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

Attached files

file	filename
8-K - CURRENT REPORT - AMERICAN FINANCIAL GROUP INC	d765208d8k.htm
EX-99.1 - EARNINGS RELEASE - AMERICAN FINANCIAL GROUP INC	d765208dex991.htm

Exhibit 99.2



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

American Financial Group, Inc.

Table of Contents - Investor Supplement - Second Quarter 2014


Section	Page

Table of Contents - Investor Supplement - Second Quarter 2014		2
Financial Highlights		3
Summary of Earnings		4
Earnings Per Share Summary		5

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

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

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

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

American Financial Group, Inc.

Financial Highlights

(in millions, except per share information)


	Three Months Ended															Six Months Ended
	06/30/14			03/31/14			12/31/13			09/30/13			06/30/13			06/30/14			06/30/13

Highlights
Core net operating earnings	$	99		$	91		$	117		$	97		$	87		$	190		$	171
Net earnings		106			103			158			83			110			209			230
Total assets		45,355			42,770			42,087			40,947			39,414			45,355			39,414
Adjusted shareholders’ equity (a)		4,298			4,191			4,109			4,048			3,978			4,298			3,978
Property and Casualty net written premiums		998			755			821			1,067			749			1,753			1,453
Annuity statutory premiums		949			967			1,381			1,167			861			1,916			1,485

Per share data
Core net operating earnings per share	$	1.07		$	1.00		$	1.28		$	1.06		$	0.96		$	2.07		$	1.88
Diluted earnings per share		1.15			1.13			1.73			0.92			1.20			2.28			2.52
Adjusted book value per share (a)		47.95			46.79			45.90			45.36			44.78			47.95			44.78

Cash dividends per common share		0.220			0.220			1.220			0.195			0.195			0.440			0.390

Financial ratios
Annualized core operating return on equity (b)		9.6	%		9.1	%		11.8	%		10.0	%		9.2	%		9.3	%		9.1	%
Annualized return on equity (b)		10.3	%		10.3	%		16.0	%		8.6	%		11.5	%		10.3	%		12.2	%

Property and Casualty combined ratio - Specialty:
Loss & LAE ratio		64.6	%		56.9	%		62.4	%		66.1	%		60.3	%		61.1	%		58.4	%
Underwriting expense ratio		32.3	%		35.3	%		28.9	%		27.4	%		36.7	%		33.6	%		36.6	%

Combined ratio - Specialty		96.9	%		92.2	%		91.3	%		93.5	%		97.0	%		94.7	%		95.0	%


Net spread on fixed annuities:
Net interest spread		2.92	%		2.81	%		2.86	%		2.89	%		3.02	%		2.87	%		3.00	%
Net spread earned		1.46	%		1.30	%		1.67	%		1.50	%		1.65	%		1.38	%		1.61	%

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

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

American Financial Group, Inc.

Summary of Earnings

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/14			03/31/14			12/31/13			09/30/13			06/30/13			06/30/14			06/30/13
Property and Casualty Insurance
Underwriting profit	$	29		$	58		$	75		$	62		$	19		$	87		$	62
Net investment income		76			67			67			65			65			143			131
Other expense		(8	)		(17	)		(11	)		(14	)		(2	)		(25	)		(15	)

Property and Casualty Insurance operating earnings		97			108			131			113			82			205			178

Annuity earnings		84			73			92			78			82			157			158
Run-off Long-Term Care and Life losses		(2	)		(2	)		(3	)		(4	)		(2	)		(4	)		(3	)
Interest expense of parent holding companies		(16	)		(17	)		(17	)		(17	)		(17	)		(33	)		(34	)
Other expense		(21	)		(24	)		(28	)		(22	)		(22	)		(45	)		(50	)

Pre-tax core operating earnings		142			138			175			148			123			280			249

Income tax expense		43			47			58			51			36			90			78

Core net operating earnings		99			91			117			97			87			190			171

Non-core items, net of tax:
Realized gains		7			12			41			35			26			19			62
Significant A&E charges:
Property and Casualty Insurance run-off operations		—			—			—			(35	)		—			—			—
Former Railroad and Manufacturing operations		—			—			—			(14	)		—			—			—
ELNY guaranty fund assessments charge (a)		—			—			—			—			(3	)		—			(3	)

Net earnings	$	106		$	103		$	158		$	83		$	110		$	209		$	230

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

American Financial Group, Inc.

Earnings Per Share Summary

(in millions, except per share information)


	Three Months Ended												Six Months Ended
	06/30/14		03/31/14		12/31/13		09/30/13			06/30/13			06/30/14		06/30/13

Core net operating earnings	$	99	$	91	$	117	$	97		$	87		$	190	$	171


Net earnings	$	106	$	103	$	158	$	83		$	110		$	209	$	230


Average number of diluted shares		91.593		91.621		91.438		91.014			91.472			91.607		91.260

Diluted earnings per share:
Core net operating earnings per share	$	1.07	$	1.00	$	1.28	$	1.06		$	0.96		$	2.07	$	1.88

Realized gains		0.08		0.13		0.45		0.40			0.28			0.21		0.68
Significant A&E charges:
Property and Casualty Insurance run-off operations		—		—		—		(0.39	)		—			—		—
Former Railroad and Manufacturing operations		—		—		—		(0.15	)		—			—		—
ELNY guaranty fund assessments charge (a)		—		—		—		—			(0.04	)		—		(0.04	)

Diluted earnings per share	$	1.15	$	1.13	$	1.73	$	0.92		$	1.20		$	2.28	$	2.52

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

American Financial Group, Inc.

