EX-99.2

EX-99.2 3 d742879dex992.htm EX-99.2 EX-99.2

Exhibit 99.2


		American Financial Group, Inc. Investor Supplement - First Quarter 2019

		May 1, 2019 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 - First Quarter 2019


Section	Page
Table of Contents - Investor Supplement - First Quarter 2019		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 Earnings (GAAP)		12
Components of Annuity Earnings Before Income Taxes (net of amortization of DAC, sales inducement costs and other related items)		13
Detail of Annuity Benefits Expense (GAAP)		14
Net Spread on Fixed Annuities (GAAP)		15
Statutory Annuity Premiums		16
Fixed Annuity Benefits Accumulated (GAAP)		17
Guaranteed Minimum Interest Rate Analysis		18
Annuity Earnings Guidance		19
Consolidated Balance Sheet / Book Value / Debt
Consolidated Balance Sheet		20
Book Value Per Share and Price / Book Summary		21
Capitalization		22
Additional Supplemental Information		23
Consolidated Investment Supplement
Total Cash and Investments		24
Net Investment Income		25
Investments Marked-to-Market Through Investment Income and Investments Accounted For Using the Equity Method		26
Fixed Maturities - By Security Type - AFG Consolidated		27
Fixed Maturities - By Security Type Portfolio		28
Fixed Maturities - Credit Rating		29
Mortgage-Backed Securities - AFG Consolidated		30
Mortgage-Backed Securities Portfolio		31
Mortgage-Backed Securities - Credit Rating		32
Appendix
A. Fixed Maturities - Credit Rating by Type		33

Page 2

American Financial Group, Inc.

Financial Highlights

(in millions, except per share information)


	Three Months Ended															Twelve Months Ended
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/18			12/31/17
Highlights
Net earnings (loss)	$	329		$	(29	)	$	204		$	210		$	145		$	530		$	475
Core net operating earnings		184			159			198			185			219			761			588
Total assets		66,132			63,456			64,190			61,834			60,656			63,456			60,658
Adjusted shareholders’ equity (a)		5,201			4,898			5,103			4,920			4,865			4,898			4,724
Property and Casualty net written premiums		1,147			1,208			1,456			1,257			1,102			5,023			4,751
Annuity statutory premiums		1,395			1,482			1,378			1,399			1,148			5,407			4,341
Per share data
Diluted earnings per share	$	3.63		$	(0.33	)	$	2.26		$	2.31		$	1.60		$	5.85		$	5.28
Core net operating earnings per share		2.02			1.75			2.19			2.04			2.42			8.40			6.55
Adjusted book value per share (a)		58.02			54.86			57.22			55.24			54.74			54.86			53.51
Cash dividends per common share		0.4000			1.9000			0.3500			1.8500			0.3500			4.4500			4.7875
Financial ratios
Annualized return on equity (b)		25.9	%		(2.3	%)		16.3	%		17.1	%		12.3	%		10.9	%		10.3	%
Annualized core operating return on equity (b)		14.5	%		12.6	%		15.8	%		15.1	%		18.6	%		15.6	%		12.7	%
Property and Casualty combined ratio - Specialty:
Loss & LAE ratio		58.9	%		62.7	%		64.3	%		59.7	%		57.8	%		61.3	%		62.9	%
Underwriting expense ratio		33.6	%		29.3	%		31.4	%		34.0	%		33.9	%		32.1	%		30.2	%

Combined ratio - Specialty		92.5	%		92.0	%		95.7	%		93.7	%		91.7	%		93.4	%		93.1	%

Net spread on fixed annuities:
Net interest spread		2.59	%		2.58	%		2.67	%		2.81	%		2.75	%		2.70	%		2.62	%
Net spread earned:
Before impact of fair value accounting and unlockings		1.43	%		0.81	%		1.37	%		1.46	%		1.38	%		1.26	%		1.34	%
Impact of fair value accounting (c)		(0.47	%)		(0.52	%)		(0.02	%)		0.04	%		0.16	%		(0.10	%)		(0.10	%)
Unlockings		0.00	%		(0.04	%)		0.00	%		(0.32	%)		0.00	%		(0.09	%)		(0.01	%)

After impact of fair value accounting and unlockings		0.96	%		0.25	%		1.35	%		1.18	%		1.54	%		1.07	%		1.23	%

(a)	Excludes unrealized gains related to fixed maturity investments, a reconciliation to the GAAP measure is on page 21.

(b)	Excludes accumulated other comprehensive income.

(c)	Change in fair value of derivatives and the estimated net offsets to deferred sales inducements, deferred policy acquisition costs and related reserves.

Page 3

American Financial Group, Inc.

Summary of Earnings

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/19			12/31/18			09/30/18			06/30/18			3/31/18			12/31/18			12/31/17
Property and Casualty Insurance
Underwriting profit	$	87		$	101		$	56		$	72		$	91		$	320		$	313
Net investment income		104			115			108			115			100			438			362
Other income (expense)		(6	)		(2	)		(6	)		(7	)		(3	)		(18	)		(15	)

Property and Casualty Insurance operating earnings		185			214			158			180			188			740			660
Annuity earnings		90			20			117			99			125			361			380
Interest expense of parent holding companies		(16	)		(16	)		(15	)		(16	)		(15	)		(62	)		(85	)
Other expense		(27	)		(13	)		(22	)		(32	)		(27	)		(94	)		(92	)

Pre-tax core operating earnings		232			205			238			231			271			945			863
Income tax expense		48			46			40			46			52			184			275

Core net operating earnings		184			159			198			185			219			761			588
Non-core items, net of tax:
Realized gains (losses) on securities		145			(188	)		27			25			(74	)		(210	)		3
Special A&E charges:
Property and Casualty Insurance run-off operations		—			—			(14	)		—			—			(14	)		(58	)
Former Railroad and Manufacturing operations		—			—			(7	)		—			—			(7	)		(16	)
Neon exited lines charge		—			—			—			—			—			—			18
Tax benefit related to Neon restructuring		—			—			—			—			—			—			56
Tax expense related to change in U.S. corporate tax rate		—			—			—			—			—			—			(83	)
Loss on retirement of debt		—			—			—			—			—			—			(33	)

Net earnings	$	329		$	(29	)	$	204		$	210		$	145		$	530		$	475

Page 4

American Financial Group, Inc.

Earnings Per Share Summary

(in millions, except per share information)


	Three Months Ended													Twelve Months Ended
	3/31/19		12/31/18			9/30/18			6/30/18		3/31/18			12/31/18			12/31/17
Core net operating earnings	$	184	$	159		$	198		$	185	$	219		$	761		$	588

Net earnings	$	329	$		(29)	$	204		$	210	$	145		$	530		$	475

Average number of diluted shares - core		90.695		90.668			90.731			90.663		90.431	#		90.626			89.812
Average number of diluted shares - net		90.695		89.278			90.731			90.663		90.431			90.626			89.812
Diluted earnings per share:
Core net operating earnings per share	$	2.02	$	1.75		$	2.19		$	2.04	$	2.42	#	$	8.40		$	6.55
Realized gains (losses) on securities		1.61		(2.08	)		0.31			0.27		(0.82	)		(2.31	)		0.03
Special A&E charges:
Property and Casualty Insurance run-off operations		—		—			(0.16	)		—		—			(0.16	)		(0.64	)
Former Railroad and Manufacturing operations		—		—			(0.08	)		—		—			(0.08	)		(0.18	)
Neon exited lines charge		—		—			—			—		—			—			0.19
Tax benefit related to Neon restructuring		—		—			—			—		—			—			0.62
Tax expense related to change in U.S. corporate tax rate		—		—			—			—		—			—			(0.92	)
Loss on retirement of debt		—		—			—			—		—			—			(0.37	)

Diluted earnings per share	$	3.63	$	(0.33	)	$	2.26		$	2.31	$	1.60		$	5.85		$	5.28

Page 5

American Financial Group, Inc.

