Current Report Filing (8-k)

AMERICAN FINANCIAL GROUP, INC.

Date: February 3, 2016

Karl J. Grafe

Karl J. Grafe

Vice President

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 2, 2016

AMERICAN FINANCIAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Ohio

1-13653

31-1544320

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)


301 East Fourth Street, Cincinnati, OH		45202
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code 513-579-2121

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 - Financial Information

Item 2.02 Results Of Operations And Financial Condition.

Reference is made to the press release of American Financial Group, Inc. (the “Company”) relating to the announcement of the Company’s results of operations for the fourth quarter of 2015 and full year ended December 31, 2015 as well as the availability of the Investor Supplement on the Company’s website. The press release was issued on February 2, 2016. A copy of the press release is attached to this Form 8-K as Exhibit 99.1 and a copy of the Investor Supplement is attached as Exhibit 99.2 and are incorporated herein by reference.

The information contained herein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 as amended (the “Exchange Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(a)

Financial statements of business acquired. Not applicable.

(b)

Pro forma financial information. Not applicable.

(c)

Shell company transactions. Not applicable

(d)

Exhibits


Exhibit No.		Description

99.1		Earnings Release dated February 2, 2016, reporting American Financial Group Inc. fourth quarter and full year results for the period ended December 31, 2015.

99.2		Investor Supplement – Fourth Quarter 2015

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit 99.1

LOGO

American Financial Group, Inc. Announces Record 2015 Fourth Quarter and Full Year Core Net Operating Earnings Per Share

•

Record fourth quarter core net operating earnings of $1.52 per share; up 13% from 2014

•

Record core net operating earnings per share of $5.44 for the full year; up 13% from 2014

•

Net earnings of $1.45 per share in the fourth quarter; $3.94 per share for the full year

•

Fourth quarter annualized core operating ROE of 12.7%

•

Full year 2016 core net operating earnings guidance between $5.35 - $5.75 per share

CINCINNATI – February 2, 2016 – American Financial Group, Inc. (NYSE: AFG) today reported 2015 fourth quarter net earnings attributable to shareholders of $129 million ($1.45 per share) compared to $127 million ($1.41 per share) for the 2014 fourth quarter. Results for the fourth quarter of 2015 include an after-tax gain of $10 million ($0.11 per share) from the sale of an apartment property, which was more than offset by an additional after-tax loss of $3 million ($0.03 per share) recorded upon closing of the sale of the long-term care business and $14 million ($0.15 per share) in after-tax realized losses. Results in the comparable prior year period included $5 million ($0.06 per share) in after-tax realized gains. Net earnings attributable to shareholders for the year were $3.94 per share, compared to $4.97 per share in 2014. Return on equity was 8.3% and 11.0% for 2015 and 2014, respectively.

Core net operating earnings were $136 million ($1.52 per share) for the 2015 fourth quarter, compared to $122 million ($1.35 per share) in the 2014 fourth quarter. The increase was due to higher underwriting profit in our Specialty Property and Casualty (“P&C”) insurance operations and higher core net operating earnings in our Annuity and Run-off Long-term Care and Life segments. Core net operating earnings for the fourth quarters of 2015 and 2014 generated annualized returns on equity of 12.7% and 11.7%, respectively. Full year 2015 core net operating earnings per share increased by 13% over the prior year. Core operating return on equity was 11.5% and 10.7% for 2015 and 2014, respectively.

During the fourth quarter of 2015, AFG repurchased approximately 188,000 shares of common stock for $13 million (average price per share of $70.20). Recent volatility in the equity markets created additional opportunities to repurchase AFG common stock. Year to date through February 1, 2016, AFG repurchased 956,000 shares for $65 million at an average price per share of $67.72.

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AFG’s net earnings attributable to shareholders, determined in accordance with U.S. generally accepted accounting principles (“GAAP”), include certain items that may not be indicative of its ongoing core operations. The following table identifies such items and reconciles net earnings attributable to shareholders to core net operating earnings, a non-GAAP financial measure that AFG believes is a useful tool for investors and analysts in analyzing ongoing operating trends.