Property and Casualty Insurance - Summary Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/14			03/31/14			12/31/13			09/30/13			06/30/13			06/30/14			06/30/13

Property and Transportation	$	(18	)	$	6		$	17		$	16		$	(31	)	$	(12	)	$	(21	)
Specialty Casualty		30			38			32			19			32			68			51
Specialty Financial		15			10			17			22			15			25			28
Other Specialty		2			5			9			5			5			7			11

Underwriting profit - Specialty		29			59			75			62			21			88			69

Other charges, included in loss and LAE		—			1			—			—			2			1			7

Underwriting profit - Core		29			58			75			62			19			87			62

Special A&E charges, included in loss and LAE		—			—			—			(54	)		—			—			—

Underwriting profit (loss) - Property and Casualty Insurance	$	29		$	58		$	75		$	8		$	19		$	87		$	62


Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	(1	)	$	1		$	—		$	1
Catastrophe loss		10			12			1			2			18			22			28

Total current accident year catastrophe losses	$	10		$	12		$	1		$	1		$	19		$	22		$	29


Loss reserve development (favorable) / adverse	$	14		$	(31	)	$	(5	)	$	40		$	(22	)	$	(17	)	$	(50	)


Combined ratio:
Property and Transportation		105.5	%		98.1	%		95.8	%		97.1	%		110.3	%		102.0	%		103.5	%
Specialty Casualty		93.6	%		87.8	%		89.7	%		93.4	%		88.4	%		91.2	%		90.5	%
Specialty Financial		87.6	%		91.0	%		85.2	%		82.3	%		86.6	%		89.3	%		87.6	%
Other Specialty		89.0	%		79.9	%		60.4	%		70.7	%		74.0	%		84.6	%		72.6	%
Combined ratio - Specialty		96.9	%		92.2	%		91.3	%		93.5	%		97.0	%		94.7	%		95.0	%

Other core charges		0.0	%		0.0	%		0.1	%		(0.1	%)		0.2	%		0.0	%		0.5	%
Special A&E charges		0.0	%		0.0	%		0.0	%		5.7	%		0.0	%		0.1	%		0.0	%

Combined ratio		96.9	%		92.2	%		91.4	%		99.1	%		97.2	%		94.8	%		95.5	%


Loss and LAE components - property and casualty insurance
Current accident year, excluding catastrophe loss		62.1	%		59.4	%		62.8	%		67.4	%		61.1	%		60.9	%		60.4	%
Prior accident year development		1.4	%		(4.1	%)		(0.4	%)		4.2	%		(3.2	%)		(1.0	%)		(3.6	%)
Current accident year catastrophe loss		1.1	%		1.6	%		0.1	%		0.1	%		2.6	%		1.3	%		2.1	%

Loss and LAE ratio		64.6	%		56.9	%		62.5	%		71.7	%		60.5	%		61.2	%		58.9	%

American Financial Group, Inc.

Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/14			03/31/14			12/31/13			09/30/13			06/30/13			06/30/14			06/30/13

Gross written premiums	$	1,291		$	1,024		$	1,071		$	1,768		$	1,041		$	2,315		$	1,966
Ceded reinsurance premiums		(293	)		(269	)		(250	)		(701	)		(292	)		(562	)		(513	)

Net written premiums		998			755			821			1,067			749			1,753			1,453
Change in unearned premiums		(67	)		(1	)		38			(118	)		(40	)		(68	)		(57	)

Net earned premiums		931			754			859			949			709			1,685			1,396

Loss and LAE		602			428			537			626			428			1,030			816
Underwriting expense		300			267			247			261			260			567			511

Underwriting profit	$	29		$	59		$	75		$	62		$	21		$	88		$	69


Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	(1	)	$	1		$	—		$	1
Catastrophe loss		10			12			1			2			18			22			28

Total current accident year catastrophe losses	$	10		$	12		$	1		$	1		$	19		$	22		$	29


Loss reserve development (favorable) / adverse	$	14		$	(32	)	$	(5	)	$	(13	)	$	(24	)	$	(18	)	$	(57	)


Combined ratio:
Loss and LAE ratio		64.6	%		56.9	%		62.4	%		66.1	%		60.3	%		61.1	%		58.4	%
Underwriting expense ratio		32.3	%		35.3	%		28.9	%		27.4	%		36.7	%		33.6	%		36.6	%

Combined ratio		96.9	%		92.2	%		91.3	%		93.5	%		97.0	%		94.7	%		95.0	%


Loss and LAE components:
Current accident year, excluding catastrophe loss		62.1	%		59.5	%		62.8	%		67.4	%		61.1	%		60.9	%		60.4	%
Prior accident year development		1.4	%		(4.2	%)		(0.5	%)		(1.4	%)		(3.4	%)		(1.1	%)		(4.1	%)
Current accident year catastrophe loss		1.1	%		1.6	%		0.1	%		0.1	%		2.6	%		1.3	%		2.1	%

Loss and LAE ratio		64.6	%		56.9	%		62.4	%		66.1	%		60.3	%		61.1	%		58.4	%

American Financial Group, Inc.

