UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 28, 2014

 

 

AMERICAN FINANCIAL GROUP, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Ohio		1-13653		31-1544320
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

301 East Fourth Street, Cincinnati, OH		45202
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code 513-579-2121

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Section 2 - Financial Information

 

Item 2.02

Results Of Operations And Financial Condition.

Reference is made to the press release of American Financial Group, Inc. (the “Company”) relating to the announcement of the Company’s results of operations for the second quarter of 2014 and the availability of the Investor Supplement on the Company’s website. The press release was issued on July 28, 2014. A copy of the press release is attached to this Form 8-K as Exhibit 99.1 and a copy of the Investor Supplement is attached as Exhibit 99.2 and are incorporated herein by reference.

The information contained herein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 as amended (the “Exchange Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

 

(a)

Financial statements of business acquired. Not applicable.

 

(b)

Pro forma financial information. Not applicable.

 

(c)

Shell company transactions. Not applicable

 

(d)

Exhibits

 

Exhibit No.		Description
99.1		Earnings Release dated July 28, 2014, reporting American Financial Group Inc. results for the quarter ended June 30, 2014.
99.2		Investor Supplement – Second Quarter 2014

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				AMERICAN FINANCIAL GROUP, INC.
Date: July 29, 2014
				By:		/s/ Karl J. Grafe
						Karl J. Grafe
						Vice President

 

3

Exhibit 99.1

 

American Financial Group, Inc. Announces Second Quarter Results

 

•

Core net operating earnings $1.07 per share, up 11% from the comparable 2013 period

 

•

Adjusted book value $47.95 per share at June 30, 2014; up 4% since year end

 

•

Full year 2014 core net operating earnings guidance unchanged at $4.50 - $4.90 per share

Cincinnati, Ohio – July 28, 2014 – American Financial Group, Inc. (NYSE/NASDAQ: AFG) today reported 2014 second quarter net earnings attributable to shareholders of $106 million ($1.15 per share) compared to $110 million ($1.20 per share) for the 2013 second quarter. After-tax net realized gains were $7 million ($0.08 per share) in the second quarter of 2014 compared to $26 million ($0.28 per share) in the comparable prior year period. Book value per share, excluding appropriated retained earnings and unrealized gains on fixed maturities, increased by $1.16 to $47.95 per share during the second quarter of 2014. Annualized return on equity was 10.3% and 11.5% for the second quarters of 2014 and 2013, respectively.

Core net operating earnings were $99 million ($1.07 per share) for the 2014 second quarter, compared to $87 million ($0.96 per share) in the 2013 second quarter. Higher operating income in our Specialty Property and Casualty (“P&C”) insurance operations as well as slightly higher earnings in our Annuity segment contributed to these results. Core net operating earnings for the second quarters of 2014 and 2013 generated annualized core returns on equity of 9.6% and 9.2%, respectively.

During the second quarter of 2014, AFG repurchased approximately 345,000 shares of common stock for $20 million (average price per share of $57.95).

AFG’s net earnings attributable to shareholders, determined in accordance with U.S. generally accepted accounting principles (“GAAP”), include certain items that may not be indicative of its ongoing core operations. The following table identifies such items and reconciles net earnings attributable to shareholders to core net operating earnings, a non-GAAP financial measure that AFG believes is a useful tool for investors and analysts in analyzing ongoing operating trends.

 

In millions, except per share amounts		Three months ended June 30,								Six months ended June 30,
		2014				2013				2014				2013
Components of net earnings attributable to shareholders:
Core net operating earnings(a)		$	99			$	87			$	190			$	171
Realized gains			7				26				19				62
ELNY guaranty fund assessments			—				(3	)			—				(3	)
Net earnings attributable to shareholders		$	106			$	110			$	209			$	230
Components of Earnings Per Share:
Core net operating earnings		$	1.07			$	0.96			$	2.07			$	1.88
Realized gains			0.08				0.28				0.21				0.68
ELNY guaranty fund assessments			—				(0.04	)			—				(0.04	)
Diluted Earnings Per Share		$	1.15			$	1.20			$	2.28			$	2.52

Footnote (a) is contained in the accompanying Notes to Financial Schedules at the end of this release.

 

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Carl H. Lindner III and S. Craig Lindner, AFG’s Co-Chief Executive Officers, issued this statement: “We were pleased to see AFG’s second quarter core operating earnings per share increase by 11% year over year as a result of solid results in our specialty P&C group and continued strong earnings in our annuity segment.

“At June 30, 2014, AFG had approximately $740 million of excess capital (including parent company cash of approximately $240 million). We will make opportunistic share repurchases and return capital to shareholders through dividends. We will also continue to invest excess capital when we see potential for healthy, profitable organic growth and through acquisitions and start-ups that meet our target return thresholds.

“Based on results for the first six months of 2014, we continue to expect core net operating earnings in 2014 to be between $4.50 and $4.90 per share. Our core earnings per share guidance excludes non-core items such as realized gains and losses, as well as other significant items that may not be indicative of ongoing operations.”

Specialty Property and Casualty Insurance Operations

The P&C specialty insurance operations generated an underwriting profit of $29 million in the 2014 second quarter, compared to $21 million in the second quarter of 2013. The combined ratio was 96.9%, a slight improvement from the comparable prior year period. Improved year-over-year underwriting results in our property and transportation group and lower catastrophe losses were partially offset by lower underwriting profit in our specialty casualty group. Catastrophe losses were $10 million (1.1 points on the combined ratio), compared to $19 million (2.6 points) in the 2013 second quarter.

Gross and net written premiums were up 24% and 33%, respectively, for the second quarter of 2014, when compared to the second quarter of 2013. The 2014 results include premiums from Summit, AFG’s specialty workers’ compensation subsidiary, from the date of acquisition on April 1, 2014. Excluding Summit premiums, growth in gross and net written premiums was 11% and 15%, respectively, due primarily to strong premium growth in other businesses within our specialty casualty group.

Further details about AFG’s specialty P&C operations may be found in the accompanying schedules.

The Property and Transportation Group reported an underwriting loss of $18 million in the second quarter of 2014, compared to an underwriting loss of $31 million in the second quarter of 2013. The 2014 second quarter underwriting loss was primarily due to adverse prior year reserve development in our National Interstate subsidiary. Improved accident year results and lower catastrophe losses in the second quarter of 2014 more than offset higher adverse prior year reserve development. Catastrophe losses were $8 million for this group during the second quarter of 2014. By comparison, catastrophe losses for the second quarter of 2013 were $18 million.

Gross and net written premiums for the second quarter of 2014 were 10% and 8% higher, respectively, than the comparable 2013 period. Crop premiums reported in the second quarter of 2014 are consistent with average historical results, whereas crop premiums reported in the second quarter of 2013 were lower than historical trends due to delayed acreage reporting from insureds as a result of excess moisture and late planting of corn and soybean crops. Excluding our crop insurance business, gross written premiums increased by 5% and net written premiums increased by 4%. Pricing in this group was up approximately 6% on average for the quarter, and includes a 9% increase in National Interstate’s renewal rates.

The Specialty Casualty Group reported an underwriting profit of $30 million in the second quarter of 2014, compared to $32 million in the second quarter of 2013. Higher underwriting profitability in our workers’ compensation businesses was offset by lower underwriting profits in our international and

 

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general liability lines of business. Additionally, lower favorable reserve development year-over-year in our excess and surplus lines and executive liability businesses impacted these results.

Gross and net written premiums for the second quarter of 2014 were up 49% and 76%, respectively, when compared to the second quarter of 2013, and include Summit’s results since April 1, 2014. Excluding premiums from Summit, gross and net premiums grew by 18% and 29%, respectively. As discussed in the first quarter of 2014, net written premiums were impacted by a 2013 timing difference in reinsurance ceded in our international businesses. Excluding the premiums from Summit and the impact of the timing change, net written premiums in this group grew 19%. While all businesses in this group reported growth, our workers’ compensation, excess and surplus lines, and targeted markets businesses were primary drivers of the higher premiums. New business opportunities, increased exposures on existing accounts and sustained pricing increases have driven the growth in our workers’ compensation businesses. Organic growth, coupled with the benefit from rate increases over multiple quarters have contributed to higher premiums in our excess and surplus businesses. Pricing in this group was up approximately 3% on average for the quarter.

The Specialty Financial Group reported underwriting profit of $15 million in both the second quarters of 2014 and 2013. Most of the businesses in this group achieved excellent underwriting margins during the second quarter of 2014.

Gross written premiums were down 5%, while net written premiums were up 3% during the 2014 second quarter when compared to the same 2013 period. Growth in gross written premiums was tempered by the October 2013 sale of a service contract business, which ceded all of its premiums under reinsurance contracts. Net written premiums increased primarily as a result of growth in our fidelity/crime and surety businesses, partially offset by lower premiums in lender-placed mortgage property insurance offered by our financial institutions business. Renewal pricing in this group was down approximately 1% for the second quarter.

Carl Lindner III stated: “Our specialty P&C businesses produced solid results overall during the second quarter, with continued strong growth in our specialty casualty group. We are excited to see growth in several of our new niches and the opportunistic expansion of existing businesses. I am disappointed, however, with the poor results reported during the quarter in our property and transportation group, particularly within our 51%-owned National Interstate subsidiary. We remain committed to our culture of underwriting discipline and achieving the necessary rate increases to strengthen the underwriting profitability of this group overall.