In millions, except per share amounts	Three months ended December 31,					Twelve months ended December 31,
	2015			2014		2015			2014
Components of net earnings attributable to shareholders:
Core net operating earnings^(a)	$	136		$	122	$	486		$	439
Non-Core Items:
Loss on sale of long-term care business		(3	)		—		(108	)		—
Gain on sale of hotel and apartment property		10			—		36			—
Other realized gains (losses)		(14	)		5		(8	)		32
Special A&E charges^(b)		—			—		(52	)		(19	)
Loss on early retirement of debt		—			—		(2	)		—

Net earnings attributable to shareholders	$	129		$	127	$	352		$	452


Components of Earnings per Share:
Core net operating earnings^(a)	$	1.52		$	1.35	$	5.44		$	4.82
Non-Core Items:
Loss on sale of long-term care business		(0.03	)		—		(1.21	)		—
Gain on sale of hotel and apartment property		0.11			—		0.40			—
Other realized gains (losses)		(0.15	)		0.06		(0.08	)		0.36
Special A&E charges^(b)		—			—		(0.58	)		(0.21	)
Loss on early retirement of debt		—			—		(0.03	)		—

Diluted Earnings Per Share	$	1.45		$	1.41	$	3.94		$	4.97

Footnotes (a) and (b) are contained in the accompanying Notes to Financial Schedules at the end of this release.

Carl H. Lindner III and S. Craig Lindner, AFG’s Co-Chief Executive Officers, commented: “Excellent Specialty P&C underwriting profitability and record annuity core operating earnings established a new record for AFG’s core net operating earnings per share for the year. Profitable growth in our insurance operations, coupled with superior investment execution and intelligent deployment of capital have helped us to achieve five year compounded growth in adjusted book value plus dividends of 9.5%.

“AFG had approximately $950 million of excess capital (including parent company cash of approximately $190 million) at December 31, 2015. In addition, the sale of our run-off long-term care insurance business will result in approximately $100 million of additional excess capital in the first half of 2016. Over the past year, we increased our quarterly dividend by 12% and in the fourth quarter of 2015 we paid a special dividend of $1.00 per share. Our excess capital will also be deployed into AFG’s core businesses as we identify potential for healthy, profitable organic growth, and opportunities to expand our specialty niche businesses through acquisitions and start-ups that meet our target return thresholds. Share repurchases, particularly when executed at attractive valuations, are an important and effective component of our capital management strategy, as indicated by our significant buyback activity in January. We will continue to make opportunistic share repurchases when it makes sense to do so and return capital to shareholders through dividends.

“Based on current information, we expect core net operating earnings in 2016 to be between $5.35 and $5.75 per share. Our core earnings per share guidance excludes non-core items such as realized gains and losses, as well as other significant items that may not be indicative of ongoing operations.”

Specialty Property and Casualty Insurance Operations

The Specialty P&C insurance operations generated underwriting profit of $100 million for the 2015 fourth quarter compared to $79 million in the fourth quarter of 2014. The fourth quarter 2015 combined ratio of 91.0% includes 0.4 points of favorable prior year reserve development, compared to 1.0 point of adverse prior year reserve development in the comparable prior year period. Fourth quarter results in 2015 include $9 million (0.8 points on the combined ratio) in catastrophe losses, compared to $3 million (0.2 points on the combined ratio) in the comparable 2014 period.

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Gross and net written premiums were up 4% and 3%, respectively, in the 2015 fourth quarter compared to the prior year period. Each of our Specialty P&C groups reported growth during the quarter. Further details of AFG’s Specialty P&C operations may be found in the accompanying schedules.

