Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 01, 2023 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
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 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 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 84,863,650 | |
Entity Central Index Key | 0001042046 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Common Stock | ||
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 | Jun. 30, 2023 | Dec. 31, 2022 |
Assets: | ||
Cash and cash equivalents | $ 988 | $ 872 |
Investments: | ||
Fixed maturities, available for sale at fair value (amortized cost — $10,488 and $10,736; allowance for expected credit losses of $16 and $11) | 9,885 | 10,095 |
Fixed maturities, trading at fair value | 38 | 32 |
Equity securities, at fair value | 1,048 | 1,010 |
Investments accounted for using the equity method | 1,756 | 1,700 |
Mortgage loans | 645 | 676 |
Real estate and other investments | 129 | 127 |
Total cash and investments | 14,489 | 14,512 |
Recoverables from reinsurers | 3,852 | 3,977 |
Prepaid reinsurance premiums | 1,112 | 917 |
Agents’ balances and premiums receivable | 1,796 | 1,339 |
Deferred policy acquisition costs | 316 | 288 |
Other receivables | 721 | 886 |
Other assets | 1,281 | 1,219 |
Goodwill | 246 | 246 |
Total assets | 29,048 | 28,831 |
Liabilities and Equity: | ||
Unpaid losses and loss adjustment expenses | 11,925 | 11,974 |
Unearned premiums | 3,686 | 3,246 |
Payable to reinsurers | 1,038 | 1,035 |
Long-term debt | 1,474 | 1,496 |
Other liabilities | 1,834 | 1,696 |
Total liabilities | 25,055 | 24,779 |
Shareholders’ equity: | ||
Common Stock, no par value — 200,000,000 shares authorized — 84,858,528 and 85,204,006 shares outstanding | 85 | 85 |
Capital surplus | 1,377 | 1,368 |
Retained earnings | 3,042 | 3,142 |
Accumulated other comprehensive income (loss), net of tax | (511) | (543) |
Total shareholders’ equity | 3,993 | 4,052 |
Total liabilities and shareholders’ equity | 29,048 | 28,831 |
Variable interest entity, primary beneficiary | ||
Investments: | ||
Total assets | 5,235 | 5,447 |
Liabilities and Equity: | ||
Total liabilities | $ 5,098 | $ 5,332 |
Consolidated Balance Sheet (U_2
Consolidated Balance Sheet (Unaudited) (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Fixed maturities, available for sale, amortized cost | $ 10,488 | $ 10,736 |
Fixed maturities, available for sale, allowance for expected credit losses | $ 16 | $ 11 |
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) | 84,858,528 | 85,204,006 |
Consolidated Statement of Earni
Consolidated Statement of Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenues: | ||||
Property and casualty insurance net earned premiums | $ 1,507 | $ 1,393 | $ 2,944 | $ 2,695 |
Net investment income | 198 | 168 | 415 | 398 |
Realized gains (losses) on: | ||||
Realized gains (losses) on securities | (2) | (93) | (48) | (108) |
Income of managed investment entities: | ||||
Investment income | 112 | 54 | 216 | 100 |
Gain (loss) on change in fair value of assets/liabilities | 0 | (15) | (4) | (20) |
Other income | 25 | 32 | 57 | 62 |
Total revenues | 1,840 | 1,539 | 3,580 | 3,127 |
Property and casualty insurance: | ||||
Losses and loss adjustment expenses | 905 | 774 | 1,725 | 1,467 |
Commissions and other underwriting expenses | 485 | 432 | 958 | 846 |
Interest charges on borrowed money | 19 | 23 | 38 | 46 |
Expenses of managed investment entities | 103 | 47 | 198 | 86 |
Other expenses | 73 | 57 | 142 | 115 |
Total costs and expenses | 1,585 | 1,333 | 3,061 | 2,560 |
Earnings before income taxes | 255 | 206 | 519 | 567 |
Provision for income taxes | 55 | 39 | 107 | 110 |
Net Earnings | $ 200 | $ 167 | $ 412 | $ 457 |
Earnings per Common Share: | ||||
Basic (USD per share) | $ 2.35 | $ 1.97 | $ 4.84 | $ 5.37 |
Diluted (USD per share) | $ 2.34 | $ 1.96 | $ 4.83 | $ 5.36 |
Average number of Common Shares: | ||||
Basic (shares) | 85.1 | 85.1 | 85.2 | 85.1 |
Diluted (shares) | 85.2 | 85.3 | 85.3 | 85.3 |
Consolidated Statement of Compr
Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 200 | $ 167 | $ 412 | $ 457 |
Net unrealized gains (losses) on securities: | ||||
Unrealized holding gains (losses) on securities arising during the period | (52) | (225) | 9 | (472) |
Reclassification adjustment for realized (gains) losses included in net earnings | 1 | 8 | 24 | 10 |
Total net unrealized gains (losses) on securities | (51) | (217) | 33 | (462) |
Net unrealized gains (losses) on cash flow hedges: | ||||
Unrealized holding gains (losses) on cash flow hedges arising during the period | (17) | (2) | (13) | (6) |
Reclassification adjustment for investment income included in net earnings | 5 | (2) | 9 | (2) |
Total net unrealized gains (losses) on cash flow hedges | (12) | (4) | (4) | (8) |
Foreign currency translation adjustments | 3 | 4 | 3 | 3 |
Other comprehensive income (loss), net of tax | (60) | (217) | 32 | (467) |
Comprehensive income (loss) | $ 140 | $ (50) | $ 444 | $ (10) |
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 Loss |
Beginning Balance (shares) at Dec. 31, 2021 | 84,920,965 | |||||
Beginning Balance at Dec. 31, 2021 | $ 5,012 | $ 1,415 | $ 3,478 | $ 119 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings | $ 457 | 457 | 457 | |||
Other comprehensive loss | (467) | (467) | ||||
Dividends | (945) | (945) | ||||
Shares issued: | ||||||
Exercise of stock options (shares) | 123,945 | |||||
Exercise of stock options | 5 | 5 | ||||
Restricted stock awards (shares) | 151,080 | |||||
Other benefit plans (shares) | 34,951 | |||||
Other benefit plans | 5 | 5 | ||||
Dividend reinvestment plan (shares) | 26,190 | |||||
Dividend reinvestment plan | 3 | 3 | ||||
Stock-based compensation expense | 10 | 10 | ||||
Shares acquired and retired (in shares) | 35,201 | |||||
Shares acquired and retired | (5) | (1) | (4) | |||
Shares exchanged — benefit plans (shares) | (56,309) | |||||
Shares exchanged — benefit plans | (8) | (1) | (7) | |||
Forfeitures of restricted stock (shares) | (11,358) | |||||
Ending Balance (shares) at Jun. 30, 2022 | 85,154,263 | |||||
Ending Balance at Jun. 30, 2022 | 4,067 | 1,436 | 2,979 | (348) | ||
Beginning Balance (shares) at Mar. 31, 2022 | 85,102,829 | |||||
Beginning Balance at Mar. 31, 2022 | 4,835 | 1,425 | 3,541 | (131) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings | $ 167 | 167 | 167 | |||
Other comprehensive loss | (217) | (217) | ||||
Dividends | (728) | (728) | ||||
Shares issued: | ||||||
Exercise of stock options (shares) | 18,541 | |||||
Exercise of stock options | 1 | 1 | ||||
Other benefit plans (shares) | 24,344 | |||||
Other benefit plans | 4 | 4 | ||||
Dividend reinvestment plan (shares) | 19,908 | |||||
Dividend reinvestment plan | 2 | 2 | ||||
Stock-based compensation expense | 4 | 4 | ||||
Shares acquired and retired | 0 | |||||
Shares exchanged — benefit plans (shares) | (8,400) | |||||
Shares exchanged — benefit plans | (1) | (1) | ||||
Forfeitures of restricted stock (shares) | (2,959) | |||||
Ending Balance (shares) at Jun. 30, 2022 | 85,154,263 | |||||
Ending Balance at Jun. 30, 2022 | 4,067 | 1,436 | 2,979 | (348) | ||
Beginning Balance (shares) at Dec. 31, 2022 | 85,204,006 | 85,204,006 | ||||
Beginning Balance at Dec. 31, 2022 | 4,052 | 1,453 | 3,142 | (543) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings | $ 412 | 412 | 412 | |||
Other comprehensive loss | 32 | 32 | ||||
Dividends | (448) | (448) | ||||
Shares issued: | ||||||
Exercise of stock options (shares) | 77,401 | |||||
Exercise of stock options | 3 | 3 | ||||
Restricted stock awards (shares) | 165,513 | |||||
Other benefit plans (shares) | 46,287 | |||||
Other benefit plans | 6 | 6 | ||||
Dividend reinvestment plan (shares) | 12,463 | |||||
Dividend reinvestment plan | 2 | 2 | ||||
Stock-based compensation expense | 9 | 9 | ||||
Shares acquired and retired (in shares) | 574,720 | |||||
Shares acquired and retired | (67) | (10) | (57) | |||
Shares exchanged — benefit plans (shares) | (56,436) | |||||
Shares exchanged — benefit plans | (8) | (1) | (7) | |||
Forfeitures of restricted stock (shares) | (15,986) | |||||
Ending Balance (shares) at Jun. 30, 2023 | 84,858,528 | 84,858,528 | ||||
Ending Balance at Jun. 30, 2023 | 3,993 | 1,462 | 3,042 | (511) | ||
Beginning Balance (shares) at Mar. 31, 2023 | 85,171,658 | |||||
Beginning Balance at Mar. 31, 2023 | 3,941 | 1,459 | 2,933 | (451) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings | $ 200 | 200 | 200 | |||
Other comprehensive loss | (60) | (60) | ||||
Dividends | (54) | (54) | ||||
Shares issued: | ||||||
Exercise of stock options (shares) | 13,062 | |||||
Restricted stock awards (shares) | 18,344 | |||||
Other benefit plans (shares) | 33,988 | |||||
Other benefit plans | 4 | 4 | ||||
Dividend reinvestment plan (shares) | 1,552 | |||||
Dividend reinvestment plan | 1 | 1 | ||||
Stock-based compensation expense | 4 | 4 | ||||
Shares acquired and retired (in shares) | 374,958 | |||||
Shares acquired and retired | (43) | (6) | (37) | |||
Shares exchanged — benefit plans (shares) | (1,054) | |||||
Forfeitures of restricted stock (shares) | (4,064) | |||||
Ending Balance (shares) at Jun. 30, 2023 | 84,858,528 | 84,858,528 | ||||
Ending Balance at Jun. 30, 2023 | $ 3,993 | $ 1,462 | $ 3,042 | $ (511) |
Consolidated Statement of Cha_2
Consolidated Statement of Changes in Equity (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends per Common Share (USD per share) | $ 0.63 | $ 8.56 | $ 5.26 | $ 11.12 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Operating Activities: | ||
Net earnings | $ 412 | $ 457 |
Adjustments: | ||
Depreciation and amortization | 39 | 53 |
Realized (gains) losses on investing activities | 46 | 105 |
Net purchases of trading securities | (2) | 0 |
Change in: | ||
Reinsurance and other receivables | (354) | (462) |
Other assets | (40) | (100) |
Insurance claims and reserves | 391 | 483 |
Payable to reinsurers | 3 | 51 |
Other liabilities | 24 | 13 |
Managed investment entities’ assets/liabilities | 70 | 42 |
Other operating activities, net | (71) | (128) |
Net cash provided by operating activities | 518 | 514 |
Purchases of: | ||
Fixed maturities | (851) | (2,673) |
Equity securities | (76) | (147) |
Mortgage loans | 0 | (271) |
Other investments | (73) | (68) |
Real estate, property and equipment | (33) | (58) |
Proceeds from: | ||
Maturities and redemptions of fixed maturities | 705 | 1,677 |
Repayments of mortgage loans | 32 | 99 |
Sales of fixed maturities | 401 | 986 |
Sales of equity securities | 67 | 63 |
Sales of other investments | 43 | 116 |
Sales of real estate, property and equipment | 2 | 24 |
Managed investment entities: | ||
Purchases of investments | (951) | (813) |
Proceeds from sales and redemptions of investments | 1,104 | 568 |
Other investing activities, net | (2) | (4) |
Net cash provided by (used in) investing activities | 368 | (501) |
Financing Activities: | ||
Reductions of long-term debt | (21) | (433) |
Issuances of Common Stock | 8 | 9 |
Repurchases of Common Stock | (67) | (5) |
Cash dividends paid on Common Stock | (446) | (942) |
Issuances of managed investment entities’ liabilities | 617 | 619 |
Retirements of managed investment entities’ liabilities | (861) | (425) |
Net cash used in financing activities | (770) | (1,177) |
Net Change in Cash and Cash Equivalents | 116 | (1,164) |
Cash and cash equivalents at beginning of period | 872 | 2,131 |
Cash and cash equivalents at end of period | $ 988 | $ 967 |
Accounting Policies
Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
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. 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 June 30, 2023, and prior to the filing of this Form 10-Q, have been evaluated for potential recognition or disclosure herein. 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. 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 six months of 2023. 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 limited partnerships and similar investments that do not qualify for equity method accounting (and are therefore 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. Realized gains or losses on the disposal of fixed maturity securities are determined on the specific identification basis. 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. Credit Losses on Fixed Maturity Investments 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. The allowance is limited 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). 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. Credit Losses on Financial Instruments Measured at Amortized Cost Credit-related impairments for financial instruments measured at amortized cost (mortgage loans, premiums receivable and reinsurance recoverables) reflect estimated 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. Derivatives Derivatives included in AFG’s Balance Sheet are recorded at fair value. Changes in fair value of derivatives are included in earnings unless the derivatives are designated and qualify as highly effective cash flow hedges. AFG’s derivatives that do not qualify for hedge accounting under GAAP consist primarily of components of certain fixed maturity securities (convertible fixed maturities and interest-only and principal-only MBS) and a total return swap related to its deferred compensation obligations to employees. To qualify for hedge accounting, at the inception of a derivative contract, AFG formally documents the relationship between the terms of the hedge and the hedged items and its risk management objective. This documentation includes defining how hedge effectiveness is evaluated at the inception date and over the life of the derivative. Changes in the fair value of derivatives that are designated and qualify as highly effective cash flow hedges are recorded in AOCI and are reclassified into earnings when the variability of the cash flows from the hedged items impacts earnings. When the change in the fair value of a qualifying cash flow hedge is included in earnings, it is included in the same line item in the statement of earnings as the cash flows from the hedged item. AFG uses interest rate swaps that are designated and qualify as highly effective cash flow hedges to mitigate interest rate risk related to certain floating-rate securities. 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 F — “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 June 30, 2023, assets and liabilities of managed investment entities included $105 million in assets and $86 million in liabilities of a temporary warehousing entity that was established to provide AFG the ability to form a new CLO. At closing, all warehoused assets will be transferred to the new CLO and the liabilities will be repaid. 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 and reasonable. 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 June 30, 2023 AFG has a $190 million lease liability included in other liabilities other assets 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: second quarter 2023 and 2022 — 0.1 million and 0.2 million; first six months of 2023 and 2022 — 0.1 million and 0.6 million. There were no anti-dilutive potential common shares for the second quarter or the first six months of 2023 or 2022. 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
Segments of Operations | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Segments of Operations | Segments of 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 and other specialty transportation niches, 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 a deferred gain on a retroactive reinsurance transaction related to the sale of a business. 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 before income taxes by segment and sub-segment. Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Revenues Property and casualty insurance: Premiums earned: Specialty Property and transportation $ 534 $ 505 $ 1,009 $ 948 Specialty casualty 711 657 1,415 1,296 Specialty financial 195 171 391 334 Other specialty 67 60 129 117 Total premiums earned 1,507 1,393 2,944 2,695 Net investment income 191 156 398 379 Other income 3 6 8 10 Total property and casualty insurance 1,701 1,555 3,350 3,084 Other 141 77 278 151 Total revenues before realized gains (losses) 1,842 1,632 3,628 3,235 Realized gains (losses) on securities (2) (93) (48) (108) Total revenues $ 1,840 $ 1,539 $ 3,580 $ 3,127 Earnings Before Income Taxes Property and casualty insurance: Underwriting: Specialty Property and transportation $ 32 $ 39 $ 75 $ 101 Specialty casualty 95 130 183 254 Specialty financial 10 37 36 66 Other specialty (14) (9) (16) (16) Other lines 1 (1) — (2) Total underwriting 124 196 278 403 Investment and other income, net 175 149 371 364 Total property and casualty insurance 299 345 649 767 Other (*) (42) (46) (82) (92) Total earnings before realized gains (losses) and income taxes 257 299 567 675 Realized gains (losses) on securities (2) (93) (48) (108) Total earnings before income taxes $ 255 $ 206 $ 519 $ 567 (*) Includes holding company interest and expenses, including a loss of $1 million and a gain of $1 million on retirement of debt in the second quarter and first six months of 2023, respectively, and losses of $9 million and $11 million on retirement of debt in the second quarter and first six months of 2022, respectively. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2023 | |
