Income Taxes

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following is a reconciliation of income taxes at the statutory rate of 35% to the provision for income taxes as shown in AFG’s Statement of Earnings (dollars in millions):

	Three months ended June 30,										Six months ended June 30,
	2016					2015					2016					2015
	Amount			% of EBT		Amount			% of EBT		Amount			% of EBT		Amount			% of EBT
Earnings before income taxes (“EBT”)	$	136				$	226				$	292				$	256
Income taxes at statutory rate	$	47		35	%	$	80		35	%	$	102		35	%	$	90		35	%
Effect of:
Tax exempt interest	(6		)	(4	%)	(7		)	(3	%)	(13		)	(4	%)	(14		)	(5	%)
Change in valuation allowance	32			24	%	1			—	%	33			11	%	—			—	%
Subsidiaries not in AFG’s tax return	1			1	%	1			—	%	2			1	%	2			1	%
Other	(1		)	(2	%)	2			2	%	1			—	%	4			1	%
Provision for income taxes as shown in the statement of earnings	$	73		54	%	$	77		34	%	$	125		43	%	$	82		32	%

Excluding the $65 million charge related to the exit of certain lines of business within Neon, AFG’s Lloyd’s-based insurer, AFG’s effective tax rate for the second quarter and six months ended June 30, 2016, was 36% and 35%, respectively. AFG maintains a full valuation allowance against the deferred tax benefits associated with losses related to Neon.

During the first six months of 2016, there were no material changes to AFG’s liability for uncertain tax positions.