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

Attached files

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8-K - FORM 8-K - AMERICAN FINANCIAL GROUP INC	d667903d8k.htm
EX-99.1 - EX-99.1 - AMERICAN FINANCIAL GROUP INC	d667903dex991.htm

Exhibit 99.2


		American Financial Group, Inc.
		Investor Supplement—Fourth Quarter 2013

		January 30, 2014

		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—Fourth Quarter 2013


Section	Page
Table of Contents—Investor Supplement—Fourth 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															Twelve Months Ended
	12/31/13			09/30/13			06/30/13			03/31/13			12/31/12			12/31/13			12/31/12
Highlights
Core net operating earnings	$	117		$	97		$	87		$	84		$	61		$	385		$	314
Net earnings		158			83			110			120			50			471			488
Total assets		42,087			40,947			39,414			39,139			39,171			42,087			39,171
Adjusted shareholders’ equity (a)		4,109			4,048			3,978			3,950			3,784			4,109			3,784
Property and Casualty net written premiums		821			1,067			749			704			702			3,341			2,949
Annuity statutory premiums		1,381			1,167			861			624			560			4,033			2,991
Per share data
Core net operating earnings per share	$	1.28		$	1.06		$	0.96		$	0.92		$	0.67		$	4.22		$	3.27
Diluted earnings per share		1.73			0.92			1.20			1.32			0.54			5.16			5.09
Adjusted book value per share (a)		45.90			45.36			44.78			43.94			42.52			45.90			42.52
Cash dividends per common share		1.220			0.1950			0.1950			0.1950			0.4450			1.8050			0.9700
Financial ratios
Annualized core operating return on equity (a)		11.5	%		9.7	%		8.9	%		8.6	%		6.4	%		9.7	%		8.2	%
Annualized return on equity (a)		15.5	%		8.3	%		11.1	%		12.4	%		5.2	%		11.9	%		12.7	%
Property and Casualty combined ratio—Specialty:
Loss & LAE ratio		62.4	%		66.1	%		60.3	%		56.5	%		72.9	%		61.7	%		64.3	%
Underwriting expense ratio		28.9	%		27.4	%		36.7	%		36.6	%		25.1	%		31.8	%		31.1	%

Combined ratio—Specialty		91.3	%		93.5	%		97.0	%		93.1	%		98.0	%		93.5	%		95.4	%

Net spread on fixed annuities:
Net interest spread		2.86	%		2.89	%		3.02	%		2.99	%		3.18	%		2.94	%		3.12	%
Net spread earned		1.67	%		1.50	%		1.65	%		1.58	%		1.49	%		1.60	%		1.48	%

(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															Twelve Months Ended
	12/31/13			09/30/13			06/30/13			03/31/13			12/31/12			12/31/13			12/31/12
Property and Casualty Insurance
Underwriting profit	$	75		$	62		$	19		$	43		$	10		$	199		$	118
Net investment income		67			65			65			66			69			263			275
Other expense		(11	)		(14	)		(2	)		(13	)		(10	)		(40	)		(50	)

Property and Casualty Insurance operating earnings		131			113			82			96			69			422			343
Annuity earnings		92			78			82			76			68			328			256
Run-off Long-Term Care and Life losses		(3	)		(4	)		(2	)		(1	)		(12	)		(10	)		(4	)
Medicare Supplement and Critical Illness earnings (a)		—			—			—			—			—			—			28
Interest expense of parent holding companies		(17	)		(17	)		(17	)		(17	)		(17	)		(68	)		(71	)
Other expense		(28	)		(22	)		(22	)		(28	)		(24	)		(100	)		(89	)

Pre-tax core operating earnings		175			148			123			126			84			572			463
Income tax expense		58			51			36			42			23			187			149

Core net operating earnings		117			97			87			84			61			385			314
Non-core items, net of tax:
Gain on sale of Medicare Supplement and Critical Illness		—			—			—			—			13			—			114
Other realized gains		41			35			26			36			36			138			128
Long-Term Care reserve charge		—			—			—			—			(99	)		—			(99	)
Significant A&E charges:
Property and Casualty Insurance run-off operations		—			(35	)		—			—			—			(35	)		(20	)
Former Railroad and Manufacturing operations		—			(14	)		—			—			—			(14	)		(1	)
AFG tax case and settlement of open tax years		—			—			—			—			39			—			67
ELNY guaranty fund assessments charge (b)		—			—			(3	)		—			—			(3	)		—
Other		—			—			—			—			—			—			(15	)

Net earnings	$	158		$	83		$	110		$	120		$	50		$	471		$	488

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

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

American Financial Group, Inc.

