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): August 1, 2017
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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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 2017 and the availability of the Investor Supplement on the Company’s website. The press release was issued on August 1, 2017. 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 August 1, 2017, reporting American Financial Group Inc. results for the quarter ended June 30, 2017. | |
| 99.2 | Investor Supplement – Second Quarter 2017 | |
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: August 2, 2017 |
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| By: | /s/ Karl J. Grafe | |||||
| Karl J. Grafe | ||||||
| Vice President | ||||||
2
Exhibit 99.1
American Financial Group, Inc. Announces Second Quarter Results
| • | Net earnings per share of $1.61, a second quarter record for AFG |
| • | Core net operating earnings $1.61 per share, an increase of 26% from the prior year period and a second quarter record for AFG |
| • | Second quarter annualized ROE of 12.3%; annualized core operating ROE of 12.3% |
| • | Full year 2017 core net operating earnings guidance increased to $6.40 - $6.90 per share |
CINCINNATI – August 1, 2017 – American Financial Group, Inc. (NYSE: AFG) today reported 2017 second quarter net earnings attributable to shareholders of $145 million ($1.61 per share) compared to $54 million ($0.62 per share) for the 2016 second quarter. The $1.61 per share is a record for AFG’s second quarter. Net earnings for the quarter include $0.05 per share in after-tax realized gains on securities and expenses of $0.05 per share related to the redemption of AFG’s 6.375% Senior Notes. Comparatively, net earnings in the 2016 second quarter included a charge of $65 million ($0.73 per share) related to the exit of certain lines of business within our Lloyd’s-based insurer Neon, as well as $6 million ($0.07 per share) in after-tax earnings related to other non-core items. Details may be found in the table below. Book value per share was $60.36 per share at June 30, 2017. AFG paid cash dividends of $1.8125 per share during the quarter, which included a $1.50 per share special dividend. Annualized return on equity was 12.3% and 5.1% for the second quarters of 2017 and 2016, respectively.
Core net operating earnings were $145 million ($1.61 per share) for the 2017 second quarter, compared to $113 million ($1.28 per share) in the 2016 second quarter. The $1.61 represents a second quarter record for AFG core earnings per share. The improved results were attributable to higher operating earnings in our Specialty Property and Casualty (“P&C”) Insurance Segment and our Annuity Segment. Book value per share, excluding unrealized gains related to fixed maturities, was $54.97 per share at June 30, 2017. Core net operating earnings for the second quarters of 2017 and 2016 generated annualized returns on equity of 12.3% and 10.5%, respectively.
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 table below identifies such items and reconciles net earnings attributable to shareholders to core net operating earnings, a non-GAAP financial measure. AFG believes that its core net operating earnings provides management, financial analysts, rating agencies and investors with an understanding of the results from the ongoing operations of the Company by excluding the impact of net realized gains and losses and other special items that are not necessarily indicative of operating trends. AFG’s management uses core net operating earnings to evaluate financial performance against historical results because it believes this provides a more comparable measure of its continuing business. Core net operating earnings is also used by AFG’s management as a basis for strategic planning and forecasting.
Page 1
| In millions, except per share amounts | Three months ended June 30, |
Six months ended June 30, |
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Components of net earnings attributable to shareholders: |
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| Core operating earnings before income taxes |
$ | 204 | $ | 183 | $ | 424 | $ | 357 | ||||||||
| Pretax non-core items: |
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| Realized gains (losses) on securities |
8 | (16 | ) | 11 | (34 | ) | ||||||||||
| Gain on sale of subsidiaries |
— | 2 | — | 2 | ||||||||||||
| Gain on sale of apartment property |
— | 32 | — | 32 | ||||||||||||
| Neon exited lines charge |
— | (65 | ) | — | (65 | ) | ||||||||||
| Loss on retirement of debt |
(7 | ) | — | (7 | ) | — | ||||||||||
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| Earnings before income taxes |
205 | 136 | 428 | 292 | ||||||||||||
| Provision (credit) for income taxes: |
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| Core operating earnings |
59 | 64 | 126 | 123 | ||||||||||||
| Non-core items |
1 | 9 | 2 | 2 | ||||||||||||
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| Total provision (credit) for income taxes |
60 | 73 | 128 | 125 | ||||||||||||
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| Net earnings, including noncontrolling interests |
145 | 63 | 300 | 167 | ||||||||||||
| Less net earnings attributable to noncontrolling interests: |
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| Core operating earnings |
— | 6 | 2 | 10 | ||||||||||||
| Non-core items |
— | 3 | — | 2 | ||||||||||||
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| Total net earnings attributable to noncontrolling interests |
— | 9 | 2 | 12 | ||||||||||||
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| Net earnings attributable to shareholders |
$ | 145 | $ | 54 | $ | 298 | $ | 155 | ||||||||
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| Net earnings: |
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| Core net operating earnings(a) |
145 | 113 | 296 | 224 | ||||||||||||
| Non-core items |
— | (59 | ) | 2 | (69 | ) | ||||||||||
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| Net earnings attributable to shareholders |
$ | 145 | $ | 54 | $ | 298 | $ | 155 | ||||||||
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| Components of Earnings Per Share: |
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| Core net operating earnings(a) |
$ | 1.61 | $ | 1.28 | $ | 3.29 | $ | 2.53 | ||||||||
| Non-core Items: |
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| Realized gains (losses) on securities |
0.05 | (0.11 | ) | 0.08 | (0.22 | ) | ||||||||||
| Gain on sale of subsidiaries |
— | 0.01 | — | 0.01 | ||||||||||||
| Gain on sale of apartment property |
— | 0.17 | — | 0.17 | ||||||||||||
| Neon exited lines charge |
(0.73 | ) | — | (0.73 | ) | |||||||||||
| Loss on retirement of debt |
(0.05 | ) | — | (0.05 | ) | — | ||||||||||
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| Diluted Earnings Per Share |
$ | 1.61 | $ | 0.62 | $ | 3.32 | $ | 1.76 | ||||||||
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Footnote (a) is contained in the accompanying Notes to Financial Schedules at the end of this release.
Carl H. Lindner III and S. Craig Lindner, AFG’s Co-Chief Executive Officers, issued this statement: “Strong results in AFG’s Specialty P&C and Annuity Segments produced new second quarter earnings per share records for AFG. In addition, we are pleased to report strong investment results and meaningful growth across our portfolio of businesses.
“AFG had approximately $1.1 billion of excess capital (including parent company cash of approximately $425 million) at June 30, 2017. This is after our payment of the $1.50 per share special dividend in May 2017. In addition to returning capital to shareholders through dividends, our excess capital will be deployed into AFG’s core businesses as we identify potential for healthy, profitable organic growth, and opportunities to expand our specialty niche businesses through acquisitions and start-ups that meet our target return thresholds. In addition, share repurchases, particularly when executed at attractive valuations, are an important and effective component of our capital management strategy; we will continue to make opportunistic share repurchases when it makes sense to do so. We will evaluate our excess capital position again in the second half of 2017 and note that the special cash dividend paid in May does not preclude our consideration of additional actions with respect to our regular quarterly dividend, additional special dividends and opportunistic share repurchases.
“Based on results for the first six months of 2017, we now expect AFG’s core net operating earnings in 2017 to be in the range of $6.40 to $6.90 per share, up from our original estimate of $6.20 to $6.70 per share. Our core earnings per share guidance assumes no change in the corporate tax rate of 35%, and excludes non-core items such as realized gains and losses, as well as other significant items that are not able to be estimated with reasonable precision, or that may not be indicative of ongoing operations.”
Page 2
Specialty Property and Casualty Insurance Operations
Operating earnings in AFG’s P&C Insurance Segment were $163 million in the second quarter of 2017, compared to $139 million in the prior year period, an increase of $24 million, or 17%. Higher P&C underwriting profit, higher net investment income and lower other expenses (primarily due to the impact of the noncontrolling interest in National Interstate in the second quarter of 2016) contributed to the improved results.
The Specialty P&C insurance operations generated an underwriting profit of $73 million in the 2017 second quarter, compared to $63 million in the second quarter of 2016, an increase of 16%. Each of our Specialty P&C Groups reported higher year-over-year underwriting profit. The second quarter 2017 combined ratio of 93.2% improved by 0.7 point over the prior year period. Results in the second quarter of 2017 include 2.2 points of favorable prior year reserve development, compared to 2.9 points in the comparable prior year period. Second quarter 2017 results include 1.7 points in catastrophe losses, compared to 2.0 points in the 2016 second quarter.
Gross and net written premiums were up 8% and 7%, respectively, for the second quarter of 2017, when compared to the second quarter of 2016. Pricing across our entire P&C Group was up 1% for the quarter.
The Property and Transportation Group reported an underwriting profit of $21 million in the second quarter of 2017, compared to $15 million in the second quarter of 2016. Higher underwriting profits in our agricultural and property & inland marine businesses were the drivers of the improved results. Catastrophe losses were $11 million for this group during the second quarter of 2017, compared to $12 million in the comparable prior year period.
Gross and net written premiums for the second quarter of 2017 were 7% and 3% higher, respectively, than the comparable 2016 period. The growth is primarily attributable to higher year-over-year premiums in our agricultural and transportation businesses, and growth in our Singapore Branch. This growth was partially offset by lower premiums resulting from an exit from the customs bond business, which was part of our ocean marine operations. Net written premiums were also impacted by lower retentions in National Interstate’s captive business. Overall renewal rates in this group increased 2% on average for the second quarter of 2017, including a 4% increase in National Interstate’s renewal rates.
The Specialty Casualty Group reported an underwriting profit of $29 million in the second quarter of 2017, compared to $23 million in the second quarter of 2016. Improved results in our excess and surplus lines businesses and Neon were partially offset by lower year-over-year profitability in our workers’ compensation and executive liability businesses, primarily due to lower favorable prior year reserve development. Catastrophe losses for this group were $2 million and $3 million in the second quarters of 2017 and 2016, respectively.
Gross and net written premiums for the second quarter of 2017 increased 10% and 12%, respectively, when compared to the second quarter of 2016, with nearly all of the businesses in this group reporting growth. A change in Neon’s mix of business to include a greater concentration in property business was a driver of higher premiums in the second quarter, which is typically when this business is written. Higher premiums in our workers’ compensation business, primarily the result of rate increases in the state of Florida, and higher premiums in our targeted markets businesses were other drivers of the year-over-year growth. Renewal pricing for this group was flat in the second quarter.
The Specialty Financial Group reported underwriting profit of $23 million in the second quarter of 2017, compared to $22 million in the second quarter of 2016. Higher underwriting profitability in our surety business was partially offset by lower underwriting profitability in our financial institutions business, primarily the result of higher catastrophe losses. Catastrophe losses for this group were $5 million and $3 million in the second quarters of 2017 and 2016, respectively. Nearly all of the businesses in this group continued to achieve excellent underwriting margins.
Page 3
Gross and net written premiums for the second quarter of 2017 were up 1% and 3%, respectively, when compared to the same 2016 period, primarily as a result of higher premiums in our fidelity and crime business, which were partially offset by lower premiums in our financial institutions business. Pricing in this group was down 2% for the quarter.
Carl Lindner III stated: “Our Specialty P&C Group reported another strong quarter. I am very pleased with overall underwriting margins, solid premium growth, and meaningful improvement reported by several of our businesses. Based on results during the first six months of the year, we continue to estimate growth in net written premium to be between 3% and 7% and continue to expect an overall 2017 calendar year combined ratio in the range of 92% to 94%.”
Further details about AFG’s Specialty P&C operations may be found in the accompanying schedules and in our Quarterly Investor Supplement, which is posted on our website.
Annuity Segment
As shown in the following table, AFG’s Annuity Segment contributed $85 million in pretax operating earnings in the second quarter of 2017 compared to $76 million in the second quarter of 2016. Earnings before the impact of fair value accounting on fixed-indexed annuities (FIAs) were $101 million in the second quarter of 2017 compared to $102 million in the second quarter of 2016.
Components of Annuity Operating Earnings Before Income Taxes
| In millions | Three months ended June 30, |
Pct. Change |
Six months ended June 30, |
Pct. Change | ||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| Annuity earnings before fair value accounting for FIAs |
$ | 101 | $ | 102 | (1%) | $ | 199 | $ | 186 | 7% | ||||||||||
| Impact of fair value accounting for FIAs |
(16 | ) | (26 | ) | nm | (18 | ) | (57 | ) | nm | ||||||||||
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| Pretax annuity operating earnings |
$ | 85 | $ | 76 | 12% | $ | 181 | $ | 129 | 40% | ||||||||||
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Annuity Earnings Before Fair Value Accounting for FIAs – AFG’s quarterly average annuity investments and reserves grew approximately 11% and 12%, respectively, year-over-year; the benefit of this growth was offset by the runoff of higher yielding investments.
Impact of Fair Value Accounting for FIAs – Variances from expectations of certain items (such as projected interest rates, option costs and surrenders), as well as changes in the stock market, have an impact on the accounting for FIAs; these accounting adjustments are recognized through AFG’s reported core earnings. Many of these adjustments are not economic in nature, but rather impact the timing of reported results.
In the second quarter of 2017, the benefit of a higher stock market was more than offset by lower interest rates, resulting in a $16 million unfavorable impact to annuity operating earnings. In the second quarter of 2016, medium to long-term interest rates decreased more substantially (30 to 40 basis points), compared to our expectation that they would increase slightly, resulting in a $26 million unfavorable impact on pretax earnings. These impacts are shown in the “Impact of fair value accounting for FIAs” amounts shown in the table above.
Annuity Premiums – AFG’s Annuity Segment reported statutory premiums of $1.3 billion in the second quarter of 2017, compared to $1.1 billion in the second quarter of 2016. Although all major channels reported year-over-year growth, the increase was due primarily to growth in traditional fixed annuity sales in the Financial Institutions channel. AFG’s strong premium production in the first six months of 2017 reflects new products, additional staffing, and increased market share within existing financial institutions.
Page 4
Craig Lindner stated, “I am pleased with the strong operating results achieved by the Annuity Segment during the second quarter. Based on these results, annuity earnings before fair value accounting are now expected to be in the range of $385 to $405 million, up from AFG’s previous guidance of $380 to $400 million. This is the second increase this year of our pre-fair value guidance. However, due to the decrease in market interest rates to date in 2017, our estimate for 2017 pretax annuity operating earnings (after fair value accounting) is now expected to be in the range of $370 to $390 million, compared to our original guidance of $375 million to $395 million.
