EX-99.2

EX-99.2 3 d789850dex992.htm EX-99.2 EX-99.2

Exhibit 99.2


		American Financial Group, Inc. Investor Supplement - Second Quarter 2019

		August 6, 2019 American Financial Group, Inc. Corporate Headquarters Great American Insurance Group Tower 301 E Fourth Street Cincinnati, OH 45202 513 579 6739

American Financial Group, Inc.

Table of Contents - Investor Supplement - Second Quarter 2019


Section	Page
Table of Contents - Investor Supplement - Second Quarter 2019		2
Financial Highlights		3
Summary of Earnings		4
Earnings Per Share Summary		5
Property and Casualty Insurance Segment
Property and Casualty Insurance - Summary Underwriting Results (GAAP)		6
Specialty - Underwriting Results (GAAP)		7
Property and Transportation - Underwriting Results (GAAP)		8
Specialty Casualty - Underwriting Results (GAAP)		9
Specialty Financial - Underwriting Results (GAAP)		10
Other Specialty - Underwriting Results (GAAP)		11
Annuity Segment
Annuity Earnings		12
Detail of Annuity Benefits Expense		13
Core Net Spread on Fixed Annuities - New Method		14
Statutory Annuity Premiums		15
Fixed Annuity Benefits Accumulated (GAAP)		16
Guaranteed Minimum Interest Rate Analysis		17
Annuity Non-Core Earnings		18
Reconciliation from Core to GAAP Annuity Pretax Earnings		19
Consolidated Balance Sheet / Book Value / Debt
Consolidated Balance Sheet		20
Book Value Per Share and Price / Book Summary		21
Capitalization		22
Additional Supplemental Information		23
Consolidated Investment Supplement
Total Cash and Investments		24
Net Investment Income		25
Significant Investments Marked-to-Market Through Investment Income and Investments Accounted For Using the Equity Method		26
Fixed Maturities - By Security Type - AFG Consolidated		27
Fixed Maturities - By Security Type Portfolio		28
Fixed Maturities - Credit Rating		29
Mortgage-Backed Securities - AFG Consolidated		30
Mortgage-Backed Securities Portfolio		31
Mortgage-Backed Securities - Credit Rating		32
Appendix
A. Fixed Maturities - Credit Rating by Type		33

Page 2

American Financial Group, Inc.

Financial Highlights

(in millions, except per share information)


	Three Months Ended															Six Months Ended
	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			06/30/19			06/30/18
Highlights
Net earnings (loss)	$	210		$	329		$	(29)		$	204		$	210		$	539		$	355
Core net operating earnings		192			184			159			198			185			376			404
Total assets		67,697			66,132			63,456			64,190			61,834			67,697			61,834
Adjusted shareholders’ equity (a)		5,260			5,201			4,898			5,103			4,920			5,260			4,920
Property and Casualty net written premiums		1,264			1,147			1,208			1,456			1,257			2,411			2,359
Annuity statutory premiums		1,349			1,395			1,482			1,378			1,399			2,744			2,547
Per share data
Diluted earnings per share	$	2.31		$	3.63		$	(0.33	)	$	2.26		$	2.31		$	5.94		$	3.92
Core net operating earnings per share		2.12			2.02			1.75			2.19			2.04			4.14			4.46
Adjusted book value per share (a)		58.49			58.02			54.86			57.22			55.24			58.49			55.24
Cash dividends per common share		1.9000			0.4000			1.9000			0.3500			1.8500			2.3000			2.2000
Financial ratios
Annualized return on equity (b)		16.0	%		25.9	%		(2.3	%)		16.3	%		17.1	%		21.0	%		14.8	%
Annualized core operating return on equity (b)		14.7	%		14.5	%		12.6	%		15.8	%		15.1	%		14.6	%		16.9	%
Property and Casualty combined ratio - Specialty:
Loss & LAE ratio		60.2	%		58.9	%		62.7	%		64.3	%		59.7	%		59.6	%		58.8	%
Underwriting expense ratio		34.8	%		33.6	%		29.3	%		31.4	%		34.0	%		34.2	%		34.0	%

Combined ratio - Specialty		95.0	%		92.5	%		92.0	%		95.7	%		93.7	%		93.8	%		92.8	%

Net spread on fixed annuities:
Net interest spread on fixed annuities - new method		2.08	%		2.01	%		1.94	%		2.08	%		2.28	%		2.05	%		2.30	%
Net spread earned on fixed annuities:
Core operating - new method		1.11	%		1.08	%		0.98	%		1.16	%		1.34	%		1.10	%		1.35	%
Non-core - new method:
Previously reported in core operating		n/a			(0.12	%)		(0.73	%)		0.19	%		(0.16	%)		(0.06	%)		0.01	%
Currently reported in non-core		(0.35	%)		n/a			n/a			n/a			n/a			(0.18	%)		n/a

(a)	Excludes unrealized gains related to fixed maturity investments, a reconciliation to the GAAP measure is on page 21.

(b)	Excludes accumulated other comprehensive income.

Page 3

American Financial Group, Inc.

Summary of Earnings

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/19			3/31/19			12/31/18			09/30/18			06/30/18			06/30/19			06/30/18
Property and Casualty Insurance
Underwriting profit	$	59		$	87		$	101		$	56		$	72		$	146		$	163
Net investment income		124			104			115			108			115			228			215
Other income (expense)		(8	)		(6	)		(2	)		(6	)		(7	)		(14	)		(10	)

Property and Casualty Insurance operating earnings		175			185			214			158			180			360			368
Annuity earnings		104			90			20			117			99			194			224
Interest expense of parent holding companies		(17	)		(16	)		(16	)		(15	)		(16	)		(33	)		(31	)
Other expense		(25	)		(27	)		(13	)		(22	)		(32	)		(52	)		(59	)

Pre-tax core operating earnings		237			232			205			238			231			469			502
Income tax expense		45			48			46			40			46			93			98

Core net operating earnings		192			184			159			198			185			376			404
Non-core items, net of tax:
Realized gains (losses) on securities		45			145			(188	)		27			25			190			(49	)
Annuity non-core earnings, net of taxes		(27	)		—			—			—			—			(27	)		—
Special A&E charges:
Property and Casualty Insurance run-off operations		—			—			—			(14	)		—			—			—
Former Railroad and Manufacturing operations		—			—			—			(7	)		—			—			—

Net earnings	$	210		$	329		$	(29	)	$	204		$	210		$	539		$	355

Page 4

American Financial Group, Inc.

Earnings Per Share Summary

(in millions, except per share information)


	Three Months Ended													Six Months Ended
	6/30/19			3/31/19		12/31/18			9/30/18			6/30/18		06/30/19			06/30/18
Core net operating earnings	$	192		$	184	$	159		$	198		$	185	$	376		$	404

Net earnings	$	210		$	329	$	(29	)	$	204		$	210	$	539		$	355

Average number of diluted shares - core		90.981			90.695		90.668			90.731			90.663		90.839			90.549
Average number of diluted shares - net		90.981			90.695		89.278			90.731			90.663		90.839			90.549
Diluted earnings per share:
Core net operating earnings per share	$	2.12		$	2.02	$	1.75		$	2.19		$	2.04	$	4.14		$	4.46
Realized gains (losses) on securities		0.48			1.61		(2.08	)		0.31			0.27		2.09			(0.54	)
Annuity non-core earnings, net of taxes		(0.29	)		—		—			—			—		(0.29	)		—
Special A&E charges:
Property and Casualty Insurance run-off operations		—			—		—			(0.16	)		—		—			—
Former Railroad and Manufacturing operations		—			—		—			(0.08	)		—		—			—

Diluted earnings per share	$	2.31		$	3.63	$	(0.33	)	$	2.26		$	2.31	$	5.94		$	3.92

Page 5

American Financial Group, Inc.

