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Investments (Tables)
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9 Months Ended |
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Sep. 30, 2012
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| Investments, Debt and Equity Securities [Abstract] |
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| Available for sale fixed maturities and equity securities |
Available for sale fixed maturities and equity securities at September 30, 2012, and December 31, 2011, consisted of the following (in millions): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2012 | | December 31, 2011 | Amortized Cost | | Fair Value | | Gross Unrealized | | Amortized Cost | | Fair Value | | Gross Unrealized | Gains | | Losses | | Gains | | Losses | Fixed maturities: | | | | | | | | | | | | | | | | U.S. Government and government agencies | $ | 345 |
| | $ | 361 |
| | $ | 16 |
| | $ | — |
| | $ | 363 |
| | $ | 382 |
| | $ | 19 |
| | $ | — |
| States, municipalities and political subdivisions | 3,976 |
| | 4,326 |
| | 352 |
| | (2 | ) | | 3,613 |
| | 3,877 |
| | 267 |
| | (3 | ) | Foreign government | 245 |
| | 264 |
| | 19 |
| | — |
| | 236 |
| | 254 |
| | 18 |
| | — |
| Residential MBS | 4,100 |
| | 4,320 |
| | 294 |
| | (74 | ) | | 3,858 |
| | 3,848 |
| | 170 |
| | (180 | ) | Commercial MBS | 2,629 |
| | 2,945 |
| | 316 |
| | — |
| | 2,628 |
| | 2,840 |
| | 218 |
| | (6 | ) | All other corporate | 10,465 |
| | 11,530 |
| | 1,076 |
| | (11 | ) | | 9,864 |
| | 10,606 |
| | 802 |
| | (60 | ) | Total fixed maturities | $ | 21,760 |
| | $ | 23,746 |
| | $ | 2,073 |
| | $ | (87 | ) | | $ | 20,562 |
| | $ | 21,807 |
| | $ | 1,494 |
| | $ | (249 | ) | Common stocks | $ | 633 |
| | $ | 828 |
| | $ | 200 |
| | $ | (5 | ) | | $ | 610 |
| | $ | 797 |
| | $ | 207 |
| | $ | (20 | ) | Perpetual preferred stocks | $ | 192 |
| | $ | 203 |
| | $ | 13 |
| | $ | (2 | ) | | $ | 134 |
| | $ | 131 |
| | $ | 5 |
| | $ | (8 | ) |
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| Available for sale securities in a continuous unrealized loss position |
The following tables show gross unrealized losses (in millions) on fixed maturities and equity securities by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2012 and December 31, 2011. | | | | | | | | | | | | | | | | | | | | | | | | | | | Less Than Twelve Months | | Twelve Months or More | | | Unrealized Loss | | Fair Value | | Fair Value as % of Cost | | Unrealized Loss | | Fair Value | | Fair Value as % of Cost | | | | | September 30, 2012 | | | | | | | | | | | | | | Fixed maturities: | | | | | | | | | | | | | | U.S. Government and government agencies | $ | — |
| | $ | 6 |
| | 100 | % | | $ | — |
| | $ | — |
| | — | % | | | States, municipalities and political subdivisions | (2 | ) | | 126 |
| | 98 | % | | — |
| | 13 |
| | 100 | % | | | Foreign government | — |
| | — |
| | — | % | | — |
| | — |
| | — | % | | | Residential MBS | (9 | ) | | 314 |
| | 97 | % | | (65 | ) | | 473 |
| | 88 | % | | | Commercial MBS | — |
| | 5 |
| | 100 | % | | — |
| | — |
| | — | % | | | All other corporate | (4 | ) | | 204 |
| | 98 | % | | (7 | ) | | 133 |
| | 95 | % | | | Total fixed maturities | $ | (15 | ) | | $ | 655 |
| | 98 | % | | $ | (72 | ) | | $ | 619 |
| | 90 | % | | | Common stocks | $ | (5 | ) | | $ | 50 |
| | 91 | % | | $ | — |
