AMERICAN FINANCIAL GROUP INC - FORM 8-K - EX-99.2 - INVESTOR SUPPLEMENT

Attached files

file	filename
8-K - CURRENT REPORT - AMERICAN FINANCIAL GROUP INC	d576320d8k.htm
EX-99.1 - NEWS RELEASE - AMERICAN FINANCIAL GROUP INC	d576320dex991.htm

Exhibit 99.2


		American Financial Group, Inc.
		Investor Supplement—Second Quarter 2013
		July 29, 2013
		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 2013


Section	Page
Table of Contents—Investor Supplement—Second Quarter 2013		2
Financial Highlights		3
Summary of Earnings		4
Earnings Per Share Summary		5

Property and Casualty Insurance Segment
Property and Casualty Insurance—Summary Underwriting Results (GAAP)		6
Specialty—Underwriting Results (GAAP)		7
Property and Transportation—Underwriting Results (GAAP)		8
Specialty Casualty—Underwriting Results (GAAP)		9
Specialty Financial—Underwriting Results (GAAP)		10
Other Specialty—Underwriting Results (GAAP)		11

Annuity Segment
Annuity Results of Operations (GAAP)		12
Net Spread on Fixed Annuities (GAAP)		13
Annuity Premiums (Statutory)		14
Fixed Annuity Benefits Accumulated (GAAP)		15

Consolidated Balance Sheet / Book Value / Debt
Consolidated Balance Sheet		16
Book Value Per Share and Price / Book Summary		17
Capitalization		18
Additional Supplemental Information		19

Consolidated Investment Supplement
Total Cash and Investments and Quarterly Net Investment Income		20
Fixed Maturities—By Security Type—AFG Consolidated		21
Fixed Maturities—By Security Type Portfolio		22
Fixed Maturities—Credit Rating and NAIC Designation		23
Mortgage-Backed Securities—AFG Consolidated		24
Mortgage-Backed Securities Portfolio		25
Mortgage-Backed Securities—Credit Rating and NAIC Designation		26

American Financial Group, Inc.

Financial Highlights

(in millions, except per share information)


	Three Months Ended															Six Months Ended
	06/30/13			03/31/13			12/31/12			09/30/12			06/30/12			06/30/13			06/30/12
Highlights
Core net operating earnings	$	87		$	84		$	61		$	78		$	90		$	171		$	175
Net earnings		110			120			50			226			99			230			212
Total assets		39,414			39,139			39,171			39,633			37,052			39,414			37,052
Adjusted shareholders’ equity (a)		3,978			3,950			3,784			3,881			3,869			3,978			3,869
Property and Casualty net written premiums		749			704			702			908			732			1,453			1,339
Annuity statutory premiums		861			624			560			723			905			1,485			1,708
Per share data
Core net operating earnings per share	$	0.96		$	0.92		$	0.67		$	0.82		$	0.91		$	1.88		$	1.77
Diluted earnings per share		1.20			1.32			0.54			2.39			1.01			2.52			2.15
Adjusted book value per share (a)		44.78			43.94			42.52			42.72			40.74			44.78			40.74
Cash dividends per common share		0.1950			0.1950			0.4450			0.1750			0.1750			0.3900			0.3500
Financial ratios
Annualized core operating return on equity (a)		8.9	%		8.6	%		6.4	%		8.0	%		9.2	%		8.8	%		9.1	%
Annualized return on equity (a)		11.1	%		12.4	%		5.2	%		23.4	%		10.2	%		11.8	%		11.1	%
Property and Casualty combined ratio—Specialty:
Loss & LAE ratio		60.3	%		56.5	%		72.9	%		68.2	%		55.7	%		58.4	%		56.3	%
Underwriting expense ratio		36.7	%		36.6	%		25.1	%		30.0	%		36.1	%		36.6	%		35.6	%

Combined ratio—Specialty		97.0	%		93.1	%		98.0	%		98.2	%		91.8	%		95.0	%		91.9	%

Net spread on fixed annuities:
Net interest spread		3.02	%		2.99	%		3.18	%		3.25	%		3.16	%		3.00	%		3.02	%
Net spread earned		1.65	%		1.58	%		1.49	%		1.57	%		1.42	%		1.61	%		1.42	%

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

American Financial Group, Inc.

Summary of Earnings

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/13			03/31/13			12/31/12			09/30/12			06/30/12			06/30/13			06/30/12
Property and Casualty Insurance
Underwriting profit	$	19		$	43		$	10		$	15		$	45		$	62		$	93
Net investment income		65			66			69			67			69			131			139
Other expense		(2	)		(13	)		(10	)		(11	)		(11	)		(15	)		(29	)

Property and Casualty Insurance operating earnings		82			96			69			71			103			178			203
Annuity earnings		82			76			68			69			59			158			119
Run-off Long-Term Care and Life earnings / (loss)		(2	)		(1	)		(12	)		2			5			(3	)		6
Medicare Supplement and Critical Illness earnings (a)		—			—			—			10			12			—			18
Interest expense of parent holding companies		(17	)		(17	)		(17	)		(19	)		(18	)		(34	)		(35	)
Other expense		(22	)		(28	)		(25	)		(18	)		(24	)		(50	)		(47	)

Pre-tax core operating earnings		123			126			83			115			137			249			264
Income tax expense		36			42			22			37			47			78			89

Core net operating earnings		87			84			61			78			90			171			175
Non-core items, net of tax:
Gain on sale of Medicare Supplement and Critical Illness		—			—			13			101			—			—			—
Other realized gains		26			36			36			55			9			62			37
Long-Term Care reserve charge		—			—			(99	)		—			—			—			—
Significant A&E charges:
Property and Casualty Insurance run-off operations		—			—			—			(20	)		—			—			—
Former Railroad and Manufacturing operations		—			—			—			(1	)		—			—			—
AFG tax case and settlement of open years		—			—			39			28			—			—			—
ELNY guaranty fund assessments (b)		(3	)		—			—			—			—			(3	)		—
Other		—			—			—			(15	)		—			—			—

Net earnings	$	110		$	120		$	50		$	226		$	99		$	230		$	212

(a)	Medicare Supplement and Critical Illness operations were sold August 2012.

