accounted for using the equity method $ 1,407 $ 1,235 $ 73 $ 36 $ 222 $ 53 (*) Includes 88% invested in multi-family properties, 2% in single family properties and 10% in other property types as of September 30, 2021 and 87% invested in multi-family properties, 2% in single family properties and 11% in other property types as of December 31, 2020. The earnings (losses) from these investments are generally reported on a three-month lag due to the timing required to obtain the necessary information from the funds. AFG regularly reviews and discusses fund performance with the fund managers to corroborate the reasonableness of the underlying reported asset values and to assess whether any events have occurred within the lag period that may materially affect the valuation of these investments. With respect to partnerships and similar investments, AFG’s continuing operations had unfunded commitments of $302 million and $290 million as of September 30, 2021 and December 31, 2020, respectively. Assets of discontinued annuity operations included investments accounted for under the equity method of $646 million as of December 31, 2020. The following table shows gross unrealized losses (dollars in millions) on available for sale fixed maturities held by AFG’s continuing operations by investment category and length of time that individual securities have been in a continuous unrealized loss position at the following balance sheet dates. Less Than Twelve Months Twelve Months or More Unrealized Fair Fair Value as Unrealized Fair Fair Value as September 30, 2021 Fixed maturities: U.S. Government and government agencies $ (1) $ 97 99 % $ — $ 19 100 % States, municipalities and political subdivisions — 13 100 % — 15 100 % Foreign government (1) 48 98 % — — — % Residential MBS — 54 100 % (1) 8 89 % Commercial MBS — — — % — — — % Collateralized loan obligations (1) 687 100 % (1) 168 99 % Other asset-backed securities (2) 662 100 % (3) 76 96 % Corporate and other (3) 278 99 % (1) 31 97 % Total fixed maturities $ (8) $ 1,839 100 % $ (6) $ 317 98 % December 31, 2020 Fixed maturities: U.S. Government and government agencies $ — $ 23 100 % $ — $ — — % States, municipalities and political subdivisions — 39 100 % — 10 100 % Foreign government — 7 100 % — — — % Residential MBS (1) 86 99 % — 7 100 % Commercial MBS — 7 100 % — 5 100 % Collateralized loan obligations (1) 192 99 % (3) 366 99 % Other asset-backed securities (10) 465 98 % (3) 92 97 % Corporate and other (2) 133 99 % (1) 17 94 % Total fixed maturities $ (14) $ 952 99 % $ (7) $ 497 99 % At September 30, 2021, the gross unrealized losses on fixed maturities of $14 million relate to 394 securities. Investment grade securities (as determined by nationally recognized rating agencies) represented approximately 74% of the gross unrealized loss and 94% of the fair value. 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 and communications with industry specialists and discussions with issuer management. AFG analyzes its MBS securities 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 September 30, 2021. Credit losses on available for sale fixed maturities are measured based on the present value of expected future cash flows compared to amortized cost. Beginning January 1, 2020, impairment losses are recognized through an allowance instead of directly writing down the amortized cost. Recoveries of previously impaired amounts are recorded as an immediate reversal of all or a portion of the allowance. In addition, the allowance on available for sale fixed maturities cannot cause the amortized cost net of the allowance to be below fair value. Accordingly, future changes in the fair value of an impaired security (when the allowance was limited by the fair value) due to reasons other than issuer credit (e.g. changes in market interest rates) result in increases or decreases in the allowance, which are recorded through realized gains (losses) on securities. A progression of the allowance for expected credit losses on fixed maturity securities held by AFG’s continuing operations is shown below (in millions): Structured Corporate and Other Total Balance at June 30, 2021 $ 8 $ 1 $ 9 Initial allowance for purchased securities with credit deterioration — — — 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 September 30, 2021 $ 8 $ 1 $ 9 Balance at June 30, 2020 $ 11 $ 3 $ 14 Initial allowance for purchased securities with credit deterioration — — — 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 September 30, 2020 $ 11 $ 3 $ 14 Balance at January 1, 2021 $ 10 $ 2 $ 12 Initial allowance for purchased securities with credit deterioration — — — Provision for expected credit losses on securities with no previous allowance — — — Additions (reductions) to previously recognized expected credit losses (2) 1 (1) Reductions due to sales or redemptions — (2) (2) Balance at September 30, 2021 $ 8 $ 1 $ 9 Balance at January 1, 2020 $ — $ — $ — Impact of adoption of new accounting policy — — — Initial allowance for purchased securities with credit deterioration — — — Provision for expected credit losses on securities with no previous allowance 12 4 16 Additions (reductions) to previously recognized expected credit losses (1) (1) (2) Reductions due to sales or redemptions — — — Balance at September 30, 2020 $ 11 $ 3 $ 14 (*) Includes mortgage-backed securities, collateralized loan obligations and other asset-backed securities. In the third quarter and first nine months of 2021 and 2020, AFG’s continuing operations did not purchase any securities with expected credit losses. The table below sets forth the scheduled maturities of AFG’s available for sale fixed maturities as of September 30, 2021 (dollars in millions). 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. Amortized Fair Value Cost, net (*) Amount % Maturity One year or less $ 1,182 $ 1,194 11 % After one year through five years 2,571 2,662 26 % After five years through ten years 901 939 9 % After ten years 284 292 3 % 4,938 5,087 49 % Collateralized loan obligations and other ABS (average life of approximately 3 years) 4,450 4,473 43 % MBS (average life of approximately 3 years) 814 867 8 % Total $ 10,202 $ 10,427 100 % (*) 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 September 30, 2021 or December 31, 2020. Net Unrealized Gain on Fixed Maturity Securities The following table shows (in millions) the components of the net unrealized gain on securities that is included in AOCI in AFG’s Balance Sheet. Pretax Deferred Tax Net September 30, 2021 Net unrealized gain on fixed maturities $ 225 $ (47) $ 178 December 31, 2020 Net unrealized gain on fixed maturities held by continuing operations $ 284 $ (60) $ 224 Discontinued operations (*): Net unrealized gain on fixed maturities $ 2,555 $ (536) $ 2,019 Deferred policy acquisition costs — annuity segment (934) 196 (738) Annuity benefits accumulated (324) 68 (256) Life, accident and health reserves (3) — (3) Unearned revenue 11 (2) 9 Total net unrealized gain from discontinued operations 1,305 (274) 1,031 Total net unrealized gain on fixed maturity securities $ 1,589 $ (334) $ 1,255 (*) In addition to adjusting fixed maturity securities classified as “available for sale” to fair value, GAAP requires that deferred policy acquisition costs and certain other balance sheet amounts related to AFG’s discontinued annuity, long-term care and life businesses be adjusted to the extent that unrealized gains and losses from securities would result in adjustments to those balances had the unrealized gains or losses actually been realized. Net Investment Income The following table shows (in millions) investment income earned and investment expenses incurred in AFG’s continuing operations. Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Investment income: Fixed maturities $ 73 $ 73 $ 217 $ 232 Equity securities: Dividends 6 9 21 27 Change in fair value (a) (b) 7 (2) 41 (10) Equity in earnings of partnerships and similar investments 73 36 222 53 Other 14 8 28 17 Gross investment income 173 124 529 319 Investment expenses (4) (2) (8) (5) Net investment income (b) $ 169 $ 122 $ 521 $ 314 (a) Although the change in the fair value of the majority of AFG’s equity securities is recorded in realized gains (losses) on securities, AFG records holding gains and losses in net investment income on equity securities classified as “trading” under previous guidance and on a small portfolio of limited partnership and similar investments that do not qualify for the equity method of accounting. (b) Net investment income in the third quarter and first nine months of 2020 includes income of $1 million and losses of $5 million, respectively, on investments held by the companies that comprise the Neon exited lines due primarily to the $7 million loss recorded on equity securities that are carried at fair value through net investment income. Realized gains (losses) and changes in unrealized appreciation (depreciation) from continuing operations included in AOCI related to fixed maturity securities are summarized as follows (in millions): Three months ended September 30, 2021 Three months ended September 30, 2020 Realized gains (losses) Realized gains (losses) Before Impairments Impairment Allowance Total Change in Unrealized Before Impairments Impairment Allowance Total Change in Unrealized Fixed maturities $ (2) $ — $ (2) $ (35) $ 1 $ — $ 1 $ 59 Equity securities (15) — (15) — 22 — 22 — Mortgage loans and other investments — — — — — — — — Total pretax (17) — (17) (35) 23 — 23 59 Tax effects 5 — 5 8 (5) — (5) (12) Net of tax $ (12) $ — $ (12) $ (27) $ 18 $ — $ 18 $ 47 Nine months ended September 30, 2021 Nine months ended September 30, 2020 Realized gains (losses) Realized gains (losses) Before Impairments Impairment Allowance Total Change in Unrealized Before Impairments Impairment Allowance Total Change in Unrealized Fixed maturities $ (2) $ 1 $ (1) $ (59) $ 5 $ (14) $ (9) $ 39 Equity securities 104 — 104 — (189) — (189) — Mortgage loans and other investments — — — — 1 — 1 — Total pretax 102 1 103 (59) (183) (14) (197) 39 Tax effects (20) — (20) 13 38 3 41 (8) Net of tax $ 82 $ 1 $ 83 $ (46) $ (145) $ (11) $ (156) $ 31 All equity securities other than those accounted for under the equity method are carried at fair value through net earnings. AFG recorded net holding gains (losses) on equity securities from continuing operations during the third quarter and first nine months of 2021 and 2020 on securities that were still owned at September 30, 2021 and September 30, 2020 as follows (in millions): Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Included in realized gains (losses) $ (16) $ 17 $ 82 $ (174) Included in net investment income 7 (1) 41 (2) $ (9) $ 16 $ 123 $ (176) Gross realized gains and losses (excluding changes in impairment allowance and mark-to-market of derivatives) on available for sale fixed maturity investment transactions from continuing operations consisted of the following (in millions): Nine months ended September 30, 2021 2020 Gross gains $ 4 $ 8 Gross losses (2) (4) |
Managed Investment Entities
Managed Investment Entities | 9 Months Ended |
Sep. 30, 2021 | |
Variable Interest Entity, Primary Beneficiary, Does Not Hold Majority Voting Interest, Disclosures [Abstract] | |
Managed Investment Entities | Managed Investment Entities AFG is the investment manager and its subsidiaries have investments ranging from 4.5% to 46.8% of the most subordinate debt tranche of twelve 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 2020, 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 $96 million (including $86 million invested in the most subordinate tranches) at September 30, 2021, and $200 million (including $143 million held by the discontinued annuity business) at December 31, 2020. During the first nine months of 2020, AFG subsidiaries purchased $57 million face amount of senior and subordinate tranches of existing CLOs for $39 million. During the first nine months of 2021 and 2020, AFG subsidiaries received $41 million and less than $1 million, respectively, in sale and redemption proceeds from its CLO investments. The revenues and expenses of the CLOs are separately identified in AFG’s Statement of Earnings, after the elimination of management fees and earnings attributable to shareholders of AFG as measured by the change in the fair value of AFG’s investments in the CLOs. Selected financial information related to the CLOs is shown below (in millions): Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Investment in CLO tranches at end of period: Held by continuing operations $ 96 $ 47 $ 96 $ 47 Held by discontinued annuity operations — 129 — 129 Total $ 96 $ 176 $ 96 $ 176 Gains (losses) on change in fair value of assets/liabilities (*): Assets $ 10 $ 132 $ 77 $ (184) Liabilities (9) (137) (68) 163 Management fees paid to AFG 4 3 12 11 CLO earnings (losses) attributable to AFG shareholders: From continuing operations $ 5 $ 4 $ 17 $ (7) From discontinued annuity operations — 9 20 (14) Total $ 5 $ 13 $ 37 $ (21) (*) 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 $63 million and $150 million at September 30, 2021 and December 31, 2020, respectively. The aggregate unpaid principal balance of the CLOs’ debt exceeded its carrying value by $174 million and $141 million at those dates. The CLO assets include loans with an aggregate fair value of $5 million at September 30, 2021 and $11 million at December 31, 2020, for which the CLOs are not accruing interest because the loans are in default (aggregate unpaid principal balance of $15 million at September 30, 2021 and $28 million at December 31, 2020). In addition to the CLOs that it manages, AFG’s continuing operations 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 $1.83 billion at September 30, 2021 and $1.06 billion at December 31, 2020. |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangibles | Goodwill and Other IntangiblesThere were no changes in the goodwill balance from AFG’s continuing operations of $176 million during the first nine months of 2021.Included in other assets in AFG’s Balance Sheet is $29 million at September 30, 2021 and $34 million at December 31, 2020 in amortizable intangible assets related to property and casualty insurance acquisitions. These amounts are net of accumulated amortization of $66 million and $62 million, respectively. Amortization of intangibles was $1 million and $3 million in the third quarter of 2021 and 2020, respectively, and $5 million and $9 million in the first nine months of 2021 and 2020, respectively. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following (in millions): September 30, 2021 December 31, 2020 Principal Discount and Issue Costs Carrying Value Principal Discount and Issue Costs Carrying Value Direct Senior Obligations of AFG: 4.50% Senior Notes due June 2047 $ 590 $ (2) $ 588 $ 590 $ (2) $ 588 3.50% Senior Notes due August 2026 425 (3) 422 425 (3) 422 5.25% Senior Notes due April 2030 300 (5) 295 300 (6) 294 Other 3 — 3 3 — 3 1,318 (10) 1,308 1,318 (11) 1,307 Direct Subordinated Obligations of AFG: 4.50% Subordinated Debentures due September 2060 200 (5) 195 200 (5) 195 5.125% Subordinated Debentures due December 2059 200 (6) 194 200 (6) 194 5.625% Subordinated Debentures due June 2060 150 (4) 146 150 (4) 146 5.875% Subordinated Debentures due March 2059 125 (4) 121 125 (4) 121 675 (19) 656 675 (19) 656 $ 1,993 $ (29) $ 1,964 $ 1,993 $ (30) $ 1,963 Scheduled principal payments on debt for the balance of 2021, the subsequent five years and thereafter are as follows: 2021 — none; 2022 — none; 2023 — none; 2024 — none; 2025 — none; 2026 — $425 million and thereafter — $1.57 billion. AFG can borrow up to $500 million under its revolving credit facility, which expires in December 2025. Amounts borrowed under this agreement bear interest at rates ranging from 1.00% to 1.875% (currently 1.375%) over LIBOR based on AFG’s credit rating. No amounts were borrowed under this facility at September 30, 2021 or December 31, 2020. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders’ Equity AFG is authorized to issue 12.5 million shares of Voting Preferred Stock and 12.5 million shares of Nonvoting Preferred Stock, each without par value. Accumulated Other Comprehensive Income, Net of Tax (“AOCI”) Comprehensive income is defined as all changes in shareholders’ equity except those arising from transactions with shareholders. Comprehensive income includes net earnings and other comprehensive income, which consists primarily of changes in net unrealized gains or losses on available for sale securities. The progression of the components of accumulated other comprehensive income follows (in millions): Other Comprehensive Income (Loss) AOCI Pretax Tax Net Attributable to Attributable to Other AOCI Quarter ended September 30, 2021 Net unrealized gains (losses) on securities: Unrealized holding losses on securities arising during the period $ (37) $ 8 $ (29) $ — $ (29) Reclassification adjustment for realized (gains) losses included in net earnings (*) 2 — 2 — 2 Total net unrealized gains (losses) on securities $ 205 (35) 8 (27) — (27) $ — $ 178 Foreign currency translation adjustments (16) (3) — (3) — (3) — (19) Pension and other postretirement plans adjustments (“OPRP”) 1 — — — — — — 1 Total $ 190 $ (38) $ 8 $ (30) $ — $ (30) $ — $ 160 Quarter ended September 30, 2020 Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 245 $ (51) $ 194 $ — $ 194 Reclassification adjustment for realized (gains) losses included in net earnings (*) (15) 3 (12) — (12) Total net unrealized gains on securities $ 1,030 230 (48) 182 — 182 $ — $ 1,212 Net unrealized gains (losses) on cash flow hedges: Unrealized holding gains on cash flow hedges arising during the period 1 — 1 — 1 Reclassification adjustment for investment income included in net earnings from discontinued operations (8) 1 (7) — (7) Total net unrealized gains (losses) on cash flow hedges 47 (7) 1 (6) — (6) — 41 Foreign currency translation adjustments (17) — — — — — 4 (13) Pension and other postretirement plans adjustments (7) — — — — — — (7) Total $ 1,053 $ 223 $ (47) $ 176 $ — $ 176 $ 4 $ 1,233 Other Comprehensive Income (Loss) AOCI Pretax Tax Net Attributable to Attributable to Other AOCI Nine months ended September 30, 2021 Net unrealized gains (losses) on securities: Unrealized holding losses on securities arising during the period $ (224) $ 47 $ (177) $ — $ (177) Reclassification adjustment for realized (gains) losses included in net earnings (*) (21) 5 (16) — (16) Reclassification for unrealized gains of subsidiaries sold (1,119) 235 (884) — (884) Total net unrealized gains (losses) on securities $ 1,255 (1,364) 287 (1,077) — (1,077) $ — $ 178 Net unrealized gains (losses) on cash flow hedges: Unrealized holding losses on cash flow hedges arising during the period (1) — (1) — (1) Reclassification adjustment for investment income included in net earnings from discontinued operations (14) 3 (11) — (11) Reclassification for unrealized gains on cash flow hedges of subsidiaries sold (37) 8 (29) — (29) Total net unrealized gains (losses) on cash flow hedges 41 (52) 11 (41) — (41) — — Foreign currency translation adjustments (16) (3) — (3) — (3) — (19) Pension and OPRP adjustments: Unrealized holding losses on pension and OPRP arising during the period (1) — (1) — (1) Reclassification adjustment for pension settlement loss included in other expense in net earnings 11 (2) 9 — 9 Total pension and OPRP adjustments (7) 10 (2) 8 — 8 — 1 Total $ 1,273 $ (1,409) $ 296 $ (1,113) $ — $ (1,113) $ — $ 160 Nine months ended September 30, 2020 Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 443 $ (93) $ 350 $ — $ 350 Reclassification adjustment for realized (gains) losses included in net earnings (*) — — — — — Total net unrealized gains on securities $ 862 443 (93) 350 — 350 $ — $ 1,212 Net unrealized gains on cash flow hedges: Unrealized holding gains on cash flow hedges arising during the period 62 (13) 49 — 49 Reclassification adjustment for investment income included in net earnings from discontinued operations (31) 6 (25) — (25) Total net unrealized gains on cash flow hedges 17 31 (7) 24 — 24 — 41 Foreign currency translation adjustments (9) (6) — (6) (2) (8) 4 (13) Pension and other postretirement plans adjustments (7) — — — — — — (7) Total $ 863 $ 468 $ (100) $ 368 $ (2) $ 366 $ 4 $ 1,233 (*) The reclassification adjustment out of net unrealized gains (losses) on securities affected the following lines in AFG’s Statement of Earnings: OCI component Affected line in the statement of earnings Pretax - continuing operations Realized gains (losses) on securities Pretax - discontinued operations Net earnings (loss) from discontinued operations Tax - continuing operations Provision (credit) for income taxes Tax - discontinued operations Net earnings (loss) from discontinued operations Stock Incentive Plans Under AFG’s stock incentive plans, employees of AFG and its subsidiaries are eligible to receive equity awards in the form of stock options, stock appreciation rights, restricted stock awards, restricted stock units and stock awards. In the first nine months of 2021, AFG issued 207,020 shares of restricted Common Stock (fair value of $111.13 per share) under the Stock Incentive Plan. Total compensation expense related to stock incentive plans of AFG and its subsidiaries was $4 million and $5 million in the third quarter of 2021 and 2020 and $11 million and $15 million in the first nine months of 2021 and 2020. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The following is a reconciliation of income taxes on continuing operations at the statutory rate of 21% to the provision for income taxes as shown in AFG’s Statement of Earnings (dollars in millions): Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Amount % of EBT Amount % of EBT Amount % of EBT Amount % of EBT Earnings (loss) from continuing operations before income taxes (“EBT”) $ 267 $ 40 $ 890 $ (5) Income taxes at statutory rate $ 56 21 % $ 8 21 % $ 187 21 % $ (1) 21 % Effect of: Pending sale of Neon — — % (73) (183 %) — — % (73) 1,460 % Stock-based compensation (2) (1 %) — — % (12) (1 %) (3) 60 % Employee stock ownership plan dividend paid deduction (2) (1 %) (1) (3 %) (10) (1 %) (1) 20 % Tax exempt interest (2) (1 %) (2) (5 %) (6) (1 %) (7) 140 % Dividends received deduction — — % (1) (3 %) (1) — % (2) 40 % Foreign operations 2 1 % (4) (10 %) — — % (3) 60 % Adjustment to prior year taxes (1) — % 1 3 % (1) — % 1 (20 %) Nondeductible expenses 2 1 % 1 3 % 6 1 % 3 (60 %) Change in valuation allowance (2) (1 %) 20 50 % 1 — % 31 (620 %) Other (3) (1 %) 3 7 % — (1 %) 3 (61 %) Provision (credit) for income taxes as shown in the statement of earnings $ 48 18 % $ (48) (120 %) $ 164 18 % $ (52) 1,040 % In September 2020, AFG reached a definitive agreement to sell the legal entities that own Neon (see Note C — “Sales of Businesses,” which resulted in a loss on sale for U.S. tax purposes. In accordance with accounting guidance for transactions that meet the GAAP “held for sale” criteria, AFG recorded a $73 million tax benefit associated with this loss in the third quarter of 2020. The changes in valuation allowance in the table above are primarily increases in the valuation allowance on tax benefits related to losses in the Neon Lloyd’s insurance business. Approximately $27 million of AFG’s net operating loss carryforwards (“NOL”) subject to separate return limitation year (“SRLY”) tax rules will expire unutilized at December 31, 2021. Since AFG maintains a full valuation allowance against its SRLY NOLs, the expiration of these loss carryforwards will be offset by a corresponding reduction in the valuation allowance and will have no overall impact on AFG’s income tax expense or results of operations. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies There have been no significant changes to the matters discussed and referred to in Note N — “Contingencies” of AFG’s 2020 Form 10-K, which covers property and casualty insurance reserves for claims related to environmental exposures, asbestos and other mass tort claims and environmental and occupational injury and disease claims of subsidiaries’ former railroad and manufacturing operations. |
