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	d582876dex991.htm
8-K - 8-K - AMERICAN FINANCIAL GROUP INC	d582876d8k.htm

Exhibit 99.2


		American Financial Group, Inc. Investor Supplement - First Quarter 2018


		May 2, 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 - First Quarter 2018


Section	Page

Table of Contents - Investor Supplement - First Quarter 2018		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
	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/17			12/31/16
Highlights
Net earnings	$	145		$	166		$	11		$	145		$	153		$	475		$	649
Core net operating earnings		219			197			95			145			151			588			534
Total assets		60,656			60,658			60,163			58,618			57,464			60,658			55,072
Adjusted shareholders’ equity (a)		4,865			4,724			4,852			4,837			4,815			4,724			4,617
Property and Casualty net written premiums		1,102			1,161			1,433			1,130			1,027			4,751			4,386
Annuity statutory premiums		1,148			909			876			1,266			1,290			4,341			4,435
Per share data
Diluted earnings per share	$	1.60		$	1.84		$	0.13		$	1.61		$	1.72		$	5.28		$	7.33
Core net operating earnings per share		2.42			2.20			1.06			1.61			1.69			6.55			6.03
Adjusted book value per share (a)		54.74			53.51			55.08			54.97			54.98			53.51			53.11
Cash dividends per common share		0.3500			2.3500			0.3125			1.8125			0.3125			4.7875			2.1525
Financial ratios
Annualized return on equity (b)		12.3	%		14.4	%		1.0	%		12.3	%		13.3	%		10.3	%		14.8	%
Annualized core operating return on equity (b)		18.6	%		17.2	%		8.1	%		12.3	%		13.1	%		12.7	%		12.2	%
Property and Casualty combined ratio - Specialty:
Loss & LAE ratio		57.8	%		59.8	%		71.4	%		59.5	%		59.5	%		62.9	%		61.7	%
Underwriting expense ratio		33.9	%		27.5	%		27.9	%		33.7	%		32.7	%		30.2	%		30.6	%

Combined ratio - Specialty		91.7	%		87.3	%		99.3	%		93.2	%		92.2	%		93.1	%		92.3	%

Net spread on fixed annuities:
Net interest spread		2.75	%		2.62	%		2.69	%		2.61	%		2.58	%		2.62	%		2.73	%
Net spread earned:
Before impact of fair value accounting		1.38	%		1.34	%		1.36	%		1.32	%		1.31	%		1.33	%		1.39	%
Impact of fair value accounting (c)		0.16	%		(0.13	%)		(0.05	%)		(0.21	%)		(0.03	%)		(0.10	%)		(0.10	%)

After impact of fair value accounting		1.54	%		1.21	%		1.31	%		1.11	%		1.28	%		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
	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/17			12/31/16
Property and Casualty Insurance
Underwriting profit	$	91		$	155		$	8		$	72		$	78		$	313		$	337
Net investment income		100			86			94			96			86			362			350
Other income (expense)		(3	)		(8	)		(7	)		(5	)		5			(15	)		(57	)

Property and Casualty Insurance operating earnings		188			233			95			163			169			660			630
Annuity earnings		125			97			102			85			96			380			368
Interest expense of parent holding companies		(15	)		(20	)		(21	)		(23	)		(21	)		(85	)		(77	)
Other expense		(27	)		(27	)		(18	)		(21	)		(26	)		(92	)		(97	)

Pre-tax core operating earnings		271			283			158			204			218			863			824
Income tax expense		52			86			63			59			67			275			290

Core net operating earnings		219			197			95			145			151			588			534
Non-core items, net of tax:
Realized gains (losses) on securities		(74	)		4			(8	)		5			2			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
Tax benefit related to Neon restructuring		—			56			—			—			—			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	$	145		$	166		$	11		$	145		$	153		$	475		$	649

Page 4

American Financial Group, Inc.

Earnings Per Share Summary

(in millions, except per share information)


	Three Months Ended														Twelve Months Ended
	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17		12/31/17			12/31/16
Core net operating earnings	$	219		$	197		$	95		$	145		$	151	$	588		$	534

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

Average number of diluted shares		90.431			90.109			89.984			89.799			89.342		89.812			88.530
Diluted earnings per share:
Core net operating earnings per share	$	2.42		$	2.20		$	1.06		$	1.61		$	1.69	$	6.55		$	6.03
Realized gains (losses) on securities		(0.82	)		0.04			(0.08	)		0.05			0.03		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
Tax benefit related to Neon restructuring		—			0.62			—			—			—		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	$	1.60		$	1.84		$	0.13		$	1.61		$	1.72	$	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
	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/17			12/31/16
Property and Transportation	$	33		$	84		$	6		$	21		$	43		$	154		$	166
Specialty Casualty		41			58			2			29			15			104			78
Specialty Financial		15			19			(3	)		23			22			61			84
Other Specialty		3			(5	)		4			—			(1	)		(2	)		9

Underwriting profit - Specialty		92			156			9			73			79			317			337
Other core charges, included in loss and LAE		1			1			1			1			1			4			—

Underwriting profit - Core		91			155			8			72			78			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	$	91		$	173		$	(81	)	$	72		$	78		$	242		$	236

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	4		$	6		$	—		$	—		$	10		$	—
Catastrophe loss		13			8			107			18			7			140			55

Total current accident year catastrophe losses	$	13		$	12		$	113		$	18		$	7		$	150		$	55

Prior year loss reserve development (favorable) / adverse	$	(56	)	$	(66	)	$	52		$	(22	)	$	(28	)	$	(64	)	$	32