Property and Casualty Insurance - Summary Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/18			12/31/17
Property and Transportation	$	39		$	64		$	—		$	23		$	33		$	120		$	154
Specialty Casualty		36			22			49			29			41			141			104
Specialty Financial		13			20			9			22			15			66			61
Other Specialty		—			(4	)		(3	)		(1	)		3			(5	)		(2	)

Underwriting profit - Specialty		88			102			55			73			92			322			317
Other core charges, included in loss and LAE		1			1			(1	)		1			1			2			4

Underwriting profit - Core		87			101			56			72			91			320			313
Special A&E charges, included in loss and LAE		—			—			(18	)		—			—			(18	)		(89	)
Neon exited lines charge, included in loss and LAE		—			—			—			—			—			—			18

Underwriting profit (loss) - Property and Casualty Insurance	$	87		$	101		$	38		$	72		$	91		$	302		$	242

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	(1	)	$	3		$	—		$	—		$	2		$	10
Catastrophe loss		12			39			35			16			13			103			140

Total current accident year catastrophe losses	$	12		$	38		$	38		$	16		$	13		$	105		$	150

Prior year loss reserve development (favorable) / adverse	$	(45	)	$	(61	)	$	(31	)	$	(44	)	$	(56	)	$	(192	)	$	(64	)

Combined ratio:
Property and Transportation		89.0	%		86.5	%		100.0	%		93.9	%		90.4	%		93.1	%		91.0	%
Specialty Casualty		94.2	%		96.5	%		92.1	%		95.1	%		92.9	%		94.2	%		95.2	%
Specialty Financial		91.4	%		85.5	%		94.4	%		85.6	%		90.2	%		88.9	%		89.4	%
Other Specialty		98.9	%		112.3	%		103.0	%		105.5	%		90.7	%		103.7	%		102.7	%
Combined ratio - Specialty		92.5	%		92.0	%		95.7	%		93.7	%		91.7	%		93.4	%		93.1	%
Other core charges		0.1	%		0.0	%		0.0	%		0.0	%		0.1	%		0.0	%		0.1	%
Neon exited lines charge, loss and LAE		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		(0.4	%)
Special A&E charges		0.0	%		0.0	%		1.5	%		0.0	%		0.0	%		0.4	%		1.9	%

Combined ratio		92.6	%		92.0	%		97.2	%		93.7	%		91.8	%		93.8	%		94.7	%

Combined ratio excl. catastrophe and prior year development		95.4	%		93.7	%		96.8	%		96.2	%		95.6	%		95.7	%		93.1	%

Loss and LAE components - property and casualty insurance
Current accident year, excluding catastrophe loss		61.8	%		64.4	%		65.4	%		62.2	%		61.7	%		63.6	%		62.9	%
Prior accident year loss reserve development		(3.9	%)		(4.7	%)		(2.2	%)		(3.9	%)		(5.0	%)		(4.0	%)		(1.4	%)
Current accident year catastrophe loss		1.1	%		3.0	%		2.6	%		1.4	%		1.2	%		2.1	%		3.0	%

Loss and LAE ratio		59.0	%		62.7	%		65.8	%		59.7	%		57.9	%		61.7	%		64.5	%

Page 6

American Financial Group, Inc.

Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/18			12/31/17
Gross written premiums	$	1,535		$	1,613		$	2,104		$	1,665		$	1,458		$	6,840		$	6,502
Ceded reinsurance premiums		(388	)		(405	)		(648	)		(408	)		(356	)		(1,817	)		(1,751	)

Net written premiums		1,147			1,208			1,456			1,257			1,102			5,023			4,751
Change in unearned premiums		26			62			(129	)		(96	)		5			(158	)		(172	)

Net earned premiums		1,173			1,270			1,327			1,161			1,107			4,865			4,579
Loss and LAE		691			796			855			692			640			2,983			2,880
Underwriting expense		394			372			417			396			375			1,560			1,382

Underwriting profit	$	88		$	102		$	55		$	73		$	92		$	322		$	317

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	(1	)	$	3		$	—		$	—		$	2		$	10
Catastrophe loss		12			39			35			16			13			103			140

Total current accident year catastrophe losses	$	12		$	38		$	38		$	16		$	13		$	105		$	150

Prior year loss reserve development (favorable) / adverse	$	(46	)	$	(61	)	$	(49	)	$	(45	)	$	(57	)	$	(212	)	$	(139	)

Combined ratio:
Loss and LAE ratio		58.9	%		62.7	%		64.3	%		59.7	%		57.8	%		61.3	%		62.9	%
Underwriting expense ratio		33.6	%		29.3	%		31.4	%		34.0	%		33.9	%		32.1	%		30.2	%

Combined ratio		92.5	%		92.0	%		95.7	%		93.7	%		91.7	%		93.4	%		93.1	%

Combined ratio excl. catastrophe and prior year development		95.4	%		93.7	%		96.8	%		96.2	%		95.6	%		95.7	%		93.1	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		61.8	%		64.4	%		65.4	%		62.2	%		61.7	%		63.6	%		62.9	%
Prior accident year loss reserve development		(4.0	%)		(4.7	%)		(3.7	%)		(3.9	%)		(5.1	%)		(4.4	%)		(3.0	%)
Current accident year catastrophe loss		1.1	%		3.0	%		2.6	%		1.4	%		1.2	%		2.1	%		3.0	%

Loss and LAE ratio		58.9	%		62.7	%		64.3	%		59.7	%		57.8	%		61.3	%		62.9	%

Page 7

American Financial Group, Inc.

Property and Transportation - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/18			12/31/17
Gross written premiums	$	439		$	651		$	953		$	615		$	426		$	2,645		$	2,688
Ceded reinsurance premiums		(95	)		(203	)		(393	)		(193	)		(102	)		(891	)		(923	)

Net written premiums		344			448			560			422			324			1,754			1,765
Change in unearned premiums		17			31			(34	)		(48	)		26			(25	)		(54	)

Net earned premiums		361			479			526			374			350			1,729			1,711
Loss and LAE		225			327			406			239			220			1,192			1,172
Underwriting expense		97			88			120			112			97			417			385

Underwriting profit	$	39		$	64		$	—		$	23		$	33		$	120		$	154

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	(1	)	$	1		$	—		$	—		$	—		$	2
Catastrophe loss		9			(1	)		12			10			5			26			36

Total current accident year catastrophe losses	$	9		$	(2	)	$	13		$	10		$	5		$	26		$	38

Prior year loss reserve development (favorable) / adverse	$	(26	)	$	(7	)	$	(4	)	$	(21	)	$	(18	)	$	(50	)	$	(40	)

Combined ratio:
Loss and LAE ratio		62.2	%		68.2	%		77.1	%		63.8	%		63.0	%		69.0	%		68.5	%
Underwriting expense ratio		26.8	%		18.3	%		22.9	%		30.1	%		27.4	%		24.1	%		22.5	%

Combined ratio		89.0	%		86.5	%		100.0	%		93.9	%		90.4	%		93.1	%		91.0	%

Combined ratio excl. catastrophe and prior year development		93.6	%		88.2	%		98.5	%		96.8	%		94.1	%		94.4	%		91.2	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		66.8	%		69.9	%		75.6	%		66.7	%		66.7	%		70.3	%		68.7	%
Prior accident year loss reserve development		(7.2	%)		(1.5	%)		(0.8	%)		(5.6	%)		(5.1	%)		(2.8	%)		(2.3	%)
Current accident year catastrophe loss		2.6	%		(0.2	%)		2.3	%		2.7	%		1.4	%		1.5	%		2.1	%

Loss and LAE ratio		62.2	%		68.2	%		77.1	%		63.8	%		63.0	%		69.0	%		68.5	%

Page 8

American Financial Group, Inc.

