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

Attached files

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EX-99.1 - EX-99.1 - AMERICAN FINANCIAL GROUP INC	d522983dex991.htm
8-K - 8-K - AMERICAN FINANCIAL GROUP INC	d522983d8k.htm

Exhibit 99.2


				American Financial Group, Inc. Investor Supplement - Fourth Quarter 2017

				January 31, 2018

				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 2017


Section	Page
Table of Contents - Investor Supplement - Fourth Quarter 2017		2
Financial Highlights		3
Summary of Earnings		4
Earnings Per Share Summary		5

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

Annuity Segment
Annuity Earnings (GAAP)		12
Detail of Annuity Benefits Expense (GAAP)		13
Net Spread on Fixed Annuities (GAAP)		14
Annuity Premiums (Statutory)		15
Fixed Annuity Benefits Accumulated (GAAP)		16
Guaranteed Minimum Interest Rate Analysis		17

Consolidated Balance Sheet / Book Value / Debt
Consolidated Balance Sheet		18
Book Value Per Share and Price / Book Summary		19
Capitalization		20
Additional Supplemental Information		21

Consolidated Investment Supplement
Total Cash and Investments		22
Net Investment Income		23
Fixed Maturities - By Security Type - AFG Consolidated		24
Fixed Maturities - By Security Type Portfolio		25
Fixed Maturities - Credit Rating		26
Mortgage-Backed Securities - AFG Consolidated		27
Mortgage-Backed Securities Portfolio		28
Mortgage-Backed Securities - Credit Rating		29

Appendix
A. Fixed Maturities - Credit Rating by Type		30

Page 2

American Financial Group, Inc.

Financial Highlights

(in millions, except per share information)


	Three Months Ended															Twelve Months Ended
	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16			12/31/17			12/31/16
Highlights
Net earnings	$	166		$	11		$	145		$	153		$	385		$	475		$	649
Core net operating earnings		197			95			145			151			176			588			534
Total assets		60,658			60,163			58,618			57,464			55,072			60,658			55,072
Adjusted shareholders’ equity (a)		4,724			4,852			4,837			4,815			4,617			4,724			4,617
Property and Casualty net written premiums		1,161			1,433			1,130			1,027			1,083			4,751			4,386
Annuity statutory premiums		909			876			1,266			1,290			1,111			4,341			4,435

Per share data
Diluted earnings per share	$	1.84		$	0.13		$	1.61		$	1.72		$	4.33		$	5.28		$	7.33
Core net operating earnings per share		2.20			1.06			1.61			1.69			1.98			6.55			6.03
Adjusted book value per share (a)		53.51			55.08			54.97			54.98			53.11			53.51			53.11

Cash dividends per common share		2.3500			0.3125			1.8125			0.3125			1.3125			4.7875			2.1525

Financial ratios
Annualized return on equity (b)		14.4	%		1.0	%		12.3	%		13.3	%		34.4	%		10.3	%		14.8	%
Annualized core operating return on equity (b)		17.2	%		8.1	%		12.3	%		13.1	%		15.7	%		12.7	%		12.2	%

Property and Casualty combined ratio - Specialty:
Loss & LAE ratio		59.8	%		71.4	%		59.5	%		59.5	%		63.7	%		62.9	%		61.7	%
Underwriting expense ratio		27.5	%		27.9	%		33.7	%		32.7	%		26.7	%		30.2	%		30.6	%

Combined ratio - Specialty		87.3	%		99.3	%		93.2	%		92.2	%		90.4	%		93.1	%		92.3	%

Net spread on fixed annuities:
Net interest spread		2.62	%		2.69	%		2.61	%		2.58	%		2.70	%		2.62	%		2.73	%
Net spread earned:
Before impact of fair value accounting		1.34	%		1.36	%		1.32	%		1.31	%		1.42	%		1.33	%		1.39	%
Impact of fair value accounting (c)		(0.13	%)		(0.05	%)		(0.21	%)		(0.03	%)		0.40	%		(0.10	%)		(0.10	%)

After impact of fair value accounting		1.21	%		1.31	%		1.11	%		1.28	%		1.82	%		1.23	%		1.29	%

(a)	Excludes unrealized gains related to fixed maturity investments, a reconciliation to the GAAP measure is on page 19.

(b)	Excludes accumulated other comprehensive income.

(c)	Change in fair value of derivatives offset by the estimated related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs.

Page 3

American Financial Group, Inc.

Summary of Earnings

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16			12/31/17			12/31/16
Property and Casualty Insurance
Underwriting profit	$	155		$	8		$	72		$	78		$	110		$	313		$	337
Net investment income		86			94			96			86			85			362			350
Other income (expense)		(8	)		(7	)		(5	)		5			(15	)		(15	)		(57	)

Property and Casualty Insurance operating earnings		233			95			163			169			180			660			630

Annuity earnings		97			102			85			96			132			380			368
Run-off Long-Term Care and Life earnings		2			2			2			—			2			6			2
Interest expense of parent holding companies		(20	)		(21	)		(23	)		(21	)		(21	)		(85	)		(77	)
Other expense		(29	)		(20	)		(23	)		(26	)		(29	)		(98	)		(99	)

Pre-tax core operating earnings		283			158			204			218			264			863			824

Income tax expense		86			63			59			67			88			275			290

Core net operating earnings		197			95			145			151			176			588			534

Non-core items, net of tax:
Realized gains (losses) on securities		4			(8	)		5			2			32			3			13
Gain on sale of subsidiaries		—			—			—			—			—			—			1
Gain on sale of apartment property		—			—			—			—			—			—			15
Special A&E charges:
Property and Casualty Insurance run-off operations		—			(58	)		—			—			—			(58	)		(23	)
Former Railroad and Manufacturing operations		—			(16	)		—			—			—			(16	)		(3	)
Neon exited lines charge		18			—			—			—			—			18			(65	)
Tax benefit related to National Interstate merger		—			—			—			—			66			—			66
Tax benefit related to Neon restructuring		56			—			—			—			111			56			111
Tax expense related to change in U.S. corporate tax rate		(83	)		—			—			—			—			(83	)		—
Loss on retirement of debt		(26	)		(2	)		(5	)		—			—			(33	)		—

Net earnings	$	166		$	11		$	145		$	153		$	385		$	475		$	649

Page 4

American Financial Group, Inc.