Combined ratio:
Property and Transportation		90.4	%		82.6	%		98.9	%		94.2	%		87.3	%		91.0	%		90.0	%
Specialty Casualty		92.9	%		90.0	%		99.5	%		94.7	%		97.0	%		95.2	%		96.1	%
Specialty Financial		90.2	%		86.2	%		102.2	%		84.4	%		85.0	%		89.4	%		84.9	%
Other Specialty		90.7	%		123.0	%		85.1	%		98.3	%		105.8	%		102.7	%		91.4	%
Combined ratio - Specialty		91.7	%		87.3	%		99.3	%		93.2	%		92.2	%		93.1	%		92.3	%
Other core charges		0.1	%		0.1	%		0.1	%		0.2	%		0.1	%		0.1	%		(0.1	%)
Neon exited lines charge, loss and LAE		0.0	%		(1.4	%)		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	%		0.0	%		7.0	%		0.0	%		0.0	%		1.9	%		0.8	%

Combined ratio		91.8	%		86.0	%		106.4	%		93.4	%		92.3	%		94.7	%		94.5	%

Combined ratio excl. catastrophe and prior year development		95.6	%		90.8	%		93.8	%		93.7	%		94.3	%		93.1	%		92.4	%

Loss and LAE components - property and casualty insurance
Current accident year, excluding catastrophe loss		61.7	%		63.3	%		65.9	%		60.0	%		61.6	%		62.9	%		61.8	%
Prior accident year loss reserve development		(5.0	%)		(5.4	%)		4.2	%		(2.0	%)		(2.7	%)		(1.4	%)		0.7	%
Current accident year catastrophe loss		1.2	%		0.6	%		8.4	%		1.7	%		0.7	%		3.0	%		1.3	%

Loss and LAE ratio		57.9	%		58.5	%		78.5	%		59.7	%		59.6	%		64.5	%		63.8	%

Page 6

American Financial Group, Inc.

Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/17			12/31/16
Gross written premiums	$	1,458		$	1,571		$	2,104		$	1,503		$	1,324		$	6,502		$	5,981
Ceded reinsurance premiums		(356	)		(410	)		(671	)		(373	)		(297	)		(1,751	)		(1,595	)

Net written premiums		1,102			1,161			1,433			1,130			1,027			4,751			4,386
Change in unearned premiums		5			64			(166	)		(65	)		(5	)		(172	)		(58	)

Net earned premiums		1,107			1,225			1,267			1,065			1,022			4,579			4,328
Loss and LAE		640			733			905			634			608			2,880			2,669
Underwriting expense		375			336			353			358			335			1,382			1,322

Underwriting profit	$	92		$	156		$	9		$	73		$	79		$	317		$	337

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	4		$	6		$	—		$	—		$	10		$	—
Catastrophe loss		13			8			107			18			7			140			55

Total current accident year catastrophe losses	$	13		$	12		$	113		$	18		$	7		$	150		$	55

Prior year loss reserve development (favorable) / adverse	$	(57	)	$	(49	)	$	(38	)	$	(23	)	$	(29	)	$	(139	)	$	(61	)

Combined ratio:
Loss and LAE ratio		57.8	%		59.8	%		71.4	%		59.5	%		59.5	%		62.9	%		61.7	%
Underwriting expense ratio		33.9	%		27.5	%		27.9	%		33.7	%		32.7	%		30.2	%		30.6	%

Combined ratio		91.7	%		87.3	%		99.3	%		93.2	%		92.2	%		93.1	%		92.3	%

Combined ratio excl. catastrophe and prior year development		95.6	%		90.8	%		93.8	%		93.7	%		94.3	%		93.1	%		92.4	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		61.7	%		63.3	%		65.9	%		60.0	%		61.6	%		62.9	%		61.8	%
Prior accident year loss reserve development		(5.1	%)		(4.1	%)		(2.9	%)		(2.2	%)		(2.8	%)		(3.0	%)		(1.4	%)
Current accident year catastrophe loss		1.2	%		0.6	%		8.4	%		1.7	%		0.7	%		3.0	%		1.3	%

Loss and LAE ratio		57.8	%		59.8	%		71.4	%		59.5	%		59.5	%		62.9	%		61.7	%

Page 7

American Financial Group, Inc.

Property and Transportation - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/17			12/31/16
Gross written premiums	$	426		$	626		$	1,073		$	573		$	416		$	2,688		$	2,504
Ceded reinsurance premiums		(102	)		(202	)		(449	)		(180	)		(92	)		(923	)		(832	)

Net written premiums		324			424			624			393			324			1,765			1,672
Change in unearned premiums		26			61			(97	)		(36	)		18			(54	)		(10	)

Net earned premiums		350			485			527			357			342			1,711			1,662
Loss and LAE		220			325			407			232			208			1,172			1,114
Underwriting expense		97			76			114			104			91			385			382

Underwriting profit	$	33		$	84		$	6		$	21		$	43		$	154		$	166

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

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

Prior year loss reserve development (favorable) / adverse	$	(18	)	$	(4	)	$	(8	)	$	(11	)	$	(17	)	$	(40	)	$	(21	)

Combined ratio:
Loss and LAE ratio		63.0	%		67.1	%		77.3	%		64.9	%		60.8	%		68.5	%		67.0	%
Underwriting expense ratio		27.4	%		15.5	%		21.6	%		29.3	%		26.5	%		22.5	%		23.0	%

Combined ratio		90.4	%		82.6	%		98.9	%		94.2	%		87.3	%		91.0	%		90.0	%

Combined ratio excl. catastrophe and prior year development		94.1	%		84.0	%		96.0	%		94.3	%		90.7	%		91.2	%		89.3	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		66.7	%		68.5	%		74.4	%		65.0	%		64.2	%		68.7	%		66.3	%
Prior accident year loss reserve development		(5.1	%)		(0.8	%)		(1.5	%)		(3.1	%)		(4.8	%)		(2.3	%)		(1.2	%)
Current accident year catastrophe loss		1.4	%		(0.6	%)		4.4	%		3.0	%		1.4	%		2.1	%		1.9	%

Loss and LAE ratio		63.0	%		67.1	%		77.3	%		64.9	%		60.8	%		68.5	%		67.0	%

Page 8

American Financial Group, Inc.

