For the Fiscal Year Ended December 31, 2015
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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
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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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6-1/4% Subordinated Debentures due September 30, 2054
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New York Stock Exchange
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6% Subordinated Debentures due November 15, 2055
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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 Disclosure 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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none
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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 Accounting Fees and Services
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Part IV
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Item 15
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—
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Exhibits, 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;
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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;
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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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||||
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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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3,692
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National Interstate
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A
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|
not rated
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727
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|
Summit (Bridgefield Casualty and Bridgefield Employers)
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A
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A+
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|
535
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|
Republic Indemnity
|
A
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|
A+
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|
277
|
|
|
Marketform Lloyd’s Syndicate
|
A
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|
A+
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|
217
|
|
|
American Empire Surplus Lines
|
A+
|
|
A+
|
|
157
|
|
|
Mid-Continent Casualty
|
A+
|
|
A+
|
|
144
|
|
|
Other
|
|
|
|
|
83
|
|
|
|
|
|
|
|
$
|
5,832
|
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Gross written premiums
|
|
$
|
5,832
|
|
|
$
|
5,477
|
|
|
$
|
4,805
|
|
Ceded reinsurance
|
|
(1,505
|
)
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|
(1,457
|
)
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|
(1,464
|
)
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|||
Net written premiums
|
|
$
|
4,327
|
|
|
$
|
4,020
|
|
|
$
|
3,341
|
|
|
|
|
|
|
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||||||
Net earned premiums
|
|
$
|
4,224
|
|
|
$
|
3,878
|
|
|
$
|
3,204
|
|
Loss and LAE
|
|
2,628
|
|
|
2,470
|
|
|
1,986
|
|
|||
Special asbestos and environmental (“A&E”) charges
|
|
67
|
|
|
24
|
|
|
54
|
|
|||
Underwriting expenses
|
|
1,304
|
|
|
1,172
|
|
|
1,019
|
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|||
Underwriting gain
|
|
$
|
225
|
|
|
$
|
212
|
|
|
$
|
145
|
|
|
|
|
|
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||||||
GAAP ratios:
|
|
|
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||||||
Loss and LAE ratio
|
|
63.8
|
%
|
|
64.3
|
%
|
|
63.7
|
%
|
|||
Underwriting expense ratio
|
|
30.9
|
%
|
|
30.2
|
%
|
|
31.8
|
%
|
|||
Combined ratio
|
|
94.7
|
%
|
|
94.5
|
%
|
|
95.5
|
%
|
|||
|
|
|
|
|
|
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||||||
Statutory ratios:
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|
|
|
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|
||||||
Loss and LAE ratio
|
|
60.9
|
%
|
|
63.2
|
%
|
|
62.2
|
%
|
|||
Underwriting expense ratio
|
|
31.6
|
%
|
|
30.4
|
%
|
|
31.9
|
%
|
|||
Combined ratio
|
|
92.5
|
%
|
|
93.6
|
%
|
|
94.1
|
%
|
|||
|
|
|
|
|
|
|
||||||
Industry statutory combined ratio (a)
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|
|
|
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||||||
All lines
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|
98.0
|
%
|
|
97.4
|
%
|
|
96.4
|
%
|
|||
Commercial lines
|
|
98.1
|
%
|
|
97.1
|
%
|
|
96.7
|
%
|
(a)
|
The source of the industry ratios is “A.M. Best’s U.S. Property/Casualty — Review & Preview” (February 2016 Edition).
|
Property and Transportation
|
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Inland and Ocean Marine
|
Provides coverage primarily for builders’ risk, contractors’ equipment, property, motor truck cargo, marine cargo, boat dealers, marina operators/dealers and excursion vessels.
|
Agricultural-related
|
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
|
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
|
|
Executive and Professional Liability
|
Markets coverage for directors and officers of businesses and non-profit organizations; errors and omissions; mergers and acquisitions; and provides medical malpractice insurance.
|
Umbrella and Excess Liability
|
Provides liability coverage in excess of primary layers.
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Excess and Surplus
|
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.
|
General Liability
|
Provides coverage for contractor-related businesses, energy development and production risks, and environmental liability risks.
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Targeted Programs
|
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
|
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
|
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
|
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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|
2015
|
|
2014
|
|
2013
|
||||||
Property and transportation
|
$
|
1,636
|
|
|
$
|
1,566
|
|
|
$
|
1,547
|
|
Specialty casualty
|
2,052
|
|
|
1,864
|
|
|
1,224
|
|
|||
Specialty financial
|
540
|
|
|
488
|
|
|
486
|
|
|||
Other
|
99
|
|
|
102
|
|
|
84
|
|
|||
|
$
|
4,327
|
|
|
$
|
4,020
|
|
|
$
|
3,341
|
|
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
California
|
|
14.2
|
%
|
|
13.9
|
%
|
|
13.8
|
%
|
|
Pennsylvania
|
|
2.6
|
%
|
|
2.6
|
%
|
|
2.3
|
%
|
Florida
|
|
9.0
|
%
|
|
8.7
|
%
|
|
4.3
|
%
|
|
Iowa
|
|
2.5
|
%
|
|
2.5
|
%
|
|
3.4
|
%
|
New York
|
|
6.7
|
%
|
|
6.6
|
%
|
|
6.6
|
%
|
|
Kansas
|
|
2.5
|
%
|
|
2.5
|
%
|
|
3.2
|
%
|
Texas
|
|
6.1
|
%
|
|
6.2
|
%
|
|
6.8
|
%
|
|
Michigan
|
|
2.5
|
%
|
|
2.3
|
%
|
|
2.4
|
%
|
Illinois
|
|
5.7
|
%
|
|
5.8
|
%
|
|
6.8
|
%
|
|
New Jersey
|
|
2.3
|
%
|
|
2.4
|
%
|
|
2.3
|
%
|
Georgia
|
|
2.8
|
%
|
|
2.8
|
%
|
|
2.3
|
%
|
|
Indiana
|
|
2.0
|
%
|
|
1.8
|
%
|
|
2.3
|
%
|
Missouri
|
|
2.8
|
%
|
|
2.7
|
%
|
|
3.1
|
%
|
|
Other
|
|
35.6
|
%
|
|
36.4
|
%
|
|
38.0
|
%
|
North Carolina
|
|
2.7
|
%
|
|
2.8
|
%
|
|
2.4
|
%
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Retention
Maximum
|
|
Reinsurance
Coverage (a)
|
|
||||
Coverage
|
|
|
|
|
|
||||
California Workers’ Compensation
|
|
$
|
2
|
|
|
$
|
148
|
|
|
Other Workers’ Compensation
|
|
3
|
|
|
37
|
|
|
||
Commercial Umbrella
|
|
7
|
|
|
43
|
|
|
||
Property — General
|
|
5
|
|
|
45
|
|
|
||
Property — Catastrophe
|
|
43
|
|
|
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 $119 million (per occurrence) provided through the Riverfront Re Ltd. catastrophe bond.
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Reinsurance ceded
|
|
$
|
1,505
|
|
|
$
|
1,457
|
|
|
$
|
1,464
|
|
Reinsurance ceded, excluding crop
|
|
899
|
|
|
891
|
|
|
802
|
|
|||
Reinsurance assumed — including involuntary pools and associations
|
|
119
|
|
|
90
|
|
|
61
|
|
|
2005
|
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
||||||||||||||||||||||
As originally estimated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Net liability shown above
|
$
|
3,619
|
|
|
$
|
3,791
|
|
|
$
|
3,868
|
|
|
$
|
4,154
|
|
|
$
|
3,899
|
|
|
$
|
4,164
|
|
|
$
|
4,282
|
|
|
$
|
4,129
|
|
|
$
|
4,288
|
|
|
$
|
5,645
|
|
|
$
|
5,926
|
|
Add reinsurance recoverables
|
2,243
|
|
|
2,309
|
|
|
2,300
|
|
|
2,610
|
|
|
2,513
|
|
|
2,249
|
|
|
2,238
|
|
|
2,716
|
|
|
2,122
|
|
|
2,227
|
|
|
2,201
|
|
|||||||||||
Gross liability
|
$
|
5,862
|
|
|
$
|
6,100
|
|
|
$
|
6,168
|
|
|
$
|
6,764
|
|
|
$
|
6,412
|
|
|
$
|
6,413
|
|
|
$
|
6,520
|
|
|
$
|
6,845
|
|
|
$
|
6,410
|
|
|
$
|
7,872
|
|
|
$
|
8,127
|
|
As re-estimated at December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Net liability shown above
|
$
|
3,469
|
|
|
$
|
3,394
|
|
|
$
|
3,354
|
|
|
$
|
3,838
|
|
|
$
|
3,716
|
|
|
$
|
4,107
|
|
|
$
|
4,321
|
|
|
$
|
4,201
|
|
|
$
|
4,365
|
|
|
$
|
5,678
|
|
|
|
||
Add reinsurance recoverables
|
2,388
|
|
|
2,167
|
|
|
1,916
|
|
|
2,235
|
|
|
1,910
|
|
|
1,909
|
|
|
1,996
|
|
|
2,912
|
|
|
2,152
|
|
|
2,257
|
|
|
|
||||||||||||
Gross liability
|
$
|
5,857
|
|
|
$
|
5,561
|
|
|
$
|
5,270
|
|
|
$
|
6,073
|
|
|
$
|
5,626
|
|
|
$
|
6,016
|
|
|
$
|
6,317
|
|
|
$
|
7,113
|
|
|
$
|
6,517
|
|
|
$
|
7,935
|
|
|
N/A
|
|
|
Gross cumulative deficiency (redundancy) (a)
|
(0.1
|
%)
|
|
(8.8
|
%)
|
|
(14.6
|
%)
|
|
(10.2
|
%)
|
|
(12.3
|
%)
|
|
(6.2
|
%)
|
|
(3.1
|
%)
|
|
3.9
|
%
|
|
1.7
|
%
|
|
0.8
|
%
|
|
N/A
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
(a) Gross cumulative deficiency (redundancy):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Special A&E charges
|
6.3
|
%
|
|
6.2
|
%
|
|
5.1
|
%
|
|
4.5
|
%
|
|
4.6
|
%
|
|
4.7
|
%
|
|
3.8
|
%
|
|
3.1
|
%
|
|
1.9
|
%
|
|
1.1
|
%
|
|
|
||||||||||||
Other
|
(6.4
|
%)
|
|
(15.0
|
%)
|
|
(19.7
|
%)
|
|
(14.7
|
%)
|
|
(16.9
|
%)
|
|
(10.9
|
%)
|
|
(6.9
|
%)
|
|
0.8
|
%
|
|
(0.2
|
%)
|
|
(0.3
|
%)
|
|
|
||||||||||||
Total
|
(0.1
|
%)
|
|
(8.8
|
%)
|
|
(14.6
|
%)
|
|
(10.2
|
%)
|
|
(12.3
|
%)
|
|
(6.2
|
%)
|
|
(3.1
|
%)
|
|
3.9
|
%
|
|
1.7
|
%
|
|
0.8
|
%
|
|
N/A
|
|
Liability reported on a SAP basis, net of $112 million of retroactive reinsurance
|
$
|
5,260
|
|
Reinsurance recoverables, net of allowance
|
2,201
|
|
|
Other, including reserves of foreign insurers
|
666
|
|
|
Liability reported on a GAAP basis
|
$
|
8,127
|
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Reserves at beginning of year
|
|
$
|
289
|
|
|
$
|
301
|
|
|
$
|
373
|
|
Incurred losses and LAE
|
|
67
|
|
|
24
|
|
|
59
|
|
|||
Paid losses and LAE — two large claims (*)
|
|
—
|
|
|
—
|
|
|
(106
|
)
|
|||
Paid losses and LAE — other
|
|
(29
|
)
|
|
(36
|
)
|
|
(25
|
)
|
|||
Reserves at end of year, net of reinsurance recoverable
|
|
327
|
|
|
289
|
|
|
301
|
|
|||
Reinsurance recoverable, net of allowance
|
|
99
|
|
|
77
|
|
|
83
|
|
|||
Gross reserves at end of year
|
|
$
|
426
|
|
|
$
|
366
|
|
|
$
|
384
|
|
(*)
|
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
|
|
$
|
3,923
|
|
|
366,000
|
|
|
A
|
|
A+
|
Annuity Investors Life Insurance Company
|
|
216
|
|
|
122,000
|
|
|
A
|
|
A+
|
|
|
Premiums
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Financial institutions single premium annuities — indexed
|
|
$
|
1,741
|
|
|
$
|
1,489
|
|
|
$
|
1,102
|
|
Financial institutions single premium annuities — fixed
|
|
229
|
|
|
332
|
|
|
628
|
|
|||
Retail single premium annuities — indexed
|
|
1,864
|
|
|
1,533
|
|
|
1,879
|
|
|||
Retail single premium annuities — fixed
|
|
70
|
|
|
101
|
|
|
165
|
|
|||
Education market — fixed and indexed annuities
|
|
194
|
|
|
194
|
|
|
207
|
|
|||
Total fixed annuity premiums
|
|
4,098
|
|
|
3,649
|
|
|
3,981
|
|
|||
Variable annuities
|
|
42
|
|
|
47
|
|
|
52
|
|
|||
Total annuity premiums
|
|
$
|
4,140
|
|
|
$
|
3,696
|
|
|
$
|
4,033
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Annuity earnings before income taxes — before change in fair value of derivatives related to FIAs and special charge for guaranty fund assessments
|
|
$
|
354
|
|
|
$
|
362
|
|
|
$
|
313
|
|
Impact of the change in fair value of derivatives related to FIAs (a)
|
|
(23
|
)
|
|
(34
|
)
|
|
15
|
|
|||
Special charge for guaranty fund assessments
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||
Annuity segment earnings before income taxes
|
|
$
|
331
|
|
|
$
|
328
|
|
|
$
|
323
|
|
|
|
|
|
|
|
|
||||||
Net spread earned on fixed annuities — before impact of derivatives related to FIAs
|
|
1.35
|
%
|
|
1.56
|
%
|
|
1.52
|
%
|
|||
Impact of derivatives related to FIAs
|
|
(0.09
|
%)
|
|
(0.15
|
%)
|
|
0.08
|
%
|
|||
Impact of special charge for guaranty fund assessments
|
|
—
|
%
|
|
—
|
%
|
|
(0.03
|
%)
|
|||
Net spread earned on fixed annuities
|
|
1.26
|
%
|
|
1.41
|
%
|
|
1.57
|
%
|
(a)
|
Fixed-indexed annuities, which represented approximately
60%
of annuity benefits accumulated at
December 31, 2015
, 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 the change in the fair value of the call option assets will generally offset the economic change in the liabilities from the index participation. Both the index-based component of the annuities (fair value of $1.37 billion at
December 31, 2015
) and the related call options (fair value of $241 million at
December 31, 2015
) 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
|
11.7%
|
BB&T Corporation
|
6.0%
|
The PNC Financial Services Group, Inc.
|
4.4%
|
Citizens Financial Group, Inc.
|
3.9%
|
LPL Financial
|
3.8%
|
|
|
2015
|
|
2014
|
|
2013
|
|||
Florida
|
|
9.2
|
%
|
|
9.2
|
%
|
|
8.9
|
%
|
California
|
|
8.3
|
%
|
|
8.5
|
%
|
|
7.3
|
%
|
Pennsylvania
|
|
6.6
|
%
|
|
6.0
|
%
|
|
6.9
|
%
|
Missouri
|
|
6.1
|
%
|
|
4.8
|
%
|
|
2.7
|
%
|
Ohio
|
|
5.5
|
%
|
|
5.7
|
%
|
|
6.6
|
%
|
North Carolina
|
|
5.4
|
%
|
|
6.2
|
%
|
|
5.1
|
%
|
|
|
2015
|
|
2014
|
|
2013
|
|||
Yield on Fixed Maturities (a):
|
|
|
|
|
|
|
|||
Excluding realized gains and losses
|
|
4.7
|
%
|
|
4.9
|
%
|
|
5.2
|
%
|
Including realized gains and losses
|
|
4.6
|
%
|
|
5.0
|
%
|
|
5.3
|
%
|
|
|
|
|
|
|
|
|||
Yield on Equity Securities (a):
|
|
|
|
|
|
|
|||
Excluding realized gains and losses
|
|
5.4
|
%
|
|
5.4
|
%
|
|
5.5
|
%
|
Including realized gains and losses
|
|
5.4
|
%
|
|
7.7
|
%
|
|
26.4
|
%
|
(a)
|
Based on amortized cost; excludes effects of changes in unrealized gains and losses. Realized losses include impairment charges.
|
|
|
2015
|
|
2014
|
|
2013
|
|||
Total return on AFG’s fixed maturities
|
|
1.5
|
%
|
|
6.9
|
%
|
|
1.3
|
%
|
Barclays Capital U.S. Universal Bond Index
|
|
0.4
|
%
|
|
5.6
|
%
|
|
(1.3
|
%)
|
|
|
|
|
|
|
|
|||
Total return on AFG’s equity securities
|
|
(3.4
|
%)
|
|
8.7
|
%
|
|
27.1
|
%
|
Standard & Poor’s 500 Index
|
|
1.4
|
%
|
|
13.7
|
%
|
|
32.4
|
%
|
|
|
Amortized
|
|
Fair Value
|
|||||||
|
|
Cost
|
|
Amount
|
|
%
|
|||||
S&P or comparable rating
|
|
|
|
|
|
|
|||||
AAA, AA, A
|
|
$
|
20,870
|
|
|
$
|
21,365
|
|
|
66
|
%
|
BBB
|
|
7,449
|
|
|
7,478
|
|
|
23
|
%
|
||
Total investment grade
|
|
28,319
|
|
|
28,843
|
|
|
89
|
%
|
||
BB
|
|
786
|
|
|
761
|
|
|
3
|
%
|
||
B
|
|
438
|
|
|
417
|
|
|
1
|
%
|
||
CCC, CC, C
|
|
813
|
|
|
917
|
|
|
3
|
%
|
||
D
|
|
372
|
|
|
447
|
|
|
1
|
%
|
||
Total non-investment grade
|
|
2,409
|
|
|
2,542
|
|
|
8
|
%
|
||
Not rated
|
|
837
|
|
|
899
|
|
|
3
|
%
|
||
Total
|
|
$
|
31,565
|
|
|
$
|
32,284
|
|
|
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.
|
|
|
2015
|
|
2014
|
||||||||||||
|
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
First Quarter
|
|
$
|
65.51
|
|
|
$
|
57.50
|
|
|
$
|
58.26
|
|
|
$
|
52.89
|
|
Second Quarter
|
|
66.72
|
|
|
62.98
|
|
|
60.00
|
|
|
55.49
|
|
||||
Third Quarter
|
|
73.65
|
|
|
65.43
|
|
|
60.64
|
|
|
55.57
|
|
||||
Fourth Quarter
|
|
75.68
|
|
|
67.39
|
|
|
62.55
|
|
|
54.63
|
|
|
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
|
1,767,240
|
|
|
$
|
63.92
|
|
|
1,767,240
|
|
|
3,232,760
|
|
Fourth Quarter:
|
|
|
|
|
|
|
|
|||||
October
|
22,500
|
|
|
68.24
|
|
|
22,500
|
|
|
3,210,260
|
|
|
November
|
—
|
|
|
—
|
|
|
—
|
|
|
3,210,260
|
|
|
December
|
165,446
|
|
|
70.46
|
|
|
165,446
|
|
|
3,044,814
|
|
|
Total
|
1,955,186
|
|
|
$
|
64.52
|
|
|
1,955,186
|
|
|
|
(a)
|
Represents the remaining shares that may be repurchased under the Plans authorized by AFG’s Board of Directors in December 2014. In February 2016, AFG’s Board of Directors authorized the repurchase of three million additional shares.
|
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Earnings Statement Data
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues
|
|
$
|
6,145
|
|
|
$
|
5,733
|
|
|
$
|
5,103
|
|
|
$
|
4,982
|
|
|
$
|
4,642
|
|
Earnings before income taxes
|
|
565
|
|
|
626
|
|
|
689
|
|
|
537
|
|
|
558
|
|
|||||
Net earnings, including noncontrolling interests
|
|
370
|
|
|
406
|
|
|
453
|
|
|
402
|
|
|
319
|
|
|||||
Less: Net earnings (loss) attributable to noncontrolling interests
|
|
18
|
|
|
(46
|
)
|
|
(18
|
)
|
|
(86
|
)
|
|
(23
|
)
|
|||||
Net earnings attributable to shareholders
|
|
352
|
|
|
452
|
|
|
471
|
|
|
488
|
|
|
342
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings attributable to shareholders per Common Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
4.02
|
|
|
$
|
5.07
|
|
|
$
|
5.27
|
|
|
$
|
5.18
|
|
|
$
|
3.37
|
|
Diluted
|
|
3.94
|
|
|
4.97
|
|
|
5.16
|
|
|
5.09
|
|
|
3.32
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends paid per share of Common Stock (a)
|
|
$
|
2.03
|
|
|
$
|
1.91
|
|
|
$
|
1.805
|
|
|
$
|
0.97
|
|
|
$
|
0.6625
|
|
Ratio of earnings to fixed charges including annuity benefits (b)
|
|
1.66
|
|
|
1.90
|
|
|
2.15
|
|
|
1.98
|
|
|
1.95
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and investments
|
|
$
|
37,736
|
|
|
$
|
36,210
|
|
|
$
|
31,313
|
|
|
$
|
28,449
|
|
|
$
|
25,577
|
|
Total assets
|
|
49,859
|
|
|
47,535
|
|
|
42,087
|
|
|
39,171
|
|
|
35,838
|
|
|||||
Property and casualty insurance reserves:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Unpaid losses and loss adjustment expenses
|
|
8,127
|
|
|
7,872
|
|
|
6,410
|
|
|
6,845
|
|
|
6,520
|
|
|||||
Unearned premiums
|
|
2,060
|
|
|
1,956
|
|
|
1,757
|
|
|
1,651
|
|
|
1,484
|
|
|||||
Annuity benefits accumulated
|
|
26,622
|
|
|
23,764
|
|
|
20,944
|
|
|
17,609
|
|
|
15,420
|
|
|||||
Life, accident and health reserves
|
|
705
|
|
|
2,175
|
|
|
2,008
|
|
|
2,059
|
|
|
1,727
|
|
|||||
Long-term debt
|
|
1,020
|
|
|
1,061
|
|
|
913
|
|
|
953
|
|
|
934
|
|
|||||
Shareholders’ equity
|
|
4,592
|
|
|
4,879
|
|
|
4,599
|
|
|
4,578
|
|
|
4,411
|
|
|||||
Less:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net unrealized gain on fixed maturities (c)
|
|
278
|
|
|
604
|
|
|
441
|
|
|
719
|
|
|
459
|
|
|||||
Appropriated retained earnings
|
|
—
|
|
|
(2
|
)
|
|
49
|
|
|
75
|
|
|
173
|
|
|||||
Adjusted shareholders’ equity (d)
|
|
4,314
|
|
|
4,277
|
|
|
4,109
|
|
|
3,784
|
|
|
3,779
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Book value per share
|
|
$
|
52.50
|
|
|
$
|
55.62
|
|
|
$
|
51.38
|
|
|
$
|
51.45
|
|
|
$
|
45.08
|
|
Adjusted book value per share (d)
|
|
49.33
|
|
|
48.76
|
|
|
45.90
|
|
|
42.52
|
|
|
38.63
|
|
(a)
|
Includes special cash dividends of $1.00 per share paid in December
2015
,
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
6.58
,
7.95
,
8.86
,
7.16
and
6.59
for
2015
,
2014
,
2013
,
2012
and
2011
, 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 (see
Note
A
— “
Accounting Policies
—
Managed Investment Entities
”
to the financial statements).
|
INDEX TO MD&A
|
||||
|
Page
|
|
|
Page
|
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
|
|
||
|
|
|
||
|
|
|
|
|
•
|
higher underwriting profit in the property and casualty insurance segment,
|
•
|
higher net operating earnings in the annuity segment,
|
•
|
improved core net operating results in the run-off long-term care and life segment,
|
•
|
the fourth quarter 2015 gain on the sale of an apartment property,
|
•
|
the fourth quarter loss reported upon closing of the sale of the long-term care business, and
|
•
|
realized losses on securities in the fourth quarter of 2015 compared to realized gains in the fourth quarter of 2014.
|
•
|
higher core underwriting profit and net investment income in the property and casualty insurance segment,
|
•
|
higher special A&E charges recorded in 2015 compared to 2014,
|
•
|
improved core net operating earnings in the run-off long-term care and life segment,
|
•
|
the fourth quarter 2015 gain on the sale of an apartment property,
|
•
|
the second quarter 2015 gain on the sale of Le Pavillon Hotel,
|
•
|
the loss on the sale of substantially all of AFG’s run-off long-term care business, and
|
•
|
realized losses on securities in 2015 compared to realized gains in 2014.