Specialty Casualty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/18			12/31/17
Gross written premiums	$	912		$	778		$	956		$	858			853		$	3,445		$	3,087
Ceded reinsurance premiums		(286	)		(197	)		(261	)		(219	)		(259	)		(936	)		(807	)

Net written premiums		626			581			695			639			594			2,509			2,280
Change in unearned premiums		3			32			(79	)		(44	)		(15	)		(106	)		(94	)

Net earned premiums		629			613			616			595			579			2,403			2,186
Loss and LAE		388			389			364			378			345			1,476			1,410
Underwriting expense		205			202			203			188			193			786			672

Underwriting profit	$	36		$	22		$	49		$	29		$	41		$	141		$	104

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	1		$	—		$	—		$	1		$	6
Catastrophe loss		1			28			11			1			5			45			71

Total current accident year catastrophe losses	$	1		$	28		$	12		$	1		$	5		$	46		$	77

Prior year loss reserve development (favorable) / adverse	$	(13	)	$	(52	)	$	(37	)	$	(15	)	$	(35	)	$	(139	)	$	(86	)

Combined ratio:
Loss and LAE ratio		61.6	%		63.5	%		59.2	%		63.4	%		59.5	%		61.5	%		64.5	%
Underwriting expense ratio		32.6	%		33.0	%		32.9	%		31.7	%		33.4	%		32.7	%		30.7	%

Combined ratio		94.2	%		96.5	%		92.1	%		95.1	%		92.9	%		94.2	%		95.2	%

Combined ratio excl. catastrophe and prior year development		96.3	%		100.3	%		96.4	%		97.5	%		97.9	%		98.1	%		95.9	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		63.7	%		67.3	%		63.5	%		65.8	%		64.5	%		65.4	%		65.2	%
Prior accident year loss reserve development		(2.2	%)		(8.5	%)		(6.0	%)		(2.5	%)		(6.0	%)		(5.8	%)		(4.0	%)
Current accident year catastrophe loss		0.1	%		4.7	%		1.7	%		0.1	%		1.0	%		1.9	%		3.3	%

Loss and LAE ratio		61.6	%		63.5	%		59.2	%		63.4	%		59.5	%		61.5	%		64.5	%

Page 9

American Financial Group, Inc.

Specialty Financial - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/18			12/31/17
Gross written premiums	$	184		$	184		$	195		$	192			179		$	750		$	727
Ceded reinsurance premiums		(39	)		(42	)		(42	)		(33	)		(31	)		(148	)		(131	)

Net written premiums		145			142			153			159			148			602			596
Change in unearned premiums		1			(1	)		(4	)		—			1			(4	)		(20	)

Net earned premiums		146			141			149			159			149			598			576
Loss and LAE		56			51			60			54			60			225			227
Underwriting expense		77			70			80			83			74			307			288

Underwriting profit	$	13		$	20		$	9		$	22		$	15		$	66		$	61

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	1		$	—		$	—		$	1		$	2
Catastrophe loss		2			10			12			3			3			28			30

Total current accident year catastrophe losses	$	2		$	10		$	13		$	3		$	3		$	29		$	32

Prior year loss reserve development (favorable) / adverse	$	(6	)	$	(7	)	$	(8	)	$	(8	)	$	(3	)	$	(26	)	$	(21	)

Combined ratio:
Loss and LAE ratio		38.2	%		36.4	%		40.1	%		33.9	%		40.2	%		37.6	%		39.4	%
Underwriting expense ratio		53.2	%		49.1	%		54.3	%		51.7	%		50.0	%		51.3	%		50.0	%

Combined ratio		91.4	%		85.5	%		94.4	%		85.6	%		90.2	%		88.9	%		89.4	%

Combined ratio excl. catastrophe and prior year development		94.3	%		83.6	%		91.5	%		89.0	%		90.2	%		88.6	%		87.8	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		41.1	%		34.5	%		37.2	%		37.3	%		40.2	%		37.3	%		37.8	%
Prior accident year loss reserve development		(4.3	%)		(5.2	%)		(5.1	%)		(5.4	%)		(1.8	%)		(4.4	%)		(3.6	%)
Current accident year catastrophe loss		1.4	%		7.1	%		8.0	%		2.0	%		1.8	%		4.7	%		5.2	%

Loss and LAE ratio		38.2	%		36.4	%		40.1	%		33.9	%		40.2	%		37.6	%		39.4	%

Page 10

American Financial Group, Inc.

Other Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/18			12/31/17
Gross written premiums	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Ceded reinsurance premiums		32			37			48			37			36			158			110

Net written premiums		32			37			48			37			36			158			110
Change in unearned premiums		5			—			(12	)		(4	)		(7	)		(23	)		(4	)

Net earned premiums		37			37			36			33			29			135			106
Loss and LAE		22			29			25			21			15			90			71
Underwriting expense		15			12			14			13			11			50			37

Underwriting profit (loss)	$	—		$	(4	)	$	(3	)	$	(1	)	$	3		$	(5	)	$	(2	)

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe loss		—			2			—			2			—			4			3

Total current accident year catastrophe losses	$	—		$	2		$	—		$	2		$	—		$	4		$	3

Prior year loss reserve development (favorable) / adverse	$	(1	)	$	5		$	—		$	(1	)	$	(1	)	$	3		$	8

Combined ratio:
Loss and LAE ratio		59.7	%		76.5	%		65.5	%		68.7	%		51.3	%		66.4	%		66.9	%
Underwriting expense ratio		39.2	%		35.8	%		37.5	%		36.8	%		39.4	%		37.3	%		35.8	%

Combined ratio		98.9	%		112.3	%		103.0	%		105.5	%		90.7	%		103.7	%		102.7	%

Combined ratio excl. catastrophe and prior year development		100.8	%		95.6	%		103.7	%		99.6	%		96.6	%		99.0	%		93.0	%

Page 11


American Financial Group, Inc. Annuity Earnings (GAAP) ($ in millions)


	Three Months Ended														Twelve Months Ended
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18		12/31/18			12/31/17
Net investment income	$	435		$	419		$	413		$	412		$	394	$	1,638		$	1,458
Guaranteed withdrawal benefit fees		16			17			16			16			16		65			60
Policy charges and other miscellaneous income		11			10			11			11			10		42			43

Total revenues		462			446			440			439			420		1,745			1,561
Annuity benefits		311			334			222			260			182		998			892
Acquisition expenses		26			56			69			49			81		255			168
Other expenses		35			36			32			31			32		131			121

Total costs and expenses		372			426			323			340			295		1,384			1,181

Annuity earnings before income taxes	$	90		$	20		$	117		$	99		$	125	$	361		$	380

Detail of Annuity earnings before income taxes (see additional detail on page 13)
Earnings before income taxes, impact of fair value accounting and unlockings	$	134		$	71		$	119		$	123		$	112	$	425		$	416
Impact of fair value accounting		(44	)		(47	)		(2	)		3			13		(33	)		(33	)

Total pretax annuity earnings before unlockings		90			24			117			126			125		392			383
Unlockings		—			(4	)		—			(27	)		—		(31	)		(3	)

Annuity earnings before income taxes	$	90		$	20		$	117		$	99		$	125	$	361		$	380

Page 12


American Financial Group, Inc. Components of Annuity Earnings Before Income Taxes (net of amortization of DAC, sales inducement costs and other related items) ($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/18			12/31/17
Components of earnings before fair value (“FV”) accounting for FIAs:
Pretax earnings before items below	$	89		$	85		$	83		$	87		$	84		$	339		$	346
Investments marked to market through core operating earnings		26			16			26			33			29			104			49
Impact of stock market on liability for guaranteed benefits (a)		14			(22	)		7			2			(1	)		(14	)		14
Impact of stock market on DAC and sales inducements (b)		5			(8	)		3			1			—			(4	)		7

Pretax Annuity earnings before FV accounting (c)	$	134		$	71		$	119		$	123		$	112		$	425		$	416

Components of Impact of FV accounting:
Interest accreted on Embedded Derivative liability	$	(10	)	$	(11	)	$	(10	)	$	(8	)	$	(7	)	$	(36	)	$	(16	)
Increase (decrease) in stock market		15			(27	)		12			6			(2	)		(11	)		29
Higher (lower) than expected changes in interest rates		(45	)		(4	)		(2	)		12			27			33			(50	)
Other		(4	)		(5	)		(2	)		(7	)		(5	)		(19	)		4

Impact of FV accounting, as reported (c)	$	(44	)	$	(47	)	$	(2	)	$	3		$	13		$	(33	)	$	(33	)

Total pretax annuity earnings before unlockings (c)	$	90		$	24		$	117		$	126		$	125		$	392		$	383

Yield on investments marked to market through core operating earnings		10.9	%		7.1	%		11.7	%		16.4	%		14.9	%		12.4	%		8.2	%
Increase (decrease) in S&P 500 (a)		13	%		(14	%)		7	%		3	%		(1	%)		(6	%)		19	%
Change in average 5 year and 15 year Corporate A2 rates		(0.49	%)		(0.07	%)		0.09	%		0.25	%		0.44	%		0.71	%		(0.13	%)
Year over year growth in average invested assets		12	%		12	%		10	%		10	%		10	%		10	%		11	%

(a)	Reflects the impact of changes in the stock market on AFG’s liability for fixed-indexed annuities with guaranteed benefits. Increases in the stock market will generally have a favorable earnings impact; decreases in the stock market will generally have an unfavorable impact.