Property and Casualty Insurance - Summary Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			06/30/19			06/30/18
Property and Transportation	$	4		$	39		$	64		$	—		$	23		$	43		$	56
Specialty Casualty		47			36			22			49			29			83			70
Specialty Financial		21			13			20			9			22			34			37
Other Specialty		(12	)		—			(4	)		(3	)		(1	)		(12	)		2

Underwriting profit - Specialty		60			88			102			55			73			148			165
Other core charges, included in loss and LAE		1			1			1			(1	)		1			2			2

Underwriting profit - Core		59			87			101			56			72			146			163
Special A&E charges, included in loss and LAE		—			—			—			(18	)		—			—			—
Neon exited lines charge, included in loss and LAE		—			—			—			—			—			—			—

Underwriting profit (loss) - Property and Casualty Insurance	$	59		$	87		$	101		$	38		$	72		$	146		$	163

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	(1	)	$	3		$	—		$	—		$	—
Catastrophe loss		12			12			39			35			16			24			29

Total current accident year catastrophe losses	$	12		$	12		$	38		$	38		$	16		$	24		$	29

Prior year loss reserve development (favorable) / adverse	$	(41	)	$	(45	)	$	(61	)	$	(31	)	$	(44	)	$	(86	)	$	(100	)

Combined ratio:
Property and Transportation		99.1	%		89.0	%		86.5	%		100.0	%		93.9	%		94.2	%		92.2	%
Specialty Casualty		92.5	%		94.2	%		96.5	%		92.1	%		95.1	%		93.4	%		94.0	%
Specialty Financial		85.6	%		91.4	%		85.5	%		94.4	%		85.6	%		88.6	%		87.9	%
Other Specialty		135.1	%		98.9	%		112.3	%		103.0	%		105.5	%		116.7	%		98.7	%
Combined ratio - Specialty		95.0	%		92.5	%		92.0	%		95.7	%		93.7	%		93.8	%		92.8	%
Other core charges		0.1	%		0.1	%		0.0	%		0.0	%		0.0	%		0.1	%		0.0	%
Special A&E charges		0.0	%		0.0	%		0.0	%		1.5	%		0.0	%		0.0	%		0.0	%

Combined ratio		95.1	%		92.6	%		92.0	%		97.2	%		93.7	%		93.9	%		92.8	%

Combined ratio excl. catastrophe and prior year development		97.5	%		95.4	%		93.7	%		96.8	%		96.2	%		96.5	%		96.0	%

Loss and LAE components - property and casualty insurance
Current accident year, excluding catastrophe loss		62.7	%		61.8	%		64.4	%		65.4	%		62.2	%		62.3	%		62.0	%
Prior accident year loss reserve development		(3.3	%)		(3.9	%)		(4.7	%)		(2.2	%)		(3.9	%)		(3.6	%)		(4.5	%)
Current accident year catastrophe loss		0.9	%		1.1	%		3.0	%		2.6	%		1.4	%		1.0	%		1.3	%

Loss and LAE ratio		60.3	%		59.0	%		62.7	%		65.8	%		59.7	%		59.7	%		58.8	%

Page 6

American Financial Group, Inc.

Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			06/30/19			06/30/18
Gross written premiums	$	1,664		$	1,535		$	1,613		$	2,104		$	1,665		$	3,199		$	3,123
Ceded reinsurance premiums		(400	)		(388	)		(405	)		(648	)		(408	)		(788	)		(764	)

Net written premiums		1,264			1,147			1,208			1,456			1,257			2,411			2,359
Change in unearned premiums		(64	)		26			62			(129	)		(96	)		(38	)		(91	)

Net earned premiums		1,200			1,173			1,270			1,327			1,161			2,373			2,268
Loss and LAE		722			691			796			855			692			1,413			1,332
Underwriting expense		418			394			372			417			396			812			771

Underwriting profit	$	60		$	88		$	102		$	55		$	73		$	148		$	165

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	(1	)	$	3		$	—		$	—		$	—
Catastrophe loss		12			12			39			35			16			24			29

Total current accident year catastrophe losses	$	12		$	12		$	38		$	38		$	16		$	24		$	29

Prior year loss reserve development (favorable) / adverse	$	(42	)	$	(46	)	$	(61	)	$	(49	)	$	(45	)	$	(88	)	$	(102	)

Combined ratio:
Loss and LAE ratio		60.2	%		58.9	%		62.7	%		64.3	%		59.7	%		59.6	%		58.8	%
Underwriting expense ratio		34.8	%		33.6	%		29.3	%		31.4	%		34.0	%		34.2	%		34.0	%

Combined ratio		95.0	%		92.5	%		92.0	%		95.7	%		93.7	%		93.8	%		92.8	%

Combined ratio excl. catastrophe and prior year development		97.5	%		95.4	%		93.7	%		96.8	%		96.2	%		96.5	%		96.0	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		62.7	%		61.8	%		64.4	%		65.4	%		62.2	%		62.3	%		62.0	%
Prior accident year loss reserve development		(3.4	%)		(4.0	%)		(4.7	%)		(3.7	%)		(3.9	%)		(3.7	%)		(4.5	%)
Current accident year catastrophe loss		0.9	%		1.1	%		3.0	%		2.6	%		1.4	%		1.0	%		1.3	%

Loss and LAE ratio		60.2	%		58.9	%		62.7	%		64.3	%		59.7	%		59.6	%		58.8	%

Page 7

American Financial Group, Inc.

Property and Transportation - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			06/30/19			06/30/18
Gross written premiums	$	579		$	439		$	651		$	953		$	615		$	1,018		$	1,041
Ceded reinsurance premiums		(157	)		(95	)		(203	)		(393	)		(193	)		(252	)		(295	)

Net written premiums		422			344			448			560			422			766			746
Change in unearned premiums		(43	)		17			31			(34	)		(48	)		(26	)		(22	)

Net earned premiums		379			361			479			526			374			740			724
Loss and LAE		259			225			327			406			239			484			459
Underwriting expense		116			97			88			120			112			213			209

Underwriting profit	$	4		$	39		$	64		$	—		$	23		$	43		$	56

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	(1	)	$	1		$	—		$	—		$	—
Catastrophe loss		8			9			(1	)		12			10			17			15

Total current accident year catastrophe losses	$	8		$	9		$	(2	)	$	13		$	10		$	17		$	15

Prior year loss reserve development (favorable) / adverse	$	(6	)	$	(26	)	$	(7	)	$	(4	)	$	(21	)	$	(32	)	$	(39	)

Combined ratio:
Loss and LAE ratio		68.4	%		62.2	%		68.2	%		77.1	%		63.8	%		65.4	%		63.4	%
Underwriting expense ratio		30.7	%		26.8	%		18.3	%		22.9	%		30.1	%		28.8	%		28.8	%

Combined ratio		99.1	%		89.0	%		86.5	%		100.0	%		93.9	%		94.2	%		92.2	%

Combined ratio excl. catastrophe and prior year development		98.7	%		93.6	%		88.2	%		98.5	%		96.8	%		96.3	%		95.5	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		68.0	%		66.8	%		69.9	%		75.6	%		66.7	%		67.5	%		66.7	%
Prior accident year loss reserve development		(1.6	%)		(7.2	%)		(1.5	%)		(0.8	%)		(5.6	%)		(4.4	%)		(5.4	%)
Current accident year catastrophe loss		2.0	%		2.6	%		(0.2	%)		2.3	%		2.7	%		2.3	%		2.1	%

Loss and LAE ratio		68.4	%		62.2	%		68.2	%		77.1	%		63.8	%		65.4	%		63.4	%

Page 8

American Financial Group, Inc.

Specialty Casualty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			06/30/19			06/30/18
Gross written premiums	$	896		$	912		$	778		$	956		$	858		$	1,808		$	1,711
Ceded reinsurance premiums		(234	)		(286	)		(197	)		(261	)		(219	)		(520	)		(478	)

Net written premiums		662			626			581			695			639			1,288			1,233
Change in unearned premiums		(28	)		3			32			(79	)		(44	)		(25	)		(59	)

Net earned premiums		634			629			613			616			595			1,263			1,174
Loss and LAE		380			388			389			364			378			768			723
Underwriting expense		207			205			202			203			188			412			381

Underwriting profit	$	47		$	36		$	22		$	49		$	29		$	83		$	70

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	1		$	—		$	—		$	—
Catastrophe loss		1			1			28			11			1			2			6

Total current accident year catastrophe losses	$	1		$	1		$	28		$	12		$	1		$	2		$	6

Prior year loss reserve development (favorable) / adverse	$	(31	)	$	(13	)	$	(52	)	$	(37	)	$	(15	)	$	(44	)	$	(50	)

Combined ratio:
Loss and LAE ratio		60.0	%		61.6	%		63.5	%		59.2	%		63.4	%		60.8	%		61.5	%
Underwriting expense ratio		32.5	%		32.6	%		33.0	%		32.9	%		31.7	%		32.6	%		32.5	%

Combined ratio		92.5	%		94.2	%		96.5	%		92.1	%		95.1	%		93.4	%		94.0	%

Combined ratio excl. catastrophe and prior year development		97.1	%		96.3	%		100.3	%		96.4	%		97.5	%		96.8	%		97.7	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		64.6	%		63.7	%		67.3	%		63.5	%		65.8	%		64.2	%		65.2	%
Prior accident year loss reserve development		(4.7	%)		(2.2	%)		(8.5	%)		(6.0	%)		(2.5	%)		(3.5	%)		(4.2	%)
Current accident year catastrophe loss		0.1	%		0.1	%		4.7	%		1.7	%		0.1	%		0.1	%		0.5	%

Loss and LAE ratio		60.0	%		61.6	%		63.5	%		59.2	%		63.4	%		60.8	%		61.5	%

Page 9

American Financial Group, Inc.

