EX-99.2

EX-99.2 3 d620854dex992.htm EX-99.2 EX-99.2

Exhibit 99.2


		American Financial Group, Inc.
		Investor Supplement—Third Quarter 2013

		October 29, 2013

		American Financial Group, Inc. Corporate Headquarters Great American Insurance Group Tower 301 E Fourth Street Cincinnati, OH 45202 513 579 6739

American Financial Group, Inc.

Table of Contents—Investor Supplement—Third Quarter 2013


Section	Page
Table of Contents—Investor Supplement—Third Quarter 2013		2
Financial Highlights		3
Summary of Earnings		4
Earnings Per Share Summary		5
Property and Casualty Insurance Segment
Property and Casualty Insurance—Summary Underwriting Results (GAAP)		6
Specialty—Underwriting Results (GAAP)		7
Property and Transportation—Underwriting Results (GAAP)		8
Specialty Casualty—Underwriting Results (GAAP)		9
Specialty Financial—Underwriting Results (GAAP)		10
Other Specialty—Underwriting Results (GAAP)		11
Annuity Segment
Annuity Results of Operations (GAAP)		12
Net Spread on Fixed Annuities (GAAP)		13
Annuity Premiums (Statutory)		14
Fixed Annuity Benefits Accumulated (GAAP)		15
Consolidated Balance Sheet / Book Value / Debt
Consolidated Balance Sheet		16
Book Value Per Share and Price / Book Summary		17
Capitalization		18
Additional Supplemental Information		19
Consolidated Investment Supplement
Total Cash and Investments and Quarterly Net Investment Income		20
Fixed Maturities—By Security Type—AFG Consolidated		21
Fixed Maturities—By Security Type Portfolio		22
Fixed Maturities—Credit Rating and NAIC Designation		23
Mortgage-Backed Securities—AFG Consolidated		24
Mortgage-Backed Securities Portfolio		25
Mortgage-Backed Securities—Credit Rating and NAIC Designation		26

American Financial Group, Inc.

Financial Highlights

(in millions, except per share information)


	Three Months Ended															Nine Months Ended
	09/30/13			06/30/13			03/31/13			12/31/12			09/30/12			09/30/13			09/30/12
Highlights
Core net operating earnings	$	97		$	87		$	84		$	61		$	78		$	268		$	253
Net earnings		83			110			120			50			226			313			438
Total assets		40,947			39,414			39,139			39,171			39,633			40,947			39,633
Adjusted shareholders’ equity (a)		4,048			3,978			3,950			3,784			3,881			4,048			3,881
Property and Casualty net written premiums		1,067			749			704			702			908			2,520			2,247
Annuity statutory premiums		1,167			861			624			560			723			2,652			2,431
Per share data
Core net operating earnings per share	$	1.06		$	0.96		$	0.92		$	0.67		$	0.82		$	2.94		$	2.59
Diluted earnings per share		0.92			1.20			1.32			0.54			2.39			3.44			4.50
Adjusted book value per share (a)		45.36			44.78			43.94			42.52			42.72			45.36			42.72
Cash dividends per common share		0.1950			0.1950			0.1950			0.4450			0.1750			0.5850			0.5250
Financial ratios
Annualized core operating return on equity (a)		9.7	%		8.9	%		8.6	%		6.4	%		8.0	%		9.1	%		8.7	%
Annualized return on equity (a)		8.3	%		11.1	%		12.4	%		5.2	%		23.4	%		10.6	%		15.3	%
Property and Casualty combined ratio—Specialty:
Loss & LAE ratio		66.1	%		60.3	%		56.5	%		72.9	%		68.2	%		61.5	%		61.1	%
Underwriting expense ratio		27.4	%		36.7	%		36.6	%		25.1	%		30.0	%		32.9	%		33.3	%

Combined ratio—Specialty		93.5	%		97.0	%		93.1	%		98.0	%		98.2	%		94.4	%		94.4	%

Net spread on fixed annuities:
Net interest spread		2.89	%		3.02	%		2.99	%		3.18	%		3.25	%		2.97	%		3.10	%
Net spread earned		1.50	%		1.65	%		1.58	%		1.49	%		1.57	%		1.58	%		1.45	%

(a)	Excludes appropriated retained earnings and unrealized gains related to fixed maturity investments.

American Financial Group, Inc.

Summary of Earnings

($ in millions)


	Three Months Ended															Nine Months Ended
	09/30/13			06/30/13			03/31/13			12/31/12			09/30/12			09/30/13			09/30/12
Property and Casualty Insurance
Underwriting profit	$	62		$	19		$	43		$	10		$	15		$	124		$	108
Net investment income		65			65			66			69			67			196			206
Other expense		(14	)		(2	)		(13	)		(10	)		(11	)		(29	)		(40	)

Property and Casualty Insurance operating earnings		113			82			96			69			71			291			274
Annuity earnings		78			82			76			68			69			236			188
Run-off Long-Term Care and Life earnings / (loss)		(4	)		(2	)		(1	)		(12	)		2			(7	)		8
Medicare Supplement and Critical Illness earnings (a)		—			—			—			—			10			—			28
Interest expense of parent holding companies		(17	)		(17	)		(17	)		(17	)		(19	)		(51	)		(54	)
Other expense		(22	)		(22	)		(28	)		(25	)		(18	)		(72	)		(65	)

Pre-tax core operating earnings		148			123			126			83			115			397			379
Income tax expense		51			36			42			22			37			129			126

Core net operating earnings		97			87			84			61			78			268			253
Non-core items, net of tax:
Gain on sale of Medicare Supplement and Critical Illness		—			—			—			13			101			—			101
Other realized gains		35			26			36			36			55			97			92
Long-Term Care reserve charge		—			—			—			(99	)		—			—			—
Significant A&E charges:
Property and Casualty Insurance run-off operations		(35	)		—			—			—			(20	)		(35	)		(20	)
Former Railroad and Manufacturing operations		(14	)		—			—			—			(1	)		(14	)		(1	)
AFG tax case and settlement of open years		—			—			—			39			28			—			28
ELNY guaranty fund assessments (b)		—			(3	)		—			—			—			(3	)		—
Other		—			—			—			—			(15	)		—			(15	)

Net earnings	$	83		$	110		$	120		$	50		$	226		$	313		$	438

(a)	Medicare Supplement and Critical Illness operations were sold August 2012.

