Segments of Operations

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segments of Operations

Segments of Operations

AFG manages its business as four segments: (i) Property and casualty insurance, (ii) Annuity, (iii) Run-off long-term care and life and (iv) Other, which includes holding company costs and the 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, professional liability, umbrella and excess liability, specialty coverage in targeted markets, customized programs for small to mid-sized businesses and workers’ compensation insurance, and (iii) Specialty financial, which includes risk management insurance programs for leasing and financing institutions (including collateral and lender-placed mortgage property insurance), surety and fidelity products and trade credit insurance. Premiums and underwriting profit included under Other specialty represent business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty sub-segments and amortization of deferred gains on retroactive reinsurance transactions related to the sales of businesses in prior years. AFG’s annuity business markets traditional fixed and fixed-indexed annuities in the retail, financial institutions and education markets. AFG’s reportable segments and their components were determined based primarily upon similar economic characteristics, products and services.

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

	Three months ended September 30,					Nine months ended September 30,
	2016		2015			2016			2015
Revenues
Property and casualty insurance:
Premiums earned:
Specialty
Property and transportation	$	493	$	517		$	1,197		$	1,157
Specialty casualty	497		503			1,496			1,496
Specialty financial	145		131			416			380
Other specialty	24		22			75			71
Total premiums earned	1,159		1,173			3,184			3,104
Net investment income	93		83			265			245
Other income (a)	3		2			46			61
Total property and casualty insurance	1,255		1,258			3,495			3,410
Annuity:
Net investment income	351		317			1,010			915
Other income	26		24			76			75
Total annuity	377		341			1,086			990
Run-off long-term care and life (b)	13		50			37			145
Other	58		49			173			137
Total revenues before realized gains (losses)	1,703		1,698			4,791			4,682
Realized gains (losses) on securities	2		(16		)	(32		)	2
Realized gains (losses) on subsidiaries	—		5			2			(157		)
Total revenues	$	1,705	$	1,687		$	4,761		$	4,527

Earnings Before Income Taxes
Property and casualty insurance:
Underwriting:
Specialty
Property and transportation	$	44		$	20		$	91		$	14
Specialty casualty	13			31			65			96
Specialty financial	19			26			64			72
Other specialty	2			7			7			13
Other lines (c)	(36		)	(69		)	(101		)	(70		)
Total underwriting	42			15			126			125
Investment and other income, net (a)	79			75			269			272
Total property and casualty insurance	121			90			395			397
Annuity	107			67			236			230
Run-off long-term care and life (b)	1			6			—			14
Other (d)	(53		)	(53		)	(131		)	(131		)
Total earnings before realized gains (losses) and income taxes	176			110			500			510
Realized gains (losses) on securities	2			(16		)	(32		)	2
Realized gains (losses) on subsidiaries	—			5			2			(157		)
Total earnings before income taxes	$	178		$	99		$	470		$	355

(a) Includes pretax income of $32 million (before noncontrolling interest) from the sale of an apartment property in the second quarter of 2016 and $51 million (before noncontrolling interest) from the sale of the Le Pavillon Hotel in the second quarter of 2015.

(b) AFG sold substantially all of its run-off long-term care insurance business in December 2015.

(c) Includes a special charge of $65 million related to the exit of certain lines of business within AFG’s Lloyd’s-based insurer, Neon, in the second quarter of 2016 and special charges of $36 million and $67 million in the third quarter of 2016 and 2015, respectively, to increase asbestos and environmental (“A&E”) reserves.

(d) Includes holding company interest and expenses, including a $4 million loss on retirement of debt in the third quarter of 2015, and special charges of $5 million and $12 million in the third quarter of 2016 and 2015, respectively, to increase A&E reserves related to AFG’s former railroad and manufacturing operations.