Earnings Per Share Summary

(in millions, except per share information)


	Three Months Ended													Twelve Months Ended
	12/31/13		09/30/13			06/30/13			03/31/13		12/31/12			12/31/13			12/31/12
Core net operating earnings	$	117	$	97		$	87		$	84	$	61		$	385		$	314

Net earnings	$	158	$	83		$	110		$	120	$	50		$	471		$	488

Average number of diluted shares		91.438		91.014			91.472			91.048		91.413			91.242			95.945
Diluted earnings per share:
Core net operating earnings per share	$	1.28	$	1.06		$	0.96		$	0.92	$	0.67		$	4.22		$	3.27
Gain on sale of Medicare Supplement and Critical Illness		—		—			—			—		0.15			—			1.19
Other realized gains		0.45		0.40			0.28			0.40		0.37			1.52			1.34
Long-Term Care reserve charge		—		—			—			—		(1.08	)		—			(1.03	)
Significant A&E charges:
Property and Casualty Insurance run-off operations		—		(0.39	)		—			—		—			(0.39	)		(0.20	)
Former Railroad and Manufacturing operations		—		(0.15	)		—			—		—			(0.15	)		(0.02	)
AFG tax case and settlement of open tax years		—		—			—			—		0.43			—			0.70
ELNY guaranty fund assessments charge (a)		—		—			(0.04	)		—		—			(0.04	)		—
Other		—		—			—			—		—			—			(0.16	)

Diluted earnings per share	$	1.73	$	0.92		$	1.20		$	1.32	$	0.54		$	5.16		$	5.09

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

American Financial Group, Inc.

Property and Casualty Insurance—Summary Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/13			09/30/13			06/30/13			03/31/13			12/31/12			12/31/13			12/31/12
Property and Transportation	$	17		$	16		$	(31	)	$	10		$	(14	)	$	12		$	19
Specialty Casualty		32			19			32			19			8			102			53
Specialty Financial		17			22			15			13			16			67			44
Other Specialty		9			5			5			6			5			25			15

Underwriting profit—Specialty		75			62			21			48			15			206			131
Other charges, included in loss and LAE		—			—			2			5			5			7			13

Underwriting profit—Core		75			62			19			43			10			199			118
Special A&E charges, included in loss and LAE		—			(54	)		—			—			—			(54	)		(31	)

Underwriting profit (loss)—Property and Casualty Insurance	$	75		$	8		$	19		$	43		$	10		$	145		$	87

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	(1	)	$	1		$	—		$	9		$	—		$	9
Catastrophe loss		1			2			18			10			24			31			37

Total current accident year catastrophe losses	$	1		$	1		$	19		$	10		$	33		$	31		$	46

Loss reserve development (favorable) / adverse	$	(5	)	$	40		$	(22	)	$	(28	)	$	(7	)	$	(15	)	$	(30	)

Combined ratio:
Property and Transportation		95.8	%		97.1	%		110.3	%		96.5	%		103.7	%		99.2	%		98.7	%
Specialty Casualty		89.7	%		93.4	%		88.4	%		92.7	%		96.8	%		90.9	%		94.5	%
Specialty Financial		85.2	%		82.3	%		86.6	%		88.5	%		84.9	%		85.6	%		89.2	%
Other Specialty		60.4	%		70.7	%		74.0	%		71.1	%		70.0	%		68.8	%		78.5	%
Combined ratio—Specialty		91.3	%		93.5	%		97.0	%		93.1	%		98.0	%		93.5	%		95.4	%
Other core charges		0.1	%		(0.1	%)		0.2	%		0.7	%		0.7	%		0.3	%		0.4	%
Special A&E charges		0.0	%		5.7	%		0.0	%		0.0	%		0.0	%		1.7	%		1.1	%

Combined ratio		91.4	%		99.1	%		97.2	%		93.8	%		98.7	%		95.5	%		96.9	%

Loss and LAE components—property and casualty insurance
Current accident year, excluding catastrophe loss		62.8	%		67.4	%		61.1	%		59.8	%		71.2	%		63.1	%		65.5	%
Prior accident year development		(0.4	%)		4.2	%		(3.2	%)		(4.1	%)		(0.8	%)		(0.4	%)		(1.0	%)
Current accident year catastrophe loss		0.1	%		0.1	%		2.6	%		1.5	%		3.2	%		1.0	%		1.3	%

Loss and LAE ratio		62.5	%		71.7	%		60.5	%		57.2	%		73.6	%		63.7	%		65.8	%

American Financial Group, Inc.

Specialty—Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/13			09/30/13			06/30/13			03/31/13			12/31/12			12/31/13			12/31/12
Gross written premiums	$	1,071		$	1,768		$	1,041		$	925		$	965		$	4,805		$	4,321
Ceded reinsurance premiums		(250	)		(701	)		(292	)		(221	)		(263	)		(1,464	)		(1,372	)

Net written premiums		821			1,067			749			704			702			3,341			2,949
Change in unearned premiums		38			(118	)		(40	)		(17	)		54			(137	)		(102	)

Net earned premiums		859			949			709			687			756			3,204			2,847
Loss and LAE		537			626			428			388			551			1,979			1,829
Underwriting expense		247			261			260			251			190			1,019			887

Underwriting profit	$	75		$	62		$	21		$	48		$	15		$	206		$	131

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	(1	)	$	1		$	—		$	9		$	—		$	9
Catastrophe loss		1			2			18			10			24			31			37

Total current accident year catastrophe losses	$	1		$	1		$	19		$	10		$	33		$	31		$	46

Loss reserve development (favorable) / adverse	$	(5	)	$	(13	)	$	(24	)	$	(33	)	$	(12	)	$	(75	)	$	(74	)

Combined ratio:
Loss and LAE ratio		62.4	%		66.1	%		60.3	%		56.5	%		72.9	%		61.7	%		64.3	%
Underwriting expense ratio		28.9	%		27.4	%		36.7	%		36.6	%		25.1	%		31.8	%		31.1	%

Combined ratio		91.3	%		93.5	%		97.0	%		93.1	%		98.0	%		93.5	%		95.4	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		62.8	%		67.4	%		61.1	%		59.8	%		71.2	%		63.1	%		65.5	%
Prior accident year development		(0.5	%)		(1.4	%)		(3.4	%)		(4.8	%)		(1.5	%)		(2.4	%)		(2.5	%)
Current accident year catastrophe loss		0.1	%		0.1	%		2.6	%		1.5	%		3.2	%		1.0	%		1.3	%

Loss and LAE ratio		62.4	%		66.1	%		60.3	%		56.5	%		72.9	%		61.7	%		64.3	%

American Financial Group, Inc.

