# AMERICAN FINANCIAL GROUP INC (AFG) FY 2024 MD&A Verbatim Item 7 Management's Discussion and Analysis from AMERICAN FINANCIAL GROUP INC's 10-K for fiscal year 2024. SEC filing source: https://www.sec.gov/Archives/edgar/data/1042046/000104204625000011/afg-20241231.htm Accession: 0001042046-25-000011 Filing date: 2025-02-25 Report date: 2024-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Company profile: /company/AFG/ All MD&A years: /company/AFG/mda/ Previous year: /company/AFG/mda/fy2023/ (FY 2023) Next year: /company/AFG/mda/fy2025/ (FY 2025) Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations [[GREPCENT_TABLE]] [["INDEX TO MD&A"],["","Page","","","Page"],["Objective","30","","Results of Operations","47"],["Overview","30","","General","47"],["Critical Accounting Policies","31","","Results of Operations \u2014 Fourth Quarter","49"],["Liquidity and Capital Resources","31","","Segmented Statement of Earnings","49"],["Ratios","31","","Property and Casualty Insurance","50"],["Condensed Consolidated Cash Flows","32","","Holding Company, Other and Unallocated","59"],["Parent and Subsidiary Liquidity","33","","Results of Operations \u2014 Full Year","62"],["Condensed Parent Only Cash Flows","34","","Segmented Statement of Earnings","62"],["Off-Balance Sheet Arrangements","35","","Property and Casualty Insurance","64"],["Investments","35","","Holding Company, Other and Unallocated","74"],["Uncertainties","38","","Recent Accounting Standards","77"],["Managed Investment Entities","44"]] [[/GREPCENT_TABLE]] OBJECTIVE The objective of Management’s Discussion and Analysis is to provide a discussion and analysis of the financial statements and other statistical data that management believes will enhance the understanding of AFG’s financial condition, changes in financial condition and results of operations. The tables and narrative that follow are presented in a manner that is consistent with the information that AFG’s management uses to make operational decisions and allocate capital resources. They are provided to demonstrate the nature of the transactions and events that could impact AFG’s financial results. This discussion should be read in conjunction with the financial statements beginning on page F-1. OVERVIEW Financial Condition AFG is organized as a holding company with almost all of its operations being conducted by subsidiaries. AFG, however, has continuing cash needs for administrative expenses, the payment of principal and interest on borrowings, shareholder dividends, and taxes. Therefore, certain analyses are most meaningfully presented on a parent only basis while others are best done on a total enterprise basis. In addition, because its businesses are financial in nature, AFG does not prepare its consolidated financial statements using a current-noncurrent format. Consequently, certain traditional ratios and financial analysis tests are not meaningful. Results of Operations Through the operations of its subsidiaries, AFG is engaged primarily in property and casualty insurance, focusing on specialized commercial products for businesses. AFG reported net earnings of $255 million ($3.03 per share, diluted) for the fourth quarter of 2024 compared to $263 million ($3.13 per share, diluted) in the fourth quarter of 2023. Higher net investment income was more than offset by net realized losses on securities in the fourth quarter of 2024 compared to net realized gains on securities in the fourth quarter of 2023 and lower underwriting profit. Full year 2024 net earnings were $887 million ($10.57 per share, diluted) compared to $852 million ($10.05 per share, diluted) in 2023. The year-over-year increase was due primarily to the impact on net investment income of higher yields on fixed maturity investments coupled with the impact of net realized losses on securities in 2023. These items were partially offset by lower net investment income from AFG’s alternative investment portfolio and lower underwriting profit. Outlook Management expects continued premium growth and strong underwriting results in the ongoing generally favorable property and casualty insurance market. In addition, management anticipates the deployment of cash during the elevated 30 Table of Contents interest rate environment (since early 2022) will continue to have a positive impact on investment income on fixed maturity investments in 2025. AFG’s financial condition, results of operations and cash flows are impacted by the economic, legal and regulatory environment. Economic inflation, social inflation and other economic conditions may impact premium levels, loss cost trends and investment returns. For a more comprehensive list of risks, see “Item 1A — Risk Factors.” Management believes that AFG’s strong financial position and current liquidity and capital at its subsidiaries will give AFG the flexibility to continue to effectively address and respond to anticipated and unanticipated challenges. AFG’s insurance subsidiaries continue to have capital at or in excess of the levels required by ratings agencies in order to maintain their current ratings, and the parent company does not have any near-term debt maturities. CRITICAL ACCOUNTING POLICIES Significant accounting policies are summarized in Note A — “Accounting Policies” to the financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that can have a significant effect on amounts reported in the financial statements. As more information becomes known, these estimates and assumptions change and, thus, impact amounts reported in the future. The areas where management believes the degree of judgment required to determine amounts recorded in the financial statements is most significant are as follows: •the valuation of investments, including the determination of impairment allowances, •the establishment of insurance reserves, especially asbestos and environmental-related reserves, •the recoverability of reinsurance, and •the establishment of asbestos and environmental liabilities of former railroad and manufacturing operations. See “Liquidity and Capital Resources — Uncertainties” for a discussion of insurance reserves, recoverables from reinsurers and contingencies related to APU Consolidated’s former operations and “Liquidity and Capital Resources — Investments” for a discussion of the allowance for credit losses (impairments) on investments. LIQUIDITY AND CAPITAL RESOURCES Ratios AFG’s debt to total capital ratio on a consolidated basis is shown below (dollars in millions). Management intends to maintain the ratio of debt to capital at or below 30% and intends to maintain the capital of its significant insurance subsidiaries at or above levels currently indicated by rating agencies as appropriate for the current ratings. [[GREPCENT_TABLE]] [["","","","December 31,"],["","2024","","2023"],["Principal amount of long-term debt","","","$","1,498","","","$","1,498"],["Total capital","","","6,204","","","6,075"],["Ratio of debt to total capital:"],["Including subordinated debt","","","24.1","%","","24.7","%"],["Excluding subordinated debt","","","13.3","%","","13.5","%"]] [[/GREPCENT_TABLE]] The ratio of debt to total capital is a non-GAAP measure that management believes is useful for investors, analysts and ratings agencies to evaluate AFG’s financial strength and liquidity and to provide insight into how AFG finances its operations. The ratio is calculated by dividing the principal amount of AFG’s long-term debt by its total capital, which includes long-term debt and shareholders’ equity (excluding accumulated other comprehensive income (loss), net of tax). In addition, maintaining a ratio of debt, excluding subordinated debt and debt secured by real estate (if any), to total capital of 35% or lower is a financial covenant in AFG’s bank credit facility. The NAIC’s model law for risk-based capital (“RBC”) applies to property and casualty companies. RBC formulas determine the amount of capital that an insurance company needs so that it has an acceptable expectation of not becoming financially impaired. At December 31, 2024, the capital ratios of all AFG insurance companies exceeded the RBC requirements. 31 Table of Contents Condensed Consolidated Cash Flows AFG’s principal sources of cash include insurance premiums, income from its investment portfolio and proceeds from the maturities, redemptions and sales of investments. Insurance premiums in excess of acquisition expenses and operating costs are invested until they are needed to meet policyholder obligations or made available to the parent company through dividends to cover debt obligations and corporate expenses, and to provide returns to shareholders through share repurchases and dividends. Cash flows from operating, investing and financing activities as detailed in AFG’s Consolidated Statement of Cash Flows are shown below (in millions): [[GREPCENT_TABLE]] [["","Year ended December 31,"],["","2024","","2023","","2022"],["Net cash provided by operating activities","$","1,152","","","$","1,970","","","$","1,153"],["Net cash provided by (used in) investing activities","95","","","414","","","(1,051)"],["Net cash used in financing activities","(1,066)","","","(2,031)","","","(1,361)"],["Net change in cash and cash equivalents","$","181","","","$","353","","","$","(1,259)"]] [[/GREPCENT_TABLE]] Net Cash Provided by Operating Activities   AFG’s property and casualty insurance operations typically produce positive net operating cash flows as premiums collected and investment income exceed policy acquisition costs, claims payments and operating expenses. AFG’s net cash provided by operating activities is impacted by the level and timing of property and casualty premiums, claim and expense payments and recoveries from reinsurers. Cash flows provided by operating activities also include the activity of AFG’s managed investment entities (collateralized loan obligations (“CLO”)) other than those activities included in investing or financing activities. The changes in the assets and liabilities of the managed investment entities included in operating activities reduced cash flows from operating activities by $80 million in 2024, increased cash flows from operating activities by $305 million in 2023 and reduced cash flows from operating activities by $183 million in 2022, resulting in a $385 million decrease in cash flows from operating activities in 2024 compared to 2023 and a $488 million increase in cash flows from operating activities in 2023 compared to 2022. As discussed in Note A — “Accounting Policies — Managed Investment Entities” to the financial statements, AFG has no right to use the CLO assets and no obligation to pay the CLO liabilities and such assets and liabilities are shown separately in AFG’s Balance Sheet. Excluding the impact of the managed investment entities, net cash provided by operating activities was $1.23 billion, $1.67 billion and $1.34 billion in 2024, 2023 and 2022, respectively. Net Cash Provided by (Used in) Investing Activities   AFG’s investing activities consist primarily of the investment of funds provided by its property and casualty businesses. Investing activities also include the purchase and disposal of managed investment entity investments, which are presented separately in AFG’s Balance Sheet. Net investment activity in the managed investment entities was a $377 million source of cash in 2024 compared to $762 million in 2023, resulting in a $385 million decrease in net cash provided by investing activities in 2024 compared to 2023. See Note A — “Accounting Policies — Managed Investment Entities” and Note G — “Managed Investment Entities” to the financial statements. Investing activities for 2024 include the fourth quarter acquisitions of an insurance agency and a consulting business for $9 million in cash. Investing activities for 2023 include the July 2023 acquisition of Crop Risk Services (“CRS”) for $234 million in cash. Excluding these acquisitions and the activity of the managed investment entities, investing activities resulted in uses of cash of $273 million in 2024 and $114 million in 2023. Net cash provided by investing activities was $414 million in 2023 compared to net cash used by investing activities of $1.05 billion in 2022, an increase in cash provided by investing activities of $1.47 billion. Net investment activity in the managed investment entities was a $762 million source of cash in 2023 compared to a $180 million use of cash in 2022, resulting in a $942 million increase in net cash provided by investing activities in 2023 compared to 2022. Excluding the acquisition of CRS in 2023 and the activity of the managed investment entities, investing activities resulted in uses of cash of $114 million in 2023 and $871 million in 2022, reflecting the opportunistic investment of cash on hand in the property and casualty operations during the rising interest rate environment in 2022. Net Cash Used In Financing Activities   AFG’s financing activities consist primarily of issuances and retirements of long-term debt, issuances and repurchases of common stock and dividend payments. Net cash used in financing activities was $1.07 billion in 2024 compared to $2.03 billion in 2023, a decrease of $965 million. AFG paid cash dividends totaling $788 million in 2024 compared to $684 million in 2023, resulting in a $104 million increase in net cash used in financing activities in 2024 compared to 2023. There were no debt retirements in 2024 compared to $21 million in debt retirements in 2023. In 2024, AFG did not repurchase any of its Common Stock compared to repurchases of $213 million in 2023. Financing activities also include issuances and retirements of managed investment entity liabilities, which are nonrecourse to AFG and presented separately in AFG’s Balance Sheet. Retirements of managed investment entity liabilities exceeded issuances by $295 million in 2024 compared to $1.13 billion in 2023, resulting in an $833 million 32 Table of Contents decrease in net cash used in financing activities in 2024 compared to 2023. See Note A — “Accounting Policies — Managed Investment Entities” and Note G — “Managed Investment Entities” to the financial statements. Net cash used in financing activities was $2.03 billion in 2023 compared to $1.36 billion in 2022, an increase of $670 million. Debt retirements were a $21 million use of cash in 2023 compared to $477 million in 2022, a decrease of $456 million. In 2023, AFG repurchased $213 million of its Common Stock compared to $11 million in 2022, resulting in a $202 million increase in net cash used in financing activities in 2023 compared to 2022. AFG paid cash dividends totaling $684 million in 2023 compared to $1.21 billion in 2022, resulting in a $529 million decrease in net cash used in financing activities in 2023 compared to 2022. Retirements of managed investment entity liabilities exceeded issuances by $1.13 billion in 2023 compared to issuances exceeding retirements by $324 million in 2022, resulting in a $1.45 billion increase in net cash used in financing activities in 2023 compared to 2022. Parent and Subsidiary Liquidity Parent Holding Company Liquidity   Management believes AFG has sufficient resources to meet its liquidity requirements. If funds generated from operations, including dividends, tax payments and borrowings from subsidiaries, are insufficient to meet fixed charges in any period, AFG would be required to utilize parent company cash and investments or to generate cash through borrowings, sales of other assets, or similar transactions. AFG’s operations continue to generate significant excess capital for future returns of capital to shareholders in the form of regular and special cash dividends and through opportunistic share repurchases or to be deployed into its property and casualty businesses as management identifies the potential for profitable organic growth, and opportunities to expand through acquisitions of established businesses or start-ups that meet target return thresholds. During 2024, AFG paid special cash dividends totaling $545 million ($2.50 per share in February and $4.00 per share in November). During 2023, AFG repurchased 1,872,544 shares of its Common Stock for $213 million and paid special cash dividends totaling $466 million ($4.00 per share in February and $1.50 per share in November). AFG may, at any time and from time to time, seek to retire or purchase its outstanding debt through cash purchases or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as management may determine, and will depend on prevailing market conditions, AFG’s liquidity requirements, contractual restrictions and other factors. During 2023, AFG repurchased $23 million principal amount of its senior notes for $21 million cash. During 2022, AFG repurchased 89,368 shares of its Common Stock for $11 million and paid special cash dividends totaling $1.02 billion ($2.00 per share in March, $8.00 per share in May and $2.00 per share in November). In 2022, AFG repurchased $472 million principal amount of its senior notes for $477 million cash. All debentures and notes issued by AFG are rated investment grade by two nationally recognized rating agencies. AFG maintains a shelf registration statement under which it can offer additional equity or debt securities. The shelf registration provides AFG with flexibility to access the capital markets from time to time as market and other conditions permit. At December 31, 2024, AFG (parent) held approximately $389 million in cash and investments. Management believes that AFG’s cash balances are held at stable banking institutions, although the amounts of many of these deposits are in excess of federally insured balances. AFG can borrow up to $450 million under its revolving credit facility, which expires in June 2028. Amounts borrowed under this agreement bear interest at rates ranging from 1.00% to 1.75% (based on AFG’s credit rating, currently 1.25%) over a SOFR-based floating rate. There were no borrowings under AFG’s credit facility, or under any other parent company short-term borrowing arrangements, during 2024 or 2023. Under a tax allocation agreement with AFG, all 80% (or more) owned U.S. subsidiaries generally pay taxes to (or recover taxes from) AFG based on each subsidiary’s contribution to amounts due under AFG’s consolidated tax return. Subsidiary Liquidity   The liquidity requirements of AFG’s insurance subsidiaries relate primarily to the policyholder claims and underwriting expenses and payments of dividends and taxes to AFG. Historically, cash flows from premiums and investment income have generally provided more than sufficient funds to meet these requirements. Funds received in excess of cash requirements are generally invested in marketable securities. In addition, the insurance subsidiaries generally hold a significant amount of highly liquid, short duration investments. 33 Table of Contents For statutory accounting purposes, equity securities of non-affiliates are generally carried at fair value. At December 31, 2024, AFG’s insurance companies owned equity securities with a fair value of $751 million. Decreases in market prices could adversely affect the insurance group’s capital, potentially impacting the amount of dividends available or necessitating a capital contribution. Conversely, increases in market prices could have a favorable impact on the group’s dividend-paying capability. Property and casualty reserves for unpaid losses and loss adjustment expenses were $14.18 billion at December 31, 2024 and include case reserves and claims incurred but not reported (“IBNR”). The ultimate amount to be paid to settle reserves is an estimate, subject to significant uncertainty. Actual payments to settle claims cannot be determined until a settlement is reached with the claimant. Final claim settlements may vary significantly from estimated amounts. See “Uncertainties — Property and Casualty Insurance Reserves” below. The timing of future payments for the next twelve months and beyond could vary materially from historical payment patterns due to, among other things, changes in claim reporting and payment patterns and large unanticipated settlements. AFG believes its insurance subsidiaries maintain sufficient liquidity to pay claims and underwriting expenses. In addition, these subsidiaries have sufficient capital to meet commitments in the event of unforeseen reserve deficiencies, inadequate premium rates or reinsurer insolvencies. Management believes that the capital levels in AFG’s insurance subsidiaries are adequate to maintain its business and rating agency ratings. Nonetheless, changes in statutory accounting rules, changes in rating agency measures, significant declines in the fair value of the insurance subsidiaries’ investment portfolios or significant ratings downgrades on these investments, could create a need for additional capital. Condensed Parent Only Cash Flows AFG’s parent holding company only condensed cash flows from operating, investing and financing activities are shown below (in millions): [[GREPCENT_TABLE]] [["","Year ended December 31,"],["","2024","","2023","","2022"],["Net cash provided by operating activities","$","712","","","$","719","","","$","327"],["Net cash provided by investing activities","72","","","225","","","992"],["Net cash used in financing activities","(769)","","","(901)","","","(1,683)"],["Net change in cash and cash equivalents","$","15","","","$","43","","","$","(364)"]] [[/GREPCENT_TABLE]] Parent Net Cash Provided by Operating Activities   Parent holding company cash flows from operating activities consist primarily of dividends and tax payments received from AFG’s insurance subsidiaries, reduced by tax payments to the IRS and holding company interest and other expenses. Parent holding company net cash provided by operating activities was $712 million in 2024 compared to $719 million in 2023 and $327 million in 2022. The $7 million decrease in net cash provided by operating activities in 2024 as compared to 2023 and the $392 million increase in net cash provided by operating activities in 2023 as compared to 2022 were due primarily to higher cash dividends received from subsidiaries in 2023 compared to the other periods. Parent Net Cash Provided by Investing Activities   Parent holding company investing activities consist of capital contributions to and returns of capital from subsidiaries and parent company investment activity. Parent holding company net cash provided by investing activities was $72 million in 2024, $225 million in 2023 and $992 million in 2022. The $153 million decrease in net cash provided by investing activities in 2024 as compared to 2023 was due primarily to lower balances of invested assets. The $767 million decrease in net cash provided by investing activities in 2023 as compared to 2022 was due to the increase in capital contributions to subsidiaries to fund the purchase of CRS in July 2023 and lower balances of invested assets. Parent Net Cash Used in Financing Activities   Parent company financing activities consist primarily of the issuance and retirement of long-term debt, repurchases of AFG Common Stock, dividends to shareholders, and, to a lesser extent, proceeds from employee stock option exercises. Significant long-term debt and common stock transactions are discussed above under “Parent Holding Company Liquidity.” Parent holding company net cash used in financing activities was $769 million in 2024 compared to $901 million in 2023 and $1.68 billion in 2022. The $132 million decrease in net cash used in financing activities in 2024 as compared to 2023 reflects no repurchases of common stock in 2024 compared to repurchases of common stock of $213 million in 2023, partially offset by higher dividends paid to shareholders (due primarily to special dividends of $6.50 per share in 2024 compared to special dividends of $5.50 per share in 2023). The $782 million decrease in net cash used in financing activities in 2023 as compared to 2022 reflects lower dividends paid to shareholders (due primarily to special dividends of $5.50 per share in 2023 compared to special dividends of $12.00 per share in 2022) and lower net retirements of long-term debt in 2023 compared to 2022. 