Specialty Financial - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			06/30/19			06/30/18
Gross written premiums	$	189		$	184		$	184		$	195		$	192		$	373		$	371
Ceded reinsurance premiums		(40	)		(39	)		(42	)		(42	)		(33	)		(79	)		(64	)

Net written premiums		149			145			142			153			159			294			307
Change in unearned premiums		2			1			(1	)		(4	)		—			3			1

Net earned premiums		151			146			141			149			159			297			308
Loss and LAE		49			56			51			60			54			105			114
Underwriting expense		81			77			70			80			83			158			157

Underwriting profit	$	21		$	13		$	20		$	9		$	22		$	34		$	37

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	1		$	—		$	—		$	—
Catastrophe loss		3			2			10			12			3			5			6

Total current accident year catastrophe losses	$	3		$	2		$	10		$	13		$	3		$	5		$	6

Prior year loss reserve development (favorable) / adverse	$	(9	)	$	(6	)	$	(7	)	$	(8	)	$	(8	)	$	(15	)	$	(11	)

Combined ratio:
Loss and LAE ratio		32.3	%		38.2	%		36.4	%		40.1	%		33.9	%		35.3	%		37.0	%
Underwriting expense ratio		53.3	%		53.2	%		49.1	%		54.3	%		51.7	%		53.3	%		50.9	%

Combined ratio		85.6	%		91.4	%		85.5	%		94.4	%		85.6	%		88.6	%		87.9	%

Combined ratio excl. catastrophe and prior year development		89.7	%		94.3	%		83.6	%		91.5	%		89.0	%		92.1	%		89.6	%

Loss and LAE components:
Current accident year, excluding catastrophe loss		36.4	%		41.1	%		34.5	%		37.2	%		37.3	%		38.8	%		38.7	%
Prior accident year loss reserve development		(5.9	%)		(4.3	%)		(5.2	%)		(5.1	%)		(5.4	%)		(5.1	%)		(3.6	%)
Current accident year catastrophe loss		1.8	%		1.4	%		7.1	%		8.0	%		2.0	%		1.6	%		1.9	%

Loss and LAE ratio		32.3	%		38.2	%		36.4	%		40.1	%		33.9	%		35.3	%		37.0	%

Page 10

American Financial Group, Inc.

Other Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			06/30/19			06/30/18
Gross written premiums	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Ceded reinsurance premiums		31			32			37			48			37			63			73

Net written premiums		31			32			37			48			37			63			73
Change in unearned premiums		5			5			—			(12	)		(4	)		10			(11	)

Net earned premiums		36			37			37			36			33			73			62
Loss and LAE		34			22			29			25			21			56			36
Underwriting expense		14			15			12			14			13			29			24

Underwriting profit (loss)	$	(12	)	$	—		$	(4	)	$	(3	)	$	(1	)	$	(12	)	$	2

Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe loss		—			—			2			—			2			—			2

Total current accident year catastrophe losses	$	—		$	—		$	2		$	—		$	2		$	—		$	2

Prior year loss reserve development (favorable) / adverse	$	4		$	(1	)	$	5		$	—		$	(1	)	$	3		$	(2	)

Combined ratio:
Loss and LAE ratio		96.0	%		59.7	%		76.5	%		65.5	%		68.7	%		77.6	%		60.7	%
Underwriting expense ratio		39.1	%		39.2	%		35.8	%		37.5	%		36.8	%		39.1	%		38.0	%

Combined ratio		135.1	%		98.9	%		112.3	%		103.0	%		105.5	%		116.7	%		98.7	%

Combined ratio excl. catastrophe and prior year development		123.4	%		100.8	%		95.6	%		103.7	%		99.6	%		111.9	%		98.2	%

Page 11

American Financial Group, Inc.

Annuity Earnings

($ in millions)


	Three Months Ended													Six Months Ended
	6/30/19		3/31/19			12/31/18			9/30/18		6/30/18			06/30/19			06/30/18
Net investment income	$	420	$	406		$	401		$	385	$	375		$	826		$	738
Investments marked to market through core operating earnings		31		29			18			28		37			60			68
Guaranteed withdrawal benefit fees		17		16			17			16		16			33			32
Policy charges and other miscellaneous income		10		11			10			11		11			21			21

Total revenues		478		462			446			440		439			940			859
Annuity benefits		272		266			260			248		235			538			455
Acquisition expenses		67		60			64			60		60			127			118
Other expenses		35		35			36			32		31			70			63

Total costs and expenses		374		361			360			340		326			735			636

Pretax Annuity core operating earnings - new method	$	104	$	101		$	86		$	100	$	113		$	205		$	223
Other amounts previously reported as core operating, net (a)		n/a		(11	)		(66	)		17		(14	)		(11	)		1

Pretax Annuity core operating earnings - as reported	$	104	$	90		$	20		$	117	$	99		$	194		$	224

(a)	“Other” primarily reflects (1) the impact of fair value accounting, (2) the impact of changes in the stock market on the liability for guaranteed benefits and DAC, and (3) unlocking.

Page 12

American Financial Group, Inc.

Detail of Annuity Benefits Expense

($ in millions)


	Three Months Ended										Six Months Ended
	6/30/19		3/31/19		12/31/18		9/30/18		6/30/18		06/30/19		06/30/18
Detail of annuity benefits expense:
Cost of funds:
Amortization of options	$	146	$	141	$	141	$	132	$	122	$	287	$	233
Traditional fixed annuities		61		59		58		59		58		120		117
Fixed component of fixed-indexed annuities		23		22		21		20		19		45		37
Immediate annuities		6		6		6		6		6		12		12
Pension risk transfer (PRT)		1		1		1		—		—		2		—
Federal Home Loan Bank		7		7		6		5		5		14		9

Total cost of funds - new method		244		236		233		222		210		480		408
Guaranteed withdrawal benefit reserve		20		19		19		22		19		39		33
Amortization of sales inducements		4		4		5		4		5		8		10
Change in expected death and annuitization reserve and other		4		7		3		—		1		11		4

Total other annuity benefits		28		30		27		26		25		58		47

Total annuity benefits expense—new method	$	272	$	266	$	260	$	248	$	235	$	538	$	455

Page 13

American Financial Group, Inc.

Core Net Spread on Fixed Annuities - New Method

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			06/30/19			06/30/18
Average fixed annuity investments (at amortized cost) (a)	$	37,907		$	36,991		$	35,993		$	34,955		$	33,935		$	37,449		$	33,469
Average annuity benefits accumulated		38,202			37,078			36,103			35,226			34,165			37,640			33,747

Annuity benefits accumulated in excess of investments (a)	$	(295	)	$	(87	)	$	(110	)	$	(271	)	$	(230	)	$	(191	)	$	(278	)

As % of average annuity benefits accumulated (except as noted)
Net investment income (as % of investments)		4.40	%		4.37	%		4.44	%		4.38	%		4.39	%		4.39	%		4.38	%
Investments marked to market through core operating earnings (as % of investments)		0.33	%		0.31	%		0.20	%		0.32	%		0.44	%		0.32	%		0.41	%
Cost of funds		(2.55	%)		(2.54	%)		(2.58	%)		(2.52	%)		(2.46	%)		(2.55	%)		(2.42	%)
Other annuity benefits, net of guaranteed withdrawal benefit fees		(0.10	%)		(0.13	%)		(0.12	%)		(0.10	%)		(0.09	%)		(0.11	%)		(0.07	%)

