UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 31, 2018
AMERICAN FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
| Ohio | 1-13653 | 31-1544320 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| 301 East Fourth Street, Cincinnati, OH | 45202 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code 513-579-2121
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Section 2 - Financial Information
| Item 2.02 | Results Of Operations And Financial Condition. |
Reference is made to the press release of American Financial Group, Inc. (the “Company”) relating to the announcement of the Company’s results of operations for the fourth quarter of 2017 and full year ended December 31, 2017 as well and the availability of the Investor Supplement on the Company’s website. The press release was issued on January 31, 2018. A copy of the press release is attached to this Form 8-K as Exhibit 99.1 and a copy of the Investor Supplement is attached as Exhibit 99.2 and are incorporated herein by reference.
The information contained herein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 as amended (the “Exchange Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act
Section 9 - Financial Statements and Exhibits
| Item 9.01 | Financial Statements and Exhibits. |
| (a) | Financial statements of business acquired. Not applicable. |
| (b) | Pro forma financial information. Not applicable. |
| (c) | Shell company transactions. Not applicable |
| (d) | Exhibits |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMERICAN FINANCIAL GROUP, INC. | ||||||
| Date: February 1, 2018 |
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| By: |
/s/ Karl J. Grafe | |||||
| Karl J. Grafe | ||||||
| Vice President | ||||||
3
Exhibit 99.1
American Financial Group, Inc. Announces Fourth Quarter and Full Year Results
| • | Net earnings of $1.84 per share in the fourth quarter and $5.28 per share for the full year |
| • | Fourth quarter core net operating earnings per share of $2.20; up 11% from 2016 |
| • | Core net operating earnings per share of $6.55 for the full year; up 9% from 2016 |
| • | Full year 2017 ROE of 10.3%; 2017 core operating ROE of 12.7% |
| • | Full year 2018 core net operating earnings guidance between $7.90—$8.40 per share |
CINCINNATI – January 31, 2018 – American Financial Group, Inc. (NYSE: AFG) today reported 2017 fourth quarter net earnings attributable to shareholders of $166 million ($1.84 per share) compared to $385 million ($4.33 per share) for the 2016 fourth quarter. Results for the fourth quarter of 2017 include an $83 million ($0.92 per share) write-down of the company’s net deferred tax asset due to the impact of a lower U.S. corporate tax rate and a previously announced loss on early retirement of debt of $26 million ($0.29 per share). These items were partially offset by $74 million ($0.81 per share) in non-core income from the reinsurance to close transaction involving Neon’s 2015 and prior years of account and tax benefits from restructuring Neon, as well as net realized gains of $4 million ($0.04 per share). Comparatively, net earnings in the 2016 fourth quarter included $209 million ($2.35 per share) in non-core items. Details may be found in the accompanying table. Net earnings attributable to shareholders for the year were $5.28 per share, compared to $7.33 per share in 2016. Book value per share was $60.38 per share at December 31, 2017. AFG paid cash dividends of $2.35 per share during the quarter, which included a $2.00 per share special dividend. Return on equity was 10.3% and 14.8% for 2017 and 2016, respectively.
Core net operating earnings were $197 million ($2.20 per share) for the 2017 fourth quarter, compared to $176 million ($1.98 per share) in the 2016 fourth quarter. The $2.20 per share established an all-time high for AFG’s quarterly core EPS. The improved results were attributable to significantly higher underwriting profit in our Property and Casualty (“P&C”) Insurance Segment, which was partially offset by the impact of fair value accounting in our Annuity Segment. Included within AFG’s core P&C Insurance Segment results was a $0.28 per share impact of the Neon reinsurance to close transaction. Book value per share, excluding unrealized gains related to fixed maturities, was $53.51 per share at December 31, 2017. For the twelve months ended December 31, 2017, AFG’s growth in adjusted book value per share plus dividends was 9.8%. Core net operating earnings for the fourth quarters of 2017 and 2016 generated annualized returns on equity of 17.2% and 15.7%, respectively. Core operating return on equity was 12.7% and 12.2% for 2017 and 2016, respectively.
AFG’s net earnings attributable to shareholders, determined in accordance with U.S. generally accepted accounting principles (“GAAP”), include certain items that may not be indicative of its ongoing core operations. The table below identifies such items and reconciles net earnings attributable to shareholders to core net operating earnings, a non-GAAP financial measure. AFG believes that its core net operating earnings provides management, financial analysts, rating agencies and investors with an understanding of the results from the ongoing operations of the Company by excluding the impact of net realized gains and losses and other special items that are not necessarily indicative of operating trends. AFG’s management uses core net operating earnings to evaluate financial performance against historical results because it believes this provides a more comparable measure of its continuing business. Core net operating earnings is also used by AFG’s management as a basis for strategic planning and forecasting.
Page 1
| In millions, except per share amounts | Three months ended December 31, |
Twelve months ended December 31, |
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Components of net earnings attributable to shareholders: |
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| Core operating earnings before income taxes |
$ | 283 | $ | 266 | $ | 865 | $ | 840 | ||||||||
| Pretax non-core items: |
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| Realized gains on securities |
6 | 51 | 5 | 19 | ||||||||||||
| Realized gain on sale of subsidiaries |
— | — | — | 2 | ||||||||||||
| Gain on sale of apartment property |
— | — | — | 32 | ||||||||||||
| Special A&E charges Neon exited lines charge Loss on early retirement of debt |
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— 18 (40 |
) |
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— — — |
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(113 18 (51 |
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(41 (65 — |
) )
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| Earnings before income taxes |
267 | 317 | 724 | 787 | ||||||||||||
| Provision (credit) for income taxes: |
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| Core operating earnings |
86 | 88 | 275 | 290 | ||||||||||||
| Non-core items: |
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| Tax benefit related to National Interstate merger |
— | (66 | ) | — | (66 | ) | ||||||||||
| Tax benefit related to Neon restructuring |
(56 | ) | (111 | ) | (56 | ) | (111 | ) | ||||||||
| Tax expense related to change in U.S. corporate tax rate |
83 | — | 83 | — | ||||||||||||
| Other |
(12 | ) | 18 | (55 | ) | 6 | ||||||||||
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| Total provision (credit) for income taxes |
101 | (71 | ) | 247 | 119 | |||||||||||
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| Net earnings, including noncontrolling interests |
166 | 388 | 477 | 668 | ||||||||||||
| Less net earnings attributable to noncontrolling interests: |
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| Core operating earnings |
— | 2 | 2 | 16 | ||||||||||||
| Non-core items |
— | 1 | — | 3 | ||||||||||||
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| Total net earnings attributable to noncontrolling interests |
— | 3 | 2 | 19 | ||||||||||||
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| Net earnings attributable to shareholders |
$ | 166 | $ | 385 | $ | 475 | $ | 649 | ||||||||
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| Net earnings: |
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| Core net operating earnings(a) |
$ | 197 | $ | 176 | $ | 588 | $ | 534 | ||||||||
| Non-core items |
(31 | ) | 209 | (113 | ) | 115 | ||||||||||
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| Net earnings attributable to shareholders |
$ | 166 | $ | 385 | $ | 475 | $ | 649 | ||||||||
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| Components of Earnings Per Share: |
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| Core net operating earnings(a) |
$ | 2.20 | $ | 1.98 | $ | 6.55 | $ | 6.03 | ||||||||
| Non-core Items: |
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| Realized gains on securities |
0.04 | 0.36 | 0.03 | 0.16 | ||||||||||||
| Realized gain on sale of subsidiaries |
— | — | — | 0.01 | ||||||||||||
| Gain on sale of apartment property |
— | — | — | 0.17 | ||||||||||||
| Special A&E charges |
— | — | (0.82 | ) | (0.30 | ) | ||||||||||
| Neon exited lines charge |
0.19 | — | 0.19 | (0.73 | ) | |||||||||||
| Loss on early retirement of debt Tax benefit related to National Interstate merger Tax benefit related to Neon restructuring Tax expense related to change in U.S. corporate tax rate |
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(0.29 — 0.62 (0.92 |
)
) |
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— 0.74 1.25 — |
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(0.37 — 0.62 (0.92 |
)
) |
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— 0.74 1.25 — |
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| Diluted Earnings Per Share |
$ | 1.84 | $ | 4.33 | $ | 5.28 | $ | 7.33 | ||||||||
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Footnote (a) is contained in the accompanying Notes to Financial Schedules at the end of this release.
Carl H. Lindner III and S. Craig Lindner, AFG’s Co-Chief Executive Officers, commented: “We are pleased to report fourth quarter and full year core net operating earnings that were an all-time high for AFG, with strong results produced by both the P&C and Annuity segments of our business. Our diversified portfolio of specialty P&C and annuity businesses has enabled us to successfully navigate a challenging year for the industry overall.
“AFG had approximately $885 million of excess capital (including parent company cash of approximately $300 million) at December 31, 2017. Our excess capital will be deployed into AFG’s core businesses as we identify potential for healthy, profitable organic growth, and opportunities to expand our specialty niche businesses through acquisitions and start-ups that meet our target return thresholds. In addition, share repurchases, particularly when executed at attractive valuations, and returning capital to shareholders through dividends are an important and effective component of our capital management strategy. Over the past year, we increased our quarterly dividend by 12% and paid special dividends of $3.50 per share.
Page 2
“With the benefit of tax reform, we expect core net operating earnings in 2018 to be between $7.90 and $8.40 per share. Our core earnings per share guidance assumes an effective tax rate of approximately 20%, and excludes non-core items such as realized gains and losses, as well as other significant items that are not able to be estimated with reasonable precision, or that may not be indicative of ongoing operations.”
Specialty Property and Casualty Insurance Operations
Core operating earnings in AFG’s P&C insurance operations were $233 million in the fourth quarter of 2017, compared to $180 million in the prior year period, an increase of $53 million, or 29%. Significantly higher P&C underwriting profit and lower other expenses were the drivers of the improved results.
The Specialty P&C insurance operations generated underwriting profit of $156 million for the 2017 fourth quarter compared to $110 million in the fourth quarter of 2016, due primarily to higher underwriting profitability in our Specialty Casualty and Property and Transportation Groups. The fourth quarter 2017 combined ratio of 87.3% includes 4.1 points of favorable prior year reserve development, compared to 0.9 points of unfavorable prior year reserve development in the comparable 2016 period.
Fourth quarter results in 2017 include 0.6 points in catastrophe losses, primarily the result of wildfires in California, compared to 1.1 points in the comparable 2016 period. The fourth quarter pretax loss from California wildfires, net of reinsurance and inclusive of reinstatement premiums, was $33 million. Losses related to third quarter catastrophes, specifically Hurricanes Harvey, Irma and Maria, and two earthquakes in Mexico, developed favorably by $25 million. Total pretax catastrophe losses, net of reinsurance and inclusive of reinstatement premiums were $12 million during the fourth quarter.
Gross and net written premiums were up 9% and 7%, respectively, in the 2017 fourth quarter compared to the same period in 2016, with each of our Specialty P&C groups reporting growth during the quarter. Average renewal pricing across our entire P&C Group was up 1% for the quarter, and up 1% overall for the year. Further details of AFG’s Specialty P&C operations may be found in the accompanying schedules.
The Property and Transportation Group reported an underwriting profit of $84 million in the fourth quarter of 2017, compared to $75 million in the comparable prior year period, due primarily to higher underwriting profit in our transportation businesses. These results were partially offset by lower year-over-year underwriting profits in our agricultural operations. Our crop insurance operations reported very strong profitability during the 2017 fourth quarter, albeit at lower levels of profitability than in the prior year fourth quarter. Catastrophe losses for this group had a favorable impact of $3 million in the fourth quarter of 2017, compared to a $6 million loss in the 2016 fourth quarter.
Fourth quarter 2017 gross and net written premiums in this group were both 8% higher, respectively, than the comparable prior year period. The increase was primarily attributed to higher crop insurance premiums, as well as higher premiums in our property & inland marine and Singapore operations. This growth was partially offset by lower premiums resulting from an exit from the customs bond business, which was part of our ocean marine operations. Overall renewal rates in this group increased 3% on average in both the 2017 fourth quarter and full year.
Page 3
The Specialty Casualty Group reported an underwriting profit of $58 million in the 2017 fourth quarter compared to $13 million in the comparable 2016 period. The higher underwriting profit was primarily attributed to favorable reserve development within Neon, most significantly in connection with the 2015 and prior years reinsurance to close (RITC) transaction attributed to ongoing lines of business, and higher underwriting profit in our workers’ compensation and excess and surplus lines businesses. These improved results were partially offset by lower underwriting profits in our targeted markets operations. Catastrophe losses for this group were $18 million in the fourth quarter of 2017 and $4 million in the comparable 2016 period.
Gross and net written premiums increased 8% and 9%, respectively, for the fourth quarter of 2017 when compared to the same prior year period. Growth within Neon, resulting from the growth of its portfolio in targeted classes of business, higher premiums in our workers’ compensation businesses, primarily the result of rate increases in Florida, and growth in our excess and surplus lines businesses all contributed to the year-over-year growth. Renewal pricing for this group increased by 1% in the fourth quarter, and was flat overall for the year.
The Specialty Financial Group reported an underwriting profit of $19 million in the fourth quarter of 2017, compared to $20 million in the fourth quarter of 2016, with all businesses in this group achieving excellent underwriting margins. Catastrophe losses for this group had a favorable impact of $5 million in the fourth quarter of 2017, compared to a $2 million loss in the 2016 fourth quarter.
Gross and net written premiums increased by 16% and 1%, respectively, in the 2017 fourth quarter when compared to the same 2016 period. Higher premiums in our lending and leasing businesses, which were largely ceded, were the primary driver of the increase. Renewal pricing in this group was flat during the fourth quarter and decreased approximately 2% overall for the full year of 2017.
Carl Lindner III stated: “Our Specialty P&C insurance operations produced very strong core operating earnings and healthy growth during the fourth quarter. Our crop insurance operations exceeded our expectations, we entered into a reinsurance to close transaction agreement for Neon’s 2008 to 2015 years of account, which resulted in a significant reserve release, and catastrophe losses in the quarter were below expectations.”
Mr. Lindner continued, “We are forecasting an overall calendar year combined ratio in the 92% to 94% range, and we are targeting growth in net written premiums in the range of 3% to 7%.”
Further details about AFG’s Specialty P&C operations may be found in the accompanying schedules and in our Quarterly Investor Supplement, which is posted on our website.
Annuity Segment
As shown in the following table, AFG’s Annuity Segment reported $97 million in pretax earnings in the fourth quarter of 2017, compared to $132 million in the fourth quarter of 2016. Earnings before the impact of fair value accounting for fixed indexed annuities (FIAs) were $108 million, up 5% from the prior year period.
Components of Annuity Earnings Before Income Taxes
| Dollars in millions | Three months ended December 31, |
Pct. Change |
Twelve months ended December 31, |
Pct. Change |
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
| Annuity earnings before fair value accounting for FIAs |
$ | 108 | $ | 103 | 5 | % | $ | 413 | $ | 395 | 5 | % | ||||||||||||
| Impact of fair value accounting for FIAs |
(11 | ) | 29 | nm | (33 | ) | (27 | ) | nm | |||||||||||||||
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| Pretax annuity earnings |
$ | 97 | $ | 132 | (27 | %) | $ | 380 | $ | 368 | 3 | % | ||||||||||||
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Page 4
Annuity Earnings Before Fair Value Accounting for FIAs – AFG’s Annuity Segment reported quarterly earnings before fair value accounting for FIAs of $108 million in the fourth quarter of 2017, a 5% increase over the $103 million reported in the comparable prior year period, and an all-time high for the Annuity Segment. Quarterly average annuity investments and reserves grew approximately 10% and 12%, respectively, year-over-year; however, the benefit of this growth was partially offset by the runoff of higher yielding investments. Both quarterly periods included the positive impact from a strong stock market and higher than expected income from certain investments required to be marked to market though earnings and unplanned investment income resulting from early redemptions and other unusual events.
In the fourth quarters of 2017 and 2016, AFG conducted detailed reviews (“unlocking”) of the major actuarial assumptions underlying its annuity operations. The review resulted in an unlocking charge of $3 million in the fourth quarter of 2017, compared to a positive unlocking of $1 million in the fourth quarter of 2016. Unlocking amounts are included in “Annuity earnings before fair value accounting for FIAs” in the table above.