34 Table of Contents Off-Balance Sheet Arrangements See Note O — “Additional Information — Financial Instruments — Unfunded Commitments” to the financial statements. Investments AFG attempts to optimize investment income while building the value of its portfolio, placing emphasis upon total long-term performance. AFG’s investment portfolio at December 31, 2024, contained $10.40 billion in fixed maturity securities classified as available for sale and carried at fair value with unrealized gains and losses included in accumulated other comprehensive income (loss) and $76 million in fixed maturities classified as trading with holding gains and losses included in net investment income. In addition, AFG’s investment portfolio includes $522 million in equity securities carried at fair value with holding gains and losses included in realized gains (losses) on securities and $229 million in equity securities carried at fair value with holding gains and losses included in net investment income. AFG’s investment portfolio also includes $2.28 billion in investments accounted for using the equity method (limited partnerships and similar investments). Under the equity method, AFG records its share of the earnings or losses of the investee based on when it is reported by the investee in its financial statements rather than in the period in which the investee declares a dividend. AFG’s share of the earnings or losses from equity method investments is included in net investment income and is generally recorded on a quarter lag due to the timing of the receipt of the investee’s financial statements. Unrealized gains and losses on AFG’s fixed maturity securities are included in shareholders’ equity after adjustments for deferred income taxes. Fixed income investment funds are generally invested in securities with intermediate-term maturities with an objective of optimizing total return while allowing flexibility to react to changes in market conditions. At December 31, 2024, the average life of AFG’s fixed maturities was about 4.2 years. Fair values for AFG’s portfolio are determined by AFG’s internal investment professionals using data from nationally recognized pricing services, non-binding broker quotes and other market information. Fair values of equity securities are determined by published closing prices when available. For AFG’s fixed maturity portfolio, approximately 88% was priced using pricing services at December 31, 2024 and 4% was priced using non-binding broker quotes. When prices obtained for the same security vary, AFG’s internal investment professionals select the price they believe is most indicative of an exit price. For additional information on determination of fair value, see Note D — “Fair Value Measurements” to the financial statements. The pricing services use a variety of observable inputs to estimate fair value of fixed maturities that do not trade on a daily basis. Based upon information provided by the pricing services, these inputs include, but are not limited to, recent reported trades, benchmark yields, issuer spreads, bids or offers, reference data, and measures of volatility. Included in the pricing of mortgage-backed securities (“MBS”) are estimates of the rate of future prepayments and defaults of principal over the remaining life of the underlying collateral. Due to the lack of transparency in the process that brokers use to develop prices, valuations that are based on brokers’ prices are classified as Level 3 in the GAAP hierarchy unless the price can be corroborated, for example, by comparison to similar securities priced using observable inputs. Valuation techniques utilized by pricing services and prices obtained from external sources are reviewed by AFG’s internal investment professionals who are familiar with the securities being priced and the markets in which they trade to ensure the fair value determination is representative of an exit price. To validate the appropriateness of the prices obtained, these investment managers consider widely published indices (as benchmarks), recent trades, changes in interest rates, general economic conditions and the credit quality of the specific issuers. In addition, AFG communicates directly with pricing services regarding the methods and assumptions used in pricing, including verifying, on a test basis, the inputs used by the services to value specific securities. In general, the fair value of AFG’s fixed maturity investments is inversely correlated to changes in interest rates. The following table demonstrates the sensitivity of such fair values to reasonably likely changes in interest rates by illustrating the estimated effect on AFG’s fixed maturity portfolio that an immediate increase of 100 basis points in the interest rate yield curve would have had at December 31, 2024 (dollars in millions). Effects of increases or decreases from the 100 basis points illustrated would be approximately proportional. [[GREPCENT_TABLE]] [["Fair value of fixed maturity portfolio","$","10,474"],["Percentage impact on fair value of 100 bps increase in interest rates","(3.0","%)"],["Pretax impact on fair value of fixed maturity portfolio","$","(314)"]] [[/GREPCENT_TABLE]] 35 Table of Contents Approximately 94% of the fixed maturities held by AFG at December 31, 2024, were rated “investment grade” (credit rating of AAA to BBB) by nationally recognized rating agencies, 3% were rated “non-investment grade” and 3% were not rated. Investment grade securities generally bear lower yields and lower degrees of risk than those that are unrated and non-investment grade. Management believes that the high-quality investment portfolio should generate a stable and predictable investment return. AFG has approximately $75 million of direct exposure to office commercial real estate through property ownership, mortgages or equity method investments. AFG’s fixed maturity portfolio includes securities (the majority of which are AAA-rated) with a carrying value of approximately $450 million that have minimal exposure to office commercial real estate. Summarized information for the unrealized gains and losses recorded in AFG’s Balance Sheet at December 31, 2024, is shown in the following table (dollars in millions). Approximately $345 million of available for sale fixed maturity securities had no unrealized gains or losses at December 31, 2024. [[GREPCENT_TABLE]] [["","Securities With Unrealized Gains","","Securities With Unrealized Losses"],["Available for Sale Fixed Maturities"],["Fair value of securities","$","4,119","","","$","5,934"],["Amortized cost of securities, net of allowance for expected credit losses","$","4,021","","","$","6,287"],["Gross unrealized gain (loss)","$","98","","","$","(353)"],["Fair value as % of amortized cost","102","%","","94","%"],["Number of security positions","750","","","1,340"],["Number individually exceeding $2 million gain or loss","1","","","35"],["Concentration of gains (losses) by type or industry (exceeding 5% of unrealized):"],["Mortgage-backed securities","$","22","","","$","(154)"],["Other asset-backed securities","19","","","(69)"],["Banking","10","","","(13)"],["Collateralized loan obligations","10","","","(12)"],["Asset managers","8","","","(15)"],["States and municipalities","3","","","(49)"],["Percentage rated investment grade","94","%","","97","%"]] [[/GREPCENT_TABLE]] The table below sets forth the scheduled maturities of AFG’s available for sale fixed maturity securities at December 31, 2024, based on their fair values. Securities with sinking funds are reported at average maturity. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers. [[GREPCENT_TABLE]] [["","Securities With Unrealized Gains","","Securities With Unrealized Losses"],["Maturity"],["One year or less","1","%","","7","%"],["After one year through five years","26","%","","25","%"],["After five years through ten years","15","%","","11","%"],["After ten years","1","%","","3","%"],["","43","%","","46","%"],["Collateralized loan obligations and other asset-backed securities (average life of approximately 3 years)","42","%","","30","%"],["Mortgage-backed securities (average life of approximately 6 years)","15","%","","24","%"],["","100","%","","100","%"]] [[/GREPCENT_TABLE]] 36 Table of Contents The table below (dollars in millions) summarizes the unrealized gains and losses on fixed maturity securities by dollar amount: [[GREPCENT_TABLE]] [["","Aggregate Fair Value","","Aggregate Unrealized Gain (Loss)","","Fair Value as % of Cost"],["Fixed Maturities at December 31, 2024"],["Securities with unrealized gains:"],["Exceeding $500,000 (32 securities)","$","520","","","$","29","","","106","%"],["$500,000 or less (718 securities)","3,599","","","69","","","102","%"],["","$","4,119","","","$","98","","","102","%"],["Securities with unrealized losses:"],["Exceeding $500,000 (158 securities)","$","1,857","","","$","(236)","","","89","%"],["$500,000 or less (1,182 securities)","4,077","","","(117)","","","97","%"],["","$","5,934","","","$","(353)","","","94","%"]] [[/GREPCENT_TABLE]] The following table (dollars in millions) summarizes the unrealized losses for all securities with unrealized losses by issuer quality and the length of time those securities have been in an unrealized loss position: [[GREPCENT_TABLE]] [["","Aggregate Fair Value","","Aggregate Unrealized Loss","","Fair Value as % of Cost"],["Securities with Unrealized Losses at December 31, 2024"],["Investment grade fixed maturities with losses for:"],["Less than one year (311 securities)","$","1,732","","","$","(22)","","","99","%"],["One year or longer (861 securities)","4,014","","","(317)","","","93","%"],["","$","5,746","","","$","(339)","","","94","%"],["Non-investment grade fixed maturities with losses for:"],["Less than one year (39 securities)","$","46","","","$","(3)","","","94","%"],["One year or longer (129 securities)","142","","","(11)","","","93","%"],["","$","188","","","$","(14)","","","93","%"]] [[/GREPCENT_TABLE]] To evaluate fixed maturities for expected credit losses (impairment), management considers the following: (a)whether the unrealized loss is credit-driven or a result of changes in market interest rates, (b)the extent to which fair value is less than cost basis, (c)cash flow projections received from independent sources, (d)historical operating, balance sheet and cash flow data contained in issuer SEC filings and news releases, (e)near-term prospects for improvement in the issuer and/or its industry, (f)third-party research and communications with industry specialists, (g)financial models and forecasts, (h)the continuity of interest payments, maintenance of investment grade ratings and hybrid nature of certain investments, (i)discussions with issuer management, and (j)ability and intent to hold the investment for a period of time sufficient to allow for anticipated recovery in fair value. Based on its analysis of the factors listed above, management believes AFG will recover its cost basis (net of any allowance) in the fixed maturity securities with unrealized losses and that AFG has the ability to hold the securities until they recover in value and had no intent to sell them at December 31, 2024. Although AFG has the ability to continue holding its fixed maturity investments with unrealized losses, its intent to hold them may change due to deterioration in the issuers’ creditworthiness, decisions to lessen exposure to a particular issuer or industry, asset/liability management decisions, market movements, changes in views about appropriate asset allocation or the desire to offset taxable realized gains. Should AFG’s ability or intent change regarding a particular security, a charge for impairment would likely be required. While it is not possible to accurately predict if or when a specific security will become impaired, increases in the allowance for credit losses could be material to results of operations in future periods. Significant declines in the fair value of AFG’s investment portfolio could have a significant adverse effect on AFG’s liquidity. For information on AFG’s realized gains (losses) on securities, see “Results of Operations — Realized Gains (Losses) on Securities.” 37 Table of Contents Uncertainties As more fully explained in the following paragraphs, management believes that the areas posing the greatest risk of material loss are the adequacy of its insurance reserves and contingencies arising out of its former railroad and manufacturing operations. Property and Casualty Insurance Reserves   Estimating the liability for unpaid losses and loss adjustment expenses (“LAE”) is inherently judgmental and is influenced by factors that are subject to significant variation. Determining the liability is a complex process incorporating input from many areas of the Company including actuarial, underwriting, pricing, claims and operations management. The estimates of liabilities for unpaid claims and for expenses of investigation and adjustment of unpaid claims are based upon: (i) the accumulation of case estimates for losses reported prior to the close of the accounting periods on direct business written (“case reserves”); (ii) estimates received from ceding reinsurers and insurance pools and associations; (iii) estimates of claims incurred but not reported (including possible development on known claims); (iv) estimates (based on experience) of expense for investigating and adjusting claims; and (v) the current state of law and coverage litigation. The process used to determine the total reserve for liabilities involves estimating the ultimate incurred losses and LAE, adjusted for amounts already paid on the claims. The IBNR reserve is derived by estimating the ultimate unpaid reserve liability and subtracting case reserves for loss and LAE. See Note N — “Insurance — Insurance Reserves” to the financial statements for a discussion of the factors considered and actuarial methods used in determining management’s best estimate of the ultimate liability for unpaid losses and LAE. The following table shows (in millions) the breakdown of AFG’s property and casualty insurance reserves between case reserves, IBNR reserves and LAE reserves (estimated amounts required to adjust, record and settle claims, other than the claim payments themselves) at December 31, 2024 and gross written premiums for the year ended December 31, 2024. [[GREPCENT_TABLE]] [["","Gross Loss Reserves"],["","Case","","IBNR","","LAE","","Total Reserves","","Gross Written Premiums"],["Statutory Line of Business"],["Other liability \u2014 occurrence","$","986","","","$","3,839","","","$","795","","","$","5,620","","","$","1,828"],["Workers\u2019 compensation","986","","","1,117","","","347","","","2,450","","","1,359"],["Other liability \u2014 claims made","315","","","721","","","444","","","1,480","","","806"],["Commercial auto/truck liability/medical","445","","","628","","","154","","","1,227","","","777"],["Special property (fire, allied lines, inland marine, earthquake)","714","","","235","","","35","","","984","","","2,990"],["Products liability \u2014 occurrence","107","","","283","","","180","","","570","","","239"],["Commercial multi-peril","201","","","134","","","86","","","421","","","470"],["Other lines","340","","","511","","","169","","","1,020","","","1,703"],["Total Statutory","4,094","","","7,468","","","2,210","","","13,772","","","10,172"],["Adjustments for GAAP:"],["Foreign operations","184","","","173","","","46","","","403","","","370"],["Deferred gains on retroactive reinsurance","\u2014","","","9","","","\u2014","","","9","","","\u2014"],["Loss reserve discounting","(5)","","","\u2014","","","\u2014","","","(5)","","","\u2014"],["Other","\u2014","","","\u2014","","","\u2014","","","\u2014","","","(9)"],["Total Adjustments for GAAP","179","","","182","","","46","","","407","","","361"],["Total GAAP Reserves and Premiums","$","4,273","","","$","7,650","","","$","2,256","","","$","14,179","","","$","10,533"]] [[/GREPCENT_TABLE]] While current factors and reasonably likely changes in variable factors are considered in estimating the liability for unpaid losses and LAE, there is no method or system that can eliminate the risk of actual ultimate results differing from such estimates. Following is a discussion of certain critical variables affecting the estimation of loss reserves of the more significant long-tail lines of business (asbestos and environmental liabilities are separately discussed below). Many other variables may also impact ultimate claim costs. An important assumption underlying reserve estimates is that the cost trends implicitly built into development patterns will continue into the future. However, future results could vary due to an unexpected change in the underlying cost trends. This unexpected change could arise from a variety of sources including a general increase in economic inflation, social inflation, new medical technologies, or other factors such as those listed below in connection with AFG’s largest lines of 38 Table of Contents business. It is not possible to isolate and measure the potential impact of just one of these variables, and future cost trends could be partially impacted by several such variables. However, it is reasonable to address the sensitivity of the reserves to potential impact from changes in these variables by measuring the effect of a possible overall 1% change in future cost trends that may be caused by one or more variables. Utilizing the effect of a 1% change in overall cost trends enables changes greater than 1% to be estimated by extrapolation. Each additional 1% change in the cost trend would increase the effect on net earnings by an amount slightly (about 5%) greater than the effect of the previous 1%. For example, if a 1% change in cost trends in a line of business would change net earnings by $20 million, a 2% change would change net earnings by approximately $41 million. The estimated cumulative adverse impact that a 1% change in cost trends in AFG’s more significant long-tail lines of property and casualty business (exceeding 5% of total reserves) would have on net earnings is shown below (in millions). [[GREPCENT_TABLE]] [["","Effect of 1% Change in Cost Trends"],["Line of business"],["Other liability \u2014 occurrence","$","78"],["Workers\u2019 compensation","69"],["Other liability \u2014 claims made","30"],["Commercial auto/truck liability/medical","18"]] [[/GREPCENT_TABLE]] The judgments and uncertainties surrounding management’s reserve estimation process and the potential for reasonably possible variability in management’s most recent reserve estimates may also be viewed by looking at how recent historical estimates of reserves have developed. The following table shows (dollars in millions) what the impact on AFG’s net earnings would be on the more significant lines of business if the December 31, 2024, reserves (net of reinsurance) were to develop at the same rate as the average development of the most recent five years. [[GREPCENT_TABLE]] [["","5-yr. Average Development (a)(b)","","Net Reserves (b) December 31, 2024","","Effect on Net Earnings (a)(b)"],["Other liability \u2014 occurrence","4.8","%","","$","2,382","","","$","115"],["Workers\u2019 compensation","(5.7","%)","","2,080","","","(118)"],["Other liability \u2014 claims made","(2.2","%)","","1,024","","","(23)"],["Commercial auto/truck liability/medical","2.2","%","","892","","","20"]] [[/GREPCENT_TABLE]] (a)Adverse (favorable), net of tax effect. (b)Excludes asbestos and environmental liabilities. The following discussion describes key assumptions and important variables that affect the estimate of the reserve for loss and LAE of the more significant lines of business and explains what caused them to change from assumptions used in the preceding period. Other Liability — Occurrence This long-tail line of business consists of coverages protecting the insured against legal liability resulting from negligence, carelessness, or a failure to act causing property damage or personal injury to others. Some of the important variables affecting estimation of loss reserves for other liability — occurrence include: •Litigious climate •Unpredictability of judicial decisions regarding coverage issues •Magnitude of jury awards •Outside counsel costs •Timing of claims reporting AFG recorded adverse prior year reserve development of $210 million in 2024, $96 million in 2023 and $109 million in 2022 related to its other liability — occurrence coverage due primarily to continued claim severity increases in excess and umbrella liability coverages. While management applies the actuarial methods discussed in Note N — “Insurance — Insurance Reserves” to the financial statements, more judgment is involved in arriving at the final reserve to be held. For recent accident years, more weight is given to the Bornhuetter-Ferguson method. 