Earnings Per Share Summary

(in millions, except per share information)


	Three Months Ended													Twelve Months Ended
	12/31/17			09/30/17			06/30/17			03/31/17		12/31/16		12/31/17			12/31/16
Core net operating earnings	$	197		$	95		$	145		$	151	$	176	$	588		$	534

Net earnings	$	166		$	11		$	145		$	153	$	385	$	475		$	649

Average number of diluted shares		90.109			89.984			89.799			89.342		88.774		89.812			88.530

Diluted earnings per share:
Core net operating earnings per share	$	2.20		$	1.06		$	1.61		$	1.69	$	1.98	$	6.55		$	6.03

Realized gains (losses) on securities		0.04			(0.08	)		0.05			0.03		0.36		0.03			0.16
Gain on sale of subsidiaries		—			—			—			—		—		—			0.01
Gain on sale of apartment property		—			—			—			—		—		—			0.17
Special A&E charges:
Property and Casualty Insurance run-off operations		—			(0.64	)		—			—		—		(0.64	)		(0.26	)
Former Railroad and Manufacturing operations		—			(0.18	)		—			—		—		(0.18	)		(0.04	)
Neon exited lines charge		0.19			—			—			—		—		0.19			(0.73	)
Tax benefit related to National Interstate merger		—			—			—			—		0.74		—			0.74
Tax benefit related to Neon restructuring		0.62			—			—			—		1.25		0.62			1.25
Tax expense related to change in U.S. corporate tax rate		(0.92	)		—			—			—		—		(0.92	)		—
Loss on retirement of debt		(0.29	)		(0.03	)		(0.05	)		—		—		(0.37	)		—

Diluted earnings per share	$	1.84		$	0.13		$	1.61		$	1.72	$	4.33	$	5.28		$	7.33

Page 5

American Financial Group, Inc.

Property and Casualty Insurance - Summary Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16			12/31/17			12/31/16
Property and Transportation	$	84		$	6		$	21		$	43		$	75		$	154		$	166
Specialty Casualty		58			2			29			15			13			104			78
Specialty Financial		19			(3	)		23			22			20			61			84
Other Specialty		(5	)		4			—			(1	)		2			(2	)		9

Underwriting profit - Specialty		156			9			73			79			110			317			337

Other core charges, included in loss and LAE		1			1			1			1			—			4			—

Underwriting profit - Core		155			8			72			78			110			313			337

Special A&E charges, included in loss and LAE		—			(89	)		—			—			—			(89	)		(36	)
Neon exited lines charge, included in loss and LAE		18			—			—			—			—			18			(57	)
Neon exited lines charge, included in underwriting expenses		—			—			—			—			—			—			(8	)

Underwriting profit (loss) - Property and Casualty Insurance	$	173		$	(81	)	$	72		$	78		$	110		$	242		$	236


Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	4		$	6		$	—		$	—		$	—		$	10		$	—
Catastrophe loss		8			107			18			7			12			140			55

Total current accident year catastrophe losses	$	12		$	113		$	18		$	7		$	12		$	150		$	55


Prior year loss reserve development (favorable) / adverse	$	(66	)	$	52		$	(22	)	$	(28	)	$	10		$	(64	)	$	32


Combined ratio:
Property and Transportation		82.6	%		98.9	%		94.2	%		87.3	%		83.9	%		91.0	%		90.0	%
Specialty Casualty		90.0	%		99.5	%		94.7	%		97.0	%		97.4	%		95.2	%		96.1	%
Specialty Financial		86.2	%		102.2	%		84.4	%		85.0	%		86.0	%		89.4	%		84.9	%
Other Specialty		123.0	%		85.1	%		98.3	%		105.8	%		94.9	%		102.7	%		91.4	%
Combined ratio - Specialty		87.3	%		99.3	%		93.2	%		92.2	%		90.4	%		93.1	%		92.3	%

Other core charges		0.1	%		0.1	%		0.2	%		0.1	%		0.0	%		0.1	%		(0.1	%)
Neon exited lines charge, loss and LAE		(1.4	%)		0.0	%		0.0	%		0.0	%		0.0	%		(0.4	%)		1.3	%
Neon exited lines charge, underwriting expenses		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.2	%
Special A&E charges		0.0	%		7.0	%		0.0	%		0.0	%		0.0	%		1.9	%		0.8	%

Combined ratio		86.0	%		106.4	%		93.4	%		92.3	%		90.4	%		94.7	%		94.5	%


Combined ratio excl. catastrophe and prior year development		90.8	%		93.8	%		93.7	%		94.3	%		88.4	%		93.1	%		92.4	%


Loss and LAE components - property and casualty insurance
Current accident year, excluding catastrophe loss		63.3	%		65.9	%		60.0	%		61.6	%		61.7	%		62.9	%		61.8	%
Prior accident year loss reserve development		(5.4	%)		4.2	%		(2.0	%)		(2.7	%)		0.9	%		(1.4	%)		0.7	%
Current accident year catastrophe loss		0.6	%		8.4	%		1.7	%		0.7	%		1.1	%		3.0	%		1.3	%

Loss and LAE ratio		58.5	%		78.5	%		59.7	%		59.6	%		63.7	%		64.5	%		63.8	%

Page 6

American Financial Group, Inc.

Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16			12/31/17			12/31/16
Gross written premiums	$	1,571		$	2,104		$	1,503		$	1,324		$	1,441		$	6,502		$	5,981
Ceded reinsurance premiums		(410	)		(671	)		(373	)		(297	)		(358	)		(1,751	)		(1,595	)

Net written premiums		1,161			1,433			1,130			1,027			1,083			4,751			4,386
Change in unearned premiums		64			(166	)		(65	)		(5	)		61			(172	)		(58	)

Net earned premiums		1,225			1,267			1,065			1,022			1,144			4,579			4,328

Loss and LAE		733			905			634			608			729			2,880			2,669
Underwriting expense		336			353			358			335			305			1,382			1,322

Underwriting profit	$	156		$	9		$	73		$	79		$	110		$	317		$	337


Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	4		$	6		$	—		$	—		$	—		$	10		$	—
Catastrophe loss		8			107			18			7			12			140			55

Total current accident year catastrophe losses	$	12		$	113		$	18		$	7		$	12		$	150		$	55


Prior year loss reserve development (favorable) / adverse	$	(49	)	$	(38	)	$	(23	)	$	(29	)	$	10		$	(139	)	$	(61	)

Combined ratio:
Loss and LAE ratio		59.8	%		71.4	%		59.5	%		59.5	%		63.7	%		62.9	%		61.7	%
Underwriting expense ratio		27.5	%		27.9	%		33.7	%		32.7	%		26.7	%		30.2	%		30.6	%

Combined ratio		87.3	%		99.3	%		93.2	%		92.2	%		90.4	%		93.1	%		92.3	%

Combined ratio excl. catastrophe and prior year development		90.8	%		93.8	%		93.7	%		94.3	%		88.4	%		93.1	%		92.4	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		63.3	%		65.9	%		60.0	%		61.6	%		61.7	%		62.9	%		61.8	%
Prior accident year loss reserve development		(4.1	%)		(2.9	%)		(2.2	%)		(2.8	%)		0.9	%		(3.0	%)		(1.4	%)
Current accident year catastrophe loss		0.6	%		8.4	%		1.7	%		0.7	%		1.1	%		3.0	%		1.3	%

Loss and LAE ratio		59.8	%		71.4	%		59.5	%		59.5	%		63.7	%		62.9	%		61.7	%

Page 7

American Financial Group, Inc.