Property and Transportation—Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/13			09/30/13			06/30/13			03/31/13			12/31/12			12/31/13			12/31/12
Gross written premiums	$	447		$	1,147		$	446		$	352		$	431		$	2,392		$	2,271
Ceded reinsurance premiums		(98	)		(553	)		(118	)		(76	)		(116	)		(845	)		(798	)

Net written premiums		349			594			328			276			315			1,547			1,473
Change in unearned premiums		61			(77	)		(27	)		17			68			(26	)		(50	)

Net earned premiums		410			517			301			293			383			1,521			1,423
Loss and LAE		307			407			236			192			340			1,142			1,062
Underwriting expense		86			94			96			91			57			367			342

Underwriting profit (loss)	$	17		$	16		$	(31	)	$	10		$	(14	)	$	12		$	19

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

Total current accident year catastrophe losses	$	—		$	(1	)	$	18		$	10		$	28		$	27		$	35

Loss reserve development (favorable) / adverse	$	3		$	(1	)	$	3		$	(6	)	$	(2	)	$	(1	)	$	(16	)

Combined ratio:
Loss and LAE ratio		74.9	%		78.8	%		78.5	%		65.4	%		88.9	%		75.1	%		74.7	%
Underwriting expense ratio		20.9	%		18.3	%		31.8	%		31.1	%		14.8	%		24.1	%		24.0	%

Combined ratio		95.8	%		97.1	%		110.3	%		96.5	%		103.7	%		99.2	%		98.7	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		74.1	%		79.1	%		71.6	%		64.0	%		84.3	%		73.4	%		73.8	%
Prior accident year development		0.8	%		(0.2	%)		1.2	%		(2.0	%)		(0.5	%)		(0.1	%)		(1.0	%)
Current accident year catastrophe loss		0.0	%		(0.1	%)		5.7	%		3.4	%		5.1	%		1.8	%		1.9	%

Loss and LAE ratio		74.9	%		78.8	%		78.5	%		65.4	%		88.9	%		75.1	%		74.7	%

American Financial Group, Inc.

Specialty Casualty—Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/13			09/30/13			06/30/13			03/31/13			12/31/12			12/31/13			12/31/12
Gross written premiums	$	459		$	461		$	440		$	430		$	384		$	1,790		$	1,484
Ceded reinsurance premiums		(138	)		(136	)		(157	)		(135	)		(126	)		(566	)		(492	)

Net written premiums		321			325			283			295			258			1,224			992
Change in unearned premiums		(11	)		(36	)		(6	)		(36	)		(9	)		(89	)		(44	)

Net earned premiums		310			289			277			259			249			1,135			948
Loss and LAE		183			174			148			148			165			653			581
Underwriting expense		95			96			97			92			76			380			314

Underwriting profit	$	32		$	19		$	32		$	19		$	8		$	102		$	53

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe loss		—			1			—			—			1			1			3

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

Loss reserve development (favorable) / adverse	$	2		$	(4	)	$	(22	)	$	(16	)	$	7		$	(40	)	$	(18	)

Combined ratio:
Loss and LAE ratio		59.0	%		60.3	%		53.4	%		57.3	%		65.9	%		57.5	%		61.3	%
Underwriting expense ratio		30.7	%		33.1	%		35.0	%		35.4	%		30.9	%		33.4	%		33.2	%

Combined ratio		89.7	%		93.4	%		88.4	%		92.7	%		96.8	%		90.9	%		94.5	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		58.5	%		61.4	%		61.2	%		63.5	%		62.5	%		61.0	%		62.8	%
Prior accident year development		0.5	%		(1.2	%)		(8.0	%)		(6.2	%)		3.0	%		(3.6	%)		(1.8	%)
Current accident year catastrophe loss		0.0	%		0.1	%		0.2	%		0.0	%		0.4	%		0.1	%		0.3	%

Loss and LAE ratio		59.0	%		60.3	%		53.4	%		57.3	%		65.9	%		57.5	%		61.3	%

American Financial Group, Inc.

Specialty Financial—Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/13			09/30/13			06/30/13			03/31/13			12/31/12			12/31/13			12/31/12
Gross written premiums	$	164		$	160		$	155		$	143		$	151		$	622		$	566
Ceded reinsurance premiums		(32	)		(36	)		(38	)		(30	)		(43	)		(136	)		(155	)

Net written premiums		132			124			117			113			108			486			411
Change in unearned premiums		(13	)		(3	)		(4	)		3			(4	)		(17	)		(6	)

Net earned premiums		119			121			113			116			104			469			405
Loss and LAE		42			37			37			42			40			158			157
Underwriting expense		60			62			61			61			48			244			204

Underwriting profit	$	17		$	22		$	15		$	13		$	16		$	67		$	44

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	1		$	—		$	1
Catastrophe loss		1			1			1			—			2			3			5

