For the Fiscal Year Ended December 31, 2014
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Commission File No. 1-13653
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Incorporated under the Laws of Ohio
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IRS Employer I.D. No. 31-1544320
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock
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New York Stock Exchange and Nasdaq Global Select Market
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6-3/8% Senior Notes due June 12, 2042
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New York Stock Exchange
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5-3/4% Senior Notes due August 25, 2042
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New York Stock Exchange
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7% Senior Notes due September 30, 2050
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New York Stock Exchange
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6-1/4% Subordinated Debentures due September 30, 2054
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New York Stock Exchange
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Page
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FORWARD-LOOKING STATEMENTS
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Part I
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Item 1
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—
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Business
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Item 1A
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—
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Risk Factors
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Item 1B
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—
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Unresolved Staff Comments
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none
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Item 2
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—
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Properties
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Item 3
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—
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Legal Proceedings
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Item 4
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—
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Mine Safety Disclosures
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none
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Part II
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Item 5
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—
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6
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—
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Selected Financial Data
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Item 7
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—
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A
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—
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8
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—
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Financial Statements and Supplementary Data
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Item 9
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—
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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none
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Item 9A
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—
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Controls and Procedures
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Item 9B
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—
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Other Information
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Part III
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Item 10
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—
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Directors, Executive Officers and Corporate Governance
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Item 11
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—
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Executive Compensation
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Item 12
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—
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13
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—
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Certain Relationships and Related Transactions, and Director Independence
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Item 14
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—
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Principal Accountant Fees and Services
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Part IV
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Item 15
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—
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Exhibits and Financial Statement Schedules
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•
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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;
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•
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performance of securities markets;
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•
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AFG’s ability to estimate accurately the likelihood, magnitude and timing of any losses in connection with investments in the non-agency residential mortgage market;
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•
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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;
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•
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the availability of capital;
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•
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regulatory actions (including changes in statutory accounting rules);
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•
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changes in the legal environment affecting AFG or its customers;
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•
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tax law and accounting changes;
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•
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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;
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•
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development of insurance loss reserves and establishment of other reserves, particularly with respect to amounts associated with asbestos and environmental claims and AFG’s run-off long-term care business;
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•
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availability of reinsurance and ability of reinsurers to pay their obligations;
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•
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trends in persistency, mortality and morbidity;
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•
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competitive pressures, including those in the annuity distribution channels;
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•
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the ability to obtain adequate rates and policy terms; and
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•
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changes in AFG’s credit ratings or the financial strength ratings assigned by major ratings agencies to AFG’s operating subsidiaries.
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Ratings
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Gross
Written
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AM Best
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S&P
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Premiums
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Company
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Great American Insurance
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A+
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A+
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$
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3,491
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National Interstate
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A
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not rated
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689
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Summit (Bridgefield Casualty and Bridgefield Employers)
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A
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A
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414
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Republic Indemnity
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A
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A+
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267
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Marketform Lloyd’s Syndicate
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A
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A+
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220
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Mid-Continent Casualty
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A+
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A+
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167
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American Empire Surplus Lines
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A+
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A+
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150
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Other
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|
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79
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|
|
|
|
|
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$
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5,477
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|
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|
2014
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|
2013
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|
2012
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||||||
Gross written premiums
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|
$
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5,477
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$
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4,805
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$
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4,321
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Ceded reinsurance
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|
(1,457
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)
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(1,464
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)
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(1,372
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)
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|||
Net written premiums
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$
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4,020
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$
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3,341
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$
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2,949
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||||||
Net earned premiums
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$
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3,878
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$
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3,204
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|
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$
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2,847
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Loss and LAE
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2,470
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1,986
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1,842
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|||
Special asbestos and environmental (“A&E”) charges
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|
24
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54
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31
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|||
Underwriting expenses
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1,172
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|
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1,019
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|
|
887
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|||
Underwriting gain
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$
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212
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$
|
145
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$
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87
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GAAP ratios:
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Loss and LAE ratio
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64.3
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%
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63.7
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%
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65.8
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%
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|||
Underwriting expense ratio
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30.2
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%
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|
31.8
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%
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31.1
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%
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|||
Combined ratio
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94.5
|
%
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|
95.5
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%
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|
96.9
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%
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|||
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||||||
Statutory ratios:
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Loss and LAE ratio
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63.2
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%
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62.2
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%
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63.2
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%
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|||
Underwriting expense ratio
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30.4
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%
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31.9
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%
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32.4
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%
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|||
Combined ratio
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93.6
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%
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|
94.1
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%
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|
95.6
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%
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|||
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||||||
Industry statutory combined ratio (a)
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||||||
All lines
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97.2
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%
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96.4
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%
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|
102.5
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%
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|||
Commercial lines
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|
97.7
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%
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96.7
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%
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104.4
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%
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(a)
|
The source of the industry ratios is “A.M. Best’s U.S. Property/Casualty — Review & Preview” (February 2015 Edition).
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Property and Transportation
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Inland and Ocean Marine
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Provides coverage primarily for builders’ risk, contractors’ equipment, property, motor truck cargo, marine cargo, boat dealers, marina operators/dealers and excursion vessels.
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Agricultural-related
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Provides federally reinsured multi-peril crop (allied lines) insurance covering most perils as well as crop-hail, equine mortality and other coverages for full-time operating farms/ranches and agribusiness operations on a nationwide basis.
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Commercial Automobile
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Provides coverage for vehicles (such as buses and trucks) in a broad range of businesses including the moving and storage and transportation industries, and a specialized physical damage product for the trucking industry.
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Specialty Casualty
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Executive and Professional Liability
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Markets coverage for directors and officers of businesses and non-profit organizations; errors and omissions; and provides medical malpractice insurance.
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Umbrella and Excess Liability
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Provides liability coverage in excess of primary layers.
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Excess and Surplus
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Provides liability, umbrella and excess coverage for unique, volatile or hard to place risks, using rates and forms that generally do not have to be approved by state insurance regulators.
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General Liability
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Provides coverage for contractor-related businesses, energy development and production risks, and environmental liability risks.
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Targeted Programs
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Includes coverage (primarily liability and property) for social service agencies, leisure, entertainment and non-profit organizations, customized solutions for other targeted markets and alternative risk programs using agency captives.
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Workers’ Compensation
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Provides coverage for prescribed benefits payable to employees who are injured on the job.
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Specialty Financial
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Fidelity and Surety
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Provides fidelity and crime coverage for government, mercantile and financial institutions and surety coverage for various types of contractors and public and private corporations.
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Lease and Loan Services
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Provides coverage for insurance risk management programs for lending and leasing institutions, including equipment leasing and collateral and lender-placed mortgage property insurance.
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2014
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|
2013
|
|
2012
|
||||||
Property and transportation
|
$
|
1,566
|
|
|
$
|
1,547
|
|
|
$
|
1,473
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|
Specialty casualty
|
1,864
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|
|
1,224
|
|
|
992
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|||
Specialty financial
|
488
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|
|
486
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|
|
411
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|||
Other
|
102
|
|
|
84
|
|
|
73
|
|
|||
|
$
|
4,020
|
|
|
$
|
3,341
|
|
|
$
|
2,949
|
|
|
|
2014
|
|
2013
|
|
2012
|
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
California
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|
13.9
|
%
|
|
13.8
|
%
|
|
12.6
|
%
|
|
Pennsylvania
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|
2.6
|
%
|
|
2.3
|
%
|
|
2.6
|
%
|
Florida
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|
8.7
|
%
|
|
4.3
|
%
|
|
4.4
|
%
|
|
Iowa
|
|
2.5
|
%
|
|
3.4
|
%
|
|
3.7
|
%
|
New York
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|
6.6
|
%
|
|
6.6
|
%
|
|
5.9
|
%
|
|
Kansas
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|
2.5
|
%
|
|
3.2
|
%
|
|
3.7
|
%
|
Texas
|
|
6.2
|
%
|
|
6.8
|
%
|
|
6.9
|
%
|
|
New Jersey
|
|
2.4
|
%
|
|
2.3
|
%
|
|
2.1
|
%
|
Illinois
|
|
5.8
|
%
|
|
6.8
|
%
|
|
7.1
|
%
|
|
Michigan
|
|
2.3
|
%
|
|
2.4
|
%
|
|
2.4
|
%
|
Georgia
|
|
2.8
|
%
|
|
2.3
|
%
|
|
2.4
|
%
|
|
South Dakota
|
|
2.1
|
%
|
|
2.7
|
%
|
|
2.5
|
%
|
North Carolina
|
|
2.8
|
%
|
|
2.4
|
%
|
|
2.3
|
%
|
|
Ohio
|
|
2.0
|
%
|
|
2.1
|
%
|
|
2.3
|
%
|
Missouri
|
|
2.7
|
%
|
|
3.1
|
%
|
|
2.9
|
%
|
|
Other
|
|
34.1
|
%
|
|
35.5
|
%
|
|
36.2
|
%
|
|
|
|
|
|
|
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Retention
Maximum
|
|
Reinsurance
Coverage (a)
|
|
||||
Coverage
|
|
|
|
|
|
||||
California Workers’ Compensation
|
|
$
|
2
|
|
|
$
|
148
|
|
|
Other Workers’ Compensation
|
|
3
|
|
|
37
|
|
|
||
Commercial Umbrella
|
|
4
|
|
|
46
|
|
|
||
Property — General
|
|
5
|
|
|
45
|
|
|
||
Property — Catastrophe
|
|
24
|
|
|
176
|
|
(b)
|
(a)
|
Reinsurance covers substantial portions of losses in excess of retention. However, in general, losses resulting from terrorism are not covered.
|
(b)
|
Includes coverage for $95 million of losses excess of $100 million (per occurrence) provided through the Riverfront Re Ltd. catastrophe bond.
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Reinsurance ceded
|
|
$
|
1,457
|
|
|
$
|
1,464
|
|
|
$
|
1,372
|
|
Reinsurance ceded, excluding crop
|
|
891
|
|
|
802
|
|
|
743
|
|
|||
Reinsurance assumed — including involuntary pools and associations
|
|
90
|
|
|
61
|
|
|
38
|
|
|
2004
|
|
2005
|
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
||||||||||||||||||||||
As originally estimated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Net liability shown above
|
$
|
3,155
|
|
|
$
|
3,619
|
|
|
$
|
3,791
|
|
|
$
|
3,868
|
|
|
$
|
4,154
|
|
|
$
|
3,899
|
|
|
$
|
4,164
|
|
|
$
|
4,282
|
|
|
$
|
4,129
|
|
|
$
|
4,288
|
|
|
$
|
5,645
|
|
Add reinsurance recoverables
|
2,234
|
|
|
2,243
|
|
|
2,309
|
|
|
2,300
|
|
|
2,610
|
|
|
2,513
|
|
|
2,249
|
|
|
2,238
|
|
|
2,716
|
|
|
2,122
|
|
|
2,227
|
|
|||||||||||
Gross liability
|
$
|
5,389
|
|
|
$
|
5,862
|
|
|
$
|
6,100
|
|
|
$
|
6,168
|
|
|
$
|
6,764
|
|
|
$
|
6,412
|
|
|
$
|
6,413
|
|
|
$
|
6,520
|
|
|
$
|
6,845
|
|
|
$
|
6,410
|
|
|
$
|
7,872
|
|
As re-estimated at December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Net liability shown above
|
$
|
3,399
|
|
|
$
|
3,405
|
|
|
$
|
3,333
|
|
|
$
|
3,293
|
|
|
$
|
3,778
|
|
|
$
|
3,650
|
|
|
$
|
4,041
|
|
|
$
|
4,259
|
|
|
$
|
4,129
|
|
|
$
|
4,294
|
|
|
|
||
Add reinsurance recoverables
|
2,605
|
|
|
2,367
|
|
|
2,154
|
|
|
1,906
|
|
|
2,252
|
|
|
1,926
|
|
|
1,913
|
|
|
1,996
|
|
|
2,911
|
|
|
2,116
|
|
|
|
||||||||||||
Gross liability
|
$
|
6,004
|
|
|
$
|
5,772
|
|
|
$
|
5,487
|
|
|
$
|
5,199
|
|
|
$
|
6,030
|
|
|
$
|
5,576
|
|
|
$
|
5,954
|
|
|
$
|
6,255
|
|
|
$
|
7,040
|
|
|
$
|
6,410
|
|
|
N/A
|
|
|
Gross cumulative deficiency (redundancy) (a)
|
11.4
|
%
|
|
(1.5
|
%)
|
|
(10.0
|
%)
|
|
(15.7
|
%)
|
|
(10.9
|
%)
|
|
(13.0
|
%)
|
|
(7.2
|
%)
|
|
(4.1
|
%)
|
|
2.8
|
%
|
|
—
|
%
|
|
N/A
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
(a) Gross cumulative deficiency (redundancy):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Special A&E charges
|
9.1
|
%
|
|
5.0
|
%
|
|
4.8
|
%
|
|
3.7
|
%
|
|
3.1
|
%
|
|
3.4
|
%
|
|
3.2
|
%
|
|
2.4
|
%
|
|
1.8
|
%
|
|
0.5
|
%
|
|
|
||||||||||||
Other
|
2.3
|
%
|
|
(6.5
|
%)
|
|
(14.8
|
%)
|
|
(19.4
|
%)
|
|
(14.0
|
%)
|
|
(16.4
|
%)
|
|
(10.4
|
%)
|
|
(6.5
|
%)
|
|
1.0
|
%
|
|
(0.5
|
%)
|
|
|
||||||||||||
Total
|
11.4
|
%
|
|
(1.5
|
%)
|
|
(10.0
|
%)
|
|
(15.7
|
%)
|
|
(10.9
|
%)
|
|
(13.0
|
%)
|
|
(7.2
|
%)
|
|
(4.1
|
%)
|
|
2.8
|
%
|
|
—
|
%
|
|
N/A
|
|
Liability reported on a SAP basis, net of $122 million of retroactive reinsurance
|
$
|
5,049
|
|
Reinsurance recoverables, net of allowance
|
2,227
|
|
|
Other, including reserves of foreign insurers
|
596
|
|
|
Liability reported on a GAAP basis
|
$
|
7,872
|
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Reserves at beginning of year
|
|
$
|
301
|
|
|
$
|
373
|
|
|
$
|
362
|
|
Incurred losses and LAE
|
|
24
|
|
|
59
|
|
|
43
|
|
|||
Paid losses and LAE — two large claims (*)
|
|
—
|
|
|
(106
|
)
|
|
—
|
|
|||
Paid losses and LAE — other
|
|
(36
|
)
|
|
(25
|
)
|
|
(32
|
)
|
|||
Reserves at end of year, net of reinsurance recoverable
|
|
289
|
|
|
301
|
|
|
373
|
|
|||
Reinsurance recoverable, net of allowance
|
|
77
|
|
|
83
|
|
|
98
|
|
|||
Gross reserves at end of year
|
|
$
|
366
|
|
|
$
|
384
|
|
|
$
|
471
|
|
(*)
|
Payments (net of reinsurance recoveries) associated with the settlement of the A.P. Green Industries claim and another large claim.
|
|
|
|
|
Annuity
|
|
|
|
|
|||
|
|
Annuity
|
|
Policies
|
|
Ratings
|
|||||
Company
|
|
Premiums
|
|
In Force
|
|
AM Best
|
|
S&P
|
|||
Great American Life Insurance Company
|
|
$
|
3,463
|
|
|
348,500
|
|
|
A
|
|
A+
|
Annuity Investors Life Insurance Company
|
|
229
|
|
|
126,000
|
|
|
A
|
|
A+
|
|
|
Premiums
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
Financial institutions single premium annuities — indexed
|
|
$
|
1,489
|
|
|
$
|
1,102
|
|
|
$
|
291
|
|
Financial institutions single premium annuities — fixed
|
|
332
|
|
|
628
|
|
|
587
|
|
|||
Retail single premium annuities — indexed
|
|
1,533
|
|
|
1,879
|
|
|
1,662
|
|
|||
Retail single premium annuities — fixed
|
|
101
|
|
|
165
|
|
|
153
|
|
|||
Education market — fixed and indexed annuities
|
|
194
|
|
|
207
|
|
|
237
|
|
|||
Total fixed annuity premiums
|
|
3,649
|
|
|
3,981
|
|
|
2,930
|
|
|||
Variable annuities
|
|
47
|
|
|
52
|
|
|
61
|
|
|||
Total annuity premiums
|
|
$
|
3,696
|
|
|
$
|
4,033
|
|
|
$
|
2,991
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
Annuity earnings before income taxes — before change in fair value of derivatives related to FIAs and special charge for guaranty fund assessments
|
|
$
|
362
|
|
|
$
|
313
|
|
|
$
|
271
|
|
Impact of the change in fair value of derivatives related to FIAs (a)
|
|
(34
|
)
|
|
15
|
|
|
(15
|
)
|
|||
Special charge for guaranty fund assessments
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|||
Annuity segment earnings before income taxes
|
|
$
|
328
|
|
|
$
|
323
|
|
|
$
|
256
|
|
|
|
|
|
|
|
|
||||||
Net spread earned on fixed annuities — before impact of derivatives related to FIAs
|
|
1.56
|
%
|
|
1.52
|
%
|
|
1.57
|
%
|
|||
Impact of derivatives related to FIAs
|
|
(0.15
|
%)
|
|
0.08
|
%
|
|
(0.09
|
%)
|
|||
Impact of special charge for guaranty fund assessments
|
|
—
|
%
|
|
(0.03
|
%)
|
|
—
|
%
|
|||
Net spread earned on fixed annuities
|
|
1.41
|
%
|
|
1.57
|
%
|
|
1.48
|
%
|
(a)
|
Fixed-indexed annuities, which represented approximately one-half of annuity benefits accumulated at
December 31, 2014
, provide policyholders with a crediting rate tied, in part, to the performance of an existing stock market index. AFG attempts to mitigate the risk in the index-based component of these products through the purchase of call options on the appropriate index. AFG’s strategy is designed so that an increase in the liabilities, due to an increase in the market index, will generally be offset by unrealized and realized gains on the call options purchased by AFG. Both the index-based component of the annuities and the related call options are considered derivatives that must be marked-to-market through earnings each period. Fluctuations in interest rates and the stock market, among other factors, can cause volatility in the periodic measurement of fair value of the embedded derivative that management believes can be inconsistent with the long-term economics of these products.
|
|
% of Total
|
|
Annuity Premiums
|
Wells Fargo & Company
|
10.5%
|
BB&T Corporation
|
8.9%
|
The PNC Financial Services Group, Inc.
|
5.1%
|
Citizens Financial Group, Inc.
|
4.3%
|
Regions Financial Corporation
|
4.1%
|
|
|
2014
|
|
2013
|
|
2012
|
|||
Florida
|
|
9.2
|
%
|
|
8.9
|
%
|
|
9.8
|
%
|
California
|
|
8.5
|
%
|
|
7.3
|
%
|
|
8.7
|
%
|
North Carolina
|
|
6.2
|
%
|
|
5.1
|
%
|
|
4.9
|
%
|
Pennsylvania
|
|
6.0
|
%
|
|
6.9
|
%
|
|
5.6
|
%
|
Ohio
|
|
5.7
|
%
|
|
6.6
|
%
|
|
6.1
|
%
|
Company
|
|
Products
|
United Teacher Associates Insurance Company
|
|
Long-term care, life, annuities
|
Continental General Insurance Company
|
|
Long-term care, life, annuities
|
Manhattan National Life Insurance Company
|
|
Life
|
|
|
2014
|
|
2013
|
|
2012
|
|||
Yield on Fixed Maturities (a):
|
|
|
|
|
|
|
|||
Excluding realized gains and losses
|
|
4.9
|
%
|
|
5.2
|
%
|
|
5.6
|
%
|
Including realized gains and losses
|
|
5.0
|
%
|
|
5.3
|
%
|
|
5.8
|
%
|
|
|
|
|
|
|
|
|||
Yield on Equity Securities (a):
|
|
|
|
|
|
|
|||
Excluding realized gains and losses
|
|
5.4
|
%
|
|
5.5
|
%
|
|
4.5
|
%
|
Including realized gains and losses
|
|
7.7
|
%
|
|
26.4
|
%
|
|
25.2
|
%
|
(a)
|
Based on amortized cost; excludes effects of changes in unrealized gains and losses. Realized losses include impairment charges.
|
|
|
2014
|
|
2013
|
|
2012
|
|||
Total return on AFG’s fixed maturities
|
|
6.9
|
%
|
|
1.3
|
%
|
|
9.1
|
%
|
Barclays Capital U.S. Universal Bond Index
|
|
5.6
|
%
|
|
(1.3
|
%)
|
|
5.5
|
%
|
|
|
|
|
|
|
|
|||
Total return on AFG’s equity securities
|
|
8.7
|
%
|
|
27.1
|
%
|
|
18.7
|
%
|
Standard & Poor’s 500 Index
|
|
13.7
|
%
|
|
32.4
|
%
|
|
16.0
|
%
|
|
|
Amortized
|
|
Fair Value
|
|||||||
|
|
Cost
|
|
Amount
|
|
%
|
|||||
S&P or comparable rating
|
|
|
|
|
|
|
|||||
AAA, AA, A
|
|
$
|
20,032
|
|
|
$
|
21,017
|
|
|
68
|
%
|
BBB
|
|
5,257
|
|
|
5,571
|
|
|
18
|
%
|
||
Total investment grade
|
|
25,289
|
|
|
26,588
|
|
|
86
|
%
|
||
BB
|
|
804
|
|
|
831
|
|
|
3
|
%
|
||
B
|
|
428
|
|
|
440
|
|
|
1
|
%
|
||
CCC, CC, C
|
|
1,029
|
|
|
1,180
|
|
|
4
|
%
|
||
D, not rated
|
|
1,524
|
|
|
1,695
|
|
|
6
|
%
|
||
Total non-investment grade
|
|
3,785
|
|
|
4,146
|
|
|
14
|
%
|
||
Total
|
|
$
|
29,074
|
|
|
$
|
30,734
|
|
|
100
|
%
|
•
|
actual or anticipated variations in quarterly operating results;
|
•
|
actual or anticipated changes in the dividends paid on AFG Common Stock;
|
•
|
rating agency actions;
|
•
|
recommendations by securities analysts;
|
•
|
significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving AFG or its competitors;
|
•
|
operating and stock price performance of other companies that investors deem comparable to AFG;
|
•
|
news reports relating to trends, concerns and other issues in AFG’s lines of business;
|
•
|
general economic conditions, including volatility in the financial markets; and
|
•
|
geopolitical conditions such as acts or threats of terrorism or military conflicts.
|
|
|
2014
|
|
2013
|
||||||||||||
|
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
First Quarter
|
|
$
|
58.26
|
|
|
$
|
52.89
|
|
|
$
|
47.50
|
|
|
$
|
39.76
|
|
Second Quarter
|
|
60.00
|
|
|
55.49
|
|
|
49.88
|
|
|
46.45
|
|
||||
Third Quarter
|
|
60.64
|
|
|
55.57
|
|
|
54.48
|
|
|
49.01
|
|
||||
Fourth Quarter
|
|
62.55
|
|
|
54.63
|
|
|
58.44
|
|
|
52.44
|
|
|
Total
Number
of Shares
Purchased
|
|
Average
Price Paid
Per Share
|
|
Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans
or Programs
|
|
Maximum Number
of Shares
that May
Yet be Purchased
Under the Plans
or Programs (a)
|
|||||
First Nine Months
|
2,209,007
|
|
|
$
|
57.33
|
|
|
2,209,007
|
|
|
2,790,993
|
|
Fourth Quarter:
|
|
|
|
|
|
|
|
|||||
October
|
696,859
|
|
|
57.40
|
|
|
696,859
|
|
|
2,094,134
|
|
|
November
|
—
|
|
|
—
|
|
|
—
|
|
|
2,094,134
|
|
|
December
|
397,773
|
|
|
60.53
|
|
|
397,773
|
|
|
5,000,000
|
|
|
Total
|
3,303,639
|
|
|
$
|
57.73
|
|
|
3,303,639
|
|
|
|
(a)
|
Represents the remaining shares that may be repurchased under the Plans authorized by AFG’s Board of Directors in February 2013 and December 2014.
|
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
Earnings Statement Data
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues
|
|
$
|
5,713
|
|
|
$
|
5,092
|
|
|
$
|
4,957
|
|
|
$
|
4,643
|
|
|
$
|
4,400
|
|
Earnings before income taxes
|
|
626
|
|
|
689
|
|
|
537
|
|
|
558
|
|
|
694
|
|
|||||
Net earnings, including noncontrolling interests
|
|
406
|
|
|
453
|
|
|
402
|
|
|
319
|
|
|
426
|
|
|||||
Less: Net earnings (loss) attributable to noncontrolling interests
|
|
(46
|
)
|
|
(18
|
)
|
|
(86
|
)
|
|
(23
|
)
|
|
(56
|
)
|
|||||
Net earnings attributable to shareholders
|
|
452
|
|
|
471
|
|
|
488
|
|
|
342
|
|
|
482
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings attributable to shareholders per Common Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
5.07
|
|
|
$
|
5.27
|
|
|
$
|
5.18
|
|
|
$
|
3.37
|
|
|
$
|
4.41
|
|
Diluted
|
|
4.97
|
|
|
5.16
|
|
|
5.09
|
|
|
3.32
|
|
|
4.36
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends paid per share of Common Stock (a)
|
|
$
|
1.91
|
|
|
$
|
1.805
|
|
|
$
|
0.97
|
|
|
$
|
0.6625
|
|
|
$
|
0.575
|
|
Ratio of earnings to fixed charges including annuity benefits (b)
|
|
1.90
|
|
|
2.15
|
|
|
1.98
|
|
|
1.95
|
|
|
2.42
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and investments
|
|
$
|
36,210
|
|
|
$
|
31,313
|
|
|
$
|
28,449
|
|
|
$
|
25,577
|
|
|
$
|
22,670
|
|
Total assets
|
|
47,535
|
|
|
42,087
|
|
|
39,171
|
|
|
35,838
|
|
|
32,241
|
|
|||||
Property and casualty insurance reserves:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Unpaid losses and loss adjustment expenses
|
|
7,872
|
|
|
6,410
|
|
|
6,845
|
|
|
6,520
|
|
|
6,413
|
|
|||||
Unearned premiums
|
|
1,956
|
|
|
1,757
|
|
|
1,651
|
|
|
1,484
|
|
|
1,534
|
|
|||||
Annuity benefits accumulated
|
|
23,764
|
|
|
20,944
|
|
|
17,609
|
|
|
15,420
|
|
|
12,905
|
|
|||||
Life, accident and health reserves
|
|
2,175
|
|
|
2,008
|
|
|
2,059
|
|
|
1,727
|
|
|
1,650
|
|
|||||
Long-term debt
|
|
1,061
|
|
|
913
|
|
|
953
|
|
|
934
|
|
|
952
|
|
|||||
Shareholders’ equity
|
|
4,879
|
|
|
4,599
|
|
|
4,578
|
|
|
4,411
|
|
|
4,331
|
|
|||||
Less:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net unrealized gain on fixed maturities (c)
|
|
604
|
|
|
441
|
|
|
719
|
|
|
459
|
|
|
341
|
|
|||||
Appropriated retained earnings
|
|
(2
|
)
|
|
49
|
|
|
75
|
|
|
173
|
|
|
197
|
|
|||||
Adjusted shareholders’ equity (d)
|
|
4,277
|
|
|
4,109
|
|
|
3,784
|
|
|
3,779
|
|
|
3,793
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Book value per share
|
|
$
|
55.62
|
|
|
$
|
51.38
|
|
|
$
|
51.45
|
|
|
$
|
45.08
|
|
|
$
|
41.18
|
|
Adjusted book value per share (d)
|
|
48.76
|
|
|
45.90
|
|
|
42.52
|
|
|
38.63
|
|
|
36.06
|
|
(a)
|
Includes special cash dividends of $1.00 per share paid in December 2014 and 2013 and $0.25 per share paid in December 2012.
|
(b)
|
Fixed charges are computed on a “total enterprise” basis. For purposes of calculating the ratios, “earnings” have been computed by adding to pretax earnings the fixed charges and the noncontrolling interests in earnings of subsidiaries having fixed charges and the undistributed equity in earnings or losses of investees. Fixed charges include interest (including annuity benefits as indicated), amortization of debt premium/discount and expense, preferred dividend and distribution requirements of subsidiaries and a portion of rental expense deemed to be representative of the interest factor. The ratio of earnings to fixed charges excluding annuity benefits was
7.95
,
8.86
,
7.16
,
6.59
and
9.14
for
2014
,
2013
,
2012
,
2011
and
2010
, respectively. Although the ratio of earnings to fixed charges excluding annuity benefits is not required or encouraged to be disclosed under Securities and Exchange Commission rules, some investors and lenders may not consider interest credited to annuity policyholders’ accounts a borrowing cost for an insurance company, and accordingly, believe this ratio is meaningful.
|
(c)
|
The net unrealized gain on fixed maturities is a component of accumulated other comprehensive income and is shown net of related adjustments to deferred policy acquisition costs and certain liabilities in the annuity, long-term care and life businesses.
|
(d)
|
Adjusted shareholders’ equity and adjusted book value per share exclude appropriated retained earnings and net unrealized gains related to fixed maturity securities. Management believes that investors find a measurement of shareholders’ equity excluding these items to be meaningful as (i) the unrealized gain on fixed maturities fluctuates with changes in interest rates in a way that is primarily only meaningful to AFG if it sells those investments and (ii) appropriated retained earnings represents amounts that will ultimately inure to the debt holders of the collateralized loan obligations managed by AFG.
|
INDEX TO MD&A
|
||||
|
Page
|
|
|
Page
|
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
|
|
||
|
|
|
|
|
•
|
higher underwriting profit and net investment income in the property and casualty insurance segment,
|
•
|
lower earnings in the annuity segment resulting from the impact of changes in interest rates and the stock market on the fair value accounting for fixed-indexed annuities, and
|
•
|
lower realized gains on securities.
|
•
|
higher underwriting profit, including lower special A&E charges, and higher net investment income in the property and casualty insurance segment,
|
•
|
lower holding company expenses, and
|
•
|
lower realized gains on securities.
|
•
|
the establishment of insurance reserves, especially asbestos and environmental-related reserves and reserves for AFG’s closed block of long-term care insurance,
|
•
|
the recoverability of reinsurance,
|
•
|
the recoverability of deferred acquisition costs,
|
•
|
the establishment of asbestos and environmental reserves of former railroad and manufacturing operations, and
|
•
|
the valuation of investments, including the determination of “other-than-temporary” impairments.
|
|
|
December 31,
|
||||||
2014
|
|
2013
|
||||||
Long-term debt
|
|
$
|
1,061
|
|
|
$
|
913
|
|
Total capital
|
|
5,513
|
|
|
5,192
|
|
||
Ratio of debt to total capital:
|
|
|
|
|
||||
Including subordinated debt and debt secured by real estate
|
|
19.2
|
%
|
|
17.6
|
%
|
||
Excluding subordinated debt and debt secured by real estate
|
|
15.6
|
%
|
|
16.6
|
%
|
|
Year ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net cash provided by operating activities
|
$
|
1,222
|
|
|
$
|
760
|
|
|
$
|
817
|
|
Net cash used in investing activities
|
(3,619
|
)
|
|
(2,915
|
)
|
|
(1,425
|
)
|
|||
Net cash provided by financing activities
|
2,101
|
|
|
2,089
|
|
|
989
|
|
|||
Net change in cash and cash equivalents
|
$
|
(296
|
)
|
|
$
|
(66
|
)
|
|
$
|
381
|
|
|
Year ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net cash provided by operating activities
|
$
|
372
|
|
|
$
|
428
|
|
|
$
|
380
|
|
Net cash used in investing activities
|
(432
|
)
|
|
(4
|
)
|
|
(284
|
)
|
|||
Net cash used in financing activities
|
(171
|
)
|
|
(180
|
)
|
|
(232
|
)
|
|||
Net change in cash and cash equivalents
|
$
|
(231
|
)
|
|
$
|
244
|
|
|
$
|
(136
|
)
|
|
|
Total
|
|
Within
One Year
|
|
2-3 Years
|
|
4-5 Years
|
|
More than
5 Years
|
||||||||||
Annuities (a)
|
|
$
|
23,764
|
|
|
$
|
2,047
|
|
|
$
|
4,579
|
|
|
$
|
5,016
|
|
|
$
|
12,122
|
|
Life, accident and health liabilities (a)
|
|
2,175
|
|
|
197
|
|
|
262
|
|
|
219
|
|
|
1,497
|
|
|||||
Property and casualty unpaid losses and loss adjustment expenses (b)
|
|
7,872
|
|
|
1,900
|
|
|
1,900
|
|
|
900
|
|
|
3,172
|
|
|||||
Long-term debt, including interest
|
|
2,527
|
|
|
93
|
|
|
209
|
|
|
483
|
|
|
1,742
|
|
|||||
Operating leases
|
|
425
|
|
|
62
|
|
|
109
|
|
|
80
|
|
|
174
|
|
|||||
Total
|
|
$
|
36,763
|
|
|
$
|
4,299
|
|
|
$
|
7,059
|
|
|
$
|
6,698
|
|
|
$
|
18,707
|
|
(a)
|
Reserve projections include anticipated cash benefit payments only. Projections do not include any impact for future earnings or additional premiums. Based on the same assumptions, AFG projects reinsurance recoveries related to life, accident and health reserves totaling $895 million as follows: Within 1 year — $119 million; 2-3 years — $139 million; 4-5 years — $119 million; and thereafter — $518 million. Actual payments and their timing could differ significantly from these estimates.
|
(b)
|
Dollar amounts and time periods are estimates based on historical net payment patterns applied to the gross reserves and do not represent actual contractual obligations. Based on the same assumptions, AFG projects reinsurance recoveries related to these reserves totaling $2.23 billion as follows: Within 1 year — $500 million; 2-3 years — $500 million; 4-5 years — $200 million; and thereafter — $1.03 billion. Actual payments and their timing could differ significantly from these estimates.