Property and Transportation - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16			12/31/17			12/31/16
Gross written premiums	$	626		$	1,073		$	573		$	416		$	577		$	2,688		$	2,504
Ceded reinsurance premiums		(202	)		(449	)		(180	)		(92	)		(183	)		(923	)		(832	)

Net written premiums		424			624			393			324			394			1,765			1,672
Change in unearned premiums		61			(97	)		(36	)		18			71			(54	)		(10	)

Net earned premiums		485			527			357			342			465			1,711			1,662

Loss and LAE		325			407			232			208			319			1,172			1,114
Underwriting expense		76			114			104			91			71			385			382

Underwriting profit	$	84		$	6		$	21		$	43		$	75		$	154		$	166

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	2		$	—		$	—		$	—		$	2		$	—
Catastrophe loss		(3	)		23			11			5			6			36			31

Total current accident year catastrophe losses	$	(3	)	$	25		$	11		$	5		$	6		$	38		$	31

Prior year loss reserve development (favorable) / adverse	$	(4	)	$	(8	)	$	(11	)	$	(17	)	$	13		$	(40	)	$	(21	)

Combined ratio:
Loss and LAE ratio		67.1	%		77.3	%		64.9	%		60.8	%		68.6	%		68.5	%		67.0	%
Underwriting expense ratio		15.5	%		21.6	%		29.3	%		26.5	%		15.3	%		22.5	%		23.0	%

Combined ratio		82.6	%		98.9	%		94.2	%		87.3	%		83.9	%		91.0	%		90.0	%

Combined ratio excl. catastrophe and prior year development		84.0	%		96.0	%		94.3	%		90.7	%		79.7	%		91.2	%		89.3	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		68.5	%		74.4	%		65.0	%		64.2	%		64.4	%		68.7	%		66.3	%
Prior accident year loss reserve development		(0.8	%)		(1.5	%)		(3.1	%)		(4.8	%)		3.0	%		(2.3	%)		(1.2	%)
Current accident year catastrophe loss		(0.6	%)		4.4	%		3.0	%		1.4	%		1.2	%		2.1	%		1.9	%

Loss and LAE ratio		67.1	%		77.3	%		64.9	%		60.8	%		68.6	%		68.5	%		67.0	%

Page 8

American Financial Group, Inc.

Specialty Casualty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16			12/31/17			12/31/16
Gross written premiums	$	737		$	850		$	756		$	744		$	684		$	3,087		$	2,792
Ceded reinsurance premiums		(182	)		(226	)		(195	)		(204	)		(174	)		(807	)		(756	)

Net written premiums		555			624			561			540			510			2,280			2,036
Change in unearned premiums		18			(56	)		(24	)		(32	)		—			(94	)		(30	)

Net earned premiums		573			568			537			508			510			2,186			2,006

Loss and LAE		338			402			339			331			348			1,410			1,320
Underwriting expense		177			164			169			162			149			672			608

Underwriting profit	$	58		$	2		$	29		$	15		$	13		$	104		$	78

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	4		$	2		$	—		$	—		$	—		$	6		$	—
Catastrophe loss		14			54			2			1			4			71			10

Total current accident year catastrophe losses	$	18		$	56		$	2		$	1		$	4		$	77		$	10

Prior year loss reserve development (favorable) / adverse	$	(52	)	$	(23	)	$	(5	)	$	(6	)	$	3		$	(86	)	$	(13	)

Combined ratio:
Loss and LAE ratio		59.1	%		70.7	%		63.1	%		65.2	%		68.2	%		64.5	%		65.8	%
Underwriting expense ratio		30.9	%		28.8	%		31.6	%		31.8	%		29.2	%		30.7	%		30.3	%

Combined ratio		90.0	%		99.5	%		94.7	%		97.0	%		97.4	%		95.2	%		96.1	%

Combined ratio excl. catastrophe and prior year development		96.7	%		94.0	%		95.2	%		97.9	%		96.1	%		95.9	%		96.3	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		65.8	%		65.2	%		63.6	%		66.1	%		66.9	%		65.2	%		66.0	%
Prior accident year loss reserve development		(9.2	%)		(4.0	%)		(0.9	%)		(1.1	%)		0.5	%		(4.0	%)		(0.7	%)
Current accident year catastrophe loss		2.5	%		9.5	%		0.4	%		0.2	%		0.8	%		3.3	%		0.5	%

Loss and LAE ratio		59.1	%		70.7	%		63.1	%		65.2	%		68.2	%		64.5	%		65.8	%

Page 9

American Financial Group, Inc.

Specialty Financial - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16			12/31/17			12/31/16
Gross written premiums	$	208		$	181		$	174		$	164		$	180		$	727		$	685
Ceded reinsurance premiums		(52	)		(31	)		(25	)		(23	)		(26	)		(131	)		(113	)

Net written premiums		156			150			149			141			154			596			572
Change in unearned premiums		(15	)		(8	)		(3	)		6			(13	)		(20	)		(15	)

Net earned premiums		141			142			146			147			141			576			557

Loss and LAE		47			79			49			52			46			227			178
Underwriting expense		75			66			74			73			75			288			295

Underwriting profit (loss)	$	19		$	(3	)	$	23		$	22		$	20		$	61		$	84

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	2		$	—		$	—		$	—		$	2		$	—
Catastrophe loss		(5	)		29			5			1			2			30			11

Total current accident year catastrophe losses	$	(5	)	$	31		$	5		$	1		$	2		$	32		$	11

Prior year loss reserve development (favorable) / adverse	$	1		$	(5	)	$	(8	)	$	(9	)	$	(6	)	$	(21	)	$	(23	)

Combined ratio:
Loss and LAE ratio		33.1	%		56.0	%		33.1	%		35.6	%		32.4	%		39.4	%		32.0	%
Underwriting expense ratio		53.1	%		46.2	%		51.3	%		49.4	%		53.6	%		50.0	%		52.9	%

Combined ratio		86.2	%		102.2	%		84.4	%		85.0	%		86.0	%		89.4	%		84.9	%

Combined ratio excl. catastrophe and prior year development		89.1	%		84.9	%		86.5	%		90.6	%		88.8	%		87.8	%		86.9	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		36.0	%		38.7	%		35.2	%		41.2	%		35.2	%		37.8	%		34.0	%
Prior accident year loss reserve development		0.8	%		(3.1	%)		(5.4	%)		(6.4	%)		(4.5	%)		(3.6	%)		(4.0	%)
Current accident year catastrophe loss		(3.7	%)		20.4	%		3.3	%		0.8	%		1.7	%		5.2	%		2.0	%

Loss and LAE ratio		33.1	%		56.0	%		33.1	%		35.6	%		32.4	%		39.4	%		32.0	%

Page 10

American Financial Group, Inc.