Specialty Casualty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/17			12/31/16
Gross written premiums		853		$	737		$	850		$	756		$	744		$	3,087		$	2,792
Ceded reinsurance premiums		(259	)		(182	)		(226	)		(195	)		(204	)		(807	)		(756	)

Net written premiums		594			555			624			561			540			2,280			2,036
Change in unearned premiums		(15	)		18			(56	)		(24	)		(32	)		(94	)		(30	)

Net earned premiums		579			573			568			537			508			2,186			2,006
Loss and LAE		345			338			402			339			331			1,410			1,320
Underwriting expense		193			177			164			169			162			672			608

Underwriting profit	$	41		$	58		$	2		$	29		$	15		$	104		$	78

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	4		$	2		$	—		$	—		$	6		$	—
Catastrophe loss		5			14			54			2			1			71			10

Total current accident year catastrophe losses	$	5		$	18		$	56		$	2		$	1		$	77		$	10

Prior year loss reserve development (favorable) / adverse	$	(35	)	$	(52	)	$	(23	)	$	(5	)	$	(6	)	$	(86	)	$	(13	)

Combined ratio:
Loss and LAE ratio		59.5	%		59.1	%		70.7	%		63.1	%		65.2	%		64.5	%		65.8	%
Underwriting expense ratio		33.4	%		30.9	%		28.8	%		31.6	%		31.8	%		30.7	%		30.3	%

Combined ratio		92.9	%		90.0	%		99.5	%		94.7	%		97.0	%		95.2	%		96.1	%

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

Loss and LAE components:
Current accident year, excluding catastrophe loss		64.5	%		65.8	%		65.2	%		63.6	%		66.1	%		65.2	%		66.0	%
Prior accident year loss reserve development		(6.0	%)		(9.2	%)		(4.0	%)		(0.9	%)		(1.1	%)		(4.0	%)		(0.7	%)
Current accident year catastrophe loss		1.0	%		2.5	%		9.5	%		0.4	%		0.2	%		3.3	%		0.5	%

Loss and LAE ratio		59.5	%		59.1	%		70.7	%		63.1	%		65.2	%		64.5	%		65.8	%

Page 9

American Financial Group, Inc.

Specialty Financial - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/17			12/31/16
Gross written premiums		179		$	208		$	181		$	174		$	164		$	727		$	685
Ceded reinsurance premiums		(31	)		(52	)		(31	)		(25	)		(23	)		(131	)		(113	)

Net written premiums		148			156			150			149			141			596			572
Change in unearned premiums		1			(15	)		(8	)		(3	)		6			(20	)		(15	)

Net earned premiums		149			141			142			146			147			576			557
Loss and LAE		60			47			79			49			52			227			178
Underwriting expense		74			75			66			74			73			288			295

Underwriting profit (loss)	$	15		$	19		$	(3	)	$	23		$	22		$	61		$	84

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	2		$	—		$	—		$	2		$	—
Catastrophe loss		3			(5	)		29			5			1			30			11

Total current accident year catastrophe losses	$	3		$	(5	)	$	31		$	5		$	1		$	32		$	11

Prior year loss reserve development (favorable) / adverse	$	(3	)	$	1		$	(5	)	$	(8	)	$	(9	)	$	(21	)	$	(23	)

Combined ratio:
Loss and LAE ratio		40.2	%		33.1	%		56.0	%		33.1	%		35.6	%		39.4	%		32.0	%
Underwriting expense ratio		50.0	%		53.1	%		46.2	%		51.3	%		49.4	%		50.0	%		52.9	%

Combined ratio		90.2	%		86.2	%		102.2	%		84.4	%		85.0	%		89.4	%		84.9	%

Combined ratio excl. catastrophe and prior year development		90.2	%		89.1	%		84.9	%		86.5	%		90.6	%		87.8	%		86.9	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		40.2	%		36.0	%		38.7	%		35.2	%		41.2	%		37.8	%		34.0	%
Prior accident year loss reserve development		(1.8	%)		0.8	%		(3.1	%)		(5.4	%)		(6.4	%)		(3.6	%)		(4.0	%)
Current accident year catastrophe loss		1.8	%		(3.7	%)		20.4	%		3.3	%		0.8	%		5.2	%		2.0	%

Loss and LAE ratio		40.2	%		33.1	%		56.0	%		33.1	%		35.6	%		39.4	%		32.0	%

Page 10

American Financial Group, Inc.

Other Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/17			12/31/16
Gross written premiums	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Ceded reinsurance premiums		36			26			35			27			22			110			106

Net written premiums		36			26			35			27			22			110			106
Change in unearned premiums		(7	)		—			(5	)		(2	)		3			(4	)		(3	)

Net earned premiums		29			26			30			25			25			106			103
Loss and LAE		15			23			17			14			17			71			57
Underwriting expense		11			8			9			11			9			37			37

Underwriting profit (loss)	$	3		$	(5	)	$	4		$	—		$	(1	)	$	(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	$	(1	)	$	6		$	(2	)	$	1		$	3		$	8		$	(4	)

Combined ratio:
Loss and LAE ratio		51.3	%		86.2	%		52.6	%		62.0	%		68.0	%		66.9	%		54.9	%
Underwriting expense ratio		39.4	%		36.8	%		32.5	%		36.3	%		37.8	%		35.8	%		36.5	%

Combined ratio		90.7	%		123.0	%		85.1	%		98.3	%		105.8	%		102.7	%		91.4	%

Combined ratio excl. catastrophe and prior year development		96.6	%		94.5	%		90.4	%		93.5	%		93.4	%		93.0	%		92.8	%

Page 11

American Financial Group, Inc.