(b)	The ELNY guaranty fund assessments represent guaranty fund assessments in connection with the insolvency and liquidation of Executive Life Insurance Company of New York, an unaffiliated life insurance company.

American Financial Group, Inc.

Earnings Per Share Summary

(in millions, except per share information)


	Three Months Ended														Nine Months Ended
	09/30/13			06/30/13			03/31/13		12/31/12			09/30/12			09/30/13			09/30/12
Core net operating earnings	$	97		$	87		$	84	$	61		$	78		$	268		$	253

Net earnings	$	83		$	110		$	120	$	50		$	226		$	313		$	438

Average number of diluted shares		91.014			91.472			91.048		91.413			94.625			91.176			97.418
Diluted earnings per share:
Core net operating earnings per share	$	1.06		$	0.96		$	0.92	$	0.67		$	0.82		$	2.94		$	2.59
Gain on sale of Medicare Supplement and Critical Illness		—			—			—		0.15			1.07			—			1.04
Other realized gains		0.40			0.28			0.40		0.37			0.59			1.08			0.95
Long-Term Care reserve charge		—			—			—		(1.08	)		—			—			—
Significant A&E charges:
Property and Casualty Insurance run-off operations		(0.39	)		—			—		—			(0.22	)		(0.39	)		(0.20	)
Former Railroad and Manufacturing operations		(0.15	)		—			—		—			(0.01	)		(0.15	)		(0.02	)
AFG tax case and settlement of open years		—			—			—		0.43			0.30			—			0.29
ELNY guaranty fund assessment (a)		—			(0.04	)		—		—			—			(0.04	)		—
Other		—			—			—		—			(0.16	)		—			(0.15	)

Diluted earnings per share	$	0.92		$	1.20		$	1.32	$	0.54		$	2.39		$	3.44		$	4.50

(a)	The ELNY guaranty fund assessments represent guaranty fund assessments in connection with the insolvency and liquidation of Executive Life Insurance Company of New York, an unaffiliated life insurance company

American Financial Group, Inc.

Property and Casualty Insurance—Summary Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Nine Months Ended
	09/30/13			06/30/13			03/31/13			12/31/12			09/30/12			09/30/13			09/30/12
Property and Transportation	$	16		$	(31	)	$	10		$	(14	)	$	—		$	(5	)	$	33
Specialty Casualty		19			32			19			8			8			70			45
Specialty Financial		22			15			13			16			1			50			28
Other Specialty		5			5			6			5			7			16			10

Underwriting profit—Specialty		62			21			48			15			16			131			116
Other charges, included in loss and LAE		—			2			5			5			1			7			8

Underwriting profit—Core		62			19			43			10			15			124			108
Special A&E charges, included in loss and LAE		(54	)		—			—			—			(31	)		(54	)		(31	)

Underwriting profit (loss)—Property and Casualty Insurance	$	8		$	19		$	43		$	10		$	(16	)	$	70		$	77

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	(1	)	$	1		$	—		$	9		$	—		$	—		$	—
Catastrophe loss		2			18			10			24			4			30			13

Total current accident year catastrophe losses	$	1		$	19		$	10		$	33		$	4		$	30		$	13

Loss reserve development (favorable) / adverse	$	40		$	(22	)	$	(28	)	$	(7	)	$	23		$	(10	)	$	(23	)

Combined ratio:
Property and Transportation		97.1	%		110.3	%		96.5	%		103.7	%		99.8	%		100.4	%		96.8	%
Specialty Casualty		93.4	%		88.4	%		92.7	%		96.8	%		96.7	%		91.5	%		93.5	%
Specialty Financial		82.3	%		86.6	%		88.5	%		84.9	%		98.8	%		85.8	%		90.6	%
Other Specialty		70.7	%		74.0	%		71.1	%		70.0	%		68.4	%		71.9	%		82.0	%
Combined ratio—Specialty		93.5	%		97.0	%		93.1	%		98.0	%		98.2	%		94.4	%		94.4	%
Other core charges		(0.1	%)		0.2	%		0.7	%		0.7	%		0.0	%		0.3	%		0.4	%
Special A&E charges		5.7	%		0.0	%		0.0	%		0.0	%		3.7	%		2.3	%		1.5	%

Combined ratio		99.1	%		97.2	%		93.8	%		98.7	%		101.9	%		97.0	%		96.3	%

Loss and LAE components—property and casualty insurance
Current accident year, excluding catastrophe loss		67.4	%		61.1	%		59.8	%		71.2	%		68.7	%		63.3	%		63.5	%
Prior accident year development		4.2	%		(3.2	%)		(4.1	%)		(0.8	%)		2.6	%		(0.5	%)		(1.1	%)
Current accident year catastrophe loss		0.1	%		2.6	%		1.5	%		3.2	%		0.6	%		1.3	%		0.6	%

Loss and LAE ratio		71.7	%		60.5	%		57.2	%		73.6	%		71.9	%		64.1	%		63.0	%

American Financial Group, Inc.

