Investments (Tables)

6 Months Ended

Jun. 30, 2024

Investments, Debt and Equity Securities [Abstract]

Available for sale fixed maturities

Available for sale fixed maturities at June 30, 2024 and December 31, 2023, consisted of the following (in millions):

	Amortized Cost		Allowance for Expected Credit Losses		Gross Unrealized				Net Unrealized		Fair Value
					Gains		Losses
June 30, 2024
Fixed maturities:
U.S. government and government agencies	$	182	$	—	$	—	$	(6)	$	(6)	$	176
States, municipalities and political subdivisions	917		—		4		(53)		(49)		868
Foreign government	234		—		1		(4)		(3)		231
Residential MBS	1,805		1		22		(163)		(141)		1,663
Commercial MBS	70		—		—		—		—		70
Collateralized loan obligations	1,467		3		14		(19)		(5)		1,459
Other asset-backed securities	2,450		6		14		(95)		(81)		2,363
Corporate and other	3,448		—		31		(113)		(82)		3,366
Total fixed maturities	$	10,573	$	10	$	86	$	(453)	$	(367)	$	10,196
December 31, 2023
Fixed maturities:
U.S. government and government agencies	$	243	$	—	$	1	$	(8)	$	(7)	$	236
States, municipalities and political subdivisions	1,014		—		8		(38)		(30)		984
Foreign government	236		—		1		(7)		(6)		230
Residential MBS	1,788		1		26		(155)		(129)		1,658
Commercial MBS	75		—		—		(1)		(1)		74
Collateralized loan obligations	1,709		3		9		(28)		(19)		1,687
Other asset-backed securities	2,477		5		10		(120)		(110)		2,362
Corporate and other	3,210		3		52		(113)		(61)		3,146
Total fixed maturities	$	10,752	$	12	$	107	$	(470)	$	(363)	$	10,377

Equity securities reported at fair value

Equity securities which are reported at fair value with holding gains and losses recognized in net earnings, consisted of the following at June 30, 2024 and December 31, 2023 (in millions):

	June 30, 2024						December 31, 2023
	Actual Cost		Fair Value		Fair Value Over Cost		Actual Cost		Fair Value		Fair Value Over Cost
Common stocks	$	558	$	655	$	97	$	512	$	586	$	74
Perpetual preferred stocks	389		422		33		422		432		10
Total equity securities carried at fair value	$	947	$	1,077	$	130	$	934	$	1,018	$	84

Investments accounted for using the equity method

The following table shows the carrying value and net investment income from investments accounted for using the equity method (in millions):

					Net Investment Income
	Carrying Value				Three months ended June 30,				Six months ended June 30,
	June 30, 2024		December 31, 2023		2024		2023		2024		2023
Real estate-related investments (*)	$	1,325	$	1,320	$	11	$	28	$	5	$	75
Private equity	519		457		1		(1)		31		7
Private debt	38		37		2		1		3		3
Total investments accounted for using the equity method	$	1,882	$	1,814	$	14	$	28	$	39	$	85

(*)90% and 92% of the carrying value relates to underlying investments in multi-family properties as of June 30, 2024 and December 31, 2023, respectively.

Gross unrealized losses on securities by investment category and length of time that have been in a continuous unrealized loss position

The following table shows gross unrealized losses (dollars in millions) on available for sale fixed maturities by investment category and length of time that individual securities have been in a continuous unrealized loss position at the following balance sheet dates.

	Less Than Twelve Months						Twelve Months or More
	Unrealized Loss		Fair Value		Fair Value as % of Cost		Unrealized Loss		Fair Value		Fair Value as % of Cost
June 30, 2024
Fixed maturities:
U.S. government and government agencies	$	—	$	33	100	%	$	(6)	$	130	96	%
States, municipalities and political subdivisions	(5)		179		97	%	(48)		530		92	%
Foreign government	(1)		73		99	%	(3)		145		98	%
Residential MBS	(2)		190		99	%	(161)		962		86	%
Commercial MBS	—		5		100	%	—		39		100	%
Collateralized loan obligations	—		26		100	%	(19)		326		94	%
Other asset-backed securities	(1)		124		99	%	(94)		1,530		94	%
Corporate and other	(6)		547		99	%	(107)		1,451		93	%
Total fixed maturities	$	(15)	$	1,177	99	%	$	(438)	$	5,113	92	%
December 31, 2023
Fixed maturities:
U.S. government and government agencies	$	—	$	11	100	%	$	(8)	$	191	96	%
States, municipalities and political subdivisions	(1)		76		99	%	(37)		526		93	%
Foreign government	—		—		—	%	(7)		207		97	%
Residential MBS	(1)		42		98	%	(154)		1,089		88	%
Commercial MBS	—		—		—	%	(1)		61		98	%
Collateralized loan obligations	—		25		100	%	(28)		807		97	%
Other asset-backed securities	(1)		151		99	%	(119)		1,663		93	%
Corporate and other	(4)		123		97	%	(109)		1,455		93	%
Total fixed maturities	$	(7)	$	428	98	%	$	(463)	$	5,999	93	%

Roll forward of allowance for credit losses on fixed maturity securities

A progression of the allowance for expected credit losses on available for sale fixed maturity securities is shown below (in millions):

