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

Attached files

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EX-99.3 - EX-99.3 - AMERICAN FINANCIAL GROUP INC	d592202dex993.htm
EX-99.1 - EX-99.1 - AMERICAN FINANCIAL GROUP INC	d592202dex991.htm
8-K - 8-K - AMERICAN FINANCIAL GROUP INC	d592202d8k.htm

Exhibit 99.2


		American Financial Group, Inc.
		Investor Supplement - Second Quarter 2018
		August 1, 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 - Second Quarter 2018


Section	Page
Table of Contents - Investor Supplement - Second 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															Six Months Ended
	6/30/18			3/31/18			12/31/17			09/30/17			06/30/17			06/30/18			06/30/17
Highlights
Net earnings	$	210		$	145		$	166		$	11		$	145		$	355		$	298
Core net operating earnings		185			219			197			95			145			404			296
Total assets		61,834			60,656			60,658			60,163			58,618			61,834			58,618
Adjusted shareholders’ equity (a)		4,920			4,865			4,724			4,852			4,837			4,920			4,837
Property and Casualty net written premiums		1,257			1,102			1,161			1,433			1,130			2,359			2,157
Annuity statutory premiums		1,399			1,148			909			876			1,266			2,547			2,556
Per share data
Diluted earnings per share	$	2.31		$	1.60		$	1.84		$	0.13		$	1.61		$	3.92		$	3.32
Core net operating earnings per share		2.04			2.42			2.20			1.06			1.61			4.46			3.29
Adjusted book value per share (a)		55.24			54.74			53.51			55.08			54.97			55.24			54.97
Cash dividends per common share		1.8500			0.3500			2.3500			0.3125			1.8125			2.2000			2.1250
Financial ratios
Annualized return on equity (b)		17.1	%		12.3	%		14.4	%		1.0	%		12.3	%		14.8	%		12.8	%
Annualized core operating return on equity (b)		15.1	%		18.6	%		17.2	%		8.1	%		12.3	%		16.9	%		12.7	%
Property and Casualty combined ratio - Specialty:
Loss & LAE ratio		59.7	%		57.8	%		59.8	%		71.4	%		59.5	%		58.8	%		59.5	%
Underwriting expense ratio		34.0	%		33.9	%		27.5	%		27.9	%		33.7	%		34.0	%		33.2	%

Combined ratio - Specialty		93.7	%		91.7	%		87.3	%		99.3	%		93.2	%		92.8	%		92.7	%

Net spread on fixed annuities:
Net interest spread		2.81	%		2.75	%		2.62	%		2.69	%		2.61	%		2.78	%		2.59	%
Net spread earned:
Before impact of fair value accounting and unlockings		1.46	%		1.38	%		1.40	%		1.36	%		1.32	%		1.43	%		1.31	%
Impact of fair value accounting (c)		0.04	%		0.16	%		(0.13	%)		(0.05	%)		(0.21	%)		0.09	%		(0.12	%)
Unlockings		(0.32	%)		0.00	%		(0.06	%)		0.00	%		0.00	%		(0.16	%)		0.00	%

After impact of fair value accounting and unlockings		1.18	%		1.54	%		1.21	%		1.31	%		1.11	%		1.36	%		1.19	%

(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															Six Months Ended
	06/30/18			3/31/18			12/31/17			09/30/17			06/30/17			06/30/18			06/30/17
Property and Casualty Insurance
Underwriting profit	$	72		$	91		$	155		$	8		$	72		$	163		$	150
Net investment income		115			100			86			94			96			215			182
Other income (expense)		(7	)		(3	)		(8	)		(7	)		(5	)		(10	)		—

Property and Casualty Insurance operating earnings		180			188			233			95			163			368			332
Annuity earnings		99			125			97			102			85			224			181
Interest expense of parent holding companies		(16	)		(15	)		(20	)		(21	)		(23	)		(31	)		(44	)
Other expense		(32	)		(27	)		(27	)		(18	)		(21	)		(59	)		(47	)

Pre-tax core operating earnings		231			271			283			158			204			502			422
Income tax expense		46			52			86			63			59			98			126

Core net operating earnings		185			219			197			95			145			404			296
Non-core items, net of tax:
Realized gains (losses) on securities		25			(74	)		4			(8	)		5			(49	)		7
Special A&E charges:
Property and Casualty Insurance run-off operations		—			—			—			(58	)		—			—			—
Former Railroad and Manufacturing operations		—			—			—			(16	)		—			—			—
Neon exited lines charge		—			—			18			—			—			—			—
Tax benefit related to Neon restructuring		—			—			56			—			—			—			—
Tax expense related to change in U.S. corporate tax rate		—			—			(83	)		—			—			—			—
Loss on retirement of debt		—			—			(26	)		(2	)		(5	)		—			(5	)

Net earnings	$	210		$	145		$	166		$	11		$	145		$	355		$	298

Page 4

American Financial Group, Inc.

Earnings Per Share Summary

(in millions, except per share information)


	Three Months Ended														Six Months Ended
	6/30/18		3/31/18			12/31/17			09/30/17			06/30/17			06/30/18			06/30/17
Core net operating earnings	$	185	$	219		$	197		$	95		$	145		$	404		$	296

Net earnings	$	210	$	145		$	166		$	11		$	145		$	355		$	298

Average number of diluted shares		90.663		90.431			90.109			89.984			89.799			90.549			89.572
Diluted earnings per share:
Core net operating earnings per share	$	2.04	$	2.42		$	2.20		$	1.06		$	1.61		$	4.46		$	3.29
Realized gains (losses) on securities		0.27		(0.82	)		0.04			(0.08	)		0.05			(0.54	)		0.08
Special A&E charges:
Property and Casualty Insurance run-off operations		—		—			—			(0.64	)		—			—			—
Former Railroad and Manufacturing operations		—		—			—			(0.18	)		—			—			—
Neon exited lines charge		—		—			0.19			—			—			—			—
Tax benefit related to Neon restructuring		—		—			0.62			—			—			—			—
Tax expense related to change in U.S. corporate tax rate		—		—			(0.92	)		—			—			—			—
Loss on retirement of debt		—		—			(0.29	)		(0.03	)		(0.05	)		—			(0.05	)

Diluted earnings per share	$	2.31	$	1.60		$	1.84		$	0.13		$	1.61		$	3.92		$	3.32

Page 5

American Financial Group, Inc.

