Investments (Tables)

12 Months Ended

Dec. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Available for sale fixed maturities and equity securities

Available for sale fixed maturities and equity securities at December 31 consisted of the following (in millions):

	2014									2013
	Amortized Cost		Fair Value		Gross Unrealized					Amortized Cost		Fair Value		Gross Unrealized
					Gains		Losses							Gains		Losses
Fixed maturities:
U.S. Government and government agencies	$	347	$	353	$	8	$	(2	)	$	310	$	314	$	7	$	(3	)
States, municipalities and political subdivisions	6,393		6,747		364		(10		)	5,360		5,372		156		(144		)
Foreign government	184		194		10		—			198		208		10		—
Residential MBS	4,046		4,442		411		(15		)	3,947		4,310		391		(28		)
Commercial MBS	2,294		2,451		158		(1		)	2,535		2,724		192		(3		)
Asset-backed securities	3,872		3,887		37		(22		)	2,477		2,493		35		(19		)
Corporate and other	11,938		12,660		751		(29		)	10,539		11,035		604		(108		)
Total fixed maturities	$	29,074	$	30,734	$	1,739	$	(79	)	$	25,366	$	26,456	$	1,395	$	(305	)
Common stocks	$	885	$	1,087	$	227	$	(25	)	$	665	$	858	$	209	$	(16	)
Perpetual preferred stocks	$	398	$	414	$	21	$	(5	)	$	266	$	265	$	9	$	(10	)

Available for sale securities in a continuous unrealized loss position

The following tables show gross unrealized losses (dollars 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 December 31, 2014 and 2013.

	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
2014
Fixed maturities:
U.S. Government and government agencies	$	—		$	39	100	%	$	(2	)	$	15	88	%
States, municipalities and political subdivisions	(2		)	222		99	%	(8		)	408		98	%
Residential MBS	(4		)	298		99	%	(11		)	209		95	%
Commercial MBS	(1		)	38		97	%	—			11		100	%
Asset-backed securities	(11		)	1,389		99	%	(11		)	622		98	%
Corporate and other	(16		)	588		97	%	(13		)	433		97	%
Total fixed maturities	$	(34	)	$	2,574	99	%	$	(45	)	$	1,698	97	%
Common stocks	$	(25	)	$	260	91	%	$	—		$	—	—	%
Perpetual preferred stocks	$	(1	)	$	45	98	%	$	(4	)	$	55	93	%
2013
Fixed maturities:
U.S. Government and government agencies	$	(3	)	$	60	95	%	$	—		$	—	—	%
States, municipalities and political subdivisions	(135		)	2,219		94	%	(9		)	73		89	%
Residential MBS	(9		)	553		98	%	(19		)	212		92	%
Commercial MBS	(3		)	106		97	%	—			2		100	%
Asset-backed securities	(18		)	1,310		99	%	(1		)	28		97	%
Corporate and other	(101		)	2,634		96	%	(7		)	85		92	%
Total fixed maturities	$	(269	)	$	6,882	96	%	$	(36	)	$	400	92	%
Common stocks	$	(16	)	$	158	91	%	$	—		$	—	—	%
Perpetual preferred stocks	$	(6	)	$	91	94	%	$	(4	)	$	20	83	%

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):

	2014			2013			2012
Balance at January 1	$	194		$	192		$	187
Additional credit impairments on:
Previously impaired securities	—			—			5
Securities without prior impairments	—			3			2
Reductions due to sales or redemptions	(24		)	(1		)	(2		)
Balance at December 31	$	170		$	194		$	192

Available for sale fixed maturity securities by contractual maturity date

The table below sets forth the scheduled maturities of available for sale fixed maturities as of December 31, 2014 (dollars in millions). Securities with sinking funds are reported at average maturity. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers.

	Amortized		Fair Value
	Cost		Amount		%
Maturity
One year or less	$	888	$	906	3	%
After one year through five years	4,803		5,142		17	%
After five years through ten years	8,797		9,211		30	%
After ten years	4,374		4,695		15	%
	18,862		19,954		65	%
ABS (average life of approximately 4-1/2 years)	3,872		3,887		13	%
MBS (average life of approximately 4-1/2 years)	6,340		6,893		22	%
Total	$	29,074	$	30,734	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 AOCI in AFG’s Balance Sheet.

	Pretax			Deferred Tax and Amounts  Attributable to Noncontrolling Interests			Net
December 31, 2014
Unrealized gain on:
Fixed maturities — annuity segment (*)	$	1,157		$	(405	)	$	752
Fixed maturities — all other	503			(185		)	318
Equity securities	218			(79		)	139
Deferred policy acquisition costs — annuity segment	(531		)	186			(345		)
Annuity benefits accumulated	(112		)	39			(73		)
Life, accident and health reserves	(104		)	36			(68		)
Unearned revenue	31			(11		)	20
	$	1,162		$	(419	)	$	743
December 31, 2013
Unrealized gain on:
Fixed maturities — annuity segment (*)	$	729		$	(255	)	$	474
Fixed maturities — all other	361			(133		)	228
Equity securities	192			(70		)	122
Deferred policy acquisition costs — annuity segment	(345		)	121			(224		)
Annuity benefits accumulated	(71		)	25			(46		)
Life, accident and health reserves	(8		)	3			(5		)
Unearned revenue	22			(8		)	14
	$	880		$	(317	)	$	563

(*)    Unrealized gains on fixed maturity investments supporting AFG’s annuity benefits accumulated.

Net investment income earned and investment expenses incurred

The following table shows (in millions) investment income earned and investment expenses incurred.

	2014			2013			2012
Investment income:
Fixed maturities	$	1,352		$	1,241		$	1,216
Equity securities	66			50			36
Equity in earnings of partnerships and similar investments (*)	18			—			—
Other	77			72			66
Gross investment income	1,513			1,363			1,318
Investment expenses	(12		)	(17		)	(17		)
Net investment income	$	1,501		$	1,346		$	1,301

(*) Equity in the earnings of partnerships has not been material and was included in realized gains (losses) on securities prior to 2014.

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
Year ended December 31, 2014
Realized before impairments	$	36		$	53		$	1		$	(2	)	$	(32	)	$	(2	)	$	54
Realized — impairments	(15		)	(26		)	—			5			13			1			(22		)
Change in unrealized	570			26			—			(314		)	(99		)	(3		)	180
Year ended December 31, 2013
Realized before impairments	$	36		$	196		$	2		$	(1	)	$	(82	)	$	(2	)	$	149
Realized — impairments	(5		)	(5		)	(5		)	3			4			—			(8		)
Change in unrealized	(945		)	31			—			504			144			6			(260		)
Year ended December 31, 2012
Realized before impairments	$	55		$	192		$	(3	)	$	(8	)	$	(83	)	$	(2	)	$	151
Realized — impairments	(9		)	(24		)	—			7			9			—			(17		)
Change in unrealized	790			(23		)	—			(379		)	(136		)	(7		)	245

(a) Primarily adjustments to deferred policy acquisition costs and reserves related to annuities and long-term care business.

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):

	2014			2013			2012
Fixed maturities:
Gross gains	$	36		$	44		$	55
Gross losses	(2		)	(5		)	(4		)
Equity securities:
Gross gains	53			193			196
Gross losses	—			—			(4		)