Impact of Fair Value Accounting for FIAs – Under Generally Accepted Accounting Principles (GAAP), a portion of the reserves for FIAs ($2.5 billion and $1.8 billion at December 31, 2017 and December 31, 2016, respectively) is considered to be an embedded derivative and is recorded at fair value based on the estimated present value of certain expected future cash flows.
The impact of fair value accounting for FIAs includes annuity interest accreted on this FIA embedded derivative reserve; interest accreted totaled $3 million in the fourth quarter of 2017 and $1 million in the fourth quarter of 2016. In addition to this interest, Annuity Segment earnings are also impacted by other changes in the fair value of the embedded derivative. Assumptions used in calculating this fair value include projected interest rates, option costs, surrenders, withdrawals and mortality. Variances from these assumptions, as well as changes in the stock market, will generally result in a change in fair value. Amounts shown in the table above under “Impact of fair value accounting for FIAs” include the impact of these variances. Many of these adjustments are not economic in nature for the current reporting period, but rather impact the timing of reported results.
In the fourth quarter of 2017, the benefit of a higher stock market was more than offset by lower than expected interest rates, resulting in a net $11 million unfavorable impact to annuity core operating earnings. By comparison, in the fourth quarter of 2016, a significant increase in interest rates, as well as an increase in the stock market, resulted in a large favorable impact on annuity earnings.
Annuity Premiums – AFG’s Annuity Segment reported statutory premiums of $909 million in the fourth quarter of 2017, compared to $1.1 billion in the fourth quarter of 2016. This decrease resulted from AFG’s adherence to pricing discipline in a relatively low interest rate environment.
Craig Lindner stated, “AFG’s Annuity Segment had another record year, achieving pretax earnings of $380 million. This record result demonstrates our commitment to achieving appropriate returns on new business and our ability to deliver consumer-friendly products that the market finds attractive. Although our annuity sales were down 2% in 2017, I am very satisfied with this result given that industry sales of fixed and indexed annuities are estimated to be down nearly 10% in 2017. We believe we continue to be well-positioned for the future.”
2018 Annuity Outlook – AFG expects that 2018 annuity sales will be up 2% to 6% compared to the $4.3 billion sold in 2017, resulting in year-over-year average asset and reserve growth of 8% to 10%; the favorable earnings impact of this growth will be partially offset by the expected runoff of higher yielding investments. As a result, AFG anticipates that its pretax annuity earnings will be in the range of $385 to $425 million, compared to $380 million in 2017.
Page 5
The 2018 guidance assumes (i) interest rates and the stock market rise moderately for the remainder of 2018, (ii) more normalized income from certain investments required to be marked to market through earnings, and (iii) lower impact in 2018 from unusual investment income items such as prepayment of fixed income securities. Fluctuations in the returns on these investments, or large changes in interest rates and/or the stock market, as compared to our expectations, could lead to significant positive or negative impacts on the Annuity Segment’s results.
More information about premiums and the results of operations for our Annuity Segment may be found in AFG’s Quarterly Investor Supplement, which is posted on our website.
Investments
AFG recorded fourth quarter 2017 net realized gains of $4 million after tax and after DAC, compared to net realized gains of $32 million in the comparable prior year period. Unrealized gains on fixed maturities were $619 million after tax and after DAC at December 31, 2017, an increase of $313 million from year-end 2016, including a $110 million favorable impact from the reduction in the U.S. corporate tax rate. Our portfolio continues to be high quality, with 90% of our fixed maturity portfolio rated investment grade and 98% with a National Association of Insurance Commissioners’ designation of NAIC 1 or 2, its highest two categories.
For the twelve months ended December 31, 2017, P&C net investment income was approximately 3% higher than the comparable 2016 period.
More information about the components of our investment portfolio may be found in our Quarterly Investor Supplement, which is posted on our website.
Reduction in the U.S. Corporate Tax Rate and Write-down of Deferred Tax Asset
In the fourth quarter of 2017, AFG recorded a one-time non-core charge of $83 million to write down its deferred tax asset. This write-down was the result of the reduction in the U.S. corporate tax rate from 35 percent to 21 percent effective Jan. 1, 2018. Although the new U.S. tax law reduces the company’s net deferred tax asset position, the company expects a net favorable future economic impact from the lower corporate income tax rate.
Tax Benefit Related to Neon Restructuring
On December 29, 2017, AFG entered into agreements under which certain Neon executives acquired an indirect noncontrolling interest in Neon. In connection with the 2016 restructuring of our Neon operations, AFG reported a loss on the liquidation for U.S. tax purposes of the foreign subsidiary that is the parent of the Neon Lloyd’s operations. Part of the loss associated with the restructuring transaction was required to be deferred under the U.S. tax laws. The sale of the noncontrolling interest in Neon resulted in the recognition of the deferred loss for U.S. tax purposes. As a result of the restructuring, AFG recognized a non-core tax benefit of $56 million ($0.62 per share) in the fourth quarter of 2017.
Loss on Early Retirement of Debt
In November 2017, AFG announced the early redemption of its $350 million of 9-7/8% Senior Notes. The redemption resulted in after-tax non-core expenses in the fourth quarter of 2017 of approximately $26 million ($0.29 per share) related to a make whole premium and other related expenses.
Page 6
Neon Exited Lines Charge (Reinsurance to Close (RITC) of Neon’s 2015 Year of Account)
On December 21, 2017, Neon announced that it had entered into a reinsurance to close transaction agreement for its 2008 to 2015 years of account with StarStone Underwriting Limited, a subsidiary of Enstar Group Limited, effective December 31, 2017. As a result of this transaction, AFG recognized after-tax income of approximately $42 million. A component of this gain ($18 million or $0.19 per share) was classified as non-core as it relates to the Neon Exited Lines, with the remainder reflected as favorable development within the Specialty Casualty Group, and included in AFG’s core earnings.
About American Financial Group, Inc.
American Financial Group is an insurance holding company, based in Cincinnati, Ohio with assets of approximately $60 billion. Through the operations of Great American Insurance Group, AFG is engaged primarily in property and casualty insurance, focusing on specialized commercial products for businesses, and in the sale of fixed and fixed-indexed annuities in the retail, financial institutions and education markets. Great American Insurance Group’s roots go back to 1872 with the founding of its flagship company, Great American Insurance Company.
Forward Looking Statements
This press release contains certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements in this press release not dealing with historical results are forward-looking and are based on estimates, assumptions and projections. Examples of such forward-looking statements include statements relating to: the Company’s expectations concerning market and other conditions and their effect on future premiums, revenues, earnings, investment activities and the amount and timing of share repurchases; recoverability of asset values; expected losses and the adequacy of reserves for asbestos, environmental pollution and mass tort claims; rate changes; and improved loss experience.
Actual results and/or financial condition could differ materially from those contained in or implied by such forward-looking statements for a variety of reasons including, but not limited to: changes in financial, political and economic conditions, including changes in interest and inflation rates, currency fluctuations and extended economic recessions or expansions in the U.S. and/or abroad; performance of securities markets; new legislation or declines in credit quality or credit ratings that could have a material impact on the valuation of securities in AFG’s investment portfolio; the availability of capital; regulatory actions (including changes in statutory accounting rules); changes in the legal environment affecting AFG or its customers; tax law and accounting changes; levels of natural catastrophes and severe weather, terrorist activities (including any nuclear, biological, chemical or radiological events), incidents of war or losses resulting from civil unrest and other major losses; development of insurance loss reserves and establishment of other reserves, particularly with respect to amounts associated with asbestos and environmental claims; availability of reinsurance and ability of reinsurers to pay their obligations; trends in persistency and mortality; competitive pressures; the ability to obtain adequate rates and policy terms; changes in AFG’s credit ratings or the financial strength ratings assigned by major ratings agencies to AFG’s operating subsidiaries; the impact of the conditions in the international financial markets and the global economy (including those associated with the United Kingdom’s expected withdrawal from the European Union, or “Brexit”) relating to AFG’s international operations; and other factors identified in AFG’s filings with the Securities and Exchange Commission.
Page 7
The forward-looking statements herein are made only as of the date of this press release. The Company assumes no obligation to publicly update any forward-looking statements.
Conference Call
The company will hold a conference call to discuss 2017 fourth quarter and full year results at 11:30 am (ET) tomorrow, Thursday, February 1, 2018. Toll-free telephone access will be available by dialing 877-459-8719 (international dial-in 424-276-6843). The conference ID for the live call is 8583267. Please dial in five to ten minutes prior to the scheduled start time of the call.
A replay will be available two hours following the completion of the call and will remain available until 11:59 pm (ET) on February 8, 2018. To listen to the replay, dial 1-855-859-2056 (international dial-in 404-537-3406) and provide the conference ID 8583267.
The conference and accompanying webcast slides will also be broadcast live over the Internet. To listen to the call via the Internet, go to the Investor Relations page on AFG’s website, www.AFGinc.com, and follow the instructions under Webcasts and Presentations.
The archived webcast will be available immediately after the call via the same link on the Investor Relations page until February 8, 2018 at 11:59 pm (ET). An archived audio MP3 file will be available within 24 hours of the call.
Contact:
Diane P. Weidner, IRC
Asst. Vice President - Investor Relations
513-369-5713
Websites:
www.AFGinc.com
www.GreatAmericanInsuranceGroup.com
# # #
(Financial summaries follow)
This earnings release and AFG’s Quarterly Investor Supplement are available in the Investor Relations section of AFG’s website: www.AFGinc.com.
AFG18-04
Page 8
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
SUMMARY OF EARNINGS AND SELECTED BALANCE SHEET DATA
(In Millions, Except Per Share Data)
| Three months ended December 31, |
Twelve months ended December 31, |
|||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues |
||||||||||||||||
| P&C insurance net earned premiums |
$ | 1,225 | $ | 1,144 | $ | 4,579 | $ | 4,328 | ||||||||
| Life, accident & health net earned premiums |
5 | 6 | 22 | 24 | ||||||||||||
| Net investment income |
465 | 429 | 1,831 | 1,696 | ||||||||||||
| Realized gains on: |
||||||||||||||||
| Securities |
6 | 51 | 5 | 19 | ||||||||||||
| Subsidiaries |
— | — | — | 2 | ||||||||||||
| Income of managed investment entities: |
||||||||||||||||
| Investment income |
55 | 49 | 210 | 190 | ||||||||||||
| Gain on change in fair value of assets/liabilities |
— | 6 | 12 | 15 | ||||||||||||
| Other income |
52 | 52 | 206 | 224 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
1,808 | 1,737 | 6,865 | 6,498 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Costs and expenses |
||||||||||||||||
| P&C insurance losses & expenses |
1,061 | 1,040 | 4,362 | 4,111 | ||||||||||||
| Annuity, life, accident & health benefits & expenses |
279 | 222 | 1,091 | 1,019 | ||||||||||||
| Interest charges on borrowed money |
20 | 21 | 85 | 77 | ||||||||||||
| Expenses of managed investment entities |
44 | 42 | 181 | 151 | ||||||||||||
| Other expenses |
137 | 95 | 422 | 353 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total costs and expenses |
1,541 | 1,420 | 6,141 | 5,711 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Earnings before income taxes |
267 | 317 | 724 | 787 | ||||||||||||
| Provision (credit) for income taxes(b) |
101 | (71 | ) | 247 | 119 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net earnings including noncontrolling interests |
166 | 388 | 477 | 668 | ||||||||||||
| Less: Net earnings attributable to noncontrolling interests |
— | 3 | 2 | 19 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net earnings attributable to shareholders |
$ | 166 | $ | 385 | $ | 475 | $ | 649 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted earnings per Common Share |
$ | 1.84 | $ | 4.33 | $ | 5.28 | $ | 7.33 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Average number of diluted shares |
90.1 | 88.8 | 89.8 | 88.5 | ||||||||||||
| Selected Balance Sheet Data: | December 31, 2017 |
December 31, 2016 |
||||||
| Total cash and investments |
$ | 46,048 | $ | 41,433 | ||||
| Long-term debt |
$ | 1,301 | $ | 1,283 | ||||
| Shareholders’ equity(c) |
$ | 5,330 | $ | 4,916 | ||||
| Shareholders’ equity (excluding unrealized gains/losses related to fixed maturities)(c) |
$ | 4,724 | $ | 4,617 | ||||
| Book value per share |
$ | 60.38 | $ | 56.55 | ||||
| Book value per share (excluding unrealized gains/losses related to fixed maturities) |
$ | 53.51 | $ | 53.11 | ||||
| Common Shares Outstanding |
88.3 | 86.9 | ||||||
Footnotes (b) and (c) are contained in the accompanying Notes to Financial Schedules at the end of this release.
Page 9
AMERICAN FINANCIAL GROUP, INC.
SPECIALTY P&C OPERATIONS
(Dollars in Millions)
| Three months ended December 31, |
Pct. Change |
Twelve months ended December 31, |
Pct. Change |
|||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
| Gross written premiums |
$ | 1,571 | $ | 1,441 | 9 | % | $ | 6,502 | $ | 5,981 | 9 | % | ||||||||||||
|
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|
|
|
|
|
|
|
|||||||||||||||||
| Net written premiums |
$ | 1,161 | $ | 1,083 | 7 | % | $ | 4,751 | $ | 4,386 | 8 | % | ||||||||||||
|
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|
|
|
|
|
|
|
|||||||||||||||||
| Ratios (GAAP): |
||||||||||||||||||||||||
| Loss & LAE ratio |
59.8 | % | 63.7 | % | 62.9 | % | 61.7 | % | ||||||||||||||||
| Underwriting expense ratio |
27.5 | % | 26.7 | % | 30.2 | % | 30.6 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Specialty Combined Ratio |
87.3 | % | 90.4 | % | 93.1 | % | 92.3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Combined Ratio – P&C Segment |
86.0 | % | 90.4 | % | 94.7 | % | 94.5 | % | ||||||||||||||||
|
|
|
|
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|
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|
|||||||||||||||||
| Supplemental Information:(d) |
||||||||||||||||||||||||
| Gross Written Premiums: |
||||||||||||||||||||||||
| Property & Transportation |
$ | 626 | $ | 577 | 8 | % | $ | 2,688 | $ | 2,504 | 7 | % | ||||||||||||
| Specialty Casualty |
737 | 684 | 8 | % | 3,087 | 2,792 | 11 | % | ||||||||||||||||
| Specialty Financial |
208 | 180 | 16 | % | 727 | 685 | 6 | % | ||||||||||||||||
|
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|
|
|
|
|
|
|
|||||||||||||||||
| $ | 1,571 | $ | 1,441 | 9 | % | $ | 6,502 | $ | 5,981 | 9 | % | |||||||||||||
|
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|
|
|
|
|
|
|
|||||||||||||||||
| Net Written Premiums: |
||||||||||||||||||||||||
| Property & Transportation |
$ | 424 | $ | 394 | 8 | % | $ | 1,765 | $ | 1,672 | 6 | % | ||||||||||||
| Specialty Casualty |
555 | 510 | 9 | % | 2,280 | 2,036 | 12 | % | ||||||||||||||||
| Specialty Financial |
156 | 154 | 1 | % | 596 | 572 | 4 | % | ||||||||||||||||
| Other |
26 | 25 | 4 | % | 110 | 106 | 4 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| $ | 1,161 | $ | 1,083 | 7 | % | $ | 4,751 | $ | 4,386 | 8 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Combined Ratio (GAAP): |
||||||||||||||||||||||||
| Property & Transportation |
82.6 | % | 83.9 | % | 91.0 | % | 90.0 | % | ||||||||||||||||
| Specialty Casualty |
90.0 | % | 97.4 | % | 95.2 | % | 96.1 | % | ||||||||||||||||
| Specialty Financial |
86.2 | % | 86.0 | % | 89.4 | % | 84.9 | % | ||||||||||||||||
| Aggregate Specialty Group |
87.3 | % | 90.4 | % | 93.1 | % | 92.3 | % | ||||||||||||||||
| Three months ended December 31, |
Twelve months ended December 31, |
|||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Reserve Development (Favorable)/Adverse: |
||||||||||||||||
| Property & Transportation |
$ | (4 | ) | $ | 13 | $ | (40 | ) | $ | (21 | ) | |||||
| Specialty Casualty |
(52 | ) | 3 | (86 | ) | (13 | ) | |||||||||
| Specialty Financial |
1 | (6 | ) | (21 | ) | (23 | ) | |||||||||
| Other |
6 | — | 8 | (4 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Specialty Group Excluding A&E and Neon Charge |
(49 | ) | 10 | (139 | ) | (61 | ) | |||||||||
| Special A&E Reserve Charge – P&C Run-off |
— | — | 89 | 36 | ||||||||||||
| Neon Exited Lines Charge and Other |
(17 | ) | — | (14 | ) | 57 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Reserve Development |
$ | (66 | ) | $ | 10 | $ | (64 | ) | $ | 32 | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Points on Combined Ratio: |
||||||||||||||||
| Property & Transportation |
(0.8 | ) | 3.0 | (2.3 | ) | (1.2 | ) | |||||||||
| Specialty Casualty |
(9.2 | ) | 0.5 | (4.0 | ) | (0.7 | ) | |||||||||
| Specialty Financial |
0.8 | (4.5 | ) | (3.6 | ) | (4.0 | ) | |||||||||
| Aggregate Specialty Group Total P&C Segment |
|
(4.1 (5.4 |
) ) |
|
0.9 0.9 |
|
|
(3.0 (1.4 |
) ) |
|
(1.4 0.7 |
)
| ||||
Footnote (d) is contained in the accompanying Notes to Financial Schedules at the end of this release.