Property and Casualty Insurance - Summary Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/18			3/31/18			12/31/17			09/30/17			06/30/17			06/30/18			06/30/17
Property and Transportation	$	23		$	33		$	84		$	6		$	21		$	56		$	64
Specialty Casualty		29			41			58			2			29			70			44
Specialty Financial		22			15			19			(3	)		23			37			45
Other Specialty		(1	)		3			(5	)		4			—			2			(1	)

Underwriting profit - Specialty		73			92			156			9			73			165			152
Other core charges, included in loss and LAE		1			1			1			1			1			2			2

Underwriting profit - Core		72			91			155			8			72			163			150
Special A&E charges, included in loss and LAE		—			—			—			(89	)		—			—			—
Neon exited lines charge, included in loss and LAE		—			—			18			—			—			—			—
Neon exited lines charge, included in underwriting expenses		—			—			—			—			—			—			—

Underwriting profit (loss) - Property and Casualty Insurance	$	72		$	91		$	173		$	(81	)	$	72		$	163		$	150

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	4		$	6		$	—		$	—		$	—
Catastrophe loss		16			13			8			107			18			29			25

Total current accident year catastrophe losses	$	16		$	13		$	12		$	113		$	18		$	29		$	25

Prior year loss reserve development (favorable) / adverse	$	(44	)	$	(56	)	$	(66	)	$	52		$	(22	)	$	(100	)	$	(50	)

Combined ratio:
Property and Transportation		93.9	%		90.4	%		82.6	%		98.9	%		94.2	%		92.2	%		90.7	%
Specialty Casualty		95.1	%		92.9	%		90.0	%		99.5	%		94.7	%		94.0	%		95.8	%
Specialty Financial		85.6	%		90.2	%		86.2	%		102.2	%		84.4	%		87.9	%		84.8	%
Other Specialty		105.5	%		90.7	%		123.0	%		85.1	%		98.3	%		98.7	%		102.0	%
Combined ratio - Specialty		93.7	%		91.7	%		87.3	%		99.3	%		93.2	%		92.8	%		92.7	%
Other core charges		0.0	%		0.1	%		0.1	%		0.1	%		0.2	%		0.0	%		0.1	%
Neon exited lines charge, loss and LAE		0.0	%		0.0	%		(1.4	%)		0.0	%		0.0	%		0.0	%		0.0	%
Neon exited lines charge, underwriting expenses		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Special A&E charges		0.0	%		0.0	%		0.0	%		7.0	%		0.0	%		0.0	%		0.0	%

Combined ratio		93.7	%		91.8	%		86.0	%		106.4	%		93.4	%		92.8	%		92.8	%

Combined ratio excl. catastrophe and prior year development		96.2	%		95.6	%		90.8	%		93.8	%		93.7	%		96.0	%		94.0	%

Loss and LAE components - property and casualty insurance
Current accident year, excluding catastrophe loss		62.2	%		61.7	%		63.3	%		65.9	%		60.0	%		62.0	%		60.8	%
Prior accident year loss reserve development		(3.9	%)		(5.0	%)		(5.4	%)		4.2	%		(2.0	%)		(4.5	%)		(2.4	%)
Current accident year catastrophe loss		1.4	%		1.2	%		0.6	%		8.4	%		1.7	%		1.3	%		1.2	%

Loss and LAE ratio		59.7	%		57.9	%		58.5	%		78.5	%		59.7	%		58.8	%		59.6	%

Page 6

American Financial Group, Inc.

Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/18			3/31/18			12/31/17			09/30/17			06/30/17			06/30/18			06/30/17
Gross written premiums	$	1,665		$	1,458		$	1,571		$	2,104		$	1,503		$	3,123		$	2,827
Ceded reinsurance premiums		(408	)		(356	)		(410	)		(671	)		(373	)		(764	)		(670	)

Net written premiums		1,257			1,102			1,161			1,433			1,130			2,359			2,157
Change in unearned premiums		(96	)		5			64			(166	)		(65	)		(91	)		(70	)

Net earned premiums		1,161			1,107			1,225			1,267			1,065			2,268			2,087
Loss and LAE		692			640			733			905			634			1,332			1,242
Underwriting expense		396			375			336			353			358			771			693

Underwriting profit	$	73		$	92		$	156		$	9		$	73		$	165		$	152

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	4		$	6		$	—		$	—		$	—
Catastrophe loss		16			13			8			107			18			29			25

Total current accident year catastrophe losses	$	16		$	13		$	12		$	113		$	18		$	29		$	25

Prior year loss reserve development (favorable) / adverse	$	(45	)	$	(57	)	$	(49	)	$	(38	)	$	(23	)	$	(102	)	$	(52	)

Combined ratio:
Loss and LAE ratio		59.7	%		57.8	%		59.8	%		71.4	%		59.5	%		58.8	%		59.5	%
Underwriting expense ratio		34.0	%		33.9	%		27.5	%		27.9	%		33.7	%		34.0	%		33.2	%

Combined ratio		93.7	%		91.7	%		87.3	%		99.3	%		93.2	%		92.8	%		92.7	%

Combined ratio excl. catastrophe and prior year development		96.2	%		95.6	%		90.8	%		93.8	%		93.7	%		96.0	%		94.0	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		62.2	%		61.7	%		63.3	%		65.9	%		60.0	%		62.0	%		60.8	%
Prior accident year loss reserve development		(3.9	%)		(5.1	%)		(4.1	%)		(2.9	%)		(2.2	%)		(4.5	%)		(2.5	%)
Current accident year catastrophe loss		1.4	%		1.2	%		0.6	%		8.4	%		1.7	%		1.3	%		1.2	%

Loss and LAE ratio		59.7	%		57.8	%		59.8	%		71.4	%		59.5	%		58.8	%		59.5	%

Page 7

American Financial Group, Inc.