Other Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16			12/31/17			12/31/16
Gross written premiums	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Ceded reinsurance premiums		26			35			27			22			25			110			106

Net written premiums		26			35			27			22			25			110			106
Change in unearned premiums		—			(5	)		(2	)		3			3			(4	)		(3	)

Net earned premiums		26			30			25			25			28			106			103

Loss and LAE		23			17			14			17			16			71			57
Underwriting expense		8			9			11			9			10			37			37

Underwriting profit (loss)	$	(5	)	$	4		$	—		$	(1	)	$	2		$	(2	)	$	9

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

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

Prior year loss reserve development (favorable) / adverse	$	6		$	(2	)	$	1		$	3		$	—		$	8		$	(4	)

Combined ratio:
Loss and LAE ratio		86.2	%		52.6	%		62.0	%		68.0	%		59.5	%		66.9	%		54.9	%
Underwriting expense ratio		36.8	%		32.5	%		36.3	%		37.8	%		35.4	%		35.8	%		36.5	%

Combined ratio		123.0	%		85.1	%		98.3	%		105.8	%		94.9	%		102.7	%		91.4	%

Combined ratio excl. catastrophe and prior year development		94.5	%		90.4	%		93.5	%		93.4	%		93.7	%		93.0	%		92.8	%

Page 11

American Financial Group, Inc.

Annuity Earnings (GAAP)

($ in millions)


	Three Months Ended														Twelve Months Ended
	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16		12/31/17			12/31/16
Net investment income	$	376		$	375		$	360		$	347		$	346	$	1,458		$	1,356
Guaranteed withdrawal benefit fees		17			15			14			14			14		60			53
Policy charges and other miscellaneous income		7			11			12			13			13		43			50

Total revenues		400			401			386			374			373		1,561			1,459

Annuity benefits		257			215			224			196			160		892			800
Acquisition expenses		15			54			47			52			54		168			181
Other expenses		31			30			30			30			27		121			110

Total costs and expenses		303			299			301			278			241		1,181			1,091

Annuity earnings before income taxes	$	97		$	102		$	85		$	96		$	132	$	380		$	368



Detail of Annuity earnings before income taxes
Earnings before income taxes and impact of fair value accounting	$	108		$	106		$	101		$	98		$	103	$	413		$	395
Impact of fair value accounting (a)		(11	)		(4	)		(16	)		(2	)		29		(33	)		(27	)

Earnings before income taxes	$	97		$	102		$	85		$	96		$	132	$	380		$	368

(a)	Change in fair value of derivatives offset by the estimated related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs.

Page 12

American Financial Group, Inc.

Detail of Annuity Benefits Expense (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16			12/31/17			12/31/16
Detail of annuity benefits expense:
Interest credited - fixed	$	164		$	160		$	157		$	152		$	148		$	633		$	574
Interest credited - fixed component of variable annuities		1			1			2			1			1			5			5
Change in expected death and annuitization reserve		5			5			4			4			4			18			18
Amortization of sales inducements		5			4			4			6			7			19			24
Guaranteed withdrawal benefit reserve		16			18			17			16			20			67			69
Change in other benefit reserves		9			16			9			11			11			45			34
Unlockings (a)		35			—			—			—			23			35			23

Subtotal before impact of fair value accounting		235			204			193			190			214			822			747

Embedded derivative mark-to-market (b)		178			127			112			147			6			564			194
Equity option mark-to-market		(156	)		(116	)		(81	)		(141	)		(60	)		(494	)		(141	)

Subtotal impact of fair value accounting		22			11			31			6			(54	)		70			53

Total annuity benefits expense	$	257		$	215		$	224		$	196		$	160		$	892		$	800

(a)

Includes unlockings for fixed indexed annuity embedded derivative reserves, sales inducement asset and other reserves. Does not include unlocking income of $32 million in 2017 and $24 million in 2016 for deferred policy acquisition costs and unearned revenue reserves. These unlockings are included in acquisition expenses and other income. In total, AFG recorded an unlocking expense of $3 million in 2017 and an expense reduction of $1 million in 2016.

(b)	Excludes unlocking impact of $25 million in 2017 and $17 million in 2016.

Page 13

American Financial Group, Inc.

Net Spread on Fixed Annuities (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16			12/31/17			12/31/16
Average fixed annuity investments (at amortized cost) (a)	$	32,245		$	31,713		$	30,988		$	30,055		$	29,192		$	31,250		$	28,223
Average annuity benefits accumulated		32,680			32,029			31,212			30,183			29,250			31,526			28,146

Annuity benefits accumulated in excess of investments (a)	$	(435	)	$	(316	)	$	(224	)	$	(128	)	$	(58	)	$	(276	)	$	77

As % of average annuity benefits accumulated (except as noted)
Net investment income (as % of investments)		4.62	%		4.70	%		4.62	%		4.59	%		4.72	%		4.63	%		4.77	%
Interest credited		(2.00	%)		(2.01	%)		(2.01	%)		(2.01	%)		(2.02	%)		(2.01	%)		(2.04	%)

Net interest spread on fixed annuities		2.62	%		2.69	%		2.61	%		2.58	%		2.70	%		2.62	%		2.73	%

Policy charges and other miscellaneous income		0.10	%		0.10	%		0.12	%		0.14	%		0.15	%		0.11	%		0.15	%
Other annuity benefit expenses, net		(0.21	%)		(0.33	%)		(0.27	%)		(0.31	%)		(0.38	%)		(0.28	%)		(0.33	%)
Acquisition expenses		(0.60	%)		(0.65	%)		(0.58	%)		(0.67	%)		(1.06	%)		(0.62	%)		(0.70	%)
Other expenses		(0.37	%)		(0.36	%)		(0.38	%)		(0.38	%)		(0.35	%)		(0.37	%)		(0.38	%)
Change in fair value of derivatives		(0.27	%)		(0.14	%)		(0.39	%)		(0.08	%)		0.73	%		(0.22	%)		(0.19	%)
Unlockings		(0.06	%)		0.00	%		0.00	%		0.00	%		0.03	%		(0.01	%)		0.01	%

Net spread earned on fixed annuities		1.21	%		1.31	%		1.11	%		1.28	%		1.82	%		1.23	%		1.29	%

Average annuity benefits accumulated	$	32,680		$	32,029		$	31,212		$	30,183		$	29,250		$	31,526		$	28,146
Net spread earned on fixed annuities		1.21	%		1.31	%		1.11	%		1.28	%		1.82	%		1.23	%		1.29	%

Earnings on fixed annuity benefits accumulated	$	99		$	105		$	87		$	96		$	133		$	387		$	363

Annuity benefits accumulated in excess of investments	$	(435	)	$	(316	)	$	(224	)	$	(128	)	$	(58	)	$	(276	)	$	77
Net investment income (as % of investments)		4.62	%		4.70	%		4.62	%		4.59	%		4.72	%		4.63	%		4.77	%

Earnings (loss) on annuity benefits accumulated in excess of investments	$	(5	)	$	(4	)	$	(3	)	$	(1	)	$	—		$	(13	)	$	4

Variable annuity earnings (loss)		3			1			1			1			(1	)		6			1

Earnings before income taxes	$	97		$	102		$	85		$	96		$	132		$	380		$	368



Detail of net spread earned on fixed annuities
Net spread earned - before impact of fair value accounting		1.34	%		1.36	%		1.32	%		1.31	%		1.42	%		1.33	%		1.39	%
Change in fair value of derivatives		(0.27	%)		(0.14	%)		(0.39	%)		(0.08	%)		0.73	%		(0.22	%)		(0.19	%)
Estimated net offsets to deferred sales inducements and deferred policy acquisition costs		0.14	%		0.09	%		0.18	%		0.05	%		(0.33	%)		0.12	%		0.09	%

Net spread earned - after impact of fair value accounting		1.21	%		1.31	%		1.11	%		1.28	%		1.82	%		1.23	%		1.29	%

(a)	Excludes non-investment assets such as deferred acquisition costs, FIA options, accrued investment income and company owned life insurance.