|
•
|
the establishment of insurance reserves, especially asbestos and environmental-related reserves,
|
•
|
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,
|
||||||
2015
|
|
2014
|
||||||
Long-term debt
|
|
$
|
1,020
|
|
|
$
|
1,061
|
|
Total capital
|
|
5,512
|
|
|
5,513
|
|
||
Ratio of debt to total capital:
|
|
|
|
|
||||
Including subordinated debt and debt secured by real estate
|
|
18.5
|
%
|
|
19.2
|
%
|
||
Excluding subordinated debt and debt secured by real estate
|
|
13.1
|
%
|
|
15.6
|
%
|
|
Year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net cash provided by operating activities
|
$
|
1,357
|
|
|
$
|
1,222
|
|
|
$
|
760
|
|
Net cash used in investing activities
|
(4,577
|
)
|
|
(3,619
|
)
|
|
(2,915
|
)
|
|||
Net cash provided by financing activities
|
3,097
|
|
|
2,101
|
|
|
2,089
|
|
|||
Net change in cash and cash equivalents
|
$
|
(123
|
)
|
|
$
|
(296
|
)
|
|
$
|
(66
|
)
|
|
|
|
|
|
% of Reserves
|
|
||
|
|
|
|
|
at December 31,
|
|
||
|
GMIR
|
|
|
|
2015
|
|
2014
|
|
|
1 — 1.99%
|
|
|
|
67%
|
|
59%
|
|
|
2 — 2.99%
|
|
|
|
7%
|
|
9%
|
|
|
3 — 3.99%
|
|
|
|
14%
|
|
18%
|
|
|
4.00% and above
|
|
|
|
12%
|
|
14%
|
|
|
|
|
|
|
|
|
|
|
|
Annuity benefits accumulated (in millions)
|
|
$26,622
|
|
$23,764
|
|
|
Year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net cash provided by operating activities
|
$
|
162
|
|
|
$
|
372
|
|
|
$
|
428
|
|
Net cash used in investing activities
|
(33
|
)
|
|
(432
|
)
|
|
(4
|
)
|
|||
Net cash used in financing activities
|
(232
|
)
|
|
(171
|
)
|
|
(180
|
)
|
|||
Net change in cash and cash equivalents
|
$
|
(103
|
)
|
|
$
|
(231
|
)
|
|
$
|
244
|
|
|
|
Total
|
|
Within
One Year
|
|
2-3 Years
|
|
4-5 Years
|
|
More than
5 Years
|
||||||||||
Annuities (a)
|
|
$
|
32,280
|
|
|
$
|
2,070
|
|
|
$
|
5,090
|
|
|
$
|
5,852
|
|
|
$
|
19,268
|
|
Life, accident and health liabilities (a)
|
|
1,503
|
|
|
124
|
|
|
239
|
|
|
201
|
|
|
939
|
|
|||||
Property and casualty unpaid losses and loss adjustment expenses (b)
|
|
8,127
|
|
|
2,000
|
|
|
2,000
|
|
|
900
|
|
|
3,227
|
|
|||||
Long-term debt, including interest
|
|
2,445
|
|
|
75
|
|
|
162
|
|
|
448
|
|
|
1,760
|
|
|||||
Operating leases
|
|
403
|
|
|
64
|
|
|
112
|
|
|
79
|
|
|
148
|
|
|||||
Total
|
|
$
|
44,758
|
|
|
$
|
4,333
|
|
|
$
|
7,603
|
|
|
$
|
7,480
|
|
|
$
|
25,342
|
|
(a)
|
Amounts presented in the table represent estimated cash payments under such contracts, based on significant assumptions related to mortality, morbidity, lapse, renewal, retirement and annuitization. These assumptions also include interest and index crediting consistent with assumptions used to amortize DPAC and assess loss recognition. All estimated cash payments are undiscounted for the time value of money. As a result, total outflows for all years exceed the corresponding liabilities of
$26.62 billion
for annuity benefits accumulated and
$705 million
for life, accident and health reserves included in AFG’s Balance Sheet as of
December 31, 2015
. Based on the same assumptions, AFG projects reinsurance recoveries related to life, accident and health reserves totaling $851 million as follows: Within 1 year — $86 million; 2-3 years — $146 million; 4-5 years — $121 million; and thereafter — $498 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 $2.20 billion as follows: Within 1 year — $500 million; 2-3 years — $500 million; 4-5 years — $200 million; and thereafter — $1.00 billion. Actual payments and their timing could differ significantly from these estimates.
|
Fair value of fixed maturity portfolio
|
$
|
32,538
|
|
Percentage impact on fair value of 100 bps increase in interest rates
|
(5.0
|
%)
|
|
Pretax impact on fair value of fixed maturity portfolio
|
$
|
(1,627
|
)
|
Offsetting adjustments to deferred policy acquisition costs and other balance sheet amounts
|
700
|
|
|
Estimated pretax impact on accumulated other comprehensive income
|
(927
|
)
|
|
Deferred income tax
|
325
|
|
|
Noncontrolling interests
|
13
|
|
|
Estimated after-tax impact on accumulated other comprehensive income
|
$
|
(589
|
)
|
|
|
Amortized
Cost
|
|
Fair Value
|
|
Fair Value as
% of Cost
|
|
Unrealized
Gain (Loss)
|
|
% Rated
Investment
Grade
|
||||||||
Collateral type
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Agency-backed
|
|
$
|
260
|
|
|
$
|
269
|
|
|
103
|
%
|
|
$
|
9
|
|
|
100
|
%
|
Non-agency prime
|
|
1,489
|
|
|
1,651
|
|
|
111
|
%
|
|
162
|
|
|
39
|
%
|
|||
Alt-A
|
|
794
|
|
|
872
|
|
|
110
|
%
|
|
78
|
|
|
18
|
%
|
|||
Subprime
|
|
698
|
|
|
742
|
|
|
106
|
%
|
|
44
|
|
|
20
|
%
|
|||
Commercial
|
|
2,112
|
|
|
2,188
|
|
|
104
|
%
|
|
76
|
|
|
100
|
%
|
|||
|
|
$
|
5,353
|
|
|
$
|
5,722
|
|
|
107
|
%
|
|
$
|
369
|
|
|
59
|
%
|
|
|
Securities
With
Unrealized
Gains
|
|
|
Securities
With
Unrealized
Losses
|
||||
Available for Sale Fixed Maturities
|
|
|
|
|
|
||||
Fair value of securities
|
|
$
|
21,380
|
|
|
|
$
|
10,345
|
|
Amortized cost of securities
|
|
$
|
20,287
|
|
|
|
$
|
10,719
|
|
Gross unrealized gain (loss)
|
|
$
|
1,093
|
|
|
|
$
|
(374
|
)
|
Fair value as % of amortized cost
|
|
105
|
%
|
|
|
97
|
%
|
||
Number of security positions
|
|
3,740
|
|
|
|
1,284
|
|
||
Number individually exceeding $2 million gain or loss
|
|
49
|
|
|
|
30
|
|
||
Concentration of gains (losses) by type or industry (exceeding 5% of unrealized):
|
|
|
|
|
|
||||
Mortgage-backed securities
|
|
$
|
385
|
|
|
|
$
|
(16
|
)
|
States and municipalities
|
|
249
|
|
|
|
(35
|
)
|
||
Banks, savings and credit institutions
|
|
84
|
|
|
|
(25
|
)
|
||
Gas and electric services
|
|
62
|
|
|
|
(37
|
)
|
||
Asset-backed securities
|
|
25
|
|
|
|
(52
|
)
|
||
Oil and gas extraction
|
|
6
|
|
|
|
(55
|
)
|
||
Metal mining
|
|
3
|
|
|
|
(34
|
)
|
||
Percentage rated investment grade
|
|
89
|
%
|
|
|
91
|
%
|
||
|
|
|
|
|
|
||||
Available for Sale Equity Securities
|
|
|
|
|
|
||||
Fair value of securities
|
|
$
|
832
|
|
|
|
$
|
622
|
|
Cost of securities
|
|
$
|
663
|
|
|
|
$
|
707
|
|
Gross unrealized gain (loss)
|
|
$
|
169
|
|
|
|
$
|
(85
|
)
|
Fair value as % of cost
|
|
125
|
%
|
|
|
88
|
%
|
||
Number of security positions
|
|
146
|
|
|
|
82
|
|
||
Number individually exceeding $2 million gain or loss
|
|
24
|
|
|
|
12
|
|
|
|
Securities
With
Unrealized
Gains
|
|
|
Securities
With
Unrealized
Losses
|
||
Maturity
|
|
|
|
|
|
||
One year or less
|
|
4
|
%
|
|
|
1
|
%
|
After one year through five years
|
|
22
|
%
|
|
|
7
|
%
|
After five years through ten years
|
|
32
|
%
|
|
|
41
|
%
|
After ten years
|
|
13
|
%
|
|
|
14
|
%
|
|
|
71
|
%
|
|
|
63
|
%
|
Asset-backed securities (average life of approximately 5 years)
|
|
7
|
%
|
|
|
30
|
%
|
Mortgage-backed securities (average life of approximately 4 years)
|
|
22
|
%
|
|
|
7
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
Aggregate
Fair
Value
|
|
Aggregate
Unrealized
Gain (Loss)
|
|
Fair
Value as
% of Cost
Basis
|
|||||
Fixed Maturities at December 31, 2015
|
|
|
|
|
|
|
|||||
Securities with unrealized gains:
|
|
|
|
|
|
|
|||||
Exceeding $500,000 (653 securities)
|
|
$
|
7,888
|
|
|
$
|
675
|
|
|
109
|
%
|
$500,000 or less (3,087 securities)
|
|
13,492
|
|
|
418
|
|
|
103
|
%
|
||
|
|
$
|
21,380
|
|
|
$
|
1,093
|
|
|
105
|
%
|
Securities with unrealized losses:
|
|
|
|
|
|
|
|||||
Exceeding $500,000 (167 securities)
|
|
$
|
2,228
|
|
|
$
|
(241
|
)
|
|
90
|
%
|
$500,000 or less (1,117 securities)
|
|
8,117
|
|
|
(133
|
)
|
|
98
|
%
|
||
|
|
$
|
10,345
|
|
|
$
|
(374
|
)
|
|
97
|
%
|
|
|
Aggregate
Fair
Value
|
|
Aggregate
Unrealized
Loss
|
|
Fair
Value as
% of Cost
Basis
|
|||||
Securities with Unrealized Losses at December 31, 2015
|
|
|
|
|
|
|
|||||
Investment grade fixed maturities with losses for:
|
|
|
|
|
|
|
|||||
Less than one year (972 securities)
|
|
$
|
8,724
|
|
|
$
|
(254
|
)
|
|
97
|
%
|
One year or longer (121 securities)
|
|
670
|
|
|
(34
|
)
|
|
95
|
%
|
||
|
|
$
|
9,394
|
|
|
$
|
(288
|
)
|
|
97
|
%
|
Non-investment grade fixed maturities with losses for:
|
|
|
|
|
|
|
|||||
Less than one year (122 securities)
|
|
$
|
707
|
|
|
$
|
(58
|
)
|
|
92
|
%
|
One year or longer (69 securities)
|
|
244
|
|
|
(28
|
)
|
|
90
|
%
|
||
|
|
$
|
951
|
|
|
$
|
(86
|
)
|
|
92
|
%
|
Common equity securities with losses for:
|
|
|
|
|
|
|
|||||
Less than one year (63 securities)
|
|
$
|
509
|
|
|
$
|
(79
|
)
|
|
87
|
%
|
One year or longer (none)
|
|
—
|
|
|
—
|
|
|
—
|
%
|
||
|
|
$
|
509
|
|
|
$
|
(79
|
)
|
|
87
|
%
|
Perpetual preferred equity securities with losses for:
|
|
|
|
|
|
|
|||||
Less than one year (16 securities)
|
|
$
|
91
|
|
|
$
|
(3
|
)
|
|
97
|
%
|
One year or longer (3 securities)
|
|
22
|
|
|
(3
|
)
|
|
88
|
%
|
||
|
|
$
|
113
|
|
|
$
|
(6
|
)
|
|
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
|
•
|
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, 2015
|
||||||||||||||
|
|
Case
|
|
IBNR
|
|
LAE
|
|
Total
Reserve
|
||||||||
Statutory Line of Business
|
|
|
|
|
|
|
|
|
||||||||
Workers’ compensation
|
|
$
|
1,053
|
|
|
$
|
1,235
|
|
|
$
|
324
|
|
|
$
|
2,612
|
|
Other liability — occurrence
|
|
559
|
|
|
1,355
|
|
|
308
|
|
|
2,222
|
|
||||
Other liability — claims made
|
|
154
|
|
|
215
|
|
|
163
|
|
|
532
|
|
||||
Commercial auto/truck liability/medical
|
|
212
|
|
|
229
|
|
|
87
|
|
|
528
|
|
||||
Special property (fire, allied lines, inland marine, earthquake)
|
|
362
|
|
|
54
|
|
|
26
|
|
|
442
|
|
||||
Products liability — occurrence
|
|
66
|
|
|
130
|
|
|
117
|
|
|
313
|
|
||||
Commercial multi-peril
|
|
102
|
|
|
88
|
|
|
66
|
|
|
256
|
|
||||
Other lines
|
|
114
|
|
|
301
|
|
|
92
|
|
|
507
|
|
||||
Total Statutory Reserves
|
|
2,622
|
|
|
3,607
|
|
|
1,183
|
|
|
7,412
|
|
||||
Adjustments for GAAP:
|
|
|
|
|
|
|
|
|
||||||||
Reserves of foreign operations
|
|
324
|
|
|
362
|
|
|
14
|
|
|
700
|
|
||||
Deferred gains on retroactive reinsurance
|
|
—
|
|
|
40
|
|
|
—
|
|
|
40
|
|
||||
Loss reserve discounting
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
||||
Other
|
|
(15
|
)
|
|
2
|
|
|
—
|
|
|
(13
|
)
|
||||
Total Adjustments for GAAP
|
|
297
|
|
|
404
|
|
|
14
|
|
|
715
|
|
||||
Total GAAP Reserves
|
|
$
|
2,919
|
|
|
$
|
4,011
|
|
|
$
|
1,197
|
|
|
$
|
8,127
|
|
Line of business
|
Effect of 1%
Change in
Cost Trends
|
||
Workers’ compensation
|
$
|
59
|
|
Other liability — occurrence
|
23
|
|
|
Commercial auto/truck liability/medical
|
6
|
|
|
Other liability — claims made
|
9
|
|
|
|
5-yr. Average
Development (a)(b)
|
|
Net Reserves (b)
December 31, 2015
|
|
Effect on Net
Earnings (b)
|
|||||
Workers’ compensation
|
|
(0.6
|
%)
|
|
$
|
2,160
|
|
|
$
|
14
|
|
Other liability — occurrence
|
|
(2.1
|
%)
|
|
881
|
|
|
19
|
|
||
Commercial auto/truck liability/medical
|
|
2.8
|
%
|
|
405
|
|
|
(11
|
)
|
||
Other liability — claims made
|
|
(5.5
|
%)
|
|
401
|
|
|
22
|
|
(a)
|
Adverse (favorable), net of tax effect.
|
(b)
|
Excludes asbestos and environmental liabilities.
|
•
|
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
|
•
|
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 climate
|
•
|
Economic conditions
|
•
|
Variability of stock prices
|
•
|
Magnitude of jury awards
|
•
|
Litigious environment
|
•
|
Magnitude of court awards
|
•
|
A slow moving judicial system including varying approaches to medical malpractice claims among courts
|
•
|
Trends in claim costs, including medical cost inflation
|
|
|
2015
|
|
2014
|
|
2013
|
|||
Before reinsurance (gross)
|
|
92.8
|
%
|
|
90.8
|
%
|
|
93.3
|
%
|
Effect of reinsurance
|
|
1.9
|
%
|
|
3.7
|
%
|
|
2.2
|
%
|
Actual (net of reinsurance)
|
|
94.7
|
%
|
|
94.5
|
%
|
|
95.5
|
%
|
|
|
December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Asbestos
|
|
$
|
205
|
|
|
$
|
196
|
|
Environmental
|
|
122
|
|
|
93
|
|
||
A&E reserves, net of reinsurance recoverable
|
|
327
|
|
|
289
|
|
||
Reinsurance recoverable, net of allowance
|
|
99
|
|
|
77
|
|
||
Gross A&E reserves
|
|
$
|
426
|
|
|
$
|
366
|
|
•
|
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.
|
|
|
2015
|
|
2014
|
|
2013
|
|||
Number of policyholders with no indemnity payments:
|
|
|
|
|
|
|
|||
Asbestos
|
|
122
|
|
|
136
|
|
|
142
|
|
Environmental
|
|
112
|
|
|
99
|
|
|
116
|
|
|
|
234
|
|
|
235
|
|
|
258
|
|
Number of policyholders with indemnity payments:
|
|
|
|
|
|
|
|||
Asbestos
|
|
50
|
|
|
45
|
|
|
48
|
|
Environmental
|
|
25
|
|
|
30
|
|
|
24
|
|
|
|
75
|
|
|
75
|
|
|
72
|
|
Total
|
|
309
|
|
|
310
|
|
|
330
|
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Asbestos — two large claims (*)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
106
|
|
Asbestos — other
|
|
16
|
|
|
18
|
|
|
10
|
|
|||
Environmental
|
|
13
|
|
|
18
|
|
|
15
|
|
|||
Total
|
|
$
|
29
|
|
|
$
|
36
|
|
|
$
|
131
|
|
(*)
|
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.
|
|
Before CLO
Consolidation
|
|
Managed
Investment
Entities
|
|
Consol.
Entries
|
|
|
|
Consolidated
As Reported
|
||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and investments
|
$
|
38,001
|
|
|
$
|
—
|
|
|
$
|
(265
|
)
|
|
(a)
|
|
$
|
37,736
|
|
Assets of managed investment entities
|
—
|
|
|
4,047
|
|
|
—
|
|
|
|
|
4,047
|
|
||||
Other assets
|
8,077
|
|
|
—
|
|
|
(1
|
)
|
|
(a)
|
|
8,076
|
|
||||
Total assets
|
$
|
46,078
|
|
|
$
|
4,047
|
|
|
$
|
(266
|
)
|
|
|
|
$
|
49,859
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Unpaid losses and loss adjustment expenses and unearned premiums
|
$
|
10,187
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
10,187
|
|
Annuity, life, accident and health benefits and reserves
|
27,327
|
|
|
—
|
|
|
—
|
|
|
|
|
27,327
|
|
||||
Liabilities of managed investment entities
|
—
|
|
|
4,027
|
|
|
(246
|
)
|
|
(a)
|
|
3,781
|
|
||||
Long-term debt and other liabilities
|
3,794
|
|
|
—
|
|
|
—
|
|
|
|
|
3,794
|
|
||||
Total liabilities
|
41,308
|
|
|
4,027
|
|
|
(246
|
)
|
|
|
|
45,089
|
|
||||
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
||||||||
Common Stock and Capital surplus
|
1,301
|
|
|
20
|
|
|
(20
|
)
|
|
|
|
1,301
|
|
||||
Retained earnings
|
2,987
|
|
|
—
|
|
|
—
|
|
|
|
|
2,987
|
|
||||
Accumulated other comprehensive income, net of tax
|
304
|
|
|
—
|
|
|
—
|
|
|
|
|
304
|
|
||||
Total shareholders’ equity
|
4,592
|
|
|
20
|
|
|
(20
|
)
|
|
|
|
4,592
|
|
||||
Noncontrolling interests
|
178
|
|
|
—
|
|
|
—
|
|
|
|
|
178
|
|
||||
Total equity
|
4,770
|
|
|
20
|
|
|
(20
|
)
|
|
|
|
4,770
|
|
||||
Total liabilities and equity
|
$
|
46,078
|
|
|
$
|
4,047
|
|
|
$
|
(266
|
)
|
|
|
|
$
|
49,859
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
(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, 2015
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
1,144
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
1,144
|
|
Net investment income
|
405
|
|
|
—
|
|
|
11
|
|
|
(b)
|
|
416
|
|
||||
Realized losses on:
|
|
|
|
|
|
|
|
|
|
||||||||
Securities
|
(21
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(21
|
)
|
||||
Subsidiaries
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(4
|
)
|
||||
Income (loss) of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
43
|
|
|
—
|
|
|
|
|
43
|
|
||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
(b)
|
|
(18
|
)
|
||||
Other income
|
62
|
|
|
—
|
|
|
(4
|
)
|
|
(c)
|
|
58
|
|
||||
Total revenues
|
1,586
|
|
|
43
|
|
|
(11
|
)
|
|
|
|
1,618
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
1,273
|
|
|
—
|
|
|
—
|
|
|
|
|
1,273
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
43
|
|
|
(11
|
)
|
|
(b)(c)
|
|
32
|
|
||||
Interest charges on borrowed money and other expenses
|
103
|
|
|
—
|
|
|
—
|
|
|
|
|
103
|
|
||||
Total costs and expenses
|
1,376
|
|
|
43
|
|
|
(11
|
)
|
|
|
|
1,408
|
|
||||
Earnings before income taxes
|
210
|
|
|
—
|
|
|
—
|
|
|
|
|
210
|
|
||||
Provision for income taxes
|
80
|
|
|
—
|
|
|
—
|
|
|
|
|
80
|
|
||||
Net earnings, including noncontrolling interests
|
130
|
|
|
—
|
|
|
—
|
|
|
|
|
130
|
|
||||
Less: Net earnings attributable to noncontrolling interests
|
1
|
|
|
—
|
|
|
—
|
|
|
|
|
1
|
|
||||
Net earnings attributable to shareholders
|
$
|
129
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
129
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
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
|
46
|
|
|
—
|
|
|
(7
|
)
|
|
(c)
|
|
39
|
|
||||
Total revenues
|
1,523
|
|
|
30
|
|
|
(12
|
)
|
|
|
|
1,541
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
1,247
|
|
|
—
|
|
|
—
|
|
|
|
|
1,247
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
34
|
|
|
(12
|
)
|
|
(b)(c)
|
|
22
|
|
||||
Interest charges on borrowed money and other expenses
|
82
|
|
|
—
|
|
|
—
|
|
|
|
|
82
|
|
||||
Total costs and expenses
|
1,329
|
|
|
34
|
|
|
(12
|
)
|
|
|
|
1,351
|
|
||||
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
|
|
(a)
|
Includes losses of
$11 million
in the fourth quarter of
2015
and
$2 million
in the fourth quarter of
2014
representing the change in fair value of AFG’s CLO investments plus
$4 million
and
$7 million
in the fourth quarter of
2015
and
2014
, respectively, in CLO management fees earned.
|
(b)
|
Elimination of the change in fair value of AFG’s investments in the CLOs, including
$7 million
and
$5 million
in the fourth quarter of
2015
and
2014
, 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, 2015
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
4,328
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
4,328
|
|
Net investment income
|
1,627
|
|
|
—
|
|
|
6
|
|
|
(b)
|
|
1,633
|
|
||||
Realized losses on:
|
|
|
|
|
|
|
|
|
|
||||||||
Securities
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(19
|
)
|
||||
Subsidiaries
|
(161
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(161
|
)
|
||||
Income (loss) of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
155
|
|
|
—
|
|
|
|
|
155
|
|
||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
2
|
|
|
(36
|
)
|
|
(b)
|
|
(34
|
)
|
||||
Other income
|
258
|
|
|
—
|
|
|
(15
|
)
|
|
(c)
|
|
243
|
|
||||
Total revenues
|
6,033
|
|
|
157
|
|
|
(45
|
)
|
|
|
|
6,145
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
5,057
|
|
|
—
|
|
|
—
|
|
|
|
|
5,057
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
155
|
|
|
(43
|
)
|
|
(b)(c)
|
|
112
|
|
||||
Interest charges on borrowed money and other expenses
|
411
|
|
|
—
|
|
|
—
|
|
|
|
|
411
|
|
||||
Total costs and expenses
|
5,468
|
|
|
155
|
|
|
(43
|
)
|
|
|
|
5,580
|
|
||||
Earnings before income taxes
|
565
|
|
|
2
|
|
|
(2
|
)
|
|
|
|
565
|
|
||||
Provision for income taxes
|
195
|
|
|
—
|
|
|
—
|
|
|
|
|
195
|
|
||||
Net earnings, including noncontrolling interests
|
370
|
|
|
2
|
|
|
(2
|
)
|
|
|
|
370
|
|
||||
Less: Net earnings attributable to noncontrolling interests
|
18
|
|
|
—
|
|
|
—
|
|
|
|
|
18
|
|
||||
Net earnings attributable to shareholders
|
$
|
352
|
|
|
$
|
2
|
|
|
$
|
(2
|
)
|
|
|
|
$
|
352
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
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
|
147
|
|
|
—
|
|
|
(25
|
)
|
|
(c)
|
|
122
|
|
||||
Total revenues
|
5,702
|
|
|
81
|
|
|
(50
|
)
|
|
|
|
5,733
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
4,671
|
|
|
—
|
|
|
—
|
|
|
|
|
4,671
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
130
|
|
|
(48
|
)
|
|
(b)(c)
|
|
82
|
|
||||
Interest charges on borrowed money and other expenses
|
354
|
|
|
—
|
|
|
—
|
|
|
|
|
354
|
|
||||
Total costs and expenses
|
5,025
|
|
|
130
|
|
|
(48
|
)
|
|
|
|
5,107
|
|
||||
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
|
|
(a)
|
Includes (
$6 million
) and
$16 million
in
2015
and
2014
, respectively, of net investment income representing the change in fair value of AFG’s CLO investments plus
$15 million
and
$25 million
in
2015
and
2014
, respectively, in CLO management fees earned.
|
(b)
|
Elimination of the change in fair value of AFG’s investments in the CLOs, including
$28 million
and
$23 million
in
2015
and
2014
, 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, 2013
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
3,318
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
3,318
|
|
Net investment income
|
1,381
|
|
|
—
|
|
|
(35
|
)
|
|
(b)
|
|
1,346
|
|
||||
Realized gains (losses) on:
|
|
|
|
|
|
|
|
|
|
||||||||
Securities
|
221
|
|
|
—
|
|
|
—
|
|
|
|
|
221
|
|
||||
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
|
124
|
|
|
—
|
|
|
(16
|
)
|
|
(c)
|
|
108
|
|
||||
Total revenues
|
5,040
|
|
|
109
|
|
|
(46
|
)
|
|
|
|
5,103
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
3,928
|
|
|
—
|
|
|
—
|
|
|
|
|
3,928
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
130
|
|
|
(41
|
)
|
|
(b)(c)
|
|
89
|
|
||||
Interest charges on borrowed money and other expenses
|
397
|
|
|
—
|
|
|
—
|
|
|
|
|
397
|
|
||||
Total costs and expenses
|
4,325
|
|
|
130
|
|
|
(41
|
)
|
|
|
|
4,414
|
|
||||
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
$35 million
in net investment income representing the change in fair value of AFG’s CLO investments plus
$16 million
in CLO management fees earned.