The Property and Transportation Group reported an underwriting profit of $34 million in the fourth quarter of 2015, compared to $22 million in the comparable prior year period. Higher accident year profitability in our transportation and agricultural operations was partially offset by adverse prior year reserve development in our National Interstate subsidiary, as well as lower profitability in our property and inland marine and ocean marine operations. Catastrophe losses for this group were $3 million in the fourth quarter of 2015 and $2 million in the comparable 2014 period.

Fourth quarter 2015 gross and net written premiums in this group were 7% and 1% higher, respectively, than the comparable prior year period. Growth in gross and net written premiums in our transportation operations and new premium from our Singapore branch, which opened for business in June 2015, were partially offset by lower premiums in our inland marine and ocean marine businesses. Although gross written premiums were higher year-over-year in our agricultural operations, additional cessions of crop premiums in the fourth quarter reduced net written premiums for these operations. Overall renewal rates in this group increased 2% in the fourth quarter of 2015, including a 4% increase in National Interstate’s renewal rates. The average renewal rate increase for this group during 2015 was approximately 4%.

The Specialty Casualty Group reported an underwriting profit of $50 million in the 2015 fourth quarter compared to $36 million in the comparable 2014 period. This increase reflects higher profitability in our workers’ compensation, targeted markets, executive liability and excess and surplus businesses. These improved results were partially offset by underwriting losses within our Marketform operations. The majority of businesses in this group produced strong underwriting profit margins during 2015.

Gross and net written premiums grew modestly in the fourth quarter of 2015 compared to the same period in 2014. The majority of businesses in this group reported modest growth, particularly our excess and surplus businesses. This growth was partially offset by lower premiums in our general liability business, primarily the result of competitive market conditions, re-underwriting efforts within the Florida homebuilders market and the slowdown within the energy sector. Renewal pricing for this group decreased by 2% in the fourth quarter, including a decrease of approximately 6% in our workers’ compensation businesses. Excluding workers’ compensation, renewal pricing in this group increased approximately 1% on average for the quarter.

The Specialty Financial Group reported an underwriting profit of $15 million in the fourth quarter of 2015, compared to $18 million in the fourth quarter of 2014. Catastrophe losses for this group were $5 million in the fourth quarter of 2015 and negligible in the comparable prior year period. Nearly all businesses in this group continued to achieve excellent underwriting margins during 2015, with an overall combined operating ratio of 88.7% for the fourth quarter of 2015 and 83.1% for the full year of 2015.

Gross and net written premiums were up 12% and 16%, respectively, in the 2015 fourth quarter, when compared to the 2014 fourth quarter, reflecting growth in our financial institutions business. Renewal pricing in this group increased approximately 1% on average for the fourth quarter and was flat for the full year of 2015.

Carl Lindner III stated: “Each of our Specialty P&C Groups delivered strong underwriting profitability during the fourth quarter, contributing to a 24% increase in underwriting profit for the full year of 2015. We’ve acted on opportunities to profitably grow our business, particularly within our Specialty

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Financial Group, where we’ve achieved double-digit growth in net written premiums, as well as superior underwriting profitability. I’m pleased with consistently strong profitability within our Specialty Casualty Group, and disciplined growth, coupled with improved results, in our Property and Transportation Group.”

Mr. Lindner continued, “Renewal pricing across our entire P&C group was up less than 1% for the quarter, and was impacted by price softening in our workers’ comp businesses. Looking ahead to 2016, we are forecasting an overall calendar year combined ratio in the 92% to 94% range. Although we have experienced pricing deceleration in many of our business units, we will keep our focus on maintaining adequate rates. We are targeting growth in net written premium in the range of 2% to 6% for 2016.”

Annuity Segment

Record Results - AFG’s Annuity Segment reported record full year operating earnings and premiums in 2015. In addressing these achievements, Craig Lindner stated, “I am pleased with the results in our Annuity Segment, as we achieved record core pretax operating earnings of $331 million and record annuity premiums of $4.1 billion. The fundamentals of our annuity business remain strong and we are committed to our consumer-friendly business model, disciplined product pricing and expense management. I’m proud of our employees, who have consistently and successfully executed our business strategies.”