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. The contingent consideration liability (included in other liabilities in AFG’s Balance Sheet) relates primarily to AFG’s acquisition of Verikai in December 2021. This estimated fair value of this liability is evaluated at each balance sheet date with changes in fair value recognized in net earnings. To estimate the fair value of the contingent consideration liability related to the Verikai acquisition ($23 million at June 30, 2023), AFG uses a weighted probability-based income approach which includes significant unobservable inputs and is classified as Level 3. There was no change to the estimated fair value of this liability during the first six months of 2023. 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, AFG 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 measured and carried at fair value in the financial statements are summarized below (in millions): Level 1 Level 2 Level 3 Total June 30, 2023 Assets: Available for sale (“AFS”) fixed maturities: U.S. government and government agencies $ 228 $ 1 $ — $ 229 States, municipalities and political subdivisions — 963 5 968 Foreign government — 228 — 228 Residential MBS — 1,541 5 1,546 Commercial MBS — 79 — 79 Collateralized loan obligations — 1,858 1 1,859 Other asset-backed securities — 1,848 321 2,169 Corporate and other 9 2,429 369 2,807 Total AFS fixed maturities 237 8,947 701 9,885 Trading fixed maturities — 38 — 38 Equity securities 566 34 448 1,048 Assets of managed investment entities (“MIE”) 593 4,631 11 5,235 Other assets — derivatives — 4 — 4 Total assets accounted for at fair value $ 1,396 $ 13,654 $ 1,160 $ 16,210 Liabilities: Contingent consideration — acquisitions $ — $ — $ 25 $ 25 Liabilities of managed investment entities 577 4,510 11 5,098 Other liabilities — derivatives — 41 — 41 Total liabilities accounted for at fair value $ 577 $ 4,551 $ 36 $ 5,164 December 31, 2022 Assets: Available for sale fixed maturities: U.S. government and government agencies $ 219 $ — $ — $ 219 States, municipalities and political subdivisions — 1,181 5 1,186 Foreign government — 226 — 226 Residential MBS — 1,589 9 1,598 Commercial MBS — 85 — 85 Collateralized loan obligations — 1,919 2 1,921 Other asset-backed securities — 1,916 329 2,245 Corporate and other 8 2,288 319 2,615 Total AFS fixed maturities 227 9,204 664 10,095 Trading fixed maturities — 32 — 32 Equity securities 556 27 427 1,010 Assets of managed investment entities 659 4,777 11 5,447 Total assets accounted for at fair value $ 1,442 $ 14,040 $ 1,102 $ 16,584 Liabilities: Contingent consideration — acquisitions $ — $ — $ 25 $ 25 Liabilities of managed investment entities 645 4,676 11 5,332 Other liabilities — derivatives — 42 — 42 Total liabilities accounted for at fair value $ 645 $ 4,718 $ 36 $ 5,399 Approximately 7% of the total assets carried at fair value at June 30, 2023, were Level 3 assets. Approximately 10% ($117 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 3% ($37 million) 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 27% ($316 million) of the Level 3 assets were equity investments in limited partnerships and similar investments that do not qualify for equity method accounting whose prices were determined based on financial information provided by the limited partnerships. Internally developed prices for fixed maturities are estimated 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 Level 3 asset fair values represent approximately 60% ($690 million) of the total fair value of Level 3 assets at June 30, 2023. Approximately 67% ($462 million) of these internally developed Level 3 assets are priced using a pricing model that uses a discounted cash flow approach to estimate the fair value of fixed maturity securities. The credit spread applied by management is the significant unobservable input of the pricing model. In instances where the security is currently callable at par value and the pricing model suggests a higher price, management caps the fair value at par value. Approximately 18% ($123 million) of the internally developed Level 3 assets are equity securities which are priced primarily using internal models with some inputs that are not market observable. Management believes that any justifiable changes in unobservable inputs used to determine internally developed fair values would not have resulted in a material change in AFG’s financial position. Changes in balances of Level 3 financial assets and liabilities carried at fair value during the second quarter and first six months of 2023 and 2022 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 March 31, 2023 Net Other comprehensive income (loss) Purchases Sales and Transfer Transfer Balance at June 30, 2023 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 5 — — — — — — 5 Residential MBS 5 — — — — — — 5 Commercial MBS — — — — — — — — Collateralized loan obligations 1 — — — — — — 1 Other asset-backed securities 335 (2) — 3 (26) 31 (20) 321 Corporate and other 359 (4) 8 12 (2) 2 (6) 369 Total AFS fixed maturities 705 (6) 8 15 (28) 33 (26) 701 Equity securities 411 10 — 30 (3) — — 448 Assets of MIE 12 (1) — — — — — 11 Total Level 3 assets $ 1,128 $ 3 $ 8 $ 45 $ (31) $ 33 $ (26) $ 1,160 Contingent consideration — acquisitions $ (25) $ — $ — $ — $ — $ — $ — $ (25) Total Level 3 liabilities $ (25) $ — $ — $ — $ — $ — $ — $ (25) Total realized/unrealized Balance at March 31, 2022 Net Other comprehensive income (loss) Purchases Sales and Transfer Transfer Balance at June 30, 2022 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 33 — (1) — — — (31) 1 Residential MBS 11 — — — — — (3) 8 Commercial MBS — — — — — — — — Collateralized loan obligations — — — — — 2 — 2 Other asset-backed securities 337 — (7) 10 (27) — — 313 Corporate and other 244 — (4) 32 (3) — — 269 Total AFS fixed maturities 625 — (12) 42 (30) 2 (34) 593 Equity securities 361 — — 21 (2) — (2) 378 Assets of MIE 12 (1) — 1 — — — 12 Total Level 3 assets $ 998 $ (1) $ (12) $ 64 $ (32) $ 2 $ (36) $ 983 Contingent consideration — acquisitions $ (23) $ — $ — $ — $ — $ — $ — $ (23) Total Level 3 liabilities $ (23) $ — $ — $ — $ — $ — $ — $ (23) Total realized/unrealized Balance at December 31, 2022 Net Other comprehensive income (loss) Purchases Sales and Transfer Transfer Balance at June 30, 2023 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 5 — — — — — — 5 Residential MBS 9 — — — (3) 4 (5) 5 Commercial MBS — — — — — — — — Collateralized loan obligations 2 — — — — — (1) 1 Other asset-backed securities 329 (2) 4 10 (31) 31 (20) 321 Corporate and other 319 1 10 56 (13) 2 (6) 369 Total AFS fixed maturities 664 (1) 14 66 (47) 37 (32) 701 Equity securities 427 7 — 61 (25) — (22) 448 Assets of MIE 11 (2) — 2 — — — 11 Total Level 3 assets $ 1,102 $ 4 $ 14 $ 129 $ (72) $ 37 $ (54) $ 1,160 Contingent consideration — acquisitions $ (25) $ — $ — $ — $ — $ — $ — $ (25) Total Level 3 liabilities $ (25) $ — $ — $ — $ — $ — $ — $ (25) Total realized/unrealized Balance at December 31, 2021 Net Other comprehensive income (loss) Purchases Sales and Transfer Transfer Balance at June 30, 2022 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 41 — (3) — (1) — (36) 1 Residential MBS 14 — — — (1) — (5) 8 Commercial MBS — — — — — — — — Collateralized loan obligations — — — — — 2 — 2 Other asset-backed securities 278 2 (16) 57 (42) 34 — 313 Corporate and other 267 — (14) 60 (10) — (34) 269 Total AFS fixed maturities 600 2 (33) 117 (54) 36 (75) 593 Equity securities 313 22 — 51 (5) 3 (6) 378 Assets of MIE 13 (2) — 1 — — — 12 Total Level 3 assets $ 926 $ 22 $ (33) $ 169 $ (59) $ 39 $ (81) $ 983 Contingent consideration — acquisitions $ (23) $ — $ — $ — $ — $ — $ — $ (23) Total Level 3 liabilities $ (23) $ — $ — $ — $ — $ — $ — $ (23) Fair Value of Financial Instruments The carrying value and fair value of financial instruments 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 June 30, 2023 Financial assets: Cash and cash equivalents $ 988 $ 988 $ 988 $ — $ — Mortgage loans 645 592 — — 592 Total financial assets not accounted for at fair value $ 1,633 $ 1,580 $ 988 $ — $ 592 Long-term debt $ 1,474 $ 1,303 $ — $ 1,300 $ 3 Total financial liabilities not accounted for at fair value $ 1,474 $ 1,303 $ — $ 1,300 $ 3 December 31, 2022 Financial assets: Cash and cash equivalents $ 872 $ 872 $ 872 $ — $ — Mortgage loans 676 626 — — 626 Total financial assets not accounted for at fair value $ 1,548 $ 1,498 $ 872 $ — $ 626 Long-term debt $ 1,496 $ 1,302 $ — $ 1,299 $ 3 Total financial liabilities not accounted for at fair value $ 1,496 $ 1,302 $ — $ 1,299 $ 3 |
Investments
Investments | 6 Months Ended |
Jun. 30, 2023 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Available for sale fixed maturities at June 30, 2023 and December 31, 2022, consisted of the following (in millions): Amortized Allowance for Expected Credit Losses Gross Unrealized Net Fair Gains Losses June 30, 2023 Fixed maturities: U.S. government and government agencies $ 241 $ — $ — $ (12) $ (12) $ 229 States, municipalities and political subdivisions 1,012 — 3 (47) (44) 968 Foreign government 242 — — (14) (14) 228 Residential MBS 1,710 2 20 (182) (162) 1,546 Commercial MBS 81 — — (2) (2) 79 Collateralized loan obligations 1,906 2 5 (50) (45) 1,859 Other asset-backed securities 2,338 7 — (162) (162) 2,169 Corporate and other 2,958 5 12 (158) (146) 2,807 Total fixed maturities $ 10,488 $ 16 $ 40 $ (627) $ (587) $ 9,885 December 31, 2022 Fixed maturities: U.S. government and government agencies $ 233 $ — $ — $ (14) $ (14) $ 219 States, municipalities and political subdivisions 1,234 — 3 (51) (48) 1,186 Foreign government 240 — — (14) (14) 226 Residential MBS 1,757 2 23 (180) (157) 1,598 Commercial MBS 88 — — (3) (3) 85 Collateralized loan obligations 1,988 1 1 (67) (66) 1,921 Other asset-backed securities 2,435 7 1 (184) (183) 2,245 Corporate and other 2,761 1 11 (156) (145) 2,615 Total fixed maturities $ 10,736 $ 11 $ 39 $ (669) $ (630) $ 10,095 Equity securities which are reported at fair value with holding gains and losses recognized in net earnings, consisted of the following at June 30, 2023 and December 31, 2022 (in millions): June 30, 2023 December 31, 2022 Actual Cost Fair Value Actual Cost Fair Value Fair Value Over (Under) Cost Fair Value Over (Under) Cost Common stocks $ 620 $ 617 $ (3) $ 556 $ 553 $ (3) Perpetual preferred stocks 434 431 (3) 436 457 21 Total equity securities carried at fair value $ 1,054 $ 1,048 $ (6) $ 992 $ 1,010 $ 18 The following table shows the carrying value and net investment income from investments accounted for using the equity method (in millions): Net Investment Income Carrying Value Six months ended June 30, June 30, 2023 December 31, 2022 2023 2022 Real estate-related investments (*) $ 1,313 $ 1,229 $ 75 $ 169 Private equity 408 438 7 38 Private debt 35 33 3 2 Total investments accounted for using the equity method $ 1,756 $ 1,700 $ 85 $ 209 (*) 92% of the carrying value relates to underlying investments in multi-family properties at both June 30, 2023 and December 31, 2022. The earnings (losses) from these investments are generally reported on a quarter 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 had unfunded commitments of $407 million and $396 million as of June 30, 2023 and December 31, 2022, respectively. The following table shows gross unrealized losses (dollars in millions) on available for sale fixed maturities 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 June 30, 2023 Fixed maturities: U.S. government and government agencies $ (1) $ 32 97 % $ (11) $ 195 95 % States, municipalities and political subdivisions (11) 352 97 % (36) 438 92 % Foreign government (3) 17 85 % (11) 211 95 % Residential MBS (13) 357 96 % (169) 1,009 86 % Commercial MBS — 11 100 % (2) 64 97 % Collateralized loan obligations (2) 92 98 % (48) 1,297 96 % Other asset-backed securities (10) 360 97 % (152) 1,601 91 % Corporate and other (31) 985 97 % (127) 1,176 90 % Total fixed maturities $ (71) $ 2,206 97 % $ (556) $ 5,991 92 % December 31, 2022 Fixed maturities: U.S. government and government agencies $ (4) $ 111 97 % $ (10) $ 107 91 % States, municipalities and political subdivisions (50) 967 95 % (1) 15 94 % Foreign government (5) 90 95 % (9) 134 94 % Residential MBS (115) 1,078 90 % (65) 315 83 % Commercial MBS (2) 44 96 % (1) 33 97 % Collateralized loan obligations (44) 1,224 97 % (23) 587 96 % Other asset-backed securities (100) 1,361 93 % (84) 740 90 % Corporate and other (105) 1,665 94 % (51) 413 89 % Total fixed maturities $ (425) $ 6,540 94 % $ (244) $ 2,344 91 % At June 30, 2023, the gross unrealized losses on fixed maturities of $627 million relate to approximately 1,800 securities. Investment grade securities (as determined by nationally recognized rating agencies) represented approximately 95% of the gross unrealized loss and 95% of the fair value of securities with unrealized losses. To evaluate fixed maturities for expected credit losses (impairment), management considers whether the unrealized loss is credit-driven or a result of changes in market interest rates, the extent to which fair value is less than cost basis, historical operating, balance sheet and cash flow data from the issuer, third party research and communications with industry specialists and discussions with issuer management. AFG analyzes its MBS for expected credit losses (impairment) each quarter based upon expected future cash flows. Management estimates expected future cash flows based upon its knowledge of the MBS market, cash flow projections (which reflect loan to collateral values, subordination, vintage and geographic concentration) received from independent sources, implied cash flows inherent in security ratings and analysis of historical payment data. Management believes AFG will recover its cost basis (net of any allowance) in the securities with unrealized losses and that AFG has the ability to hold the securities until they recover in value and had no intent to sell them at June 30, 2023. A progression of the allowance for expected credit losses on available for sale fixed maturity securities is shown below (in millions): Structured Corporate and Other Total Balance at March 31, 2023 $ 11 $ 5 $ 16 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 June 30, 2023 $ 11 $ 5 $ 16 Balance at March 31, 2022 $ 6 $ 1 $ 7 Provision for expected credit losses on securities with no previous allowance 1 — 1 Additions (reductions) to previously recognized expected credit losses — — — Reductions due to sales or redemptions — (1) (1) Balance at June 30, 2022 $ 7 $ — $ 7 Balance at January 1, 2023 $ 10 $ 1 $ 11 Provision for expected credit losses on securities with no previous allowance 1 5 6 Additions (reductions) to previously recognized expected credit losses — (1) (1) Reductions due to sales or redemptions — — — Balance at June 30, 2023 $ 11 $ 5 $ 16 Balance at January 1, 2022 $ 8 $ 1 $ 9 Provision for expected credit losses on securities with no previous allowance 1 — 1 Additions (reductions) to previously recognized expected credit losses (2) — (2) Reductions due to sales or redemptions — (1) (1) Balance at June 30, 2022 $ 7 $ — $ 7 (*) Includes mortgage-backed securities, collateralized loan obligations and other asset-backed securities. In the first six months of 2023 and 2022, AFG 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 June 30, 2023 (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 $ 479 $ 471 5 % After one year through five years 2,551 2,414 24 % After five years through ten years 1,075 1,024 10 % After ten years 343 323 3 % 4,448 4,232 42 % Collateralized loan obligations and other ABS (average life of approximately 3 years) 4,235 4,028 41 % MBS (average life of approximately 6.5 years) 1,789 1,625 17 % Total $ 10,472 $ 9,885 100 % (*) 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 June 30, 2023 or December 31, 2022. Net Investment Income The following table shows (in millions) investment income earned and investment expenses incurred. Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Investment income: Fixed maturities: Interest and amortization $ 124 $ 85 $ 243 $ 165 Change in fair value (a) 7 — 10 — Equity securities: Dividends 9 8 18 15 Change in fair value (b) 13 (9) 29 (2) Equity in earnings of partnerships and similar investments 28 76 85 209 Other 22 13 40 20 Gross investment income 203 173 425 407 Investment expenses (5) (5) (10) (9) Net investment income $ 198 $ 168 $ 415 $ 398 (a) The change in the fair value of fixed maturities classified as trading and derivatives embedded in convertible fixed maturities related to limited partnerships and similar investments. (b) 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 limited partnerships and similar investments that do not qualify for equity method accounting and related investments. Realized gains (losses) and changes in unrealized appreciation (depreciation) included in AOCI related to fixed maturity securities are summarized as follows (in millions): Three months ended June 30, 2023 Three months ended June 30, 2022 Realized gains (losses) Realized gains (losses) Before Impairments Impairment Allowance Total Change in Unrealized Before Impairments Impairment Allowance Total Change in Unrealized Fixed maturities $ (5) $ — $ (5) $ (64) $ (10) $ (1) $ (11) $ (275) Equity securities 3 — 3 — (82) — (82) — Mortgage loans and other investments — — — — — — — — Total pretax (2) — (2) (64) (92) (1) (93) (275) Tax effects 1 — 1 13 20 — 20 58 Net of tax $ (1) $ — $ (1) $ (51) $ (72) $ (1) $ (73) $ (217) Six months ended June 30, 2023 Six months ended June 30, 2022 Realized gains (losses) Realized gains (losses) Before Impairments Impairment Allowance Total Change in Unrealized Before Impairments Impairment Allowance Total Change in Unrealized Fixed maturities $ (28) $ (5) $ (33) $ 43 $ (14) $ 1 $ (13) $ (586) Equity securities (15) — (15) — (95) — (95) — Mortgage loans and other investments — — — — — — — — Total pretax (43) (5) (48) 43 (109) 1 (108) (586) Tax effects 9 1 10 (10) 23 — 23 124 Net of tax $ (34) $ (4) $ (38) $ 33 $ (86) $ 1 $ (85) $ (462) 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 during the second quarter and first six months of 2023 and 2022 on securities that were still owned at June 30, 2023 and June 30, 2022 as follows (in millions): Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Included in realized gains (losses) $ 2 $ (82) $ (21) $ (96) Included in net investment income 13 (9) 29 (4) $ 15 $ (91) $ 8 $ (100) Gross realized gains and losses (excluding changes in impairment allowance and mark-to-market of derivatives) on available for sale fixed maturity investment transactions consisted of the following (in millions): Six months ended June 30, 2023 2022 Gross gains $ 2 $ 3 Gross losses (27) (9) |
Derivatives