Annuity Earnings (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/17			12/31/16
Net investment income	$	394		$	376		$	375		$	360		$	347		$	1,458		$	1,356
Guaranteed withdrawal benefit fees		16			17			15			14			14			60			53
Policy charges and other miscellaneous income		10			7			11			12			13			43			50

Total revenues		420			400			401			386			374			1,561			1,459
Annuity benefits		182			257			215			224			196			892			800
Acquisition expenses		81			15			54			47			52			168			181
Other expenses		32			31			30			30			30			121			110

Total costs and expenses		295			303			299			301			278			1,181			1,091

Annuity earnings before income taxes	$	125		$	97		$	102		$	85		$	96		$	380		$	368

Detail of Annuity earnings before income taxes
Earnings before income taxes and impact of fair value accounting	$	112		$	108		$	106		$	101		$	98		$	413		$	395
Impact of fair value accounting (a)		13			(11	)		(4	)		(16	)		(2	)		(33	)		(27	)

Earnings before income taxes	$	125		$	97		$	102		$	85		$	96		$	380		$	368


(a) Changes in fair value of derivatives, offset by an estimate of the related acceleration/deceleration of the amortization of deferred policy acquistion costs and the deferred sales inducements, were as follows:
Interest on Embedded Derivative liability	$	(7	)	$	(5	)	$	(4	)	$	(4	)	$	(3	)	$	(16	)	$	(7	)
Impact of changes in interest rates higher (lower) than expected		27			(12	)		(10	)		(17	)		(11	)		(50	)		(29	)
Change in markets ⁽¹⁾		(2	)		9			6			5			9			29			6
Renewal option purchases lower (higher) than expected		(4	)		—			1			1			2			4			5
Other ⁽²⁾		(1	)		(3	)		3			(1	)		1			—			(2	)

Impact of Fair Value accounting, as reported	$	13		$	(11	)	$	(4	)	$	(16	)	$	(2	)	$	(33	)	$	(27	)

Embedded Derivative liability balance at end of period	$	2,549		$	2,542		$	2,293		$	2,129		$	1,963		$	2,542		$	1,759

⁽¹⁾	Reflects impact of changes in stock market, incuding volatility

⁽²⁾	Includes impact of actual vs. expected lapse activity

Page 12

American Financial Group, Inc.

Detail of Annuity Benefits Expense (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/17			12/31/16
Detail of annuity benefits expense:
Interest credited - fixed	$	166		$	164		$	160		$	157		$	152		$	633		$	574
Interest credited - fixed component of variable annuities		1			1			1			2			1			5			5
Change in expected death and annuitization reserve		4			5			5			4			4			18			18
Amortization of sales inducements		5			5			4			4			6			19			24
Guaranteed withdrawal benefit reserve		23			16			18			17			16			67			69
Change in other benefit reserves		8			9			16			9			11			45			34
Unlockings (a)		—			35			—			—			—			35			23

Subtotal before impact of fair value accounting		207			235			204			193			190			822			747
Embedded derivative mark-to-market (b)		(63	)		178			127			112			147			564			194
Equity option mark-to-market		38			(156	)		(116	)		(81	)		(141	)		(494	)		(141	)

Subtotal impact of fair value accounting		(25	)		22			11			31			6			70			53

Total annuity benefits expense	$	182		$	257		$	215		$	224		$	196		$	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
	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/17			12/31/16
Average fixed annuity investments (at amortized cost) (a)	$	33,002		$	32,245		$	31,713		$	30,988		$	30,055		$	31,250		$	28,223
Average annuity benefits accumulated		33,329			32,680			32,029			31,212			30,183			31,526			28,146

Annuity benefits accumulated in excess of investments (a)	$	(327	)	$	(435	)	$	(316	)	$	(224	)	$	(128	)	$	(276	)	$	77

As % of average annuity benefits accumulated (except as noted)
Net investment income (as % of investments)		4.74	%		4.62	%		4.70	%		4.62	%		4.59	%		4.63	%		4.77	%
Interest credited		(1.99	%)		(2.00	%)		(2.01	%)		(2.01	%)		(2.01	%)		(2.01	%)		(2.04	%)

Net interest spread on fixed annuities		2.75	%		2.62	%		2.69	%		2.61	%		2.58	%		2.62	%		2.73	%
Policy charges and other miscellaneous income		0.10	%		0.10	%		0.10	%		0.12	%		0.14	%		0.11	%		0.15	%
Other annuity benefit expenses, net		(0.29	%)		(0.21	%)		(0.33	%)		(0.27	%)		(0.31	%)		(0.28	%)		(0.33	%)
Acquisition expenses		(0.94	%)		(0.60	%)		(0.65	%)		(0.58	%)		(0.67	%)		(0.62	%)		(0.70	%)
Other expenses		(0.38	%)		(0.37	%)		(0.36	%)		(0.38	%)		(0.38	%)		(0.37	%)		(0.38	%)
Change in fair value of derivatives		0.30	%		(0.27	%)		(0.14	%)		(0.39	%)		(0.08	%)		(0.22	%)		(0.19	%)
Unlockings		0.00	%		(0.06	%)		0.00	%		0.00	%		0.00	%		(0.01	%)		0.01	%

