Acquisitions and Sale of Businesses (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of estimated fair values of assets acquired and liabilities assumed

The purchase price was allocated to the acquired assets and liabilities of Verikai based on management’s best estimate of fair value as of the acquisition date. The purchase price allocation is shown below (in millions).


	December 6, 2021
Purchase price:
Cash	$	120
Fair value of contingent consideration	23
Total purchase price	143

Tangible assets acquired	16
Liabilities acquired	3
Net tangible assets acquired, at fair value	13
Excess purchase price over net tangible assets acquired	$	130

Allocation of excess purchase price:
Intangible assets acquired (*)	$	76
Deferred tax on intangible assets acquired (*)	(16)
Goodwill	70
	$	130

(*)Included in Other assets in AFG’s Balance Sheet.

Schedule of disposal groups that are not discontinued operations, disclosures

The gain on the sale of Neon, which was recorded in AFG’s financial statements as of December 31, 2020, is shown below (in millions):


Sale proceeds, net of expenses	$	3

Assets of businesses sold:
Cash and investments	$	453
Recoverables from reinsurers	224
Prepaid reinsurance premiums	8
Agents’ balances and premiums receivable	42
Other assets	60
Total assets	787
Liabilities of businesses sold:
Unpaid losses and loss adjustment expenses	640
Unearned premiums	49
Payable to reinsurers	19
Other liabilities	92
Total liabilities	800
Reclassify accumulated other comprehensive income	(7)
Net liabilities of businesses sold	$	(20)

Pretax gain on subsidiaries recorded in 2020	$	23

In the second quarter of 2021, AFG received an additional $10 million of cash proceeds and recognized a pretax gain of $4 million related to contingent consideration received on the sale of Neon.

Revenues, costs and expenses, and earnings before income taxes for the subsidiaries sold were (in millions):


	Year ended December 31, 2020
Net earned premiums	$	200
Loss and loss adjustment expenses	218
Commissions and other underwriting expenses	117
Underwriting loss	(135)

Net investment loss	(5)
Other income and expenses, net	(5)
Loss before income taxes and noncontrolling interests	$	(145)

The impact of Neon exited lines on AFG’s net earnings for the year ended December 31, 2020 is shown below (in millions):


Underwriting loss	$	(135)
Net investment income (loss)	(5)
Other income and expenses, net	(5)
Loss before income taxes and noncontrolling interests	(145)
Pretax gain on sale of subsidiaries	23
Total pretax loss from Neon exited lines	(122)
Tax benefit related to sale of subsidiaries	72
Less: Net loss attributable to noncontrolling interests	(11)
Net loss from Neon exited lines attributable to shareholders	$	(39)