Shareholders' Equity

9 Months Ended

Sep. 30, 2023

Stockholders' Equity Note [Abstract]

Shareholders' Equity

Shareholders’ Equity

AFG is authorized to issue 12.5 million shares of Voting Preferred Stock and 12.5 million shares of Nonvoting Preferred Stock, each without par value.

Accumulated Other Comprehensive Income (Loss), Net of Tax (“AOCI”)   Comprehensive income is defined as all changes in shareholders’ equity except those arising from transactions with shareholders. Comprehensive income includes net earnings and other comprehensive income (loss), which consists primarily of changes in net unrealized gains or losses on available for sale fixed maturity securities.

The progression of the components of accumulated other comprehensive income (loss) follows (in millions):

			Other Comprehensive Income (Loss)
	AOCI Beginning Balance		Pretax		Tax		Net of tax		AOCI Ending Balance
Quarter ended September 30, 2023
Net unrealized gains (losses) on securities:
Unrealized holding gains (losses) on securities arising during the period			$	(81)	$	17	$	(64)
Reclassification adjustment for realized (gains) losses included in net earnings (*)			9		(2)		7
Total net unrealized gains (losses) on securities	$	(464)	(72)		15		(57)		$	(521)
Net unrealized gains (losses) on cash flow hedges:
Unrealized holding gains (losses) on cash flow hedges arising during the period			(9)		2		(7)
Reclassification adjustment for investment income included in net earnings (*)			8		(2)		6
Total net unrealized gains (losses) on cash flow hedges	(33)		(1)		—		(1)		(34)
Foreign currency translation adjustments	(17)		—		(1)		(1)		(18)
Pension and other postretirement plan adjustments	3		—		—		—		3
Total	$	(511)	$	(73)	$	14	$	(59)	$	(570)
Quarter ended September 30, 2022
Net unrealized gains (losses) on securities:
Unrealized holding gains (losses) on securities arising during the period			$	(292)	$	61	$	(231)
Reclassification adjustment for realized (gains) losses included in net earnings (*)			4		(1)		3
Total net unrealized gains (losses) on securities	$	(326)	(288)		60		(228)		$	(554)
Net unrealized gains (losses) on cash flow hedges:
Unrealized holding gains (losses) on cash flow hedges arising during the period			(26)		5		(21)
Reclassification adjustment for investment income included in net earnings (*)			(1)		1		—
Total net unrealized gains (losses) on cash flow hedges	(8)		(27)		6		(21)		(29)
Foreign currency translation adjustments	(15)		(4)		(1)		(5)		(20)
Pension and other postretirement plan adjustments	1		—		—		—		1
Total	$	(348)	$	(319)	$	65	$	(254)	$	(602)

			Other Comprehensive Income (Loss)
	AOCI Beginning Balance		Pretax		Tax		Net of tax		AOCI Ending Balance
Nine months ended September 30, 2023
Net unrealized gains (losses) on securities:
Unrealized holding gains (losses) on securities arising during the period			$	(69)	$	14	$	(55)
Reclassification adjustment for realized (gains) losses included in net earnings (*)			40		(9)		31
Total net unrealized gains (losses) on securities	$	(497)	(29)		5		(24)		$	(521)
Net unrealized gains (losses) on cash flow hedges:
Unrealized holding gains (losses) on cash flow hedges arising during the period			(25)		5		(20)
Reclassification adjustment for investment income included in net earnings (*)			19		(4)		15
Total net unrealized gains (losses) on cash flow hedges	(29)		(6)		1		(5)		(34)
Foreign currency translation adjustments	(20)		2		—		2		(18)
Pension and other postretirement plan adjustments	3		—		—		—		3
Total	$	(543)	$	(33)	$	6	$	(27)	$	(570)
Nine months ended September 30, 2022
Net unrealized gains (losses) on securities:
Unrealized holding gains (losses) on securities arising during the period			$	(884)	$	186	$	(698)
Reclassification adjustment for realized (gains) losses included in net earnings (*)			10		(2)		8
Total net unrealized gains (losses) on securities	$	136	(874)		184		(690)		$	(554)
Net unrealized gains (losses) on cash flow hedges:
Unrealized holding gains (losses) on cash flow hedges arising during the period			(34)		7		(27)
Reclassification adjustment for investment income included in net earnings (*)			(3)		1		(2)
Total net unrealized gains (losses) on cash flow hedges	—		(37)		8		(29)		(29)
Foreign currency translation adjustments	(18)		(1)		(1)		(2)		(20)
Pension and other postretirement plan adjustments	1		—		—		—		1
Total	$	119	$	(912)	$	191	$	(721)	$	(602)

(*)The reclassification adjustments affected the following lines in AFG’s Statement of Earnings:

OCI component	Affected line in the statement of earnings
Pretax - Net unrealized gains (losses) on securities	Realized gains (losses) on securities
Pretax - Net unrealized gains (losses) on cash flow hedges	Net investment income
Tax	Provision for income taxes

Stock Incentive Plans   Under AFG’s stock incentive plans, employees of AFG and its subsidiaries are eligible to receive equity awards in the form of stock options, stock appreciation rights, restricted stock awards, restricted stock units and stock awards. In the first nine months of 2023, AFG issued 165,513 shares of restricted Common Stock (fair value of $130.52 per share) under the Stock Incentive Plan.

Total compensation expense related to stock incentive plans of AFG and its subsidiaries was $5 million and $4 million in the third quarter of 2023 and 2022, respectively, and $14 million in the first nine months of 2023 and 2022.