|
Fair value of fixed maturity portfolio
|
$
|
31,000
|
|
Pretax impact on fair value of 100 bps increase in interest rates
|
$
|
(1,550
|
)
|
Pretax impact as % of total fixed maturity portfolio
|
(5.0
|
%)
|
|
|
Amortized
Cost
|
|
Fair Value
|
|
Fair Value as
% of Cost
|
|
Unrealized
Gain (Loss)
|
|
% Rated
Investment
Grade
|
||||||||
Collateral type
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Agency-backed
|
|
$
|
315
|
|
|
$
|
327
|
|
|
104
|
%
|
|
$
|
12
|
|
|
100
|
%
|
Non-agency prime
|
|
1,923
|
|
|
2,135
|
|
|
111
|
%
|
|
212
|
|
|
43
|
%
|
|||
Alt-A
|
|
948
|
|
|
1,054
|
|
|
111
|
%
|
|
106
|
|
|
18
|
%
|
|||
Subprime
|
|
867
|
|
|
933
|
|
|
108
|
%
|
|
66
|
|
|
17
|
%
|
|||
Commercial
|
|
2,300
|
|
|
2,457
|
|
|
107
|
%
|
|
157
|
|
|
100
|
%
|
|||
|
|
$
|
6,353
|
|
|
$
|
6,906
|
|
|
109
|
%
|
|
$
|
553
|
|
|
58
|
%
|
|
|
Securities
With
Unrealized
Gains
|
|
|
Securities
With
Unrealized
Losses
|
||||
Available for Sale Fixed Maturities
|
|
|
|
|
|
||||
Fair value of securities
|
|
$
|
26,012
|
|
|
|
$
|
4,272
|
|
Amortized cost of securities
|
|
$
|
24,273
|
|
|
|
$
|
4,351
|
|
Gross unrealized gain (loss)
|
|
$
|
1,739
|
|
|
|
$
|
(79
|
)
|
Fair value as % of amortized cost
|
|
107
|
%
|
|
|
98
|
%
|
||
Number of security positions
|
|
4,487
|
|
|
|
653
|
|
||
Number individually exceeding $2 million gain or loss
|
|
114
|
|
|
|
5
|
|
||
Concentration of gains (losses) by type or industry (exceeding 5% of unrealized):
|
|
|
|
|
|
||||
Mortgage-backed securities
|
|
$
|
569
|
|
|
|
$
|
(16
|
)
|
States and municipalities
|
|
364
|
|
|
|
(10
|
)
|
||
Banks, savings and credit institutions
|
|
143
|
|
|
|
(7
|
)
|
||
Gas and electric services
|
|
121
|
|
|
|
(2
|
)
|
||
Asset-backed securities
|
|
37
|
|
|
|
(22
|
)
|
||
Oil and gas extraction
|
|
14
|
|
|
|
(6
|
)
|
||
Percentage rated investment grade
|
|
87
|
%
|
|
|
85
|
%
|
||
|
|
|
|
|
|
||||
Available for Sale Equity Securities
|
|
|
|
|
|
||||
Fair value of securities
|
|
$
|
1,051
|
|
|
|
$
|
360
|
|
Cost of securities
|
|
$
|
803
|
|
|
|
$
|
390
|
|
Gross unrealized gain (loss)
|
|
$
|
248
|
|
|
|
$
|
(30
|
)
|
Fair value as % of cost
|
|
131
|
%
|
|
|
92
|
%
|
||
Number of security positions
|
|
183
|
|
|
|
53
|
|
||
Number individually exceeding $2 million gain or loss
|
|
38
|
|
|
|
4
|
|
|
|
Securities
With
Unrealized
Gains
|
|
|
Securities
With
Unrealized
Losses
|
||
Maturity
|
|
|
|
|
|
||
One year or less
|
|
3
|
%
|
|
|
—
|
%
|
After one year through five years
|
|
19
|
%
|
|
|
6
|
%
|
After five years through ten years
|
|
31
|
%
|
|
|
25
|
%
|
After ten years
|
|
17
|
%
|
|
|
9
|
%
|
|
|
70
|
%
|
|
|
40
|
%
|
Asset-backed securities (average life of approximately 4-1/2 years)
|
|
6
|
%
|
|
|
47
|
%
|
Mortgage-backed securities (average life of approximately 4-1/2 years)
|
|
24
|
%
|
|
|
13
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
Aggregate
Fair
Value
|
|
Aggregate
Unrealized
Gain (Loss)
|
|
Fair
Value as
% of Cost
Basis
|
|||||
Fixed Maturities at December 31, 2014
|
|
|
|
|
|
|
|||||
Securities with unrealized gains:
|
|
|
|
|
|
|
|||||
Exceeding $500,000 (1,099 securities)
|
|
$
|
13,031
|
|
|
$
|
1,243
|
|
|
111
|
%
|
$500,000 or less (3,388 securities)
|
|
12,981
|
|
|
496
|
|
|
104
|
%
|
||
|
|
$
|
26,012
|
|
|
$
|
1,739
|
|
|
107
|
%
|
Securities with unrealized losses:
|
|
|
|
|
|
|
|||||
Exceeding $500,000 (17 securities)
|
|
$
|
198
|
|
|
$
|
(19
|
)
|
|
91
|
%
|
$500,000 or less (636 securities)
|
|
4,074
|
|
|
(60
|
)
|
|
99
|
%
|
||
|
|
$
|
4,272
|
|
|
$
|
(79
|
)
|
|
98
|
%
|
|
|
Aggregate
Fair
Value
|
|
Aggregate
Unrealized
Loss
|
|
Fair
Value as
% of Cost
Basis
|
|||||
Securities with Unrealized Losses at December 31, 2014
|
|
|
|
|
|
|
|||||
Investment grade fixed maturities with losses for:
|
|
|
|
|
|
|
|||||
Less than one year (276 securities)
|
|
$
|
2,147
|
|
|
$
|
(22
|
)
|
|
99
|
%
|
One year or longer (228 securities)
|
|
1,498
|
|
|
(34
|
)
|
|
98
|
%
|
||
|
|
$
|
3,645
|
|
|
$
|
(56
|
)
|
|
98
|
%
|
Non-investment grade fixed maturities with losses for:
|
|
|
|
|
|
|
|||||
Less than one year (67 securities)
|
|
$
|
427
|
|
|
$
|
(12
|
)
|
|
97
|
%
|
One year or longer (82 securities)
|
|
200
|
|
|
(11
|
)
|
|
95
|
%
|
||
|
|
$
|
627
|
|
|
$
|
(23
|
)
|
|
96
|
%
|
Common equity securities with losses for:
|
|
|
|
|
|
|
|||||
Less than one year (34 securities)
|
|
$
|
260
|
|
|
$
|
(25
|
)
|
|
91
|
%
|
One year or longer (none)
|
|
—
|
|
|
—
|
|
|
—
|
%
|
||
|
|
$
|
260
|
|
|
$
|
(25
|
)
|
|
91
|
%
|
Perpetual preferred equity securities with losses for:
|
|
|
|
|
|
|
|||||
Less than one year (11 securities)
|
|
$
|
45
|
|
|
$
|
(1
|
)
|
|
98
|
%
|
One year or longer (8 securities)
|
|
55
|
|
|
(4
|
)
|
|
93
|
%
|
||
|
|
$
|
100
|
|
|
$
|
(5
|
)
|
|
95
|
%
|
a)
|
whether the unrealized loss is credit-driven or a result of changes in market interest rates,
|
b)
|
the extent to which fair value is less than cost basis,
|
c)
|
cash flow projections received from independent sources,
|
d)
|
historical operating, balance sheet and cash flow data contained in issuer SEC filings and news releases,
|
e)
|
near-term prospects for improvement in the issuer and/or its industry,
|
f)
|
third party research and communications with industry specialists,
|
g)
|
financial models and forecasts,
|
h)
|
the continuity of dividend payments, maintenance of investment grade ratings and hybrid nature of certain investments,
|
i)
|
discussions with issuer management, and
|
j)
|
ability and intent to hold the investment for a period of time sufficient to allow for anticipated recovery in fair value.
|
•
|
Case Incurred Development Method
|
•
|
Paid Development Method
|
•
|
Projected Claim Count Times Projected Claim Severity
|
•
|
Bornhuetter-Ferguson Method
|
•
|
Incremental Paid LAE to Paid Loss Methods
|
•
|
Open and closed claim counts
|
•
|
Average case reserves and average incurred on open claims
|
•
|
Closure rates and statistics related to closed and open claim percentages
|
•
|
Average closed claim severity
|
•
|
Ultimate claim severity
|
•
|
Reported loss ratios
|
•
|
Projected ultimate loss ratios
|
•
|
Loss payment patterns
|
|
|
Gross Loss Reserves at December 31, 2014
|
||||||||||||||
|
|
Case
|
|
IBNR
|
|
LAE
|
|
Total
Reserve
|
||||||||
Statutory Line of Business
|
|
|
|
|
|
|
|
|
||||||||
Workers’ compensation
|
|
$
|
1,060
|
|
|
$
|
1,154
|
|
|
$
|
310
|
|
|
$
|
2,524
|
|
Other liability — occurrence
|
|
461
|
|
|
1,296
|
|
|
278
|
|
|
2,035
|
|
||||
Special property (fire, allied lines, inland marine, earthquake)
|
|
545
|
|
|
42
|
|
|
26
|
|
|
613
|
|
||||
Other liability — claims made
|
|
189
|
|
|
207
|
|
|
122
|
|
|
518
|
|
||||
Commercial auto/truck liability/medical
|
|
200
|
|
|
199
|
|
|
83
|
|
|
482
|
|
||||
Products liability — occurrence
|
|
68
|
|
|
105
|
|
|
100
|
|
|
273
|
|
||||
Commercial multi-peril
|
|
101
|
|
|
87
|
|
|
68
|
|
|
256
|
|
||||
Other lines
|
|
131
|
|
|
297
|
|
|
86
|
|
|
514
|
|
||||
Total Statutory Reserves
|
|
2,755
|
|
|
3,387
|
|
|
1,073
|
|
|
7,215
|
|
||||
Adjustments for GAAP:
|
|
|
|
|
|
|
|
|
||||||||
Reserves of foreign operations
|
|
291
|
|
|
324
|
|
|
10
|
|
|
625
|
|
||||
Deferred gains on retroactive reinsurance
|
|
—
|
|
|
48
|
|
|
—
|
|
|
48
|
|
||||
Loss reserve discounting
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
||||
Other
|
|
(7
|
)
|
|
3
|
|
|
—
|
|
|
(4
|
)
|
||||
Total Adjustments for GAAP
|
|
272
|
|
|
375
|
|
|
10
|
|
|
657
|
|
||||
Total GAAP Reserves
|
|
$
|
3,027
|
|
|
$
|
3,762
|
|
|
$
|
1,083
|
|
|
$
|
7,872
|
|
Line of business
|
Effect of 1%
Change in
Cost Trends
|
||
Workers’ compensation
|
$
|
56
|
|
Other liability — occurrence
|
23
|
|
|
Other liability — claims made
|
9
|
|
|
Commercial auto/truck liability/medical
|
6
|
|
|
|
5-yr. Average
Development (a)(b)
|
|
Net Reserves (b)
December 31, 2014
|
|
Effect on Net
Earnings (b)
|
|||||
Workers’ compensation
|
|
(0.3
|
%)
|
|
$
|
2,069
|
|
|
$
|
6
|
|
Other liability — occurrence
|
|
(3.8
|
%)
|
|
819
|
|
|
31
|
|
||
Other liability — claims made
|
|
(6.8
|
%)
|
|
392
|
|
|
27
|
|
||
Commercial auto/truck liability/ medical
|
|
1.2
|
%
|
|
385
|
|
|
(5
|
)
|
•
|
Legislative actions and regulatory and legal interpretations
|
•
|
Future medical cost inflation
|
•
|
Economic conditions
|
•
|
Timing of claims reporting
|
•
|
Litigious climate
|
•
|
Unpredictability of judicial decisions regarding coverage issues
|
•
|
Magnitude of jury awards
|
•
|
Outside counsel costs
|
•
|
Timing of claims reporting
|
•
|
Litigious climate
|
•
|
Economic conditions
|
•
|
Variability of stock prices
|
•
|
Magnitude of jury awards
|
•
|
Magnitude of jury awards
|
•
|
Unpredictability of judicial decisions regarding coverage issues
|
•
|
Litigious climate and trends
|
•
|
Change in frequency of severe accidents
|
•
|
Health care costs and utilization of medical services by injured parties
|
•
|
Litigious environment
|
•
|
Magnitude of court awards
|
•
|
A slow moving judicial system including varying approaches to medical malpractice claims among courts in different regions of Italy
|
•
|
Third party claims administration in Italy
|
•
|
Trends in claim costs, including medical cost inflation and, in Italy, escalating tables used to establish damages for personal injury
|
|
|
2014
|
|
2013
|
|
2012
|
|||
Before reinsurance (gross)
|
|
90.8
|
%
|
|
93.3
|
%
|
|
108.7
|
%
|
Effect of reinsurance
|
|
3.7
|
%
|
|
2.2
|
%
|
|
(11.8
|
%)
|
Actual (net of reinsurance)
|
|
94.5
|
%
|
|
95.5
|
%
|
|
96.9
|
%
|
|
|
December 31,
|
||||||
|
|
2014
|
|
2013
|
||||
Asbestos
|
|
$
|
196
|
|
|
$
|
210
|
|
Environmental
|
|
93
|
|
|
91
|
|
||
A&E reserves, net of reinsurance recoverable
|
|
289
|
|
|
301
|
|
||
Reinsurance recoverable, net of allowance
|
|
77
|
|
|
83
|
|
||
Gross A&E reserves
|
|
$
|
366
|
|
|
$
|
384
|
|
•
|
There is a growing interest at the state level to attempt to legislatively address asbestos liabilities and the manner in which asbestos claims are resolved. These developments are fluid and could result in piecemeal state-by-state solutions.
|
•
|
The manner by which bankruptcy courts are addressing asbestos liabilities is in flux.
|
•
|
AFG’s insureds may make claims alleging significant non-products exposures.
|
|
|
2014
|
|
2013
|
|
2012
|
|||
Number of policyholders with no indemnity payments:
|
|
|
|
|
|
|
|||
Asbestos
|
|
136
|
|
|
142
|
|
|
129
|
|
Environmental
|
|
99
|
|
|
116
|
|
|
97
|
|
|
|
235
|
|
|
258
|
|
|
226
|
|
Number of policyholders with indemnity payments:
|
|
|
|
|
|
|
|||
Asbestos
|
|
45
|
|
|
48
|
|
|
54
|
|
Environmental
|
|
30
|
|
|
24
|
|
|
21
|
|
|
|
75
|
|
|
72
|
|
|
75
|
|
Total
|
|
310
|
|
|
330
|
|
|
301
|
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Asbestos — two large claims (*)
|
|
$
|
—
|
|
|
$
|
106
|
|
|
$
|
—
|
|
Asbestos — other
|
|
18
|
|
|
10
|
|
|
15
|
|
|||
Environmental
|
|
18
|
|
|
15
|
|
|
17
|
|
|||
Total
|
|
$
|
36
|
|
|
$
|
131
|
|
|
$
|
32
|
|
(*)
|
Asbestos claims paid in 2013 include payments totaling $106 million associated with the settlement of A.P. Green Industries and another large claim. Substantially all of the settlement amounts had been accrued for in prior years.
|
Loss recognition margin at December 31, 2013
|
$
|
64
|
|
Changes in margin attributed to each updated assumption:
|
|
||
Claim costs
|
(50
|
)
|
|
Rate increases
|
40
|
|
|
Reinvestment rates
|
(34
|
)
|
|
Expenses
|
(11
|
)
|
|
Other
|
2
|
|
|
Loss recognition margin at December 31, 2014
|
$
|
11
|
|
|
|
Impact on
|
|
|
Loss Recognition
|
Assumptions Change
|
|
Margin (pretax)
|
5% morbidity change in all future years
|
|
$55 — $65
|
5% lapse and mortality rate change in all future years
|
|
$35 — $40
|
0.25% reinvestment rate change in all future years
|
|
$20 — $25
|
0.25% initial reinvestment rate change; no change to ultimate reinvestment rate
|
|
$8 — $10
|
1% change in expected rate increase approvals
|
|
$15 — $20
|
|
Before CLO
Consolidation
|
|
Managed
Investment
Entities
|
|
Consol.
Entries
|
|
|
|
Consolidated
As Reported
|
||||||||
December 31, 2014
|
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and investments
|
$
|
36,499
|
|
|
$
|
—
|
|
|
$
|
(289
|
)
|
|
(a)
|
|
$
|
36,210
|
|
Assets of managed investment entities
|
—
|
|
|
3,108
|
|
|
—
|
|
|
|
|
3,108
|
|
||||
Other assets
|
8,219
|
|
|
—
|
|
|
(2
|
)
|
|
(a)
|
|
8,217
|
|
||||
Total assets
|
$
|
44,718
|
|
|
$
|
3,108
|
|
|
$
|
(291
|
)
|
|
|
|
$
|
47,535
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Unpaid losses and loss adjustment expenses and unearned premiums
|
$
|
9,828
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
9,828
|
|
Annuity, life, accident and health benefits and reserves
|
25,939
|
|
|
—
|
|
|
—
|
|
|
|
|
25,939
|
|
||||
Liabilities of managed investment entities
|
—
|
|
|
3,105
|
|
|
(286
|
)
|
|
(a)
|
|
2,819
|
|
||||
Long-term debt and other liabilities
|
3,895
|
|
|
—
|
|
|
—
|
|
|
|
|
3,895
|
|
||||
Total liabilities
|
39,662
|
|
|
3,105
|
|
|
(286
|
)
|
|
|
|
42,481
|
|
||||
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
||||||||
Common Stock and Capital surplus
|
1,240
|
|
|
5
|
|
|
(5
|
)
|
|
|
|
1,240
|
|
||||
Retained earnings:
|
|
|
|
|
|
|
|
|
|
||||||||
Appropriated — managed investment entities
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
|
|
(2
|
)
|
||||
Unappropriated
|
2,914
|
|
|
—
|
|
|
—
|
|
|
|
|
2,914
|
|
||||
Accumulated other comprehensive income, net of tax
|
727
|
|
|
—
|
|
|
—
|
|
|
|
|
727
|
|
||||
Total shareholders’ equity
|
4,881
|
|
|
3
|
|
|
(5
|
)
|
|
|
|
4,879
|
|
||||
Noncontrolling interests
|
175
|
|
|
—
|
|
|
—
|
|
|
|
|
175
|
|
||||
Total equity
|
5,056
|
|
|
3
|
|
|
(5
|
)
|
|
|
|
5,054
|
|
||||
Total liabilities and equity
|
$
|
44,718
|
|
|
$
|
3,108
|
|
|
$
|
(291
|
)
|
|
|
|
$
|
47,535
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2013
|
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and investments
|
$
|
31,584
|
|
|
$
|
—
|
|
|
$
|
(271
|
)
|
|
(a)
|
|
$
|
31,313
|
|
Assets of managed investment entities
|
—
|
|
|
2,888
|
|
|
—
|
|
|
|
|
2,888
|
|
||||
Other assets
|
7,887
|
|
|
—
|
|
|
(1
|
)
|
|
(a)
|
|
7,886
|
|
||||
Total assets
|
$
|
39,471
|
|
|
$
|
2,888
|
|
|
$
|
(272
|
)
|
|
|
|
$
|
42,087
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Unpaid losses and loss adjustment expenses and unearned premiums
|
$
|
8,167
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
8,167
|
|
Annuity, life, accident and health benefits and reserves
|
22,952
|
|
|
—
|
|
|
—
|
|
|
|
|
22,952
|
|
||||
Liabilities of managed investment entities
|
—
|
|
|
2,839
|
|
|
(272
|
)
|
|
(a)
|
|
2,567
|
|
||||
Long-term debt and other liabilities
|
3,632
|
|
|
—
|
|
|
—
|
|
|
|
|
3,632
|
|
||||
Total liabilities
|
34,751
|
|
|
2,839
|
|
|
(272
|
)
|
|
|
|
37,318
|
|
||||
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
||||||||
Common Stock and Capital surplus
|
1,213
|
|
|
—
|
|
|
—
|
|
|
|
|
1,213
|
|
||||
Retained earnings:
|
|
|
|
|
|
|
|
|
|
||||||||
Appropriated — managed investment entities
|
—
|
|
|
49
|
|
|
—
|
|
|
|
|
49
|
|
||||
Unappropriated
|
2,777
|
|
|
—
|
|
|
—
|
|
|
|
|
2,777
|
|
||||
Accumulated other comprehensive income, net of tax
|
560
|
|
|
—
|
|
|
—
|
|
|
|
|
560
|
|
||||
Total shareholders’ equity
|
4,550
|
|
|
49
|
|
|
—
|
|
|
|
|
4,599
|
|
||||
Noncontrolling interests
|
170
|
|
|
—
|
|
|
—
|
|
|
|
|
170
|
|
||||
Total equity
|
4,720
|
|
|
49
|
|
|
—
|
|
|
|
|
4,769
|
|
||||
Total liabilities and equity
|
$
|
39,471
|
|
|
$
|
2,888
|
|
|
$
|
(272
|
)
|
|
|
|
$
|
42,087
|
|
(a)
|
Elimination of the fair value of AFG’s investment in CLOs and related accrued interest.
|
|
Before CLO
Consolidation (a) |
|
Managed
Investment Entities |
|
Consol.
Entries |
|
|
|
Consolidated
As Reported |
||||||||
Three months ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
1,087
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
1,087
|
|
Net investment income
|
382
|
|
|
—
|
|
|
2
|
|
|
(b)
|
|
384
|
|
||||
Realized gains on securities
|
8
|
|
|
—
|
|
|
—
|
|
|
|
|
8
|
|
||||
Income (loss) of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
32
|
|
|
—
|
|
|
|
|
32
|
|
||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
(2
|
)
|
|
(7
|
)
|
|
(b)
|
|
(9
|
)
|
||||
Other income
|
34
|
|
|
—
|
|
|
(7
|
)
|
|
(c)
|
|
27
|
|
||||
Total revenues
|
1,511
|
|
|
30
|
|
|
(12
|
)
|
|
|
|
1,529
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
1,235
|
|
|
—
|
|
|
—
|
|
|
|
|
1,235
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
34
|
|
|
(12
|
)
|
|
(b)(c)
|
|
22
|
|
||||
Interest charges on borrowed money and other expenses
|
82
|
|
|
—
|
|
|
—
|
|
|
|
|
82
|
|
||||
Total costs and expenses
|
1,317
|
|
|
34
|
|
|
(12
|
)
|
|
|
|
1,339
|
|
||||
Earnings before income taxes
|
194
|
|
|
(4
|
)
|
|
—
|
|
|
|
|
190
|
|
||||
Provision for income taxes
|
65
|
|
|
—
|
|
|
—
|
|
|
|
|
65
|
|
||||
Net earnings, including noncontrolling interests
|
129
|
|
|
(4
|
)
|
|
—
|
|
|
|
|
125
|
|
||||
Less: Net earnings (loss) attributable to noncontrolling interests
|
2
|
|
|
—
|
|
|
(4
|
)
|
|
(d)
|
|
(2
|
)
|
||||
Net earnings attributable to shareholders
|
$
|
127
|
|
|
$
|
(4
|
)
|
|
$
|
4
|
|
|
|
|
$
|
127
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Three months ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
886
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
886
|
|
Net investment income
|
358
|
|
|
—
|
|
|
(8
|
)
|
|
(b)
|
|
350
|
|
||||
Realized gains on securities
|
67
|
|
|
—
|
|
|
—
|
|
|
|
|
67
|
|
||||
Realized losses on subsidiaries
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(4
|
)
|
||||
Income (loss) of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
30
|
|
|
—
|
|
|
|
|
30
|
|
||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
6
|
|
|
1
|
|
|
(b)
|
|
7
|
|
||||
Other income
|
30
|
|
|
—
|
|
|
(4
|
)
|
|
(c)
|
|
26
|
|
||||
Total revenues
|
1,337
|
|
|
36
|
|
|
(11
|
)
|
|
|
|
1,362
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
1,000
|
|
|
—
|
|
|
—
|
|
|
|
|
1,000
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
31
|
|
|
(10
|
)
|
|
(b)(c)
|
|
21
|
|
||||
Interest charges on borrowed money and other expenses
|
95
|
|
|
—
|
|
|
—
|
|
|
|
|
95
|
|
||||
Total costs and expenses
|
1,095
|
|
|
31
|
|
|
(10
|
)
|
|
|
|
1,116
|
|
||||
Earnings before income taxes
|
242
|
|
|
5
|
|
|
(1
|
)
|
|
|
|
246
|
|
||||
Provision for income taxes
|
81
|
|
|
—
|
|
|
—
|
|
|
|
|
81
|
|
||||
Net earnings, including noncontrolling interests
|
161
|
|
|
5
|
|
|
(1
|
)
|
|
|
|
165
|
|
||||
Less: Net earnings (loss) attributable to noncontrolling interests
|
3
|
|
|
—
|
|
|
4
|
|
|
(d)
|
|
7
|
|
||||
Net earnings attributable to shareholders
|
$
|
158
|
|
|
$
|
5
|
|
|
$
|
(5
|
)
|
|
|
|
$
|
158
|
|
(a)
|
Includes net investment income of (
$2 million
) in the fourth quarter of
2014
and
$8 million
in the fourth quarter of
2013
representing the change in fair value of AFG’s CLO investments plus
$7 million
and
$4 million
in the fourth quarter of
2014
and
2013
, respectively, in CLO management fees earned.
|
(b)
|
Elimination of the change in fair value of AFG’s investments in the CLOs, including
$5 million
and
$6 million
in the fourth quarter of
2014
and
2013
, respectively, in distributions recorded as interest expense by the CLOs.
|
(c)
|
Elimination of management fees earned by AFG.
|
(d)
|
Allocate earnings (losses) of CLOs attributable to other debt holders to noncontrolling interests.
|
|
Before CLO
Consolidation (a)
|
|
Managed
Investment
Entities
|
|
Consol.
Entries
|
|
|
|
Consolidated
As Reported
|
||||||||
Year ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
3,986
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
3,986
|
|
Net investment income
|
1,517
|
|
|
—
|
|
|
(16
|
)
|
|
(b)
|
|
1,501
|
|
||||
Realized gains on securities
|
52
|
|
|
—
|
|
|
—
|
|
|
|
|
52
|
|
||||
Income (loss) of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
116
|
|
|
—
|
|
|
|
|
116
|
|
||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
(35
|
)
|
|
(9
|
)
|
|
(b)
|
|
(44
|
)
|
||||
Other income
|
127
|
|
|
—
|
|
|
(25
|
)
|
|
(c)
|
|
102
|
|
||||
Total revenues
|
5,682
|
|
|
81
|
|
|
(50
|
)
|
|
|
|
5,713
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
4,651
|
|
|
—
|
|
|
—
|
|
|
|
|
4,651
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
130
|
|
|
(48
|
)
|
|
(b)(c)
|
|
82
|
|
||||
Interest charges on borrowed money and other expenses
|
354
|
|
|
—
|
|
|
—
|
|
|
|
|
354
|
|
||||
Total costs and expenses
|
5,005
|
|
|
130
|
|
|
(48
|
)
|
|
|
|
5,087
|
|
||||
Earnings before income taxes
|
677
|
|
|
(49
|
)
|
|
(2
|
)
|
|
|
|
626
|
|
||||
Provision for income taxes
|
220
|
|
|
—
|
|
|
—
|
|
|
|
|
220
|
|
||||
Net earnings, including noncontrolling interests
|
457
|
|
|
(49
|
)
|
|
(2
|
)
|
|
|
|
406
|
|
||||
Less: Net earnings (loss) attributable to noncontrolling interests
|
5
|
|
|
—
|
|
|
(51
|
)
|
|
(d)
|
|
(46
|
)
|
||||
Net earnings attributable to shareholders
|
$
|
452
|
|
|
$
|
(49
|
)
|
|
$
|
49
|
|
|
|
|
$
|
452
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Year ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
3,318
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
3,318
|
|
Net investment income
|
1,381
|
|
|
—
|
|
|
(35
|
)
|
|
(b)
|
|
1,346
|
|
||||
Realized gains on securities
|
221
|
|
|
—
|
|
|
—
|
|
|
|
|
221
|
|
||||
Realized losses on subsidiaries
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(4
|
)
|
||||
Income (loss) of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
128
|
|
|
—
|
|
|
|
|
128
|
|
||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
(19
|
)
|
|
5
|
|
|
(b)
|
|
(14
|
)
|
||||
Other income
|
113
|
|
|
—
|
|
|
(16
|
)
|
|
(c)
|
|
97
|
|
||||
Total revenues
|
5,029
|
|
|
109
|
|
|
(46
|
)
|
|
|
|
5,092
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
3,917
|
|
|
—
|
|
|
—
|
|
|
|
|
3,917
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
130
|
|
|
(41
|
)
|
|
(b)(c)
|
|
89
|
|
||||
Interest charges on borrowed money and other expenses
|
397
|
|
|
—
|
|
|
—
|
|
|
|
|
397
|
|
||||
Total costs and expenses
|
4,314
|
|
|
130
|
|
|
(41
|
)
|
|
|
|
4,403
|
|
||||
Earnings before income taxes
|
715
|
|
|
(21
|
)
|
|
(5
|
)
|
|
|
|
689
|
|
||||
Provision for income taxes
|
236
|
|
|
—
|
|
|
—
|
|
|
|
|
236
|
|
||||
Net earnings, including noncontrolling interests
|
479
|
|
|
(21
|
)
|
|
(5
|
)
|
|
|
|
453
|
|
||||
Less: Net earnings (loss) attributable to noncontrolling interests
|
8
|
|
|
—
|
|
|
(26
|
)
|
|
(d)
|
|
(18
|
)
|
||||
Net earnings attributable to shareholders
|
$
|
471
|
|
|
$
|
(21
|
)
|
|
$
|
21
|
|
|
|
|
$
|
471
|
|
(a)
|
Includes
$16 million
and
$35 million
in
2014
and
2013
, respectively, in net investment income representing the change in fair value of AFG’s CLO investments plus
$25 million
and
$16 million
in
2014
and
2013
, respectively, in CLO management fees earned.
|
(b)
|
Elimination of the change in fair value of AFG’s investments in the CLOs, including
$23 million
and
$25 million
in
2014
and
2013
, respectively, in distributions recorded as interest expense by the CLOs.
|
(c)
|
Elimination of management fees earned by AFG.
|
(d)
|
Allocate losses of CLOs attributable to other debt holders to noncontrolling interests.
|
|
Before CLO
Consolidation (a) |
|
Managed
Investment Entities |
|
Consol.
