Property and Casualty Insurance Reserves Estimating the liability for unpaid losses and loss adjustment expenses (“LAE”) is inherently judgmental and is influenced by factors that are subject to significant variation. Determining the liability is a complex process incorporating input from many areas of the Company including actuarial, underwriting, pricing, claims and operations management.

The process used to determine the total reserve for liabilities involves estimating the ultimate incurred losses and LAE, adjusted for amounts already paid on the claims. The IBNR reserve is derived by first estimating the ultimate unpaid reserve liability and subtracting case reserves for loss and LAE.

In determining management’s best estimate of the ultimate liability, management (with the assistance of Company actuaries) considers items such as the effect of inflation on medical, hospitalization, material, repair and replacement costs, the nature and maturity of lines of insurance, general economic trends and the legal environment. In addition, historical trends adjusted for changes in underwriting standards, policy provisions, product mix and other factors are analyzed using actuarial reserve development techniques. Weighing all of the factors, the management team determines a single or “point” estimate that it records as its best estimate of the ultimate liability. Ranges of loss reserves are not

Each quarterly review includes in-depth analysis of several hundred subdivisions of the business, employing multiple actuarial techniques. For each subdivision, actuaries use informed, professional judgment to adjust these techniques as necessary to respond to specific conditions in the data or within the business.

Each method has particular strengths and weaknesses and no single estimation method is most accurate in all situations. When applied to a particular group of claims, the relative strengths and weaknesses of each method can change over time based on the facts and circumstances. Ultimately, the estimation methods chosen are those which the actuary believes produce the most reliable indication for the particular liabilities under review.

The period of time from the event triggering a claim through the settlement of the liability is referred to as the “tail”. Generally, the same actuarial methods are considered for both short-tail and long-tail lines of business because most of them work properly for both. The methods are designed to incorporate the effects of the differing length of time to settle particular claims. For nearly all lines of business, the actuaries rely heavily on the Bornhuetter-Ferguson method for more recent accident periods. As accident years mature and the underlying claim data becomes more credible, more weight is given to the Case Incurred and Paid Development methods. This transition occurs relatively quickly for short-tailed lines, and over a number of years for long-tail lines. Liability claims for long-tail lines are more susceptible to litigation and can be significantly affected by changing contract interpretation and the legal environment. Therefore, the estimation of loss reserves for these classes is more complex and subject to a higher degree of variability.

The level of detail in which data is analyzed varies among the different lines of business. Data is generally analyzed by major product or by coverage within product, using countrywide data; however, in some situations, data may be reviewed by state or region. Appropriate segmentation of the data is determined based on data credibility, homogeneity of development patterns, mix of business, and other actuarial considerations.

Within each business, results of individual methods are reviewed, supplementary statistical information is analyzed, and data from underwriting, operating and claim management are considered in deriving management’s best estimate of the ultimate liability. This estimate may be the result of one method, a weighted average of several methods, or a judgmental selection as the management team determines is appropriate.

The liability for losses and LAE for a very limited number of claims with long-term scheduled payments under certain workers’ compensation policies has been discounted at 3.5% at both December 31, 2022 and December 31, 2021, which represents an approximation of long-term investment yields. Because of the limited amount of claims involved, the net impact of discounting did not materially impact AFG’s total liability for unpaid losses and loss adjustment expenses (net reductions from discounting of $9 million and $8 million at December 31, 2022 and 2021, respectively).