Core net interest spread on fixed annuities - new method		2.08	%		2.01	%		1.94	%		2.08	%		2.28	%		2.05	%		2.30	%
Policy charges and other miscellaneous income		0.08	%		0.08	%		0.08	%		0.09	%		0.10	%		0.08	%		0.10	%
Acquisition expenses		(0.68	%)		(0.65	%)		(0.66	%)		(0.65	%)		(0.69	%)		(0.66	%)		(0.69	%)
Other expenses		(0.37	%)		(0.36	%)		(0.38	%)		(0.36	%)		(0.35	%)		(0.37	%)		(0.36	%)

Core net spread earned on fixed annuities - new method		1.11	%		1.08	%		0.98	%		1.16	%		1.34	%		1.10	%		1.35	%
Net spread earned on items previously reported as core operating		n/a			(0.12	%)		(0.73	%)		0.19	%		(0.16	%)		(0.06	%)		0.01	%

Core net spread earned on fixed annuities - as reported		1.11	%		0.96	%		0.25	%		1.35	%		1.18	%		1.04	%		1.36	%

Average annuity benefits accumulated	$	38,202		$	37,078		$	36,103		$	35,226		$	34,165		$	37,640		$	33,747
Net spread earned on fixed annuities - core		1.11	%		1.08	%		0.98	%		1.16	%		1.34	%		1.10	%		1.35	%

Earnings on fixed annuity benefits accumulated - core	$	106		$	100		$	88		$	102		$	115		$	206		$	228
Annuity benefits accumulated in excess of investments	$	(295	)	$	(87	)	$	(110	)	$	(271	)	$	(230	)	$	(191	)	$	(278	)
Net investment income (as % of investments)		4.73	%		4.68	%		4.64	%		4.70	%		4.83	%		4.71	%		4.79	%

Earnings/(loss) on annuity benefits accumulated in excess of investments	$	(3	)	$	(1	)	$	(1	)	$	(3	)	$	(3	)	$	(4	)	$	(7	)
Variable annuity earnings		1			2			(1	)		1			1			3			2

Pretax Annuity core operating earnings - new method		104			101			86			100			113			205			223
Other amounts previously reported as core operating, net		n/a			(11	)		(66	)		17			(14	)		(11	)		1

Pretax Annuity core operating earnings - as reported	$	104		$	90		$	20		$	117		$	99		$	194		$	224

(a)	Excludes non-investment assets such as deferred acquisition costs, FIA options, accrued investment income and company owned life insurance.

Page 14

American Financial Group, Inc.

Statutory Annuity Premiums

($ in millions)


	Three Months Ended										Six Months Ended
	6/30/19		3/31/19		12/31/18		9/30/18		6/30/18		06/30/19		06/30/18
Financial institutions single premium annuities - indexed	$	429	$	424	$	455	$	460	$	448	$	853	$	861
Financial institutions single premium annuities - fixed		313		344		142		114		131		657		236
Retail single premium annuities - indexed		274		301		392		354		378		575		672
Retail single premium annuities - fixed		36		29		27		17		22		65		43
Broker dealer single premium annuities - indexed		189		227		335		322		355		416		614
Broker dealer single premium annuities - fixed		8		6		4		3		4		14		7
Pension risk transfer (PRT)		50		10		75		56		1		60		1
Education market - fixed and indexed annuities		44		49		46		46		54		93		100

Subtotal fixed annuity premiums		1,343		1,390		1,476		1,372		1,393		2,733		2,534
Variable annuities		6		5		6		6		6		11		13

Total annuity premiums	$	1,349	$	1,395	$	1,482	$	1,378	$	1,399	$	2,744	$	2,547

Summary by Distribution Channel:
Financial institutions	$	742	$	768	$	597	$	574	$	579	$	1,510	$	1,097
Retail		310		330		419		371		400		640		715
Broker dealer		197		233		339		325		359		430		621
Other		100		64		127		108		61		164		114

Total annuity premiums	$	1,349	$	1,395	$	1,482	$	1,378	$	1,399	$	2,744	$	2,547

Summary by Product Type:
Total indexed	$	917	$	980	$	1,211	$	1,164	$	1,213	$	1,897	$	2,205
Total fixed		426		410		265		208		180		836		329
Variable		6		5		6		6		6		11		13

Total annuity premiums	$	1,349	$	1,395	$	1,482	$	1,378	$	1,399	$	2,744	$	2,547

Page 15

American Financial Group, Inc.

Fixed Annuity Benefits Accumulated (GAAP)

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			06/30/19			06/30/18
Beginning fixed annuity reserves	$	37,724		$	36,431		$	35,774		$	34,678		$	33,652		$	36,431		$	33,005
Premiums		1,343			1,390			1,476			1,372			1,393			2,733			2,534
Federal Home Loan Bank (“FHLB”) advances (paydowns)		—			—			225			—			—			—			—
Surrenders, benefits and other withdrawals		(862	)		(761	)		(796	)		(707	)		(706	)		(1,623	)		(1,333	)
Interest and other annuity benefit expenses:
Cost of funds		244			236			233			222			210			480			408
Embedded derivative mark-to-market		251			462			(490	)		223			82			713			19
Unlockings		—			—			4			—			55			—			55
Other		(20	)		(34	)		5			(14	)		(8	)		(54	)		(10	)

Ending fixed annuity reserves	$	38,680		$	37,724		$	36,431		$	35,774		$	34,678		$	38,680		$	34,678

Reconciliation to annuity benefits accumulated:
Ending fixed annuity reserves	$	38,680		$	37,724		$	36,431		$	35,774		$	34,678		$	38,680		$	34,678
Impact of unrealized investment gains on reserves		192			108			10			8			32			192			32
Fixed component of variable annuities		172			174			175			176			176			172			176

Annuity benefits accumulated per balance sheet	$	39,044		$	38,006		$	36,616		$	35,958		$	34,886		$	39,044		$	34,886

Annualized surrenders and other withdrawals as a % of beginning reserves		9.1	%		8.4	%		8.9	%		8.2	%		8.4	%		8.9	%		8.1	%
Rider reserves included in ending fixed annuity reserves above	$	491		$	478		$	472		$	428		$	411		$	491		$	411

Embedded Derivative liability included in ending fixed annuity reserves above	$	3,541		$	3,247		$	2,720		$	3,105		$	2,776		$	3,541		$	2,776

Page 16

American Financial Group, Inc.

Guaranteed Minimum Interest Rate (“GMIR”) Analysis

($ in millions)


	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			3/31/18
GMIR
1 - 1.99%		80	%		79	%		79	%		78	%		78	%		77	%
2 - 2.99%		4	%		4	%		4	%		4	%		4	%		5	%
3 - 3.99%		7	%		8	%		8	%		9	%		9	%		9	%
4.00% and above		9	%		9	%		9	%		9	%		9	%		9	%
Annuity Benefits Accumulated	$	39,044		$	38,006		$	36,616		$	35,958		$	34,886		$	33,901
Traditional Fixed and FIA Surrender Value (a)	$	29,891		$	29,163		$	27,842		$	27,434		$	26,502		$	25,582
Ability to Lower Average Crediting Rates by (a) (b)		1.20	%		1.20	%		1.19	%		1.16	%		1.09	%		1.00	%
Pretax earnings impact of crediting guaranteed minimums (a)	$	359		$	350		$	331		$	317		$	288		$	255
(assumes net DAC impact over time = $0)

(a)	Excludes Annuities with Guaranteed Withdrawal Benefits, FHLB advances, immediate reserves and certain other reserves.

(b)	Weighted Average Crediting Rate less GMIR

Page 17

American Financial Group, Inc.