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

American Financial Group, Inc.

Earnings Per Share Summary

(in millions, except per share information)


	Three Months Ended													Six Months Ended
	06/30/13			03/31/13		12/31/12			09/30/12			06/30/12		06/30/13			06/30/12
Core net operating earnings	$	87		$	84	$	61		$	78		$	90	$	171		$	175

Net earnings	$	110		$	120	$	50		$	226		$	99	$	230		$	212

Average number of diluted shares		91.472			91.048		91.413			94.625			98.004		91.260			98.690
Diluted earnings per share:
Core net operating earnings per share	$	0.96		$	0.92	$	0.67		$	0.82		$	0.91	$	1.88		$	1.77
Gain on sale of Medicare Supplement and Critical Illness		—			—		0.15			1.07			—		—			—
Other realized gains		0.28			0.40		0.37			0.59			0.10		0.68			0.38
Long-Term Care reserve charge		—			—		(1.08	)		—			—		—			—
Significant A&E charges:
Property and Casualty Insurance run-off operations		—			—		—			(0.22	)		—		—			—
Former Railroad and Manufacturing operations		—			—		—			(0.01	)		—		—			—
AFG tax case and settlement of open years		—			—		0.43			0.30			—		—			—
ELNY guaranty fund assessments (a)		(0.04	)		—		—			—			—		(0.04	)		—
Other		—			—		—			(0.16	)		—		—			—

Diluted earnings per share	$	1.20		$	1.32	$	0.54		$	2.39		$	1.01	$	2.52		$	2.15

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

American Financial Group, Inc.

Property and Casualty Insurance—Summary Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/13			03/31/13			12/31/12			09/30/12			06/30/12			06/30/13			06/30/12
Property and Transportation	$	(31	)	$	10		$	(14	)	$	—		$	6		$	(21	)	$	33
Specialty Casualty		32			19			8			8			33			51			37
Specialty Financial		15			13			16			1			11			28			27
Other Specialty		5			6			5			7			2			11			3

Underwriting profit—Specialty		21			48			15			16			52			69			100
Other charges, included in loss and LAE		2			5			5			1			7			7			7

Underwriting profit—Core		19			43			10			15			45			62			93
Special A&E charges, included in loss and LAE		—			—			—			(31	)		—			—			—

Underwriting profit (loss)—Property and Casualty Insurance	$	19		$	43		$	10		$	(16	)	$	45		$	62		$	93

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	1		$	—		$	9		$	—		$	—		$	1		$	—
Catastrophe loss		18			10			24			4			6			28			9

Total current accident year catastrophe losses	$	19		$	10		$	33		$	4		$	6		$	29		$	9

Loss reserve development (favorable) / adverse	$	(22	)	$	(28	)	$	(7	)	$	23		$	(27	)	$	(50	)	$	(46	)

Combined ratio:
Property and Transportation		110.3	%		96.5	%		103.7	%		99.8	%		98.1	%		103.5	%		94.0	%
Specialty Casualty		88.4	%		92.7	%		96.8	%		96.7	%		86.1	%		90.5	%		91.8	%
Specialty Financial		86.6	%		88.5	%		84.9	%		98.8	%		88.5	%		87.6	%		86.6	%
Other Specialty		74.0	%		71.1	%		70.0	%		68.4	%		86.0	%		72.6	%		89.2	%
Combined ratio—Specialty		97.0	%		93.1	%		98.0	%		98.2	%		91.8	%		95.0	%		91.9	%
Other core charges		0.2	%		0.7	%		0.7	%		0.0	%		1.1	%		0.5	%		0.6	%
Special A&E charges		0.0	%		0.0	%		0.0	%		3.7	%		0.0	%		0.0	%		0.0	%

Combined ratio		97.2	%		93.8	%		98.7	%		101.9	%		92.9	%		95.5	%		92.5	%

Loss and LAE components—property and casualty insurance
Current accident year, excluding catastrophe loss		61.1	%		59.8	%		71.2	%		68.7	%		60.2	%		60.4	%		59.9	%
Prior accident year development		(3.2	%)		(4.1	%)		(0.8	%)		2.6	%		(4.2	%)		(3.6	%)		(3.7	%)
Current accident year catastrophe loss		2.6	%		1.5	%		3.2	%		0.6	%		0.8	%		2.1	%		0.7	%

Loss and LAE ratio		60.5	%		57.2	%		73.6	%		71.9	%		56.8	%		58.9	%		56.9	%

American Financial Group, Inc.

