Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 01, 2020 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-13653 | |
Entity Registrant Name | AMERICAN FINANCIAL GROUP, INC. | |
Entity Incorporation, State or Country Code | OH | |
Entity Tax Identification Number | 31-1544320 | |
Entity Central Index Key | 0001042046 | |
Entity Address, Address Line One | 301 East Fourth Street | |
Entity Address, City or Town | Cincinnati | |
Entity Address, State or Province | OH | |
Entity Address, Postal Zip Code | 45202 | |
City Area Code | 513 | |
Local Phone Number | 579-2121 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 86,844,220 | |
Entity Common Stock, Shares Outstanding Owned by Subsidiaries | 14,900,000 | |
Common stocks | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Common Stock | |
Trading Symbol | AFG | |
Security Exchange Name | NYSE | |
6% Subordinated Debentures due November 2055 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 6% Subordinated Debentures due November 15, 2055 | |
Trading Symbol | AFGH | |
Security Exchange Name | NYSE | |
5.875% Subordinated Debentures due March 2059 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 5.875% Subordinated Debentures due March 30, 2059 | |
Trading Symbol | AFGB | |
Security Exchange Name | NYSE | |
5.625% Subordinated Debentures due June 2060 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 5.625% Subordinated Debentures due June 1, 2060 | |
Trading Symbol | AFGD | |
Security Exchange Name | NYSE | |
5.125% Subordinate Debentures due December 2059 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 5.125% Subordinated Debentures due December 15, 2059 | |
Trading Symbol | AFGC | |
Security Exchange Name | NYSE | |
4.50% Subordinated Debentures due September 2060 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 4.50% Subordinated Debentures due September 15, 2060 | |
Trading Symbol | AFGE | |
Security Exchange Name | NYSE |
Consolidated Balance Sheet (Una
Consolidated Balance Sheet (Unaudited) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Assets: | ||
Cash and cash equivalents | $ 3,747 | $ 2,314 |
Investments: | ||
Fixed maturities, available for sale at fair value (amortized cost — $45,297 and $44,524; allowance for expected credit losses of $54 at September 30, 2020) | 48,193 | 46,505 |
Fixed maturities, trading at fair value | 92 | 113 |
Equity securities, at fair value | 1,606 | 1,937 |
Investments accounted for using the equity method | 1,841 | 1,688 |
Mortgage loans | 1,482 | 1,329 |
Policy loans | 154 | 164 |
Equity index call options | 697 | 924 |
Real estate and other investments | 275 | 278 |
Total cash and investments | 58,087 | 55,252 |
Recoverables from reinsurers | 3,819 | 3,415 |
Prepaid reinsurance premiums | 862 | 678 |
Agents’ balances and premiums receivable | 1,384 | 1,335 |
Deferred policy acquisition costs | 497 | 1,037 |
Assets of managed investment entities | 73,110 | 70,130 |
Other receivables | 1,185 | 975 |
Variable annuity assets (separate accounts) | 603 | 628 |
Other assets | 1,749 | 1,867 |
Goodwill | 207 | 207 |
Total assets | 73,110 | 70,130 |
Liabilities and Equity: | ||
Unpaid losses and loss adjustment expenses | 10,754 | 10,232 |
Unearned premiums | 3,015 | 2,830 |
Annuity benefits accumulated | 41,932 | 40,406 |
Life, accident and health reserves | 609 | 612 |
Payable to reinsurers | 977 | 814 |
Liabilities of managed investment entities | 66,770 | 63,861 |
Long-term debt | 2,108 | 1,473 |
Variable annuity liabilities (separate accounts) | 603 | 628 |
Other liabilities | 2,231 | 2,295 |
Total liabilities | 66,770 | 63,861 |
Temporary equity | ||
Redeemable noncontrolling interests | 0 | 0 |
Shareholders’ equity: | ||
Common Stock, no par value — 200,000,000 shares authorized — 87,266,582 and 90,303,686 shares outstanding | 87 | 90 |
Capital surplus | 1,283 | 1,307 |
Retained earnings | 3,737 | 4,009 |
Accumulated other comprehensive income, net of tax | 1,233 | 863 |
Total shareholders’ equity | 6,340 | 6,269 |
Noncontrolling interests | 0 | 0 |
Total equity | 6,340 | 6,269 |
Total liabilities and equity | 73,110 | 70,130 |
Variable interest entity, primary beneficiary | ||
Investments: | ||
Assets of managed investment entities | 4,717 | 4,736 |
Total assets | 4,717 | 4,736 |
Liabilities and Equity: | ||
Liabilities of managed investment entities | 4,541 | 4,571 |
Total liabilities | $ 4,541 | $ 4,571 |
Consolidated Balance Sheet (U_2
Consolidated Balance Sheet (Unaudited) (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Fixed maturities, available for sale, amortized cost | $ 45,297 | $ 44,524 |
Fixed maturities, available for sale, allowance for expected credit losses | $ 54 | $ 0 |
Common Stock, par value (USD per share) | $ 0 | $ 0 |
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 |
Common Stock, Shares, Outstanding | 87,266,582 | 90,303,686 |
Consolidated Statement of Earni
Consolidated Statement of Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues: | ||||
Property and casualty insurance net earned premiums | $ 1,381 | $ 1,442 | $ 3,774 | $ 3,815 |
Net investment income | 572 | 588 | 1,584 | 1,710 |
Realized gains (losses) on securities | 45 | (18) | (302) | 222 |
Realized losses on subsidiaries | (30) | 0 | (30) | 0 |
Income of managed investment entities: | ||||
Investment income | 46 | 67 | 154 | 206 |
Gain (loss) on change in fair value of assets/liabilities | 1 | (14) | (47) | (16) |
Other income | 45 | 58 | 153 | 170 |
Total revenues | 2,060 | 2,123 | 5,286 | 6,107 |
Costs and Expenses: | ||||
Losses and loss adjustment expenses | 963 | 944 | 2,441 | 2,359 |
Commissions and other underwriting expenses | 406 | 450 | 1,235 | 1,275 |
Annuity benefits | 203 | 250 | 905 | 900 |
Annuity and supplemental insurance acquisition expenses | 172 | 120 | 250 | 181 |
Interest charges on borrowed money | 24 | 17 | 64 | 50 |
Expenses of managed investment entities | 31 | 54 | 117 | 168 |
Other expenses | 127 | 111 | 310 | 325 |
Total costs and expenses | 1,926 | 1,946 | 5,322 | 5,258 |
Earnings (loss) before income taxes | 134 | 177 | (36) | 849 |
Provision (credit) for income taxes | (30) | 34 | (63) | 171 |
Net earnings, including noncontrolling interests | 164 | 143 | 27 | 678 |
Less: Net earnings (loss) attributable to noncontrolling interests | 0 | (4) | (13) | (8) |
Net Earnings Attributable to Shareholders | $ 164 | $ 147 | $ 40 | $ 686 |
Earnings Attributable to Shareholders per Common Share: | ||||
Basic (USD per share) | $ 1.86 | $ 1.64 | $ 0.45 | $ 7.65 |
Diluted (USD per share) | $ 1.86 | $ 1.62 | $ 0.45 | $ 7.55 |
Average number of Common Shares: | ||||
Basic (shares) | 88.2 | 90 | 89.4 | 89.7 |
Diluted (shares) | 88.5 | 91.1 | 89.9 | 90.9 |
Consolidated Statement of Compr
Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings, including noncontrolling interests | $ 164 | $ 143 | $ 27 | $ 678 |
Net unrealized gains on securities: | ||||
Unrealized holding gains on securities arising during the period | 194 | 107 | 350 | 847 |
Reclassification adjustment for realized (gains) losses included in net earnings | (12) | 1 | 0 | (10) |
Total net unrealized gains on securities | 182 | 108 | 350 | 837 |
Net unrealized gains (losses) on cash flow hedges | (6) | 7 | 24 | 36 |
Foreign currency translation adjustments | 0 | (7) | (6) | (3) |
Pension and other postretirement plans adjustments | 0 | 1 | 0 | 1 |
Other comprehensive income, net of tax | 176 | 109 | 368 | 871 |
Total comprehensive income, net of tax | 340 | 252 | 395 | 1,549 |
Less: Comprehensive income (loss) attributable to noncontrolling interests | 0 | (3) | (11) | (6) |
Comprehensive income attributable to shareholders | $ 340 | $ 255 | $ 406 | $ 1,555 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Equity (Unaudited) - USD ($) $ in Millions | Total | Total | Common Shares | Common Stock and Capital Surplus | Retained Earnings | Accumulated Other Comp. Income | Noncontrolling interests |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of accounting change | $ 4,972 | $ 4,970 | $ 1,334 | $ 3,588 | $ 48 | $ 2 | |
Beginning Balance, shares at Dec. 31, 2018 | 89,291,724 | ||||||
Beginning Balance at Dec. 31, 2018 | 4,972 | 4,970 | 1,334 | 3,588 | 48 | 2 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of accounting change | 6,321 | 4,970 | 1,334 | 4,022 | 917 | 2 | |
Net earnings (losses) attributable to parent | 686 | 686 | 686 | ||||
Net earnings (losses) including portion attributable to nonredeemable noncontrolling interest | 686 | 0 | |||||
Other comprehensive income (loss), attributable to parent | 869 | 869 | |||||
Other comprehensive income (loss) including portion attributable to nonredeemable noncontrolling interest | 869 | ||||||
Dividends | (242) | (242) | (242) | ||||
Shares issued: | |||||||
Exercise of stock options, shares | 591,233 | ||||||
Exercise of stock options | 25 | 25 | 25 | ||||
Restricted stock awards, shares | 232,635 | ||||||
Other benefit plans, shares | 58,488 | ||||||
Other benefit plans | 6 | 6 | 6 | ||||
Dividend reinvestment plan, shares | 11,059 | ||||||
Dividend reinvestment plan | 1 | 1 | 1 | ||||
Stock-based compensation expense | 17 | 17 | 17 | ||||
Shares exchanged — benefit plans, shares | (47,069) | ||||||
Shares exchanged — benefit plans | (5) | (5) | (1) | (4) | |||
Forfeitures of restricted stock, shares | (10,647) | ||||||
Other | (8) | (6) | (6) | (2) | |||
Ending Balance, shares at Sep. 30, 2019 | 90,127,423 | ||||||
Ending Balance at Sep. 30, 2019 | 6,321 | 6,321 | 1,382 | 4,022 | 917 | 0 | |
Beginning Balance, Redeemable Noncontrolling Interests at Dec. 31, 2018 | 0 | ||||||
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Abstract] | |||||||
Net earnings attributable to redeemable noncontrolling interests | (8) | ||||||
Other comprehensive income (loss) attributable to redeemable noncontrolling interests | 2 | ||||||
Other | 6 | ||||||
Ending Balance, Redeemable Noncontrolling Interests at Sep. 30, 2019 | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of accounting change | 6,090 | 6,090 | 1,367 | 3,914 | 809 | 0 | |
Beginning Balance, shares at Jun. 30, 2019 | 89,917,601 | ||||||
Beginning Balance at Jun. 30, 2019 | 6,090 | 6,090 | 1,367 | 3,914 | 809 | 0 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of accounting change | 6,321 | 6,321 | 1,382 | 4,022 | 917 | 0 | |
Net earnings (losses) attributable to parent | 147 | 147 | 147 | ||||
Net earnings (losses) including portion attributable to nonredeemable noncontrolling interest | 147 | 0 | |||||
Other comprehensive income (loss), attributable to parent | 108 | 108 | |||||
Other comprehensive income (loss) including portion attributable to nonredeemable noncontrolling interest | 108 | ||||||
Dividends | (36) | (36) | (36) | ||||
Shares issued: | |||||||
Exercise of stock options, shares | 191,227 | ||||||
Exercise of stock options | 8 | 8 | 8 | ||||
Restricted stock awards, shares | 70 | ||||||
Other benefit plans, shares | 17,345 | ||||||
Other benefit plans | 2 | 2 | 2 | ||||
Dividend reinvestment plan, shares | 1,570 | ||||||
Dividend reinvestment plan | 0 | 0 | 0 | ||||
Stock-based compensation expense | 5 | 5 | 5 | ||||
Shares exchanged — benefit plans, shares | (80) | ||||||
Shares exchanged — benefit plans | 0 | 0 | 0 | 0 | |||
Forfeitures of restricted stock, shares | (310) | ||||||
Other | (3) | (3) | (3) | 0 | |||
Ending Balance, shares at Sep. 30, 2019 | 90,127,423 | ||||||
Ending Balance at Sep. 30, 2019 | 6,321 | 6,321 | 1,382 | 4,022 | 917 | 0 | |
Beginning Balance, Redeemable Noncontrolling Interests at Jun. 30, 2019 | 0 | ||||||
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Abstract] | |||||||
Net earnings attributable to redeemable noncontrolling interests | (4) | ||||||
Other comprehensive income (loss) attributable to redeemable noncontrolling interests | 1 | ||||||
Other | 3 | ||||||
Ending Balance, Redeemable Noncontrolling Interests at Sep. 30, 2019 | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of accounting change | 6,321 | 6,321 | 1,382 | 4,022 | 917 | 0 | |
Cumulative effect of accounting change | $ 6,269 | 6,269 | 1,397 | 4,009 | 863 | 0 | |
Beginning Balance, shares at Dec. 31, 2019 | 90,303,686 | 90,303,686 | |||||
Beginning Balance at Dec. 31, 2019 | $ 6,269 | 6,269 | 1,397 | 4,009 | 863 | 0 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of accounting change | 6,269 | 6,269 | 1,397 | 4,009 | 863 | 0 | |
Net earnings (losses) attributable to parent | 40 | 40 | 40 | ||||
Net earnings (losses) including portion attributable to nonredeemable noncontrolling interest | 40 | 0 | |||||
Other comprehensive income (loss), attributable to parent | 366 | 366 | |||||
Other comprehensive income (loss) including portion attributable to nonredeemable noncontrolling interest | 366 | ||||||
Dividends | (120) | (120) | (120) | ||||
Shares issued: | |||||||
Exercise of stock options, shares | 229,208 | ||||||
Exercise of stock options | 10 | 10 | 10 | ||||
Restricted stock awards, shares | 227,867 | ||||||
Other benefit plans, shares | 105,318 | ||||||
Other benefit plans | 7 | 7 | 7 | ||||
Dividend reinvestment plan, shares | 7,251 | ||||||
Dividend reinvestment plan | 1 | 1 | 1 | ||||
Stock-based compensation expense | 15 | 15 | 15 | ||||
Shares acquired and retired, shares | (3,468,107) | ||||||
Shares acquired and retired | (233) | (233) | (54) | (179) | |||
Shares exchanged — benefit plans, shares | (97,731) | ||||||
Shares exchanged — benefit plans | (11) | (11) | (2) | (9) | |||
Forfeitures of restricted stock, shares | (40,910) | ||||||
Other | $ (11) | (11) | (4) | (11) | 4 | 0 | |
Ending Balance, shares at Sep. 30, 2020 | 87,266,582 | 87,266,582 | |||||
Ending Balance at Sep. 30, 2020 | $ 6,340 | 6,340 | 1,370 | 3,737 | 1,233 | 0 | |
Beginning Balance, Redeemable Noncontrolling Interests at Dec. 31, 2019 | 0 | ||||||
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Abstract] | |||||||
Net earnings attributable to redeemable noncontrolling interests | (13) | ||||||
Other comprehensive income (loss) attributable to redeemable noncontrolling interests | 2 | ||||||
Other | 11 | ||||||
Ending Balance, Redeemable Noncontrolling Interests at Sep. 30, 2020 | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of accounting change | 6,126 | 6,126 | 1,388 | 3,685 | 1,053 | 0 | |
Beginning Balance, shares at Jun. 30, 2020 | 88,659,407 | ||||||
Beginning Balance at Jun. 30, 2020 | 6,126 | 6,126 | 1,388 | 3,685 | 1,053 | 0 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of accounting change | 6,126 | 6,340 | 1,370 | 3,737 | 1,233 | 0 | |
Net earnings (losses) attributable to parent | 164 | 164 | 164 | ||||
Net earnings (losses) including portion attributable to nonredeemable noncontrolling interest | 164 | 0 | |||||
Other comprehensive income (loss), attributable to parent | 176 | 176 | |||||
Other comprehensive income (loss) including portion attributable to nonredeemable noncontrolling interest | 176 | ||||||
Dividends | (39) | (39) | (39) | ||||
Shares issued: | |||||||
Exercise of stock options, shares | 19,865 | ||||||
Exercise of stock options | 1 | 1 | 1 | ||||
Restricted stock awards, shares | 0 | ||||||
Other benefit plans, shares | 38,822 | ||||||
Other benefit plans | 2 | 2 | 2 | ||||
Dividend reinvestment plan, shares | 2,901 | ||||||
Dividend reinvestment plan | 1 | 1 | 1 | ||||
Stock-based compensation expense | 5 | 5 | 5 | ||||
Shares acquired and retired, shares | (1,447,588) | ||||||
Shares acquired and retired | (96) | (96) | (23) | (73) | |||
Shares exchanged — benefit plans, shares | (1,337) | ||||||
Shares exchanged — benefit plans | 0 | 0 | 0 | 0 | |||
Forfeitures of restricted stock, shares | (5,488) | ||||||
Other | $ 0 | (4) | 0 | 4 | 0 | ||
Ending Balance, shares at Sep. 30, 2020 | 87,266,582 | 87,266,582 | |||||
Ending Balance at Sep. 30, 2020 | $ 6,340 | 6,340 | 1,370 | 3,737 | 1,233 | 0 | |
Beginning Balance, Redeemable Noncontrolling Interests at Jun. 30, 2020 | 0 | ||||||
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Abstract] | |||||||
Net earnings attributable to redeemable noncontrolling interests | 0 | ||||||
Other comprehensive income (loss) attributable to redeemable noncontrolling interests | 0 | ||||||
Other | 0 | ||||||
Ending Balance, Redeemable Noncontrolling Interests at Sep. 30, 2020 | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative effect of accounting change | $ 6,340 | $ 6,340 | $ 1,370 | $ 3,737 | $ 1,233 | $ 0 |
Consolidated Statement of Cha_2
Consolidated Statement of Changes in Equity (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends per Common Share (USD per share) | $ 0.45 | $ 0.40 | $ 1.35 | $ 2.70 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operating Activities: | ||
Net earnings, including noncontrolling interests | $ 27 | $ 678 |
Adjustments: | ||
Depreciation and amortization | 248 | 195 |
Annuity benefits | 905 | 900 |
Realized (gains) losses on investing activities | 332 | (223) |
Net (purchases) sales of trading securities | 18 | (2) |
Deferred annuity and life policy acquisition costs | (112) | (163) |
Change in: | ||
Reinsurance and other receivables | (597) | (330) |
Other assets | 120 | (281) |
Insurance claims and reserves | 702 | 475 |
Payable to reinsurers | 163 | 115 |
Other liabilities | (220) | 417 |
Managed investment entities’ assets/liabilities | 99 | (2) |
Other operating activities, net | 11 | (88) |
Net cash provided by operating activities | 1,696 | 1,691 |
Investing Activities: | ||
Purchases of fixed maturities | (7,817) | (5,533) |
Purchases of equity securities | (354) | (161) |
Purchases of mortgage loans | (197) | (181) |
Purchases of equity index call options and other investments | (699) | (658) |
Purchases of real estate, property and equipment | (41) | (33) |
Proceeds from maturities and redemptions of fixed maturities | 4,114 | 3,411 |
Proceeds from repayments of mortgage loans | 48 | 76 |
Proceeds from sales of fixed maturities | 3,123 | 569 |
Proceeds from sales of equity securities | 421 | 223 |
Proceeds from sales and settlements of equity index call options and other investments | 673 | 486 |
Proceeds from sales of real estate, property and equipment | 7 | 3 |
Managed investment entities: | ||
Purchases of investments | (878) | (1,062) |
Proceeds from sales and redemptions of investments | 818 | 1,081 |
Other investing activities, net | 10 | 1 |
Net cash used in investing activities | (772) | (1,778) |
Financing Activities: | ||
Annuity receipts | 2,968 | 3,821 |
Annuity surrenders, benefits and withdrawals | (2,506) | (2,502) |
Ceded annuity receipts | (246) | 0 |
Net transfers from variable annuity assets | 44 | 45 |
Additional long-term borrowings | 635 | 121 |
Issuances of managed investment entities’ liabilities | 30 | 0 |
Retirements of managed investment entities’ liabilities | (79) | (8) |
Issuances of Common Stock | 15 | 29 |
Repurchases of Common Stock | (233) | 0 |
Cash dividends paid on Common Stock | (119) | (241) |
Net cash provided by financing activities | 509 | 1,265 |
Net Change in Cash and Cash Equivalents | 1,433 | 1,178 |
Cash and cash equivalents at beginning of period | 2,314 | 1,515 |
Cash and cash equivalents at end of period | $ 3,747 | $ 2,693 |
Accounting Policies
Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Accounting Policies | Accounting Policies Basis of Presentation The accompanying consolidated financial statements for American Financial Group, Inc. and its subsidiaries (“AFG”) are unaudited; however, management believes that all adjustments (consisting only of normal recurring accruals unless otherwise disclosed herein) necessary for fair presentation have been made. The results of operations for interim periods are not necessarily indicative of results to be expected for the year. The financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary to be in conformity with U.S. generally accepted accounting principles (“GAAP”). Certain reclassifications have been made to prior periods to conform to the current year’s presentation. All significant intercompany balances and transactions have been eliminated. The results of operations of companies since their formation or acquisition are included in the consolidated financial statements. Events or transactions occurring subsequent to September 30, 2020, and prior to the filing of this Form 10-Q, have been evaluated for potential recognition or disclosure herein. The preparation of the financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Changes in circumstances could cause actual results to differ materially from those estimates. Fair Value Measurements Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The standards establish a hierarchy of valuation techniques based on whether the assumptions that market participants would use in pricing the asset or liability (“inputs”) are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect AFG’s assumptions about the assumptions market participants would use in pricing the asset or liability. Other than recording an estimated loss on the pending sale of Neon, its United Kingdom-based Lloyd’s insurer (see Note B — “Acquisitions and Sale of Businesses ”), AFG did not have any material nonrecurring fair value measurements in the first nine months of 2020. Credit Losses on Financial Instruments On January 1, 2020, AFG adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments , which provides a new loss model for determining credit-related impairments for financial instruments measured at amortized cost (mortgage loans, premiums receivable and reinsurance recoverables) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses considers historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. Expected credit losses, and subsequent increases or decreases in such expected losses, are recorded immediately through net earnings as an allowance that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the balance sheet at the amount expected to be collected. AFG’s portfolio of mortgage loans crosses a wide variety of commercial properties with very strong loan to value ratios and no credit losses in recent years. In addition, the reinsurance used in AFG’s insurance operations is purchased from financially strong (highly rated) reinsurers and the Company has a long history of collecting premiums receivable through various economic cycles. At the date of adoption, the impact of adjusting AFG’s existing allowances for uncollectable mortgage loans, premiums receivable and reinsurance recoverables to the allowances calculated under the new guidance resulted in a reduction in the net allowance, which was recorded as the cumulative effect of an accounting change ($7 million increase in retained earnings at January 1, 2020). The updated guidance also amended the current other-than-temporary impairment model for available for sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. Subsequent increases or decreases in expected credit losses will be recorded immediately in net earnings through realized gains (losses). Investments Equity securities other than those accounted for under the equity method are reported at fair value with holding gains and losses generally recorded in realized gains (losses) on securities. However, AFG records holding gains and losses on securities classified as “trading” under previous guidance, its small portfolio of limited partnerships and similar investments carried at fair value and certain other securities classified at purchase as “fair value through net investment income” in net investment income. Fixed maturity securities classified as “available for sale” are reported at fair value with unrealized gains and losses included in AOCI in AFG’s Balance Sheet. Fixed maturity securities classified as “trading” are reported at fair value with changes in unrealized holding gains or losses during the period included in net investment income. Mortgage loans (net of any allowance) and policy loans are carried primarily at the aggregate unpaid balance. Premiums and discounts on fixed maturity securities are amortized using the effective interest method. Mortgage-backed securities (“MBS”) are amortized over a period based on estimated future principal payments, including prepayments. Prepayment assumptions are reviewed periodically and adjusted to reflect actual prepayments and changes in expectations. Limited partnerships and similar investments are generally accounted for using the equity method of accounting. Under the equity method, AFG records its share of the earnings or losses of the investee based on when they are reported by the investee in its financial statements rather than in the period in which the investee declares a dividend. AFG’s share of the earnings or losses from equity method investments is generally recorded on a quarter lag due to the timing of the receipt of the investee’s financial statements. AFG’s equity in the earnings (losses) of limited partnerships and similar investments is included in net investment income. Realized gains or losses on the disposal of fixed maturity securities are determined on the specific identification basis. When a decline in the value of an available for sale fixed maturity is considered to be other-than-temporary at the balance sheet date, an allowance for credit losses (impairment), including any write-off of accrued interest, is charged to earnings (included in realized gains (losses) on securities). If management can assert that it does not intend to sell the security and it is not more likely than not that it will have to sell it before recovery of its amortized cost basis (net of allowance), then the impairment allowance is separated into two components: (i) the amount related to credit losses (recorded in earnings) and (ii) the amount related to all other factors (recorded in other comprehensive income). The credit-related portion is measured by comparing a security’s amortized cost to the present value of its current expected cash flows discounted at its effective yield prior to the charge. If management intends to sell an impaired security, or it is more likely than not that it will be required to sell the security before recovery, an impairment is recorded in earnings to reduce the amortized cost (net of allowance) of that security to fair value. See “Credit Losses on Financial Instruments” above for a discussion of new guidance adopted on January 1, 2020. Derivatives Derivatives included in AFG’s Balance Sheet are recorded at fair value. Changes in fair value of derivatives are included in earnings unless the derivatives are designated and qualify as highly effective cash flow hedges. Derivatives that do not qualify for hedge accounting under GAAP consist primarily of (i) components of certain fixed maturity securities (primarily interest-only and principal-only MBS) and (ii) the equity-based component of certain annuity products (included in annuity benefits accumulated) and related equity index options designed to be consistent with the characteristics of the liabilities and used to mitigate the risk embedded in those annuity products. To qualify for hedge accounting, at the inception of a derivative contract, AFG formally documents the relationship between the terms of the hedge and the hedged items and its risk management objective. This documentation includes defining how hedge effectiveness and ineffectiveness will be measured on a retrospective and prospective basis. Changes in the fair value of derivatives that are designated and qualify as highly effective cash flow hedges are recorded in AOCI and are reclassified into earnings when the variability of the cash flows from the hedged items impacts earnings. When the change in the fair value of a qualifying cash flow hedge is included in earnings, it is included in the same line item in the statement of earnings as the cash flows from the hedged item. AFG uses interest rate swaps that are designated and qualify as highly effective cash flow hedges to mitigate interest rate risk related to certain floating-rate securities included in AFG’s portfolio of fixed maturity securities. Goodwill Goodwill represents the excess of cost of subsidiaries over AFG’s equity in their underlying net assets. Goodwill is not amortized, but is subject to an impairment test at least annually. An entity is not required to complete the quantitative annual goodwill impairment test on a reporting unit if the entity elects to perform a qualitative analysis and determines that it is more likely than not that the reporting unit’s fair value exceeds its carrying amount. Reinsurance Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies. AFG’s property and casualty insurance subsidiaries report as assets (i) the estimated reinsurance recoverable on paid and unpaid losses, including an estimate for losses incurred but not reported, and (ii) amounts paid or due to reinsurers applicable to the unexpired terms of policies in force. Payable to reinsurers includes ceded premiums due to reinsurers, as well as ceded premiums retained by AFG’s property and casualty insurance subsidiaries under contracts to fund ceded losses as they become due. AFG’s insurance subsidiaries also assume reinsurance from other companies. Earnings on reinsurance assumed is recognized based on information received from ceding companies. An AFG subsidiary cedes life insurance policies to a third party on a funds withheld basis whereby the subsidiary retains the assets (securities) associated with the reinsurance contract. Interest is credited to the reinsurer based on the actual investment performance of the retained assets. This reinsurance contract is considered to contain an embedded derivative (that must be adjusted to fair value) because the yield on the payable is based on a specific block of the ceding company’s assets, rather than the overall creditworthiness of the ceding company. AFG determined that changes in the fair value of the underlying portfolio of fixed maturity securities is an appropriate measure of the value of the embedded derivative. The securities related to this contract are classified as “trading.” The adjustment to fair value on the embedded derivative offsets the investment income recorded on the adjustment to fair value of the related trading portfolio. Certain reinsurance arrangements in AFG’s annuity operations do not transfer significant insurance risk and are therefore accounted for using the deposit method. This accounting treatment results in amounts paid by AFG to the reinsurer to be recorded as a deposit asset. The reinsurance deposit asset is adjusted as amounts are paid or received under the underlying contracts. Deferred Policy Acquisition Costs (“DPAC”) Policy acquisition costs (principally commissions, premium taxes and certain underwriting and policy issuance costs) directly related to the successful acquisition or renewal of an insurance contract are deferred. DPAC also includes capitalized costs associated with sales inducements offered to fixed annuity policyholders such as enhanced interest rates and premium and persistency bonuses. For the property and casualty companies, DPAC is limited based upon recoverability without any consideration for anticipated investment income and is charged against income ratably over the terms of the related policies. A premium deficiency is recognized if the sum of expected claims costs, claims adjustment expenses and unamortized acquisition costs exceed the related unearned premiums. A premium deficiency is first recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. If the premium deficiency is greater than unamortized acquisition costs, a liability is accrued for the excess deficiency and reported with unpaid losses and loss adjustment expenses. DPAC related to annuities is deferred to the extent deemed recoverable and amortized, with interest, in relation to the present value of actual and expected gross profits on the policies. Expected gross profits consist principally of estimated future investment margin (estimated future net investment income less interest credited on policyholder funds) and surrender, mortality, and other life and annuity policy charges, less death, annuitization and guaranteed withdrawal benefits in excess of account balances and estimated future policy administration expenses. To the extent that realized gains and losses result in adjustments to the amortization of DPAC related to annuities, such adjustments are reflected as components of realized gains (losses) on securities. DPAC related to traditional life and health insurance is amortized over the expected premium paying period of the related policies, in proportion to the ratio of annual premium revenues to total anticipated premium revenues. See “Life, Accident and Health Reserves” below for details on the impact of loss recognition on the accounting for traditional life and health insurance contracts. DPAC includes the present value of future profits on business in force of annuity and life, accident and health insurance companies acquired (“PVFP”). PVFP represents the portion of the costs to acquire companies that is allocated to the value of the right to receive future cash flows from insurance contracts existing at the date of acquisition. PVFP is amortized with interest in relation to expected gross profits of the acquired policies for annuities and universal life products and in relation to the premium paying period for traditional life and health insurance products. DPAC and certain other balance sheet amounts related to annuity and life businesses are also adjusted, net of tax, for the change in expense that would have been recorded if the unrealized gains (losses) from securities had actually been realized. These adjustments are included in unrealized gains (losses) on marketable securities, a component of AOCI in AFG’s Balance Sheet. Managed Investment Entities A company is considered the primary beneficiary of, and therefore must consolidate, a variable interest entity (“VIE”) based primarily on its ability to direct the activities of the VIE that most significantly impact that entity’s economic performance and the obligation to absorb losses of, or receive benefits from, the entity that could potentially be significant to the VIE. AFG manages, and has investments in, collateralized loan obligations (“CLOs”) that are VIEs (see Note H — “Managed Investment Entities” ). AFG has determined that it is the primary beneficiary of these CLOs because (i) its role as asset manager gives it the power to direct the activities that most significantly impact the