	Structured Securities (*)		Corporate and Other		Total
Balance at March 31, 2024	$	11	$	—	$	11
Provision for expected credit losses on securities with no previous allowance	—		—		—
Additions to previously recognized expected credit losses	—		—		—
Reductions due to sales or redemptions	(1)		—		(1)
Balance at June 30, 2024	$	10	$	—	$	10
Balance at March 31, 2023	$	11	$	5	$	16
Provision for expected credit losses on securities with no previous allowance	—		—		—
Additions to previously recognized expected credit losses	—		—		—
Reductions due to sales or redemptions	—		—		—
Balance at June 30, 2023	$	11	$	5	$	16
Balance at December 31, 2023	$	9	$	3	$	12
Provision for expected credit losses on securities with no previous allowance	1		—		1
Additions to previously recognized expected credit losses	1		—		1
Reductions due to sales or redemptions	(1)		(3)		(4)
Balance at June 30, 2024	$	10	$	—	$	10
Balance at December 31, 2022	$	10	$	1	$	11
Provision for expected credit losses on securities with no previous allowance	1		5		6
Reductions to previously recognized expected credit losses	—		(1)		(1)
Reductions due to sales or redemptions	—		—		—
Balance at June 30, 2023	$	11	$	5	$	16

(*)Includes mortgage-backed securities, collateralized loan obligations and other asset-backed securities.

Available for sale fixed maturity securities by contractual maturity date

The table below sets forth the scheduled maturities of AFG’s available for sale fixed maturities as of June 30, 2024 (dollars in millions). Securities with sinking funds are reported at average maturity. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers.

	Amortized		Fair Value
	Cost, net (*)		Amount		%
Maturity
One year or less	$	414	$	404	4	%
After one year through five years	2,857		2,764		27	%
After five years through ten years	1,226		1,204		12	%
After ten years	284		269		3	%
	4,781		4,641		46	%
Collateralized loan obligations and other ABS (average life of approximately 3 years)	3,908		3,822		37	%
MBS (average life of approximately 6.5 years)	1,874		1,733		17	%
Total	$	10,563	$	10,196	100	%

(*)Amortized cost, net of allowance for expected credit losses.

Net investment income earned and investment expenses incurred

The following table shows (in millions) investment income earned and investment expenses incurred.

	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Investment income:
Fixed maturities:
Interest and amortization	$	136	$	124	$	270	$	243
Change in fair value (a)	—		7		—		10
Equity securities:
Dividends	7		9		14		18
Change in fair value (b)	9		13		25		29
Equity in earnings of partnerships and similar investments	14		28		39		85
Other	27		22		49		40
Gross investment income	193		203		397		425
Investment expenses	(5)		(5)		(11)		(10)
Net investment income	$	188	$	198	$	386	$	415

(a)The change in the fair value of fixed maturities classified as trading and derivatives embedded in convertible fixed maturities related to limited partnerships and similar investments.

(b)AFG records holding gains and losses on limited partnerships and similar investments that do not qualify for equity method accounting and related equity investments in net investment income.

Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments

Realized gains (losses) and changes in unrealized appreciation (depreciation) included in AOCI related to fixed maturity securities are summarized as follows (in millions):

	Three months ended June 30, 2024								Three months ended June 30, 2023
	Realized gains (losses)								Realized gains (losses)
	Before Impairments		Impairment Allowance		Total		Change in Unrealized		Before Impairments		Impairment Allowance		Total		Change in Unrealized
Fixed maturities	$	(1)	$	—	$	(1)	$	(15)	$	(5)	$	—	$	(5)	$	(64)
Equity securities	(1)		—		(1)		—		3		—		3		—
Mortgage loans and other investments	—		—		—		—		—		—		—		—
Total pretax	(2)		—		(2)		(15)		(2)		—		(2)		(64)
Tax effects	—		—		—		3		1		—		1		13
Net of tax	$	(2)	$	—	$	(2)	$	(12)	$	(1)	$	—	$	(1)	$	(51)
	Six months ended June 30, 2024								Six months ended June 30, 2023
	Realized gains (losses)								Realized gains (losses)
	Before Impairments		Impairment Allowance		Total		Change in Unrealized		Before Impairments		Impairment Allowance		Total		Change in Unrealized
Fixed maturities	$	(5)	$	(2)	$	(7)	$	(4)	$	(28)	$	(5)	$	(33)	$	43
Equity securities	19		—		19		—		(15)		—		(15)		—
Mortgage loans and other investments	—		—		—		—		—		—		—		—
Total pretax	14		(2)		12		(4)		(43)		(5)		(48)		43
Tax effects	(3)		—		(3)		1		9		1		10		(10)
Net of tax	$	11	$	(2)	$	9	$	(3)	$	(34)	$	(4)	$	(38)	$	33

Holding gains (losses) on equity securities still held

AFG recorded net holding gains (losses) on equity securities during the second quarter and first six months of 2024 and 2023 on securities that were still owned at June 30, 2024 and June 30, 2023 as follows (in millions):

	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Included in realized gains (losses)	$	(3)	$	2	$	17	$	(21)
Included in net investment income	9		13		25		29
	$	6	$	15	$	42	$	8

Gross realized gains and losses on available for sale fixed maturity and equity security investments

Gross realized gains and losses (excluding changes in impairment allowance and mark-to-market of derivatives) on available for sale fixed maturity investment transactions consisted of the following (in millions):

	Six months ended June 30,
	2024		2023
Gross gains	$	—	$	2
Gross losses	(4)		(27)