“Based on premium growth across our P&C book of business during the first six months of 2014, we continue to expect net written premium growth for the full year of 2014 to be between 17% and 21%. We have adjusted our premium guidance up in our specialty casualty group, and lowered expectations slightly in our property and transportation and specialty financial groups. This guidance reflects the inclusion of nine months of Summit premiums. Overall renewal pricing was up about 3% during the quarter. Our objective remains to achieve an increase of 3% to 4% in the specialty group’s overall average renewal rates in 2014.”

Annuity Segment

AFG’s annuity operations contributed $84 million in pretax core earnings in the second quarter of 2014 compared to $82 million in the second quarter of 2013, an increase of $2 million or 2%. AFG’s 2014 earnings continue to benefit from growth in annuity assets. While AFG’s average annuity investments grew nearly 20% over the last year, the impact of this growth was offset by (i) the runoff of higher yielding investments and (ii) the impact that fluctuations in interest rates in the second quarters of 2014 and 2013 had on the accounting for fixed-indexed annuities.

 

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In the second quarter of 2014, the interest rate index used by AFG to discount certain fixed-indexed annuity reserves generally decreased 15 to 25 basis points versus AFG’s assumption that interest rates would rise; this difference had a negative impact on AFG’s earnings due to the fair value accounting prescribed for fixed-indexed annuities. Conversely, in the second quarter of 2013, the interest rate index used by AFG generally increased 70 to 80 basis points, which was much higher than previously assumed by AFG; this difference between actual and previously assumed interest rates resulted in a favorable impact on AFG’s earnings.

As a result of the above, AFG’s net spread earned was 1.46% in the second quarter of 2014, a decrease of 19 basis points from the comparable previous year period. See the accompanying schedules for additional information about spreads for AFG’s fixed annuity operations.

The Annuity segment reported statutory premiums of $949 million in the second quarter of 2014, an increase of 10% from the comparable prior year period, but slightly lower than the first quarter of 2014. The year-over-year increase was largely the result of growth in sales of fixed-indexed annuities in the financial institutions market.

Craig Lindner stated, “I continue to be pleased with our strong annuity earnings. Based on the results through the first six months of 2014, assuming no significant change in interest rates or the stock market, we continue to expect that the full year 2014 core pretax annuity operating earnings will be flat compared to the $328 million reported for the full year of 2013. Significant changes in interest rates and/or the stock market could lead to significant positive or negative impacts on the Annuity segment’s results.”

In addressing premiums, Mr. Lindner said, “The second half of last year was a very strong period of fixed and fixed-indexed annuity sales for both AFG and the industry, which we attribute primarily to the rising interest rate environment in 2013. That sales pace has declined in the first six months of 2014, which we attribute primarily to the decreasing interest rate environment this year. As a result, based on information currently available, we now expect that premiums for the full year of 2014 will be 5% to 10% lower than the $4 billion achieved for the full year in 2013.”

More information about premiums and the results of operations for our Annuity segment may be found in our Quarterly Investor Supplement, which is posted on our website.

Run-off Long-Term Care and Life Segment

AFG’s run-off long-term care and life segment incurred a pretax core operating loss of $2 million in the second quarter of 2014, the same amount as reported in the comparable prior year period. While AFG’s run-off long-term care business essentially broke even in the first half of 2014, AFG’s run-off life segment experienced worse than expected mortality, after reinsurance.

Investments

AFG recorded second quarter 2014 net realized gains on securities of $7 million after tax and after deferred acquisition costs (DAC), compared to $26 million in the comparable prior year period. Unrealized gains on fixed maturities were $656 million, after tax, after DAC at June 30, 2014, an increase of $215 million since year-end. Our portfolio continues to be high quality, with 86% of our fixed maturity portfolio rated investment grade and 97% with a National Association of Insurance Commissioners’ designation of NAIC 1 or 2, its highest two categories.

Second quarter 2014 P&C net investment income was approximately 17% higher than the comparable 2013 period, reflecting the investment of cash received in connection with the Summit acquisition.

 

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More information about the components of our investment portfolio may be found in our Quarterly Investor Supplement, which is posted on our website.

About American Financial Group, Inc.

American Financial Group is an insurance holding company, based in Cincinnati, Ohio with assets of approximately $45 billion. Through the operations of Great American Insurance Group, AFG is engaged primarily in property and casualty insurance, focusing on specialized commercial products for businesses, and in the sale of fixed and fixed-indexed annuities in the retail, financial institutions and education markets. Great American Insurance Group’s roots go back to 1872 with the founding of its flagship company, Great American Insurance Company.

Forward Looking Statements

This press release contains certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements in this press release not dealing with historical results are forward-looking and are based on estimates, assumptions and projections. Examples of such forward-looking statements include statements relating to: the Company’s expectations concerning market and other conditions and their effect on future premiums, revenues, earnings and investment activities; recoverability of asset values; expected losses and the adequacy of reserves for long-term care, asbestos, environmental pollution and mass tort claims; rate changes; and improved loss experience.

Actual results and/or financial condition could differ materially from those contained in or implied by such forward-looking statements for a variety of reasons including but not limited to: changes in financial, political and economic conditions, including changes in interest and inflation rates, currency fluctuations and extended economic recessions or expansions in the U.S. and/or abroad; performance of securities markets; AFG’s ability to estimate accurately the likelihood, magnitude and timing of any losses in connection with investments in the non-agency residential mortgage market; new legislation or declines in credit quality or credit ratings that could have a material impact on the valuation of securities in AFG’s investment portfolio; the availability of capital; regulatory actions (including changes in statutory accounting rules); changes in the legal environment affecting AFG or its customers; tax law and accounting changes; levels of natural catastrophes and severe weather, terrorist activities (including any nuclear, biological, chemical or radiological events), incidents of war or losses resulting from civil unrest and other major losses; development of insurance loss reserves and establishment of other reserves, particularly with respect to amounts associated with asbestos and environmental claims and AFG’s run-off long-term care business; availability of reinsurance and ability of reinsurers to pay their obligations; trends in persistency, mortality and morbidity; competitive pressures, including those in the annuity distribution channels, the ability to obtain adequate rates and policy terms; changes in AFG’s credit ratings or the financial strength ratings assigned by major ratings agencies to our operating subsidiaries; and other factors identified in our filings with the Securities and Exchange Commission.

The forward-looking statements herein are made only as of the date of this press release. The Company assumes no obligation to publicly update any forward-looking statements.

Conference Call

The Company will hold a conference call to discuss 2014 second quarter results at 11:30 a.m. (ET) tomorrow, Tuesday, July 29, 2014. Toll-free telephone access will be available by dialing 1-877-459-8719 (international dial-in 424-276-6843). The conference ID for the live call is 67319962. Please dial in five to ten minutes prior to the scheduled start time of the call.

 

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A replay will be available two hours following the completion of the call and will remain available until 11:59 p.m. (ET) on August 5, 2014. To listen to the replay, dial 1-855-859-2056 (international dial-in 404-537-3406) and provide the conference ID 67319962.

The conference call and accompanying webcast slides will also be broadcast live over the Internet. To listen to the call via the Internet, go to the Investor Relations page on AFG’s website, www.AFGinc.com, and follow the instructions at the Webcasts and Presentations link.

The archived webcast will be available immediately after the call via the same link on the Investor Relations page until August 5, 2014 at 11:59 p.m. (ET). An archived audio MP3 file will be available within 24 hours of the call.

Contact:

Diane P. Weidner

Asst. Vice President – Investor Relations

(513) 369-5713

Websites:

www.AFGinc.com

www.GreatAmericanInsuranceGroup.com

# # #

(Financial summaries follow)

This earnings release and AFG’s Quarterly Investor Supplement are available in the Investor Relations section of AFG’s website: www.AFGinc.com.

 

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AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES

SUMMARY OF EARNINGS AND SELECTED BALANCE SHEET DATA

(In Millions, Except Per Share Data)

 

		Three months ended June 30,								Six months ended June 30,
		2014				2013				2014				2013
Revenues
P&C insurance net earned premiums		$	931			$	709			$	1,685			$	1,396
Life, accident & health net earned premiums			27				28				55				58
Net investment income			379				332				740				658
Realized gains			12				41				31				98
Income (loss) of managed investment entities:
Investment income			27				32				55				66
Loss on change in fair value of assets/liabilities			(10	)			(28	)			(10	)			(36	)
Other income			26				25				47				47
Total revenues			1,392				1,139				2,603				2,287
Costs and expenses
P&C insurance losses & expenses			902				690				1,598				1,334
Annuity, life, accident & health benefits & expenses			246				210				492				420
Interest charges on borrowed money			17				18				35				36
Expenses of managed investment entities			21				24				41				46
Other expenses			76				71				146				150
Total costs and expenses			1,262				1,013				2,312				1,986
Earnings before income taxes			130				126				291				301
Provision for income taxes(b)			47				49				101				111
Net earnings including noncontrolling interests			83				77				190				190
Less: Net earnings (loss) attributable to noncontrolling interests			(23	)			(33	)			(19	)			(40	)
Net earnings attributable to shareholders		$	106			$	110			$	209			$	230
Diluted Earnings per Common Share		$	1.15			$	1.20			$	2.28			$	2.52
Average number of diluted shares			91.6				91.5				91.6				91.3

 

Selected Balance Sheet Data:		June 30, 2014				December 31, 2013
Total cash and investments		$	34,843			$	31,313
Long-term debt		$	912			$	913
Shareholders’ equity(c)		$	4,954			$	4,550
Shareholders’ equity (excluding appropriated retained earnings and unrealized gains/losses on fixed maturities)(c)		$	4,298			$	4,109
Book Value Per Share:
Excluding appropriated retained earnings		$	55.27			$	50.83
Excluding appropriated retained earnings and unrealized gains/losses on fixed maturities		$	47.95			$	45.90
Common Shares Outstanding			89.6				89.5

Footnotes (b) and (c) are contained in the accompanying Notes to Financial Schedules at the end of this release.

