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Document and Entity Information - USD ($) $ in Billions	9 Months Ended
Document and Entity Information - USD ($) $ in Billions	Sep. 30, 2010	Nov. 01, 2010	Jun. 30, 2009
Document and Entity Information [Abstract]
Entity Registrant Name	AMERICAN FINANCIAL GROUP INC
Entity Central Index Key	0001042046
Document Type	10-Q
Document Period End Date	Sep. 30, 2010
Amendment Flag	false
Document Fiscal Year Focus	2010
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 1.9
Entity Common Stock, Shares Outstanding		107,755,778

Consolidated Balance Sheet (Unaudited) - USD ($) $ in Millions	Sep. 30, 2010	Dec. 31, 2009
Assets:
Cash and cash equivalents	$ 1,140	$ 1,120
Investments:
Fixed maturities, available for sale at fair value (amortized cost - $18,237 and $16,730)	19,454	16,823
Fixed maturities, trading at fair value	385	372
Equity securities, at fair value (cost - $409 and $228)	581	411
Mortgage loans	492	376
Policy loans	267	276
Real estate and other investments	404	413
Total cash and investments	22,723	19,791
Recoverables from reinsurers	2,949	3,279
Prepaid reinsurance premiums	536	381
Agents' balances and premiums receivable	773	554
Deferred policy acquisition costs	1,154	1,570
Assets of managed investment entities	2,491	0
Other receivables	655	774
Variable annuity assets (separate accounts)	573	549
Other assets	599	577
Goodwill	186	208
Total assets	32,639	27,683
Liabilities and Equity:
Unpaid losses and loss adjustment expenses	6,434	6,412
Unearned premiums	1,743	1,568
Annuity benefits accumulated	12,476	11,335
Life, accident and health reserves	1,643	1,603
Payable to reinsurers	446	462
Liabilities of managed investment entities	2,271	0
Long-term debt	954	828
Variable annuity liabilities (separate accounts)	573	549
Other liabilities	1,370	1,007
Total liabilities	27,910	23,764
Shareholders' Equity:
Common Stock, no par value - 200,000,000 shares authorized - 107,739,128 and 113,386,343 shares outstanding	108	113
Capital surplus	1,190	1,231
Retained Earnings:
Appropriated - managed investment entities	208	0
Unappropriated	2,464	2,274
Accumulated other comprehensive income, net of tax	607	163
Total shareholders' equity	4,577	3,781
Noncontrolling interests	152	138
Total equity	4,729	3,919
Total liabilities and equity	$ 32,639	$ 27,683

Consolidated Balance Sheet (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2010	Dec. 31, 2009
Investments:
Fixed maturities, available for sale at amortized cost	$ 18,237,000,000	$ 16,730,000,000
Equity securities, at cost	409,000,000	228,000,000
Shareholders' Equity:
Common Stock, par value	$ 0	$ 0
Common Stock, shares authorized	200,000,000	200,000,000
Common Stock, shares outstanding	107,739,128	113,386,343

Consolidated Statement of Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2010	Sep. 30, 2009	Sep. 30, 2010	Sep. 30, 2009
Revenues:
Property and casualty insurance premiums	$ 736	$ 622	$ 1,887	$ 1,809
Life, accident and health premiums	112	112	340	331
Investment income	296	301	885	900
Realized gains (losses) on:
Securities	57	9	72	(17)
Subsidiaries	(22)	(5)	(22)	(5)
Income (loss) of managed investment entities:
Investment income	23	0	68	0
Loss on change in fair value of assets/liabilities	(4)	0	(44)	0
Other income	57	54	155	177
Total revenues	1,255	1,093	3,341	3,195
Costs and Expenses:
Property and casualty losses and loss adjustment expenses	446	296	1,052	846
Property and casualty commissions and other underwriting expenses	222	218	633	643
Annuity benefits	114	112	340	323
Life, accident and health benefits	90	86	279	268
Annuity and supplemental insurance acquisition expenses	47	38	150	136
Interest charges on borrowed money	21	19	57	48
Expenses of managed investment entities	15	0	38	0
Other operating and general expenses	92	121	279	354
Total costs and expenses	1,047	890	2,828	2,618
Operating earnings before income taxes	208	203	513	577
Provision for income taxes	82	72	199	204
Net earnings, including noncontrolling interests	126	131	314	373
Less: Net earnings (loss) attributable to noncontrolling interests	(6)	4	(32)	15
Net Earnings Attributable to Shareholders	$ 132	$ 127	$ 346	$ 358
Earnings Attributable to Shareholders per Common Share:
Basic	$ 1.22	$ 1.1	$ 3.14	$ 3.09
Diluted	$ 1.21	$ 1.09	$ 3.11	$ 3.07
Average number of Common Shares:
Basic	108.2	116.1	110.1	115.8
Diluted	109.5	117.2	111.4	116.9
Cash dividends per Common Share	$ 0.1375	$ 0.13	$ 0.4125	$ 0.39
Supplemental disclosure of Realized gains (losses) on securities:
Realized gains before impairments	$ 68	$ 35	$ 120	$ 136
Losses on securities with impairment	(8)	(47)	(42)	(301)
Non-credit portion recognized in other comprehensive income (loss)	(3)	21	(6)	148
Impairment charges recognized in earnings	(11)	(26)	(48)	(153)
Total realized gains (losses) on securities	$ 57	$ 9	$ 72	$ (17)

Consolidated Statement of Changes in Equity (Unaudited) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2010 USD ($) shares	Sep. 30, 2009 USD ($) shares	Sep. 30, 2010 USD ($) shares	Sep. 30, 2009 USD ($) shares
Statement [Line Items]
Beginning Balance			$ 3,919	$ 2,602
Beginning Balance, shares \| shares			113,386,343
Cumulative effect of accounting change			$ 245
Net earnings	$ 126	$ 131	314	373
Other comprehensive income (loss), net of tax:
Change in unrealized gain (loss) on securities			446	834
Change in foreign currency translation			9	15
Change in unrealized pension and other postretirement benefits			1	1
Total comprehensive income			770	1,223
Dividends on Common Stock			(46)	(45)
Shares issued:
Exercise of stock options			27	16
Other benefit plans			6	2
Stock-based compensation expense			9	8
Shares acquired and retired			(201)
Shares exchanged in option exercises				(4)
Ending Balance	$ 4,729	$ 3,802	$ 4,729	$ 3,802
Ending Balance, shares \| shares	107,739,128		107,739,128
Common Shares
Statement [Line Items]
Beginning Balance, shares \| shares			113,386,343	115,599,169
Shares issued:
Exercise of stock options, shares \| shares			1,312,149	903,133
Other benefit plans, shares \| shares			388,094	190,629
Dividend reinvestment plan, shares \| shares			12,652	16,589
Shares acquired and retired, shares \| shares			(7,360,110)
Shares exchanged in option exercises, shares \| shares				(175,530)
Ending Balance, shares \| shares	107,739,128	116,533,990	107,739,128	116,533,990
Common Stock and Capital Surplus
Statement [Line Items]
Beginning Balance			$ 1,344	$ 1,351
Shares issued:
Exercise of stock options			27	16
Other benefit plans			6	2
Stock-based compensation expense			9	8
Shares acquired and retired			(87)
Shares exchanged in option exercises				(2)
Other			(1)	3
Ending Balance	$ 1,298	$ 1,378	1,298	1,378
Retained Earnings Approp.
Statement [Line Items]
Beginning Balance			0	0
Cumulative effect of accounting change			245
Other comprehensive income (loss), net of tax:
Allocation of losses of managed investment entities			(37)
Shares issued:
Other			0	0
Ending Balance	208	0	208	0
Retained Earnings Unapprop.
Statement [Line Items]
Beginning Balance			2,274	1,842
Cumulative effect of accounting change			4	17
Net earnings			346	358
Other comprehensive income (loss), net of tax:
Dividends on Common Stock			(46)	(45)
Shares issued:
Shares acquired and retired			(114)
Shares exchanged in option exercises				(2)
Other			0	0
Ending Balance	2,464	2,170	2,464	2,170
Accumulated Other Comprehensive Income (Loss)
Statement [Line Items]
Beginning Balance			163	(703)
Cumulative effect of accounting change			(4)	(17)
Other comprehensive income (loss), net of tax:
Change in unrealized gain (loss) on securities			440	827
Change in foreign currency translation			7	14
Change in unrealized pension and other postretirement benefits			1	1
Shares issued:
Other			0	0
Ending Balance	607	122	607	122
Total Shareholders' Equity
Statement [Line Items]
Beginning Balance			3,781	2,490
Cumulative effect of accounting change			245
Net earnings			346	358
Other comprehensive income (loss), net of tax:
Change in unrealized gain (loss) on securities			440	827
Change in foreign currency translation			7	14
Change in unrealized pension and other postretirement benefits			1	1
Total comprehensive income			794	1,200
Allocation of losses of managed investment entities			(37)
Dividends on Common Stock			(46)	(45)
Shares issued:
Exercise of stock options			27	16
Other benefit plans			6	2
Stock-based compensation expense			9	8
Shares acquired and retired			(201)
Shares exchanged in option exercises				(4)
Other			(1)	3
Ending Balance	4,577	3,670	4,577	3,670
Noncontrolling Interests
Statement [Line Items]
Beginning Balance			138	112
Net earnings			(32)	15
Other comprehensive income (loss), net of tax:
Change in unrealized gain (loss) on securities			6	7
Change in foreign currency translation			2	1
Change in unrealized pension and other postretirement benefits			0	0
Total comprehensive income			(24)	23
Allocation of losses of managed investment entities			37
Shares issued:
Other			1	(3)
Ending Balance	$ 152	$ 132	$ 152	$ 132

Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2010	Sep. 30, 2009
Operating Activities:
Net earnings, including noncontrolling interests	$ 314	$ 373
Adjustments:
Depreciation and amortization	141	155
Annuity benefits	340	323
Realized (gains) losses on investing activities	(57)	26
Net purchases of trading securities	(2)	(25)
Deferred annuity and life policy acquisition costs	(157)	(128)
Change in:
Reinsurance and other receivables	256	188
Other assets	13	85
Insurance claims and reserves	(195)	(335)
Payable to reinsurers	(24)	142
Other liabilities	101	(44)
Other operating activities, net	51	1
Net cash provided by operating activities	781	761
Investing Activities:
Purchases of fixed maturities	(3,737)	(3,245)
Purchases of equity securities	(183)	(20)
Purchases of mortgage loans	(143)	(9)
Purchases of real estate, property and equipment	(62)	(49)
Purchases of subsidiaries	(128)	(5)
Proceeds from maturities and redemptions of fixed maturities	1,474	1,388
Proceeds from repayments of mortgage loans	35	6
Proceeds from sales of fixed maturities	1,215	1,504
Proceeds from sales of equity securities	10	41
Proceeds from sales of real estate, property and equipment	3	1
Change in securities lending collateral	0	48
Managed investment entities:
Purchases of investments	(617)	0
Proceeds from sales and redemptions of investments	658	0
Cash and cash equivalents of businesses acquired	95	0
Other investing activities, net	6	(65)
Net cash used in investing activities	(1,374)	(405)
Financing Activities:
Annuity receipts	1,661	1,092
Annuity surrenders, benefits and withdrawals	(914)	(986)
Additional long-term borrowings	158	526
Reductions of long-term debt	(36)	(682)
Managed investment entities' retirement of liabilities	(42)	0
Change in securities lending obligation	0	(95)
Issuances of Common Stock	27	13
Repurchases of Common Stock	(201)	0
Cash dividends paid on Common Stock	(46)	(45)
Other financing activities, net	6	(8)
Net cash provided by (used in) financing activities	613	(185)
Net Change in Cash and Cash Equivalents	20	171
Cash and cash equivalents at beginning of period	1,120	1,264
Cash and cash equivalents at end of period	$ 1,140	$ 1,435

Accounting Policies

9 Months Ended

Sep. 30, 2010

Accounting Policies [Abstract]

Accounting Policies

Accounting Policies

Basis of Presentation The accompanying consolidated financial statements for American Financial Group, Inc. (“AFG”) and subsidiaries 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.

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, 2010, and prior to the filing date 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. Except for the impairment of goodwill discussed in Note I, AFG did not have any significant nonrecurring fair value measurements of nonfinancial assets and liabilities in the first nine months of 2010.

New accounting guidance adopted by AFG on January 1, 2010, requires additional disclosures about transfers between levels in the hierarchy of fair value measurements. The guidance also clarifies existing disclosure requirements related to the level of disaggregation presented and inputs used in determining fair values. Additional detail relating to the roll-forward of Level 3 fair values will be required beginning in 2011.

Investments Fixed maturity and equity securities classified as “available for sale” are reported at fair value with unrealized gains and losses included in a separate component of shareholders’ equity. Fixed maturity and equity securities classified as “trading” are reported at fair value with changes in unrealized holding gains or losses during the period included in investment income. Mortgage and policy loans are carried primarily at the aggregate unpaid balance.

Premiums and discounts on fixed maturity securities are amortized using the 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.

Gains or losses on securities are determined on the specific identification basis. When a decline in the value of a specific investment is considered to be other-than-temporary at the balance sheet date, a provision for impairment is charged to earnings (included in realized gains (losses)) and the cost basis of that investment is reduced.

In 2009, AFG adopted new accounting guidance relating to the recognition and presentation of other-than-temporary impairments. Under the guidance, if management can assert that it does not intend to sell an impaired fixed maturity security and it is not more likely than not that it will have to sell the security before recovery of its amortized cost basis, then an entity may separate other-than-temporary impairments into two components: 1) the amount related to credit losses (recorded in earnings) and 2) the amount related to all other factors (recorded in other comprehensive income (loss)). The credit-related portion of an other-than-temporary impairment 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 impairment charge. Both components are required to be shown in the Statement of Earnings. 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 charge to earnings is required to reduce the amortized cost of that security to fair value. AFG adopted this guidance effective January 1, 2009, and recorded a cumulative effect adjustment of $17 million to reclassify the non-credit component of previously recognized impairments from retained earnings to accumulated other comprehensive income (loss). Additional disclosures required by this guidance are contained in Note E — “Investments.”

Derivatives Derivatives included in AFG’s Balance Sheet are recorded at fair value and consist primarily of (i) components of certain fixed maturity securities (primarily interest-only MBS) and (ii) the equity-based component of certain annuity products (included in annuity benefits accumulated) and related call options (included in other investments) designed to be consistent with the characteristics of the liabilities and used to mitigate the risk embedded in those annuity products. Changes in the fair value of derivatives are included in earnings.

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.

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 (a) the estimated reinsurance recoverable on paid and unpaid losses, including an estimate for losses incurred but not reported, and (b) amounts paid 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.

Certain annuity and supplemental insurance subsidiaries cede life insurance policies to a third party on a funds withheld basis whereby the subsidiaries retain the assets (securities) associated with the reinsurance contracts. Interest is credited to the reinsurer based on the actual investment performance of the retained assets. These reinsurance contracts are considered to contain embedded derivatives (that must be adjusted to fair value) because the yield on the payables is based on specific blocks of the ceding companies’ assets, rather than the overall creditworthiness of the ceding company. AFG determined that changes in the fair value of the underlying portfolios of fixed maturity securities is an appropriate measure of the value of the embedded derivative. The securities related to these transactions are classified as “trading.” The adjustment to fair value on the embedded derivatives offsets the investment income recorded on the adjustment to fair value of the related trading portfolios.

Deferred Policy Acquisition Costs (“DPAC”) Policy acquisition costs (principally commissions, premium taxes and other marketing and underwriting expenses) related to the production of new business 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, unamortized acquisition costs and policy maintenance 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 and universal life insurance products 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 variable annuity policy charges, less death and annuitization 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).

DPAC related to annuities is also adjusted, net of tax, for the change in amortization that would have been recorded if the unrealized gains (losses) from securities had actually been realized. This adjustment is included in unrealized gains on marketable securities, a component of “Accumulated Other Comprehensive Income, net of tax” in the Shareholders’ Equity section of the Balance Sheet.

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.

DPAC includes the present value of future profits on business in force of annuity and supplemental 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 In 2009, the Financial Accounting Standards Board issued a new standard changing how a company determines if it is the primary beneficiary of, and therefore must consolidate, a variable interest entity (“VIE”). This determination is based primarily on a company’s ability to direct the activities of the entity that most significantly impact the 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 minor investments in, six collateralized loan obligations (“CLOs”) that are VIEs. As further described in Note H, these entities issued securities in various tranches and invested the proceeds primarily in secured bank loans, which serve as collateral for the debt securities issued by each particular CLO. Both the management fees (payment of which are subordinate to other obligations of the CLOs) and the investments in the CLOs are considered variable interests. Based on the new accounting guidance, AFG has determined that it is the primary beneficiary of the 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) it has exposure to CLO losses (through its investments in the CLO subordinated debt tranches) and the right to receive benefits (through its subordinated management fees and returns on its investments), both of which could potentially be significant to the CLOs. Accordingly, AFG began consolidating these entities on January 1, 2010.

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 Consolidated Balance Sheet. As permitted under the new standard, the assets and liabilities of the CLOs have been recorded at fair value upon adoption of the new standard on January 1, 2010. At that date, the excess of fair value of the assets ($2.382 billion) over the fair value of the liabilities ($2.137 billion) of $245 million was included in AFG’s Balance Sheet as appropriated retained earnings — managed investment entities, representing the cumulative effect of adopting the new standard that ultimately will inure to the benefit of the CLO debt holders.

