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Derivatives
 12 Months Ended
Dec. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Derivatives
As discussed under “Derivatives” in Note A — “Accounting Policies,” AFG uses derivatives to mitigate certain market risks related to its investment portfolio and deferred compensation obligations to employees.

The following table presents the classification of derivative assets and liabilities included in AFG’s Balance Sheet at fair value (in millions):
December 31, 2023December 31, 2022
Balance Sheet LineAssetLiabilityAssetLiability
Derivatives designated and qualifying as cash flow hedges:
Interest rate swaps
Other assets/Other liabilities
$1 $22 $— $37 
Derivatives not designated as hedging instruments:
Fixed maturities with embedded derivatives
Fixed maturities81 — 40 — 
Total return swap
Other assets/Other liabilities5 — — 5 
$87 $22 $40 $42 

AFG’s interest rate swaps are designated and qualify as highly effective cash flow hedges to mitigate interest rate risk related to certain floating-rate securities included in AFG’s portfolio of fixed maturity securities. The purpose of each of these swaps is to effectively convert a portion of AFG’s floating-rate fixed maturity securities to fixed rates by offsetting the variability in cash flows attributable to changes in the applicable Secured Overnight Financing Rate (“SOFR”).

Under the terms of the swaps, AFG receives fixed-rate interest payments in exchange for variable interest payments based on SOFR (previously based on LIBOR). The notional amounts of the interest rate swaps generally decline over each swap’s respective life (the swaps expire between July 2024 and July 2028) in anticipation of the expected decline in AFG’s portfolio of fixed maturity securities with floating interest rates based on SOFR. The total outstanding notional amount of AFG’s interest rate swaps was $1.30 billion at December 31, 2023 compared to $1.25 billion at December 31, 2022, reflecting the issuance of six new swaps with a total notional amount of $230 million in 2023, partially offset by scheduled amortization. In 2023 and 2022 a loss of $26 million and income of less than $1 million (net), respectively, were reclassified from AOCI to net earnings. Based on forward interest rate curves at December 31, 2023, management estimates that it will reclassify approximately $20 million of pre-tax net losses on interest rate swaps in AOCI to net investment income over the next twelve months. The actual amount will vary based on changes in SOFR. A collateral receivable supporting these swaps of $48 million and $62 million at December 31, 2023 and December 31, 2022, respectively, is included in other assets in AFG’s Balance Sheet.
The fixed maturities with embedded derivatives consist of convertible fixed maturity securities and interest-only and principal-only MBS. AFG records the change in the fair value of these securities in net earnings. These investments are part of AFG’s overall investment strategy and represent a small component of AFG’s overall investment portfolio.

AFG is exposed to fair value changes from certain equity and fixed maturity market-based exposures related to its deferred compensation obligations to certain employees. To mitigate this risk, AFG entered into a total return swap, beginning in 2022. AFG’s Balance Sheet includes a $5 million liability to return collateral related to the swap (included in other liabilities) at December 31, 2023, and a $7 million receivable for collateral posted related to the swap (included in other assets) at December 31, 2022.

The following table summarizes the gains (losses) included in AFG’s Statement of Earnings for changes in the fair value of derivatives for 2023, 2022 and 2021 (in millions):
Non-designated hedges - gains (losses) included in net earningsQualifying cash flow hedges - gains (losses) reclassified from AOCI to net earnings
Statement of Earnings Line202320222021202320222021
Derivative instruments of continuing operations:
Interest rate swapsNet investment income$— $— $— $(26)$— $— 
Fixed maturities with embedded derivatives
Realized gains (losses) on securities(2)(12)(6)— — — 
Fixed maturities with embedded derivativesNet investment income(4)— — — — — 
Total return swap
Other expenses13 (5)— — — — 
Total earnings (losses) of continuing operations$7 $(17)$(6)$(26)$— $— 
Derivative instruments of discontinued operations (*):
Interest rate swapsNet earnings from discontinued operations$— $— $— $— $— $14 
MBS with embedded derivativesNet earnings from discontinued operations— — (1)— — — 
Fixed-indexed and variable-indexed annuities (embedded derivative)Net earnings from discontinued operations— — (222)— — — 
Equity index call optionsNet earnings from discontinued operations— — 237 — — — 
Equity index put optionsNet earnings from discontinued operations— — 5 — — — 
Reinsurance contract (embedded derivative)Net earnings from discontinued operations— — 1 — — — 
Total earnings (losses) of discontinued operations— — 20 — — 14 
Earnings (losses)
$7 $(17)$14 $(26)$— $14 
(*)Earnings (losses) for 2021 are through the May 31, 2021 effective date of the sale of the annuity business.