(b)	Reflects the impact of changes in the stock market on the current and projected lifetime profitability of AFG’s annuity business. Increases in the stock market will generally have a favorable earnings impact; decreases in the stock market will generally have an unfavorable impact.

(c)	See page 19 for general rules of thumb related to earnings sensitivity from changes in the S&P 500, changes in market interest rates, and incremental yields on investments marked to market through core operating earnings.

Page 13

American Financial Group, Inc.

Detail of Annuity Benefits Expense (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/18			12/31/17
Detail of annuity benefits expense:
Interest credited - fixed	$	194		$	186		$	179		$	173		$	166		$	704		$	633
Interest credited - fixed component of variable annuities		1			1			1			2			1			5			5
Change in expected death and annuitization reserve		4			4			5			4			4			17			18
Amortization of sales inducements		3			4			5			5			5			19			19
Guaranteed withdrawal benefit reserve:
Impact of change in stock market		(14	)		22			(7	)		(2	)		1			14			(14	)
Accretion of benefits and other		21			24			25			21			22			92			81
Change in other benefit reserves		7			8			10			11			8			37			45
Unlockings (a)		—			5			—			54			—			59			35

Subtotal before impact of fair value accounting		216			254			218			268			207			947			822
Embedded derivative mark-to-market (b)		462			(490	)		223			82			(63	)		(248	)		564
Equity option mark-to-market		(367	)		570			(219	)		(90	)		38			299			(494	)

Subtotal impact in fair value accounting		95			80			4			(8	)		(25	)		51			70

Total annuity benefits expense	$	311		$	334		$	222		$	260		$	182		$	998		$	892

(a)

Includes unlockings for fixed indexed annuity embedded derivative reserves, sales inducement asset and other reserves. Does not include unlocking income of $28 million in 2018 and $32 million in 2017 for deferred policy acquisition costs and unearned revenue reserves. These unlockings are included in acquisition expenses and other income. In total, AFG recorded an unlocking expense of $31 million in 2018 and $3 million in 2017.

(b)	Excludes unlocking impact of $44 million in 2018 and $25 million in 2017.

Page 14

American Financial Group, Inc.

Net Spread on Fixed Annuities (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/18			12/31/17
Average fixed annuity investments (at amortized cost) (a)	$	36,991		$	35,993		$	34,955		$	33,935		$	33,002		$	34,471		$	31,250
Average annuity benefits accumulated		37,078			36,103			35,226			34,165			33,329			34,706			31,526

Annuity benefits accumulated in excess of investments (a)	$	(87	)	$	(110	)	$	(271	)	$	(230	)	$	(327	)	$	(235	)	$	(276	)

As % of average annuity benefits accumulated (except as noted)
Net investment income (as % of investments)		4.68	%		4.64	%		4.70	%		4.83	%		4.74	%		4.73	%		4.63	%
Interest credited		(2.09	%)		(2.06	%)		(2.03	%)		(2.02	%)		(1.99	%)		(2.03	%)		(2.01	%)

Net interest spread on fixed annuities		2.59	%		2.58	%		2.67	%		2.81	%		2.75	%		2.70	%		2.62	%
Policy charges and other miscellaneous income		0.08	%		0.08	%		0.09	%		0.10	%		0.10	%		0.10	%		0.11	%
Other annuity benefit expenses, net		(0.04	%)		(0.51	%)		(0.24	%)		(0.27	%)		(0.29	%)		(0.33	%)		(0.28	%)
Acquisition expenses		(0.28	%)		(0.59	%)		(0.76	%)		(0.89	%)		(0.94	%)		(0.79	%)		(0.62	%)
Other expenses		(0.36	%)		(0.38	%)		(0.36	%)		(0.35	%)		(0.38	%)		(0.37	%)		(0.37	%)
Change in fair value of derivatives		(1.03	%)		(0.89	%)		(0.05	%)		0.10	%		0.30	%		(0.15	%)		(0.22	%)
Unlockings		0.00	%		(0.04	%)		0.00	%		(0.32	%)		0.00	%		(0.09	%)		(0.01	%)

Net spread earned on fixed annuities		0.96	%		0.25	%		1.35	%		1.18	%		1.54	%		1.07	%		1.23	%

Average annuity benefits accumulated	$	37,078		$	36,103		$	35,226		$	34,165		$	33,329		$	34,706		$	31,526
Net spread earned on fixed annuities		0.96	%		0.25	%		1.35	%		1.18	%		1.54	%		1.07	%		1.23	%

Earnings on fixed annuity benefits accumulated	$	89		$	22		$	119		$	101		$	128		$	370		$	387
Annuity benefits accumulated in excess of investments	$	(87	)	$	(110	)	$	(271	)	$	(230	)	$	(327	)	$	(235	)	$	(276	)
Net investment income (as % of investments)		4.68	%		4.64	%		4.70	%		4.83	%		4.74	%		4.73	%		4.63	%

Earnings/(loss) on annuity benefits accumulated in excess of investments	$	(1	)	$	(1	)	$	(3	)	$	(3	)	$	(4	)	$	(11	)	$	(13	)
Variable annuity earnings (includes unlockings)		2			(1	)		1			1			1			2			6

Earnings before income taxes	$	90		$	20		$	117		$	99		$	125		$	361		$	380

Detail of net spread earned on fixed annuities
Net spread earned - before impact of fair value accounting and unlockings		1.43	%		0.81	%		1.37	%		1.46	%		1.38	%		1.26	%		1.34	%
Change in fair value of derivatives		(1.03	%)		(0.89	%)		(0.05	%)		0.10	%		0.30	%		(0.15	%)		(0.22	%)
Estimated net offsets to deferred sales inducements, deferred policy acquisition costs and related reserves		0.56	%		0.37	%		0.03	%		(0.06	%)		(0.14	%)		0.05	%		0.12	%
Unlockings		0.00	%		(0.04	%)		0.00	%		(0.32	%)		0.00	%		(0.09	%)		(0.01	%)

Net spread earned - after impact of fair value accounting and unlockings		0.96	%		0.25	%		1.35	%		1.18	%		1.54	%		1.07	%		1.23	%

(a)	Excludes non-investment assets such as deferred acquisition costs, FIA options, accrued investment income and company owned life insurance.

Page 15

American Financial Group, Inc.

Statutory Annuity Premiums

($ in millions)


	Three Months Ended										Twelve Months Ended
	3/31/19		12/31/18		9/30/18		6/30/18		3/31/18		12/31/18		12/31/17
Retail single premium annuities - indexed	$	301	$	392	$	354	$	378	$	294	$	1,418	$	990
Retail single premium annuities - fixed		29		27		17		22		21		87		70
Broker dealer single premium annuities - indexed		227		335		322		355		259		1,271		733
Broker dealer single premium annuities - fixed		6		4		3		4		3		14		7
Financial institutions single premium annuities - indexed		424		455		460		448		413		1,776		1,711
Financial institutions single premium annuities - fixed		344		142		114		131		105		492		622
Pension risk transfer (PRT)		10		75		56		1		—		132		6
Education market - fixed and indexed annuities		49		46		46		54		46		192		174

Subtotal fixed annuity premiums		1,390		1,476		1,372		1,393		1,141		5,382		4,313
Variable annuities		5		6		6		6		7		25		28

Total annuity premiums	$	1,395	$	1,482	$	1,378	$	1,399	$	1,148	$	5,407	$	4,341

Summary by Distribution Channel:
Retail	$	330	$	419	$	371	$	400	$	315	$	1,505	$	1,060
Broker dealer		233		339		325		359		262		1,285		740
Financial institutions		768		597		574		579		518		2,268		2,333
Other		64		127		108		61		53		349		208

Total annuity premiums	$	1,395	$	1,482	$	1,378	$	1,399	$	1,148	$	5,407	$	4,341

Summary by Product Type:
Total indexed	$	980	$	1,211	$	1,164	$	1,213	$	992	$	4,580	$	3,523
Total fixed		410		265		208		180		149		802		790
Variable		5		6		6		6		7		25		28

Total annuity premiums	$	1,395	$	1,482	$	1,378	$	1,399	$	1,148	$	5,407	$	4,341

Page 16

American Financial Group, Inc.

