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

Attached files

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8-K - 8-K - AMERICAN FINANCIAL GROUP INC	d643498d8k.htm
EX-99.1 - EX-99.1 - AMERICAN FINANCIAL GROUP INC	d643498dex991.htm

Exhibit 99.2


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

		October 31, 2018

		American Financial Group, Inc. Corporate Headquarters Great American Insurance Group Tower 301 E Fourth Street Cincinnati, OH 45202 513 579 6739

American Financial Group, Inc.

Table of Contents - Investor Supplement - Third Quarter 2018


Section	Page
Table of Contents - Investor Supplement - Third 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															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			09/30/17			09/30/18			09/30/17
Highlights
Net earnings	$	204		$	210		$	145		$	166		$	11		$	559		$	309
Core net operating earnings		198			185			219			197			95			602			391
Total assets		64,190			61,834			60,656			60,658			60,163			64,190			60,163
Adjusted shareholders’ equity (a)		5,103			4,920			4,865			4,724			4,852			5,103			4,852
Property and Casualty net written premiums		1,456			1,257			1,102			1,161			1,433			3,815			3,590
Annuity statutory premiums		1,378			1,399			1,148			909			876			3,925			3,432

Per share data
Diluted earnings per share	$	2.26		$	2.31		$	1.60		$	1.84		$	0.13		$	6.17		$	3.44
Core net operating earnings per share		2.19			2.04			2.42			2.20			1.06			6.65			4.35
Adjusted book value per share (a)		57.22			55.24			54.74			53.51			55.08			57.22			55.08

Cash dividends per common share		0.3500			1.8500			0.3500			2.3500			0.3125			2.5500			2.4375

Financial ratios
Annualized return on equity (b)		16.3	%		17.1	%		12.3	%		14.4	%		1.0	%		15.3	%		8.9	%
Annualized core operating return on equity (b)		15.8	%		15.1	%		18.6	%		17.2	%		8.1	%		16.5	%		11.2	%

Property and Casualty combined ratio - Specialty:
Loss & LAE ratio		64.3	%		59.7	%		57.8	%		59.8	%		71.4	%		60.8	%		64.0	%
Underwriting expense ratio		31.4	%		34.0	%		33.9	%		27.5	%		27.9	%		33.0	%		31.2	%

Combined ratio - Specialty		95.7	%		93.7	%		91.7	%		87.3	%		99.3	%		93.8	%		95.2	%

Net spread on fixed annuities:
Net interest spread		2.67	%		2.81	%		2.75	%		2.62	%		2.69	%		2.74	%		2.63	%
Net spread earned:
Before impact of fair value accounting and unlockings		1.37	%		1.46	%		1.38	%		1.40	%		1.36	%		1.41	%		1.32	%
Impact of fair value accounting (c)		(0.02	%)		0.04	%		0.16	%		(0.13	%)		(0.05	%)		0.05	%		(0.09	%)
Unlockings		0.00	%		(0.32	%)		0.00	%		(0.06	%)		0.00	%		(0.11	%)		0.00	%

After impact of fair value accounting and unlockings		1.35	%		1.18	%		1.54	%		1.21	%		1.31	%		1.35	%		1.23	%

(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															Nine Months Ended
	09/30/18			06/30/18			3/31/18			12/31/17			09/30/17			09/30/18			09/30/17
Property and Casualty Insurance
Underwriting profit	$	56		$	72		$	91		$	155		$	8		$	219		$	158
Net investment income		108			115			100			86			94			323			276
Other income (expense)		(6	)		(7	)		(3	)		(8	)		(7	)		(16	)		(7	)

Property and Casualty Insurance operating earnings		158			180			188			233			95			526			427

Annuity earnings		117			99			125			97			102			341			283
Interest expense of parent holding companies		(15	)		(16	)		(15	)		(20	)		(21	)		(46	)		(65	)
Other expense		(22	)		(32	)		(27	)		(27	)		(18	)		(81	)		(65	)

Pre-tax core operating earnings		238			231			271			283			158			740			580

Income tax expense		40			46			52			86			63			138			189

Core net operating earnings		198			185			219			197			95			602			391
Non-core items, net of tax:
Realized gains (losses) on securities		27			25			(74	)		4			(8	)		(22	)		(1	)
Special A&E charges:
Property and Casualty Insurance run-off operations		(14	)		—			—			—			(58	)		(14	)		(58	)
Former Railroad and Manufacturing operations		(7	)		—			—			—			(16	)		(7	)		(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	)		—			(7	)

Net earnings	$	204		$	210		$	145		$	166		$	11		$	559		$	309

Page 4

American Financial Group, Inc.

Earnings Per Share Summary

(in millions, except per share information)


	Three Months Ended														Nine Months Ended
	9/30/18			6/30/18		3/31/18			12/31/17			09/30/17			09/30/18			09/30/17
Core net operating earnings	$	198		$	185	$	219		$	197		$	95		$	602		$	391

Net earnings	$	204		$	210	$	145		$	166		$	11		$	559		$	309

Average number of diluted shares		90.731			90.663		90.431			90.109			89.984			90.610			89.712

Diluted earnings per share:
Core net operating earnings per share	$	2.19		$	2.04	$	2.42		$	2.20		$	1.06		$	6.65		$	4.35

Realized gains (losses) on securities		0.31			0.27		(0.82	)		0.04			(0.08	)		(0.24	)		(0.01	)
Special A&E charges:
Property and Casualty Insurance run-off operations		(0.16	)		—		—			—			(0.64	)		(0.16	)		(0.64	)
Former Railroad and Manufacturing operations		(0.08	)		—		—			—			(0.18	)		(0.08	)		(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	)		—			(0.08	)

Diluted earnings per share	$	2.26		$	2.31	$	1.60		$	1.84		$	0.13		$	6.17		$	3.44

Page 5

American Financial Group, Inc.