Net spread earned on fixed annuities		1.54	%		1.21	%		1.31	%		1.11	%		1.28	%		1.23	%		1.29	%

Average annuity benefits accumulated	$	33,329		$	32,680		$	32,029		$	31,212		$	30,183		$	31,526		$	28,146
Net spread earned on fixed annuities		1.54	%		1.21	%		1.31	%		1.11	%		1.28	%		1.23	%		1.29	%

Earnings on fixed annuity benefits accumulated	$	128		$	99		$	105		$	87		$	96		$	387		$	363
Annuity benefits accumulated in excess of investments	$	(327	)	$	(435	)	$	(316	)	$	(224	)	$	(128	)	$	(276	)	$	77
Net investment income (as % of investments)		4.74	%		4.62	%		4.70	%		4.62	%		4.59	%		4.63	%		4.77	%

Earnings (loss) on annuity benefits accumulated in excess of investments	$	(4	)	$	(5	)	$	(4	)	$	(3	)	$	(1	)	$	(13	)	$	4
Variable annuity earnings		1			3			1			1			1			6			1

Earnings before income taxes	$	125		$	97		$	102		$	85		$	96		$	380		$	368

Detail of net spread earned on fixed annuities
Net spread earned - before impact of fair value accounting		1.38	%		1.34	%		1.36	%		1.32	%		1.31	%		1.33	%		1.39	%
Change in fair value of derivatives		0.30	%		(0.27	%)		(0.14	%)		(0.39	%)		(0.08	%)		(0.22	%)		(0.19	%)
Estimated net offsets to deferred sales inducements and deferred policy acquisition costs		(0.14	%)		0.14	%		0.09	%		0.18	%		0.05	%		0.12	%		0.09	%

Net spread earned - after impact of fair value accounting		1.54	%		1.21	%		1.31	%		1.11	%		1.28	%		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
	3/31/18		12/31/17		09/30/17		06/30/17		03/31/17		12/31/17		12/31/16
Retail single premium annuities - indexed	$	553	$	413	$	367	$	474	$	469	$	1,723	$	1,714
Retail single premium annuities - fixed		24		22		19		22		20		83		82
Financial institutions single premium annuities - indexed		413		364		360		500		487		1,711		1,950
Financial institutions single premium annuities - fixed		105		63		82		215		262		622		468
Education market - fixed and indexed annuities		46		41		41		47		45		174		184

Subtotal fixed annuity premiums		1,141		903		869		1,258		1,283		4,313		4,398
Variable annuities		7		6		7		8		7		28		37

Total annuity premiums	$	1,148	$	909	$	876	$	1,266	$	1,290	$	4,341	$	4,435

Summary by Distribution Channel:
Total retail	$	577	$	435	$	386	$	496	$	489	$	1,806	$	1,796

Total financial institutions	$	518	$	427	$	442	$	715	$	749	$	2,333	$	2,418

Summary by Product Type:
Total indexed	$	992	$	802	$	746	$	998	$	977	$	3,523	$	3,751

Total fixed	$	149	$	101	$	123	$	260	$	306	$	790	$	647

Page 15

American Financial Group, Inc.

Fixed Annuity Benefits Accumulated (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/17			12/31/16
Beginning fixed annuity reserves	$	33,005		$	32,354		$	31,704		$	30,719		$	29,647		$	29,647		$	26,371
Premiums		1,141			903			869			1,258			1,283			4,313			4,398
Federal Home Loan Bank (“FHLB”) advances (paydowns)		—			(64	)		—			—			—			(64	)		150
Surrenders, benefits and other withdrawals		(627	)		(596	)		(540	)		(571	)		(539	)		(2,246	)		(2,189	)
Interest and other annuity benefit expenses:
Interest credited		166			164			160			157			152			633			574
Embedded derivative mark-to-market		(63	)		178			127			112			147			564			194
Change in other benefit reserves		30			25			34			29			29			117			122
Unlockings		—			41			—			—			—			41			27

Ending fixed annuity reserves	$	33,652		$	33,005		$	32,354		$	31,704		$	30,719		$	33,005		$	29,647

Reconciliation to annuity benefits accumulated:
Ending fixed annuity reserves	$	33,652		$	33,005		$	32,354		$	31,704		$	30,719		$	33,005		$	29,647
Impact of unrealized investment gains on reserves		71			133			138			128			100			133			76
Fixed component of variable annuities		178			178			179			182			183			178			184

Annuity benefits accumulated per balance sheet	$	33,901		$	33,316		$	32,671		$	32,014		$	31,002		$	33,316		$	29,907

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

Page 16

American Financial Group, Inc.

Guaranteed Minimum Interest Rate (“GMIR”) Analysis

($ in millions)


GMIR	3/31/18			12/31/17			9/30/17			6/30/17			3/31/17			12/31/16
1 - 1.99%		77	%		76	%		75	%		75	%		73	%		72	%
2 - 2.99%		5	%		5	%		5	%		5	%		6	%		6	%
3 - 3.99%		9	%		10	%		10	%		10	%		11	%		12	%
4.00% and above		9	%		9	%		10	%		10	%		10	%		10	%
Annuity Benefits Accumulated	$	33,901		$	33,316		$	32,671		$	32,014		$	31,002		$	29,907
Traditional Fixed and FIA Surrender Value (a) (b)	$	25,582		$	25,138		$	24,428		$	23,925		$	23,284		$	22,264
Ability to Lower Average Crediting Rates by (a) (c)		1.00	%		0.92	%		0.88	%		0.86	%		0.82	%		0.80	%
Pretax earnings impact of crediting guaranteed minimums (a)	$	255		$	230		$	216		$	206		$	191		$	178
(assumes net DAC impact over time = $0)