Total current accident year catastrophe losses	$	1		$	1		$	1		$	—		$	3		$	3		$	6

Loss reserve development (favorable) / adverse	$	(4	)	$	(4	)	$	—		$	(6	)	$	(13	)	$	(14	)	$	(29	)

Combined ratio:
Loss and LAE ratio		34.2	%		31.2	%		32.9	%		35.8	%		38.2	%		33.5	%		38.8	%
Underwriting expense ratio		51.0	%		51.1	%		53.7	%		52.7	%		46.7	%		52.1	%		50.4	%

Combined ratio		85.2	%		82.3	%		86.6	%		88.5	%		84.9	%		85.6	%		89.2	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		36.7	%		33.7	%		32.9	%		40.3	%		48.2	%		35.9	%		44.6	%
Prior accident year development		(3.2	%)		(3.2	%)		(0.7	%)		(4.8	%)		(12.1	%)		(3.0	%)		(7.1	%)
Current accident year catastrophe loss		0.7	%		0.7	%		0.7	%		0.3	%		2.1	%		0.6	%		1.3	%

Loss and LAE ratio		34.2	%		31.2	%		32.9	%		35.8	%		38.2	%		33.5	%		38.8	%

American Financial Group, Inc.

Other Specialty—Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/13			09/30/13			06/30/13			03/31/13			12/31/12			12/31/13			12/31/12
Gross written premiums	$	1		$	—		$	—		$	—		$	(1	)	$	1		$	—
Ceded reinsurance premiums		18			24			21			20			22			83			73

Net written premiums		19			24			21			20			21			84			73
Change in unearned premiums		1			(2	)		(3	)		(1	)		(1	)		(5	)		(2	)

Net earned premiums		20			22			18			19			20			79			71
Loss and LAE		5			8			7			6			6			26			29
Underwriting expense		6			9			6			7			9			28			27

Underwriting profit	$	9		$	5		$	5		$	6		$	5		$	25		$	15

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

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

Loss reserve development (favorable) / adverse	$	(6	)	$	(4	)	$	(5	)	$	(5	)	$	(4	)	$	(20	)	$	(11	)

Combined ratio:
Loss and LAE ratio		28.3	%		35.0	%		35.1	%		33.7	%		32.7	%		32.9	%		41.3	%
Underwriting expense ratio		32.1	%		35.7	%		38.9	%		37.4	%		37.3	%		35.9	%		37.2	%

Combined ratio		60.4	%		70.7	%		74.0	%		71.1	%		70.0	%		68.8	%		78.5	%

American Financial Group, Inc.

Annuity Results of Operations (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/13			09/30/13			06/30/13			03/31/13			12/31/12			12/31/13			12/31/12
Net investment income	$	270		$	259		$	257		$	248		$	254		$	1,034		$	976
Guaranteed withdrawal benefit fees		7			7			6			5			5			25			14
Policy charges and other miscellaneous income		14			10			9			9			8			42			38

Total revenues		291			276			272			262			267			1,101			1,028
Annuity benefits		137			140			120			134			124			531			541
Acquisition expenses		35			35			48			31			58			149			150
Other expenses		27			23			22			21			17			93			81

Total costs and expenses		199			198			190			186			199			773			772

Earnings before income taxes—core		92			78			82			76			68			328			256
ELNY guaranty fund assessments charge (a)		—			—			(5	)		—			—			(5	)		—

Earnings before income taxes	$	92		$	78		$	77		$	76		$	68		$	323		$	256

Detail of annuity benefits above:
Interest credited—fixed	$	118		$	113		$	111		$	109		$	109		$	451		$	438
Interest credited—fixed component of variable annuities		1			2			1			2			2			6			7
Change in expected death and annuitization reserve		5			4			6			4			5			19			19
Amortization of sales inducements		7			8			8			7			9			30			32
Guaranteed withdrawal benefit reserve		10			10			10			8			5			38			14
Change in other benefit reserves		1			2			3			1			3			7			10
Embedded derivative mark-to-market		74			33			(3	)		80			(4	)		184			93
Equity option mark-to-market		(85	)		(32	)		(16	)		(77	)		1			(210	)		(66	)
Unlockings		6			—			—			—			(6	)		6			(6	)

Total annuity benefits	$	137		$	140		$	120		$	134		$	124		$	531		$	541

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

American Financial Group, Inc.

Net Spread on Fixed Annuities (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/13			09/30/13			06/30/13			03/31/13			12/31/12			12/31/13			12/31/12
Average fixed annuity investments (at amortized cost)	$	20,524		$	19,519		$	18,615		$	17,945		$	17,485		$	19,151		$	16,650
Average annuity benefits accumulated		20,092			19,035			18,151			17,506			17,137			18,696			16,394

Investments in excess of annuity benefits accumulated	$	432		$	484		$	464		$	439		$	348		$	455		$	256

As % of average annuity benefits accumulated (except as noted)
Net investment income (as % of investments)		5.21	%		5.27	%		5.45	%		5.48	%		5.74	%		5.35	%		5.80	%
Interest credited		(2.35	%)		(2.38	%)		(2.43	%)		(2.49	%)		(2.56	%)		(2.41	%)		(2.68	%)