|
(b)
|
Elimination of the change in fair value of AFG’s investments in the CLOs, including
$25 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,
|
||||||||||||||||
2015
|
|
2014
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||
Core net operating earnings
|
$
|
136
|
|
|
$
|
122
|
|
|
$
|
486
|
|
|
$
|
439
|
|
|
$
|
385
|
|
Loss on sale of long-term care business (*)
|
(3
|
)
|
|
—
|
|
|
(108
|
)
|
|
—
|
|
|
—
|
|
|||||
Gain on sale of hotel and apartment property (*)
|
10
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
—
|
|
|||||
Other realized gains (losses) (*)
|
(14
|
)
|
|
5
|
|
|
(8
|
)
|
|
32
|
|
|
138
|
|
|||||
Special A&E charges (*)
|
—
|
|
|
—
|
|
|
(52
|
)
|
|
(19
|
)
|
|
(49
|
)
|
|||||
Loss on early retirement of debt (*)
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|||||
Executive Life Insurance Company of New York (“ELNY”) guaranty fund assessments (*)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
Net earnings attributable to shareholders
|
$
|
129
|
|
|
$
|
127
|
|
|
$
|
352
|
|
|
$
|
452
|
|
|
$
|
471
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted per share amounts:
|
|
|
|
|
|
|
|
|
|
||||||||||
Core net operating earnings
|
$
|
1.52
|
|
|
$
|
1.35
|
|
|
$
|
5.44
|
|
|
$
|
4.82
|
|
|
$
|
4.22
|
|
Loss on sale of long-term care business
|
(0.03
|
)
|
|
—
|
|
|
(1.21
|
)
|
|
—
|
|
|
—
|
|
|||||
Gain on sale of hotel and apartment property
|
0.11
|
|
|
—
|
|
|
0.40
|
|
|
—
|
|
|
—
|
|
|||||
Other realized gains (losses)
|
(0.15
|
)
|
|
0.06
|
|
|
(0.08
|
)
|
|
0.36
|
|
|
1.52
|
|
|||||
Special A&E charges
|
—
|
|
|
—
|
|
|
(0.58
|
)
|
|
(0.21
|
)
|
|
(0.54
|
)
|
|||||
Loss on early retirement of debt
|
—
|
|
|
—
|
|
|
(0.03
|
)
|
|
—
|
|
|
—
|
|
|||||
ELNY guaranty fund assessments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.04
|
)
|
|||||
Net earnings attributable to shareholders
|
$
|
1.45
|
|
|
$
|
1.41
|
|
|
$
|
3.94
|
|
|
$
|
4.97
|
|
|
$
|
5.16
|
|
(*)
|
The tax effects of reconciling items are shown below (in millions):
|
Loss on sale of long-term care business
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
58
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Gain on sale of hotel and apartment property
|
(5
|
)
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
—
|
|
|||||
Other realized gains (losses)
|
7
|
|
|
(3
|
)
|
|
5
|
|
|
(19
|
)
|
|
(78
|
)
|
|||||
Special A&E charges
|
—
|
|
|
—
|
|
|
27
|
|
|
11
|
|
|
27
|
|
|||||
Loss on early retirement of debt
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|||||
ELNY guaranty fund assessments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Gain on sale of hotel
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Other realized gains (losses)
|
—
|
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
(1
|
)
|
|
|
|
|
|
|
|
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, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance net earned premiums
|
$
|
1,120
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,120
|
|
|
$
|
—
|
|
|
$
|
1,120
|
|
Life, accident and health net earned premiums
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
||||||||
Net investment income
|
74
|
|
|
309
|
|
|
19
|
|
|
11
|
|
|
3
|
|
|
416
|
|
|
—
|
|
|
416
|
|
||||||||
Realized losses on:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21
|
)
|
|
(21
|
)
|
||||||||
Subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||||
Income (loss) of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
43
|
|
||||||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
(18
|
)
|
||||||||
Other income
|
2
|
|
|
23
|
|
|
—
|
|
|
(4
|
)
|
|
22
|
|
|
43
|
|
|
15
|
|
|
58
|
|
||||||||
Total revenues
|
1,196
|
|
|
332
|
|
|
43
|
|
|
32
|
|
|
25
|
|
|
1,628
|
|
|
(10
|
)
|
|
1,618
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss adjustment expenses
|
693
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
693
|
|
|
—
|
|
|
693
|
|
||||||||
Commissions and other underwriting expenses
|
327
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
333
|
|
|
—
|
|
|
333
|
|
||||||||
Annuity benefits
|
—
|
|
|
189
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
189
|
|
|
—
|
|
|
189
|
|
||||||||
Life, accident and health benefits
|
—
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
||||||||
Annuity and supplemental insurance acquisition expenses
|
—
|
|
|
20
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
||||||||
Interest charges on borrowed money
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
17
|
|
|
—
|
|
|
17
|
|
||||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
||||||||
Other expenses
|
11
|
|
|
22
|
|
|
5
|
|
|
—
|
|
|
48
|
|
|
86
|
|
|
—
|
|
|
86
|
|
||||||||
Total costs and expenses
|
1,032
|
|
|
231
|
|
|
43
|
|
|
32
|
|
|
70
|
|
|
1,408
|
|
|
—
|
|
|
1,408
|
|
||||||||
Earnings before income taxes
|
164
|
|
|
101
|
|
|
—
|
|
|
—
|
|
|
(45
|
)
|
|
220
|
|
|
(10
|
)
|
|
210
|
|
||||||||
Provision for income taxes
|
64
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
83
|
|
|
(3
|
)
|
|
80
|
|
||||||||
Net earnings, including noncontrolling interests
|
100
|
|
|
67
|
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
137
|
|
|
(7
|
)
|
|
130
|
|
||||||||
Less: Net earnings attributable to noncontrolling interests
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||||
Core Net Operating Earnings
|
99
|
|
|
67
|
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
136
|
|
|
|
|
|
||||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Loss on sale of long-term care business, net of tax
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
3
|
|
|
—
|
|
||||||||
Gain on sale of apartment property, net of tax
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
(10
|
)
|
|
—
|
|
||||||||
Other realized gains (losses), net of tax and noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
(14
|
)
|
|
14
|
|
|
—
|
|
||||||||
Net Earnings Attributable to Shareholders
|
$
|
109
|
|
|
$
|
67
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
(44
|
)
|
|
$
|
129
|
|
|
$
|
—
|
|
|
$
|
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
|
||||||||||||||||
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
|
|
|
33
|
|
|
1
|
|
|
(7
|
)
|
|
11
|
|
|
39
|
|
|
—
|
|
|
39
|
|
||||||||
Total revenues
|
1,137
|
|
|
318
|
|
|
47
|
|
|
18
|
|
|
13
|
|
|
1,533
|
|
|
8
|
|
|
1,541
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
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
|
—
|
|
|
59
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
63
|
|
||||||||
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
|
|
|
233
|
|
|
54
|
|
|
22
|
|
|
48
|
|
|
1,351
|
|
|
—
|
|
|
1,351
|
|
||||||||
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
|
|
(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,
|
|
|
|||||||||||||
|
2015
|
|
2014
|
|
|
|||||||||||
|
GWP
|
|
%
|
|
GWP
|
|
%
|
|
% Change
|
|||||||
Property and transportation
|
$
|
515
|
|
|
38
|
%
|
|
$
|
482
|
|
|
37
|
%
|
|
7
|
%
|
Specialty casualty
|
661
|
|
|
49
|
%
|
|
660
|
|
|
51
|
%
|
|
—
|
%
|
||
Specialty financial
|
179
|
|
|
13
|
%
|
|
160
|
|
|
12
|
%
|
|
12
|
%
|
||
Other specialty
|
1
|
|
|
—
|
%
|
|
1
|
|
|
—
|
%
|
|
—
|
%
|
||
|
$
|
1,356
|
|
|
100
|
%
|
|
$
|
1,303
|
|
|
100
|
%
|
|
4
|
%
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2015
|
|
2014
|
|
Change in
|
|||||||||||
|
Ceded
|
|
% of GWP
|
|
Ceded
|
|
% of GWP
|
|
% of GWP
|
|||||||
Property and transportation
|
$
|
(137
|
)
|
|
27
|
%
|
|
$
|
(109
|
)
|
|
23
|
%
|
|
4
|
%
|
Specialty casualty
|
(158
|
)
|
|
24
|
%
|
|
(162
|
)
|
|
25
|
%
|
|
(1
|
%)
|
||
Specialty financial
|
(27
|
)
|
|
15
|
%
|
|
(29
|
)
|
|
18
|
%
|
|
(3
|
%)
|
||
Other specialty
|
22
|
|
|
|
|
22
|
|
|
|
|
|
|||||
|
$
|
(300
|
)
|
|
22
|
%
|
|
$
|
(278
|
)
|
|
21
|
%
|
|
1
|
%
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2015
|
|
2014
|
|
|
|||||||||||
|
NWP
|
|
%
|
|
NWP
|
|
%
|
|
% Change
|
|||||||
Property and transportation
|
$
|
378
|
|
|
36
|
%
|
|
$
|
373
|
|
|
36
|
%
|
|
1
|
%
|
Specialty casualty
|
503
|
|
|
48
|
%
|
|
498
|
|
|
49
|
%
|
|
1
|
%
|
||
Specialty financial
|
152
|
|
|
14
|
%
|
|
131
|
|
|
13
|
%
|
|
16
|
%
|
||
Other specialty
|
23
|
|
|
2
|
%
|
|
23
|
|
|
2
|
%
|
|
—
|
%
|
||
|
$
|
1,056
|
|
|
100
|
%
|
|
$
|
1,025
|
|
|
100
|
%
|
|
3
|
%
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2015
|
|
2014
|
|
|
|||||||||||
|
NEP
|
|
%
|
|
NEP
|
|
%
|
|
% Change
|
|||||||
Property and transportation
|
$
|
442
|
|
|
39
|
%
|
|
$
|
415
|
|
|
39
|
%
|
|
7
|
%
|
Specialty casualty
|
515
|
|
|
46
|
%
|
|
499
|
|
|
47
|
%
|
|
3
|
%
|
||
Specialty financial
|
137
|
|
|
12
|
%
|
|
121
|
|
|
11
|
%
|
|
13
|
%
|
||
Other specialty
|
26
|
|
|
3
|
%
|
|
26
|
|
|
3
|
%
|
|
—
|
%
|
||
|
$
|
1,120
|
|
|
100
|
%
|
|
$
|
1,061
|
|
|
100
|
%
|
|
6
|
%
|
|
Three months ended December 31,
|
|
|
|
Three months ended December 31,
|
|||||||||||
|
2015
|
|
2014
|
|
Change
|
|
2015
|
|
2014
|
|||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
71.7
|
%
|
|
72.2
|
%
|
|
(0.5
|
%)
|
|
|
|
|
||||
Underwriting expense ratio
|
20.7
|
%
|
|
22.4
|
%
|
|
(1.7
|
%)
|
|
|
|
|
||||
Combined ratio
|
92.4
|
%
|
|
94.6
|
%
|
|
(2.2
|
%)
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
34
|
|
|
$
|
22
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
61.1
|
%
|
|
65.1
|
%
|
|
(4.0
|
%)
|
|
|
|
|
||||
Underwriting expense ratio
|
29.1
|
%
|
|
27.8
|
%
|
|
1.3
|
%
|
|
|
|
|
||||
Combined ratio
|
90.2
|
%
|
|
92.9
|
%
|
|
(2.7
|
%)
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
50
|
|
|
$
|
36
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
32.8
|
%
|
|
34.5
|
%
|
|
(1.7
|
%)
|
|
|
|
|
||||
Underwriting expense ratio
|
55.9
|
%
|
|
51.1
|
%
|
|
4.8
|
%
|
|
|
|
|
||||
Combined ratio
|
88.7
|
%
|
|
85.6
|
%
|
|
3.1
|
%
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
15
|
|
|
$
|
18
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
61.8
|
%
|
|
64.0
|
%
|
|
(2.2
|
%)
|
|
|
|
|
||||
Underwriting expense ratio
|
29.2
|
%
|
|
28.6
|
%
|
|
0.6
|
%
|
|
|
|
|
||||
Combined ratio
|
91.0
|
%
|
|
92.6
|
%
|
|
(1.6
|
%)
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
100
|
|
|
$
|
79
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Aggregate — including discontinued lines
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
61.8
|
%
|
|
64.0
|
%
|
|
(2.2
|
%)
|
|
|
|
|
||||
Underwriting expense ratio
|
29.2
|
%
|
|
28.6
|
%
|
|
0.6
|
%
|
|
|
|
|
||||
Combined ratio
|
91.0
|
%
|
|
92.6
|
%
|
|
(1.6
|
%)
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
100
|
|
|
$
|
79
|
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
Amount
|
|
Ratio
|
|
Change in
|
|||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Ratio
|
|||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
306
|
|
|
$
|
294
|
|
|
69.2
|
%
|
|
71.3
|
%
|
|
(2.1
|
%)
|
Prior accident years development
|
8
|
|
|
3
|
|
|
1.8
|
%
|
|
0.6
|
%
|
|
1.2
|
%
|
||
Current year catastrophe losses
|
3
|
|
|
2
|
|
|
0.7
|
%
|
|
0.3
|
%
|
|
0.4
|
%
|
||
Property and transportation losses and LAE and ratio
|
$
|
317
|
|
|
$
|
299
|
|
|
71.7
|
%
|
|
72.2
|
%
|
|
(0.5
|
%)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
321
|
|
|
$
|
310
|
|
|
62.3
|
%
|
|
62.1
|
%
|
|
0.2
|
%
|
Prior accident years development
|
(7
|
)
|
|
14
|
|
|
(1.4
|
%)
|
|
2.9
|
%
|
|
(4.3
|
%)
|
||
Current year catastrophe losses
|
1
|
|
|
1
|
|
|
0.2
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
||
Specialty casualty losses and LAE and ratio
|
$
|
315
|
|
|
$
|
325
|
|
|
61.1
|
%
|
|
65.1
|
%
|
|
(4.0
|
%)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
46
|
|
|
$
|
46
|
|
|
32.9
|
%
|
|
37.7
|
%
|
|
(4.8
|
%)
|
Prior accident years development
|
(5
|
)
|
|
(4
|
)
|
|
(3.6
|
%)
|
|
(3.3
|
%)
|
|
(0.3
|
%)
|
||
Current year catastrophe losses
|
5
|
|
|
—
|
|
|
3.5
|
%
|
|
0.1
|
%
|
|
3.4
|
%
|
||
Specialty financial losses and LAE and ratio
|
$
|
46
|
|
|
$
|
42
|
|
|
32.8
|
%
|
|
34.5
|
%
|
|
(1.7
|
%)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
689
|
|
|
$
|
666
|
|
|
61.4
|
%
|
|
62.8
|
%
|
|
(1.4
|
%)
|
Prior accident years development
|
(5
|
)
|
|
10
|
|
|
(0.4
|
%)
|
|
1.0
|
%
|
|
(1.4
|
%)
|
||
Current year catastrophe losses
|
9
|
|
|
3
|
|
|
0.8
|
%
|
|
0.2
|
%
|
|
0.6
|
%
|
||
Total Specialty losses and LAE and ratio
|
$
|
693
|
|
|
$
|
679
|
|
|
61.8
|
%
|
|
64.0
|
%
|
|
(2.2
|
%)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Aggregate — including discontinued lines
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
689
|
|
|
$
|
666
|
|
|
61.4
|
%
|
|
62.8
|
%
|
|
(1.4
|
%)
|
Prior accident years development
|
(5
|
)
|
|
10
|
|
|
(0.4
|
%)
|
|
1.0
|
%
|
|
(1.4
|
%)
|
||
Current year catastrophe losses
|
9
|
|
|
3
|
|
|
0.8
|
%
|
|
0.2
|
%
|
|
0.6
|
%
|
||
Aggregate losses and LAE and ratio
|
$
|
693
|
|
|
$
|
679
|
|
|
61.8
|
%
|
|
64.0
|
%
|
|
(2.2
|
%)
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2015
|
|
2014
|
|
Change in
|
|||||||||||
|
U/W Exp
|
|
% of NEP
|
|
U/W Exp
|
|
% of NEP
|
|
% of NEP
|
|||||||
Property and transportation
|
$
|
91
|
|
|
20.7
|
%
|
|
$
|
94
|
|
|
22.4
|
%
|
|
(1.7
|
%)
|
Specialty casualty
|
150
|
|
|
29.1
|
%
|
|
138
|
|
|
27.8
|
%
|
|
1.3
|
%
|
||
Specialty financial
|
76
|
|
|
55.9
|
%
|
|
61
|
|
|
51.1
|
%
|
|
4.8
|
%
|
||
Other specialty
|
10
|
|
|
36.1
|
%
|
|
10
|
|
|
37.3
|
%
|
|
(1.2
|
%)
|
||
|
$
|
327
|
|
|
29.2
|
%
|
|
$
|
303
|
|
|
28.6
|
%
|
|
0.6
|
%
|
|
Three months ended December 31,
|
|
|
|
|
|||||||||
|
2015
|
|
2014
|
|
Change
|
|
% Change
|
|||||||
Net investment income
|
$
|
74
|
|
|
$
|
75
|
|
|
$
|
(1
|
)
|
|
(1
|
%)
|
|
|
|
|
|
|
|
|
|||||||
Average invested assets (at amortized cost)
|
$
|
9,113
|
|
|
$
|
8,485
|
|
|
$
|
628
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|||||||
Yield (net investment income as a % of average invested assets)
|
3.25
|
%
|
|
3.54
|
%
|
|
(0.29
|
%)
|
|
|
||||
|
|
|
|
|
|
|
|
|||||||
Tax equivalent yield (*)
|
3.82
|
%
|
|
4.08
|
%
|
|
(0.26
|
%)
|
|
|
(*)
|
Adjusts the yield on equity securities and tax-exempt bonds to the fully taxable equivalent yield.
|
|
Three months ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
Other income
|
|
|
|
||||
Income from the sale of real estate (*)
|
$
|
—
|
|
|
$
|
—
|
|
Other
|
2
|
|
|
1
|
|
||
Total other income
|
2
|
|
|
1
|
|
||
Other expenses
|
|
|
|
||||
Amortization of intangibles
|
2
|
|
|
5
|
|
||
Other
|
9
|
|
|
6
|
|
||
Total other expense
|
11
|
|
|
11
|
|
||
Interest expense
|
1
|
|
|
1
|
|
||
Core other income and expenses, net
|
(10
|
)
|
|
(11
|
)
|
||
Pretax non-core gain on sale of apartment property
|
15
|
|
|
—
|
|
||
GAAP other income and expenses, net
|
$
|
5
|
|
|
$
|
(11
|
)
|
(*)
|
Excludes the
$15 million
pretax non-core gain on the sale of an apartment property in the fourth quarter of 2015.
|
|
Three months ended December 31,
|
|
|
|||||||
|
2015
|
|
2014
|
|
% Change
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Net investment income
|
$
|
309
|
|
|
$
|
285
|
|
|
8
|
%
|
Other income:
|
|
|
|
|
|
|||||
Guaranteed withdrawal benefit fees
|
12
|
|
|
9
|
|
|
33
|
%
|
||
Policy charges and other miscellaneous income
|
11
|
|
|
24
|
|
|
(54
|
%)
|
||
Total revenues
|
332
|
|
|
318
|
|
|
4
|
%
|
||
|
|
|
|
|
|
|||||
Costs and Expenses:
|
|
|
|
|
|
|||||
Annuity benefits (*)
|
189
|
|
|
157
|
|
|
20
|
%
|
||
Acquisition expenses
|
20
|
|
|
59
|
|
|
(66
|
%)
|
||
Other expenses
|
22
|
|
|
17
|
|
|
29
|
%
|
||
Total costs and expenses
|
231
|
|
|
233
|
|
|
(1
|
%)
|
||
Earnings before income taxes
|
$
|
101
|
|
|
$
|
85
|
|
|
19
|
%
|
|
Three months ended December 31,
|
|
|
|||||||
|
2015
|
|
2014
|
|
% Change
|
|||||
Earnings before income taxes — before the impact of derivatives related to FIAs
|
$
|
96
|
|
|
$
|
93
|
|
|
3
|
%
|
Impact of derivatives related to FIAs
|
5
|
|
|
(8
|
)
|
|
(163
|
%)
|
||
Earnings before income taxes
|
$
|
101
|
|
|
$
|
85
|
|
|
19
|
%
|
(*)
|
Annuity benefits consisted of the following (dollars in millions):
|
|
Three months ended December 31,
|
|
|
|||||||
|
2015
|
|
2014
|
|
% Change
|
|||||
Interest credited — fixed
|
$
|
138
|
|
|
$
|
127
|
|
|
9
|
%
|
Interest credited — fixed component of variable annuities
|
1
|
|
|
1
|
|
|
—
|
%
|
||
Change in expected death and annuitization reserve
|
5
|
|
|
4
|
|
|
25
|
%
|
||
Amortization of sales inducements
|
6
|
|
|
6
|
|
|
—
|
%
|
||
Change in guaranteed withdrawal benefit reserve
|
15
|
|
|
11
|
|
|
36
|
%
|
||
Change in other benefit reserves
|
5
|
|
|
1
|
|
|
400
|
%
|
||
Subtotal before impact of derivatives related to FIAs and unlocking
|
170
|
|
|
150
|
|
|
13
|
%
|
||
Derivatives related to fixed-indexed annuities:
|
|
|
|
|
|
|||||
Embedded derivative mark-to-market
|
88
|
|
|
87
|
|
|
1
|
%
|
||
Equity option mark-to-market
|
(88
|
)
|
|
(69
|
)
|
|
28
|
%
|
||
Impact of derivatives related to FIAs
|
—
|
|
|
18
|
|
|
(100
|
%)
|
||
Unlocking
|
19
|
|
|
(11
|
)
|
|
(273
|
%)
|
||
Total annuity benefits
|
$
|
189
|
|
|
$
|
157
|
|
|
20
|
%
|
|
Three months ended December 31,
|
|
|
|||||||
|
2015
|
|
2014
|
|
% Change
|
|||||
Average fixed annuity investments (at amortized cost)
|
$
|
26,401
|
|
|
$
|
23,334
|
|
|
13
|
%
|
Average fixed annuity benefits accumulated
|
26,048
|
|
|
23,104
|
|
|
13
|
%
|
||
|
|
|
|
|
|
|||||
As % of fixed annuity benefits accumulated (except as noted):
|
|
|
|
|
|
|||||
Net investment income (as % of fixed annuity investments)
|
4.65
|
%
|
|
4.85
|
%
|
|
|
|||
Interest credited — fixed
|
(2.12
|
%)
|
|
(2.21
|
%)
|
|
|
|||
Net interest spread
|
2.53
|
%
|
|
2.64
|
%
|
|
|
|||
|
|
|
|
|
|
|||||
Policy charges and other miscellaneous income
|
0.15
|
%
|
|
0.18
|
%
|
|
|
|||
Other annuity benefit expenses, net of guaranteed withdrawal benefit fees
|
(0.31
|
%)
|
|
(0.20
|
%)
|
|
|
|||
Acquisition expenses
|
(0.75
|
%)
|
|
(0.65
|
%)
|
|
|
|||
Other expenses
|
(0.32
|
%)
|
|
(0.28
|
%)
|
|
|
|||
Change in fair value of derivatives related to fixed-indexed annuities
|
0.02
|
%
|
|
(0.31
|
%)
|
|
|
|||
Unlocking
|
0.07
|
%
|
|
0.02
|
%
|
|
|
|||
Net spread earned on fixed annuities
|
1.39
|
%
|
|
1.40
|
%
|
|
|
|
Three months ended December 31,
|
|
|
||||
|
2015
|
|
2014
|
|
|
||
Net spread earned on fixed annuities — before impact of derivatives related to fixed-indexed annuities
|
1.31
|
%
|
|
1.54
|
%
|
|
|
Impact of derivatives related to fixed-indexed annuities (*)
|
0.08
|
%
|
|
(0.14
|
%)
|
|
|
Net spread earned on fixed annuities
|
1.39
|
%
|
|
1.40
|
%
|
|
|
(*)
|
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.
|
|
Three months ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
Change in expected death and annuitization reserve
|
$
|
5
|
|
|
$
|
4
|
|
Amortization of sales inducements
|
6
|
|
|
6
|
|
||
Change in guaranteed withdrawal benefit reserve
|
15
|
|
|
11
|
|
||
Change in other benefit reserves
|
5
|
|
|
1
|
|
||
Other annuity benefits
|
31
|
|
|
22
|
|
||
Offset guaranteed withdrawal benefit fees
|
(12
|
)
|
|
(9
|
)
|
||
Other annuity benefits, net
|
$
|
19
|
|
|
$
|
13
|
|
|
Three months ended December 31,
|
|
|
|||||||
|
2015
|
|
2014
|
|
% Change
|
|||||
Earnings before income taxes — before change in fair value of derivatives related to fixed-indexed annuities
|
$
|
96
|
|
|
$
|
93
|
|
|
3
|
%
|
Change in fair value of derivatives related to fixed-indexed annuities
|
—
|
|
|
(18
|
)
|
|
(100
|
%)
|
||
Related impact on amortization of DPAC (*)
|
5
|
|
|
10
|
|
|
(50
|
%)
|
||
Earnings before income taxes
|
$
|
101
|
|
|
$
|
85
|
|
|
19
|
%
|
(*)
|
An estimate of the related acceleration/deceleration of amortization of deferred sales inducements and deferred policy acquisition costs.