Specialty—Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Nine Months Ended
	09/30/13			06/30/13			03/31/13			12/31/12			09/30/12			09/30/13			09/30/12
Gross written premiums	$	1,768		$	1,041		$	925		$	965		$	1,509		$	3,734		$	3,356
Ceded reinsurance premiums		(701	)		(292	)		(221	)		(263	)		(601	)		(1,214	)		(1,109	)

Net written premiums		1,067			749			704			702			908			2,520			2,247
Change in unearned premiums		(118	)		(40	)		(17	)		54			(60	)		(175	)		(156	)

Net earned premiums		949			709			687			756			848			2,345			2,091
Loss and LAE		626			428			388			551			578			1,442			1,278
Underwriting expense		261			260			251			190			254			772			697

Underwriting profit	$	62		$	21		$	48		$	15		$	16		$	131		$	116

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	(1	)	$	1		$	—		$	9		$	—		$	—		$	—
Catastrophe loss		2			18			10			24			4			30			13

Total current accident year catastrophe losses	$	1		$	19		$	10		$	33		$	4		$	30		$	13

Loss reserve development (favorable) / adverse	$	(13	)	$	(24	)	$	(33	)	$	(12	)	$	(9	)	$	(70	)	$	(62	)

Combined ratio:
Loss and LAE ratio		66.1	%		60.3	%		56.5	%		72.9	%		68.2	%		61.5	%		61.1	%
Underwriting expense ratio		27.4	%		36.7	%		36.6	%		25.1	%		30.0	%		32.9	%		33.3	%

Combined ratio		93.5	%		97.0	%		93.1	%		98.0	%		98.2	%		94.4	%		94.4	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		67.4	%		61.1	%		59.8	%		71.2	%		68.7	%		63.3	%		63.5	%
Prior accident year development		(1.4	%)		(3.4	%)		(4.8	%)		(1.5	%)		(1.1	%)		(3.1	%)		(3.0	%)
Current accident year catastrophe loss		0.1	%		2.6	%		1.5	%		3.2	%		0.6	%		1.3	%		0.6	%

Loss and LAE ratio		66.1	%		60.3	%		56.5	%		72.9	%		68.2	%		61.5	%		61.1	%

American Financial Group, Inc.

Property and Transportation—Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Nine Months Ended
	09/30/13			06/30/13			03/31/13			12/31/12			09/30/12			09/30/13			09/30/12
Gross written premiums	$	1,147		$	446		$	352		$	431		$	981		$	1,945		$	1,840
Ceded reinsurance premiums		(553	)		(118	)		(76	)		(116	)		(442	)		(747	)		(682	)

Net written premiums		594			328			276			315			539			1,198			1,158
Change in unearned premiums		(77	)		(27	)		17			68			(52	)		(87	)		(118	)

Net earned premiums		517			301			293			383			487			1,111			1,040
Loss and LAE		407			236			192			340			371			835			722
Underwriting expense		94			96			91			57			116			281			285

Underwriting profit (loss)	$	16		$	(31	)	$	10		$	(14	)	$	—		$	(5	)	$	33

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	(1	)	$	1		$	—		$	8		$	—		$	—		$	—
Catastrophe loss		—			17			10			20			2			27			7

Total current accident year catastrophe losses	$	(1	)	$	18		$	10		$	28		$	2		$	27		$	7

Loss reserve development (favorable) / adverse	$	(1	)	$	3		$	(6	)	$	(2	)	$	(2	)	$	(4	)	$	(14	)

Combined ratio:
Loss and LAE ratio		78.8	%		78.5	%		65.4	%		88.9	%		76.1	%		75.1	%		69.4	%
Underwriting expense ratio		18.3	%		31.8	%		31.1	%		14.8	%		23.7	%		25.3	%		27.4	%

Combined ratio		97.1	%		110.3	%		96.5	%		103.7	%		99.8	%		100.4	%		96.8	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		79.1	%		71.6	%		64.0	%		84.3	%		76.0	%		73.1	%		70.0	%
Prior accident year development		(0.2	%)		1.2	%		(2.0	%)		(0.5	%)		(0.5	%)		(0.4	%)		(1.3	%)
Current accident year catastrophe loss		(0.1	%)		5.7	%		3.4	%		5.1	%		0.6	%		2.4	%		0.7	%

Loss and LAE ratio		78.8	%		78.5	%		65.4	%		88.9	%		76.1	%		75.1	%		69.4	%

American Financial Group, Inc.

Specialty Casualty—Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Nine Months Ended
	09/30/13			06/30/13			03/31/13			12/31/12			09/30/12			09/30/13			09/30/12
Gross written premiums	$	461		$	440		$	430		$	384		$	376		$	1,331		$	1,100
Ceded reinsurance premiums		(136	)		(157	)		(135	)		(126	)		(133	)		(428	)		(366	)

Net written premiums		325			283			295			258			243			903			734
Change in unearned premiums		(36	)		(6	)		(36	)		(9	)		—			(78	)		(35	)

Net earned premiums		289			277			259			249			243			825			699
Loss and LAE		174			148			148			165			155			470			416
Underwriting expense		96			97			92			76			80			285			238

Underwriting profit	$	19		$	32		$	19		$	8		$	8		$	70		$	45

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe loss		1			—			—			1			1			1			2

Total current accident year catastrophe losses	$	1		$	—		$	—		$	1		$	1		$	1		$	2

Loss reserve development (favorable) / adverse	$	(4	)	$	(22	)	$	(16	)	$	7		$	3		$	(42	)	$	(25	)

Combined ratio:
Loss and LAE ratio		60.3	%		53.4	%		57.3	%		65.9	%		63.8	%		57.1	%		59.5	%
Underwriting expense ratio		33.1	%		35.0	%		35.4	%		30.9	%		32.9	%		34.4	%		34.0	%

Combined ratio		93.4	%		88.4	%		92.7	%		96.8	%		96.7	%		91.5	%		93.5	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		61.4	%		61.2	%		63.5	%		62.5	%		62.3	%		62.0	%		63.0	%
Prior accident year development		(1.2	%)		(8.0	%)		(6.2	%)		3.0	%		1.2	%		(5.0	%)		(3.7	%)
Current accident year catastrophe loss		0.1	%		0.2	%		0.0	%		0.4	%		0.3	%		0.1	%		0.2	%

Loss and LAE ratio		60.3	%		53.4	%		57.3	%		65.9	%		63.8	%		57.1	%		59.5	%

American Financial Group, Inc.