Page 14

American Financial Group, Inc.

Annuity Premiums (Statutory)

($ in millions)


	Three Months Ended										Twelve Months Ended
	12/31/17		09/30/17		06/30/17		03/31/17		12/31/16		12/31/17		12/31/16
Retail single premium annuities - indexed	$	413	$	367	$	474	$	469	$	415	$	1,723	$	1,714
Retail single premium annuities - fixed		22		19		22		20		22		83		82
Financial institutions single premium annuities - indexed		364		360		500		487		474		1,711		1,950
Financial institutions single premium annuities - fixed		63		82		215		262		152		622		468
Education market - fixed and indexed annuities		41		41		47		45		40		174		184

Subtotal fixed annuity premiums		903		869		1,258		1,283		1,103		4,313		4,398

Variable annuities		6		7		8		7		8		28		37

Total annuity premiums	$	909	$	876	$	1,266	$	1,290	$	1,111	$	4,341	$	4,435

Page 15

American Financial Group, Inc.

Fixed Annuity Benefits Accumulated (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16			12/31/17			12/31/16
Beginning fixed annuity reserves	$	32,354		$	31,704		$	30,719		$	29,647		$	28,853		$	29,647		$	26,371
Premiums		903			869			1,258			1,283			1,103			4,313			4,398
Federal Home Loan Bank advances (paydowns) (“FHLB”)		(64	)		—			—			—			—			(64	)		150
Surrenders, benefits and other withdrawals		(596	)		(540	)		(571	)		(539	)		(524	)		(2,246	)		(2,189	)
Interest and other annuity benefit expenses:
Interest credited		164			160			157			152			148			633			574
Embedded derivative mark-to-market		178			127			112			147			6			564			194
Change in other benefit reserves		25			34			29			29			34			117			122
Unlockings		41			—			—			—			27			41			27

Ending fixed annuity reserves	$	33,005		$	32,354		$	31,704		$	30,719		$	29,647		$	33,005		$	29,647

Reconciliation to annuity benefits accumulated:
Ending fixed annuity reserves	$	33,005		$	32,354		$	31,704		$	30,719		$	29,647		$	33,005		$	29,647
Impact of unrealized investment gains on reserves		133			138			128			100			76			133			76
Fixed component of variable annuities		178			179			182			183			184			178			184

Annuity benefits accumulated per balance sheet	$	33,316		$	32,671		$	32,014		$	31,002		$	29,907		$	33,316		$	29,907

Annualized surrenders and other withdrawals as a % of beginning reserves		7.4	%		6.8	%		7.4	%		7.3	%		7.3	%		7.6	%		8.3	%

Page 16

American Financial Group, Inc.

Guaranteed Minimum Interest Rate (“GMIR”) Analysis

($ in millions)


GMIR	12/31/17			9/30/17			6/30/17			3/31/17			12/31/16
1 - 1.99%		76	%		75	%		75	%		73	%		72	%
2 - 2.99%		5	%		5	%		5	%		6	%		6	%
3 - 3.99%		10	%		10	%		10	%		11	%		12	%
4.00% and above		9	%		10	%		10	%		10	%		10	%

Annuity Benefits Accumulated	$	33,316		$	32,671		$	32,014		$	31,002		$	29,907

Traditional Fixed and FIA Surrender Value (a) (b)	$	25,138		$	24,428		$	23,925		$	23,284		$	22,264

Ability to Lower Average Crediting Rates by (a) (c)		0.92	%		0.88	%		0.86	%		0.82	%		0.80	%

Pretax earnings impact of crediting guaranteed minimums (a) (assumes net DAC impact over time = $0)	$	230		$	216		$	206		$	191		$	178

(a)	Excludes Annuities with Guaranteed Withdrawal Benefits, FHLB advances, immediate reserves and certain other reserves.

(b)	FIA Surrender Value include Host + Embedded Derivatives + Fixed Account values.

(c)	Weighted Average Crediting Rate less GMIR

Page 17

American Financial Group, Inc.

Consolidated Balance Sheet

($ in millions)


	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16			09/30/16
Assets:
Total cash and investments	$	46,048		$	45,253		$	44,779		$	43,350		$	41,433		$	41,805
Recoverables from reinsurers		3,369			3,262			2,839			2,735			2,737			2,814
Prepaid reinsurance premiums		600			691			587			533			539			634
Agents’ balances and premiums receivable		1,146			1,173			1,124			989			997			1,029
Deferred policy acquisition costs		1,216			1,119			1,156			1,205			1,239			867
Assets of managed investment entities		4,902			4,767			4,873			5,331			4,765			4,312
Other receivables		1,030			1,545			923			875			908			1,391
Variable annuity assets (separate accounts)		644			628			620			614			600			606
Other assets		1,504			1,526			1,518			1,633			1,655			1,188
Goodwill		199			199			199			199			199			199

Total assets	$	60,658		$	60,163		$	58,618		$	57,464		$	55,072		$	54,845

Liabilities and Equity:
Unpaid losses and loss adjustment expenses	$	9,678		$	9,563		$	8,730		$	8,621		$	8,563		$	8,661
Unearned premiums		2,410			2,567			2,294			2,174			2,171			2,328
Annuity benefits accumulated		33,316			32,671			32,014			31,002			29,907			29,222
Life, accident and health reserves		658			667			676			687			691			700
Payable to reinsurers		743			906			681			621			634			835
Liabilities of managed investment entities		4,687			4,506			4,685			5,101			4,549			4,067
Long-term debt		1,301			1,284			1,405			1,283			1,283			1,300
Variable annuity liabilities (separate accounts)		644			628			620			614			600			606
Other liabilities		1,887			1,992			2,201			2,166			1,755			1,768

Total liabilities	$	55,324		$	54,784		$	53,306		$	52,269		$	50,153		$	49,487

Redeemable noncontrolling interests	$	3		$	—		$	—		$	—		$	—		$	—

Shareholders’ equity (a):
Common stock	$	88		$	88		$	88		$	88		$	87		$	87
Capital surplus		1,181			1,167			1,158			1,138			1,111			1,242
Unappropriated retained earnings		3,248			3,435			3,451			3,466			3,343			3,079
Unrealized gains - equities		221			173			158			145			98			103
Unrealized gains - fixed maturities		619			533			481			384			306			669
Unrealized gains (losses) - fixed maturity-related cash flow hedges		(13	)		(6	)		(6	)		(8	)		(7	)		5
Other comprehensive income, net of tax		(14	)		(11	)		(18	)		(22	)		(22	)		(24	)

Total shareholders’ equity		5,330			5,379			5,312			5,191			4,916			5,161

Noncontrolling interests		1			—			—			4			3			197

Total liabilities and equity	$	60,658		$	60,163		$	58,618		$	57,464		$	55,072		$	54,845

(a)

AFG intends to adopt the pending FASB guidance regarding the reclassification of certain tax effects between accumulated other comprehensive income (“AOCI”) and retained earnings effective December 31, 2017. Accordingly, the components of shareholders’ equity in this supplement reflect the reclassification of the impact of the change in the U.S. corporate rate on the components of AOCI from retained earnings to the individual components of AOCI.