|
|
Three months ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
Beginning fixed annuity reserves
|
$
|
25,725
|
|
|
$
|
22,745
|
|
Fixed annuity premiums (receipts)
|
1,097
|
|
|
960
|
|
||
Federal Home Loan Bank advances
|
45
|
|
|
—
|
|
||
Surrenders, benefits and other withdrawals
|
(515
|
)
|
|
(464
|
)
|
||
Sale of subsidiaries
|
(261
|
)
|
|
—
|
|
||
Interest and other annuity benefit expenses:
|
|
|
|
||||
Interest credited
|
138
|
|
|
127
|
|
||
Embedded derivative mark-to-market
|
88
|
|
|
87
|
|
||
Change in other benefit reserves
|
31
|
|
|
18
|
|
||
Unlocking
|
23
|
|
|
(11
|
)
|
||
Ending fixed annuity reserves
|
$
|
26,371
|
|
|
$
|
23,462
|
|
|
|
|
|
||||
Reconciliation to annuity benefits accumulated per balance sheet:
|
|
|
|
||||
Ending fixed annuity reserves (from above)
|
$
|
26,371
|
|
|
$
|
23,462
|
|
Impact of unrealized investment gains
|
64
|
|
|
111
|
|
||
Fixed component of variable annuities
|
187
|
|
|
191
|
|
||
Annuity benefits accumulated per balance sheet
|
$
|
26,622
|
|
|
$
|
23,764
|
|
|
Three months ended December 31,
|
|
|
|||||||
2015
|
|
2014
|
|
% Change
|
||||||
Financial institutions single premium annuities — indexed
|
$
|
462
|
|
|
$
|
426
|
|
|
8
|
%
|
Financial institutions single premium annuities — fixed
|
72
|
|
|
61
|
|
|
18
|
%
|
||
Retail single premium annuities — indexed
|
494
|
|
|
405
|
|
|
22
|
%
|
||
Retail single premium annuities — fixed
|
18
|
|
|
19
|
|
|
(5
|
%)
|
||
Education market — fixed and indexed annuities
|
51
|
|
|
49
|
|
|
4
|
%
|
||
Total fixed annuity premiums
|
1,097
|
|
|
960
|
|
|
14
|
%
|
||
Variable annuities
|
10
|
|
|
11
|
|
|
(9
|
%)
|
||
Total annuity premiums
|
$
|
1,107
|
|
|
$
|
971
|
|
|
14
|
%
|
|
|
Three months ended December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Policy charges and other miscellaneous income:
|
|
|
|
|
||||
Unearned revenue
|
|
$
|
(2
|
)
|
|
$
|
10
|
|
Total revenues
|
|
(2
|
)
|
|
10
|
|
||
Annuity benefits:
|
|
|
|
|
||||
Fixed-indexed annuity embedded derivative
|
|
28
|
|
|
(58
|
)
|
||
Sales inducements
|
|
(4
|
)
|
|
—
|
|
||
Other reserves
|
|
(5
|
)
|
|
47
|
|
||
Total annuity benefits
|
|
19
|
|
|
(11
|
)
|
||
Annuity and supplemental insurance acquisition expenses:
|
|
|
|
|
||||
Deferred policy acquisition costs
|
|
(31
|
)
|
|
20
|
|
||
Total costs and expenses
|
|
(12
|
)
|
|
9
|
|
||
Net expense reduction
|
|
$
|
10
|
|
|
$
|
1
|
|
|
Three months ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
Earnings on fixed annuity benefits accumulated
|
$
|
91
|
|
|
$
|
81
|
|
Earnings on investments in excess of fixed annuity benefits accumulated (*)
|
4
|
|
|
3
|
|
||
Variable annuity earnings
|
6
|
|
|
1
|
|
||
Earnings before income taxes
|
$
|
101
|
|
|
$
|
85
|
|
(*)
|
Net investment income (as a % of investments) of
4.65%
and
4.85%
for the three months ended
December 31, 2015
and
2014
, 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,
|
|
|
|||||||
|
2015
|
|
2014
|
|
% Change
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Net earned premiums:
|
|
|
|
|
|
|||||
Long-term care
|
$
|
17
|
|
|
$
|
18
|
|
|
(6
|
%)
|
Life operations
|
7
|
|
|
8
|
|
|
(13
|
%)
|
||
Net investment income
|
19
|
|
|
20
|
|
|
(5
|
%)
|
||
Other income
|
—
|
|
|
1
|
|
|
(100
|
%)
|
||
Total revenues
|
43
|
|
|
47
|
|
|
(9
|
%)
|
||
|
|
|
|
|
|
|||||
Costs and Expenses:
|
|
|
|
|
|
|||||
Life, accident and health benefits:
|
|
|
|
|
|
|||||
Long-term care
|
24
|
|
|
35
|
|
|
(31
|
%)
|
||
Life operations
|
11
|
|
|
10
|
|
|
10
|
%
|
||
Acquisition expenses
|
3
|
|
|
4
|
|
|
(25
|
%)
|
||
Other expenses
|
5
|
|
|
5
|
|
|
—
|
%
|
||
Total costs and expenses
|
43
|
|
|
54
|
|
|
(20
|
%)
|
||
Core earnings (loss) before income taxes
|
—
|
|
|
(7
|
)
|
|
(100
|
%)
|
||
Pretax non-core realized loss on subsidiaries
|
(4
|
)
|
|
—
|
|
|
—
|
%
|
||
GAAP loss before income taxes
|
$
|
(4
|
)
|
|
$
|
(7
|
)
|
|
(43
|
%)
|
|
Three months ended December 31,
|
|
|
|||||||
|
2015
|
|
2014
|
|
% Change
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Net investment income
|
$
|
3
|
|
|
$
|
2
|
|
|
50
|
%
|
Other income — P&C fees
|
16
|
|
|
—
|
|
|
—
|
%
|
||
Other income
|
6
|
|
|
11
|
|
|
(45
|
%)
|
||
Total revenues
|
25
|
|
|
13
|
|
|
92
|
%
|
||
|
|
|
|
|
|
|||||
Costs and Expenses:
|
|
|
|
|
|
|||||
Property and casualty insurance — commissions and other underwriting expenses
|
6
|
|
|
—
|
|
|
—
|
%
|
||
Interest charges on borrowed money
|
16
|
|
|
19
|
|
|
(16
|
%)
|
||
Other expense — expenses associated with P&C fees
|
10
|
|
|
—
|
|
|
—
|
%
|
||
Other expenses
|
38
|
|
|
29
|
|
|
31
|
%
|
||
Total costs and expenses
|
70
|
|
|
48
|
|
|
46
|
%
|
||
Loss before income taxes, excluding realized gains and losses
|
$
|
(45
|
)
|
|
$
|
(35
|
)
|
|
29
|
%
|
|
October 1,
2015 |
|
October 1,
2014 |
||||
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
|
|
||
6-1/4% Subordinated Debentures due September 2054
|
150
|
|
|
150
|
|
||
Other
|
3
|
|
|
3
|
|
||
Total Holding Company Debt
|
$
|
858
|
|
|
$
|
990
|
|
|
|
|
|
||||
Weighted Average Interest Rate
|
7.7
|
%
|
|
7.6
|
%
|
(*)
|
In June 2015, AFG entered into an interest rate swap to mitigate the interest rate risk associated with its fixed-rate 9-7/8% Senior Notes due June 2019 by effectively converting the interest rate on those notes to a floating rate of three-month LIBOR plus 8.099% (8.6110% at
December 31, 2015
).
|
|
Three months ended December 31,
|
||||||
2015
|
|
2014
|
|||||
Realized gains (losses) before impairments:
|
|
|
|
||||
Disposals
|
$
|
41
|
|
|
$
|
34
|
|
Change in the fair value of derivatives
|
(4
|
)
|
|
(2
|
)
|
||
Adjustments to annuity deferred policy acquisition costs and related items
|
(2
|
)
|
|
(1
|
)
|
||
|
35
|
|
|
31
|
|
||
Impairment charges:
|
|
|
|
||||
Securities
|
(60
|
)
|
|
(25
|
)
|
||
Adjustments to annuity deferred policy acquisition costs and related items
|
4
|
|
|
2
|
|
||
|
(56
|
)
|
|
(23
|
)
|
||
Realized gains (losses) on securities
|
$
|
(21
|
)
|
|
$
|
8
|
|
|
Three months ended December 31,
|
||||||||||||
|
2015
|
|
2014
|
||||||||||
|
Amount
|
|
% of EBT
|
|
Amount
|
|
% of EBT
|
||||||
Earnings before income taxes (“EBT”)
|
$
|
210
|
|
|
|
|
$
|
190
|
|
|
|
||
|
|
|
|
|
|
|
|
||||||
Income taxes at statutory rate
|
$
|
74
|
|
|
35
|
%
|
|
$
|
66
|
|
|
35
|
%
|
Effect of:
|
|
|
|
|
|
|
|
||||||
Tax exempt interest
|
(7
|
)
|
|
(3
|
%)
|
|
(7
|
)
|
|
(4
|
%)
|
||
Change in valuation allowance
|
15
|
|
|
7
|
%
|
|
5
|
|
|
3
|
%
|
||
Losses of managed investment entities
|
—
|
|
|
—
|
%
|
|
2
|
|
|
1
|
%
|
||
Other
|
(2
|
)
|
|
(1
|
%)
|
|
(1
|
)
|
|
(1
|
%)
|
||
Provision for income taxes
|
$
|
80
|
|
|
38
|
%
|
|
$
|
65
|
|
|
34
|
%
|
|
Three months ended December 31,
|
|
|
|||||||
|
2015
|
|
2014
|
|
% Change
|
|||||
National Interstate
|
$
|
1
|
|
|
$
|
2
|
|
|
(50
|
%)
|
Managed Investment Entities
|
—
|
|
|
(4
|
)
|
|
(100
|
%)
|
||
Earnings (loss) attributable to noncontrolling interests
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
(150
|
%)
|
|
|
|
|
|
|
|
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, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance net earned premiums
|
$
|
4,224
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,224
|
|
|
$
|
—
|
|
|
$
|
4,224
|
|
Life, accident and health net earned premiums
|
—
|
|
|
—
|
|
|
104
|
|
|
—
|
|
|
—
|
|
|
104
|
|
|
—
|
|
|
104
|
|
||||||||
Net investment income
|
319
|
|
|
1,224
|
|
|
80
|
|
|
6
|
|
|
4
|
|
|
1,633
|
|
|
—
|
|
|
1,633
|
|
||||||||
Realized losses on:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
(19
|
)
|
||||||||
Subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
|
(161
|
)
|
||||||||
Income (loss) of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
155
|
|
|
—
|
|
|
155
|
|
|
—
|
|
|
155
|
|
||||||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
(34
|
)
|
||||||||
Other income
|
12
|
|
|
98
|
|
|
4
|
|
|
(15
|
)
|
|
78
|
|
|
177
|
|
|
66
|
|
|
243
|
|
||||||||
Total revenues
|
4,555
|
|
|
1,322
|
|
|
188
|
|
|
112
|
|
|
82
|
|
|
6,259
|
|
|
(114
|
)
|
|
6,145
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss adjustment expenses
|
2,628
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,628
|
|
|
67
|
|
|
2,695
|
|
||||||||
Commissions and other underwriting expenses
|
1,304
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
1,320
|
|
|
—
|
|
|
1,320
|
|
||||||||
Annuity benefits
|
—
|
|
|
732
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
732
|
|
|
—
|
|
|
732
|
|
||||||||
Life, accident and health benefits
|
—
|
|
|
—
|
|
|
131
|
|
|
—
|
|
|
—
|
|
|
131
|
|
|
—
|
|
|
131
|
|
||||||||
Annuity and supplemental insurance acquisition expenses
|
—
|
|
|
163
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
179
|
|
|
—
|
|
|
179
|
|
||||||||
Interest charges on borrowed money
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
72
|
|
|
74
|
|
|
—
|
|
|
74
|
|
||||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
—
|
|
|
112
|
|
|
—
|
|
|
112
|
|
|
—
|
|
|
112
|
|
||||||||
Other expenses
|
44
|
|
|
96
|
|
|
27
|
|
|
—
|
|
|
154
|
|
|
321
|
|
|
16
|
|
|
337
|
|
||||||||
Total costs and expenses
|
3,978
|
|
|
991
|
|
|
174
|
|
|
112
|
|
|
242
|
|
|
5,497
|
|
|
83
|
|
|
5,580
|
|
||||||||
Earnings before income taxes
|
577
|
|
|
331
|
|
|
14
|
|
|
—
|
|
|
(160
|
)
|
|
762
|
|
|
(197
|
)
|
|
565
|
|
||||||||
Provision for income taxes
|
199
|
|
|
113
|
|
|
5
|
|
|
—
|
|
|
(54
|
)
|
|
263
|
|
|
(68
|
)
|
|
195
|
|
||||||||
Net earnings, including noncontrolling interests
|
378
|
|
|
218
|
|
|
9
|
|
|
—
|
|
|
(106
|
)
|
|
499
|
|
|
(129
|
)
|
|
370
|
|
||||||||
Less: Net earnings attributable to noncontrolling interests
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
13
|
|
|
5
|
|
|
18
|
|
||||||||
Core Net Operating Earnings
|
367
|
|
|
218
|
|
|
9
|
|
|
—
|
|
|
(108
|
)
|
|
486
|
|
|
|
|
|
||||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Loss on sale of long-term care business, net of tax
|
—
|
|
|
—
|
|
|
(108
|
)
|
|
—
|
|
|
—
|
|
|
(108
|
)
|
|
108
|
|
|
—
|
|
||||||||
Gain on sale of hotel and apartment property, net of tax and noncontrolling interests
|
36
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|
(36
|
)
|
|
—
|
|
||||||||
Other realized gains (losses), net of tax and noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(8
|
)
|
|
8
|
|
|
—
|
|
||||||||
Special A&E charges, net of tax
|
(44
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(52
|
)
|
|
52
|
|
|
—
|
|
||||||||
Loss on retirement of debt, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
2
|
|
|
—
|
|
||||||||
Net Earnings Attributable to Shareholders
|
$
|
359
|
|
|
$
|
218
|
|
|
$
|
(99
|
)
|
|
$
|
—
|
|
|
$
|
(126
|
)
|
|
$
|
352
|
|
|
$
|
—
|
|
|
$
|
352
|
|
|
|
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
|
|
|
97
|
|
|
5
|
|
|
(25
|
)
|
|
36
|
|
|
122
|
|
|
—
|
|
|
122
|
|
||||||||
Total revenues
|
4,181
|
|
|
1,233
|
|
|
195
|
|
|
31
|
|
|
41
|
|
|
5,681
|
|
|
52
|
|
|
5,733
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
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
|
—
|
|
|
175
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
193
|
|
|
—
|
|
|
193
|
|
||||||||
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
|
|
|
905
|
|
|
205
|
|
|
82
|
|
|
184
|
|
|
5,077
|
|
|
30
|
|
|
5,107
|
|
||||||||
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 and noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
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 (losses) on:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
221
|
|
|
221
|
|
||||||||
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
|
|
|
77
|
|
|
5
|
|
|
(16
|
)
|
|
27
|
|
|
108
|
|
|
—
|
|
|
108
|
|
||||||||
Total revenues
|
3,482
|
|
|
1,111
|
|
|
195
|
|
|
63
|
|
|
35
|
|
|
4,886
|
|
|
217
|
|
|
5,103
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
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
|
—
|
|
|
159
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
178
|
|
|
—
|
|
|
178
|
|
||||||||
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
|
|
|
783
|
|
|
205
|
|
|
89
|
|
|
203
|
|
|
4,333
|
|
|
81
|
|
|
4,414
|
|
||||||||
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 and noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
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
|
|
(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
|
|||||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
|||||||||||||||||
|
GWP
|
|
%
|
|
GWP
|
|
%
|
|
GWP
|
|
%
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
2,455
|
|
|
42
|
%
|
|
$
|
2,342
|
|
|
43
|
%
|
|
$
|
2,392
|
|
|
50
|
%
|
|
5
|
%
|
|
(2
|
%)
|
Specialty casualty
|
2,739
|
|
|
47
|
%
|
|
2,529
|
|
|
46
|
%
|
|
1,790
|
|
|
37
|
%
|
|
8
|
%
|
|
41
|
%
|
|||
Specialty financial
|
637
|
|
|
11
|
%
|
|
605
|
|
|
11
|
%
|
|
622
|
|
|
13
|
%
|
|
5
|
%
|
|
(3
|
%)
|
|||
Other specialty
|
1
|
|
|
—
|
%
|
|
1
|
|
|
—
|
%
|
|
1
|
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
|
$
|
5,832
|
|
|
100
|
%
|
|
$
|
5,477
|
|
|
100
|
%
|
|
$
|
4,805
|
|
|
100
|
%
|
|
6
|
%
|
|
14
|
%
|
|
Year ended December 31,
|
|
Change in % of GWP
|
|||||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
|||||||||||||||||
|
Ceded
|
|
% of GWP
|
|
Ceded
|
|
% of GWP
|
|
Ceded
|
|
% of GWP
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
(819
|
)
|
|
33
|
%
|
|
$
|
(776
|
)
|
|
33
|
%
|
|
$
|
(845
|
)
|
|
35
|
%
|
|
—
|
%
|
|
(2
|
%)
|
Specialty casualty
|
(687
|
)
|
|
25
|
%
|
|
(665
|
)
|
|
26
|
%
|
|
(566
|
)
|
|
32
|
%
|
|
(1
|
%)
|
|
(6
|
%)
|
|||
Specialty financial
|
(97
|
)
|
|
15
|
%
|
|
(117
|
)
|
|
19
|
%
|
|
(136
|
)
|
|
22
|
%
|
|
(4
|
%)
|
|
(3
|
%)
|
|||
Other specialty
|
98
|
|
|
|
|
101
|
|
|
|
|
83
|
|
|
|
|
|
|
|
||||||||
|
$
|
(1,505
|
)
|
|
26
|
%
|
|
$
|
(1,457
|
)
|
|
27
|
%
|
|
$
|
(1,464
|
)
|
|
30
|
%
|
|
(1
|
%)
|
|
(3
|
%)
|
|
Year ended December 31,
|
|
% Change
|
|||||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
|||||||||||||||||
|
NWP
|
|
%
|
|
NWP
|
|
%
|
|
NWP
|
|
%
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
1,636
|
|
|
38
|
%
|
|
$
|
1,566
|
|
|
39
|
%
|
|
$
|
1,547
|
|
|
45
|
%
|
|
4
|
%
|
|
1
|
%
|
Specialty casualty
|
2,052
|
|
|
47
|
%
|
|
1,864
|
|
|
46
|
%
|
|
1,224
|
|
|
37
|
%
|
|
10
|
%
|
|
52
|
%
|
|||
Specialty financial
|
540
|
|
|
12
|
%
|
|
488
|
|
|
12
|
%
|
|
486
|
|
|
15
|
%
|
|
11
|
%
|
|
—
|
%
|
|||
Other specialty
|
99
|
|
|
3
|
%
|
|
102
|
|
|
3
|
%
|
|
84
|
|
|
3
|
%
|
|
(3
|
%)
|
|
21
|
%
|
|||
|
$
|
4,327
|
|
|
100
|
%
|
|
$
|
4,020
|
|
|
100
|
%
|
|
$
|
3,341
|
|
|
100
|
%
|
|
8
|
%
|
|
20
|
%
|
|
Year ended December 31,
|
|
% Change
|
|||||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
|||||||||||||||||
|
NEP
|
|
%
|
|
NEP
|
|
%
|
|
NEP
|
|
%
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
1,599
|
|
|
38
|
%
|
|
$
|
1,544
|
|
|
40
|
%
|
|
$
|
1,521
|
|
|
48
|
%
|
|
4
|
%
|
|
2
|
%
|
Specialty casualty
|
2,011
|
|
|
48
|
%
|
|
1,765
|
|
|
45
|
%
|
|
1,135
|
|
|
35
|
%
|
|
14
|
%
|
|
56
|
%
|
|||
Specialty financial
|
517
|
|
|
12
|
%
|
|
469
|
|
|
12
|
%
|
|
469
|
|
|
15
|
%
|
|
10
|
%
|
|
—
|
%
|
|||
Other specialty
|
97
|
|
|
2
|
%
|
|
100
|
|
|
3
|
%
|
|
79
|
|
|
2
|
%
|
|
(3
|
%)
|
|
27
|
%
|
|||
|
$
|
4,224
|
|
|
100
|
%
|
|
$
|
3,878
|
|
|
100
|
%
|
|
$
|
3,204
|
|
|
100
|
%
|
|
9
|
%
|
|
21
|
%
|
|
Year ended December 31,
|
|
Change
|
|
Year ended December 31,
|
|||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
72.4
|
%
|
|
74.9
|
%
|
|
75.1
|
%
|
|
(2.5
|
%)
|
|
(0.2
|
%)
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
24.5
|
%
|
|
23.8
|
%
|
|
24.1
|
%
|
|
0.7
|
%
|
|
(0.3
|
%)
|
|
|
|
|
|
|
||||||
Combined ratio
|
96.9
|
%
|
|
98.7
|
%
|
|
99.2
|
%
|
|
(1.8
|
%)
|
|
(0.5
|
%)
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
48
|
|
|
$
|
21
|
|
|
$
|
12
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
62.9
|
%
|
|
62.7
|
%
|
|
57.5
|
%
|
|
0.2
|
%
|
|
5.2
|
%
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
29.8
|
%
|
|
29.6
|
%
|
|
33.4
|
%
|
|
0.2
|
%
|
|
(3.8
|
%)
|
|
|
|
|
|
|
||||||
Combined ratio
|
92.7
|
%
|
|
92.3
|
%
|
|
90.9
|
%
|
|
0.4
|
%
|
|
1.4
|
%
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
146
|
|
|
$
|
136
|
|
|
$
|
102
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
29.7
|
%
|
|
33.9
|
%
|
|
33.5
|
%
|
|
(4.2
|
%)
|
|
0.4
|
%
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
53.4
|
%
|
|
52.6
|
%
|
|
52.1
|
%
|
|
0.8
|
%
|
|
0.5
|
%
|
|
|
|
|
|
|
||||||
Combined ratio
|
83.1
|
%
|
|
86.5
|
%
|
|
85.6
|
%
|
|
(3.4
|
%)
|
|
0.9
|
%
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
87
|
|
|
$
|
64
|
|
|
$
|
67
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
62.2
|
%
|
|
63.7
|
%
|
|
61.7
|
%
|
|
(1.5
|
%)
|
|
2.0
|
%
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
30.9
|
%
|
|
30.2
|
%
|
|
31.8
|
%
|
|
0.7
|
%
|
|
(1.6
|
%)
|
|
|
|
|
|
|
||||||
Combined ratio
|
93.1
|
%
|
|
93.9
|
%
|
|
93.5
|
%
|
|
(0.8
|
%)
|
|
0.4
|
%
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
295
|
|
|
$
|
237
|
|
|
$
|
206
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Aggregate — including discontinued lines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loss and LAE ratio
|
63.8
|
%
|
|
64.3
|
%
|
|
63.7
|
%
|
|
(0.5
|
%)
|
|
0.6
|
%
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
30.9
|
%
|
|
30.2
|
%
|
|
31.8
|
%
|
|
0.7
|
%
|
|
(1.6
|
%)
|
|
|
|
|
|
|
||||||
Combined ratio
|
94.7
|
%
|
|
94.5
|
%
|
|
95.5
|
%
|
|
0.2
|
%
|
|
(1.0
|
%)
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
225
|
|
|
$
|
212
|
|
|
$
|
145
|
|
|
Year ended December 31,
|
|
|
|
|
|||||||||||||||||||||
|
Amount
|
|
Ratio
|
|
Change in Ratio
|
|||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
|||||||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
1,123
|
|
|
$
|
1,119
|
|
|
$
|
1,116
|
|
|
70.2
|
%
|
|
72.6
|
%
|
|
73.4
|
%
|
|
(2.4
|
%)
|
|
(0.8
|
%)
|
Prior accident years development
|
15
|
|
|
16
|
|
|
(1
|
)
|
|
0.9
|
%
|
|
1.0
|
%
|
|
(0.1
|
%)
|
|
(0.1
|
%)
|
|
1.1
|
%
|
|||
Current year catastrophe losses
|
21
|
|
|
20
|
|
|
27
|
|
|
1.3
|
%
|
|
1.3
|
%
|
|
1.8
|
%
|
|
—
|
%
|
|
(0.5
|
%)
|
|||
Property and transportation losses and LAE and ratio
|
$
|
1,159
|
|
|
$
|
1,155
|
|
|
$
|
1,142
|
|
|
72.4
|
%
|
|
74.9
|
%
|
|
75.1
|
%
|
|
(2.5
|
%)
|
|
(0.2
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
1,272
|
|
|
$
|
1,110
|
|
|
$
|
692
|
|
|
63.2
|
%
|
|
62.9
|
%
|
|
61.0
|
%
|
|
0.3
|
%
|
|
1.9
|
%
|
Prior accident years development
|
(11
|
)
|
|
(7
|
)
|
|
(40
|
)
|
|
(0.5
|
%)
|
|
(0.4
|
%)
|
|
(3.6
|
%)
|
|
(0.1
|
%)
|
|
3.2
|
%
|
|||
Current year catastrophe losses
|
4
|
|
|
4
|
|
|
1
|
|
|
0.2
|
%
|
|
0.2
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
0.1
|
%
|
|||
Specialty casualty losses and LAE and ratio
|
$
|
1,265
|
|
|
$
|
1,107
|
|
|
$
|
653
|
|
|
62.9
|
%
|
|
62.7
|
%
|
|
57.5
|
%
|
|
0.2
|
%
|
|
5.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
175
|
|
|
$
|
173
|
|
|
$
|
169
|
|
|
33.7
|
%
|
|
36.9
|
%
|
|
35.9
|
%
|
|
(3.2
|
%)
|
|
1.0
|
%
|
Prior accident years development
|
(30
|
)
|
|
(17
|
)
|
|
(14
|
)
|
|
(5.7
|
%)
|
|
(3.7
|
%)
|
|
(3.0
|
%)
|
|
(2.0
|
%)
|
|
(0.7
|
%)
|
|||
Current year catastrophe losses
|
9
|
|
|
3
|
|
|
3
|
|
|
1.7
|
%
|
|
0.7
|
%
|
|
0.6
|
%
|
|
1.0
|
%
|
|
0.1
|
%
|
|||
Specialty financial losses and LAE and ratio
|
$
|
154
|
|
|
$
|
159
|
|
|
$
|
158
|
|
|
29.7
|
%
|
|
33.9
|
%
|
|
33.5
|
%
|
|
(4.2
|
%)
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
2,627
|
|
|
$
|
2,460
|
|
|
$
|
2,023
|
|
|
62.2
|
%
|
|
63.5
|
%
|
|
63.1
|
%
|
|
(1.3
|
%)
|
|
0.4
|
%
|
Prior accident years development
|
(37
|
)
|
|
(19
|
)
|
|
(75
|
)
|
|
(0.8
|
%)
|
|
(0.5
|
%)
|
|
(2.4
|
%)
|
|
(0.3
|
%)
|
|
1.9
|
%
|
|||
Current year catastrophe losses
|
35
|
|
|
28
|
|
|
31
|
|
|
0.8
|
%
|
|
0.7
|
%
|
|
1.0
|
%
|
|
0.1
|
%
|
|
(0.3
|
%)
|
|||
Total Specialty losses and LAE and ratio
|
$
|
2,625
|
|
|
$
|
2,469
|
|
|
$
|
1,979
|
|
|
62.2
|
%
|
|
63.7
|
%
|
|
61.7
|
%
|
|
(1.5
|
%)
|
|
2.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Aggregate — including discontinued lines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
2,627
|
|
|
$
|
2,460
|
|
|
$
|
2,024
|
|
|
62.2
|
%
|
|
63.5
|
%
|
|
63.1
|
%
|
|
(1.3
|
%)
|
|
0.4
|
%
|
Prior accident years development
|
33
|
|
|
6
|
|
|
(15
|
)
|
|
0.8
|
%
|
|
0.1
|
%
|
|
(0.4
|
%)
|
|
0.7
|
%
|
|
0.5
|
%
|
|||
Current year catastrophe losses
|
35
|
|
|
28
|
|
|
31
|
|
|
0.8
|
%
|
|
0.7
|
%
|
|
1.0
|
%
|
|
0.1
|
%
|
|
(0.3
|
%)
|
|||
Aggregate losses and LAE and ratio
|
$
|
2,695
|
|
|
$
|
2,494
|
|
|
$
|
2,040
|
|
|
63.8
|
%
|
|
64.3
|
%
|
|
63.7
|
%
|
|
(0.5
|
%)
|
|
0.6
|
%
|
|
Year ended December 31,
|
|
Change in % of NEP
|
|||||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
|||||||||||||||||
|
U/W Exp
|
|
% of NEP
|
|
U/W Exp
|
|
% of NEP
|
|
U/W Exp
|
|
% of NEP
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
392
|
|
|
24.5
|
%
|
|
$
|
368
|
|
|
23.8
|
%
|
|
$
|
367
|
|
|
24.1
|
%
|
|
0.7
|
%
|
|
(0.3
|
%)
|
Specialty casualty
|
600
|
|
|
29.8
|
%
|
|
522
|
|
|
29.6
|
%
|
|
380
|
|
|
33.4
|
%
|
|
0.2
|
%
|
|
(3.8
|
%)
|
|||
Specialty financial
|
276
|
|
|
53.4
|
%
|
|
246
|
|
|
52.6
|
%
|
|
244
|
|
|
52.1
|
%
|
|
0.8
|
%
|
|
0.5
|
%
|
|||
Other specialty
|
36
|
|
|
36.1
|
%
|
|
36
|
|
|
35.5
|
%
|
|
28
|
|
|
35.9
|
%
|
|
0.6
|
%
|
|
(0.4
|
%)
|
|||
|
$
|
1,304
|
|
|
30.9
|
%
|
|
$
|
1,172
|
|
|
30.2
|
%
|
|
$
|
1,019
|
|
|
31.8
|
%
|
|
0.7
|
%
|
|
(1.6
|
%)
|
|
Year ended December 31,
|
|
2015 - 2014
|
|
2014 - 2013
|
||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
Change
|
|
% Change
|
|
Change
|
|
% Change
|
||||||||||||
Net investment income
|
$
|
319
|
|
|
$
|
294
|
|
|
$
|
263
|
|
|
$
|
25
|
|
|
9
|
%
|
|
$
|
31
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Average invested assets (at amortized cost)
|
$
|
8,956
|
|
|
$
|
7,849
|
|
|
$
|
6,863
|
|
|
$
|
1,107
|
|
|
14
|
%
|
|
$
|
986
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Yield (net investment income as a % of average invested assets)
|
3.56
|
%
|
|
3.75
|
%
|
|
3.83
|
%
|
|
(0.19
|
%)
|
|
|
|
(0.08
|
%)
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Tax equivalent yield (*)
|
4.13
|
%
|
|
4.32
|
%
|
|
4.43
|
%
|
|
(0.19
|
%)
|
|
|
|
(0.11
|
%)
|
|
|
(*)
|
Adjusts the yield on equity securities and tax-exempt bonds to the fully taxable equivalent yield.
|
|
Year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Other income
|
|
|
|
|
|
||||||
Income from the sale of real estate (*)
|
$
|
3
|
|
|
$
|
2
|
|
|
$
|
6
|
|
Other
|
9
|
|
|
7
|
|
|
9
|
|
|||
Total other income
|
12
|
|
|
9
|
|
|
15
|
|
|||
Other expenses
|
|
|
|
|
|
||||||
Amortization of intangibles
|
8
|
|
|
19
|
|
|
14
|
|
|||
Tender offer expenses
|
—
|
|
|
3
|
|
|
—
|
|
|||
Other
|
36
|
|
|
33
|
|
|
31
|
|
|||
Total other expense
|
44
|
|
|
55
|
|
|
45
|
|
|||
Interest expense
|
2
|
|
|
4
|
|
|
3
|
|
|||
Core other income and expenses, net
|
(34
|
)
|
|
(50
|
)
|
|
(33
|
)
|
|||
Pretax non-core gain on sale of hotel and apartment property
|
66
|
|
|
—
|
|
|
—
|
|
|||
GAAP other income and expenses, net
|
$
|
32
|
|
|
$
|
(50
|
)
|
|
$
|
(33
|
)
|
(*)
|
Excludes the $51 million pretax non-core gain on the sale of Le Pavillon Hotel in the second quarter of
2015
and the $15 million pretax non-core gain on the sale of an apartment property in the fourth quarter of 2015.
