American Financial Group Q3 2024 Update

TL;DR

AFG Q3 2024 results are in. Check the 10-Q for details.

AI Summary

American Financial Group Inc. reported its third-quarter results for the period ending September 30, 2024. The company, headquartered in Cincinnati, OH, operates in the fire, marine, and casualty insurance sector. This 10-Q filing provides a detailed overview of their financial performance and position during this period.

Why It Matters

This filing provides investors with crucial financial data for American Financial Group, impacting investment decisions in the insurance sector.

Risk Assessment

Risk Level: low — This is a standard quarterly financial filing with no immediate red flags.

Key Players & Entities

• AMERICAN FINANCIAL GROUP INC (company) — Filer
• 301 E. 4TH STREET (location) — Business Address
• CINCINNATI (location) — City
• OH (location) — State
• 20240930 (date) — Period of Report

FAQ

Filing Documents

• afg-20240930.htm (10-Q) — 3671KB
• afg-2024930xex31a.htm (EX-31.A) — 11KB
• afg-2024930xex31b.htm (EX-31.B) — 11KB
• afg-2024930xex31c.htm (EX-31.C) — 11KB
• afg-2024930xex32.htm (EX-32) — 10KB
• afg-20240930_g1.jpg (GRAPHIC) — 40KB
• 0001042046-24-000034.txt ( ) — 16412KB
• afg-20240930.xsd (EX-101.SCH) — 74KB
• afg-20240930_cal.xml (EX-101.CAL) — 128KB
• afg-20240930_def.xml (EX-101.DEF) — 467KB
• afg-20240930_lab.xml (EX-101.LAB) — 962KB
• afg-20240930_pre.xml (EX-101.PRE) — 691KB
• afg-20240930_htm.xml (XML) — 3572KB

— Financial Information

Part I — Financial Information

— Financial Statements

Item 1 — Financial Statements: Consolidated Balance Sheet 2 Consolidated Statement of Earnings 3 Consolidated Statement of Comprehensive Income 4 Consolidated Statement of Changes in Equity 6 Consolidated Statement of Cash Flows 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8

— Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations 33

— Quantitative and Qualitative Disclosure about Market Risk

Item 3 — Quantitative and Qualitative Disclosure about Market Risk 73

— Controls and Procedures

Item 4 — Controls and Procedures 74

— Other Information

Part II — Other Information

— Unregistered Sales of Equity Securities and Use of Proceeds

Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds 74

— Other Information

Item 5 — Other Information 74

— Exhibits

Item 6 — Exhibits 75 Signature 75 Table of Contents AMERICAN FINANCIAL GROUP, INC. 10-Q PART I

— FINANCIAL STATEMENTS

ITEM 1. — FINANCIAL STATEMENTS AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED) (Dollars in Millions) September 30, 2024 December 31, 2023 Assets: Cash and cash equivalents $ 1,322 $ 1,225 Investments: Fixed maturities, available for sale at fair value (amortized cost — $ 10,586 and $ 10,752 ; allowance for expected credit losses of $ 25 and $ 12 ) 10,435 10,377 Fixed maturities, trading at fair value 78 57 Equity securities, at fair value 1,081 1,018 Investments accounted for using the equity method 1,911 1,814 Mortgage loans 765 643 Real estate and other investments 149 129 Total cash and investments 15,741 15,263 Recoverables from reinsurers 5,217 4,477 Prepaid reinsurance premiums 1,346 961 Agents' balances and premiums receivable 1,995 1,471 Deferred policy acquisition costs 340 309 Assets of managed investment entities 4,332 4,484 Other receivables 1,989 1,171 Other assets 1,326 1,346 Goodwill 305 305 Total assets $ 32,591 $ 29,787 Liabilities and Equity: Unpaid losses and loss adjustment expenses $ 14,206 $ 13,087 Unearned premiums 4,320 3,451 Payable to reinsurers 1,620 1,186 Liabilities of managed investment entities 4,168 4,307 Long-term debt 1,475 1,475 Other liabilities 2,094 2,023 Total liabilities 27,883 25,529 Shareholders' equity: Common Stock, no par value — 200,000,000 shares authorized — 83,923,446 and 83,635,807 shares outstanding 84 84 Capital surplus 1,400 1,372 Retained earnings 3,360 3,121 Accumulated other comprehensive income (loss), net of tax ( 136 ) ( 319 ) Total shareholders' equity 4,708 4,258 Total liabilities and shareholders' equity $ 32,591 $ 29,787 2 Table of Contents AMERICAN FINANCIAL GROUP, INC. 10-Q AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED) (In Millions, Except Per Share Data) Three months ended September 30, Nine months ended September 30, 2024 2023 2024 2023 Revenues: Proper

