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8-K - FORM 8-K - AMERICAN FINANCIAL GROUP INC | c04165e8vk.htm |
EX-99.2 - EXHIBIT 99.2 - AMERICAN FINANCIAL GROUP INC | c04165exv99w2.htm |
Exhibit 99.1
American Financial Group, Inc. Announces
Second Quarter and Six Month Results
Second Quarter and Six Month Results
| Second quarter core net operating earnings $.91 per share |
| Growth in book value per share, excluding appropriated retained earnings,
40% since 12/31/07; 12% in 2010 |
| Repurchased 2.7 million shares during the quarter (average price $27.82 per share) |
| Increased 2010 core earnings guidance to $3.55 $3.85 per share |
Cincinnati, Ohio August 2, 2010 American Financial Group, Inc. (NYSE/NASDAQ: AFG) today
reported net earnings attributable to shareholders of $108 million ($0.97 per share) for the
2010 second quarter, compared to $127 million ($1.09 per share) reported for the 2009 second
quarter. The 2010 results reflect realized gains on investments of $6 million, compared to $10
million in the 2009 period. Book value per share, excluding appropriated retained earnings,
increased by $2.02 to $37.48 per share during the quarter. Net earnings for the first six months
of 2010 were $214 million ($1.90 per share) compared to $231 million ($1.98 per share) for the
same period a year ago.
Core net operating earnings of $102 million ($0.91 per share) for the 2010 second quarter
were consistent with our expectations, but down 13% percent from the record results in the 2009
comparable period. Improved results in the annuity and supplemental insurance group were offset
by lower underwriting profit in our specialty property and casualty insurance (P&C) operations
resulting from higher weather-related losses and lower investment income. Core net operating
earnings for the first six months of 2010 were $205 million ($1.82 per share) compared to $248
million ($2.13 per share) for the same period a year ago. Six month annualized core operating
return on equity was 10%.
During the second quarter of 2010, AFG repurchased 2.7 million shares of common stock at an
average price per share of $27.82.
AFGs net earnings attributable to shareholders, determined in accordance with generally
accepted accounting principles (GAAP), include certain items that may not be indicative of its
ongoing core operations. The following table identifies such items and reconciles net earnings
attributable to shareholders to core net operating earnings, a non-GAAP financial measure that
AFG believes is a useful tool for investors and analysts in analyzing ongoing operating trends.
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
In millions, except per share amounts | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Components of net earnings attributable to
shareholders: |
||||||||||||||||
Core net operating earnings (a) |
$ | 102 | $ | 117 | $ | 205 | $ | 248 | ||||||||
Realized investment gains (losses) |
6 | 10 | 9 | (17 | ) | |||||||||||
Net earnings attributable to shareholders |
$ | 108 | $ | 127 | $ | 214 | $ | 231 | ||||||||
Components of EPS: |
||||||||||||||||
Core net operating earnings |
$ | 0.91 | $ | 1.01 | $ | 1.82 | $ | 2.13 | ||||||||
Realized investment gains (losses) |
.06 | .08 | .08 | (.15 | ) | |||||||||||
Diluted EPS |
$ | 0.97 | $ | 1.09 | $ | 1.90 | $ | 1.98 | ||||||||
Footnote (a) is contained in the accompanying Notes To Financial Schedules at the end of this
release.
Carl Lindner III and Craig Lindner, AFGs Co-Chief Executive Officers, issued this
statement: AFGs results for the second quarter and first six months of 2010 demonstrate our
ability to navigate continued challenges in the insurance marketplace. The specialty nature and
mix of our insurance businesses serve us well in this environment. We have posted solid core
operating earnings and continue to see a meaningful improvement in the market value of our
investment portfolio.
We continue to evaluate effective ways to deploy our excess capital to achieve appropriate
returns on shareholders equity. Through June 30, 2010, AFG has repurchased over 5.6 million
shares of its common stock, representing approximately 5 percent of shares outstanding at the
beginning of 2010. We believe that purchasing shares at attractive prices is an effective use of
our excess capital, producing a favorable effect on our earnings per share and book value per
share. Growth in AFGs book value per share is a key strategic benchmark in measuring value
creation for our shareholders. Since the end of 2007, AFG has grown its book value per share,
excluding appropriated retained earnings, by 40%.