39 Table of Contents Workers’ Compensation This long-tail line of business provides coverage to employees who may be injured in the course of employment. Some of the important variables affecting estimation of loss reserves for workers’ compensation include: •Legislative actions and regulatory and legal interpretations •Future medical cost inflation •Economic conditions •Frequency of reopening claims previously closed •Advances in medical equipment and processes •Pace and intensity of employee rehabilitation •Changes in the use of pharmaceutical drugs •Changes in mortality trends for permanently injured workers Approximately 23% and 24% of AFG’s workers’ compensation reserves at December 31, 2024 relate to policies written in Florida and California, respectively. AFG recorded favorable prior year reserve development of $128 million in 2024, $116 million in 2023 and $189 million in 2022, related to its workers’ compensation coverage due to lower than anticipated medical severity. Other Liability — Claims Made This long-tail line of business consists mostly of directors’ and officers’ liability (“D&O”). Some of the important variables affecting estimation of loss reserves for other liability — claims made include: •Litigious climate •Economic conditions •Variability of stock prices •Magnitude of jury awards The general state of the economy and the variability of the stock price of the insured can affect the frequency and severity of shareholder class action suits and other situations that trigger coverage under D&O policies. For example, from 2008 to 2010, economic conditions led to higher frequency of claims, particularly in the D&O policies for small account and not-for-profit organizations. After peaking in 2010, claim frequency decreased and stabilized to near pre-2008 levels until dropping sharply during the pandemic-related shutdowns. Post-pandemic, frequency has increased slightly but has not rebounded to pre-pandemic levels. AFG recorded favorable prior year reserve development of $15 million in 2024, $33 million in 2023 and $24 million in 2022 on its D&O business as claim frequency and severity were less than expected across several prior accident years. Commercial Auto/Truck Liability/Medical This line of business is a mix of coverage protecting the insured against legal liability for property damage or personal injury to others arising from the operation of commercial motor vehicles. The property damage liability exposure is usually short-tail with relatively prompt reporting and settlement of claims. The bodily injury and medical payments exposures are longer-tailed; although the claim reporting is relatively prompt, the final settlement can take longer to achieve. Some of the important variables affecting estimation of loss reserves for commercial auto/truck liability/medical are similar to other liability — occurrence and include: •Magnitude of jury awards •Unpredictability of judicial decisions regarding coverage issues •Litigious climate and trends •Change in frequency of severe accidents •Health care costs and utilization of medical services by injured parties AFG recorded adverse prior year reserve development of $36 million in 2024, $29 million in 2023 and $32 million in 2022 for this line of business due to higher than anticipated claim severity. Recoverables from Reinsurers and Availability of Reinsurance   AFG is subject to credit risk with respect to its reinsurers, as reinsurance contracts do not relieve AFG of its liability to policyholders. To mitigate this risk, substantially all reinsurance is ceded to companies rated “A” or better by S&P or is secured by “funds withheld” or other collateral. The availability and cost of reinsurance are subject to prevailing market conditions, which are beyond AFG’s control and which may affect AFG’s level of business and profitability. Although the cost of certain reinsurance programs may 40 Table of Contents increase, management believes that AFG will be able to maintain adequate reinsurance coverage at acceptable rates without a material adverse effect on AFG’s results of operations. AFG’s gross and net combined ratios are shown in the table below. See Item 1 — Business — “Property and Casualty Insurance Segment — Reinsurance” for more information on AFG’s reinsurance programs. For additional information on the effect of reinsurance on AFG’s historical results of operations see Note N — “Insurance — Reinsurance” to the financial statements. The following table illustrates the effect that purchasing property and casualty reinsurance has had on AFG’s combined ratio over the last three years. [[GREPCENT_TABLE]] [["","2024","","2023","","2022"],["Before reinsurance (gross)","98.2","%","","92.8","%","","90.9","%"],["Effect of reinsurance","(7.0","%)","","(2.4","%)","","(3.6","%)"],["Actual (net of reinsurance)","91.2","%","","90.4","%","","87.3","%"]] [[/GREPCENT_TABLE]] Asbestos and Environmental-related (“A&E”) Insurance Reserves   Asbestos and environmental reserves of the property and casualty group consisted of the following (in millions): [[GREPCENT_TABLE]] [["","December 31,"],["","2024","","2023"],["Asbestos","$","197","","","$","202"],["Environmental","162","","","168"],["A&E reserves, net of reinsurance recoverable","359","","","370"],["Reinsurance recoverable, net of allowance","135","","","128"],["Gross A&E reserves","$","494","","","$","498"]] [[/GREPCENT_TABLE]] Asbestos reserves include claims asserting alleged injuries and damages from exposure to asbestos. Environmental reserves include claims relating to polluted sites. Asbestos claims against manufacturers, distributors or installers of asbestos products were presented under the products liability section of their policies, which typically had aggregate limits that capped an insurer’s liability. In addition, asbestos claims are being presented as “non-products” claims, such as those by installers of asbestos products and by property owners or operators who allegedly had asbestos on their property, under the premises or operations section of their policies. Unlike products exposures, these non-products exposures typically had no aggregate limits, creating greater exposure for insurers. Further, in an effort to seek additional insurance coverage, some insureds with installation activities who have substantially eroded their products coverage are presenting new asbestos claims as non-products operations claims or attempting to reclassify previously settled products claims as non-products claims to restore a portion of previously exhausted products aggregate limits. Approximately 48% of AFG’s net asbestos reserves relate to policies written directly by AFG subsidiaries. Claims from these policies generally are product-oriented claims with only a limited amount of non-products exposures and are dominated by small to mid-sized commercial entities that are mostly regional policyholders with few national target defendants. The remainder is assumed reinsurance business that includes exposures from 1954 to 1983. The asbestos and environmental assumed claims are ceded by various insurance companies under reinsurance treaties. A majority of the individual assumed claims have exposures of less than $100,000 to AFG. Asbestos losses assumed include some of the industry known manufacturers, distributors and installers. Pollution losses include industry known insured names and sites. Establishing reserves for A&E claims relating to policies and participations in reinsurance treaties and former operations is subject to uncertainties that are significantly greater than those presented by other types of claims. For this group of claims, traditional actuarial techniques that rely on historical loss development trends cannot be used and a range of reasonably possible losses cannot be estimated. Case reserves and expense reserves are established by the claims department as specific policies are identified. In addition to the case reserves established for known claims, management establishes additional reserves for claims not yet known or reported and for possible development on known claims. These additional reserves are management’s best estimate based on periodic comprehensive studies and internal reviews adjusted for payments and identifiable changes, supplemented by management’s review of industry information about such claims, with due consideration to individual claim situations. 41 Table of Contents Management believes that estimating the ultimate liability for asbestos claims presents a unique and difficult challenge to the insurance industry due to, among other things, difficulty in predicting the number of future claims, inconsistent court decisions, an increase in bankruptcy filings as a result of asbestos-related liabilities, unresolved issues such as whether coverage exists, novel theories of coverage, how claims are to be allocated among triggered policies and implicated years, whether claimants who exhibit no signs of illness will be successful in pursuing their claims and judicial interpretations that often expand theories of recovery and broaden the scope of coverage. Environmental claims likewise present challenges in prediction, due to uncertainty regarding the interpretation of insurance policies, complexities regarding multi-party involvements at sites, evolving cleanup standards and protracted time periods required to assess the level of cleanup required at contaminated sites. While management believes that AFG’s reserves for A&E claims are a reasonable estimate of ultimate liability for such claims, actual results may vary materially from the amounts currently recorded due to the factors listed above. A 1% variation in loss cost trends, caused by any of the factors previously described, would change net earnings by approximately $28 million. The following factors could impact AFG’s A&E reserves and payments: •There is interest at the state level to attempt to legislatively address asbestos liabilities and the manner in which asbestos claims are resolved. These developments are fluid and could result in piecemeal state-by-state solutions. •The manner by which bankruptcy courts are addressing asbestos liabilities is in flux. •AFG’s insureds may make claims alleging significant non-products exposures. AFG tracks its A&E claims by policyholder. The following table shows, by type of claim, the number of policyholders that did not receive any payments in the calendar year separate from policyholders that did receive a payment. Policyholder counts represent policies written by AFG subsidiaries and do not include assumed reinsurance. [[GREPCENT_TABLE]] [["","2024","","2023","","2022"],["Number of policyholders with no indemnity payments:"],["Asbestos","85","","","107","","","103"],["Environmental","159","","","137","","","129"],["","244","","","244","","","232"],["Number of policyholders with indemnity payments:"],["Asbestos","51","","","47","","","45"],["Environmental","18","","","23","","","25"],["","69","","","70","","","70"],["Total","313","","","314","","","302"]] [[/GREPCENT_TABLE]] Amounts paid (net of reinsurance recoveries) for asbestos and environmental claims, including LAE, were as follows (in millions): [[GREPCENT_TABLE]] [["","2024","","2023","","2022"],["Asbestos","$","6","","","$","13","","","$","12"],["Environmental","5","","","2","","","11"],["Total","$","11","","","$","15","","","$","23"]] [[/GREPCENT_TABLE]] The survival ratio is a measure often used by industry analysts to compare A&E reserves’ strength among companies. This ratio is typically calculated by dividing reserves for A&E exposures by the three-year average of paid losses, and therefore measures the number of years that it would take to pay off current reserves based on recent average payments. Because this ratio can be significantly impacted by a number of factors such as loss payout variability, caution should be exercised in attempting to determine reserve adequacy based simply on the survival ratio. At December 31, 2024, the property and casualty insurance segment’s three-year survival ratios compare favorably with industry survival ratios published by A.M. Best (as of December 31, 2023, and adjusted for several large portfolio transfers) as detailed in the following table: [[GREPCENT_TABLE]] [["","Property and Casualty Insurance Reserves Three-Year Survival Ratio (Times Paid Losses)"],["","Asbestos","","Environmental","","Total A&E"],["AFG (12/31/2024)","19.4","","","26.2","","","22.0"],["Industry (12/31/2023)","8.7","","","7.5","","","8.4"]] [[/GREPCENT_TABLE]] 42 Table of Contents During the third quarter of 2024, AFG completed an in-depth internal review of its asbestos and environmental exposures relating to the run-off operations of its property and casualty insurance segment. AFG annually conducts a comprehensive review of its asbestos and environmental reserves. In connection with these reviews, AFG engages with outside counsel and, as appropriate, engineering and consulting firms and specialty actuarial firms. During the 2024 internal review, no new trends were identified and recent claims activity was generally consistent with AFG’s expectations resulting from its in-depth internal reviews in the prior three years, and the most recent external study in 2020. As a result, and consistent with the internal review in the third quarter of 2023, the 2024 review resulted in no net change to AFG’s property and casualty insurance segment’s asbestos and environmental reserves. Contingencies related to Subsidiaries’ Former Operations   The A&E reviews and external study discussed above also encompassed reserves for various environmental and occupational injury and disease claims and other contingencies arising out of the railroad operations disposed of by APU Consolidated’s predecessor and certain manufacturing operations disposed of by APU Consolidated and its subsidiaries and by Great American Financial Resources, Inc. AFG recorded pretax special non-core A&E charges of $14 million in 2024 and $15 million in 2023 to increase liabilities for those operations as a result of the internal reviews. Liabilities for claims and contingencies arising from these former railroad and manufacturing operations totaled $91 million at December 31, 2024. For a discussion of the uncertainties in determining the ultimate liability, see Note M — “Contingencies” to the financial statements. 43 Table of Contents MANAGED INVESTMENT ENTITIES Accounting standards require AFG to consolidate its investments in collateralized loan obligation (“CLO”) entities that it manages and owns an interest in (in the form of debt). See Note A — “Accounting Policies — Managed Investment Entities” and Note G — “Managed Investment Entities” to the financial statements. The effect of consolidating these entities is shown in the tables below (in millions). The “Before CLO Consolidation” columns include AFG’s investment and earnings in the CLOs on an unconsolidated basis. CONDENSED CONSOLIDATING BALANCE SHEET [[GREPCENT_TABLE]] [["","Before CLO Consolidation","","Managed Investment Entities","","Consol. Entries","","","","Consolidated As Reported"],["December 31, 2024"],["Assets:"],["Cash and investments","$","16,026","","","$","\u2014","","","$","(174)","","","(*)","","$","15,852"],["Assets of managed investment entities","\u2014","","","4,140","","","\u2014","","","","","4,140"],["Other assets","10,845","","","\u2014","","","(1)","","","(*)","","10,844"],["Total assets","$","26,871","","","$","4,140","","","$","(175)","","","","","$","30,836"],["Liabilities:"],["Unpaid losses and loss adjustment expenses and unearned premiums","$","17,763","","","$","\u2014","","","$","\u2014","","","","","$","17,763"],["Liabilities of managed investment entities","\u2014","","","4,091","","","(126)","","","(*)","","3,965"],["Long-term debt and other liabilities","4,642","","","\u2014","","","\u2014","","","","","4,642"],["Total liabilities","22,405","","","4,091","","","(126)","","","","","26,370"],["Shareholders\u2019 equity:"],["Common Stock and Capital surplus","1,495","","","49","","","(49)","","","","","1,495"],["Retained earnings","3,211","","","\u2014","","","\u2014","","","","","3,211"],["Accumulated other comprehensive income (loss), net of tax","(240)","","","\u2014","","","\u2014","","","","","(240)"],["Total shareholders\u2019 equity","4,466","","","49","","","(49)","","","","","4,466"],["Total liabilities and shareholders\u2019 equity","$","26,871","","","$","4,140","","","$","(175)","","","","","$","30,836"],["December 31, 2023"],["Assets:"],["Cash and investments","$","15,438","","","$","\u2014","","","$","(175)","","","(*)","","$","15,263"],["Assets of managed investment entities","\u2014","","","4,484","","","\u2014","","","","","4,484"],["Other assets","10,042","","","\u2014","","","(2)","","","(*)","","10,040"],["Total assets","$","25,480","","","$","4,484","","","$","(177)","","","","","$","29,787"],["Liabilities:"],["Unpaid losses and loss adjustment expenses and unearned premiums","$","16,538","","","$","\u2014","","","$","\u2014","","","","","$","16,538"],["Liabilities of managed investment entities","\u2014","","","4,446","","","(139)","","","(*)","","4,307"],["Long-term debt and other liabilities","4,684","","","\u2014","","","\u2014","","","","","4,684"],["Total liabilities","21,222","","","4,446","","","(139)","","","","","25,529"],["Shareholders\u2019 equity:"],["Common Stock and Capital surplus","1,456","","","38","","","(38)","","","","","1,456"],["Retained earnings","3,121","","","\u2014","","","\u2014","","","","","3,121"],["Accumulated other comprehensive income (loss), net of tax","(319)","","","\u2014","","","\u2014","","","","","(319)"],["Total shareholders\u2019 equity","4,258","","","38","","","(38)","","","","","4,258"],["Total liabilities and shareholders\u2019 equity","$","25,480","","","$","4,484","","","$","(177)","","","","","$","29,787"]] [[/GREPCENT_TABLE]] (*)Elimination of the fair value of AFG’s investment in CLOs and related accrued interest. 44 Table of Contents CONDENSED CONSOLIDATING STATEMENT OF EARNINGS [[GREPCENT_TABLE]] [["","Before CLO Consolidation (a)","","Managed Investment Entities","","Consol. Entries","","","","Consolidated As Reported"],["Three months ended December 31, 2024"],["Revenues:"],["Net earned premiums","$","1,850","","","$","\u2014","","","$","\u2014","","","","","$","1,850"],["Net investment income","202","","","\u2014","","","(8)","","","(b)","","194"],["Realized gains (losses) on securities","(10)","","","\u2014","","","\u2014","","","","","(10)"],["Income of managed investment entities:"],["Investment income","\u2014","","","84","","","\u2014","","","","","84"],["Gain (loss) on change in fair value of assets/liabilities","\u2014","","","3","","","(4)","","","(b)","","(1)"],["Other income","36","","","\u2014","","","(4)","","","(c)","","32"],["Total revenues","2,078","","","87","","","(16)","","","","","2,149"],["Costs and Expenses:"],["Insurance benefits and expenses","1,661","","","\u2014","","","\u2014","","","","","1,661"],["Expenses of managed investment entities","\u2014","","","87","","","(16)","","","(b)(c)","","71"],["Interest charges on borrowed money and other expenses","97","","","\u2014","","","\u2014","","","","","97"],["Total costs and expenses","1,758","","","87","","","(16)","","","","","1,829"],["Earnings before income taxes","320","","","\u2014","","","\u2014","","","","","320"],["Provision for income taxes","65","","","\u2014","","","\u2014","","","","","65"],["Net earnings","$","255","","","$","\u2014","","","$","\u2014","","","","","$","255"],["Three months ended December 31, 2023"],["Revenues:"],["Net earned premiums","$","1,732","","","$","\u2014","","","$","\u2014","","","","","$","1,732"],["Net investment income","168","","","\u2014","","","(9)","","","(b)","","159"],["Realized gains (losses) on securities","31","","","\u2014","","","\u2014","","","","","31"],["Income of managed investment entities:"],["Investment income","\u2014","","","100","","","\u2014","","","","","100"],["Gain (loss) on change in fair value of assets/liabilities","\u2014","","","17","","","(2)","","","(b)","","15"],["Other income","50","","","\u2014","","","(4)","","","(c)","","46"],["Total revenues","1,981","","","117","","","(15)","","","","","2,083"],["Costs and Expenses:"],["Insurance benefits and expenses","1,549","","","\u2014","","","\u2014","","","","","1,549"],["Expenses of managed investment entities","\u2014","","","117","","","(15)","","","(b)(c)","","102"],["Interest charges on borrowed money and other expenses","97","","","\u2014","","","\u2014","","","","","97"],["Total costs and expenses","1,646","","","117","","","(15)","","","","","1,748"],["Earnings before income taxes","335","","","\u2014","","","\u2014","","","","","335"],["Provision for income taxes","72","","","\u2014","","","\u2014","","","","","72"],["Net earnings","$","263","","","$","\u2014","","","$","\u2014","","","","","$","263"]] [[/GREPCENT_TABLE]] (a)Includes income of $8 million in the fourth quarter of 2024 and $9 million in the fourth quarter of 2023, representing the change in fair value of AFG’s CLO investments and $4 million of income in both the fourth quarter of 2024 and 2023, in CLO management fees earned. (b)Elimination of the change in fair value of AFG’s investments in the CLOs, including $12 million and $11 million in the fourth quarter of 2024 and 2023, respectively, in distributions recorded as interest expense by the CLOs. (c)Elimination of management fees earned by AFG. 45 Table of Contents CONDENSED CONSOLIDATING STATEMENT OF EARNINGS - CONTINUED [[GREPCENT_TABLE]] [["","Before CLO Consol. (a)","","Managed Investment Entities","","Consol. Entries","","","","Consolidated As Reported"],["Year ended December 31, 2024"],["Revenues:"],["Net earned premiums","$","7,036","","","$","\u2014","","","$","\u2014","","","","","$","7,036"],["Net investment income","813","","","\u2014","","","(33)","","","(b)","","780"],["Realized gains (losses) on securities","\u2014","","","\u2014","","","\u2014","","","","","\u2014"],["Income of managed investment entities:"],["Investment income","\u2014","","","380","","","\u2014","","","","","380"],["Gain (loss) on change in fair value of assets/liabilities","\u2014","","","12","","","(8)","","","(b)","","4"],["Other income","137","","","\u2014","","","(13)","","","(c)","","124"],["Total revenues","7,986","","","392","","","(54)","","","","","8,324"],["Costs and Expenses:"],["Insurance benefits and expenses","6,467","","","\u2014","","","\u2014","","","","","6,467"],["Expenses of managed investment entities","\u2014","","","388","","","(50)","","","(b)(c)","","338"],["Interest charges on borrowed money and other expenses","395","","","\u2014","","","\u2014","","","","","395"],["Total costs and expenses","6,862","","","388","","","(50)","","","","","7,200"],["Earnings before income taxes","1,124","","","4","","","(4)","","","","","1,124"],["Provision for income taxes","237","","","\u2014","","","\u2014","","","","","237"],["Net earnings","$","887","","","$","4","","","$","(4)","","","","","$","887"],["Year ended December 31, 2023"],["Revenues:"],["Net earned premiums","$","6,531","","","$","\u2014","","","$","\u2014","","","","","$","6,531"],["Net investment income","769","","","\u2014","","","(27)","","","(b)","","742"],["Realized gains (losses) on:"],["Securities","(36)","","","\u2014","","","\u2014","","","","","(36)"],["Subsidiaries","(4)","","","\u2014","","","\u2014","","","","","(4)"],["Income of managed investment entities:"],["Investment income","\u2014","","","421","","","\u2014","","","","","421"],["Gain (loss) on change in fair value of assets/liabilities","\u2014","","","29","","","(2)","","","(b)","","27"],["Other income","162","","","\u2014","","","(16)","","","(c)","","146"],["Total revenues","7,422","","","450","","","(45)","","","","","7,827"],["Costs and Expenses:"],["Insurance benefits and expenses","5,968","","","\u2014","","","\u2014","","","","","5,968"],["Expenses of managed investment entities","\u2014","","","450","","","(45)","","","(b)(c)","","405"],["Interest charges on borrowed money and other expenses","381","","","\u2014","","","\u2014","","","","","381"],["Total costs and expenses","6,349","","","450","","","(45)","","","","","6,754"],["Earnings before income taxes","1,073","","","\u2014","","","\u2014","","","","","1,073"],["Provision for income taxes","221","","","\u2014","","","\u2014","","","","","221"],["Net earnings","$","852","","","$","\u2014","","","$","\u2014","","","","","$","852"]] [[/GREPCENT_TABLE]] (a)Includes income of $33 million in 2024 and $27 million in 2023, representing the change in fair value of AFG’s CLO investments and $13 million and $16 million of income in 2024 and 2023, respectively, in CLO management fees earned. (b)Elimination of the change in fair value of AFG’s investments in the CLOs, including $37 million and $29 million in 2024 and 2023, respectively, in distributions recorded as interest expense by the CLOs. (c)Elimination of management fees earned by AFG. 46 Table of Contents CONDENSED CONSOLIDATING STATEMENT OF EARNINGS - CONTINUED [[GREPCENT_TABLE]] [["","Before CLO Consol. (a)","","Managed Investment Entities","","Consol. Entries","","","","Consolidated As Reported"],["Year ended December 31, 2022"],["Revenues:"],["Net earned premiums","$","6,085","","","$","\u2014","","","$","\u2014","","","","","$","6,085"],["Net investment income","707","","","\u2014","","","10","","","(b)","","717"],["Realized gains (losses) on securities","(116)","","","\u2014","","","\u2014","","","","","(116)"],["Income of managed investment entities:"],["Investment income","\u2014","","","268","","","\u2014","","","","","268"],["Gain (loss) on change in fair value of assets/liabilities","\u2014","","","(2)","","","(29)","","","(b)","","(31)"],["Other income","134","","","\u2014","","","(17)","","","(c)","","117"],["Total revenues","6,810","","","266","","","(36)","","","","","7,040"],["Costs and Expenses:"],["Insurance benefits and expenses","5,347","","","\u2014","","","\u2014","","","","","5,347"],["Expenses of managed investment entities","\u2014","","","265","","","(35)","","","(b)(c)","","230"],["Interest charges on borrowed money and other expenses","340","","","\u2014","","","\u2014","","","","","340"],["Total costs and expenses","5,687","","","265","","","(35)","","","","","5,917"],["Earnings before income taxes","1,123","","","1","","","(1)","","","","","1,123"],["Provision for income taxes","225","","","\u2014","","","\u2014","","","","","225"],["Net earnings","$","898","","","$","1","","","$","(1)","","","","","$","898"]] [[/GREPCENT_TABLE]] (a)Includes a loss of $10 million representing the change in fair value of AFG’s CLO investments and $17 million of income in CLO management fees earned. (b)Elimination of the change in fair value of AFG’s investments in the CLOs, including $18 million in distributions recorded as interest expense by the CLOs. (c)Elimination of management fees earned by AFG. RESULTS OF OPERATIONS General AFG’s net earnings, determined in accordance with GAAP, include certain items that may not be indicative of its ongoing core operations. Core net operating earnings excludes realized gains (losses) on securities because such gains and losses are influenced significantly by financial markets, interest rates and the timing of sales. In addition, special charges related to coverage that AFG no longer writes, such as asbestos and environmental exposures, are excluded from core earnings. 