Securities Registered Pursuant to Section 12(b) of the Act:
|
|||||
|
Title of Each Class
|
|
Trading Symbol(s)
|
|
Name of Each Exchange on Which Registered
|
|
Common Stock
|
|
AFG
|
|
New York Stock Exchange
|
|
6% Subordinated Debentures due November 15, 2055
|
|
AFGH
|
|
New York Stock Exchange
|
|
5.875% Subordinated Debentures due March 30, 2059
|
|
AFGB
|
|
New York Stock Exchange
|
|
5.125% Subordinated Debentures due December 15, 2059
|
|
AFGC
|
|
New York Stock Exchange
|
|
|
|
Page
|
FORWARD-LOOKING STATEMENTS
|
|||
|
|
|
|
Part I
|
|
|
|
Item 1
|
—
|
Business
|
|
Item 1A
|
—
|
Risk Factors
|
|
Item 1B
|
—
|
Unresolved Staff Comments
|
none
|
Item 2
|
—
|
Properties
|
|
Item 3
|
—
|
Legal Proceedings
|
|
Item 4
|
—
|
Mine Safety Disclosures
|
none
|
|
|
|
|
Part II
|
|
|
|
Item 5
|
—
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
Item 6
|
—
|
Selected Financial Data
|
|
Item 7
|
—
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Item 7A
|
—
|
Quantitative and Qualitative Disclosure About Market Risk
|
|
Item 8
|
—
|
Financial Statements and Supplementary Data
|
|
Item 9
|
—
|
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
|
none
|
Item 9A
|
—
|
Controls and Procedures
|
|
Item 9B
|
—
|
Other Information
|
none
|
|
|
|
|
Part III
|
|
|
|
Item 10
|
—
|
Directors, Executive Officers and Corporate Governance
|
|
Item 11
|
—
|
Executive Compensation
|
|
Item 12
|
—
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
|
Item 13
|
—
|
Certain Relationships and Related Transactions, and Director Independence
|
|
Item 14
|
—
|
Principal Accounting Fees and Services
|
|
|
|
|
|
Part IV
|
|
|
|
Item 15
|
—
|
Exhibits, Financial Statement Schedules
|
•
|
changes in financial, political and economic conditions, including changes in interest and inflation rates, currency fluctuations and extended economic recessions or expansions in the U.S. and/or abroad;
|
•
|
performance of securities markets, including the cost of equity index options;
|
•
|
new legislation or declines in credit quality or credit ratings that could have a material impact on the valuation of securities in AFG’s investment portfolio;
|
•
|
the availability of capital;
|
•
|
changes in insurance law or regulation, including changes in statutory accounting rules and changes in regulation of the Lloyd’s market, including modifications to capital requirements; changes in costs associated with the exit from the Lloyd’s market and the run-off of AFG’s Lloyd’s based insurer, Neon;
|
•
|
changes in the legal environment affecting AFG or its customers;
|
•
|
tax law and accounting changes, including the impact of recent changes in U.S. corporate tax law;
|
•
|
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;
|
•
|
disruption caused by cyber-attacks or other technology breaches or failures by AFG or its business partners and service providers, which could negatively impact AFG’s business and/or expose AFG to litigation;
|
•
|
development of insurance loss reserves and establishment of other reserves, particularly with respect to amounts associated with asbestos and environmental claims;
|
•
|
availability of reinsurance and ability of reinsurers to pay their obligations;
|
•
|
trends in persistency and mortality;
|
•
|
competitive pressures;
|
•
|
the ability to obtain adequate rates and policy terms;
|
•
|
changes in AFG’s credit ratings or the financial strength ratings assigned by major ratings agencies to AFG’s operating subsidiaries; and
|
•
|
the impact of the conditions in the international financial markets and the global economy relating to AFG’s international operations.
|
|
Ratings
|
|
Gross
Written
|
||||
|
AM Best
|
|
S&P
|
|
Premiums
|
||
Insurance Group
|
|
|
|
|
|
||
Great American Insurance
|
A+
|
|
A+
|
|
$
|
4,857
|
|
National Interstate
|
A+
|
|
not rated
|
|
816
|
|
|
Summit (Bridgefield Casualty and Bridgefield Employers)
|
A
|
|
A+
|
|
602
|
|
|
Republic Indemnity
|
A
|
|
A+
|
|
202
|
|
|
Neon Lloyd’s Syndicate
|
A
|
|
A+
|
|
567
|
|
|
Mid-Continent Casualty
|
A+
|
|
A+
|
|
142
|
|
|
Other
|
|
|
|
|
113
|
|
|
|
|
|
|
|
$
|
7,299
|
|
(*)
|
The sources of the commercial lines industry ratios are © 2019 Conning, Inc.’s Property–Casualty Forecast & Analysis (Fourth Quarter 2019 Edition, used with permission) for 2019 and © 2019 A.M. Best Company’s Review & Preview Reports for the preceding years.
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Gross written premiums
|
|
$
|
7,299
|
|
|
$
|
6,840
|
|
|
$
|
6,502
|
|
Ceded reinsurance
|
|
(1,957
|
)
|
|
(1,817
|
)
|
|
(1,751
|
)
|
|||
Net written premiums
|
|
$
|
5,342
|
|
|
$
|
5,023
|
|
|
$
|
4,751
|
|
|
|
|
|
|
|
|
||||||
Net earned premiums
|
|
$
|
5,185
|
|
|
$
|
4,865
|
|
|
$
|
4,579
|
|
Loss and LAE
|
|
3,207
|
|
|
2,985
|
|
|
2,884
|
|
|||
Special asbestos and environmental (“A&E”) charges
|
|
18
|
|
|
18
|
|
|
89
|
|
|||
Neon exited lines charge
|
|
76
|
|
|
—
|
|
|
(18
|
)
|
|||
Underwriting expenses
|
|
1,672
|
|
|
1,560
|
|
|
1,382
|
|
|||
Underwriting gain
|
|
$
|
212
|
|
|
$
|
302
|
|
|
$
|
242
|
|
|
|
|
|
|
|
|
||||||
GAAP ratios:
|
|
|
|
|
|
|
||||||
Loss and LAE ratio
|
|
63.0
|
%
|
|
61.7
|
%
|
|
64.5
|
%
|
|||
Underwriting expense ratio
|
|
32.8
|
%
|
|
32.1
|
%
|
|
30.2
|
%
|
|||
Combined ratio
|
|
95.8
|
%
|
|
93.8
|
%
|
|
94.7
|
%
|
|||
|
|
|
|
|
|
|
||||||
Statutory ratios:
|
|
|
|
|
|
|
||||||
Loss and LAE ratio
|
|
61.3
|
%
|
|
60.2
|
%
|
|
63.0
|
%
|
|||
Underwriting expense ratio
|
|
31.6
|
%
|
|
31.6
|
%
|
|
30.1
|
%
|
|||
Combined ratio
|
|
92.9
|
%
|
|
91.8
|
%
|
|
93.1
|
%
|
|||
|
|
|
|
|
|
|
||||||
Industry statutory combined ratio (a)
|
|
|
|
|
|
|
||||||
All lines
|
|
96.8
|
%
|
|
101.5
|
%
|
|
104.0
|
%
|
|||
Commercial lines
|
|
97.6
|
%
|
|
102.0
|
%
|
|
102.1
|
%
|
(a)
|
The sources of the industry ratios are © 2019 Conning, Inc.’s Property–Casualty Forecast & Analysis (Fourth Quarter 2019 Edition, used with permission) for 2019 and © 2019 A.M. Best Company’s Review & Preview Report (February 2019 Edition) for 2018 and 2017.
|
Property and Transportation
|
|
Agricultural-related
|
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
|
Coverage for vehicles (such as buses and trucks) in a broad range of businesses including the moving and storage and transportation industries, as well as alternative risk transfer programs, and a specialized physical damage product for the trucking industry.
|
|
|
Property, Inland Marine and Ocean Marine
|
Coverage primarily for commercial properties, builders’ risk, contractors’ equipment, property, motor truck cargo, marine cargo, boat dealers, marina operators/dealers and excursion vessels.
|
|
|
Specialty Casualty
|
|
Excess and Surplus
|
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.
|
|
|
Executive and Professional Liability
|
Coverage for directors and officers of businesses and non-profit organizations, errors and omissions, cyber, and mergers and acquisitions.
|
|
|
General Liability
|
Coverage for contractor-related businesses, energy development and production risks, and environmental liability risks.
|
|
|
Targeted Programs
|
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.
|
|
|
Umbrella and Excess Liability
|
Coverage in excess of primary layers.
|
|
|
Workers’ Compensation
|
Coverage for prescribed benefits payable to employees who are injured on the job.
|
|
|
Specialty Financial
|
|
Fidelity and Surety
|
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
|
Coverage for insurance risk management programs for lending and leasing institutions, including equipment leasing and collateral and lender-placed mortgage property insurance.
|
(*)
|
Excludes underwriting profits and losses recorded outside of AFG’s Specialty property and casualty group.
|
|
2019
|
|
2018
|
|
2017
|
||||||
Property and transportation
|
$
|
1,876
|
|
|
$
|
1,754
|
|
|
$
|
1,765
|
|
Specialty casualty
|
2,701
|
|
|
2,509
|
|
|
2,280
|
|
|||
Specialty financial
|
617
|
|
|
602
|
|
|
596
|
|
|||
Other specialty (*)
|
148
|
|
|
158
|
|
|
110
|
|
|||
|
$
|
5,342
|
|
|
$
|
5,023
|
|
|
$
|
4,751
|
|
(*)
|
Premiums assumed by AFG’s internal reinsurance program from the operations that make up AFG’s Specialty property and casualty insurance sub-segments.
|
|
|
2019
|
|
2018
|
|
2017
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
California
|
|
13.4
|
%
|
|
13.5
|
%
|
|
13.2
|
%
|
|
Pennsylvania
|
|
2.6
|
%
|
|
2.5
|
%
|
|
2.4
|
%
|
Florida
|
|
10.1
|
%
|
|
10.0
|
%
|
|
10.0
|
%
|
|
New Jersey
|
|
2.5
|
%
|
|
2.6
|
%
|
|
2.6
|
%
|
Texas
|
|
6.9
|
%
|
|
6.8
|
%
|
|
6.2
|
%
|
|
Iowa
|
|
2.2
|
%
|
|
2.3
|
%
|
|
2.4
|
%
|
New York
|
|
6.7
|
%
|
|
6.8
|
%
|
|
6.6
|
%
|
|
Kansas
|
|
2.2
|
%
|
|
2.3
|
%
|
|
2.2
|
%
|
Illinois
|
|
5.5
|
%
|
|
5.3
|
%
|
|
5.6
|
%
|
|
North Carolina
|
|
2.0
|
%
|
|
2.1
|
%
|
|
2.1
|
%
|
Georgia
|
|
3.3
|
%
|
|
3.3
|
%
|
|
3.2
|
%
|
|
Indiana
|
|
2.0
|
%
|
|
1.9
|
%
|
|
1.9
|
%
|
Missouri
|
|
2.6
|
%
|
|
2.5
|
%
|
|
2.8
|
%
|
|
Other
|
|
38.0
|
%
|
|
38.1
|
%
|
|
38.8
|
%
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Summit Workers’ Compensation
|
|
3
|
|
|
37
|
|
|
—
|
%
|
|
—
|
|
|
3
|
|
||||
Other Workers’ Compensation
|
|
2
|
|
|
48
|
|
|
—
|
%
|
|
—
|
|
|
2
|
|
||||
Commercial Umbrella
|
|
2
|
|
|
48
|
|
|
10
|
%
|
|
5
|
|
|
7
|
|
||||
Property — General
|
|
5
|
|
|
45
|
|
|
—
|
%
|
|
—
|
|
|
5
|
|
||||
Property — Catastrophe (c)
|
|
15
|
|
|
119
|
|
|
—
|
%
|
|
—
|
|
|
15
|
|
||||
Neon Lloyd’s Syndicate
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Property — Catastrophe (direct) (c)
|
|
15
|
|
|
130
|
|
|
—
|
%
|
|
—
|
|
|
15
|
|
||||
Property — Catastrophe (assumed) (c)
|
|
15
|
|
|
30
|
|
|
—
|
%
|
|
—
|
|
|
15
|
|
(a)
|
Includes the participation of AFG’s internal reinsurance program.
|
(b)
|
Maximum loss per event for claims up to reinsurance coverage limit.
|
(c)
|
Additional catastrophe coverage is provided by the Riverfront Re Ltd. catastrophe bond described above.
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Reinsurance ceded
|
|
$
|
1,957
|
|
|
$
|
1,817
|
|
|
$
|
1,751
|
|
Reinsurance ceded, excluding crop
|
|
1,371
|
|
|
1,202
|
|
|
1,076
|
|
|||
Reinsurance assumed — including involuntary pools and associations
|
|
255
|
|
|
214
|
|
|
192
|
|
Liability reported on a SAP basis, net of $131 million of retroactive reinsurance
|
$
|
6,539
|
|
Reinsurance recoverables, net of allowance
|
3,024
|
|
|
Other, including reserves of foreign insurers
|
669
|
|
|
Liability reported on a GAAP basis
|
$
|
10,232
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Reserves at beginning of year
|
|
$
|
395
|
|
|
$
|
403
|
|
|
$
|
337
|
|
Incurred losses and LAE
|
|
18
|
|
|
18
|
|
|
89
|
|
|||
Paid losses and LAE
|
|
(30
|
)
|
|
(26
|
)
|
|
(23
|
)
|
|||
Reserves at end of year, net of reinsurance recoverable
|
|
383
|
|
|
395
|
|
|
403
|
|
|||
Reinsurance recoverable, net of allowance
|
|
146
|
|
|
129
|
|
|
125
|
|
|||
Gross reserves at end of year
|
|
$
|
529
|
|
|
$
|
524
|
|
|
$
|
528
|
|
(*)
|
Market rankings through September 30, 2019, as reported by LIMRA for deferred annuities.
|
|
|
|
|
Annuity
|
|
|
|
|
|||
|
|
Annuity
|
|
Policies
|
|
Ratings
|
|||||
Company
|
|
Premiums
|
|
In Force
|
|
AM Best
|
|
S&P
|
|||
Great American Life Insurance Company
|
|
$
|
4,799
|
|
|
436,000
|
|
|
A
|
|
A+
|
Annuity Investors Life Insurance Company
|
|
161
|
|
|
107,000
|
|
|
A
|
|
A+
|
|
|
Statutory Premiums
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Financial institutions single premium annuities — indexed
|
|
$
|
1,537
|
|
|
$
|
1,776
|
|
|
$
|
1,711
|
|
Financial institutions single premium annuities — fixed
|
|
1,229
|
|
|
492
|
|
|
622
|
|
|||
Retail single premium annuities — indexed
|
|
943
|
|
|
1,418
|
|
|
990
|
|
|||
Retail single premium annuities — fixed
|
|
120
|
|
|
87
|
|
|
70
|
|
|||
Broker dealer single premium annuities — indexed
|
|
657
|
|
|
1,271
|
|
|
733
|
|
|||
Broker dealer single premium annuities — fixed
|
|
32
|
|
|
14
|
|
|
7
|
|
|||
Pension risk transfer
|
|
257
|
|
|
132
|
|
|
6
|
|
|||
Education market — fixed and indexed annuities
|
|
164
|
|
|
192
|
|
|
174
|
|
|||
Total fixed annuity premiums
|
|
4,939
|
|
|
5,382
|
|
|
4,313
|
|
|||
Variable annuities
|
|
21
|
|
|
25
|
|
|
28
|
|
|||
Total annuity premiums
|
|
$
|
4,960
|
|
|
$
|
5,407
|
|
|
$
|
4,341
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Annuity earnings before income taxes — before the impact of unlocking, derivatives related to FIAs and other impacts of stock market performance and interest rates on FIAs
|
|
$
|
409
|
|
|
$
|
409
|
|
|
$
|
388
|
|
Unlocking
|
|
(1
|
)
|
|
(31
|
)
|
|
(3
|
)
|
|||
Impact of derivatives related to FIAs and other impacts of changes in the stock market and interest rates on FIAs over or under option costs (a):
|
|
|
|
|
|
|
||||||
Change in fair value of derivatives related to FIAs
|
|
(294
|
)
|
|
(51
|
)
|
|
(70
|
)
|
|||
Accretion of guaranteed minimum FIA benefits
|
|
(408
|
)
|
|
(347
|
)
|
|
(289
|
)
|
|||
Other annuity benefits
|
|
(14
|
)
|
|
(83
|
)
|
|
(58
|
)
|
|||
Less cost of equity options
|
|
586
|
|
|
506
|
|
|
395
|
|
|||
Related impact on the amortization of deferred policy acquisition costs (b)
|
|
84
|
|
|
(42
|
)
|
|
17
|
|
|||
Annuity segment earnings before income taxes
|
|
$
|
362
|
|
|
$
|
361
|
|
|
$
|
380
|
|
|
|
|
|
|
|
|
||||||
Net spread earned on fixed annuities — before impact of unlocking, changes in the fair value of derivatives related to FIAs and other impacts of changes in the stock market and interest rates on FIAs
|
|
1.08
|
%
|
|
1.20
|
%
|
|
1.25
|
%
|
|||
Changes in fair value of derivatives related to FIAs and other impacts of the stock market and interest rates under (over) option costs
|
|
(0.12
|
%)
|
|
(0.04
|
%)
|
|
(0.01
|
%)
|
|||
Unlocking
|
|
—
|
%
|
|
(0.09
|
%)
|
|
(0.01
|
%)
|
|||
Net spread earned on fixed annuities
|
|
0.96
|
%
|
|
1.07
|
%
|
|
1.23
|
%
|
(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 and sale of call and put options on the appropriate index. AFG’s strategy is designed so that the net change in the fair value of the call option assets and put option liabilities will generally offset the economic change in the net liability from the index participation. Both the index-based component of the annuities (an embedded derivative with a fair value of $3.73 billion at December 31, 2019) and the related call and put options (net fair value of $923 million at December 31, 2019) are considered derivatives that must be adjusted for changes in fair value through earnings each period. The fair values of these derivatives are impacted by actual and expected stock market performance and interest rates as well as other factors. Fluctuations in certain of these factors, such as changes in interest rates and the performance of the stock market, are not economic in nature for the current reporting period, but rather impact the timing of reported results.
|
(b)
|
An estimate of the related acceleration/deceleration of the amortization of deferred policy acquisition costs and deferred sales inducements.
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Wells Fargo & Company
|
|
12.0
|
%
|
|
7.4
|
%
|
|
8.1
|
%
|
The PNC Financial Services Group, Inc.
|
|
8.8
|
%
|
|
6.6
|
%
|
|
9.1
|
%
|
Regions Financial Corporation
|
|
6.7
|
%
|
|
4.8
|
%
|
|
6.5
|
%
|
BB&T Corporation
|
|
5.1
|
%
|
|
3.7
|
%
|
|
5.5
|
%
|
LPL Financial
|
|
4.4
|
%
|
|
4.8
|
%
|
|
5.5
|
%
|
|
|
2019
|
|
2018
|
|
2017
|
|||
California
|
|
9.9
|
%
|
|
10.2
|
%
|
|
10.0
|
%
|
Florida
|
|
8.3
|
%
|
|
8.1
|
%
|
|
7.3
|
%
|
North Carolina
|
|
6.0
|
%
|
|
4.5
|
%
|
|
4.8
|
%
|
Ohio
|
|
5.9
|
%
|
|
5.2
|
%
|
|
5.4
|
%
|
Pennsylvania
|
|
5.2
|
%
|
|
5.5
|
%
|
|
6.1
|
%
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Total return on AFG’s fixed maturities
|
|
8.7
|
%
|
|
1.3
|
%
|
|
5.9
|
%
|
Barclays Capital U.S. Universal Bond Index
|
|
9.3
|
%
|
|
(0.3
|
%)
|
|
4.1
|
%
|
|
|
|
|
|
|
|
|||
Total return on AFG’s common stocks and equivalents
|
|
26.0
|
%
|
|
(12.0
|
%)
|
|
15.8
|
%
|
Standard & Poor’s 500 Index
|
|
31.5
|
%
|
|
(4.4
|
%)
|
|
21.8
|
%
|
|
|
Amortized
|
|
Fair Value
|
|||||||
|
|
Cost
|
|
Amount
|
|
%
|
|||||
S&P or comparable rating
|
|
|
|
|
|
|
|||||
AAA, AA, A
|
|
$
|
27,832
|
|
|
$
|
28,856
|
|
|
62
|
%
|
BBB
|
|
12,746
|
|
|
13,452
|
|
|
29
|
%
|
||
Total investment grade
|
|
40,578
|
|
|
42,308
|
|
|
91
|
%
|
||
BB
|
|
711
|
|
|
721
|
|
|
2
|
%
|
||
B
|
|
185
|
|
|
182
|
|
|
—
|
%
|
||
CCC, CC, C
|
|
508
|
|
|
591
|
|
|
1
|
%
|
||
D
|
|
159
|
|
|
186
|
|
|
—
|
%
|
||
Total non-investment grade
|
|
1,563
|
|
|
1,680
|
|
|
3
|
%
|
||
Not rated
|
|
2,383
|
|
|
2,517
|
|
|
6
|
%
|
||
Total
|
|
$
|
44,524
|
|
|
$
|
46,505
|
|
|
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.
|
|
|
As of December 31,
|
||||||||||||||||||||||
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||||
AFG
|
|
$
|
100
|
|
|
$
|
122
|
|
|
$
|
154
|
|
|
$
|
199
|
|
|
$
|
173
|
|
|
$
|
220
|
|
S&P 500 Index
|
|
100
|
|
|
101
|
|
|
113
|
|
|
138
|
|
|
132
|
|
|
174
|
|
||||||
S&P 500 P&C Index (b)
|
|
100
|
|
|
110
|
|
|
127
|
|
|
155
|
|
|
148
|
|
|
186
|
|
||||||
S&P 500 Life & Health Index (c)
|
|
100
|
|
|
94
|
|
|
117
|
|
|
136
|
|
|
108
|
|
|
133
|
|
(a)
|
Cumulative total shareholder return measures the performance of a company’s stock (or an index) over time and is calculated as the change in the stock price plus cumulative dividends (assuming dividends are reinvested) over a specific period of time divided by the stock price at the beginning of the time period.
|
(b)
|
The S&P 500 Property & Casualty Insurance Index included the following companies at December 31, 2019 (weighted by market capitalization): The Allstate Corporation, Chubb Limited, Cincinnati Financial Corporation, Loews Corporation, The Progressive Corporation, The Travelers Companies, Inc. and W.R. Berkley Corporation.
|
(c)
|
The S&P 500 Life & Health Insurance Index included the following companies at December 31, 2019 (weighted by market capitalization): Aflac Incorporated, Globe Life Inc., Lincoln National Corporation, MetLife Inc., Principal Financial Group, Inc., Prudential Financial, Inc. and Unum Group.
|
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Earnings Statement Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Property and casualty insurance
|
|
$
|
5,668
|
|
|
$
|
5,313
|
|
|
$
|
4,969
|
|
|
$
|
4,729
|
|
|
$
|
4,621
|
|
Annuity
|
|
1,900
|
|
|
1,745
|
|
|
1,561
|
|
|
1,459
|
|
|
1,322
|
|
|||||
Other
|
|
382
|
|
|
358
|
|
|
330
|
|
|
289
|
|
|
382
|
|
|||||
Realized gains (losses) on securities and subsidiaries
|
|
287
|
|
|
(266
|
)
|
|
5
|
|
|
21
|
|
|
(180
|
)
|
|||||
Total revenues
|
|
$
|
8,237
|
|
|
$
|
7,150
|
|
|
$
|
6,865
|
|
|
$
|
6,498
|
|
|
$
|
6,145
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings before income taxes:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Property and casualty insurance
|
|
$
|
649
|
|
|
$
|
709
|
|
|
$
|
591
|
|
|
$
|
577
|
|
|
$
|
576
|
|
Annuity
|
|
362
|
|
|
361
|
|
|
380
|
|
|
368
|
|
|
331
|
|
|||||
Other
|
|
(190
|
)
|
|
(165
|
)
|
|
(252
|
)
|
|
(179
|
)
|
|
(162
|
)
|
|||||
Realized gains (losses) on securities and subsidiaries
|
|
287
|
|
|
(266
|
)
|
|
5
|
|
|
21
|
|
|
(180
|
)
|
|||||
Earnings before income taxes
|
|
$
|
1,108
|
|
|
$
|
639
|
|
|
$
|
724
|
|
|
$
|
787
|
|
|
$
|
565
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net earnings, including noncontrolling interests
|
|
$
|
869
|
|
|
$
|
517
|
|
|
$
|
477
|
|
|
$
|
668
|
|
|
$
|
370
|
|
Less: Net earnings (loss) attributable to noncontrolling interests
|
|
(28
|
)
|
|
(13
|
)
|
|
2
|
|
|
19
|
|
|
18
|
|
|||||
Net earnings attributable to shareholders
|
|
$
|
897
|
|
|
$
|
530
|
|
|
$
|
475
|
|
|
$
|
649
|
|
|
$
|
352
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings attributable to shareholders per Common Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic — GAAP
|
|
$
|
9.98
|
|
|
$
|
5.95
|
|
|
$
|
5.40
|
|
|
$
|
7.47
|
|
|
$
|
4.02
|
|
Diluted — GAAP
|
|
9.85
|
|
|
5.85
|
|
|
5.28
|
|
|
7.33
|
|
|
3.94
|
|
|||||
Core net operating earnings per share (diluted) (a)
|
|
8.62
|
|
|
8.40
|
|
|
6.55
|
|
|
6.03
|
|
|
5.44
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends paid per share of Common Stock (b)
|
|
$
|
4.95
|
|
|
$
|
4.45
|
|
|
$
|
4.7875
|
|
|
$
|
2.1525
|
|
|
$
|
2.03
|
|
Ratio of earnings to fixed charges including annuity benefits (c)
|
|
1.85
|
|
|
1.54
|
|
|
1.72
|
|
|
1.85
|
|
|
1.66
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and investments
|
|
$
|
55,252
|
|
|
$
|
48,498
|
|
|
$
|
46,048
|
|
|
$
|
41,433
|
|
|
$
|
37,736
|
|
Total assets
|
|
70,130
|
|
|
63,456
|
|
|
60,658
|
|
|
55,072
|
|
|
49,837
|
|
|||||
Property and casualty insurance reserves:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Unpaid losses and loss adjustment expenses
|
|
10,232
|
|
|
9,741
|
|
|
9,678
|
|
|
8,563
|
|
|
8,127
|
|
|||||
Unearned premiums
|
|
2,830
|
|
|
2,595
|
|
|
2,410
|
|
|
2,171
|
|
|
2,060
|
|
|||||
Annuity benefits accumulated
|
|
40,406
|
|
|
36,616
|
|
|
33,316
|
|
|
29,907
|
|
|
26,622
|
|
|||||
Life, accident and health reserves
|
|
612
|
|
|
635
|
|
|
658
|
|
|
691
|
|
|
705
|
|
|||||
Long-term debt
|
|
1,473
|
|
|
1,302
|
|
|
1,301
|
|
|
1,283
|
|
|
998
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholders’ equity
|
|
$
|
6,269
|
|
|
$
|
4,970
|
|
|
$
|
5,330
|
|
|
$
|
4,916
|
|
|
$
|
4,592
|
|
Less: Net unrealized gains related to fixed maturities (d)
|
|
879
|
|
|
72
|
|
|
606
|
|
|
299
|
|
|
279
|
|
|||||
Adjusted shareholders’ equity (e)
|
|
$
|
5,390
|
|
|
$
|
4,898
|
|
|
$
|
4,724
|
|
|
$
|
4,617
|
|
|
$
|
4,313
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Book value per share
|
|
$
|
69.43
|
|
|
$
|
55.66
|
|
|
$
|
60.38
|
|
|
$
|
56.55
|
|
|
$
|
52.50
|
|
Adjusted book value per share (e)
|
|
59.70
|
|
|
54.86
|
|
|
53.51
|
|
|
53.11
|
|
|
49.32
|
|
(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 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)
|
AFG increased its quarterly dividend in October of each of the last five years as follows: increased to $0.45 per share in 2019, $0.40 per share in 2018, $0.35 per share in 2017, $0.3125 per share in 2016 and $0.28 per share in 2015. In addition, AFG paid special cash dividends of $3.30 per share in 2019, $3.00 per share in 2018, $3.50 per share in 2017 and $1.00 per share in 2016 and 2015.
|
(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 core earnings to fixed charges excluding annuity benefits and the ratio of earnings to fixed charges excluding and including annuity benefits are shown in the table below:
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|||||
Ratio of core earnings to fixed charges excluding annuity benefits
|
12.78
|
|
|
11.31
|
|
|
8.97
|
|
|
9.15
|
|
|
8.59
|
|
Impact of non-core items
|
1.83
|
|
|
(3.45
|
)
|
|
(1.30
|
)
|
|
(0.53
|
)
|
|
(2.01
|
)
|
Ratio of earnings to fixed charges excluding annuity benefits
|
14.61
|
|
|
7.86
|
|
|
7.67
|
|
|
8.62
|
|
|
6.58
|
|
Impact of including interest on annuities as a fixed charge
|
(12.76
|
)
|
|
(6.32
|
)
|
|
(5.95
|
)
|
|
(6.77
|
)
|
|
(4.92
|
)
|
Ratio of earnings to fixed charges including annuity benefits
|
1.85
|
|
|
1.54
|
|
|
1.72
|
|
|
1.85
|
|
|
1.66
|
|
(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 net unrealized gains related to fixed maturity securities. Management believes that investors find a measurement of shareholders’ equity excluding net unrealized gains related to fixed maturity securities to be meaningful as 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.
|
INDEX TO MD&A
|
||||
|
Page
|
|
|
Page
|
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
||||
|
|
|
|
|
•
|
net realized gains on securities in the fourth quarter of 2019 compared to net realized losses on securities in the fourth quarter of 2018. Both the 2019 and 2018 periods reflect the change in the fair value of equity securities that are required to be carried at fair value through net earnings under accounting guidance adopted on January 1, 2018,
|
•
|
higher earnings in the annuity segment,
|
•
|
higher net investment income in the property and casualty insurance segment,
|
•
|
lower underwriting profit in the property and casualty insurance segment,
|
•
|
higher interest charges on borrowed money, and
|
•
|
higher holding company expenses.
|
•
|
net realized gains on securities in 2019 compared to net realized losses on securities in 2018,
|
•
|
higher net investment income in the property and casualty insurance segment,
|
•
|
lower underwriting profit in the property and casualty insurance segment,
|
•
|
higher interest charges on borrowed money, and
|
•
|
higher holding company expenses.
|
•
|
the establishment of insurance reserves, especially asbestos and environmental-related reserves,
|
•
|
the recoverability of reinsurance,
|
•
|
the amortization of annuity deferred policy acquisition costs,
|
•
|
the measurement of the derivatives embedded in indexed annuity liabilities,
|
•
|
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,
|
||||||
2019
|
|
2018
|
||||||
Principal amount of long-term debt
|
|
$
|
1,493
|
|
|
$
|
1,318
|
|
Total capital
|
|
6,883
|
|
|
6,218
|
|
||
Ratio of debt to total capital:
|
|
|
|
|
||||
Including subordinated debt
|
|
21.7
|
%
|
|
21.2
|
%
|
||
Excluding subordinated debt
|
|
14.8
|
%
|
|
16.4
|
%
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash provided by operating activities
|
$
|
2,456
|
|
|
$
|
2,083
|
|
|
$
|
1,804
|
|
Net cash used in investing activities
|
(3,065
|
)
|
|
(5,350
|
)
|
|
(3,292
|
)
|
|||
Net cash provided by financing activities
|
1,408
|
|
|
2,444
|
|
|
1,719
|
|
|||
Net change in cash and cash equivalents
|
$
|
799
|
|
|
$
|
(823
|
)
|
|
$
|
231
|
|
|
|
|
|
|
% of Reserves
|
|
||||
|
|
|
|
|
at December 31,
|
|
||||
|
GMIR
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
|
1 — 1.99%
|
|
|
|
81%
|
|
79%
|
|
76%
|
|
|
2 — 2.99%
|
|
|
|
3%
|
|
4%
|
|
5%
|
|
|
3 — 3.99%
|
|
|
|
7%
|
|
8%
|
|
10%
|
|
|
4.00% and above
|
|
|
|
9%
|
|
9%
|
|
9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuity benefits accumulated (in millions)
|
|
$40,406
|
|
$36,616
|
|
$33,316
|
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash provided by operating activities
|
$
|
306
|
|
|
$
|
215
|
|
|
$
|
578
|
|
Net cash provided by (used in) investing activities
|
(56
|
)
|
|
10
|
|
|
(63
|
)
|
|||
Net cash used in financing activities
|
(242
|
)
|
|
(366
|
)
|
|
(413
|
)
|
|||
Net change in cash and cash equivalents
|
$
|
8
|
|
|
$
|
(141
|
)
|
|
$
|
102
|
|
|
|
Total
|
|
Within
One Year
|
|
2-3 Years
|
|
4-5 Years
|
|
More than
5 Years
|
||||||||||
Annuities (a)
|
|
$
|
45,451
|
|
|
$
|
3,546
|
|
|
$
|
8,819
|
|
|
$
|
11,035
|
|
|
$
|
22,051
|
|
Life, accident and health liabilities (a)
|
|
1,283
|
|
|
101
|
|
|
207
|
|
|
163
|
|
|
812
|
|
|||||
Property and casualty unpaid losses and loss adjustment expenses (b)
|
|
10,232
|
|
|
2,834
|
|
|
2,753
|
|
|
1,156
|
|
|
3,489
|
|
|||||
Long-term debt, including interest
|
|
3,349
|
|
|
68
|
|
|
136
|
|
|
136
|
|
|
3,009
|
|
|||||
Operating leases (c)
|
|
202
|
|
|
47
|
|
|
73
|
|
|
47
|
|
|
35
|
|
|||||
Total
|
|
$
|
60,517
|
|
|
$
|
6,596
|
|
|
$
|
11,988
|
|
|
$
|
12,537
|
|
|
$
|
29,396
|
|
(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 $40.41 billion for annuity benefits accumulated and $612 million for life, accident and health reserves included in AFG’s Balance Sheet as of December 31, 2019. Based on the same assumptions, AFG projects reinsurance recoveries related to life, accident and health reserves totaling $597 million as follows: Within 1 year — $60 million; 2-3 years — $100 million; 4-5 years — $76 million; and thereafter — $361 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 $3.02 billion as follows: Within 1 year — $838 million; 2-3 years — $813 million; 4-5 years — $342 million; and thereafter — $1.03 billion. Actual payments and their timing could differ significantly from these estimates.
|
(c)
|
Amounts presented in the table represent lease component payments, including short-term lease payments, and exclude non-lease component payments of building leases (primarily common area maintenance and property tax payments). Estimated non-lease component payments totaling $92 million are as follows: Within 1 year — $17 million; 2-3 years — $30 million; 4-5 years — $24 million; and thereafter — $21 million.