At December 31, 2009, AFG’s investments in the CLOs were included in fixed maturity securities and had a cost of approximately $700,000 and a fair value of $6.4 million. Beginning January 1, 2010, these investments are eliminated in consolidation.

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 subsequent to January 1, 2010, is separately presented in AFG’s Statement of Earnings. CLO earnings attributable to AFG’s shareholders represent the change in fair value of AFG’s investments in the CLOs and management fees earned. As further detailed in Note H - “Managed Investment Entities,” all other CLO earnings (losses) are not attributable to AFG’s shareholders and will ultimately inure to the benefit of the other CLO debt holders. As a result, such CLO earnings (losses) are included in “net earnings (loss) attributable to noncontrolling interests” in AFG’s Statement of Earnings and in appropriated retained earnings — managed investment entities in the Balance Sheet. As the CLOs approach maturity (2016 to 2022), it is expected that losses attributable to noncontrolling interests will reduce appropriated retained earnings towards zero as the fair values of the assets and liabilities converge and the CLO assets are used to pay the CLO debt.

Unpaid Losses and Loss Adjustment Expenses The net liabilities stated for unpaid claims and for expenses of investigation and adjustment of unpaid claims are based upon (a) the accumulation of case estimates for losses reported prior to the close of the accounting period on direct business written; (b) estimates received from ceding reinsurers and insurance pools and associations; (c) estimates of unreported losses (including possible development on known claims) based on past experience; (d) estimates based on experience of expenses for investigating and adjusting claims; and (e) 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 expense and decreases for surrender charges are credited to other income.

For certain products, annuity benefits accumulated also includes reserves for accrued persistency and premium bonuses and excess benefits expected to be paid on future deaths and annuitizations (“EDAR”). The liability for EDAR is 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 variable annuity policy charges, and unearned revenues once they are recognized as income.

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. Reserves established for accident and health claims are modified as necessary to reflect actual experience and developing trends.

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.

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.

Noncontrolling Interests For Balance Sheet purposes, noncontrolling interests represents 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.

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. Deferred tax assets are recognized if it is more likely than not that a benefit will be realized.

AFG records a liability for the inherent uncertainty in quantifying its income tax provisions. Related interest and penalties are recognized as a component of tax expense.

Stock-Based Compensation All share-based grants are recognized as compensation expense 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. See Note K - “Shareholders’ Equity” for further information on stock options.

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 Basic earnings per share is calculated using the weighted average number of 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 2010 and 2009 — 1.3 million and 1.1 million; first nine months of 2010 and 2009 — 1.3 million and 1.1 million, respectively.

AFG’s weighted average diluted shares outstanding excludes the following anti-dilutive potential common shares related to stock compensation plans: third quarter 2010 and 2009 — 3.1 million and 4.6 million; first nine months of 2010 and 2009 — 4.0 million and 6.0 million, respectively. Adjustments to net earnings attributable to shareholders in the calculation of diluted earnings per share were nominal in the 2010 and 2009 periods.

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 and property and equipment. “Financing activities” include obtaining resources from owners and providing them with a return on their investments, borrowing money and repaying amounts borrowed. Annuity receipts, 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.

Acquisition of Subsidiary

9 Months Ended

Sep. 30, 2010

Acquisition of Subsidiary [Abstract]

Acquisition of Subsidiary

Acquisition of Subsidiary In July 2010, National Interstate (“NATL”), a 52.5%-owned subsidiary of AFG, completed the acquisition of Vanliner Group, Inc., a subsidiary of UniGroup, Inc. for $128 million in cash, which was based on Vanliner’s estimated tangible book value at the date of closing and is subject to certain adjustments. The purchase price is subject to a four and one-half-year balance sheet guarantee whereby both favorable and unfavorable balance sheet developments inure to UniGroup. The preliminary allocation of the purchase price based on the estimated fair value of the assets and liabilities is subject to change upon finalizing valuations. NATL funded the acquisition primarily with cash on hand. Vanliner wrote approximately $104 million of gross premiums in 2009 in the moving and storage industry.

Segments of Operations

9 Months Ended

Sep. 30, 2010

Segments of Operations [Abstract]

Segments of Operations

Segments of Operations AFG manages its business as three segments: (i) property and casualty insurance, (ii) annuity and supplemental insurance and (iii) other, which includes holding company costs and operations 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, trucks and recreational vehicles, inland and ocean marine, agricultural-related products and other property coverages, (ii) Specialty casualty, which includes primarily excess and surplus, general liability, executive liability, umbrella and excess liability and customized programs for small to mid-sized businesses and California workers’ compensation, and (iii) Specialty financial, which includes risk management insurance programs for lending and leasing institutions (including collateral and mortgage protection insurance), surety and fidelity products and trade credit insurance. AFG’s annuity and supplemental insurance business markets traditional fixed, indexed and variable annuities and a variety of supplemental insurance products. AFG’s reportable segments and their components were determined based primarily upon similar economic characteristics, products and services.

The following tables (in millions) show AFG’s revenues and operating earnings before income taxes by significant business segment and sub-segment.


	Three months ended						Nine months ended
	September 30,						September 30,
	2010			2009			2010			2009
Revenues
Property and casualty insurance:
Premiums earned:
Specialty
Property and transportation	$	407		$	239		$	832		$	676
Specialty casualty		224			237			661			692
Specialty financial		92			127			347			388
Other		13			19			47			53

		736			622			1,887			1,809
Investment income		80			102			257			313
Realized gains		46			17			69			41
Other		13			26			49			87

		875			767			2,262			2,250
Annuity and supplemental insurance:
Investment income		215			195			625			585
Life, accident and health premiums		112			112			340			331
Realized losses		(11	)		(13	)		(19	)		(63	)
Other		23			26			81			88

		339			320			1,027			941
Other		41			6			52			4

	$	1,255		$	1,093		$	3,341		$	3,195


Operating Earnings Before Income Taxes
Property and casualty insurance:
Underwriting:
Specialty
Property and transportation	$	41		$	47		$	81		$	121
Specialty casualty		(13	)		27			29			106
Specialty financial		36			29			91			96
Other		4			6			13			3
Other lines		—			(1	)		(12	)		(6	)

		68			108			202			320
Investment and other operating income		67			80			229			253
Realized gains		46			17			69			41

		181			205			500			614
Annuity and supplemental insurance:
Operations		58			46			148			127
Realized losses		(11	)		(13	)		(19	)		(63	)

		47			33			129			64
Other (*)		(20	)		(35	)		(116	)		(101	)

	$	208		$	203		$	513		$	577


(*)		The third quarter and first nine months of 2010 include $8 million and $23 million, respectively, in earnings from managed investment entities attributable to AFG shareholders and $4 million and $37 million, respectively, in losses of managed investment entities attributable to noncontrolling interests.

Fair Value Measurements

9 Months Ended

Sep. 30, 2010

Fair Value Measurements [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 and 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, mortgage-backed securities (“MBS”) 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. The unobservable inputs may include management’s own assumptions about the assumptions market participants would use based on the best information available in the circumstances. AFG’s Level 3 is comprised of financial instruments, including liabilities of managed investment entities, 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.

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. 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), changes in interest rates, general economic conditions and the credit quality of the specific issuers.

Assets and liabilities measured at fair value are summarized below (in millions):


	Level 1		Level 2		Level 3		Total
September 30, 2010
Assets:
Available for sale (“AFS”) fixed maturities:
U.S. Government and government agencies	$	264	$	259	$	—	$	523
States, municipalities and political subdivisions		—		2,532		21		2,553
Foreign government		—		308		—		308
Residential MBS		—		3,646		292		3,938
Commercial MBS		—		2,092		5		2,097
All other corporate		10		9,573		452		10,035

Total AFS fixed maturities		274		18,410		770		19,454

Trading fixed maturities		—		384		1		385
Equity securities		402		158		21		581
Assets of managed investment entities (“MIE”)		122		2,327		42		2,491
Variable annuity assets (separate accounts) (a)		—		573		—		573
Other investments		—		65		—		65

Total assets accounted for at fair value	$	798	$	21,917	$	834	$	23,549


Liabilities:
Liabilities of managed investment entities	$	72	$	—	$	2,199	$	2,271
Derivatives embedded in annuity benefits accumulated		—		—		170		170

Total liabilities accounted for at fair value	$	72	$	—	$	2,369	$	2,441


December 31, 2009
Assets:
Fixed maturities:
Available for sale	$	371	$	15,683	$	769	$	16,823
Trading		—		371		1		372
Equity securities		197		189		25		411
Variable annuity assets (separate accounts) (a)		—		549		—		549
Other investments		—		85		—		85

Total assets accounted for at fair value	$	568	$	16,877	$	795	$	18,240


Liabilities:
Derivatives embedded in annuity benefits accumulated	$	—	$	—	$	113	$	113


(a)		Variable annuity liabilities equal the fair value of annuity assets.