Annuity Non-Core Earnings

($ in millions)


	Reported in Non-Core Earnings			Reported in Core Earnings Prior to Second Quarter of 2019
	Reported in Non-Core Earnings			Three Months Ended												Six Months Ended
	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			6/30/19			6/30/18
Annuity Non-Core Earnings:
Stock market impact on:
Liability for guaranteed benefits (a)	$	6		$	14		$		(22)	$	7		$	2		$	20		$	1
DAC and sales inducements (b)		1			5			(8	)		3			1			6			1
Fair Value (FV) accounting		—			14			(27	)		12			6			14			4

Subtotal impact of changes in stock market		7			33			(57	)		22			9			40			6
Impact of changes in interest rates on FV accounting		(38	)		(45	)		(4	)		(2	)		12			(83	)		39
Other FIA items		(2	)		1			(1	)		(3	)		(8	)		(1	)		(17	)
Unlockings		—			—			(4	)		—			(27	)		—			(27	)

Annuity Non-Core Earnings	$	(33	)	$	(11	)	$	(66	)	$	17		$	(14	)	$	(44	)	$	1

Reported as		Non-core			Core			Core			Core			Core			Q1 Core = Q2 Non-core =	($11) ($33)		Core
Annuity Non-Core Net Spread Earned:
Stock market impact on:
Liability for guaranteed benefits (a)		0.06	%		0.15	%		(0.24	%)		0.08	%		0.03	%		0.11	%		0.01	%
DAC and sales inducements (b)		0.01	%		0.06	%		(0.09	%)		0.03	%		0.01	%		0.03	%		0.01	%
Fair Value (FV) accounting		0.00	%		0.15	%		(0.30	%)		0.14	%		0.07	%		0.07	%		0.02	%

Subtotal impact of changes in stock market		0.07	%		0.36	%		(0.63	%)		0.25	%		0.11	%		0.21	%		0.04	%
Impact of changes in interest rates on FV accounting		(0.40	%)		(0.49	%)		(0.05	%)		(0.03	%)		0.14	%		(0.44	%)		0.23	%
Other FIA items		(0.02	%)		0.01	%		(0.01	%)		(0.03	%)		(0.09	%)		(0.01	%)		(0.10	%)
Unlockings		0.00	%		0.00	%		(0.04	%)		0.00	%		(0.32	%)		0.00	%		(0.16	%)

Non-core net spread earned on fixed annuities		(0.35	%)		(0.12	%)		(0.73	%)		0.19	%		(0.16	%)		(0.24	%)		0.01	%

Reported as		Non-core			Core			Core			Core			Core			Q1 Core = (.06%) Q2 Non-core = (.18%)			Core

(a)	Reflects the impact of changes in the stock market on AFG’s liability for fixed-indexed annuities with guaranteed benefits. Increases in the stock market will generally have a favorable earnings impact; decreases in the stock market will generally have an unfavorable impact.

(b)	Reflects the impact of changes in the stock market on the current and projected lifetime profitability of AFG’s annuity business. Increases in the stock market will generally have a favorable earnings impact; decreases in the stock market will generally have an unfavorable impact.


S&P 500	2,942		2,834		2,507		2,914		2,718		2,942		2,718
Average 5 and 15 year Corp A2 rates	2.97	%	3.41	%	3.90	%	3.97	%	3.88	%	2.97	%	3.88	%
Non-core earnings sensitivities:
Incremental +/- 1% change in S&P 500	~ +/- $2mm to $4mm
Incremental +/- 10bps change in interest rates	~ +/- $9mm to $11mm
(Assumes parallel shift in rates (primarily Corporate A2 rates))

Page 18

American Financial Group, Inc.

Reconciliation from Core to GAAP Annuity Pretax Earnings

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			06/30/19			06/30/18
Annuity Earnings
Core annuity operating earnings - as reported (see page 12)	$	104		$	90		$	20		$	117		$	99		$	194		$	224
Annuity non-core earnings		(33	)		—			—			—			—			(33	)		—

Earnings before income taxes - GAAP	$	71		$	90		$	20		$	117		$	99		$	161		$	224

Annuity Benefit Expense
Annuity benefits expense - new method (see page 13)	$	272		$	266		$	260		$	248		$	235		$	538		$	455
Annuity non-core annuity benefits		67			45			74			(26	)		25			112			(13	)

Annuity Benefit Expense - GAAP	$	339		$	311		$	334		$	222		$	260		$	650		$	442

Net Spread on Fixed Annuities
Core net spread earned on fixed annuities - as reported (see page 14)		1.11	%		0.96	%		0.25	%		1.35	%		1.18	%		1.04	%		1.36	%
Non-core net spread earned on fixed annuities		(0.35	%)		0.00	%		0.00	%		0.00	%		0.00	%		(0.18	%)		0.00	%

Net Spread on Fixed Annuities		0.76	%		0.96	%		0.25	%		1.35	%		1.18	%		0.86	%		1.36	%

Page 19

American Financial Group, Inc.

Consolidated Balance Sheet

($ in millions)


	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			3/31/18
Assets:
Total cash and investments	$	52,907		$	51,040		$	48,498		$	47,841		$	46,779		$	45,949
Recoverables from reinsurers		3,150			3,258			3,349			3,352			3,073			3,173
Prepaid reinsurance premiums		651			636			610			717			645			614
Agents’ balances and premiums receivable		1,398			1,283			1,234			1,299			1,266			1,113
Deferred policy acquisition costs		1,203			1,447			1,682			1,669			1,582			1,417
Assets of managed investment entities		4,781			4,786			4,700			4,998			5,032			5,090
Other receivables		999			1,011			1,090			1,633			1,048			918
Variable annuity assets (separate accounts)		616			610			557			650			636			632
Other assets		1,785			1,854			1,529			1,832			1,574			1,551
Goodwill		207			207			207			199			199			199

Total assets	$	67,697		$	66,132		$	63,456		$	64,190		$	61,834		$	60,656

Liabilities and Equity:
Unpaid losses and loss adjustment expenses	$	9,577		$	9,623		$	9,741		$	9,670		$	9,093		$	9,193
Unearned premiums		2,683			2,605			2,595			2,740			2,539			2,413
Annuity benefits accumulated		39,044			38,006			36,616			35,958			34,886			33,901
Life, accident and health reserves		619			632			635			643			647			656
Payable to reinsurers		755			730			752			932			721			661
Liabilities of managed investment entities		4,590			4,593			4,512			4,807			4,840			4,869
Long-term debt		1,423			1,423			1,302			1,302			1,301			1,301
Variable annuity liabilities (separate accounts)		616			610			557			650			636			632
Other liabilities		2,300			2,245			1,774			2,324			2,087			1,847

Total liabilities	$	61,607		$	60,467		$	58,484		$	59,026		$	56,750		$	55,473
Redeemable noncontrolling interests	$	—		$	—		$	—		$	—		$	—		$	—
Shareholders’ equity:
Common stock	$	90		$	90		$	89		$	89		$	89		$	89
Capital surplus		1,277			1,256			1,245			1,231			1,220			1,205
Retained earnings		3,914			3,875			3,588			3,800			3,628			3,584
Unrealized gains—equities		—			—			—			—			—			—
Unrealized gains—fixed maturities		812			464			83			93			191			342
Unrealized gains (losses)—fixed maturity-related cash flow hedges		18			—			(11	)		(32	)		(27	)		(24	)
Other comprehensive income, net of tax		(21	)		(20	)		(24	)		(17	)		(17	)		(13	)

Total shareholders’ equity		6,090			5,665			4,970			5,164			5,084			5,183
Noncontrolling interests		—			—			2			—			—			—

Total liabilities and equity	$	67,697		$	66,132		$	63,456		$	64,190		$	61,834		$	60,656

Page 20

American Financial Group, Inc.

Book Value Per Share and Price / Book Summary

(in millions, except per share information)


	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			3/31/18
Shareholders’ equity	$	6,090		$	5,665		$	4,970		$	5,164		$	5,084		$	5,183
Unrealized (gains) related to fixed maturities		(830	)		(464	)		(72	)		(61	)		(164	)		(318	)

Adjusted shareholders’ equity		5,260			5,201			4,898			5,103			4,920			4,865
Goodwill		(207	)		(207	)		(207	)		(199	)		(199	)		(199	)
Intangibles		(48	)		(51	)		(54	)		(31	)		(34	)		(36	)

Tangible adjusted shareholders’ equity	$	5,005		$	4,943		$	4,637		$	4,873		$	4,687		$	4,630

Common shares outstanding		89.918			89.638			89.292			89.189			89.072			88.881
Book value per share:
Book value per share	$	67.72		$	63.20		$	55.66		$	57.90		$	57.08		$	58.32
Adjusted (a)		58.49			58.02			54.86			57.22			55.24			54.74
Tangible, adjusted (b)		55.65			55.14			51.93			54.64			52.63			52.10
Market capitalization
AFG’s closing common share price	$	102.47		$	96.21		$	90.53		$	110.97		$	107.33		$	112.22
Market capitalization	$	9,214		$	8,624		$	8,084		$	9,897		$	9,560		$	9,974
Price / Adjusted book value ratio		1.75			1.66			1.65			1.94			1.94			2.05

(a)	Excludes unrealized gains related to fixed maturity investments.