47 Table of Contents The following table (in millions, except per share amounts) identifies non-core items and reconciles net earnings to core net operating earnings, a non-GAAP financial measure. AFG believes core net operating earnings is a useful tool for investors and analysts in analyzing ongoing operating trends and for management to evaluate financial performance against historical results because it believes this provides a more comparable measure of its continuing business. [[GREPCENT_TABLE]] [["","Three months ended December 31,","","Year ended December 31,"],["2024","","2023","","2024","","2023","","2022"],["Components of net earnings:"],["Core operating earnings before income taxes","$","330","","","$","304","","","$","1,138","","","$","1,127","","","$","1,248"],["Pretax non-core items:"],["Realized gains (losses) on securities","(10)","","","31","","","\u2014","","","(36)","","","(116)"],["Realized loss on subsidiary","\u2014","","","\u2014","","","\u2014","","","(4)","","","\u2014"],["Special A&E charges","\u2014","","","\u2014","","","(14)","","","(15)","","","\u2014"],["Gain (loss) on retirement of debt","\u2014","","","\u2014","","","\u2014","","","1","","","(9)"],["Other","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Earnings before income taxes","320","","","335","","","1,124","","","1,073","","","1,123"],["Provision for income taxes:"],["Core operating earnings","68","","","66","","","236","","","232","","","255"],["Non-core items:"],["Realized gains (losses) on securities","(3)","","","6","","","\u2014","","","(8)","","","(24)"],["Realized loss on subsidiary","\u2014","","","\u2014","","","4","","","\u2014","","","\u2014"],["Special A&E charges","\u2014","","","\u2014","","","(3)","","","(3)","","","\u2014"],["Gain (loss) on retirement of debt","\u2014","","","\u2014","","","\u2014","","","\u2014","","","(2)"],["Other","\u2014","","","\u2014","","","\u2014","","","\u2014","","","(4)"],["Total provision for income taxes","65","","","72","","","237","","","221","","","225"],["Net earnings","$","255","","","$","263","","","$","887","","","$","852","","","$","898"],["Net earnings:"],["Core net operating earnings","$","262","","","$","238","","","$","902","","","$","895","","","$","993"],["Realized gains (losses) on securities","(7)","","","25","","","\u2014","","","(28)","","","(92)"],["Realized loss on subsidiary","\u2014","","","\u2014","","","(4)","","","(4)","","","\u2014"],["Special A&E charges","\u2014","","","\u2014","","","(11)","","","(12)","","","\u2014"],["Gain (loss) on retirement of debt","\u2014","","","\u2014","","","\u2014","","","1","","","(7)"],["Other","\u2014","","","\u2014","","","\u2014","","","\u2014","","","4"],["Net earnings","$","255","","","$","263","","","$","887","","","$","852","","","$","898"],["Diluted per share amounts:"],["Core net operating earnings","$","3.12","","","$","2.84","","","$","10.75","","","$","10.56","","","$","11.63"],["Realized gains (losses) on securities","(0.09)","","","0.29","","","\u2014","","","(0.33)","","","(1.06)"],["Realized loss on subsidiary","\u2014","","","\u2014","","","(0.05)","","","(0.04)","","","\u2014"],["Special A&E charges","\u2014","","","\u2014","","","(0.13)","","","(0.15)","","","\u2014"],["Gain (loss) on retirement of debt","\u2014","","","\u2014","","","\u2014","","","0.01","","","(0.09)"],["Other","\u2014","","","\u2014","","","\u2014","","","\u2014","","","0.05"],["Net earnings","$","3.03","","","$","3.13","","","$","10.57","","","$","10.05","","","$","10.53"]] [[/GREPCENT_TABLE]] Net earnings were $255 million in the fourth quarter of 2024 compared to $263 million in the fourth quarter of 2023 reflecting net realized losses on securities in the fourth quarter of 2024 compared to net realized gains on securities in the fourth quarter of 2023, partially offset by higher core net operating earnings. Core net operating earnings for the fourth quarter of 2024 increased $24 million compared to the fourth quarter of 2023 reflecting higher net investment income, including improved returns on alternative investments, partially offset by lower underwriting profit. Net realized losses on securities of $7 million in the fourth quarter of 2024 and net realized gains on securities of $25 million in the fourth quarter of 2023 include $1 million of after-tax losses and $22 million of after-tax gains, respectively, from the change in fair value of equity securities that were still held at the balance sheet date. Net earnings were $887 million for the full-year of 2024 compared to $852 million in 2023 reflecting the impact of net realized losses on securities in 2023 and higher core net operating earnings. Core net operating earnings for 2024 increased $7 million compared to 2023. Higher investment income outside of alternative investments was partially offset by lower returns on AFG’s alternative investment portfolio and lower underwriting profit. Net realized gains on securities of less than $1 million in 2024 and net realized losses on securities of $28 million in 2023 include $19 million of after-tax 48 Table of Contents gains and $2 million of after-tax losses, respectively, from the change in fair value of equity securities that were still held at the balance sheet date. Net earnings were $852 million for the full-year of 2023 compared to $898 million in 2022 reflecting lower core net operating earnings and a special A&E charge recorded in the third quarter of 2023, partially offset by lower net realized losses on securities in 2023 compared to 2022. Core net operating earnings for 2023 decreased $98 million compared to 2022 reflecting lower returns on AFG’s alternative investment portfolio when compared to the strong performance of this portfolio in 2022 and lower underwriting profit, partially offset by higher investment income outside of alternative investments. Net realized losses on securities of $28 million in 2023 and $92 million in 2022 include $2 million and $75 million, respectively, of after-tax losses from the change in fair value of equity securities that were still held at the balance sheet date. RESULTS OF OPERATIONS — THREE MONTHS ENDED DECEMBER 31, 2024 AND 2023 Segmented Statement of Earnings AFG reports its operations as two segments: (i) Property and casualty insurance (“P&C”) and (ii) Other, which includes holding company costs and income and expenses related to the managed investment entities (“MIEs”). AFG’s net earnings, determined in accordance with GAAP, include certain items that may not be indicative of its ongoing core operations. The following tables for the three months ended December 31, 2024 and 2023 identify such items by segment and reconcile net earnings to core net operating earnings, a non-GAAP financial measure that AFG believes is a useful tool for investors and analysts in analyzing ongoing operating trends (in millions): [[GREPCENT_TABLE]] [["","","","Other"],["","P&C","","Consol. MIEs","","Holding Co., other and unallocated","","Total","","Non-core reclass","","GAAP Total"],["Three months ended December 31, 2024"],["Revenues:"],["Net earned premiums","$","1,850","","","$","\u2014","","","$","\u2014","","","$","1,850","","","$","\u2014","","","$","1,850"],["Net investment income","195","","","(8)","","","7","","","194","","","\u2014","","","194"],["Realized gains (losses) on securities","\u2014","","","\u2014","","","\u2014","","","\u2014","","","(10)","","","(10)"],["Income of MIEs:"],["Investment income","\u2014","","","84","","","\u2014","","","84","","","\u2014","","","84"],["Gain (loss) on change in fair value of assets/liabilities","\u2014","","","(1)","","","\u2014","","","(1)","","","\u2014","","","(1)"],["Other income","2","","","(4)","","","34","","","32","","","\u2014","","","32"],["Total revenues","2,047","","","71","","","41","","","2,159","","","(10)","","","2,149"],["Costs and Expenses:"],["Losses and loss adjustment expenses","1,181","","","\u2014","","","\u2014","","","1,181","","","\u2014","","","1,181"],["Commissions and other underwriting expenses","467","","","\u2014","","","13","","","480","","","\u2014","","","480"],["Interest charges on borrowed money","\u2014","","","\u2014","","","19","","","19","","","\u2014","","","19"],["Expenses of MIEs","\u2014","","","71","","","\u2014","","","71","","","\u2014","","","71"],["Other expenses","21","","","\u2014","","","57","","","78","","","\u2014","","","78"],["Total costs and expenses","1,669","","","71","","","89","","","1,829","","","\u2014","","","1,829"],["Earnings before income taxes","378","","","\u2014","","","(48)","","","330","","","(10)","","","320"],["Provision for income taxes","81","","","\u2014","","","(13)","","","68","","","(3)","","","65"],["Core Net Operating Earnings","297","","","\u2014","","","(35)","","","262"],["Non-core earnings (loss) (*):"],["Realized gains (losses) on securities, net of tax","\u2014","","","\u2014","","","(7)","","","(7)","","","7","","","\u2014"],["Net Earnings","$","297","","","$","\u2014","","","$","(42)","","","$","255","","","$","\u2014","","","$","255"]] [[/GREPCENT_TABLE]] 49 Table of Contents [[GREPCENT_TABLE]] [["","","","Other"],["","P&C","","Consol. MIEs","","Holding Co., other and unallocated","","Total","","Non-core reclass","","GAAP Total"],["Three months ended December 31, 2023"],["Revenues:"],["Net earned premiums","$","1,732","","","$","\u2014","","","$","\u2014","","","$","1,732","","","$","\u2014","","","$","1,732"],["Net investment income","161","","","(9)","","","7","","","159","","","\u2014","","","159"],["Realized gains (losses) on securities","\u2014","","","\u2014","","","\u2014","","","\u2014","","","31","","","31"],["Income of MIEs:"],["Investment income","\u2014","","","100","","","\u2014","","","100","","","\u2014","","","100"],["Gain (loss) on change in fair value of assets/liabilities","\u2014","","","15","","","\u2014","","","15","","","\u2014","","","15"],["Other income","3","","","(4)","","","47","","","46","","","\u2014","","","46"],["Total revenues","1,896","","","102","","","54","","","2,052","","","31","","","2,083"],["Costs and Expenses:"],["Losses and loss adjustment expenses","1,053","","","\u2014","","","16","","","1,069","","","\u2014","","","1,069"],["Commissions and other underwriting expenses","468","","","\u2014","","","12","","","480","","","\u2014","","","480"],["Interest charges on borrowed money","\u2014","","","\u2014","","","19","","","19","","","\u2014","","","19"],["Expenses of MIEs","\u2014","","","102","","","\u2014","","","102","","","\u2014","","","102"],["Other expenses","18","","","\u2014","","","60","","","78","","","\u2014","","","78"],["Total costs and expenses","1,539","","","102","","","107","","","1,748","","","\u2014","","","1,748"],["Earnings before income taxes","357","","","\u2014","","","(53)","","","304","","","31","","","335"],["Provision for income taxes","74","","","\u2014","","","(8)","","","66","","","6","","","72"],["Core Net Operating Earnings","283","","","\u2014","","","(45)","","","238"],["Non-core earnings (loss) (*):"],["Realized gains (losses) on securities, net of tax","\u2014","","","\u2014","","","25","","","25","","","(25)","","","\u2014"],["Net Earnings","$","283","","","$","\u2014","","","$","(20)","","","$","263","","","$","\u2014","","","$","263"]] [[/GREPCENT_TABLE]] (*)See the reconciliation of core earnings to GAAP net earnings under “Results of Operations — General” for details on the tax impacts of these reconciling items. Property and Casualty Insurance Segment — Results of Operations Performance measures such as underwriting profit or loss and related combined ratios are often used by property and casualty insurers to help users of their financial statements better understand the company’s performance. Underwriting profitability is measured by the combined ratio, which is a sum of the ratios of losses and loss adjustment expenses, and commissions and other underwriting expenses to premiums. A combined ratio under 100% indicates an underwriting profit. The combined ratio does not reflect net investment income, other income, other expenses or federal income taxes. AFG’s property and casualty insurance operations contributed $378 million in pretax earnings in the fourth quarter of 2024 compared to $357 million in the fourth quarter of 2023, an increase of $21 million (6%) as a result of higher net investment income which was partially offset by lower underwriting profit. 50 Table of Contents The following table details AFG’s earnings before income taxes from its property and casualty insurance operations for the three months ended December 31, 2024 and 2023 (dollars in millions): [[GREPCENT_TABLE]] [["","Three months ended December 31,"],["","2024","","2023","","% Change"],["Gross written premiums","$","2,043","","","$","1,992","","","3","%"],["Reinsurance premiums ceded","(583)","","","(547)","","","7","%"],["Net written premiums","1,460","","","1,445","","","1","%"],["Change in unearned premiums","390","","","287","","","36","%"],["Net earned premiums","1,850","","","1,732","","","7","%"],["Loss and loss adjustment expenses","1,181","","","1,053","","","12","%"],["Commissions and other underwriting expenses","467","","","468","","","\u2014","%"],["Underwriting gain","202","","","211","","","(4","%)"],["Net investment income","195","","","161","","","21","%"],["Other income and expenses, net","(19)","","","(15)","","","27","%"],["Earnings before income taxes","$","378","","","$","357","","","6","%"],["","Three months ended December 31,"],["Combined Ratios:","2024","","2023","","Change"],["Specialty lines"],["Loss and LAE ratio","63.7","%","","60.7","%","","3.0","%"],["Underwriting expense ratio","25.3","%","","27.0","%","","(1.7","%)"],["Combined ratio","89.0","%","","87.7","%","","1.3","%"],["Aggregate \u2014 including exited lines"],["Loss and LAE ratio","63.8","%","","60.8","%","","3.0","%"],["Underwriting expense ratio","25.3","%","","27.0","%","","(1.7","%)"],["Combined ratio","89.1","%","","87.8","%","","1.3","%"]] [[/GREPCENT_TABLE]] AFG’s statutory combined ratio has been better than the U.S. industry average for 37 of the most recent 39 years. Management believes that AFG’s insurance operations have performed better than the industry as a result of its specialty niche focus, product line diversification, stringent underwriting discipline and alignment of compensation incentives. AFG reports the underwriting performance of its Specialty property and casualty insurance business in the following sub-segments: (i) Property and transportation, (ii) Specialty casualty and (iii) Specialty financial. To understand the overall profitability of particular lines, the timing of claims payments and the related impact of investment income must be considered. Certain “short-tail” lines of business (primarily property coverages) generally have quick loss payouts, which reduce the time funds are held, thereby limiting investment income earned thereon. In contrast, “long-tail” lines of business (primarily liability coverages and workers’ compensation) generally have payouts that are either structured over many years or take many years to settle, thereby significantly increasing investment income earned on related premiums received. Gross Written Premiums Gross written premiums (“GWP”) for AFG’s property and casualty insurance segment were $2.04 billion for the fourth quarter of 2024 compared to $1.99 billion for the fourth quarter of 2023, an increase of $51 million (3%). Detail of AFG’s property and casualty gross written premiums is shown below (dollars in millions): [[GREPCENT_TABLE]] [["","Three months ended December 31,"],["","2024","","2023"],["","GWP","","%","","GWP","","%","","% Change"],["Property and transportation","$","585","","","29","%","","$","623","","","31","%","","(6","%)"],["Specialty casualty","1,126","","","55","%","","1,069","","","54","%","","5","%"],["Specialty financial","332","","","16","%","","300","","","15","%","","11","%"],["","$","2,043","","","100","%","","$","1,992","","","100","%","","3","%"]] [[/GREPCENT_TABLE]] 51 Table of Contents Reinsurance Premiums Ceded Reinsurance premiums ceded (“Ceded”) for AFG’s property and casualty insurance segment were 29% of gross written premiums for the fourth quarter of 2024 compared to 27% of gross written premiums for the fourth quarter of 2023, an increase of 2 percentage points. Detail of AFG’s property and casualty reinsurance premiums ceded is shown below (dollars in millions): [[GREPCENT_TABLE]] [["","Three months ended December 31,"],["","2024","","2023","","Change in % of GWP"],["","Ceded","","% of GWP","","Ceded","","% of GWP"],["Property and transportation","$","(186)","","","32","%","","$","(197)","","","32","%","","\u2014","%"],["Specialty casualty","(401)","","","36","%","","(369)","","","35","%","","1","%"],["Specialty financial","(53)","","","16","%","","(50)","","","17","%","","(1","%)"],["Other specialty","57","","","","","69"],["","$","(583)","","","29","%","","$","(547)","","","27","%","","2","%"]] [[/GREPCENT_TABLE]] Net Written Premiums Net written premiums (“NWP”) for AFG’s property and casualty insurance segment were $1.46 billion for the fourth quarter of 2024 compared to $1.45 billion for the fourth quarter of 2023, an increase of $15 million (1%). Detail of AFG’s property and casualty net written premiums is shown below (dollars in millions): [[GREPCENT_TABLE]] [["","Three months ended December 31,"],["","2024","","2023"],["","NWP","","%","","NWP","","%","","% Change"],["Property and transportation","$","399","","","27","%","","$","426","","","30","%","","(6","%)"],["Specialty casualty","725","","","50","%","","700","","","48","%","","4","%"],["Specialty financial","279","","","19","%","","250","","","17","%","","12","%"],["Other specialty","57","","","4","%","","69","","","5","%","","(17","%)"],["","$","1,460","","","100","%","","$","1,445","","","100","%","","1","%"]] [[/GREPCENT_TABLE]] Net Earned Premiums Net earned premiums (“NEP”) for AFG’s property and casualty insurance segment were $1.85 billion for the fourth quarter of 2024 compared to $1.73 billion for the fourth quarter of 2023, an increase of $118 million (7%). Detail of AFG’s property and casualty net earned premiums is shown below (dollars in millions): [[GREPCENT_TABLE]] [["","Three months ended December 31,"],["","2024","","2023"],["","NEP","","%","","NEP","","%","","% Change"],["Property and transportation","$","756","","","41","%","","$","682","","","39","%","","11","%"],["Specialty casualty","754","","","41","%","","737","","","43","%","","2","%"],["Specialty financial","279","","","15","%","","244","","","14","%","","14","%"],["Other specialty","61","","","3","%","","69","","","4","%","","(12","%)"],["","$","1,850","","","100","%","","$","1,732","","","100","%","","7","%"]] [[/GREPCENT_TABLE]] Gross written premiums for the fourth quarter of 2024 increased $51 million (3%) compared to the fourth quarter of 2023 driven primarily by new business opportunities, a good renewal rate environment and increased exposures. Overall average renewal rates increased approximately 7% in the fourth quarter of 2024. Excluding overall rate decreases in the workers’ compensation businesses, renewal rates increased approximately 8%. Property and transportation Gross written premiums decreased $38 million (6%) in the fourth quarter of 2024 compared to the fourth quarter of 2023. This decrease was due primarily to the impact of lower year-over-year commodity pricing on winter wheat premiums, coupled with elevated pricing competition and the non-renewal of certain under-performing accounts in the transportation businesses. Average renewal rates increased 7% for this group in the fourth quarter of 2024. Reinsurance premiums ceded as a percentage of gross written premiums were comparable in the fourth quarter of 2024 and the fourth quarter of 2023 reflecting higher cessions in the crop business offset by the impact of lower cessions in certain transportation businesses. Specialty casualty Gross written premiums increased $57 million (5%) in the fourth quarter of 2024 compared to the fourth quarter of 2023. The primary drivers of growth were new business opportunities and favorable renewal pricing in 52 Table of Contents several of the targeted markets businesses and in the excess and surplus business. The mergers and acquisitions liability business also benefited from an increase in mergers and acquisition activity. This growth was tempered by lower year-over-year workers’ compensation premiums. Average renewal rates for this group increased approximately 8% in the fourth quarter of 2024. Excluding rate decreases in the workers’ compensation businesses, renewal rates for this group increased approximately 11%. Reinsurance premiums ceded as a percentage of gross written premiums increased 1 percentage point for the fourth quarter of 2024 compared to the fourth quarter of 2023 reflecting higher premiums in the excess and surplus and mergers and acquisitions liability businesses, which cede a larger percentage of premiums than some of the other businesses in the Specialty casualty sub-segment as well as higher cessions in the public sector business, partially offset by lower cessions in certain more heavily reinsured products in the social services business. Specialty financial Gross written premiums increased $32 million (11%) in the fourth quarter of 2024 compared to the fourth quarter of 2023 due primarily to growth in the financial institutions business. Average renewal rates for this group increased approximately 3% in the fourth quarter of 2024. Reinsurance premiums ceded as a percentage of gross written premiums decreased 1 percentage point in the fourth quarter of 2024 compared to the fourth quarter of 2023 reflecting the impact of lower gross written premiums in the innovative markets business, which cedes a larger percentage of premiums than some of the other businesses in the Specialty financial sub-segment. Other specialty The amounts shown as reinsurance premiums ceded represent business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty property and casualty insurance sub-segments. Reinsurance premiums assumed decreased $12 million (17%) in the fourth quarter of 2024 compared to the fourth quarter of 2023 reflecting a decrease in premiums retained, primarily from businesses in the Specialty casualty sub-segment. 