Incorporated under the Laws of Ohio
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IRS Employer I.D. No. 31-1544320
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Securities Registered Pursuant to Section 12(b) of the Act:
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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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6-1/4% 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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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, including the impact of recent changes in U.S. corporate tax law;
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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 and mortality;
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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;
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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; and
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•
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the impact of the conditions in the international financial markets and the global economy (including those associated with the United Kingdom’s expected withdrawal from the European Union, or “Brexit”) relating to AFG’s international operations.
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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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4,243
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|
National Interstate
|
A
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|
not rated
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746
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|
Summit (Bridgefield Casualty and Bridgefield Employers)
|
A
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A+
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607
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Republic Indemnity
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A
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|
A+
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|
245
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Neon Lloyd’s Syndicate
|
A
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|
A+
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|
295
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|
American Empire Surplus Lines
|
A+
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A+
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|
133
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|
Mid-Continent Casualty
|
A+
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A+
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|
131
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Other
|
|
|
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|
102
|
|
|
|
|
|
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|
$
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6,502
|
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|
|
2017
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|
2016
|
|
2015
|
||||||
Gross written premiums
|
|
$
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6,502
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|
$
|
5,981
|
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|
$
|
5,832
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|
Ceded reinsurance
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|
(1,751
|
)
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|
(1,595
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)
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(1,505
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)
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|||
Net written premiums
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|
$
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4,751
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|
|
$
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4,386
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|
$
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4,327
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|
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||||||
Net earned premiums
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|
$
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4,579
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$
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4,328
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$
|
4,224
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Loss and LAE
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|
2,884
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|
|
2,669
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|
2,628
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|||
Special asbestos and environmental (“A&E”) charges
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|
89
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|
|
36
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|
|
67
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|||
Neon exited lines charge
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(18
|
)
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65
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|
—
|
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|||
Underwriting expenses
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|
1,382
|
|
|
1,322
|
|
|
1,304
|
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|||
Underwriting gain
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$
|
242
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|
|
$
|
236
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|
$
|
225
|
|
|
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||||||
GAAP ratios:
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||||||
Loss and LAE ratio
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64.5
|
%
|
|
63.8
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%
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63.8
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%
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|||
Underwriting expense ratio
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|
30.2
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%
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|
30.7
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%
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|
30.9
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%
|
|||
Combined ratio
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94.7
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%
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|
94.5
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%
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|
94.7
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%
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|||
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||||||
Statutory ratios:
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||||||
Loss and LAE ratio
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63.0
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%
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|
58.8
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%
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|
60.9
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%
|
|||
Underwriting expense ratio
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|
30.1
|
%
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|
31.4
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%
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|
31.7
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%
|
|||
Combined ratio
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|
93.1
|
%
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|
90.2
|
%
|
|
92.6
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%
|
|||
|
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|
|
|
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||||||
Industry statutory combined ratio (a)
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||||||
All lines
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105.1
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%
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|
100.9
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%
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|
98.3
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%
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|||
Commercial lines
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|
103.5
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%
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|
99.6
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%
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|
97.5
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%
|
(a)
|
The source of the industry ratios is “A.M. Best’s Review & Preview Report” (
February 2018
Edition).
|
Property and Transportation
|
|
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.
|
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
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|
Executive and Professional Liability
|
Markets coverage for directors and officers of businesses and non-profit organizations; errors and omissions; cyber; and mergers and acquisitions.
|
Umbrella and Excess Liability
|
Provides liability coverage in excess of primary layers.
|
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.
|
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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|
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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.
|
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.
|
|
2017
|
|
2016
|
|
2015
|
||||||
Property and transportation
|
$
|
1,765
|
|
|
$
|
1,672
|
|
|
$
|
1,636
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|
Specialty casualty
|
2,280
|
|
|
2,036
|
|
|
2,052
|
|
|||
Specialty financial
|
596
|
|
|
572
|
|
|
540
|
|
|||
Other
|
110
|
|
|
106
|
|
|
99
|
|
|||
|
$
|
4,751
|
|
|
$
|
4,386
|
|
|
$
|
4,327
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
California
|
|
13.2
|
%
|
|
14.3
|
%
|
|
14.2
|
%
|
|
New Jersey
|
|
2.6
|
%
|
|
2.5
|
%
|
|
2.3
|
%
|
Florida
|
|
10.0
|
%
|
|
9.6
|
%
|
|
9.0
|
%
|
|
Arizona
|
|
2.6
|
%
|
|
2.1
|
%
|
|
1.1
|
%
|
New York
|
|
6.6
|
%
|
|
6.7
|
%
|
|
6.7
|
%
|
|
Pennsylvania
|
|
2.4
|
%
|
|
2.5
|
%
|
|
2.6
|
%
|
Texas
|
|
6.2
|
%
|
|
6.1
|
%
|
|
6.1
|
%
|
|
Iowa
|
|
2.4
|
%
|
|
2.3
|
%
|
|
2.5
|
%
|
Illinois
|
|
5.6
|
%
|
|
5.3
|
%
|
|
5.7
|
%
|
|
Kansas
|
|
2.2
|
%
|
|
2.2
|
%
|
|
2.5
|
%
|
Georgia
|
|
3.2
|
%
|
|
2.9
|
%
|
|
2.8
|
%
|
|
North Carolina
|
|
2.1
|
%
|
|
2.4
|
%
|
|
2.7
|
%
|
Missouri
|
|
2.8
|
%
|
|
2.7
|
%
|
|
2.8
|
%
|
|
Other
|
|
38.1
|
%
|
|
38.4
|
%
|
|
39.0
|
%
|
|
|
|
|
|
|
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
Reinsurance Coverage
|
|
AFG
|
|||||||||||||
|
|
Primary
|
|
Coverage
|
|
AFG Participation (a)
|
|
Maximum
|
|||||||||||
|
|
Retention
|
|
Amount
|
|
%
|
|
$
|
|
Loss (b)
|
|||||||||
U.S.-based operations:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
California Workers’ Compensation
|
|
$
|
2
|
|
|
$
|
148
|
|
|
1
|
%
|
|
$
|
1
|
|
|
$
|
3
|
|
Other Workers’ Compensation
|
|
3
|
|
|
37
|
|
|
—
|
%
|
|
—
|
|
|
3
|
|
||||
Commercial Umbrella
|
|
1
|
|
|
49
|
|
|
14
|
%
|
|
7
|
|
|
8
|
|
||||
Property — General
|
|
5
|
|
|
45
|
|
|
—
|
%
|
|
—
|
|
|
5
|
|
||||
Property — Catastrophe
|
|
15
|
|
|
85
|
|
|
—
|
%
|
|
—
|
|
|
15
|
|
||||
Neon Lloyd’s Syndicate
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Property — Catastrophe (c)
|
|
15
|
|
|
200
|
|
|
7.5
|
%
|
|
—
|
|
|
15
|
|
||||
Riverfront Re Ltd. catastrophe bond (d)
|
|
100
|
|
|
200
|
|
|
5
|
%
|
|
10
|
|
|
N/A
|
|
(a)
|
Includes the participation of AFG’s internal reinsurance program.
|
(b)
|
Maximum loss per event for claims up to reinsurance coverage limit.
|
(c)
|
Coverage amount extends to $225 million for U.S. catastrophe events. The combination of Neon’s excess of loss catastrophe reinsurance and 12.5% gross property loss treaty (discussed above) limits the maximum retained loss per event to $15 million until such coverage is exhausted.
|
(d)
|
Includes aggregate coverage. See description above.
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Reinsurance ceded
|
|
$
|
1,751
|
|
|
$
|
1,595
|
|
|
$
|
1,505
|
|
Reinsurance ceded, excluding crop
|
|
1,076
|
|
|
985
|
|
|
899
|
|
|||
Reinsurance assumed — including involuntary pools and associations
|
|
192
|
|
|
123
|
|
|
119
|
|
Liability reported on a SAP basis, net of $152 million of retroactive reinsurance
|
$
|
5,931
|
|
Reinsurance recoverables, net of allowance
|
2,957
|
|
|
Other, including reserves of foreign insurers
|
790
|
|
|
Liability reported on a GAAP basis
|
$
|
9,678
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Reserves at beginning of year
|
|
$
|
337
|
|
|
$
|
327
|
|
|
$
|
289
|
|
Incurred losses and LAE
|
|
89
|
|
|
36
|
|
|
67
|
|
|||
Paid losses and LAE
|
|
(23
|
)
|
|
(26
|
)
|
|
(29
|
)
|
|||
Reserves at end of year, net of reinsurance recoverable
|
|
403
|
|
|
337
|
|
|
327
|
|
|||
Reinsurance recoverable, net of allowance
|
|
125
|
|
|
106
|
|
|
99
|
|
|||
Gross reserves at end of year
|
|
$
|
528
|
|
|
$
|
443
|
|
|
$
|
426
|
|
|
|
|
|
Annuity
|
|
|
|
|
|||
|
|
Annuity
|
|
Policies
|
|
Ratings
|
|||||
Company
|
|
Premiums
|
|
In Force
|
|
AM Best
|
|
S&P
|
|||
Great American Life Insurance Company
|
|
$
|
4,130
|
|
|
402,000
|
|
|
A
|
|
A+
|
Annuity Investors Life Insurance Company
|
|
211
|
|
|
114,000
|
|
|
A
|
|
A+
|
|
|
Premiums
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Financial institutions single premium annuities — indexed
|
|
$
|
1,711
|
|
|
$
|
1,950
|
|
|
$
|
1,741
|
|
Financial institutions single premium annuities — fixed
|
|
622
|
|
|
468
|
|
|
229
|
|
|||
Retail single premium annuities — indexed
|
|
1,723
|
|
|
1,714
|
|
|
1,864
|
|
|||
Retail single premium annuities — fixed
|
|
83
|
|
|
82
|
|
|
70
|
|
|||
Education market — fixed and indexed annuities
|
|
174
|
|
|
184
|
|
|
194
|
|
|||
Total fixed annuity premiums
|
|
4,313
|
|
|
4,398
|
|
|
4,098
|
|
|||
Variable annuities
|
|
28
|
|
|
37
|
|
|
42
|
|
|||
Total annuity premiums
|
|
$
|
4,341
|
|
|
$
|
4,435
|
|
|
$
|
4,140
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Annuity earnings before income taxes — before the impact of derivatives related to FIAs
|
|
$
|
413
|
|
|
$
|
395
|
|
|
$
|
354
|
|
Impact of derivatives related to FIAs (a)
|
|
(33
|
)
|
|
(27
|
)
|
|
(23
|
)
|
|||
Annuity segment earnings before income taxes
|
|
$
|
380
|
|
|
$
|
368
|
|
|
$
|
331
|
|
|
|
|
|
|
|
|
||||||
Net spread earned on fixed annuities — before impact of derivatives related to FIAs
|
|
1.33
|
%
|
|
1.39
|
%
|
|
1.35
|
%
|
|||
Impact of derivatives related to FIAs
|
|
(0.10
|
%)
|
|
(0.10
|
%)
|
|
(0.09
|
%)
|
|||
Net spread earned on fixed annuities
|
|
1.23
|
%
|
|
1.29
|
%
|
|
1.26
|
%
|
(a)
|
FIAs provide policyholders with a crediting rate tied, in part, to the performance of an existing stock market or other financial 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
$2.54 billion
at
December 31, 2017
) and the related call options (fair value of
$701 million
at
December 31, 2017
) 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.
|
|
|
2017
|
|
2016
|
|
2015
|
|||
California
|
|
10.0
|
%
|
|
9.8
|
%
|
|
9.7
|
%
|
Florida
|
|
7.3
|
%
|
|
8.5
|
%
|
|
9.0
|
%
|
Pennsylvania
|
|
6.1
|
%
|
|
7.2
|
%
|
|
7.2
|
%
|
Ohio
|
|
5.4
|
%
|
|
5.2
|
%
|
|
5.7
|
%
|
Texas
|
|
5.1
|
%
|
|
4.6
|
%
|
|
4.3
|
%
|
|
|
2017
|
|
2016
|
|
2015
|
|||
Yield on Fixed Maturities (a):
|
|
|
|
|
|
|
|||
Excluding realized gains and losses
|
|
4.4
|
%
|
|
4.5
|
%
|
|
4.7
|
%
|
Including realized gains and losses
|
|
4.4
|
%
|
|
4.5
|
%
|
|
4.6
|
%
|
|
|
|
|
|
|
|
|||
Yield on Equity Securities (includes perpetual preferred stocks) (a):
|
|
|
|
|
|
|
|||
Excluding realized gains and losses
|
|
5.7
|
%
|
|
5.3
|
%
|
|
5.4
|
%
|
Including realized gains and losses
|
|
6.1
|
%
|
|
6.2
|
%
|
|
5.4
|
%
|
(a)
|
Based on amortized cost; excludes effects of changes in unrealized gains and losses. Realized losses include impairment charges.
|
|
|
2017
|
|
2016
|
|
2015
|
|||
Total return on AFG’s fixed maturities
|
|
5.9
|
%
|
|
4.7
|
%
|
|
1.5
|
%
|
Barclays Capital U.S. Universal Bond Index
|
|
4.1
|
%
|
|
3.9
|
%
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|||
Total return on AFG’s equity securities (includes perpetual preferred stocks)
|
|
13.7
|
%
|
|
10.3
|
%
|
|
(3.4
|
%)
|
Standard & Poor’s 500 Index
|
|
21.8
|
%
|
|
12.0
|
%
|
|
1.4
|
%
|
|
|
Amortized
|
|
Fair Value
|
|||||||
|
|
Cost
|
|
Amount
|
|
%
|
|||||
S&P or comparable rating
|
|
|
|
|
|
|
|||||
AAA, AA, A
|
|
$
|
23,259
|
|
|
$
|
23,920
|
|
|
63
|
%
|
BBB
|
|
10,104
|
|
|
10,455
|
|
|
27
|
%
|
||
Total investment grade
|
|
33,363
|
|
|
34,375
|
|
|
90
|
%
|
||
BB
|
|
716
|
|
|
730
|
|
|
2
|
%
|
||
B
|
|
321
|
|
|
326
|
|
|
1
|
%
|
||
CCC, CC, C
|
|
797
|
|
|
935
|
|
|
2
|
%
|
||
D
|
|
458
|
|
|
521
|
|
|
1
|
%
|
||
Total non-investment grade
|
|
2,292
|
|
|
2,512
|
|
|
6
|
%
|
||
Not rated
|
|
1,383
|
|
|
1,492
|
|
|
4
|
%
|
||
Total
|
|
$
|
37,038
|
|
|
$
|
38,379
|
|
|
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.
|
|
|
2017
|
|
2016
|
||||||||||||
|
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
First Quarter
|
|
$
|
97.00
|
|
|
$
|
85.57
|
|
|
$
|
71.66
|
|
|
$
|
64.87
|
|
Second Quarter
|
|
103.19
|
|
|
93.25
|
|
|
73.95
|
|
|
66.78
|
|
||||
Third Quarter
|
|
105.58
|
|
|
95.19
|
|
|
76.03
|
|
|
70.82
|
|
||||
Fourth Quarter
|
|
109.41
|
|
|
101.02
|
|
|
88.54
|
|
|
73.38
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Earnings Statement Data
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues
|
|
$
|
6,865
|
|
|
$
|
6,498
|
|
|
$
|
6,145
|
|
|
$
|
5,733
|
|
|
$
|
5,103
|
|
Earnings before income taxes
|
|
724
|
|
|
787
|
|
|
565
|
|
|
626
|
|
|
689
|
|
|||||
Net earnings, including noncontrolling interests
|
|
477
|
|
|
668
|
|
|
370
|
|
|
406
|
|
|
453
|
|
|||||
Less: Net earnings (loss) attributable to noncontrolling interests
|
|
2
|
|
|
19
|
|
|
18
|
|
|
(46
|
)
|
|
(18
|
)
|
|||||
Net earnings attributable to shareholders
|
|
475
|
|
|
649
|
|
|
352
|
|
|
452
|
|
|
471
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings attributable to shareholders per Common Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic — GAAP
|
|
$
|
5.40
|
|
|
$
|
7.47
|
|
|
$
|
4.02
|
|
|
$
|
5.07
|
|
|
$
|
5.27
|
|
Diluted — GAAP
|
|
5.28
|
|
|
7.33
|
|
|
3.94
|
|
|
4.97
|
|
|
5.16
|
|
|||||
Core net operating earnings per share (diluted) (a)
|
|
6.55
|
|
|
6.03
|
|
|
5.44
|
|
|
4.82
|
|
|
4.22
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends paid per share of Common Stock (b)
|
|
$
|
4.7875
|
|
|
$
|
2.1525
|
|
|
$
|
2.03
|
|
|
$
|
1.91
|
|
|
$
|
1.805
|
|
Ratio of earnings to fixed charges including annuity benefits (c)
|
|
1.72
|
|
|
1.85
|
|
|
1.66
|
|
|
1.90
|
|
|
2.15
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and investments
|
|
$
|
46,048
|
|
|
$
|
41,433
|
|
|
$
|
37,736
|
|
|
$
|
36,210
|
|
|
$
|
31,313
|
|
Total assets
|
|
60,658
|
|
|
55,072
|
|
|
49,837
|
|
|
47,513
|
|
|
42,070
|
|
|||||
Property and casualty insurance reserves:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Unpaid losses and loss adjustment expenses
|
|
9,678
|
|
|
8,563
|
|
|
8,127
|
|
|
7,872
|
|
|
6,410
|
|
|||||
Unearned premiums
|
|
2,410
|
|
|
2,171
|
|
|
2,060
|
|
|
1,956
|
|
|
1,757
|
|
|||||
Annuity benefits accumulated
|
|
33,316
|
|
|
29,907
|
|
|
26,622
|
|
|
23,764
|
|
|
20,944
|
|
|||||
Life, accident and health reserves
|
|
658
|
|
|
691
|
|
|
705
|
|
|
2,175
|
|
|
2,008
|
|
|||||
Long-term debt
|
|
1,301
|
|
|
1,283
|
|
|
998
|
|
|
1,039
|
|
|
896
|
|
|||||
Shareholders’ equity
|
|
5,330
|
|
|
4,916
|
|
|
4,592
|
|
|
4,879
|
|
|
4,599
|
|
|||||
Less:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net unrealized gains related to fixed maturities (d)
|
|
606
|
|
|
299
|
|
|
279
|
|
|
604
|
|
|
441
|
|
|||||
Appropriated retained earnings
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
49
|
|
|||||
Adjusted shareholders’ equity (e)
|
|
4,724
|
|
|
4,617
|
|
|
4,313
|
|
|
4,277
|
|
|
4,109
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Book value per share
|
|
$
|
60.38
|
|
|
$
|
56.55
|
|
|
$
|
52.50
|
|
|
$
|
55.62
|
|
|
$
|
51.38
|
|
Adjusted book value per share (e)
|
|
53.51
|
|
|
53.11
|
|
|
49.32
|
|
|
48.76
|
|
|
45.90
|
|
(a)
|
AFG’s net earnings per share (diluted), determined in accordance with GAAP, includes certain items that may not be indicative of its ongoing core operations. AFG believes that its core net operating earnings per share provides management, financial analysts, rating agencies and investors with an understanding of the results from the ongoing operations of the Company by excluding the impact of net realized investment gains and losses and other items that are not necessarily indicative of operating trends. AFG’s management uses core net operating earnings to evaluate financial performance against historical results because it believes this provides a more comparable measure of its continuing business. Core net operating earnings is also used by AFG’s management as a basis for strategic planning and forecasting. Core net operating earnings per share (diluted) is a non-GAAP financial measure. See
Item 7 — Management’s Discussion and Analysis — “Results of Operations — General”
for additional details, including a reconciliation of core net operating earnings per share (diluted) to net earnings available to shareholders (diluted) computed in accordance with GAAP.
|
(b)
|
Includes special cash dividends of $3.50 paid in 2017 and $1.00 per share paid in 2016, 2015, 2014 and 2013.
|
(c)
|
Fixed charges are computed on a “total enterprise” basis. For purposes of calculating the ratios, “earnings” have been computed by adding to pretax earnings the fixed charges and the noncontrolling interests in earnings of subsidiaries having fixed charges and the undistributed equity in earnings or losses of investees. Fixed charges include interest (including annuity benefits as indicated), amortization of debt premium/discount and expense, preferred dividend and distribution requirements of subsidiaries and a portion of rental expense deemed to be representative of the interest factor. The ratio of earnings to fixed charges excluding annuity benefits was
7.67
,
8.62
,
6.58
,
7.95
and
8.86
for
2017
,
2016
,
2015
,
2014
and
2013
, 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.
|
(d)
|
Net unrealized gains related to fixed maturities, which includes net unrealized gains (losses) on cash flow hedges, is part 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.
|
(e)
|
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 gains related to 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,
|
•
|
lower earnings in the annuity segment, resulting from the fair value accounting for fixed-indexed annuities,
|
•
|
lower net realized gains on securities in the fourth quarter of 2017 compared to the fourth quarter of 2016,
|
•
|
the fourth quarter 2017 loss on retirement of debt,
|
•
|
the fourth quarter 2017 tax benefit related to the Neon Underwriting Ltd. (“Neon”) restructuring,
|
•
|
the fourth quarter 2017 tax expense related to the change in the U.S. corporate tax rate and
|
•
|
the fourth quarter 2016 tax benefits from the National Interstate merger and Neon restructuring.
|
•
|
higher underwriting profit in the property and casualty insurance segment due primarily to higher favorable prior year reserve development,
|
•
|
higher earnings in the annuity segment,
|
•
|
higher profitability in the run-off long-term care and life segment,
|
•
|
lower realized gains on securities in 2017 compared to 2016,
|
•
|
the 2017 loss on retirement of debt,
|
•
|
the fourth quarter 2017 tax benefit related to the Neon restructuring,
|
•
|
the fourth quarter 2017 tax expense related to the change in the U.S. corporate tax rate,
|
•
|
the second quarter 2016 gain on the sale of an apartment property, and
|
•
|
the fourth quarter 2016 tax benefits related to the National Interstate merger and Neon restructuring.
|
•
|
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,
|
||||||
2017
|
|
2016
|
||||||
Principal amount of long-term debt
|
|
$
|
1,318
|
|
|
$
|
1,308
|
|
Total capital
|
|
6,033
|
|
|
5,921
|
|
||
Ratio of debt to total capital:
|
|
|
|
|
||||
Including subordinated debt
|
|
21.8
|
%
|
|
22.1
|
%
|
||
Excluding subordinated debt
|
|
16.9
|
%
|
|
17.0
|
%
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net cash provided by operating activities
|
$
|
1,804
|
|
|
$
|
1,150
|
|
|
$
|
1,353
|
|
Net cash used in investing activities
|
(3,292
|
)
|
|
(2,981
|
)
|
|
(4,573
|
)
|
|||
Net cash provided by financing activities
|
1,719
|
|
|
2,718
|
|
|
3,097
|
|
|||
Net change in cash and cash equivalents
|
$
|
231
|
|
|
$
|
887
|
|
|
$
|
(123
|
)
|
|
|
|
|
|
% of Reserves
|
|
||||
|
|
|
|
|
at December 31,
|
|
||||
|
GMIR
|
|
|
|
2017
|
|
2016
|
|
2015
|
|
|
1 — 1.99%
|
|
|
|
76%
|
|
72%
|
|
67%
|
|
|
2 — 2.99%
|
|
|
|
5%
|
|
6%
|
|
7%
|
|
|
3 — 3.99%
|
|
|
|
10%
|
|
12%
|
|
14%
|
|
|
4.00% and above
|
|
|
|
9%
|
|
10%
|
|
12%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuity benefits accumulated (in millions)
|
|
$33,316
|
|
$29,907
|
|
$26,662
|
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net cash provided by operating activities
|
$
|
578
|
|
|
$
|
555
|
|
|
$
|
162
|
|
Net cash used in investing activities
|
(63
|
)
|
|
(560
|
)
|
|
(33
|
)
|
|||
Net cash provided by (used in) financing activities
|
(413
|
)
|
|
13
|
|
|
(232
|
)
|
|||
Net change in cash and cash equivalents
|
$
|
102
|
|
|
$
|
8
|
|
|
$
|
(103
|
)
|
|
|
Total
|
|
Within
One Year
|
|
2-3 Years
|
|
4-5 Years
|
|
More than
5 Years
|
||||||||||
Annuities (a)
|
|
$
|
38,653
|
|
|
$
|
2,655
|
|
|
$
|
6,552
|
|
|
$
|
8,464
|
|
|
$
|
20,982
|
|
Life, accident and health liabilities (a)
|
|
1,449
|
|
|
123
|
|
|
209
|
|
|
197
|
|
|
920
|
|
|||||
Property and casualty unpaid losses and loss adjustment expenses (b)
|
|
9,678
|
|
|
2,600
|
|
|
2,500
|
|
|
1,100
|
|
|
3,478
|
|
|||||
Long-term debt, including interest
|
|
2,922
|
|
|
60
|
|
|
120
|
|
|
120
|
|
|
2,622
|
|
|||||
Operating leases
|
|
346
|
|
|
63
|
|
|
107
|
|
|
76
|
|
|
100
|
|
|||||
Total
|
|
$
|
53,048
|
|
|
$
|
5,501
|
|
|
$
|
9,488
|
|
|
$
|
9,957
|
|
|
$
|
28,102
|
|
(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
$33.32 billion
for annuity benefits accumulated and
$658 million
for life, accident and health reserves included in AFG’s Balance Sheet as of
December 31, 2017
. Based on the same assumptions, AFG projects reinsurance recoveries related to life, accident and health reserves totaling $708 million as follows: Within 1 year — $68 million; 2-3 years — $124 million; 4-5 years — $96 million; and thereafter — $420 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 $2.96 billion as follows: Within 1 year — $800 million; 2-3 years — $800 million; 4-5 years — $300 million; and thereafter — $1.06 billion. Actual payments and their timing could differ significantly from these estimates.
|
Fair value of fixed maturity portfolio
|
$
|
38,727
|
|
Percentage impact on fair value of 100 bps increase in interest rates
|
(5.0
|
%)
|
|
Pretax impact on fair value of fixed maturity portfolio
|
$
|
(1,936
|
)
|
Offsetting adjustments to deferred policy acquisition costs and other balance sheet amounts
|
750
|
|
|
Estimated pretax impact on accumulated other comprehensive income
|
(1,186
|
)
|
|
Deferred income tax
|
249
|
|
|
Estimated after-tax impact on accumulated other comprehensive income
|
$
|
(937
|
)
|
|
|
Amortized
Cost
|
|
Fair Value
|
|
Fair Value as
% of Cost
|
|
Unrealized
Gain (Loss)
|
|
% Rated
Investment
Grade
|
||||||||
Collateral type
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Agency-backed
|
|
$
|
207
|
|
|
$
|
205
|
|
|
99
|
%
|
|
$
|
(2
|
)
|
|
100
|
%
|
Non-agency prime
|
|
1,218
|
|
|
1,386
|
|
|
114
|
%
|
|
168
|
|
|
27
|
%
|
|||
Alt-A
|
|
994
|
|
|
1,122
|
|
|
113
|
%
|
|
128
|
|
|
15
|
%
|
|||
Subprime
|
|
468
|
|
|
517
|
|
|
110
|
%
|
|
49
|
|
|
19
|
%
|
|||
Commercial
|
|
928
|
|
|
963
|
|
|
104
|
%
|
|
35
|
|
|
95
|
%
|
|||
|
|
$
|
3,815
|
|
|
$
|
4,193
|
|
|
110
|
%
|
|
$
|
378
|
|
|
42
|
%
|
|
Securities
With
Unrealized
Gains
|
|
Securities
With
Unrealized
Losses
|
||||
Available for Sale Fixed Maturities
|
|
|
|
||||
Fair value of securities
|
$
|
31,743
|
|
|
$
|
5,869
|
|
Amortized cost of securities
|
$
|
30,320
|
|
|
$
|
5,951
|
|
Gross unrealized gain (loss)
|
$
|
1,423
|
|
|
$
|
(82
|
)
|
Fair value as % of amortized cost
|
105
|
%
|
|
99
|
%
|
||
Number of security positions
|
4,354
|
|
|
841
|
|
||
Number individually exceeding $2 million gain or loss
|
82
|
|
|
1
|
|
||
Concentration of gains (losses) by type or industry (exceeding 5% of unrealized):
|
|
|
|
||||
Mortgage-backed securities
|
$
|
385
|
|
|
$
|
(7
|
)
|
States and municipalities
|
254
|
|
|
(18
|
)
|
||
Banks, savings and credit institutions
|
167
|
|
|
(5
|
)
|
||
Asset-backed securities
|
142
|
|
|
(16
|
)
|
||
Manufacturing
|
107
|
|
|
(9
|
)
|
||
Insurance companies
|
76
|
|
|
(3
|
)
|
||
Percentage rated investment grade
|
90
|
%
|
|
90
|
%
|
||
|
|
|
|
||||
Available for Sale Equity Securities
|
|
|
|
||||
Fair value of securities
|
$
|
1,350
|
|
|
$
|
171
|
|
Cost of securities
|
$
|
1,048
|
|
|
$
|
194
|
|
Gross unrealized gain (loss)
|
$
|
302
|
|
|
$
|
(23
|
)
|
Fair value as % of cost
|
129
|
%
|
|
88
|
%
|
||
Number of security positions
|
172
|
|
|
23
|
|
||
Number individually exceeding $2 million gain or loss
|
36
|
|
|
4
|
|
|
|
Securities
With
Unrealized
Gains
|
|
Securities
With
Unrealized
Losses
|
||
Maturity
|
|
|
|
|
||
One year or less
|
|
2
|
%
|
|
2
|
%
|
After one year through five years
|
|
18
|
%
|
|
20
|
%
|
After five years through ten years
|
|
37
|
%
|
|
31
|
%
|
After ten years
|
|
12
|
%
|
|
16
|
%
|
|
|
69
|
%
|
|
69
|
%
|
Asset-backed securities (average life of approximately 5 years)
|
|
19
|
%
|
|
26
|
%
|
Mortgage-backed securities (average life of approximately 4-1/2 years)
|
|
12
|
%
|
|
5
|
%
|
|
|
100
|
%
|
|
100
|
%
|
|
|
Aggregate
Fair
Value
|
|
Aggregate
Unrealized
Gain (Loss)
|
|
Fair
Value as
% of Cost
|
|||||
Fixed Maturities at December 31, 2017
|
|
|
|
|
|
|
|||||
Securities with unrealized gains:
|
|
|
|
|
|
|
|||||
Exceeding $500,000 (829 securities)
|
|
$
|
12,450
|
|
|
$
|
923
|
|
|
108
|
%
|
$500,000 or less (3,525 securities)
|
|
19,293
|
|
|
500
|
|
|
103
|
%
|
||
|
|
$
|
31,743
|
|
|
$
|
1,423
|
|
|
105
|
%
|
Securities with unrealized losses:
|
|
|
|
|
|
|
|||||
Exceeding $500,000 (26 securities)
|
|
$
|
583
|
|
|
$
|
(24
|
)
|
|
96
|
%
|
$500,000 or less (815 securities)
|
|
5,286
|
|
|
(58
|
)
|
|
99
|
%
|
||
|
|
$
|
5,869
|
|
|
$
|
(82
|
)
|
|
99
|
%
|
|
|
Aggregate
Fair
Value
|
|
Aggregate
Unrealized
Loss
|
|
Fair
Value as
% of Cost
|
|||||
Securities with Unrealized Losses at December 31, 2017
|
|
|
|
|
|
|
|||||
Investment grade fixed maturities with losses for:
|
|
|
|
|
|
|
|||||
Less than one year (489 securities)
|
|
$
|
3,940
|
|
|
$
|
(32
|
)
|
|
99
|
%
|
One year or longer (230 securities)
|
|
1,342
|
|
|
(32
|
)
|
|
98
|
%
|
||
|
|
$
|
5,282
|
|
|
$
|
(64
|
)
|
|
99
|
%
|
Non-investment grade fixed maturities with losses for:
|
|
|
|
|
|
|
|||||
Less than one year (75 securities)
|
|
$
|
355
|
|
|
$
|
(5
|
)
|
|
99
|
%
|
One year or longer (47 securities)
|
|
232
|
|
|
(13
|
)
|
|
95
|
%
|
||
|
|
$
|
587
|
|
|
$
|
(18
|
)
|
|
97
|
%
|
Common stocks with losses for:
|
|
|
|
|
|
|
|||||
Less than one year (16 securities)
|
|
$
|
117
|
|
|
$
|
(22
|
)
|
|
84
|
%
|
One year or longer (none)
|
|
—
|
|
|
—
|
|
|
—
|
%
|
||
|
|
$
|
117
|
|
|
$
|
(22
|
)
|
|
84
|
%
|
Perpetual preferred stocks with losses for:
|
|
|
|
|
|
|
|||||
Less than one year (4 securities)
|
|
$
|
41
|
|
|
$
|
—
|
|
|
100
|
%
|
One year or longer (3 securities)
|
|
13
|
|
|
(1
|
)
|
|
93
|
%
|
||
|
|
$
|
54
|
|
|
$
|
(1
|
)
|
|
98
|
%
|
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.