Insurance
Insurance | 9 Months Ended |
Sep. 30, 2021 | |
Insurance [Abstract] | |
Insurance | Insurance Property and Casualty Insurance Reserves The following table provides an analysis of changes in the liability for losses and loss adjustment expenses during the first nine months of 2021 and 2020 (in millions): Nine months ended September 30, 2021 2020 Balance at beginning of year $ 10,392 $ 10,232 Less reinsurance recoverables, net of allowance 3,117 3,024 Net liability at beginning of year 7,275 7,208 Provision for losses and LAE occurring in the current period 2,543 2,560 Net increase (decrease) in the provision for claims of prior years: Special A&E charges — 47 Other (208) (166) Total losses and LAE incurred 2,335 2,441 Payments for losses and LAE of: Current year (589) (592) Prior years (1,430) (1,406) Total payments (2,019) (1,998) Foreign currency translation and other — (11) Net liability at end of period 7,591 7,640 Add back reinsurance recoverables, net of allowance 3,400 3,114 Gross unpaid losses and LAE included in the balance sheet at end of period $ 10,991 $ 10,754 The net decrease in the provision for claims of prior years during the first nine months of 2021 reflects (i) lower than anticipated claim frequency and severity in the transportation businesses, lower than expected losses in the crop business, lower than expected claim severity in the property and inland marine business and lower than expected claim frequency in the aviation business (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency in the surety and trade credit businesses and lower than expected claim frequency and severity in the financial institutions business (within the Specialty financial sub-segment). This favorable development was partially offset by (i) higher than expected claim frequency and severity in the equine business (within the Property and transportation sub-segment) and (ii) higher than anticipated claim severity in the general liability and targeted markets businesses (within the Specialty casualty sub-segment). The net decrease in the provision for claims of prior years during the first nine months of 2020 reflects (i) lower than expected claim frequency and severity in the agricultural and transportation businesses (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses and lower than anticipated claim frequency in the executive liability business (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency in the trade credit business and lower than anticipated claim frequency and severity in the financial institutions, fidelity and surety businesses (within the Specialty financial sub-segment). This favorable development was partially offset by (i) the $47 million special charge to increase asbestos and environmental reserves and (ii) higher than expected claim frequency in general liability contractor claims and higher than expected claim frequency and severity in the excess and surplus businesses (within the Specialty casualty sub-segment) and higher than expected losses at Neon. Recoverables from Reinsurers and Premiums Receivable Progressions of the 2021 and 2020 allowance for expected credit losses on recoverables from reinsurers and premiums receivable related to continuing operations are shown below (in millions): Recoverables from Reinsurers Premiums Receivable 2021 2020 2021 2020 Balance at June 30 $ 8 $ 7 $ 9 $ 10 Provision (credit) for expected credit losses — — 1 1 Write-offs charged against the allowance — — — — Balance at September 30 $ 8 $ 7 $ 10 $ 11 Balance at January 1 $ 6 $ 18 $ 10 $ 13 Impact of adoption of new accounting policy — (11) — (3) Provision (credit) for expected credit losses 2 — — 1 Write-offs charged against the allowance — — — — Balance at September 30 $ 8 $ 7 $ 10 $ 11 |
Accounting Policies (Policies)
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements for American Financial Group, Inc. and its subsidiaries (“AFG”) are unaudited; however, management believes that all adjustments (consisting only of normal recurring accruals unless otherwise disclosed herein) necessary for fair presentation have been made. The results of operations for interim periods are not necessarily indicative of results to be expected for the year. The financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary to be in conformity with U.S. generally accepted accounting principles (“GAAP”). Certain reclassifications have been made to prior periods to conform to the current year’s presentation including reclassifying the assets and liabilities of the Annuity subsidiaries sold in May 2021 to assets and liabilities of discontinued annuity operations and their earnings to net earnings (loss) from discontinued operations. See Note B — “Discontinued Operations.” All significant intercompany balances and transactions have been eliminated. The results of operations of companies since their formation or acquisition are included in the consolidated financial statements. Events or transactions occurring subsequent to September 30, 2021, and prior to the filing of this Form 10-Q, have been evaluated for potential recognition or disclosure herein. Unless otherwise stated, the information in the Notes to the Consolidated Financial Statements relates to AFG’s continuing operations. The preparation of the financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Changes in circumstances could cause actual results to differ materially from those estimates. |
Discontinued Operations | Discontinued Operations Disposals of components of an entity that represent a strategic shift and that have a major effect on a reporting entity’s operations and financial results are reported as discontinued operations. |
Fair Value Measurements | Fair Value Measurements Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The standards establish a hierarchy of valuation techniques based on whether the assumptions that market participants would use in pricing the asset or liability (“inputs”) are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect AFG’s assumptions about the assumptions market participants would use in pricing the asset or liability. AFG did not have any material nonrecurring fair value measurements in the first nine months of 2021. Accounting standards for measuring fair value are based on inputs used in estimating fair value. The three levels of the hierarchy are as follows: Level 1 — Quoted prices for identical assets or liabilities in active markets (markets in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis). AFG’s Level 1 financial instruments consist primarily of publicly traded equity securities, highly liquid government bonds for which quoted market prices in active markets are available and short-term investments of managed investment entities. Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar assets or liabilities in inactive markets (markets in which there are few transactions, the prices are not current, price quotations vary substantially over time or among market makers, or in which little information is released publicly); and valuations based on other significant inputs that are observable in active markets. AFG’s Level 2 financial instruments include corporate and municipal fixed maturity securities, asset-backed securities (“ABS”), mortgage-backed securities (“MBS”), certain non-affiliated common stocks and investments of managed investment entities priced using observable inputs. Level 2 inputs include benchmark yields, reported trades, corroborated broker/dealer quotes, issuer spreads and benchmark securities. When non-binding broker quotes can be corroborated by comparison to similar securities priced using observable inputs, they are classified as Level 2. Level 3 — Valuations derived from market valuation techniques generally consistent with those used to estimate the fair values of Level 2 financial instruments in which one or more significant inputs are unobservable or when the market for a security exhibits significantly less liquidity relative to markets supporting Level 2 fair value measurements. The unobservable inputs may include management’s own assumptions about the assumptions market participants would use based on the best information available at the valuation date. Financial instruments whose fair value is estimated based on non-binding broker quotes or internally developed using significant inputs not based on, or corroborated by, observable market information are classified as Level 3. As discussed in Note A — “Accounting Policies — Managed Investment Entities,” AFG has set the carrying value of its CLO liabilities equal to the fair value of the CLO assets (which have more observable fair values) as an alternative to reporting those liabilities at separately measured fair values. As a result, the CLO liabilities are categorized within the fair value hierarchy on the same basis (proportionally) as the related CLO assets. Since the portion of the CLO liabilities allocated to Level 3 is derived from the fair value of the CLO assets, these amounts are excluded from the progression of Level 3 financial instruments. AFG’s management is responsible for the valuation process and uses data from outside sources (including nationally recognized pricing services and broker/dealers) in establishing fair value. AFG’s internal investment professionals are a group of approximately 20 investment professionals whose primary responsibility is to manage AFG’s investment portfolio. These professionals monitor individual investments as well as overall industries and are active in the financial markets on a daily basis. The group is led by AFG’s chief investment officer, who reports directly to one of AFG’s Co-CEOs. Valuation techniques utilized by pricing services and prices obtained from external sources are reviewed by AFG’s internal investment professionals who are familiar with the securities being priced and the markets in which they trade to ensure the fair value determination is representative of an exit price. To validate the appropriateness of the prices obtained, these investment managers consider widely published indices (as benchmarks), recent trades, changes in interest rates, general economic conditions and the credit quality of the specific issuers. In addition, the Company communicates directly with the pricing services regarding the methods and assumptions used in pricing, including verifying, on a test basis, the inputs used by the service to value specific securities. |
Credit Losses on Financial Instruments | Credit Losses on Financial Instruments On January 1, 2020, AFG adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments , which provides a new loss model for determining credit-related impairments for financial instruments measured at amortized cost (mortgage loans, premiums receivable and reinsurance recoverables) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses considers historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. Expected credit losses, and subsequent increases or decreases in such expected losses, are recorded immediately through net earnings as an allowance that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the balance sheet at the amount expected to be collected. At the date of adoption, the impact of adjusting AFG’s existing allowances for uncollectable mortgage loans, premiums receivable and reinsurance recoverables to the allowances calculated under the new guidance resulted in a reduction in the net allowance, which was recorded as the cumulative effect of an accounting change ($7 million increase in retained earnings at January 1, 2020). The updated guidance also amended the other-than-temporary impairment model for available for sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. Subsequent increases or decreases in expected credit losses are recorded immediately in net earnings through realized gains (losses). |
Investments | Investments Equity securities other than those accounted for under the equity method are reported at fair value with holding gains and losses generally recorded in realized gains (losses) on securities. However, AFG records holding gains and losses on securities classified as “trading” under previous guidance, its small portfolio of limited partnerships and similar investments carried at fair value and certain other securities classified at purchase as “fair value through net investment income” in net investment income. Fixed maturity securities classified as “available for sale” are reported at fair value with unrealized gains and losses included in accumulated other comprehensive income (“AOCI”) in AFG’s Balance Sheet. Fixed maturity securities classified as “trading” are reported at fair value with changes in unrealized holding gains or losses during the period included in net investment income. Mortgage loans (net of any allowance) are carried primarily at the aggregate unpaid balance. Premiums and discounts on fixed maturity securities are amortized using the effective interest method. Mortgage-backed securities (“MBS”) are amortized over a period based on estimated future principal payments, including prepayments. Prepayment assumptions are reviewed periodically and adjusted to reflect actual prepayments and changes in expectations. Limited partnerships and similar investments are generally accounted for using the equity method of accounting. Under the equity method, AFG records its share of the earnings or losses of the investee based on when it is reported by the investee in its financial statements rather than in the period in which the investee declares a dividend. AFG’s share of the earnings or losses from equity method investments is generally recorded on a quarter lag due to the timing of the receipt of the investee’s financial statements. AFG’s equity in the earnings (losses) of limited partnerships and similar investments is included in net investment income. Realized gains or losses on the disposal of fixed maturity securities are determined on the specific identification basis. When a decline in the value of an available for sale fixed maturity is considered to be other-than-temporary at the balance sheet date, an allowance for credit losses (impairment), including any write-off of accrued interest, is charged to earnings (included in realized gains (losses) on securities). If management can assert that it does not intend to sell the security and it is not more likely than not that it will have to sell it before recovery of its amortized cost basis (net of allowance), then the impairment is separated into two components: (i) the allowance related to credit losses (recorded in earnings) and (ii) the amount related to all other factors (recorded in other comprehensive income). The credit-related portion is measured by comparing a security’s amortized cost to the present value of its current expected cash flows discounted at its effective yield prior to the charge. If management intends to sell an impaired security, or it is more likely than not that it will be required to sell the security before recovery, an impairment is recorded in earnings to reduce the amortized cost (net of allowance) of that security to fair value. |
Goodwill | Goodwill Goodwill represents the excess of cost of subsidiaries over AFG’s equity in their underlying net assets at the date of acquisition. Goodwill is not amortized, but is subject to an impairment test at least annually. An entity is not required to complete the quantitative annual goodwill impairment test on a reporting unit if the entity elects to perform a qualitative analysis and determines that it is more likely than not that the reporting unit’s fair value exceeds its carrying amount. |
Reinsurance | Reinsurance Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies. AFG reports as assets (i) the estimated reinsurance recoverable on paid and unpaid losses, including an estimate for losses incurred but not reported, and (ii) amounts paid or due to reinsurers applicable to the unexpired terms of policies in force. Payable to reinsurers includes ceded premiums due to reinsurers, as well as ceded premiums retained by AFG under contracts to fund ceded losses as they become due. AFG also assumes reinsurance from other companies. Earnings on reinsurance assumed is recognized based on information received from ceding companies. |
Deferred Policy Acquisition Costs (“DPAC”) | Deferred Policy Acquisition Costs (“DPAC”) Policy acquisition costs (principally commissions, premium taxes and certain underwriting and policy issuance costs) directly related to the successful acquisition or renewal of an insurance contract are deferred. DPAC is limited based upon recoverability without any consideration for anticipated investment income and is charged against income ratably over the terms of the related policies. A premium deficiency is recognized if the sum of expected claims costs, claims adjustment expenses and unamortized acquisition costs exceed the related unearned premiums. A premium deficiency is first recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. If the premium deficiency is greater than unamortized acquisition costs, a liability is accrued for the excess deficiency and reported with unpaid losses and loss adjustment expenses. |
Managed Investment Entities | Managed Investment Entities A company is considered the primary beneficiary of, and therefore must consolidate, a variable interest entity (“VIE”) based primarily on its ability to direct the activities of the VIE that most significantly impact that entity’s economic performance and the obligation to absorb losses of, or receive benefits from, the entity that could potentially be significant to the VIE. AFG manages, and has investments in, collateralized loan obligations (“CLOs”) that are VIEs (see Note G — “Managed Investment Entities” ). AFG has determined that it is the primary beneficiary of these CLOs because (i) its role as asset manager gives it the power to direct the activities that most significantly impact the economic performance of the CLOs and (ii) through its investment in the CLO debt tranches, it has exposure to CLO losses (limited to the amount AFG invested) and the right to receive CLO benefits that could potentially be significant to the CLOs. Because AFG has no right to use the CLO assets and no obligation to pay the CLO liabilities, the assets and liabilities of the CLOs are shown separately in AFG’s Balance Sheet. AFG has elected the fair value option for reporting on the CLO assets and liabilities to improve the transparency of financial reporting related to the CLOs. The net gain or loss from accounting for the CLO assets and liabilities at fair value is presented separately in AFG’s Statement of Earnings. The fair values of a CLO’s assets may differ from the separately measured fair values of its liabilities even though the CLO liabilities only have recourse to the CLO assets. AFG has set the carrying value of the CLO liabilities equal to the fair value of the CLO assets (which have more observable fair values) as an alternative to reporting those liabilities at a separately measured fair value. CLO earnings attributable to AFG’s shareholders are measured by the change in the fair value of AFG’s investments in the CLOs and management fees earned. At September 30, 2021, assets and liabilities of managed investment entities included $171 million in assets and $131 million in liabilities of a temporary warehousing entity that was established in connection with the formation of a new CLO that is expected to close in the fourth quarter of 2021. At closing, all warehoused assets will be transferred to the new CLO and the liabilities will be repaid. |
