Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following is a reconciliation of income taxes at the statutory rate of 21% 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,
	2019					2018					2019					2018
	Amount			% of EBT		Amount			% of EBT		Amount			% of EBT		Amount			% of EBT
Earnings before income taxes (“EBT”)	$	259				$	260				$	672				$	434
Income taxes at statutory rate	$	54		21	%	$	54		21	%	$	141		21	%	$	91		21	%
Effect of:
Tax exempt interest	(3		)	(1	%)	(4		)	(2	%)	(7		)	(1	%)	(7		)	(2	%)
Dividends received deduction	(1		)	—	%	(1		)	—	%	(2		)	—	%	(2		)	—	%
Employee Stock Ownership Plan dividends paid deduction	(1		)	—	%	(1		)	—	%	(1		)	—	%	(1		)	—	%
Stock-based compensation	(2		)	(1	%)	(2		)	(1	%)	(4		)	(1	%)	(7		)	(2	%)
Nondeductible expenses	2			1	%	2			1	%	4			1	%	4			1	%
Change in valuation allowance	1			—	%	2			1	%	3			—	%	2			—	%
Foreign operations	—			—	%	—			—	%	—			—	%	3			1	%
Other	—			(1	%)	2			—	%	3			—	%	2			1	%
Provision for income taxes as shown in the statement of earnings	$	50		19	%	$	52		20	%	$	137		20	%	$	85		20	%

Approximately $19 million of AFG’s net operating loss carryforwards (“NOL”) subject to separate return limitation year (“SRLY”) tax rules will expire unutilized at December 31, 2019. Since AFG maintains a full valuation allowance against its SRLY NOLs, the expiration of these loss carryforwards will be offset by a corresponding reduction in the valuation allowance and will have no overall impact on AFG’s income tax expense or results of operations.