Property and Transportation - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/14			03/31/14			12/31/13			09/30/13			06/30/13			06/30/14			06/30/13

Gross written premiums	$	489		$	376		$	447		$	1,147		$	446		$	865		$	798
Ceded reinsurance premiums		(136	)		(92	)		(98	)		(553	)		(118	)		(228	)		(194	)

Net written premiums		353			284			349			594			328			637			604
Change in unearned premiums		(29	)		17			61			(77	)		(27	)		(12	)		(10	)

Net earned premiums		324			301			410			517			301			625			594

Loss and LAE		248			201			307			407			236			449			428
Underwriting expense		94			94			86			94			96			188			187

Underwriting profit (loss)	$	(18	)	$	6		$	17		$	16		$	(31	)	$	(12	)	$	(21	)


Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	(1	)	$	1		$	—		$	1
Catastrophe loss		8			9			—			—			17			17			27

Total current accident year catastrophe losses	$	8		$	9		$	—		$	(1	)	$	18		$	17		$	28


Loss reserve development (favorable) / adverse	$	22		$	(4	)	$	3		$	(1	)	$	3		$	18		$	(3	)


Combined ratio:
Loss and LAE ratio		76.4	%		67.0	%		74.9	%		78.8	%		78.5	%		71.9	%		72.1	%
Underwriting expense ratio		29.1	%		31.1	%		20.9	%		18.3	%		31.8	%		30.1	%		31.4	%

Combined ratio		105.5	%		98.1	%		95.8	%		97.1	%		110.3	%		102.0	%		103.5	%


Loss and LAE components:
Current accident year, excluding catastrophe loss		67.1	%		65.3	%		74.1	%		79.1	%		71.6	%		66.3	%		67.9	%
Prior accident year development		6.6	%		(1.1	%)		0.8	%		(0.2	%)		1.2	%		2.9	%		(0.4	%)
Current accident year catastrophe loss		2.7	%		2.8	%		0.0	%		(0.1	%)		5.7	%		2.7	%		4.6	%

Loss and LAE ratio		76.4	%		67.0	%		74.9	%		78.8	%		78.5	%		71.9	%		72.1	%

American Financial Group, Inc.

Specialty Casualty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/14			03/31/14			12/31/13			09/30/13			06/30/13			06/30/14			06/30/13

Gross written premiums	$	655		$	507		$	459		$	461		$	440		$	1,162		$	870
Ceded reinsurance premiums		(156	)		(176	)		(138	)		(136	)		(157	)		(332	)		(292	)

Net written premiums		499			331			321			325			283			830			578
Change in unearned premiums		(32	)		(18	)		(11	)		(36	)		(6	)		(50	)		(42	)

Net earned premiums		467			313			310			289			277			780			536

Loss and LAE		300			172			183			174			148			472			296
Underwriting expense		137			103			95			96			97			240			189

Underwriting profit	$	30		$	38		$	32		$	19		$	32		$	68		$	51


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

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


Loss reserve development (favorable) / adverse	$	(4	)	$	(24	)	$	2		$	(4	)	$	(22	)	$	(28	)	$	(38	)


Combined ratio:
Loss and LAE ratio		64.3	%		55.0	%		59.0	%		60.3	%		53.4	%		60.5	%		55.3	%
Underwriting expense ratio		29.3	%		32.8	%		30.7	%		33.1	%		35.0	%		30.7	%		35.2	%

Combined ratio		93.6	%		87.8	%		89.7	%		93.4	%		88.4	%		91.2	%		90.5	%


Loss and LAE components:
Current accident year, excluding catastrophe loss		65.0	%		62.3	%		58.5	%		61.4	%		61.2	%		63.9	%		62.3	%
Prior accident year development		(0.8	%)		(7.7	%)		0.5	%		(1.2	%)		(8.0	%)		(3.6	%)		(7.1	%)
Current accident year catastrophe loss		0.1	%		0.4	%		0.0	%		0.1	%		0.2	%		0.2	%		0.1	%

Loss and LAE ratio		64.3	%		55.0	%		59.0	%		60.3	%		53.4	%		60.5	%		55.3	%

American Financial Group, Inc.