During the third quarter of 2010, there were no significant transfers between Level 1 and Level 2. Approximately 4% of the total assets measured at fair value on September 30, 2010, were Level 3 assets. Approximately 36% of these assets were MBS whose fair values were determined primarily using non-binding broker quotes; the balance was primarily private placement debt securities whose fair values were determined internally using significant unobservable inputs, including the evaluation of underlying collateral and issuer creditworthiness, as well as certain Level 2 inputs such as comparable yields and multiples on similar publicly traded issues. The fair values of the liabilities of managed investment entities were determined using non-binding broker quotes, which were reviewed by AFG’s internal investment professionals.

Changes in balances of Level 3 financial assets and liabilities during the third quarter and first nine months of 2010 and 2009 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
				Gains (losses)
				included in
							Other		Purchases,
	Balance at						comp.		sales,			Transfer		Transfer			Balance at
	June 30,			Net			income		issuances and			into		out of			September 30,
	2010			income			(loss)		settlements			Level 3		Level 3			2010
AFS fixed maturities:
State and municipal	$	21		$	—		$	—	$	—		$	—	$	—		$	21
Residential MBS		326			4			11		5			7		(61	)		292
Commercial MBS		6			(1	)		—		—			—		—			5
All other corporate		426			—			7		14			27		(22	)		452
Trading fixed maturities		1			—			—		—			—		—			1
Equity securities		24			—			—		—			—		(3	)		21
Assets of MIE		46			—			—		(4	)		—		—			42
Liabilities of MIE		(2,152	)		(51	)		—		4			—		—			(2,199	)
Embedded derivatives		(128	)		(26	)		—		(16	)		—		—			(170	)


				Total
				realized/unrealized
				gains (losses)
	Balance at			included in					Purchases,		Transfer			Balance at
	June 30,						Other comp.		sales, issuances		out of			September 30,
	2009			Net income			income (loss)		and settlements		Level 3			2009
AFS fixed maturities	$	712		$	5		$	68	$	185	$	(313	)	$	657
Trading fixed maturities		5			—			—		—		(4	)		1
Equity securities		26			(2	)		—		—		—			24
Other assets		—			—			—		—		—			—
Embedded derivatives		(93	)		(23	)		—		5		—			(111	)


							Total
							realized/unrealized
							gains (losses)
							included in
				Consolidate						Other			Purchases,
	Balance at			Managed						comp.			sales,			Transfer		Transfer			Balance at
	Dec. 31,			Inv.			Net			income			issuances and			into		out of			September 30,
	2009			Entities			income			(loss)			settlements			Level 3		Level 3			2010
AFS fixed maturities:
State and municipal	$	23		$	—		$	—		$	1		$	(3	)	$	17	$	(17	)	$	21
Residential MBS		435			—			6			22			11			9		(191	)		292
Commercial MBS		—			—			(1	)		—			6			—		—			5
All other corporate		311			(6	)		(12	)		15			101			96		(53	)		452
Trading fixed maturities		1			—			—			—			4			—		(4	)		1
Equity securities		25			—			—			(1	)		—			—		(3	)		21
Assets of MIE		—			90			5			—			(8	)		7		(52	)		42
Liabilities of MIE		—			(2,100	)		(141	)		—			42			—		—			(2,199	)
Embedded derivatives		(113	)		—			(25	)		—			(32	)		—		—			(170	)


				Total
				realized/unrealized
				gains (losses)
	Balance at			included in					Purchases,			Transfer			Balance at
	Dec. 31,						Other comp.		sales, issuances			out of			September 30,
	2008			Net income			income (loss)		and settlements			Level 3			2009
AFS fixed maturities	$	706		$	12		$	71	$	144		$	(276	)	$	657
Trading fixed maturities		1			—			—		—			—			1
Equity securities		44			(11	)		1		(4	)		(6	)		24
Other assets		5			—			—		—			(5	)		—
Embedded derivatives		(96	)		(23	)		—		8			—			(111	)

Fair Value of Financial Instruments The following table presents (in millions) the carrying value and estimated fair value of AFG’s financial instruments at September 30, 2010 and December 31, 2009.


	September 30, 2010				December 31, 2009
	Carrying		Fair		Carrying		Fair
	Value		Value		Value		Value
Assets:
Cash and cash equivalents	$	1,140	$	1,140	$	1,120	$	1,120
Fixed maturities		19,839		19,839		17,195		17,195
Equity securities		581		581		411		411
Mortgage loans		492		494		376		373
Policy loans		267		267		276		276
Assets of managed investment entities		2,491		2,491		—		—
Variable annuity assets (separate accounts)		573		573		549		549

Liabilities:
Annuity benefits accumulated (*)	$	12,266	$	12,131	$	11,123	$	10,365
Long-term debt		954		1,037		828		839
Liabilities of managed investment entities		2,271		2,271		—		—
Variable annuity liabilities (separate accounts)		573		573		549		549


(*)		Excludes life contingent annuities in the payout phase.

The carrying amount of cash and cash equivalents approximates fair value. Fair values for mortgage loans are estimated by discounting the future contractual cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings. The fair value of policy loans is estimated to approximate carrying value; policy loans have no defined maturity dates and are inseparable from insurance contracts. The fair value of annuity benefits was estimated based on expected cash flows discounted using forward interest rates adjusted for the Company’s credit risk and includes the impact of maintenance expenses and capital costs. Fair values of long-term debt are based primarily on quoted market prices.

Investments

9 Months Ended

Sep. 30, 2010

Investments [Abstract]

Investments

Investments Available for sale fixed maturities and equity securities at September 30, 2010, and December 31, 2009, consisted of the following (in millions):


	September 30, 2010									December 31, 2009
	Amortized		Fair		Gross Unrealized					Amortized		Fair		Gross Unrealized
	Cost		Value		Gains		Losses			Cost		Value		Gains		Losses

Fixed maturities:
U.S. Government and government agencies	$	502	$	523	$	21	$	—		$	599	$	612	$	14	$	(1	)
States, municipalities and political subdivisions		2,443		2,553		114		(4	)		1,764		1,789		40		(15	)
Foreign government		292		308		16		—			261		264		4		(1	)
Residential MBS		3,873		3,938		223		(158	)		4,142		3,956		126		(312	)
Commercial MBS		1,916		2,097		185		(4	)		1,434		1,431		22		(25	)
All other corporate		9,211		10,035		849		(25	)		8,530		8,771		375		(134	)


	$	18,237	$	19,454	$	1,408	$	(191	)	$	16,730	$	16,823	$	581	$	(488	)


Common stocks	$	270	$	441	$	173	$	(2	)	$	112	$	298	$	187	$	(1	)


Perpetual preferred stocks	$	139	$	140	$	6	$	(5	)	$	116	$	113	$	6	$	(9	)

The non-credit related portion of other-than-temporary impairment charges are included in other comprehensive income (loss). Such charges taken for securities still owned at September 30, 2010 and December 31, 2009, respectively, were: residential MBS — $266 million and $284 million; commercial MBS — $3 million in both periods; corporate bonds — $1 million and $4 million.

The following tables show gross unrealized losses (in millions) on fixed maturities and equity securities by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2010 and December 31, 2009.


	Less Than Twelve Months								Twelve Months or More
	Unrealized			Fair		Fair Value as			Unrealized			Fair		Fair Value as
	Loss			Value		% of Cost			Loss			Value		% of Cost
September 30, 2010
Fixed maturities:
U.S. Government and government agencies	$	—		$	53		100	%	$	—		$	—		—	%
States, municipalities and political subdivisions		(1	)		164		99	%		(3	)		54		95	%
Foreign government		—			5		100	%		—			—		—	%
Residential MBS		(13	)		274		96	%		(145	)		664		82	%
Commercial MBS		—			36		99	%		(4	)		20		85	%
All other corporate		(4	)		191		98	%		(21	)		365		95	%


	$	(18	)	$	723		98	%	$	(173	)	$	1,103		87	%


Common Stocks	$	(2	)	$	35		95	%	$	—		$	2		91	%


Perpetual Preferred Stocks	$	—		$	4		99	%	$	(5	)	$	37		87	%


December 31, 2009
Fixed maturities:
U.S. Government and government agencies	$	(1	)	$	232		99	%	$	—		$	—		—	%
States, municipalities and political subdivisions		(8	)		470		98	%		(7	)		69		90	%
Foreign government		(1	)		81		99	%		—			—		—	%
Residential MBS		(37	)		458		93	%		(275	)		1,392		84	%
Commercial MBS		(1	)		209		99	%		(24	)		395		94	%
All other corporate		(19	)		895		98	%		(115	)		1,336		92	%


	$	(67	)	$	2,345		97	%	$	(421	)	$	3,192		88	%


Common Stocks	$	(1	)	$	3		79	%	$	—		$	2		99	%


Perpetual Preferred Stocks	$	—		$	—		—	%	$	(9	)	$	47		84	%

At September 30, 2010 the gross unrealized losses on fixed maturities of $191 million relate to approximately 630 securities. Investment grade securities (as determined by nationally recognized rating agencies) represented approximately 37% of the gross unrealized loss and 64% of the fair value. Residential MBS comprised approximately 83% of the gross unrealized losses on the available for sale fixed maturity portfolio at September 30, 2010.