Page 18

American Financial Group, Inc.

Book Value Per Share and Price / Book Summary

(in millions, except per share information)


	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16			09/30/16
Shareholders’ equity	$	5,330		$	5,379		$	5,312		$	5,191		$	4,916		$	5,161
Unrealized (gains) related to fixed maturities		(606	)		(527	)		(475	)		(376	)		(299	)		(674	)

Adjusted shareholders’ equity		4,724			4,852			4,837			4,815			4,617			4,487
Goodwill		(199	)		(199	)		(199	)		(199	)		(199	)		(199	)
Intangibles		(27	)		(29	)		(30	)		(32	)		(34	)		(44	)

Tangible adjusted shareholders’ equity	$	4,498		$	4,624		$	4,608		$	4,584		$	4,384		$	4,244

Common shares outstanding		88.275			88.093			88.007			87.592			86.924			86.813

Book value per share:
Book value per share	$	60.38		$	61.06		$	60.36		$	59.26		$	56.55		$	59.45
Adjusted (a)		53.51			55.08			54.97			54.98			53.11			51.68
Tangible, adjusted (b)		50.95			52.50			52.36			52.34			50.43			48.89

Market capitalization

AFG’s closing common share price	$	108.54		$	103.45		$	99.37		$	95.42		$	88.12		$	75.00

Market capitalization	$	9,581		$	9,113		$	8,745		$	8,358		$	7,660		$	6,511

Price / Adjusted book value ratio		2.03			1.88			1.81			1.74			1.66			1.45

(a)	Excludes unrealized gains related to fixed maturity investments.

(b)	Excludes unrealized gains related to fixed maturity investments, goodwill and intangibles.

Page 19

American Financial Group, Inc.

Capitalization

($ in millions)


	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16			09/30/16
AFG senior obligations	$	1,018		$	1,003		$	1,128		$	1,008		$	1,008		$	1,008
Borrowings drawn under credit facility		—			—			—			—			—			—
Obligations of subsidiaries - other		—			—			—			—			—			18

Debt excluding subordinated debt	$	1,018		$	1,003		$	1,128		$	1,008		$	1,008		$	1,026

AFG subordinated debentures		300			300			300			300			300			300

Total principal amount of long-term debt	$	1,318		$	1,303		$	1,428		$	1,308		$	1,308		$	1,326

Shareholders’ equity		5,330			5,379			5,312			5,191			4,916			5,161
Noncontrolling interests (including redeemable NCI)		4			—			—			4			3			197
Less:
Unrealized (gains) - fixed maturity investments		(619	)		(533	)		(481	)		(384	)		(306	)		(669	)

Total adjusted capital	$	6,033		$	6,149		$	6,259		$	6,119		$	5,921		$	6,015

Ratio of debt to total adjusted capital:
Including subordinated debt		21.8	%		21.2	%		22.8	%		21.4	%		22.1	%		22.0	%
Excluding subordinated debt		16.9	%		16.3	%		18.0	%		16.5	%		17.0	%		17.1	%

Page 20

American Financial Group, Inc.

Additional Supplemental Information

($ in millions)


	Three Months Ended										Twelve Months Ended
	12/31/17		09/30/17		06/30/17		03/31/17		12/31/16		12/31/17		12/31/16
Property and Casualty Insurance
Paid Losses (GAAP)	$	726	$	596	$	652	$	554	$	683	$	2,528	$	2,353


	12/31/17		09/30/17		06/30/17		03/31/17		12/31/16		09/30/16
Statutory Surplus

Property and Casualty Insurance	$	2,732	$	2,817	$	2,882	$	3,013	$	2,939	$	3,038

AFG’s principal annuity subsidiaries (total adjusted capital)	$	2,442	$	2,433	$	2,389	$	2,341	$	2,234	$	2,216

Allowable dividends without regulatory approval

Property and Casualty Insurance	$	567	$	496	$	496	$	496	$	496	$	434
Annuity and Run-off		263		197		197		197		197		375

Total	$	830	$	693	$	693	$	693	$	693	$	809

Page 21

American Financial Group, Inc.

Total Cash and Investments

($ in millions)


	Carrying Value - December 31, 2017
	Property and Casualty Insurance		Annuity and Run-off		Parent and Other Non- Insurance		Consolidate CLOs			Total AFG Consolidated		% of Investment Portfolio
Total cash and investments:
Cash and cash equivalents	$	1,398	$	625	$	315	$	—		$	2,338		5	%
Fixed maturities - Available for sale		7,142		31,223		14		—			38,379		83	%
Fixed maturities - Trading		232		116		—		—			348		1	%
Equity securities		1,012		594		56		—			1,662		4	%
Policy loans		—		184		—		—			184		0	%
Mortgage loans		308		817		—		—			1,125		2	%
Equity index call options		—		701		—		—			701		2	%
Real estate and other investments		562		906		57		(214	)		1,311		3	%

Total cash and investments	$	10,654	$	35,166	$	442	$	(214	)	$	46,048		100	%

Unrealized gain/(loss) on equity securities	$	165	$	114	$	—	$	—		$	279


	Carrying Value - December 31, 2016
	Property and Casualty Insurance		Annuity and Run-off		Parent and Other Non- Insurance		Consolidate CLOs			Total AFG Consolidated		% of Investment Portfolio
Total cash and investments:
Cash and cash equivalents	$	1,383	$	511	$	213	$	—		$	2,107		5	%
Fixed maturities - Available for sale		6,510		28,021		13		—			34,544		83	%
Fixed maturities - Trading		242		117		—		—			359		1	%
Equity securities		1,013		496		49		—			1,558		4	%
Policy loans		—		192		—		—			192		0	%
Mortgage loans		261		886		—		—			1,147		3	%
Equity index call options		—		492		—		—			492		1	%
Real estate and other investments		497		705		48		(216	)		1,034		3	%

Total cash and investments	$	9,906	$	31,420	$	323	$	(216	)	$	41,433		100	%

Unrealized gain/(loss) on equity securities	$	102	$	49	$	—	$	—		$	151

Page 22

American Financial Group, Inc.

