Segments of Operations

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Segments of Operations

Segments of Operations

Subsequent to the sale of its annuity operations, see Note B — “Discontinued Operations,” AFG manages its business as two segments: Property and casualty insurance and Other, which includes holding company costs 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 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 (loss) from continuing operations before income taxes by segment and sub-segment.

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Revenues
Property and casualty insurance:
Premiums earned:
Specialty
Property and transportation	$	700	$	574	$	1,547	$	1,350
Specialty casualty	613		560		1,772		1,663
Specialty financial	163		155		477		455
Other specialty	53		50		156		132
Other lines (a)	—		42		—		174
Total premiums earned	1,529		1,381		3,952		3,774
Net investment income (b)	165		112		467		277
Other income	4		—		9		8
Total property and casualty insurance	1,698		1,493		4,428		4,059
Other	73		60		208		195
Income on real estate-related entities (c)	—		10		51		29
Total revenues before realized gains (losses)	1,771		1,563		4,687		4,283
Realized gains (losses) on securities	(17)		23		103		(197)
Realized gains (losses) on subsidiaries	—		(30)		4		(30)
Total revenues	$	1,754	$	1,556	$	4,794	$	4,056

(a)Represents premiums earned in the Neon exited lines (which were sold in December 2020) during the third quarter and first nine months of 2020.

(b)Includes income of $1 million for the third quarter of 2020 and a loss of $5 million in the Neon exited lines in the first nine months of 2020 (primarily from the change in fair value of equity securities).

(c)Represents investment income from real estate-related entities acquired from the discontinued annuity operations while they were held by those operations. Subsequent to the sale of the annuity group, this income is included in the segment of the acquirer.

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Earnings (Loss) From Continuing Operations Before Income Taxes
Property and casualty insurance:
Underwriting:
Specialty
Property and transportation	$	45	$	47	$	163	$	107
Specialty casualty	110		53		237		132
Specialty financial	26		13		72		30
Other specialty	(12)		(9)		(16)		(22)
Other lines (a)	(1)		(86)		(2)		(133)
Total underwriting	168		18		454		114
Investment and other income, net (b)	161		100		451		249
Total property and casualty insurance	329		118		905		363
Other (c)	(45)		(74)		(173)		(152)
Income on real estate-related entities (d)	—		3		51		11
Total earnings from continuing operations before realized gains (losses) and income taxes	284		47		783		222
Realized gains (losses) on securities	(17)		23		103		(197)
Realized gains (losses) on subsidiaries	—		(30)		4		(30)
Total earnings (loss) from continuing operations before income taxes	$	267	$	40	$	890	$	(5)

(a)Includes an underwriting loss of $38 million in the third quarter of 2020 and $82 million in the first nine months of 2020 in the Neon exited lines. Also includes a special charge of $47 million in the third quarter of 2020 to increase asbestos and environmental (“A&E”) reserves.

(b)Includes $2 million and $10 million in the third quarter and first nine months of 2020, respectively, in net expenses from the Neon exited lines, before noncontrolling interest.

(c)Includes holding company interest and expenses, including a special charge of $21 million in the third quarter of 2020 to increase A&E reserves related to AFG’s former railroad and manufacturing operations.

(d)Represents investment income (net of DAC) from real estate-related entities acquired from the discontinued annuity operations while they were held by those operations. Subsequent to the sale of the annuity group, this income is included in the segment of the acquirer.