Property and Transportation - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/18			3/31/18			12/31/17			09/30/17			06/30/17			06/30/18			06/30/17
Gross written premiums	$	615		$	426		$	626		$	1,073		$	573		$	1,041		$	989
Ceded reinsurance premiums		(193	)		(102	)		(202	)		(449	)		(180	)		(295	)		(272	)

Net written premiums		422			324			424			624			393			746			717
Change in unearned premiums		(48	)		26			61			(97	)		(36	)		(22	)		(18	)

Net earned premiums		374			350			485			527			357			724			699
Loss and LAE		239			220			325			407			232			459			440
Underwriting expense		112			97			76			114			104			209			195

Underwriting profit	$	23		$	33		$	84		$	6		$	21		$	56		$	64

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	2		$	—		$	—		$	—
Catastrophe loss		10			5			(3	)		23			11			15			16

Total current accident year catastrophe losses	$	10		$	5		$	(3	)	$	25		$	11		$	15		$	16

Prior year loss reserve development (favorable) / adverse	$	(21	)	$	(18	)	$	(4	)	$	(8	)	$	(11	)	$	(39	)	$	(28	)

Combined ratio:
Loss and LAE ratio		63.8	%		63.0	%		67.1	%		77.3	%		64.9	%		63.4	%		62.8	%
Underwriting expense ratio		30.1	%		27.4	%		15.5	%		21.6	%		29.3	%		28.8	%		27.9	%

Combined ratio		93.9	%		90.4	%		82.6	%		98.9	%		94.2	%		92.2	%		90.7	%

Combined ratio excl. catastrophe and prior year development		96.8	%		94.1	%		84.0	%		96.0	%		94.3	%		95.5	%		92.5	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		66.7	%		66.7	%		68.5	%		74.4	%		65.0	%		66.7	%		64.6	%
Prior accident year loss reserve development		(5.6	%)		(5.1	%)		(0.8	%)		(1.5	%)		(3.1	%)		(5.4	%)		(4.0	%)
Current accident year catastrophe loss		2.7	%		1.4	%		(0.6	%)		4.4	%		3.0	%		2.1	%		2.2	%

Loss and LAE ratio		63.8	%		63.0	%		67.1	%		77.3	%		64.9	%		63.4	%		62.8	%

Page 8

American Financial Group, Inc.

Specialty Casualty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/18			3/31/18			12/31/17			09/30/17			06/30/17			06/30/18			06/30/17
Gross written premiums	$	858			853		$	737		$	850		$	756		$	1,711		$	1,500
Ceded reinsurance premiums		(219	)		(259	)		(182	)		(226	)		(195	)		(478	)		(399	)

Net written premiums		639			594			555			624			561			1,233			1,101
Change in unearned premiums		(44	)		(15	)		18			(56	)		(24	)		(59	)		(56	)

Net earned premiums		595			579			573			568			537			1,174			1,045
Loss and LAE		378			345			338			402			339			723			670
Underwriting expense		188			193			177			164			169			381			331

Underwriting profit	$	29		$	41		$	58		$	2		$	29		$	70		$	44

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	4		$	2		$	—		$	—		$	—
Catastrophe loss		1			5			14			54			2			6			3

Total current accident year catastrophe losses	$	1		$	5		$	18		$	56		$	2		$	6		$	3

Prior year loss reserve development (favorable) / adverse	$	(15	)	$	(35	)	$	(52	)	$	(23	)	$	(5	)	$	(50	)	$	(11	)

Combined ratio:
Loss and LAE ratio		63.4	%		59.5	%		59.1	%		70.7	%		63.1	%		61.5	%		64.1	%
Underwriting expense ratio		31.7	%		33.4	%		30.9	%		28.8	%		31.6	%		32.5	%		31.7	%

Combined ratio		95.1	%		92.9	%		90.0	%		99.5	%		94.7	%		94.0	%		95.8	%

Combined ratio excl. catastrophe and prior year development		97.5	%		97.9	%		96.7	%		94.0	%		95.2	%		97.7	%		96.5	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		65.8	%		64.5	%		65.8	%		65.2	%		63.6	%		65.2	%		64.8	%
Prior accident year loss reserve development		(2.5	%)		(6.0	%)		(9.2	%)		(4.0	%)		(0.9	%)		(4.2	%)		(1.0	%)
Current accident year catastrophe loss		0.1	%		1.0	%		2.5	%		9.5	%		0.4	%		0.5	%		0.3	%

Loss and LAE ratio		63.4	%		59.5	%		59.1	%		70.7	%		63.1	%		61.5	%		64.1	%

Page 9

American Financial Group, Inc.

Specialty Financial - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/18			3/31/18			12/31/17			09/30/17			06/30/17			06/30/18			06/30/17
Gross written premiums	$	192			179		$	208		$	181		$	174		$	371		$	338
Ceded reinsurance premiums		(33	)		(31	)		(52	)		(31	)		(25	)		(64	)		(48	)

Net written premiums		159			148			156			150			149			307			290
Change in unearned premiums		—			1			(15	)		(8	)		(3	)		1			3

Net earned premiums		159			149			141			142			146			308			293
Loss and LAE		54			60			47			79			49			114			101
Underwriting expense		83			74			75			66			74			157			147

Underwriting profit (loss)	$	22		$	15		$	19		$	(3	)	$	23		$	37		$	45

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	2		$	—		$	—		$	—
Catastrophe loss		3			3			(5	)		29			5			6			6

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

Prior year loss reserve development (favorable) / adverse	$	(8	)	$	(3	)	$	1		$	(5	)	$	(8	)	$	(11	)	$	(17	)

Combined ratio:
Loss and LAE ratio		33.9	%		40.2	%		33.1	%		56.0	%		33.1	%		37.0	%		34.4	%
Underwriting expense ratio		51.7	%		50.0	%		53.1	%		46.2	%		51.3	%		50.9	%		50.4	%

Combined ratio		85.6	%		90.2	%		86.2	%		102.2	%		84.4	%		87.9	%		84.8	%

Combined ratio excl. catastrophe and prior year development		89.0	%		90.2	%		89.1	%		84.9	%		86.5	%		89.6	%		88.6	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		37.3	%		40.2	%		36.0	%		38.7	%		35.2	%		38.7	%		38.2	%
Prior accident year loss reserve development		(5.4	%)		(1.8	%)		0.8	%		(3.1	%)		(5.4	%)		(3.6	%)		(5.8	%)
Current accident year catastrophe loss		2.0	%		1.8	%		(3.7	%)		20.4	%		3.3	%		1.9	%		2.0	%

Loss and LAE ratio		33.9	%		40.2	%		33.1	%		56.0	%		33.1	%		37.0	%		34.4	%

Page 10

American Financial Group, Inc.