Earlier today, we renewed our $500 million bank line, which strengthens our financial
flexibility. The financial leverage and capital in our insurance businesses are at levels that
fully support our operations and are consistent with our commitments to rating agencies.
Based on our results for the first half of the year, we increased our 2010 core operating
earnings guidance to $3.55 to $3.85 per share, up from $3.30 to $3.70 per share. As has been
our practice, this guidance excludes realized gains and losses, as well as the potential for
significant catastrophe and crop losses and unforeseen major adjustments to asbestos and
environmental reserves, and unlocking adjustments related to annuity deferred acquisition
costs.
Business Segment Results
The P&C specialty insurance operations generated an underwriting profit of $68 million in
the 2010 second quarter, compared to $112 million in the second quarter of 2009. The reduced
profit in 2010 is primarily the result of $34 million (6 points on the combined ratio) in
catastrophe losses, compared to $11 million (2 points) in the 2009 second quarter. Favorable
reserve development was $62 million (11 points) compared to $80 million (13 points) in 2009.
Underwriting profit of the P&C specialty insurance operations for the first six months of 2010
was $145 million, 33% lower than the comparable 2009 period.
Gross and net written premiums were lower in the 2010 second quarter and first six months
compared to the 2009 periods. Further details of the P&C Specialty operations may be found in
the accompanying schedules.
The Property and Transportation group reported an underwriting profit of $8 million in the
second quarter of 2010, compared to $26 million in the second quarter of 2009. This decrease is
largely attributable to a $22 million increase in catastrophe losses resulting primarily from
hail storms in Oklahoma during the month of May. Favorable reserve development served to offset
these results somewhat. Underwriting profit in the first six months of 2010 decreased
approximately $34 million from the comparable 2009 period. Gross written premiums for the
second quarter and first six months of 2010 were impacted by a competitive pricing environment
as well as lower spring commodity prices that have the effect of lowering our crop premium
volume. In 2010, we returned to historical levels of cessions under our crop reinsurance
agreement, contributing to an 8% increase to this groups net written premiums for the first
half of 2010 compared to the 2009 period. Excluding crop, this groups net written premiums for
the first six months decreased by 1% from the prior year.
The Specialty Casualty group reported an underwriting profit of $23 million in the second
quarter of 2010, compared to $38 million in the second quarter of 2009. Underwriting profit in
the first six months of 2010 decreased approximately $37 million from the comparable 2009
period. Both periods include the results of our California Workers Compensation business,
which was previously reported as a separate operating group. Lower underwriting results in our
general liability operations, (primarily
those that serve the homebuilders industry), excess and surplus lines and our California
workers compensation businesses were offset somewhat by improvements in our executive liability
and targeted markets operations. Many businesses in this group produced strong underwriting
profit margins, but at lower levels than in 2009. Gross and net written premiums for the first
six months of 2010 were down 8% and 7%, respectively, from the same 2009 period. A soft pricing
environment and competitive market conditions in the excess and surplus markets and California
workers compensation business, as well as volume reductions resulting from decreased demand for
general liability coverages in the homebuilders market contributed to these declines. Growth in
gross and net written premiums in our Marketform, executive liability and environmental
operations partially offset these declines.
The Specialty Financial group reported underwriting profits of $33 million in the second
quarter of 2010 compared to $54 million in the same 2009 period. Improvements in used car sales
prices resulted in $13 million in favorable reserve development in this groups automobile
residual value insurance (RVI) business, compared to $39 million of favorable development in the
second quarter of 2009. Our remaining $23 million of Canadian RVI reserves relate to leases
that terminate through the end of 2010. Specialty Financial underwriting profits were $54
million for the six month period, compared to $67 million in the same 2009 period. All other
lines of business in this group produced excellent underwriting results, but at lower levels
than the prior year. Gross and net written premiums decreased approximately 8% and 13%,
respectively, from the 2009 first six months primarily due to economic conditions affecting the
automotive industry. In addition, net written premiums were impacted by a decision to exit
certain automotive lines of business during 2009.
Carl Lindner III stated, Increased catastrophes during the second quarter coupled with a
continued soft pricing environment and competitive market conditions have been challenging for
our property and casualty businesses; however, we remain on target to achieve our 2010 operating
goals. We continue to focus on writing quality business that will produce appropriate returns.