economic performance of the CLOs and (ii) through its investment in the CLO debt tranches, it has exposure to CLO losses (limited to the amount AFG invested) and the right to receive CLO benefits that could potentially be significant to the CLOs. Because AFG has no right to use the CLO assets and no obligation to pay the CLO liabilities, the assets and liabilities of the CLOs are shown separately in AFG’s Balance Sheet. AFG has elected the fair value option for reporting on the CLO assets and liabilities to improve the transparency of financial reporting related to the CLOs. The net gain or loss from accounting for the CLO assets and liabilities at fair value is presented separately in AFG’s Statement of Earnings. The fair values of a CLO’s assets may differ from the separately measured fair values of its liabilities even though the CLO liabilities only have recourse to the CLO assets. AFG has set the carrying value of the CLO liabilities equal to the fair value of the CLO assets (which have more observable fair values) as an alternative to reporting those liabilities at a separately measured fair value. CLO earnings attributable to AFG’s shareholders are measured by the change in the fair value of AFG’s investments in the CLOs and management fees earned. At September 30, 2020, assets and liabilities of managed investment entities included $140 million in assets and $130 million in liabilities of a temporary warehousing entity that was established in connection with the formation of a new CLO that is expected to close in November 2020. At closing, all warehoused assets will be transferred to the new CLO and the liabilities will be repaid. Unpaid Losses and Loss Adjustment Expenses The net liabilities stated for unpaid claims and for expenses of investigation and adjustment of unpaid claims represent management’s best estimate and are based upon (i) the accumulation of case estimates for losses reported prior to the close of the accounting period on direct business written; (ii) estimates received from ceding reinsurers and insurance pools and associations; (iii) estimates of unreported losses (including possible development on known claims) based on past experience; (iv) estimates based on experience of expenses for investigating and adjusting claims; and (v) the current state of the law and coverage litigation. Establishing reserves for asbestos, environmental and other mass tort claims involves considerably more judgment than other types of claims due to, among other things, inconsistent court decisions, an increase in bankruptcy filings as a result of asbestos-related liabilities, novel theories of coverage, and judicial interpretations that often expand theories of recovery and broaden the scope of coverage. Loss reserve liabilities are subject to the impact of changes in claim amounts and frequency and other factors. Changes in estimates of the liabilities for losses and loss adjustment expenses are reflected in the statement of earnings in the period in which determined. Despite the variability inherent in such estimates, management believes that the liabilities for unpaid losses and loss adjustment expenses are adequate. Annuity Benefits Accumulated Annuity receipts and benefit payments are recorded as increases or decreases in annuity benefits accumulated rather than as revenue and expense. Increases in this liability for interest credited are charged to annuity benefits expense and decreases for annuity policy charges are recorded in other income. For traditional fixed annuities, the liability for annuity benefits accumulated represents the account value that had accrued to the benefit of the policyholder as of the balance sheet date. For fixed-indexed annuities (“FIAs”), the liability for annuity benefits accumulated includes an embedded derivative that represents the estimated fair value of the index participation with the remaining component representing the discounted value of the guaranteed minimum contract benefits. For certain products, annuity benefits accumulated also includes reserves for accrued persistency and premium bonuses, guaranteed withdrawals and excess benefits expected to be paid on future deaths and annuitizations (“EDAR”). The liabilities for EDAR and guaranteed withdrawals are accrued for and modified using assumptions consistent with those used in determining DPAC and DPAC amortization, except that amounts are determined in relation to the present value of total expected assessments. Total expected assessments consist principally of estimated future investment margin, surrender, mortality, and other life and annuity policy charges, and unearned revenues once they are recognized as income. Annuity benefits accumulated also includes amounts advanced from the Federal Home Loan Bank of Cincinnati. Unearned Revenue Certain upfront policy charges on annuities are deferred as unearned revenue (included in other liabilities) and recognized in net earnings (included in other income) using the same assumptions and estimated gross profits used to amortize DPAC. Life, Accident and Health Reserves Liabilities for future policy benefits under traditional life, accident and health policies are computed using the net level premium method. Computations are based on the original projections of investment yields, mortality, morbidity and surrenders and include provisions for unfavorable deviations unless a loss recognition event (premium deficiency) occurs. Claim reserves and liabilities established for accident and health claims are modified as necessary to reflect actual experience and developing trends. For long-duration contracts (such as traditional life and long-term care policies), loss recognition occurs when, based on current expectations as of the measurement date, existing contract liabilities plus the present value of future premiums (including reasonably expected rate increases) are not expected to cover the present value of future claims payments and related settlement and maintenance costs (excluding overhead) as well as unamortized acquisition costs. If a block of business is determined to be in loss recognition, a charge is recorded in earnings in an amount equal to the excess of the present value of expected future claims costs and unamortized acquisition costs over existing reserves plus the present value of expected future premiums (with no provision for adverse deviation). The charge is recorded first to reduce unamortized acquisition costs and then as an additional reserve (if unamortized acquisition costs have been reduced to zero). In addition, reserves for traditional life and long-term care policies are subject to adjustment for loss recognition charges that would have been recorded if the unrealized gains (losses) from securities had actually been realized. This adjustment is included in unrealized gains (losses) on marketable securities, a component of AOCI in AFG’s Balance Sheet. Debt Issuance Costs Debt issuance costs related to AFG’s outstanding debt are presented in its Balance Sheet as a direct reduction in the carrying value of long-term debt and are amortized over the life of the related debt using the effective interest method as a component of interest expense. Debt issuance costs related to AFG’s revolving credit facilities are included in other assets in AFG’s Balance Sheet. Variable Annuity Assets and Liabilities Separate accounts related to variable annuities represent the fair value of deposits invested in underlying investment funds on which AFG earns a fee. Investment funds are selected and may be changed only by the policyholder, who retains all investment risk. AFG’s variable annuity contracts contain a guaranteed minimum death benefit (“GMDB”) to be paid if the policyholder dies before the annuity payout period commences. In periods of declining equity markets, the GMDB may exceed the value of the policyholder’s account. A GMDB liability is established for future excess death benefits using assumptions together with a range of reasonably possible scenarios for investment fund performance that are consistent with DPAC capitalization and amortization assumptions. Leases On January 1, 2019, AFG adopted ASU 2016-02, which requires entities that lease assets for terms longer than one year to recognize assets and liabilities for the rights and obligations created by those leases on the balance sheet based on the present value of contractual cash flows. The adoption of the new guidance did not have a material effect on AFG’s results of operations or liquidity. At September 30, 2020 AFG has a $175 million lease liability included in other liabilities and a lease right-of-use asset of $154 million included in other assets compared to $180 million and $158 million, respectively, at December 31, 2019. Noncontrolling Interests For balance sheet purposes, noncontrolling interests represent the interests of shareholders other than AFG in consolidated entities. In the statement of earnings, net earnings and losses attributable to noncontrolling interests represents such shareholders’ interest in the earnings and losses of those entities. Noncontrolling interests that are redeemable at the option of the holder are presented separately in the mezzanine section of the balance sheet (between liabilities and equity). Premium Recognition Property and casualty premiums are earned generally over the terms of the policies on a pro rata basis. Unearned premiums represent that portion of premiums written, which is applicable to the unexpired terms of policies in force. On reinsurance assumed from other insurance companies or written through various underwriting organizations, unearned premiums are based on information received from such companies and organizations. For traditional life, accident and health products, premiums are recognized as revenue when legally collectible from policyholders. For interest-sensitive life and universal life products, premiums are recorded in a policyholder account, which is reflected as a liability. Revenue is recognized as amounts are assessed against the policyholder account for mortality coverage and contract expenses. Income Taxes Deferred income taxes are calculated using the liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases and are measured using enacted tax rates. A valuation allowance is established to reduce total deferred tax assets to an amount that will more likely than not be realized. The effect of a change in tax rates on deferred tax assets and liabilities is recorded in net earnings in the period that includes the enactment date. AFG recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained under examination by the appropriate taxing authority. Interest and penalties on AFG’s reserve for uncertain tax positions are recognized as a component of tax expense. Stock-Based Compensation All share-based grants are recognized as compensation expense on a straight-line basis over their vesting periods based on their calculated fair value at the date of grant. AFG uses the Black Scholes pricing model to measure the fair value of employee stock options. AFG records excess tax benefits or deficiencies for share-based payments through income tax expense in the statement of earnings. In addition, AFG accounts for forfeitures of awards when they occur. Benefit Plans AFG provides retirement benefits to qualified employees of participating companies through the AFG 401(k) Retirement and Savings Plan, a defined contribution plan. AFG makes all contributions to the retirement fund portion of the plan and matches a percentage of employee contributions to the savings fund. Company contributions are expensed in the year for which they are declared. AFG and many of its subsidiaries provide health care and life insurance benefits to eligible retirees. AFG also provides postemployment benefits to former or inactive employees (primarily those on disability) who were not deemed retired under other company plans. The projected future cost of providing these benefits is expensed over the period employees earn such benefits. Earnings Per Share Although basic earnings per share only considers shares of common stock outstanding during the period, the calculation of diluted earnings per share includes the following adjustments to weighted average common shares related to stock-based compensation plans: third quarter 2020 and 2019 — 0.3 million and 1.1 million; first nine months of 2020 and 2019 — 0.5 million and 1.2 million, respectively. There were no anti-dilutive potential common shares for the third quarter or the first nine months of 2020 or 2019. Statement of Cash Flows For cash flow purposes, “investing activities” are defined as making and collecting loans and acquiring and disposing of debt or equity instruments, property and equipment and businesses. “Financing activities” include obtaining resources from owners and providing them with a return on their investments, borrowing money and repaying amounts borrowed. Annuity receipts, surrenders, benefits and withdrawals are also reflected as financing activities. All other activities are considered “operating.” Short-term investments having original maturities of three months or less when purchased are considered to be cash equivalents for purposes of the financial statements. |
Acquisitions and Sale of Busine
Acquisitions and Sale of Businesses | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisition of Business | Acquisitions and Sale of Businesses Paratransit Book of Business Effective in June 2019, National Interstate, a property and casualty insurance subsidiary of AFG, entered into an agreement with Atlas Financial Holdings, Inc. (“AFH”) to become the exclusive underwriter of AFH’s paratransit book of business. National Interstate estimated that the majority of AFH’s $110 million paratransit business was eligible for quotation under this arrangement following inception of the agreement. Under the terms of the agreement (as extended in 2020), AFH will act as an underwriting manager for National Interstate until at least August 2021 for fleets with seven or fewer vehicles and until November 2020 for accounts with eight or more vehicles, after which time National Interstate is entitled to acquire the renewal rights for the business from AFH for a purchase price equal to 15% of the in force gross written premiums at that date. The majority of the purchase price ultimately paid for the renewal rights will be recorded as an intangible renewal rights asset and will be amortized over the estimated life of the business acquired. In connection with the transaction, AFG was granted a five Neon In December 2019, AFG initiated actions to exit the Lloyd’s of London insurance market, which included placing Neon Underwriting Ltd. and its other Lloyd’s subsidiaries in run-off. Neon and its predecessor, Marketform, failed to achieve AFG’s profitability objectives since AFG’s purchase of Marketform in 2008. On June 30, 2020, AFG acquired 100% of the indirect noncontrolling interest in Neon from certain former and current Neon executives for cash based on the nominal fair value of the interest acquired as determined by a third-party valuation firm. On September 28, 2020, AFG announced that it has reached a definitive agreement to sell GAI Holding Bermuda and its subsidiaries, comprising the legal entities that own Neon, to RiverStone Holdings Limited for estimated proceeds of $6 million. The sale is subject to customary conditions, including receipt of regulatory approval, is expected to close in the fourth quarter of 2020, and will complete AFG’s exit from the Lloyd’s of London insurance market. Based on the status of the sale transaction at the end of the third quarter, management determined that the pending sale of Neon met the GAAP “held for sale” criteria as of September 30, 2020. Accordingly, AFG recorded a loss in the third quarter of 2020 to establish a liability (included in other liabilities in AFG’s Balance Sheet) equal to the excess of the net carrying value of the assets and liabilities to be disposed over the estimated net sale proceeds. The loss may be adjusted at the closing date based on the final proceeds and the final net assets disposed. At September 30, 2020, the carrying value of the assets and liabilities to be disposed represented approximately 1% of both AFG’s assets and liabilities and are detailed in the table below. Under GAAP accounting guidance, only disposals of components of an entity that represent a strategic shift and that have a major effect on a reporting entity’s operations and financial results are reported as discontinued operations. Because AFG’s primary business continues to be commercial property and casualty insurance, as well as the immaterial expected impact on AFG’s ongoing results of operations, the pending sale of Neon has not been reported as a discontinued operation. The impact of Neon exited lines on AFG’s net earnings for the three months ended September 30, 2020 is shown below (in millions): Underwriting gain (loss) $ (38) Net investment income 1 Other income and expenses, net (3) Pretax loss from operations (40) Estimated loss on sale of subsidiaries (30) Total pretax loss from Neon exited lines (70) Tax benefit related to sale of subsidiaries 73 Net earnings from Neon exited lines $ 3 The estimated loss on the pending sale of Neon, which was recorded in AFG’s financial statements as of September 30, 2020, is shown below (in millions): Estimated sale proceeds, net of expenses $ 4 Assets of businesses to be sold: Cash and investments $ 461 Recoverables from reinsurers 198 Prepaid reinsurance premiums 30 Agents’ balances and premiums receivable 48 Other assets 73 Total assets 810 Liabilities of businesses to be sold: Unpaid losses and loss adjustment expenses 598 Unearned premiums 83 Payable to reinsurers 39 Other liabilities 47 Total liabilities 767 Reclassify accumulated other comprehensive income (9) Net assets of businesses to be sold $ 34 Pretax loss on subsidiaries recorded in the third quarter of 2020 $ (30) Revenues, costs and expenses, and earnings before income taxes for the subsidiaries to be sold were (in millions): Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Net earned premiums $ 42 $ 97 $ 174 $ 274 Loss and loss adjustment expenses 60 66 166 172 Commissions and other underwriting expenses 20 50 90 135 Underwriting loss (38) (19) (82) (33) Net investment income 1 2 (5) 5 Other income and expenses, net (3) (3) (5) (8) Loss before income taxes and noncontrolling interests $ (40) $ (20) $ (92) $ (36) As discussed in Note L — “Income Taxes,” the pending sale of Neon allowed AFG to recognize a $73 million tax benefit. |
Segments of Operations
Segments of Operations | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segments of Operations | Segments of Operations AFG manages its business as three segments: (i) Property and casualty insurance, (ii) Annuity and (iii) Other, which includes holding company costs, revenues and costs of AFG’s limited insurance operations outside of property and casualty insurance and annuity segments, and operations attributable to the noncontrolling interests of the managed investment entities. AFG reports its property and casualty insurance business in the following Specialty sub-segments: (i) Property and transportation, which includes physical damage and liability coverage for buses and trucks, inland and ocean marine, agricultural-related products and other commercial property coverages, (ii) Specialty casualty, which includes primarily excess and surplus, executive and professional liability, general liability, umbrella and excess liability, specialty coverages in targeted markets, customized programs for small to mid-sized businesses and workers’ compensation insurance, and (iii) Specialty financial, which includes risk management insurance programs for lending and leasing institutions (including equipment leasing and collateral and lender-placed mortgage property insurance), fidelity and surety products and trade credit insurance. Premiums and underwriting profit included under Other specialty represent business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty sub-segments and amortization of deferred gains on retroactive reinsurance transactions related to the sales of businesses in prior years. AFG’s annuity business sells traditional fixed and indexed annuities in the retail, financial institutions, broker-dealer and registered investment advisor markets. AFG’s reportable segments and their components were determined based primarily upon similar economic characteristics, products and services. As discussed in Note B — “Acquisitions and Sale of Businesses,” AFG initiated actions to exit the Lloyd’s of London insurance market, which included placing its Lloyd’s subsidiaries including its Lloyd’s Managing Agency, Neon Underwriting Ltd., into run-off in December 2019. Beginning prospectively with the first quarter of 2020, the results for AFG’s Specialty casualty sub-segment exclude the run-off operations of Neon (“Neon exited lines”). The following tables (in millions) show AFG’s revenues and earnings before income taxes by segment and sub-segment. Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Revenues Property and casualty insurance: Premiums earned: Specialty Property and transportation $ 574 $ 583 $ 1,350 $ 1,323 Specialty casualty 560 658 1,663 1,921 Specialty financial 155 161 455 458 Other specialty 50 40 132 113 Other lines (a) 42 — 174 — Total premiums earned 1,381 1,442 3,774 3,815 Net investment income (b) 112 124 277 352 Other income — 5 8 10 Total property and casualty insurance 1,493 1,571 4,059 4,177 Annuity: Net investment income 464 448 1,270 1,334 Other income 30 32 95 90 Total annuity 494 480 1,365 1,424 Other 58 90 194 284 Total revenues before realized gains (losses) 2,045 2,141 5,618 5,885 Realized gains (losses) on securities 45 (18) (302) 222 Realized losses on subsidiaries (30) — (30) — Total revenues $ 2,060 $ 2,123 $ 5,286 $ 6,107 (a) Represents premiums earned in the Neon exited lines during the third quarter and first nine months of 2020. Neon’s $97 million and $274 million in earned premiums during the third quarter and first nine months of 2019, respectively, are included in the Specialty casualty sub-segment. (b) Includes income of $1 million for the third quarter of 2020 and a loss of $5 million in the Neon exited lines in the first nine months of 2020 (primarily from the change in fair value of equity securities). Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Earnings (Loss) Before Income Taxes Property and casualty insurance: Underwriting: Specialty Property and transportation $ 47 $ 38 $ 107 $ 81 Specialty casualty 53 23 132 106 Specialty financial 13 26 30 60 Other specialty (9) 1 (22) (11) Other lines (a) (86) (34) (133) (36) Total underwriting 18 54 114 200 Investment and other income, net (b) 100 118 249 328 Total property and casualty insurance 118 172 363 528 Annuity 78 73 90 234 Other (c) (77) (50) (157) (135) Total earnings before realized gains (losses) and income taxes 119 195 296 627 Realized gains (losses) on securities 45 (18) (302) 222 Realized losses on subsidiaries (30) — (30) — Total earnings (loss) before income taxes $ 134 $ 177 $ (36) $ 849 (a) Includes an underwriting loss of $38 million in the third quarter of 2020 and $82 million in the first nine months of 2020 in the Neon exited lines. Neon’s $19 million and $33 million underwriting losses in the third quarter and first nine months of 2019, respectively, are included in the Specialty casualty sub-segment. Also includes special charges of $47 million and $18 million in the third quarter of 2020 and 2019, respectively, to increase asbestos and environmental (“A&E”) reserves. (b) Includes $2 million and $10 million in the third quarter and first nine months of 2020, respectively, in net expenses from the Neon exited lines, before noncontrolling interest. (c) Includes holding company interest and expenses, including special charges of $21 million and $11 million in the third quarter of 2020 and 2019, respectively, to increase A&E reserves related to AFG’s former railroad and manufacturing operations. Also includes the results of AFG’s run-off life and long-term care businesses, including a $4 million loss recognition charge recorded in the run-off long-term care business in September 2020. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Accounting standards for measuring fair value are based on inputs used in estimating fair value. The three levels of the hierarchy are as follows: Level 1 — Quoted prices for identical assets or liabilities in active markets (markets in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis). AFG’s Level 1 financial instruments consist primarily of publicly traded equity securities, highly liquid government bonds for which quoted market prices in active markets are available and short-term investments of managed investment entities. Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar assets or liabilities in inactive markets (markets in which there are few transactions, the prices are not current, price quotations vary substantially over time or among market makers, or in which little information is released publicly); and valuations based on other significant inputs that are observable in active markets. AFG’s Level 2 financial instruments include separate account assets, corporate and municipal fixed maturity securities, asset-backed securities (“ABS”), mortgage-backed securities (“MBS”), certain non-affiliated common stocks, equity index options and investments of managed investment entities priced using observable inputs. Level 2 inputs include benchmark yields, reported trades, corroborated broker/dealer quotes, issuer spreads and benchmark securities. When non-binding broker quotes can be corroborated by comparison to similar securities priced using observable inputs, they are classified as Level 2. Level 3 — Valuations derived from market valuation techniques generally consistent with those used to estimate the fair values of Level 2 financial instruments in which one or more significant inputs are unobservable or when the market for a security exhibits significantly less liquidity relative to markets supporting Level 2 fair value measurements. The unobservable inputs may include management’s own assumptions about the assumptions market participants would use based on the best information available at the valuation date. Financial instruments whose fair value is estimated based on non-binding broker quotes or internally developed using significant inputs not based on, or corroborated by, observable market information are classified as Level 3. As discussed in Note A — “Accounting Policies — Managed Investment Entities,” AFG has set the carrying value of its CLO liabilities equal to the fair value of the CLO assets (which have more observable fair values) as an alternative to reporting those liabilities at separately measured fair values. As a result, the CLO liabilities are categorized within the fair value hierarchy on the same basis (proportionally) as the related CLO assets. Since the portion of the CLO liabilities allocated to Level 3 is derived from the fair value of the CLO assets, these amounts are excluded from the progression of Level 3 financial instruments. AFG’s management is responsible for the valuation process and uses data from outside sources (including nationally recognized pricing services and broker/dealers) in establishing fair value. AFG’s internal investment professionals are a group of approximately 20 investment professionals whose primary responsibility is to manage AFG’s investment portfolio. These professionals monitor individual investments as well as overall industries and are active in the financial markets on a daily basis. The group is led by AFG’s chief investment officer, who reports directly to one of AFG’s Co-CEOs. Valuation techniques utilized by pricing services and prices obtained from external sources are reviewed by AFG’s internal investment professionals who are familiar with the securities being priced and the markets in which they trade to ensure the fair value determination is representative of an exit price. To validate the appropriateness of the prices obtained, these investment managers consider widely published indices (as benchmarks), recent trades, changes in interest rates, general economic conditions and the credit quality of the specific issuers. In addition, the Company communicates directly with the pricing services regarding the methods and assumptions used in pricing, including verifying, on a test basis, the inputs used by the service to value specific securities. Assets and liabilities measured and carried at fair value in the financial statements are summarized below (in millions): Level 1 Level 2 Level 3 Total September 30, 2020 Assets: Available for sale (“AFS”) fixed maturities: U.S. Government and government agencies $ 182 $ 27 $ 15 $ 224 States, municipalities and political subdivisions — 6,616 106 6,722 Foreign government — 195 — 195 Residential MBS — 2,959 178 3,137 Commercial MBS — 846 10 856 Collateralized loan obligations — 4,395 212 4,607 Other asset-backed securities — 6,075 1,344 7,419 Corporate and other 24 23,528 1,481 25,033 Total AFS fixed maturities 206 44,641 3,346 48,193 Trading fixed maturities — 92 — 92 Equity securities 1,090 72 444 1,606 Equity index call options — 697 — 697 Assets of managed investment entities (“MIE”) 148 4,554 15 4,717 Variable annuity assets (separate accounts) (*) — 603 — 603 Other assets — derivatives — 114 — 114 Total assets accounted for at fair value $ 1,444 $ 50,773 $ 3,805 $ 56,022 Liabilities: Liabilities of managed investment entities $ 142 $ 4,384 $ 15 $ 4,541 Derivatives in annuity benefits accumulated — — 3,657 3,657 Other liabilities — derivatives — 9 — 9 Total liabilities accounted for at fair value $ 142 $ 4,393 $ 3,672 $ 8,207 December 31, 2019 Assets: Available for sale 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 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 (*) Variable annuity liabilities equal the fair value of variable annuity assets. Approximately 7% of the total assets carried at fair value at September 30, 2020, were Level 3 assets. Approximately 38% ($1.46 billion) of the Level 3 assets were priced using non-binding broker quotes, for which there is a lack of transparency as to the inputs used to determine fair value. Details as to the quantitative inputs are neither provided by the brokers nor otherwise reasonably obtainable by AFG. Internally developed Level 3 asset fair values represent approximately $1.74 billion at September 30, 2020. Of this amount, approximately $730 million relates to fixed maturity securities that were priced using management’s best estimate of an appropriate credit spread over the treasury yield (of a similar duration) to discount future expected cash flows using a third-party model. The credit spread applied by management is the significant unobservable input. For this group of 43 securities, the average spread used was 397 basis points over the reference treasury yield and the spreads ranged from 100 basis points to 1,253 basis points (approximately 80% of the spreads were between 200 and 700 basis points). Had management used higher spreads, the fair value of this group of securities would have been lower. Conversely, if the spreads used were lower, the fair values would have been higher. Management believes that any justifiable changes in unobservable inputs used to determine internally developed fair values would not have resulted in a material change in AFG’s financial position. The derivatives embedded in AFG’s fixed-indexed and variable-indexed annuity liabilities are measured using a discounted cash flow approach and had a fair value of $3.66 billion at September 30, 2020. The following table presents information about the unobservable inputs used by management in determining fair value of these Level 3 liabilities. See Note F — “Derivatives.” Unobservable Input Range Adjustment for insurance subsidiary’s credit risk 0.2% – 2.9% over the risk-free rate Risk margin for uncertainty in cash flows 0.99% reduction in the discount rate Surrenders 4% – 23% of indexed account value Partial surrenders 2% – 11% of indexed account value Annuitizations 0.1% – 1% of indexed account value Deaths 1.8% – 13.2% of indexed account value Budgeted option costs 2.2% – 2.8% of indexed account value The range of adjustments for insurance subsidiary’s credit risk is based on the Moody’s corporate A2 bond index and reflects credit spread variations across the yield curve. The range of projected surrender rates reflects the specific surrender charges and other features of AFG’s individual fixed-indexed and variable-indexed annuity products with an expected range of 8% to 11% in the majority of future calendar years (4% to 23% over all periods). Increasing the budgeted option cost or risk margin for uncertainty in cash flow assumptions in the table above would increase the fair value of the fixed-indexed and variable-indexed annuity embedded derivatives, while increasing any of the other unobservable inputs in the table above would decrease the fair value of the embedded derivatives. Changes in balances of Level 3 financial assets and liabilities carried at fair value during the third quarter and first nine months of 2020 and 2019 are presented below (in millions). The transfers into and out of Level 3 were due to changes in the availability of market observable inputs. All transfers are reflected in the table at fair value as of the end of the reporting period. Total realized/unrealized Balance at June 30, 2020 Net Other Purchases Sales and Transfer Transfer Balance at September 30, 2020 AFS fixed maturities: U.S. government agency $ 15 $ 1 $ (1) $ — $ — $ — $ — $ 15 State and municipal 107 — — — (1) — — 106 Residential MBS 156 (4) 1 — (6) 49 (18) 178 Commercial MBS 33 (1) — — — — (22) 10 Collateralized loan obligations 207 (1) 6 — — — — 212 Other asset-backed securities 1,328 (2) 13 39 (75) 77 (36) 1,344 Corporate and other 1,525 6 4 53 (77) 121 (151) 1,481 Total AFS fixed maturities 3,371 (1) 23 92 (159) 247 (227) 3,346 Equity securities 452 (10) — 12 — — (10) 444 Assets of MIE 17 (2) — — — — — 15 Total Level 3 assets $ 3,840 $ (13) $ 23 $ 104 $ (159) $ 247 $ (237) $ 3,805 Embedded derivatives (a) $ (3,675) $ (5) $ — $ (56) $ 79 $ — $ — $ (3,657) Total Level 3 liabilities (b) $ (3,675) $ (5) $ — $ (56) $ 79 $ — $ — $ (3,657) Total realized/unrealized Balance at June 30, 2019 Net Other Purchases Sales and Transfer Transfer Balance at September 30, 2019 AFS fixed maturities: U.S. government agency $ 8 $ — $ — $ — $ — $ — $ — $ 8 State and municipal 82 — 2 — — 18 — 102 Residential MBS 139 1 (1) — (4) 22 (1) 156 Commercial MBS 50 1 — — — 4 — 55 Collateralized loan obligations 50 (2) 1 8 — — — 57 Other asset-backed securities 367 — 1 49 (3) — — 414 Corporate and other 2,014 — 20 324 (81) 10 (1) 2,286 Total AFS fixed maturities 2,710 — 23 381 (88) 54 (2) 3,078 Equity securities 377 (7) — 18 (2) 34 — 420 Assets of MIE 19 (1) — — — — — 18 Total Level 3 assets $ 3,106 $ (8) $ 23 $ 399 $ (90) $ 88 $ (2) $ 3,516 Embedded derivatives (a) $ (3,541) $ 70 $ — $ (63) $ 65 $ — $ — $ (3,469) Total Level 3 liabilities (b) $ (3,541) $ 70 $ — $ (63) $ 65 $ — $ — $ (3,469) (a) Total realized/unrealized gains (losses) included in net earnings for the embedded derivatives reflects a favorable adjustment related to the unlocking of actuarial assumptions of $240 million in the third quarter of 2020 compared to $181 million in the third quarter of 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 MIE assets. Total realized/unrealized Balance at December 31, 2019 Net Other Purchases Sales and Transfer Transfer Balance at September 30, 2020 AFS fixed maturities: U.S. government agency $ 15 $ 3 $ (3) $ — $ — $ — $ — $ 15 State and municipal 105 — 6 — (3) — (2) 106 Residential MBS 173 1 (7) — (15) 51 (25) 178 Commercial MBS 35 — — — (3) — (22) 10 Collateralized loan obligations 15 (11) 21 — — 187 — 212 Other asset-backed securities 1,286 (16) 6 314 (278) 211 (179) 1,344 Corporate and other 1,758 4 24 220 (133) 130 (522) 1,481 Total AFS fixed maturities 3,387 (19) 47 534 (432) 579 (750) 3,346 Equity securities 437 (35) — 35 — 17 (10) 444 Assets of MIE 17 (4) — — — 2 — 15 Total Level 3 assets $ 3,841 $ (58) $ 47 $ 569 $ (432) $ 598 $ (760) $ 3,805 Embedded derivatives (a) $ (3,730) $ 41 $ — $ (180) $ 212 $ — $ — $ (3,657) Total Level 3 liabilities (b) $ (3,730) $ 41 $ — $ (180) $ 212 $ — $ — $ (3,657) Total realized/unrealized Balance at December 31, 2018 Net Other Purchases Sales and Transfer Transfer Balance at September 30, 2019 AFS fixed maturities: U.S. government agency $ 9 $ — $ — $ — $ (1) $ — $ — $ 8 State and municipal 59 — 9 — (2) 36 — 102 Residential MBS 197 10 (6) — (14) 24 (55) 156 Commercial MBS 56 3 — — (3) 4 (5) 55 Collateralized loan obligations 116 (5) 7 8 — 13 (82) 57 Other asset-backed securities 731 — 6 141 (135) — (329) 414 Corporate and other 1,996 2 71 985 (330) 12 (450) 2,286 Total AFS fixed maturities 3,164 10 87 1,134 (485) 89 (921) 3,078 Equity securities 336 (7) — 38 (3) 56 — 420 Assets of MIE 21 (3) — — — — — 18 Total Level 3 assets $ 3,521 $ — $ 87 $ 1,172 $ (488) $ 145 $ (921) $ 3,516 Embedded derivatives (a) $ (2,720) $ (643) $ — $ (276) $ 170 $ — $ — $ (3,469) Total Level 3 liabilities (b) $ (2,720) $ (643) $ — $ (276) $ 170 $ — $ — $ (3,469) (a) Total realized/unrealized gains (losses) included in net earnings for the embedded derivatives reflects a favorable adjustment related to the unlocking of actuarial assumptions of $240 million in the first nine months of 2020 compared to $181 million in the first nine months of 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. Fair Value of Financial Instruments The carrying value and fair value of financial instruments that are not carried at fair value in the financial statements are summarized below (in millions): Carrying Fair Value Value Total Level 1 Level 2 Level 3 September 30, 2020 Financial assets: Cash and cash equivalents $ 3,747 $ 3,747 $ 3,747 $ — $ — Mortgage loans 1,482 1,507 — — 1,507 Policy loans 154 154 — — 154 Total financial assets not accounted for at fair value $ 5,383 $ 5,408 $ 3,747 $ — $ 1,661 Financial liabilities: Annuity benefits accumulated (*) $ 41,082 $ 42,938 $ — $ — $ 42,938 Long-term debt 2,108 2,397 — 2,394 3 Total financial liabilities not accounted for at fair value $ 43,190 $ 45,335 $ — $ 2,394 $ 42,941 December 31, 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 (*) Excludes $850 million and $247 million of life contingent annuities in the payout phase at September 30, 2020 and December 31, 2019, respectively. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Available for sale fixed maturities at September 30, 2020 and December 31, 2019, consisted of the following (in millions): Amortized Allowance for Expected Credit Losses Gross Unrealized Net Fair Gains Losses September 30, 2020 Fixed maturities: U.S. Government and government agencies $ 211 $ — $ 13 $ — $ 13 $ 224 States, municipalities and political subdivisions 6,150 — 575 (3) 572 6,722 Foreign government 187 — 8 — 8 195 Residential MBS 2,882 3 264 (6) 258 3,137 Commercial MBS 814 — 44 (2) 42 856 Collateralized loan obligations 4,643 20 25 (41) (16) 4,607 Other asset-backed securities 7,405 16 154 (124) 30 7,419 Corporate and other 23,005 15 2,121 (78) 2,043 25,033 Total fixed maturities $ 45,297 $ 54 $ 3,204 $ (254) $ 2,950 $ 48,193 December 31, 2019 Fixed maturities: U.S. Government and government agencies $ 199 $ — $ 10 $ — $ 10 $ 209 States, municipalities and political subdivisions 6,604 — 363 (4) 359 6,963 Foreign government 170 — 3 (1) 2 172 Residential MBS 2,900 — 265 (5) 260 3,160 Commercial MBS 896 — 31 — 31 927 Collateralized loan obligations 4,307 — 10 (37) (27) 4,280 Other asset-backed securities 6,992 — 156 (20) 136 7,128 Corporate and other 22,456 — 1,231 (21) 1,210 23,666 Total fixed maturities $ 44,524 $ — $ 2,069 $ (88) $ 1,981 $ 46,505 Equity securities, which are reported at fair value with holding gains and losses recognized in net earnings, consisted of the following at September 30, 2020 and December 31, 2019 (in millions): September 30, 2020 December 31, 2019 Fair Value Fair Value Actual Cost over (under) Actual Cost over (under) Fair Value Cost Fair Value Cost Common stocks $ 1,145 $ 874 $ (271) $ 1,164 $ 1,283 $ 119 Perpetual preferred stocks 724 732 8 640 654 14 Total equity securities carried at fair value $ 1,869 $ 1,606 $ (263) $ 1,804 $ 1,937 $ 133 The following tables show gross unrealized losses (dollars in millions) on available for sale fixed maturities by investment category and length of time that individual securities have been in a continuous unrealized loss position at the following balance sheet dates. Less Than Twelve Months Twelve Months or More Unrealized Fair Fair Value as Unrealized Fair Fair Value as September 30, 2020 Fixed maturities: U.S. Government and government agencies $ — $ 19 100 % $ — $ — — % States, municipalities and political subdivisions (3) 120 98 % — 15 100 % Foreign government — 5 100 % — — — % Residential MBS (4) 144 97 % (2) 35 95 % Commercial MBS (2) 47 96 % — — — % Collateralized loan obligations (11) 1,248 99 % (30) 1,393 98 % Other asset-backed securities (107) 2,164 95 % (17) 245 94 % Corporate and other (67) 1,791 96 % (11) 196 95 % Total fixed maturities $ (194) $ 5,538 97 % $ (60) $ 1,884 97 % 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 % At September 30, 2020, the gross unrealized losses on fixed maturities of $254 million relate to 759 securities. Investment grade securities (as determined by nationally recognized rating agencies) represented approximately 77% of the gross unrealized loss and 84% of the fair value. To evaluate fixed maturities for expected credit losses (impairment), management considers whether the unrealized loss is credit-driven or a result of changes in market interest rates, the extent to which fair value is less than cost basis, historical operating, balance sheet and cash flow data from the issuer, third party research and communications with industry specialists and discussions with issuer management. AFG analyzes its MBS securities for expected credit losses (impairment) each quarter based upon expected future cash flows. Management estimates expected future cash flows based upon its knowledge of the MBS market, cash flow projections (which reflect loan to collateral values, subordination, vintage and geographic concentration) received from independent sources, implied cash flows inherent in security ratings and analysis of historical payment data. Management believes AFG will recover its cost basis (net of any allowance) in the securities with unrealized losses and that AFG has the ability to hold the securities until they recover in value and had no intent to sell them at September 30, 2020. See Note A — “Accounting Policies — Credit Losses on Financial Instruments,” for a discussion of new guidance effective January 1, 2020, which impacts the accounting for expected credit losses (impairments) of fixed maturity securities. Under the new guidance, credit losses on available for sale fixed maturities continue to be measured based on the present value of expected future cash flows compared to amortized cost; however, impairment losses are now recognized through an allowance instead of directly writing down the amortized cost. Under the new guidance, recoveries of previously impaired amounts are recorded as an immediate reversal of all or a portion of the allowance instead of accreted as investment income through a yield adjustment. In addition, the allowance on available for sale fixed maturities cannot cause the amortized cost net of the allowance to be below fair value. Accordingly, future changes in the fair value of an impaired security (when the allowance was limited by the fair value) due to reasons other than issuer credit (e.g. changes in market interest rates) result in increases or decreases in the allowance, which are recorded through realized gains (losses) on securities. A progression of the allowance for expected credit losses on fixed maturity securities is shown below (in millions): Structured Corporate and Other Total Balance at June 30 $ 39 $ 22 $ 61 Initial allowance for purchased securities with credit deterioration — — — Provision for expected credit losses on securities with no previous allowance — — — Additions (reductions) to previously recognized expected credit losses 1 (4) (3) Reductions due to sales or redemptions (1) (3) (4) Balance at September 30 $ 39 $ 15 $ 54 Balance at January 1 $ — $ — $ — Impact of adoption of new accounting policy — — — Initial allowance for purchased securities with credit deterioration 1 — 1 Provision for expected credit losses on securities with no previous allowance 39 28 67 Additions (reductions) to previously recognized expected credit losses — (10) (10) Reductions due to sales or redemptions (1) (3) (4) Balance at September 30 $ 39 $ 15 $ 54 (*) Includes mortgage-backed securities, collateralized loan obligations and other asset-backed securities. In the first nine months of 2020, AFG purchased two residential mortgage-backed securities with expected credit losses. In aggregate at the time of purchase, the par value was $8 million, the purchase price was $6 million and the allowance for credit losses and the discount were each $1 million. No such securities were purchased during the third quarter of 2020. The table below sets forth the scheduled maturities of available for sale fixed maturities as of September 30, 2020 (dollars in millions). Securities with sinking funds are reported at average maturity. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers. Amortized Fair Value Cost, net (*) Amount % Maturity One year or less $ 2,218 $ 2,250 5 % After one year through five years 11,434 12,224 25 % After five years through ten years 12,737 14,199 30 % After ten years 3,149 3,501 7 % 29,538 32,174 67 % Collateralized loan obligations and other ABS (average life of approximately 4 years) 12,012 12,026 25 % MBS (average life of approximately 3-1/2 years) 3,693 3,993 8 % Total $ 45,243 $ 48,193 100 % (*) Amortized cost, net of allowance for expected credit losses. Certain risks are inherent in fixed maturity securities, including loss upon default, price volatility in reaction to changes in interest rates, and general market factors and risks associated with reinvestment of proceeds due to prepayments or redemptions in a period of declining interest rates. There were no investments in individual issuers that exceeded 10% of shareholders’ equity at September 30, 2020 or December 31, 2019. Net Unrealized Gain on Marketable Securities In addition to adjusting fixed maturity securities classified as “available for sale” to fair value, GAAP requires that deferred policy acquisition costs and certain other balance sheet amounts related to annuity, long-term care and life businesses be adjusted to the extent that unrealized gains and losses from securities would result in adjustments to those balances had the unrealized gains or losses actually been realized. The following table shows (in millions) the components of the net unrealized gain on securities that is included in AOCI in AFG’s Balance Sheet. Pretax Deferred Tax Net September 30, 2020 Net unrealized gain on: Fixed maturities — annuity segment (*) $ 2,473 $ (519) $ 1,954 Fixed maturities — all other 477 (100) 377 Total fixed maturities 2,950 (619) 2,331 Deferred policy acquisition costs — annuity segment (1,049) 220 (829) Annuity benefits accumulated (377) 79 (298) Life, accident and health reserves (3) 1 (2) Unearned revenue 13 (3) 10 Total net unrealized gain on marketable securities $ 1,534 $ (322) $ 1,212 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 (*) Net unrealized gains on fixed maturity investments supporting AFG’s annuity benefits accumulated. Net Investment Income The following table shows (in millions) investment income earned and investment expenses incurred. Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Investment income: Fixed maturities $ 473 $ 475 $ 1,449 $ 1,422 Equity securities: Dividends 16 22 49 66 Change in fair value (a) (b) (3) 17 (6) 35 Equity in earnings of partnerships and similar investments 66 43 37 109 Other 26 36 72 95 Gross investment income 578 593 1,601 1,727 Investment expenses (6) (5) (17) (17) Net investment income (b) $ 572 $ 588 $ 1,584 $ 1,710 (a) 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. (b) Net investment income in the third quarter and first nine months of 2020 includes income of $1 million and losses of $5 million, respectively, on investments held by the companies that comprise the Neon exited lines due primarily to the $7 million loss recorded in first quarter of 2020 on equity securities that are carried at fair value through net investment income. Realized gains (losses) and changes in unrealized appreciation (depreciation) included in AOCI related to fixed maturity securities are summarized as follows (in millions): Three months ended September 30, 2020 Three months ended September 30, 2019 Realized gains (losses) Realized gains (losses) Before Impairments Impairment Allowance Total Change in Unrealized Before Impairments Impairments Total Change in Unrealized Fixed maturities $ 14 $ 3 $ 17 $ 513 $ 9 $ (14) $ (5) $ 367 Equity securities 30 — 30 — (16) — (16) — Mortgage loans and other investments — — — — — — — — Other (*) (1) (1) (2) (283) (2) 5 3 (230) Total pretax 43 2 45 230 (9) (9) (18) 137 Tax effects (9) (1) (10) (48) 2 2 4 (29) Net of tax $ 34 $ 1 $ 35 $ 182 $ (7) $ (7) $ (14) $ 108 Nine months ended September 30, 2020 Nine months ended September 30, 2019 Realized gains (losses) Realized gains (losses) Before Impairments Impairment Allowance Total Change in Unrealized Before Impairments Impairments Total Change in Unrealized Fixed maturities $ 46 $ (57) $ (11) $ 969 $ 23 $ (20) $ 3 $ 2,009 Equity securities (303) — (303) — 210 — 210 — Mortgage loans and other investments 4 — 4 — 3 — 3 — Other (*) (6) 14 8 (526) (1) 7 6 (949) Total pretax (259) (43) (302) 443 235 (13) 222 1,060 Tax effects 54 9 63 (93) (49) 3 (46) (223) Net of tax $ (205) $ (34) $ (239) $ 350 $ 186 $ (10) $ 176 $ 837 (*) Primarily adjustments to deferred policy acquisition costs and reserves related to the annuity business. All equity securities other than those accounted for under the equity method are carried at fair value through net earnings. AFG recorded net holding gains (losses) on equity securities during the third quarter and first nine months of 2020 and 2019 on securities that were still owned at September 30, 2020 and September 30, 2019 as follows (in millions): Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Included in realized gains (losses) $ 23 $ (24) $ (300) $ 146 Included in net investment income (4) 17 1 34 $ 19 $ (7) $ (299) $ 180 Gross realized gains and losses (excluding impairment charges and mark-to-market of derivatives) on available for sale fixed maturity investment transactions consisted of the following (in millions): Nine months ended September 30, 2020 2019 Gross gains $ 77 $ 20 Gross losses (33) (12) |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives As discussed under “Derivatives” in Note A — “Accounting Policies,” AFG uses derivatives in certain areas of its operations. Derivatives That Do Not Qualify for Hedge Accounting The following derivatives that do not qualify for hedge accounting under GAAP are included in AFG’s Balance Sheet at fair value (in millions): September 30, 2020 December 31, 2019 Derivative Balance Sheet Line Asset Liability Asset Liability MBS with embedded derivatives Fixed maturities $ 172 $ — $ 102 $ — Public company warrants Equity securities — — — — Fixed-indexed and variable-indexed annuities (embedded derivative) Annuity benefits accumulated — 3,657 — 3,730 Equity index call options Equity index call options 697 — 924 — Equity index put options Other liabilities — 4 — 1 Reinsurance contracts (embedded derivative) Other liabilities — 4 — 4 $ 869 $ 3,665 $ 1,026 $ 3,735 The MBS with embedded derivatives consist of primarily interest-only and principal-only MBS. AFG records the entire change in the fair value of these securities in earnings. These investments are part of AFG’s overall investment strategy and represent a small component of AFG’s overall investment portfolio. Warrants to purchase shares of publicly traded companies, which represent a small component of AFG’s overall investment portfolio, are considered to be derivatives that are required to be carried at fair value through earnings. AFG’s fixed-indexed and variable-indexed annuities 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 receives collateral from certain counterparties to support its purchased call option assets (net of collateral required under put option contracts with the same counterparties). This collateral ($342 million at September 30, 2020 and $577 million at December 31, 2019) is included in other assets in AFG’s Balance Sheet with an offsetting liability to return the collateral, which is included in other liabilities. 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) and the related call and put options 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. As discussed under “Reinsurance” in Note A , AFG has a reinsurance contract that is considered to contain an embedded derivative. The following table summarizes the gains (losses) included in AFG’s Statement of Earnings for changes in the fair value of derivatives that do not qualify for hedge accounting for the third quarter and first nine months of 2020 and 2019 (in millions): Three months ended September 30, Nine months ended September 30, Derivative Statement of Earnings Line 2020 2019 2020 2019 MBS with embedded derivatives Realized gains (losses) on securities $ (5) $ 3 $ 2 $ 15 Public company warrants Realized gains (losses) on securities — (1) — (1) Fixed-indexed and variable-indexed annuities (embedded derivative) (*) Annuity benefits (5) 70 41 (643) Equity index call options Annuity benefits 203 30 (42) 544 Equity index put options Annuity benefits 2 — 1 1 Reinsurance contract (embedded derivative) Net investment income 1 — — (2) $ 196 $ 102 $ 2 $ (86) (*) The change in fair value of the embedded derivative includes a favorable adjustment related to the unlocking of actuarial assumptions of $240 million in the third quarter of 2020 and $181 million in the third quarter of 2019. Derivatives Designated and Qualifying as Cash Flow Hedges As of September 30, 2020, AFG has nine active interest rate swaps that are designated and qualify as highly effective cash flow hedges to mitigate interest rate risk related to certain floating-rate securities included in AFG’s portfolio of fixed maturity securities. The purpose of each of these swaps is to effectively convert a portion of AFG’s floating-rate fixed maturity securities to fixed rates by offsetting the variability in cash flows attributable to changes in short-term LIBOR. Under the terms of the swaps, AFG receives fixed-rate interest payments in exchange for variable interest payments based on short-term LIBOR. The notional amounts of the interest rate swaps generally decline over each swap’s respective life (the swaps expire between December 2023 and June 2030) in anticipation of the expected decline in AFG’s portfolio of fixed maturity securities with floating interest rates based on short-term LIBOR. The total outstanding notional amount of AFG’s interest rate swaps was $1.65 billion at September 30, 2020 compared to $1.98 billion at December 31, 2019, reflecting the scheduled amortization discussed above, the termination of a swap with a total notional amount of $83 million in the first quarter of 2020, the termination of two swaps with a total notional amount of $166 million in the second quarter of 2020 and the expiration of a swap with a notional amount of $44 million in the second quarter of 2020. The fair value of the interest rate swaps in an asset position and included in other assets was $114 million at September 30, 2020 and $50 million at December 31, 2019. The fair value of the interest rate swaps in a liability position and included in other liabilities was zero at September 30, 2020 and $5 million at December 31, 2019. The net unrealized gain or loss on cash flow hedges is included in AOCI, net of DPAC and deferred taxes. Amounts reclassified from AOCI (before DPAC and taxes) to net investment income were income of $8 million in the third quarter of 2020 and losses of less than $1 million in the third quarter of 2019 and income of $31 million and losses of $1 million for the first nine months of 2020 and 2019, respectively. AFG had a $7 million liability to return collateral related to these swaps (included in other liabilities) at September 30, 2020 and a $20 million receivable for collateral posted related to these swaps (included in other assets) at December 31, 2019. |
Deferred Policy Acquisition Cos
Deferred Policy Acquisition Costs | 9 Months Ended |
Sep. 30, 2020 | |
Deferred Policy Acquisition Costs Disclosures [Abstract] | |
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs A progression of deferred policy acquisition costs is presented below (in millions): P&C Annuity and Other Deferred Deferred Sales Consolidated Costs Costs Inducements PVFP Subtotal Unrealized (*) Total Total Balance at June 30, 2020 $ 296 $ 1,342 $ 73 $ 33 $ 1,448 $ (926) $ 522 $ 818 Additions 142 33 — — 33 — 33 175 Amortization: Periodic amortization (170) (39) (2) (1) (42) — (42) (212) Annuity unlocking — (118) 4 — (114) — (114) (114) Included in realized gains — (2) — — (2) — (2) (2) Foreign currency translation 1 — — — — — — 1 Change in unrealized — — — — — (169) (169) (169) Balance at September 30, 2020 $ 269 $ 1,216 $ 75 $ 32 $ 1,323 $ (1,095) $ 228 $ 497 Balance at June 30, 2019 $ 330 $ 1,373 $ 81 $ 38 $ 1,492 $ (619) $ 873 $ 1,203 Additions 188 43 1 — 44 — 44 232 Amortization: Periodic amortization (194) (29) (3) (1) (33) — (33) (227) Annuity unlocking — (76) (1) — (77) — (77) (77) Included in realized gains — 3 — — 3 — 3 3 Foreign currency translation (1) — — — — — — (1) Change in unrealized — — — — — (169) (169) (169) Balance at September 30, 2019 $ 323 $ 1,314 $ 78 $ 37 $ 1,429 $ (788) $ 641 $ 964 Balance at December 31, 2019 $ 322 $ 1,303 $ 75 $ 36 $ 1,414 $ (699) $ 715 $ 1,037 Additions 448 112 1 — 113 — 113 561 Amortization: Periodic amortization (500) (87) (6) (4) (97) — (97) (597) Annuity unlocking — (118) 4 — (114) — (114) (114) Included in realized gains — 6 1 — 7 — 7 7 Foreign currency translation (1) — — — — — — (1) Change in unrealized — — — — — (396) (396) (396) Balance at September 30, 2020 $ 269 $ 1,216 $ 75 $ 32 $ 1,323 $ (1,095) $ 228 $ 497 Balance at December 31, 2018 $ 299 $ 1,285 $ 86 $ 42 $ 1,413 $ (30) $ 1,383 $ 1,682 Additions 569 163 2 — 165 — 165 734 Amortization: Periodic amortization (544) (63) (10) (5) (78) — (78) (622) Annuity unlocking — (76) (1) — (77) — (77) (77) Included in realized gains — 5 1 — 6 — 6 6 Foreign currency translation (1) — — — — — — (1) Change in unrealized — — — — — (758) (758) (758) Balance at September 30, 2019 $ 323 $ 1,314 $ 78 $ 37 $ 1,429 $ (788) $ 641 $ 964 (*) Adjustments to DPAC related to net unrealized gains/losses on securities and cash flow hedges. The present value of future profits (“PVFP”) amounts in the table above are net of $158 million and $154 million of accumulated amortization at September 30, 2020 and December 31, 2019, respectively. |
Managed Investment Entities
Managed Investment Entities | 9 Months Ended |
Sep. 30, 2020 | |
Variable Interest Entity, Primary Beneficiary, Does Not Hold Majority Voting Interest, Disclosures [Abstract] | |
Managed Investment Entities | Managed Investment Entities AFG is the investment manager and its subsidiaries have investments ranging from 15.0% to 100.0% of the most subordinate debt tranche of eleven active collateralized loan obligation entities (“CLOs”), which are considered variable interest entities. AFG’s subsidiaries also own portions of the senior debt tranches of certain of these CLOs. Upon formation between 2012 and 2018, these entities issued securities in various senior and subordinate classes and invested the proceeds primarily in secured bank loans, which serve as collateral for the debt securities issued by each CLO. None of the collateral was purchased from AFG. AFG’s investments in the subordinate debt tranches of these entities receive residual income from the CLOs only after the CLOs pay expenses (including management fees to AFG) and interest on and returns of capital to senior levels of debt securities. There are no contractual requirements for AFG to provide additional funding for these entities. AFG has not provided and does not intend to provide any financial support to these entities. AFG’s maximum exposure to economic loss on the CLOs that it manages is limited to its investment in those CLOs, which had an aggregate fair value of $176 million (including $89 million invested in the most subordinate tranches) at September 30, 2020, and $165 million at December 31, 2019. During the first nine months of 2020, AFG subsidiaries purchased $57 million face amount of senior and subordinate tranches of existing CLOs for $39 million. During both the first nine months of 2020 and 2019, AFG subsidiaries received less than $1 million in sale and redemption proceeds from its CLO investments. The revenues and expenses of the CLOs are separately identified in AFG’s Statement of Earnings, after the elimination of management fees and earnings attributable to shareholders of AFG as measured by the change in the fair value of AFG’s investments in the CLOs. Selected financial information related to the CLOs is shown below (in millions): Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Investment in CLO tranches at end of period $ 176 $ 179 $ 176 $ 179 Gains (losses) on change in fair value of assets/liabilities (a): Assets 132 (18) (184) 69 Liabilities (131) 4 137 (85) Management fees paid to AFG 3 4 11 11 CLO earnings (losses) attributable to AFG shareholders (b) 13 (5) (21) 11 (a) Included in revenues in AFG’s Statement of Earnings. (b) Included in earnings before income taxes in AFG’s Statement of Earnings. The aggregate unpaid principal balance of the CLOs’ fixed maturity investments exceeded the fair value of the investments by $276 million and $146 million at September 30, 2020 and December 31, 2019, respectively. The aggregate unpaid principal balance of the CLOs’ debt exceeded its carrying value by $248 million and $129 million at those dates. The CLO assets include loans with an aggregate fair value of $26 million at September 30, 2020 and $10 million at December 31, 2019, for which the CLOs are not accruing interest because the loans are in default (aggregate unpaid principal balance of $55 million at September 30, 2020 and $25 million at December 31, 2019). In addition to the CLOs that it manages, AFG had investments in CLOs that are managed by third parties (therefore not consolidated), which are included in available for sale fixed maturity securities and had a fair value of $4.61 billion at September 30, 2020 and $4.28 billion at December 31, 2019. |
Goodwill and Other Intangibles
Goodwill and Other Intangibles | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangibles | Goodwill and Other IntangiblesThere were no changes in the goodwill balance of $207 million during the first nine months of 2020. Included in other assets in AFG’s Balance Sheet is $34 million at September 30, 2020 and $43 million at December 31, 2019 in amortizable intangible assets related to property and casualty insurance acquisitions. These amounts are net of accumulated amortization of $59 million and $50 million, respectively. Amortization of intangibles was $3 million in both the third quarters of 2020 and 2019, and $9 million in both the first nine months of 2020 and 2019. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following (in millions): September 30, 2020 December 31, 2019 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 (3) 422 5.25% Senior Notes due April 2030 300 (7) 293 — — — Other 3 — 3 3 — 3 1,318 (12) 1,306 1,018 (5) 1,013 Direct Subordinated Obligations of AFG: 4.50% Subordinated Debentures due September 2060 200 (4) 196 — — — 5.125% Subordinate Debentures due December 2059 200 (6) 194 200 (6) 194 6% Subordinated Debentures due November 2055 150 (5) 145 150 (5) 145 5.625% Subordinated Debentures due June 2060 150 (4) 146 — — — 5.875% Subordinated Debentures due March 2059 125 (4) 121 125 (4) 121 825 (23) 802 475 (15) 460 $ 2,143 $ (35) $ 2,108 $ 1,493 $ (20) $ 1,473 In September 2020, AFG issued $200 million in 4.50% Subordinated Debentures due in September 2060. The net proceeds of this offering will be used for general corporate purposes, including the redemption of AFG’s 6% Subordinated Debentures due in November 2055 at par value on November 15, 2020. In April and May 2020, AFG issued $300 million in 5.25% Senior Notes due in 2030 and $150 million in 5.625% Subordinated Debentures due in June 2060, respectively. The net proceeds of these offerings will be used for general corporate purposes, which includes repurchases of outstanding common shares. Other than the announced redemption of AFG’s 6% Subordinated Debentures in November 2020 mentioned above, AFG has no scheduled principal payments on its long-term debt for the balance of 2020 or in the subsequent five years. AFG can borrow up to $500 million under its revolving credit facility, which expires in June 2021. Amounts borrowed under this agreement bear interest at rates ranging from 1.00% to 1.875% (currently 1.375%) over LIBOR based on AFG’s credit rating. No amounts were borrowed under this facility at September 30, 2020 or December 31, 2019. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders’ Equity AFG is authorized to issue 12.5 million shares of Voting Preferred Stock and 12.5 million shares of Nonvoting Preferred Stock, each without par value. Accumulated Other Comprehensive Income, Net of Tax (“AOCI”) Comprehensive income is defined as all changes in shareholders’ equity except those arising from transactions with shareholders. Comprehensive income includes net earnings and other comprehensive income, which consists primarily of changes in net unrealized gains or losses on available for sale securities. The progression of the components of accumulated other comprehensive income follows (in millions): Other Comprehensive Income (Loss) AOCI Pretax Tax Net Attributable to Attributable to Other AOCI Quarter ended September 30, 2020 Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 245 $ (51) $ 194 $ — $ 194 Reclassification adjustment for realized (gains) losses included in net earnings (*) (15) 3 (12) — (12) Total net unrealized gains (losses) on securities $ 1,030 230 (48) 182 — 182 $ — $ 1,212 Net unrealized gains (losses) on cash flow hedges 47 (7) 1 (6) — (6) — 41 Foreign currency translation adjustments (17) — — — — — 4 (13) Pension and other postretirement plans adjustments (7) — — — — — — (7) Total $ 1,053 $ 223 $ (47) $ 176 $ — $ 176 $ 4 $ 1,233 Quarter ended September 30, 2019 Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 136 $ (29) $ 107 $ — $ 107 Reclassification adjustment for realized (gains) losses included in net earnings (*) 1 — 1 — 1 Total net unrealized gains (losses) on securities $ 812 137 (29) 108 — 108 $ — $ 920 Net unrealized gains on cash flow hedges 18 9 (2) 7 — 7 — 25 Foreign currency translation adjustments (13) (6) (1) (7) (1) (8) — (21) Pension and other postretirement plans adjustments (8) 1 — 1 — 1 — (7) Total $ 809 $ 141 $ (32) $ 109 $ (1) $ 108 $ — $ 917 Nine months ended September 30, 2020 Net unrealized gains (losses) on securities: Unrealized holding gains on securities arising during the period $ 443 $ (93) $ 350 $ — $ 350 Reclassification adjustment for realized (gains) losses included in net earnings (*) — — — — — Total net unrealized gains (losses) on securities $ 862 443 (93) 350 — 350 $ — $ 1,212 Net unrealized gains on cash flow hedges 17 31 (7) 24 — 24 — 41 Foreign currency translation adjustments (9) (6) — (6) (2) (8) 4 (13) Pension and other postretirement plans adjustments (7) — — — — — — (7) Total $ 863 $ 468 $ (100) $ 368 $ (2) $ 366 $ 4 $ 1,233 Nine months ended September 30, 2019 Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 1,073 $ (226) $ 847 $ — $ 847 Reclassification adjustment for realized (gains) losses included in net earnings (*) (13) 3 (10) — (10) Total net unrealized gains (losses) on securities $ 83 1,060 (223) 837 — 837 $ — $ 920 Net unrealized gains (losses) on cash flow hedges (11) 46 (10) 36 — 36 — 25 Foreign currency translation adjustments (16) (3) — (3) (2) (5) — (21) Pension and other postretirement plans adjustments (8) 1 — 1 — 1 — (7) Total $ 48 $ 1,104 $ (233) $ 871 $ (2) $ 869 $ — $ 917 (*) The reclassification adjustment out of net unrealized gains (losses) on securities affected the following lines in AFG’s Statement of Earnings: OCI component Affected line in the statement of earnings Pretax Realized gains (losses) on securities Tax Provision (credit) for income taxes Stock Incentive Plans Under AFG’s stock incentive plans, employees of AFG and its subsidiaries are eligible to receive equity awards in the form of stock options, stock appreciation rights, restricted stock awards, restricted stock units and stock awards. In the first nine months of 2020, AFG issued 227,867 shares of restricted Common Stock (fair value of $104.15 per share) under the Stock Incentive Plan. Total compensation expense related to stock incentive plans of AFG and its subsidiaries was $5 million in both the third quarters of 2020 and 2019, and $15 million and $17 million in the first nine months of 2020 and 2019, respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The following is a reconciliation of income taxes at the statutory rate of 21% to the provision for income taxes as shown in AFG’s Statement of Earnings (dollars in millions): Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Amount % of EBT Amount % of EBT Amount % of EBT Amount % of EBT Earnings (loss) before income taxes (“EBT”) $ 134 $ 177 $ (36) $ 849 Income taxes at statutory rate $ 28 21 % $ 37 21 % $ (8) 21 % $ 178 21 % Effect of: Pending sale of Neon (73) (54 %) — — % (73) 203 % — — % Tax exempt interest (3) (2 %) (4) (2 %) (9) 25 % (11) (1 %) Stock-based compensation — — % (2) (1 %) (4) 11 % (6) (1 %) Dividends received deduction (1) (1 %) (1) (1 %) (2) 6 % (3) — % Adjustment to prior year taxes (1) (1 %) (3) (2 %) (1) 3 % (3) — % Employee Stock Ownership Plan dividends paid deduction (1) (1 %) — — % (1) 3 % (1) — % Change in valuation allowance 20 15 % 4 2 % 31 (86 %) 7 1 % Nondeductible expenses 2 1 % 2 1 % 4 (11 %) 6 1 % Foreign operations (4) (3 %) — — % (3) 8 % — — % Other 3 3 % 1 1 % 3 (8 %) 4 (1 %) Provision (credit) for income taxes as shown in the statement of earnings $ (30) (22 %) $ 34 19 % $ (63) 175 % $ 171 20 % In September 2020, AFG reached a definitive agreement to sell the legal entities that own Neon (see Note B — “ Acquisitions and Sale of Businesses” , which will result in a loss on sale for U.S. tax purposes. In accordance with accounting guidance for transactions that meet the GAAP “held for sale” criteria, AFG recorded a $73 million tax benefit associated with this loss in the third quarter of 2020. The changes in valuation allowance in the table above are primarily increases in the valuation allowance on tax benefits related to losses in the Neon Lloyd’s insurance business. Approximately $23 million of AFG’s net operating loss carryforwards (“NOL”) subject to separate return limitation year (“SRLY”) tax rules will expire unutilized at December 31, 2020. Since AFG maintains a full valuation allowance against its SRLY NOLs, the expiration of these loss carryforwards will be offset by a corresponding reduction in the valuation allowance and will have no overall impact on AFG’s income tax expense or results of operations. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | ContingenciesIn December 2015, AFG completed the sale of substantially all of its run-off long-term care insurance business to HC2 Holdings, Inc. (“HC2”). As part of the transaction, AFG agreed to provide up to an aggregate of $35 million of capital support for the insurance companies, on an as-needed basis to maintain specified surplus levels, subject to immediate reimbursement by HC2 through a five Other than the matter described above, there have been no significant changes to the matters discussed and referred to in Note N — “Contingencies” of AFG’s 2019 Form 10-K, which covers property and casualty insurance reserves for claims related to environmental exposures, asbestos and other mass tort claims and environmental and occupational injury and disease claims of former subsidiary railroad and manufacturing operations. |
