Aquisitions and Sales of Subsidiaries

9 Months Ended

Sep. 30, 2012

Discontinued Operations and Disposal Groups [Abstract]

Sale of Operations

B.     Acquisitions and Sales of Subsidiaries

On August 31, 2012, AFG completed the sale of its Medicare supplement and critical illness businesses, which included Loyal American Life Insurance Company and four other insurance companies, to Cigna Corporation for $307 million in cash. AFG realized a gain of $155 million on the sale (subject to post-closing adjustments). Since the transaction includes the ongoing cessions of certain business to Cigna, the operations being sold are not reported as discontinued operations. Following the sale, AFG’s supplemental insurance operations consist solely of its run-off long-term care business.

The impact of the August 2012 sale of the Medicare supplement and critical illness businesses on AFG’s financial statements is shown below (in millions):

Sale proceeds	$	307
Expenses	(12		)
Net proceeds	$	295
Assets of businesses sold:
Cash and investments	$	217
Deferred policy acquisition costs	108
Other assets	31
Total assets	356
Liabilities of businesses sold:
Life, accident and health reserves	209
Other liabilities	7
Total liabilities	216
Net assets of businesses sold	$	140
Gain on sale of subsidiaries	$	155

Summarized Statement of Earnings information for the Medicare supplement and critical illness businesses through the sale date is shown below (in millions):

	Three months ended				Nine months ended
	September 30,				September 30,
	2012 (*)		2011		2012 (*)		2011
Total revenues	$	53	$	80	$	212	$	244
Total costs and expenses	43		69		184		223
Operating earnings before income taxes	$	10	$	11	$	28	$	21

(*) Reflects revenues and expenses through the end of August 2012.

During the third quarter of 2012, AFG acquired the outstanding 28% of Marketform, its London-based Lloyd’s property and casualty insurance operation, that it did not already own for $17 million and sold an additional small annuity and supplemental insurance company for $7 million.