Entries |
|
|
|
Consolidated
As Reported |
||||||||
Year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
3,165
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
3,165
|
|
Net investment income
|
1,332
|
|
|
—
|
|
|
(31
|
)
|
|
(b)
|
|
1,301
|
|
||||
Realized gains on securities
|
210
|
|
|
—
|
|
|
—
|
|
|
|
|
210
|
|
||||
Realized gains on subsidiaries
|
161
|
|
|
—
|
|
|
—
|
|
|
|
|
161
|
|
||||
Income (loss) of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
125
|
|
|
—
|
|
|
|
|
125
|
|
||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
(107
|
)
|
|
13
|
|
|
(b)
|
|
(94
|
)
|
||||
Other income
|
107
|
|
|
—
|
|
|
(18
|
)
|
|
(c)
|
|
89
|
|
||||
Total revenues
|
4,975
|
|
|
18
|
|
|
(36
|
)
|
|
|
|
4,957
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
3,939
|
|
|
—
|
|
|
—
|
|
|
|
|
3,939
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
116
|
|
|
(36
|
)
|
|
(b)(c)
|
|
80
|
|
||||
Interest charges on borrowed money and other expenses
|
401
|
|
|
—
|
|
|
—
|
|
|
|
|
401
|
|
||||
Total costs and expenses
|
4,340
|
|
|
116
|
|
|
(36
|
)
|
|
|
|
4,420
|
|
||||
Earnings before income taxes
|
635
|
|
|
(98
|
)
|
|
—
|
|
|
|
|
537
|
|
||||
Provision for income taxes
|
135
|
|
|
—
|
|
|
—
|
|
|
|
|
135
|
|
||||
Net earnings, including noncontrolling interests
|
500
|
|
|
(98
|
)
|
|
—
|
|
|
|
|
402
|
|
||||
Less: Net earnings (loss) attributable to noncontrolling interests
|
12
|
|
|
—
|
|
|
(98
|
)
|
|
(d)
|
|
(86
|
)
|
||||
Net earnings attributable to shareholders
|
$
|
488
|
|
|
$
|
(98
|
)
|
|
$
|
98
|
|
|
|
|
$
|
488
|
|
(a)
|
Includes
$31 million
in net investment income representing the change in fair value of AFG’s CLO investments plus
$18 million
in CLO management fees earned.
|
(b)
|
Elimination of the change in fair value of AFG’s investments in the CLOs, including
$18 million
in distributions recorded as interest expense by the CLOs.
|
(c)
|
Elimination of management fees earned by AFG.
|
(d)
|
Allocate losses of CLOs attributable to other debt holders to noncontrolling interests.
|
|
Three months ended December 31,
|
|
Year ended December 31,
|
||||||||||||||||
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2012
|
|||||||||||
Core net operating earnings
|
$
|
122
|
|
|
$
|
117
|
|
|
$
|
439
|
|
|
$
|
385
|
|
|
$
|
314
|
|
Gain on sale of Medicare supplement and critical illness businesses (*)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
114
|
|
|||||
Other realized gains (*)
|
5
|
|
|
41
|
|
|
32
|
|
|
138
|
|
|
128
|
|
|||||
Long-term care reserve charge (*)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(99
|
)
|
|||||
Special A&E charges (*)
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
(49
|
)
|
|
(21
|
)
|
|||||
Executive Life Insurance Company of New York (“ELNY”) guaranty fund assessments (*)
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|||||
AFG tax case and settlement of open tax years
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|||||
Other (*)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|||||
Net earnings attributable to shareholders
|
$
|
127
|
|
|
$
|
158
|
|
|
$
|
452
|
|
|
$
|
471
|
|
|
$
|
488
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted per share amounts:
|
|
|
|
|
|
|
|
|
|
||||||||||
Core net operating earnings
|
$
|
1.35
|
|
|
$
|
1.28
|
|
|
$
|
4.82
|
|
|
$
|
4.22
|
|
|
$
|
3.27
|
|
Gain on sale of Medicare supplement and critical illness businesses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.19
|
|
|||||
Other realized gains
|
0.06
|
|
|
0.45
|
|
|
0.36
|
|
|
1.52
|
|
|
1.34
|
|
|||||
Long-term care reserve charge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.03
|
)
|
|||||
Special A&E charges
|
—
|
|
|
—
|
|
|
(0.21
|
)
|
|
(0.54
|
)
|
|
(0.22
|
)
|
|||||
ELNY guaranty fund assessments
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.04
|
)
|
|
—
|
|
|||||
AFG tax case and settlement of open tax years
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.70
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.16
|
)
|
|||||
Net earnings attributable to shareholders
|
$
|
1.41
|
|
|
$
|
1.73
|
|
|
$
|
4.97
|
|
|
$
|
5.16
|
|
|
$
|
5.09
|
|
Gain on sale of Medicare supplement and critical illness businesses
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(56
|
)
|
Other realized gains
|
(3
|
)
|
|
(23
|
)
|
|
(19
|
)
|
|
(78
|
)
|
|
(71
|
)
|
|||||
Long-term care reserve charge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54
|
|
|||||
Special A&E charges
|
—
|
|
|
—
|
|
|
11
|
|
|
27
|
|
|
12
|
|
|||||
ELNY guaranty fund assessments
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
Noncontrolling interests
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
||||||||||||||||||
|
P&C
|
|
Annuity
|
|
Run-off long-term care and life
|
|
Consol. MIEs
|
|
Holding Co., other and unallocated
|
|
Total
|
|
Non-core reclass
|
|
GAAP Total
|
||||||||||||||||
Quarter ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance net earned premiums
|
$
|
1,061
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,061
|
|
|
$
|
—
|
|
|
$
|
1,061
|
|
Life, accident and health net earned premiums
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
26
|
|
||||||||
Net investment income
|
75
|
|
|
285
|
|
|
20
|
|
|
2
|
|
|
2
|
|
|
384
|
|
|
—
|
|
|
384
|
|
||||||||
Realized gains on securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
8
|
|
||||||||
Income (loss) of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
||||||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
||||||||
Other income
|
1
|
|
|
21
|
|
|
1
|
|
|
(7
|
)
|
|
11
|
|
|
27
|
|
|
—
|
|
|
27
|
|
||||||||
Total revenues
|
1,137
|
|
|
306
|
|
|
47
|
|
|
18
|
|
|
13
|
|
|
1,521
|
|
|
8
|
|
|
1,529
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss adjustment expenses
|
679
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
679
|
|
|
—
|
|
|
679
|
|
||||||||
Commissions and other underwriting expenses
|
303
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
303
|
|
|
—
|
|
|
303
|
|
||||||||
Annuity benefits
|
—
|
|
|
157
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
157
|
|
|
—
|
|
|
157
|
|
||||||||
Life, accident and health benefits
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
45
|
|
||||||||
Annuity and supplemental insurance acquisition expenses
|
—
|
|
|
47
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|
—
|
|
|
51
|
|
||||||||
Interest charges on borrowed money
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
20
|
|
|
—
|
|
|
20
|
|
||||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
||||||||
Other expenses
|
11
|
|
|
17
|
|
|
5
|
|
|
—
|
|
|
29
|
|
|
62
|
|
|
—
|
|
|
62
|
|
||||||||
Total costs and expenses
|
994
|
|
|
221
|
|
|
54
|
|
|
22
|
|
|
48
|
|
|
1,339
|
|
|
—
|
|
|
1,339
|
|
||||||||
Earnings before income taxes
|
143
|
|
|
85
|
|
|
(7
|
)
|
|
(4
|
)
|
|
(35
|
)
|
|
182
|
|
|
8
|
|
|
190
|
|
||||||||
Provision for income taxes
|
47
|
|
|
29
|
|
|
(2
|
)
|
|
—
|
|
|
(12
|
)
|
|
62
|
|
|
3
|
|
|
65
|
|
||||||||
Net earnings, including noncontrolling interests
|
96
|
|
|
56
|
|
|
(5
|
)
|
|
(4
|
)
|
|
(23
|
)
|
|
120
|
|
|
5
|
|
|
125
|
|
||||||||
Less: Net earnings (loss) attributable to noncontrolling interests
|
2
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||||||
Core Net Operating Earnings
|
94
|
|
|
56
|
|
|
(5
|
)
|
|
—
|
|
|
(23
|
)
|
|
122
|
|
|
|
|
|
||||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Realized gains on securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
(5
|
)
|
|
—
|
|
||||||||
Net Earnings Attributable to Shareholders
|
$
|
94
|
|
|
$
|
56
|
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
$
|
(18
|
)
|
|
$
|
127
|
|
|
$
|
—
|
|
|
$
|
127
|
|
|
|
Other
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
P&C
|
|
Annuity
|
|
Run-off long-term care and life
|
|
Consol. MIEs
|
|
Holding Co., other and unallocated
|
|
Total
|
|
Non-core reclass
|
|
GAAP Total
|
||||||||||||||||
Quarter ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance net earned premiums
|
$
|
859
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
859
|
|
|
$
|
—
|
|
|
$
|
859
|
|
Life, accident and health net earned premiums
|
—
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
27
|
|
||||||||
Net investment income
|
67
|
|
|
270
|
|
|
19
|
|
|
(8
|
)
|
|
2
|
|
|
350
|
|
|
—
|
|
|
350
|
|
||||||||
Realized gains on securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
67
|
|
||||||||
Realized losses on subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||||
Income (loss) of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
30
|
|
||||||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||||
Other income
|
5
|
|
|
21
|
|
|
1
|
|
|
(4
|
)
|
|
3
|
|
|
26
|
|
|
—
|
|
|
26
|
|
||||||||
Total revenues
|
931
|
|
|
291
|
|
|
47
|
|
|
25
|
|
|
5
|
|
|
1,299
|
|
|
63
|
|
|
1,362
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss adjustment expenses
|
537
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
537
|
|
|
—
|
|
|
537
|
|
||||||||
Commissions and other underwriting expenses
|
247
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
247
|
|
|
—
|
|
|
247
|
|
||||||||
Annuity benefits
|
—
|
|
|
137
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
137
|
|
|
—
|
|
|
137
|
|
||||||||
Life, accident and health benefits
|
—
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|
40
|
|
||||||||
Annuity and supplemental insurance acquisition expenses
|
—
|
|
|
35
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
39
|
|
||||||||
Interest charges on borrowed money
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
17
|
|
|
—
|
|
|
17
|
|
||||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
||||||||
Other expenses
|
11
|
|
|
27
|
|
|
6
|
|
|
—
|
|
|
34
|
|
|
78
|
|
|
—
|
|
|
78
|
|
||||||||
Total costs and expenses
|
795
|
|
|
199
|
|
|
50
|
|
|
21
|
|
|
51
|
|
|
1,116
|
|
|
—
|
|
|
1,116
|
|
||||||||
Earnings before income taxes
|
136
|
|
|
92
|
|
|
(3
|
)
|
|
4
|
|
|
(46
|
)
|
|
183
|
|
|
63
|
|
|
246
|
|
||||||||
Provision for income taxes
|
41
|
|
|
32
|
|
|
(1
|
)
|
|
—
|
|
|
(14
|
)
|
|
58
|
|
|
23
|
|
|
81
|
|
||||||||
Net earnings, including noncontrolling interests
|
95
|
|
|
60
|
|
|
(2
|
)
|
|
4
|
|
|
(32
|
)
|
|
125
|
|
|
40
|
|
|
165
|
|
||||||||
Less: Net earnings (loss) attributable to noncontrolling interests
|
5
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
(1
|
)
|
|
8
|
|
|
(1
|
)
|
|
7
|
|
||||||||
Core Net Operating Earnings
|
90
|
|
|
60
|
|
|
(2
|
)
|
|
—
|
|
|
(31
|
)
|
|
117
|
|
|
|
|
|
||||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Realized gains, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
41
|
|
|
(41
|
)
|
|
—
|
|
||||||||
Net Earnings Attributable to Shareholders
|
$
|
90
|
|
|
$
|
60
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
158
|
|
|
$
|
—
|
|
|
$
|
158
|
|
(a)
|
See the reconciliation of core earnings to GAAP net earnings under
“Results of Operations —
General
”
for details on the tax and noncontrolling interest impacts of these reconciling items.
|
|
Three months ended December 31,
|
|
|
|||||||
|
2014
|
|
2013
|
|
% Change
|
|||||
Gross written premiums
|
$
|
1,303
|
|
|
$
|
1,071
|
|
|
22
|
%
|
Reinsurance premiums ceded
|
(278
|
)
|
|
(250
|
)
|
|
11
|
%
|
||
Net written premiums
|
1,025
|
|
|
821
|
|
|
25
|
%
|
||
Change in unearned premiums
|
36
|
|
|
38
|
|
|
(5
|
%)
|
||
Net earned premiums
|
1,061
|
|
|
859
|
|
|
24
|
%
|
||
Loss and loss adjustment expenses
|
679
|
|
|
537
|
|
|
26
|
%
|
||
Commissions and other underwriting expenses
|
303
|
|
|
247
|
|
|
23
|
%
|
||
Underwriting gain
|
79
|
|
|
75
|
|
|
5
|
%
|
||
|
|
|
|
|
|
|||||
Net investment income
|
75
|
|
|
67
|
|
|
12
|
%
|
||
Other income and expenses, net
|
(11
|
)
|
|
(6
|
)
|
|
83
|
%
|
||
Earnings before income taxes
|
$
|
143
|
|
|
$
|
136
|
|
|
5
|
%
|
|
|
|
|
|
|
|||||
Combined Ratios:
|
|
|
|
|
|
|||||
Specialty lines
|
|
|
|
|
Change
|
|||||
Loss and LAE ratio
|
64.0
|
%
|
|
62.4
|
%
|
|
1.6
|
%
|
||
Underwriting expense ratio
|
28.6
|
%
|
|
28.9
|
%
|
|
(0.3
|
%)
|
||
Combined ratio
|
92.6
|
%
|
|
91.3
|
%
|
|
1.3
|
%
|
||
|
|
|
|
|
|
|||||
Aggregate — including discontinued lines
|
|
|
|
|
|
|||||
Loss and LAE ratio
|
64.0
|
%
|
|
62.5
|
%
|
|
1.5
|
%
|
||
Underwriting expense ratio
|
28.6
|
%
|
|
28.9
|
%
|
|
(0.3
|
%)
|
||
Combined ratio
|
92.6
|
%
|
|
91.4
|
%
|
|
1.2
|
%
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2014
|
|
2013
|
|
|
|||||||||||
|
GWP
|
|
%
|
|
GWP
|
|
%
|
|
% Change
|
|||||||
Property and transportation
|
$
|
482
|
|
|
37
|
%
|
|
$
|
447
|
|
|
42
|
%
|
|
8
|
%
|
Specialty casualty
|
660
|
|
|
51
|
%
|
|
459
|
|
|
43
|
%
|
|
44
|
%
|
||
Specialty financial
|
160
|
|
|
12
|
%
|
|
164
|
|
|
15
|
%
|
|
(2
|
%)
|
||
Other specialty
|
1
|
|
|
—
|
%
|
|
1
|
|
|
—
|
%
|
|
|
|||
|
$
|
1,303
|
|
|
100
|
%
|
|
$
|
1,071
|
|
|
100
|
%
|
|
22
|
%
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2014
|
|
2013
|
|
Change in
|
|||||||||||
|
Ceded
|
|
% of GWP
|
|
Ceded
|
|
% of GWP
|
|
% of GWP
|
|||||||
Property and transportation
|
$
|
(109
|
)
|
|
23
|
%
|
|
$
|
(98
|
)
|
|
22
|
%
|
|
1
|
%
|
Specialty casualty
|
(162
|
)
|
|
25
|
%
|
|
(138
|
)
|
|
30
|
%
|
|
(5
|
%)
|
||
Specialty financial
|
(29
|
)
|
|
18
|
%
|
|
(32
|
)
|
|
20
|
%
|
|
(2
|
%)
|
||
Other specialty
|
22
|
|
|
|
|
18
|
|
|
|
|
|
|||||
|
$
|
(278
|
)
|
|
21
|
%
|
|
$
|
(250
|
)
|
|
23
|
%
|
|
(2
|
%)
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2014
|
|
2013
|
|
|
|||||||||||
|
NWP
|
|
%
|
|
NWP
|
|
%
|
|
% Change
|
|||||||
Property and transportation
|
$
|
373
|
|
|
36
|
%
|
|
$
|
349
|
|
|
43
|
%
|
|
7
|
%
|
Specialty casualty
|
498
|
|
|
49
|
%
|
|
321
|
|
|
39
|
%
|
|
55
|
%
|
||
Specialty financial
|
131
|
|
|
13
|
%
|
|
132
|
|
|
16
|
%
|
|
(1
|
%)
|
||
Other specialty
|
23
|
|
|
2
|
%
|
|
19
|
|
|
2
|
%
|
|
21
|
%
|
||
|
$
|
1,025
|
|
|
100
|
%
|
|
$
|
821
|
|
|
100
|
%
|
|
25
|
%
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2014
|
|
2013
|
|
|
|||||||||||
|
NEP
|
|
%
|
|
NEP
|
|
%
|
|
% Change
|
|||||||
Property and transportation
|
$
|
415
|
|
|
39
|
%
|
|
$
|
410
|
|
|
48
|
%
|
|
1
|
%
|
Specialty casualty
|
499
|
|
|
47
|
%
|
|
310
|
|
|
36
|
%
|
|
61
|
%
|
||
Specialty financial
|
121
|
|
|
11
|
%
|
|
119
|
|
|
14
|
%
|
|
2
|
%
|
||
Other specialty
|
26
|
|
|
3
|
%
|
|
20
|
|
|
2
|
%
|
|
30
|
%
|
||
|
$
|
1,061
|
|
|
100
|
%
|
|
$
|
859
|
|
|
100
|
%
|
|
24
|
%
|
|
Three months ended December 31,
|
|
|
|
Three months ended December 31,
|
|||||||||||
|
2014
|
|
2013
|
|
Change
|
|
2014
|
|
2013
|
|||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
72.2
|
%
|
|
74.9
|
%
|
|
(2.7
|
%)
|
|
|
|
|
||||
Underwriting expense ratio
|
22.4
|
%
|
|
20.9
|
%
|
|
1.5
|
%
|
|
|
|
|
||||
Combined ratio
|
94.6
|
%
|
|
95.8
|
%
|
|
(1.2
|
%)
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
22
|
|
|
$
|
17
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
65.1
|
%
|
|
59.0
|
%
|
|
6.1
|
%
|
|
|
|
|
||||
Underwriting expense ratio
|
27.8
|
%
|
|
30.7
|
%
|
|
(2.9
|
%)
|
|
|
|
|
||||
Combined ratio
|
92.9
|
%
|
|
89.7
|
%
|
|
3.2
|
%
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
36
|
|
|
$
|
32
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
34.5
|
%
|
|
34.2
|
%
|
|
0.3
|
%
|
|
|
|
|
||||
Underwriting expense ratio
|
51.1
|
%
|
|
51.0
|
%
|
|
0.1
|
%
|
|
|
|
|
||||
Combined ratio
|
85.6
|
%
|
|
85.2
|
%
|
|
0.4
|
%
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
18
|
|
|
$
|
17
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
64.0
|
%
|
|
62.4
|
%
|
|
1.6
|
%
|
|
|
|
|
||||
Underwriting expense ratio
|
28.6
|
%
|
|
28.9
|
%
|
|
(0.3
|
%)
|
|
|
|
|
||||
Combined ratio
|
92.6
|
%
|
|
91.3
|
%
|
|
1.3
|
%
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
79
|
|
|
$
|
75
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Aggregate — including discontinued lines
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
64.0
|
%
|
|
62.5
|
%
|
|
1.5
|
%
|
|
|
|
|
||||
Underwriting expense ratio
|
28.6
|
%
|
|
28.9
|
%
|
|
(0.3
|
%)
|
|
|
|
|
||||
Combined ratio
|
92.6
|
%
|
|
91.4
|
%
|
|
1.2
|
%
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
79
|
|
|
$
|
75
|
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
Amount
|
|
Ratio
|
|
Change in
|
|||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Ratio
|
|||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
294
|
|
|
$
|
304
|
|
|
71.3
|
%
|
|
74.1
|
%
|
|
(2.8
|
%)
|
Prior accident years development
|
3
|
|
|
3
|
|
|
0.6
|
%
|
|
0.8
|
%
|
|
(0.2
|
%)
|
||
Current year catastrophe losses
|
2
|
|
|
—
|
|
|
0.3
|
%
|
|
—
|
%
|
|
0.3
|
%
|
||
Property and transportation losses and LAE and ratio
|
$
|
299
|
|
|
$
|
307
|
|
|
72.2
|
%
|
|
74.9
|
%
|
|
(2.7
|
%)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
310
|
|
|
$
|
181
|
|
|
62.1
|
%
|
|
58.5
|
%
|
|
3.6
|
%
|
Prior accident years development
|
14
|
|
|
2
|
|
|
2.9
|
%
|
|
0.5
|
%
|
|
2.4
|
%
|
||
Current year catastrophe losses
|
1
|
|
|
—
|
|
|
0.1
|
%
|
|
—
|
%
|
|
0.1
|
%
|
||
Specialty casualty losses and LAE and ratio
|
$
|
325
|
|
|
$
|
183
|
|
|
65.1
|
%
|
|
59.0
|
%
|
|
6.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
46
|
|
|
$
|
45
|
|
|
37.7
|
%
|
|
36.7
|
%
|
|
1.0
|
%
|
Prior accident years development
|
(4
|
)
|
|
(4
|
)
|
|
(3.3
|
%)
|
|
(3.2
|
%)
|
|
(0.1
|
%)
|
||
Current year catastrophe losses
|
—
|
|
|
1
|
|
|
0.1
|
%
|
|
0.7
|
%
|
|
(0.6
|
%)
|
||
Specialty financial losses and LAE and ratio
|
$
|
42
|
|
|
$
|
42
|
|
|
34.5
|
%
|
|
34.2
|
%
|
|
0.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
666
|
|
|
$
|
541
|
|
|
62.8
|
%
|
|
62.8
|
%
|
|
—
|
%
|
Prior accident years development
|
10
|
|
|
(5
|
)
|
|
1.0
|
%
|
|
(0.5
|
%)
|
|
1.5
|
%
|
||
Current year catastrophe losses
|
3
|
|
|
1
|
|
|
0.2
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
||
Total Specialty losses and LAE and ratio
|
$
|
679
|
|
|
$
|
537
|
|
|
64.0
|
%
|
|
62.4
|
%
|
|
1.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Aggregate — including discontinued lines
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
666
|
|
|
$
|
541
|
|
|
62.8
|
%
|
|
62.8
|
%
|
|
—
|
%
|
Prior accident years development
|
10
|
|
|
(5
|
)
|
|
1.0
|
%
|
|
(0.4
|
%)
|
|
1.4
|
%
|
||
Current year catastrophe losses
|
3
|
|
|
1
|
|
|
0.2
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
||
Aggregate losses and LAE and ratio
|
$
|
679
|
|
|
$
|
537
|
|
|
64.0
|
%
|
|
62.5
|
%
|
|
1.5
|
%
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2014
|
|
2013
|
|
Change in
|
|||||||||||
|
U/W Exp
|
|
% of NEP
|
|
U/W Exp
|
|
% of NEP
|
|
% of NEP
|
|||||||
Property and transportation
|
$
|
94
|
|
|
22.4
|
%
|
|
$
|
86
|
|
|
20.9
|
%
|
|
1.5
|
%
|
Specialty casualty
|
138
|
|
|
27.8
|
%
|
|
95
|
|
|
30.7
|
%
|
|
(2.9
|
%)
|
||
Specialty financial
|
61
|
|
|
51.1
|
%
|
|
60
|
|
|
51.0
|
%
|
|
0.1
|
%
|
||
Other specialty
|
10
|
|
|
37.3
|
%
|
|
6
|
|
|
32.1
|
%
|
|
5.2
|
%
|
||
|
$
|
303
|
|
|
28.6
|
%
|
|
$
|
247
|
|
|
28.9
|
%
|
|
(0.3
|
%)
|
|
Three months ended December 31,
|
|
|
|
|
|||||||||
|
2014
|
|
2013
|
|
Change
|
|
% Change
|
|||||||
Net investment income
|
$
|
75
|
|
|
$
|
67
|
|
|
$
|
8
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|||||||
Average invested assets (at amortized cost)
|
$
|
8,485
|
|
|
$
|
6,805
|
|
|
$
|
1,680
|
|
|
25
|
%
|
|
|
|
|
|
|
|
|
|||||||
Yield (net investment income as a % of average invested assets)
|
3.54
|
%
|
|
3.94
|
%
|
|
(0.40
|
%)
|
|
|
||||
|
|
|
|
|
|
|
|
|||||||
Tax equivalent yield (*)
|
4.08
|
%
|
|
4.58
|
%
|
|
(0.50
|
%)
|
|
|
|
Three months ended December 31,
|
||||||
|
2014
|
|
2013
|
||||
Other income
|
|
|
|
||||
Income from the sale of real estate
|
$
|
—
|
|
|
$
|
2
|
|
Other
|
1
|
|
|
3
|
|
||
Total other income
|
1
|
|
|
5
|
|
||
Other expenses
|
|
|
|
||||
Amortization of intangibles
|
5
|
|
|
4
|
|
||
Other
|
6
|
|
|
7
|
|
||
Total other expense
|
11
|
|
|
11
|
|
||
Interest expense
|
1
|
|
|
—
|
|
||
Other income and expenses, net
|
$
|
(11
|
)
|
|
$
|
(6
|
)
|
|
Three months ended December 31,
|
|
|
|||||||
|
2014
|
|
2013
|
|
% Change
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Net investment income
|
$
|
285
|
|
|
$
|
270
|
|
|
6
|
%
|
Other income:
|
|
|
|
|
|
|||||
Guaranteed withdrawal benefit fees
|
9
|
|
|
7
|
|
|
29
|
%
|
||
Policy charges and other miscellaneous income
|
12
|
|
|
14
|
|
|
(14
|
%)
|
||
Total revenues
|
306
|
|
|
291
|
|
|
5
|
%
|
||
|
|
|
|
|
|
|||||
Costs and Expenses:
|
|
|
|
|
|
|||||
Annuity benefits (*)
|
157
|
|
|
137
|
|
|
15
|
%
|
||
Acquisition expenses
|
47
|
|
|
35
|
|
|
34
|
%
|
||
Other expenses
|
17
|
|
|
27
|
|
|
(37
|
%)
|
||
Total costs and expenses
|
221
|
|
|
199
|
|
|
11
|
%
|
||
Earnings before income taxes
|
$
|
85
|
|
|
$
|
92
|
|
|
(8
|
%)
|
|
Three months ended December 31,
|
|
|
|||||||
|
2014
|
|
2013
|
|
% Change
|
|||||
Earnings before income taxes — before the impact of derivatives related to FIAs
|
$
|
93
|
|
|
$
|
86
|
|
|
8
|
%
|
Impact of derivatives related to FIAs
|
(8
|
)
|
|
6
|
|
|
(233
|
%)
|
||
Earnings before income taxes
|
$
|
85
|
|
|
$
|
92
|
|
|
(8
|
%)
|
|
Three months ended December 31,
|
|
|
|||||||
|
2014
|
|
2013
|
|
% Change
|
|||||
Interest credited — fixed
|
$
|
127
|
|
|
$
|
118
|
|
|
8
|
%
|
Interest credited — fixed component of variable annuities
|
1
|
|
|
1
|
|
|
—
|
%
|
||
Change in expected death and annuitization reserve
|
4
|
|
|
5
|
|
|
(20
|
%)
|
||
Amortization of sales inducements
|
6
|
|
|
7
|
|
|
(14
|
%)
|
||
Change in guaranteed withdrawal benefit reserve
|
11
|
|
|
10
|
|
|
10
|
%
|
||
Change in other benefit reserves
|
1
|
|
|
1
|
|
|
—
|
%
|
||
Subtotal before impact of derivatives related to FIAs
|
150
|
|
|
142
|
|
|
6
|
%
|
||
Derivatives related to fixed-indexed annuities:
|
|
|
|
|
|
|||||
Embedded derivative mark-to-market
|
87
|
|
|
74
|
|
|
18
|
%
|
||
Equity option mark-to-market
|
(69
|
)
|
|
(85
|
)
|
|
(19
|
%)
|
||
Impact of derivatives related to FIAs
|
18
|
|
|
(11
|
)
|
|
(264
|
%)
|
||
Unlocking
|
(11
|
)
|
|
6
|
|
|
(283
|
%)
|
||
Total annuity benefits
|
$
|
157
|
|
|
$
|
137
|
|
|
15
|
%
|
|
Three months ended December 31,
|
|
|
|||||||
|
2014
|
|
2013
|
|
% Change
|
|||||
Average fixed annuity investments (at amortized cost)
|
$
|
23,334
|
|
|
$
|
20,524
|
|
|
14
|
%
|
Average fixed annuity benefits accumulated
|
23,104
|
|
|
20,092
|
|
|
15
|
%
|
||
|
|
|
|
|
|
|||||
As % of fixed annuity benefits accumulated (except as noted):
|
|
|
|
|
|
|||||
Net investment income (as % of fixed annuity investments)
|
4.85
|
%
|
|
5.21
|
%
|
|
|
|||
Interest credited — fixed
|
(2.21
|
%)
|
|
(2.35
|
%)
|
|
|
|||
Net interest spread
|
2.64
|
%
|
|
2.86
|
%
|
|
|
|||
|
|
|
|
|
|
|||||
Policy charges and other miscellaneous income
|
0.14
|
%
|
|
0.22
|
%
|
|
|
|||
Other annuity benefit expenses, net of guaranteed withdrawal benefit fees
|
(0.20
|
%)
|
|
(0.31
|
%)
|
|
|
|||
Acquisition expenses
|
(0.61
|
%)
|
|
(0.75
|
%)
|
|
|
|||
Other expenses
|
(0.28
|
%)
|
|
(0.53
|
%)
|
|
|
|||
Change in fair value of derivatives related to fixed-indexed annuities
|
(0.31
|
%)
|
|
0.22
|
%
|
|
|
|||
Unlocking
|
0.02
|
%
|
|
(0.04
|
%)
|
|
|
|||
Net spread earned on fixed annuities
|
1.40
|
%
|
|
1.67
|
%
|
|
|
|
Three months ended December 31,
|
|
|
||||
|
2014
|
|
2013
|
|
|
||
Net spread earned on fixed annuities — before impact of derivatives related to fixed-indexed annuities
|
1.54
|
%
|
|
1.55
|
%
|
|
|
Impact of derivatives related to fixed-indexed annuities (*)
|
(0.14
|
%)
|
|
0.12
|
%
|
|
|
Net spread earned on fixed annuities
|
1.40
|
%
|
|
1.67
|
%
|
|
|
(*)
|
Change in fair value of derivatives related to fixed-indexed annuities offset by an estimate of the related acceleration/deceleration of amortization of deferred sales inducements and deferred policy acquisition costs.
|
|
|
|
% of
|
|
|
|
GMIR
|
|
Reserves
|
|
|
|
1 — 1.99%
|
|
59%
|
|
|
|
2 — 2.99%
|
|
9%
|
|
|
|
3 — 3.99%
|
|
18%
|
|
|
|
4.00% and above
|
|
14%
|
|
|
|
Three months ended December 31,
|
||||||
|
2014
|
|
2013
|
||||
Change in expected death and annuitization reserve
|
$
|
4
|
|
|
$
|
5
|
|
Amortization of sales inducements
|
6
|
|
|
7
|
|
||
Change in guaranteed withdrawal benefit reserve
|
11
|
|
|
10
|
|
||
Change in other benefit reserves
|
1
|
|
|
1
|
|
||
Other annuity benefits
|
22
|
|
|
23
|
|
||
Offset guaranteed withdrawal benefit fees
|
(9
|
)
|
|
(7
|
)
|
||
Other annuity benefits, net
|
$
|
13
|
|
|
$
|
16
|
|
|
Three months ended December 31,
|
|
|
|||||||
|
2014
|
|
2013
|
|
% Change
|
|||||
Earnings before income taxes — before change in fair value of derivatives related to fixed-indexed annuities
|
$
|
93
|
|
|
$
|
86
|
|
|
8
|
%
|
Change in fair value of derivatives related to fixed-indexed annuities
|
(18
|
)
|
|
11
|
|
|
(264
|
%)
|
||
Related impact on amortization of DPAC (*)
|
10
|
|
|
(5
|
)
|
|
(300
|
%)
|
||
Earnings before income taxes
|
$
|
85
|
|
|
$
|
92
|
|
|
(8
|
%)
|
(*)
|
An estimate of the related acceleration/deceleration of amortization of deferred sales inducements and deferred policy acquisition costs.
|
|
Three months ended December 31,
|
||||||
|
2014
|
|
2013
|
||||
Beginning fixed annuity reserves
|
$
|
22,745
|
|
|
$
|
19,505
|
|
Fixed annuity premiums (receipts)
|
960
|
|
|
1,368
|
|
||
Surrenders, benefits and other withdrawals
|
(464
|
)
|
|
(408
|
)
|
||
Interest and other annuity benefit expenses:
|
|
|
|
||||
Interest credited
|
127
|
|
|
118
|
|
||
Embedded derivative mark-to-market
|
87
|
|
|
74
|
|
||
Change in other benefit reserves
|
18
|
|
|
18
|
|
||
Unlocking
|
(11
|
)
|
|
4
|
|
||
Ending fixed annuity reserves
|
$
|
23,462
|
|
|
$
|
20,679
|
|
|
|
|
|
||||
Reconciliation to annuity benefits accumulated per balance sheet:
|
|
|
|
||||
Ending fixed annuity reserves (from above)
|
$
|
23,462
|
|
|
$
|
20,679
|
|
Impact of unrealized investment gains
|
111
|
|
|
71
|
|
||
Fixed component of variable annuities
|
191
|
|
|
194
|
|
||
Annuity benefits accumulated per balance sheet
|
$
|
23,764
|
|
|
$
|
20,944
|
|
|
Three months ended December 31,
|
|
|
|||||||
2014
|
|
2013
|
|
% Change
|
||||||
Financial institutions single premium annuities — indexed
|
$
|
426
|
|
|
$
|
498
|
|
|
(14
|
%)
|
Financial institutions single premium annuities — fixed
|
61
|
|
|
201
|
|
|
(70
|
%)
|
||
Retail single premium annuities — indexed
|
405
|
|
|
565
|
|
|
(28
|
%)
|
||
Retail single premium annuities — fixed
|
19
|
|
|
53
|
|
|
(64
|
%)
|
||
Education market — fixed and indexed annuities
|
49
|
|
|
51
|
|
|
(4
|
%)
|
||
Total fixed annuity premiums
|
960
|
|
|
1,368
|
|
|
(30
|
%)
|
||
Variable annuities
|
11
|
|
|
13
|
|
|
(15
|
%)
|
||
Total annuity premiums
|
$
|
971
|
|
|
$
|
1,381
|
|
|
(30
|
%)
|
|
|
Three months ended December 31,
|
||||||
|
|
2014
|
|
2013
|
||||
Annuity benefits:
|
|
|
|
|
||||
Fixed-indexed annuity embedded derivative
|
|
$
|
(58
|
)
|
|
$
|
(2
|
)
|
Sales inducements
|
|
—
|
|
|
2
|
|
||
Other reserves
|
|
47
|
|
|
6
|
|
||
Total annuity benefits
|
|
(11
|
)
|
|
6
|
|
||
Annuity and supplemental insurance acquisition expenses:
|
|
|
|
|
||||
Deferred policy acquisition costs
|
|
20
|
|
|
(4
|
)
|
||
Unearned revenue
|
|
(10
|
)
|
|
—
|
|
||
Net charge (expense reduction)
|
|
$
|
(1
|
)
|
|
$
|
2
|
|
|
Three months ended December 31,
|
||||||
|
2014
|
|
2013
|
||||
Earnings on fixed annuity benefits accumulated
|
$
|
81
|
|
|
$
|
84
|
|
Earnings on investments in excess of fixed annuity benefits accumulated (*)
|
3
|
|
|
6
|
|
||
Variable annuity earnings
|
1
|
|
|
2
|
|
||
Earnings before income taxes
|
$
|
85
|
|
|
$
|
92
|
|
(*)
|
Net investment income (as a % of investments) of
4.85%
and
5.21%
for the three months ended
December 31, 2014
and
2013
, respectively, multiplied by the difference between average fixed annuity investments (at amortized cost) and average fixed annuity benefits accumulated in each period.