|
Fair value of fixed maturity portfolio
|
$
|
46,618
|
|
Percentage impact on fair value of 100 bps increase in interest rates
|
(4.0
|
%)
|
|
Pretax impact on fair value of fixed maturity portfolio
|
$
|
(1,865
|
)
|
Offsetting adjustments to deferred policy acquisition costs and other balance sheet amounts
|
850
|
|
|
Estimated pretax impact on accumulated other comprehensive income
|
(1,015
|
)
|
|
Deferred income tax
|
213
|
|
|
Estimated after-tax impact on accumulated other comprehensive income
|
$
|
(802
|
)
|
|
|
Amortized
Cost
|
|
Fair Value
|
|
Fair Value as
% of Cost
|
|
Unrealized
Gain (Loss)
|
|
% Rated
Investment
Grade
|
||||||||
Collateral type
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Agency-backed
|
|
$
|
549
|
|
|
$
|
552
|
|
|
101
|
%
|
|
$
|
3
|
|
|
100
|
%
|
Non-agency prime
|
|
1,157
|
|
|
1,264
|
|
|
109
|
%
|
|
107
|
|
|
53
|
%
|
|||
Alt-A
|
|
897
|
|
|
1,015
|
|
|
113
|
%
|
|
118
|
|
|
37
|
%
|
|||
Subprime
|
|
298
|
|
|
330
|
|
|
111
|
%
|
|
32
|
|
|
25
|
%
|
|||
Commercial
|
|
896
|
|
|
927
|
|
|
103
|
%
|
|
31
|
|
|
96
|
%
|
|||
|
|
$
|
3,797
|
|
|
$
|
4,088
|
|
|
108
|
%
|
|
$
|
291
|
|
|
63
|
%
|
|
Securities
With
Unrealized
Gains
|
|
Securities
With
Unrealized
Losses
|
||||
Available for Sale Fixed Maturities
|
|
|
|
||||
Fair value of securities
|
$
|
38,726
|
|
|
$
|
6,685
|
|
Amortized cost of securities
|
$
|
36,657
|
|
|
$
|
6,773
|
|
Gross unrealized gain (loss)
|
$
|
2,069
|
|
|
$
|
(88
|
)
|
Fair value as % of amortized cost
|
106
|
%
|
|
99
|
%
|
||
Number of security positions
|
4,680
|
|
|
649
|
|
||
Number individually exceeding $2 million gain or loss
|
165
|
|
|
7
|
|
||
Concentration of gains (losses) by type or industry (exceeding 5% of unrealized):
|
|
|
|
||||
States and municipalities
|
$
|
363
|
|
|
$
|
(4
|
)
|
Mortgage-backed securities
|
296
|
|
|
(5
|
)
|
||
Banks, savings and credit institutions
|
287
|
|
|
(2
|
)
|
||
Other asset-backed securities
|
156
|
|
|
(20
|
)
|
||
Insurance
|
138
|
|
|
(1
|
)
|
||
Collateralized loans obligations
|
10
|
|
|
(37
|
)
|
||
Percentage rated investment grade
|
92
|
%
|
|
93
|
%
|
|
|
Securities
With
Unrealized
Gains
|
|
Securities
With
Unrealized
Losses
|
||
Maturity
|
|
|
|
|
||
One year or less
|
|
4
|
%
|
|
2
|
%
|
After one year through five years
|
|
27
|
%
|
|
7
|
%
|
After five years through ten years
|
|
36
|
%
|
|
9
|
%
|
After ten years
|
|
8
|
%
|
|
8
|
%
|
|
|
75
|
%
|
|
26
|
%
|
Collateralized loan obligations and other asset-backed securities (average life of approximately 4 years)
|
|
16
|
%
|
|
65
|
%
|
Mortgage-backed securities (average life of approximately 4-1/2 years)
|
|
9
|
%
|
|
9
|
%
|
|
|
100
|
%
|
|
100
|
%
|
|
|
Aggregate
Fair
Value
|
|
Aggregate
Unrealized
Gain (Loss)
|
|
Fair
Value as
% of Cost
|
|||||
Fixed Maturities at December 31, 2019
|
|
|
|
|
|
|
|||||
Securities with unrealized gains:
|
|
|
|
|
|
|
|||||
Exceeding $500,000 (1,278 securities)
|
|
$
|
20,444
|
|
|
$
|
1,557
|
|
|
108
|
%
|
$500,000 or less (3,402 securities)
|
|
18,282
|
|
|
512
|
|
|
103
|
%
|
||
|
|
$
|
38,726
|
|
|
$
|
2,069
|
|
|
106
|
%
|
Securities with unrealized losses:
|
|
|
|
|
|
|
|||||
Exceeding $500,000 (34 securities)
|
|
$
|
793
|
|
|
$
|
(41
|
)
|
|
95
|
%
|
$500,000 or less (615 securities)
|
|
5,892
|
|
|
(47
|
)
|
|
99
|
%
|
||
|
|
$
|
6,685
|
|
|
$
|
(88
|
)
|
|
99
|
%
|
|
|
Aggregate
Fair
Value
|
|
Aggregate
Unrealized
Loss
|
|
Fair
Value as
% of Cost
|
|||||
Securities with Unrealized Losses at December 31, 2019
|
|
|
|
|
|
|
|||||
Investment grade fixed maturities with losses for:
|
|
|
|
|
|
|
|||||
Less than one year (295 securities)
|
|
$
|
4,086
|
|
|
$
|
(32
|
)
|
|
99
|
%
|
One year or longer (222 securities)
|
|
2,116
|
|
|
(33
|
)
|
|
98
|
%
|
||
|
|
$
|
6,202
|
|
|
$
|
(65
|
)
|
|
99
|
%
|
Non-investment grade fixed maturities with losses for:
|
|
|
|
|
|
|
|||||
Less than one year (98 securities)
|
|
$
|
375
|
|
|
$
|
(12
|
)
|
|
97
|
%
|
One year or longer (34 securities)
|
|
108
|
|
|
(11
|
)
|
|
91
|
%
|
||
|
|
$
|
483
|
|
|
$
|
(23
|
)
|
|
95
|
%
|
a)
|
whether the unrealized loss is credit-driven or a result of changes in market interest rates,
|
b)
|
the extent to which fair value is less than cost basis,
|
c)
|
cash flow projections received from independent sources,
|
d)
|
historical operating, balance sheet and cash flow data contained in issuer SEC filings and news releases,
|
e)
|
near-term prospects for improvement in the issuer and/or its industry,
|
f)
|
third-party research and communications with industry specialists,
|
g)
|
financial models and forecasts,
|
h)
|
the continuity of interest 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
|
|
$
|
817
|
|
|
$
|
1,973
|
|
|
$
|
477
|
|
|
$
|
3,267
|
|
|
$
|
1,098
|
|
Workers’ compensation
|
|
995
|
|
|
1,360
|
|
|
350
|
|
|
2,705
|
|
|
1,270
|
|
|||||
Other liability — claims made
|
|
204
|
|
|
354
|
|
|
260
|
|
|
818
|
|
|
588
|
|
|||||
Commercial auto/truck liability/medical
|
|
261
|
|
|
343
|
|
|
118
|
|
|
722
|
|
|
449
|
|
|||||
Special property (fire, allied lines, inland marine, earthquake)
|
|
366
|
|
|
98
|
|
|
25
|
|
|
489
|
|
|
1,439
|
|
|||||
Products liability — occurrence
|
|
87
|
|
|
170
|
|
|
145
|
|
|
402
|
|
|
138
|
|
|||||
Commercial multi-peril
|
|
136
|
|
|
113
|
|
|
66
|
|
|
315
|
|
|
300
|
|
|||||
Other lines
|
|
200
|
|
|
409
|
|
|
93
|
|
|
702
|
|
|
1,190
|
|
|||||
Total Statutory
|
|
3,066
|
|
|
4,820
|
|
|
1,534
|
|
|
9,420
|
|
|
6,472
|
|
|||||
Adjustments for GAAP:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign operations
|
|
293
|
|
|
475
|
|
|
36
|
|
|
804
|
|
|
811
|
|
|||||
Deferred gains on retroactive reinsurance
|
|
—
|
|
|
27
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|||||
Loss reserve discounting
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|||||
Other
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
16
|
|
|||||
Total Adjustments for GAAP
|
|
274
|
|
|
502
|
|
|
36
|
|
|
812
|
|
|
827
|
|
|||||
Total GAAP Reserves and Premiums
|
|
$
|
3,340
|
|
|
$
|
5,322
|
|
|
$
|
1,570
|
|
|
$
|
10,232
|
|
|
$
|
7,299
|
|
Line of business
|
Effect of 1%
Change in
Cost Trends
|
||
Other liability — occurrence
|
$
|
45
|
|
Workers’ compensation
|
72
|
|
|
Other liability — claims made
|
15
|
|
|
Commercial auto/truck liability/medical
|
10
|
|
|
|
5-yr. Average
Development (a)(b)
|
|
Net Reserves (b) December 31, 2019
|
|
Effect on Net
Earnings (b)
|
|||||
Other liability — occurrence
|
|
4.5
|
%
|
|
$
|
1,428
|
|
|
$
|
(64
|
)
|
Workers’ compensation
|
|
(3.7
|
%)
|
|
2,283
|
|
|
84
|
|
||
Other liability — claims made
|
|
(2.1
|
%)
|
|
605
|
|
|
13
|
|
||
Commercial auto/truck liability/medical
|
|
0.3
|
%
|
|
508
|
|
|
(2
|
)
|
(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
|
•
|
Reporting lag from ceding property insurers
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Before reinsurance (gross)
|
|
95.6
|
%
|
|
94.1
|
%
|
|
98.9
|
%
|
Effect of reinsurance
|
|
0.2
|
%
|
|
(0.3
|
%)
|
|
(4.2
|
%)
|
Actual (net of reinsurance)
|
|
95.8
|
%
|
|
93.8
|
%
|
|
94.7
|
%
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Asbestos
|
|
$
|
221
|
|
|
$
|
234
|
|
Environmental
|
|
162
|
|
|
161
|
|
||
A&E reserves, net of reinsurance recoverable
|
|
383
|
|
|
395
|
|
||
Reinsurance recoverable, net of allowance
|
|
146
|
|
|
129
|
|
||
Gross A&E reserves
|
|
$
|
529
|
|
|
$
|
524
|
|
•
|
There is 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.
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Number of policyholders with no indemnity payments:
|
|
|
|
|
|
|
|||
Asbestos
|
|
98
|
|
|
94
|
|
|
81
|
|
Environmental
|
|
113
|
|
|
112
|
|
|
101
|
|
|
|
211
|
|
|
206
|
|
|
182
|
|
Number of policyholders with indemnity payments:
|
|
|
|
|
|
|
|||
Asbestos
|
|
46
|
|
|
49
|
|
|
74
|
|
Environmental
|
|
17
|
|
|
32
|
|
|
31
|
|
|
|
63
|
|
|
81
|
|
|
105
|
|
Total
|
|
274
|
|
|
287
|
|
|
287
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Asbestos
|
|
$
|
17
|
|
|
$
|
9
|
|
|
$
|
11
|
|
Environmental
|
|
13
|
|
|
17
|
|
|
12
|
|
|||
Total
|
|
$
|
30
|
|
|
$
|
26
|
|
|
$
|
23
|
|
|
Property and Casualty Insurance Reserves
|
|||||||
|
Three-Year Survival Ratio (Times Paid Losses)
|
|||||||
|
Asbestos
|
|
Environmental
|
|
Total A&E
|
|||
AFG (12/31/2019)
|
17.9
|
|
|
11.8
|
|
|
14.6
|
|
Industry (12/31/2018)
|
7.0
|
|
|
8.3
|
|
|
7.3
|
|
|
Before CLO
Consolidation
|
|
Managed
Investment
Entities
|
|
Consol.
Entries
|
|
|
|
Consolidated
As Reported
|
||||||||
December 31, 2019
|
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and investments
|
$
|
55,416
|
|
|
$
|
—
|
|
|
$
|
(164
|
)
|
|
(a)
|
|
$
|
55,252
|
|
Assets of managed investment entities
|
—
|
|
|
4,736
|
|
|
—
|
|
|
|
|
4,736
|
|
||||
Other assets
|
10,143
|
|
|
—
|
|
|
(1
|
)
|
|
(a)
|
|
10,142
|
|
||||
Total assets
|
$
|
65,559
|
|
|
$
|
4,736
|
|
|
$
|
(165
|
)
|
|
|
|
$
|
70,130
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Unpaid losses and loss adjustment expenses and unearned premiums
|
$
|
13,062
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
13,062
|
|
Annuity, life, accident and health benefits and reserves
|
41,018
|
|
|
—
|
|
|
—
|
|
|
|
|
41,018
|
|
||||
Liabilities of managed investment entities
|
—
|
|
|
4,736
|
|
|
(165
|
)
|
|
(a)
|
|
4,571
|
|
||||
Long-term debt and other liabilities
|
5,210
|
|
|
—
|
|
|
—
|
|
|
|
|
5,210
|
|
||||
Total liabilities
|
59,290
|
|
|
4,736
|
|
|
(165
|
)
|
|
|
|
63,861
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
||||||||
Common Stock and Capital surplus
|
1,397
|
|
|
—
|
|
|
—
|
|
|
|
|
1,397
|
|
||||
Retained earnings
|
4,009
|
|
|
—
|
|
|
—
|
|
|
|
|
4,009
|
|
||||
Accumulated other comprehensive income, net of tax
|
863
|
|
|
—
|
|
|
—
|
|
|
|
|
863
|
|
||||
Total shareholders’ equity
|
6,269
|
|
|
—
|
|
|
—
|
|
|
|
|
6,269
|
|
||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
||||
Total equity
|
6,269
|
|
|
—
|
|
|
—
|
|
|
|
|
6,269
|
|
||||
Total liabilities and equity
|
$
|
65,559
|
|
|
$
|
4,736
|
|
|
$
|
(165
|
)
|
|
|
|
$
|
70,130
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and investments
|
$
|
48,685
|
|
|
$
|
—
|
|
|
$
|
(187
|
)
|
|
(a)
|
|
$
|
48,498
|
|
Assets of managed investment entities
|
—
|
|
|
4,700
|
|
|
—
|
|
|
|
|
4,700
|
|
||||
Other assets
|
10,259
|
|
|
—
|
|
|
(1
|
)
|
|
(a)
|
|
10,258
|
|
||||
Total assets
|
$
|
58,944
|
|
|
$
|
4,700
|
|
|
$
|
(188
|
)
|
|
|
|
$
|
63,456
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Unpaid losses and loss adjustment expenses and unearned premiums
|
$
|
12,336
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
12,336
|
|
Annuity, life, accident and health benefits and reserves
|
37,251
|
|
|
—
|
|
|
—
|
|
|
|
|
37,251
|
|
||||
Liabilities of managed investment entities
|
—
|
|
|
4,700
|
|
|
(188
|
)
|
|
(a)
|
|
4,512
|
|
||||
Long-term debt and other liabilities
|
4,385
|
|
|
—
|
|
|
—
|
|
|
|
|
4,385
|
|
||||
Total liabilities
|
53,972
|
|
|
4,700
|
|
|
(188
|
)
|
|
|
|
58,484
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
||||||||
Common Stock and Capital surplus
|
1,334
|
|
|
—
|
|
|
—
|
|
|
|
|
1,334
|
|
||||
Retained earnings
|
3,588
|
|
|
—
|
|
|
—
|
|
|
|
|
3,588
|
|
||||
Accumulated other comprehensive income, net of tax
|
48
|
|
|
—
|
|
|
—
|
|
|
|
|
48
|
|
||||
Total shareholders’ equity
|
4,970
|
|
|
—
|
|
|
—
|
|
|
|
|
4,970
|
|
||||
Noncontrolling interests
|
2
|
|
|
—
|
|
|
—
|
|
|
|
|
2
|
|
||||
Total equity
|
4,972
|
|
|
—
|
|
|
—
|
|
|
|
|
4,972
|
|
||||
Total liabilities and equity
|
$
|
58,944
|
|
|
$
|
4,700
|
|
|
$
|
(188
|
)
|
|
|
|
$
|
63,456
|
|
(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, 2019
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
1,375
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
1,375
|
|
Net investment income
|
586
|
|
|
—
|
|
|
7
|
|
|
(b)
|
|
593
|
|
||||
Realized gains (losses) on securities
|
65
|
|
|
—
|
|
|
—
|
|
|
|
|
65
|
|
||||
Income (loss) of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
63
|
|
|
—
|
|
|
|
|
63
|
|
||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
(1
|
)
|
|
(13
|
)
|
|
(b)
|
|
(14
|
)
|
||||
Other income
|
52
|
|
|
—
|
|
|
(4
|
)
|
|
(c)
|
|
48
|
|
||||
Total revenues
|
2,078
|
|
|
62
|
|
|
(10
|
)
|
|
|
|
2,130
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
1,695
|
|
|
—
|
|
|
—
|
|
|
|
|
1,695
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
62
|
|
|
(10
|
)
|
|
(b)(c)
|
|
52
|
|
||||
Interest charges on borrowed money and other expenses
|
124
|
|
|
—
|
|
|
—
|
|
|
|
|
124
|
|
||||
Total costs and expenses
|
1,819
|
|
|
62
|
|
|
(10
|
)
|
|
|
|
1,871
|
|
||||
Earnings before income taxes
|
259
|
|
|
—
|
|
|
—
|
|
|
|
|
259
|
|
||||
Provision for income taxes
|
68
|
|
|
—
|
|
|
—
|
|
|
|
|
68
|
|
||||
Net earnings, including noncontrolling interests
|
191
|
|
|
—
|
|
|
—
|
|
|
|
|
191
|
|
||||
Less: Net earnings (losses) attributable to noncontrolling interests
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(20
|
)
|
||||
Net earnings attributable to shareholders
|
$
|
211
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
211
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Three months ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
1,276
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
1,276
|
|
Net investment income
|
538
|
|
|
—
|
|
|
4
|
|
|
(b)
|
|
542
|
|
||||
Realized gains (losses) on securities
|
(238
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(238
|
)
|
||||
Income (loss) of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
68
|
|
|
—
|
|
|
|
|
68
|
|
||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
(1
|
)
|
|
(10
|
)
|
|
(b)
|
|
(11
|
)
|
||||
Other income
|
57
|
|
|
—
|
|
|
(4
|
)
|
|
(c)
|
|
53
|
|
||||
Total revenues
|
1,633
|
|
|
67
|
|
|
(10
|
)
|
|
|
|
1,690
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
1,575
|
|
|
—
|
|
|
—
|
|
|
|
|
1,575
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
67
|
|
|
(10
|
)
|
|
(b)(c)
|
|
57
|
|
||||
Interest charges on borrowed money and other expenses
|
97
|
|
|
—
|
|
|
—
|
|
|
|
|
97
|
|
||||
Total costs and expenses
|
1,672
|
|
|
67
|
|
|
(10
|
)
|
|
|
|
1,729
|
|
||||
Earnings (loss) before income taxes
|
(39
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(39
|
)
|
||||
Provision (credit) for income taxes
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(4
|
)
|
||||
Net earnings (loss), including noncontrolling interests
|
(35
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(35
|
)
|
||||
Less: Net earnings (losses) attributable to noncontrolling interests
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(6
|
)
|
||||
Net earnings (loss) attributable to shareholders
|
$
|
(29
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
(29
|
)
|
(a)
|
Includes losses of $7 million and $4 million in the fourth quarter of 2019 and 2018, respectively, representing the change in fair value of AFG’s CLO investments plus $4 million in both the fourth quarter of 2019 and 2018 in CLO management fees earned.
|
(b)
|
Elimination of the change in fair value of AFG’s investments in the CLOs, including $6 million in both the fourth quarter of 2019 and 2018 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, 2019
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
5,207
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
5,207
|
|
Net investment income
|
2,307
|
|
|
—
|
|
|
(4
|
)
|
|
(b)
|
|
2,303
|
|
||||
Realized gains (losses) on securities
|
287
|
|
|
—
|
|
|
—
|
|
|
|
|
287
|
|
||||
Income (loss) of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
269
|
|
|
—
|
|
|
|
|
269
|
|
||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
(8
|
)
|
|
(22
|
)
|
|
(b)
|
|
(30
|
)
|
||||
Other income
|
216
|
|
|
—
|
|
|
(15
|
)
|
|
(c)
|
|
201
|
|
||||
Total revenues
|
8,017
|
|
|
261
|
|
|
(41
|
)
|
|
|
|
8,237
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
6,436
|
|
|
—
|
|
|
—
|
|
|
|
|
6,436
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
261
|
|
|
(41
|
)
|
|
(b)(c)
|
|
220
|
|
||||
Interest charges on borrowed money and other expenses
|
473
|
|
|
—
|
|
|
—
|
|
|
|
|
473
|
|
||||
Total costs and expenses
|
6,909
|
|
|
261
|
|
|
(41
|
)
|
|
|
|
7,129
|
|
||||
Earnings before income taxes
|
1,108
|
|
|
—
|
|
|
—
|
|
|
|
|
1,108
|
|
||||
Provision for income taxes
|
239
|
|
|
—
|
|
|
—
|
|
|
|
|
239
|
|
||||
Net earnings, including noncontrolling interests
|
869
|
|
|
—
|
|
|
—
|
|
|
|
|
869
|
|
||||
Less: Net earnings (losses) attributable to noncontrolling interests
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(28
|
)
|
||||
Net earnings attributable to shareholders
|
$
|
897
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
897
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Year ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance net earned premiums
|
$
|
4,889
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
4,889
|
|
Net investment income
|
2,101
|
|
|
—
|
|
|
(7
|
)
|
|
(b)
|
|
2,094
|
|
||||
Realized gains (losses) on securities
|
(266
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(266
|
)
|
||||
Income (loss) of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
255
|
|
|
—
|
|
|
|
|
255
|
|
||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
(7
|
)
|
|
(14
|
)
|
|
(b)
|
|
(21
|
)
|
||||
Other income
|
215
|
|
|
—
|
|
|
(16
|
)
|
|
(c)
|
|
199
|
|
||||
Total revenues
|
6,939
|
|
|
248
|
|
|
(37
|
)
|
|
|
|
7,150
|
|
||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Insurance benefits and expenses
|
5,885
|
|
|
—
|
|
|
—
|
|
|
|
|
5,885
|
|
||||
Expenses of managed investment entities
|
—
|
|
|
248
|
|
|
(37
|
)
|
|
(b)(c)
|
|
211
|
|
||||
Interest charges on borrowed money and other expenses
|
415
|
|
|
—
|
|
|
—
|
|
|
|
|
415
|
|
||||
Total costs and expenses
|
6,300
|
|
|
248
|
|
|
(37
|
)
|
|
|
|
6,511
|
|
||||
Earnings before income taxes
|
639
|
|
|
—
|
|
|
—
|
|
|
|
|
639
|
|
||||
Provision for income taxes
|
122
|
|
|
—
|
|
|
—
|
|
|
|
|
122
|
|
||||
Net earnings, including noncontrolling interests
|
517
|
|
|
—
|
|
|
—
|
|
|
|
|
517
|
|
||||
Less: Net earnings (losses) attributable to noncontrolling interests
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
|
|
(13
|
)
|
||||
Net earnings attributable to shareholders
|
$
|
530
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
530
|
|
(a)
|
Includes income of $4 million and $7 million in 2019 and 2018, respectively, representing the change in fair value of AFG’s CLO investments plus $15 million and $16 million in 2019 and 2018, respectively, in CLO management fees earned.
|
(b)
|
Elimination of the change in fair value of AFG’s investments in the CLOs, including $26 million and $21 million in 2019 and 2018, 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 (losses) on securities
|
5
|
|
|
—
|
|
|
—
|
|
|
|
|
5
|
|
||||
Income (loss) of managed investment entities:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
—
|
|
|
210
|
|
|
—
|
|
|
|
|
210
|
|
||||
Gain (loss) 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 (losses) attributable to noncontrolling interests
|
2
|
|
|
—
|
|
|
—
|
|
|
|
|
2
|
|
||||
Net earnings attributable to shareholders
|
$
|
475
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
|
|
$
|
475
|
|
(a)
|
Includes income of $23 million representing the change in fair value of AFG’s CLO investments plus $18 million in CLO management fees earned.
|
(b)
|
Elimination of the change in fair value of AFG’s investments in the CLOs, including $32 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,
|
||||||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||
Components of net earnings (loss) attributable to shareholders:
|
|
|
|
|
|
|
|
|
|
||||||||||
Core operating earnings before income taxes
|
$
|
251
|
|
|
$
|
199
|
|
|
$
|
967
|
|
|
$
|
932
|
|
|
$
|
865
|
|
Pretax non-core items:
|
|
|
|
|
|
|
|
|
|
||||||||||
Realized gains (losses) on securities
|
65
|
|
|
(238
|
)
|
|
287
|
|
|
(266
|
)
|
|
5
|
|
|||||
Annuity non-core earnings (losses) (*)
|
24
|
|
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
—
|
|
|||||
Special A&E charges
|
—
|
|
|
—
|
|
|
(29
|
)
|
|
(27
|
)
|
|
(113
|
)
|
|||||
Neon exited lines charge
|
(76
|
)
|
|
—
|
|
|
(76
|
)
|
|
—
|
|
|
18
|
|
|||||
Loss on retirement of debt
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(51
|
)
|
|||||
Earnings (loss) before income taxes
|
259
|
|
|
(39
|
)
|
|
1,108
|
|
|
639
|
|
|
724
|
|
|||||
Provision (credit) for income taxes:
|
|
|
|
|
|
|
|
|
|
||||||||||
Core operating earnings
|
50
|
|
|
46
|
|
|
193
|
|
|
184
|
|
|
275
|
|
|||||
Non-core items:
|
|
|
|
|
|
|
|
|
|
||||||||||
Realized gains (losses) on securities
|
14
|
|
|
(50
|
)
|
|
60
|
|
|
(56
|
)
|
|
2
|
|
|||||
Annuity non-core earnings (losses) (*)
|
5
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|||||
Special A&E charges
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
|
(39
|
)
|
|||||
Loss on retirement of debt
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(18
|
)
|
|||||
Tax benefit related to Neon restructuring
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(56
|
)
|
|||||
Tax expense related to change in U.S. corporate tax rate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83
|
|
|||||
Total provision (credit) for income taxes
|
68
|
|
|
(4
|
)
|
|
239
|
|
|
122
|
|
|
247
|
|
|||||
Net earnings (loss), including noncontrolling interests
|
191
|
|
|
(35
|
)
|
|
869
|
|
|
517
|
|
|
477
|
|
|||||
Less net earnings (losses) attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
||||||||||
Core operating earnings
|
(2
|
)
|
|
(6
|
)
|
|
(10
|
)
|
|
(13
|
)
|
|
2
|
|
|||||
Neon exited lines charge
|
(18
|
)
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|||||
Total net earnings (losses) attributable to noncontrolling interests
|
(20
|
)
|
|
(6
|
)
|
|
(28
|
)
|
|
(13
|
)
|
|
2
|
|
|||||
Net earnings (loss) attributable to shareholders
|
$
|
211
|
|
|
$
|
(29
|
)
|
|
$
|
897
|
|
|
$
|
530
|
|
|
$
|
475
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net earnings (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Core net operating earnings
|
$
|
203
|
|
|
$
|
159
|
|
|
$
|
784
|
|
|
$
|
761
|
|
|
$
|
588
|
|
Realized gains (losses) on securities
|
51
|
|
|
(188
|
)
|
|
227
|
|
|
(210
|
)
|
|
3
|
|
|||||
Annuity non-core earnings (losses) (*)
|
19
|
|
|
—
|
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
|||||
Special A&E charges
|
—
|
|
|
—
|
|
|
(23
|
)
|
|
(21
|
)
|
|
(74
|
)
|
|||||
Neon exited lines charge
|
(58
|
)
|
|
—
|
|
|
(58
|
)
|
|
—
|
|
|
18
|
|
|||||
Loss on retirement of debt
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(33
|
)
|
|||||
Tax benefit related to Neon restructuring
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56
|
|
|||||
Tax expense related to change in U.S. corporate tax rate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(83
|
)
|
|||||
Net earnings (loss) attributable to shareholders
|
$
|
211
|
|
|
$
|
(29
|
)
|
|
$
|
897
|
|
|
$
|
530
|
|
|
$
|
475
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted per share amounts:
|
|
|
|
|
|
|
|
|
|
||||||||||
Core net operating earnings
|
$
|
2.22
|
|
|
$
|
1.75
|
|
|
$
|
8.62
|
|
|
$
|
8.40
|
|
|
$
|
6.55
|
|
Realized gains (losses) on securities
|
0.56
|
|
|
(2.08
|
)
|
|
2.47
|
|
|
(2.31
|
)
|
|
0.03
|
|
|||||
Annuity non-core earnings (losses) (*)
|
0.21
|
|
|
—
|
|
|
(0.31
|
)
|
|
—
|
|
|
—
|
|
|||||
Special A&E charges
|
—
|
|
|
—
|
|
|
(0.25
|
)
|
|
(0.24
|
)
|
|
(0.82
|
)
|
|||||
Neon exited lines charge
|
(0.64
|
)
|
|
—
|
|
|
(0.64
|
)
|
|
—
|
|
|
0.19
|
|
|||||
Loss on retirement of debt
|
(0.04
|
)
|
|
—
|
|
|
(0.04
|
)
|
|
—
|
|
|
(0.37
|
)
|
|||||
Tax benefit related to Neon restructuring
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.62
|
|
|||||
Tax expense related to change in U.S. corporate tax rate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.92
|
)
|
|||||
Net earnings (loss) attributable to shareholders
|
$
|
2.31
|
|
|
$
|
(0.33
|
)
|
|
$
|
9.85
|
|
|
$
|
5.85
|
|
|
$
|
5.28
|
|
(*)
|
As discussed above, beginning prospectively with the second quarter of 2019, unlocking, the impact of changes in the fair value of derivatives related to FIAs, and other impacts of changes in the stock market and interest rates on the accounting for FIAs over or under the cost of the equity index options purchased to mitigate the risk in the index-based component of those FIAs are considered annuity non-core earnings (losses).
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
||||||||||||||||
|
P&C
|
|
Annuity
|
|
Consol. MIEs
|
|
Holding Co., other and unallocated
|
|
Total
|
|
Non-core reclass
|
|
GAAP Total
|
||||||||||||||
Three months ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Property and casualty insurance net earned premiums
|
$
|
1,370
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,370
|
|
|
$
|
—
|
|
|
$
|
1,370
|
|
Life, accident and health net earned premiums
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||||
Net investment income
|
120
|
|
|
458
|
|
|
7
|
|
|
8
|
|
|
593
|
|
|
—
|
|
|
593
|
|
|||||||
Realized gains (losses) on securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|
65
|
|
|||||||
Income (loss) of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
63
|
|
|||||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
(14
|
)
|
|||||||
Other income
|
1
|
|
|
26
|
|
|
(4
|
)
|
|
25
|
|
|
48
|
|
|
—
|
|
|
48
|
|
|||||||
Total revenues
|
1,491
|
|
|
484
|
|
|
52
|
|
|
38
|
|
|
2,065
|
|
|
65
|
|
|
2,130
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Property and casualty insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss adjustment expenses
|
866
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
866
|
|
|
46
|
|
|
912
|
|
|||||||
Commissions and other underwriting expenses
|
416
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
420
|
|
|
30
|
|
|
450
|
|
|||||||
Annuity benefits
|
—
|
|
|
281
|
|
|
—
|
|
|
—
|
|
|
281
|
|
|
(30
|
)
|
|
251
|
|
|||||||
Life, accident and health benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|||||||
Annuity and supplemental insurance acquisition expenses
|
—
|
|
|
65
|
|
|
—
|
|
|
1
|
|
|
66
|
|
|
6
|
|
|
72
|
|
|||||||
Interest charges on borrowed money
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
18
|
|
|
—
|
|
|
18
|
|
|||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
52
|
|
|||||||
Other expenses
|
12
|
|
|
34
|
|
|
—
|
|
|
55
|
|
|
101
|
|
|
5
|
|
|
106
|
|
|||||||
Total costs and expenses
|
1,294
|
|
|
380
|
|
|
52
|
|
|
88
|
|
|
1,814
|
|
|
57
|
|
|
1,871
|
|
|||||||
Earnings before income taxes
|
197
|
|
|
104
|
|
|
—
|
|
|
(50
|
)
|
|
251
|
|
|
8
|
|
|
259
|
|
|||||||
Provision for income taxes
|
39
|
|
|
21
|
|
|
—
|
|
|
(10
|
)
|
|
50
|
|
|
18
|
|
|
68
|
|
|||||||
Net earnings, including noncontrolling interests
|
158
|
|
|
83
|
|
|
—
|
|
|
(40
|
)
|
|
201
|
|
|
(10
|
)
|
|
191
|
|
|||||||
Less: Net earnings (losses) attributable to noncontrolling interests
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(18
|
)
|
|
(20
|
)
|
|||||||
Core Net Operating Earnings
|
160
|
|
|
83
|
|
|
—
|
|
|
(40
|
)
|
|
203
|
|
|
|
|
|
|||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Realized gains (losses) on securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|
51
|
|
|
(51
|
)
|
|
—
|
|
|||||||
Annuity non-core earnings (losses), net of tax (b)
|
—
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
(19
|
)
|
|
—
|
|
|||||||
Neon exited lines charge
|
(58
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
|
58
|
|
|
—
|
|
|||||||
Loss on retirement of debt, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
|
4
|
|
|
—
|
|
|||||||
Net Earnings Attributable to Shareholders
|
$
|
102
|
|
|
$
|
102
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
211
|
|
|
$
|
—
|
|
|
$
|
211
|
|
|
|
Other
|
|
|
|
|
|
|
|||||||||||||||||||
|
P&C
|
|
Annuity
|
|
Consol. MIEs
|
|
Holding Co., other and unallocated
|
|
Total
|
|
Non-core reclass
|
|
GAAP Total
|
||||||||||||||
Three months ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Property and casualty insurance net earned premiums
|
$
|
1,270
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,270
|
|
|
$
|
—
|
|
|
$
|
1,270
|
|
Life, accident and health net earned premiums
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|||||||
Net investment income
|
115
|
|
|
419
|
|
|
4
|
|
|
4
|
|
|
542
|
|
|
—
|
|
|
542
|
|
|||||||
Realized gains (losses) on securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(238
|
)
|
|
(238
|
)
|
|||||||
Income (loss) of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
68
|
|
|
—
|
|
|
68
|
|
|
—
|
|
|
68
|
|
|||||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
|||||||
Other income
|
2
|
|
|
27
|
|
|
(4
|
)
|
|
28
|
|
|
53
|
|
|
—
|
|
|
53
|
|
|||||||
Total revenues
|
1,387
|
|
|
446
|
|
|
57
|
|
|
38
|
|
|
1,928
|
|
|
(238
|
)
|
|
1,690
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Property and casualty insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss adjustment expenses
|
797
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
797
|
|
|
—
|
|
|
797
|
|
|||||||
Commissions and other underwriting expenses
|
372
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
378
|
|
|
—
|
|
|
378
|
|
|||||||
Annuity benefits
|
—
|
|
|
334
|
|
|
—
|
|
|
—
|
|
|
334
|
|
|
—
|
|
|
334
|
|
|||||||
Life, accident and health benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|||||||
Annuity and supplemental insurance acquisition expenses
|
—
|
|
|
56
|
|
|
—
|
|
|
2
|
|
|
58
|
|
|
—
|
|
|
58
|
|
|||||||
Interest charges on borrowed money
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
16
|
|
|
—
|
|
|
16
|
|
|||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
|||||||
Other expenses
|
10
|
|
|
36
|
|
|
—
|
|
|
35
|
|
|
81
|
|
|
—
|
|
|
81
|
|
|||||||
Total costs and expenses
|
1,179
|
|
|
426
|
|
|
57
|
|
|
67
|
|
|
1,729
|
|
|
—
|
|
|
1,729
|
|
|||||||
Earnings (loss) before income taxes
|
208
|
|
|
20
|
|
|
—
|
|
|
(29
|
)
|
|
199
|
|
|
(238
|
)
|
|
(39
|
)
|
|||||||
Provision (credit) for income taxes
|
49
|
|
|
5
|
|
|
—
|
|
|
(8
|
)
|
|
46
|
|
|
(50
|
)
|
|
(4
|
)
|
|||||||
Net earnings (loss), including noncontrolling interests
|
159
|
|
|
15
|
|
|
—
|
|
|
(21
|
)
|
|
153
|
|
|
(188
|
)
|
|
(35
|
)
|
|||||||
Less: Net earnings (losses) attributable to noncontrolling interests
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
|||||||
Core Net Operating Earnings
|
165
|
|
|
15
|
|
|
—
|
|
|
(21
|
)
|
|
159
|
|
|
|
|
|
|||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Realized gains (losses) on securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(188
|
)
|
|
(188
|
)
|
|
188
|
|
|
—
|
|
|||||||
Net Earnings (Loss) Attributable to Shareholders
|
$
|
165
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
(209
|
)
|
|
$
|
(29
|
)
|
|
$
|
—
|
|
|
$
|
(29
|
)
|
(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.
|
(b)
|
As discussed under “Results of Operations — General,” beginning with the second quarter of 2019, unlocking, the impact of changes in the fair value of derivatives related to FIAs, and other impacts of changes in the stock market and interest rates on the accounting for FIAs over or under the cost of the equity index options purchased to mitigate the risk in the index-based component of those FIAs are considered annuity non-core earnings (losses).
|
|
Three months ended December 31,
|
|
|
|||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
Gross written premiums
|
$
|
1,749
|
|
|
$
|
1,613
|
|
|
8
|
%
|
Reinsurance premiums ceded
|
(436
|
)
|
|
(405
|
)
|
|
8
|
%
|
||
Net written premiums
|
1,313
|
|
|
1,208
|
|
|
9
|
%
|
||
Change in unearned premiums
|
57
|
|
|
62
|
|
|
(8
|
%)
|
||
Net earned premiums
|
1,370
|
|
|
1,270
|
|
|
8
|
%
|
||
Loss and loss adjustment expenses (a)
|
866
|
|
|
797
|
|
|
9
|
%
|
||
Commissions and other underwriting expenses (b)
|
416
|
|
|
372
|
|
|
12
|
%
|
||
Core underwriting gain
|
88
|
|
|
101
|
|
|
(13
|
%)
|
||
|
|
|
|
|
|
|||||
Net investment income
|
120
|
|
|
115
|
|
|
4
|
%
|
||
Other income and expenses, net
|
(11
|
)
|
|
(8
|
)
|
|
38
|
%
|
||
Core earnings before income taxes
|
197
|
|
|
208
|
|
|
(5
|
%)
|
||
Pretax non-core Neon exited lines charge
|
(76
|
)
|
|
—
|
|
|
—
|
%
|
||
GAAP earnings before income taxes
|
$
|
121
|
|
|
$
|
208
|
|
|
(42
|
%)
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|||||
|
Three months ended December 31,
|
|
|
|||||||
Combined Ratios:
|
2019
|
|
2018
|
|
Change
|
|||||
Specialty lines
|
|
|
|
|
|
|||||
Loss and LAE ratio (a)
|
63.2
|
%
|
|
62.7
|
%
|
|
0.5
|
%
|
||
Underwriting expense ratio (b)
|
30.3
|
%
|
|
29.3
|
%
|
|
1.0
|
%
|
||
Combined ratio
|
93.5
|
%
|
|
92.0
|
%
|
|
1.5
|
%
|
||
|
|
|
|
|
|
|||||
Aggregate — including exited lines
|
|
|
|
|
|
|||||
Loss and LAE ratio
|
66.6
|
%
|
|
62.7
|
%
|
|
3.9
|
%
|
||
Underwriting expense ratio
|
32.5
|
%
|
|
29.3
|
%
|
|
3.2
|
%
|
||
Combined ratio
|
99.1
|
%
|
|
92.0
|
%
|
|
7.1
|
%
|
(a)
|
Excludes a pretax non-core charge of $46 million (3.3 points on the combined ratio) in the fourth quarter of 2019 associated with plans to exit the Lloyd’s of London insurance market in 2020.
|
(b)
|
Excludes a pretax non-core charge of $30 million (2.2 points on the combined ratio) in the fourth quarter of 2019 associated with plans to exit the Lloyd’s of London insurance market in 2020.