Net interest spread on fixed annuities		2.86	%		2.89	%		3.02	%		2.99	%		3.18	%		2.94	%		3.12	%
Policy charges and other miscellaneous income		0.22	%		0.15	%		0.13	%		0.14	%		0.14	%		0.16	%		0.16	%
Other annuity benefit expenses, net		(0.31	%)		(0.38	%)		(0.46	%)		(0.35	%)		(0.39	%)		(0.37	%)		(0.36	%)
Acquisition expenses		(0.75	%)		(0.72	%)		(1.00	%)		(0.69	%)		(0.85	%)		(0.79	%)		(0.75	%)
Other expenses		(0.53	%)		(0.44	%)		(0.43	%)		(0.45	%)		(0.39	%)		(0.46	%)		(0.46	%)
Change in fair value of derivatives		0.22	%		0.00	%		0.39	%		(0.06	%)		0.09	%		0.13	%		(0.16	%)
Unlockings		(0.04	%)		0.00	%		0.00	%		0.00	%		(0.29	%)		(0.01	%)		(0.07	%)

Net spread earned on fixed annuities—core		1.67	%		1.50	%		1.65	%		1.58	%		1.49	%		1.60	%		1.48	%

Average annuity benefits accumulated	$	20,092		$	19,035		$	18,151		$	17,506		$	17,137		$	18,696		$	16,394
Net spread earned on fixed annuities		1.67	%		1.50	%		1.65	%		1.58	%		1.49	%		1.60	%		1.48	%

Earnings on fixed annuity benefits accumulated	$	84		$	72		$	75		$	69		$	64		$	300		$	243
Investments in excess of annuity benefits accumulated	$	432		$	484		$	464		$	439		$	348		$	455		$	256
Net investment income (as % of investments)		5.21	%		5.27	%		5.45	%		5.48	%		5.74	%		5.35	%		5.80	%

Earnings on investments in excess of annuity benefits accumulated	$	6		$	6		$	6		$	6		$	5		$	24			14
Variable annuity earnings		2			—			1			1			(1	)		4			(1	)

Earnings before income taxes—core		92			78			82			76			68			328			256
ELNY guaranty fund assessments charge (a)		—			—			(5	)		—			—			(5	)		—

Earnings before income taxes	$	92		$	78		$	77		$	76		$	68		$	323		$	256

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

American Financial Group

Annuity Premiums (Statutory)

($ in millions)


	Three Months Ended										Twelve Months Ended
	12/31/13		09/30/13		06/30/13		03/31/13		12/31/12		12/31/13		12/31/12
Retail single premium annuities—indexed	$	565	$	509	$	472	$	333	$	305	$	1,879	$	1,662
Retail single premium annuities—fixed		53		48		37		27		35		165		153
Financial institutions single premium annuities—indexed		498		352		169		83		59		1,102		291
Financial institutions single premium annuities—fixed		201		198		118		111		86		628		587
Education market—403(b) fixed and indexed annuities		51		49		52		55		60		207		237

Subtotal fixed annuity premiums		1,368		1,156		848		609		545		3,981		2,930
Variable annuities		13		11		13		15		15		52		61

Total annuity premiums	$	1,381	$	1,167	$	861	$	624	$	560	$	4,033	$	2,991

American Financial Group, Inc.

Fixed Annuity Benefits Accumulated (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/13			09/30/13			06/30/13			03/31/13			12/31/12			12/31/13			12/31/12
Beginning fixed annuity reserves	$	19,505		$	18,564		$	17,737		$	17,274		$	16,999		$	17,274		$	15,188
Premiums		1,368			1,156			848			609			545			3,981			2,930
Federal Home Loan Bank advances		—			—			200			—			—			200			—
Surrenders, benefits and other withdrawals		(408	)		(381	)		(352	)		(352	)		(355	)		(1,493	)		(1,397	)
Interest and other annuity benefit expenses:
Interest credited		118			113			111			109			109			451			438
Embedded derivative mark-to-market		74			33			(3	)		80			(4	)		184			93
Change in other benefit reserves		18			20			23			17			(10	)		78			32
Unlockings		4			—			—			—			(10	)		4			(10	)

Ending fixed annuity reserves	$	20,679		$	19,505		$	18,564		$	17,737		$	17,274		$	20,679		$	17,274

Reconciliation to annuity benefits accumulated:
Ending fixed annuity reserves	$	20,679		$	19,505		$	18,564		$	17,737		$	17,274		$	20,679		$	17,274
Impact of unrealized investment gains on reserves		71			84			87			140			136			71			136
Fixed component of variable annuities		194			196			197			198			199			194			199

Annuity benefits accumulated per balance sheet	$	20,944		$	19,785		$	18,848		$	18,075		$	17,609		$	20,944		$	17,609

Annualized surrenders and other withdrawals as a % of beginning reserves		8.4	%		8.2	%		7.9	%		8.2	%		8.4	%		8.6	%		9.2	%

American Financial Group, Inc.