(b)	Excludes unrealized gains related to fixed maturity investments, goodwill and intangibles.

Page 21

American Financial Group, Inc.

Capitalization

($ in millions)


	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			3/31/18
AFG senior obligations	$	1,018		$	1,018		$	1,018		$	1,018		$	1,018		$	1,018
Borrowings drawn under credit facility		—			—			—			—			—			—

Debt excluding subordinated debt	$	1,018		$	1,018		$	1,018		$	1,018		$	1,018		$	1,018
AFG subordinated debentures		425			425			300			300			300			300

Total principal amount of long-term debt	$	1,443		$	1,443		$	1,318		$	1,318		$	1,318		$	1,318
Shareholders’ equity		6,090			5,665			4,970			5,164			5,084			5,183
Noncontrolling interests (including redeemable NCI)		—			—			2			—			—			—
Less:
Unrealized (gains) related to fixed maturity investments		(830	)		(464	)		(72	)		(61	)		(164	)		(318	)

Total adjusted capital	$	6,703		$	6,644		$	6,218		$	6,421		$	6,238		$	6,183

Ratio of debt to total adjusted capital:
Including subordinated debt		21.5	%		21.7	%		21.2	%		20.5	%		21.1	%		21.3	%
Excluding subordinated debt		15.2	%		15.3	%		16.4	%		15.9	%		16.3	%		16.5	%

Page 22

American Financial Group, Inc.

Additional Supplemental Information

($ in millions)

LOGO


	Three Months Ended										Six Months Ended
	6/30/19		3/31/19		12/31/18		9/30/18		6/30/18		06/30/19		06/30/18
Property and Casualty Insurance
Paid Losses (GAAP)	$	666	$	704	$	719	$	614	$	629	$	1,370	$	1,269


	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			3/31/18
GAAP Equity (excluding AOCI)
Property and Casualty Insurance	$	3,959		$	3,868		$	3,638		$	3,664		$	3,535		$	3,493
Annuity		2,612			2,553			2,443			2,513			2,397			2,354
Parent and other subsidiaries		(1,290	)		(1,200	)		(1,159	)		(1,057	)		(995	)		(969	)

AFG GAAP Equity (excluding AOCI)	$	5,281		$	5,221		$	4,922		$	5,120		$	4,937		$	4,878

Allowable dividends without regulatory approval
Property and Casualty Insurance	$	529		$	529		$	529		$	563		$	563		$	563
Annuity and Run-off		768			768			768			263			263			263

Total	$	1,297		$	1,297		$	1,297		$	826		$	826		$	826

Page 23

American Financial Group, Inc.

Total Cash and Investments

($ in millions)


	Carrying Value - June 30, 2019
	Property and				Parent and							% of
	Casualty		Annuity and		Other Non-		Consolidate			Total AFG		Investment
	Insurance		Run-off		Insurance		CLOs			Consolidated		Portfolio
Total cash and investments:
Cash and cash equivalents	$	1,230	$	995	$	149	$	—		$	2,374		4	%
Fixed maturities - Available for sale		8,011		36,688		11		—			44,710		85	%
Fixed maturities - Trading		52		54		—		—			106		0	%
Equity securities		1,137		786		62		—			1,985		4	%
Investments accounted for using the equity method		614		892		—		—			1,506		3	%
Mortgage loans		292		781		—		—			1,073		2	%
Policy loans		—		170		—		—			170		0	%
Equity index call options		—		712		—		—			712		1	%
Real estate and other investments		132		283		47		(191	)		271		1	%

Total cash and investments	$	11,468	$	41,361	$	269	$	(191)		$	52,907		100	%


	Carrying Value - December 31, 2018
	Property and				Parent and							% of
	Casualty		Annuity and		Other Non-		Consolidate			Total AFG		Investment
	Insurance		Run-off		Insurance		CLOs			Consolidated		Portfolio
Total cash and investments:
Cash and cash equivalents	$	1,007	$	339	$	169	$	—		$	1,515		3	%
Fixed maturities - Available for sale		7,853		34,132		12		—			41,997		87	%
Fixed maturities - Trading		50		55		—		—			105		0	%
Equity securities		1,017		744		53		—			1,814		4	%
Investments accounted for using the equity method		557		817		—		—			1,374		3	%
Mortgage loans		289		779		—		—			1,068		2	%
Policy loans		—		174		—		—			174		0	%
Equity index call options		—		184		—		—			184		0	%
Real estate and other investments		134		276		44		(187	)		267		1	%

Total cash and investments	$	10,907	$	37,500	$	278	$	(187	)	$	48,498		100	%

Page 24

American Financial Group, Inc.

Net Investment Income

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			06/30/19			06/30/18
Property and Casualty Insurance:
Gross Investment Income
Fixed maturities - Available for sale	$	79		$	77		$	74		$	72		$	72		$	156		$	138
Fixed maturities - Trading		1			1			1			—			2			2			2
Equity securities - dividends		13			13			11			13			11			26			24
Equity securities - MTM		1			2			9			(1	)		5			3			5
Equity in investees		20			3			14			16			18			23			35
AFG managed CLOs		2			3			(1	)		1			1			5			2
Other investments (a)		10			7			10			9			8			17			13

Gross investment income		126			106			118			110			117			232			219
Investment expenses		(2	)		(2	)		(3	)		(2	)		(2	)		(4	)		(4	)

Total net investment income	$	124		$	104		$	115		$	108		$	115		$	228		$	215

Average cash and investments (b)	$	11,193		$	10,997		$	10,651		$	10,388		$	10,346		$	11,084		$	10,395

Average yield (c)		4.43	%		3.78	%		4.32	%		4.16	%		4.45	%		4.11	%		4.14	%

Fixed Annuity
Gross Investment Income
Fixed maturities - Available for sale	$	391		$	384		$	376		$	361		$	350		$	775		$	688
Equity securities - dividends		8			9			9			6			7			17			15
Equity securities - MTM		3			3			2			—			11			6			11
Equity in investees		25			18			19			25			23			43			52
AFG managed CLOs		3			8			(3	)		3			3			11			5
Other investments (a)		22			15			18			19			19			37			36

Gross investment income		452			437			421			414			413			889			807
Investment expenses		(4	)		(4	)		(4	)		(3	)		(3	)		(8	)		(6	)

Total net investment income	$	448		$	433		$	417		$	411		$	410		$	881		$	801

Average cash and investments (b)	$	37,907		$	36,991		$	35,993		$	34,955		$	33,935		$	37,449		$	33,469

Average yield (c)		4.73	%		4.68	%		4.64	%		4.70	%		4.83	%		4.71	%		4.79	%

AFG consolidated net investment income:
Property & Casualty	$	124		$	104		$	115		$	108		$	115		$	228		$	215
Annuity:
Fixed Annuity		448			433			417			411			410			881			801
Variable Annuity		3			2			2			2			2			5			5
Parent & other		10			14			4			10			7			24			11
Consolidate CLOs		(5	)		(11	)		4			(4	)		(4	)		(16	)		(7	)

Total net investment income	$	580		$	542		$	542		$	527		$	530		$	1,122		$	1,025

(a)	Includes income from mortgage loans, real estate, policy loans, short-term investments, and cash equivalents.

(b)	Average cash and investments is the average of the beginning and ending quarter balances, or the average of the five quarters balances.

(c)	Average yield is calculated by dividing investment income for the quarter by the average cash and investment balance over the quarter.

Page 25

American Financial Group, Inc.