The Annuity Segment reported a record $101 million in core pretax operating earnings in the fourth quarter of 2015, an increase of 19% from the $85 million reported in the fourth quarter of 2014. In addition, as shown in the table below, earnings before the impact of fair value accounting on fixed-indexed annuities (FIAs) were up 3% in the fourth quarter, to a record $96 million:


Components of Core Annuity Operating Earnings Before Income Taxes
In millions	Three months ended December 31,					Pct. Change			Twelve months ended December 31,						Pct. Change
	2015		2014						2015			2014

Annuity earnings before fair value accounting for FIAs	$	96	$	93			3	%	$	354		$	362			(2	%)
Impact of fair value accounting for FIAs		5		(8	)		nm			(23	)		(34	)		nm


Core Pretax Annuity Operating Earnings	$	101	$	85			19	%	$	331		$	328			1	%

Annuity Earnings Before Fair Value Accounting for FIAs – AFG’s fourth quarter 2015 earnings continued to benefit from growth in annuity assets as well as the ability to maintain strong net interest spreads. AFG’s quarterly average annuity investments and reserves both grew approximately 13% year-over-year; the benefit of this growth was partially offset by the impact of lower investment yields.

In the fourth quarters of 2015 and 2014, AFG conducted detailed reviews (“unlocking”) of the major actuarial assumptions underlying its annuity operations. The review resulted in a positive unlocking of $10 million in the fourth quarter of 2015, reflecting higher than previously projected net interest spreads as well as the impact of higher assets under management, and expense discipline; in the fourth quarter of 2014, the positive unlocking amount was $1 million. Unlocking amounts are included in “Annuity earnings before fair value accounting for FIAs” in the table above.

Impact of Fair Value Accounting for FIAs - Variances from expectations of certain items (such as projected interest rates, option costs and surrenders), as well as changes in the stock market, have an impact on the accounting for FIAs; these accounting adjustments are recognized through AFG’s reported core earnings. Many of these adjustments are not economic in nature, but rather impact the timing of reported results.

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In the fourth quarter of 2015, increases in the stock market resulted in a favorable impact on annuity earnings. Conversely, in the fourth quarter of 2014, the favorable impact of the increase in the stock market was more than offset by a decrease in longer-term interest rates, resulting in an unfavorable impact on earnings.

Annuity Premiums - AFG’s Annuity Segment reported statutory premiums of $1.1 billion in the fourth quarter of 2015, a 14% increase from the fourth quarter of 2014. This increase reflects growth in sales of FIAs in both the Retail and Financial Institutions channels.

Annuity Guidance - Craig Lindner continued, “Looking ahead to 2016, we anticipate modest growth in annuity premiums as we continue to maintain pricing discipline in these volatile markets. In addition, we expect the Annuity Segment’s assets and reserves to grow by 10% to 12%; the favorable earnings impact of this growth will be partially offset by the runoff of higher yielding investments.

“In addition, the decreases in interest rates and the stock market that have occurred so far in 2016 are likely to put downward pressure on annuity earnings in the first quarter due to fair value accounting for FIAs. As a result, for the full year, we expect annuity earnings in 2016 to grow modestly when compared to 2015. Significant changes in the stock market and/or interest rates, as compared to our expectations, can lead to significant positive or negative impacts on the Annuity Segment’s results, due to the impact of fair value accounting. These impacts relate primarily to the timing of reported results.

More information about premiums and the results of operations for our Annuity Segment may be found in our Quarterly Investor Supplement, which is posted on our website.

Run-off Long-Term Care and Life Segment

AFG’s Run-off Long-term Care and Life segment reported core pretax operating earnings of less than $1 million in the fourth quarter of 2015, compared to a loss of $7 million in the fourth quarter of 2014.