Unpaid Losses and Loss Adjustment Expenses | Unpaid Losses and Loss Adjustment Expenses The net liabilities stated for unpaid claims and for expenses of investigation and adjustment of unpaid claims represent management’s best estimate and are based upon (i) the accumulation of case estimates for losses reported prior to the close of the accounting period on direct business written; (ii) estimates received from ceding reinsurers and insurance pools and associations; (iii) estimates of unreported losses (including possible development on known claims) based on past experience; (iv) estimates based on experience of expenses for investigating and adjusting claims; and (v) the current state of the law and coverage litigation. Establishing reserves for asbestos, environmental and other mass tort claims involves considerably more judgment than other types of claims due to, among other things, inconsistent court decisions, an increase in bankruptcy filings as a result of asbestos-related liabilities, novel theories of coverage, and judicial interpretations that often expand theories of recovery and broaden the scope of coverage. Loss reserve liabilities are subject to the impact of changes in claim amounts and frequency and other factors. Changes in estimates of the liabilities for losses and loss adjustment expenses are reflected in the statement of earnings in the period in which determined. Despite the variability inherent in such estimates, management believes that the liabilities for unpaid losses and loss adjustment expenses are adequate. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs related to AFG’s outstanding debt are presented in its Balance Sheet as a direct reduction in the carrying value of long-term debt and are amortized over the life of the related debt using the effective interest method as a component of interest expense. Debt issuance costs related to AFG’s revolving credit facilities are included in other assets in AFG’s Balance Sheet. |
Leases | Leases Leases for terms of longer than one year are recognized as assets and liabilities for the rights and obligations created by those leases on the balance sheet based on the present value of contractual cash flows. other liabilities |
Noncontrolling Interests | Noncontrolling Interests For balance sheet purposes, noncontrolling interests represent the interests of shareholders other than AFG in consolidated entities. In the statement of earnings, net earnings and losses attributable to noncontrolling interests represents such shareholders’ interest in the earnings and losses of those entities. |
Premium Recognition | Premium Recognition Property and casualty premiums are earned generally over the terms of the policies on a pro rata basis. Unearned premiums represent that portion of premiums written, which is applicable to the unexpired terms of policies in force. On reinsurance assumed from other insurance companies or written through various underwriting organizations, unearned premiums are based on information received from such companies and organizations. |
Income Taxes | Income Taxes Deferred income taxes are calculated using the liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases and are measured using enacted tax rates. A valuation allowance is established to reduce total deferred tax assets to an amount that will more likely than not be realized. The effect of a change in tax rates on deferred tax assets and liabilities is recorded in net earnings in the period that includes the enactment date. AFG recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained under examination by the appropriate taxing authority. Interest and penalties on AFG’s reserve for uncertain tax positions are recognized as a component of tax expense. |
Stock-Based Compensation | Stock-Based Compensation All share-based grants are recognized as compensation expense on a straight-line basis over their vesting periods based on their calculated fair value at the date of grant. AFG records excess tax benefits or deficiencies for share-based payments through income tax expense in the statement of earnings. In addition, AFG accounts for forfeitures of awards when they occur. |
Benefit Plans | Benefit Plans AFG provides retirement benefits to qualified employees of participating companies through the AFG 401(k) Retirement and Savings Plan, a defined contribution plan. AFG makes all contributions to the retirement fund portion of the plan and matches a percentage of employee contributions to the savings fund. Company contributions are expensed in the year for which they are declared. AFG and many of its subsidiaries provide health care and life insurance benefits to eligible retirees. AFG also provides postemployment benefits to former or inactive employees (primarily those on disability) who were not deemed retired under other company plans. The projected future cost of providing these benefits is expensed over the period employees earn such benefits. |
Earnings Per Share | Earnings Per Share Although basic earnings per share only considers shares of common stock outstanding during the period, the calculation of diluted earnings per share includes the following adjustments to weighted average common shares related to stock-based compensation plans: third quarter of 2021 and 2020 — 0.4 million and 0.3 million; first nine months of 2021 and 2020 — 0.6 million and 0.5 million. There were no anti-dilutive potential common shares for the third quarter or the first nine months of 2021 or 2020. |
Statement of Cash Flows | Statement of Cash Flows For cash flow purposes, “investing activities” are defined as making and collecting loans and acquiring and disposing of debt or equity instruments, property and equipment and businesses. “Financing activities” include obtaining resources from owners and providing them with a return on their investments, borrowing money and repaying amounts borrowed. All other activities are considered “operating.” Short-term investments having original maturities of three months or less when purchased are considered to be cash equivalents for purposes of the financial statements. |
Segments of Operations | AFG reports its property and casualty insurance business in the following Specialty sub-segments: (i) Property and transportation, which includes physical damage and liability coverage for buses and trucks, inland and ocean marine, agricultural-related products and other commercial property coverages, (ii) Specialty casualty, which includes primarily excess and surplus, executive and professional liability, general liability, umbrella and excess liability, specialty coverages in targeted markets, customized programs for small to mid-sized businesses and workers’ compensation insurance, and (iii) Specialty financial, which includes risk management insurance programs for lending and leasing institutions (including equipment leasing and collateral and lender-placed mortgage property insurance), fidelity and surety products and trade credit insurance. Premiums and underwriting profit included under Other specialty represent business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty sub-segments and amortization of deferred gains on retroactive reinsurance transactions related to the sales of businesses in prior years. AFG’s reportable segments and their components were determined based primarily upon similar economic characteristics, products and services. |
Accumulated Other Comprehensive Income, Net of Tax ("AOCI") | Accumulated Other Comprehensive Income, Net of Tax (“AOCI”) Comprehensive income is defined as all changes in shareholders’ equity except those arising from transactions with shareholders. Comprehensive income includes net earnings and other comprehensive income, which consists primarily of changes in net unrealized gains or losses on available for sale securities. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Information on sale of Annuity subsidiaries | Details of the assets and liabilities of the Annuity subsidiaries sold were as follows (in millions): May 31, 2021 December 31, 2020 Assets of businesses sold: Cash and cash equivalents $ 2,060 $ 1,145 Investments 38,323 38,011 Recoverables from reinsurers 6,748 6,804 Other assets 2,152 1,925 Total assets of discontinued annuity operations 49,283 47,885 Liabilities of businesses sold: Annuity benefits accumulated 43,690 42,573 Other liabilities 1,813 1,885 Total liabilities of discontinued annuity operations 45,503 44,458 Receivable from AFG for real estate-related investments — 537 Reclassify AOCI (913) (1,071) Net investment in annuity businesses sold, excluding AOCI $ 2,867 $ 2,893 Details of the results of operations for the discontinued annuity operations were (in millions): Three months ended September 30, Nine months ended September 30, 2021 2020 2021 (*) 2020 Net investment income $ — $ 459 $ 746 $ 1,256 Realized gains (losses) on securities — 22 112 (105) Other income — 26 52 91 Total revenues — 507 910 1,242 Annuity benefits — 203 377 905 Annuity and supplemental insurance acquisition expenses — 172 136 250 Other expenses — 38 73 118 Total costs and expenses — 413 586 1,273 Earnings (loss) before income taxes from discontinued operations — 94 324 (31) Provision (credit) for income taxes on operations — 18 66 (11) Net earnings (loss) from operations, net of tax — 76 258 (20) Gain on sale, net of tax — — 656 — Net earnings (loss) from discontinued operations $ — $ 76 $ 914 $ (20) (*) Results through the May 31, 2021 effective date of the sale. The impact of the sale of the annuity business is shown below (in millions): May 31, 2021 Cash proceeds $ 3,537 Receivable from MassMutual 34 Sale related expenses (8) Total net proceeds 3,563 Net investment in annuity businesses sold, excluding AOCI 2,867 Reclassify net deferred tax asset (199) Pretax gain on sale 895 Income tax expense: Reclassify net deferred tax asset 199 Tax liabilities triggered by pending sale in the first quarter of 2021 41 Other (1) Total income tax expense 239 Net gain on sale $ 656 Summarized cash flows for the discontinued annuity operations were (in millions): Nine months ended September 30, 2021 2020 Net cash provided by operating activities $ 87 $ 904 Net cash used in investing activities (1,709) (440) Net cash provided by financing activities 477 260 Derivatives The vast majority of AFG’s derivatives were held by the sold annuity subsidiaries. The following table summarizes the gains (losses) included in net earnings (loss) from discontinued operations for changes in the fair value of derivatives that do not qualify for hedge accounting for the first nine months of 2021 and 2020 (in millions): Three months ended September 30, Nine months ended September 30, Derivative 2021 2020 2021 (*) 2020 MBS with embedded derivatives $ — $ (3) $ (1) $ 2 Fixed-indexed and variable-indexed annuities (embedded derivative) — (5) (222) 41 Equity index call options — 203 237 (42) Equity index put options — 2 5 1 Reinsurance contract (embedded derivative) — 1 1 — $ — $ 198 $ 20 $ 2 (*) Through the May 31, 2021 effective date of the sale. |
Sales of Businesses (Tables)
Sales of Businesses (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract] | |
Revenues, costs and expenses, and earnings before income taxes for subsidiaries sold | An estimated loss of $30 million on the sale of Neon was recorded in AFG’s financial statements as of September 30, 2020 as shown below (in millions): Estimated sale proceeds, net of expenses $ 4 Assets of businesses to be sold: Cash and investments $ 461 Recoverables from reinsurers 198 Prepaid reinsurance premiums 30 Agents’ balances and premiums receivable 48 Other assets 73 Total assets 810 Liabilities of businesses to be sold: Unpaid losses and loss adjustment expenses 598 Unearned premiums 83 Payable to reinsurers 39 Other liabilities 47 Total liabilities 767 Reclassify accumulated other comprehensive income (9) Net assets of businesses to be sold $ 34 Pretax loss on subsidiaries recorded in the third quarter of 2020 $ (30) Revenues, costs and expenses, and earnings before income taxes for the subsidiaries sold were (in millions): Three months ended Nine months ended September 30, 2020 September 30, 2020 Net earned premiums $ 42 $ 174 Loss and loss adjustment expenses 60 166 Commissions and other underwriting expenses 20 90 Underwriting loss (38) (82) Net investment income 1 (5) Other income and expenses, net (3) (5) Loss before income taxes and noncontrolling interests $ (40) $ (92) |
Segments of Operations (Tables)
Segments of Operations (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Segment Reporting Information, by Segment | The following tables (in millions) show AFG’s revenues and earnings (loss) from continuing operations before income taxes by segment and sub-segment. Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Revenues Property and casualty insurance: Premiums earned: Specialty Property and transportation $ 700 $ 574 $ 1,547 $ 1,350 Specialty casualty 613 560 1,772 1,663 Specialty financial 163 155 477 455 Other specialty 53 50 156 132 Other lines (a) — 42 — 174 Total premiums earned 1,529 1,381 3,952 3,774 Net investment income (b) 165 112 467 277 Other income 4 — 9 8 Total property and casualty insurance 1,698 1,493 4,428 4,059 Other 73 60 208 195 Income on real estate-related entities (c) — 10 51 29 Total revenues before realized gains (losses) 1,771 1,563 4,687 4,283 Realized gains (losses) on securities (17) 23 103 (197) Realized gains (losses) on subsidiaries — (30) 4 (30) Total revenues $ 1,754 $ 1,556 $ 4,794 $ 4,056 (a) Represents premiums earned in the Neon exited lines (which were sold in December 2020) during the third quarter and first nine months of 2020. (b) Includes income of $1 million for the third quarter of 2020 and a loss of $5 million in the Neon exited lines in the first nine months of 2020 (primarily from the change in fair value of equity securities). (c) Represents investment income from real estate-related entities acquired from the discontinued annuity operations while they were held by those operations. Subsequent to the sale of the annuity group, this income is included in the segment of the acquirer. Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Earnings (Loss) From Continuing Operations Before Income Taxes Property and casualty insurance: Underwriting: Specialty Property and transportation $ 45 $ 47 $ 163 $ 107 Specialty casualty 110 53 237 132 Specialty financial 26 13 72 30 Other specialty (12) (9) (16) (22) Other lines (a) (1) (86) (2) (133) Total underwriting 168 18 454 114 Investment and other income, net (b) 161 100 451 249 Total property and casualty insurance 329 118 905 363 Other (c) (45) (74) (173) (152) Income on real estate-related entities (d) — 3 51 11 Total earnings from continuing operations before realized gains (losses) and income taxes 284 47 783 222 Realized gains (losses) on securities (17) 23 103 (197) Realized gains (losses) on subsidiaries — (30) 4 (30) Total earnings (loss) from continuing operations before income taxes $ 267 $ 40 $ 890 $ (5) (a) Includes an underwriting loss of $38 million in the third quarter of 2020 and $82 million in the first nine months of 2020 in the Neon exited lines. Also includes a special charge of $47 million in the third quarter of 2020 to increase asbestos and environmental (“A&E”) reserves. (b) Includes $2 million and $10 million in the third quarter and first nine months of 2020, respectively, in net expenses from the Neon exited lines, before noncontrolling interest. (c) Includes holding company interest and expenses, including a special charge of $21 million in the third quarter of 2020 to increase A&E reserves related to AFG’s former railroad and manufacturing operations. (d) Represents investment income (net of DAC) from real estate-related entities acquired from the discontinued annuity operations while they were held by those operations. Subsequent to the sale of the annuity group, this income is included in the segment of the acquirer. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Assets and liabilities measured at fair value | Assets and liabilities of continuing operations measured and carried at fair value in the financial statements are summarized below (in millions): Level 1 Level 2 Level 3 Total September 30, 2021 Assets: Available for sale (“AFS”) fixed maturities: U.S. Government and government agencies $ 217 $ 1 $ — $ 218 States, municipalities and political subdivisions — 1,884 42 1,926 Foreign government — 217 — 217 Residential MBS — 736 18 754 Commercial MBS — 113 — 113 Collateralized loan obligations — 1,828 1 1,829 Other asset-backed securities — 2,335 309 2,644 Corporate and other 15 2,463 248 2,726 Total AFS fixed maturities 232 9,577 618 10,427 Trading fixed maturities — 29 — 29 Equity securities 681 44 268 993 Assets of managed investment entities (“MIE”) 316 4,802 12 5,130 Total assets accounted for at fair value $ 1,229 $ 14,452 $ 898 $ 16,579 Liabilities: Liabilities of managed investment entities $ 310 $ 4,712 $ 12 $ 5,034 Total liabilities accounted for at fair value $ 310 $ 4,712 $ 12 $ 5,034 December 31, 2020 Assets: Available for sale fixed maturities: U.S. Government and government agencies $ 195 $ 3 $ — $ 198 States, municipalities and political subdivisions — 2,273 39 2,312 Foreign government — 176 — 176 Residential MBS — 877 38 915 Commercial MBS — 90 2 92 Collateralized loan obligations — 1,046 16 1,062 Other asset-backed securities — 1,742 305 2,047 Corporate and other 4 2,140 138 2,282 Total AFS fixed maturities 199 8,347 538 9,084 Trading fixed maturities — 24 — 24 Equity securities 665 48 176 889 Assets of managed investment entities 217 4,733 21 4,971 Total assets accounted for at fair value $ 1,081 $ 13,152 $ 735 $ 14,968 Liabilities: Liabilities of managed investment entities $ 215 $ 4,678 $ 21 $ 4,914 Total liabilities accounted for at fair value $ 215 $ 4,678 $ 21 $ 4,914 |
Changes in balances of Level 3 financial assets | Changes in balances of Level 3 financial assets and liabilities carried at fair value during the third quarter and first nine months of 2021 and 2020 are presented below (in millions). The transfers into and out of Level 3 were due to changes in the availability of market observable inputs. All transfers are reflected in the table at fair value as of the end of the reporting period. Total realized/unrealized Balance at June 30, 2021 Net OCI Purchases Sales and Transfer Transfer Balance at September 30, 2021 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 36 — — — — 8 (2) 42 Residential MBS 28 (1) — — (1) — (8) 18 Commercial MBS — — — — — — — — Collateralized loan obligations 6 — 1 — — — (6) 1 Other asset-backed securities 315 1 (1) 41 (38) — (9) 309 Corporate and other 220 — (1) 36 (9) 2 — 248 Total AFS fixed maturities 605 — (1) 77 (48) 10 (25) 618 Equity securities 245 7 — 20 (4) — — 268 Assets of MIE 15 (2) — 1 — — (2) 12 Total Level 3 assets $ 865 $ 5 $ (1) $ 98 $ (52) $ 10 $ (27) $ 898 Total realized/unrealized Balance at June 30, 2020 Net OCI Purchases Sales and Transfer Transfer Balance at September 30, 2020 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 41 — — — — — — 41 Residential MBS 42 (1) — — (3) 8 (1) 45 Commercial MBS 6 — — — — — (4) 2 Collateralized loan obligations 55 — 1 — — — — 56 Other asset-backed securities 293 (1) 2 8 (15) 14 (8) 293 Corporate and other 178 3 1 8 (28) 1 (26) 137 Total AFS fixed maturities 615 1 4 16 (46) 23 (39) 574 Equity securities 164 (5) — 5 — — (5) 159 Assets of MIE 17 (2) — — — — — 15 Assets of discontinued annuity operations 3,044 (7) 19 83 (113) 224 (193) 3,057 Total Level 3 assets $ 3,840 $ (13) $ 23 $ 104 $ (159) $ 247 $ (237) $ 3,805 Liabilities of discontinued annuity operations $ (3,675) $ (5) $ — $ (56) $ 79 $ — $ — $ (3,657) Total Level 3 liabilities $ (3,675) $ (5) $ — $ (56) $ 79 $ — $ — $ (3,657) Total realized/unrealized Balance at December 31, 2020 Net OCI Purchases Sales and Transfer Transfer Sale of annuity business Balance at September 30, 2021 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 39 — — — (3) 8 (2) — 42 Residential MBS 38 (4) — 6 (2) 6 (26) — 18 Commercial MBS 2 — — — — — (2) — — Collateralized loan obligations 16 1 — — (1) — (15) — 1 Other asset-backed securities 305 1 — 131 (110) 14 (32) — 309 Corporate and other 138 (1) (2) 142 (29) 5 (5) — 248 Total AFS fixed maturities 538 (3) (2) 279 (145) 33 (82) — 618 Equity securities 176 78 — 44 (23) — (7) — 268 Assets of MIE 21 1 — 3 — 1 (14) — 12 Assets of discontinued annuity operations 2,971 85 (21) 209 (328) 32 (229) (2,719) — Total Level 3 assets $ 3,706 $ 161 $ (23) $ 535 $ (496) $ 66 $ (332) $ (2,719) $ 898 Liabilities of discontinued annuity operations $ (3,933) $ (222) $ — $ (146) $ 158 $ — $ — $ 4,143 $ — Total Level 3 liabilities $ (3,933) $ (222) $ — $ (146) $ 158 $ — $ — $ 4,143 $ — Total realized/unrealized Balance at December 31, 2019 Net Other Purchases Sales and Transfer Transfer Balance at September 30, 2020 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 40 — 2 — (1) — — 41 Residential MBS 45 — (1) — (5) 9 (3) 45 Commercial MBS 6 — — — — — (4) 2 Collateralized loan obligations 1 (1) 4 — — 52 — 56 Other asset-backed securities 256 (6) 3 69 (62) 41 (8) 293 Corporate and other 223 2 — 40 (39) 3 (92) 137 Total AFS fixed maturities 571 (5) 8 109 (107) 105 (107) 574 Equity securities 161 (22) — 16 — 9 (5) 159 Assets of MIE 17 (4) — — — 2 — 15 Assets of discontinued annuity operations 3,092 (27) 39 444 (325) 482 (648) 3,057 Total Level 3 assets $ 3,841 $ (58) $ 47 $ 569 $ (432) $ 598 $ (760) $ 3,805 Liabilities of discontinued annuity operations $ (3,730) $ 41 $ — $ (180) $ 212 $ — $ — $ (3,657) Total Level 3 liabilities $ (3,730) $ 41 $ — $ (180) $ 212 $ — $ — $ (3,657) |