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2019
|
|
2018
|
|
|
|||||||||||
|
GWP
|
|
%
|
|
GWP
|
|
%
|
|
% Change
|
|||||||
Property and transportation
|
$
|
628
|
|
|
36
|
%
|
|
$
|
651
|
|
|
40
|
%
|
|
(4
|
%)
|
Specialty casualty
|
929
|
|
|
53
|
%
|
|
778
|
|
|
48
|
%
|
|
19
|
%
|
||
Specialty financial
|
192
|
|
|
11
|
%
|
|
184
|
|
|
12
|
%
|
|
4
|
%
|
||
|
$
|
1,749
|
|
|
100
|
%
|
|
$
|
1,613
|
|
|
100
|
%
|
|
8
|
%
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2019
|
|
2018
|
|
Change in
|
|||||||||||
|
Ceded
|
|
% of GWP
|
|
Ceded
|
|
% of GWP
|
|
% of GWP
|
|||||||
Property and transportation
|
$
|
(179
|
)
|
|
29
|
%
|
|
$
|
(203
|
)
|
|
31
|
%
|
|
(2
|
%)
|
Specialty casualty
|
(260
|
)
|
|
28
|
%
|
|
(197
|
)
|
|
25
|
%
|
|
3
|
%
|
||
Specialty financial
|
(36
|
)
|
|
19
|
%
|
|
(42
|
)
|
|
23
|
%
|
|
(4
|
%)
|
||
Other specialty
|
39
|
|
|
|
|
37
|
|
|
|
|
|
|||||
|
$
|
(436
|
)
|
|
25
|
%
|
|
$
|
(405
|
)
|
|
25
|
%
|
|
—
|
%
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2019
|
|
2018
|
|
|
|||||||||||
|
NWP
|
|
%
|
|
NWP
|
|
%
|
|
% Change
|
|||||||
Property and transportation
|
$
|
449
|
|
|
34
|
%
|
|
$
|
448
|
|
|
37
|
%
|
|
—
|
%
|
Specialty casualty
|
669
|
|
|
51
|
%
|
|
581
|
|
|
48
|
%
|
|
15
|
%
|
||
Specialty financial
|
156
|
|
|
12
|
%
|
|
142
|
|
|
12
|
%
|
|
10
|
%
|
||
Other specialty
|
39
|
|
|
3
|
%
|
|
37
|
|
|
3
|
%
|
|
5
|
%
|
||
|
$
|
1,313
|
|
|
100
|
%
|
|
$
|
1,208
|
|
|
100
|
%
|
|
9
|
%
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2019
|
|
2018
|
|
|
|||||||||||
|
NEP
|
|
%
|
|
NEP
|
|
%
|
|
% Change
|
|||||||
Property and transportation
|
$
|
505
|
|
|
37
|
%
|
|
$
|
479
|
|
|
38
|
%
|
|
5
|
%
|
Specialty casualty
|
676
|
|
|
49
|
%
|
|
613
|
|
|
48
|
%
|
|
10
|
%
|
||
Specialty financial
|
152
|
|
|
11
|
%
|
|
141
|
|
|
11
|
%
|
|
8
|
%
|
||
Other specialty
|
37
|
|
|
3
|
%
|
|
37
|
|
|
3
|
%
|
|
—
|
%
|
||
|
$
|
1,370
|
|
|
100
|
%
|
|
$
|
1,270
|
|
|
100
|
%
|
|
8
|
%
|
|
Three months ended December 31,
|
|
|
|
Three months ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
77.8
|
%
|
|
68.2
|
%
|
|
9.6
|
%
|
|
|
|
|
||||
Underwriting expense ratio
|
22.6
|
%
|
|
18.3
|
%
|
|
4.3
|
%
|
|
|
|
|
||||
Combined ratio
|
100.4
|
%
|
|
86.5
|
%
|
|
13.9
|
%
|
|
|
|
|
||||
Underwriting profit (loss)
|
|
|
|
|
|
|
$
|
(2
|
)
|
|
$
|
64
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
59.4
|
%
|
|
63.5
|
%
|
|
(4.1
|
%)
|
|
|
|
|
||||
Underwriting expense ratio
|
30.3
|
%
|
|
33.0
|
%
|
|
(2.7
|
%)
|
|
|
|
|
||||
Combined ratio
|
89.7
|
%
|
|
96.5
|
%
|
|
(6.8
|
%)
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
69
|
|
|
$
|
22
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
26.1
|
%
|
|
36.4
|
%
|
|
(10.3
|
%)
|
|
|
|
|
||||
Underwriting expense ratio
|
53.5
|
%
|
|
49.1
|
%
|
|
4.4
|
%
|
|
|
|
|
||||
Combined ratio
|
79.6
|
%
|
|
85.5
|
%
|
|
(5.9
|
%)
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
32
|
|
|
$
|
20
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
63.2
|
%
|
|
62.7
|
%
|
|
0.5
|
%
|
|
|
|
|
||||
Underwriting expense ratio
|
30.3
|
%
|
|
29.3
|
%
|
|
1.0
|
%
|
|
|
|
|
||||
Combined ratio
|
93.5
|
%
|
|
92.0
|
%
|
|
1.5
|
%
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
89
|
|
|
$
|
102
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Aggregate — including exited lines
|
|
|
|
|
|
|
|
|
|
|||||||
Loss and LAE ratio
|
66.6
|
%
|
|
62.7
|
%
|
|
3.9
|
%
|
|
|
|
|
||||
Underwriting expense ratio
|
32.5
|
%
|
|
29.3
|
%
|
|
3.2
|
%
|
|
|
|
|
||||
Combined ratio
|
99.1
|
%
|
|
92.0
|
%
|
|
7.1
|
%
|
|
|
|
|
||||
Underwriting profit
|
|
|
|
|
|
|
$
|
12
|
|
|
$
|
101
|
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
Amount
|
|
Ratio
|
|
Change in
|
|||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Ratio
|
|||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
403
|
|
|
$
|
335
|
|
|
79.9
|
%
|
|
69.9
|
%
|
|
10.0
|
%
|
Prior accident years development
|
(18
|
)
|
|
(7
|
)
|
|
(3.5
|
%)
|
|
(1.5
|
%)
|
|
(2.0
|
%)
|
||
Current year catastrophe losses
|
7
|
|
|
(1
|
)
|
|
1.4
|
%
|
|
(0.2
|
%)
|
|
1.6
|
%
|
||
Property and transportation losses and LAE and ratio
|
$
|
392
|
|
|
$
|
327
|
|
|
77.8
|
%
|
|
68.2
|
%
|
|
9.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
422
|
|
|
$
|
413
|
|
|
62.4
|
%
|
|
67.3
|
%
|
|
(4.9
|
%)
|
Prior accident years development
|
(25
|
)
|
|
(52
|
)
|
|
(3.8
|
%)
|
|
(8.5
|
%)
|
|
4.7
|
%
|
||
Current year catastrophe losses
|
5
|
|
|
28
|
|
|
0.8
|
%
|
|
4.7
|
%
|
|
(3.9
|
%)
|
||
Specialty casualty losses and LAE and ratio
|
$
|
402
|
|
|
$
|
389
|
|
|
59.4
|
%
|
|
63.5
|
%
|
|
(4.1
|
%)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
52
|
|
|
$
|
48
|
|
|
34.2
|
%
|
|
34.5
|
%
|
|
(0.3
|
%)
|
Prior accident years development
|
(14
|
)
|
|
(7
|
)
|
|
(9.2
|
%)
|
|
(5.2
|
%)
|
|
(4.0
|
%)
|
||
Current year catastrophe losses
|
2
|
|
|
10
|
|
|
1.1
|
%
|
|
7.1
|
%
|
|
(6.0
|
%)
|
||
Specialty financial losses and LAE and ratio
|
$
|
40
|
|
|
$
|
51
|
|
|
26.1
|
%
|
|
36.4
|
%
|
|
(10.3
|
%)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
904
|
|
|
$
|
818
|
|
|
66.0
|
%
|
|
64.4
|
%
|
|
1.6
|
%
|
Prior accident years development
|
(53
|
)
|
|
(61
|
)
|
|
(3.8
|
%)
|
|
(4.7
|
%)
|
|
0.9
|
%
|
||
Current year catastrophe losses
|
14
|
|
|
39
|
|
|
1.0
|
%
|
|
3.0
|
%
|
|
(2.0
|
%)
|
||
Total Specialty losses and LAE and ratio
|
$
|
865
|
|
|
$
|
796
|
|
|
63.2
|
%
|
|
62.7
|
%
|
|
0.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Aggregate — including exited lines
|
|
|
|
|
|
|
|
|
|
|||||||
Current year, excluding catastrophe losses
|
$
|
943
|
|
|
$
|
819
|
|
|
66.0
|
%
|
|
64.4
|
%
|
|
1.6
|
%
|
Prior accident years development
|
(45
|
)
|
|
(61
|
)
|
|
(0.4
|
%)
|
|
(4.7
|
%)
|
|
4.3
|
%
|
||
Current year catastrophe losses
|
14
|
|
|
39
|
|
|
1.0
|
%
|
|
3.0
|
%
|
|
(2.0
|
%)
|
||
Aggregate losses and LAE and ratio
|
$
|
912
|
|
|
$
|
797
|
|
|
66.6
|
%
|
|
62.7
|
%
|
|
3.9
|
%
|
|
|
|
Approximate impact of modeled loss
|
|
|
Industry Model
|
|
on AFG’s Shareholders’ Equity
|
|
|
100-year event
|
|
1%
|
|
|
250-year event
|
|
2%
|
|
|
500-year event
|
|
6%
|
|
|
Three months ended December 31,
|
|
|
|||||||||||||
|
2019
|
|
2018
|
|
Change in
|
|||||||||||
|
U/W Exp
|
|
% of NEP
|
|
U/W Exp
|
|
% of NEP
|
|
% of NEP
|
|||||||
Property and transportation
|
$
|
115
|
|
|
22.6
|
%
|
|
$
|
88
|
|
|
18.3
|
%
|
|
4.3
|
%
|
Specialty casualty
|
205
|
|
|
30.3
|
%
|
|
202
|
|
|
33.0
|
%
|
|
(2.7
|
%)
|
||
Specialty financial
|
80
|
|
|
53.5
|
%
|
|
70
|
|
|
49.1
|
%
|
|
4.4
|
%
|
||
Other specialty
|
16
|
|
|
39.0
|
%
|
|
12
|
|
|
35.8
|
%
|
|
3.2
|
%
|
||
Total Specialty
|
416
|
|
|
30.3
|
%
|
|
372
|
|
|
29.3
|
%
|
|
1.0
|
%
|
||
Neon exited lines charge
|
30
|
|
|
|
|
—
|
|
|
|
|
|
|||||
Total Aggregate
|
$
|
446
|
|
|
32.5
|
%
|
|
$
|
372
|
|
|
29.3
|
%
|
|
3.2
|
%
|
|
Three months ended December 31,
|
|
|
|
%
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
Change
|
|||||||
Net investment income
|
$
|
120
|
|
|
$
|
115
|
|
|
$
|
5
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|||||||
Average invested assets (at amortized cost)
|
$
|
11,744
|
|
|
$
|
10,651
|
|
|
$
|
1,093
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|||||||
Yield (net investment income as a % of average invested assets)
|
4.09
|
%
|
|
4.32
|
%
|
|
(0.23
|
%)
|
|
|
||||
|
|
|
|
|
|
|
|
|||||||
Tax equivalent yield (*)
|
4.22
|
%
|
|
4.49
|
%
|
|
(0.27
|
%)
|
|
|
(*)
|
Adjusts the yield on equity securities and tax-exempt bonds to the fully taxable equivalent yield.
|
|
Three months ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Other income
|
$
|
1
|
|
|
$
|
2
|
|
Other expenses
|
|
|
|
||||
Amortization of intangibles
|
2
|
|
|
2
|
|
||
Other
|
10
|
|
|
8
|
|
||
Total other expenses
|
12
|
|
|
10
|
|
||
Other income and expenses, net
|
$
|
(11
|
)
|
|
$
|
(8
|
)
|
|
Three months ended December 31,
|
|
|
|||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Net investment income
|
$
|
458
|
|
|
$
|
419
|
|
|
9
|
%
|
Other income:
|
|
|
|
|
|
|||||
Guaranteed withdrawal benefit fees
|
17
|
|
|
17
|
|
|
—
|
%
|
||
Policy charges and other miscellaneous income (a)
|
9
|
|
|
10
|
|
|
(10
|
%)
|
||
Total revenues
|
484
|
|
|
446
|
|
|
9
|
%
|
||
|
|
|
|
|
|
|||||
Costs and Expenses:
|
|
|
|
|
|
|||||
Annuity benefits (a)(b)
|
281
|
|
|
334
|
|
|
(16
|
%)
|
||
Acquisition expenses (a)
|
65
|
|
|
56
|
|
|
16
|
%
|
||
Other expenses
|
34
|
|
|
36
|
|
|
(6
|
%)
|
||
Total costs and expenses
|
380
|
|
|
426
|
|
|
(11
|
%)
|
||
Core earnings before income taxes
|
104
|
|
|
20
|
|
|
420
|
%
|
||
Pretax non-core earnings (losses) (a)
|
24
|
|
|
—
|
|
|
—
|
%
|
||
GAAP earnings before income taxes
|
$
|
128
|
|
|
$
|
20
|
|
|
540
|
%
|
(a)
|
As discussed under “Results of Operations — General,” beginning prospectively with the second quarter of 2019, unlocking, the impact of changes in the fair value of derivatives related to FIAs, and other impacts of changes in the stock market and interest rates on the accounting for FIAs over or under the cost of the equity index options purchased to mitigate the risk in the index-based component of those FIAs are considered non-core earnings (losses). For the fourth quarter of 2019, annuity benefits exclude the $30 million favorable impact of these items and acquisition expenses exclude the related $6 million unfavorable impact on the amortization of deferred policy acquisition costs.
|
(b)
|
Details of the components of annuity benefits are provided below.
|
|
Three months ended December 31,
|
|
|
|||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
Earnings before income taxes — before the impact of unlocking, derivatives related to FIAs and other impacts of stock market performance and interest rates on FIAs
|
$
|
104
|
|
|
$
|
86
|
|
|
21
|
%
|
Unlocking
|
—
|
|
|
(4
|
)
|
|
(100
|
%)
|
||
Impact of derivatives related to FIAs and other impacts of changes in the stock market and interest rates on FIAs over or under option costs:
|
|
|
|
|
|
|||||
Change in fair value of derivatives related to FIAs
|
(15
|
)
|
|
(80
|
)
|
|
(81
|
%)
|
||
Accretion of guaranteed minimum FIA benefits
|
(103
|
)
|
|
(94
|
)
|
|
10
|
%
|
||
Other annuity benefits
|
(2
|
)
|
|
(35
|
)
|
|
(94
|
%)
|
||
Less cost of equity options
|
150
|
|
|
141
|
|
|
6
|
%
|
||
Related impact on the amortization of deferred policy acquisition costs
|
(6
|
)
|
|
6
|
|
|
(200
|
%)
|
||
Earnings before income taxes
|
$
|
128
|
|
|
$
|
20
|
|
|
540
|
%
|
|
|
Three months ended December 31,
|
|
|
|||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
Total %
|
|||||||||||||||||||||
|
|
Core
|
|
Non-core
|
|
Total
|
|
Core
|
|
Non-core
|
|
Total
|
|
Change
|
|||||||||||||
Interest credited — fixed
|
|
$
|
102
|
|
|
$
|
—
|
|
|
$
|
102
|
|
|
$
|
92
|
|
|
$
|
—
|
|
|
$
|
92
|
|
|
11
|
%
|
Accretion of guaranteed minimum FIA benefits
|
|
—
|
|
|
103
|
|
|
103
|
|
|
94
|
|
|
—
|
|
|
94
|
|
|
10
|
%
|
||||||
Interest credited — fixed component of variable annuities
|
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
%
|
||||||
Cost of equity options
|
|
150
|
|
|
(150
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
||||||
Other annuity benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Amortization of sales inducements
|
|
3
|
|
|
—
|
|
|
3
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|
(40
|
%)
|
||||||
Change in guaranteed withdrawal benefit reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Impact of change in the stock market and interest rates
|
|
—
|
|
|
(8
|
)
|
|
(8
|
)
|
|
27
|
|
|
—
|
|
|
27
|
|
|
(130
|
%)
|
||||||
Accretion of benefits and other
|
|
24
|
|
|
—
|
|
|
24
|
|
|
19
|
|
|
—
|
|
|
19
|
|
|
26
|
%
|
||||||
Change in expected death and annuitization reserves and other
|
|
1
|
|
|
—
|
|
|
1
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
(67
|
%)
|
||||||
Change in other benefit reserves — impact of changes in interest rates and the stock market
|
|
—
|
|
|
10
|
|
|
10
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|
25
|
%
|
||||||
Unlocking
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|
(100
|
%)
|
||||||
Derivatives related to fixed-indexed annuities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Embedded derivative mark-to-market
|
|
—
|
|
|
276
|
|
|
276
|
|
|
(490
|
)
|
|
—
|
|
|
(490
|
)
|
|
(156
|
%)
|
||||||
Equity option mark-to-market
|
|
—
|
|
|
(261
|
)
|
|
(261
|
)
|
|
570
|
|
|
—
|
|
|
570
|
|
|
(146
|
%)
|
||||||
Impact of derivatives related to FIAs
|
|
—
|
|
|
15
|
|
|
15
|
|
|
80
|
|
|
—
|
|
|
80
|
|
|
(81
|
%)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total annuity benefits
|
|
$
|
281
|
|
|
$
|
(30
|
)
|
|
$
|
251
|
|
|
$
|
334
|
|
|
$
|
—
|
|
|
$
|
334
|
|
|
(25
|
%)
|
|
Three months ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Interest credited — fixed
|
$
|
102
|
|
|
$
|
92
|
|
Include cost of equity options
|
150
|
|
|
141
|
|
||
Cost of funds
|
252
|
|
|
233
|
|
||
|
|
|
|
||||
Interest credited — fixed component of variable annuities
|
1
|
|
|
1
|
|
||
Other annuity benefits, excluding the impact of interest rates and the stock market on FIAs
|
28
|
|
|
27
|
|
||
|
281
|
|
|
261
|
|
||
Unlocking, changes in fair value of derivatives related to FIAs, and other impacts of the stock market and interest rates over or under option costs:
|
|
|
|
||||
Unlocking
|
—
|
|
|
5
|
|
||
Impact of derivatives related to FIAs
|
15
|
|
|
80
|
|
||
Accretion of guaranteed minimum FIA benefits
|
103
|
|
|
94
|
|
||
Other annuity benefits — impact of the stock market and interest rates on FIAs
|
2
|
|
|
35
|
|
||
Less cost of equity options (included in cost of funds)
|
(150
|
)
|
|
(141
|
)
|
||
Total annuity benefits expense
|
$
|
251
|
|
|
$
|
334
|
|
|
Three months ended December 31,
|
|
%
|
|||||||
|
2019
|
|
2018
|
|
Change
|
|||||
Average fixed annuity investments (at amortized cost)
|
$
|
39,316
|
|
|
$
|
35,993
|
|
|
9
|
%
|
Average fixed annuity benefits accumulated
|
39,615
|
|
|
36,103
|
|
|
10
|
%
|
||
|
|
|
|
|
|
|||||
As % of fixed annuity benefits accumulated (except as noted):
|
|
|
|
|
|
|||||
Net investment income (as % of fixed annuity investments)
|
4.63
|
%
|
|
4.64
|
%
|
|
|
|||
Cost of funds
|
(2.54
|
%)
|
|
(2.58
|
%)
|
|
|
|||
Other annuity benefit expenses, net of guaranteed withdrawal benefit fees (*)
|
(0.11
|
%)
|
|
(0.12
|
%)
|
|
|
|||
Net interest spread
|
1.98
|
%
|
|
1.94
|
%
|
|
|
|||
|
|
|
|
|
|
|||||
Policy charges and other miscellaneous income (*)
|
0.07
|
%
|
|
0.08
|
%
|
|
|
|||
Acquisition expenses (*)
|
(0.65
|
%)
|
|
(0.66
|
%)
|
|
|
|||
Other expenses
|
(0.33
|
%)
|
|
(0.38
|
%)
|
|
|
|||
Net spread earned on fixed annuities excluding the impact of unlocking, changes in the fair value of derivatives related to FIAs, and other impacts of changes in the stock market and interest rates on FIAs
|
1.07
|
%
|
|
0.98
|
%
|
|
|
|||
Changes in fair value of derivatives related to FIAs and other impacts of the stock market and interest rates under (over) option costs
|
0.24
|
%
|
|
(0.69
|
%)
|
|
|
|||
Unlocking
|
—
|
%
|
|
(0.04
|
%)
|
|
|
|||
Net spread earned on fixed annuities
|
1.31
|
%
|
|
0.25
|
%
|
|
|
(*)
|
Excluding unlocking, the impact of changes in the fair value of derivatives related to FIAs, and other impacts of changes in the stock market and interest rates on annuity benefits and the related impact on the amortization of deferred policy acquisition costs.
|
|
Three months ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Cost of equity options (FIAs)
|
$
|
150
|
|
|
$
|
141
|
|
Interest credited:
|
|
|
|
||||
Traditional fixed annuities
|
62
|
|
|
58
|
|
||
Fixed component of fixed-indexed annuities
|
25
|
|
|
21
|
|
||
Immediate annuities
|
6
|
|
|
6
|
|
||
Pension risk transfer products
|
3
|
|
|
1
|
|
||
Federal Home Loan Bank advances
|
6
|
|
|
6
|
|
||
Total cost of funds
|
$
|
252
|
|
|
$
|
233
|
|
|
Three months ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Other annuity benefits, excluding the impact of the stock market and interest rates on FIAs:
|
|
|
|
||||
Amortization of sales inducements
|
$
|
3
|
|
|
$
|
5
|
|
Change in guaranteed withdrawal benefit reserve
|
24
|
|
|
19
|
|
||
Change in other benefit reserves
|
1
|
|
|
3
|
|
||
Other annuity benefits
|
28
|
|
|
27
|
|
||
Offset guaranteed withdrawal benefit fees
|
(17
|
)
|
|
(17
|
)
|
||
Other annuity benefits excluding the impact of the stock market and interest rates, net
|
11
|
|
|
10
|
|
||
Other annuity benefits — impact of the stock market and interest rates
|
2
|
|
|
35
|
|
||
Other annuity benefits, net
|
$
|
13
|
|
|
$
|
45
|
|
|
Three months ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Annuity acquisition expenses before the impact of changes in the fair value of derivatives related to FIAs and other impacts of the stock market and interest rates
|
$
|
65
|
|
|
$
|
64
|
|
Unlocking
|
—
|
|
|
(1
|
)
|
||
Impact of changes in the fair value of derivatives and other impacts of the stock market and interest rates
|
6
|
|
|
(7
|
)
|
||
Annuity acquisition expenses
|
$
|
71
|
|
|
$
|
56
|
|
|
Three months ended December 31,
|
||||
|
2019
|
|
2018
|
||
Before unlocking, the impact of changes in the fair value of derivatives related to FIAs and other impacts of the stock market and interest rates
|
0.65
|
%
|
|
0.66
|
%
|
Unlocking
|
—
|
%
|
|
(0.01
|
%)
|
Impact of changes in fair value of derivatives and other impacts of the stock market and interest rates
|
0.06
|
%
|
|
(0.07
|
%)
|
Annuity acquisition expenses as a % of fixed annuity benefits accumulated
|
0.71
|
%
|
|
0.58
|
%
|
|
Three months ended December 31,
|
|
|
|||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
Change in the fair value of derivatives related to FIAs
|
$
|
(15
|
)
|
|
$
|
(80
|
)
|
|
(81
|
%)
|
Accretion of guaranteed minimum FIA benefits
|
(103
|
)
|
|
(94
|
)
|
|
10
|
%
|
||
Other annuity benefits
|
(2
|
)
|
|
(35
|
)
|
|
(94
|
%)
|
||
Less cost of equity options
|
150
|
|
|
141
|
|
|
6
|
%
|
||
Related impact on the amortization of DPAC
|
(6
|
)
|
|
6
|
|
|
(200
|
%)
|
||
Impact on annuity segment earnings before income taxes
|
$
|
24
|
|
|
$
|
(62
|
)
|
|
(139
|
%)
|
|
Three months ended December 31,
|
|
|
|||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
Changes in the stock market, including volatility
|
$
|
24
|
|
|
$
|
(57
|
)
|
|
(142
|
%)
|
Changes in interest rates higher (lower) than expected
|
(4
|
)
|
|
(4
|
)
|
|
—
|
%
|
||
Other
|
4
|
|
|
(1
|
)
|
|
(500
|
%)
|
||
Impact on annuity segment earnings before income taxes
|
$
|
24
|
|
|
$
|
(62
|
)
|
|
(139
|
%)
|
|
Three months ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Beginning fixed annuity reserves
|
$
|
39,212
|
|
|
$
|
35,774
|
|
Fixed annuity premiums (receipts)
|
1,134
|
|
|
1,476
|
|
||
Federal Home Loan Bank advances
|
—
|
|
|
225
|
|
||
Surrenders, benefits and other withdrawals
|
(829
|
)
|
|
(796
|
)
|
||
Interest and other annuity benefit expenses:
|
|
|
|
||||
Cost of funds
|
252
|
|
|
233
|
|
||
Embedded derivative mark-to-market
|
276
|
|
|
(490
|
)
|
||
Change in other benefit reserves
|
(27
|
)
|
|
5
|
|
||
Unlocking
|
—
|
|
|
4
|
|
||
Ending fixed annuity reserves
|
$
|
40,018
|
|
|
$
|
36,431
|
|
|
|
|
|
||||
Reconciliation to annuity benefits accumulated per balance sheet:
|
|
|
|
||||
Ending fixed annuity reserves (from above)
|
$
|
40,018
|
|
|
$
|
36,431
|
|
Impact of unrealized investment gains
|
225
|
|
|
10
|
|
||
Fixed component of variable annuities
|
163
|
|
|
175
|
|
||
Annuity benefits accumulated per balance sheet
|
$
|
40,406
|
|
|
$
|
36,616
|
|
|
Three months ended December 31,
|
|
|
|||||||
2019
|
|
2018
|
|
% Change
|
||||||
Financial institutions single premium annuities — indexed
|
$
|
359
|
|
|
$
|
455
|
|
|
(21
|
%)
|
Financial institutions single premium annuities — fixed
|
270
|
|
|
142
|
|
|
90
|
%
|
||
Retail single premium annuities — indexed
|
170
|
|
|
392
|
|
|
(57
|
%)
|
||
Retail single premium annuities — fixed
|
25
|
|
|
27
|
|
|
(7
|
%)
|
||
Broker dealer single premium annuities — indexed
|
107
|
|
|
335
|
|
|
(68
|
%)
|
||
Broker dealer single premium annuities — fixed
|
9
|
|
|
4
|
|
|
125
|
%
|
||
Pension risk transfer
|
158
|
|
|
75
|
|
|
111
|
%
|
||
Education market — fixed and indexed annuities
|
36
|
|
|
46
|
|
|
(22
|
%)
|
||
Total fixed annuity premiums
|
1,134
|
|
|
1,476
|
|
|
(23
|
%)
|
||
Variable annuities
|
5
|
|
|
6
|
|
|
(17
|
%)
|
||
Total annuity premiums
|
$
|
1,139
|
|
|
$
|
1,482
|
|
|
(23
|
%)
|
|
|
Three months ended December 31,
|
||||||
|
|
2019 (*)
|
|
2018
|
||||
Policy charges and other miscellaneous income:
|
|
|
|
|
||||
Unearned revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
Total revenues
|
|
—
|
|
|
—
|
|
||
Annuity benefits:
|
|
|
|
|
||||
Fixed-indexed annuity embedded derivative
|
|
—
|
|
|
—
|
|
||
Guaranteed withdrawal benefit reserve
|
|
—
|
|
|
(1
|
)
|
||
Other reserves
|
|
—
|
|
|
5
|
|
||
Sales inducements asset
|
|
—
|
|
|
1
|
|
||
Total annuity benefits
|
|
—
|
|
|
5
|
|
||
Annuity and supplemental insurance acquisition expenses:
|
|
|
|
|
||||
Deferred policy acquisition costs
|
|
—
|
|
|
(1
|
)
|
||
Total costs and expenses
|
|
—
|
|
|
4
|
|
||
Net charge
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
(*)
|
The detailed review of the major actuarial assumptions was conducted in the third quarter of 2019.
|
|
Three months ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Earnings on fixed annuity benefits accumulated
|
$
|
129
|
|
|
$
|
22
|
|
Earnings impact of investments in excess of fixed annuity benefits accumulated (*)
|
(3
|
)
|
|
(1
|
)
|
||
Variable annuity earnings (loss)
|
2
|
|
|
(1
|
)
|
||
Earnings before income taxes
|
$
|
128
|
|
|
$
|
20
|
|
(*)
|
Net investment income (as a % of investments) of 4.63% and 4.64% for the three months ended December 31, 2019 and 2018, 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,
|
|
|
|||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Life, accident and health net earned premiums
|
$
|
5
|
|
|
$
|
6
|
|
|
(17
|
%)
|
Net investment income
|
8
|
|
|
4
|
|
|
100
|
%
|
||
Other income — P&C fees
|
17
|
|
|
19
|
|
|
(11
|
%)
|
||
Other income
|
8
|
|
|
9
|
|
|
(11
|
%)
|
||
Total revenues
|
38
|
|
|
38
|
|
|
—
|
%
|
||
|
|
|
|
|
|
|||||
Costs and Expenses:
|
|
|
|
|
|
|||||
Property and casualty insurance — commissions and other underwriting expenses
|
4
|
|
|
6
|
|
|
(33
|
%)
|
||
Life, accident and health benefits
|
10
|
|
|
8
|
|
|
25
|
%
|
||
Life, accident and health acquisition expenses
|
1
|
|
|
2
|
|
|
(50
|
%)
|
||
Other expense — expenses associated with P&C fees
|
13
|
|
|
13
|
|
|
—
|
%
|
||
Other expenses (*)
|
42
|
|
|
22
|
|
|
91
|
%
|
||
Costs and expenses, excluding interest charges on borrowed money
|
70
|
|
|
51
|
|
|
37
|
%
|
||
Core loss before income taxes, excluding realized gains and losses and interest charges on borrowed money
|
(32
|
)
|
|
(13
|
)
|
|
146
|
%
|
||
Interest charges on borrowed money
|
18
|
|
|
16
|
|
|
13
|
%
|
||
Core loss before income taxes, excluding realized gains and losses
|
(50
|
)
|
|
(29
|
)
|
|
72
|
%
|
||
Pretax non-core loss on retirement of debt
|
(5
|
)
|
|
—
|
|
|
—
|
%
|
||
GAAP loss before income taxes, excluding realized gains and losses
|
$
|
(55
|
)
|
|
$
|
(29
|
)
|
|
90
|
%
|
(*)
|
Excludes a pretax non-core loss on retirement of debt of $5 million in the fourth quarter of 2019.
|
|
December 31,
2019 |
|
December 31,
2018 |
||||
Direct obligations of AFG:
|
|
|
|
||||
4.50% Senior Notes due June 2047
|
$
|
590
|
|
|
$
|
590
|
|
3.50% Senior Notes due August 2026
|
425
|
|
|
425
|
|
||
5.125% Subordinated Debentures due December 2059
|
200
|
|
|
—
|
|
||
6% Subordinated Debentures due November 2055
|
150
|
|
|
150
|
|
||
5.875% Subordinated Debentures due March 2059
|
125
|
|
|
—
|
|
||
6-1/4% Subordinated Debentures due September 2054
|
—
|
|
|
150
|
|
||
Other
|
3
|
|
|
3
|
|
||
Total principal amount of Holding Company Debt
|
$
|
1,493
|
|
|
$
|
1,318
|
|
|
|
|
|
||||
Weighted Average Interest Rate
|
4.6
|
%
|
|
4.6
|
%
|
•
|
Issued $125 million of 5.875% Subordinated Debentures in March 2019
|
•
|
Issued $200 million of 5.125% Subordinated Debentures in December 2019
|
•
|
Redeemed $150 million of 6-1/4% Subordinated Debentures in December 2019
|
|
Three months ended December 31,
|
||||||
2019
|
|
2018
|
|||||
Realized gains (losses) before impairments:
|
|
|
|
||||
Disposals
|
$
|
8
|
|
|
$
|
(2
|
)
|
Change in the fair value of equity securities (*)
|
67
|
|
|
(223
|
)
|
||
Change in the fair value of derivatives
|
(5
|
)
|
|
3
|
|
||
Adjustments to annuity deferred policy acquisition costs and related items
|
1
|
|
|
—
|
|
||
|
71
|
|
|
(222
|
)
|
||
Impairment charges:
|
|
|
|
||||
Securities
|
(9
|
)
|
|
(23
|
)
|
||
Adjustments to annuity deferred policy acquisition costs and related items
|
3
|
|
|
7
|
|
||
|
(6
|
)
|
|
(16
|
)
|
||
Realized gains (losses) on securities
|
$
|
65
|
|
|
$
|
(238
|
)
|
(*)
|
The 2019 quarter includes a $55 million net gain on securities that were still held at December 31, 2019, and the 2018 quarter includes a $228 million net loss on securities that were still held at December 31, 2018.