“In response to 2017’s decline in market interest rates, AFG announced decreases in the crediting rates and rider benefits on the majority of its products in the second quarter of 2017. As a result, AFG has seen a recent slowdown in premiums. We now expect our 2017 annuity premiums to be relatively flat compared to the $4.4 billion reported in 2016.”
Fluctuations in the returns on investments that are required to be marked to market, or large changes in interest rates and/or the stock market, as compared to our expectations, could lead to significant positive or negative impacts on the Annuity Segment’s results.
Department of Labor (DOL) Rule – The DOL Fiduciary Rule became effective on June 9, 2017, although the DOL delayed certain requirements until January 1, 2018. As a result, insurance-only agents are able to continue selling fixed-indexed annuities through the end of 2017, provided the agent acts in the customer’s best interest, makes no misleading statements and receives only reasonable compensation. There is considerable uncertainty as to whether the rule will take effect in its current form on January 1, 2018 or if there will be an additional delay or adjustments to the rule. AFG’s management continues to believe the implementation of the rule in its current form and on the current schedule will impact annuity premiums throughout the remainder of 2017 and into 2018. Nonetheless, management does not believe the new rule will have a material impact on AFG’s results of operations.
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.
Investments
AFG recorded second quarter 2017 net realized gains on securities of $5 million after tax and after deferred acquisition costs (DAC), compared to net realized losses on securities of $10 million in the comparable 2016 period. Unrealized gains on fixed maturities were $481 million after tax and after DAC at June 30, 2017, an increase of $175 million since year-end. Our portfolio continues to be high quality, with 90% of our fixed maturity portfolio rated investment grade and 98% with a National Association of Insurance Commissioners’ designation of NAIC 1 or 2, its highest two categories.
For the six months ended June 30, 2017, P&C net investment income was approximately 6% higher than the comparable 2016 period.
More information about the components of our investment portfolio may be found in our Quarterly Investor Supplement, which is posted on our website.
Loss on Retirement of Debt
On June 26, 2017, AFG redeemed all $230 million principal amount of its outstanding 6.375% Senior Notes due June 2042, at 100% of principal plus accrued and unpaid interest. The redemption resulted in after-tax expenses of $5 million ($0.05 per share) related to unamortized debt issue costs.
Page 5
On July 20, 2017, AFG provided notice of redemption of all of the outstanding 5.75% Senior Notes due August 2042. The 5.75% Senior Notes, which have an outstanding principal balance of $125 million, will be redeemed on August 25, 2017, at 100% of principal plus accrued and unpaid interest, if any, to the redemption date. It is expected that the early redemption of the 5.75% Senior Notes will result in after-tax expenses of $2 million ($0.02 per share) related to unamortized debt issue costs during the third quarter of 2017.
The redemptions of the 6.375% and 5.75% Senior Notes are financed, in part, by the $345 million of net proceeds from the May 2017 offering of $350 million of 4.50% Senior Notes due June 15, 2047. It is expected that the redemption of the 6.375% and 5.75% Senior Notes and the issuance of the 4.50% Senior Notes will result in annual pretax interest savings to AFG of $6 million ($0.04 per share after-tax), beginning in 2018.
About American Financial Group, Inc.
American Financial Group is an insurance holding company, based in Cincinnati, Ohio with assets over $55 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, investment activities and the amount and timing of share repurchases; recoverability of asset values; expected losses and the adequacy of reserves for 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; 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; availability of reinsurance and ability of reinsurers to pay their obligations; trends in persistency and mortality; competitive pressures; the ability to obtain adequate rates and policy terms; changes in AFG’s credit ratings or the financial strength ratings assigned by major ratings agencies to AFG’s operating subsidiaries; the impact of the conditions in the international financial markets and the global economy (including those associated with the United Kingdom’s expected withdrawal from the European Union, or “Brexit”) relating to AFG’s international operations; and other factors identified in AFG’s 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.
Page 6
Conference Call
The Company will hold a conference call to discuss 2017 second quarter results at 11:30 a.m. (ET) tomorrow, Wednesday, August 2, 2017. 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 51157158. Please dial in five to ten minutes prior to the scheduled start time of the call.
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 9, 2017. To listen to the replay, dial 1-855-859-2056 (international dial-in 404-537-3406) and provide the conference ID 51157158.
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 9, 2017 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.
AFG17-14
Page 7
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, |
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues |
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| P&C insurance net earned premiums |
$ | 1,065 | $ | 1,027 | $ | 2,087 | $ | 2,025 | ||||||||
| Life, accident & health net earned premiums |
5 | 6 | 11 | 12 | ||||||||||||
| Net investment income |
460 | 423 | 895 | 834 | ||||||||||||
| Realized gains (losses) on: |
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| Securities |
8 | (16 | ) | 11 | (34 | ) | ||||||||||
| Subsidiaries |
— | 2 | — | 2 | ||||||||||||
| Income (loss) of managed investment entities: |
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| Investment income |
50 | 48 | 101 | 93 | ||||||||||||
| Gain (loss) on change in fair value of assets/liabilities |
11 | 11 | 11 | (2 | ) | |||||||||||
| Other income |
47 | 80 | 106 | 126 | ||||||||||||
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| Total revenues |
1,646 | 1,581 | 3,222 | 3,056 | ||||||||||||
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| Costs and expenses |
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| P&C insurance losses & expenses |
1,001 | 1,035 | 1,949 | 1,950 | ||||||||||||
| Annuity, life, accident & health benefits & expenses |
278 | 274 | 536 | 546 | ||||||||||||
| Interest charges on borrowed money |
23 | 19 | 44 | 37 | ||||||||||||
| Expenses of managed investment entities |
51 | 36 | 92 | 71 | ||||||||||||
| Other expenses |
88 | 81 | 173 | 160 | ||||||||||||
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| Total costs and expenses |
1,441 | 1,445 | 2,794 | 2,764 | ||||||||||||
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| Earnings before income taxes |
205 | 136 | 428 | 292 | ||||||||||||
| Provision for income taxes(b) |
60 | 73 | 128 | 125 | ||||||||||||
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| Net earnings including noncontrolling interests |
145 | 63 | 300 | 167 | ||||||||||||
| Less: Net earnings attributable to noncontrolling interests |
— | 9 | 2 | 12 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net earnings attributable to shareholders |
$ | 145 | $ | 54 | $ | 298 | $ | 155 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted Earnings per Common Share |
$ | 1.61 | $ | 0.62 | $ | 3.32 | $ | 1.76 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Average number of diluted shares |
89.8 | 88.4 | 89.6 | 88.4 | ||||||||||||
| June 30, 2017 |
December 31, 2016 |
|||||||
| Selected Balance Sheet Data: |
||||||||
| Total cash and investments |
$ | 44,779 | $ | 41,433 | ||||
| Long-term debt |
$ | 1,405 | $ | 1,283 | ||||
| Shareholders’ equity(c) |
$ | 5,312 | $ | 4,916 | ||||
| Shareholders’ equity (excluding unrealized gains/losses related to fixed maturities)(c) |
$ | 4,837 | $ | 4,617 | ||||
| Book Value Per Share |
$ | 60.36 | $ | 56.55 | ||||
| Book Value Per Share (excluding unrealized gains/losses related to fixed maturities |
$ | 54.97 | $ | 53.11 | ||||
| Common Shares Outstanding |
88.0 | 86.9 | ||||||
Footnotes (b) and (c) are contained in the accompanying Notes to Financial Schedules at the end of this release.
Page 8
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 |
|||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
| Gross written premiums |
$ | 1,503 | $ | 1,398 | 8 | % | $ | 2,827 | $ | 2,641 | 7 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net written premiums |
$ | 1,130 | $ | 1,056 | 7 | % | $ | 2,157 | $ | 2,035 | 6 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Ratios (GAAP): |
||||||||||||||||||||||||
| Loss & LAE ratio |
59.5 | % | 61.2 | % | 59.5 | % | 59.8 | % | ||||||||||||||||
| Underwriting expense ratio |
33.7 | % | 32.7 | % | 33.2 | % | 32.9 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Specialty Combined Ratio |
93.2 | % | 93.9 | % | 92.7 | % | 92.7 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Combined Ratio – P&C Segment |
93.4 | % | 100.3 | % | 92.8 | % | 95.9 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Supplemental Information:(d) |
||||||||||||||||||||||||
| Gross Written Premiums: |
||||||||||||||||||||||||
| Property & Transportation |
$ | 573 | $ | 538 | 7 | % | $ | 989 | $ | 936 | 6 | % | ||||||||||||
| Specialty Casualty |
756 | 688 | 10 | % | 1,500 | 1,386 | 8 | % | ||||||||||||||||
| Specialty Financial |
174 | 172 | 1 | % | 338 | 319 | 6 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| $ | 1,503 | $ | 1,398 | 8 | % | $ | 2,827 | $ | 2,641 | 7 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net Written Premiums: |
||||||||||||||||||||||||
| Property & Transportation |
$ | 393 | $ | 382 | 3 | % | $ | 717 | $ | 693 | 3 | % | ||||||||||||
| Specialty Casualty |
561 | 503 | 12 | % | 1,101 | 1,022 | 8 | % | ||||||||||||||||
| Specialty Financial |
149 | 144 | 3 | % | 290 | 269 | 8 | % | ||||||||||||||||
| Other |
27 | 27 | — | 49 | 51 | (4 | %) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| $ | 1,130 | $ | 1,056 | 7 | % | $ | 2,157 | $ | 2,035 | 6 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Combined Ratio (GAAP): |
||||||||||||||||||||||||
| Property & Transportation |
94.2 | % | 95.9 | % | 90.7 | % | 93.4 | % | ||||||||||||||||
| Specialty Casualty |
94.7 | % | 95.3 | % | 95.8 | % | 94.8 | % | ||||||||||||||||
| Specialty Financial |
84.4 | % | 84.4 | % | 84.8 | % | 83.5 | % | ||||||||||||||||
| Aggregate Specialty Group |
93.2 | % | 93.9 | % | 92.7 | % | 92.7 | % | ||||||||||||||||
| Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Reserve Development (Favorable)/Adverse: |
||||||||||||||||
| Property & Transportation |
$ | (11 | ) | $ | (12 | ) | $ | (28 | ) | $ | (29 | ) | ||||
| Specialty Casualty |
(5 | ) | (10 | ) | (11 | ) | (14 | ) | ||||||||
| Specialty Financial |
(8 | ) | (7 | ) | (17 | ) | (11 | ) | ||||||||
| Other Specialty |
1 | (1 | ) | 4 | (3 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Specialty Group Excluding Neon Charge |
(23 | ) | (30 | ) | (52 | ) | (57 | ) | ||||||||
| Neon Exited Lines Charge and Other |
1 | 58 | 2 | 57 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Reserve Development |
$ | (22 | ) | $ | 28 | $ | (50 | ) | $ | — | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Points on Combined Ratio: |
||||||||||||||||
| Property & Transportation |
(3.1 | ) | (3.2 | ) | (4.0 | ) | (4.1 | ) | ||||||||
| Specialty Casualty |
(0.9 | ) | (2.0 | ) | (1.0 | ) | (1.4 | ) | ||||||||
| Specialty Financial |
(5.4 | ) | (4.6 | ) | (5.8 | ) | (4.0 | ) | ||||||||
| Aggregate Specialty Group |
(2.2 | ) | (2.9 | ) | (2.5 | ) | (2.8 | ) | ||||||||
| Total P&C Segment |
(2.0 | ) | 2.7 | (2.4 | ) | 0.1 | ||||||||||
Footnote (d) is contained in the accompanying Notes to Financial Schedules at the end of this release.
Page 9
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 |
|||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
| Annuity Premiums: |
||||||||||||||||||||||||
| Financial Institutions |
$ | 715 | $ | 607 | 18 | % | $ | 1,464 | $ | 1,260 | 16 | % | ||||||||||||
| Retail |
496 | 435 | 14 | % | 985 | 1,001 | (2 | %) | ||||||||||||||||
| Education Market |
47 | 45 | 4 | % | 92 | 102 | (10 | %) | ||||||||||||||||
| Variable Annuities |
8 | 11 | (27 | %) | 15 | 20 | (25 | %) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Annuity Premiums |
$ | 1,266 | $ | 1,098 | 15 | % | $ | 2,556 | $ | 2,383 | 7 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Components of Operating Earnings Before Income Taxes
| Three months ended June 30, |
Pct. Change |
Six months ended June 30, |
Pct. Change |
|||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
| Revenues: |
||||||||||||||||||||||||
| Net investment income |
$ | 360 | $ | 344 | 5 | % | $ | 707 | $ | 659 | 7 | % | ||||||||||||
| Other income |
26 | 24 | 8 | % | 53 | 50 | 6 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total revenues |
386 | 368 | 5 | % | 760 | 709 | 7 | % | ||||||||||||||||
| Costs and Expenses: |
||||||||||||||||||||||||
| Annuity benefits |
224 | 223 | — | 420 | 451 | (7 | %) | |||||||||||||||||
| Acquisition expenses |
47 | 40 | 18 | % | 99 | 74 | 34 | % | ||||||||||||||||
| Other expenses |
30 | 29 | 3 | % | 60 | 55 | 9 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total costs and expenses |
301 | 292 | 3 | % | 579 | 580 | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating earnings before income taxes |
$ | 85 | $ | 76 | 12 | % | $ | 181 | $ | 129 | 40 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Supplemental Annuity Information
| Three months ended June 30, |
Pct. Change |
Six months ended June 30, |
Pct. Change |
|||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
| Operating earnings before impact of fair value accounting on FIAs |
$ | 101 | $ | 102 | (1 | %) | $ | 199 | $ | 186 | 7 | % | ||||||||||||
| Impact of fair value accounting |
(16 | ) | (26 | ) | nm | (18 | ) | (57 | ) | nm | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating earnings before income taxes |
$ | 85 | $ | 76 | 12 | % | $ | 181 | $ | 129 | 40 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Average fixed annuity reserves* |
$ | 31,212 | $ | 27,861 | 12 | % | $ | 30,698 | $ | 27,398 | 12 | % | ||||||||||||
| Net interest spread* |
2.61 | % | 2.84 | % | 2.59 | % | 2.69 | % | ||||||||||||||||
| Net spread earned before impact of fair value accounting* |
1.32 | % | 1.45 | % | 1.31 | % | 1.33 | % | ||||||||||||||||
| Net spread earned after impact of fair value accounting* |
1.11 | % | 1.08 | % | 1.19 | % | 0.91 | % | ||||||||||||||||
| * | Excludes fixed annuity portion of variable annuity business. |
Page 10
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, |
|||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Core Operating Earnings before Income Taxes: |
||||||||||||||||
| P&C insurance segment |
$ | 163 | $ | 139 | $ | 332 | $ | 297 | ||||||||
| Annuity segment, before impact of fair value accounting |
101 | 102 | 199 | 186 | ||||||||||||
| Impact of fair value accounting |
(16 | ) | (26 | ) | (18 | ) | (57 | ) | ||||||||
| Run-off long-term care and life segment |
2 | — | 2 | (1 | ) | |||||||||||
| Interest and other corporate expenses |
(46 | ) | (38 | ) | (93 | ) | (78 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Core operating earnings before income taxes |
204 | 177 | 422 | 347 | ||||||||||||
| Related income taxes |
59 | 64 | 126 | 123 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Core net operating earnings |
$ | 145 | $ | 113 | $ | 296 | $ | 224 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| b) | Excluding the significant tax benefit related to stock-based compensation, AFG’s effective tax rate for the quarter and six months ended June 30, 2017 was 32% and 33%, respectively. Excluding the impact of the Neon Exited Lines Charge that was reported in the second quarter of 2016, AFG’s effective tax rate for the quarter and six months ended June 30, 2016 was 36% and 35%, respectively. AFG maintains a full valuation allowance against the deferred tax benefits associated with losses related to AFG’s specialist Lloyd’s insurance business, Neon. |
| c) | Shareholders’ Equity at June 30, 2017 includes $481 million ($5.46 per share) in unrealized after-tax gains on fixed maturities and $6 million ($0.07 per share) in unrealized after-tax losses on fixed maturity-related cash flow hedges. Shareholders’ Equity at December 31, 2016 includes $306 million ($3.52 per share) in unrealized after-tax gains on fixed maturities and $7 million ($0.08 per share) in unrealized after-tax losses on fixed maturity-related cash flow hedges. |
| 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 lending and leasing institutions (including equipment leasing and collateral and lender-placed mortgage property insurance), surety and fidelity products and trade credit insurance. |
| • | Other includes an internal reinsurance facility. |
Page 11
Exhibit 99.2
|
American Financial Group, Inc. Investor Supplement - Second Quarter 2017
August 1, 2017
American Financial Group, Inc. Corporate Headquarters Great American Insurance Group Tower 301 E Fourth Street Cincinnati, OH 45202 513 579 6739 |
| ||
American Financial Group, Inc.