Changes in balances of Level 3 financial liabilities | Changes in balances of Level 3 financial assets and liabilities carried at fair value during the third quarter and first nine months of 2021 and 2020 are presented below (in millions). The transfers into and out of Level 3 were due to changes in the availability of market observable inputs. All transfers are reflected in the table at fair value as of the end of the reporting period. Total realized/unrealized Balance at June 30, 2021 Net OCI Purchases Sales and Transfer Transfer Balance at September 30, 2021 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 36 — — — — 8 (2) 42 Residential MBS 28 (1) — — (1) — (8) 18 Commercial MBS — — — — — — — — Collateralized loan obligations 6 — 1 — — — (6) 1 Other asset-backed securities 315 1 (1) 41 (38) — (9) 309 Corporate and other 220 — (1) 36 (9) 2 — 248 Total AFS fixed maturities 605 — (1) 77 (48) 10 (25) 618 Equity securities 245 7 — 20 (4) — — 268 Assets of MIE 15 (2) — 1 — — (2) 12 Total Level 3 assets $ 865 $ 5 $ (1) $ 98 $ (52) $ 10 $ (27) $ 898 Total realized/unrealized Balance at June 30, 2020 Net OCI Purchases Sales and Transfer Transfer Balance at September 30, 2020 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 41 — — — — — — 41 Residential MBS 42 (1) — — (3) 8 (1) 45 Commercial MBS 6 — — — — — (4) 2 Collateralized loan obligations 55 — 1 — — — — 56 Other asset-backed securities 293 (1) 2 8 (15) 14 (8) 293 Corporate and other 178 3 1 8 (28) 1 (26) 137 Total AFS fixed maturities 615 1 4 16 (46) 23 (39) 574 Equity securities 164 (5) — 5 — — (5) 159 Assets of MIE 17 (2) — — — — — 15 Assets of discontinued annuity operations 3,044 (7) 19 83 (113) 224 (193) 3,057 Total Level 3 assets $ 3,840 $ (13) $ 23 $ 104 $ (159) $ 247 $ (237) $ 3,805 Liabilities of discontinued annuity operations $ (3,675) $ (5) $ — $ (56) $ 79 $ — $ — $ (3,657) Total Level 3 liabilities $ (3,675) $ (5) $ — $ (56) $ 79 $ — $ — $ (3,657) Total realized/unrealized Balance at December 31, 2020 Net OCI Purchases Sales and Transfer Transfer Sale of annuity business Balance at September 30, 2021 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 39 — — — (3) 8 (2) — 42 Residential MBS 38 (4) — 6 (2) 6 (26) — 18 Commercial MBS 2 — — — — — (2) — — Collateralized loan obligations 16 1 — — (1) — (15) — 1 Other asset-backed securities 305 1 — 131 (110) 14 (32) — 309 Corporate and other 138 (1) (2) 142 (29) 5 (5) — 248 Total AFS fixed maturities 538 (3) (2) 279 (145) 33 (82) — 618 Equity securities 176 78 — 44 (23) — (7) — 268 Assets of MIE 21 1 — 3 — 1 (14) — 12 Assets of discontinued annuity operations 2,971 85 (21) 209 (328) 32 (229) (2,719) — Total Level 3 assets $ 3,706 $ 161 $ (23) $ 535 $ (496) $ 66 $ (332) $ (2,719) $ 898 Liabilities of discontinued annuity operations $ (3,933) $ (222) $ — $ (146) $ 158 $ — $ — $ 4,143 $ — Total Level 3 liabilities $ (3,933) $ (222) $ — $ (146) $ 158 $ — $ — $ 4,143 $ — Total realized/unrealized Balance at December 31, 2019 Net Other Purchases Sales and Transfer Transfer Balance at September 30, 2020 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 40 — 2 — (1) — — 41 Residential MBS 45 — (1) — (5) 9 (3) 45 Commercial MBS 6 — — — — — (4) 2 Collateralized loan obligations 1 (1) 4 — — 52 — 56 Other asset-backed securities 256 (6) 3 69 (62) 41 (8) 293 Corporate and other 223 2 — 40 (39) 3 (92) 137 Total AFS fixed maturities 571 (5) 8 109 (107) 105 (107) 574 Equity securities 161 (22) — 16 — 9 (5) 159 Assets of MIE 17 (4) — — — 2 — 15 Assets of discontinued annuity operations 3,092 (27) 39 444 (325) 482 (648) 3,057 Total Level 3 assets $ 3,841 $ (58) $ 47 $ 569 $ (432) $ 598 $ (760) $ 3,805 Liabilities of discontinued annuity operations $ (3,730) $ 41 $ — $ (180) $ 212 $ — $ — $ (3,657) Total Level 3 liabilities $ (3,730) $ 41 $ — $ (180) $ 212 $ — $ — $ (3,657) |
Fair value of financial instruments | The carrying value and fair value of financial instruments of continuing operations that are not carried at fair value in the financial statements are summarized below (in millions): Carrying Fair Value Value Total Level 1 Level 2 Level 3 September 30, 2021 Financial assets: Cash and cash equivalents $ 2,833 $ 2,833 $ 2,833 $ — $ — Mortgage loans 537 555 — — 555 Total financial assets not accounted for at fair value $ 3,370 $ 3,388 $ 2,833 $ — $ 555 Long-term debt $ 1,964 $ 2,295 $ — $ 2,292 $ 3 Total financial liabilities not accounted for at fair value $ 1,964 $ 2,295 $ — $ 2,292 $ 3 December 31, 2020 Financial assets: Cash and cash equivalents $ 1,665 $ 1,665 $ 1,665 $ — $ — Mortgage loans 377 382 — — 382 Total financial assets not accounted for at fair value $ 2,042 $ 2,047 $ 1,665 $ — $ 382 Long-term debt $ 1,963 $ 2,325 $ — $ 2,322 $ 3 Total financial liabilities not accounted for at fair value $ 1,963 $ 2,325 $ — $ 2,322 $ 3 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Available for sale fixed maturities | Available for sale fixed maturities held by AFG’s continuing operations at September 30, 2021 and December 31, 2020, consisted of the following (in millions): Amortized Allowance for Expected Credit Losses Gross Unrealized Net Fair Gains Losses September 30, 2021 Fixed maturities: U.S. Government and government agencies $ 216 $ — $ 3 $ (1) $ 2 $ 218 States, municipalities and political subdivisions 1,849 — 77 — 77 1,926 Foreign government 216 — 2 (1) 1 217 Residential MBS 704 — 51 (1) 50 754 Commercial MBS 110 — 3 — 3 113 Collateralized loan obligations 1,827 1 5 (2) 3 1,829 Other asset-backed securities 2,631 7 25 (5) 20 2,644 Corporate and other 2,658 1 73 (4) 69 2,726 Total fixed maturities $ 10,211 $ 9 $ 239 $ (14) $ 225 $ 10,427 December 31, 2020 Fixed maturities: U.S. Government and government agencies $ 192 $ — $ 6 $ — $ 6 $ 198 States, municipalities and political subdivisions 2,196 — 116 — 116 2,312 Foreign government 172 — 4 — 4 176 Residential MBS 859 — 57 (1) 56 915 Commercial MBS 89 — 3 — 3 92 Collateralized loan obligations 1,065 3 4 (4) — 1,062 Other asset-backed securities 2,040 7 27 (13) 14 2,047 Corporate and other 2,199 2 88 (3) 85 2,282 Total fixed maturities $ 8,812 $ 12 $ 305 $ (21) $ 284 $ 9,084 Available for sale fixed maturities that are included in assets of discontinued annuity operations at December 31, 2020, consisted of the following (in millions): Amortized Allowance for Expected Credit Losses Gross Unrealized Net Fair Gains Losses December 31, 2020 Fixed maturities: U.S. Government and government agencies $ 39 $ — $ 5 $ — $ 5 $ 44 States, municipalities and political subdivisions 3,053 — 370 (2) 368 3,421 Foreign government 31 — 4 — 4 35 Residential MBS 1,953 3 194 (4) 190 2,140 Commercial MBS 659 — 40 (1) 39 698 Collateralized loan obligations 3,491 10 23 (13) 10 3,491 Other asset-backed securities 5,098 11 142 (53) 89 5,176 Corporate and other 17,272 4 1,874 (24) 1,850 19,118 Total fixed maturities $ 31,596 $ 28 $ 2,652 $ (97) $ 2,555 $ 34,123 |
Equity securities reported at fair value | Equity securities held by AFG’s continuing operations, which are reported at fair value with holding gains and losses recognized in net earnings, consisted of the following at September 30, 2021 and December 31, 2020 (in millions): September 30, 2021 December 31, 2020 Fair Value Fair Value Actual Cost over (under) Actual Cost over (under) Fair Value Cost Fair Value Cost Common stocks $ 464 $ 563 $ 99 $ 516 $ 510 $ (6) Perpetual preferred stocks 386 430 44 369 379 10 Total equity securities carried at fair value $ 850 $ 993 $ 143 $ 885 $ 889 $ 4 |
Investments accounted for using the equity method | Investments accounted for using the equity method held by AFG’s continuing operations, by category, carrying value and net investment income are as follows (in millions): Carrying Value Net Investment Income September 30, 2021 December 31, 2020 Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Real estate-related investments (*) $ 1,024 $ 915 $ 52 $ 17 $ 151 $ 55 Private equity 336 266 21 21 66 4 Private debt 47 54 — (2) 5 (6) Total investments accounted for using the equity method $ 1,407 $ 1,235 $ 73 $ 36 $ 222 $ 53 (*) Includes 88% invested in multi-family properties, 2% in single family properties and 10% in other property types as of September 30, 2021 and 87% invested in multi-family properties, 2% in single family properties and 11% in other property types as of December 31, 2020. |
Available for sale securities in a continuous unrealized loss position | The following table shows gross unrealized losses (dollars in millions) on available for sale fixed maturities held by AFG’s continuing operations by investment category and length of time that individual securities have been in a continuous unrealized loss position at the following balance sheet dates. Less Than Twelve Months Twelve Months or More Unrealized Fair Fair Value as Unrealized Fair Fair Value as September 30, 2021 Fixed maturities: U.S. Government and government agencies $ (1) $ 97 99 % $ — $ 19 100 % States, municipalities and political subdivisions — 13 100 % — 15 100 % Foreign government (1) 48 98 % — — — % Residential MBS — 54 100 % (1) 8 89 % Commercial MBS — — — % — — — % Collateralized loan obligations (1) 687 100 % (1) 168 99 % Other asset-backed securities (2) 662 100 % (3) 76 96 % Corporate and other (3) 278 99 % (1) 31 97 % Total fixed maturities $ (8) $ 1,839 100 % $ (6) $ 317 98 % December 31, 2020 Fixed maturities: U.S. Government and government agencies $ — $ 23 100 % $ — $ — — % States, municipalities and political subdivisions — 39 100 % — 10 100 % Foreign government — 7 100 % — — — % Residential MBS (1) 86 99 % — 7 100 % Commercial MBS — 7 100 % — 5 100 % Collateralized loan obligations (1) 192 99 % (3) 366 99 % Other asset-backed securities (10) 465 98 % (3) 92 97 % Corporate and other (2) 133 99 % (1) 17 94 % Total fixed maturities $ (14) $ 952 99 % $ (7) $ 497 99 % |
Roll forward of allowance for credit losses on fixed maturity securities | A progression of the allowance for expected credit losses on fixed maturity securities held by AFG’s continuing operations is shown below (in millions): Structured Corporate and Other Total Balance at June 30, 2021 $ 8 $ 1 $ 9 Initial allowance for purchased securities with credit deterioration — — — 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 September 30, 2021 $ 8 $ 1 $ 9 Balance at June 30, 2020 $ 11 $ 3 $ 14 Initial allowance for purchased securities with credit deterioration — — — 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 September 30, 2020 $ 11 $ 3 $ 14 Balance at January 1, 2021 $ 10 $ 2 $ 12 Initial allowance for purchased securities with credit deterioration — — — Provision for expected credit losses on securities with no previous allowance — — — Additions (reductions) to previously recognized expected credit losses (2) 1 (1) Reductions due to sales or redemptions — (2) (2) Balance at September 30, 2021 $ 8 $ 1 $ 9 Balance at January 1, 2020 $ — $ — $ — Impact of adoption of new accounting policy — — — Initial allowance for purchased securities with credit deterioration — — — Provision for expected credit losses on securities with no previous allowance 12 4 16 Additions (reductions) to previously recognized expected credit losses (1) (1) (2) Reductions due to sales or redemptions — — — Balance at September 30, 2020 $ 11 $ 3 $ 14 (*) Includes mortgage-backed securities, collateralized loan obligations and other asset-backed securities. |
Available for sale fixed maturity securities by contractual maturity date | The table below sets forth the scheduled maturities of AFG’s available for sale fixed maturities as of September 30, 2021 (dollars in millions). 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. Amortized Fair Value Cost, net (*) Amount % Maturity One year or less $ 1,182 $ 1,194 11 % After one year through five years 2,571 2,662 26 % After five years through ten years 901 939 9 % After ten years 284 292 3 % 4,938 5,087 49 % Collateralized loan obligations and other ABS (average life of approximately 3 years) 4,450 4,473 43 % MBS (average life of approximately 3 years) 814 867 8 % Total $ 10,202 $ 10,427 100 % (*) Amortized cost, net of allowance for expected credit losses. |
Components of the net unrealized gain on securities, included in Accumulated Other Comprehensive Income | The following table shows (in millions) the components of the net unrealized gain on securities that is included in AOCI in AFG’s Balance Sheet. Pretax Deferred Tax Net September 30, 2021 Net unrealized gain on fixed maturities $ 225 $ (47) $ 178 December 31, 2020 Net unrealized gain on fixed maturities held by continuing operations $ 284 $ (60) $ 224 Discontinued operations (*): Net unrealized gain on fixed maturities $ 2,555 $ (536) $ 2,019 Deferred policy acquisition costs — annuity segment (934) 196 (738) Annuity benefits accumulated (324) 68 (256) Life, accident and health reserves (3) — (3) Unearned revenue 11 (2) 9 Total net unrealized gain from discontinued operations 1,305 (274) 1,031 Total net unrealized gain on fixed maturity securities $ 1,589 $ (334) $ 1,255 (*) In addition to adjusting fixed maturity securities classified as “available for sale” to fair value, GAAP requires that deferred policy acquisition costs and certain other balance sheet amounts related to AFG’s discontinued annuity, long-term care and life businesses be adjusted to the extent that unrealized gains and losses from securities would result in adjustments to those balances had the unrealized gains or losses actually been realized. |
Net investment income earned and investment expenses incurred | The following table shows (in millions) investment income earned and investment expenses incurred in AFG’s continuing operations. Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Investment income: Fixed maturities $ 73 $ 73 $ 217 $ 232 Equity securities: Dividends 6 9 21 27 Change in fair value (a) (b) 7 (2) 41 (10) Equity in earnings of partnerships and similar investments 73 36 222 53 Other 14 8 28 17 Gross investment income 173 124 529 319 Investment expenses (4) (2) (8) (5) Net investment income (b) $ 169 $ 122 $ 521 $ 314 (a) Although the change in the fair value of the majority of AFG’s equity securities is recorded in realized gains (losses) on securities, AFG records holding gains and losses in net investment income on equity securities classified as “trading” under previous guidance and on a small portfolio of limited partnership and similar investments that do not qualify for the equity method of accounting. (b) Net investment income in the third quarter and first nine months of 2020 includes income of $1 million and losses of $5 million, respectively, on investments held by the companies that comprise the Neon exited lines due primarily to the $7 million loss recorded on equity securities that are carried at fair value through net investment income. |
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | Realized gains (losses) and changes in unrealized appreciation (depreciation) from continuing operations included in AOCI related to fixed maturity securities are summarized as follows (in millions): Three months ended September 30, 2021 Three months ended September 30, 2020 Realized gains (losses) Realized gains (losses) Before Impairments Impairment Allowance Total Change in Unrealized Before Impairments Impairment Allowance Total Change in Unrealized Fixed maturities $ (2) $ — $ (2) $ (35) $ 1 $ — $ 1 $ 59 Equity securities (15) — (15) — 22 — 22 — Mortgage loans and other investments — — — — — — — — Total pretax (17) — (17) (35) 23 — 23 59 Tax effects 5 — 5 8 (5) — (5) (12) Net of tax $ (12) $ — $ (12) $ (27) $ 18 $ — $ 18 $ 47 Nine months ended September 30, 2021 Nine months ended September 30, 2020 Realized gains (losses) Realized gains (losses) Before Impairments Impairment Allowance Total Change in Unrealized Before Impairments Impairment Allowance Total Change in Unrealized Fixed maturities $ (2) $ 1 $ (1) $ (59) $ 5 $ (14) $ (9) $ 39 Equity securities 104 — 104 — (189) — (189) — Mortgage loans and other investments — — — — 1 — 1 — Total pretax 102 1 103 (59) (183) (14) (197) 39 Tax effects (20) — (20) 13 38 3 41 (8) Net of tax $ 82 $ 1 $ 83 $ (46) $ (145) $ (11) $ (156) $ 31 |
Holding gains (losses) on equity securities still held | AFG recorded net holding gains (losses) on equity securities from continuing operations during the third quarter and first nine months of 2021 and 2020 on securities that were still owned at September 30, 2021 and September 30, 2020 as follows (in millions): Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Included in realized gains (losses) $ (16) $ 17 $ 82 $ (174) Included in net investment income 7 (1) 41 (2) $ (9) $ 16 $ 123 $ (176) |
Gross realized gains and losses on available for sale fixed maturity and equity security investments | Gross realized gains and losses (excluding changes in impairment allowance and mark-to-market of derivatives) on available for sale fixed maturity investment transactions from continuing operations consisted of the following (in millions): Nine months ended September 30, 2021 2020 Gross gains $ 4 $ 8 Gross losses (2) (4) |
Managed Investment Entities (Ta
Managed Investment Entities (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Variable Interest Entity, Primary Beneficiary, Does Not Hold Majority Voting Interest, Disclosures [Abstract] | |
Selected financial information related to collateralized loan obligations | Selected financial information related to the CLOs is shown below (in millions): Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Investment in CLO tranches at end of period: Held by continuing operations $ 96 $ 47 $ 96 $ 47 Held by discontinued annuity operations — 129 — 129 Total $ 96 $ 176 $ 96 $ 176 Gains (losses) on change in fair value of assets/liabilities (*): Assets $ 10 $ 132 $ 77 $ (184) Liabilities (9) (137) (68) 163 Management fees paid to AFG 4 3 12 11 CLO earnings (losses) attributable to AFG shareholders: From continuing operations $ 5 $ 4 $ 17 $ (7) From discontinued annuity operations — 9 20 (14) Total $ 5 $ 13 $ 37 $ (21) (*) Included in revenues in AFG’s Statement of Earnings. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt instruments | Long-term debt consisted of the following (in millions): September 30, 2021 December 31, 2020 Principal Discount and Issue Costs Carrying Value Principal Discount and Issue Costs Carrying Value Direct Senior Obligations of AFG: 4.50% Senior Notes due June 2047 $ 590 $ (2) $ 588 $ 590 $ (2) $ 588 3.50% Senior Notes due August 2026 425 (3) 422 425 (3) 422 5.25% Senior Notes due April 2030 300 (5) 295 300 (6) 294 Other 3 — 3 3 — 3 1,318 (10) 1,308 1,318 (11) 1,307 Direct Subordinated Obligations of AFG: 4.50% Subordinated Debentures due September 2060 200 (5) 195 200 (5) 195 5.125% Subordinated Debentures due December 2059 200 (6) 194 200 (6) 194 5.625% Subordinated Debentures due June 2060 150 (4) 146 150 (4) 146 5.875% Subordinated Debentures due March 2059 125 (4) 121 125 (4) 121 675 (19) 656 675 (19) 656 $ 1,993 $ (29) $ 1,964 $ 1,993 $ (30) $ 1,963 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
Components of accumulated other comprehensive income (loss) | The progression of the components of accumulated other comprehensive income follows (in millions): Other Comprehensive Income (Loss) AOCI Pretax Tax Net Attributable to Attributable to Other AOCI Quarter ended September 30, 2021 Net unrealized gains (losses) on securities: Unrealized holding losses on securities arising during the period $ (37) $ 8 $ (29) $ — $ (29) Reclassification adjustment for realized (gains) losses included in net earnings (*) 2 — 2 — 2 Total net unrealized gains (losses) on securities $ 205 (35) 8 (27) — (27) $ — $ 178 Foreign currency translation adjustments (16) (3) — (3) — (3) — (19) Pension and other postretirement plans adjustments (“OPRP”) 1 — — — — — — 1 Total $ 190 $ (38) $ 8 $ (30) $ — $ (30) $ — $ 160 Quarter ended September 30, 2020 Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 245 $ (51) $ 194 $ — $ 194 Reclassification adjustment for realized (gains) losses included in net earnings (*) (15) 3 (12) — (12) Total net unrealized gains on securities $ 1,030 230 (48) 182 — 182 $ — $ 1,212 Net unrealized gains (losses) on cash flow hedges: Unrealized holding gains on cash flow hedges arising during the period 1 — 1 — 1 Reclassification adjustment for investment income included in net earnings from discontinued operations (8) 1 (7) — (7) Total net unrealized gains (losses) on cash flow hedges 47 (7) 1 (6) — (6) — 41 Foreign currency translation adjustments (17) — — — — — 4 (13) Pension and other postretirement plans adjustments (7) — — — — — — (7) Total $ 1,053 $ 223 $ (47) $ 176 $ — $ 176 $ 4 $ 1,233 Other Comprehensive Income (Loss) AOCI Pretax Tax Net Attributable to Attributable to Other AOCI Nine months ended September 30, 2021 Net unrealized gains (losses) on securities: Unrealized holding losses on securities arising during the period $ (224) $ 47 $ (177) $ — $ (177) Reclassification adjustment for realized (gains) losses included in net earnings (*) (21) 5 (16) — (16) Reclassification for unrealized gains of subsidiaries sold (1,119) 235 (884) — (884) Total net unrealized gains (losses) on securities $ 1,255 (1,364) 287 (1,077) — (1,077) $ — $ 178 Net unrealized gains (losses) on cash flow hedges: Unrealized holding losses on cash flow hedges arising during the period (1) — (1) — (1) Reclassification adjustment for investment income included in net earnings from discontinued operations (14) 3 (11) — (11) Reclassification for unrealized gains on cash flow hedges of subsidiaries sold (37) 8 (29) — (29) Total net unrealized gains (losses) on cash flow hedges 41 (52) 11 (41) — (41) — — Foreign currency translation adjustments (16) (3) — (3) — (3) — (19) Pension and OPRP adjustments: Unrealized holding losses on pension and OPRP arising during the period (1) — (1) — (1) Reclassification adjustment for pension settlement loss included in other expense in net earnings 11 (2) 9 — 9 Total pension and OPRP adjustments (7) 10 (2) 8 — 8 — 1 Total $ 1,273 $ (1,409) $ 296 $ (1,113) $ — $ (1,113) $ — $ 160 Nine months ended September 30, 2020 Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 443 $ (93) $ 350 $ — $ 350 Reclassification adjustment for realized (gains) losses included in net earnings (*) — — — — — Total net unrealized gains on securities $ 862 443 (93) 350 — 350 $ — $ 1,212 Net unrealized gains on cash flow hedges: Unrealized holding gains on cash flow hedges arising during the period 62 (13) 49 — 49 Reclassification adjustment for investment income included in net earnings from discontinued operations (31) 6 (25) — (25) Total net unrealized gains on cash flow hedges 17 31 (7) 24 — 24 — 41 Foreign currency translation adjustments (9) (6) — (6) (2) (8) 4 (13) Pension and other postretirement plans adjustments (7) — — — — — — (7) Total $ 863 $ 468 $ (100) $ 368 $ (2) $ 366 $ 4 $ 1,233 (*) The reclassification adjustment out of net unrealized gains (losses) on securities affected the following lines in AFG’s Statement of Earnings: OCI component Affected line in the statement of earnings Pretax - continuing operations Realized gains (losses) on securities Pretax - discontinued operations Net earnings (loss) from discontinued operations Tax - continuing operations Provision (credit) for income taxes Tax - discontinued operations Net earnings (loss) from discontinued operations |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of income taxes at the statutory rate and income taxes shown in the Statement of Earnings | The following is a reconciliation of income taxes on continuing operations at the statutory rate of 21% to the provision for income taxes as shown in AFG’s Statement of Earnings (dollars in millions): Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Amount % of EBT Amount % of EBT Amount % of EBT Amount % of EBT Earnings (loss) from continuing operations before income taxes (“EBT”) $ 267 $ 40 $ 890 $ (5) Income taxes at statutory rate $ 56 21 % $ 8 21 % $ 187 21 % $ (1) 21 % Effect of: Pending sale of Neon — — % (73) (183 %) — — % (73) 1,460 % Stock-based compensation (2) (1 %) — — % (12) (1 %) (3) 60 % Employee stock ownership plan dividend paid deduction (2) (1 %) (1) (3 %) (10) (1 %) (1) 20 % Tax exempt interest (2) (1 %) (2) (5 %) (6) (1 %) (7) 140 % Dividends received deduction — — % (1) (3 %) (1) — % (2) 40 % Foreign operations 2 1 % (4) (10 %) — — % (3) 60 % Adjustment to prior year taxes (1) — % 1 3 % (1) — % 1 (20 %) Nondeductible expenses 2 1 % 1 3 % 6 1 % 3 (60 %) Change in valuation allowance (2) (1 %) 20 50 % 1 — % 31 (620 %) Other (3) (1 %) 3 7 % — (1 %) 3 (61 %) Provision (credit) for income taxes as shown in the statement of earnings $ 48 18 % $ (48) (120 %) $ 164 18 % $ (52) 1,040 % |