Specialty—Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/13			03/31/13			12/31/12			09/30/12			06/30/12			06/30/13			06/30/12
Gross written premiums	$	1,041		$	925		$	965		$	1,509		$	1,024		$	1,966		$	1,847
Ceded reinsurance premiums		(292	)		(221	)		(263	)		(601	)		(292	)		(513	)		(508	)

Net written premiums		749			704			702			908			732			1,453			1,339
Change in unearned premiums		(40	)		(17	)		54			(60	)		(92	)		(57	)		(96	)

Net earned premiums		709			687			756			848			640			1,396			1,243
Loss and LAE		428			388			551			578			356			816			700
Underwriting expense		260			251			190			254			232			511			443

Underwriting profit	$	21		$	48		$	15		$	16		$	52		$	69		$	100

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	1		$	—		$	9		$	—		$	—		$	1		$	—
Catastrophe loss		18			10			24			4			6			28			9

Total current accident year catastrophe losses	$	19		$	10		$	33		$	4		$	6		$	29		$	9

Loss reserve development (favorable) / adverse	$	(24	)	$	(33	)	$	(12	)	$	(9	)	$	(34	)	$	(57	)	$	(53	)

Combined ratio:
Loss and LAE ratio		60.3	%		56.5	%		72.9	%		68.2	%		55.7	%		58.4	%		56.3	%
Underwriting expense ratio		36.7	%		36.6	%		25.1	%		30.0	%		36.1	%		36.6	%		35.6	%

Combined ratio		97.0	%		93.1	%		98.0	%		98.2	%		91.8	%		95.0	%		91.9	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		61.1	%		59.8	%		71.2	%		68.7	%		60.2	%		60.4	%		59.9	%
Prior accident year development		(3.4	%)		(4.8	%)		(1.5	%)		(1.1	%)		(5.3	%)		(4.1	%)		(4.3	%)
Current accident year catastrophe loss		2.6	%		1.5	%		3.2	%		0.6	%		0.8	%		2.1	%		0.7	%

Loss and LAE ratio		60.3	%		56.5	%		72.9	%		68.2	%		55.7	%		58.4	%		56.3	%

American Financial Group, Inc.

Property and Transportation—Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/13			03/31/13			12/31/12			09/30/12			06/30/12			06/30/13			06/30/12
Gross written premiums	$	446		$	352		$	431		$	981		$	531		$	798		$	859
Ceded reinsurance premiums		(118	)		(76	)		(116	)		(442	)		(162	)		(194	)		(240	)

Net written premiums		328			276			315			539			369			604			619
Change in unearned premiums		(27	)		17			68			(52	)		(79	)		(10	)		(66	)

Net earned premiums		301			293			383			487			290			594			553
Loss and LAE		236			192			340			371			196			428			351
Underwriting expense		96			91			57			116			88			187			169

Underwriting profit (loss)	$	(31	)	$	10		$	(14	)	$	—		$	6		$	(21	)	$	33

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	1		$	—		$	8		$	—		$	—		$	1		$	—
Catastrophe loss		17			10			20			2			4			27			5

Total current accident year catastrophe losses	$	18		$	10		$	28		$	2		$	4		$	28		$	5

Loss reserve development (favorable) / adverse	$	3		$	(6	)	$	(2	)	$	(2	)	$	(2	)	$	(3	)	$	(12	)

Combined ratio:
Loss and LAE ratio		78.5	%		65.4	%		88.9	%		76.1	%		67.6	%		72.1	%		63.4	%
Underwriting expense ratio		31.8	%		31.1	%		14.8	%		23.7	%		30.5	%		31.4	%		30.6	%

Combined ratio		110.3	%		96.5	%		103.7	%		99.8	%		98.1	%		103.5	%		94.0	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		71.6	%		64.0	%		84.3	%		76.0	%		66.7	%		67.9	%		64.7	%
Prior accident year development		1.2	%		(2.0	%)		(0.5	%)		(0.5	%)		(0.5	%)		(0.4	%)		(2.1	%)
Current accident year catastrophe loss		5.7	%		3.4	%		5.1	%		0.6	%		1.4	%		4.6	%		0.8	%

Loss and LAE ratio		78.5	%		65.4	%		88.9	%		76.1	%		67.6	%		72.1	%		63.4	%

American Financial Group, Inc.

Specialty Casualty—Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/13			03/31/13			12/31/12			09/30/12			06/30/12			06/30/13			06/30/12
Gross written premiums	$	440		$	430		$	384		$	376		$	358		$	870		$	724
Ceded reinsurance premiums		(157	)		(135	)		(126	)		(133	)		(114	)		(292	)		(233	)

Net written premiums		283			295			258			243			244			578			491
Change in unearned premiums		(6	)		(36	)		(9	)		—			(8	)		(42	)		(35	)

Net earned premiums		277			259			249			243			236			536			456
Loss and LAE		148			148			165			155			117			296			261
Underwriting expense		97			92			76			80			86			189			158

Underwriting profit	$	32		$	19		$	8		$	8		$	33		$	51		$	37

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe loss		—			—			1			1			1			—			1

Total current accident year catastrophe losses	$	—		$	—		$	1		$	1		$	1		$	—		$	1

Loss reserve development (favorable) / adverse	$	(22	)	$	(16	)	$	7		$	3		$	(27	)	$	(38	)	$	(28	)

Combined ratio:
Loss and LAE ratio		53.4	%		57.3	%		65.9	%		63.8	%		49.9	%		55.3	%		57.3	%
Underwriting expense ratio		35.0	%		35.4	%		30.9	%		32.9	%		36.2	%		35.2	%		34.5	%

Combined ratio		88.4	%		92.7	%		96.8	%		96.7	%		86.1	%		90.5	%		91.8	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		61.2	%		63.5	%		62.5	%		62.3	%		61.0	%		62.3	%		63.3	%
Prior accident year development		(8.0	%)		(6.2	%)		3.0	%		1.2	%		(11.3	%)		(7.1	%)		(6.2	%)
Current accident year catastrophe loss		0.2	%		0.0	%		0.4	%		0.3	%		0.2	%		0.1	%		0.2	%

Loss and LAE ratio		53.4	%		57.3	%		65.9	%		63.8	%		49.9	%		55.3	%		57.3	%

American Financial Group, Inc.