Net Investment Income

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/17			09/30/17			06/30/17			03/31/17			12/31/16			12/31/17			12/31/16
Property and Casualty Insurance:
Gross Investment Income
Fixed maturities - Available for sale	$	65		$	65		$	65		$	63		$	64		$	258		$	257
Fixed maturities - Trading		—			—			2			1			(1	)		3			3
Equity securities		13			12			12			14			13			51			51
Equity in investees		4			8			11			4			7			27			22
Other investments		8			11			8			6			6			33			27

Gross investment income		90			96			98			88			89			372			360
Investment expenses		(4	)		(2	)		(2	)		(2	)		(4	)		(10	)		(10	)

Total net investment income	$	86		$	94		$	96		$	86		$	85		$	362		$	350

Average cash and investments (a)	$	10,062		$	9,851		$	9,947		$	9,855		$	9,779		$	9,948		$	9,550

Average yield (b)		3.42	%		3.82	%		3.86	%		3.49	%		3.48	%		3.64	%		3.66	%

Fixed Annuity:
Gross Investment Income
Fixed maturities - Available for sale	$	342		$	332		$	322		$	318		$	315		$	1,314		$	1,223
Equity securities		7			5			5			5			7			22			24
Equity in investees		9			12			10			6			6			37			22
Other investments		19			26			22			19			20			86			87

Gross investment income		377			375			359			348			348			1,459			1,356
Investment expenses		(4	)		(2	)		(2	)		(3	)		(4	)		(11	)		(10	)

Total net investment income	$	373		$	373		$	357		$	345		$	344		$	1,448		$	1,346

Average cash and investments (a)	$	32,245		$	31,713		$	30,988		$	30,055		$	29,192		$	31,250		$	28,223

Average yield (b)		4.62	%		4.70	%		4.62	%		4.59	%		4.72	%		4.63	%		4.77	%

AFG consolidated net investment income:
Property & Casualty	$	86		$	94		$	96		$	86		$	85		$	362		$	350
Annuity and Run-off:
Fixed Annuity		373			373			357			345			344			1,448			1,346
Variable Annuity		3			2			3			2			2			10			10
Run-off		4			6			5			5			6			20			21
Other		6			1			4			3			—			14			6
Consolidate CLOs		(7	)		(5	)		(5	)		(6	)		(8	)		(23	)		(37	)

Total net investment income	$	465		$	471		$	460		$	435		$	429		$	1,831		$	1,696

(a)	Average cash and investments is the average of the beginning and ending quarter balances, or the average of the five quarters balances.

(b)	Average yield is calculated by dividing investment income for the quarter by the average cash and investment balance over the quarter.

Page 23

American Financial Group, Inc.

Fixed Maturities - By Security Type - AFG Consolidated

($ in millions )


December 31, 2017	Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Investment Portfolio
US Government and government agencies	$	293		$	291	$	(2	)		1	%		1	%
States, municipalities and political subdivisions		6,912			7,148		236			18	%		15	%
Foreign government		239			242		3			1	%		1	%
Residential mortgage-backed securities		2,887			3,230		343			8	%		7	%
Commercial mortgage-backed securities		928			963		35			2	%		2	%
Asset-backed securities		7,836			7,962		126			21	%		17	%
Corporate and other bonds		18,291			18,891		600			49	%		41	%

Total AFG consolidated	$	37,386		$	38,727	$	1,341			100	%		84	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.51	%
Net of investment expense (a)		4.43	%

Approximate average life and duration:
Approximate average life		6.5 years
Approximate duration		5 years
December 31, 2016	Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Investment Portfolio
US Government and government agencies	$	348		$	348	$	—			1	%		1	%
States, municipalities and political subdivisions		6,677			6,808		131			19	%		16	%
Foreign government		256			261		5			1	%		1	%
Residential mortgage-backed securities		3,371			3,639		268			11	%		9	%
Commercial mortgage-backed securities		1,446			1,493		47			4	%		3	%
Asset-backed securities		5,962			5,959		(3	)		17	%		14	%
Corporate and other bonds		16,034			16,395		361			47	%		40	%

Total AFG consolidated	$	34,094		$	34,903	$	809			100	%		84	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.56	%
Net of investment expense (a)		4.48	%

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

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

Page 24

American Financial Group, Inc.

Fixed Maturities - By Security Type Portfolio

($ in millions )


	December 31, 2017											December 31, 2016
	Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value			Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value
Property and Casualty Insurance:
US Government and government agencies	$	244		$	243	$	(1	)		3	%	$	295		$	295	$	—			4	%
States, municipalities and political subdivisions		2,740			2,798		58			38	%		2,588			2,605		17			39	%
Foreign government		228			229		1			3	%		245			249		4			4	%
Residential mortgage-backed securities		843			918		75			13	%		980			1,026		46			15	%
Commercial mortgage-backed securities		93			95		2			1	%		142			144		2			2	%
Asset-backed securities		1,716			1,724		8			23	%		1,445			1,440		(5	)		21	%
Corporate and other bonds		1,349			1,367		18			19	%		976			993		17			15	%

Property and Casualty Insurance	$	7,213		$	7,374	$	161			100	%	$	6,671		$	6,752	$	81			100	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		3.73	%										3.88	%
Net of investment expense (a)		3.54	%										3.67	%
Tax equivalent, net of investment expense (b)		4.03	%										4.20	%

Approximate average life and duration:
Approximate average life		5 years											4.5 years
Approximate duration		4 years											3.5 years


	December 31, 2017											December 31, 2016
	Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value			Amortized Cost			Fair Value		Unrealized Gain (Loss)		% of Fair Value
Annuity and Run-off:
US Government and government agencies	$	48		$	47	$	(1	)		0	%	$	52		$	52	$	—		0	%
States, municipalities and political subdivisions		4,172			4,350		178			14	%		4,089			4,203		114		15	%
Foreign government		11			13		2			0	%		11			12		1		0	%
Residential mortgage-backed securities		2,041			2,299		258			7	%		2,390			2,601		211		9	%
Commercial mortgage-backed securities		835			868		33			3	%		1,304			1,349		45		5	%
Asset-backed securities		6,120			6,238		118			20	%		4,517			4,519		2		16	%
Corporate and other bonds		16,942			17,524		582			56	%		15,058			15,402		344		55	%

Total Annuity and Run-off	$	30,169		$	31,339	$	1,170			100	%	$	27,421		$	28,138	$	717		100	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.66	%										4.72	%
Net of investment expense (a)		4.61	%										4.67	%
Approximate average life and duration:
Approximate average life		6.5 years											6.5 years
Approximate duration		5 years											5 years

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

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

Page 25

American Financial Group, Inc.

Fixed Maturities - Credit Rating

($ in millions)


	December 31, 2017
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value
Investment grade
AAA	$	6,253	$	6,356	$	103		16	%
AA		8,150		8,411		261		22	%
A		9,149		9,447		298		25	%
BBB		10,146		10,496		350		27	%

Subtotal - Investment grade		33,698		34,710		1,012		90	%
BB		725		739		14		2	%
B		324		328		4		1	%
Other (b)		2,639		2,950		311		7	%

Subtotal - Non-Investment grade		3,688		4,017		329		10	%

Total	$	37,386	$	38,727	$	1,341		100	%

98% of the fixed maturity portfolio is NAIC designated 1 or 2.


	December 31, 2016
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value
Investment grade
AAA	$	6,117	$	6,189	$	72			18	%
AA		7,123		7,257		134			21	%
A		8,323		8,487		164			24	%
BBB		8,999		9,193		194			26	%

Subtotal - Investment grade		30,562		31,126		564			89	%
BB		687		695		8			2	%
B		446		445		(1	)		1	%
Other (b)		2,399		2,637		238			8	%

Subtotal - Non-Investment grade		3,532		3,777		245			11	%

Total	$	34,094	$	34,903	$	809			100	%

97% of the fixed maturity portfolio is NAIC designated 1 or 2.