(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)


	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/16
Assets:
Total cash and investments	$	45,949		$	46,048		$	45,253		$	44,779		$	43,350		$	41,433
Recoverables from reinsurers		3,173			3,369			3,262			2,839			2,735			2,737
Prepaid reinsurance premiums		614			600			691			587			533			539
Agents’ balances and premiums receivable		1,113			1,146			1,173			1,124			989			997
Deferred policy acquisition costs		1,417			1,216			1,119			1,156			1,205			1,239
Assets of managed investment entities		5,090			4,902			4,767			4,873			5,331			4,765
Other receivables		918			1,030			1,545			923			875			908
Variable annuity assets (separate accounts)		632			644			628			620			614			600
Other assets		1,551			1,504			1,526			1,518			1,633			1,655
Goodwill		199			199			199			199			199			199

Total assets	$	60,656		$	60,658		$	60,163		$	58,618		$	57,464		$	55,072

Liabilities and Equity:
Unpaid losses and loss adjustment expenses	$	9,193		$	9,678		$	9,563		$	8,730		$	8,621		$	8,563
Unearned premiums		2,413			2,410			2,567			2,294			2,174			2,171
Annuity benefits accumulated		33,901			33,316			32,671			32,014			31,002			29,907
Life, accident and health reserves		656			658			667			676			687			691
Payable to reinsurers		661			743			906			681			621			634
Liabilities of managed investment entities		4,869			4,687			4,506			4,685			5,101			4,549
Long-term debt		1,301			1,301			1,284			1,405			1,283			1,283
Variable annuity liabilities (separate accounts)		632			644			628			620			614			600
Other liabilities		1,847			1,887			1,992			2,201			2,166			1,755

Total liabilities	$	55,473		$	55,324		$	54,784		$	53,306		$	52,269		$	50,153
Redeemable noncontrolling interests	$	—		$	3		$	—		$	—		$	—		$	—
Shareholders’ equity:
Common stock	$	89		$	88		$	88		$	88		$	88		$	87
Capital surplus		1,205			1,181			1,167			1,158			1,138			1,111
Retained earnings		3,584			3,248			3,435			3,451			3,466			3,343
Unrealized gains - equities		—			221			173			158			145			98
Unrealized gains - fixed maturities		342			619			533			481			384			306
Unrealized gains (losses) - fixed maturity-related cash flow hedges		(24	)		(13	)		(6	)		(6	)		(8	)		(7	)
Other comprehensive income, net of tax		(13	)		(14	)		(11	)		(18	)		(22	)		(22	)

Total shareholders’ equity		5,183			5,330			5,379			5,312			5,191			4,916
Noncontrolling interests		—			1			—			—			4			3

Total liabilities and equity	$	60,656		$	60,658		$	60,163		$	58,618		$	57,464		$	55,072

Page 18

American Financial Group, Inc.

Book Value Per Share and Price / Book Summary

(in millions, except per share information)


	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/16
Shareholders’ equity	$	5,183		$	5,330		$	5,379		$	5,312		$	5,191		$	4,916
Unrealized (gains) related to fixed maturities		(318	)		(606	)		(527	)		(475	)		(376	)		(299	)

Adjusted shareholders’ equity		4,865			4,724			4,852			4,837			4,815			4,617
Goodwill		(199	)		(199	)		(199	)		(199	)		(199	)		(199	)
Intangibles		(36	)		(27	)		(29	)		(30	)		(32	)		(34	)

Tangible adjusted shareholders’ equity	$	4,630		$	4,498		$	4,624		$	4,608		$	4,584		$	4,384

Common shares outstanding		88.881			88.275			88.093			88.007			87.592			86.924

Book value per share:
Book value per share	$	58.32		$	60.38		$	61.06		$	60.36		$	59.26		$	56.55
Adjusted (a)		54.74			53.51			55.08			54.97			54.98			53.11
Tangible, adjusted (b)		52.10			50.95			52.50			52.36			52.34			50.43

Market capitalization
AFG’s closing common share price	$	112.22		$	108.54		$	103.45		$	99.37		$	95.42		$	88.12
Market capitalization	$	9,974		$	9,581		$	9,113		$	8,745		$	8,358		$	7,660
Price / Adjusted book value ratio		2.05			2.03			1.88			1.81			1.74			1.66

(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)


	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/16
AFG senior obligations	$	1,018		$	1,018		$	1,003		$	1,128		$	1,008		$	1,008
Borrowings drawn under credit facility		—			—			—			—			—			—

Debt excluding subordinated debt	$	1,018		$	1,018		$	1,003		$	1,128		$	1,008		$	1,008
AFG subordinated debentures		300			300			300			300			300			300

Total principal amount of long-term debt	$	1,318		$	1,318		$	1,303		$	1,428		$	1,308		$	1,308
Shareholders’ equity		5,183			5,330			5,379			5,312			5,191			4,916
Noncontrolling interests (including redeemable NCI)		—			4			—			—			4			3
Less:
Unrealized (gains) - fixed maturity investments		(342	)		(619	)		(533	)		(481	)		(384	)		(306	)

Total adjusted capital	$	6,159		$	6,033		$	6,149		$	6,259		$	6,119		$	5,921

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

Page 20

American Financial Group, Inc.