|
|
Three months ended December 31,
|
|
|
|||||||
|
2014
|
|
2013
|
|
% Change
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Net earned premiums:
|
|
|
|
|
|
|||||
Long-term care
|
$
|
18
|
|
|
$
|
18
|
|
|
—
|
%
|
Life operations
|
8
|
|
|
9
|
|
|
(11
|
%)
|
||
Net investment income
|
20
|
|
|
19
|
|
|
5
|
%
|
||
Other income
|
1
|
|
|
1
|
|
|
—
|
%
|
||
Total revenues
|
47
|
|
|
47
|
|
|
—
|
%
|
||
|
|
|
|
|
|
|||||
Costs and Expenses:
|
|
|
|
|
|
|||||
Life, accident and health benefits:
|
|
|
|
|
|
|||||
Long-term care
|
35
|
|
|
28
|
|
|
25
|
%
|
||
Life operations
|
10
|
|
|
12
|
|
|
(17
|
%)
|
||
Acquisition expenses
|
4
|
|
|
4
|
|
|
—
|
%
|
||
Other expenses
|
5
|
|
|
6
|
|
|
(17
|
%)
|
||
Total costs and expenses
|
54
|
|
|
50
|
|
|
8
|
%
|
||
Loss before income taxes
|
$
|
(7
|
)
|
|
$
|
(3
|
)
|
|
133
|
%
|
|
Three months ended December 31,
|
|
|
|||||||
|
2014
|
|
2013
|
|
% Change
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Net investment income
|
$
|
2
|
|
|
$
|
2
|
|
|
—
|
%
|
Other income
|
11
|
|
|
3
|
|
|
267
|
%
|
||
Total revenues
|
13
|
|
|
5
|
|
|
160
|
%
|
||
|
|
|
|
|
|
|||||
Costs and Expenses:
|
|
|
|
|
|
|||||
Interest charges on borrowed money
|
19
|
|
|
17
|
|
|
12
|
%
|
||
Other expenses
|
29
|
|
|
34
|
|
|
(15
|
%)
|
||
Total costs and expenses
|
48
|
|
|
51
|
|
|
(6
|
%)
|
||
Loss before income taxes, excluding realized gains
|
$
|
(35
|
)
|
|
$
|
(46
|
)
|
|
(24
|
%)
|
|
December 31,
2014 |
|
December 31,
2013 |
||||
Direct obligations of AFG:
|
|
|
|
||||
9-7/8% Senior Notes due June 2019
|
$
|
350
|
|
|
$
|
350
|
|
6-3/8% Senior Notes due June 2042
|
230
|
|
|
230
|
|
||
5-3/4% Senior Notes due August 2042
|
125
|
|
|
125
|
|
||
7% Senior Notes due September 2050
|
132
|
|
|
132
|
|
||
6-1/4% Subordinated Debentures due September 2054
|
150
|
|
|
—
|
|
||
Other
|
3
|
|
|
3
|
|
||
Total Holding Company Debt
|
$
|
990
|
|
|
$
|
840
|
|
|
|
|
|
||||
Weighted Average Interest Rate
|
7.6
|
%
|
|
7.8
|
%
|
|
Three months ended December 31,
|
||||||
2014
|
|
2013
|
|||||
Realized gains (losses) before impairments:
|
|
|
|
||||
Disposals
|
$
|
34
|
|
|
$
|
75
|
|
Change in the fair value of derivatives
|
(2
|
)
|
|
(1
|
)
|
||
Adjustments to annuity deferred policy acquisition costs and related items
|
(1
|
)
|
|
(1
|
)
|
||
|
31
|
|
|
73
|
|
||
Impairment charges:
|
|
|
|
||||
Securities
|
(25
|
)
|
|
(9
|
)
|
||
Adjustments to annuity deferred policy acquisition costs and related items
|
2
|
|
|
3
|
|
||
|
(23
|
)
|
|
(6
|
)
|
||
Realized gains on securities
|
$
|
8
|
|
|
$
|
67
|
|
|
Three months ended December 31,
|
||||||||||||
|
2014
|
|
2013
|
||||||||||
|
Amount
|
|
% of EBT
|
|
Amount
|
|
% of EBT
|
||||||
Earnings before income taxes (“EBT”)
|
$
|
190
|
|
|
|
|
$
|
246
|
|
|
|
||
|
|
|
|
|
|
|
|
||||||
Income taxes at statutory rate
|
$
|
66
|
|
|
35
|
%
|
|
$
|
86
|
|
|
35
|
%
|
Effect of:
|
|
|
|
|
|
|
|
||||||
Tax exempt interest
|
(7
|
)
|
|
(4
|
%)
|
|
(5
|
)
|
|
(2
|
%)
|
||
Losses of managed investment entities
|
2
|
|
|
1
|
%
|
|
(2
|
)
|
|
(1
|
%)
|
||
Change in valuation allowance
|
5
|
|
|
3
|
%
|
|
—
|
|
|
—
|
%
|
||
Other
|
(1
|
)
|
|
(1
|
%)
|
|
2
|
|
|
1
|
%
|
||
Provision for income taxes
|
$
|
65
|
|
|
34
|
%
|
|
$
|
81
|
|
|
33
|
%
|
|
Three months ended December 31,
|
|
|
|||||||
|
2014
|
|
2013
|
|
% Change
|
|||||
National Interstate
|
$
|
2
|
|
|
$
|
4
|
|
|
(50
|
%)
|
Managed Investment Entities
|
(4
|
)
|
|
4
|
|
|
(200
|
%)
|
||
Other
|
—
|
|
|
(1
|
)
|
|
(100
|
%)
|
||
Earnings (loss) attributable to noncontrolling interests
|
$
|
(2
|
)
|
|
$
|
7
|
|
|
(129
|
%)
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
||||||||||||||||||
|
P&C
|
|
Annuity
|
|
Run-off long-term care and life
|
|
Consol. MIEs
|
|
Holding Co., other and unallocated
|
|
Total
|
|
Non-core reclass
|
|
GAAP Total
|
||||||||||||||||
Year ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance net earned premiums
|
$
|
3,878
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,878
|
|
|
$
|
—
|
|
|
$
|
3,878
|
|
Life, accident and health net earned premiums
|
—
|
|
|
—
|
|
|
108
|
|
|
—
|
|
|
—
|
|
|
108
|
|
|
—
|
|
|
108
|
|
||||||||
Net investment income
|
294
|
|
|
1,136
|
|
|
82
|
|
|
(16
|
)
|
|
5
|
|
|
1,501
|
|
|
—
|
|
|
1,501
|
|
||||||||
Realized gains on securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|
52
|
|
||||||||
Income (loss) of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
116
|
|
|
—
|
|
|
116
|
|
|
—
|
|
|
116
|
|
||||||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
(44
|
)
|
|
—
|
|
|
(44
|
)
|
|
—
|
|
|
(44
|
)
|
||||||||
Other income
|
9
|
|
|
78
|
|
|
4
|
|
|
(25
|
)
|
|
36
|
|
|
102
|
|
|
—
|
|
|
102
|
|
||||||||
Total revenues
|
4,181
|
|
|
1,214
|
|
|
194
|
|
|
31
|
|
|
41
|
|
|
5,661
|
|
|
52
|
|
|
5,713
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss adjustment expenses
|
2,470
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,470
|
|
|
24
|
|
|
2,494
|
|
||||||||
Commissions and other underwriting expenses
|
1,172
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,172
|
|
|
—
|
|
|
1,172
|
|
||||||||
Annuity benefits
|
—
|
|
|
648
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
648
|
|
|
—
|
|
|
648
|
|
||||||||
Life, accident and health benefits
|
—
|
|
|
—
|
|
|
164
|
|
|
—
|
|
|
—
|
|
|
164
|
|
|
—
|
|
|
164
|
|
||||||||
Annuity and supplemental insurance acquisition expenses
|
—
|
|
|
156
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
173
|
|
|
—
|
|
|
173
|
|
||||||||
Interest charges on borrowed money
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|
73
|
|
|
—
|
|
|
73
|
|
||||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
—
|
|
|
82
|
|
|
—
|
|
|
82
|
|
|
—
|
|
|
82
|
|
||||||||
Other expenses
|
55
|
|
|
82
|
|
|
23
|
|
|
—
|
|
|
115
|
|
|
275
|
|
|
6
|
|
|
281
|
|
||||||||
Total costs and expenses
|
3,701
|
|
|
886
|
|
|
204
|
|
|
82
|
|
|
184
|
|
|
5,057
|
|
|
30
|
|
|
5,087
|
|
||||||||
Earnings before income taxes
|
480
|
|
|
328
|
|
|
(10
|
)
|
|
(51
|
)
|
|
(143
|
)
|
|
604
|
|
|
22
|
|
|
626
|
|
||||||||
Provision for income taxes
|
151
|
|
|
112
|
|
|
(3
|
)
|
|
—
|
|
|
(48
|
)
|
|
212
|
|
|
8
|
|
|
220
|
|
||||||||
Net earnings, including noncontrolling interests
|
329
|
|
|
216
|
|
|
(7
|
)
|
|
(51
|
)
|
|
(95
|
)
|
|
392
|
|
|
14
|
|
|
406
|
|
||||||||
Less: Net earnings (loss) attributable to noncontrolling interests
|
4
|
|
|
—
|
|
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
(47
|
)
|
|
1
|
|
|
(46
|
)
|
||||||||
Core Net Operating Earnings
|
325
|
|
|
216
|
|
|
(7
|
)
|
|
—
|
|
|
(95
|
)
|
|
439
|
|
|
|
|
|
||||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Realized gains on securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
32
|
|
|
(32
|
)
|
|
—
|
|
||||||||
Special A&E charges, net of tax
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(19
|
)
|
|
19
|
|
|
—
|
|
||||||||
Net Earnings Attributable to Shareholders
|
$
|
310
|
|
|
$
|
216
|
|
|
$
|
(7
|
)
|
|
$
|
—
|
|
|
$
|
(67
|
)
|
|
$
|
452
|
|
|
$
|
—
|
|
|
$
|
452
|
|
|
|
Other
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
P&C
|
|
Annuity
|
|
Run-off long-term care and life
|
|
Consol. MIEs
|
|
Holding Co., other and unallocated
|
|
Total
|
|
Non-core reclass
|
|
GAAP Total
|
||||||||||||||||
Year ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance net earned premiums
|
$
|
3,204
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,204
|
|
|
$
|
—
|
|
|
$
|
3,204
|
|
Life, accident and health net earned premiums
|
—
|
|
|
—
|
|
|
114
|
|
|
—
|
|
|
—
|
|
|
114
|
|
|
—
|
|
|
114
|
|
||||||||
Net investment income
|
263
|
|
|
1,034
|
|
|
76
|
|
|
(35
|
)
|
|
8
|
|
|
1,346
|
|
|
—
|
|
|
1,346
|
|
||||||||
Realized gains on securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
221
|
|
|
221
|
|
||||||||
Realized losses on subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||||
Income (loss) of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
128
|
|
|
—
|
|
|
128
|
|
|
—
|
|
|
128
|
|
||||||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
(14
|
)
|
||||||||
Other income
|
15
|
|
|
67
|
|
|
4
|
|
|
(16
|
)
|
|
27
|
|
|
97
|
|
|
—
|
|
|
97
|
|
||||||||
Total revenues
|
3,482
|
|
|
1,101
|
|
|
194
|
|
|
63
|
|
|
35
|
|
|
4,875
|
|
|
217
|
|
|
5,092
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss adjustment expenses
|
1,986
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,986
|
|
|
54
|
|
|
2,040
|
|
||||||||
Commissions and other underwriting expenses
|
1,019
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,019
|
|
|
—
|
|
|
1,019
|
|
||||||||
Annuity benefits
|
—
|
|
|
531
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
531
|
|
|
—
|
|
|
531
|
|
||||||||
Life, accident and health benefits
|
—
|
|
|
—
|
|
|
160
|
|
|
—
|
|
|
—
|
|
|
160
|
|
|
—
|
|
|
160
|
|
||||||||
Annuity and supplemental insurance acquisition expenses
|
—
|
|
|
149
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
167
|
|
|
—
|
|
|
167
|
|
||||||||
Interest charges on borrowed money
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
68
|
|
|
71
|
|
|
—
|
|
|
71
|
|
||||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
—
|
|
|
89
|
|
|
—
|
|
|
89
|
|
|
—
|
|
|
89
|
|
||||||||
Other expenses
|
45
|
|
|
93
|
|
|
26
|
|
|
—
|
|
|
135
|
|
|
299
|
|
|
27
|
|
|
326
|
|
||||||||
Total costs and expenses
|
3,053
|
|
|
773
|
|
|
204
|
|
|
89
|
|
|
203
|
|
|
4,322
|
|
|
81
|
|
|
4,403
|
|
||||||||
Earnings before income taxes
|
429
|
|
|
328
|
|
|
(10
|
)
|
|
(26
|
)
|
|
(168
|
)
|
|
553
|
|
|
136
|
|
|
689
|
|
||||||||
Provision for income taxes
|
132
|
|
|
113
|
|
|
(4
|
)
|
|
—
|
|
|
(54
|
)
|
|
187
|
|
|
49
|
|
|
236
|
|
||||||||
Net earnings, including noncontrolling interests
|
297
|
|
|
215
|
|
|
(6
|
)
|
|
(26
|
)
|
|
(114
|
)
|
|
366
|
|
|
87
|
|
|
453
|
|
||||||||
Less: Net earnings (loss) attributable to noncontrolling interests
|
7
|
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
(19
|
)
|
|
1
|
|
|
(18
|
)
|
||||||||
Core Net Operating Earnings
|
290
|
|
|
215
|
|
|
(6
|
)
|
|
—
|
|
|
(114
|
)
|
|
385
|
|
|
|
|
|
||||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Realized gains, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
138
|
|
|
138
|
|
|
(138
|
)
|
|
—
|
|
||||||||
Special A&E charges, net of tax
|
(35
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
(49
|
)
|
|
49
|
|
|
—
|
|
||||||||
ELNY guaranty fund assessments, net of tax
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
3
|
|
|
—
|
|
||||||||
Net Earnings Attributable to Shareholders
|
$
|
255
|
|
|
$
|
212
|
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
471
|
|
|
$
|
—
|
|
|
$
|
471
|
|
|
|
|
Other
|
|
|
|
|
|
|
||||||||||||||||||||||||||
|
P&C
|
|
Annuity
|
|
Run-off long-term care and life
|
|
Medicare supplement and critical illness
|
|
Consol. MIEs
|
|
Holding Co., other and unallocated
|
|
Total
|
|
Non-core reclass
|
|
GAAP Total
|
||||||||||||||||||
Year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property and casualty insurance net earned premiums
|
$
|
2,847
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,847
|
|
|
$
|
—
|
|
|
$
|
2,847
|
|
Life, accident and health net earned premiums
|
—
|
|
|
—
|
|
|
119
|
|
|
199
|
|
|
—
|
|
|
—
|
|
|
318
|
|
|
—
|
|
|
318
|
|
|||||||||
Net investment income
|
275
|
|
|
976
|
|
|
69
|
|
|
7
|
|
|
(31
|
)
|
|
5
|
|
|
1,301
|
|
|
—
|
|
|
1,301
|
|
|||||||||
Realized gains on securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
210
|
|
|
210
|
|
|||||||||
Realized gains on subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
161
|
|
|
161
|
|
|||||||||
Income (loss) of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
125
|
|
|
—
|
|
|
125
|
|
|
—
|
|
|
125
|
|
|||||||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(94
|
)
|
|
—
|
|
|
(94
|
)
|
|
—
|
|
|
(94
|
)
|
|||||||||
Other income
|
24
|
|
|
52
|
|
|
3
|
|
|
6
|
|
|
(18
|
)
|
|
22
|
|
|
89
|
|
|
—
|
|
|
89
|
|
|||||||||
Total revenues
|
3,146
|
|
|
1,028
|
|
|
191
|
|
|
212
|
|
|
(18
|
)
|
|
27
|
|
|
4,586
|
|
|
371
|
|
|
4,957
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property and casualty insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Losses and loss adjustment expenses
|
1,842
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,842
|
|
|
31
|
|
|
1,873
|
|
|||||||||
Commissions and other underwriting expenses
|
887
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
887
|
|
|
—
|
|
|
887
|
|
|||||||||
Annuity benefits
|
—
|
|
|
541
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
541
|
|
|
—
|
|
|
541
|
|
|||||||||
Life, accident and health benefits
|
—
|
|
|
—
|
|
|
151
|
|
|
131
|
|
|
—
|
|
|
—
|
|
|
282
|
|
|
74
|
|
|
356
|
|
|||||||||
Annuity and supplemental insurance acquisition expenses
|
—
|
|
|
150
|
|
|
22
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
203
|
|
|
79
|
|
|
282
|
|
|||||||||
Interest charges on borrowed money
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
71
|
|
|
75
|
|
|
—
|
|
|
75
|
|
|||||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80
|
|
|
—
|
|
|
80
|
|
|
—
|
|
|
80
|
|
|||||||||
Other expenses
|
60
|
|
|
81
|
|
|
22
|
|
|
22
|
|
|
—
|
|
|
116
|
|
|
301
|
|
|
25
|
|
|
326
|
|
|||||||||
Total costs and expenses
|
2,793
|
|
|
772
|
|
|
195
|
|
|
184
|
|
|
80
|
|
|
187
|
|
|
4,211
|
|
|
209
|
|
|
4,420
|
|
|||||||||
Earnings before income taxes
|
353
|
|
|
256
|
|
|
(4
|
)
|
|
28
|
|
|
(98
|
)
|
|
(160
|
)
|
|
375
|
|
|
162
|
|
|
537
|
|
|||||||||
Provision for income taxes
|
102
|
|
|
89
|
|
|
(1
|
)
|
|
10
|
|
|
—
|
|
|
(51
|
)
|
|
149
|
|
|
(14
|
)
|
|
135
|
|
|||||||||
Net earnings, including noncontrolling interests
|
251
|
|
|
167
|
|
|
(3
|
)
|
|
18
|
|
|
(98
|
)
|
|
(109
|
)
|
|
226
|
|
|
176
|
|
|
402
|
|
|||||||||
Less: Net earnings (loss) attributable to noncontrolling interests
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(98
|
)
|
|
—
|
|
|
(88
|
)
|
|
2
|
|
|
(86
|
)
|
|||||||||
Core Net Operating Earnings
|
241
|
|
|
167
|
|
|
(3
|
)
|
|
18
|
|
|
—
|
|
|
(109
|
)
|
|
314
|
|
|
|
|
|
|||||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Gain on sale of Medicare supplement and critical illness businesses, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
114
|
|
|
—
|
|
|
—
|
|
|
114
|
|
|
(114
|
)
|
|
—
|
|
|||||||||
Other realized gains, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
128
|
|
|
128
|
|
|
(128
|
)
|
|
—
|
|
|||||||||
Long-term care reserve charge, net of tax
|
—
|
|
|
—
|
|
|
(99
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(99
|
)
|
|
99
|
|
|
—
|
|
|||||||||
Special A&E charges, net of tax
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(21
|
)
|
|
21
|
|
|
—
|
|
|||||||||
AFG tax case and settlement of open tax years
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
67
|
|
|
(67
|
)
|
|
—
|
|
|||||||||
Other, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
(15
|
)
|
|
15
|
|
|
—
|
|
|||||||||
Net Earnings Attributable to Shareholders
|
$
|
221
|
|
|
$
|
167
|
|
|
$
|
(102
|
)
|
|
$
|
132
|
|
|
$
|
—
|
|
|
$
|
70
|
|
|
$
|
488
|
|
|
$
|
—
|
|
|
$
|
488
|
|
(a)
|
See the reconciliation of core earnings to GAAP net earnings under
“Results of Operations —
General
”
for details on the tax and noncontrolling interest impacts of these reconciling items.
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
||||||||
Gross written premiums
|
$
|
5,477
|
|
|
$
|
4,805
|
|
|
$
|
4,321
|
|
|
14
|
%
|
|
11
|
%
|
Reinsurance premiums ceded
|
(1,457
|
)
|
|
(1,464
|
)
|
|
(1,372
|
)
|
|
—
|
%
|
|
7
|
%
|
|||
Net written premiums
|
4,020
|
|
|
3,341
|
|
|
2,949
|
|
|
20
|
%
|
|
13
|
%
|
|||
Change in unearned premiums
|
(142
|
)
|
|
(137
|
)
|
|
(102
|
)
|
|
4
|
%
|
|
34
|
%
|
|||
Net earned premiums
|
3,878
|
|
|
3,204
|
|
|
2,847
|
|
|
21
|
%
|
|
13
|
%
|
|||
Loss and loss adjustment expenses (*)
|
2,470
|
|
|
1,986
|
|
|
1,842
|
|
|
24
|
%
|
|
8
|
%
|
|||
Commissions and other underwriting expenses
|
1,172
|
|
|
1,019
|
|
|
887
|
|
|
15
|
%
|
|
15
|
%
|
|||
Core underwriting gain
|
236
|
|
|
199
|
|
|
118
|
|
|
19
|
%
|
|
69
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Net investment income
|
294
|
|
|
263
|
|
|
275
|
|
|
12
|
%
|
|
(4
|
%)
|
|||
Other income and expenses, net
|
(50
|
)
|
|
(33
|
)
|
|
(40
|
)
|
|
52
|
%
|
|
(18
|
%)
|
|||
Core earnings before income taxes
|
480
|
|
|
429
|
|
|
353
|
|
|
12
|
%
|
|
22
|
%
|
|||
Pretax non-core special A&E charges
|
(24
|
)
|
|
(54
|
)
|
|
(31
|
)
|
|
(56
|
%)
|
|
74
|
%
|
|||
GAAP earnings before income taxes
|
$
|
456
|
|
|
$
|
375
|
|
|
$
|
322
|
|
|
22
|
%
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
||||||||
(*) Excluding non-core special A&E charges
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Combined Ratios:
|
|
|
|
|
|
|
Change
|
||||||||||
Specialty lines
|
|
|
|
|
|
|
2014 - 2013
|
|
2013 - 2012
|
||||||||
Loss and LAE ratio
|
63.7
|
%
|
|
61.7
|
%
|
|
64.3
|
%
|
|
2.0
|
%
|
|
(2.6
|
%)
|
|||
Underwriting expense ratio
|
30.2
|
%
|
|
31.8
|
%
|
|
31.1
|
%
|
|
(1.6
|
%)
|
|
0.7
|
%
|
|||
Combined ratio
|
93.9
|
%
|
|
93.5
|
%
|
|
95.4
|
%
|
|
0.4
|
%
|
|
(1.9
|
%)
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Aggregate — including discontinued lines
|
|
|
|
|
|
|
|
|
|
||||||||
Loss and LAE ratio
|
64.3
|
%
|
|
63.7
|
%
|
|
65.8
|
%
|
|
0.6
|
%
|
|
(2.1
|
%)
|
|||
Underwriting expense ratio
|
30.2
|
%
|
|
31.8
|
%
|
|
31.1
|
%
|
|
(1.6
|
%)
|
|
0.7
|
%
|
|||
Combined ratio
|
94.5
|
%
|
|
95.5
|
%
|
|
96.9
|
%
|
|
(1.0
|
%)
|
|
(1.4
|
%)
|
|
Year ended December 31,
|
|
% Change
|
|||||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
|||||||||||||||||
|
GWP
|
|
%
|
|
GWP
|
|
%
|
|
GWP
|
|
%
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
2,342
|
|
|
43
|
%
|
|
$
|
2,392
|
|
|
50
|
%
|
|
$
|
2,271
|
|
|
53
|
%
|
|
(2
|
%)
|
|
5
|
%
|
Specialty casualty
|
2,529
|
|
|
46
|
%
|
|
1,790
|
|
|
37
|
%
|
|
1,484
|
|
|
34
|
%
|
|
41
|
%
|
|
21
|
%
|
|||
Specialty financial
|
605
|
|
|
11
|
%
|
|
622
|
|
|
13
|
%
|
|
566
|
|
|
13
|
%
|
|
(3
|
%)
|
|
10
|
%
|
|||
Other specialty
|
1
|
|
|
—
|
%
|
|
1
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
|
$
|
5,477
|
|
|
100
|
%
|
|
$
|
4,805
|
|
|
100
|
%
|
|
$
|
4,321
|
|
|
100
|
%
|
|
14
|
%
|
|
11
|
%
|
|
Year ended December 31,
|
|
Change in % of GWP
|
|||||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
|||||||||||||||||
|
Ceded
|
|
% of GWP
|
|
Ceded
|
|
% of GWP
|
|
Ceded
|
|
% of GWP
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
(776
|
)
|
|
33
|
%
|
|
$
|
(845
|
)
|
|
35
|
%
|
|
$
|
(798
|
)
|
|
35
|
%
|
|
(2
|
%)
|
|
—
|
%
|
Specialty casualty
|
(665
|
)
|
|
26
|
%
|
|
(566
|
)
|
|
32
|
%
|
|
(492
|
)
|
|
33
|
%
|
|
(6
|
%)
|
|
(1
|
%)
|
|||
Specialty financial
|
(117
|
)
|
|
19
|
%
|
|
(136
|
)
|
|
22
|
%
|
|
(155
|
)
|
|
27
|
%
|
|
(3
|
%)
|
|
(5
|
%)
|
|||
Other specialty
|
101
|
|
|
|
|
83
|
|
|
|
|
73
|
|
|
|
|
|
|
|
||||||||
|
$
|
(1,457
|
)
|
|
27
|
%
|
|
$
|
(1,464
|
)
|
|
30
|
%
|
|
$
|
(1,372
|
)
|
|
32
|
%
|
|
(3
|
%)
|
|
(2
|
%)
|
|
Year ended December 31,
|
|
% Change
|
|||||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
|||||||||||||||||
|
NWP
|
|
%
|
|
NWP
|
|
%
|
|
NWP
|
|
%
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
1,566
|
|
|
39
|
%
|
|
$
|
1,547
|
|
|
45
|
%
|
|
$
|
1,473
|
|
|
50
|
%
|
|
1
|
%
|
|
5
|
%
|
Specialty casualty
|
1,864
|
|
|
46
|
%
|
|
1,224
|
|
|
37
|
%
|
|
992
|
|
|
34
|
%
|
|
52
|
%
|
|
23
|
%
|
|||
Specialty financial
|
488
|
|
|
12
|
%
|
|
486
|
|
|
15
|
%
|
|
411
|
|
|
14
|
%
|
|
—
|
%
|
|
18
|
%
|
|||
Other specialty
|
102
|
|
|
3
|
%
|
|
84
|
|
|
3
|
%
|
|
73
|
|
|
2
|
%
|
|
21
|
%
|
|
15
|
%
|
|||
|
$
|
4,020
|
|
|
100
|
%
|
|
$
|
3,341
|
|
|
100
|
%
|
|
$
|
2,949
|
|
|
100
|
%
|
|
20
|
%
|
|
13
|
%
|
|
Year ended December 31,
|
|
% Change
|
|||||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
|||||||||||||||||
|
NEP
|
|
%
|
|
NEP
|
|
%
|
|
NEP
|
|
%
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
1,544
|
|
|
40
|
%
|
|
$
|
1,521
|
|
|
48
|
%
|
|
$
|
1,423
|
|
|
50
|
%
|
|
2
|
%
|
|
7
|
%
|
Specialty casualty
|
1,765
|
|
|
45
|
%
|
|
1,135
|
|
|
35
|
%
|
|
948
|
|
|
34
|
%
|
|
56
|
%
|
|
20
|
%
|
|||
Specialty financial
|
469
|
|
|
12
|
%
|
|
469
|
|
|
15
|
%
|
|
405
|
|
|
14
|
%
|
|
—
|
%
|
|
16
|
%
|
|||
Other specialty
|
100
|
|
|
3
|
%
|
|
79
|
|
|
2
|
%
|
|
71
|
|
|
2
|
%
|
|
27
|
%
|
|
11
|
%
|
|||
|
$
|
3,878
|
|
|
100
|
%
|
|
$
|
3,204
|
|
|
100
|
%
|
|
$
|
2,847
|
|
|
100
|
%
|
|
21
|
%
|
|
13
|
%
|
|
Year ended December 31,
|
|
Change
|
|
Year ended December 31,
|
|||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
|
2014
|
|
2013
|
|
2012
|
|||||||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
74.9
|
%
|
|
75.1
|
%
|
|
74.7
|
%
|
|
(0.2
|
%)
|
|
0.4
|
%
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
23.8
|
%
|
|
24.1
|
%
|
|
24.0
|
%
|
|
(0.3
|
%)
|
|
0.1
|
%
|
|
|
|
|
|
|
||||||
Combined ratio
|
98.7
|
%
|
|
99.2
|
%
|
|
98.7
|
%
|
|
(0.5
|
%)
|
|
0.5
|
%
|
|
|
|
|
|
|
||||||
Underwriting profit (loss)
|
|
|
|
|
|
|
|
|
|
|
$
|
21
|
|
|
$
|
12
|
|
|
$
|
19
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
62.7
|
%
|
|
57.5
|
%
|
|
61.3
|
%
|
|
5.2
|
%
|
|
(3.8
|
%)
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
29.6
|
%
|
|
33.4
|
%
|
|
33.2
|
%
|
|
(3.8
|
%)
|
|
0.2
|
%
|
|
|
|
|
|
|
||||||
Combined ratio
|
92.3
|
%
|
|
90.9
|
%
|
|
94.5
|
%
|
|
1.4
|
%
|
|
(3.6
|
%)
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
136
|
|
|
$
|
102
|
|
|
$
|
53
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
33.9
|
%
|
|
33.5
|
%
|
|
38.8
|
%
|
|
0.4
|
%
|
|
(5.3
|
%)
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
52.6
|
%
|
|
52.1
|
%
|
|
50.4
|
%
|
|
0.5
|
%
|
|
1.7
|
%
|
|
|
|
|
|
|
||||||
Combined ratio
|
86.5
|
%
|
|
85.6
|
%
|
|
89.2
|
%
|
|
0.9
|
%
|
|
(3.6
|
%)
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
64
|
|
|
$
|
67
|
|
|
$
|
44
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
63.7
|
%
|
|
61.7
|
%
|
|
64.3
|
%
|
|
2.0
|
%
|
|
(2.6
|
%)
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
30.2
|
%
|
|
31.8
|
%
|
|
31.1
|
%
|
|
(1.6
|
%)
|
|
0.7
|
%
|
|
|
|
|
|
|
||||||
Combined ratio
|
93.9
|
%
|
|
93.5
|
%
|
|
95.4
|
%
|
|
0.4
|
%
|
|
(1.9
|
%)
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
237
|
|
|
$
|
206
|
|
|
$
|
131
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Aggregate — including discontinued lines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loss and LAE ratio
|
64.3
|
%
|
|
63.7
|
%
|
|
65.8
|
%
|
|
0.6
|
%
|
|
(2.1
|
%)
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
30.2
|
%
|
|
31.8
|
%
|
|
31.1
|
%
|
|
(1.6
|
%)
|
|
0.7
|
%
|
|
|
|
|
|
|
||||||
Combined ratio
|
94.5
|
%
|
|
95.5
|
%
|
|
96.9
|
%
|
|
(1.0
|
%)
|
|
(1.4
|
%)
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
212
|
|
|
$
|
145
|
|
|
$
|
87
|
|
|
Year ended December 31,
|
|
|
|
|
|||||||||||||||||||||
|
Amount
|
|
Ratio
|
|
Change in Ratio
|
|||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
|||||||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
1,119
|
|
|
$
|
1,116
|
|
|
$
|
1,051
|
|
|
72.6
|
%
|
|
73.4
|
%
|
|
73.8
|
%
|
|
(0.8
|
%)
|
|
(0.4
|
%)
|
Prior accident years development
|
16
|
|
|
(1
|
)
|
|
(16
|
)
|
|
1.0
|
%
|
|
(0.1
|
%)
|
|
(1.0
|
%)
|
|
1.1
|
%
|
|
0.9
|
%
|
|||
Current year catastrophe losses
|
20
|
|
|
27
|
|
|
27
|
|
|
1.3
|
%
|
|
1.8
|
%
|
|
1.9
|
%
|
|
(0.5
|
%)
|
|
(0.1
|
%)
|
|||
Property and transportation losses and LAE and ratio
|
$
|
1,155
|
|
|
$
|
1,142
|
|
|
$
|
1,062
|
|
|
74.9
|
%
|
|
75.1
|
%
|
|
74.7
|
%
|
|
(0.2
|
%)
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
1,110
|
|
|
$
|
692
|
|
|
$
|
596
|
|
|
62.9
|
%
|
|
61.0
|
%
|
|
62.8
|
%
|
|
1.9
|
%
|
|
(1.8
|
%)
|
Prior accident years development
|
(7
|
)
|
|
(40
|
)
|
|
(18
|
)
|
|
(0.4
|
%)
|
|
(3.6
|
%)
|
|
(1.8
|
%)
|
|
3.2
|
%
|
|
(1.8
|
%)
|
|||
Current year catastrophe losses
|
4
|
|
|
1
|
|
|
3
|
|
|
0.2
|
%
|
|
0.1
|
%
|
|
0.3
|
%
|
|
0.1
|
%
|
|
(0.2
|
%)
|
|||
Specialty casualty losses and LAE and ratio
|
$
|
1,107
|
|
|
$
|
653
|
|
|
$
|
581
|
|
|
62.7
|
%
|
|
57.5
|
%
|
|
61.3
|
%
|
|
5.2
|
%
|
|
(3.8
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
173
|
|
|
$
|
169
|
|
|
$
|
181
|
|
|
36.9
|
%
|
|
35.9
|
%
|
|
44.6
|
%
|
|
1.0
|
%
|
|
(8.7
|
%)
|
Prior accident years development
|
(17
|
)
|
|
(14
|
)
|
|
(29
|
)
|
|
(3.7
|
%)
|
|
(3.0
|
%)
|
|
(7.1
|
%)
|
|
(0.7
|
%)
|
|
4.1
|
%
|
|||
Current year catastrophe losses
|
3
|
|
|
3
|
|
|
5
|
|
|
0.7
|
%
|
|
0.6
|
%
|
|
1.3
|
%
|
|
0.1
|
%
|
|
(0.7
|
%)
|
|||
Specialty financial losses and LAE and ratio
|
$
|
159
|
|
|
$
|
158
|
|
|
$
|
157
|
|
|
33.9
|
%
|
|
33.5
|
%
|
|
38.8
|
%
|
|
0.4
|
%
|
|
(5.3
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
2,460
|
|
|
$
|
2,023
|
|
|
$
|
1,866
|
|
|
63.5
|
%
|
|
63.1
|
%
|
|
65.5
|
%
|
|
0.4
|
%
|
|
(2.4
|
%)
|
Prior accident years development
|
(19
|
)
|
|
(75
|
)
|
|
(74
|
)
|
|
(0.5
|
%)
|
|
(2.4
|
%)
|
|
(2.5
|
%)
|
|
1.9
|
%
|
|
0.1
|
%
|
|||
Current year catastrophe losses
|
28
|
|
|
31
|
|
|
37
|
|
|
0.7
|
%
|
|
1.0
|
%
|
|
1.3
|
%
|
|
(0.3
|
%)
|
|
(0.3
|
%)
|
|||
Total Specialty losses and LAE and ratio
|
$
|
2,469
|
|
|
$
|
1,979
|
|
|
$
|
1,829
|
|
|
63.7
|
%
|
|
61.7
|
%
|
|
64.3
|
%
|
|
2.0
|
%
|
|
(2.6
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Aggregate — including discontinued lines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
2,460
|
|
|
$
|
2,024
|
|
|
$
|
1,866
|
|
|
63.5
|
%
|
|
63.1
|
%
|
|
65.5
|
%
|
|
0.4
|
%
|
|
(2.4
|
%)
|
Prior accident years development
|
6
|
|
|
(15
|
)
|
|
(30
|
)
|
|
0.1
|
%
|
|
(0.4
|
%)
|
|
(1.0
|
%)
|
|
0.5
|
%
|
|
0.6
|
%
|
|||
Current year catastrophe losses
|
28
|
|
|
31
|
|
|
37
|
|
|
0.7
|
%
|
|
1.0
|
%
|
|
1.3
|
%
|
|
(0.3
|
%)
|
|
(0.3
|
%)
|
|||
Aggregate losses and LAE and ratio
|
$
|
2,494
|
|
|
$
|
2,040
|
|
|
$
|
1,873
|
|
|
64.3
|
%
|
|
63.7
|
%
|
|
65.8
|
%
|
|
0.6
|
%
|
|
(2.1
|
%)
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Property and casualty group
|
|
$
|
24
|
|
|
$
|
59
|
|
|
$
|
43
|
|
Former operations
|
|
13
|
|
|
29
|
|
|
12
|
|
|
Year ended December 31,
|
|
Change in % of NEP
|
|||||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
|||||||||||||||||
|
U/W Exp
|
|
% of NEP
|
|
U/W Exp
|
|
% of NEP
|
|
U/W Exp
|
|
% of NEP
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
368
|
|
|
23.8
|
%
|
|
$
|
367
|
|
|
24.1
|
%
|
|
$
|
342
|
|
|
24.0
|
%
|
|
(0.3
|
%)
|
|
0.1
|
%
|
Specialty casualty
|
522
|
|
|
29.6
|
%
|
|
380
|
|
|
33.4
|
%
|
|
314
|
|
|
33.2
|
%
|
|
(3.8
|
%)
|
|
0.2
|
%
|
|||
Specialty financial
|
246
|
|
|
52.6
|
%
|
|
244
|
|
|
52.1
|
%
|
|
204
|
|
|
50.4
|
%
|
|
0.5
|
%
|
|
1.7
|
%
|
|||
Other specialty
|
36
|
|
|
35.5
|
%
|
|
28
|
|
|
35.9
|
%
|
|
27
|
|
|
37.2
|
%
|
|
(0.4
|
%)
|
|
(1.3
|
%)
|
|||
|
$
|
1,172
|
|
|
30.2
|
%
|
|
$
|
1,019
|
|
|
31.8
|
%
|
|
$
|
887
|
|
|
31.1
|
%
|
|
(1.6
|
%)
|
|
0.7
|
%
|
|
Year ended December 31,
|
|
2014 - 2013
|
|
2013 - 2012
|
||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
Change
|
|
% Change
|
|
Change
|
|
% Change
|
||||||||||||
Net investment income
|
$
|
294
|
|
|
$
|
263
|
|
|
$
|
275
|
|
|
$
|
31
|
|
|
12
|
%
|
|
$
|
(12
|
)
|
|
(4
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Average invested assets (at amortized cost)
|
$
|
7,849
|
|
|
$
|
6,863
|
|
|
$
|
6,675
|
|
|
$
|
986
|
|
|
14
|
%
|
|
$
|
188
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Yield (net investment income as a % of average invested assets)
|
3.75
|
%
|
|
3.83
|
%
|
|
4.12
|
%
|
|
(0.08
|
%)
|
|
|
|
(0.29
|
%)
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Tax equivalent yield (*)
|
4.32
|
%
|
|
4.43
|
%
|
|
4.77
|
%
|
|
(0.11
|
%)
|
|
|
|
(0.34
|
%)
|
|
|
(*)
|
Adjusts the yield on equity securities and tax-exempt bonds to the fully taxable equivalent yield.