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Net investment income
|
$
|
1,224
|
|
|
$
|
1,136
|
|
|
$
|
1,034
|
|
|
8
|
%
|
|
10
|
%
|
Other income:
|
|
|
|
|
|
|
|
|
|
||||||||
Guaranteed withdrawal benefit fees
|
43
|
|
|
34
|
|
|
25
|
|
|
26
|
%
|
|
36
|
%
|
|||
Policy charges and other miscellaneous income
|
55
|
|
|
63
|
|
|
52
|
|
|
(13
|
%)
|
|
21
|
%
|
|||
Total revenues
|
1,322
|
|
|
1,233
|
|
|
1,111
|
|
|
7
|
%
|
|
11
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Annuity benefits (a)
|
732
|
|
|
648
|
|
|
531
|
|
|
13
|
%
|
|
22
|
%
|
|||
Acquisition expenses
|
163
|
|
|
175
|
|
|
159
|
|
|
(7
|
%)
|
|
10
|
%
|
|||
Other expenses (b)
|
96
|
|
|
82
|
|
|
93
|
|
|
17
|
%
|
|
(12
|
%)
|
|||
Total costs and expenses
|
991
|
|
|
905
|
|
|
783
|
|
|
10
|
%
|
|
16
|
%
|
|||
Core earnings before income taxes
|
331
|
|
|
328
|
|
|
328
|
|
|
1
|
%
|
|
—
|
%
|
|||
Pretax non-core ELNY guaranty fund assessments
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
%
|
|
(100
|
%)
|
|||
GAAP earnings before income taxes
|
$
|
331
|
|
|
$
|
328
|
|
|
$
|
323
|
|
|
1
|
%
|
|
2
|
%
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
||||||||
Core earnings before income taxes — before the impact of derivatives related to FIAs
|
$
|
354
|
|
|
$
|
362
|
|
|
$
|
313
|
|
|
(2
|
%)
|
|
16
|
%
|
Impact of derivatives related to FIAs
|
(23
|
)
|
|
(34
|
)
|
|
15
|
|
|
(32
|
%)
|
|
(327
|
%)
|
|||
Core earnings before income taxes
|
331
|
|
|
328
|
|
|
328
|
|
|
1
|
%
|
|
—
|
%
|
|||
Pretax non-core ELNY guaranty fund assessments
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
%
|
|
(100
|
%)
|
|||
GAAP earnings before income taxes
|
$
|
331
|
|
|
$
|
328
|
|
|
$
|
323
|
|
|
1
|
%
|
|
2
|
%
|
(a)
|
Annuity benefits consisted of the following (dollars in millions):
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
||||||||
Interest credited — fixed
|
$
|
532
|
|
|
$
|
497
|
|
|
$
|
451
|
|
|
7
|
%
|
|
10
|
%
|
Interest credited — fixed component of variable annuities
|
6
|
|
|
6
|
|
|
6
|
|
|
—
|
%
|
|
—
|
%
|
|||
Change in expected death and annuitization reserve
|
19
|
|
|
18
|
|
|
19
|
|
|
6
|
%
|
|
(5
|
%)
|
|||
Amortization of sales inducements
|
26
|
|
|
26
|
|
|
30
|
|
|
—
|
%
|
|
(13
|
%)
|
|||
Change in guaranteed withdrawal benefit reserve
|
63
|
|
|
41
|
|
|
38
|
|
|
54
|
%
|
|
8
|
%
|
|||
Change in other benefit reserves
|
22
|
|
|
12
|
|
|
7
|
|
|
83
|
%
|
|
71
|
%
|
|||
Subtotal before impact of derivatives related to FIAs and unlocking
|
668
|
|
|
600
|
|
|
551
|
|
|
11
|
%
|
|
9
|
%
|
|||
Derivatives related to fixed-indexed annuities:
|
|
|
|
|
|
|
|
|
|
||||||||
Embedded derivative mark-to-market
|
(11
|
)
|
|
240
|
|
|
184
|
|
|
(105
|
%)
|
|
30
|
%
|
|||
Equity option mark-to-market
|
56
|
|
|
(181
|
)
|
|
(210
|
)
|
|
(131
|
%)
|
|
(14
|
%)
|
|||
Impact of derivatives related to FIAs
|
45
|
|
|
59
|
|
|
(26
|
)
|
|
(24
|
%)
|
|
(327
|
%)
|
|||
Unlocking
|
19
|
|
|
(11
|
)
|
|
6
|
|
|
(273
|
%)
|
|
(283
|
%)
|
|||
Total annuity benefits
|
$
|
732
|
|
|
$
|
648
|
|
|
$
|
531
|
|
|
13
|
%
|
|
22
|
%
|
(b)
|
Other expenses exclude the $5 million pretax non-core charge for ELNY guaranty fund assessments in 2013.
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
||||||||
Average fixed annuity investments (at amortized cost)
|
$
|
25,174
|
|
|
$
|
22,391
|
|
|
$
|
19,151
|
|
|
12
|
%
|
|
17
|
%
|
Average fixed annuity benefits accumulated
|
24,898
|
|
|
22,119
|
|
|
18,696
|
|
|
13
|
%
|
|
18
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
As % of fixed annuity benefits accumulated (except as noted):
|
|
|
|
|
|
|
|
|
|
||||||||
Net investment income (as % of fixed annuity investments)
|
4.83
|
%
|
|
5.03
|
%
|
|
5.35
|
%
|
|
|
|
|
|||||
Interest credited — fixed
|
(2.14
|
%)
|
|
(2.25
|
%)
|
|
(2.41
|
%)
|
|
|
|
|
|||||
Net interest spread
|
2.69
|
%
|
|
2.78
|
%
|
|
2.94
|
%
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||
Policy charges and other miscellaneous income
|
0.18
|
%
|
|
0.18
|
%
|
|
0.22
|
%
|
|
|
|
|
|||||
Other annuity benefit expenses, net of guaranteed withdrawal benefit fees
|
(0.35
|
%)
|
|
(0.28
|
%)
|
|
(0.37
|
%)
|
|
|
|
|
|||||
Acquisition expenses
|
(0.74
|
%)
|
|
(0.67
|
%)
|
|
(0.85
|
%)
|
|
|
|
|
|||||
Other expenses (*)
|
(0.36
|
%)
|
|
(0.34
|
%)
|
|
(0.46
|
%)
|
|
|
|
|
|||||
Change in fair value of derivatives related to FIAs
|
(0.18
|
%)
|
|
(0.27
|
%)
|
|
0.13
|
%
|
|
|
|
|
|||||
Unlocking
|
0.02
|
%
|
|
0.01
|
%
|
|
(0.01
|
%)
|
|
|
|
|
|||||
Net spread earned on fixed annuities
|
1.26
|
%
|
|
1.41
|
%
|
|
1.60
|
%
|
|
|
|
|
(*)
|
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,
|
|||||||
|
2015
|
|
2014
|
|
2013
|
|||
Net spread earned on fixed annuities — before impact of derivatives related to fixed-indexed annuities
|
1.35
|
%
|
|
1.56
|
%
|
|
1.52
|
%
|
Impact of derivatives related to fixed-indexed annuities (*)
|
(0.09
|
%)
|
|
(0.15
|
%)
|
|
0.08
|
%
|
Net spread earned on fixed annuities
|
1.26
|
%
|
|
1.41
|
%
|
|
1.60
|
%
|
(*)
|
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,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Change in expected death and annuitization reserve
|
$
|
19
|
|
|
$
|
18
|
|
|
$
|
19
|
|
Amortization of sales inducements
|
26
|
|
|
26
|
|
|
30
|
|
|||
Change in guaranteed withdrawal benefit reserve
|
63
|
|
|
41
|
|
|
38
|
|
|||
Change in other benefit reserves
|
22
|
|
|
12
|
|
|
7
|
|
|||
Other annuity benefits
|
130
|
|
|
97
|
|
|
94
|
|
|||
Offset guaranteed withdrawal benefit fees
|
(43
|
)
|
|
(34
|
)
|
|
(25
|
)
|
|||
Other annuity benefits, net
|
$
|
87
|
|
|
$
|
63
|
|
|
$
|
69
|
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
||||||||
Core earnings before income taxes — before change in fair value of derivatives related to fixed-indexed annuities
|
$
|
354
|
|
|
$
|
362
|
|
|
$
|
313
|
|
|
(2
|
%)
|
|
16
|
%
|
Change in fair value of derivatives related to fixed-indexed annuities
|
(45
|
)
|
|
(59
|
)
|
|
26
|
|
|
(24
|
%)
|
|
(327
|
%)
|
|||
Related impact on amortization of DPAC (*)
|
22
|
|
|
25
|
|
|
(11
|
)
|
|
(12
|
%)
|
|
(327
|
%)
|
|||
Core earnings before income taxes
|
331
|
|
|
328
|
|
|
328
|
|
|
1
|
%
|
|
—
|
%
|
|||
Pretax non-core ELNY guaranty fund assessments
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
%
|
|
(100
|
%)
|
|||
GAAP earnings before income taxes
|
$
|
331
|
|
|
$
|
328
|
|
|
$
|
323
|
|
|
1
|
%
|
|
2
|
%
|
(*)
|
An estimate of the related acceleration/deceleration of amortization of deferred sales inducements and deferred policy acquisition costs.
|
|
Year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Beginning fixed annuity reserves
|
$
|
23,462
|
|
|
$
|
20,679
|
|
|
$
|
17,274
|
|
Fixed annuity premiums (receipts)
|
4,098
|
|
|
3,649
|
|
|
3,981
|
|
|||
Federal Home Loan Bank advances
|
345
|
|
|
—
|
|
|
200
|
|
|||
Surrenders, benefits and other withdrawals
|
(1,932
|
)
|
|
(1,673
|
)
|
|
(1,493
|
)
|
|||
Sale of subsidiaries
|
(261
|
)
|
|
—
|
|
|
—
|
|
|||
Interest and other annuity benefit expenses:
|
|
|
|
|
|
||||||
Interest credited
|
532
|
|
|
497
|
|
|
451
|
|
|||
Embedded derivative mark-to-market
|
(11
|
)
|
|
240
|
|
|
184
|
|
|||
Change in other benefit reserves
|
115
|
|
|
81
|
|
|
78
|
|
|||
Unlocking
|
23
|
|
|
(11
|
)
|
|
4
|
|
|||
Ending fixed annuity reserves
|
$
|
26,371
|
|
|
$
|
23,462
|
|
|
$
|
20,679
|
|
|
|
|
|
|
|
||||||
Reconciliation to annuity benefits accumulated per balance sheet:
|
|
|
|
|
|
||||||
Ending fixed annuity reserves (from above)
|
$
|
26,371
|
|
|
$
|
23,462
|
|
|
$
|
20,679
|
|
Impact of unrealized investment gains
|
64
|
|
|
111
|
|
|
71
|
|
|||
Fixed component of variable annuities
|
187
|
|
|
191
|
|
|
194
|
|
|||
Annuity benefits accumulated per balance sheet
|
$
|
26,622
|
|
|
$
|
23,764
|
|
|
$
|
20,944
|
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
|||||||||
Financial institutions single premium annuities — indexed
|
$
|
1,741
|
|
|
$
|
1,489
|
|
|
$
|
1,102
|
|
|
17
|
%
|
|
35
|
%
|
Financial institutions single premium annuities — fixed
|
229
|
|
|
332
|
|
|
628
|
|
|
(31
|
%)
|
|
(47
|
%)
|
|||
Retail single premium annuities — indexed
|
1,864
|
|
|
1,533
|
|
|
1,879
|
|
|
22
|
%
|
|
(18
|
%)
|
|||
Retail single premium annuities — fixed
|
70
|
|
|
101
|
|
|
165
|
|
|
(31
|
%)
|
|
(39
|
%)
|
|||
Education market — fixed and indexed annuities
|
194
|
|
|
194
|
|
|
207
|
|
|
—
|
%
|
|
(6
|
%)
|
|||
Total fixed annuity premiums
|
4,098
|
|
|
3,649
|
|
|
3,981
|
|
|
12
|
%
|
|
(8
|
%)
|
|||
Variable annuities
|
42
|
|
|
47
|
|
|
52
|
|
|
(11
|
%)
|
|
(10
|
%)
|
|||
Total annuity premiums
|
$
|
4,140
|
|
|
$
|
3,696
|
|
|
$
|
4,033
|
|
|
12
|
%
|
|
(8
|
%)
|
|
|
Year ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Policy charges and other miscellaneous income:
|
|
|
|
|
|
|
||||||
Unearned revenue
|
|
$
|
(2
|
)
|
|
$
|
10
|
|
|
$
|
—
|
|
Total revenues
|
|
(2
|
)
|
|
10
|
|
|
—
|
|
|||
Annuity benefits:
|
|
|
|
|
|
|
||||||
Fixed-indexed annuities embedded derivative
|
|
28
|
|
|
(58
|
)
|
|
(2
|
)
|
|||
Sales inducements
|
|
(4
|
)
|
|
—
|
|
|
2
|
|
|||
Other reserves
|
|
(5
|
)
|
|
47
|
|
|
6
|
|
|||
Total annuity benefits
|
|
19
|
|
|
(11
|
)
|
|
6
|
|
|||
Annuity and supplemental insurance acquisition expenses:
|
|
|
|
|
|
|
||||||
Deferred policy acquisition costs
|
|
(31
|
)
|
|
20
|
|
|
(4
|
)
|
|||
Total costs and expenses
|
|
(12
|
)
|
|
9
|
|
|
2
|
|
|||
Net expense reduction (charge)
|
|
$
|
10
|
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
Year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Earnings on fixed annuity benefits accumulated (a)
|
$
|
313
|
|
|
$
|
312
|
|
|
$
|
300
|
|
Earnings on investments in excess of fixed annuity benefits accumulated (b)
|
13
|
|
|
14
|
|
|
24
|
|
|||
Variable annuity earnings (loss)
|
5
|
|
|
2
|
|
|
4
|
|
|||
Core earnings before income taxes
|
331
|
|
|
328
|
|
|
328
|
|
|||
Pretax non-core ELNY guaranty fund assessments
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||
GAAP earnings before income taxes
|
$
|
331
|
|
|
$
|
328
|
|
|
$
|
323
|
|
(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
4.83%
and
5.03%
and
5.35%
in
2015
,
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.
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Net earned premiums:
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term care
|
$
|
73
|
|
|
$
|
74
|
|
|
$
|
76
|
|
|
(1
|
%)
|
|
(3
|
%)
|
Life operations
|
31
|
|
|
34
|
|
|
38
|
|
|
(9
|
%)
|
|
(11
|
%)
|
|||
Net investment income
|
80
|
|
|
82
|
|
|
76
|
|
|
(2
|
%)
|
|
8
|
%
|
|||
Other income
|
4
|
|
|
5
|
|
|
5
|
|
|
(20
|
%)
|
|
—
|
%
|
|||
Total revenues
|
188
|
|
|
195
|
|
|
195
|
|
|
(4
|
%)
|
|
—
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Life, accident and health benefits:
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term care
|
91
|
|
|
119
|
|
|
113
|
|
|
(24
|
%)
|
|
5
|
%
|
|||
Life operations
|
40
|
|
|
45
|
|
|
47
|
|
|
(11
|
%)
|
|
(4
|
%)
|
|||
Acquisition expenses
|
16
|
|
|
18
|
|
|
19
|
|
|
(11
|
%)
|
|
(5
|
%)
|
|||
Other expenses
|
27
|
|
|
23
|
|
|
26
|
|
|
17
|
%
|
|
(12
|
%)
|
|||
Total costs and expenses
|
174
|
|
|
205
|
|
|
205
|
|
|
(15
|
%)
|
|
—
|
%
|
|||
Core earnings (loss) before income taxes
|
14
|
|
|
(10
|
)
|
|
(10
|
)
|
|
(240
|
%)
|
|
—
|
%
|
|||
Pretax non-core realized loss on subsidiaries
|
(166
|
)
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|||
GAAP loss before income taxes
|
$
|
(152
|
)
|
|
$
|
(10
|
)
|
|
$
|
(10
|
)
|
|
1,420
|
%
|
|
—
|
%
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Net investment income
|
$
|
4
|
|
|
$
|
5
|
|
|
$
|
8
|
|
|
(20
|
%)
|
|
(38
|
%)
|
Other income — P&C fees
|
54
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|||
Other income
|
24
|
|
|
36
|
|
|
27
|
|
|
(33
|
%)
|
|
33
|
%
|
|||
Total revenues
|
82
|
|
|
41
|
|
|
35
|
|
|
100
|
%
|
|
17
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Property and casualty insurance — commissions and other underwriting expenses
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|||
Interest charges on borrowed money
|
72
|
|
|
69
|
|
|
68
|
|
|
4
|
%
|
|
1
|
%
|
|||
Other expense — expenses associated with P&C fees
|
38
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|||
Other expenses (*)
|
116
|
|
|
115
|
|
|
135
|
|
|
1
|
%
|
|
(15
|
%)
|
|||
Total costs and expenses
|
242
|
|
|
184
|
|
|
203
|
|
|
32
|
%
|
|
(9
|
%)
|
|||
Core loss before income taxes, excluding realized gains and losses
|
(160
|
)
|
|
(143
|
)
|
|
(168
|
)
|
|
12
|
%
|
|
(15
|
%)
|
|||
Pretax non-core special A&E charges
|
(12
|
)
|
|
(6
|
)
|
|
(22
|
)
|
|
100
|
%
|
|
(73
|
%)
|
|||
Pretax non-core loss on early retirement of debt
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|||
GAAP loss before income taxes, excluding realized gains and losses
|
$
|
(176
|
)
|
|
$
|
(149
|
)
|
|
$
|
(190
|
)
|
|
18
|
%
|
|
(22
|
%)
|
(*)
|
Excludes pretax non-core special A&E charges of
$12 million
,
$6 million
and
$22 million
in
2015
,
2014
and
2013
, respectively, and a pretax non-core loss on early retirement of debt of $4 million in
2015
.
|
|
Year ended December 31,
|
||||||||||
2015
|
|
2014
|
|
2013
|
|||||||
Realized gains (losses) before impairments:
|
|
|
|
|
|
||||||
Disposals
|
$
|
122
|
|
|
$
|
89
|
|
|
$
|
233
|
|
Change in the fair value of derivatives
|
(11
|
)
|
|
1
|
|
|
1
|
|
|||
Adjustments to annuity deferred policy acquisition costs and related items
|
(5
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|||
|
106
|
|
|
88
|
|
|
233
|
|
|||
Impairment charges:
|
|
|
|
|
|
||||||
Securities
|
(140
|
)
|
|
(41
|
)
|
|
(15
|
)
|
|||
Adjustments to annuity deferred policy acquisition costs and related items
|
15
|
|
|
5
|
|
|
3
|
|
|||
|
(125
|
)
|
|
(36
|
)
|
|
(12
|
)
|
|||
Realized gains (losses) on securities
|
$
|
(19
|
)
|
|
$
|
52
|
|
|
$
|
221
|
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015 - 2014
|
|
2014 - 2013
|
||||||||
National Interstate
|
$
|
10
|
|
|
$
|
5
|
|
|
$
|
8
|
|
|
100
|
%
|
|
(38
|
%)
|
Managed Investment Entities
|
—
|
|
|
(51
|
)
|
|
(26
|
)
|
|
(100
|
%)
|
|
96
|
%
|
|||
Other
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|||
Earnings (loss) attributable to noncontrolling interests
|
$
|
18
|
|
|
$
|
(46
|
)
|
|
$
|
(18
|
)
|
|
(139
|
%)
|
|
156
|
%
|
|
|
2015
|
|
2014
|
||||
Fair value of fixed maturity portfolio
|
|
$
|
32,538
|
|
|
$
|
31,000
|
|
Percentage impact on fair value of 100 bps increase in interest rates
|
|
(5.0
|
%)
|
|
(5.0
|
%)
|
||
Pretax impact on fair value of fixed maturity portfolio
|
|
$
|
(1,627
|
)
|
|
$
|
(1,550
|
)
|
Offsetting adjustments to deferred policy acquisition costs and other balance sheet amounts
|
|
700
|
|
|
650
|
|
||
Estimated pretax impact on accumulated other comprehensive income
|
|
(927
|
)
|
|
(900
|
)
|
||
Deferred income tax
|
|
325
|
|
|
315
|
|
||
Noncontrolling interests
|
|
13
|
|
|
12
|
|
||
Estimated after-tax impact on accumulated other comprehensive income
|
|
$
|
(589
|
)
|
|
$
|
(573
|
)
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Fifth
|
|
Thereafter
|
|
Total
|
|
Fair
Value (*)
|
||||||||||||||||
2015
|
|
$
|
2,070
|
|
|
$
|
2,380
|
|
|
$
|
2,710
|
|
|
$
|
2,817
|
|
|
$
|
3,035
|
|
|
$
|
19,268
|
|
|
$
|
32,280
|
|
|
$
|
25,488
|
|
2014
|
|
2,004
|
|
|
2,211
|
|
|
2,285
|
|
|
2,434
|
|
|
2,510
|
|
|
16,825
|
|
|
28,269
|
|
|
23,187
|
|
(*)
|
Fair value of annuity benefits accumulated excluding life contingent annuities in the payout phase (carrying value of $200 million at
December 31, 2015
and $203 million at
December 31, 2014
).
|
|
|
|
December 31, 2015
|
|
|
|
December 31, 2014
|
|
||||||||||
|
|
|
Scheduled
Principal
Payments
|
|
Rate
|
|
|
|
Scheduled
Principal
Payments
|
|
Rate
|
|
||||||
|
2016
|
|
$
|
—
|
|
|
—
|
%
|
|
2015
|
|
$
|
14
|
|
|
5.7
|
%
|
|
|
2017
|
|
—
|
|
|
—
|
%
|
|
2016
|
|
45
|
|
|
6.1
|
%
|
|
||
|
2018
|
|
—
|
|
|
—
|
%
|
|
2017
|
|
—
|
|
|
—
|
%
|
|
||
|
2019
|
|
350
|
|
|
9.9
|
%
|
(*)
|
2018
|
|
—
|
|
|
—
|
%
|
|
||
|
2020
|
|
—
|
|
|
—
|
%
|
|
2019
|
|
350
|
|
|
9.9
|
%
|
|
||
|
Thereafter
|
|
658
|
|
|
6.2
|
%
|
|
Thereafter
|
|
640
|
|
|
6.4
|
%
|
|
||
|
Total
|
|
$
|
1,008
|
|
|
7.5
|
%
|
|
Total
|
|
$
|
1,049
|
|
|
7.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Fair Value
|
|
$
|
1,108
|
|
|
|
|
Fair Value
|
|
$
|
1,168
|
|
|
|
|
(*)
|
In June 2015, AFG entered into an interest rate swap that effectively converts its 9-7/8% Senior Notes due 2019 to a floating rate of three-month LIBOR plus 8.099% (8.6110% at December 31, 2015). The 9-7/8% Senior Notes appear in the table above (at the contractual 9-7/8% interest rate) because the notes themselves are fixed-rate obligations.