	2022		2021		2020
Balance at beginning of period	$	11,074	$	10,392	$	10,232
Less reinsurance recoverables, net of allowance	3,419		3,117		3,024
Net liability at beginning of period	7,655		7,275		7,208
Provision for losses and LAE occurring in the current year	3,914		3,436		3,398
Net increase (decrease) in the provision for claims of prior years:
Special A&E charges	—		—		47
Neon exited lines	—		—		19
Other	(285)		(279)		(193)
Total losses and LAE incurred	3,629		3,157		3,271
Payments for losses and LAE of:
Current year	(1,212)		(1,024)		(990)
Prior years	(1,870)		(1,753)		(1,766)
Total payments	(3,082)		(2,777)		(2,756)
Reserves of businesses disposed (*)	—		—		(449)
Foreign currency translation and other	5		—		1
Net liability at end of period	8,207		7,655		7,275
Add back reinsurance recoverables, net of allowance	3,767		3,419		3,117
Gross unpaid losses and LAE included in the balance sheet	$	11,974	$	11,074	$	10,392

The 2021 and 2020 provision for losses and LAE occurring in the current year includes $16 million and $115 million (including $20 million recorded by the Neon exited lines), respectively, of COVID-19 related losses. In addition, the net decrease in the provision for losses and LAE includes favorable development of $19 million in both 2022 and 2021 related to COVID-19 related losses.

The net decrease in the provision for claims of prior years in 2022 reflects (i) lower than anticipated losses in the crop business, lower than expected claim frequency in the trucking and ocean marine businesses and in the Singapore operations, lower than expected claim frequency and severity in the aviation business and lower than anticipated claim severity in the property and inland marine business (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses and lower than expected claim frequency in the executive liability and excess and surplus businesses (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency in the surety, trade credit and financial institutions businesses (within the Specialty financial sub-segment). This favorable development was partially offset by (i) higher than anticipated claim severity in the general liability, umbrella and excess liability and certain targeted markets businesses (within the Specialty casualty sub-segment) and (ii) net adverse development associated with AFG’s internal reinsurance program (within Other specialty), primarily related to social inflation exposed business assumed from the Specialty casualty sub-segment.

The net decrease in the provision for claims of prior years in 2021 reflects (i) lower than anticipated claim frequency and severity in the transportation businesses, lower than expected losses in the crop business, lower than expected claim severity in the ocean marine business and lower than expected claim frequency in the aviation business (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency in the surety and trade credit businesses and lower than expected claim frequency and severity in the financial institutions business (within the Specialty financial sub-segment). This favorable development was partially offset by higher than anticipated claim severity in the general liability and targeted markets businesses (within the Specialty casualty sub-segment) and (ii) net adverse development associated with AFG’s internal reinsurance program (within Other specialty).

The net decrease in the provision for claims of prior years in 2020 reflects (i) lower than expected claim frequency and severity in the aviation, transportation and agricultural businesses (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses and lower than anticipated claim frequency in the executive liability business (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency in the trade credit business and lower than anticipated claim frequency and severity in the financial

institutions, fidelity and surety businesses (within the Specialty financial sub-segment). This favorable development was partially offset by (i) the $47 million special charge to increase asbestos and environmental reserves and adverse reserve development of $19 million on Neon’s exited lines of business, (ii) higher than expected claim frequency and severity in general liability contractor claims and the excess and surplus and excess liability businesses and higher than anticipated claim severity in the targeted markets businesses (within the Specialty casualty sub-segment), (iii) net adverse development associated with AFG’s internal reinsurance program (within Other specialty) and (iv) net adverse reserve development related to business outside the Specialty group that AFG no longer writes.


	2022
Unpaid losses and allocated LAE, net of reinsurance:
Specialty
Property and transportation	$	1,481
Specialty casualty	4,688
Specialty financial	277
Other specialty	525
Total Specialty (excluding foreign reserves)	6,971

Other reserves
Foreign operations	380
A&E reserves	385
Unallocated LAE	418
Other	53
Total other reserves	1,236
Total reserves, net of reinsurance	8,207

Add back reinsurance recoverables, net of allowance	3,767
Gross unpaid losses and LAE included in the balance sheet	$	11,974

The following claims development tables and associated disclosures related to short-duration insurance contracts are prepared by sub-segment within the property and casualty insurance business for the most recent 10 accident years. AFG determines its claim counts at the claimant or policy feature level depending on the particular facts and circumstances of the underlying claim. While the methodology is generally consistent within each sub-segment, there are minor differences between and within the sub-segments. The methods used to summarize claim counts have not changed significantly over the time periods reported in the tables below.


