Segments of Operations

9 Months Ended

Sep. 30, 2019

AFG manages its business as three segments: (i) Property and casualty insurance, (ii) Annuity and (iii) Other, which includes holding company costs, revenues and costs of AFG’s limited insurance operations outside of property and casualty insurance and annuity segments, and 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 and trucks, inland and ocean marine, agricultural-related products and other commercial property coverages, (ii) Specialty casualty, which includes primarily excess and surplus, executive and professional liability, general liability, umbrella and excess liability, specialty coverages 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 lending and leasing institutions (including equipment leasing and collateral and lender-placed mortgage property insurance), fidelity and surety 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 sells traditional fixed, fixed-indexed and variable-indexed annuities in the retail, financial institutions, broker-dealer and registered investment advisor 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,
	2019			2018		2019		2018
Revenues
Property and casualty insurance:
Premiums earned:
Specialty
Property and transportation	$	583		$	526	$	1,323	$	1,250
Specialty casualty	658			616		1,921		1,790
Specialty financial	161			149		458		457
Other specialty	40			36		113		98
Total premiums earned	1,442			1,327		3,815		3,595
Net investment income	124			108		352		323
Other income	5			4		10		8
Total property and casualty insurance	1,571			1,439		4,177		3,926
Annuity:
Net investment income	448			413		1,334		1,219
Other income	28			27		82		80
Total annuity	476			440		1,416		1,299
Other	94			95		292		263
Total revenues before realized gains (losses)	2,141			1,974		5,885		5,488
Realized gains (losses) on securities	(18		)	34		222		(28		)
Total revenues	$	2,123		$	2,008	$	6,107	$	5,460



	Three months ended September 30,						Nine months ended September 30,
	2019			2018			2019			2018
Earnings Before Income Taxes
Property and casualty insurance:
Underwriting:
Specialty
Property and transportation	$	38		$	—		$	81		$	56
Specialty casualty	23			49			106			119
Specialty financial	26			9			60			46
Other specialty	1			(3		)	(11		)	(1		)
Other lines (a)	(34		)	(17		)	(36		)	(19		)
Total underwriting	54			38			200			201
Investment and other income, net	118			101			328			300
Total property and casualty insurance	172			139			528			501
Annuity	73			117			234			341
Other (b)	(50		)	(46		)	(135		)	(136		)
Total earnings before realized gains (losses) and income taxes	195			210			627			706
Realized gains (losses) on securities	(18		)	34			222			(28		)
Total earnings before income taxes	$	177		$	244		$	849		$	678


(a)	Includes special charges of $18 million in both the third quarter of 2019 and 2018, respectively, to increase asbestos and environmental (“A&E”) reserves.

(b)

Includes holding company interest and expenses, including special charges of $11 million and $9 million in the third quarter of 2019 and 2018, respectively, to increase A&E reserves related to AFG’s former railroad and manufacturing operations.