Insurance (Tables)
Insurance (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Insurance [Abstract] | |
Reconciliation of beginning and ending liability for unpaid losses and loss adjustment expenses | The following table provides an analysis of changes in the liability for losses and loss adjustment expenses during the first nine months of 2021 and 2020 (in millions): Nine months ended September 30, 2021 2020 Balance at beginning of year $ 10,392 $ 10,232 Less reinsurance recoverables, net of allowance 3,117 3,024 Net liability at beginning of year 7,275 7,208 Provision for losses and LAE occurring in the current period 2,543 2,560 Net increase (decrease) in the provision for claims of prior years: Special A&E charges — 47 Other (208) (166) Total losses and LAE incurred 2,335 2,441 Payments for losses and LAE of: Current year (589) (592) Prior years (1,430) (1,406) Total payments (2,019) (1,998) Foreign currency translation and other — (11) Net liability at end of period 7,591 7,640 Add back reinsurance recoverables, net of allowance 3,400 3,114 Gross unpaid losses and LAE included in the balance sheet at end of period $ 10,991 $ 10,754 |
Reinsurance Recoverable and Premiums Receivable, Allowance for Credit Loss | Progressions of the 2021 and 2020 allowance for expected credit losses on recoverables from reinsurers and premiums receivable related to continuing operations are shown below (in millions): Recoverables from Reinsurers Premiums Receivable 2021 2020 2021 2020 Balance at June 30 $ 8 $ 7 $ 9 $ 10 Provision (credit) for expected credit losses — — 1 1 Write-offs charged against the allowance — — — — Balance at September 30 $ 8 $ 7 $ 10 $ 11 Balance at January 1 $ 6 $ 18 $ 10 $ 13 Impact of adoption of new accounting policy — (11) — (3) Provision (credit) for expected credit losses 2 — — 1 Write-offs charged against the allowance — — — — Balance at September 30 $ 8 $ 7 $ 10 $ 11 |
Accounting Policies - Narrative
Accounting Policies - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Jun. 30, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | |
Significant Accounting Policies [Line Items] | ||||||||
Cumulative effect of accounting change | $ 5,240 | $ 6,340 | $ 5,240 | $ 6,340 | $ 5,601 | $ 6,789 | $ 6,126 | $ 6,269 |
Assets of managed investment entities | 29,942 | 29,942 | 73,710 | |||||
Liabilities of managed investment entities | 24,702 | 24,702 | 66,921 | |||||
Operating lease liability | $ 136 | $ 136 | $ 159 | |||||
Operating lease liability, current, Statement of Financial Position | Other liabilities | Other liabilities | Other liabilities | |||||
Operating lease right-of-use asset | $ 118 | $ 118 | $ 139 | |||||
Weighted average common shares adjustment related to stock-based compensation (shares) | 400,000 | 300,000 | 600,000 | 500,000 | ||||
Anti-dilutive potential common shares related to stock-based compensation plans (shares) | 0 | 0 | 0 | 0 | ||||
Maturities of short term investments | 3 months | |||||||
New collateralized loan obligation temporary warehousing entities | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Assets of managed investment entities | $ 171 | $ 171 | ||||||
Liabilities of managed investment entities | 131 | 131 | ||||||
Retained Earnings | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Cumulative effect of accounting change | $ 3,680 | $ 3,737 | $ 3,680 | $ 3,737 | $ 4,023 | $ 4,149 | $ 3,685 | 4,009 |
Cumulative effect adjustment in period of adoption | Retained Earnings | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Cumulative effect of accounting change | 7 | |||||||
Cumulative effect adjustment in period of adoption | Retained Earnings | Accounting Standards Update 2016-13 | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Cumulative effect of accounting change | $ 7 |
Discontinued Operations - Narra
Discontinued Operations - Narrative (Details) - USD ($) $ in Millions | May 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | May 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 |
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Investments accounted for using the equity method | $ 1,407 | $ 1,407 | $ 1,235 | ||||
Net investment income | 169 | $ 122 | 521 | $ 314 | |||
Net earnings (loss) from discontinued operations | 0 | 76 | $ 914 | 914 | (20) | ||
Annuity subsidiaries | |||||||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Net proceeds from sale of businesses | $ 3,570 | ||||||
Post-closing adjustments | 34 | 34 | |||||
Gain on sale, net of tax | 656 | $ 0 | 0 | 656 | 0 | ||
Real estate-related investments | Continuing operations | |||||||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Net investment income | $ 10 | $ 51 | $ 29 | ||||
Great American Life Insurance Company | Investments accounted for using the equity method | |||||||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Investments accounted for using the equity method | 480 | 480 | |||||
Great American Life Insurance Company | Real Estate | |||||||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Other real estate | $ 100 | $ 100 |
Discontinued Operations - Asset
Discontinued Operations - Assets and liabilities of businesses disposed (Details) - USD ($) $ in Millions | Sep. 30, 2021 | May 31, 2021 | Dec. 31, 2020 |
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Total assets of discontinued annuity operations | $ 0 | $ 47,885 | |
Liabilities of discontinued annuity operations | 0 | 44,458 | |
Reclassify AOCI | 160 | 1,273 | |
Net investment in annuity businesses sold, excluding AOCI | $ 5,240 | 6,789 | |
Annuity subsidiaries | |||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Cash and cash equivalents | $ 2,060 | ||
Investments | 38,323 | ||
Recoverables from reinsurers | 6,748 | ||
Other assets | 2,152 | ||
Total assets of discontinued annuity operations | 49,283 | 47,885 | |
Annuity benefits accumulated | 43,690 | ||
Other liabilities | 1,813 | ||
Liabilities of discontinued annuity operations | 45,503 | 44,458 | |
Receivable from AFG for real estate-related investments | 0 | 537 | |
Reclassify AOCI | (913) | (1,071) | |
Net investment in annuity businesses sold, excluding AOCI | $ 2,867 | 2,893 | |
Annuity subsidiaries | Assets of discontinued annuity operations | |||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Cash and cash equivalents | 1,145 | ||
Investments | 38,011 | ||
Recoverables from reinsurers | 6,804 | ||
Other assets | 1,925 | ||
Annuity subsidiaries | Liabilities of discontinued annuity operations | |||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Annuity benefits accumulated | 42,573 | ||
Other liabilities | $ 1,885 |
Discontinued Operations - Detai
Discontinued Operations - Details of the results of the Annuity subsidiaries sold (Details) - USD ($) $ in Millions | May 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | May 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 |
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Net earnings (loss) from discontinued operations | $ 0 | $ 76 | $ 914 | $ 914 | $ (20) | |
Annuity subsidiaries | ||||||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Gain on sale, net of tax | $ 656 | 0 | 0 | 656 | 0 | |
Annuity subsidiaries | Net earnings (loss) from discontinued operations | ||||||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Net investment income | 0 | 459 | 746 | 1,256 | ||
Realized gains (losses) on securities | 0 | 22 | 112 | (105) | ||
Other income | 0 | 26 | 52 | 91 | ||
Total revenues | 0 | 507 | 910 | 1,242 | ||
Annuity benefits | 0 | 203 | 377 | 905 | ||
Annuity and supplemental insurance acquisition expenses | 0 | 172 | 136 | 250 | ||
Other expenses | 0 | 38 | 73 | 118 | ||
Total costs and expenses | 0 | 413 | 586 | 1,273 | ||
Earnings (loss) before income taxes from discontinued operations | 0 | 94 | 324 | (31) | ||
Provision (credit) for income taxes on operations | 0 | 18 | 66 | (11) | ||
Net earnings (loss) from operations, net of tax | $ 0 | $ 76 | $ 258 | $ (20) |
Discontinued Operations - Impac
Discontinued Operations - Impact of the sale of the annuity businesses (Details) - USD ($) $ in Millions | May 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | May 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 |
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Cash proceeds from sale of businesses | $ 3,547 | $ 0 | |||||
Net investment in annuity businesses sold, excluding AOCI | $ 5,240 | $ 5,240 | $ 6,789 | ||||
Annuity subsidiaries | |||||||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Cash proceeds from sale of businesses | $ 3,537 | ||||||
Receivable from MassMutual | 34 | $ 34 | |||||
Sale related expenses | (8) | ||||||
Total net proceeds | 3,563 | ||||||
Net investment in annuity businesses sold, excluding AOCI | 2,867 | 2,867 | $ 2,893 | ||||
Reclassify net deferred tax asset | 199 | ||||||
Realized gains (losses) on subsidiaries | 895 | ||||||
Tax liabilities triggered by pending sale in the first quarter of 2021 | 41 | ||||||
Other tax expense on gain on sale of subsidiaries | (1) | ||||||
Total income tax expense on gain on sale of subsidiaries | 239 | ||||||
Gain on sale, net of tax | $ 656 | $ 0 | $ 0 | $ 656 | $ 0 |
Discontinued Operations - Summa
Discontinued Operations - Summarized cash flow information (Details) - Annuity subsidiaries - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net cash provided by operating activities | $ 87 | $ 904 |
Net cash used in investing activities | (1,709) | (440) |
Net cash provided by financing activities | $ 477 | $ 260 |
Discontinued Operations - Gain
Discontinued Operations - Gain (loss) included in the Statement of Earnings for changes in the fair value of derivatives that do not qualify for hedge accounting (Details) - Not designated as hedging instrument - USD ($) $ in Millions | 3 Months Ended | 5 Months Ended | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | May 31, 2021 | Sep. 30, 2020 | |
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Derivative | $ 0 | $ 198 | $ 20 | $ 2 |
MBS with embedded derivatives | Annuity subsidiaries | Net earnings (loss) from discontinued operations | ||||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Derivative | 0 | (3) | (1) | 2 |
Fixed-indexed and variable-indexed annuities (embedded derivative) | Annuity subsidiaries | Net earnings (loss) from discontinued operations | ||||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Derivative | 0 | (5) | (222) | 41 |
Equity index call options | Annuity subsidiaries | Net earnings (loss) from discontinued operations | ||||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Derivative | 0 | 203 | 237 | (42) |
Equity index put options | Annuity subsidiaries | Net earnings (loss) from discontinued operations | ||||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Derivative | 0 | 2 | 5 | 1 |
Reinsurance contract (embedded derivative) | Annuity subsidiaries | Net earnings (loss) from discontinued operations | ||||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Derivative | $ 0 | $ 1 | $ 1 | $ 0 |
Sales of Businesses - Narrative
Sales of Businesses - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds from sale of businesses | $ 3,547 | $ 0 | ||||
Realized gains (losses) on subsidiaries | $ 0 | $ (30) | $ 4 | $ (30) | ||
Neon Capital Limited | ||||||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds from sale of businesses | $ 6 | |||||
Realized gains (losses) on subsidiaries | $ 4 | $ (30) |
Sales of Businesses - Assets an
Sales of Businesses - Assets and liabilities disposed (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2021 | Jun. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disposal Group, Not Discontinued Operation, Disposal Disclosures [Line Items] | |||||||
Cash and investments | $ 16,387 | $ 16,387 | $ 13,494 | ||||
Recoverables from reinsurers | 3,523 | 3,523 | 3,288 | ||||
Prepaid reinsurance premiums | 1,028 | 1,028 | 768 | ||||
Agents’ balances and premiums receivable | 1,492 | 1,492 | 1,229 | ||||
Other assets | 847 | 847 | 977 | ||||
Total assets | 29,942 | 29,942 | 73,710 | ||||
Unpaid losses and loss adjustment expenses | 10,991 | $ 10,754 | 10,991 | $ 10,754 | 10,392 | $ 10,232 | |
Unearned premiums | 3,415 | 3,415 | 2,803 | ||||
Payable to reinsurers | 1,146 | 1,146 | 807 | ||||
Other liabilities | 2,152 | 2,152 | 1,584 | ||||
Total liabilities | 24,702 | 24,702 | $ 66,921 | ||||
Realized gains (losses) on subsidiaries | $ 0 | (30) | $ 4 | (30) | |||
Neon Capital Limited | |||||||
Disposal Group, Not Discontinued Operation, Disposal Disclosures [Line Items] | |||||||
Estimated sale proceeds, net of expenses | 4 | ||||||
Cash and investments | 461 | 461 | |||||
Recoverables from reinsurers | 198 | 198 | |||||
Prepaid reinsurance premiums | 30 | 30 | |||||
Agents’ balances and premiums receivable | 48 | 48 | |||||
Other assets | 73 | 73 | |||||
Total assets | 810 | 810 | |||||
Unpaid losses and loss adjustment expenses | 598 | 598 | |||||
Unearned premiums | 83 | 83 | |||||
Payable to reinsurers | 39 | 39 | |||||
Other liabilities | 47 | 47 | |||||
Total liabilities | 767 | 767 | |||||
Reclassification from accumulated other comprehensive income | (9) | ||||||
Net assets of businesses to be sold | 34 | $ 34 | |||||
Realized gains (losses) on subsidiaries | $ 4 | $ (30) |
Sales of Businesses - Revenues,
Sales of Businesses - Revenues, costs and expenses, and earnings before income taxes of business disposed (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net earned premiums | $ 1,529 | $ 1,381 | $ 3,952 | $ 3,774 |
Losses and loss adjustment expenses | 954 | 963 | 2,335 | 2,441 |
Commissions and other underwriting expenses | 417 | 406 | 1,187 | 1,235 |
Net investment income | 169 | 122 | 521 | 314 |
Net earnings, including noncontrolling interests | $ 219 | 164 | $ 1,640 | 27 |
Neon Capital Limited | ||||
Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net earned premiums | 42 | 174 | ||
Losses and loss adjustment expenses | 60 | 166 | ||
Commissions and other underwriting expenses | 20 | 90 | ||
Underwriting loss | (38) | (82) | ||
Net investment income | 1 | (5) | ||
Other income and expenses, net | (3) | (5) | ||
Net earnings, including noncontrolling interests | $ (40) | $ (92) |
Segments of Operations - Narrat
Segments of Operations - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)segment | Sep. 30, 2020USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of segments | segment | 2 | |||
Net investment income | $ 169 | $ 122 | $ 521 | $ 314 |
Neon Capital Limited | ||||
Segment Reporting Information [Line Items] | ||||
Net investment income | 1 | (5) | ||
Continuing operations | Real estate-related investments | ||||
Segment Reporting Information [Line Items] | ||||
Net investment income | 10 | 51 | 29 | |
Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net investment income | 165 | 112 | 467 | 277 |
Property and casualty insurance underwriting | 168 | 18 | 454 | 114 |
Investment and other income, net | 161 | 100 | 451 | 249 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Special charges to increase asbestos and environmental reserves | 21 | |||
Other | Continuing operations | Real estate-related investments | ||||
Segment Reporting Information [Line Items] | ||||
Net investment income | 0 | 10 | 51 | 29 |
Earnings from real-estate related investments, net of DAC | 0 | 3 | 51 | 11 |
Other lines | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | $ (1) | (86) | (2) | (133) |
Special A&E charges | $ 0 | 47 | ||
Other lines | Property and Casualty Insurance | Neon Capital Limited | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | (38) | (82) | ||
Investment and other income, net | (2) | (10) | ||
Neon Capital Limited | Other lines | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net investment income | $ 1 | $ (5) |
Segments of Operations - Revenu
Segments of Operations - Revenues by segment and sub-segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment Reporting Information [Line Items] | ||||
Net earned premiums | $ 1,529 | $ 1,381 | $ 3,952 | $ 3,774 |
Net investment income | 169 | 122 | 521 | 314 |
Other income | 27 | 19 | 70 | 62 |
Revenues before realized gains (losses) | 1,771 | 1,563 | 4,687 | 4,283 |
Realized gains (losses) on securities | (17) | 23 | 103 | (197) |
Realized gains (losses) on subsidiaries | 0 | (30) | 4 | (30) |
Total revenues | 1,754 | 1,556 | 4,794 | 4,056 |
Real estate-related investments | Continuing operations | ||||
Segment Reporting Information [Line Items] | ||||
Net investment income | 10 | 51 | 29 | |
Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net earned premiums | 1,529 | 1,381 | 3,952 | 3,774 |
Net investment income | 165 | 112 | 467 | 277 |
Other income | 4 | 0 | 9 | 8 |
Revenues before realized gains (losses) | 1,698 | 1,493 | 4,428 | 4,059 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Revenues before realized gains (losses) | 73 | 60 | 208 | 195 |
Other | Real estate-related investments | Continuing operations | ||||
Segment Reporting Information [Line Items] | ||||
Net investment income | 0 | 10 | 51 | 29 |
Specialty Property and transportation | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net earned premiums | 700 | 574 | 1,547 | 1,350 |
Specialty casualty | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net earned premiums | 613 | 560 | 1,772 | 1,663 |
Specialty financial | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net earned premiums | 163 | 155 | 477 | 455 |
Other specialty | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net earned premiums | 53 | 50 | 156 | 132 |
Other lines | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net earned premiums | $ 0 | $ 42 | $ 0 | $ 174 |
Segments of Operations - Earnin
Segments of Operations - Earnings before income taxes by segment and sub-segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment Reporting Information [Line Items] | ||||
Earnings before realized gains (losses) and income taxes | $ 284 | $ 47 | $ 783 | $ 222 |
Realized gains (losses) on securities | (17) | 23 | 103 | (197) |
Realized gains (losses) on subsidiaries | 0 | (30) | 4 | (30) |
Earnings (loss) from continuing operations before income taxes | 267 | 40 | 890 | (5) |
Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | 168 | 18 | 454 | 114 |
Investment and other income, net | 161 | 100 | 451 | 249 |
Earnings before realized gains (losses) and income taxes | 329 | 118 | 905 | 363 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Earnings before realized gains (losses) and income taxes | (45) | (74) | (173) | (152) |
Other | Continuing operations | Real estate-related investments | ||||
Segment Reporting Information [Line Items] | ||||
Earnings from real-estate related investments, net of DAC | 0 | 3 | 51 | 11 |
Specialty Property and transportation | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | 45 | 47 | 163 | 107 |
Specialty casualty | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | 110 | 53 | 237 | 132 |
Specialty financial | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | 26 | 13 | 72 | 30 |
Other specialty | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | (12) | (9) | (16) | (22) |
Other lines | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | $ (1) | $ (86) | $ (2) | $ (133) |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) $ in Millions | Sep. 30, 2021USD ($)professional |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
AFG's internal investment professionals | professional | 20 |
Level 3 | Continuing operations | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Level 3 assets as a percentage of total assets measured at fair value | 5.00% |
Percentage of level 3 assets that were priced using non-binding broker quotes | 17.00% |
Level 3 assets that were priced using non-binding broker quotes | $ 150 |
Level 3 assets that were priced by pricing services. | $ 61 |
Percentage of level 3 assets that were priced by pricing services | 7.00% |
Percentage of level 3 equity investments that do not qualify for equity accounting | 17.00% |
