Quarterly Operating Results (Unaudited)

12 Months Ended

Dec. 31, 2012

Quarterly Financial Information Disclosure [Abstract]

Quarterly Operating Results (Unaudited)

N.     Quarterly Operating Results (Unaudited)

The operations of certain AFG business segments are seasonal in nature. While insurance premiums are recognized on a relatively level basis, claim losses related to adverse weather (snow, hail, hurricanes, severe storms, tornadoes, etc.) may be seasonal. The profitability of AFG’s crop insurance business is primarily recognized during the second half of the year as crop prices and yields are determined. Quarterly results necessarily rely heavily on estimates. These estimates and certain other factors, such as the discretionary sales of assets, cause the quarterly results not to be necessarily indicative of results for longer periods of time.

The following are quarterly results of consolidated operations for the two years ended December 31, 2012 (in millions, except per share amounts). Quarterly earnings per share do not add to year-to-date amounts due to changes in shares outstanding.

	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total Year
2012
Revenues	$	1,113	$	1,150	$	1,563	$	1,236	$	5,062
Net earnings, including noncontrolling interests	88		84		211		19		402
Net earnings attributable to shareholders	113		99		226		50		488
Earnings attributable to shareholders per common share:
Basic	$	1.16	$	1.02	$	2.43	$	0.55	$	5.18
Diluted	1.14		1.01		2.39		0.54		5.09
Average number of Common Shares:
Basic	97.7		96.4		92.9		89.8		94.2
Diluted	99.4		98.0		94.6		91.4		95.9
2011
Revenues	$	1,039	$	1,093	$	1,335	$	1,283	$	4,750
Net earnings, including noncontrolling interests	54		30		108		127		319
Net earnings attributable to shareholders	88		48		97		109		342
Earnings attributable to shareholders per common share:
Basic	$	0.84	$	0.47	$	0.97	$	1.11	$	3.37
Diluted	0.83		0.46		0.95		1.09		3.32
Average number of Common Shares:
Basic	104.6		102.7		99.7		98.2		101.3
Diluted	106.2		104.4		101.3		99.8		102.9

Pretax realized gains (losses) on subsidiaries and securities (including other-than-temporary impairments) and favorable (unfavorable) prior year development of AFG’s liability for losses and loss adjustment expenses (“LAE”) were as follows (in millions):

	1st Quarter			2nd Quarter			3rd Quarter			4th Quarter		Total Year
Realized Gains (Losses)
2012	$	44		$	15		$	241		$	71	$	371
2011	(3		)	19			8			49		73
Prior Year Development Favorable (Unfavorable)
2012	$	19		$	26		$	(22	)	$	7	$	30
2011	21			(13		)	34			27		69

Realized gains and losses (in the table above) for the third quarter of 2012 include a pretax gain of $155 million on the sale of AFG’s Medicare supplement and critical illness businesses. Unfavorable prior year development (in the table above) for the third quarter of 2012 includes pretax special charges of $31 million to strengthen property and casualty insurance reserves for asbestos and environmental exposures. Results for the third quarter of 2012 also include a $28 million benefit from the resolution of AFG’s tax case. Results for the fourth quarter of 2012 include a $15 million additional pretax realized gain resulting from post-closing adjustments to the Medicare supplement and critical illness sale, a pretax charge of $153 million to write off deferred policy acquisition costs and strengthen reserves in the closed block of long-term care insurance, pretax catastrophe losses of $32 million from Superstorm Sandy, a $14 million pretax charge due to a review of major actuarial assumptions in the annuity business, and tax benefits of $39 million from the closure of the 2004 through 2007 tax years following the settlement of AFG’s tax case.

Unfavorable prior year development for the second quarter of 2011 includes pretax special charges of $50 million to strengthen property and casualty insurance asbestos and environmental reserves. Results for the second quarter of 2011 also include pretax special charges of $9 million to strengthen reserves for asbestos and environmental exposures related to AFG’s railroad and manufacturing operations, pretax catastrophe losses of $23 million primarily from tornadoes and pretax realized gains of $33 million from the sales of a portion of AFG’s investment in Verisk Analytics, Inc. (“Verisk”). The 2011 fourth quarter includes a $34 million special charge for a valuation allowance against deferred tax assets and $40 million of pretax realized gains on sales of Verisk.