Specialty Financial - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/14			03/31/14			12/31/13			09/30/13			06/30/13			06/30/14			06/30/13

Gross written premiums	$	147		$	141		$	164		$	160		$	155		$	288		$	298
Ceded reinsurance premiums		(27	)		(25	)		(32	)		(36	)		(38	)		(52	)		(68	)

Net written premiums		120			116			132			124			117			236			230
Change in unearned premiums		(4	)		1			(13	)		(3	)		(4	)		(3	)		(1	)

Net earned premiums		116			117			119			121			113			233			229

Loss and LAE		40			45			42			37			37			85			79
Underwriting expense		61			62			60			62			61			123			122

Underwriting profit	$	15		$	10		$	17		$	22		$	15		$	25		$	28


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

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


Loss reserve development (favorable) / adverse	$	(2	)	$	(1	)	$	(4	)	$	(4	)	$	—		$	(3	)	$	(6	)


Combined ratio:
Loss and LAE ratio		35.3	%		37.9	%		34.2	%		31.2	%		32.9	%		36.6	%		34.4	%
Underwriting expense ratio		52.3	%		53.1	%		51.0	%		51.1	%		53.7	%		52.7	%		53.2	%

Combined ratio		87.6	%		91.0	%		85.2	%		82.3	%		86.6	%		89.3	%		87.6	%


Loss and LAE components:
Current accident year, excluding catastrophe loss		36.3	%		37.1	%		36.7	%		33.7	%		32.9	%		36.7	%		36.7	%
Prior accident year development		(1.8	%)		(0.7	%)		(3.2	%)		(3.2	%)		(0.7	%)		(1.2	%)		(2.8	%)
Current accident year catastrophe loss		0.8	%		1.5	%		0.7	%		0.7	%		0.7	%		1.1	%		0.5	%

Loss and LAE ratio		35.3	%		37.9	%		34.2	%		31.2	%		32.9	%		36.6	%		34.4	%

American Financial Group, Inc.

Other Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/14			03/31/14			12/31/13			09/30/13			06/30/13			06/30/14			06/30/13

Gross written premiums	$	—		$	—		$	1		$	—		$	—		$	—		$	—
Ceded reinsurance premiums		26			24			18			24			21			50			41

Net written premiums		26			24			19			24			21			50			41
Change in unearned premiums		(2	)		(1	)		1			(2	)		(3	)		(3	)		(4	)

Net earned premiums		24			23			20			22			18			47			37

Loss and LAE		14			10			5			8			7			24			13
Underwriting expense		8			8			6			9			6			16			13

Underwriting profit	$	2		$	5		$	9		$	5		$	5		$	7		$	11


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

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


Loss reserve development (favorable) / adverse	$	(2	)	$	(3	)	$	(6	)	$	(4	)	$	(5	)	$	(5	)	$	(10	)


Combined ratio:
Loss and LAE ratio		53.2	%		45.8	%		28.3	%		35.0	%		35.1	%		49.6	%		34.4	%
Underwriting expense ratio		35.8	%		34.1	%		32.1	%		35.7	%		38.9	%		35.0	%		38.2	%

Combined ratio		89.0	%		79.9	%		60.4	%		70.7	%		74.0	%		84.6	%		72.6	%

American Financial Group, Inc.

Annuity Results of Operations (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/14			03/31/14			12/31/13			09/30/13			06/30/13			06/30/14			06/30/13

Net investment income	$	289		$	275		$	270		$	259		$	257		$	564		$	505
Guaranteed withdrawal benefit fees		8			8			7			7			6			16			11
Policy charges and other miscellaneous income		11			10			14			10			9			21			18


Total revenues		308			293			291			276			272			601			534

Annuity benefits		166			168			137			140			120			334			254
Acquisition expenses		37			31			35			35			48			68			79
Other expenses		21			21			27			23			22			42			43


Total costs and expenses		224			220			199			198			190			444			376


Earnings before income taxes - core		84			73			92			78			82			157			158

ELNY guaranty fund assessments charge (a)		—			—			—			—			(5	)		—			(5	)


Earnings before income taxes	$	84		$	73		$	92		$	78		$	77		$	157		$	153


Detail of annuity benefits above:
Interest credited - fixed	$	123		$	121		$	118		$	113		$	111		$	244		$	220
Interest credited - fixed component of variable annuities		2			1			1			2			1			3			3
Change in expected death and annuitization reserve		5			4			5			4			6			9			10
Amortization of sales inducements		6			7			7			8			8			13			15
Guaranteed withdrawal benefit reserve		10			8			10			10			10			18			18
Change in other benefit reserves		5			3			1			2			3			8			4
Embedded derivative mark-to-market		78			54			74			33			(3	)		132			77
Equity option mark-to-market		(63	)		(30	)		(85	)		(32	)		(16	)		(93	)		(93	)
Unlockings		—			—			6			—			—			—			—


Total annuity benefits	$	166		$	168		$	137		$	140		$	120		$	334		$	254

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

American Financial Group, Inc.