Derivatives | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives As discussed under “ Derivatives ” in Note A — “Accounting Policies ,” AFG uses derivatives to mitigate certain market risks related to its investment portfolio and deferred compensation obligations to employees. The following table presents the classification of derivative assets and liabilities included in AFG’s Balance Sheet at fair value (in millions): June 30, 2023 December 31, 2022 Balance Sheet Line Asset Liability Asset Liability Derivatives designated and qualifying as cash flow hedges: Interest rate swaps Other assets/Other liabilities $ — $ 41 $ — $ 37 Derivatives not designated as hedging instruments: Fixed maturities with embedded derivatives Fixed maturities 92 — 40 — Total return swap Other assets/Other liabilities 4 — — 5 $ 96 $ 41 $ 40 $ 42 AFG’s interest rate swaps are designated and qualify as highly effective cash flow hedges to mitigate interest rate risk related to certain floating-rate securities included in AFG’s portfolio of fixed maturity securities. The purpose of each of these swaps is to effectively convert a portion of AFG’s floating-rate fixed maturity securities to fixed rates by offsetting the variability in cash flows attributable to changes in short-term reference rates (LIBOR or SOFR). Under the terms of the swaps, AFG receives fixed-rate interest payments in exchange for variable interest payments based on short-term LIBOR or SOFR. The notional amounts of the interest rate swaps generally decline over each swap’s respective life (the swaps expire between July 2024 and July 2028) in anticipation of the expected decline in AFG’s portfolio of fixed maturity securities with floating interest rates based on short-term LIBOR or SOFR. The total outstanding notional amount of AFG’s interest rate swaps was $1.35 billion at June 30, 2023 compared to $1.25 billion at December 31, 2022, reflecting the issuance of four new swaps with a total notional amount of $170 million in the first six months of 2023, partially offset by scheduled amortization. In the second quarter of 2023 and 2022, a loss of $7 million and income of $1 million, respectively, and in the first six months of 2023 and 2022, a loss of $12 million and income of $2 million, respectively, were reclassified from AOCI to net earnings. A collateral receivable supporting these swaps of $68 million and $62 million at June 30, 2023 and December 31, 2022, respectively, is included in other assets in AFG’s Balance Sheet. The fixed maturities with embedded derivatives consist of convertible fixed maturity securities and interest-only and principal-only MBS. AFG records the change in the fair value of these securities in earnings. These investments are part of AFG’s overall investment strategy and represent a small component of AFG’s overall investment portfolio. AFG is exposed to fair value changes from certain equity and fixed maturity market-based exposures related to its deferred compensation obligations to certain employees. To mitigate this risk, AFG entered into a total return swap in 2022. A payable of $3 million to return collateral related to this swap is included in other liabilities in AFG’s Balance Sheet at June 30, 2023 and a collateral receivable of $7 million supporting this swap is included in other assets in AFG’s Balance Sheet at December 31, 2022. The following table summarizes the gains (losses) included in AFG’s Statement of Earnings for changes in the fair value of derivatives for the second quarter and six months ended June 30, 2023 and 2022 (in millions): Three months ended June 30, Six months ended June 30, Statement of Earnings Line 2023 2022 2023 2022 Qualifying cash flow hedges - gains (losses) reclassified from AOCI to net earnings: Interest rate swaps Net investment income $ (7) $ 1 $ (12) $ 2 Non-designated hedges - gains (losses) included in net earnings: Fixed maturities with embedded derivatives Realized gains (losses) on securities (4) (3) (3) (8) Fixed maturities with embedded derivatives Net investment income 7 — 10 — Total return swap Other expenses 3 (4) 9 (4) Earnings (losses) on non-designated hedges 6 (7) 16 (12) Total earnings (losses) on derivatives $ (1) $ (6) $ 4 $ (10) Based on forward interest rate curves at June 30, 2023, management estimates that it will reclassify approximately $25 million of pre-tax net losses on interest rate swaps in AOCI to net investment income over the next twelve months. The actual amount will vary based on changes in SOFR. |
Managed Investment Entities
Managed Investment Entities | 6 Months Ended |
Jun. 30, 2023 | |
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 it has investments ranging from 7.4% to 100% of the most subordinate debt tranche of sixteen 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 2023, 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 $136 million (including $85 million invested in the most subordinate tranches and $19 million invested in a temporary warehousing entity) at June 30, 2023, and $115 million at December 31, 2022. In March 2023, AFG formed one new CLO, which issued $407 million face amount of liabilities (including $16 million face amount purchased by AFG). In May 2022, AFG formed one new CLO, which issued $404 million face amount of liabilities (including $13 million face amount purchased by AFG). The following table shows a progression of the fair value of AFG's investment in CLO tranches (in millions): Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Balance at beginning of period $ 119 $ 89 $ 112 $ 76 Purchases — 15 11 33 Sales — — — — Distributions (7) (6) (12) (9) Change in fair value 5 (13) 6 (15) Balance at end of period (*) $ 117 $ 85 $ 117 $ 85 (*) Excludes $19 million invested in a temporary warehousing entity at June 30, 2023 that was established to provide AFG the ability to form a new CLO. 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 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 June 30, Six months ended June 30, 2023 2022 2023 2022 Gains (losses) on change in fair value of assets/liabilities (*): Assets $ 32 $ (247) $ 66 $ (304) Liabilities (32) 232 (70) 284 Management fees paid to AFG 4 4 8 8 CLO earnings (losses) attributable to AFG 5 (12) 6 (14) (*) 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 $230 million and $339 million at June 30, 2023 and December 31, 2022, respectively. The aggregate unpaid principal balance of the CLOs’ debt exceeded its carrying value by $353 million and $413 million at those dates. The CLO assets include loans with an aggregate fair value of $5 million at June 30, 2023 and $4 million at December 31, 2022, for which the CLOs are not accruing interest because the loans are in default (aggregate unpaid principal balance of $15 million at June 30, 2023 and $17 million at December 31, 2022). In addition to the CLOs that it manages, AFG had investments in CLOs that are managed by third parties (therefore not consolidated), which are included in available for sale fixed maturity securities and had a fair value of $1.86 billion at June 30, 2023 and $1.92 billion at December 31, 2022. |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangibles | Goodwill and Other Intangibles There were no changes in the goodwill balance of $246 million during the first six months of 2023. Included in other assets in AFG’s Balance Sheet is $102 million at June 30, 2023 and $108 million at December 31, 2022 in amortizable intangible assets related to acquisitions. These amounts are net of accumulated amortization of $29 million and $24 million, respectively. Amortization of intangibles was $3 million in both the second quarter of 2023 and 2022 and $6 million and $5 million in the first six months of 2023 and 2022, respectively. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following (in millions): June 30, 2023 December 31, 2022 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 $ 567 $ (1) $ 566 $ 582 $ (1) $ 581 5.25% Senior Notes due April 2030 253 (4) 249 261 (5) 256 Other 3 — 3 3 — 3 823 (5) 818 846 (6) 840 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 $ 1,498 $ (24) $ 1,474 $ 1,521 $ (25) $ 1,496 Scheduled principal payments on debt for the balance of 2023, the subsequent five years and thereafter are as follows: 2023 — none; 2024 — none; 2025 — none; 2026 — none; 2027 — none; 2028 — none and thereafter — $1.50 billion. In the first six months of 2023, AFG repurchased $15 million principal amount of its 4.50% Senior Notes due in June 2047 for $13 million and $8 million principal amount of its 5.25% Senior Notes due in April 2030 for $8 million in open market transactions. In the first six months of 2022, AFG repurchased $49 million principal amount of its 3.50% Senior Notes due in August 2026 in open market transactions for $51 million. In June 2022, AFG redeemed the remaining $376 million of outstanding 3.50% Senior Notes due August 2026 for $382 million (including a $6 million make-whole call premium). In June 2023, AFG replaced its existing credit facility with a new five-year, $450 million revolving credit facility, which expires in June 2028. Amounts borrowed under this agreement bear interest at rates ranging from 1.00% to 1.75% (based on AFG’s credit rating, currently 1.25%) over a SOFR-based floating rate. No amounts were borrowed under this facility at June 30, 2023 or under AFG’s previous credit facility at December 31, 2022. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2023 | |
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 (Loss), 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 (loss), which consists primarily of changes in net unrealized gains or losses on available for sale fixed maturity securities. The progression of the components of accumulated other comprehensive income (loss) follows (in millions): Other Comprehensive Income (Loss) AOCI Beginning Balance Pretax Tax Net of tax AOCI Ending Balance Quarter ended June 30, 2023 Net unrealized gains (losses) on securities: Unrealized holding gains (losses) on securities arising during the period $ (66) $ 14 $ (52) Reclassification adjustment for realized (gains) losses included in net earnings (*) 2 (1) 1 Total net unrealized gains (losses) on securities $ (413) (64) 13 (51) $ (464) Net unrealized gains (losses) on cash flow hedges: Unrealized holding gains (losses) on cash flow hedges arising during the period $ (21) $ 4 $ (17) Reclassification adjustment for investment income included in net earnings (*) 6 (1) 5 Total net unrealized gains (losses) on cash flow hedges (21) (15) 3 (12) (33) Foreign currency translation adjustments (20) 2 1 3 (17) Pension and other postretirement plan adjustments 3 — — — 3 Total $ (451) $ (77) $ 17 $ (60) $ (511) Quarter ended June 30, 2022 Net unrealized gains (losses) on securities: Unrealized holding gains (losses) on securities arising during the period $ (286) $ 61 $ (225) Reclassification adjustment for realized (gains) losses included in net earnings (*) 11 (3) 8 Total net unrealized gains (losses) on securities $ (109) (275) 58 (217) $ (326) Net unrealized gains (losses) on cash flow hedges: Unrealized holding gains (losses) on cash flow hedges arising during the period (3) 1 (2) Reclassification adjustment for investment income included in net earnings (*) (2) — (2) Total net unrealized gains (losses) on cash flow hedges (4) (5) 1 (4) (8) Foreign currency translation adjustments (19) 5 (1) 4 (15) Pension and other postretirement plan adjustments 1 — — — 1 Total $ (131) $ (275) $ 58 $ (217) $ (348) Other Comprehensive Income (Loss) AOCI Beginning Balance Pretax Tax Net of tax AOCI Ending Balance Six months ended June 30, 2023 Net unrealized gains (losses) on securities: Unrealized holding gains (losses) on securities arising during the period $ 12 $ (3) $ 9 Reclassification adjustment for realized (gains) losses included in net earnings (*) 31 (7) 24 Total net unrealized gains (losses) on securities $ (497) 43 (10) 33 $ (464) Net unrealized gains (losses) on cash flow hedges: Unrealized holding gains (losses) on cash flow hedges arising during the period (16) 3 (13) Reclassification adjustment for investment income included in net earnings (*) 11 (2) 9 Total net unrealized gains (losses) on cash flow hedges (29) (5) 1 (4) (33) Foreign currency translation adjustments (20) 2 1 3 (17) Pension and other postretirement plan adjustments 3 — — — 3 Total $ (543) $ 40 $ (8) $ 32 $ (511) Six months ended June 30, 2022 Net unrealized gains (losses) on securities: Unrealized holding gains (losses) on securities arising during the period $ (599) $ 127 $ (472) Reclassification adjustment for realized (gains) losses included in net earnings (*) 13 (3) 10 Total net unrealized gains (losses) on securities $ 136 (586) 124 (462) $ (326) Net unrealized gains (losses) on cash flow hedges: Unrealized holding gains (losses) on cash flow hedges arising during the period (8) 2 (6) Reclassification adjustment for investment income included in net earnings (*) (2) — (2) Total net unrealized gains (losses) on cash flow hedges — (10) 2 (8) (8) Foreign currency translation adjustments (18) 3 — 3 (15) Pension and other postretirement plan adjustments 1 — — — 1 Total $ 119 $ (593) $ 126 $ (467) $ (348) (*) The reclassification adjustments affected the following lines in AFG’s Statement of Earnings: OCI component Affected line in the statement of earnings Pretax - Net unrealized gains (losses) on securities Realized gains (losses) on securities Pretax - Net unrealized gains (losses) on cash flow hedges Net investment income Tax Provision for income taxes 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 six months of 2023, AFG issued 165,513 shares of restricted Common Stock (fair value of $130.52 per share) under the Stock Incentive Plan. Total compensation expense related to stock incentive plans of AFG and its subsidiaries was $4 million in both the second quarter of 2023 and 2022 and $9 million and $10 million in the first six months of 2023 and 2022, respectively. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The following is a reconciliation of income taxes 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 June 30, Six months ended June 30, 2023 2022 2023 2022 Amount % of EBT Amount % of EBT Amount % of EBT Amount % of EBT Earnings before income taxes (“EBT”) $ 255 $ 206 $ 519 $ 567 Income taxes at statutory rate $ 54 21 % $ 43 21 % $ 109 21 % $ 119 21 % Effect of: Employee stock ownership plan dividend paid deduction — — % (4) (2 %) (3) (1 %) (6) (1 %) Stock-based compensation — — % (2) (1 %) (2) — % (4) (1 %) Tax exempt interest (1) — % (2) (1 %) (2) — % (4) (1 %) Dividends received deduction — — % — — % (1) — % (1) — % Nondeductible expenses 2 1 % 1 — % 5 1 % 3 1 % Foreign operations 2 1 % — — % 4 1 % 5 1 % Change in valuation allowance — — % 1 — % — — % (1) — % Other (2) (1 %) 2 2 % (3) (1 %) (1) (1 %) Provision for income taxes as shown in the statement of earnings $ 55 22 % $ 39 19 % $ 107 21 % $ 110 19 % |
Contingencies
Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
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 2022 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 | 6 Months Ended |
Jun. 30, 2023 | |
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 six months of 2023 and 2022 (in millions): Six months ended June 30, 2023 2022 Balance at beginning of year $ 11,974 $ 11,074 Less reinsurance recoverables, net of allowance 3,767 3,419 Net liability at beginning of year 8,207 7,655 Provision for losses and LAE occurring in the current period 1,850 1,640 Net decrease in the provision for claims of prior years (125) (173) Total losses and LAE incurred 1,725 1,467 Payments for losses and LAE of: Current year (338) (290) Prior years (1,345) (1,102) Total payments (1,683) (1,392) Foreign currency translation and other — — Net liability at end of period 8,249 7,730 Add back reinsurance recoverables, net of allowance 3,676 3,471 Gross unpaid losses and LAE included in the balance sheet at end of period $ 11,925 $ 11,201 The net decrease in the provision for claims of prior years during the first six months of 2023 reflects (i) lower than anticipated losses in the crop business, lower than expected claim frequency and severity in the trucking business and lower than anticipated claim frequency in the property and inland marine business (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses, lower than expected claim frequency in the executive liability and environmental businesses and favorable reserve development related to COVID-19 losses across several businesses (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency in the trade credit and financial institutions businesses and lower than expected claim frequency and severity in the surety business (within the Specialty financial sub-segment). This favorable development was partially offset by higher than anticipated claim severity in the public sector and excess liability businesses (within the Specialty casualty sub-segment). The net decrease in the provision for claims of prior years during the first six months of 2022 reflects (i) lower than anticipated losses in the crop business, lower than expected claim frequency in the trucking and ocean marine businesses and at the Singapore branch, lower than expected claim frequency and severity in the aviation business and lower than anticipated claim severity in the property and inland marine business (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses, lower than expected claim frequency in the executive liability business and lower than anticipated claim frequency and severity in the excess and surplus business (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency in the surety, trade credit and financial institutions businesses (within the Specialty financial sub-segment). This favorable development was partially offset by (i) higher than anticipated claim severity in the targeted markets and excess liability businesses (within the Specialty casualty sub-segment) and (ii) net adverse development associated with AFG’s internal reinsurance program (within Other specialty). Recoverables from Reinsurers and Premiums Receivable Progressions of the 2023 and 2022 allowance for expected credit losses on recoverables from reinsurers and premiums receivable are shown below (in millions): Recoverables from Reinsurers Premiums Receivable 2023 2022 2023 2022 Balance at March 31 $ 9 $ 7 $ 8 $ 7 Provision (credit) for expected credit losses — — 1 2 Write-offs charged against the allowance — — — — Balance at June 30 $ 9 $ 7 $ 9 $ 9 Balance at January 1 $ 8 $ 8 $ 8 $ 8 Provision (credit) for expected credit losses 1 (1) 1 1 Write-offs charged against the allowance — — — — Balance at June 30 $ 9 $ 7 $ 9 $ 9 |
Subsequent Event
Subsequent Event | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent EventOn July 3, 2023, AFG completed the acquisition of Crop Risk Services (“CRS”) from American International Group (“AIG”). CRS is a primary crop insurance general agent based in Decatur, Illinois, with crop year 2022 gross written premiums of approximately $1.2 billion and was the seventh largest provider of multi-peril crop insurance in the United States based on 2022 premiums. At closing, AFG paid AIG approximately $235 million (based on an estimated $25 million in net tangible assets) using cash on hand. The sale is subject to post-closing adjustments which are expected to be finalized during the third quarter of 2023. The purchase price in excess of the net tangible assets acquired ($210 million) will be recorded as a combination of amortizing intangible assets (primarily related to existing agency relationships) and goodwill. AFG expensed $3 million of acquisition expenses incurred.AFG’s Great American Insurance Company has been providing crop-hail coverage since 1915 and began writing multi-peril crop insurance in 1980 after Congress authorized the program. Great American’s existing Crop Division generated gross written premiums of approximately $1.8 billion in 2022 and was the fifth largest provider of multi-peril crop insurance in the United States. As part of the AFG organization, CRS will continue to do business in all 37 states in which it currently operates. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net earnings | $ 200 | $ 167 | $ 412 | $ 457 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Accounting Policies (Policies)
Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
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. 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 June 30, 2023, and prior to the filing of this Form 10-Q, have been evaluated for potential recognition or disclosure herein. 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. |
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 six months of 2023. 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. The contingent consideration liability (included in other liabilities in AFG’s Balance Sheet) relates primarily to AFG’s acquisition of Verikai in December 2021. This estimated fair value of this liability is evaluated at each balance sheet date with changes in fair value recognized in net earnings. To estimate the fair value of the contingent consideration liability related to the Verikai acquisition ($23 million at June 30, 2023), AFG uses a weighted probability-based income approach which includes significant unobservable inputs and is classified as Level 3. There was no change to the estimated fair value of this liability during the first six months of 2023. 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, AFG 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. |
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 limited partnerships and similar investments that do not qualify for equity method accounting (and are therefore 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. Realized gains or losses on the disposal of fixed maturity securities are determined on the specific identification basis. 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. |
Credit Losses on Financial Instruments | Credit Losses on Fixed Maturity Investments 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. The allowance is limited 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). 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. Credit Losses on Financial Instruments Measured at Amortized Cost Credit-related impairments for financial instruments measured at amortized cost (mortgage loans, premiums receivable and reinsurance recoverables) reflect estimated 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. |
Derivatives | Derivatives Derivatives included in AFG’s Balance Sheet are recorded at fair value. Changes in fair value of derivatives are included in earnings unless the derivatives are designated and qualify as highly effective cash flow hedges. AFG’s derivatives that do not qualify for hedge accounting under GAAP consist primarily of components of certain fixed maturity securities (convertible fixed maturities and interest-only and principal-only MBS) and a total return swap related to its deferred compensation obligations to employees. To qualify for hedge accounting, at the inception of a derivative contract, AFG formally documents the relationship between the terms of the hedge and the hedged items and its risk management objective. This documentation includes defining how hedge effectiveness is evaluated at the inception date and over the life of the derivative. Changes in the fair value of derivatives that are designated and qualify as highly effective cash flow hedges are recorded in AOCI and are reclassified into earnings when the variability of the cash flows from the hedged items impacts earnings. When the change in the fair value of a qualifying cash flow hedge is included in earnings, it is included in the same line item in the statement of earnings as the cash flows from the hedged item. AFG uses interest rate swaps that are designated and qualify as highly effective cash flow hedges to mitigate interest rate risk related to certain floating-rate securities. |
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 F — “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 June 30, 2023, assets and liabilities of managed investment entities included $105 million in assets and $86 million in liabilities of a temporary warehousing entity that was established to provide AFG the ability to form a new CLO. At closing, all warehoused assets will be transferred to the new CLO and the liabilities will be repaid. |
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 and reasonable. |
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. At June 30, 2023 AFG has a $190 million lease liability included in other liabilities other assets |
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: second quarter 2023 and 2022 — 0.1 million and 0.2 million; first six months of 2023 and 2022 — 0.1 million and 0.6 million. There were no anti-dilutive potential common shares for the second quarter or the first six months of 2023 or 2022. |
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 and other specialty transportation niches, 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 a deferred gain on a retroactive reinsurance transaction related to the sale of a business. 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 (Loss), 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 (loss), which consists primarily of changes in net unrealized gains or losses on available for sale fixed maturity securities. |
Segments of Operations (Tables)
Segments of Operations (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Segment reporting information, by segment | The following tables (in millions) show AFG’s revenues and earnings before income taxes by segment and sub-segment. Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Revenues Property and casualty insurance: Premiums earned: Specialty Property and transportation $ 534 $ 505 $ 1,009 $ 948 Specialty casualty 711 657 1,415 1,296 Specialty financial 195 171 391 334 Other specialty 67 60 129 117 Total premiums earned 1,507 1,393 2,944 2,695 Net investment income 191 156 398 379 Other income 3 6 8 10 Total property and casualty insurance 1,701 1,555 3,350 3,084 Other 141 77 278 151 Total revenues before realized gains (losses) 1,842 1,632 3,628 3,235 Realized gains (losses) on securities (2) (93) (48) (108) Total revenues $ 1,840 $ 1,539 $ 3,580 $ 3,127 Earnings Before Income Taxes Property and casualty insurance: Underwriting: Specialty Property and transportation $ 32 $ 39 $ 75 $ 101 Specialty casualty 95 130 183 254 Specialty financial 10 37 36 66 Other specialty (14) (9) (16) (16) Other lines 1 (1) — (2) Total underwriting 124 196 278 403 Investment and other income, net 175 149 371 364 Total property and casualty insurance 299 345 649 767 Other (*) (42) (46) (82) (92) Total earnings before realized gains (losses) and income taxes 257 299 567 675 Realized gains (losses) on securities (2) (93) (48) (108) Total earnings before income taxes $ 255 $ 206 $ 519 $ 567 (*) Includes holding company interest and expenses, including a loss of $1 million and a gain of $1 million on retirement of debt in the second quarter and first six months of 2023, respectively, and losses of $9 million and $11 million on retirement of debt in the second quarter and first six months of 2022, respectively. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Assets and liabilities measured at fair value | Assets and liabilities measured and carried at fair value in the financial statements are summarized below (in millions): Level 1 Level 2 Level 3 Total June 30, 2023 Assets: Available for sale (“AFS”) fixed maturities: U.S. government and government agencies $ 228 $ 1 $ — $ 229 States, municipalities and political subdivisions — 963 5 968 Foreign government — 228 — 228 Residential MBS — 1,541 5 1,546 Commercial MBS — 79 — 79 Collateralized loan obligations — 1,858 1 1,859 Other asset-backed securities — 1,848 321 2,169 Corporate and other 9 2,429 369 2,807 Total AFS fixed maturities 237 8,947 701 9,885 Trading fixed maturities — 38 — 38 Equity securities 566 34 448 1,048 Assets of managed investment entities (“MIE”) 593 4,631 11 5,235 Other assets — derivatives — 4 — 4 Total assets accounted for at fair value $ 1,396 $ 13,654 $ 1,160 $ 16,210 Liabilities: Contingent consideration — acquisitions $ — $ — $ 25 $ 25 Liabilities of managed investment entities 577 4,510 11 5,098 Other liabilities — derivatives — 41 — 41 Total liabilities accounted for at fair value $ 577 $ 4,551 $ 36 $ 5,164 December 31, 2022 Assets: Available for sale fixed maturities: U.S. government and government agencies $ 219 $ — $ — $ 219 States, municipalities and political subdivisions — 1,181 5 1,186 Foreign government — 226 — 226 Residential MBS — 1,589 9 1,598 Commercial MBS — 85 — 85 Collateralized loan obligations — 1,919 2 1,921 Other asset-backed securities — 1,916 329 2,245 Corporate and other 8 2,288 319 2,615 Total AFS fixed maturities 227 9,204 664 10,095 Trading fixed maturities — 32 — 32 Equity securities 556 27 427 1,010 Assets of managed investment entities 659 4,777 11 5,447 Total assets accounted for at fair value $ 1,442 $ 14,040 $ 1,102 $ 16,584 Liabilities: Contingent consideration — acquisitions $ — $ — $ 25 $ 25 Liabilities of managed investment entities 645 4,676 11 5,332 Other liabilities — derivatives — 42 — 42 Total liabilities accounted for at fair value $ 645 $ 4,718 $ 36 $ 5,399 |
Changes in balances of Level 3 financial assets | Changes in balances of Level 3 financial assets and liabilities carried at fair value during the second quarter and first six months of 2023 and 2022 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 March 31, 2023 Net Other comprehensive income (loss) Purchases Sales and Transfer Transfer Balance at June 30, 2023 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 5 — — — — — — 5 Residential MBS 5 — — — — — — 5 Commercial MBS — — — — — — — — Collateralized loan obligations 1 — — — — — — 1 Other asset-backed securities 335 (2) — 3 (26) 31 (20) 321 Corporate and other 359 (4) 8 12 (2) 2 (6) 369 Total AFS fixed maturities 705 (6) 8 15 (28) 33 (26) 701 Equity securities 411 10 — 30 (3) — — 448 Assets of MIE 12 (1) — — — — — 11 Total Level 3 assets $ 1,128 $ 3 $ 8 $ 45 $ (31) $ 33 $ (26) $ 1,160 Contingent consideration — acquisitions $ (25) $ — $ — $ — $ — $ — $ — $ (25) Total Level 3 liabilities $ (25) $ — $ — $ — $ — $ — $ — $ (25) Total realized/unrealized Balance at March 31, 2022 Net Other comprehensive income (loss) Purchases Sales and Transfer Transfer Balance at June 30, 2022 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 33 — (1) — — — (31) 1 Residential MBS 11 — — — — — (3) 8 Commercial MBS — — — — — — — — Collateralized loan obligations — — — — — 2 — 2 Other asset-backed securities 337 — (7) 10 (27) — — 313 Corporate and other 244 — (4) 32 (3) — — 269 Total AFS fixed maturities 625 — (12) 42 (30) 2 (34) 593 Equity securities 361 — — 21 (2) — (2) 378 Assets of MIE 12 (1) — 1 — — — 12 Total Level 3 assets $ 998 $ (1) $ (12) $ 64 $ (32) $ 2 $ (36) $ 983 Contingent consideration — acquisitions $ (23) $ — $ — $ — $ — $ — $ — $ (23) Total Level 3 liabilities $ (23) $ — $ — $ — $ — $ — $ — $ (23) Total realized/unrealized Balance at December 31, 2022 Net Other comprehensive income (loss) Purchases Sales and Transfer Transfer Balance at June 30, 2023 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 5 — — — — — — 5 Residential MBS 9 — — — (3) 4 (5) 5 Commercial MBS — — — — — — — — Collateralized loan obligations 2 — — — — — (1) 1 Other asset-backed securities 329 (2) 4 10 (31) 31 (20) 321 Corporate and other 319 1 10 56 (13) 2 (6) 369 Total AFS fixed maturities 664 (1) 14 66 (47) 37 (32) 701 Equity securities 427 7 — 61 (25) — (22) 448 Assets of MIE 11 (2) — 2 — — — 11 Total Level 3 assets $ 1,102 $ 4 $ 14 $ 129 $ (72) $ 37 $ (54) $ 1,160 Contingent consideration — acquisitions $ (25) $ — $ — $ — $ — $ — $ — $ (25) Total Level 3 liabilities $ (25) $ — $ — $ — $ — $ — $ — $ (25) Total realized/unrealized Balance at December 31, 2021 Net Other comprehensive income (loss) Purchases Sales and Transfer Transfer Balance at June 30, 2022 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 41 — (3) — (1) — (36) 1 Residential MBS 14 — — — (1) — (5) 8 Commercial MBS — — — — — — — — Collateralized loan obligations — — — — — 2 — 2 Other asset-backed securities 278 2 (16) 57 (42) 34 — 313 Corporate and other 267 — (14) 60 (10) — (34) 269 Total AFS fixed maturities 600 2 (33) 117 (54) 36 (75) 593 Equity securities 313 22 — 51 (5) 3 (6) 378 Assets of MIE 13 (2) — 1 — — — 12 Total Level 3 assets $ 926 $ 22 $ (33) $ 169 $ (59) $ 39 $ (81) $ 983 Contingent consideration — acquisitions $ (23) $ — $ — $ — $ — $ — $ — $ (23) Total Level 3 liabilities $ (23) $ — $ — $ — $ — $ — $ — $ (23) |
Changes in balances of Level 3 financial liabilities | Changes in balances of Level 3 financial assets and liabilities carried at fair value during the second quarter and first six months of 2023 and 2022 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 March 31, 2023 Net Other comprehensive income (loss) Purchases Sales and Transfer Transfer Balance at June 30, 2023 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 5 — — — — — — 5 Residential MBS 5 — — — — — — 5 Commercial MBS — — — — — — — — Collateralized loan obligations 1 — — — — — — 1 Other asset-backed securities 335 (2) — 3 (26) 31 (20) 321 Corporate and other 359 (4) 8 12 (2) 2 (6) 369 Total AFS fixed maturities 705 (6) 8 15 (28) 33 (26) 701 Equity securities 411 10 — 30 (3) — — 448 Assets of MIE 12 (1) — — — — — 11 Total Level 3 assets $ 1,128 $ 3 $ 8 $ 45 $ (31) $ 33 $ (26) $ 1,160 Contingent consideration — acquisitions $ (25) $ — $ — $ — $ — $ — $ — $ (25) Total Level 3 liabilities $ (25) $ — $ — $ — $ — $ — $ — $ (25) Total realized/unrealized Balance at March 31, 2022 Net Other comprehensive income (loss) Purchases Sales and Transfer Transfer Balance at June 30, 2022 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 33 — (1) — — — (31) 1 Residential MBS 11 — — — — — (3) 8 Commercial MBS — — — — — — — — Collateralized loan obligations — — — — — 2 — 2 Other asset-backed securities 337 — (7) 10 (27) — — 313 Corporate and other 244 — (4) 32 (3) — — 269 Total AFS fixed maturities 625 — (12) 42 (30) 2 (34) 593 Equity securities 361 — — 21 (2) — (2) 378 Assets of MIE 12 (1) — 1 — — — 12 Total Level 3 assets $ 998 $ (1) $ (12) $ 64 $ (32) $ 2 $ (36) $ 983 Contingent consideration — acquisitions $ (23) $ — $ — $ — $ — $ — $ — $ (23) Total Level 3 liabilities $ (23) $ — $ — $ — $ — $ — $ — $ (23) Total realized/unrealized Balance at December 31, 2022 Net Other comprehensive income (loss) Purchases Sales and Transfer Transfer Balance at June 30, 2023 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 5 — — — — — — 5 Residential MBS 9 — — — (3) 4 (5) 5 Commercial MBS — — — — — — — — Collateralized loan obligations 2 — — — — — (1) 1 Other asset-backed securities 329 (2) 4 10 (31) 31 (20) 321 Corporate and other 319 1 10 56 (13) 2 (6) 369 Total AFS fixed maturities 664 (1) 14 66 (47) 37 (32) 701 Equity securities 427 7 — 61 (25) — (22) 448 Assets of MIE 11 (2) — 2 — — — 11 Total Level 3 assets $ 1,102 $ 4 $ 14 $ 129 $ (72) $ 37 $ (54) $ 1,160 Contingent consideration — acquisitions $ (25) $ — $ — $ — $ — $ — $ — $ (25) Total Level 3 liabilities $ (25) $ — $ — $ — $ — $ — $ — $ (25) Total realized/unrealized Balance at December 31, 2021 Net Other comprehensive income (loss) Purchases Sales and Transfer Transfer Balance at June 30, 2022 AFS fixed maturities: U.S. government agency $ — $ — $ — $ — $ — $ — $ — $ — State and municipal 41 — (3) — (1) — (36) 1 Residential MBS 14 — — — (1) — (5) 8 Commercial MBS — — — — — — — — Collateralized loan obligations — — — — — 2 — 2 Other asset-backed securities 278 2 (16) 57 (42) 34 — 313 Corporate and other 267 — (14) 60 (10) — (34) 269 Total AFS fixed maturities 600 2 (33) 117 (54) 36 (75) 593 Equity securities 313 22 — 51 (5) 3 (6) 378 Assets of MIE 13 (2) — 1 — — — 12 Total Level 3 assets $ 926 $ 22 $ (33) $ 169 $ (59) $ 39 $ (81) $ 983 Contingent consideration — acquisitions $ (23) $ — $ — $ — $ — $ — $ — $ (23) Total Level 3 liabilities $ (23) $ — $ — $ — $ — $ — $ — $ (23) |
Fair value of financial instruments | The carrying value and fair value of financial instruments 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 June 30, 2023 Financial assets: Cash and cash equivalents $ 988 $ 988 $ 988 $ — $ — Mortgage loans 645 592 — — 592 Total financial assets not accounted for at fair value $ 1,633 $ 1,580 $ 988 $ — $ 592 Long-term debt $ 1,474 $ 1,303 $ — $ 1,300 $ 3 Total financial liabilities not accounted for at fair value $ 1,474 $ 1,303 $ — $ 1,300 $ 3 December 31, 2022 Financial assets: Cash and cash equivalents $ 872 $ 872 $ 872 $ — $ — Mortgage loans 676 626 — — 626 Total financial assets not accounted for at fair value $ 1,548 $ 1,498 $ 872 $ — $ 626 Long-term debt $ 1,496 $ 1,302 $ — $ 1,299 $ 3 Total financial liabilities not accounted for at fair value $ 1,496 $ 1,302 $ — $ 1,299 $ 3 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Investments, Debt and Equity Securities [Abstract] | |
Available for sale fixed maturities | Available for sale fixed maturities at June 30, 2023 and December 31, 2022, consisted of the following (in millions): Amortized Allowance for Expected Credit Losses Gross Unrealized Net Fair Gains Losses June 30, 2023 Fixed maturities: U.S. government and government agencies $ 241 $ — $ — $ (12) $ (12) $ 229 States, municipalities and political subdivisions 1,012 — 3 (47) (44) 968 Foreign government 242 — — (14) (14) 228 Residential MBS 1,710 2 20 (182) (162) 1,546 Commercial MBS 81 — — (2) (2) 79 Collateralized loan obligations 1,906 2 5 (50) (45) 1,859 Other asset-backed securities 2,338 7 — (162) (162) 2,169 Corporate and other 2,958 5 12 (158) (146) 2,807 Total fixed maturities $ 10,488 $ 16 $ 40 $ (627) $ (587) $ 9,885 December 31, 2022 Fixed maturities: U.S. government and government agencies $ 233 $ — $ — $ (14) $ (14) $ 219 States, municipalities and political subdivisions 1,234 — 3 (51) (48) 1,186 Foreign government 240 — — (14) (14) 226 Residential MBS 1,757 2 23 (180) (157) 1,598 Commercial MBS 88 — — (3) (3) 85 Collateralized loan obligations 1,988 1 1 (67) (66) 1,921 Other asset-backed securities 2,435 7 1 (184) (183) 2,245 Corporate and other 2,761 1 11 (156) (145) 2,615 Total fixed maturities $ 10,736 $ 11 $ 39 $ (669) $ (630) $ 10,095 |
Equity securities reported at fair value | Equity securities which are reported at fair value with holding gains and losses recognized in net earnings, consisted of the following at June 30, 2023 and December 31, 2022 (in millions): June 30, 2023 December 31, 2022 Actual Cost Fair Value Actual Cost Fair Value Fair Value Over (Under) Cost Fair Value Over (Under) Cost Common stocks $ 620 $ 617 $ (3) $ 556 $ 553 $ (3) Perpetual preferred stocks 434 431 (3) 436 457 21 Total equity securities carried at fair value $ 1,054 $ 1,048 $ (6) $ 992 $ 1,010 $ 18 |