 

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AMERICAN FINANCIAL GROUP, INC.

SPECIALTY P&C OPERATIONS

(Dollars in Millions)

 

		Three months ended June 30,								Pct. Change				Six months ended June 30,								Pct. Change
		2014				2013								2014				2013
Gross written premiums		$	1,291			$	1,041				24	%		$	2,315			$	1,966				18	%
Net written premiums		$	998			$	749				33	%		$	1,753			$	1,453				21	%
Ratios (GAAP):
Loss & LAE ratio			64.6	%			60.3	%							61.1	%			58.4	%
Underwriting expense ratio			32.3	%			36.7	%							33.6	%			36.6	%
Combined Ratio			96.9	%			97.0	%							94.7	%			95.0	%
Supplemental Information:(d)
Gross Written Premiums:
Property & Transportation		$	489			$	446				10	%		$	865			$	798				8	%
Specialty Casualty			655				440				49	%			1,162				870				34	%
Specialty Financial			147				155				(5	%)			288				298				(3	%)
		$	1,291			$	1,041				24	%		$	2,315			$	1,966				18	%
Net Written Premiums:
Property & Transportation		$	353			$	328				8	%		$	637			$	604				5	%
Specialty Casualty			499				283				76	%			830				578				44	%
Specialty Financial			120				117				3	%			236				230				3	%
Other			26				21				24	%			50				41				22	%
		$	998			$	749				33	%		$	1,753			$	1,453				21	%
Combined Ratio (GAAP):
Property & Transportation			105.5	%			110.3	%							102.0	%			103.5	%
Specialty Casualty			93.6	%			88.4	%							91.2	%			90.5	%
Specialty Financial			87.6	%			86.6	%							89.3	%			87.6	%
Aggregate Specialty Group			96.9	%			97.0	%							94.7	%			95.0	%

 

		Three months ended June 30,								Six months ended June 30,
		2014				2013				2014				2013
Reserve Development (Favorable)/Adverse:
Property & Transportation		$	22			$	3			$	18			$	(3	)
Specialty Casualty			(4	)			(22	)			(28	)			(38	)
Specialty Financial			(2	)			—				(3	)			(6	)
Other			(2	)			(5	)			(5	)			(10	)
		$	14			$	(24	)		$	(18	)		$	(57	)
Points on Combined Ratio:
Property & Transportation			6.6				1.2				2.9				(0.4	)
Specialty Casualty			(0.8	)			(8.0	)			(3.6	)			(7.1	)
Specialty Financial			(1.8	)			(0.7	)			(1.2	)			(2.8	)
Aggregate Specialty Group			1.4				(3.4	)			(1.1	)			(4.1	)

Footnote (d) is contained in the accompanying Notes to Financial Schedules at the end of this release

 

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AMERICAN FINANCIAL GROUP, INC.

ANNUITY SEGMENT

(Dollars in Millions)

Components of Statutory Premiums

 

		Three months ended June 30,								Pct. Change				Six months ended June 30,								Pct. Change
		2014				2013								2014				2013
Annuity Premiums:
Financial Institutions
Single Premium		$	459			$	287				60	%		$	939			$	481				95	%
Retail Single Premium			428				509				(16	%)			853				869				(2	%)
Education Market - 403(b)			49				52				(6	%)			99				107				(7	%)
Variable Annuities			13				13				—				25				28				(11	%)
Total Annuity Premiums		$	949			$	861				10	%		$	1,916			$	1,485				29	%
Annuity Premiums by Product Type:
Fixed-Indexed Annuities		$	787			$	661				19	%		$	1,559			$	1,097				42	%
Traditional Fixed Annuities			149				187				(20	%)			332				360				(8	%)
Variable Annuities			13				13				—				25				28				(11	%)
Total Annuity Premiums		$	949			$	861				10	%		$	1,916			$	1,485				29	%

Components of Core Operating Earnings Before Income Taxes

 

		Three months ended June 30,								Pct. Change				Six months ended June 30,								Pct. Change
		2014				2013								2014				2013
Revenues:
Net investment income		$	289			$	257				12	%		$	564			$	505				12	%
Other income			19				15				27	%			37				29				28	%
Total revenues			308				272				13	%			601				534				13	%
Costs and Expenses:
Annuity benefits			166				120				38	%			334				254				31	%
Acquisition expenses			37				48				(23	%)			68				79				(14	%)
Other expenses			21				22				(5	%)			42				43				(2	%)
Total costs and expenses			224				190				18	%			444				376				18	%
Core operating earnings before income taxes		$	84			$	82				2	%		$	157			$	158				(1	%)

Supplemental Fixed Annuity Information (excludes fixed annuity portion of variable annuity business)

 

		Three months ended June 30,												Six months ended June 30,
		2014				2013				Change*				2014				2013				Change*
Average Fixed Annuity Reserves		$	21,829			$	18,151				20	%		$	21,448			$	17,829				20	%
Net Interest Spread			2.92	%			3.02	%			(0.10	%)			2.87	%			3.00	%			(0.13	%)
Net Spread Earned			1.46	%			1.65	%			(0.19	%)			1.38	%			1.61	%			(0.23	%)

 

*	Calculated as a percentage change for dollars and an arithmetic difference for percentages.

 

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AMERICAN FINANCIAL GROUP, INC.

Notes to Financial Schedules

 

a)	Components of core net operating earnings (in millions):

 

		Three months ended June 30,								Six months ended June 30,
		2014				2013				2014				2013
Core Operating Earnings before Income Taxes:
P&C insurance segment		$	97			$	82			$	205			$	178
Annuity segment			84				82				157				158
Run-off long-term care and life segment			(2	)			(2	)			(4	)			(3	)
Interest & other corporate expense			(37	)			(39	)			(78	)			(84	)
Core operating earnings before income taxes			142				123				280				249
Related income taxes			43				36				90				78
Core net operating earnings		$	99			$	87			$	190			$	171

 

b)

Earnings before income taxes includes $18 million in non-deductible losses attributable to noncontrolling interests related to managed investment entities in both the second quarter and first six months of 2014 and $31 million and $42 million in the second quarter and first six months of 2013, respectively.

 

c)

Shareholders’ Equity at June 30, 2014 includes $656 million ($7.32 per share) in unrealized after-tax gains on fixed maturities and $31 million ($0.35 per share) of retained earnings appropriated to managed investment entities. Shareholder’s Equity at December 31, 2013 includes $441 million ($4.93 per share) in unrealized after-tax gains on fixed maturities and $49 million ($0.55 per share) of retained earnings appropriated to managed investment entities. The appropriated retained earnings will ultimately inure to the benefit of the debt holders of the investment entities managed by AFG.

 

d)	Supplemental Notes:

 

•

Property & Transportation includes primarily physical damage and liability coverage for buses, trucks and recreational vehicles, inland and ocean marine, agricultural-related products and other property coverages.

 

•

Specialty Casualty includes primarily excess and surplus, general liability, executive liability, professional liability, umbrella and excess liability, specialty coverages in targeted markets, customized programs for small to mid-sized businesses and workers’ compensation insurance.

 

•

Specialty Financial includes risk management insurance programs for leasing and financing institutions (including collateral and lender-placed mortgage property insurance), surety and fidelity products and trade credit insurance.

 

•

Other includes an internal reinsurance facility.