Through the first six months of 2010, our businesses continued to achieve solid underwriting
profits, albeit at lower levels than in 2009. Pricing for the quarter and first six months was
flat overall and we continue to monitor rate adequacy in our markets. We know that it is
important to gauge business growth based on our ability to achieve adequate pricing, but we also
want to be well positioned for a market turn.
Annuity and Supplemental Insurance Core Results
The Annuity and Supplemental Insurance Group generated core operating earnings before
income taxes of $46 million for the 2010 second quarter, compared to $42 million in the 2009
period. The increase was primarily attributable to higher operating earnings in the fixed
annuity and supplemental insurance operations, which were partially offset by lower earnings in
our variable annuity operations. Core operating earnings before income taxes for the first half
of 2010 were 11% higher than the comparable 2009 period.
Statutory premiums of $671 million and $1.2 billion in the 2010 second quarter and first
six months were 31% and 32% higher, respectively, than the comparable periods in 2009. These
results reflect increased sales of single premium annuities and higher sales in the bank market.
Due to the two-tier nature and other surrender protection features in certain of its
annuity products, AFG continues to experience strong persistency in its annuity businesses.
A&E Reserve Study
During the second quarter, AFG completed an internal review of its asbestos and
environmental exposures relating to the run-off operations of its P&C group and its exposures
related to former railroad and manufacturing operations and sites. We conduct similar studies
with the assistance of outside actuaries and specialty outside counsel every two years and
perform an in-depth internal study during the intervening years. This years study resulted in
a net reserve adjustment of less than $5 million on an after-tax basis. During the course of
this years study, there were no newly identified
emerging trends or issues that management believes significantly impact the overall
adequacy of AFGs A&E reserves.
At June 30, 2010, AFGs three year survival ratio for property and casualty exposures was
9.6 times paid losses for asbestos reserves and 8.5 times paid losses for total A&E reserves.
These ratios compare favorably with industry data published by Conning Research and Consulting,
Inc. in May 2010, which indicate that A&E survival ratios were 8.2 for asbestos reserves and 7.7
for total industry A&E reserves at December 31, 2009.
Investments
AFG recorded second quarter 2010 net realized gains of $6 million after tax and after DAC,
compared to $10 million in the prior year period. After-tax, after-DAC realized gains for the
first six months of 2010 were $9 million, compared to realized losses of $17 million in the same
period in 2009. Unrealized gains on fixed maturities were $287 million, after tax, after DAC,
an increase of $239 million since December 31, 2009. Our portfolio continues to be high
quality, with 91% of our fixed maturity portfolio rated investment grade and 95% with a National
Association of Insurance Commissioners designation of NAIC 1 or 2, its highest two categories.
More information about the components of our investment portfolio may be found in our
Financial and Investment Supplements, which are posted on our website.
About American Financial Group, Inc.
American Financial Group is an insurance holding company, based in Cincinnati, Ohio with
assets in excess of $30 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 traditional fixed, indexed and variable annuities
and a variety of supplemental insurance products. Great American Insurance Groups 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 Companys
expectations concerning market and other conditions and their effect on future premiums,
revenues, earnings and investment activities; recoverability of asset values; expected losses
and the adequacy of reserves for asbestos, environmental pollution and mass tort claims; rate
changes; and improved loss experience.
Actual results or financial condition could differ materially from those contained in or
implied by such forward-looking statements for a variety of factors including but not limited
to: changes in financial, political and economic conditions, including changes in interest rates
and extended economic recessions or expansions; performance of securities markets; AFGs ability
to estimate accurately the likelihood, magnitude and timing of any losses in connection with
investments in the non-agency residential mortgage market; new legislation or declines in credit
quality or credit ratings that could have a material impact on the valuation of securities in
AFGs investment portfolio, including mortgage-backed securities; the availability of capital;
regulatory actions (including changes in statutory accounting rules); changes in legal
environment affecting AFG or its customers; tax law and accounting changes; levels of natural
catastrophes, terrorist activities (including any nuclear, biological, chemical or radiological
events), incidents of war 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; the unpredictability of possible future litigation if certain settlements
of current litigation do not become effective; trends in persistency, mortality and
morbidity; competitive pressures, including the ability to obtain adequate rates; changes in
AFGs credit ratings or the financial strength ratings assigned by major ratings agencies to
AFGs operating subsidiaries; and other factors identified in our filings with the Securities
and Exchange Commission.