Specialty Financial—Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Nine Months Ended
	09/30/13			06/30/13			03/31/13			12/31/12			09/30/12			09/30/13			09/30/12
Gross written premiums	$	160		$	155		$	143		$	151		$	152		$	458		$	415
Ceded reinsurance premiums		(36	)		(38	)		(30	)		(43	)		(44	)		(104	)		(112	)

Net written premiums		124			117			113			108			108			354			303
Change in unearned premiums		(3	)		(4	)		3			(4	)		(8	)		(4	)		(2	)

Net earned premiums		121			113			116			104			100			350			301
Loss and LAE		37			37			42			40			46			116			117
Underwriting expense		62			61			61			48			53			184			156

Underwriting profit	$	22		$	15		$	13		$	16		$	1		$	50		$	28

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	1		$	—		$	—		$	—
Catastrophe loss		1			1			—			2			1			2			3

Total current accident year catastrophe losses	$	1		$	1		$	—		$	3		$	1		$	2		$	3

Loss reserve development (favorable) / adverse	$	(4	)	$	—		$	(6	)	$	(13	)	$	(5	)	$	(10	)	$	(16	)

Combined ratio:
Loss and LAE ratio		31.2	%		32.9	%		35.8	%		38.2	%		46.7	%		33.3	%		38.9	%
Underwriting expense ratio		51.1	%		53.7	%		52.7	%		46.7	%		52.1	%		52.5	%		51.7	%

Combined ratio		82.3	%		86.6	%		88.5	%		84.9	%		98.8	%		85.8	%		90.6	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		33.7	%		32.9	%		40.3	%		48.2	%		51.5	%		35.6	%		43.3	%
Prior accident year development		(3.2	%)		(0.7	%)		(4.8	%)		(12.1	%)		(5.5	%)		(2.9	%)		(5.5	%)
Current accident year catastrophe loss		0.7	%		0.7	%		0.3	%		2.1	%		0.7	%		0.6	%		1.1	%

Loss and LAE ratio		31.2	%		32.9	%		35.8	%		38.2	%		46.7	%		33.3	%		38.9	%

American Financial Group, Inc.

Other Specialty—Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Nine Months Ended
	09/30/13			06/30/13			03/31/13			12/31/12			09/30/12			09/30/13			09/30/12
Gross written premiums	$	—		$	—		$	—		$	(1	)	$	—		$	—		$	1
Ceded reinsurance premiums		24			21			20			22			18			65			51

Net written premiums		24			21			20			21			18			65			52
Change in unearned premiums		(2	)		(3	)		(1	)		(1	)		—			(6	)		(1	)

Net earned premiums		22			18			19			20			18			59			51
Loss and LAE		8			7			6			6			6			21			23
Underwriting expense		9			6			7			9			5			22			18

Underwriting profit	$	5		$	5		$	6		$	5		$	7		$	16		$	10

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe loss		—			—			—			1			—			—			1

Total current accident year catastrophe losses	$	—		$	—		$	—		$	1		$	—		$	—		$	1

Loss reserve development (favorable) / adverse	$	(4	)	$	(5	)	$	(5	)	$	(4	)	$	(5	)	$	(14	)	$	(7	)

Combined ratio:
Loss and LAE ratio		35.0	%		35.1	%		33.7	%		32.7	%		31.6	%		34.6	%		44.8	%
Underwriting expense ratio		35.7	%		38.9	%		37.4	%		37.3	%		36.8	%		37.3	%		37.2	%

Combined ratio		70.7	%		74.0	%		71.1	%		70.0	%		68.4	%		71.9	%		82.0	%

American Financial Group, Inc.

Annuity Results of Operations (GAAP)

($ in millions)


	Three Months Ended															Nine Months Ended
	09/30/13			06/30/13			03/31/13			12/31/12			09/30/12			09/30/13			09/30/12
Net investment income	$	259		$	257		$	248		$	254		$	249		$	764		$	722
Guaranteed withdrawal benefit fees		7			6			5			5			4			18			9
Policy charges and other miscellaneous income		10			9			9			8			10			28			30

Total revenues		276			272			262			267			263			810			761
Annuity benefits		140			120			134			124			140			394			417
Acquisition expenses		35			48			31			58			32			114			92
Other expenses		23			22			21			17			22			66			64

Total costs and expenses		198			190			186			199			194			574			573

Earnings before income taxes—core		78			82			76			68			69			236			188
ELNY guaranty fund assessments charge (a)		—			(5	)		—			—			—			(5	)		—

Earnings before income taxes	$	78		$	77		$	76		$	68		$	69		$	231		$	188

Detail of annuity benefits above:
Interest credited—fixed	$	113		$	111		$	109		$	109		$	107		$	333		$	329
Interest credited—fixed component of variable annuities		2			1			2			2			2			5			5
Change in expected death and annuitization reserve		4			6			4			5			5			14			14
Amortization of sales inducements		8			8			7			9			8			23			23
Guaranteed withdrawal benefit reserve		10			10			8			5			4			28			9
Change in other benefit reserves		2			3			1			(2	)		5			6			7
Embedded derivative mark-to-market		33			(3	)		80			1			40			110			97
Equity option mark-to-market		(32	)		(16	)		(77	)		1			(31	)		(125	)		(67	)
Unlockings		—			—			—			(6	)		—			—			—

Total annuity benefits	$	140		$	120		$	134		$	124		$	140		$	394		$	417

(a)	The ELNY guaranty fund assessments represent guaranty fund assessments in connection with the insolvency and liquidation of Executive Life Insurance Company of New York, an unaffiliated life insurance company.

American Financial Group, Inc.