Table of Contents - Investor Supplement - Second Quarter 2017
| Section |
Page |
|||
| Table of Contents - Investor Supplement - Second Quarter 2017 |
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 Earnings (GAAP) |
12 | |||
| Detail of Annuity Benefits Expense (GAAP) |
13 | |||
| Net Spread on Fixed Annuities (GAAP) |
14 | |||
| Annuity Premiums (Statutory) |
15 | |||
| Fixed Annuity Benefits Accumulated (GAAP) |
16 | |||
| Consolidated Balance Sheet / Book Value / Debt |
||||
| Consolidated Balance Sheet |
17 | |||
| Book Value Per Share and Price / Book Summary |
18 | |||
| Capitalization |
19 | |||
| Additional Supplemental Information |
20 | |||
| Consolidated Investment Supplement |
||||
| Total Cash and Investments |
21 | |||
| Net Investment Income |
22 | |||
| Fixed Maturities - By Security Type - AFG Consolidated |
23 | |||
| Fixed Maturities - By Security Type Portfolio |
24 | |||
| Fixed Maturities - Credit Rating |
25 | |||
| Mortgage-Backed Securities - AFG Consolidated |
26 | |||
| Mortgage-Backed Securities Portfolio |
27 | |||
| Mortgage-Backed Securities - Credit Rating |
28 | |||
| Appendix |
||||
| A. Fixed Maturities - Credit Rating by Type |
29 | |||
Page 2
|
| ||
American Financial Group, Inc.
Financial Highlights
(in millions, except per share information)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Highlights |
||||||||||||||||||||||||||||
| Net earnings |
$ | 145 | $ | 153 | $ | 385 | $ | 109 | $ | 54 | $ | 298 | $ | 155 | ||||||||||||||
| Core net operating earnings |
145 | 151 | 176 | 134 | 113 | 296 | 224 | |||||||||||||||||||||
| Total assets |
58,618 | 57,464 | 55,072 | 54,845 | 52,733 | 58,618 | 52,733 | |||||||||||||||||||||
| Adjusted shareholders’ equity (a) |
4,837 | 4,815 | 4,617 | 4,487 | 4,356 | 4,837 | 4,356 | |||||||||||||||||||||
| Property and Casualty net written premiums |
1,130 | 1,027 | 1,083 | 1,268 | 1,056 | 2,157 | 2,035 | |||||||||||||||||||||
| Annuity statutory premiums |
1,266 | 1,290 | 1,111 | 941 | 1,098 | 2,556 | 2,383 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Per share data |
||||||||||||||||||||||||||||
| Diluted earnings per share |
$ | 1.61 | $ | 1.72 | $ | 4.33 | $ | 1.23 | $ | 0.62 | $ | 3.32 | $ | 1.76 | ||||||||||||||
| Core net operating earnings per share |
1.61 | 1.69 | 1.98 | 1.51 | 1.28 | 3.29 | 2.53 | |||||||||||||||||||||
| Adjusted book value per share (a) |
54.97 | 54.98 | 53.11 | 51.68 | 50.16 | 54.97 | 50.16 | |||||||||||||||||||||
| Cash dividends per common share |
1.8125 | 0.3125 | 1.3125 | 0.2800 | 0.2800 | 2.1250 | 0.5600 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Financial ratios |
||||||||||||||||||||||||||||
| Annualized return on equity (b) |
12.3 | % | 13.3 | % | 34.4 | % | 9.9 | % | 5.1 | % | 12.8 | % | 7.2 | % | ||||||||||||||
| Annualized core operating return on equity (b) |
12.3 | % | 13.1 | % | 15.7 | % | 12.2 | % | 10.5 | % | 12.7 | % | 10.4 | % | ||||||||||||||
| Property and Casualty combined ratio - Specialty: |
||||||||||||||||||||||||||||
| Loss & LAE ratio |
59.5 | % | 59.5 | % | 63.7 | % | 62.9 | % | 61.2 | % | 59.5 | % | 59.8 | % | ||||||||||||||
| Underwriting expense ratio |
33.7 | % | 32.7 | % | 26.7 | % | 30.3 | % | 32.7 | % | 33.2 | % | 32.9 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio - Specialty |
93.2 | % | 92.2 | % | 90.4 | % | 93.2 | % | 93.9 | % | 92.7 | % | 92.7 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net spread on fixed annuities: |
||||||||||||||||||||||||||||
| Net interest spread |
2.61 | % | 2.58 | % | 2.70 | % | 2.85 | % | 2.84 | % | 2.59 | % | 2.69 | % | ||||||||||||||
| Net spread earned: |
||||||||||||||||||||||||||||
| Before impact of fair value accounting |
1.32 | % | 1.31 | % | 1.42 | % | 1.46 | % | 1.45 | % | 1.31 | % | 1.33 | % | ||||||||||||||
| Impact of fair value accounting (c) |
(0.21 | %) | (0.03 | %) | 0.40 | % | 0.01 | % | (0.37 | %) | (0.12 | %) | (0.42 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| After impact of fair value accounting |
1.11 | % | 1.28 | % | 1.82 | % | 1.47 | % | 1.08 | % | 1.19 | % | 0.91 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (a) | Excludes unrealized gains related to fixed maturity investments, a reconciliation to the GAAP measure is on page 18. |
| (b) | Excludes accumulated other comprehensive income. |
| (c) | Change in fair value of derivatives offset by the estimated related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs. |
Page 3
|
| ||
American Financial Group, Inc.
Summary of Earnings
($ in millions)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Property and Casualty Insurance |
||||||||||||||||||||||||||||
| Underwriting profit |
$ | 72 | $ | 78 | $ | 110 | $ | 78 | $ | 62 | $ | 150 | $ | 149 | ||||||||||||||
| Net investment income |
96 | 86 | 85 | 93 | 89 | 182 | 172 | |||||||||||||||||||||
| Other income (expense) |
(5 | ) | 5 | (15 | ) | (18 | ) | (12 | ) | — | (24 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Property and Casualty Insurance operating earnings |
163 | 169 | 180 | 153 | 139 | 332 | 297 | |||||||||||||||||||||
| Annuity earnings |
85 | 96 | 132 | 107 | 76 | 181 | 129 | |||||||||||||||||||||
| Run-off Long-Term Care and Life earnings |
2 | — | 2 | 1 | — | 2 | (1 | ) | ||||||||||||||||||||
| Interest expense of parent holding companies |
(23 | ) | (21 | ) | (21 | ) | (19 | ) | (19 | ) | (44 | ) | (37 | ) | ||||||||||||||
| Other expense |
(23 | ) | (26 | ) | (29 | ) | (29 | ) | (19 | ) | (49 | ) | (41 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Pre-tax core operating earnings |
204 | 218 | 264 | 213 | 177 | 422 | 347 | |||||||||||||||||||||
| Income tax expense |
59 | 67 | 88 | 79 | 64 | 126 | 123 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Core net operating earnings |
145 | 151 | 176 | 134 | 113 | 296 | 224 | |||||||||||||||||||||
| Non-core items, net of tax: |
||||||||||||||||||||||||||||
| Realized gains (losses) on securities |
5 | 2 | 32 | 1 | (10 | ) | 7 | (20 | ) | |||||||||||||||||||
| Realized gain (loss) on sale of subsidiaries |
— | — | — | — | 1 | — | 1 | |||||||||||||||||||||
| Gain on sale of hotel and apartment properties |
— | — | — | — | 15 | — | 15 | |||||||||||||||||||||
| Special A&E charges: |
||||||||||||||||||||||||||||
| Property and Casualty Insurance run-off operations |
— | — | — | (23 | ) | — | — | — | ||||||||||||||||||||
| Former Railroad and Manufacturing operations |
— | — | — | (3 | ) | — | — | — | ||||||||||||||||||||
| Neon exited lines charge |
— | — | — | — | (65 | ) | — | (65 | ) | |||||||||||||||||||
| Tax benefit related to National Interstate merger |
— | — | 66 | — | — | — | — | |||||||||||||||||||||
| Tax benefit related to Neon restructuring |
— | — | 111 | — | — | — | — | |||||||||||||||||||||
| Loss on retirement of debt |
(5 | ) | — | — | — | — | (5 | ) | — | |||||||||||||||||||
|
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|
|
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|
|
|
|
|
|
|||||||||||||||
| Net earnings |
$ | 145 | $ | 153 | $ | 385 | $ | 109 | $ | 54 | $ | 298 | $ | 155 | ||||||||||||||
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Page 4
|
| ||
American Financial Group, Inc.
Earnings Per Share Summary
(in millions, except per share information)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Core net operating earnings |
$ | 145 | $ | 151 | $ | 176 | $ | 134 | $ | 113 | $ | 296 | $ | 224 | ||||||||||||||
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|
|
|
|
|
|
|||||||||||||||
| Net earnings |
$ | 145 | $ | 153 | $ | 385 | $ | 109 | $ | 54 | $ | 298 | $ | 155 | ||||||||||||||
|
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|
|
|||||||||||||||
| Average number of diluted shares |
89.799 | 89.342 | 88.774 | 88.461 | 88.390 | 89.572 | 88.443 | |||||||||||||||||||||
| Diluted earnings per share: |
||||||||||||||||||||||||||||
| Core net operating earnings per share |
$ | 1.61 | $ | 1.69 | $ | 1.98 | $ | 1.51 | $ | 1.28 | $ | 3.29 | $ | 2.53 | ||||||||||||||
| Realized gains (losses) on securities |
0.05 | 0.03 | 0.36 | 0.02 | (0.11 | ) | 0.08 | (0.22 | ) | |||||||||||||||||||
| Realized gain (loss) on sale of subsidiaries |
— | — | — | — | 0.01 | — | 0.01 | |||||||||||||||||||||
| Gain on sale of hotel and apartment properties |
— | — | — | — | 0.17 | — | 0.17 | |||||||||||||||||||||
| Special A&E charges: |
||||||||||||||||||||||||||||
| Property and Casualty Insurance run-off operations |
— | — | — | (0.26 | ) | — | — | — | ||||||||||||||||||||
| Former Railroad and Manufacturing operations |
— | — | — | (0.04 | ) | — | — | — | ||||||||||||||||||||
| Neon exited lines charge |
— | — | — | — | (0.73 | ) | — | (0.73 | ) | |||||||||||||||||||
| Tax benefit related to National Interstate merger |
— | — | 0.74 | — | — | — | — | |||||||||||||||||||||
| Tax benefit related to Neon restructuring |
— | — | 1.25 | — | — | — | — | |||||||||||||||||||||
| Loss on retirement of debt |
(0.05 | ) | — | — | — | — | (0.05 | ) | — | |||||||||||||||||||
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|||||||||||||||
| Diluted earnings per share |
$ | 1.61 | $ | 1.72 | $ | 4.33 | $ | 1.23 | $ | 0.62 | $ | 3.32 | $ | 1.76 | ||||||||||||||
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Page 5
|
| ||
American Financial Group, Inc.