Specialty Financial—Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/13			03/31/13			12/31/12			09/30/12			06/30/12			06/30/13			06/30/12
Gross written premiums	$	155		$	143		$	151		$	152		$	134		$	298		$	263
Ceded reinsurance premiums		(38	)		(30	)		(43	)		(44	)		(32	)		(68	)		(68	)

Net written premiums		117			113			108			108			102			230			195
Change in unearned premiums		(4	)		3			(4	)		(8	)		(4	)		(1	)		6

Net earned premiums		113			116			104			100			98			229			201
Loss and LAE		37			42			40			46			36			79			71
Underwriting expense		61			61			48			53			51			122			103

Underwriting profit	$	15		$	13		$	16		$	1		$	11		$	28		$	27

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	1		$	—		$	—		$	—		$	—
Catastrophe loss		1			—			2			1			—			1			2

Total current accident year catastrophe losses	$	1		$	—		$	3		$	1		$	—		$	1		$	2

Loss reserve development (favorable) / adverse	$	—		$	(6	)	$	(13	)	$	(5	)	$	(4	)	$	(6	)	$	(11	)

Combined ratio:
Loss and LAE ratio		32.9	%		35.8	%		38.2	%		46.7	%		35.8	%		34.4	%		35.1	%
Underwriting expense ratio		53.7	%		52.7	%		46.7	%		52.1	%		52.7	%		53.2	%		51.5	%

Combined ratio		86.6	%		88.5	%		84.9	%		98.8	%		88.5	%		87.6	%		86.6	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		32.9	%		40.3	%		48.2	%		51.5	%		39.4	%		36.7	%		39.2	%
Prior accident year development		(0.7	%)		(4.8	%)		(12.1	%)		(5.5	%)		(3.6	%)		(2.8	%)		(5.4	%)
Current accident year catastrophe loss		0.7	%		0.3	%		2.1	%		0.7	%		0.0	%		0.5	%		1.3	%

Loss and LAE ratio		32.9	%		35.8	%		38.2	%		46.7	%		35.8	%		34.4	%		35.1	%

American Financial Group, Inc.

Other Specialty—Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/13			03/31/13			12/31/12			09/30/12			06/30/12			06/30/13			06/30/12
Gross written premiums	$	—		$	—		$	(1	)	$	—		$	1		$	—		$	1
Ceded reinsurance premiums		21			20			22			18			16			41			33

Net written premiums		21			20			21			18			17			41			34
Change in unearned premiums		(3	)		(1	)		(1	)		—			(1	)		(4	)		(1	)

Net earned premiums		18			19			20			18			16			37			33
Loss and LAE		7			6			6			6			7			13			17
Underwriting expense		6			7			9			5			7			13			13

Underwriting profit	$	5		$	6		$	5		$	7		$	2		$	11		$	3

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe loss		—			—			1			—			1			—			1

Total current accident year catastrophe losses	$	—		$	—		$	1		$	—		$	1		$	—		$	1

Loss reserve development (favorable) / adverse	$	(5	)	$	(5	)	$	(4	)	$	(5	)	$	(1	)	$	(10	)	$	(2	)

Combined ratio:
Loss and LAE ratio		35.1	%		33.7	%		32.7	%		31.6	%		48.5	%		34.4	%		51.8	%
Underwriting expense ratio		38.9	%		37.4	%		37.3	%		36.8	%		37.5	%		38.2	%		37.4	%

Combined ratio		74.0	%		71.1	%		70.0	%		68.4	%		86.0	%		72.6	%		89.2	%

American Financial Group, Inc.

Annuity Results of Operations (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/13			03/31/13			12/31/12			09/30/12			06/30/12			06/30/13			06/30/12
Net investment income	$	257		$	248		$	254		$	249		$	245		$	505		$	473
Guaranteed withdrawal benefit fees		6			5			5			4			3			11			5
Policy charges and other miscellaneous income		9			9			8			10			9			18			20

Total revenues		272			262			267			263			257			534			498
Annuity benefits		120			134			124			140			147			254			277
Acquisition expenses		48			31			58			32			31			79			60
Other expenses		22			21			17			22			20			43			42

Total costs and expenses		190			186			199			194			198			376			379

Earnings before income taxes—core		82			76			68			69			59			158			119
ELNY guaranty fund assessments (a)		(5	)		—			—			—			—			(5	)		—

Earnings before income taxes	$	77		$	76		$	68		$	69		$	59		$	153		$	119

Detail of annuity benefits above:
Interest credited—fixed	$	111		$	109		$	109		$	107		$	112		$	220		$	222
Interest credited—fixed component of variable annuities		1			2			2			2			1			3			3
Change in expected death and annuitization reserve		6			4			5			5			5			10			9
Amortization of sales inducements		8			7			9			8			7			15			15
Guaranteed withdrawal benefit reserve		10			8			5			4			3			18			5
Change in other benefit reserves		3			1			(1	)		4			1			4			2
Embedded derivative mark-to-market		(3	)		80			1			40			(3	)		77			57
Equity option mark-to-market		(16	)		(77	)		—			(30	)		21			(93	)		(36	)
Unlockings		—			—			(6	)		—			—			—			—

Total annuity benefits	$	120		$	134		$	124		$	140		$	147		$	254		$	277

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

American Financial Group, Inc.