Net Spread on Fixed Annuities (GAAP)

($ in millions)


	Three Months Ended															Nine Months Ended
	09/30/13			06/30/13			03/31/13			12/31/12			09/30/12			09/30/13			09/30/12
Average fixed annuity investments (at amortized cost)	$	19,519		$	18,615		$	17,945		$	17,485		$	16,994		$	18,693		$	16,371
Average annuity benefits accumulated		19,035			18,151			17,506			17,137			16,759			18,231			16,147

Investments in excess of annuity benefits accumulated	$	484		$	464		$	439		$	348		$	235		$	462		$	224

As % of average annuity benefits accumulated (except as noted)
Net investment income (as % of investments)		5.27	%		5.45	%		5.48	%		5.74	%		5.80	%		5.40	%		5.82	%
Interest credited		(2.38	%)		(2.43	%)		(2.49	%)		(2.56	%)		(2.55	%)		(2.43	%)		(2.72	%)

Net interest spread on fixed annuities		2.89	%		3.02	%		2.99	%		3.18	%		3.25	%		2.97	%		3.10	%
Policy charges and other miscellaneous income		0.15	%		0.13	%		0.14	%		0.14	%		0.16	%		0.14	%		0.17	%
Other annuity benefit expenses, net		(0.39	%)		(0.46	%)		(0.35	%)		(0.40	%)		(0.27	%)		(0.39	%)		(0.32	%)
Acquisition expenses		(0.72	%)		(1.00	%)		(0.69	%)		(0.85	%)		(0.72	%)		(0.80	%)		(0.72	%)
Other expenses		(0.44	%)		(0.43	%)		(0.45	%)		(0.39	%)		(0.48	%)		(0.45	%)		(0.49	%)
Change in fair value of derivatives		0.01	%		0.39	%		(0.06	%)		0.10	%		(0.37	%)		0.11	%		(0.29	%)
Unlockings		0.00	%		0.00	%		0.00	%		(0.29	%)		0.00	%		0.00	%		0.00	%

Net spread earned on fixed annuities—core		1.50	%		1.65	%		1.58	%		1.49	%		1.57	%		1.58	%		1.45	%

Average annuity benefits accumulated	$	19,035		$	18,151		$	17,506		$	17,137		$	16,759		$	18,231		$	16,147
Net spread earned on fixed annuities		1.50	%		1.65	%		1.58	%		1.49	%		1.57	%		1.58	%		1.45	%

Earnings on fixed annuity benefits accumulated	$	72		$	75		$	69		$	64		$	66			216			179
Investments in excess of annuity benefits accumulated	$	484		$	464		$	439		$	348		$	235		$	462		$	224
Net investment income (as % of investments)		5.27	%		5.45	%		5.48	%		5.74	%		5.80	%		5.40	%		5.82	%

Earnings on investments in excess of annuity benefits accumulated	$	6		$	6		$	6		$	5		$	3			18			9
Variable annuity earnings		—			1			1			(1	)		—			2			—

Earnings before income taxes—core		78			82			76			68			69			236			188
ELNY guaranty fund assessments charge (a)		—			(5	)		—			—			—			(5	)		—

Earnings before income taxes	$	78		$	77		$	76		$	68		$	69		$	231		$	188

(a)	The ELNY guaranty fund assessments represent guaranty fund assessments in connection with the insolvency and liquidation of Executive Life Insruance Company of New York, an unaffiliated life insurance company.

American Financial Group

Annuity Premiums (Statutory)

($ in millions)


	Three Months Ended										Nine months ended
	09/30/13		06/30/13		03/31/13		12/31/12		09/30/12		09/30/13		09/30/12
Retail single premium annuities—indexed	$	509	$	472	$	333	$	305	$	417	$	1,314	$	1,357
Retail single premium annuities—fixed		48		37		27		35		42		112		118
Financial institutions single premium annuities—indexed		352		169		83		59		72		604		232
Financial institutions single premium annuities—fixed		198		118		111		86		127		427		501
Education market—403(b) fixed and indexed annuities		49		52		55		60		51		156		177

Subtotal fixed annuity premiums		1,156		848		609		545		709		2,613		2,385
Variable annuities		11		13		15		15		14		39		46

Total annuity premiums	$	1,167	$	861	$	624	$	560	$	723	$	2,652	$	2,431

American Financial Group, Inc.

Fixed Annuity Benefits Accumulated (GAAP)

($ in millions)


	Three Months Ended															Nine Months Ended
	09/30/13			06/30/13			03/31/13			12/31/12			09/30/12			09/30/13			09/30/12
Beginning fixed annuity reserves	$	18,564		$	17,737		$	17,274		$	16,999		$	16,518		$	17,274		$	15,188
Premiums		1,156			848			609			545			709			2,613			2,385
Federal Home Loan Bank advances		—			200			—			—			—			200			—
Surrenders, benefits and other withdrawals		(381	)		(352	)		(352	)		(355	)		(390	)		(1,085	)		(1,042	)
Interest and other annuity benefit expenses:
Interest credited		113			111			109			109			107			333			329
Embedded derivative mark-to-market		33			(3	)		80			1			40			110			97
Change in other benefit reserves		20			23			17			(15	)		15			60			42
Unlockings		—			—			—			(10	)		—			—			—

Ending fixed annuity reserves	$	19,505		$	18,564		$	17,737		$	17,274		$	16,999		$	19,505		$	16,999

Reconciliation to annuity benefits accumulated:
Ending fixed annuity reserves	$	19,505		$	18,564		$	17,737		$	17,274		$	16,999		$	19,505		$	16,999
Impact of unrealized investment gains on reserves		84			87			140			136			46			84			46
Fixed component of variable annuities		196			197			198			199			200			196			200

Annuity benefits accumulated per balance sheet	$	19,785		$	18,848		$	18,075		$	17,609		$	17,245		$	19,785		$	17,245

Annualized surrenders and other withdrawals as a % of beginning reserves		8.2	%		7.9	%		8.2	%		8.4	%		9.4	%		8.4	%		9.1	%

American Financial Group, Inc.

