Leases

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

Leases

Leases

AFG and its subsidiaries lease real estate that is primarily used for office space and, to a lesser extent, equipment under operating lease arrangements. Most of AFG’s real estate leases include an option to extend or renew the lease term at AFG’s option. The operating lease liability includes lease payments related to options to extend or renew the lease term if AFG is reasonably certain of exercising those options. Lease payments are discounted using the implicit discount rate in the lease. If the implicit discount rate for the lease cannot be readily determined, AFG uses an estimate of its incremental secured borrowing rate. AFG did not have any material contracts accounted for as finance or short-term leases at December 31, 2023 or December 31, 2022.

AFG’s operating lease right-of-use asset and operating lease liability are included in other assets and other liabilities, respectively, in AFG’s Balance Sheet at December 31 and are presented in the following table (in millions):

	2023		2022
Right-of-use asset	$	176	$	103
Lease liability	198		116

The increase in the lease liability and right-of-use asset in 2023 is due primarily to the renewal of AFG’s largest office lease in the second quarter of 2023, which extended the term for an additional 10 years.

The following table details AFG’s lease activity for the years ended December 31, 2023, 2022 and 2021 (in millions):

	2023		2022		2021
Operating lease expense included in other expenses	$	36	$	36	$	41
Sublease income (*)	—		(2)		(2)
Total lease expense, net of sublease income	$	36	$	34	$	39

(*)Sublease income consisted of rent from third parties of office space and is included in other income in AFG’s Statement of Earnings.

Other operating lease information for the years ended December 31, 2023, 2022 and 2021 (in millions):

	2023		2022		2021
Cash paid for lease liabilities reported in operating cash flows	$	38	$	38	$	43
Right-of-use assets obtained under new leases	102		11		10

The following table presents the undiscounted contractual maturities of AFG’s operating lease liability at December 31, 2023 (in millions):

Operating lease payments:
2024	$	37
2025	30
2026	26
2027	24
2028	20
Thereafter	150
Total lease payments	287
Impact of discounting	(89)
Operating lease liability	$	198

Weighted-average remaining lease term	13.6 years
Weighted-average discount rate	5.1	%