Consolidated Balance Sheet

($ in millions)


	12/31/13			09/30/13		06/30/13			03/31/13		12/31/12		09/30/12
Assets:
Total cash and investments	$	31,313		$	29,921	$	29,262		$	29,084	$	28,449	$	28,037
Recoverables from reinsurers		3,157			3,138		3,044			3,083		3,750		3,865
Prepaid reinsurance premiums		408			662		520			466		471		587
Agents’ balances and premiums receivable		739			801		754			649		636		750
Deferred policy acquisition costs		975			867		818			565		550		621
Assets of managed investment entities		2,888			2,779		2,973			3,285		3,225		3,102
Other receivables		854			1,078		422			384		539		1,168
Variable annuity assets (separate accounts)		665			629		608			614		580		577
Other assets		903			887		828			824		786		741
Goodwill		185			185		185			185		185		185

Total assets	$	42,087		$	40,947	$	39,414		$	39,139	$	39,171	$	39,633

Liabilities and Equity:
Unpaid losses and loss adjustment expenses	$	6,410		$	6,441	$	6,098		$	6,238	$	6,845	$	7,277
Unearned premiums		1,757			2,047		1,789			1,697		1,651		1,821
Annuity benefits accumulated		20,944			19,785		18,848			18,075		17,609		17,245
Life, accident and health reserves		2,063			2,011		2,017			2,021		2,059		1,699
Payable to reinsurers		508			601		367			250		475		656
Liabilities of managed investment entities		2,567			2,429		2,603			2,880		2,892		2,753
Long-term debt		913			913		949			950		953		966
Variable annuity liabilities (separate accounts)		665			629		608			614		580		577
Other liabilities		1,527			1,381		1,497			1,506		1,359		1,675

Total liabilities	$	37,354		$	36,237	$	34,776		$	34,231	$	34,423	$	34,669
Shareholders’ equity:
Common stock	$	90		$	89	$	89		$	90	$	89	$	91
Capital surplus		1,123			1,109		1,088			1,090		1,063		1,071
Appropriated retained earnings		49			45		33			64		75		109
Unappropriated retained earnings		2,777			2,729		2,664			2,620		2,520		2,577
Unrealized gains—fixed maturities		405			449		462			719		719		789
Unrealized gains—equities		121			119		138			146		104		132
Other comprehensive income, net of tax		(2	)		2		(1	)		4		8		10

Total shareholders’ equity		4,563			4,542		4,473			4,733		4,578		4,779
Noncontrolling interests		170			168		165			175		170		185

Total liabilities and equity	$	42,087		$	40,947	$	39,414		$	39,139	$	39,171	$	39,633

American Financial Group, Inc.

Book Value Per Share and Price / Book Summary

(in millions, except per share information)


	12/31/13			09/30/13			06/30/13			03/31/13			12/31/12			09/30/12
Shareholders’ equity	$	4,563		$	4,542		$	4,473		$	4,733		$	4,578		$	4,779
Appropriated retained earnings		(49	)		(45	)		(33	)		(64	)		(75	)		(109	)

Shareholders’ equity, excluding appropriated retained earnings		4,514			4,497			4,440			4,669			4,503			4,670
Unrealized (gains) on fixed maturities		(405	)		(449	)		(462	)		(719	)		(719	)		(789	)

Adjusted shareholders’ equity		4,109			4,048			3,978			3,950			3,784			3,881
Goodwill		(185	)		(185	)		(185	)		(185	)		(185	)		(185	)
Intangibles		(22	)		(26	)		(29	)		(33	)		(36	)		(39	)

Tangible adjusted shareholders’ equity	$	3,902		$	3,837		$	3,764		$	3,732		$	3,563		$	3,657

Common shares outstanding		89.513			89.224			88.821			89.883			88.979			90.847
Book value per share:
Excluding appropriated retained earnings (a)	$	50.43		$	50.40		$	49.98		$	51.94		$	50.61		$	51.40
Adjusted (b)		45.90			45.36			44.78			43.94			42.52			42.72
Tangible, adjusted (c)		43.59			43.00			42.38			41.52			40.04			40.26
Market capitalization
AFG’s closing common share price	$	57.72		$	54.06		$	48.91		$	47.38		$	39.52		$	37.90
Market capitalization	$	5,167		$	4,823		$	4,344		$	4,259		$	3,516		$	3,443
Price / Adjusted book value ratio		1.26			1.19			1.09			1.08			0.93			0.89

(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)


	12/31/13			09/30/13			06/30/13			03/31/13			12/31/12			09/30/12
Direct obligations of AFG	$	840		$	840		$	840		$	840		$	840		$	840
Direct obligations of subsidiaries		73			73			89			90			93			106
Payable to subsidiary trusts		—			—			20			20			20			20

Long-term debt	$	913		$	913		$	949		$	950		$	953		$	966
Obligations secured by real estate		(61	)		(61	)		(62	)		(62	)		(62	)		(63	)

Debt excluding obligations secured by real estate	$	852		$	852		$	887		$	888		$	891		$	903

Total capital (a)	$	5,597		$	5,578		$	5,554		$	5,794		$	5,626		$	5,821
Total capital excluding obligations secured by real estate (a)		5,536			5,517			5,492			5,732			5,564			5,758
Total adjusted capital (b)	$	5,192		$	5,129		$	5,092		$	5,074		$	4,907		$	5,032
Total adjusted capital excluding obligations secured by real estate (b)		5,131			5,068			5,030			5,012			4,845			4,969
Ratio of debt to total capital (a):
Including debt secured by real estate		16.3	%		16.4	%		17.1	%		16.4	%		16.9	%		16.6	%
Excluding debt secured by real estate		15.4	%		15.4	%		16.2	%		15.5	%		16.0	%		15.7	%
Ratio of debt to total adjusted capital (b):
Including debt secured by real estate		17.6	%		17.8	%		18.6	%		18.7	%		19.4	%		19.2	%
Excluding debt secured by real estate		16.6	%		16.8	%		17.6	%		17.7	%		18.4	%		18.2	%