Net Spread on Fixed Annuities (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/13			03/31/13			12/31/12			09/30/12			06/30/12			06/30/13			06/30/12
Average fixed annuity investments (at amortized cost)	$	18,615		$	17,945		$	17,485		$	16,994		$	16,373		$	18,280		$	16,060
Average annuity benefits accumulated		18,151			17,506			17,137			16,759			16,173			17,829			15,841

Investments in excess of annuity benefits accumulated	$	464		$	439		$	348		$	235		$	200		$	451		$	219

As % of average annuity benefits accumulated (except as noted)
Net investment income (as % of investments)		5.45	%		5.48	%		5.74	%		5.80	%		5.93	%		5.46	%		5.83	%
Interest credited		(2.43	%)		(2.49	%)		(2.56	%)		(2.55	%)		(2.77	%)		(2.46	%)		(2.81	%)

Net interest spread on fixed annuities		3.02	%		2.99	%		3.18	%		3.25	%		3.16	%		3.00	%		3.02	%
Policy charges and other miscellaneous income		0.13	%		0.14	%		0.14	%		0.16	%		0.17	%		0.14	%		0.18	%
Other annuity benefit expenses, net		(0.46	%)		(0.35	%)		(0.40	%)		(0.27	%)		(0.34	%)		(0.41	%)		(0.34	%)
Acquisition expenses		(1.00	%)		(0.69	%)		(0.85	%)		(0.72	%)		(0.69	%)		(0.85	%)		(0.71	%)
Other expenses		(0.43	%)		(0.45	%)		(0.39	%)		(0.48	%)		(0.46	%)		(0.44	%)		(0.49	%)
Change in fair value of derivatives		0.39	%		(0.06	%)		0.10	%		(0.37	%)		(0.42	%)		0.17	%		(0.24	%)
Unlockings		0.00	%		0.00	%		(0.29	%)		0.00	%		0.00	%		0.00	%		0.00	%

Net spread earned on fixed annuities—core		1.65	%		1.58	%		1.49	%		1.57	%		1.42	%		1.61	%		1.42	%

Average annuity benefits accumulated	$	18,151		$	17,506		$	17,137		$	16,759		$	16,173		$	17,829		$	15,841
Net spread earned on fixed annuities		1.65	%		1.58	%		1.49	%		1.57	%		1.42	%		1.61	%		1.42	%

Earnings on fixed annuity benefits accumulated	$	75		$	69		$	64		$	66		$	57		$	144		$	113
Investments in excess of annuity benefits accumulated	$	464		$	439		$	348		$	235		$	200		$	451		$	219
Net investment income (as % of investments)		5.45	%		5.48	%		5.74	%		5.80	%		5.93	%		5.46	%		5.83	%

Earnings on investments in excess of annuity benefits accumulated	$	6		$	6		$	5		$	3		$	3		$	12		$	6
Variable annuity earnings		1			1			(1	)		—			(1	)		2			—

Earnings before income taxes—core		82			76			68			69			59			158			119
ELNY guaranty fund assessments (a)		(5	)		—			—			—			—			(5	)		—

Earnings before income taxes	$	77		$	76		$	68		$	69		$	59		$	153		$	119

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

American Financial Group

Annuity Premiums (Statutory)

($ in millions)


	Three Months Ended										Six months ended
	06/30/13		03/31/13		12/31/12		09/30/12		06/30/12		06/30/13		06/30/12
Retail single premium annuities—indexed	$	472	$	333	$	305	$	417	$	531	$	805	$	940
Retail single premium annuities—fixed		37		27		35		42		34		64		76
Financial institutions single premium annuities—indexed		169		83		59		72		80		252		160
Financial institutions single premium annuities—fixed		118		111		86		127		179		229		374
Education market—403(b) fixed and indexed annuities		52		55		60		51		64		107		126

Subtotal fixed annuity premiums		848		609		545		709		888		1,457		1,676
Variable annuities		13		15		15		14		17		28		32

Total annuity premiums	$	861	$	624	$	560	$	723	$	905	$	1,485	$	1,708

American Financial Group, Inc.

Fixed Annuity Benefits Accumulated (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/13			03/31/13			12/31/12			09/30/12			06/30/12			06/30/13			06/30/12
Beginning fixed annuity reserves	$	17,737		$	17,274		$	16,999		$	16,518		$	15,828		$	17,274		$	15,188
Premiums		848			609			545			709			888			1,457			1,676
Federal Home Loan Bank advances		200			—			—			—			—			200			—
Surrenders, benefits and other withdrawals		(352	)		(352	)		(355	)		(390	)		(328	)		(704	)		(652	)
Interest and other annuity benefit expenses:
Interest credited		111			109			109			107			112			220			222
Embedded derivative mark-to-market		(3	)		80			1			40			(3	)		77			57
Change in other benefit reserves		23			17			(15	)		15			21			40			27
Unlockings		—			—			(10	)		—			—			—			—

Ending fixed annuity reserves	$	18,564		$	17,737		$	17,274		$	16,999		$	16,518		$	18,564		$	16,518

Reconciliation to annuity benefits accumulated:
Ending fixed annuity reserves	$	18,564		$	17,737		$	17,274		$	16,999		$	16,518		$	18,564		$	16,518
Impact of unrealized investment gains on reserves		87			140			136			46			38			87			38
Fixed component of variable annuities		197			198			199			200			202			197			202

Annuity benefits accumulated per balance sheet	$	18,848		$	18,075		$	17,609		$	17,245		$	16,758		$	18,848		$	16,758

Annualized surrenders and other withdrawals as a % of beginning reserves		7.9	%		8.2	%		8.4	%		9.4	%		8.3	%		8.2	%		8.6	%

American Financial Group, Inc.