Fixed Annuity Benefits Accumulated (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/18			12/31/17
Beginning fixed annuity reserves	$	36,431		$	35,774		$	34,678		$	33,652		$	33,005		$	33,005		$	29,647
Premiums		1,390			1,476			1,372			1,393			1,141			5,382			4,313
Federal Home Loan Bank (“FHLB”) advances (paydowns)		—			225			—			—			—			225			(64	)
Surrenders, benefits and other withdrawals		(761	)		(796	)		(707	)		(706	)		(627	)		(2,836	)		(2,246	)
Interest and other annuity benefit expenses:
Interest credited		194			186			179			173			166			704			633
Embedded derivative mark-to-market		462			(490	)		223			82			(63	)		(248	)		564
Change in other benefit reserves		8			52			29			29			30			140			117
Unlockings		—			4			—			55			—			59			41

Ending fixed annuity reserves	$	37,724		$	36,431		$	35,774		$	34,678		$	33,652		$	36,431		$	33,005

Reconciliation to annuity benefits accumulated:
Ending fixed annuity reserves	$	37,724		$	36,431		$	35,774		$	34,678		$	33,652		$	36,431		$	33,005
Impact of unrealized investment gains on reserves		108			10			8			32			71			10			133
Fixed component of variable annuities		174			175			176			176			178			175			178

Annuity benefits accumulated per balance sheet	$	38,006		$	36,616		$	35,958		$	34,886		$	33,901		$	36,616		$	33,316

Annualized surrenders and other withdrawals as a % of beginning reserves		8.4	%		8.9	%		8.2	%		8.4	%		7.6	%		8.6	%		7.6	%
Rider reserves included in ending fixed annuity reserves above	$	478		$	472		$	428		$	411		$	381		$	472		$	358

Embedded Derivative liability included in ending fixed annuity reserves above	$	3,247		$	2,720		$	3,105		$	2,776		$	2,549		$	2,720		$	2,542

Page 17

American Financial Group, Inc.

Guaranteed Minimum Interest Rate (“GMIR”) Analysis

($ in millions)


	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/17
GMIR
1 - 1.99%		79	%		79	%		78	%		78	%		77	%		76	%
2 - 2.99%		4	%		4	%		4	%		4	%		5	%		5	%
3 - 3.99%		8	%		8	%		9	%		9	%		9	%		10	%
4.00% and above		9	%		9	%		9	%		9	%		9	%		9	%
Annuity Benefits Accumulated	$	38,006		$	36,616		$	35,958		$	34,886		$	33,901		$	33,316
Traditional Fixed and FIA Surrender Value (a) (b)	$	29,163		$	27,842		$	27,434		$	26,502		$	25,582		$	25,138
Ability to Lower Average Crediting Rates by (a) (c)		1.20	%		1.19	%		1.16	%		1.09	%		1.00	%		0.92	%
Pretax earnings impact of crediting guaranteed minimums (a)	$	350		$	331		$	317		$	288		$	255		$	230
(assumes net DAC impact over time = $0)

(a)	Excludes Annuities with Guaranteed Withdrawal Benefits, FHLB advances, immediate reserves and certain other reserves.

(b)	FIA Surrender Value include Host + Embedded Derivatives + Fixed Account values.

(c)	Weighted Average Crediting Rate less GMIR

Page 18

American Financial Group, Inc.

Annuity Earnings Guidance

($ in millions)

Earnings Sensitivities

(Incremental Changes are Versus Amounts Assumed in Guidance)

Incremental

Guidance as provided

+/- 1% Yield on

in conjunction

Partnerships,

with AFG’s

Midpoint

Incremental

Private Equities,

1st Quarter

+/- 1%

+/-10bps change in

Mark-to-Market

Earnings Release

Guidance

S&P 500 (a) (b)

Interest Rates (b) (c)

Investments (a)

Pretax Annuity Earnings (Before Impact of Fair Value Accounting for FIAs)

445

475

460

~ +/- $1mm to $2mm

~ +/- $8mm

Implied Fair Value Accounting Impact

(80

)

(50

)

(65

)

~ +/- $1mm to $2mm

~ +/- $8mm to $10mm

Pretax Annuity Earnings, As Reported

365

425

395

~ +/- $2mm to $4mm

~ +/- $8mm to $10mm

~ +/- $8mm

(a)	Current guidance assumptions related to Pretax Annuity Earnings (Before Impact of Fair Value Accounting for FIAs), as provided in conjunction with AFG’s 1st Quarter Earnings Release:

Assumes 20% increase in stock market in 2019 (see additional information on page 13)

Assumes 8% to 9% yield on partnerships, private equities and investments marked to market in last 3 quarters of 2019 (see additional information on page 26)

(b)	Current guidance assumptions related to Impact of Fair Value Accounting for FIAs, as provided in conjunction with AFG’s 1st Quarter Earnings Release:

Assumes 20% increase in stock market in 2019

Assumes 10 to 20 bp increase in average of 5 year and 15 year Corporate A2 rate in last 3 quarters of 2019

See additional information on page 13

(c)	Assumes parallel shift in rates (primarily Corporate A2 rates)

Page 19

American Financial Group, Inc.

Consolidated Balance Sheet

($ in millions)


	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/17
Assets:
Total cash and investments	$	51,040		$	48,498		$	47,841		$	46,779		$	45,949		$	46,048
Recoverables from reinsurers		3,258			3,349			3,352			3,073			3,173			3,369
Prepaid reinsurance premiums		636			610			717			645			614			600
Agents’ balances and premiums receivable		1,283			1,234			1,299			1,266			1,113			1,146
Deferred policy acquisition costs		1,447			1,682			1,669			1,582			1,417			1,216
Assets of managed investment entities		4,786			4,700			4,998			5,032			5,090			4,902
Other receivables		1,011			1,090			1,633			1,048			918			1,030
Variable annuity assets (separate accounts)		610			557			650			636			632			644
Other assets		1,854			1,529			1,832			1,574			1,551			1,504
Goodwill		207			207			199			199			199			199

Total assets	$	66,132		$	63,456		$	64,190		$	61,834		$	60,656		$	60,658

Liabilities and Equity:
Unpaid losses and loss adjustment expenses	$	9,623		$	9,741		$	9,670		$	9,093		$	9,193		$	9,678
Unearned premiums		2,605			2,595			2,740			2,539			2,413			2,410
Annuity benefits accumulated		38,006			36,616			35,958			34,886			33,901			33,316
Life, accident and health reserves		632			635			643			647			656			658
Payable to reinsurers		730			752			932			721			661			743
Liabilities of managed investment entities		4,593			4,512			4,807			4,840			4,869			4,687
Long-term debt		1,423			1,302			1,302			1,301			1,301			1,301
Variable annuity liabilities (separate accounts)		610			557			650			636			632			644
Other liabilities		2,245			1,774			2,324			2,087			1,847			1,887

Total liabilities	$	60,467		$	58,484		$	59,026		$	56,750		$	55,473		$	55,324
Redeemable noncontrolling interests	$	—		$	—		$	—		$	—		$	—		$	3
Shareholders’ equity:
Common stock	$	90		$	89		$	89		$	89		$	89		$	88
Capital surplus		1,256			1,245			1,231			1,220			1,205			1,181
Retained earnings		3,875			3,588			3,800			3,628			3,584			3,248
Unrealized gains - equities		—			—			—			—			—			221
Unrealized gains - fixed maturities		464			83			93			191			342			619
Unrealized gains (losses) - fixed maturity-related cash flow hedges		—			(11	)		(32	)		(27	)		(24	)		(13	)
Other comprehensive income, net of tax		(20	)		(24	)		(17	)		(17	)		(13	)		(14	)

Total shareholders’ equity		5,665			4,970			5,164			5,084			5,183			5,330
Noncontrolling interests		—			2			—			—			—			1

Total liabilities and equity	$	66,132		$	63,456		$	64,190		$	61,834		$	60,656		$	60,658

Page 20

American Financial Group, Inc.