Investments accounted for using the equity method | The following table shows the carrying value and net investment income from investments accounted for using the equity method (in millions): Net Investment Income Carrying Value Six months ended June 30, June 30, 2023 December 31, 2022 2023 2022 Real estate-related investments (*) $ 1,313 $ 1,229 $ 75 $ 169 Private equity 408 438 7 38 Private debt 35 33 3 2 Total investments accounted for using the equity method $ 1,756 $ 1,700 $ 85 $ 209 (*) 92% of the carrying value relates to underlying investments in multi-family properties at both June 30, 2023 and December 31, 2022. |
Gross unrealized losses on securities by investment category and length of time that have been in a continuous unrealized loss position | The following table shows gross unrealized losses (dollars in millions) on available for sale fixed maturities 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 June 30, 2023 Fixed maturities: U.S. government and government agencies $ (1) $ 32 97 % $ (11) $ 195 95 % States, municipalities and political subdivisions (11) 352 97 % (36) 438 92 % Foreign government (3) 17 85 % (11) 211 95 % Residential MBS (13) 357 96 % (169) 1,009 86 % Commercial MBS — 11 100 % (2) 64 97 % Collateralized loan obligations (2) 92 98 % (48) 1,297 96 % Other asset-backed securities (10) 360 97 % (152) 1,601 91 % Corporate and other (31) 985 97 % (127) 1,176 90 % Total fixed maturities $ (71) $ 2,206 97 % $ (556) $ 5,991 92 % December 31, 2022 Fixed maturities: U.S. government and government agencies $ (4) $ 111 97 % $ (10) $ 107 91 % States, municipalities and political subdivisions (50) 967 95 % (1) 15 94 % Foreign government (5) 90 95 % (9) 134 94 % Residential MBS (115) 1,078 90 % (65) 315 83 % Commercial MBS (2) 44 96 % (1) 33 97 % Collateralized loan obligations (44) 1,224 97 % (23) 587 96 % Other asset-backed securities (100) 1,361 93 % (84) 740 90 % Corporate and other (105) 1,665 94 % (51) 413 89 % Total fixed maturities $ (425) $ 6,540 94 % $ (244) $ 2,344 91 % |
Roll forward of allowance for credit losses on fixed maturity securities | A progression of the allowance for expected credit losses on available for sale fixed maturity securities is shown below (in millions): Structured Corporate and Other Total Balance at March 31, 2023 $ 11 $ 5 $ 16 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 June 30, 2023 $ 11 $ 5 $ 16 Balance at March 31, 2022 $ 6 $ 1 $ 7 Provision for expected credit losses on securities with no previous allowance 1 — 1 Additions (reductions) to previously recognized expected credit losses — — — Reductions due to sales or redemptions — (1) (1) Balance at June 30, 2022 $ 7 $ — $ 7 Balance at January 1, 2023 $ 10 $ 1 $ 11 Provision for expected credit losses on securities with no previous allowance 1 5 6 Additions (reductions) to previously recognized expected credit losses — (1) (1) Reductions due to sales or redemptions — — — Balance at June 30, 2023 $ 11 $ 5 $ 16 Balance at January 1, 2022 $ 8 $ 1 $ 9 Provision for expected credit losses on securities with no previous allowance 1 — 1 Additions (reductions) to previously recognized expected credit losses (2) — (2) Reductions due to sales or redemptions — (1) (1) Balance at June 30, 2022 $ 7 $ — $ 7 (*) 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 June 30, 2023 (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 $ 479 $ 471 5 % After one year through five years 2,551 2,414 24 % After five years through ten years 1,075 1,024 10 % After ten years 343 323 3 % 4,448 4,232 42 % Collateralized loan obligations and other ABS (average life of approximately 3 years) 4,235 4,028 41 % MBS (average life of approximately 6.5 years) 1,789 1,625 17 % Total $ 10,472 $ 9,885 100 % (*) Amortized cost, net of allowance for expected credit losses. |
Net investment income earned and investment expenses incurred | The following table shows (in millions) investment income earned and investment expenses incurred. Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Investment income: Fixed maturities: Interest and amortization $ 124 $ 85 $ 243 $ 165 Change in fair value (a) 7 — 10 — Equity securities: Dividends 9 8 18 15 Change in fair value (b) 13 (9) 29 (2) Equity in earnings of partnerships and similar investments 28 76 85 209 Other 22 13 40 20 Gross investment income 203 173 425 407 Investment expenses (5) (5) (10) (9) Net investment income $ 198 $ 168 $ 415 $ 398 (a) The change in the fair value of fixed maturities classified as trading and derivatives embedded in convertible fixed maturities related to limited partnerships and similar investments. (b) 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 limited partnerships and similar investments that do not qualify for equity method accounting and related investments. |
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) included in AOCI related to fixed maturity securities are summarized as follows (in millions): Three months ended June 30, 2023 Three months ended June 30, 2022 Realized gains (losses) Realized gains (losses) Before Impairments Impairment Allowance Total Change in Unrealized Before Impairments Impairment Allowance Total Change in Unrealized Fixed maturities $ (5) $ — $ (5) $ (64) $ (10) $ (1) $ (11) $ (275) Equity securities 3 — 3 — (82) — (82) — Mortgage loans and other investments — — — — — — — — Total pretax (2) — (2) (64) (92) (1) (93) (275) Tax effects 1 — 1 13 20 — 20 58 Net of tax $ (1) $ — $ (1) $ (51) $ (72) $ (1) $ (73) $ (217) Six months ended June 30, 2023 Six months ended June 30, 2022 Realized gains (losses) Realized gains (losses) Before Impairments Impairment Allowance Total Change in Unrealized Before Impairments Impairment Allowance Total Change in Unrealized Fixed maturities $ (28) $ (5) $ (33) $ 43 $ (14) $ 1 $ (13) $ (586) Equity securities (15) — (15) — (95) — (95) — Mortgage loans and other investments — — — — — — — — Total pretax (43) (5) (48) 43 (109) 1 (108) (586) Tax effects 9 1 10 (10) 23 — 23 124 Net of tax $ (34) $ (4) $ (38) $ 33 $ (86) $ 1 $ (85) $ (462) |
Holding gains (losses) on equity securities still held | AFG recorded net holding gains (losses) on equity securities during the second quarter and first six months of 2023 and 2022 on securities that were still owned at June 30, 2023 and June 30, 2022 as follows (in millions): Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Included in realized gains (losses) $ 2 $ (82) $ (21) $ (96) Included in net investment income 13 (9) 29 (4) $ 15 $ (91) $ 8 $ (100) |
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 consisted of the following (in millions): Six months ended June 30, 2023 2022 Gross gains $ 2 $ 3 Gross losses (27) (9) |
Derivatives (Tables)
Derivatives (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives included in the Balance Sheet at fair value | The following table presents the classification of derivative assets and liabilities included in AFG’s Balance Sheet at fair value (in millions): June 30, 2023 December 31, 2022 Balance Sheet Line Asset Liability Asset Liability Derivatives designated and qualifying as cash flow hedges: Interest rate swaps Other assets/Other liabilities $ — $ 41 $ — $ 37 Derivatives not designated as hedging instruments: Fixed maturities with embedded derivatives Fixed maturities 92 — 40 — Total return swap Other assets/Other liabilities 4 — — 5 $ 96 $ 41 $ 40 $ 42 |
Summary of gain (loss) included in the Statement of Earnings for changes in the fair value of derivatives | The following table summarizes the gains (losses) included in AFG’s Statement of Earnings for changes in the fair value of derivatives for the second quarter and six months ended June 30, 2023 and 2022 (in millions): Three months ended June 30, Six months ended June 30, Statement of Earnings Line 2023 2022 2023 2022 Qualifying cash flow hedges - gains (losses) reclassified from AOCI to net earnings: Interest rate swaps Net investment income $ (7) $ 1 $ (12) $ 2 Non-designated hedges - gains (losses) included in net earnings: Fixed maturities with embedded derivatives Realized gains (losses) on securities (4) (3) (3) (8) Fixed maturities with embedded derivatives Net investment income 7 — 10 — Total return swap Other expenses 3 (4) 9 (4) Earnings (losses) on non-designated hedges 6 (7) 16 (12) Total earnings (losses) on derivatives $ (1) $ (6) $ 4 $ (10) |
Managed Investment Entities (Ta
Managed Investment Entities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Variable Interest Entity, Primary Beneficiary, Does Not Hold Majority Voting Interest, Disclosures [Abstract] | |
Selected financial information related to collateralized loan obligations | The following table shows a progression of the fair value of AFG's investment in CLO tranches (in millions): Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Balance at beginning of period $ 119 $ 89 $ 112 $ 76 Purchases — 15 11 33 Sales — — — — Distributions (7) (6) (12) (9) Change in fair value 5 (13) 6 (15) Balance at end of period (*) $ 117 $ 85 $ 117 $ 85 (*) Excludes $19 million invested in a temporary warehousing entity at June 30, 2023 that was established to provide AFG the ability to form a new CLO. Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Gains (losses) on change in fair value of assets/liabilities (*): Assets $ 32 $ (247) $ 66 $ (304) Liabilities (32) 232 (70) 284 Management fees paid to AFG 4 4 8 8 CLO earnings (losses) attributable to AFG 5 (12) 6 (14) (*) Included in revenues in AFG’s Statement of Earnings. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt instruments | Long-term debt consisted of the following (in millions): June 30, 2023 December 31, 2022 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 $ 567 $ (1) $ 566 $ 582 $ (1) $ 581 5.25% Senior Notes due April 2030 253 (4) 249 261 (5) 256 Other 3 — 3 3 — 3 823 (5) 818 846 (6) 840 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 $ 1,498 $ (24) $ 1,474 $ 1,521 $ (25) $ 1,496 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Stockholders' Equity Note [Abstract] | |
Components of accumulated other comprehensive income (loss) | The progression of the components of accumulated other comprehensive income (loss) follows (in millions): Other Comprehensive Income (Loss) AOCI Beginning Balance Pretax Tax Net of tax AOCI Ending Balance Quarter ended June 30, 2023 Net unrealized gains (losses) on securities: Unrealized holding gains (losses) on securities arising during the period $ (66) $ 14 $ (52) Reclassification adjustment for realized (gains) losses included in net earnings (*) 2 (1) 1 Total net unrealized gains (losses) on securities $ (413) (64) 13 (51) $ (464) Net unrealized gains (losses) on cash flow hedges: Unrealized holding gains (losses) on cash flow hedges arising during the period $ (21) $ 4 $ (17) Reclassification adjustment for investment income included in net earnings (*) 6 (1) 5 Total net unrealized gains (losses) on cash flow hedges (21) (15) 3 (12) (33) Foreign currency translation adjustments (20) 2 1 3 (17) Pension and other postretirement plan adjustments 3 — — — 3 Total $ (451) $ (77) $ 17 $ (60) $ (511) Quarter ended June 30, 2022 Net unrealized gains (losses) on securities: Unrealized holding gains (losses) on securities arising during the period $ (286) $ 61 $ (225) Reclassification adjustment for realized (gains) losses included in net earnings (*) 11 (3) 8 Total net unrealized gains (losses) on securities $ (109) (275) 58 (217) $ (326) Net unrealized gains (losses) on cash flow hedges: Unrealized holding gains (losses) on cash flow hedges arising during the period (3) 1 (2) Reclassification adjustment for investment income included in net earnings (*) (2) — (2) Total net unrealized gains (losses) on cash flow hedges (4) (5) 1 (4) (8) Foreign currency translation adjustments (19) 5 (1) 4 (15) Pension and other postretirement plan adjustments 1 — — — 1 Total $ (131) $ (275) $ 58 $ (217) $ (348) Other Comprehensive Income (Loss) AOCI Beginning Balance Pretax Tax Net of tax AOCI Ending Balance Six months ended June 30, 2023 Net unrealized gains (losses) on securities: Unrealized holding gains (losses) on securities arising during the period $ 12 $ (3) $ 9 Reclassification adjustment for realized (gains) losses included in net earnings (*) 31 (7) 24 Total net unrealized gains (losses) on securities $ (497) 43 (10) 33 $ (464) Net unrealized gains (losses) on cash flow hedges: Unrealized holding gains (losses) on cash flow hedges arising during the period (16) 3 (13) Reclassification adjustment for investment income included in net earnings (*) 11 (2) 9 Total net unrealized gains (losses) on cash flow hedges (29) (5) 1 (4) (33) Foreign currency translation adjustments (20) 2 1 3 (17) Pension and other postretirement plan adjustments 3 — — — 3 Total $ (543) $ 40 $ (8) $ 32 $ (511) Six months ended June 30, 2022 Net unrealized gains (losses) on securities: Unrealized holding gains (losses) on securities arising during the period $ (599) $ 127 $ (472) Reclassification adjustment for realized (gains) losses included in net earnings (*) 13 (3) 10 Total net unrealized gains (losses) on securities $ 136 (586) 124 (462) $ (326) Net unrealized gains (losses) on cash flow hedges: Unrealized holding gains (losses) on cash flow hedges arising during the period (8) 2 (6) Reclassification adjustment for investment income included in net earnings (*) (2) — (2) Total net unrealized gains (losses) on cash flow hedges — (10) 2 (8) (8) Foreign currency translation adjustments (18) 3 — 3 (15) Pension and other postretirement plan adjustments 1 — — — 1 Total $ 119 $ (593) $ 126 $ (467) $ (348) (*) The reclassification adjustments affected the following lines in AFG’s Statement of Earnings: OCI component Affected line in the statement of earnings Pretax - Net unrealized gains (losses) on securities Realized gains (losses) on securities Pretax - Net unrealized gains (losses) on cash flow hedges Net investment income Tax Provision for income taxes |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
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 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 June 30, Six months ended June 30, 2023 2022 2023 2022 Amount % of EBT Amount % of EBT Amount % of EBT Amount % of EBT Earnings before income taxes (“EBT”) $ 255 $ 206 $ 519 $ 567 Income taxes at statutory rate $ 54 21 % $ 43 21 % $ 109 21 % $ 119 21 % Effect of: Employee stock ownership plan dividend paid deduction — — % (4) (2 %) (3) (1 %) (6) (1 %) Stock-based compensation — — % (2) (1 %) (2) — % (4) (1 %) Tax exempt interest (1) — % (2) (1 %) (2) — % (4) (1 %) Dividends received deduction — — % — — % (1) — % (1) — % Nondeductible expenses 2 1 % 1 — % 5 1 % 3 1 % Foreign operations 2 1 % — — % 4 1 % 5 1 % Change in valuation allowance — — % 1 — % — — % (1) — % Other (2) (1 %) 2 2 % (3) (1 %) (1) (1 %) Provision for income taxes as shown in the statement of earnings $ 55 22 % $ 39 19 % $ 107 21 % $ 110 19 % |
Insurance (Tables)
Insurance (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
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 six months of 2023 and 2022 (in millions): Six months ended June 30, 2023 2022 Balance at beginning of year $ 11,974 $ 11,074 Less reinsurance recoverables, net of allowance 3,767 3,419 Net liability at beginning of year 8,207 7,655 Provision for losses and LAE occurring in the current period 1,850 1,640 Net decrease in the provision for claims of prior years (125) (173) Total losses and LAE incurred 1,725 1,467 Payments for losses and LAE of: Current year (338) (290) Prior years (1,345) (1,102) Total payments (1,683) (1,392) Foreign currency translation and other — — Net liability at end of period 8,249 7,730 Add back reinsurance recoverables, net of allowance 3,676 3,471 Gross unpaid losses and LAE included in the balance sheet at end of period $ 11,925 $ 11,201 |
Reinsurance recoverable and premiums receivable, allowance for credit loss | Progressions of the 2023 and 2022 allowance for expected credit losses on recoverables from reinsurers and premiums receivable are shown below (in millions): Recoverables from Reinsurers Premiums Receivable 2023 2022 2023 2022 Balance at March 31 $ 9 $ 7 $ 8 $ 7 Provision (credit) for expected credit losses — — 1 2 Write-offs charged against the allowance — — — — Balance at June 30 $ 9 $ 7 $ 9 $ 9 Balance at January 1 $ 8 $ 8 $ 8 $ 8 Provision (credit) for expected credit losses 1 (1) 1 1 Write-offs charged against the allowance — — — — Balance at June 30 $ 9 $ 7 $ 9 $ 9 |
Accounting Policies - Narrative
Accounting Policies - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Significant Accounting Policies [Line Items] | |||||
Assets of managed investment entities | $ 29,048 | $ 29,048 | $ 28,831 | ||
Liabilities of managed investment entities | 25,055 | 25,055 | 24,779 | ||
Operating lease liability | $ 190 | $ 190 | $ 116 | ||
Operating lease liability, current, Statement of Financial Position | Other Liabilities | Other Liabilities | Other Liabilities | ||
Operating lease right-of-use asset | $ 167 | $ 167 | $ 103 | ||
Operating lease, right-of-use asset, Statement of Financial Position | Other Assets | Other Assets | Other Assets | ||
Weighted average common shares adjustment related to stock-based compensation (shares) | 100,000 | 200,000 | 100,000 | 600,000 | |
Anti-dilutive potential common shares related to stock-based compensation plans (shares) | 0 | 0 | 0 | 0 | |
Maturities of short term investments | 3 months | ||||
Lessee, Operating Lease, Renewal Term | 10 years | 10 years | |||
New collateralized loan obligation temporary warehousing entities | |||||
Significant Accounting Policies [Line Items] | |||||
Assets of managed investment entities | $ 105 | $ 105 | |||
Liabilities of managed investment entities | $ 86 | $ 86 |
Segments of Operations - Narrat
Segments of Operations - Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) segment | Jun. 30, 2022 USD ($) | |
Segment Reporting [Abstract] | ||||
Number of segments | segment | 2 | |||
Other | ||||
Segment Reporting Information [Line Items] | ||||
Loss on retirement of debt | $ | $ (1) | $ (9) | $ 1 | $ (11) |
Segments of Operations - Revenu
Segments of Operations - Revenues by segment and sub-segment (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Total premiums earned | $ 1,507 | $ 1,393 | $ 2,944 | $ 2,695 |
Net investment income | 198 | 168 | 415 | 398 |
Other income | 25 | 32 | 57 | 62 |
Revenues before realized gains (losses) | 1,842 | 1,632 | 3,628 | 3,235 |
Realized gains (losses) on securities | (2) | (93) | (48) | (108) |
Total revenues | 1,840 | 1,539 | 3,580 | 3,127 |
Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Total premiums earned | 1,507 | 1,393 | 2,944 | 2,695 |