Other Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/18			3/31/18			12/31/17			09/30/17			06/30/17			06/30/18			06/30/17
Gross written premiums	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Ceded reinsurance premiums		37			36			26			35			27			73			49

Net written premiums		37			36			26			35			27			73			49
Change in unearned premiums		(4	)		(7	)		—			(5	)		(2	)		(11	)		1

Net earned premiums		33			29			26			30			25			62			50
Loss and LAE		21			15			23			17			14			36			31
Underwriting expense		13			11			8			9			11			24			20

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

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

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

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

Combined ratio:
Loss and LAE ratio		68.7	%		51.3	%		86.2	%		52.6	%		62.0	%		60.7	%		64.9	%
Underwriting expense ratio		36.8	%		39.4	%		36.8	%		32.5	%		36.3	%		38.0	%		37.1	%

Combined ratio		105.5	%		90.7	%		123.0	%		85.1	%		98.3	%		98.7	%		102.0	%

Combined ratio excl. catastrophe and prior year development		99.6	%		96.6	%		94.5	%		90.4	%		93.5	%		98.2	%		93.5	%

Page 11

American Financial Group, Inc.

Annuity Earnings (GAAP)

($ in millions)


	Three Months Ended														Six Months Ended
	6/30/18			3/31/18		12/31/17			09/30/17			06/30/17			06/30/18			06/30/17
Net investment income	$	412		$	394	$	376		$	375		$	360		$	806		$	707
Guaranteed withdrawal benefit fees		16			16		17			15			14			32			28
Policy charges and other miscellaneous income		11			10		7			11			12			21			25

Total revenues		439			420		400			401			386			859			760
Annuity benefits		260			182		257			215			224			442			420
Acquisition expenses		49			81		15			54			47			130			99
Other expenses		31			32		31			30			30			63			60

Total costs and expenses		340			295		303			299			301			635			579

Annuity earnings before income taxes	$	99		$	125	$	97		$	102		$	85		$	224		$	181

Detail of Annuity earnings before income taxes
Earnings before income taxes, impact of fair value accounting and unlockings	$	123		$	112	$	111		$	106		$	101		$	235		$	199
Impact of fair value accounting (a)		3			13		(11	)		(4	)		(16	)		16			(18	)
Unlockings		(27	)		—		(3	)		—			—			(27	)		—

Earnings before income taxes	$	99		$	125	$	97		$	102		$	85		$	224		$	181

(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	$	(8	)	$	(7	)	$	(5	)	$	(4	)	$	(4	)	$	(15	)	$	(7	)
Impact of changes in interest rates higher (lower) than expected		12			27			(12	)		(10	)		(17	)		39			(28	)
Change in markets ⁽¹⁾		6			(2	)		9			6			5			4			14
Renewal option purchases lower (higher) than expected		(3	)		(4	)		—			1			1			(7	)		3
Other ⁽²⁾		(4	)		(1	)		(3	)		3			(1	)		(5	)		—

Impact of Fair Value accounting, as reported	$	3		$	13		$	(11	)	$	(4	)	$	(16	)	$	16		$	(18	)

Embedded Derivative liability balance at end of period	$	2,776		$	2,549		$	2,542		$	2,293		$	2,129		$	2,776		$	2,129

⁽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															Six Months Ended
	6/30/18			3/31/18			12/31/17			09/30/17			06/30/17			06/30/18			06/30/17
Detail of annuity benefits expense:
Interest credited - fixed	$	173		$	166		$	164		$	160		$	157		$	339		$	309
Interest credited - fixed component of variable annuities		2			1			1			1			2			3			3
Change in expected death and annuitization reserve		4			4			5			5			4			8			8
Amortization of sales inducements		5			5			5			4			4			10			10
Guaranteed withdrawal benefit reserve		19			23			16			18			17			42			33
Change in other benefit reserves		11			8			9			16			9			19			20
Unlockings (a)		54			—			35			—			—			54			—

Subtotal before impact of fair value accounting		268			207			235			204			193			475			383
Embedded derivative mark-to-market (b)		82			(63	)		178			127			112			19			259
Equity option mark-to-market		(90	)		38			(156	)		(116	)		(81	)		(52	)		(222	)

Subtotal impact of fair value accounting		(8	)		(25	)		22			11			31			(33	)		37

Total annuity benefits expense	$	260		$	182		$	257		$	215		$	224		$	442		$	420

(a)

Includes unlockings for fixed indexed annuity embedded derivative reserves, sales inducement asset and other reserves. Does not include unlocking income of $27 million in 2018 and $32 million in 2017 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 $27 million in Q2 2018 and $3 million in Q4 2017.

(b)	Excludes unlocking impact of $44 million in 2018 and $25 million in 2017.

Page 13

American Financial Group, Inc.

Net Spread on Fixed Annuities (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/18			3/31/18			12/31/17			09/30/17			06/30/17			06/30/18			06/30/17
Average fixed annuity investments (at amortized cost) (a)	$	33,935		$	33,002		$	32,245		$	31,713		$	30,988		$	33,469		$	30,522
Average annuity benefits accumulated		34,165			33,329			32,680			32,029			31,212			33,747			30,698

Annuity benefits accumulated in excess of investments (a)	$	(230	)	$	(327	)	$	(435	)	$	(316	)	$	(224	)	$	(278	)	$	(176	)

As % of average annuity benefits accumulated (except as noted)
Net investment income (as % of investments)		4.83	%		4.74	%		4.62	%		4.70	%		4.62	%		4.79	%		4.60	%
Interest credited		(2.02	%)		(1.99	%)		(2.00	%)		(2.01	%)		(2.01	%)		(2.01	%)		(2.01	%)