Book Value Per Share and Price / Book Summary

(in millions, except per share information)


	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/17
Shareholders’ equity	$	5,665		$	4,970		$	5,164		$	5,084		$	5,183		$	5,330
Unrealized (gains) related to fixed maturities		(464	)		(72	)		(61	)		(164	)		(318	)		(606	)

Adjusted shareholders’ equity		5,201			4,898			5,103			4,920			4,865			4,724
Goodwill		(207	)		(207	)		(199	)		(199	)		(199	)		(199	)
Intangibles		(51	)		(54	)		(31	)		(34	)		(36	)		(26	)

Tangible adjusted shareholders’ equity	$	4,943		$	4,637		$	4,873		$	4,687		$	4,630		$	4,499

Common shares outstanding		89.638			89.292			89.189			89.072			88.881			88.275
Book value per share:
Book value per share	$	63.20		$	55.66		$	57.90		$	57.08		$	58.32		$	60.38
Adjusted (a)		58.02			54.86			57.22			55.24			54.74			53.51
Tangible, adjusted (b)		55.14			51.93			54.64			52.63			52.10			50.95
Market capitalization
AFG’s closing common share price	$	96.21		$	90.53		$	110.97		$	107.33		$	112.22		$	108.54
Market capitalization	$	8,624		$	8,084		$	9,897		$	9,560		$	9,974		$	9,581
Price / Adjusted book value ratio		1.66			1.65			1.94			1.94			2.05			2.03

(a)	Excludes unrealized gains related to fixed maturity investments.

(b)	Excludes unrealized gains related to fixed maturity investments, goodwill and intangibles.

Page 21

American Financial Group, Inc.

Capitalization

($ in millions)


	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/17
AFG senior obligations	$	1,018		$	1,018		$	1,018		$	1,018		$	1,018		$	1,018
Borrowings drawn under credit facility		—			—			—			—			—			—

Debt excluding subordinated debt	$	1,018		$	1,018		$	1,018		$	1,018		$	1,018		$	1,018
AFG subordinated debentures		425			300			300			300			300			300

Total principal amount of long-term debt	$	1,443		$	1,318		$	1,318		$	1,318		$	1,318		$	1,318
Shareholders’ equity		5,665			4,970			5,164			5,084			5,183			5,330
Noncontrolling interests (including redeemable NCI)		—			2			—			—			—			4
Less:
Unrealized (gains) related to fixed maturity investments		(464	)		(72	)		(61	)		(164	)		(318	)		(606	)

Total adjusted capital	$	6,644		$	6,218		$	6,421		$	6,238		$	6,183		$	6,046

Ratio of debt to total adjusted capital:
Including subordinated debt		21.7	%		21.2	%		20.5	%		21.1	%		21.3	%		21.8	%
Excluding subordinated debt		15.3	%		16.4	%		15.9	%		16.3	%		16.5	%		16.8	%

Page 22

American Financial Group, Inc.

Additional Supplemental Information

($ in millions)

LOGO


	Three Months Ended										Twelve Months Ended
	3/31/19		12/31/18		9/30/18		6/30/18		3/31/18		12/31/18		12/31/17
Property and Casualty Insurance
Paid Losses (GAAP)	$	704	$	719	$	614	$	629	$	640	$	2,602	$	2,528


	3/31/19		12/31/18		9/30/18		6/30/18		3/31/18		12/31/2017
Statutory Surplus
Property and Casualty Insurance	$	3,041	$	2,867	$	2,885	$	2,797	$	2,781	$	2,729
AFG’s principal annuity subsidiaries (total adjusted capital)	$	3,035	$	3,015	$	2,703	$	2,511	$	2,442	$	2,442
Allowable dividends without regulatory approval
Property and Casualty Insurance	$	529	$	529	$	563	$	563	$	563	$	563
Annuity and Run-off		768		768		263		263		263		263

Total	$	1,297	$	1,297	$	826	$	826	$	826	$	826

Page 23

American Financial Group, Inc.

Total Cash and Investments

($ in millions)


	Carrying Value - March 31, 2019
	Property and				Parent and							% of
	Casualty		Annuity and		Other Non-		Consolidate			Total AFG		Investment
	Insurance		Run-off		Insurance		CLOs			Consolidated		Portfolio
Total cash and investments:
Cash and cash equivalents	$	1,055	$	716	$	229	$	—		$	2,000		4	%
Fixed maturities - Available for sale		8,041		35,379		11		—			43,431		85	%
Fixed maturities - Trading		54		53		—		—			107		0	%
Equity securities		1,110		762		58		—			1,930		4	%
Investments accounted for using the equity method		578		862		—		—			1,440		3	%
Mortgage loans		292		786		—		—			1,078		2	%
Policy loans		—		172		—		—			172		0	%
Equity index call options		—		620		—		—			620		1	%
Real estate and other investments		133		278		43		(192	)		262		1	%

Total cash and investments	$	11,263	$	39,628	$	341	$	(192	)	$	51,040		100	%


	Carrying Value - December 31, 2018
	Property and				Parent and							% of
	Casualty		Annuity and		Other Non-		Consolidate			Total AFG		Investment
	Insurance		Run-off		Insurance		CLOs			Consolidated		Portfolio
Total cash and investments:
Cash and cash equivalents	$	1,007	$	339	$	169	$	—		$	1,515		3	%
Fixed maturities - Available for sale		7,853		34,132		12		—			41,997		87	%
Fixed maturities - Trading		50		55		—		—			105		0	%
Equity securities		1,017		744		53		—			1,814		4	%
Investments accounted for using the equity method		557		817		—		—			1,374		3	%
Mortgage loans		289		779		—		—			1,068		2	%
Policy loans		—		174		—		—			174		0	%
Equity index call options		—		184		—		—			184		0	%
Real estate and other investments		134		276		44		(187	)		267		1	%

Total cash and investments	$	10,907	$	37,500	$	278	$	(187	)	$	48,498		100	%

Page 24

American Financial Group, Inc.

Net Investment Income

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/18			12/31/17
Property and Casualty Insurance:
Gross Investment Income
Fixed maturities - Available for sale	$	77		$	74		$	72		$	72		$	66		$	284		$	258
Fixed maturities - Trading		1			1			—			2			—			3			3
Equity securities - dividends		13			11			13			11			13			48			51
Equity securities - MTM		2			9			(1	)		5			—			13			—
Equity in investees		3			14			16			18			17			65			27
AFG managed CLOs		3			(1	)		1			1			1			2			7
Other investments (a)		7			10			9			8			5			32			26

Gross investment income		106			118			110			117			102			447			372
Investment expenses		(2	)		(3	)		(2	)		(2	)		(2	)		(9	)		(10	)

Total net investment income	$	104		$	115		$	108		$	115		$	100		$	438		$	362

Average cash and investments (b)	$	10,997		$	10,651		$	10,388		$	10,346		$	10,422		$	10,497		$	9,948

Average yield (c)		3.78	%		4.32	%		4.16	%		4.45	%		3.84	%		4.17	%		3.64	%

Fixed Annuity
Gross Investment Income
Fixed maturities - Available for sale	$	384		$	376		$	361		$	350		$	338		$	1,425		$	1,314
Equity securities - dividends		9			9			6			7			8			30			22
Equity securities - MTM		3			2			—			11			—			13			—
Equity in investees		18			19			25			23			29			96			37
AFG managed CLOs		8			(3	)		3			3			2			5			16
Other investments (a)		15			18			19			19			17			73			70

Gross investment income		437			421			414			413			394			1,642			1,459
Investment expenses		(4	)		(4	)		(3	)		(3	)		(3	)		(13	)		(11	)

Total net investment income	$	433		$	417		$	411		$	410		$	391		$	1,629		$	1,448

Average cash and investments (b)	$	36,991		$	35,993		$	34,955		$	33,935		$	33,002		$	34,471		$	31,250

Average yield (c)		4.68	%		4.64	%		4.70	%		4.83	%		4.74	%		4.73	%		4.63	%

AFG consolidated net investment income:
Property & Casualty	$	104		$	115		$	108		$	115		$	100		$	438		$	362
Annuity:
Fixed Annuity		433			417			411			410			391			1,629			1,448
Variable Annuity		2			2			2			2			3			9			10
Parent & other		14			4			10			7			4			25			34
Consolidate CLOs		(11	)		4			(4	)		(4	)		(3	)		(7	)		(23	)

Total net investment income	$	542		$	542		$	527		$	530		$	495		$	2,094		$	1,831

(a)	Includes income from mortgage loans, real estate, policy loans, short-term investments, and cash equivalents.