Page 10
AMERICAN FINANCIAL GROUP, INC.
ANNUITY SEGMENT
(Dollars in Millions)
Components of Statutory Premiums
| Three months ended December 31, |
Pct. Change |
Twelve months ended December 31, |
Pct. Change |
|||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
| Annuity Premiums: |
||||||||||||||||||||||||
| Financial Institutions |
$ | 427 | $ | 626 | (32 | %) | $ | 2,333 | $ | 2,418 | (4 | %) | ||||||||||||
| Retail |
435 | 437 | — | 1,806 | 1,796 | 1 | % | |||||||||||||||||
| Education Market |
41 | 40 | 3 | % | 174 | 184 | (5 | %) | ||||||||||||||||
| Variable Annuities |
6 | 8 | (25 | %) | 28 | 37 | (24 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Annuity Premiums |
$ | 909 | $ | 1,111 | (18 | %) | $ | 4,341 | $ | 4,435 | (2 | %) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Components of Annuity Earnings Before Income Taxes
| Three months ended December 31, |
Pct. Change |
Twelve months ended December 31, |
Pct. Change |
|||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
| Revenues: |
||||||||||||||||||||||||
| Net investment income |
$ | 376 | $ | 346 | 9 | % | $ | 1,458 | $ | 1,356 | 8 | % | ||||||||||||
| Other income |
24 | 27 | (11 | %) | 103 | 103 | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total revenues |
400 | 373 | 7 | % | 1,561 | 1,459 | 7 | % | ||||||||||||||||
| Costs and Expenses: |
||||||||||||||||||||||||
| Annuity benefits |
257 | 160 | 61 | % | 892 | 800 | 12 | % | ||||||||||||||||
| Acquisition expenses |
15 | 54 | (72 | %) | 168 | 181 | (7 | %) | ||||||||||||||||
| Other expenses |
31 | 27 | 15 | % | 121 | 110 | 10 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total costs and expenses |
303 | 241 | 26 | % | 1,181 | 1,091 | 8 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Annuity earnings before income taxes |
$ | 97 | $ | 132 | (27 | %) | $ | 380 | $ | 368 | 3 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Supplemental Annuity Information
| Three months ended December 31, |
Pct. Change |
Twelve months ended December 31, |
Pct. Change |
|||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
| Earnings before fair value accounting for FIAs |
$ | 108 | $ | 103 | 5 | % | $ | 413 | $ | 395 | 5 | % | ||||||||||||
| Impact of fair value accounting for FIAs |
(11 | ) | 29 | nm | (33 | ) | (27 | ) | nm | |||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Earnings before income taxes |
$ | 97 | $ | 132 | (27 | %) | $ | 380 | $ | 368 | 3 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Average fixed annuity reserves* |
$ | 32,680 | $ | 29,250 | 12 | % | $ | 31,526 | $ | 28,146 | 12 | % | ||||||||||||
| Net interest spread* |
2.62 | % | 2.70 | % | 2.62 | % | 2.73 | % | ||||||||||||||||
| Net spread earned before fair value accounting for FIAs* |
1.34 | % | 1.42 | % | 1.33 | % | 1.39 | % | ||||||||||||||||
| Net spread earned after impact of fair value accounting for FIAs* |
1.21 | % | 1.82 | % | 1.23 | % | 1.29 | % | ||||||||||||||||
| * | Excludes fixed annuity portion of variable annuity business. |
Page 11
AMERICAN FINANCIAL GROUP, INC.
Notes to Financial Schedules
| a) | Components of core net operating earnings (in millions): |
| Three months ended December 31, |
Twelve months ended December 31, |
|||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Core Operating Earnings before Income Taxes: |
||||||||||||||||
| P&C insurance segment |
$ | 233 | $ | 180 | $ | 660 | $ | 630 | ||||||||
| Annuity segment, before fair value accounting for FIAs |
108 | 103 | 413 | 395 | ||||||||||||
| Impact of fair value accounting for FIAs |
(11 | ) | 29 | (33 | ) | (27 | ) | |||||||||
| Run-off long-term care and life segment |
2 | 2 | 6 | 2 | ||||||||||||
| Interest & other corporate expense |
(49 | ) | (50 | ) | (183 | ) | (176 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Core operating earnings before income taxes |
283 | 264 | 863 | 824 | ||||||||||||
| Related income taxes |
86 | 88 | 275 | 290 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Core net operating earnings |
$ | 197 | $ | 176 | $ | 588 | $ | 534 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| b) | Excluding the impact of the Neon Exited Lines Charge that was reported in the second quarter of 2016, the Tax Benefit related to the National Interstate Merger and the Tax Benefit Related to the Neon Restructuring reported in the fourth quarter of 2016, AFG’s effective tax rate for the fourth quarter and twelve months ended December 31, 2016 was 33% and 35%, respectively. AFG maintains a full valuation allowance against the deferred tax benefits associated with losses related to AFG’s specialist Lloyd’s insurance business, Neon. |
| c) | Shareholders’ Equity at December 31, 2017 includes $619 million ($7.01 per share) in unrealized after-tax gains on fixed maturities and $13 million ($0.14 per share) in unrealized after-tax losses on fixed maturity-related cash flow hedges. Shareholders’ Equity at December 31, 2016 includes $306 million ($3.52 per share) in unrealized after-tax gains on fixed maturities and $7 million ($0.08 per share) in unrealized after-tax losses on fixed maturity-related cash flow hedges. |
| d) | Supplemental Notes: |
| • | Property & Transportation includes primarily physical damage and liability coverage for buses, trucks and recreational vehicles, inland and ocean marine, agricultural-related products and other property coverages. |
| • | Specialty Casualty includes primarily excess and surplus, general liability, executive liability, professional liability, umbrella and excess liability, specialty coverages in targeted markets, customized programs for small to mid-sized businesses and workers’ compensation insurance. |
| • | Specialty Financial includes risk management insurance programs for lending and leasing institutions (including equipment leasing and collateral and lender-placed mortgage property insurance), surety and fidelity products and trade credit insurance. |
| • | Other includes an internal reinsurance facility. |
Page 12
Exhibit 99.2
|
American Financial Group, Inc.
Investor Supplement - Fourth Quarter 2017 | |||
| January 31, 2018 | ||||
| American Financial Group, Inc. | ||||
| Corporate Headquarters | ||||
| Great American Insurance Group Tower | ||||
| 301 E Fourth Street | ||||
| Cincinnati, OH 45202 | ||||
| 513 579 6739 | ||||
|
American Financial Group, Inc. Table of Contents - Investor Supplement - Fourth Quarter 2017 |
|
| Section |
Page | |||
| Table of Contents - Investor Supplement - Fourth Quarter 2017 |
2 | |||
| Financial Highlights |
3 | |||
| Summary of Earnings |
4 | |||
| Earnings Per Share Summary |
5 | |||
| Property and Casualty Insurance Segment |
||||
| Property and Casualty Insurance - Summary Underwriting Results (GAAP) |
6 | |||
| Specialty - Underwriting Results (GAAP) |
7 | |||
| Property and Transportation - Underwriting Results (GAAP) |
8 | |||
| Specialty Casualty - Underwriting Results (GAAP) |
9 | |||
| Specialty Financial - Underwriting Results (GAAP) |
10 | |||
| Other Specialty - Underwriting Results (GAAP) |
11 | |||
| Annuity Segment |
||||
| Annuity Earnings (GAAP) |
12 | |||
| Detail of Annuity Benefits Expense (GAAP) |
13 | |||
| Net Spread on Fixed Annuities (GAAP) |
14 | |||
| Annuity Premiums (Statutory) |
15 | |||
| Fixed Annuity Benefits Accumulated (GAAP) |
16 | |||
| Guaranteed Minimum Interest Rate Analysis |
17 | |||
| Consolidated Balance Sheet / Book Value / Debt |
||||
| Consolidated Balance Sheet |
18 | |||
| Book Value Per Share and Price / Book Summary |
19 | |||
| Capitalization |
20 | |||
| Additional Supplemental Information |
21 | |||
| Consolidated Investment Supplement |
||||
| Total Cash and Investments |
22 | |||
| Net Investment Income |
23 | |||
| Fixed Maturities - By Security Type - AFG Consolidated |
24 | |||
| Fixed Maturities - By Security Type Portfolio |
25 | |||
| Fixed Maturities - Credit Rating |
26 | |||
| Mortgage-Backed Securities - AFG Consolidated |
27 | |||
| Mortgage-Backed Securities Portfolio |
28 | |||
| Mortgage-Backed Securities - Credit Rating |
29 | |||
| Appendix |
||||
| A. Fixed Maturities - Credit Rating by Type |
30 | |||
Page 2
|
American Financial Group, Inc. Financial Highlights (in millions, except per share information) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Highlights |
||||||||||||||||||||||||||||
| Net earnings |
$ | 166 | $ | 11 | $ | 145 | $ | 153 | $ | 385 | $ | 475 | $ | 649 | ||||||||||||||
| Core net operating earnings |
197 | 95 | 145 | 151 | 176 | 588 | 534 | |||||||||||||||||||||
| Total assets |
60,658 | 60,163 | 58,618 | 57,464 | 55,072 | 60,658 | 55,072 | |||||||||||||||||||||
| Adjusted shareholders’ equity (a) |
4,724 | 4,852 | 4,837 | 4,815 | 4,617 | 4,724 | 4,617 | |||||||||||||||||||||
| Property and Casualty net written premiums |
1,161 | 1,433 | 1,130 | 1,027 | 1,083 | 4,751 | 4,386 | |||||||||||||||||||||
| Annuity statutory premiums |
909 | 876 | 1,266 | 1,290 | 1,111 | 4,341 | 4,435 | |||||||||||||||||||||
| Per share data |
||||||||||||||||||||||||||||
| Diluted earnings per share |
$ | 1.84 | $ | 0.13 | $ | 1.61 | $ | 1.72 | $ | 4.33 | $ | 5.28 | $ | 7.33 | ||||||||||||||
| Core net operating earnings per share |
2.20 | 1.06 | 1.61 | 1.69 | 1.98 | 6.55 | 6.03 | |||||||||||||||||||||
| Adjusted book value per share (a) |
53.51 | 55.08 | 54.97 | 54.98 | 53.11 | 53.51 | 53.11 | |||||||||||||||||||||
| Cash dividends per common share |
2.3500 | 0.3125 | 1.8125 | 0.3125 | 1.3125 | 4.7875 | 2.1525 | |||||||||||||||||||||
| Financial ratios |
||||||||||||||||||||||||||||
| Annualized return on equity (b) |
14.4 | % | 1.0 | % | 12.3 | % | 13.3 | % | 34.4 | % | 10.3 | % | 14.8 | % | ||||||||||||||
| Annualized core operating return on equity (b) |
17.2 | % | 8.1 | % | 12.3 | % | 13.1 | % | 15.7 | % | 12.7 | % | 12.2 | % | ||||||||||||||
| Property and Casualty combined ratio - Specialty: |
||||||||||||||||||||||||||||
| Loss & LAE ratio |
59.8 | % | 71.4 | % | 59.5 | % | 59.5 | % | 63.7 | % | 62.9 | % | 61.7 | % | ||||||||||||||
| Underwriting expense ratio |
27.5 | % | 27.9 | % | 33.7 | % | 32.7 | % | 26.7 | % | 30.2 | % | 30.6 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio - Specialty |
87.3 | % | 99.3 | % | 93.2 | % | 92.2 | % | 90.4 | % | 93.1 | % | 92.3 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net spread on fixed annuities: |
||||||||||||||||||||||||||||
| Net interest spread |
2.62 | % | 2.69 | % | 2.61 | % | 2.58 | % | 2.70 | % | 2.62 | % | 2.73 | % | ||||||||||||||
| Net spread earned: |
||||||||||||||||||||||||||||
| Before impact of fair value accounting |
1.34 | % | 1.36 | % | 1.32 | % | 1.31 | % | 1.42 | % | 1.33 | % | 1.39 | % | ||||||||||||||
| Impact of fair value accounting (c) |
(0.13 | %) | (0.05 | %) | (0.21 | %) | (0.03 | %) | 0.40 | % | (0.10 | %) | (0.10 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| After impact of fair value accounting |
1.21 | % | 1.31 | % | 1.11 | % | 1.28 | % | 1.82 | % | 1.23 | % | 1.29 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (a) | Excludes unrealized gains related to fixed maturity investments, a reconciliation to the GAAP measure is on page 19. |
| (b) | Excludes accumulated other comprehensive income. |
| (c) | Change in fair value of derivatives offset by the estimated related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs. |
Page 3
|
American Financial Group, Inc. Summary of Earnings ($ in millions) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Property and Casualty Insurance |
||||||||||||||||||||||||||||
| Underwriting profit |
$ | 155 | $ | 8 | $ | 72 | $ | 78 | $ | 110 | $ | 313 | $ | 337 | ||||||||||||||
| Net investment income |
86 | 94 | 96 | 86 | 85 | 362 | 350 | |||||||||||||||||||||
| Other income (expense) |
(8 | ) | (7 | ) | (5 | ) | 5 | (15 | ) | (15 | ) | (57 | ) | |||||||||||||||
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| Property and Casualty Insurance operating earnings |
233 | 95 | 163 | 169 | 180 | 660 | 630 | |||||||||||||||||||||
| Annuity earnings |
97 | 102 | 85 | 96 | 132 | 380 | 368 | |||||||||||||||||||||
| Run-off Long-Term Care and Life earnings |
2 | 2 | 2 | — | 2 | 6 | 2 | |||||||||||||||||||||
| Interest expense of parent holding companies |
(20 | ) | (21 | ) | (23 | ) | (21 | ) | (21 | ) | (85 | ) | (77 | ) | ||||||||||||||
| Other expense |
(29 | ) | (20 | ) | (23 | ) | (26 | ) | (29 | ) | (98 | ) | (99 | ) | ||||||||||||||
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| Pre-tax core operating earnings |
283 | 158 | 204 | 218 | 264 | 863 | 824 | |||||||||||||||||||||
| Income tax expense |
86 | 63 | 59 | 67 | 88 | 275 | 290 | |||||||||||||||||||||
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| Core net operating earnings |
197 | 95 | 145 | 151 | 176 | 588 | 534 | |||||||||||||||||||||
| Non-core items, net of tax: |
||||||||||||||||||||||||||||
| Realized gains (losses) on securities |
4 | (8 | ) | 5 | 2 | 32 | 3 | 13 | ||||||||||||||||||||
| Gain on sale of subsidiaries |
— | — | — | — | — | — | 1 | |||||||||||||||||||||
| Gain on sale of apartment property |
— | — | — | — | — | — | 15 | |||||||||||||||||||||
| Special A&E charges: |
||||||||||||||||||||||||||||
| Property and Casualty Insurance run-off operations |
— | (58 | ) | — | — | — | (58 | ) | (23 | ) | ||||||||||||||||||
| Former Railroad and Manufacturing operations |
— | (16 | ) | — | — | — | (16 | ) | (3 | ) | ||||||||||||||||||
| Neon exited lines charge |
18 | — | — | — | — | 18 | (65 | ) | ||||||||||||||||||||
| Tax benefit related to National Interstate merger |
— | — | — | — | 66 | — | 66 | |||||||||||||||||||||
| Tax benefit related to Neon restructuring |
56 | — | — | — | 111 | 56 | 111 | |||||||||||||||||||||
| Tax expense related to change in U.S. corporate tax rate |
(83 | ) | — | — | — | — | (83 | ) | — | |||||||||||||||||||
| Loss on retirement of debt |
(26 | ) | (2 | ) | (5 | ) | — | — | (33 | ) | — | |||||||||||||||||
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| Net earnings |
$ | 166 | $ | 11 | $ | 145 | $ | 153 | $ | 385 | $ | 475 | $ | 649 | ||||||||||||||
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Page 4
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American Financial Group, Inc. Earnings Per Share Summary (in millions, except per share information) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Core net operating earnings |
$ | 197 | $ | 95 | $ | 145 | $ | 151 | $ | 176 | $ | 588 | $ | 534 | ||||||||||||||
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| Net earnings |
$ | 166 | $ | 11 | $ | 145 | $ | 153 | $ | 385 | $ | 475 | $ | 649 | ||||||||||||||
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| Average number of diluted shares |