|
|
Three months ended December 31,
|
||||||||||||
|
2019
|
|
2018
|
||||||||||
|
Amount
|
|
% of EBT
|
|
Amount
|
|
% of EBT
|
||||||
Earnings (loss) before income taxes (“EBT”)
|
$
|
259
|
|
|
|
|
$
|
(39
|
)
|
|
|
||
|
|
|
|
|
|
|
|
||||||
Income taxes at statutory rate
|
$
|
55
|
|
|
21
|
%
|
|
$
|
(8
|
)
|
|
21
|
%
|
Effect of:
|
|
|
|
|
|
|
|
||||||
Tax exempt interest
|
(3
|
)
|
|
(1
|
%)
|
|
(3
|
)
|
|
8
|
%
|
||
Stock-based compensation
|
(2
|
)
|
|
(1
|
%)
|
|
(1
|
)
|
|
3
|
%
|
||
Dividend received deduction
|
(1
|
)
|
|
—
|
%
|
|
(1
|
)
|
|
3
|
%
|
||
Employee stock ownership plan dividend paid deduction
|
(1
|
)
|
|
—
|
%
|
|
(1
|
)
|
|
3
|
%
|
||
Adjustment to prior year taxes
|
—
|
|
|
—
|
%
|
|
1
|
|
|
(3
|
%)
|
||
Change in valuation allowance
|
10
|
|
|
4
|
%
|
|
8
|
|
|
(21
|
%)
|
||
Foreign operations
|
4
|
|
|
2
|
%
|
|
(5
|
)
|
|
13
|
%
|
||
Nondeductible expenses
|
2
|
|
|
1
|
%
|
|
2
|
|
|
(5
|
%)
|
||
Other
|
4
|
|
|
—
|
%
|
|
4
|
|
|
(12
|
%)
|
||
Provision (credit) for income taxes
|
$
|
68
|
|
|
26
|
%
|
|
$
|
(4
|
)
|
|
10
|
%
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
||||||||||||||||
|
P&C
|
|
Annuity
|
|
Consol. MIEs
|
|
Holding Co., other and unallocated
|
|
Total
|
|
Non-core reclass
|
|
GAAP Total
|
||||||||||||||
Year ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Property and casualty insurance net earned premiums
|
$
|
5,185
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,185
|
|
|
$
|
—
|
|
|
$
|
5,185
|
|
Life, accident and health net earned premiums
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
22
|
|
|
—
|
|
|
22
|
|
|||||||
Net investment income
|
472
|
|
|
1,792
|
|
|
(4
|
)
|
|
43
|
|
|
2,303
|
|
|
—
|
|
|
2,303
|
|
|||||||
Realized gains (losses) on securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
287
|
|
|
287
|
|
|||||||
Income (loss) of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
269
|
|
|
—
|
|
|
269
|
|
|
—
|
|
|
269
|
|
|||||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
—
|
|
|
(30
|
)
|
|
—
|
|
|
(30
|
)
|
|||||||
Other income
|
11
|
|
|
107
|
|
|
(15
|
)
|
|
97
|
|
|
200
|
|
|
1
|
|
|
201
|
|
|||||||
Total revenues
|
5,668
|
|
|
1,899
|
|
|
220
|
|
|
162
|
|
|
7,949
|
|
|
288
|
|
|
8,237
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Property and casualty insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss adjustment expenses
|
3,207
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,207
|
|
|
64
|
|
|
3,271
|
|
|||||||
Commissions and other underwriting expenses
|
1,672
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
1,695
|
|
|
30
|
|
|
1,725
|
|
|||||||
Annuity benefits
|
—
|
|
|
1,140
|
|
|
—
|
|
|
—
|
|
|
1,140
|
|
|
11
|
|
|
1,151
|
|
|||||||
Life, accident and health benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|
36
|
|
|
—
|
|
|
36
|
|
|||||||
Annuity and supplemental insurance acquisition expenses
|
—
|
|
|
222
|
|
|
—
|
|
|
5
|
|
|
227
|
|
|
26
|
|
|
253
|
|
|||||||
Interest charges on borrowed money
|
—
|
|
|
—
|
|
|
—
|
|
|
68
|
|
|
68
|
|
|
—
|
|
|
68
|
|
|||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
220
|
|
|
—
|
|
|
220
|
|
|
—
|
|
|
220
|
|
|||||||
Other expenses
|
46
|
|
|
139
|
|
|
—
|
|
|
204
|
|
|
389
|
|
|
16
|
|
|
405
|
|
|||||||
Total costs and expenses
|
4,925
|
|
|
1,501
|
|
|
220
|
|
|
336
|
|
|
6,982
|
|
|
147
|
|
|
7,129
|
|
|||||||
Earnings before income taxes
|
743
|
|
|
398
|
|
|
—
|
|
|
(174
|
)
|
|
967
|
|
|
141
|
|
|
1,108
|
|
|||||||
Provision for income taxes
|
150
|
|
|
80
|
|
|
—
|
|
|
(37
|
)
|
|
193
|
|
|
46
|
|
|
239
|
|
|||||||
Net earnings, including noncontrolling interests
|
593
|
|
|
318
|
|
|
—
|
|
|
(137
|
)
|
|
774
|
|
|
95
|
|
|
869
|
|
|||||||
Less: Net earnings (losses) attributable to noncontrolling interests
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
(18
|
)
|
|
(28
|
)
|
|||||||
Core Net Operating Earnings
|
603
|
|
|
318
|
|
|
—
|
|
|
(137
|
)
|
|
784
|
|
|
|
|
|
|||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Realized gains (losses) on securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
227
|
|
|
227
|
|
|
(227
|
)
|
|
—
|
|
|||||||
Annuity non-core earnings (losses), net of tax (b)
|
—
|
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
|
29
|
|
|
—
|
|
|||||||
Neon exited lines charge
|
(58
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
|
58
|
|
|
—
|
|
|||||||
Special A&E charges, net of tax
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
(23
|
)
|
|
23
|
|
|
—
|
|
|||||||
Loss on retirement of debt, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
|
4
|
|
|
—
|
|
|||||||
Net Earnings Attributable to Shareholders
|
$
|
531
|
|
|
$
|
289
|
|
|
$
|
—
|
|
|
$
|
77
|
|
|
$
|
897
|
|
|
$
|
—
|
|
|
$
|
897
|
|
|
|
Other
|
|
|
|
|
|
|
|||||||||||||||||||
|
P&C
|
|
Annuity
|
|
Consol. MIEs
|
|
Holding Co., other and unallocated
|
|
Total
|
|
Non-core reclass
|
|
GAAP Total
|
||||||||||||||
Year ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Property and casualty insurance net earned premiums
|
$
|
4,865
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,865
|
|
|
$
|
—
|
|
|
$
|
4,865
|
|
Life, accident and health net earned premiums
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
24
|
|
|
—
|
|
|
24
|
|
|||||||
Net investment income
|
438
|
|
|
1,638
|
|
|
(7
|
)
|
|
25
|
|
|
2,094
|
|
|
—
|
|
|
2,094
|
|
|||||||
Realized gains (losses) on securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(266
|
)
|
|
(266
|
)
|
|||||||
Income (loss) of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
255
|
|
|
—
|
|
|
255
|
|
|
—
|
|
|
255
|
|
|||||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
(21
|
)
|
|
—
|
|
|
(21
|
)
|
|
—
|
|
|
(21
|
)
|
|||||||
Other income
|
10
|
|
|
107
|
|
|
(16
|
)
|
|
98
|
|
|
199
|
|
|
—
|
|
|
199
|
|
|||||||
Total revenues
|
5,313
|
|
|
1,745
|
|
|
211
|
|
|
147
|
|
|
7,416
|
|
|
(266
|
)
|
|
7,150
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Property and casualty insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Losses and loss adjustment expenses
|
2,985
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,985
|
|
|
18
|
|
|
3,003
|
|
|||||||
Commissions and other underwriting expenses
|
1,560
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
1,583
|
|
|
—
|
|
|
1,583
|
|
|||||||
Annuity benefits
|
—
|
|
|
998
|
|
|
—
|
|
|
—
|
|
|
998
|
|
|
—
|
|
|
998
|
|
|||||||
Life, accident and health benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
40
|
|
|
—
|
|
|
40
|
|
|||||||
Annuity and supplemental insurance acquisition expenses
|
—
|
|
|
255
|
|
|
—
|
|
|
6
|
|
|
261
|
|
|
—
|
|
|
261
|
|
|||||||
Interest charges on borrowed money
|
—
|
|
|
—
|
|
|
—
|
|
|
62
|
|
|
62
|
|
|
—
|
|
|
62
|
|
|||||||
Expenses of MIEs
|
—
|
|
|
—
|
|
|
211
|
|
|
—
|
|
|
211
|
|
|
—
|
|
|
211
|
|
|||||||
Other expenses
|
41
|
|
|
131
|
|
|
—
|
|
|
172
|
|
|
344
|
|
|
9
|
|
|
353
|
|
|||||||
Total costs and expenses
|
4,586
|
|
|
1,384
|
|
|
211
|
|
|
303
|
|
|
6,484
|
|
|
27
|
|
|
6,511
|
|
|||||||
Earnings before income taxes
|
727
|
|
|
361
|
|
|
—
|
|
|
(156
|
)
|
|
932
|
|
|
(293
|
)
|
|
639
|
|
|||||||
Provision for income taxes
|
149
|
|
|
70
|
|
|
—
|
|
|
(35
|
)
|
|
184
|
|
|
(62
|
)
|
|
122
|
|
|||||||
Net earnings, including noncontrolling interests
|
578
|
|
|
291
|
|
|
—
|
|
|
(121
|
)
|
|
748
|
|
|
(231
|
)
|
|
517
|
|
|||||||
Less: Net earnings (losses) attributable to noncontrolling interests
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
|||||||
Core Net Operating Earnings
|
591
|
|
|
291
|
|
|
—
|
|
|
(121
|
)
|
|
761
|
|
|
|
|
|
|||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Realized gains (losses) on securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(210
|
)
|
|
(210
|
)
|
|
210
|
|
|
—
|
|
|||||||
Special A&E charges, net of tax
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(21
|
)
|
|
21
|
|
|
—
|
|
|||||||
Net Earnings Attributable to Shareholders
|
$
|
577
|
|
|
$
|
291
|
|
|
$
|
—
|
|
|
$
|
(338
|
)
|
|
$
|
530
|
|
|
$
|
—
|
|
|
$
|
530
|
|
|
|
|
Other
|
|
|
|
|
|
|
||||||||||||||||||
|
P&C
|
|
Annuity
|
|
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
|
|
|
(23
|
)
|
|
34
|
|
|
1,831
|
|
|
—
|
|
|
1,831
|
|
|||||||
Realized gains (losses) on securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|||||||
Income (loss) of MIEs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Investment income
|
—
|
|
|
—
|
|
|
210
|
|
|
—
|
|
|
210
|
|
|
—
|
|
|
210
|
|
|||||||
Gain (loss) on change in fair value of assets/liabilities
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|||||||
Other income
|
28
|
|
|
103
|
|
|
(18
|
)
|
|
93
|
|
|
206
|
|
|
—
|
|
|
206
|
|
|||||||
Total revenues
|
4,969
|
|
|
1,561
|
|
|
181
|
|
|
149
|
|
|
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
|
|
|
—
|
|
|
185
|
|
|
347
|
|
|
75
|
|
|
422
|
|
|||||||
Total costs and expenses
|
4,307
|
|
|
1,181
|
|
|
181
|
|
|
326
|
|
|
5,995
|
|
|
146
|
|
|
6,141
|
|
|||||||
Earnings before income taxes
|
662
|
|
|
380
|
|
|
—
|
|
|
(177
|
)
|
|
865
|
|
|
(141
|
)
|
|
724
|
|
|||||||
Provision for income taxes
|
219
|
|
|
128
|
|
|
—
|
|
|
(72
|
)
|
|
275
|
|
|
(28
|
)
|
|
247
|
|
|||||||
Net earnings, including noncontrolling interests
|
443
|
|
|
252
|
|
|
—
|
|
|
(105
|
)
|
|
590
|
|
|
(113
|
)
|
|
477
|
|
|||||||
Less: Net earnings (losses) attributable to noncontrolling interests
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||||
Core Net Operating Earnings
|
441
|
|
|
252
|
|
|
—
|
|
|
(105
|
)
|
|
588
|
|
|
|
|
|
|||||||||
Non-core earnings attributable to shareholders (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Realized gains (losses) 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
|
|
|
—
|
|
|
(20
|
)
|
|
(83
|
)
|
|
83
|
|
|
—
|
|
|||||||
Net Earnings Attributable to Shareholders
|
$
|
369
|
|
|
$
|
277
|
|
|
$
|
—
|
|
|
$
|
(171
|
)
|
|
$
|
475
|
|
|
$
|
—
|
|
|
$
|
475
|
|
(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.
|
(b)
|
As discussed under “Results of Operations — General,” beginning prospectively with the second quarter of 2019,
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||
Gross written premiums
|
$
|
7,299
|
|
|
$
|
6,840
|
|
|
$
|
6,502
|
|
|
7
|
%
|
|
5
|
%
|
Reinsurance premiums ceded
|
(1,957
|
)
|
|
(1,817
|
)
|
|
(1,751
|
)
|
|
8
|
%
|
|
4
|
%
|
|||
Net written premiums
|
5,342
|
|
|
5,023
|
|
|
4,751
|
|
|
6
|
%
|
|
6
|
%
|
|||
Change in unearned premiums
|
(157
|
)
|
|
(158
|
)
|
|
(172
|
)
|
|
(1
|
%)
|
|
(8
|
%)
|
|||
Net earned premiums
|
5,185
|
|
|
4,865
|
|
|
4,579
|
|
|
7
|
%
|
|
6
|
%
|
|||
Loss and loss adjustment expenses (a)
|
3,207
|
|
|
2,985
|
|
|
2,884
|
|
|
7
|
%
|
|
4
|
%
|
|||
Commissions and other underwriting expenses (b)
|
1,672
|
|
|
1,560
|
|
|
1,382
|
|
|
7
|
%
|
|
13
|
%
|
|||
Core underwriting gain
|
306
|
|
|
320
|
|
|
313
|
|
|
(4
|
%)
|
|
2
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Net investment income
|
472
|
|
|
438
|
|
|
362
|
|
|
8
|
%
|
|
21
|
%
|
|||
Other income and expenses, net
|
(35
|
)
|
|
(31
|
)
|
|
(13
|
)
|
|
13
|
%
|
|
138
|
%
|
|||
Core earnings before income taxes
|
743
|
|
|
727
|
|
|
662
|
|
|
2
|
%
|
|
10
|
%
|
|||
Pretax non-core special A&E charges
|
(18
|
)
|
|
(18
|
)
|
|
(89
|
)
|
|
—
|
%
|
|
(80
|
%)
|
|||
Pretax non-core Neon exited lines charge
|
(76
|
)
|
|
—
|
|
|
18
|
|
|
—
|
%
|
|
(100
|
%)
|
|||
GAAP earnings before income taxes
|
$
|
649
|
|
|
$
|
709
|
|
|
$
|
591
|
|
|
(8
|
%)
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Year ended December 31,
|
|
Change
|
||||||||||||||
Combined Ratios:
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||
Specialty lines
|
|
|
|
|
|
|
|
|
|
||||||||
Loss and LAE ratio (a)
|
61.5
|
%
|
|
61.3
|
%
|
|
62.9
|
%
|
|
0.2
|
%
|
|
(1.6
|
%)
|
|||
Underwriting expense ratio (b)
|
32.2
|
%
|
|
32.1
|
%
|
|
30.2
|
%
|
|
0.1
|
%
|
|
1.9
|
%
|
|||
Combined ratio
|
93.7
|
%
|
|
93.4
|
%
|
|
93.1
|
%
|
|
0.3
|
%
|
|
0.3
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Aggregate — including exited lines
|
|
|
|
|
|
|
|
|
|
||||||||
Loss and LAE ratio
|
63.0
|
%
|
|
61.7
|
%
|
|
64.5
|
%
|
|
1.3
|
%
|
|
(2.8
|
%)
|
|||
Underwriting expense ratio
|
32.8
|
%
|
|
32.1
|
%
|
|
30.2
|
%
|
|
0.7
|
%
|
|
1.9
|
%
|
|||
Combined ratio
|
95.8
|
%
|
|
93.8
|
%
|
|
94.7
|
%
|
|
2.0
|
%
|
|
(0.9
|
%)
|
(a)
|
Excludes pretax non-core special A&E charges of $18 million in both 2019 and 2018 (0.3 and 0.4 points on the combined ratio, respectively) and $89 million (1.9 points) in 2017, a pretax non-core charge of $46 million (0.9 points) in 2019 associated with plans to exit the Lloyd’s of London insurance market in 2020 and income of $18 million (0.4 points) in 2017 representing favorable development related to the Neon exited lines in connection with a reinsurance to close transaction.
|
(b)
|
Excludes a pretax non-core charge of $30 million (0.6 points on the combined ratio) in 2019 associated with plans to exit the Lloyd’s of London insurance market in 2020.
|
|
Year ended December 31,
|
|
% Change
|
|||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
|||||||||||||||||
|
GWP
|
|
%
|
|
GWP
|
|
%
|
|
GWP
|
|
%
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
2,759
|
|
|
38
|
%
|
|
$
|
2,645
|
|
|
39
|
%
|
|
$
|
2,688
|
|
|
41
|
%
|
|
4
|
%
|
|
(2
|
%)
|
Specialty casualty
|
3,768
|
|
|
52
|
%
|
|
3,445
|
|
|
50
|
%
|
|
3,087
|
|
|
48
|
%
|
|
9
|
%
|
|
12
|
%
|
|||
Specialty financial
|
772
|
|
|
10
|
%
|
|
750
|
|
|
11
|
%
|
|
727
|
|
|
11
|
%
|
|
3
|
%
|
|
3
|
%
|
|||
|
$
|
7,299
|
|
|
100
|
%
|
|
$
|
6,840
|
|
|
100
|
%
|
|
$
|
6,502
|
|
|
100
|
%
|
|
7
|
%
|
|
5
|
%
|
|
Year ended December 31,
|
|
Change in % of GWP
|
|||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
|||||||||||||||||
|
Ceded
|
|
% of GWP
|
|
Ceded
|
|
% of GWP
|
|
Ceded
|
|
% of GWP
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
(883
|
)
|
|
32
|
%
|
|
$
|
(891
|
)
|
|
34
|
%
|
|
$
|
(923
|
)
|
|
34
|
%
|
|
(2
|
%)
|
|
—
|
%
|
Specialty casualty
|
(1,067
|
)
|
|
28
|
%
|
|
(936
|
)
|
|
27
|
%
|
|
(807
|
)
|
|
26
|
%
|
|
1
|
%
|
|
1
|
%
|
|||
Specialty financial
|
(155
|
)
|
|
20
|
%
|
|
(148
|
)
|
|
20
|
%
|
|
(131
|
)
|
|
18
|
%
|
|
—
|
%
|
|
2
|
%
|
|||
Other specialty
|
148
|
|
|
|
|
158
|
|
|
|
|
110
|
|
|
|
|
|
|
|
||||||||
|
$
|
(1,957
|
)
|
|
27
|
%
|
|
$
|
(1,817
|
)
|
|
27
|
%
|
|
$
|
(1,751
|
)
|
|
27
|
%
|
|
—
|
%
|
|
—
|
%
|
|
Year ended December 31,
|
|
% Change
|
|||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
|||||||||||||||||
|
NWP
|
|
%
|
|
NWP
|
|
%
|
|
NWP
|
|
%
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
1,876
|
|
|
35
|
%
|
|
$
|
1,754
|
|
|
35
|
%
|
|
$
|
1,765
|
|
|
37
|
%
|
|
7
|
%
|
|
(1
|
%)
|
Specialty casualty
|
2,701
|
|
|
51
|
%
|
|
2,509
|
|
|
50
|
%
|
|
2,280
|
|
|
48
|
%
|
|
8
|
%
|
|
10
|
%
|
|||
Specialty financial
|
617
|
|
|
12
|
%
|
|
602
|
|
|
12
|
%
|
|
596
|
|
|
13
|
%
|
|
2
|
%
|
|
1
|
%
|
|||
Other specialty
|
148
|
|
|
2
|
%
|
|
158
|
|
|
3
|
%
|
|
110
|
|
|
2
|
%
|
|
(6
|
%)
|
|
44
|
%
|
|||
|
$
|
5,342
|
|
|
100
|
%
|
|
$
|
5,023
|
|
|
100
|
%
|
|
$
|
4,751
|
|
|
100
|
%
|
|
6
|
%
|
|
6
|
%
|
|
Year ended December 31,
|
|
% Change
|
|||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
|||||||||||||||||
|
NEP
|
|
%
|
|
NEP
|
|
%
|
|
NEP
|
|
%
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
1,828
|
|
|
35
|
%
|
|
$
|
1,729
|
|
|
36
|
%
|
|
$
|
1,711
|
|
|
37
|
%
|
|
6
|
%
|
|
1
|
%
|
Specialty casualty
|
2,597
|
|
|
50
|
%
|
|
2,403
|
|
|
49
|
%
|
|
2,186
|
|
|
48
|
%
|
|
8
|
%
|
|
10
|
%
|
|||
Specialty financial
|
610
|
|
|
12
|
%
|
|
598
|
|
|
12
|
%
|
|
576
|
|
|
13
|
%
|
|
2
|
%
|
|
4
|
%
|
|||
Other specialty
|
150
|
|
|
3
|
%
|
|
135
|
|
|
3
|
%
|
|
106
|
|
|
2
|
%
|
|
11
|
%
|
|
27
|
%
|
|||
|
$
|
5,185
|
|
|
100
|
%
|
|
$
|
4,865
|
|
|
100
|
%
|
|
$
|
4,579
|
|
|
100
|
%
|
|
7
|
%
|
|
6
|
%
|
|
Year ended December 31,
|
|
Change
|
|
Year ended December 31,
|
|||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
71.0
|
%
|
|
69.0
|
%
|
|
68.5
|
%
|
|
2.0
|
%
|
|
0.5
|
%
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
24.7
|
%
|
|
24.1
|
%
|
|
22.5
|
%
|
|
0.6
|
%
|
|
1.6
|
%
|
|
|
|
|
|
|
||||||
Combined ratio
|
95.7
|
%
|
|
93.1
|
%
|
|
91.0
|
%
|
|
2.6
|
%
|
|
2.1
|
%
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
79
|
|
|
$
|
120
|
|
|
$
|
154
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
61.1
|
%
|
|
61.5
|
%
|
|
64.5
|
%
|
|
(0.4
|
%)
|
|
(3.0
|
%)
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
32.2
|
%
|
|
32.7
|
%
|
|
30.7
|
%
|
|
(0.5
|
%)
|
|
2.0
|
%
|
|
|
|
|
|
|
||||||
Combined ratio
|
93.3
|
%
|
|
94.2
|
%
|
|
95.2
|
%
|
|
(0.9
|
%)
|
|
(1.0
|
%)
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
175
|
|
|
$
|
141
|
|
|
$
|
104
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
31.5
|
%
|
|
37.6
|
%
|
|
39.4
|
%
|
|
(6.1
|
%)
|
|
(1.8
|
%)
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
53.5
|
%
|
|
51.3
|
%
|
|
50.0
|
%
|
|
2.2
|
%
|
|
1.3
|
%
|
|
|
|
|
|
|
||||||
Combined ratio
|
85.0
|
%
|
|
88.9
|
%
|
|
89.4
|
%
|
|
(3.9
|
%)
|
|
(0.5
|
%)
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
92
|
|
|
$
|
66
|
|
|
$
|
61
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Loss and LAE ratio
|
61.5
|
%
|
|
61.3
|
%
|
|
62.9
|
%
|
|
0.2
|
%
|
|
(1.6
|
%)
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
32.2
|
%
|
|
32.1
|
%
|
|
30.2
|
%
|
|
0.1
|
%
|
|
1.9
|
%
|
|
|
|
|
|
|
||||||
Combined ratio
|
93.7
|
%
|
|
93.4
|
%
|
|
93.1
|
%
|
|
0.3
|
%
|
|
0.3
|
%
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
325
|
|
|
$
|
322
|
|
|
$
|
317
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Aggregate — including exited lines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loss and LAE ratio
|
63.0
|
%
|
|
61.7
|
%
|
|
64.5
|
%
|
|
1.3
|
%
|
|
(2.8
|
%)
|
|
|
|
|
|
|
||||||
Underwriting expense ratio
|
32.8
|
%
|
|
32.1
|
%
|
|
30.2
|
%
|
|
0.7
|
%
|
|
1.9
|
%
|
|
|
|
|
|
|
||||||
Combined ratio
|
95.8
|
%
|
|
93.8
|
%
|
|
94.7
|
%
|
|
2.0
|
%
|
|
(0.9
|
%)
|
|
|
|
|
|
|
||||||
Underwriting profit
|
|
|
|
|
|
|
|
|
|
|
$
|
212
|
|
|
$
|
302
|
|
|
$
|
242
|
|
|
Year ended December 31,
|
|
|
|
|
|||||||||||||||||||||
|
Amount
|
|
Ratio
|
|
Change in Ratio
|
|||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
|||||||||||
Property and transportation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
1,332
|
|
|
$
|
1,216
|
|
|
$
|
1,176
|
|
|
72.8
|
%
|
|
70.3
|
%
|
|
68.7
|
%
|
|
2.5
|
%
|
|
1.6
|
%
|
Prior accident years development
|
(67
|
)
|
|
(50
|
)
|
|
(40
|
)
|
|
(3.6
|
%)
|
|
(2.8
|
%)
|
|
(2.3
|
%)
|
|
(0.8
|
%)
|
|
(0.5
|
%)
|
|||
Current year catastrophe losses
|
32
|
|
|
26
|
|
|
36
|
|
|
1.8
|
%
|
|
1.5
|
%
|
|
2.1
|
%
|
|
0.3
|
%
|
|
(0.6
|
%)
|
|||
Property and transportation losses and LAE and ratio
|
$
|
1,297
|
|
|
$
|
1,192
|
|
|
$
|
1,172
|
|
|
71.0
|
%
|
|
69.0
|
%
|
|
68.5
|
%
|
|
2.0
|
%
|
|
0.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
1,657
|
|
|
$
|
1,570
|
|
|
$
|
1,425
|
|
|
63.8
|
%
|
|
65.4
|
%
|
|
65.2
|
%
|
|
(1.6
|
%)
|
|
0.2
|
%
|
Prior accident years development
|
(88
|
)
|
|
(139
|
)
|
|
(86
|
)
|
|
(3.4
|
%)
|
|
(5.8
|
%)
|
|
(4.0
|
%)
|
|
2.4
|
%
|
|
(1.8
|
%)
|
|||
Current year catastrophe losses
|
17
|
|
|
45
|
|
|
71
|
|
|
0.7
|
%
|
|
1.9
|
%
|
|
3.3
|
%
|
|
(1.2
|
%)
|
|
(1.4
|
%)
|
|||
Specialty casualty losses and LAE and ratio
|
$
|
1,586
|
|
|
$
|
1,476
|
|
|
$
|
1,410
|
|
|
61.1
|
%
|
|
61.5
|
%
|
|
64.5
|
%
|
|
(0.4
|
%)
|
|
(3.0
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Specialty financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
220
|
|
|
$
|
223
|
|
|
$
|
218
|
|
|
36.2
|
%
|
|
37.3
|
%
|
|
37.8
|
%
|
|
(1.1
|
%)
|
|
(0.5
|
%)
|
Prior accident years development
|
(38
|
)
|
|
(26
|
)
|
|
(21
|
)
|
|
(6.3
|
%)
|
|
(4.4
|
%)
|
|
(3.6
|
%)
|
|
(1.9
|
%)
|
|
(0.8
|
%)
|
|||
Current year catastrophe losses
|
10
|
|
|
28
|
|
|
30
|
|
|
1.6
|
%
|
|
4.7
|
%
|
|
5.2
|
%
|
|
(3.1
|
%)
|
|
(0.5
|
%)
|
|||
Specialty financial losses and LAE and ratio
|
$
|
192
|
|
|
$
|
225
|
|
|
$
|
227
|
|
|
31.5
|
%
|
|
37.6
|
%
|
|
39.4
|
%
|
|
(6.1
|
%)
|
|
(1.8
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Specialty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
3,315
|
|
|
$
|
3,092
|
|
|
$
|
2,879
|
|
|
64.0
|
%
|
|
63.6
|
%
|
|
62.9
|
%
|
|
0.4
|
%
|
|
0.7
|
%
|
Prior accident years development
|
(187
|
)
|
|
(212
|
)
|
|
(139
|
)
|
|
(3.7
|
%)
|
|
(4.4
|
%)
|
|
(3.0
|
%)
|
|
0.7
|
%
|
|
(1.4
|
%)
|
|||
Current year catastrophe losses
|
60
|
|
|
103
|
|
|
140
|
|
|
1.2
|
%
|
|
2.1
|
%
|
|
3.0
|
%
|
|
(0.9
|
%)
|
|
(0.9
|
%)
|
|||
Total Specialty losses and LAE and ratio
|
$
|
3,188
|
|
|
$
|
2,983
|
|
|
$
|
2,880
|
|
|
61.5
|
%
|
|
61.3
|
%
|
|
62.9
|
%
|
|
0.2
|
%
|
|
(1.6
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Aggregate — including exited lines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Current year, excluding catastrophe losses
|
$
|
3,354
|
|
|
$
|
3,092
|
|
|
$
|
2,879
|
|
|
64.0
|
%
|
|
63.6
|
%
|
|
62.9
|
%
|
|
0.4
|
%
|
|
0.7
|
%
|
Prior accident years development
|
(143
|
)
|
|
(192
|
)
|
|
(64
|
)
|
|
(2.2
|
%)
|
|
(4.0
|
%)
|
|
(1.4
|
%)
|
|
1.8
|
%
|
|
(2.6
|
%)
|
|||
Current year catastrophe losses
|
60
|
|
|
103
|
|
|
140
|
|
|
1.2
|
%
|
|
2.1
|
%
|
|
3.0
|
%
|
|
(0.9
|
%)
|
|
(0.9
|
%)
|
|||
Aggregate losses and LAE and ratio
|
$
|
3,271
|
|
|
$
|
3,003
|
|
|
$
|
2,955
|
|
|
63.0
|
%
|
|
61.7
|
%
|
|
64.5
|
%
|
|
1.3
|
%
|
|
(2.8
|
%)
|
|
Year ended December 31,
|
|
Change in % of NEP
|
|||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
|||||||||||||||||
|
U/W Exp
|
|
% of NEP
|
|
U/W Exp
|
|
% of NEP
|
|
U/W Exp
|
|
% of NEP
|
|
|
|
|
|||||||||||
Property and transportation
|
$
|
452
|
|
|
24.7
|
%
|
|
$
|
417
|
|
|
24.1
|
%
|
|
$
|
385
|
|
|
22.5
|
%
|
|
0.6
|
%
|
|
1.6
|
%
|
Specialty casualty
|
836
|
|
|
32.2
|
%
|
|
786
|
|
|
32.7
|
%
|
|
672
|
|
|
30.7
|
%
|
|
(0.5
|
%)
|
|
2.0
|
%
|
|||
Specialty financial
|
326
|
|
|
53.5
|
%
|
|
307
|
|
|
51.3
|
%
|
|
288
|
|
|
50.0
|
%
|
|
2.2
|
%
|
|
1.3
|
%
|
|||
Other specialty
|
58
|
|
|
37.9
|
%
|
|
50
|
|
|
37.3
|
%
|
|
37
|
|
|
35.8
|
%
|
|
0.6
|
%
|
|
1.5
|
%
|
|||
Total Specialty
|
1,672
|
|
|
32.2
|
%
|
|
1,560
|
|
|
32.1
|
%
|
|
1,382
|
|
|
30.2
|
%
|
|
0.1
|
%
|
|
1.9
|
%
|
|||
Neon exited lines charge
|
30
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
|
||||||||
Total Aggregate
|
$
|
1,702
|
|
|
32.8
|
%
|
|
$
|
1,560
|
|
|
32.1
|
%
|
|
$
|
1,382
|
|
|
30.2
|
%
|
|
0.7
|
%
|
|
1.9
|
%
|
|
Year ended December 31,
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|
Change
|
|
% Change
|
||||||||||||
Net investment income
|
$
|
472
|
|
|
$
|
438
|
|
|
$
|
362
|
|
|
$
|
34
|
|
|
8
|
%
|
|
$
|
76
|
|
|
21
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Average invested assets (at amortized cost)
|
$
|
11,348
|
|
|
$
|
10,497
|
|
|
$
|
9,948
|
|
|
$
|
851
|
|
|
8
|
%
|
|
$
|
549
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Yield (net investment income as a % of average invested assets)
|
4.16
|
%
|
|
4.17
|
%
|
|
3.64
|
%
|
|
(0.01
|
%)
|
|
|
|
0.53
|
%
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Tax equivalent yield (*)
|
4.32
|
%
|
|
4.35
|
%
|
|
4.10
|
%
|
|
(0.03
|
%)
|
|
|
|
0.25
|
%
|
|
|
(*)
|
Adjusts the yield on equity securities and tax-exempt bonds to the fully taxable equivalent yield.
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Other income
|
|
|
|
|
|
||||||
Income from the sale of real estate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16
|
|
Other
|
11
|
|
|
10
|
|
|
12
|
|
|||
Total other income
|
11
|
|
|
10
|
|
|
28
|
|
|||
Other expenses
|
|
|
|
|
|
||||||
Amortization of intangibles
|
11
|
|
|
9
|
|
|
8
|
|
|||
Other
|
35
|
|
|
32
|
|
|
33
|
|
|||
Total other expenses
|
46
|
|
|
41
|
|
|
41
|
|
|||
Other income and expenses, net
|
$
|
(35
|
)
|
|
$
|
(31
|
)
|
|
$
|
(13
|
)
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Net investment income
|
$
|
1,792
|
|
|
$
|
1,638
|
|
|
$
|
1,458
|
|
|
9
|
%
|
|
12
|
%
|
Other income:
|
|
|
|
|
|
|
|
|
|
||||||||
Guaranteed withdrawal benefit fees
|
67
|
|
|
65
|
|
|
60
|
|
|
3
|
%
|
|
8
|
%
|
|||
Policy charges and other miscellaneous income (a)
|
40
|
|
|
42
|
|
|
43
|
|
|
(5
|
%)
|
|
(2
|
%)
|
|||
Total revenues
|
1,899
|
|
|
1,745
|
|
|
1,561
|
|
|
9
|
%
|
|
12
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Annuity benefits (a)(b)
|
1,140
|
|
|
998
|
|
|
892
|
|
|
14
|
%
|
|
12
|
%
|
|||
Acquisition expenses (a)
|
222
|
|
|
255
|
|
|
168
|
|
|
(13
|
%)
|
|
52
|
%
|
|||
Other expenses
|
139
|
|
|
131
|
|
|
121
|
|
|
6
|
%
|
|
8
|
%
|
|||
Total costs and expenses
|
1,501
|
|
|
1,384
|
|
|
1,181
|
|
|
8
|
%
|
|
17
|
%
|
|||
Core earnings before income taxes
|
398
|
|
|
361
|
|
|
380
|
|
|
10
|
%
|
|
(5
|
%)
|
|||
Pretax non-core earnings (losses) (a)
|
(36
|
)
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|||
GAAP earnings before income taxes
|
$
|
362
|
|
|
$
|
361
|
|
|
$
|
380
|
|
|
—
|
%
|
|
(5
|
%)
|
(a)
|
As discussed under “Results of Operations — General,” beginning prospectively with the second quarter of 2019, unlocking, the impact of changes in the fair value of derivatives related to FIAs, and other impacts of changes in the stock market and interest rates on the accounting for FIAs over or under the cost of the equity index options purchased to mitigate the risk in the index-based component of those FIAs are considered non-core earnings (losses). For 2019, policy charges and other miscellaneous income excludes the $1 million favorable impact of these items and annuity benefits and acquisition expenses exclude the $11 million and $26 million, respectively, unfavorable impact of these items.
|
(b)
|
Details of the components of annuity benefits are provided below.