|
|
|
Gross Loss Reserves
|
|
|
||||||||||||||||
|
|
Case
|
|
IBNR
|
|
LAE
|
|
Total
Reserves
|
|
Gross Written Premiums
|
||||||||||
Statutory Line of Business
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other liability — occurrence
|
|
$
|
657
|
|
|
$
|
1,700
|
|
|
$
|
426
|
|
|
$
|
2,783
|
|
|
$
|
969
|
|
Workers’ compensation
|
|
1,048
|
|
|
1,352
|
|
|
342
|
|
|
2,742
|
|
|
1,333
|
|
|||||
Other liability — claims made
|
|
165
|
|
|
302
|
|
|
216
|
|
|
683
|
|
|
397
|
|
|||||
Special property (fire, allied lines, inland marine, earthquake)
|
|
432
|
|
|
165
|
|
|
30
|
|
|
627
|
|
|
1,410
|
|
|||||
Commercial auto/truck liability/medical
|
|
212
|
|
|
298
|
|
|
91
|
|
|
601
|
|
|
427
|
|
|||||
Products liability — occurrence
|
|
78
|
|
|
147
|
|
|
141
|
|
|
366
|
|
|
134
|
|
|||||
Commercial multi-peril
|
|
182
|
|
|
108
|
|
|
73
|
|
|
363
|
|
|
273
|
|
|||||
Other lines
|
|
183
|
|
|
311
|
|
|
97
|
|
|
591
|
|
|
1,025
|
|
|||||
Total Statutory
|
|
2,957
|
|
|
4,383
|
|
|
1,416
|
|
|
8,756
|
|
|
5,968
|
|
|||||
Adjustments for GAAP:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign operations
|
|
357
|
|
|
506
|
|
|
38
|
|
|
901
|
|
|
498
|
|
|||||
Deferred gains on retroactive reinsurance
|
|
—
|
|
|
40
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|||||
Loss reserve discounting
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|||||
Other
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
36
|
|
|||||
Total Adjustments for GAAP
|
|
338
|
|
|
546
|
|
|
38
|
|
|
922
|
|
|
534
|
|
|||||
Total GAAP Reserves and Premiums
|
|
$
|
3,295
|
|
|
$
|
4,929
|
|
|
$
|
1,454
|
|
|
$
|
9,678
|
|
|
$
|
6,502
|
|
Line of business
|
Effect of 1%
Change in
Cost Trends
|
||
Other liability — occurrence
|
$
|
37
|
|
Workers’ compensation
|
75
|
|
|
Other liability — claims made
|
10
|
|
|
Commercial auto/truck liability/medical
|
10
|
|
|
|
5-yr. Average
Development (a)(b)
|
|
Net Reserves (b)
December 31, 2017
|
|
Effect on Net
Earnings (b)
|
|||||
Other liability — occurrence
|
|
1.3
|
%
|
|
$
|
1,094
|
|
|
$
|
(14
|
)
|
Workers’ compensation
|
|
(2.1
|
%)
|
|
2,317
|
|
|
49
|
|
||
Other liability — claims made
|
|
(3.3
|
%)
|
|
498
|
|
|
16
|
|
||
Commercial auto/truck liability/medical
|
|
4.7
|
%
|
|
449
|
|
|
(21
|
)
|
(a)
|
Adverse (favorable), net of tax effect.
|
(b)
|
Excludes asbestos and environmental liabilities.
|
•
|
Litigious climate
|
•
|
Unpredictability of judicial decisions regarding coverage issues
|
•
|
Magnitude of jury awards
|
•
|
Outside counsel costs
|
•
|
Timing of claims reporting
|
•
|
Legislative actions and regulatory and legal interpretations
|
•
|
Future medical cost inflation
|
•
|
Economic conditions
|
•
|
Frequency of reopening claims previously closed
|
•
|
Advances in medical equipment and processes
|
•
|
Pace and intensity of employee rehabilitation
|
•
|
Changes in the use of pharmaceutical drugs
|
•
|
Changes in longevity trends for permanently injured workers
|
•
|
Litigious climate
|
•
|
Economic conditions
|
•
|
Variability of stock prices
|
•
|
Magnitude of jury awards
|
•
|
Magnitude of jury awards
|
•
|
Unpredictability of judicial decisions regarding coverage issues
|
•
|
Litigious climate and trends
|
•
|
Change in frequency of severe accidents
|
•
|
Health care costs and utilization of medical services by injured parties
|
•
|
Litigious environment
|
•
|
Magnitude of court awards
|
•
|
Trends in claim costs, including medical cost inflation
|
•
|
Global economic conditions
|
|
|
2017
|
|
2016
|
|
2015
|
|||
Before reinsurance (gross)
|
|
98.9
|
%
|
|
92.5
|
%
|
|
92.8
|
%
|
Effect of reinsurance
|
|
(4.2
|
%)
|
|
2.0
|
%
|
|
1.9
|
%
|
Actual (net of reinsurance)
|
|
94.7
|
%
|
|
94.5
|
%
|
|
94.7
|
%
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Asbestos
|
|
$
|
238
|
|
|
$
|
198
|
|
Environmental
|
|
165
|
|
|
139
|
|
||
A&E reserves, net of reinsurance recoverable
|
|
403
|
|
|
337
|
|
||
Reinsurance recoverable, net of allowance
|
|
125
|
|
|
106
|
|
||
Gross A&E reserves
|
|
$
|
528
|
|
|
$
|
443
|
|
•
|
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.
|
|
|
2017
|
|
2016
|
|
2015
|
|||
Number of policyholders with no indemnity payments:
|
|
|
|
|
|
|
|||
Asbestos
|
|
81
|
|
|
87
|
|
|
122
|
|
Environmental
|
|
101
|
|
|
107
|
|
|
112
|
|
|
|
182
|
|
|
194
|
|
|
234
|
|
Number of policyholders with indemnity payments:
|
|
|
|
|
|
|
|||
Asbestos
|
|
74
|
|
|
66
|
|
|
50
|
|
Environmental
|
|
31
|
|
|
28
|
|
|
25
|
|
|
|
105
|
|
|
94
|
|
|
75
|
|
Total
|
|
287
|
|
|
288
|
|
|
309
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Asbestos
|
|
$
|
11
|
|
|
$
|
12
|
|
|
$
|
16
|
|
Environmental
|
|
12
|
|
|
14
|
|
|
13
|
|
|||
Total
|
|
$
|
23
|
|
|
$
|
26
|
|
|
$
|
29
|
|
|
Property and Casualty Insurance Reserves
|
|||||||
|
Three-Year Survival Ratio (% Times Paid Losses)
|
|||||||
|
Asbestos
|
|
Environmental
|
|
Total A&E
|
|||
AFG (12/31/2017)
|
18.6
|
|
|
12.8
|
|
|
15.7
|
|
Industry (12/31/2016)
|
6.7
|
|
|
8.0
|
|
|
6.9
|
|
|
Before CLO
Consolidation
|
|
Managed
Investment
Entities
|
|
Consol.
Entries
|
|
|
|
Consolidated
As Reported
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and investments
|
$
|
46,262
|
|
|
$
|
—
|
|
|
$
|
(214
|
)
|
|
(a)
|
|
$
|
46,048
|
|
Assets of managed investment entities
|
—
|
|
|
4,902
|
|
|
—
|
|
|
|
|
4,902
|
|
||||
Other assets
|
9,709
|
|
|
—
|
|
|
(1
|
)
|
|
(a)
|
|
9,708
|
|
||||
Total assets
|
$
|
55,971
|
|
|
$
|
4,902
|
|
|
$
|
(215
|
)
|
|
|
|
$
|
60,658
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Unpaid losses and loss adjustment expenses and unearned premiums
|
$
|
12,088
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
12,088
|
|
Annuity, life, accident and health benefits and reserves
|
33,974
|
|
|
—
|
|
|
—
|
|
|
|
|
33,974
|
|
||||
Liabilities of managed investment entities
|
—
|
|
|
4,902
|
|
|
(215
|
)
|
|
(a)
|
|
4,687
|
|
||||
Long-term debt and other liabilities
|
4,575
|
|
|
—
|
|
|
—
|
|
|
|
|
4,575
|
|
||||
Total liabilities
|
50,637
|
|
|
4,902
|
|
|
(215
|
)
|
|
|
|
55,324
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Redeemable noncontrolling interests
|
3
|
|
|
—
|
|
|
—
|
|
|
|
|
3
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
||||||||
Common Stock and Capital surplus
|
1,269
|
|
|
—
|
|
|
—
|
|
|
|
|
1,269
|
|
||||
Retained earnings
|
3,248
|
|
|
—
|
|
|
—
|
|
|
|
|
3,248
|
|
||||
Accumulated other comprehensive income, net of tax
|
813
|
|
|
—
|
|
|
—
|
|
|
|
|
813
|
|
||||
Total shareholders’ equity
|
5,330
|
|
|
—
|
|
|
—
|
|
|
|
|
5,330
|
|
||||
Noncontrolling interests
|
1
|
|
|
—
|
|
|
—
|
|
|
|
|
1
|
|
||||
Total equity
|
5,331
|
|
|
—
|
|
|
—
|
|
|
|
|
5,331
|
|
||||
Total liabilities and equity
|
$
|
55,971
|
|
|
$
|
4,902
|
|
|
$
|
(215
|
)
|
|
|
|
$
|
60,658
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and investments
|
$
|
41,649
|
|
|
$
|
—
|
|
|
$
|
(216
|
)
|
|
(a)
|
|
$
|
41,433
|
|
Assets of managed investment entities
|
—
|
|
|
4,765
|
|
|
—
|
|
|
|
|
4,765
|
|
||||
Other assets
|
8,874
|
|
|
—
|
|
|
—
|
|
|
(a)
|
|
8,874
|
|
||||
Total assets
|
$
|
50,523
|
|
|
$
|
4,765
|
|
|
$
|
(216
|
)
|
|
|
|
$
|
55,072
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Unpaid losses and loss adjustment expenses and unearned premiums
|
$
|
10,734
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
10,734
|
|
Annuity, life, accident and health benefits and reserves
|
30,598
|
|
|
—
|
|
|
—
|
|
|
|
|
30,598
|
|
||||
Liabilities of managed investment entities
|
—
|
|
|
4,760
|
|
|
(211
|
)
|
|
(a)
|
|
4,549
|
|
||||
Long-term debt and other liabilities
|
4,272
|
|
|
—
|
|
|
—
|
|
|
|
|
4,272
|
|
||||
Total liabilities
|
45,604
|
|
|
4,760
|
|
|
(211
|
)
|
|
|
|
50,153
|
|
||||
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
||||||||
Common Stock and Capital surplus
|
1,198
|
|
|
5
|
|
|
(5
|
)
|
|
|
|
1,198
|
|
||||
Retained earnings
|
3,343
|
|
|
—
|
|
|
—
|
|
|
|
|
3,343
|
|
||||
Accumulated other comprehensive income, net of tax
|
375
|
|
|
—
|
|
|
—
|
|
|
|
|
375
|
|
||||
Total shareholders’ equity
|
4,916
|
|
|
5
|
|
|
(5
|
)
|
|
|
|
4,916
|
|
||||
Noncontrolling interests
|
3
|
|
|
—
|
|
|
—
|
|
|
|
|
3
|
|
||||
Total equity
|
4,919
|
|
|
5
|
|
|
(5
|
)
|
|
|
|
4,919
|
|
||||
Total liabilities and equity
|
$
|
50,523
|
|
|
$
|
4,765
|
|
|
$
|
(216
|
)
|
|
|
|
$
|
55,072
|
|
(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, 2017
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
1,230
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
1,230
|
|
Net investment income
|
472
|
|
|
—
|
|
|
(7
|
)
|
|
(b)
|
|
465
|
|
||||
Realized gains on securities
|
6
|
|
|
—
|
|
|
—
|
|
|
|
|
6
|
|
||||
Income of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
55
|
|
|
—
|
|
|
|
|
55
|
|
||||
Gain on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
(b)
|
|
—
|
|
||||
Other income
|
56
|
|
|
—
|
|
|
(4
|
)
|
|
(c)
|
|
52
|
|
||||
Total revenues
|
1,764
|
|
|
55
|
|
|
(11
|
)
|
|
|
|
1,808
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
1,340
|
|
|
—
|
|
|
—
|
|
|
|
|
1,340
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
54
|
|
|
(10
|
)
|
|
(b)(c)
|
|
44
|
|
||||
Interest charges on borrowed money and other expenses
|
157
|
|
|
—
|
|
|
—
|
|
|
|
|
157
|
|
||||
Total costs and expenses
|
1,497
|
|
|
54
|
|
|
(10
|
)
|
|
|
|
1,541
|
|
||||
Earnings before income taxes
|
267
|
|
|
1
|
|
|
(1
|
)
|
|
|
|
267
|
|
||||
Provision for income taxes
|
101
|
|
|
—
|
|
|
—
|
|
|
|
|
101
|
|
||||
Net earnings, including noncontrolling interests
|
166
|
|
|
1
|
|
|
(1
|
)
|
|
|
|
166
|
|
||||
Less: Net earnings attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
||||
Net earnings attributable to shareholders
|
$
|
166
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
|
|
$
|
166
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Three months ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
1,150
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
1,150
|
|
Net investment income
|
437
|
|
|
—
|
|
|
(8
|
)
|
|
(b)
|
|
429
|
|
||||
Realized gains on securities
|
51
|
|
|
—
|
|
|
—
|
|
|
|
|
51
|
|
||||
Income of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
49
|
|
|
—
|
|
|
|
|
49
|
|
||||
Gain on change in fair value of assets/liabilities
|
—
|
|
|
6
|
|
|
—
|
|
|
(b)
|
|
6
|
|
||||
Other income
|
57
|
|
|
—
|
|
|
(5
|
)
|
|
(c)
|
|
52
|
|
||||
Total revenues
|
1,695
|
|
|
55
|
|
|
(13
|
)
|
|
|
|
1,737
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
1,262
|
|
|
—
|
|
|
—
|
|
|
|
|
1,262
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
55
|
|
|
(13
|
)
|
|
(b)(c)
|
|
42
|
|
||||
Interest charges on borrowed money and other expenses
|
116
|
|
|
—
|
|
|
—
|
|
|
|
|
116
|
|
||||
Total costs and expenses
|
1,378
|
|
|
55
|
|
|
(13
|
)
|
|
|
|
1,420
|
|
||||
Earnings before income taxes
|
317
|
|
|
—
|
|
|
—
|
|
|
|
|
317
|
|
||||
Provision (credit) for income taxes
|
(71
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(71
|
)
|
||||
Net earnings, including noncontrolling interests
|
388
|
|
|
—
|
|
|
—
|
|
|
|
|
388
|
|
||||
Less: Net earnings attributable to noncontrolling interests
|
3
|
|
|
—
|
|
|
—
|
|
|
|
|
3
|
|
||||
Net earnings attributable to shareholders
|
$
|
385
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
385
|
|
(a)
|
Includes income of
$7 million
and
$8 million
in the fourth quarter of
2017
and
2016
, respectively, representing the change in fair value of AFG’s CLO investments plus
$4 million
and
$5 million
in the fourth quarter of
2017
and
2016
, respectively, in CLO management fees earned.
|
(b)
|
Elimination of the change in fair value of AFG’s investments in the CLOs, including
$6 million
and
$8 million
in the fourth quarter of
2017
and
2016
, respectively, in distributions recorded as interest expense by the CLOs.
|
(c)
|
Elimination of management fees earned by AFG.
|
|
Before CLO
Consolidation (a)
|
|
Managed
Investment
Entities
|
|
Consol.
Entries
|
|
|
|
Consolidated
As Reported
|
||||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
4,601
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
4,601
|
|
Net investment income
|
1,854
|
|
|
—
|
|
|
(23
|
)
|
|
(b)
|
|
1,831
|
|
||||
Realized gains on securities
|
5
|
|
|
—
|
|
|
—
|
|
|
|
|
5
|
|
||||
Income of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
210
|
|
|
—
|
|
|
|
|
210
|
|
||||
Gain on change in fair value of assets/liabilities
|
—
|
|
|
22
|
|
|
(10
|
)
|
|
(b)
|
|
12
|
|
||||
Other income
|
224
|
|
|
—
|
|
|
(18
|
)
|
|
(c)
|
|
206
|
|
||||
Total revenues
|
6,684
|
|
|
232
|
|
|
(51
|
)
|
|
|
|
6,865
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
5,453
|
|
|
—
|
|
|
—
|
|
|
|
|
5,453
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
231
|
|
|
(50
|
)
|
|
(b)(c)
|
|
181
|
|
||||
Interest charges on borrowed money and other expenses
|
507
|
|
|
—
|
|
|
—
|
|
|
|
|
507
|
|
||||
Total costs and expenses
|
5,960
|
|
|
231
|
|
|
(50
|
)
|
|
|
|
6,141
|
|
||||
Earnings before income taxes
|
724
|
|
|
1
|
|
|
(1
|
)
|
|
|
|
724
|
|
||||
Provision for income taxes
|
247
|
|
|
—
|
|
|
—
|
|
|
|
|
247
|
|
||||
Net earnings, including noncontrolling interests
|
477
|
|
|
1
|
|
|
(1
|
)
|
|
|
|
477
|
|
||||
Less: Net earnings attributable to noncontrolling interests
|
2
|
|
|
—
|
|
|
—
|
|
|
|
|
2
|
|
||||
Net earnings attributable to shareholders
|
$
|
475
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
|
|
$
|
475
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
4,352
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
4,352
|
|
Net investment income
|
1,733
|
|
|
—
|
|
|
(37
|
)
|
|
(b)
|
|
1,696
|
|
||||
Realized gains on:
|
|
|
|
|
|
|
|
|
|
||||||||
Securities
|
19
|
|
|
—
|
|
|
—
|
|
|
|
|
19
|
|
||||
Subsidiaries
|
2
|
|
|
—
|
|
|
—
|
|
|
|
|
2
|
|
||||
Income of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
190
|
|
|
—
|
|
|
|
|
190
|
|
||||
Gain on change in fair value of assets/liabilities
|
—
|
|
|
8
|
|
|
7
|
|
|
(b)
|
|
15
|
|
||||
Other income
|
241
|
|
|
—
|
|
|
(17
|
)
|
|
(c)
|
|
224
|
|
||||
Total revenues
|
6,347
|
|
|
198
|
|
|
(47
|
)
|
|
|
|
6,498
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
5,130
|
|
|
—
|
|
|
—
|
|
|
|
|
5,130
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
197
|
|
|
(46
|
)
|
|
(b)(c)
|
|
151
|
|
||||
Interest charges on borrowed money and other expenses
|
430
|
|
|
—
|
|
|
—
|
|
|
|
|
430
|
|
||||
Total costs and expenses
|
5,560
|
|
|
197
|
|
|
(46
|
)
|
|
|
|
5,711
|
|
||||
Earnings before income taxes
|
787
|
|
|
1
|
|
|
(1
|
)
|
|
|
|
787
|
|
||||
Provision for income taxes
|
119
|
|
|
—
|
|
|
—
|
|
|
|
|
119
|
|
||||
Net earnings, including noncontrolling interests
|
668
|
|
|
1
|
|
|
(1
|
)
|
|
|
|
668
|
|
||||
Less: Net earnings attributable to noncontrolling interests
|
19
|
|
|
—
|
|
|
—
|
|
|
|
|
19
|
|
||||
Net earnings attributable to shareholders
|
$
|
649
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
|
|
$
|
649
|
|
(a)
|
Includes income of
$23 million
and
$37 million
in
2017
and
2016
, respectively, representing the change in fair value of AFG’s CLO investments plus
$18 million
and
$17 million
in
2017
and
2016
, respectively, in CLO management fees earned.
|
(b)
|
Elimination of the change in fair value of AFG’s investments in the CLOs, including
$32 million
and
$29 million
in
2017
and
2016
, respectively, in distributions recorded as interest expense by the CLOs.
|
(c)
|
Elimination of management fees earned by AFG.
|
|
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
|
|
(a)
|
Includes a loss of
$6 million
representing the change in fair value of AFG’s CLO investments plus
$15 million
in CLO management fees earned.
|
(b)
|
Elimination of the change in fair value of AFG’s investments in the CLOs, including
$28 million
in distributions recorded as interest expense by the CLOs.
|
(c)
|
Elimination of management fees earned by AFG.
|
|
Three months ended December 31,
|
|
Year ended December 31,
|
||||||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||
Components of net earnings attributable to shareholders:
|
|
|
|
|
|
|
|
|
|
||||||||||
Core operating earnings before income taxes
|
$
|
283
|
|
|
$
|
266
|
|
|
$
|
865
|
|
|
$
|
840
|
|
|
$
|
762
|
|
Pretax non-core items:
|
|
|
|
|
|
|
|
|
|
||||||||||
Realized gains (losses) on securities
|
6
|
|
|
51
|
|
|
5
|
|
|
19
|
|
|
(19
|
)
|
|||||
Realized gain (loss) on subsidiaries:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term care business
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
(166
|
)
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||
Gain on sale of apartment properties and hotel
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
66
|
|
|||||
Special A&E charges
|
—
|
|
|
—
|
|
|
(113
|
)
|
|
(41
|
)
|
|
(79
|
)
|
|||||
Neon exited lines charge
|
18
|
|
|
—
|
|
|
18
|
|
|
(65
|
)
|
|
—
|
|
|||||
Loss on retirement of debt
|
(40
|
)
|
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
(4
|
)
|
|||||
Earnings before income taxes
|
267
|
|
|
317
|
|
|
724
|
|
|
787
|
|
|
565
|
|
|||||
Provision (credit) for income taxes:
|
|
|
|
|
|
|
|
|
|
||||||||||
Core operating earnings
|
86
|
|
|
88
|
|
|
275
|
|
|
290
|
|
|
263
|
|
|||||
Non-core items:
|
|
|
|
|
|
|
|
|
|
||||||||||
Tax benefit related to Neon restructuring
|
(56
|
)
|
|
(111
|
)
|
|
(56
|
)
|
|
(111
|
)
|
|
—
|
|
|||||
Tax expense related to change in U.S. corporate tax rate
|
83
|
|
|
—
|
|
|
83
|
|
|
—
|
|
|
—
|
|
|||||
Tax benefit related to National Interstate merger
|
—
|
|
|
(66
|
)
|
|
—
|
|
|
(66
|
)
|
|
—
|
|
|||||
Other
|
(12
|
)
|
|
18
|
|
|
(55
|
)
|
|
6
|
|
|
(68
|
)
|
|||||
Total provision (credit) for income taxes
|
101
|
|
|
(71
|
)
|
|
247
|
|
|
119
|
|
|
195
|
|
|||||
Net earnings, including noncontrolling interests
|
166
|
|
|
388
|
|
|
477
|
|
|
668
|
|
|
370
|
|
|||||
Less net earnings attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
||||||||||
Core operating earnings
|
—
|
|
|
2
|
|
|
2
|
|
|
16
|
|
|
13
|
|
|||||
Non-core items
|
—
|
|
|
1
|
|
|
—
|
|
|
3
|
|
|
5
|
|
|||||
Total net earnings attributable to noncontrolling interests
|
—
|
|
|
3
|
|
|
2
|
|
|
19
|
|
|
18
|
|
|||||
Net earnings attributable to shareholders
|
$
|
166
|
|
|
$
|
385
|
|
|
$
|
475
|
|
|
$
|
649
|
|
|
$
|
352
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
Core net operating earnings
|
$
|
197
|
|
|
$
|
176
|
|
|
$
|
588
|
|
|
$
|
534
|
|
|
$
|
486
|
|
Non-core items
|
(31
|
)
|
|
209
|
|
|
(113
|
)
|
|
115
|
|
|
(134
|
)
|
|||||
Net earnings attributable to shareholders
|
$
|
166
|
|
|
$
|
385
|
|
|
$
|
475
|
|
|
$
|
649
|
|
|
$
|
352
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted per share amounts:
|
|
|
|
|
|
|
|
|
|
||||||||||
Core net operating earnings
|
$
|
2.20
|
|
|
$
|
1.98
|
|
|
$
|
6.55
|
|
|
$
|
6.03
|
|
|
$
|
5.44
|
|
Realized gains (losses) on securities
|
0.04
|
|
|
0.36
|
|
|
0.03
|
|
|
0.16
|
|
|
(0.12
|
)
|
|||||
Realized gain (loss) on subsidiaries:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term care business
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
(1.21
|
)
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.04
|
|
|||||
Gain on sale of apartment properties and hotel
|
—
|
|
|
—
|
|
|
—
|
|
|
0.17
|
|
|
0.40
|
|
|||||
Special A&E charges
|
—
|
|
|
—
|
|
|
(0.82
|
)
|
|
(0.30
|
)
|
|
(0.58
|
)
|
|||||
Neon exited lines charge
|
0.19
|
|
|
—
|
|
|
0.19
|
|
|
(0.73
|
)
|
|
—
|
|
|||||
Loss on retirement of debt
|
(0.29
|
)
|
|
—
|
|
|
(0.37
|
)
|
|
—
|
|
|
(0.03
|
)
|
|||||
Tax benefit related to Neon restructuring
|
0.62
|
|
|
1.25
|
|
|
0.62
|
|
|
1.25
|
|
|
—
|
|
|||||
Tax expense related to change in U.S. corporate tax rate
|
(0.92
|
)
|
|
—
|
|
|
(0.92
|
)
|
|
—
|
|
|
—
|
|
|||||
Tax benefit related to National Interstate merger
|
—
|
|
|
0.74
|
|
|
—
|
|
|
0.74
|
|
|
—
|
|
|||||
Net earnings attributable to shareholders
|
$
|
1.84
|
|
|
$
|
4.33
|
|
|
$
|
5.28
|
|
|
$
|
7.33
|
|
|
$
|
3.94
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
||||||||||||||||||
|
P&C
|
|
Annuity
|
|
Run-off long-term care and life
|
|
Consol. MIEs
|
|
Holding Co., other and unallocated
|
|
Total
|
|
Non-core reclass
|
|
GAAP Total
|
||||||||||||||||
Three months ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance net earned premiums
|
$
|
1,225
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,225
|
|
|
$
|
—
|
|
|
$
|
1,225
|
|
Life, accident and health net earned premiums
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||||||
Net investment income
|
86
|
|
|
376
|
|
|
4
|
|
|
(7
|
)
|
|
6
|
|
|
465
|
|
|
—
|
|
|
465
|
|
||||||||
Realized gains on securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
||||||||
Income of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
55
|
|
||||||||
Gain on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Other income
|
7
|
|
|
24
|
|
|
3
|
|
|
(4
|
)
|
|
22
|
|
|
52
|
|
|
—
|
|
|
52
|
|
||||||||
Total revenues
|
1,318
|
|
|
400
|
|
|
12
|
|
|
44
|
|
|
28
|
|
|
1,802
|
|
|
6
|
|
|
1,808
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss adjustment expenses
|
734
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
734
|
|
|
(18
|
)
|
|
716
|
|
||||||||
Commissions and other underwriting expenses
|
336
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
345
|
|
|
—
|
|
|
345
|
|
||||||||
Annuity benefits
|
—
|
|
|
257
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
257
|
|
|
—
|
|
|
257
|
|
||||||||
Life, accident and health benefits
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||||||
Annuity and supplemental insurance acquisition expenses
|
—
|
|
|
15
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
||||||||
Interest charges on borrowed money
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
20
|
|
|
—
|
|
|
20
|
|
||||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
—
|
|
|
44
|
|
|
—
|
|
|
44
|
|
||||||||
Other expenses
|
15
|
|
|
31
|
|
|
3
|
|
|
—
|
|
|
48
|
|
|
97
|
|
|
40
|
|
|
137
|
|
||||||||
Total costs and expenses
|
1,085
|
|
|
303
|
|
|
10
|
|
|
44
|
|
|
77
|
|
|
1,519
|
|
|
22
|
|
|
1,541
|
|
||||||||
Earnings before income taxes
|
233
|
|
|
97
|
|
|
2
|
|
|
—
|
|
|
(49
|
)
|
|
283
|
|
|
(16
|
)
|
|
267
|
|
||||||||
Provision for income taxes
|
69
|
|
|
32
|
|
|
1
|
|
|
—
|
|
|
(16
|
)
|
|
86
|
|
|
15
|
|
|
101
|
|
||||||||
Net earnings, including noncontrolling interests
|
164
|
|
|
65
|
|
|
1
|
|
|
—
|
|
|
(33
|
)
|
|
197
|
|
|
(31
|
)
|
|
166
|
|
||||||||
Less: Net earnings attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Core Net Operating Earnings
|
164
|
|
|
65
|
|
|
1
|
|
|
—
|
|
|
(33
|
)
|
|
197
|
|
|
|
|
|
||||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Realized gains on securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
(4
|
)
|
|
—
|
|
||||||||
Neon exited lines charge
|
18
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
(18
|
)
|
|
—
|
|
||||||||
Loss on retirement of debt, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
|
(26
|
)
|
|
26
|
|
|
—
|
|
||||||||
Tax benefit related to Neon restructuring
|
56
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|
(56
|
)
|
|
—
|
|
||||||||
Tax expense related to change in U.S. corporate tax rate
|
(88
|
)
|
|
25
|
|
|
(1
|
)
|
|
—
|
|
|
(19
|
)
|
|
(83
|
)
|
|
83
|
|
|
—
|
|
||||||||
Net Earnings Attributable to Shareholders
|
$
|
150
|
|
|
$
|
90
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(74
|
)
|
|
$
|
166
|
|
|
$
|
—
|
|
|
$
|
166
|
|
|
|
Other
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
P&C
|
|
Annuity
|
|
Run-off long-term care and life
|
|
Consol. MIEs
|
|
Holding Co., other and unallocated
|
|
Total
|
|
Non-core reclass
|
|
GAAP Total
|
||||||||||||||||
Three months ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance net earned premiums
|
$
|
1,144
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,144
|
|
|
$
|
—
|
|
|
$
|
1,144
|
|
Life, accident and health net earned premiums
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||||||
Net investment income
|
85
|
|
|
346
|
|
|
6
|
|
|
(8
|
)
|
|
—
|
|
|
429
|
|
|
—
|
|
|
429
|
|
||||||||
Realized gains on securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|
51
|
|
||||||||
Income of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
49
|
|
|
—
|
|
|
49
|
|
|
—
|
|
|
49
|
|
||||||||
Gain on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||||||
Other income
|
5
|
|
|
27
|
|
|
—
|
|
|
(5
|
)
|
|
25
|
|
|
52
|
|
|
—
|
|
|
52
|
|
||||||||
Total revenues
|
1,234
|
|
|
373
|
|
|
12
|
|
|
42
|
|
|
25
|
|
|
1,686
|
|
|
51
|
|
|
1,737
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss adjustment expenses
|
729
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
729
|
|
|
—
|
|
|
729
|
|
||||||||
Commissions and other underwriting expenses
|
305
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
311
|
|
|
—
|
|
|
311
|
|
||||||||
Annuity benefits
|
—
|
|
|
160
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
160
|
|
|
—
|
|
|
160
|
|
||||||||
Life, accident and health benefits
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||||
Annuity and supplemental insurance acquisition expenses
|
—
|
|
|
54
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
55
|
|
||||||||
Interest charges on borrowed money
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
21
|
|
|
—
|
|
|
21
|
|
||||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
42
|
|
||||||||
Other expenses
|
18
|
|
|
27
|
|
|
2
|
|
|
—
|
|
|
48
|
|
|
95
|
|
|
—
|
|
|
95
|
|
||||||||
Total costs and expenses
|
1,052
|
|
|
241
|
|
|
10
|
|
|
42
|
|
|
75
|
|
|
1,420
|
|
|
—
|
|
|
1,420
|
|
||||||||
Earnings before income taxes
|
182
|
|
|
132
|
|
|
2
|
|
|
—
|
|
|
(50
|
)
|
|
266
|
|
|
51
|
|
|
317
|
|
||||||||
Provision (credit) for income taxes
|
65
|
|
|
44
|
|
|
1
|
|
|
—
|
|
|
(22
|
)
|
|
88
|
|
|
(159
|
)
|
|
(71
|
)
|
||||||||
Net earnings, including noncontrolling interests
|
117
|
|
|
88
|
|
|
1
|
|
|
—
|
|
|
(28
|
)
|
|
178
|
|
|
210
|
|
|
388
|
|
||||||||
Less: Net earnings attributable to noncontrolling interests
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
3
|
|
||||||||
Core Net Operating Earnings
|
115
|
|
|
88
|
|
|
1
|
|
|
—
|
|
|
(28
|
)
|
|
176
|
|
|
|
|
|
||||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Realized gains on securities, net of tax and noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
32
|
|
|
(32
|
)
|
|
—
|
|
||||||||
Tax benefit related to Neon restructuring
|
111
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
111
|
|
|
(111
|
)
|
|
—
|
|
||||||||
Tax benefit related to National Interstate merger
|
66
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
66
|
|
|
(66
|
)
|
|
—
|
|
||||||||
Net Earnings Attributable to Shareholders
|
$
|
292
|
|
|
$
|
88
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
385
|
|
|
$
|
—
|
|
|
$
|
385
|
|
(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,
|
|
|
|||||||||||||
|
2017
|
|
2016
|
|
|
|||||||||||
|
GWP
|
|
%
|
|
GWP
|
|
%
|
|
% Change
|
|||||||
Property and transportation
|
$
|
626
|
|
|
40
|
%
|
|
$
|
577
|
|
|
40
|
%
|
|
8
|
%
|
Specialty casualty
|
737
|
|
|
47
|
%
|
|
684
|
|
|
47
|
%
|
|
8
|
%
|
||
Specialty financial
|
208
|
|
|
13
|
%
|
|
180
|
|
|
13
|
%
|
|
16
|
%
|
||
|
$
|
1,571
|
|
|
100
|
%
|
|
$
|
1,441
|
|
|
100
|
%
|
|
9
|
%
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2017
|
|
2016
|
|
Change in
|
|||||||||||
|
Ceded
|
|
% of GWP
|
|
Ceded
|
|
% of GWP
|
|
% of GWP
|
|||||||
Property and transportation
|
$
|
(202
|
)
|
|
32
|
%
|
|
$
|
(183
|
)
|
|
32
|
%
|
|
—
|
%
|
Specialty casualty
|
(182
|
)
|
|
25
|
%
|
|
(174
|
)
|
|
25
|
%
|
|
—
|
%
|
||
Specialty financial
|
(52
|
)
|
|
25
|
%
|
|
(26
|
)
|
|
14
|
%
|
|
11
|
%
|
||
Other specialty
|
26
|
|
|
|
|
25
|
|
|
|
|
|
|||||
|
$
|
(410
|
)
|
|
26
|
%
|
|
$
|
(358
|
)
|
|
25
|
%
|
|
1
|
%
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2017
|
|
2016
|
|
|
|||||||||||
|
NWP
|
|
%
|
|
NWP
|
|
%
|
|
% Change
|
|||||||
Property and transportation
|
$
|
424
|
|
|
37
|
%
|
|
$
|
394
|
|
|
37
|
%
|
|
8
|
%
|
Specialty casualty
|
555
|
|
|
48
|
%
|
|
510
|
|
|
47
|
%
|
|
9
|
%
|
||
Specialty financial
|
156
|
|
|
13
|
%
|
|
154
|
|
|
14
|
%
|
|
1
|
%
|
||
Other specialty
|
26
|
|
|
2
|
%
|
|
25
|
|
|
2
|
%
|
|
4
|
%
|
||
|
$
|
1,161
|
|
|
100
|
%
|
|
$
|
1,083
|
|
|
100
|
%
|
|
7
|
%
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2017
|
|
2016
|
|
|
|||||||||||
|
NEP
|
|
%
|
|
NEP
|
|
%
|
|
% Change
|
|||||||
Property and transportation
|
$
|
485
|
|
|
40
|
%
|
|
$
|
465
|
|
|
41
|
%
|
|
4
|
%
|
Specialty casualty
|
573
|
|
|
47
|
%
|
|
510
|
|
|
45
|
%
|
|
12
|
%
|
||
Specialty financial
|
141
|
|
|
11
|
%
|
|
141
|
|
|
12
|
%
|
|
—
|
%
|
||
Other specialty
|
26
|
|
|
2
|
%
|
|
28
|
|
|
2
|
%
|
|
(7
|
%)
|
||
|
$
|
1,225
|
|
|
100
|
%
|
|
$
|
1,144
|
|
|
100
|
%
|
|
7
|
%
|
|
Three months ended December 31,
|
|
|
|
Three months ended December 31,
|
|||||||||||
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
67.1
|
%
|
|
68.6
|
%
|
|
(1.5
|
%)
|
|
|
|
|
||||
Underwriting expense ratio
|
15.5
|
%
|
|
15.3
|
%
|
|
0.2
|
%
|
|
|
|
|
||||
Combined ratio
|
82.6
|
%
|
|
83.9
|
%
|
|
(1.3
|
%)
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
84
|
|
|
$
|
75
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
59.1
|
%
|
|
68.2
|
%
|
|
(9.1
|
%)
|
|
|
|
|
||||
Underwriting expense ratio
|
30.9
|
%
|
|
29.2
|
%
|
|
1.7
|
%
|
|
|
|
|
||||
Combined ratio
|
90.0
|
%
|
|
97.4
|
%
|
|
(7.4
|
%)
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
58
|
|
|
$
|
13
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
33.1
|
%
|
|
32.4
|
%
|
|
0.7
|
%
|
|
|
|
|
||||
Underwriting expense ratio
|
53.1
|
%
|
|
53.6
|
%
|
|
(0.5
|
%)
|
|
|
|
|
||||
Combined ratio
|
86.2
|
%
|
|
86.0
|
%
|
|
0.2
|
%
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
19
|
|
|
$
|
20
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
59.8
|
%
|
|
63.7
|
%
|
|
(3.9
|
%)
|
|
|
|
|
||||
Underwriting expense ratio
|
27.5
|
%
|
|
26.7
|
%
|
|
0.8
|
%
|
|
|
|
|
||||
Combined ratio
|
87.3
|
%
|
|
90.4
|
%
|
|
(3.1
|
%)
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
156
|
|
|
$
|
110
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Aggregate — including exited lines
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
58.5
|
%
|
|
63.7
|
%
|
|
(5.2
|
%)
|
|
|
|
|
||||
Underwriting expense ratio
|
27.5
|
%
|
|
26.7
|
%
|
|
0.8
|
%
|
|
|
|
|
||||
Combined ratio
|
86.0
|
%
|
|
90.4
|
%
|
|
(4.4
|
%)
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
173
|
|
|
$
|
110
|
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
Amount
|
|
Ratio
|
|
Change in
|
|||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Ratio
|
|||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
332
|
|
|
$
|
300
|
|
|
68.5
|
%
|
|
64.4
|
%
|
|
4.1
|
%
|
Prior accident years development
|
(4
|
)
|
|
13
|
|
|
(0.8
|
%)
|
|
3.0
|
%
|
|
(3.8
|
%)
|
||
Current year catastrophe losses
|
(3
|
)
|
|
6
|
|
|
(0.6
|
%)
|
|
1.2
|
%
|
|
(1.8
|
%)
|
||
Property and transportation losses and LAE and ratio
|
$
|
325
|
|
|
$
|
319
|
|
|
67.1
|
%
|
|
68.6
|
%
|
|
(1.5
|
%)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
376
|
|
|
$
|
341
|
|
|
65.8
|
%
|
|
66.9
|
%
|
|
(1.1
|
%)
|
Prior accident years development
|
(52
|
)
|
|
3
|
|
|
(9.2
|
%)
|
|
0.5
|
%
|
|
(9.7
|
%)
|
||
Current year catastrophe losses
|
14
|
|
|
4
|
|
|
2.5
|
%
|
|
0.8
|
%
|
|
1.7
|
%
|
||
Specialty casualty losses and LAE and ratio
|
$
|
338
|
|
|
$
|
348
|
|
|
59.1
|
%
|
|
68.2
|
%
|
|
(9.1
|
%)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
51
|
|
|
$
|
50
|
|
|
36.0
|
%
|
|
35.2
|
%
|
|
0.8
|
%
|
Prior accident years development
|
1
|
|
|
(6
|
)
|
|
0.8
|
%
|
|
(4.5
|
%)
|
|
5.3
|
%
|
||
Current year catastrophe losses
|
(5
|
)
|
|
2
|
|
|
(3.7
|
%)
|
|
1.7
|
%
|
|
(5.4
|
%)
|
||
Specialty financial losses and LAE and ratio
|
$
|
47
|
|
|
$
|
46
|
|
|
33.1
|
%
|
|
32.4
|
%
|
|
0.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
774
|
|
|
$
|
707
|
|
|
63.3
|
%
|
|
61.7
|
%
|
|
1.6
|
%
|
Prior accident years development
|
(49
|
)
|
|
10
|
|
|
(4.1
|
%)
|
|
0.9
|
%
|
|
(5.0
|
%)
|
||
Current year catastrophe losses
|
8
|
|
|
12
|
|
|
0.6
|
%
|
|
1.1
|
%
|
|
(0.5
|
%)
|
||
Total Specialty losses and LAE and ratio
|
$
|
733
|
|
|
$
|
729
|
|
|
59.8
|
%
|
|
63.7
|
%
|
|
(3.9
|
%)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Aggregate — including exited lines
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
774
|
|
|
$
|
707
|
|
|
63.3
|
%
|
|
61.7
|
%
|
|
1.6
|
%
|
Prior accident years development
|
(66
|
)
|
|
10
|
|
|
(5.4
|
%)
|
|
0.9
|
%
|
|
(6.3
|
%)
|
||
Current year catastrophe losses
|
8
|
|
|
12
|
|
|
0.6
|
%
|
|
1.1
|
%
|
|
(0.5
|
%)
|
||
Aggregate losses and LAE and ratio
|
$
|
716
|
|
|
$
|
729
|
|
|
58.5
|
%
|
|
63.7
|
%
|
|
(5.2
|
%)
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2017
|
|
2016
|
|
Change in
|
|||||||||||
|
U/W Exp
|
|
% of NEP
|
|
U/W Exp
|
|
% of NEP
|
|
% of NEP
|
|||||||
Property and transportation
|
$
|
76
|
|
|
15.5
|
%
|
|
$
|
71
|
|
|
15.3
|
%
|
|
0.2
|
%
|
Specialty casualty
|
177
|
|
|
30.9
|
%
|
|
149
|
|
|
29.2
|
%
|
|
1.7
|
%
|
||
Specialty financial
|
75
|
|
|
53.1
|
%
|
|
75
|
|
|
53.6
|
%
|
|
(0.5
|
%)
|
||
Other specialty
|
8
|
|
|
36.8
|
%
|
|
10
|
|
|
35.4
|
%
|
|
1.4
|
%
|
||
|
$
|
336
|
|
|
27.5
|
%
|
|
$
|
305
|
|
|
26.7
|
%
|
|
0.8
|
%
|
|
Three months ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|
% Change
|
|||||||
Net investment income
|
$
|
86
|
|
|
$
|
85
|
|
|
$
|
1
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|||||||
Average invested assets (at amortized cost)
|
$
|
10,062
|
|
|
$
|
9,779
|
|
|
$
|
283
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|||||||
Yield (net investment income as a % of average invested assets)
|
3.42
|
%
|
|
3.48
|
%
|
|
(0.06
|
%)
|
|
|
||||
|
|
|
|
|
|
|
|
|||||||
Tax equivalent yield (*)
|
3.85
|
%
|
|
3.92
|
%
|
|
(0.07
|
%)
|
|
|
(*)
|
Adjusts the yield on equity securities and tax-exempt bonds to the fully taxable equivalent yield.
