Shareholders' Equity

12 Months Ended

Dec. 31, 2023

Stockholders' Equity Note [Abstract]

Shareholders' Equity

Shareholders’ Equity

AFG is authorized to issue 12.5 million shares of Voting Preferred Stock and 12.5 million shares of Nonvoting Preferred Stock, each without par value.

Stock Incentive Plans   Under AFG’s stock incentive plans, employees of AFG and its subsidiaries are eligible to receive equity awards in the form of stock options, stock appreciation rights, restricted stock awards, restricted stock units and stock awards. At December 31, 2023, there were 2.1 million shares of AFG Common Stock reserved for issuance under AFG’s stock incentive plans.

The restricted Common Stock that AFG has granted generally vests over a four-year period. Data relating to grants of restricted stock is presented below:

	Shares	Average Grant Date Fair Value
Outstanding at January 1, 2023	615,867	$	111.97
Granted	165,513	$	130.52
Vested	(189,606)	$	101.86
Forfeited	(18,882)	$	123.65
Outstanding at December 31, 2023	572,892	$	120.28

The total fair value of restricted stock that vested during 2023, 2022 and 2021 was $25 million, $23 million and $28 million, respectively.

AFG has not granted any stock options since 2015. Options granted in prior years have an exercise price equal to the market price of AFG Common Stock at the date of grant (adjusted for certain special dividends). Options generally became exercisable at the rate of 20% per year commencing one year after grant and expire ten years after the date of grant.

Data for stock options issued under AFG’s stock incentive plans is presented below:

	Shares	Average Exercise Price		Average Remaining Contractual Term	Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2023	243,604	$	44.75
Exercised	(96,953)	$	42.46
Forfeited/Cancelled	—	$	—
Outstanding at December 31, 2023	146,651	$	46.26	0.7 years	$	11
Options exercisable at December 31, 2023	146,651	$	46.26	0.7 years	$	11

The total intrinsic value of options exercised during 2023, 2022 and 2021 was $8 million, $18 million and $88 million, respectively. During 2023, 2022 and 2021, AFG received $4 million, $7 million and $58 million, respectively, in cash from the exercise of stock options. The total tax benefit related to the exercises was $1 million, $3 million and $14 million during those years, respectively.

Total compensation expense related to stock incentive plans of AFG and its subsidiaries was $18 million for 2023, $19 million for 2022 and $16 million for 2021. AFG’s provision for income tax includes tax benefits of $6 million in 2023, $8 million in 2022 and $19 million in 2021 related to AFG’s stock incentive plans. At December 31, 2023, there was $32 million of unrecognized compensation expense related to restricted stock awards, which is expected to be recognized over a weighted average of 2.5 years. At December 31, 2023, there was no unrecognized compensation expense related to unvested stock options.

Accumulated Other Comprehensive Income (Loss), Net of Tax (“AOCI”)   Comprehensive income is defined as all changes in shareholders’ equity except those arising from transactions with shareholders. Comprehensive income includes net earnings and other comprehensive income (loss), which consists primarily of changes in net unrealized gains or losses on available for sale fixed maturity securities.

The progression of the components of accumulated other comprehensive income (loss) follows (in millions):

			Other Comprehensive Income (Loss)
	AOCI Beginning Balance		Pretax		Tax		Net of tax		AOCI Ending Balance
Year ended December 31, 2023
Net unrealized gains (losses) on securities:
Unrealized holding gains (losses) on securities arising during the period			$	224	$	(48)	$	176
Reclassification adjustment for realized (gains) losses included in net earnings (*)			43		(9)		34
Total net unrealized gains (losses) on securities	$	(497)	267		(57)		210		$	(287)
Net unrealized gains (losses) on cash flow hedges:
Unrealized holding gains (losses) on cash flow hedges arising during the period			(11)		2		(9)
Reclassification adjustment for investment income included in net earnings (*)			26		(5)		21
Total net unrealized gains (losses) on cash flow hedges	(29)		15		(3)		12		(17)
Foreign currency translation adjustments	(20)		2		1		3		(17)
Pension and other postretirement plan adjustments	3		(1)		—		(1)		2
Total	$	(543)	$	283	$	(59)	$	224	$	(319)
Year ended December 31, 2022
Net unrealized gains (losses) on securities:
Unrealized holding gains (losses) on securities arising during the period			$	(821)	$	174	$	(647)
Reclassification adjustment for realized (gains) losses included in net earnings (*)			18		(4)		14
Total net unrealized gains (losses) on securities	$	136	(803)		170		(633)		$	(497)
Net unrealized gains (losses) on cash flow hedges:
Unrealized holding gains (losses) on cash flow hedges arising during the period			(37)		8		(29)
Reclassification adjustment for investment income included in net earnings (*)			—		—		—
Total net unrealized gains (losses) on cash flow hedges	—		(37)		8		(29)		(29)
Foreign currency translation adjustments	(18)		(1)		(1)		(2)		(20)
Pension and other postretirement plan adjustments	1		2		—		2		3
Total	$	119	$	(839)	$	177	$	(662)	$	(543)

			Other Comprehensive Income (Loss)
	AOCI Beginning Balance		Pretax		Tax		Net of tax		AOCI Ending Balance
Year ended December 31, 2021
Net unrealized gains (losses) on securities:
Unrealized holding gains (losses) on securities arising during the period			$	(275)	$	57	$	(218)
Reclassification adjustment for realized (gains) losses included in net earnings (*)			(22)		5		(17)
Reclassification for unrealized gains of subsidiaries sold			(1,119)		235		(884)
Total net unrealized gains (losses) on securities	$	1,255	(1,416)		297		(1,119)		$	136
Net unrealized gains (losses) on cash flow hedges:
Unrealized holding gains (losses) on cash flow hedges arising during the period			(1)		—		(1)
Reclassification adjustment for investment income included in net earnings from discontinued operations			(14)		3		(11)
Reclassification for unrealized gains on cash flow hedges of subsidiaries sold			(37)		8		(29)
Total net unrealized gains (losses) on cash flow hedges	41		(52)		11		(41)		—
Foreign currency translation adjustments	(16)		(2)		—		(2)		(18)
Pension and other postretirement plan adjustments:
Unrealized holding gains (losses) on pension and other postretirement plans arising during the period			(1)		—		(1)
Reclassification adjustment for pension settlement loss included in other expense in net earnings			11		(2)		9
Total pension and other postretirement plan adjustments	(7)		10		(2)		8		1
Total	$	1,273	$	(1,460)	$	306	$	(1,154)	$	119

(*)The reclassification adjustments affected the following lines in AFG’s Statement of Earnings:

OCI component	Affected line in the statement of earnings
Pretax - Net unrealized gains (losses) on securities	Realized gains (losses) on securities
Pretax - Net unrealized gains (losses) on cash flow hedges	Net investment income
Pretax - Net unrealized gains (losses) on pension and other postretirement plans	Other expenses
Tax	Provision for income taxes