Level 3 assets that are equity securities that do not qualify for equity accounting | $ 149 |
Internally developed level 3 assets | $ 519 |
Percentage of internally developed level 3 assets compared to total level 3 assets | 58.00% |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and liabilities measured and carried at fair value in the financial statements (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Assets: | ||
Available for sale (AFS) fixed maturities | $ 10,427 | $ 9,084 |
Trading fixed maturities | 29 | 24 |
Equity securities | 993 | 889 |
Assets of managed investment entities | 29,942 | 73,710 |
Total assets accounted for at fair value | 16,579 | 14,968 |
Liabilities: | ||
Liabilities of managed investment entities | 24,702 | 66,921 |
Total liabilities accounted for at fair value | 5,034 | 4,914 |
Variable interest entity, primary beneficiary | ||
Assets: | ||
Assets of managed investment entities | 5,130 | 4,971 |
Liabilities: | ||
Liabilities of managed investment entities | 5,034 | 4,914 |
Fixed maturities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 10,427 | 9,084 |
Trading fixed maturities | 29 | 24 |
U.S. Government and government agencies | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 218 | 198 |
States, municipalities and political subdivisions | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 1,926 | 2,312 |
Foreign government | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 217 | 176 |
Residential MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 754 | 915 |
Commercial MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 113 | 92 |
Collateralized loan obligations | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 1,829 | 1,062 |
Other asset-backed securities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 2,644 | 2,047 |
Corporate and other | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 2,726 | 2,282 |
Equity securities | ||
Assets: | ||
Equity securities | 993 | 889 |
Level 1 | ||
Assets: | ||
Total assets accounted for at fair value | 1,229 | 1,081 |
Liabilities: | ||
Total liabilities accounted for at fair value | 310 | 215 |
Level 1 | Variable interest entity, primary beneficiary | ||
Assets: | ||
Assets of managed investment entities | 316 | 217 |
Liabilities: | ||
Liabilities of managed investment entities | 310 | 215 |
Level 1 | Fixed maturities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 232 | 199 |
Trading fixed maturities | 0 | 0 |
Level 1 | U.S. Government and government agencies | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 217 | 195 |
Level 1 | States, municipalities and political subdivisions | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 1 | Foreign government | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 1 | Residential MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 1 | Commercial MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 1 | Collateralized loan obligations | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 1 | Other asset-backed securities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 1 | Corporate and other | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 15 | 4 |
Level 1 | Equity securities | ||
Assets: | ||
Equity securities | 681 | 665 |
Level 2 | ||
Assets: | ||
Total assets accounted for at fair value | 14,452 | 13,152 |
Liabilities: | ||
Total liabilities accounted for at fair value | 4,712 | 4,678 |
Level 2 | Variable interest entity, primary beneficiary | ||
Assets: | ||
Assets of managed investment entities | 4,802 | 4,733 |
Liabilities: | ||
Liabilities of managed investment entities | 4,712 | 4,678 |
Level 2 | Fixed maturities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 9,577 | 8,347 |
Trading fixed maturities | 29 | 24 |
Level 2 | U.S. Government and government agencies | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 1 | 3 |
Level 2 | States, municipalities and political subdivisions | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 1,884 | 2,273 |
Level 2 | Foreign government | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 217 | 176 |
Level 2 | Residential MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 736 | 877 |
Level 2 | Commercial MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 113 | 90 |
Level 2 | Collateralized loan obligations | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 1,828 | 1,046 |
Level 2 | Other asset-backed securities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 2,335 | 1,742 |
Level 2 | Corporate and other | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 2,463 | 2,140 |
Level 2 | Equity securities | ||
Assets: | ||
Equity securities | 44 | 48 |
Level 3 | ||
Assets: | ||
Total assets accounted for at fair value | 898 | 735 |
Liabilities: | ||
Total liabilities accounted for at fair value | 12 | 21 |
Level 3 | Variable interest entity, primary beneficiary | ||
Assets: | ||
Assets of managed investment entities | 12 | 21 |
Liabilities: | ||
Liabilities of managed investment entities | 12 | 21 |
Level 3 | Fixed maturities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 618 | 538 |
Trading fixed maturities | 0 | 0 |
Level 3 | U.S. Government and government agencies | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 3 | States, municipalities and political subdivisions | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 42 | 39 |
Level 3 | Foreign government | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 3 | Residential MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 18 | 38 |
Level 3 | Commercial MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 2 |
Level 3 | Collateralized loan obligations | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 1 | 16 |
Level 3 | Other asset-backed securities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 309 | 305 |
Level 3 | Corporate and other | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 248 | 138 |
Level 3 | Equity securities | ||
Assets: | ||
Equity securities | $ 268 | $ 176 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in balances of Level 3 financial assets carried at fair value (Details) - USD ($) $ in Millions | May 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 |
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||||
Financial assets, Beginning Balance | $ 865 | $ 3,840 | $ 3,706 | $ 3,841 | |
Total realized/unrealized gains (losses) included in Net income | 5 | (13) | 161 | (58) | |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | (1) | 23 | (23) | 47 | |
Purchases and issuances | 98 | 104 | 535 | 569 | |
Sales and settlements | (52) | (159) | (496) | (432) | |
Transfer into Level 3 | 10 | 247 | 66 | 598 | |
Transfer out of Level 3 | (27) | (237) | (332) | (760) | |
Sale of annuity business | $ (2,719) | ||||
Financial assets, Ending Balance | 898 | 3,805 | 898 | 3,805 | |
Fixed maturities | |||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||||
Financial assets, Beginning Balance | 605 | 615 | 538 | 571 | |
Total realized/unrealized gains (losses) included in Net income | 0 | 1 | (3) | (5) | |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | (1) | 4 | (2) | 8 | |
Purchases and issuances | 77 | 16 | 279 | 109 | |
Sales and settlements | (48) | (46) | (145) | (107) | |
Transfer into Level 3 | 10 | 23 | 33 | 105 | |
Transfer out of Level 3 | (25) | (39) | (82) | (107) | |
Sale of annuity business | 0 | ||||
Financial assets, Ending Balance | 618 | 574 | 618 | 574 | |
U.S. government agency | |||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||||
Financial assets, Beginning Balance | 0 | 0 | 0 | 0 | |
Total realized/unrealized gains (losses) included in Net income | 0 | 0 | 0 | 0 | |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | 0 | |
Purchases and issuances | 0 | 0 | 0 | 0 | |
Sales and settlements | 0 | 0 | 0 | 0 | |
Transfer into Level 3 | 0 | 0 | 0 | 0 | |
Transfer out of Level 3 | 0 | 0 | 0 | 0 | |
Sale of annuity business | 0 | ||||
Financial assets, Ending Balance | 0 | 0 | 0 | 0 | |
State and municipal | |||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||||
Financial assets, Beginning Balance | 36 | 41 | 39 | 40 | |
Total realized/unrealized gains (losses) included in Net income | 0 | 0 | 0 | 0 | |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | 2 | |
Purchases and issuances | 0 | 0 | 0 | 0 | |
Sales and settlements | 0 | 0 | (3) | (1) | |
Transfer into Level 3 | 8 | 0 | 8 | 0 | |
Transfer out of Level 3 | (2) | 0 | (2) | 0 | |
Sale of annuity business | 0 | ||||
Financial assets, Ending Balance | 42 | 41 | 42 | 41 | |
Residential MBS | |||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||||
Financial assets, Beginning Balance | 28 | 42 | 38 | 45 | |
Total realized/unrealized gains (losses) included in Net income | (1) | (1) | (4) | 0 | |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | (1) | |
Purchases and issuances | 0 | 0 | 6 | 0 | |
Sales and settlements | (1) | (3) | (2) | (5) | |
Transfer into Level 3 | 0 | 8 | 6 | 9 | |
Transfer out of Level 3 | (8) | (1) | (26) | (3) | |
Sale of annuity business | 0 | ||||
Financial assets, Ending Balance | 18 | 45 | 18 | 45 | |
Commercial MBS | |||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||||
Financial assets, Beginning Balance | 0 | 6 | 2 | 6 | |
Total realized/unrealized gains (losses) included in Net income | 0 | 0 | 0 | 0 | |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | 0 | |
Purchases and issuances | 0 | 0 | 0 | 0 | |
Sales and settlements | 0 | 0 | 0 | 0 | |
Transfer into Level 3 | 0 | 0 | 0 | 0 | |
Transfer out of Level 3 | 0 | (4) | (2) | (4) | |
Sale of annuity business | 0 | ||||
Financial assets, Ending Balance | 0 | 2 | 0 | 2 | |
Collateralized loan obligations | |||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||||
Financial assets, Beginning Balance | 6 | 55 | 16 | 1 | |
Total realized/unrealized gains (losses) included in Net income | 0 | 0 | 1 | (1) | |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 1 | 1 | 0 | 4 | |
Purchases and issuances | 0 | 0 | 0 | 0 | |
Sales and settlements | 0 | 0 | (1) | 0 | |
Transfer into Level 3 | 0 | 0 | 0 | 52 | |
Transfer out of Level 3 | (6) | 0 | (15) | 0 | |
Sale of annuity business | 0 | ||||
Financial assets, Ending Balance | 1 | 56 | 1 | 56 | |
Other asset-backed securities | |||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||||
Financial assets, Beginning Balance | 315 | 293 | 305 | 256 | |
Total realized/unrealized gains (losses) included in Net income | 1 | (1) | 1 | (6) | |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | (1) | 2 | 0 | 3 | |
Purchases and issuances | 41 | 8 | 131 | 69 | |
Sales and settlements | (38) | (15) | (110) | (62) | |
Transfer into Level 3 | 0 | 14 | 14 | 41 | |
Transfer out of Level 3 | (9) | (8) | (32) | (8) | |
Sale of annuity business | 0 | ||||
Financial assets, Ending Balance | 309 | 293 | 309 | 293 | |
Corporate and other | |||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||||
Financial assets, Beginning Balance | 220 | 178 | 138 | 223 | |
Total realized/unrealized gains (losses) included in Net income | 0 | 3 | (1) | 2 | |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | (1) | 1 | (2) | 0 | |
Purchases and issuances | 36 | 8 | 142 | 40 | |
Sales and settlements | (9) | (28) | (29) | (39) | |
Transfer into Level 3 | 2 | 1 | 5 | 3 | |
Transfer out of Level 3 | 0 | (26) | (5) | (92) | |
Sale of annuity business | 0 | ||||
Financial assets, Ending Balance | 248 | 137 | 248 | 137 | |
Equity securities | |||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||||
Financial assets, Beginning Balance | 245 | 164 | 176 | 161 | |
Total realized/unrealized gains (losses) included in Net income | 7 | (5) | 78 | (22) | |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | 0 | |
Purchases and issuances | 20 | 5 | 44 | 16 | |
Sales and settlements | (4) | 0 | (23) | 0 | |
Transfer into Level 3 | 0 | 0 | 0 | 9 | |
Transfer out of Level 3 | 0 | (5) | (7) | (5) | |
Sale of annuity business | 0 | ||||
Financial assets, Ending Balance | 268 | 159 | 268 | 159 | |
Assets of MIE | |||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||||
Financial assets, Beginning Balance | 15 | 17 | 21 | 17 | |
Total realized/unrealized gains (losses) included in Net income | (2) | (2) | 1 | (4) | |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | 0 | |
Purchases and issuances | 1 | 0 | 3 | 0 | |
Sales and settlements | 0 | 0 | 0 | 0 | |
Transfer into Level 3 | 0 | 0 | 1 | 2 | |
Transfer out of Level 3 | (2) | 0 | (14) | 0 | |
Sale of annuity business | 0 | ||||
Financial assets, Ending Balance | 12 | 15 | 12 | 15 | |
Assets of discontinued annuity operations | Annuity subsidiaries | |||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||||
Financial assets, Beginning Balance | 3,044 | 2,971 | 3,092 | ||
Total realized/unrealized gains (losses) included in Net income | (7) | 85 | (27) | ||
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 19 | (21) | 39 | ||
Purchases and issuances | 83 | 209 | 444 | ||
Sales and settlements | (113) | (328) | (325) | ||
Transfer into Level 3 | 224 | 32 | 482 | ||
Transfer out of Level 3 | (193) | (229) | (648) | ||
Sale of annuity business | $ (2,719) | ||||
Financial assets, Ending Balance | $ 0 | $ 3,057 | $ 0 | $ 3,057 |
Fair Value Measurements - Cha_2
Fair Value Measurements - Changes in balances of Level 3 financial liabilities carried at fair value (Details) - USD ($) $ in Millions | May 31, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Financial liabilities, Beginning Balance | $ (3,675) | $ (3,933) | $ (3,730) | |
Total realized/unrealized gains (losses) included in Net income | (5) | (222) | 41 | |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | |
Purchases and issuances | (56) | (146) | (180) | |
Sales and settlements | 79 | 158 | 212 | |
Transfer into Level 3 | 0 | 0 | 0 | |
Transfer out of Level 3 | 0 | 0 | 0 | |
Sale of annuity business | $ 4,143 | |||
Financial liabilities, Ending Balance | (3,657) | 0 | (3,657) | |
Liabilities of discontinued annuity operations | Annuity subsidiaries | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Financial liabilities, Beginning Balance | (3,675) | (3,933) | (3,730) | |
Total realized/unrealized gains (losses) included in Net income | (5) | (222) | 41 | |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | |
Purchases and issuances | (56) | (146) | (180) | |
Sales and settlements | 79 | 158 | 212 | |
Transfer into Level 3 | 0 | 0 | 0 | |
Transfer out of Level 3 | 0 | 0 | 0 | |
Sale of annuity business | $ 4,143 | |||
Financial liabilities, Ending Balance | $ (3,657) | $ 0 | $ (3,657) |
Fair Value Measurements - The c
Fair Value Measurements - The carrying value and fair value of financial instruments (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Financial assets: | ||
Mortgage loans | $ 537 | $ 377 |
Long-term debt | 1,964 | 1,963 |
Level 1 | ||
Financial assets: | ||
Cash and cash equivalents | 2,833 | 1,665 |
Mortgage loans | 0 | 0 |
Total financial assets not accounted for at fair value | 2,833 | 1,665 |
Long-term debt | 0 | 0 |
Total financial liabilities not accounted for at fair value | 0 | 0 |
Level 2 | ||
Financial assets: | ||
Cash and cash equivalents | 0 | 0 |
Mortgage loans | 0 | 0 |
Total financial assets not accounted for at fair value | 0 | 0 |
Long-term debt | 2,292 | 2,322 |
Total financial liabilities not accounted for at fair value | 2,292 | 2,322 |
Level 3 | ||
Financial assets: | ||
Cash and cash equivalents | 0 | 0 |
Mortgage loans | 555 | 382 |
Total financial assets not accounted for at fair value | 555 | 382 |
Long-term debt | 3 | 3 |
Total financial liabilities not accounted for at fair value | 3 | 3 |
Carrying Value | ||
Financial assets: | ||
Cash and cash equivalents | 2,833 | 1,665 |
Mortgage loans | 537 | 377 |
Total financial assets not accounted for at fair value | 3,370 | 2,042 |
Long-term debt | 1,964 | 1,963 |
Total financial liabilities not accounted for at fair value | 1,964 | 1,963 |
Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 2,833 | 1,665 |
Mortgage loans | 555 | 382 |
Total financial assets not accounted for at fair value | 3,388 | 2,047 |
Long-term debt | 2,295 | 2,325 |
Total financial liabilities not accounted for at fair value | $ 2,295 | $ 2,325 |
Investments - Narrative (Detail
Investments - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)security | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
Schedule of Investments [Line Items] | |||||
Unfunded commitments to limited partnerships | $ 302 | $ 302 | $ 290 | ||
Investments accounted for using the equity method | 1,407 | $ 1,407 | $ 1,235 | ||
Percentage (based on amount of unrealized loss) of available for sale fixed maturities that are in an unrealized loss position and rated investment grade | 74.00% | ||||
Percentage (based on fair value) of available for sale fixed maturities that are in an unrealized loss position and rated investment grade | 94.00% | ||||
Net investment income | $ 169 | $ 122 | $ 521 | $ 314 | |
Multifamily | |||||
Schedule of Investments [Line Items] | |||||
Percent of real-estate related investments by property type | 88.00% | 88.00% | 87.00% | ||
Single Family | |||||
Schedule of Investments [Line Items] | |||||
Percent of real-estate related investments by property type | 2.00% | 2.00% | 2.00% | ||
Other Property | |||||
Schedule of Investments [Line Items] | |||||
Percent of real-estate related investments by property type | 10.00% | 10.00% | 11.00% | ||
Annuity subsidiaries | Assets of discontinued annuity operations | |||||
Schedule of Investments [Line Items] | |||||
Investments accounted for using the equity method | $ 646 | ||||
Neon Capital Limited | |||||
Schedule of Investments [Line Items] | |||||
Net investment income | $ 1 | (5) | |||
Neon Capital Limited | Investment income | |||||
Schedule of Investments [Line Items] | |||||
Loss on sale of equity securities | $ (7) | ||||
Fixed maturities | |||||
Schedule of Investments [Line Items] | |||||
Gross unrealized losses on fixed maturities | $ 14 | $ 14 | 21 | ||
Number of available for sale securities in an unrealized loss position | security | 394 | ||||
Fixed maturities | Annuity subsidiaries | Assets of discontinued annuity operations | |||||
Schedule of Investments [Line Items] | |||||
Gross unrealized losses on fixed maturities | $ 97 |
Investments - Available for sal
Investments - Available for sale fixed maturities (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Jan. 01, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | $ 10,211 | $ 8,812 | |||||
Fixed maturities, available for sale, allowance for expected credit losses | 9 | $ 9 | 12 | $ 14 | $ 14 | $ 0 | |
Available for sale (AFS) fixed maturities | 10,427 | 9,084 | |||||
Total fixed maturities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 10,211 | 8,812 | |||||
Fixed maturities, available for sale, allowance for expected credit losses | 9 | 12 | |||||
Fixed maturities, available for sale, gross unrealized, gains | 239 | 305 | |||||
Fixed maturities, available for sale, gross unrealized, losses | (14) | (21) | |||||
Available for sale (AFS) fixed maturities | 10,427 | 9,084 | |||||
Total fixed maturities | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 31,596 | ||||||
Fixed maturities, available for sale, allowance for expected credit losses | 28 | ||||||
Fixed maturities, available for sale, gross unrealized, gains | 2,652 | ||||||
Fixed maturities, available for sale, gross unrealized, losses | (97) | ||||||
Available for sale (AFS) fixed maturities | 34,123 | ||||||
Total fixed maturities | Debt Securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 225 | 284 | |||||
Total fixed maturities | Debt Securities | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 2,555 | ||||||
U.S. Government and government agencies | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 216 | 192 | |||||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | 0 | |||||
Fixed maturities, available for sale, gross unrealized, gains | 3 | 6 | |||||
Fixed maturities, available for sale, gross unrealized, losses | (1) | 0 | |||||
Available for sale (AFS) fixed maturities | 218 | 198 | |||||
U.S. Government and government agencies | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 39 | ||||||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | ||||||
Fixed maturities, available for sale, gross unrealized, gains | 5 | ||||||
Fixed maturities, available for sale, gross unrealized, losses | 0 | ||||||
Available for sale (AFS) fixed maturities | 44 | ||||||
U.S. Government and government agencies | Debt Securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 2 | 6 | |||||
U.S. Government and government agencies | Debt Securities | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 5 | ||||||
States, municipalities and political subdivisions | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 1,849 | 2,196 | |||||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | 0 | |||||
Fixed maturities, available for sale, gross unrealized, gains | 77 | 116 | |||||
Fixed maturities, available for sale, gross unrealized, losses | 0 | 0 | |||||
Available for sale (AFS) fixed maturities | 1,926 | 2,312 | |||||
States, municipalities and political subdivisions | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 3,053 | ||||||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | ||||||
Fixed maturities, available for sale, gross unrealized, gains | 370 | ||||||
Fixed maturities, available for sale, gross unrealized, losses | (2) | ||||||
Available for sale (AFS) fixed maturities | 3,421 | ||||||
States, municipalities and political subdivisions | Debt Securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 77 | 116 | |||||
States, municipalities and political subdivisions | Debt Securities | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 368 | ||||||
Foreign government | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 216 | 172 | |||||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | 0 | |||||
Fixed maturities, available for sale, gross unrealized, gains | 2 | 4 | |||||