Property and Casualty Insurance - Summary Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			09/30/17			09/30/18			09/30/17
Property and Transportation	$	—		$	23		$	33		$	84		$	6		$	56		$	70
Specialty Casualty		49			29			41			58			2			119			46
Specialty Financial		9			22			15			19			(3	)		46			42
Other Specialty		(3	)		(1	)		3			(5	)		4			(1	)		3

Underwriting profit - Specialty		55			73			92			156			9			220			161
Other core charges, included in loss and LAE		(1	)		1			1			1			1			1			3

Underwriting profit - Core		56			72			91			155			8			219			158
Special A&E charges, included in loss and LAE		(18	)		—			—			—			(89	)		(18	)		(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	$	38		$	72		$	91		$	173		$		(81)	$	201		$	69

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	3		$	—		$	—		$	4		$	6		$	3		$	6
Catastrophe loss		35			16			13			8			107			64			132

Total current accident year catastrophe losses	$	38		$	16		$	13		$	12		$	113		$	67		$	138

Prior year loss reserve development (favorable) / adverse	$		(31)	$		(44)	$	(56	)	$		(66)	$	52		$	(131	)	$	2

Combined ratio:
Property and Transportation		100.0	%		93.9	%		90.4	%		82.6	%		98.9	%		95.5	%		94.3	%
Specialty Casualty		92.1	%		95.1	%		92.9	%		90.0	%		99.5	%		93.3	%		97.1	%
Specialty Financial		94.4	%		85.6	%		90.2	%		86.2	%		102.2	%		90.0	%		90.4	%
Other Specialty		103.0	%		105.5	%		90.7	%		123.0	%		85.1	%		100.3	%		95.8	%
Combined ratio - Specialty		95.7	%		93.7	%		91.7	%		87.3	%		99.3	%		93.8	%		95.2	%
Other core charges		0.0	%		0.0	%		0.1	%		0.1	%		0.1	%		0.0	%		0.1	%
Neon exited lines charge, loss and LAE		0.0	%		0.0	%		0.0	%		(1.4	%)		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		1.5	%		0.0	%		0.0	%		0.0	%		7.0	%		0.6	%		2.6	%

Combined ratio		97.2	%		93.7	%		91.8	%		86.0	%		106.4	%		94.4	%		97.9	%

Combined ratio excl. catastrophe and prior year development		96.8	%		96.2	%		95.6	%		90.8	%		93.8	%		96.3	%		93.9	%

Loss and LAE components - property and casualty insurance
Current accident year, excluding catastrophe loss		65.4	%		62.2	%		61.7	%		63.3	%		65.9	%		63.3	%		62.7	%
Prior accident year loss reserve development		(2.2	%)		(3.9	%)		(5.0	%)		(5.4	%)		4.2	%		(3.7	%)		0.1	%
Current accident year catastrophe loss		2.6	%		1.4	%		1.2	%		0.6	%		8.4	%		1.8	%		3.9	%

Loss and LAE ratio		65.8	%		59.7	%		57.9	%		58.5	%		78.5	%		61.4	%		66.7	%

Page 6

American Financial Group, Inc.

Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			09/30/17			09/30/18			09/30/17
Gross written premiums	$	2,104		$	1,665		$	1,458		$	1,571		$	2,104		$	5,227		$	4,931
Ceded reinsurance premiums		(648	)		(408	)		(356	)		(410	)		(671	)		(1,412	)		(1,341	)

Net written premiums		1,456			1,257			1,102			1,161			1,433			3,815			3,590
Change in unearned premiums		(129	)		(96	)		5			64			(166	)		(220	)		(236	)

Net earned premiums		1,327			1,161			1,107			1,225			1,267			3,595			3,354
Loss and LAE		855			692			640			733			905			2,187			2,147
Underwriting expense		417			396			375			336			353			1,188			1,046

Underwriting profit	$	55		$	73		$	92		$	156		$	9		$	220		$	161

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	3		$	—		$	—		$	4		$	6		$	3		$	6
Catastrophe loss		35			16			13			8			107			64			132

Total current accident year catastrophe losses	$	38		$	16		$	13		$	12		$	113		$	67		$	138

Prior year loss reserve development (favorable) / adverse	$	(49)		$	(45)		$	(57)		$	(49)		$	(38)		$	(151)		$	(90)

Combined ratio:
Loss and LAE ratio		64.3	%		59.7	%		57.8	%		59.8	%		71.4	%		60.8	%		64.0	%
Underwriting expense ratio		31.4	%		34.0	%		33.9	%		27.5	%		27.9	%		33.0	%		31.2	%

Combined ratio		95.7	%		93.7	%		91.7	%		87.3	%		99.3	%		93.8	%		95.2	%

Combined ratio excl. catastrophe and prior year development		96.8	%		96.2	%		95.6	%		90.8	%		93.8	%		96.3	%		93.9	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		65.4	%		62.2	%		61.7	%		63.3	%		65.9	%		63.3	%		62.7	%
Prior accident year loss reserve development		(3.7	%)		(3.9	%)		(5.1	%)		(4.1	%)		(2.9	%)		(4.3	%)		(2.6	%)
Current accident year catastrophe loss		2.6	%		1.4	%		1.2	%		0.6	%		8.4	%		1.8	%		3.9	%

Loss and LAE ratio		64.3	%		59.7	%		57.8	%		59.8	%		71.4	%		60.8	%		64.0	%

Page 7

American Financial Group, Inc.