90.109 | 89.984 | 89.799 | 89.342 | 88.774 | 89.812 | 88.530 | |||||||||||||||||||||
| Diluted earnings per share: |
||||||||||||||||||||||||||||
| Core net operating earnings per share |
$ | 2.20 | $ | 1.06 | $ | 1.61 | $ | 1.69 | $ | 1.98 | $ | 6.55 | $ | 6.03 | ||||||||||||||
| Realized gains (losses) on securities |
0.04 | (0.08 | ) | 0.05 | 0.03 | 0.36 | 0.03 | 0.16 | ||||||||||||||||||||
| Gain on sale of subsidiaries |
— | — | — | — | — | — | 0.01 | |||||||||||||||||||||
| Gain on sale of apartment property |
— | — | — | — | — | — | 0.17 | |||||||||||||||||||||
| Special A&E charges: |
||||||||||||||||||||||||||||
| Property and Casualty Insurance run-off operations |
— | (0.64 | ) | — | — | — | (0.64 | ) | (0.26 | ) | ||||||||||||||||||
| Former Railroad and Manufacturing operations |
— | (0.18 | ) | — | — | — | (0.18 | ) | (0.04 | ) | ||||||||||||||||||
| Neon exited lines charge |
0.19 | — | — | — | — | 0.19 | (0.73 | ) | ||||||||||||||||||||
| Tax benefit related to National Interstate merger |
— | — | — | — | 0.74 | — | 0.74 | |||||||||||||||||||||
| Tax benefit related to Neon restructuring |
0.62 | — | — | — | 1.25 | 0.62 | 1.25 | |||||||||||||||||||||
| Tax expense related to change in U.S. corporate tax rate |
(0.92 | ) | — | — | — | — | (0.92 | ) | — | |||||||||||||||||||
| Loss on retirement of debt |
(0.29 | ) | (0.03 | ) | (0.05 | ) | — | — | (0.37 | ) | — | |||||||||||||||||
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| Diluted earnings per share |
$ | 1.84 | $ | 0.13 | $ | 1.61 | $ | 1.72 | $ | 4.33 | $ | 5.28 | $ | 7.33 | ||||||||||||||
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Page 5
|
American Financial Group, Inc. Property and Casualty Insurance - Summary Underwriting Results (GAAP) ($ in millions) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Property and Transportation |
$ | 84 | $ | 6 | $ | 21 | $ | 43 | $ | 75 | $ | 154 | $ | 166 | ||||||||||||||
| Specialty Casualty |
58 | 2 | 29 | 15 | 13 | 104 | 78 | |||||||||||||||||||||
| Specialty Financial |
19 | (3 | ) | 23 | 22 | 20 | 61 | 84 | ||||||||||||||||||||
| Other Specialty |
(5 | ) | 4 | — | (1 | ) | 2 | (2 | ) | 9 | ||||||||||||||||||
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| Underwriting profit - Specialty |
156 | 9 | 73 | 79 | 110 | 317 | 337 | |||||||||||||||||||||
| Other core charges, included in loss and LAE |
1 | 1 | 1 | 1 | — | 4 | — | |||||||||||||||||||||
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| Underwriting profit - Core |
155 | 8 | 72 | 78 | 110 | 313 | 337 | |||||||||||||||||||||
| Special A&E charges, included in loss and LAE |
— | (89 | ) | — | — | — | (89 | ) | (36 | ) | ||||||||||||||||||
| Neon exited lines charge, included in loss and LAE |
18 | — | — | — | — | 18 | (57 | ) | ||||||||||||||||||||
| Neon exited lines charge, included in underwriting expenses |
— | — | — | — | — | — | (8 | ) | ||||||||||||||||||||
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| Underwriting profit (loss) - Property and Casualty Insurance |
$ | 173 | $ | (81 | ) | $ | 72 | $ | 78 | $ | 110 | $ | 242 | $ | 236 | |||||||||||||
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|||||||||||||||
| Included in results above: |
||||||||||||||||||||||||||||
| Current accident year catastrophe losses: |
||||||||||||||||||||||||||||
| Catastrophe reinstatement premium |
$ | 4 | $ | 6 | $ | — | $ | — | $ | — | $ | 10 | $ | — | ||||||||||||||
| Catastrophe loss |
8 | 107 | 18 | 7 | 12 | 140 | 55 | |||||||||||||||||||||
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| Total current accident year catastrophe losses |
$ | 12 | $ | 113 | $ | 18 | $ | 7 | $ | 12 | $ | 150 | $ | 55 | ||||||||||||||
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| Prior year loss reserve development (favorable) / adverse |
$ | (66 | ) | $ | 52 | $ | (22 | ) | $ | (28 | ) | $ | 10 | $ | (64 | ) | $ | 32 | ||||||||||
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| Combined ratio: |
||||||||||||||||||||||||||||
| Property and Transportation |
82.6 | % | 98.9 | % | 94.2 | % | 87.3 | % | 83.9 | % | 91.0 | % | 90.0 | % | ||||||||||||||
| Specialty Casualty |
90.0 | % | 99.5 | % | 94.7 | % | 97.0 | % | 97.4 | % | 95.2 | % | 96.1 | % | ||||||||||||||
| Specialty Financial |
86.2 | % | 102.2 | % | 84.4 | % | 85.0 | % | 86.0 | % | 89.4 | % | 84.9 | % | ||||||||||||||
| Other Specialty |
123.0 | % | 85.1 | % | 98.3 | % | 105.8 | % | 94.9 | % | 102.7 | % | 91.4 | % | ||||||||||||||
| Combined ratio - Specialty |
87.3 | % | 99.3 | % | 93.2 | % | 92.2 | % | 90.4 | % | 93.1 | % | 92.3 | % | ||||||||||||||
| Other core charges |
0.1 | % | 0.1 | % | 0.2 | % | 0.1 | % | 0.0 | % | 0.1 | % | (0.1 | %) | ||||||||||||||
| Neon exited lines charge, loss and LAE |
(1.4 | %) | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | (0.4 | %) | 1.3 | % | ||||||||||||||
| Neon exited lines charge, underwriting expenses |
0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.2 | % | ||||||||||||||
| Special A&E charges |
0.0 | % | 7.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 1.9 | % | 0.8 | % | ||||||||||||||
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|
|||||||||||||||
| Combined ratio |
86.0 | % | 106.4 | % | 93.4 | % | 92.3 | % | 90.4 | % | 94.7 | % | 94.5 | % | ||||||||||||||
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|||||||||||||||
| Combined ratio excl. catastrophe and prior year development |
90.8 | % | 93.8 | % | 93.7 | % | 94.3 | % | 88.4 | % | 93.1 | % | 92.4 | % | ||||||||||||||
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|||||||||||||||
| Loss and LAE components - property and casualty insurance |
||||||||||||||||||||||||||||
| Current accident year, excluding catastrophe loss |
63.3 | % | 65.9 | % | 60.0 | % | 61.6 | % | 61.7 | % | 62.9 | % | 61.8 | % | ||||||||||||||
| Prior accident year loss reserve development |
(5.4 | %) | 4.2 | % | (2.0 | %) | (2.7 | %) | 0.9 | % | (1.4 | %) | 0.7 | % | ||||||||||||||
| Current accident year catastrophe loss |
0.6 | % | 8.4 | % | 1.7 | % | 0.7 | % | 1.1 | % | 3.0 | % | 1.3 | % | ||||||||||||||
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|
|||||||||||||||
| Loss and LAE ratio |
58.5 | % | 78.5 | % | 59.7 | % | 59.6 | % | 63.7 | % | 64.5 | % | 63.8 | % | ||||||||||||||
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Page 6
|
American Financial Group, Inc. Specialty - Underwriting Results (GAAP) ($ in millions) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Gross written premiums |
$ | 1,571 | $ | 2,104 | $ | 1,503 | $ | 1,324 | $ | 1,441 | $ | 6,502 | $ | 5,981 | ||||||||||||||
| Ceded reinsurance premiums |
(410 | ) | (671 | ) | (373 | ) | (297 | ) | (358 | ) | (1,751 | ) | (1,595 | ) | ||||||||||||||
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| Net written premiums |
1,161 | 1,433 | 1,130 | 1,027 | 1,083 | 4,751 | 4,386 | |||||||||||||||||||||
| Change in unearned premiums |
64 | (166 | ) | (65 | ) | (5 | ) | 61 | (172 | ) | (58 | ) | ||||||||||||||||
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| Net earned premiums |
1,225 | 1,267 | 1,065 | 1,022 | 1,144 | 4,579 | 4,328 | |||||||||||||||||||||
| Loss and LAE |
733 | 905 | 634 | 608 | 729 | 2,880 | 2,669 | |||||||||||||||||||||
| Underwriting expense |
336 | 353 | 358 | 335 | 305 | 1,382 | 1,322 | |||||||||||||||||||||
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| Underwriting profit |
$ | 156 | $ | 9 | $ | 73 | $ | 79 | $ | 110 | $ | 317 | $ | 337 | ||||||||||||||
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|||||||||||||||
| Included in results above: |
||||||||||||||||||||||||||||
| Current accident year catastrophe losses: |
||||||||||||||||||||||||||||
| Catastrophe reinstatement premium |
$ | 4 | $ | 6 | $ | — | $ | — | $ | — | $ | 10 | $ | — | ||||||||||||||
| Catastrophe loss |
8 | 107 | 18 | 7 | 12 | 140 | 55 | |||||||||||||||||||||
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| Total current accident year catastrophe losses |
$ | 12 | $ | 113 | $ | 18 | $ | 7 | $ | 12 | $ | 150 | $ | 55 | ||||||||||||||
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| Prior year loss reserve development (favorable) / adverse |
$ | (49 | ) | $ | (38 | ) | $ | (23 | ) | $ | (29 | ) | $ | 10 | $ | (139 | ) | $ | (61 | ) | ||||||||
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|||||||||||||||
| Combined ratio: |
||||||||||||||||||||||||||||
| Loss and LAE ratio |
59.8 | % | 71.4 | % | 59.5 | % | 59.5 | % | 63.7 | % | 62.9 | % | 61.7 | % | ||||||||||||||
| Underwriting expense ratio |
27.5 | % | 27.9 | % | 33.7 | % | 32.7 | % | 26.7 | % | 30.2 | % | 30.6 | % | ||||||||||||||
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|||||||||||||||
| Combined ratio |
87.3 | % | 99.3 | % | 93.2 | % | 92.2 | % | 90.4 | % | 93.1 | % | 92.3 | % | ||||||||||||||
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|||||||||||||||
| Combined ratio excl. catastrophe and prior year development |
90.8 | % | 93.8 | % | 93.7 | % | 94.3 | % | 88.4 | % | 93.1 | % | 92.4 | % | ||||||||||||||
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| Loss and LAE components: |
||||||||||||||||||||||||||||
| Current accident year, excluding catastrophe loss |
63.3 | % | 65.9 | % | 60.0 | % | 61.6 | % | 61.7 | % | 62.9 | % | 61.8 | % | ||||||||||||||
| Prior accident year loss reserve development |
(4.1 | %) | (2.9 | %) | (2.2 | %) | (2.8 | %) | 0.9 | % | (3.0 | %) | (1.4 | %) | ||||||||||||||
| Current accident year catastrophe loss |
0.6 | % | 8.4 | % | 1.7 | % | 0.7 | % | 1.1 | % | 3.0 | % | 1.3 | % | ||||||||||||||
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|||||||||||||||
| Loss and LAE ratio |
59.8 | % | 71.4 | % | 59.5 | % | 59.5 | % | 63.7 | % | 62.9 | % | 61.7 | % | ||||||||||||||
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Page 7
|
American Financial Group, Inc. Property and Transportation - Underwriting Results (GAAP) ($ in millions) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Gross written premiums |
$ | 626 | $ | 1,073 | $ | 573 | $ | 416 | $ | 577 | $ | 2,688 | $ | 2,504 | ||||||||||||||
| Ceded reinsurance premiums |
(202 | ) | (449 | ) | (180 | ) | (92 | ) | (183 | ) | (923 | ) | (832 | ) | ||||||||||||||
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| Net written premiums |
424 | 624 | 393 | 324 | 394 | 1,765 | 1,672 | |||||||||||||||||||||
| Change in unearned premiums |
61 | (97 | ) | (36 | ) | 18 | 71 | (54 | ) | (10 | ) | |||||||||||||||||
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| Net earned premiums |
485 | 527 | 357 | 342 | 465 | 1,711 | 1,662 | |||||||||||||||||||||
| Loss and LAE |
325 | 407 | 232 | 208 | 319 | 1,172 | 1,114 | |||||||||||||||||||||
| Underwriting expense |
76 | 114 | 104 | 91 | 71 | 385 | 382 | |||||||||||||||||||||
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| Underwriting profit |
$ | 84 | $ | 6 | $ | 21 | $ | 43 | $ | 75 | $ | 154 | $ | 166 | ||||||||||||||
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|||||||||||||||
| Included in results above: |
||||||||||||||||||||||||||||
| Current accident year catastrophe losses: |
||||||||||||||||||||||||||||
| Catastrophe reinstatement premium |
$ | — | $ | 2 | $ | — | $ | — | $ | — | $ | 2 | $ | — | ||||||||||||||
| Catastrophe loss |
(3 | ) | 23 | 11 | 5 | 6 | 36 | 31 | ||||||||||||||||||||
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| Total current accident year catastrophe losses |
$ | (3 | ) | $ | 25 | $ | 11 | $ | 5 | $ | 6 | $ | 38 | $ | 31 | |||||||||||||
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| Prior year loss reserve development (favorable) / adverse |
$ | (4 | ) | $ | (8 | ) | $ | (11 | ) | $ | (17 | ) | $ | 13 | $ | (40 | ) | $ | (21 | ) | ||||||||
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|||||||||||||||
| Combined ratio: |
||||||||||||||||||||||||||||
| Loss and LAE ratio |
67.1 | % | 77.3 | % | 64.9 | % | 60.8 | % | 68.6 | % | 68.5 | % | 67.0 | % | ||||||||||||||
| Underwriting expense ratio |
15.5 | % | 21.6 | % | 29.3 | % | 26.5 | % | 15.3 | % | 22.5 | % | 23.0 | % | ||||||||||||||
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|
|
|||||||||||||||
| Combined ratio |
82.6 | % | 98.9 | % | 94.2 | % | 87.3 | % | 83.9 | % | 91.0 | % | 90.0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio excl. catastrophe and prior year development |
84.0 | % | 96.0 | % | 94.3 | % | 90.7 | % | 79.7 | % | 91.2 | % | 89.3 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE components: |
||||||||||||||||||||||||||||
| Current accident year, excluding catastrophe loss |
68.5 | % | 74.4 | % | 65.0 | % | 64.2 | % | 64.4 | % | 68.7 | % | 66.3 | % | ||||||||||||||
| Prior accident year loss reserve development |
(0.8 | %) | (1.5 | %) | (3.1 | %) | (4.8 | %) | 3.0 | % | (2.3 | %) | (1.2 | %) | ||||||||||||||
| Current accident year catastrophe loss |
(0.6 | %) | 4.4 | % | 3.0 | % | 1.4 | % | 1.2 | % | 2.1 | % | 1.9 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE ratio |
67.1 | % | 77.3 | % | 64.9 | % | 60.8 | % | 68.6 | % | 68.5 | % | 67.0 | % | ||||||||||||||
|
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|
|
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|
|||||||||||||||
Page 8
|
American Financial Group, Inc. Specialty Casualty - Underwriting Results (GAAP) ($ in millions) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Gross written premiums |
$ | 737 | $ | 850 | $ | 756 | $ | 744 | $ | 684 | $ | 3,087 | $ | 2,792 | ||||||||||||||
| Ceded reinsurance premiums |
(182 | ) | (226 | ) | (195 | ) | (204 | ) | (174 | ) | (807 | ) | (756 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net written premiums |
555 | 624 | 561 | 540 | 510 | 2,280 | 2,036 | |||||||||||||||||||||
| Change in unearned premiums |
18 | (56 | ) | (24 | ) | (32 | ) | — | (94 | ) | (30 | ) | ||||||||||||||||
|
|
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|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net earned premiums |
573 | 568 | 537 | 508 | 510 | 2,186 | 2,006 | |||||||||||||||||||||
| Loss and LAE |
338 | 402 | 339 | 331 | 348 | 1,410 | 1,320 | |||||||||||||||||||||
| Underwriting expense |
177 | 164 | 169 | 162 | 149 | 672 | 608 | |||||||||||||||||||||
|
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|
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|
|
|
|
|
|
|
|
|||||||||||||||
| Underwriting profit |
$ | 58 | $ | 2 | $ | 29 | $ | 15 | $ | 13 | $ | 104 | $ | 78 | ||||||||||||||
|
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|
|
|
|
|
|
|||||||||||||||
| Included in results above: |
||||||||||||||||||||||||||||
| Current accident year catastrophe losses: |
||||||||||||||||||||||||||||
| Catastrophe reinstatement premium |
$ | 4 | $ | 2 | $ | — | $ | — | $ | — | $ | 6 | $ | — | ||||||||||||||
| Catastrophe loss |