|
|
Three months ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Other income
|
|
|
|
||||
Income from the sale of real estate
|
$
|
—
|
|
|
$
|
1
|
|
Other
|
7
|
|
|
4
|
|
||
Total other income
|
7
|
|
|
5
|
|
||
Other expenses
|
|
|
|
||||
Amortization of intangibles
|
2
|
|
|
2
|
|
||
NATL merger expenses
|
—
|
|
|
5
|
|
||
Other
|
13
|
|
|
11
|
|
||
Total other expenses
|
15
|
|
|
18
|
|
||
Other income and expenses, net
|
$
|
(8
|
)
|
|
$
|
(13
|
)
|
|
Three months ended December 31,
|
|
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Net investment income
|
$
|
376
|
|
|
$
|
346
|
|
|
9
|
%
|
Other income:
|
|
|
|
|
|
|||||
Guaranteed withdrawal benefit fees
|
17
|
|
|
14
|
|
|
21
|
%
|
||
Policy charges and other miscellaneous income
|
7
|
|
|
13
|
|
|
(46
|
%)
|
||
Total revenues
|
400
|
|
|
373
|
|
|
7
|
%
|
||
|
|
|
|
|
|
|||||
Costs and Expenses:
|
|
|
|
|
|
|||||
Annuity benefits (*)
|
257
|
|
|
160
|
|
|
61
|
%
|
||
Acquisition expenses
|
15
|
|
|
54
|
|
|
(72
|
%)
|
||
Other expenses
|
31
|
|
|
27
|
|
|
15
|
%
|
||
Total costs and expenses
|
303
|
|
|
241
|
|
|
26
|
%
|
||
Earnings before income taxes
|
$
|
97
|
|
|
$
|
132
|
|
|
(27
|
%)
|
|
Three months ended December 31,
|
|
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|||||
Earnings before income taxes — before the impact of derivatives related to FIAs
|
$
|
108
|
|
|
$
|
103
|
|
|
5
|
%
|
Impact of derivatives related to FIAs
|
(11
|
)
|
|
29
|
|
|
(138
|
%)
|
||
Earnings before income taxes
|
$
|
97
|
|
|
$
|
132
|
|
|
(27
|
%)
|
(*)
|
Annuity benefits consisted of the following (dollars in millions):
|
|
Three months ended December 31,
|
|
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|||||
Interest credited — fixed
|
$
|
164
|
|
|
$
|
148
|
|
|
11
|
%
|
Interest credited — fixed component of variable annuities
|
1
|
|
|
1
|
|
|
—
|
%
|
||
Other annuity benefits:
|
|
|
|
|
|
|||||
Change in expected death and annuitization reserve
|
5
|
|
|
4
|
|
|
25
|
%
|
||
Amortization of sales inducements
|
5
|
|
|
7
|
|
|
(29
|
%)
|
||
Change in guaranteed withdrawal benefit reserve
|
16
|
|
|
20
|
|
|
(20
|
%)
|
||
Change in other benefit reserves
|
9
|
|
|
11
|
|
|
(18
|
%)
|
||
Total other annuity benefits
|
35
|
|
|
42
|
|
|
(17
|
%)
|
||
Total before impact of derivatives related to FIAs and unlocking
|
200
|
|
|
191
|
|
|
5
|
%
|
||
Derivatives related to fixed-indexed annuities:
|
|
|
|
|
|
|||||
Embedded derivative mark-to-market
|
178
|
|
|
6
|
|
|
2,867
|
%
|
||
Equity option mark-to-market
|
(156
|
)
|
|
(60
|
)
|
|
160
|
%
|
||
Impact of derivatives related to FIAs
|
22
|
|
|
(54
|
)
|
|
(141
|
%)
|
||
Unlocking
|
35
|
|
|
23
|
|
|
52
|
%
|
||
Total annuity benefits
|
$
|
257
|
|
|
$
|
160
|
|
|
61
|
%
|
|
Three months ended December 31,
|
|
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|||||
Average fixed annuity investments (at amortized cost)
|
$
|
32,245
|
|
|
$
|
29,192
|
|
|
10
|
%
|
Average fixed annuity benefits accumulated
|
32,680
|
|
|
29,250
|
|
|
12
|
%
|
||
|
|
|
|
|
|
|||||
As % of fixed annuity benefits accumulated (except as noted):
|
|
|
|
|
|
|||||
Net investment income (as % of fixed annuity investments)
|
4.62
|
%
|
|
4.72
|
%
|
|
|
|||
Interest credited — fixed
|
(2.00
|
%)
|
|
(2.02
|
%)
|
|
|
|||
Net interest spread
|
2.62
|
%
|
|
2.70
|
%
|
|
|
|||
|
|
|
|
|
|
|||||
Policy charges and other miscellaneous income
|
0.10
|
%
|
|
0.15
|
%
|
|
|
|||
Other annuity benefit expenses, net of guaranteed withdrawal benefit fees
|
(0.21
|
%)
|
|
(0.38
|
%)
|
|
|
|||
Acquisition expenses
|
(0.60
|
%)
|
|
(1.06
|
%)
|
|
|
|||
Other expenses
|
(0.37
|
%)
|
|
(0.35
|
%)
|
|
|
|||
Change in fair value of derivatives related to fixed-indexed annuities
|
(0.27
|
%)
|
|
0.73
|
%
|
|
|
|||
Unlocking
|
(0.06
|
%)
|
|
0.03
|
%
|
|
|
|||
Net spread earned on fixed annuities
|
1.21
|
%
|
|
1.82
|
%
|
|
|
|
Three months ended December 31,
|
||||
|
2017
|
|
2016
|
||
Net spread earned on fixed annuities — before impact of derivatives related to FIAs
|
1.34
|
%
|
|
1.42
|
%
|
Impact of derivatives related to fixed-indexed annuities:
|
|
|
|
||
Change in fair value of derivatives
|
(0.27
|
%)
|
|
0.73
|
%
|
Related impact on amortization of DPAC (*)
|
0.14
|
%
|
|
(0.31
|
%)
|
Related impact on amortization of deferred sales inducements (*)
|
—
|
%
|
|
(0.02
|
%)
|
Net spread earned on fixed annuities
|
1.21
|
%
|
|
1.82
|
%
|
(*)
|
An estimate of the related acceleration/deceleration of the amortization of deferred policy acquisition costs and deferred sales inducements.
|
|
Three months ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Change in expected death and annuitization reserve
|
$
|
5
|
|
|
$
|
4
|
|
Amortization of sales inducements
|
5
|
|
|
7
|
|
||
Change in guaranteed withdrawal benefit reserve
|
16
|
|
|
20
|
|
||
Change in other benefit reserves
|
9
|
|
|
11
|
|
||
Other annuity benefits
|
35
|
|
|
42
|
|
||
Offset guaranteed withdrawal benefit fees
|
(17
|
)
|
|
(14
|
)
|
||
Other annuity benefits, net
|
$
|
18
|
|
|
$
|
28
|
|
|
Three months ended December 31,
|
||||
|
2017
|
|
2016
|
||
Before the impact of changes in the fair value of derivatives related to FIAs on the amortization of DPAC
|
0.74
|
%
|
|
0.75
|
%
|
Impact of changes in fair value of derivatives related to FIAs on the amortization of DPAC (*)
|
(0.14
|
%)
|
|
0.31
|
%
|
Annuity acquisition expenses as a % of fixed annuity benefits accumulated
|
0.60
|
%
|
|
1.06
|
%
|
(*)
|
An estimate of the acceleration/deceleration in the amortization of deferred policy acquisition costs resulting from fair value accounting for derivatives related to fixed-indexed annuities.
|
|
Three months ended December 31,
|
|
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|||||
Earnings before income taxes — before change in fair value of derivatives related to FIAs
|
$
|
108
|
|
|
$
|
103
|
|
|
5
|
%
|
Change in fair value of derivatives related to FIAs
|
(22
|
)
|
|
54
|
|
|
(141
|
%)
|
||
Related impact on amortization of DPAC (*)
|
11
|
|
|
(25
|
)
|
|
(144
|
%)
|
||
Earnings before income taxes
|
$
|
97
|
|
|
$
|
132
|
|
|
(27
|
%)
|
(*)
|
An estimate of the related acceleration/deceleration of amortization of deferred sales inducements and deferred policy acquisition costs.
|
|
Three months ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Beginning fixed annuity reserves
|
$
|
32,354
|
|
|
$
|
28,853
|
|
Fixed annuity premiums (receipts)
|
903
|
|
|
1,103
|
|
||
Federal Home Loan Bank paydowns
|
(64
|
)
|
|
—
|
|
||
Surrenders, benefits and other withdrawals
|
(596
|
)
|
|
(524
|
)
|
||
Interest and other annuity benefit expenses:
|
|
|
|
||||
Interest credited
|
164
|
|
|
148
|
|
||
Embedded derivative mark-to-market
|
178
|
|
|
6
|
|
||
Change in other benefit reserves
|
25
|
|
|
34
|
|
||
Unlocking
|
41
|
|
|
27
|
|
||
Ending fixed annuity reserves
|
$
|
33,005
|
|
|
$
|
29,647
|
|
|
|
|
|
||||
Reconciliation to annuity benefits accumulated per balance sheet:
|
|
|
|
||||
Ending fixed annuity reserves (from above)
|
$
|
33,005
|
|
|
$
|
29,647
|
|
Impact of unrealized investment gains
|
133
|
|
|
76
|
|
||
Fixed component of variable annuities
|
178
|
|
|
184
|
|
||
Annuity benefits accumulated per balance sheet
|
$
|
33,316
|
|
|
$
|
29,907
|
|
|
Three months ended December 31,
|
|
|
|||||||
2017
|
|
2016
|
|
% Change
|
||||||
Financial institutions single premium annuities — indexed
|
$
|
364
|
|
|
$
|
474
|
|
|
(23
|
%)
|
Financial institutions single premium annuities — fixed
|
63
|
|
|
152
|
|
|
(59
|
%)
|
||
Retail single premium annuities — indexed
|
413
|
|
|
415
|
|
|
—
|
%
|
||
Retail single premium annuities — fixed
|
22
|
|
|
22
|
|
|
—
|
%
|
||
Education market — fixed and indexed annuities
|
41
|
|
|
40
|
|
|
3
|
%
|
||
Total fixed annuity premiums
|
903
|
|
|
1,103
|
|
|
(18
|
%)
|
||
Variable annuities
|
6
|
|
|
8
|
|
|
(25
|
%)
|
||
Total annuity premiums
|
$
|
909
|
|
|
$
|
1,111
|
|
|
(18
|
%)
|
|
|
Three months ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Policy charges and other miscellaneous income:
|
|
|
|
|
||||
Unearned revenue
|
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
Total revenues
|
|
(3
|
)
|
|
(1
|
)
|
||
Annuity benefits:
|
|
|
|
|
||||
Fixed-indexed annuity embedded derivative
|
|
25
|
|
|
17
|
|
||
Sales inducements
|
|
(6
|
)
|
|
(4
|
)
|
||
Other reserves
|
|
16
|
|
|
10
|
|
||
Total annuity benefits
|
|
35
|
|
|
23
|
|
||
Annuity and supplemental insurance acquisition expenses:
|
|
|
|
|
||||
Deferred policy acquisition costs
|
|
(35
|
)
|
|
(25
|
)
|
||
Total costs and expenses
|
|
—
|
|
|
(2
|
)
|
||
Net expense reduction (charge)
|
|
$
|
(3
|
)
|
|
$
|
1
|
|
|
|
First
|
|
|
|
|
||
Unlocking
|
|
Investment
|
|
Reinvestment Rate
|
||||
Year
|
|
Period
|
|
Assumed (*)
|
|
Achieved
|
||
2014
|
|
2015
|
|
3.75
|
%
|
|
4.27
|
%
|
2015
|
|
2016
|
|
4.05
|
%
|
|
4.27
|
%
|
2016
|
|
2017
|
|
4.42
|
%
|
|
3.95
|
%
|
2017
|
|
2018
|
|
4.17
|
%
|
|
n/a
|
|
(*)
|
Assumed reinvestment rates exclude default rates of 0.18% in each period.
|
|
Three months ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Earnings on fixed annuity benefits accumulated
|
$
|
99
|
|
|
$
|
133
|
|
Earnings impact of investments in excess of fixed annuity benefits accumulated (*)
|
(5
|
)
|
|
—
|
|
||
Variable annuity earnings (loss)
|
3
|
|
|
(1
|
)
|
||
Earnings before income taxes
|
$
|
97
|
|
|
$
|
132
|
|
(*)
|
Net investment income (as a % of investments) of
4.62%
and
4.72%
for the three months ended
December 31, 2017
and
2016
, 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,
|
|
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Net earned premiums:
|
|
|
|
|
|
|||||
Long-term care
|
$
|
1
|
|
|
$
|
1
|
|
|
—
|
%
|
Life operations
|
4
|
|
|
5
|
|
|
(20
|
%)
|
||
Net investment income
|
4
|
|
|
6
|
|
|
(33
|
%)
|
||
Other income
|
3
|
|
|
—
|
|
|
—
|
%
|
||
Total revenues
|
12
|
|
|
12
|
|
|
—
|
%
|
||
|
|
|
|
|
|
|||||
Costs and Expenses:
|
|
|
|
|
|
|||||
Life, accident and health benefits:
|
|
|
|
|
|
|||||
Long-term care
|
1
|
|
|
—
|
|
|
—
|
%
|
||
Life operations
|
4
|
|
|
7
|
|
|
(43
|
%)
|
||
Acquisition expenses
|
2
|
|
|
1
|
|
|
100
|
%
|
||
Other expenses
|
3
|
|
|
2
|
|
|
50
|
%
|
||
Total costs and expenses
|
10
|
|
|
10
|
|
|
—
|
%
|
||
Earnings before income taxes
|
$
|
2
|
|
|
$
|
2
|
|
|
—
|
%
|
|
Three months ended December 31,
|
|
|
|||||||
|
2017
|
|
2016
|
|
% Change
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Net investment income
|
$
|
6
|
|
|
$
|
—
|
|
|
—
|
%
|
Other income — P&C fees
|
20
|
|
|
17
|
|
|
18
|
%
|
||
Other income
|
2
|
|
|
8
|
|
|
(75
|
%)
|
||
Total revenues
|
28
|
|
|
25
|
|
|
12
|
%
|
||
|
|
|
|
|
|
|||||
Costs and Expenses:
|
|
|
|
|
|
|||||
Property and casualty insurance — commissions and other underwriting expenses
|
9
|
|
|
6
|
|
|
50
|
%
|
||
Interest charges on borrowed money
|
20
|
|
|
21
|
|
|
(5
|
%)
|
||
Other expense — expenses associated with P&C fees
|
11
|
|
|
11
|
|
|
—
|
%
|
||
Other expenses (*)
|
37
|
|
|
37
|
|
|
—
|
%
|
||
Total costs and expenses
|
77
|
|
|
75
|
|
|
3
|
%
|
||
Core loss before income taxes, excluding realized gains and losses
|
(49
|
)
|
|
(50
|
)
|
|
(2
|
%)
|
||
Pretax non-core loss on retirement of debt
|
(40
|
)
|
|
—
|
|
|
—
|
%
|
||
GAAP loss before income taxes, excluding realized gains and losses
|
$
|
(89
|
)
|
|
$
|
(50
|
)
|
|
78
|
%
|
(*)
|
Excludes a pretax non-core loss on retirement of debt of $40 million in the fourth quarter of 2017.
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Direct obligations of AFG:
|
|
|
|
||||
4.50% Senior Notes due June 2047
|
$
|
590
|
|
|
$
|
—
|
|
3.50% Senior Notes due August 2026
|
425
|
|
|
300
|
|
||
9-7/8% Senior Notes due June 2019
|
—
|
|
|
350
|
|
||
6-3/8% Senior Notes due June 2042
|
—
|
|
|
230
|
|
||
5-3/4% Senior Notes due August 2042
|
—
|
|
|
125
|
|
||
6-1/4% Subordinated Debentures due September 2054
|
150
|
|
|
150
|
|
||
6% Subordinated Debentures due November 2055
|
150
|
|
|
150
|
|
||
Other
|
3
|
|
|
3
|
|
||
Total principal amount of Holding Company Debt
|
$
|
1,318
|
|
|
$
|
1,308
|
|
|
|
|
|
||||
Weighted Average Interest Rate
|
4.6
|
%
|
|
6.5
|
%
|
•
|
Issued $350 million of 4.50% Senior Notes on June 2, 2017
|
•
|
Redeemed $230 million of 6-3/8% Senior Notes on June 26, 2017
|
•
|
Redeemed $125 million of 5-3/4% Senior Notes on August 25, 2017
|
•
|
Issued an additional $125 million of 3.50% Senior Notes on November 9, 2017
|
•
|
Issued an additional $240 million of 4.50% Senior Notes on November 9, 2017
|
•
|
Redeemed $350 million of 9-7/8% Senior Notes on December 11, 2017
|
|
Three months ended December 31,
|
||||||
2017
|
|
2016
|
|||||
Realized gains (losses) before impairments:
|
|
|
|
||||
Disposals
|
$
|
26
|
|
|
$
|
69
|
|
Change in the fair value of derivatives
|
(2
|
)
|
|
(9
|
)
|
||
Adjustments to annuity deferred policy acquisition costs and related items
|
2
|
|
|
—
|
|
||
|
26
|
|
|
60
|
|
||
Impairment charges:
|
|
|
|
||||
Securities
|
(23
|
)
|
|
(11
|
)
|
||
Adjustments to annuity deferred policy acquisition costs and related items
|
3
|
|
|
2
|
|
||
|
(20
|
)
|
|
(9
|
)
|
||
Realized gains (losses) on securities
|
$
|
6
|
|
|
$
|
51
|
|
|
Three months ended December 31,
|
||||||||||||
|
2017
|
|
2016
|
||||||||||
|
Amount
|
|
% of EBT
|
|
Amount
|
|
% of EBT
|
||||||
Earnings before income taxes (“EBT”)
|
$
|
267
|
|
|
|
|
$
|
317
|
|
|
|
||
|
|
|
|
|
|
|
|
||||||
Income taxes at statutory rate
|
$
|
93
|
|
|
35
|
%
|
|
$
|
110
|
|
|
35
|
%
|
Effect of:
|
|
|
|
|
|
|
|
||||||
Tax exempt interest
|
(6
|
)
|
|
(2
|
%)
|
|
(6
|
)
|
|
(2
|
%)
|
||
Dividend received deduction
|
(2
|
)
|
|
(1
|
%)
|
|
(2
|
)
|
|
(1
|
%)
|
||
Stock-based compensation
|
(2
|
)
|
|
(1
|
%)
|
|
(9
|
)
|
|
(3
|
%)
|
||
Employee stock ownership plan dividend paid deduction
|
(3
|
)
|
|
(1
|
%)
|
|
(1
|
)
|
|
—
|
%
|
||
Foreign operations
|
14
|
|
|
5
|
%
|
|
1
|
|
|
—
|
%
|
||
Change in valuation allowance (excluding change in tax rate)
|
(23
|
)
|
|
(9
|
%)
|
|
12
|
|
|
4
|
%
|
||
Neon restructuring
|
(56
|
)
|
|
(21
|
%)
|
|
(111
|
)
|
|
(35
|
%)
|
||
Change in U.S. corporate tax rate
|
83
|
|
|
31
|
%
|
|
—
|
|
|
—
|
%
|
||
Acquisition of noncontrolling interest in NATL
|
—
|
|
|
—
|
%
|
|
(66
|
)
|
|
(21
|
%)
|
||
Other
|
3
|
|
|
2
|
%
|
|
1
|
|
|
1
|
%
|
||
Provision (credit) for income taxes
|
$
|
101
|
|
|
38
|
%
|
|
$
|
(71
|
)
|
|
(22
|
%)
|
|
|
|
|
|
|
|
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, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance net earned premiums
|
$
|
4,579
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,579
|
|
|
$
|
—
|
|
|
$
|
4,579
|
|
Life, accident and health net earned premiums
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
||||||||
Net investment income
|
362
|
|
|
1,458
|
|
|
20
|
|
|
(23
|
)
|
|
14
|
|
|
1,831
|
|
|
—
|
|
|
1,831
|
|
||||||||
Realized gains on securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
||||||||
Income of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
210
|
|
|
—
|
|
|
210
|
|
|
—
|
|
|
210
|
|
||||||||
Gain on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||||||
Other income
|
28
|
|
|
103
|
|
|
5
|
|
|
(18
|
)
|
|
88
|
|
|
206
|
|
|
—
|
|
|
206
|
|
||||||||
Total revenues
|
4,969
|
|
|
1,561
|
|
|
47
|
|
|
181
|
|
|
102
|
|
|
6,860
|
|
|
5
|
|
|
6,865
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss adjustment expenses
|
2,884
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,884
|
|
|
71
|
|
|
2,955
|
|
||||||||
Commissions and other underwriting expenses
|
1,382
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
1,407
|
|
|
—
|
|
|
1,407
|
|
||||||||
Annuity benefits
|
—
|
|
|
892
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
892
|
|
|
—
|
|
|
892
|
|
||||||||
Life, accident and health benefits
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
26
|
|
||||||||
Annuity and supplemental insurance acquisition expenses
|
—
|
|
|
168
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
173
|
|
|
—
|
|
|
173
|
|
||||||||
Interest charges on borrowed money
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
85
|
|
|
85
|
|
|
—
|
|
|
85
|
|
||||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
—
|
|
|
181
|
|
|
—
|
|
|
181
|
|
|
—
|
|
|
181
|
|
||||||||
Other expenses
|
41
|
|
|
121
|
|
|
10
|
|
|
—
|
|
|
175
|
|
|
347
|
|
|
75
|
|
|
422
|
|
||||||||
Total costs and expenses
|
4,307
|
|
|
1,181
|
|
|
41
|
|
|
181
|
|
|
285
|
|
|
5,995
|
|
|
146
|
|
|
6,141
|
|
||||||||
Earnings before income taxes
|
662
|
|
|
380
|
|
|
6
|
|
|
—
|
|
|
(183
|
)
|
|
865
|
|
|
(141
|
)
|
|
724
|
|
||||||||
Provision for income taxes
|
219
|
|
|
128
|
|
|
2
|
|
|
—
|
|
|
(74
|
)
|
|
275
|
|
|
(28
|
)
|
|
247
|
|
||||||||
Net earnings, including noncontrolling interests
|
443
|
|
|
252
|
|
|
4
|
|
|
—
|
|
|
(109
|
)
|
|
590
|
|
|
(113
|
)
|
|
477
|
|
||||||||
Less: Net earnings attributable to noncontrolling interests
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||||
Core Net Operating Earnings
|
441
|
|
|
252
|
|
|
4
|
|
|
—
|
|
|
(109
|
)
|
|
588
|
|
|
|
|
|
||||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Realized gains on securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
||||||||
Special A&E charges, net of tax
|
(58
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
(74
|
)
|
|
74
|
|
|
—
|
|
||||||||
Neon exited lines charge
|
18
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
(18
|
)
|
|
—
|
|
||||||||
Loss on retirement of debt, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33
|
)
|
|
(33
|
)
|
|
33
|
|
|
—
|
|
||||||||
Tax benefit related to Neon restructuring
|
56
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|
(56
|
)
|
|
—
|
|
||||||||
Tax expense related to change in U.S. corporate tax rate
|
(88
|
)
|
|
25
|
|
|
(1
|
)
|
|
—
|
|
|
(19
|
)
|
|
(83
|
)
|
|
83
|
|
|
—
|
|
||||||||
Net Earnings Attributable to Shareholders
|
$
|
369
|
|
|
$
|
277
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
(174
|
)
|
|
$
|
475
|
|
|
$
|
—
|
|
|
$
|
475
|
|
|
|
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, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance net earned premiums
|
$
|
4,328
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,328
|
|
|
$
|
—
|
|
|
$
|
4,328
|
|
Life, accident and health net earned premiums
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
||||||||
Net investment income
|
350
|
|
|
1,356
|
|
|
21
|
|
|
(37
|
)
|
|
6
|
|
|
1,696
|
|
|
—
|
|
|
1,696
|
|
||||||||
Realized gains on:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
19
|
|
||||||||
Subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||||
Income of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
190
|
|
|
—
|
|
|
190
|
|
|
—
|
|
|
190
|
|
||||||||
Gain on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
||||||||
Other income
|
19
|
|
|
103
|
|
|
4
|
|
|
(17
|
)
|
|
83
|
|
|
192
|
|
|
32
|
|
|
224
|
|
||||||||
Total revenues
|
4,697
|
|
|
1,459
|
|
|
49
|
|
|
151
|
|
|
89
|
|
|
6,445
|
|
|
53
|
|
|
6,498
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property and casualty insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Losses and loss adjustment expenses
|
2,669
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,669
|
|
|
93
|
|
|
2,762
|
|
||||||||
Commissions and other underwriting expenses
|
1,322
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
1,341
|
|
|
8
|
|
|
1,349
|
|
||||||||
Annuity benefits
|
—
|
|
|
800
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
800
|
|
|
—
|
|
|
800
|
|
||||||||
Life, accident and health benefits
|
—
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
33
|
|
||||||||
Annuity and supplemental insurance acquisition expenses
|
—
|
|
|
181
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
186
|
|
|
—
|
|
|
186
|
|
||||||||
Interest charges on borrowed money
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|
77
|
|
|
—
|
|
|
77
|
|
||||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
—
|
|
|
151
|
|
|
—
|
|
|
151
|
|
|
—
|
|
|
151
|
|
||||||||
Other expenses
|
60
|
|
|
110
|
|
|
9
|
|
|
—
|
|
|
169
|
|
|
348
|
|
|
5
|
|
|
353
|
|
||||||||
Total costs and expenses
|
4,051
|
|
|
1,091
|
|
|
47
|
|
|
151
|
|
|
265
|
|
|
5,605
|
|
|
106
|
|
|
5,711
|
|
||||||||
Earnings before income taxes
|
646
|
|
|
368
|
|
|
2
|
|
|
—
|
|
|
(176
|
)
|
|
840
|
|
|
(53
|
)
|
|
787
|
|
||||||||
Provision for income taxes
|
229
|
|
|
127
|
|
|
1
|
|
|
—
|
|
|
(67
|
)
|
|
290
|
|
|
(171
|
)
|
|
119
|
|