Net Spread on Fixed Annuities (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/14			03/31/14			12/31/13			09/30/13			06/30/13			06/30/14			06/30/13

Average fixed annuity investments (at amortized cost)	$	22,098		$	21,402		$	20,524		$	19,519		$	18,615		$	21,750		$	18,280
Average annuity benefits accumulated		21,829			21,066			20,092			19,035			18,151			21,448			17,829

Investments in excess of annuity benefits accumulated	$	269		$	336		$	432		$	484		$	464		$	302		$	451


As % of average annuity benefits accumulated (except as noted)
Net investment income (as % of investments)		5.18	%		5.10	%		5.21	%		5.27	%		5.45	%		5.14	%		5.46	%
Interest credited		(2.26	%)		(2.29	%)		(2.35	%)		(2.38	%)		(2.43	%)		(2.27	%)		(2.46	%)

Net interest spread on fixed annuities		2.92	%		2.81	%		2.86	%		2.89	%		3.02	%		2.87	%		3.00	%

Policy charges and other miscellaneous income		0.14	%		0.13	%		0.22	%		0.15	%		0.13	%		0.14	%		0.14	%
Other annuity benefit expenses, net		(0.33	%)		(0.27	%)		(0.31	%)		(0.38	%)		(0.46	%)		(0.29	%)		(0.41	%)
Acquisition expenses		(0.64	%)		(0.55	%)		(0.75	%)		(0.72	%)		(1.00	%)		(0.60	%)		(0.85	%)
Other expenses		(0.36	%)		(0.37	%)		(0.53	%)		(0.44	%)		(0.43	%)		(0.37	%)		(0.44	%)
Change in fair value of derivatives		(0.27	%)		(0.45	%)		0.22	%		0.00	%		0.39	%		(0.37	%)		0.17	%
Unlockings		0.00	%		0.00	%		(0.04	%)		0.00	%		0.00	%		0.00	%		0.00	%

Net spread earned on fixed annuities - core		1.46	%		1.30	%		1.67	%		1.50	%		1.65	%		1.38	%		1.61	%


Average annuity benefits accumulated	$	21,829		$	21,066		$	20,092		$	19,035		$	18,151		$	21,448		$	17,829
Net spread earned on fixed annuities		1.46	%		1.30	%		1.67	%		1.50	%		1.65	%		1.38	%		1.61	%

Earnings on fixed annuity benefits accumulated	$	80		$	68		$	84		$	72		$	75		$	148		$	144

Investments in excess of annuity benefits accumulated	$	269		$	336		$	432		$	484		$	464		$	302		$	451
Net investment income (as % of investments)		5.18	%		5.10	%		5.21	%		5.27	%		5.45	%		5.14	%		5.46	%

Earnings on investments in excess of annuity benefits accumulated	$	3		$	5		$	6		$	6		$	6		$	8		$	12

Variable annuity earnings		1			—			2			—			1			1			2

Earnings before income taxes - core		84			73			92			78			82			157			158

ELNY guaranty fund assessments charge (a)		—			—			—			—			(5	)		—			(5	)

Earnings before income taxes	$	84		$	73		$	92		$	78		$	77		$	157		$	153

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

American Financial Group

Annuity Premiums (Statutory)

($ in millions)


	Three Months Ended										Six months ended
	06/30/14		03/31/14		12/31/13		09/30/13		06/30/13		06/30/14		06/30/13

Retail single premium annuities - indexed	$	403	$	386	$	565	$	509	$	472	$	789	$	805
Retail single premium annuities - fixed		25		39		53		48		37		64		64
Financial institutions single premium annuities - indexed		364		366		498		352		169		730		252
Financial institutions single premium annuities - fixed		95		114		201		198		118		209		229
Education market - 403(b) fixed and indexed annuities		49		50		51		49		52		99		107

Subtotal fixed annuity premiums		936		955		1,368		1,156		848		1,891		1,457

Variable annuities		13		12		13		11		13		25		28

Total annuity premiums	$	949	$	967	$	1,381	$	1,167	$	861	$	1,916	$	1,485

American Financial Group, Inc.

Fixed Annuity Benefits Accumulated (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	06/30/14			03/31/14			12/31/13			09/30/13			06/30/13			06/30/14			06/30/13

Beginning fixed annuity reserves	$	21,453		$	20,679		$	19,505		$	18,564		$	17,737		$	20,679		$	17,274
Premiums		936			955			1,368			1,156			848			1,891			1,457
Federal Home Loan Bank advances		—			—			—			—			200			—			200
Surrenders, benefits and other withdrawals		(408	)		(375	)		(408	)		(381	)		(352	)		(783	)		(704	)
Interest and other annuity benefit expenses:
Interest credited		123			121			118			113			111			244			220
Embedded derivative mark-to-market		78			54			74			33			(3	)		132			77
Change in other benefit reserves		23			19			18			20			23			42			40
Unlockings		—			—			4			—			—			—			—

Ending fixed annuity reserves	$	22,205		$	21,453		$	20,679		$	19,505		$	18,564		$	22,205		$	18,564


Reconciliation to annuity benefits accumulated:
Ending fixed annuity reserves	$	22,205		$	21,453		$	20,679		$	19,505		$	18,564		$	22,205		$	18,564
Impact of unrealized investment gains on reserves		117			97			71			84			87			117			87
Fixed component of variable annuities		194			194			194			196			197			194			197

Annuity benefits accumulated per balance sheet	$	22,516		$	21,744		$	20,944		$	19,785		$	18,848		$	22,516		$	18,848


Annualized surrenders and other withdrawals as a % of beginning reserves		7.6	%		7.3	%		8.4	%		8.2	%		7.9	%		7.6	%		8.2	%

American Financial Group, Inc.