Property and Casualty Insurance - Summary Underwriting Results (GAAP)
($ in millions)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Property and Transportation |
$ | 21 | $ | 43 | $ | 75 | $ | 44 | $ | 15 | $ | 64 | $ | 47 | ||||||||||||||
| Specialty Casualty |
29 | 15 | 13 | 13 | 23 | 44 | 52 | |||||||||||||||||||||
| Specialty Financial |
23 | 22 | 20 | 19 | 22 | 45 | 45 | |||||||||||||||||||||
| Other Specialty |
— | (1 | ) | 2 | 2 | 3 | (1 | ) | 5 | |||||||||||||||||||
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|||||||||||||||
| Underwriting profit - Specialty |
73 | 79 | 110 | 78 | 63 | 152 | 149 | |||||||||||||||||||||
| Other core charges, included in loss and LAE |
1 | 1 | — | — | 1 | 2 | — | |||||||||||||||||||||
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|
|||||||||||||||
| Underwriting profit - Core |
72 | 78 | 110 | 78 | 62 | 150 | 149 | |||||||||||||||||||||
| Special A&E charges, included in loss and LAE |
— | — | — | (36 | ) | — | — | — | ||||||||||||||||||||
| Neon exited lines charge, included in loss and LAE |
— | — | — | — | (57 | ) | — | (57 | ) | |||||||||||||||||||
| Neon exited lines charge, included in underwriting expenses |
— | — | — | — | (8 | ) | — | (8 | ) | |||||||||||||||||||
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|
|||||||||||||||
| Underwriting profit (loss) - Property and Casualty Insurance |
$ | 72 | $ | 78 | $ | 110 | $ | 42 | $ | (3 | ) | $ | 150 | $ | 84 | |||||||||||||
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|
|||||||||||||||
| Included in results above: |
||||||||||||||||||||||||||||
| Current accident year catastrophe losses: |
||||||||||||||||||||||||||||
| Catastrophe reinstatement premium |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
| Catastrophe loss |
18 | 7 | 12 | 14 | 21 | 25 | 29 | |||||||||||||||||||||
|
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|
|||||||||||||||
| Total current accident year catastrophe losses |
$ | 18 | $ | 7 | $ | 12 | $ | 14 | $ | 21 | $ | 25 | $ | 29 | ||||||||||||||
|
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|
|||||||||||||||
| Prior year loss reserve development (favorable) / adverse |
$ | (22 | ) | $ | (28 | ) | $ | 10 | $ | 22 | $ | 28 | $ | (50 | ) | $ | — | |||||||||||
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|
|||||||||||||||
| Combined ratio: |
||||||||||||||||||||||||||||
| Property and Transportation |
94.2 | % | 87.3 | % | 83.9 | % | 91.1 | % | 95.9 | % | 90.7 | % | 93.4 | % | ||||||||||||||
| Specialty Casualty |
94.7 | % | 97.0 | % | 97.4 | % | 97.4 | % | 95.3 | % | 95.8 | % | 94.8 | % | ||||||||||||||
| Specialty Financial |
84.4 | % | 85.0 | % | 86.0 | % | 86.4 | % | 84.4 | % | 84.8 | % | 83.5 | % | ||||||||||||||
| Other Specialty |
98.3 | % | 105.8 | % | 94.9 | % | 91.5 | % | 89.2 | % | 102.0 | % | 89.4 | % | ||||||||||||||
| Combined ratio - Specialty |
93.2 | % | 92.2 | % | 90.4 | % | 93.2 | % | 93.9 | % | 92.7 | % | 92.7 | % | ||||||||||||||
| Other core charges |
0.2 | % | 0.1 | % | 0.0 | % | 0.1 | % | 0.1 | % | 0.1 | % | 0.0 | % | ||||||||||||||
| Neon exited lines charge, loss and LAE |
0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 5.5 | % | 0.0 | % | 2.8 | % | ||||||||||||||
| Neon exited lines charge, underwriting expenses |
0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.8 | % | 0.0 | % | 0.4 | % | ||||||||||||||
| Special A&E charges |
0.0 | % | 0.0 | % | 0.0 | % | 3.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio |
93.4 | % | 92.3 | % | 90.4 | % | 96.3 | % | 100.3 | % | 92.8 | % | 95.9 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio excl. catastrophe and prior year development |
93.7 | % | 94.3 | % | 88.4 | % | 93.1 | % | 94.8 | % | 94.0 | % | 94.1 | % | ||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE components - property and casualty insurance |
||||||||||||||||||||||||||||
| Current accident year, excluding catastrophe loss |
60.0 | % | 61.6 | % | 61.7 | % | 62.8 | % | 62.1 | % | 60.8 | % | 61.2 | % | ||||||||||||||
| Prior accident year loss reserve development |
(2.0 | %) | (2.7 | %) | 0.9 | % | 2.0 | % | 2.7 | % | (2.4 | %) | 0.1 | % | ||||||||||||||
| Current accident year catastrophe loss |
1.7 | % | 0.7 | % | 1.1 | % | 1.2 | % | 2.0 | % | 1.2 | % | 1.4 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE ratio |
59.7 | % | 59.6 | % | 63.7 | % | 66.0 | % | 66.8 | % | 59.6 | % | 62.7 | % | ||||||||||||||
|
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|
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|
|||||||||||||||
Page 6
|
| ||
American Financial Group, Inc.
Specialty - Underwriting Results (GAAP)
($ in millions)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Gross written premiums |
$ | 1,503 | $ | 1,324 | $ | 1,441 | $ | 1,899 | $ | 1,398 | $ | 2,827 | $ | 2,641 | ||||||||||||||
| Ceded reinsurance premiums |
(373 | ) | (297 | ) | (358 | ) | (631 | ) | (342 | ) | (670 | ) | (606 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net written premiums |
1,130 | 1,027 | 1,083 | 1,268 | 1,056 | 2,157 | 2,035 | |||||||||||||||||||||
| Change in unearned premiums |
(65 | ) | (5 | ) | 61 | (109 | ) | (29 | ) | (70 | ) | (10 | ) | |||||||||||||||
|
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|
|
|
|
|
|||||||||||||||
| Net earned premiums |
1,065 | 1,022 | 1,144 | 1,159 | 1,027 | 2,087 | 2,025 | |||||||||||||||||||||
| Loss and LAE |
634 | 608 | 729 | 729 | 629 | 1,242 | 1,211 | |||||||||||||||||||||
| Underwriting expense |
358 | 335 | 305 | 352 | 335 | 693 | 665 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Underwriting profit |
$ | 73 | $ | 79 | $ | 110 | $ | 78 | $ | 63 | $ | 152 | $ | 149 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Included in results above: |
||||||||||||||||||||||||||||
| Current accident year catastrophe losses: |
||||||||||||||||||||||||||||
| Catastrophe reinstatement premium |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
| Catastrophe loss |
18 | 7 | 12 | 14 | 21 | 25 | 29 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total current accident year catastrophe losses |
$ | 18 | $ | 7 | $ | 12 | $ | 14 | $ | 21 | $ | 25 | $ | 29 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Prior year loss reserve development (favorable) / adverse |
$ | (23 | ) | $ | (29 | ) | $ | 10 | $ | (14 | ) | $ | (30 | ) | $ | (52 | ) | $ | (57 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio: |
||||||||||||||||||||||||||||
| Loss and LAE ratio |
59.5 | % | 59.5 | % | 63.7 | % | 62.9 | % | 61.2 | % | 59.5 | % | 59.8 | % | ||||||||||||||
| Underwriting expense ratio |
33.7 | % | 32.7 | % | 26.7 | % | 30.3 | % | 32.7 | % | 33.2 | % | 32.9 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio |
93.2 | % | 92.2 | % | 90.4 | % | 93.2 | % | 93.9 | % | 92.7 | % | 92.7 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio excl. catastrophe and prior year development |
93.7 | % | 94.3 | % | 88.4 | % | 93.1 | % | 94.8 | % | 94.0 | % | 94.1 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE components: |
||||||||||||||||||||||||||||
| Current accident year, excluding catastrophe loss |
60.0 | % | 61.6 | % | 61.7 | % | 62.8 | % | 62.1 | % | 60.8 | % | 61.2 | % | ||||||||||||||
| Prior accident year loss reserve development |
(2.2 | %) | (2.8 | %) | 0.9 | % | (1.1 | %) | (2.9 | %) | (2.5 | %) | (2.8 | %) | ||||||||||||||
| Current accident year catastrophe loss |
1.7 | % | 0.7 | % | 1.1 | % | 1.2 | % | 2.0 | % | 1.2 | % | 1.4 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE ratio |
59.5 | % | 59.5 | % | 63.7 | % | 62.9 | % | 61.2 | % | 59.5 | % | 59.8 | % | ||||||||||||||
|
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|
|||||||||||||||
Page 7
|
| ||
American Financial Group, Inc.
Property and Transportation - Underwriting Results (GAAP)
($ in millions)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Gross written premiums |
$ | 573 | $ | 416 | $ | 577 | $ | 991 | $ | 538 | $ | 989 | $ | 936 | ||||||||||||||
| Ceded reinsurance premiums |
(180 | ) | (92 | ) | (183 | ) | (406 | ) | (156 | ) | (272 | ) | (243 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net written premiums |
393 | 324 | 394 | 585 | 382 | 717 | 693 | |||||||||||||||||||||
| Change in unearned premiums |
(36 | ) | 18 | 71 | (92 | ) | (17 | ) | (18 | ) | 11 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net earned premiums |
357 | 342 | 465 | 493 | 365 | 699 | 704 | |||||||||||||||||||||
| Loss and LAE |
232 | 208 | 319 | 339 | 245 | 440 | 456 | |||||||||||||||||||||
| Underwriting expense |
104 | 91 | 71 | 110 | 105 | 195 | 201 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Underwriting profit |
$ | 21 | $ | 43 | $ | 75 | $ | 44 | $ | 15 | $ | 64 | $ | 47 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Included in results above: |
||||||||||||||||||||||||||||
| Current accident year catastrophe losses: |
||||||||||||||||||||||||||||
| Catastrophe reinstatement premium |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
| Catastrophe loss |
11 | 5 | 6 | 7 | 12 | 16 | 18 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total current accident year catastrophe losses |
$ | 11 | $ | 5 | $ | 6 | $ | 7 | $ | 12 | $ | 16 | $ | 18 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Prior year loss reserve development (favorable) / adverse |
$ | (11 | ) | $ | (17 | ) | $ | 13 | $ | (5 | ) | $ | (12 | ) | $ | (28 | ) | $ | (29 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio: |
||||||||||||||||||||||||||||
| Loss and LAE ratio |
64.9 | % | 60.8 | % | 68.6 | % | 68.8 | % | 67.0 | % | 62.8 | % | 64.7 | % | ||||||||||||||
| Underwriting expense ratio |
29.3 | % | 26.5 | % | 15.3 | % | 22.3 | % | 28.9 | % | 27.9 | % | 28.7 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio |
94.2 | % | 87.3 | % | 83.9 | % | 91.1 | % | 95.9 | % | 90.7 | % | 93.4 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio excl. catastrophe and prior year development |
94.3 | % | 90.7 | % | 79.7 | % | 90.7 | % | 95.8 | % | 92.5 | % | 95.0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE components: |
||||||||||||||||||||||||||||
| Current accident year, excluding catastrophe loss |
65.0 | % | 64.2 | % | 64.4 | % | 68.4 | % | 66.9 | % | 64.6 | % | 66.3 | % | ||||||||||||||
| Prior accident year loss reserve development |
(3.1 | %) | (4.8 | %) | 3.0 | % | (1.2 | %) | (3.2 | %) | (4.0 | %) | (4.1 | %) | ||||||||||||||
| Current accident year catastrophe loss |
3.0 | % | 1.4 | % | 1.2 | % | 1.6 | % | 3.3 | % | 2.2 | % | 2.5 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE ratio |
64.9 | % | 60.8 | % | 68.6 | % | 68.8 | % | 67.0 | % | 62.8 | % | 64.7 | % | ||||||||||||||
|
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|
|||||||||||||||
Page 8
|
| ||
American Financial Group, Inc.
Specialty Casualty - Underwriting Results (GAAP)
($ in millions)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Gross written premiums |
$ | 756 | $ | 744 | $ | 684 | $ | 722 | $ | 688 | $ | 1,500 | $ | 1,386 | ||||||||||||||
| Ceded reinsurance premiums |
(195 | ) | (204 | ) | (174 | ) | (218 | ) | (185 | ) | (399 | ) | (364 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net written premiums |
561 | 540 | 510 | 504 | 503 | 1,101 | 1,022 | |||||||||||||||||||||
| Change in unearned premiums |
(24 | ) | (32 | ) | — | (7 | ) | (6 | ) | (56 | ) | (23 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net earned premiums |
537 | 508 | 510 | 497 | 497 | 1,045 | 999 | |||||||||||||||||||||
| Loss and LAE |
339 | 331 | 348 | 330 | 329 | 670 | 642 | |||||||||||||||||||||
| Underwriting expense |
169 | 162 | 149 | 154 | 145 | 331 | 305 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Underwriting profit |
$ | 29 | $ | 15 | $ | 13 | $ | 13 | $ | 23 | $ | 44 | $ | 52 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Included in results above: |
||||||||||||||||||||||||||||
| Current accident year catastrophe losses: |
||||||||||||||||||||||||||||
| Catastrophe reinstatement premium |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
| Catastrophe loss |
2 | 1 | 4 | 2 | 3 | 3 | 4 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total current accident year catastrophe losses |
$ | 2 | $ | 1 | $ | 4 | $ | 2 | $ | 3 | $ | 3 | $ | 4 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Prior year loss reserve development (favorable) / adverse |
$ | (5 | ) | $ | (6 | ) | $ | 3 | $ | (2 | ) | $ | (10 | ) | $ | (11 | ) | $ | (14 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio: |
||||||||||||||||||||||||||||
| Loss and LAE ratio |
63.1 | % | 65.2 | % | 68.2 | % | 66.5 | % | 66.1 | % | 64.1 | % | 64.2 | % | ||||||||||||||
| Underwriting expense ratio |
31.6 | % | 31.8 | % | 29.2 | % | 30.9 | % | 29.2 | % | 31.7 | % | 30.6 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio |
94.7 | % | 97.0 | % | 97.4 | % | 97.4 | % | 95.3 | % | 95.8 | % | 94.8 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio excl. catastrophe and prior year development |
95.2 | % | 97.9 | % | 96.1 | % | 97.4 | % | 96.6 | % | 96.5 | % | 95.8 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE components: |
||||||||||||||||||||||||||||
| Current accident year, excluding catastrophe loss |
63.6 | % | 66.1 | % | 66.9 | % | 66.5 | % | 67.4 | % | 64.8 | % | 65.2 | % | ||||||||||||||
| Prior accident year loss reserve development |
(0.9 | %) | (1.1 | %) | 0.5 | % | (0.3 | %) | (2.0 | %) | (1.0 | %) | (1.4 | %) | ||||||||||||||
| Current accident year catastrophe loss |
0.4 | % | 0.2 | % | 0.8 | % | 0.3 | % | 0.7 | % | 0.3 | % | 0.4 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE ratio |
63.1 | % | 65.2 | % | 68.2 | % | 66.5 | % | 66.1 | % | 64.1 | % | 64.2 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Page 9
|
| ||
American Financial Group, Inc.
