AMERICAN FINANCIAL GROUP INC

For the period ended Dec 31, 2023. Filed Feb 23, 2024.

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FY2023 · Filed Feb 23, 2024

AFG$160.84+1.9%Stored close · as of Nov 10, 2026

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Managed Investment Entities

Accounting standards require AFG to consolidate its investments in collateralized loan obligation (“CLO”) entities that it manages and owns an interest in (in the form of debt). See Note A — “Accounting Policies — Managed Investment Entities” and Note H — “Managed Investment Entities” to the financial statements. The effect of consolidating these entities is shown in the tables below (in millions). The “Before CLO Consolidation” columns include AFG’s investment and earnings in the CLOs on an unconsolidated basis.

CONDENSED CONSOLIDATING BALANCE SHEET

Before CLOConsolidation · ManagedInvestmentEntities · Consol.Entries · ConsolidatedAs Reported
Assets:
Cash and investments	$15,438	$—	$(175)	(*)	$15,263
Assets of managed investment entities	—	4,484	—		4,484
Other assets	10,042	—	(2)	(*)	10,040
Total assets	$25,480	$4,484	$(177)		$29,787
Liabilities:
Unpaid losses and loss adjustment expenses and unearned premiums	$16,538	$—	$—		$16,538
Liabilities of managed investment entities	—	4,446	(139)	(*)	4,307
Long-term debt and other liabilities	4,684	—	—		4,684
Total liabilities	21,222	4,446	(139)		25,529
Shareholders’ equity:
Common Stock and Capital surplus	1,456	38	(38)		1,456
Retained earnings	3,121	—	—		3,121
Accumulated other comprehensive income (loss), net of tax	(319)	—	—		(319)
Total shareholders’ equity	4,258	38	(38)		4,258
Total liabilities and shareholders’ equity	$25,480	$4,484	$(177)		$29,787
Assets:
Cash and investments	$14,627	$—	$(115)	(*)	$14,512
Assets of managed investment entities	—	5,447	—		5,447
Other assets	8,872	—	—	(*)	8,872
Total assets	$23,499	$5,447	$(115)		$28,831
Liabilities:
Unpaid losses and loss adjustment expenses and unearned premiums	$15,220	$—	$—		$15,220
Liabilities of managed investment entities	—	5,444	(112)	(*)	5,332
Long-term debt and other liabilities	4,227	—	—		4,227
Total liabilities	19,447	5,444	(112)		24,779
Shareholders’ equity:
Common Stock and Capital surplus	1,453	3	(3)		1,453
Retained earnings	3,142	—	—		3,142
Accumulated other comprehensive income (loss), net of tax	(543)	—	—		(543)
Total shareholders’ equity	4,052	3	(3)		4,052
Total liabilities and shareholders’ equity	$23,499	$5,447	$(115)		$28,831

(*)Elimination of the fair value of AFG’s investment in CLOs and related accrued interest.

CONDENSED CONSOLIDATING STATEMENT OF EARNINGS

Before CLOConsolidation (a) · ManagedInvestmentEntities · Consol.Entries · ConsolidatedAs Reported
Revenues:
Property and casualty insurance net earned premiums	$1,732	$—	$—		$1,732
Net investment income	168	—	(9)	(b)	159
Realized gains (losses) on securities	31	—	—		31
Income of managed investment entities:
Investment income	—	100	—		100
Gain (loss) on change in fair value of assets/liabilities	—	17	(2)	(b)	15
Other income	50	—	(4)	(c)	46
Total revenues	1,981	117	(15)		2,083
Costs and Expenses:
Insurance benefits and expenses	1,549	—	—		1,549
Expenses of managed investment entities	—	117	(15)	(b)(c)	102
Interest charges on borrowed money and other expenses	97	—	—		97
Total costs and expenses	1,646	117	(15)		1,748
Earnings before income taxes	335	—	—		335
Provision for income taxes	72	—	—		72
Net earnings	$263	$—	$—		$263
Revenues:
Property and casualty insurance net earned premiums	$1,623	$—	$—		$1,623
Net investment income	168	—	—	(b)	168
Realized gains (losses) on securities	27	—	—		27
Income of managed investment entities:
Investment income	—	93	—		93
Gain (loss) on change in fair value of assets/liabilities	—	(1)	(5)	(b)	(6)
Other income	29	—	(5)	(c)	24
Total revenues	1,847	92	(10)		1,929
Costs and Expenses:
Insurance benefits and expenses	1,413	—	—		1,413
Expenses of managed investment entities	—	92	(10)	(b)(c)	82
Interest charges on borrowed money and other expenses	88	—	—		88
Total costs and expenses	1,501	92	(10)		1,583
Earnings before income taxes	346	—	—		346
Provision for income taxes	70	—	—		70
Net earnings	$276	$—	$—		$276

(a)Includes income of $9 million in the fourth quarter of 2023 and less than $1 million in the fourth quarter of 2022, representing the change in fair value of AFG’s CLO investments and $4 million and $5 million of income in the fourth quarter of 2023 and 2022, respectively, in CLO management fees earned.