Gross Unrealized Losses on MBS Over 97% of AFG’s commercial MBS are AAA-rated. Of the residential MBS that have been in an unrealized loss position (“impaired”) for 12 months or more (286 securities), approximately 37% of the unrealized losses and 50% of the fair value relate to investment grade rated securities. AFG analyzes its MBS securities for other-than-temporary 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. For the first nine months of 2010, AFG recorded in earnings $42 million in other-than-temporary impairment charges related to its residential MBS.

Gross Unrealized Losses on All Other Corporates For the first nine months of 2010, AFG recorded in earnings $18 million in other-than-temporary impairment charges on “all other corporate” securities. Management concluded that no additional impairment charges were required based on many factors, including AFG’s ability and intent to hold the investments for a period of time sufficient to allow for anticipated recovery of its amortized cost, the length of time and the extent to which fair value has been below cost, analysis of historical and projected company-specific financial data, the outlook for industry sectors, and credit ratings.

The following tables progress the credit portion of other-than-temporary impairments on fixed maturity securities for which the non-credit portion of an impairment has been recognized in other comprehensive income (loss) (in millions).


	2010			2009

Balance at June 30	$	121		$	67
Additional credit impairments on:
Previously impaired securities		11			4
Securities without prior impairments		1			9
Reductions — disposals		—			(4	)


Balance at September 30	$	133		$	76


Balance at January 1	$	99		$	14
Additional credit impairments on:
Previously impaired securities		34			14
Securities without prior impairments		8			59
Reductions — disposals		(8	)		(11	)


Balance at September 30	$	133		$	76

The table below sets forth the scheduled maturities of available for sale fixed maturities as of September 30, 2010 (in millions). Asset-backed securities and other 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. MBS had an average life of approximately 4 years at September 30, 2010.


	Amortized		Fair Value
	Cost		Amount		%
Maturity
One year or less	$	516	$	526		3	%
After one year through five years		4,998		5,323		27
After five years through ten years		5,525		6,066		31
After ten years		1,409		1,504		8

		12,448		13,419		69
MBS		5,789		6,035		31

Total	$	18,237	$	19,454		100	%

Certain risks are inherent in connection with 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 (other than U.S. Treasury Notes) that exceeded 10% of Shareholders’ Equity at September 30, 2010 or December 31, 2009.

Net Unrealized Gain on Marketable Securities In addition to adjusting equity securities and fixed maturity securities classified as “available for sale” to fair value, GAAP requires that deferred policy acquisition costs related to annuities and certain other balance sheet amounts 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 the components of the net unrealized gain on securities that is included in Accumulated Other Comprehensive Income in AFG’s Balance Sheet.


				Deferred Tax and
				Amounts Attributable
				to Noncontrolling
	Pre-tax			Interests			Net
September 30, 2010
Unrealized gain on:
Fixed maturity securities	$	1,217		$	(432	)	$	785
Equity securities		172			(61	)		111
Deferred policy acquisition costs		(460	)		161			(299	)
Annuity benefits and other liabilities		9			(3	)		6

	$	938		$	(335	)	$	603


December 31, 2009
Unrealized gain on:
Fixed maturity securities	$	93		$	(33	)	$	60
Equity securities		183			(65	)		118
Deferred policy acquisition costs		(18	)		6			(12	)

	$	258		$	(92	)	$	166

Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments are summarized as follows (in millions):


													Noncon-
	Fixed			Equity						Tax			trolling
	Maturities			Securities			Other (*)			Effects			Interests			Total

Quarter ended September 30, 2010
Realized before impairments	$	44		$	29		$	(5	)	$	(24	)	$	—		$	44
Realized — impairments		(14	)		(1	)		4			4			—			(7	)
Change in Unrealized		498			(7	)		(177	)		(110	)		(4	)		200

Quarter ended September 30, 2009
Realized before impairments	$	37		$	2		$	(4	)	$	(11	)	$	(2	)	$	22
Realized — impairments		(28	)		(8	)		10			9			1			(16	)
Change in Unrealized		1,039			98			(407	)		(256	)		(3	)		471

Nine months ended September 30, 2010
Realized before impairments	$	99		$	31		$	(10	)	$	(42	)	$	(1	)	$	77
Realized — impairments		(64	)		(4	)		20			17			—			(31	)
Change in Unrealized		1,131			(11	)		(434	)		(240	)		(6	)		440

Nine months ended September 30, 2009
Realized before impairments	$	168		$	(12	)	$	(20	)	$	(47	)	$	(2	)	$	87
Realized — impairments		(182	)		(27	)		56			54			1			(98	)
Change in Unrealized		1,834			161			(712	)		(449	)		(7	)		827


(*)		Primarily adjustments to deferred policy acquisition costs related to annuities.

Realized gains include net gains of $25 million and $51 million in the third quarter and first nine months of 2010 from the mark-to-market of certain MBS, primarily interest-only securities with interest rates that float inversely with short-term rates. In the 2009 periods, realized gains included $32 million in the third quarter and $129 million for the first nine months from the mark-to-market of these securities. Gross realized gains and losses (excluding impairment writedowns and mark-to-market of derivatives) on available for sale fixed maturity and equity security investment transactions included in the Statement of Cash Flows consisted of the following (in millions):


	Nine months ended
	September 30,
	2010			2009
Fixed maturities:
Gross gains	$	74		$	68
Gross losses		(10	)		(24	)

Equity securities:
Gross gains		29			6
Gross losses		—			(21	)

Derivatives

9 Months Ended

Sep. 30, 2010

Derivatives [Abstract]

Derivatives

Derivatives As discussed under “Derivatives” in Note A, AFG uses derivatives in certain areas of its operations. AFG’s derivatives do not qualify for hedge accounting under GAAP; changes in the fair value of derivatives are included in earnings.

The following derivatives are included in AFG’s Balance Sheet at fair value (in millions):


		September 30, 2010				December 31, 2009
Derivative	Balance Sheet Line	Asset		Liability		Asset		Liability
MBS with embedded derivatives	Fixed maturities	$	97	$	—	$	226	$	—
Interest rate swaptions	Other investments		13		—		24		—
Indexed annuities (embedded derivative)	Annuity benefits accumulated		—		170		—		113
Equity index call options	Other investments		52		—		61		—
Reinsurance contracts (embedded derivative)	Other liabilities		—		21		—		5

		$	162	$	191	$	311	$	118

The MBS with embedded derivatives consist primarily of interest-only MBS with interest rates that float inversely with short-term rates. AFG has elected to measure these securities (in their entirety) at fair value in its financial statements. These investments are part of AFG’s overall investment strategy and represent a small component of AFG’s overall investment portfolio.

AFG has entered into $800 million notional amount of pay-fixed interest rate swaptions (options to enter into pay-fixed/receive floating interest rate swaps at future dates expiring between 2012 and 2015) to mitigate interest rate risk in its annuity operations. AFG paid $21 million to purchase these swaptions, which represents its maximum potential economic loss over the life of the contracts.

AFG’s indexed annuities, which represented 26% of annuity benefits accumulated at September 30, 2010, provide policyholders with a crediting rate tied, in part, to the performance of an existing stock market index. AFG attempts to mitigate the risk in the index-based component of these products through the purchase of call options on the appropriate index. AFG’s strategy is designed so that an increase in the liabilities, due to an increase in the market index, will be generally offset by unrealized and realized gains on the call options purchased by AFG. Both the index-based component of the annuities and the related call options are considered derivatives.

As discussed under “Reinsurance” in Note A, certain reinsurance contracts in AFG’s annuity and supplemental insurance business are considered to contain embedded derivatives.