Net interest spread on fixed annuities		2.81	%		2.75	%		2.62	%		2.69	%		2.61	%		2.78	%		2.59	%
Policy charges and other miscellaneous income		0.10	%		0.10	%		0.10	%		0.10	%		0.12	%		0.10	%		0.13	%
Other annuity benefit expenses, net		(0.27	%)		(0.29	%)		(0.21	%)		(0.33	%)		(0.27	%)		(0.28	%)		(0.29	%)
Acquisition expenses		(0.89	%)		(0.94	%)		(0.60	%)		(0.65	%)		(0.58	%)		(0.91	%)		(0.62	%)
Other expenses		(0.35	%)		(0.38	%)		(0.37	%)		(0.36	%)		(0.38	%)		(0.36	%)		(0.38	%)
Change in fair value of derivatives		0.10	%		0.30	%		(0.27	%)		(0.14	%)		(0.39	%)		0.19	%		(0.24	%)
Unlockings		(0.32	%)		0.00	%		(0.06	%)		0.00	%		0.00	%		(0.16	%)		0.00	%

Net spread earned on fixed annuities		1.18	%		1.54	%		1.21	%		1.31	%		1.11	%		1.36	%		1.19	%

Average annuity benefits accumulated	$	34,165		$	33,329		$	32,680		$	32,029		$	31,212		$	33,747		$	30,698
Net spread earned on fixed annuities		1.18	%		1.54	%		1.21	%		1.31	%		1.11	%		1.36	%		1.19	%

Earnings on fixed annuity benefits accumulated	$	101		$	128		$	99		$	105		$	87		$	229		$	183
Annuity benefits accumulated in excess of investments	$	(230	)	$	(327	)	$	(435	)	$	(316	)	$	(224	)	$	(278	)	$	(176	)
Net investment income (as % of investments)		4.83	%		4.74	%		4.62	%		4.70	%		4.62	%		4.79	%		4.60	%

Earnings (loss) on annuity benefits accumulated in excess of investments	$	(3	)	$	(4	)	$	(5	)	$	(4	)	$	(3	)	$	(7	)	$	(4	)
Variable annuity earnings		1			1			3			1			1			2			2

Earnings before income taxes	$	99		$	125		$	97		$	102		$	85		$	224		$	181

Detail of net spread earned on fixed annuities
Net spread earned - before impact of fair value accounting and unlockings		1.46	%		1.38	%		1.40	%		1.36	%		1.32	%		1.43	%		1.31	%
Change in fair value of derivatives		0.10	%		0.30	%		(0.27	%)		(0.14	%)		(0.39	%)		0.19	%		(0.24	%)
Estimated net offsets to deferred sales inducements and deferred policy acquisition costs		(0.06	%)		(0.14	%)		0.14	%		0.09	%		0.18	%		(0.10	%)		0.12	%
Unlockings		(0.32	%)		0.00	%		(0.06	%)		0.00	%		0.00	%		(0.16	%)		0.00	%

Net spread earned - after impact of fair value accounting and unlockings		1.18	%		1.54	%		1.21	%		1.31	%		1.11	%		1.36	%		1.19	%

(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										Six Months Ended
	6/30/18		3/31/18		12/31/17		09/30/17		06/30/17		06/30/18		06/30/17
Retail single premium annuities - indexed	$	378	$	294	$	239	$	219	$	265	$	672	$	532
Retail single premium annuities - fixed		23		21		21		18		19		44		37
Broker dealer single premium annuities - indexed		355		259		174		148		209		614		411
Broker dealer single premium annuities - fixed		4		3		1		1		3		7		5
Financial institutions single premium annuities - indexed		448		413		364		360		500		861		987
Financial institutions single premium annuities - fixed		131		105		63		82		215		236		477
Education market - fixed and indexed annuities		54		46		41		41		47		100		92

Subtotal fixed annuity premiums		1,393		1,141		903		869		1,258		2,534		2,541
Variable annuities		6		7		6		7		8		13		15

Total annuity premiums	$	1,399	$	1,148	$	909	$	876	$	1,266	$	2,547	$	2,556

Summary by Distribution Channel:
Total retail	$	401	$	315	$	260	$	237	$	284	$	716	$	569

Total broker dealer	$	359	$	262	$	175	$	149	$	212	$	621	$	416

Total financial institutions	$	579	$	518	$	427	$	442	$	715	$	1,097	$	1,464

Summary by Product Type:
Total indexed	$	1,213	$	992	$	802	$	746	$	998	$	2,205	$	1,975

Total fixed	$	180	$	149	$	101	$	123	$	260	$	329	$	566

Page 15


American Financial Group, Inc. Fixed Annuity Benefits Accumulated (GAAP) ($ in millions)


	Three Months Ended															Six Months Ended
	6/30/18			3/31/18			12/31/17			09/30/17			06/30/17			06/30/18			06/30/17
Beginning fixed annuity reserves	$	33,652		$	33,005		$	32,354		$	31,704		$	30,719		$	33,005		$	29,647
Premiums		1,393			1,141			903			869			1,258			2,534			2,541
Federal Home Loan Bank (“FHLB”) advances (paydowns)		—			—			(64	)		—			—			—			—
Surrenders, benefits and other withdrawals		(706	)		(627	)		(596	)		(540	)		(571	)		(1,333	)		(1,110	)
Interest and other annuity benefit expenses:
Interest credited		173			166			164			160			157			339			309
Embedded derivative mark-to-market		82			(63	)		178			127			112			19			259
Change in other benefit reserves		29			30			25			34			29			59			58
Unlockings		55			—			41			—			—			55			—

Ending fixed annuity reserves	$	34,678		$	33,652		$	33,005		$	32,354		$	31,704		$	34,678		$	31,704

Reconciliation to annuity benefits accumulated:
Ending fixed annuity reserves	$	34,678		$	33,652		$	33,005		$	32,354		$	31,704		$	34,678		$	31,704
Impact of unrealized investment gains on reserves		32			71			133			138			128			32			128
Fixed component of variable annuities		176			178			178			179			182			176			182

Annuity benefits accumulated per balance sheet	$	34,886		$	33,901		$	33,316		$	32,671		$	32,014		$	34,886		$	32,014

Annualized surrenders and other withdrawals as a % of beginning reserves		8.4	%		7.6	%		7.4	%		6.8	%		7.4	%		8.1	%		7.5	%

Page 16


American Financial Group, Inc. Guaranteed Minimum Interest Rate (“GMIR”) Analysis ($ in millions)