Fixed maturities, available for sale, gross unrealized, losses | (1) | 0 | |||||
Available for sale (AFS) fixed maturities | 217 | 176 | |||||
Foreign government | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 31 | ||||||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | ||||||
Fixed maturities, available for sale, gross unrealized, gains | 4 | ||||||
Fixed maturities, available for sale, gross unrealized, losses | 0 | ||||||
Available for sale (AFS) fixed maturities | 35 | ||||||
Foreign government | Debt Securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 1 | 4 | |||||
Foreign government | Debt Securities | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 4 | ||||||
Residential MBS | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 704 | 859 | |||||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | 0 | |||||
Fixed maturities, available for sale, gross unrealized, gains | 51 | 57 | |||||
Fixed maturities, available for sale, gross unrealized, losses | (1) | (1) | |||||
Available for sale (AFS) fixed maturities | 754 | 915 | |||||
Residential MBS | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 1,953 | ||||||
Fixed maturities, available for sale, allowance for expected credit losses | 3 | ||||||
Fixed maturities, available for sale, gross unrealized, gains | 194 | ||||||
Fixed maturities, available for sale, gross unrealized, losses | (4) | ||||||
Available for sale (AFS) fixed maturities | 2,140 | ||||||
Residential MBS | Debt Securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 50 | 56 | |||||
Residential MBS | Debt Securities | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 190 | ||||||
Commercial MBS | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 110 | 89 | |||||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | 0 | |||||
Fixed maturities, available for sale, gross unrealized, gains | 3 | 3 | |||||
Fixed maturities, available for sale, gross unrealized, losses | 0 | 0 | |||||
Available for sale (AFS) fixed maturities | 113 | 92 | |||||
Commercial MBS | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 659 | ||||||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | ||||||
Fixed maturities, available for sale, gross unrealized, gains | 40 | ||||||
Fixed maturities, available for sale, gross unrealized, losses | (1) | ||||||
Available for sale (AFS) fixed maturities | 698 | ||||||
Commercial MBS | Debt Securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 3 | 3 | |||||
Commercial MBS | Debt Securities | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 39 | ||||||
Collateralized loan obligations | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 1,827 | 1,065 | |||||
Fixed maturities, available for sale, allowance for expected credit losses | 1 | 3 | |||||
Fixed maturities, available for sale, gross unrealized, gains | 5 | 4 | |||||
Fixed maturities, available for sale, gross unrealized, losses | (2) | (4) | |||||
Available for sale (AFS) fixed maturities | 1,829 | 1,062 | |||||
Collateralized loan obligations | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 3,491 | ||||||
Fixed maturities, available for sale, allowance for expected credit losses | 10 | ||||||
Fixed maturities, available for sale, gross unrealized, gains | 23 | ||||||
Fixed maturities, available for sale, gross unrealized, losses | (13) | ||||||
Available for sale (AFS) fixed maturities | 3,491 | ||||||
Collateralized loan obligations | Debt Securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 3 | 0 | |||||
Collateralized loan obligations | Debt Securities | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 10 | ||||||
Other asset-backed securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 2,631 | 2,040 | |||||
Fixed maturities, available for sale, allowance for expected credit losses | 7 | 7 | |||||
Fixed maturities, available for sale, gross unrealized, gains | 25 | 27 | |||||
Fixed maturities, available for sale, gross unrealized, losses | (5) | (13) | |||||
Available for sale (AFS) fixed maturities | 2,644 | 2,047 | |||||
Other asset-backed securities | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 5,098 | ||||||
Fixed maturities, available for sale, allowance for expected credit losses | 11 | ||||||
Fixed maturities, available for sale, gross unrealized, gains | 142 | ||||||
Fixed maturities, available for sale, gross unrealized, losses | (53) | ||||||
Available for sale (AFS) fixed maturities | 5,176 | ||||||
Other asset-backed securities | Debt Securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 20 | 14 | |||||
Other asset-backed securities | Debt Securities | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | 89 | ||||||
Corporate and other | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 2,658 | 2,199 | |||||
Fixed maturities, available for sale, allowance for expected credit losses | 1 | $ 1 | 2 | $ 3 | $ 3 | $ 0 | $ 0 |
Fixed maturities, available for sale, gross unrealized, gains | 73 | 88 | |||||
Fixed maturities, available for sale, gross unrealized, losses | (4) | (3) | |||||
Available for sale (AFS) fixed maturities | 2,726 | 2,282 | |||||
Corporate and other | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available for sale, amortized cost | 17,272 | ||||||
Fixed maturities, available for sale, allowance for expected credit losses | 4 | ||||||
Fixed maturities, available for sale, gross unrealized, gains | 1,874 | ||||||
Fixed maturities, available for sale, gross unrealized, losses | (24) | ||||||
Available for sale (AFS) fixed maturities | 19,118 | ||||||
Corporate and other | Debt Securities | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | $ 69 | 85 | |||||
Corporate and other | Debt Securities | Assets of discontinued annuity operations | Annuity subsidiaries | |||||||
Debt Securities, Available-for-sale [Line Items] | |||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | $ 1,850 |
Investments - Equity securities
Investments - Equity securities reported at fair value (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Equity securities | $ 993 | $ 889 |
Common stocks | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Equity securities, at cost | 464 | 516 |
Equity securities | 563 | 510 |
Equity securities, fair value in excess of cost | 99 | (6) |
Perpetual preferred stocks | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Equity securities, at cost | 386 | 369 |
Equity securities | 430 | 379 |
Equity securities, fair value in excess of cost | 44 | 10 |
Equity securities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Equity securities, at cost | 850 | 885 |
Equity securities | 993 | 889 |
Equity securities, fair value in excess of cost | $ 143 | $ 4 |
Investments - Detail of equity
Investments - Detail of equity method investments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Schedule of Investments [Line Items] | |||||
Investments accounted for using the equity method | $ 1,407 | $ 1,407 | $ 1,235 | ||
Equity in earnings of partnerships and similar investments | 73 | $ 36 | 222 | $ 53 | |
Real estate-related investments | |||||
Schedule of Investments [Line Items] | |||||
Investments accounted for using the equity method | 1,024 | 1,024 | 915 | ||
Equity in earnings of partnerships and similar investments | 52 | 17 | 151 | 55 | |
Private equity | |||||
Schedule of Investments [Line Items] | |||||
Investments accounted for using the equity method | 336 | 336 | 266 | ||
Equity in earnings of partnerships and similar investments | 21 | 21 | 66 | 4 | |
Private debt | |||||
Schedule of Investments [Line Items] | |||||
Investments accounted for using the equity method | 47 | 47 | $ 54 | ||
Equity in earnings of partnerships and similar investments | $ 0 | $ (2) | $ 5 | $ (6) |
Investments - Gross unrealized
Investments - Gross unrealized losses on securities by investment category and length of time that have been in a continuous unrealized loss position (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Total fixed maturities | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ (8) | $ (14) |
Fair value - less than twelve months | $ 1,839 | $ 952 |
Fair value as percentage of cost - Less than twelve months | 100.00% | 99.00% |
Unrealized Loss - Twelve months or more | $ (6) | $ (7) |
Fair Value - Twelve months or more | $ 317 | $ 497 |
Fair value as percentage of cost - Twelve months or more | 98.00% | 99.00% |
U.S. Government and government agencies | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ (1) | $ 0 |
Fair value - less than twelve months | $ 97 | $ 23 |
Fair value as percentage of cost - Less than twelve months | 99.00% | 100.00% |
Unrealized Loss - Twelve months or more | $ 0 | $ 0 |
Fair Value - Twelve months or more | $ 19 | $ 0 |
Fair value as percentage of cost - Twelve months or more | 100.00% | 0.00% |
States, municipalities and political subdivisions | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ 0 | $ 0 |
Fair value - less than twelve months | $ 13 | $ 39 |
Fair value as percentage of cost - Less than twelve months | 100.00% | 100.00% |
Unrealized Loss - Twelve months or more | $ 0 | $ 0 |
Fair Value - Twelve months or more | $ 15 | $ 10 |
Fair value as percentage of cost - Twelve months or more | 100.00% | 100.00% |
Foreign government | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ (1) | $ 0 |
Fair value - less than twelve months | $ 48 | $ 7 |
Fair value as percentage of cost - Less than twelve months | 98.00% | 100.00% |
Unrealized Loss - Twelve months or more | $ 0 | $ 0 |
Fair Value - Twelve months or more | $ 0 | $ 0 |
Fair value as percentage of cost - Twelve months or more | 0.00% | 0.00% |
Residential MBS | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ 0 | $ (1) |
Fair value - less than twelve months | $ 54 | $ 86 |
Fair value as percentage of cost - Less than twelve months | 100.00% | 99.00% |
Unrealized Loss - Twelve months or more | $ (1) | $ 0 |
Fair Value - Twelve months or more | $ 8 | $ 7 |
Fair value as percentage of cost - Twelve months or more | 89.00% | 100.00% |
Commercial MBS | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ 0 | $ 0 |
Fair value - less than twelve months | $ 0 | $ 7 |
Fair value as percentage of cost - Less than twelve months | 0.00% | 100.00% |
Unrealized Loss - Twelve months or more | $ 0 | $ 0 |
Fair Value - Twelve months or more | $ 0 | $ 5 |
Fair value as percentage of cost - Twelve months or more | 0.00% | 100.00% |
Collateralized loan obligations | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ (1) | $ (1) |
Fair value - less than twelve months | $ 687 | $ 192 |
Fair value as percentage of cost - Less than twelve months | 100.00% | 99.00% |
Unrealized Loss - Twelve months or more | $ (1) | $ (3) |
Fair Value - Twelve months or more | $ 168 | $ 366 |
Fair value as percentage of cost - Twelve months or more | 99.00% | 99.00% |
Other asset-backed securities | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ (2) | $ (10) |
Fair value - less than twelve months | $ 662 | $ 465 |
Fair value as percentage of cost - Less than twelve months | 100.00% | 98.00% |
Unrealized Loss - Twelve months or more | $ (3) | $ (3) |
Fair Value - Twelve months or more | $ 76 | $ 92 |
Fair value as percentage of cost - Twelve months or more | 96.00% | 97.00% |
Corporate and other | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ (3) | $ (2) |
Fair value - less than twelve months | $ 278 | $ 133 |
Fair value as percentage of cost - Less than twelve months | 99.00% | 99.00% |
Unrealized Loss - Twelve months or more | $ (1) | $ (1) |
Fair Value - Twelve months or more | $ 31 | $ 17 |
Fair value as percentage of cost - Twelve months or more | 97.00% | 94.00% |
Investments - Allowance for cre
Investments - Allowance for credit losses on fixed maturities (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Jan. 01, 2020 | |
Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | $ 9 | $ 14 | $ 12 | $ 0 | |
Impact of adoption of new accounting policy | 9 | 14 | 9 | 14 | |
Initial allowance for purchased securities with credit deterioration | 0 | 0 | 0 | 0 | |
Provision for expected credit losses on securities with no previous allowance | 0 | 0 | 0 | 16 | |
Additions (reductions) to previously recognized expected credit losses | 0 | 0 | (1) | (2) | |
Reductions due to sales or redemptions | 0 | 0 | (2) | 0 | |
Ending balance | 9 | 14 | 9 | 14 | |
Structured securities | |||||
Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | 8 | 11 | 10 | 0 | |
Impact of adoption of new accounting policy | 8 | 11 | 8 | 11 | $ 0 |
Initial allowance for purchased securities with credit deterioration | 0 | 0 | 0 | 0 | |
Provision for expected credit losses on securities with no previous allowance | 0 | 0 | 0 | 12 | |
Additions (reductions) to previously recognized expected credit losses | 0 | 0 | (2) | (1) | |
Reductions due to sales or redemptions | 0 | 0 | 0 | 0 | |
Ending balance | 8 | 11 | 8 | 11 | |
Corporate and other | |||||
Allowance for Credit Losses [Roll Forward] | |||||
Beginning balance | 1 | 3 | 2 | 0 | |
Impact of adoption of new accounting policy | 1 | 3 | 1 | 3 | 0 |
Initial allowance for purchased securities with credit deterioration | 0 | 0 | 0 | 0 | |
Provision for expected credit losses on securities with no previous allowance | 0 | 0 | 0 | 4 | |
Additions (reductions) to previously recognized expected credit losses | 0 | 0 | 1 | (1) | |
Reductions due to sales or redemptions | 0 | 0 | (2) | 0 | |
Ending balance | $ 1 | $ 3 | $ 1 | $ 3 | |
Accounting Standards Update 2016-13 | |||||
Allowance for Credit Losses [Roll Forward] | |||||
Impact of adoption of new accounting policy | $ 0 |
Investments - Scheduled maturit
Investments - Scheduled maturities of available for sale fixed maturities (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Fair Value, Fiscal Year Maturity [Abstract] | ||
Fair Value | $ 10,427 | $ 9,084 |
Fair Value Percent, Fiscal Year Maturity [Abstract] | ||
Average life of ABS | 3 years | |
Average life of MBS | 3 years | |
Fixed maturities | ||
Amortized Cost Basis, Fiscal Year Maturity [Abstract] | ||
One year or less | $ 1,182 | |
After one year through five years | 2,571 | |
After five years through ten years | 901 | |
After ten years | 284 | |
Fixed maturities amortized cost, Subtotal | 4,938 | |
Collateralized loan obligations and other ABS (average life of approximately 3 years) | 4,450 | |
MBS (average life of approximately 3 years) | 814 | |
Amortized Cost | 10,202 | |
Fair Value, Fiscal Year Maturity [Abstract] | ||
One year or less | 1,194 | |
After one year through five years | 2,662 | |
After five years through ten years | 939 | |
After ten years | 292 | |
Fixed maturities fair value, Subtotal | 5,087 | |
Collateralized loan obligations and other ABS (average life of approximately 3 years) | 4,473 | |
MBS (average life of approximately 3 years) | 867 | |
Fair Value | $ 10,427 | $ 9,084 |
Fair Value Percent, Fiscal Year Maturity [Abstract] | ||
One year or less | 11.00% | |
After one year through five years | 26.00% | |
After five years through ten years | 9.00% | |
After ten years | 3.00% | |
Fixed maturities fair value, Subtotal, Percent | 49.00% | |
Collateralized loan obligations and other ABS (average life of approximately 3 years) | 43.00% | |
MBS (average life of approximately 3 years) | 8.00% | |
Fair value, Total, Percent | 100.00% |
Investments - Components of the
Investments - Components of the net unrealized gain on securities that is included in AOCI in the Balance Sheet (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Unrealized gain on: | ||
Pretax | $ 1,589 | |
Deferred Tax | (334) | |
Net | 1,255 | |
Annuity subsidiaries | Net earnings (loss) from discontinued operations | ||
Unrealized gain on: | ||
Pretax | 1,305 | |
Deferred Tax | (274) | |
Net | 1,031 | |
Total fixed maturities | ||
Unrealized gain on: | ||
Pretax | $ 225 | 284 |
Deferred Tax | (47) | (60) |
Net | $ 178 | 224 |
Fixed maturities — annuity segment | Annuity subsidiaries | Net earnings (loss) from discontinued operations | ||
Unrealized gain on: | ||
Pretax | 2,555 | |
Deferred Tax | (536) | |
Net | 2,019 | |
Deferred policy acquisition costs — annuity segment | Annuity subsidiaries | Net earnings (loss) from discontinued operations | ||
Unrealized gain on: | ||
Pretax | (934) | |
Deferred Tax | 196 | |
Net | (738) | |
Annuity benefits accumulated | Annuity subsidiaries | Net earnings (loss) from discontinued operations | ||
Unrealized gain on: | ||
Pretax | (324) | |
Deferred Tax | 68 | |
Net | (256) | |
Life, accident and health reserves | Annuity subsidiaries | Net earnings (loss) from discontinued operations | ||
Unrealized gain on: | ||
Pretax | (3) | |
Deferred Tax | 0 | |
Net | (3) | |
Unearned revenue | Annuity subsidiaries | Net earnings (loss) from discontinued operations | ||
Unrealized gain on: | ||
Pretax | 11 | |
Deferred Tax | (2) | |
Net | $ 9 |
Investments - Schedule of sourc
Investments - Schedule of sources of net investment income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Net Investment Income [Line Items] | ||||
Investment income | $ 173 | $ 124 | $ 529 | $ 319 |
Equity in earnings of partnerships and similar investments | 73 | 36 | 222 | 53 |
Investment expenses | (4) | (2) | (8) | (5) |
Net investment income | 169 | 122 | 521 | 314 |
Investment income | ||||
Net Investment Income [Line Items] | ||||
Change in fair value of equity securities | 7 | (2) | 41 | (10) |
Fixed maturities | ||||
Net Investment Income [Line Items] | ||||
Investment income | 73 | 73 | 217 | 232 |
Other | ||||
Net Investment Income [Line Items] | ||||
Investment income | 14 | 8 | 28 | 17 |
Investment income | Equity securities | ||||
Net Investment Income [Line Items] | ||||
Investment income | $ 6 | $ 9 | $ 21 | $ 27 |
Investments - Realized gains (l
Investments - Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized gains (losses) on securities | $ (17) | $ 23 | $ 103 | $ (197) |
Net of tax | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | (12) | 18 | 82 | (145) |
Realized — impairments | 0 | 0 | 1 | (11) |
Realized gains (losses) on securities | (12) | 18 | 83 | (156) |
Change in unrealized | (27) | 47 | (46) | 31 |
Total pretax | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | (17) | 23 | 102 | (183) |
Realized — impairments | 0 | 0 | 1 | (14) |
Realized gains (losses) on securities | (17) | 23 | 103 | (197) |
Change in unrealized | (35) | 59 | (59) | 39 |
Fixed maturities | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | (2) | 1 | (2) | 5 |
Realized — impairments | 0 | 0 | 1 | (14) |
Realized gains (losses) on securities | (2) | 1 | (1) | (9) |
Change in unrealized | (35) | 59 | (59) | 39 |
Equity securities | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | (15) | 22 | 104 | (189) |
Realized — impairments | 0 | 0 | 0 | 0 |
Realized gains (losses) on securities | (15) | 22 | 104 | (189) |
Change in unrealized | 0 | 0 | 0 | 0 |
Mortgage loans and other investments | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | 0 | 0 | 0 | 1 |
Realized — impairments | 0 | 0 | 0 | 0 |
Realized gains (losses) on securities | 0 | 0 | 0 | 1 |
Change in unrealized | 0 | 0 | 0 | 0 |
Tax effects | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | 5 | (5) | (20) | 38 |
Realized — impairments | 0 | 0 | 0 | 3 |
Realized gains (losses) on securities | 5 | (5) | (20) | 41 |
Change in unrealized | $ 8 | $ (12) | $ 13 | $ (8) |
Investments - Holding gains (lo
Investments - Holding gains (losses) on equity securities still held (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Holding Gains (Losses) on Equity Securities Still Held [Line Items] | ||||
Holding gains (losses) on equity securities still held | $ (9) | $ 16 | $ 123 | $ (176) |
Realized gains (losses) on securities | ||||
Holding Gains (Losses) on Equity Securities Still Held [Line Items] | ||||
Holding gains (losses) on equity securities still held | (16) | 17 | 82 | (174) |
Investment income | ||||
Holding Gains (Losses) on Equity Securities Still Held [Line Items] | ||||
Holding gains (losses) on equity securities still held | $ 7 | $ (1) | $ 41 | $ (2) |
Investments - Gross realized ga
Investments - Gross realized gains and losses on available for sale fixed maturity investment transactions (Details) - Fixed maturities - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Gross realized gains and losses on the sale of available for sale fixed maturity and equity security investments | ||
Gross gains | $ 4 | $ 8 |
Gross losses | $ (2) | $ (4) |
Managed Investment Entities - N
Managed Investment Entities - Narrative (Details) $ in Millions | 9 Months Ended | ||
Sep. 30, 2021USD ($)collateralizedloanobligation | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
Variable Interest Entity [Line Items] | |||
Percentage of investment of most subordinate debt tranche, Minimum | 4.50% | ||
Percentage of investment of most subordinate debt tranche, Maximum | 46.80% | ||
Number of collateralized loan obligation entities | collateralizedloanobligation | 12 | ||
Face amount of managed investment entities liabilities purchased by subsidiaries after issuance date | $ 57 | ||
Amount paid by subsidiaries to purchase managed investment entities liabilities after issuance date | 39 | ||
Proceeds received by subsidiaries related to sales and redemptions of managed investment entities liabilities | $ 41 | ||
Difference between aggregate unpaid principal balance and fair value of CLOs' fixed maturity investments | 63 | $ 150 | |
Difference between aggregate unpaid principal balance and carrying value of CLOs' debt | 174 | 141 | |
Carrying amount of CLO loans in default | 5 | 11 | |
Aggregate unpaid principal balance of variable interest entity loans in default | 15 | 28 | |
Available for sale (AFS) fixed maturities | 10,427 | 9,084 | |
Maximum | |||
Variable Interest Entity [Line Items] | |||
Proceeds received by subsidiaries related to sales and redemptions of managed investment entities liabilities | 1 | ||
Collateralized loan obligations | |||
Variable Interest Entity [Line Items] | |||
Available for sale (AFS) fixed maturities | 1,829 | 1,062 | |