14 | 54 | 2 | 1 | 4 | 71 | 10 | |||||||||||||||||||||
|
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|
|
|
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|
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|
|
|
|
|
|
|||||||||||||||
| Total current accident year catastrophe losses |
$ | 18 | $ | 56 | $ | 2 | $ | 1 | $ | 4 | $ | 77 | $ | 10 | ||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Prior year loss reserve development (favorable) / adverse |
$ | (52 | ) | $ | (23 | ) | $ | (5 | ) | $ | (6 | ) | $ | 3 | $ | (86 | ) | $ | (13 | ) | ||||||||
|
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|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio: |
||||||||||||||||||||||||||||
| Loss and LAE ratio |
59.1 | % | 70.7 | % | 63.1 | % | 65.2 | % | 68.2 | % | 64.5 | % | 65.8 | % | ||||||||||||||
| Underwriting expense ratio |
30.9 | % | 28.8 | % | 31.6 | % | 31.8 | % | 29.2 | % | 30.7 | % | 30.3 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio |
90.0 | % | 99.5 | % | 94.7 | % | 97.0 | % | 97.4 | % | 95.2 | % | 96.1 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio excl. catastrophe and prior year development |
96.7 | % | 94.0 | % | 95.2 | % | 97.9 | % | 96.1 | % | 95.9 | % | 96.3 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE components: |
||||||||||||||||||||||||||||
| Current accident year, excluding catastrophe loss |
65.8 | % | 65.2 | % | 63.6 | % | 66.1 | % | 66.9 | % | 65.2 | % | 66.0 | % | ||||||||||||||
| Prior accident year loss reserve development |
(9.2 | %) | (4.0 | %) | (0.9 | %) | (1.1 | %) | 0.5 | % | (4.0 | %) | (0.7 | %) | ||||||||||||||
| Current accident year catastrophe loss |
2.5 | % | 9.5 | % | 0.4 | % | 0.2 | % | 0.8 | % | 3.3 | % | 0.5 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE ratio |
59.1 | % | 70.7 | % | 63.1 | % | 65.2 | % | 68.2 | % | 64.5 | % | 65.8 | % | ||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Page 9
|
American Financial Group, Inc. Specialty Financial - Underwriting Results (GAAP) ($ in millions) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Gross written premiums |
$ | 208 | $ | 181 | $ | 174 | $ | 164 | $ | 180 | $ | 727 | $ | 685 | ||||||||||||||
| Ceded reinsurance premiums |
(52 | ) | (31 | ) | (25 | ) | (23 | ) | (26 | ) | (131 | ) | (113 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net written premiums |
156 | 150 | 149 | 141 | 154 | 596 | 572 | |||||||||||||||||||||
| Change in unearned premiums |
(15 | ) | (8 | ) | (3 | ) | 6 | (13 | ) | (20 | ) | (15 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net earned premiums |
141 | 142 | 146 | 147 | 141 | 576 | 557 | |||||||||||||||||||||
| Loss and LAE |
47 | 79 | 49 | 52 | 46 | 227 | 178 | |||||||||||||||||||||
| Underwriting expense |
75 | 66 | 74 | 73 | 75 | 288 | 295 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Underwriting profit (loss) |
$ | 19 | $ | (3 | ) | $ | 23 | $ | 22 | $ | 20 | $ | 61 | $ | 84 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Included in results above: |
||||||||||||||||||||||||||||
| Current accident year catastrophe losses: |
||||||||||||||||||||||||||||
| Catastrophe reinstatement premium |
$ | — | $ | 2 | $ | — | $ | — | $ | — | $ | 2 | $ | — | ||||||||||||||
| Catastrophe loss |
(5 | ) | 29 | 5 | 1 | 2 | 30 | 11 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total current accident year catastrophe losses |
$ | (5 | ) | $ | 31 | $ | 5 | $ | 1 | $ | 2 | $ | 32 | $ | 11 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Prior year loss reserve development (favorable) / adverse |
$ | 1 | $ | (5 | ) | $ | (8 | ) | $ | (9 | ) | $ | (6 | ) | $ | (21 | ) | $ | (23 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio: |
||||||||||||||||||||||||||||
| Loss and LAE ratio |
33.1 | % | 56.0 | % | 33.1 | % | 35.6 | % | 32.4 | % | 39.4 | % | 32.0 | % | ||||||||||||||
| Underwriting expense ratio |
53.1 | % | 46.2 | % | 51.3 | % | 49.4 | % | 53.6 | % | 50.0 | % | 52.9 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio |
86.2 | % | 102.2 | % | 84.4 | % | 85.0 | % | 86.0 | % | 89.4 | % | 84.9 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio excl. catastrophe and prior year development |
89.1 | % | 84.9 | % | 86.5 | % | 90.6 | % | 88.8 | % | 87.8 | % | 86.9 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE components: |
||||||||||||||||||||||||||||
| Current accident year, excluding catastrophe loss |
36.0 | % | 38.7 | % | 35.2 | % | 41.2 | % | 35.2 | % | 37.8 | % | 34.0 | % | ||||||||||||||
| Prior accident year loss reserve development |
0.8 | % | (3.1 | %) | (5.4 | %) | (6.4 | %) | (4.5 | %) | (3.6 | %) | (4.0 | %) | ||||||||||||||
| Current accident year catastrophe loss |
(3.7 | %) | 20.4 | % | 3.3 | % | 0.8 | % | 1.7 | % | 5.2 | % | 2.0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE ratio |
33.1 | % | 56.0 | % | 33.1 | % | 35.6 | % | 32.4 | % | 39.4 | % | 32.0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Page 10
|
American Financial Group, Inc. Other Specialty - Underwriting Results (GAAP) ($ in millions) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Gross written premiums |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
| Ceded reinsurance premiums |
26 | 35 | 27 | 22 | 25 | 110 | 106 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net written premiums |
26 | 35 | 27 | 22 | 25 | 110 | 106 | |||||||||||||||||||||
| Change in unearned premiums |
— | (5 | ) | (2 | ) | 3 | 3 | (4 | ) | (3 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net earned premiums |
26 | 30 | 25 | 25 | 28 | 106 | 103 | |||||||||||||||||||||
| Loss and LAE |
23 | 17 | 14 | 17 | 16 | 71 | 57 | |||||||||||||||||||||
| Underwriting expense |
8 | 9 | 11 | 9 | 10 | 37 | 37 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Underwriting profit (loss) |
$ | (5 | ) | $ | 4 | $ | — | $ | (1 | ) | $ | 2 | $ | (2 | ) | $ | 9 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Included in results above: |
||||||||||||||||||||||||||||
| Current accident year catastrophe losses: |
||||||||||||||||||||||||||||
| Catastrophe reinstatement premium |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
| Catastrophe loss |
2 | 1 | — | — | — | 3 | 3 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total current accident year catastrophe losses |
$ | 2 | $ | 1 | $ | — | $ | — | $ | — | $ | 3 | $ | 3 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Prior year loss reserve development (favorable) / adverse |
$ | 6 | $ | (2 | ) | $ | 1 | $ | 3 | $ | — | $ | 8 | $ | (4 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio: |
||||||||||||||||||||||||||||
| Loss and LAE ratio |
86.2 | % | 52.6 | % | 62.0 | % | 68.0 | % | 59.5 | % | 66.9 | % | 54.9 | % | ||||||||||||||
| Underwriting expense ratio |
36.8 | % | 32.5 | % | 36.3 | % | 37.8 | % | 35.4 | % | 35.8 | % | 36.5 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio |
123.0 | % | 85.1 | % | 98.3 | % | 105.8 | % | 94.9 | % | 102.7 | % | 91.4 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio excl. catastrophe and prior year development |
94.5 | % | 90.4 | % | 93.5 | % | 93.4 | % | 93.7 | % | 93.0 | % | 92.8 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Page 11
|
American Financial Group, Inc. Annuity Earnings (GAAP) ($ in millions) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Net investment income |
$ | 376 | $ | 375 | $ | 360 | $ | 347 | $ | 346 | $ | 1,458 | $ | 1,356 | ||||||||||||||
| Guaranteed withdrawal benefit fees |
17 | 15 | 14 | 14 | 14 | 60 | 53 | |||||||||||||||||||||
| Policy charges and other miscellaneous income |
7 | 11 | 12 | 13 | 13 | 43 | 50 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total revenues |
400 | 401 | 386 | 374 | 373 | 1,561 | 1,459 | |||||||||||||||||||||
| Annuity benefits |
257 | 215 | 224 | 196 | 160 | 892 | 800 | |||||||||||||||||||||
| Acquisition expenses |
15 | 54 | 47 | 52 | 54 | 168 | 181 | |||||||||||||||||||||
| Other expenses |
31 | 30 | 30 | 30 | 27 | 121 | 110 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total costs and expenses |
303 | 299 | 301 | 278 | 241 | 1,181 | 1,091 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Annuity earnings before income taxes |
$ | 97 | $ | 102 | $ | 85 | $ | 96 | $ | 132 | $ | 380 | $ | 368 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Detail of Annuity earnings before income taxes |
||||||||||||||||||||||||||||
| Earnings before income taxes and impact of fair value accounting |
$ | 108 | $ | 106 | $ | 101 | $ | 98 | $ | 103 | $ | 413 | $ | 395 | ||||||||||||||
| Impact of fair value accounting (a) |
(11 | ) | (4 | ) | (16 | ) | (2 | ) | 29 | (33 | ) | (27 | ) | |||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Earnings before income taxes |
$ | 97 | $ | 102 | $ | 85 | $ | 96 | $ | 132 | $ | 380 | $ | 368 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (a) | Change in fair value of derivatives offset by the estimated related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs. |
Page 12
|
American Financial Group, Inc. Detail of Annuity Benefits Expense (GAAP) ($ in millions) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Detail of annuity benefits expense: |
||||||||||||||||||||||||||||
| Interest credited - fixed |
$ | 164 | $ | 160 | $ | 157 | $ | 152 | $ | 148 | $ | 633 | $ | 574 | ||||||||||||||
| Interest credited - fixed component of variable annuities |
1 | 1 | 2 | 1 | 1 | 5 | 5 | |||||||||||||||||||||
| Change in expected death and annuitization reserve |
5 | 5 | 4 | 4 | 4 | 18 | 18 | |||||||||||||||||||||
| Amortization of sales inducements |
5 | 4 | 4 | 6 | 7 | 19 | 24 | |||||||||||||||||||||
| Guaranteed withdrawal benefit reserve |
16 | 18 | 17 | 16 | 20 | 67 | 69 | |||||||||||||||||||||
| Change in other benefit reserves |
9 | 16 | 9 | 11 | 11 | 45 | 34 | |||||||||||||||||||||
| Unlockings (a) |
35 | — | — | — | 23 | 35 | 23 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Subtotal before impact of fair value accounting |
235 | 204 | 193 | 190 | 214 | 822 | 747 | |||||||||||||||||||||
| Embedded derivative mark-to-market (b) |
178 | 127 | 112 | 147 | 6 | 564 | 194 | |||||||||||||||||||||
| Equity option mark-to-market |
(156 | ) | (116 | ) | (81 | ) | (141 | ) | (60 | ) | (494 | ) | (141 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Subtotal impact of fair value accounting |
22 | 11 | 31 | 6 | (54 | ) | 70 | 53 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total annuity benefits expense |
$ | 257 | $ | 215 | $ | 224 | $ | 196 | $ | 160 | $ | 892 | $ | 800 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (a) | Includes unlockings for fixed indexed annuity embedded derivative reserves, sales inducement asset and other reserves. Does not include unlocking income of $32 million in 2017 and $24 million in 2016 for deferred policy acquisition costs and unearned revenue reserves. These unlockings are included in acquisition expenses and other income. In total, AFG recorded an unlocking expense of $3 million in 2017 and an expense reduction of $1 million in 2016. |
| (b) | Excludes unlocking impact of $25 million in 2017 and $17 million in 2016. |
Page 13
| American Financial Group, Inc. Net Spread on Fixed Annuities (GAAP) ($ in millions) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Average fixed annuity investments (at amortized cost) (a) |
$ | 32,245 | $ | 31,713 | $ | 30,988 | $ | 30,055 | $ | 29,192 | $ | 31,250 | $ | 28,223 | ||||||||||||||
| Average annuity benefits accumulated |
32,680 | 32,029 | 31,212 | 30,183 | 29,250 | 31,526 | 28,146 | |||||||||||||||||||||
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| Annuity benefits accumulated in excess of investments (a) |
$ | (435 | ) | $ | (316 | ) | $ | (224 | ) | $ | (128 | ) | $ | (58 | ) | $ | (276 | ) | $ | 77 | ||||||||
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| As % of average annuity benefits accumulated (except as noted) |
||||||||||||||||||||||||||||
| Net investment income (as % of investments) |
4.62 | % | 4.70 | % | 4.62 | % | 4.59 | % | 4.72 | % | 4.63 | % | 4.77 | % | ||||||||||||||
| Interest credited |
(2.00 | %) | (2.01 | %) | (2.01 | %) | (2.01 | %) | (2.02 | %) | (2.01 | %) | (2.04 | %) | ||||||||||||||
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| Net interest spread on fixed annuities |
2.62 | % | 2.69 | % | 2.61 | % | 2.58 | % | 2.70 | % | 2.62 | % | 2.73 | % | ||||||||||||||
| Policy charges and other miscellaneous income |
0.10 | % | 0.10 | % | 0.12 | % | 0.14 | % | 0.15 | % | 0.11 | % | 0.15 | % | ||||||||||||||
| Other annuity benefit expenses, net |
(0.21 | %) | (0.33 | %) | (0.27 | %) | (0.31 | %) | (0.38 | %) | (0.28 | %) | (0.33 | %) | ||||||||||||||
| Acquisition expenses |
(0.60 | %) | (0.65 | %) | (0.58 | %) | (0.67 | %) | (1.06 | %) | (0.62 | %) | (0.70 | %) | ||||||||||||||
| Other expenses |
(0.37 | %) | (0.36 | %) | (0.38 | %) | (0.38 | %) | (0.35 | %) | (0.37 | %) | (0.38 | %) | ||||||||||||||
| Change in fair value of derivatives |
(0.27 | %) | (0.14 | %) | (0.39 | %) | (0.08 | %) | 0.73 | % | (0.22 | %) | (0.19 | %) | ||||||||||||||
| Unlockings |
(0.06 | %) | 0.00 | % | 0.00 | % | 0.00 | % | 0.03 | % | (0.01 | %) | 0.01 | % | ||||||||||||||
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| Net spread earned on fixed annuities |
1.21 | % | 1.31 | % | 1.11 | % | 1.28 | % | 1.82 | % | 1.23 | % | 1.29 | % | ||||||||||||||
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| Average annuity benefits accumulated |
$ | 32,680 | $ | 32,029 | $ | 31,212 | $ | 30,183 | $ | 29,250 | $ | 31,526 | $ | 28,146 | ||||||||||||||
| Net spread earned on fixed annuities |
1.21 | % | 1.31 | % | 1.11 | % | 1.28 | % | 1.82 | % | 1.23 | % | 1.29 | % | ||||||||||||||
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| Earnings on fixed annuity benefits accumulated |
$ | 99 | $ | 105 | $ | 87 | $ | 96 | $ | 133 | $ | 387 | $ | 363 | ||||||||||||||
| Annuity benefits accumulated in excess of investments |
$ | (435 | ) | $ | (316 | ) | $ | (224 | ) | $ | (128 | ) | $ | (58 | ) | $ | (276 | ) | $ | 77 | ||||||||
| Net investment income (as % of investments) |
4.62 | % | 4.70 | % | 4.62 | % | 4.59 | % | 4.72 | % | 4.63 | % | 4.77 | % | ||||||||||||||
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| Earnings (loss) on annuity benefits accumulated in excess of investments |
$ | (5 | ) | $ | (4 | ) | $ | (3 | ) | $ | (1 | ) | $ | — | $ | (13 | ) | $ | 4 | |||||||||
| Variable annuity earnings (loss) |
3 | 1 | 1 | 1 | (1 | ) | 6 | 1 | ||||||||||||||||||||
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| Earnings before income taxes |
$ | 97 | $ | 102 | $ | 85 | $ | 96 | $ | 132 | $ | 380 | $ | 368 | ||||||||||||||
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| Detail of net spread earned on fixed annuities |