||||||||
Net earnings, including noncontrolling interests
|
417
|
|
|
241
|
|
|
1
|
|
|
—
|
|
|
(109
|
)
|
|
550
|
|
|
118
|
|
|
668
|
|
||||||||
Less: Net earnings attributable to noncontrolling interests
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
3
|
|
|
19
|
|
||||||||
Core Net Operating Earnings
|
401
|
|
|
241
|
|
|
1
|
|
|
—
|
|
|
(109
|
)
|
|
534
|
|
|
|
|
|
||||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Realized gains on securities, net of tax and noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
|
(13
|
)
|
|
—
|
|
||||||||
Realized gain on subsidiaries, net of tax
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
||||||||
Gain on sale of apartment property, net of tax and noncontrolling interests
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
(15
|
)
|
|
—
|
|
||||||||
Special A&E charges, net of tax
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(26
|
)
|
|
26
|
|
|
—
|
|
||||||||
Neon exited lines charge
|
(65
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(65
|
)
|
|
65
|
|
|
—
|
|
||||||||
Tax benefit related to Neon restructuring
|
111
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
111
|
|
|
(111
|
)
|
|
—
|
|
||||||||
Tax benefit related to National Interstate merger
|
66
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
66
|
|
|
(66
|
)
|
|
—
|
|
||||||||
Net Earnings Attributable to Shareholders
|
$
|
505
|
|
|
$
|
241
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(99
|
)
|
|
$
|
649
|
|
|
$
|
—
|
|
|
$
|
649
|
|
|
|
|
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
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
73
|
|
|
75
|
|
|
—
|
|
|
75
|
|
||||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
—
|
|
|
112
|
|
|
—
|
|
|
112
|
|
|
—
|
|
|
112
|
|
||||||||
Other expenses
|
44
|
|
|
96
|
|
|
27
|
|
|
—
|
|
|
153
|
|
|
320
|
|
|
16
|
|
|
336
|
|
||||||||
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):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Realized losses on securities, net of tax and noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
(12
|
)
|
|
12
|
|
|
—
|
|
||||||||
Realized gain (loss) on subsidiaries, net of tax
|
—
|
|
|
—
|
|
|
(108
|
)
|
|
—
|
|
|
4
|
|
|
(104
|
)
|
|
104
|
|
|
—
|
|
||||||||
Gain on sale of hotel and apartment property, net of tax and noncontrolling interests
|
36
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|
(36
|
)
|
|
—
|
|
||||||||
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
|
|
(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
|
|||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
|||||||||||||||||
|
GWP
|
|
%
|
|
GWP
|
|
%
|
|
GWP
|
|
%
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
2,688
|
|
|
41
|
%
|
|
$
|
2,504
|
|
|
42
|
%
|
|
$
|
2,455
|
|
|
42
|
%
|
|
7
|
%
|
|
2
|
%
|
Specialty casualty
|
3,087
|
|
|
48
|
%
|
|
2,792
|
|
|
47
|
%
|
|
2,739
|
|
|
47
|
%
|
|
11
|
%
|
|
2
|
%
|
|||
Specialty financial
|
727
|
|
|
11
|
%
|
|
685
|
|
|
11
|
%
|
|
637
|
|
|
11
|
%
|
|
6
|
%
|
|
8
|
%
|
|||
Other specialty
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
1
|
|
|
—
|
%
|
|
—
|
%
|
|
(100
|
%)
|
|||
|
$
|
6,502
|
|
|
100
|
%
|
|
$
|
5,981
|
|
|
100
|
%
|
|
$
|
5,832
|
|
|
100
|
%
|
|
9
|
%
|
|
3
|
%
|
|
Year ended December 31,
|
|
Change in % of GWP
|
|||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
|||||||||||||||||
|
Ceded
|
|
% of GWP
|
|
Ceded
|
|
% of GWP
|
|
Ceded
|
|
% of GWP
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
(923
|
)
|
|
34
|
%
|
|
$
|
(832
|
)
|
|
33
|
%
|
|
$
|
(819
|
)
|
|
33
|
%
|
|
1
|
%
|
|
—
|
%
|
Specialty casualty
|
(807
|
)
|
|
26
|
%
|
|
(756
|
)
|
|
27
|
%
|
|
(687
|
)
|
|
25
|
%
|
|
(1
|
%)
|
|
2
|
%
|
|||
Specialty financial
|
(131
|
)
|
|
18
|
%
|
|
(113
|
)
|
|
16
|
%
|
|
(97
|
)
|
|
15
|
%
|
|
2
|
%
|
|
1
|
%
|
|||
Other specialty
|
110
|
|
|
|
|
106
|
|
|
|
|
98
|
|
|
|
|
|
|
|
||||||||
|
$
|
(1,751
|
)
|
|
27
|
%
|
|
$
|
(1,595
|
)
|
|
27
|
%
|
|
$
|
(1,505
|
)
|
|
26
|
%
|
|
—
|
%
|
|
1
|
%
|
|
Year ended December 31,
|
|
% Change
|
|||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
|||||||||||||||||
|
NWP
|
|
%
|
|
NWP
|
|
%
|
|
NWP
|
|
%
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
1,765
|
|
|
37
|
%
|
|
$
|
1,672
|
|
|
38
|
%
|
|
$
|
1,636
|
|
|
38
|
%
|
|
6
|
%
|
|
2
|
%
|
Specialty casualty
|
2,280
|
|
|
48
|
%
|
|
2,036
|
|
|
46
|
%
|
|
2,052
|
|
|
47
|
%
|
|
12
|
%
|
|
(1
|
%)
|
|||
Specialty financial
|
596
|
|
|
13
|
%
|
|
572
|
|
|
13
|
%
|
|
540
|
|
|
12
|
%
|
|
4
|
%
|
|
6
|
%
|
|||
Other specialty
|
110
|
|
|
2
|
%
|
|
106
|
|
|
3
|
%
|
|
99
|
|
|
3
|
%
|
|
4
|
%
|
|
7
|
%
|
|||
|
$
|
4,751
|
|
|
100
|
%
|
|
$
|
4,386
|
|
|
100
|
%
|
|
$
|
4,327
|
|
|
100
|
%
|
|
8
|
%
|
|
1
|
%
|
|
Year ended December 31,
|
|
% Change
|
|||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
|||||||||||||||||
|
NEP
|
|
%
|
|
NEP
|
|
%
|
|
NEP
|
|
%
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
1,711
|
|
|
37
|
%
|
|
$
|
1,662
|
|
|
38
|
%
|
|
$
|
1,599
|
|
|
38
|
%
|
|
3
|
%
|
|
4
|
%
|
Specialty casualty
|
2,186
|
|
|
48
|
%
|
|
2,006
|
|
|
46
|
%
|
|
2,011
|
|
|
48
|
%
|
|
9
|
%
|
|
—
|
%
|
|||
Specialty financial
|
576
|
|
|
13
|
%
|
|
557
|
|
|
13
|
%
|
|
517
|
|
|
12
|
%
|
|
3
|
%
|
|
8
|
%
|
|||
Other specialty
|
106
|
|
|
2
|
%
|
|
103
|
|
|
3
|
%
|
|
97
|
|
|
2
|
%
|
|
3
|
%
|
|
6
|
%
|
|||
|
$
|
4,579
|
|
|
100
|
%
|
|
$
|
4,328
|
|
|
100
|
%
|
|
$
|
4,224
|
|
|
100
|
%
|
|
6
|
%
|
|
2
|
%
|
|
Year ended December 31,
|
|
Change
|
|
Year ended December 31,
|
|||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
68.5
|
%
|
|
67.0
|
%
|
|
72.4
|
%
|
|
1.5
|
%
|
|
(5.4
|
%)
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
22.5
|
%
|
|
23.0
|
%
|
|
24.5
|
%
|
|
(0.5
|
%)
|
|
(1.5
|
%)
|
|
|
|
|
|
|
||||||
Combined ratio
|
91.0
|
%
|
|
90.0
|
%
|
|
96.9
|
%
|
|
1.0
|
%
|
|
(6.9
|
%)
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
154
|
|
|
$
|
166
|
|
|
$
|
48
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
64.5
|
%
|
|
65.8
|
%
|
|
62.9
|
%
|
|
(1.3
|
%)
|
|
2.9
|
%
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
30.7
|
%
|
|
30.3
|
%
|
|
29.8
|
%
|
|
0.4
|
%
|
|
0.5
|
%
|
|
|
|
|
|
|
||||||
Combined ratio
|
95.2
|
%
|
|
96.1
|
%
|
|
92.7
|
%
|
|
(0.9
|
%)
|
|
3.4
|
%
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
104
|
|
|
$
|
78
|
|
|
$
|
146
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
39.4
|
%
|
|
32.0
|
%
|
|
29.7
|
%
|
|
7.4
|
%
|
|
2.3
|
%
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
50.0
|
%
|
|
52.9
|
%
|
|
53.4
|
%
|
|
(2.9
|
%)
|
|
(0.5
|
%)
|
|
|
|
|
|
|
||||||
Combined ratio
|
89.4
|
%
|
|
84.9
|
%
|
|
83.1
|
%
|
|
4.5
|
%
|
|
1.8
|
%
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
61
|
|
|
$
|
84
|
|
|
$
|
87
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
62.9
|
%
|
|
61.7
|
%
|
|
62.2
|
%
|
|
1.2
|
%
|
|
(0.5
|
%)
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
30.2
|
%
|
|
30.6
|
%
|
|
30.9
|
%
|
|
(0.4
|
%)
|
|
(0.3
|
%)
|
|
|
|
|
|
|
||||||
Combined ratio
|
93.1
|
%
|
|
92.3
|
%
|
|
93.1
|
%
|
|
0.8
|
%
|
|
(0.8
|
%)
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
317
|
|
|
$
|
337
|
|
|
$
|
295
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Aggregate — including exited lines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loss and LAE ratio
|
64.5
|
%
|
|
63.8
|
%
|
|
63.8
|
%
|
|
0.7
|
%
|
|
—
|
%
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
30.2
|
%
|
|
30.7
|
%
|
|
30.9
|
%
|
|
(0.5
|
%)
|
|
(0.2
|
%)
|
|
|
|
|
|
|
||||||
Combined ratio
|
94.7
|
%
|
|
94.5
|
%
|
|
94.7
|
%
|
|
0.2
|
%
|
|
(0.2
|
%)
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
242
|
|
|
$
|
236
|
|
|
$
|
225
|
|
|
Year ended December 31,
|
|
|
|
|
|||||||||||||||||||||
|
Amount
|
|
Ratio
|
|
Change in Ratio
|
|||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
|||||||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
1,176
|
|
|
$
|
1,104
|
|
|
$
|
1,123
|
|
|
68.7
|
%
|
|
66.3
|
%
|
|
70.2
|
%
|
|
2.4
|
%
|
|
(3.9
|
%)
|
Prior accident years development
|
(40
|
)
|
|
(21
|
)
|
|
15
|
|
|
(2.3
|
%)
|
|
(1.2
|
%)
|
|
0.9
|
%
|
|
(1.1
|
%)
|
|
(2.1
|
%)
|
|||
Current year catastrophe losses
|
36
|
|
|
31
|
|
|
21
|
|
|
2.1
|
%
|
|
1.9
|
%
|
|
1.3
|
%
|
|
0.2
|
%
|
|
0.6
|
%
|
|||
Property and transportation losses and LAE and ratio
|
$
|
1,172
|
|
|
$
|
1,114
|
|
|
$
|
1,159
|
|
|
68.5
|
%
|
|
67.0
|
%
|
|
72.4
|
%
|
|
1.5
|
%
|
|
(5.4
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
1,425
|
|
|
$
|
1,323
|
|
|
$
|
1,272
|
|
|
65.2
|
%
|
|
66.0
|
%
|
|
63.2
|
%
|
|
(0.8
|
%)
|
|
2.8
|
%
|
Prior accident years development
|
(86
|
)
|
|
(13
|
)
|
|
(11
|
)
|
|
(4.0
|
%)
|
|
(0.7
|
%)
|
|
(0.5
|
%)
|
|
(3.3
|
%)
|
|
(0.2
|
%)
|
|||
Current year catastrophe losses
|
71
|
|
|
10
|
|
|
4
|
|
|
3.3
|
%
|
|
0.5
|
%
|
|
0.2
|
%
|
|
2.8
|
%
|
|
0.3
|
%
|
|||
Specialty casualty losses and LAE and ratio
|
$
|
1,410
|
|
|
$
|
1,320
|
|
|
$
|
1,265
|
|
|
64.5
|
%
|
|
65.8
|
%
|
|
62.9
|
%
|
|
(1.3
|
%)
|
|
2.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
218
|
|
|
$
|
190
|
|
|
$
|
175
|
|
|
37.8
|
%
|
|
34.0
|
%
|
|
33.7
|
%
|
|
3.8
|
%
|
|
0.3
|
%
|
Prior accident years development
|
(21
|
)
|
|
(23
|
)
|
|
(30
|
)
|
|
(3.6
|
%)
|
|
(4.0
|
%)
|
|
(5.7
|
%)
|
|
0.4
|
%
|
|
1.7
|
%
|
|||
Current year catastrophe losses
|
30
|
|
|
11
|
|
|
9
|
|
|
5.2
|
%
|
|
2.0
|
%
|
|
1.7
|
%
|
|
3.2
|
%
|
|
0.3
|
%
|
|||
Specialty financial losses and LAE and ratio
|
$
|
227
|
|
|
$
|
178
|
|
|
$
|
154
|
|
|
39.4
|
%
|
|
32.0
|
%
|
|
29.7
|
%
|
|
7.4
|
%
|
|
2.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
2,879
|
|
|
$
|
2,675
|
|
|
$
|
2,627
|
|
|
62.9
|
%
|
|
61.8
|
%
|
|
62.2
|
%
|
|
1.1
|
%
|
|
(0.4
|
%)
|
Prior accident years development
|
(139
|
)
|
|
(61
|
)
|
|
(37
|
)
|
|
(3.0
|
%)
|
|
(1.4
|
%)
|
|
(0.8
|
%)
|
|
(1.6
|
%)
|
|
(0.6
|
%)
|
|||
Current year catastrophe losses
|
140
|
|
|
55
|
|
|
35
|
|
|
3.0
|
%
|
|
1.3
|
%
|
|
0.8
|
%
|
|
1.7
|
%
|
|
0.5
|
%
|
|||
Total Specialty losses and LAE and ratio
|
$
|
2,880
|
|
|
$
|
2,669
|
|
|
$
|
2,625
|
|
|
62.9
|
%
|
|
61.7
|
%
|
|
62.2
|
%
|
|
1.2
|
%
|
|
(0.5
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Aggregate — including exited lines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
2,879
|
|
|
$
|
2,675
|
|
|
$
|
2,627
|
|
|
62.9
|
%
|
|
61.8
|
%
|
|
62.2
|
%
|
|
1.1
|
%
|
|
(0.4
|
%)
|
Prior accident years development
|
(64
|
)
|
|
32
|
|
|
33
|
|
|
(1.4
|
%)
|
|
0.7
|
%
|
|
0.8
|
%
|
|
(2.1
|
%)
|
|
(0.1
|
%)
|
|||
Current year catastrophe losses
|
140
|
|
|
55
|
|
|
35
|
|
|
3.0
|
%
|
|
1.3
|
%
|
|
0.8
|
%
|
|
1.7
|
%
|
|
0.5
|
%
|
|||
Aggregate losses and LAE and ratio
|
$
|
2,955
|
|
|
$
|
2,762
|
|
|
$
|
2,695
|
|
|
64.5
|
%
|
|
63.8
|
%
|
|
63.8
|
%
|
|
0.7
|
%
|
|
—
|
%
|
|
Year ended December 31,
|
|
Change in % of NEP
|
|||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
|||||||||||||||||
|
U/W Exp
|
|
% of NEP
|
|
U/W Exp
|
|
% of NEP
|
|
U/W Exp
|
|
% of NEP
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
385
|
|
|
22.5
|
%
|
|
$
|
382
|
|
|
23.0
|
%
|
|
$
|
392
|
|
|
24.5
|
%
|
|
(0.5
|
%)
|
|
(1.5
|
%)
|
Specialty casualty
|
672
|
|
|
30.7
|
%
|
|
608
|
|
|
30.3
|
%
|
|
600
|
|
|
29.8
|
%
|
|
0.4
|
%
|
|
0.5
|
%
|
|||
Specialty financial
|
288
|
|
|
50.0
|
%
|
|
295
|
|
|
52.9
|
%
|
|
276
|
|
|
53.4
|
%
|
|
(2.9
|
%)
|
|
(0.5
|
%)
|
|||
Other specialty
|
37
|
|
|
35.8
|
%
|
|
37
|
|
|
36.5
|
%
|
|
36
|
|
|
36.1
|
%
|
|
(0.7
|
%)
|
|
0.4
|
%
|
|||
Total Specialty
|
1,382
|
|
|
30.2
|
%
|
|
1,322
|
|
|
30.6
|
%
|
|
1,304
|
|
|
30.9
|
%
|
|
(0.4
|
%)
|
|
(0.3
|
%)
|
|||
Neon exited lines charge
|
—
|
|
|
|
|
8
|
|
|
|
|
—
|
|
|
|
|
|
|
|
||||||||
Total Aggregate
|
$
|
1,382
|
|
|
30.2
|
%
|
|
$
|
1,330
|
|
|
30.7
|
%
|
|
$
|
1,304
|
|
|
30.9
|
%
|
|
(0.5
|
%)
|
|
(0.2
|
%)
|
|
Year ended December 31,
|
|
2017 - 2016
|
|
2016 - 2015
|
||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
Change
|
|
% Change
|
|
Change
|
|
% Change
|
||||||||||||
Net investment income
|
$
|
362
|
|
|
$
|
350
|
|
|
$
|
319
|
|
|
$
|
12
|
|
|
3
|
%
|
|
$
|
31
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Average invested assets (at amortized cost)
|
$
|
9,948
|
|
|
$
|
9,550
|
|
|
$
|
8,956
|
|
|
$
|
398
|
|
|
4
|
%
|
|
$
|
594
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Yield (net investment income as a % of average invested assets)
|
3.64
|
%
|
|
3.66
|
%
|
|
3.56
|
%
|
|
(0.02
|
%)
|
|
|
|
0.10
|
%
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Tax equivalent yield (*)
|
4.10
|
%
|
|
4.16
|
%
|
|
4.13
|
%
|
|
(0.06
|
%)
|
|
|
|
0.03
|
%
|
|
|
(*)
|
Adjusts the yield on equity securities and tax-exempt bonds to the fully taxable equivalent yield.
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Other income
|
|
|
|
|
|
||||||
Income from the sale of real estate (*)
|
$
|
16
|
|
|
$
|
1
|
|
|
$
|
3
|
|
Other
|
12
|
|
|
18
|
|
|
9
|
|
|||
Total other income
|
28
|
|
|
19
|
|
|
12
|
|
|||
Other expenses
|
|
|
|
|
|
||||||
Amortization of intangibles
|
8
|
|
|
8
|
|
|
8
|
|
|||
NATL merger/tender offer expenses
|
—
|
|
|
10
|
|
|
—
|
|
|||
Other
|
33
|
|
|
42
|
|
|
36
|
|
|||
Total other expense
|
41
|
|
|
60
|
|
|
44
|
|
|||
Interest expense
|
—
|
|
|
—
|
|
|
2
|
|
|||
Core other income and expenses, net
|
(13
|
)
|
|
(41
|
)
|
|
(34
|
)
|
|||
Pretax non-core gain on sale of hotel and apartment properties
|
—
|
|
|
32
|
|
|
66
|
|
|||
GAAP other income and expenses, net
|
$
|
(13
|
)
|
|
$
|
(9
|
)
|
|
$
|
32
|
|
(*)
|
Excludes pretax non-core gains of $32 million on the sale of an apartment property in 2016 and $51 million on the sale of a hotel and $15 million on the sale of an apartment property in 2015.
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Net investment income
|
$
|
1,458
|
|
|
$
|
1,356
|
|
|
$
|
1,224
|
|
|
8
|
%
|
|
11
|
%
|
Other income:
|
|
|
|
|
|
|
|
|
|
||||||||
Guaranteed withdrawal benefit fees
|
60
|
|
|
53
|
|
|
43
|
|
|
13
|
%
|
|
23
|
%
|
|||
Policy charges and other miscellaneous income
|
43
|
|
|
50
|
|
|
55
|
|
|
(14
|
%)
|
|
(9
|
%)
|
|||
Total revenues
|
1,561
|
|
|
1,459
|
|
|
1,322
|
|
|
7
|
%
|
|
10
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Annuity benefits (*)
|
892
|
|
|
800
|
|
|
732
|
|
|
12
|
%
|
|
9
|
%
|
|||
Acquisition expenses
|
168
|
|
|
181
|
|
|
163
|
|
|
(7
|
%)
|
|
11
|
%
|
|||
Other expenses
|
121
|
|
|
110
|
|
|
96
|
|
|
10
|
%
|
|
15
|
%
|
|||
Total costs and expenses
|
1,181
|
|
|
1,091
|
|
|
991
|
|
|
8
|
%
|
|
10
|
%
|
|||
Earnings before income taxes
|
$
|
380
|
|
|
$
|
368
|
|
|
$
|
331
|
|
|
3
|
%
|
|
11
|
%
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
||||||||
Earnings before income taxes — before the impact of derivatives related to FIAs
|
$
|
413
|
|
|
$
|
395
|
|
|
$
|
354
|
|
|
5
|
%
|
|
12
|
%
|
Impact of derivatives related to FIAs
|
(33
|
)
|
|
(27
|
)
|
|
(23
|
)
|
|
22
|
%
|
|
17
|
%
|
|||
Earnings before income taxes
|
$
|
380
|
|
|
$
|
368
|
|
|
$
|
331
|
|
|
3
|
%
|
|
11
|
%
|
(*)
|
Annuity benefits consisted of the following (dollars in millions):
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
||||||||
Interest credited — fixed
|
$
|
633
|
|
|
$
|
574
|
|
|
$
|
532
|
|
|
10
|
%
|
|
8
|
%
|
Interest credited — fixed component of variable annuities
|
5
|
|
|
5
|
|
|
6
|
|
|
—
|
%
|
|
(17
|
%)
|
|||
Other annuity benefits:
|
|
|
|
|
|
|
|
|
|
||||||||
Change in expected death and annuitization reserve
|
18
|
|
|
18
|
|
|
19
|
|
|
—
|
%
|
|
(5
|
%)
|
|||
Amortization of sales inducements
|
19
|
|
|
24
|
|
|
26
|
|
|
(21
|
%)
|
|
(8
|
%)
|
|||
Change in guaranteed withdrawal benefit reserve
|
67
|
|
|
69
|
|
|
63
|
|
|
(3
|
%)
|
|
10
|
%
|
|||
Change in other benefit reserves
|
45
|
|
|
34
|
|
|
22
|
|
|
32
|
%
|
|
55
|
%
|
|||
Total other annuity benefits
|
149
|
|
|
145
|
|
|
130
|
|
|
3
|
%
|
|
12
|
%
|
|||
Total before impact of derivatives related to FIAs and unlocking
|
787
|
|
|
724
|
|
|
668
|
|
|
9
|
%
|
|
8
|
%
|
|||
Derivatives related to fixed-indexed annuities:
|
|
|
|
|
|
|
|
|
|
||||||||
Embedded derivative mark-to-market
|
564
|
|
|
194
|
|
|
(11
|
)
|
|
191
|
%
|
|
(1,864
|
%)
|
|||
Equity option mark-to-market
|
(494
|
)
|
|
(141
|
)
|
|
56
|
|
|
250
|
%
|
|
(352
|
%)
|
|||
Impact of derivatives related to FIAs
|
70
|
|
|
53
|
|
|
45
|
|
|
32
|
%
|
|
18
|
%
|
|||
Unlocking
|
35
|
|
|
23
|
|
|
19
|
|
|
52
|
%
|
|
21
|
%
|
|||
Total annuity benefits
|
$
|
892
|
|
|
$
|
800
|
|
|
$
|
732
|
|
|
12
|
%
|
|
9
|
%
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
||||||||
Average fixed annuity investments (at amortized cost)
|
$
|
31,250
|
|
|
$
|
28,223
|
|
|
$
|
25,174
|
|
|
11
|
%
|
|
12
|
%
|
Average fixed annuity benefits accumulated
|
31,526
|
|
|
28,146
|
|
|
24,898
|
|
|
12
|
%
|
|
13
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
As % of fixed annuity benefits accumulated (except as noted):
|
|
|
|
|
|
|
|
|
|
||||||||
Net investment income (as % of fixed annuity investments)
|
4.63
|
%
|
|
4.77
|
%
|
|
4.83
|
%
|
|
|
|
|
|||||
Interest credited — fixed
|
(2.01
|
%)
|
|
(2.04
|
%)
|
|
(2.14
|
%)
|
|
|
|
|
|||||
Net interest spread
|
2.62
|
%
|
|
2.73
|
%
|
|
2.69
|
%
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||
Policy charges and other miscellaneous income
|
0.11
|
%
|
|
0.15
|
%
|
|
0.18
|
%
|
|
|
|
|
|||||
Other annuity benefit expenses, net of guaranteed withdrawal benefit fees
|
(0.28
|
%)
|
|
(0.33
|
%)
|
|
(0.35
|
%)
|
|
|
|
|
|||||
Acquisition expenses
|
(0.62
|
%)
|
|
(0.70
|
%)
|
|
(0.74
|
%)
|
|
|
|
|
|||||
Other expenses
|
(0.37
|
%)
|
|
(0.38
|
%)
|
|
(0.36
|
%)
|
|
|
|
|
|||||
Change in fair value of derivatives related to fixed-indexed annuities
|
(0.22
|
%)
|
|
(0.19
|
%)
|
|
(0.18
|
%)
|
|
|
|
|
|||||
Unlocking
|
(0.01
|
%)
|
|
0.01
|
%
|
|
0.02
|
%
|
|
|
|
|
|||||
Net spread earned on fixed annuities
|
1.23
|
%
|
|
1.29
|
%
|
|
1.26
|
%
|
|
|
|
|
|
Year ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Net spread earned on fixed annuities — before impact of derivatives related to FIAs
|
1.33
|
%
|
|
1.39
|
%
|
|
1.35
|
%
|
Impact of derivatives related to fixed-indexed annuities:
|
|
|
|
|
|
|||
Change in fair value of derivatives
|
(0.22
|
%)
|
|
(0.19
|
%)
|
|
(0.18
|
%)
|
Related impact on amortization of DPAC (*)
|
0.12
|
%
|
|
0.09
|
%
|
|
0.08
|
%
|
Related impact on amortization of deferred sales inducements (*)
|
—
|
%
|
|
—
|
%
|
|
0.01
|
%
|
Net spread earned on fixed annuities
|
1.23
|
%
|
|
1.29
|
%
|
|
1.26
|
%
|
(*)
|
An estimate of the related acceleration/deceleration of the amortization of deferred policy acquisition costs and deferred sales inducements.
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Change in expected death and annuitization reserve
|
$
|
18
|
|
|
$
|
18
|
|
|
$
|
19
|
|
Amortization of sales inducements
|
19
|
|
|
24
|
|
|
26
|
|
|||
Change in guaranteed withdrawal benefit reserve
|
67
|
|
|
69
|
|
|
63
|
|
|||
Change in other benefit reserves
|
45
|
|
|
34
|
|
|
22
|
|
|||
Other annuity benefits
|
149
|
|
|
145
|
|
|
130
|
|
|||
Offset guaranteed withdrawal benefit fees
|
(60
|
)
|
|
(53
|
)
|
|
(43
|
)
|
|||
Other annuity benefits, net
|
$
|
89
|
|
|
$
|
92
|
|
|
$
|
87
|
|
|
Year ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Before the impact of changes in the fair value of derivatives related to FIAs on the amortization of DPAC
|
0.74
|
%
|
|
0.79
|
%
|
|
0.82
|
%
|
Impact of changes in fair value of derivatives related to FIAs on the amortization of DPAC (*)
|
(0.12
|
%)
|
|
(0.09
|
%)
|
|
(0.08
|
%)
|
Annuity acquisition expenses as a % of fixed annuity benefits accumulated
|
0.62
|
%
|
|
0.70
|
%
|
|
0.74
|
%
|
(*)
|
An estimate of the acceleration/deceleration in the amortization of deferred policy acquisition costs resulting from fair value accounting for derivatives related to fixed-indexed annuities.
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
||||||||
Earnings before income taxes — before change in fair value of derivatives related to FIAs
|
$
|
413
|
|
|
$
|
395
|
|
|
$
|
354
|
|
|
5
|
%
|
|
12
|
%
|
Change in fair value of derivatives related to FIAs
|
(70
|
)
|
|
(53
|
)
|
|
(45
|
)
|
|
32
|
%
|
|
18
|
%
|
|||
Related impact on amortization of DPAC (*)
|
37
|
|
|
26
|
|
|
22
|
|
|
42
|
%
|
|
18
|
%
|
|||
Earnings before income taxes
|
$
|
380
|
|
|
$
|
368
|
|
|
$
|
331
|
|
|
3
|
%
|
|
11
|
%
|
(*)
|
An estimate of the related acceleration/deceleration of amortization of deferred sales inducements and deferred policy acquisition costs.