| | $ | — |
| | — | % | | | Perpetual preferred stocks | $ | — |
| | $ | — |
| | — | % | | $ | (2 | ) | | $ | 25 |
| | 93 | % | | | | | | | | | | | | | | | | | December 31, 2011 | | | | | | | | | | | | | | Fixed maturities: | | | | | | | | | | | | | | U.S. Government and government agencies | $ | — |
| | $ | 2 |
| | 100 | % | | $ | — |
| | $ | — |
| | — | % | | | States, municipalities and political subdivisions | (2 | ) | | 120 |
| | 98 | % | | (1 | ) | | 59 |
| | 98 | % | | | Foreign government | — |
| | 1 |
| | 100 | % | | — |
| | — |
| | — | % | | | Residential MBS | (59 | ) | | 1,141 |
| | 95 | % | | (121 | ) | | 473 |
| | 80 | % | | | Commercial MBS | (6 | ) | | 183 |
| | 97 | % | | — |
| | 18 |
| | 100 | % | | | All other corporate | (43 | ) | | 940 |
| | 96 | % | | (17 | ) | | 114 |
| | 87 | % | | | Total fixed maturities | $ | (110 | ) | | $ | 2,387 |
| | 96 | % | | $ | (139 | ) | | $ | 664 |
| | 83 | % | | | Common stocks | $ | (19 | ) | | $ | 169 |
| | 90 | % | | $ | (1 | ) | | $ | 4 |
| | 80 | % | | | Perpetual preferred stocks | $ | (1 | ) | | $ | 23 |
| | 96 | % | | $ | (7 | ) | | $ | 31 |
| | 82 | % |
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| Roll forward of cumulative credit portion of other-than-temporary impairments on fixed maturity securities |
A progression of the credit portion of other-than-temporary impairments on fixed maturity securities for which the non-credit portion of an impairment has been recognized in other comprehensive income is shown below (in millions).
| | | | | | | | | | 2012 | | 2011 | Balance at June 30 | $ | 191 |
| | $ | 171 |
| Additional credit impairments on: | | | | Previously impaired securities | — |
| | 8 |
| Securities without prior impairments | — |
| | 2 |
| Reductions — disposals | — |
| | (1 | ) | Balance at September 30 | $ | 191 |
| | $ | 180 |
| | | | | Balance at January 1 | $ | 187 |
| | $ | 143 |
| Additional credit impairments on: | | | | Previously impaired securities | 4 |
| | 37 |
| Securities without prior impairments | — |
| | 7 |
| Reductions — disposals | — |
| | (7 | ) | Balance at September 30 | $ | 191 |
| | $ | 180 |
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| Available for sale fixed maturity securities by contractual maturity date |
| | | | | | | | | | | | | Amortized | | Fair Value | Cost | | Amount | | % | Maturity | | | | | | One year or less | $ | 838 |
| | $ | 857 |
| | 4 | % | After one year through five years | 5,320 |
| | 5,735 |
| | 24 |
| After five years through ten years | 6,529 |
| | 7,285 |
| | 31 |
| After ten years | 2,344 |
| | 2,604 |
| | 11 |
| | 15,031 |
| | 16,481 |
| | 70 |
| MBS | 6,729 |
| | 7,265 |
| | 30 |
| Total | $ | 21,760 |
| | $ | 23,746 |
| | 100 | % |
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| Components of the net unrealized gain on securities, included in Accumulated Other Comprehensive Income |
The following table shows (in millions) the components of the net unrealized gain on securities that is included in Accumulated Other Comprehensive Income in AFG’s Balance Sheet. | | | | | | | | | | | | | | Pretax | | Deferred Tax and Amounts Attributable to Noncontrolling Interests | | Net | September 30, 2012 | | | | | | Unrealized gain on: | | | | | | Fixed maturities | $ | 1,986 |
| | $ | (709 | ) | | $ | 1,277 |
| Equity securities | 206 |