Net investment income | 191 | 156 | 398 | 379 |
Other income | 3 | 6 | 8 | 10 |
Revenues before realized gains (losses) | 1,701 | 1,555 | 3,350 | 3,084 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Revenues before realized gains (losses) | 141 | 77 | 278 | 151 |
Property and transportation | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Total premiums earned | 534 | 505 | 1,009 | 948 |
Specialty casualty | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Total premiums earned | 711 | 657 | 1,415 | 1,296 |
Specialty financial | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Total premiums earned | 195 | 171 | 391 | 334 |
Other specialty | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Total premiums earned | $ 67 | $ 60 | $ 129 | $ 117 |
Segments of Operations - Earnin
Segments of Operations - Earnings before income taxes by segment and sub-segment (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Earnings before realized gains (losses) and income taxes | $ 257 | $ 299 | $ 567 | $ 675 |
Realized gains (losses) on securities | (2) | (93) | (48) | (108) |
Earnings before income taxes | 255 | 206 | 519 | 567 |
Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | 124 | 196 | 278 | 403 |
Investment and other income, net | 175 | 149 | 371 | 364 |
Earnings before realized gains (losses) and income taxes | 299 | 345 | 649 | 767 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Earnings before realized gains (losses) and income taxes | (42) | (46) | (82) | (92) |
Property and transportation | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | 32 | 39 | 75 | 101 |
Specialty casualty | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | 95 | 130 | 183 | 254 |
Specialty financial | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | 10 | 37 | 36 | 66 |
Other specialty | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | (14) | (9) | (16) | (16) |
Other lines | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | $ 1 | $ (1) | $ 0 | $ (2) |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) | 6 Months Ended | |
Jun. 30, 2023 USD ($) professional | Dec. 31, 2022 USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
AFG's internal investment professionals | professional | 20 | |
Percentage of level three assets that were priced using a discounted cash flow approach | 67% | |
Level three assets that were priced using a discounted cash flow approach | $ 462,000,000 | |
Percentage of level three assets, equity securities, priced using broker quotes and internal models | 18% | |
Level three assets, equity securities, priced using broker quotes and internal models | $ 123,000,000 | |
Contingent consideration — acquisitions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of potential contingent consideration | 25,000,000 | $ 25,000,000 |
Change in fair value of contingent consideration liability | 0 | |
Contingent consideration — acquisitions | Verikai, Inc. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of potential contingent consideration | $ 23,000,000 | |
Level 3 | ||
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 | 7% | |
Percentage of level 3 assets that were priced using non-binding broker quotes | 10% | |
Level 3 assets that were priced using non-binding broker quotes | $ 117,000,000 | |
Percentage of level 3 assets that were priced by pricing services | 3% | |
Level 3 assets that were priced by pricing services. | $ 37,000,000 | |
Percentage of level 3 equity investments that do not qualify for equity accounting | 27% | |
Level 3 assets that are equity securities that do not qualify for equity accounting | $ 316,000,000 | |
Percentage of internally developed level 3 assets compared to total level 3 assets | 60% | |
Internally developed level 3 assets | $ 690,000,000 | |
Level 3 | Contingent consideration — acquisitions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of potential contingent consideration | $ 25,000,000 | $ 25,000,000 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and liabilities measured and carried at fair value in the financial statements (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Assets: | ||
Available for sale (AFS) fixed maturities | $ 9,885 | $ 10,095 |
Trading fixed maturities | 38 | 32 |
Equity securities | 1,048 | 1,010 |
Assets of managed investment entities | 29,048 | 28,831 |
Derivative asset | 96 | 40 |
Total assets accounted for at fair value | 16,210 | 16,584 |
Liabilities: | ||
Liabilities of managed investment entities | 25,055 | 24,779 |
Derivative liability | 41 | 42 |
Total liabilities accounted for at fair value | 5,164 | 5,399 |
Contingent consideration — acquisitions | ||
Liabilities: | ||
Fair value of potential contingent consideration | 25 | 25 |
Other liabilities — derivatives | ||
Liabilities: | ||
Derivative liability | 41 | 42 |
Variable interest entity, primary beneficiary | ||
Assets: | ||
Assets of managed investment entities | 5,235 | 5,447 |
Liabilities: | ||
Liabilities of managed investment entities | 5,098 | 5,332 |
Fixed maturities: | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 9,885 | 10,095 |
Trading fixed maturities | 38 | 32 |
U.S. government and government agencies | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 229 | 219 |
States, municipalities and political subdivisions | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 968 | 1,186 |
Foreign government | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 228 | 226 |
Residential MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 1,546 | 1,598 |
Commercial MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 79 | 85 |
Collateralized loan obligations | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 1,859 | 1,921 |
Other asset-backed securities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 2,169 | 2,245 |
Corporate and other | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 2,807 | 2,615 |
Equity securities | ||
Assets: | ||
Equity securities | 1,048 | 1,010 |
Other assets | ||
Assets: | ||
Derivative asset | 4 | |
Level 1 | ||
Assets: | ||
Total assets accounted for at fair value | 1,396 | 1,442 |
Liabilities: | ||
Total liabilities accounted for at fair value | 577 | 645 |
Level 1 | Contingent consideration — acquisitions | ||
Liabilities: | ||
Fair value of potential contingent consideration | 0 | 0 |
Level 1 | Other liabilities — derivatives | ||
Liabilities: | ||
Derivative liability | 0 | 0 |
Level 1 | Variable interest entity, primary beneficiary | ||
Assets: | ||
Assets of managed investment entities | 593 | 659 |
Liabilities: | ||
Liabilities of managed investment entities | 577 | 645 |
Level 1 | Fixed maturities: | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 237 | 227 |
Trading fixed maturities | 0 | 0 |
Level 1 | U.S. government and government agencies | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 228 | 219 |
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 | 9 | 8 |
Level 1 | Equity securities | ||
Assets: | ||
Equity securities | 566 | 556 |
Level 1 | Other assets | ||
Assets: | ||
Derivative asset | 0 | |
Level 2 | ||
Assets: | ||
Total assets accounted for at fair value | 13,654 | 14,040 |
Liabilities: | ||
Total liabilities accounted for at fair value | 4,551 | 4,718 |
Level 2 | Contingent consideration — acquisitions | ||
Liabilities: | ||
Fair value of potential contingent consideration | 0 | 0 |
Level 2 | Other liabilities — derivatives | ||
Liabilities: | ||
Derivative liability | 41 | 42 |
Level 2 | Variable interest entity, primary beneficiary | ||
Assets: | ||
Assets of managed investment entities | 4,631 | 4,777 |
Liabilities: | ||
Liabilities of managed investment entities | 4,510 | 4,676 |
Level 2 | Fixed maturities: | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 8,947 | 9,204 |
Trading fixed maturities | 38 | 32 |
Level 2 | U.S. government and government agencies | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 1 | 0 |
Level 2 | States, municipalities and political subdivisions | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 963 | 1,181 |
Level 2 | Foreign government | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 228 | 226 |
Level 2 | Residential MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 1,541 | 1,589 |
Level 2 | Commercial MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 79 | 85 |
Level 2 | Collateralized loan obligations | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 1,858 | 1,919 |
Level 2 | Other asset-backed securities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 1,848 | 1,916 |
Level 2 | Corporate and other | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 2,429 | 2,288 |
Level 2 | Equity securities | ||
Assets: | ||
Equity securities | 34 | 27 |
Level 2 | Other assets | ||
Assets: | ||
Derivative asset | 4 | |
Level 3 | ||
Assets: | ||
Total assets accounted for at fair value | 1,160 | 1,102 |
Liabilities: | ||
Total liabilities accounted for at fair value | 36 | 36 |
Level 3 | Contingent consideration — acquisitions | ||
Liabilities: | ||
Fair value of potential contingent consideration | 25 | 25 |
Level 3 | Other liabilities — derivatives | ||
Liabilities: | ||
Derivative liability | 0 | 0 |
Level 3 | Variable interest entity, primary beneficiary | ||
Assets: | ||
Assets of managed investment entities | 11 | 11 |
Liabilities: | ||
Liabilities of managed investment entities | 11 | 11 |
Level 3 | Fixed maturities: | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 701 | 664 |
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 | 5 | 5 |
Level 3 | Foreign government | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 3 | Residential MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 5 | 9 |
Level 3 | Commercial MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 3 | Collateralized loan obligations | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 1 | 2 |
Level 3 | Other asset-backed securities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 321 | 329 |
Level 3 | Corporate and other | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 369 | 319 |
Level 3 | Equity securities | ||
Assets: | ||
Equity securities | 448 | $ 427 |
Level 3 | Other assets | ||
Assets: | ||
Derivative asset | $ 0 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in balances of Level 3 financial assets carried at fair value (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | |
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||||||
Financial assets, Beginning Balance | $ 1,128 | $ 998 | $ 1,102 | $ 926 | ||||
Total realized/unrealized gains (losses) included in Net income | 3 | (1) | 4 | 22 | ||||
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 8 | (12) | 14 | (33) | ||||
Purchases and issuances | 45 | 64 | 129 | 169 | ||||
Sales and settlements | (31) | (32) | (72) | (59) | ||||
Transfer into Level 3 | 33 | 2 | 37 | 39 | ||||
Transfer out of Level 3 | (26) | (36) | (54) | (81) | ||||
Financial assets, Ending Balance | 1,160 | 983 | 1,160 | 983 | ||||
Contingent consideration - acquisitions, Total Level 3 liabilities | (25) | (23) | (25) | (23) | $ (25) | $ (25) | $ (23) | $ (23) |
Contingent consideration — acquisitions | ||||||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||||||
Contingent consideration - acquisitions, Total Level 3 liabilities | (25) | (23) | (25) | (23) | $ (25) | $ (25) | $ (23) | $ (23) |
Fixed maturities: | ||||||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||||||
Financial assets, Beginning Balance | 705 | 625 | 664 | 600 | ||||
Total realized/unrealized gains (losses) included in Net income | (6) | 0 | (1) | 2 | ||||
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 8 | (12) | 14 | (33) | ||||
Purchases and issuances | 15 | 42 | 66 | 117 | ||||
Sales and settlements | (28) | (30) | (47) | (54) | ||||
Transfer into Level 3 | 33 | 2 | 37 | 36 | ||||
Transfer out of Level 3 | (26) | (34) | (32) | (75) | ||||
Financial assets, Ending Balance | 701 | 593 | 701 | 593 | ||||
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 | ||||
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 | 5 | 33 | 5 | 41 | ||||
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 | (1) | 0 | (3) | ||||
Purchases and issuances | 0 | 0 | 0 | 0 | ||||
Sales and settlements | 0 | 0 | 0 | (1) | ||||
Transfer into Level 3 | 0 | 0 | 0 | 0 | ||||
Transfer out of Level 3 | 0 | (31) | 0 | (36) | ||||
Financial assets, Ending Balance | 5 | 1 | 5 | 1 | ||||
Residential MBS | ||||||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||||||
Financial assets, Beginning Balance | 5 | 11 | 9 | 14 | ||||
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 | (3) | (1) | ||||
Transfer into Level 3 | 0 | 0 | 4 | 0 | ||||
Transfer out of Level 3 | 0 | (3) | (5) | (5) | ||||
Financial assets, Ending Balance | 5 | 8 | 5 | 8 | ||||
Commercial MBS | ||||||||
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 | ||||
Financial assets, Ending Balance | 0 | 0 | 0 | 0 | ||||
Collateralized loan obligations | ||||||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||||||
Financial assets, Beginning Balance | 1 | 0 | 2 | 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 | 2 | 0 | 2 | ||||
Transfer out of Level 3 | 0 | 0 | (1) | 0 | ||||
Financial assets, Ending Balance | 1 | 2 | 1 | 2 | ||||
Other asset-backed securities | ||||||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||||||
Financial assets, Beginning Balance | 335 | 337 | 329 | 278 | ||||
Total realized/unrealized gains (losses) included in Net income | (2) | 0 | (2) | 2 | ||||
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | (7) | 4 | (16) | ||||
Purchases and issuances | 3 | 10 | 10 | 57 | ||||
Sales and settlements | (26) | (27) | (31) | (42) | ||||
Transfer into Level 3 | 31 | 0 | 31 | 34 | ||||
Transfer out of Level 3 | (20) | 0 | (20) | 0 | ||||
Financial assets, Ending Balance | 321 | 313 | 321 | 313 | ||||
Corporate and other | ||||||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||||||
Financial assets, Beginning Balance | 359 | 244 | 319 | 267 | ||||
Total realized/unrealized gains (losses) included in Net income | (4) | 0 | 1 | 0 | ||||
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 8 | (4) | 10 | (14) | ||||
Purchases and issuances | 12 | 32 | 56 | 60 | ||||
Sales and settlements | (2) | (3) | (13) | (10) | ||||
Transfer into Level 3 | 2 | 0 | 2 | 0 | ||||
Transfer out of Level 3 | (6) | 0 | (6) | (34) | ||||
Financial assets, Ending Balance | 369 | 269 | 369 | 269 | ||||
Equity securities | ||||||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||||||
Financial assets, Beginning Balance | 411 | 361 | 427 | 313 | ||||
Total realized/unrealized gains (losses) included in Net income | 10 | 0 | 7 | 22 | ||||
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | 0 | ||||
Purchases and issuances | 30 | 21 | 61 | 51 | ||||
Sales and settlements | (3) | (2) | (25) | (5) | ||||
Transfer into Level 3 | 0 | 0 | 0 | 3 | ||||
Transfer out of Level 3 | 0 | (2) | (22) | (6) | ||||
Financial assets, Ending Balance | 448 | 378 | 448 | 378 | ||||
Contingent consideration - acquisitions, Total Level 3 liabilities | 378 | 378 | ||||||
Assets of MIE | ||||||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||||||
Financial assets, Beginning Balance | 12 | 12 | 11 | 13 | ||||
Total realized/unrealized gains (losses) included in Net income | (1) | (1) | (2) | (2) | ||||
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | 0 | ||||
Purchases and issuances | 0 | 1 | 2 | 1 | ||||
Sales and settlements | 0 | 0 | 0 | 0 | ||||
Transfer into Level 3 | 0 | 0 | 0 | 0 | ||||
Transfer out of Level 3 | 0 | 0 | 0 | 0 | ||||
Financial assets, Ending Balance | $ 11 | $ 12 | $ 11 | $ 12 |
Fair Value Measurements - Cha_2
Fair Value Measurements - Changes in balances of Level 3 financial liabilities carried at fair value (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Financial liabilities, Beginning Balance | $ (25) | $ (23) | $ (25) | $ (23) |
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 |
Financial liabilities, Ending Balance | (25) | (23) | (25) | (23) |
Contingent consideration — acquisitions | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Financial liabilities, Beginning Balance | (25) | (23) | (25) | (23) |
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 |
Financial liabilities, Ending Balance | $ (25) | $ (23) | $ (25) | $ (23) |
Fair Value Measurements - The c
Fair Value Measurements - The carrying value and fair value of financial instruments (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Financial assets: | ||
Mortgage loans | $ 645 | $ 676 |
Long-term debt | 1,474 | 1,496 |
Level 1 | ||
Financial assets: | ||
Cash and cash equivalents | 988 | 872 |
Mortgage loans | 0 | 0 |
Total financial assets not accounted for at fair value | 988 | 872 |
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 | 1,300 | 1,299 |
Total financial liabilities not accounted for at fair value | 1,300 | 1,299 |
Level 3 | ||
Financial assets: | ||
Cash and cash equivalents | 0 | 0 |
Mortgage loans | 592 | 626 |
Total financial assets not accounted for at fair value | 592 | 626 |
Long-term debt | 3 | 3 |
Total financial liabilities not accounted for at fair value | 3 | 3 |
Carrying Value | ||
Financial assets: | ||
Cash and cash equivalents | 988 | 872 |
Mortgage loans | 645 | 676 |
Total financial assets not accounted for at fair value | 1,633 | 1,548 |
Long-term debt | 1,474 | 1,496 |
Total financial liabilities not accounted for at fair value | 1,474 | 1,496 |
Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 988 | 872 |
Mortgage loans | 592 | 626 |
Total financial assets not accounted for at fair value | 1,580 | 1,498 |
Long-term debt | 1,303 | 1,302 |
Total financial liabilities not accounted for at fair value | $ 1,303 | $ 1,302 |
Investments - Narrative (Detail
Investments - Narrative (Details) $ in Millions | Jun. 30, 2023 USD ($) security | Dec. 31, 2022 USD ($) |
Schedule of Investments [Line Items] | ||
Unfunded commitments to limited partnerships | $ 407 | $ 396 |
Percentage (based on amount of unrealized loss) of available for sale fixed maturities that are in an unrealized loss position and rated investment grade | 95% | |
Percentage (based on fair value) of available for sale fixed maturities that are in an unrealized loss position and rated investment grade | 95% | |
Multifamily | ||
Schedule of Investments [Line Items] | ||
Percent of real-estate related investments by property type | 92% | 92% |
Fixed maturities: | ||
Schedule of Investments [Line Items] | ||
Gross unrealized losses on fixed maturities | $ 627 | $ 669 |
Number of fixed maturity securities in an unrealized loss position | security | 1,800 |
Investments - Available for sal
Investments - Available for sale fixed maturities (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Securities, Available-for-sale [Line Items] | ||||||