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||
Earnings before income taxes — before the impact of unlocking, derivatives related to FIAs and other impacts of stock market performance and interest rates on FIAs
|
$
|
409
|
|
|
$
|
409
|
|
|
$
|
388
|
|
|
—
|
%
|
|
5
|
%
|
Unlocking
|
(1
|
)
|
|
(31
|
)
|
|
(3
|
)
|
|
(97
|
%)
|
|
933
|
%
|
|||
Impact of derivatives related to FIAs and other impacts of changes in the stock market and interest rates on FIAs over or under option costs:
|
|
|
|
|
|
|
|
|
|
||||||||
Change in fair value of derivatives related to FIAs
|
(294
|
)
|
|
(51
|
)
|
|
(70
|
)
|
|
476
|
%
|
|
(27
|
%)
|
|||
Accretion of guaranteed minimum FIA benefits
|
(408
|
)
|
|
(347
|
)
|
|
(289
|
)
|
|
18
|
%
|
|
20
|
%
|
|||
Other annuity benefits
|
(14
|
)
|
|
(83
|
)
|
|
(58
|
)
|
|
(83
|
%)
|
|
43
|
%
|
|||
Less cost of equity options
|
586
|
|
|
506
|
|
|
395
|
|
|
16
|
%
|
|
28
|
%
|
|||
Related impact on the amortization of deferred policy acquisition costs
|
84
|
|
|
(42
|
)
|
|
17
|
|
|
(300
|
%)
|
|
(347
|
%)
|
|||
Earnings before income taxes
|
$
|
362
|
|
|
$
|
361
|
|
|
$
|
380
|
|
|
—
|
%
|
|
(5
|
%)
|
|
Year ended December 31,
|
|
Total
|
|||||||||||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|||||||||||||||||||||
|
Core
|
|
Non-core
|
|
Total
|
|
Core
|
|
Non-core
|
|
Total
|
|
2019 - 2018
|
|||||||||||||
Interest credited — fixed
|
$
|
396
|
|
|
$
|
—
|
|
|
$
|
396
|
|
|
$
|
357
|
|
|
$
|
—
|
|
|
$
|
357
|
|
|
11
|
%
|
Accretion of guaranteed minimum FIA benefits
|
99
|
|
|
309
|
|
|
408
|
|
|
347
|
|
|
—
|
|
|
347
|
|
|
18
|
%
|
||||||
Interest credited — fixed component of variable annuities
|
4
|
|
|
—
|
|
|
4
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|
(20
|
%)
|
||||||
Cost of equity options
|
445
|
|
|
(445
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
||||||
Other annuity benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Amortization of sales inducements
|
13
|
|
|
—
|
|
|
13
|
|
|
19
|
|
|
—
|
|
|
19
|
|
|
(32
|
%)
|
||||||
Change in guaranteed withdrawal benefit reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Impact of change in the stock market and interest rates
|
(12
|
)
|
|
(12
|
)
|
|
(24
|
)
|
|
32
|
|
|
—
|
|
|
32
|
|
|
(175
|
%)
|
||||||
Accretion of benefits and other
|
84
|
|
|
—
|
|
|
84
|
|
|
74
|
|
|
—
|
|
|
74
|
|
|
14
|
%
|
||||||
Change in expected death and annuitization reserves and other
|
12
|
|
|
—
|
|
|
12
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
300
|
%
|
||||||
Change in other benefit reserves — impact of changes in interest rates and the stock market
|
4
|
|
|
34
|
|
|
38
|
|
|
51
|
|
|
—
|
|
|
51
|
|
|
(25
|
%)
|
||||||
Unlocking
|
—
|
|
|
(74
|
)
|
|
(74
|
)
|
|
59
|
|
|
—
|
|
|
59
|
|
|
(225
|
%)
|
||||||
Derivatives related to fixed-indexed annuities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Embedded derivative mark-to-market
|
462
|
|
|
638
|
|
|
1,100
|
|
|
(248
|
)
|
|
—
|
|
|
(248
|
)
|
|
(544
|
%)
|
||||||
Equity option mark-to-market
|
(367
|
)
|
|
(439
|
)
|
|
(806
|
)
|
|
299
|
|
|
—
|
|
|
299
|
|
|
(370
|
%)
|
||||||
Impact of derivatives related to FIAs
|
95
|
|
|
199
|
|
|
294
|
|
|
51
|
|
|
—
|
|
|
51
|
|
|
476
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total annuity benefits
|
$
|
1,140
|
|
|
$
|
11
|
|
|
$
|
1,151
|
|
|
$
|
998
|
|
|
$
|
—
|
|
|
$
|
998
|
|
|
15
|
%
|
|
|
|
Total
|
|||||||||||
|
Year ended December 31, 2017
|
|
% Change
|
|||||||||||
|
Core
|
|
Non-core
|
|
Total
|
|
2018 - 2017
|
|||||||
Interest credited — fixed
|
$
|
344
|
|
|
$
|
—
|
|
|
$
|
344
|
|
|
4
|
%
|
Accretion of guaranteed minimum FIA benefits
|
289
|
|
|
—
|
|
|
289
|
|
|
20
|
%
|
|||
Interest credited — fixed component of variable annuities
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
%
|
|||
Cost of equity options
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|||
Other annuity benefits:
|
|
|
|
|
|
|
|
|||||||
Amortization of sales inducements
|
18
|
|
|
—
|
|
|
18
|
|
|
6
|
%
|
|||
Change in guaranteed withdrawal benefit reserve:
|
|
|
|
|
|
|
|
|||||||
Impact of change in the stock market and interest rates
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
(3,300
|
%)
|
|||
Accretion of benefits and other
|
68
|
|
|
—
|
|
|
68
|
|
|
9
|
%
|
|||
Change in expected death and annuitization reserves and other
|
5
|
|
|
—
|
|
|
5
|
|
|
(40
|
%)
|
|||
Change in other benefit reserves — impact of changes in interest rates and the stock market
|
59
|
|
|
—
|
|
|
59
|
|
|
(14
|
%)
|
|||
Unlocking
|
35
|
|
|
—
|
|
|
35
|
|
|
69
|
%
|
|||
Derivatives related to fixed-indexed annuities:
|
|
|
|
|
|
|
|
|||||||
Embedded derivative mark-to-market
|
564
|
|
|
—
|
|
|
564
|
|
|
(144
|
%)
|
|||
Equity option mark-to-market
|
(494
|
)
|
|
—
|
|
|
(494
|
)
|
|
(161
|
%)
|
|||
Impact of derivatives related to FIAs
|
70
|
|
|
—
|
|
|
70
|
|
|
(27
|
%)
|
|||
|
|
|
|
|
|
|
|
|||||||
Total annuity benefits
|
$
|
892
|
|
|
$
|
—
|
|
|
$
|
892
|
|
|
12
|
%
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Interest credited — fixed
|
$
|
396
|
|
|
$
|
357
|
|
|
$
|
344
|
|
Include cost of equity options
|
586
|
|
|
506
|
|
|
395
|
|
|||
Cost of funds
|
982
|
|
|
863
|
|
|
739
|
|
|||
|
|
|
|
|
|
||||||
Interest credited — fixed component of variable annuities
|
4
|
|
|
5
|
|
|
5
|
|
|||
Other annuity benefits, excluding the impact of interest rates and the stock market on FIAs
|
109
|
|
|
96
|
|
|
91
|
|
|||
|
1,095
|
|
|
964
|
|
|
835
|
|
|||
Unlocking, changes in fair value of derivatives related to FIAs, and other impacts of the stock market and interest rates over or under option costs:
|
|
|
|
|
|
||||||
Unlocking
|
(74
|
)
|
|
59
|
|
|
35
|
|
|||
Impact of derivatives related to FIAs
|
294
|
|
|
51
|
|
|
70
|
|
|||
Accretion of guaranteed minimum FIA benefits
|
408
|
|
|
347
|
|
|
289
|
|
|||
Other annuity benefits — impact of the stock market and interest rates on FIAs
|
14
|
|
|
83
|
|
|
58
|
|
|||
Less cost of equity options (included in cost of funds)
|
(586
|
)
|
|
(506
|
)
|
|
(395
|
)
|
|||
Total annuity benefits expense
|
$
|
1,151
|
|
|
$
|
998
|
|
|
$
|
892
|
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||
Average fixed annuity investments (at amortized cost)
|
$
|
38,216
|
|
|
$
|
34,471
|
|
|
$
|
31,250
|
|
|
11
|
%
|
|
10
|
%
|
Average fixed annuity benefits accumulated
|
38,460
|
|
|
34,706
|
|
|
31,526
|
|
|
11
|
%
|
|
10
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
As % of fixed annuity benefits accumulated (except as noted):
|
|
|
|
|
|
|
|
|
|||||||||
Net investment income (as % of fixed annuity investments)
|
4.67
|
%
|
|
4.73
|
%
|
|
4.63
|
%
|
|
|
|
|
|||||
Cost of funds
|
(2.55
|
%)
|
|
(2.49
|
%)
|
|
(2.34
|
%)
|
|
|
|
|
|||||
Other annuity benefit expenses, net of guaranteed withdrawal benefit fees (*)
|
(0.11
|
%)
|
|
(0.10
|
%)
|
|
(0.10
|
%)
|
|
|
|
|
|||||
Net interest spread
|
2.01
|
%
|
|
2.14
|
%
|
|
2.19
|
%
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||
Policy charges and other miscellaneous income (*)
|
0.08
|
%
|
|
0.10
|
%
|
|
0.11
|
%
|
|
|
|
|
|||||
Acquisition expenses (*)
|
(0.66
|
%)
|
|
(0.67
|
%)
|
|
(0.68
|
%)
|
|
|
|
|
|||||
Other expenses
|
(0.35
|
%)
|
|
(0.37
|
%)
|
|
(0.37
|
%)
|
|
|
|
|
|||||
Net spread earned on fixed annuities excluding the impact of unlocking, changes in the fair value of derivatives related to FIAs and other impacts of changes in the stock market and interest rates on FIAs
|
1.08
|
%
|
|
1.20
|
%
|
|
1.25
|
%
|
|
|
|
|
|||||
Changes in fair value of derivatives related to FIAs and other impacts of the stock market and interest rates under (over) options costs:
|
|
|
|
|
|
|
|
|
|
||||||||
Included in core
|
(0.03
|
%)
|
|
(0.04
|
%)
|
|
(0.01
|
%)
|
|
|
|
|
|||||
Annuity non-core earnings (losses)
|
(0.09
|
%)
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|||||
Unlocking
|
—
|
%
|
|
(0.09
|
%)
|
|
(0.01
|
%)
|
|
|
|
|
|||||
Net spread earned on fixed annuities
|
0.96
|
%
|
|
1.07
|
%
|
|
1.23
|
%
|
|
|
|
|
(*)
|
Excluding unlocking, the impact of changes in the fair value of derivatives related to FIAs, and other impacts of changes in the stock market and interest rates on annuity benefits and the related impact on the amortization of deferred policy acquisition costs.
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cost of equity options (FIAs)
|
$
|
586
|
|
|
$
|
506
|
|
|
$
|
395
|
|
Interest credited:
|
|
|
|
|
|
||||||
Traditional fixed annuities
|
244
|
|
|
234
|
|
|
238
|
|
|||
Fixed component of fixed-indexed annuities
|
94
|
|
|
78
|
|
|
68
|
|
|||
Immediate annuities
|
24
|
|
|
24
|
|
|
24
|
|
|||
Pension risk transfer products
|
7
|
|
|
1
|
|
|
—
|
|
|||
Federal Home Loan Bank advances
|
27
|
|
|
20
|
|
|
14
|
|
|||
Total cost of funds
|
$
|
982
|
|
|
$
|
863
|
|
|
$
|
739
|
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Other annuity benefits, excluding the impact of the stock market and interest rates on FIAs:
|
|
|
|
|
|
||||||
Amortization of sales inducements
|
$
|
13
|
|
|
$
|
19
|
|
|
$
|
18
|
|
Change in guaranteed withdrawal benefit reserve
|
84
|
|
|
74
|
|
|
68
|
|
|||
Change in other benefit reserves
|
12
|
|
|
3
|
|
|
5
|
|
|||
Other annuity benefits
|
109
|
|
|
96
|
|
|
91
|
|
|||
Offset guaranteed withdrawal benefit fees
|
(67
|
)
|
|
(65
|
)
|
|
(60
|
)
|
|||
Other annuity benefits excluding the impact of the stock market and interest rates, net
|
42
|
|
|
31
|
|
|
31
|
|
|||
Other annuity benefits — impact of the stock market and interest rates
|
14
|
|
|
83
|
|
|
58
|
|
|||
Other annuity benefits, net
|
$
|
56
|
|
|
$
|
114
|
|
|
$
|
89
|
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Annuity acquisition expenses before the impact of changes in the fair value of derivatives related to FIAs and other impacts of the stock market and interest rates
|
$
|
256
|
|
|
$
|
242
|
|
|
$
|
220
|
|
Unlocking
|
76
|
|
|
(29
|
)
|
|
(35
|
)
|
|||
Impact of changes in the fair value of derivatives and other impacts of the stock market and interest rates:
|
|
|
|
|
|
||||||
Included in core
|
(34
|
)
|
|
42
|
|
|
(17
|
)
|
|||
Annuity non-core earnings (losses)
|
(50
|
)
|
|
—
|
|
|
—
|
|
|||
Annuity acquisition expenses
|
$
|
248
|
|
|
$
|
255
|
|
|
$
|
168
|
|
|
Year ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Before unlocking, the impact of changes in the fair value of derivatives related to FIAs and other impacts of the stock market and interest rates
|
0.66
|
%
|
|
0.67
|
%
|
|
0.68
|
%
|
Unlocking
|
0.20
|
%
|
|
(0.08
|
%)
|
|
(0.11
|
%)
|
Impact of changes in fair value of derivatives and other impacts of the stock market and interest rates
|
(0.23
|
%)
|
|
0.12
|
%
|
|
(0.06
|
%)
|
Annuity acquisition expenses as a % of fixed annuity benefits accumulated
|
0.63
|
%
|
|
0.71
|
%
|
|
0.51
|
%
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||
Change in the fair value of derivatives related to FIAs
|
$
|
(294
|
)
|
|
$
|
(51
|
)
|
|
$
|
(70
|
)
|
|
476
|
%
|
|
(27
|
%)
|
Accretion of guaranteed minimum FIA benefits
|
(408
|
)
|
|
(347
|
)
|
|
(289
|
)
|
|
18
|
%
|
|
20
|
%
|
|||
Other annuity benefits
|
(14
|
)
|
|
(83
|
)
|
|
(58
|
)
|
|
(83
|
%)
|
|
43
|
%
|
|||
Less cost of equity options
|
586
|
|
|
506
|
|
|
395
|
|
|
16
|
%
|
|
28
|
%
|
|||
Related impact on the amortization of DPAC
|
84
|
|
|
(42
|
)
|
|
17
|
|
|
(300
|
%)
|
|
(347
|
%)
|
|||
Impact on annuity segment earnings before income taxes
|
$
|
(46
|
)
|
|
$
|
(17
|
)
|
|
$
|
(5
|
)
|
|
171
|
%
|
|
240
|
%
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||
Changes in the stock market, including volatility
|
$
|
68
|
|
|
$
|
(29
|
)
|
|
$
|
50
|
|
|
(334
|
%)
|
|
(158
|
%)
|
Changes in interest rates higher (lower) than expected
|
(117
|
)
|
|
33
|
|
|
(50
|
)
|
|
(455
|
%)
|
|
(166
|
%)
|
|||
Other
|
3
|
|
|
(21
|
)
|
|
(5
|
)
|
|
(114
|
%)
|
|
320
|
%
|
|||
Impact on annuity segment earnings before income taxes
|
$
|
(46
|
)
|
|
$
|
(17
|
)
|
|
$
|
(5
|
)
|
|
171
|
%
|
|
240
|
%
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Beginning fixed annuity reserves
|
$
|
36,431
|
|
|
$
|
33,005
|
|
|
$
|
29,647
|
|
Fixed annuity premiums (receipts)
|
4,939
|
|
|
5,382
|
|
|
4,313
|
|
|||
Federal Home Loan Bank advances and repayments
|
—
|
|
|
225
|
|
|
(64
|
)
|
|||
Surrenders, benefits and other withdrawals
|
(3,260
|
)
|
|
(2,836
|
)
|
|
(2,246
|
)
|
|||
Interest and other annuity benefit expenses:
|
|
|
|
|
|
||||||
Cost of funds
|
982
|
|
|
863
|
|
|
739
|
|
|||
Embedded derivative mark-to-market
|
1,100
|
|
|
(248
|
)
|
|
564
|
|
|||
Change in other benefit reserves
|
(99
|
)
|
|
(19
|
)
|
|
11
|
|
|||
Unlocking
|
(75
|
)
|
|
59
|
|
|
41
|
|
|||
Ending fixed annuity reserves
|
$
|
40,018
|
|
|
$
|
36,431
|
|
|
$
|
33,005
|
|
|
|
|
|
|
|
||||||
Reconciliation to annuity benefits accumulated per balance sheet:
|
|
|
|
|
|
||||||
Ending fixed annuity reserves (from above)
|
$
|
40,018
|
|
|
$
|
36,431
|
|
|
$
|
33,005
|
|
Impact of unrealized investment gains
|
225
|
|
|
10
|
|
|
133
|
|
|||
Fixed component of variable annuities
|
163
|
|
|
175
|
|
|
178
|
|
|||
Annuity benefits accumulated per balance sheet
|
$
|
40,406
|
|
|
$
|
36,616
|
|
|
$
|
33,316
|
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
|||||||||
Financial institutions single premium annuities — indexed
|
$
|
1,537
|
|
|
$
|
1,776
|
|
|
$
|
1,711
|
|
|
(13
|
%)
|
|
4
|
%
|
Financial institutions single premium annuities — fixed
|
1,229
|
|
|
492
|
|
|
622
|
|
|
150
|
%
|
|
(21
|
%)
|
|||
Retail single premium annuities — indexed
|
943
|
|
|
1,418
|
|
|
990
|
|
|
(33
|
%)
|
|
43
|
%
|
|||
Retail single premium annuities — fixed
|
120
|
|
|
87
|
|
|
70
|
|
|
38
|
%
|
|
24
|
%
|
|||
Broker dealer single premium annuities — indexed
|
657
|
|
|
1,271
|
|
|
733
|
|
|
(48
|
%)
|
|
73
|
%
|
|||
Broker dealer single premium annuities — fixed
|
32
|
|
|
14
|
|
|
7
|
|
|
129
|
%
|
|
100
|
%
|
|||
Pension risk transfer
|
257
|
|
|
132
|
|
|
6
|
|
|
95
|
%
|
|
2,100
|
%
|
|||
Education market — fixed and indexed annuities
|
164
|
|
|
192
|
|
|
174
|
|
|
(15
|
%)
|
|
10
|
%
|
|||
Total fixed annuity premiums
|
4,939
|
|
|
5,382
|
|
|
4,313
|
|
|
(8
|
%)
|
|
25
|
%
|
|||
Variable annuities
|
21
|
|
|
25
|
|
|
28
|
|
|
(16
|
%)
|
|
(11
|
%)
|
|||
Total annuity premiums
|
$
|
4,960
|
|
|
$
|
5,407
|
|
|
$
|
4,341
|
|
|
(8
|
%)
|
|
25
|
%
|
|
|
Year ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Policy charges and other miscellaneous income:
|
|
|
|
|
|
|
||||||
Unearned revenue
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
(3
|
)
|
Total revenues
|
|
1
|
|
|
(1
|
)
|
|
(3
|
)
|
|||
Annuity benefits:
|
|
|
|
|
|
|
||||||
Fixed-indexed annuities embedded derivative
|
|
(181
|
)
|
|
44
|
|
|
25
|
|
|||
Guaranteed withdrawal benefit reserve
|
|
102
|
|
|
10
|
|
|
13
|
|
|||
Other reserves
|
|
4
|
|
|
5
|
|
|
3
|
|
|||
Sales inducements asset
|
|
1
|
|
|
—
|
|
|
(6
|
)
|
|||
Total annuity benefits
|
|
(74
|
)
|
|
59
|
|
|
35
|
|
|||
Annuity and supplemental insurance acquisition expenses:
|
|
|
|
|
|
|
||||||
Deferred policy acquisition costs
|
|
76
|
|
|
(29
|
)
|
|
(35
|
)
|
|||
Total costs and expenses
|
|
2
|
|
|
30
|
|
|
—
|
|
|||
Net charge
|
|
$
|
(1
|
)
|
|
$
|
(31
|
)
|
|
$
|
(3
|
)
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Earnings on fixed annuity benefits accumulated
|
$
|
367
|
|
|
$
|
370
|
|
|
$
|
387
|
|
Earnings impact of investments in excess of fixed annuity benefits accumulated (*)
|
(10
|
)
|
|
(11
|
)
|
|
(13
|
)
|
|||
Variable annuity earnings
|
5
|
|
|
2
|
|
|
6
|
|
|||
Earnings before income taxes
|
$
|
362
|
|
|
$
|
361
|
|
|
$
|
380
|
|
(*)
|
Net investment income (as a % of investments) of 4.67%, 4.73% and 4.63% in 2019, 2018 and 2017, 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
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Life, accident and health net earned premiums
|
$
|
22
|
|
|
$
|
24
|
|
|
$
|
22
|
|
|
(8
|
%)
|
|
9
|
%
|
Net investment income
|
43
|
|
|
25
|
|
|
34
|
|
|
72
|
%
|
|
(26
|
%)
|
|||
Other income — P&C fees
|
69
|
|
|
69
|
|
|
66
|
|
|
—
|
%
|
|
5
|
%
|
|||
Other income
|
28
|
|
|
29
|
|
|
27
|
|
|
(3
|
%)
|
|
7
|
%
|
|||
Total revenues
|
162
|
|
|
147
|
|
|
149
|
|
|
10
|
%
|
|
(1
|
%)
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Property and casualty insurance — commissions and other underwriting expenses
|
23
|
|
|
23
|
|
|
25
|
|
|
—
|
%
|
|
(8
|
%)
|
|||
Life, accident and health benefits
|
36
|
|
|
40
|
|
|
26
|
|
|
(10
|
%)
|
|
54
|
%
|
|||
Life, accident and health acquisition expenses
|
5
|
|
|
6
|
|
|
5
|
|
|
(17
|
%)
|
|
20
|
%
|
|||
Other expense — expenses associated with P&C fees
|
46
|
|
|
46
|
|
|
41
|
|
|
—
|
%
|
|
12
|
%
|
|||
Other expenses (*)
|
158
|
|
|
126
|
|
|
144
|
|
|
25
|
%
|
|
(13
|
%)
|
|||
Costs and expenses, excluding interest charges on borrowed money
|
268
|
|
|
241
|
|
|
241
|
|
|
11
|
%
|
|
—
|
%
|
|||
Core loss before income taxes, excluding realized gains and losses and interest charges on borrowed money
|
(106
|
)
|
|
(94
|
)
|
|
(92
|
)
|
|
13
|
%
|
|
2
|
%
|
|||
Interest charges on borrowed money
|
68
|
|
|
62
|
|
|
85
|
|
|
10
|
%
|
|
(27
|
%)
|
|||
Core loss before income taxes, excluding realized gains and losses
|
(174
|
)
|
|
(156
|
)
|
|
(177
|
)
|
|
12
|
%
|
|
(12
|
%)
|
|||
Pretax non-core special A&E charges
|
(11
|
)
|
|
(9
|
)
|
|
(24
|
)
|
|
22
|
%
|
|
(63
|
%)
|
|||
Pretax non-core loss on retirement of debt
|
(5
|
)
|
|
—
|
|
|
(51
|
)
|
|
—
|
%
|
|
(100
|
%)
|
|||
GAAP loss before income taxes, excluding realized gains and losses
|
$
|
(190
|
)
|
|
$
|
(165
|
)
|
|
$
|
(252
|
)
|
|
15
|
%
|
|
(35
|
%)
|
(*)
|
Excludes pretax non-core special A&E charges of $11 million, $9 million and $24 million in 2019, 2018 and 2017, respectively, and a pretax non-core loss on retirement of debt of $5 million in 2019 and $51 million in 2017.
|
|
December 31, 2019
|
|
December 31, 2018
|
|
January 1, 2017
|
||||||
Direct obligations of AFG:
|
|
|
|
|
|
||||||
4.50% Senior Notes due June 2047
|
$
|
590
|
|
|
$
|
590
|
|
|
$
|
—
|
|
3.50% Senior Notes due August 2026
|
425
|
|
|
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
|
|
|||
5.125% Subordinated Debentures due December 2059
|
200
|
|
|
—
|
|
|
—
|
|
|||
6% Subordinated Debentures due November 2055
|
150
|
|
|
150
|
|
|
150
|
|
|||
5.875% Subordinated Debentures due March 2059
|
125
|
|
|
—
|
|
|
—
|
|
|||
6-1/4% Subordinated Debentures due September 2054
|
—
|
|
|
150
|
|
|
150
|
|
|||
Other
|
3
|
|
|
3
|
|
|
3
|
|
|||
Total principal amount of Holding Company Debt
|
$
|
1,493
|
|
|
$
|
1,318
|
|
|
$
|
1,308
|
|
|
|
|
|
|
|
||||||
Weighted Average Interest Rate
|
4.6
|
%
|
|
4.6
|
%
|
|
6.5
|
%
|
•
|
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 $125 million of 5.875% Subordinated Debentures in March 2019
|
•
|
Issued $200 million of 5.125% Subordinated Debentures in December 2019
|
•
|
Redeemed $150 million of 6-1/4% Subordinated Debentures in December 2019
|
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Realized gains (losses) before impairments:
|
|
|
|
|
|
||||||
Disposals
|
$
|
19
|
|
|
$
|
9
|
|
|
$
|
87
|
|
Change in the fair value of equity securities (*)
|
278
|
|
|
(262
|
)
|
|
—
|
|
|||
Change in the fair value of derivatives
|
9
|
|
|
(5
|
)
|
|
(6
|
)
|
|||
Adjustments to annuity deferred policy acquisition costs and related items
|
—
|
|
|
11
|
|
|
(3
|
)
|
|||
|
306
|
|
|
(247
|
)
|
|
78
|
|
|||
Impairment charges:
|
|
|
|
|
|
||||||
Securities
|
(29
|
)
|
|
(26
|
)
|
|
(88
|
)
|
|||
Adjustments to annuity deferred policy acquisition costs and related items
|
10
|
|
|
7
|
|
|
15
|
|
|||
|
(19
|
)
|
|
(19
|
)
|
|
(73
|
)
|
|||
Realized gains (losses) on securities
|
$
|
287
|
|
|
$
|
(266
|
)
|
|
$
|
5
|
|
(*)
|
As discussed in Note A — “Accounting Policies — Investments,” beginning in January 2018, all equity securities other than those accounted for under the equity method are carried at fair value through net earnings. These
|
|
Year ended December 31,
|
|
% Change
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||
Neon
|
$
|
(28
|
)
|
|
$
|
(13
|
)
|
|
$
|
—
|
|
|
115
|
%
|
|
—
|
%
|
Other
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
%
|
|
(100
|
%)
|
|||
Earnings (losses) attributable to noncontrolling interests
|
$
|
(28
|
)
|
|
$
|
(13
|
)
|
|
$
|
2
|
|
|
115
|
%
|
|
(750
|
%)
|
|
|
2019
|
|
2018
|
||||
Fair value of fixed maturity portfolio
|
|
$
|
46,618
|
|
|
$
|
42,102
|
|
Percentage impact on fair value of 100 bps increase in interest rates
|
|
(4.0
|
%)
|
|
(4.5
|
%)
|
||
Pretax impact on fair value of fixed maturity portfolio
|
|
$
|
(1,865
|
)
|
|
$
|
(1,895
|
)
|
Offsetting adjustments to deferred policy acquisition costs and other balance sheet amounts
|
|
850
|
|
|
800
|
|
||
Estimated pretax impact on accumulated other comprehensive income
|
|
(1,015
|
)
|
|
(1,095
|
)
|
||
Deferred income tax
|
|
213
|
|
|
230
|
|
||
Estimated after-tax impact on accumulated other comprehensive income
|
|
$
|
(802
|
)
|
|
$
|
(865
|
)
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Fifth
|
|
Thereafter
|
|
Total
|
|
Fair
Value (*)
|
||||||||||||||||
2019
|
|
$
|
3,546
|
|
|
$
|
4,185
|
|
|
$
|
4,634
|
|
|
$
|
5,196
|
|
|
$
|
5,839
|
|
|
$
|
22,051
|
|
|
$
|
45,451
|
|
|
$
|
40,182
|
|
2018
|
|
3,493
|
|
|
3,989
|
|
|
4,609
|
|
|
4,701
|
|
|
4,640
|
|
|
22,156
|
|
|
43,588
|
|
|
34,765
|
|
(*)
|
Fair value of annuity benefits accumulated excluding life contingent annuities in the payout phase (carrying value of $247 million at December 31, 2019 and $232 million at December 31, 2018).
|
|
|
|
December 31, 2019
|
|
|
|
December 31, 2018
|
|
||||||||||
|
|
|
Scheduled
Principal
Payments
|
|
Rate
|
|
|
|
Scheduled
Principal
Payments
|
|
Rate
|
|
||||||
|
2020
|
|
$
|
—
|
|
|
—
|
%
|
|
2019
|
|
$
|
—
|
|
|
—
|
%
|
|
|
2021
|
|
—
|
|
|
—
|
%
|
|
2020
|
|
—
|
|
|
—
|
%
|
|
||
|
2022
|
|
—
|
|
|
—
|
%
|
|
2021
|
|
—
|
|
|
—
|
%
|
|
||
|
2023
|
|
—
|
|
|
—
|
%
|
|
2022
|
|
—
|
|
|
—
|
%
|
|
||
|
2024
|
|
—
|
|
|
—
|
%
|
|
2023
|
|
—
|
|
|
—
|
%
|
|
||
|
Thereafter
|
|
1,493
|
|
|
4.6
|
%
|
|
Thereafter
|
|
1,318
|
|
|
4.6
|
%
|
|
||
|
Total
|
|
$
|
1,493
|
|
|
4.6
|
%
|
|
Total
|
|
$
|
1,318
|
|
|
4.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Fair Value
|
|
$
|
1,622
|
|
|
|
|
Fair Value
|
|
$
|
1,231
|
|
|
|
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheet as of December 31, 2019 and 2018
|
|
Consolidated Statement of Earnings for the years ended December 31, 2019, 2018 and 2017
|
|
Consolidated Statement of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017
|
|
Consolidated Statement of Changes in Equity for the years ended December 31, 2019, 2018 and 2017
|
|
Consolidated Statement of Cash Flows for the years ended December 31, 2019, 2018 and 2017
|
|
Notes to Consolidated Financial Statements
|
|
|
|
|
|
|
/s/ ERNST & YOUNG LLP
|
|
|
Cincinnati, Ohio
|
|
|
February 25, 2020
|
|
|
|
|
Valuation of investments in securities
|
Description of the Matter
|
|
As of December 31, 2019, the fair value of the Company’s fixed-income and equity securities totaled $48.56 billion, a portion of which are valued based on non-binding broker quotes or internally developed using significant inputs not based on, or corroborated by, observable market information. The fair value of these securities are determined by management applying the methodologies outlined in Note D to the consolidated financial statements. The lack of visibility into assumptions used in non-binding broker quotes and the credit spread applied by management for internally developed fixed-income investments are significant unobservable inputs, which create greater subjectivity when determining the fair values. Credit spread inputs are developed based on management’s review of trade activity for comparable securities and credit spreads over the treasury yield of securities with a similar duration.
Auditing the fair value of the fixed-income and equity securities that use unobservable inputs was complex and highly judgmental due to the judgment used by the Company in determining unobservable inputs and assumptions to estimate the securities’ fair value. Significant unobservable inputs and assumptions include non-binding broker quotes and credit spreads over the treasury yield.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over management’s valuation process for the fixed-income and equity securities priced using unobservable inputs. This included, among others, testing controls over investment pricing and the development and review of significant inputs and assumptions used in determining the fair values.
To test the Company’s investment fair values, our audit procedures included, among others, comparing the fair values for a sample of securities to pricing service values or internally developed cash flow models. With the assistance of our valuation specialists, we evaluated the valuation methodologies used by the Company and compared the Company’s fair value estimate to an independently calculated range of fair value estimates for a sample of securities. We evaluated information that corroborated or contradicted the Company’s fair value estimates, including observable yields, transaction data for similar securities, and historical collateral performance data. |
|
|
Property and casualty unpaid losses and loss adjustment expenses
|
Description of the Matter
|
|
As of December 31, 2019, the Company’s unpaid losses and loss adjustment expenses reserve liabilities net of reinsurance recoverables, net of allowance, (“reserves”) totaled $7.21 billion as disclosed in Note P to the consolidated financial statements. This liability represents management’s best estimate of the ultimate net cost of all unpaid losses and loss adjustment expenses and is determined by using case-basis evaluations, actuarial projections, and management’s judgment. Estimating the reserves is inherently judgmental and is influenced by factors that are subject to significant variation, particularly for lines of business that develop or are paid over a long period of time or that contain exposures with high potential severities, such as workers’ compensation, other liability, and asbestos and environmental.
Auditing management’s best estimate of reserves was complex because it required the involvement of our actuarial specialists due to the highly judgmental nature of the assumptions used in the evaluation process. The significant judgment was primarily due to the sensitivity of management’s best estimate to the selection and weighting of actuarial methods, loss development factors, expected loss ratios, and inflation. These assumptions have a significant effect on the valuation of reserves. |
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the process for estimating reserves. This included, among others, the review and approval processes that management has in place for the methods and assumptions used in estimating the reserves.
With the assistance of actuarial specialists, our audit procedures included, among others, an evaluation of the Company’s selection and weighting of actuarial methods used with those methods used in prior periods and those used in the industry for the specific types of insurance. To evaluate the significant assumptions used by management, we compared the significant assumptions, including loss development factors, expected loss ratios, and inflation, to factors historically used and current industry benchmarks. We also performed a review of the development of prior years’ reserve estimates. With the assistance of actuarial specialists, we established an independent range of reasonable reserve estimates, which we compared to management’s best estimate. |
|
|
Amortization of annuity deferred policy acquisition costs
|
Description of the Matter
|
|
At December 31, 2019, deferred policy acquisition costs totaled $1.04 billion, of which $696 million related to annuity contracts. As described in Notes A and G to the consolidated financial statements, the carrying amount of the annuity deferred policy acquisition costs is the total of costs deferred less amortization that is calculated in relation to the present value of estimated gross profits of the underlying annuity policies. There is a significant amount of uncertainty inherent in calculating estimated gross profits as the calculation is sensitive to management’s best estimate of assumptions, such as future investment yields, lapse rates, mortality, and morbidity. Management’s assumptions are adjusted, also known as unlocking, over time for emerging experience and expected trends. The unlocking results in amortization being recalculated, using the new assumptions for estimated gross profits, that results either in additional or less cumulative amortization expense.
Auditing management’s estimate of the amortization of annuity deferred policy acquisition costs was complex because it required the involvement of our actuarial specialists due to the highly judgmental nature of the assumptions used in management’s projection of estimated gross profits, which are used in the amortization of annuity deferred policy acquisition costs. The significant judgment was primarily due to the sensitivity of the estimated gross profits to the expected investment yield and lapse rate assumptions. |
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the process for estimating amortization of annuity deferred policy acquisition costs. This included, among others, controls over the review and approval processes that management has in place for the assumptions used in measuring estimated gross profits.
To test the amortization of deferred policy acquisition costs related to annuity contracts, our audit procedures included, among others, testing the completeness and accuracy of the data used to calculate the estimated gross profits through testing the reconciliation of the underlying data recorded in the source systems to the actuarial valuation models. With the assistance of our actuarial specialists, we evaluated the assumptions used by management in determining estimated gross profits with those used in prior periods. Also, with the assistance of our actuarial specialists, we compared significant assumptions, including expected investment yields and lapse rates, to prior actual experience and observable market data, and we evaluated management’s estimates of prospective changes in these assumptions. In addition, we performed an independent calculation of estimated and actual gross profits for a sample of product cohorts for comparison with the actuarial model used by management. |
|
|
Valuation of annuity contract embedded derivatives
|
Description of the Matter
|
|
At December 31, 2019, the liability for annuity benefits accumulated included $3.73 billion for the embedded derivatives related to the equity participation feature of the Company’s fixed-indexed annuity products. As described in Note F to the consolidated financial statements, there is a significant amount of estimation uncertainty inherent in measuring the fair value of the embedded derivatives as it includes management’s assumptions of various factors, such as future interest rates, expected stock market performance, budgeted option costs, lapses, and annuitizations. Management’s assumptions are adjusted for emerging experience and expected trends, resulting in changes to the estimated fair value of the embedded derivatives.
Auditing management’s estimate of the fair value of the embedded derivatives related to fixed-indexed annuity products was complex because it required the involvement of our actuarial specialists due to the highly judgmental nature of the assumptions used in the valuation process. The significant judgment was primarily due to the sensitivity of the budgeted option costs and lapse assumptions. |
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the process for estimating the embedded derivatives. This included, among others, the review and approval processes that management has in place for the methods and assumptions used in the valuation process of the embedded derivatives.