Insurance
Insurance | 9 Months Ended |
Sep. 30, 2020 | |
Insurance [Abstract] | |
Insurance | Insurance Property and Casualty Insurance Reserves The following table provides an analysis of changes in the liability for losses and loss adjustment expenses during the first nine months of 2020 and 2019 (in millions): Nine months ended September 30, 2020 2019 Balance at beginning of year $ 10,232 $ 9,741 Less reinsurance recoverables, net of allowance 3,024 2,942 Net liability at beginning of year 7,208 6,799 Provision for losses and LAE occurring in the current period 2,560 2,457 Net increase (decrease) in the provision for claims of prior years: Special A&E charges 47 18 Other (166) (116) Total losses and LAE incurred 2,441 2,359 Payments for losses and LAE of: Current year (592) (731) Prior years (1,406) (1,408) Total payments (1,998) (2,139) Foreign currency translation and other (11) (5) Net liability at end of period 7,640 7,014 Add back reinsurance recoverables, net of allowance 3,114 2,833 Gross unpaid losses and LAE included in the balance sheet at end of period $ 10,754 $ 9,847 The net decrease in the provision for claims of prior years during the first nine months of 2020 reflects (i) lower than expected claim frequency and severity in the agricultural businesses and lower than anticipated claim frequency and severity in the transportation businesses (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses and lower than anticipated claim frequency in the executive liability business (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency in the trade credit business and lower than anticipated claim frequency and severity in the financial institutions, fidelity and surety businesses (within the Specialty financial sub-segment). This favorable development was partially offset by (i) the $47 million special charge to increase asbestos and environmental reserves and (ii) higher than expected claim frequency in general liability contractor claims and higher than expected claim frequency and severity in the excess and surplus businesses (within the Specialty casualty sub-segment). The net decrease in the provision for claims of prior years during the first nine months of 2019 reflects (i) lower than expected claim frequency and severity in the transportation businesses and lower than expected losses in the crop business (all within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses (within the Specialty casualty sub-segment), and (iii) lower than expected claim frequency and severity in the surety and financial institutions businesses and lower than anticipated claim severity in the fidelity business (all within the Specialty financial sub-segment). This favorable development was partially offset by (i) the $18 million special charge to increase asbestos and environmental reserves, (ii) higher than expected claim severity in the excess and surplus lines businesses and higher than expected claim frequency in general liability contractor claims (all within the Specialty casualty sub-segment), and (iii) net adverse reserve development related to business outside the Specialty group that AFG no longer writes. Recoverables from Reinsurers and Premiums Receivable See Note A — “Accounting Policies — Credit Losses on Financial Instruments,” for a discussion of new guidance effective January 1, 2020, which impacts the accounting for expected credit losses of recoverables from reinsurers and premiums receivable. Progressions of the 2020 allowance for expected credit losses are shown below (in millions): Recoverables from Reinsurers Premiums Receivable Balance at June 30 $ 13 $ 10 Provision for expected credit losses 1 1 Write-offs charged against the allowance — — Balance at September 30 $ 14 $ 11 Balance at January 1 $ 18 $ 13 Impact of adoption of new accounting policy (6) (3) Provision for expected credit losses 2 1 Write-offs charged against the allowance — — Balance at September 30 $ 14 $ 11 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Subsequent Events On October 13, 2020, AFG called its $150 million of 6% Subordinated Debentures due in November 2055 for redemption on November 15, 2020. On October 19, 2020, AFG entered into a reinsurance agreement with Commonwealth Annuity and Life Insurance Company (“Commonwealth”), a subsidiary of Global Atlantic Financial Group Limited. The agreement has an effective date of October 1, 2020 and will be reported in AFG’s fourth quarter financial statements. Under the terms of the agreement, AFG’s Annuity subsidiary, Great American Life Insurance Company (“GALIC”), ceded approximately $6 billion of inforce traditional fixed and indexed annuities, representing approximately 15% of its inforce business, and transferred a similar amount of investments to Commonwealth. The assets transferred were primarily available for sale fixed maturity securities, the disposal of which will result in the recognition (through net income) of the approximately $275 million to $300 million (net of DAC and tax) in net unrealized gains included in AOCI immediately prior to the transaction. Under the reinsurance accounting guidance, the reinsurance transaction will be accounted for using the deposit method and the loss on the transaction will be deferred and recognized over the expected life of the ceded reserves (7-10 years). |
Accounting Policies (Policies)
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements for American Financial Group, Inc. and its subsidiaries (“AFG”) are unaudited; however, management believes that all adjustments (consisting only of normal recurring accruals unless otherwise disclosed herein) necessary for fair presentation have been made. The results of operations for interim periods are not necessarily indicative of results to be expected for the year. The financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary to be in conformity with U.S. generally accepted accounting principles (“GAAP”). Certain reclassifications have been made to prior periods to conform to the current year’s presentation. All significant intercompany balances and transactions have been eliminated. The results of operations of companies since their formation or acquisition are included in the consolidated financial statements. Events or transactions occurring subsequent to September 30, 2020, and prior to the filing of this Form 10-Q, have been evaluated for potential recognition or disclosure herein. The preparation of the financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Changes in circumstances could cause actual results to differ materially from those estimates. |
Fair Value Measurements | Fair Value Measurements Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The standards establish a hierarchy of valuation techniques based on whether the assumptions that market participants would use in pricing the asset or liability (“inputs”) are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect AFG’s assumptions about the assumptions market participants would use in pricing the asset or liability. Other than recording an estimated loss on the pending sale of Neon, its United Kingdom-based Lloyd’s insurer (see Note B — “Acquisitions and Sale of Businesses ”), AFG did not have any material nonrecurring fair value measurements in the first nine months of 2020. Accounting standards for measuring fair value are based on inputs used in estimating fair value. The three levels of the hierarchy are as follows: Level 1 — Quoted prices for identical assets or liabilities in active markets (markets in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis). AFG’s Level 1 financial instruments consist primarily of publicly traded equity securities, highly liquid government bonds for which quoted market prices in active markets are available and short-term investments of managed investment entities. Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar assets or liabilities in inactive markets (markets in which there are few transactions, the prices are not current, price quotations vary substantially over time or among market makers, or in which little information is released publicly); and valuations based on other significant inputs that are observable in active markets. AFG’s Level 2 financial instruments include separate account assets, corporate and municipal fixed maturity securities, asset-backed securities (“ABS”), mortgage-backed securities (“MBS”), certain non-affiliated common stocks, equity index options and investments of managed investment entities priced using observable inputs. Level 2 inputs include benchmark yields, reported trades, corroborated broker/dealer quotes, issuer spreads and benchmark securities. When non-binding broker quotes can be corroborated by comparison to similar securities priced using observable inputs, they are classified as Level 2. Level 3 — Valuations derived from market valuation techniques generally consistent with those used to estimate the fair values of Level 2 financial instruments in which one or more significant inputs are unobservable or when the market for a security exhibits significantly less liquidity relative to markets supporting Level 2 fair value measurements. The unobservable inputs may include management’s own assumptions about the assumptions market participants would use based on the best information available at the valuation date. Financial instruments whose fair value is estimated based on non-binding broker quotes or internally developed using significant inputs not based on, or corroborated by, observable market information are classified as Level 3. As discussed in Note A — “Accounting Policies — Managed Investment Entities,” AFG has set the carrying value of its CLO liabilities equal to the fair value of the CLO assets (which have more observable fair values) as an alternative to reporting those liabilities at separately measured fair values. As a result, the CLO liabilities are categorized within the fair value hierarchy on the same basis (proportionally) as the related CLO assets. Since the portion of the CLO liabilities allocated to Level 3 is derived from the fair value of the CLO assets, these amounts are excluded from the progression of Level 3 financial instruments. AFG’s management is responsible for the valuation process and uses data from outside sources (including nationally recognized pricing services and broker/dealers) in establishing fair value. AFG’s internal investment professionals are a group of approximately 20 investment professionals whose primary responsibility is to manage AFG’s investment portfolio. These professionals monitor individual investments as well as overall industries and are active in the financial markets on a daily basis. The group is led by AFG’s chief investment officer, who reports directly to one of AFG’s Co-CEOs. Valuation techniques utilized by pricing services and prices obtained from external sources are reviewed by AFG’s internal investment professionals who are familiar with the securities being priced and the markets in which they trade to ensure the fair value determination is representative of an exit price. To validate the appropriateness of the prices obtained, these investment managers consider widely published indices (as benchmarks), recent trades, changes in interest rates, general economic conditions and the credit quality of the specific issuers. In addition, the Company communicates directly with the pricing services regarding the methods and assumptions used in pricing, including verifying, on a test basis, the inputs used by the service to value specific securities. |
Credit Losses on Financial Instruments | Credit Losses on Financial Instruments On January 1, 2020, AFG adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments , which provides a new loss model for determining credit-related impairments for financial instruments measured at amortized cost (mortgage loans, premiums receivable and reinsurance recoverables) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses considers historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. Expected credit losses, and subsequent increases or decreases in such expected losses, are recorded immediately through net earnings as an allowance that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the balance sheet at the amount expected to be collected. AFG’s portfolio of mortgage loans crosses a wide variety of commercial properties with very strong loan to value ratios and no credit losses in recent years. In addition, the reinsurance used in AFG’s insurance operations is purchased from financially strong (highly rated) reinsurers and the Company has a long history of collecting premiums receivable through various economic cycles. At the date of adoption, the impact of adjusting AFG’s existing allowances for uncollectable mortgage loans, premiums receivable and reinsurance recoverables to the allowances calculated under the new guidance resulted in a reduction in the net allowance, which was recorded as the cumulative effect of an accounting change ($7 million increase in retained earnings at January 1, 2020). |
Investments | Investments Equity securities other than those accounted for under the equity method are reported at fair value with holding gains and losses generally recorded in realized gains (losses) on securities. However, AFG records holding gains and losses on securities classified as “trading” under previous guidance, its small portfolio of limited partnerships and similar investments carried at fair value and certain other securities classified at purchase as “fair value through net investment income” in net investment income. Fixed maturity securities classified as “available for sale” are reported at fair value with unrealized gains and losses included in AOCI in AFG’s Balance Sheet. Fixed maturity securities classified as “trading” are reported at fair value with changes in unrealized holding gains or losses during the period included in net investment income. Mortgage loans (net of any allowance) and policy loans are carried primarily at the aggregate unpaid balance. Premiums and discounts on fixed maturity securities are amortized using the effective interest method. Mortgage-backed securities (“MBS”) are amortized over a period based on estimated future principal payments, including prepayments. Prepayment assumptions are reviewed periodically and adjusted to reflect actual prepayments and changes in expectations. Limited partnerships and similar investments are generally accounted for using the equity method of accounting. Under the equity method, AFG records its share of the earnings or losses of the investee based on when they are reported by the investee in its financial statements rather than in the period in which the investee declares a dividend. AFG’s share of the earnings or losses from equity method investments is generally recorded on a quarter lag due to the timing of the receipt of the investee’s financial statements. AFG’s equity in the earnings (losses) of limited partnerships and similar investments is included in net investment income. Realized gains or losses on the disposal of fixed maturity securities are determined on the specific identification basis. When a decline in the value of an available for sale fixed maturity is considered to be other-than-temporary at the balance sheet date, an allowance for credit losses (impairment), including any write-off of accrued interest, is charged to earnings (included in realized gains (losses) on securities). If management can assert that it does not intend to sell the security and it is not more likely than not that it will have to sell it before recovery of its amortized cost basis (net of allowance), then the impairment allowance is separated into two components: (i) the amount related to credit losses (recorded in earnings) and (ii) the amount related to all other factors (recorded in other comprehensive income). The credit-related portion is measured by comparing a security’s amortized cost to the present value of its current expected cash flows discounted at its effective yield prior to the charge. If management intends to sell an impaired security, or it is more likely than not that it will be required to sell the security before recovery, an impairment is recorded in earnings to reduce the amortized cost (net of allowance) of that security to fair value. See “Credit Losses on Financial Instruments” above for a discussion of new guidance adopted on January 1, 2020. |
Derivatives | Derivatives Derivatives included in AFG’s Balance Sheet are recorded at fair value. Changes in fair value of derivatives are included in earnings unless the derivatives are designated and qualify as highly effective cash flow hedges. Derivatives that do not qualify for hedge accounting under GAAP consist primarily of (i) components of certain fixed maturity securities (primarily interest-only and principal-only MBS) and (ii) the equity-based component of certain annuity products (included in annuity benefits accumulated) and related equity index options designed to be consistent with the characteristics of the liabilities and used to mitigate the risk embedded in those annuity products. To qualify for hedge accounting, at the inception of a derivative contract, AFG formally documents the relationship between the terms of the hedge and the hedged items and its risk management objective. This documentation includes defining how hedge effectiveness and ineffectiveness will be measured on a retrospective and prospective basis. Changes in the fair value of derivatives that are designated and qualify as highly effective cash flow hedges are recorded in AOCI and are reclassified into earnings when the variability of the cash flows from the hedged items impacts earnings. When the change in the fair value of a qualifying cash flow hedge is included in earnings, it is included in the same line item in the statement of earnings as the cash flows from the hedged item. AFG uses interest rate swaps that are designated and qualify as highly effective cash flow hedges to mitigate interest rate risk related to certain floating-rate securities included in AFG’s portfolio of fixed maturity securities. |
Goodwill | Goodwill Goodwill represents the excess of cost of subsidiaries over AFG’s equity in their underlying net assets. Goodwill is not amortized, but is subject to an impairment test at least annually. An entity is not required to complete the quantitative annual goodwill impairment test on a reporting unit if the entity elects to perform a qualitative analysis and determines that it is more likely than not that the reporting unit’s fair value exceeds its carrying amount. |
Reinsurance | Reinsurance Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies. AFG’s property and casualty insurance subsidiaries report as assets (i) the estimated reinsurance recoverable on paid and unpaid losses, including an estimate for losses incurred but not reported, and (ii) amounts paid or due to reinsurers applicable to the unexpired terms of policies in force. Payable to reinsurers includes ceded premiums due to reinsurers, as well as ceded premiums retained by AFG’s property and casualty insurance subsidiaries under contracts to fund ceded losses as they become due. AFG’s insurance subsidiaries also assume reinsurance from other companies. Earnings on reinsurance assumed is recognized based on information received from ceding companies. An AFG subsidiary cedes life insurance policies to a third party on a funds withheld basis whereby the subsidiary retains the assets (securities) associated with the reinsurance contract. Interest is credited to the reinsurer based on the actual investment performance of the retained assets. This reinsurance contract is considered to contain an embedded derivative (that must be adjusted to fair value) because the yield on the payable is based on a specific block of the ceding company’s assets, rather than the overall creditworthiness of the ceding company. AFG determined that changes in the fair value of the underlying portfolio of fixed maturity securities is an appropriate measure of the value of the embedded derivative. The securities related to this contract are classified as “trading.” The adjustment to fair value on the embedded derivative offsets the investment income recorded on the adjustment to fair value of the related trading portfolio. Certain reinsurance arrangements in AFG’s annuity operations do not transfer significant insurance risk and are therefore accounted for using the deposit method. This accounting treatment results in amounts paid by AFG to the reinsurer to be recorded as a deposit asset. The reinsurance deposit asset is adjusted as amounts are paid or received under the underlying contracts. |
Deferred Policy Acquisition Costs (“DPAC”) | Deferred Policy Acquisition Costs (“DPAC”) Policy acquisition costs (principally commissions, premium taxes and certain underwriting and policy issuance costs) directly related to the successful acquisition or renewal of an insurance contract are deferred. DPAC also includes capitalized costs associated with sales inducements offered to fixed annuity policyholders such as enhanced interest rates and premium and persistency bonuses. For the property and casualty companies, DPAC is limited based upon recoverability without any consideration for anticipated investment income and is charged against income ratably over the terms of the related policies. A premium deficiency is recognized if the sum of expected claims costs, claims adjustment expenses and unamortized acquisition costs exceed the related unearned premiums. A premium deficiency is first recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. If the premium deficiency is greater than unamortized acquisition costs, a liability is accrued for the excess deficiency and reported with unpaid losses and loss adjustment expenses. DPAC related to annuities is deferred to the extent deemed recoverable and amortized, with interest, in relation to the present value of actual and expected gross profits on the policies. Expected gross profits consist principally of estimated future investment margin (estimated future net investment income less interest credited on policyholder funds) and surrender, mortality, and other life and annuity policy charges, less death, annuitization and guaranteed withdrawal benefits in excess of account balances and estimated future policy administration expenses. To the extent that realized gains and losses result in adjustments to the amortization of DPAC related to annuities, such adjustments are reflected as components of realized gains (losses) on securities. DPAC related to traditional life and health insurance is amortized over the expected premium paying period of the related policies, in proportion to the ratio of annual premium revenues to total anticipated premium revenues. See “Life, Accident and Health Reserves” below for details on the impact of loss recognition on the accounting for traditional life and health insurance contracts. DPAC includes the present value of future profits on business in force of annuity and life, accident and health insurance companies acquired (“PVFP”). PVFP represents the portion of the costs to acquire companies that is allocated to the value of the right to receive future cash flows from insurance contracts existing at the date of acquisition. PVFP is amortized with interest in relation to expected gross profits of the acquired policies for annuities and universal life products and in relation to the premium paying period for traditional life and health insurance products. |
Managed Investment Entities | Managed Investment Entities A company is considered the primary beneficiary of, and therefore must consolidate, a variable interest entity (“VIE”) based primarily on its ability to direct the activities of the VIE that most significantly impact that entity’s economic performance and the obligation to absorb losses of, or receive benefits from, the entity that could potentially be significant to the VIE. AFG manages, and has investments in, collateralized loan obligations (“CLOs”) that are VIEs (see Note H — “Managed Investment Entities” ). AFG has determined that it is the primary beneficiary of these CLOs because (i) its role as asset manager gives it the power to direct the activities that most significantly impact the economic performance of the CLOs and (ii) through its investment in the CLO debt tranches, it has exposure to CLO losses (limited to the amount AFG invested) and the right to receive CLO benefits that could potentially be significant to the CLOs. Because AFG has no right to use the CLO assets and no obligation to pay the CLO liabilities, the assets and liabilities of the CLOs are shown separately in AFG’s Balance Sheet. AFG has elected the fair value option for reporting on the CLO assets and liabilities to improve the transparency of financial reporting related to the CLOs. The net gain or loss from accounting for the CLO assets and liabilities at fair value is presented separately in AFG’s Statement of Earnings. The fair values of a CLO’s assets may differ from the separately measured fair values of its liabilities even though the CLO liabilities only have recourse to the CLO assets. AFG has set the carrying value of the CLO liabilities equal to the fair value of the CLO assets (which have more observable fair values) as an alternative to reporting those liabilities at a separately measured fair value. CLO earnings attributable to AFG’s shareholders are measured by the change in the fair value of AFG’s investments in the CLOs and management fees earned. At September 30, 2020, assets and liabilities of managed investment entities included $140 million in assets and $130 million in liabilities of a temporary warehousing entity that was established in connection with the formation of a new CLO that is expected to close in November 2020. At closing, all warehoused assets will be transferred to the new CLO and the liabilities will be repaid. |
Unpaid Losses and Loss Adjustment Expenses | Unpaid Losses and Loss Adjustment Expenses The net liabilities stated for unpaid claims and for expenses of investigation and adjustment of unpaid claims represent management’s best estimate and are based upon (i) the accumulation of case estimates for losses reported prior to the close of the accounting period on direct business written; (ii) estimates received from ceding reinsurers and insurance pools and associations; (iii) estimates of unreported losses (including possible development on known claims) based on past experience; (iv) estimates based on experience of expenses for investigating and adjusting claims; and (v) the current state of the law and coverage litigation. Establishing reserves for asbestos, environmental and other mass tort claims involves considerably more judgment than other types of claims due to, among other things, inconsistent court decisions, an increase in bankruptcy filings as a result of asbestos-related liabilities, novel theories of coverage, and judicial interpretations that often expand theories of recovery and broaden the scope of coverage. Loss reserve liabilities are subject to the impact of changes in claim amounts and frequency and other factors. Changes in estimates of the liabilities for losses and loss adjustment expenses are reflected in the statement of earnings in the period in which determined. Despite the variability inherent in such estimates, management believes that the liabilities for unpaid losses and loss adjustment expenses are adequate. |
Annuity Benefits Accumulated | Annuity Benefits Accumulated Annuity receipts and benefit payments are recorded as increases or decreases in annuity benefits accumulated rather than as revenue and expense. Increases in this liability for interest credited are charged to annuity benefits expense and decreases for annuity policy charges are recorded in other income. For traditional fixed annuities, the liability for annuity benefits accumulated represents the account value that had accrued to the benefit of the policyholder as of the balance sheet date. For fixed-indexed annuities (“FIAs”), the liability for annuity benefits accumulated includes an embedded derivative that represents the estimated fair value of the index participation with the remaining component representing the discounted value of the guaranteed minimum contract benefits. For certain products, annuity benefits accumulated also includes reserves for accrued persistency and premium bonuses, guaranteed withdrawals and excess benefits expected to be paid on future deaths and annuitizations (“EDAR”). The liabilities for EDAR and guaranteed withdrawals are accrued for and modified using assumptions consistent with those used in determining DPAC and DPAC amortization, except that amounts are determined in relation to the present value of total expected assessments. Total expected assessments consist principally of estimated future investment margin, surrender, mortality, and other life and annuity policy charges, and unearned revenues once they are recognized as income. Annuity benefits accumulated also includes amounts advanced from the Federal Home Loan Bank of Cincinnati. |
Unearned Revenue | Unearned Revenue Certain upfront policy charges on annuities are deferred as unearned revenue (included in other liabilities) and recognized in net earnings (included in other income) using the same assumptions and estimated gross profits used to amortize DPAC. |