| | (74 | ) | | 132 |
| Deferred policy acquisition costs | (764 | ) | | 267 |
| | (497 | ) | Annuity benefits and other liabilities | 13 |
| | (4 | ) | | 9 |
| | $ | 1,441 |
| | $ | (520 | ) | | $ | 921 |
| December 31, 2011 | | | | | | Unrealized gain on: | | | | | | Fixed maturities | $ | 1,245 |
| | $ | (444 | ) | | $ | 801 |
| Equity securities | 184 |
| | (65 | ) | | 119 |
| Deferred policy acquisition costs | (537 | ) | | 188 |
| | (349 | ) | Annuity benefits and other liabilities | 10 |
| | (3 | ) | | 7 |
| | $ | 902 |
| | $ | (324 | ) | | $ | 578 |
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| Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments |
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments are summarized as follows (in millions): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fixed Maturities | | Equity Securities | | Mortgage Loans and Other Investments | | Other (a) | | Tax Effects | | Noncon- trolling Interests | | Total | Quarter ended September 30, 2012 | | | | | | | | | | | | | | Realized before impairments | $ | 20 |
| | $ | 77 |
| | $ | — |
| | $ | (4 | ) | | $ | (33 | ) | | $ | — |
| | $ | 60 |
| Realized — impairments | (1 | ) | | (9 | ) | | — |
| | 2 |
| | 3 |
| | — |
| | (5 | ) | Change in unrealized | 378 |
| | (18 | ) | | — |
| | (122 | ) | | (84 | ) | | (4 | ) | | 150 |
| Quarter ended September 30, 2011 | | | | | | | | | | | | | | Realized before impairments | $ | 27 |
| | $ | 6 |
| | $ | (15 | ) | | $ | — |
| | $ | (6 | ) | | $ | — |
| | $ | 12 |
| Realized — impairments | (12 | ) | | (2 | ) | | — |
| | 4 |
| | 3 |
| | — |
| | (7 | ) | Change in unrealized | 172 |
| | (75 | ) | | — |
| | (121 | ) | | 9 |
| | (2 | ) | | (17 | ) | Nine months ended September 30, 2012 | | | | | | | | | | | | | | Realized before impairments | $ | 40 |
| | $ | 133 |
| | $ | (3 | ) | | $ | (6 | ) | | $ | (58 | ) | | $ | (1 | ) | | $ | 105 |
| Realized — impairments | (5 | ) | | (19 | ) | | — |
| | 5 |
| | 7 |
| | — |
| | (12 | ) | Change in unrealized | 741 |
| | 22 |
| | — |
| | (224 | ) | | (189 | ) | | (7 | ) | | 343 |
| Nine months ended September 30, 2011 | | | | | | | | | | | | | | Realized before impairments | $ | 51 |
| | $ | 41 |
| | $ | (22 | ) | | $ | (2 | ) | | $ | (24 | ) | | $ | (1 | ) | | $ | 43 |
| Realized — impairments | (49 | ) | | (2 | ) | | (4 | ) | | 14 |
| | 14 |
| | — |
| | (27 | ) | Change in unrealized | 417 |
| | (77 | ) | | — |
| | (185 | ) | | (54 | ) | | (4 | ) | | 97 |
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| | (a) | Primarily adjustments to deferred policy acquisition costs related to annuities. |
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| Gross realized gains and losses on available for sale fixed maturity and equity security investments |
Gross realized gains and losses (excluding impairment writedowns and mark-to-market of derivatives) on available for sale fixed maturity and equity security investment transactions included in the Statement of Cash Flows consisted of the following (in millions): | | | | | | | | | | Nine months ended | September 30, | 2012 | | 2011 | Fixed maturities: | | | | Gross gains | $ | 37 |
| | $ | 57 |
| Gross losses | (2 | ) | | (5 | ) | Equity securities: | | | | Gross gains | 136 |
| | 42 |
| Gross losses | (3 | ) | | (1 | ) |
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