Consolidated Balance Sheet

($ in millions)


	06/30/14			03/31/14			12/31/13			09/30/13		06/30/13			03/31/13
Assets:
Total cash and investments	$	34,843		$	32,727		$	31,313		$	29,921	$	29,262		$	29,084
Recoverables from reinsurers		3,107			2,969			3,157			3,138		3,044			3,083
Prepaid reinsurance premiums		489			438			408			662		520			466
Agents’ balances and premiums receivable		902			735			739			801		754			649
Deferred policy acquisition costs		806			890			975			867		818			565
Assets of managed investment entities		2,799			2,723			2,888			2,779		2,973			3,285
Other receivables		527			524			854			1,078		422			384
Variable annuity assets (separate accounts)		681			666			665			629		608			614
Other assets		1,001			913			903			887		828			824
Goodwill		200			185			185			185		185			185

Total assets	$	45,355		$	42,770		$	42,087		$	40,947	$	39,414		$	39,139


Liabilities and Equity:
Unpaid losses and loss adjustment expenses	$	7,370		$	6,134		$	6,410		$	6,441	$	6,098		$	6,238
Unearned premiums		1,911			1,788			1,757			2,047		1,789			1,697
Annuity benefits accumulated		22,516			21,744			20,944			19,785		18,848			18,075
Life, accident and health reserves		2,082			2,039			2,008			2,011		2,017			2,021
Payable to reinsurers		445			400			508			601		367			250
Liabilities of managed investment entities		2,499			2,413			2,567			2,429		2,603			2,880
Long-term debt		912			913			913			913		949			950
Variable annuity liabilities (separate accounts)		681			666			665			629		608			614
Other liabilities		1,781			1,700			1,546			1,381		1,497			1,506

Total liabilities	$	40,197		$	37,797		$	37,318		$	36,237	$	34,776		$	34,231

Shareholders’ equity:
Common stock	$	90		$	90		$	90		$	89	$	89		$	90
Capital surplus		1,152			1,138			1,123			1,109		1,088			1,090
Appropriated retained earnings		31			49			49			45		33			64
Unappropriated retained earnings		2,913			2,842			2,777			2,729		2,664			2,620
Unrealized gains - fixed maturities		656			556			441			449		462			719
Unrealized gains - equities		149			129			121			119		138			146
Other comprehensive income, net of tax		(6	)		(8	)		(2	)		2		(1	)		4

Total shareholders’ equity		4,985			4,796			4,599			4,542		4,473			4,733

Noncontrolling interests		173			177			170			168		165			175

Total liabilities and equity	$	45,355		$	42,770		$	42,087		$	40,947	$	39,414		$	39,139

American Financial Group, Inc.

Book Value Per Share and Price / Book Summary

(in millions, except per share information)


	06/30/14			03/31/14			12/31/13			09/30/13			06/30/13			03/31/13

Shareholders’ equity	$	4,985		$	4,796		$	4,599		$	4,542		$	4,473		$	4,733
Appropriated retained earnings		(31	)		(49	)		(49	)		(45	)		(33	)		(64	)

Shareholders’ equity, excluding appropriated retained earnings		4,954			4,747			4,550			4,497			4,440			4,669
Unrealized (gains) on fixed maturities		(656	)		(556	)		(441	)		(449	)		(462	)		(719	)

Adjusted shareholders’ equity		4,298			4,191			4,109			4,048			3,978			3,950
Goodwill		(200	)		(185	)		(185	)		(185	)		(185	)		(185	)
Intangibles		(66	)		(27	)		(22	)		(26	)		(29	)		(33	)

Tangible adjusted shareholders’ equity	$	4,032		$	3,979		$	3,902		$	3,837		$	3,764		$	3,732


Common shares outstanding		89.618			89.589			89.513			89.224			88.821			89.883

Book value per share:
Excluding appropriated retained earnings (a)	$	55.27		$	52.99		$	50.83		$	50.40		$	49.98		$	51.94
Adjusted (b)		47.95			46.79			45.90			45.36			44.78			43.94
Tangible, adjusted (c)		44.99			44.42			43.59			43.00			42.38			41.52

Market capitalization

AFG’s closing common share price	$	59.56		$	57.71		$	57.72		$	54.06		$	48.91		$	47.38

Market capitalization	$	5,338		$	5,170		$	5,167		$	4,823		$	4,344		$	4,259

Price / Adjusted book value ratio		1.24			1.23			1.26			1.19			1.09			1.08

(a)	Excludes appropriated retained earnings.

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

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

American Financial Group, Inc.