53 Table of Contents Combined Ratio Performance measures such as the combined ratio are often used by property and casualty insurers to help users of their financial statements better understand the company’s performance. The combined ratio is the sum of the loss and loss adjustment expenses (“LAE”) and underwriting expense ratios. These ratios are calculated by dividing each of the respective expenses by net earned premiums. The table below (dollars in millions) details the components of the combined ratio for AFG’s property and casualty insurance segment: [[GREPCENT_TABLE]] [["","Three months ended December 31,","","","","Three months ended December 31,"],["","2024","","2023","","Change","","2024","","2023"],["Property and transportation"],["Loss and LAE ratio","69.3","%","","69.0","%","","0.3","%"],["Underwriting expense ratio","19.9","%","","21.3","%","","(1.4","%)"],["Combined ratio","89.2","%","","90.3","%","","(1.1","%)"],["Underwriting profit","","","","","","","$","82","","","$","67"],["Specialty casualty"],["Loss and LAE ratio","65.6","%","","59.6","%","","6.0","%"],["Underwriting expense ratio","23.4","%","","25.0","%","","(1.6","%)"],["Combined ratio","89.0","%","","84.6","%","","4.4","%"],["Underwriting profit","","","","","","","$","82","","","$","114"],["Specialty financial"],["Loss and LAE ratio","38.1","%","","34.8","%","","3.3","%"],["Underwriting expense ratio","42.6","%","","46.5","%","","(3.9","%)"],["Combined ratio","80.7","%","","81.3","%","","(0.6","%)"],["Underwriting profit","","","","","","","$","54","","","$","45"],["Total Specialty"],["Loss and LAE ratio","63.7","%","","60.7","%","","3.0","%"],["Underwriting expense ratio","25.3","%","","27.0","%","","(1.7","%)"],["Combined ratio","89.0","%","","87.7","%","","1.3","%"],["Underwriting profit","","","","","","","$","204","","","$","212"],["Aggregate \u2014 including exited lines"],["Loss and LAE ratio","63.8","%","","60.8","%","","3.0","%"],["Underwriting expense ratio","25.3","%","","27.0","%","","(1.7","%)"],["Combined ratio","89.1","%","","87.8","%","","1.3","%"],["Underwriting profit","","","","","","","$","202","","","$","211"]] [[/GREPCENT_TABLE]] The Specialty property and casualty insurance operations generated an underwriting profit of $204 million in the fourth quarter of 2024 compared to $212 million in the fourth quarter of 2023, a decrease of $8 million (4%). Higher underwriting profit in the Property and transportation and Specialty financial sub-segments was more than offset by lower year-over-year underwriting profit in the Specialty casualty sub-segment, which was impacted by net adverse prior year reserve development in certain social inflation exposed businesses. Overall catastrophe losses were $21 million (1.1 points on the combined ratio), including $1 million in net reinstatement premiums in the fourth quarter of 2024 compared to catastrophe losses of $25 million (1.4 points), including $1 million in net reinstatement premiums in the fourth quarter of 2023. Property and transportation Underwriting profit for this group was $82 million for the fourth quarter of 2024 compared to $67 million in the fourth quarter of 2023, an increase of $15 million (22%), reflecting higher year-over-year underwriting profitability in the crop insurance operations. Catastrophe losses for this group were $10 million (1.3 points on the combined ratio), including $1 million in net reinstatement premiums in the fourth quarter of 2024 compared to catastrophe losses of $5 million (0.6 points), including $2 million in net reinstatement premiums in the fourth quarter of 2023. Specialty casualty Underwriting profit for this group was $82 million for the fourth quarter of 2024 compared to $114 million in the fourth quarter of 2023, a decrease of $32 million (28%). Higher year-over-year underwriting profit in the targeted markets businesses was more than offset by lower underwriting profit in the excess liability, workers’ compensation and executive liability businesses. Catastrophe losses, including the impact of lower than previously estimated losses from Hurricane Helene, had a favorable impact of $5 million (0.8 points on the combined ratio) compared 54 Table of Contents to catastrophe losses of $8 million (1.1 points), including a $1 million favorable impact from lower than previously estimated net reinstatement premiums in the fourth quarter of 2023. Specialty financial Underwriting profit for this group was $54 million for the fourth quarter of 2024 compared to $45 million in the fourth quarter of 2023, an increase of $9 million (20%). This year-over-year increase reflects higher underwriting profit in the financial institutions business. Catastrophe losses were $17 million (6.2 points on the combined ratio) in the fourth quarter of 2024 compared to $4 million (2.0 points) in the fourth quarter of 2023. Other specialty This group reported an underwriting loss of $14 million for the fourth quarter of 2024 and the fourth quarter of 2023, reflecting losses in the business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty sub-segments. Favorable changes in estimated losses from Hurricane Helene resulted in a favorable impact of $1 million from catastrophe losses in the fourth quarter of 2024 compared to catastrophe losses of $8 million in the fourth quarter of 2023. Aggregate Aggregate underwriting results for AFG’s property and casualty insurance segment include adverse prior year reserve development of $2 million in the fourth quarter of 2024 and $1 million in the fourth quarter of 2023 related to business outside of the Specialty group that AFG no longer writes. 55 Table of Contents Losses and Loss Adjustment Expenses AFG’s overall loss and LAE ratio was 63.8% for the fourth quarter of 2024 compared to 60.8% for the fourth quarter of 2023, an increase of 3.0 percentage points. The components of AFG’s property and casualty losses and LAE amounts and ratio are detailed below (dollars in millions): [[GREPCENT_TABLE]] [["","Three months ended December 31,"],["","Amount","","Ratio","","Change in Ratio"],["","2024","","2023","","2024","","2023"],["Property and transportation"],["Current year, excluding catastrophe losses","$","517","","","$","479","","","68.5","%","","70.2","%","","(1.7","%)"],["Prior accident years development","(3)","","","(12)","","","(0.5","%)","","(1.8","%)","","1.3","%"],["Current year catastrophe losses including the impact of net reinstatement premiums","9","","","3","","","1.3","%","","0.6","%","","0.7","%"],["Property and transportation losses and LAE and ratio","$","523","","","$","470","","","69.3","%","","69.0","%","","0.3","%"],["Specialty casualty"],["Current year, excluding catastrophe losses","$","464","","","$","466","","","61.6","%","","63.5","%","","(1.9","%)"],["Prior accident years development","36","","","(37)","","","4.8","%","","(5.0","%)","","9.8","%"],["Current year catastrophe losses including the impact of net reinstatement premiums","(5)","","","9","","","(0.8","%)","","1.1","%","","(1.9","%)"],["Specialty casualty losses and LAE and ratio","$","495","","","$","438","","","65.6","%","","59.6","%","","6.0","%"],["Specialty financial"],["Current year, excluding catastrophe losses","$","97","","","$","89","","","34.8","%","","36.2","%","","(1.4","%)"],["Prior accident years development","(8)","","","(8)","","","(2.9","%)","","(3.4","%)","","0.5","%"],["Current year catastrophe losses including the impact of net reinstatement premiums","17","","","4","","","6.2","%","","2.0","%","","4.2","%"],["Specialty financial losses and LAE and ratio","$","106","","","$","85","","","38.1","%","","34.8","%","","3.3","%"],["Total Specialty"],["Current year, excluding catastrophe losses","$","1,125","","","$","1,085","","","60.8","%","","62.6","%","","(1.8","%)"],["Prior accident years development","34","","","(57)","","","1.8","%","","(3.3","%)","","5.1","%"],["Current year catastrophe losses including the impact of net reinstatement premiums","20","","","24","","","1.1","%","","1.4","%","","(0.3","%)"],["Total Specialty losses and LAE and ratio","$","1,179","","","$","1,052","","","63.7","%","","60.7","%","","3.0","%"],["Aggregate \u2014 including exited lines"],["Current year, excluding catastrophe losses","$","1,125","","","$","1,085","","","60.8","%","","62.6","%","","(1.8","%)"],["Prior accident years development","36","","","(56)","","","1.9","%","","(3.2","%)","","5.1","%"],["Current year catastrophe losses including the impact of net reinstatement premiums","20","","","24","","","1.1","%","","1.4","%","","(0.3","%)"],["Aggregate losses and LAE and ratio","$","1,181","","","$","1,053","","","63.8","%","","60.8","%","","3.0","%"]] [[/GREPCENT_TABLE]] Current accident year losses and LAE, excluding catastrophe losses The current accident year loss and LAE ratio, excluding catastrophe losses for AFG’s Specialty property and casualty insurance operations was 60.8% for the fourth quarter of 2024 compared to 62.6% in the fourth quarter of 2023, a decrease of 1.8 percentage points. Property and transportation   The 1.7 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects improved profitability in the crop, ocean marine and property and inland marine businesses, partially offset by higher claim severity in the commercial auto business. Specialty casualty   The 1.9 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects growth in certain programs in the social services business that have a lower loss and LAE ratio than some of the other businesses in the Specialty casualty sub-segment and improved results in the workers’ 56 Table of Contents compensation businesses, partially offset by higher claim severity in the excess and surplus business and the impact of pressure on rates in the executive liability business. Specialty financial   The 1.4 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects growth in the financial institutions business, which has a lower loss and LAE ratio than some of the other businesses in the Specialty financial sub-segment. Net prior year reserve development AFG’s Specialty property and casualty insurance operations recorded net adverse reserve development related to prior accident years of $34 million in the fourth quarter of 2024 compared to net favorable reserve development related to prior accident years of $57 million in the fourth quarter of 2023, a change of $91 million (160%). Property and transportation   Net favorable reserve development of $3 million in the fourth quarter of 2024 reflects lower than anticipated losses in the crop business and lower than expected claim severity in the aviation business, partially offset by higher than anticipated claim severity in the commercial auto business. Net favorable reserve development of $12 million in the fourth quarter of 2023 reflects lower than anticipated losses in the crop business and lower than expected claim frequency in the ocean marine and property and inland marine businesses. Specialty casualty   Net adverse reserve development of $36 million in the fourth quarter of 2024 reflects higher than anticipated claim frequency and severity in the umbrella and excess liability businesses and higher than expected claim severity in the social services and general liability businesses, partially offset by lower than expected claim severity in the workers’ compensation businesses. Net favorable reserve development of $37 million in the fourth quarter of 2023 reflects lower than anticipated claim severity in the workers’ compensation businesses, partially offset by higher than anticipated claim severity in the excess and surplus business and higher than expected claim frequency and severity in the excess liability and general liability businesses. Specialty financial   Net favorable reserve development of $8 million in the fourth quarter of 2024 reflects lower than anticipated claim frequency and severity in the financial institutions business and lower than expected claim severity in the fidelity business. Net favorable reserve development of $8 million in the fourth quarter of 2023 reflects lower than anticipated claim frequency and severity in the fidelity business and lower than expected claim frequency in the financial institutions and trade credit businesses. Other specialty In addition to the development discussed above, total Specialty prior year reserve development includes net adverse reserve development of $9 million in the fourth quarter of 2024 and less than $1 million in the fourth quarter of 2023 primarily associated with AFG’s internal reinsurance program. The net adverse reserve development in 2024 is primarily related to social inflation exposed business assumed from the Specialty casualty sub-segment. Aggregate Aggregate net prior accident years reserve development for AFG’s property and casualty insurance segment includes net adverse reserve development of $2 million in the fourth quarter of 2024 and $1 million in the fourth quarter of 2023 related to business outside of the Specialty group that AFG no longer writes. Catastrophe losses AFG generally seeks to reduce its exposure to catastrophes (whether resulting from climate change or otherwise) through individual risk selection, including minimizing coastal and known fault-line exposures, and the purchase of reinsurance. Based on data available at December 31, 2024 (including the expected placement of a catastrophe bond structure or additional other reinsurance protection in the second quarter of 2025), AFG’s exposure to a catastrophic earthquake or windstorm that industry models indicate should statistically occur once in every 100, 250 or 500 years as a percentage of AFG’s Shareholders’ Equity is shown below: [[GREPCENT_TABLE]] [["","","","Approximate impact of modeled loss on AFG\u2019s Shareholders\u2019 Equity"],["","Industry Model","","Excluding the expected placement of a catastrophe bond","","Including the expected placement of a catastrophe bond"],["","100-year event","","3%","","2%"],["","250-year event","","6%","","2%"],["","500-year event","","8%","","3%"]] [[/GREPCENT_TABLE]] Catastrophe losses of $20 million (before $1 million in net reinstatement premiums) in the fourth quarter of 2024 resulted primarily from Hurricane Milton. Catastrophe losses of $24 million (before $1 million in net reinstatement premiums) in the fourth quarter of 2023 resulted primarily from storms in multiple regions of the United States. 57 Table of Contents Commissions and Other Underwriting Expenses AFG’s property and casualty commissions and other underwriting expenses (“U/W Exp”) were $467 million in the fourth quarter of 2024 compared to $468 million for the fourth quarter of 2023, a decrease of $1 million. AFG’s underwriting expense ratio, calculated as commissions and other underwriting expenses divided by net premiums earned, was 25.3% for the fourth quarter of 2024 compared to 27.0% for the fourth quarter of 2023, a decrease of 1.7 percentage points. Detail of AFG’s property and casualty commissions and other underwriting expenses and underwriting expense ratios is shown below (dollars in millions): [[GREPCENT_TABLE]] [["","Three months ended December 31,"],["","2024","","2023","","Change in % of NEP"],["","U/W Exp","","% of NEP","","U/W Exp","","% of NEP"],["Property and transportation","$","151","","","19.9","%","","$","145","","","21.3","%","","(1.4","%)"],["Specialty casualty","177","","","23.4","%","","185","","","25.0","%","","(1.6","%)"],["Specialty financial","119","","","42.6","%","","114","","","46.5","%","","(3.9","%)"],["Other specialty","20","","","35.2","%","","24","","","36.1","%","","(0.9","%)"],["","$","467","","","25.3","%","","$","468","","","27.0","%","","(1.7","%)"]] [[/GREPCENT_TABLE]] Property and transportation   Commissions and other underwriting expenses as a percentage of net earned premiums decreased 1.4 percentage points in the fourth quarter of 2024 compared to the fourth quarter of 2023. The decrease reflects the impact on the ratio of higher earned premiums, including in the crop business which has a lower commissions and other underwriting expense ratio than some of the other businesses in the Property and transportation sub-segment, and lower average commission rates in the transportation businesses due to a change in the mix of business. Specialty casualty   Commissions and other underwriting expenses as a percentage of net earned premiums decreased 1.6 percentage points in the fourth quarter of 2024 compared to the fourth quarter of 2023 reflecting a change in the mix of business towards products with lower commission rates. Specialty financial   Commissions and other underwriting expenses as a percentage of net earned premiums decreased 3.9 percentage points in the fourth quarter of 2024 compared to the fourth quarter of 2023 reflecting the impact on the ratio of higher earned premiums in the financial institutions business and a change in the mix of business towards products with lower commission rates. Property and Casualty Net Investment Income Net investment income in AFG’s property and casualty insurance operations was $195 million in the fourth quarter of 2024 compared to $161 million in the fourth quarter of 2023, an increase of $34 million (21%). The average invested assets and overall yield earned on investments held by AFG’s property and casualty insurance operations are provided below (dollars in millions): [[GREPCENT_TABLE]] [["","Three months ended December 31,","","","","%"],["","2024","","2023","","Change","","Change"],["Net investment income:"],["Net investment income, excluding alternative investments","$","162","","","$","156","","","$","6","","","4","%"],["Alternative investments","33","","","5","","","28","","","560","%"],["Total net investment income","$","195","","","$","161","","","$","34","","","21","%"],["Average invested assets (at amortized cost)","$","15,718","","","$","15,227","","","$","491","","","3","%"],["Yield (net investment income as a % of average invested assets)","4.96","%","","4.23","%","","0.73","%"],["Tax equivalent yield (*)","5.03","%","","4.31","%","","0.72","%"]] [[/GREPCENT_TABLE]] (*)Adjusts the yield on equity securities and tax-exempt bonds to the fully taxable equivalent yield. The increase in the property and casualty insurance segment’s net investment income for the fourth quarter of 2024 compared to the fourth quarter of 2023 reflects the impact of higher balances of invested assets, higher returns on fixed maturity investments and higher returns on AFG’s alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs). The property and casualty insurance segment’s overall yield on investments (net investment income as a percentage of average invested assets) was 4.96% for the fourth quarter of 2024 compared to 4.23% for the 58 Table of Contents fourth quarter of 2023, an increase of 0.73 percentage points. The annualized return earned on alternative investments was 4.9% in the fourth quarter of 2024 compared to 0.8% in the comparable prior year period. Property and Casualty Other Income and Expenses, Net Other income and expenses, net for AFG’s property and casualty insurance operations was a net expense of $19 million for the fourth quarter of 2024 compared to $15 million for the fourth quarter of 2023, an increase of $4 million (27%). The table below details the items included in other income and expenses, net for AFG’s property and casualty insurance operations (in millions): [[GREPCENT_TABLE]] [["","Three months ended December 31,"],["","2024","","2023"],["Other income","$","2","","","$","3"],["Other expenses:"],["Amortization of intangibles","6","","","4"],["Interest expense on funds withheld","12","","","12"],["Other","3","","","2"],["Total other expenses","21","","","18"],["Other income and expenses, net","$","(19)","","","$","(15)"]] [[/GREPCENT_TABLE]] Holding Company, Other and Unallocated — Results of Operations AFG’s net pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $48 million in the fourth quarter of 2024 compared to $53 million in the fourth quarter of 2023, a decrease of $5 million (9%). The following table details AFG’s loss before income taxes from operations outside of its property and casualty insurance segment for the three months ended December 31, 2024 and 2023 (dollars in millions): [[GREPCENT_TABLE]] [["","Three months ended December 31,"],["","2024","","2023","","% Change"],["Revenues:"],["Net investment income","$","7","","","$","7","","","\u2014","%"],["Other income \u2014 P&C fees","28","","","42","","","(33","%)"],["Other income","6","","","5","","","20","%"],["Total revenues","41","","","54","","","(24","%)"],["Costs and Expenses:"],["Property and casualty insurance \u2014 loss adjustment and underwriting expenses","13","","","28","","","(54","%)"],["Other expense \u2014 expenses associated with P&C fees","15","","","14","","","7","%"],["Other expenses","42","","","46","","","(9","%)"],["Costs and expenses, excluding interest charges on borrowed money","70","","","88","","","(20","%)"],["Loss before income taxes, excluding realized gains and losses and interest charges on borrowed money","(29)","","","(34)","","","(15","%)"],["Interest charges on borrowed money","19","","","19","","","\u2014","%"],["Loss before income taxes, excluding realized gains and losses","$","(48)","","","$","(53)","","","(9","%)"]] [[/GREPCENT_TABLE]] Holding Company and Other — Net Investment Income AFG recorded net investment income on investments held outside of its property and casualty insurance segment of $7 million in both the fourth quarter of 2024 and the fourth quarter of 2023. Holding Company and Other — P&C Fees and Related Expenses Summit, a workers’ compensation insurance subsidiary, collects fees from a small group of unaffiliated insurers for providing underwriting, policy administration and claims services. In addition, certain of AFG’s property and casualty insurance businesses collect fees from customers for ancillary services such as workplace safety programs and premium financing. In the fourth quarter of 2024, AFG collected $28 million in fees for these services compared to $23 million in the fourth quarter of 2023. Management views this fee income, net of the $15 million in the fourth quarter of 2024 and $14 million in the fourth quarter of 2023 in expenses incurred to generate such fees, as a reduction in the cost of underwriting its property and casualty insurance policies. In addition, AFG’s property and casualty insurance businesses earned $19 million in fees during the fourth quarter of 2023 as compensation for providing services related to the 59 Table of Contents administration of crop insurance business generated by CRS for its former owner prior to AFG’s acquisition of CRS. The expenses related to providing such services are embedded in underwriting expenses. Consistent with internal management reporting, these fees and the related expenses are netted and recorded as a reduction of loss adjustment and other underwriting expenses in AFG’s segmented results. Holding Company and Other — Other Income Other income in the table above includes $4 million in both the fourth quarter of 2024 and the fourth quarter of 2023, in management fees paid to AFG by the AFG-managed CLOs (AFG’s consolidated managed investment entities). The management fees are eliminated in consolidation — see the other income line in the Consolidate MIEs column under “Results of Operations — Segmented Statement of Earnings.” Excluding amounts eliminated in consolidation, AFG recorded other income outside of its property and casualty insurance segment of $2 million and $1 million in the fourth quarter of 2024 and the fourth quarter of 2023, respectively. Holding Company and Other — Other Expenses AFG’s holding companies and other operations outside of its property and casualty insurance segment recorded other expenses of $42 million in the fourth quarter of 2024 compared to $46 million in the fourth quarter of 2023, a decrease of $4 million (9%). This decrease is due primarily to lower aircraft related expenses in the fourth quarter of 2024 compared to the fourth quarter of 2023. Holding Company and Other — Interest Charges on Borrowed Money AFG’s holding companies and other operations outside of its property and casualty insurance segment recorded interest expense of $19 million in both the fourth quarter of 2024 and the fourth quarter of 2023. Realized Gains (Losses) on Securities AFG’s realized gains (losses) on securities were net losses of $10 million in the fourth quarter of 2024 compared to net gains of $31 million in the fourth quarter of 2023, a change of $41 million (132%). Realized gains (losses) on securities consisted of the following (in millions): [[GREPCENT_TABLE]] [["","Three months ended December 31,"],["2024","","2023"],["Realized gains (losses) before impairment allowances:"],["Disposals","$","\u2014","","","$","(2)"],["Change in the fair value of equity securities","3","","","33"],["Change in the fair value of derivatives","(3)","","","2"],["","\u2014","","","33"],["Change in allowance for impairments on securities","(10)","","","(2)"],["Realized gains (losses) on securities","$","(10)","","","$","31"]] [[/GREPCENT_TABLE]] The $3 million net realized gain from the change in the fair value of equity securities in the fourth quarter of 2024 includes gains of $4 million on investments in technology companies. The $33 million net realized gain from the change in the fair value of equity securities in the fourth quarter of 2023 includes gains of $15 million on investments in banks and financing companies, $6 million on investments in retail companies, $5 million on investments in healthcare companies and $5 million on investments in media companies. The $10 million change in allowance for impairments on securities in the fourth quarter of 2024 relates primarily to an allowance taken on fixed maturities from a single issuer in the retail sector. 