Significant Investments Marked-to-Market Through Investment Income and Investments Accounted For Using the Equity Method

($ in millions)


	Three Months Ended															Six Months Ended
	6/30/19			3/31/19			12/31/18			9/30/18			6/30/18			06/30/19			06/30/18
Property and Casualty Insurance:
Net Investment Income
Equity securities MTM through investment income (a)	$	1		$	2		$	9		$	(1	)	$	5		$	3		$	5
Investments accounted for using the equity method (b)		20			3			14			16			18			23			35
AFG managed CLOs (eliminated in consolidation)		2			3			(1	)		1			1			5			2

Total Property & Casualty	$	23		$	8		$	22		$	16		$	24		$	31		$	42

Investments
Equity securities MTM through investment income (a)	$	57		$	52		$	50		$	40		$	40		$	57		$	40
Investments accounted for using the equity method (b)		614			578			557			520			475			614			475
AFG managed CLOs (eliminated in consolidation)		56			57			56			57			57			56			57

Total Property & Casualty	$	727		$	687		$	663		$	617		$	572		$	727		$	572

Annualized Yield - Property & Casualty		13.0	%		4.7	%		13.8	%		10.8	%		17.3	%		9.0	%		15.7	%
Fixed Annuity:
Net Investment Income
Equity securities MTM through investment income (a)	$	3		$	3		$	2		$	—		$	11		$	6		$	11
Investments accounted for using the equity method (b)		25			18			19			25			23			43			52
AFG managed CLOs (eliminated in consolidation)		3			8			(3	)		3			3			11			5

Total Fixed Annuity	$	31		$	29		$	18		$	28		$	37		$	60		$	68

Investments
Equity securities MTM through investment income (a)	$	101		$	88		$	84		$	79		$	79		$	101		$	79
Investments accounted for using the equity method (b)		892			862			817			769			719			892			719
AFG managed CLOs (eliminated in consolidation)		135			136			132			134			135			135			135

Total Fixed Annuity	$	1,128		$	1,086		$	1,033		$	982		$	933		$	1,128		$	933

Annualized Yield - Fixed Annuity		11.2	%		10.9	%		7.1	%		11.7	%		16.4	%		11.1	%		15.7	%
Combined (includes Parent amounts not shown above):
Net Investment Income
Equity securities MTM through investment income (a)	$	8		$	11		$	6		$	1		$	16		$	19		$	15
Investments accounted for using the equity method (b)		45			21			33			41			41			66			87
AFG managed CLOs (eliminated in consolidation)		5			11			(4	)		4			4			16			7

Total Combined (including Parent)	$	58		$	43		$	35		$	46		$	61		$	101		$	109

Investments
Equity securities MTM through investment income (a)	$	220		$	198		$	187		$	176		$	173		$	220		$	173
Investments accounted for using the equity method (b)		1,506			1,440			1,374			1,289			1,194			1,506			1,194
AFG managed CLOs (eliminated in consolidation)		191			193			188			191			192			191			192

Total Combined (including Parent)	$	1,917		$	1,831		$	1,749		$	1,656		$	1,559		$	1,917		$	1,559

Annualized Yield - Combined		12.4	%		9.6	%		8.2	%		11.4	%		16.2	%		11.0	%		15.0	%

(a)	AFG carries the small portion of its equity securities previously classified as “trading” and investments in limited partnerships and similar investments that aren’t accounted for using the equity method at fair value through net investment income.

(b)	The majority of AFG’s investments accounted for using the equity method mark their underlying assets to market through net income.

Page 26

American Financial Group, Inc.

Fixed Maturities - By Security Type - AFG Consolidated

($ in millions )


												% of
	Amortized					Unrealized			% of			Investment
June 30, 2019	Cost			Fair Value		Gain (Loss)			Fair Value			Portfolio
US Government and government agencies	$	232		$	234	$	2			1	%		1	%
States, municipalities and political subdivisions		6,652			7,020		368			16	%		13	%
Foreign government		177			180		3			0	%		0	%
Residential mortgage-backed securities		2,369			2,668		299			6	%		5	%
Commercial mortgage-backed securities		938			974		36			2	%		2	%
Collateralized loan obligations		4,359			4,333		(26	)		10	%		8	%
Other asset-backed securities		5,749			5,944		195			13	%		11	%
Corporate and other bonds		22,538			23,463		925			52	%		45	%

Total AFG consolidated	$	43,014		$	44,816	$	1,802			100	%		85	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.46	%
Net of investment expense (a)		4.41	%
Approximate average life and duration:
Approximate average life		6 years
Approximate duration		4.5 years

												% of
	Amortized					Unrealized			% of			Investment
December 31, 2018	Cost			Fair Value		Gain (Loss)			Fair Value			Portfolio
US Government and government agencies	$	245		$	243	$	(2	)		1	%		1	%
States, municipalities and political subdivisions		6,850			6,964		114			17	%		14	%
Foreign government		166			168		2			0	%		0	%
Residential mortgage-backed securities		2,478			2,746		268			7	%		6	%
Commercial mortgage-backed securities		905			920		15			2	%		2	%
Collateralized loan obligations		4,350			4,278		(72	)		10	%		9	%
Other asset-backed securities		5,431			5,533		102			13	%		11	%
Corporate and other bonds		21,517			21,250		(267	)		50	%		44	%

Total AFG consolidated	$	41,942		$	42,102	$	160			100	%		87	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.47	%
Net of investment expense (a)		4.42	%
Approximate average life and duration:
Approximate average life		6 years
Approximate duration		4.5 years

(a)	Annualized yield is calculated by dividing investment income for the quarter by the average cost over the quarter. Average cost is the average of the beginning and ending quarter asset balances.

Page 27

American Financial Group, Inc.

Fixed Maturities - By Security Type Portfolio

($ in millions )


	June 30, 2019											December 31, 2018
	Amortized					Unrealized			% of			Amortized					Unrealized			% of
Property and Casualty Insurance:	Cost			Fair Value		Gain (Loss)			Fair Value			Cost			Fair Value		Gain (Loss)			Fair Value
US Government and government agencies	$	193		$	195		2			2	%	$	203		$	202	$	(1	)		3	%
States, municipalities and political subdivisions		2,504			2,580		76			32	%		2,630			2,642		12			33	%
Foreign government		166			167		1			2	%		155			156		1			2	%
Residential mortgage-backed securities		687			757		70			10	%		725			784		59			10	%
Commercial mortgage-backed securities		94			97		3			1	%		83			84		1			1	%
Collateralized loan obligations		908			902		(6	)		11	%		910			895		(15	)		12	%
Other asset-backed securities		1,403			1,424		21			18	%		1,365			1,364		(1	)		17	%
Corporate and other bonds		1,900			1,941		41			24	%		1,792			1,776		(16	)		22	%

Property and Casualty Insurance	$	7,855		$	8,063	$	208			100	%	$	7,863		$	7,903	$	40			101	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.01	%										3.91	%
Net of investment expense (a)		3.95	%										3.81	%
Tax equivalent, net of investment expense (b)		4.14	%										3.99	%
Approximate average life and duration:
Approximate average life		5 years											4.5 years
Approximate duration		3.5 years											3.5 years

	June 30, 2019											December 31, 2018
	Amortized					Unrealized			% of			Amortized					Unrealized			% of
Annuity and Run-off:	Cost			Fair Value		Gain (Loss)			Fair Value			Cost			Fair Value		Gain (Loss)			Fair Value
US Government and government agencies	$	39		$	39	$	—			0	%	$	42		$	41	$	(1	)		0	%
States, municipalities and political subdivisions		4,148			4,440		292			12	%		4,220			4,322		102			13	%
Foreign government		11			13		2			0	%		11			12		1			0	%
Residential mortgage-backed securities		1,680			1,900		220			5	%		1,750			1,950		200			6	%
Commercial mortgage-backed securities		844			877		33			2	%		822			836		14			2	%
Collateralized loan obligations		3,451			3,431		(20	)		9	%		3,440			3,383		(57	)		10	%
Other asset-backed securities		4,346			4,520		174			13	%		4,066			4,169		103			12	%
Corporate and other bonds		20,638			21,522		884			59	%		19,725			19,474		(251	)		57	%

Total Annuity and Run-off	$	35,157		$	36,742	$	1,585			100	%	$	34,076		$	34,187	$	111			100	%

Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.56	%										4.59	%
Net of investment expense (a)		4.51	%										4.55	%
Approximate average life and duration:
Approximate average life		6 years											6.5 years
Approximate duration		4.5 years											4.5 years

(a)	Annualized yield is calculated by dividing investment income for the quarter by the average cost over the quarter. Average cost is the average of the beginning and ending quarter asset balances.

(b)	Adjusts the yield on tax-exempt bonds to the fully taxable equivalent yield.

Page 28

American Financial Group, Inc.

Fixed Maturities - Credit Rating

($ in millions)

LOGO


	June 30, 2019
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value
Investment grade
AAA	$	7,636	$	7,790	$	154			18	%
AA		8,670		9,043		373			20	%
A		10,394		10,863		469			24	%
BBB		12,535		13,067		532			29	%

Subtotal - Investment grade		39,235		40,763		1,528			91	%
BB		741		741		—			2	%
B		229		228		(1	)		0	%
Other (b)		2,809		3,084		275			7	%

Subtotal - Non-Investment grade		3,779		4,053		274			9	%

Total	$	43,014	$	44,816	$	1,802			100	%

98% of the fixed maturity portfolio is NAIC designated 1 or 2.