Life, Accident and Health Reserves | Life, Accident and Health Reserves Liabilities for future policy benefits under traditional life, accident and health policies are computed using the net level premium method. Computations are based on the original projections of investment yields, mortality, morbidity and surrenders and include provisions for unfavorable deviations unless a loss recognition event (premium deficiency) occurs. Claim reserves and liabilities established for accident and health claims are modified as necessary to reflect actual experience and developing trends. For long-duration contracts (such as traditional life and long-term care policies), loss recognition occurs when, based on current expectations as of the measurement date, existing contract liabilities plus the present value of future premiums (including reasonably expected rate increases) are not expected to cover the present value of future claims payments and related settlement and maintenance costs (excluding overhead) as well as unamortized acquisition costs. If a block of business is determined to be in loss recognition, a charge is recorded in earnings in an amount equal to the excess of the present value of expected future claims costs and unamortized acquisition costs over existing reserves plus the present value of expected future premiums (with no provision for adverse deviation). The charge is recorded first to reduce unamortized acquisition costs and then as an additional reserve (if unamortized acquisition costs have been reduced to zero). In addition, reserves for traditional life and long-term care policies are subject to adjustment for loss recognition charges that would have been recorded if the unrealized gains (losses) from securities had actually been realized. This adjustment is included in unrealized gains (losses) on marketable securities, a component of AOCI in AFG’s Balance Sheet. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs related to AFG’s outstanding debt are presented in its Balance Sheet as a direct reduction in the carrying value of long-term debt and are amortized over the life of the related debt using the effective interest method as a component of interest expense. Debt issuance costs related to AFG’s revolving credit facilities are included in other assets in AFG’s Balance Sheet. |
Variable Annuity Assets and Liabilities | Variable Annuity Assets and Liabilities Separate accounts related to variable annuities represent the fair value of deposits invested in underlying investment funds on which AFG earns a fee. Investment funds are selected and may be changed only by the policyholder, who retains all investment risk. AFG’s variable annuity contracts contain a guaranteed minimum death benefit (“GMDB”) to be paid if the policyholder dies before the annuity payout period commences. In periods of declining equity markets, the GMDB may exceed the value of the policyholder’s account. A GMDB liability is established for future excess death benefits using assumptions together with a range of reasonably possible scenarios for investment fund performance that are consistent with DPAC capitalization and amortization assumptions. |
Leases | Leases On January 1, 2019, AFG adopted ASU 2016-02, which requires entities that lease assets for terms longer than one year to recognize assets and liabilities for the rights and obligations created by those leases on the balance sheet based on the present value of contractual cash flows. The adoption of the new guidance did not have a material effect on AFG’s results of operations or liquidity. |
Noncontrolling Interests | Noncontrolling Interests For balance sheet purposes, noncontrolling interests represent the interests of shareholders other than AFG in consolidated entities. In the statement of earnings, net earnings and losses attributable to noncontrolling interests represents such shareholders’ interest in the earnings and losses of those entities. Noncontrolling |
Premium Recognition | Premium Recognition Property and casualty premiums are earned generally over the terms of the policies on a pro rata basis. Unearned premiums represent that portion of premiums written, which is applicable to the unexpired terms of policies in force. On reinsurance assumed from other insurance companies or written through various underwriting organizations, unearned premiums are based on information received from such companies and organizations. For traditional life, accident and health products, premiums are recognized as revenue when legally collectible from policyholders. For interest-sensitive life and universal life products, premiums are recorded in a policyholder account, which is reflected as a liability. Revenue is recognized as amounts are assessed against the policyholder account for mortality coverage and contract expenses. |
Income Taxes | Income Taxes Deferred income taxes are calculated using the liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases and are measured using enacted tax rates. A valuation allowance is established to reduce total deferred tax assets to an amount that will more likely than not be realized. The effect of a change in tax rates on deferred tax assets and liabilities is recorded in net earnings in the period that includes the enactment date. AFG recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained under examination by the appropriate taxing authority. Interest and penalties on AFG’s reserve for uncertain tax positions are recognized as a component of tax expense. |
Stock-Based Compensation | Stock-Based Compensation All share-based grants are recognized as compensation expense on a straight-line basis over their vesting periods based on their calculated fair value at the date of grant. AFG uses the Black Scholes pricing model to measure the fair value of employee stock options. AFG records excess tax benefits or deficiencies for share-based payments through income tax expense in the statement of earnings. In addition, AFG accounts for forfeitures of awards when they occur. |
Benefit Plans | Benefit Plans AFG provides retirement benefits to qualified employees of participating companies through the AFG 401(k) Retirement and Savings Plan, a defined contribution plan. AFG makes all contributions to the retirement fund portion of the plan and matches a percentage of employee contributions to the savings fund. Company contributions are expensed in the year for which they are declared. AFG and many of its subsidiaries provide health care and life insurance benefits to eligible retirees. AFG also provides postemployment benefits to former or inactive employees (primarily those on disability) who were not deemed retired under other company plans. The projected future cost of providing these benefits is expensed over the period employees earn such benefits. |
Earnings Per Share | Earnings Per Share Although basic earnings per share only considers shares of common stock outstanding during the period, the calculation of diluted earnings per share includes the following adjustments to weighted average common shares related to stock-based compensation plans: third quarter 2020 and 2019 — 0.3 million and 1.1 million; first nine months of 2020 and 2019 — 0.5 million and 1.2 million, respectively. There were no anti-dilutive potential common shares for the third quarter or the first nine months of 2020 or 2019. |
Statement of Cash Flows | Statement of Cash Flows For cash flow purposes, “investing activities” are defined as making and collecting loans and acquiring and disposing of debt or equity instruments, property and equipment and businesses. “Financing activities” include obtaining resources from owners and providing them with a return on their investments, borrowing money and repaying amounts borrowed. Annuity receipts, surrenders, benefits and withdrawals are also reflected as financing activities. All other activities are considered “operating.” Short-term investments having original maturities of three months or less when purchased are considered to be cash equivalents for purposes of the financial statements. |
Segments of Operations | AFG reports its property and casualty insurance business in the following Specialty sub-segments: (i) Property and transportation, which includes physical damage and liability coverage for buses and trucks, inland and ocean marine, agricultural-related products and other commercial property coverages, (ii) Specialty casualty, which includes primarily excess and surplus, executive and professional liability, general liability, umbrella and excess liability, specialty coverages in targeted markets, customized programs for small to mid-sized businesses and workers’ compensation insurance, and (iii) Specialty financial, which includes risk management insurance programs for lending and leasing institutions (including equipment leasing and collateral and lender-placed mortgage property insurance), fidelity and surety products and trade credit insurance. Premiums and underwriting profit included under Other specialty represent business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty sub-segments and amortization of deferred gains on retroactive reinsurance transactions related to the sales of businesses in prior years. AFG’s annuity business sells traditional fixed and indexed annuities in the retail, financial institutions, broker-dealer and registered investment advisor markets. AFG’s reportable segments and their components were determined based primarily upon similar economic characteristics, products and services. |
Accumulated Other Comprehensive Income, Net of Tax ("AOCI") | Accumulated Other Comprehensive Income, Net of Tax (“AOCI”) Comprehensive income is defined as all changes in shareholders’ equity except those arising from transactions with shareholders. Comprehensive income includes net earnings and other comprehensive income, which consists primarily of changes in net unrealized gains or losses on available for sale securities. |
Net Unrealized Gain on Marketable Securities | Net Unrealized Gain on Marketable Securities In addition to adjusting fixed maturity securities classified as “available for sale” to fair value, GAAP requires that deferred policy acquisition costs and certain other balance sheet amounts related to annuity, long-term care and life businesses be adjusted to the extent that unrealized gains and losses from securities would result in adjustments to those balances had the unrealized gains or losses actually been realized. |
Acquisitions and Sale of Busi_2
Acquisitions and Sale of Businesses (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Information on sale of Neon | The impact of Neon exited lines on AFG’s net earnings for the three months ended September 30, 2020 is shown below (in millions): Underwriting gain (loss) $ (38) Net investment income 1 Other income and expenses, net (3) Pretax loss from operations (40) Estimated loss on sale of subsidiaries (30) Total pretax loss from Neon exited lines (70) Tax benefit related to sale of subsidiaries 73 Net earnings from Neon exited lines $ 3 The estimated loss on the pending sale of Neon, which was recorded in AFG’s financial statements as of September 30, 2020, is shown below (in millions): Estimated sale proceeds, net of expenses $ 4 Assets of businesses to be sold: Cash and investments $ 461 Recoverables from reinsurers 198 Prepaid reinsurance premiums 30 Agents’ balances and premiums receivable 48 Other assets 73 Total assets 810 Liabilities of businesses to be sold: Unpaid losses and loss adjustment expenses 598 Unearned premiums 83 Payable to reinsurers 39 Other liabilities 47 Total liabilities 767 Reclassify accumulated other comprehensive income (9) Net assets of businesses to be sold $ 34 Pretax loss on subsidiaries recorded in the third quarter of 2020 $ (30) Revenues, costs and expenses, and earnings before income taxes for the subsidiaries to be sold were (in millions): Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Net earned premiums $ 42 $ 97 $ 174 $ 274 Loss and loss adjustment expenses 60 66 166 172 Commissions and other underwriting expenses 20 50 90 135 Underwriting loss (38) (19) (82) (33) Net investment income 1 2 (5) 5 Other income and expenses, net (3) (3) (5) (8) Loss before income taxes and noncontrolling interests $ (40) $ (20) $ (92) $ (36) As discussed in Note L — “Income Taxes,” the pending sale of Neon allowed AFG to recognize a $73 million tax benefit. |
Segments of Operations (Tables)
Segments of Operations (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting Information, by Segment | The following tables (in millions) show AFG’s revenues and earnings before income taxes by segment and sub-segment. Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Revenues Property and casualty insurance: Premiums earned: Specialty Property and transportation $ 574 $ 583 $ 1,350 $ 1,323 Specialty casualty 560 658 1,663 1,921 Specialty financial 155 161 455 458 Other specialty 50 40 132 113 Other lines (a) 42 — 174 — Total premiums earned 1,381 1,442 3,774 3,815 Net investment income (b) 112 124 277 352 Other income — 5 8 10 Total property and casualty insurance 1,493 1,571 4,059 4,177 Annuity: Net investment income 464 448 1,270 1,334 Other income 30 32 95 90 Total annuity 494 480 1,365 1,424 Other 58 90 194 284 Total revenues before realized gains (losses) 2,045 2,141 5,618 5,885 Realized gains (losses) on securities 45 (18) (302) 222 Realized losses on subsidiaries (30) — (30) — Total revenues $ 2,060 $ 2,123 $ 5,286 $ 6,107 (a) Represents premiums earned in the Neon exited lines during the third quarter and first nine months of 2020. Neon’s $97 million and $274 million in earned premiums during the third quarter and first nine months of 2019, respectively, are included in the Specialty casualty sub-segment. (b) Includes income of $1 million for the third quarter of 2020 and a loss of $5 million in the Neon exited lines in the first nine months of 2020 (primarily from the change in fair value of equity securities). Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Earnings (Loss) Before Income Taxes Property and casualty insurance: Underwriting: Specialty Property and transportation $ 47 $ 38 $ 107 $ 81 Specialty casualty 53 23 132 106 Specialty financial 13 26 30 60 Other specialty (9) 1 (22) (11) Other lines (a) (86) (34) (133) (36) Total underwriting 18 54 114 200 Investment and other income, net (b) 100 118 249 328 Total property and casualty insurance 118 172 363 528 Annuity 78 73 90 234 Other (c) (77) (50) (157) (135) Total earnings before realized gains (losses) and income taxes 119 195 296 627 Realized gains (losses) on securities 45 (18) (302) 222 Realized losses on subsidiaries (30) — (30) — Total earnings (loss) before income taxes $ 134 $ 177 $ (36) $ 849 (a) Includes an underwriting loss of $38 million in the third quarter of 2020 and $82 million in the first nine months of 2020 in the Neon exited lines. Neon’s $19 million and $33 million underwriting losses in the third quarter and first nine months of 2019, respectively, are included in the Specialty casualty sub-segment. Also includes special charges of $47 million and $18 million in the third quarter of 2020 and 2019, respectively, to increase asbestos and environmental (“A&E”) reserves. (b) Includes $2 million and $10 million in the third quarter and first nine months of 2020, respectively, in net expenses from the Neon exited lines, before noncontrolling interest. (c) Includes holding company interest and expenses, including special charges of $21 million and $11 million in the third quarter of 2020 and 2019, respectively, to increase A&E reserves related to AFG’s former railroad and manufacturing operations. Also includes the results of AFG’s run-off life and long-term care businesses, including a $4 million loss recognition charge recorded in the run-off long-term care business in September 2020. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Assets and liabilities measured at fair value | Assets and liabilities measured and carried at fair value in the financial statements are summarized below (in millions): Level 1 Level 2 Level 3 Total September 30, 2020 Assets: Available for sale (“AFS”) fixed maturities: U.S. Government and government agencies $ 182 $ 27 $ 15 $ 224 States, municipalities and political subdivisions — 6,616 106 6,722 Foreign government — 195 — 195 Residential MBS — 2,959 178 3,137 Commercial MBS — 846 10 856 Collateralized loan obligations — 4,395 212 4,607 Other asset-backed securities — 6,075 1,344 7,419 Corporate and other 24 23,528 1,481 25,033 Total AFS fixed maturities 206 44,641 3,346 48,193 Trading fixed maturities — 92 — 92 Equity securities 1,090 72 444 1,606 Equity index call options — 697 — 697 Assets of managed investment entities (“MIE”) 148 4,554 15 4,717 Variable annuity assets (separate accounts) (*) — 603 — 603 Other assets — derivatives — 114 — 114 Total assets accounted for at fair value $ 1,444 $ 50,773 $ 3,805 $ 56,022 Liabilities: Liabilities of managed investment entities $ 142 $ 4,384 $ 15 $ 4,541 Derivatives in annuity benefits accumulated — — 3,657 3,657 Other liabilities — derivatives — 9 — 9 Total liabilities accounted for at fair value $ 142 $ 4,393 $ 3,672 $ 8,207 December 31, 2019 Assets: Available for sale 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 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 (*) Variable annuity liabilities equal the fair value of variable annuity assets. |
Unobservable inputs used by management in determining fair value of embedded derivatives | The following table presents information about the unobservable inputs used by management in determining fair value of these Level 3 liabilities. See Note F — “Derivatives.” Unobservable Input Range Adjustment for insurance subsidiary’s credit risk 0.2% – 2.9% over the risk-free rate Risk margin for uncertainty in cash flows 0.99% reduction in the discount rate Surrenders 4% – 23% of indexed account value Partial surrenders 2% – 11% of indexed account value Annuitizations 0.1% – 1% of indexed account value Deaths 1.8% – 13.2% of indexed account value Budgeted option costs 2.2% – 2.8% of indexed account value |
Changes in balances of Level 3 financial assets | Changes in balances of Level 3 financial assets and liabilities carried at fair value during the third quarter and first nine months of 2020 and 2019 are presented below (in millions). The transfers into and out of Level 3 were due to changes in the availability of market observable inputs. All transfers are reflected in the table at fair value as of the end of the reporting period. Total realized/unrealized Balance at June 30, 2020 Net Other Purchases Sales and Transfer Transfer Balance at September 30, 2020 AFS fixed maturities: U.S. government agency $ 15 $ 1 $ (1) $ — $ — $ — $ — $ 15 State and municipal 107 — — — (1) — — 106 Residential MBS 156 (4) 1 — (6) 49 (18) 178 Commercial MBS 33 (1) — — — — (22) 10 Collateralized loan obligations 207 (1) 6 — — — — 212 Other asset-backed securities 1,328 (2) 13 39 (75) 77 (36) 1,344 Corporate and other 1,525 6 4 53 (77) 121 (151) 1,481 Total AFS fixed maturities 3,371 (1) 23 92 (159) 247 (227) 3,346 Equity securities 452 (10) — 12 — — (10) 444 Assets of MIE 17 (2) — — — — — 15 Total Level 3 assets $ 3,840 $ (13) $ 23 $ 104 $ (159) $ 247 $ (237) $ 3,805 Embedded derivatives (a) $ (3,675) $ (5) $ — $ (56) $ 79 $ — $ — $ (3,657) Total Level 3 liabilities (b) $ (3,675) $ (5) $ — $ (56) $ 79 $ — $ — $ (3,657) Total realized/unrealized Balance at June 30, 2019 Net Other Purchases Sales and Transfer Transfer Balance at September 30, 2019 AFS fixed maturities: U.S. government agency $ 8 $ — $ — $ — $ — $ — $ — $ 8 State and municipal 82 — 2 — — 18 — 102 Residential MBS 139 1 (1) — (4) 22 (1) 156 Commercial MBS 50 1 — — — 4 — 55 Collateralized loan obligations 50 (2) 1 8 — — — 57 Other asset-backed securities 367 — 1 49 (3) — — 414 Corporate and other 2,014 — 20 324 (81) 10 (1) 2,286 Total AFS fixed maturities 2,710 — 23 381 (88) 54 (2) 3,078 Equity securities 377 (7) — 18 (2) 34 — 420 Assets of MIE 19 (1) — — — — — 18 Total Level 3 assets $ 3,106 $ (8) $ 23 $ 399 $ (90) $ 88 $ (2) $ 3,516 Embedded derivatives (a) $ (3,541) $ 70 $ — $ (63) $ 65 $ — $ — $ (3,469) Total Level 3 liabilities (b) $ (3,541) $ 70 $ — $ (63) $ 65 $ — $ — $ (3,469) (a) Total realized/unrealized gains (losses) included in net earnings for the embedded derivatives reflects a favorable adjustment related to the unlocking of actuarial assumptions of $240 million in the third quarter of 2020 compared to $181 million in the third quarter of 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 MIE assets. Total realized/unrealized Balance at December 31, 2019 Net Other Purchases Sales and Transfer Transfer Balance at September 30, 2020 AFS fixed maturities: U.S. government agency $ 15 $ 3 $ (3) $ — $ — $ — $ — $ 15 State and municipal 105 — 6 — (3) — (2) 106 Residential MBS 173 1 (7) — (15) 51 (25) 178 Commercial MBS 35 — — — (3) — (22) 10 Collateralized loan obligations 15 (11) 21 — — 187 — 212 Other asset-backed securities 1,286 (16) 6 314 (278) 211 (179) 1,344 Corporate and other 1,758 4 24 220 (133) 130 (522) 1,481 Total AFS fixed maturities 3,387 (19) 47 534 (432) 579 (750) 3,346 Equity securities 437 (35) — 35 — 17 (10) 444 Assets of MIE 17 (4) — — — 2 — 15 Total Level 3 assets $ 3,841 $ (58) $ 47 $ 569 $ (432) $ 598 $ (760) $ 3,805 Embedded derivatives (a) $ (3,730) $ 41 $ — $ (180) $ 212 $ — $ — $ (3,657) Total Level 3 liabilities (b) $ (3,730) $ 41 $ — $ (180) $ 212 $ — $ — $ (3,657) Total realized/unrealized Balance at December 31, 2018 Net Other Purchases Sales and Transfer Transfer Balance at September 30, 2019 AFS fixed maturities: U.S. government agency $ 9 $ — $ — $ — $ (1) $ — $ — $ 8 State and municipal 59 — 9 — (2) 36 — 102 Residential MBS 197 10 (6) — (14) 24 (55) 156 Commercial MBS 56 3 — — (3) 4 (5) 55 Collateralized loan obligations 116 (5) 7 8 — 13 (82) 57 Other asset-backed securities 731 — 6 141 (135) — (329) 414 Corporate and other 1,996 2 71 985 (330) 12 (450) 2,286 Total AFS fixed maturities 3,164 10 87 1,134 (485) 89 (921) 3,078 Equity securities 336 (7) — 38 (3) 56 — 420 Assets of MIE 21 (3) — — — — — 18 Total Level 3 assets $ 3,521 $ — $ 87 $ 1,172 $ (488) $ 145 $ (921) $ 3,516 Embedded derivatives (a) $ (2,720) $ (643) $ — $ (276) $ 170 $ — $ — $ (3,469) Total Level 3 liabilities (b) $ (2,720) $ (643) $ — $ (276) $ 170 $ — $ — $ (3,469) (a) Total realized/unrealized gains (losses) included in net earnings for the embedded derivatives reflects a favorable adjustment related to the unlocking of actuarial assumptions of $240 million in the first nine months of 2020 compared to $181 million in the first nine months of 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. |
Changes in balances of Level 3 financial liabilities | Changes in balances of Level 3 financial assets and liabilities carried at fair value during the third quarter and first nine months of 2020 and 2019 are presented below (in millions). The transfers into and out of Level 3 were due to changes in the availability of market observable inputs. All transfers are reflected in the table at fair value as of the end of the reporting period. Total realized/unrealized Balance at June 30, 2020 Net Other Purchases Sales and Transfer Transfer Balance at September 30, 2020 AFS fixed maturities: U.S. government agency $ 15 $ 1 $ (1) $ — $ — $ — $ — $ 15 State and municipal 107 — — — (1) — — 106 Residential MBS 156 (4) 1 — (6) 49 (18) 178 Commercial MBS 33 (1) — — — — (22) 10 Collateralized loan obligations 207 (1) 6 — — — — 212 Other asset-backed securities 1,328 (2) 13 39 (75) 77 (36) 1,344 Corporate and other 1,525 6 4 53 (77) 121 (151) 1,481 Total AFS fixed maturities 3,371 (1) 23 92 (159) 247 (227) 3,346 Equity securities 452 (10) — 12 — — (10) 444 Assets of MIE 17 (2) — — — — — 15 Total Level 3 assets $ 3,840 $ (13) $ 23 $ 104 $ (159) $ 247 $ (237) $ 3,805 Embedded derivatives (a) $ (3,675) $ (5) $ — $ (56) $ 79 $ — $ — $ (3,657) Total Level 3 liabilities (b) $ (3,675) $ (5) $ — $ (56) $ 79 $ — $ — $ (3,657) Total realized/unrealized Balance at June 30, 2019 Net Other Purchases Sales and Transfer Transfer Balance at September 30, 2019 AFS fixed maturities: U.S. government agency $ 8 $ — $ — $ — $ — $ — $ — $ 8 State and municipal 82 — 2 — — 18 — 102 Residential MBS 139 1 (1) — (4) 22 (1) 156 Commercial MBS 50 1 — — — 4 — 55 Collateralized loan obligations 50 (2) 1 8 — — — 57 Other asset-backed securities 367 — 1 49 (3) — — 414 Corporate and other 2,014 — 20 324 (81) 10 (1) 2,286 Total AFS fixed maturities 2,710 — 23 381 (88) 54 (2) 3,078 Equity securities 377 (7) — 18 (2) 34 — 420 Assets of MIE 19 (1) — — — — — 18 Total Level 3 assets $ 3,106 $ (8) $ 23 $ 399 $ (90) $ 88 $ (2) $ 3,516 Embedded derivatives (a) $ (3,541) $ 70 $ — $ (63) $ 65 $ — $ — $ (3,469) Total Level 3 liabilities (b) $ (3,541) $ 70 $ — $ (63) $ 65 $ — $ — $ (3,469) (a) Total realized/unrealized gains (losses) included in net earnings for the embedded derivatives reflects a favorable adjustment related to the unlocking of actuarial assumptions of $240 million in the third quarter of 2020 compared to $181 million in the third quarter of 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 MIE assets. Total realized/unrealized Balance at December 31, 2019 Net Other Purchases Sales and Transfer Transfer Balance at September 30, 2020 AFS fixed maturities: U.S. government agency $ 15 $ 3 $ (3) $ — $ — $ — $ — $ 15 State and municipal 105 — 6 — (3) — (2) 106 Residential MBS 173 1 (7) — (15) 51 (25) 178 Commercial MBS 35 — — — (3) — (22) 10 Collateralized loan obligations 15 (11) 21 — — 187 — 212 Other asset-backed securities 1,286 (16) 6 314 (278) 211 (179) 1,344 Corporate and other 1,758 4 24 220 (133) 130 (522) 1,481 Total AFS fixed maturities 3,387 (19) 47 534 (432) 579 (750) 3,346 Equity securities 437 (35) — 35 — 17 (10) 444 Assets of MIE 17 (4) — — — 2 — 15 Total Level 3 assets $ 3,841 $ (58) $ 47 $ 569 $ (432) $ 598 $ (760) $ 3,805 Embedded derivatives (a) $ (3,730) $ 41 $ — $ (180) $ 212 $ — $ — $ (3,657) Total Level 3 liabilities (b) $ (3,730) $ 41 $ — $ (180) $ 212 $ — $ — $ (3,657) Total realized/unrealized Balance at December 31, 2018 Net Other Purchases Sales and Transfer Transfer Balance at September 30, 2019 AFS fixed maturities: U.S. government agency $ 9 $ — $ — $ — $ (1) $ — $ — $ 8 State and municipal 59 — 9 — (2) 36 — 102 Residential MBS 197 10 (6) — (14) 24 (55) 156 Commercial MBS 56 3 — — (3) 4 (5) 55 Collateralized loan obligations 116 (5) 7 8 — 13 (82) 57 Other asset-backed securities 731 — 6 141 (135) — (329) 414 Corporate and other 1,996 2 71 985 (330) 12 (450) 2,286 Total AFS fixed maturities 3,164 10 87 1,134 (485) 89 (921) 3,078 Equity securities 336 (7) — 38 (3) 56 — 420 Assets of MIE 21 (3) — — — — — 18 Total Level 3 assets $ 3,521 $ — $ 87 $ 1,172 $ (488) $ 145 $ (921) $ 3,516 Embedded derivatives (a) $ (2,720) $ (643) $ — $ (276) $ 170 $ — $ — $ (3,469) Total Level 3 liabilities (b) $ (2,720) $ (643) $ — $ (276) $ 170 $ — $ — $ (3,469) (a) Total realized/unrealized gains (losses) included in net earnings for the embedded derivatives reflects a favorable adjustment related to the unlocking of actuarial assumptions of $240 million in the first nine months of 2020 compared to $181 million in the first nine months of 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. |
Fair value of financial instruments | The carrying value and fair value of financial instruments that are not carried at fair value in the financial statements are summarized below (in millions): Carrying Fair Value Value Total Level 1 Level 2 Level 3 September 30, 2020 Financial assets: Cash and cash equivalents $ 3,747 $ 3,747 $ 3,747 $ — $ — Mortgage loans 1,482 1,507 — — 1,507 Policy loans 154 154 — — 154 Total financial assets not accounted for at fair value $ 5,383 $ 5,408 $ 3,747 $ — $ 1,661 Financial liabilities: Annuity benefits accumulated (*) $ 41,082 $ 42,938 $ — $ — $ 42,938 Long-term debt 2,108 2,397 — 2,394 3 Total financial liabilities not accounted for at fair value $ 43,190 $ 45,335 $ — $ 2,394 $ 42,941 December 31, 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 (*) Excludes $850 million and $247 million of life contingent annuities in the payout phase at September 30, 2020 and December 31, 2019, respectively. |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Available for sale fixed maturities | Available for sale fixed maturities at September 30, 2020 and December 31, 2019, consisted of the following (in millions): Amortized Allowance for Expected Credit Losses Gross Unrealized Net Fair Gains Losses September 30, 2020 Fixed maturities: U.S. Government and government agencies $ 211 $ — $ 13 $ — $ 13 $ 224 States, municipalities and political subdivisions 6,150 — 575 (3) 572 6,722 Foreign government 187 — 8 — 8 195 Residential MBS 2,882 3 264 (6) 258 3,137 Commercial MBS 814 — 44 (2) 42 856 Collateralized loan obligations 4,643 20 25 (41) (16) 4,607 Other asset-backed securities 7,405 16 154 (124) 30 7,419 Corporate and other 23,005 15 2,121 (78) 2,043 25,033 Total fixed maturities $ 45,297 $ 54 $ 3,204 $ (254) $ 2,950 $ 48,193 December 31, 2019 Fixed maturities: U.S. Government and government agencies $ 199 $ — $ 10 $ — $ 10 $ 209 States, municipalities and political subdivisions 6,604 — 363 (4) 359 6,963 Foreign government 170 — 3 (1) 2 172 Residential MBS 2,900 — 265 (5) 260 3,160 Commercial MBS 896 — 31 — 31 927 Collateralized loan obligations 4,307 — 10 (37) (27) 4,280 Other asset-backed securities 6,992 — 156 (20) 136 7,128 Corporate and other 22,456 — 1,231 (21) 1,210 23,666 Total fixed maturities $ 44,524 $ — $ 2,069 $ (88) $ 1,981 $ 46,505 |
Equity securities reported at fair value | Equity securities, which are reported at fair value with holding gains and losses recognized in net earnings, consisted of the following at September 30, 2020 and December 31, 2019 (in millions): September 30, 2020 December 31, 2019 Fair Value Fair Value Actual Cost over (under) Actual Cost over (under) Fair Value Cost Fair Value Cost Common stocks $ 1,145 $ 874 $ (271) $ 1,164 $ 1,283 $ 119 Perpetual preferred stocks 724 732 8 640 654 14 Total equity securities carried at fair value $ 1,869 $ 1,606 $ (263) $ 1,804 $ 1,937 $ 133 |
Available for sale securities in a continuous unrealized loss position | The following tables show gross unrealized losses (dollars in millions) on available for sale fixed maturities by investment category and length of time that individual securities have been in a continuous unrealized loss position at the following balance sheet dates. Less Than Twelve Months Twelve Months or More Unrealized Fair Fair Value as Unrealized Fair Fair Value as September 30, 2020 Fixed maturities: U.S. Government and government agencies $ — $ 19 100 % $ — $ — — % States, municipalities and political subdivisions (3) 120 98 % — 15 100 % Foreign government — 5 100 % — — — % Residential MBS (4) 144 97 % (2) 35 95 % Commercial MBS (2) 47 96 % — — — % Collateralized loan obligations (11) 1,248 99 % (30) 1,393 98 % Other asset-backed securities (107) 2,164 95 % (17) 245 94 % Corporate and other (67) 1,791 96 % (11) 196 95 % Total fixed maturities $ (194) $ 5,538 97 % $ (60) $ 1,884 97 % 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 % |
Roll forward of allowance for credit losses on fixed maturity securities | A progression of the allowance for expected credit losses on fixed maturity securities is shown below (in millions): Structured Corporate and Other Total Balance at June 30 $ 39 $ 22 $ 61 Initial allowance for purchased securities with credit deterioration — — — Provision for expected credit losses on securities with no previous allowance — — — Additions (reductions) to previously recognized expected credit losses 1 (4) (3) Reductions due to sales or redemptions (1) (3) (4) Balance at September 30 $ 39 $ 15 $ 54 Balance at January 1 $ — $ — $ — Impact of adoption of new accounting policy — — — Initial allowance for purchased securities with credit deterioration 1 — 1 Provision for expected credit losses on securities with no previous allowance 39 28 67 Additions (reductions) to previously recognized expected credit losses — (10) (10) Reductions due to sales or redemptions (1) (3) (4) Balance at September 30 $ 39 $ 15 $ 54 (*) Includes mortgage-backed securities, collateralized loan obligations and other asset-backed securities. |
Available for sale fixed maturity securities by contractual maturity date | The table below sets forth the scheduled maturities of available for sale fixed maturities as of September 30, 2020 (dollars in millions). Securities with sinking funds are reported at average maturity. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers. Amortized Fair Value Cost, net (*) Amount % Maturity One year or less $ 2,218 $ 2,250 5 % After one year through five years 11,434 12,224 25 % After five years through ten years 12,737 14,199 30 % After ten years 3,149 3,501 7 % 29,538 32,174 67 % Collateralized loan obligations and other ABS (average life of approximately 4 years) 12,012 12,026 25 % MBS (average life of approximately 3-1/2 years) 3,693 3,993 8 % Total $ 45,243 $ 48,193 100 % (*) Amortized cost, net of allowance for expected credit losses. |
Components of the net unrealized gain on securities, included in Accumulated Other Comprehensive Income | The following table shows (in millions) the components of the net unrealized gain on securities that is included in AOCI in AFG’s Balance Sheet. Pretax Deferred Tax Net September 30, 2020 Net unrealized gain on: Fixed maturities — annuity segment (*) $ 2,473 $ (519) $ 1,954 Fixed maturities — all other 477 (100) 377 Total fixed maturities 2,950 (619) 2,331 Deferred policy acquisition costs — annuity segment (1,049) 220 (829) Annuity benefits accumulated (377) 79 (298) Life, accident and health reserves (3) 1 (2) Unearned revenue 13 (3) 10 Total net unrealized gain on marketable securities $ 1,534 $ (322) $ 1,212 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 (*) Net unrealized gains on fixed maturity investments supporting AFG’s annuity benefits accumulated. |
Net investment income earned and investment expenses incurred | The following table shows (in millions) investment income earned and investment expenses incurred. Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Investment income: Fixed maturities $ 473 $ 475 $ 1,449 $ 1,422 Equity securities: Dividends 16 22 49 66 Change in fair value (a) (b) (3) 17 (6) 35 Equity in earnings of partnerships and similar investments 66 43 37 109 Other 26 36 72 95 Gross investment income 578 593 1,601 1,727 Investment expenses (6) (5) (17) (17) Net investment income (b) $ 572 $ 588 $ 1,584 $ 1,710 (a) 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. (b) Net investment income in the third quarter and first nine months of 2020 includes income of $1 million and losses of $5 million, respectively, on investments held by the companies that comprise the Neon exited lines due primarily to the $7 million loss recorded in first quarter of 2020 on equity securities that are carried at fair value through net investment income. |