Property and transportation
(Dollars in Millions)

	Incurred Claims and Allocated LAE, Net of Reinsurance																				As of December 31, 2022
	For the Years Ended (2013–2021 is Supplementary Information and Unaudited)																				Total IBNR Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	882	$	870	$	872	$	878	$	878	$	877	$	873	$	871	$	870	$	870	$	4	139,031
2014			844		828		817		820		815		808		804		802		800		5		133,262
2015					818		784		779		777		777		772		768		769		7		135,048
2016							746		716		714		706		694		688		689		9		121,361
2017									889		847		843		823		816		820		15		140,902
2018											932		902		886		876		882		24		130,600
2019													1,111		1,058		1,051		1,055		35		154,011
2020															1,043		974		957		71		121,649
2021																	1,119		1,023		129		122,024
2022																			1,393		436		122,637
																	Total		$	9,258


	Cumulative Paid Claims and Allocated LAE, Net of Reinsurance
Accident Year	For the Years Ended (2013–2021 is Supplementary Information and Unaudited)
	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		% (a)
2013	$	438	$	702	$	760	$	804	$	831	$	847	$	858	$	860	$	861	$	864	99.3	%
2014			329		632		693		744		770		783		789		791		792		99.0	%
2015					359		582		667		707		736		744		750		755		98.2	%
2016							294		521		577		618		640		656		665		96.5	%
2017									379		640		696		735		755		783		95.5	%
2018											396		676		738		781		824		93.4	%
2019													527		823		904		959		90.9	%
2020															461		726		804		84.0	%
2021																	449		767		75.0	%
2022																			587		42.1	%
																	Total		$	7,800
							Unpaid losses and LAE — years 2013 through 2022												1,458
			Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE)																23
			Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE)																$	1,481


	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Supplementary Information and Unaudited)
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
Annual	45.6	%	31.2	%	7.9	%	5.3	%	3.4	%	2.0	%	1.0	%	0.4	%	0.1	%	0.3	%
Cumulative	45.6	%	76.8	%	84.7	%	90.0	%	93.4	%	95.4	%	96.4	%	96.8	%	96.9	%	97.2	%


Specialty casualty
(Dollars in Millions)

	Incurred Claims and Allocated LAE, Net of Reinsurance																				As of December 31, 2022
	For the Years Ended (2013–2021 is Supplementary Information and Unaudited)																				Total IBNR Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	968	$	949	$	945	$	940	$	945	$	926	$	916	$	905	$	898	$	895	$	28	55,221
2014			1,035		1,008		1,008		1,006		982		967		952		950		955		36		57,158
2015					1,081		1,043		1,041		1,042		1,024		1,021		1,015		1,007		49		58,251
2016							1,131		1,122		1,116		1,101		1,090		1,069		1,046		83		56,549
2017									1,211		1,221		1,204		1,189		1,162		1,139		139		57,232
2018											1,277		1,307		1,302		1,262		1,269		226		59,219
2019													1,308		1,311		1,322		1,280		300		59,029
2020															1,352		1,329		1,258		440		53,383
2021																	1,384		1,389		696		54,555
2022																			1,475		954		48,805
																	Total		$	11,713


	Cumulative Paid Claims and Allocated LAE, Net of Reinsurance
Accident Year	For the Years Ended (2013–2021 is Supplementary Information and Unaudited)
	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		% (a)
2013	$	182	$	396	$	554	$	666	$	729	$	766	$	797	$	820	$	835	$	845	94.4	%
2014			190		412		574		680		755		801		829		862		881		92.3	%
2015					178		411		577		702		792		844		888		913		90.7	%
2016							186		418		584		713		806		870		906		86.6	%
2017									200		422		612		755		833		902		79.2	%
2018											210		475		649		794		901		71.0	%
2019													212		455		651		795		62.1	%
2020															188		446		613		48.7	%
2021																	191		438		31.5	%
2022																			198		13.4	%
																	Total		$	7,392
							Unpaid losses and LAE — years 2013 through 2022												4,321
			Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE)																367
			Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE)																$	4,688