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheet as of December 31, 2015 and 2014
|
|
Consolidated Statement of Earnings for the years ended December 31, 2015, 2014 and 2013
|
|
Consolidated Statement of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013
|
|
Consolidated Statement of Changes in Equity for the years ended December 31, 2015, 2014 and 2013
|
|
Consolidated Statement of Cash Flows for the years ended December 31, 2015, 2014 and 2013
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
|
/s/ ERNST & YOUNG LLP
|
Cincinnati, Ohio
|
|
|
February 26, 2016
|
|
|
|
|
|
|
|
/s/ ERNST & YOUNG LLP
|
Cincinnati, Ohio
|
|
|
February 26, 2016
|
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,220
|
|
|
$
|
1,343
|
|
Investments:
|
|
|
|
||||
Fixed maturities, available for sale at fair value (amortized cost — $31,565 and $29,074)
|
32,284
|
|
|
30,734
|
|
||
Fixed maturities, trading at fair value
|
254
|
|
|
266
|
|
||
Equity securities, available for sale at fair value (cost — $1,469 and $1,283)
|
1,553
|
|
|
1,501
|
|
||
Equity securities, trading at fair value
|
166
|
|
|
195
|
|
||
Mortgage loans
|
1,067
|
|
|
1,117
|
|
||
Policy loans
|
201
|
|
|
228
|
|
||
Real estate and other investments
|
991
|
|
|
826
|
|
||
Total cash and investments
|
37,736
|
|
|
36,210
|
|
||
Recoverables from reinsurers
|
2,636
|
|
|
3,238
|
|
||
Prepaid reinsurance premiums
|
480
|
|
|
469
|
|
||
Agents’ balances and premiums receivable
|
937
|
|
|
889
|
|
||
Deferred policy acquisition costs
|
1,184
|
|
|
821
|
|
||
Assets of managed investment entities
|
4,047
|
|
|
3,108
|
|
||
Other receivables
|
820
|
|
|
910
|
|
||
Variable annuity assets (separate accounts)
|
608
|
|
|
662
|
|
||
Other assets
|
1,212
|
|
|
1,027
|
|
||
Goodwill
|
199
|
|
|
201
|
|
||
Total assets
|
$
|
49,859
|
|
|
$
|
47,535
|
|
|
|
|
|
||||
Liabilities and Equity:
|
|
|
|
||||
Unpaid losses and loss adjustment expenses
|
$
|
8,127
|
|
|
$
|
7,872
|
|
Unearned premiums
|
2,060
|
|
|
1,956
|
|
||
Annuity benefits accumulated
|
26,622
|
|
|
23,764
|
|
||
Life, accident and health reserves
|
705
|
|
|
2,175
|
|
||
Payable to reinsurers
|
591
|
|
|
645
|
|
||
Liabilities of managed investment entities
|
3,781
|
|
|
2,819
|
|
||
Long-term debt
|
1,020
|
|
|
1,061
|
|
||
Variable annuity liabilities (separate accounts)
|
608
|
|
|
662
|
|
||
Other liabilities
|
1,575
|
|
|
1,527
|
|
||
Total liabilities
|
45,089
|
|
|
42,481
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Common Stock, no par value
— 200,000,000 shares authorized
— 87,474,452 and 87,708,793 shares outstanding
|
87
|
|
|
88
|
|
||
Capital surplus
|
1,214
|
|
|
1,152
|
|
||
Retained earnings:
|
|
|
|
||||
Appropriated — managed investment entities
|
—
|
|
|
(2
|
)
|
||
Unappropriated
|
2,987
|
|
|
2,914
|
|
||
Accumulated other comprehensive income, net of tax
|
304
|
|
|
727
|
|
||
Total shareholders’ equity
|
4,592
|
|
|
4,879
|
|
||
Noncontrolling interests
|
178
|
|
|
175
|
|
||
Total equity
|
4,770
|
|
|
5,054
|
|
||
Total liabilities and equity
|
$
|
49,859
|
|
|
$
|
47,535
|
|
|
Year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Property and casualty insurance net earned premiums
|
$
|
4,224
|
|
|
$
|
3,878
|
|
|
$
|
3,204
|
|
Life, accident and health net earned premiums
|
104
|
|
|
108
|
|
|
114
|
|
|||
Net investment income
|
1,633
|
|
|
1,501
|
|
|
1,346
|
|
|||
Realized gains (losses) on:
|
|
|
|
|
|
||||||
Securities (*)
|
(19
|
)
|
|
52
|
|
|
221
|
|
|||
Subsidiaries
|
(161
|
)
|
|
—
|
|
|
(4
|
)
|
|||
Income (loss) of managed investment entities:
|
|
|
|
|
|
||||||
Investment income
|
155
|
|
|
116
|
|
|
128
|
|
|||
Loss on change in fair value of assets/liabilities
|
(34
|
)
|
|
(44
|
)
|
|
(14
|
)
|
|||
Other income
|
243
|
|
|
122
|
|
|
108
|
|
|||
Total revenues
|
6,145
|
|
|
5,733
|
|
|
5,103
|
|
|||
|
|
|
|
|
|
||||||
Costs and Expenses:
|
|
|
|
|
|
||||||
Property and casualty insurance:
|
|
|
|
|
|
||||||
Losses and loss adjustment expenses
|
2,695
|
|
|
2,494
|
|
|
2,040
|
|
|||
Commissions and other underwriting expenses
|
1,320
|
|
|
1,172
|
|
|
1,019
|
|
|||
Annuity benefits
|
732
|
|
|
648
|
|
|
531
|
|
|||
Life, accident and health benefits
|
131
|
|
|
164
|
|
|
160
|
|
|||
Annuity and supplemental insurance acquisition expenses
|
179
|
|
|
193
|
|
|
178
|
|
|||
Interest charges on borrowed money
|
74
|
|
|
73
|
|
|
71
|
|
|||
Expenses of managed investment entities
|
112
|
|
|
82
|
|
|
89
|
|
|||
Other expenses
|
337
|
|
|
281
|
|
|
326
|
|
|||
Total costs and expenses
|
5,580
|
|
|
5,107
|
|
|
4,414
|
|
|||
Earnings before income taxes
|
565
|
|
|
626
|
|
|
689
|
|
|||
Provision for income taxes
|
195
|
|
|
220
|
|
|
236
|
|
|||
Net earnings, including noncontrolling interests
|
370
|
|
|
406
|
|
|
453
|
|
|||
Less: Net earnings (loss) attributable to noncontrolling interests
|
18
|
|
|
(46
|
)
|
|
(18
|
)
|
|||
Net Earnings Attributable to Shareholders
|
$
|
352
|
|
|
$
|
452
|
|
|
$
|
471
|
|
|
|
|
|
|
|
||||||
Earnings Attributable to Shareholders per Common Share:
|
|
|
|
|
|
||||||
Basic
|
$
|
4.02
|
|
|
$
|
5.07
|
|
|
$
|
5.27
|
|
Diluted
|
$
|
3.94
|
|
|
$
|
4.97
|
|
|
$
|
5.16
|
|
Average number of Common Shares:
|
|
|
|
|
|
||||||
Basic
|
87.6
|
|
|
89.0
|
|
|
89.3
|
|
|||
Diluted
|
89.4
|
|
|
91.0
|
|
|
91.2
|
|
|||
|
|
|
|
|
|
||||||
Cash dividends per Common Share
|
$
|
2.03
|
|
|
$
|
1.91
|
|
|
$
|
1.805
|
|
________________________________________
|
|
|
|
|
|
||||||
(*) Consists of the following:
|
|
|
|
|
|
||||||
Realized gains before impairments
|
$
|
106
|
|
|
$
|
88
|
|
|
$
|
233
|
|
|
|
|
|
|
|
||||||
Losses on securities with impairment
|
(125
|
)
|
|
(36
|
)
|
|
(14
|
)
|
|||
Non-credit portion recognized in other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
2
|
|
|||
Impairment charges recognized in earnings
|
(125
|
)
|
|
(36
|
)
|
|
(12
|
)
|
|||
Total realized gains (losses) on securities
|
$
|
(19
|
)
|
|
$
|
52
|
|
|
$
|
221
|
|
|
Year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Net earnings, including noncontrolling interests
|
$
|
370
|
|
|
$
|
406
|
|
|
$
|
453
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Net unrealized gains (losses) on securities:
|
|
|
|
|
|
||||||
Unrealized holding gains (losses) on securities arising during the period
|
(406
|
)
|
|
216
|
|
|
(122
|
)
|
|||
Reclassification adjustment for realized (gains) losses included in net earnings
|
9
|
|
|
(33
|
)
|
|
(144
|
)
|
|||
Reclassification for unrealized gains of subsidiaries sold
|
(22
|
)
|
|
—
|
|
|
—
|
|
|||
Total net unrealized gains (losses) on securities
|
(419
|
)
|
|
183
|
|
|
(266
|
)
|
|||
Net unrealized gains on cash flow hedges
|
1
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation adjustments
|
(14
|
)
|
|
(9
|
)
|
|
(13
|
)
|
|||
Pension and other postretirement plans adjustments
|
1
|
|
|
(4
|
)
|
|
2
|
|
|||
Other comprehensive income (loss), net of tax
|
(431
|
)
|
|
170
|
|
|
(277
|
)
|
|||
Total comprehensive income (loss), net of tax
|
(61
|
)
|
|
576
|
|
|
176
|
|
|||
Less: Comprehensive income (loss) attributable to noncontrolling interests
|
10
|
|
|
(43
|
)
|
|
(24
|
)
|
|||
Comprehensive income (loss) attributable to shareholders
|
$
|
(71
|
)
|
|
$
|
619
|
|
|
$
|
200
|
|
|
|
|
|
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, 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
|
|
Cumulative effect of accounting change
|
—
|
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||||
Net earnings
|
—
|
|
|
|
—
|
|
|
—
|
|
|
352
|
|
|
—
|
|
|
352
|
|
|
18
|
|
|
370
|
|
|||||||
Other comprehensive loss
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(423
|
)
|
|
(423
|
)
|
|
(8
|
)
|
|
(431
|
)
|
|||||||
Dividends on Common Stock
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(178
|
)
|
|
—
|
|
|
(178
|
)
|
|
—
|
|
|
(178
|
)
|
|||||||
Shares issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Exercise of stock options
|
1,475,202
|
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59
|
|
|
—
|
|
|
59
|
|
|||||||
Other benefit plans
|
282,811
|
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|||||||
Dividend reinvestment plan
|
26,167
|
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
|||||||
Shares acquired and retired
|
(1,955,186
|
)
|
|
|
(27
|
)
|
|
—
|
|
|
(99
|
)
|
|
—
|
|
|
(126
|
)
|
|
—
|
|
|
(126
|
)
|
|||||||
Shares exchanged — benefit plans
|
(45,765
|
)
|
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||||
Forfeitures of restricted stock
|
(17,570
|
)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
|||||||
Balance at December 31, 2015
|
87,474,452
|
|
|
|
$
|
1,301
|
|
|
$
|
—
|
|
|
$
|
2,987
|
|
|
$
|
304
|
|
|
$
|
4,592
|
|
|
$
|
178
|
|
|
$
|
4,770
|
|
|
Year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Operating Activities:
|
|
|
|
|
|
||||||
Net earnings, including noncontrolling interests
|
$
|
370
|
|
|
$
|
406
|
|
|
$
|
453
|
|
Adjustments:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
132
|
|
|
144
|
|
|
142
|
|
|||
Annuity benefits
|
732
|
|
|
648
|
|
|
531
|
|
|||
Realized (gains) losses on investing activities
|
100
|
|
|
(58
|
)
|
|
(230
|
)
|
|||
Net (purchases) sales of trading securities
|
10
|
|
|
(109
|
)
|
|
2
|
|
|||
Deferred annuity and life policy acquisition costs
|
(224
|
)
|
|
(198
|
)
|
|
(222
|
)
|
|||
Change in:
|
|
|
|
|
|
||||||
Reinsurance and other receivables
|
(10
|
)
|
|
(199
|
)
|
|
176
|
|
|||
Other assets
|
(13
|
)
|
|
(87
|
)
|
|
(149
|
)
|
|||
Insurance claims and reserves
|
451
|
|
|
587
|
|
|
(200
|
)
|
|||
Payable to reinsurers
|
(54
|
)
|
|
134
|
|
|
51
|
|
|||
Other liabilities
|
27
|
|
|
(63
|
)
|
|
280
|
|
|||
Managed investment entities’ assets/liabilities
|
(190
|
)
|
|
2
|
|
|
(98
|
)
|
|||
Other operating activities, net
|
26
|
|
|
15
|
|
|
24
|
|
|||
Net cash provided by operating activities
|
1,357
|
|
|
1,222
|
|
|
760
|
|
|||
|
|
|
|
|
|
||||||
Investing Activities:
|
|
|
|
|
|
||||||
Purchases of:
|
|
|
|
|
|
||||||
Fixed maturities
|
(7,201
|
)
|
|
(6,846
|
)
|
|
(6,690
|
)
|
|||
Equity securities
|
(570
|
)
|
|
(471
|
)
|
|
(461
|
)
|
|||
Mortgage loans
|
(213
|
)
|
|
(450
|
)
|
|
(274
|
)
|
|||
Real estate, property and equipment
|
(102
|
)
|
|
(47
|
)
|
|
(52
|
)
|
|||
Businesses
|
—
|
|
|
(267
|
)
|
|
—
|
|
|||
Proceeds from:
|
|
|
|
|
|
||||||
Maturities and redemptions of fixed maturities
|
3,333
|
|
|
2,988
|
|
|
3,236
|
|
|||
Repayments of mortgage loans
|
265
|
|
|
116
|
|
|
102
|
|
|||
Sales of fixed maturities
|
321
|
|
|
287
|
|
|
275
|
|
|||
Sales of equity securities
|
364
|
|
|
155
|
|
|
434
|
|
|||
Sales of real estate, property and equipment
|
117
|
|
|
14
|
|
|
34
|
|
|||
Sales of businesses
|
7
|
|
|
—
|
|
|
—
|
|
|||
Cash and cash equivalents of businesses acquired (sold)
|
(49
|
)
|
|
1,078
|
|
|
(5
|
)
|
|||
Managed investment entities:
|
|
|
|
|
|
||||||
Purchases of investments
|
(1,530
|
)
|
|
(1,692
|
)
|
|
(1,426
|
)
|
|||
Proceeds from sales and redemptions of investments
|
855
|
|
|
1,417
|
|
|
1,904
|
|
|||
Other investing activities, net
|
(174
|
)
|
|
99
|
|
|
8
|
|
|||
Net cash used in investing activities
|
(4,577
|
)
|
|
(3,619
|
)
|
|
(2,915
|
)
|
|||
|
|
|
|
|
|
||||||
Financing Activities:
|
|
|
|
|
|
||||||
Annuity receipts
|
4,485
|
|
|
3,696
|
|
|
4,233
|
|
|||
Annuity surrenders, benefits and withdrawals
|
(2,025
|
)
|
|
(1,773
|
)
|
|
(1,588
|
)
|
|||
Net transfers from variable annuity assets
|
43
|
|
|
43
|
|
|
32
|
|
|||
Additional long-term borrowings
|
145
|
|
|
145
|
|
|
—
|
|
|||
Reductions of long-term debt
|
(192
|
)
|
|
(2
|
)
|
|
(40
|
)
|
|||
Issuances of managed investment entities’ liabilities
|
1,026
|
|
|
1,400
|
|
|
1,192
|
|
|||
Retirements of managed investment entities’ liabilities
|
(136
|
)
|
|
(1,094
|
)
|
|
(1,560
|
)
|
|||
Issuances of Common Stock
|
61
|
|
|
47
|
|
|
54
|
|
|||
Repurchases of Common Stock
|
(126
|
)
|
|
(191
|
)
|
|
(70
|
)
|
|||
Cash dividends paid on Common Stock
|
(176
|
)
|
|
(167
|
)
|
|
(160
|
)
|
|||
Other financing activities, net
|
(8
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|||
Net cash provided by financing activities
|
3,097
|
|
|
2,101
|
|
|
2,089
|
|
|||
Net Change in Cash and Cash Equivalents
|
(123
|
)
|
|
(296
|
)
|
|
(66
|
)
|
|||
Cash and cash equivalents at beginning of year
|
1,343
|
|
|
1,639
|
|
|
1,705
|
|
|||
Cash and cash equivalents at end of year
|
$
|
1,220
|
|
|
$
|
1,343
|
|
|
$
|
1,639
|
|
INDEX TO NOTES
|
|||||
|
|
|
|
|
|
A.
|
Accounting Policies
|
|
I.
|
Goodwill and Other Intangibles
|
|
B.
|
Acquisitions and Sale 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
|
|
|
|
|
|
|
|
|
April 1, 2014
|
||||||
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)
|
AFG’s net deferred tax assets are included in Other assets in AFG’s Balance Sheet at
December 31, 2015
.
|
(b)
|
Included in Other assets in AFG’s Balance Sheet.
|
|
December 24, 2015
|
||||||
Net sale proceeds (*)
|
|
|
$
|
13
|
|
||
|
|
|
|
||||
Assets of businesses sold:
|
|
|
|
||||
Cash and investments
|
$
|
1,334
|
|
|
|
|
|
Recoverables from reinsurers
|
630
|
|
|
|
|
||
Deferred policy acquisition costs
|
16
|
|
|
|
|
||
Other receivables
|
16
|
|
|
|
|
||
Other assets
|
(4
|
)
|
|
|
|
||
Goodwill
|
2
|
|
|
|
|
||
Total assets
|
|
|
1,994
|
|
|||
Liabilities of businesses sold:
|
|
|
|
||||
Annuity benefits accumulated
|
261
|
|
|
|
|
||
Life, accident and health reserves
|
1,525
|
|
|
|
|
||
Other liabilities
|
7
|
|
|
|
|
||
Total liabilities
|
|
|
1,793
|
|
|||
Reclassify net unrealized gain on marketable securities
|
|
|
22
|
|
|||
Net assets of businesses sold
|
|
|
179
|
|
|||
|
|
|
|
||||
Loss on subsidiaries, pretax
|
|
|
(166
|
)
|
|||
Tax benefit
|
|
|
58
|
|
|||
Loss on subsidiaries, net of tax
|
|
|
$
|
(108
|
)
|
(*)
|
Includes the fair value of the potential additional consideration and capital maintenance agreement and is shown net of estimated expenses.
|
|
Year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Life, accident and health net earned premiums:
|
|
|
|
|
|
||||||
Long-term care
|
$
|
73
|
|
|
$
|
74
|
|
|
$
|
76
|
|
Life operations
|
11
|
|
|
11
|
|
|
12
|
|
|||
Net investment income
|
73
|
|
|
75
|
|
|
68
|
|
|||
Realized gains (losses) on securities and other income
|
(11
|
)
|
|
(6
|
)
|
|
10
|
|
|||
Total revenues
|
146
|
|
|
154
|
|
|
166
|
|
|||
Annuity benefits
|
8
|
|
|
7
|
|
|
9
|
|
|||
Life, accident and health benefits:
|
|
|
|
|
|
||||||
Long-term care
|
91
|
|
|
119
|
|
|
113
|
|
|||
Life operations
|
11
|
|
|
11
|
|
|
12
|
|
|||
Annuity and supplemental insurance acquisition expenses
|
12
|
|
|
11
|
|
|
14
|
|
|||
Other expenses
|
16
|
|
|
14
|
|
|
12
|
|
|||
Total costs and expenses
|
138
|
|
|
162
|
|
|
160
|
|
|||
Earnings before income taxes
|
$
|
8
|
|
|
$
|
(8
|
)
|
|
$
|
6
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Assets
|
|
|
|
|
|
||||||
Property and casualty insurance (a)
|
$
|
14,689
|
|
|
$
|
14,069
|
|
|
$
|
11,717
|
|
Annuity
|
29,865
|
|
|
27,317
|
|
|
24,294
|
|
|||
Run-off long-term care and life (b)
|
772
|
|
|
2,489
|
|
|
2,408
|
|
|||
Other
|
4,533
|
|
|
3,660
|
|
|
3,668
|
|
|||
Total assets
|
$
|
49,859
|
|
|
$
|
47,535
|
|
|
$
|
42,087
|
|
Revenues
|
|
|
|
|
|
||||||
Property and casualty insurance:
|
|
|
|
|
|
||||||
Premiums earned:
|
|
|
|
|
|
||||||
Specialty
|
|
|
|
|
|
||||||
Property and transportation
|
$
|
1,599
|
|
|
$
|
1,544
|
|
|
$
|
1,521
|
|
Specialty casualty
|
2,011
|
|
|
1,765
|
|
|
1,135
|
|
|||
Specialty financial
|
517
|
|
|
469
|
|
|
469
|
|
|||
Other specialty
|
97
|
|
|
100
|
|
|
79
|
|
|||
Total premiums earned
|
4,224
|
|
|
3,878
|
|
|
3,204
|
|
|||
Net investment income
|
319
|
|
|
294
|
|
|
263
|
|
|||
Other income (c)
|
78
|
|
|
9
|
|
|
15
|
|
|||
Total property and casualty insurance
|
4,621
|
|
|
4,181
|
|
|
3,482
|
|
|||
Annuity:
|
|
|
|
|
|
||||||
Net investment income
|
1,224
|
|
|
1,136
|
|
|
1,034
|
|
|||
Other income
|
98
|
|
|
97
|
|
|
77
|
|
|||
Total annuity
|
1,322
|
|
|
1,233
|
|
|
1,111
|
|
|||
Run-off long-term care and life (b)
|
188
|
|
|
195
|
|
|
195
|
|
|||
Other
|
194
|
|
|
72
|
|
|
98
|
|
|||
Total revenues before realized gains (losses)
|
6,325
|
|
|
5,681
|
|
|
4,886
|
|
|||
Realized gains (losses) on securities
|
(19
|
)
|
|
52
|
|
|
221
|
|
|||
Realized losses on subsidiaries
|
(161
|
)
|
|
—
|
|
|
(4
|
)
|
|||
Total revenues
|
$
|
6,145
|
|
|
$
|
5,733
|
|
|
$
|
5,103
|
|
(a)
|
Not allocable to sub-segments.
|
(b)
|
AFG sold substantially all of its run-off long-term care insurance business in December 2015.
|
(c)
|
Includes pretax income of
$51 million
(before noncontrolling interest) from the sale of the Le Pavillon Hotel in the second quarter of
2015
and
$15 million
from the sale of an apartment property in the fourth quarter of
2015
.
|
|
2015
|
|
2014
|
|
2013
|
||||||
Earnings Before Income Taxes
|
|
|
|
|
|
||||||
Property and casualty insurance:
|
|
|
|
|
|
||||||
Underwriting:
|
|
|
|
|
|
||||||
Specialty
|
|
|
|
|
|
||||||
Property and transportation
|
$
|
48
|
|
|
$
|
21
|
|
|
$
|
12
|
|
Specialty casualty
|
146
|
|
|
136
|
|
|
102
|
|
|||
Specialty financial
|
87
|
|
|
64
|
|
|
67
|
|
|||
Other specialty
|
14
|
|
|
16
|
|
|
25
|
|
|||
Other lines (a)
|
(70
|
)
|
|
(25
|
)
|
|
(61
|
)
|
|||
Total underwriting
|
225
|
|
|
212
|
|
|
145
|
|
|||
Investment and other income, net (b)
|
351
|
|
|
244
|
|
|
230
|
|
|||
Total property and casualty insurance
|
576
|
|
|
456
|
|
|
375
|
|
|||
Annuity (c)
|
331
|
|
|
328
|
|
|
323
|
|
|||
Run-off long-term care and life (d)
|
14
|
|
|
(10
|
)
|
|
(10
|
)
|
|||
Other (e)
|
(176
|
)
|
|
(200
|
)
|
|
(216
|
)
|
|||
Total earnings before realized gains (losses) and income taxes
|
745
|
|
|
574
|
|
|
472
|
|
|||
Realized gains (losses) on securities
|
(19
|
)
|
|
52
|
|
|
221
|
|
|||
Realized losses on subsidiaries
|
(161
|
)
|
|
—
|
|
|
(4
|
)
|
|||
Total earnings before income taxes
|
$
|
565
|
|
|
$
|
626
|
|
|
$
|
689
|
|
(a)
|
Includes special charges to increase asbestos and environmental (“A&E”) reserves of
$67 million
,
$24 million
and
$54 million
in
2015
,
2014
and
2013
, respectively.
|
(b)
|
Includes pretax income of
$51 million
(before noncontrolling interest) from the sale of the Le Pavillon Hotel in the second quarter of
2015
and
$15 million
from the sale of an apartment property in the fourth quarter of
2015
.
|
(c)
|
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.
|
(d)
|
AFG sold substantially all of its run-off long-term care insurance business in December 2015.
|
(e)
|
Primarily holding company expenses, including a
$4 million
loss on retirement of debt in the third quarter of 2015 and special charges to increase A&E reserves related to AFG’s former railroad and manufacturing operations (
$12 million
in
2015
,
$6 million
in
2014
and
$22 million
in
2013
) and losses of managed investment entities attributable to noncontrolling interests (
$51 million
in
2014
and
$26 million
in
2013
). Following the adoption of new guidance in the first quarter of 2015, there are no longer earnings (losses) of managed investment entities that are attributable to noncontrolling interests. See
Note
A
—
“
Accounting Policies
—
Managed Investment Entities
.”