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Beginning fixed annuity reserves
|
$
|
29,647
|
|
|
$
|
26,371
|
|
|
$
|
23,462
|
|
Fixed annuity premiums (receipts)
|
4,313
|
|
|
4,398
|
|
|
4,098
|
|
|||
Federal Home Loan Bank advances (paydowns)
|
(64
|
)
|
|
150
|
|
|
345
|
|
|||
Surrenders, benefits and other withdrawals
|
(2,246
|
)
|
|
(2,189
|
)
|
|
(1,932
|
)
|
|||
Sale of subsidiaries
|
—
|
|
|
—
|
|
|
(261
|
)
|
|||
Interest and other annuity benefit expenses:
|
|
|
|
|
|
||||||
Interest credited
|
633
|
|
|
574
|
|
|
532
|
|
|||
Embedded derivative mark-to-market
|
564
|
|
|
194
|
|
|
(11
|
)
|
|||
Change in other benefit reserves
|
117
|
|
|
122
|
|
|
115
|
|
|||
Unlocking
|
41
|
|
|
27
|
|
|
23
|
|
|||
Ending fixed annuity reserves
|
$
|
33,005
|
|
|
$
|
29,647
|
|
|
$
|
26,371
|
|
|
|
|
|
|
|
||||||
Reconciliation to annuity benefits accumulated per balance sheet:
|
|
|
|
|
|
||||||
Ending fixed annuity reserves (from above)
|
$
|
33,005
|
|
|
$
|
29,647
|
|
|
$
|
26,371
|
|
Impact of unrealized investment gains
|
133
|
|
|
76
|
|
|
64
|
|
|||
Fixed component of variable annuities
|
178
|
|
|
184
|
|
|
187
|
|
|||
Annuity benefits accumulated per balance sheet
|
$
|
33,316
|
|
|
$
|
29,907
|
|
|
$
|
26,622
|
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
|||||||||
Financial institutions single premium annuities — indexed
|
$
|
1,711
|
|
|
$
|
1,950
|
|
|
$
|
1,741
|
|
|
(12
|
%)
|
|
12
|
%
|
Financial institutions single premium annuities — fixed
|
622
|
|
|
468
|
|
|
229
|
|
|
33
|
%
|
|
104
|
%
|
|||
Retail single premium annuities — indexed
|
1,723
|
|
|
1,714
|
|
|
1,864
|
|
|
1
|
%
|
|
(8
|
%)
|
|||
Retail single premium annuities — fixed
|
83
|
|
|
82
|
|
|
70
|
|
|
1
|
%
|
|
17
|
%
|
|||
Education market — fixed and indexed annuities
|
174
|
|
|
184
|
|
|
194
|
|
|
(5
|
%)
|
|
(5
|
%)
|
|||
Total fixed annuity premiums
|
4,313
|
|
|
4,398
|
|
|
4,098
|
|
|
(2
|
%)
|
|
7
|
%
|
|||
Variable annuities
|
28
|
|
|
37
|
|
|
42
|
|
|
(24
|
%)
|
|
(12
|
%)
|
|||
Total annuity premiums
|
$
|
4,341
|
|
|
$
|
4,435
|
|
|
$
|
4,140
|
|
|
(2
|
%)
|
|
7
|
%
|
|
|
Year ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Policy charges and other miscellaneous income:
|
|
|
|
|
|
|
||||||
Unearned revenue
|
|
$
|
(3
|
)
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
Total revenues
|
|
(3
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|||
Annuity benefits:
|
|
|
|
|
|
|
||||||
Fixed-indexed annuities embedded derivative
|
|
25
|
|
|
17
|
|
|
28
|
|
|||
Sales inducements
|
|
(6
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|||
Other reserves
|
|
16
|
|
|
10
|
|
|
(5
|
)
|
|||
Total annuity benefits
|
|
35
|
|
|
23
|
|
|
19
|
|
|||
Annuity and supplemental insurance acquisition expenses:
|
|
|
|
|
|
|
||||||
Deferred policy acquisition costs
|
|
(35
|
)
|
|
(25
|
)
|
|
(31
|
)
|
|||
Total costs and expenses
|
|
—
|
|
|
(2
|
)
|
|
(12
|
)
|
|||
Net expense reduction (charge)
|
|
$
|
(3
|
)
|
|
$
|
1
|
|
|
$
|
10
|
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Earnings on fixed annuity benefits accumulated
|
$
|
387
|
|
|
$
|
363
|
|
|
$
|
313
|
|
Earnings impact of investments in excess of fixed annuity benefits accumulated (*)
|
(13
|
)
|
|
4
|
|
|
13
|
|
|||
Variable annuity earnings
|
6
|
|
|
1
|
|
|
5
|
|
|||
Earnings before income taxes
|
$
|
380
|
|
|
$
|
368
|
|
|
$
|
331
|
|
(*)
|
Net investment income (as a % of investments) of
4.63%
,
4.77%
and
4.83%
in
2017
,
2016
and
2015
, 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
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Net earned premiums:
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term care
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
73
|
|
|
—
|
%
|
|
(96
|
%)
|
Life operations
|
19
|
|
|
21
|
|
|
31
|
|
|
(10
|
%)
|
|
(32
|
%)
|
|||
Net investment income
|
20
|
|
|
21
|
|
|
80
|
|
|
(5
|
%)
|
|
(74
|
%)
|
|||
Other income
|
5
|
|
|
4
|
|
|
4
|
|
|
25
|
%
|
|
—
|
%
|
|||
Total revenues
|
47
|
|
|
49
|
|
|
188
|
|
|
(4
|
%)
|
|
(74
|
%)
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Life, accident and health benefits:
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term care
|
5
|
|
|
5
|
|
|
91
|
|
|
—
|
%
|
|
(95
|
%)
|
|||
Life operations
|
21
|
|
|
28
|
|
|
40
|
|
|
(25
|
%)
|
|
(30
|
%)
|
|||
Acquisition expenses
|
5
|
|
|
5
|
|
|
16
|
|
|
—
|
%
|
|
(69
|
%)
|
|||
Other expenses
|
10
|
|
|
9
|
|
|
27
|
|
|
11
|
%
|
|
(67
|
%)
|
|||
Total costs and expenses
|
41
|
|
|
47
|
|
|
174
|
|
|
(13
|
%)
|
|
(73
|
%)
|
|||
Core earnings before income taxes
|
6
|
|
|
2
|
|
|
14
|
|
|
200
|
%
|
|
(86
|
%)
|
|||
Pretax non-core realized gain (loss) on subsidiaries
|
—
|
|
|
2
|
|
|
(166
|
)
|
|
(100
|
%)
|
|
(101
|
%)
|
|||
GAAP earnings (loss) before income taxes
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
(152
|
)
|
|
50
|
%
|
|
(103
|
%)
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Net investment income
|
$
|
14
|
|
|
$
|
6
|
|
|
$
|
4
|
|
|
133
|
%
|
|
50
|
%
|
Other income — P&C fees
|
66
|
|
|
60
|
|
|
54
|
|
|
10
|
%
|
|
11
|
%
|
|||
Other income
|
22
|
|
|
23
|
|
|
24
|
|
|
(4
|
%)
|
|
(4
|
%)
|
|||
Total revenues
|
102
|
|
|
89
|
|
|
82
|
|
|
15
|
%
|
|
9
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Property and casualty insurance — commissions and other underwriting expenses
|
25
|
|
|
19
|
|
|
16
|
|
|
32
|
%
|
|
19
|
%
|
|||
Interest charges on borrowed money
|
85
|
|
|
77
|
|
|
73
|
|
|
10
|
%
|
|
5
|
%
|
|||
Other expense — expenses associated with P&C fees
|
41
|
|
|
41
|
|
|
38
|
|
|
—
|
%
|
|
8
|
%
|
|||
Other expenses (*)
|
134
|
|
|
128
|
|
|
115
|
|
|
5
|
%
|
|
11
|
%
|
|||
Total costs and expenses
|
285
|
|
|
265
|
|
|
242
|
|
|
8
|
%
|
|
10
|
%
|
|||
Core loss before income taxes, excluding realized gains and losses
|
(183
|
)
|
|
(176
|
)
|
|
(160
|
)
|
|
4
|
%
|
|
10
|
%
|
|||
Pretax non-core special A&E charges
|
(24
|
)
|
|
(5
|
)
|
|
(12
|
)
|
|
380
|
%
|
|
(58
|
%)
|
|||
Pretax non-core loss on retirement of debt
|
(51
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
%
|
|
(100
|
%)
|
|||
GAAP loss before income taxes, excluding realized gains and losses
|
$
|
(258
|
)
|
|
$
|
(181
|
)
|
|
$
|
(176
|
)
|
|
43
|
%
|
|
3
|
%
|
(*)
|
Excludes pretax non-core special A&E charges of
$24 million
,
$5 million
and
$12 million
in
2017
,
2016
and
2015
, respectively, and pretax non-core losses on retirement of debt of $51 million in 2017 and $4 million in 2015.
|
•
|
Issued $300 million of 3.50% Senior Notes in August 2016
|
•
|
Issued $350 million of 4.50% Senior Notes in June 2017
|
•
|
Redeemed $230 million of 6-3/8% Senior Notes in June 2017
|
•
|
Redeemed $125 million of 5-3/4% Senior Notes in August 2017
|
•
|
Issued an additional $125 million of 3.50% Senior Notes in November 2017
|
•
|
Issued an additional $240 million of 4.50% Senior Notes in November 2017
|
•
|
Redeemed $350 million of 9-7/8% Senior Notes in December 2017
|
•
|
Issued $300 million of 3.50% Senior Notes in August 2016
|
•
|
Issued $150 million of 6% Subordinated Debentures in November 2015
|
•
|
Redeemed $132 million of 7% Senior Notes in September 2015
|
|
Year ended December 31,
|
||||||||||
2017
|
|
2016
|
|
2015
|
|||||||
Realized gains (losses) before impairments:
|
|
|
|
|
|
||||||
Disposals
|
$
|
87
|
|
|
$
|
151
|
|
|
$
|
122
|
|
Change in the fair value of derivatives
|
(6
|
)
|
|
(9
|
)
|
|
(11
|
)
|
|||
Adjustments to annuity deferred policy acquisition costs and related items
|
(3
|
)
|
|
(7
|
)
|
|
(5
|
)
|
|||
|
78
|
|
|
135
|
|
|
106
|
|
|||
Impairment charges:
|
|
|
|
|
|
||||||
Securities
|
(88
|
)
|
|
(131
|
)
|
|
(140
|
)
|
|||
Adjustments to annuity deferred policy acquisition costs and related items
|
15
|
|
|
15
|
|
|
15
|
|
|||
|
(73
|
)
|
|
(116
|
)
|
|
(125
|
)
|
|||
Realized gains (losses) on securities
|
$
|
5
|
|
|
$
|
19
|
|
|
$
|
(19
|
)
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017 - 2016
|
|
2016 - 2015
|
||||||||
National Interstate
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
10
|
|
|
(100
|
%)
|
|
50
|
%
|
Other
|
2
|
|
|
4
|
|
|
8
|
|
|
(50
|
%)
|
|
(50
|
%)
|
|||
Earnings attributable to noncontrolling interests
|
$
|
2
|
|
|
$
|
19
|
|
|
$
|
18
|
|
|
(89
|
%)
|
|
6
|
%
|
|
|
2017
|
|
2016
|
||||
Fair value of fixed maturity portfolio
|
|
$
|
38,727
|
|
|
$
|
34,903
|
|
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
|
|
$
|
(1,936
|
)
|
|
$
|
(1,745
|
)
|
Offsetting adjustments to deferred policy acquisition costs and other balance sheet amounts
|
|
750
|
|
|
700
|
|
||
Estimated pretax impact on accumulated other comprehensive income
|
|
(1,186
|
)
|
|
(1,045
|
)
|
||
Deferred income tax (*)
|
|
249
|
|
|
366
|
|
||
Estimated after-tax impact on accumulated other comprehensive income
|
|
$
|
(937
|
)
|
|
$
|
(679
|
)
|
(*)
|
Reflects a U.S. corporate tax rate of 21% for the December 31, 2017 illustration and 35% for December 31, 2016.
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Fifth
|
|
Thereafter
|
|
Total
|
|
Fair
Value (*)
|
||||||||||||||||
2017
|
|
$
|
2,655
|
|
|
$
|
3,071
|
|
|
$
|
3,481
|
|
|
$
|
4,121
|
|
|
$
|
4,343
|
|
|
$
|
20,982
|
|
|
$
|
38,653
|
|
|
$
|
32,461
|
|
2016
|
|
2,523
|
|
|
2,856
|
|
|
3,131
|
|
|
3,442
|
|
|
3,747
|
|
|
18,305
|
|
|
34,004
|
|
|
28,932
|
|
(*)
|
Fair value of annuity benefits accumulated excluding life contingent annuities in the payout phase (carrying value of $206 million at
December 31, 2017
and $204 million at
December 31, 2016
).
|
|
|
|
December 31, 2017
|
|
|
|
December 31, 2016
|
|
||||||||||
|
|
|
Scheduled
Principal
Payments
|
|
Rate
|
|
|
|
Scheduled
Principal
Payments
|
|
Rate
|
|
||||||
|
2018
|
|
$
|
—
|
|
|
—
|
%
|
|
2017
|
|
$
|
—
|
|
|
—
|
%
|
|
|
2019
|
|
—
|
|
|
—
|
%
|
|
2018
|
|
—
|
|
|
—
|
%
|
|
||
|
2020
|
|
—
|
|
|
—
|
%
|
|
2019
|
|
350
|
|
|
9.9
|
%
|
(*)
|
||
|
2021
|
|
—
|
|
|
—
|
%
|
|
2020
|
|
—
|
|
|
—
|
%
|
|
||
|
2022
|
|
—
|
|
|
—
|
%
|
|
2021
|
|
—
|
|
|
—
|
%
|
|
||
|
Thereafter
|
|
1,318
|
|
|
4.6
|
%
|
|
Thereafter
|
|
958
|
|
|
5.3
|
%
|
|
||
|
Total
|
|
$
|
1,318
|
|
|
4.6
|
%
|
|
Total
|
|
$
|
1,308
|
|
|
6.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Fair Value
|
|
$
|
1,354
|
|
|
|
|
Fair Value
|
|
$
|
1,356
|
|
|
|
|
(*)
|
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% (9.0624% at December 31, 2016). The 9-7/8% Senior Notes appear in the table above at December 31, 2016 (at the contractual 9-7/8% interest rate) because the notes themselves are fixed-rate obligations. The swap was terminated in December 2017 contemporaneously with the redemption of the 9-7/8% Senior Notes.
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheet as of December 31, 2017 and 2016
|
|
Consolidated Statement of Earnings for the years ended December 31, 2017, 2016 and 2015
|
|
Consolidated Statement of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015
|
|
Consolidated Statement of Changes in Equity for the years ended December 31, 2017, 2016 and 2015
|
|
Consolidated Statement of Cash Flows for the years ended December 31, 2017, 2016 and 2015
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
|
|
/s/ ERNST & YOUNG LLP
|
|
|
Cincinnati, Ohio
|
|
|
February 23, 2018
|
|
|
|
|
|
|
|
|
/s/ ERNST & YOUNG LLP
|
|
|
We have served as the Company’s auditor since 1961.
|
|
|
Cincinnati, Ohio
|
|
|
February 23, 2018
|
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,338
|
|
|
$
|
2,107
|
|
Investments:
|
|
|
|
||||
Fixed maturities, available for sale at fair value (amortized cost — $37,038 and $33,735)
|
38,379
|
|
|
34,544
|
|
||
Fixed maturities, trading at fair value
|
348
|
|
|
359
|
|
||
Equity securities, available for sale at fair value (cost — $1,321 and $1,351)
|
1,600
|
|
|
1,502
|
|
||
Equity securities, trading at fair value
|
62
|
|
|
56
|
|
||
Mortgage loans
|
1,125
|
|
|
1,147
|
|
||
Policy loans
|
184
|
|
|
192
|
|
||
Equity index call options
|
701
|
|
|
492
|
|
||
Real estate and other investments
|
1,311
|
|
|
1,034
|
|
||
Total cash and investments
|
46,048
|
|
|
41,433
|
|
||
Recoverables from reinsurers
|
3,369
|
|
|
2,737
|
|
||
Prepaid reinsurance premiums
|
600
|
|
|
539
|
|
||
Agents’ balances and premiums receivable
|
1,146
|
|
|
997
|
|
||
Deferred policy acquisition costs
|
1,216
|
|
|
1,239
|
|
||
Assets of managed investment entities
|
4,902
|
|
|
4,765
|
|
||
Other receivables
|
1,030
|
|
|
908
|
|
||
Variable annuity assets (separate accounts)
|
644
|
|
|
600
|
|
||
Other assets
|
1,504
|
|
|
1,655
|
|
||
Goodwill
|
199
|
|
|
199
|
|
||
Total assets
|
$
|
60,658
|
|
|
$
|
55,072
|
|
|
|
|
|
||||
Liabilities and Equity:
|
|
|
|
||||
Unpaid losses and loss adjustment expenses
|
$
|
9,678
|
|
|
$
|
8,563
|
|
Unearned premiums
|
2,410
|
|
|
2,171
|
|
||
Annuity benefits accumulated
|
33,316
|
|
|
29,907
|
|
||
Life, accident and health reserves
|
658
|
|
|
691
|
|
||
Payable to reinsurers
|
743
|
|
|
634
|
|
||
Liabilities of managed investment entities
|
4,687
|
|
|
4,549
|
|
||
Long-term debt
|
1,301
|
|
|
1,283
|
|
||
Variable annuity liabilities (separate accounts)
|
644
|
|
|
600
|
|
||
Other liabilities
|
1,887
|
|
|
1,755
|
|
||
Total liabilities
|
55,324
|
|
|
50,153
|
|
||
|
|
|
|
||||
Redeemable noncontrolling interests
|
3
|
|
|
—
|
|
||
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Common Stock, no par value
— 200,000,000 shares authorized
— 88,275,460 and 86,924,399 shares outstanding
|
88
|
|
|
87
|
|
||
Capital surplus
|
1,181
|
|
|
1,111
|
|
||
Retained earnings
|
3,248
|
|
|
3,343
|
|
||
Accumulated other comprehensive income, net of tax
|
813
|
|
|
375
|
|
||
Total shareholders’ equity
|
5,330
|
|
|
4,916
|
|
||
Noncontrolling interests
|
1
|
|
|
3
|
|
||
Total equity
|
5,331
|
|
|
4,919
|
|
||
Total liabilities and equity
|
$
|
60,658
|
|
|
$
|
55,072
|
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Property and casualty insurance net earned premiums
|
$
|
4,579
|
|
|
$
|
4,328
|
|
|
$
|
4,224
|
|
Life, accident and health net earned premiums
|
22
|
|
|
24
|
|
|
104
|
|
|||
Net investment income
|
1,831
|
|
|
1,696
|
|
|
1,633
|
|
|||
Realized gains (losses) on:
|
|
|
|
|
|
||||||
Securities (*)
|
5
|
|
|
19
|
|
|
(19
|
)
|
|||
Subsidiaries
|
—
|
|
|
2
|
|
|
(161
|
)
|
|||
Income (loss) of managed investment entities:
|
|
|
|
|
|
||||||
Investment income
|
210
|
|
|
190
|
|
|
155
|
|
|||
Gain (loss) on change in fair value of assets/liabilities
|
12
|
|
|
15
|
|
|
(34
|
)
|
|||
Other income
|
206
|
|
|
224
|
|
|
243
|
|
|||
Total revenues
|
6,865
|
|
|
6,498
|
|
|
6,145
|
|
|||
|
|
|
|
|
|
||||||
Costs and Expenses:
|
|
|
|
|
|
||||||
Property and casualty insurance:
|
|
|
|
|
|
||||||
Losses and loss adjustment expenses
|
2,955
|
|
|
2,762
|
|
|
2,695
|
|
|||
Commissions and other underwriting expenses
|
1,407
|
|
|
1,349
|
|
|
1,320
|
|
|||
Annuity benefits
|
892
|
|
|
800
|
|
|
732
|
|
|||
Life, accident and health benefits
|
26
|
|
|
33
|
|
|
131
|
|
|||
Annuity and supplemental insurance acquisition expenses
|
173
|
|
|
186
|
|
|
179
|
|
|||
Interest charges on borrowed money
|
85
|
|
|
77
|
|
|
75
|
|
|||
Expenses of managed investment entities
|
181
|
|
|
151
|
|
|
112
|
|
|||
Other expenses
|
422
|
|
|
353
|
|
|
336
|
|
|||
Total costs and expenses
|
6,141
|
|
|
5,711
|
|
|
5,580
|
|
|||
Earnings before income taxes
|
724
|
|
|
787
|
|
|
565
|
|
|||
Provision for income taxes
|
247
|
|
|
119
|
|
|
195
|
|
|||
Net earnings, including noncontrolling interests
|
477
|
|
|
668
|
|
|
370
|
|
|||
Less: Net earnings attributable to noncontrolling interests
|
2
|
|
|
19
|
|
|
18
|
|
|||
Net Earnings Attributable to Shareholders
|
$
|
475
|
|
|
$
|
649
|
|
|
$
|
352
|
|
|
|
|
|
|
|
||||||
Earnings Attributable to Shareholders per Common Share:
|
|
|
|
|
|
||||||
Basic
|
$
|
5.40
|
|
|
$
|
7.47
|
|
|
$
|
4.02
|
|
Diluted
|
$
|
5.28
|
|
|
$
|
7.33
|
|
|
$
|
3.94
|
|
Average number of Common Shares:
|
|
|
|
|
|
||||||
Basic
|
87.8
|
|
|
86.9
|
|
|
87.6
|
|
|||
Diluted
|
89.8
|
|
|
88.5
|
|
|
89.4
|
|
|||
|
|
|
|
|
|
||||||
Cash dividends per Common Share
|
$
|
4.7875
|
|
|
$
|
2.1525
|
|
|
$
|
2.03
|
|
________________________________________
|
|
|
|
|
|
||||||
(*) Consists of the following:
|
|
|
|
|
|
||||||
Realized gains before impairments
|
$
|
78
|
|
|
$
|
135
|
|
|
$
|
106
|
|
|
|
|
|
|
|
||||||
Losses on securities with impairment
|
(74
|
)
|
|
(115
|
)
|
|
(125
|
)
|
|||
Non-credit portion recognized in other comprehensive income (loss)
|
1
|
|
|
(1
|
)
|
|
—
|
|
|||
Impairment charges recognized in earnings
|
(73
|
)
|
|
(116
|
)
|
|
(125
|
)
|
|||
Total realized gains (losses) on securities
|
$
|
5
|
|
|
$
|
19
|
|
|
$
|
(19
|
)
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net earnings, including noncontrolling interests
|
$
|
477
|
|
|
$
|
668
|
|
|
$
|
370
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Net unrealized gains (losses) on securities:
|
|
|
|
|
|
||||||
Unrealized holding gains (losses) on securities arising during the period
|
297
|
|
|
80
|
|
|
(406
|
)
|
|||
Reclassification adjustment for realized (gains) losses included in net earnings
|
(10
|
)
|
|
(12
|
)
|
|
9
|
|
|||
Reclassification for unrealized gains of subsidiaries sold
|
—
|
|
|
—
|
|
|
(22
|
)
|
|||
Total net unrealized gains (losses) on securities
|
287
|
|
|
68
|
|
|
(419
|
)
|
|||
Net unrealized gains (losses) on cash flow hedges
|
(4
|
)
|
|
(8
|
)
|
|
1
|
|
|||
Foreign currency translation adjustments
|
12
|
|
|
7
|
|
|
(14
|
)
|
|||
Pension and other postretirement plans adjustments
|
1
|
|
|
—
|
|
|
1
|
|
|||
Other comprehensive income (loss), net of tax
|
296
|
|
|
67
|
|
|
(431
|
)
|
|||
Total comprehensive income (loss), net of tax
|
773
|
|
|
735
|
|
|
(61
|
)
|
|||
Less: Comprehensive income attributable to noncontrolling interests
|
2
|
|
|
24
|
|
|
10
|
|
|||
Comprehensive income (loss) attributable to shareholders
|
$
|
771
|
|
|
$
|
711
|
|
|
$
|
(71
|
)
|
|
|
|
|
Shareholders’ Equity
|
|
|
|
|
|
Redeemable
|
|||||||||||||||||||||
Common
|
|
|
Common Stock
and Capital
|
|
Retained
|
|
Accumulated
Other Comp.
|
|
|
|
Noncon-
trolling
|
|
Total
|
|
Noncon-
trolling |
||||||||||||||||
Shares
|
|
|
Surplus
|
|
Earnings
|
|
Inc. (Loss)
|
|
Total
|
|
Interests
|
|
Equity
|
|
Interests
|
||||||||||||||||
Balance at December 31, 2014
|
87,708,793
|
|
|
|
$
|
1,240
|
|
|
$
|
2,912
|
|
|
$
|
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
|
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|||||||
Restricted stock awards
|
171,130
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other benefit plans
|
111,681
|
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|||||||
Dividend reinvestment plan
|
26,167
|
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|||||||
Stock-based compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Expense
|
—
|
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|||||||
Excess tax benefits
|
—
|
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|||||||
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
|
|
|
$
|
—
|
|
Net earnings
|
—
|
|
|
|
—
|
|
|
649
|
|
|
—
|
|
|
649
|
|
|
19
|
|
|
668
|
|
|
—
|
|
|||||||
Other comprehensive income
|
—
|
|
|
|
—
|
|
|
—
|
|
|
62
|
|
|
62
|
|
|
5
|
|
|
67
|
|
|
—
|
|
|||||||
Dividends on Common Stock
|
—
|
|
|
|
—
|
|
|
(187
|
)
|
|
—
|
|
|
(187
|
)
|
|
—
|
|
|
(187
|
)
|
|
—
|
|
|||||||
Shares issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Exercise of stock options
|
958,344
|
|
|
|
32
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|||||||
Restricted stock awards
|
318,940
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other benefit plans
|
95,875
|
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|||||||
Dividend reinvestment plan
|
25,516
|
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|||||||
Shares acquired and retired
|
(1,911,976
|
)
|
|
|
(29
|
)
|
|
(104
|
)
|
|
—
|
|
|
(133
|
)
|
|
—
|
|
|
(133
|
)
|
|
—
|
|
|||||||
Shares exchanged — benefit plans
|
(32,707
|
)
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|||||||
Forfeitures of restricted stock
|
(4,045
|
)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Acquisition of noncontrolling interests
|
—
|
|
|
|
(137
|
)
|
|
—
|
|
|
9
|
|
|
(128
|
)
|
|
(187
|
)
|
|
(315
|
)
|
|
—
|
|
|||||||
Other
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
(12
|
)
|
|
—
|
|
|||||||
Balance at December 31, 2016
|
86,924,399
|
|
|
|
$
|
1,198
|
|
|
$
|
3,343
|
|
|
$
|
375
|
|
|
$
|
4,916
|
|
|
$
|
3
|
|
|
$
|
4,919
|
|
|
$
|
—
|
|
Net earnings
|
—
|
|
|
|
—
|
|
|
475
|
|
|
—
|
|
|
475
|
|
|
2
|
|
|
477
|
|
|
—
|
|
|||||||
Other comprehensive income
|
—
|
|
|
|
—
|
|
|
—
|
|
|
296
|
|
|
296
|
|
|
—
|
|
|
296
|
|
|
—
|
|
|||||||
Impact of the U.S. corporate tax rate change on AOCI
|
—
|
|
|
|
—
|
|
|
(145
|
)
|
|
145
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Dividends on Common Stock
|
—
|
|
|
|
—
|
|
|
(421
|
)
|
|
—
|
|
|
(421
|
)
|
|
—
|
|
|
(421
|
)
|
|
—
|
|
|||||||
Shares issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Exercise of stock options
|
1,020,986
|
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|||||||
Restricted stock awards
|
232,250
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other benefit plans
|
99,588
|
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|||||||
Dividend reinvestment plan
|
42,572
|
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|||||||
Shares exchanged — benefit plans
|
(37,718
|
)
|
|
|
(1
|
)
|
|
(4
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|||||||
Forfeitures of restricted stock
|
(6,617
|
)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Sale of redeemable noncontrolling interests
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
3
|
|
|||||||
Other
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
|
—
|
|
|||||||
Balance at December 31, 2017
|
88,275,460
|
|
|
|
$
|
1,269
|
|
|
$
|
3,248
|
|
|
$
|
813
|
|
|
$
|
5,330
|
|
|
$
|
1
|
|
|
$
|
5,331
|
|
|
$
|
3
|
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Operating Activities:
|
|
|
|
|
|
||||||
Net earnings, including noncontrolling interests
|
$
|
477
|
|
|
$
|
668
|
|
|
$
|
370
|
|
Adjustments:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
107
|
|
|
134
|
|
|
134
|
|
|||
Annuity benefits
|
892
|
|
|
800
|
|
|
732
|
|
|||
Realized (gains) losses on investing activities
|
(23
|
)
|
|
(61
|
)
|
|
100
|
|
|||
Net sales of trading securities
|
17
|
|
|
79
|
|
|
10
|
|
|||
Deferred annuity and life policy acquisition costs
|
(225
|
)
|
|
(230
|
)
|
|
(224
|
)
|
|||
Change in:
|
|
|
|
|
|
||||||
Reinsurance and other receivables
|
(963
|
)
|
|
(315
|
)
|
|
(10
|
)
|
|||
Other assets
|
13
|
|
|
(467
|
)
|
|
(13
|
)
|
|||
Insurance claims and reserves
|
1,321
|
|
|
533
|
|
|
451
|
|
|||
Payable to reinsurers
|
109
|
|
|
43
|
|
|
(54
|
)
|
|||
Other liabilities
|
(18
|
)
|
|
265
|
|
|
12
|
|
|||
Managed investment entities’ assets/liabilities
|
60
|
|
|
(279
|
)
|
|
(190
|
)
|
|||
Other operating activities, net
|
37
|
|
|
(20
|
)
|
|
35
|
|
|||
Net cash provided by operating activities
|
1,804
|
|
|
1,150
|
|
|
1,353
|
|
|||
|
|
|
|
|
|
||||||
Investing Activities:
|
|
|
|
|
|
||||||
Purchases of:
|
|
|
|
|
|
||||||
Fixed maturities
|
(9,485
|
)
|
|
(7,537
|
)
|
|
(7,201
|
)
|
|||
Equity securities
|
(182
|
)
|
|
(207
|
)
|
|
(570
|
)
|
|||
Mortgage loans
|
(254
|
)
|
|
(341
|
)
|
|
(213
|
)
|
|||
Equity index call options and other investments
|
(831
|
)
|
|
(738
|
)
|
|
(534
|
)
|
|||
Real estate, property and equipment
|
(109
|
)
|
|
(49
|
)
|
|
(102
|
)
|
|||
Proceeds from:
|
|
|
|
|
|
||||||
Maturities and redemptions of fixed maturities
|
6,105
|
|
|
4,713
|
|
|
3,333
|
|
|||
Repayments of mortgage loans
|
215
|
|
|
262
|
|
|
265
|
|
|||
Sales of fixed maturities
|
392
|
|
|
641
|
|
|
321
|
|
|||
Sales of equity securities
|
216
|
|
|
348
|
|
|
364
|
|
|||
Sales and settlements of equity index call options and other investments
|
789
|
|
|
319
|
|
|
374
|
|
|||
Sales of real estate, property and equipment
|
55
|
|
|
55
|
|
|
117
|
|
|||
Sales of businesses
|
—
|
|
|
—
|
|
|
7
|
|
|||
Cash and cash equivalents of businesses sold
|
—
|
|
|
—
|
|
|
(49
|
)
|
|||
Managed investment entities:
|
|
|
|
|
|
||||||
Purchases of investments
|
(2,979
|
)
|
|
(2,254
|
)
|
|
(1,530
|
)
|
|||
Proceeds from sales and redemptions of investments
|
2,774
|
|
|
1,890
|
|
|
855
|
|
|||
Other investing activities, net
|
2
|
|
|
(83
|
)
|
|
(10
|
)
|
|||
Net cash used in investing activities
|
(3,292
|
)
|
|
(2,981
|
)
|
|
(4,573
|
)
|
|||
|
|
|
|
|
|
||||||
Financing Activities:
|
|
|
|
|
|
||||||
Annuity receipts
|
4,341
|
|
|
4,585
|
|
|
4,485
|
|
|||
Annuity surrenders, benefits and withdrawals
|
(2,405
|
)
|
|
(2,275
|
)
|
|
(2,025
|
)
|
|||
Net transfers from variable annuity assets
|
54
|
|
|
42
|
|
|
43
|
|
|||
Additional long-term borrowings
|
712
|
|
|
302
|
|
|
145
|
|
|||
Reductions of long-term debt
|
(745
|
)
|
|
(18
|
)
|
|
(192
|
)
|
|||
Issuances of managed investment entities’ liabilities
|
2,731
|
|
|
2,293
|
|
|
1,026
|
|
|||
Retirements of managed investment entities’ liabilities
|
(2,585
|
)
|
|
(1,600
|
)
|
|
(136
|
)
|
|||
Issuances of Common Stock
|
37
|
|
|
35
|
|
|
61
|
|
|||
Repurchases of Common Stock
|
—
|
|
|
(133
|
)
|
|
(126
|
)
|
|||
Cash dividends paid on Common Stock
|
(417
|
)
|
|
(185
|
)
|
|
(176
|
)
|
|||
Acquisition of noncontrolling interests in subsidiary
|
—
|
|
|
(315
|
)
|
|
—
|
|
|||
Other financing activities, net
|
(4
|
)
|
|
(13
|
)
|
|
(8
|
)
|
|||
Net cash provided by financing activities
|
1,719
|
|
|
2,718
|
|
|
3,097
|
|
|||
Net Change in Cash and Cash Equivalents
|
231
|
|
|
887
|
|
|
(123
|
)
|
|||
Cash and cash equivalents at beginning of year
|
2,107
|
|
|
1,220
|
|
|
1,343
|
|
|||
Cash and cash equivalents at end of year
|
$
|
2,338
|
|
|
$
|
2,107
|
|
|
$
|
1,220
|
|
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
|
|
|
|
|
|
|
|
|
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
|
||
Life, accident and health net earned premiums:
|
|
||
Long-term care
|
$
|
73
|
|
Life operations
|
11
|
|
|
Net investment income
|
73
|
|
|
Realized gains (losses) on securities and other income
|
(11
|
)
|
|
Total revenues
|
146
|
|
|
Annuity benefits
|
8
|
|
|
Life, accident and health benefits:
|
|
||
Long-term care
|
91
|
|
|
Life operations
|
11
|
|
|
Annuity and supplemental insurance acquisition expenses
|
12
|
|
|
Other expenses
|
16
|
|
|
Total costs and expenses
|
138
|
|
|
Earnings before income taxes
|
$
|
8
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Assets
|
|
|
|
|
|
||||||
Property and casualty insurance (a)
|
$
|
17,171
|
|
|
$
|
15,574
|
|
|
$
|
14,689
|
|
Annuity
|
37,179
|
|
|
33,409
|
|
|
29,865
|
|
|||
Run-off long-term care and life
|
730
|
|
|
752
|
|
|
772
|
|
|||
Other
|
5,578
|
|
|
5,337
|
|
|
4,511
|
|
|||
Total assets
|
$
|
60,658
|
|
|
$
|
55,072
|
|
|
$
|
49,837
|
|
Revenues
|
|
|
|
|
|
||||||
Property and casualty insurance:
|
|
|
|
|
|
||||||
Premiums earned:
|
|
|
|
|
|
||||||
Specialty
|
|
|
|
|
|
||||||
Property and transportation
|
$
|
1,711
|
|
|
$
|
1,662
|
|
|
$
|
1,599
|
|
Specialty casualty
|
2,186
|
|
|
2,006
|
|
|
2,011
|
|
|||
Specialty financial
|
576
|
|
|
557
|
|
|
517
|
|
|||
Other specialty
|
106
|
|
|
103
|
|
|
97
|
|
|||
Total premiums earned
|
4,579
|
|
|
4,328
|
|
|
4,224
|
|
|||
Net investment income
|
362
|
|
|
350
|
|
|
319
|
|
|||
Other income (b)
|
28
|
|
|
51
|
|
|
78
|
|
|||
Total property and casualty insurance
|
4,969
|
|
|
4,729
|
|
|
4,621
|
|
|||
Annuity:
|
|
|
|
|
|
||||||
Net investment income
|
1,458
|
|
|
1,356
|
|
|
1,224
|
|
|||
Other income
|
103
|
|
|
103
|
|
|
98
|
|
|||
Total annuity
|
1,561
|
|
|
1,459
|
|
|
1,322
|
|
|||
Run-off long-term care and life (c)
|
47
|
|
|
49
|
|
|
188
|
|
|||
Other
|
283
|
|
|
240
|
|
|
194
|
|
|||
Total revenues before realized gains (losses)
|
6,860
|
|
|
6,477
|
|
|
6,325
|
|
|||
Realized gains (losses) on securities
|
5
|
|
|
19
|
|
|
(19
|
)
|
|||
Realized gains (losses) on subsidiaries
|
—
|
|
|
2
|
|
|
(161
|
)
|
|||
Total revenues
|
$
|
6,865
|
|
|
$
|
6,498
|
|
|
$
|
6,145
|
|
(a)
|
Not allocable to sub-segments.
|
(b)
|
Includes income of
$32 million
(before noncontrolling interest) from the sale of an apartment property in 2016 and
$66 million
(before noncontrolling interest) from the sales of a hotel and an apartment property in 2015.
|
(c)
|
AFG sold substantially all of its run-off long-term care insurance business in December 2015.
|
|
2017
|
|
2016
|
|
2015
|
||||||
Earnings Before Income Taxes
|
|
|
|
|
|
||||||
Property and casualty insurance:
|
|
|
|
|
|
||||||
Underwriting:
|
|
|
|
|
|
||||||
Specialty
|
|
|
|
|
|
||||||
Property and transportation
|
$
|
154
|
|
|
$
|
166
|
|
|
$
|
48
|
|
Specialty casualty
|
104
|
|
|
78
|
|
|
146
|
|
|||
Specialty financial
|
61
|
|
|
84
|
|
|
87
|
|
|||
Other specialty
|
(2
|
)
|
|
9
|
|
|
14
|
|
|||
Other lines (a)
|
(75
|
)
|
|
(101
|
)
|
|
(70
|
)
|
|||
Total underwriting
|
242
|
|
|
236
|
|
|
225
|
|
|||
Investment and other income, net (b)
|
349
|
|
|
341
|
|
|
351
|
|
|||
Total property and casualty insurance
|
591
|
|
|
577
|
|
|
576
|
|
|||
Annuity
|
380
|
|
|
368
|
|
|
331
|
|
|||
Run-off long-term care and life (c)
|
6
|
|
|
2
|
|
|
14
|
|
|||
Other (d)
|
(258
|
)
|
|
(181
|
)
|
|
(176
|
)
|
|||
Total earnings before realized gains (losses) and income taxes
|
719
|
|
|
766
|
|
|
745
|
|
|||
Realized gains (losses) on securities
|
5
|
|
|
19
|
|
|
(19
|
)
|
|||
Realized gains (losses) on subsidiaries
|
—
|
|
|
2
|
|
|
(161
|
)
|
|||
Total earnings before income taxes
|
$
|
724
|
|
|
$
|
787
|
|
|
$
|
565
|
|
(a)
|
Includes special charges to increase asbestos and environmental (“A&E”) reserves of
$89 million
,
$36 million
and
$67 million
in
2017
,
2016
and
2015
, respectively. Also includes
$18 million
in favorable development related to the Neon exited lines recorded in connection with a reinsurance to close transaction in 2017 and a charge of
$65 million
related to Neon exited lines in 2016.
|
(b)
|
Includes income of
$32 million
(before noncontrolling interest) from the sale of an apartment property in 2016 and
$66 million
(before noncontrolling interest) from the sales of a hotel and an apartment property in 2015.
|
(c)
|
AFG sold substantially all of its run-off long-term care insurance business in December 2015.
|
(d)
|
Primarily holding company interest and expenses, including losses on retirement of debt of
$51 million
in 2017 and
$4 million
in 2015, and special charges to increase A&E reserves related to AFG’s former railroad and manufacturing operations (
$24 million
in
2017
,
$5 million
in
2016
and
$12 million
in
2015
).