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | Realized gains (losses) and changes in unrealized appreciation (depreciation) included in AOCI related to fixed maturity securities are summarized as follows (in millions): Three months ended September 30, 2020 Three months ended September 30, 2019 Realized gains (losses) Realized gains (losses) Before Impairments Impairment Allowance Total Change in Unrealized Before Impairments Impairments Total Change in Unrealized Fixed maturities $ 14 $ 3 $ 17 $ 513 $ 9 $ (14) $ (5) $ 367 Equity securities 30 — 30 — (16) — (16) — Mortgage loans and other investments — — — — — — — — Other (*) (1) (1) (2) (283) (2) 5 3 (230) Total pretax 43 2 45 230 (9) (9) (18) 137 Tax effects (9) (1) (10) (48) 2 2 4 (29) Net of tax $ 34 $ 1 $ 35 $ 182 $ (7) $ (7) $ (14) $ 108 Nine months ended September 30, 2020 Nine months ended September 30, 2019 Realized gains (losses) Realized gains (losses) Before Impairments Impairment Allowance Total Change in Unrealized Before Impairments Impairments Total Change in Unrealized Fixed maturities $ 46 $ (57) $ (11) $ 969 $ 23 $ (20) $ 3 $ 2,009 Equity securities (303) — (303) — 210 — 210 — Mortgage loans and other investments 4 — 4 — 3 — 3 — Other (*) (6) 14 8 (526) (1) 7 6 (949) Total pretax (259) (43) (302) 443 235 (13) 222 1,060 Tax effects 54 9 63 (93) (49) 3 (46) (223) Net of tax $ (205) $ (34) $ (239) $ 350 $ 186 $ (10) $ 176 $ 837 (*) Primarily adjustments to deferred policy acquisition costs and reserves related to the annuity business. |
Holding gains (losses) on equity securities still held | AFG recorded net holding gains (losses) on equity securities during the third quarter and first nine months of 2020 and 2019 on securities that were still owned at September 30, 2020 and September 30, 2019 as follows (in millions): Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Included in realized gains (losses) $ 23 $ (24) $ (300) $ 146 Included in net investment income (4) 17 1 34 $ 19 $ (7) $ (299) $ 180 |
Gross realized gains and losses on available for sale fixed maturity and equity security investments | Gross realized gains and losses (excluding impairment charges and mark-to-market of derivatives) on available for sale fixed maturity investment transactions consisted of the following (in millions): Nine months ended September 30, 2020 2019 Gross gains $ 77 $ 20 Gross losses (33) (12) |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives included in Balance Sheet at fair value | The following derivatives that do not qualify for hedge accounting under GAAP are included in AFG’s Balance Sheet at fair value (in millions): September 30, 2020 December 31, 2019 Derivative Balance Sheet Line Asset Liability Asset Liability MBS with embedded derivatives Fixed maturities $ 172 $ — $ 102 $ — Public company warrants Equity securities — — — — Fixed-indexed and variable-indexed annuities (embedded derivative) Annuity benefits accumulated — 3,657 — 3,730 Equity index call options Equity index call options 697 — 924 — Equity index put options Other liabilities — 4 — 1 Reinsurance contracts (embedded derivative) Other liabilities — 4 — 4 $ 869 $ 3,665 $ 1,026 $ 3,735 |
Summary of gain (loss) included in the Statement of Earnings for changes in the fair value of derivatives | The following table summarizes the gains (losses) included in AFG’s Statement of Earnings for changes in the fair value of derivatives that do not qualify for hedge accounting for the third quarter and first nine months of 2020 and 2019 (in millions): Three months ended September 30, Nine months ended September 30, Derivative Statement of Earnings Line 2020 2019 2020 2019 MBS with embedded derivatives Realized gains (losses) on securities $ (5) $ 3 $ 2 $ 15 Public company warrants Realized gains (losses) on securities — (1) — (1) Fixed-indexed and variable-indexed annuities (embedded derivative) (*) Annuity benefits (5) 70 41 (643) Equity index call options Annuity benefits 203 30 (42) 544 Equity index put options Annuity benefits 2 — 1 1 Reinsurance contract (embedded derivative) Net investment income 1 — — (2) $ 196 $ 102 $ 2 $ (86) (*) The change in fair value of the embedded derivative includes a favorable adjustment related to the unlocking of actuarial assumptions of $240 million in the third quarter of 2020 and $181 million in the third quarter of 2019. |
Deferred Policy Acquisition C_2
Deferred Policy Acquisition Costs (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Deferred Policy Acquisition Costs Disclosures [Abstract] | |
Deferred Policy Acquisition Costs Details | A progression of deferred policy acquisition costs is presented below (in millions): P&C Annuity and Other Deferred Deferred Sales Consolidated Costs Costs Inducements PVFP Subtotal Unrealized (*) Total Total Balance at June 30, 2020 $ 296 $ 1,342 $ 73 $ 33 $ 1,448 $ (926) $ 522 $ 818 Additions 142 33 — — 33 — 33 175 Amortization: Periodic amortization (170) (39) (2) (1) (42) — (42) (212) Annuity unlocking — (118) 4 — (114) — (114) (114) Included in realized gains — (2) — — (2) — (2) (2) Foreign currency translation 1 — — — — — — 1 Change in unrealized — — — — — (169) (169) (169) Balance at September 30, 2020 $ 269 $ 1,216 $ 75 $ 32 $ 1,323 $ (1,095) $ 228 $ 497 Balance at June 30, 2019 $ 330 $ 1,373 $ 81 $ 38 $ 1,492 $ (619) $ 873 $ 1,203 Additions 188 43 1 — 44 — 44 232 Amortization: Periodic amortization (194) (29) (3) (1) (33) — (33) (227) Annuity unlocking — (76) (1) — (77) — (77) (77) Included in realized gains — 3 — — 3 — 3 3 Foreign currency translation (1) — — — — — — (1) Change in unrealized — — — — — (169) (169) (169) Balance at September 30, 2019 $ 323 $ 1,314 $ 78 $ 37 $ 1,429 $ (788) $ 641 $ 964 Balance at December 31, 2019 $ 322 $ 1,303 $ 75 $ 36 $ 1,414 $ (699) $ 715 $ 1,037 Additions 448 112 1 — 113 — 113 561 Amortization: Periodic amortization (500) (87) (6) (4) (97) — (97) (597) Annuity unlocking — (118) 4 — (114) — (114) (114) Included in realized gains — 6 1 — 7 — 7 7 Foreign currency translation (1) — — — — — — (1) Change in unrealized — — — — — (396) (396) (396) Balance at September 30, 2020 $ 269 $ 1,216 $ 75 $ 32 $ 1,323 $ (1,095) $ 228 $ 497 Balance at December 31, 2018 $ 299 $ 1,285 $ 86 $ 42 $ 1,413 $ (30) $ 1,383 $ 1,682 Additions 569 163 2 — 165 — 165 734 Amortization: Periodic amortization (544) (63) (10) (5) (78) — (78) (622) Annuity unlocking — (76) (1) — (77) — (77) (77) Included in realized gains — 5 1 — 6 — 6 6 Foreign currency translation (1) — — — — — — (1) Change in unrealized — — — — — (758) (758) (758) Balance at September 30, 2019 $ 323 $ 1,314 $ 78 $ 37 $ 1,429 $ (788) $ 641 $ 964 (*) Adjustments to DPAC related to net unrealized gains/losses on securities and cash flow hedges. |
Managed Investment Entities (Ta
Managed Investment Entities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Variable Interest Entity, Primary Beneficiary, Does Not Hold Majority Voting Interest, Disclosures [Abstract] | |
Selected financial information related to collateralized loan obligations | Selected financial information related to the CLOs is shown below (in millions): Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Investment in CLO tranches at end of period $ 176 $ 179 $ 176 $ 179 Gains (losses) on change in fair value of assets/liabilities (a): Assets 132 (18) (184) 69 Liabilities (131) 4 137 (85) Management fees paid to AFG 3 4 11 11 CLO earnings (losses) attributable to AFG shareholders (b) 13 (5) (21) 11 (a) Included in revenues in AFG’s Statement of Earnings. (b) Included in earnings before income taxes in AFG’s Statement of Earnings. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt instruments | Long-term debt consisted of the following (in millions): September 30, 2020 December 31, 2019 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 (3) 422 5.25% Senior Notes due April 2030 300 (7) 293 — — — Other 3 — 3 3 — 3 1,318 (12) 1,306 1,018 (5) 1,013 Direct Subordinated Obligations of AFG: 4.50% Subordinated Debentures due September 2060 200 (4) 196 — — — 5.125% Subordinate Debentures due December 2059 200 (6) 194 200 (6) 194 6% Subordinated Debentures due November 2055 150 (5) 145 150 (5) 145 5.625% Subordinated Debentures due June 2060 150 (4) 146 — — — 5.875% Subordinated Debentures due March 2059 125 (4) 121 125 (4) 121 825 (23) 802 475 (15) 460 $ 2,143 $ (35) $ 2,108 $ 1,493 $ (20) $ 1,473 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Components of accumulated other comprehensive income (loss) | The progression of the components of accumulated other comprehensive income follows (in millions): Other Comprehensive Income (Loss) AOCI Pretax Tax Net Attributable to Attributable to Other AOCI Quarter ended September 30, 2020 Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 245 $ (51) $ 194 $ — $ 194 Reclassification adjustment for realized (gains) losses included in net earnings (*) (15) 3 (12) — (12) Total net unrealized gains (losses) on securities $ 1,030 230 (48) 182 — 182 $ — $ 1,212 Net unrealized gains (losses) on cash flow hedges 47 (7) 1 (6) — (6) — 41 Foreign currency translation adjustments (17) — — — — — 4 (13) Pension and other postretirement plans adjustments (7) — — — — — — (7) Total $ 1,053 $ 223 $ (47) $ 176 $ — $ 176 $ 4 $ 1,233 Quarter ended September 30, 2019 Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 136 $ (29) $ 107 $ — $ 107 Reclassification adjustment for realized (gains) losses included in net earnings (*) 1 — 1 — 1 Total net unrealized gains (losses) on securities $ 812 137 (29) 108 — 108 $ — $ 920 Net unrealized gains on cash flow hedges 18 9 (2) 7 — 7 — 25 Foreign currency translation adjustments (13) (6) (1) (7) (1) (8) — (21) Pension and other postretirement plans adjustments (8) 1 — 1 — 1 — (7) Total $ 809 $ 141 $ (32) $ 109 $ (1) $ 108 $ — $ 917 Nine months ended September 30, 2020 Net unrealized gains (losses) on securities: Unrealized holding gains on securities arising during the period $ 443 $ (93) $ 350 $ — $ 350 Reclassification adjustment for realized (gains) losses included in net earnings (*) — — — — — Total net unrealized gains (losses) on securities $ 862 443 (93) 350 — 350 $ — $ 1,212 Net unrealized gains on cash flow hedges 17 31 (7) 24 — 24 — 41 Foreign currency translation adjustments (9) (6) — (6) (2) (8) 4 (13) Pension and other postretirement plans adjustments (7) — — — — — — (7) Total $ 863 $ 468 $ (100) $ 368 $ (2) $ 366 $ 4 $ 1,233 Nine months ended September 30, 2019 Net unrealized gains on securities: Unrealized holding gains on securities arising during the period $ 1,073 $ (226) $ 847 $ — $ 847 Reclassification adjustment for realized (gains) losses included in net earnings (*) (13) 3 (10) — (10) Total net unrealized gains (losses) on securities $ 83 1,060 (223) 837 — 837 $ — $ 920 Net unrealized gains (losses) on cash flow hedges (11) 46 (10) 36 — 36 — 25 Foreign currency translation adjustments (16) (3) — (3) (2) (5) — (21) Pension and other postretirement plans adjustments (8) 1 — 1 — 1 — (7) Total $ 48 $ 1,104 $ (233) $ 871 $ (2) $ 869 $ — $ 917 (*) The reclassification adjustment out of net unrealized gains (losses) on securities affected the following lines in AFG’s Statement of Earnings: OCI component Affected line in the statement of earnings Pretax Realized gains (losses) on securities Tax Provision (credit) for income taxes |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of income taxes at the statutory rate and income taxes shown in the Statement of Earnings | The following is a reconciliation of income taxes at the statutory rate of 21% to the provision for income taxes as shown in AFG’s Statement of Earnings (dollars in millions): Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Amount % of EBT Amount % of EBT Amount % of EBT Amount % of EBT Earnings (loss) before income taxes (“EBT”) $ 134 $ 177 $ (36) $ 849 Income taxes at statutory rate $ 28 21 % $ 37 21 % $ (8) 21 % $ 178 21 % Effect of: Pending sale of Neon (73) (54 %) — — % (73) 203 % — — % Tax exempt interest (3) (2 %) (4) (2 %) (9) 25 % (11) (1 %) Stock-based compensation — — % (2) (1 %) (4) 11 % (6) (1 %) Dividends received deduction (1) (1 %) (1) (1 %) (2) 6 % (3) — % Adjustment to prior year taxes (1) (1 %) (3) (2 %) (1) 3 % (3) — % Employee Stock Ownership Plan dividends paid deduction (1) (1 %) — — % (1) 3 % (1) — % Change in valuation allowance 20 15 % 4 2 % 31 (86 %) 7 1 % Nondeductible expenses 2 1 % 2 1 % 4 (11 %) 6 1 % Foreign operations (4) (3 %) — — % (3) 8 % — — % Other 3 3 % 1 1 % 3 (8 %) 4 (1 %) Provision (credit) for income taxes as shown in the statement of earnings $ (30) (22 %) $ 34 19 % $ (63) 175 % $ 171 20 % |
Insurance (Tables)
Insurance (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Insurance [Abstract] | |
Reconciliation of beginning and ending liability for unpaid losses and loss adjustment expenses | The following table provides an analysis of changes in the liability for losses and loss adjustment expenses during the first nine months of 2020 and 2019 (in millions): Nine months ended September 30, 2020 2019 Balance at beginning of year $ 10,232 $ 9,741 Less reinsurance recoverables, net of allowance 3,024 2,942 Net liability at beginning of year 7,208 6,799 Provision for losses and LAE occurring in the current period 2,560 2,457 Net increase (decrease) in the provision for claims of prior years: Special A&E charges 47 18 Other (166) (116) Total losses and LAE incurred 2,441 2,359 Payments for losses and LAE of: Current year (592) (731) Prior years (1,406) (1,408) Total payments (1,998) (2,139) Foreign currency translation and other (11) (5) Net liability at end of period 7,640 7,014 Add back reinsurance recoverables, net of allowance 3,114 2,833 Gross unpaid losses and LAE included in the balance sheet at end of period $ 10,754 $ 9,847 |
Reinsurance Recoverable and Premiums Receivable, Allowance for Credit Loss | Progressions of the 2020 allowance for expected credit losses are shown below (in millions): Recoverables from Reinsurers Premiums Receivable Balance at June 30 $ 13 $ 10 Provision for expected credit losses 1 1 Write-offs charged against the allowance — — Balance at September 30 $ 14 $ 11 Balance at January 1 $ 18 $ 13 Impact of adoption of new accounting policy (6) (3) Provision for expected credit losses 2 1 Write-offs charged against the allowance — — Balance at September 30 $ 14 $ 11 |
Accounting Policies - Narrative
Accounting Policies - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | |
Significant Accounting Policies [Line Items] | |||||||||
Cumulative effect of accounting change | $ 6,340 | $ 6,321 | $ 6,340 | $ 6,321 | $ 6,126 | $ 6,269 | $ 6,090 | $ 4,972 | |
Assets of managed investment entities | 73,110 | 73,110 | 70,130 | ||||||
Liabilities of managed investment entities | 66,770 | 66,770 | 63,861 | ||||||
Operating lease liability | 175 | 175 | 180 | ||||||
Operating lease right-of-use asset | $ 154 | $ 154 | 158 | ||||||
Weighted average common shares adjustment related to stock-based compensation (shares) | 300,000 | 1,100,000 | 500,000 | 1,200,000 | |||||
Anti-dilutive potential common shares related to stock-based compensation plans (shares) | 0 | 0 | 0 | 0 | |||||
Maturities of short term investments | 3 months | ||||||||
New collateralized loan obligation temporary warehousing entity | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Assets of managed investment entities | $ 140 | $ 140 | |||||||
Liabilities of managed investment entities | 130 | 130 | |||||||
Retained Earnings | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Cumulative effect of accounting change | $ 3,737 | $ 4,022 | $ 3,737 | $ 4,022 | $ 3,685 | $ 4,009 | $ 3,914 | $ 3,588 | |
Cumulative effect adjustment in period of adoption | Retained Earnings | Accounting Standards Update 2016-13 | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Cumulative effect of accounting change | $ 7 |
Acquisitions and Sales of Busin
Acquisitions and Sales of Businesses - Narrative (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2017 | Jun. 30, 2020 | Jun. 10, 2019 | |
Business Acquisition [Line Items] | |||||||
Income tax expense (benefit) | $ (30) | $ 34 | $ (63) | $ 171 | |||
Neon Capital Limited | |||||||
Business Acquisition [Line Items] | |||||||
Estimated proceeds from divestiture of Neon | $ 6 | ||||||
Carrying value of assets and liabilities as a percentage of total assets and liabilities | 1.00% | 1.00% | |||||
Income tax expense (benefit) | $ (73) | ||||||
Atlas Financial Holdings - Paratransit Business | |||||||
Business Acquisition [Line Items] | |||||||
Gross written premiums eligible for renewal | $ 110 | ||||||
Business acquisition, price as a percent of gross written premiums | 15.00% | ||||||
Warrant term to acquire shares | 5 years | ||||||
Number of shares able to be acquired with the warrant | 2.4 | ||||||
Business acquisition, percentage of entity acquired by warrants | 19.90% | ||||||
Neon Capital Limited | Neon Capital Limited Executives | |||||||
Business Acquisition [Line Items] | |||||||
Percentage of indirect noncontrolling interest acquired | 100.00% | ||||||
Equity securities | Public company warrants | Atlas Financial Holdings - Paratransit Business | |||||||
Business Acquisition [Line Items] | |||||||
Fair value of warrant on date received | $ 1 |
Acquisitions and Sale of Busi_3
Acquisitions and Sale of Businesses - Impact of exited lines on earnings (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net investment income | $ 572 | $ 588 | $ 1,584 | $ 1,710 |
Net earnings, including noncontrolling interests | 164 | 143 | 27 | 678 |
Realized losses on subsidiaries | (30) | 0 | (30) | 0 |
Income tax expense (benefit) | (30) | 34 | (63) | 171 |
Neon Capital Limited | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Underwriting gain (loss), Property and Casualty Insurance | (38) | (19) | (82) | (33) |
Net investment income | 1 | 2 | (5) | 5 |
Other income and expenses, net | (3) | (3) | (5) | (8) |
Net earnings, including noncontrolling interests | (40) | $ (20) | $ (92) | $ (36) |
Realized losses on subsidiaries | (30) | |||
Total pretax loss from Neon exited lines | (70) | |||
Income tax expense (benefit) | (73) | |||
Net earnings from Neon exited lines | $ 3 |
Acquisitions and Sale of Busi_4
Acquisitions and Sale of Businesses - Assets and liabilities disposed (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Cash and investments | $ 58,087 | $ 58,087 | $ 55,252 | |||
Recoverables from reinsurers | 3,819 | 3,819 | 3,415 | |||
Prepaid reinsurance premiums | 862 | 862 | 678 | |||
Agents’ balances and premiums receivable | 1,384 | 1,384 | 1,335 | |||
Other assets | 1,749 | 1,749 | 1,867 | |||
Total assets | 73,110 | 73,110 | 70,130 | |||
Unpaid losses and loss adjustment expenses | 10,754 | $ 9,847 | 10,754 | $ 9,847 | 10,232 | $ 9,741 |
Unearned premiums | 3,015 | 3,015 | 2,830 | |||
Payable to reinsurers | 977 | 977 | 814 | |||
Other liabilities | 2,231 | 2,231 | 2,295 | |||
Total liabilities | 66,770 | 66,770 | $ 63,861 | |||
Realized losses on subsidiaries | (30) | $ 0 | (30) | $ 0 | ||
Neon Capital Limited | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Estimated sale proceeds, net of expenses | 4 | |||||
Cash and investments | 461 | 461 | ||||
Recoverables from reinsurers | 198 | 198 | ||||
Prepaid reinsurance premiums | 30 | 30 | ||||
Agents’ balances and premiums receivable | 48 | 48 | ||||
Other assets | 73 | 73 | ||||
Total assets | 810 | 810 | ||||
Unpaid losses and loss adjustment expenses | 598 | 598 | ||||
Unearned premiums | 83 | 83 | ||||
Payable to reinsurers | 39 | 39 | ||||
Other liabilities | 47 | 47 | ||||
Total liabilities | 767 | 767 | ||||
Reclassification from accumulated other comprehensive income | (9) | |||||
Net assets of business to be sold | 34 | $ 34 | ||||
Realized losses on subsidiaries | $ (30) |
Acquisitions and Sale of Busi_5
Acquisitions and Sale of Businesses - Revenues, costs and expenses, and earnings before income taxes of business disposed (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net earned premiums | $ 1,381 | $ 1,442 | $ 3,774 | $ 3,815 |
Losses and loss adjustment expenses | 963 | 944 | 2,441 | 2,359 |
Commissions and other underwriting expenses | 406 | 450 | 1,235 | 1,275 |
Net investment income | 572 | 588 | 1,584 | 1,710 |
Net earnings, including noncontrolling interests | 164 | 143 | 27 | 678 |
Neon Capital Limited | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net earned premiums | 42 | 97 | 174 | 274 |
Losses and loss adjustment expenses | 60 | 66 | 166 | 172 |
Commissions and other underwriting expenses | 20 | 50 | 90 | 135 |
Underwriting loss | (38) | (19) | (82) | (33) |
Net investment income | 1 | 2 | (5) | 5 |
Other income and expenses, net | (3) | (3) | (5) | (8) |
Net earnings, including noncontrolling interests | $ (40) | $ (20) | $ (92) | $ (36) |
Segments of Operations - Narrat
Segments of Operations - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of segments | segment | 3 | |||
Net earned premiums | $ 1,381 | $ 1,442 | $ 3,774 | $ 3,815 |
Net investment income | 572 | 588 | 1,584 | 1,710 |
Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net earned premiums | 1,381 | 1,442 | 3,774 | 3,815 |
Net investment income | 112 | 124 | 277 | 352 |
Property and casualty insurance underwriting | 18 | 54 | 114 | 200 |
Investment and other income, net | 100 | 118 | 249 | 328 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Special charges to increase asbestos and environmental reserves | 21 | 11 | ||
Run-off Long-term Care and Life | ||||
Segment Reporting Information [Line Items] | ||||
Loss recognition charge | 4 | |||
Other lines | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net earned premiums | 42 | 0 | 174 | 0 |
Property and casualty insurance underwriting | (86) | (34) | (133) | (36) |
Special A&E charges | 47 | 18 | 47 | 18 |
Neon Capital Limited | ||||
Segment Reporting Information [Line Items] | ||||
Net investment income | 1 | (5) | ||
Neon Capital Limited | Other lines | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net earned premiums | 97 | 274 | ||
Net investment income | 1 | (5) | ||
Property and casualty insurance underwriting | (38) | $ (19) | (82) | $ (33) |
Investment and other income, net | $ (2) | $ (10) |
Segments of Operations - Revenu
Segments of Operations - Revenues by segment and sub-segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Net earned premiums | $ 1,381 | $ 1,442 | $ 3,774 | $ 3,815 |
Net investment income | 572 | 588 | 1,584 | 1,710 |
Other income | 45 | 58 | 153 | 170 |
Revenues before realized gains (losses) | 2,045 | 2,141 | 5,618 | 5,885 |
Realized gains (losses) on securities | 45 | (18) | (302) | 222 |
Realized losses on subsidiaries | (30) | 0 | (30) | 0 |
Total revenues | 2,060 | 2,123 | 5,286 | 6,107 |
Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net earned premiums | 1,381 | 1,442 | 3,774 | 3,815 |
Net investment income | 112 | 124 | 277 | 352 |
Other income | 0 | 5 | 8 | 10 |
Revenues before realized gains (losses) | 1,493 | 1,571 | 4,059 | 4,177 |
Annuity | ||||
Segment Reporting Information [Line Items] | ||||
Net investment income | 464 | 448 | 1,270 | 1,334 |
Other income | 30 | 32 | 95 | 90 |
Revenues before realized gains (losses) | 494 | 480 | 1,365 | 1,424 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Revenues before realized gains (losses) | 58 | 90 | 194 | 284 |
Specialty Property and transportation | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net earned premiums | 574 | 583 | 1,350 | 1,323 |
Specialty casualty | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net earned premiums | 560 | 658 | 1,663 | 1,921 |
Specialty financial | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net earned premiums | 155 | 161 | 455 | 458 |
Other specialty | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net earned premiums | 50 | 40 | 132 | 113 |
Other lines | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Net earned premiums | $ 42 | $ 0 | $ 174 | $ 0 |
Segments of Operations - Earnin
Segments of Operations - Earnings before income taxes by segment and sub-segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Earnings before realized gains (losses) and income taxes | $ 119 | $ 195 | $ 296 | $ 627 |
Realized gains (losses) on securities | 45 | (18) | (302) | 222 |
Realized losses on subsidiaries | (30) | 0 | (30) | 0 |
Earnings (loss) before income taxes | 134 | 177 | (36) | 849 |
Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | 18 | 54 | 114 | 200 |
Investment and other income, net | 100 | 118 | 249 | 328 |
Earnings before realized gains (losses) and income taxes | 118 | 172 | 363 | 528 |
Annuity | ||||
Segment Reporting Information [Line Items] | ||||
Earnings before realized gains (losses) and income taxes | 78 | 73 | 90 | 234 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Earnings before realized gains (losses) and income taxes | (77) | (50) | (157) | (135) |
Specialty Property and transportation | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | 47 | 38 | 107 | 81 |
Specialty casualty | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | 53 | 23 | 132 | 106 |
Specialty financial | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | 13 | 26 | 30 | 60 |
Other specialty | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | (9) | 1 | (22) | (11) |
Other lines | Property and Casualty Insurance | ||||
Segment Reporting Information [Line Items] | ||||
Property and casualty insurance underwriting | $ (86) | $ (34) | $ (133) | $ (36) |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($)basispointsecurity | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)basispointsecurityprofessional | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
AFG's internal investment professionals | professional | 20 | ||||
Level 3 assets as a percentage of total assets measured at fair value | 7.00% | ||||
Percentage of level 3 assets that were priced using non-binding broker quotes | 38.00% | ||||
Level 3 assets that were priced using non-binding broker quotes | $ 1,460 | ||||
Percent of spreads between 200 and 700 basis points | 80.00% | 80.00% | |||
Life contingent annuities | $ 850 | $ 850 | $ 247 | ||
Fixed-indexed and variable-indexed annuities (embedded derivative), majority of future years | Minimum | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Unobservable input surrenders used in Level 3 fair value determination | 8.00% | ||||
Fixed-indexed and variable-indexed annuities (embedded derivative), majority of future years | Maximum | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Unobservable input surrenders used in Level 3 fair value determination | 11.00% | ||||
Fixed-indexed and variable-indexed annuities (embedded derivative) | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Fair value of derivatives in annuity benefits accumulated measured using a discounted cash flow approach | 3,660 | $ 3,660 | |||
Embedded derivatives | Minimum | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Unobservable input surrenders used in Level 3 fair value determination | 4.00% | ||||
Embedded derivatives | Maximum | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Unobservable input surrenders used in Level 3 fair value determination | 23.00% | ||||
Fixed-Indexed Annuities (Embedded Derivative) | Not designated as hedging instrument | Annuity benefits | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Total realized/unrealized gains (losses) related to unlocking of actuarial assumptions | 240 | $ 181 | $ 240 | $ 181 | |
Level 3 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Internally developed level 3 assets | 1,740 | 1,740 | |||
Third party pricing model | Fixed maturities | Level 3 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Internally developed level 3 assets | $ 730 | $ 730 | |||
Securities priced using a third-party model | security | 43 | 43 | |||
Basis points credit spread applied by management using third party model | basispoint | 397 | 397 | |||
Third party pricing model | Fixed maturities | Level 3 | Minimum | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Basis points credit spread applied by management using third party model | basispoint | 200 | 200 | |||
Third party pricing model | Fixed maturities | Level 3 | Maximum | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Basis points credit spread applied by management using third party model | basispoint | 700 | 700 | |||
Credit spread used in pricing model | Third party pricing model | Fixed maturities | Level 3 | Minimum | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Basis points credit spread applied by management using third party model | basispoint | 100 | 100 | |||
Credit spread used in pricing model | Third party pricing model | Fixed maturities | Level 3 | Maximum | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Basis points credit spread applied by management using third party model | basispoint | 1,253 | 1,253 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and liabilities measured and carried at fair value in the financial statements (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Assets: | ||
Available for sale (AFS) fixed maturities | $ 48,193 | $ 46,505 |
Trading fixed maturities | 92 | 113 |
Equity securities | 1,606 | 1,937 |
Equity index call options | 697 | 924 |
Assets of managed investment entities | 73,110 | 70,130 |
Variable annuity assets (separate accounts) | 603 | 628 |
Total assets accounted for at fair value | 56,022 | 54,893 |
Liabilities: | ||
Liabilities of managed investment entities | 66,770 | 63,861 |
Total liabilities accounted for at fair value | 8,207 | 8,311 |
Variable interest entity, primary beneficiary | ||
Assets: | ||
Assets of managed investment entities | 4,717 | 4,736 |
Liabilities: | ||
Liabilities of managed investment entities | 4,541 | 4,571 |
Annuity benefits accumulated | ||
Liabilities: | ||
Derivatives included in annuity benefits accumulated, long-term debt, and other liabilities | 3,657 | 3,730 |
Other liabilities — derivatives | ||
Liabilities: | ||
Derivatives included in annuity benefits accumulated, long-term debt, and other liabilities | 9 | 10 |
Fixed maturities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 48,193 | 46,505 |
Trading fixed maturities | 92 | 113 |
U.S. Government and government agencies | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 224 | 209 |
States, municipalities and political subdivisions | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 6,722 | 6,963 |
Foreign government | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 195 | 172 |
Residential MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 3,137 | 3,160 |
Commercial MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 856 | 927 |
Collateralized loan obligations | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 4,607 | 4,280 |
Other asset-backed securities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 7,419 | 7,128 |
Corporate and other | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 25,033 | 23,666 |
Equity securities | ||
Assets: | ||
Equity securities | 1,606 | 1,937 |
Other assets | ||
Assets: | ||
Equity index call options | 114 | 50 |
Level 1 | ||
Assets: | ||
Variable annuity assets (separate accounts) | 0 | 0 |
Total assets accounted for at fair value | 1,444 | 1,828 |
Liabilities: | ||
Total liabilities accounted for at fair value | 142 | 206 |
Level 1 | Variable interest entity, primary beneficiary | ||
Assets: | ||
Assets of managed investment entities | 148 | 213 |
Liabilities: | ||
Liabilities of managed investment entities | 142 | 206 |
Level 1 | Annuity benefits accumulated | ||
Liabilities: | ||
Derivatives included in annuity benefits accumulated, long-term debt, and other liabilities | 0 | 0 |
Level 1 | Other liabilities — derivatives | ||
Liabilities: | ||
Derivatives included in annuity benefits accumulated, long-term debt, and other liabilities | 0 | 0 |
Level 1 | Fixed maturities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 206 | 180 |
Trading fixed maturities | 0 | 2 |
Level 1 | U.S. Government and government agencies | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 182 | 151 |
Level 1 | States, municipalities and political subdivisions | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 1 | Foreign government | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 1 | Residential MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 1 | Commercial MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 1 | Collateralized loan obligations | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 1 | Other asset-backed securities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 1 | Corporate and other | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 24 | 29 |
Level 1 | Equity securities | ||
Assets: | ||
Equity securities | 1,090 | 1,433 |
Level 1 | Other assets | ||
Assets: | ||
Equity index call options | 0 | 0 |
Level 2 | ||
Assets: | ||
Variable annuity assets (separate accounts) | 603 | 628 |
Total assets accounted for at fair value | 50,773 | 49,224 |
Liabilities: | ||
Total liabilities accounted for at fair value | 4,393 | 4,359 |
Level 2 | Variable interest entity, primary beneficiary | ||
Assets: | ||
Assets of managed investment entities | 4,554 | 4,506 |
Liabilities: | ||
Liabilities of managed investment entities | 4,384 | 4,349 |
Level 2 | Annuity benefits accumulated | ||
Liabilities: | ||
Derivatives included in annuity benefits accumulated, long-term debt, and other liabilities | 0 | 0 |
Level 2 | Other liabilities — derivatives | ||
Liabilities: | ||
Derivatives included in annuity benefits accumulated, long-term debt, and other liabilities | 9 | 10 |
Level 2 | Fixed maturities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 44,641 | 42,938 |
Trading fixed maturities | 92 | 111 |
Level 2 | U.S. Government and government agencies | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 27 | 43 |
Level 2 | States, municipalities and political subdivisions | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 6,616 | 6,858 |
Level 2 | Foreign government | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 195 | 172 |
Level 2 | Residential MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 2,959 | 2,987 |
Level 2 | Commercial MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 846 | 892 |
Level 2 | Collateralized loan obligations | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 4,395 | 4,265 |
Level 2 | Other asset-backed securities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 6,075 | 5,842 |
Level 2 | Corporate and other | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 23,528 | 21,879 |