 

Page 10

Exhibit 99.2

 

		American Financial Group, Inc.
		Investor Supplement - Second Quarter 2014
		July 28, 2014
		American Financial Group, Inc.
		Corporate Headquarters
		Great American Insurance Group Tower
		301 E Fourth Street
		Cincinnati, OH 45202
		513 579 6739

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American Financial Group, Inc. Table of Contents - Investor Supplement - Second Quarter 2014

 

Section		Page
Table of Contents - Investor Supplement - Second Quarter 2014			2
Financial Highlights			3
Summary of Earnings			4
Earnings Per Share Summary			5
Property and Casualty Insurance Segment
Property and Casualty Insurance - Summary Underwriting Results (GAAP)			6
Specialty - Underwriting Results (GAAP)			7
Property and Transportation - Underwriting Results (GAAP)			8
Specialty Casualty - Underwriting Results (GAAP)			9
Specialty Financial - Underwriting Results (GAAP)			10
Other Specialty - Underwriting Results (GAAP)			11
Annuity Segment
Annuity Results of Operations (GAAP)			12
Net Spread on Fixed Annuities (GAAP)			13
Annuity Premiums (Statutory)			14
Fixed Annuity Benefits Accumulated (GAAP)			15
Consolidated Balance Sheet / Book Value / Debt
Consolidated Balance Sheet			16
Book Value Per Share and Price / Book Summary			17
Capitalization			18
Additional Supplemental Information			19
Consolidated Investment Supplement
Total Cash and Investments and Quarterly Net Investment Income			20
Fixed Maturities - By Security Type - AFG Consolidated			21
Fixed Maturities - By Security Type Portfolio			22
Fixed Maturities - Credit Rating and NAIC Designation			23
Mortgage-Backed Securities - AFG Consolidated			24
Mortgage-Backed Securities Portfolio			25
Mortgage-Backed Securities - Credit Rating and NAIC Designation			26

 

2

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American Financial Group, Inc. Financial Highlights (in millions, except per share information)

 

		Three Months Ended																				Six Months Ended
		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				06/30/14				06/30/13
Highlights
Core net operating earnings		$	99			$	91			$	117			$	97			$	87			$	190			$	171
Net earnings			106				103				158				83				110				209				230
Total assets			45,355				42,770				42,087				40,947				39,414				45,355				39,414
Adjusted shareholders’ equity (a)			4,298				4,191				4,109				4,048				3,978				4,298				3,978
Property and Casualty net written premiums			998				755				821				1,067				749				1,753				1,453
Annuity statutory premiums			949				967				1,381				1,167				861				1,916				1,485
Per share data
Core net operating earnings per share		$	1.07			$	1.00			$	1.28			$	1.06			$	0.96			$	2.07			$	1.88
Diluted earnings per share			1.15				1.13				1.73				0.92				1.20				2.28				2.52
Adjusted book value per share (a)			47.95				46.79				45.90				45.36				44.78				47.95				44.78
Cash dividends per common share			0.220				0.220				1.220				0.195				0.195				0.440				0.390
Financial ratios
Annualized core operating return on equity (b)			9.6	%			9.1	%			11.8	%			10.0	%			9.2	%			9.3	%			9.1	%
Annualized return on equity (b)			10.3	%			10.3	%			16.0	%			8.6	%			11.5	%			10.3	%			12.2	%
Property and Casualty combined ratio - Specialty:
Loss & LAE ratio			64.6	%			56.9	%			62.4	%			66.1	%			60.3	%			61.1	%			58.4	%
Underwriting expense ratio			32.3	%			35.3	%			28.9	%			27.4	%			36.7	%			33.6	%			36.6	%
Combined ratio - Specialty			96.9	%			92.2	%			91.3	%			93.5	%			97.0	%			94.7	%			95.0	%
Net spread on fixed annuities:
Net interest spread			2.92	%			2.81	%			2.86	%			2.89	%			3.02	%			2.87	%			3.00	%
Net spread earned			1.46	%			1.30	%			1.67	%			1.50	%			1.65	%			1.38	%			1.61	%

 

(a)	Excludes appropriated retained earnings and unrealized gains related to fixed maturity investments.

(b)	Excludes appropriated retained earnings and accumulated other comprehensive income.

 

3

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American Financial Group, Inc. Summary of Earnings ($ in millions)

 

		Three Months Ended																				Six Months Ended
		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				06/30/14				06/30/13
Property and Casualty Insurance
Underwriting profit		$	29			$	58			$	75			$	62			$	19			$	87			$	62
Net investment income			76				67				67				65				65				143				131
Other expense			(8	)			(17	)			(11	)			(14	)			(2	)			(25	)			(15	)
Property and Casualty Insurance operating earnings			97				108				131				113				82				205				178
Annuity earnings			84				73				92				78				82				157				158
Run-off Long-Term Care and Life losses			(2	)			(2	)			(3	)			(4	)			(2	)			(4	)			(3	)
Interest expense of parent holding companies			(16	)			(17	)			(17	)			(17	)			(17	)			(33	)			(34	)
Other expense			(21	)			(24	)			(28	)			(22	)			(22	)			(45	)			(50	)
Pre-tax core operating earnings			142				138				175				148				123				280				249
Income tax expense			43				47				58				51				36				90				78
Core net operating earnings			99				91				117				97				87				190				171
Non-core items, net of tax:
Realized gains			7				12				41				35				26				19				62
Significant A&E charges:
Property and Casualty Insurance run-off operations			—				—				—				(35	)			—				—				—
Former Railroad and Manufacturing operations			—				—				—				(14	)			—				—				—
ELNY guaranty fund assessments charge (a)			—				—				—				—				(3	)			—				(3	)
Net earnings		$	106			$	103			$	158			$	83			$	110			$	209			$	230

 

(a)	The ELNY guaranty fund assessments charge represent guaranty fund assessments in connection with the insolvency and liquidation of Executive Life Insurance Company of New York, an unaffiliated life insurance company.

 

4

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American Financial Group, Inc. Earnings Per Share Summary (in millions, except per share information)

 

		Three Months Ended																				Six Months Ended
		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				06/30/14				06/30/13
Core net operating earnings		$	99			$	91			$	117			$	97			$	87			$	190			$	171
Net earnings		$	106			$	103			$	158			$	83			$	110			$	209			$	230
Average number of diluted shares			91.593				91.621				91.438				91.014				91.472				91.607				91.260
Diluted earnings per share:
Core net operating earnings per share		$	1.07			$	1.00			$	1.28			$	1.06			$	0.96			$	2.07			$	1.88
Realized gains			0.08				0.13				0.45				0.40				0.28				0.21				0.68
Significant A&E charges:
Property and Casualty Insurance run-off operations			—				—				—				(0.39	)			—				—				—
Former Railroad and Manufacturing operations			—				—				—				(0.15	)			—				—				—
ELNY guaranty fund assessments charge (a)			—				—				—				—				(0.04	)			—				(0.04	)
Diluted earnings per share		$	1.15			$	1.13			$	1.73			$	0.92			$	1.20			$	2.28			$	2.52

 

(a)	The ELNY guaranty fund assessments charge represent guaranty fund assessments in connection with the insolvency and liquidation of Executive Life Insurance Company of New York, an unaffiliated life insurance company.

 

5

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American Financial Group, Inc. Property and Casualty Insurance - Summary Underwriting Results (GAAP) ($ in millions)

 

		Three Months Ended																				Six Months Ended
		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				06/30/14				06/30/13
Property and Transportation		$	(18	)		$	6			$	17			$	16			$	(31	)		$	(12	)		$	(21	)
Specialty Casualty			30				38				32				19				32				68				51
Specialty Financial			15				10				17				22				15				25				28
Other Specialty			2				5				9				5				5				7				11
Underwriting profit - Specialty			29				59				75				62				21				88				69
Other charges, included in loss and LAE			—				1				—				—				2				1				7
Underwriting profit - Core			29				58				75				62				19				87				62
Special A&E charges, included in loss and LAE			—				—				—				(54	)			—				—				—
Underwriting profit (loss) - Property and Casualty Insurance		$	29			$	58			$	75			$	8			$	19			$	87			$	62
Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium		$	—			$	—			$	—			$	(1	)		$	1			$	—			$	1
Catastrophe loss			10				12				1				2				18				22				28
Total current accident year catastrophe losses		$	10			$	12			$	1			$	1			$	19			$	22			$	29
Loss reserve development (favorable) / adverse		$	14			$	(31	)		$	(5	)		$	40			$	(22	)		$	(17	)		$	(50	)
Combined ratio:
Property and Transportation			105.5	%			98.1	%			95.8	%			97.1	%			110.3	%			102.0	%			103.5	%
Specialty Casualty			93.6	%			87.8	%			89.7	%			93.4	%			88.4	%			91.2	%			90.5	%
Specialty Financial			87.6	%			91.0	%			85.2	%			82.3	%			86.6	%			89.3	%			87.6	%
Other Specialty			89.0	%			79.9	%			60.4	%			70.7	%			74.0	%			84.6	%			72.6	%
Combined ratio - Specialty			96.9	%			92.2	%			91.3	%			93.5	%			97.0	%			94.7	%			95.0	%
Other core charges			0.0	%			0.0	%			0.1	%			(0.1	%)			0.2	%			0.0	%			0.5	%
Special A&E charges			0.0	%			0.0	%			0.0	%			5.7	%			0.0	%			0.1	%			0.0	%
Combined ratio			96.9	%			92.2	%			91.4	%			99.1	%			97.2	%			94.8	%			95.5	%
Loss and LAE components - property and casualty insurance
Current accident year, excluding catastrophe loss			62.1	%			59.4	%			62.8	%			67.4	%			61.1	%			60.9	%			60.4	%
Prior accident year development			1.4	%			(4.1	%)			(0.4	%)			4.2	%			(3.2	%)			(1.0	%)			(3.6	%)
Current accident year catastrophe loss			1.1	%			1.6	%			0.1	%			0.1	%			2.6	%			1.3	%			2.1	%
Loss and LAE ratio			64.6	%			56.9	%			62.5	%			71.7	%			60.5	%			61.2	%			58.9	%

 