(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										Twelve Months Ended
	12/31/13		09/30/13		06/30/13		03/31/13		12/31/12		12/31/13		12/31/12
Property and Casualty Insurance
Paid Losses (GAAP)	$	576	$	417	$	520	$	357	$	785	$	1,870	$	2,026


	12/31/13		09/30/13		06/30/13		03/31/13		12/31/12		09/30/12
Statutory Surplus
Property and Casualty Insurance	$	1,895	$	2,133	$	2,096	$	2,090	$	2,015	$	2,044
AFG’s principal annuity subsidiaries (total adjusted capital)	$	1,660	$	1,590	$	1,517	$	1,483	$	1,380	$	1,275
Allowable dividends without regulatory approval
Property and Casualty Insurance	$	335	$	237	$	237	$	237	$	237	$	375
Annuity and Run-off		274		158		158		158		158		171

Total	$	609	$	395	$	395	$	395	$	395	$	546

American Financial Group, Inc.

Total Cash and Investments and Quarterly Net Investment Income

December 31, 2013

($ in millions)


	Carrying Value
	Property and											% of
	Casualty		Annuity and				Consolidate			Total AFG		Investment
	Insurance		Run-off		Other		CLOs			Consolidated		Portfolio
Total cash and investments:
Cash and cash equivalents	$	636	$	439	$	564	$	—		$	1,639		5	%
Fixed maturities		5,229		21,521		11		—			26,761		86	%
Equity securities		816		321		42		—			1,179		4	%
Policy loans		—		238		—		—			238		1	%
Mortgage loans		118		663		—		—			781		2	%
Real estate and other investments		320		658		8		(271	)		715		2	%

Total cash and investments	$	7,119	$	23,840	$	625	$	(271	)	$	31,313		100	%


	Property and
	Casualty			Annuity and					Consolidate			Total AFG
	Insurance			Run-off			Other		CLOs			Consolidated
Total quarterly net investment income:
Fixed maturities	$	53		$	268		$	—	$	—		$	321
Equity securities		9			4			2		—			15
Other investments		8			20			—		(8	)		20

Gross investment income		70			292			2		(8	)		356
Investment expenses		(3	)		(3	)		—		—			(6	)

Total net investment income	$	67		$	289		$	2	$	(8	)	$	350


	Equity Securities
					Unrealized
	Cost		Fair Value		Gain (Loss)
Annuity and Run-off	$	279	$	321	$	42
Property and Casualty Insurance		666		816		150
Other		42		42		—

Total AFG consolidated	$	987	$	1,179	$	192

American Financial Group, Inc.

Fixed Maturities—By Security Type—AFG Consolidated

December 31, 2013

($ in millions )


	Amortized Cost			Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Investment Portfolio
US Government and government agencies	$	334		$	338	$	4		1	%		1	%
States, municipalities and political subdivisions		5,390			5,402		12		20	%		17	%
Foreign government		307			317		10		1	%		1	%
Residential mortgage-backed securities		3,958			4,321		363		16	%		14	%
Commercial mortgage-backed securities		2,543			2,732		189		10	%		9	%
Asset-backed securities		2,482			2,498		16		10	%		8	%
Corporate bonds
Manufacturing		2,217			2,310		93		9	%		7	%
Banks, lending and credit institutions		1,859			1,946		87		8	%		6	%
Gas and electric services		1,301			1,406		105		5	%		5	%
Insurance and insurance related		825			869		44		3	%		3	%
Other corporate		4,455			4,622		167		17	%		15	%

Total AFG consolidated	$	25,671		$	26,761	$	1,090		100	%		86	%

Annuity and Run-off	$	20,599		$	21,521		922		80	%		69	%
Property and Casualty Insurance		5,071			5,229		158		20	%		17	%
Other		1			11		10		0	%		0	%

Total AFG consolidated	$	25,671		$	26,761	$	1,090		100	%		86	%

Annualized yield on fixed maturities:
Excluding investment expense (a)		5.10	%
Net of investment expense (a)		5.01	%
Approximate average life and duration:
Approximate average life		6.5 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

December 31, 2013

($ in millions )


	Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value
Annuity and Run-off:
US Government and government agencies	$	89		$	89	$	—			0	%
States, municipalities and political subdivisions		3,299			3,254		(45	)		15	%
Foreign government		17			18		1			0	%
Residential mortgage-backed securities		3,277			3,586		309			17	%
Commercial mortgage-backed securities		2,315			2,490		175			12	%
Asset-backed securities		1,899			1,916		17			9	%
Corporate debt		9,703			10,168		465			47	%

Total Annuity and Run-off	$	20,599		$	21,521	$	922			100	%

Annualized yield on fixed maturities:
Excluding investment expense (a)		5.32	%
Net of investment expense (a)		5.26	%
Approximate average life and duration:
Approximate average life		7 years
Approximate duration		5 years

	Amortized					Unrealized			% of
	Cost			Fair Value		Gain (Loss)			Fair Value
Property and Casualty Insurance:
US Government and government agencies	$	245		$	249	$	4			5	%
States, municipalities and political subdivisions		2,091			2,148		57			41	%
Foreign government		290			299		9			6	%
Residential mortgage-backed securities		680			724		44			14	%
Commercial mortgage-backed securities		228			242		14			4	%
Asset-backed securities		583			582		(1	)		11	%
Corporate debt		954			985		31			19	%

Property and Casualty Insurance	$	5,071		$	5,229	$	158			100	%

Annualized yield on fixed maturities:
Excluding investment expense (a)		4.22	%
Net of investment expense (a)		4.04	%
Approximate average life and duration:
Approximate average life		4.5 years
Approximate duration		3.5 years

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

American Financial Group, Inc.