Additional Supplemental Information

($ in millions)


	Three Months Ended										Twelve Months Ended
	3/31/18		12/31/17		09/30/17		06/30/17		03/31/17		12/31/17		12/31/16
Property and Casualty Insurance
Paid Losses (GAAP)	$	640	$	726	$	596	$	652	$	554	$	2,528	$	2,353

	3/31/18		12/31/17		09/30/17		06/30/17		03/31/17		12/31/16
Statutory Surplus
Property and Casualty Insurance	$	2,781	$	2,729	$	2,817	$	2,882	$	3,013	$	2,939
AFG’s principal annuity subsidiaries (total adjusted capital)	$	2,442	$	2,442	$	2,433	$	2,389	$	2,341	$	2,234

Allowable dividends without regulatory approval
Property and Casualty Insurance	$	563	$	563	$	496	$	496	$	496	$	496
Annuity and Run-off		263		263		197		197		197		197

Total	$	826	$	826	$	693	$	693	$	693	$	693

Page 21

American Financial Group, Inc.

Total Cash and Investments

($ in millions)


	Carrying Value - March 31, 2018
	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	$	973	$	392	$	294	$	—		$	1,659		4	%
Fixed maturities - Available for sale		7,420		31,693		12		—			39,125		85	%
Fixed maturities - Trading		104		56		—		—			160		0	%
Equity securities		1,051		681		54		—			1,786		4	%
Investments accounted for using the equity method		440		657		—		—			1,097		2	%
Mortgage loans		307		775		—		—			1,082		2	%
Policy loans		—		181		—		—			181		1	%
Equity Index Call Options		—		591		—		—			591		1	%
Real estate and other investments		146		293		49		(220	)		268		1	%

Total cash and investments	$	10,441	$	35,319	$	409	$	(220	)	$	45,949		100	%


	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	%
Investments accounted for using the equity method		404		595		—		—			999		2	%
Mortgage loans		308		817		—		—			1,125		2	%
Policy loans		—		184		—		—			184		0	%
Equity Index Call Options		—		701		—		—			701		2	%
Real estate and other investments		158		311		57		(214	)		312		1	%

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

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

Note: On January 1, 2018, AFG adopted Accounting Standards Update (“ASU”) 2016-01, which requires all equity securities other than those accounted for under the equity method to be reported at fair value with holding gains and losses recognized in net earnings.

Page 22

American Financial Group, Inc.

Net Investment Income

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/18			12/31/17			09/30/17			06/30/17			03/31/17			12/31/17			12/31/16
Property and Casualty Insurance:
Gross Investment Income
Fixed maturities - Available for sale	$	66		$	65		$	65		$	65		$	63		$	258		$	257
Fixed maturities - Trading		—			—			—			2			1			3			3
Equity securities		13			13			12			12			14			51			51
Equity in investees		17			4			8			11			4			27			22
Other investments		6			8			11			8			6			33			27

Gross investment income		102			90			96			98			88			372			360
Investment expenses		(2	)		(4	)		(2	)		(2	)		(2	)		(10	)		(10	)

Total net investment income	$	100		$	86		$	94		$	96		$	86		$	362		$	350

Average cash and investments (a)	$	10,422		$	10,062		$	9,851		$	9,947		$	9,855		$	9,948		$	9,550

Average yield (b)		3.84	%		3.42	%		3.82	%		3.86	%		3.49	%		3.64	%		3.66	%

Annuity and Run-off: Fixed Annuity
Gross Investment Income
Fixed maturities - Available for sale	$	338		$	342		$	332		$	322		$	318		$	1,314		$	1,223
Equity securities		8			7			5			5			5			22			24
Equity in investees		29			9			12			10			6			37			22
Other investments		19			19			26			22			19			86			87

Gross investment income		394			377			375			359			348			1,459			1,356
Investment expenses		(3	)		(4	)		(2	)		(2	)		(3	)		(11	)		(10	)

Total net investment income	$	391		$	373		$	373		$	357		$	345		$	1,448		$	1,346

Average cash and investments (a)	$	33,002		$	32,245		$	31,713		$	30,988		$	30,055		$	31,250		$	28,223

Average yield (b)		4.74	%		4.62	%		4.70	%		4.62	%		4.59	%		4.63	%		4.77	%

AFG consolidated net investment income:
Property & Casualty	$	100		$	86		$	94		$	96		$	86		$	362		$	350
Annuity and Run-off:
Fixed Annuity		391			373			373			357			345			1,448			1,346
Variable Annuity		3			3			2			3			2			10			10
Run-off		4			4			6			5			5			20			21
Parent & other non-insurance		—			6			1			4			3			14			6
Consolidate CLOs		(3	)		(7	)		(5	)		(5	)		(6	)		(23	)		(37	)

Total net investment income	$	495		$	465		$	471		$	460		$	435		$	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 )


March 31, 2018	Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Investment Portfolio
US Government and government agencies	$	306		$	303	$	(3	)		1	%		0	%
States, municipalities and political subdivisions		6,881			7,029		148			18	%		15	%
Foreign government		153			155		2			0	%		0	%
Residential mortgage-backed securities		2,734			3,065		331			8	%		7	%
Commercial mortgage-backed securities		922			940		18			2	%		2	%
Asset-backed securities		8,546			8,663		117			22	%		19	%
Corporate and other bonds		19,001			19,130		129			49	%		42	%

Total AFG consolidated	$	38,543		$	39,285	$	742			100	%		85	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.36	%
Net of investment expense (a)		4.31	%
Approximate average life and duration:
Approximate average life		6 years
Approximate duration		5 years

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

(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 )