|
|
Year ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Other income
|
|
|
|
|
|
||||||
Warranty operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17
|
|
Income from the sale of real estate
|
2
|
|
|
6
|
|
|
—
|
|
|||
Other
|
7
|
|
|
9
|
|
|
7
|
|
|||
Total other income
|
9
|
|
|
15
|
|
|
24
|
|
|||
Other expenses
|
|
|
|
|
|
||||||
Warranty operations
|
—
|
|
|
—
|
|
|
19
|
|
|||
Amortization of intangibles
|
19
|
|
|
14
|
|
|
14
|
|
|||
Tender offer expenses
|
3
|
|
|
—
|
|
|
—
|
|
|||
Other
|
33
|
|
|
31
|
|
|
27
|
|
|||
Total other expense
|
55
|
|
|
45
|
|
|
60
|
|
|||
Interest expense
|
4
|
|
|
3
|
|
|
4
|
|
|||
Other income and expenses, net
|
$
|
(50
|
)
|
|
$
|
(33
|
)
|
|
$
|
(40
|
)
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Net investment income
|
$
|
1,136
|
|
|
$
|
1,034
|
|
|
$
|
976
|
|
|
10
|
%
|
|
6
|
%
|
Other income:
|
|
|
|
|
|
|
|
|
|
||||||||
Guaranteed withdrawal benefit fees
|
34
|
|
|
25
|
|
|
14
|
|
|
36
|
%
|
|
79
|
%
|
|||
Policy charges and other miscellaneous income
|
44
|
|
|
42
|
|
|
38
|
|
|
5
|
%
|
|
11
|
%
|
|||
Total revenues
|
1,214
|
|
|
1,101
|
|
|
1,028
|
|
|
10
|
%
|
|
7
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Annuity benefits (a)
|
648
|
|
|
531
|
|
|
541
|
|
|
22
|
%
|
|
(2
|
%)
|
|||
Acquisition expenses
|
156
|
|
|
149
|
|
|
150
|
|
|
5
|
%
|
|
(1
|
%)
|
|||
Other expenses (b)
|
82
|
|
|
93
|
|
|
81
|
|
|
(12
|
%)
|
|
15
|
%
|
|||
Total costs and expenses
|
886
|
|
|
773
|
|
|
772
|
|
|
15
|
%
|
|
—
|
%
|
|||
Core earnings before income taxes
|
328
|
|
|
328
|
|
|
256
|
|
|
—
|
%
|
|
28
|
%
|
|||
Pretax non-core ELNY guaranty fund assessments
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(100
|
%)
|
|
—
|
%
|
|||
GAAP earnings before income taxes
|
$
|
328
|
|
|
$
|
323
|
|
|
$
|
256
|
|
|
2
|
%
|
|
26
|
%
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
||||||||
Core earnings before income taxes — before the impact of derivatives related to FIAs
|
$
|
362
|
|
|
$
|
313
|
|
|
$
|
271
|
|
|
16
|
%
|
|
15
|
%
|
Impact of derivatives related to FIAs
|
(34
|
)
|
|
15
|
|
|
(15
|
)
|
|
(327
|
%)
|
|
(200
|
%)
|
|||
Core earnings before income taxes
|
328
|
|
|
328
|
|
|
256
|
|
|
—
|
%
|
|
28
|
%
|
|||
Pretax non-core ELNY guaranty fund assessments
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(100
|
%)
|
|
—
|
%
|
|||
GAAP earnings before income taxes
|
$
|
328
|
|
|
$
|
323
|
|
|
$
|
256
|
|
|
2
|
%
|
|
26
|
%
|
(a)
|
Annuity benefits consisted of the following (dollars in millions):
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
||||||||
Interest credited — fixed
|
$
|
497
|
|
|
$
|
451
|
|
|
$
|
438
|
|
|
10
|
%
|
|
3
|
%
|
Interest credited — fixed component of variable annuities
|
6
|
|
|
6
|
|
|
7
|
|
|
—
|
%
|
|
(14
|
%)
|
|||
Change in expected death and annuitization reserve
|
18
|
|
|
19
|
|
|
19
|
|
|
(5
|
%)
|
|
—
|
%
|
|||
Amortization of sales inducements
|
26
|
|
|
30
|
|
|
32
|
|
|
(13
|
%)
|
|
(6
|
%)
|
|||
Change in guaranteed withdrawal benefit reserve
|
41
|
|
|
38
|
|
|
14
|
|
|
8
|
%
|
|
171
|
%
|
|||
Change in other benefit reserves
|
12
|
|
|
7
|
|
|
10
|
|
|
71
|
%
|
|
(30
|
%)
|
|||
Subtotal before impact of derivatives related to FIAs
|
600
|
|
|
551
|
|
|
520
|
|
|
9
|
%
|
|
6
|
%
|
|||
Derivatives related to fixed-indexed annuities:
|
|
|
|
|
|
|
|
|
|
||||||||
Embedded derivative mark-to-market
|
240
|
|
|
184
|
|
|
93
|
|
|
30
|
%
|
|
98
|
%
|
|||
Equity option mark-to-market
|
(181
|
)
|
|
(210
|
)
|
|
(66
|
)
|
|
(14
|
%)
|
|
218
|
%
|
|||
Impact of derivatives related to FIAs
|
59
|
|
|
(26
|
)
|
|
27
|
|
|
(327
|
%)
|
|
(196
|
%)
|
|||
Unlocking
|
(11
|
)
|
|
6
|
|
|
(6
|
)
|
|
(283
|
%)
|
|
(200
|
%)
|
|||
Total annuity benefits
|
$
|
648
|
|
|
$
|
531
|
|
|
$
|
541
|
|
|
22
|
%
|
|
(2
|
%)
|
(b)
|
Other expenses exclude the $5 million pretax non-core charge for ELNY guaranty fund assessments in 2013.
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
||||||||
Average fixed annuity investments (at amortized cost)
|
$
|
22,391
|
|
|
$
|
19,151
|
|
|
$
|
16,650
|
|
|
17
|
%
|
|
15
|
%
|
Average fixed annuity benefits accumulated
|
22,119
|
|
|
18,696
|
|
|
16,394
|
|
|
18
|
%
|
|
14
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
As % of fixed annuity benefits accumulated (except as noted):
|
|
|
|
|
|
|
|
|
|
||||||||
Net investment income (as % of fixed annuity investments)
|
5.03
|
%
|
|
5.35
|
%
|
|
5.80
|
%
|
|
|
|
|
|||||
Interest credited — fixed
|
(2.25
|
%)
|
|
(2.41
|
%)
|
|
(2.68
|
%)
|
|
|
|
|
|||||
Net interest spread
|
2.78
|
%
|
|
2.94
|
%
|
|
3.12
|
%
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||
Policy charges and other miscellaneous income
|
0.14
|
%
|
|
0.16
|
%
|
|
0.16
|
%
|
|
|
|
|
|||||
Other annuity benefit expenses, net of guaranteed withdrawal benefit fees
|
(0.28
|
%)
|
|
(0.37
|
%)
|
|
(0.36
|
%)
|
|
|
|
|
|||||
Acquisition expenses
|
(0.63
|
%)
|
|
(0.79
|
%)
|
|
(0.75
|
%)
|
|
|
|
|
|||||
Other expenses (*)
|
(0.34
|
%)
|
|
(0.46
|
%)
|
|
(0.46
|
%)
|
|
|
|
|
|||||
Change in fair value of derivatives related to FIAs
|
(0.27
|
%)
|
|
0.13
|
%
|
|
(0.16
|
%)
|
|
|
|
|
|||||
Unlocking
|
0.01
|
%
|
|
(0.01
|
%)
|
|
(0.07
|
%)
|
|
|
|
|
|||||
Net spread earned on fixed annuities
|
1.41
|
%
|
|
1.60
|
%
|
|
1.48
|
%
|
|
|
|
|
(*)
|
Excludes the $5 million pretax non-core charge for ELNY guaranty fund assessments. Including this charge, the net spread earned on fixed annuities was 1.57% in 2013.
|
|
Year ended December 31,
|
|||||||
|
2014
|
|
2013
|
|
2012
|
|||
Net spread earned on fixed annuities — before impact of derivatives related to fixed-indexed annuities
|
1.56
|
%
|
|
1.52
|
%
|
|
1.57
|
%
|
Impact of derivatives related to fixed-indexed annuities (*)
|
(0.15
|
%)
|
|
0.08
|
%
|
|
(0.09
|
%)
|
Net spread earned on fixed annuities
|
1.41
|
%
|
|
1.60
|
%
|
|
1.48
|
%
|
(*)
|
Change in fair value of derivatives related to fixed-indexed annuities offset by an estimate of the related acceleration/deceleration of amortization of deferred sales inducements and deferred policy acquisition costs.
|
|
Year ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Change in expected death and annuitization reserve
|
$
|
18
|
|
|
$
|
19
|
|
|
$
|
19
|
|
Amortization of sales inducements
|
26
|
|
|
30
|
|
|
32
|
|
|||
Change in guaranteed withdrawal benefit reserve
|
41
|
|
|
38
|
|
|
14
|
|
|||
Change in other benefit reserves
|
12
|
|
|
7
|
|
|
10
|
|
|||
Other annuity benefits
|
97
|
|
|
94
|
|
|
75
|
|
|||
Offset guaranteed withdrawal benefit fees
|
(34
|
)
|
|
(25
|
)
|
|
(14
|
)
|
|||
Other annuity benefits, net
|
$
|
63
|
|
|
$
|
69
|
|
|
$
|
61
|
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
||||||||
Core earnings before income taxes — before change in fair value of derivatives related to fixed-indexed annuities
|
$
|
362
|
|
|
$
|
313
|
|
|
$
|
271
|
|
|
16
|
%
|
|
15
|
%
|
Change in fair value of derivatives related to fixed-indexed annuities
|
(59
|
)
|
|
26
|
|
|
(27
|
)
|
|
(327
|
%)
|
|
(196
|
%)
|
|||
Related impact on amortization of DPAC (*)
|
25
|
|
|
(11
|
)
|
|
12
|
|
|
(327
|
%)
|
|
(192
|
%)
|
|||
Core earnings before income taxes
|
328
|
|
|
328
|
|
|
256
|
|
|
—
|
%
|
|
28
|
%
|
|||
Pretax non-core ELNY guaranty fund assessments
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(100
|
%)
|
|
—
|
%
|
|||
GAAP earnings before income taxes
|
$
|
328
|
|
|
$
|
323
|
|
|
$
|
256
|
|
|
2
|
%
|
|
26
|
%
|
(*)
|
An estimate of the related acceleration/deceleration of amortization of deferred sales inducements and deferred policy acquisition costs.
|
|
Year ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Beginning fixed annuity reserves
|
$
|
20,679
|
|
|
$
|
17,274
|
|
|
$
|
15,188
|
|
Fixed annuity premiums (receipts)
|
3,649
|
|
|
3,981
|
|
|
2,930
|
|
|||
Federal Home Loan Bank advances
|
—
|
|
|
200
|
|
|
—
|
|
|||
Surrenders, benefits and other withdrawals
|
(1,673
|
)
|
|
(1,493
|
)
|
|
(1,397
|
)
|
|||
Interest and other annuity benefit expenses:
|
|
|
|
|
|
||||||
Interest credited
|
497
|
|
|
451
|
|
|
438
|
|
|||
Embedded derivative mark-to-market
|
240
|
|
|
184
|
|
|
93
|
|
|||
Change in other benefit reserves
|
81
|
|
|
78
|
|
|
32
|
|
|||
Unlocking
|
(11
|
)
|
|
4
|
|
|
(10
|
)
|
|||
Ending fixed annuity reserves
|
$
|
23,462
|
|
|
$
|
20,679
|
|
|
$
|
17,274
|
|
|
|
|
|
|
|
||||||
Reconciliation to annuity benefits accumulated per balance sheet:
|
|
|
|
|
|
||||||
Ending fixed annuity reserves (from above)
|
$
|
23,462
|
|
|
$
|
20,679
|
|
|
$
|
17,274
|
|
Impact of unrealized investment gains
|
111
|
|
|
71
|
|
|
136
|
|
|||
Fixed component of variable annuities
|
191
|
|
|
194
|
|
|
199
|
|
|||
Annuity benefits accumulated per balance sheet
|
$
|
23,764
|
|
|
$
|
20,944
|
|
|
$
|
17,609
|
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
|||||||||
Financial institutions single premium annuities — indexed
|
$
|
1,489
|
|
|
$
|
1,102
|
|
|
$
|
291
|
|
|
35
|
%
|
|
279
|
%
|
Financial institutions single premium annuities — fixed
|
332
|
|
|
628
|
|
|
587
|
|
|
(47
|
%)
|
|
7
|
%
|
|||
Retail single premium annuities — indexed
|
1,533
|
|
|
1,879
|
|
|
1,662
|
|
|
(18
|
%)
|
|
13
|
%
|
|||
Retail single premium annuities — fixed
|
101
|
|
|
165
|
|
|
153
|
|
|
(39
|
%)
|
|
8
|
%
|
|||
Education market — fixed and indexed annuities
|
194
|
|
|
207
|
|
|
237
|
|
|
(6
|
%)
|
|
(13
|
%)
|
|||
Total fixed annuity premiums
|
3,649
|
|
|
3,981
|
|
|
2,930
|
|
|
(8
|
%)
|
|
36
|
%
|
|||
Variable annuities
|
47
|
|
|
52
|
|
|
61
|
|
|
(10
|
%)
|
|
(15
|
%)
|
|||
Total annuity premiums
|
$
|
3,696
|
|
|
$
|
4,033
|
|
|
$
|
2,991
|
|
|
(8
|
%)
|
|
35
|
%
|
|
|
Year ended December 31,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
Annuity benefits:
|
|
|
|
|
|
|
||||||
Fixed-indexed annuities embedded derivative
|
|
$
|
(58
|
)
|
|
$
|
(2
|
)
|
|
$
|
(36
|
)
|
Sales inducements
|
|
—
|
|
|
2
|
|
|
4
|
|
|||
Other reserves
|
|
47
|
|
|
6
|
|
|
26
|
|
|||
Total annuity benefits
|
|
(11
|
)
|
|
6
|
|
|
(6
|
)
|
|||
Annuity and supplemental insurance acquisition expenses:
|
|
|
|
|
|
|
||||||
Deferred policy acquisition costs
|
|
20
|
|
|
(4
|
)
|
|
33
|
|
|||
Unearned revenue
|
|
(10
|
)
|
|
—
|
|
|
(13
|
)
|
|||
Net charge (expense reduction)
|
|
$
|
(1
|
)
|
|
$
|
2
|
|
|
$
|
14
|
|
|
Year ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Earnings on fixed annuity benefits accumulated (a)
|
$
|
312
|
|
|
$
|
300
|
|
|
$
|
243
|
|
Earnings on investments in excess of fixed annuity benefits accumulated (b)
|
14
|
|
|
24
|
|
|
14
|
|
|||
Variable annuity earnings (loss)
|
2
|
|
|
4
|
|
|
(1
|
)
|
|||
Core earnings before income taxes
|
328
|
|
|
328
|
|
|
256
|
|
|||
Pretax non-core ELNY guaranty fund assessments
|
—
|
|
|
(5
|
)
|
|
—
|
|
|||
GAAP earnings before income taxes
|
$
|
328
|
|
|
$
|
323
|
|
|
$
|
256
|
|
(a)
|
Excludes the $5 million pretax non-core charge for ELNY guarantee fund assessments in 2013.
|
(b)
|
Net investment income (as a % of investments) of
5.03%
and
5.35%
and
5.80%
in
2014
,
2013
and
2012
, respectively, multiplied by the difference between average fixed annuity investments (at amortized cost) and average fixed annuity benefits accumulated in each period.
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Net earned premiums:
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term care
|
$
|
74
|
|
|
$
|
76
|
|
|
$
|
78
|
|
|
(3
|
%)
|
|
(3
|
%)
|
Life operations
|
34
|
|
|
38
|
|
|
41
|
|
|
(11
|
%)
|
|
(7
|
%)
|
|||
Net investment income
|
82
|
|
|
76
|
|
|
69
|
|
|
8
|
%
|
|
10
|
%
|
|||
Other income
|
4
|
|
|
4
|
|
|
3
|
|
|
—
|
%
|
|
33
|
%
|
|||
Total revenues
|
194
|
|
|
194
|
|
|
191
|
|
|
—
|
%
|
|
2
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Life, accident and health benefits:
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term care (*)
|
119
|
|
|
113
|
|
|
99
|
|
|
5
|
%
|
|
14
|
%
|
|||
Life operations
|
45
|
|
|
47
|
|
|
52
|
|
|
(4
|
%)
|
|
(10
|
%)
|
|||
Acquisition expenses (*)
|
17
|
|
|
18
|
|
|
22
|
|
|
(6
|
%)
|
|
(18
|
%)
|
|||
Other expenses
|
23
|
|
|
26
|
|
|
22
|
|
|
(12
|
%)
|
|
18
|
%
|
|||
Total costs and expenses
|
204
|
|
|
204
|
|
|
195
|
|
|
—
|
%
|
|
5
|
%
|
|||
Core loss before income taxes
|
(10
|
)
|
|
(10
|
)
|
|
(4
|
)
|
|
—
|
%
|
|
150
|
%
|
|||
Pretax non-core loss recognition charge
|
—
|
|
|
—
|
|
|
(153
|
)
|
|
—
|
%
|
|
(100
|
%)
|
|||
GAAP loss before income taxes
|
$
|
(10
|
)
|
|
$
|
(10
|
)
|
|
$
|
(157
|
)
|
|
—
|
%
|
|
(94
|
%)
|
(*)
|
Excludes the pretax non-core loss recognition charge recorded in the fourth quarter of 2012 to increase life, accident and health benefits by $74 million and acquisition expenses by $79 million.
|
|
|
Year ended December 31,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Net earned premiums
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
199
|
|
Net investment income
|
|
—
|
|
|
—
|
|
|
7
|
|
|||
Other income
|
|
—
|
|
|
—
|
|
|
6
|
|
|||
Total revenues
|
|
—
|
|
|
—
|
|
|
212
|
|
|||
|
|
|
|
|
|
|
||||||
Costs and Expenses:
|
|
|
|
|
|
|
||||||
Life, accident and health benefits
|
|
—
|
|
|
—
|
|
|
131
|
|
|||
Acquisition expenses
|
|
—
|
|
|
—
|
|
|
31
|
|
|||
Other expenses
|
|
—
|
|
|
—
|
|
|
22
|
|
|||
Total costs and expenses
|
|
—
|
|
|
—
|
|
|
184
|
|
|||
Core earnings before income taxes
|
|
—
|
|
|
—
|
|
|
28
|
|
|||
Pretax non-core realized gain on sale of Medicare supplement and critical illness businesses
|
|
—
|
|
|
—
|
|
|
170
|
|
|||
GAAP earnings before income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
198
|
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Net investment income
|
$
|
5
|
|
|
$
|
8
|
|
|
$
|
5
|
|
|
(38
|
%)
|
|
60
|
%
|
Other income
|
36
|
|
|
27
|
|
|
22
|
|
|
33
|
%
|
|
23
|
%
|
|||
Total revenues
|
41
|
|
|
35
|
|
|
27
|
|
|
17
|
%
|
|
30
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Interest charges on borrowed money
|
69
|
|
|
68
|
|
|
71
|
|
|
1
|
%
|
|
(4
|
%)
|
|||
Other expenses (*)
|
115
|
|
|
135
|
|
|
116
|
|
|
(15
|
%)
|
|
16
|
%
|
|||
Total costs and expenses
|
184
|
|
|
203
|
|
|
187
|
|
|
(9
|
%)
|
|
9
|
%
|
|||
Core loss before income taxes, excluding realized gains
|
(143
|
)
|
|
(168
|
)
|
|
(160
|
)
|
|
(15
|
%)
|
|
5
|
%
|
|||
Pretax non-core items, excluding realized gains:
|
|
|
|
|
|
|
|
|
|
||||||||
Special A&E charges
|
(6
|
)
|
|
(22
|
)
|
|
(2
|
)
|
|
(73
|
%)
|
|
1,000
|
%
|
|||
Other
|
—
|
|
|
—
|
|
|
(23
|
)
|
|
—
|
%
|
|
(100
|
%)
|
|||
GAAP loss before income taxes, excluding realized gains
|
$
|
(149
|
)
|
|
$
|
(190
|
)
|
|
$
|
(185
|
)
|
|
(22
|
%)
|
|
3
|
%
|
(*)
|
Excludes pretax non-core special A&E charges of
$6 million
,
$22 million
and
$2 million
in
2014
,
2013
and
2012
, respectively. Other expenses in 2012 also exclude $23 million in other non-core charges (discussed below).
|
|
Year ended December 31,
|
||||||||||
2014
|
|
2013
|
|
2012
|
|||||||
Realized gains (losses) before impairments:
|
|
|
|
|
|
||||||
Disposals
|
$
|
89
|
|
|
$
|
233
|
|
|
$
|
243
|
|
Change in the fair value of derivatives
|
1
|
|
|
1
|
|
|
1
|
|
|||
Adjustments to annuity deferred policy acquisition costs and related items
|
(2
|
)
|
|
(1
|
)
|
|
(8
|
)
|
|||
|
88
|
|
|
233
|
|
|
236
|
|
|||
Impairment charges:
|
|
|
|
|
|
||||||
Securities
|
(41
|
)
|
|
(15
|
)
|
|
(33
|
)
|
|||
Adjustments to annuity deferred policy acquisition costs and related items
|
5
|
|
|
3
|
|
|
7
|
|
|||
|
(36
|
)
|
|
(12
|
)
|
|
(26
|
)
|
|||
Realized gains on securities
|
$
|
52
|
|
|
$
|
221
|
|
|
$
|
210
|
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014 - 2013
|
|
2013 - 2012
|
||||||||
National Interstate
|
$
|
5
|
|
|
$
|
8
|
|
|
$
|
16
|
|
|
(38
|
%)
|
|
(50
|
%)
|
Marketform
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
%
|
|
(100
|
%)
|
|||
Managed Investment Entities
|
(51
|
)
|
|
(26
|
)
|
|
(98
|
)
|
|
96
|
%
|
|
(73
|
%)
|
|||
Loss attributable to noncontrolling interests
|
$
|
(46
|
)
|
|
$
|
(18
|
)
|
|
$
|
(86
|
)
|
|
156
|
%
|
|
(79
|
%)
|
|
|
2014
|
|
2013
|
||||
Fair value of fixed maturity portfolio
|
|
$
|
31,000
|
|
|
$
|
26,761
|
|
Pretax impact on fair value of 100 bps increase in interest rates
|
|
$
|
(1,550
|
)
|
|
$
|
(1,204
|
)
|
Pretax impact as % of total fixed maturity portfolio
|
|
(5.0
|
%)
|
|
(4.5
|
%)
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Fifth
|
|
Thereafter
|
|
Total
|
|
Fair
Value (*)
|
||||||||||||||||
2014
|
|
$
|
2,047
|
|
|
$
|
2,254
|
|
|
$
|
2,325
|
|
|
$
|
2,472
|
|
|
$
|
2,544
|
|
|
$
|
12,122
|
|
|
$
|
23,764
|
|
|
$
|
23,187
|
|
2013
|
|
1,808
|
|
|
2,071
|
|
|
2,248
|
|
|
2,303
|
|
|
2,356
|
|
|
10,158
|
|
|
20,944
|
|
|
19,959
|
|
(*)
|
Fair value excludes life contingent annuities in the payout phase (carrying value of $203 million at
December 31, 2014
and 2013).
|
|
|
|
December 31, 2014
|
|
|
|
December 31, 2013
|
|
||||||||||
|
|
|
Scheduled
Principal
Payments
|
|
Rate
|
|
|
|
Scheduled
Principal
Payments
|
|
Rate
|
|
||||||
|
2015
|
|
$
|
14
|
|
|
5.7
|
%
|
|
2014
|
|
$
|
2
|
|
|
5.9
|
%
|
|
|
2016
|
|
45
|
|
|
6.1
|
%
|
|
2015
|
|
14
|
|
|
5.7
|
%
|
|
||
|
2017
|
|
—
|
|
|
—
|
%
|
|
2016
|
|
45
|
|
|
6.1
|
%
|
|
||
|
2018
|
|
—
|
|
|
—
|
%
|
|
2017
|
|
—
|
|
|
—
|
%
|
|
||
|
2019
|
|
350
|
|
|
9.9
|
%
|
|
2018
|
|
—
|
|
|
—
|
%
|
|
||
|
Thereafter
|
|
640
|
|
|
6.4
|
%
|
|
Thereafter
|
|
840
|
|
|
7.9
|
%
|
|
||
|
Total
|
|
$
|
1,049
|
|
|
7.5
|
%
|
|
Total
|
|
$
|
901
|
|
|
7.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Fair Value
|
|
$
|
1,168
|
|
|
|
|
Fair Value
|
|
$
|
973
|
|
|
|
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheet as of December 31, 2014 and 2013
|
|
Consolidated Statement of Earnings for the years ended December 31, 2014, 2013 and 2012
|
|
Consolidated Statement of Comprehensive Income for the years ended December 31, 2014, 2013 and 2012
|
|
Consolidated Statement of Changes in Equity for the years ended December 31, 2014, 2013 and 2012
|
|
Consolidated Statement of Cash Flows for the years ended December 31, 2014, 2013 and 2012
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
|
/s/ ERNST & YOUNG LLP
|
Cincinnati, Ohio
|
|
|
February 26, 2015
|
|
|
|
|
|
|
|
/s/ ERNST & YOUNG LLP
|
Cincinnati, Ohio
|
|
|
February 26, 2015
|
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,343
|
|
|
$
|
1,639
|
|
Investments:
|
|
|
|
||||
Fixed maturities, available for sale at fair value (amortized cost — $29,074 and $25,366)
|
30,734
|
|
|
26,456
|
|
||
Fixed maturities, trading at fair value
|
266
|
|
|
305
|
|
||
Equity securities, available for sale at fair value (cost — $1,283 and $931)
|
1,501
|
|
|
1,123
|
|
||
Equity securities, trading at fair value
|
195
|
|
|
56
|
|
||
Mortgage loans
|
1,117
|
|
|
781
|
|
||
Policy loans
|
228
|
|
|
238
|
|
||
Real estate and other investments
|
826
|
|
|
715
|
|
||
Total cash and investments
|
36,210
|
|
|
31,313
|
|
||
Recoverables from reinsurers
|
3,238
|
|
|
3,157
|
|
||
Prepaid reinsurance premiums
|
469
|
|
|
408
|
|
||
Agents’ balances and premiums receivable
|
889
|
|
|
739
|
|
||
Deferred policy acquisition costs
|
821
|
|
|
975
|
|
||
Assets of managed investment entities
|
3,108
|
|
|
2,888
|
|
||
Other receivables
|
910
|
|
|
854
|
|
||
Variable annuity assets (separate accounts)
|
662
|
|
|
665
|
|
||
Other assets
|
1,027
|
|
|
903
|
|
||
Goodwill
|
201
|
|
|
185
|
|
||
Total assets
|
$
|
47,535
|
|
|
$
|
42,087
|
|
|
|
|
|
||||
Liabilities and Equity:
|
|
|
|
||||
Unpaid losses and loss adjustment expenses
|
$
|
7,872
|
|
|
$
|
6,410
|
|
Unearned premiums
|
1,956
|
|
|
1,757
|
|
||
Annuity benefits accumulated
|
23,764
|
|
|
20,944
|
|
||
Life, accident and health reserves
|
2,175
|
|
|
2,008
|
|
||
Payable to reinsurers
|
645
|
|
|
508
|
|
||
Liabilities of managed investment entities
|
2,819
|
|
|
2,567
|
|
||
Long-term debt
|
1,061
|
|
|
913
|
|
||
Variable annuity liabilities (separate accounts)
|
662
|
|
|
665
|
|
||
Other liabilities
|
1,527
|
|
|
1,546
|
|
||
Total liabilities
|
42,481
|
|
|
37,318
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Common Stock, no par value
— 200,000,000 shares authorized
— 87,708,793 and 89,513,386 shares outstanding
|
88
|
|
|
90
|
|
||
Capital surplus
|
1,152
|
|
|
1,123
|
|
||
Retained earnings:
|
|
|
|
||||
Appropriated — managed investment entities
|
(2
|
)
|
|
49
|
|
||
Unappropriated
|
2,914
|
|
|
2,777
|
|
||
Accumulated other comprehensive income, net of tax
|
727
|
|
|
560
|
|
||
Total shareholders’ equity
|
4,879
|
|
|
4,599
|
|
||
Noncontrolling interests
|
175
|
|
|
170
|
|
||
Total equity
|
5,054
|
|
|
4,769
|
|
||
Total liabilities and equity
|
$
|
47,535
|
|
|
$
|
42,087
|
|
|
Year ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Property and casualty insurance net earned premiums
|
$
|
3,878
|
|
|
$
|
3,204
|
|
|
$
|
2,847
|
|
Life, accident and health net earned premiums
|
108
|
|
|
114
|
|
|
318
|
|
|||
Net investment income
|
1,501
|
|
|
1,346
|
|
|
1,301
|
|
|||
Realized gains (losses) on:
|
|
|
|
|
|
||||||
Securities (*)
|
52
|
|
|
221
|
|
|
210
|
|
|||
Subsidiaries
|
—
|
|
|
(4
|
)
|
|
161
|
|
|||
Income (loss) of managed investment entities:
|
|
|
|
|
|
||||||
Investment income
|
116
|
|
|
128
|
|
|
125
|
|
|||
Loss on change in fair value of assets/liabilities
|
(44
|
)
|
|
(14
|
)
|
|
(94
|
)
|
|||
Other income
|
102
|
|
|
97
|
|
|
89
|
|
|||
Total revenues
|
5,713
|
|
|
5,092
|
|
|
4,957
|
|
|||
|
|
|
|
|
|
||||||
Costs and Expenses:
|
|
|
|
|
|
||||||
Property and casualty insurance:
|
|
|
|
|
|
||||||
Losses and loss adjustment expenses
|
2,494
|
|
|
2,040
|
|
|
1,873
|
|
|||
Commissions and other underwriting expenses
|
1,172
|
|
|
1,019
|
|
|
887
|
|
|||
Annuity benefits
|
648
|
|
|
531
|
|
|
541
|
|
|||
Life, accident and health benefits
|
164
|
|
|
160
|
|
|
356
|
|
|||
Annuity and supplemental insurance acquisition expenses
|
173
|
|
|
167
|
|
|
282
|
|
|||
Interest charges on borrowed money
|
73
|
|
|
71
|
|
|
75
|
|
|||
Expenses of managed investment entities
|
82
|
|
|
89
|
|
|
80
|
|
|||
Other expenses
|
281
|
|
|
326
|
|
|
326
|
|
|||
Total costs and expenses
|
5,087
|
|
|
4,403
|
|
|
4,420
|
|
|||
Earnings before income taxes
|
626
|
|
|
689
|
|
|
537
|
|
|||
Provision for income taxes
|
220
|
|
|
236
|
|
|
135
|
|
|||
Net earnings, including noncontrolling interests
|
406
|
|
|
453
|
|
|
402
|
|
|||
Less: Net earnings (loss) attributable to noncontrolling interests
|
(46
|
)
|
|
(18
|
)
|
|
(86
|
)
|
|||
Net Earnings Attributable to Shareholders
|
$
|
452
|
|
|
$
|
471
|
|
|
$
|
488
|
|
|
|
|
|
|
|
||||||
Earnings Attributable to Shareholders per Common Share:
|
|
|
|
|
|
||||||
Basic
|
$
|
5.07
|
|
|
$
|
5.27
|
|
|
$
|
5.18
|
|
Diluted
|
$
|
4.97
|
|
|
$
|
5.16
|
|
|
$
|
5.09
|
|
Average number of Common Shares:
|
|
|
|
|
|
||||||
Basic
|
89.0
|
|
|
89.3
|
|
|
94.2
|
|
|||
Diluted
|
91.0
|
|
|
91.2
|
|
|
95.9
|
|
|||
|
|
|
|
|
|
||||||
Cash dividends per Common Share
|
$
|
1.91
|
|
|
$
|
1.805
|
|
|
$
|
0.97
|
|
________________________________________
|
|
|
|
|
|
||||||
(*) Consists of the following:
|
|
|
|
|
|
||||||
Realized gains before impairments
|
$
|
88
|
|
|
$
|
233
|
|
|
$
|
236
|
|
|
|
|
|
|
|
||||||
Losses on securities with impairment
|
(36
|
)
|
|
(14
|
)
|
|
(27
|
)
|
|||
Non-credit portion recognized in other comprehensive income (loss)
|
—
|
|
|
2
|
|
|
1
|
|
|||
Impairment charges recognized in earnings
|
(36
|
)
|
|
(12
|
)
|
|
(26
|
)
|
|||
Total realized gains on securities
|
$
|
52
|
|
|
$
|
221
|
|
|
$
|
210
|
|
|
Year ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net earnings, including noncontrolling interests
|
$
|
406
|
|
|
$
|
453
|
|
|
$
|
402
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Net unrealized gains (losses) on securities:
|
|
|
|
|
|
||||||
Unrealized holding gains (losses) on securities arising during the period
|
216
|
|
|
(122
|
)
|
|
408
|
|
|||
Reclassification adjustment for realized gains included in net earnings
|
(33
|
)
|
|
(144
|
)
|
|
(138
|
)
|
|||
Reclassification adjustment for unrealized gains of subsidiaries sold
|
—
|
|
|
—
|
|
|
(18
|
)
|
|||
Total net unrealized gains (losses) on securities
|
183
|
|
|
(266
|
)
|
|
252
|
|
|||
Foreign currency translation adjustments
|
(9
|
)
|
|
(13
|
)
|
|
6
|
|
|||
Pension and other postretirement plans adjustments
|
(4
|
)
|
|
2
|
|
|
2
|
|
|||
Other comprehensive income (loss), net of tax
|
170
|
|
|
(277
|
)
|
|
260
|
|
|||
Total comprehensive income, net of tax
|
576
|
|
|
176
|
|
|
662
|
|
|||
Less: Comprehensive income (loss) attributable to noncontrolling interests
|
(43
|
)
|
|
(24
|
)
|
|
(78
|
)
|
|||
Comprehensive income attributable to shareholders
|
$
|
619
|
|
|
$
|
200
|
|
|
$
|
740
|
|
|
|
|
|
Shareholders’ Equity
|
|
|
|
|
|||||||||||||||||||||||
Common
|
|
|
Common Stock
and Capital
|
|
Retained Earnings
|
|
Accumulated
Other Comp
|
|
|
|
Noncon-
trolling
|
|
Total
|
||||||||||||||||||
Shares
|
|
|
Surplus
|
|
Approp.