To test the embedded derivatives related to fixed-indexed annuity products, our procedures included, among others, testing the completeness and accuracy of data used in the valuation process through testing the reconciliation of the underlying data recorded in the source systems to the actuarial valuation models. With the assistance of our actuarial specialists, we evaluated the methods and assumptions used by management in determining the estimated fair value of the embedded derivatives. We compared the significant assumptions, including expected budget option costs and lapses, to prior actual experience and management’s estimates of prospective changes in these assumptions. In addition, we performed an independent calculation of the embedded derivatives for a sample of policies for comparison with the fair value calculated by the actuarial model used by management. |
|
|
|
|
|
|
/s/ ERNST & YOUNG LLP
|
|
|
We have served as the Company’s auditor since 1961.
|
|
|
Cincinnati, Ohio
|
|
|
February 25, 2020
|
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,314
|
|
|
$
|
1,515
|
|
Investments:
|
|
|
|
||||
Fixed maturities, available for sale at fair value (amortized cost — $44,524 and $41,837)
|
46,505
|
|
|
41,997
|
|
||
Fixed maturities, trading at fair value
|
113
|
|
|
105
|
|
||
Equity securities, at fair value
|
1,937
|
|
|
1,814
|
|
||
Investments accounted for using the equity method
|
1,688
|
|
|
1,374
|
|
||
Mortgage loans
|
1,329
|
|
|
1,068
|
|
||
Policy loans
|
164
|
|
|
174
|
|
||
Equity index call options
|
924
|
|
|
184
|
|
||
Real estate and other investments
|
278
|
|
|
267
|
|
||
Total cash and investments
|
55,252
|
|
|
48,498
|
|
||
Recoverables from reinsurers
|
3,415
|
|
|
3,349
|
|
||
Prepaid reinsurance premiums
|
678
|
|
|
610
|
|
||
Agents’ balances and premiums receivable
|
1,335
|
|
|
1,234
|
|
||
Deferred policy acquisition costs
|
1,037
|
|
|
1,682
|
|
||
Assets of managed investment entities
|
4,736
|
|
|
4,700
|
|
||
Other receivables
|
975
|
|
|
1,090
|
|
||
Variable annuity assets (separate accounts)
|
628
|
|
|
557
|
|
||
Other assets
|
1,867
|
|
|
1,529
|
|
||
Goodwill
|
207
|
|
|
207
|
|
||
Total assets
|
$
|
70,130
|
|
|
$
|
63,456
|
|
|
|
|
|
||||
Liabilities and Equity:
|
|
|
|
||||
Unpaid losses and loss adjustment expenses
|
$
|
10,232
|
|
|
$
|
9,741
|
|
Unearned premiums
|
2,830
|
|
|
2,595
|
|
||
Annuity benefits accumulated
|
40,406
|
|
|
36,616
|
|
||
Life, accident and health reserves
|
612
|
|
|
635
|
|
||
Payable to reinsurers
|
814
|
|
|
752
|
|
||
Liabilities of managed investment entities
|
4,571
|
|
|
4,512
|
|
||
Long-term debt
|
1,473
|
|
|
1,302
|
|
||
Variable annuity liabilities (separate accounts)
|
628
|
|
|
557
|
|
||
Other liabilities
|
2,295
|
|
|
1,774
|
|
||
Total liabilities
|
63,861
|
|
|
58,484
|
|
||
|
|
|
|
||||
Redeemable noncontrolling interests
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Common Stock, no par value
— 200,000,000 shares authorized
— 90,303,686 and 89,291,724 shares outstanding
|
90
|
|
|
89
|
|
||
Capital surplus
|
1,307
|
|
|
1,245
|
|
||
Retained earnings
|
4,009
|
|
|
3,588
|
|
||
Accumulated other comprehensive income, net of tax
|
863
|
|
|
48
|
|
||
Total shareholders’ equity
|
6,269
|
|
|
4,970
|
|
||
Noncontrolling interests
|
—
|
|
|
2
|
|
||
Total equity
|
6,269
|
|
|
4,972
|
|
||
Total liabilities and equity
|
$
|
70,130
|
|
|
$
|
63,456
|
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Property and casualty insurance net earned premiums
|
$
|
5,185
|
|
|
$
|
4,865
|
|
|
$
|
4,579
|
|
Life, accident and health net earned premiums
|
22
|
|
|
24
|
|
|
22
|
|
|||
Net investment income
|
2,303
|
|
|
2,094
|
|
|
1,831
|
|
|||
Realized gains (losses) on securities (*)
|
287
|
|
|
(266
|
)
|
|
5
|
|
|||
Income (loss) of managed investment entities:
|
|
|
|
|
|
||||||
Investment income
|
269
|
|
|
255
|
|
|
210
|
|
|||
Gain (loss) on change in fair value of assets/liabilities
|
(30
|
)
|
|
(21
|
)
|
|
12
|
|
|||
Other income
|
201
|
|
|
199
|
|
|
206
|
|
|||
Total revenues
|
8,237
|
|
|
7,150
|
|
|
6,865
|
|
|||
|
|
|
|
|
|
||||||
Costs and Expenses:
|
|
|
|
|
|
||||||
Property and casualty insurance:
|
|
|
|
|
|
||||||
Losses and loss adjustment expenses
|
3,271
|
|
|
3,003
|
|
|
2,955
|
|
|||
Commissions and other underwriting expenses
|
1,725
|
|
|
1,583
|
|
|
1,407
|
|
|||
Annuity benefits
|
1,151
|
|
|
998
|
|
|
892
|
|
|||
Life, accident and health benefits
|
36
|
|
|
40
|
|
|
26
|
|
|||
Annuity and supplemental insurance acquisition expenses
|
253
|
|
|
261
|
|
|
173
|
|
|||
Interest charges on borrowed money
|
68
|
|
|
62
|
|
|
85
|
|
|||
Expenses of managed investment entities
|
220
|
|
|
211
|
|
|
181
|
|
|||
Other expenses
|
405
|
|
|
353
|
|
|
422
|
|
|||
Total costs and expenses
|
7,129
|
|
|
6,511
|
|
|
6,141
|
|
|||
Earnings before income taxes
|
1,108
|
|
|
639
|
|
|
724
|
|
|||
Provision for income taxes
|
239
|
|
|
122
|
|
|
247
|
|
|||
Net earnings, including noncontrolling interests
|
869
|
|
|
517
|
|
|
477
|
|
|||
Less: Net earnings (losses) attributable to noncontrolling interests
|
(28
|
)
|
|
(13
|
)
|
|
2
|
|
|||
Net Earnings Attributable to Shareholders
|
$
|
897
|
|
|
$
|
530
|
|
|
$
|
475
|
|
|
|
|
|
|
|
||||||
Earnings Attributable to Shareholders per Common Share:
|
|
|
|
|
|
||||||
Basic
|
$
|
9.98
|
|
|
$
|
5.95
|
|
|
$
|
5.40
|
|
Diluted
|
$
|
9.85
|
|
|
$
|
5.85
|
|
|
$
|
5.28
|
|
Average number of Common Shares:
|
|
|
|
|
|
||||||
Basic
|
89.9
|
|
|
89.0
|
|
|
87.8
|
|
|||
Diluted
|
91.0
|
|
|
90.6
|
|
|
89.8
|
|
|||
________________________________________
|
|
|
|
|
|
||||||
(*) Consists of the following:
|
|
|
|
|
|
||||||
Realized gains (losses) before impairments
|
$
|
306
|
|
|
$
|
(247
|
)
|
|
$
|
78
|
|
|
|
|
|
|
|
||||||
Losses on securities with impairment
|
(19
|
)
|
|
(19
|
)
|
|
(74
|
)
|
|||
Non-credit portion recognized in other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
1
|
|
|||
Impairment charges recognized in earnings
|
(19
|
)
|
|
(19
|
)
|
|
(73
|
)
|
|||
Total realized gains (losses) on securities
|
$
|
287
|
|
|
$
|
(266
|
)
|
|
$
|
5
|
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net earnings, including noncontrolling interests
|
$
|
869
|
|
|
$
|
517
|
|
|
$
|
477
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Net unrealized gains (losses) on securities:
|
|
|
|
|
|
||||||
Unrealized holding gains (losses) on securities arising during the period
|
788
|
|
|
(544
|
)
|
|
297
|
|
|||
Reclassification adjustment for realized (gains) losses included in net earnings
|
(9
|
)
|
|
8
|
|
|
(10
|
)
|
|||
Total net unrealized gains (losses) on securities
|
779
|
|
|
(536
|
)
|
|
287
|
|
|||
Net unrealized gains (losses) on cash flow hedges
|
28
|
|
|
2
|
|
|
(4
|
)
|
|||
Foreign currency translation adjustments
|
7
|
|
|
(10
|
)
|
|
12
|
|
|||
Pension and other postretirement plans adjustments
|
1
|
|
|
—
|
|
|
1
|
|
|||
Other comprehensive income (loss), net of tax
|
815
|
|
|
(544
|
)
|
|
296
|
|
|||
Total comprehensive income (loss), net of tax
|
1,684
|
|
|
(27
|
)
|
|
773
|
|
|||
Less: Comprehensive income (loss) attributable to noncontrolling interests
|
(28
|
)
|
|
(13
|
)
|
|
2
|
|
|||
Comprehensive income (loss) attributable to shareholders
|
$
|
1,712
|
|
|
$
|
(14
|
)
|
|
$
|
771
|
|
|
|
|
|
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, 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 ($4.7875 per share)
|
—
|
|
|
|
—
|
|
|
(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
|
|
Cumulative effect of accounting change
|
—
|
|
|
|
—
|
|
|
225
|
|
|
(221
|
)
|
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|||||||
Net earnings (losses)
|
—
|
|
|
|
—
|
|
|
530
|
|
|
—
|
|
|
530
|
|
|
1
|
|
|
531
|
|
|
(14
|
)
|
|||||||
Other comprehensive loss
|
—
|
|
|
|
—
|
|
|
—
|
|
|
(544
|
)
|
|
(544
|
)
|
|
—
|
|
|
(544
|
)
|
|
—
|
|
|||||||
Dividends ($4.45 per share)
|
—
|
|
|
|
—
|
|
|
(397
|
)
|
|
—
|
|
|
(397
|
)
|
|
—
|
|
|
(397
|
)
|
|
—
|
|
|||||||
Shares issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Exercise of stock options
|
778,270
|
|
|
|
29
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|||||||
Restricted stock awards
|
200,625
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other benefit plans
|
103,797
|
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|||||||
Dividend reinvestment plan
|
29,998
|
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|||||||
Shares acquired and retired
|
(65,589
|
)
|
|
|
(1
|
)
|
|
(5
|
)
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|||||||
Shares exchanged — benefit plans
|
(26,520
|
)
|
|
|
(1
|
)
|
|
(2
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|||||||
Forfeitures of restricted stock
|
(4,317
|
)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other
|
—
|
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
|
11
|
|
|||||||
Balance at December 31, 2018
|
89,291,724
|
|
|
|
$
|
1,334
|
|
|
$
|
3,588
|
|
|
$
|
48
|
|
|
$
|
4,970
|
|
|
$
|
2
|
|
|
$
|
4,972
|
|
|
$
|
—
|
|
Net earnings (losses)
|
—
|
|
|
|
—
|
|
|
897
|
|
|
—
|
|
|
897
|
|
|
(2
|
)
|
|
895
|
|
|
(26
|
)
|
|||||||
Other comprehensive income
|
—
|
|
|
|
—
|
|
|
—
|
|
|
815
|
|
|
815
|
|
|
—
|
|
|
815
|
|
|
—
|
|
|||||||
Dividends ($4.95 per share)
|
—
|
|
|
|
—
|
|
|
(446
|
)
|
|
—
|
|
|
(446
|
)
|
|
—
|
|
|
(446
|
)
|
|
—
|
|
|||||||
Shares issued:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Exercise of stock options
|
747,167
|
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|||||||
Restricted stock awards
|
232,635
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other benefit plans
|
77,429
|
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|||||||
Dividend reinvestment plan
|
19,334
|
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|||||||
Shares exchanged — benefit plans
|
(50,062
|
)
|
|
|
(1
|
)
|
|
(4
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|||||||
Forfeitures of restricted stock
|
(14,541
|
)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other
|
—
|
|
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
(26
|
)
|
|
26
|
|
|||||||
Balance at December 31, 2019
|
90,303,686
|
|
|
|
$
|
1,397
|
|
|
$
|
4,009
|
|
|
$
|
863
|
|
|
$
|
6,269
|
|
|
$
|
—
|
|
|
$
|
6,269
|
|
|
$
|
—
|
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating Activities:
|
|
|
|
|
|
||||||
Net earnings, including noncontrolling interests
|
$
|
869
|
|
|
$
|
517
|
|
|
$
|
477
|
|
Adjustments:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
259
|
|
|
210
|
|
|
107
|
|
|||
Annuity benefits
|
1,151
|
|
|
998
|
|
|
892
|
|
|||
Realized (gains) losses on investing activities
|
(288
|
)
|
|
265
|
|
|
(23
|
)
|
|||
Net (purchases) sales of trading securities
|
(5
|
)
|
|
111
|
|
|
17
|
|
|||
Deferred annuity and life policy acquisition costs
|
(206
|
)
|
|
(263
|
)
|
|
(225
|
)
|
|||
Change in:
|
|
|
|
|
|
||||||
Reinsurance and other receivables
|
(112
|
)
|
|
(211
|
)
|
|
(963
|
)
|
|||
Other assets
|
(406
|
)
|
|
96
|
|
|
13
|
|
|||
Insurance claims and reserves
|
703
|
|
|
425
|
|
|
1,321
|
|
|||
Payable to reinsurers
|
62
|
|
|
9
|
|
|
109
|
|
|||
Other liabilities
|
516
|
|
|
(140
|
)
|
|
(18
|
)
|
|||
Managed investment entities’ assets/liabilities
|
23
|
|
|
148
|
|
|
60
|
|
|||
Other operating activities, net
|
(110
|
)
|
|
(82
|
)
|
|
37
|
|
|||
Net cash provided by operating activities
|
2,456
|
|
|
2,083
|
|
|
1,804
|
|
|||
|
|
|
|
|
|
||||||
Investing Activities:
|
|
|
|
|
|
||||||
Purchases of:
|
|
|
|
|
|
||||||
Fixed maturities
|
(8,260
|
)
|
|
(10,183
|
)
|
|
(9,485
|
)
|
|||
Equity securities
|
(242
|
)
|
|
(568
|
)
|
|
(182
|
)
|
|||
Mortgage loans
|
(442
|
)
|
|
(167
|
)
|
|
(254
|
)
|
|||
Equity index options and other investments
|
(991
|
)
|
|
(973
|
)
|
|
(831
|
)
|
|||
Real estate, property and equipment
|
(44
|
)
|
|
(80
|
)
|
|
(109
|
)
|
|||
Businesses
|
—
|
|
|
(36
|
)
|
|
—
|
|
|||
Proceeds from:
|
|
|
|
|
|
||||||
Maturities and redemptions of fixed maturities
|
4,567
|
|
|
4,948
|
|
|
6,105
|
|
|||
Repayments of mortgage loans
|
184
|
|
|
201
|
|
|
215
|
|
|||
Sales of fixed maturities
|
927
|
|
|
501
|
|
|
392
|
|
|||
Sales of equity securities
|
453
|
|
|
247
|
|
|
216
|
|
|||
Sales and settlements of equity index options and other investments
|
771
|
|
|
883
|
|
|
789
|
|
|||
Sales of real estate, property and equipment
|
4
|
|
|
3
|
|
|
55
|
|
|||
Cash and cash equivalents of businesses acquired
|
—
|
|
|
13
|
|
|
—
|
|
|||
Managed investment entities:
|
|
|
|
|
|
||||||
Purchases of investments
|
(1,398
|
)
|
|
(2,117
|
)
|
|
(2,979
|
)
|
|||
Proceeds from sales and redemptions of investments
|
1,409
|
|
|
1,948
|
|
|
2,774
|
|
|||
Other investing activities, net
|
(3
|
)
|
|
30
|
|
|
2
|
|
|||
Net cash used in investing activities
|
(3,065
|
)
|
|
(5,350
|
)
|
|
(3,292
|
)
|
|||
|
|
|
|
|
|
||||||
Financing Activities:
|
|
|
|
|
|
||||||
Annuity receipts
|
4,960
|
|
|
5,632
|
|
|
4,341
|
|
|||
Annuity surrenders, benefits and withdrawals
|
(3,358
|
)
|
|
(2,916
|
)
|
|
(2,405
|
)
|
|||
Net transfers from variable annuity assets
|
60
|
|
|
47
|
|
|
54
|
|
|||
Additional long-term borrowings
|
315
|
|
|
—
|
|
|
712
|
|
|||
Reductions of long-term debt
|
(150
|
)
|
|
—
|
|
|
(745
|
)
|
|||
Issuances of managed investment entities’ liabilities
|
371
|
|
|
1,983
|
|
|
2,731
|
|
|||
Retirements of managed investment entities’ liabilities
|
(382
|
)
|
|
(1,935
|
)
|
|
(2,585
|
)
|
|||
Issuances of Common Stock
|
36
|
|
|
33
|
|
|
37
|
|
|||
Repurchases of Common Stock
|
—
|
|
|
(6
|
)
|
|
—
|
|
|||
Cash dividends paid on Common Stock
|
(444
|
)
|
|
(394
|
)
|
|
(417
|
)
|
|||
Other financing activities, net
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||
Net cash provided by financing activities
|
1,408
|
|
|
2,444
|
|
|
1,719
|
|
|||
Net Change in Cash and Cash Equivalents
|
799
|
|
|
(823
|
)
|
|
231
|
|
|||
Cash and cash equivalents at beginning of year
|
1,515
|
|
|
2,338
|
|
|
2,107
|
|
|||
Cash and cash equivalents at end of year
|
$
|
2,314
|
|
|
$
|
1,515
|
|
|
$
|
2,338
|
|
INDEX TO NOTES
|
|||||
|
|
|
|
|
|
A.
|
Accounting Policies
|
|
J.
|
Long-Term Debt
|
|
B.
|
Acquisitions and Sale of Businesses
|
|
K.
|
Leases
|
|
C.
|
Segments of Operations
|
|
L.
|
Shareholders’ Equity
|
|
D.
|
Fair Value Measurements
|
|
M.
|
Income Taxes
|
|
E.
|
Investments
|
|
N.
|
Contingencies
|
|
F.
|
Derivatives
|
|
O.
|
Quarterly Operating Results (Unaudited)
|
|
G.
|
Deferred Policy Acquisition Costs
|
|
P.
|
Insurance
|
|
H.
|
Managed Investment Entities
|
|
Q.
|
Additional Information
|
|
I.
|
Goodwill and Other Intangibles
|
|
|
|
|
•
|
exclude leases with a term of 12 months or less from the calculation of lease assets and liabilities,
|
•
|
not separate lease and non-lease components except for buildings (office space and storage facilities),
|
•
|
for contracts existing at the date of adoption – not reassess whether a contract is a lease or contains a lease, how initial direct costs were accounted for or whether the lease is an operating or finance lease, and
|
•
|
use hindsight to determine the lease term for leases existing at the date of adoption.
|
|
November 30,
2018 |
||
Total purchase price
|
$
|
30
|
|
|
|
||
Tangible assets acquired
|
28
|
|
|
Liabilities acquired
|
26
|
|
|
Net tangible assets acquired, at fair value
|
2
|
|
|
Excess purchase price over net tangible assets acquired
|
$
|
28
|
|
|
|
||
Allocation of excess purchase price:
|
|
||
Intangible assets acquired (*)
|
$
|
25
|
|
Deferred tax on intangible assets acquired (*)
|
(5
|
)
|
|
Goodwill
|
8
|
|
|
|
$
|
28
|
|
(*)
|
Included in Other assets in AFG’s Balance Sheet.
|
|
2019
|
|
2018
|
|
2017
|
||||||
Assets
|
|
|
|
|
|
||||||
Property and casualty insurance (a)
|
$
|
19,098
|
|
|
$
|
17,681
|
|
|
$
|
17,171
|
|
Annuity
|
45,074
|
|
|
39,952
|
|
|
37,179
|
|
|||
Other
|
5,958
|
|
|
5,823
|
|
|
6,308
|
|
|||
Total assets
|
$
|
70,130
|
|
|
$
|
63,456
|
|
|
$
|
60,658
|
|
Revenues
|
|
|
|
|
|
||||||
Property and casualty insurance:
|
|
|
|
|
|
||||||
Premiums earned:
|
|
|
|
|
|
||||||
Specialty
|
|
|
|
|
|
||||||
Property and transportation
|
$
|
1,828
|
|
|
$
|
1,729
|
|
|
$
|
1,711
|
|
Specialty casualty
|
2,597
|
|
|
2,403
|
|
|
2,186
|
|
|||
Specialty financial
|
610
|
|
|
598
|
|
|
576
|
|
|||
Other specialty
|
150
|
|
|
135
|
|
|
106
|
|
|||
Total premiums earned
|
5,185
|
|
|
4,865
|
|
|
4,579
|
|
|||
Net investment income
|
472
|
|
|
438
|
|
|
362
|
|
|||
Other income
|
11
|
|
|
10
|
|
|
28
|
|
|||
Total property and casualty insurance
|
5,668
|
|
|
5,313
|
|
|
4,969
|
|
|||
Annuity:
|
|
|
|
|
|
||||||
Net investment income
|
1,792
|
|
|
1,638
|
|
|
1,458
|
|
|||
Other income
|
108
|
|
|
107
|
|
|
103
|
|
|||
Total annuity
|
1,900
|
|
|
1,745
|
|
|
1,561
|
|
|||
Other
|
382
|
|
|
358
|
|
|
330
|
|
|||
Total revenues before realized gains (losses)
|
7,950
|
|
|
7,416
|
|
|
6,860
|
|
|||
Realized gains (losses) on securities
|
287
|
|
|
(266
|
)
|
|
5
|
|
|||
Total revenues
|
$
|
8,237
|
|
|
$
|
7,150
|
|
|
$
|
6,865
|
|
(a)
|
Not allocable to sub-segments.
|
|
2019
|
|
2018
|
|
2017
|
||||||
Earnings Before Income Taxes
|
|
|
|
|
|
||||||
Property and casualty insurance:
|
|
|
|
|
|
||||||
Underwriting:
|
|
|
|
|
|
||||||
Specialty
|
|
|
|
|
|
||||||
Property and transportation
|
$
|
79
|
|
|
$
|
120
|
|
|
$
|
154
|
|
Specialty casualty
|
175
|
|
|
141
|
|
|
104
|
|
|||
Specialty financial
|
92
|
|
|
66
|
|
|
61
|
|
|||
Other specialty
|
(21
|
)
|
|
(5
|
)
|
|
(2
|
)
|
|||
Other lines (a)
|
(113
|
)
|
|
(20
|
)
|
|
(75
|
)
|
|||
Total underwriting
|
212
|
|
|
302
|
|
|
242
|
|
|||
Investment and other income, net
|
437
|
|
|
407
|
|
|
349
|
|
|||
Total property and casualty insurance
|
649
|
|
|
709
|
|
|
591
|
|
|||
Annuity
|
362
|
|
|
361
|
|
|
380
|
|
|||
Other (b)
|
(190
|
)
|
|
(165
|
)
|
|
(252
|
)
|
|||
Total earnings before realized gains (losses) and income taxes
|
821
|
|
|
905
|
|
|
719
|
|
|||
Realized gains (losses) on securities
|
287
|
|
|
(266
|
)
|
|
5
|
|
|||
Total earnings before income taxes
|
$
|
1,108
|
|
|
$
|
639
|
|
|
$
|
724
|
|
(a)
|
Includes special charges to increase asbestos and environmental (“A&E”) reserves of $18 million in both 2019 and 2018 and $89 million in 2017, respectively. Also includes a $76 million charge in 2019 and $18 million in favorable development recorded in 2017 related to the Neon exited lines.
|
(b)
|
Primarily holding company interest and expenses, including losses on retirement of debt of $5 million in 2019 and $51 million in 2017 and special charges to increase A&E reserves related to AFG’s former railroad and manufacturing operations ($11 million in 2019, $9 million in 2018 and $24 million in 2017).
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Available for sale (“AFS”) fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. Government and government agencies
|
$
|
151
|
|
|
$
|
43
|
|
|
$
|
15
|
|
|
$
|
209
|
|
States, municipalities and political subdivisions
|
—
|
|
|
6,858
|
|
|
105
|
|
|
6,963
|
|
||||
Foreign government
|
—
|
|
|
172
|
|
|
—
|
|
|
172
|
|
||||
Residential MBS
|
—
|
|
|
2,987
|
|
|
173
|
|
|
3,160
|
|
||||
Commercial MBS
|
—
|
|
|
892
|
|
|
35
|
|
|
927
|
|
||||
Collateralized loan obligations
|
—
|
|
|
4,265
|
|
|
15
|
|
|
4,280
|
|
||||
Other asset-backed securities
|
—
|
|
|
5,842
|
|
|
1,286
|
|
|
7,128
|
|
||||
Corporate and other
|
29
|
|
|
21,879
|
|
|
1,758
|
|
|
23,666
|
|
||||
Total AFS fixed maturities
|
180
|
|
|
42,938
|
|
|
3,387
|
|
|
46,505
|
|
||||
Trading fixed maturities
|
2
|
|
|
111
|
|
|
—
|
|
|
113
|
|
||||
Equity securities
|
1,433
|
|
|
67
|
|
|
437
|
|
|
1,937
|
|
||||
Equity index call options
|
—
|
|
|
924
|
|
|
—
|
|
|
924
|
|
||||
Assets of managed investment entities (“MIE”)
|
213
|
|
|
4,506
|
|
|
17
|
|
|
4,736
|
|
||||
Variable annuity assets (separate accounts) (*)
|
—
|
|
|
628
|
|
|
—
|
|
|
628
|
|
||||
Other assets — derivatives
|
—
|
|
|
50
|
|
|
—
|
|
|
50
|
|
||||
Total assets accounted for at fair value
|
$
|
1,828
|
|
|
$
|
49,224
|
|
|
$
|
3,841
|
|
|
$
|
54,893
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Liabilities of managed investment entities
|
$
|
206
|
|
|
$
|
4,349
|
|
|
$
|
16
|
|
|
$
|
4,571
|
|
Derivatives in annuity benefits accumulated
|
—
|
|
|
—
|
|
|
3,730
|
|
|
3,730
|
|
||||
Other liabilities — derivatives
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
||||
Total liabilities accounted for at fair value
|
$
|
206
|
|
|
$
|
4,359
|
|
|
$
|
3,746
|
|
|
$
|
8,311
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Available for sale fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. Government and government agencies
|
$
|
141
|
|
|
$
|
83
|
|
|
$
|
9
|
|
|
$
|
233
|
|
States, municipalities and political subdivisions
|
—
|
|
|
6,880
|
|
|
59
|
|
|
6,939
|
|
||||
Foreign government
|
—
|
|
|
142
|
|
|
—
|
|
|
142
|
|
||||
Residential MBS
|
—
|
|
|
2,547
|
|
|
197
|
|
|
2,744
|
|
||||
Commercial MBS
|
—
|
|
|
864
|
|
|
56
|
|
|
920
|
|
||||
Collateralized loan obligations
|
—
|
|
|
4,162
|
|
|
116
|
|
|
4,278
|
|
||||
Other asset-backed securities
|
—
|
|
|
4,802
|
|
|
731
|
|
|
5,533
|
|
||||
Corporate and other
|
28
|
|
|
19,184
|
|
|
1,996
|
|
|
21,208
|
|
||||
Total AFS fixed maturities
|
169
|
|
|
38,664
|
|
|
3,164
|
|
|
41,997
|
|
||||
Trading fixed maturities
|
9
|
|
|
96
|
|
|
—
|
|
|
105
|
|
||||
Equity securities
|
1,410
|
|
|
68
|
|
|
336
|
|
|
1,814
|
|
||||
Equity index call options
|
—
|
|
|
184
|
|
|
—
|
|
|
184
|
|
||||
Assets of managed investment entities
|
203
|
|
|
4,476
|
|
|
21
|
|
|
4,700
|
|
||||
Variable annuity assets (separate accounts) (*)
|
—
|
|
|
557
|
|
|
—
|
|
|
557
|
|
||||
Other assets — derivatives
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
||||
Total assets accounted for at fair value
|
$
|
1,791
|
|
|
$
|
44,061
|
|
|
$
|
3,521
|
|
|
$
|
49,373
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Liabilities of managed investment entities
|
$
|
195
|
|
|
$
|
4,297
|
|
|
$
|
20
|
|
|
$
|
4,512
|
|
Derivatives in annuity benefits accumulated
|
—
|
|
|
—
|
|
|
2,720
|
|
|
2,720
|
|
||||
Other liabilities — derivatives
|
—
|
|
|
49
|
|
|
—
|
|
|
49
|
|
||||
Total liabilities accounted for at fair value
|
$
|
195
|
|
|
$
|
4,346
|
|
|
$
|
2,740
|
|
|
$
|
7,281
|
|
|
Level 2 To Level 1 Transfers
|
|
Level 1 To Level 2 Transfers
|
||||||||||||||||||||||||||||||||||||||
|
# of Transfers
|
|
Fair Value
|
|
# of Transfers
|
|
Fair Value
|
||||||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
Perpetual preferred stocks
|
2
|
|
|
2
|
|
|
4
|
|
|
$
|
11
|
|
|
$
|
5
|
|
|
$
|
23
|
|
|
1
|
|
|
2
|
|
|
2
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
11
|
|
Common stocks
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Unobservable Input
|
|
Range
|
|
|
Adjustment for insurance subsidiary’s credit risk
|
|
0.2% – 2.4% over the risk-free rate
|
|
|
Risk margin for uncertainty in cash flows
|
|
0.80% reduction in the discount rate
|
|
|
Surrenders
|
|
3% – 22% of indexed account value
|
|
|
Partial surrenders
|
|
2% – 9% of indexed account value
|
|
|
Annuitizations
|
|
0.1% – 1% of indexed account value
|
|
|
Deaths
|
|
1.5% – 10.6% of indexed account value
|
|
|
Budgeted option costs
|
|
2.5% – 3.3% of indexed account value
|
|
|
|
|
Total realized/unrealized
gains (losses) included in
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2018
|
|
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, 2019
|
|||||||||||||||||
AFS fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. government agency
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15
|
|
State and municipal
|
59
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
(3
|
)
|
|
55
|
|
|
(11
|
)
|
|
105
|
|
||||||||
Residential MBS
|
197
|
|
|
6
|
|
|
(3
|
)
|
|
—
|
|
|
(20
|
)
|
|
48
|
|
|
(55
|
)
|
|
173
|
|
||||||||
Commercial MBS
|
56
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
4
|
|
|
(15
|
)
|
|
35
|
|
||||||||
Collateralized loan obligations
|
116
|
|
|
(5
|
)
|
|
5
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
(129
|
)
|
|
15
|
|
||||||||
Other asset-backed securities
|
731
|
|
|
—
|
|
|
6
|
|
|
787
|
|
|
(192
|
)
|
|
23
|
|
|
(69
|
)
|
|
1,286
|
|
||||||||
Corporate and other
|
1,996
|
|
|
(3
|
)
|
|
55
|
|
|
738
|
|
|
(335
|
)
|
|
30
|
|
|
(723
|
)
|
|
1,758
|
|
||||||||
Total AFS fixed maturities
|
3,164
|
|
|
—
|
|
|
75
|
|
|
1,525
|
|
|
(563
|
)
|
|
188
|
|
|
(1,002
|
)
|
|
3,387
|
|
||||||||
Equity securities
|
336
|
|
|
(5
|
)
|
|
—
|
|
|
52
|
|
|
(2
|
)
|
|
56
|
|
|
—
|
|
|
437
|
|
||||||||
Assets of MIE
|
21
|
|
|
(5
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||||||
Total Level 3 assets
|
$
|
3,521
|
|
|
$
|
(10
|
)
|
|
$
|
75
|
|
|
$
|
1,578
|
|
|
$
|
(565
|
)
|
|
$
|
244
|
|
|
$
|
(1,002
|
)
|
|
$
|
3,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Embedded derivatives (a)
|
$
|
(2,720
|
)
|
|
$
|
(919
|
)
|
|
$
|
—
|
|
|
$
|
(333
|
)
|
|
$
|
242
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3,730
|
)
|
Total Level 3 liabilities (b)
|
$
|
(2,720
|
)
|
|
$
|
(919
|
)
|
|
$
|
—
|
|
|
$
|
(333
|
)
|
|
$
|
242
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3,730
|
)
|
(a)
|
Total realized/unrealized gains (losses) included in net earnings for the embedded derivatives includes a favorable adjustment related to the unlocking of actuarial assumptions of $181 million in 2019.
|
(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, 2017
|
|
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, 2018
|
|||||||||||||||||
AFS fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. government agency
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
9
|
|
State and municipal
|
148
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(84
|
)
|
|
59
|
|
||||||||
Residential MBS
|
122
|
|
|
(9
|
)
|
|
(4
|
)
|
|
—
|
|
|
(21
|
)
|
|
130
|
|
|
(21
|
)
|
|
197
|
|
||||||||
Commercial MBS
|
36
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56
|
|
||||||||
Collateralized loan obligations
|
200
|
|
|
(3
|
)
|
|
(13
|
)
|
|
35
|
|
|
(20
|
)
|
|
3
|
|
|
(86
|
)
|
|
116
|
|
||||||||
Other asset-backed securities
|
544
|
|
|
—
|
|
|
(2
|
)
|
|
391
|
|
|
(228
|
)
|
|
79
|
|
|
(53
|
)
|
|
731
|
|
||||||||
Corporate and other
|
1,044
|
|
|
(10
|
)
|
|
(18
|
)
|
|
1,221
|
|
|
(204
|
)
|
|
27
|
|
|
(64
|
)
|
|
1,996
|
|
||||||||
Total AFS fixed maturities
|
2,102
|
|
|
(22
|
)
|
|
(39
|
)
|
|
1,667
|
|
|
(476
|
)
|
|
240
|
|
|
(308
|
)
|
|
3,164
|
|
||||||||
Equity securities
|
165
|
|
|
9
|
|
|
—
|
|
|
155
|
|
|
(6
|
)
|
|
30
|
|
|
(17
|
)
|
|
336
|
|
||||||||
Assets of MIE
|
23
|
|
|
(8
|
)
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||||||
Total Level 3 assets
|
$
|
2,290
|
|
|
$
|
(21
|
)
|
|
$
|
(39
|
)
|
|
$
|
1,828
|
|
|
$
|
(482
|
)
|
|
$
|
270
|
|
|
$
|
(325
|
)
|
|
$
|
3,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Embedded derivatives (a)
|
$
|
(2,542
|
)
|
|
$
|
204
|
|
|
$
|
—
|
|
|
$
|
(545
|
)
|
|
$
|
163
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2,720
|
)
|
Total Level 3 liabilities (b)
|
$
|
(2,542
|
)
|
|
$
|
204
|
|
|
$
|
—
|
|
|
$
|
(545
|
)
|
|
$
|
163
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2,720
|
)
|
(a)
|
Total realized/unrealized gains (losses) included in net earnings for the embedded derivatives includes losses related to the unlocking of actuarial assumptions of $44 million in 2018.
|
(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, 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
|
|
||||||||
Collateralized loan obligations
|
174
|
|
|
(1
|
)
|
|
(1
|
)
|
|
55
|
|
|
(27
|
)
|
|
—
|
|
|
—
|
|
|
200
|
|
||||||||
Other asset-backed securities
|
310
|
|
|
1
|
|
|
2
|
|
|
355
|
|
|
(105
|
)
|
|
202
|
|
|
(221
|
)
|
|
544
|
|
||||||||
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 includes 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.
|
|
Carrying
|
|
Fair Value
|
||||||||||||||||
|
Value
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
2,314
|
|
|
$
|
2,314
|
|
|
$
|
2,314
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mortgage loans
|
1,329
|
|
|
1,346
|
|
|
—
|
|
|
—
|
|
|
1,346
|
|
|||||
Policy loans
|
164
|
|
|
164
|
|
|
—
|
|
|
—
|
|
|
164
|
|
|||||
Total financial assets not accounted for at fair value
|
$
|
3,807
|
|
|
$
|
3,824
|
|
|
$
|
2,314
|
|
|
$
|
—
|
|
|
$
|
1,510
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Annuity benefits accumulated (*)
|
$
|
40,159
|
|
|
$
|
40,182
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
40,182
|
|
Long-term debt
|
1,473
|
|
|
1,622
|
|
|
—
|
|
|
1,619
|
|
|
3
|
|
|||||
Total financial liabilities not accounted for at fair value
|
$
|
41,632
|
|
|
$
|
41,804
|
|
|
$
|
—
|
|
|
$
|
1,619
|
|
|
$
|
40,185
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
1,515
|
|
|
$
|
1,515
|
|
|
$
|
1,515
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mortgage loans
|
1,068
|
|
|
1,056
|
|
|
—
|
|
|
—
|
|
|
1,056
|
|
|||||
Policy loans
|
174
|
|
|
174
|
|
|
—
|
|
|
—
|
|
|
174
|
|
|||||
Total financial assets not accounted for at fair value
|
$
|
2,757
|
|
|
$
|
2,745
|
|
|
$
|
1,515
|
|
|
$
|
—
|
|
|
$
|
1,230
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Annuity benefits accumulated (*)
|
$
|
36,384
|
|
|
$
|
34,765
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34,765
|
|
Long-term debt
|
1,302
|
|
|
1,231
|
|
|
—
|
|
|
1,228
|
|
|
3
|
|
|||||
Total financial liabilities not accounted for at fair value
|
$
|
37,686
|
|
|
$
|
35,996
|
|
|
$
|
—
|
|
|
$
|
1,228
|
|
|
$
|
34,768
|
|
(*)
|
Excludes $247 million and $232 million of life contingent annuities in the payout phase at December 31, 2019 and 2018, respectively.
|
|
2019
|
|
2018
|
||||||||||||||||||||||||||||||||||||
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
|
$
|
199
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
209
|
|
|
$
|
235
|
|
|
$
|
1
|
|
|
$
|
(3
|
)
|
|
$
|
(2
|
)
|
|
$
|
233
|
|
States municipalities and political subdivisions
|
6,604
|
|
|
363
|
|
|
(4
|
)
|
|
359
|
|
|
6,963
|
|
|
6,825
|
|
|
169
|
|
|
(55
|
)
|
|
114
|
|
|
6,939
|
|
||||||||||
Foreign government
|
170
|
|
|
3
|
|
|
(1
|
)
|
|
2
|
|
|
172
|
|
|
140
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
142
|
|
||||||||||
Residential MBS
|
2,900
|
|
|
265
|
|
|
(5
|
)
|
|
260
|
|
|
3,160
|
|
|
2,476
|
|
|
277
|
|
|
(9
|
)
|
|
268
|
|
|
2,744
|
|
||||||||||
Commercial MBS
|
896
|
|
|
31
|
|
|
—
|
|
|
31
|
|
|
927
|
|
|
905
|
|
|
17
|
|
|
(2
|
)
|
|
15
|
|
|
920
|
|
||||||||||
Collateralized loan obligations
|
4,307
|
|
|
10
|
|
|
(37
|
)
|
|
(27
|
)
|
|
4,280
|
|
|
4,350
|
|
|
1
|
|
|
(73
|
)
|
|
(72
|
)
|
|
4,278
|
|
||||||||||
Other asset-backed securities
|
6,992
|
|
|
156
|
|
|
(20
|
)
|
|
136
|
|
|
7,128
|
|
|
5,431
|
|
|
129
|
|
|
(27
|
)
|
|
102
|
|
|
5,533
|
|
||||||||||
Corporate and other
|
22,456
|
|
|
1,231
|
|
|
(21
|
)
|
|
1,210
|
|
|
23,666
|
|
|
21,475
|
|
|
167
|
|
|
(434
|
)
|
|
(267
|
)
|
|
21,208
|
|
||||||||||
Total fixed maturities
|
$
|
44,524
|
|
|
$
|
2,069
|
|
|
$
|
(88
|
)
|
|
$
|
1,981
|
|
|
$
|
46,505
|
|
|
$
|
41,837
|
|
|
$
|
763
|
|
|
$
|
(603
|
)
|
|
$
|
160
|
|
|
$
|
41,997
|
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
|
|
|
|
Fair Value
|
|
|
|
|
|
Fair Value
|
||||||||||||
|
Actual
|
|
|
|
over (under)
|
|
Actual
|
|
|
|
over (under)
|
||||||||||||
|
Cost
|
|
Fair Value
|
|
Cost
|
|
Cost
|
|
Fair Value
|
|
Cost
|
||||||||||||
Common stocks
|
$
|
1,164
|
|
|
$
|
1,283
|
|
|
$
|
119
|
|
|
$
|
1,241
|
|
|
$
|
1,148
|
|
|
$
|
(93
|
)
|
Perpetual preferred stocks
|
640
|
|
|
654
|
|
|
14
|
|
|
705
|
|
|
666
|
|
|
(39
|
)
|
||||||
Total equity securities carried at fair value
|
$
|
1,804
|
|
|
$
|
1,937
|
|
|
$
|
133
|
|
|
$
|
1,946
|
|
|
$
|
1,814
|
|
|
$
|
(132
|
)
|
|
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
|
||||||||||||
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
U.S. Government and government agencies
|
$
|
—
|
|
|
$
|
16
|
|
|
100
|
%
|
|
$
|
—
|
|
|
$
|
11
|
|
|
100
|
%
|
|
States, municipalities and political subdivisions
|
(3
|
)
|
|
254
|
|
|
99
|
%
|
|
(1
|
)
|
|
82
|
|
|
99
|
%
|
|||||
Foreign government
|
(1
|
)
|
|
70
|
|
|
99
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|||||
Residential MBS
|
(4
|
)
|
|
509
|
|
|
99
|
%
|
|
(1
|
)
|
|
69
|
|
|
99
|
%
|
|||||
Commercial MBS
|
—
|
|
|
17
|
|
|
100
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|||||
Collateralized loan obligations
|
(11
|
)
|
|
1,284
|
|
|
99
|
%
|
|
(26
|
)
|
|
1,728
|
|
|
99
|
%
|
|||||
Other asset-backed securities
|
(12
|
)
|
|
1,211
|
|
|
99
|
%
|
|
(8
|
)
|
|
123
|
|
|
94
|
%
|
|||||
Corporate and other
|
(13
|
)
|
|
1,100
|
|
|
99
|
%
|
|
(8
|
)
|
|
211
|
|
|
96
|
%
|
|||||
Total fixed maturities
|
$
|
(44
|
)
|
|
$
|
4,461
|
|
|
99
|
%
|
|
$
|
(44
|
)
|
|
$
|
2,224
|
|
|
98
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
U.S. Government and government agencies
|
$
|
—
|
|
|
$
|
41
|
|
|
100
|
%
|
|
$
|
(3
|
)
|
|
$
|
120
|
|
|
98
|
%
|
|
States, municipalities and political subdivisions
|
(23
|
)
|
|
1,497
|
|
|
98
|
%
|
|
(32
|
)
|
|
902
|
|
|
97
|
%
|
|||||
Foreign government
|
—
|
|
|
18
|
|
|
100
|
%
|
|
—
|
|
|
4
|
|
|
100
|
%
|
|||||
Residential MBS
|
(4
|
)
|
|
279
|
|
|
99
|
%
|
|
(5
|
)
|
|
139
|
|
|
97
|
%
|
|||||
Commercial MBS
|
(1
|
)
|
|
147
|
|
|
99
|
%
|
|
(1
|
)
|
|
30
|
|
|
97
|
%
|
|||||
Collateralized loan obligations
|
(61
|
)
|
|
3,540
|
|
|
98
|
%
|
|
(12
|
)
|
|
197
|
|
|
94
|
%
|
|||||
Other asset-backed securities
|
(16
|
)
|
|
1,866
|
|
|
99
|
%
|
|
(11
|
)
|
|
432
|
|
|
98
|
%
|
|||||
Corporate and other
|
(306
|
)
|
|
10,378
|
|
|
97
|
%
|
|
(128
|
)
|
|
2,078
|
|
|
94
|
%
|
|||||
Total fixed maturities
|
$
|
(411
|
)
|
|
$
|
17,766
|
|
|
98
|
%
|
|
$
|
(192
|
)
|
|
$
|
3,902
|
|
|
95
|
%
|
a)
|
whether the unrealized loss is credit-driven or a result of changes in market interest rates,
|
b)
|
the extent to which fair value is less than cost basis,
|
c)
|
cash flow projections received from independent sources,
|
d)
|
historical operating, balance sheet and cash flow data contained in issuer SEC filings and news releases,
|
e)
|
near-term prospects for improvement in the issuer and/or its industry,
|
f)
|
third-party research and communications with industry specialists,
|
g)
|
financial models and forecasts,
|
h)
|
the continuity of interest 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.