GMIR	6/30/18			3/31/18			12/31/17			9/30/17			6/30/17			3/31/17
1 - 1.99%		78	%		77	%		76	%		75	%		75	%		73	%
2 - 2.99%		4	%		5	%		5	%		5	%		5	%		6	%
3 - 3.99%		9	%		9	%		10	%		10	%		10	%		11	%
4.00% and above		9	%		9	%		9	%		10	%		10	%		10	%
Annuity Benefits Accumulated	$	34,886		$	33,901		$	33,316		$	32,671		$	32,014		$	31,002
Traditional Fixed and FIA Surrender Value (a) (b)	$	26,502		$	25,582		$	25,138		$	24,428		$	23,925		$	23,284
Ability to Lower Average Crediting Rates by (a) (c)		1.09	%		1.00	%		0.92	%		0.88	%		0.86	%		0.82	%
Pretax earnings impact of crediting guaranteed minimums (a) (assumes net DAC impact over time = $0)	$	288		$	255		$	230		$	216		$	206		$	191

(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)


	6/30/18			3/31/18			12/31/17			09/30/17			06/30/17			03/31/17
Assets:
Total cash and investments	$	46,779		$	45,949		$	46,048		$	45,253		$	44,779		$	43,350
Recoverables from reinsurers		3,073			3,173			3,369			3,262			2,839			2,735
Prepaid reinsurance premiums		645			614			600			691			587			533
Agents’ balances and premiums receivable		1,266			1,113			1,146			1,173			1,124			989
Deferred policy acquisition costs		1,582			1,417			1,216			1,119			1,156			1,205
Assets of managed investment entities		5,032			5,090			4,902			4,767			4,873			5,331
Other receivables		1,048			918			1,030			1,545			923			875
Variable annuity assets (separate accounts)		636			632			644			628			620			614
Other assets		1,574			1,551			1,504			1,526			1,518			1,633
Goodwill		199			199			199			199			199			199

Total assets	$	61,834		$	60,656		$	60,658		$	60,163		$	58,618		$	57,464

Liabilities and Equity:
Unpaid losses and loss adjustment expenses	$	9,093		$	9,193		$	9,678		$	9,563		$	8,730		$	8,621
Unearned premiums		2,539			2,413			2,410			2,567			2,294			2,174
Annuity benefits accumulated		34,886			33,901			33,316			32,671			32,014			31,002
Life, accident and health reserves		647			656			658			667			676			687
Payable to reinsurers		721			661			743			906			681			621
Liabilities of managed investment entities		4,840			4,869			4,687			4,506			4,685			5,101
Long-term debt		1,301			1,301			1,301			1,284			1,405			1,283
Variable annuity liabilities (separate accounts)		636			632			644			628			620			614
Other liabilities		2,087			1,847			1,887			1,992			2,201			2,166

Total liabilities	$	56,750		$	55,473		$	55,324		$	54,784		$	53,306		$	52,269
Redeemable noncontrolling interests	$	—		$	—		$	3		$	—		$	—		$	—
Shareholders’ equity:
Common stock	$	89		$	89		$	88		$	88		$	88		$	88
Capital surplus		1,220			1,205			1,181			1,167			1,158			1,138
Retained earnings		3,628			3,584			3,248			3,435			3,451			3,466
Unrealized gains - equities		—			—			221			173			158			145
Unrealized gains - fixed maturities		191			342			619			533			481			384
Unrealized gains (losses) - fixed maturity-related cash flow hedges		(27	)		(24	)		(13	)		(6	)		(6	)		(8	)
Other comprehensive income, net of tax		(17	)		(13	)		(14	)		(11	)		(18	)		(22	)

Total shareholders’ equity		5,084			5,183			5,330			5,379			5,312			5,191
Noncontrolling interests		—			—			1			—			—			4

Total liabilities and equity	$	61,834		$	60,656		$	60,658		$	60,163		$	58,618		$	57,464

Page 18


American Financial Group, Inc. Book Value Per Share and Price / Book Summary (in millions, except per share information)


	6/30/18			3/31/18			12/31/17			09/30/17			06/30/17			03/31/17
Shareholders’ equity	$	5,084		$	5,183		$	5,330		$	5,379		$	5,312		$	5,191
Unrealized (gains) related to fixed maturities		(164	)		(318	)		(606	)		(527	)		(475	)		(376	)

Adjusted shareholders’ equity		4,920			4,865			4,724			4,852			4,837			4,815
Goodwill		(199	)		(199	)		(199	)		(199	)		(199	)		(199	)
Intangibles		(34	)		(36	)		(26	)		(29	)		(30	)		(32	)

Tangible adjusted shareholders’ equity	$	4,687		$	4,630		$	4,499		$	4,624		$	4,608		$	4,584

Common shares outstanding		89.072			88.881			88.275			88.093			88.007			87.592
Book value per share:
Book value per share	$	57.08		$	58.32		$	60.38		$	61.06		$	60.36		$	59.26
Adjusted (a)		55.24			54.74			53.51			55.08			54.97			54.98
Tangible, adjusted (b)		52.63			52.10			50.95			52.50			52.36			52.34
Market capitalization
AFG’s closing common share price	$	107.33		$	112.22		$	108.54		$	103.45		$	99.37		$	95.42
Market capitalization	$	9,560		$	9,974		$	9,581		$	9,113		$	8,745		$	8,358
Price / Adjusted book value ratio		1.94			2.05			2.03			1.88			1.81			1.74

(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)


	6/30/18			3/31/18			12/31/17			09/30/17			06/30/17			03/31/17
AFG senior obligations	$	1,018		$	1,018		$	1,018		$	1,003		$	1,128		$	1,008
Borrowings drawn under credit facility		—			—			—			—			—			—

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

Total principal amount of long-term debt	$	1,318		$	1,318		$	1,318		$	1,303		$	1,428		$	1,308
Shareholders’ equity		5,084			5,183			5,330			5,379			5,312			5,191
Noncontrolling interests (including redeemable NCI)		—			—			4			—			—			4
Less:
Unrealized (gains) - fixed maturity investments		(191	)		(342	)		(619	)		(533	)		(481	)		(384	)

Total adjusted capital	$	6,211		$	6,159		$	6,033		$	6,149		$	6,259		$	6,119

Ratio of debt to total adjusted capital:
Including subordinated debt		21.2	%		21.4	%		21.8	%		21.2	%		22.8	%		21.4	%
Excluding subordinated debt		16.4	%		16.5	%		16.9	%		16.3	%		18.0	%		16.5	%

Page 20

American Financial Group, Inc.