Fixed maturities, available for sale, amortized cost | $ 10,488 | $ 10,736 | ||||
Fixed maturities, available for sale, allowance for expected credit losses | 16 | $ 16 | 11 | $ 7 | $ 7 | $ 9 |
Available for sale (AFS) fixed maturities | 9,885 | 10,095 | ||||
Total fixed maturities | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Fixed maturities, available for sale, amortized cost | 10,488 | 10,736 | ||||
Fixed maturities, available for sale, allowance for expected credit losses | 16 | 11 | ||||
Fixed maturities, available for sale, gross unrealized, gains | 40 | 39 | ||||
Fixed maturities, available for sale, gross unrealized, losses | (627) | (669) | ||||
Available for sale (AFS) fixed maturities | 9,885 | 10,095 | ||||
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 | (587) | (630) | ||||
U.S. government and government agencies | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Fixed maturities, available for sale, amortized cost | 241 | 233 | ||||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | 0 | ||||
Fixed maturities, available for sale, gross unrealized, gains | 0 | 0 | ||||
Fixed maturities, available for sale, gross unrealized, losses | (12) | (14) | ||||
Available for sale (AFS) fixed maturities | 229 | 219 | ||||
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 | (12) | (14) | ||||
States, municipalities and political subdivisions | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Fixed maturities, available for sale, amortized cost | 1,012 | 1,234 | ||||
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 | (47) | (51) | ||||
Available for sale (AFS) fixed maturities | 968 | 1,186 | ||||
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 | (44) | (48) | ||||
Foreign government | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Fixed maturities, available for sale, amortized cost | 242 | 240 | ||||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | 0 | ||||
Fixed maturities, available for sale, gross unrealized, gains | 0 | 0 | ||||
Fixed maturities, available for sale, gross unrealized, losses | (14) | (14) | ||||
Available for sale (AFS) fixed maturities | 228 | 226 | ||||
Foreign government | Debt Securities | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | (14) | (14) | ||||
Residential MBS | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Fixed maturities, available for sale, amortized cost | 1,710 | 1,757 | ||||
Fixed maturities, available for sale, allowance for expected credit losses | 2 | 2 | ||||
Fixed maturities, available for sale, gross unrealized, gains | 20 | 23 | ||||
Fixed maturities, available for sale, gross unrealized, losses | (182) | (180) | ||||
Available for sale (AFS) fixed maturities | 1,546 | 1,598 | ||||
Residential MBS | Debt Securities | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | (162) | (157) | ||||
Commercial MBS | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Fixed maturities, available for sale, amortized cost | 81 | 88 | ||||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | 0 | ||||
Fixed maturities, available for sale, gross unrealized, gains | 0 | 0 | ||||
Fixed maturities, available for sale, gross unrealized, losses | (2) | (3) | ||||
Available for sale (AFS) fixed maturities | 79 | 85 | ||||
Commercial MBS | Debt Securities | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Fixed maturities, available-for-sale securities, accumulated gross unrealized gain (loss), before tax | (2) | (3) | ||||
Collateralized loan obligations | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Fixed maturities, available for sale, amortized cost | 1,906 | 1,988 | ||||
Fixed maturities, available for sale, allowance for expected credit losses | 2 | 1 | ||||
Fixed maturities, available for sale, gross unrealized, gains | 5 | 1 | ||||
Fixed maturities, available for sale, gross unrealized, losses | (50) | (67) | ||||
Available for sale (AFS) fixed maturities | 1,859 | 1,921 | ||||
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 | (45) | (66) | ||||
Other asset-backed securities | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Fixed maturities, available for sale, amortized cost | 2,338 | 2,435 | ||||
Fixed maturities, available for sale, allowance for expected credit losses | 7 | 7 | ||||
Fixed maturities, available for sale, gross unrealized, gains | 0 | 1 | ||||
Fixed maturities, available for sale, gross unrealized, losses | (162) | (184) | ||||
Available for sale (AFS) fixed maturities | 2,169 | 2,245 | ||||
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 | (162) | (183) | ||||
Corporate and other | ||||||
Debt Securities, Available-for-sale [Line Items] | ||||||
Fixed maturities, available for sale, amortized cost | 2,958 | 2,761 | ||||
Fixed maturities, available for sale, allowance for expected credit losses | 5 | $ 5 | 1 | $ 0 | $ 1 | $ 1 |
Fixed maturities, available for sale, gross unrealized, gains | 12 | 11 | ||||
Fixed maturities, available for sale, gross unrealized, losses | (158) | (156) | ||||
Available for sale (AFS) fixed maturities | 2,807 | 2,615 | ||||
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 | $ (146) | $ (145) |
Investments - Equity securities
Investments - Equity securities reported at fair value (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Equity securities | $ 1,048 | $ 1,010 |
Common stocks | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Equity securities, at cost | 620 | 556 |
Equity securities | 617 | 553 |
Equity securities, fair value in excess of cost | (3) | (3) |
Perpetual preferred stocks | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Equity securities, at cost | 434 | 436 |
Equity securities | 431 | 457 |
Equity securities, fair value in excess of cost | (3) | 21 |
Equity securities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Equity securities, at cost | 1,054 | 992 |
Equity securities | 1,048 | 1,010 |
Equity securities, fair value in excess of cost | $ (6) | $ 18 |
Investments - Detail of equity
Investments - Detail of equity method investments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Schedule of Investments [Line Items] | |||||
Investments accounted for using the equity method | $ 1,756 | $ 1,756 | $ 1,700 | ||
Equity in earnings of partnerships and similar investments | 28 | $ 76 | 85 | $ 209 | |
Real estate-related investments | |||||
Schedule of Investments [Line Items] | |||||
Investments accounted for using the equity method | 1,313 | 1,313 | 1,229 | ||
Equity in earnings of partnerships and similar investments | 75 | 169 | |||
Private equity | |||||
Schedule of Investments [Line Items] | |||||
Investments accounted for using the equity method | 408 | 408 | 438 | ||
Equity in earnings of partnerships and similar investments | 7 | 38 | |||
Private debt | |||||
Schedule of Investments [Line Items] | |||||
Investments accounted for using the equity method | $ 35 | 35 | $ 33 | ||
Equity in earnings of partnerships and similar investments | $ 3 | $ 2 |
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 | Jun. 30, 2023 | Dec. 31, 2022 |
Total fixed maturities | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ (71) | $ (425) |
Fair value - less than twelve months | $ 2,206 | $ 6,540 |
Fair value as percentage of cost - Less than twelve months | 97% | 94% |
Unrealized Loss - Twelve months or more | $ (556) | $ (244) |
Fair Value - Twelve months or more | $ 5,991 | $ 2,344 |
Fair value as percentage of cost - Twelve months or more | 92% | 91% |
U.S. government and government agencies | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ (1) | $ (4) |
Fair value - less than twelve months | $ 32 | $ 111 |
Fair value as percentage of cost - Less than twelve months | 97% | 97% |
Unrealized Loss - Twelve months or more | $ (11) | $ (10) |
Fair Value - Twelve months or more | $ 195 | $ 107 |
Fair value as percentage of cost - Twelve months or more | 95% | 91% |
States, municipalities and political subdivisions | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ (11) | $ (50) |
Fair value - less than twelve months | $ 352 | $ 967 |
Fair value as percentage of cost - Less than twelve months | 97% | 95% |
Unrealized Loss - Twelve months or more | $ (36) | $ (1) |
Fair Value - Twelve months or more | $ 438 | $ 15 |
Fair value as percentage of cost - Twelve months or more | 92% | 94% |
Foreign government | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ (3) | $ (5) |
Fair value - less than twelve months | $ 17 | $ 90 |
Fair value as percentage of cost - Less than twelve months | 85% | 95% |
Unrealized Loss - Twelve months or more | $ (11) | $ (9) |
Fair Value - Twelve months or more | $ 211 | $ 134 |
Fair value as percentage of cost - Twelve months or more | 95% | 94% |
Residential MBS | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ (13) | $ (115) |
Fair value - less than twelve months | $ 357 | $ 1,078 |
Fair value as percentage of cost - Less than twelve months | 96% | 90% |
Unrealized Loss - Twelve months or more | $ (169) | $ (65) |
Fair Value - Twelve months or more | $ 1,009 | $ 315 |
Fair value as percentage of cost - Twelve months or more | 86% | 83% |
Commercial MBS | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ 0 | $ (2) |
Fair value - less than twelve months | $ 11 | $ 44 |
Fair value as percentage of cost - Less than twelve months | 100% | 96% |
Unrealized Loss - Twelve months or more | $ (2) | $ (1) |
Fair Value - Twelve months or more | $ 64 | $ 33 |
Fair value as percentage of cost - Twelve months or more | 97% | 97% |
Collateralized loan obligations | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ (2) | $ (44) |
Fair value - less than twelve months | $ 92 | $ 1,224 |
Fair value as percentage of cost - Less than twelve months | 98% | 97% |
Unrealized Loss - Twelve months or more | $ (48) | $ (23) |
Fair Value - Twelve months or more | $ 1,297 | $ 587 |
Fair value as percentage of cost - Twelve months or more | 96% | 96% |
Other asset-backed securities | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ (10) | $ (100) |
Fair value - less than twelve months | $ 360 | $ 1,361 |
Fair value as percentage of cost - Less than twelve months | 97% | 93% |
Unrealized Loss - Twelve months or more | $ (152) | $ (84) |
Fair Value - Twelve months or more | $ 1,601 | $ 740 |
Fair value as percentage of cost - Twelve months or more | 91% | 90% |
Corporate and other | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized loss - less than twelve months | $ (31) | $ (105) |
Fair value - less than twelve months | $ 985 | $ 1,665 |
Fair value as percentage of cost - Less than twelve months | 97% | 94% |
Unrealized Loss - Twelve months or more | $ (127) | $ (51) |
Fair Value - Twelve months or more | $ 1,176 | $ 413 |
Fair value as percentage of cost - Twelve months or more | 90% | 89% |
Investments - Allowance for cre
Investments - Allowance for credit losses on fixed maturities (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Allowance for Credit Losses [Roll Forward] | ||||
Beginning balance | $ 16 | $ 7 | $ 11 | $ 9 |
Provision for expected credit losses on securities with no previous allowance | 0 | 1 | 6 | 1 |
Additions (reductions) to previously recognized expected credit losses | 0 | 0 | (1) | (2) |
Reductions due to sales or redemptions | 0 | (1) | 0 | (1) |
Ending balance | 16 | 7 | 16 | 7 |
Structured securities | ||||
Allowance for Credit Losses [Roll Forward] | ||||
Beginning balance | 11 | 6 | 10 | 8 |
Provision for expected credit losses on securities with no previous allowance | 0 | 1 | 1 | 1 |
Additions (reductions) to previously recognized expected credit losses | 0 | 0 | 0 | (2) |
Reductions due to sales or redemptions | 0 | 0 | 0 | 0 |
Ending balance | 11 | 7 | 11 | 7 |
Corporate and other | ||||
Allowance for Credit Losses [Roll Forward] | ||||
Beginning balance | 5 | 1 | 1 | 1 |
Provision for expected credit losses on securities with no previous allowance | 0 | 0 | 5 | 0 |
Additions (reductions) to previously recognized expected credit losses | 0 | 0 | (1) | 0 |
Reductions due to sales or redemptions | 0 | (1) | 0 | (1) |
Ending balance | $ 5 | $ 0 | $ 5 | $ 0 |
Investments - Scheduled maturit
Investments - Scheduled maturities of available for sale fixed maturities (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Fair Value, Fiscal Year Maturity [Abstract] | ||
Available for sale (AFS) fixed maturities | $ 9,885 | $ 10,095 |
Fair Value Percent, Fiscal Year Maturity [Abstract] | ||
Average life of ABS | 3 years | |
Average life of MBS | 6 years 6 months | |
Fixed maturities: | ||
Amortized Cost Basis, Fiscal Year Maturity [Abstract] | ||
One year or less | $ 479 | |
After one year through five years | 2,551 | |
After five years through ten years | 1,075 | |
After ten years | 343 | |
Fixed maturities amortized cost, Subtotal | 4,448 | |
Amortized Cost | 10,472 | |
Fair Value, Fiscal Year Maturity [Abstract] | ||
One year or less | 471 | |
After one year through five years | 2,414 | |
After five years through ten years | 1,024 | |
After ten years | 323 | |
Fixed maturities fair value, Subtotal | 4,232 | |
Available for sale (AFS) fixed maturities | $ 9,885 | $ 10,095 |
Fair Value Percent, Fiscal Year Maturity [Abstract] | ||
One year or less | 5% | |
After one year through five years | 24% | |
After five years through ten years | 10% | |
After ten years | 3% | |
Fixed maturities fair value, Subtotal, Percent | 42% | |
Fair value, Total, Percent | 100% | |
Collateralized loan obligations and other asset backed securities | ||
Amortized Cost Basis, Fiscal Year Maturity [Abstract] | ||
Fixed maturities without single maturity date | $ 4,235 | |
Fair Value, Fiscal Year Maturity [Abstract] | ||
Fixed maturities without single maturity date | $ 4,028 | |
Fair Value Percent, Fiscal Year Maturity [Abstract] | ||
Fixed maturities without single maturity date | 41% | |
Mortgage-backed securities | ||
Amortized Cost Basis, Fiscal Year Maturity [Abstract] | ||
Fixed maturities without single maturity date | $ 1,789 | |
Fair Value, Fiscal Year Maturity [Abstract] | ||
Fixed maturities without single maturity date | $ 1,625 | |
Fair Value Percent, Fiscal Year Maturity [Abstract] | ||
Fixed maturities without single maturity date | 17% |
Investments - Schedule of sourc
Investments - Schedule of sources of net investment income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Net Investment Income [Line Items] | ||||
Investment income | $ 203 | $ 173 | $ 425 | $ 407 |
Equity in earnings of partnerships and similar investments | 28 | 76 | 85 | 209 |
Investment expenses | (5) | (5) | (10) | (9) |
Net investment income | 198 | 168 | 415 | 398 |
Fixed maturities: | Net investment income | ||||
Net Investment Income [Line Items] | ||||
Investment income | 124 | 85 | 243 | 165 |
Fixed maturities: | Net investment income | ||||
Net Investment Income [Line Items] | ||||
Investment income | 7 | 0 | 10 | 0 |
Equity securities | Net investment income | ||||
Net Investment Income [Line Items] | ||||
Change in fair value of equity securities | 13 | (9) | 29 | (2) |
Other | ||||
Net Investment Income [Line Items] | ||||
Investment income | 22 | 13 | 40 | 20 |
Net investment income | Equity securities | ||||
Net Investment Income [Line Items] | ||||
Investment income | $ 9 | $ 8 | $ 18 | $ 15 |
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 | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized gains (losses) on securities | $ (2) | $ (93) | $ (48) | $ (108) |
Net of tax | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | (1) | (72) | (34) | (86) |
Realized — impairments | 0 | (1) | (4) | 1 |
Realized gains (losses) on securities | (1) | (73) | (38) | (85) |
Change in unrealized | (51) | (217) | 33 | (462) |
Total pretax | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | (2) | (92) | (43) | (109) |
Realized — impairments | 0 | (1) | (5) | 1 |
Realized gains (losses) on securities | (2) | (93) | (48) | (108) |
Change in unrealized | (64) | (275) | 43 | (586) |
Fixed maturities: | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | (5) | (10) | (28) | (14) |
Realized — impairments | 0 | (1) | (5) | 1 |
Realized gains (losses) on securities | (5) | (11) | (33) | (13) |
Change in unrealized | (64) | (275) | 43 | (586) |
Equity securities | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | 3 | (82) | (15) | (95) |
Realized — impairments | 0 | 0 | 0 | 0 |
Realized gains (losses) on securities | 3 | (82) | (15) | (95) |
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 | 0 |
Realized — impairments | 0 | 0 | 0 | 0 |
Realized gains (losses) on securities | 0 | 0 | 0 | 0 |
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 | 1 | 20 | 9 | 23 |
Realized — impairments | 0 | 0 | 1 | 0 |
Realized gains (losses) on securities | 1 | 20 | 10 | 23 |
Change in unrealized | $ 13 | $ 58 | $ (10) | $ 124 |
Investments - Holding gains (lo
Investments - Holding gains (losses) on equity securities still held (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Holding Gains (Losses) on Equity Securities Still Held [Line Items] | ||||
Holding gains (losses) on equity securities | $ 15 | $ (91) | $ 8 | $ (100) |
Realized gains (losses) on securities | ||||
Holding Gains (Losses) on Equity Securities Still Held [Line Items] | ||||
Holding gains (losses) on equity securities | 2 | (82) | (21) | (96) |
Net investment income | ||||
Holding Gains (Losses) on Equity Securities Still Held [Line Items] | ||||
Holding gains (losses) on equity securities | $ 13 | $ (9) | $ 29 | $ (4) |
Investments - Gross realized ga
Investments - Gross realized gains and losses on available for sale fixed maturity investment transactions (Details) - Fixed maturities: - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Gross realized gains and losses on the sale of available for sale fixed maturity and equity security investments | ||
Gross gains | $ 2 | $ 3 |
Gross losses | $ (27) | $ (9) |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) $ in Millions | 6 Months Ended | |
Jun. 30, 2023 USD ($) swap | Dec. 31, 2022 USD ($) | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Number of interest rate swaps entered during the period | swap | 4 | |
Gains (losses) on interest rate swaps expected to be reclassified from AOCI to net earnings over the next 12 months. | $ 25 | |
Interest rate swaps | Cash flow hedging | Designated as hedging instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, notional amount | 1,350 | $ 1,250 |
Receivable for collateral posted related to swaps | 68 | 62 |
New interest rate swaps entered during the period | Cash flow hedging | Designated as hedging instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative, notional amount | 170 | |
Total return swap | Not designated as hedging instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Receivable for collateral posted related to swaps | $ 7 | |