|
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at January 1
|
$
|
142
|
|
|
$
|
145
|
|
|
$
|
153
|
|
Additional credit impairments on:
|
|
|
|
|
|
||||||
Previously impaired securities
|
1
|
|
|
1
|
|
|
1
|
|
|||
Securities without prior impairments
|
—
|
|
|
1
|
|
|
3
|
|
|||
Reductions due to sales or redemptions
|
(9
|
)
|
|
(5
|
)
|
|
(12
|
)
|
|||
Balance at December 31
|
$
|
134
|
|
|
$
|
142
|
|
|
$
|
145
|
|
|
Amortized
|
|
Fair Value
|
|||||||
Cost
|
|
Amount
|
|
%
|
||||||
Maturity
|
|
|
|
|
|
|||||
One year or less
|
$
|
1,764
|
|
|
$
|
1,793
|
|
|
4
|
%
|
After one year through five years
|
10,613
|
|
|
11,044
|
|
|
24
|
%
|
||
After five years through ten years
|
13,513
|
|
|
14,419
|
|
|
31
|
%
|
||
After ten years
|
3,539
|
|
|
3,754
|
|
|
8
|
%
|
||
|
29,429
|
|
|
31,010
|
|
|
67
|
%
|
||
Collateralized loan obligations and other ABS (average life of approximately 4 years)
|
11,299
|
|
|
11,408
|
|
|
24
|
%
|
||
MBS (average life of approximately 4-1/2 years)
|
3,796
|
|
|
4,087
|
|
|
9
|
%
|
||
Total
|
$
|
44,524
|
|
|
$
|
46,505
|
|
|
100
|
%
|
|
Pretax
|
|
Deferred Tax
|
|
Net
|
||||||
December 31, 2019
|
|
|
|
|
|
||||||
Net unrealized gain on:
|
|
|
|
|
|
||||||
Fixed maturities — annuity segment (*)
|
$
|
1,611
|
|
|
$
|
(338
|
)
|
|
$
|
1,273
|
|
Fixed maturities — all other
|
370
|
|
|
(78
|
)
|
|
292
|
|
|||
Total fixed maturities
|
1,981
|
|
|
(416
|
)
|
|
1,565
|
|
|||
Deferred policy acquisition costs — annuity segment
|
(681
|
)
|
|
143
|
|
|
(538
|
)
|
|||
Annuity benefits accumulated
|
(219
|
)
|
|
46
|
|
|
(173
|
)
|
|||
Life, accident and health reserves
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Unearned revenue
|
11
|
|
|
(2
|
)
|
|
9
|
|
|||
Total net unrealized gain on marketable securities
|
$
|
1,091
|
|
|
$
|
(229
|
)
|
|
$
|
862
|
|
|
|
|
|
|
|
||||||
December 31, 2018
|
|
|
|
|
|
||||||
Net unrealized gain on:
|
|
|
|
|
|
||||||
Fixed maturities — annuity segment (*)
|
$
|
101
|
|
|
$
|
(21
|
)
|
|
$
|
80
|
|
Fixed maturities — all other
|
59
|
|
|
(13
|
)
|
|
46
|
|
|||
Total fixed maturities
|
160
|
|
|
(34
|
)
|
|
126
|
|
|||
Deferred policy acquisition costs — annuity segment
|
(42
|
)
|
|
9
|
|
|
(33
|
)
|
|||
Annuity benefits accumulated
|
(14
|
)
|
|
3
|
|
|
(11
|
)
|
|||
Unearned revenue
|
1
|
|
|
—
|
|
|
1
|
|
|||
Total net unrealized gain on marketable securities
|
$
|
105
|
|
|
$
|
(22
|
)
|
|
$
|
83
|
|
(*)
|
Net unrealized gains on fixed maturity investments supporting AFG’s annuity benefits accumulated.
|
|
2019
|
|
2018
|
|
2017
|
||||||
Investment income:
|
|
|
|
|
|
||||||
Fixed maturities
|
$
|
1,915
|
|
|
$
|
1,742
|
|
|
$
|
1,607
|
|
Equity securities:
|
|
|
|
|
|
||||||
Dividends
|
85
|
|
|
79
|
|
|
73
|
|
|||
Change in fair value (*)
|
39
|
|
|
22
|
|
|
6
|
|
|||
Equity in earnings of partnerships and similar investments
|
154
|
|
|
161
|
|
|
64
|
|
|||
Other
|
132
|
|
|
112
|
|
|
102
|
|
|||
Gross investment income
|
2,325
|
|
|
2,116
|
|
|
1,852
|
|
|||
Investment expenses
|
(22
|
)
|
|
(22
|
)
|
|
(21
|
)
|
|||
Net investment income
|
$
|
2,303
|
|
|
$
|
2,094
|
|
|
$
|
1,831
|
|
(*)
|
Although the change in the fair value of the majority of AFG’s equity securities is recorded in realized gains (losses) on securities, AFG records holding gains and losses in net investment income on equity securities classified as “trading” under previous guidance and on a small portfolio of limited partnership and similar investments that do not qualify for the equity method of accounting.
|
|
2019
|
|
2018
|
||||||||||||||||||||||||||||
|
Realized gains (losses)
|
|
|
|
Realized gains (losses)
|
|
|
||||||||||||||||||||||||
|
Before Impairments
|
|
Impairments
|
|
Total
|
|
Change in Unrealized
|
|
Before Impairments
|
|
Impairments
|
|
Total
|
|
Change in Unrealized
|
||||||||||||||||
Fixed maturities
|
$
|
26
|
|
|
$
|
(29
|
)
|
|
$
|
(3
|
)
|
|
$
|
1,821
|
|
|
$
|
6
|
|
|
$
|
(26
|
)
|
|
$
|
(20
|
)
|
|
$
|
(1,181
|
)
|
Equity securities
|
277
|
|
|
—
|
|
|
277
|
|
|
—
|
|
|
(265
|
)
|
|
—
|
|
|
(265
|
)
|
|
—
|
|
||||||||
Mortgage loans and other investments
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||||||
Other (*)
|
—
|
|
|
10
|
|
|
10
|
|
|
(835
|
)
|
|
11
|
|
|
7
|
|
|
18
|
|
|
502
|
|
||||||||
Total pretax
|
306
|
|
|
(19
|
)
|
|
287
|
|
|
986
|
|
|
(247
|
)
|
|
(19
|
)
|
|
(266
|
)
|
|
(679
|
)
|
||||||||
Tax effects
|
(64
|
)
|
|
4
|
|
|
(60
|
)
|
|
(207
|
)
|
|
52
|
|
|
4
|
|
|
56
|
|
|
143
|
|
||||||||
Net of tax
|
$
|
242
|
|
|
$
|
(15
|
)
|
|
$
|
227
|
|
|
$
|
779
|
|
|
$
|
(195
|
)
|
|
$
|
(15
|
)
|
|
$
|
(210
|
)
|
|
$
|
(536
|
)
|
|
|
|
2017
|
||||||||||||||||||||
|
|
|
|
|
Realized gains (losses)
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
Before Impairments
|
|
Impairments
|
|
Total
|
|
Change in Unrealized
|
||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
$
|
17
|
|
|
$
|
(20
|
)
|
|
$
|
(3
|
)
|
|
$
|
532
|
|
Equity securities
|
|
|
|
|
|
|
|
|
70
|
|
|
(64
|
)
|
|
6
|
|
|
128
|
|
||||
Mortgage loans and other investments
|
|
|
|
|
|
|
|
|
(6
|
)
|
|
(4
|
)
|
|
(10
|
)
|
|
—
|
|
||||
Other (*)
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
15
|
|
|
12
|
|
|
(219
|
)
|
||||
Total pretax
|
|
|
|
|
|
|
|
|
78
|
|
|
(73
|
)
|
|
5
|
|
|
441
|
|
||||
Tax effects:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Reclassify impact of U.S. corporate tax rate change
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
149
|
|
||||
Other
|
|
|
|
|
|
|
|
|
(27
|
)
|
|
25
|
|
|
(2
|
)
|
|
(154
|
)
|
||||
Total tax effects
|
|
|
|
|
|
|
|
|
(27
|
)
|
|
25
|
|
|
(2
|
)
|
|
(5
|
)
|
||||
Net of tax
|
|
|
|
|
|
|
|
|
$
|
51
|
|
|
$
|
(48
|
)
|
|
$
|
3
|
|
|
$
|
436
|
|
(*)
|
Primarily adjustments to deferred policy acquisition costs and reserves related to the annuity business.
|
|
2019
|
|
2018
|
||||
Included in realized gains (losses)
|
$
|
169
|
|
|
$
|
(279
|
)
|
Included in net investment income
|
38
|
|
|
22
|
|
||
|
$
|
207
|
|
|
$
|
(257
|
)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Gross gains
|
$
|
35
|
|
|
$
|
22
|
|
|
$
|
43
|
|
Gross losses
|
(19
|
)
|
|
(14
|
)
|
|
(20
|
)
|
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||
Derivative
|
|
Balance Sheet Line
|
|
Asset
|
|
Liability
|
|
Asset
|
|
Liability
|
||||||||
MBS with embedded derivatives
|
|
Fixed maturities
|
|
$
|
102
|
|
|
$
|
—
|
|
|
$
|
109
|
|
|
$
|
—
|
|
Public company warrants
|
|
Equity securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Fixed-indexed and variable-indexed annuities (embedded derivative)
|
|
Annuity benefits accumulated
|
|
—
|
|
|
3,730
|
|
|
—
|
|
|
2,720
|
|
||||
Equity index call options
|
|
Equity index call options
|
|
924
|
|
|
—
|
|
|
184
|
|
|
—
|
|
||||
Equity index put options
|
|
Other liabilities
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Reinsurance contract (embedded derivative)
|
|
Other liabilities
|
|
—
|
|
|
4
|
|
|
—
|
|
|
2
|
|
||||
|
|
|
|
$
|
1,026
|
|
|
$
|
3,735
|
|
|
$
|
293
|
|
|
$
|
2,723
|
|
Derivative
|
|
Statement of Earnings Line
|
|
2019
|
|
2018
|
|
2017
|
||||||
MBS with embedded derivatives
|
|
Realized gains (losses) on securities
|
|
$
|
10
|
|
|
$
|
(7
|
)
|
|
$
|
(6
|
)
|
Public company warrants
|
|
Realized gains (losses) on securities
|
|
(1
|
)
|
|
(3
|
)
|
|
—
|
|
|||
Fixed-indexed and variable-indexed annuities (embedded derivative) (*)
|
|
Annuity benefits
|
|
(919
|
)
|
|
204
|
|
|
(589
|
)
|
|||
Equity index call options
|
|
Annuity benefits
|
|
804
|
|
|
(298
|
)
|
|
494
|
|
|||
Equity index put options
|
|
Annuity benefits
|
|
2
|
|
|
(1
|
)
|
|
—
|
|
|||
Reinsurance contracts (embedded derivative)
|
|
Net investment income
|
|
(2
|
)
|
|
2
|
|
|
(2
|
)
|
|||
|
|
|
|
$
|
(106
|
)
|
|
$
|
(103
|
)
|
|
$
|
(103
|
)
|
(*)
|
The change in fair value of the embedded derivative includes a favorable adjustment related to unlocking of actuarial assumptions of $181 million in 2019 and losses of $44 million in 2018 and $25 million in 2017.
|
|
P&C
|
|
|
Annuity and Other
|
|
|
|
||||||||||||||||||||||||||
|
Deferred
|
|
|
Deferred
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
||||||||||||||||
|
Costs
|
|
|
Costs
|
|
Inducements
|
|
PVFP
|
|
Subtotal
|
|
Unrealized (*)
|
|
Total
|
|
|
Total
|
||||||||||||||||
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
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Additions
|
675
|
|
|
|
263
|
|
|
2
|
|
|
—
|
|
|
265
|
|
|
—
|
|
|
265
|
|
|
|
940
|
|
||||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Periodic amortization
|
(644
|
)
|
|
|
(238
|
)
|
|
(19
|
)
|
|
(7
|
)
|
|
(264
|
)
|
|
—
|
|
|
(264
|
)
|
|
|
(908
|
)
|
||||||||
Annuity unlocking
|
—
|
|
|
|
29
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
|
|
29
|
|
||||||||
Included in realized gains
|
—
|
|
|
|
14
|
|
|
1
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|
|
15
|
|
||||||||
Foreign currency translation
|
(2
|
)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
(2
|
)
|
||||||||
Change in unrealized
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
392
|
|
|
392
|
|
|
|
392
|
|
||||||||
Balance at December 31, 2018
|
299
|
|
|
|
1,285
|
|
|
86
|
|
|
42
|
|
|
1,413
|
|
|
(30
|
)
|
|
1,383
|
|
|
|
1,682
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Additions
|
744
|
|
|
|
206
|
|
|
2
|
|
|
—
|
|
|
208
|
|
|
—
|
|
|
208
|
|
|
|
952
|
|
||||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Periodic amortization
|
(721
|
)
|
|
|
(120
|
)
|
|
(13
|
)
|
|
(6
|
)
|
|
(139
|
)
|
|
—
|
|
|
(139
|
)
|
|
|
(860
|
)
|
||||||||
Annuity unlocking
|
—
|
|
|
|
(76
|
)
|
|
(1
|
)
|
|
—
|
|
|
(77
|
)
|
|
—
|
|
|
(77
|
)
|
|
|
(77
|
)
|
||||||||
Included in realized gains
|
—
|
|
|
|
8
|
|
|
1
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
|
9
|
|
||||||||
Foreign currency translation
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||||
Change in unrealized
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(669
|
)
|
|
(669
|
)
|
|
|
(669
|
)
|
||||||||
Balance at December 31, 2019
|
$
|
322
|
|
|
|
$
|
1,303
|
|
|
$
|
75
|
|
|
$
|
36
|
|
|
$
|
1,414
|
|
|
$
|
(699
|
)
|
|
$
|
715
|
|
|
|
$
|
1,037
|
|
(*)
|
Adjustments to DPAC related to net unrealized gains/losses on securities and cash flow hedges.
|
|
Year ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
Investment in CLO tranches
|
$
|
165
|
|
|
$
|
188
|
|
|
$
|
215
|
|
Gains (losses) on change in fair value of assets/liabilities (a):
|
|
|
|
|
|
||||||
Assets
|
80
|
|
|
(189
|
)
|
|
(8
|
)
|
|||
Liabilities
|
(110
|
)
|
|
168
|
|
|
20
|
|
|||
Management fees paid to AFG
|
15
|
|
|
16
|
|
|
18
|
|
|||
CLO earnings attributable to AFG Shareholders (b)
|
4
|
|
|
7
|
|
|
23
|
|
(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, 2017 and December 31, 2017
|
$
|
168
|
|
|
$
|
31
|
|
|
$
|
199
|
|
Acquisition of subsidiary in 2018
|
8
|
|
|
—
|
|
|
8
|
|
|||
Balance at December 31, 2018 and December 31, 2019
|
$
|
176
|
|
|
$
|
31
|
|
|
$
|
207
|
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
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
|
|
|
$
|
590
|
|
|
$
|
(2
|
)
|
|
$
|
588
|
|
3.50% Senior Notes due August 2026
|
425
|
|
|
(3
|
)
|
|
422
|
|
|
425
|
|
|
(4
|
)
|
|
421
|
|
||||||
Other
|
3
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||
|
1,018
|
|
|
(5
|
)
|
|
1,013
|
|
|
1,018
|
|
|
(6
|
)
|
|
1,012
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Direct Subordinated Obligations of AFG:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
5.125% Subordinated Debentures due December 2059
|
200
|
|
|
(6
|
)
|
|
194
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
6% Subordinated Debentures due November 2055
|
150
|
|
|
(5
|
)
|
|
145
|
|
|
150
|
|
|
(5
|
)
|
|
145
|
|
||||||
5.875% Subordinated Debentures due March 2059
|
125
|
|
|
(4
|
)
|
|
121
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
6-1/4% Subordinated Debentures due September 2054
|
—
|
|
|
—
|
|
|
—
|
|
|
150
|
|
|
(5
|
)
|
|
145
|
|
||||||
|
475
|
|
|
(15
|
)
|
|
460
|
|
|
300
|
|
|
(10
|
)
|
|
290
|
|
||||||
|
$
|
1,493
|
|
|
$
|
(20
|
)
|
|
$
|
1,473
|
|
|
$
|
1,318
|
|
|
$
|
(16
|
)
|
|
$
|
1,302
|
|
|
2019
|
||
Lease expense:
|
|
||
Operating leases
|
$
|
46
|
|
Short-term leases
|
1
|
|
|
Total lease expense
|
$
|
47
|
|
Cash paid for lease liabilities reported in operating cash flows
|
$
|
49
|
|
Right-of-use assets obtained under new leases
|
19
|
|
Operating lease payments:
|
|
||
2020
|
$
|
46
|
|
2021
|
41
|
|
|
2022
|
32
|
|
|
2023
|
27
|
|
|
2024
|
20
|
|
|
Thereafter
|
35
|
|
|
Total lease payments
|
201
|
|
|
Impact of discounting
|
(21
|
)
|
|
Operating lease liability
|
$
|
180
|
|
Weighted-average remaining lease term
|
5.5 years
|
|
Weighted-average discount rate
|
4.1
|
%
|
|
Shares
|
|
Average
Grant Date
Fair Value
|
|||
Outstanding at January 1, 2019
|
865,930
|
|
|
$
|
84.06
|
|
Granted
|
232,635
|
|
|
$
|
99.28
|
|
Vested
|
(167,326
|
)
|
|
$
|
66.10
|
|
Forfeited
|
(11,304
|
)
|
|
$
|
90.26
|
|
Outstanding at December 31, 2019
|
919,935
|
|
|
$
|
91.10
|
|
|
Shares
|
|
Average
Exercise
Price
|
|
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding at January 1, 2019
|
2,667,442
|
|
|
$
|
48.20
|
|
|
|
|
|
||
Exercised
|
(747,167
|
)
|
|
$
|
41.13
|
|
|
|
|
|
||
Forfeited/Cancelled
|
(2,485
|
)
|
|
$
|
61.88
|
|
|
|
|
|
||
Outstanding at December 31, 2019
|
1,917,790
|
|
|
$
|
50.93
|
|
|
3.7 years
|
|
$
|
113
|
|
|
|
|
|
|
|
|
|
|||||
Options exercisable at December 31, 2019
|
1,779,941
|
|
|
$
|
50.13
|
|
|
3.6 years
|
|
$
|
107
|
|
|
|
|
Other Comprehensive Income (Loss)
|
|
|
|
|
||||||||||||||||||||||||
|
AOCI
Beginning
Balance
|
|
Pretax
|
|
Tax
|
|
Net
of
tax
|
|
Attributable to
noncontrolling
interests
|
|
Attributable to
shareholders
|
|
Other (c)
|
|
AOCI
Ending
Balance
|
||||||||||||||||
Year ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net unrealized gains on securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Unrealized holding gains on securities arising during the period
|
|
|
$
|
997
|
|
|
$
|
(209
|
)
|
|
$
|
788
|
|
|
$
|
—
|
|
|
$
|
788
|
|
|
|
|
|
||||||
Reclassification adjustment for realized (gains) losses included in net earnings (a)
|
|
|
(11
|
)
|
|
2
|
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|
|
|
|
|||||||||||
Total net unrealized gains on securities (b)
|
$
|
83
|
|
|
986
|
|
|
(207
|
)
|
|
779
|
|
|
—
|
|
|
779
|
|
|
$
|
—
|
|
|
$
|
862
|
|
|||||
Net unrealized gains (losses) on cash flow hedges
|
(11
|
)
|
|
36
|
|
|
(8
|
)
|
|
28
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
17
|
|
||||||||
Foreign currency translation adjustments
|
(16
|
)
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
(9
|
)
|
||||||||
Pension and other postretirement plans adjustments
|
(8
|
)
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
(7
|
)
|
||||||||
Total
|
$
|
48
|
|
|
$
|
1,030
|
|
|
$
|
(215
|
)
|
|
$
|
815
|
|
|
$
|
—
|
|
|
$
|
815
|
|
|
$
|
—
|
|
|
$
|
863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Year ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net unrealized gains (losses) on securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Unrealized holding losses on securities arising during the period
|
|
|
$
|
(689
|
)
|
|
$
|
145
|
|
|
$
|
(544
|
)
|
|
$
|
—
|
|
|
$
|
(544
|
)
|
|
|
|
|
||||||
Reclassification adjustment for realized (gains) losses included in net earnings (a)
|
|
|
10
|
|
|
(2
|
)
|
|
8
|
|
|
—
|
|
|
8
|
|
|
|
|
|
|||||||||||
Total net unrealized gains (losses) on securities (b)
|
$
|
840
|
|
|
(679
|
)
|
|
143
|
|
|
(536
|
)
|
|
—
|
|
|
(536
|
)
|
|
$
|
(221
|
)
|
|
$
|
83
|
|
|||||
Net unrealized gains (losses) on cash flow hedges
|
(13
|
)
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
(11
|
)
|
||||||||
Foreign currency translation adjustments
|
(6
|
)
|
|
(9
|
)
|
|
(1
|
)
|
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(16
|
)
|
||||||||
Pension and other postretirement plans adjustments
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
||||||||
Total
|
$
|
813
|
|
|
$
|
(686
|
)
|
|
$
|
142
|
|
|
$
|
(544
|
)
|
|
$
|
—
|
|
|
$
|
(544
|
)
|
|
$
|
(221
|
)
|
|
$
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
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
|
|
|
OCI component
|
|
Affected line in the statement of earnings
|
|
|
Pretax
|
|
Realized gains (losses) on securities
|
|
|
Tax
|
|
Provision for income taxes
|
|
(b)
|
Includes net unrealized gains of $55 million at December 31, 2019 compared to $58 million and $68 million at December 31, 2018 and 2017, related to securities for which only the credit portion of an other-than-temporary impairment has been recorded in earnings.
|
(c)
|
On January 1, 2018, AFG adopted new guidance that requires all equity securities other than those accounted for under the equity method to be reported at fair value with holding gains and losses recognized in net earnings. At the date of adoption, the $221 million net unrealized gain on equity securities classified as available for sale (with unrealized holding gains and losses reported in AOCI) under the prior guidance was reclassified from AOCI to retained earnings as the cumulative effect of an accounting change. Other also 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.
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Amount
|
|
% of EBT
|
|
Amount
|
|
% of EBT
|
|
Amount
|
|
% of EBT
|
|||||||||
Earnings before income taxes (“EBT”)
|
$
|
1,108
|
|
|
|
|
$
|
639
|
|
|
|
|
$
|
724
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income taxes at statutory rate
|
$
|
233
|
|
|
21
|
%
|
|
$
|
134
|
|
|
21
|
%
|
|
$
|
253
|
|
|
35
|
%
|
Effect of:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Tax exempt interest
|
(14
|
)
|
|
(1
|
%)
|
|
(13
|
)
|
|
(2
|
%)
|
|
(23
|
)
|
|
(3
|
%)
|
|||
Stock-based compensation
|
(8
|
)
|
|
(1
|
%)
|
|
(8
|
)
|
|
(1
|
%)
|
|
(16
|
)
|
|
(2
|
%)
|
|||
Dividend received deduction
|
(4
|
)
|
|
—
|
%
|
|
(4
|
)
|
|
(1
|
%)
|
|
(8
|
)
|
|
(1
|
%)
|
|||
Adjustment to prior year taxes
|
(3
|
)
|
|
—
|
%
|
|
(8
|
)
|
|
(1
|
%)
|
|
(4
|
)
|
|
(1
|
%)
|
|||
Employee stock ownership plan dividend paid deduction
|
(2
|
)
|
|
—
|
%
|
|
(3
|
)
|
|
(1
|
%)
|
|
(5
|
)
|
|
(1
|
%)
|
|||
Change in valuation allowance (excluding change in tax rate)
|
17
|
|
|
2
|
%
|
|
11
|
|
|
2
|
%
|
|
(7
|
)
|
|
(1
|
%)
|
|||
Nondeductible expenses
|
8
|
|
|
1
|
%
|
|
7
|
|
|
1
|
%
|
|
6
|
|
|
1
|
%
|
|||
Foreign operations
|
4
|
|
|
—
|
%
|
|
(2
|
)
|
|
—
|
%
|
|
21
|
|
|
3
|
%
|
|||
Neon restructuring
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(56
|
)
|
|
(8
|
%)
|
|||
Change in U.S corporate tax rate
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
83
|
|
|
11
|
%
|
|||
Other
|
8
|
|
|
—
|
%
|
|
8
|
|
|
1
|
%
|
|
3
|
|
|
1
|
%
|
|||
Provision for income taxes as shown in the statement of earnings
|
$
|
239
|
|
|
22
|
%
|
|
$
|
122
|
|
|
19
|
%
|
|
$
|
247
|
|
|
34
|
%
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current taxes:
|
|
|
|
|
|
||||||
Federal
|
$
|
250
|
|
|
$
|
196
|
|
|
$
|
153
|
|
State
|
10
|
|
|
8
|
|
|
6
|
|
|||
Foreign
|
2
|
|
|
—
|
|
|
—
|
|
|||
Deferred taxes:
|
|
|
|
|
|
||||||
Federal
|
(23
|
)
|
|
(82
|
)
|
|
5
|
|
|||
Impact of change in U.S. corporate tax rate
|
—
|
|
|
—
|
|
|
83
|
|
|||
Total Federal deferred taxes
|
(23
|
)
|
|
(82
|
)
|
|
88
|
|
|||
Provision for income taxes
|
$
|
239
|
|
|
$
|
122
|
|
|
$
|
247
|
|
|
Expiring
|
|
Amount
|
|
||
Operating Loss – U.S.
|
2020 - 2022
|
|
$
|
93
|
|
|
Operating Loss – United Kingdom
|
indefinite
|
|
305
|
|
(*)
|
(*)
|
£231 million
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
Excluding Unrealized Gains
|
|
Impact of Unrealized Gains
|
|
Total
|
|
Excluding Unrealized Gains
|
|
Impact of Unrealized Gains
|
|
Total
|
||||||||||||
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Federal net operating loss carryforwards
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
23
|
|
Foreign underwriting losses
|
118
|
|
|
—
|
|
|
118
|
|
|
93
|
|
|
—
|
|
|
93
|
|
||||||
Insurance claims and reserves
|
829
|
|
|
46
|
|
|
875
|
|
|
740
|
|
|
3
|
|
|
743
|
|
||||||
Employee benefits
|
93
|
|
|
—
|
|
|
93
|
|
|
88
|
|
|
—
|
|
|
88
|
|
||||||
Other, net
|
45
|
|
|
(2
|
)
|
|
43
|
|
|
44
|
|
|
—
|
|
|
44
|
|
||||||
Total deferred tax assets before valuation allowance
|
1,104
|
|
|
44
|
|
|
1,148
|
|
|
988
|
|
|
3
|
|
|
991
|
|
||||||
Valuation allowance against deferred tax assets
|
(140
|
)
|
|
—
|
|
|
(140
|
)
|
|
(119
|
)
|
|
—
|
|
|
(119
|
)
|
||||||
Total deferred tax assets
|
964
|
|
|
44
|
|
|
1,008
|
|
|
869
|
|
|
3
|
|
|
872
|
|
||||||
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment securities
|
(140
|
)
|
|
(416
|
)
|
|
(556
|
)
|
|
(36
|
)
|
|
(34
|
)
|
|
(70
|
)
|
||||||
Deferred policy acquisition costs
|
(293
|
)
|
|
143
|
|
|
(150
|
)
|
|
(300
|
)
|
|
9
|
|
|
(291
|
)
|
||||||
Insurance claims and reserves transition liability
|
(93
|
)
|
|
—
|
|
|
(93
|
)
|
|
(110
|
)
|
|
—
|
|
|
(110
|
)
|
||||||
Real estate, property and equipment
|
(35
|
)
|
|
—
|
|
|
(35
|
)
|
|
(36
|
)
|
|
—
|
|
|
(36
|
)
|
||||||
Total deferred tax liabilities
|
(561
|
)
|
|
(273
|
)
|
|
(834
|
)
|
|
(482
|
)
|
|
(25
|
)
|
|
(507
|
)
|
||||||
Net deferred tax asset (liability)
|
$
|
403
|
|
|
$
|
(229
|
)
|
|
$
|
174
|
|
|
$
|
387
|
|
|
$
|
(22
|
)
|
|
$
|
365
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at January 1
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Additions for tax positions of prior years
|
—
|
|
|
—
|
|
|
—
|
|
|||
Reductions for tax positions of prior years
|
—
|
|
|
—
|
|
|
—
|
|
|||
Additions for tax positions of current year
|
—
|
|
|
—
|
|
|
—
|
|
|||
Settlements
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Balance at December 31
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
1st
Quarter
|
|
2nd
Quarter
|
|
3rd
Quarter
|
|
4th
Quarter
|
|
Total
Year
|
||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
2,024
|
|
|
$
|
1,960
|
|
|
$
|
2,123
|
|
|
$
|
2,130
|
|
|
$
|
8,237
|
|
Net earnings, including noncontrolling interests
|
|
326
|
|
|
209
|
|
|
143
|
|
|
191
|
|
|
869
|
|
|||||
Net earnings attributable to shareholders
|
|
329
|
|
|
210
|
|
|
147
|
|
|
211
|
|
|
897
|
|
|||||
Earnings attributable to shareholders per Common Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
3.68
|
|
|
$
|
2.34
|
|
|
$
|
1.64
|
|
|
$
|
2.33
|
|
|
$
|
9.98
|
|
Diluted
|
|
3.63
|
|
|
2.31
|
|
|
1.62
|
|
|
2.30
|
|
|
9.85
|
|
|||||
Average number of Common Shares:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
89.4
|
|
|
89.7
|
|
|
90.0
|
|
|
90.2
|
|
|
89.9
|
|
|||||
Diluted
|
|
90.7
|
|
|
91.0
|
|
|
91.1
|
|
|
91.3
|
|
|
91.0
|
|
|||||
2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
1,619
|
|
|
$
|
1,833
|
|
|
$
|
2,008
|
|
|
$
|
1,690
|
|
|
$
|
7,150
|
|
Net earnings (losses), including noncontrolling interests
|
|
141
|
|
|
208
|
|
|
203
|
|
|
(35
|
)
|
|
517
|
|
|||||
Net earnings (losses) attributable to shareholders
|
|
145
|
|
|
210
|
|
|
204
|
|
|
(29
|
)
|
|
530
|
|
|||||
Earnings (losses) attributable to shareholders per Common Share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
1.64
|
|
|
$
|
2.36
|
|
|
$
|
2.30
|
|
|
$
|
(0.33
|
)
|
|
$
|
5.95
|
|
Diluted
|
|
1.60
|
|
|
2.31
|
|
|
2.26
|
|
|
(0.33
|
)
|
|
5.85
|
|
|||||
Average number of Common Shares:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
88.6
|
|
|
89.0
|
|
|
89.1
|
|
|
89.3
|
|
|
89.0
|
|
|||||
Diluted
|
|
90.4
|
|
|
90.7
|
|
|
90.7
|
|
|
89.3
|
|
|
90.6
|
|
|
|
1st
Quarter
|
|
2nd
Quarter
|
|
3rd
Quarter
|
|
4th
Quarter
|
|
Total
Year
|
||||||||||
2019 — change in fair value of equity securities
|
|
$
|
182
|
|
|
$
|
44
|
|
|
$
|
(15
|
)
|
|
$
|
67
|
|
|
$
|
278
|
|
2019 — other realized gains (losses)
|
|
2
|
|
|
12
|
|
|
(3
|
)
|
|
(2
|
)
|
|
9
|
|
|||||
2018 — change in fair value of equity securities
|
|
(95
|
)
|
|
23
|
|
|
33
|
|
|
(223
|
)
|
|
(262
|
)
|
|||||
2018 — other realized gains (losses)
|
|
2
|
|
|
8
|
|
|
1
|
|
|
(15
|
)
|
|
(4
|
)
|
|
|
1st
Quarter
|
|
2nd
Quarter
|
|
3rd
Quarter
|
|
4th
Quarter
|
|
Total
Year
|
||||||||||
2019
|
|
$
|
(11
|
)
|
|
$
|
(33
|
)
|
|
$
|
(27
|
)
|
|
$
|
24
|
|
|
$
|
(47
|
)
|
2018
|
|
15
|
|
|
(14
|
)
|
|
17
|
|
|
(66
|
)
|
|
(48
|
)
|
|
|
1st
Quarter
|
|
2nd
Quarter
|
|
3rd
Quarter
|
|
4th
Quarter
|
|
Total
Year
|
||||||||||
2019
|
|
$
|
45
|
|
|
$
|
41
|
|
|
$
|
12
|
|
|
$
|
45
|
|
|
$
|
143
|
|
2018
|
|
56
|
|
|
44
|
|
|
31
|
|
|
61
|
|
|
192
|
|
|
|
1st
Quarter
|
|
2nd
Quarter
|
|
3rd
Quarter
|
|
4th
Quarter
|
|
Total
Year
|
||||||||||
2019
|
|
$
|
(12
|
)
|
|
$
|
(12
|
)
|
|
$
|
(22
|
)
|
|
$
|
(15
|
)
|
|
$
|
(61
|
)
|
2018
|
|
(13
|
)
|
|
(16
|
)
|
|
(38
|
)
|
|
(38
|
)
|
|
(105
|
)
|
•
|
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
|
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at beginning of period
|
$
|
9,741
|
|
|
$
|
9,678
|
|
|
$
|
8,563
|
|
Less reinsurance recoverables, net of allowance
|
2,942
|
|
|
2,957
|
|
|
2,302
|
|
|||
Net liability at beginning of period
|
6,799
|
|
|
6,721
|
|
|
6,261
|
|
|||
Provision for losses and LAE occurring in the current year
|
3,414
|
|
|
3,195
|
|
|
3,019
|
|
|||
Net increase (decrease) in the provision for claims of prior years:
|
|
|
|
|
|
||||||
Special A&E charges
|
18
|
|
|
18
|
|
|
89
|
|
|||
Neon exited lines charge
|
7
|
|
|
—
|
|
|
(18
|
)
|
|||
Other
|
(168
|
)
|
|
(210
|
)
|
|
(135
|
)
|
|||
Total losses and LAE incurred
|
3,271
|
|
|
3,003
|
|
|
2,955
|
|
|||
Payments for losses and LAE of:
|
|
|
|
|
|
||||||
Current year
|
(1,076
|
)
|
|
(963
|
)
|
|
(942
|
)
|
|||
Prior years
|
(1,790
|
)
|
|
(1,639
|
)
|
|
(1,586
|
)
|
|||
Total payments
|
(2,866
|
)
|
|
(2,602
|
)
|
|
(2,528
|
)
|
|||
Reserves of businesses disposed (*)
|
—
|
|
|
(319
|
)
|
|
—
|
|
|||
Foreign currency translation and other
|
4
|
|
|
(4
|
)
|
|
33
|
|
|||
Net liability at end of period
|
7,208
|
|
|
6,799
|
|
|
6,721
|
|
|||
Add back reinsurance recoverables, net of allowance
|
3,024
|
|
|
2,942
|
|
|
2,957
|
|
|||
Gross unpaid losses and LAE included in the balance sheet
|
$
|
10,232
|
|
|
$
|
9,741
|
|
|
$
|
9,678
|
|
(*)
|
Reflects the reinsurance to close transactions at Neon (discussed below).