Property and Transportation - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			09/30/17			09/30/18			09/30/17
Gross written premiums	$	953		$	615		$	426		$	626		$	1,073		$	1,994		$	2,062
Ceded reinsurance premiums		(393	)		(193	)		(102	)		(202	)		(449	)		(688	)		(721	)

Net written premiums		560			422			324			424			624			1,306			1,341
Change in unearned premiums		(34	)		(48	)		26			61			(97	)		(56	)		(115	)

Net earned premiums		526			374			350			485			527			1,250			1,226
Loss and LAE		406			239			220			325			407			865			847
Underwriting expense		120			112			97			76			114			329			309

Underwriting profit	$	—		$	23		$	33		$	84		$	6		$	56		$	70

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	1		$	—		$	—		$	—		$	2		$	1		$	2
Catastrophe loss		12			10			5			(3	)		23			27			39

Total current accident year catastrophe losses	$	13		$	10		$	5		$	(3)		$	25		$	28		$	41

Prior year loss reserve development (favorable) / adverse	$	(4)		$	(21	)	$	(18	)	$	(4)		$	(8)		$	(43)		$	(36)

Combined ratio:
Loss and LAE ratio		77.1	%		63.8	%		63.0	%		67.1	%		77.3	%		69.2	%		69.1	%
Underwriting expense ratio		22.9	%		30.1	%		27.4	%		15.5	%		21.6	%		26.3	%		25.2	%

Combined ratio		100.0	%		93.9	%		90.4	%		82.6	%		98.9	%		95.5	%		94.3	%

Combined ratio excl. catastrophe and prior year development		98.5	%		96.8	%		94.1	%		84.0	%		96.0	%		96.8	%		94.1	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		75.6	%		66.7	%		66.7	%		68.5	%		74.4	%		70.5	%		68.9	%
Prior accident year loss reserve development		(0.8	%)		(5.6	%)		(5.1	%)		(0.8	%)		(1.5	%)		(3.5	%)		(3.0	%)
Current accident year catastrophe loss		2.3	%		2.7	%		1.4	%		(0.6	%)		4.4	%		2.2	%		3.2	%

Loss and LAE ratio		77.1	%		63.8	%		63.0	%		67.1	%		77.3	%		69.2	%		69.1	%

Page 8

American Financial Group, Inc.

Specialty Casualty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			09/30/17			09/30/18			09/30/17
Gross written premiums	$	956		$	858			853		$	737		$	850		$	2,667		$	2,350
Ceded reinsurance premiums		(261	)		(219	)		(259	)		(182	)		(226	)		(739	)		(625	)

Net written premiums		695			639			594			555			624			1,928			1,725
Change in unearned premiums		(79	)		(44	)		(15	)		18			(56	)		(138	)		(112	)

Net earned premiums		616			595			579			573			568			1,790			1,613
Loss and LAE		364			378			345			338			402			1,087			1,072
Underwriting expense		203			188			193			177			164			584			495

Underwriting profit	$	49		$	29		$	41		$	58		$	2		$	119		$	46

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	1		$	—		$	—		$	4		$	2		$	1		$	2
Catastrophe loss		11			1			5			14			54			17			57

Total current accident year catastrophe losses	$	12		$	1		$	5		$	18		$	56		$	18		$	59

Prior year loss reserve development (favorable) / adverse	$	(37	)	$	(15	)	$	(35	)	$	(52	)	$	(23	)	$	(87	)	$	(34	)

Combined ratio:
Loss and LAE ratio		59.2	%		63.4	%		59.5	%		59.1	%		70.7	%		60.7	%		66.4	%
Underwriting expense ratio		32.9	%		31.7	%		33.4	%		30.9	%		28.8	%		32.6	%		30.7	%

Combined ratio		92.1	%		95.1	%		92.9	%		90.0	%		99.5	%		93.3	%		97.1	%

Combined ratio excl. catastrophe and prior year development		96.4	%		97.5	%		97.9	%		96.7	%		94.0	%		97.2	%		95.7	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		63.5	%		65.8	%		64.5	%		65.8	%		65.2	%		64.6	%		65.0	%
Prior accident year loss reserve development		(6.0	%)		(2.5	%)		(6.0	%)		(9.2	%)		(4.0	%)		(4.8	%)		(2.1	%)
Current accident year catastrophe loss		1.7	%		0.1	%		1.0	%		2.5	%		9.5	%		0.9	%		3.5	%

Loss and LAE ratio		59.2	%		63.4	%		59.5	%		59.1	%		70.7	%		60.7	%		66.4	%

Page 9

American Financial Group, Inc.

Specialty Financial - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			09/30/17			09/30/18			09/30/17
Gross written premiums	$	195		$	192			179		$	208		$	181		$	566		$	519
Ceded reinsurance premiums		(42	)		(33	)		(31	)		(52	)		(31	)		(106	)		(79	)

Net written premiums		153			159			148			156			150			460			440
Change in unearned premiums		(4	)		—			1			(15	)		(8	)		(3	)		(5	)

Net earned premiums		149			159			149			141			142			457			435
Loss and LAE		60			54			60			47			79			174			180
Underwriting expense		80			83			74			75			66			237			213

Underwriting profit (loss)	$	9		$	22		$	15		$	19		$		(3)	$	46		$	42

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	1		$	—		$	—		$	—		$	2		$	1		$	2
Catastrophe loss		12			3			3			(5	)		29			18			35

Total current accident year catastrophe losses	$	13		$	3		$	3		$		(5)	$	31		$	19		$	37

Prior year loss reserve development (favorable) / adverse	$	(8	)	$	(8	)	$	(3	)	$	1		$	(5	)	$	(19	)	$	(22	)

Combined ratio:
Loss and LAE ratio		40.1	%		33.9	%		40.2	%		33.1	%		56.0	%		38.0	%		41.4	%
Underwriting expense ratio		54.3	%		51.7	%		50.0	%		53.1	%		46.2	%		52.0	%		49.0	%

Combined ratio		94.4	%		85.6	%		90.2	%		86.2	%		102.2	%		90.0	%		90.4	%

Combined ratio excl. catastrophe and prior year development		91.5	%		89.0	%		90.2	%		89.1	%		84.9	%		90.2	%		87.4	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		37.2	%		37.3	%		40.2	%		36.0	%		38.7	%		38.2	%		38.4	%
Prior accident year loss reserve development		(5.1	%)		(5.4	%)		(1.8	%)		0.8	%		(3.1	%)		(4.1	%)		(5.0	%)
Current accident year catastrophe loss		8.0	%		2.0	%		1.8	%		(3.7	%)		20.4	%		3.9	%		8.0	%

Loss and LAE ratio		40.1	%		33.9	%		40.2	%		33.1	%		56.0	%		38.0	%		41.4	%

Page 10

American Financial Group, Inc.