	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Supplementary Information and Unaudited)
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
Annual	16.8	%	21.1	%	15.7	%	11.9	%	8.0	%	5.3	%	3.6	%	2.8	%	1.8	%	1.1	%
Cumulative	16.8	%	37.9	%	53.6	%	65.5	%	73.5	%	78.8	%	82.4	%	85.2	%	87.0	%	88.1	%


Specialty financial
(Dollars in Millions)

	Incurred Claims and Allocated LAE, Net of Reinsurance																				As of December 31, 2022
	For the Years Ended (2013–2021 is Supplementary Information and Unaudited)																				Total IBNR Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	140	$	145	$	137	$	131	$	127	$	126	$	122	$	122	$	120	$	118	$	1	28,477
2014			146		157		156		153		147		142		137		136		135		1		29,470
2015					156		160		158		153		145		138		136		135		1		37,627
2016							179		184		187		182		174		170		173		2		45,177
2017									212		215		212		208		203		202		4		48,831
2018											212		217		219		207		201		7		46,764
2019													194		198		191		186		15		41,898
2020															231		215		202		23		29,638
2021																	223		201		49		26,983
2022																			243		124		19,415
																	Total		$	1,796


	Cumulative Paid Claims and Allocated LAE, Net of Reinsurance
Accident Year	For the Years Ended (2013–2021 is Supplementary Information and Unaudited)
	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		% (a)
2013	$	70	$	100	$	107	$	113	$	117	$	117	$	118	$	118	$	118	$	117	99.2	%
2014			62		109		125		128		137		139		141		140		141		104.4	%
2015					72		110		129		133		132		134		134		134		99.3	%
2016							88		141		158		161		163		164		171		98.8	%
2017									120		169		186		194		193		192		95.0	%
2018											112		163		187		188		192		95.5	%
2019													99		146		164		168		90.3	%
2020															100		144		159		78.7	%
2021																	98		136		67.7	%
2022																			108		44.4	%
																	Total		$	1,518
							Unpaid losses and LAE — years 2013 through 2022												278
			Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE)																(1)
			Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE)																$	277


	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Supplementary Information and Unaudited)
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
Annual	52.1	%	26.1	%	9.9	%	2.7	%	2.0	%	0.6	%	1.6	%	(0.2	%)	0.4	%	(0.8	%)
Cumulative	52.1	%	78.2	%	88.1	%	90.8	%	92.8	%	93.4	%	95.0	%	94.8	%	95.2	%	94.4	%


Other specialty
(Dollars in Millions)

	Incurred Claims and Allocated LAE, Net of Reinsurance																				As of December 31, 2022
	For the Years Ended (2013–2021 is Supplementary Information and Unaudited)																				Total IBNR Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims (a)
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	46	$	47	$	46	$	47	$	50	$	53	$	58	$	58	$	60	$	63	$	1	—
2014			58		57		59		59		60		61		64		66		68		3		—
2015					59		60		63		66		76		82		84		87		5		—
2016							61		61		65		71		76		77		78		10		—
2017									63		65		70		81		88		95		7		—
2018											86		90		92		94		100		26		—
2019													108		107		108		111		32		—
2020															122		117		129		62		—
2021																	135		141		95		—
2022																			159		122		—
																	Total		$	1,031


	Cumulative Paid Claims and Allocated LAE, Net of Reinsurance
Accident Year	For the Years Ended (2013–2021 is Supplementary Information and Unaudited)
	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		% (b)
2013	$	7	$	16	$	22	$	34	$	37	$	44	$	51	$	53	$	57	$	60	95.2	%
2014			13		21		30		36		43		50		53		54		56		82.4	%
2015					10		26		31		50		62		69		75		76		87.4	%
2016							9		19		31		47		53		60		64		82.1	%
2017									10		19		30		52		63		76		80.0	%
2018											12		23		32		44		60		60.0	%
2019													9		24		49		61		55.0	%
2020															9		21		44		34.1	%
2021																	8		27		19.1	%
2022																			11		6.9	%
																	Total		$	535
							Unpaid losses and LAE — years 2013 through 2022												496
			Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE)																29
			Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE)																$	525