6

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American Financial Group, Inc. Specialty - Underwriting Results (GAAP) ($ in millions)

 

		Three Months Ended																				Six Months Ended
		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				06/30/14				06/30/13
Gross written premiums		$	1,291			$	1,024			$	1,071			$	1,768			$	1,041			$	2,315			$	1,966
Ceded reinsurance premiums			(293	)			(269	)			(250	)			(701	)			(292	)			(562	)			(513	)
Net written premiums			998				755				821				1,067				749				1,753				1,453
Change in unearned premiums			(67	)			(1	)			38				(118	)			(40	)			(68	)			(57	)
Net earned premiums			931				754				859				949				709				1,685				1,396
Loss and LAE			602				428				537				626				428				1,030				816
Underwriting expense			300				267				247				261				260				567				511
Underwriting profit		$	29			$	59			$	75			$	62			$	21			$	88			$	69
Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium		$	—			$	—			$	—			$	(1	)		$	1			$	—			$	1
Catastrophe loss			10				12				1				2				18				22				28
Total current accident year catastrophe losses		$	10			$	12			$	1			$	1			$	19			$	22			$	29
Loss reserve development (favorable) / adverse		$	14			$	(32	)		$	(5	)		$	(13	)		$	(24	)		$	(18	)		$	(57	)
Combined ratio:
Loss and LAE ratio			64.6	%			56.9	%			62.4	%			66.1	%			60.3	%			61.1	%			58.4	%
Underwriting expense ratio			32.3	%			35.3	%			28.9	%			27.4	%			36.7	%			33.6	%			36.6	%
Combined ratio			96.9	%			92.2	%			91.3	%			93.5	%			97.0	%			94.7	%			95.0	%
Loss and LAE components:
Current accident year, excluding catastrophe loss			62.1	%			59.5	%			62.8	%			67.4	%			61.1	%			60.9	%			60.4	%
Prior accident year development			1.4	%			(4.2	%)			(0.5	%)			(1.4	%)			(3.4	%)			(1.1	%)			(4.1	%)
Current accident year catastrophe loss			1.1	%			1.6	%			0.1	%			0.1	%			2.6	%			1.3	%			2.1	%
Loss and LAE ratio			64.6	%			56.9	%			62.4	%			66.1	%			60.3	%			61.1	%			58.4	%

 

7

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American Financial Group, Inc. Property and Transportation - Underwriting Results (GAAP) ($ in millions)

 

		Three Months Ended																				Six Months Ended
		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				06/30/14				06/30/13
Gross written premiums		$	489			$	376			$	447			$	1,147			$	446			$	865			$	798
Ceded reinsurance premiums			(136	)			(92	)			(98	)			(553	)			(118	)			(228	)			(194	)
Net written premiums			353				284				349				594				328				637				604
Change in unearned premiums			(29	)			17				61				(77	)			(27	)			(12	)			(10	)
Net earned premiums			324				301				410				517				301				625				594
Loss and LAE			248				201				307				407				236				449				428
Underwriting expense			94				94				86				94				96				188				187
Underwriting profit (loss)		$	(18	)		$	6			$	17			$	16			$	(31	)		$	(12	)		$	(21	)
Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium		$	—			$	—			$	—			$	(1	)		$	1			$	—			$	1
Catastrophe loss			8				9				—				—				17				17				27
Total current accident year catastrophe losses		$	8			$	9			$	—			$	(1	)		$	18			$	17			$	28
Loss reserve development (favorable) / adverse		$	22			$	(4	)		$	3			$	(1	)		$	3			$	18			$	(3	)
Combined ratio:
Loss and LAE ratio			76.4	%			67.0	%			74.9	%			78.8	%			78.5	%			71.9	%			72.1	%
Underwriting expense ratio			29.1	%			31.1	%			20.9	%			18.3	%			31.8	%			30.1	%			31.4	%
Combined ratio			105.5	%			98.1	%			95.8	%			97.1	%			110.3	%			102.0	%			103.5	%
Loss and LAE components:
Current accident year, excluding catastrophe loss			67.1	%			65.3	%			74.1	%			79.1	%			71.6	%			66.3	%			67.9	%
Prior accident year development			6.6	%			(1.1	%)			0.8	%			(0.2	%)			1.2	%			2.9	%			(0.4	%)
Current accident year catastrophe loss			2.7	%			2.8	%			0.0	%			(0.1	%)			5.7	%			2.7	%			4.6	%
Loss and LAE ratio			76.4	%			67.0	%			74.9	%			78.8	%			78.5	%			71.9	%			72.1	%

 

8

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American Financial Group, Inc. Specialty Casualty - Underwriting Results (GAAP) ($ in millions)

 

		Three Months Ended																				Six Months Ended
		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				06/30/14				06/30/13
Gross written premiums		$	655			$	507			$	459			$	461			$	440			$	1,162			$	870
Ceded reinsurance premiums			(156	)			(176	)			(138	)			(136	)			(157	)			(332	)			(292	)
Net written premiums			499				331				321				325				283				830				578
Change in unearned premiums			(32	)			(18	)			(11	)			(36	)			(6	)			(50	)			(42	)
Net earned premiums			467				313				310				289				277				780				536
Loss and LAE			300				172				183				174				148				472				296
Underwriting expense			137				103				95				96				97				240				189
Underwriting profit		$	30			$	38			$	32			$	19			$	32			$	68			$	51
Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium		$	—			$	—			$	—			$	—			$	—			$	—			$	—
Catastrophe loss			1				1				—				1				—				2				—
Total current accident year catastrophe losses		$	1			$	1			$	—			$	1			$	—			$	2			$	—
Loss reserve development (favorable) / adverse		$	(4	)		$	(24	)		$	2			$	(4	)		$	(22	)		$	(28	)		$	(38	)
Combined ratio:
Loss and LAE ratio			64.3	%			55.0	%			59.0	%			60.3	%			53.4	%			60.5	%			55.3	%
Underwriting expense ratio			29.3	%			32.8	%			30.7	%			33.1	%			35.0	%			30.7	%			35.2	%
Combined ratio			93.6	%			87.8	%			89.7	%			93.4	%			88.4	%			91.2	%			90.5	%
Loss and LAE components:
Current accident year, excluding catastrophe loss			65.0	%			62.3	%			58.5	%			61.4	%			61.2	%			63.9	%			62.3	%
Prior accident year development			(0.8	%)			(7.7	%)			0.5	%			(1.2	%)			(8.0	%)			(3.6	%)			(7.1	%)
Current accident year catastrophe loss			0.1	%			0.4	%			0.0	%			0.1	%			0.2	%			0.2	%			0.1	%
Loss and LAE ratio			64.3	%			55.0	%			59.0	%			60.3	%			53.4	%			60.5	%			55.3	%

 

9

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American Financial Group, Inc. Specialty Financial - Underwriting Results (GAAP) ($ in millions)

 

		Three Months Ended																				Six Months Ended
		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				06/30/14				06/30/13
Gross written premiums		$	147			$	141			$	164			$	160			$	155			$	288			$	298
Ceded reinsurance premiums			(27	)			(25	)			(32	)			(36	)			(38	)			(52	)			(68	)
Net written premiums			120				116				132				124				117				236				230
Change in unearned premiums			(4	)			1				(13	)			(3	)			(4	)			(3	)			(1	)
Net earned premiums			116				117				119				121				113				233				229
Loss and LAE			40				45				42				37				37				85				79
Underwriting expense			61				62				60				62				61				123				122
Underwriting profit		$	15			$	10			$	17			$	22			$	15			$	25			$	28
Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium		$	—			$	—			$	—			$	—			$	—			$	—			$	—
Catastrophe loss			1				2				1				1				1				3				1
Total current accident year catastrophe losses		$	1			$	2			$	1			$	1			$	1			$	3			$	1
Loss reserve development (favorable) / adverse		$	(2	)		$	(1	)		$	(4	)		$	(4	)		$	—			$	(3	)		$	(6	)
Combined ratio:
Loss and LAE ratio			35.3	%			37.9	%			34.2	%			31.2	%			32.9	%			36.6	%			34.4	%
Underwriting expense ratio			52.3	%			53.1	%			51.0	%			51.1	%			53.7	%			52.7	%			53.2	%
Combined ratio			87.6	%			91.0	%			85.2	%			82.3	%			86.6	%			89.3	%			87.6	%
Loss and LAE components:
Current accident year, excluding catastrophe loss			36.3	%			37.1	%			36.7	%			33.7	%			32.9	%			36.7	%			36.7	%
Prior accident year development			(1.8	%)			(0.7	%)			(3.2	%)			(3.2	%)			(0.7	%)			(1.2	%)			(2.8	%)
Current accident year catastrophe loss			0.8	%			1.5	%			0.7	%			0.7	%			0.7	%			1.1	%			0.5	%
Loss and LAE ratio			35.3	%			37.9	%			34.2	%			31.2	%			32.9	%			36.6	%			34.4	%

 

10

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American Financial Group, Inc. Other Specialty - Underwriting Results (GAAP) ($ in millions)

 