Consolidated Balance Sheet

($ in millions)


	09/30/13		06/30/13			03/31/13		12/31/12		09/30/12		06/30/12
Assets:
Total cash and investments	$	29,921	$	29,262		$	29,084	$	28,449	$	28,037	$	27,301
Recoverables from reinsurers		3,138		3,044			3,083		3,750		3,865		2,740
Prepaid reinsurance premiums		662		520			466		471		587		488
Agents’ balances and premiums receivable		801		754			649		636		750		702
Deferred policy acquisition costs		867		818			565		550		621		846
Assets of managed investment entities		2,779		2,973			3,285		3,225		3,102		2,825
Other receivables		1,078		422			384		539		1,168		673
Variable annuity assets (separate accounts)		629		608			614		580		577		574
Other assets		887		828			824		786		741		717
Goodwill		185		185			185		185		185		186

Total assets	$	40,947	$	39,414		$	39,139	$	39,171	$	39,633	$	37,052

Liabilities and Equity:
Unpaid losses and loss adjustment expenses	$	6,441	$	6,098		$	6,238	$	6,845	$	7,277	$	6,153
Unearned premiums		2,047		1,789			1,697		1,651		1,821		1,661
Annuity benefits accumulated		19,785		18,848			18,075		17,609		17,245		16,758
Life, accident and health reserves		2,011		2,017			2,021		2,059		1,699		1,750
Payable to reinsurers		601		367			250		475		656		396
Liabilities of managed investment entities		2,429		2,603			2,880		2,892		2,753		2,502
Long-term debt		913		949			950		953		966		1,158
Variable annuity liabilities (separate accounts)		629		608			614		580		577		574
Other liabilities		1,381		1,497			1,506		1,359		1,675		1,325

Total liabilities	$	36,237	$	34,776		$	34,231	$	34,423	$	34,669	$	32,277
Shareholders’ equity:
Common stock	$	89	$	89		$	90	$	89	$	91	$	95
Capital surplus		1,109		1,088			1,090		1,063		1,071		1,112
Appropriated retained earnings		45		33			64		75		109		127
Unappropriated retained earnings		2,729		2,664			2,620		2,520		2,577		2,515
Unrealized gains—fixed maturities		449		462			719		719		789		626
Unrealized gains—equities		119		138			146		104		132		145
Other comprehensive income, net of tax		2		(1	)		4		8		10		2

Total shareholders’ equity		4,542		4,473			4,733		4,578		4,779		4,622
Noncontrolling interests		168		165			175		170		185		153

Total liabilities and equity	$	40,947	$	39,414		$	39,139	$	39,171	$	39,633	$	37,052

American Financial Group, Inc.

Book Value Per Share and Price / Book Summary

(in millions, except per share information)


	09/30/13			06/30/13			03/31/13			12/31/12			09/30/12			06/30/12
Shareholders’ equity	$	4,542		$	4,473		$	4,733		$	4,578		$	4,779		$	4,622
Appropriated retained earnings		(45	)		(33	)		(64	)		(75	)		(109	)		(127	)

Shareholders’ equity, excluding appropriated retained earnings		4,497			4,440			4,669			4,503			4,670			4,495
Unrealized (gains) on fixed maturities		(449	)		(462	)		(719	)		(719	)		(789	)		(626	)

Adjusted shareholders’ equity		4,048			3,978			3,950			3,784			3,881			3,869
Goodwill		(185	)		(185	)		(185	)		(185	)		(185	)		(186	)
Intangibles		(26	)		(29	)		(33	)		(36	)		(39	)		(43	)

Tangible adjusted shareholders’ equity	$	3,837		$	3,764		$	3,732		$	3,563		$	3,657		$	3,640

Common shares outstanding		89.224			88.821			89.883			88.979			90.847			94.959
Book value per share:
Excluding appropriated retained earnings (a)	$	50.40		$	49.98		$	51.94		$	50.61		$	51.40		$	47.34
Adjusted (b)		45.36			44.78			43.94			42.52			42.72			40.74
Tangible, adjusted (c)		43.00			42.38			41.52			40.04			40.26			38.34
Market capitalization
AFG’s closing common share price	$	54.06		$	48.91		$	47.38		$	39.52		$	37.90		$	39.23
Market capitalization	$	4,823		$	4,344		$	4,259		$	3,516		$	3,443		$	3,725
Price / Adjusted book value ratio		1.19			1.09			1.08			0.93			0.89			0.96

(a)	Excludes appropriated retained earnings.

(b)	Excludes appropriated retained earnings and unrealized gains related to fixed maturity investments.

(c)	Excludes appropriated retained earnings, unrealized gains related to fixed maturity investments, goodwill and intangibles.

American Financial Group, Inc.

Capitalization

($ in millions)


	09/30/13			06/30/13			03/31/13			12/31/12			09/30/12			06/30/12
Direct obligations of AFG	$	840		$	840		$	840		$	840		$	840		$	830
Direct obligations of subsidiaries		73			89			90			93			106			308
Payable to subsidiary trusts		—			20			20			20			20			20

Long-term debt	$	913		$	949		$	950		$	953		$	966		$	1,158
Obligations secured by real estate		(61	)		(62	)		(62	)		(62	)		(63	)		(64	)

Debt excluding obligations secured by real estate	$	852		$	887		$	888		$	891		$	903		$	1,094

Total capital (a)	$	5,578		$	5,554		$	5,794		$	5,626		$	5,821		$	5,806
Total capital excluding obligations secured by real estate (a)		5,517			5,492			5,732			5,564			5,758			5,742
Total adjusted capital (b)	$	5,129		$	5,092		$	5,074		$	4,907		$	5,032		$	5,180
Total adjusted capital excluding obligations secured by real estate (b)		5,068			5,030			5,012			4,845			4,969			5,116
Ratio of debt to total capital (a):
Including debt secured by real estate		16.4	%		17.1	%		16.4	%		16.9	%		16.6	%		19.9	%
Excluding debt secured by real estate		15.4	%		16.2	%		15.5	%		16.0	%		15.7	%		19.1	%
Ratio of debt to total adjusted capital (b):
Including debt secured by real estate		17.8	%		18.6	%		18.7	%		19.4	%		19.2	%		22.4	%
Excluding debt secured by real estate		16.8	%		17.6	%		17.7	%		18.4	%		18.2	%		21.4	%

(a)	Includes long-term debt, noncontrolling interests and shareholders’ equity, excluding appropriated retained earnings.