60 Table of Contents Consolidated Income Taxes AFG’s consolidated provision for income taxes was $65 million for the fourth quarter of 2024 compared to $72 million in the fourth quarter of 2023, a decrease of $7 million (10%). The following is a reconciliation of income taxes at the statutory rate to the provision for income taxes as shown in the segmented statement of earnings (dollars in millions): [[GREPCENT_TABLE]] [["","Three months ended December 31,"],["","2024","","2023"],["","Amount","","% of EBT","","Amount","","% of EBT"],["Earnings before income taxes (\u201cEBT\u201d)","$","320","","","","","$","335"],["Income taxes at statutory rate","$","67","","","21","%","","$","70","","","21","%"],["Effect of:"],["Tax exempt interest","(2)","","","(1","%)","","(1)","","","\u2014","%"],["Employee stock ownership plan dividend paid deduction","(2)","","","(1","%)","","(2)","","","(1","%)"],["Stock-based compensation","(1)","","","\u2014","%","","\u2014","","","\u2014","%"],["Change in valuation allowance","(1)","","","\u2014","%","","\u2014","","","\u2014","%"],["Dividend received deduction","\u2014","","","\u2014","%","","(1)","","","\u2014","%"],["Nondeductible expenses","1","","","\u2014","%","","3","","","1","%"],["Foreign operations","1","","","\u2014","%","","\u2014","","","\u2014","%"],["Other","2","","","1","%","","3","","","\u2014","%"],["Provision for income taxes","$","65","","","20","%","","$","72","","","21","%"]] [[/GREPCENT_TABLE]] See Note L — “Income Taxes” to the financial statements for an analysis of items affecting AFG’s effective tax rate. 61 Table of Contents RESULTS OF OPERATIONS — YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 Segmented Statement of Earnings AFG reports its operations as two segments: (i) Property and casualty insurance (“P&C”) and (ii) Other, which includes holding company costs and income and expenses related to the managed investment entities (“MIEs”). AFG’s net earnings, determined in accordance with GAAP, include certain items that may not be indicative of its ongoing core operations. The following tables for the years ended December 31, 2024, 2023 and 2022 identify such items by segment and reconcile net earnings to core net operating earnings, a non-GAAP financial measure that AFG believes is a useful tool for investors and analysts in analyzing ongoing operating trends (in millions): [[GREPCENT_TABLE]] [["","","","Other"],["","P&C","","Consol. MIEs","","Holding Co., other and unallocated","","Total","","Non-core reclass","","GAAP Total"],["Year ended December 31, 2024"],["Revenues:"],["Net earned premiums","$","7,036","","","$","\u2014","","","$","\u2014","","","$","7,036","","","$","\u2014","","","$","7,036"],["Net investment income","784","","","(33)","","","29","","","780","","","\u2014","","","780"],["Realized gains (losses) on securities","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Income of MIEs:"],["Investment income","\u2014","","","380","","","\u2014","","","380","","","\u2014","","","380"],["Gain (loss) on change in fair value of assets/liabilities","\u2014","","","4","","","\u2014","","","4","","","\u2014","","","4"],["Other income","8","","","(13)","","","129","","","124","","","\u2014","","","124"],["Total revenues","7,828","","","338","","","158","","","8,324","","","\u2014","","","8,324"],["Costs and Expenses:"],["Losses and loss adjustment expenses","4,455","","","\u2014","","","5","","","4,460","","","\u2014","","","4,460"],["Commissions and other underwriting expenses","1,961","","","\u2014","","","46","","","2,007","","","\u2014","","","2,007"],["Interest charges on borrowed money","\u2014","","","\u2014","","","76","","","76","","","\u2014","","","76"],["Expenses of MIEs","\u2014","","","338","","","\u2014","","","338","","","\u2014","","","338"],["Other expenses","84","","","\u2014","","","221","","","305","","","14","","","319"],["Total costs and expenses","6,500","","","338","","","348","","","7,186","","","14","","","7,200"],["Earnings before income taxes","1,328","","","\u2014","","","(190)","","","1,138","","","(14)","","","1,124"],["Provision for income taxes","279","","","\u2014","","","(43)","","","236","","","1","","","237"],["Core Net Operating Earnings","1,049","","","\u2014","","","(147)","","","902"],["Non-core earnings (loss) (*):"],["Realized gains (losses) on securities, net of tax","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Realized loss on subsidiary","(4)","","","\u2014","","","\u2014","","","(4)","","","4","","","\u2014"],["Special A&E charge, net of tax","\u2014","","","\u2014","","","(11)","","","(11)","","","11","","","\u2014"],["Net Earnings","$","1,045","","","$","\u2014","","","$","(158)","","","$","887","","","$","\u2014","","","$","887"]] [[/GREPCENT_TABLE]] 62 Table of Contents [[GREPCENT_TABLE]] [["","","","Other"],["","P&C","","Consol. MIEs","","Holding Co., other and unallocated","","Total","","Non-core reclass","","GAAP Total"],["Year ended December 31, 2023"],["Revenues:"],["Net earned premiums","$","6,531","","","$","\u2014","","","$","\u2014","","","$","6,531","","","$","\u2014","","","$","6,531"],["Net investment income","729","","","(27)","","","40","","","742","","","\u2014","","","742"],["Realized gains (losses) on:"],["Securities","\u2014","","","\u2014","","","\u2014","","","\u2014","","","(36)","","","(36)"],["Subsidiary","\u2014","","","\u2014","","","\u2014","","","\u2014","","","(4)","","","(4)"],["Income of MIEs:"],["Investment income","\u2014","","","421","","","\u2014","","","421","","","\u2014","","","421"],["Gain (loss) on change in fair value of assets/liabilities","\u2014","","","27","","","\u2014","","","27","","","\u2014","","","27"],["Other income","16","","","(16)","","","146","","","146","","","\u2014","","","146"],["Total revenues","7,276","","","405","","","186","","","7,867","","","(40)","","","7,827"],["Costs and Expenses:"],["Losses and loss adjustment expenses","4,017","","","\u2014","","","16","","","4,033","","","\u2014","","","4,033"],["Commissions and other underwriting expenses","1,883","","","\u2014","","","52","","","1,935","","","\u2014","","","1,935"],["Interest charges on borrowed money","\u2014","","","\u2014","","","76","","","76","","","\u2014","","","76"],["Expenses of MIEs","\u2014","","","405","","","\u2014","","","405","","","\u2014","","","405"],["Other expenses","72","","","\u2014","","","219","","","291","","","14","","","305"],["Total costs and expenses","5,972","","","405","","","363","","","6,740","","","14","","","6,754"],["Earnings before income taxes","1,304","","","\u2014","","","(177)","","","1,127","","","(54)","","","1,073"],["Provision for income taxes","265","","","\u2014","","","(33)","","","232","","","(11)","","","221"],["Core Net Operating Earnings","1,039","","","\u2014","","","(144)","","","895"],["Non-core earnings (loss) (*):"],["Realized gains (losses) on securities, net of tax","\u2014","","","\u2014","","","(28)","","","(28)","","","28","","","\u2014"],["Realized loss on subsidiary","(4)","","","\u2014","","","\u2014","","","(4)","","","4","","","\u2014"],["Special A&E charge, net of tax","\u2014","","","\u2014","","","(12)","","","(12)","","","12","","","\u2014"],["Gain on retirement of debt, net of tax","\u2014","","","\u2014","","","1","","","1","","","(1)","","","\u2014"],["Net Earnings","$","1,035","","","$","\u2014","","","$","(183)","","","$","852","","","$","\u2014","","","$","852"]] [[/GREPCENT_TABLE]] 63 Table of Contents [[GREPCENT_TABLE]] [["","","","Other"],["","P&C","","Consol. MIEs","","Holding Co., other and unallocated","","Total","","Non-core reclass","","GAAP Total"],["Year ended December 31, 2022"],["Revenues:"],["Net earned premiums","$","6,085","","","$","\u2014","","","$","\u2014","","","$","6,085","","","$","\u2014","","","$","6,085"],["Net investment income","683","","","10","","","24","","","717","","","\u2014","","","717"],["Realized gains (losses) on securities","\u2014","","","\u2014","","","\u2014","","","\u2014","","","(116)","","","(116)"],["Income of MIEs:"],["Investment income","\u2014","","","268","","","\u2014","","","268","","","\u2014","","","268"],["Gain (loss) on change in fair value of assets/liabilities","\u2014","","","(31)","","","\u2014","","","(31)","","","\u2014","","","(31)"],["Other income","12","","","(17)","","","122","","","117","","","\u2014","","","117"],["Total revenues","6,780","","","230","","","146","","","7,156","","","(116)","","","7,040"],["Costs and Expenses:"],["Losses and loss adjustment expenses","3,629","","","\u2014","","","\u2014","","","3,629","","","\u2014","","","3,629"],["Commissions and other underwriting expenses","1,680","","","\u2014","","","38","","","1,718","","","\u2014","","","1,718"],["Interest charges on borrowed money","\u2014","","","\u2014","","","85","","","85","","","\u2014","","","85"],["Expenses of MIEs","\u2014","","","230","","","\u2014","","","230","","","\u2014","","","230"],["Other expenses","52","","","\u2014","","","194","","","246","","","9","","","255"],["Total costs and expenses","5,361","","","230","","","317","","","5,908","","","9","","","5,917"],["Earnings before income taxes","1,419","","","\u2014","","","(171)","","","1,248","","","(125)","","","1,123"],["Provision for income taxes","295","","","\u2014","","","(40)","","","255","","","(30)","","","225"],["Core Net Operating Earnings","1,124","","","\u2014","","","(131)","","","993"],["Non-core earnings (loss) (*):"],["Realized gains (losses) on securities, net of tax","\u2014","","","\u2014","","","(92)","","","(92)","","","92","","","\u2014"],["Loss on retirement of debt, net of tax","\u2014","","","\u2014","","","(7)","","","(7)","","","7","","","\u2014"],["Other, net of tax","\u2014","","","\u2014","","","4","","","4","","","(4)","","","\u2014"],["Net Earnings","$","1,124","","","$","\u2014","","","$","(226)","","","$","898","","","$","\u2014","","","$","898"]] [[/GREPCENT_TABLE]] (*)See the reconciliation of core earnings to GAAP net earnings under “Results of Operations — General” for details on the tax and noncontrolling interest impacts of these reconciling items. Property and Casualty Insurance Segment — Results of Operations AFG’s property and casualty insurance operations contributed $1.33 billion in GAAP pretax earnings in 2024 compared to $1.30 billion in 2023, an increase of $28 million (2%). Property and casualty core pretax earnings were $1.33 billion in 2024 compared to $1.30 billion in 2023, an increase of $24 million (2%). The increase in GAAP and core pretax earnings in 2024 compared to 2023 reflects higher investment income outside of alternative investments, partially offset by lower investment income from AFG’s alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs) and lower underwriting profit. AFG’s property and casualty insurance operations contributed $1.30 billion in GAAP pretax earnings in 2023 compared to $1.42 billion in 2022, a decrease of $119 million (8%). Property and casualty core pretax earnings were $1.30 billion in 2023 compared to $1.42 billion in 2022, a decrease of $115 million (8%). The decrease in GAAP and core pretax earnings reflects lower underwriting profit and lower investment income from alternative investments, partially offset by higher investment income outside of alternative investments in 2023 compared to 2022. 64 Table of Contents The following table details AFG’s GAAP and core earnings before income taxes from its property and casualty insurance operations for the years ended December 31, 2024, 2023 and 2022 (dollars in millions): [[GREPCENT_TABLE]] [["","Year ended December 31,","","% Change"],["","2024","","2023","","2022","","2024 - 2023","","2023 - 2022"],["Gross written premiums","$","10,533","","","$","9,656","","","$","9,057","","","9","%","","7","%"],["Reinsurance premiums ceded","(3,394)","","","(2,964)","","","(2,851)","","","15","%","","4","%"],["Net written premiums","7,139","","","6,692","","","6,206","","","7","%","","8","%"],["Change in unearned premiums","(103)","","","(161)","","","(121)","","","(36","%)","","33","%"],["Net earned premiums","7,036","","","6,531","","","6,085","","","8","%","","7","%"],["Loss and loss adjustment expenses","4,455","","","4,017","","","3,629","","","11","%","","11","%"],["Commissions and other underwriting expenses","1,961","","","1,883","","","1,680","","","4","%","","12","%"],["Underwriting gain","620","","","631","","","776","","","(2","%)","","(19","%)"],["Net investment income","784","","","729","","","683","","","8","%","","7","%"],["Other income and expenses, net","(76)","","","(56)","","","(40)","","","36","%","","40","%"],["Core earnings before income taxes","1,328","","","1,304","","","1,419","","","2","%","","(8","%)"],["Realized loss on subsidiary","\u2014","","","(4)","","","\u2014","","","(100","%)","","\u2014","%"],["GAAP earnings before income taxes","$","1,328","","","$","1,300","","","$","1,419","","","2","%","","(8","%)"],["","Year ended December 31,","","Change"],["Combined Ratios:","2024","","2023","","2022","","2024 - 2023","","2023 - 2022"],["Specialty lines"],["Loss and LAE ratio","63.3","%","","61.5","%","","59.6","%","","1.8","%","","1.9","%"],["Underwriting expense ratio","27.9","%","","28.8","%","","27.6","%","","(0.9","%)","","1.2","%"],["Combined ratio","91.2","%","","90.3","%","","87.2","%","","0.9","%","","3.1","%"],["Aggregate \u2014 including exited lines"],["Loss and LAE ratio","63.3","%","","61.6","%","","59.7","%","","1.7","%","","1.9","%"],["Underwriting expense ratio","27.9","%","","28.8","%","","27.6","%","","(0.9","%)","","1.2","%"],["Combined ratio","91.2","%","","90.4","%","","87.3","%","","0.8","%","","3.1","%"]] [[/GREPCENT_TABLE]] AFG reports the underwriting performance of its Specialty property and casualty insurance business in the following sub-segments: (i) Property and transportation, (ii) Specialty casualty and (iii) Specialty financial. Gross Written Premiums Gross written premiums (“GWP”) for AFG’s property and casualty insurance segment were $10.53 billion in 2024 compared to $9.66 billion in 2023, an increase of $877 million (9%). GWP increased $599 million (7%) in 2023 compared to 2022. Detail of AFG’s property and casualty gross written premiums is shown below (dollars in millions): [[GREPCENT_TABLE]] [["","Year ended December 31,","","% Change"],["","2024","","2023","","2022","","2024 - 2023","","2023 - 2022"],["","GWP","","%","","GWP","","%","","GWP","","%"],["Property and transportation","$","4,735","","","45","%","","$","4,146","","","43","%","","$","4,060","","","45","%","","14","%","","2","%"],["Specialty casualty","4,543","","","43","%","","4,368","","","45","%","","4,115","","","45","%","","4","%","","6","%"],["Specialty financial","1,255","","","12","%","","1,142","","","12","%","","882","","","10","%","","10","%","","29","%"],["","$","10,533","","","100","%","","$","9,656","","","100","%","","$","9,057","","","100","%","","9","%","","7","%"]] [[/GREPCENT_TABLE]] 65 Table of Contents Reinsurance Premiums Ceded Reinsurance premiums ceded (“Ceded”) for AFG’s property and casualty insurance segment were 32% of gross written premiums for the year ended December 31, 2024 and 31% for both years ended December 31, 2023 and December 31, 2022, an increase of 1 percentage point for 2024 compared to 2023 and 2022. Detail of AFG’s property and casualty reinsurance premiums ceded is shown below (dollars in millions): [[GREPCENT_TABLE]] [["","Year ended December 31,","","Change in % of GWP"],["","2024","","2023","","2022","","2024 - 2023","","2023 - 2022"],["","Ceded","","% of GWP","","Ceded","","% of GWP","","Ceded","","% of GWP"],["Property and transportation","$","(1,924)","","","41","%","","$","(1,595)","","","38","%","","$","(1,545)","","","38","%","","3","%","","\u2014","%"],["Specialty casualty","(1,500)","","","33","%","","(1,424)","","","33","%","","(1,387)","","","34","%","","\u2014","%","","(1","%)"],["Specialty financial","(210)","","","17","%","","(207)","","","18","%","","(171)","","","19","%","","(1","%)","","(1","%)"],["Other specialty","240","","","","","262","","","","","252"],["","$","(3,394)","","","32","%","","$","(2,964)","","","31","%","","$","(2,851)","","","31","%","","1","%","","\u2014","%"]] [[/GREPCENT_TABLE]] Net Written Premiums Net written premiums (“NWP”) for AFG’s property and casualty insurance segment were $7.14 billion in 2024 compared to $6.69 billion in 2023, an increase of $447 million (7%). NWP increased $486 million (8%) in 2023 compared to 2022. Detail of AFG’s property and casualty net written premiums is shown below (dollars in millions): [[GREPCENT_TABLE]] [["","Year ended December 31,","","% Change"],["","2024","","2023","","2022","","2024 - 2023","","2023 - 2022"],["","NWP","","%","","NWP","","%","","NWP","","%"],["Property and transportation","$","2,811","","","39","%","","$","2,551","","","38","%","","$","2,515","","","41","%","","10","%","","1","%"],["Specialty casualty","3,043","","","43","%","","2,944","","","44","%","","2,728","","","44","%","","3","%","","8","%"],["Specialty financial","1,045","","","15","%","","935","","","14","%","","711","","","11","%","","12","%","","32","%"],["Other specialty","240","","","3","%","","262","","","4","%","","252","","","4","%","","(8","%)","","4","%"],["","$","7,139","","","100","%","","$","6,692","","","100","%","","$","6,206","","","100","%","","7","%","","8","%"]] [[/GREPCENT_TABLE]] Net Earned Premiums Net earned premiums (“NEP”) for AFG’s property and casualty insurance segment were $7.04 billion in 2024 compared to $6.53 billion in 2023, an increase of $505 million (8%). NEP increased $446 million (7%) in 2023 compared to 2022. Detail of AFG’s property and casualty net earned premiums is shown below (dollars in millions): [[GREPCENT_TABLE]] [["","Year ended December 31,","","% Change"],["","2024","","2023","","2022","","2024 - 2023","","2023 - 2022"],["","NEP","","%","","NEP","","%","","NEP","","%"],["Property and transportation","$","2,793","","","40","%","","$","2,519","","","39","%","","$","2,487","","","41","%","","11","%","","1","%"],["Specialty casualty","2,967","","","42","%","","2,886","","","44","%","","2,659","","","44","%","","3","%","","9","%"],["Specialty financial","1,032","","","15","%","","867","","","13","%","","698","","","11","%","","19","%","","24","%"],["Other specialty","244","","","3","%","","259","","","4","%","","241","","","4","%","","(6","%)","","7","%"],["","$","7,036","","","100","%","","$","6,531","","","100","%","","$","6,085","","","100","%","","8","%","","7","%"]] [[/GREPCENT_TABLE]] The $877 million (9%) increase in gross written premiums in 2024 compared to 2023 reflects growth in each of the Specialty property and casualty sub-segments as a result of additional crop premiums from the CRS acquisition in the Property and transportation sub-segment and new business opportunities, increased exposures and a good renewal rate environment. Overall average renewal rates increased approximately 7% in 2024. Excluding the workers’ compensation businesses, renewal pricing increased approximately 8%. The $599 million (7%) increase in gross written premiums in 2023 compared to 2022 reflects growth in each of the Specialty property and casualty sub-segments as a result of a combination of new business opportunities, increased exposures and a good renewal rate environment. Overall average renewal rates increased approximately 5% in 2023. Excluding the workers’ compensation businesses, renewal pricing increased approximately 6%. Property and transportation Gross written premiums increased $589 million (14%) in 2024 compared to 2023. Year-over-year premium growth resulted from additional crop premium associated with the CRS acquisition as well as new business opportunities, a favorable rate environment and increased exposures in the commercial auto businesses. This year-over-year premium growth was tempered by the impact of lower year-over-year commodity pricing on winter wheat premiums, coupled with elevated pricing competition and the non-renewal of certain under-performing accounts in the 66 Table of Contents transportation businesses. Excluding crop premium, gross and net written premiums in this group grew by 5% and 4%, respectively. Average renewal rates increased approximately 8% for this group in 2024. Reinsurance premiums ceded as a percentage of gross written premiums increased 3 percentage points in 2024 compared to 2023 reflecting the impact of higher cessions in the crop business and growth in certain programs in the transportation businesses that cede a larger percentage of premiums than some of the other businesses in the Property and transportation sub-segment. Gross written premiums increased $86 million (2%) in 2023 compared to 2022 reflecting the impact of increased rates, retentions and exposures in the transportation and ocean marine businesses and slightly higher crop premium related to the CRS acquisition in the fourth quarter of 2023. These items were partially offset by the impact of 2023 spring commodity futures pricing and related volatility on premiums in the crop business. Average renewal rates increased approximately 6% for this group in 2023. Reinsurance premiums ceded as a percentage of gross written premiums were comparable in 2023 and 2022 reflecting growth in alternative risk transfer products in the transportation businesses, offset by the impact of lower cessions in the crop business. Both of these businesses cede a larger percentage of premiums than some of the other businesses in the Property and transportation sub-segment. Specialty casualty Gross written premiums increased $175 million (4%) in 2024 compared to 2023. The higher-year-over-year premiums resulted primarily from growth in the excess and surplus, excess liability and certain targeted markets businesses as a result of rate increases, new business opportunities and strong policy retention. The mergers and acquisitions liability business also benefited from an increase in mergers and acquisition activity. This growth was tempered by lower year-over-year workers’ compensation premiums. Average renewal rates increased approximately 6% for this group in 2024. Excluding overall rate decreases in the workers’ compensation businesses, renewal rates for this group increased approximately 9% in 2024. Reinsurance premiums ceded as a percentage of gross written premiums were comparable in 2024 and 2023 reflecting lower cessions in certain more heavily reinsured products in the social services business, offset by the impact of higher premiums in the excess and surplus and mergers and acquisitions liability businesses, which cede a larger percentage of premiums than some of the other businesses in the Specialty casualty sub-segment and higher cessions in the public sector business. Gross written premiums increased $253 million (6%) in 2023 compared to 2022 due primarily to increased exposures from payroll growth and new business in the workers’ compensation businesses, new business opportunities, strong policy retention and rate increases in several of the targeted markets businesses and increased exposures and higher renewal rates in the excess and surplus and excess liability businesses. This growth was partially offset by lower premiums in the mergers and acquisitions liability and executive liability businesses. Average renewal rates increased approximately 4% for this group in 2023. Excluding overall rate decreases in the workers’ compensation businesses, renewal rates for this group increased approximately 6% in 2023. Reinsurance premiums ceded as a percentage of gross written premiums decreased 1 percentage point in 2023 compared to 2022 reflecting higher premiums in the workers’ compensation businesses (which cede a lower percentage of premiums than some of the other businesses in the Specialty casualty sub-segment) and lower cessions in the environmental and mergers and acquisitions liability businesses and at ABA Insurance Services. Specialty financial Gross written premiums increased $113 million (10%) in 2024 compared to 2023. Year-over-year growth in the financial institutions business was partially offset by a decision to pause writing of new intellectual property-related coverage. Average renewal rates increased approximately 6% for this group in 2024. Reinsurance premiums ceded as a percentage of gross written premiums decreased 1 percentage point in 2024 compared to 2023 reflecting lower gross written premiums in the innovative markets business, which cedes a larger percentage of premiums than some of the other businesses in the Specialty financial sub-segment, partially offset by the impact of higher reinstatement premiums paid to reinsurers in the fidelity and surety businesses. Gross written premiums increased $260 million (29%) in 2023 compared to 2022 due primarily to growth in the financial institutions business. Average renewal rates for this group increased approximately 5% in 2023. Reinsurance premiums ceded as a percentage of gross written premiums decreased 1 percentage point in 2023 compared to 2022 reflecting the impact of reinstatement premiums paid to reinsurers in 2022 related to Hurricane Ian. Other specialty The amounts shown as reinsurance premiums ceded represent business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty property and casualty insurance sub-segments. Reinsurance premiums assumed decreased $22 million (8%) in 2024 compared to 2023 and increased $10 million (4%) in 2023 compared to 2022, reflecting changes in premiums retained, primarily from businesses in the Specialty casualty sub-segment. 