||||||||||||||||||||||||||||
| Net spread earned - before impact of fair value accounting |
1.34 | % | 1.36 | % | 1.32 | % | 1.31 | % | 1.42 | % | 1.33 | % | 1.39 | % | ||||||||||||||
| Change in fair value of derivatives |
(0.27 | %) | (0.14 | %) | (0.39 | %) | (0.08 | %) | 0.73 | % | (0.22 | %) | (0.19 | %) | ||||||||||||||
| Estimated net offsets to deferred sales inducements and deferred policy acquisition costs |
0.14 | % | 0.09 | % | 0.18 | % | 0.05 | % | (0.33 | %) | 0.12 | % | 0.09 | % | ||||||||||||||
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| Net spread earned - after impact of fair value accounting |
1.21 | % | 1.31 | % | 1.11 | % | 1.28 | % | 1.82 | % | 1.23 | % | 1.29 | % | ||||||||||||||
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| (a) | Excludes non-investment assets such as deferred acquisition costs, FIA options, accrued investment income and company owned life insurance. |
Page 14
|
American Financial Group, Inc. Annuity Premiums (Statutory) ($ in millions) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Retail single premium annuities - indexed |
$ | 413 | $ | 367 | $ | 474 | $ | 469 | $ | 415 | $ | 1,723 | $ | 1,714 | ||||||||||||||
| Retail single premium annuities - fixed |
22 | 19 | 22 | 20 | 22 | 83 | 82 | |||||||||||||||||||||
| Financial institutions single premium annuities - indexed |
364 | 360 | 500 | 487 | 474 | 1,711 | 1,950 | |||||||||||||||||||||
| Financial institutions single premium annuities - fixed |
63 | 82 | 215 | 262 | 152 | 622 | 468 | |||||||||||||||||||||
| Education market - fixed and indexed annuities |
41 | 41 | 47 | 45 | 40 | 174 | 184 | |||||||||||||||||||||
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| Subtotal fixed annuity premiums |
903 | 869 | 1,258 | 1,283 | 1,103 | 4,313 | 4,398 | |||||||||||||||||||||
| Variable annuities |
6 | 7 | 8 | 7 | 8 | 28 | 37 | |||||||||||||||||||||
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| Total annuity premiums |
$ | 909 | $ | 876 | $ | 1,266 | $ | 1,290 | $ | 1,111 | $ | 4,341 | $ | 4,435 | ||||||||||||||
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Page 15
|
American Financial Group, Inc. Fixed Annuity Benefits Accumulated (GAAP) ($ in millions) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Beginning fixed annuity reserves |
$ | 32,354 | $ | 31,704 | $ | 30,719 | $ | 29,647 | $ | 28,853 | $ | 29,647 | $ | 26,371 | ||||||||||||||
| Premiums |
903 | 869 | 1,258 | 1,283 | 1,103 | 4,313 | 4,398 | |||||||||||||||||||||
| Federal Home Loan Bank advances (paydowns) (“FHLB”) |
(64 | ) | — | — | — | — | (64 | ) | 150 | |||||||||||||||||||
| Surrenders, benefits and other withdrawals |
(596 | ) | (540 | ) | (571 | ) | (539 | ) | (524 | ) | (2,246 | ) | (2,189 | ) | ||||||||||||||
| Interest and other annuity benefit expenses: |
||||||||||||||||||||||||||||
| Interest credited |
164 | 160 | 157 | 152 | 148 | 633 | 574 | |||||||||||||||||||||
| Embedded derivative mark-to-market |
178 | 127 | 112 | 147 | 6 | 564 | 194 | |||||||||||||||||||||
| Change in other benefit reserves |
25 | 34 | 29 | 29 | 34 | 117 | 122 | |||||||||||||||||||||
| Unlockings |
41 | — | — | — | 27 | 41 | 27 | |||||||||||||||||||||
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| Ending fixed annuity reserves |
$ | 33,005 | $ | 32,354 | $ | 31,704 | $ | 30,719 | $ | 29,647 | $ | 33,005 | $ | 29,647 | ||||||||||||||
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|||||||||||||||
| Reconciliation to annuity benefits accumulated: |
||||||||||||||||||||||||||||
| Ending fixed annuity reserves |
$ | 33,005 | $ | 32,354 | $ | 31,704 | $ | 30,719 | $ | 29,647 | $ | 33,005 | $ | 29,647 | ||||||||||||||
| Impact of unrealized investment gains on reserves |
133 | 138 | 128 | 100 | 76 | 133 | 76 | |||||||||||||||||||||
| Fixed component of variable annuities |
178 | 179 | 182 | 183 | 184 | 178 | 184 | |||||||||||||||||||||
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| Annuity benefits accumulated per balance sheet |
$ | 33,316 | $ | 32,671 | $ | 32,014 | $ | 31,002 | $ | 29,907 | $ | 33,316 | $ | 29,907 | ||||||||||||||
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|||||||||||||||
| Annualized surrenders and other withdrawals as a % of beginning reserves |
7.4 | % | 6.8 | % | 7.4 | % | 7.3 | % | 7.3 | % | 7.6 | % | 8.3 | % | ||||||||||||||
Page 16
|
American Financial Group, Inc. Guaranteed Minimum Interest Rate (“GMIR”) Analysis ($ in millions) |
|
| GMIR | 12/31/17 | 9/30/17 | 6/30/17 | 3/31/17 | 12/31/16 | |||||||||||||||
| 1 - 1.99% |
76 | % | 75 | % | 75 | % | 73 | % | 72 | % | ||||||||||
| 2 - 2.99% |
5 | % | 5 | % | 5 | % | 6 | % | 6 | % | ||||||||||
| 3 - 3.99% |
10 | % | 10 | % | 10 | % | 11 | % | 12 | % | ||||||||||
| 4.00% and above |
9 | % | 10 | % | 10 | % | 10 | % | 10 | % | ||||||||||
| Annuity Benefits Accumulated |
$ | 33,316 | $ | 32,671 | $ | 32,014 | $ | 31,002 | $ | 29,907 | ||||||||||
| Traditional Fixed and FIA Surrender Value (a) (b) |
$ | 25,138 | $ | 24,428 | $ | 23,925 | $ | 23,284 | $ | 22,264 | ||||||||||
| Ability to Lower Average Crediting Rates by (a) (c) |
0.92 | % | 0.88 | % | 0.86 | % | 0.82 | % | 0.80 | % | ||||||||||
| Pretax earnings impact of crediting guaranteed minimums (a) (assumes net DAC impact over time = $0) |
$ | 230 | $ | 216 | $ | 206 | $ | 191 | $ | 178 | ||||||||||
| (a) | Excludes Annuities with Guaranteed Withdrawal Benefits, FHLB advances, immediate reserves and certain other reserves. |
| (b) | FIA Surrender Value include Host + Embedded Derivatives + Fixed Account values. |
| (c) | Weighted Average Crediting Rate less GMIR |
Page 17
| American Financial Group, Inc. Consolidated Balance Sheet ($ in millions) |
|
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | |||||||||||||||||||
| Assets: |
||||||||||||||||||||||||
| Total cash and investments |
$ | 46,048 | $ | 45,253 | $ | 44,779 | $ | 43,350 | $ | 41,433 | $ | 41,805 | ||||||||||||
| Recoverables from reinsurers |
3,369 | 3,262 | 2,839 | 2,735 | 2,737 | 2,814 | ||||||||||||||||||
| Prepaid reinsurance premiums |
600 | 691 | 587 | 533 | 539 | 634 | ||||||||||||||||||
| Agents’ balances and premiums receivable |
1,146 | 1,173 | 1,124 | 989 | 997 | 1,029 | ||||||||||||||||||
| Deferred policy acquisition costs |
1,216 | 1,119 | 1,156 | 1,205 | 1,239 | 867 | ||||||||||||||||||
| Assets of managed investment entities |
4,902 | 4,767 | 4,873 | 5,331 | 4,765 | 4,312 | ||||||||||||||||||
| Other receivables |
1,030 | 1,545 | 923 | 875 | 908 | 1,391 | ||||||||||||||||||
| Variable annuity assets (separate accounts) |
644 | 628 | 620 | 614 | 600 | 606 | ||||||||||||||||||
| Other assets |
1,504 | 1,526 | 1,518 | 1,633 | 1,655 | 1,188 | ||||||||||||||||||
| Goodwill |
199 | 199 | 199 | 199 | 199 | 199 | ||||||||||||||||||
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| Total assets |
$ | 60,658 | $ | 60,163 | $ | 58,618 | $ | 57,464 | $ | 55,072 | $ | 54,845 | ||||||||||||
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|
|||||||||||||
| Liabilities and Equity: |
||||||||||||||||||||||||
| Unpaid losses and loss adjustment expenses |
$ | 9,678 | $ | 9,563 | $ | 8,730 | $ | 8,621 | $ | 8,563 | $ | 8,661 | ||||||||||||
| Unearned premiums |
2,410 | 2,567 | 2,294 | 2,174 | 2,171 | 2,328 | ||||||||||||||||||
| Annuity benefits accumulated |
33,316 | 32,671 | 32,014 | 31,002 | 29,907 | 29,222 | ||||||||||||||||||
| Life, accident and health reserves |
658 | 667 | 676 | 687 | 691 | 700 | ||||||||||||||||||
| Payable to reinsurers |
743 | 906 | 681 | 621 | 634 | 835 | ||||||||||||||||||
| Liabilities of managed investment entities |
4,687 | 4,506 | 4,685 | 5,101 | 4,549 | 4,067 | ||||||||||||||||||
| Long-term debt |
1,301 | 1,284 | 1,405 | 1,283 | 1,283 | 1,300 | ||||||||||||||||||
| Variable annuity liabilities (separate accounts) |
644 | 628 | 620 | 614 | 600 | 606 | ||||||||||||||||||
| Other liabilities |
1,887 | 1,992 | 2,201 | 2,166 | 1,755 | 1,768 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total liabilities |
$ | 55,324 | $ | 54,784 | $ | 53,306 | $ | 52,269 | $ | 50,153 | $ | 49,487 | ||||||||||||
| Redeemable noncontrolling interests |
$ | 3 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
| Shareholders’ equity (a): |
||||||||||||||||||||||||
| Common stock |
$ | 88 | $ | 88 | $ | 88 | $ | 88 | $ | 87 | $ | 87 | ||||||||||||
| Capital surplus |
1,181 | 1,167 | 1,158 | 1,138 | 1,111 | 1,242 | ||||||||||||||||||
| Unappropriated retained earnings |
3,248 | 3,435 | 3,451 | 3,466 | 3,343 | 3,079 | ||||||||||||||||||
| Unrealized gains - equities |
221 | 173 | 158 | 145 | 98 | 103 | ||||||||||||||||||
| Unrealized gains - fixed maturities |
619 | 533 | 481 | 384 | 306 | 669 | ||||||||||||||||||
| Unrealized gains (losses) - fixed maturity-related cash flow hedges |
(13 | ) | (6 | ) | (6 | ) | (8 | ) | (7 | ) | 5 | |||||||||||||
| Other comprehensive income, net of tax |
(14 | ) | (11 | ) | (18 | ) | (22 | ) | (22 | ) | (24 | ) | ||||||||||||
|
|
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|
|
|
|
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|
|
|||||||||||||
| Total shareholders’ equity |
5,330 | 5,379 | 5,312 | 5,191 | 4,916 | 5,161 | ||||||||||||||||||
| Noncontrolling interests |
1 | — | — | 4 | 3 | 197 | ||||||||||||||||||
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|
|
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|
|
|||||||||||||
| Total liabilities and equity |
$ | 60,658 | $ | 60,163 | $ | 58,618 | $ | 57,464 | $ | 55,072 | $ | 54,845 | ||||||||||||
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|
|||||||||||||
| (a) | AFG intends to adopt the pending FASB guidance regarding the reclassification of certain tax effects between accumulated other comprehensive income (“AOCI”) and retained earnings effective December 31, 2017. Accordingly, the components of shareholders’ equity in this supplement reflect the reclassification of the impact of the change in the U.S. corporate rate on the components of AOCI from retained earnings to the individual components of AOCI. |
Page 18
| American Financial Group, Inc. Book Value Per Share and Price / Book Summary (in millions, except per share information) |
|
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | |||||||||||||||||||
| Shareholders’ equity |
$ | 5,330 | $ | 5,379 | $ | 5,312 | $ | 5,191 | $ | 4,916 | $ | 5,161 | ||||||||||||
| Unrealized (gains) related to fixed maturities |
(606 | ) | (527 | ) | (475 | ) | (376 | ) | (299 | ) | (674 | ) | ||||||||||||
|
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|
|||||||||||||
| Adjusted shareholders’ equity |
4,724 | 4,852 | 4,837 | 4,815 | 4,617 | 4,487 | ||||||||||||||||||
| Goodwill |
(199 | ) | (199 | ) | (199 | ) | (199 | ) | (199 | ) | (199 | ) | ||||||||||||
| Intangibles |
(27 | ) | (29 | ) | (30 | ) | (32 | ) | (34 | ) | (44 | ) | ||||||||||||
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|
|
|||||||||||||
| Tangible adjusted shareholders’ equity |
$ | 4,498 | $ | 4,624 | $ | 4,608 | $ | 4,584 | $ | 4,384 | $ | 4,244 | ||||||||||||
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|
|||||||||||||
| Common shares outstanding |
88.275 | 88.093 | 88.007 | 87.592 | 86.924 | 86.813 | ||||||||||||||||||
| Book value per share: |
||||||||||||||||||||||||
| Book value per share |
$ | 60.38 | $ | 61.06 | $ | 60.36 | $ | 59.26 | $ | 56.55 | $ | 59.45 | ||||||||||||
| Adjusted (a) |
53.51 | 55.08 | 54.97 | 54.98 | 53.11 | 51.68 | ||||||||||||||||||
| Tangible, adjusted (b) |
50.95 | 52.50 | 52.36 | 52.34 | 50.43 | 48.89 | ||||||||||||||||||
| Market capitalization |
||||||||||||||||||||||||
| AFG’s closing common share price |
$ | 108.54 | $ | 103.45 | $ | 99.37 | $ | 95.42 | $ | 88.12 | $ | 75.00 | ||||||||||||
| Market capitalization |
$ | 9,581 | $ | 9,113 | $ | 8,745 | $ | 8,358 | $ | 7,660 | $ | 6,511 | ||||||||||||
| Price / Adjusted book value ratio |
2.03 | 1.88 | 1.81 | 1.74 | 1.66 | 1.45 | ||||||||||||||||||
| (a) | Excludes unrealized gains related to fixed maturity investments. |
| (b) | Excludes unrealized gains related to fixed maturity investments, goodwill and intangibles. |
Page 19
|
American Financial Group, Inc. Capitalization ($ in millions) |
|
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | |||||||||||||||||||
| AFG senior obligations |
$ | 1,018 | $ | 1,003 | $ | 1,128 | $ | 1,008 | $ | 1,008 | $ | 1,008 | ||||||||||||
| Borrowings drawn under credit facility |
— | — | — | — | — | — | ||||||||||||||||||
| Obligations of subsidiaries - other |
— | — | — | — | — | 18 | ||||||||||||||||||
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|
|||||||||||||
| Debt excluding subordinated debt |
$ | 1,018 | $ | 1,003 | $ | 1,128 | $ | 1,008 | $ | 1,008 | $ | 1,026 | ||||||||||||
| AFG subordinated debentures |
300 | 300 | 300 | 300 | 300 | 300 | ||||||||||||||||||
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|
|||||||||||||
| Total principal amount of long-term debt |
$ | 1,318 | $ | 1,303 | $ | 1,428 | $ | 1,308 | $ | 1,308 | $ | 1,326 | ||||||||||||
| Shareholders’ equity |
5,330 | 5,379 | 5,312 | 5,191 | 4,916 | 5,161 | ||||||||||||||||||
| Noncontrolling interests (including redeemable NCI) |
4 | — | — | 4 | 3 | 197 | ||||||||||||||||||
| Less: |
||||||||||||||||||||||||
| Unrealized (gains) - fixed maturity investments |
(619 | ) | (533 | ) | (481 | ) | (384 | ) | (306 | ) | (669 | ) | ||||||||||||
|
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|
|||||||||||||
| Total adjusted capital |
$ | 6,033 | $ | 6,149 | $ | 6,259 | $ | 6,119 | $ | 5,921 | $ | 6,015 | ||||||||||||
|
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|
|
|||||||||||||
| Ratio of debt to total adjusted capital: |
||||||||||||||||||||||||
| Including subordinated debt |
21.8 | % | 21.2 | % | 22.8 | % | 21.4 | % | 22.1 | % | 22.0 | % | ||||||||||||
| Excluding subordinated debt |
16.9 | % | 16.3 | % | 18.0 | % | 16.5 | % | 17.0 | % | 17.1 | % | ||||||||||||
Page 20
|
American Financial Group, Inc. Additional Supplemental Information ($ in millions) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Property and Casualty Insurance |
||||||||||||||||||||||||||||
| Paid Losses (GAAP) |
$ | 726 | $ | 596 | $ | 652 | $ | 554 | $ | 683 | $ | 2,528 | $ | 2,353 | ||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | |||||||||||||||||||
| Statutory Surplus |
||||||||||||||||||||||||
| Property and Casualty Insurance |
$ | 2,732 | $ | 2,817 | $ | 2,882 | $ | 3,013 | $ | 2,939 | $ | 3,038 | ||||||||||||
| AFG’s principal annuity subsidiaries (total adjusted capital) |
$ | 2,442 | $ | 2,433 | $ | 2,389 | $ | 2,341 | $ | 2,234 | $ | 2,216 | ||||||||||||
| Allowable dividends without regulatory approval |
||||||||||||||||||||||||
| Property and Casualty Insurance |