Level 2 | Equity securities | ||
Assets: | ||
Equity securities | 72 | 67 |
Level 2 | Other assets | ||
Assets: | ||
Equity index call options | 114 | 50 |
Level 3 | ||
Assets: | ||
Variable annuity assets (separate accounts) | 0 | 0 |
Total assets accounted for at fair value | 3,805 | 3,841 |
Liabilities: | ||
Total liabilities accounted for at fair value | 3,672 | 3,746 |
Level 3 | Variable interest entity, primary beneficiary | ||
Assets: | ||
Assets of managed investment entities | 15 | 17 |
Liabilities: | ||
Liabilities of managed investment entities | 15 | 16 |
Level 3 | Annuity benefits accumulated | ||
Liabilities: | ||
Derivatives included in annuity benefits accumulated, long-term debt, and other liabilities | 3,657 | 3,730 |
Level 3 | Other liabilities — derivatives | ||
Liabilities: | ||
Derivatives included in annuity benefits accumulated, long-term debt, and other liabilities | 0 | 0 |
Level 3 | Fixed maturities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 3,346 | 3,387 |
Trading fixed maturities | 0 | 0 |
Level 3 | U.S. Government and government agencies | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 15 | 15 |
Level 3 | States, municipalities and political subdivisions | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 106 | 105 |
Level 3 | Foreign government | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 0 | 0 |
Level 3 | Residential MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 178 | 173 |
Level 3 | Commercial MBS | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 10 | 35 |
Level 3 | Collateralized loan obligations | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 212 | 15 |
Level 3 | Other asset-backed securities | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 1,344 | 1,286 |
Level 3 | Corporate and other | ||
Assets: | ||
Available for sale (AFS) fixed maturities | 1,481 | 1,758 |
Level 3 | Equity securities | ||
Assets: | ||
Equity securities | 444 | 437 |
Level 3 | Other assets | ||
Assets: | ||
Equity index call options | 0 | 0 |
Equity index call options | Equity index call options | ||
Assets: | ||
Equity index call options | 697 | 924 |
Equity index call options | Level 1 | Equity index call options | ||
Assets: | ||
Equity index call options | 0 | 0 |
Equity index call options | Level 2 | Equity index call options | ||
Assets: | ||
Equity index call options | 697 | 924 |
Equity index call options | Level 3 | Equity index call options | ||
Assets: | ||
Equity index call options | $ 0 | $ 0 |
Fair Value Measurements - Unobs
Fair Value Measurements - Unobservable inputs used in determining fair value of embedded derivatives (Details) - Embedded derivatives | 9 Months Ended |
Sep. 30, 2020 | |
Unobservable inputs used by management in determining fair value of embedded derivatives | |
Risk margin for uncertainty in cash flows | 0.99% |
Minimum | |
Unobservable inputs used by management in determining fair value of embedded derivatives | |
Adjustment for insurance subsidiary’s credit risk | 0.20% |
Surrenders | 4.00% |
Partial surrenders | 2.00% |
Annuitizations | 0.10% |
Deaths | 1.80% |
Budgeted option costs | 2.20% |
Maximum | |
Unobservable inputs used by management in determining fair value of embedded derivatives | |
Adjustment for insurance subsidiary’s credit risk | 2.90% |
Surrenders | 23.00% |
Partial surrenders | 11.00% |
Annuitizations | 1.00% |
Deaths | 13.20% |
Budgeted option costs | 2.80% |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in balances of Level 3 financial assets carried at fair value (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | $ 3,840 | $ 3,106 | $ 3,841 | $ 3,521 |
Total realized/unrealized gains (losses) included in Net income | (13) | (8) | (58) | 0 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 23 | 23 | 47 | 87 |
Purchases and issuances | 104 | 399 | 569 | 1,172 |
Sales and settlements | (159) | (90) | (432) | (488) |
Transfer into Level 3 | 247 | 88 | 598 | 145 |
Transfer out of Level 3 | (237) | (2) | (760) | (921) |
Financial assets, Ending Balance | 3,805 | 3,516 | 3,805 | 3,516 |
Fixed maturities | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 3,371 | 2,710 | 3,387 | 3,164 |
Total realized/unrealized gains (losses) included in Net income | (1) | 0 | (19) | 10 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 23 | 23 | 47 | 87 |
Purchases and issuances | 92 | 381 | 534 | 1,134 |
Sales and settlements | (159) | (88) | (432) | (485) |
Transfer into Level 3 | 247 | 54 | 579 | 89 |
Transfer out of Level 3 | (227) | (2) | (750) | (921) |
Financial assets, Ending Balance | 3,346 | 3,078 | 3,346 | 3,078 |
U.S. government agency | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 15 | 8 | 15 | 9 |
Total realized/unrealized gains (losses) included in Net income | 1 | 0 | 3 | 0 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | (1) | 0 | (3) | 0 |
Purchases and issuances | 0 | 0 | 0 | 0 |
Sales and settlements | 0 | 0 | 0 | (1) |
Transfer into Level 3 | 0 | 0 | 0 | 0 |
Transfer out of Level 3 | 0 | 0 | 0 | 0 |
Financial assets, Ending Balance | 15 | 8 | 15 | 8 |
State and municipal | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 107 | 82 | 105 | 59 |
Total realized/unrealized gains (losses) included in Net income | 0 | 0 | 0 | 0 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 2 | 6 | 9 |
Purchases and issuances | 0 | 0 | 0 | 0 |
Sales and settlements | (1) | 0 | (3) | (2) |
Transfer into Level 3 | 0 | 18 | 0 | 36 |
Transfer out of Level 3 | 0 | 0 | (2) | 0 |
Financial assets, Ending Balance | 106 | 102 | 106 | 102 |
Residential MBS | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 156 | 139 | 173 | 197 |
Total realized/unrealized gains (losses) included in Net income | (4) | 1 | 1 | 10 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 1 | (1) | (7) | (6) |
Purchases and issuances | 0 | 0 | 0 | 0 |
Sales and settlements | (6) | (4) | (15) | (14) |
Transfer into Level 3 | 49 | 22 | 51 | 24 |
Transfer out of Level 3 | (18) | (1) | (25) | (55) |
Financial assets, Ending Balance | 178 | 156 | 178 | 156 |
Commercial MBS | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 33 | 50 | 35 | 56 |
Total realized/unrealized gains (losses) included in Net income | (1) | 1 | 0 | 3 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Purchases and issuances | 0 | 0 | 0 | 0 |
Sales and settlements | 0 | 0 | (3) | (3) |
Transfer into Level 3 | 0 | 4 | 0 | 4 |
Transfer out of Level 3 | (22) | 0 | (22) | (5) |
Financial assets, Ending Balance | 10 | 55 | 10 | 55 |
Collateralized loan obligations | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 207 | 50 | 15 | 116 |
Total realized/unrealized gains (losses) included in Net income | (1) | (2) | (11) | (5) |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 6 | 1 | 21 | 7 |
Purchases and issuances | 0 | 8 | 0 | 8 |
Sales and settlements | 0 | 0 | 0 | 0 |
Transfer into Level 3 | 0 | 0 | 187 | 13 |
Transfer out of Level 3 | 0 | 0 | 0 | (82) |
Financial assets, Ending Balance | 212 | 57 | 212 | 57 |
Other asset-backed securities | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 1,328 | 367 | 1,286 | 731 |
Total realized/unrealized gains (losses) included in Net income | (2) | 0 | (16) | 0 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 13 | 1 | 6 | 6 |
Purchases and issuances | 39 | 49 | 314 | 141 |
Sales and settlements | (75) | (3) | (278) | (135) |
Transfer into Level 3 | 77 | 0 | 211 | 0 |
Transfer out of Level 3 | (36) | 0 | (179) | (329) |
Financial assets, Ending Balance | 1,344 | 414 | 1,344 | 414 |
Corporate and other | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 1,525 | 2,014 | 1,758 | 1,996 |
Total realized/unrealized gains (losses) included in Net income | 6 | 0 | 4 | 2 |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 4 | 20 | 24 | 71 |
Purchases and issuances | 53 | 324 | 220 | 985 |
Sales and settlements | (77) | (81) | (133) | (330) |
Transfer into Level 3 | 121 | 10 | 130 | 12 |
Transfer out of Level 3 | (151) | (1) | (522) | (450) |
Financial assets, Ending Balance | 1,481 | 2,286 | 1,481 | 2,286 |
Equity securities | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 452 | 377 | 437 | 336 |
Total realized/unrealized gains (losses) included in Net income | (10) | (7) | (35) | (7) |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Purchases and issuances | 12 | 18 | 35 | 38 |
Sales and settlements | 0 | (2) | 0 | (3) |
Transfer into Level 3 | 0 | 34 | 17 | 56 |
Transfer out of Level 3 | (10) | 0 | (10) | 0 |
Financial assets, Ending Balance | 444 | 420 | 444 | 420 |
Assets of MIE | ||||
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||||
Financial assets, Beginning Balance | 17 | 19 | 17 | 21 |
Total realized/unrealized gains (losses) included in Net income | (2) | (1) | (4) | (3) |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Purchases and issuances | 0 | 0 | 0 | 0 |
Sales and settlements | 0 | 0 | 0 | 0 |
Transfer into Level 3 | 0 | 0 | 2 | 0 |
Transfer out of Level 3 | 0 | 0 | 0 | 0 |
Financial assets, Ending Balance | $ 15 | $ 18 | $ 15 | $ 18 |
Fair Value Measurements - Cha_2
Fair Value Measurements - Changes in balances of Level 3 financial liabilities carried at fair value (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Financial liabilities, Beginning Balance | $ (3,675) | $ (3,541) | $ (3,730) | $ (2,720) |
Total realized/unrealized gains (losses) included in Net income | (5) | 70 | 41 | (643) |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Purchases and issuances | (56) | (63) | (180) | (276) |
Sales and settlements | 79 | 65 | 212 | 170 |
Transfer into Level 3 | 0 | 0 | 0 | 0 |
Transfer out of Level 3 | 0 | 0 | 0 | 0 |
Financial liabilities, Ending Balance | (3,657) | (3,469) | (3,657) | (3,469) |
Embedded derivatives | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Financial liabilities, Beginning Balance | (3,675) | (3,541) | (3,730) | (2,720) |
Total realized/unrealized gains (losses) included in Net income | (5) | 70 | 41 | (643) |
Total realized/unrealized gains (losses) included in other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Purchases and issuances | (56) | (63) | (180) | (276) |
Sales and settlements | 79 | 65 | 212 | 170 |
Transfer into Level 3 | 0 | 0 | 0 | 0 |
Transfer out of Level 3 | 0 | 0 | 0 | 0 |
Financial liabilities, Ending Balance | $ (3,657) | $ (3,469) | $ (3,657) | $ (3,469) |
Fair Value Measurements - The c
Fair Value Measurements - The carrying value and fair value of financial instruments (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Financial assets: | ||
Mortgage loans | $ 1,482 | $ 1,329 |
Policy loans | 154 | 164 |
Financial liabilities: | ||
Long-term debt | 2,108 | 1,473 |
Level 1 | ||
Financial assets: | ||
Cash and cash equivalents | 3,747 | 2,314 |
Mortgage loans | 0 | 0 |
Policy loans | 0 | 0 |
Total financial assets not accounted for at fair value | 3,747 | 2,314 |
Financial liabilities: | ||
Annuity benefits accumulated | 0 | 0 |
Long-term debt | 0 | 0 |
Total financial liabilities not accounted for at fair value | 0 | 0 |
Level 2 | ||
Financial assets: | ||
Cash and cash equivalents | 0 | 0 |
Mortgage loans | 0 | 0 |
Policy loans | 0 | 0 |
Total financial assets not accounted for at fair value | 0 | 0 |
Financial liabilities: | ||
Annuity benefits accumulated | 0 | 0 |
Long-term debt | 2,394 | 1,619 |
Total financial liabilities not accounted for at fair value | 2,394 | 1,619 |
Level 3 | ||
Financial assets: | ||
Cash and cash equivalents | 0 | 0 |
Mortgage loans | 1,507 | 1,346 |
Policy loans | 154 | 164 |
Total financial assets not accounted for at fair value | 1,661 | 1,510 |
Financial liabilities: | ||
Annuity benefits accumulated | 42,938 | 40,182 |
Long-term debt | 3 | 3 |
Total financial liabilities not accounted for at fair value | 42,941 | 40,185 |
Carrying Value | ||
Financial assets: | ||
Cash and cash equivalents | 3,747 | 2,314 |
Mortgage loans | 1,482 | 1,329 |
Policy loans | 154 | 164 |
Total financial assets not accounted for at fair value | 5,383 | 3,807 |
Financial liabilities: | ||
Annuity benefits accumulated | 41,082 | 40,159 |
Long-term debt | 2,108 | 1,473 |
Total financial liabilities not accounted for at fair value | 43,190 | 41,632 |
Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 3,747 | 2,314 |
Mortgage loans | 1,507 | 1,346 |
Policy loans | 154 | 164 |
Total financial assets not accounted for at fair value | 5,408 | 3,824 |
Financial liabilities: | ||
Annuity benefits accumulated | 42,938 | 40,182 |
Long-term debt | 2,397 | 1,622 |
Total financial liabilities not accounted for at fair value | $ 45,335 | $ 41,804 |
Investments - Narrative (Detail
Investments - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)security | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Schedule of Investments [Line Items] | ||||||
Percentage (based on amount of unrealized loss) of available for sale fixed maturities that are in an unrealized loss position and rated investment grade | 77.00% | |||||
Percentage (based on fair value) of available for sale fixed maturities that are in an unrealized loss position and rated investment grade | 84.00% | |||||
Net investment income | $ 572 | $ 588 | $ 1,584 | $ 1,710 | ||
Fixed maturities | ||||||
Schedule of Investments [Line Items] | ||||||
Gross unrealized losses on fixed maturities | 254 | $ 254 | $ 88 | |||
Number of available for sale securities in an unrealized loss position | security | 759 | |||||
Residential MBS | ||||||
Schedule of Investments [Line Items] | ||||||
Gross unrealized losses on fixed maturities | 6 | $ 6 | $ 5 | |||
Number of securities purchased with credit deterioration | security | 2 | |||||
Aggregate par value of securities purchased with credit deterioration, at time of purchase | $ 8 | |||||
Aggregate purchase price of securities purchased with credit deterioration, at time of purchase | 6 | |||||
Initial allowance for purchased securities with credit deterioration | 1 | |||||
Initial discount for purchased securities with credit deterioration | 1 | |||||
Neon Capital Limited | ||||||
Schedule of Investments [Line Items] | ||||||
Net investment income | $ 1 | $ (5) | ||||
Accounting Standards Update 2016-01 | Equity securities | Neon Capital Limited | ||||||
Schedule of Investments [Line Items] | ||||||
Net investment income | $ (7) |
Investments - Available for sal
Investments - Available for sale fixed maturities (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Jun. 30, 2020 | Jan. 01, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||||
Fixed maturities, available for sale, amortized cost | $ 45,297 | $ 44,524 | ||
Fixed maturities, available for sale, allowance for expected credit losses | 54 | $ 61 | 0 | |
Available for sale (AFS) fixed maturities | 48,193 | 46,505 | ||
Total fixed maturities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Fixed maturities, available for sale, amortized cost | 45,297 | 44,524 | ||
Fixed maturities, available for sale, allowance for expected credit losses | 54 | 0 | ||
Fixed maturities, Available for sale, Gross Unrealized, Gains | 3,204 | 2,069 | ||
Fixed maturities, Available for sale, Gross Unrealized, Losses | (254) | (88) | ||
Available for sale (AFS) fixed maturities | 48,193 | 46,505 | ||
Total fixed maturities | Debt Securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Available-for-sale Securities, Accumulated Gross Unrealized Gain (Loss), before Tax | 2,950 | 1,981 | ||
U.S. Government and government agencies | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Fixed maturities, available for sale, amortized cost | 211 | 199 | ||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | 0 | ||
Fixed maturities, Available for sale, Gross Unrealized, Gains | 13 | 10 | ||
Fixed maturities, Available for sale, Gross Unrealized, Losses | 0 | 0 | ||
Available for sale (AFS) fixed maturities | 224 | 209 | ||
U.S. Government and government agencies | Debt Securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Available-for-sale Securities, Accumulated Gross Unrealized Gain (Loss), before Tax | 13 | 10 | ||
States, municipalities and political subdivisions | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Fixed maturities, available for sale, amortized cost | 6,150 | 6,604 | ||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | 0 | ||
Fixed maturities, Available for sale, Gross Unrealized, Gains | 575 | 363 | ||
Fixed maturities, Available for sale, Gross Unrealized, Losses | (3) | (4) | ||
Available for sale (AFS) fixed maturities | 6,722 | 6,963 | ||
States, municipalities and political subdivisions | Debt Securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Available-for-sale Securities, Accumulated Gross Unrealized Gain (Loss), before Tax | 572 | 359 | ||
Foreign government | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Fixed maturities, available for sale, amortized cost | 187 | 170 | ||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | 0 | ||
Fixed maturities, Available for sale, Gross Unrealized, Gains | 8 | 3 | ||
Fixed maturities, Available for sale, Gross Unrealized, Losses | 0 | (1) | ||
Available for sale (AFS) fixed maturities | 195 | 172 | ||
Foreign government | Debt Securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Available-for-sale Securities, Accumulated Gross Unrealized Gain (Loss), before Tax | 8 | 2 | ||
Residential MBS | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Fixed maturities, available for sale, amortized cost | 2,882 | 2,900 | ||
Fixed maturities, available for sale, allowance for expected credit losses | 3 | 0 | ||
Fixed maturities, Available for sale, Gross Unrealized, Gains | 264 | 265 | ||
Fixed maturities, Available for sale, Gross Unrealized, Losses | (6) | (5) | ||
Available for sale (AFS) fixed maturities | 3,137 | 3,160 | ||
Residential MBS | Debt Securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Available-for-sale Securities, Accumulated Gross Unrealized Gain (Loss), before Tax | 258 | 260 | ||
Commercial MBS | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Fixed maturities, available for sale, amortized cost | 814 | 896 | ||
Fixed maturities, available for sale, allowance for expected credit losses | 0 | 0 | ||
Fixed maturities, Available for sale, Gross Unrealized, Gains | 44 | 31 | ||
Fixed maturities, Available for sale, Gross Unrealized, Losses | (2) | 0 | ||
Available for sale (AFS) fixed maturities | 856 | 927 | ||
Commercial MBS | Debt Securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Available-for-sale Securities, Accumulated Gross Unrealized Gain (Loss), before Tax | 42 | 31 | ||
Collateralized loan obligations | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Fixed maturities, available for sale, amortized cost | 4,643 | 4,307 | ||
Fixed maturities, available for sale, allowance for expected credit losses | 20 | 0 | ||
Fixed maturities, Available for sale, Gross Unrealized, Gains | 25 | 10 | ||
Fixed maturities, Available for sale, Gross Unrealized, Losses | (41) | (37) | ||
Collateralized loan obligations | Debt Securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Available-for-sale Securities, Accumulated Gross Unrealized Gain (Loss), before Tax | (16) | (27) | ||
Other asset-backed securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Fixed maturities, available for sale, amortized cost | 7,405 | 6,992 | ||
Fixed maturities, available for sale, allowance for expected credit losses | 16 | 0 | ||
Fixed maturities, Available for sale, Gross Unrealized, Gains | 154 | 156 | ||
Fixed maturities, Available for sale, Gross Unrealized, Losses | (124) | (20) | ||
Available for sale (AFS) fixed maturities | 7,419 | 7,128 | ||
Other asset-backed securities | Debt Securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Available-for-sale Securities, Accumulated Gross Unrealized Gain (Loss), before Tax | 30 | 136 | ||
Corporate and other | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Fixed maturities, available for sale, amortized cost | 23,005 | 22,456 | ||
Fixed maturities, available for sale, allowance for expected credit losses | 15 | $ 22 | $ 0 | 0 |
Fixed maturities, Available for sale, Gross Unrealized, Gains | 2,121 | 1,231 | ||
Fixed maturities, Available for sale, Gross Unrealized, Losses | (78) | (21) | ||
Available for sale (AFS) fixed maturities | 25,033 | 23,666 | ||
Corporate and other | Debt Securities | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Available-for-sale Securities, Accumulated Gross Unrealized Gain (Loss), before Tax | 2,043 | 1,210 | ||
Managed by third parties | Collateralized loan obligations | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Available for sale (AFS) fixed maturities | $ 4,607 | $ 4,280 |
Investments - Equity securities
Investments - Equity securities reported at fair value (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Equity securities | $ 1,606 | $ 1,937 |
Common stocks | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Equity securities, at cost | 1,145 | 1,164 |
Equity securities | 874 | 1,283 |
Equity securities, fair value in excess of cost | (271) | 119 |
Perpetual preferred stocks | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Equity securities, at cost | 724 | 640 |
Equity securities | 732 | 654 |
Equity securities, fair value in excess of cost | 8 | 14 |
Equity securities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Equity securities, at cost | 1,869 | 1,804 |
Equity securities | 1,606 | 1,937 |
Equity securities, fair value in excess of cost | $ (263) | $ 133 |
Investments - Gross unrealized
Investments - Gross unrealized losses on securities by investment category and length of time that have been in a continuous unrealized loss position (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Total fixed maturities | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized Loss - Less than twelve months | $ (194) | $ (44) |
Fair Value - Less than twelve months | $ 5,538 | $ 4,461 |
Fair Value as % of Cost - Less than twelve months | 97.00% | 99.00% |
Unrealized Loss - Twelve months or more | $ (60) | $ (44) |
Fair Value - Twelve months or more | $ 1,884 | $ 2,224 |
Fair Value as % of Cost - Twelve months or more | 97.00% | 98.00% |
U.S. Government and government agencies | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized Loss - Less than twelve months | $ 0 | $ 0 |
Fair Value - Less than twelve months | $ 19 | $ 16 |
Fair Value as % of Cost - Less than twelve months | 100.00% | 100.00% |
Unrealized Loss - Twelve months or more | $ 0 | $ 0 |
Fair Value - Twelve months or more | $ 0 | $ 11 |
Fair Value as % of Cost - Twelve months or more | 0.00% | 100.00% |
States, municipalities and political subdivisions | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized Loss - Less than twelve months | $ (3) | $ (3) |
Fair Value - Less than twelve months | $ 120 | $ 254 |
Fair Value as % of Cost - Less than twelve months | 98.00% | 99.00% |
Unrealized Loss - Twelve months or more | $ 0 | $ (1) |
Fair Value - Twelve months or more | $ 15 | $ 82 |
Fair Value as % of Cost - Twelve months or more | 100.00% | 99.00% |
Foreign government | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized Loss - Less than twelve months | $ 0 | $ (1) |
Fair Value - Less than twelve months | $ 5 | $ 70 |
Fair Value as % of Cost - Less than twelve months | 100.00% | 99.00% |
Unrealized Loss - Twelve months or more | $ 0 | $ 0 |
Fair Value - Twelve months or more | $ 0 | $ 0 |
Fair Value as % of Cost - Twelve months or more | 0.00% | 0.00% |
Residential MBS | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized Loss - Less than twelve months | $ (4) | $ (4) |
Fair Value - Less than twelve months | $ 144 | $ 509 |
Fair Value as % of Cost - Less than twelve months | 97.00% | 99.00% |
Unrealized Loss - Twelve months or more | $ (2) | $ (1) |
Fair Value - Twelve months or more | $ 35 | $ 69 |
Fair Value as % of Cost - Twelve months or more | 95.00% | 99.00% |
Commercial MBS | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized Loss - Less than twelve months | $ (2) | $ 0 |
Fair Value - Less than twelve months | $ 47 | $ 17 |
Fair Value as % of Cost - Less than twelve months | 96.00% | 100.00% |
Unrealized Loss - Twelve months or more | $ 0 | $ 0 |
Fair Value - Twelve months or more | $ 0 | $ 0 |
Fair Value as % of Cost - Twelve months or more | 0.00% | 0.00% |
Collateralized loan obligations | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized Loss - Less than twelve months | $ (11) | $ (11) |
Fair Value - Less than twelve months | $ 1,248 | $ 1,284 |
Fair Value as % of Cost - Less than twelve months | 99.00% | 99.00% |
Unrealized Loss - Twelve months or more | $ (30) | $ (26) |
Fair Value - Twelve months or more | $ 1,393 | $ 1,728 |
Fair Value as % of Cost - Twelve months or more | 98.00% | 99.00% |
Other asset-backed securities | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized Loss - Less than twelve months | $ (107) | $ (12) |
Fair Value - Less than twelve months | $ 2,164 | $ 1,211 |
Fair Value as % of Cost - Less than twelve months | 95.00% | 99.00% |
Unrealized Loss - Twelve months or more | $ (17) | $ (8) |
Fair Value - Twelve months or more | $ 245 | $ 123 |
Fair Value as % of Cost - Twelve months or more | 94.00% | 94.00% |
Corporate and other | ||
Available for sale securities in a continuous unrealized loss position | ||
Unrealized Loss - Less than twelve months | $ (67) | $ (13) |
Fair Value - Less than twelve months | $ 1,791 | $ 1,100 |
Fair Value as % of Cost - Less than twelve months | 96.00% | 99.00% |
Unrealized Loss - Twelve months or more | $ (11) | $ (8) |
Fair Value - Twelve months or more | $ 196 | $ 211 |
Fair Value as % of Cost - Twelve months or more | 95.00% | 96.00% |
Investments - Allowance for cre
Investments - Allowance for credit losses on fixed maturities (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Jan. 01, 2020 | |
Allowance for Credit Losses [Roll Forward] | |||
Beginning balance | $ 61 | $ 0 | |
Impact of adoption of new accounting policy | 61 | 0 | |
Initial allowance for purchased securities with credit deterioration | 0 | 1 | |
Provision for expected credit losses on securities with no previous allowance | 0 | 67 | |
Additions (reductions) to previously recognized expected credit losses | (3) | (10) | |
Reductions due to sales or redemptions | 4 | 4 | |
Ending balance | 54 | 54 | |
Structured securities | |||
Allowance for Credit Losses [Roll Forward] | |||
Beginning balance | 39 | 0 | |
Impact of adoption of new accounting policy | 39 | 39 | $ 0 |
Initial allowance for purchased securities with credit deterioration | 0 | 1 | |
Provision for expected credit losses on securities with no previous allowance | 0 | 39 | |
Additions (reductions) to previously recognized expected credit losses | 1 | 0 | |
Reductions due to sales or redemptions | 1 | 1 | |
Ending balance | 39 | 39 | |
Corporate and other | |||
Allowance for Credit Losses [Roll Forward] | |||
Beginning balance | 22 | 0 | |
Impact of adoption of new accounting policy | 15 | 15 | 0 |
Initial allowance for purchased securities with credit deterioration | 0 | 0 | |
Provision for expected credit losses on securities with no previous allowance | 0 | 28 | |
Additions (reductions) to previously recognized expected credit losses | (4) | (10) | |
Reductions due to sales or redemptions | 3 | 3 | |
Ending balance | $ 15 | $ 15 | |
Accounting Standards Update 2016-13 | |||
Allowance for Credit Losses [Roll Forward] | |||
Impact of adoption of new accounting policy | $ 0 |
Investments - Scheduled maturit
Investments - Scheduled maturities of available for sale fixed maturities (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Fair Value Percent, Fiscal Year Maturity [Abstract] | |
Average life of ABS | 4 years |
Average life of MBS | 3 years 6 months |
Fixed maturities | |
Amortized Cost Basis, Fiscal Year Maturity [Abstract] | |
One year or less | $ 2,218 |
After one year through five years | 11,434 |
After five years through ten years | 12,737 |
After ten years | 3,149 |
Fixed maturities amortized cost, Subtotal | 29,538 |
Collateralized loan obligations and other ABS (average life of approximately 4 years) | 12,012 |
MBS (average life of approximately 3-1/2 years) | 3,693 |
Amortized Cost | 45,243 |
Fair Value, Fiscal Year Maturity [Abstract] | |
One year or less | 2,250 |
After one year through five years | 12,224 |
After five years through ten years | 14,199 |
After ten years | 3,501 |
Fixed maturities fair value, Subtotal | 32,174 |
Collateralized loan obligations and other ABS (average life of approximately 4 years) | 12,026 |
MBS (average life of approximately 3-1/2 years) | 3,993 |
Fair Value | $ 48,193 |
Fair Value Percent, Fiscal Year Maturity [Abstract] | |
One year or less | 5.00% |
After one year through five years | 25.00% |
After five years through ten years | 30.00% |
After ten years | 7.00% |
Fixed maturities fair value, Subtotal, Percent | 67.00% |
Collateralized loan obligations and other ABS (average life of approximately 4 years) | 25.00% |
MBS (average life of approximately 3-1/2 years) | 8.00% |
Fair value, Total, Percent | 100.00% |
Investments - Components of the
Investments - Components of the net unrealized gain on securities that is included in AOCI in the Balance Sheet (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Unrealized gain on: | ||
Pretax | $ 1,534 | $ 1,091 |
Deferred Tax | (322) | (229) |
Net | 1,212 | 862 |
Total fixed maturities | ||
Unrealized gain on: | ||
Pretax | 2,950 | 1,981 |
Deferred Tax | (619) | (416) |
Net | 2,331 | 1,565 |
Fixed maturities — annuity segment | ||
Unrealized gain on: | ||
Pretax | 2,473 | 1,611 |
Deferred Tax | (519) | (338) |
Net | 1,954 | 1,273 |
Fixed maturities — all other | ||
Unrealized gain on: | ||
Pretax | 477 | 370 |
Deferred Tax | (100) | (78) |
Net | 377 | 292 |
Deferred policy acquisition costs — annuity segment | ||
Unrealized gain on: | ||
Pretax | (1,049) | (681) |
Deferred Tax | 220 | 143 |
Net | (829) | (538) |
Annuity benefits accumulated | ||
Unrealized gain on: | ||
Pretax | (377) | (219) |
Deferred Tax | 79 | 46 |
Net | (298) | (173) |
Life, accident and health reserves | ||
Unrealized gain on: | ||
Pretax | (3) | (1) |
Deferred Tax | 1 | 0 |
Net | (2) | (1) |
Unearned revenue | ||
Unrealized gain on: | ||
Pretax | 13 | 11 |
Deferred Tax | (3) | (2) |
Net | $ 10 | $ 9 |
Investments - Schedule of sourc
Investments - Schedule of sources of net investment income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Net Investment Income [Line Items] | ||||
Investment income | $ 578 | $ 593 | $ 1,601 | $ 1,727 |
Equity in earnings of partnerships and similar investments | 66 | 43 | 37 | 109 |
Investment expenses | (6) | (5) | (17) | (17) |
Net Investment Income, Total | 572 | 588 | 1,584 | 1,710 |
Fixed maturities | ||||
Net Investment Income [Line Items] | ||||
Investment income | 473 | 475 | 1,449 | 1,422 |
Other | ||||
Net Investment Income [Line Items] | ||||
Investment income | 26 | 36 | 72 | 95 |
Accounting Standards Update 2016-01 | Equity securities | ||||
Net Investment Income [Line Items] | ||||
Investment income | (3) | 17 | (6) | 35 |
Investment income | Equity securities | ||||
Net Investment Income [Line Items] | ||||
Investment income | $ 16 | $ 22 | $ 49 | $ 66 |
Investments - Realized gains (l
Investments - Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized gains (losses) on securities | $ 45 | $ (18) | $ (302) | $ 222 |
Net of tax | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | 34 | (7) | (205) | 186 |
Realized — impairments | 1 | (7) | (34) | (10) |
Realized gains (losses) on securities | 35 | (14) | (239) | 176 |
Change in unrealized | 182 | 108 | 350 | 837 |
Total pretax | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | 43 | (9) | (259) | 235 |
Realized — impairments | 2 | (9) | (43) | (13) |
Realized gains (losses) on securities | 45 | (18) | (302) | 222 |
Change in unrealized | 230 | 137 | 443 | 1,060 |
Fixed maturities | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | 14 | 9 | 46 | 23 |
Realized — impairments | 3 | (14) | (57) | (20) |
Realized gains (losses) on securities | 17 | (5) | (11) | 3 |
Change in unrealized | 513 | 367 | 969 | 2,009 |
Equity securities | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | 30 | (16) | (303) | 210 |
Realized — impairments | 0 | 0 | 0 | 0 |
Realized gains (losses) on securities | 30 | (16) | (303) | 210 |
Change in unrealized | 0 | 0 | 0 | 0 |
Mortgage loans and other investments | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | 0 | 0 | 4 | 3 |
Realized — impairments | 0 | 0 | 0 | 0 |
Realized gains (losses) on securities | 0 | 0 | 4 | 3 |
Change in unrealized | 0 | 0 | 0 | 0 |
Other, Including DPAC and reserves related to the annuity business | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | (1) | (2) | (6) | (1) |
Realized — impairments | (1) | 5 | 14 | 7 |
Realized gains (losses) on securities | (2) | 3 | 8 | 6 |
Change in unrealized | (283) | (230) | (526) | (949) |
Tax effects | ||||
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | ||||
Realized before impairments | (9) | 2 | 54 | (49) |
Realized — impairments | (1) | 2 | 9 | 3 |
Realized gains (losses) on securities | (10) | 4 | 63 | (46) |
Change in unrealized | $ (48) | $ (29) | $ (93) | $ (223) |
Investments - Holding gains (lo
Investments - Holding gains (losses) on equity securities still held (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Holding Gains (Losses) on Equity Securities Still Held [Line Items] | ||||
Realized gains (losses) on securities still owned | $ 45 | $ (18) | $ (302) | $ 222 |
Included in net investment income | 578 | 593 | 1,601 | 1,727 |
Equity securities | ||||
Holding Gains (Losses) on Equity Securities Still Held [Line Items] | ||||
Realized gains (losses) on securities still owned | 30 | (16) | (303) | 210 |
Equity securities still owned | Equity securities | Accounting Standards Update 2016-01 | ||||
Holding Gains (Losses) on Equity Securities Still Held [Line Items] | ||||
Net holding gains (losses) on equity securities | 19 | (7) | (299) | 180 |
Equity securities still owned | Realized gains (losses) on securities | Equity securities | Accounting Standards Update 2016-01 | ||||
Holding Gains (Losses) on Equity Securities Still Held [Line Items] | ||||
Realized gains (losses) on securities still owned | 23 | (24) | (300) | 146 |
Equity securities still owned | Investment income | Equity securities | Accounting Standards Update 2016-01 | ||||
Holding Gains (Losses) on Equity Securities Still Held [Line Items] | ||||