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
December 31, 2015
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Available for sale (“AFS”) fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. Government and government agencies
|
$
|
100
|
|
|
$
|
192
|
|
|
$
|
15
|
|
|
$
|
307
|
|
States, municipalities and political subdivisions
|
—
|
|
|
6,767
|
|
|
89
|
|
|
6,856
|
|
||||
Foreign government
|
—
|
|
|
154
|
|
|
—
|
|
|
154
|
|
||||
Residential MBS
|
—
|
|
|
3,305
|
|
|
224
|
|
|
3,529
|
|
||||
Commercial MBS
|
—
|
|
|
2,148
|
|
|
39
|
|
|
2,187
|
|
||||
Asset-backed securities (“ABS”)
|
—
|
|
|
4,464
|
|
|
470
|
|
|
4,934
|
|
||||
Corporate and other
|
50
|
|
|
13,634
|
|
|
633
|
|
|
14,317
|
|
||||
Total AFS fixed maturities
|
150
|
|
|
30,664
|
|
|
1,470
|
|
|
32,284
|
|
||||
Trading fixed maturities
|
13
|
|
|
241
|
|
|
—
|
|
|
254
|
|
||||
Equity securities
|
1,362
|
|
|
217
|
|
|
140
|
|
|
1,719
|
|
||||
Assets of managed investment entities (“MIE”)
|
309
|
|
|
3,712
|
|
|
26
|
|
|
4,047
|
|
||||
Variable annuity assets (separate accounts) (*)
|
—
|
|
|
608
|
|
|
—
|
|
|
608
|
|
||||
Other investments — derivatives
|
—
|
|
|
241
|
|
|
—
|
|
|
241
|
|
||||
Other assets — derivatives
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Total assets accounted for at fair value
|
$
|
1,834
|
|
|
$
|
35,685
|
|
|
$
|
1,636
|
|
|
$
|
39,155
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Liabilities of managed investment entities
|
$
|
289
|
|
|
$
|
3,468
|
|
|
$
|
24
|
|
|
$
|
3,781
|
|
Derivatives in annuity benefits accumulated
|
—
|
|
|
—
|
|
|
1,369
|
|
|
1,369
|
|
||||
Derivatives in long-term debt
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||
Other liabilities — derivatives
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
||||
Total liabilities accounted for at fair value
|
$
|
289
|
|
|
$
|
3,474
|
|
|
$
|
1,393
|
|
|
$
|
5,156
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2014
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Available for sale 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
|
—
|
|
|
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
|
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
|
|
|
Level 2 To Level 1 Transfers
|
|
Level 1 To Level 2 Transfers
|
||||||||||||||||||||||||||||||||||||||
|
# of Transfers
|
|
Fair Value
|
|
# of Transfers
|
|
Fair Value
|
||||||||||||||||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||||||||
Perpetual preferred stocks
|
5
|
|
|
14
|
|
|
15
|
|
|
$
|
19
|
|
|
$
|
96
|
|
|
$
|
70
|
|
|
7
|
|
|
13
|
|
|
2
|
|
|
$
|
31
|
|
|
$
|
83
|
|
|
$
|
10
|
|
Common stocks
|
7
|
|
|
—
|
|
|
2
|
|
|
80
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
||||||
Redeemable preferred stocks
|
2
|
|
|
1
|
|
|
3
|
|
|
11
|
|
|
5
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Unobservable Input
|
|
Range
|
Adjustment for insurance subsidiary’s credit risk
|
|
0.30% – 2.95% over the risk free rate
|
Risk margin for uncertainty in cash flows
|
|
0.58% reduction in the discount rate
|
Surrenders
|
|
3% – 18% of indexed account value
|
Partial surrenders
|
|
2% – 10% of indexed account value
|
Annuitizations
|
|
0.75% – 1.5% of indexed account value
|
Deaths
|
|
1.5% – 4.0% of indexed account value
|
Budgeted option costs
|
|
1.75% – 3.5% of indexed account value
|
|
|
|
|
|
Total realized/unrealized
gains (losses) included in
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Bal. at
Dec. 31,
2014
|
|
Impact of
accounting change (a) |
|
Net
income
|
|
Other
comprehensive
income (loss)
|
|
Purchases
and
issuances
|
|
Sales and
settlements
|
|
Transfer
into
Level 3
|
|
Transfer
out of
Level 3
|
|
Sale of subsidiaries
|
|
Bal. at
Dec. 31,
2015
|
|||||||||||||||||||||
AFS fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
U.S. government agency
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15
|
|
State and municipal
|
100
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
34
|
|
|
(1
|
)
|
|
2
|
|
|
(39
|
)
|
|
(6
|
)
|
|
89
|
|
||||||||||
Residential MBS
|
300
|
|
|
—
|
|
|
(11
|
)
|
|
(1
|
)
|
|
—
|
|
|
(34
|
)
|
|
86
|
|
|
(88
|
)
|
|
(28
|
)
|
|
224
|
|
||||||||||
Commercial MBS
|
44
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
4
|
|
|
(1
|
)
|
|
(4
|
)
|
|
39
|
|
||||||||||
Asset-backed securities
|
226
|
|
|
—
|
|
|
1
|
|
|
(7
|
)
|
|
265
|
|
|
(56
|
)
|
|
53
|
|
|
(10
|
)
|
|
(2
|
)
|
|
470
|
|
||||||||||
Corporate and other
|
546
|
|
|
—
|
|
|
(5
|
)
|
|
(9
|
)
|
|
161
|
|
|
(90
|
)
|
|
41
|
|
|
(5
|
)
|
|
(6
|
)
|
|
633
|
|
||||||||||
Equity securities
|
93
|
|
|
—
|
|
|
(4
|
)
|
|
(9
|
)
|
|
77
|
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
140
|
|
||||||||||
Assets of MIE
|
31
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
||||||||||
Liabilities of MIE
|
(2,701
|
)
|
|
2,701
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Embedded derivatives (b)
|
(1,160
|
)
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
(257
|
)
|
|
65
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,369
|
)
|
(a)
|
The impact of implementing new guidance adopted in 2015, as discussed above and in
Note
A
—
“
Accounting Policies
—
Managed Investment Entities
.”
|
(b)
|
Total realized/unrealized gains (losses) included in net income for the embedded derivatives reflects losses related to the unlocking of actuarial assumptions of
$28 million
in
2015
.
|
|
|
|
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
.
|
|
Carrying
Value
|
|
Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
2015
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
1,220
|
|
|
$
|
1,220
|
|
|
$
|
1,220
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mortgage loans
|
1,067
|
|
|
1,074
|
|
|
—
|
|
|
—
|
|
|
1,074
|
|
|||||
Policy loans
|
201
|
|
|
201
|
|
|
—
|
|
|
—
|
|
|
201
|
|
|||||
Total financial assets not accounted for at fair value
|
$
|
2,488
|
|
|
$
|
2,495
|
|
|
$
|
1,220
|
|
|
$
|
—
|
|
|
$
|
1,275
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Annuity benefits accumulated (*)
|
$
|
26,422
|
|
|
$
|
25,488
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25,488
|
|
Long-term debt
|
1,022
|
|
|
1,120
|
|
|
—
|
|
|
1,105
|
|
|
15
|
|
|||||
Total financial liabilities not accounted for at fair value
|
$
|
27,444
|
|
|
$
|
26,608
|
|
|
$
|
—
|
|
|
$
|
1,105
|
|
|
$
|
25,503
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
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
|
|
(*)
|
Excludes
$200 million
and
$203 million
of life contingent annuities in the payout phase at
December 31, 2015
and
2014
, respectively.
|
|
2015
|
|
2014
|
||||||||||||||||||||||||||||
Amortized
Cost
|
|
Fair
Value
|
|
Gross Unrealized
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Gross Unrealized
|
|||||||||||||||||||||
Gains
|
|
Losses
|
|
Gains
|
|
Losses
|
|||||||||||||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Government and government agencies
|
$
|
305
|
|
|
$
|
307
|
|
|
$
|
5
|
|
|
$
|
(3
|
)
|
|
$
|
347
|
|
|
$
|
353
|
|
|
$
|
8
|
|
|
$
|
(2
|
)
|
States, municipalities and political subdivisions
|
6,642
|
|
|
6,856
|
|
|
249
|
|
|
(35
|
)
|
|
6,393
|
|
|
6,747
|
|
|
364
|
|
|
(10
|
)
|
||||||||
Foreign government
|
147
|
|
|
154
|
|
|
7
|
|
|
—
|
|
|
184
|
|
|
194
|
|
|
10
|
|
|
—
|
|
||||||||
Residential MBS
|
3,236
|
|
|
3,529
|
|
|
308
|
|
|
(15
|
)
|
|
4,046
|
|
|
4,442
|
|
|
411
|
|
|
(15
|
)
|
||||||||
Commercial MBS
|
2,111
|
|
|
2,187
|
|
|
77
|
|
|
(1
|
)
|
|
2,294
|
|
|
2,451
|
|
|
158
|
|
|
(1
|
)
|
||||||||
Asset-backed securities
|
4,961
|
|
|
4,934
|
|
|
25
|
|
|
(52
|
)
|
|
3,872
|
|
|
3,887
|
|
|
37
|
|
|
(22
|
)
|
||||||||
Corporate and other
|
14,163
|
|
|
14,317
|
|
|
422
|
|
|
(268
|
)
|
|
11,938
|
|
|
12,660
|
|
|
751
|
|
|
(29
|
)
|
||||||||
Total fixed maturities
|
$
|
31,565
|
|
|
$
|
32,284
|
|
|
$
|
1,093
|
|
|
$
|
(374
|
)
|
|
$
|
29,074
|
|
|
$
|
30,734
|
|
|
$
|
1,739
|
|
|
$
|
(79
|
)
|
Common stocks
|
$
|
1,051
|
|
|
$
|
1,118
|
|
|
$
|
146
|
|
|
$
|
(79
|
)
|
|
$
|
885
|
|
|
$
|
1,087
|
|
|
$
|
227
|
|
|
$
|
(25
|
)
|
Perpetual preferred stocks
|
$
|
418
|
|
|
$
|
435
|
|
|
$
|
23
|
|
|
$
|
(6
|
)
|
|
$
|
398
|
|
|
$
|
414
|
|
|
$
|
21
|
|
|
$
|
(5
|
)
|
|
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
|
||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
U.S. Government and government agencies
|
$
|
(1
|
)
|
|
$
|
112
|
|
|
99
|
%
|
|
$
|
(2
|
)
|
|
$
|
15
|
|
|
88
|
%
|
|
States, municipalities and political subdivisions
|
(33
|
)
|
|
1,419
|
|
|
98
|
%
|
|
(2
|
)
|
|
50
|
|
|
96
|
%
|
|||||
Residential MBS
|
(7
|
)
|
|
438
|
|
|
98
|
%
|
|
(8
|
)
|
|
201
|
|
|
96
|
%
|
|||||
Commercial MBS
|
—
|
|
|
95
|
|
|
100
|
%
|
|
(1
|
)
|
|
28
|
|
|
97
|
%
|
|||||
Asset-backed securities
|
(42
|
)
|
|
2,706
|
|
|
98
|
%
|
|
(10
|
)
|
|
455
|
|
|
98
|
%
|
|||||
Corporate and other
|
(229
|
)
|
|
4,661
|
|
|
95
|
%
|
|
(39
|
)
|
|
165
|
|
|
81
|
%
|
|||||
Total fixed maturities
|
$
|
(312
|
)
|
|
$
|
9,431
|
|
|
97
|
%
|
|
$
|
(62
|
)
|
|
$
|
914
|
|
|
94
|
%
|
|
Common stocks
|
$
|
(79
|
)
|
|
$
|
509
|
|
|
87
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
Perpetual preferred stocks
|
$
|
(3
|
)
|
|
$
|
91
|
|
|
97
|
%
|
|
$
|
(3
|
)
|
|
$
|
22
|
|
|
88
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
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
|
%
|
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.
|
|
2015
|
|
2014
|
|
2013
|
||||||
Balance at January 1
|
$
|
170
|
|
|
$
|
194
|
|
|
$
|
192
|
|
Additional credit impairments on:
|
|
|
|
|
|
||||||
Previously impaired securities
|
1
|
|
|
—
|
|
|
—
|
|
|||
Securities without prior impairments
|
2
|
|
|
—
|
|
|
3
|
|
|||
Reductions due to:
|
|
|
|
|
|
||||||
Sales or redemptions
|
(9
|
)
|
|
(24
|
)
|
|
(1
|
)
|
|||
Sale of subsidiaries
|
(4
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at December 31
|
$
|
160
|
|
|
$
|
170
|
|
|
$
|
194
|
|
|
Amortized
|
|
Fair Value
|
|||||||
Cost
|
|
Amount
|
|
%
|
||||||
Maturity
|
|
|
|
|
|
|||||
One year or less
|
$
|
922
|
|
|
$
|
935
|
|
|
3
|
%
|
After one year through five years
|
5,208
|
|
|
5,417
|
|
|
17
|
%
|
||
After five years through ten years
|
11,007
|
|
|
11,054
|
|
|
34
|
%
|
||
After ten years
|
4,120
|
|
|
4,228
|
|
|
13
|
%
|
||
|
21,257
|
|
|
21,634
|
|
|
67
|
%
|
||
ABS (average life of approximately 5 years)
|
4,961
|
|
|
4,934
|
|
|
15
|
%
|
||
MBS (average life of approximately 4 years)
|
5,347
|
|
|
5,716
|
|
|
18
|
%
|
||
Total
|
$
|
31,565
|
|
|
$
|
32,284
|
|
|
100
|
%
|
|
Pretax
|
|
Deferred Tax and
Amounts Attributable
to Noncontrolling
Interests
|
|
Net
|
||||||
December 31, 2015
|
|
|
|
|
|
||||||
Unrealized gain on:
|
|
|
|
|
|
||||||
Fixed maturities — annuity segment (*)
|
$
|
523
|
|
|
$
|
(183
|
)
|
|
$
|
340
|
|
Fixed maturities — all other
|
196
|
|
|
(72
|
)
|
|
124
|
|
|||
Equity securities
|
84
|
|
|
(30
|
)
|
|
54
|
|
|||
Deferred policy acquisition costs — annuity segment
|
(233
|
)
|
|
82
|
|
|
(151
|
)
|
|||
Annuity benefits accumulated
|
(64
|
)
|
|
22
|
|
|
(42
|
)
|
|||
Unearned revenue
|
11
|
|
|
(4
|
)
|
|
7
|
|
|||
|
$
|
517
|
|
|
$
|
(185
|
)
|
|
$
|
332
|
|
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
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Investment income:
|
|
|
|
|
|
||||||
Fixed maturities
|
$
|
1,461
|
|
|
$
|
1,352
|
|
|
$
|
1,241
|
|
Equity securities
|
76
|
|
|
66
|
|
|
50
|
|
|||
Equity in earnings of partnerships and similar investments (*)
|
27
|
|
|
18
|
|
|
—
|
|
|||
Other
|
87
|
|
|
77
|
|
|
72
|
|
|||
Gross investment income
|
1,651
|
|
|
1,513
|
|
|
1,363
|
|
|||
Investment expenses
|
(18
|
)
|
|
(12
|
)
|
|
(17
|
)
|
|||
Net investment income
|
$
|
1,633
|
|
|
$
|
1,501
|
|
|
$
|
1,346
|
|
(*)
|
Prior to 2014, equity in the earnings of partnerships was not material and was included in realized gains (losses) on securities.
|
|
Fixed
Maturities
|
|
Equity
Securities
|
|
Mortgage
Loans
and Other
Investments
|
|
Other (*)
|
|
Total
Pretax |
|
Tax
Effects
|
|
Noncon-
trolling
Interests
|
|
Total
|
||||||||||||||||
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Realized before impairments
|
$
|
19
|
|
|
$
|
94
|
|
|
$
|
(2
|
)
|
|
$
|
(5
|
)
|
|
$
|
106
|
|
|
$
|
(38
|
)
|
|
$
|
(2
|
)
|
|
$
|
66
|
|
Realized — impairments
|
(43
|
)
|
|
(94
|
)
|
|
(3
|
)
|
|
15
|
|
|
(125
|
)
|
|
45
|
|
|
2
|
|
|
(78
|
)
|
||||||||
Change in unrealized
|
(941
|
)
|
|
(134
|
)
|
|
—
|
|
|
430
|
|
|
(645
|
)
|
|
226
|
|
|
8
|
|
|
(411
|
)
|
||||||||
Year ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Realized before impairments
|
$
|
36
|
|
|
$
|
53
|
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
88
|
|
|
$
|
(32
|
)
|
|
$
|
(2
|
)
|
|
$
|
54
|
|
Realized — impairments
|
(15
|
)
|
|
(26
|
)
|
|
—
|
|
|
5
|
|
|
(36
|
)
|
|
13
|
|
|
1
|
|
|
(22
|
)
|
||||||||
Change in unrealized
|
570
|
|
|
26
|
|
|
—
|
|
|
(314
|
)
|
|
282
|
|
|
(99
|
)
|
|
(3
|
)
|
|
180
|
|
||||||||
Year ended December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Realized before impairments
|
$
|
36
|
|
|
$
|
196
|
|
|
$
|
2
|
|
|
$
|
(1
|
)
|
|
$
|
233
|
|
|
$
|
(82
|
)
|
|
$
|
(2
|
)
|
|
$
|
149
|
|
Realized — impairments
|
(5
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
3
|
|
|
(12
|
)
|
|
4
|
|
|
—
|
|
|
(8
|
)
|
||||||||
Change in unrealized
|
(945
|
)
|
|
31
|
|
|
—
|
|
|
504
|
|
|
(410
|
)
|
|
144
|
|
|
6
|
|
|
(260
|
)
|
(*)
|
Primarily adjustments to deferred policy acquisition costs and reserves related to annuities and long-term care business.
|
|
2015
|
|
2014
|
|
2013
|
||||||
Fixed maturities:
|
|
|
|
|
|
||||||
Gross gains
|
$
|
38
|
|
|
$
|
36
|
|
|
$
|
44
|
|
Gross losses
|
(7
|
)
|
|
(2
|
)
|
|
(5
|
)
|
|||
Equity securities:
|
|
|
|
|
|
||||||
Gross gains
|
99
|
|
|
53
|
|
|
193
|
|
|||
Gross losses
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||
Derivative
|
|
Balance Sheet Line
|
|
Asset
|
|
Liability
|
|
Asset
|
|
Liability
|
||||||||
MBS with embedded derivatives
|
|
Fixed maturities
|
|
$
|
130
|
|
|
$
|
—
|
|
|
$
|
158
|
|
|
$
|
—
|
|
Public company warrants
|
|
Equity securities
|
|
4
|
|
|
—
|
|
|
19
|
|
|
—
|
|
||||
Fixed-indexed annuities (embedded derivative)
|
|
Annuity benefits accumulated
|
|
—
|
|
|
1,369
|
|
|
—
|
|
|
1,160
|
|
||||
Equity index call options
|
|
Other investments
|
|
241
|
|
|
—
|
|
|
322
|
|
|
—
|
|
||||
Reinsurance contracts (embedded derivative)
|
|
Other liabilities
|
|
—
|
|
|
7
|
|
|
—
|
|
|
13
|
|
||||
|
|
|
|
$
|
375
|
|
|
$
|
1,376
|
|
|
$
|
499
|
|
|
$
|
1,173
|
|
Derivative
|
|
Statement of Earnings Line
|
|
2015
|
|
2014
|
|
2013
|
||||||
MBS with embedded derivatives
|
|
Realized gains on securities
|
|
$
|
(16
|
)
|
|
$
|
3
|
|
|
$
|
(3
|
)
|
Public company warrants
|
|
Realized gains on securities
|
|
—
|
|
|
—
|
|
|
3
|
|
|||
Interest rate swaptions
|
|
Realized gains on securities
|
|
—
|
|
|
(2
|
)
|
|
1
|
|
|||
Fixed-indexed annuities (embedded derivative) (*)
|
|
Annuity benefits
|
|
(17
|
)
|
|
(182
|
)
|
|
(182
|
)
|
|||
Equity index call options
|
|
Annuity benefits
|
|
(56
|
)
|
|
181
|
|
|
210
|
|
|||
Reinsurance contracts (embedded derivative)
|
|
Net investment income
|
|
6
|
|
|
(3
|
)
|
|
7
|
|
|||
|
|
|
|
$
|
(83
|
)
|
|
$
|
(3
|
)
|
|
$
|
36
|
|
(*)
|
The change in fair value of the embedded derivative includes losses related to unlocking of actuarial assumptions of
$28 million
in
2015
compared to gains related to unlocking of actuarial assumptions of
$58 million
in
2014
and
$2 million
in
2013
.
|
|
P&C
|
|
|
Annuity and Run-off Long-term Care and Life
|
|
|
|
||||||||||||||||||||||||||
|
Deferred
|
|
|
Deferred
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
||||||||||||||||
|
Costs
|
|
|
Costs
|
|
Inducements
|
|
PVFP
|
|
Subtotal
|
|
Unrealized
|
|
Total
|
|
|
Total
|
||||||||||||||||
Balance at December 31, 2012
|
$
|
204
|
|
|
|
$
|
787
|
|
|
$
|
170
|
|
|
$
|
99
|
|
|
$
|
1,056
|
|
|
$
|
(710
|
)
|
|
$
|
346
|
|
|
|
$
|
550
|
|
Additions
|
468
|
|
|
|
222
|
|
|
11
|
|
|
—
|
|
|
233
|
|
|
—
|
|
|
233
|
|
|
|
701
|
|
||||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Periodic amortization
|
(460
|
)
|
|
|
(140
|
)
|
|
(30
|
)
|
|
(14
|
)
|
|
(184
|
)
|
|
—
|
|
|
(184
|
)
|
|
|
(644
|
)
|
||||||||
Annuity unlocking
|
—
|
|
|
|
4
|
|
|
(2
|
)
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
|
2
|
|
||||||||
Included in realized gains
|
—
|
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
|
2
|
|
||||||||
Foreign currency translation
|
(1
|
)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(1
|
)
|
||||||||
Change in unrealized
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
365
|
|
|
365
|
|
|
|
365
|
|
||||||||
Balance at December 31, 2013
|
211
|
|
|
|
875
|
|
|
149
|
|
|
85
|
|
|
1,109
|
|
|
(345
|
)
|
|
764
|
|
|
|
975
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Additions
|
497
|
|
|
|
198
|
|
|
8
|
|
|
—
|
|
|
206
|
|
|
—
|
|
|
206
|
|
|
|
703
|
|
||||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Periodic amortization
|
(485
|
)
|
|
|
(130
|
)
|
|
(26
|
)
|
|
(11
|
)
|
|
(167
|
)
|
|
—
|
|
|
(167
|
)
|
|
|
(652
|
)
|
||||||||
Annuity unlocking
|
—
|
|
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
(20
|
)
|
|
|
(20
|
)
|
||||||||
Included in realized gains
|
—
|
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
|
3
|
|
||||||||
Foreign currency translation
|
(2
|
)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(2
|
)
|
||||||||
Change in unrealized
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(186
|
)
|
|
(186
|
)
|
|
|
(186
|
)
|
||||||||
Balance at December 31, 2014
|
221
|
|
|
|
925
|
|
|
132
|
|
|
74
|
|
|
1,131
|
|
|
(531
|
)
|
|
600
|
|
|
|
821
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Additions
|
519
|
|
|
|
224
|
|
|
11
|
|
|
—
|
|
|
235
|
|
|
—
|
|
|
235
|
|
|
|
754
|
|
||||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Periodic amortization
|
(511
|
)
|
|
|
(162
|
)
|
|
(26
|
)
|
|
(11
|
)
|
|
(199
|
)
|
|
—
|
|
|
(199
|
)
|
|
|
(710
|
)
|
||||||||
Annuity unlocking
|
—
|
|
|
|
31
|
|
|
4
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
|
|
35
|
|
||||||||
Included in realized gains
|
—
|
|
|
|
8
|
|
|
1
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
|
9
|
|
||||||||
Sale of subsidiaries
|
—
|
|
|
|
(8
|
)
|
|
(3
|
)
|
|
(8
|
)
|
|
(19
|
)
|
|
—
|
|
|
(19
|
)
|
|
|
(19
|
)
|
||||||||
Foreign currency translation
|
(3
|
)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(3
|
)
|
||||||||
Change in unrealized
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
297
|
|
|
297
|
|
|
|
297
|
|
||||||||
Balance at December 31, 2015
|
$
|
226
|
|
|
|
$
|
1,018
|
|
|
$
|
119
|
|
|
$
|
55
|
|
|
$
|
1,192
|
|
|
$
|
(234
|
)
|
|
$
|
958
|
|
|
|
$
|
1,184
|
|
|
Year ended December 31,
|
||||||||||
2015
|
|
2014
|
|
2013
|
|||||||
Gains (losses) on change in fair value of assets/liabilities (a):
|
|
|
|
|
|
||||||
Assets
|
$
|
(116
|
)
|
|
$
|
(66
|
)
|
|
$
|
11
|
|
Liabilities
|
82
|
|
|
22
|
|
|
(25
|
)
|
|||
Management fees paid to AFG
|
15
|
|
|
25
|
|
|
16
|
|
|||
CLO earnings (losses) attributable to (b):
|
|
|
|
|
|
||||||
AFG shareholders
|
(6
|
)
|
|
16
|
|
|
35
|
|
|||
Noncontrolling interests
|
—
|
|
|
(51
|
)
|
|
(26
|
)
|
(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, 2013 and January 1, 2014
|
$
|
152
|
|
|
$
|
33
|
|
|
$
|
185
|
|
Acquisition of subsidiary in 2014
|
16
|
|
|
—
|
|
|
16
|
|
|||
Balance at December 31, 2014
|
168
|
|
|
33
|
|
|
201
|
|
|||
Sale of subsidiaries in 2015
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
Balance at December 31, 2015
|
$
|
168
|
|
|
$
|
31
|
|
|
$
|
199
|
|
|
2015
|
|
2014
|
||||
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
|
|
||
Other
|
3
|
|
|
3
|
|
||
|
708
|
|
|
840
|
|
||
|
|
|
|
||||
Direct Subordinated Obligations of AFG:
|
|
|
|
||||
6-1/4% Subordinated Debentures due September 2054
|
150
|
|
|
150
|
|
||
6% Subordinated Debentures due November 2055
|
150
|
|
|
—
|
|
||
|
300
|
|
|
150
|
|
||
Subsidiaries:
|
|
|
|
||||
Notes payable secured by real estate
|
—
|
|
|
59
|
|
||
National Interstate bank credit facility
|
12
|
|
|
12
|
|
||
|
12
|
|
|
71
|
|
||
|
$
|
1,020
|
|
|
$
|
1,061
|
|
|
2015
|
|
2014
|
||||
Senior unsecured obligations
|
$
|
720
|
|
|
$
|
852
|
|
Subordinated unsecured obligations
|
300
|
|
|
150
|
|
||
Obligations secured by real estate
|
—
|
|
|
59
|
|
||
|
$
|
1,020
|
|
|
$
|
1,061
|
|
|
Shares
|
|
Average
Exercise
Price
|
|
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding at January 1, 2015
|
6,383,799
|
|
|
$
|
36.92
|
|
|
|
|
|
||
Granted
|
716,818
|
|
|
$
|
63.15
|
|
|
|
|
|
||
Exercised
|
(1,475,202
|
)
|
|
$
|
31.77
|
|
|
|
|
|
||
Forfeited/Cancelled
|
(109,325
|
)
|
|
$
|
49.34
|
|
|
|
|
|
||
Outstanding at December 31, 2015
|
5,516,090
|
|
|
$
|
41.46
|
|
|
5.9 years
|
|
$
|
169
|
|
|
|
|
|
|
|
|
|
|||||
Options exercisable at December 31, 2015
|
2,988,920
|
|
|
$
|
32.85
|
|
|
4.4 years
|
|
$
|
117
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Exercise price
|
$
|
63.15
|
|
|
$
|
56.47
|
|
|
$
|
44.01
|
|
Expected dividend yield
|
1.6
|
%
|
|
1.6
|
%
|
|
1.8
|
%
|
|||
Expected volatility
|
25
|
%
|
|
26
|
%
|
|
39
|
%
|
|||
Expected term (in years)
|
7.25
|
|
|
7.25
|
|
|
7.25
|
|
|||
Risk-free rate
|
1.88
|
%
|
|
2.20
|
%
|
|
1.36
|
%
|
|||
|
|
|
|
|
|
||||||
Grant date fair value
|
$
|
15.29
|
|
|
$
|
14.66
|
|
|
$
|
15.10
|
|
|
Shares
|
|
Average
Grant Date
Fair Value
|
|||
Outstanding at January 1, 2015
|
515,450
|
|
|
$
|
43.32
|
|
Granted
|
171,130
|
|
|
$
|
63.15
|
|
Vested
|
(163,312
|
)
|
|
$
|
38.36
|
|
Forfeited
|
(17,570
|
)
|
|
$
|
49.28
|
|
Outstanding at December 31, 2015
|
505,698
|
|
|
$
|
51.43
|
|
|
|
|
Other Comprehensive Income
|
|
|
||||||||||||||||||||||
|
AOCI
Beginning
Balance
|
|
Pretax
|
|
Tax
|
|
Net
of
tax
|
|
Attributable to
noncontrolling
interests
|
|
Attributable to
shareholders
|
|
AOCI
Ending
Balance
|
||||||||||||||
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net unrealized gains (losses) on securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Unrealized holding gains (losses) on securities arising during the period
|
|
|
$
|
(625
|
)
|
|
$
|
219
|
|
|
$
|
(406
|
)
|
|
$
|
9
|
|
|
$
|
(397
|
)
|
|
|
||||
Reclassification adjustment for realized (gains) losses included in net earnings (a)
|
|
|
14
|
|
|
(5
|
)
|
|
9
|
|
|
(1
|
)
|
|
8
|
|
|
|
|||||||||
Reclassification for unrealized gains of subsidiaries sold
|
|
|
(34
|
)
|
|
12
|
|
|
(22
|
)
|
|
—
|
|
|
(22
|
)
|
|
|
|||||||||
Total net unrealized gains (losses) on securities (b)
|
$
|
743
|
|
|
(645
|
)
|
|
226
|
|
|
(419
|
)
|
|
8
|
|
|
(411
|
)
|
|
$
|
332
|
|
|||||
Net unrealized gains on cash flow hedges
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|||||||
Foreign currency translation adjustments
|
(8
|
)
|
|
(9
|
)
|
|
(5
|
)
|
|
(14
|
)
|
|
—
|
|
|
(14
|
)
|
|
(22
|
)
|
|||||||
Pension and other postretirement plans adjustments
|
(8
|
)
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
(7
|
)
|
|||||||
Total
|
$
|
727
|
|
|
$
|
(652
|
)
|
|
$
|
221
|
|
|
$
|
(431
|
)
|
|
$
|
8
|
|
|
$
|
(423
|
)
|
|
$
|
304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
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
|
|
|
(8
|
)
|
|
(1
|
)
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|
(8
|
)
|
|||||||
Pension and other postretirement plans adjustments
|
(4
|
)
|
|
(6
|
)
|
|
2
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|
(8
|
)
|
|||||||
Total
|
$
|
560
|
|
|
$
|
268
|
|
|
$
|
(98
|
)
|
|
$
|
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
|
|
(a)
|
The reclassification adjustment out of net unrealized gains on securities affected the following lines in AFG’s Statement of Earnings:
|
|
OCI component
|
|
Affected line in the 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
$51 million
at
December 31, 2015
compared to net unrealized
gains
of
$58 million
and
$54 million
at
December 31, 2014
and
2013
, related to securities for which only the credit portion of an other-than-temporary impairment has been recorded in earnings.