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS INDEX TO NOTES A. Accounting Policies H. Goodwill and Other Intangibles B. Acquisition of Business I. Long-Term Debt C. Segments of Operations J. Shareholders' Equity D. Fair Value Measurements K. Income Taxes E. Investments L. Contingencies F. Derivatives M. Insurance G. Managed Investment Entities A. Accounting Policies Basis of Presentation The accompanying consolidated financial statements for American Financial Group, Inc. and its subsidiaries ("AFG") are unaudited; however, management believes that all adjustments (consisting only of normal recurring accruals unless otherwise disclosed herein) necessary for fair presentation have been made. The results of operations for interim periods are not necessarily indicative of results to be expected for the year. The financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary to be in conformity with U.S. generally accepted accounting principles ("GAAP"). Certain reclassifications have been made to prior periods to conform to the current year's presentation. All significant intercompany balances and transactions have been eliminated. The results of operations of companies since their formation or acquisition are included in the consolidated financial statements. Events or transactions occurring subsequent to September 30, 2024, and prior to the filing of this Form 10-Q, have been evaluated for potential recognition or disclosure herein. The preparation of the financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Changes in circumstances could cause actual results to differ materially from those estimates. Fair Value Measurements Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED Limited partnerships and similar investments are generally accounted for using the equity method of accounting. Under the equity method, AFG records its share of the earnings or losses of the investee based on when it is reported by the investee in its financial statements rather than in the period in which the investee declares a dividend. AFG's share of the earnings or losses from equity method investments is generally recorded on a quarter lag due to the timing of the receipt of the investee's financial statements. AFG's equity in the earnings (losses) of limited partnerships and similar investments is included in net investment income. Credit Losses on Fixed Maturity Investments When a decline in the value of an available for sale fixed maturity is considered to be other-than-temporary at the balance sheet date, an allowance for credit losses (impairment), including any write-off of accrued interest, is charged to earnings (included in realized gains (losses) on securities). If management can assert that it does not intend to sell the security and it is not more likely than not that it will have to sell it before recovery of its amortized cost basis (net of allowance), then the impairment is separated into two components: (i) the allowance related to credit losses (recorded in earnings) and (ii) the amount related to all other factors (recorded in other comprehensive income). The credit-related portion is measured by comparing a security's amortized cost to the present value of its current expected cash flows discounted at its effective yield prior to the charge. The allowance is limited to the difference between a security's amortized cost basis and its fair value. Subsequent increases or decreases in expected credit losses are recorded immediately in net earnings through realized gains (losses). If management intends to sell an impaired security, or it is more likely than not that it will be required t

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED Deferred Policy Acquisition Costs ("DPAC") Policy acquisition costs (principally commissions, premium taxes and certain underwriting and policy issuance costs) directly related to the successful acquisition or renewal of an insurance contract are deferred. DPAC is limited based upon recoverability without any consideration for anticipated investment income and is charged against income ratably over the terms of the related policies. A premium deficiency is recognized if the sum of expected claims costs, claims adjustment expenses and unamortized acquisition costs exceed the related unearned premiums. A premium deficiency is first recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. If the premium deficiency is greater than unamortized acquisition costs, a liability is accrued for the excess deficiency and reported with unpaid losses and loss adjustment expenses. Managed Investment Entities A company is considered the primary beneficiary of, and therefore must consolidate, a variable interest entity ("VIE") based primarily on its ability to direct the activities of the VIE that most significantly impact that entity's economic performance and the obligation to absorb losses of, or receive benefits from, the entity that could potentially be significant to the VIE. AFG manages, and has investments in, collateralized loan obligations ("CLOs") that are VIEs (see Note G — "Managed Investment Entities" ). AFG has determined that it is the primary beneficiary of these CLOs because (i) its role as asset manager gives it the power to direct the activities that most significantly impact the economic performance of the CLOs and (ii) through its investment in the CLO debt tranches, it has exposure to CLO losses (limited to the amount AFG invested) and the right to receive CLO benefits that could potentially be significant to the CLOs. Because AFG has n

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED Leases Leases for terms of longer than one year are recognized as assets and liabilities for the rights and obligations created by those leases on the balance sheet based on the present value of contractual cash flows. At September 30, 2024 AFG has a $ 235 million lease liability included in other liabilities and a lease right-of-use asset of $ 214 million included in other assets compared to $ 198 million and $ 176 million, respectively, at December 31, 2023. Premium Recognition Property and casualty premiums are earned generally over the terms of the policies on a pro rata basis. Unearned premiums represent that portion of premiums written, which is applicable to the unexpired terms of policies in force. On reinsurance assumed from other insurance companies or written through various underwriting organizations, unearned premiums are based on information received from such companies and organizations. Income Taxes Deferred income taxes are calculated using the liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases and are measured using enacted tax rates. A valuation allowance is established to reduce total deferred tax assets to an amount that will more likely than not be realized. The effect of a change in tax rates on deferred tax assets a

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