(b)	Includes long-term debt, noncontrolling interests and shareholders’ equity, excluding appropriated retained earnings and unrealized gains related to fixed maturity investments.

American Financial Group, Inc.

Additional Supplemental Information

($ in millions)


	Three Months Ended										Nine months ended
	09/30/13		06/30/13		03/31/13		12/31/12		09/30/12		09/30/13		09/30/12
Property and Casualty Insurance
Paid Losses (GAAP)	$	417	$	520	$	357	$	785	$	337	$	1,294	$	1,241


	09/30/13		06/30/13		03/31/13		12/31/12		09/30/12		6/30/2012
Statutory Surplus
Property and Casualty Insurance	$	2,133	$	2,096	$	2,090	$	2,015	$	2,044	$	2,052
AFG’s principal annuity subsidiaries (total adjusted capital)	$	1,590	$	1,517	$	1,483	$	1,380	$	1,275	$	1,219
Allowable dividends without regulatory approval
Property and Casualty Insurance	$	237	$	237	$	237	$	237	$	375	$	375
Annuity and Run-off		158		158		158		158		171		171

Total	$	395	$	395	$	395	$	395	$	546	$	546

American Financial Group, Inc.

Total Cash and Investments and Quarterly Net Investment Income

September 30, 2013

($ in millions)


	Carrying Value
	Property and Casualty Insurance		Annuity and Run-off		Other		Consolidate CLOs			Total AFG Consolidated		% of Investment Portfolio
Total cash and investments:
Cash and cash equivalents	$	651	$	441	$	239	$	—		$	1,331		4	%
Fixed maturities		5,236		20,717		11		—			25,964		87	%
Equity securities		786		317		40		—			1,143		4	%
Policy loans		—		240		—		—			240		1	%
Mortgage loans		110		501		—		—			611		2	%
Real estate and other investments		319		608		8		(303	)		632		2	%

Total cash and investments	$	7,102	$	22,824	$	298	$	(303	)	$	29,921		100	%


	Property and Casualty Insurance			Annuity and Run-off			Other		Consolidate CLOs			Total AFG Consolidated
Total quarterly net investment income:
Fixed maturities	$	51		$	259		$	—	$	—		$	310
Equity securities		8			5			2		—			15
Other investments		6			19			1		(9	)		17

Gross investment income		65			283			3		(9	)		342
Investment expenses		(2	)		(2	)		—		—			(4	)

Total net investment income	$	63		$	281		$	3	$	(9	)	$	338


	Equity Securities
	Cost		Fair Value		Unrealized Gain (Loss)
Annuity and Run-off	$	266	$	317	$	51
Property and Casualty Insurance		650		786		136
Other		40		40		—

Total AFG consolidated	$	956	$	1,143	$	187

American Financial Group, Inc.

Fixed Maturities—By Security Type—AFG Consolidated

September 30, 2013

($ in millions )


	Amortized Cost			Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Investment Portfolio
US Government and government agencies	$	328		$	337	$	9		1	%		1	%
States, municipalities and political subdivisions		5,023			5,104		81		20	%		17	%
Foreign government		346			357		11		1	%		1	%
Residential mortgage-backed securities		3,955			4,288		333		17	%		14	%
Commercial mortgage-backed securities		2,565			2,778		213		11	%		9	%
Asset-backed securities		2,275			2,293		18		9	%		8	%
Corporate bonds
Manufacturing		2,163			2,277		114		9	%		8	%
Banks, lending and credit institutions		1,728			1,823		95		7	%		6	%
Gas and electric services		1,261			1,383		122		5	%		5	%
Insurance and insurance related		823			873		50		3	%		3	%
Other corporate		4,259			4,451		192		17	%		15	%

Total AFG consolidated	$	24,726		$	25,964	$	1,238		100	%		87	%

Annuity and Run-off	$	19,657		$	20,717		1,060		80	%		70	%
Property and Casualty Insurance		5,068			5,236		168		20	%		17	%
Other		1			11		10		0	%		0	%

Total AFG consolidated	$	24,726		$	25,964	$	1,238		100	%		87	%

Annualized yield on fixed maturities:
Excluding investment expense (a)		5.09	%
Net of investment expense (a)		5.02	%
Approximate average life and duration:
Approximate average life		6 years
Approximate duration		4.5 years

(a)	Annualized yield is calculated by dividing investment income for the quarter by the average cost over the quarter.

Average cost is the average of the beginning and ending quarter asset balances.

American Financial Group, Inc.

Fixed Maturities—By Security Type Portfolio

September 30, 2013

($ in millions )


Annuity and Run-off:	Amortized Cost			Fair Value		Unrealized Gain (Loss)		% of Fair Value
US Government and government agencies	$	92		$	95	$	3		1	%
States, municipalities and political subdivisions		2,960			2,977		17		15	%
Foreign government		17			19		2		0	%
Residential mortgage-backed securities		3,299			3,581		282		17	%
Commercial mortgage-backed securities		2,320			2,518		198		12	%
Asset-backed securities		1,709			1,727		18		8	%
Corporate debt		9,260			9,800		540		47	%

Total Annuity and Run-off	$	19,657		$	20,717	$	1,060		100	%

Annualized yield on fixed maturities:
Excluding investment expense (a)		5.36	%
Net of investment expense (a)		5.32	%
Approximate average life and duration:
Approximate average life		6 years
Approximate duration		5 years

Property and Casualty Insurance:	Amortized Cost			Fair Value		Unrealized Gain (Loss)		% of Fair Value
US Government and government agencies	$	236		$	242	$	6		5	%
States, municipalities and political subdivisions		2,063			2,127		64		41	%
Foreign government		329			338		9		6	%
Residential mortgage-backed securities		655			696		41		13	%
Commercial mortgage-backed securities		245			260		15		5	%
Asset-backed securities		566			566		—		11	%
Corporate debt		974			1,007		33		19	%

Property and Casualty Insurance	$	5,068		$	5,236	$	168		100	%

Annualized yield on fixed maturities:
Excluding investment expense (a)		4.03	%
Net of investment expense (a)		3.88	%
Approximate average life and duration:
Approximate average life		4 years
Approximate duration		3 years

(a)	Annualized yield is calculated by dividing investment income for the quarter by the average cost over the quarter.