Additional Supplemental Information

($ in millions)


	Three Months Ended										Six Months Ended
	6/30/18		3/31/18		12/31/17		09/30/17		06/30/17		06/30/18		06/30/17
Property and Casualty Insurance
Paid Losses (GAAP)	$	629	$	640	$	726	$	596	$	652	$	1,269	$	1,206


	6/30/18		3/31/18		12/31/17		09/30/17		06/30/17		03/31/17
Statutory Surplus
Property and Casualty Insurance	$	2,797	$	2,781	$	2,729	$	2,817	$	2,882	$	3,013
AFG’s principal annuity subsidiaries (total adjusted capital)	$	2,511	$	2,442	$	2,442	$	2,433	$	2,389	$	2,341
Allowable dividends without regulatory approval
Property and Casualty Insurance	$	563	$	563	$	563	$	496	$	496	$	496
Annuity and Run-off		263		263		263		197		197		197

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

Page 21

American Financial Group, Inc.

Total Cash and Investments

($ in millions)


	Carrying Value - June 30, 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	$	862	$	674	$	274	$	—		$	1,810		4	%
Fixed maturities - Available for sale		7,506		32,130		12		—			39,648		85	%
Fixed maturities - Trading		81		56		—		—			137		0	%
Equity securities		1,036		687		54		—			1,777		4	%
Investments accounted for using the equity method		475		719		—		—			1,194		3	%
Mortgage loans		307		840		—		—			1,147		2	%
Policy loans		—		179		—		—			179		0	%
Equity index call options		—		615		—		—			615		1	%
Real estate and other investments		138		272		53		(191	)		272		1	%

Total cash and investments	$	10,405	$	36,172	$	393	$	(191	)	$	46,779		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															Six Months Ended
	6/30/18			3/31/18			12/31/17			09/30/17			06/30/17			06/30/18			06/30/17
Property and Casualty Insurance:
Gross Investment Income
Fixed maturities - Available for sale	$	72		$	66		$	65		$	65		$	65		$	138		$	128
Fixed maturities - Trading		2			—			—			—			2			2			3
Equity securities		16			13			13			12			12			29			26
Equity in investees		18			17			4			8			11			35			15
Other investments		9			6			8			11			8			15			14

Gross investment income		117			102			90			96			98			219			186
Investment expenses		(2	)		(2	)		(4	)		(2	)		(2	)		(4	)		(4	)

Total net investment income	$	115		$	100		$	86		$	94		$	96		$	215		$	182

Average cash and investments (a)	$	10,346		$	10,422		$	10,062		$	9,851		$	9,947		$	10,395		$	9,872

Average yield (b)		4.45	%		3.84	%		3.42	%		3.82	%		3.86	%		4.14	%		3.69	%

Fixed Annuity
Gross Investment Income
Fixed maturities - Available for sale	$	350		$	338		$	342		$	332		$	322		$	688		$	640
Equity securities		18			8			7			5			5			26			10
Equity in investees		23			29			9			12			10			52			16
Other investments		22			19			19			26			22			41			41

Gross investment income		413			394			377			375			359			807			707
Investment expenses		(3	)		(3	)		(4	)		(2	)		(2	)		(6	)		(5	)

Total net investment income	$	410		$	391		$	373		$	373		$	357		$	801		$	702

Average cash and investments (a)	$	33,935		$	33,002		$	32,245		$	31,713		$	30,988		$	33,469		$	30,522

Average yield (b)		4.83	%		4.74	%		4.62	%		4.70	%		4.62	%		4.79	%		4.60	%

AFG consolidated net investment income:
Property & Casualty	$	115		$	100		$	86		$	94		$	96		$	215		$	182
Annuity:
Fixed Annuity		410			391			373			373			357			801			702
Variable Annuity		2			3			3			2			3			5			5
Parent & other		7			4			10			7			9			11			17
Consolidate CLOs		(4	)		(3	)		(7	)		(5	)		(5	)		(7	)		(11	)

Total net investment income	$	530		$	495		$	465		$	471		$	460		$	1,025		$	895

(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 )


												% of
	Amortized					Unrealized			% of			Investment
June 30, 2018	Cost			Fair Value		Gain (Loss)			Fair Value			Portfolio
US Government and government agencies	$	278		$	275	$	(3	)		1	%		1	%
States, municipalities and political subdivisions		6,829			6,938		109			17	%		15	%
Foreign government		149			151		2			0	%		0	%
Residential mortgage-backed securities		2,566			2,888		322			7	%		6	%
Commercial mortgage-backed securities		920			934		14			2	%		2	%
Asset-backed securities		8,849			8,935		86			23	%		19	%
Corporate and other bonds		19,790			19,664		(126	)		50	%		42	%

Total AFG consolidated	$	39,381		$	39,785	$	404			100	%		85	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.42	%
Net of investment expense (a)		4.37	%
Approximate average life and duration:
Approximate average life		6 years
Approximate duration		4.5 years

												% of
	Amortized					Unrealized			% of			Investment
December 31, 2017	Cost			Fair Value		Gain (Loss)			Fair Value			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 )


	June 30, 2018											December 31, 2017
	Amortized					Unrealized			% of			Amortized					Unrealized			% of
	Cost			Fair Value		Gain (Loss)			Fair Value			Cost			Fair Value		Gain (Loss)			Fair Value
Property and Casualty Insurance:
US Government and government agencies	$	232		$	230	$	(2	)		3	%	$	244		$	243	$	(1	)		3	%
States, municipalities and political subdivisions		2,658			2,669		11			35	%		2,740			2,798		58			38	%
Foreign government		138			138		—			2	%		228			229		1			3	%
Residential mortgage-backed securities		759			831		72			11	%		843			918		75			13	%
Commercial mortgage-backed securities		86			87		1			1	%		93			95		2			1	%
Asset-backed securities		2,193			2,187		(6	)		29	%		1,716			1,724		8			23	%
Corporate and other bonds		1,457			1,445		(12	)		19	%		1,349			1,367		18			19	%