Other Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			09/30/17			09/30/18			09/30/17
Gross written premiums	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Ceded reinsurance premiums		48			37			36			26			35			121			84

Net written premiums		48			37			36			26			35			121			84
Change in unearned premiums		(12	)		(4	)		(7	)		—			(5	)		(23	)		(4	)

Net earned premiums		36			33			29			26			30			98			80
Loss and LAE		25			21			15			23			17			61			48
Underwriting expense		14			13			11			8			9			38			29

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

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

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

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

Combined ratio:
Loss and LAE ratio		65.5	%		68.7	%		51.3	%		86.2	%		52.6	%		62.5	%		60.4	%
Underwriting expense ratio		37.5	%		36.8	%		39.4	%		36.8	%		32.5	%		37.8	%		35.4	%

Combined ratio		103.0	%		105.5	%		90.7	%		123.0	%		85.1	%		100.3	%		95.8	%

Combined ratio excl. catastrophe and prior year development		103.7	%		99.6	%		96.6	%		94.5	%		90.4	%		100.2	%		92.3	%

Page 11


American Financial Group, Inc. Annuity Earnings (GAAP) ($ in millions)


	Three Months Ended															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			09/30/17			09/30/18			09/30/17
Net investment income	$	413		$	412		$	394		$	376		$	375		$	1,219		$	1,082
Guaranteed withdrawal benefit fees		16			16			16			17			15			48			43
Policy charges and other miscellaneous income		11			11			10			7			11			32			36

Total revenues		440			439			420			400			401			1,299			1,161
Annuity benefits		222			260			182			257			215			664			635
Acquisition expenses		69			49			81			15			54			199			153
Other expenses		32			31			32			31			30			95			90

Total costs and expenses		323			340			295			303			299			958			878

Annuity earnings before income taxes	$	117		$	99		$	125		$	97		$	102		$	341		$	283

Detail of Annuity earnings before income taxes
Earnings before income taxes, impact of fair value accounting and unlockings	$	119		$	123		$	112		$	111		$	106		$	354		$	305
Impact of fair value accounting (a)		(2	)		3			13			(11	)		(4	)		14			(22	)
Unlockings		—			(27	)		—			(3	)		—			(27	)		—

Earnings before income taxes	$	117		$	99		$	125		$	97		$	102		$	341		$	283


(a) Changes in fair value of derivatives, offset by an estimate of the related acceleration/deceleration of the amortization of deferred policy acquisition costs and the deferred sales inducements, were as follows:

Interest on Embedded Derivative liability	$	(10	)	$	(8	)	$	(7	)	$	(5	)	$	(4	)	$	(25	)	$	(11	)
Impact of changes in interest rates higher (lower) than expected		(2	)		12			27			(12	)		(10	)		37			(38	)
Change in markets ⁽¹⁾		12			6			(2	)		9			6			16			20
Renewal option purchases lower (higher) than expected		—			(3	)		(4	)		—			1			(7	)		4
Other ⁽²⁾		(2	)		(4	)		(1	)		(3	)		3			(7	)		3

Impact of Fair Value accounting, as reported	$	(2	)	$	3		$	13		$	(11	)	$	(4	)	$	14		$	(22	)

Embedded Derivative liability balance at end of period	$	3,105		$	2,776		$	2,549		$	2,542		$	2,293		$	3,105		$	2,293

⁽¹⁾	Reflects impact of changes in stock market, including 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															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			09/30/17			09/30/18			09/30/17
Detail of annuity benefits expense:
Interest credited - fixed	$	179		$	173		$	166		$	164		$	160		$	518		$	469
Interest credited - fixed component of variable annuities		1			2			1			1			1			4			4
Change in expected death and annuitization reserve		5			4			4			5			5			13			13
Amortization of sales inducements		5			5			5			5			4			15			14
Guaranteed withdrawal benefit reserve		18			19			23			16			18			60			51
Change in other benefit reserves		10			11			8			9			16			29			36
Unlockings (a)		—			54			—			35			—			54			—

Subtotal before impact of fair value accounting		218			268			207			235			204			693			587
Embedded derivative mark-to-market (b)		223			82			(63	)		178			127			242			386
Equity option mark-to-market		(219	)		(90	)		38			(156	)		(116	)		(271	)		(338	)

Subtotal impact of fair value accounting		4			(8	)		(25	)		22			11			(29	)		48

Total annuity benefits expense	$	222		$	260		$	182		$	257		$	215		$	664		$	635

(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 2018 and $3 million in 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															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			09/30/17			09/30/18			09/30/17
Average fixed annuity investments (at amortized cost) (a)	$	34,955		$	33,935		$	33,002		$	32,245		$	31,713		$	33,964		$	30,919
Average annuity benefits accumulated		35,226			34,165			33,329			32,680			32,029			34,240			31,141

Annuity benefits accumulated in excess of investments (a)	$	(271	)	$	(230	)	$	(327	)	$	(435	)	$	(316	)	$	(276	)	$	(222	)

As % of average annuity benefits accumulated (except as noted)
Net investment income (as % of investments)		4.70	%		4.83	%		4.74	%		4.62	%		4.70	%		4.76	%		4.64	%
Interest credited		(2.03	%)		(2.02	%)		(1.99	%)		(2.00	%)		(2.01	%)		(2.02	%)		(2.01	%)