The following table summarizes the gain (loss) included in the Statement of Earnings for changes in the fair value of these derivatives for the third quarter and first nine months of 2010 and 2009 (in millions):


		Three months ended						Nine months ended
		September 30,						September 30,
Derivative	Statement of Earnings Line	2010			2009			2010			2009
MBS with embedded derivatives	Realized gains	$	25		$	32		$	51		$	129
Interest rate swaptions	Realized gains		(2	)		—			(16	)		5
Indexed annuities (embedded derivative)	Annuity benefits		(26	)		(23	)		(25	)		(23	)
Equity index call options	Annuity benefits		23			19			11			17
Reinsurance contracts (embedded derivative)	Investment income		(6	)		(14	)		(16	)		(24	)

		$	14		$	14		$	5		$	104

Deferred Policy Acquisition Costs

9 Months Ended

Sep. 30, 2010

Deferred Policy Acquisition Costs [Abstract]

Deferred Policy Acquisition Costs

Deferred Policy Acquisition Costs Deferred policy acquisition costs consisted of the following (in millions):


	September 30,			December 31,
	2010			2009
Property and casualty insurance	$	321		$	338
Annuity and supplemental insurance:
Policy acquisition costs		911			853
Policyholder sales inducements		214			207
Present value of future profits (“PVFP”)		168			190
Impact of unrealized gains and losses on securities		(460	)		(18	)

Total annuity and supplemental		833			1,232


	$	1,154		$	1,570

The PVFP amounts in the table above are net of $170 million and $148 million of accumulated amortization at September 30, 2010 and December 31, 2009, respectively. Amortization of the PVFP was $6 million in the third quarter and $22 million during the first nine months of 2010 and $7 million in the third quarter and $22 million in the first nine months of 2009, respectively.

Managed Investment Entities

9 Months Ended

Sep. 30, 2010

Managed Investment Entities [Abstract]

Managed Investment Entities

Managed Investment Entities AFG is the investment manager and has investments ranging from 7.5% to 24.4% of the most subordinate debt tranche of six collateralized loan obligation entities or “CLOs,” which are considered variable interest entities. Upon formation between 2004 and 2007, 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 particular CLO. None of the collateral was purchased from AFG. AFG’s investments in these entities receive residual income from the CLOs only after the CLOs pay operating expenses (including management fees to AFG), 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.

In analyzing expected cash flows related to these entities, AFG determined that it will not receive a majority of the residual returns nor absorb a majority of the entities’ expected losses. Accordingly, AFG was not required to consolidate these variable interest entities prior to 2010. Beginning in 2010, accounting standards for determining the primary beneficiary of a variable interest entity changed from the above quantitative assessment to a qualitative assessment as outlined in Note A - “Accounting Policies, Managed Investment Entities.” Under the new guidance, AFG determined that it is the primary beneficiary of the CLOs it manages and began consolidating the CLOs on January 1, 2010.

AFG’s maximum ultimate exposure to economic loss on its CLOs is limited to its investment in the CLOs, which had an aggregate fair value of $12 million at September 30, 2010.

The revenues and expenses of the CLOs are separately identified in AFG’s Statement of Earnings, after elimination of $5 million and $13 million in management fees and $3 million and $10 million in income attributable to shareholders of AFG for the third quarter and nine months of 2010, respectively, as measured by the change in the fair value of AFG’s investments in the CLOs. AFG’s “Operating earnings before income taxes” for the third quarter and first nine months of 2010 includes $4 million and $37 million, respectively, in CLO losses attributable to noncontrolling interests.

The net loss from changes in the fair value of assets and liabilities of managed investment entities included in the Statement of Earnings for 2010 includes gains of $47 million in the third quarter and gains of $97 million for the first nine months from changes in the fair value of CLO assets and losses of $51 million in the third quarter and losses of $141 million for the first nine months from changes in the fair value of CLO liabilities. The aggregate unpaid principal balance of the CLOs’ fixed maturity investments exceeded the fair value of the investments by $132 million at September 30, 2010. The aggregate unpaid principal balance of the CLOs’ debt exceeded its fair value by $390 million at that date. The CLO assets include $17 million in loans (aggregate unpaid principal balance of $37 million) for which the CLOs are not accruing interest because the loans are in default.

Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2010

Goodwill and Intangible Assets [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets Changes in the carrying value of goodwill during the first nine months of 2010, by reporting segment, are presented in the following table (in millions):


	Property and		Annuity and
	Casualty		Supplemental			Total
Balance January 1, 2010	$	152	$	56		$	208
Impairment charge		—		(22	)		(22	)


Balance September 30, 2010	$	152	$	34		$	186

In the third quarter of 2010, management reached a decision to de-emphasize the sale of supplemental health insurance products through career agents, including the sale of a marketing subsidiary. As a result of this decision, AFG performed an interim impairment test of the goodwill associated with the reporting unit using an income valuation method based on discounted cash flows. Based on the results of this test, AFG recorded a goodwill impairment charge of $22 million (included in realized gains (losses) on subsidiaries) to write off all of the goodwill related to this reporting unit.

Included in other assets in AFG’s Balance Sheet is $52 million at September 30, 2010 and $60 million at December 31, 2009, in amortizable intangible assets related to property and casualty insurance acquisitions, primarily the 2008 acquisitions of Marketform and Strategic Comp. These amounts are net of accumulated amortization of $32 million and $23 million, respectively. Amortization of these intangibles was $3 million in the third quarter and $9 million during the first nine months of 2010 compared to $7 million in the third quarter and $19 million during the first nine months of 2009. Other assets also include $8 million in non-amortizable intangible assets related to insurance licenses acquired in the acquisition of Vanliner in 2010.

Long-Term Debt

9 Months Ended

Sep. 30, 2010

Long-Term Debt [Abstract]

Long-Term Debt

Long-Term Debt The carrying value of long-term debt consisted of the following (in millions):


	September 30,		December 31,
	2010		2009
Direct obligations of AFG:
9-7/8% Senior Notes due June 2019	$	350	$	350
7% Senior Notes due September 2050		132		—
7-1/8% Senior Debentures due February 2034		115		115
Other		3		3

		600		468

Subsidiaries:
Obligations of AAG Holding (guaranteed by AFG):
7-1/2% Senior Debentures due November 2033		112		112
7-1/4% Senior Debentures due January 2034		86		86
Notes payable secured by real estate due 2010 through 2016		65		66
Secured borrowings ($18 and $19 guaranteed by AFG)		43		52
National Interstate bank credit facility		19		15
American Premier Underwriters 10-7/8% Subordinated
Notes due May 2011		8		8
Other		1		1

		334		340

Payable to Subsidiary Trusts:
AAG Holding Variable Rate Subordinated Debentures due May 2033		20		20


	$	954	$	828

Scheduled principal payments on debt for the balance of 2010 and the subsequent five years were as follows: 2010 — $3 million; 2011 — $20 million; 2012 — $31 million; 2013 — $20 million; 2014 — $2 million and 2015 — $14 million.

As shown below (in millions), the majority of AFG’s long-term debt is unsecured obligations of the holding company and its subsidiaries:


	September 30,		December 31,
	2010		2009
Unsecured obligations	$	846	$	710
Obligations secured by real estate		65		66
Other secured borrowings		43		52

	$	954	$	828

In August 2010, AFG replaced its credit facility with a three-year, $500 million revolving credit line. Amounts borrowed under this agreement bear interest at rates ranging from 1.75% to 3.00% (currently 2%) over LIBOR based on AFG’s credit rating. No amounts were borrowed under this facility at September 30, 2010.

In September 2010, AFG issued $132 million of 7% Senior Notes due 2050. In April 2009, AFG paid $136 million to redeem its outstanding 7-1/8% Senior Debentures at maturity. In June 2009, AFG issued $350 million of 9-7/8% Senior Notes due 2019 and used the proceeds to repay borrowings under the credit facility.

In 2009, AFG subsidiaries borrowed a total of $59 million at interest rates ranging from 3.8% to 4.25% over LIBOR (weighted average interest rate of 4.4% at September 30, 2010). The loans require principal payments over the next four years.

Shareholders' Equity

9 Months Ended

Sep. 30, 2010

Shareholders' Equity [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 (Loss), Net of Tax Comprehensive income (loss) is defined as all changes in Shareholders’ Equity except those arising from transactions with shareholders. Comprehensive income (loss) includes net earnings and other comprehensive income (loss), which consists primarily of changes in net unrealized gains or losses on available for sale securities and foreign currency translation. The progression of the components of accumulated other comprehensive income (loss) follows (in millions):


	Pretax			Foreign												Accumulated
	Net Unrealized			Currency									Noncon-			Other
	Gains (Losses)			Translation						Tax			trolling			Comprehensive
	on Securities			Adjustment			Other (a)			Effects			Interests			Income (Loss)
Balance at December 31, 2009	$	258	(b)	$	1		$	(13	)	$	(86	)	$	3		$	163	(b)
Unrealized holding gains on securities arising during the period		758			—			—			(265	)		(7	)		486
Realized gains included in net income		(72	)		—			—			25			1			(46	)
Foreign currency translation gains		—			9			—			—			(2	)		7
Other		(6	)		—			1			2			—			(3	)


Balance at September 30, 2010	$	938	(b)	$	10		$	(12	)	$	(324	)	$	(5	)	$	607	(b)


Balance at December 31, 2008	$	(1,058	)	$	(18	)	$	(11	)	$	374		$	10		$	(703	)
Cumulative effect of accounting change		(27	)		—			—			10			—			(17	)
Unrealized holding losses on securities arising during the period		1,266			—			—			(442	)		(8	)		816
Realized losses included in net income		17			—			—			(7	)		1			11
Foreign currency translation gains		—			15			—			—			(1	)		14
Other		—			—			1			—			—			1


Balance at September 30, 2009	$	198		$	(3	)	$	(10	)	$	(65	)	$	2		$	122


(a)		Net unrealized pension and other postretirement plan benefits.