Fixed Maturities—Credit Rating and NAIC Designation

December 31, 2013

($ in millions)


	GAAP Data
	Amortized				% of			Unrealized
By Credit Rating	Cost		Fair Value		Fair Value			Gain (Loss)
Investment grade
AAA	$	5,634	$	5,803		22	%	$	169
AA		5,097		5,137		19	%		40
A		6,570		6,855		26	%		285
BBB		4,952		5,204		19	%		252

Subtotal—Investment grade		22,253		22,999		86	%		746
BB		689		720		3	%		31
B		504		525		2	%		21
Other		2,225		2,517		9	%		292

Total	$	25,671	$	26,761		100	%	$	1,090

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	$	19,789		78	%	$	19,792	$	20,632	$	840
NAIC 2		4,766		19	%		4,766		4,996		230

		24,555		97	%		24,558		25,628		1,070
NAIC 3		508		2	%		508		528		20
NAIC 4		228		1	%		228		237		9
NAIC 5		48		0	%		49		54		5
NAIC 6		36		0	%		40		63		23

Total	$	25,375		100	%	$	25,383	$	26,510	$	1,127

American Financial Group, Inc.

Mortgage-Backed Securities—AFG Consolidated

December 31, 2013

($ in millions)


								% of
	Amortized				% of			Investment			Unrealized
By Asset Type	Cost		Fair Value		Fair Value			Portfolio			Gain (Loss)
Residential
Agency	$	297	$	300		4	%		1	%	$	3
Prime (Non-Agency)		1,866		2,070		29	%		7	%		204
Alt-A		938		1,028		15	%		3	%		90
Subprime		857		923		13	%		3	%		66

Subtotal—Residential		3,958		4,321		61	%		14	%		363
Commercial		2,543		2,732		39	%		9	%		189

Total AFG consolidated	$	6,501	$	7,053		100	%		23	%	$	552

Annuity and Run-off	$	5,592	$	6,076		86	%		20	%		484
Property and Casualty Insurance		908		966		14	%		3	%		58
Other		1		11		0	%		0	%		10

Total AFG consolidated	$	6,501	$	7,053		100	%		23	%	$	552

•

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 78%; Subprime 84%; CMBS 99%.

•

The average FICO score of our residential MBS securities is—Prime 736; Alt-A 712; Subprime 643.

•

100% of our Commercial MBS portfolio is investment-grade rated (84% AAA) and the average subordination for this group assets is 38%.

•

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

American Financial Group, Inc.

Mortgage-Backed Securities Portfolio

December 31, 2013

($ in millions)

Annuity and Run-off:


								% of
	Amortized				% of			Investment			Unrealized
By Asset Type	Cost		Fair Value		Fair Value			Portfolio			Gain (Loss)
Residential
Agency	$	118	$	122		2	%		1	%	$	4
Prime (Non-Agency)		1,725		1,902		31	%		8	%		177
Alt-A		766		842		14	%		4	%		76
Subprime		668		720		12	%		3	%		52

Subtotal—Residential		3,277		3,586		59	%		16	%		309
Commercial		2,315		2,490		41	%		11	%		175

Total Annuity and Run-off	$	5,592	$	6,076		100	%		27	%	$	484

Property and Casualty Insurance:


								% of
	Amortized				% of			Investment			Unrealized
By Asset Type	Cost		Fair Value		Fair Value			Portfolio			Gain (Loss)
Residential
Agency	$	179	$	178		19	%		3	%	$	(1	)
Prime (Non-Agency)		140		157		16	%		2	%		17
Alt-A		172		186		19	%		3	%		14
Subprime		189		203		21	%		3	%		14

Subtotal—Residential		680		724		75	%		11	%		44
Commercial		228		242		25	%		3	%		14

Total Property and Casualty Insurance	$	908	$	966		100	%		14	%	$	58

American Financial Group, Inc.

Mortgage-Backed Securities—Credit Rating and NAIC Designation

December 31, 2013

($ in millions)


	GAAP data
	Amortized				% of			Unrealized
By Credit Rating	Cost		Fair Value		Fair Value			Gain (Loss)
Investment grade
AAA	$	2,745	$	2,921		41	%	$	176
AA		385		406		6	%		21
A		603		633		9	%		30
BBB		305		327		5	%		22

Subtotal—investment grade		4,038		4,287		61	%		249
BB		310		319		5	%		9
B		426		441		6	%		15
Other		1,727		2,006		28	%		279

Total	$	6,501	$	7,053		100	%	$	552

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	$	6,159		96	%	$	6,162	$	6,742	$	580
NAIC 2		123		2	%		123		123		—

		6,282		98	%		6,285		6,865		580
NAIC 3		39		1	%		39		37		(2	)
NAIC 4		70		1	%		71		75		4
NAIC 5		10		0	%		10		17		7
NAIC 6		15		0	%		16		33		17

Total	$	6,416		100	%	$	6,421	$	7,027	$	606

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AMERICAN FINANCIAL GROUP INC Reports