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Available for sale (“AFS”) fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. Government and government agencies
|
$
|
122
|
|
|
$
|
112
|
|
|
$
|
8
|
|
|
$
|
242
|
|
States, municipalities and political subdivisions
|
—
|
|
|
6,975
|
|
|
148
|
|
|
7,123
|
|
||||
Foreign government
|
—
|
|
|
127
|
|
|
—
|
|
|
127
|
|
||||
Residential MBS
|
—
|
|
|
3,105
|
|
|
122
|
|
|
3,227
|
|
||||
Commercial MBS
|
—
|
|
|
926
|
|
|
36
|
|
|
962
|
|
||||
Asset-backed securities (“ABS”)
|
—
|
|
|
7,218
|
|
|
744
|
|
|
7,962
|
|
||||
Corporate and other
|
30
|
|
|
17,662
|
|
|
1,044
|
|
|
18,736
|
|
||||
Total AFS fixed maturities
|
152
|
|
|
36,125
|
|
|
2,102
|
|
|
38,379
|
|
||||
Trading fixed maturities
|
44
|
|
|
304
|
|
|
—
|
|
|
348
|
|
||||
Equity securities — AFS and trading
|
1,411
|
|
|
86
|
|
|
165
|
|
|
1,662
|
|
||||
Assets of managed investment entities (“MIE”)
|
307
|
|
|
4,572
|
|
|
23
|
|
|
4,902
|
|
||||
Variable annuity assets (separate accounts) (*)
|
—
|
|
|
644
|
|
|
—
|
|
|
644
|
|
||||
Equity index call options
|
—
|
|
|
701
|
|
|
—
|
|
|
701
|
|
||||
Other assets — derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total assets accounted for at fair value
|
$
|
1,914
|
|
|
$
|
42,432
|
|
|
$
|
2,290
|
|
|
$
|
46,636
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Liabilities of managed investment entities
|
$
|
293
|
|
|
$
|
4,372
|
|
|
$
|
22
|
|
|
$
|
4,687
|
|
Derivatives in annuity benefits accumulated
|
—
|
|
|
—
|
|
|
2,542
|
|
|
2,542
|
|
||||
Other liabilities — derivatives
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
||||
Total liabilities accounted for at fair value
|
$
|
293
|
|
|
$
|
4,407
|
|
|
$
|
2,564
|
|
|
$
|
7,264
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Available for sale fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. Government and government agencies
|
$
|
133
|
|
|
$
|
174
|
|
|
$
|
8
|
|
|
$
|
315
|
|
States, municipalities and political subdivisions
|
—
|
|
|
6,641
|
|
|
140
|
|
|
6,781
|
|
||||
Foreign government
|
—
|
|
|
136
|
|
|
—
|
|
|
136
|
|
||||
Residential MBS
|
—
|
|
|
3,445
|
|
|
190
|
|
|
3,635
|
|
||||
Commercial MBS
|
—
|
|
|
1,468
|
|
|
25
|
|
|
1,493
|
|
||||
Asset-backed securities
|
—
|
|
|
5,475
|
|
|
484
|
|
|
5,959
|
|
||||
Corporate and other
|
29
|
|
|
15,484
|
|
|
712
|
|
|
16,225
|
|
||||
Total AFS fixed maturities
|
162
|
|
|
32,823
|
|
|
1,559
|
|
|
34,544
|
|
||||
Trading fixed maturities
|
30
|
|
|
329
|
|
|
—
|
|
|
359
|
|
||||
Equity securities — AFS and trading
|
1,305
|
|
|
79
|
|
|
174
|
|
|
1,558
|
|
||||
Assets of managed investment entities
|
380
|
|
|
4,356
|
|
|
29
|
|
|
4,765
|
|
||||
Variable annuity assets (separate accounts) (*)
|
—
|
|
|
600
|
|
|
—
|
|
|
600
|
|
||||
Equity index call options
|
—
|
|
|
492
|
|
|
—
|
|
|
492
|
|
||||
Other assets — derivatives
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Total assets accounted for at fair value
|
$
|
1,877
|
|
|
$
|
38,680
|
|
|
$
|
1,762
|
|
|
$
|
42,319
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Liabilities of managed investment entities
|
$
|
363
|
|
|
$
|
4,158
|
|
|
$
|
28
|
|
|
$
|
4,549
|
|
Derivatives in annuity benefits accumulated
|
—
|
|
|
—
|
|
|
1,759
|
|
|
1,759
|
|
||||
Derivatives in long-term debt
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Other liabilities — derivatives
|
—
|
|
|
30
|
|
|
—
|
|
|
30
|
|
||||
Total liabilities accounted for at fair value
|
$
|
363
|
|
|
$
|
4,187
|
|
|
$
|
1,787
|
|
|
$
|
6,337
|
|
|
Level 2 To Level 1 Transfers
|
|
Level 1 To Level 2 Transfers
|
||||||||||||||||||||||||||||||||||||||
|
# of Transfers
|
|
Fair Value
|
|
# of Transfers
|
|
Fair Value
|
||||||||||||||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||
Perpetual preferred stocks
|
4
|
|
|
6
|
|
|
5
|
|
|
$
|
23
|
|
|
$
|
35
|
|
|
$
|
19
|
|
|
2
|
|
|
7
|
|
|
7
|
|
|
$
|
11
|
|
|
$
|
28
|
|
|
$
|
31
|
|
Common stocks
|
—
|
|
|
3
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
80
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Redeemable preferred stocks
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Unobservable Input
|
|
Range
|
|
|
Adjustment for insurance subsidiary’s credit risk
|
|
0.2% – 2.0% over the risk free rate
|
|
|
Risk margin for uncertainty in cash flows
|
|
0.70% reduction in the discount rate
|
|
|
Surrenders
|
|
3% – 23% of indexed account value
|
|
|
Partial surrenders
|
|
2% – 10% of indexed account value
|
|
|
Annuitizations
|
|
0.1% – 1% of indexed account value
|
|
|
Deaths
|
|
1.6% – 8.0% of indexed account value
|
|
|
Budgeted option costs
|
|
2.4% – 3.6% of indexed account value
|
|
|
|
|
Total realized/unrealized
gains (losses) included in
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2016
|
|
Net
earnings
|
|
Other
comprehensive
income (loss)
|
|
Purchases
and
issuances
|
|
Sales and
settlements
|
|
Transfer
into
Level 3
|
|
Transfer
out of
Level 3
|
|
Balance at December 31, 2017
|
|||||||||||||||||
AFS fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. government agency
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
State and municipal
|
140
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
(2
|
)
|
|
10
|
|
|
(2
|
)
|
|
148
|
|
||||||||
Residential MBS
|
190
|
|
|
(4
|
)
|
|
2
|
|
|
1
|
|
|
(40
|
)
|
|
44
|
|
|
(71
|
)
|
|
122
|
|
||||||||
Commercial MBS
|
25
|
|
|
2
|
|
|
—
|
|
|
15
|
|
|
(10
|
)
|
|
4
|
|
|
—
|
|
|
36
|
|
||||||||
Asset-backed securities
|
484
|
|
|
—
|
|
|
1
|
|
|
410
|
|
|
(132
|
)
|
|
202
|
|
|
(221
|
)
|
|
744
|
|
||||||||
Corporate and other
|
712
|
|
|
(5
|
)
|
|
2
|
|
|
606
|
|
|
(237
|
)
|
|
29
|
|
|
(63
|
)
|
|
1,044
|
|
||||||||
Total AFS fixed maturities
|
1,559
|
|
|
(7
|
)
|
|
7
|
|
|
1,032
|
|
|
(421
|
)
|
|
289
|
|
|
(357
|
)
|
|
2,102
|
|
||||||||
Equity securities
|
174
|
|
|
(21
|
)
|
|
10
|
|
|
38
|
|
|
(16
|
)
|
|
—
|
|
|
(20
|
)
|
|
165
|
|
||||||||
Assets of MIE
|
29
|
|
|
(11
|
)
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
23
|
|
||||||||
Total Level 3 assets
|
$
|
1,762
|
|
|
$
|
(39
|
)
|
|
$
|
17
|
|
|
$
|
1,079
|
|
|
$
|
(437
|
)
|
|
$
|
289
|
|
|
$
|
(381
|
)
|
|
$
|
2,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Embedded derivatives (a)
|
$
|
(1,759
|
)
|
|
$
|
(589
|
)
|
|
$
|
—
|
|
|
$
|
(300
|
)
|
|
$
|
106
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2,542
|
)
|
Total Level 3 liabilities (b)
|
$
|
(1,759
|
)
|
|
$
|
(589
|
)
|
|
$
|
—
|
|
|
$
|
(300
|
)
|
|
$
|
106
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2,542
|
)
|
(a)
|
Total realized/unrealized gains (losses) included in net earnings for the embedded derivatives reflects losses related to the unlocking of actuarial assumptions of
$25 million
in
2017
.
|
(b)
|
As previously discussed, these tables exclude the portion of MIE liabilities allocated to Level 3, which are derived from the fair value of the MIE assets.
|
|
|
|
Total realized/unrealized
gains (losses) included in |
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2015
|
|
Net
earnings |
|
Other
comprehensive income (loss) |
|
Purchases
and issuances |
|
Sales and
settlements |
|
Transfer
into Level 3 |
|
Transfer
out of Level 3 |
|
Balance at December 31, 2016
|
|||||||||||||||||
AFS fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. government agency
|
$
|
15
|
|
|
$
|
(8
|
)
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
State and municipal
|
89
|
|
|
—
|
|
|
(4
|
)
|
|
57
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
140
|
|
||||||||
Residential MBS
|
224
|
|
|
(4
|
)
|
|
(2
|
)
|
|
8
|
|
|
(28
|
)
|
|
34
|
|
|
(42
|
)
|
|
190
|
|
||||||||
Commercial MBS
|
39
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(6
|
)
|
|
25
|
|
||||||||
Asset-backed securities
|
470
|
|
|
(1
|
)
|
|
1
|
|
|
50
|
|
|
(52
|
)
|
|
60
|
|
|
(44
|
)
|
|
484
|
|
||||||||
Corporate and other
|
633
|
|
|
—
|
|
|
(10
|
)
|
|
176
|
|
|
(100
|
)
|
|
30
|
|
|
(17
|
)
|
|
712
|
|
||||||||
Total AFS fixed maturities
|
1,470
|
|
|
(14
|
)
|
|
(14
|
)
|
|
291
|
|
|
(189
|
)
|
|
124
|
|
|
(109
|
)
|
|
1,559
|
|
||||||||
Equity securities
|
140
|
|
|
(12
|
)
|
|
35
|
|
|
44
|
|
|
(28
|
)
|
|
15
|
|
|
(20
|
)
|
|
174
|
|
||||||||
Assets of MIE
|
26
|
|
|
(9
|
)
|
|
—
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
||||||||
Total Level 3 assets
|
$
|
1,636
|
|
|
$
|
(35
|
)
|
|
$
|
21
|
|
|
$
|
347
|
|
|
$
|
(217
|
)
|
|
$
|
139
|
|
|
$
|
(129
|
)
|
|
$
|
1,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Embedded derivatives (a)
|
$
|
(1,369
|
)
|
|
$
|
(211
|
)
|
|
$
|
—
|
|
|
$
|
(277
|
)
|
|
$
|
98
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,759
|
)
|
Total Level 3 liabilities (b)
|
$
|
(1,369
|
)
|
|
$
|
(211
|
)
|
|
$
|
—
|
|
|
$
|
(277
|
)
|
|
$
|
98
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,759
|
)
|
(a)
|
Total realized/unrealized gains (losses) included in net earnings for the embedded derivatives reflects losses related to the unlocking of actuarial assumptions of
$17 million
in
2016
.
|
(b)
|
As previously discussed, these tables exclude the portion of MIE liabilities allocated to Level 3, which are derived from the fair value of the MIE assets.
|
|
|
|
|
|
Total realized/unrealized
gains (losses) included in
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Bal. at
Dec. 31,
2014
|
|
Impact of
accounting change (b) |
|
Net
earnings
|
|
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
|
|
||||||||||
Total AFS fixed maturities
|
1,231
|
|
|
—
|
|
|
(16
|
)
|
|
(19
|
)
|
|
460
|
|
|
(183
|
)
|
|
186
|
|
|
(143
|
)
|
|
(46
|
)
|
|
1,470
|
|
||||||||||
Equity securities
|
93
|
|
|
—
|
|
|
(4
|
)
|
|
(9
|
)
|
|
77
|
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
140
|
|
||||||||||
Assets of MIE
|
31
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
||||||||||
Total Level 3 assets
|
$
|
1,355
|
|
|
$
|
—
|
|
|
$
|
(31
|
)
|
|
$
|
(28
|
)
|
|
$
|
543
|
|
|
$
|
(183
|
)
|
|
$
|
186
|
|
|
$
|
(160
|
)
|
|
$
|
(46
|
)
|
|
$
|
1,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Liabilities of MIE
|
$
|
(2,701
|
)
|
|
$
|
2,701
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Embedded derivatives (a)
|
(1,160
|
)
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
(257
|
)
|
|
65
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,369
|
)
|
||||||||||
Total Level 3 liabilities
|
$
|
(3,861
|
)
|
|
$
|
2,701
|
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
|
$
|
(257
|
)
|
|
$
|
65
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,369
|
)
|
(a)
|
Total realized/unrealized gains (losses) included in net earnings for the embedded derivatives reflects losses related to the unlocking of actuarial assumptions of
$28 million
in
2015
.
|
(b)
|
The impact of implementing new guidance adopted in 2015, as discussed in
Note
A
—
“
Accounting Policies
—
Managed Investment Entities
.”
|
|
Carrying
|
|
Fair Value
|
||||||||||||||||
|
Value
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
2,338
|
|
|
$
|
2,338
|
|
|
$
|
2,338
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mortgage loans
|
1,125
|
|
|
1,119
|
|
|
—
|
|
|
—
|
|
|
1,119
|
|
|||||
Policy loans
|
184
|
|
|
184
|
|
|
—
|
|
|
—
|
|
|
184
|
|
|||||
Total financial assets not accounted for at fair value
|
$
|
3,647
|
|
|
$
|
3,641
|
|
|
$
|
2,338
|
|
|
$
|
—
|
|
|
$
|
1,303
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Annuity benefits accumulated (*)
|
$
|
33,110
|
|
|
$
|
32,461
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
32,461
|
|
Long-term debt
|
1,301
|
|
|
1,354
|
|
|
—
|
|
|
1,351
|
|
|
3
|
|
|||||
Total financial liabilities not accounted for at fair value
|
$
|
34,411
|
|
|
$
|
33,815
|
|
|
$
|
—
|
|
|
$
|
1,351
|
|
|
$
|
32,464
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
2,107
|
|
|
$
|
2,107
|
|
|
$
|
2,107
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mortgage loans
|
1,147
|
|
|
1,146
|
|
|
—
|
|
|
—
|
|
|
1,146
|
|
|||||
Policy loans
|
192
|
|
|
192
|
|
|
—
|
|
|
—
|
|
|
192
|
|
|||||
Total financial assets not accounted for at fair value
|
$
|
3,446
|
|
|
$
|
3,445
|
|
|
$
|
2,107
|
|
|
$
|
—
|
|
|
$
|
1,338
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Annuity benefits accumulated (*)
|
$
|
29,703
|
|
|
$
|
28,932
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28,932
|
|
Long-term debt
|
1,284
|
|
|
1,356
|
|
|
—
|
|
|
1,353
|
|
|
3
|
|
|||||
Total financial liabilities not accounted for at fair value
|
$
|
30,987
|
|
|
$
|
30,288
|
|
|
$
|
—
|
|
|
$
|
1,353
|
|
|
$
|
28,935
|
|
(*)
|
Excludes
$206 million
and
$204 million
of life contingent annuities in the payout phase at
December 31, 2017
and
2016
, respectively.
|
|
2017
|
|
2016
|
||||||||||||||||||||||||||||||||||||
Amortized
Cost
|
|
Gross Unrealized
|
|
Net
Unrealized
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Gross Unrealized
|
|
Net
Unrealized
|
|
Fair
Value
|
|||||||||||||||||||||||||
Gains
|
|
Losses
|
|
|
|
Gains
|
|
Losses
|
|
|
|||||||||||||||||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
U.S. Government and government agencies
|
$
|
244
|
|
|
$
|
1
|
|
|
$
|
(3
|
)
|
|
$
|
(2
|
)
|
|
$
|
242
|
|
|
$
|
315
|
|
|
$
|
3
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
315
|
|
States, municipalities and political subdivisions
|
6,887
|
|
|
254
|
|
|
(18
|
)
|
|
236
|
|
|
7,123
|
|
|
6,650
|
|
|
200
|
|
|
(69
|
)
|
|
131
|
|
|
6,781
|
|
||||||||||
Foreign government
|
124
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
127
|
|
|
131
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|
136
|
|
||||||||||
Residential MBS
|
2,884
|
|
|
349
|
|
|
(6
|
)
|
|
343
|
|
|
3,227
|
|
|
3,367
|
|
|
281
|
|
|
(13
|
)
|
|
268
|
|
|
3,635
|
|
||||||||||
Commercial MBS
|
927
|
|
|
36
|
|
|
(1
|
)
|
|
35
|
|
|
962
|
|
|
1,446
|
|
|
49
|
|
|
(2
|
)
|
|
47
|
|
|
1,493
|
|
||||||||||
Asset-backed securities
|
7,836
|
|
|
142
|
|
|
(16
|
)
|
|
126
|
|
|
7,962
|
|
|
5,962
|
|
|
43
|
|
|
(46
|
)
|
|
(3
|
)
|
|
5,959
|
|
||||||||||
Corporate and other
|
18,136
|
|
|
638
|
|
|
(38
|
)
|
|
600
|
|
|
18,736
|
|
|
15,864
|
|
|
473
|
|
|
(112
|
)
|
|
361
|
|
|
16,225
|
|
||||||||||
Total fixed maturities
|
$
|
37,038
|
|
|
$
|
1,423
|
|
|
$
|
(82
|
)
|
|
$
|
1,341
|
|
|
$
|
38,379
|
|
|
$
|
33,735
|
|
|
$
|
1,054
|
|
|
$
|
(245
|
)
|
|
$
|
809
|
|
|
$
|
34,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Common stocks
|
$
|
786
|
|
|
$
|
263
|
|
|
$
|
(22
|
)
|
|
$
|
241
|
|
|
$
|
1,027
|
|
|
$
|
879
|
|
|
$
|
160
|
|
|
$
|
(23
|
)
|
|
$
|
137
|
|
|
$
|
1,016
|
|
Perpetual preferred stocks
|
535
|
|
|
39
|
|
|
(1
|
)
|
|
38
|
|
|
573
|
|
|
472
|
|
|
21
|
|
|
(7
|
)
|
|
14
|
|
|
486
|
|
||||||||||
Total equity securities
|
$
|
1,321
|
|
|
$
|
302
|
|
|
$
|
(23
|
)
|
|
$
|
279
|
|
|
$
|
1,600
|
|
|
$
|
1,351
|
|
|
$
|
181
|
|
|
$
|
(30
|
)
|
|
$
|
151
|
|
|
$
|
1,502
|
|
|
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
|
||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
U.S. Government and government agencies
|
$
|
—
|
|
|
$
|
55
|
|
|
100
|
%
|
|
$
|
(3
|
)
|
|
$
|
123
|
|
|
98
|
%
|
|
States, municipalities and political subdivisions
|
(8
|
)
|
|
825
|
|
|
99
|
%
|
|
(10
|
)
|
|
431
|
|
|
98
|
%
|
|||||
Foreign government
|
—
|
|
|
4
|
|
|
100
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|||||
Residential MBS
|
(1
|
)
|
|
118
|
|
|
99
|
%
|
|
(5
|
)
|
|
118
|
|
|
96
|
%
|
|||||
Commercial MBS
|
(1
|
)
|
|
67
|
|
|
99
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|||||
Asset-backed securities
|
(7
|
)
|
|
1,195
|
|
|
99
|
%
|
|
(9
|
)
|
|
299
|
|
|
97
|
%
|
|||||
Corporate and other
|
(20
|
)
|
|
2,031
|
|
|
99
|
%
|
|
(18
|
)
|
|
603
|
|
|
97
|
%
|
|||||
Total fixed maturities
|
$
|
(37
|
)
|
|
$
|
4,295
|
|
|
99
|
%
|
|
$
|
(45
|
)
|
|
$
|
1,574
|
|
|
97
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Common stocks
|
$
|
(22
|
)
|
|
$
|
117
|
|
|
84
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
Perpetual preferred stocks
|
—
|
|
|
41
|
|
|
100
|
%
|
|
(1
|
)
|
|
13
|
|
|
93
|
%
|
|||||
Total equity securities
|
$
|
(22
|
)
|
|
$
|
158
|
|
|
88
|
%
|
|
$
|
(1
|
)
|
|
$
|
13
|
|
|
93
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
U.S. Government and government agencies
|
$
|
(1
|
)
|
|
$
|
153
|
|
|
99
|
%
|
|
$
|
(2
|
)
|
|
$
|
8
|
|
|
80
|
%
|
|
States, municipalities and political subdivisions
|
(64
|
)
|
|
2,289
|
|
|
97
|
%
|
|
(5
|
)
|
|
44
|
|
|
90
|
%
|
|||||
Residential MBS
|
(7
|
)
|
|
502
|
|
|
99
|
%
|
|
(6
|
)
|
|
162
|
|
|
96
|
%
|
|||||
Commercial MBS
|
(2
|
)
|
|
121
|
|
|
98
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|||||
Asset-backed securities
|
(29
|
)
|
|
1,737
|
|
|
98
|
%
|
|
(17
|
)
|
|
634
|
|
|
97
|
%
|
|||||
Corporate and other
|
(93
|
)
|
|
3,849
|
|
|
98
|
%
|
|
(19
|
)
|
|
312
|
|
|
94
|
%
|
|||||
Total fixed maturities
|
$
|
(196
|
)
|
|
$
|
8,651
|
|
|
98
|
%
|
|
$
|
(49
|
)
|
|
$
|
1,160
|
|
|
96
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Common stocks
|
$
|
(23
|
)
|
|
$
|
215
|
|
|
90
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
Perpetual preferred stocks
|
(6
|
)
|
|
135
|
|
|
96
|
%
|
|
(1
|
)
|
|
6
|
|
|
86
|
%
|
|||||
Total equity securities
|
$
|
(29
|
)
|
|
$
|
350
|
|
|
92
|
%
|
|
$
|
(1
|
)
|
|
$
|
6
|
|
|
86
|
%
|
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.
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance at January 1
|
$
|
153
|
|
|
$
|
160
|
|
|
$
|
170
|
|
Additional credit impairments on:
|
|
|
|
|
|
||||||
Previously impaired securities
|
1
|
|
|
2
|
|
|
1
|
|
|||
Securities without prior impairments
|
3
|
|
|
1
|
|
|
2
|
|
|||
Reductions due to:
|
|
|
|
|
|
||||||
Sales or redemptions
|
(12
|
)
|
|
(10
|
)
|
|
(9
|
)
|
|||
Sale of subsidiaries
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||
Balance at December 31
|
$
|
145
|
|
|
$
|
153
|
|
|
$
|
160
|
|
|
Amortized
|
|
Fair Value
|
|||||||
Cost
|
|
Amount
|
|
%
|
||||||
Maturity
|
|
|
|
|
|
|||||
One year or less
|
$
|
746
|
|
|
$
|
759
|
|
|
2
|
%
|
After one year through five years
|
6,730
|
|
|
6,939
|
|
|
18
|
%
|
||
After five years through ten years
|
13,235
|
|
|
13,662
|
|
|
35
|
%
|
||
After ten years
|
4,680
|
|
|
4,868
|
|
|
13
|
%
|
||
|
25,391
|
|
|
26,228
|
|
|
68
|
%
|
||
ABS (average life of approximately 5 years)
|
7,836
|
|
|
7,962
|
|
|
21
|
%
|
||
MBS (average life of approximately 4.5 years)
|
3,811
|
|
|
4,189
|
|
|
11
|
%
|
||
Total
|
$
|
37,038
|
|
|
$
|
38,379
|
|
|
100
|
%
|
|
Pretax
|
|
Deferred Tax
|
|
Net
|
||||||
December 31, 2017
|
|
|
|
|
|
||||||
Net unrealized gain on:
|
|
|
|
|
|
||||||
Fixed maturities — annuity segment (a)
|
$
|
1,082
|
|
|
$
|
(227
|
)
|
|
$
|
855
|
|
Fixed maturities — all other
|
259
|
|
|
(55
|
)
|
|
204
|
|
|||
Total fixed maturities
|
1,341
|
|
|
(282
|
)
|
|
1,059
|
|
|||
Equity securities (b)
|
279
|
|
|
(58
|
)
|
|
221
|
|
|||
Total investments
|
1,620
|
|
|
(340
|
)
|
|
1,280
|
|
|||
Deferred policy acquisition costs — annuity segment
|
(433
|
)
|
|
91
|
|
|
(342
|
)
|
|||
Annuity benefits accumulated
|
(137
|
)
|
|
29
|
|
|
(108
|
)
|
|||
Unearned revenue
|
13
|
|
|
(3
|
)
|
|
10
|
|
|||
Total net unrealized gain on marketable securities
|
$
|
1,063
|
|
|
$
|
(223
|
)
|
|
$
|
840
|
|
|
|
|
|
|
|
||||||
December 31, 2016
|
|
|
|
|
|
||||||
Net unrealized gain on:
|
|
|
|
|
|
||||||
Fixed maturities — annuity segment (a)
|
$
|
640
|
|
|
$
|
(224
|
)
|
|
$
|
416
|
|
Fixed maturities — all other
|
169
|
|
|
(59
|
)
|
|
110
|
|
|||
Total fixed maturities
|
809
|
|
|
(283
|
)
|
|
526
|
|
|||
Equity securities (b)
|
151
|
|
|
(53
|
)
|
|
98
|
|
|||
Total investments
|
960
|
|
|
(336
|
)
|
|
624
|
|
|||
Deferred policy acquisition costs — annuity segment
|
(273
|
)
|
|
96
|
|
|
(177
|
)
|
|||
Annuity benefits accumulated
|
(78
|
)
|
|
27
|
|
|
(51
|
)
|
|||
Unearned revenue
|
13
|
|
|
(5
|
)
|
|
8
|
|
|||
Total net unrealized gain on marketable securities
|
$
|
622
|
|
|
$
|
(218
|
)
|
|
$
|
404
|
|
(a)
|
Net unrealized gains on fixed maturity investments supporting AFG’s annuity benefits accumulated.
|
(b)
|
As discussed in
Note
A
— “
Accounting Policies
—
Investments
,”
effective January 1, 2018, all equity securities currently classified as “available for sale” will be required to be carried at fair value through net earnings instead of AOCI.
|
|
2017
|
|
2016
|
|
2015
|
||||||
Investment income:
|
|
|
|
|
|
||||||
Fixed maturities
|
$
|
1,607
|
|
|
$
|
1,510
|
|
|
$
|
1,461
|
|
Equity securities
|
79
|
|
|
81
|
|
|
76
|
|
|||
Equity in earnings of partnerships and similar investments
|
64
|
|
|
44
|
|
|
27
|
|
|||
Other
|
102
|
|
|
81
|
|
|
87
|
|
|||
Gross investment income
|
1,852
|
|
|
1,716
|
|
|
1,651
|
|
|||
Investment expenses
|
(21
|
)
|
|
(20
|
)
|
|
(18
|
)
|
|||
Net investment income
|
$
|
1,831
|
|
|
$
|
1,696
|
|
|
$
|
1,633
|
|
|
2017
|
|
2016
|
||||||||||||||||||||||||||||
|
Realized gains (losses)
|
|
|
|
Realized gains (losses)
|
|
|
||||||||||||||||||||||||
|
Before Impairments
|
|
Impairments
|
|
Total
|
|
Change in Unrealized
|
|
Before Impairments
|
|
Impairments
|
|
Total
|
|
Change in Unrealized
|
||||||||||||||||
Fixed maturities
|
$
|
17
|
|
|
$
|
(20
|
)
|
|
$
|
(3
|
)
|
|
$
|
532
|
|
|
$
|
36
|
|
|
$
|
(38
|
)
|
|
$
|
(2
|
)
|
|
$
|
90
|
|
Equity securities
|
70
|
|
|
(64
|
)
|
|
6
|
|
|
128
|
|
|
106
|
|
|
(93
|
)
|
|
13
|
|
|
67
|
|
||||||||
Mortgage loans and other investments
|
(6
|
)
|
|
(4
|
)
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Other (*)
|
(3
|
)
|
|
15
|
|
|
12
|
|
|
(219
|
)
|
|
(7
|
)
|
|
15
|
|
|
8
|
|
|
(52
|
)
|
||||||||
Total pretax
|
78
|
|
|
(73
|
)
|
|
5
|
|
|
441
|
|
|
135
|
|
|
(116
|
)
|
|
19
|
|
|
105
|
|
||||||||
Tax effects
|
(27
|
)
|
|
25
|
|
|
(2
|
)
|
|
(5
|
)
|
|
(48
|
)
|
|
41
|
|
|
(7
|
)
|
|
(37
|
)
|
||||||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
3
|
|
|
1
|
|
|
4
|
|
||||||||
Net of tax and noncontrolling interests
|
$
|
51
|
|
|
$
|
(48
|
)
|
|
$
|
3
|
|
|
$
|
436
|
|
|
$
|
85
|
|
|
$
|
(72
|
)
|
|
$
|
13
|
|
|
$
|
72
|
|
|
|
|
2015
|
||||||||||||||||||||
|
|
|
|
|
Realized gains (losses)
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
Before Impairments
|
|
Impairments
|
|
Total
|
|
Change in Unrealized
|
||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
$
|
19
|
|
|
$
|
(43
|
)
|
|
$
|
(24
|
)
|
|
$
|
(941
|
)
|
Equity securities
|
|
|
|
|
|
|
|
|
94
|
|
|
(94
|
)
|
|
—
|
|
|
(134
|
)
|
||||
Mortgage loans and other investments
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|
—
|
|
||||
Other (*)
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
15
|
|
|
10
|
|
|
430
|
|
||||
Total pretax
|
|
|
|
|
|
|
|
|
106
|
|
|
(125
|
)
|
|
(19
|
)
|
|
(645
|
)
|
||||
Tax effects
|
|
|
|
|
|
|
|
|
(38
|
)
|
|
45
|
|
|
7
|
|
|
226
|
|
||||
Noncontrolling interests
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
2
|
|
|
—
|
|
|
8
|
|
||||
Net of tax and noncontrolling interests
|
|
|
|
|
|
|
|
|
$
|
66
|
|
|
$
|
(78
|
)
|
|
$
|
(12
|
)
|
|
$
|
(411
|
)
|
(*)
|
Primarily adjustments to deferred policy acquisition costs and reserves related to the annuity business.
|
|
2017
|
|
2016
|
|
2015
|
||||||
Fixed maturities:
|
|
|
|
|
|
||||||
Gross gains
|
$
|
43
|
|
|
$
|
55
|
|
|
$
|
38
|
|
Gross losses
|
(20
|
)
|
|
(10
|
)
|
|
(7
|
)
|
|||
Equity securities:
|
|
|
|
|
|
||||||
Gross gains
|
87
|
|
|
110
|
|
|
99
|
|
|||
Gross losses
|
(17
|
)
|
|
(4
|
)
|
|
(5
|
)
|
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
Derivative
|
|
Balance Sheet Line
|
|
Asset
|
|
Liability
|
|
Asset
|
|
Liability
|
||||||||
MBS with embedded derivatives
|
|
Fixed maturities
|
|
$
|
105
|
|
|
$
|
—
|
|
|
$
|
107
|
|
|
$
|
—
|
|
Public company warrants
|
|
Equity securities
|
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Fixed-indexed annuities (embedded derivative)
|
|
Annuity benefits accumulated
|
|
—
|
|
|
2,542
|
|
|
—
|
|
|
1,759
|
|
||||
Equity index call options
|
|
Equity index call options
|
|
701
|
|
|
—
|
|
|
492
|
|
|
—
|
|
||||
Reinsurance contract (embedded derivative)
|
|
Other liabilities
|
|
—
|
|
|
4
|
|
|
—
|
|
|
8
|
|
||||
|
|
|
|
$
|
810
|
|
|
$
|
2,546
|
|
|
$
|
603
|
|
|
$
|
1,767
|
|
Derivative
|
|
Statement of Earnings Line
|
|
2017
|
|
2016
|
|
2015
|
||||||
MBS with embedded derivatives
|
|
Realized gains (losses) on securities
|
|
$
|
(6
|
)
|
|
$
|
(9
|
)
|
|
$
|
(16
|
)
|
Public company warrants
|
|
Realized gains (losses) on securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Fixed-indexed annuities (embedded derivative) (*)
|
|
Annuity benefits
|
|
(589
|
)
|
|
(211
|
)
|
|
(17
|
)
|
|||
Equity index call options
|
|
Annuity benefits
|
|
494
|
|
|
141
|
|
|
(56
|
)
|
|||
Reinsurance contracts (embedded derivative)
|
|
Net investment income
|
|
(2
|
)
|
|
(1
|
)
|
|
6
|
|
|||
|
|
|
|
$
|
(103
|
)
|
|
$
|
(80
|
)
|
|
$
|
(83
|
)
|
(*)
|
The change in fair value of the embedded derivative includes losses related to unlocking of actuarial assumptions of
$25 million
in
2017
compared to
$17 million
in
2016
and
$28 million
in
2015
.