Specialty Financial - Underwriting Results (GAAP)
($ in millions)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Gross written premiums |
$ | 174 | $ | 164 | $ | 180 | $ | 186 | $ | 172 | $ | 338 | $ | 319 | ||||||||||||||
| Ceded reinsurance premiums |
(25 | ) | (23 | ) | (26 | ) | (37 | ) | (28 | ) | (48 | ) | (50 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net written premiums |
149 | 141 | 154 | 149 | 144 | 290 | 269 | |||||||||||||||||||||
| Change in unearned premiums |
(3 | ) | 6 | (13 | ) | (4 | ) | (5 | ) | 3 | 2 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net earned premiums |
146 | 147 | 141 | 145 | 139 | 293 | 271 | |||||||||||||||||||||
| Loss and LAE |
49 | 52 | 46 | 45 | 42 | 101 | 87 | |||||||||||||||||||||
| Underwriting expense |
74 | 73 | 75 | 81 | 75 | 147 | 139 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Underwriting profit |
$ | 23 | $ | 22 | $ | 20 | $ | 19 | $ | 22 | $ | 45 | $ | 45 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Included in results above: |
||||||||||||||||||||||||||||
| Current accident year catastrophe losses: |
||||||||||||||||||||||||||||
| Catastrophe reinstatement premium |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
| Catastrophe loss |
5 | 1 | 2 | 5 | 3 | 6 | 4 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total current accident year catastrophe losses |
$ | 5 | $ | 1 | $ | 2 | $ | 5 | $ | 3 | $ | 6 | $ | 4 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Prior year loss reserve development (favorable) / adverse |
$ | (8 | ) | $ | (9 | ) | $ | (6 | ) | $ | (6 | ) | $ | (7 | ) | $ | (17 | ) | $ | (11 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio: |
||||||||||||||||||||||||||||
| Loss and LAE ratio |
33.1 | % | 35.6 | % | 32.4 | % | 31.6 | % | 30.1 | % | 34.4 | % | 32.0 | % | ||||||||||||||
| Underwriting expense ratio |
51.3 | % | 49.4 | % | 53.6 | % | 54.8 | % | 54.3 | % | 50.4 | % | 51.5 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio |
84.4 | % | 85.0 | % | 86.0 | % | 86.4 | % | 84.4 | % | 84.8 | % | 83.5 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio excl. catastrophe and prior year development |
86.5 | % | 90.6 | % | 88.8 | % | 87.0 | % | 87.0 | % | 88.6 | % | 85.9 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE components: |
||||||||||||||||||||||||||||
| Current accident year, excluding catastrophe loss |
35.2 | % | 41.2 | % | 35.2 | % | 32.2 | % | 32.7 | % | 38.2 | % | 34.4 | % | ||||||||||||||
| Prior accident year loss reserve development |
(5.4 | %) | (6.4 | %) | (4.5 | %) | (3.9 | %) | (4.6 | %) | (5.8 | %) | (4.0 | %) | ||||||||||||||
| Current accident year catastrophe loss |
3.3 | % | 0.8 | % | 1.7 | % | 3.3 | % | 2.0 | % | 2.0 | % | 1.6 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Loss and LAE ratio |
33.1 | % | 35.6 | % | 32.4 | % | 31.6 | % | 30.1 | % | 34.4 | % | 32.0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Page 10
|
| ||
American Financial Group, Inc.
Other Specialty - Underwriting Results (GAAP)
($ in millions)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Gross written premiums |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
| Ceded reinsurance premiums |
27 | 22 | 25 | 30 | 27 | 49 | 51 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net written premiums |
27 | 22 | 25 | 30 | 27 | 49 | 51 | |||||||||||||||||||||
| Change in unearned premiums |
(2 | ) | 3 | 3 | (6 | ) | (1 | ) | 1 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net earned premiums |
25 | 25 | 28 | 24 | 26 | 50 | 51 | |||||||||||||||||||||
| Loss and LAE |
14 | 17 | 16 | 15 | 13 | 31 | 26 | |||||||||||||||||||||
| Underwriting expense |
11 | 9 | 10 | 7 | 10 | 20 | 20 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Underwriting profit |
$ | — | $ | (1 | ) | $ | 2 | $ | 2 | $ | 3 | $ | (1 | ) | $ | 5 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Included in results above: |
||||||||||||||||||||||||||||
| Current accident year catastrophe losses: |
||||||||||||||||||||||||||||
| Catastrophe reinstatement premium |
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
| Catastrophe loss |
— | — | — | — | 3 | — | 3 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total current accident year catastrophe losses |
$ | — | $ | — | $ | — | $ | — | $ | 3 | $ | — | $ | 3 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Prior year loss reserve development (favorable) / adverse |
$ | 1 | $ | 3 | $ | — | $ | (1 | ) | $ | (1 | ) | $ | 4 | $ | (3 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio: |
||||||||||||||||||||||||||||
| Loss and LAE ratio |
62.0 | % | 68.0 | % | 59.5 | % | 55.2 | % | 52.5 | % | 64.9 | % | 52.3 | % | ||||||||||||||
| Underwriting expense ratio |
36.3 | % | 37.8 | % | 35.4 | % | 36.3 | % | 36.7 | % | 37.1 | % | 37.1 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio |
98.3 | % | 105.8 | % | 94.9 | % | 91.5 | % | 89.2 | % | 102.0 | % | 89.4 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Combined ratio excl. catastrophe and prior year development |
93.5 | % | 93.4 | % | 93.7 | % | 95.1 | % | 86.4 | % | 93.5 | % | 91.1 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Page 11
|
| ||
American Financial Group, Inc.
Annuity Earnings (GAAP)
($ in millions)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Net investment income |
$ | 360 | $ | 347 | $ | 346 | $ | 351 | $ | 344 | $ | 707 | $ | 659 | ||||||||||||||
| Guaranteed withdrawal benefit fees |
14 | 14 | 14 | 14 | 13 | 28 | 25 | |||||||||||||||||||||
| Policy charges and other miscellaneous income |
12 | 13 | 13 | 12 | 11 | 25 | 25 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total revenues |
386 | 374 | 373 | 377 | 368 | 760 | 709 | |||||||||||||||||||||
| Annuity benefits expense |
224 | 196 | 160 | 189 | 223 | 420 | 451 | |||||||||||||||||||||
| Acquisition expenses |
47 | 52 | 54 | 53 | 40 | 99 | 74 | |||||||||||||||||||||
| Other expenses |
30 | 30 | 27 | 28 | 29 | 60 | 55 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total costs and expenses |
301 | 278 | 241 | 270 | 292 | 579 | 580 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Annuity earnings before income taxes |
$ | 85 | $ | 96 | $ | 132 | $ | 107 | $ | 76 | $ | 181 | $ | 129 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Detail of Annuity earnings before income taxes |
||||||||||||||||||||||||||||
| Earnings before income taxes and impact of fair value accounting |
$ | 101 | $ | 98 | $ | 103 | $ | 106 | $ | 102 | $ | 199 | $ | 186 | ||||||||||||||
| Impact of fair value accounting (a) |
(16 | ) | (2 | ) | 29 | 1 | (26 | ) | (18 | ) | (57 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Annuity earnings before income taxes |
$ | 85 | $ | 96 | $ | 132 | $ | 107 | $ | 76 | $ | 181 | $ | 129 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (a) | Change in fair value of derivatives offset by the estimated related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs. |
Page 12
|
| ||
American Financial Group, Inc.
Detail of Annuity Benefits Expense (GAAP)
($ in millions)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Detail of annuity benefits expense: |
||||||||||||||||||||||||||||
| Interest credited - fixed |
$ | 157 | $ | 152 | $ | 148 | $ | 145 | $ | 142 | $ | 309 | $ | 281 | ||||||||||||||
| Interest credited - fixed component of variable annuities |
2 | 1 | 1 | 1 | 2 | 3 | 3 | |||||||||||||||||||||
| Change in expected death and annuitization reserve |
4 | 4 | 4 | 5 | 4 | 8 | 9 | |||||||||||||||||||||
| Amortization of sales inducements |
4 | 6 | 7 | 6 | 6 | 10 | 11 | |||||||||||||||||||||
| Guaranteed withdrawal benefit reserve |
17 | 16 | 20 | 18 | 15 | 33 | 31 | |||||||||||||||||||||
| Change in other benefit reserves |
9 | 11 | 11 | 10 | 8 | 20 | 13 | |||||||||||||||||||||
| Unlockings (a) |
— | — | 23 | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Subtotal before impact of fair value accounting |
193 | 190 | 214 | 185 | 177 | 383 | 348 | |||||||||||||||||||||
| Embedded derivative mark-to-market (b) |
112 | 147 | 6 | 109 | 62 | 259 | 79 | |||||||||||||||||||||
| Equity option mark-to-market |
(81 | ) | (141 | ) | (60 | ) | (105 | ) | (16 | ) | (222 | ) | 24 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Subtotal impact of fair value accounting |
31 | 6 | (54 | ) | 4 | 46 | 37 | 103 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total annuity benefits expense |
$ | 224 | $ | 196 | $ | 160 | $ | 189 | $ | 223 | $ | 420 | $ | 451 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (a) | Includes unlockings for fixed indexed annuity embedded derivative reserves, sales inducement asset and other reserves. Does not include unlocking income of $24 million in 2016 for deferred policy acquisition costs and unearned revenue reserves. These unlockings are included in acquisition expenses and other income. In total, AFG recorded an unlocking expense reduction of $1 million in 2016. |
| (b) | Excludes unlocking impact of $17 million in 2016. |
Page 13
|
| ||
American Financial Group, Inc.
Net Spread on Fixed Annuities (GAAP)
($ in millions)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Average fixed annuity investments (at amortized cost) |
$ | 30,988 | $ | 30,055 | $ | 29,192 | $ | 28,548 | $ | 27,964 | $ | 30,522 | $ | 27,575 | ||||||||||||||
| Average annuity benefits accumulated |
31,212 | 30,183 | 29,250 | 28,538 | 27,861 | 30,698 | 27,398 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Investments in excess of annuity benefits accumulated |
$ | (224 | ) | $ | (128 | ) | $ | (58 | ) | $ | 10 | $ | 103 | $ | (176 | ) | $ | 177 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| As % of average annuity benefits accumulated (except as noted) |
||||||||||||||||||||||||||||
| Net investment income (as % of investments) |
4.62 | % | 4.59 | % | 4.72 | % | 4.88 | % | 4.88 | % | 4.60 | % | 4.74 | % | ||||||||||||||
| Interest credited |
(2.01 | %) | (2.01 | %) | (2.02 | %) | (2.03 | %) | (2.04 | %) | (2.01 | %) | (2.05 | %) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net interest spread on fixed annuities |
2.61 | % | 2.58 | % | 2.70 | % | 2.85 | % | 2.84 | % | 2.59 | % | 2.69 | % | ||||||||||||||
| Policy charges and other miscellaneous income |
0.12 | % | 0.14 | % | 0.15 | % | 0.14 | % | 0.13 | % | 0.13 | % | 0.15 | % | ||||||||||||||
| Other annuity benefit expenses, net |
(0.27 | %) | (0.31 | %) | (0.38 | %) | (0.36 | %) | (0.30 | %) | (0.29 | %) | (0.28 | %) | ||||||||||||||
| Acquisition expenses |
(0.58 | %) | (0.67 | %) | (1.06 | %) | (0.72 | %) | (0.55 | %) | (0.62 | %) | (0.51 | %) | ||||||||||||||
| Other expenses |
(0.38 | %) | (0.38 | %) | (0.35 | %) | (0.39 | %) | (0.38 | %) | (0.38 | %) | (0.38 | %) | ||||||||||||||
| Change in fair value of derivatives |
(0.39 | %) | (0.08 | %) | 0.73 | % | (0.05 | %) | (0.66 | %) | (0.24 | %) | (0.76 | %) | ||||||||||||||
| Unlockings |
0.00 | % | 0.00 | % | 0.03 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net spread earned on fixed annuities |
1.11 | % | 1.28 | % | 1.82 | % | 1.47 | % | 1.08 | % | 1.19 | % | 0.91 | % | ||||||||||||||
|
|
|
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|
|||||||||||||||
| Average annuity benefits accumulated |
$ | 31,212 | $ | 30,183 | $ | 29,250 | $ | 28,538 | $ | 27,861 | $ | 30,698 | $ | 27,398 | ||||||||||||||
| Net spread earned on fixed annuities |
1.11 | % | 1.28 | % | 1.82 | % | 1.47 | % | 1.08 | % | 1.19 | % | 0.91 | % | ||||||||||||||
|
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|
|||||||||||||||
| Earnings on fixed annuity benefits accumulated |
$ | 87 | $ | 96 | $ | 133 | $ | 105 | $ | 75 | $ | 183 | $ | 125 | ||||||||||||||
| Investments in excess of annuity benefits accumulated |
$ | (224 | ) | $ | (128 | ) | $ | (58 | ) | $ | 10 | $ | 103 | $ | (176 | ) | $ | 177 | ||||||||||
| Net investment income (as % of investments) |
4.62 | % | 4.59 | % | 4.72 | % | 4.88 | % | 4.88 | % | 4.60 | % | 4.74 | % | ||||||||||||||
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|||||||||||||||
| Earnings on investments in excess of annuity benefits accumulated |
$ | (3 | ) | $ | (1 | ) | $ | — | $ | — | $ | 1 | $ | (4 | ) | $ | 4 | |||||||||||
| Variable annuity earnings |
1 | 1 | (1 | ) | 2 | — | 2 | — | ||||||||||||||||||||
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| Earnings before income taxes - core |
$ | 85 | $ | 96 | $ | 132 | $ | 107 | $ | 76 | $ | 181 | $ | 129 | ||||||||||||||
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|
|||||||||||||||
| Detail of net spread earned on fixed annuities - core |
||||||||||||||||||||||||||||
| Net spread earned core - before impact of fair value accounting |
1.32 | % | 1.31 | % | 1.42 | % | 1.46 | % | 1.45 | % | 1.31 | % | 1.33 | % | ||||||||||||||
| Change in fair value of derivatives |
(0.39 | %) | (0.08 | %) | 0.73 | % | (0.05 | %) | (0.66 | %) | (0.24 | %) | (0.76 | %) | ||||||||||||||
| Estimated net offsets to deferred sales inducements and deferred policy acquisition costs |
0.18 | % | 0.05 | % | (0.33 | %) | 0.06 | % | 0.29 | % | 0.12 | % | 0.34 | % | ||||||||||||||
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|||||||||||||||
| Net spread earned core - after impact of fair value accounting |
1.11 | % | 1.28 | % | 1.82 | % | 1.47 | % | 1.08 | % | 1.19 | % | 0.91 | % | ||||||||||||||
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Page 14
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| ||
American Financial Group, Inc.