Payable to return collateral related to swaps | $ 3 |
Derivatives - Derivatives inclu
Derivatives - Derivatives included in the Balance Sheet at fair value (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Derivatives, Fair Value [Line Items] | ||
Derivative asset | $ 96 | $ 40 |
Derivative liability | 41 | 42 |
Interest rate swaps | Designated as hedging instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 0 | 0 |
Derivative liability | $ 41 | $ 37 |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Other Assets | Other Assets |
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Other Liabilities | Other Liabilities |
Fixed maturities with embedded derivatives | Not designated as hedging instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | $ 92 | $ 40 |
Derivative liability | $ 0 | 0 |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Available for sale (AFS) fixed maturities | |
Total return swap | Not designated as hedging instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | $ 4 | 0 |
Derivative liability | $ 0 | $ 5 |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Other Assets | Other Assets |
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Other Liabilities | Other Liabilities |
Derivatives - Gains (losses) in
Derivatives - Gains (losses) included in the Statement of Earnings for changes in the fair value of derivatives (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivatives not designated as hedges, gains (losses) included in net earnings | $ 6 | $ (7) | $ 16 | $ (12) |
Earnings (losses) on derivatives | (1) | (6) | 4 | (10) |
Fixed maturities with embedded derivatives | Net investment income | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivatives not designated as hedges, gains (losses) included in net earnings | 7 | 0 | 10 | 0 |
Fixed maturities with embedded derivatives | Realized gains (losses) on securities | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivatives not designated as hedges, gains (losses) included in net earnings | (4) | (3) | (3) | (8) |
Total return swap | Other expenses | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivatives not designated as hedges, gains (losses) included in net earnings | 3 | (4) | 9 | (4) |
Designated as hedging instrument | Interest rate swaps | Net investment income | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Reclassification from accumulated other comprehensive income | $ (7) | $ 1 | $ (12) | $ 2 |
Managed Investment Entities - N
Managed Investment Entities - Narrative (Details) $ in Millions | 1 Months Ended | 6 Months Ended | |||||
Mar. 31, 2023 USD ($) collateralizedloanobligation | May 31, 2022 USD ($) collateralizedloanobligation | Jun. 30, 2023 USD ($) collateralizedloanobligation | Dec. 31, 2022 USD ($) | Jun. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Variable Interest Entity [Line Items] | |||||||
Percentage of investment of most subordinate debt tranche, Minimum | 7.40% | ||||||
Percentage of investment of most subordinate debt tranche, Maximum | 100% | ||||||
Number of collateralized loan obligation entities | collateralizedloanobligation | 16 | ||||||
Number of collateralized loan obligation entities formed during the period | collateralizedloanobligation | 1 | 1 | |||||
Difference between aggregate unpaid principal balance and fair value of CLOs' fixed maturity investments | $ 230 | $ 339 | |||||
Difference between aggregate unpaid principal balance and carrying value of CLOs' debt | 353 | 413 | |||||
Carrying amount of CLO loans in default | 5 | 4 | |||||
Aggregate unpaid principal balance of variable interest entity loans in default | 15 | 17 | |||||
Available for sale (AFS) fixed maturities | 9,885 | 10,095 | |||||
Collateralized loan obligations | |||||||
Variable Interest Entity [Line Items] | |||||||
Available for sale (AFS) fixed maturities | 1,859 | 1,921 | |||||
Collateralized loan obligations | Managed by third parties | |||||||
Variable Interest Entity [Line Items] | |||||||
Available for sale (AFS) fixed maturities | 1,860 | 1,920 | |||||
Variable interest entity, primary beneficiary | |||||||
Variable Interest Entity [Line Items] | |||||||
Investment in CLO tranches | 136 | 115 | |||||
Amount invested in a temporary warehousing entity | $ 119 | 117 | $ 112 | $ 85 | $ 89 | $ 76 | |
Variable interest entity, primary beneficiary | Subordinated Debt Obligations | |||||||
Variable Interest Entity [Line Items] | |||||||
Investment in CLO tranches | 85 | ||||||
New collateralized loan obligation temporary warehousing entities | |||||||
Variable Interest Entity [Line Items] | |||||||
Amount invested in a temporary warehousing entity | $ 19 | ||||||
New Collateralized Loan Obligation Entities | |||||||
Variable Interest Entity [Line Items] | |||||||
Face value of liabilities issued by managed investment entities on issuance date | 407 | $ 404 | |||||
Face amount of managed investment entities liabilities purchased at issuance date | $ 16 | $ 13 |
Managed Investment Entities - P
Managed Investment Entities - Progression of investment in CLO tranches (Details) - Variable interest entity, primary beneficiary - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Variable Interest Entity, Ownership [Roll Forward] | ||||
Balance at beginning of period of ownership of CLO tranches | $ 119 | $ 89 | $ 112 | $ 76 |
Purchases | 0 | 15 | 11 | 33 |
Sales | 0 | 0 | 0 | 0 |
Distributions | (7) | (6) | (12) | (9) |
Change in fair value | 5 | (13) | 6 | (15) |
Balance at end of period of ownership of CLO tranches | $ 117 | $ 85 | $ 117 | $ 85 |
Managed Investment Entities - S
Managed Investment Entities - Selected financial information related to CLOs (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Gains (losses) on change in fair value of assets/liabilities: | ||||
Assets | $ 32 | $ (247) | $ 66 | $ (304) |
Liabilities | (32) | 232 | (70) | 284 |
Management fees paid to AFG | 4 | 4 | 8 | 8 |
Variable interest entity, primary beneficiary | ||||
Gains (losses) on change in fair value of assets/liabilities: | ||||
CLO earnings (losses) attributable to AFG | $ 5 | $ (12) | $ 6 | $ (14) |
Goodwill and Other Intangibles
Goodwill and Other Intangibles - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Changes in the goodwill | $ 0 | ||||
Goodwill | $ 246,000,000 | 246,000,000 | $ 246,000,000 | ||
Amortizable intangible assets related to property and casualty insurance acquisitions | 102,000,000 | 102,000,000 | 108,000,000 | ||
Accumulated amortization | 29,000,000 | 29,000,000 | $ 24,000,000 | ||
Amortization of intangible assets | $ 3,000,000 | $ 3,000,000 | $ 6,000,000 | $ 5,000,000 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) - USD ($) | 1 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Jun. 03, 2022 | |
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||||
Scheduled principal payments on debt remainder of fiscal year | $ 0 | $ 0 | ||||
Scheduled principal payments on debt in year one | 0 | 0 | ||||
Scheduled principal payments on debt in year two | 0 | 0 | ||||
Scheduled principal payments on debt in year three | 0 | 0 | ||||
Scheduled principal payments on debt in year four | 0 | 0 | ||||
Scheduled principal payments on debt in year five | 0 | 0 | ||||
Scheduled principal payments on debt thereafter | $ 1,500,000,000 | 1,500,000,000 | ||||
Reductions of long-term debt | 21,000,000 | $ 433,000,000 | ||||
3.50% Senior Notes due August 2026 | Senior Notes | ||||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||||
Loss on retirement of debt | $ (6,000,000) | |||||
AFG | ||||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||||
Revolving credit facility term | 5 years | |||||
Revolving credit line | $ 450,000,000 | 450,000,000 | ||||
Amount borrowed under revolving credit facility | 0 | 0 | $ 0 | |||
AFG | 4.50% Senior Notes due June 2047 | Senior Notes | ||||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||||
Face amount of debt repurchased | $ 15,000,000 | $ 15,000,000 | ||||
Interest rate on debt instruments | 4.50% | 4.50% | ||||
Amount of debt repurchased | $ 13,000,000 | $ 13,000,000 | ||||
AFG | 5.25% Senior Notes due April 2030 | Senior Notes | ||||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||||
Face amount of debt repurchased | $ 8,000,000 | $ 8,000,000 | ||||
Interest rate on debt instruments | 5.25% | 5.25% | ||||
Amount of debt repurchased | $ 8,000,000 | $ 8,000,000 | ||||
AFG | 3.50% Senior Notes due August 2026 | Senior Notes | ||||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||||
Face amount of debt repurchased | $ 49,000,000 | $ 49,000,000 | $ 376,000,000 | |||
Interest rate on debt instruments | 3.50% | 3.50% | ||||
Amount of debt repurchased | $ 51,000,000 | $ 51,000,000 | ||||
Reductions of long-term debt | $ 382,000,000 | |||||
SOFR | AFG | ||||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||||
Interest rate on revolving debt facility | 1.25% | |||||
SOFR | AFG | Minimum | ||||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||||
Interest rate on revolving debt facility | 1% | |||||
SOFR | AFG | Maximum | ||||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||||
Interest rate on revolving debt facility | 1.75% |
Long-Term Debt - Schedule of lo
Long-Term Debt - Schedule of long-term debt (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Summary of Carrying value of long-term debt | ||
Principal | $ 1,498 | $ 1,521 |
Discount and Issue Costs | (24) | (25) |
Carrying Value | 1,474 | 1,496 |
Senior Notes | AFG | ||
Summary of Carrying value of long-term debt | ||
Principal | 823 | 846 |
Discount and Issue Costs | (5) | (6) |
Carrying Value | $ 818 | 840 |
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 | $ 567 | 582 |
Discount and Issue Costs | (1) | (1) |
Carrying Value | $ 566 | 581 |
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 | $ 253 | 261 |
Discount and Issue Costs | (4) | (5) |
Carrying Value | 249 | 256 |
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) | Jun. 30, 2023 $ / shares shares |
Voting Preferred Stock | |
Class of Stock [Line Items] | |
Preferred Stock, shares authorized (shares) | shares | 12,500,000 |
Preferred Stock, par value (USD per share) | $ / shares | $ 0 |
Nonvoting Preferred Stock | |
Class of Stock [Line Items] | |
Preferred Stock, shares authorized (shares) | shares | 12,500,000 |
Preferred Stock, par value (USD per share) | $ / shares | $ 0 |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted Common Stock, shares issued (shares) | 165,513 | |||
Fair value per share of restricted common stock issued under Stock Incentive Plan | $ 130.52 | |||
Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense related to stock incentive plans | $ 4 | $ 4 | $ 9 | $ 10 |
Shareholders' Equity - Progress
Shareholders' Equity - Progression of the components of accumulated other comprehensive income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | $ (543) | |||
Other comprehensive income (loss), pretax | $ (77) | $ (275) | 40 | $ (593) |
Other comprehensive income (loss), tax | 17 | 58 | (8) | 126 |
Other comprehensive income (loss) | (60) | (217) | 32 | (467) |
AOCI ending balance | (511) | (511) | ||
Net unrealized gains (losses) on securities: | ||||
Unrealized holding gains (losses) on securities arising during the period, pretax | (66) | (286) | 12 | (599) |
Unrealized holding gains (losses) on securities arising during the period, tax | 14 | 61 | (3) | 127 |
Unrealized holding gains (losses) on securities arising during the period, after tax | (52) | (225) | 9 | (472) |
Reclassification adjustment for realized (gains) losses included in net earnings, pretax | 2 | 11 | 31 | 13 |
Reclassification adjustment for realized (gains) losses included in net earnings, tax | (1) | (3) | (7) | (3) |
Reclassification adjustment for realized (gains) losses included in net earnings, after tax | 1 | 8 | 24 | 10 |
Total net unrealized gains (losses) on securities, pretax | (64) | (275) | 43 | (586) |
Total net unrealized gains (losses) on securities, tax | 13 | 58 | (10) | 124 |
Total net unrealized gains (losses) on securities | (51) | (217) | 33 | (462) |
Reclassification of Cash Flow Hedge Gain (Loss) [Abstract] | ||||
Unrealized holding gains (losses) on cash flow hedges arising during the period, pretax | (21) | (3) | (16) | (8) |
Unrealized holding gains (losses) on cash flow hedges arising during the period, tax | 4 | 1 | 3 | 2 |
Unrealized holding gains (losses) on cash flow hedges arising during the period, after tax | (17) | (2) | (13) | (6) |
Reclassification adjustment for investment income included in net earnings, pretax | 6 | (2) | 11 | (2) |
Reclassification adjustment for investment income included in net earnings, tax | (1) | 0 | (2) | 0 |
Reclassification adjustment for investment income included in net earnings from discontinued operations, after tax | 5 | (2) | 9 | (2) |
Total net unrealized gains (losses) on cash flow hedges, pretax | (15) | (5) | (5) | (10) |
Total net unrealized gains (losses) on cash flow hedges, tax | 3 | 1 | 1 | 2 |
Total net unrealized gains (losses) on cash flow hedges | (12) | (4) | (4) | (8) |
Foreign currency translation adjustments, pretax | 2 | 5 | 2 | 3 |
Foreign currency translation adjustments, tax | 1 | (1) | 1 | 0 |
Foreign currency translation adjustments | 3 | 4 | 3 | 3 |
Total pension and OPRP adjustments, pretax | 0 | 0 | 0 | 0 |
Total pension and OPRP adjustments, tax | 0 | 0 | 0 | 0 |
Pension and OPRP adjustments | 0 | 0 | 0 | 0 |
Accumulated net investment gain (loss) attributable to parent | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | (413) | (109) | (497) | 136 |
AOCI ending balance | (464) | (326) | (464) | (326) |
Accumulated gain (loss), net, cash flow hedge, parent | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | (21) | (4) | (29) | 0 |
AOCI ending balance | (33) | (8) | (33) | (8) |
Accumulated foreign currency adjustment attributable to parent | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | (20) | (19) | (20) | (18) |
AOCI ending balance | (17) | (15) | (17) | (15) |
Accumulated defined benefit plans adjustment attributable to parent | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | 3 | 1 | 3 | 1 |
AOCI ending balance | 3 | 1 | 3 | 1 |
AOCI attributable to parent | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | (451) | (131) | (543) | 119 |
AOCI ending balance | $ (511) | $ (348) | $ (511) | $ (348) |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Statutory rate of income taxes | 21% | 21% | 21% | 21% |
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 | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | ||||
Earnings before income taxes (“EBT”) | $ 255 | $ 206 | $ 519 | $ 567 |
Income taxes at statutory rate | 54 | 43 | 109 | 119 |
Effect of ESOP dividend paid deduction | 0 | (4) | (3) | (6) |
Effect of stock-based compensation | 0 | (2) | (2) | (4) |
Effect of tax exempt interest | (1) | (2) | (2) | (4) |
Effect of dividends received deduction | 0 | 0 | (1) | (1) |
Effect of nondeductible expenses | 2 | 1 | 5 | 3 |
Effect of foreign operations | 2 | 0 | 4 | 5 |
Effect of change in valuation allowance | 0 | 1 | 0 | (1) |
Effect of other income | (2) | 2 | (3) | (1) |
Provision for income taxes as shown on the Statement of Earnings | $ 55 | $ 39 | $ 107 | $ 110 |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||||
Income taxes at statutory rate as a percentage of EBT | 21% | 21% | 21% | 21% |
Effect of ESOP dividend paid deduction as a percentage of EBT | 0% | (2.00%) | (1.00%) | (1.00%) |
Effect of stock-based compensation as a percentage of EBT | 0% | (1.00%) | 0% | (1.00%) |
Effect of tax exempt interest as a percentage of EBT | 0% | (1.00%) | 0% | (1.00%) |
Effect of dividends received deduction as a percentage of EBT | 0% | 0% | 0% | 0% |
Effect of nondeductible expenses as a percentage of EBT | 1% | 0% | 1% | 1% |
Effect of foreign operations as a percentage of EBT | 1% | 0% | 1% | 1% |
Effect of change in valuation allowance as a percentage of EBT | 0% | 0% | 0% | 0% |
Effect of other income tax reconciliation as a percentage of EBT | (1.00%) | 2% | (1.00%) | (1.00%) |
Provision for income taxes as shown on the Statement of Earnings as a percentage of EBT | 22% | 19% | 21% | 19% |
Insurance - Analysis of changes
Insurance - Analysis of changes in the liability for losses and loss adjustment expenses, net of reinsurance (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Analysis of changes in the liability for losses and loss adjustment expenses, net of reinsurance | ||
Balance at beginning of year | $ 11,974 | $ 11,074 |
Less reinsurance recoverables, net of allowance | 3,767 | 3,419 |
Net liability at beginning of year | 8,207 | 7,655 |
Provision for losses and LAE occurring in the current period | 1,850 | 1,640 |
Net decrease in the provision for claims of prior years | (125) | (173) |
Total losses and LAE incurred | 1,725 | 1,467 |
Payments for losses and LAE of: | ||
Current year | (338) | (290) |
Prior years | (1,345) | (1,102) |
Total payments | (1,683) | (1,392) |
Foreign currency translation and other | 0 | 0 |
Net liability at end of period | 8,249 | 7,730 |
Add back reinsurance recoverables, net of allowance | 3,676 | 3,471 |
Gross unpaid losses and LAE included in the balance sheet at end of period | $ 11,925 | $ 11,201 |
Insurance - Recoverables from r
Insurance - Recoverables from reinsurance, progression of allowance for expected credit losses (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Reinsurance Recoverable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning Balance | $ 9 | $ 7 | $ 8 | $ 8 |
Provision (credit) for expected credit losses | 0 | 0 | 1 | (1) |
Write-offs charged against the allowance | 0 | 0 | 0 | 0 |
Ending Balance | $ 9 | $ 7 | $ 9 | $ 7 |
Insurance - Premiums receivable
Insurance - Premiums receivable, progression of allowance for expected credit losses (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Premium Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning Balance | $ 8 | $ 7 | $ 8 | $ 8 |
Provision (credit) for expected credit losses | 1 | 2 | 1 | 1 |
Write-offs charged against the allowance | 0 | 0 | 0 | 0 |
Ending Balance | $ 9 | $ 9 | $ 9 | $ 9 |
Subsequent Event - Narrative (D
Subsequent Event - Narrative (Details) - Subsequent event $ in Millions | Jul. 03, 2023 USD ($) States |
Crop Risk Services | |
Subsequent Event [Line Items] | |
Payments to acquire subsidiaries | $ 235 |
Net tangible assets to be acquired | 25 |
Purchase price in excess of tangible assets acquired | 210 |
Acquisition expenses incurred | $ 3 |
Number of states in which entity operates | States | 37 |
Crop Risk Services | Crop year 2022 | |
Subsequent Event [Line Items] | |
Gross written premiums | $ 1,200 |
Great American Insurance Company | Crop year 2022 | |
Subsequent Event [Line Items] | |
Gross written premiums | $ 1,800 |