Capitalization

($ in millions)


	06/30/14			03/31/14			12/31/13			09/30/13			06/30/13			03/31/13

Direct obligations of AFG	$	840		$	840		$	840		$	840		$	840		$	840
Direct obligations of subsidiaries		72			73			73			73			89			90
Payable to subsidiary trusts		—			—			—			—			20			20

Long-term debt	$	912		$	913		$	913		$	913		$	949		$	950
Obligations secured by real estate		(60	)		(61	)		(61	)		(61	)		(62	)		(62	)

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


Total capital (a)	$	6,039		$	5,837		$	5,633		$	5,578		$	5,554		$	5,794
Total capital excluding obligations secured by real estate (a)		5,979			5,776			5,572			5,517			5,492			5,732

Total adjusted capital (b)	$	5,383		$	5,281		$	5,192		$	5,129		$	5,092		$	5,074
Total adjusted capital excluding obligations secured by real estate (b)		5,323			5,220			5,131			5,068			5,030			5,012

Ratio of debt to total capital (a):
Including debt secured by real estate		15.1	%		15.6	%		16.2	%		16.4	%		17.1	%		16.4	%
Excluding debt secured by real estate		14.2	%		14.8	%		15.3	%		15.4	%		16.2	%		15.5	%

Ratio of debt to total adjusted capital (b):
Including debt secured by real estate		16.9	%		17.3	%		17.6	%		17.8	%		18.6	%		18.7	%
Excluding debt secured by real estate		16.0	%		16.3	%		16.6	%		16.8	%		17.6	%		17.7	%

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

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

American Financial Group, Inc.

Additional Supplemental Information

($ in millions)


	Three Months Ended										Six months ended
	06/30/14		03/31/14		12/31/13		09/30/13		06/30/13		06/30/14		06/30/13
Property and Casualty Insurance

Paid Losses (GAAP)	$	530	$	510	$	577	$	417	$	520	$	1,040	$	877


	06/30/14		03/31/14		12/31/13		09/30/13		06/30/13		03/31/13
Statutory Surplus

Property and Casualty Insurance	$	2,227	$	1,981	$	1,896	$	2,133	$	2,096	$	2,090

AFG’s principal annuity subsidiaries (total adjusted capital)	$	1,751	$	1,688	$	1,661	$	1,590	$	1,517	$	1,483

Allowable dividends without regulatory approval

Property and Casualty Insurance	$	335	$	335	$	335	$	237	$	237	$	237
Annuity and Run-off		275		275		275		158		158		158

Total	$	610	$	610	$	610	$	395	$	395	$	395

American Financial Group, Inc.

Total Cash and Investments and Quarterly Net Investment Income

June 30, 2014

($ in millions)


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

Total cash and investments	$	8,790	$	25,983	$	338	$	(268	)	$	34,843		100	%


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

Gross investment income		77			308		2		(7	)		380

Investment expenses		(1	)		—		—		—			(1	)

Total net investment income	$	76		$	308	$	2	$	(7	)	$	379


	Equity Securities
	Cost		Fair Value		Unrealized Gain (Loss)

Annuity and Run-off	$	369	$	423	$	54
Property and Casualty Insurance		826		1,007		181
Other		43		43		—

Total AFG consolidated	$	1,238	$	1,473	$	235

American Financial Group, Inc.

Fixed Maturities - By Security Type - AFG Consolidated

June 30, 2014

($ in millions )


	Amortized Cost			Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Investment Portfolio
US Government and government agencies	$	377		$	383	$	6		1	%		1	%
States, municipalities and political subdivisions		6,010			6,259		249		21	%		18	%
Foreign government		253			263		10		1	%		1	%
Residential mortgage-backed securities		4,284			4,694		410		16	%		14	%
Commercial mortgage-backed securities		2,396			2,589		193		9	%		7	%
Asset-backed securities		3,189			3,223		34		11	%		9	%
Corporate bonds
Manufacturing		2,221			2,370		149		8	%		7	%
Banks, lending and credit institutions		2,218			2,364		146		8	%		7	%
Gas and electric services		1,289			1,422		133		5	%		4	%
Insurance and insurance related		798			867		69		3	%		2	%
Other corporate		4,595			4,897		302		17	%		14	%

Total AFG consolidated	$	27,630		$	29,331	$	1,701		100	%		84	%


Annuity and Run-off	$	21,726		$	23,200		1,474		79	%		66	%
Property and Casualty Insurance		5,903			6,119		216		21	%		18	%
Other		1			12		11		0	%		0	%

Total AFG consolidated	$	27,630		$	29,331	$	1,701		100	%		84	%


Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		5.02	%
Net of investment expense (a)		5.02	%

Approximate average life and duration:
Approximate average life		6.5 years
Approximate duration		5 years

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

American Financial Group, Inc.

Fixed Maturities - By Security Type Portfolio

June 30, 2014

($ in millions )


	Amortized Cost			Fair Value		Unrealized Gain (Loss)		% of Fair Value
Annuity and Run-off:
US Government and government agencies	$	86		$	87	$	1		0	%
States, municipalities and political subdivisions		3,546			3,703		157		16	%
Foreign government		17			19		2		0	%
Residential mortgage-backed securities		3,345			3,688		343		16	%
Commercial mortgage-backed securities		2,170			2,350		180		10	%
Asset-backed securities		2,365			2,396		31		11	%
Corporate debt		10,197			10,957		760		47	%

Total Annuity and Run-off	$	21,726		$	23,200	$	1,474		100	%


Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		5.24	%
Net of investment expense (a)		5.26	%

Approximate average life and duration:
Approximate average life		7 years
Approximate duration		5 years

	Amortized Cost			Fair Value		Unrealized Gain (Loss)		% of Fair Value
Property and Casualty Insurance:
US Government and government agencies	$	291		$	296	$	5		5	%
States, municipalities and political subdivisions		2,464			2,556		92		42	%
Foreign government		236			244		8		4	%
Residential mortgage-backed securities		938			994		56		16	%
Commercial mortgage-backed securities		226			239		13		4	%
Asset-backed securities		824			827		3		13	%
Corporate debt		924			963		39		16	%

Property and Casualty Insurance	$	5,903		$	6,119	$	216		100	%


Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.17	%
Net of investment expense (a)		4.08	%
Tax equivalent, net of investment expense (b)		4.68	%

Approximate average life and duration:
Approximate average life		5 years
Approximate duration		3.5 years

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

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

American Financial Group, Inc.