(b)	Average cash and investments is the average of the beginning and ending quarter balances, or the average of the five quarters balances.

(c)	Average yield is calculated by dividing investment income for the quarter by the average cash and investment balance over the quarter.

Page 25

American Financial Group, Inc.

Investments Marked-to-Market Through Investment Income and Investments Accounted For Using the Equity Method

($ in millions)


	Three Months Ended															Twelve Months Ended
	3/31/19			12/31/18			9/30/18			6/30/18			3/31/18			12/31/18			12/31/17
Property and Casualty Insurance:
Net Investment Income
Equity securities MTM through investment income (a)	$	2		$	9		$	(1	)	$	5		$	—		$	13		$	—
Investments accounted for using the equity method (b)		3			14			16			18			17			65			27
AFG managed CLOs (eliminated in consolidation)		3			(1	)		1			1			1			2			7

Total Property & Casualty	$	8		$	22		$	16		$	24		$	18		$	80		$	34

Investments
Equity securities MTM through investment income (a)	$	52		$	50		$	40		$	40		$	31		$	50		$	27
Investments accounted for using the equity method (b)		578			557			520			475			440			557			402
AFG managed CLOs (eliminated in consolidation)		57			56			57			57			66			56			64

Total Property & Casualty	$	687		$	663		$	617		$	572		$	537		$	663		$	493

Annualized Yield - Property & Casualty		4.7	%		13.8	%		10.8	%		17.3	%		14.0	%		13.9	%		7.9	%
Fixed Annuity:
Net Investment Income
Equity securities MTM through investment income (a)	$	3		$	2		$	—		$	11		$	—		$	13		$	—
Investments accounted for using the equity method (b)		18			19			25			23			29			96			37
AFG managed CLOs (eliminated in consolidation)		8			(3	)		3			3			2			5			16

Total Fixed Annuity	$	29		$	18		$	28		$	37		$	31		$	114		$	53

Investments
Equity securities MTM through investment income (a)	$	88		$	84		$	79		$	79		$	57		$	84		$	49
Investments accounted for using the equity method (b)		862			817			769			719			657			817			590
AFG managed CLOs (eliminated in consolidation)		136			132			134			135			155			132			151

Total Fixed Annuity	$	1,086		$	1,033		$	982		$	933		$	869		$	1,033		$	790

Annualized Yield - Fixed Annuity		10.9	%		7.1	%		11.7	%		16.4	%		14.9	%		12.4	%		8.2	%
Combined (includes Parent amounts not shown above):
Net Investment Income
Equity securities MTM through investment income (a)	$	11		$	6		$	1		$	16		$	(1	)	$	22		$	7
Investments accounted for using the equity method (b)		21			33			41			41			46			161			64
AFG managed CLOs (eliminated in consolidation)		11			(4	)		4			4			3			7			23

Total Combined (including Parent)	$	43		$	35		$	46		$	61		$	48		$	190		$	94

Investments
Equity securities MTM through investment income (a)	$	198		$	187		$	176		$	173		$	142		$	187		$	132
Investments accounted for using the equity method (b)		1,440			1,374			1,289			1,194			1,097			1,374			992
AFG managed CLOs (eliminated in consolidation)		193			188			191			192			221			188			215

Total Combined (including Parent)	$	1,831		$	1,749		$	1,656		$	1,559		$	1,460		$	1,749		$	1,339

Annualized Yield - Combined		9.6	%		8.2	%		11.4	%		16.2	%		13.7	%		12.2	%		8.3	%

(a)	AFG carries the small portion of its equity securities previously classified as “trading” and investments in limited partnerships and similar investments that aren’t accounted for using the equity method at fair value through net investment income.

(b)	The majority of AFG’s investments accounted for using the equity method mark their underlying assets to market through net income.

Page 26

American Financial Group, Inc.

Fixed Maturities - By Security Type - AFG Consolidated

($ in millions )


												% of
	Amortized					Unrealized			% of			Investment
March 31, 2019	Cost			Fair Value		Gain (Loss)			Fair Value			Portfolio
US Government and government agencies	$	243		$	243	$	—			1	%		0	%
States, municipalities and political subdivisions		6,768			7,001		233			16	%		14	%
Foreign government		176			178		2			1	%		0	%
Residential mortgage-backed securities		2,479			2,758		279			6	%		5	%
Commercial mortgage-backed securities		900			924		24			2	%		2	%
Asset-backed securities		9,909			10,018		109			23	%		20	%
Corporate and other bonds		22,050			22,416		366			51	%		44	%

Total AFG consolidated	$	42,525		$	43,538	$	1,013			100	%		85	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.44	%
Net of investment expense (a)		4.39	%
Approximate average life and duration:
Approximate average life		6 years
Approximate duration		4.5 years

												% of
	Amortized					Unrealized			% of			Investment
December 31, 2018	Cost			Fair Value		Gain (Loss)			Fair Value			Portfolio
US Government and government agencies	$	245		$	243	$	(2	)		1	%		1	%
States, municipalities and political subdivisions		6,850			6,964		114			17	%		14	%
Foreign government		166			168		2			0	%		0	%
Residential mortgage-backed securities		2,478			2,746		268			7	%		6	%
Commercial mortgage-backed securities		905			920		15			2	%		2	%
Asset-backed securities		9,781			9,811		30			23	%		20	%
Corporate and other bonds		21,517			21,250		(267	)		50	%		44	%

Total AFG consolidated	$	41,942		$	42,102	$	160			100	%		87	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.47	%
Net of investment expense (a)		4.42	%
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.

Page 27

American Financial Group, Inc.

Fixed Maturities - By Security Type Portfolio

($ in millions )


	March 31, 2019											December 31, 2018
	Amortized					Unrealized			% of			Amortized					Unrealized			% of
Property and Casualty Insurance:	Cost			Fair Value		Gain (Loss)			Fair Value			Cost			Fair Value		Gain (Loss)			Fair Value
US Government and government agencies	$	203		$	204		1			2	%	$	203		$	202	$	(1	)		3	%
States, municipalities and political subdivisions		2,559			2,610		51			32	%		2,630			2,642		12			33	%
Foreign government		165			165		—			2	%		155			156		1			2	%
Residential mortgage-backed securities		720			784		64			10	%		725			784		59			10	%
Commercial mortgage-backed securities		88			90		2			1	%		83			84		1			1	%
Asset-backed securities		2,315			2,316		1			29	%		2,275			2,259		(16	)		29	%
Corporate and other bonds		1,908			1,926		18			24	%		1,792			1,776		(16	)		22	%

Property and Casualty Insurance	$	7,958		$	8,095	$	137			100	%	$	7,863		$	7,903	$	40			100	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		3.93	%										3.91	%
Net of investment expense (a)		3.85	%										3.81	%
Tax equivalent, net of investment expense (b)		4.04	%										3.99	%
Approximate average life and duration:
Approximate average life		4.5 years											4.5 years
Approximate duration		3.5 years											3.5 years

	March 31, 2019											December 31, 2018
	Amortized					Unrealized			% of			Amortized					Unrealized			% of
Annuity and Run-off:	Cost			Fair Value		Gain (Loss)			Fair Value			Cost			Fair Value		Gain (Loss)			Fair Value
US Government and government agencies	$	40		$	39	$	(1	)		0	%	$	42		$	41	$	(1	)		0	%
States, municipalities and political subdivisions		4,209			4,391		182			12	%		4,220			4,322		102			13	%
Foreign government		11			13		2			0	%		11			12		1			0	%
Residential mortgage-backed securities		1,757			1,963		206			6	%		1,750			1,950		200			6	%
Commercial mortgage-backed securities		812			834		22			2	%		822			836		14			2	%
Asset-backed securities		7,594			7,702		108			22	%		7,506			7,552		46			22	%
Corporate and other bonds		20,142			20,490		348			58	%		19,725			19,474		(251	)		57	%

Total Annuity and Run-off	$	34,565		$	35,432	$	867			100	%	$	34,076		$	34,187	$	111			100	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.55	%										4.59	%
Net of investment expense (a)		4.51	%										4.55	%
Approximate average life and duration:
Approximate average life		6 years											6.5 years
Approximate duration		4.5 years											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.