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
|
Amount
|
|
% of EBT
|
|
Amount
|
|
% of EBT
|
|
Amount
|
|
% of EBT
|
|||||||||
Earnings before income taxes (“EBT”)
|
$
|
565
|
|
|
|
|
$
|
626
|
|
|
|
|
$
|
689
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income taxes at statutory rate
|
$
|
198
|
|
|
35
|
%
|
|
$
|
219
|
|
|
35
|
%
|
|
$
|
241
|
|
|
35
|
%
|
Effect of:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Tax exempt interest
|
(27
|
)
|
|
(5
|
%)
|
|
(25
|
)
|
|
(4
|
%)
|
|
(21
|
)
|
|
(3
|
%)
|
|||
Losses of managed investment entities
|
—
|
|
|
—
|
%
|
|
18
|
|
|
3
|
%
|
|
9
|
|
|
1
|
%
|
|||
Change in valuation allowance
|
23
|
|
|
4
|
%
|
|
7
|
|
|
1
|
%
|
|
1
|
|
|
—
|
%
|
|||
Subsidiaries not in AFG’s tax return
|
2
|
|
|
1
|
%
|
|
1
|
|
|
—
|
%
|
|
2
|
|
|
—
|
%
|
|||
Other
|
(1
|
)
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
4
|
|
|
1
|
%
|
|||
Provision for income taxes as shown in the Statement of Earnings
|
$
|
195
|
|
|
35
|
%
|
|
$
|
220
|
|
|
35
|
%
|
|
$
|
236
|
|
|
34
|
%
|
|
2015
|
|
2014
|
|
2013
|
||||||
Current taxes:
|
|
|
|
|
|
||||||
Federal
|
$
|
216
|
|
|
$
|
265
|
|
|
$
|
308
|
|
State
|
8
|
|
|
8
|
|
|
5
|
|
|||
Deferred taxes:
|
|
|
|
|
|
||||||
Federal
|
(29
|
)
|
|
(53
|
)
|
|
(77
|
)
|
|||
Provision for income taxes
|
$
|
195
|
|
|
$
|
220
|
|
|
$
|
236
|
|
|
Expiring
|
|
Amount
|
|
||
Operating Loss – U.S.
|
2017 - 2022
|
|
$
|
143
|
|
|
Operating Loss – United Kingdom
|
indefinite
|
|
133
|
|
(*)
|
|
Capital Loss – U.S.
|
2020
|
|
90
|
|
|
(*)
|
£90 million
|
|
2015
|
|
2014
|
||||||||||||||||||||
|
Excluding Unrealized Gains
|
|
Impact of Unrealized Gains
|
|
Total
|
|
Excluding Unrealized Gains
|
|
Impact of Unrealized Gains
|
|
Total
|
||||||||||||
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Federal net operating loss carryforwards
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
51
|
|
|
$
|
—
|
|
|
$
|
51
|
|
Foreign underwriting losses
|
77
|
|
|
—
|
|
|
77
|
|
|
56
|
|
|
—
|
|
|
56
|
|
||||||
Capital loss carryforwards
|
32
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Insurance claims and reserves
|
691
|
|
|
22
|
|
|
713
|
|
|
682
|
|
|
75
|
|
|
757
|
|
||||||
Employee benefits
|
115
|
|
|
—
|
|
|
115
|
|
|
107
|
|
|
—
|
|
|
107
|
|
||||||
Other, net
|
33
|
|
|
(4
|
)
|
|
29
|
|
|
26
|
|
|
(11
|
)
|
|
15
|
|
||||||
Total deferred tax assets before valuation allowance
|
998
|
|
|
18
|
|
|
1,016
|
|
|
922
|
|
|
64
|
|
|
986
|
|
||||||
Valuation allowance against deferred tax assets
|
(130
|
)
|
|
—
|
|
|
(130
|
)
|
|
(109
|
)
|
|
—
|
|
|
(109
|
)
|
||||||
Total deferred tax assets
|
868
|
|
|
18
|
|
|
886
|
|
|
813
|
|
|
64
|
|
|
877
|
|
||||||
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Subsidiaries not in AFG’s tax return (*)
|
(63
|
)
|
|
—
|
|
|
(63
|
)
|
|
(61
|
)
|
|
—
|
|
|
(61
|
)
|
||||||
Investment securities
|
23
|
|
|
(281
|
)
|
|
(258
|
)
|
|
(6
|
)
|
|
(657
|
)
|
|
(663
|
)
|
||||||
Deferred policy acquisition costs
|
(418
|
)
|
|
82
|
|
|
(336
|
)
|
|
(364
|
)
|
|
186
|
|
|
(178
|
)
|
||||||
Total deferred tax liabilities
|
(458
|
)
|
|
(199
|
)
|
|
(657
|
)
|
|
(431
|
)
|
|
(471
|
)
|
|
(902
|
)
|
||||||
Net deferred tax asset (liability)
|
$
|
410
|
|
|
$
|
(181
|
)
|
|
$
|
229
|
|
|
$
|
382
|
|
|
$
|
(407
|
)
|
|
$
|
(25
|
)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Balance at January 1
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
18
|
|
Additions for tax positions of prior years
|
1
|
|
|
—
|
|
|
—
|
|
|||
Reductions for tax positions of prior years
|
—
|
|
|
(8
|
)
|
|
—
|
|
|||
Additions for tax positions of current year
|
—
|
|
|
—
|
|
|
1
|
|
|||
Settlements
|
—
|
|
|
(11
|
)
|
|
—
|
|
|||
Balance at December 31
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
|
1st
Quarter
|
|
2nd
Quarter
|
|
3rd
Quarter
|
|
4th
Quarter
|
|
Total
Year
|
||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
1,294
|
|
|
$
|
1,541
|
|
|
$
|
1,684
|
|
|
$
|
1,626
|
|
|
$
|
6,145
|
|
Net earnings, including noncontrolling interests
|
|
25
|
|
|
149
|
|
|
66
|
|
|
130
|
|
|
370
|
|
|||||
Net earnings attributable to shareholders
|
|
19
|
|
|
141
|
|
|
63
|
|
|
129
|
|
|
352
|
|
|||||
Earnings attributable to shareholders per Common Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
0.22
|
|
|
$
|
1.60
|
|
|
$
|
0.72
|
|
|
$
|
1.48
|
|
|
$
|
4.02
|
|
Diluted
|
|
0.21
|
|
|
1.57
|
|
|
0.71
|
|
|
1.45
|
|
|
3.94
|
|
|||||
Average number of Common Shares:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
87.6
|
|
|
87.7
|
|
|
87.5
|
|
|
87.4
|
|
|
87.6
|
|
|||||
Diluted
|
|
89.4
|
|
|
89.5
|
|
|
89.3
|
|
|
89.2
|
|
|
89.4
|
|
|||||
2014
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
1,211
|
|
|
$
|
1,392
|
|
|
$
|
1,581
|
|
|
$
|
1,549
|
|
|
$
|
5,733
|
|
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
|
|
|
|
1st
Quarter
|
|
2nd
Quarter
|
|
3rd
Quarter
|
|
4th
Quarter
|
|
Total
Year
|
||||||||||
Realized Gains (Losses) on Securities and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2015
|
|
$
|
(143
|
)
|
|
$
|
(1
|
)
|
|
$
|
(11
|
)
|
|
$
|
(25
|
)
|
|
$
|
(180
|
)
|
2014
|
|
19
|
|
|
12
|
|
|
13
|
|
|
8
|
|
|
52
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Prior Year Development Favorable (Adverse)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2015
|
|
$
|
7
|
|
|
$
|
10
|
|
|
$
|
(55
|
)
|
|
$
|
5
|
|
|
$
|
(33
|
)
|
2014
|
|
31
|
|
|
(14
|
)
|
|
(13
|
)
|
|
(10
|
)
|
|
(6
|
)
|
|
2015
|
|
2014
|
|
2013
|
||||||
Balance at beginning of period
|
$
|
5,645
|
|
|
$
|
4,288
|
|
|
$
|
4,129
|
|
Provision for losses and LAE occurring in the current year
|
2,662
|
|
|
2,488
|
|
|
2,055
|
|
|||
Net increase (decrease) in the provision for claims of prior years:
|
|
|
|
|
|
||||||
Special A&E charges
|
67
|
|
|
24
|
|
|
54
|
|
|||
Other
|
(34
|
)
|
|
(18
|
)
|
|
(69
|
)
|
|||
Total losses and LAE incurred
|
2,695
|
|
|
2,494
|
|
|
2,040
|
|
|||
Payments for losses and LAE of:
|
|
|
|
|
|
||||||
Current year
|
(828
|
)
|
|
(789
|
)
|
|
(739
|
)
|
|||
Prior years
|
(1,575
|
)
|
|
(1,340
|
)
|
|
(1,131
|
)
|
|||
Total payments
|
(2,403
|
)
|
|
(2,129
|
)
|
|
(1,870
|
)
|
|||
Reserves of businesses acquired (*)
|
—
|
|
|
1,028
|
|
|
—
|
|
|||
Foreign currency translation and other
|
(11
|
)
|
|
(36
|
)
|
|
(11
|
)
|
|||
Balance at end of period
|
5,926
|
|
|
5,645
|
|
|
4,288
|
|
|||
Add back reinsurance recoverables, net of allowance
|
2,201
|
|
|
2,227
|
|
|
2,122
|
|
|||
Gross unpaid losses and LAE included in the balance sheet
|
$
|
8,127
|
|
|
$
|
7,872
|
|
|
$
|
6,410
|
|
|
Net Earnings
|
|
Capital and Surplus
|
||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2015
|
|
2014
|
||||||||||
Property and casualty companies
|
$
|
408
|
|
|
$
|
318
|
|
|
$
|
332
|
|
|
$
|
2,488
|
|
|
$
|
2,286
|
|
Life insurance companies
|
399
|
|
|
349
|
|
|
294
|
|
|
1,721
|
|
|
1,714
|
|
|
2015
|
|
2014
|
|
2013
|
||||||
Direct premiums written
|
$
|
5,713
|
|
|
$
|
5,387
|
|
|
$
|
4,744
|
|
Reinsurance assumed
|
119
|
|
|
90
|
|
|
61
|
|
|||
Reinsurance ceded
|
(1,505
|
)
|
|
(1,457
|
)
|
|
(1,464
|
)
|
|||
Net written premiums
|
$
|
4,327
|
|
|
$
|
4,020
|
|
|
$
|
3,341
|
|
|
|
|
|
|
|
||||||
Direct premiums earned
|
$
|
5,613
|
|
|
$
|
5,195
|
|
|
$
|
4,684
|
|
Reinsurance assumed
|
105
|
|
|
75
|
|
|
45
|
|
|||
Reinsurance ceded
|
(1,494
|
)
|
|
(1,392
|
)
|
|
(1,525
|
)
|
|||
Net earned premiums
|
$
|
4,224
|
|
|
$
|
3,878
|
|
|
$
|
3,204
|
|
|
|
|
|
|
|
||||||
Reinsurance recoveries
|
$
|
936
|
|
|
$
|
895
|
|
|
$
|
1,255
|
|
|
2015
|
|
2014
|
||||
Expected death and annuitization
|
$
|
214
|
|
|
$
|
213
|
|
Guaranteed withdrawal benefits
|
203
|
|
|
151
|
|
||
Accrued persistency and premium bonuses
|
11
|
|
|
14
|
|
|
||||||
(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 2015, 2014 and 2013:
|
|
||
|
|
|
|
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,
|
||||||
|
2015
|
|
2014
|
||||
Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
189
|
|
|
$
|
292
|
|
Investment in securities
|
63
|
|
|
58
|
|
||
Investment in subsidiaries (a)
|
5,439
|
|
|
5,638
|
|
||
Other investments
|
2
|
|
|
2
|
|
||
Other assets
|
106
|
|
|
103
|
|
||
Total assets
|
$
|
5,799
|
|
|
$
|
6,093
|
|
|
|
|
|
||||
Liabilities and Equity:
|
|
|
|
||||
Long-term debt
|
$
|
1,008
|
|
|
$
|
990
|
|
Other liabilities
|
199
|
|
|
224
|
|
||
Shareholders’ equity
|
4,592
|
|
|
4,879
|
|
||
Total liabilities and equity
|
$
|
5,799
|
|
|
$
|
6,093
|
|
|
Year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Dividends from subsidiaries
|
$
|
311
|
|
|
$
|
480
|
|
|
$
|
606
|
|
Equity in undistributed earnings of subsidiaries
|
386
|
|
|
332
|
|
|
260
|
|
|||
Investment and other income
|
4
|
|
|
5
|
|
|
8
|
|
|||
Total revenues
|
701
|
|
|
817
|
|
|
874
|
|
|||
|
|
|
|
|
|
||||||
Costs and Expenses:
|
|
|
|
|
|
||||||
Interest charges on intercompany borrowings
|
9
|
|
|
10
|
|
|
10
|
|
|||
Interest charges on other borrowings
|
72
|
|
|
69
|
|
|
67
|
|
|||
Other expenses
|
73
|
|
|
66
|
|
|
90
|
|
|||
Total costs and expenses
|
154
|
|
|
145
|
|
|
167
|
|
|||
|
|
|
|
|
|
||||||
Earnings before income taxes
|
547
|
|
|
672
|
|
|
707
|
|
|||
Provision for income taxes
|
195
|
|
|
220
|
|
|
236
|
|
|||
Net Earnings Attributable to Shareholders
|
$
|
352
|
|
|
$
|
452
|
|
|
$
|
471
|
|
Net earnings attributable to shareholders
|
$
|
352
|
|
|
$
|
452
|
|
|
$
|
471
|
|
Other comprehensive income (loss), net of tax
|
(423
|
)
|
|
167
|
|
|
(271
|
)
|
|||
Total comprehensive income, net of tax
|
$
|
(71
|
)
|
|
$
|
619
|
|
|
$
|
200
|
|
(a)
|
Investment in subsidiaries includes intercompany receivables and payables.
|
|
Year ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Operating Activities:
|
|
|
|
|
|
||||||
Net earnings attributable to shareholders
|
$
|
352
|
|
|
$
|
452
|
|
|
$
|
471
|
|
Adjustments:
|
|
|
|
|
|
||||||
Equity in net earnings of subsidiaries
|
(451
|
)
|
|
(545
|
)
|
|
(579
|
)
|
|||
Dividends from subsidiaries
|
280
|
|
|
451
|
|
|
543
|
|
|||
Other operating activities, net
|
(19
|
)
|
|
14
|
|
|
(7
|
)
|
|||
Net cash provided by operating activities
|
162
|
|
|
372
|
|
|
428
|
|
|||
|
|
|
|
|
|
||||||
Investing Activities:
|
|
|
|
|
|
||||||
Capital contributions to subsidiaries
|
(27
|
)
|
|
(431
|
)
|
|
(38
|
)
|
|||
Returns of capital from subsidiaries
|
1
|
|
|
—
|
|
|
36
|
|
|||
Purchases of investments, property and equipment
|
(10
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|||
Proceeds from sales of investments, property and equipment
|
3
|
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(33
|
)
|
|
(432
|
)
|
|
(4
|
)
|
|||
|
|
|
|
|
|
||||||
Financing Activities:
|
|
|
|
|
|
||||||
Additional long-term borrowings
|
145
|
|
|
145
|
|
|
—
|
|
|||
Reductions of long-term debt
|
(132
|
)
|
|
—
|
|
|
—
|
|
|||
Issuances of Common Stock
|
57
|
|
|
42
|
|
|
50
|
|
|||
Repurchases of Common Stock
|
(126
|
)
|
|
(191
|
)
|
|
(70
|
)
|
|||
Cash dividends paid on Common Stock
|
(176
|
)
|
|
(167
|
)
|
|
(160
|
)
|
|||
Net cash used in financing activities
|
(232
|
)
|
|
(171
|
)
|
|
(180
|
)
|
|||
|
|
|
|
|
|
||||||
Net Change in Cash and Cash Equivalents
|
(103
|
)
|
|
(231
|
)
|
|
244
|
|
|||
Cash and cash equivalents at beginning of year
|
292
|
|
|
523
|
|
|
279
|
|
|||
Cash and cash equivalents at end of year
|
$
|
189
|
|
|
$
|
292
|
|
|
$
|
523
|
|
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)
|
||||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property and casualty insurance
|
|
$
|
226
|
|
|
$
|
8,127
|
|
|
$
|
2,060
|
|
|
$
|
4,224
|
|
|
$
|
319
|
|
|
$
|
2,695
|
|
|
$
|
511
|
|
|
$
|
839
|
|
|
$
|
4,327
|
|
Annuity
|
|
934
|
|
|
26,622
|
|
|
—
|
|
|
—
|
|
|
1,224
|
|
|
732
|
|
|
136
|
|
|
123
|
|
|
—
|
|
|||||||||
Run-off long-term care and life
|
|
24
|
|
|
705
|
|
|
—
|
|
|
104
|
|
|
80
|
|
|
131
|
|
|
6
|
|
|
37
|
|
|
73
|
|
|||||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
370
|
|
|
—
|
|
|||||||||
Total
|
|
$
|
1,184
|
|
|
$
|
35,454
|
|
|
$
|
2,060
|
|
|
$
|
4,328
|
|
|
$
|
1,633
|
|
|
$
|
3,558
|
|
|
$
|
653
|
|
|
$
|
1,369
|
|
|
$
|
4,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
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
|
|
|
102
|
|
|
—
|
|
|||||||||
Run-off long-term care and life
|
|
36
|
|
|
2,175
|
|
|
—
|
|
|
108
|
|
|
82
|
|
|
164
|
|
|
6
|
|
|
35
|
|
|
74
|
|
|||||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
272
|
|
|
—
|
|
|||||||||
Total
|
|
$
|
821
|
|
|
$
|
33,811
|
|
|
$
|
1,956
|
|
|
$
|
3,986
|
|
|
$
|
1,501
|
|
|
$
|
3,306
|
|
|
$
|
646
|
|
|
$
|
1,155
|
|
|
$
|
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
|
|
|
113
|
|
|
—
|
|
|||||||||
Run-off long-term care and life
|
|
41
|
|
|
2,008
|
|
|
—
|
|
|
114
|
|
|
76
|
|
|
160
|
|
|
6
|
|
|
39
|
|
|
76
|
|
|||||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
—
|
|
|
314
|
|
|
—
|
|
|||||||||
Total
|
|
$
|
975
|
|
|
$
|
29,362
|
|
|
$
|
1,757
|
|
|
$
|
3,318
|
|
|
$
|
1,346
|
|
|
$
|
2,731
|
|
|
$
|
610
|
|
|
$
|
1,073
|
|
|
$
|
3,417
|
|
|
|
|
|
|
American Financial Group, Inc.
|
||
|
|
|
|
|
|
|
|
|
|
|
|
February 26, 2016
|
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, 2016
|
Carl H. Lindner III
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ S. Craig Lindner
|
|
Co-Chief Executive Officer and Director
|
|
February 26, 2016
|
S. Craig Lindner
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Joseph E. (Jeff) Consolino
|
|
Executive Vice President, Chief Financial Officer and Director
|
|
February 26, 2016
|
Joseph E. (Jeff) Consolino
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Kenneth C. Ambrecht
|
|
Director
|
|
February 26, 2016
|
Kenneth C. Ambrecht
|
|
|
|
|
|
|
|
|
|
/s/ John B. Berding
|
|
Director
|
|
February 26, 2016
|
John B. Berding
|
|
|
|
|
|
|
|
|
|
/s/ Virginia (Gina) C. Drosos
|
|
Director*
|
|
February 26, 2016
|
Virginia (Gina) C. Drosos
|
|
|
|
|
|
|
|
|
|
/s/ James E. Evans
|
|
Director
|
|
February 26, 2016
|
James E. Evans
|
|
|
|
|
|
|
|
|
|
/s/ Terry S. Jacobs
|
|
Director*
|
|
February 26, 2016
|
Terry S. Jacobs
|
|
|
|
|
|
|
|
|
|
/s/ Gregory G. Joseph
|
|
Director*
|
|
February 26, 2016
|
Gregory G. Joseph
|
|
|
|
|
|
|
|
|
|
/s/ William W. Verity
|
|
Director
|
|
February 26, 2016
|
William W. Verity
|
|
|
|
|
|
|
|
|
|
/s/ John I. Von Lehman
|
|
Director*
|
|
February 26, 2016
|
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)
|
|
2015 Stock Incentive Plan.
|
|
|
||
10(h)
|
|
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(i)
|
|
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.
|
|
(*)
|
||
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, 2015, 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,
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Earnings before income taxes
|
|
$
|
565
|
|
|
$
|
626
|
|
|
$
|
689
|
|
|
$
|
537
|
|
|
$
|
558
|
|
Undistributed equity in (earnings) losses of investees
|
|
(18
|
)
|
|
(10
|
)
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
|||||
Losses of managed investment entities attributable to noncontrolling interest
|
|
—
|
|
|
51
|
|
|
26
|
|
|
98
|
|
|
24
|
|
|||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest on annuities
|
|
732
|
|
|
648
|
|
|
531
|
|
|
541
|
|
|
510
|
|
|||||
Interest expense
|
|
74
|
|
|
73
|
|
|
71
|
|
|
75
|
|
|
74
|
|
|||||
Debt discount, expense and other fixed charges
|
|
1
|
|
|
1
|
|
|
1
|
|
|
12
|
|
|
13
|
|
|||||
Portion of rentals representing interest
|
|
23
|
|
|
22
|
|
|
19
|
|
|
16
|
|
|
18
|
|
|||||
EARNINGS
|
|
$
|
1,377
|
|
|
$
|
1,411
|
|
|
$
|
1,337
|
|
|
$
|
1,278
|
|
|
$
|
1,198
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest on annuities
|
|
$
|
732
|
|
|
$
|
648
|
|
|
$
|
531
|
|
|
$
|
541
|
|
|
$
|
510
|
|
Interest expense
|
|
74
|
|
|
73
|
|
|
71
|
|
|
75
|
|
|
74
|
|
|||||
Debt discount, expense and other fixed charges
|
|
1
|
|
|
1
|
|
|
1
|
|
|
12
|
|
|
13
|
|
|||||
Portion of rentals representing interest
|
|
23
|
|
|
22
|
|
|
19
|
|
|
16
|
|
|
18
|
|
|||||
FIXED CHARGES
|
|
$
|
830
|
|
|
$
|
744
|
|
|
$
|
622
|
|
|
$
|
644
|
|
|
$
|
615
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of Earnings to Fixed Charges
|
|
1.66
|
|
|
1.90
|
|
|
2.15
|
|
|
1.98
|
|
|
1.95
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings in Excess of Fixed Charges
|
|
$
|
547
|
|
|
$
|
667
|
|
|
$
|
715
|
|
|
$
|
634
|
|
|
$
|
583
|
|
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
|
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
|
Great American Holding, Inc.
|
|
Ohio
|
|
100
|
American Empire Surplus Lines Insurance Company
|
|
Delaware
|
|
100
|
American Empire Insurance Company
|
|
Ohio
|
|
100
|
Great American International Insurance Limited
|
|
Ireland
|
|
100
|
Mid-Continent Casualty Company
|
|
Ohio
|
|
100
|
Mid-Continent Assurance Company
|
|
Ohio
|
|
100
|
Mid-Continent Excess and Surplus Insurance Company
|
|
Delaware
|
|
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
|
El Aguila, Compañia de Seguros, S.A. de C.V.
|
|
Mexico
|
|
100
|
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
|
|
|
|
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-8
|
|
333-206291
|
|
2015 Stock Incentive Plan
|
|
|
S-3
|
|
333-202421
|
|
Shelf Registration
|
|
|
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, 2016
|
|
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, 2016
|
|
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.
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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;
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3.
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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;
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4.
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5.
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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):
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a)
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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
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b)
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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.
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February 26, 2016
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By:
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/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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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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February 26, 2016
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By:
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/s/ Carl H. Lindner III
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Date
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Carl H. Lindner III
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Co-Chief Executive Officer
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February 26, 2016
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By:
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/s/ S. Craig Lindner
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Date
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S. Craig Lindner
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Co-Chief Executive Officer
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February 26, 2016
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By:
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/s/ Joseph E. (Jeff) Consolino
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Date
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Joseph E. (Jeff) Consolino
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Executive Vice President and Chief Financial Officer
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