As previously announced, AFG completed the sale of the legal entities containing substantially all of its run-off long-term care insurance business and certain life and annuity blocks to HC2 Holdings on December 24, 2015.

Investments

AFG recorded fourth quarter 2015 net realized losses of $14 million after tax and after deferred acquisition costs (DAC), compared to net realized gains of $5 million in the comparable prior year period. Unrealized gains on fixed maturities were $278 million after tax and after DAC at December 31, 2015, a decrease of $326 million from year-end 2014. Our portfolio continues to be high quality, with 89% of our fixed maturity portfolio rated investment grade and 97% with a National Association of Insurance Commissioners’ designation of NAIC 1 or 2, its highest two categories.

For the year ended December 31, 2015, P&C net investment income was approximately 9% higher than the prior year, reflecting the investment of cash received in connection with the Summit acquisition.

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More information about the components of our investment portfolio may be found in our Quarterly Investor Supplement, which is posted on our website.

About American Financial Group, Inc.

American Financial Group is an insurance holding company, based in Cincinnati, Ohio with assets of approximately $50 billion. Through the operations of Great American Insurance Group, AFG is engaged primarily in property and casualty insurance, focusing on specialized commercial products for businesses, and in the sale of fixed and fixed-indexed annuities in the retail, financial institutions and education markets. Great American Insurance Group’s roots go back to 1872 with the founding of its flagship company, Great American Insurance Company.

Forward Looking Statements

This press release contains certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements in this press release not dealing with historical results are forward-looking and are based on estimates, assumptions and projections. Examples of such forward-looking statements include statements relating to: the Company’s expectations concerning market and other conditions and their effect on future premiums, revenues, earnings, investment activities and the amount and timing of share repurchases; recoverability of asset values; expected losses and the adequacy of reserves for asbestos, environmental pollution and mass tort claims; rate changes; and improved loss experience.

Actual results and/or financial condition could differ materially from those contained in or implied by such forward-looking statements for a variety of reasons including but not limited to: changes in financial, political and economic conditions, including changes in interest and inflation rates, currency fluctuations and extended economic recessions or expansions in the U.S. and/or abroad; performance of securities markets; AFG’s ability to estimate accurately the likelihood, magnitude and timing of any losses in connection with investments in the non-agency residential mortgage market; new legislation or declines in credit quality or credit ratings that could have a material impact on the valuation of securities in AFG’s investment portfolio; the availability of capital; regulatory actions (including changes in statutory accounting rules); changes in the legal environment affecting AFG or its customers; tax law and accounting changes; levels of natural catastrophes and severe weather, terrorist activities (including any nuclear, biological, chemical or radiological events), incidents of war or losses resulting from civil unrest and other major losses; development of insurance loss reserves and establishment of other reserves, particularly with respect to amounts associated with asbestos and environmental claims; availability of reinsurance and ability of reinsurers to pay their obligations; trends in persistency, mortality and morbidity; competitive pressures, including those in the annuity distribution channels, the ability to obtain adequate rates and policy terms; changes in AFG’s credit ratings or the financial strength ratings assigned by major ratings agencies to our operating subsidiaries; and other factors identified in our filings with the Securities and Exchange Commission. The forward-looking statements herein are made only as of the date of this press release. The Company assumes no obligation to publicly update any forward-looking statements.

Conference Call

The company will hold a conference call to discuss 2015 fourth quarter and full year results at 11:30 am (ET) tomorrow, Wednesday, February 3, 2016. Toll-free telephone access will be available by dialing 877-459-8719 (international dial-in 424-276-6843). The conference ID for the live call is 21470917. Please dial in five to ten minutes prior to the scheduled start time of the call.

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A replay will be available approximately two hours following the completion of the call and will remain available until 11:59 pm (ET) on February 10, 2016. To listen to the replay, dial 1-855-859-2056 (international dial-in 404-537-3406) and provide the conference ID 21470917.