Net interest spread on fixed annuities		2.67	%		2.81	%		2.75	%		2.62	%		2.69	%		2.74	%		2.63	%
Policy charges and other miscellaneous income		0.09	%		0.10	%		0.10	%		0.10	%		0.10	%		0.10	%		0.12	%
Other annuity benefit expenses, net		(0.24	%)		(0.27	%)		(0.29	%)		(0.21	%)		(0.33	%)		(0.26	%)		(0.31	%)
Acquisition expenses		(0.76	%)		(0.89	%)		(0.94	%)		(0.60	%)		(0.65	%)		(0.86	%)		(0.63	%)
Other expenses		(0.36	%)		(0.35	%)		(0.38	%)		(0.37	%)		(0.36	%)		(0.37	%)		(0.38	%)
Change in fair value of derivatives		(0.05	%)		0.10	%		0.30	%		(0.27	%)		(0.14	%)		0.11	%		(0.20	%)
Unlockings		0.00	%		(0.32	%)		0.00	%		(0.06	%)		0.00	%		(0.11	%)		0.00	%

Net spread earned on fixed annuities		1.35	%		1.18	%		1.54	%		1.21	%		1.31	%		1.35	%		1.23	%

Average annuity benefits accumulated	$	35,226		$	34,165		$	33,329		$	32,680		$	32,029		$	34,240		$	31,141
Net spread earned on fixed annuities		1.35	%		1.18	%		1.54	%		1.21	%		1.31	%		1.35	%		1.23	%

Earnings on fixed annuity benefits accumulated	$	119		$	101		$	128		$	99		$	105		$	348		$	288
Annuity benefits accumulated in excess of investments	$	(271	)	$	(230	)	$	(327	)	$	(435	)	$	(316	)	$	(276	)	$	(222	)
Net investment income (as % of investments)		4.70	%		4.83	%		4.74	%		4.62	%		4.70	%		4.76	%		4.64	%

Earnings (loss) on annuity benefits accumulated in excess of investments	$	(3	)	$	(3	)	$	(4	)	$	(5	)	$	(4	)	$	(10	)	$	(8	)
Variable annuity earnings		1			1			1			3			1			3			3

Earnings before income taxes	$	117		$	99		$	125		$	97		$	102		$	341		$	283

Detail of net spread earned on fixed annuities
Net spread earned - before impact of fair value accounting and unlockings		1.37	%		1.46	%		1.38	%		1.40	%		1.36	%		1.41	%		1.32	%
Change in fair value of derivatives		(0.05	%)		0.10	%		0.30	%		(0.27	%)		(0.14	%)		0.11	%		(0.20	%)
Estimated net offsets to deferred sales inducements and deferred policy acquisition costs		0.03	%		(0.06	%)		(0.14	%)		0.14	%		0.09	%		(0.06	%)		0.11	%
Unlockings		0.00	%		(0.32	%)		0.00	%		(0.06	%)		0.00	%		(0.11	%)		0.00	%

Net spread earned - after impact of fair value accounting and unlockings		1.35	%		1.18	%		1.54	%		1.21	%		1.31	%		1.35	%		1.23	%

(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										Nine Months Ended
	9/30/18		6/30/18		3/31/18		12/31/17		09/30/17		09/30/18		09/30/17
Retail single premium annuities - indexed	$	354	$	378	$	294	$	239	$	219	$	1,026	$	751
Retail single premium annuities - fixed		17		22		21		16		18		60		55
Broker dealer single premium annuities - indexed		322		355		259		174		148		936		559
Broker dealer single premium annuities - fixed		3		4		3		1		1		10		6
Financial institutions single premium annuities - indexed		460		448		413		364		360		1,321		1,347
Financial institutions single premium annuities - fixed		114		131		105		63		82		350		559
Pension risk transfer (PRT)		56		1		—		5		—		57		—
Education market - fixed and indexed annuities		46		54		46		41		41		146		133

Subtotal fixed annuity premiums		1,372		1,393		1,141		903		869		3,906		3,410
Variable annuities		6		6		7		6		7		19		22

Total annuity premiums	$	1,378	$	1,399	$	1,148	$	909	$	876	$	3,925	$	3,432

Summary by Distribution Channel:
Retail	$	371	$	400	$	315	$	255	$	237	$	1,086	$	806
Broker dealer		325		359		262		175		149		946		565
Financial institutions		574		579		518		427		442		1,671		1,906
Other		108		61		53		52		48		222		155

Total annuity premiums	$	1,378	$	1,399	$	1,148	$	909	$	876	$	3,925	$	3,432

Summary by Product Type:
Total indexed	$	1,164	$	1,213	$	992	$	802	$	746	$	3,369	$	2,721
Total fixed		208		180		149		101		123		537		689
Variable		6		6		7		6		7		19		22

Total annuity premiums	$	1,378	$	1,399	$	1,148	$	909	$	876	$	3,925	$	3,432

Page 15


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


	Three Months Ended															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			09/30/17			09/30/18			09/30/17
Beginning fixed annuity reserves	$	34,678		$	33,652		$	33,005		$	32,354		$	31,704		$	33,005		$	29,647
Premiums		1,372			1,393			1,141			903			869			3,906			3,410
Federal Home Loan Bank (“FHLB”) advances (paydowns)		—			—			—			(64	)		—			—			—
Surrenders, benefits and other withdrawals		(707	)		(706	)		(627	)		(596	)		(540	)		(2,040	)		(1,650	)
Interest and other annuity benefit expenses:
Interest credited		179			173			166			164			160			518			469
Embedded derivative mark-to-market		223			82			(63	)		178			127			242			386
Change in other benefit reserves		29			29			30			25			34			88			92
Unlockings		—			55			—			41			—			55			—

Ending fixed annuity reserves	$	35,774		$	34,678		$	33,652		$	33,005		$	32,354		$	35,774		$	32,354

Reconciliation to annuity benefits accumulated:
Ending fixed annuity reserves	$	35,774		$	34,678		$	33,652		$	33,005		$	32,354		$	35,774		$	32,354
Impact of unrealized investment gains on reserves		8			32			71			133			138			8			138
Fixed component of variable annuities		176			176			178			178			179			176			179