The forward-looking statements herein are made only as of the date of this press release.
The Company assumes no obligation to publicly update any forward-looking statements.
Conference Call
The information in this press release should be read in conjunction with financial and
investment supplements that are available in the Investor Relations section of our web site at
www.AFGinc.com. The company will hold a conference call to discuss 2010 second quarter results
at 11:30 am (ET) tomorrow, Tuesday, August 3, 2010. Toll-free telephone access will be
available by dialing 1-888-892-6137 (international dial in 706-758-4386). The conference ID for
the live call is 87161611. Please dial in five to ten minutes prior to the scheduled start time
of the call.
A replay of the call will also be available two hours from the conclusion of the call, at
approximately 1:30 pm (ET) on August 3, 2010 until 11:59 pm (ET) on August 10, 2010. To listen
to the replay, dial 1-800-642-1687 (international dial in 706-645-9291) and provide the
conference ID 87161611.
The conference call will also be broadcast over the Internet. To listen to the call via
the Internet, go to AFGs website, www.AFGinc.com, and follow the instructions at the Webcast
link within the Investor Relations section. An archived webcast will be available immediately
after the call via a link on the Investor Relations page until August 10, 2010 at 11:59 pm (ET).
An archived audio MP3 file will also be available within 24 hours of the call.
Contact:
|
Diane P. Weidner | Web Sites: | ||
Asst. Vice President Investor Relations | www.AFGinc.com | |||
(513) 369-5713 | www.GreatAmericanInsurance.com | |||
www.GAFRI.com |
-o0o-
(Financial summaries follow)
(Financial summaries follow)
This earnings release and additional Financial and Investment Supplements are available in the
Investor Relations section of AFGs web site: www.AFGinc.com.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
SUMMARY OF EARNINGS
(In Millions, Except Per Share Data)
SUMMARY OF EARNINGS
(In Millions, Except Per Share Data)
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues |
||||||||||||||||
P&C insurance premiums |
$ | 572 | $ | 612 | $ | 1,151 | $ | 1,187 | ||||||||
Life, accident & health premiums |
113 | 110 | 228 | 219 | ||||||||||||
Investment income |
294 | 299 | 589 | 599 | ||||||||||||
Realized investment gains (losses) |
11 | 15 | 15 | (26 | ) | |||||||||||
Income (loss) of managed investment
entities: |
||||||||||||||||
Investment income |
23 | | 45 | | ||||||||||||
Loss on change in fair value of
assets/liabilities |
(15 | ) | | (40 | ) | | ||||||||||
Other income |
54 | 60 | 98 | 123 | ||||||||||||
1,052 | 1,096 | 2,086 | 2,102 | |||||||||||||
Costs and expenses |
||||||||||||||||
P&C insurance losses & expenses |
509 | 504 | 1,017 | 975 | ||||||||||||
Annuity, life, accident & health
benefits & expenses |
265 | 240 | 518 | 491 | ||||||||||||
Interest on borrowed money |
18 | 13 | 36 | 29 | ||||||||||||
Expenses of managed investment
entities |
14 | | 23 | | ||||||||||||
Other operating and general expenses |
88 | 133 | 187 | 233 | ||||||||||||
894 | 890 | 1,781 | 1,728 | |||||||||||||
Operating earnings before income
taxes |
158 | 206 | 305 | 374 | ||||||||||||
Provision for income taxes(b) |
58 | 74 | 117 | 132 | ||||||||||||
Net earnings including noncontrolling
interests |
100 | 132 | 188 | 242 | ||||||||||||
Less: Net earnings (loss) attributable
to noncontrolling interests |
(8 | ) | 5 | (26 | ) | 11 | ||||||||||
Net earnings attributable to
shareholders |
$ | 108 | $ | 127 | $ | 214 | $ | 231 | ||||||||
Diluted Earnings per Common Share |
$ | 0.97 | $ | 1.09 | $ | 1.90 | $ | 1.98 | ||||||||
Average number of Diluted Shares |
111.8 | 116.5 | 112.5 | 116.5 |
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
Selected Balance Sheet Data: |
||||||||
Total Cash and Investments |
$ | 20,927 | $ | 19,791 | ||||
Long-term Debt |
$ | 851 | $ | 828 | ||||
Shareholders Equity(c) |
$ | 4,285 | $ | 3,781 | ||||
Shareholders Equity (Excluding appropriated
retained earnings & unrealized
gains/losses on fixed maturities)(c) |
$ | 3,786 | $ | 3,733 | ||||
Book Value Per Share: |
||||||||
Excluding appropriated retained earnings |
$ | 37.48 | $ | 33.35 | ||||
Excluding appropriated retained earnings and
unrealized gains/losses on fixed maturities |
$ | 34.84 | $ | 32.92 | ||||
Common Shares Outstanding |
108.6 | 113.4 |
Footnotes (b) and (c) are contained in the accompanying Notes To Financial Schedules at the end
of this release.