Consolidated Balance Sheet

($ in millions)


	06/30/13			03/31/13		12/31/12		09/30/12		06/30/12		03/31/12
Assets:
Total cash and investments	$	29,262		$	29,084	$	28,449	$	28,037	$	27,301	$	26,478
Recoverables from reinsurers		3,044			3,083		3,750		3,865		2,740		2,678
Prepaid reinsurance premiums		520			466		471		587		488		415
Agents’ balances and premiums receivable		754			649		636		750		702		550
Deferred policy acquisition costs		818			565		550		621		846		916
Assets of managed investment entities		2,973			3,285		3,225		3,102		2,825		2,952
Other receivables		422			384		539		1,168		673		625
Variable annuity assets (separate accounts)		608			614		580		577		574		601
Other assets		828			824		786		741		717		810
Goodwill		185			185		185		185		186		186

Total assets	$	39,414		$	39,139	$	39,171	$	39,633	$	37,052	$	36,211

Liabilities and Equity:
Unpaid losses and loss adjustment expenses	$	6,098		$	6,238	$	6,845	$	7,277	$	6,153	$	6,117
Unearned premiums		1,789			1,697		1,651		1,821		1,661		1,496
Annuity benefits accumulated		18,848			18,075		17,609		17,245		16,758		16,064
Life, accident and health reserves		2,017			2,021		2,059		1,699		1,750		1,739
Payable to reinsurers		367			250		475		656		396		292
Liabilities of managed investment entities		2,603			2,880		2,892		2,753		2,502		2,672
Long-term debt		949			950		953		966		1,158		931
Variable annuity liabilities (separate accounts)		608			614		580		577		574		601
Other liabilities		1,497			1,506		1,359		1,675		1,325		1,567

Total liabilities	$	34,776		$	34,231	$	34,423	$	34,669	$	32,277	$	31,479
Shareholders’ equity:
Common stock	$	89		$	90	$	89	$	91	$	95	$	97
Capital surplus		1,088			1,090		1,063		1,071		1,112		1,126
Appropriated retained earnings		33			64		75		109		127		145
Unappropriated retained earnings		2,664			2,620		2,520		2,577		2,515		2,498
Unrealized gains—fixed maturities		462			719		719		789		626		541
Unrealized gains—equities		138			146		104		132		145		164
Other comprehensive income, net of tax		(1	)		4		8		10		2		9

Total shareholders’ equity		4,473			4,733		4,578		4,779		4,622		4,580
Noncontrolling interests		165			175		170		185		153		152

Total liabilities and equity	$	39,414		$	39,139	$	39,171	$	39,633	$	37,052	$	36,211

American Financial Group, Inc.

Book Value Per Share and Price / Book Summary

(in millions, except per share information)


	06/30/13			03/31/13			12/31/12			09/30/12			06/30/12			03/31/12
Shareholders’ equity	$	4,473		$	4,733		$	4,578		$	4,779		$	4,622		$	4,580
Appropriated retained earnings		(33	)		(64	)		(75	)		(109	)		(127	)		(145	)

Shareholders’ equity, excluding appropriated retained earnings		4,440			4,669			4,503			4,670			4,495			4,435
Unrealized (gains) on fixed maturities		(462	)		(719	)		(719	)		(789	)		(626	)		(541	)

Adjusted shareholders’ equity		3,978			3,950			3,784			3,881			3,869			3,894
Goodwill		(185	)		(185	)		(185	)		(185	)		(186	)		(186	)
Intangibles		(29	)		(33	)		(36	)		(39	)		(43	)		(46	)

Tangible adjusted shareholders’ equity	$	3,764		$	3,732		$	3,563		$	3,657		$	3,640		$	3,662

Common shares outstanding		88.821			89.883			88.979			90.847			94.959			97.178
Book value per share:
Excluding appropriated retained earnings (a)	$	49.98		$	51.94		$	50.61		$	51.40		$	47.34		$	45.65
Adjusted (b)		44.78			43.94			42.52			42.72			40.74			40.07
Tangible, adjusted (c)		42.38			41.52			40.04			40.26			38.34			37.69
Market capitalization
AFG’s closing common share price	$	48.91		$	47.38		$	39.52		$	37.90		$	39.23		$	38.58
Market capitalization	$	4,344		$	4,259		$	3,516		$	3,443		$	3,725		$	3,749
Price / Adjusted book value ratio		1.09			1.08			0.93			0.89			0.96			0.96

(a)	Excludes appropriated retained earnings.

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

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

American Financial Group, Inc.

Capitalization

($ in millions)


	06/30/13			03/31/13			12/31/12			09/30/12			06/30/12			03/31/12
Direct obligations of AFG	$	840		$	840		$	840		$	840		$	830		$	600
Direct obligations of subsidiaries		89			90			93			106			308			311
Payable to subsidiary trusts		20			20			20			20			20			20

Long-term debt	$	949		$	950		$	953		$	966		$	1,158		$	931
Obligations secured by real estate		(62	)		(62	)		(62	)		(63	)		(64	)		(64	)

Debt excluding obligations secured by real estate	$	887		$	888		$	891		$	903		$	1,094		$	867

Total capital (a)	$	5,554		$	5,794		$	5,626		$	5,821		$	5,806		$	5,518
Total capital excluding obligations secured by real estate (a)		5,492			5,732			5,564			5,758			5,742			5,454
Total adjusted capital (b)	$	5,092		$	5,074		$	4,907		$	5,032		$	5,180		$	4,977
Total adjusted capital excluding obligations secured by real estate (b)		5,030			5,012			4,845			4,969			5,116			4,913
Ratio of debt to total capital (a):
Including debt secured by real estate		17.1	%		16.4	%		16.9	%		16.6	%		19.9	%		16.9	%
Excluding debt secured by real estate		16.2	%		15.5	%		16.0	%		15.7	%		19.1	%		15.9	%
Ratio of debt to total adjusted capital (b):
Including debt secured by real estate		18.6	%		18.7	%		19.4	%		19.2	%		22.4	%		18.7	%
Excluding debt secured by real estate		17.6	%		17.7	%		18.4	%		18.2	%		21.4	%		17.7	%

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

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

American Financial Group, Inc.