$ | 567 | $ | 496 | $ | 496 | $ | 496 | $ | 496 | $ | 434 | ||||||||||||
| Annuity and Run-off |
263 | 197 | 197 | 197 | 197 | 375 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
$ | 830 | $ | 693 | $ | 693 | $ | 693 | $ | 693 | $ | 809 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Page 21
|
American Financial Group, Inc. Total Cash and Investments ($ in millions) |
|
| Carrying Value - December 31, 2017 | ||||||||||||||||||||||||
| Property and Casualty Insurance |
Annuity and Run-off |
Parent and Other Non- Insurance |
Consolidate CLOs |
Total AFG Consolidated |
% of Investment Portfolio |
|||||||||||||||||||
| Total cash and investments: |
||||||||||||||||||||||||
| Cash and cash equivalents |
$ | 1,398 | $ | 625 | $ | 315 | $ | — | $ | 2,338 | 5 | % | ||||||||||||
| Fixed maturities - Available for sale |
7,142 | 31,223 | 14 | — | 38,379 | 83 | % | |||||||||||||||||
| Fixed maturities - Trading |
232 | 116 | — | — | 348 | 1 | % | |||||||||||||||||
| Equity securities |
1,012 | 594 | 56 | — | 1,662 | 4 | % | |||||||||||||||||
| Policy loans |
— | 184 | — | — | 184 | 0 | % | |||||||||||||||||
| Mortgage loans |
308 | 817 | — | — | 1,125 | 2 | % | |||||||||||||||||
| Equity index call options |
— | 701 | — | — | 701 | 2 | % | |||||||||||||||||
| Real estate and other investments |
562 | 906 | 57 | (214 | ) | 1,311 | 3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total cash and investments |
$ | 10,654 | $ | 35,166 | $ | 442 | $ | (214 | ) | $ | 46,048 | 100 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Unrealized gain/(loss) on equity securities |
$ | 165 | $ | 114 | $ | — | $ | — | $ | 279 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Carrying Value - December 31, 2016 | ||||||||||||||||||||||||
| Property and Casualty Insurance |
Annuity and Run-off |
Parent and Other Non- Insurance |
Consolidate CLOs |
Total AFG Consolidated |
% of Investment Portfolio |
|||||||||||||||||||
| Total cash and investments: |
||||||||||||||||||||||||
| Cash and cash equivalents |
$ | 1,383 | $ | 511 | $ | 213 | $ | — | $ | 2,107 | 5 | % | ||||||||||||
| Fixed maturities - Available for sale |
6,510 | 28,021 | 13 | — | 34,544 | 83 | % | |||||||||||||||||
| Fixed maturities - Trading |
242 | 117 | — | — | 359 | 1 | % | |||||||||||||||||
| Equity securities |
1,013 | 496 | 49 | — | 1,558 | 4 | % | |||||||||||||||||
| Policy loans |
— | 192 | — | — | 192 | 0 | % | |||||||||||||||||
| Mortgage loans |
261 | 886 | — | — | 1,147 | 3 | % | |||||||||||||||||
| Equity index call options |
— | 492 | — | — | 492 | 1 | % | |||||||||||||||||
| Real estate and other investments |
497 | 705 | 48 | (216 | ) | 1,034 | 3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total cash and investments |
$ | 9,906 | $ | 31,420 | $ | 323 | $ | (216 | ) | $ | 41,433 | 100 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Unrealized gain/(loss) on equity securities |
$ | 102 | $ | 49 | $ | — | $ | — | $ | 151 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Page 22
|
American Financial Group, Inc. Net Investment Income ($ in millions) |
|
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||
| 12/31/17 | 09/30/17 | 06/30/17 | 03/31/17 | 12/31/16 | 12/31/17 | 12/31/16 | ||||||||||||||||||||||
| Property and Casualty Insurance: |
||||||||||||||||||||||||||||
| Gross Investment Income |
||||||||||||||||||||||||||||
| Fixed maturities - Available for sale |
$ | 65 | $ | 65 | $ | 65 | $ | 63 | $ | 64 | $ | 258 | $ | 257 | ||||||||||||||
| Fixed maturities - Trading |
— | — | 2 | 1 | (1 | ) | 3 | 3 | ||||||||||||||||||||
| Equity securities |
13 | 12 | 12 | 14 | 13 | 51 | 51 | |||||||||||||||||||||
| Equity in investees |
4 | 8 | 11 | 4 | 7 | 27 | 22 | |||||||||||||||||||||
| Other investments |
8 | 11 | 8 | 6 | 6 | 33 | 27 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Gross investment income |
90 | 96 | 98 | 88 | 89 | 372 | 360 | |||||||||||||||||||||
| Investment expenses |
(4 | ) | (2 | ) | (2 | ) | (2 | ) | (4 | ) | (10 | ) | (10 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total net investment income |
$ | 86 | $ | 94 | $ | 96 | $ | 86 | $ | 85 | $ | 362 | $ | 350 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Average cash and investments (a) |
$ | 10,062 | $ | 9,851 | $ | 9,947 | $ | 9,855 | $ | 9,779 | $ | 9,948 | $ | 9,550 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Average yield (b) |
3.42 | % | 3.82 | % | 3.86 | % | 3.49 | % | 3.48 | % | 3.64 | % | 3.66 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Fixed Annuity: |
||||||||||||||||||||||||||||
| Gross Investment Income |
||||||||||||||||||||||||||||
| Fixed maturities - Available for sale |
$ | 342 | $ | 332 | $ | 322 | $ | 318 | $ | 315 | $ | 1,314 | $ | 1,223 | ||||||||||||||
| Equity securities |
7 | 5 | 5 | 5 | 7 | 22 | 24 | |||||||||||||||||||||
| Equity in investees |
9 | 12 | 10 | 6 | 6 | 37 | 22 | |||||||||||||||||||||
| Other investments |
19 | 26 | 22 | 19 | 20 | 86 | 87 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Gross investment income |
377 | 375 | 359 | 348 | 348 | 1,459 | 1,356 | |||||||||||||||||||||
| Investment expenses |
(4 | ) | (2 | ) | (2 | ) | (3 | ) | (4 | ) | (11 | ) | (10 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total net investment income |
$ | 373 | $ | 373 | $ | 357 | $ | 345 | $ | 344 | $ | 1,448 | $ | 1,346 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Average cash and investments (a) |
$ | 32,245 | $ | 31,713 | $ | 30,988 | $ | 30,055 | $ | 29,192 | $ | 31,250 | $ | 28,223 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Average yield (b) |
4.62 | % | 4.70 | % | 4.62 | % | 4.59 | % | 4.72 | % | 4.63 | % | 4.77 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| AFG consolidated net investment income: |
||||||||||||||||||||||||||||
| Property & Casualty |
$ | 86 | $ | 94 | $ | 96 | $ | 86 | $ | 85 | $ | 362 | $ | 350 | ||||||||||||||
| Annuity and Run-off: |
||||||||||||||||||||||||||||
| Fixed Annuity |
373 | 373 | 357 | 345 | 344 | 1,448 | 1,346 | |||||||||||||||||||||
| Variable Annuity |
3 | 2 | 3 | 2 | 2 | 10 | 10 | |||||||||||||||||||||
| Run-off |
4 | 6 | 5 | 5 | 6 | 20 | 21 | |||||||||||||||||||||
| Other |
6 | 1 | 4 | 3 | — | 14 | 6 | |||||||||||||||||||||
| Consolidate CLOs |
(7 | ) | (5 | ) | (5 | ) | (6 | ) | (8 | ) | (23 | ) | (37 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total net investment income |
$ | 465 | $ | 471 | $ | 460 | $ | 435 | $ | 429 | $ | 1,831 | $ | 1,696 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (a) | Average cash and investments is the average of the beginning and ending quarter balances, or the average of the five quarters balances. |
| (b) | Average yield is calculated by dividing investment income for the quarter by the average cash and investment balance over the quarter. |
Page 23
|
American Financial Group, Inc. Fixed Maturities - By Security Type - AFG Consolidated ($ in millions ) |
|
| December 31, 2017 |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
% of Investment Portfolio |
|||||||||||||||
| US Government and government agencies |
$ | 293 | $ | 291 | $ | (2 | ) | 1 | % | 1 | % | |||||||||
| States, municipalities and political subdivisions |
6,912 | 7,148 | 236 | 18 | % | 15 | % | |||||||||||||
| Foreign government |
239 | 242 | 3 | 1 | % | 1 | % | |||||||||||||
| Residential mortgage-backed securities |
2,887 | 3,230 | 343 | 8 | % | 7 | % | |||||||||||||
| Commercial mortgage-backed securities |
928 | 963 | 35 | 2 | % | 2 | % | |||||||||||||
| Asset-backed securities |
7,836 | 7,962 | 126 | 21 | % | 17 | % | |||||||||||||
| Corporate and other bonds |
18,291 | 18,891 | 600 | 49 | % | 41 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total AFG consolidated |
$ | 37,386 | $ | 38,727 | $ | 1,341 | 100 | % | 84 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Annualized yield on available for sale fixed maturities: |
|
|||||||||||||||||||
| Excluding investment expense (a) |
4.51 | % | ||||||||||||||||||
| Net of investment expense (a) |
4.43 | % | ||||||||||||||||||
| Approximate average life and duration: |
||||||||||||||||||||
| Approximate average life |
6.5 years | |||||||||||||||||||
| Approximate duration |
5 years | |||||||||||||||||||
| December 31, 2016 |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
% of Investment Portfolio |
|||||||||||||||
| US Government and government agencies |
$ | 348 | $ | 348 | $ | — | 1 | % | 1 | % | ||||||||||
| States, municipalities and political subdivisions |
6,677 | 6,808 | 131 | 19 | % | 16 | % | |||||||||||||
| Foreign government |
256 | 261 | 5 | 1 | % | 1 | % | |||||||||||||
| Residential mortgage-backed securities |
3,371 | 3,639 | 268 | 11 | % | 9 | % | |||||||||||||
| Commercial mortgage-backed securities |
1,446 | 1,493 | 47 | 4 | % | 3 | % | |||||||||||||
| Asset-backed securities |
5,962 | 5,959 | (3 | ) | 17 | % | 14 | % | ||||||||||||
| Corporate and other bonds |
16,034 | 16,395 | 361 | 47 | % | 40 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total AFG consolidated |
$ | 34,094 | $ | 34,903 | $ | 809 | 100 | % | 84 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Annualized yield on available for sale fixed maturities: |
|
|||||||||||||||||||
| Excluding investment expense (a) |
4.56 | % | ||||||||||||||||||
| Net of investment expense (a) |
4.48 | % | ||||||||||||||||||
| Approximate average life and duration: |
||||||||||||||||||||
| Approximate average life |
6.5 years | |||||||||||||||||||
| Approximate duration |
5 years | |||||||||||||||||||
| (a) | Annualized yield is calculated by dividing investment income for the quarter by the average cost over the quarter. Average cost is the average of the beginning and ending quarter asset balances. |
Page 24
|
American Financial Group, Inc. Fixed Maturities - By Security Type Portfolio ($ in millions ) |
|
| December 31, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||||
| Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
|||||||||||||||||||||||||
| Property and Casualty Insurance: |
||||||||||||||||||||||||||||||||
| US Government and government agencies |
$ | 244 | $ | 243 | $ | (1 | ) | 3 | % | $ | 295 | $ | 295 | $ | — | 4 | % | |||||||||||||||
| States, municipalities and political subdivisions |
2,740 | 2,798 | 58 | 38 | % | 2,588 | 2,605 | 17 | 39 | % | ||||||||||||||||||||||
| Foreign government |
228 | 229 | 1 | 3 | % | 245 | 249 | 4 | 4 | % | ||||||||||||||||||||||
| Residential mortgage-backed securities |
843 | 918 | 75 | 13 | % | 980 | 1,026 | 46 | 15 | % | ||||||||||||||||||||||
| Commercial mortgage-backed securities |
93 | 95 | 2 | 1 | % | 142 | 144 | 2 | 2 | % | ||||||||||||||||||||||
| Asset-backed securities |
1,716 | 1,724 | 8 | 23 | % | 1,445 | 1,440 | (5 | ) | 21 | % | |||||||||||||||||||||
| Corporate and other bonds |
1,349 | 1,367 | 18 | 19 | % | 976 | 993 | 17 | 15 | % | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Property and Casualty Insurance |
$ | 7,213 | $ | 7,374 | $ | 161 | 100 | % | $ | 6,671 | $ | 6,752 | $ | 81 | 100 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Annualized yield on available for sale fixed maturities: |
|
|||||||||||||||||||||||||||||||
| Excluding investment expense (a) |
3.73 | % | 3.88 | % | ||||||||||||||||||||||||||||
| Net of investment expense (a) |
3.54 | % | 3.67 | % | ||||||||||||||||||||||||||||
| Tax equivalent, net of investment expense (b) |
4.03 | % | 4.20 | % | ||||||||||||||||||||||||||||
| Approximate average life and duration: |
||||||||||||||||||||||||||||||||
| Approximate average life |
5 years | 4.5 years | ||||||||||||||||||||||||||||||
| Approximate duration |
4 years | 3.5 years | ||||||||||||||||||||||||||||||
| December 31, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||||
| Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
|||||||||||||||||||||||||
| Annuity and Run-off: |
||||||||||||||||||||||||||||||||
| US Government and government agencies |
$ | 48 | $ | 47 | $ | (1 | ) | 0 | % | $ | 52 | $ | 52 | $ | — | 0 | % | |||||||||||||||
| States, municipalities and political subdivisions |
4,172 | 4,350 | 178 | 14 | % | 4,089 | 4,203 | 114 | 15 | % | ||||||||||||||||||||||
| Foreign government |
11 | 13 | 2 | 0 | % | 11 | 12 | 1 | 0 | % | ||||||||||||||||||||||
| Residential mortgage-backed securities |
2,041 | 2,299 | 258 | 7 | % | 2,390 | 2,601 | 211 | 9 | % | ||||||||||||||||||||||
| Commercial mortgage-backed securities |
835 | 868 | 33 | 3 | % | 1,304 | 1,349 | 45 | 5 | % | ||||||||||||||||||||||
| Asset-backed securities |
6,120 | 6,238 | 118 | 20 | % | 4,517 | 4,519 | 2 | 16 | % | ||||||||||||||||||||||
| Corporate and other bonds |
16,942 | 17,524 | 582 | 56 | % | 15,058 | 15,402 | 344 | 55 | % | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Annuity and Run-off |
$ | 30,169 | $ | 31,339 | $ | 1,170 | 100 | % | $ | 27,421 | $ | 28,138 | $ | 717 | 100 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Annualized yield on available for sale fixed maturities: |
|
|||||||||||||||||||||||||||||||
| Excluding investment expense (a) |
4.66 | % | 4.72 | % | ||||||||||||||||||||||||||||
| Net of investment expense (a) |
4.61 | % | 4.67 | % | ||||||||||||||||||||||||||||
| Approximate average life and duration: |
||||||||||||||||||||||||||||||||
| Approximate average life |
6.5 years | 6.5 years | ||||||||||||||||||||||||||||||
| Approximate duration |
5 years | 5 years | ||||||||||||||||||||||||||||||
| (a) | Annualized yield is calculated by dividing investment income for the quarter by the average cost over the quarter. Average cost is the average of the beginning and ending quarter asset balances. |
| (b) | Adjusts the yield on tax-exempt bonds to the fully taxable equivalent yield. |
Page 25
|
American Financial Group, Inc. Fixed Maturities - Credit Rating ($ in millions) |
|
| December 31, 2017 | ||||||||||||||||
| By Credit Rating (a) |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
||||||||||||
| Investment grade |
||||||||||||||||
| AAA |
$ | 6,253 | $ | 6,356 | $ | 103 | 16 | % | ||||||||
| AA |
8,150 | 8,411 | 261 | 22 | % | |||||||||||
| A |
9,149 | 9,447 | 298 | 25 | % | |||||||||||
| BBB |
10,146 | 10,496 | 350 | 27 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Subtotal - Investment grade |
33,698 | 34,710 | 1,012 | 90 | % | |||||||||||
| BB |
725 | 739 | 14 | 2 | % | |||||||||||
| B |
324 | 328 | 4 | 1 | % | |||||||||||
| Other (b) |
2,639 | 2,950 | 311 | 7 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Subtotal - Non-Investment grade |
3,688 | 4,017 | 329 | 10 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 37,386 | $ | 38,727 | $ | 1,341 | 100 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
98% of the fixed maturity portfolio is NAIC designated 1 or 2.