|
|
Unapprop.
|
|
Inc. (Loss)
|
|
Total
|
|
Interests
|
|
Equity
|
||||||||||||||||
Balance at December 31, 2011
|
97,846,402
|
|
|
|
$
|
1,219
|
|
|
$
|
173
|
|
|
$
|
2,439
|
|
|
$
|
580
|
|
|
$
|
4,411
|
|
|
$
|
146
|
|
|
$
|
4,557
|
|
Net earnings
|
—
|
|
|
|
—
|
|
|
—
|
|
|
488
|
|
|
—
|
|
|
488
|
|
|
(86
|
)
|
|
402
|
|
|||||||
Other comprehensive income
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
252
|
|
|
252
|
|
|
8
|
|
|
260
|
|
|||||||
Allocation of losses of managed investment entities
|
—
|
|
|
|
—
|
|
|
(98
|
)
|
|
—
|
|
|
—
|
|
|
(98
|
)
|
|
98
|
|
|
—
|
|
|||||||
Dividends on Common Stock
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(91
|
)
|
|
—
|
|
|
(91
|
)
|
|
—
|
|
|
(91
|
)
|
|||||||
Shares issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Exercise of stock options
|
1,702,782
|
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
45
|
|
|||||||
Other benefit plans
|
308,352
|
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|||||||
Dividend reinvestment plan
|
21,484
|
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
18
|
|
|||||||
Shares acquired and retired
|
(10,864,184
|
)
|
|
|
(137
|
)
|
|
—
|
|
|
(278
|
)
|
|
—
|
|
|
(415
|
)
|
|
—
|
|
|
(415
|
)
|
|||||||
Shares exchanged — benefit plans
|
(35,533
|
)
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||||
Other
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
(1
|
)
|
|
(39
|
)
|
|
4
|
|
|
(35
|
)
|
|||||||
Balance at December 31, 2012
|
88,979,303
|
|
|
|
$
|
1,152
|
|
|
$
|
75
|
|
|
$
|
2,520
|
|
|
$
|
831
|
|
|
$
|
4,578
|
|
|
$
|
170
|
|
|
$
|
4,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net earnings
|
—
|
|
|
|
—
|
|
|
—
|
|
|
471
|
|
|
—
|
|
|
471
|
|
|
(18
|
)
|
|
453
|
|
|||||||
Other comprehensive loss
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(271
|
)
|
|
(271
|
)
|
|
(6
|
)
|
|
(277
|
)
|
|||||||
Allocation of losses of managed investment entities
|
—
|
|
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
|
26
|
|
|
—
|
|
|||||||
Dividends on Common Stock
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
|
—
|
|
|
(161
|
)
|
|
—
|
|
|
(161
|
)
|
|||||||
Shares issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Exercise of stock options
|
1,625,023
|
|
|
|
53
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|
—
|
|
|
53
|
|
|||||||
Other benefit plans
|
388,043
|
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|||||||
Dividend reinvestment plan
|
28,147
|
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
|||||||
Shares acquired and retired
|
(1,448,156
|
)
|
|
|
(19
|
)
|
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
(70
|
)
|
|
—
|
|
|
(70
|
)
|
|||||||
Shares exchanged — benefit plans
|
(58,974
|
)
|
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||||
Other
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||||||
Balance at December 31, 2013
|
89,513,386
|
|
|
|
$
|
1,213
|
|
|
$
|
49
|
|
|
$
|
2,777
|
|
|
$
|
560
|
|
|
$
|
4,599
|
|
|
$
|
170
|
|
|
$
|
4,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net earnings
|
—
|
|
|
|
—
|
|
|
—
|
|
|
452
|
|
|
—
|
|
|
452
|
|
|
(46
|
)
|
|
406
|
|
|||||||
Other comprehensive income
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
167
|
|
|
167
|
|
|
3
|
|
|
170
|
|
|||||||
Allocation of losses of managed investment entities
|
—
|
|
|
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
—
|
|
|
(51
|
)
|
|
51
|
|
|
—
|
|
|||||||
Dividends on Common Stock
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(169
|
)
|
|
—
|
|
|
(169
|
)
|
|
—
|
|
|
(169
|
)
|
|||||||
Shares issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Exercise of stock options
|
1,262,313
|
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
45
|
|
|||||||
Other benefit plans
|
242,669
|
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|||||||
Dividend reinvestment plan
|
27,238
|
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
|||||||
Shares acquired and retired
|
(3,303,639
|
)
|
|
|
(46
|
)
|
|
—
|
|
|
(145
|
)
|
|
—
|
|
|
(191
|
)
|
|
—
|
|
|
(191
|
)
|
|||||||
Shares exchanged — benefit plans
|
(33,174
|
)
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||||||
Other
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|||||||
Balance at December 31, 2014
|
87,708,793
|
|
|
|
$
|
1,240
|
|
|
$
|
(2
|
)
|
|
$
|
2,914
|
|
|
$
|
727
|
|
|
$
|
4,879
|
|
|
$
|
175
|
|
|
$
|
5,054
|
|
|
Year ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Operating Activities:
|
|
|
|
|
|
||||||
Net earnings, including noncontrolling interests
|
$
|
406
|
|
|
$
|
453
|
|
|
$
|
402
|
|
Adjustments:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
144
|
|
|
142
|
|
|
257
|
|
|||
Annuity benefits
|
648
|
|
|
531
|
|
|
541
|
|
|||
Realized gains on investing activities
|
(58
|
)
|
|
(230
|
)
|
|
(367
|
)
|
|||
Net (purchases) sales of trading securities
|
(109
|
)
|
|
2
|
|
|
17
|
|
|||
Deferred annuity and life policy acquisition costs
|
(198
|
)
|
|
(222
|
)
|
|
(212
|
)
|
|||
Change in:
|
|
|
|
|
|
||||||
Reinsurance and other receivables
|
(199
|
)
|
|
176
|
|
|
(495
|
)
|
|||
Other assets
|
(87
|
)
|
|
(149
|
)
|
|
(51
|
)
|
|||
Insurance claims and reserves
|
587
|
|
|
(200
|
)
|
|
918
|
|
|||
Payable to reinsurers
|
134
|
|
|
51
|
|
|
—
|
|
|||
Other liabilities
|
(63
|
)
|
|
280
|
|
|
(180
|
)
|
|||
Managed investment entities’ assets/liabilities
|
2
|
|
|
(98
|
)
|
|
(21
|
)
|
|||
Other operating activities, net
|
15
|
|
|
24
|
|
|
8
|
|
|||
Net cash provided by operating activities
|
1,222
|
|
|
760
|
|
|
817
|
|
|||
|
|
|
|
|
|
||||||
Investing Activities:
|
|
|
|
|
|
||||||
Purchases of:
|
|
|
|
|
|
||||||
Fixed maturities
|
(6,846
|
)
|
|
(6,690
|
)
|
|
(4,458
|
)
|
|||
Equity securities
|
(471
|
)
|
|
(461
|
)
|
|
(281
|
)
|
|||
Mortgage loans
|
(450
|
)
|
|
(274
|
)
|
|
(269
|
)
|
|||
Real estate, property and equipment
|
(47
|
)
|
|
(52
|
)
|
|
(71
|
)
|
|||
Businesses
|
(267
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from:
|
|
|
|
|
|
||||||
Maturities and redemptions of fixed maturities
|
2,988
|
|
|
3,236
|
|
|
2,262
|
|
|||
Repayments of mortgage loans
|
116
|
|
|
102
|
|
|
46
|
|
|||
Sales of fixed maturities
|
287
|
|
|
275
|
|
|
632
|
|
|||
Sales of equity securities
|
155
|
|
|
434
|
|
|
437
|
|
|||
Sales of real estate, property and equipment
|
14
|
|
|
34
|
|
|
4
|
|
|||
Sales of businesses
|
—
|
|
|
—
|
|
|
322
|
|
|||
Cash and cash equivalents of businesses acquired (sold)
|
1,078
|
|
|
(5
|
)
|
|
(34
|
)
|
|||
Managed investment entities:
|
|
|
|
|
|
||||||
Purchases of investments
|
(1,692
|
)
|
|
(1,426
|
)
|
|
(1,849
|
)
|
|||
Proceeds from sales and redemptions of investments
|
1,417
|
|
|
1,904
|
|
|
1,857
|
|
|||
Other investing activities, net
|
99
|
|
|
8
|
|
|
(23
|
)
|
|||
Net cash used in investing activities
|
(3,619
|
)
|
|
(2,915
|
)
|
|
(1,425
|
)
|
|||
|
|
|
|
|
|
||||||
Financing Activities:
|
|
|
|
|
|
||||||
Annuity receipts
|
3,696
|
|
|
4,233
|
|
|
2,993
|
|
|||
Annuity surrenders, benefits and withdrawals
|
(1,773
|
)
|
|
(1,588
|
)
|
|
(1,504
|
)
|
|||
Net transfers from variable annuity assets
|
43
|
|
|
32
|
|
|
36
|
|
|||
Additional long-term borrowings
|
145
|
|
|
—
|
|
|
372
|
|
|||
Reductions of long-term debt
|
(2
|
)
|
|
(40
|
)
|
|
(365
|
)
|
|||
Issuances of managed investment entities’ liabilities
|
1,400
|
|
|
1,192
|
|
|
781
|
|
|||
Retirement of managed investment entities’ liabilities
|
(1,094
|
)
|
|
(1,560
|
)
|
|
(830
|
)
|
|||
Issuances of Common Stock
|
47
|
|
|
54
|
|
|
46
|
|
|||
Repurchases of Common Stock
|
(191
|
)
|
|
(70
|
)
|
|
(415
|
)
|
|||
Cash dividends paid on Common Stock
|
(167
|
)
|
|
(160
|
)
|
|
(90
|
)
|
|||
Other financing activities, net
|
(3
|
)
|
|
(4
|
)
|
|
(35
|
)
|
|||
Net cash provided by financing activities
|
2,101
|
|
|
2,089
|
|
|
989
|
|
|||
Net Change in Cash and Cash Equivalents
|
(296
|
)
|
|
(66
|
)
|
|
381
|
|
|||
Cash and cash equivalents at beginning of year
|
1,639
|
|
|
1,705
|
|
|
1,324
|
|
|||
Cash and cash equivalents at end of year
|
$
|
1,343
|
|
|
$
|
1,639
|
|
|
$
|
1,705
|
|
INDEX TO NOTES
|
|||||
|
|
|
|
|
|
A.
|
Accounting Policies
|
|
I.
|
Goodwill and Other Intangibles
|
|
B.
|
Acquisitions and Sales of Businesses
|
|
J.
|
Long-Term Debt
|
|
C.
|
Segments of Operations
|
|
K.
|
Shareholders’ Equity
|
|
D.
|
Fair Value Measurements
|
|
L.
|
Income Taxes
|
|
E.
|
Investments
|
|
M.
|
Contingencies
|
|
F.
|
Derivatives
|
|
N.
|
Quarterly Operating Results (Unaudited)
|
|
G.
|
Deferred Policy Acquisition Costs
|
|
O.
|
Insurance
|
|
H.
|
Managed Investment Entities
|
|
P.
|
Additional Information
|
|
|
|
|
|
|
|
Total purchase price
|
|
|
$
|
259
|
|
||
|
|
|
|
||||
Tangible assets acquired:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,078
|
|
|
|
||
Fixed maturities, available for sale
|
92
|
|
|
|
|||
Recoverables from reinsurers
|
116
|
|
|
|
|||
Agents’ balances and premiums receivable
|
41
|
|
|
|
|||
Deferred tax assets, net (a)
|
67
|
|
|
|
|||
Other receivables
|
21
|
|
|
|
|||
Other assets
|
11
|
|
|
|
|||
Total tangible assets acquired
|
|
|
1,426
|
|
|||
|
|
|
|
||||
Liabilities acquired:
|
|
|
|
||||
Unpaid losses and loss adjustment expenses
|
1,142
|
|
|
|
|||
Unearned premiums
|
3
|
|
|
|
|||
Payable to reinsurers
|
3
|
|
|
|
|||
Other liabilities
|
66
|
|
|
|
|||
Total liabilities acquired
|
|
|
1,214
|
|
|||
|
|
|
|
||||
Net tangible assets acquired, at fair value
|
|
|
212
|
|
|||
Excess purchase price over net tangible assets acquired
|
|
|
$
|
47
|
|
||
|
|
|
|
||||
Allocation of excess purchase price:
|
|
|
|
||||
Intangible assets acquired (b)
|
|
|
$
|
47
|
|
||
Deferred tax on intangible assets acquired (a)
|
|
|
(16
|
)
|
|||
Goodwill
|
|
|
16
|
|
|||
|
|
|
$
|
47
|
|
(a)
|
Included with AFG’s net deferred tax liabilities, which are included in Other liabilities in AFG’s Consolidated Balance Sheet.
|
(b)
|
Included in Other assets in AFG’s Consolidated Balance Sheet.
|
|
2012
|
||
Sale proceeds
|
$
|
326
|
|
Expenses
|
(11
|
)
|
|
Net proceeds
|
$
|
315
|
|
|
|
||
Assets of businesses sold:
|
|
||
Cash and investments
|
$
|
217
|
|
Deferred policy acquisition costs
|
108
|
|
|
Other assets
|
31
|
|
|
Total assets
|
356
|
|
|
Liabilities of businesses sold:
|
|
||
Life, accident and health reserves
|
209
|
|
|
Other liabilities
|
2
|
|
|
Total liabilities
|
211
|
|
|
Net assets of businesses sold
|
$
|
145
|
|
|
|
||
Gain on sale of subsidiaries
|
$
|
170
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Assets
|
|
|
|
|
|
||||||
Property and casualty insurance (a)
|
$
|
14,069
|
|
|
$
|
11,717
|
|
|
$
|
12,163
|
|
Annuity
|
27,317
|
|
|
24,294
|
|
|
20,909
|
|
|||
Run-off long-term care and life
|
2,489
|
|
|
2,408
|
|
|
2,304
|
|
|||
Other
|
3,660
|
|
|
3,668
|
|
|
3,795
|
|
|||
Total assets
|
$
|
47,535
|
|
|
$
|
42,087
|
|
|
$
|
39,171
|
|
Revenues
|
|
|
|
|
|
||||||
Property and casualty insurance:
|
|
|
|
|
|
||||||
Premiums earned:
|
|
|
|
|
|
||||||
Specialty
|
|
|
|
|
|
||||||
Property and transportation
|
$
|
1,544
|
|
|
$
|
1,521
|
|
|
$
|
1,423
|
|
Specialty casualty
|
1,765
|
|
|
1,135
|
|
|
948
|
|
|||
Specialty financial
|
469
|
|
|
469
|
|
|
405
|
|
|||
Other specialty
|
100
|
|
|
79
|
|
|
71
|
|
|||
Total premiums earned
|
3,878
|
|
|
3,204
|
|
|
2,847
|
|
|||
Net investment income
|
294
|
|
|
263
|
|
|
275
|
|
|||
Other income
|
9
|
|
|
15
|
|
|
24
|
|
|||
Total property and casualty insurance
|
4,181
|
|
|
3,482
|
|
|
3,146
|
|
|||
Annuity:
|
|
|
|
|
|
||||||
Net investment income
|
1,136
|
|
|
1,034
|
|
|
976
|
|
|||
Other income
|
78
|
|
|
67
|
|
|
52
|
|
|||
Total annuity
|
1,214
|
|
|
1,101
|
|
|
1,028
|
|
|||
Run-off long-term care and life
|
194
|
|
|
194
|
|
|
191
|
|
|||
Medicare supplement and critical illness (b)
|
—
|
|
|
—
|
|
|
212
|
|
|||
Other
|
72
|
|
|
98
|
|
|
9
|
|
|||
Total revenues before realized gains (losses)
|
5,661
|
|
|
4,875
|
|
|
4,586
|
|
|||
Realized gains on securities
|
52
|
|
|
221
|
|
|
210
|
|
|||
Realized gains (losses) on subsidiaries
|
—
|
|
|
(4
|
)
|
|
161
|
|
|||
Total revenues
|
$
|
5,713
|
|
|
$
|
5,092
|
|
|
$
|
4,957
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Earnings Before Income Taxes
|
|
|
|
|
|
||||||
Property and casualty insurance:
|
|
|
|
|
|
||||||
Underwriting:
|
|
|
|
|
|
||||||
Specialty
|
|
|
|
|
|
||||||
Property and transportation
|
$
|
21
|
|
|
$
|
12
|
|
|
$
|
19
|
|
Specialty casualty
|
136
|
|
|
102
|
|
|
53
|
|
|||
Specialty financial
|
64
|
|
|
67
|
|
|
44
|
|
|||
Other specialty
|
16
|
|
|
25
|
|
|
15
|
|
|||
Other lines (a)
|
(25
|
)
|
|
(61
|
)
|
|
(44
|
)
|
|||
Total underwriting
|
212
|
|
|
145
|
|
|
87
|
|
|||
Investment and other income, net
|
244
|
|
|
230
|
|
|
235
|
|
|||
Total property and casualty insurance
|
456
|
|
|
375
|
|
|
322
|
|
|||
Annuity (b)
|
328
|
|
|
323
|
|
|
256
|
|
|||
Run-off long-term care and life (c)
|
(10
|
)
|
|
(10
|
)
|
|
(157
|
)
|
|||
Medicare supplement and critical illness (d)
|
—
|
|
|
—
|
|
|
28
|
|
|||
Other (e)
|
(200
|
)
|
|
(216
|
)
|
|
(283
|
)
|
|||
Total earnings before realized gains (losses) and income taxes
|
574
|
|
|
472
|
|
|
166
|
|
|||
Realized gains on securities
|
52
|
|
|
221
|
|
|
210
|
|
|||
Realized gains (losses) on subsidiaries
|
—
|
|
|
(4
|
)
|
|
161
|
|
|||
Total earnings before income taxes
|
$
|
626
|
|
|
$
|
689
|
|
|
$
|
537
|
|
(a)
|
Includes special charges to increase asbestos and environmental (“A&E”) reserves of
$24 million
,
$54 million
and
$31 million
in
2014
,
2013
and
2012
, respectively.
|
(b)
|
Includes a
$5 million
charge in the second quarter of 2013 to cover expected assessments from state guaranty funds related to insolvency and liquidation of an unaffiliated life insurance company.
|
(c)
|
Includes a loss recognition charge of
$153 million
in the fourth quarter of 2012.
|
(d)
|
Sold in August 2012.
|
(e)
|
Includes holding company expenses, special charges to increase A&E reserves (
$6 million
in
2014
,
$22 million
in
2013
and
$2 million
in
2012
) and losses of managed investment entities attributable to noncontrolling interests (
$51 million
in
2014
,
$26 million
in
2013
and
$98 million
in
2012
). Holding company expenses in 2012 also include an
$8 million
loss on retirement of debt and a
$15 million
charge for a labor matter related to AFG’s former railroad operations.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
December 31, 2014
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Available for sale (“AFS”) fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. Government and government agencies
|
$
|
164
|
|
|
$
|
174
|
|
|
$
|
15
|
|
|
$
|
353
|
|
States, municipalities and political subdivisions
|
—
|
|
|
6,647
|
|
|
100
|
|
|
6,747
|
|
||||
Foreign government
|
—
|
|
|
194
|
|
|
—
|
|
|
194
|
|
||||
Residential MBS
|
—
|
|
|
4,142
|
|
|
300
|
|
|
4,442
|
|
||||
Commercial MBS
|
—
|
|
|
2,407
|
|
|
44
|
|
|
2,451
|
|
||||
Asset-backed securities (“ABS”)
|
—
|
|
|
3,661
|
|
|
226
|
|
|
3,887
|
|
||||
Corporate and other
|
36
|
|
|
12,078
|
|
|
546
|
|
|
12,660
|
|
||||
Total AFS fixed maturities
|
200
|
|
|
29,303
|
|
|
1,231
|
|
|
30,734
|
|
||||
Trading fixed maturities
|
12
|
|
|
254
|
|
|
—
|
|
|
266
|
|
||||
Equity securities
|
1,306
|
|
|
297
|
|
|
93
|
|
|
1,696
|
|
||||
Assets of managed investment entities (“MIE”)
|
174
|
|
|
2,903
|
|
|
31
|
|
|
3,108
|
|
||||
Variable annuity assets (separate accounts) (*)
|
—
|
|
|
662
|
|
|
—
|
|
|
662
|
|
||||
Other investments — derivatives
|
—
|
|
|
322
|
|
|
—
|
|
|
322
|
|
||||
Total assets accounted for at fair value
|
$
|
1,692
|
|
|
$
|
33,741
|
|
|
$
|
1,355
|
|
|
$
|
36,788
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Liabilities of managed investment entities
|
$
|
118
|
|
|
$
|
—
|
|
|
$
|
2,701
|
|
|
$
|
2,819
|
|
Derivatives in annuity benefits accumulated
|
—
|
|
|
—
|
|
|
1,160
|
|
|
1,160
|
|
||||
Other liabilities — derivatives
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||
Total liabilities accounted for at fair value
|
$
|
118
|
|
|
$
|
13
|
|
|
$
|
3,861
|
|
|
$
|
3,992
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2013
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Available for sale fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. Government and government agencies
|
$
|
147
|
|
|
$
|
152
|
|
|
$
|
15
|
|
|
$
|
314
|
|
States, municipalities and political subdivisions
|
—
|
|
|
5,311
|
|
|
61
|
|
|
5,372
|
|
||||
Foreign government
|
—
|
|
|
208
|
|
|
—
|
|
|
208
|
|
||||
Residential MBS
|
—
|
|
|
3,994
|
|
|
316
|
|
|
4,310
|
|
||||
Commercial MBS
|
—
|
|
|
2,696
|
|
|
28
|
|
|
2,724
|
|
||||
Asset-backed securities
|
—
|
|
|
2,418
|
|
|
75
|
|
|
2,493
|
|
||||
Corporate and other
|
28
|
|
|
10,672
|
|
|
335
|
|
|
11,035
|
|
||||
Total AFS fixed maturities
|
175
|
|
|
25,451
|
|
|
830
|
|
|
26,456
|
|
||||
Trading fixed maturities
|
—
|
|
|
305
|
|
|
—
|
|
|
305
|
|
||||
Equity securities
|
1,023
|
|
|
125
|
|
|
31
|
|
|
1,179
|
|
||||
Assets of managed investment entities
|
266
|
|
|
2,592
|
|
|
30
|
|
|
2,888
|
|
||||
Variable annuity assets (separate accounts) (*)
|
—
|
|
|
665
|
|
|
—
|
|
|
665
|
|
||||
Other investments — derivatives
|
—
|
|
|
274
|
|
|
—
|
|
|
274
|
|
||||
Total assets accounted for at fair value
|
$
|
1,464
|
|
|
$
|
29,412
|
|
|
$
|
891
|
|
|
$
|
31,767
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Liabilities of managed investment entities
|
$
|
156
|
|
|
$
|
—
|
|
|
$
|
2,411
|
|
|
$
|
2,567
|
|
Derivatives in annuity benefits accumulated
|
—
|
|
|
—
|
|
|
804
|
|
|
804
|
|
||||
Other liabilities — derivatives
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
||||
Total liabilities accounted for at fair value
|
$
|
156
|
|
|
$
|
10
|
|
|
$
|
3,215
|
|
|
$
|
3,381
|
|
|
Level 2 To Level 1 Transfers
|
|
Level 1 To Level 2 Transfers
|
||||||||||||||||||||||||||||||||||||||
|
# of Transfers
|
|
Fair Value
|
|
# of Transfers
|
|
Fair Value
|
||||||||||||||||||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|
2012
|
||||||||||||||||||
Perpetual preferred stocks
|
14
|
|
|
15
|
|
|
2
|
|
|
$
|
96
|
|
|
$
|
70
|
|
|
$
|
16
|
|
|
13
|
|
|
2
|
|
|
7
|
|
|
$
|
83
|
|
|
$
|
10
|
|
|
$
|
41
|
|
Common stocks
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
—
|
|
||||||
Redeemable preferred stocks
|
1
|
|
|
3
|
|
|
1
|
|
|
5
|
|
|
21
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Unobservable Input
|
|
Range
|
Adjustment for insurance subsidiary’s credit risk
|
|
0.40% – 1.75% over the risk free rate
|
Risk margin for uncertainty in cash flows
|
|
0.52% reduction in the discount rate
|
Surrenders
|
|
4% – 16% of indexed account value
|
Partial surrenders
|
|
2% – 6% of indexed account value
|
Annuitizations
|
|
1% – 1.5% of indexed account value
|
Deaths
|
|
1.5% – 3.0% of indexed account value
|
Budgeted option costs
|
|
2.25% – 3.5% of indexed account value
|
|
|
|
Total realized/unrealized
gains (losses) included in
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2013
|
|
Net
income
|
|
Other
comprehensive
income (loss)
|
|
Purchases
and
issuances
|
|
Sales and
settlements
|
|
Transfer
into
Level 3
|
|
Transfer
out of
Level 3
|
|
Balance at December 31, 2014
|
|||||||||||||||||
AFS fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. government agency
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15
|
|
State and municipal
|
61
|
|
|
(1
|
)
|
|
—
|
|
|
30
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
100
|
|
||||||||
Residential MBS
|
316
|
|
|
4
|
|
|
3
|
|
|
13
|
|
|
(31
|
)
|
|
111
|
|
|
(116
|
)
|
|
300
|
|
||||||||
Commercial MBS
|
28
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
44
|
|
||||||||
Asset-backed securities
|
75
|
|
|
3
|
|
|
(2
|
)
|
|
99
|
|
|
(39
|
)
|
|
117
|
|
|
(27
|
)
|
|
226
|
|
||||||||
Corporate and other
|
335
|
|
|
2
|
|
|
13
|
|
|
102
|
|
|
(73
|
)
|
|
172
|
|
|
(5
|
)
|
|
546
|
|
||||||||
Equity securities
|
31
|
|
|
1
|
|
|
2
|
|
|
62
|
|
|
(9
|
)
|
|
22
|
|
|
(16
|
)
|
|
93
|
|
||||||||
Assets of MIE
|
30
|
|
|
(3
|
)
|
|
—
|
|
|
6
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
31
|
|
||||||||
Liabilities of MIE (a)
|
(2,411
|
)
|
|
22
|
|
|
—
|
|
|
(817
|
)
|
|
505
|
|
|
—
|
|
|
—
|
|
|
(2,701
|
)
|
||||||||
Embedded derivatives (b)
|
(804
|
)
|
|
(182
|
)
|
|
—
|
|
|
(221
|
)
|
|
47
|
|
|
—
|
|
|
—
|
|
|
(1,160
|
)
|
(a)
|
Total realized/unrealized gains (losses) included in net income includes gains of
$50 million
related to liabilities outstanding as of
December 31, 2014
. See
Note
H
— “
Managed Investment Entities
.”
|
(b)
|
Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects gains related to the unlocking of actuarial assumptions of
$58 million
in
2014
.
|
|
|
|
Total realized/unrealized
gains (losses) included in
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2012
|
|
Net
income
|
|
Other
comprehensive
income (loss)
|
|
Purchases
and
issuances
|
|
Sales and
settlements
|
|
Transfer
into
Level 3
|
|
Transfer
out of
Level 3
|
|
Balance at December 31, 2013
|
|||||||||||||||||
AFS fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. government agency
|
$
|
20
|
|
|
$
|
(2
|
)
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15
|
|
State and municipal
|
58
|
|
|
(1
|
)
|
|
(2
|
)
|
|
10
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
61
|
|
||||||||
Residential MBS
|
371
|
|
|
5
|
|
|
24
|
|
|
6
|
|
|
(53
|
)
|
|
86
|
|
|
(123
|
)
|
|
316
|
|
||||||||
Commercial MBS
|
22
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
28
|
|
||||||||
Asset-backed securities
|
253
|
|
|
4
|
|
|
(3
|
)
|
|
12
|
|
|
(57
|
)
|
|
11
|
|
|
(145
|
)
|
|
75
|
|
||||||||
Corporate and other
|
236
|
|
|
1
|
|
|
(14
|
)
|
|
113
|
|
|
(17
|
)
|
|
24
|
|
|
(8
|
)
|
|
335
|
|
||||||||
Equity securities
|
37
|
|
|
(1
|
)
|
|
6
|
|
|
53
|
|
|
(12
|
)
|
|
—
|
|
|
(52
|
)
|
|
31
|
|
||||||||
Assets of MIE
|
40
|
|
|
(5
|
)
|
|
—
|
|
|
8
|
|
|
(7
|
)
|
|
—
|
|
|
(6
|
)
|
|
30
|
|
||||||||
Liabilities of MIE (a)
|
(2,745
|
)
|
|
(25
|
)
|
|
—
|
|
|
(728
|
)
|
|
1,068
|
|
|
—
|
|
|
19
|
|
|
(2,411
|
)
|
||||||||
Embedded derivatives (b)
|
(465
|
)
|
|
(182
|
)
|
|
—
|
|
|
(192
|
)
|
|
35
|
|
|
—
|
|
|
—
|
|
|
(804
|
)
|
(a)
|
Total realized/unrealized gains (losses) included in net income includes gains of
$7 million
related to liabilities outstanding as of
December 31, 2013
. See
Note
H
— “
Managed Investment Entities
.”
|
(b)
|
Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects gains related to the unlocking of actuarial assumptions of
$2 million
in
2013
.