|
|
2019
|
||
Unpaid losses and allocated LAE, net of reinsurance:
|
|
||
Specialty
|
|
||
Property and transportation
|
$
|
1,171
|
|
Specialty casualty
|
4,056
|
|
|
Specialty financial
|
221
|
|
|
Other specialty
|
313
|
|
|
Total Specialty (excluding foreign reserves)
|
5,761
|
|
|
|
|
||
Other reserves
|
|
||
Reserves for foreign operations:
|
|
||
Neon Lloyd’s business
|
357
|
|
|
Other subsidiaries
|
289
|
|
|
A&E reserves
|
383
|
|
|
Unallocated LAE
|
361
|
|
|
Other
|
57
|
|
|
Total other reserves
|
1,447
|
|
|
Total reserves, net of reinsurance
|
7,208
|
|
|
|
|
||
Add back reinsurance recoverables, net of allowance
|
3,024
|
|
|
Gross unpaid losses and LAE included in the balance sheet
|
$
|
10,232
|
|
|
|
Cumulative Paid Claims and Allocated LAE, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
For the Years Ended (2010–2018 is Supplementary Information and Unaudited)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
% (a)
|
|
|
||||||||||||||||||||||
2010
|
|
$
|
316
|
|
|
$
|
486
|
|
|
$
|
535
|
|
|
$
|
596
|
|
|
$
|
626
|
|
|
$
|
637
|
|
|
$
|
642
|
|
|
$
|
647
|
|
|
$
|
649
|
|
|
$
|
650
|
|
|
99.2
|
%
|
|
|
2011
|
|
|
|
365
|
|
|
667
|
|
|
727
|
|
|
771
|
|
|
803
|
|
|
821
|
|
|
829
|
|
|
833
|
|
|
834
|
|
|
98.9
|
%
|
|
|
|||||||||||
2012
|
|
|
|
|
|
572
|
|
|
708
|
|
|
772
|
|
|
816
|
|
|
842
|
|
|
856
|
|
|
882
|
|
|
869
|
|
|
98.6
|
%
|
|
|
||||||||||||
2013
|
|
|
|
|
|
|
|
438
|
|
|
702
|
|
|
760
|
|
|
804
|
|
|
831
|
|
|
847
|
|
|
858
|
|
|
98.3
|
%
|
|
|
|||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
329
|
|
|
632
|
|
|
693
|
|
|
744
|
|
|
770
|
|
|
783
|
|
|
96.9
|
%
|
|
|
||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
359
|
|
|
582
|
|
|
667
|
|
|
707
|
|
|
736
|
|
|
94.7
|
%
|
|
|
|||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
294
|
|
|
521
|
|
|
577
|
|
|
618
|
|
|
87.5
|
%
|
|
|
||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
379
|
|
|
640
|
|
|
696
|
|
|
82.6
|
%
|
|
|
|||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
396
|
|
|
676
|
|
|
74.9
|
%
|
|
|
||||||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
527
|
|
|
47.4
|
%
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
7,247
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
Unpaid losses and LAE — years 2010 through 2019
|
|
|
1,152
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE)
|
|
|
19
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE)
|
|
|
$
|
1,171
|
|
|
|
|
|
|
|
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
|
|
47.1
|
%
|
|
29.8
|
%
|
|
7.7
|
%
|
|
6.0
|
%
|
|
3.6
|
%
|
|
1.8
|
%
|
|
1.5
|
%
|
|
(0.1
|
%)
|
|
0.2
|
%
|
|
0.2
|
%
|
|
|
|
|
Cumulative
|
|
47.1
|
%
|
|
76.9
|
%
|
|
84.6
|
%
|
|
90.6
|
%
|
|
94.2
|
%
|
|
96.0
|
%
|
|
97.5
|
%
|
|
97.4
|
%
|
|
97.6
|
%
|
|
97.8
|
%
|
|
|
|
|
(a)
|
Represents the cumulative percentage paid of incurred claims and allocated LAE (net of reinsurance, as estimated at December 31, 2019).
|
Specialty casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
(Dollars in Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Incurred Claims and Allocated LAE, Net of Reinsurance
|
|
As of December 31, 2019
|
|||||||||||||||||||||||||||||||||||||||||||
|
|
For the Years Ended (2010–2018 is Supplementary Information and Unaudited)
|
|
Total IBNR Plus Expected Development on Reported Claims
|
|
Cumulative Number of Reported Claims
|
|||||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
|
|||||||||||||||||||||||||
2010
|
|
$
|
871
|
|
|
$
|
887
|
|
|
$
|
888
|
|
|
$
|
867
|
|
|
$
|
880
|
|
|
$
|
870
|
|
|
$
|
868
|
|
|
$
|
866
|
|
|
$
|
855
|
|
|
$
|
846
|
|
|
$
|
28
|
|
|
56,716
|
|
2011
|
|
|
|
852
|
|
|
849
|
|
|
839
|
|
|
848
|
|
|
834
|
|
|
828
|
|
|
826
|
|
|
817
|
|
|
810
|
|
|
37
|
|
|
54,755
|
|
||||||||||||
2012
|
|
|
|
|
|
901
|
|
|
892
|
|
|
885
|
|
|
885
|
|
|
883
|
|
|
877
|
|
|
849
|
|
|
842
|
|
|
53
|
|
|
54,682
|
|
|||||||||||||
2013
|
|
|
|
|
|
|
|
968
|
|
|
949
|
|
|
945
|
|
|
940
|
|
|
945
|
|
|
926
|
|
|
916
|
|
|
77
|
|
|
54,929
|
|
||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
1,035
|
|
|
1,008
|
|
|
1,008
|
|
|
1,006
|
|
|
982
|
|
|
967
|
|
|
98
|
|
|
56,445
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
1,081
|
|
|
1,043
|
|
|
1,041
|
|
|
1,042
|
|
|
1,024
|
|
|
126
|
|
|
57,427
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,131
|
|
|
1,122
|
|
|
1,116
|
|
|
1,101
|
|
|
236
|
|
|
56,000
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,211
|
|
|
1,221
|
|
|
1,204
|
|
|
372
|
|
|
56,073
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,277
|
|
|
1,307
|
|
|
548
|
|
|
57,081
|
|
|||||||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,308
|
|
|
773
|
|
|
51,198
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
10,325
|
|
|
|
|
|
|
|
Cumulative Paid Claims and Allocated LAE, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
For the Years Ended (2010–2018 is Supplementary Information and Unaudited)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
% (a)
|
|
|
||||||||||||||||||||||
2010
|
|
$
|
191
|
|
|
$
|
412
|
|
|
$
|
560
|
|
|
$
|
645
|
|
|
$
|
700
|
|
|
$
|
736
|
|
|
$
|
757
|
|
|
$
|
771
|
|
|
$
|
783
|
|
|
$
|
798
|
|
|
94.3
|
%
|
|
|
2011
|
|
|
|
174
|
|
|
383
|
|
|
522
|
|
|
612
|
|
|
662
|
|
|
694
|
|
|
714
|
|
|
731
|
|
|
745
|
|
|
92.0
|
%
|
|
|
|||||||||||
2012
|
|
|
|
|
|
173
|
|
|
385
|
|
|
516
|
|
|
621
|
|
|
684
|
|
|
723
|
|
|
745
|
|
|
761
|
|
|
90.4
|
%
|
|
|
||||||||||||
2013
|
|
|
|
|
|
|
|
182
|
|
|
396
|
|
|
554
|
|
|
666
|
|
|
729
|
|
|
766
|
|
|
797
|
|
|
87.0
|
%
|
|
|
|||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
190
|
|
|
412
|
|
|
574
|
|
|
680
|
|
|
755
|
|
|
801
|
|
|
82.8
|
%
|
|
|
||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
178
|
|
|
411
|
|
|
577
|
|
|
702
|
|
|
792
|
|
|
77.3
|
%
|
|
|
|||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
186
|
|
|
418
|
|
|
584
|
|
|
713
|
|
|
64.8
|
%
|
|
|
||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200
|
|
|
422
|
|
|
612
|
|
|
50.8
|
%
|
|
|
|||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
210
|
|
|
475
|
|
|
36.3
|
%
|
|
|
||||||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
212
|
|
|
16.2
|
%
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
6,706
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
Unpaid losses and LAE — years 2010 through 2019
|
|
|
3,619
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE)
|
|
|
437
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE)
|
|
|
$
|
4,056
|
|
|
|
|
|
|
|
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
|
|
18.7
|
%
|
|
22.9
|
%
|
|
16.4
|
%
|
|
11.5
|
%
|
|
7.3
|
%
|
|
4.3
|
%
|
|
2.7
|
%
|
|
1.9
|
%
|
|
1.6
|
%
|
|
1.8
|
%
|
|
|
|
|
Cumulative
|
|
18.7
|
%
|
|
41.6
|
%
|
|
58.0
|
%
|
|
69.5
|
%
|
|
76.8
|
%
|
|
81.1
|
%
|
|
83.8
|
%
|
|
85.7
|
%
|
|
87.3
|
%
|
|
89.1
|
%
|
|
|
|
|
(a)
|
Represents the cumulative percentage paid of incurred claims and allocated LAE (net of reinsurance, as estimated at December 31, 2019).
|
Specialty financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
(Dollars in Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
|
Incurred Claims and Allocated LAE, Net of Reinsurance
|
|
As of December 31, 2019
|
|||||||||||||||||||||||||||||||||||||||||||
|
|
For the Years Ended (2010–2018 is Supplementary Information and Unaudited)
|
|
Total IBNR Plus Expected Development on Reported Claims
|
|
Cumulative Number of Reported Claims
|
|||||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
|
|||||||||||||||||||||||||
2010
|
|
$
|
138
|
|
|
$
|
145
|
|
|
$
|
132
|
|
|
$
|
132
|
|
|
$
|
135
|
|
|
$
|
133
|
|
|
$
|
130
|
|
|
$
|
127
|
|
|
$
|
126
|
|
|
$
|
126
|
|
|
$
|
1
|
|
|
21,925
|
|
2011
|
|
|
|
138
|
|
|
157
|
|
|
155
|
|
|
153
|
|
|
147
|
|
|
144
|
|
|
143
|
|
|
139
|
|
|
137
|
|
|
—
|
|
|
16,369
|
|
||||||||||||
2012
|
|
|
|
|
|
163
|
|
|
163
|
|
|
151
|
|
|
139
|
|
|
137
|
|
|
135
|
|
|
132
|
|
|
127
|
|
|
1
|
|
|
21,076
|
|
|||||||||||||
2013
|
|
|
|
|
|
|
|
140
|
|
|
145
|
|
|
137
|
|
|
131
|
|
|
127
|
|
|
126
|
|
|
122
|
|
|
4
|
|
|
28,460
|
|
||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
146
|
|
|
157
|
|
|
156
|
|
|
153
|
|
|
147
|
|
|
142
|
|
|
5
|
|
|
29,436
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
156
|
|
|
160
|
|
|
158
|
|
|
153
|
|
|
145
|
|
|
10
|
|
|
37,562
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
179
|
|
|
184
|
|
|
187
|
|
|
182
|
|
|
18
|
|
|
45,054
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
212
|
|
|
215
|
|
|
212
|
|
|
27
|
|
|
48,421
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
212
|
|
|
217
|
|
|
30
|
|
|
46,198
|
|
|||||||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
194
|
|
|
77
|
|
|
35,369
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
1,604
|
|
|
|
|
|
|
|
Cumulative Paid Claims and Allocated LAE, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
For the Years Ended (2010–2018 is Supplementary Information and Unaudited)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
% (a)
|
|
|
||||||||||||||||||||||
2010
|
|
$
|
61
|
|
|
$
|
93
|
|
|
$
|
104
|
|
|
$
|
122
|
|
|
$
|
132
|
|
|
$
|
130
|
|
|
$
|
128
|
|
|
$
|
126
|
|
|
$
|
126
|
|
|
$
|
126
|
|
|
100.0
|
%
|
|
|
2011
|
|
|
|
58
|
|
|
111
|
|
|
115
|
|
|
123
|
|
|
130
|
|
|
131
|
|
|
131
|
|
|
132
|
|
|
132
|
|
|
96.4
|
%
|
|
|
|||||||||||
2012
|
|
|
|
|
|
71
|
|
|
104
|
|
|
109
|
|
|
117
|
|
|
121
|
|
|
126
|
|
|
128
|
|
|
126
|
|
|
99.2
|
%
|
|
|
||||||||||||
2013
|
|
|
|
|
|
|
|
70
|
|
|
100
|
|
|
107
|
|
|
113
|
|
|
117
|
|
|
117
|
|
|
118
|
|
|
96.7
|
%
|
|
|
|||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
62
|
|
|
109
|
|
|
125
|
|
|
128
|
|
|
137
|
|
|
139
|
|
|
97.9
|
%
|
|
|
||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
72
|
|
|
110
|
|
|
129
|
|
|
133
|
|
|
132
|
|
|
91.0
|
%
|
|
|
|||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88
|
|
|
141
|
|
|
158
|
|
|
161
|
|
|
88.5
|
%
|
|
|
||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120
|
|
|
169
|
|
|
186
|
|
|
87.7
|
%
|
|
|
|||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112
|
|
|
163
|
|
|
75.1
|
%
|
|
|
||||||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99
|
|
|
51.0
|
%
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
1,382
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
Unpaid losses and LAE — years 2010 through 2019
|
|
|
222
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE)
|
|
|
(1
|
)
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
|
|
|
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
|
|
50.5
|
%
|
|
27.7
|
%
|
|
7.9
|
%
|
|
5.4
|
%
|
|
4.2
|
%
|
|
0.9
|
%
|
|
0.2
|
%
|
|
(0.8
|
%)
|
|
—
|
%
|
|
—
|
%
|
|
|
|
|
Cumulative
|
|
50.5
|
%
|
|
78.2
|
%
|
|
86.1
|
%
|
|
91.5
|
%
|
|
95.7
|
%
|
|
96.6
|
%
|
|
96.8
|
%
|
|
96.0
|
%
|
|
96.0
|
%
|
|
96.0
|
%
|
|
|
|
|
(a)
|
Represents the cumulative percentage paid of incurred claims and allocated LAE (net of reinsurance, as estimated at December 31, 2019).
|
Other specialty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
(Dollars in Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
|
Incurred Claims and Allocated LAE, Net of Reinsurance
|
|
As of December 31, 2019
|
|||||||||||||||||||||||||||||||||||||||||||
|
|
For the Years Ended (2010–2018 is Supplementary Information and Unaudited)
|
|
Total IBNR Plus Expected Development on Reported Claims
|
|
Cumulative Number of Reported Claims (a)
|
|||||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
|
|||||||||||||||||||||||||
2010
|
|
$
|
36
|
|
|
$
|
39
|
|
|
$
|
40
|
|
|
$
|
39
|
|
|
$
|
40
|
|
|
$
|
40
|
|
|
$
|
40
|
|
|
$
|
40
|
|
|
$
|
40
|
|
|
$
|
39
|
|
|
$
|
1
|
|
|
—
|
|
2011
|
|
|
|
39
|
|
|
43
|
|
|
42
|
|
|
43
|
|
|
43
|
|
|
44
|
|
|
44
|
|
|
43
|
|
|
42
|
|
|
1
|
|
|
—
|
|
||||||||||||
2012
|
|
|
|
|
|
42
|
|
|
40
|
|
|
39
|
|
|
40
|
|
|
41
|
|
|
39
|
|
|
39
|
|
|
36
|
|
|
2
|
|
|
—
|
|
|||||||||||||
2013
|
|
|
|
|
|
|
|
46
|
|
|
47
|
|
|
46
|
|
|
47
|
|
|
50
|
|
|
53
|
|
|
58
|
|
|
3
|
|
|
—
|
|
||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
58
|
|
|
57
|
|
|
59
|
|
|
59
|
|
|
60
|
|
|
61
|
|
|
6
|
|
|
—
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
59
|
|
|
60
|
|
|
63
|
|
|
66
|
|
|
76
|
|
|
3
|
|
|
—
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61
|
|
|
61
|
|
|
65
|
|
|
71
|
|
|
15
|
|
|
—
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63
|
|
|
65
|
|
|
70
|
|
|
23
|
|
|
—
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86
|
|
|
90
|
|
|
53
|
|
|
—
|
|
|||||||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
108
|
|
|
87
|
|
|
—
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
651
|
|
|
|
|
|
|
|
Cumulative Paid Claims and Allocated LAE, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
For the Years Ended (2010–2018 is Supplementary Information and Unaudited)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
% (b)
|
|
|
||||||||||||||||||||||
2010
|
|
$
|
8
|
|
|
$
|
14
|
|
|
$
|
21
|
|
|
$
|
24
|
|
|
$
|
27
|
|
|
$
|
33
|
|
|
$
|
35
|
|
|
$
|
36
|
|
|
$
|
37
|
|
|
$
|
37
|
|
|
94.9
|
%
|
|
|
2011
|
|
|
|
12
|
|
|
20
|
|
|
25
|
|
|
28
|
|
|
34
|
|
|
36
|
|
|
37
|
|
|
38
|
|
|
39
|
|
|
92.9
|
%
|
|
|
|||||||||||
2012
|
|
|
|
|
|
8
|
|
|
17
|
|
|
21
|
|
|
25
|
|
|
28
|
|
|
30
|
|
|
30
|
|
|
32
|
|
|
88.9
|
%
|
|
|
||||||||||||
2013
|
|
|
|
|
|
|
|
7
|
|
|
16
|
|
|
22
|
|
|
34
|
|
|
37
|
|
|
44
|
|
|
51
|
|
|
87.9
|
%
|
|
|
|||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
13
|
|
|
21
|
|
|
30
|
|
|
36
|
|
|
43
|
|
|
50
|
|
|
82.0
|
%
|
|
|
||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
26
|
|
|
31
|
|
|
50
|
|
|
62
|
|
|
81.6
|
%
|
|
|
|||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
19
|
|
|
31
|
|
|
47
|
|
|
66.2
|
%
|
|
|
||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
19
|
|
|
30
|
|
|
42.9
|
%
|
|
|
|||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
|
23
|
|
|
25.6
|
%
|
|
|
||||||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
|
8.3
|
%
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
380
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
Unpaid losses and LAE — years 2010 through 2019
|
|
|
271
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE)
|
|
|
42
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE)
|
|
|
$
|
313
|
|
|
|
|
|
|
|
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
|
|
16.6
|
%
|
|
16.5
|
%
|
|
13.2
|
%
|
|
14.9
|
%
|
|
10.5
|
%
|
|
9.8
|
%
|
|
4.9
|
%
|
|
3.5
|
%
|
|
2.5
|
%
|
|
—
|
%
|
|
|
|
|
Cumulative
|
|
16.6
|
%
|
|
33.1
|
%
|
|
46.3
|
%
|
|
61.2
|
%
|
|
71.7
|
%
|
|
81.5
|
%
|
|
86.4
|
%
|
|
89.9
|
%
|
|
92.4
|
%
|
|
92.4
|
%
|
|
|
|
|
(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, 2019).
|
Total Specialty Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
(Dollars in Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
|
Incurred Claims and Allocated LAE, Net of Reinsurance
|
|
As of December 31, 2019
|
|||||||||||||||||||||||||||||||||||||||||||
|
|
For the Years Ended (2010–2018 is Supplementary Information and Unaudited)
|
|
Total IBNR Plus Expected Development on Reported Claims
|
|
Cumulative Number of Reported Claims
|
|||||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
|
|||||||||||||||||||||||||
2010
|
|
$
|
1,724
|
|
|
$
|
1,710
|
|
|
$
|
1,705
|
|
|
$
|
1,690
|
|
|
$
|
1,710
|
|
|
$
|
1,698
|
|
|
$
|
1,698
|
|
|
$
|
1,690
|
|
|
$
|
1,676
|
|
|
$
|
1,666
|
|
|
$
|
33
|
|
|
216,746
|
|
2011
|
|
|
|
1,840
|
|
|
1,848
|
|
|
1,849
|
|
|
1,871
|
|
|
1,861
|
|
|
1,866
|
|
|
1,859
|
|
|
1,843
|
|
|
1,832
|
|
|
43
|
|
|
209,433
|
|
||||||||||||
2012
|
|
|
|
|
|
1,970
|
|
|
1,952
|
|
|
1,946
|
|
|
1,947
|
|
|
1,955
|
|
|
1,941
|
|
|
1,906
|
|
|
1,886
|
|
|
64
|
|
|
218,880
|
|
|||||||||||||
2013
|
|
|
|
|
|
|
|
2,036
|
|
|
2,011
|
|
|
2,000
|
|
|
1,996
|
|
|
2,000
|
|
|
1,982
|
|
|
1,969
|
|
|
94
|
|
|
222,253
|
|
||||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
2,083
|
|
|
2,050
|
|
|
2,040
|
|
|
2,038
|
|
|
2,004
|
|
|
1,978
|
|
|
124
|
|
|
218,852
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
2,114
|
|
|
2,047
|
|
|
2,041
|
|
|
2,038
|
|
|
2,022
|
|
|
162
|
|
|
229,607
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,117
|
|
|
2,083
|
|
|
2,082
|
|
|
2,060
|
|
|
315
|
|
|
221,938
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,375
|
|
|
2,348
|
|
|
2,329
|
|
|
502
|
|
|
244,561
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,507
|
|
|
2,516
|
|
|
750
|
|
|
231,707
|
|
|||||||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,721
|
|
|
1,225
|
|
|
225,075
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
20,979
|
|
|
|
|
|
|
|
Cumulative Paid Claims and Allocated LAE, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Accident Year
|
|
For the Years Ended (2010–2018 is Supplementary Information and Unaudited)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
% (a)
|
|
|
||||||||||||||||||||||
2010
|
|
$
|
576
|
|
|
$
|
1,005
|
|
|
$
|
1,220
|
|
|
$
|
1,387
|
|
|
$
|
1,485
|
|
|
$
|
1,536
|
|
|
$
|
1,562
|
|
|
$
|
1,580
|
|
|
$
|
1,595
|
|
|
$
|
1,611
|
|
|
96.7
|
%
|
|
|
2011
|
|
|
|
609
|
|
|
1,181
|
|
|
1,389
|
|
|
1,534
|
|
|
1,629
|
|
|
1,682
|
|
|
1,711
|
|
|
1,734
|
|
|
1,750
|
|
|
95.5
|
%
|
|
|
|||||||||||
2012
|
|
|
|
|
|
824
|
|
|
1,214
|
|
|
1,418
|
|
|
1,579
|
|
|
1,675
|
|
|
1,735
|
|
|
1,785
|
|
|
1,788
|
|
|
94.8
|
%
|
|
|
||||||||||||
2013
|
|
|
|
|
|
|
|
697
|
|
|
1,214
|
|
|
1,443
|
|
|
1,617
|
|
|
1,714
|
|
|
1,774
|
|
|
1,824
|
|
|
92.6
|
%
|
|
|
|||||||||||||
2014
|
|
|
|
|
|
|
|
|
|
594
|
|
|
1,174
|
|
|
1,422
|
|
|
1,588
|
|
|
1,705
|
|
|
1,773
|
|
|
89.6
|
%
|
|
|
||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
619
|
|
|
1,129
|
|
|
1,404
|
|
|
1,592
|
|
|
1,722
|
|
|
85.2
|
%
|
|
|
|||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
577
|
|
|
1,099
|
|
|
1,350
|
|
|
1,539
|
|
|
74.7
|
%
|
|
|
||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
709
|
|
|
1,250
|
|
|
1,524
|
|
|
65.4
|
%
|
|
|
|||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
730
|
|
|
1,337
|
|
|
53.1
|
%
|
|
|
||||||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
847
|
|
|
31.1
|
%
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
15,715
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
Unpaid losses and LAE — years 2010 through 2019
|
|
|
5,264
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE)
|
|
|
497
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
|
|
|
Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE)
|
|
|
$
|
5,761
|
|
|
|
|
|
|
|
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
|
|
32.6
|
%
|
|
25.7
|
%
|
|
12.1
|
%
|
|
8.9
|
%
|
|
5.6
|
%
|
|
3.1
|
%
|
|
2.1
|
%
|
|
0.8
|
%
|
|
0.9
|
%
|
|
1.0
|
%
|
|
|
|
|
Cumulative
|
|
32.6
|
%
|
|
58.3
|
%
|
|
70.4
|
%
|
|
79.3
|
%
|
|
84.9
|
%
|
|
88.0
|
%
|
|
90.1
|
%
|
|
90.9
|
%
|
|
91.8
|
%
|
|
92.8
|
%
|
|
|
|
|
(a)
|
Represents the cumulative percentage paid of incurred claims and allocated LAE (net of reinsurance, as estimated at December 31, 2019).
|
|
Net Earnings
|
|
Capital and Surplus
|
||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
||||||||||
Property and casualty companies
|
$
|
584
|
|
|
$
|
546
|
|
|
$
|
484
|
|
|
$
|
3,342
|
|
|
$
|
2,867
|
|
Life (annuity) insurance companies
|
34
|
|
|
802
|
|
|
286
|
|
|
2,868
|
|
|
2,701
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Direct premiums written
|
$
|
7,044
|
|
|
$
|
6,626
|
|
|
$
|
6,310
|
|
Reinsurance assumed
|
255
|
|
|
214
|
|
|
192
|
|
|||
Reinsurance ceded
|
(1,957
|
)
|
|
(1,817
|
)
|
|
(1,751
|
)
|
|||
Net written premiums
|
$
|
5,342
|
|
|
$
|
5,023
|
|
|
$
|
4,751
|
|
|
|
|
|
|
|
||||||
Direct premiums earned
|
$
|
6,848
|
|
|
$
|
6,472
|
|
|
$
|
6,112
|
|
Reinsurance assumed
|
226
|
|
|
204
|
|
|
157
|
|
|||
Reinsurance ceded
|
(1,889
|
)
|
|
(1,811
|
)
|
|
(1,690
|
)
|
|||
Net earned premiums
|
$
|
5,185
|
|
|
$
|
4,865
|
|
|
$
|
4,579
|
|
|
|
|
|
|
|
||||||
Reinsurance recoveries
|
$
|
1,404
|
|
|
$
|
1,249
|
|
|
$
|
1,379
|
|
|
2019
|
|
2018
|
||||
Expected death and annuitization
|
$
|
232
|
|
|
$
|
229
|
|
Guaranteed withdrawal benefits
|
625
|
|
|
472
|
|
||
Accrued persistency and premium bonuses
|
1
|
|
|
1
|
|
Number
|
|
Exhibit Description
|
|
|
|
|
|
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. 333-184913) 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.
|
|
(*)
|
|||
|
Annual Senior Executive Bonus Plan, filed as Exhibit 10(d) to AFG’s 10-K for 2017.
|
|
(*)
|
|||
|
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.
|
|
(*)
|
|||
|
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.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
||
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
|
||
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
||
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
||
101.LAB
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
||
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
||
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) Incorporated herein by reference.
|
|
|
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
166
|
|
|
$
|
158
|
|
Investment in securities
|
77
|
|
|
65
|
|
||
Investment in subsidiaries (a)
|
7,623
|
|
|
6,155
|
|
||
Other investments
|
2
|
|
|
2
|
|
||
Other assets
|
143
|
|
|
68
|
|
||
Total assets
|
$
|
8,011
|
|
|
$
|
6,448
|
|
|
|
|
|
||||
Liabilities and Equity:
|
|
|
|
||||
Long-term debt
|
$
|
1,473
|
|
|
$
|
1,302
|
|
Other liabilities
|
269
|
|
|
176
|
|
||
Shareholders’ equity
|
6,269
|
|
|
4,970
|
|
||
Total liabilities and equity
|
$
|
8,011
|
|
|
$
|
6,448
|
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Dividends from subsidiaries
|
$
|
417
|
|
|
$
|
261
|
|
|
$
|
681
|
|
Equity in undistributed earnings of subsidiaries
|
888
|
|
|
529
|
|
|
264
|
|
|||
Investment and other income
|
20
|
|
|
2
|
|
|
13
|
|
|||
Total revenues
|
1,325
|
|
|
792
|
|
|
958
|
|
|||
|
|
|
|
|
|
||||||
Costs and Expenses:
|
|
|
|
|
|
||||||
Interest charges on intercompany borrowings
|
8
|
|
|
8
|
|
|
9
|
|
|||
Interest charges on other borrowings
|
68
|
|
|
62
|
|
|
85
|
|
|||
Other expenses
|
113
|
|
|
70
|
|
|
142
|
|
|||
Total costs and expenses
|
189
|
|
|
140
|
|
|
236
|
|
|||
|
|
|
|
|
|
||||||
Earnings before income taxes
|
1,136
|
|
|
652
|
|
|
722
|
|
|||
Provision for income taxes
|
239
|
|
|
122
|
|
|
247
|
|
|||
Net Earnings Attributable to Shareholders
|
$
|
897
|
|
|
$
|
530
|
|
|
$
|
475
|
|
Net earnings attributable to shareholders
|
$
|
897
|
|
|
$
|
530
|
|
|
$
|
475
|
|
Other comprehensive income (loss), net of tax
|
815
|
|
|
(544
|
)
|
|
296
|
|
|||
Total comprehensive income (loss), net of tax
|
$
|
1,712
|
|
|
$
|
(14
|
)
|
|
$
|
771
|
|
(a)
|
Investment in subsidiaries includes intercompany receivables and payables.
|
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating Activities:
|
|
|
|
|
|
||||||
Net earnings attributable to shareholders
|
$
|
897
|
|
|
$
|
530
|
|
|
$
|
475
|
|
Adjustments:
|
|
|
|
|
|
||||||
Equity in net earnings of subsidiaries
|
(1,032
|
)
|
|
(637
|
)
|
|
(575
|
)
|
|||
Dividends from subsidiaries
|
408
|
|
|
238
|
|
|
580
|
|
|||
Other operating activities, net
|
33
|
|
|
84
|
|
|
98
|
|
|||
Net cash provided by operating activities
|
306
|
|
|
215
|
|
|
578
|
|
|||
|
|
|
|
|
|
||||||
Investing Activities:
|
|
|
|
|
|
||||||
Capital contributions to subsidiaries
|
(60
|
)
|
|
(11
|
)
|
|
(93
|
)
|
|||
Returns of capital from subsidiaries
|
4
|
|
|
23
|
|
|
30
|
|
|||
Purchases of investments, property and equipment
|
(3
|
)
|
|
(5
|
)
|
|
(2
|
)
|
|||
Proceeds from maturities and redemptions of investments
|
3
|
|
|
3
|
|
|
2
|
|
|||
Net cash provided by (used in) investing activities
|
(56
|
)
|
|
10
|
|
|
(63
|
)
|
|||
|
|
|
|
|
|
||||||
Financing Activities:
|
|
|
|
|
|
||||||
Additional long-term borrowings
|
315
|
|
|
—
|
|
|
712
|
|
|||
Reductions of long-term debt
|
(150
|
)
|
|
—
|
|
|
(745
|
)
|
|||
Issuances of Common Stock
|
37
|
|
|
34
|
|
|
37
|
|
|||
Repurchases of Common Stock
|
—
|
|
|
(6
|
)
|
|
—
|
|
|||
Cash dividends paid on Common Stock
|
(444
|
)
|
|
(394
|
)
|
|
(417
|
)
|
|||
Net cash used in financing activities
|
(242
|
)
|
|
(366
|
)
|
|
(413
|
)
|
|||
|
|
|
|
|
|
||||||
Net Change in Cash and Cash Equivalents
|
8
|
|
|
(141
|
)
|
|
102
|
|
|||
Cash and cash equivalents at beginning of year
|
158
|
|
|
299
|
|
|
197
|
|
|||
Cash and cash equivalents at end of year
|
$
|
166
|
|
|
$
|
158
|
|
|
$
|
299
|
|
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)
|
||||||||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property and casualty insurance
|
|
$
|
322
|
|
|
$
|
10,232
|
|
|
$
|
2,830
|
|
|
$
|
5,185
|
|
|
$
|
472
|
|
|
$
|
3,271
|
|
|
$
|
721
|
|
|
$
|
1,027
|
|
|
$
|
5,342
|
|
Annuity
|
|
696
|
|
|
40,406
|
|
|
—
|
|
|
—
|
|
|
1,792
|
|
|
1,151
|
|
|
198
|
|
|
189
|
|
|
—
|
|
|||||||||
Other
|
|
19
|
|
|
612
|
|
|
—
|
|
|
22
|
|
|
39
|
|
|
36
|
|
|
4
|
|
|
532
|
|
|
3
|
|
|||||||||
Total
|
|
$
|
1,037
|
|
|
$
|
51,250
|
|
|
$
|
2,830
|
|
|
$
|
5,207
|
|
|
$
|
2,303
|
|
|
$
|
4,458
|
|
|
$
|
923
|
|
|
$
|
1,748
|
|
|
$
|
5,345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property and casualty insurance
|
|
$
|
299
|
|
|
$
|
9,741
|
|
|
$
|
2,595
|
|
|
$
|
4,865
|
|
|
$
|
438
|
|
|
$
|
3,003
|
|
|
$
|
644
|
|
|
$
|
957
|
|
|
$
|
5,023
|
|
Annuity
|
|
1,360
|
|
|
36,616
|
|
|
—
|
|
|
—
|
|
|
1,638
|
|
|
998
|
|
|
212
|
|
|
174
|
|
|
—
|
|
|||||||||
Other
|
|
23
|
|
|
635
|
|
|
—
|
|
|
24
|
|
|
18
|
|
|
40
|
|
|
4
|
|
|
479
|
|
|
3
|
|
|||||||||
Total
|
|
$
|
1,682
|
|
|
$
|
46,992
|
|
|
$
|
2,595
|
|
|
$
|
4,889
|
|
|
$
|
2,094
|
|
|
$
|
4,041
|
|
|
$
|
860
|
|
|
$
|
1,610
|
|
|
$
|
5,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
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
|
|
|
—
|
|
|||||||||
Other
|
|
26
|
|
|
658
|
|
|
—
|
|
|
22
|
|
|
11
|
|
|
26
|
|
|
4
|
|
|
552
|
|
|
3
|
|
|||||||||
Total
|
|
$
|
1,216
|
|
|
$
|
43,652
|
|
|
$
|
2,410
|
|
|
$
|
4,601
|
|
|
$
|
1,831
|
|
|
$
|
3,873
|
|
|
$
|
690
|
|
|
$
|
1,578
|
|
|
$
|
4,754
|
|
|
|
|
|
|
American Financial Group, Inc.
|
||
|
|
|
|
|
|
|
|
|
|
|
|
February 25, 2020
|
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 25, 2020
|
Carl H. Lindner III
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ S. Craig Lindner
|
|
Co-Chief Executive Officer and Director
|
|
February 25, 2020
|
S. Craig Lindner
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Joseph E. (Jeff) Consolino
|
|
Executive Vice President, Chief Financial Officer and Director
|
|
February 25, 2020
|
Joseph E. (Jeff) Consolino
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Kenneth C. Ambrecht
|
|
Director
|
|
February 25, 2020
|
Kenneth C. Ambrecht
|
|
|
|
|
|
|
|
|
|
/s/ John B. Berding
|
|
Director
|
|
February 25, 2020
|
John B. Berding
|
|
|
|
|
|
|
|
|
|
/s/ Virginia (Gina) C. Drosos
|
|
Director*
|
|
February 25, 2020
|
Virginia (Gina) C. Drosos
|
|
|
|
|
|
|
|
|
|
/s/ James E. Evans
|
|
Director
|
|
February 25, 2020
|
James E. Evans
|
|
|
|
|
|
|
|
|
|
/s/ Terry S. Jacobs
|
|
Director*
|
|
February 25, 2020
|
Terry S. Jacobs
|
|
|
|
|
|
|
|
|
|
/s/ Gregory G. Joseph
|
|
Lead Independent Director*
|
|
February 25, 2020
|
Gregory G. Joseph
|
|
|
|
|
|
|
|
|
|
/s/ Mary Beth Martin
|
|
Director
|
|
February 25, 2020
|
Mary Beth Martin
|
|
|
|
|
|
|
|
|
|
/s/ William W. Verity
|
|
Director
|
|
February 25, 2020
|
William W. Verity
|
|
|
|
|
|
|
|
|
|
/s/ John I. Von Lehman
|
|
Director*
|
|
February 25, 2020
|
John I. Von Lehman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Member of the Audit Committee
|
|
|
|
Name of Company
|
|
Incorporated
|
|
Percentage of Ownership
|
American Money Management Corporation
|
|
Ohio
|
|
100
|
American Real Estate Capital Company, LLC
|
|
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
|
ABA Insurance Services, Inc.
|
|
Ohio
|
|
100
|
Great American Holding (Europe) Limited
|
|
United Kingdom
|
|
100
|
Great American Europe Limited
|
|
United Kingdom
|
|
100
|
Great American International Insurance (EU) Designated Activity Company
|
|
Ireland
|
|
100
|
Great American International Insurance (UK) Limited
|
|
United Kingdom
|
|
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
|
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
|
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 Insurance Company
|
|
Ohio
|
|
100
|
American Empire Surplus Lines Insurance Company
|
|
Delaware
|
|
100
|
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
|
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
|
|
333-223216
|
|
Shelf Registration
|
|
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 25, 2020
|
|
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 25, 2020
|
|
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 25, 2020
|
|
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 25, 2020
|
|
By:
|
/s/ Carl H. Lindner III
|
Date
|
|
|
Carl H. Lindner III
|
|
|
|
Co-Chief Executive Officer
|
|
|
|
|
February 25, 2020
|
|
By:
|
/s/ S. Craig Lindner
|
Date
|
|
|
S. Craig Lindner
|
|
|
|
Co-Chief Executive Officer
|
|
|
|
|
February 25, 2020
|
|
By:
|
/s/ Joseph E. (Jeff) Consolino
|
Date
|
|
|
Joseph E. (Jeff) Consolino
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|