Collateralized loan obligations | Managed by third parties | |||
Variable Interest Entity [Line Items] | |||
Available for sale (AFS) fixed maturities | 1,830 | 1,060 | |
Variable interest entity, primary beneficiary | |||
Variable Interest Entity [Line Items] | |||
Aggregate fair value of investment in collateralized loan obligations | 96 | 176 | 200 |
Variable interest entity, primary beneficiary | Annuity subsidiaries | Net earnings (loss) from discontinued operations | |||
Variable Interest Entity [Line Items] | |||
Aggregate fair value of investment in collateralized loan obligations | 0 | $ 129 | $ 143 |
Variable interest entity, primary beneficiary | Subordinated Debt Obligations | |||
Variable Interest Entity [Line Items] | |||
Aggregate fair value of investment in collateralized loan obligations | $ 86 |
Managed Investment Entities - S
Managed Investment Entities - Selected financial information related to CLOs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Gains (losses) on change in fair value of assets/liabilities: | |||||
Assets | $ 10 | $ 132 | $ 77 | $ (184) | |
Liabilities | (9) | (137) | (68) | 163 | |
Management fees paid to AFG | 4 | 3 | 12 | 11 | |
CLO earnings (losses) attributable to AFG shareholders | 5 | 13 | 37 | (21) | |
Variable interest entity, primary beneficiary | |||||
Variable Interest Entity [Line Items] | |||||
Investment in CLO tranches | 96 | 176 | 96 | 176 | $ 200 |
Variable interest entity, primary beneficiary | Continuing operations | |||||
Variable Interest Entity [Line Items] | |||||
Investment in CLO tranches | 96 | 47 | 96 | 47 | |
Gains (losses) on change in fair value of assets/liabilities: | |||||
CLO earnings (losses) attributable to AFG shareholders | 5 | 4 | 17 | (7) | |
Variable interest entity, primary beneficiary | Net earnings (loss) from discontinued operations | Annuity subsidiaries | |||||
Variable Interest Entity [Line Items] | |||||
Investment in CLO tranches | 0 | 129 | 0 | 129 | $ 143 |
Gains (losses) on change in fair value of assets/liabilities: | |||||
CLO earnings (losses) attributable to AFG shareholders | $ 0 | $ 9 | $ 20 | $ (14) |
Goodwill and Other Intangibles
Goodwill and Other Intangibles - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Changes in the goodwill balance during the period | $ 0 | ||||
Goodwill | $ 176,000,000 | 176,000,000 | $ 176,000,000 | ||
Amortizable intangible assets related to property and casualty insurance acquisitions | 29,000,000 | 29,000,000 | 34,000,000 | ||
Accumulated amortization | 66,000,000 | 66,000,000 | $ 62,000,000 | ||
Amortization of intangible assets | $ 1,000,000 | $ 3,000,000 | $ 5,000,000 | $ 9,000,000 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
Scheduled principal payments on debt remainder of fiscal year | $ 0 | |
Scheduled principal payments on debt in year one | 0 | |
Scheduled principal payments on debt in year two | 0 | |
Scheduled principal payments on debt in year three | 0 | |
Scheduled principal payments on debt in year four | 0 | |
Scheduled principal payments on debt in year five | 425,000,000 | |
Scheduled principal payments on debt thereafter | 1,570,000,000 | |
AFG | ||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
Revolving credit line | $ 500,000,000 | |
Interest rate description for revolving credit facility | 1.00% to 1.875% (currently 1.375%) over LIBOR | |
Amount borrowed under revolving credit facility | $ 0 | $ 0 |
LIBOR | AFG | ||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
Interest rate on revolving debt facility | 1.375% | |
LIBOR | AFG | Minimum | ||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
Interest rate on revolving debt facility | 1.00% | |
LIBOR | AFG | Maximum | ||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
Interest rate on revolving debt facility | 1.875% |
Long-Term Debt - Schedule of lo
Long-Term Debt - Schedule of long-term debt (Details) - USD ($) $ in Millions | Sep. 30, 2021 | Dec. 31, 2020 |
Summary of Carrying value of long-term debt | ||
Principal | $ 1,993 | $ 1,993 |
Discount and Issue Costs | (29) | (30) |
Carrying Value | 1,964 | 1,963 |
Senior Notes | AFG | ||
Summary of Carrying value of long-term debt | ||
Principal | 1,318 | 1,318 |
Discount and Issue Costs | (10) | (11) |
Carrying Value | $ 1,308 | 1,307 |
Senior Notes | 4.50% Senior Notes due June 2047 | AFG | ||
Debt Instrument [Line Items] | ||
Interest rate on debt instruments | 4.50% | |
Summary of Carrying value of long-term debt | ||
Principal | $ 590 | 590 |
Discount and Issue Costs | (2) | (2) |
Carrying Value | $ 588 | 588 |
Senior Notes | 3.50% Senior Notes due August 2026 | AFG | ||
Debt Instrument [Line Items] | ||
Interest rate on debt instruments | 3.50% | |
Summary of Carrying value of long-term debt | ||
Principal | $ 425 | 425 |
Discount and Issue Costs | (3) | (3) |
Carrying Value | $ 422 | 422 |
Senior Notes | 5.25% Senior Notes due April 2030 | AFG | ||
Debt Instrument [Line Items] | ||
Interest rate on debt instruments | 5.25% | |
Summary of Carrying value of long-term debt | ||
Principal | $ 300 | 300 |
Discount and Issue Costs | (5) | (6) |
Carrying Value | 295 | 294 |
Senior Notes | Other | AFG | ||
Summary of Carrying value of long-term debt | ||
Principal | 3 | 3 |
Discount and Issue Costs | 0 | 0 |
Carrying Value | 3 | 3 |
Subordinated Debentures | AFG | ||
Summary of Carrying value of long-term debt | ||
Principal | 675 | 675 |
Discount and Issue Costs | (19) | (19) |
Carrying Value | $ 656 | 656 |
Subordinated Debentures | 4.50% Subordinated Debentures due September 2060 | AFG | ||
Debt Instrument [Line Items] | ||
Interest rate on debt instruments | 4.50% | |
Summary of Carrying value of long-term debt | ||
Principal | $ 200 | 200 |
Discount and Issue Costs | (5) | (5) |
Carrying Value | $ 195 | 195 |
Subordinated Debentures | 5.125% Subordinated Debentures due December 2059 | AFG | ||
Debt Instrument [Line Items] | ||
Interest rate on debt instruments | 5.125% | |
Summary of Carrying value of long-term debt | ||
Principal | $ 200 | 200 |
Discount and Issue Costs | (6) | (6) |
Carrying Value | $ 194 | 194 |
Subordinated Debentures | 5.625% Subordinated Debentures due June 2060 | AFG | ||
Debt Instrument [Line Items] | ||
Interest rate on debt instruments | 5.625% | |
Summary of Carrying value of long-term debt | ||
Principal | $ 150 | 150 |
Discount and Issue Costs | (4) | (4) |
Carrying Value | $ 146 | 146 |
Subordinated Debentures | 5.875% Subordinated Debentures due March 2059 | AFG | ||
Debt Instrument [Line Items] | ||
Interest rate on debt instruments | 5.875% | |
Summary of Carrying value of long-term debt | ||
Principal | $ 125 | 125 |
Discount and Issue Costs | (4) | (4) |
Carrying Value | $ 121 | $ 121 |
Shareholders' Equity - Preferre
Shareholders' Equity - Preferred stock authorized for issuance (Details) | Sep. 30, 2021$ / sharesshares |
Voting Preferred Stock | |
Class of Stock [Line Items] | |
Preferred Stock, shares authorized | shares | 12,500,000 |
Preferred Stock, par value (in USD per share) | $ / shares | $ 0 |
Nonvoting Preferred Stock | |
Class of Stock [Line Items] | |
Preferred Stock, shares authorized | shares | 12,500,000 |
Preferred Stock, par value (in USD per share) | $ / shares | $ 0 |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense related to stock incentive plans | $ 4 | $ 5 | $ 11 | $ 15 |
Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted Common Stock, shares issued (shares) | 207,020 | |||
Restricted Common Stock, fair value per share (USD per share) | $ 111.13 |
Shareholders' Equity - Progress
Shareholders' Equity - Progression of the components of accumulated other comprehensive income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | $ 1,273 | |||
Other comprehensive income (loss), pretax | $ (38) | $ 223 | (1,409) | $ 468 |
Other comprehensive income (loss), tax | 8 | (47) | 296 | (100) |
Other comprehensive income (loss), net of tax | (30) | 176 | (1,113) | 368 |
Accumulated other comprehensive income, net of tax | 160 | 160 | ||
AOCI ending balance | 160 | 160 | ||
Net unrealized gains (losses) on securities: | ||||
Unrealized holding gains (losses) on securities arising during the period, pretax | (37) | 245 | (224) | 443 |
Unrealized holding gains (losses) on securities arising during the period, tax | 8 | (51) | 47 | (93) |
Unrealized holding gains (losses) on securities arising during the period, after tax | 29 | (194) | 177 | (350) |
Reclassification adjustment for realized (gains) losses included in net earnings, pretax | 2 | (15) | (21) | 0 |
Reclassification adjustment for realized (gains) losses included in net earnings, tax | 0 | 3 | 5 | 0 |
Reclassification adjustment for realized (gains) losses included in net earnings, after tax | 2 | (12) | (16) | 0 |
Reclassification adjustment for unrealized gains (losses) on securities of subsidiaries sold, pretax | (1,119) | |||
Reclassification adjustment for unrealized gains (losses) on securities of subsidiaries sold, tax | 235 | |||
Reclassification adjustment for unrealized gains (losses) on securities of subsidiaries sold, after tax | 0 | 0 | (884) | 0 |
Total net unrealized gains (losses) on securities, pretax | (35) | 230 | (1,364) | 443 |
Total net unrealized gains (losses) on securities, tax | 8 | (48) | 287 | (93) |
Total net unrealized gains (losses) on securities | (27) | 182 | (1,077) | 350 |
Reclassification of Cash Flow Hedge Gain (Loss) [Abstract] | ||||
Unrealized holding gains (losses) on cash flow hedges arising during the period, pretax | 1 | (1) | 62 | |
Unrealized holding gains (losses) on cash flow hedges arising during the period, tax | 0 | 0 | (13) | |
Unrealized holding gains (losses) on cash flow hedges arising during the period, after tax | 0 | 1 | (1) | 49 |
Reclassification adjustment for investment income included in net earnings from discontinued operations, pretax | (8) | (14) | (31) | |
Reclassification adjustment for investment income included in net earnings from discontinued operations, tax | 1 | 3 | 6 | |
Reclassification adjustment for investment income included in net earnings from discontinued operations, after tax | 0 | (7) | (11) | (25) |
Reclassification for unrealized gains on cash flow hedges of subsidiaries sold, pretax | (37) | |||
Reclassification for unrealized gains on cash flow hedges of subsidiaries sold, tax | 8 | |||
Reclassification for unrealized gains on cash flow hedges of subsidiaries sold, after tax | 0 | 0 | (29) | 0 |
Total net unrealized gains (losses) on cash flow hedges, pretax | (7) | (52) | 31 | |
Total net unrealized gains (losses) on cash flow hedges, tax | 1 | 11 | (7) | |
Total net unrealized gains (losses) on cash flow hedges | 0 | (6) | (41) | 24 |
Foreign currency translation adjustments, pretax | (3) | 0 | (3) | (6) |
Foreign currency translation adjustments, tax | 0 | 0 | 0 | 0 |
Foreign currency translation adjustments | (3) | 0 | (3) | (6) |
Other Comprehensive (Income) Loss, Defined Benefit Plan, before Tax, after Reclassification Adjustment, Attributable to Parent [Abstract] | ||||
Unrealized holding gains (losses) on pension and OPRP arising during the period, pretax | (1) | |||
Unrealized holding gains (losses) on pension and OPRP arising during the period, tax | 0 | |||
Unrealized holding gains (losses) on pension and OPRP arising during the period, after tax | 0 | 0 | (1) | 0 |
Reclassification adjustment for pension settlement loss included in other expense in net earnings, pretax | 11 | |||
Reclassification adjustment for pension settlement loss included in other expense in net earnings, tax | (2) | |||
Reclassification adjustment for pension settlement loss included in net earnings | 0 | 0 | 9 | 0 |
Total pension and OPRP adjustments, pretax | 0 | 0 | 10 | 0 |
Total pension and OPRP adjustments, tax | 0 | 0 | (2) | 0 |
Total pension and OPRP adjustments | 0 | 0 | 8 | 0 |
Attributable to noncontrolling interests | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive income (loss), net of tax | 0 | 0 | 0 | (2) |
Net unrealized gains (losses) on securities: | ||||
Unrealized holding gains (losses) on securities arising during the period, after tax | 0 | 0 | 0 | 0 |
Reclassification adjustment for realized (gains) losses included in net earnings, after tax | 0 | 0 | 0 | 0 |
Reclassification adjustment for unrealized gains (losses) on securities of subsidiaries sold, after tax | 0 | |||
Total net unrealized gains (losses) on securities | 0 | 0 | 0 | 0 |
Reclassification of Cash Flow Hedge Gain (Loss) [Abstract] | ||||
Unrealized holding gains (losses) on cash flow hedges arising during the period, after tax | 0 | 0 | 0 | |
Reclassification adjustment for investment income included in net earnings from discontinued operations, after tax | 0 | 0 | 0 | |
Reclassification for unrealized gains on cash flow hedges of subsidiaries sold, after tax | 0 | |||
Total net unrealized gains (losses) on cash flow hedges | 0 | 0 | 0 | |
Foreign currency translation adjustments | 0 | 0 | 0 | (2) |
Other Comprehensive (Income) Loss, Defined Benefit Plan, before Tax, after Reclassification Adjustment, Attributable to Parent [Abstract] | ||||
Unrealized holding gains (losses) on pension and OPRP arising during the period, after tax | 0 | |||
Reclassification adjustment for pension settlement loss included in net earnings | 0 | |||
Total pension and OPRP adjustments | 0 | 0 | 0 | 0 |
Attributable to shareholders | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive income (loss), net of tax | (30) | 176 | (1,113) | 366 |
Net unrealized gains (losses) on securities: | ||||
Unrealized holding gains (losses) on securities arising during the period, after tax | 29 | (194) | 177 | (350) |
Reclassification adjustment for realized (gains) losses included in net earnings, after tax | 2 | (12) | (16) | 0 |
Reclassification adjustment for unrealized gains (losses) on securities of subsidiaries sold, after tax | (884) | |||
Total net unrealized gains (losses) on securities | (27) | 182 | (1,077) | 350 |
Reclassification of Cash Flow Hedge Gain (Loss) [Abstract] | ||||
Unrealized holding gains (losses) on cash flow hedges arising during the period, after tax | 1 | (1) | 49 | |
Reclassification adjustment for investment income included in net earnings from discontinued operations, after tax | (7) | (11) | (25) | |
Reclassification for unrealized gains on cash flow hedges of subsidiaries sold, after tax | (29) | |||
Total net unrealized gains (losses) on cash flow hedges | (6) | (41) | 24 | |
Foreign currency translation adjustments | (3) | 0 | (3) | (8) |
Other Comprehensive (Income) Loss, Defined Benefit Plan, before Tax, after Reclassification Adjustment, Attributable to Parent [Abstract] | ||||
Unrealized holding gains (losses) on pension and OPRP arising during the period, after tax | (1) | |||
Reclassification adjustment for pension settlement loss included in net earnings | 9 | |||
Total pension and OPRP adjustments | 0 | 0 | 8 | 0 |
Accumulated net investment gain (loss) attributable to parent | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | 205 | 1,030 | 1,255 | 862 |
Accumulated other comprehensive income, net of tax | 178 | 1,212 | 178 | 1,212 |
AOCI ending balance | 178 | 1,212 | 178 | 1,212 |
Accumulated gain (loss), net, cash flow hedge, parent | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | 47 | 41 | 17 | |
Accumulated other comprehensive income, net of tax | 0 | 41 | 0 | 41 |
AOCI ending balance | 0 | 41 | 0 | 41 |
Accumulated foreign currency adjustment attributable to parent | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | (16) | (17) | (16) | (9) |
Accumulated other comprehensive income, net of tax | (19) | (13) | (19) | (13) |
AOCI ending balance | (19) | (13) | (19) | (13) |
Accumulated foreign currency adjustment attributable to parent | Neon Capital Limited | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Accumulated other comprehensive income, net of tax | 4 | 4 | ||
AOCI ending balance | 4 | 4 | ||
Accumulated defined benefit plans adjustment attributable to parent | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | 1 | (7) | (7) | (7) |
Accumulated other comprehensive income, net of tax | 1 | (7) | 1 | (7) |
AOCI ending balance | 1 | (7) | 1 | (7) |
AOCI attributable to parent | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | 190 | 1,053 | 1,273 | 863 |
Accumulated other comprehensive income, net of tax | 160 | 1,233 | 160 | 1,233 |
AOCI ending balance | $ 160 | 1,233 | $ 160 | 1,233 |
AOCI attributable to parent | Neon Capital Limited | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Accumulated other comprehensive income, net of tax | 4 | 4 | ||
AOCI ending balance | $ 4 | $ 4 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Operating Loss Carryforwards [Line Items] | ||||
Statutory rate of income taxes | 21.00% | 21.00% | 21.00% | 21.00% |
Provision (credit) for income taxes | $ 48 | $ (48) | $ 164 | $ (52) |
Separate Return Limitation Year Tax Rules | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards subject to SRLY tax rules will expire unutilized at December 31, 2021 | $ 27 | $ 27 | ||
Neon Capital Limited | ||||
Operating Loss Carryforwards [Line Items] | ||||
Provision (credit) for income taxes | $ 73 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of income taxes at the statutory rate to the provision for income taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | ||||
Earnings (loss) from continuing operations before income taxes (“EBT”) | $ 267 | $ 40 | $ 890 | $ (5) |
Income taxes at statutory rate | 56 | 8 | 187 | (1) |
Effect of a sale of subsidiaries | 0 | (73) | 0 | (73) |
Effect of stock-based compensation | (2) | 0 | (12) | (3) |
Effect of ESOP dividend paid deduction | (2) | (1) | (10) | (1) |
Effect of tax exempt interest | (2) | (2) | (6) | (7) |
Effect of dividends received deduction | 0 | (1) | (1) | (2) |
Effect of foreign operations | 2 | (4) | 0 | (3) |
Effect of prior year income taxes | (1) | 1 | (1) | 1 |
Effect of nondeductible expenses | 2 | 1 | 6 | 3 |
Effect of change in valuation allowance | (2) | 20 | 1 | 31 |
Effect of other income | (3) | 3 | 0 | 3 |
Provision for income taxes as shown on the Statement of Earnings | $ 48 | $ (48) | $ 164 | $ (52) |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||||
Income taxes at statutory rate as a percentage of EBT | 21.00% | 21.00% | 21.00% | 21.00% |
Effect of sale of subsidiaries as a percentage of EBT | 0.00% | (183.00%) | 0.00% | 1460.00% |
Effect of stock-based compensation as a percentage of EBT | (1.00%) | 0.00% | (1.00%) | 60.00% |
Effect of ESOP dividend paid deduction as a percentage of EBT | (1.00%) | (3.00%) | (1.00%) | 20.00% |
Effect of tax exempt interest as a percentage of EBT | (1.00%) | (5.00%) | (1.00%) | 140.00% |
Effect of dividends received deduction as a percentage of EBT | 0.00% | (3.00%) | 0.00% | 40.00% |
Effect of foreign operations as a percentage of EBT | 1.00% | (10.00%) | 0.00% | 60.00% |
Effect of prior year income taxes as a percentage of EBT | 0.00% | 3.00% | 0.00% | (20.00%) |
Effect of nondeductible expenses as a percentage of EBT | 1.00% | 3.00% | 1.00% | (60.00%) |
Effect of change in valuation allowance as a percentage of EBT | (1.00%) | 50.00% | 0.00% | (620.00%) |
Effect of other income tax reconciliation as a percentage of EBT | (1.00%) | 7.00% | (1.00%) | (61.00%) |
Provision for income taxes as shown on the Statement of Earnings as a percentage of EBT | 18.00% | (120.00%) | 18.00% | 1040.00% |
Insurance - Narrative (Details)
Insurance - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Property and Casualty Insurance | Other lines | ||
Insurance [Line Items] | ||
Special A&E charges | $ 0 | $ 47 |
Insurance - Analysis of changes
Insurance - Analysis of changes in the liability for losses and loss adjustment expenses, net of reinsurance (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Analysis of changes in the liability for losses and loss adjustment expenses, net of reinsurance | ||
Balance at beginning of year | $ 10,392 | $ 10,232 |
Less reinsurance recoverables, net of allowance | 3,117 | 3,024 |
Net liability at beginning of year | 7,275 | 7,208 |
Liability for losses and loss adjustment expenses, period increase (decrease) [Abstract] | ||
Provision for losses and LAE occurring in the current period | 2,543 | 2,560 |
Net increase (decrease) in the provision for claims of prior years | (208) | (166) |
Total losses and LAE incurred | 2,335 | 2,441 |
Payments for losses and LAE of: | ||
Current year | (589) | (592) |
Prior years | (1,430) | (1,406) |
Total payments | (2,019) | (1,998) |
Foreign currency translation and other | 0 | (11) |
Net liability at end of period | 7,591 | 7,640 |
Add back reinsurance recoverables, net of allowance | 3,400 | 3,114 |
Gross unpaid losses and LAE included in the balance sheet at end of period | 10,991 | 10,754 |
Property and Casualty Insurance | Other lines | ||
Liability for losses and loss adjustment expenses, period increase (decrease) [Abstract] | ||
Special A&E charges | $ 0 | $ 47 |
Insurance - Recoverables from r
Insurance - Recoverables from reinsurance, progression of allowance for expected credit losses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Jan. 01, 2020 | |
Reinsurance Recoverable, Allowance for Credit Loss [Roll Forward] | |||||
Beginning Balance | $ 8 | $ 7 | $ 6 | $ 18 | |
Impact of adoption of new accounting principles | (8) | (7) | (8) | (7) | $ (11) |
Provision (credit) for expected credit losses | 0 | 0 | 2 | 0 | |
Write-offs charged against the allowance | 0 | 0 | 0 | 0 | |
Ending Balance | $ 8 | $ 7 | $ 8 | $ 7 |
Insurance - Premiums receivable
Insurance - Premiums receivable, progression of allowance for expected credit losses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Jan. 01, 2020 | |
Premium Receivable, Allowance for Credit Loss [Roll Forward] | |||||
Beginning Balance | $ 9 | $ 10 | $ 10 | $ 13 | |
Impact of adoption of new accounting principles | (10) | (11) | (10) | (11) | $ (3) |
Provision (credit) for expected credit losses | 1 | 1 | 0 | 1 | |
Write-offs charged against the allowance | 0 | 0 | 0 | 0 | |
Ending Balance | $ 10 | $ 11 | $ 10 | $ 11 |