(b)Elimination of the change in fair value of AFG’s investments in the CLOs, including $11 million and $5 million in the fourth quarter of 2023 and 2022, respectively, in distributions recorded as interest expense by the CLOs.

CONDENSED CONSOLIDATING STATEMENT OF EARNINGS - CONTINUED

Before CLOConsol. (a) · ManagedInvestmentEntities · Consol.Entries · ConsolidatedAs Reported
Revenues:
Property and casualty insurance net earned premiums	$6,531	$—	$—		$6,531
Net investment income	769	—	(27)	(b)	742
Realized gains (losses) on:
Securities	(36)	—	—		(36)
Subsidiaries	(4)	—	—		(4)
Income of managed investment entities:
Investment income	—	421	—		421
Gain (loss) on change in fair value of assets/liabilities	—	29	(2)	(b)	27
Other income	162	—	(16)	(c)	146
Total revenues	7,422	450	(45)		7,827
Costs and Expenses:
Insurance benefits and expenses	5,968	—	—		5,968
Expenses of managed investment entities	—	450	(45)	(b)(c)	405
Interest charges on borrowed money and other expenses	381	—	—		381
Total costs and expenses	6,349	450	(45)		6,754
Earnings before income taxes	1,073	—	—		1,073
Provision for income taxes	221	—	—		221
Net earnings	$852	$—	$—		$852
Revenues:
Property and casualty insurance net earned premiums	$6,085	$—	$—		$6,085
Net investment income	707	—	10	(b)	717
Realized gains (losses) on securities	(116)	—	—		(116)
Income of managed investment entities:
Investment income	—	268	—		268
Gain (loss) on change in fair value of assets/liabilities	—	(2)	(29)	(b)	(31)
Other income	134	—	(17)	(c)	117
Total revenues	6,810	266	(36)		7,040
Costs and Expenses:
Insurance benefits and expenses	5,347	—	—		5,347
Expenses of managed investment entities	—	265	(35)	(b)(c)	230
Interest charges on borrowed money and other expenses	340	—	—		340
Total costs and expenses	5,687	265	(35)		5,917
Earnings before income taxes	1,123	1	(1)		1,123
Provision for income taxes	225	—	—		225
Net earnings	$898	$1	$(1)		$898

(a)Includes income of $27 million in 2023 and a loss of $10 million in 2022, representing the change in fair value of AFG’s CLO investments and $16 million and $17 million of income in 2023 and 2022, respectively, in CLO management fees earned.

(b)Elimination of the change in fair value of AFG’s investments in the CLOs, including $29 million and $18 million in 2023 and 2022, respectively, in distributions recorded as interest expense by the CLOs.

CONDENSED CONSOLIDATING STATEMENT OF EARNINGS - CONTINUED

Before CLOConsol. (a) · ManagedInvestmentEntities · Consol.Entries · ConsolidatedAs Reported
Revenues:
Property and casualty insurance net earned premiums	$5,404	$—	$—		$5,404
Net investment income	750	—	(20)	(b)	730
Realized gains (losses) on:
Securities	110	—	—		110
Subsidiaries	4	—	—		4
Income of managed investment entities:
Investment income	—	181	—		181
Gain (loss) on change in fair value of assets/liabilities	—	3	7	(b)	10
Other income	129	—	(16)	(c)	113
Total revenues	6,397	184	(29)		6,552
Costs and Expenses:
Insurance benefits and expenses	4,704	—	—		4,704
Expenses of managed investment entities	—	183	(28)	(b)(c)	155
Interest charges on borrowed money and other expenses	358	—	—		358
Total costs and expenses	5,062	183	(28)		5,217
Earnings from continuing operations before income taxes	1,335	1	(1)		1,335
Provision for income taxes	254	—	—		254
Net earnings from continuing operations	1,081	1	(1)		1,081
Net earnings from discontinued operations	914	—	—		914
Net earnings	$1,995	$1	$(1)		$1,995

(a)Includes income of $20 million representing the change in fair value of AFG’s CLO investments and $16 million of income in CLO management fees earned.

(b)Elimination of the change in fair value of AFG’s investments in the CLOs, including $12 million in distributions recorded as interest expense by the CLOs.

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