Income Taxes

3 Months Ended

Mar. 31, 2017

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 March 31,
	2017					2016
	Amount			% of EBT		Amount			% of EBT
Earnings before income taxes (“EBT”)	$	223				$	156
Income taxes at statutory rate	$	78		35	%	$	55		35	%
Effect of:
Tax exempt interest	(6		)	(3	%)	(7		)	(4	%)
Stock-based compensation	(6		)	(3	%)	—			—	%
Change in valuation allowance	(2		)	(1	%)	1			1	%
Subsidiaries not in AFG’s tax return	—			—	%	1			—	%
Other	4			2	%	2			1	%
Provision for income taxes as shown in the statement of earnings	$	68		30	%	$	52		33	%

The favorable impact of stock-based compensation on AFG’s effective tax rate in the first three months of 2017 reflects the high volume of employee stock option exercises during that period, including the impact of the increase in the market price of AFG Common Stock.

During the first three months of 2017, there were no material changes to AFG’s liability for uncertain tax positions.