Acquisitions and Sale of Businesses (Tables)

9 Months Ended

Sep. 30, 2015

Business Combinations [Abstract]

Schedule of estimated fair values of assets acquired and liabilities assumed

The allocation of the purchase price is shown in the table below (in millions):

Total purchase price			$	259
Tangible assets acquired:
Cash and cash equivalents	$	1,078
Fixed maturities, available for sale	92
Recoverables from reinsurers	116
Agents’ balances and premiums receivable	41
Deferred tax assets, net (a)	67
Other receivables	21
Other assets	11
Total tangible assets acquired			1,426
Liabilities acquired:
Unpaid losses and loss adjustment expenses	1,142
Unearned premiums	3
Payable to reinsurers	3
Other liabilities	66
Total liabilities acquired			1,214
Net tangible assets acquired, at fair value			212
Excess purchase price over net tangible assets acquired			$	47
Allocation of excess purchase price:
Intangible assets acquired (b)			$	47
Deferred tax on intangible assets acquired (a)			(16		)
Goodwill			16
			$	47

(a) AFG’s net deferred tax assets are included in Other assets in AFG’s Consolidated Balance Sheet at September 30, 2015.

(b) Included in Other assets in AFG’s Consolidated Balance Sheet.

Summarized financial information

The estimated impact of the pending sale of the run-off long-term care insurance business, which was recorded in AFG’s financial statements as of March 31, 2015, is shown below (in millions):

Estimated sale proceeds (*)	$	14
Assets of businesses sold:
Cash and investments	$	1,397
Recoverables from reinsurers	603
Deferred policy acquisition costs	15
Other receivables	14
Other assets	7
Goodwill	2
Total assets	2,038
Liabilities of businesses sold:
Annuity benefits accumulated	270
Life, accident and health reserves	1,537
Other liabilities	27
Total liabilities	1,834
Reclassify net unrealized gain on marketable securities	28
Net assets of businesses sold	$	176
Pretax loss on subsidiaries recorded in the first quarter of 2015	$	(162	)

(*) Includes fair value of the potential additional consideration and is shown net of estimated expenses.

Revenues, costs and expenses, and earnings before income taxes for the subsidiaries to be sold were (in millions):

	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
Life, accident and health net earned premiums:
Long-term care	$	19		$	18		$	56		$	56
Life operations	3			3			8			8
Net investment income	19			18			56			57
Realized gains (losses) on securities and other income	(4		)	(1		)	(6		)	1
Total revenues	37			38			114			122
Annuity benefits	2			2			6			6
Life, accident and health benefits:
Long-term care	21			27			67			84
Life operations	3			3			8			9
Annuity and supplemental insurance acquisition expenses	3			3			9			10
Other expenses	4			3			13			10
Total costs and expenses	33			38			103			119
Earnings before income taxes	$	4		$	—		$	11		$	3