|
|
|
|
Total realized/unrealized
gains (losses) included in
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2011
|
|
Net
income
|
|
Other
comprehensive
income (loss)
|
|
Purchases
and
issuances
|
|
Sales and
settlements
|
|
Transfer
into
Level 3
|
|
Transfer
out of
Level 3
|
|
Balance at December 31, 2012
|
|||||||||||||||||
AFS fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. government agency
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20
|
|
State and municipal
|
83
|
|
|
—
|
|
|
4
|
|
|
19
|
|
|
(7
|
)
|
|
8
|
|
|
(49
|
)
|
|
58
|
|
||||||||
Residential MBS
|
361
|
|
|
5
|
|
|
17
|
|
|
96
|
|
|
(45
|
)
|
|
228
|
|
|
(291
|
)
|
|
371
|
|
||||||||
Commercial MBS
|
19
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
||||||||
Asset-backed securities
|
228
|
|
|
7
|
|
|
8
|
|
|
55
|
|
|
(36
|
)
|
|
14
|
|
|
(23
|
)
|
|
253
|
|
||||||||
Corporate and other
|
291
|
|
|
3
|
|
|
9
|
|
|
86
|
|
|
(35
|
)
|
|
15
|
|
|
(133
|
)
|
|
236
|
|
||||||||
Trading fixed maturities
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||||||
Equity securities
|
11
|
|
|
—
|
|
|
2
|
|
|
30
|
|
|
—
|
|
|
13
|
|
|
(19
|
)
|
|
37
|
|
||||||||
Assets of MIE
|
44
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
(14
|
)
|
|
13
|
|
|
(23
|
)
|
|
40
|
|
||||||||
Liabilities of MIE (a)
|
(2,593
|
)
|
|
(189
|
)
|
|
—
|
|
|
(793
|
)
|
|
830
|
|
|
—
|
|
|
—
|
|
|
(2,745
|
)
|
||||||||
Embedded derivatives (b)
|
(361
|
)
|
|
(57
|
)
|
|
—
|
|
|
(73
|
)
|
|
26
|
|
|
—
|
|
|
—
|
|
|
(465
|
)
|
(a)
|
Total realized/unrealized gains (losses) included in net income includes losses of
$125 million
related to liabilities outstanding as of
December 31, 2012
. See
Note
H
— “
Managed Investment Entities
.”
|
(b)
|
Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects gains related to the unlocking of actuarial assumptions of
$36 million
in
2012
.
|
|
Carrying
Value
|
|
Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
2014
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
1,343
|
|
|
$
|
1,343
|
|
|
$
|
1,343
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mortgage loans
|
1,117
|
|
|
1,124
|
|
|
—
|
|
|
—
|
|
|
1,124
|
|
|||||
Policy loans
|
228
|
|
|
228
|
|
|
—
|
|
|
—
|
|
|
228
|
|
|||||
Total financial assets not accounted for at fair value
|
$
|
2,688
|
|
|
$
|
2,695
|
|
|
$
|
1,343
|
|
|
$
|
—
|
|
|
$
|
1,352
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Annuity benefits accumulated (*)
|
$
|
23,561
|
|
|
$
|
23,187
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,187
|
|
Long-term debt
|
1,061
|
|
|
1,180
|
|
|
—
|
|
|
1,106
|
|
|
74
|
|
|||||
Total financial liabilities not accounted for at fair value
|
$
|
24,622
|
|
|
$
|
24,367
|
|
|
$
|
—
|
|
|
$
|
1,106
|
|
|
$
|
23,261
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2013
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
1,639
|
|
|
$
|
1,639
|
|
|
$
|
1,639
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mortgage loans
|
781
|
|
|
779
|
|
|
—
|
|
|
—
|
|
|
779
|
|
|||||
Policy loans
|
238
|
|
|
238
|
|
|
—
|
|
|
—
|
|
|
238
|
|
|||||
Total financial assets not accounted for at fair value
|
$
|
2,658
|
|
|
$
|
2,656
|
|
|
$
|
1,639
|
|
|
$
|
—
|
|
|
$
|
1,017
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Annuity benefits accumulated (*)
|
$
|
20,741
|
|
|
$
|
19,959
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,959
|
|
Long-term debt
|
913
|
|
|
985
|
|
|
—
|
|
|
909
|
|
|
76
|
|
|||||
Total financial liabilities not accounted for at fair value
|
$
|
21,654
|
|
|
$
|
20,944
|
|
|
$
|
—
|
|
|
$
|
909
|
|
|
$
|
20,035
|
|
(*)
|
Excludes life contingent annuities in the payout phase.
|
|
2014
|
|
2013
|
||||||||||||||||||||||||||||
Amortized
Cost
|
|
Fair
Value
|
|
Gross Unrealized
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Gross Unrealized
|
|||||||||||||||||||||
Gains
|
|
Losses
|
|
Gains
|
|
Losses
|
|||||||||||||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Government and government agencies
|
$
|
347
|
|
|
$
|
353
|
|
|
$
|
8
|
|
|
$
|
(2
|
)
|
|
$
|
310
|
|
|
$
|
314
|
|
|
$
|
7
|
|
|
$
|
(3
|
)
|
States, municipalities and political subdivisions
|
6,393
|
|
|
6,747
|
|
|
364
|
|
|
(10
|
)
|
|
5,360
|
|
|
5,372
|
|
|
156
|
|
|
(144
|
)
|
||||||||
Foreign government
|
184
|
|
|
194
|
|
|
10
|
|
|
—
|
|
|
198
|
|
|
208
|
|
|
10
|
|
|
—
|
|
||||||||
Residential MBS
|
4,046
|
|
|
4,442
|
|
|
411
|
|
|
(15
|
)
|
|
3,947
|
|
|
4,310
|
|
|
391
|
|
|
(28
|
)
|
||||||||
Commercial MBS
|
2,294
|
|
|
2,451
|
|
|
158
|
|
|
(1
|
)
|
|
2,535
|
|
|
2,724
|
|
|
192
|
|
|
(3
|
)
|
||||||||
Asset-backed securities
|
3,872
|
|
|
3,887
|
|
|
37
|
|
|
(22
|
)
|
|
2,477
|
|
|
2,493
|
|
|
35
|
|
|
(19
|
)
|
||||||||
Corporate and other
|
11,938
|
|
|
12,660
|
|
|
751
|
|
|
(29
|
)
|
|
10,539
|
|
|
11,035
|
|
|
604
|
|
|
(108
|
)
|
||||||||
Total fixed maturities
|
$
|
29,074
|
|
|
$
|
30,734
|
|
|
$
|
1,739
|
|
|
$
|
(79
|
)
|
|
$
|
25,366
|
|
|
$
|
26,456
|
|
|
$
|
1,395
|
|
|
$
|
(305
|
)
|
Common stocks
|
$
|
885
|
|
|
$
|
1,087
|
|
|
$
|
227
|
|
|
$
|
(25
|
)
|
|
$
|
665
|
|
|
$
|
858
|
|
|
$
|
209
|
|
|
$
|
(16
|
)
|
Perpetual preferred stocks
|
$
|
398
|
|
|
$
|
414
|
|
|
$
|
21
|
|
|
$
|
(5
|
)
|
|
$
|
266
|
|
|
$
|
265
|
|
|
$
|
9
|
|
|
$
|
(10
|
)
|
|
Less Than Twelve Months
|
|
Twelve Months or More
|
|||||||||||||||||||
Unrealized
Loss
|
|
Fair
Value
|
|
Fair Value as
% of Cost
|
|
Unrealized
Loss
|
|
Fair
Value
|
|
Fair Value as
% of Cost
|
||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
U.S. Government and government agencies
|
$
|
—
|
|
|
$
|
39
|
|
|
100
|
%
|
|
$
|
(2
|
)
|
|
$
|
15
|
|
|
88
|
%
|
|
States, municipalities and political subdivisions
|
(2
|
)
|
|
222
|
|
|
99
|
%
|
|
(8
|
)
|
|
408
|
|
|
98
|
%
|
|||||
Residential MBS
|
(4
|
)
|
|
298
|
|
|
99
|
%
|
|
(11
|
)
|
|
209
|
|
|
95
|
%
|
|||||
Commercial MBS
|
(1
|
)
|
|
38
|
|
|
97
|
%
|
|
—
|
|
|
11
|
|
|
100
|
%
|
|||||
Asset-backed securities
|
(11
|
)
|
|
1,389
|
|
|
99
|
%
|
|
(11
|
)
|
|
622
|
|
|
98
|
%
|
|||||
Corporate and other
|
(16
|
)
|
|
588
|
|
|
97
|
%
|
|
(13
|
)
|
|
433
|
|
|
97
|
%
|
|||||
Total fixed maturities
|
$
|
(34
|
)
|
|
$
|
2,574
|
|
|
99
|
%
|
|
$
|
(45
|
)
|
|
$
|
1,698
|
|
|
97
|
%
|
|
Common stocks
|
$
|
(25
|
)
|
|
$
|
260
|
|
|
91
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
Perpetual preferred stocks
|
$
|
(1
|
)
|
|
$
|
45
|
|
|
98
|
%
|
|
$
|
(4
|
)
|
|
$
|
55
|
|
|
93
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
U.S. Government and government agencies
|
$
|
(3
|
)
|
|
$
|
60
|
|
|
95
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
States, municipalities and political subdivisions
|
(135
|
)
|
|
2,219
|
|
|
94
|
%
|
|
(9
|
)
|
|
73
|
|
|
89
|
%
|
|||||
Residential MBS
|
(9
|
)
|
|
553
|
|
|
98
|
%
|
|
(19
|
)
|
|
212
|
|
|
92
|
%
|
|||||
Commercial MBS
|
(3
|
)
|
|
106
|
|
|
97
|
%
|
|
—
|
|
|
2
|
|
|
100
|
%
|
|||||
Asset-backed securities
|
(18
|
)
|
|
1,310
|
|
|
99
|
%
|
|
(1
|
)
|
|
28
|
|
|
97
|
%
|
|||||
Corporate and other
|
(101
|
)
|
|
2,634
|
|
|
96
|
%
|
|
(7
|
)
|
|
85
|
|
|
92
|
%
|
|||||
Total fixed maturities
|
$
|
(269
|
)
|
|
$
|
6,882
|
|
|
96
|
%
|
|
$
|
(36
|
)
|
|
$
|
400
|
|
|
92
|
%
|
|
Common stocks
|
$
|
(16
|
)
|
|
$
|
158
|
|
|
91
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
Perpetual preferred stocks
|
$
|
(6
|
)
|
|
$
|
91
|
|
|
94
|
%
|
|
$
|
(4
|
)
|
|
$
|
20
|
|
|
83
|
%
|
a)
|
whether the unrealized loss is credit-driven or a result of changes in market interest rates,
|
b)
|
the extent to which fair value is less than cost basis,
|
c)
|
cash flow projections received from independent sources,
|
d)
|
historical operating, balance sheet and cash flow data contained in issuer SEC filings and news releases,
|
e)
|
near-term prospects for improvement in the issuer and/or its industry,
|
f)
|
third party research and communications with industry specialists,
|
g)
|
financial models and forecasts,
|
h)
|
the continuity of dividend payments, maintenance of investment grade ratings and hybrid nature of certain investments,
|
i)
|
discussions with issuer management, and
|
j)
|
ability and intent to hold the investment for a period of time sufficient to allow for anticipated recovery in fair value.
|
|
2014
|
|
2013
|
|
2012
|
||||||
Balance at January 1
|
$
|
194
|
|
|
$
|
192
|
|
|
$
|
187
|
|
Additional credit impairments on:
|
|
|
|
|
|
||||||
Previously impaired securities
|
—
|
|
|
—
|
|
|
5
|
|
|||
Securities without prior impairments
|
—
|
|
|
3
|
|
|
2
|
|
|||
Reductions due to sales or redemptions
|
(24
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|||
Balance at December 31
|
$
|
170
|
|
|
$
|
194
|
|
|
$
|
192
|
|
|
Amortized
|
|
Fair Value
|
|||||||
Cost
|
|
Amount
|
|
%
|
||||||
Maturity
|
|
|
|
|
|
|||||
One year or less
|
$
|
888
|
|
|
$
|
906
|
|
|
3
|
%
|
After one year through five years
|
4,803
|
|
|
5,142
|
|
|
17
|
%
|
||
After five years through ten years
|
8,797
|
|
|
9,211
|
|
|
30
|
%
|
||
After ten years
|
4,374
|
|
|
4,695
|
|
|
15
|
%
|
||
|
18,862
|
|
|
19,954
|
|
|
65
|
%
|
||
ABS (average life of approximately 4-1/2 years)
|
3,872
|
|
|
3,887
|
|
|
13
|
%
|
||
MBS (average life of approximately 4-1/2 years)
|
6,340
|
|
|
6,893
|
|
|
22
|
%
|
||
Total
|
$
|
29,074
|
|
|
$
|
30,734
|
|
|
100
|
%
|
|
Pretax
|
|
Deferred Tax and
Amounts Attributable
to Noncontrolling
Interests
|
|
Net
|
||||||
December 31, 2014
|
|
|
|
|
|
||||||
Unrealized gain on:
|
|
|
|
|
|
||||||
Fixed maturities — annuity segment (*)
|
$
|
1,157
|
|
|
$
|
(405
|
)
|
|
$
|
752
|
|
Fixed maturities — all other
|
503
|
|
|
(185
|
)
|
|
318
|
|
|||
Equity securities
|
218
|
|
|
(79
|
)
|
|
139
|
|
|||
Deferred policy acquisition costs — annuity segment
|
(531
|
)
|
|
186
|
|
|
(345
|
)
|
|||
Annuity benefits accumulated
|
(112
|
)
|
|
39
|
|
|
(73
|
)
|
|||
Life, accident and health reserves
|
(104
|
)
|
|
36
|
|
|
(68
|
)
|
|||
Unearned revenue
|
31
|
|
|
(11
|
)
|
|
20
|
|
|||
|
$
|
1,162
|
|
|
$
|
(419
|
)
|
|
$
|
743
|
|
December 31, 2013
|
|
|
|
|
|
||||||
Unrealized gain on:
|
|
|
|
|
|
||||||
Fixed maturities — annuity segment (*)
|
$
|
729
|
|
|
$
|
(255
|
)
|
|
$
|
474
|
|
Fixed maturities — all other
|
361
|
|
|
(133
|
)
|
|
228
|
|
|||
Equity securities
|
192
|
|
|
(70
|
)
|
|
122
|
|
|||
Deferred policy acquisition costs — annuity segment
|
(345
|
)
|
|
121
|
|
|
(224
|
)
|
|||
Annuity benefits accumulated
|
(71
|
)
|
|
25
|
|
|
(46
|
)
|
|||
Life, accident and health reserves
|
(8
|
)
|
|
3
|
|
|
(5
|
)
|
|||
Unearned revenue
|
22
|
|
|
(8
|
)
|
|
14
|
|
|||
|
$
|
880
|
|
|
$
|
(317
|
)
|
|
$
|
563
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Investment income:
|
|
|
|
|
|
||||||
Fixed maturities
|
$
|
1,352
|
|
|
$
|
1,241
|
|
|
$
|
1,216
|
|
Equity securities
|
66
|
|
|
50
|
|
|
36
|
|
|||
Equity in earnings of partnerships and similar investments (*)
|
18
|
|
|
—
|
|
|
—
|
|
|||
Other
|
77
|
|
|
72
|
|
|
66
|
|
|||
Gross investment income
|
1,513
|
|
|
1,363
|
|
|
1,318
|
|
|||
Investment expenses
|
(12
|
)
|
|
(17
|
)
|
|
(17
|
)
|
|||
Net investment income
|
$
|
1,501
|
|
|
$
|
1,346
|
|
|
$
|
1,301
|
|
(*)
|
Equity in the earnings of partnerships has not been material and was included in realized gains (losses) on securities prior to 2014.
|
|
Fixed
Maturities
|
|
Equity
Securities
|
|
Mortgage
Loans
and Other
Investments
|
|
Other (a)
|
|
Tax
Effects
|
|
Noncon-
trolling
Interests
|
|
Total
|
||||||||||||||
Year ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Realized before impairments
|
$
|
36
|
|
|
$
|
53
|
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
(32
|
)
|
|
$
|
(2
|
)
|
|
$
|
54
|
|
Realized — impairments
|
(15
|
)
|
|
(26
|
)
|
|
—
|
|
|
5
|
|
|
13
|
|
|
1
|
|
|
(22
|
)
|
|||||||
Change in unrealized
|
570
|
|
|
26
|
|
|
—
|
|
|
(314
|
)
|
|
(99
|
)
|
|
(3
|
)
|
|
180
|
|
|||||||
Year ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Realized before impairments
|
$
|
36
|
|
|
$
|
196
|
|
|
$
|
2
|
|
|
$
|
(1
|
)
|
|
$
|
(82
|
)
|
|
$
|
(2
|
)
|
|
$
|
149
|
|
Realized — impairments
|
(5
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
3
|
|
|
4
|
|
|
—
|
|
|
(8
|
)
|
|||||||
Change in unrealized
|
(945
|
)
|
|
31
|
|
|
—
|
|
|
504
|
|
|
144
|
|
|
6
|
|
|
(260
|
)
|
|||||||
Year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Realized before impairments
|
$
|
55
|
|
|
$
|
192
|
|
|
$
|
(3
|
)
|
|
$
|
(8
|
)
|
|
$
|
(83
|
)
|
|
$
|
(2
|
)
|
|
$
|
151
|
|
Realized — impairments
|
(9
|
)
|
|
(24
|
)
|
|
—
|
|
|
7
|
|
|
9
|
|
|
—
|
|
|
(17
|
)
|
|||||||
Change in unrealized
|
790
|
|
|
(23
|
)
|
|
—
|
|
|
(379
|
)
|
|
(136
|
)
|
|
(7
|
)
|
|
245
|
|
(a)
|
Primarily adjustments to deferred policy acquisition costs and reserves related to annuities and long-term care business.
|
|
2014
|
|
2013
|
|
2012
|
||||||
Fixed maturities:
|
|
|
|
|
|
||||||
Gross gains
|
$
|
36
|
|
|
$
|
44
|
|
|
$
|
55
|
|
Gross losses
|
(2
|
)
|
|
(5
|
)
|
|
(4
|
)
|
|||
Equity securities:
|
|
|
|
|
|
||||||
Gross gains
|
53
|
|
|
193
|
|
|
196
|
|
|||
Gross losses
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||||
Derivative
|
|
Balance Sheet Line
|
|
Asset
|
|
Liability
|
|
Asset
|
|
Liability
|
||||||||
MBS with embedded derivatives
|
|
Fixed maturities
|
|
$
|
158
|
|
|
$
|
—
|
|
|
$
|
140
|
|
|
$
|
—
|
|
Public company warrants
|
|
Equity securities
|
|
19
|
|
|
—
|
|
|
19
|
|
|
—
|
|
||||
Interest rate swaptions
|
|
Other investments
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Fixed-indexed annuities (embedded derivative)
|
|
Annuity benefits accumulated
|
|
—
|
|
|
1,160
|
|
|
—
|
|
|
804
|
|
||||
Equity index call options
|
|
Other investments
|
|
322
|
|
|
—
|
|
|
272
|
|
|
—
|
|
||||
Reinsurance contracts (embedded derivative)
|
|
Other liabilities
|
|
—
|
|
|
13
|
|
|
—
|
|
|
10
|
|
||||
|
|
|
|
$
|
499
|
|
|
$
|
1,173
|
|
|
$
|
433
|
|
|
$
|
814
|
|
Derivative
|
|
Statement of Earnings Line
|
|
2014
|
|
2013
|
|
2012
|
||||||
MBS with embedded derivatives
|
|
Realized gains on securities
|
|
$
|
3
|
|
|
$
|
(3
|
)
|
|
$
|
5
|
|
Public company warrants
|
|
Realized gains on securities
|
|
—
|
|
|
3
|
|
|
—
|
|
|||
Interest rate swaptions
|
|
Realized gains on securities
|
|
(2
|
)
|
|
1
|
|
|
(4
|
)
|
|||
Fixed-indexed annuities (embedded derivative) (*)
|
|
Annuity benefits
|
|
(182
|
)
|
|
(182
|
)
|
|
(57
|
)
|
|||
Equity index call options
|
|
Annuity benefits
|
|
181
|
|
|
210
|
|
|
66
|
|
|||
Reinsurance contracts (embedded derivative)
|
|
Net investment income
|
|
(3
|
)
|
|
7
|
|
|
(6
|
)
|
|||
|
|
|
|
$
|
(3
|
)
|
|
$
|
36
|
|
|
$
|
4
|
|
(*)
|
The change in fair value of the embedded derivative includes gains related to unlocking of actuarial assumptions of
$58 million
in
2014
,
$2 million
in
2013
and
$36 million
in
2012
.
|
|
P&C
|
|
|
Annuity and Other (*)
|
|
|
|
||||||||||||||||||||||
|
Deferred
|
|
|
Deferred
|
|
Sales
|
|
|
|
|
|
|
|
|
Consolidated
|
||||||||||||||
|
Costs
|
|
|
Costs
|
|
Inducements
|
|
PVFP
|
|
Unrealized
|
|
Total
|
|
|
Total
|
||||||||||||||
Balance at December 31, 2011
|
$
|
189
|
|
|
|
$
|
916
|
|
|
$
|
189
|
|
|
$
|
144
|
|
|
$
|
(537
|
)
|
|
$
|
712
|
|
|
|
$
|
901
|
|
Additions
|
438
|
|
|
|
212
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
227
|
|
|
|
665
|
|
|||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Periodic amortization
|
(423
|
)
|
|
|
(148
|
)
|
|
(30
|
)
|
|
(17
|
)
|
|
—
|
|
|
(195
|
)
|
|
|
(618
|
)
|
|||||||
Annuity unlocking
|
—
|
|
|
|
(33
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(37
|
)
|
|
|
(37
|
)
|
|||||||
Loss recognition charge
|
—
|
|
|
|
(67
|
)
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(79
|
)
|
|
|
(79
|
)
|
|||||||
Included in realized gains
|
—
|
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|||||||
Sale of subsidiaries
|
—
|
|
|
|
(92
|
)
|
|
—
|
|
|
(16
|
)
|
|
—
|
|
|
(108
|
)
|
|
|
(108
|
)
|
|||||||
Change in unrealized
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(173
|
)
|
|
(173
|
)
|
|
|
(173
|
)
|
|||||||
Balance at December 31, 2012
|
204
|
|
|
|
787
|
|
|
170
|
|
|
99
|
|
|
(710
|
)
|
|
346
|
|
|
|
550
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Additions
|
468
|
|
|
|
222
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
233
|
|
|
|
701
|
|
|||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Periodic amortization
|
(460
|
)
|
|
|
(140
|
)
|
|
(30
|
)
|
|
(14
|
)
|
|
—
|
|
|
(184
|
)
|
|
|
(644
|
)
|
|||||||
Annuity unlocking
|
—
|
|
|
|
4
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
2
|
|
|
|
2
|
|
|||||||
Included in realized gains
|
—
|
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
|
2
|
|
|||||||
Foreign currency translation
|
(1
|
)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(1
|
)
|
|||||||
Change in unrealized
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
365
|
|
|
365
|
|
|
|
365
|
|
|||||||
Balance at December 31, 2013
|
211
|
|
|
|
875
|
|
|
149
|
|
|
85
|
|
|
(345
|
)
|
|
764
|
|
|
|
975
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Additions
|
497
|
|
|
|
198
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
206
|
|
|
|
703
|
|
|||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Periodic amortization
|
(485
|
)
|
|
|
(130
|
)
|
|
(26
|
)
|
|
(11
|
)
|
|
—
|
|
|
(167
|
)
|
|
|
(652
|
)
|
|||||||
Annuity unlocking
|
—
|
|
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|
|
(20
|
)
|
|||||||
Included in realized gains
|
—
|
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
|
3
|
|
|||||||
Foreign currency translation
|
(2
|
)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(2
|
)
|
|||||||
Change in unrealized
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(186
|
)
|
|
(186
|
)
|
|
|
(186
|
)
|
|||||||
Balance at December 31, 2014
|
$
|
221
|
|
|
|
$
|
925
|
|
|
$
|
132
|
|
|
$
|
74
|
|
|
$
|
(531
|
)
|
|
$
|
600
|
|
|
|
$
|
821
|
|
(*)
|
Includes AFG’s run-off long-term care and life segment and Medicare supplement and critical illness segment (sold in August 2012).
|
|
Year ended December 31,
|
||||||||||
2014
|
|
2013
|
|
2012
|
|||||||
Gains (losses) on change in fair value of assets/liabilities (a):
|
|
|
|
|
|
||||||
Assets
|
$
|
(66
|
)
|
|
$
|
11
|
|
|
$
|
95
|
|
Liabilities
|
22
|
|
|
(25
|
)
|
|
(189
|
)
|
|||
Management fees paid to AFG
|
25
|
|
|
16
|
|
|
18
|
|
|||
CLO earnings (losses) attributable to (b):
|
|
|
|
|
|
||||||
AFG shareholders
|
16
|
|
|
35
|
|
|
31
|
|
|||
Noncontrolling interests
|
(51
|
)
|
|
(26
|
)
|
|
(98
|
)
|
(a)
|
Included in Revenues in AFG’s Statement of Earnings.
|
(b)
|
Included in Earnings before income taxes in AFG’s Statement of Earnings.
|
|
Property and
Casualty
|
|
Annuity
|
|
Total
|
||||||
Balance at January 1, 2012
|
$
|
152
|
|
|
$
|
34
|
|
|
$
|
186
|
|
Sale of subsidiary in 2012
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Balance at December 31, 2012 and 2013
|
152
|
|
|
33
|
|
|
185
|
|
|||
Acquisition of subsidiary in 2014
|
16
|
|
|
—
|
|
|
16
|
|
|||
Balance at December 31, 2014
|
$
|
168
|
|
|
$
|
33
|
|
|
$
|
201
|
|
|
2014
|
|
2013
|
||||
Direct Senior Obligations of AFG:
|
|
|
|
||||
9-7/8% Senior Notes due June 2019
|
$
|
350
|
|
|
$
|
350
|
|
6-3/8% Senior Notes due June 2042
|
230
|
|
|
230
|
|
||
5-3/4% Senior Notes due August 2042
|
125
|
|
|
125
|
|
||
7% Senior Notes due September 2050
|
132
|
|
|
132
|
|
||
Other
|
3
|
|
|
3
|
|
||
|
840
|
|
|
840
|
|
||
|
|
|
|
||||
Direct Subordinated Obligations of AFG:
|
|
|
|
||||
6-1/4% Subordinated Debentures due September 2054
|
150
|
|
|
—
|
|
||
|
|
|
|
||||
Subsidiaries:
|
|
|
|
||||
Notes payable secured by real estate due 2015 through 2016
|
59
|
|
|
61
|
|
||
National Interstate bank credit facility
|
12
|
|
|
12
|
|
||
|
71
|
|
|
73
|
|
||
|
$
|
1,061
|
|
|
$
|
913
|
|
|
2014
|
|
2013
|
||||
Senior unsecured obligations
|
$
|
852
|
|
|
$
|
852
|
|
Subordinated unsecured obligations
|
150
|
|
|
—
|
|
||
Obligations secured by real estate
|
59
|
|
|
61
|
|
||
|
$
|
1,061
|
|
|
$
|
913
|
|
|
Shares
|
|
Average
Exercise
Price
|
|
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding at January 1, 2014
|
6,608,614
|
|
|
$
|
32.16
|
|
|
|
|
|
||
Granted
|
1,047,375
|
|
|
$
|
56.47
|
|
|
|
|
|
||
Exercised
|
(1,262,313
|
)
|
|
$
|
28.19
|
|
|
|
|
|
||
Forfeited/Cancelled
|
(9,877
|
)
|
|
$
|
42.22
|
|
|
|
|
|
||
Outstanding at December 31, 2014
|
6,383,799
|
|
|
$
|
36.92
|
|
|
5.8 years
|
|
$
|
152
|
|
|
|
|
|
|
|
|
|
|||||
Options exercisable at December 31, 2014
|
3,465,644
|
|
|
$
|
30.04
|
|
|
4.1 years
|
|
$
|
106
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Exercise price
|
$
|
56.47
|
|
|
$
|
44.01
|
|
|
$
|
38.10
|
|
Expected dividend yield
|
1.6
|
%
|
|
1.8
|
%
|
|
1.8
|
%
|
|||
Expected volatility
|
26
|
%
|
|
39
|
%
|
|
39
|
%
|
|||
Expected term (in years)
|
7.25
|
|
|
7.25
|
|
|
7.25
|
|
|||
Risk-free rate
|
2.20
|
%
|
|
1.36
|
%
|
|
1.40
|
%
|
|||
|
|
|
|
|
|
||||||
Grant date fair value
|
$
|
14.66
|
|
|
$
|
15.10
|
|
|
$
|
13.02
|
|
|
Shares
|
|
Average
Grant Date
Fair Value
|
|||
Outstanding at January 1, 2014
|
552,569
|
|
|
$
|
37.79
|
|
Granted
|
102,330
|
|
|
$
|
56.44
|
|
Vested
|
(139,449
|
)
|
|
$
|
31.05
|
|
Outstanding at December 31, 2014
|
515,450
|
|
|
$
|
43.32
|
|
|
|
|
Other Comprehensive Income
|
|
|
|
|
||||||||||||||||||||||||
|
AOCI
Beginning
Balance
|
|
Pretax
|
|
Tax
|
|
Net
of
tax
|
|
Attributable to
noncontrolling
interests
|
|
Attributable to
shareholders
|
|
Other (c)
|
|
AOCI
Ending
Balance
|
||||||||||||||||
Year ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net unrealized gains on securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Unrealized holding gains (losses) on securities arising during the period
|
|
|
$
|
334
|
|
|
$
|
(118
|
)
|
|
$
|
216
|
|
|
$
|
(4
|
)
|
|
$
|
212
|
|
|
|
|
|
||||||
Reclassification adjustment for realized (gains) losses included in net earnings (a)
|
|
|
(52
|
)
|
|
19
|
|
|
(33
|
)
|
|
1
|
|
|
(32
|
)
|
|
|
|
|
|||||||||||
Total net unrealized gains on securities (b)
|
$
|
563
|
|
|
282
|
|
|
(99
|
)
|
|
183
|
|
|
(3
|
)
|
|
180
|
|
|
$
|
—
|
|
|
$
|
743
|
|
|||||
Foreign currency translation adjustments
|
1
|
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(8
|
)
|
||||||||
Pension and other postretirement plans adjustments
|
(4
|
)
|
|
(6
|
)
|
|
2
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(8
|
)
|
||||||||
Total
|
$
|
560
|
|
|
$
|
267
|
|
|
$
|
(97
|
)
|
|
$
|
170
|
|
|
$
|
(3
|
)
|
|
$
|
167
|
|
|
$
|
—
|
|
|
$
|
727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Year ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net unrealized gains on securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Unrealized holding gains (losses) on securities arising during the period
|
|
|
$
|
(188
|
)
|
|
$
|
66
|
|
|
$
|
(122
|
)
|
|
$
|
4
|
|
|
$
|
(118
|
)
|
|
|
|
|
||||||
Reclassification adjustment for realized (gains) losses included in net earnings (a)
|
|
|
(222
|
)
|
|
78
|
|
|
(144
|
)
|
|
2
|
|
|
(142
|
)
|
|
|
|
|
|||||||||||
Total net unrealized gains on securities (b)
|
$
|
823
|
|
|
(410
|
)
|
|
144
|
|
|
(266
|
)
|
|
6
|
|
|
(260
|
)
|
|
$
|
—
|
|
|
$
|
563
|
|
|||||
Foreign currency translation adjustments
|
14
|
|
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
1
|
|
||||||||
Pension and other postretirement plans adjustments
|
(6
|
)
|
|
3
|
|
|
(1
|
)
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
(4
|
)
|
||||||||
Total
|
$
|
831
|
|
|
$
|
(420
|
)
|
|
$
|
143
|
|
|
$
|
(277
|
)
|
|
$
|
6
|
|
|
$
|
(271
|
)
|
|
$
|
—
|
|
|
$
|
560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net unrealized gains on securities (b)
|
$
|
578
|
|
|
$
|
388
|
|
|
$
|
(136
|
)
|
|
$
|
252
|
|
|
$
|
(7
|
)
|
|
$
|
245
|
|
|
$
|
—
|
|
|
$
|
823
|
|
Foreign currency translation adjustments
|
10
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|
(1
|
)
|
|
5
|
|
|
(1
|
)
|
|
14
|
|
||||||||
Pension and other postretirement plans adjustments
|
(8
|
)
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
(6
|
)
|
||||||||
Total
|
$
|
580
|
|
|
$
|
396
|
|
|
$
|
(136
|
)
|
|
$
|
260
|
|
|
$
|
(8
|
)
|
|
$
|
252
|
|
|
$
|
(1
|
)
|
|
$
|
831
|
|
(a)
|
The reclassification adjustment out of net unrealized gains on securities affected the following lines in AFG’s Consolidated Statement of Earnings:
|
|
OCI component
|
|
Affected line in the Consolidated Statement of Earnings
|
|
|
Pretax
|
|
Realized gains on securities
|
|
|
Tax
|
|
Provision for income taxes
|
|
|
Attributable to noncontrolling interests
|
|
Net earnings (loss) attributable to noncontrolling interests
|
|
(b)
|
Includes net unrealized
gains
of
$58 million
at
December 31, 2014
compared to net unrealized
gains
of
$54 million
and
$33 million
at
December 31, 2013
and
2012
, related to securities for which only the credit portion of an other-than-temporary impairment has been recorded in earnings.
|
(c)
|
Other relates to the 2012 acquisition of noncontrolling interest in a subsidiary.