	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Supplementary Information and Unaudited)
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
Annual	10.3	%	12.7	%	13.1	%	16.6	%	10.7	%	10.4	%	6.9	%	1.9	%	4.6	%	4.8	%
Cumulative	10.3	%	23.0	%	36.1	%	52.7	%	63.4	%	73.8	%	80.7	%	82.6	%	87.2	%	92.0	%

(a)The amounts shown in Other specialty represent business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty property and casualty insurance sub-segments. Accordingly, the liability for incurred claims and allocated LAE represents additional reserves held on claims counted in the tables provided for the other sub-segments (above).


Total Specialty Group
(Dollars in Millions)

	Incurred Claims and Allocated LAE, Net of Reinsurance																				As of December 31, 2022
	For the Years Ended (2013–2021 is Supplementary Information and Unaudited)																				Total IBNR Plus Expected Development on Reported Claims		Cumulative Number of Reported Claims
Accident Year	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022
2013	$	2,036	$	2,011	$	2,000	$	1,996	$	2,000	$	1,982	$	1,969	$	1,956	$	1,948	$	1,946	$	34	222,729
2014			2,083		2,050		2,040		2,038		2,004		1,978		1,957		1,954		1,958		45		219,890
2015					2,114		2,047		2,041		2,038		2,022		2,013		2,003		1,998		62		230,926
2016							2,117		2,083		2,082		2,060		2,034		2,004		1,986		104		223,087
2017									2,375		2,348		2,329		2,301		2,269		2,256		165		246,965
2018											2,507		2,516		2,499		2,439		2,452		283		236,583
2019													2,721		2,674		2,672		2,632		382		254,938
2020															2,748		2,635		2,546		596		204,670
2021																	2,861		2,754		969		203,562
2022																			3,270		1,636		190,857
																	Total		$	23,798


	Cumulative Paid Claims and Allocated LAE, Net of Reinsurance
Accident Year	For the Years Ended (2013–2021 is Supplementary Information and Unaudited)
	2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		% (a)
2013	$	697	$	1,214	$	1,443	$	1,617	$	1,714	$	1,774	$	1,824	$	1,851	$	1,871	$	1,886	96.9	%
2014			594		1,174		1,422		1,588		1,705		1,773		1,812		1,847		1,870		95.5	%
2015					619		1,129		1,404		1,592		1,722		1,791		1,847		1,878		94.0	%
2016							577		1,099		1,350		1,539		1,662		1,750		1,806		90.9	%
2017									709		1,250		1,524		1,736		1,844		1,953		86.6	%
2018											730		1,337		1,606		1,807		1,977		80.6	%
2019													847		1,448		1,768		1,983		75.3	%
2020															758		1,337		1,620		63.6	%
2021																	746		1,368		49.7	%
2022																			904		27.6	%
																	Total		$	17,245
							Unpaid losses and LAE — years 2013 through 2022												6,553
			Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE)																418
			Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE)																$	6,971


	Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance (Supplementary Information and Unaudited)
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
Annual	30.4	%	25.0	%	12.2	%	8.9	%	5.9	%	3.9	%	2.5	%	1.6	%	1.1	%	0.8	%
Cumulative	30.4	%	55.4	%	67.6	%	76.5	%	82.4	%	86.3	%	88.8	%	90.4	%	91.5	%	92.3	%

Deferred Policy Acquisition Costs Included in property and casualty insurance commissions and other underwriting expenses in AFG’s Statement of Earnings is amortization of deferred policy acquisition costs of $641 million, $580 million, and $615 million in 2022, 2021 and 2020, respectively.