AMERICAN FINANCIAL GROUP, INC.
P&C SPECIALTY GROUP UNDERWRITING RESULTS
(In Millions)
P&C SPECIALTY GROUP UNDERWRITING RESULTS
(In Millions)
Three months | Six months | |||||||||||||||||||||||
ended | Pct. | ended | Pct. | |||||||||||||||||||||
June 30, | Change | June 30, | Change | |||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||
Gross written premiums |
$ | 811 | $ | 850 | (5 | %) | $ | 1,555 | $ | 1,668 | (7 | %) | ||||||||||||
Net written premiums |
$ | 575 | $ | 589 | (2 | %) | $ | 1,141 | $ | 1,174 | (3 | %) | ||||||||||||
Ratios (GAAP): |
||||||||||||||||||||||||
Loss & LAE ratio |
52 | % | 45 | % | 52 | % | 46 | % | ||||||||||||||||
Expense ratio |
36 | % | 37 | % | 36 | % | 36 | % | ||||||||||||||||
Combined Ratio(Excluding A&E) |
88 | % | 82 | % | 88 | % | 82 | % | ||||||||||||||||
Total Combined Ratio |
89 | % | 82 | % | 88 | % | 82 | % | ||||||||||||||||
Supplemental:(d) |
||||||||||||||||||||||||
Gross Written Premiums: |
||||||||||||||||||||||||
Property & Transportation |
$ | 364 | $ | 361 | 1 | % | $ | 641 | $ | 677 | (5 | %) | ||||||||||||
Specialty Casualty |
316 | 352 | (10 | %) | 663 | 721 | (8 | %) | ||||||||||||||||
Specialty Financial |
128 | 137 | (7 | %) | 250 | 272 | (8 | %) | ||||||||||||||||
Other |
3 | | | 1 | (2 | ) | | |||||||||||||||||
$ | 811 | $ | 850 | (5 | %) | $ | 1,555 | $ | 1,668 | (7 | %) | |||||||||||||
Net Written Premiums: |
||||||||||||||||||||||||
Property & Transportation |
$ | 246 | $ | 224 | 10 | % | $ | 462 | $ | 426 | 8 | % | ||||||||||||
Specialty Casualty |
211 | 233 | (9 | %) | 449 | 481 | (7 | %) | ||||||||||||||||
Specialty Financial |
104 | 114 | (9 | %) | 202 | 233 | (13 | %) | ||||||||||||||||
Other |
14 | 18 | | 28 | 34 | | ||||||||||||||||||
$ | 575 | $ | 589 | (2 | %) | $ | 1,141 | $ | 1,174 | (3 | %) | |||||||||||||
Combined Ratio (GAAP): |
||||||||||||||||||||||||
Property & Transportation |
96 | % | 88 | % | 91 | % | 83 | % | ||||||||||||||||
Specialty Casualty |
90 | % | 84 | % | 91 | % | 83 | % | ||||||||||||||||
Specialty Financial |
74 | % | 59 | % | 79 | % | 74 | % | ||||||||||||||||
Aggregate Specialty Group |
88 | % | 82 | % | 88 | % | 82 | % |
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Reserve Development |
||||||||||||||||
Favorable/(Unfavorable): |
||||||||||||||||
Property & Transportation |
$ | 15 | $ | 11 | $ | 24 | $ | 39 | ||||||||
Specialty Casualty |
31 | 34 | 50 | 66 | ||||||||||||
Specialty Financial |
13 | 40 | 23 | 41 | ||||||||||||
Other |
3 | (5 | ) | 10 | (2 | ) | ||||||||||
$ | 62 | $ | 80 | $ | 107 | $ | 144 | |||||||||
Points on Combined Ratio: |
||||||||||||||||
Property & Transportation |
7 | 5 | 6 | 9 | ||||||||||||
Specialty Casualty |
14 | 14 | 11 | 14 | ||||||||||||
Specialty Financial |
10 | 31 | 9 | 16 | ||||||||||||
Aggregate Specialty Group |
11 | 13 | 9 | 12 |
Footnote (d) is contained in the accompanying Notes To Financial Schedules at the end of this
release.