|
|
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, 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
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Additions
|
535
|
|
|
|
230
|
|
|
9
|
|
|
—
|
|
|
239
|
|
|
—
|
|
|
239
|
|
|
|
774
|
|
||||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Periodic amortization
|
(520
|
)
|
|
|
(169
|
)
|
|
(24
|
)
|
|
(9
|
)
|
|
(202
|
)
|
|
—
|
|
|
(202
|
)
|
|
|
(722
|
)
|
||||||||
Annuity unlocking
|
—
|
|
|
|
25
|
|
|
4
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
|
|
29
|
|
||||||||
Included in realized gains
|
—
|
|
|
|
6
|
|
|
2
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|
|
8
|
|
||||||||
Foreign currency translation
|
(3
|
)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(3
|
)
|
||||||||
Change in unrealized
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31
|
)
|
|
(31
|
)
|
|
|
(31
|
)
|
||||||||
Balance at December 31, 2016
|
238
|
|
|
|
1,110
|
|
|
110
|
|
|
46
|
|
|
1,266
|
|
|
(265
|
)
|
|
1,001
|
|
|
|
1,239
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Additions
|
588
|
|
|
|
225
|
|
|
4
|
|
|
—
|
|
|
229
|
|
|
—
|
|
|
229
|
|
|
|
817
|
|
||||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Periodic amortization
|
(556
|
)
|
|
|
(161
|
)
|
|
(19
|
)
|
|
(8
|
)
|
|
(188
|
)
|
|
—
|
|
|
(188
|
)
|
|
|
(744
|
)
|
||||||||
Annuity unlocking
|
—
|
|
|
|
34
|
|
|
6
|
|
|
1
|
|
|
41
|
|
|
—
|
|
|
41
|
|
|
|
41
|
|
||||||||
Included in realized gains
|
—
|
|
|
|
9
|
|
|
1
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|
|
10
|
|
||||||||
Foreign currency translation
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||||
Other
|
—
|
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|
|
10
|
|
||||||||
Change in unrealized
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(157
|
)
|
|
(157
|
)
|
|
|
(157
|
)
|
||||||||
Balance at December 31, 2017
|
$
|
270
|
|
|
|
$
|
1,217
|
|
|
$
|
102
|
|
|
$
|
49
|
|
|
$
|
1,368
|
|
|
$
|
(422
|
)
|
|
$
|
946
|
|
|
|
$
|
1,216
|
|
(*)
|
Unrealized adjustments to DPAC includes net unrealized gains/losses on securities and net unrealized gains/losses on cash flow hedges.
|
|
Year ended December 31,
|
||||||||||
2017
|
|
2016
|
|
2015
|
|||||||
Investment in CLO tranches
|
$
|
215
|
|
|
$
|
216
|
|
|
$
|
266
|
|
Gains (losses) on change in fair value of assets/liabilities (a):
|
|
|
|
|
|
||||||
Assets
|
(8
|
)
|
|
131
|
|
|
(116
|
)
|
|||
Liabilities
|
20
|
|
|
(116
|
)
|
|
82
|
|
|||
Management fees paid to AFG
|
18
|
|
|
17
|
|
|
15
|
|
|||
CLO earnings (losses) attributable to AFG Shareholders (b)
|
23
|
|
|
37
|
|
|
(6
|
)
|
(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, 2015
|
$
|
168
|
|
|
$
|
33
|
|
|
$
|
201
|
|
Sale of subsidiaries in 2015
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
Balance at December 31, 2015, December 31, 2016 and December 31, 2017
|
$
|
168
|
|
|
$
|
31
|
|
|
$
|
199
|
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
Principal
|
|
Discount and Issue Costs
|
|
Carrying Value
|
|
Principal
|
|
Discount and Issue Costs
|
|
Carrying Value
|
||||||||||||
Direct Senior Obligations of AFG:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
4.50% Senior Notes due June 2047
|
$
|
590
|
|
|
$
|
(2
|
)
|
|
$
|
588
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
3.50% Senior Notes due August 2026
|
425
|
|
|
(5
|
)
|
|
420
|
|
|
300
|
|
|
(3
|
)
|
|
297
|
|
||||||
9-7/8% Senior Notes due June 2019
|
—
|
|
|
—
|
|
|
—
|
|
|
350
|
|
|
(1
|
)
|
|
349
|
|
||||||
6-3/8% Senior Notes due June 2042
|
—
|
|
|
—
|
|
|
—
|
|
|
230
|
|
|
(7
|
)
|
|
223
|
|
||||||
5-3/4% Senior Notes due August 2042
|
—
|
|
|
—
|
|
|
—
|
|
|
125
|
|
|
(4
|
)
|
|
121
|
|
||||||
Other
|
3
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||
|
1,018
|
|
|
(7
|
)
|
|
1,011
|
|
|
1,008
|
|
|
(15
|
)
|
|
993
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Direct Subordinated Obligations of AFG:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
6-1/4% Subordinated Debentures due September 2054
|
150
|
|
|
(5
|
)
|
|
145
|
|
|
150
|
|
|
(5
|
)
|
|
145
|
|
||||||
6% Subordinated Debentures due November 2055
|
150
|
|
|
(5
|
)
|
|
145
|
|
|
150
|
|
|
(5
|
)
|
|
145
|
|
||||||
|
300
|
|
|
(10
|
)
|
|
290
|
|
|
300
|
|
|
(10
|
)
|
|
290
|
|
||||||
|
$
|
1,318
|
|
|
$
|
(17
|
)
|
|
$
|
1,301
|
|
|
$
|
1,308
|
|
|
$
|
(25
|
)
|
|
$
|
1,283
|
|
|
Shares
|
|
Average
Grant Date
Fair Value
|
|||
Outstanding at January 1, 2017
|
678,875
|
|
|
$
|
60.90
|
|
Granted
|
232,250
|
|
|
$
|
94.44
|
|
Vested
|
(145,473
|
)
|
|
$
|
48.76
|
|
Forfeited
|
(6,617
|
)
|
|
$
|
71.30
|
|
Outstanding at December 31, 2017
|
759,035
|
|
|
$
|
73.40
|
|
|
Shares
|
|
Average
Exercise
Price
|
|
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding at January 1, 2017
|
4,505,101
|
|
|
$
|
43.02
|
|
|
|
|
|
||
Exercised
|
(1,020,986
|
)
|
|
$
|
33.38
|
|
|
|
|
|
||
Forfeited/Cancelled
|
(16,775
|
)
|
|
$
|
55.82
|
|
|
|
|
|
||
Outstanding at December 31, 2017
|
3,467,340
|
|
|
$
|
45.80
|
|
|
4.9 years
|
|
$
|
218
|
|
|
|
|
|
|
|
|
|
|||||
Options exercisable at December 31, 2017
|
2,589,277
|
|
|
$
|
42.00
|
|
|
4.4 years
|
|
$
|
172
|
|
|
2015
|
||
Exercise price
|
$
|
63.15
|
|
Expected dividend yield
|
1.6
|
%
|
|
Expected volatility
|
25
|
%
|
|
Expected term (in years)
|
7.25
|
|
|
Risk-free rate
|
1.88
|
%
|
|
|
|
||
Grant date fair value
|
$
|
15.29
|
|
|
|
|
Other Comprehensive Income
|
|
|
|
|
||||||||||||||||||||||||
|
AOCI
Beginning
Balance
|
|
Pretax
|
|
Tax
|
|
Net
of
tax
|
|
Attributable to
noncontrolling
interests
|
|
Attributable to
shareholders
|
|
Other (c)
|
|
AOCI
Ending
Balance
|
||||||||||||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net unrealized gains on securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Unrealized holding gains on securities arising during the period
|
|
|
$
|
456
|
|
|
$
|
(159
|
)
|
|
$
|
297
|
|
|
$
|
—
|
|
|
$
|
297
|
|
|
|
|
|
||||||
Reclassification adjustment for realized (gains) losses included in net earnings (a)
|
|
|
(15
|
)
|
|
5
|
|
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
|
|
|
|
|||||||||||
Total net unrealized gains on securities (b)
|
$
|
404
|
|
|
441
|
|
|
(154
|
)
|
|
287
|
|
|
—
|
|
|
287
|
|
|
$
|
149
|
|
|
$
|
840
|
|
|||||
Net unrealized losses on cash flow hedges
|
(7
|
)
|
|
(6
|
)
|
|
2
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|
(2
|
)
|
|
(13
|
)
|
||||||||
Foreign currency translation adjustments
|
(15
|
)
|
|
9
|
|
|
3
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|
(3
|
)
|
|
(6
|
)
|
||||||||
Pension and other postretirement plans adjustments
|
(7
|
)
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
(2
|
)
|
|
(8
|
)
|
||||||||
Total
|
$
|
375
|
|
|
$
|
445
|
|
|
$
|
(149
|
)
|
|
$
|
296
|
|
|
$
|
—
|
|
|
$
|
296
|
|
|
$
|
142
|
|
|
$
|
813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net unrealized gains on securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Unrealized holding gains on securities arising during the period
|
|
|
$
|
124
|
|
|
$
|
(44
|
)
|
|
$
|
80
|
|
|
$
|
(4
|
)
|
|
$
|
76
|
|
|
|
|
|
||||||
Reclassification adjustment for realized (gains) losses included in net earnings (a)
|
|
|
(19
|
)
|
|
7
|
|
|
(12
|
)
|
|
(1
|
)
|
|
(13
|
)
|
|
|
|
|
|||||||||||
Total net unrealized gains on securities (b)
|
$
|
332
|
|
|
105
|
|
|
(37
|
)
|
|
68
|
|
|
(5
|
)
|
|
63
|
|
|
$
|
9
|
|
|
$
|
404
|
|
|||||
Net unrealized gains (losses) on cash flow hedges
|
1
|
|
|
(12
|
)
|
|
4
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(7
|
)
|
||||||||
Foreign currency translation adjustments
|
(22
|
)
|
|
6
|
|
|
1
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
(15
|
)
|
||||||||
Pension and other postretirement plans adjustments
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
||||||||
Total
|
$
|
304
|
|
|
$
|
99
|
|
|
$
|
(32
|
)
|
|
$
|
67
|
|
|
$
|
(5
|
)
|
|
$
|
62
|
|
|
$
|
9
|
|
|
$
|
375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net unrealized gains (losses) on securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Unrealized holding 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
|
|
|
OCI component
|
|
Affected line in the statement of earnings
|
|
|
Pretax
|
|
Realized gains (losses) on securities
|
|
|
Tax
|
|
Provision for income taxes
|
|
|
Attributable to noncontrolling interests
|
|
Net earnings attributable to noncontrolling interests
|
|
(b)
|
Includes net unrealized
gains
of
$68 million
at
December 31, 2017
compared to net unrealized
gains
of
$52 million
and
$51 million
at
December 31, 2016
and
2015
, related to securities for which only the credit portion of an other-than-temporary impairment has been recorded in earnings.
|
(c)
|
Other includes the December 2017 reclassification of
$145 million
stranded in AOCI from accounting for the Tax Cuts and Jobs Act of 2017 to retained earnings (see
Note
A
— “
Accounting Policies
—
Income Taxes
”)
, and the impact on AOCI of the December 2017 sale of redeemable noncontrolling interests in Neon and the November 2016 acquisition of the noncontrolling interest in NATL (see
Note
B
— “
Acquisitions and Sale of Businesses
”).
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
Amount
|
|
% of EBT
|
|
Amount
|
|
% of EBT
|
|
Amount
|
|
% of EBT
|
|||||||||
Earnings before income taxes (“EBT”)
|
$
|
724
|
|
|
|
|
$
|
787
|
|
|
|
|
$
|
565
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income taxes at statutory rate
|
$
|
253
|
|
|
35
|
%
|
|
$
|
275
|
|
|
35
|
%
|
|
$
|
198
|
|
|
35
|
%
|
Effect of:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Tax exempt interest
|
(23
|
)
|
|
(3
|
%)
|
|
(24
|
)
|
|
(3
|
%)
|
|
(27
|
)
|
|
(5
|
%)
|
|||
Dividend received deduction
|
(8
|
)
|
|
(1
|
%)
|
|
(7
|
)
|
|
(1
|
%)
|
|
(8
|
)
|
|
(1
|
%)
|
|||
Stock-based compensation
|
(16
|
)
|
|
(2
|
%)
|
|
(9
|
)
|
|
(1
|
%)
|
|
1
|
|
|
—
|
%
|
|||
Employee stock ownership plan dividend paid deduction
|
(5
|
)
|
|
(1
|
%)
|
|
(2
|
)
|
|
—
|
%
|
|
(1
|
)
|
|
—
|
%
|
|||
Foreign operations
|
21
|
|
|
3
|
%
|
|
5
|
|
|
—
|
%
|
|
3
|
|
|
1
|
%
|
|||
Change in valuation allowance (excluding change in tax rate)
|
(7
|
)
|
|
(1
|
%)
|
|
52
|
|
|
7
|
%
|
|
23
|
|
|
4
|
%
|
|||
Subsidiaries not in AFG’s tax return
|
—
|
|
|
—
|
%
|
|
3
|
|
|
—
|
%
|
|
2
|
|
|
—
|
%
|
|||
Neon restructuring
|
(56
|
)
|
|
(8
|
%)
|
|
(111
|
)
|
|
(14
|
%)
|
|
—
|
|
|
—
|
%
|
|||
Change in U.S corporate tax rate
|
83
|
|
|
11
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Acquisition of noncontrolling interest in NATL
|
—
|
|
|
—
|
%
|
|
(66
|
)
|
|
(8
|
%)
|
|
—
|
|
|
—
|
%
|
|||
Other
|
5
|
|
|
1
|
%
|
|
3
|
|
|
—
|
%
|
|
4
|
|
|
1
|
%
|
|||
Provision for income taxes as shown in the statement of earnings
|
$
|
247
|
|
|
34
|
%
|
|
$
|
119
|
|
|
15
|
%
|
|
$
|
195
|
|
|
35
|
%
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current taxes:
|
|
|
|
|
|
||||||
Federal
|
$
|
153
|
|
|
$
|
299
|
|
|
$
|
216
|
|
State
|
6
|
|
|
12
|
|
|
8
|
|
|||
Deferred taxes:
|
|
|
|
|
|
||||||
Federal
|
5
|
|
|
(192
|
)
|
|
(29
|
)
|
|||
Impact of change in U.S. corporate tax rate
|
83
|
|
|
—
|
|
|
—
|
|
|||
Total Federal deferred taxes
|
88
|
|
|
(192
|
)
|
|
(29
|
)
|
|||
Provision for income taxes
|
$
|
247
|
|
|
$
|
119
|
|
|
$
|
195
|
|
|
Expiring
|
|
Amount
|
|
||
Operating Loss – U.S.
|
2018 - 2022
|
|
$
|
130
|
|
|
Operating Loss – United Kingdom
|
indefinite
|
|
252
|
|
(*)
|
|
Capital Loss – U.S.
|
2022
|
|
109
|
|
|
(*)
|
£186 million
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
Excluding Unrealized Gains
|
|
Impact of Unrealized Gains
|
|
Total
|
|
Excluding Unrealized Gains
|
|
Impact of Unrealized Gains
|
|
Total
|
||||||||||||
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Federal net operating loss carryforwards
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
27
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
50
|
|
Foreign underwriting losses
|
80
|
|
|
—
|
|
|
80
|
|
|
120
|
|
|
—
|
|
|
120
|
|
||||||
Capital loss carryforwards
|
32
|
|
|
—
|
|
|
32
|
|
|
83
|
|
|
—
|
|
|
83
|
|
||||||
Insurance claims and reserves
|
665
|
|
|
29
|
|
|
694
|
|
|
774
|
|
|
27
|
|
|
801
|
|
||||||
Employee benefits
|
84
|
|
|
—
|
|
|
84
|
|
|
131
|
|
|
—
|
|
|
131
|
|
||||||
Other, net
|
48
|
|
|
(3
|
)
|
|
45
|
|
|
85
|
|
|
(5
|
)
|
|
80
|
|
||||||
Total deferred tax assets before valuation allowance
|
936
|
|
|
26
|
|
|
962
|
|
|
1,243
|
|
|
22
|
|
|
1,265
|
|
||||||
Valuation allowance against deferred tax assets
|
(109
|
)
|
|
—
|
|
|
(109
|
)
|
|
(173
|
)
|
|
—
|
|
|
(173
|
)
|
||||||
Total deferred tax assets
|
827
|
|
|
26
|
|
|
853
|
|
|
1,070
|
|
|
22
|
|
|
1,092
|
|
||||||
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment securities
|
(1
|
)
|
|
(340
|
)
|
|
(341
|
)
|
|
29
|
|
|
(336
|
)
|
|
(307
|
)
|
||||||
Deferred policy acquisition costs
|
(293
|
)
|
|
91
|
|
|
(202
|
)
|
|
(448
|
)
|
|
96
|
|
|
(352
|
)
|
||||||
Insurance claims and reserves transition liability
|
(128
|
)
|
|
—
|
|
|
(128
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Real estate, property and equipment
|
(35
|
)
|
|
—
|
|
|
(35
|
)
|
|
(45
|
)
|
|
—
|
|
|
(45
|
)
|
||||||
Total deferred tax liabilities
|
(457
|
)
|
|
(249
|
)
|
|
(706
|
)
|
|
(464
|
)
|
|
(240
|
)
|
|
(704
|
)
|
||||||
Net deferred tax asset (liability)
|
$
|
370
|
|
|
$
|
(223
|
)
|
|
$
|
147
|
|
|
$
|
606
|
|
|
$
|
(218
|
)
|
|
$
|
388
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance at January 1
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Additions for tax positions of prior years
|
—
|
|
|
—
|
|
|
1
|
|
|||
Reductions for tax positions of prior years
|
—
|
|
|
—
|
|
|
—
|
|
|||
Additions for tax positions of current year
|
—
|
|
|
—
|
|
|
—
|
|
|||
Settlements
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at December 31
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
|
1st
Quarter
|
|
2nd
Quarter
|
|
3rd
Quarter
|
|
4th
Quarter
|
|
Total
Year
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
1,576
|
|
|
$
|
1,646
|
|
|
$
|
1,835
|
|
|
$
|
1,808
|
|
|
$
|
6,865
|
|
Net earnings, including noncontrolling interests
|
|
155
|
|
|
145
|
|
|
11
|
|
|
166
|
|
|
477
|
|
|||||
Net earnings attributable to shareholders
|
|
153
|
|
|
145
|
|
|
11
|
|
|
166
|
|
|
475
|
|
|||||
Earnings attributable to shareholders per Common Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
1.76
|
|
|
$
|
1.64
|
|
|
$
|
0.13
|
|
|
$
|
1.88
|
|
|
$
|
5.40
|
|
Diluted
|
|
1.72
|
|
|
1.61
|
|
|
0.13
|
|
|
1.84
|
|
|
5.28
|
|
|||||
Average number of Common Shares:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
87.2
|
|
|
87.8
|
|
|
88.1
|
|
|
88.2
|
|
|
87.8
|
|
|||||
Diluted
|
|
89.3
|
|
|
89.8
|
|
|
90.0
|
|
|
90.1
|
|
|
89.8
|
|
|||||
2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
1,475
|
|
|
$
|
1,581
|
|
|
$
|
1,705
|
|
|
$
|
1,737
|
|
|
$
|
6,498
|
|
Net earnings, including noncontrolling interests
|
|
104
|
|
|
63
|
|
|
113
|
|
|
388
|
|
|
668
|
|
|||||
Net earnings attributable to shareholders
|
|
101
|
|
|
54
|
|
|
109
|
|
|
385
|
|
|
649
|
|
|||||
Earnings attributable to shareholders per Common Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
1.16
|
|
|
$
|
0.63
|
|
|
$
|
1.25
|
|
|
$
|
4.43
|
|
|
$
|
7.47
|
|
Diluted
|
|
1.14
|
|
|
0.62
|
|
|
1.23
|
|
|
4.33
|
|
|
7.33
|
|
|||||
Average number of Common Shares:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
86.9
|
|
|
86.8
|
|
|
86.9
|
|
|
86.9
|
|
|
86.9
|
|
|||||
Diluted
|
|
88.5
|
|
|
88.4
|
|
|
88.5
|
|
|
88.8
|
|
|
88.5
|
|
|
|
1st
Quarter
|
|
2nd
Quarter
|
|
3rd
Quarter
|
|
4th
Quarter
|
|
Total
Year
|
||||||||||
Realized Gains (Losses) on Securities and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2017
|
|
$
|
3
|
|
|
$
|
8
|
|
|
$
|
(12
|
)
|
|
$
|
6
|
|
|
$
|
5
|
|
2016
|
|
(18
|
)
|
|
(14
|
)
|
|
2
|
|
|
51
|
|
|
21
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Prior Year Development Favorable (Adverse)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2017
|
|
$
|
28
|
|
|
$
|
22
|
|
|
$
|
(52
|
)
|
|
$
|
66
|
|
|
$
|
64
|
|
2016
|
|
28
|
|
|
(28
|
)
|
|
(22
|
)
|
|
(10
|
)
|
|
(32
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Impact of Derivatives related to Fixed-indexed Annuities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2017
|
|
$
|
(2
|
)
|
|
$
|
(16
|
)
|
|
$
|
(4
|
)
|
|
$
|
(11
|
)
|
|
$
|
(33
|
)
|
2016
|
|
(31
|
)
|
|
(26
|
)
|
|
1
|
|
|
29
|
|
|
(27
|
)
|
•
|
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
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance at beginning of period
|
$
|
8,563
|
|
|
$
|
8,127
|
|
|
$
|
7,872
|
|
Less reinsurance recoverables, net of allowance
|
2,302
|
|
|
2,201
|
|
|
2,227
|
|
|||
Net liability at beginning of period
|
6,261
|
|
|
5,926
|
|
|
5,645
|
|
|||
Provision for losses and LAE occurring in the current year
|
3,019
|
|
|
2,730
|
|
|
2,662
|
|
|||
Net increase (decrease) in the provision for claims of prior years:
|
|
|
|
|
|
||||||
Special A&E charges
|
89
|
|
|
36
|
|
|
67
|
|
|||
Neon exited lines charge
|
(18
|
)
|
|
57
|
|
|
—
|
|
|||
Other
|
(135
|
)
|
|
(61
|
)
|
|
(34
|
)
|
|||
Total losses and LAE incurred
|
2,955
|
|
|
2,762
|
|
|
2,695
|
|
|||
Payments for losses and LAE of:
|
|
|
|
|
|
||||||
Current year
|
(942
|
)
|
|
(841
|
)
|
|
(828
|
)
|
|||
Prior years
|
(1,586
|
)
|
|
(1,512
|
)
|
|
(1,575
|
)
|
|||
Total payments
|
(2,528
|
)
|
|
(2,353
|
)
|
|
(2,403
|
)
|
|||
Reserves of businesses disposed (*)
|
—
|
|
|
(40
|
)
|
|
—
|
|
|||
Foreign currency translation and other
|
33
|
|
|
(34
|
)
|
|
(11
|
)
|
|||
Net liability at end of period
|
6,721
|
|
|
6,261
|
|
|
5,926
|
|
|||
Add back reinsurance recoverables, net of allowance
|
2,957
|
|
|
2,302
|
|
|
2,201
|
|
|||
Gross unpaid losses and LAE included in the balance sheet
|
$
|
9,678
|
|
|
$
|
8,563
|
|
|
$
|
8,127
|
|
(*)
|
Reflects the 2016 reinsurance to close transactions at Neon (discussed below).
|
|
2017
|
||
Unpaid losses and allocated LAE, net of reinsurance:
|
|
||
Specialty
|
|
||
Property and transportation
|
$
|
1,069
|
|
Specialty casualty
|
3,630
|
|
|
Specialty financial
|
221
|
|
|
Other specialty
|
278
|
|
|
Total Specialty (excluding foreign reserves)
|
5,198
|
|
|
|
|
||
Other reserves
|
|
||
Reserves for foreign operations:
|
|
||
Neon Lloyd’s business
|
480
|
|
|
Other subsidiaries
|
269
|
|
|
A&E reserves
|
403
|
|
|
Unallocated LAE
|
326
|
|
|
Other
|
45
|
|
|
Total other reserves
|
1,523
|
|
|
Total reserves, net of reinsurance
|
6,721
|
|
|
|
|
||
Add back reinsurance recoverables, net of allowance
|
2,957
|
|
|
Gross unpaid losses and LAE included in the balance sheet
|
$
|
9,678
|
|
|
|
Cumulative Paid Claims and Allocated LAE, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
For the Years Ended (2008–2016 is Supplementary Information and Unaudited)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
% (a)
|
|
|
||||||||||||||||||||||
2008
|
|
$
|
352
|
|
|
$
|
706
|
|
|
$
|
761
|
|
|
$
|
799
|
|
|
$
|
824
|
|
|
$
|
835
|
|
|
$
|
846
|
|
|
$
|
846
|
|
|
$
|
847
|
|
|
$
|
848
|
|
|
99.3
|
%
|
|
|
2009
|
|
|
|
229
|
|
|
348
|
|
|
413
|
|
|
456
|
|
|
479
|
|
|
493
|
|
|
497
|
|
|
499
|
|
|
502
|
|
|
98.8
|
%
|
|
|
|||||||||||
2010
|
|
|
|
|
|
328
|
|
|
505
|
|
|
556
|
|
|
618
|
|
|
649
|
|
|
660
|
|
|
665
|
|
|
669
|
|
|
98.4
|
%
|
|
|
||||||||||||
2011
|
|
|
|
|
|
|
|
373
|
|
|
679
|
|
|
742
|
|
|
787
|
|
|
821
|
|
|
840
|
|
|
847
|
|
|
97.9
|
%
|
|
|
|||||||||||||
2012
|
|
|
|
|
|
|
|
|
|
582
|
|
|
725
|
|
|
793
|
|
|
841
|
|
|
868
|
|
|
883
|
|
|
96.2
|
%
|
|
|
||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
449
|
|
|
721
|
|
|
784
|
|
|
831
|
|
|
862
|
|
|
94.7
|
%
|
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
337
|
|
|
646
|
|
|
711
|
|
|
765
|
|
|
90.7
|
%
|
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
367
|
|
|
595
|
|
|
683
|
|
|
85.6
|
%
|
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
299
|
|
|
534
|
|
|
72.2
|
%
|
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
387
|
|
|
42.4
|
%
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
6,980
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Unpaid losses and LAE — years 2008 through 2017
|
|
|
1,049
|
|
|
|
|
|
|||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE)
|
|
|
20
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE)
|
|
|
$
|
1,069
|
|
|
|
|
|
|
|
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
(Supplementary Information and Unaudited) |
|
|
|
|
||||||||||||||||||||||||||||
|
|
Year 1
|
|
Year 2
|
|
Year 3
|
|
Year 4
|
|
Year 5
|
|
Year 6
|
|
Year 7
|
|
Year 8
|
|
Year 9
|
|
Year 10
|
|
|
|
|
||||||||||
Annual
|
|
45.9
|
%
|
|
29.9
|
%
|
|
8.4
|
%
|
|
6.3
|
%
|
|
3.7
|
%
|
|
1.9
|
%
|
|
0.9
|
%
|
|
0.3
|
%
|
|
0.4
|
%
|
|
0.1
|
%
|
|
|
|
|
Cumulative
|
|
45.9
|
%
|
|
75.8
|
%
|
|
84.2
|
%
|
|
90.5
|
%
|
|
94.2
|
%
|
|
96.1
|
%
|
|
97.0
|
%
|
|
97.3
|
%
|
|
97.7
|
%
|
|
97.8
|
%
|
|
|
|
|
(a)
|
Represents the cumulative percentage paid of incurred claims and allocated LAE (net of reinsurance, as estimated at
December 31, 2017
).
|
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
(Dollars in Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Incurred Claims and Allocated LAE, Net of Reinsurance
|
|
As of December 31, 2017
|
|||||||||||||||||||||||||||||||||||||||||||
|
|
For the Years Ended (2008–2016 is Supplementary Information and Unaudited)
|
|
Total IBNR Plus Expected Development on Reported Claims
|
|
Cumulative Number of Reported Claims
|
|||||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
|
|||||||||||||||||||||||||
2008
|
|
$
|
905
|
|
|
$
|
891
|
|
|
$
|
874
|
|
|
$
|
860
|
|
|
$
|
871
|
|
|
$
|
856
|
|
|
$
|
855
|
|
|
$
|
849
|
|
|
$
|
855
|
|
|
$
|
854
|
|
|
$
|
41
|
|
|
59,991
|
|
2009
|
|
|
|
864
|
|
|
867
|
|
|
845
|
|
|
826
|
|
|
816
|
|
|
811
|
|
|
812
|
|
|
807
|
|
|
803
|
|
|
48
|
|
|
53,192
|
|
||||||||||||
2010
|
|
|
|
|
|
847
|
|
|
863
|
|
|
864
|
|
|
842
|
|
|
856
|
|
|
846
|
|
|
845
|
|
|
842
|
|
|
65
|
|
|
52,855
|
|
|||||||||||||
2011
|
|
|
|
|
|
|
|
831
|
|
|
831
|
|
|
819
|
|
|
828
|
|
|
814
|
|
|
808
|
|
|
806
|
|
|
73
|
|
|
50,851
|
|
||||||||||||||
2012
|
|
|
|
|
|
|
|
|
|
874
|
|
|
865
|
|
|
859
|
|
|
859
|
|
|
855
|
|
|
849
|
|
|
104
|
|
|
49,836
|
|
|||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
938
|
|
|
921
|
|
|
915
|
|
|
910
|
|
|
913
|
|
|
132
|
|
|
49,412
|
|
||||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,011
|
|
|
984
|
|
|
984
|
|
|
982
|
|
|
202
|
|
|
52,167
|
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,057
|
|
|
1,023
|
|
|
1,022
|
|
|
268
|
|
|
52,846
|
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,105
|
|
|
1,098
|
|
|
426
|
|
|
50,652
|
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,186
|
|
|
715
|
|
|
46,399
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
9,355
|
|
|
|
|
|
|
|
Cumulative Paid Claims and Allocated LAE, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
For the Years Ended (2008–2016 is Supplementary Information and Unaudited)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
% (a)
|
|
|
||||||||||||||||||||||
2008
|
|
$
|
162
|
|
|
$
|
355
|
|
|
$
|
490
|
|
|
$
|
588
|
|
|
$
|
653
|
|
|
$
|
702
|
|
|
$
|
727
|
|
|
$
|
751
|
|
|
$
|
768
|
|
|
$
|
782
|
|
|
91.6
|
%
|
|
|
2009
|
|
|
|
160
|
|
|
366
|
|
|
494
|
|
|
575
|
|
|
636
|
|
|
673
|
|
|
698
|
|
|
713
|
|
|
722
|
|
|
89.9
|
%
|
|
|
|||||||||||
2010
|
|
|
|
|
|
179
|
|
|
393
|
|
|
539
|
|
|
623
|
|
|
676
|
|
|
712
|
|
|
734
|
|
|
748
|
|
|
88.8
|
%
|
|
|
||||||||||||
2011
|
|
|
|
|
|
|
|
165
|
|
|
369
|
|
|
506
|
|
|
595
|
|
|
643
|
|
|
674
|
|
|
694
|
|
|
86.1
|
%
|
|
|
|||||||||||||
2012
|
|
|
|
|
|
|
|
|
|
163
|
|
|
368
|
|
|
495
|
|
|
596
|
|
|
658
|
|
|
696
|
|
|
82.0
|
%
|
|
|
||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
171
|
|
|
377
|
|
|
530
|
|
|
638
|
|
|
698
|
|
|
76.5
|
%
|
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
182
|
|
|
398
|
|
|
556
|
|
|
659
|
|
|
67.1
|
%
|
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
170
|
|
|
398
|
|
|
560
|
|
|
54.8
|
%
|
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
181
|
|
|
404
|
|
|
36.8
|
%
|
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
192
|
|
|
16.2
|
%
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
6,155
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Unpaid losses and LAE — years 2008 through 2017
|
|
|
3,200
|
|
|
|
|
|
|||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE)
|
|
|
430
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE)
|
|
|
$
|
3,630
|
|
|
|
|
|
|
|
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
(Supplementary Information and Unaudited) |
|
|
|
|
||||||||||||||||||||||||||||
|
|
Year 1
|
|
Year 2
|
|
Year 3
|
|
Year 4
|
|
Year 5
|
|
Year 6
|
|
Year 7
|
|
Year 8
|
|
Year 9
|
|
Year 10
|
|
|
|
|
||||||||||
Annual
|
|
18.6
|
%
|
|
23.4
|
%
|
|
16.2
|
%
|
|
11.0
|
%
|
|
6.9
|
%
|
|
4.6
|
%
|
|
2.8
|
%
|
|
2.1
|
%
|
|
1.6
|
%
|
|
1.6
|
%
|
|
|
|
|
Cumulative
|
|
18.6
|
%
|
|
42.0
|
%
|
|
58.2
|
%
|
|
69.2
|
%
|
|
76.1
|
%
|
|
80.7
|
%
|
|
83.5
|
%
|
|
85.6
|
%
|
|
87.2
|
%
|
|
88.8
|
%
|
|
|
|
|
(a)
|
Represents the cumulative percentage paid of incurred claims and allocated LAE (net of reinsurance, as estimated at
December 31, 2017
).