		Three Months Ended																				Six Months Ended
		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				06/30/14				06/30/13
Gross written premiums		$	—			$	—			$	1			$	—			$	—			$	—			$	—
Ceded reinsurance premiums			26				24				18				24				21				50				41
Net written premiums			26				24				19				24				21				50				41
Change in unearned premiums			(2	)			(1	)			1				(2	)			(3	)			(3	)			(4	)
Net earned premiums			24				23				20				22				18				47				37
Loss and LAE			14				10				5				8				7				24				13
Underwriting expense			8				8				6				9				6				16				13
Underwriting profit		$	2			$	5			$	9			$	5			$	5			$	7			$	11
Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium		$	—			$	—			$	—			$	—			$	—			$	—			$	—
Catastrophe loss			—				—				—				—				—				—				—
Total current accident year catastrophe losses		$	—			$	—			$	—			$	—			$	—			$	—			$	—
Loss reserve development (favorable) / adverse		$	(2	)		$	(3	)		$	(6	)		$	(4	)		$	(5	)		$	(5	)		$	(10	)
Combined ratio:
Loss and LAE ratio			53.2	%			45.8	%			28.3	%			35.0	%			35.1	%			49.6	%			34.4	%
Underwriting expense ratio			35.8	%			34.1	%			32.1	%			35.7	%			38.9	%			35.0	%			38.2	%
Combined ratio			89.0	%			79.9	%			60.4	%			70.7	%			74.0	%			84.6	%			72.6	%

 

11

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American Financial Group, Inc. Annuity Results of Operations (GAAP) ($ in millions)

 

		Three Months Ended																				Six Months Ended
		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				06/30/14				06/30/13
Net investment income		$	289			$	275			$	270			$	259			$	257			$	564			$	505
Guaranteed withdrawal benefit fees			8				8				7				7				6				16				11
Policy charges and other miscellaneous income			11				10				14				10				9				21				18
Total revenues			308				293				291				276				272				601				534
Annuity benefits			166				168				137				140				120				334				254
Acquisition expenses			37				31				35				35				48				68				79
Other expenses			21				21				27				23				22				42				43
Total costs and expenses			224				220				199				198				190				444				376
Earnings before income taxes - core			84				73				92				78				82				157				158
ELNY guaranty fund assessments charge (a)			—				—				—				—				(5	)			—				(5	)
Earnings before income taxes		$	84			$	73			$	92			$	78			$	77			$	157			$	153
Detail of annuity benefits above:
Interest credited - fixed		$	123			$	121			$	118			$	113			$	111			$	244			$	220
Interest credited - fixed component of variable annuities			2				1				1				2				1				3				3
Change in expected death and annuitization reserve			5				4				5				4				6				9				10
Amortization of sales inducements			6				7				7				8				8				13				15
Guaranteed withdrawal benefit reserve			10				8				10				10				10				18				18
Change in other benefit reserves			5				3				1				2				3				8				4
Embedded derivative mark-to-market			78				54				74				33				(3	)			132				77
Equity option mark-to-market			(63	)			(30	)			(85	)			(32	)			(16	)			(93	)			(93	)
Unlockings			—				—				6				—				—				—				—
Total annuity benefits		$	166			$	168			$	137			$	140			$	120			$	334			$	254

 

(a)	The ELNY guaranty fund assessments charge represent guaranty fund assessments in connection with the insolvency and liquidation of Executive Life Insurance Company of New York, an unaffiliated life insurance company.

 

12

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American Financial Group, Inc. Net Spread on Fixed Annuities (GAAP) ($ in millions)

 

		Three Months Ended																				Six Months Ended
		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				06/30/14				06/30/13
Average fixed annuity investments (at amortized cost)		$	22,098			$	21,402			$	20,524			$	19,519			$	18,615			$	21,750			$	18,280
Average annuity benefits accumulated			21,829				21,066				20,092				19,035				18,151				21,448				17,829
Investments in excess of annuity benefits accumulated		$	269			$	336			$	432			$	484			$	464			$	302			$	451
As % of average annuity benefits accumulated (except as noted)
Net investment income (as % of investments)			5.18	%			5.10	%			5.21	%			5.27	%			5.45	%			5.14	%			5.46	%
Interest credited			(2.26	%)			(2.29	%)			(2.35	%)			(2.38	%)			(2.43	%)			(2.27	%)			(2.46	%)
Net interest spread on fixed annuities			2.92	%			2.81	%			2.86	%			2.89	%			3.02	%			2.87	%			3.00	%
Policy charges and other miscellaneous income			0.14	%			0.13	%			0.22	%			0.15	%			0.13	%			0.14	%			0.14	%
Other annuity benefit expenses, net			(0.33	%)			(0.27	%)			(0.31	%)			(0.38	%)			(0.46	%)			(0.29	%)			(0.41	%)
Acquisition expenses			(0.64	%)			(0.55	%)			(0.75	%)			(0.72	%)			(1.00	%)			(0.60	%)			(0.85	%)
Other expenses			(0.36	%)			(0.37	%)			(0.53	%)			(0.44	%)			(0.43	%)			(0.37	%)			(0.44	%)
Change in fair value of derivatives			(0.27	%)			(0.45	%)			0.22	%			0.00	%			0.39	%			(0.37	%)			0.17	%
Unlockings			0.00	%			0.00	%			(0.04	%)			0.00	%			0.00	%			0.00	%			0.00	%
Net spread earned on fixed annuities - core			1.46	%			1.30	%			1.67	%			1.50	%			1.65	%			1.38	%			1.61	%
Average annuity benefits accumulated		$	21,829			$	21,066			$	20,092			$	19,035			$	18,151			$	21,448			$	17,829
Net spread earned on fixed annuities			1.46	%			1.30	%			1.67	%			1.50	%			1.65	%			1.38	%			1.61	%
Earnings on fixed annuity benefits accumulated		$	80			$	68			$	84			$	72			$	75			$	148			$	144
Investments in excess of annuity benefits accumulated		$	269			$	336			$	432			$	484			$	464			$	302			$	451
Net investment income (as % of investments)			5.18	%			5.10	%			5.21	%			5.27	%			5.45	%			5.14	%			5.46	%
Earnings on investments in excess of annuity benefits accumulated		$	3			$	5			$	6			$	6			$	6			$	8			$	12
Variable annuity earnings			1				—				2				—				1				1				2
Earnings before income taxes - core			84				73				92				78				82				157				158
ELNY guaranty fund assessments charge (a)			—				—				—				—				(5	)			—				(5	)
Earnings before income taxes		$	84			$	73			$	92			$	78			$	77			$	157			$	153

 

(a)	The ELNY guaranty fund assessments represent guaranty fund assessments charge in connection with the insolvency and liquidation of Executive Life Insurance Company of New York, an unaffiliated life insurance company.

 

13

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American Financial Group Annuity Premiums (Statutory) ($ in millions)

 

		Three Months Ended																				Six months ended
		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				06/30/14				06/30/13
Retail single premium annuities - indexed		$	403			$	386			$	565			$	509			$	472			$	789			$	805
Retail single premium annuities - fixed			25				39				53				48				37				64				64
Financial institutions single premium annuities - indexed			364				366				498				352				169				730				252
Financial institutions single premium annuities - fixed			95				114				201				198				118				209				229
Education market - 403(b) fixed and indexed annuities			49				50				51				49				52				99				107
Subtotal fixed annuity premiums			936				955				1,368				1,156				848				1,891				1,457
Variable annuities			13				12				13				11				13				25				28
Total annuity premiums		$	949			$	967			$	1,381			$	1,167			$	861			$	1,916			$	1,485

 

14

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American Financial Group, Inc. Fixed Annuity Benefits Accumulated (GAAP) ($ in millions)

 

		Three Months Ended																				Six Months Ended
		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				06/30/14				06/30/13
Beginning fixed annuity reserves		$	21,453			$	20,679			$	19,505			$	18,564			$	17,737			$	20,679			$	17,274
Premiums			936				955				1,368				1,156				848				1,891				1,457
Federal Home Loan Bank advances			—				—				—				—				200				—				200
Surrenders, benefits and other withdrawals			(408	)			(375	)			(408	)			(381	)			(352	)			(783	)			(704	)
Interest and other annuity benefit expenses:
Interest credited			123				121				118				113				111				244				220
Embedded derivative mark-to-market			78				54				74				33				(3	)			132				77
Change in other benefit reserves			23				19				18				20				23				42				40
Unlockings			—				—				4				—				—				—				—
Ending fixed annuity reserves		$	22,205			$	21,453			$	20,679			$	19,505			$	18,564			$	22,205			$	18,564
Reconciliation to annuity benefits accumulated:
Ending fixed annuity reserves		$	22,205			$	21,453			$	20,679			$	19,505			$	18,564			$	22,205			$	18,564
Impact of unrealized investment gains on reserves			117				97				71				84				87				117				87
Fixed component of variable annuities			194				194				194				196				197				194				197
Annuity benefits accumulated per balance sheet		$	22,516			$	21,744			$	20,944			$	19,785			$	18,848			$	22,516			$	18,848
Annualized surrenders and other withdrawals as a % of beginning reserves			7.6	%			7.3	%			8.4	%			8.2	%			7.9	%			7.6	%			8.2	%

 

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American Financial Group, Inc. Consolidated Balance Sheet ($ in millions)

 