Annuity benefits accumulated per balance sheet	$	35,958		$	34,886		$	33,901		$	33,316		$	32,671		$	35,958		$	32,671

Annualized surrenders and other withdrawals as a % of beginning reserves		8.2	%		8.4	%		7.6	%		7.4	%		6.8	%		8.2	%		7.4	%

Page 16


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


GMIR	9/30/18			6/30/18			3/31/18			12/31/17			9/30/17			6/30/17
1 - 1.99%		78	%		78	%		77	%		76	%		75	%		75	%
2 - 2.99%		4	%		4	%		5	%		5	%		5	%		5	%
3 - 3.99%		9	%		9	%		9	%		10	%		10	%		10	%
4.00% and above		9	%		9	%		9	%		9	%		10	%		10	%
Annuity Benefits Accumulated	$	35,958		$	34,886		$	33,901		$	33,316		$	32,671		$	32,014
Traditional Fixed and FIA Surrender Value (a) (b)	$	27,434		$	26,502		$	25,582		$	25,138		$	24,428		$	23,925
Ability to Lower Average Crediting Rates by (a) (c)		1.16	%		1.09	%		1.00	%		0.92	%		0.88	%		0.86	%
Pretax earnings impact of crediting guaranteed minimums (a)	$	317		$	288		$	255		$	230		$	216		$	206

(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)


	9/30/18			6/30/18			3/31/18			12/31/17			09/30/17			06/30/17
Assets:
Total cash and investments	$	47,841		$	46,779		$	45,949		$	46,048		$	45,253		$	44,779
Recoverables from reinsurers		3,352			3,073			3,173			3,369			3,262			2,839
Prepaid reinsurance premiums		717			645			614			600			691			587
Agents’ balances and premiums receivable		1,299			1,266			1,113			1,146			1,173			1,124
Deferred policy acquisition costs		1,669			1,582			1,417			1,216			1,119			1,156
Assets of managed investment entities		4,998			5,032			5,090			4,902			4,767			4,873
Other receivables		1,633			1,048			918			1,030			1,545			923
Variable annuity assets (separate accounts)		650			636			632			644			628			620
Other assets		1,832			1,574			1,551			1,504			1,526			1,518
Goodwill		199			199			199			199			199			199

Total assets	$	64,190		$	61,834		$	60,656		$	60,658		$	60,163		$	58,618

Liabilities and Equity:
Unpaid losses and loss adjustment expenses	$	9,670		$	9,093		$	9,193		$	9,678		$	9,563		$	8,730
Unearned premiums		2,740			2,539			2,413			2,410			2,567			2,294
Annuity benefits accumulated		35,958			34,886			33,901			33,316			32,671			32,014
Life, accident and health reserves		643			647			656			658			667			676
Payable to reinsurers		932			721			661			743			906			681
Liabilities of managed investment entities		4,807			4,840			4,869			4,687			4,506			4,685
Long-term debt		1,302			1,301			1,301			1,301			1,284			1,405
Variable annuity liabilities (separate accounts)		650			636			632			644			628			620
Other liabilities		2,324			2,087			1,847			1,887			1,992			2,201

Total liabilities	$	59,026		$	56,750		$	55,473		$	55,324		$	54,784		$	53,306
Redeemable noncontrolling interests	$	—		$	—		$	—		$	3		$	—		$	—
Shareholders’ equity:
Common stock	$	89		$	89		$	89		$	88		$	88		$	88
Capital surplus		1,231			1,220			1,205			1,181			1,167			1,158
Retained earnings		3,800			3,628			3,584			3,248			3,435			3,451
Unrealized gains - equities		—			—			—			221			173			158
Unrealized gains - fixed maturities		93			191			342			619			533			481
Unrealized gains (losses) - fixed maturity-related cash flow hedges		(32	)		(27	)		(24	)		(13	)		(6	)		(6	)
Other comprehensive income, net of tax		(17	)		(17	)		(13	)		(14	)		(11	)		(18	)

Total shareholders’ equity		5,164			5,084			5,183			5,330			5,379			5,312
Noncontrolling interests		—			—			—			1			—			—

Total liabilities and equity	$	64,190		$	61,834		$	60,656		$	60,658		$	60,163		$	58,618

Page 18


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


	9/30/18			6/30/18			3/31/18			12/31/17			09/30/17			06/30/17
Shareholders’ equity	$	5,164		$	5,084		$	5,183		$	5,330		$	5,379		$	5,312
Unrealized (gains) related to fixed maturities		(61	)		(164	)		(318	)		(606	)		(527	)		(475	)

Adjusted shareholders’ equity		5,103			4,920			4,865			4,724			4,852			4,837
Goodwill		(199	)		(199	)		(199	)		(199	)		(199	)		(199	)
Intangibles		(31	)		(34	)		(36	)		(26	)		(29	)		(30	)

Tangible adjusted shareholders’ equity	$	4,873		$	4,687		$	4,630		$	4,499		$	4,624		$	4,608

Common shares outstanding		89.189			89.072			88.881			88.275			88.093			88.007
Book value per share:
Book value per share	$	57.90		$	57.08		$	58.32		$	60.38		$	61.06		$	60.36
Adjusted (a)		57.22			55.24			54.74			53.51			55.08			54.97
Tangible, adjusted (b)		54.64			52.63			52.10			50.95			52.50			52.36
Market capitalization
AFG’s closing common share price	$	110.97		$	107.33		$	112.22		$	108.54		$	103.45		$	99.37
Market capitalization	$	9,897		$	9,560		$	9,974		$	9,581		$	9,113		$	8,745
Price / Adjusted book value ratio		1.94			1.94			2.05			2.03			1.88			1.81

(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)