|
Specialty financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
(Dollars in Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
|
Incurred Claims and Allocated LAE, Net of Reinsurance
|
|
As of December 31, 2017
|
|||||||||||||||||||||||||||||||||||||||||||
|
|
For the Years Ended (2008–2016 is Supplementary Information and Unaudited)
|
|
Total IBNR Plus Expected Development on Reported Claims
|
|
Cumulative Number of Reported Claims
|
|||||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
|
|||||||||||||||||||||||||
2008
|
|
$
|
190
|
|
|
$
|
207
|
|
|
$
|
212
|
|
|
$
|
209
|
|
|
$
|
203
|
|
|
$
|
199
|
|
|
$
|
198
|
|
|
$
|
197
|
|
|
$
|
198
|
|
|
$
|
199
|
|
|
$
|
1
|
|
|
27,292
|
|
2009
|
|
|
|
193
|
|
|
193
|
|
|
187
|
|
|
184
|
|
|
188
|
|
|
186
|
|
|
187
|
|
|
186
|
|
|
185
|
|
|
—
|
|
|
27,441
|
|
||||||||||||
2010
|
|
|
|
|
|
139
|
|
|
146
|
|
|
133
|
|
|
133
|
|
|
135
|
|
|
133
|
|
|
130
|
|
|
128
|
|
|
2
|
|
|
21,929
|
|
|||||||||||||
2011
|
|
|
|
|
|
|
|
140
|
|
|
158
|
|
|
157
|
|
|
155
|
|
|
148
|
|
|
146
|
|
|
144
|
|
|
11
|
|
|
16,374
|
|
||||||||||||||
2012
|
|
|
|
|
|
|
|
|
|
164
|
|
|
163
|
|
|
151
|
|
|
139
|
|
|
137
|
|
|
135
|
|
|
11
|
|
|
21,050
|
|
|||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
141
|
|
|
145
|
|
|
137
|
|
|
131
|
|
|
127
|
|
|
9
|
|
|
28,279
|
|
||||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146
|
|
|
157
|
|
|
156
|
|
|
154
|
|
|
16
|
|
|
28,983
|
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156
|
|
|
159
|
|
|
157
|
|
|
21
|
|
|
37,125
|
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
179
|
|
|
183
|
|
|
26
|
|
|
43,484
|
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
212
|
|
|
84
|
|
|
36,116
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
1,624
|
|
|
|
|
|
|
|
Cumulative Paid Claims and Allocated LAE, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
For the Years Ended (2008–2016 is Supplementary Information and Unaudited)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
% (a)
|
|
|
||||||||||||||||||||||
2008
|
|
$
|
103
|
|
|
$
|
153
|
|
|
$
|
185
|
|
|
$
|
189
|
|
|
$
|
189
|
|
|
$
|
191
|
|
|
$
|
193
|
|
|
$
|
194
|
|
|
$
|
194
|
|
|
$
|
197
|
|
|
99.0
|
%
|
|
|
2009
|
|
|
|
112
|
|
|
145
|
|
|
157
|
|
|
166
|
|
|
171
|
|
|
182
|
|
|
185
|
|
|
186
|
|
|
186
|
|
|
100.5
|
%
|
|
|
|||||||||||
2010
|
|
|
|
|
|
61
|
|
|
93
|
|
|
104
|
|
|
122
|
|
|
133
|
|
|
131
|
|
|
128
|
|
|
127
|
|
|
99.2
|
%
|
|
|
||||||||||||
2011
|
|
|
|
|
|
|
|
59
|
|
|
113
|
|
|
116
|
|
|
124
|
|
|
131
|
|
|
132
|
|
|
133
|
|
|
92.4
|
%
|
|
|
|||||||||||||
2012
|
|
|
|
|
|
|
|
|
|
71
|
|
|
104
|
|
|
109
|
|
|
117
|
|
|
121
|
|
|
126
|
|
|
93.3
|
%
|
|
|
||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
70
|
|
|
100
|
|
|
107
|
|
|
114
|
|
|
117
|
|
|
92.1
|
%
|
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62
|
|
|
108
|
|
|
125
|
|
|
128
|
|
|
83.1
|
%
|
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72
|
|
|
109
|
|
|
129
|
|
|
82.2
|
%
|
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87
|
|
|
141
|
|
|
77.0
|
%
|
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119
|
|
|
56.1
|
%
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
1,403
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Unpaid losses and LAE — years 2008 through 2017
|
|
|
221
|
|
|
|
|
|
|||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE)
|
|
|
—
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE)
|
|
|
$
|
221
|
|
|
|
|
|
|
|
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
(Supplementary Information and Unaudited) |
|
|
|
|
||||||||||||||||||||||||||||
|
|
Year 1
|
|
Year 2
|
|
Year 3
|
|
Year 4
|
|
Year 5
|
|
Year 6
|
|
Year 7
|
|
Year 8
|
|
Year 9
|
|
Year 10
|
|
|
|
|
||||||||||
Annual
|
|
49.8
|
%
|
|
26.3
|
%
|
|
8.3
|
%
|
|
5.7
|
%
|
|
3.6
|
%
|
|
2.0
|
%
|
|
0.2
|
%
|
|
0.1
|
%
|
|
—
|
%
|
|
1.5
|
%
|
|
|
|
|
Cumulative
|
|
49.8
|
%
|
|
76.1
|
%
|
|
84.4
|
%
|
|
90.1
|
%
|
|
93.7
|
%
|
|
95.7
|
%
|
|
95.9
|
%
|
|
96.0
|
%
|
|
96.0
|
%
|
|
97.5
|
%
|
|
|
|
|
(a)
|
Represents the cumulative percentage paid of incurred claims and allocated LAE (net of reinsurance, as estimated at
December 31, 2017
).
|
Other specialty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
(Dollars in Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
|
Incurred Claims and Allocated LAE, Net of Reinsurance
|
|
As of December 31, 2017
|
|||||||||||||||||||||||||||||||||||||||||||
|
|
For the Years Ended (2008–2016 is Supplementary Information and Unaudited)
|
|
Total IBNR Plus Expected Development on Reported Claims
|
|
Cumulative Number of Reported Claims (a)
|
|||||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
|
|||||||||||||||||||||||||
2008
|
|
$
|
49
|
|
|
$
|
49
|
|
|
$
|
49
|
|
|
$
|
49
|
|
|
$
|
48
|
|
|
$
|
46
|
|
|
$
|
45
|
|
|
$
|
45
|
|
|
$
|
44
|
|
|
$
|
43
|
|
|
$
|
3
|
|
|
—
|
|
2009
|
|
|
|
41
|
|
|
41
|
|
|
41
|
|
|
40
|
|
|
37
|
|
|
37
|
|
|
36
|
|
|
38
|
|
|
33
|
|
|
7
|
|
|
—
|
|
||||||||||||
2010
|
|
|
|
|
|
36
|
|
|
39
|
|
|
40
|
|
|
39
|
|
|
40
|
|
|
40
|
|
|
40
|
|
|
40
|
|
|
2
|
|
|
—
|
|
|||||||||||||
2011
|
|
|
|
|
|
|
|
39
|
|
|
43
|
|
|
42
|
|
|
43
|
|
|
43
|
|
|
44
|
|
|
44
|
|
|
4
|
|
|
—
|
|
||||||||||||||
2012
|
|
|
|
|
|
|
|
|
|
42
|
|
|
40
|
|
|
39
|
|
|
40
|
|
|
41
|
|
|
39
|
|
|
8
|
|
|
—
|
|
|||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
46
|
|
|
47
|
|
|
46
|
|
|
47
|
|
|
50
|
|
|
5
|
|
|
—
|
|
||||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58
|
|
|
57
|
|
|
59
|
|
|
59
|
|
|
16
|
|
|
—
|
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59
|
|
|
60
|
|
|
63
|
|
|
20
|
|
|
—
|
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61
|
|
|
61
|
|
|
31
|
|
|
—
|
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63
|
|
|
47
|
|
|
—
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
495
|
|
|
|
|
|
|
|
Cumulative Paid Claims and Allocated LAE, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
For the Years Ended (2008–2016 is Supplementary Information and Unaudited)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
% (b)
|
|
|
||||||||||||||||||||||
2008
|
|
$
|
10
|
|
|
$
|
16
|
|
|
$
|
23
|
|
|
$
|
31
|
|
|
$
|
35
|
|
|
$
|
37
|
|
|
$
|
37
|
|
|
$
|
37
|
|
|
$
|
38
|
|
|
$
|
39
|
|
|
90.7
|
%
|
|
|
2009
|
|
|
|
8
|
|
|
12
|
|
|
15
|
|
|
19
|
|
|
22
|
|
|
22
|
|
|
24
|
|
|
26
|
|
|
25
|
|
|
75.8
|
%
|
|
|
|||||||||||
2010
|
|
|
|
|
|
8
|
|
|
14
|
|
|
21
|
|
|
24
|
|
|
27
|
|
|
33
|
|
|
35
|
|
|
36
|
|
|
90.0
|
%
|
|
|
||||||||||||
2011
|
|
|
|
|
|
|
|
12
|
|
|
20
|
|
|
25
|
|
|
28
|
|
|
34
|
|
|
36
|
|
|
37
|
|
|
84.1
|
%
|
|
|
|||||||||||||
2012
|
|
|
|
|
|
|
|
|
|
8
|
|
|
17
|
|
|
21
|
|
|
25
|
|
|
28
|
|
|
30
|
|
|
76.9
|
%
|
|
|
||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
16
|
|
|
22
|
|
|
34
|
|
|
37
|
|
|
74.0
|
%
|
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
|
|
|
21
|
|
|
30
|
|
|
36
|
|
|
61.0
|
%
|
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
26
|
|
|
31
|
|
|
49.2
|
%
|
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
19
|
|
|
31.1
|
%
|
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
15.9
|
%
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
300
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Unpaid losses and LAE — years 2008 through 2017
|
|
|
195
|
|
|
|
|
|
|||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE)
|
|
|
83
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE)
|
|
|
$
|
278
|
|
|
|
|
|
|
|
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
(Supplementary Information and Unaudited) |
|
|
|
|
||||||||||||||||||||||||||||
|
|
Year 1
|
|
Year 2
|
|
Year 3
|
|
Year 4
|
|
Year 5
|
|
Year 6
|
|
Year 7
|
|
Year 8
|
|
Year 9
|
|
Year 10
|
|
|
|
|
||||||||||
Annual
|
|
19.8
|
%
|
|
17.3
|
%
|
|
12.5
|
%
|
|
12.8
|
%
|
|
8.9
|
%
|
|
5.9
|
%
|
|
3.3
|
%
|
|
2.9
|
%
|
|
(0.4
|
%)
|
|
2.3
|
%
|
|
|
|
|
Cumulative
|
|
19.8
|
%
|
|
37.1
|
%
|
|
49.6
|
%
|
|
62.4
|
%
|
|
71.3
|
%
|
|
77.2
|
%
|
|
80.5
|
%
|
|
83.4
|
%
|
|
83.0
|
%
|
|
85.3
|
%
|
|
|
|
|
(a)
|
The amounts shown in Other specialty represent business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty property and casualty insurance sub-segments. Accordingly, the liability for incurred claims and allocated LAE represents additional reserves held on claims counted in the tables provided for the other sub-segments (above).
|
(b)
|
Represents the cumulative percentage paid of incurred claims and allocated LAE (net of reinsurance, as estimated at
December 31, 2017
).
|
Total Specialty Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
(Dollars in Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
|
Incurred Claims and Allocated LAE, Net of Reinsurance
|
|
As of December 31, 2017
|
|||||||||||||||||||||||||||||||||||||||||||
|
|
For the Years Ended (2008–2016 is Supplementary Information and Unaudited)
|
|
Total IBNR Plus Expected Development on Reported Claims
|
|
Cumulative Number of Reported Claims
|
|||||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
|
|||||||||||||||||||||||||
2008
|
|
$
|
2,067
|
|
|
$
|
2,018
|
|
|
$
|
1,987
|
|
|
$
|
1,971
|
|
|
$
|
1,978
|
|
|
$
|
1,955
|
|
|
$
|
1,953
|
|
|
$
|
1,947
|
|
|
$
|
1,951
|
|
|
$
|
1,950
|
|
|
$
|
46
|
|
|
244,447
|
|
2009
|
|
|
|
1,624
|
|
|
1,607
|
|
|
1,596
|
|
|
1,566
|
|
|
1,552
|
|
|
1,545
|
|
|
1,543
|
|
|
1,539
|
|
|
1,529
|
|
|
58
|
|
|
221,165
|
|
||||||||||||
2010
|
|
|
|
|
|
1,724
|
|
|
1,710
|
|
|
1,705
|
|
|
1,690
|
|
|
1,710
|
|
|
1,698
|
|
|
1,698
|
|
|
1,690
|
|
|
75
|
|
|
215,418
|
|
|||||||||||||
2011
|
|
|
|
|
|
|
|
1,840
|
|
|
1,848
|
|
|
1,849
|
|
|
1,871
|
|
|
1,861
|
|
|
1,866
|
|
|
1,859
|
|
|
98
|
|
|
207,643
|
|
||||||||||||||
2012
|
|
|
|
|
|
|
|
|
|
1,970
|
|
|
1,952
|
|
|
1,946
|
|
|
1,947
|
|
|
1,955
|
|
|
1,941
|
|
|
142
|
|
|
217,516
|
|
|||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
2,036
|
|
|
2,011
|
|
|
2,000
|
|
|
1,996
|
|
|
2,000
|
|
|
168
|
|
|
219,940
|
|
||||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,083
|
|
|
2,050
|
|
|
2,040
|
|
|
2,038
|
|
|
272
|
|
|
218,032
|
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,114
|
|
|
2,046
|
|
|
2,040
|
|
|
363
|
|
|
225,000
|
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,116
|
|
|
2,082
|
|
|
593
|
|
|
216,248
|
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,374
|
|
|
1,119
|
|
|
210,970
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
19,503
|
|
|
|
|
|
|
|
Cumulative Paid Claims and Allocated LAE, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
For the Years Ended (2008–2016 is Supplementary Information and Unaudited)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
% (a)
|
|
|
||||||||||||||||||||||
2008
|
|
$
|
627
|
|
|
$
|
1,230
|
|
|
$
|
1,459
|
|
|
$
|
1,607
|
|
|
$
|
1,701
|
|
|
$
|
1,765
|
|
|
$
|
1,803
|
|
|
$
|
1,828
|
|
|
$
|
1,847
|
|
|
$
|
1,866
|
|
|
95.7
|
%
|
|
|
2009
|
|
|
|
509
|
|
|
871
|
|
|
1,079
|
|
|
1,216
|
|
|
1,308
|
|
|
1,370
|
|
|
1,404
|
|
|
1,424
|
|
|
1,435
|
|
|
93.9
|
%
|
|
|
|||||||||||
2010
|
|
|
|
|
|
576
|
|
|
1,005
|
|
|
1,220
|
|
|
1,387
|
|
|
1,485
|
|
|
1,536
|
|
|
1,562
|
|
|
1,580
|
|
|
93.5
|
%
|
|
|
||||||||||||
2011
|
|
|
|
|
|
|
|
609
|
|
|
1,181
|
|
|
1,389
|
|
|
1,534
|
|
|
1,629
|
|
|
1,682
|
|
|
1,711
|
|
|
92.0
|
%
|
|
|
|||||||||||||
2012
|
|
|
|
|
|
|
|
|
|
824
|
|
|
1,214
|
|
|
1,418
|
|
|
1,579
|
|
|
1,675
|
|
|
1,735
|
|
|
89.4
|
%
|
|
|
||||||||||||||
2013
|
|
|
|
|
|
|
|
|
|
|
|
697
|
|
|
1,214
|
|
|
1,443
|
|
|
1,617
|
|
|
1,714
|
|
|
85.7
|
%
|
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
594
|
|
|
1,173
|
|
|
1,422
|
|
|
1,588
|
|
|
77.9
|
%
|
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
619
|
|
|
1,128
|
|
|
1,403
|
|
|
68.8
|
%
|
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
576
|
|
|
1,098
|
|
|
52.7
|
%
|
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
708
|
|
|
29.8
|
%
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
14,838
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Unpaid losses and LAE — years 2008 through 2017
|
|
|
4,665
|
|
|
|
|
|
|||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE)
|
|
|
533
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE)
|
|
|
$
|
5,198
|
|
|
|
|
|
|
|
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
(Supplementary Information and Unaudited) |
|
|
|
|
||||||||||||||||||||||||||||
|
|
Year 1
|
|
Year 2
|
|
Year 3
|
|
Year 4
|
|
Year 5
|
|
Year 6
|
|
Year 7
|
|
Year 8
|
|
Year 9
|
|
Year 10
|
|
|
|
|
||||||||||
Annual
|
|
32.7
|
%
|
|
26.1
|
%
|
|
12.1
|
%
|
|
8.5
|
%
|
|
5.3
|
%
|
|
3.3
|
%
|
|
1.8
|
%
|
|
1.2
|
%
|
|
0.8
|
%
|
|
1.0
|
%
|
|
|
|
|
Cumulative
|
|
32.7
|
%
|
|
58.8
|
%
|
|
70.9
|
%
|
|
79.4
|
%
|
|
84.7
|
%
|
|
88.0
|
%
|
|
89.8
|
%
|
|
91.0
|
%
|
|
91.8
|
%
|
|
92.8
|
%
|
|
|
|
|
(a)
|
Represents the cumulative percentage paid of incurred claims and allocated LAE (net of reinsurance, as estimated at
December 31, 2017
).
|
|
Net Earnings
|
|
Capital and Surplus
|
||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
||||||||||
Property and casualty companies
|
$
|
484
|
|
|
$
|
461
|
|
|
$
|
408
|
|
|
$
|
2,729
|
|
|
$
|
2,939
|
|
Life insurance companies
|
286
|
|
|
167
|
|
|
399
|
|
|
2,132
|
|
|
1,976
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Direct premiums written
|
$
|
6,310
|
|
|
$
|
5,858
|
|
|
$
|
5,713
|
|
Reinsurance assumed
|
192
|
|
|
123
|
|
|
119
|
|
|||
Reinsurance ceded
|
(1,751
|
)
|
|
(1,595
|
)
|
|
(1,505
|
)
|
|||
Net written premiums
|
$
|
4,751
|
|
|
$
|
4,386
|
|
|
$
|
4,327
|
|
|
|
|
|
|
|
||||||
Direct premiums earned
|
$
|
6,112
|
|
|
$
|
5,745
|
|
|
$
|
5,613
|
|
Reinsurance assumed
|
157
|
|
|
118
|
|
|
105
|
|
|||
Reinsurance ceded
|
(1,690
|
)
|
|
(1,535
|
)
|
|
(1,494
|
)
|
|||
Net earned premiums
|
$
|
4,579
|
|
|
$
|
4,328
|
|
|
$
|
4,224
|
|
|
|
|
|
|
|
||||||
Reinsurance recoveries
|
$
|
1,379
|
|
|
$
|
810
|
|
|
$
|
936
|
|
|
2017
|
|
2016
|
||||
Expected death and annuitization
|
$
|
228
|
|
|
$
|
223
|
|
Guaranteed withdrawal benefits
|
357
|
|
|
278
|
|
||
Accrued persistency and premium bonuses
|
3
|
|
|
6
|
|
|
||||||
(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 2017, 2016 and 2015:
|
|
||
|
|
|
|
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 the next page.
|
||||
|
|
|
Number
|
|
Exhibit Description
|
|
|
|
|
|
Agreement and Plan of Merger dated July 25, 2016 by and among Great American Insurance Company and National Interstate Corporation, filed as Exhibit 2.1 to AFG’s Form 8-K on July 25, 2016.
|
|
(*)
|
|||
|
Amended and Restated Articles of Incorporation.
|
|
|
|||
|
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:
|
|
|
|
|
|
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.
|
|
(*)
|
|||
|
Amended and Restated Deferred Compensation Plan, filed as Exhibit 10(b) to AFG’s Form 10-K for 2008.
|
|
(*)
|
|||
|
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.
|
|
(*)
|
|||
|
Annual Senior Executive Bonus Plan.
|
|
|
|||
|
Amended and restated Nonqualified Auxiliary RASP, filed as Exhibit 10(f) to AFG’s Form 10-K for 2008.
|
|
(*)
|
|||
|
2005 Stock Incentive Plan Exhibit 10 to the Form S-8 Registration Statement (File No. 333-184914) filed by AFG on November 13, 2012.
|
|
(*)
|
|||
|
2015 Stock Incentive Plan filed as Exhibit 10(g) to AFG’s Form 10-K for 2015.
|
|
(*)
|
|||
|
Senior Executive Long Term Incentive Compensation Plan, filed as Appendix A to AFG’s Proxy Statement filed on April 1, 2016.
|
|
(*)
|
|||
|
Credit Agreement dated June 2, 2016, among American Financial Group, Inc., Bank of America, N.A., as Administrative Agent, and several lenders, filed as Exhibit 10.1 to AFG’s Form 8-K filed on June 2, 2016.
|
|
(*)
|
|||
|
Computation of ratios of earnings to fixed charges.
|
|
|
|||
|
Subsidiaries of the Registrant.
|
|
|
|||
|
Consent of independent registered public accounting firm.
|
|
|
|||
|
Certification of Co-Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
|
|
|
|||
|
Certification of Co-Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
|
|
|
|||
|
Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
|
|
|
|||
|
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, 2017, 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.
|
|
|
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
299
|
|
|
$
|
197
|
|
Investment in securities
|
70
|
|
|
63
|
|
||
Investment in subsidiaries (a)
|
6,310
|
|
|
5,989
|
|
||
Other investments
|
2
|
|
|
2
|
|
||
Other assets
|
141
|
|
|
136
|
|
||
Total assets
|
$
|
6,822
|
|
|
$
|
6,387
|
|
|
|
|
|
||||
Liabilities and Equity:
|
|
|
|
||||
Long-term debt
|
$
|
1,301
|
|
|
$
|
1,283
|
|
Other liabilities
|
191
|
|
|
188
|
|
||
Shareholders’ equity
|
5,330
|
|
|
4,916
|
|
||
Total liabilities and equity
|
$
|
6,822
|
|
|
$
|
6,387
|
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Dividends from subsidiaries
|
$
|
681
|
|
|
$
|
643
|
|
|
$
|
311
|
|
Equity in undistributed earnings of subsidiaries
|
264
|
|
|
286
|
|
|
386
|
|
|||
Investment and other income
|
13
|
|
|
7
|
|
|
4
|
|
|||
Total revenues
|
958
|
|
|
936
|
|
|
701
|
|
|||
|
|
|
|
|
|
||||||
Costs and Expenses:
|
|
|
|
|
|
||||||
Interest charges on intercompany borrowings
|
9
|
|
|
9
|
|
|
9
|
|
|||
Interest charges on other borrowings
|
85
|
|
|
77
|
|
|
73
|
|
|||
Other expenses
|
142
|
|
|
82
|
|
|
72
|
|
|||
Total costs and expenses
|
236
|
|
|
168
|
|
|
154
|
|
|||
|
|
|
|
|
|
||||||
Earnings before income taxes
|
722
|
|
|
768
|
|
|
547
|
|
|||
Provision for income taxes
|
247
|
|
|
119
|
|
|
195
|
|
|||
Net Earnings Attributable to Shareholders
|
$
|
475
|
|
|
$
|
649
|
|
|
$
|
352
|
|
Net earnings attributable to shareholders
|
$
|
475
|
|
|
$
|
649
|
|
|
$
|
352
|
|
Other comprehensive income (loss), net of tax
|
296
|
|
|
62
|
|
|
(423
|
)
|
|||
Total comprehensive income (loss), net of tax
|
$
|
771
|
|
|
$
|
711
|
|
|
$
|
(71
|
)
|
(a)
|
Investment in subsidiaries includes intercompany receivables and payables.
|
|
Year ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Operating Activities:
|
|
|
|
|
|
||||||
Net earnings attributable to shareholders
|
$
|
475
|
|
|
$
|
649
|
|
|
$
|
352
|
|
Adjustments:
|
|
|
|
|
|
||||||
Equity in net earnings of subsidiaries
|
(575
|
)
|
|
(638
|
)
|
|
(451
|
)
|
|||
Dividends from subsidiaries
|
580
|
|
|
611
|
|
|
280
|
|
|||
Other operating activities, net
|
98
|
|
|
(67
|
)
|
|
(19
|
)
|
|||
Net cash provided by operating activities
|
578
|
|
|
555
|
|
|
162
|
|
|||
|
|
|
|
|
|
||||||
Investing Activities:
|
|
|
|
|
|
||||||
Capital contributions to subsidiaries
|
(93
|
)
|
|
(560
|
)
|
|
(27
|
)
|
|||
Returns of capital from subsidiaries
|
30
|
|
|
—
|
|
|
1
|
|
|||
Purchases of investments, property and equipment
|
(2
|
)
|
|
(1
|
)
|
|
(10
|
)
|
|||
Proceeds from maturities and redemptions of investments
|
2
|
|
|
1
|
|
|
—
|
|
|||
Proceeds from sales of investments, property and equipment
|
—
|
|
|
—
|
|
|
3
|
|
|||
Net cash used in investing activities
|
(63
|
)
|
|
(560
|
)
|
|
(33
|
)
|
|||
|
|
|
|
|
|
||||||
Financing Activities:
|
|
|
|
|
|
||||||
Additional long-term borrowings
|
712
|
|
|
296
|
|
|
145
|
|
|||
Reductions of long-term debt
|
(745
|
)
|
|
—
|
|
|
(132
|
)
|
|||
Issuances of Common Stock
|
37
|
|
|
35
|
|
|
57
|
|
|||
Repurchases of Common Stock
|
—
|
|
|
(133
|
)
|
|
(126
|
)
|
|||
Cash dividends paid on Common Stock
|
(417
|
)
|
|
(185
|
)
|
|
(176
|
)
|
|||
Net cash provided by (used in) financing activities
|
(413
|
)
|
|
13
|
|
|
(232
|
)
|
|||
|
|
|
|
|
|
||||||
Net Change in Cash and Cash Equivalents
|
102
|
|
|
8
|
|
|
(103
|
)
|
|||
Cash and cash equivalents at beginning of year
|
197
|
|
|
189
|
|
|
292
|
|
|||
Cash and cash equivalents at end of year
|
$
|
299
|
|
|
$
|
197
|
|
|
$
|
189
|
|
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)
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property and casualty insurance
|
|
$
|
270
|
|
|
$
|
9,678
|
|
|
$
|
2,410
|
|
|
$
|
4,579
|
|
|
$
|
362
|
|
|
$
|
2,955
|
|
|
$
|
556
|
|
|
$
|
867
|
|
|
$
|
4,751
|
|
Annuity
|
|
920
|
|
|
33,316
|
|
|
—
|
|
|
—
|
|
|
1,458
|
|
|
892
|
|
|
130
|
|
|
159
|
|
|
—
|
|
|||||||||
Run-off long-term care and life
|
|
26
|
|
|
658
|
|
|
—
|
|
|
22
|
|
|
20
|
|
|
26
|
|
|
4
|
|
|
11
|
|
|
3
|
|
|||||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
541
|
|
|
—
|
|
|||||||||
Total
|
|
$
|
1,216
|
|
|
$
|
43,652
|
|
|
$
|
2,410
|
|
|
$
|
4,601
|
|
|
$
|
1,831
|
|
|
$
|
3,873
|
|
|
$
|
690
|
|
|
$
|
1,578
|
|
|
$
|
4,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property and casualty insurance
|
|
$
|
238
|
|
|
$
|
8,563
|
|
|
$
|
2,171
|
|
|
$
|
4,328
|
|
|
$
|
350
|
|
|
$
|
2,762
|
|
|
$
|
520
|
|
|
$
|
870
|
|
|
$
|
4,386
|
|
Annuity
|
|
981
|
|
|
29,907
|
|
|
—
|
|
|
—
|
|
|
1,356
|
|
|
800
|
|
|
149
|
|
|
142
|
|
|
—
|
|
|||||||||
Run-off long-term care and life
|
|
20
|
|
|
691
|
|
|
—
|
|
|
24
|
|
|
21
|
|
|
33
|
|
|
4
|
|
|
10
|
|
|
3
|
|
|||||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31
|
)
|
|
—
|
|
|
—
|
|
|
421
|
|
|
—
|
|
|||||||||
Total
|
|
$
|
1,239
|
|
|
$
|
39,161
|
|
|
$
|
2,171
|
|
|
$
|
4,352
|
|
|
$
|
1,696
|
|
|
$
|
3,595
|
|
|
$
|
673
|
|
|
$
|
1,443
|
|
|
$
|
4,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
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
|
|
|
|
|
|
|
American Financial Group, Inc.
|
||
|
|
|
|
|
|
|
|
|
|
|
|
February 23, 2018
|
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 23, 2018
|
Carl H. Lindner III
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ S. Craig Lindner
|
|
Co-Chief Executive Officer and Director
|
|
February 23, 2018
|
S. Craig Lindner
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Joseph E. (Jeff) Consolino
|
|
Executive Vice President, Chief Financial Officer and Director
|
|
February 23, 2018
|
Joseph E. (Jeff) Consolino
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Kenneth C. Ambrecht
|
|
Director
|
|
February 23, 2018
|
Kenneth C. Ambrecht
|
|
|
|
|
|
|
|
|
|
/s/ John B. Berding
|
|
Director
|
|
February 23, 2018
|
John B. Berding
|
|
|
|
|
|
|
|
|
|
/s/ Virginia (Gina) C. Drosos
|
|
Director*
|
|
February 23, 2018
|
Virginia (Gina) C. Drosos
|
|
|
|
|
|
|
|
|
|
/s/ James E. Evans
|
|
Director
|
|
February 23, 2018
|
James E. Evans
|
|
|
|
|
|
|
|
|
|
/s/ Terry S. Jacobs
|
|
Director*
|
|
February 23, 2018
|
Terry S. Jacobs
|
|
|
|
|
|
|
|
|
|
/s/ Gregory G. Joseph
|
|
Director*
|
|
February 23, 2018
|
Gregory G. Joseph
|
|
|
|
|
|
|
|
|
|
/s/ William W. Verity
|
|
Director
|
|
February 23, 2018
|
William W. Verity
|
|
|
|
|
|
|
|
|
|
/s/ John I. Von Lehman
|
|
Director*
|
|
February 23, 2018
|
John I. Von Lehman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Member of the Audit Committee
|
|
|
|
|
1.
|
PURPOSE
|
2.
|
DEFINITIONS
|
|
Year ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Earnings before income taxes
|
$
|
724
|
|
|
$
|
787
|
|
|
$
|
565
|
|
|
$
|
626
|
|
|
$
|
689
|
|
Undistributed equity in earnings of investees
|
(4
|
)
|
|
(25
|
)
|
|
(18
|
)
|
|
(10
|
)
|
|
—
|
|
|||||
Losses of managed investment entities attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|
26
|
|
|||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest on annuities
|
892
|
|
|
800
|
|
|
732
|
|
|
648
|
|
|
531
|
|
|||||
Interest expense
|
84
|
|
|
76
|
|
|
74
|
|
|
73
|
|
|
71
|
|
|||||
Debt discount, expense and other fixed charges
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|||||
Portion of rentals representing interest
|
23
|
|
|
23
|
|
|
23
|
|
|
22
|
|
|
19
|
|
|||||
EARNINGS
|
$
|
1,720
|
|
|
$
|
1,662
|
|
|
$
|
1,377
|
|
|
$
|
1,411
|
|
|
$
|
1,337
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest on annuities
|
$
|
892
|
|
|
$
|
800
|
|
|
$
|
732
|
|
|
$
|
648
|
|
|
$
|
531
|
|
Interest expense
|
84
|
|
|
76
|
|
|
74
|
|
|
73
|
|
|
71
|
|
|||||
Debt discount, expense and other fixed charges
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|||||
Portion of rentals representing interest
|
23
|
|
|
23
|
|
|
23
|
|
|
22
|
|
|
19
|
|
|||||
FIXED CHARGES
|
$
|
1,000
|
|
|
$
|
900
|
|
|
$
|
830
|
|
|
$
|
744
|
|
|
$
|
622
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of Earnings to Fixed Charges
|
1.72
|
|
|
1.85
|
|
|
1.66
|
|
|
1.90
|
|
|
2.15
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings in Excess of Fixed Charges
|
$
|
720
|
|
|
$
|
762
|
|
|
$
|
547
|
|
|
$
|
667
|
|
|
$
|
715
|
|
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
|
|
77 (a)
|
GAI Indemnity, Ltd.
|
|
United Kingdom
|
|
100
|
Neon Capital Limited
|
|
United Kingdom
|
|
100
|
Neon Holdings (U.K.) Limited
|
|
United Kingdom
|
|
100
|
Lavenham Underwriting Limited
|
|
United Kingdom
|
|
100
|
Neon Service Company (U.K.) 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
|
Great American International Insurance Designated Activity Company
|
|
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
|
American Empire Surplus Lines Insurance Company
|
|
Delaware
|
|
100
|
American Empire 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
|
|
100
|
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
|
Helium Holdings Limited
|
|
Bermuda
|
|
100
|
Neon Employee Ownership LLC
|
|
Delaware
|
|
23.35 (b)
|
GAI Australia Pty Ltd.
|
|
Australia
|
|
100 (c)
|
(a)
|
AFG directly owns 69.99% of GAI Holding Bermuda Ltd. and the remaining 30.01% is owned by GAI Australia Pty Ltd. (see footnote C below).
|
(b)
|
AFG's 100%-owned subsidiary, Helium Holdings Limited, owns 23.35% (but the majority of the voting interest) of Neon Employee Ownership LLC ("NEO"). The remaining 76.65% is owned by the management of Neon Capital Limited.
|
(c)
|
NEO owns 100% of the common stock of GAI Australia Pty Ltd. Accordingly, the noncontrolling shareholders of NEO indirectly own approximately 23% of GAI Holding Bermuda (76.65% of NEO multiplied by the 30.01% of GAI Holding Bermuda owned by GAI Australia).
|
|
|
|
Registration
|
|
|
|
|
Form
|
|
Number
|
|
Description
|
|
|
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 23, 2018
|
|
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 23, 2018
|
|
By:
|
/s/ S. Craig Lindner
|
|
|
|
|
S. Craig Lindner
|
|
|
|
|
Co-Chief Executive Officer
|
|
1.
|
I have reviewed this annual report on Form 10-K of American Financial Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
February 23, 2018
|
|
By:
|
/s/ Joseph E. (Jeff) Consolino
|
|
|
|
|
Joseph E. (Jeff) Consolino
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
February 23, 2018
|
|
By:
|
/s/ Carl H. Lindner III
|
|
Date
|
|
|
Carl H. Lindner III
|
|
|
|
|
Co-Chief Executive Officer
|
|
|
|
|
|
|
February 23, 2018
|
|
By:
|
/s/ S. Craig Lindner
|
|
Date
|
|
|
S. Craig Lindner
|
|
|
|
|
Co-Chief Executive Officer
|
|
|
|
|
|
|
February 23, 2018
|
|
By:
|
/s/ Joseph E. (Jeff) Consolino
|
|
Date
|
|
|
Joseph E. (Jeff) Consolino
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|