Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Reconciliation of income taxes at the statutory rate and income taxes shown in the Statement of Earnings

The following is a reconciliation of income taxes on continuing operations at the statutory rate of 21% to the provision for income taxes as shown in AFG’s Statement of Earnings (dollars in millions):


	2022				2021				2020
	Amount		% of EBT		Amount		% of EBT		Amount		% of EBT
Earnings from continuing operations before income taxes (“EBT”)	$	1,123			$	1,335			$	339

Income taxes at statutory rate	$	236	21	%	$	280	21	%	$	71	21	%
Effect of:
Change in valuation allowance	(9)		(1	%)	(4)		—	%	(117)		(35	%)
Employee stock ownership plan dividend paid deduction	(8)		(1	%)	(16)		(1	%)	(2)		(1	%)
Tax exempt interest	(6)		(1	%)	(8)		(1	%)	(10)		(3	%)
Stock-based compensation	(5)		—	%	(13)		(1	%)	(4)		(1	%)
Adjustment to prior year taxes	(3)		—	%	(1)		—	%	1		—	%
Dividend received deduction	(2)		—	%	(2)		—	%	(2)		(1	%)
Tax benefit related to sale of Neon	—		—	%	—		—	%	(72)		(21	%)
Nondeductible expenses	8		1	%	8		1	%	4		1	%
Foreign operations	7		1	%	—		—	%	149		44	%
Other	7		—	%	10		—	%	7		3	%
Provision for income taxes as shown in the statement of earnings	$	225	20	%	$	254	19	%	$	25	7	%

Components of income tax provision (credit)

The total income tax provision of continuing operations consists of (in millions):


	2022		2021		2020
Current taxes:
Federal	$	192	$	162	$	46
State	10		7		4
Foreign	1		1		3
Deferred taxes:
Federal	22		84		(28)
Provision for income taxes	$	225	$	254	$	25

Summary of operating loss carryforwards

For income tax purposes, AFG and its subsidiaries had the following carryforwards available at December 31, 2022 (in millions):


	Expiring	Amount
Operating Loss – U.S.	2023 - 2041	$	12
Operating Loss – United Kingdom	indefinite	36		(*)

(*)£30 million

Components of deferred tax assets and liabilities

The significant components of deferred tax assets and liabilities included in AFG’s Balance Sheet at December 31 were as follows (in millions):


	2022		2021
Deferred tax assets:
Federal net operating loss carryforwards	$	2	$	12
Foreign underwriting losses	10		9

Insurance claims and reserves	255		249
Employee benefits	108		112
Other, net	24		26
Total deferred tax assets before valuation allowance	399		408
Valuation allowance against deferred tax assets	(16)		(25)
Total deferred tax assets	383		383
Deferred tax liabilities:
Investment securities	(52)		(200)
Deferred policy acquisition costs	(66)		(61)
Insurance claims and reserves transition liability	(12)		(17)
Real estate, property and equipment	(23)		(29)
Total deferred tax liabilities	(153)		(307)
Net deferred tax asset	$	230	$	76