Annuity Premiums (Statutory)
($ in millions)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Retail single premium annuities - indexed |
$ | 474 | $ | 469 | $ | 415 | $ | 340 | $ | 413 | $ | 943 | $ | 959 | ||||||||||||||
| Retail single premium annuities - fixed |
22 | 20 | 22 | 18 | 22 | 42 | 42 | |||||||||||||||||||||
| Financial institutions single premium annuities - indexed |
500 | 487 | 474 | 435 | 507 | 987 | 1,041 | |||||||||||||||||||||
| Financial institutions single premium annuities - fixed |
215 | 262 | 152 | 97 | 100 | 477 | 219 | |||||||||||||||||||||
| Education market - fixed and indexed annuities |
47 | 45 | 40 | 42 | 45 | 92 | 102 | |||||||||||||||||||||
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|
|
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|
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|
|
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|
|
|
|||||||||||||||
| Subtotal fixed annuity premiums |
1,258 | 1,283 | 1,103 | 932 | 1,087 | 2,541 | 2,363 | |||||||||||||||||||||
| Variable annuities |
8 | 7 | 8 | 9 | 11 | 15 | 20 | |||||||||||||||||||||
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|
|||||||||||||||
| Total annuity premiums |
$ | 1,266 | $ | 1,290 | $ | 1,111 | $ | 941 | $ | 1,098 | $ | 2,556 | $ | 2,383 | ||||||||||||||
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|||||||||||||||
Page 15
|
| ||
American Financial Group, Inc.
Fixed Annuity Benefits Accumulated (GAAP)
($ in millions)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Beginning fixed annuity reserves |
$ | 30,719 | $ | 29,647 | $ | 28,853 | $ | 28,222 | $ | 27,499 | $ | 29,647 | $ | 26,371 | ||||||||||||||
| Premiums |
1,258 | 1,283 | 1,103 | 932 | 1,087 | 2,541 | 2,363 | |||||||||||||||||||||
| Federal Home Loan Bank advances |
— | — | — | — | — | — | 150 | |||||||||||||||||||||
| Surrenders, benefits and other withdrawals |
(571 | ) | (539 | ) | (524 | ) | (586 | ) | (596 | ) | (1,110 | ) | (1,079 | ) | ||||||||||||||
| Interest and other annuity benefit expenses: |
||||||||||||||||||||||||||||
| Interest credited |
157 | 152 | 148 | 145 | 142 | 309 | 281 | |||||||||||||||||||||
| Embedded derivative mark-to-market |
112 | 147 | 6 | 109 | 62 | 259 | 79 | |||||||||||||||||||||
| Change in other benefit reserves |
29 | 29 | 34 | 31 | 28 | 58 | 57 | |||||||||||||||||||||
| Unlockings |
— | — | 27 | — | — | — | — | |||||||||||||||||||||
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|
|||||||||||||||
| Ending fixed annuity reserves |
$ | 31,704 | $ | 30,719 | $ | 29,647 | $ | 28,853 | $ | 28,222 | $ | 31,704 | $ | 28,222 | ||||||||||||||
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|
|||||||||||||||
| Reconciliation to annuity benefits accumulated: |
||||||||||||||||||||||||||||
| Ending fixed annuity reserves |
$ | 31,704 | $ | 30,719 | $ | 29,647 | $ | 28,853 | $ | 28,222 | $ | 31,704 | $ | 28,222 | ||||||||||||||
| Impact of unrealized investment gains on reserves |
128 | 100 | 76 | 180 | 188 | 128 | 188 | |||||||||||||||||||||
| Fixed component of variable annuities |
182 | 183 | 184 | 189 | 186 | 182 | 186 | |||||||||||||||||||||
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|
|||||||||||||||
| Annuity benefits accumulated per balance sheet |
$ | 32,014 | $ | 31,002 | $ | 29,907 | $ | 29,222 | $ | 28,596 | $ | 32,014 | $ | 28,596 | ||||||||||||||
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|
|||||||||||||||
| Annualized surrenders and other withdrawals as a % of beginning reserves |
7.4 | % | 7.3 | % | 7.3 | % | 8.3 | % | 8.7 | % | 7.5 | % | 8.2 | % | ||||||||||||||
Page 16
|
| ||
American Financial Group, Inc.
Consolidated Balance Sheet
($ in millions)
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 03/31/16 | |||||||||||||||||||
| Assets: |
||||||||||||||||||||||||
| Total cash and investments |
$ | 44,779 | $ | 43,350 | $ | 41,433 | $ | 41,805 | $ | 40,639 | $ | 39,437 | ||||||||||||
| Recoverables from reinsurers |
2,839 | 2,735 | 2,737 | 2,814 | 2,576 | 2,561 | ||||||||||||||||||
| Prepaid reinsurance premiums |
587 | 533 | 539 | 634 | 521 | 475 | ||||||||||||||||||
| Agents’ balances and premiums receivable |
1,124 | 989 | 997 | 1,029 | 992 | 936 | ||||||||||||||||||
| Deferred policy acquisition costs |
1,156 | 1,205 | 1,239 | 867 | 881 | 1,055 | ||||||||||||||||||
| Assets of managed investment entities |
4,873 | 5,331 | 4,765 | 4,312 | 4,410 | 3,906 | ||||||||||||||||||
| Other receivables |
923 | 875 | 908 | 1,391 | 788 | 693 | ||||||||||||||||||
| Variable annuity assets (separate accounts) |
620 | 614 | 600 | 606 | 595 | 595 | ||||||||||||||||||
| Other assets |
1,518 | 1,633 | 1,655 | 1,188 | 1,132 | 1,181 | ||||||||||||||||||
| Goodwill |
199 | 199 | 199 | 199 | 199 | 199 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total assets |
$ | 58,618 | $ | 57,464 | $ | 55,072 | $ | 54,845 | $ | 52,733 | $ | 51,038 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Liabilities and Equity: |
||||||||||||||||||||||||
| Unpaid losses and loss adjustment expenses |
$ | 8,730 | $ | 8,621 | $ | 8,563 | $ | 8,661 | $ | 8,203 | $ | 8,108 | ||||||||||||
| Unearned premiums |
2,294 | 2,174 | 2,171 | 2,328 | 2,109 | 2,051 | ||||||||||||||||||
| Annuity benefits accumulated |
32,014 | 31,002 | 29,907 | 29,222 | 28,596 | 27,812 | ||||||||||||||||||
| Life, accident and health reserves |
676 | 687 | 691 | 700 | 702 | 708 | ||||||||||||||||||
| Payable to reinsurers |
681 | 621 | 634 | 835 | 588 | 501 | ||||||||||||||||||
| Liabilities of managed investment entities |
4,685 | 5,101 | 4,549 | 4,067 | 4,192 | 3,656 | ||||||||||||||||||
| Long-term debt |
1,405 | 1,283 | 1,283 | 1,300 | 998 | 998 | ||||||||||||||||||
| Variable annuity liabilities (separate accounts) |
620 | 614 | 600 | 606 | 595 | 595 | ||||||||||||||||||
| Other liabilities |
2,201 | 2,166 | 1,755 | 1,768 | 1,557 | 1,672 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total liabilities |
$ | 53,306 | $ | 52,269 | $ | 50,153 | $ | 49,487 | $ | 47,540 | $ | 46,101 | ||||||||||||
| Shareholders’ equity: |
||||||||||||||||||||||||
| Common stock |
$ | 88 | $ | 88 | $ | 87 | $ | 87 | $ | 87 | $ | 87 | ||||||||||||
| Capital surplus |
1,158 | 1,138 | 1,111 | 1,242 | 1,228 | 1,218 | ||||||||||||||||||
| Unappropriated retained earnings |
3,451 | 3,466 | 3,343 | 3,079 | 3,016 | 3,002 | ||||||||||||||||||
| Unrealized gains - equities |
158 | 145 | 98 | 103 | 46 | 40 | ||||||||||||||||||
| Unrealized gains - fixed maturities |
481 | 384 | 306 | 669 | 639 | 426 | ||||||||||||||||||
| Unrealized gains (losses) - fixed maturity-related cash flow hedges |
(6 | ) | (8 | ) | (7 | ) | 5 | 5 | 4 | |||||||||||||||
| Other comprehensive income, net of tax |
(18 | ) | (22 | ) | (22 | ) | (24 | ) | (21 | ) | (22 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total shareholders’ equity |
5,312 | 5,191 | 4,916 | 5,161 | 5,000 | 4,755 | ||||||||||||||||||
| Noncontrolling interests |
— | 4 | 3 | 197 | 193 | 182 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total liabilities and equity |
$ | 58,618 | $ | 57,464 | $ | 55,072 | $ | 54,845 | $ | 52,733 | $ | 51,038 | ||||||||||||
|
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|
|
|
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|
|||||||||||||
Page 17
|
| ||
American Financial Group, Inc.
Book Value Per Share and Price / Book Summary
(in millions, except per share information)
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 03/31/16 | |||||||||||||||||||
| Shareholders’ equity |
$ | 5,312 | $ | 5,191 | $ | 4,916 | $ | 5,161 | $ | 5,000 | $ | 4,755 | ||||||||||||
| Unrealized (gains) related to fixed maturities |
(475 | ) | (376 | ) | (299 | ) | (674 | ) | (644 | ) | (430 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Adjusted shareholders’ equity |
4,837 | 4,815 | 4,617 | 4,487 | 4,356 | 4,325 | ||||||||||||||||||
| Goodwill |
(199 | ) | (199 | ) | (199 | ) | (199 | ) | (199 | ) | (199 | ) | ||||||||||||
| Intangibles |
(30 | ) | (32 | ) | (34 | ) | (44 | ) | (46 | ) | (47 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Tangible adjusted shareholders’ equity |
$ | 4,608 | $ | 4,584 | $ | 4,384 | $ | 4,244 | $ | 4,111 | $ | 4,079 | ||||||||||||
|
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|
|
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|
|
|
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|
|
|
|||||||||||||
| Common shares outstanding |
88.007 | 87.592 | 86.924 | 86.813 | 86.850 | 86.966 | ||||||||||||||||||
| Book value per share: |
||||||||||||||||||||||||
| Book value per share |
$ | 60.36 | $ | 59.26 | $ | 56.55 | $ | 59.45 | $ | 57.57 | $ | 54.67 | ||||||||||||
| Adjusted (a) |
54.97 | 54.98 | 53.11 | 51.68 | 50.16 | 49.72 | ||||||||||||||||||
| Tangible, adjusted (b) |
52.36 | 52.34 | 50.43 | 48.89 | 47.34 | 46.90 | ||||||||||||||||||
| Market capitalization |
||||||||||||||||||||||||
| AFG’s closing common share price |
$ | 99.37 | $ | 95.42 | $ | 88.12 | $ | 75.00 | $ | 73.93 | $ | 70.37 | ||||||||||||
| Market capitalization |
$ | 8,745 | $ | 8,358 | $ | 7,660 | $ | 6,511 | $ | 6,421 | $ | 6,120 | ||||||||||||
| Price / Adjusted book value ratio |
1.81 | 1.74 | 1.66 | 1.45 | 1.47 | 1.42 | ||||||||||||||||||
| (a) | Excludes unrealized gains related to fixed maturity investments. |
| (b) | Excludes unrealized gains related to fixed maturity investments, goodwill and intangibles. |
Page 18
|
| ||
American Financial Group, Inc.
Capitalization
($ in millions)
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 03/31/16 | |||||||||||||||||||
| AFG senior obligations |
$ | 1,128 | $ | 1,008 | $ | 1,008 | $ | 1,008 | $ | 708 | $ | 708 | ||||||||||||
| Borrowings drawn under credit facility |
— | — | — | — | — | — | ||||||||||||||||||
| Obligations of subsidiaries - other |
— | — | — | 18 | 12 | 12 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Debt excluding subordinated debt |
$ | 1,128 | $ | 1,008 | $ | 1,008 | $ | 1,026 | $ | 720 | $ | 720 | ||||||||||||
| AFG subordinated debentures |
300 | 300 | 300 | 300 | 300 | 300 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total principal amount of long-term debt |
$ | 1,428 | $ | 1,308 | $ | 1,308 | $ | 1,326 | $ | 1,020 | $ | 1,020 | ||||||||||||
| Shareholders’ equity |
5,312 | 5,191 | 4,916 | 5,161 | 5,000 | 4,755 | ||||||||||||||||||
| Noncontrolling interests |
— | 4 | 3 | 197 | 193 | 182 | ||||||||||||||||||
| Less: |
||||||||||||||||||||||||
| Unrealized (gains) - fixed maturity investments |
(481 | ) | (384 | ) | (306 | ) | (669 | ) | (639 | ) | (426 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total adjusted capital |
$ | 6,259 | $ | 6,119 | $ | 5,921 | $ | 6,015 | $ | 5,574 | $ | 5,531 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratio of debt to total adjusted capital: |
||||||||||||||||||||||||
| Including subordinated debt |
22.8 | % | 21.4 | % | 22.1 | % | 22.0 | % | 18.3 | % | 18.4 | % | ||||||||||||
| Excluding subordinated debt |
18.0 | % | 16.5 | % | 17.0 | % | 17.1 | % | 12.9 | % | 13.0 | % | ||||||||||||
Page 19
|
| ||
American Financial Group, Inc.
Additional Supplemental Information
($ in millions)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Property and Casualty Insurance |
||||||||||||||||||||||||||||
| Paid Losses (GAAP) |
$ | 652 | $ | 554 | $ | 683 | $ | 537 | $ | 586 | $ | 1,206 | $ | 1,133 | ||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 03/31/16 | |||||||||||||||||||
| Statutory Surplus |
||||||||||||||||||||||||
| Property and Casualty Insurance |
$ | 2,882 | $ | 3,013 | $ | 2,939 | $ | 3,038 | $ | 2,601 | $ | 2,574 | ||||||||||||
| AFG’s principal annuity subsidiaries (total adjusted capital) |
$ | 2,389 | $ | 2,341 | $ | 2,234 | $ | 2,216 | $ | 2,089 | $ | 2,032 | ||||||||||||
| Allowable dividends without regulatory approval |
||||||||||||||||||||||||
| Property and Casualty Insurance |
$ | 496 | $ | 496 | $ | 496 | $ | 434 | $ | 434 | $ | 434 | ||||||||||||
| Annuity and Run-off |
197 | 197 | 197 | 375 | 375 | 375 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total |
$ | 693 | $ | 693 | $ | 693 | $ | 809 | $ | 809 | $ | 809 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Page 20
|
| ||
American Financial Group, Inc.