		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				03/31/13
Assets:
Total cash and investments		$	34,843			$	32,727			$	31,313			$	29,921			$	29,262			$	29,084
Recoverables from reinsurers			3,107				2,969				3,157				3,138				3,044				3,083
Prepaid reinsurance premiums			489				438				408				662				520				466
Agents’ balances and premiums receivable			902				735				739				801				754				649
Deferred policy acquisition costs			806				890				975				867				818				565
Assets of managed investment entities			2,799				2,723				2,888				2,779				2,973				3,285
Other receivables			527				524				854				1,078				422				384
Variable annuity assets (separate accounts)			681				666				665				629				608				614
Other assets			1,001				913				903				887				828				824
Goodwill			200				185				185				185				185				185
Total assets		$	45,355			$	42,770			$	42,087			$	40,947			$	39,414			$	39,139
Liabilities and Equity:
Unpaid losses and loss adjustment expenses		$	7,370			$	6,134			$	6,410			$	6,441			$	6,098			$	6,238
Unearned premiums			1,911				1,788				1,757				2,047				1,789				1,697
Annuity benefits accumulated			22,516				21,744				20,944				19,785				18,848				18,075
Life, accident and health reserves			2,082				2,039				2,008				2,011				2,017				2,021
Payable to reinsurers			445				400				508				601				367				250
Liabilities of managed investment entities			2,499				2,413				2,567				2,429				2,603				2,880
Long-term debt			912				913				913				913				949				950
Variable annuity liabilities (separate accounts)			681				666				665				629				608				614
Other liabilities			1,781				1,700				1,546				1,381				1,497				1,506
Total liabilities		$	40,197			$	37,797			$	37,318			$	36,237			$	34,776			$	34,231
Shareholders’ equity:
Common stock		$	90			$	90			$	90			$	89			$	89			$	90
Capital surplus			1,152				1,138				1,123				1,109				1,088				1,090
Appropriated retained earnings			31				49				49				45				33				64
Unappropriated retained earnings			2,913				2,842				2,777				2,729				2,664				2,620
Unrealized gains - fixed maturities			656				556				441				449				462				719
Unrealized gains - equities			149				129				121				119				138				146
Other comprehensive income, net of tax			(6	)			(8	)			(2	)			2				(1	)			4
Total shareholders’ equity			4,985				4,796				4,599				4,542				4,473				4,733
Noncontrolling interests			173				177				170				168				165				175
Total liabilities and equity		$	45,355			$	42,770			$	42,087			$	40,947			$	39,414			$	39,139

 

16

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American Financial Group, Inc. Book Value Per Share and Price / Book Summary (in millions, except per share information)

 

		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				03/31/13
Shareholders’ equity		$	4,985			$	4,796			$	4,599			$	4,542			$	4,473			$	4,733
Appropriated retained earnings			(31	)			(49	)			(49	)			(45	)			(33	)			(64	)
Shareholders’ equity, excluding appropriated retained earnings			4,954				4,747				4,550				4,497				4,440				4,669
Unrealized (gains) on fixed maturities			(656	)			(556	)			(441	)			(449	)			(462	)			(719	)
Adjusted shareholders’ equity			4,298				4,191				4,109				4,048				3,978				3,950
Goodwill			(200	)			(185	)			(185	)			(185	)			(185	)			(185	)
Intangibles			(66	)			(27	)			(22	)			(26	)			(29	)			(33	)
Tangible adjusted shareholders’ equity		$	4,032			$	3,979			$	3,902			$	3,837			$	3,764			$	3,732
Common shares outstanding			89.618				89.589				89.513				89.224				88.821				89.883
Book value per share:
Excluding appropriated retained earnings (a)		$	55.27			$	52.99			$	50.83			$	50.40			$	49.98			$	51.94
Adjusted (b)			47.95				46.79				45.90				45.36				44.78				43.94
Tangible, adjusted (c)			44.99				44.42				43.59				43.00				42.38				41.52
Market capitalization
AFG’s closing common share price		$	59.56			$	57.71			$	57.72			$	54.06			$	48.91			$	47.38
Market capitalization		$	5,338			$	5,170			$	5,167			$	4,823			$	4,344			$	4,259
Price / Adjusted book value ratio			1.24				1.23				1.26				1.19				1.09				1.08

 

(a)	Excludes appropriated retained earnings.

(b)	Excludes appropriated retained earnings and unrealized gains related to fixed maturity investments.

(c)	Excludes appropriated retained earnings, unrealized gains related to fixed maturity investments, goodwill and intangibles.

 

17

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American Financial Group, Inc. Capitalization ($ in millions)

 

		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				03/31/13
Direct obligations of AFG		$	840			$	840			$	840			$	840			$	840			$	840
Direct obligations of subsidiaries			72				73				73				73				89				90
Payable to subsidiary trusts			—				—				—				—				20				20
Long-term debt		$	912			$	913			$	913			$	913			$	949			$	950
Obligations secured by real estate			(60	)			(61	)			(61	)			(61	)			(62	)			(62	)
Debt excluding obligations secured by real estate		$	852			$	852			$	852			$	852			$	887			$	888
Total capital (a)		$	6,039			$	5,837			$	5,633			$	5,578			$	5,554			$	5,794
Total capital excluding obligations secured by real estate (a)			5,979				5,776				5,572				5,517				5,492				5,732
Total adjusted capital (b)		$	5,383			$	5,281			$	5,192			$	5,129			$	5,092			$	5,074
Total adjusted capital excluding obligations secured by real estate (b)			5,323				5,220				5,131				5,068				5,030				5,012
Ratio of debt to total capital (a):
Including debt secured by real estate			15.1	%			15.6	%			16.2	%			16.4	%			17.1	%			16.4	%
Excluding debt secured by real estate			14.2	%			14.8	%			15.3	%			15.4	%			16.2	%			15.5	%
Ratio of debt to total adjusted capital (b):
Including debt secured by real estate			16.9	%			17.3	%			17.6	%			17.8	%			18.6	%			18.7	%
Excluding debt secured by real estate			16.0	%			16.3	%			16.6	%			16.8	%			17.6	%			17.7	%

 

(a)	Includes long-term debt, noncontrolling interests and shareholders’ equity, excluding appropriated retained earnings.

(b)	Includes long-term debt, noncontrolling interests and shareholders’ equity, excluding appropriated retained earnings and unrealized gains related to fixed maturity investments.

 

18

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American Financial Group, Inc. Additional Supplemental Information ($ in millions)

 

		Three Months Ended																				Six months ended
		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				06/30/14				06/30/13
Property and Casualty Insurance
Paid Losses (GAAP)		$	530			$	510			$	577			$	417			$	520			$	1,040			$	877

 

		06/30/14				03/31/14				12/31/13				09/30/13				06/30/13				03/31/13
Statutory Surplus
Property and Casualty Insurance		$	2,227			$	1,981			$	1,896			$	2,133			$	2,096			$	2,090
AFG’s principal annuity subsidiaries (total adjusted capital)		$	1,751			$	1,688			$	1,661			$	1,590			$	1,517			$	1,483
Allowable dividends without regulatory approval
Property and Casualty Insurance		$	335			$	335			$	335			$	237			$	237			$	237
Annuity and Run-off			275				275				275				158				158				158
Total		$	610			$	610			$	610			$	395			$	395			$	395

 

19

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American Financial Group, Inc. Total Cash and Investments and Quarterly Net Investment Income June 30, 2014 ($ in millions)

 

		Carrying Value
		Property and Casualty Insurance				Annuity and Run-off				Other				Consolidate CLOs				Total AFG Consolidated				% of Investment Portfolio
Total cash and investments:
Cash and cash equivalents		$	1,189			$	653			$	274			$	—			$	2,116				6	%
Fixed maturities - Available for sale			5,895				23,081				12				—				28,988				83	%
Fixed maturities - Trading			224				119				—				—				343				1	%
Equity securities			1,007				423				43				—				1,473				4	%
Policy loans			—				233				—				—				233				1	%
Mortgage loans			152				768				—				—				920				3	%
Real estate and other investments			323				706				9				(268	)			770				2	%
Total cash and investments		$	8,790			$	25,983			$	338			$	(268	)		$	34,843				100	%

 

		Property and Casualty Insurance				Annuity and Run-off				Other				Consolidate CLOs				Total AFG Consolidated
Total quarterly net investment income:
Fixed maturities - Available for sale		$	55			$	279			$	—			$	—			$	334
Fixed maturities - Trading			3				1				—				—				4
Equity securities			10				4				2				—				16
Equity in investees			3				4				—				—				7
Other investments			6				20				—				(7	)			19
Gross investment income			77				308				2				(7	)			380
Investment expenses			(1	)			—				—				—				(1	)
Total net investment income		$	76			$	308			$	2			$	(7	)		$	379

 

		Equity Securities
		Cost				Fair Value				Unrealized Gain (Loss)
Annuity and Run-off		$	369			$	423			$	54
Property and Casualty Insurance			826				1,007				181
Other			43				43				—
Total AFG consolidated		$	1,238			$	1,473			$	235

 

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American Financial Group, Inc. Fixed Maturities - By Security Type - AFG Consolidated June 30, 2014 ($ in millions )

 