67 Table of Contents Combined Ratio The table below (dollars in millions) details the components of the combined ratio for AFG’s property and casualty insurance segment for 2024, 2023 and 2022: [[GREPCENT_TABLE]] [["","Year ended December 31,","","Change","","Year ended December 31,"],["","2024","","2023","","2022","","2024 - 2023","","2023 - 2022","","2024","","2023","","2022"],["Property and transportation"],["Loss and LAE ratio","69.9","%","","69.2","%","","69.8","%","","0.7","%","","(0.6","%)"],["Underwriting expense ratio","22.5","%","","23.6","%","","21.9","%","","(1.1","%)","","1.7","%"],["Combined ratio","92.4","%","","92.8","%","","91.7","%","","(0.4","%)","","1.1","%"],["Underwriting profit","","","","","","","","","","","$","211","","","$","184","","","$","208"],["Specialty casualty"],["Loss and LAE ratio","62.4","%","","60.3","%","","54.7","%","","2.1","%","","5.6","%"],["Underwriting expense ratio","26.1","%","","26.7","%","","26.5","%","","(0.6","%)","","0.2","%"],["Combined ratio","88.5","%","","87.0","%","","81.2","%","","1.5","%","","5.8","%"],["Underwriting profit","","","","","","","","","","","$","340","","","$","375","","","$","500"],["Specialty financial"],["Loss and LAE ratio","41.6","%","","37.8","%","","34.1","%","","3.8","%","","3.7","%"],["Underwriting expense ratio","45.5","%","","49.5","%","","49.6","%","","(4.0","%)","","(0.1","%)"],["Combined ratio","87.1","%","","87.3","%","","83.7","%","","(0.2","%)","","3.6","%"],["Underwriting profit","","","","","","","","","","","$","134","","","$","110","","","$","114"],["Total Specialty"],["Loss and LAE ratio","63.3","%","","61.5","%","","59.6","%","","1.8","%","","1.9","%"],["Underwriting expense ratio","27.9","%","","28.8","%","","27.6","%","","(0.9","%)","","1.2","%"],["Combined ratio","91.2","%","","90.3","%","","87.2","%","","0.9","%","","3.1","%"],["Underwriting profit","","","","","","","","","","","$","626","","","$","633","","","$","780"],["Aggregate \u2014 including exited lines"],["Loss and LAE ratio","63.3","%","","61.6","%","","59.7","%","","1.7","%","","1.9","%"],["Underwriting expense ratio","27.9","%","","28.8","%","","27.6","%","","(0.9","%)","","1.2","%"],["Combined ratio","91.2","%","","90.4","%","","87.3","%","","0.8","%","","3.1","%"],["Underwriting profit","","","","","","","","","","","$","620","","","$","631","","","$","776"]] [[/GREPCENT_TABLE]] The Specialty property and casualty insurance operations generated an underwriting profit of $626 million in 2024 compared to $633 million in 2023, a decrease of $7 million (1%). Higher underwriting profit in the Property and transportation and Specialty financial sub-segments was more than offset by lower underwriting profit in the Specialty casualty sub-segment and higher losses in the business assumed by AFG’s internal reinsurance program. Overall catastrophe losses were $182 million (2.6 points on the combined ratio), including $2 million in net reinstatement premiums, for 2024 compared to catastrophe losses of $165 million (2.5 points), including $3 million in net reinstatement premiums, for 2023. The Specialty property and casualty insurance operations generated an underwriting profit of $633 million in 2023 compared to $780 million in 2022, a decrease of $147 million (19%). This decrease reflects lower underwriting profit in each of the Specialty property and casualty insurance sub-segments. Overall catastrophe losses were $165 million (2.5 points on the combined ratio), including $3 million in net reinstatement premiums, for 2023 compared to catastrophe losses of $93 million (1.5 points), including $5 million in net reinstatement premiums, for 2022. Property and transportation Underwriting profit for this group was $211 million in 2024 compared to $184 million in 2023, an increase of $27 million (15%). Higher year-over-year underwriting profit in the property and inland marine and crop insurance operations was partially offset by lower underwriting profitability in the transportation businesses. Catastrophe losses were $65 million (2.3 points on the combined ratio), including $1 million in net reinstatement premiums, in 2024 compared to catastrophe losses of $53 million (2.0 points), including $2 million in net reinstatement premiums, in 2023. 68 Table of Contents Underwriting profit for this group was $184 million in 2023 compared to $208 million in 2022, a decrease of $24 million (12%). Below average underwriting profitability in the crop insurance operations was partially offset by higher year-over-year underwriting profit in the property and inland marine business. Catastrophe losses were $53 million (2.0 points on the combined ratio), including $2 million in net reinstatement premiums, in 2023 compared to catastrophe losses of $45 million (1.9 points), including $3 million in net reinstatement premiums, in 2022. Specialty casualty Underwriting profit for this group was $340 million in 2024 compared to $375 million in 2023, a decrease of $35 million (9%). Higher year-over-year underwriting profit in the targeted markets businesses was more than offset by lower levels of favorable prior year reserve development in the executive liability business and social inflation driven adverse development in the umbrella and excess business. Catastrophe losses were $32 million (1.1 points on the combined ratio), including $1 million in net reinstatement premiums, in 2024 compared to catastrophe losses of $36 million (1.2 points), including $1 million in net reinstatement premiums, in 2023. Underwriting profit for this group was $375 million in 2023 compared to $500 million in 2022, a decrease of $125 million (25%). The lower year-over-year underwriting profit was due primarily to lower favorable prior year reserve development in the workers’ compensation businesses and adverse reserve development in the public sector and excess and surplus businesses, partially offset by higher favorable prior year reserve development in the executive liability business. Catastrophe losses were $36 million (1.2 points on the combined ratio), including $1 million in net reinstatement premiums, in 2023 compared to catastrophe losses of $11 million (0.5 points) in 2022. Specialty financial Underwriting profit for this group was $134 million in 2024 compared to $110 million in 2023, an increase of $24 million (22%). This year-over-year increase reflects higher underwriting profit in the financial institutions business, partially offset by lower profitability resulting from the pause in writing of intellectual property-related coverage. Catastrophe losses were $81 million (7.8 points on the combined ratio) in 2024 compared to catastrophe losses of $49 million (5.7 points) in 2023. Underwriting profit for this group was $110 million in 2023 compared to $114 million in 2022, a decrease of $4 million (4%). This decrease reflects higher year-over-year catastrophe losses in the financial institutions business and lower underwriting profit in the surety business. Catastrophe losses were $49 million (5.7 points on the combined ratio) in 2023 compared to catastrophe losses of $36 million (4.9 points), including $3 million in net reinstatement premiums, in 2022. Other specialty This group reported an underwriting loss of $59 million in 2024 compared to $36 million in 2023, an increase of $23 million (64%), reflecting higher losses in the business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty sub-segments. Catastrophe losses were $4 million in 2024 compared to $27 million in 2023. This group reported an underwriting loss of $36 million in 2023 compared to $42 million in 2022, a decrease of $6 million (14%), reflecting lower losses in the business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty sub-segments. The underwriting loss in 2022 relates primarily to losses from social inflation exposed operations in the Specialty casualty sub-segment. Catastrophe losses were $27 million in 2023 compared to $1 million in 2022. Aggregate Aggregate underwriting results for AFG’s property and casualty insurance segment include adverse prior year reserve development of $6 million in 2024, $2 million in 2023 and $4 million in 2022, related to business outside of the Specialty group that AFG no longer writes. 69 Table of Contents Losses and Loss Adjustment Expenses AFG’s overall loss and LAE ratio was 63.3%, 61.6% and 59.7% in 2024, 2023 and 2022, respectively. The components of AFG’s property and casualty losses and LAE amounts and ratio are detailed below (dollars in millions): [[GREPCENT_TABLE]] [["","Year ended December 31,"],["","Amount","","Ratio","","Change in Ratio"],["","2024","","2023","","2022","","2024","","2023","","2022","","2024 - 2023","","2023 - 2022"],["Property and transportation"],["Current year, excluding catastrophe losses","$","1,982","","","$","1,774","","","$","1,785","","","71.0","%","","70.5","%","","71.6","%","","0.5","%","","(1.1","%)"],["Prior accident years development","(94)","","","(84)","","","(92)","","","(3.4","%)","","(3.3","%)","","(3.7","%)","","(0.1","%)","","0.4","%"],["Current year catastrophe losses including the impact of net reinstatement premiums","64","","","51","","","42","","","2.3","%","","2.0","%","","1.9","%","","0.3","%","","0.1","%"],["Property and transportation losses and LAE and ratio","$","1,952","","","$","1,741","","","$","1,735","","","69.9","%","","69.2","%","","69.8","%","","0.7","%","","(0.6","%)"],["Specialty casualty"],["Current year, excluding catastrophe losses","$","1,832","","","$","1,814","","","$","1,632","","","61.7","%","","62.9","%","","61.4","%","","(1.2","%)","","1.5","%"],["Prior accident years development","(10)","","","(110)","","","(190)","","","(0.4","%)","","(3.8","%)","","(7.2","%)","","3.4","%","","3.4","%"],["Current year catastrophe losses including the impact of net reinstatement premiums","31","","","35","","","11","","","1.1","%","","1.2","%","","0.5","%","","(0.1","%)","","0.7","%"],["Specialty casualty losses and LAE and ratio","$","1,853","","","$","1,739","","","$","1,453","","","62.4","%","","60.3","%","","54.7","%","","2.1","%","","5.6","%"],["Specialty financial"],["Current year, excluding catastrophe losses","$","359","","","$","311","","","$","252","","","34.9","%","","35.8","%","","36.0","%","","(0.9","%)","","(0.2","%)"],["Prior accident years development","(11)","","","(32)","","","(47)","","","(1.1","%)","","(3.7","%)","","(6.8","%)","","2.6","%","","3.1","%"],["Current year catastrophe losses including the impact of net reinstatement premiums","81","","","49","","","33","","","7.8","%","","5.7","%","","4.9","%","","2.1","%","","0.8","%"],["Specialty financial losses and LAE and ratio","$","429","","","$","328","","","$","238","","","41.6","%","","37.8","%","","34.1","%","","3.8","%","","3.7","%"],["Total Specialty"],["Current year, excluding catastrophe losses","$","4,339","","","$","4,079","","","$","3,826","","","61.7","%","","62.4","%","","62.8","%","","(0.7","%)","","(0.4","%)"],["Prior accident years development","(70)","","","(226)","","","(289)","","","(1.0","%)","","(3.4","%)","","(4.7","%)","","2.4","%","","1.3","%"],["Current year catastrophe losses including the impact of net reinstatement premiums","180","","","162","","","88","","","2.6","%","","2.5","%","","1.5","%","","0.1","%","","1.0","%"],["Total Specialty losses and LAE and ratio","$","4,449","","","$","4,015","","","$","3,625","","","63.3","%","","61.5","%","","59.6","%","","1.8","%","","1.9","%"],["Aggregate \u2014 including exited lines"],["Current year, excluding catastrophe losses","$","4,339","","","$","4,079","","","$","3,826","","","61.7","%","","62.4","%","","62.8","%","","(0.7","%)","","(0.4","%)"],["Prior accident years development","(64)","","","(224)","","","(285)","","","(0.9","%)","","(3.4","%)","","(4.7","%)","","2.5","%","","1.3","%"],["Current year catastrophe losses including the impact of net reinstatement premiums","180","","","162","","","88","","","2.5","%","","2.6","%","","1.6","%","","(0.1","%)","","1.0","%"],["Aggregate losses and LAE and ratio","$","4,455","","","$","4,017","","","$","3,629","","","63.3","%","","61.6","%","","59.7","%","","1.7","%","","1.9","%"]] [[/GREPCENT_TABLE]] Current accident year losses and LAE, excluding catastrophe losses The current accident year loss and LAE ratio, excluding catastrophe losses for AFG’s Specialty property and casualty insurance operations was 61.7% in 2024, 62.4% in 2023 and 62.8% in 2022. Property and transportation   The 0.5 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses in 2024 compared to 2023 reflects growth in the crop business, which has a higher loss and LAE ratio than some of the other businesses in the Property and transportation sub-segment and higher reported claim severity in the commercial auto business, partially offset by the impact of improved profitability in the property and inland marine business. The 1.1 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses in 2023 compared to 2022 is due primarily to the impact of elevated large loss activity in the property and inland marine business in 2022 and improved results in certain transportation businesses, partially offset by lower profit in the crop business. 70 Table of Contents Specialty casualty   The 1.2 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses in 2024 compared to 2023 reflects improved results in the workers’ compensation and targeted markets businesses, partially offset by higher claim severity in the excess and surplus business. The 1.5 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses in 2023 compared to 2022 reflects anticipated medical cost inflation and the impact of pressure on rates in the workers’ compensation businesses and higher claim severity in certain liability coverages. Specialty financial   The 0.9 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses in 2024 compared to 2023 reflects growth in the financial institutions business, which has a lower loss and LAE ratio than some of the other businesses in the Specialty financial sub-segment, partially offset by higher reported losses and lower premiums in the fidelity and surety businesses. The 0.2 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses in 2023 compared to 2022 reflects lower claim frequency and growth in the financial institutions business, which has a lower loss and LAE ratio than some of the other businesses in the Specialty financial sub-segment, partially offset by higher claim severity in the innovative markets business. Net prior year reserve development AFG’s Specialty property and casualty insurance operations recorded net favorable reserve development related to prior accident years of $70 million in 2024 compared to $226 million in 2023 and $289 million in 2022, a decrease of $156 million (69%) and $63 million (22%), respectively. Property and transportation Net favorable reserve development of $94 million in 2024 reflects lower than anticipated losses in the crop business, lower than expected claim severity in the property and inland marine and aviation businesses and lower than anticipated claim frequency and severity in the ocean marine business. Net favorable reserve development of $84 million in 2023 reflects lower than anticipated losses in the crop business, lower than expected claim frequency and severity across the transportation businesses and lower than anticipated claim frequency in the property and inland marine and ocean marine businesses and in the Singapore operations. Net favorable reserve development of $92 million in 2022 reflects lower than anticipated losses in the crop business, lower than expected claim frequency in the trucking and ocean marine businesses and in the Singapore operations, lower than expected claim frequency and severity in the aviation business and lower than anticipated claim severity in the property and inland marine business. Specialty casualty Net favorable reserve development of $10 million in 2024 reflects lower than anticipated claim severity in the workers’ compensation businesses and lower than expected claim frequency and severity in the executive liability business, partially offset by higher than anticipated claim frequency and severity in the umbrella and excess liability and social services businesses and higher than expected claim severity in the public sector and general liability businesses. Net favorable reserve development of $110 million in 2023 reflects lower than anticipated claim severity in the workers’ compensation businesses, lower than expected claim frequency in the executive liability and environmental businesses and favorable reserve development related to COVID-19 losses across several businesses, partially offset by higher than anticipated claim severity in the public sector business and higher than expected claim frequency and severity in the excess liability and general liability businesses. Net favorable reserve development of $190 million in 2022 reflects lower than anticipated claim severity in the workers’ compensation businesses and lower than expected claim frequency in the executive liability and excess and surplus businesses, partially offset by higher than anticipated claim severity in the general liability, umbrella and excess liability, and certain targeted markets businesses. Specialty financial Net favorable reserve development of $11 million in 2024 reflects lower than anticipated claim frequency and severity in the financial institutions and fidelity businesses and lower than expected claim frequency in the trade credit business, partially offset by higher than anticipated claim severity in the innovative markets and surety businesses. Net favorable reserve development of $32 million in 2023 reflects lower than anticipated claim frequency in the trade credit, financial institutions and surety businesses and lower than expected claim frequency and severity in the fidelity business. 71 Table of Contents Net favorable reserve development of $47 million in 2022 reflects lower than anticipated claim frequency in the surety, trade credit and financial institutions businesses. Other specialty In addition to the development discussed above, total Specialty prior year reserve development includes net adverse reserve development of $45 million, less than $1 million and $40 million in 2024, 2023, and 2022, respectively, primarily associated with AFG’s internal reinsurance program. The net adverse reserve development reflects $50 million, $4 million and $44 million in 2024, 2023 and 2022, respectively, of net adverse development associated with AFG’s internal reinsurance program, primarily related to social inflation exposed business assumed from the Specialty casualty sub-segment. Aggregate Aggregate net prior accident years reserve development for AFG’s property and casualty insurance segment includes net adverse reserve development of $6 million in 2024, $2 million in 2023 and $4 million in 2022 related to business outside the Specialty group that AFG no longer writes. Catastrophe losses AFG generally seeks to reduce its exposure to catastrophes (whether resulting from climate change or otherwise) through individual risk selection, including minimizing coastal and known fault-line exposures, and the purchase of reinsurance. AFG recorded net catastrophe losses of $180 million in 2024 (before $2 million in net reinstatement premiums) primarily from winter and convective storms in multiple regions of the United States in the first and second quarters, Hurricane Helene in the third quarter and Hurricane Milton in the fourth quarter. Catastrophe losses of $162 million in 2023 (before $3 million in net reinstatement premiums) resulted primarily from February and March storms across much of the United States in the first quarter and storms in multiple regions of the United States in the second, third and fourth quarters. Catastrophe losses of $88 million in 2022 (before $5 million in net reinstatement premiums) resulted primarily from winter storms in multiple regions of the United States in the first quarter, storms in multiple regions of the United States in the second quarter, Hurricane Ian in the third quarter and Winter Storm Elliott in the fourth quarter. Commissions and Other Underwriting Expenses AFG’s property and casualty commissions and other underwriting expenses (“U/W Exp”) were $1.96 billion in 2024 compared to $1.88 billion in 2023, an increase of $78 million (4%). AFG’s underwriting expense ratio was 27.9% in 2024 compared to 28.8% in 2023, a decrease of 0.9 percentage points. AFG’s property and casualty U/W Exp were $1.88 billion in 2023 compared to $1.68 billion in 2022, an increase of $203 million (12%). AFG’s underwriting expense ratio was 28.8% in 2023 compared to 27.6% in 2022, an increase of 1.2 percentage points. Detail of AFG’s property and casualty commissions and other underwriting expenses and underwriting expense ratios is shown below (dollars in millions): [[GREPCENT_TABLE]] [["","Year ended December 31,","","Change in % of NEP"],["","2024","","2023","","2022","","2024 - 2023","","2023 - 2022"],["","U/W Exp","","% of NEP","","U/W Exp","","% of NEP","","U/W Exp","","% of NEP"],["Property and transportation","$","630","","","22.5","%","","$","594","","","23.6","%","","$","544","","","21.9","%","","(1.1","%)","","1.7","%"],["Specialty casualty","774","","","26.1","%","","772","","","26.7","%","","706","","","26.5","%","","(0.6","%)","","0.2","%"],["Specialty financial","469","","","45.5","%","","429","","","49.5","%","","346","","","49.6","%","","(4.0","%)","","(0.1","%)"],["Other specialty","88","","","36.1","%","","88","","","33.9","%","","84","","","34.7","%","","2.2","%","","(0.8","%)"],["","$","1,961","","","27.9","%","","$","1,883","","","28.8","%","","$","1,680","","","27.6","%","","(0.9","%)","","1.2","%"]] [[/GREPCENT_TABLE]] Property and transportation   Commissions and other underwriting expenses as a percentage of net earned premiums decreased 1.1 percentage points in 2024 compared to 2023 reflecting the impact on the ratio of higher earned premiums, including in the crop business which has a lower commissions and other underwriting expense ratio compared to some of the other businesses in the Property and transportation sub-segment and lower average commission rates in the transportation businesses due to a change in the mix of business. 