	March 31, 2018											December 31, 2017
	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	$	258		$	256	$	(2	)		3	%	$	244		$	243	$	(1	)		3	%
States, municipalities and political subdivisions		2,688			2,706		18			36	%		2,740			2,798		58			38	%
Foreign government		142			143		1			2	%		228			229		1			3	%
Residential mortgage-backed securities		803			876		73			12	%		843			918		75			13	%
Commercial mortgage-backed securities		89			90		1			1	%		93			95		2			1	%
Asset-backed securities		2,040			2,042		2			27	%		1,716			1,724		8			23	%
Corporate and other bonds		1,414			1,411		(3	)		19	%		1,349			1,367		18			19	%

Property and Casualty Insurance	$	7,434		$	7,524	$	90			100	%	$	7,213		$	7,374	$	161			100	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		3.71	%										3.73	%
Net of investment expense (a)		3.60	%										3.54	%
Tax equivalent, net of investment expense (b)		3.82	%										4.03	%
Approximate average life and duration:
Approximate average life		5 years											5 years
Approximate duration		4 years											4 years

	March 31, 2018											December 31, 2017
	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	%	$	48		$	47	$	(1	)		0	%
States, municipalities and political subdivisions		4,193			4,323		130			13	%		4,172			4,350		178			14	%
Foreign government		11			12		1			0	%		11			13		2			0	%
Residential mortgage-backed securities		1,928			2,177		249			7	%		2,041			2,299		258			7	%
Commercial mortgage-backed securities		833			850		17			3	%		835			868		33			3	%
Asset-backed securities		6,506			6,621		115			21	%		6,120			6,238		118			20	%
Corporate and other bonds		17,587			17,719		132			56	%		16,942			17,524		582			56	%

Total Annuity and Run-off	$	31,106		$	31,749	$	643			100	%	$	30,169		$	31,339	$	1,170			100	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.51	%										4.66	%
Net of investment expense (a)		4.47	%										4.61	%
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)


	March 31, 2018
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value
Investment grade
AAA	$	6,558	$	6,600	$	42		17	%
AA		8,326		8,493		167		21	%
A		9,261		9,365		104		24	%
BBB		10,512		10,628		116		27	%

Subtotal - Investment grade		34,657		35,086		429		89	%
BB		852		859		7		2	%
B		270		272		2		1	%
Other (b)		2,764		3,068		304		8	%

Subtotal - Non-Investment grade		3,886		4,199		313		11	%

Total	$	38,543	$	39,285	$	742		100	%


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

	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.

(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)


March 31, 2018	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Investment Portfolio
Residential
Agency	$	200	$	196	$	(4	)		5	%		1	%
Prime (Non-Agency)		1,149		1,310		161			33	%		3	%
Alt-A		945		1,070		125			27	%		2	%
Subprime		440		489		49			12	%		1	%
Commercial		922		940		18			23	%		2	%

Total AFG consolidated	$	3,656	$	4,005	$	349			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 83%; 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 (82% 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 years.


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	%

Page 27

American Financial Group, Inc.

Mortgage-Backed Securities Portfolio

($ in millions)


Property and Casualty Insurance:	March 31, 2018
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Inv Portfolio
Residential
Agency	$	160	$	155	$	(5	)		16	%		1	%
Prime (Non-Agency)		164		185		21			19	%		2	%
Alt-A		288		325		37			34	%		3	%
Subprime		191		211		20			22	%		2	%
Commercial		89		90		1			9	%		1	%

Total	$	892	$	966	$	74			100	%		9	%


	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	%


Annuity and Run-off:	March 31, 2018
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Inv Portfolio
Residential
Agency	$	40	$	41	$	1			1	%		0	%
Prime (Non-Agency)		982		1,113		131			37	%		3	%
Alt-A		657		745		88			25	%		2	%
Subprime		249		278		29			9	%		1	%
Commercial		833		850		17			28	%		2	%

Total	$	2,761	$	3,027	$	266			100	%		8	%


	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	%

Page 28

American Financial Group, Inc.

Mortgage-Backed Securities - Credit Rating

($ in millions)


	March 31, 2018
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value
Investment grade
AAA	$	1,183	$	1,199	$	16		30	%
AA		92		94		2		3	%
A		196		207		11		5	%
BBB		198		211		13		5	%

Subtotal - investment grade		1,669		1,711		42		43	%
BB		190		195		5		5	%
B		177		180		3		4	%
Other (b)		1,620		1,919		299		48	%

Total	$	3,656	$	4,005	$	349		100	%


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

	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.

(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 31 for more information.

Page 29

Appendix A

American Financial Group, Inc.

Fixed Maturities - Credit Rating by Type

($ in millions)


	Fair Value - March 31, 2018
By Credit Rating (a)	US Gov		Munis		Frgn gov		RMBS		CMBS		ABS		Corp/Oth		Total		% Total
Investment grade
AAA	$	265	$	1,837	$	94	$	425	$	774	$	3,028	$	177	$	6,600		17	%
AA		30		4,573		60		76		18		2,443		1,293		8,493		21	%
A		—		475		1		184		23		1,811		6,871		9,365		24	%
BBB		—		56		—		137		74		785		9,576		10,628		27	%

Subtotal - Investment grade		295		6,941		155		822		889		8,067		17,917		35,086		89	%
BB		—		4		—		167		28		27		633		859		2	%
B		—		7		—		176		4		4		81		272		1	%
CCC, CC, C		—		1		—		1,004		6		2		24		1,037		3	%
D		—		7		—		257		—		—		—		264		1	%

Subtotal - Non-Investment grade		—		19		—		1,604		38		33		738		2,432		7	%
Not Rated		8		69		—		639		13		563		475		1,767		4	%

Total	$	303	$	7,029	$	155	$	3,065	$	940	$	8,663	$	19,130	$	39,285		100	%


	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	%

(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.

Page 30

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