		Amortized Cost				Fair Value				Unrealized Gain (Loss)				% of Fair Value				% of Investment Portfolio
US Government and government agencies		$	377			$	383			$	6				1	%			1	%
States, municipalities and political subdivisions			6,010				6,259				249				21	%			18	%
Foreign government			253				263				10				1	%			1	%
Residential mortgage-backed securities			4,284				4,694				410				16	%			14	%
Commercial mortgage-backed securities			2,396				2,589				193				9	%			7	%
Asset-backed securities			3,189				3,223				34				11	%			9	%
Corporate bonds
Manufacturing			2,221				2,370				149				8	%			7	%
Banks, lending and credit institutions			2,218				2,364				146				8	%			7	%
Gas and electric services			1,289				1,422				133				5	%			4	%
Insurance and insurance related			798				867				69				3	%			2	%
Other corporate			4,595				4,897				302				17	%			14	%
Total AFG consolidated		$	27,630			$	29,331			$	1,701				100	%			84	%
Annuity and Run-off		$	21,726			$	23,200				1,474				79	%			66	%
Property and Casualty Insurance			5,903				6,119				216				21	%			18	%
Other			1				12				11				0	%			0	%
Total AFG consolidated		$	27,630			$	29,331			$	1,701				100	%			84	%
Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)			5.02	%
Net of investment expense (a)			5.02	%
Approximate average life and duration:
Approximate average life			6.5 years
Approximate duration			5 years

 

(a)	Annualized yield is calculated by dividing investment income for the quarter by the average cost over the quarter. Average cost is the average of the beginning and ending quarter asset balances.

 

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American Financial Group, Inc. Fixed Maturities - By Security Type Portfolio June 30, 2014 ($ in millions )

 

		Amortized Cost				Fair Value				Unrealized Gain (Loss)				% of Fair Value
Annuity and Run-off:
US Government and government agencies		$	86			$	87			$	1				0	%
States, municipalities and political subdivisions			3,546				3,703				157				16	%
Foreign government			17				19				2				0	%
Residential mortgage-backed securities			3,345				3,688				343				16	%
Commercial mortgage-backed securities			2,170				2,350				180				10	%
Asset-backed securities			2,365				2,396				31				11	%
Corporate debt			10,197				10,957				760				47	%
Total Annuity and Run-off		$	21,726			$	23,200			$	1,474				100	%
Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)			5.24	%
Net of investment expense (a)			5.26	%
Approximate average life and duration:
Approximate average life			7 years
Approximate duration			5 years
		Amortized Cost				Fair Value				Unrealized Gain (Loss)				% of Fair Value
Property and Casualty Insurance:
US Government and government agencies		$	291			$	296			$	5				5	%
States, municipalities and political subdivisions			2,464				2,556				92				42	%
Foreign government			236				244				8				4	%
Residential mortgage-backed securities			938				994				56				16	%
Commercial mortgage-backed securities			226				239				13				4	%
Asset-backed securities			824				827				3				13	%
Corporate debt			924				963				39				16	%
Property and Casualty Insurance		$	5,903			$	6,119			$	216				100	%
Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)			4.17	%
Net of investment expense (a)			4.08	%
Tax equivalent, net of investment expense (b)			4.68	%
Approximate average life and duration:
Approximate average life			5 years
Approximate duration			3.5 years

 

(a)	Annualized yield is calculated by dividing investment income for the quarter by the average cost over the quarter. Average cost is the average of the beginning and ending quarter asset balances.

(b)	Adjusts the yield on tax-exempt bonds to the fully taxable equivalent yield.

 

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American Financial Group, Inc. Fixed Maturities - Credit Rating and NAIC Designation June 30, 2014 ($ in millions)

 

		GAAP Data
By Credit Rating		Amortized Cost				Fair Value				Unrealized Gain (Loss)				% of Fair Value
Investment grade
AAA		$	6,152			$	6,404			$	252				22	%
AA			5,781				6,005				224				20	%
A			7,067				7,524				457				26	%
BBB			4,922				5,303				381				18	%
Subtotal - Investment grade			23,922				25,236				1,314				86	%
BB			724				766				42				2	%
B			475				499				24				2	%
Other			2,509				2,830				321				10	%
Total		$	27,630			$	29,331			$	1,701				100	%

If two agencies rate a security, the rating displayed above is the lower of the two; if three or more agencies rate a security, the rating displayed is the second lowest.

 

		Statutory Data
By NAIC Designation		Carrying Value				% of Carrying Value				Amortized Cost				Fair Value				Unrealized Gain (Loss)
NAIC 1		$	21,582				79	%		$	21,583			$	22,917			$	1,334
NAIC 2			4,848				18	%			4,848				5,212				364
			26,430				97	%			26,431				28,129				1,698
NAIC 3			520				2	%			520				548				28
NAIC 4			234				1	%			235				247				12
NAIC 5			42				0	%			42				49				7
NAIC 6			45				0	%			49				70				21
Total		$	27,271				100	%		$	27,277			$	29,043			$	1,766

 

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American Financial Group, Inc. Mortgage-Backed Securities - AFG Consolidated June 30, 2014 ($ in millions)

 

By Asset Type		Amortized Cost				Fair Value				Unrealized Gain (Loss)				% of Fair Value				% of Investment Portfolio
Residential
Agency		$	326			$	334			$	8				4	%			1	%
Prime (Non-Agency)			2,084				2,305				221				32	%			7	%
Alt-A			983				1,092				109				15	%			3	%
Subprime			891				963				72				13	%			3	%
Subtotal - Residential			4,284				4,694				410				64	%			14	%
Commercial			2,396				2,589				193				36	%			7	%
Total AFG consolidated		$	6,680			$	7,283			$	603				100	%			21	%
Annuity and Run-off		$	5,515			$	6,038				523				83	%			17	%
Property and Casualty Insurance			1,164				1,233				69				17	%			4	%
Other			1				12				11				0	%			0	%
Total AFG consolidated		$	6,680			$	7,283			$	603				100	%			21	%

 

•

Substantially all of AFG’s MBS securities are either senior tranches of securitizations or collateralized by senior tranches of securitizations.

 

•

The average amortized cost as a percent of par is - Prime 84%; Alt-A 78%; Subprime 86%; CMBS 99%.

 

•

The average FICO score of our residential MBS securities is - Prime 740; Alt-A 712; Subprime 641.

 

•

100% of our Commercial MBS portfolio is investment-grade rated (85% AAA) and the average subordination for this group assets is 39%.

 

•

The approximate average life by collateral type is - Residential 5 years; Commercial 4 years.

 

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American Financial Group, Inc. Mortgage-Backed Securities Portfolio June 30, 2014 ($ in millions)

 

Annuity and Run-off: By Asset Type		Amortized Cost				Fair Value				Unrealized Gain (Loss)				% of Fair Value				% of Investment Portfolio
Residential
Agency		$	132			$	138			$	6				2	%			1	%
Prime (Non-Agency)			1,849				2,041				192				34	%			8	%
Alt-A			746				836				90				14	%			3	%
Subprime			618				673				55				11	%			3	%
Subtotal - Residential			3,345				3,688				343				61	%			15	%
Commercial			2,170				2,350				180				39	%			9	%
Total Annuity and Run-off		$	5,515			$	6,038			$	523				100	%			24	%
Property and Casualty Insurance: By Asset Type		Amortized Cost				Fair Value				Unrealized Gain (Loss)				% of Fair Value				% of Investment Portfolio
Residential
Agency		$	194			$	196			$	2				16	%			2	%
Prime (Non-Agency)			234				252				18				20	%			3	%
Alt-A			237				256				19				21	%			3	%
Subprime			273				290				17				24	%			3	%
Subtotal - Residential			938				994				56				81	%			11	%
Commercial			226				239				13				19	%			3	%
Total Property and Casualty Insurance		$	1,164			$	1,233			$	69				100	%			14	%

 

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American Financial Group, Inc. Mortgage-Backed Securities - Credit Rating and NAIC Designation June 30, 2014 ($ in millions)

 

		GAAP data
By Credit Rating		Amortized Cost				Fair Value				Unrealized Gain (Loss)				% of Fair Value
Investment grade
AAA		$	2,883			$	3,075			$	192				42	%
AA			383				405				22				5	%
A			541				574				33				8	%
BBB			257				279				22				4	%
Subtotal - investment grade			4,064				4,333				269				59	%
BB			331				345				14				5	%
B			407				424				17				6	%
Other			1,878				2,181				303				30	%
Total		$	6,680			$	7,283			$	603				100	%

If two agencies rate a security, the rating displayed above is the lower of the two; if three or more agencies rate a security, the rating displayed is the second lowest.

 

		Statutory data
By NAIC Designation		Carrying Value				% of Carrying Value				Amortized Cost				Fair Value				Unrealized Gain (Loss)
NAIC 1		$	6,285				95	%		$	6,286			$	6,928			$	642
NAIC 2			127				2	%			127				128				1
			6,412				97	%			6,413				7,056				643
NAIC 3			45				1	%			45				46				1
NAIC 4			104				2	%			104				111				7
NAIC 5			4				0	%			4				12				8
NAIC 6			26				0	%			27				43				16
Total		$	6,591				100	%		$	6,593			$	7,268			$	675

 

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