Included in net investment income | $ (4) | $ 17 | $ 1 | $ 34 |
Investments - Gross realized ga
Investments - Gross realized gains and losses on available for sale fixed maturity investment transactions (Details) - Fixed maturities - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Gross realized gains and losses on the sale of available for sale fixed maturity and equity security investments | ||
Gross gains | $ 77 | $ 20 |
Gross losses | $ (33) | $ (12) |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2020USD ($)swap | Jun. 30, 2020USD ($)swap | Mar. 31, 2020USD ($)swap | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)swap | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Carrying value of collateral received to support purchased call options | $ 342,000,000 | $ 342,000,000 | $ 577,000,000 | ||||
Not designated as hedging instrument | Fixed-Indexed Annuities (Embedded Derivative) | Annuity benefits | |||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Total realized/unrealized gains (losses) related to unlocking of actuarial assumptions | $ 240,000,000 | $ 181,000,000 | $ 240,000,000 | $ 181,000,000 | |||
Cash Flow Hedges | Designated as Hedging Instrument | Interest rate swaps | |||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Number of interest rate swaps designated and qualifying as a cash flow hedges | swap | 9 | 9 | |||||
Derivative, notional amount | $ 1,650,000,000 | $ 1,650,000,000 | 1,980,000,000 | ||||
Gain (loss) reclassified from AOCI into net investment income | 8,000,000 | 31,000,000 | $ (1,000,000) | ||||
Collateral payable related to interest rate swaps | 7,000,000 | 7,000,000 | |||||
Collateral receivable related to interest rate swaps | 20,000,000 | ||||||
Cash Flow Hedges | Designated as Hedging Instrument | Interest rate swaps | Maximum | |||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Gain (loss) reclassified from AOCI into net investment income | $ (1,000,000) | ||||||
Other assets | Cash Flow Hedges | Designated as Hedging Instrument | Interest rate swaps | |||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Net derivatives, at fair value | 114,000,000 | 114,000,000 | 50,000,000 | ||||
Other liabilities | Cash Flow Hedges | Designated as Hedging Instrument | Interest rate swaps | |||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Net derivatives, at fair value | $ 0 | $ 0 | $ (5,000,000) | ||||
Contract termination | Cash Flow Hedges | Interest rate swaps | |||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Derivative, notional amount | $ 166,000,000 | $ 83,000,000 | |||||
Number of interest rate derivatives terminated | swap | 2 | 1 | |||||
Facility closing | Cash Flow Hedges | Interest rate swaps | |||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Derivative, notional amount | $ 44,000,000 | ||||||
Number of interest rate derivatives terminated | swap | 1 |
Derivatives - Derivatives that
Derivatives - Derivatives that do not qualify for hedge accounting under GAAP included in the Balance Sheet at fair value (Details) - Not designated as hedging instrument - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Derivatives included in AFG' s Balance Sheet at fair value | ||
Derivative asset, at fair value | $ 869 | $ 1,026 |
Derivative liability, at fair value | 3,665 | 3,735 |
MBS with embedded derivatives | Fixed maturities | ||
Derivatives included in AFG' s Balance Sheet at fair value | ||
Derivative asset, at fair value | 172 | 102 |
Fixed-indexed and variable-indexed annuities (embedded derivative) | Annuity benefits accumulated | ||
Derivatives included in AFG' s Balance Sheet at fair value | ||
Derivative liability, at fair value | 3,657 | 3,730 |
Equity index call options | Equity index call options | ||
Derivatives included in AFG' s Balance Sheet at fair value | ||
Derivative asset, at fair value | 697 | 924 |
Equity index put options | Other liabilities | ||
Derivatives included in AFG' s Balance Sheet at fair value | ||
Derivative asset, at fair value | 0 | |
Derivative liability, at fair value | 4 | 1 |
Reinsurance contracts (embedded derivative) | Other liabilities | ||
Derivatives included in AFG' s Balance Sheet at fair value | ||
Derivative liability, at fair value | $ 4 | $ 4 |
Derivatives - Gain (loss) inclu
Derivatives - Gain (loss) included in the Statement of Earnings for changes in the fair value of derivatives that do not qualify for hedge accounting (Details) - Not designated as hedging instrument - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||
Derivative | $ 196 | $ 102 | $ 2 | $ (86) |
MBS with embedded derivatives | Realized gains (losses) on securities | ||||
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||
Derivative | (5) | 3 | 2 | 15 |
Public company warrants | Realized gains (losses) on securities | ||||
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||
Derivative | 0 | (1) | 0 | (1) |
Fixed-indexed and variable-indexed annuities (embedded derivative) | Annuity benefits | ||||
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||
Derivative | (5) | 70 | 41 | (643) |
Equity index call options | Annuity benefits | ||||
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||
Derivative | 203 | 30 | (42) | 544 |
Equity index put options | Annuity benefits | ||||
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||
Derivative | 2 | 0 | 1 | 1 |
Reinsurance contracts (embedded derivative) | Net investment income | ||||
Derivative, Gain (Loss) on Derivative, Net [Abstract] | ||||
Derivative | $ 1 | $ 0 | $ 0 | $ (2) |
Deferred Policy Acquisition C_3
Deferred Policy Acquisition Costs - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Deferred Policy Acquisition Costs Disclosures [Abstract] | ||
Accumulated amortization of present value of future profits | $ 158 | $ 154 |
Deferred Policy Acquisition C_4
Deferred Policy Acquisition Costs - Progression of deferred policy acquisition costs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Movement Analysis of Deferred Policy Acquisition Costs and Present Value of Future Profits [Roll Forward] | ||||
Deferred policy acquisition costs and present value of future profits, beginning balance | $ 818 | $ 1,203 | $ 1,037 | $ 1,682 |
Deferred policy acquisition costs and present value of future profits, additions | 175 | 232 | 561 | 734 |
Deferred policy acquisition costs and present value of future profits, periodic amortization | (212) | (227) | (597) | (622) |
Deferred policy acquisition costs and present value of future profits, annuity unlocking | (114) | (77) | (114) | (77) |
Deferred policy acquisition costs and present value of future profits, change included in realized gains | (2) | 3 | 7 | 6 |
Deferred policy acquisition costs and present value of future profits, foreign currency translation | 1 | (1) | (1) | (1) |
Deferred policy acquisition costs and present value of future profits, change in unrealized | (169) | (169) | (396) | (758) |
Deferred policy acquisition costs and present value of future profits, ending balance | 497 | 964 | 497 | 964 |
P&C | ||||
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward] | ||||
Deferred policy acquisition costs, beginning balance | 296 | 330 | 322 | 299 |
Deferred policy acquisition costs, additions | 142 | 188 | 448 | 569 |
Deferred policy acquisition costs, periodic amortization | (170) | (194) | (500) | (544) |
Deferred policy acquisition costs, foreign currency translation | 1 | (1) | (1) | (1) |
Deferred policy acquisition costs, ending balance | 269 | 323 | 269 | 323 |
Annuity and Other | ||||
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward] | ||||
Deferred policy acquisition costs, beginning balance | 1,342 | 1,373 | 1,303 | 1,285 |
Deferred policy acquisition costs, additions | 33 | 43 | 112 | 163 |
Deferred policy acquisition costs, periodic amortization | (39) | (29) | (87) | (63) |
Deferred policy acquisition cost, annuity unlocking | (118) | (76) | (118) | (76) |
Deferred policy acquisition costs, change included in realized gains | (2) | 3 | 6 | 5 |
Deferred policy acquisition costs, ending balance | 1,216 | 1,314 | 1,216 | 1,314 |
Movement in Deferred Sales Inducements [Roll Forward] | ||||
Deferred sales inducements, beginning balance | 73 | 81 | 75 | 86 |
Deferred sales inducements, additions | 0 | 1 | 1 | 2 |
Deferred sales inducements, periodic amortization | (2) | (3) | (6) | (10) |
Deferred sales inducements, annuity unlocking | 4 | (1) | 4 | (1) |
Deferred sales inducements, change included in realized gains | 0 | 0 | 1 | 1 |
Deferred sales inducements, ending balance | 75 | 78 | 75 | 78 |
Movement in Present Value of Future Insurance Profits [Roll Forward] | ||||
Present value of future profits, beginning balance | 33 | 38 | 36 | 42 |
Present value of future profits, periodic amortization | (1) | (1) | (4) | (5) |
Present value of future insurance profits, annuity unlocking | 0 | 0 | 0 | 0 |
Present value of future profits, ending balance | 32 | 37 | 32 | 37 |
Movement in Unrealized Gains (Losses) Related to Deferred Policy Acquisition Costs and Present Value of Future Profits [Roll Forward] | ||||
Unrealized investment gains (losses), beginning balance | (926) | (619) | (699) | (30) |
Unrealized investment gains (losses), change in unrealized | (169) | (169) | (396) | (758) |
Unrealized investment gains (losses), ending balance | (1,095) | (788) | (1,095) | (788) |
Movement Analysis of Deferred Policy Acquisition Costs and Present Value of Future Profits [Roll Forward] | ||||
Deferred policy acquisition costs and present value of future profits, beginning balance | 522 | 873 | 715 | 1,383 |
Deferred policy acquisition costs and present value of future profits, additions | 33 | 44 | 113 | 165 |
Deferred policy acquisition costs and present value of future profits, periodic amortization | (42) | (33) | (97) | (78) |
Deferred policy acquisition costs and present value of future profits, annuity unlocking | (114) | (77) | (114) | (77) |
Deferred policy acquisition costs and present value of future profits, change included in realized gains | (2) | 3 | 7 | 6 |
Deferred policy acquisition costs and present value of future profits, change in unrealized | (169) | (169) | (396) | (758) |
Deferred policy acquisition costs and present value of future profits, ending balance | 228 | 641 | 228 | 641 |
Excluding Unrealized Gains | Annuity and Other | ||||
Movement Analysis of Deferred Policy Acquisition Costs and Present Value of Future Profits [Roll Forward] | ||||
Deferred policy acquisition costs and present value of future profits, beginning balance | 1,448 | 1,492 | 1,414 | 1,413 |
Deferred policy acquisition costs and present value of future profits, change in unrealized | 0 | 0 | 0 | 0 |
Deferred policy acquisition costs and present value of future profits, ending balance | $ 1,323 | $ 1,429 | $ 1,323 | $ 1,429 |
Managed Investment Entities - N
Managed Investment Entities - Narrative (Details) $ in Millions | 9 Months Ended | ||
Sep. 30, 2020USD ($)collateralizedloanobligation | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Variable Interest Entity [Line Items] | |||
Percentage of investment of most subordinate debt tranche, Minimum | 15.00% | ||
Percentage of investment of most subordinate debt tranche, Maximum | 100.00% | ||
Number of collateralized loan obligation entities | collateralizedloanobligation | 11 | ||
Face amount of managed investment entities liabilities purchased by subsidiaries after issuance date | $ 57 | ||
Amount paid by subsidiaries to purchase managed investment entities liabilities after issuance date | 39 | ||
Difference between aggregate unpaid principal balance and fair value of CLOs' fixed maturity investments | 276 | $ 146 | |
Difference between aggregate unpaid principal balance and carrying value of CLOs' debt | 248 | 129 | |
Carrying amount of CLO loans in default | 26 | 10 | |
Aggregate unpaid principal balance of variable interest entity loans in default | 55 | 25 | |
Available for sale (AFS) fixed maturities | 48,193 | 46,505 | |
Maximum | |||
Variable Interest Entity [Line Items] | |||
Proceeds received by subsidiaries related to sales and redemptions of managed investment entities liabilities | 1 | $ 1 | |
Collateralized loan obligations | Managed by third parties | |||
Variable Interest Entity [Line Items] | |||
Available for sale (AFS) fixed maturities | 4,607 | 4,280 | |
Variable interest entity, primary beneficiary | |||
Variable Interest Entity [Line Items] | |||
Aggregate fair value of investment in collateralized loan obligations | 176 | $ 179 | $ 165 |
Variable interest entity, primary beneficiary | Subordinated Debt Obligations | |||
Variable Interest Entity [Line Items] | |||
Aggregate fair value of investment in collateralized loan obligations | $ 89 |
Managed Investment Entities - S
Managed Investment Entities - Selected financial information related to CLOs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Gains (losses) on change in fair value of assets/liabilities: | |||||
Assets | $ 132 | $ (18) | $ (184) | $ 69 | |
Liabilities | (131) | 4 | 137 | (85) | |
Management fees paid to AFG | 3 | 4 | 11 | 11 | |
CLO earnings (losses) attributable to AFG shareholders | 13 | (5) | (21) | 11 | |
Variable interest entity, primary beneficiary | |||||
Variable Interest Entity [Line Items] | |||||
Investment in CLO tranches at end of period | $ 176 | $ 179 | $ 176 | $ 179 | $ 165 |
Goodwill and Other Intangibles
Goodwill and Other Intangibles - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Changes in the goodwill balance during the period | $ 0 | ||||
Goodwill | $ 207,000,000 | 207,000,000 | $ 207,000,000 | ||
Amortizable intangible assets related to property and casualty insurance acquisitions | 34,000,000 | 34,000,000 | 43,000,000 | ||
Accumulated amortization | 59,000,000 | 59,000,000 | $ 50,000,000 | ||
Amortization of intangible assets | $ 3,000,000 | $ 3,000,000 | $ 9,000,000 | $ 9,000,000 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) - USD ($) | 9 Months Ended | |||
Sep. 30, 2020 | May 29, 2020 | Apr. 02, 2020 | Dec. 31, 2019 | |
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||
Scheduled principal payments on debt remainder of fiscal year | $ 0 | |||
Scheduled principal payments on debt in year one | 0 | |||
Scheduled principal payments on debt in year two | 0 | |||
Scheduled principal payments on debt in year three | 0 | |||
Scheduled principal payments on debt in year four | 0 | |||
Scheduled principal payments on debt in year five | 0 | |||
Principal | 2,143,000,000 | $ 1,493,000,000 | ||
AFG | ||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||
Revolving credit line | 500,000,000 | |||
Amount borrowed under revolving credit facility | $ 0 | 0 | ||
Interest rate description for revolving credit facility | 1.00% to 1.875% (currently 1.375%) over LIBOR | |||
LIBOR | AFG | ||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||
Interest rate on revolving debt facility | 1.375% | |||
LIBOR | AFG | Minimum | ||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||
Interest rate on revolving debt facility | 1.00% | |||
LIBOR | AFG | Maximum | ||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||
Interest rate on revolving debt facility | 1.875% | |||
Senior Notes | AFG | ||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||
Principal | $ 1,318,000,000 | 1,018,000,000 | ||
Senior Notes | 5.25% Senior Notes due April 2030 | AFG | ||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||
Principal | $ 300,000,000 | $ 300,000,000 | 0 | |
Interest rate on debt instruments | 5.25% | 5.25% | ||
Subordinated Debentures | AFG | ||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||
Principal | $ 825,000,000 | 475,000,000 | ||
Subordinated Debentures | 5.625% Subordinated Debentures due June 2060 | AFG | ||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||
Principal | $ 150,000,000 | $ 150,000,000 | 0 | |
Interest rate on debt instruments | 5.625% | 5.625% | ||
Subordinated Debentures | 4.50% Subordinated Debentures due September 2060 | AFG | ||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||
Principal | $ 200,000,000 | 0 | ||
Interest rate on debt instruments | 4.50% | |||
Subordinated Debentures | Subordinated Debentures Due In November 2055 [Member] | AFG | ||||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||||
Principal | $ 150,000,000 | $ 150,000,000 | ||
Interest rate on debt instruments | 6.00% |
Long-Term Debt - Schedule of lo
Long-Term Debt - Schedule of long-term debt (Details) - USD ($) | Sep. 30, 2020 | May 29, 2020 | Apr. 02, 2020 | Dec. 31, 2019 |
Summary of Carrying value of long-term debt | ||||
Principal | $ 2,143,000,000 | $ 1,493,000,000 | ||
Discount and Issue Costs | (35,000,000) | (20,000,000) | ||
Carrying Value | 2,108,000,000 | 1,473,000,000 | ||
Senior Notes | AFG | ||||
Summary of Carrying value of long-term debt | ||||
Principal | 1,318,000,000 | 1,018,000,000 | ||
Discount and Issue Costs | (12,000,000) | (5,000,000) | ||
Carrying Value | $ 1,306,000,000 | 1,013,000,000 | ||
Senior Notes | 4.50% Senior Notes due June 2047 | AFG | ||||
Debt Instrument [Line Items] | ||||
Interest rate on debt instruments | 4.50% | |||
Summary of Carrying value of long-term debt | ||||
Principal | $ 590,000,000 | 590,000,000 | ||
Discount and Issue Costs | (2,000,000) | (2,000,000) | ||
Carrying Value | $ 588,000,000 | 588,000,000 | ||
Senior Notes | 3.50% Senior Notes due August 2026 | AFG | ||||
Debt Instrument [Line Items] | ||||
Interest rate on debt instruments | 3.50% | |||
Summary of Carrying value of long-term debt | ||||
Principal | $ 425,000,000 | 425,000,000 | ||
Discount and Issue Costs | (3,000,000) | (3,000,000) | ||
Carrying Value | $ 422,000,000 | 422,000,000 | ||
Senior Notes | 5.25% Senior Notes due April 2030 | AFG | ||||
Debt Instrument [Line Items] | ||||
Interest rate on debt instruments | 5.25% | 5.25% | ||
Summary of Carrying value of long-term debt | ||||
Principal | $ 300,000,000 | $ 300,000,000 | 0 | |
Discount and Issue Costs | (7,000,000) | 0 | ||
Carrying Value | 293,000,000 | 0 | ||
Senior Notes | Other | AFG | ||||
Summary of Carrying value of long-term debt | ||||
Principal | 3,000,000 | 3,000,000 | ||
Discount and Issue Costs | 0 | 0 | ||
Carrying Value | 3,000,000 | 3,000,000 | ||
Subordinated Debentures | AFG | ||||
Summary of Carrying value of long-term debt | ||||
Principal | 825,000,000 | 475,000,000 | ||
Discount and Issue Costs | (23,000,000) | (15,000,000) | ||
Carrying Value | $ 802,000,000 | 460,000,000 | ||
Subordinated Debentures | 4.50% Subordinated Debentures due September 2060 | AFG | ||||
Debt Instrument [Line Items] | ||||
Interest rate on debt instruments | 4.50% | |||
Summary of Carrying value of long-term debt | ||||
Principal | $ 200,000,000 | 0 | ||
Discount and Issue Costs | (4,000,000) | 0 | ||
Carrying Value | $ 196,000,000 | 0 | ||
Subordinated Debentures | 5.125% Subordinate Debentures due December 2059 | AFG | ||||
Debt Instrument [Line Items] | ||||
Interest rate on debt instruments | 5.125% | |||
Summary of Carrying value of long-term debt | ||||
Principal | $ 200,000,000 | 200,000,000 | ||
Discount and Issue Costs | (6,000,000) | (6,000,000) | ||
Carrying Value | $ 194,000,000 | 194,000,000 | ||
Subordinated Debentures | 6% Subordinated Debentures due November 2055 | AFG | ||||
Debt Instrument [Line Items] | ||||
Interest rate on debt instruments | 6.00% | |||
Summary of Carrying value of long-term debt | ||||
Principal | $ 150,000,000 | 150,000,000 | ||
Discount and Issue Costs | (5,000,000) | (5,000,000) | ||
Carrying Value | $ 145,000,000 | 145,000,000 | ||
Subordinated Debentures | 5.625% Subordinated Debentures due June 2060 | AFG | ||||
Debt Instrument [Line Items] | ||||
Interest rate on debt instruments | 5.625% | 5.625% | ||
Summary of Carrying value of long-term debt | ||||
Principal | $ 150,000,000 | $ 150,000,000 | 0 | |
Discount and Issue Costs | (4,000,000) | 0 | ||
Carrying Value | $ 146,000,000 | 0 | ||
Subordinated Debentures | 5.875% Subordinated Debentures due March 2059 | AFG | ||||
Debt Instrument [Line Items] | ||||
Interest rate on debt instruments | 5.875% | |||
Summary of Carrying value of long-term debt | ||||
Principal | $ 125,000,000 | 125,000,000 | ||
Discount and Issue Costs | (4,000,000) | (4,000,000) | ||
Carrying Value | $ 121,000,000 | $ 121,000,000 |
Shareholders' Equity - Preferre
Shareholders' Equity - Preferred stock authorized for issuance (Details) | Sep. 30, 2020$ / sharesshares |
Voting Preferred Stock | |
Class of Stock [Line Items] | |
Preferred Stock, shares authorized | shares | 12,500,000 |
Preferred Stock, par value (in USD per share) | $ / shares | $ 0 |
Nonvoting Preferred Stock | |
Class of Stock [Line Items] | |
Preferred Stock, shares authorized | shares | 12,500,000 |
Preferred Stock, par value (in USD per share) | $ / shares | $ 0 |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense related to stock incentive plans | $ 5 | $ 5 | $ 15 | $ 17 |
Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted Common Stock, shares issued (shares) | 227,867 | |||
Restricted Common Stock, fair value per share (USD per share) | $ 104.15 |
Shareholders' Equity - Progress
Shareholders' Equity - Progression of the components of accumulated other comprehensive income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | $ 863 | |||
Other comprehensive income, net of tax | $ 176 | $ 109 | 368 | $ 871 |
AOCI, other effects | 1,233 | 863 | ||
AOCI ending balance | 1,233 | 1,233 | ||
Accumulated Net Investment Gain (Loss) Including Portion Attributable to Noncontrolling Interest | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other comprehensive income (loss), unrealized holding gains on securities arising during the period, Pretax | 245 | 136 | 443 | 1,073 |
Other comprehensive income (loss), unrealized holding gains on securities arising during the period, tax | (51) | (29) | (93) | (226) |
Other comprehensive income (loss), unrealized holding gains on securities arising during the period, net of tax | 194 | 107 | 350 | 847 |
Reclassification from accumulated other comprehensive income, pretax | (15) | 1 | 0 | (13) |
Reclassification from accumulated other comprehensive income, tax | 3 | 0 | 0 | 3 |
Reclassification from accumulated other comprehensive income, net of tax | (12) | 1 | 0 | (10) |
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive income (loss), pretax | 230 | 137 | 443 | 1,060 |
Other comprehensive income (loss), tax | (48) | (29) | (93) | (223) |
Other comprehensive income, net of tax | 182 | 108 | 350 | 837 |
Accumulated Net Investment Gain (Loss) Attributable to Noncontrolling Interest | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other comprehensive income (loss), unrealized holding gains on securities arising during the period, net of tax | 0 | 0 | 0 | 0 |
Reclassification from accumulated other comprehensive income, net of tax | 0 | 0 | 0 | 0 |
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive income, net of tax | 0 | 0 | 0 | 0 |
Accumulated Net Investment Gain (Loss) Attributable to Parent | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other comprehensive income (loss), unrealized holding gains on securities arising during the period, net of tax | 194 | 107 | 350 | 847 |
Reclassification from accumulated other comprehensive income, net of tax | (12) | 1 | 0 | (10) |
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | 1,030 | 812 | 862 | 83 |
Other comprehensive income, net of tax | 182 | 108 | 350 | 837 |
AOCI, other effects | 1,212 | 920 | 862 | 83 |
AOCI ending balance | 1,212 | 920 | 1,212 | 920 |
Accumulated Net Gain (Loss) from Cash Flow Hedges Including Portion Attributable to Noncontrolling Interest | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive income (loss), pretax | (7) | 9 | 31 | 46 |
Other comprehensive income (loss), tax | 1 | (2) | (7) | (10) |
Other comprehensive income, net of tax | (6) | 7 | 24 | 36 |
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Noncontrolling Interest | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive income, net of tax | 0 | 0 | 0 | 0 |
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | 47 | 18 | 17 | (11) |
Other comprehensive income, net of tax | (6) | 7 | 24 | 36 |
AOCI, other effects | 41 | 25 | 17 | (11) |
AOCI ending balance | 41 | 25 | 41 | 25 |
Accumulated Foreign Currency Adjustment Including Portion Attributable to Noncontrolling Interest | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive income (loss), pretax | 0 | (6) | (6) | (3) |
Other comprehensive income (loss), tax | 0 | (1) | 0 | 0 |
Other comprehensive income, net of tax | 0 | (7) | (6) | (3) |
Accumulated Foreign Currency Adjustment Attributable to Noncontrolling Interest | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive income, net of tax | 0 | (1) | (2) | (2) |
Accumulated Foreign Currency Adjustment Attributable to Parent | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | (17) | (13) | (9) | (16) |
Other comprehensive income, net of tax | 0 | (8) | (8) | (5) |
AOCI, other effects | (13) | (21) | (13) | (21) |
AOCI ending balance | (13) | (21) | (13) | (21) |
Accumulated Foreign Currency Adjustment Attributable to Parent | Neon Capital Limited | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI, other effects | 4 | 4 | ||
AOCI ending balance | 4 | 4 | ||
Accumulated Defined Benefit Plans Adjustment Including Portion Attributable to Noncontrolling Interest | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive income (loss), pretax | 0 | 1 | 0 | 1 |
Other comprehensive income (loss), tax | 0 | 0 | 0 | 0 |
Other comprehensive income, net of tax | 0 | 1 | 0 | 1 |
Accumulated Defined Benefit Plans Adjustment Attributable to Noncontrolling Interest | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive income, net of tax | 0 | 0 | 0 | 0 |
Accumulated Defined Benefit Plans Adjustment Attributable to Parent | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | (7) | (8) | (7) | (8) |
Other comprehensive income, net of tax | 0 | 1 | 0 | 1 |
AOCI, other effects | (7) | (7) | (7) | (7) |
AOCI ending balance | (7) | (7) | (7) | (7) |
AOCI Including Portion Attributable to Noncontrolling Interest | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive income (loss), pretax | 223 | 141 | 468 | 1,104 |
Other comprehensive income (loss), tax | (47) | (32) | (100) | (233) |
Other comprehensive income, net of tax | 176 | 109 | 368 | 871 |
AOCI Attributable to Noncontrolling Interest | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
Other comprehensive income, net of tax | 0 | (1) | (2) | (2) |
AOCI Attributable to Parent | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI beginning balance | 1,053 | 809 | 863 | 48 |
Other comprehensive income, net of tax | 176 | 108 | 366 | 869 |
AOCI, other effects | 1,233 | 917 | 1,233 | 917 |
AOCI ending balance | 1,233 | $ 917 | 1,233 | $ 917 |
AOCI Attributable to Parent | Neon Capital Limited | ||||
Accumulated Other Comprehensive Income [Roll Forward] | ||||
AOCI, other effects | 4 | 4 | ||
AOCI ending balance | $ 4 | $ 4 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Statutory rate of income taxes | 21.00% | 21.00% | 21.00% | 21.00% |
Income tax expense (benefit) | $ (30) | $ 34 | $ (63) | $ 171 |
Operating loss carryforwards subject to SRLY tax rules will expire unutilized at December 31, 2020 | $ 23 | $ 23 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of income taxes at the statutory rate to the provision for income taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | ||||
Earnings (loss) before income taxes (“EBT”) | $ 134 | $ 177 | $ (36) | $ 849 |
Income taxes at statutory rate | 28 | 37 | (8) | 178 |
Effect of a sale of subsidiaries | (73) | 0 | (73) | 0 |
Effect of tax exempt interest | (3) | (4) | (9) | (11) |
Effect of stock-based compensation | 0 | (2) | (4) | (6) |
Effect of dividends received deduction | (1) | (1) | (2) | (3) |
Effect of prior year income taxes | (1) | (3) | (1) | (3) |
Effect of employee stock ownership plan dividend paid deduction | (1) | 0 | (1) | (1) |
Effect of change in valuation allowance | 20 | 4 | 31 | 7 |
Effect of nondeductible expenses | 2 | 2 | 4 | 6 |
Effect of foreign operations | (4) | 0 | (3) | 0 |
Effect of other income tax reconciliation | 3 | 1 | 3 | 4 |
Provision for income taxes as shown on the Statement of Earnings | $ (30) | $ 34 | $ (63) | $ 171 |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||||
Income taxes at statutory rate as a percentage of EBT | 21.00% | 21.00% | 21.00% | 21.00% |
Effect of sale of subsidiaries as a percentage of EBT | (54.00%) | 0.00% | 203.00% | 0.00% |
Effect of tax exempt interest as a percentage of EBT | (2.00%) | (2.00%) | 25.00% | (1.00%) |
Effect of stock-based compensation as a percentage of EBT | 0.00% | (1.00%) | 11.00% | (1.00%) |
Effect of dividends received deduction as a percentage of EBT | (1.00%) | (1.00%) | 6.00% | 0.00% |
Effect of prior year taxes as a percentage of EBT | (1.00%) | (2.00%) | 3.00% | 0.00% |
Effect of dividends received deduction as a percentage of EBT | (1.00%) | 0.00% | 3.00% | 0.00% |
Effect of change in valuation allowance as a percentage of EBT | 15.00% | 2.00% | (86.00%) | 1.00% |
Effect of nondeductible expenses as a percentage of EBT | 1.00% | 1.00% | (11.00%) | 1.00% |
Effect of foreign operations as a percentage of EBT | (3.00%) | 0.00% | 8.00% | 0.00% |
Effect of other income tax reconciliation as a percentage of EBT | 3.00% | 1.00% | (8.00%) | (1.00%) |
Provision for income taxes as shown on the Statement of Earnings as a percentage of EBT | (22.00%) | 19.00% | 175.00% | 20.00% |
Contingencies - Narrative (Deta
Contingencies - Narrative (Details) - Run-off Long-term Care and Life $ in Millions | Dec. 24, 2015USD ($) |
Loss Contingencies [Line Items] | |
Contingent capital support agreement amount | $ 35 |
Contingent capital support agreement contractual term | 5 years |
Insurance - Narrative (Details)
Insurance - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Property and Casualty Insurance | Other lines | ||||
Insurance [Line Items] | ||||
Special A&E charges | $ 47 | $ 18 | $ 47 | $ 18 |
Insurance - Analysis of changes
Insurance - Analysis of changes in the liability for losses and loss adjustment expenses, net of reinsurance (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Analysis of changes in the liability for losses and loss adjustment expenses, net of reinsurance | ||||
Balance at beginning of year | $ 10,232 | $ 9,741 | ||
Less reinsurance recoverables, net of allowance | 3,024 | 2,942 | ||
Net liability at beginning of year | 7,208 | 6,799 | ||
Liability for losses and loss adjustment expenses, period increase (decrease) [Abstract] | ||||
Provision for losses and LAE occurring in the current period | 2,560 | 2,457 | ||
Net increase (decrease) in the provision for claims of prior years | (166) | (116) | ||
Total losses and LAE incurred | 2,441 | 2,359 | ||
Payments for losses and LAE of: | ||||
Current year | (592) | (731) | ||
Prior years | (1,406) | (1,408) | ||
Total payments | (1,998) | (2,139) | ||
Foreign currency translation and other | (11) | (5) | ||
Net liability at end of period | $ 7,640 | $ 7,014 | 7,640 | 7,014 |
Add back reinsurance recoverables, net of allowance | 3,114 | 2,833 | 3,114 | 2,833 |
Gross unpaid losses and LAE included in the balance sheet at end of period | 10,754 | 9,847 | 10,754 | 9,847 |
Property and Casualty Insurance | Other lines | ||||
Liability for losses and loss adjustment expenses, period increase (decrease) [Abstract] | ||||
Special A&E charges | $ 47 | $ 18 | $ 47 | $ 18 |
Insurance - Recoverables from r
Insurance - Recoverables from reinsurance, progression of allowance for expected credit losses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Jan. 01, 2020 | |
Reinsurance Recoverable, Allowance for Credit Loss [Roll Forward] | |||
Beginning Balance | $ 13 | $ 18 | |
Impact of adoption of new accounting principles | (14) | (14) | $ (6) |
Provision for expected credit losses | 1 | 2 | |
Write-offs charged against the allowance | 0 | 0 | |
Ending Balance | $ 14 | $ 14 |
Insurance - Premiums receivable
Insurance - Premiums receivable, progression of allowance for expected credit losses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Jan. 01, 2020 | |
Premium Receivable, Allowance for Credit Loss [Roll Forward] | |||
Beginning Balance | $ 10 | $ 13 | |
Impact of adoption of new accounting principles | (11) | (11) | $ (3) |
Provision for expected credit losses | 1 | 1 | |
Write-offs charged against the allowance | 0 | 0 | |
Ending Balance | $ 11 | $ 11 |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - USD ($) | Oct. 01, 2020 | Oct. 13, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Subsequent Event [Line Items] | ||||||||
Principal | $ 2,143,000,000 | $ 1,493,000,000 | ||||||
AOCI, other effects | 1,233,000,000 | 863,000,000 | ||||||
Accumulated Net Investment Gain (Loss) Attributable to Parent | ||||||||
Subsequent Event [Line Items] | ||||||||
AOCI, other effects | 1,212,000,000 | $ 1,030,000,000 | 862,000,000 | $ 920,000,000 | $ 812,000,000 | $ 83,000,000 | ||
Subsequent event | ||||||||
Subsequent Event [Line Items] | ||||||||
Inforce annuity business ceded | $ 6,000,000,000 | |||||||
Inforce annuity business ceded, percent of total inforce annuity business | 15.00% | |||||||
Subsequent event | Minimum | ||||||||
Subsequent Event [Line Items] | ||||||||
Expected life of ceded reserves | 7 years | |||||||
Subsequent event | Minimum | Accumulated Net Investment Gain (Loss) Attributable to Parent | ||||||||
Subsequent Event [Line Items] | ||||||||
AOCI, other effects | $ 275,000,000 | |||||||
Subsequent event | Maximum | ||||||||
Subsequent Event [Line Items] | ||||||||
Expected life of ceded reserves | 10 years | |||||||
Subsequent event | Maximum | Accumulated Net Investment Gain (Loss) Attributable to Parent | ||||||||
Subsequent Event [Line Items] | ||||||||
AOCI, other effects | $ 300,000,000 | |||||||
AFG | Subordinated Debentures | ||||||||
Subsequent Event [Line Items] | ||||||||
Principal | 825,000,000 | 475,000,000 | ||||||
AFG | Subordinated Debentures | 6% Subordinated Debentures due November 2055 | ||||||||
Subsequent Event [Line Items] | ||||||||
Principal | $ 150,000,000 | $ 150,000,000 | ||||||
Interest rate on debt instruments | 6.00% | |||||||
AFG | Subordinated Debentures | 6% Subordinated Debentures due November 2055 | Subsequent event | ||||||||
Subsequent Event [Line Items] | ||||||||
Principal | $ 150,000,000 | |||||||
Interest rate on debt instruments | 6.00% |