(b)		Includes $35 million at September 30, 2010, and $98 million at December 31, 2009 in net pretax unrealized losses ($24 million and $63 million net of tax) related to securities for which only the credit portion of an other-than-temporary impairment has been recorded in earnings.

Stock Based Compensation Under AFG’s Stock Incentive Plan, 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 2010, AFG issued 175,282 shares of restricted Common Stock (fair value of $24.83 per share) and granted stock options for 1.1 million shares of Common Stock (at an average exercise price of $24.83) under the Stock Incentive Plan. In addition, AFG issued 141,264 shares of Common Stock (fair value of $24.83 per share) in the first quarter of 2010 under its Annual Co-CEO Equity Bonus Plan.

AFG uses the Black-Scholes option pricing model to calculate the “fair value” of its option grants. Expected volatility is based on historical volatility over a period equal to the expected term. The expected term was estimated based on historical exercise patterns and post vesting cancellations. The fair value of options granted during 2010 was $8.90 per share based on the following assumptions: expected dividend yield — 2.2%; expected volatility — 39%; expected term — 7.5 years; risk-free rate — 3.2%.

Total compensation expense related to stock incentive plans of AFG and its subsidiaries was as follows: third quarter of 2010 and 2009 — $5 million and $4 million, respectively; nine months of 2010 and 2009 — $15 million and $14 million, respectively.

Income Taxes

9 Months Ended

Sep. 30, 2010

Income Taxes [Abstract]

Income Taxes

Income Taxes Operating income before income taxes includes $4 million in the third quarter of 2010 and $37 million for the first nine months of 2010 in non-deductible losses of managed investment entities attributable to noncontrolling interests, thereby increasing AFG’s effective tax rate.

As discussed in Note K - “Income Taxes,” to AFG’s 2009 Form 10-K, AFG has several tax years for which there are ongoing disputes with the Internal Revenue Service (“IRS”). AFG filed a suit for refund in the U.S. District Court in Southern Ohio as a result of its dispute with the IRS regarding the calculation of tax reserves for certain annuity reserves pursuant to Actuarial Guideline 33. Oral arguments on joint motions for summary judgment were presented in June 2009. On March 15, 2010, the Court issued an Order denying both motions. On June 18, 2010, the Court issued a final judgment in favor of AFG. The IRS has appealed the decision. AFG’s liabilities for uncertain tax positions will not be adjusted until the case is “effectively settled.” Resolution of the case could result in a decrease in the liability for unrecognized tax benefits by up to $36 million and a decrease in related accrued interest of $12 million. These amounts do not include tax and interest paid to the IRS in 2005 and 2006, for which the suit was filed, totaling $17 million.

In the third quarter of 2010, AFG increased its liability for uncertain tax positions by $19 million, exclusive of interest, to reflect uncertainty as to the timing of tax return inclusion of income related to certain securities. Because the ultimate recognition of income with respect to these securities is highly certain, the recording of this liability resulted in an offsetting reduction in AFG’s deferred tax liability. Accordingly, the ultimate resolution of this item will not impact AFG’s annual effective tax rate but could accelerate the payment of taxes.

Contingencies

9 Months Ended

Sep. 30, 2010

Contingencies [Abstract]

Contingencies

Contingencies There have been no significant changes to the matters discussed and referred to in Note M — “Contingencies” of AFG’s 2009 Annual Report on Form 10-K covering property and casualty insurance reserves for claims related to environmental exposures, asbestos and other mass tort claims as well as environmental and occupational injury and disease claims of former subsidiary railroad and manufacturing operations.

Condensed Consolidating Information

9 Months Ended

Sep. 30, 2010

Condensed Consolidating Information [Abstract]

Condensed Consolidating Information

Condensed Consolidating Information AFG has guaranteed all of the outstanding debt of Great American Financial Resources, Inc. (“GAFRI”) and GAFRI’s wholly-owned subsidiary, AAG Holding Company, Inc. In addition, GAFRI guarantees AAG Holding’s public debt. The AFG and GAFRI guarantees are full and unconditional and joint and several. Condensed consolidating financial statements for AFG are as follows:

CONDENSED CONSOLIDATING BALANCE SHEET
(In millions)


					AAG		All Other		Consol.
	AFG		GAFRI		Holding		Subs		Entries			Consolidated
September 30, 2010

Assets:
Cash and investments	$	379	$	34	$	—	$	22,312	$	(2	)	$	22,723
Recoverables from reinsurers and prepaid reinsurance premiums		—		—		—		3,485		—			3,485
Agents’ balances and premiums receivable		—		—		—		773		—			773
Deferred policy acquisition costs		—		—		—		1,154		—			1,154
Assets of managed investment entities		—		—		—		2,491		—			2,491
Other assets		29		6		5		1,984		(11	)		2,013
Investment in subsidiaries and affiliates		5,007		1,952		2,050		677		(9,686	)		—


Total assets	$	5,415	$	1,992	$	2,055	$	32,876	$	(9,699	)	$	32,639


Liabilities and Equity:
Unpaid losses, loss adjustment expenses and unearned premiums	$	—	$	—	$	—	$	8,177	$	—		$	8,177
Annuity, life, accident and health benefits and reserves		—		—		—		14,120		(1	)		14,119
Liabilities of managed investment entities		—		—		—		2,271		—			2,271
Long-term debt		600		1		219		134		—			954
Other liabilities		238		18		111		2,277		(255	)		2,389

		838		19		330		26,979		(256	)		27,910
Total shareholders’ equity		4,577		1,973		1,725		5,745		(9,443	)		4,577
Noncontrolling interests		—		—		—		152		—			152


Total liabilities and equity	$	5,415	$	1,992	$	2,055	$	32,876	$	(9,699	)	$	32,639


December 31, 2009

Assets:
Cash and investments	$	225	$	33	$	—	$	19,535	$	(2	)	$	19,791
Recoverables from reinsurers and prepaid reinsurance premiums		—		—		—		3,660		—			3,660
Agents’ balances and premiums receivable		—		—		—		554		—			554
Deferred policy acquisition costs		—		—		—		1,570		—			1,570
Other assets		14		5		6		2,063		20			2,108
Investment in subsidiaries and affiliates		4,189		1,539		1,624		687		(8,039	)		—


Total assets	$	4,428	$	1,577	$	1,630	$	28,069	$	(8,021	)	$	27,683


Liabilities and Equity:
Unpaid losses, loss adjustment expenses and unearned premiums	$	—	$	—	$	—	$	7,980	$	—		$	7,980
Annuity, life, accident and health benefits and reserves		—		—		—		12,939		(1	)		12,938
Long-term debt		468		1		219		140		—			828
Other liabilities		179		21		110		1,876		(168	)		2,018

		647		22		329		22,935		(169	)		23,764
Total shareholders’ equity		3,781		1,555		1,301		4,996		(7,852	)		3,781
Noncontrolling interests		—		—		—		138		—			138


Total liabilities and equity	$	4,428	$	1,577	$	1,630	$	28,069	$	(8,021	)	$	27,683

CONDENSED CONSOLIDATING STATEMENT OF EARNINGS
(In millions)


FOR THE THREE MONTHS ENDED						AAG		All Other			Consol.
SEPTEMBER 30, 2010	AFG		GAFRI			Holding		Subs			Entries			Consolidated

Revenues:
Property and casualty insurance premiums	$	—	$	—		$	—	$	736		$	—		$	736
Life, accident and health premiums		—		—			—		112			—			112
Realized gains (losses)		—		(2	)		—		37			—			35
Income of managed investment entities		—		—			—		19			—			19
Investment and other income		3		3			—		352			(5	)		353
Equity in earnings of subsidiaries		242		48			76		—			(366	)		—

		245		49			76		1,256			(371	)		1,255

Costs and Expenses:
Insurance benefits and expenses		—		—			—		919			—			919
Interest charges on borrowed money		15		—			6		6			(6	)		21
Expenses of managed investment entities		—		—			—		15			—			15
Other expenses		16		6			2		68			—			92

		31		6			8		1,008			(6	)		1,047


Operating earnings before income taxes		214		43			68		248			(365	)		208
Provision (credit) for income taxes		82		21			22		97			(140	)		82


Net earnings, including noncontrolling interests		132		22			46		151			(225	)		126
Less: Net earnings (loss) attributable to noncontrolling interests		—		—			—		(6	)		—			(6	)