(b)	Adjusts the yield on tax-exempt bonds to the fully taxable equivalent yield.

Page 28

American Financial Group, Inc.

Fixed Maturities - Credit Rating

($ in millions)

LOGO


	March 31, 2019
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value
Investment grade
AAA	$	7,378	$	7,447	$	69			17	%
AA		8,809		9,055		246			21	%
A		10,268		10,504		236			24	%
BBB		12,261		12,464		203			29	%

Subtotal - Investment grade		38,716		39,470		754			91	%
BB		709		705		(4	)		2	%
B		249		245		(4	)		0	%
Other (b)		2,851		3,118		267			7	%

Subtotal - Non-Investment grade		3,809		4,068		259			9	%

Total	$	42,525	$	43,538	$	1,013			100	%

98% of the fixed maturity portfolio is NAIC designated 1 or 2.


	December 31, 2018
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value
Investment grade
AAA	$	7,367	$	7,359	$	(8	)		17	%
AA		8,714		8,831		117			21	%
A		10,006		9,989		(17	)		24	%
BBB		12,206		12,053		(153	)		29	%

Subtotal - Investment grade		38,293		38,232		(61	)		91	%
BB		703		685		(18	)		2	%
B		261		254		(7	)		0	%
Other (b)		2,685		2,931		246			7	%

Subtotal - Non-Investment grade		3,649		3,870		221			9	%

Total	$	41,942	$	42,102	$	160			100	%

98% of the fixed maturity portfolio is NAIC designated 1 or 2.

(a)	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.

(b)	See page 33 for more information.

Page 29

American Financial Group, Inc.

Mortgage-Backed Securities - AFG Consolidated

($ in millions)

LOGO


March 31, 2019	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Investment Portfolio
Residential
Agency	$	163	$	163	$	—		4	%		0	%
Prime (Non-Agency)		960		1,089		129		30	%		2	%
Alt-A		1,005		1,118		113		30	%		2	%
Subprime		351		388		37		11	%		1	%
Commercial		900		924		24		25	%		2	%

Total AFG consolidated	$	3,379	$	3,682	$	303		100	%		7	%

•

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 81%; Subprime 83%; CMBS 100%.

•

The average FICO score of our residential MBS securities is - Prime 734; Alt-A 696; Subprime 630.

•

96% of our Commercial MBS portfolio is investment-grade rated (82% AAA) and the average subordination for this group of assets is 34%.

•

The approximate average life by collateral type is - Residential 4.5 years; Commercial 4 years.


December 31, 2018	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Investment Portfolio
Residential
Agency	$	170	$	168	$	(2	)		5	%		1	%
Prime (Non-Agency)		967		1,098		131			30	%		2	%
Alt-A		972		1,074		102			29	%		2	%
Subprime		369		406		37			11	%		1	%
Commercial		905		920		15			25	%		2	%

Total AFG consolidated	$	3,383	$	3,666	$	283			100	%		8	%

Page 30

American Financial Group, Inc.

Mortgage-Backed Securities Portfolio

($ in millions)

Property and Casualty Insurance:


	March 31, 2019
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Inv Portfolio
Residential
Agency	$	131	$	130	$	(1	)		15	%		1	%
Prime (Non-Agency)		138		154		16			18	%		1	%
Alt-A		296		330		34			38	%		3	%
Subprime		155		170		15			19	%		2	%
Commercial		88		90		2			10	%		1	%

Total	$	808	$	874	$	66			100	%		8	%


	December 31, 2018
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Inv Portfolio
Residential
Agency	$	137	$	134	$	(3	)		15	%		1	%
Prime (Non-Agency)		138		155		17			18	%		1	%
Alt-A		289		319		30			37	%		3	%
Subprime		161		176		15			20	%		2	%
Commercial		83		84		1			10	%		1	%

Total	$	808	$	868	$	60			100	%		8	%

Annuity and Run-off:



	March 31, 2019
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Inv Portfolio
Residential
Agency	$	32	$	33	$	1		1	%		0	%
Prime (Non-Agency)		820		924		104		33	%		2	%
Alt-A		709		788		79		28	%		2	%
Subprime		196		218		22		8	%		1	%
Commercial		812		834		22		30	%		2	%

Total	$	2,569	$	2,797	$	228		100	%		7	%


	December 31, 2018
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Inv Portfolio
Residential
Agency	$	33	$	34	$	1		1	%		0	%
Prime (Non-Agency)		826		931		105		34	%		2	%
Alt-A		683		755		72		27	%		2	%
Subprime		208		230		22		8	%		1	%
Commercial		822		836		14		30	%		2	%

Total	$	2,572	$	2,786	$	214		100	%		7	%

Page 31

American Financial Group, Inc.

Mortgage-Backed Securities - Credit Rating

($ in millions)


	March 31, 2019
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value
Investment grade
AAA	$	1,099	$	1,122	$	23		31	%
AA		158		161		3		4	%
A		324		338		14		9	%
BBB		198		206		8		6	%

Subtotal - investment grade		1,779		1,827		48		50	%
BB		133		136		3		4	%
B		136		136		—		4	%
Other (b)		1,331		1,583		252		42	%

Total	$	3,379	$	3,682	$	303		100	%

96% of the mortgage-backed security portfolio has an NAIC 1 designation.



	December 31, 2018
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value
Investment grade
AAA	$	1,107	$	1,119	$	12			31	%
AA		143		147		4			4	%
A		263		270		7			7	%
BBB		232		243		11			7	%

Subtotal - investment grade		1,745		1,779		34			49	%
BB		128		131		3			3	%
B		155		154		(1	)		4	%
Other (b)		1,355		1,602		247			44	%

Total	$	3,383	$	3,666	$	283			100	%

96% of the mortgage-backed security portfolio has an NAIC 1 designation.

(a)	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.

(b)	See page 33 for more information.

Page 32

Appendix A

American Financial Group, Inc.

Fixed Maturities - Credit Rating by Type

($ in millions)


	Fair Value - March 31, 2019
By Credit Rating (a)	US Gov		Munis		Frgn Gov		RMBS		CMBS		ABS		Corp/Oth		Total		% Total
Investment grade
AAA	$	208	$	1,930	$	102	$	361	$	761	$	3,911	$	174	$	7,447		17	%
AA		22		4,448		53		144		17		2,678		1,693		9,055		21	%
A		—		456		1		310		28		2,141		7,568		10,504		24	%
BBB		—		109		2		130		76		766		11,381		12,464		29	%

Subtotal - Investment grade		230		6,943		158		945		882		9,496		20,816		39,470		91	%
BB		—		—		—		101		35		34		535		705		2	%
B		—		8		—		134		2		4		97		245		0	%
CCC, CC, C		—		—		—		648		5		2		12		667		2	%
D		5		—		—		220		—		—		—		225		0	%

Subtotal - Non-Investment grade		5		8		—		1,103		42		40		644		1,842		4	%
Not Rated		8		50		20		710		—		482		956		2,226		5	%

Total	$	243	$	7,001	$	178	$	2,758	$	924	$	10,018	$	22,416	$	43,538		100	%


	Fair Value - December 31, 2018
By Credit Rating (a)	US Gov		Munis		Frgn Gov		RMBS		CMBS		ABS		Corp/Oth		Total		% Total
Investment grade
AAA	$	213	$	1,889	$	98	$	367	$	752	$	3,870	$	170	$	7,359		17	%
AA		22		4,456		53		129		18		2,570		1,583		8,831		21	%
A		—		448		—		248		22		2,086		7,185		9,989		24	%
BBB		—		110		—		169		74		769		10,931		12,053		29	%

Subtotal - Investment grade		235		6,903		151		913		866		9,295		19,869		38,232		91	%
BB		—		—		—		97		34		23		531		685		2	%
B		—		8		—		151		3		4		88		254		0	%
CCC, CC, C		—		—		—		670		5		2		12		689		2	%
D		—		3		—		230		—		—		1		234		1	%

Subtotal - Non-Investment grade		—		11		—		1,148		42		29		632		1,862		5	%
Not Rated		8		50		17		685		12		487		749		2,008		4	%

Total	$	243	$	6,964	$	168	$	2,746	$	920	$	9,811	$	21,250	$	42,102		100	%

(a)	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.

Page 33