|
|
2014
|
|
2013
|
|
2012
|
|||||||||||||||
|
Amount
|
|
% of EBT
|
|
Amount
|
|
% of EBT
|
|
Amount
|
|
% of EBT
|
|||||||||
Earnings before income taxes (“EBT”)
|
$
|
626
|
|
|
|
|
$
|
689
|
|
|
|
|
$
|
537
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income taxes at statutory rate
|
$
|
219
|
|
|
35
|
%
|
|
$
|
241
|
|
|
35
|
%
|
|
$
|
188
|
|
|
35
|
%
|
Effect of:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Tax exempt interest
|
(25
|
)
|
|
(4
|
%)
|
|
(21
|
)
|
|
(3
|
%)
|
|
(23
|
)
|
|
(4
|
%)
|
|||
Losses of managed investment entities
|
18
|
|
|
3
|
%
|
|
9
|
|
|
1
|
%
|
|
34
|
|
|
6
|
%
|
|||
Change in valuation allowance
|
7
|
|
|
1
|
%
|
|
1
|
|
|
—
|
%
|
|
3
|
|
|
1
|
%
|
|||
Subsidiaries not in AFG’s tax return
|
1
|
|
|
—
|
%
|
|
2
|
|
|
—
|
%
|
|
(1
|
)
|
|
—
|
%
|
|||
Tax case and settlement of open tax years
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(67
|
)
|
|
(13
|
%)
|
|||
Other
|
—
|
|
|
—
|
%
|
|
4
|
|
|
1
|
%
|
|
1
|
|
|
—
|
%
|
|||
Provision for income taxes as shown in the Statement of Earnings
|
$
|
220
|
|
|
35
|
%
|
|
$
|
236
|
|
|
34
|
%
|
|
$
|
135
|
|
|
25
|
%
|
|
2014
|
|
2013
|
|
2012
|
||||||
Current taxes:
|
|
|
|
|
|
||||||
Federal
|
$
|
265
|
|
|
$
|
308
|
|
|
$
|
146
|
|
State
|
8
|
|
|
5
|
|
|
6
|
|
|||
Deferred taxes:
|
|
|
|
|
|
||||||
Federal
|
(53
|
)
|
|
(77
|
)
|
|
(17
|
)
|
|||
Provision for income taxes
|
$
|
220
|
|
|
$
|
236
|
|
|
$
|
135
|
|
|
Expiring
|
|
Amount
|
|
||
Operating Loss – U.S.
|
2017 - 2024
|
|
$
|
144
|
|
|
Operating Loss – United Kingdom
|
indefinite
|
|
131
|
|
(*)
|
(*)
|
£85 million
|
|
2014
|
|
2013
|
||||
Deferred tax assets:
|
|
|
|
||||
Federal net operating loss carryforwards
|
$
|
51
|
|
|
$
|
51
|
|
Foreign underwriting losses
|
56
|
|
|
50
|
|
||
Insurance claims and reserves
|
746
|
|
|
558
|
|
||
Employee benefits
|
107
|
|
|
98
|
|
||
Other, net
|
26
|
|
|
51
|
|
||
Total deferred tax assets before valuation allowance
|
986
|
|
|
808
|
|
||
Valuation allowance against deferred tax assets
|
(109
|
)
|
|
(103
|
)
|
||
Total deferred tax assets
|
877
|
|
|
705
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Subsidiaries not in AFG’s tax return (*)
|
(61
|
)
|
|
(60
|
)
|
||
Investment securities
|
(663
|
)
|
|
(443
|
)
|
||
Deferred policy acquisition costs
|
(178
|
)
|
|
(234
|
)
|
||
Total deferred tax liabilities
|
(902
|
)
|
|
(737
|
)
|
||
Net deferred tax liability
|
$
|
(25
|
)
|
|
$
|
(32
|
)
|
|
2014
|
|
2013
|
|
2012
|
||||||
Balance at January 1
|
$
|
19
|
|
|
$
|
18
|
|
|
$
|
59
|
|
Reductions for tax positions of prior years
|
(8
|
)
|
|
—
|
|
|
(46
|
)
|
|||
Additions for tax positions of current year
|
—
|
|
|
1
|
|
|
5
|
|
|||
Settlements
|
(11
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at December 31
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
18
|
|
|
|
1st
Quarter
|
|
2nd
Quarter
|
|
3rd
Quarter
|
|
4th
Quarter
|
|
Total
Year
|
||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
1,211
|
|
|
$
|
1,392
|
|
|
$
|
1,581
|
|
|
$
|
1,529
|
|
|
$
|
5,713
|
|
Net earnings, including noncontrolling interests
|
|
107
|
|
|
83
|
|
|
91
|
|
|
125
|
|
|
406
|
|
|||||
Net earnings attributable to shareholders
|
|
103
|
|
|
106
|
|
|
116
|
|
|
127
|
|
|
452
|
|
|||||
Earnings attributable to shareholders per Common Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
1.15
|
|
|
$
|
1.18
|
|
|
$
|
1.30
|
|
|
$
|
1.44
|
|
|
$
|
5.07
|
|
Diluted
|
|
1.13
|
|
|
1.15
|
|
|
1.28
|
|
|
1.41
|
|
|
4.97
|
|
|||||
Average number of Common Shares:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
89.6
|
|
|
89.6
|
|
|
89.0
|
|
|
87.9
|
|
|
89.0
|
|
|||||
Diluted
|
|
91.6
|
|
|
91.6
|
|
|
90.9
|
|
|
89.8
|
|
|
91.0
|
|
|||||
2013
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
1,148
|
|
|
$
|
1,139
|
|
|
$
|
1,443
|
|
|
$
|
1,362
|
|
|
$
|
5,092
|
|
Net earnings, including noncontrolling interests
|
|
113
|
|
|
77
|
|
|
98
|
|
|
165
|
|
|
453
|
|
|||||
Net earnings attributable to shareholders
|
|
120
|
|
|
110
|
|
|
83
|
|
|
158
|
|
|
471
|
|
|||||
Earnings attributable to shareholders per Common Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
1.34
|
|
|
$
|
1.23
|
|
|
$
|
0.94
|
|
|
$
|
1.77
|
|
|
$
|
5.27
|
|
Diluted
|
|
1.32
|
|
|
1.20
|
|
|
0.92
|
|
|
1.73
|
|
|
5.16
|
|
|||||
Average number of Common Shares:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
89.4
|
|
|
89.6
|
|
|
89.1
|
|
|
89.4
|
|
|
89.3
|
|
|||||
Diluted
|
|
91.0
|
|
|
91.5
|
|
|
91.0
|
|
|
91.4
|
|
|
91.2
|
|
|
|
1st
Quarter
|
|
2nd
Quarter
|
|
3rd
Quarter
|
|
4th
Quarter
|
|
Total
Year
|
||||||||||
Realized Gains
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2014
|
|
$
|
19
|
|
|
$
|
12
|
|
|
$
|
13
|
|
|
$
|
8
|
|
|
$
|
52
|
|
2013
|
|
57
|
|
|
41
|
|
|
56
|
|
|
63
|
|
|
217
|
|
|||||
Prior Year Development Favorable (Adverse)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2014
|
|
$
|
31
|
|
|
$
|
(14
|
)
|
|
$
|
(13
|
)
|
|
$
|
(10
|
)
|
|
$
|
(6
|
)
|
2013
|
|
28
|
|
|
22
|
|
|
(40
|
)
|
|
5
|
|
|
15
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Balance at beginning of period
|
$
|
4,288
|
|
|
$
|
4,129
|
|
|
$
|
4,282
|
|
Provision for losses and LAE occurring in the current year
|
2,488
|
|
|
2,055
|
|
|
1,903
|
|
|||
Net increase (decrease) in provision for claims of prior years
|
6
|
|
|
(15
|
)
|
|
(30
|
)
|
|||
Total losses and LAE incurred
|
2,494
|
|
|
2,040
|
|
|
1,873
|
|
|||
Payments for losses and LAE of:
|
|
|
|
|
|
||||||
Current year
|
(789
|
)
|
|
(739
|
)
|
|
(841
|
)
|
|||
Prior years
|
(1,340
|
)
|
|
(1,131
|
)
|
|
(1,185
|
)
|
|||
Total payments
|
(2,129
|
)
|
|
(1,870
|
)
|
|
(2,026
|
)
|
|||
Reserves of businesses acquired (*)
|
1,028
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation and other
|
(36
|
)
|
|
(11
|
)
|
|
—
|
|
|||
Balance at end of period
|
5,645
|
|
|
4,288
|
|
|
4,129
|
|
|||
Add back reinsurance recoverables, net of allowance
|
2,227
|
|
|
2,122
|
|
|
2,716
|
|
|||
Gross unpaid losses and LAE included in the Balance Sheet
|
$
|
7,872
|
|
|
$
|
6,410
|
|
|
$
|
6,845
|
|
|
Net Earnings
|
|
Capital and Surplus
|
||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
||||||||||
Property and casualty companies
|
$
|
318
|
|
|
$
|
332
|
|
|
$
|
221
|
|
|
$
|
2,286
|
|
|
$
|
1,896
|
|
Life insurance companies
|
349
|
|
|
294
|
|
|
171
|
|
|
1,714
|
|
|
1,619
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Direct premiums written
|
$
|
5,387
|
|
|
$
|
4,744
|
|
|
$
|
4,283
|
|
Reinsurance assumed
|
90
|
|
|
61
|
|
|
38
|
|
|||
Reinsurance ceded
|
(1,457
|
)
|
|
(1,464
|
)
|
|
(1,372
|
)
|
|||
Net written premiums
|
$
|
4,020
|
|
|
$
|
3,341
|
|
|
$
|
2,949
|
|
|
|
|
|
|
|
||||||
Direct premiums earned
|
$
|
5,195
|
|
|
$
|
4,684
|
|
|
$
|
4,120
|
|
Reinsurance assumed
|
75
|
|
|
45
|
|
|
36
|
|
|||
Reinsurance ceded
|
(1,392
|
)
|
|
(1,525
|
)
|
|
(1,309
|
)
|
|||
Net earned premiums
|
$
|
3,878
|
|
|
$
|
3,204
|
|
|
$
|
2,847
|
|
|
|
|
|
|
|
||||||
Reinsurance recoveries
|
$
|
895
|
|
|
$
|
1,255
|
|
|
$
|
1,743
|
|
|
2014
|
|
2013
|
||||
Excess death and annuitization
|
$
|
213
|
|
|
$
|
197
|
|
Guaranteed withdrawal benefits
|
151
|
|
|
71
|
|
||
Accrued persistency and premium bonuses
|
14
|
|
|
15
|
|
|
||||||
(a)
|
Documents filed as part of this Report:
|
|||||
|
1.
|
Financial Statements are included in Part II, Item 8.
|
||||
|
|
|
||||
|
2.
|
Financial Statement Schedules:
|
||||
|
|
A.
|
Selected Quarterly Financial Data is included in
Note N
to the Consolidated Financial Statements.
|
|
||
|
|
|
|
|
||
|
|
B.
|
Schedules filed herewith for 2014, 2013 and 2012:
|
|
||
|
|
|
|
Page
|
||
|
|
|
II — Condensed Financial Information of Registrant
|
|||
|
|
|
|
|
||
|
|
|
III — Supplementary Insurance Information
|
|||
|
|
|
|
|
||
|
|
|
All other schedules for which provisions are made in the applicable regulation of the Securities and Exchange Commission have been omitted as they are not applicable, not required, or the information required thereby is set forth in the Financial Statements or the notes thereto.
|
|
||
|
|
|
||||
|
3.
|
Exhibits — See Exhibit Index on page E-1.
|
||||
|
|
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
292
|
|
|
$
|
523
|
|
Investment in securities
|
58
|
|
|
53
|
|
||
Investment in subsidiaries (a)
|
5,638
|
|
|
5,041
|
|
||
Other investments
|
2
|
|
|
2
|
|
||
Other assets
|
103
|
|
|
108
|
|
||
Total assets
|
$
|
6,093
|
|
|
$
|
5,727
|
|
|
|
|
|
||||
Liabilities and Equity:
|
|
|
|
||||
Long-term debt
|
$
|
990
|
|
|
$
|
840
|
|
Other liabilities
|
224
|
|
|
288
|
|
||
Shareholders’ equity
|
4,879
|
|
|
4,599
|
|
||
Total liabilities and equity
|
$
|
6,093
|
|
|
$
|
5,727
|
|
|
Year ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Dividends from subsidiaries
|
$
|
480
|
|
|
$
|
606
|
|
|
$
|
433
|
|
Equity in undistributed earnings of subsidiaries
|
332
|
|
|
260
|
|
|
325
|
|
|||
Investment and other income
|
5
|
|
|
8
|
|
|
5
|
|
|||
Total revenues
|
817
|
|
|
874
|
|
|
763
|
|
|||
|
|
|
|
|
|
||||||
Costs and Expenses:
|
|
|
|
|
|
||||||
Interest charges on intercompany borrowings
|
10
|
|
|
10
|
|
|
11
|
|
|||
Interest charges on other borrowings
|
69
|
|
|
67
|
|
|
61
|
|
|||
Other expenses
|
66
|
|
|
90
|
|
|
68
|
|
|||
Total costs and expenses
|
145
|
|
|
167
|
|
|
140
|
|
|||
|
|
|
|
|
|
||||||
Earnings before income taxes
|
672
|
|
|
707
|
|
|
623
|
|
|||
Provision for income taxes
|
220
|
|
|
236
|
|
|
135
|
|
|||
Net Earnings Attributable to Shareholders
|
$
|
452
|
|
|
$
|
471
|
|
|
$
|
488
|
|
Net earnings attributable to shareholders
|
$
|
452
|
|
|
$
|
471
|
|
|
$
|
488
|
|
Other comprehensive income (loss), net of tax
|
167
|
|
|
(271
|
)
|
|
252
|
|
|||
Total comprehensive income, net of tax
|
$
|
619
|
|
|
$
|
200
|
|
|
$
|
740
|
|
(a)
|
Investment in subsidiaries includes intercompany receivables and payables.
|
|
Year ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Operating Activities:
|
|
|
|
|
|
||||||
Net earnings attributable to shareholders
|
$
|
452
|
|
|
$
|
471
|
|
|
$
|
488
|
|
Adjustments:
|
|
|
|
|
|
||||||
Equity in net earnings of subsidiaries
|
(545
|
)
|
|
(579
|
)
|
|
(515
|
)
|
|||
Dividends from subsidiaries
|
451
|
|
|
543
|
|
|
417
|
|
|||
Other operating activities, net
|
14
|
|
|
(7
|
)
|
|
(10
|
)
|
|||
Net cash provided by operating activities
|
372
|
|
|
428
|
|
|
380
|
|
|||
|
|
|
|
|
|
||||||
Investing Activities:
|
|
|
|
|
|
||||||
Capital contributions to subsidiaries
|
(431
|
)
|
|
(38
|
)
|
|
(274
|
)
|
|||
Returns of capital from subsidiaries
|
—
|
|
|
36
|
|
|
1
|
|
|||
Purchases of investments, property and equipment
|
(1
|
)
|
|
(2
|
)
|
|
(11
|
)
|
|||
Net cash used in investing activities
|
(432
|
)
|
|
(4
|
)
|
|
(284
|
)
|
|||
|
|
|
|
|
|
||||||
Financing Activities:
|
|
|
|
|
|
||||||
Additional long-term borrowings
|
145
|
|
|
—
|
|
|
344
|
|
|||
Reductions of long-term debt
|
—
|
|
|
—
|
|
|
(115
|
)
|
|||
Issuances of Common Stock
|
42
|
|
|
50
|
|
|
44
|
|
|||
Repurchases of Common Stock
|
(191
|
)
|
|
(70
|
)
|
|
(415
|
)
|
|||
Cash dividends paid on Common Stock
|
(167
|
)
|
|
(160
|
)
|
|
(90
|
)
|
|||
Net cash used in financing activities
|
(171
|
)
|
|
(180
|
)
|
|
(232
|
)
|
|||
|
|
|
|
|
|
||||||
Net Change in Cash and Cash Equivalents
|
(231
|
)
|
|
244
|
|
|
(136
|
)
|
|||
Cash and cash equivalents at beginning of year
|
523
|
|
|
279
|
|
|
415
|
|
|||
Cash and cash equivalents at end of year
|
$
|
292
|
|
|
$
|
523
|
|
|
$
|
279
|
|
Segment
|
|
Deferred policy acquisition costs
|
|
Reserves for future policy benefits, claims and unpaid losses and LAE
|
|
Unearned premiums
|
|
Net earned premiums
|
|
Net investment income
|
|
Benefits, claims, losses and settlement expenses
|
|
Amortization of deferred policy acquisition costs
|
|
Other operating expenses
|
|
Net written premiums (excluding life)
|
||||||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property and casualty insurance
|
|
$
|
221
|
|
|
$
|
7,872
|
|
|
$
|
1,956
|
|
|
$
|
3,878
|
|
|
$
|
294
|
|
|
$
|
2,494
|
|
|
$
|
485
|
|
|
$
|
746
|
|
|
$
|
4,020
|
|
Annuity
|
|
564
|
|
|
23,764
|
|
|
—
|
|
|
—
|
|
|
1,136
|
|
|
648
|
|
|
155
|
|
|
83
|
|
|
—
|
|
|||||||||
Run-off long-term care and life
|
|
36
|
|
|
2,175
|
|
|
—
|
|
|
108
|
|
|
82
|
|
|
164
|
|
|
6
|
|
|
34
|
|
|
74
|
|
|||||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
272
|
|
|
—
|
|
|||||||||
Total
|
|
$
|
821
|
|
|
$
|
33,811
|
|
|
$
|
1,956
|
|
|
$
|
3,986
|
|
|
$
|
1,501
|
|
|
$
|
3,306
|
|
|
$
|
646
|
|
|
$
|
1,135
|
|
|
$
|
4,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property and casualty insurance
|
|
$
|
211
|
|
|
$
|
6,410
|
|
|
$
|
1,757
|
|
|
$
|
3,204
|
|
|
$
|
263
|
|
|
$
|
2,040
|
|
|
$
|
460
|
|
|
$
|
607
|
|
|
$
|
3,341
|
|
Annuity
|
|
723
|
|
|
20,944
|
|
|
—
|
|
|
—
|
|
|
1,034
|
|
|
531
|
|
|
144
|
|
|
103
|
|
|
—
|
|
|||||||||
Run-off long-term care and life
|
|
41
|
|
|
2,008
|
|
|
—
|
|
|
114
|
|
|
76
|
|
|
160
|
|
|
6
|
|
|
38
|
|
|
76
|
|
|||||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
—
|
|
|
314
|
|
|
—
|
|
|||||||||
Total
|
|
$
|
975
|
|
|
$
|
29,362
|
|
|
$
|
1,757
|
|
|
$
|
3,318
|
|
|
$
|
1,346
|
|
|
$
|
2,731
|
|
|
$
|
610
|
|
|
$
|
1,062
|
|
|
$
|
3,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property and casualty insurance
|
|
$
|
204
|
|
|
$
|
6,845
|
|
|
$
|
1,651
|
|
|
$
|
2,847
|
|
|
$
|
275
|
|
|
$
|
1,873
|
|
|
$
|
423
|
|
|
$
|
528
|
|
|
$
|
2,949
|
|
Annuity
|
|
299
|
|
|
17,609
|
|
|
—
|
|
|
—
|
|
|
976
|
|
|
541
|
|
|
163
|
|
|
68
|
|
|
—
|
|
|||||||||
Run-off long-term care and life
|
|
47
|
|
|
2,059
|
|
|
—
|
|
|
119
|
|
|
69
|
|
|
225
|
|
|
95
|
|
|
28
|
|
|
79
|
|
|||||||||
Medicare supplement and critical illness
|
|
—
|
|
|
—
|
|
|
—
|
|
|
199
|
|
|
7
|
|
|
131
|
|
|
19
|
|
|
34
|
|
|
199
|
|
|||||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
—
|
|
|
292
|
|
|
—
|
|
|||||||||
Total
|
|
$
|
550
|
|
|
$
|
26,513
|
|
|
$
|
1,651
|
|
|
$
|
3,165
|
|
|
$
|
1,301
|
|
|
$
|
2,770
|
|
|
$
|
700
|
|
|
$
|
950
|
|
|
$
|
3,227
|
|
|
|
|
|
|
American Financial Group, Inc.
|
||
|
|
|
|
|
|
|
|
|
|
|
|
February 26, 2015
|
By:
|
|
/s/ Joseph E. (Jeff) Consolino
|
|
|
|
Joseph E. (Jeff) Consolino
|
|
|
|
Executive Vice President and Chief Financial Officer
|
Signature
|
|
Capacity
|
|
Date
|
|
|
|
|
|
/s/ Carl H. Lindner III
|
|
Co-Chief Executive Officer and Director
|
|
February 26, 2015
|
Carl H. Lindner III
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ S. Craig Lindner
|
|
Co-Chief Executive Officer and Director
|
|
February 26, 2015
|
S. Craig Lindner
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Joseph E. (Jeff) Consolino
|
|
Executive Vice President, Chief Financial Officer and Director
|
|
February 26, 2015
|
Joseph E. (Jeff) Consolino
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Kenneth C. Ambrecht
|
|
Director
|
|
February 26, 2015
|
Kenneth C. Ambrecht
|
|
|
|
|
|
|
|
|
|
/s/ John B. Berding
|
|
Director
|
|
February 26, 2015
|
John B. Berding
|
|
|
|
|
|
|
|
|
|
/s/ Virginia (Gina) C. Drosos
|
|
Director*
|
|
February 26, 2015
|
Virginia (Gina) C. Drosos
|
|
|
|
|
|
|
|
|
|
/s/ James E. Evans
|
|
Director
|
|
February 26, 2015
|
James E. Evans
|
|
|
|
|
|
|
|
|
|
/s/ Terry S. Jacobs
|
|
Director*
|
|
February 26, 2015
|
Terry S. Jacobs
|
|
|
|
|
|
|
|
|
|
/s/ Gregory G. Joseph
|
|
Director*
|
|
February 26, 2015
|
Gregory G. Joseph
|
|
|
|
|
|
|
|
|
|
/s/ William W. Verity
|
|
Director
|
|
February 26, 2015
|
William W. Verity
|
|
|
|
|
|
|
|
|
|
/s/ John I. Von Lehman
|
|
Director*
|
|
February 26, 2015
|
John I. Von Lehman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Member of the Audit Committee
|
|
|
|
|
Number
|
|
Exhibit Description
|
|
|
|
|
3(a)
|
|
Amended and Restated Articles of Incorporation, filed as Exhibit 3(a) to AFG’s Form 10-K for 1997.
|
|
(*)
|
||
3(b)
|
|
Amended and Restated Code of Regulations, filed as Exhibit 3 to AFG’s Form 8-K filed on August 16, 2012.
|
|
(*)
|
||
4
|
|
Instruments defining the rights of security holders.
|
Registrant has no outstanding debt issues exceeding 10% of the assets of Registrant and consolidated subsidiaries.
|
|||
|
|
Material Contracts:
|
|
|
|
|
10(a)
|
|
Amended and Restated Non-Employee Directors Compensation Plan, filed as Exhibit 10 to the Form S-8 Registration Statement (File No. 333-181913) filed by AFG on November 13, 2012.
|
|
(*)
|
||
10(b)
|
|
Amended and Restated Deferred Compensation Plan, filed as Exhibit 10(b) to AFG’s Form 10-K for 2008.
|
|
(*)
|
||
10(c)
|
|
2011 Equity Bonus Plan (formerly known as the 2011 Co-CEO Equity Bonus Plan), filed as Exhibit 10 to the Form S-8 Registration Statement (File No. 333-184915) filed by AFG on November 13, 2012.
|
|
(*)
|
||
10(d)
|
|
2011 Annual Senior Executive Bonus Plan, filed as Annex B to AFG’s Proxy statement filed on March 30, 2011.
|
|
(*)
|
||
10(e)
|
|
Amended and restated Nonqualified Auxiliary RASP, filed as Exhibit 10(f) to AFG’s Form 10-K for 2008.
|
|
(*)
|
||
10(f)
|
|
2005 Stock Incentive Plan Exhibit 10 to the Form S-8 Registration Statement (File No. 333-184914) filed by AFG on November 13, 2012.
|
|
(*)
|
||
10(g)
|
|
Credit Agreement dated December 5, 2012, among American Financial Group, Inc., Bank of America, N.A., as Administrative Agent, and several lenders, filed as Exhibit 10 to AFG’s Form 8-K filed on December 7, 2012.
|
|
(*)
|
||
10(h)
|
|
Stock Purchase Agreement dated January 9, 2014 by and between Liberty Mutual Group Inc. and Great American Holding, Inc. (Summit Holdings Southeast, Inc.), filed as Exhibit 10(h) to AFG’s Form 10-K for 2013.
|
|
(*)
|
||
10(i)
|
|
Amended and Restated Consulting Agreement dated February 23, 2015 between AFG and James E. Evans.
|
|
|
||
12
|
|
Computation of ratios of earnings to fixed charges.
|
|
|
||
21
|
|
Subsidiaries of the Registrant.
|
|
|
||
23
|
|
Consent of independent registered public accounting firm.
|
|
|
||
31(a)
|
|
Certification of Co-Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
|
|
|
||
31(b)
|
|
Certification of Co-Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
|
|
|
||
31(c)
|
|
Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
|
|
|
||
32
|
|
Certification of Co-Chief Executive Officers and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
||
101
|
|
The following financial information from American Financial Group’s Form 10-K for the year ended December 31, 2014, formatted in XBRL (Extensible Business Reporting Language):
|
|
|
||
|
|
(i) Consolidated Balance Sheet
|
|
|
||
|
|
(ii) Consolidated Statement of Earnings
|
|
|
||
|
|
(iii) Consolidated Statement of Comprehensive Income
|
|
|
||
|
|
(iv) Consolidated Statement of Changes in Equity
|
|
|
||
|
|
(v) Consolidated Statement of Cash Flows
|
|
|
||
|
|
(vi) Notes to Consolidated Financial Statements
|
|
|
||
|
|
(vii) Financial Statement Schedules
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) Incorporated herein by reference.
|
|
|
|
|
|
|
Year ended December 31,
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
Earnings before income taxes
|
|
$
|
626
|
|
|
$
|
689
|
|
|
$
|
537
|
|
|
$
|
558
|
|
|
$
|
694
|
|
Undistributed equity in (earnings) losses of investee
|
|
(10
|
)
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
3
|
|
|||||
Losses of managed investment entities attributable to noncontrolling interest
|
|
51
|
|
|
26
|
|
|
98
|
|
|
24
|
|
|
64
|
|
|||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest on annuities
|
|
648
|
|
|
531
|
|
|
541
|
|
|
510
|
|
|
444
|
|
|||||
Interest expense
|
|
73
|
|
|
71
|
|
|
75
|
|
|
74
|
|
|
69
|
|
|||||
Debt discount, expense and other fixed charges
|
|
1
|
|
|
1
|
|
|
12
|
|
|
13
|
|
|
11
|
|
|||||
Portion of rentals representing interest
|
|
22
|
|
|
19
|
|
|
16
|
|
|
18
|
|
|
14
|
|
|||||
EARNINGS
|
|
$
|
1,411
|
|
|
$
|
1,337
|
|
|
$
|
1,278
|
|
|
$
|
1,198
|
|
|
$
|
1,299
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest on annuities
|
|
$
|
648
|
|
|
$
|
531
|
|
|
$
|
541
|
|
|
$
|
510
|
|
|
$
|
444
|
|
Interest expense
|
|
73
|
|
|
71
|
|
|
75
|
|
|
74
|
|
|
69
|
|
|||||
Debt discount, expense and other fixed charges
|
|
1
|
|
|
1
|
|
|
12
|
|
|
13
|
|
|
11
|
|
|||||
Portion of rentals representing interest
|
|
22
|
|
|
19
|
|
|
16
|
|
|
18
|
|
|
14
|
|
|||||
FIXED CHARGES
|
|
$
|
744
|
|
|
$
|
622
|
|
|
$
|
644
|
|
|
$
|
615
|
|
|
$
|
538
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of Earnings to Fixed Charges
|
|
1.90
|
|
|
2.15
|
|
|
1.98
|
|
|
1.95
|
|
|
2.42
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings in Excess of Fixed Charges
|
|
$
|
667
|
|
|
$
|
715
|
|
|
$
|
634
|
|
|
$
|
583
|
|
|
$
|
761
|
|
Name of Company
|
|
Incorporated
|
|
Percentage of Ownership
|
American Money Management Corporation
|
|
Ohio
|
|
100
|
APU Holding Company
|
|
Ohio
|
|
100
|
American Premier Underwriters, Inc.
|
|
Pennsylvania
|
|
100
|
GAI Holding Bermuda Ltd.
|
|
Bermuda
|
|
100
|
GAI Indemnity, Ltd.
|
|
United Kingdom
|
|
100
|
Marketform Group Limited
|
|
United Kingdom
|
|
100
|
Marketform Holdings Limited
|
|
United Kingdom
|
|
100
|
Lavenham Underwriting Limited
|
|
United Kingdom
|
|
100
|
Marketform Limited
|
|
United Kingdom
|
|
100
|
Sampford Underwriting Limited
|
|
United Kingdom
|
|
100
|
Great American Financial Resources, Inc.
|
|
Delaware
|
|
100
|
Ceres Group, Inc.
|
|
Delaware
|
|
100
|
Continental General Corporation
|
|
Nebraska
|
|
100
|
Continental General Insurance Company
|
|
Ohio
|
|
100
|
Great American Life Insurance Company
|
|
Ohio
|
|
100
|
Annuity Investors Life Insurance Company
|
|
Ohio
|
|
100
|
Manhattan National Holding Corporation
|
|
Ohio
|
|
100
|
Manhattan National Life Insurance Company
|
|
Ohio
|
|
100
|
United Teacher Associates Insurance Company
|
|
Texas
|
|
100
|
Great American Holding, Inc.
|
|
Ohio
|
|
100
|
American Empire Surplus Lines Insurance Company
|
|
Delaware
|
|
100
|
American Empire Insurance Company
|
|
Ohio
|
|
100
|
Mid-Continent Casualty Company
|
|
Ohio
|
|
100
|
Mid-Continent Assurance Company
|
|
Ohio
|
|
100
|
Oklahoma Surety Company
|
|
Ohio
|
|
100
|
Republic Indemnity Company of America
|
|
California
|
|
100
|
Republic Indemnity Company of California
|
|
California
|
|
100
|
Summit Holding Southeast, Inc.
|
|
Florida
|
|
100
|
Bridgefield Employers Insurance Company
|
|
Florida
|
|
100
|
Bridgefield Casualty Insurance Company
|
|
Florida
|
|
100
|
Great American Insurance Company
|
|
Ohio
|
|
100
|
Brothers Property Corporation
|
|
Ohio
|
|
80
|
GAI Warranty Company
|
|
Ohio
|
|
100
|
GAI Warranty Company of Florida
|
|
Florida
|
|
100
|
Great American Alliance Insurance Company
|
|
Ohio
|
|
100
|
Great American Assurance Company
|
|
Ohio
|
|
100
|
Great American Casualty Insurance Company
|
|
Ohio
|
|
100
|
Great American Contemporary Insurance Company
|
|
Ohio
|
|
100
|
Great American E&S Insurance Company
|
|
Delaware
|
|
100
|
Great American Fidelity Insurance Company
|
|
Delaware
|
|
100
|
Great American Insurance Company of New York
|
|
New York
|
|
100
|
Great American Protection Insurance Company
|
|
Ohio
|
|
100
|
Great American Security Insurance Company
|
|
Ohio
|
|
100
|
Great American Spirit Insurance Company
|
|
Ohio
|
|
100
|
National Interstate Corporation
|
|
Ohio
|
|
51
|
Hudson Indemnity, Ltd.
|
|
Cayman Islands
|
|
100
|
National Interstate Insurance Company
|
|
Ohio
|
|
100
|
National Interstate Insurance Company of Hawaii, Inc.
|
|
Ohio
|
|
100
|
Triumphe Casualty Company
|
|
Ohio
|
|
100
|
Vanliner Insurance Company
|
|
Missouri
|
|
100
|
Professional Risk Brokers, Inc.
|
|
Illinois
|
|
100
|
Strategic Comp Holdings, LLC
|
|
Louisiana
|
|
100
|
Strategic Comp Services, LLC
|
|
Louisiana
|
|
100
|
Strategic Comp, LLC
|
|
Louisiana
|
|
100
|
|
|
|
Registration
|
|
|
|
|
Form
|
|
Number
|
|
Description
|
|
|
S-8
|
|
33-58825
|
|
Stock Option Plan
|
|
|
S-8
|
|
33-58827
|
|
Employee Stock Purchase Plan
|
|
|
S-3
|
|
333-102567
|
|
Dividend Reinvestment Plan
|
|
|
S-8
|
|
333-117062
|
|
Non-employee Directors Compensation Plan
|
|
|
S-8
|
|
333-184913
|
|
Non-employee Directors Compensation Plan
|
|
|
S-8
|
|
333-14935
|
|
Retirement and Savings Plan
|
|
|
S-8
|
|
333-91945
|
|
Deferred Compensation Plan
|
|
|
S-8
|
|
333-125304
|
|
2005 Stock Incentive Plan
|
|
|
S-8
|
|
333-170343
|
|
2005 Stock Incentive Plan
|
|
|
S-8
|
|
333-184914
|
|
2005 Stock Incentive Plan
|
|
|
S-3
|
|
333-179867
|
|
Shelf Registration — Debt and Equity Securities
|
|
|
S-8
|
|
333-176192
|
|
2011 Equity Bonus Plan (formerly known as the 2011 Co-CEO Equity Bonus Plan)
|
|
|
S-8
|
|
333-184915
|
|
2011 Equity Bonus Plan (formerly known as the 2011 Co-CEO Equity Bonus Plan)
|
|
1.
|
I have reviewed this annual report on Form 10-K of American Financial Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
February 26, 2015
|
|
By:
|
/s/ Carl H. Lindner III
|
|
|
|
|
Carl H. Lindner III
|
|
|
|
|
Co-Chief Executive Officer
|
|
1.
|
I have reviewed this annual report on Form 10-K of American Financial Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
February 26, 2015
|
|
By:
|
/s/ S. Craig Lindner
|
|
|
|
|
S. Craig Lindner
|
|
|
|
|
Co-Chief Executive Officer
|
|
1.
|
I have reviewed this annual report on Form 10-K of American Financial Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
February 26, 2015
|
|
By:
|
/s/ Joseph E. (Jeff) Consolino
|
|
|
|
|
Joseph E. (Jeff) Consolino
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
February 26, 2015
|
|
By:
|
/s/ Carl H. Lindner III
|
|
Date
|
|
|
Carl H. Lindner III
|
|
|
|
|
Co-Chief Executive Officer
|
|
|
|
|
|
|
February 26, 2015
|
|
By:
|
/s/ S. Craig Lindner
|
|
Date
|
|
|
S. Craig Lindner
|
|
|
|
|
Co-Chief Executive Officer
|
|
|
|
|
|
|
February 26, 2015
|
|
By:
|
/s/ Joseph E. (Jeff) Consolino
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Joseph E. (Jeff) Consolino
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Executive Vice President and Chief Financial Officer
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