Segments of Operations

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Segments of Operations

C.    Segments of Operations

In December 2012, AFG disaggregated its annuity and supplemental operations into three reporting segments — annuity, run-off long-term care and life, and Medicare supplement and critical illness. The segment reporting changes reflect the Company’s revised, more granular view of these businesses following the sale of the Medicare supplement and critical illness business in the third quarter of 2012 and significant loss recognition charge in the long-term care business in the fourth quarter of 2012. This change will give management and investors greater insight into the results of operations and financial position of each of these businesses. The changes in AFG’s internal financial reporting related to this disaggregation took effect on December 31, 2012, and resulted in these reporting segment changes. Prior period amounts have been restated to conform to the new presentation.

AFG manages its business as five segments: (i) property and casualty insurance, (ii) annuity, (iii) run-off long-term care and life, (iv) Medicare supplement and critical illness and (v) other, which includes holding company assets and costs, and the assets and operations attributable to the noncontrolling interests of the managed investment entities.

AFG reports its property and casualty insurance business in the following Specialty sub-segments: (i) Property and transportation, which includes physical damage and liability coverage for buses, trucks and recreational vehicles, inland and ocean marine, agricultural-related products and other property coverages, (ii) Specialty casualty, which includes primarily excess and surplus, general liability, executive liability, umbrella and excess liability, customized programs for small to mid-sized businesses and workers’ compensation, and (iii) Specialty financial, which includes risk management insurance programs for lending and leasing institutions (including collateral and mortgage protection insurance), surety and fidelity products and trade credit insurance. AFG’s annuity business markets traditional fixed and fixed-indexed annuities in the individual, bank and education markets. AFG’s reportable segments and their components were determined based primarily upon similar economic characteristics, products and services.

Sales of property and casualty insurance outside of the United States represented 5% of AFG’s revenues in 2012 and 2011 and 4% in 2010.

The following tables (in millions) show AFG’s assets, revenues and operating earnings before income taxes by significant business segment and sub-segment.

	2012		2011		2010
Assets
Property and casualty insurance (a)	$	12,163	$	11,740	$	11,466
Annuity	20,909		18,245		15,646
Run-off long-term care and life	2,304		1,785		1,596
Medicare supplement and critical illness (b)	—		359		454
Other	3,795		3,709		3,079
Total assets	$	39,171	$	35,838	$	32,241

Revenues
Property and casualty insurance:
Premiums earned:
Specialty
Property and transportation	$	1,423	$	1,412		$	1,167
Specialty casualty	948		872			873
Specialty financial	405		408			446
Other	71		67			64
Total premiums earned	2,847		2,759			2,550
Investment income	279		296			341
Other income	67		65			64
Total property and casualty insurance	3,193		3,120			2,955
Annuity:
Investment income	982		868			788
Other income	85		73			70
Total annuity	1,067		941			858
Run-off long-term care and life	212		212			218
Medicare supplement and critical illness (b)	212		325			341
Other	7		79			37
Total revenues before realized gains (losses)	4,691		4,677			4,409
Realized gains (losses) on securities	210		76			101
Realized gains (losses) on subsidiaries	161		(3		)	(13		)
Total revenues	$	5,062	$	4,750		$	4,497

(a)   Not allocable to sub-segments.

(b)   Sold in August 2012.

	2012			2011			2010
Operating Earnings Before Income Taxes
Property and casualty insurance:
Underwriting:
Specialty
Property and transportation	$	19		$	113		$	141
Specialty casualty	53			35			45
Specialty financial	44			65			123
Other	15			18			8
Other lines (a)	(44		)	(51		)	(11		)
Total underwriting	87			180			306
Investment and other income, net	237			263			299
Total property and casualty insurance	324			443			605
Annuity	256			188			159
Run-off long-term care and life (b)	(157		)	—			7
Medicare supplement and critical illness (c)	28			34			31
Other (d)	(285		)	(180		)	(196		)
Total operating earnings before realized gains (losses) and income taxes	166			485			606
Realized gains (losses) on securities	210			76			101
Realized gains (losses) on subsidiaries	161			(3		)	(13		)
Total operating earnings before income taxes	$	537		$	558		$	694

(a) Includes third quarter 2012 and second quarter 2011 special charges of $31 million and $50 million, respectively, to increase asbestos and environmental reserves.

(b) Includes a loss recognition charge of $153 million in the fourth quarter of 2012.

(c) Sold in August 2012.

(d) Includes holding company expenses, a second quarter 2011 special charge of $9 million to increase asbestos and environmental reserves and $98 million, $24 million and $64 million in losses of managed investment entities attributable to noncontrolling interests for the years ended December 31, 2012, 2011 and 2010, respectively. Holding company expenses in 2012 also include an $8 million loss on retirement of debt and a $15 million charge for a labor matter related to AFG’s former railroad operations.