Net Earnings Attributable to Shareholders	$	132	$	22		$	46	$	157		$	(225	)	$	132


FOR THE THREE MONTHS ENDED						AAG		All Other		Consol.
SEPTEMBER 30, 2009	AFG		GAFRI			Holding		Subs		Entries			Consolidated

Revenues:
Property and casualty insurance premiums	$	—	$	—		$	—	$	622	$	—		$	622
Life, accident and health premiums		—		—			—		112		—			112
Realized gains (losses)		—		(6	)		—		10		—			4
Investment and other income		4		8			—		349		(6	)		355
Equity in earnings of subsidiaries		226		31			41		—		(298	)		—

		230		33			41		1,093		(304	)		1,093

Costs and Expenses:
Insurance benefits and expenses		—		—			—		750		—			750
Interest charges on borrowed money		15		—			6		4		(6	)		19
Other expenses		16		4			2		99		—			121

		31		4			8		853		(6	)		890


Operating earnings before income taxes		199		29			33		240		(298	)		203
Provision (credit) for income taxes		72		9			10		80		(99	)		72


Net earnings, including noncontrolling interests		127		20			23		160		(199	)		131
Less: Net earnings (loss) attributable to noncontrolling interests		—		—			—		4		—			4


Net Earnings Attributable to Shareholders	$	127	$	20		$	23	$	156	$	(199	)	$	127

CONDENSED CONSOLIDATING STATEMENT OF EARNINGS
(In millions)


FOR THE NINE MONTHS ENDED						AAG		All Other			Consol.
SEPTEMBER 30, 2010	AFG		GAFRI			Holding		Subs			Entries			Consolidated

Revenues:
Property and casualty insurance premiums	$	—	$	—		$	—	$	1,887		$	—		$	1,887
Life, accident and health premiums		—		—			—		340			—			340
Realized gains (losses)		—		(2	)		—		52			—			50
Income of managed investment entities		—		—			—		24			—			24
Investment and other income		3		8			—		1,045			(16	)		1,040
Equity in earnings of subsidiaries		621		129			172		—			(922	)		—

		624		135			172		3,348			(938	)		3,341

Costs and Expenses:
Insurance benefits and expenses		—		—			—		2,454			—			2,454
Interest charges on borrowed money		42		—			19		13			(17	)		57
Expenses of managed investment entities		—		—			—		38			—			38
Other expenses		37		13			5		224			—			279

		79		13			24		2,729			(17	)		2,828


Operating earnings before income taxes		545		122			148		619			(921	)		513
Provision (credit) for income taxes		199		49			50		236			(335	)		199


Net earnings, including noncontrolling interests		346		73			98		383			(586	)		314
Less: Net earnings (loss) attributable to noncontrolling interests		—		—			—		(32	)		—			(32	)


Net Earnings Attributable to Shareholders	$	346	$	73		$	98	$	415		$	(586	)	$	346


FOR THE NINE MONTHS ENDED						AAG		All Other			Consol.
SEPTEMBER 30, 2009	AFG		GAFRI			Holding		Subs			Entries			Consolidated

Revenues:
Property and casualty insurance premiums	$	—	$	—		$	—	$	1,809		$	—		$	1,809
Life, accident and health premiums		—		—			—		331			—			331
Realized gains (losses)		—		(6	)		—		(16	)		—			(22	)
Investment and other income		3		7			—		1,084			(17	)		1,077
Equity in earnings of subsidiaries		629		61			94		—			(784	)		—

		632		62			94		3,208			(801	)		3,195

Costs and Expenses:
Insurance benefits and expenses		—		—			—		2,216			—			2,216
Interest charges on borrowed money		36		—			19		10			(17	)		48
Other expenses		34		13			4		304			(1	)		354

		70		13			23		2,530			(18	)		2,618


Operating earnings before income taxes		562		49			71		678			(783	)		577
Provision (credit) for income taxes		204		14			21		233			(268	)		204


Net earnings, including noncontrolling interests		358		35			50		445			(515	)		373
Less: Net earnings (loss) attributable to noncontrolling interests		—		—			—		15			—			15


Net Earnings Attributable to Shareholders	$	358	$	35		$	50	$	430		$	(515	)	$	358

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(In millions)


FOR THE NINE MONTHS ENDED							AAG			All Other			Consol.
SEPTEMBER 30, 2010	AFG			GAFRI			Holding			Subs			Entries			Consolidated

Operating Activities:
Net earnings, including noncontrolling interests	$	346		$	73		$	98		$	383		$	(586	)	$	314
Adjustments:
Equity in net earnings of subsidiaries		(395	)		(78	)		(114	)		—			587			—
Dividends from subsidiaries		359			—			16			—			(375	)		—
Other operating activities, net		(52	)		(2	)		4			518			(1	)		467

Net cash provided by (used in) operating activities		258			(7	)		4			901			(375	)		781


Investing Activities:
Purchases of investments, property and equipment		(6	)		—			—			(4,119	)		—			(4,125	)
Purchase of subsidiaries		—			—			—			(128	)		—			(128	)
Capital contributions to subsidiaries		(12	)		(2	)		(5	)		—			19			—
Proceeds from maturities and redemptions of investments		—			6			—			1,503			—			1,509
Proceeds from sales of investments, property and equipment		—			—			—			1,228			—			1,228
Managed investment entities:
Purchases of investments		—			—			—			(617	)		—			(617	)
Proceeds from sales and redemptions of investments		—			—			—			658			—			658
Other investing activities, net		—			—			—			101			—			101

Net cash provided by (used in) investing activities		(18	)		4			(5	)		(1,374	)		19			(1,374	)


Financing Activities:
Annuity receipts		—			—			—			1,661			—			1,661
Annuity surrenders, benefits and withdrawals		—			—			—			(914	)		—			(914	)
Additional long-term borrowings		128			—			—			30			—			158
Reductions of long-term debt		—			—			—			(36	)		—			(36	)
Managed investment entities’ retirement of liabilities		—			—			—			(42	)		—			(42	)
Issuances of Common Stock		26			—			—			1			—			27
Capital contributions from parent		—			12			1			6			(19	)		—
Repurchases of Common Stock		(201	)		—			—			—			—			(201	)
Cash dividends paid		(46	)		—			—			(375	)		375			(46	)
Other financing activities, net		(1	)		—			—			7			—			6

Net cash provided by (used in) financing activities		(94	)		12			1			338			356			613


Net change in cash and cash equivalents		146			9			—			(135	)		—			20
Cash and cash equivalents at beginning of period		197			12			—			911			—			1,120


Cash and cash equivalents at end of period	$	343		$	21		$	—		$	776		$	—		$	1,140

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(In millions)


FOR THE NINE MONTHS ENDED							AAG			All Other			Consol.
SEPTEMBER 30, 2009	AFG			GAFRI			Holding			Subs			Entries			Consolidated

Operating Activities:
Net earnings including noncontrolling interests	$	358		$	35		$	50		$	445		$	(515	)	$	373
Adjustments:
Equity in net earnings of subsidiaries		(407	)		(43	)		(66	)		—			516			—
Dividends from subsidiaries		284			3			—			—			(287	)		—
Other operating activities, net		16			2			(3	)		374			(1	)		388

Net cash provided by (used in) operating activities		251			(3	)		(19	)		819			(287	)		761


Investing Activities:
Purchases of investments, property and equipment		(9	)		—			—			(3,314	)		—			(3,323	)
Capital contributions to subsidiaries		(129	)		(119	)		(98	)		—			346			—
Proceeds from maturities and redemptions of investments		—			—			—			1,394			—			1,394
Proceeds from sales of investments, property and equipment		8			1			—			1,537			—			1,546
Other investing activities, net		—			1			—			(23	)		—			(22	)

Net cash provided by (used in) investing activities		(130	)		(117	)		(98	)		(406	)		346			(405	)


Financing Activities:
Annuity receipts		—			—			—			1,092			—			1,092
Annuity surrenders, benefits and withdrawals		—			—			—			(986	)		—			(986	)
Additional long-term borrowings		467			—			—			59			—			526
Reductions of long-term debt		(676	)		—			—			(6	)		—			(682	)
Issuances of Common Stock		12			—			—			1			—			13
Capital contributions from parent		—			128			118			100			(346	)		—
Cash dividends paid		(45	)		—			—			(287	)		287			(45	)
Other financing activities, net		—			—			—			(103	)		—			(103	)

Net cash provided by (used in) financing activities		(242	)		128			118			(130	)		(59	)		(185	)


Net change in cash and cash equivalents		(121	)		8			1			283			—			171
Cash and cash equivalents at beginning of period		160			2			—			1,102			—			1,264


Cash and cash equivalents at end of period	$	39		$	10		$	1		$	1,385		$	—		$	1,435