Additional Supplemental Information

($ in millions)


	Three Months Ended										Six months ended
	06/30/13		03/31/13		12/31/12		09/30/12		06/30/12		06/30/13		06/30/12
Property and Casualty Insurance
Paid Losses (GAAP)	$	520	$	357	$	785	$	337	$	409	$	877	$	904


	06/30/13		03/31/13		12/31/12		09/30/12		06/30/12		03/31/12
Statutory Surplus
Property and Casualty Insurance	$	2,096	$	2,090	$	2,015	$	2,044	$	2,052	$	2,037
AFG’s principal annuity subsidiaries (total adjusted capital)	$	1,517	$	1,483	$	1,380	$	1,275	$	1,219	$	1,183
Allowable dividends without regulatory approval
Property and Casualty Insurance	$	237	$	237	$	237	$	375	$	375	$	375
Annuity and Run-off		158		158		158		171		171		171


Total	$	395	$	395	$	395	$	546	$	546	$	546


American Financial Group, Inc.
Total Cash and Investments and Quarterly Net Investment Income
June 30, 2013
($ in millions)


	Carrying Value
	Property and Casualty Insurance		Annuity and Run-off		Other		Consolidate CLOs			Total AFG Consolidated		% of Investment Portfolio
Total cash and investments:
Cash and cash equivalents	$	639	$	330	$	302	$	—		$	1,271		4	%
Fixed maturities		5,277		20,041		10		—			25,328		87	%
Equity securities		860		301		38		—			1,199		4	%
Policy loans		—		242		—		—			242		1	%
Mortgage loans		107		492		—		—			599		2	%
Real estate and other investments		332		619		8		(336	)		623		2	%

Total cash and investments	$	7,215	$	22,025	$	358	$	(336	)	$	29,262		100	%


	Property and Casualty Insurance			Annuity and Run-off			Other			Consolidate CLOs			Total AFG Consolidated
Total quarterly net investment income:
Fixed maturities	$	53		$	255		$	—		$	—		$	308
Equity securities		7			3			(1	)		—			9
Other investments		7			19			—			(7	)		19

Gross investment income		67			277			(1	)		(7	)		336
Investment expenses		(2	)		(2	)		—			—			(4	)

Total net investment income	$	65		$	275		$	(1	)	$	(7	)	$	332


	Equity Securities
					Unrealized
	Cost		Fair Value		Gain (Loss)
Annuity and Run-off	$	254	$	301	$	47
Property and Casualty Insurance		692		860		168
Other		38		38		—

Total AFG consolidated	$	984	$	1,199	$	215


American Financial Group, Inc.
Fixed Maturities—By Security Type—AFG Consolidated
June 30, 2013
($ in millions )


											% of
	Amortized					Unrealized		% of			Investment
	Cost			Fair Value		Gain (Loss)		Fair Value			Portfolio
US Government and government agencies	$	313		$	323	$	10		1	%		1	%
States, municipalities and political subdivisions		4,733			4,844		111		19	%		17	%
Foreign government		352			364		12		1	%		1	%
Residential mortgage-backed securities		3,862			4,166		304		16	%		14	%
Commercial mortgage-backed securities		2,631			2,858		227		11	%		10	%
Asset-backed securities		2,210			2,239		29		9	%		8	%
Corporate bonds
Manufacturing		2,196			2,317		121		9	%		8	%
Banks, lending and credit institutions		1,654			1,742		88		7	%		6	%
Gas and electric services		1,254			1,381		127		6	%		5	%
Insurance and insurance related		827			881		54		4	%		3	%
Other corporate		4,001			4,213		212		17	%		14	%

Total AFG consolidated	$	24,033		$	25,328	$	1,295		100	%		87	%

Annuity and Run-off	$	18,930		$	20,041		1,111		79	%		69	%
Property and Casualty Insurance		5,102			5,277		175		21	%		18	%
Other		1			10		9		0	%		0	%

Total AFG consolidated	$	24,033		$	25,328	$	1,295		100	%		87	%

Annualized yield on fixed maturities:
Excluding investment expense (a)		5.24	%
Net of investment expense (a)		5.18	%
Approximate average life and duration:
Approximate average life		6 years
Approximate duration		4.5 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.


American Financial Group, Inc.
Fixed Maturities—By Security Type Portfolio
June 30, 2013
($ in millions )


	Amortized					Unrealized		% of
Annuity and Run-off:	Cost			Fair Value		Gain (Loss)		Fair Value
US Government and government agencies	$	76		$	80	$	4		0	%
States, municipalities and political subdivisions		2,638			2,681		43		13	%
Foreign government		31			34		3		0	%
Residential mortgage-backed securities		3,262			3,519		257		18	%
Commercial mortgage-backed securities		2,311			2,520		209		13	%
Asset-backed securities		1,663			1,691		28		8	%
Corporate debt		8,949			9,516		567		48	%

Total Annuity and Run-off	$	18,930		$	20,041	$	1,111		100	%

Annualized yield on fixed maturities:
Excluding investment expense (a)		5.52	%
Net of investment expense (a)		5.47	%
Approximate average life and duration:
Approximate average life		6 years
Approximate duration		5 years


	Amortized					Unrealized		% of
Property and Casualty Insurance:	Cost			Fair Value		Gain (Loss)		Fair Value
US Government and government agencies	$	237		$	243	$	6		5	%
States, municipalities and political subdivisions		2,095			2,163		68		41	%
Foreign government		321			330		9		6	%
Residential mortgage-backed securities		599			637		38		12	%
Commercial mortgage-backed securities		320			338		18		7	%
Asset-backed securities		547			548		1		10	%
Corporate debt		983			1,018		35		19	%

Property and Casualty Insurance	$	5,102		$	5,277	$	175		100	%

Annualized yield on fixed maturities:
Excluding investment expense (a)		4.21	%
Net of investment expense (a)		4.08	%
Approximate average life and duration:
Approximate average life		4 years
Approximate duration		3 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.