72 Table of Contents Commissions and other underwriting expenses as a percentage of net earned premiums increased 1.7 percentage points in 2023 compared to 2022 reflecting the impact of lower profit-based ceding commissions related to below average profitability in the crop operations, the impact on the ratio of lower earned premiums in the crop operations (which has a lower commissions and other underwriting expense ratio compared to some of the other businesses in the Property and transportation sub-segment) and higher expenses related to certain technology initiatives. Specialty casualty   Commissions and other underwriting expenses as a percentage of net earned premiums decreased 0.6 percentage points in 2024 compared to 2023 reflecting a change in the mix of business towards products with lower commission rates, partially offset by lower ceding commissions received in the workers’ compensation businesses. Commissions and other underwriting expenses as a percentage of net earned premiums increased 0.2 percentage points in 2023 compared to 2022 reflecting higher expenses related to certain technology initiatives, partially offset by the impact on the ratio of growth in earned premiums in the workers’ compensation businesses. Specialty financial   Commissions and other underwriting expenses as a percentage of net earned premiums decreased 4.0 percentage points in 2024 compared to 2023 due primarily to the impact on the ratio of higher earned premiums in the financial institutions business and a change in the mix of business towards products with lower commission rates. Commissions and other underwriting expenses as a percentage of net earned premiums decreased 0.1 percentage points in 2023 compared to 2022 reflecting the impact on the ratio of growth in earned premiums in the financial institutions and innovative markets businesses, partially offset by higher expenses related to certain technology initiatives and the impact of lower profit-based commissions to agents and lower reinstatement premiums recorded in 2022 as a result of losses from Hurricane Ian. Property and Casualty Net Investment Income Net investment income in AFG’s property and casualty insurance operations was $784 million in 2024 compared to $729 million in 2023, an increase of $55 million (8%). Net investment income in AFG’s property and casualty insurance operations was $729 million in 2023 compared to $683 million in 2022, an increase of $46 million (7%). The average invested assets and overall yield earned on investments held by AFG’s property and casualty insurance operations are provided below (dollars in millions): [[GREPCENT_TABLE]] [["","Year ended December 31,","","2024 - 2023","","2023 - 2022"],["","2024","","2023","","2022","","Change","","% Change","","Change","","% Change"],["Net investment income:"],["Net investment income, excluding alternative investments","$","626","","","$","566","","","$","418","","","$","60","","","11","%","","$","148","","","35","%"],["Alternative investments","158","","","163","","","265","","","(5)","","","(3","%)","","(102)","","","(38","%)"],["Total net investment income","$","784","","","$","729","","","$","683","","","$","55","","","8","%","","$","46","","","7","%"],["Average invested assets (at amortized cost)","$","15,479","","","$","14,753","","","$","14,048","","","$","726","","","5","%","","$","705","","","5","%"],["Yield (net investment income as a % of average invested assets)","5.06","%","","4.94","%","","4.86","%","","0.12","%","","","","0.08","%"],["Tax equivalent yield (*)","5.13","%","","5.01","%","","4.96","%","","0.12","%","","","","0.05","%"]] [[/GREPCENT_TABLE]] (*)Adjusts the yield on equity securities and tax-exempt bonds to the fully taxable equivalent yield. The increase in the property and casualty insurance segment’s net investment income in 2024 compared to 2023 reflects the impact of higher balances of invested assets and higher returns on fixed maturity investments, partially offset by lower returns on AFG’s alternative investments portfolio (partnerships and similar investments and AFG-managed CLOs). The property and casualty insurance segment’s overall yield on investments (net investment income as a percentage of average invested assets) was 5.06% in 2024 compared to 4.94% in 2023, an increase of 0.12 percentage points. The annualized return earned on alternative investments was 6.1% in 2024 compared to 7.0% in 2023. The increase in net investment income in 2023 compared to 2022 reflects the impact of higher yields on fixed maturity investments and higher balances of invested assets, partially offset by lower returns on AFG’s alternative investments portfolio as compared to the very strong performance of this portfolio in the prior year period. The property and casualty 73 Table of Contents insurance segment’s overall yield on investments was 4.94% in 2023 compared to 4.86% in 2022, an increase of 0.08 percentage points. The annualized return earned on alternative investments was 7.0% in 2023 compared to 13.2% in 2022. Property and Casualty Other Income and Expenses, Net Other income and expenses, net for AFG’s property and casualty insurance operations was a net expense of $76 million in 2024, $56 million in 2023 and $40 million in 2022, an increase of $20 million (36%) in 2024 compared to 2023 and an increase of $16 million (40%) in 2023 compared to 2022. The table below details the items included in other income and expenses, net for AFG’s property and casualty insurance operations (in millions): [[GREPCENT_TABLE]] [["","Year ended December 31,"],["","2024","","2023","","2022"],["Other income:"],["Income related to the sale of real estate","$","\u2014","","","$","\u2014","","","$","1"],["Other","8","","","16","","","11"],["Total other income","8","","","16","","","12"],["Other expenses:"],["Amortization of intangibles","20","","","15","","","11"],["Interest expense on funds withheld","50","","","41","","","29"],["Acquisition expenses related to CRS","\u2014","","","3","","","\u2014"],["Other (*)","14","","","13","","","12"],["Total other expenses","84","","","72","","","52"],["Other income and expenses, net","$","(76)","","","$","(56)","","","$","(40)"]] [[/GREPCENT_TABLE]] (*)Includes $9 million of expenses in 2024, 2023 and 2022 related to certain technology initiatives. The decrease in other income in 2024 compared to 2023 is due primarily to death benefits received in 2023 from company-owned life insurance policies. The higher amortization of intangibles in 2024 compared to 2023 and 2023 compared to 2022 reflects the acquisition of CRS in July 2023. The $9 million (22%) increase in interest expense on funds withheld in 2024 compared to 2023 and the $12 million (41%) increase in 2023 compared to 2022 reflects the impact of higher balances and higher interest rates paid on funds withheld. Holding Company, Other and Unallocated — Results of Operations AFG’s net GAAP pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $204 million in 2024 compared to $191 million in 2023, an increase of $13 million (7%). AFG’s net core pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $190 million in 2024 compared to $177 million in 2023, an increase of $13 million (7%). AFG’s net GAAP pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $191 million in 2023 compared to $180 million in 2022, an increase of $11 million (6%). AFG’s net core pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $177 million in 2023 compared to $171 million in 2022, an increase of $6 million (4%). 74 Table of Contents The following table details AFG’s GAAP and core loss before income taxes from operations outside of its property and casualty insurance segment in 2024, 2023 and 2022 (dollars in millions): [[GREPCENT_TABLE]] [["","Year ended December 31,","","% Change"],["","2024","","2023","","2022","","2024 - 2023","","2023 - 2022"],["Revenues:"],["Net investment income","$","29","","","$","40","","","$","24","","","(28","%)","","67","%"],["Other income \u2014 P&C fees","111","","","125","","","89","","","(11","%)","","40","%"],["Other income","18","","","21","","","33","","","(14","%)","","(36","%)"],["Total revenues","158","","","186","","","146","","","(15","%)","","27","%"],["Costs and Expenses:"],["Property and casualty insurance \u2014 loss adjustment and underwriting expenses","51","","","68","","","38","","","(25","%)","","79","%"],["Other expense \u2014 expenses associated with P&C fees","60","","","57","","","51","","","5","%","","12","%"],["Other expenses (*)","161","","","162","","","143","","","(1","%)","","13","%"],["Costs and expenses, excluding interest charges on borrowed money","272","","","287","","","232","","","(5","%)","","24","%"],["Loss before income taxes, excluding realized gains and losses and interest charges on borrowed money","(114)","","","(101)","","","(86)","","","13","%","","17","%"],["Interest charges on borrowed money","76","","","76","","","85","","","\u2014","%","","(11","%)"],["Core loss before income taxes, excluding realized gains and losses","(190)","","","(177)","","","(171)","","","7","%","","4","%"],["Pretax non-core special A&E charge","(14)","","","(15)","","","\u2014","","","(7","%)","","\u2014","%"],["Pretax non-core gain (loss) on retirement of debt","\u2014","","","1","","","(9)","","","(100","%)","","(111","%)"],["GAAP loss before income taxes, excluding realized gains and losses","$","(204)","","","$","(191)","","","$","(180)","","","7","%","","6","%"]] [[/GREPCENT_TABLE]] (*)Excludes pretax non-core special A&E charges of $14 million and $15 million in 2024 and 2023, respectively, a pretax non-core gain on retirement of debt of $1 million in 2023 and a pretax non-core loss on retirement of debt of $9 million in 2022. Holding Company and Other — Net Investment Income AFG recorded net investment income on investments held outside of its property and casualty insurance segment of $29 million, $40 million and $24 million in 2024, 2023 and 2022, respectively. The $11 million (28%) decrease in 2024 compared to 2023 reflects the impact of lower average investment balances. The $16 million (67%) increase in 2023 compared to 2022 reflects the impact of a small portfolio of securities held at the holding company that were carried at fair value through net investment income. These securities, all of which were sold in 2022, declined in value by $7 million in 2022. Excluding the change in fair value of these equity securities, net investment income outside of AFG’s property and casualty insurance segment increased $9 million in 2023 compared to 2022 reflecting the impact of higher interest rates on cash and fixed maturity investments, partially offset by lower average investment balances. Holding Company and Other — P&C Fees and Related Expenses Summit, a workers’ compensation insurance subsidiary, collects fees from a small group of unaffiliated insurers for providing underwriting, policy administration and claims services. In addition, certain of AFG’s property and casualty insurance businesses collect fees from customers for ancillary services such as workplace safety programs and premium financing. In 2024, AFG collected $100 million in fees for these services compared to $91 million in 2023 and $82 million in 2022. Management views this fee income, net of the $60 million in 2024, $57 million in 2023 and $51 million in 2022, in expenses incurred to generate such fees, as a reduction in the cost of underwriting its property and casualty insurance policies. In addition, AFG’s property and casualty insurance businesses earned $11 million in 2024 and $34 million in 2023 in fees as compensation for providing services related to the administration of crop insurance business generated by CRS for its former owner prior to AFG’s acquisition of CRS and $7 million in 2022 in fees from AFG’s disposed annuity operations as compensation for certain services provided under a transition services agreement. The expenses related to providing such services are embedded in underwriting expenses. Consistent with internal management reporting, these fees and the related expenses are netted and recorded as a reduction of loss adjustment and other underwriting expenses in AFG’s segmented results. Holding Company and Other — Other Income Other income in the table above includes $13 million in 2024, $16 million in 2023 and $17 million in 2022, in management fees paid to AFG by the AFG-managed CLOs (AFG’s consolidated managed investment entities). The management fees are eliminated in consolidation — see the other income line in the Consolidated MIEs column under “Results of 75 Table of Contents Operations — Segmented Statement of Earnings.” Excluding amounts eliminated in consolidation, AFG recorded other income outside of its property and casualty insurance segment of $5 million in both 2024 and 2023 and $16 million in 2022. The decrease in 2024 and 2023 compared to 2022 is due primarily to income from the sale of real estate in 2022. Holding Company and Other — Other Expenses Excluding the non-core special A&E charges and the non-core gain on retirement of debt discussed below, AFG’s holding companies and other operations outside of its property and casualty insurance segment recorded other expenses of $161 million in 2024 compared to $162 million in 2023, a decrease of $1 million (1%). Excluding the non-core special A&E charge and the non-core gain (loss) on retirement of debt discussed below, AFG’s holding companies and other operations outside of its property and casualty insurance segment recorded other expenses of $162 million in 2023 compared to $143 million in 2022, an increase of $19 million (13%) reflecting the favorable impact of poor stock market performance in 2022 on expenses related to deferred compensation obligations to employees that are tied to stock market performance. To mitigate the impact of fair value changes related to the equity components of these obligations, AFG entered into a total return swap in the second half of 2022. Holding Company and Other — Interest Charges on Borrowed Money AFG’s holding companies and other operations outside of its property and casualty insurance segment recorded interest expense of $76 million in both 2024 and 2023 and $85 million in 2022. The $9 million (11%) decrease in interest expense in 2024 and 2023 compared to 2022 is due primarily to the retirement of AFG’s $425 million principal amount of 3.50% Senior Notes during the first six months of 2022. Holding Company and Other — Special A&E Charges As a result of the in-depth internal reviews of A&E exposures discussed under “Uncertainties — Asbestos and Environmental-related (“A&E”) Insurance Reserves,” AFG’s holding companies and other operations outside of its property and casualty insurance segment recorded pretax non-core special charges of $14 million in 2024, $15 million in 2023 and a minor charge in 2022 (included in AFG’s core operating earnings) to increase liabilities related to the A&E exposures of AFG’s former railroad and manufacturing operations. The 2024 and 2023 charges reflect changes in the scope and costs of investigation and an increase in estimated remediation costs at a limited number of sites. AFG has also increased its reserve for asbestos and toxic substance exposures arising out of these operations. Total charges recorded to increase liabilities for A&E exposures of AFG’s former railroad and manufacturing operations (included in other expenses) were $24 million in 2024, $22 million in 2023, and $17 million in 2022. Holding Company and Other — Gain (Loss) on Retirement of Debt During 2023, AFG repurchased $23 million principal amount of its senior notes, which resulted in a $2 million pretax non-core gain and recorded a $1 million pretax non-core loss related to the write-off of debt issue costs associated with its previous revolving credit facility, which was replaced in June 2023. During 2022, AFG retired $472 million principal amount of its senior notes, which resulted in a $9 million pretax non-core loss. Realized Gains (Losses) on Securities AFG’s realized gains (losses) on securities were net gains of less than $1 million in 2024 compared to net losses of $36 million in 2023, a change of $36 million (100%). AFG’s consolidated realized gains (losses) on securities were net losses of $36 million in 2023 compared to $116 million in 2022, a decrease of $80 million (69%). Realized gains (losses) on securities consisted of the following (in millions): [[GREPCENT_TABLE]] [["","Year ended December 31,"],["2024","","2023","","2022"],["Realized gains (losses) before impairment allowances:"],["Disposals","$","(4)","","","$","(33)","","","$","(15)"],["Change in the fair value of equity securities","32","","","10","","","(96)"],["Change in the fair value of derivatives","(1)","","","(2)","","","(12)"],["Other","\u2014","","","\u2014","","","10"],["","27","","","(25)","","","(113)"],["Change in allowance for impairments on securities","(27)","","","(11)","","","(3)"],["Realized gains (losses) on securities","$","\u2014","","","$","(36)","","","$","(116)"]] [[/GREPCENT_TABLE]] The $33 million net realized loss from disposals in 2023 includes losses of $15 million from the sale of investments in banks and $5 million from the sale of municipal bonds. 76 Table of Contents The $32 million net realized gain from the change in the fair value of equity securities in 2024 includes gains of $21 million on investments in banks and financing companies, $8 million on investments in natural gas companies and $5 million on investments in technology companies, partially offset by losses of $6 million on investments in energy companies. The $10 million net realized gain from the change in the fair value of equity securities in 2023 includes gains of $8 million on investments in retail companies, $7 million on investments in banks and financing companies, $5 million on investments in capital goods companies and $4 million on investments in natural gas companies, partially offset by losses of $8 million on investments in media companies and $6 million on investments in energy companies. The $96 million net realized loss from the change in the fair value of equity securities in 2022 includes losses of $51 million on investments in banks and financing companies, $21 million on investments in media companies, $14 million on investments in healthcare companies, $7 million on investments in technology companies and $3 million on investments in retail companies, partially offset by gains of $17 million on investments in energy and natural gas companies. The $27 million change in allowance for impairments on securities in 2024 relates primarily to allowances taken on corporate bonds from a single issuer in the financial sector and fixed maturities from a single issuer in the retail sector. Realized Loss on Subsidiaries In the second quarter of 2024, AFG recorded $4 million in net tax expense related to a pending IRS settlement regarding the sale of a subsidiary in a prior year. In the third quarter of 2023, AFG recorded a realized loss on subsidiary of $4 million, consisting of a $26 million goodwill impairment charge, partially offset by a $22 million reduction in the fair value of a contingent consideration liability, both related to AFG’s investment in Verikai. See Note D — “Fair Value Measurements” and Note H — “Goodwill and Other Intangibles” to the financial statements. Consolidated Income Taxes AFG’s consolidated provision for income taxes was $237 million in 2024 compared to $221 million in 2023, an increase of $16 million (7%). AFG’s consolidated provision for income taxes was $221 million in 2023 compared to $225 million in 2022, a decrease of $4 million (2%). See Note L — “Income Taxes” to the financial statements for an analysis of items affecting AFG’s effective tax rate. RECENTLY ADOPTED ACCOUNTING STANDARDS See Note C — “Segments of Operations” to the financial statements for accounting guidance adopted in the fourth quarter of 2024, which requires enhanced disclosures about significant segment expenses and a description of the composition of other segment expenses by business segment. The title and position of the chief operating decision maker (“CODM”) and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources is also required to be disclosed. ACCOUNTING STANDARDS TO BE ADOPTED In December 2023, the FASB issued ASU No. 2023-09 (“ASU 2023-09”), Improvements to Income Tax Disclosures. ASU 2023-09 is intended to improve income tax disclosures by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation presented in both dollar and percentage terms; (ii) the disaggregation of income taxes paid (net of refunds received), income (loss) before income taxes and income taxes by jurisdiction (federal, state and foreign taxes); and (iii) further disaggregation of income taxes paid by any individual jurisdiction equal to or exceeding five percent of total income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application. As of December 31, 2024, AFG has not adopted ASU 2023-09. Management is evaluating the impact of the standard to AFG’s income tax disclosures. Since ASU 2023-09 only requires additional disclosure, the adoption of this guidance will not have an impact on AFG’s results of operations or financial condition. In November 2024, the FASB issued ASU No. 2024-03 (“ASU 2024-03”), Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 requires additional information and disaggregation of specified expense categories in the notes to financial statements. ASU 2024-04 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted and applied either prospectively or 77 Table of Contents retrospectively. As of December 31, 2024, AFG has not adopted ASU 2024-03. Management is evaluating the impact of the standard to AFG’s income statement expense disclosures. Since ASU 2024-03 only requires additional disclosures, the adoption of this guidance will not have an impact on AFG’s results of operations or financial condition.