Investments (Tables)

3 Months Ended

Mar. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Available for sale fixed maturities and equity securities

Available for sale fixed maturities and equity securities at March 31, 2015 and December 31, 2014, consisted of the following (in millions):

	March 31, 2015									December 31, 2014
	Amortized Cost		Fair Value		Gross Unrealized					Amortized Cost		Fair Value		Gross Unrealized
					Gains		Losses							Gains		Losses
Fixed maturities:
U.S. Government and government agencies	$	323	$	330	$	10	$	(3	)	$	347	$	353	$	8	$	(2	)
States, municipalities and political subdivisions	6,713		7,106		401		(8		)	6,393		6,747		364		(10		)
Foreign government	172		184		12		—			184		194		10		—
Residential MBS	3,934		4,325		404		(13		)	4,046		4,442		411		(15		)
Commercial MBS	2,247		2,403		156		—			2,294		2,451		158		(1		)
Asset-backed securities	4,175		4,224		57		(8		)	3,872		3,887		37		(22		)
Corporate and other	12,526		13,396		892		(22		)	11,938		12,660		751		(29		)
Total fixed maturities	$	30,090	$	31,968	$	1,932	$	(54	)	$	29,074	$	30,734	$	1,739	$	(79	)
Common stocks	$	888	$	1,087	$	232	$	(33	)	$	885	$	1,087	$	227	$	(25	)
Perpetual preferred stocks	$	418	$	443	$	28	$	(3	)	$	398	$	414	$	21	$	(5	)

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 March 31, 2015 and December 31, 2014.

	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
March 31, 2015
Fixed maturities:
U.S. Government and government agencies	$	—		$	6	100	%	$	(3	)	$	15	83	%
States, municipalities and political subdivisions	(5		)	507		99	%	(3		)	57		95	%
Residential MBS	(5		)	332		99	%	(8		)	193		96	%
Commercial MBS	—			38		100	%	—			10		100	%
Asset-backed securities	(3		)	625		100	%	(5		)	461		99	%
Corporate and other	(18		)	555		97	%	(4		)	75		95	%
Total fixed maturities	$	(31	)	$	2,063	99	%	$	(23	)	$	811	97	%
Common stocks	$	(33	)	$	218	87	%	$	—		$	—	—	%
Perpetual preferred stocks	$	—		$	20	100	%	$	(3	)	$	49	94	%
December 31, 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	%

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):

	2015			2014
Balance at January 1	$	170		$	194
Additional credit impairments on:
Previously impaired securities	1			—
Securities without prior impairments	—			—
Reductions due to sales or redemptions	(3		)	(17		)
Balance at March 31	$	168		$	177

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 March 31, 2015 (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	$	958	$	978	3	%
After one year through five years	4,894		5,262		16	%
After five years through ten years	9,286		9,817		31	%
After ten years	4,596		4,959		16	%
	19,734		21,016		66	%
ABS (average life of approximately 4-1/2 years)	4,175		4,224		13	%
MBS (average life of approximately 4-1/2 years)	6,181		6,728		21	%
Total	$	30,090	$	31,968	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
March 31, 2015
Unrealized gain on:
Fixed maturities — annuity segment (*)	$	1,349		$	(472	)	$	877
Fixed maturities — all other	529			(196		)	333
Equity securities	224			(81		)	143
Deferred policy acquisition costs — annuity segment	(601		)	210			(391		)
Annuity benefits accumulated	(179		)	63			(116		)
Life, accident and health reserves	(109		)	38			(71		)
Unearned revenue	36			(12		)	24
	$	1,249		$	(450	)	$	799
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

(*) 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.

	Three months ended March 31,
	2015			2014
Investment income:
Fixed maturities	$	352		$	327
Equity securities	17			16
Equity in earnings of partnerships and similar investments	3			6
Other	21			17
Gross investment income	393			366
Investment expenses	(5		)	(5		)
Net investment income	$	388		$	361

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)			Total Pretax			Tax Effects			Noncon- trolling Interests			Total
Three months ended March 31, 2015
Realized before impairments	$	3		$	21		$	—	$	(1	)	$	23		$	(8	)	$	—		$	15
Realized — impairments	(5		)	(2		)	—		3			(4		)	1			—			(3		)
Change in unrealized	218			6			—		(137		)	87			(30		)	(1		)	56
Three months ended March 31, 2014
Realized before impairments	$	13		$	6		$	1	$	—		$	20		$	(7	)	$	—		$	13
Realized — impairments	(1		)	—			—		—			(1		)	—			—			(1		)
Change in unrealized	316			13			—		(136		)	193			(68		)	(3		)	122

(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):

	Three months ended March 31,
	2015		2014
Fixed maturities:
Gross gains	$	5	$	11
Gross losses	—		(1		)
Equity securities:
Gross gains	21		8
Gross losses	—		—