Segments of Operations

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segments of Operations

Segments of Operations

AFG manages its business as three segments: (i) Property and casualty insurance, (ii) Annuity and (iii) Other, which includes holding company costs, revenues and costs of AFG’s limited insurance operations outside of property and casualty insurance and annuity segments, and operations attributable to the noncontrolling interests of the managed investment entities.

AFG reports its property and casualty insurance business in the following Specialty sub-segments: (i) Property and transportation, which includes physical damage and liability coverage for buses and trucks, inland and ocean marine, agricultural-related products and other commercial property coverages, (ii) Specialty casualty, which includes primarily excess and surplus, executive and professional liability, general liability, umbrella and excess liability, specialty coverages in targeted markets, customized programs for small to mid-sized businesses and workers’ compensation insurance, and (iii) Specialty financial, which includes risk management insurance programs for lending and leasing institutions (including equipment leasing and collateral and lender-placed mortgage property insurance), fidelity and surety products and trade credit insurance. Premiums and underwriting profit included under Other specialty represent business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty sub-segments and amortization of deferred gains on retroactive reinsurance transactions related to the sales of businesses in prior years. AFG’s annuity business sells traditional fixed and indexed annuities in the retail, financial institutions, broker-dealer and registered investment advisor markets. AFG’s reportable segments and their components were determined based primarily upon similar economic characteristics, products and services.

In December 2019, AFG initiated actions to exit the Lloyd’s of London insurance market, which included placing its Lloyd’s subsidiaries including its Lloyd’s Managing Agency, Neon Underwriting Ltd., into run-off. Neon and its predecessor, Marketform, have failed to achieve AFG’s profitability objectives since AFG’s purchase of Marketform in 2008. Beginning prospectively with the first quarter of 2020, the results for AFG’s Specialty casualty sub-segment exclude the run-off operations of Neon (“Neon exited lines”).

The following tables (in millions) show AFG’s revenues and earnings before income taxes by segment and sub-segment.

	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Revenues
Property and casualty insurance:
Premiums earned:
Specialty
Property and transportation	$	390	$	379	$	776	$	740
Specialty casualty	547		634		1,103		1,263
Specialty financial	144		151		300		297
Other specialty	42		36		82		73
Other lines (a)	61		—		132		—
Total premiums earned	1,184		1,200		2,393		2,373
Net investment income (b)	72		124		165		228
Other income	3		2		8		5
Total property and casualty insurance	1,259		1,326		2,566		2,606
Annuity:
Net investment income	384		451		806		886
Other income	30		30		65		58
Total annuity	414		481		871		944
Other	74		97		136		194
Total revenues before realized gains (losses)	1,747		1,904		3,573		3,744
Realized gains (losses) on securities	204		56		(347)		240
Total revenues	$	1,951	$	1,960	$	3,226	$	3,984

(a)Represents premiums earned in the Neon exited lines during the second quarter and first six months of 2020. Neon’s $89 million and $177 million in earned premiums during the second quarter and first six months of 2019, respectively, are included in the Specialty casualty sub-segment.

(b)Includes income of less than $1 million for the second quarter of 2020 and a loss of $6 million in the Neon exited lines in the first six months of 2020 (primarily from the change in fair value of equity securities).

	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Earnings (Loss) Before Income Taxes
Property and casualty insurance:
Underwriting:
Specialty
Property and transportation	$	33	$	4	$	60	$	43
Specialty casualty	27		47		79		83
Specialty financial	—		21		17		34
Other specialty	(6)		(12)		(13)		(12)
Other lines (a)	(45)		(1)		(47)		(2)
Total underwriting	9		59		96		146
Investment and other income, net (b)	65		115		149		210
Total property and casualty insurance	74		174		245		356
Annuity	(17)		71		12		161
Other (c)	(43)		(42)		(80)		(85)
Total earnings before realized gains (losses) and income taxes	14		203		177		432
Realized gains (losses) on securities	204		56		(347)		240
Total earnings (loss) before income taxes	$	218	$	259	$	(170)	$	672

(a)Includes an underwriting loss of $43 million in the second quarter of 2020 and $44 million in the first six months of 2020 in the Neon exited lines. Neon’s $4 million and $14 million underwriting losses in the second quarter and first six months of 2019, respectively, are included in the Specialty casualty sub-segment.

(b)Includes $1 million and $10 million in the second quarter and first six months of 2020, respectively, in net expenses from the Neon exited lines, before noncontrolling interest.

(c)Includes holding company interest and expenses.