	9/30/18			6/30/18			3/31/18			12/31/17			09/30/17			06/30/17
AFG senior obligations	$	1,018		$	1,018		$	1,018		$	1,018		$	1,003		$	1,128
Borrowings drawn under credit facility		—			—			—			—			—			—

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

Total principal amount of long-term debt	$	1,318		$	1,318		$	1,318		$	1,318		$	1,303		$	1,428
Shareholders’ equity		5,164			5,084			5,183			5,330			5,379			5,312
Noncontrolling interests (including redeemable NCI)		—			—			—			4			—			—
Less:
Unrealized (gains) - fixed maturity investments		(93	)		(191	)		(342	)		(619	)		(533	)		(481	)

Total adjusted capital	$	6,389		$	6,211		$	6,159		$	6,033		$	6,149		$	6,259

Ratio of debt to total adjusted capital:
Including subordinated debt		20.6	%		21.2	%		21.4	%		21.8	%		21.2	%		22.8	%
Excluding subordinated debt		15.9	%		16.4	%		16.5	%		16.9	%		16.3	%		18.0	%

Page 20

American Financial Group, Inc.

Additional Supplemental Information

($ in millions)


	Three Months Ended										Nine Months Ended
	9/30/18		6/30/18		3/31/18		12/31/17		09/30/17		09/30/18		09/30/17
Property and Casualty Insurance
Paid Losses (GAAP)	$	614	$	629	$	640	$	726	$	596	$	1,883	$	1,802


	9/30/18		6/30/18		3/31/18		12/31/17		09/30/17		06/30/17
Statutory Surplus
Property and Casualty Insurance	$	2,885	$	2,797	$	2,781	$	2,729	$	2,817	$	2,882
AFG’s principal annuity subsidiaries (total adjusted capital)	$	2,703	$	2,511	$	2,442	$	2,442	$	2,433	$	2,389
Allowable dividends without regulatory approval
Property and Casualty Insurance	$	563	$	563	$	563	$	563	$	496	$	496
Annuity and Run-off		263		263		263		263		197		197

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

Page 21

American Financial Group, Inc.

Total Cash and Investments

($ in millions)


	Carrying Value - September 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	$	1,008	$	669	$	332	$	—		$	2,009		4	%
Fixed maturities - Available for sale		7,413		32,819		12		—			40,244		84	%
Fixed maturities - Trading		48		55		—		—			103		0	%
Equity securities		1,034		736		57		—			1,827		4	%
Investments accounted for using the equity method		520		769		—		—			1,289		3	%
Mortgage loans		306		846		—		—			1,152		2	%
Policy loans		—		176		—		—			176		0	%
Equity index call options		—		759		—		—			759		2	%
Real estate and other investments		136		273		63		(190	)		282		1	%

Total cash and investments	$	10,465	$	37,102	$	464	$	(190	)	$	47,841		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															Nine Months Ended
	9/30/18			6/30/18			3/31/18			12/31/17			09/30/17			09/30/18			09/30/17
Property and Casualty Insurance:
Gross Investment Income
Fixed maturities - Available for sale	$	72		$	72		$	66		$	65		$	65		$	210		$	193
Fixed maturities - Trading		—			2			—			—			—			2			3
Equity securities		12			16			13			13			12			41			38
Equity in investees		16			18			17			4			8			51			23
Other investments (a)		10			9			6			8			11			25			25

Gross investment income		110			117			102			90			96			329			282
Investment expenses		(2	)		(2	)		(2	)		(4	)		(2	)		(6	)		(6	)

Total net investment income	$	108		$	115		$	100		$	86		$	94		$	323		$	276

Average cash and investments (b)	$	10,388		$	10,346		$	10,422		$	10,062		$	9,851		$	10,405		$	9,853

Average yield (c)		4.16	%		4.45	%		3.84	%		3.42	%		3.82	%		4.14	%		3.73	%

Fixed Annuity
Gross Investment Income
Fixed maturities - Available for sale	$	361		$	350		$	338		$	342		$	332		$	1,049		$	972
Equity securities		6			18			8			7			5			32			15
Equity in investees		25			23			29			9			12			77			28
Other investments (a)		22			22			19			19			26			63			67

Gross investment income		414			413			394			377			375			1,221			1,082
Investment expenses		(3	)		(3	)		(3	)		(4	)		(2	)		(9	)		(7	)

Total net investment income	$	411		$	410		$	391		$	373		$	373		$	1,212		$	1,075

Average cash and investments (b)	$	34,955		$	33,935		$	33,002		$	32,245		$	31,713		$	33,964		$	30,919

Average yield (c)		4.70	%		4.83	%		4.74	%		4.62	%		4.70	%		4.76	%		4.64	%

AFG consolidated net investment income:
Property & Casualty	$	108		$	115		$	100		$	86		$	94		$	323		$	276
Annuity:
Fixed Annuity		411			410			391			373			373			1,212			1,075
Variable Annuity		2			2			3			3			2			7			7
Parent & other		10			7			4			10			7			21			24
Consolidate CLOs		(4	)		(4	)		(3	)		(7	)		(5	)		(11	)		(16	)

Total net investment income	$	527		$	530		$	495		$	465		$	471		$	1,552		$	1,366

(a)	Includes income from mortgage loans, real estate, policy loans, affiliated CLO’s, short-term investments, and cash equivalents.