Fixed Maturities - Credit Rating and NAIC Designation

June 30, 2014

($ in millions)


	GAAP Data
By Credit Rating	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value
Investment grade
AAA	$	6,152	$	6,404	$	252		22	%
AA		5,781		6,005		224		20	%
A		7,067		7,524		457		26	%
BBB		4,922		5,303		381		18	%

Subtotal - Investment grade		23,922		25,236		1,314		86	%

BB		724		766		42		2	%
B		475		499		24		2	%
Other		2,509		2,830		321		10	%

Total	$	27,630	$	29,331	$	1,701		100	%

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


	Statutory Data
By NAIC Designation	Carrying Value		% of Carrying Value			Amortized Cost		Fair Value		Unrealized Gain (Loss)
NAIC 1	$	21,582		79	%	$	21,583	$	22,917	$	1,334
NAIC 2		4,848		18	%		4,848		5,212		364

		26,430		97	%		26,431		28,129		1,698

NAIC 3		520		2	%		520		548		28
NAIC 4		234		1	%		235		247		12
NAIC 5		42		0	%		42		49		7
NAIC 6		45		0	%		49		70		21

Total	$	27,271		100	%	$	27,277	$	29,043	$	1,766

American Financial Group, Inc.

Mortgage-Backed Securities - AFG Consolidated

June 30, 2014

($ in millions)


By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Investment Portfolio
Residential
Agency	$	326	$	334	$	8		4	%		1	%
Prime (Non-Agency)		2,084		2,305		221		32	%		7	%
Alt-A		983		1,092		109		15	%		3	%
Subprime		891		963		72		13	%		3	%

Subtotal - Residential		4,284		4,694		410		64	%		14	%
Commercial		2,396		2,589		193		36	%		7	%

Total AFG consolidated	$	6,680	$	7,283	$	603		100	%		21	%


Annuity and Run-off	$	5,515	$	6,038		523		83	%		17	%
Property and Casualty Insurance		1,164		1,233		69		17	%		4	%
Other		1		12		11		0	%		0	%

Total AFG consolidated	$	6,680	$	7,283	$	603		100	%		21	%

•

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

•

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

•

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

•

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

•

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

American Financial Group, Inc.

Mortgage-Backed Securities Portfolio

June 30, 2014

($ in millions)


Annuity and Run-off: By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Investment Portfolio
Residential
Agency	$	132	$	138	$	6		2	%		1	%
Prime (Non-Agency)		1,849		2,041		192		34	%		8	%
Alt-A		746		836		90		14	%		3	%
Subprime		618		673		55		11	%		3	%

Subtotal - Residential		3,345		3,688		343		61	%		15	%
Commercial		2,170		2,350		180		39	%		9	%

Total Annuity and Run-off	$	5,515	$	6,038	$	523		100	%		24	%


Property and Casualty Insurance: By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Investment Portfolio
Residential
Agency	$	194	$	196	$	2		16	%		2	%
Prime (Non-Agency)		234		252		18		20	%		3	%
Alt-A		237		256		19		21	%		3	%
Subprime		273		290		17		24	%		3	%

Subtotal - Residential		938		994		56		81	%		11	%
Commercial		226		239		13		19	%		3	%

Total Property and Casualty Insurance	$	1,164	$	1,233	$	69		100	%		14	%

American Financial Group, Inc.

Mortgage-Backed Securities - Credit Rating and NAIC Designation

June 30, 2014

($ in millions)


	GAAP data
By Credit Rating	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value
Investment grade
AAA	$	2,883	$	3,075	$	192		42	%
AA		383		405		22		5	%
A		541		574		33		8	%
BBB		257		279		22		4	%

Subtotal - investment grade		4,064		4,333		269		59	%

BB		331		345		14		5	%
B		407		424		17		6	%
Other		1,878		2,181		303		30	%

Total	$	6,680	$	7,283	$	603		100	%

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


	Statutory data
By NAIC Designation	Carrying Value		% of Carrying Value			Amortized Cost		Fair Value		Unrealized Gain (Loss)
NAIC 1	$	6,285		95	%	$	6,286	$	6,928	$	642
NAIC 2		127		2	%		127		128		1

		6,412		97	%		6,413		7,056		643

NAIC 3		45		1	%		45		46		1
NAIC 4		104		2	%		104		111		7
NAIC 5		4		0	%		4		12		8
NAIC 6		26		0	%		27		43		16

Total	$	6,591		100	%	$	6,593	$	7,268	$	675

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AMERICAN FINANCIAL GROUP INC Reports