	December 31, 2018
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value
Investment grade
AAA	$	7,367	$	7,359	$	(8	)		17	%
AA		8,714		8,831		117			21	%
A		10,006		9,989		(17	)		24	%
BBB		12,206		12,053		(153	)		29	%

Subtotal - Investment grade		38,293		38,232		(61	)		91	%
BB		703		685		(18	)		2	%
B		261		254		(7	)		0	%
Other (b)		2,685		2,931		246			7	%

Subtotal - Non-Investment grade		3,649		3,870		221			9	%

Total	$	41,942	$	42,102	$	160			100	%

98% of the fixed maturity portfolio is NAIC designated 1 or 2.

(a)	If two agencies rate a security, the rating displayed above is the lower of the two; if three or more agencies rate a security, the rating displayed is the second lowest.

(b)	See page 33 for more information.

Page 29

American Financial Group, Inc.

Mortgage-Backed Securities - AFG Consolidated

($ in millions)


June 30, 2019	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Investment Portfolio
Residential
Agency	$	156	$	158	$	2		4	%		0	%
Prime (Non-Agency)		913		1,044		131		29	%		2	%
Alt-A		969		1,097		128		30	%		2	%
Subprime		331		369		38		10	%		1	%
Commercial		938		974		36		27	%		2	%

Total AFG consolidated	$	3,307	$	3,642	$	335		100	%		7	%

•

Substantially all of AFG’s MBS securities are either senior tranches of securitizations or collateralized by senior tranches of securitizations.

•

The average amortized cost as a percent of par is—Prime 82%; Alt-A 81%; Subprime 82%; CMBS 100%.

•

The average FICO score of our residential MBS securities is—Prime 735; Alt-A 695; Subprime 631.

•

96% of our Commercial MBS portfolio is investment-grade rated (83% AAA) and the average subordination for this group of assets is 36%.

•

The approximate average life by collateral type is—Residential 4.5 years; Commercial 4 years.


December 31, 2018	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Investment Portfolio
Residential
Agency	$	170	$	168	$	(2	)		5	%		1	%
Prime (Non-Agency)		967		1,098		131			30	%		2	%
Alt-A		972		1,074		102			29	%		2	%
Subprime		369		406		37			11	%		1	%
Commercial		905		920		15			25	%		2	%

Total AFG consolidated	$	3,383	$	3,666	$	283			100	%		8	%

Page 30

American Financial Group, Inc.

Mortgage-Backed Securities Portfolio

($ in millions)

Property and Casualty Insurance:


	June 30, 2019
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Inv Portfolio
Residential
Agency	$	124	$	125	$	1			15	%		1	%
Prime (Non-Agency)		131		147		16			17	%		1	%
Alt-A		286		324		38			38	%		3	%
Subprime		146		161		15			19	%		1	%
Commercial		94		97		3			11	%		1	%

Total	$	781	$	854	$	73			100	%		7	%


	December 31, 2018
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Inv Portfolio
Residential
Agency	$	137	$	134	$	(3	)		15	%		1	%
Prime (Non-Agency)		138		155		17			18	%		1	%
Alt-A		289		319		30			37	%		3	%
Subprime		161		176		15			20	%		2	%
Commercial		83		84		1			10	%		1	%

Total	$	808	$	868	$	60			100	%		8	%

Annuity and Run-off:


	June 30, 2019
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Inv Portfolio
Residential
Agency	$	32	$	33	$	1		1	%		0	%
Prime (Non-Agency)		780		886		106		32	%		2	%
Alt-A		683		773		90		28	%		2	%
Subprime		185		208		23		7	%		1	%
Commercial		844		877		33		32	%		2	%

Total	$	2,524	$	2,777	$	253		100	%		7	%


	December 31, 2018
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Inv Portfolio
Residential
Agency	$	33	$	34	$	1		1	%		0	%
Prime (Non-Agency)		826		931		105		34	%		2	%
Alt-A		683		755		72		27	%		2	%
Subprime		208		230		22		8	%		1	%
Commercial		822		836		14		30	%		2	%

Total	$	2,572	$	2,786	$	214		100	%		7	%

Page 31

American Financial Group, Inc.

Mortgage-Backed Securities - Credit Rating

($ in millions)


	June 30, 2019
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value
Investment grade
AAA	$	1,136	$	1,177	$	41		32	%
AA		160		167		7		5	%
A		321		343		22		10	%
BBB		182		194		12		5	%

Subtotal - investment grade		1,799		1,881		82		52	%
BB		108		110		2		3	%
B		131		133		2		3	%
Other (b)		1,269		1,518		249		42	%

Total	$	3,307	$	3,642	$	335		100	%

95% of the mortgage-backed security portfolio has an NAIC 1 designation.


	December 31, 2018
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value
Investment grade
AAA	$	1,107	$	1,119	$	12			31	%
AA		143		147		4			4	%
A		263		270		7			7	%
BBB		232		243		11			7	%

Subtotal - investment grade		1,745		1,779		34			49	%
BB		128		131		3			3	%
B		155		154		(1	)		4	%
Other (b)		1,355		1,602		247			44	%

Total	$	3,383	$	3,666	$	283			100	%

96% of the mortgage-backed security portfolio has an NAIC 1 designation.

(a)	If two agencies rate a security, the rating displayed above is the lower of the two; if three or more agencies rate a security, the rating displayed is the second lowest.

(b)	See page 33 for more information.

Page 32

Appendix A

American Financial Group, Inc.

Fixed Maturities - Credit Rating by Type

($ in millions)


	Fair Value - June 30, 2019
By Credit Rating (a)	US Gov		Munis		Frgn Gov		RMBS		CMBS		CLOs		Other ABS		Corp/Oth		Total		% Total
Investment grade
AAA	$	223	$	2,032	$	104	$	366	$	811	$	2,919	$	1,156	$	179	$	7,790		18	%
AA		11		4,383		53		144		23		1,070		1,571		1,788		9,043		20	%
A		—		431		—		321		22		237		2,010		7,842		10,863		24	%
BBB		—		108		3		117		77		83		697		11,982		13,067		29	%

Subtotal - Investment grade		234		6,954		160		948		933		4,309		5,434		21,791		40,763		91	%
BB		—		—		—		79		31		—		29		602		741		2	%
B		—		8		—		127		6		—		8		79		228		0	%
CCC, CC, C		—		—		—		623		4		—		2		33		662		2	%
D		—		—		—		205		—		—		—		—		205		0	%

Subtotal - Non-Investment grade		—		8		—		1,034		41		—		39		714		1,836		4	%
Not Rated		—		58		20		686		—		24		471		958		2,217		5	%

Total	$	234	$	7,020	$	180	$	2,668	$	974	$	4,333	$	5,944	$	23,463	$	44,816		100	%


	Fair Value - December 31, 2018
By Credit Rating (a)	US Gov		Munis		Frgn Gov		RMBS		CMBS		CLOs		Other ABS		Corp/Oth		Total		% Total
Investment grade
AAA	$	213	$	1,889	$	98	$	367	$	752	$	2,679	$	1,191	$	170	$	7,359		17	%
AA		22		4,456		53		129		18		1,244		1,326		1,583		8,831		21	%
A		—		448		—		248		22		250		1,836		7,185		9,989		24	%
BBB		—		110		—		169		74		84		685		10,931		12,053		29	%

Subtotal - Investment grade		235		6,903		151		913		866		4,257		5,038		19,869		38,232		91	%
BB		—		—		—		97		34		—		23		531		685		2	%
B		—		8		—		151		3		—		4		88		254		0	%
CCC, CC, C		—		—		—		670		5		—		2		12		689		2	%
D		—		3		—		230		—		—		—		1		234		1	%

Subtotal - Non-Investment grade		—		11		—		1,148		42		—		29		632		1,862		5	%
Not Rated		8		50		17		685		12		21		466		749		2,008		4	%

Total	$	243	$	6,964	$	168	$	2,746	$	920	$	4,278	$	5,533	$	21,250	$	42,102		100	%

(a)	If two agencies rate a security, the rating displayed above is the lower of the two; if three or more agencies rate a security, the rating displayed is the second lowest.

Page 33