Statutory Information AFG’s U.S.-based insurance subsidiaries are required to file financial statements with state insurance regulatory authorities prepared on an accounting basis prescribed or permitted by such authorities (statutory basis). Net earnings and capital and surplus on a statutory basis for the insurance subsidiaries were as follows (in millions):

The National Association of Insurance Commissioners’ (“NAIC”) model law for risk-based capital (“RBC”) applies to property and casualty insurance companies. RBC formulas determine the amount of capital that an insurance company needs so that it has an acceptable expectation of not becoming financially impaired. Companies below specific trigger points or ratios are subject to regulatory action. At December 31, 2022 and 2021, the capital ratios of all AFG insurance companies substantially exceeded the RBC requirements. AFG’s insurance companies did not use any prescribed or permitted statutory accounting practices that differed from the NAIC statutory accounting practices at December 31, 2022 or 2021.

Payments of dividends by AFG’s insurance companies are subject to various state laws that limit the amount of dividends that can be paid. Under applicable restrictions, the maximum amount of dividends available to AFG in 2023 from its insurance subsidiaries without seeking regulatory approval is $887 million. Additional amounts of dividends require regulatory approval.

Holding Company Dividends AFG declared and paid common stock dividends to shareholders totaling $1.22 billion, $2.38 billion and $336 million in 2022, 2021 and 2020, respectively. Currently, there are no regulatory restrictions on AFG’s retained earnings or net earnings that materially impact its ability to pay dividends. Based on shareholders’ equity at December 31, 2022, AFG could pay dividends of approximately $1 billion without violating its most restrictive debt covenant. However, the payment of future dividends will be at the discretion of AFG’s Board of Directors and will be dependent on many factors including AFG’s financial condition and results of operations, the capital requirements of its insurance subsidiaries, and rating agency commitments.

Reinsurance In the normal course of business, AFG cedes reinsurance to other companies to diversify risk and limit maximum loss arising from large claims. However, AFG remains liable to its insureds regardless of whether a reinsurer is able to meet its obligations. The following table shows (in millions) (i) amounts deducted from property and casualty written and earned premiums in connection with reinsurance ceded, (ii) written and earned premiums included in income for reinsurance assumed and (iii) reinsurance recoveries, which represent ceded losses and loss adjustment expenses.


	2022		2021		2020
Direct premiums written	$	8,774	$	7,700	$	6,862
Reinsurance assumed	283		246		225
Reinsurance ceded	(2,851)		(2,373)		(2,074)
Net written premiums	$	6,206	$	5,573	$	5,013

Direct premiums earned	$	8,582	$	7,462	$	6,846
Reinsurance assumed	274		249		237
Reinsurance ceded	(2,771)		(2,307)		(1,984)
Net earned premiums	$	6,085	$	5,404	$	5,099

Reinsurance recoveries	$	2,065	$	1,478	$	1,522

AFG maintains supplemental fully collateralized reinsurance coverage up to 94% of $325 million for catastrophe losses in excess of $125 million of traditional catastrophe reinsurance through a catastrophe bond. AFG’s cost for this coverage is approximately $16 million per year. Recoveries from the catastrophe bond apply before calculating losses recoverable from this catastrophe excess of loss reinsurance.

Recoverables from Reinsurers and Premiums Receivable See Note A — “Accounting Policies — Credit Losses on Financial Instruments,” for a discussion of guidance effective January 1, 2020, which impacted the accounting for expected credit losses of recoverables from reinsurers and premiums receivable. AFG reviews the allowance quarterly and makes adjustments as necessary to reflect changes in expected credit losses. Progressions of the allowance for expected credit losses are shown below (in millions):


	Recoverables from Reinsurers						Premiums Receivable
	2022		2021		2020		2022		2021		2020
Balance at January 1	$	8	$	6	$	18	$	8	$	10	$	13
Impact of adoption of new accounting policy	—		—		(11)		—		—		(3)
Provision for expected credit losses	—		2		—		—		(2)		1
Write-offs charged against the allowance	—		—		—		—		—		(1)
Businesses disposed	—		—		(1)		—		—		—
Balance at December 31	$	8	$	8	$	6	$	8	$	8	$	10