Property and Casualty Insurance	$	7,523		$	7,587	$	64			100	%	$	7,213		$	7,374	$	161			100	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		3.89	%										3.73	%
Net of investment expense (a)		3.79	%										3.54	%
Tax equivalent, net of investment expense (b)		4.00	%										4.03	%
Approximate average life and duration:
Approximate average life		5 years											5 years
Approximate duration		4 years											4 years

	June 30, 2018											December 31, 2017
	Amortized					Unrealized			% of			Amortized					Unrealized			% of
	Cost			Fair Value		Gain (Loss)			Fair Value			Cost			Fair Value		Gain (Loss)			Fair Value
Annuity and Run-off:
US Government and government agencies	$	46		$	45	$	(1	)		0	%	$	48		$	47	$	(1	)		0	%
States, municipalities and political subdivisions		4,171			4,269		98			13	%		4,172			4,350		178			14	%
Foreign government		11			13		2			0	%		11			13		2			0	%
Residential mortgage-backed securities		1,804			2,045		241			6	%		2,041			2,299		258			7	%
Commercial mortgage-backed securities		834			847		13			3	%		835			868		33			3	%
Asset-backed securities		6,656			6,748		92			21	%		6,120			6,238		118			20	%
Corporate and other bonds		18,333			18,219		(114	)		57	%		16,942			17,524		582			56	%

Total Annuity and Run-off	$	31,855		$	32,186	$	331			100	%	$	30,169		$	31,339	$	1,170			100	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.53	%										4.66	%
Net of investment expense (a)		4.49	%										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)


	June 30, 2018
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value
Investment grade
AAA	$	6,691	$	6,706	$	15			17	%
AA		8,360		8,487		127			21	%
A		9,574		9,581		7			24	%
BBB		11,075		11,041		(34	)		28	%

Subtotal - Investment grade		35,700		35,815		115			90	%
BB		784		779		(5	)		2	%
B		279		280		1			1	%
Other (b)		2,618		2,911		293			7	%

Subtotal - Non-Investment grade		3,681		3,970		289			10	%

Total	$	39,381	$	39,785	$	404			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)


											% of
June 30, 2018	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			Investment Portfolio
Residential
Agency	$	189	$	185	$	(4	)		5	%		0	%
Prime (Non-Agency)		1,076		1,231		155			32	%		3	%
Alt-A		891		1,015		124			27	%		2	%
Subprime		410		457		47			12	%		1	%
Commercial		920		934		14			24	%		2	%

Total AFG consolidated	$	3,486	$	3,822	$	336			100	%		8	%

•

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

•

The average amortized cost as a percent of par is - Prime 82%; Alt-A 78%; Subprime 83%; CMBS 99%.

•

The average FICO score of our residential MBS securities is - Prime 733; Alt-A 702; Subprime 631.

•

94% 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.


											% of
December 31, 2017	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			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:	June 30, 2018
	Amortized				Unrealized			% of			% of Inv
By Asset Type	Cost		Fair Value		Gain (Loss)			Fair Value			Portfolio
Residential
Agency	$	151	$	147	$	(4	)		16	%		1	%
Prime (Non-Agency)		155		175		20			19	%		2	%
Alt-A		275		312		37			34	%		3	%
Subprime		178		197		19			21	%		2	%
Commercial		86		87		1			10	%		1	%

Total	$	845	$	918	$	73			100	%		9	%


	December 31, 2017
	Amortized				Unrealized			% of			% of Inv
By Asset Type	Cost		Fair Value		Gain (Loss)			Fair Value			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:	June 30, 2018
	Amortized				Unrealized			% of			% of Inv
By Asset Type	Cost		Fair Value		Gain (Loss)			Fair Value			Portfolio
Residential
Agency	$	38	$	38	$	—			1	%		0	%
Prime (Non-Agency)		918		1,044		126			36	%		3	%
Alt-A		616		703		87			25	%		2	%
Subprime		232		260		28			9	%		1	%
Commercial		834		847		13			29	%		2	%

Total	$	2,638	$	2,892	$	254			100	%		8	%


	December 31, 2017
	Amortized				Unrealized			% of			% of Inv
By Asset Type	Cost		Fair Value		Gain (Loss)			Fair Value			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)


	June 30, 2018
	Amortized				Unrealized		% of
By Credit Rating (a)	Cost		Fair Value		Gain (Loss)		Fair Value
Investment grade
AAA	$	1,153	$	1,165	$	12		30	%
AA		132		137		5		4	%
A		150		157		7		4	%
BBB		205		219		14		6	%

Subtotal - investment grade		1,640		1,678		38		44	%
BB		183		186		3		5	%
B		187		191		4		5	%
Other (b)		1,476		1,767		291		46	%

Total	$	3,486	$	3,822	$	336		100	%

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


	December 31, 2017
	Amortized				Unrealized		% of
By Credit Rating (a)	Cost		Fair Value		Gain (Loss)		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 30 for more information.

Page 29


Appendix A
American Financial Group, Inc.
Fixed Maturities - Credit Rating by Type
($ in millions)


	Fair Value - June 30, 2018
By Credit Rating (a)	US Gov		Munis		Frgn gov		RMBS		CMBS		ABS		Corp/Oth		Total		% Total
Investment grade
AAA	$	238	$	1,847	$	88	$	403	$	762	$	3,173	$	195	$	6,706		17	%
AA		29		4,445		56		119		18		2,405		1,415		8,487		21	%
A		—		508		1		135		22		1,976		6,939		9,581		24	%
BBB		—		61		—		145		74		764		9,997		11,041		28	%

Subtotal - Investment grade		267		6,861		145		802		876		8,318		18,546		35,815		90	%
BB		—		—		—		150		36		25		568		779		2	%
B		—		8		—		187		4		4		77		280		1	%
CCC, CC, C		—		—		—		881		6		3		20		910		2	%
D		—		3		—		262		—		—		—		265		1	%

Subtotal - Non-Investment grade		—		11		—		1,480		46		32		665		2,234		6	%
Not Rated		8		66		6		606		12		585		453		1,736		4	%

Total	$	275	$	6,938	$	151	$	2,888	$	934	$	8,935	$	19,664	$	39,785		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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