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

(c)	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 )


September 30, 2018	Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value			Investment Portfolio
US Government and government agencies	$	248		$	244	$	(4)			1	%		1	%
States, municipalities and political subdivisions		6,781			6,800		19			17	%		14	%
Foreign government		161			163		2			0	%		0	%
Residential mortgage-backed securities		2,410			2,711		301			7	%		6	%
Commercial mortgage-backed securities		913			923		10			2	%		2	%
Asset-backed securities		9,249			9,307		58			23	%		19	%
Corporate and other bonds		20,394			20,199		(195	)		50	%		42	%

Total AFG consolidated	$	40,156		$	40,347	$	191			100	%		84	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.43	%
Net of investment expense (a)		4.38	%
Approximate average life and duration:
Approximate average life		6 years
Approximate duration		4.5 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 )


	September 30, 2018											December 31, 2017
Property and Casualty Insurance:	Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value			Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value
US Government and government agencies	$	205		$	202		(3	)		3	%	$	244		$	243	$	(1)			3	%
States, municipalities and political subdivisions		2,581			2,572		(9	)		34	%		2,740			2,798		58			38	%
Foreign government		150			150		—			2	%		228			229		1			3	%
Residential mortgage-backed securities		717			784		67			11	%		843			918		75			13	%
Commercial mortgage-backed securities		84			85		1			1	%		93			95		2			1	%
Asset-backed securities		2,192			2,179		(13	)		29	%		1,716			1,724		8			23	%
Corporate and other bonds		1,502			1,489		(13	)		20	%		1,349			1,367		18			19	%

Property and Casualty Insurance	$	7,431		$	7,461	$	30			100	%	$	7,213		$	7,374	$	161			100	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		3.88	%										3.73	%
Net of investment expense (a)		3.80	%										3.54	%
Tax equivalent, net of investment expense (b)		4.00	%										4.03	%
Approximate average life and duration:
Approximate average life		4.5 years											5 years
Approximate duration		3.5 years											4 years

	September 30, 2018											December 31, 2017
Annuity and Run-off:	Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value			Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value
US Government and government agencies	$	43		$	42	$		(1)		0	%	$	48		$	47	$		(1)		0	%
States, municipalities and political subdivisions		4,200			4,228		28			13	%		4,172			4,350		178			14	%
Foreign government		11			13		2			0	%		11			13		2			0	%
Residential mortgage-backed securities		1,690			1,915		225			6	%		2,041			2,299		258			7	%
Commercial mortgage-backed securities		829			838		9			2	%		835			868		33			3	%
Asset-backed securities		7,057			7,128		71			22	%		6,120			6,238		118			20	%
Corporate and other bonds		18,892			18,710		(182	)		57	%		16,942			17,524		582			56	%

Total Annuity and Run-off	$	32,722		$	32,874	$	152			100	%	$	30,169		$	31,339	$	1,170			100	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.55	%										4.66	%
Net of investment expense (a)		4.51	%										4.61	%
Approximate average life and duration:
Approximate average life		6.5 years											6.5 years
Approximate duration		4.5 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)


	September 30, 2018
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value
Investment grade
AAA	$	6,791	$	6,766	$	(25	)		17	%
AA		8,468		8,522		54			21	%
A		9,805		9,764		(41	)		24	%
BBB		11,373		11,294		(79	)		28	%

Subtotal - Investment grade		36,437		36,346		(91	)		90	%
BB		725		723		(2	)		2	%
B		264		267		3			1	%
Other (b)		2,730		3,011		281			7	%

Subtotal - Non-Investment grade		3,719		4,001		282			10	%

Total	$	40,156	$	40,347	$	191			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)


September 30, 2018	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Investment Portfolio
Residential
Agency	$	177	$	173	$	(4)		5	%		0	%
Prime (Non-Agency)		1,009		1,154		145		32	%		3	%
Alt-A		837		953		116		26	%		2	%
Subprime		387		431		44		12	%		1	%
Commercial		913		923		10		25	%		2	%

Total AFG consolidated	$	3,323	$	3,634	$	311		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 81%; 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 33%.

•

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:	September 30, 2018
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Inv Portfolio
Residential
Agency	$	143	$	138	$	(5	)		16	%		1	%
Prime (Non-Agency)		145		164		19			19	%		1	%
Alt-A		261		295		34			34	%		3	%
Subprime		168		187		19			21	%		2	%
Commercial		84		85		1			10	%		1	%

Total	$	801	$	869	$	68			100	%		8	%


	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:	September 30, 2018
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Inv Portfolio
Residential
Agency	$	34	$	35	$	1			1	%		0	%
Prime (Non-Agency)		861		978		117			36	%		2	%
Alt-A		576		658		82			24	%		2	%
Subprime		219		244		25			9	%		1	%
Commercial		829		838		9			30	%		2	%

Total	$	2,519	$	2,753	$	234			100	%		7	%


	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)


	September 30, 2018
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value
Investment grade
AAA	$	1,126	$	1,131	$	5		31	%
AA		123		127		4		3	%
A		149		155		6		4	%
BBB		192		204		12		6	%

Subtotal - investment grade		1,590		1,617		27		44	%
BB		172		175		3		5	%
B		163		167		4		5	%
Other (b)		1,398		1,675		277		46	%

Total	$	3,323	$	3,634	$	311		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 30 for more information.

Page 29

Appendix A

American Financial Group, Inc.

Fixed Maturities - Credit Rating by Type

($ in millions)


	Fair Value - September 30, 2018
By Credit Rating (a)	US Gov		Munis		Frgn Gov		RMBS		CMBS		ABS		Corp/Oth		Total		% Total
Investment grade
AAA	$	214	$	1,845	$	91	$	377	$	754	$	3,294	$	191	$	6,766		17	%
AA		22		4,328		55		109		18		2,553		1,437		8,522		21	%
A		—		500		—		133		22		2,056		7,053		9,764		24	%
BBB		—		56		—		131		73		778		10,256		11,294		28	%

Subtotal - Investment grade		236		6,729		146		750		867		8,681		18,937		36,346		90	%
BB		—		—		—		140		35		25		523		723		2	%
B		—		7		—		164		3		4		89		267		1	%
CCC, CC, C		—		—		—		851		6		2		20		879		2	%
D		—		3		—		236		—		—		—		239		1	%

Subtotal - Non-Investment grade		—		10		—		1,391		44		31		632		2,108		6	%
Not Rated		8		61		17		570		12		595		630		1,893		4	%

Total	$	244	$	6,800	$	163	$	2,711	$	923	$	9,307	$	20,199	$	40,347		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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