AMERICAN FINANCIAL GROUP, INC.
ANNUITY & SUPPLEMENTAL INSURANCE GROUP
STATUTORY PREMIUMS
(In Millions)
ANNUITY & SUPPLEMENTAL INSURANCE GROUP
STATUTORY PREMIUMS
(In Millions)
Three months | Six months | |||||||||||||||||||||||
ended | ended | |||||||||||||||||||||||
June 30, | Pct. | June 30, | Pct. | |||||||||||||||||||||
2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||
Retirement annuity premiums: |
||||||||||||||||||||||||
Fixed annuities |
$ | 218 | $ | 128 | 70 | % | $ | 370 | $ | 220 | 68 | % | ||||||||||||
Indexed annuities |
180 | 117 | 54 | % | 340 | 247 | 38 | % | ||||||||||||||||
Bank annuities |
142 | 133 | 7 | % | 196 | 151 | 30 | % | ||||||||||||||||
Variable annuities |
19 | 25 | (24 | %) | 39 | 51 | (24 | %) | ||||||||||||||||
559 | 403 | 945 | 669 | |||||||||||||||||||||
Supplemental insurance |
101 | 97 | 4 | % | 203 | 192 | 6 | % | ||||||||||||||||
Life insurance |
11 | 12 | (8 | %) | 20 | 24 | (17 | %) | ||||||||||||||||
Total statutory premiums |
$ | 671 | $ | 512 | 31 | % | $ | 1,168 | $ | 885 | 32 | % | ||||||||||||
AMERICAN FINANCIAL GROUP, INC.
Notes To Financial Schedules
Notes To Financial Schedules
a) | GAAP to Non GAAP Reconciliation Components of core net operating earnings: |
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
In millions | 2010 | 2009 | 2010 | 2009 | ||||||||||||
P&C operating earnings |
$ | 139 | $ | 185 | $ | 288 | $ | 373 | ||||||||
Annuity & supplemental insurance
operating earnings |
46 | 42 | 90 | 81 | ||||||||||||
Interest & other corporate expense |
(30 | ) | (41 | ) | (61 | ) | (64 | ) | ||||||||
Core operating earnings before income
taxes |
155 | 186 | 317 | 390 | ||||||||||||
Related income taxes |
53 | 69 | 112 | 142 | ||||||||||||
Core net operating earnings |
$ | 102 | $ | 117 | $ | 205 | $ | 248 | ||||||||
b) | Operating income before income taxes includes $13 million and $33 million in
non-deductible losses attributable to noncontrolling interests related to managed
investment entities in the second quarter and first six months of 2010, respectively. |
|
c) | Shareholders Equity at June 30, 2010 includes $287 million ($2.64 per share) in
unrealized gains on fixed maturities and $212 million ($1.96 per share) of retained
earnings appropriated to managed investment entities. The appropriated retained earnings
will ultimately inure to the benefit of the debt holders of the investment entities managed
by AFG. Shareholders Equity at December 31, 2009 includes $48 million ($.43 per share) in
unrealized gains on fixed maturities. |
|
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, umbrella and excess liability and customized programs for small to mid-sized
businesses and workers compensation insurance, primarily in the state of California. |
||
| Specialty Financial includes risk management insurance programs for lending and leasing
institutions (including collateral and mortgage protection insurance), surety and fidelity
products and trade credit insurance. |
||
| Other includes an internal reinsurance facility. |