| December 31, 2016 | ||||||||||||||||
| By Credit Rating (a) |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
||||||||||||
| Investment grade |
||||||||||||||||
| AAA |
$ | 6,117 | $ | 6,189 | $ | 72 | 18 | % | ||||||||
| AA |
7,123 | 7,257 | 134 | 21 | % | |||||||||||
| A |
8,323 | 8,487 | 164 | 24 | % | |||||||||||
| BBB |
8,999 | 9,193 | 194 | 26 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Subtotal - Investment grade |
30,562 | 31,126 | 564 | 89 | % | |||||||||||
| BB |
687 | 695 | 8 | 2 | % | |||||||||||
| B |
446 | 445 | (1 | ) | 1 | % | ||||||||||
| Other (b) |
2,399 | 2,637 | 238 | 8 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Subtotal - Non-Investment grade |
3,532 | 3,777 | 245 | 11 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 34,094 | $ | 34,903 | $ | 809 | 100 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
97% of the fixed maturity portfolio is NAIC designated 1 or 2.
| (a) | If two agencies rate a security, the rating displayed above is the lower of the two; if three or more agencies rate a security, the rating displayed is the second lowest. |
| (b) | See page 30 for more information. |
Page 26
|
American Financial Group, Inc. Mortgage-Backed Securities - AFG Consolidated ($ in millions) |
|
| December 31, 2017 |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
% of Investment Portfolio |
|||||||||||||||
| Residential |
||||||||||||||||||||
| Agency |
$ | 207 | $ | 205 | $ | (2 | ) | 5 | % | 0 | % | |||||||||
| Prime (Non-Agency) |
1,218 | 1,386 | 168 | 33 | % | 3 | % | |||||||||||||
| Alt-A |
994 | 1,122 | 128 | 27 | % | 3 | % | |||||||||||||
| Subprime |
468 | 517 | 49 | 12 | % | 1 | % | |||||||||||||
| Commercial |
928 | 963 | 35 | 23 | % | 2 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total AFG consolidated |
$ | 3,815 | $ | 4,193 | $ | 378 | 100 | % | 9 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| - | Substantially all of AFG’s MBS securities are either senior tranches of securitizations or collateralized by senior tranches of securitizations. |
| - | The average amortized cost as a percent of par is - Prime 82%; Alt-A 79%; Subprime 84%; CMBS 99%. |
| - | The average FICO score of our residential MBS securities is - Prime 733; Alt-A 702; Subprime 632. |
| - | 95% of our Commercial MBS portfolio is investment-grade rated (83% AAA) and the average subordination for this group of assets is 32%. |
| - | The approximate average life by collateral type is - Residential 4.5 years; Commercial 5.5 years. |
| December 31, 2016 |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
% of Investment Portfolio |
|||||||||||||||
| Residential |
||||||||||||||||||||
| Agency |
$ | 243 | $ | 243 | $ | — | 5 | % | 0 | % | ||||||||||
| Prime (Non-Agency) |
1,406 | 1,557 | 151 | 30 | % | 4 | % | |||||||||||||
| Alt-A |
1,093 | 1,170 | 77 | 23 | % | 3 | % | |||||||||||||
| Subprime |
629 | 669 | 40 | 13 | % | 2 | % | |||||||||||||
| Commercial |
1,446 | 1,493 | 47 | 29 | % | 3 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total AFG consolidated |
$ | 4,817 | $ | 5,132 | $ | 315 | 100 | % | 12 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Page 27
|
American Financial Group, Inc. Mortgage-Backed Securities Portfolio ($ in millions) |
|
Property and Casualty Insurance:
| December 31, 2017 | ||||||||||||||||||||
| By Asset Type |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
% of Inv Portfolio |
|||||||||||||||
| Residential |
||||||||||||||||||||
| Agency |
$ | 166 | $ | 163 | $ | (3 | ) | 16 | % | 2 | % | |||||||||
| Prime (Non-Agency) |
174 | 195 | 21 | 19 | % | 2 | % | |||||||||||||
| Alt-A |
301 | 339 | 38 | 34 | % | 3 | % | |||||||||||||
| Subprime |
202 | 221 | 19 | 22 | % | 2 | % | |||||||||||||
| Commercial |
93 | 95 | 2 | 9 | % | 1 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
$ | 936 | $ | 1,013 | $ | 77 | 100 | % | 10 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| December 31, 2016 | ||||||||||||||||||||
| By Asset Type |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
% of Inv Portfolio |
|||||||||||||||
| Residential |
||||||||||||||||||||
| Agency |
$ | 192 | $ | 191 | $ | (1 | ) | 17 | % | 2 | % | |||||||||
| Prime (Non-Agency) |
187 | 202 | 15 | 17 | % | 2 | % | |||||||||||||
| Alt-A |
342 | 361 | 19 | 31 | % | 4 | % | |||||||||||||
| Subprime |
259 | 272 | 13 | 23 | % | 3 | % | |||||||||||||
| Commercial |
142 | 144 | 2 | 12 | % | 1 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
$ | 1,122 | $ | 1,170 | $ | 48 | 100 | % | 12 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Annuity and Run-off: |
||||||||||||||||||||
| December 31, 2017 | ||||||||||||||||||||
| By Asset Type |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
% of Inv Portfolio |
|||||||||||||||
| Residential |
||||||||||||||||||||
| Agency |
$ | 41 | $ | 42 | $ | 1 | 1 | % | 0 | % | ||||||||||
| Prime (Non-Agency) |
1,041 | 1,178 | 137 | 37 | % | 4 | % | |||||||||||||
| Alt-A |
693 | 783 | 90 | 25 | % | 2 | % | |||||||||||||
| Subprime |
266 | 296 | 30 | 10 | % | 1 | % | |||||||||||||
| Commercial |
835 | 868 | 33 | 27 | % | 2 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
$ | 2,876 | $ | 3,167 | $ | 291 | 100 | % | 9 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| December 31, 2016 | ||||||||||||||||||||
| By Asset Type |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
% of Inv Portfolio |
|||||||||||||||
| Residential |
||||||||||||||||||||
| Agency |
$ | 51 | $ | 52 | $ | 1 | 1 | % | 0 | % | ||||||||||
| Prime (Non-Agency) |
1,218 | 1,343 | 125 | 34 | % | 4 | % | |||||||||||||
| Alt-A |
751 | 809 | 58 | 21 | % | 3 | % | |||||||||||||
| Subprime |
370 | 397 | 27 | 10 | % | 1 | % | |||||||||||||
| Commercial |
1,304 | 1,349 | 45 | 34 | % | 5 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
$ | 3,694 | $ | 3,950 | $ | 256 | 100 | % | 13 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Page 28
|
American Financial Group, Inc. Mortgage-Backed Securities - Credit Rating ($ in millions) |
|
| December 31, 2017 | ||||||||||||||||
| By Credit Rating (a) |
Amortized Cost |
Fair Value |
Unrealized Gain (Loss) |
% of Fair Value |
||||||||||||
| Investment grade |
||||||||||||||||
| AAA |
$ | 1,209 | $ | 1,246 | $ | 37 | 30 | % | ||||||||
| AA |
90 | 93 | 3 | 2 | % | |||||||||||
| A |
225 | 239 | 14 | 6 | % | |||||||||||
| BBB |
170 | 182 | 12 | 4 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Subtotal - investment grade |
1,694 | 1,760 | 66 | 42 | % | |||||||||||
| BB |
192 | 197 | 5 | 5 | % | |||||||||||
| B |
224 | 230 | 6 | 5 | % | |||||||||||
| Other (b) |
1,705 | 2,006 | 301 | 48 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 3,815 | $ | 4,193 | $ | 378 | 100 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
97% of the mortgage-backed security portfolio has an NAIC 1 designation.
| December 31, 2016 | ||||||||||||||||
| By Credit Rating (a) |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
||||||||||||
| Investment grade |
||||||||||||||||
| AAA |
$ | 1,668 | $ | 1,720 | $ | 52 | 34 | % | ||||||||
| AA |
164 | 169 | 5 | 3 | % | |||||||||||
| A |
256 | 268 | 12 | 5 | % | |||||||||||
| BBB |
274 | 288 | 14 | 6 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Subtotal - investment grade |
2,362 | 2,445 | 83 | 48 | % | |||||||||||
| BB |
211 | 212 | 1 | 4 | % | |||||||||||
| B |
330 | 333 | 3 | 6 | % | |||||||||||
| Other (b) |
1,914 | 2,142 | 228 | 42 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 4,817 | $ | 5,132 | $ | 315 | 100 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
97% of the mortgage-backed security portfolio has an NAIC 1 designation.
| (a) | If two agencies rate a security, the rating displayed above is the lower of the two; if three or more agencies rate a security, the rating displayed is the second lowest. |
| (b) | See page 30 for more information. |
Page 29
| Appendix A American Financial Group, Inc. Fixed Maturities - Credit Rating by Type ($ in millions) |
|
| Fair Value - December 31, 2017 | ||||||||||||||||||||||||||||||||||||||
| By Credit Rating (a) |
US Gov | Munis | Frgn gov | RMBS | CMBS | ABS | Corp/Oth | Total | % Total | |||||||||||||||||||||||||||||
| Investment grade |
||||||||||||||||||||||||||||||||||||||
| AAA |
$ | 250 | $ | 1,848 | $ | 168 | $ | 444 | $ | 802 | $ | 2,649 | $ | 195 | $ | 6,356 | 16 | % | ||||||||||||||||||||
| AA |
34 | 4,671 | 66 | 74 | 19 | 2,242 | 1,305 | 8,411 | 22 | % | ||||||||||||||||||||||||||||
| A |
— | 494 | 3 | 216 | 23 | 1,835 | 6,876 | 9,447 | 25 | % | ||||||||||||||||||||||||||||
| BBB |
— | 47 | — | 106 | 76 | 800 | 9,467 | 10,496 | 27 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Subtotal - Investment grade |
284 | 7,060 | 237 | 840 | 920 | 7,526 | 17,843 | 34,710 | 90 | % | ||||||||||||||||||||||||||||
| BB |
— | 4 | 4 | 173 | 24 | 23 | 511 | 739 | 2 | % | ||||||||||||||||||||||||||||
| B |
— | 7 | 1 | 226 | 4 | — | 90 | 328 | 1 | % | ||||||||||||||||||||||||||||
| CCC, CC, C |
— | 1 | — | 902 | 3 | 3 | 26 | 935 | 2 | % | ||||||||||||||||||||||||||||
| D |
— | 5 | — | 517 | — | — | — | 522 | 1 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Subtotal - Non-Investment grade |
— | 17 | 5 | 1,818 | 31 | 26 | 627 | 2,524 | 6 | % | ||||||||||||||||||||||||||||
| Not Rated |
7 | 71 | — | 572 | 12 | 410 | 421 | 1,493 | 4 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total |
$ | 291 | $ | 7,148 | $ | 242 | $ | 3,230 | $ | 963 | $ | 7,962 | $ | 18,891 | $ | 38,727 | 100 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Fair Value - December 31, 2016 | ||||||||||||||||||||||||||||||||||||||
| By Credit Rating (a) |
US Gov | Munis | Frgn gov | RMBS | CMBS | ABS | Corp/Oth | Total | % Total | |||||||||||||||||||||||||||||
| Investment grade |
||||||||||||||||||||||||||||||||||||||
| AAA |
$ | 299 | $ | 1,727 | $ | 171 | $ | 508 | $ | 1,213 | $ | 2,053 | $ | 218 | $ | 6,189 | 18 | % | ||||||||||||||||||||
| AA |
41 | 4,388 | 30 | 127 | 42 | 1,480 | 1,149 | 7,257 | 21 | % | ||||||||||||||||||||||||||||
| A |
— | 501 | 55 | 170 | 98 | 1,593 | 6,070 | 8,487 | 24 | % | ||||||||||||||||||||||||||||
| BBB |
— | 69 | 5 | 202 | 86 | 813 | 8,018 | 9,193 | 26 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Subtotal - Investment grade |
340 | 6,685 | 261 | 1,007 | 1,439 | 5,939 | 15,455 | 31,126 | 89 | % | ||||||||||||||||||||||||||||
| BB |
— | 4 | — | 184 | 29 | 16 | 462 | 695 | 2 | % | ||||||||||||||||||||||||||||
| B |
— | 8 | — | 307 | 25 | 1 | 104 | 445 | 1 | % | ||||||||||||||||||||||||||||
| CCC, CC, C |
— | 11 | — | 963 | — | 3 | 32 | 1,009 | 3 | % | ||||||||||||||||||||||||||||
| D |
— | — | — | 679 | — | — | — | 679 | 2 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Subtotal - Non-Investment grade |
— | 23 | — | 2,133 | 54 | 20 | 598 | 2,828 | 8 | % | ||||||||||||||||||||||||||||
| Not Rated |
8 | 100 | — | 499 | — | — | 342 | 949 | 3 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total |
$ | 348 | $ | 6,808 | $ | 261 | $ | 3,639 | $ | 1,493 | $ | 5,959 | $ | 16,395 | $ | 34,903 | 100 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| (a) | If two agencies rate a security, the rating displayed above is the lower of the two; if three or more agencies rate a security, the rating displayed is the second lowest. |
Page 30