American Financial Group, Inc.
Fixed Maturities—Credit Rating and NAIC Designation
June 30, 2013
($ in millions)


	GAAP Data
	Amortized				% of			Unrealized
By Credit Rating	Cost		Fair Value		Fair Value			Gain (Loss)
Investment grade
AAA	$	5,245	$	5,488		22	%	$	243
AA		4,530		4,650		18	%		120
A		6,214		6,575		26	%		361
BBB		4,690		4,977		20	%		287

Subtotal—Investment grade		20,679		21,690		86	%		1,011
BB		683		705		3	%		22
B		400		405		1	%		5
Other		2,271		2,528		10	%		257

Total	$	24,033	$	25,328		100	%	$	1,295

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


	Statutory Data
By NAIC	Carrying		% of Carrying			Amortized				Unrealized
Designation	Value		Value			Cost		Fair Value		Gain (Loss)
NAIC 1	$	18,312		77	%	$	18,311	$	19,320	$	1,009
NAIC 2		4,543		19	%		4,541		4,808		267

		22,855		96	%		22,852		24,128		1,276
NAIC 3		513		2	%		514		533		19
NAIC 4		298		1	%		301		305		4
NAIC 5		62		1	%		63		75		12
NAIC 6		23		0	%		23		50		27

Total	$	23,751		100	%	$	23,753	$	25,091	$	1,338

American Financial Group, Inc.

Mortgage-Backed Securities—AFG Consolidated

June 30, 2013

($ in millions)


By Asset Type	Amortized Cost		Fair Value		% of Fair Value			% of Investment Portfolio			Unrealized Gain (Loss)
Residential
Agency	$	226	$	232		3	%		1	%	$	6
Prime (Non-Agency)		1,922		2,094		30	%		7	%		172
Alt-A		828		895		13	%		3	%		67
Subprime		886		945		13	%		3	%		59

Subtotal—Residential		3,862		4,166		59	%		14	%		304
Commercial		2,631		2,858		41	%		10	%		227

Total AFG consolidated	$	6,493	$	7,024		100	%		24	%	$	531

Annuity and Run-off	$	5,573	$	6,039		86	%		21	%		466
Property and Casualty Insurance		919		975		14	%		3	%		56
Other		1		10		0	%		0	%		9

Total AFG consolidated	$	6,493	$	7,024		100	%		24	%	$	531

•

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 76%; Subprime 84%; CMBS 99%.

•

The average FICO score of our residential MBS securities is—Prime 737; Alt-A 713; Subprime 646.

•

97% of our Commercial MBS portfolio is investment-grade rated (81% AAA) and the average subordination for this group assets is 36%.

•

The approximate average life by collateral type is—Residential 3 years; Commercial 4 years.

American Financial Group, Inc.

Mortgage-Backed Securities Portfolio

June 30, 2013

($ in millions)

Annuity and Run-off:


By Asset Type	Amortized Cost		Fair Value		% of Fair Value			% of Investment Portfolio			Unrealized Gain (Loss)
Residential
Agency	$	81	$	85		2	%		0	%	$	4
Prime (Non-Agency)		1,800		1,949		32	%		9	%		149
Alt-A		683		739		12	%		3	%		56
Subprime		698		746		12	%		3	%		48

Subtotal—Residential		3,262		3,519		58	%		15	%		257
Commercial		2,311		2,520		42	%		12	%		209

Total Annuity and Run-off	$	5,573	$	6,039		100	%		27	%	$	466

Property and Casualty Insurance:


By Asset Type	Amortized Cost		Fair Value		% of Fair Value			% of Investment Portfolio			Unrealized Gain (Loss)
Residential
Agency	$	145	$	147		15	%		2	%	$	2
Prime (Non-Agency)		121		135		14	%		2	%		14
Alt-A		145		156		16	%		2	%		11
Subprime		188		199		20	%		3	%		11

Subtotal—Residential		599		637		65	%		9	%		38
Commercial		320		338		35	%		5	%		18

Total Property and Casualty Insurance	$	919	$	975		100	%		14	%	$	56

American Financial Group, Inc.

Mortgage-Backed Securities—Credit Rating and NAIC Designation

June 30, 2013

($ in millions)


	GAAP data
	Amortized				% of			Unrealized
By Credit Rating	Cost		Fair Value		Fair Value			Gain (Loss)
Investment grade
AAA	$	2,695	$	2,910		41	%	$	215
AA		431		456		7	%		25
A		604		634		9	%		30
BBB		266		283		4	%		17

Subtotal—investment grade		3,996		4,283		61	%		287
BB		339		346		5	%		7
B		368		373		5	%		5
Other		1,790		2,022		29	%		232

Total	$	6,493	$	7,024		100	%	$	531

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


	Statutory data
By NAIC Designation	Carrying Value		% of Carrying Value			Amortized Cost		Fair Value		Unrealized Gain (Loss)
NAIC 1	$	6,043		94	%	$	6,043	$	6,597	$	554
NAIC 2		162		3	%		162		160		(2	)

		6,205		97	%		6,205		6,757		552
NAIC 3		77		1	%		77		78		1
NAIC 4		95		2	%		95		97		2
NAIC 5		15		0	%		15		26		11
NAIC 6		16		0	%		17		39		22

Total	$	6,408		100	%	$	6,409	$	6,997	$	588

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