Total Cash and Investments
($ in millions)
| Carrying Value - June 30, 2017 | ||||||||||||||||||||||||
| Property and | Parent and | % of | ||||||||||||||||||||||
| Casualty | Annuity and | Other Non- | Consolidate | Total AFG | Investment | |||||||||||||||||||
| Insurance | Run-off | Insurance | CLOs | Consolidated | Portfolio | |||||||||||||||||||
| Total cash and investments: |
||||||||||||||||||||||||
| Cash and cash equivalents |
$ | 1,024 | $ | 740 | $ | 443 | $ | — | $ | 2,207 | 5 | % | ||||||||||||
| Fixed maturities - Available for sale |
7,152 | 30,338 | 14 | — | 37,504 | 84 | % | |||||||||||||||||
| Fixed maturities - Trading |
222 | 117 | — | — | 339 | 1 | % | |||||||||||||||||
| Equity securities |
1,050 | 537 | 53 | — | 1,640 | 4 | % | |||||||||||||||||
| Policy loans |
— | 188 | — | — | 188 | 0 | % | |||||||||||||||||
| Mortgage loans |
256 | 928 | — | — | 1,184 | 2 | % | |||||||||||||||||
| Equity index call options |
— | 589 | — | — | 589 | 1 | % | |||||||||||||||||
| Real estate and other investments |
504 | 766 | 46 | (188 | ) | 1,128 | 3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total cash and investments |
$ | 10,208 | $ | 34,203 | $ | 556 | $ | (188 | ) | $ | 44,779 | 100 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Unrealized gain/(loss) on equity securities |
$ | 155 | $ | 88 | $ | — | $ | — | $ | 243 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Carrying Value - December 31, 2016 | ||||||||||||||||||||||||
| Property and | Parent and | % of | ||||||||||||||||||||||
| Casualty | Annuity and | Other Non- | Consolidate | Total AFG | Investment | |||||||||||||||||||
| Insurance | Run-off | Insurance | CLOs | Consolidated | Portfolio | |||||||||||||||||||
| Total cash and investments: |
||||||||||||||||||||||||
| Cash and cash equivalents |
$ | 1,383 | $ | 511 | $ | 213 | $ | — | $ | 2,107 | 5 | % | ||||||||||||
| Fixed maturities - Available for sale |
6,510 | 28,021 | 13 | — | 34,544 | 83 | % | |||||||||||||||||
| Fixed maturities - Trading |
242 | 117 | — | — | 359 | 1 | % | |||||||||||||||||
| Equity securities |
1,013 | 496 | 49 | — | 1,558 | 4 | % | |||||||||||||||||
| Policy loans |
— | 192 | — | — | 192 | 0 | % | |||||||||||||||||
| Mortgage loans |
261 | 886 | — | — | 1,147 | 3 | % | |||||||||||||||||
| Equity index call options |
— | 492 | — | — | 492 | 1 | % | |||||||||||||||||
| Real estate and other investments |
497 | 705 | 48 | (216 | ) | 1,034 | 3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total cash and investments |
$ | 9,906 | $ | 31,420 | $ | 323 | $ | (216 | ) | $ | 41,433 | 100 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Unrealized gain/(loss) on equity securities |
$ | 102 | $ | 49 | $ | — | $ | — | $ | 151 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Page 21
|
| ||
American Financial Group, Inc.
Net Investment Income
($ in millions)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
| 06/30/17 | 03/31/17 | 12/31/16 | 09/30/16 | 06/30/16 | 06/30/17 | 06/30/16 | ||||||||||||||||||||||
| Property and Casualty Insurance: |
||||||||||||||||||||||||||||
| Gross Investment Income |
||||||||||||||||||||||||||||
| Fixed maturities - Available for sale |
$ | 65 | $ | 63 | $ | 64 | $ | 63 | $ | 66 | $ | 128 | $ | 130 | ||||||||||||||
| Fixed maturities - Trading |
2 | 1 | (1 | ) | 2 | 1 | 3 | 2 | ||||||||||||||||||||
| Equity securities |
12 | 14 | 13 | 13 | 12 | 26 | 25 | |||||||||||||||||||||
| Equity in investees |
11 | 4 | 7 | 7 | 2 | 15 | 8 | |||||||||||||||||||||
| Other investments |
8 | 6 | 6 | 10 | 10 | 14 | 11 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Gross investment income |
98 | 88 | 89 | 95 | 91 | 186 | 176 | |||||||||||||||||||||
| Investment expenses |
(2 | ) | (2 | ) | (4 | ) | (2 | ) | (2 | ) | (4 | ) | (4 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total net investment income |
$ | 96 | $ | 86 | $ | 85 | $ | 93 | $ | 89 | $ | 182 | $ | 172 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Average cash and investments (a) |
$ | 9,947 | $ | 9,855 | $ | 9,779 | $ | 9,647 | $ | 9,465 | $ | 9,872 | $ | 9,397 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Average yield (b) |
3.86 | % | 3.49 | % | 3.48 | % | 3.86 | % | 3.76 | % | 3.69 | % | 3.66 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Fixed Annuity: |
||||||||||||||||||||||||||||
| Gross Investment Income |
||||||||||||||||||||||||||||
| Fixed maturities - Available for sale |
$ | 322 | $ | 318 | $ | 315 | $ | 307 | $ | 307 | $ | 640 | $ | 601 | ||||||||||||||
| Fixed maturities - Trading |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Equity securities |
5 | 5 | 7 | 6 | 6 | 10 | 11 | |||||||||||||||||||||
| Equity in investees |
10 | 6 | 6 | 9 | 2 | 16 | 7 | |||||||||||||||||||||
| Other investments |
22 | 19 | 20 | 27 | 29 | 41 | 40 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Gross investment income |
359 | 348 | 348 | 349 | 344 | 707 | 659 | |||||||||||||||||||||
| Investment expenses |
(2 | ) | (3 | ) | (4 | ) | (1 | ) | (2 | ) | (5 | ) | (5 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total net investment income |
$ | 357 | $ | 345 | $ | 344 | $ | 348 | $ | 342 | $ | 702 | $ | 654 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Average cash and investments (a) |
$ | 30,988 | $ | 30,055 | $ | 29,192 | $ | 28,548 | $ | 27,964 | $ | 30,522 | $ | 27,575 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Average yield (b) |
4.62 | % | 4.59 | % | 4.72 | % | 4.88 | % | 4.88 | % | 4.60 | % | 4.74 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| AFG consolidated net investment income: |
||||||||||||||||||||||||||||
| Property & Casualty |
$ | 96 | $ | 86 | $ | 85 | $ | 93 | $ | 89 | $ | 182 | $ | 172 | ||||||||||||||
| Annuity and Run-off: |
||||||||||||||||||||||||||||
| Fixed Annuity |
357 | 345 | 344 | 348 | 342 | 702 | 654 | |||||||||||||||||||||
| Variable Annuity |
3 | 2 | 2 | 3 | 2 | 5 | 5 | |||||||||||||||||||||
| Run-off |
5 | 5 | 6 | 5 | 5 | 10 | 10 | |||||||||||||||||||||
| Other |
4 | 3 | — | 1 | 4 | 7 | 5 | |||||||||||||||||||||
| Consolidate CLOs |
(5 | ) | (6 | ) | (8 | ) | (17 | ) | (19 | ) | (11 | ) | (12 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total net investment income |
$ | 460 | $ | 435 | $ | 429 | $ | 433 | $ | 423 | $ | 895 | $ | 834 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (a) | Average cash and investments is the average of the beginning and ending quarter balances, or the average of the five quarters balances. |
| (b) | Average yield is calculated by dividing investment income for the quarter by the average cash and investment balance over the quarter. |
Page 22
|
| ||
American Financial Group, Inc.
Fixed Maturities - By Security Type - AFG Consolidated
($ in millions )
| % of | ||||||||||||||||||
| Amortized | Unrealized | % of | Investment | |||||||||||||||
| June 30, 2017 |
Cost |
Fair Value | Gain (Loss) | Fair Value | Portfolio | |||||||||||||
| US Government and government agencies |
$314 | $ | 314 | $ | — | 1 | % | 1 | % | |||||||||
| States, municipalities and political subdivisions |
6,837 | 7,056 | 219 | 19 | % | 16 | % | |||||||||||
| Foreign government |
256 | 260 | 4 | 1 | % | 1 | % | |||||||||||
| Residential mortgage-backed securities |
3,254 | 3,567 | 313 | 9 | % | 8 | % | |||||||||||
| Commercial mortgage-backed securities |
1,041 | 1,085 | 44 | 3 | % | 2 | % | |||||||||||
| Asset-backed securities |
7,108 | 7,191 | 83 | 19 | % | 16 | % | |||||||||||
| Corporate and other bonds |
17,760 | 18,370 | 610 | 48 | % | 41 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
| Total AFG consolidated |
$36,570 | $ | 37,843 | $ | 1,273 | 100 | % | 85 | % | |||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
| Annualized yield on available for sale fixed maturities: |
||||||||||||||||||
| Excluding investment expense (a) |
4.40% | |||||||||||||||||
| Net of investment expense (a) |
4.36% | |||||||||||||||||
| Approximate average life and duration: |
||||||||||||||||||
| Approximate average life |
6.5 years | |||||||||||||||||
| Approximate duration |
5 years | |||||||||||||||||
| % of | ||||||||||||||||||
| Amortized | Unrealized | % of | Investment | |||||||||||||||
| December 31, 2016 |
Cost |
Fair Value | Gain (Loss) | Fair Value | Portfolio | |||||||||||||
| US Government and government agencies |
$348 | $ | 348 | $ | — | 1 | % | 1 | % | |||||||||
| States, municipalities and political subdivisions |
6,677 | 6,808 | 131 | 19 | % | 16 | % | |||||||||||
| Foreign government |
256 | 261 | 5 | 1 | % | 1 | % | |||||||||||
| Residential mortgage-backed securities |
3,371 | 3,639 | 268 | 11 | % | 9 | % | |||||||||||
| Commercial mortgage-backed securities |
1,446 | 1,493 | 47 | 4 | % | 3 | % | |||||||||||
| Asset-backed securities |
5,962 | 5,959 | (3 | ) | 17 | % | 14 | % | ||||||||||
| Corporate and other bonds |
16,034 | 16,395 | 361 | 47 | % | 40 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
| Total AFG consolidated |
$34,094 | $ | 34,903 | $ | 809 | 100 | % | 84 | % | |||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
| Annualized yield on available for sale fixed maturities: |
||||||||||||||||||
| Excluding investment expense (a) |
4.56% | |||||||||||||||||
| Net of investment expense (a) |
4.48% | |||||||||||||||||
| 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. |
Page 23
|
| ||
American Financial Group, Inc.
Fixed Maturities - By Security Type Portfolio
($ in millions )
| June 30, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||||
| Amortized Cost |
Fair Value |
Unrealized Gain (Loss) |
% of Fair Value |
Amortized Cost |
Fair Value |
Unrealized Gain (Loss) |
% of Fair Value |
|||||||||||||||||||||||||
| Property and Casualty Insurance: |
||||||||||||||||||||||||||||||||
| US Government and government agencies |
$ | 264 | $ | 264 | $ | — | 4 | % | $ | 295 | $ | 295 | $ | — | 4 | % | ||||||||||||||||
| States, municipalities and political subdivisions |
2,677 | 2,725 | 48 | 37 | % | 2,588 | 2,605 | 17 | 39 | % | ||||||||||||||||||||||
| Foreign government |
245 | 247 | 2 | 3 | % | 245 | 249 | 4 | 4 | % | ||||||||||||||||||||||
| Residential mortgage-backed securities |
943 | 1,003 | 60 | 14 | % | 980 | 1,026 | 46 | 15 | % | ||||||||||||||||||||||
| Commercial mortgage-backed securities |
107 | 110 | 3 | 1 | % | 142 | 144 | 2 | 2 | % | ||||||||||||||||||||||
| Asset-backed securities |
1,640 | 1,648 | 8 | 22 | % | 1,445 | 1,440 | (5 | ) | 21 | % | |||||||||||||||||||||
| Corporate and other bonds |
1,351 | 1,377 | 26 | 19 | % | 976 | 993 | 17 | 15 | % | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Property and Casualty Insurance |
$ | 7,227 | $ | 7,374 | $ | 147 | 100 | % | $ | 6,671 | $ | 6,752 | $ | 81 | 100 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Annualized yield on available for sale fixed maturities: |
||||||||||||||||||||||||||||||||
| Excluding investment expense (a) |
3.75 | % | 3.88 | % | ||||||||||||||||||||||||||||
| Net of investment expense (a) |
3.65 | % | 3.67 | % | ||||||||||||||||||||||||||||
| Tax equivalent, net of investment expense (b) |
4.15 | % | 4.20 | % | ||||||||||||||||||||||||||||
| Approximate average life and duration: |
||||||||||||||||||||||||||||||||
| Approximate average life |
5 years | 4.5 years | ||||||||||||||||||||||||||||||
| Approximate duration |
4 years | 3.5 years | ||||||||||||||||||||||||||||||
| June 30, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||||
| Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
|||||||||||||||||||||||||
| Annuity and Run-off: |
||||||||||||||||||||||||||||||||
| US Government and government agencies |
$ | 49 | $ | 49 | $ | — | 0 | % | $ | 52 | $ | 52 | $ | — | 0 | % | ||||||||||||||||
| States, municipalities and political subdivisions |
4,160 | 4,331 | 171 | 14 | % | 4,089 | 4,203 | 114 | 15 | % | ||||||||||||||||||||||
| Foreign government |
11 | 13 | 2 | 0 | % | 11 | 12 | 1 | 0 | % | ||||||||||||||||||||||
| Residential mortgage-backed securities |
2,310 | 2,551 | 241 | 9 | % | 2,390 | 2,601 | 211 | 9 | % | ||||||||||||||||||||||
| Commercial mortgage-backed securities |
934 | 975 | 41 | 3 | % | 1,304 | 1,349 | 45 | 5 | % | ||||||||||||||||||||||
| Asset-backed securities |
5,468 | 5,543 | 75 | 18 | % | 4,517 | 4,519 | 2 | 16 | % | ||||||||||||||||||||||
| Corporate and other bonds |
16,409 | 16,993 | 584 | 56 | % | 15,058 | 15,402 | 344 | 55 | % | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total Annuity and Run-off |
$ | 29,341 | $ | 30,455 | $ | 1,114 | 100 | % | $ | 27,421 | $ | 28,138 | $ | 717 | 100 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Annualized yield on available for sale fixed maturities: |
||||||||||||||||||||||||||||||||
| Excluding investment expense (a) |
4.54 | % | 4.72 | % | ||||||||||||||||||||||||||||
| Net of investment expense (a) |
4.52 | % | 4.67 | % | ||||||||||||||||||||||||||||
| Approximate average life and duration: |
||||||||||||||||||||||||||||||||
| Approximate average life |
7 years | 6.5 years | ||||||||||||||||||||||||||||||
| Approximate duration |
5 years | 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. |
Page 24
|
| ||
American Financial Group, Inc.
