Acquisitions and Sale of Businesses

12 Months Ended

Dec. 31, 2023

Crop Risk Services On July 3, 2023, AFG completed the acquisition of Crop Risk Services (“CRS”) from American International Group (“AIG”). CRS is a primary crop insurance general agent based in Decatur, Illinois, that generated crop year 2022 gross written premiums of approximately $1.2 billion and was the seventh largest provider of multi-peril crop insurance in the United States based on 2022 premiums. At closing, AFG paid AIG $234 million (based on $24 million in net tangible assets) using cash on hand.

AFG expensed the $3 million in acquisition costs incurred. The purchase price was allocated to the acquired assets and liabilities of CRS based on management’s best estimate of fair value as of the acquisition date. The purchase price allocation is shown below (in millions).


	July 3, 2023
Cash paid at purchase	$	234

Tangible assets acquired:
Cash and cash equivalents	$	26
Agents’ balances and premiums receivable	164
Other assets	3
Total tangible assets acquired	$	193

Liabilities acquired:
Other liabilities	$	169
Total liabilities acquired	169
Net tangible assets acquired, at fair value	24
Excess purchase price over net tangible assets acquired	$	210

Allocation of excess purchase price:
Intangible assets acquired (*)	$	124
Deferred tax asset (*)	1
Goodwill	85
	$	210

(*)Included in Other assets in AFG’s Balance Sheet.

In the purchase price allocation, $124 million of the purchase price was recognized as finite lived intangible assets primarily related to existing agency relationships, which will be amortized over an average estimated life of approximately 14 years. The acquisition resulted in the recognition of $85 million in GAAP basis goodwill based on the excess of the purchase price over the fair value of the net assets acquired. The acquisition resulted in $79 million of tax basis goodwill, which is deductible for tax purposes.

Verikai In December 2021, AFG acquired Verikai, Inc., a machine learning and artificial intelligence company that utilizes a predictive risk tool to assess insurance risk, for $120 million using cash on hand at the parent. Verikai continues to operate as a stand-alone company to service its insurance clients. AFG expects to benefit from Verikai’s predictive risk tool as it enters the medical stop loss insurance business, with a primary focus on small and underserved risks.

AFG expensed the approximately $1 million in acquisition costs incurred. The purchase price was allocated to the acquired assets and liabilities of Verikai based on management’s best estimate of fair value as of the acquisition date. The purchase price allocation is shown below (in millions).


	December 6, 2021
Purchase price:
Cash	$	120
Fair value of contingent consideration	23
Total purchase price	143

Tangible assets acquired	16
Liabilities acquired	3
Net tangible assets acquired, at fair value	13
Excess purchase price over net tangible assets acquired	$	130

Allocation of excess purchase price:
Intangible assets acquired (*)	$	76
Deferred tax on intangible assets acquired (*)	(16)
Goodwill	70
	$	130

(*)Included in Other assets in AFG’s Balance Sheet.

In the purchase price allocation, $76 million of the purchase price was recognized as finite lived intangible assets related to acquired technology and customer relationships, which will be amortized over an average estimated life of approximately 10 years. The acquisition resulted in the recognition of $70 million in goodwill based on the excess of the purchase price over the fair value of the net assets acquired. The goodwill represents the fair value of acquired intangible assets that do not qualify for separate recognition, including the value of Verikai’s future technology and opportunities and assembled workforce.

In the third quarter of 2022, AFG acquired an insurance agency business for $12 million, including $10 million in cash. Virtually all of the purchase price was recorded as an amortizing intangible asset representing the fair value of the agency’s customer base at acquisition.

Annuity Operations See Note B — “Discontinued Operations” for information on the sale of AFG’s annuity operations.

Neon In December 2019, AFG initiated actions to exit the Lloyd’s of London insurance market, which included placing Neon Underwriting Ltd. and its other Lloyd’s subsidiaries in run-off. Neon and its predecessor, Marketform, failed to achieve AFG’s profitability objectives since AFG’s purchase of Marketform in 2008.

On December 31, 2020, AFG completed the sale of GAI Holding Bermuda and its subsidiaries, comprising the legal entities that own Neon, to RiverStone Holdings Limited for proceeds of $6 million. The sale completed AFG’s exit from the Lloyd’s of London insurance market.

In the second quarter of 2021, AFG received an additional $10 million of cash proceeds and recognized a pretax gain of $4 million related to contingent consideration received on the sale of Neon.