Average cost is the average of the beginning and ending quarter asset balances.

American Financial Group, Inc.

Fixed Maturities—Credit Rating and NAIC Designation

September 30, 2013

($ in millions)


	GAAP Data
By Credit Rating	Amortized Cost		Fair Value		% of Fair Value			Unrealized Gain (Loss)
Investment grade
AAA	$	5,287	$	5,505		21	%	$	218
AA		4,661		4,758		18	%		97
A		6,513		6,850		27	%		337
BBB		4,878		5,158		20	%		280

Subtotal—Investment grade		21,339		22,271		86	%		932
BB		709		730		3	%		21
B		537		551		2	%		14
Other		2,141		2,412		9	%		271

Total	$	24,726	$	25,964		100	%	$	1,238

If two agencies rate a security, the rating displayed above is the lower of the two; if three or more agencies rate a security, the rating displayed is the second lowest.


	Statutory Data
By NAIC Designation	Carrying Value		% of Carrying Value			Amortized Cost		Fair Value		Unrealized Gain (Loss)
NAIC 1	$	18,834		77	%	$	18,838	$	19,805	$	967
NAIC 2		4,722		19	%		4,722		4,978		256

		23,556		96	%		23,560		24,783		1,223
NAIC 3		561		2	%		562		578		16
NAIC 4		242		1	%		243		251		8
NAIC 5		54		1	%		54		65		11
NAIC 6		17		0	%		19		45		26

Total	$	24,430		100	%	$	24,438	$	25,722	$	1,284

American Financial Group, Inc.

Mortgage-Backed Securities—AFG Consolidated

September 30, 2013

($ in millions)


By Asset Type	Amortized Cost		Fair Value		% of Fair Value			% of Investment Portfolio			Unrealized Gain (Loss)
Residential
Agency	$	244	$	251		4	%		1	%	$	7
Prime (Non-Agency)		1,913		2,099		30	%		7	%		186
Alt-A		912		993		14	%		3	%		81
Subprime		886		945		13	%		3	%		59

Subtotal—Residential		3,955		4,288		61	%		14	%		333
Commercial		2,565		2,778		39	%		9	%		213

Total AFG consolidated	$	6,520	$	7,066		100	%		23	%	$	546

Annuity and Run-off	$	5,619	$	6,099		86	%		20	%		480
Property and Casualty Insurance		900		956		14	%		3	%		56
Other		1		11		0	%		0	%		10

Total AFG consolidated	$	6,520	$	7,066		100	%		23	%	$	546

•

Substantially all of AFG’s MBS securities are either senior tranches of securitizations or collateralized by senior tranches of securitizations.

•

The average amortized cost as a percent of par is—Prime 82%; Alt-A 77%; Subprime 84%; CMBS 99%.

•

The average FICO score of our residential MBS securities is—Prime 736; Alt-A 712; Subprime 643.

•

99% of our Commercial MBS portfolio is investment-grade rated (83% AAA) and the average subordination for this group assets is 37%.

•

The approximate average life by collateral type is—Residential 4 years; Commercial 4 years.

American Financial Group, Inc.

Mortgage-Backed Securities Portfolio

September 30, 2013

($ in millions)

Annuity and Run-off:


By Asset Type	Amortized Cost		Fair Value		% of Fair Value			% of Investment Portfolio			Unrealized Gain (Loss)
Residential
Agency	$	101	$	106		2	%		0	%	$	5
Prime (Non-Agency)		1,769		1,931		32	%		8	%		162
Alt-A		746		815		13	%		4	%		69
Subprime		683		729		12	%		3	%		46

Subtotal—Residential		3,299		3,581		59	%		15	%		282
Commercial		2,320		2,518		41	%		12	%		198

Total Annuity and Run-off	$	5,619	$	6,099		100	%		27	%	$	480


Property and Casualty Insurance:

By Asset Type	Amortized Cost		Fair Value		% of Fair Value			% of Investment Portfolio			Unrealized Gain (Loss)
Residential
Agency	$	143	$	145		15	%		2	%	$	2
Prime (Non-Agency)		143		157		16	%		2	%		14
Alt-A		166		178		19	%		3	%		12
Subprime		203		216		23	%		3	%		13

Subtotal—Residential		655		696		73	%		10	%		41
Commercial		245		260		27	%		4	%		15

Total Property and Casualty Insurance	$	900	$	956		100	%		14	%	$	56

American Financial Group, Inc.

Mortgage-Backed Securities—Credit Rating and NAIC Designation

September 30, 2013

($ in millions)


	GAAP data
By Credit Rating	Amortized Cost		Fair Value		% of Fair Value			Unrealized Gain (Loss)
Investment grade
AAA	$	2,675	$	2,877		41	%	$	202
AA		393		418		6	%		25
A		619		648		9	%		29
BBB		309		330		5	%		21

Subtotal—investment grade		3,996		4,273		61	%		277
BB		349		353		5	%		4
B		450		459		6	%		9
Other		1,725		1,981		28	%		256

Total	$	6,520	$	7,066		100	%	$	546

If two agencies rate a security, the rating displayed above is the lower of the two; if three or more agencies rate a security, the rating displayed is the second lowest.


	Statutory data
By NAIC Designation	Carrying Value		% of Carrying Value			Amortized Cost		Fair Value		Unrealized Gain (Loss)
NAIC 1	$	5,990		93	%	$	5,995	$	6,563	$	568
NAIC 2		184		3	%		184		185		1

		6,174		96	%		6,179		6,748		569
NAIC 3		122		2	%		122		123		1
NAIC 4		102		2	%		102		105		3
NAIC 5		18		0	%		18		29		11
NAIC 6		15		0	%		16		36		20

Total	$	6,431		100	%	$	6,437	$	7,041	$	604