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

(b)	See page 30 for more information.

Page 26

American Financial Group, Inc.

Mortgage-Backed Securities - AFG Consolidated

($ in millions)


December 31, 2017	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Investment Portfolio
Residential
Agency	$	207	$	205	$	(2	)		5	%		0	%
Prime (Non-Agency)		1,218		1,386		168			33	%		3	%
Alt-A		994		1,122		128			27	%		3	%
Subprime		468		517		49			12	%		1	%
Commercial		928		963		35			23	%		2	%

Total AFG consolidated	$	3,815	$	4,193	$	378			100	%		9	%

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

-	The average amortized cost as a percent of par is - Prime 82%; Alt-A 79%; Subprime 84%; CMBS 99%.

-	The average FICO score of our residential MBS securities is - Prime 733; Alt-A 702; Subprime 632.

-	95% of our Commercial MBS portfolio is investment-grade rated (83% AAA) and the average subordination for this group of assets is 32%.

-	The approximate average life by collateral type is - Residential 4.5 years; Commercial 5.5 years.


December 31, 2016	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Investment Portfolio
Residential
Agency	$	243	$	243	$	—		5	%		0	%
Prime (Non-Agency)		1,406		1,557		151		30	%		4	%
Alt-A		1,093		1,170		77		23	%		3	%
Subprime		629		669		40		13	%		2	%
Commercial		1,446		1,493		47		29	%		3	%

Total AFG consolidated	$	4,817	$	5,132	$	315		100	%		12	%

Page 27

American Financial Group, Inc.

Mortgage-Backed Securities Portfolio

($ in millions)

Property and Casualty Insurance:


	December 31, 2017
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Inv Portfolio
Residential
Agency	$	166	$	163	$	(3	)		16	%		2	%
Prime (Non-Agency)		174		195		21			19	%		2	%
Alt-A		301		339		38			34	%		3	%
Subprime		202		221		19			22	%		2	%
Commercial		93		95		2			9	%		1	%

Total	$	936	$	1,013	$	77			100	%		10	%


	December 31, 2016
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Inv Portfolio
Residential
Agency	$	192	$	191	$	(1	)		17	%		2	%
Prime (Non-Agency)		187		202		15			17	%		2	%
Alt-A		342		361		19			31	%		4	%
Subprime		259		272		13			23	%		3	%
Commercial		142		144		2			12	%		1	%

Total	$	1,122	$	1,170	$	48			100	%		12	%


Annuity and Run-off:

	December 31, 2017
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Inv Portfolio
Residential
Agency	$	41	$	42	$	1			1	%		0	%
Prime (Non-Agency)		1,041		1,178		137			37	%		4	%
Alt-A		693		783		90			25	%		2	%
Subprime		266		296		30			10	%		1	%
Commercial		835		868		33			27	%		2	%

Total	$	2,876	$	3,167	$	291			100	%		9	%


	December 31, 2016
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Inv Portfolio
Residential
Agency	$	51	$	52	$	1			1	%		0	%
Prime (Non-Agency)		1,218		1,343		125			34	%		4	%
Alt-A		751		809		58			21	%		3	%
Subprime		370		397		27			10	%		1	%
Commercial		1,304		1,349		45			34	%		5	%

Total	$	3,694	$	3,950	$	256			100	%		13	%

Page 28

American Financial Group, Inc.

Mortgage-Backed Securities - Credit Rating

($ in millions)


	December 31, 2017
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value
Investment grade
AAA	$	1,209	$	1,246	$	37		30	%
AA		90		93		3		2	%
A		225		239		14		6	%
BBB		170		182		12		4	%

Subtotal - investment grade		1,694		1,760		66		42	%

BB		192		197		5		5	%
B		224		230		6		5	%
Other (b)		1,705		2,006		301		48	%

Total	$	3,815	$	4,193	$	378		100	%

97% of the mortgage-backed security portfolio has an NAIC 1 designation.


	December 31, 2016
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value
Investment grade
AAA	$	1,668	$	1,720	$	52		34	%
AA		164		169		5		3	%
A		256		268		12		5	%
BBB		274		288		14		6	%

Subtotal - investment grade		2,362		2,445		83		48	%

BB		211		212		1		4	%
B		330		333		3		6	%
Other (b)		1,914		2,142		228		42	%

Total	$	4,817	$	5,132	$	315		100	%

97% of the mortgage-backed security portfolio has an NAIC 1 designation.

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

(b)	See page 30 for more information.

Page 29

Appendix A

American Financial Group, Inc.

Fixed Maturities - Credit Rating by Type

($ in millions)


	Fair Value - December 31, 2017
By Credit Rating (a)	US Gov		Munis		Frgn gov		RMBS		CMBS		ABS		Corp/Oth		Total		% Total
Investment grade
AAA	$	250	$	1,848	$	168	$	444	$	802	$	2,649	$	195	$	6,356		16	%
AA		34		4,671		66		74		19		2,242		1,305		8,411		22	%
A		—		494		3		216		23		1,835		6,876		9,447		25	%
BBB		—		47		—		106		76		800		9,467		10,496		27	%

Subtotal - Investment grade		284		7,060		237		840		920		7,526		17,843		34,710		90	%

BB		—		4		4		173		24		23		511		739		2	%
B		—		7		1		226		4		—		90		328		1	%
CCC, CC, C		—		1		—		902		3		3		26		935		2	%
D		—		5		—		517		—		—		—		522		1	%

Subtotal - Non-Investment grade		—		17		5		1,818		31		26		627		2,524		6	%

Not Rated		7		71		—		572		12		410		421		1,493		4	%

Total	$	291	$	7,148	$	242	$	3,230	$	963	$	7,962	$	18,891	$	38,727		100	%


	Fair Value - December 31, 2016
By Credit Rating (a)	US Gov		Munis		Frgn gov		RMBS		CMBS		ABS		Corp/Oth		Total		% Total
Investment grade
AAA	$	299	$	1,727	$	171	$	508	$	1,213	$	2,053	$	218	$	6,189		18	%
AA		41		4,388		30		127		42		1,480		1,149		7,257		21	%
A		—		501		55		170		98		1,593		6,070		8,487		24	%
BBB		—		69		5		202		86		813		8,018		9,193		26	%

Subtotal - Investment grade		340		6,685		261		1,007		1,439		5,939		15,455		31,126		89	%

BB		—		4		—		184		29		16		462		695		2	%
B		—		8		—		307		25		1		104		445		1	%
CCC, CC, C		—		11		—		963		—		3		32		1,009		3	%
D		—		—		—		679		—		—		—		679		2	%

Subtotal - Non-Investment grade		—		23		—		2,133		54		20		598		2,828		8	%
Not Rated		8		100		—		499		—		—		342		949		3	%

Total	$	348	$	6,808	$	261	$	3,639	$	1,493	$	5,959	$	16,395	$	34,903		100	%

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

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