Investments (Tables)

9 Months Ended

Sep. 30, 2012

Investments, Debt and Equity Securities [Abstract]

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	)

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	%

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

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	%

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

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

(a) Primarily adjustments to deferred policy acquisition costs related to annuities.

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		)