Fixed Maturities - Credit Rating
($ in millions)
| June 30, 2017 | ||||||||||||||||
| By Credit Rating (a) |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
||||||||||||
| Investment grade |
||||||||||||||||
| AAA |
$ | 6,144 | $ | 6,250 | $ | 106 | 17 | % | ||||||||
| AA |
8,064 | 8,303 | 239 | 22 | % | |||||||||||
| A |
8,905 | 9,193 | 288 | 24 | % | |||||||||||
| BBB |
9,939 | 10,284 | 345 | 27 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Subtotal - Investment grade |
33,052 | 34,030 | 978 | 90 | % | |||||||||||
| BB |
652 | 664 | 12 | 2 | % | |||||||||||
| B |
353 | 357 | 4 | 1 | % | |||||||||||
| Other (b) |
2,513 | 2,792 | 279 | 7 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Subtotal - Non-Investment grade |
3,518 | 3,813 | 295 | 10 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 36,570 | $ | 37,843 | $ | 1,273 | 100 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
98% of the fixed maturity portfolio is NAIC designated 1 or 2.
| December 31, 2016 | ||||||||||||||||
| By Credit Rating (a) |
Amortized Cost |
Fair Value |
Unrealized Gain (Loss) |
% of Fair Value |
||||||||||||
| Investment grade |
||||||||||||||||
| AAA |
$ | 6,117 | $ | 6,189 | $ | 72 | 18 | % | ||||||||
| AA |
7,123 | 7,257 | 134 | 21 | % | |||||||||||
| A |
8,323 | 8,487 | 164 | 24 | % | |||||||||||
| BBB |
8,999 | 9,193 | 194 | 26 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Subtotal - Investment grade |
30,562 | 31,126 | 564 | 89 | % | |||||||||||
| BB |
687 | 695 | 8 | 2 | % | |||||||||||
| B |
446 | 445 | (1 | ) | 1 | % | ||||||||||
| Other (b) |
2,399 | 2,637 | 238 | 8 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Subtotal - Non-Investment grade |
3,532 | 3,777 | 245 | 11 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 34,094 | $ | 34,903 | $ | 809 | 100 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
97% of the fixed maturity portfolio is NAIC designated 1 or 2.
| (a) | 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. |
| (b) | See page 28 and 29 for more information. |
Page 25
|
| ||
American Financial Group, Inc.
Mortgage-Backed Securities - AFG Consolidated
($ in millions)
| June 30, 2017 |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
% of Investment Portfolio |
|||||||||||||||
| Residential |
||||||||||||||||||||
| Agency |
$ | 230 | $ | 230 | $ | — | 5 | % | 1 | % | ||||||||||
| Prime (Non-Agency) |
1,370 | 1,533 | 163 | 33 | % | 3 | % | |||||||||||||
| Alt-A |
1,104 | 1,209 | 105 | 26 | % | 3 | % | |||||||||||||
| Subprime |
550 | 595 | 45 | 13 | % | 1 | % | |||||||||||||
| Commercial |
1,041 | 1,085 | 44 | 23 | % | 2 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total AFG consolidated |
$ | 4,295 | $ | 4,652 | $ | 357 | 100 | % | 10 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| • | 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 82%; Alt-A 79%; Subprime 86%; CMBS 99%. |
| • | The average FICO score of our residential MBS securities is - Prime 740; Alt-A 710; Subprime 641. |
| • | 95% of our Commercial MBS portfolio is investment-grade rated (80% AAA) and the average subordination for this group of assets is 32%. |
| • | The approximate average life by collateral type is - Residential 4.5 years; Commercial 5 years. |
| December 31, 2016 |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
% of Investment Portfolio |
|||||||||||||||
| Residential |
||||||||||||||||||||
| Agency |
$ | 243 | $ | 243 | $ | — | 5 | % | 0 | % | ||||||||||
| Prime (Non-Agency) |
1,406 | 1,557 | 151 | 30 | % | 4 | % | |||||||||||||
| Alt-A |
1,093 | 1,170 | 77 | 23 | % | 3 | % | |||||||||||||
| Subprime |
629 | 669 | 40 | 13 | % | 2 | % | |||||||||||||
| Commercial |
1,446 | 1,493 | 47 | 29 | % | 3 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total AFG consolidated |
$ | 4,817 | $ | 5,132 | $ | 315 | 100 | % | 12 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Page 26
|
| ||
American Financial Group, Inc.
Mortgage-Backed Securities Portfolio
($ in millions)
| Property and Casualty Insurance: |
June 30, 2017 | |||||||||||||||||||
| By Asset Type |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
% of Inv Portfolio |
|||||||||||||||
| Residential |
||||||||||||||||||||
| Agency |
$ | 184 | $ | 183 | $ | (1 | ) | 16 | % | 2 | % | |||||||||
| Prime (Non-Agency) |
195 | 212 | 17 | 19 | % | 2 | % | |||||||||||||
| Alt-A |
333 | 362 | 29 | 33 | % | 4 | % | |||||||||||||
| Subprime |
231 | 246 | 15 | 22 | % | 2 | % | |||||||||||||
| Commercial |
107 | 110 | 3 | 10 | % | 1 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
$ | 1,050 | $ | 1,113 | $ | 63 | 100 | % | 11 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| December 31, 2016 | ||||||||||||||||||||
| By Asset Type |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
% of Inv Portfolio |
|||||||||||||||
| Residential |
||||||||||||||||||||
| Agency |
$ | 192 | $ | 191 | $ | (1 | ) | 17 | % | 2 | % | |||||||||
| Prime (Non-Agency) |
187 | 202 | 15 | 17 | % | 2 | % | |||||||||||||
| Alt-A |
342 | 361 | 19 | 31 | % | 4 | % | |||||||||||||
| Subprime |
259 | 272 | 13 | 23 | % | 3 | % | |||||||||||||
| Commercial |
142 | 144 | 2 | 12 | % | 1 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
$ | 1,122 | $ | 1,170 | $ | 48 | 100 | % | 12 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Annuity and Run-off: |
June 30, 2017 | |||||||||||||||||||
| By Asset Type |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
% of Inv Portfolio |
|||||||||||||||
| Residential |
||||||||||||||||||||
| Agency |
$ | 46 | $ | 47 | $ | 1 | 1 | % | 0 | % | ||||||||||
| Prime (Non-Agency) |
1,174 | 1,308 | 134 | 37 | % | 4 | % | |||||||||||||
| Alt-A |
771 | 847 | 76 | 24 | % | 2 | % | |||||||||||||
| Subprime |
319 | 349 | 30 | 10 | % | 1 | % | |||||||||||||
| Commercial |
934 | 975 | 41 | 28 | % | 3 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
$ | 3,244 | $ | 3,526 | $ | 282 | 100 | % | 10 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| December 31, 2016 | ||||||||||||||||||||
| By Asset Type |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
% of Inv Portfolio |
|||||||||||||||
| Residential |
||||||||||||||||||||
| Agency |
$ | 51 | $ | 52 | $ | 1 | 1 | % | 0 | % | ||||||||||
| Prime (Non-Agency) |
1,218 | 1,343 | 125 | 34 | % | 4 | % | |||||||||||||
| Alt-A |
751 | 809 | 58 | 21 | % | 3 | % | |||||||||||||
| Subprime |
370 | 397 | 27 | 10 | % | 1 | % | |||||||||||||
| Commercial |
1,304 | 1,349 | 45 | 34 | % | 5 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
$ | 3,694 | $ | 3,950 | $ | 256 | 100 | % | 13 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Page 27
|
| ||
American Financial Group, Inc.
Mortgage-Backed Securities - Credit Rating
($ in millions)
| June 30, 2017 | ||||||||||||||||
| By Credit Rating (a) |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
||||||||||||
| Investment grade |
||||||||||||||||
| AAA |
$ | 1,320 | $ | 1,368 | $ | 48 | 29 | % | ||||||||
| AA |
107 | 111 | 4 | 2 | % | |||||||||||
| A |
253 | 267 | 14 | 6 | % | |||||||||||
| BBB |
254 | 269 | 15 | 6 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Subtotal - investment grade |
1,934 | 2,015 | 81 | 43 | % | |||||||||||
| BB |
206 | 209 | 3 | 4 | % | |||||||||||
| B |
271 | 278 | 7 | 6 | % | |||||||||||
| Other |
1,884 | 2,150 | 266 | 47 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 4,295 | $ | 4,652 | $ | 357 | 100 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
96% of the mortgage-backed security portfolio has an NAIC 1 designation.
| December 31, 2016 | ||||||||||||||||
| By Credit Rating (a) |
Amortized Cost |
Fair Value | Unrealized Gain (Loss) |
% of Fair Value |
||||||||||||
| Investment grade |
||||||||||||||||
| AAA |
$ | 1,668 | $ | 1,720 | $ | 52 | 34 | % | ||||||||
| AA |
164 | 169 | 5 | 3 | % | |||||||||||
| A |
256 | 268 | 12 | 5 | % | |||||||||||
| BBB |
274 | 288 | 14 | 6 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Subtotal - investment grade |
2,362 | 2,445 | 83 | 48 | % | |||||||||||
| BB |
211 | 212 | 1 | 4 | % | |||||||||||
| B |
330 | 333 | 3 | 6 | % | |||||||||||
| Other |
1,914 | 2,142 | 228 | 42 | % | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 4,817 | $ | 5,132 | $ | 315 | 100 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
97% of the mortgage-backed security portfolio has an NAIC 1 designation.
| (a) | 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. |
Page 28
|
| ||
Appendix A
American Financial Group, Inc.
Fixed Maturities - Credit Rating by Type
($ in millions)
| Fair Value - June 30, 2017 | ||||||||||||||||||||||||||||||||||||||
| By Credit Rating (a) |
US Gov | Munis | Frgn gov | RMBS | CMBS | ABS | Corp/Oth | Total | % Total | |||||||||||||||||||||||||||||
| Investment grade |
||||||||||||||||||||||||||||||||||||||
| AAA |
$ | 270 | $ | 1,811 | $ | 157 | $ | 499 | $ | 869 | $ | 2,418 | $ | 226 | $ | 6,250 | 17 | % | ||||||||||||||||||||
| AA |
36 | 4,563 | 85 | 93 | 18 | 2,150 | 1,358 | 8,303 | 22 | % | ||||||||||||||||||||||||||||
| A |
— | 522 | 14 | 206 | 61 | 1,705 | 6,685 | 9,193 | 24 | % | ||||||||||||||||||||||||||||
| BBB |
— | 51 | 4 | 183 | 86 | 838 | 9,122 | 10,284 | 27 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Subtotal - Investment grade |
306 | 6,947 | 260 | 981 | 1,034 | 7,111 | 17,391 | 34,030 | 90 | % | ||||||||||||||||||||||||||||
| BB |
— | 4 | — | 185 | 24 | 1 | 450 | 664 | 2 | % | ||||||||||||||||||||||||||||
| B |
— | 5 | — | 266 | 12 | — | 74 | 357 | 1 | % | ||||||||||||||||||||||||||||
| CCC, CC, C |
— | 8 | — | 989 | 4 | 3 | 25 | 1,029 | 3 | % | ||||||||||||||||||||||||||||
| D |
— | — | — | 552 | — | — | — | 552 | 1 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Subtotal - Non-Investment grade |
— | 17 | — | 1,992 | 40 | 4 | 549 | 2,602 | 7 | % | ||||||||||||||||||||||||||||
| Not Rated |
8 | 92 | — | 594 | 11 | 76 | 430 | 1,211 | 3 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total |
$ | 314 | $ | 7,056 | $ | 260 | $ | 3,567 | $ | 1,085 | $ | 7,191 | $ | 18,370 | $ | 37,843 | 100 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Fair Value - December 31, 2016 | ||||||||||||||||||||||||||||||||||||||
| By Credit Rating (a) |
US Gov | Munis | Frgn gov | RMBS | CMBS | ABS | Corp/Oth | Total | % Total | |||||||||||||||||||||||||||||
| Investment grade |
||||||||||||||||||||||||||||||||||||||
| AAA |
$ | 299 | $ | 1,727 | $ | 171 | $ | 508 | $ | 1,213 | $ | 2,053 | $ | 218 | $ | 6,189 | 18 | % | ||||||||||||||||||||
| AA |
41 | 4,388 | 30 | 127 | 42 | 1,480 | 1,149 | 7,257 | 21 | % | ||||||||||||||||||||||||||||
| A |
— | 501 | 55 | 170 | 98 | 1,593 | 6,070 | 8,487 | 24 | % | ||||||||||||||||||||||||||||
| BBB |
— | 69 | 5 | 202 | 86 | 813 | 8,018 | 9,193 | 26 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Subtotal - Investment grade |
340 | 6,685 | 261 | 1,007 | 1,439 | 5,939 | 15,455 | 31,126 | 89 | % | ||||||||||||||||||||||||||||
| BB |
— | 4 | — | 184 | 29 | 16 | 462 | 695 | 2 | % | ||||||||||||||||||||||||||||
| B |
— | 8 | — | 307 | 25 | 1 | 104 | 445 | 1 | % | ||||||||||||||||||||||||||||
| CCC, CC, C |
— | 11 | — | 963 | — | 3 | 32 | 1,009 | 3 | % | ||||||||||||||||||||||||||||
| D |
— | — | — | 679 | — | — | — | 679 | 2 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Subtotal - Non-Investment grade |
— | 23 | — | 2,133 | 54 | 20 | 598 | 2,828 | 8 | % | ||||||||||||||||||||||||||||
| Not Rated |
8 | 100 | — | 499 | — | — | 342 | 949 | 3 | % | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total |
$ | 348 | $ | 6,808 | $ | 261 | $ | 3,639 | $ | 1,493 | $ | 5,959 | $ | 16,395 | $ | 34,903 | 100 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| (a) | 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. |
Page 29