The conference and accompanying webcast slides will also be broadcast live over the Internet. To listen to the call via the Internet, go to the Investor Relations page on AFG’s website, www.AFGinc.com, and follow the instructions under Webcasts and Presentations.

The archived webcast will be available immediately after the call via the same link on the Investor Relations page until February 10, 2016 at 11:59 pm (ET). An archived audio MP3 file will be available within 24 hours of the call.

Contact:

Diane P. Weidner

Asst. Vice President - Investor Relations

513-369-5713

Websites:

www.AFGinc.com

www.GreatAmericanInsuranceGroup.com

# # #

(Financial summaries follow)

This earnings release and AFG’s Quarterly Investor Supplement are available in the Investor Relations section of AFG’s website: www.AFGinc.com.

AFG16-04

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AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES

SUMMARY OF EARNINGS AND SELECTED BALANCE SHEET DATA

(In Millions, Except Per Share Data)


	Three months ended December 31,						Twelve months ended December 31,
	2015			2014			2015			2014
Revenues
P&C insurance net earned premiums	$	1,120		$	1,061		$	4,224		$	3,878
Life, accident & health net earned premiums		24			26			104			108
Net investment income		416			384			1,633			1,501
Realized gains (losses) on:
Securities		(21	)		8			(19	)		52
Subsidiaries		(4	)		—			(161	)		—
Income (loss) of managed investment entities:
Investment income		43			32			155			116
Loss on change in fair value of assets/liabilities		(18	)		(9	)		(34	)		(44	)
Other income		58			39			243			122

Total revenues		1,618			1,541			6,145			5,733


Costs and expenses
P&C insurance losses & expenses		1,026			982			4,015			3,666
Annuity, life, accident & health benefits & expenses		247			265			1,042			1,005
Interest charges on borrowed money		17			20			74			73
Expenses of managed investment entities		32			22			112			82
Other expenses		86			62			337			281

Total costs and expenses		1,408			1,351			5,580			5,107


Earnings before income taxes		210			190			565			626
Provision for income taxes^(c)		80			65			195			220


Net earnings including noncontrolling interests		130			125			370			406

Less: Net earnings (loss) attributable to noncontrolling interests		1			(2	)		18			(46	)


Net earnings attributable to shareholders	$	129		$	127		$	352		$	452


Diluted Earnings per Common Share	$	1.45		$	1.41		$	3.94		$	4.97


Average number of diluted shares		89.2			89.8			89.4			91.0


Selected Balance Sheet Data:	December 31, 2015		December 31, 2014
Total cash and investments	$	37,736	$	36,210
Long-term debt	$	1,020	$	1,061
Shareholders’ equity^(d)	$	4,592	$	4,879
Shareholders’ equity (excluding appropriated retained earnings and unrealized gains/losses on fixed maturities)^(d)	$	4,314	$	4,277
Book Value Per Share:
Excluding appropriated retained earnings	$	52.50	$	55.65
Excluding appropriated retained earnings and unrealized gains/losses on fixed maturities	$	49.33	$	48.76

Common Shares Outstanding		87.5		87.7

Footnotes (c) and (d) are contained in the accompanying Notes to Financial Schedules at the end of this release.

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AMERICAN FINANCIAL GROUP, INC.

SPECIALTY P&C OPERATIONS

(Dollars in Millions)


	Three months ended December 31,						Pct. Change			Twelve months ended December 31,						Pct. Change
	2015			2014						2015			2014

Gross written premiums	$	1,356		$	1,303			4	%	$	5,832		$	5,477			6	%


Net written premiums	$	1,056		$	1,025			3	%	$	4,327		$	4,020			8	%


Ratios (GAAP):
Loss & LAE ratio		61.8	%		64.0	%					62.2	%		63.7	%
Underwriting expense ratio		29.2	%		28.6	%					30.9	%		30.2	%


Specialty Combined Ratio		91.0	%		92.6	%					93.1	%		93.9	%


Combined Ratio (Including A&E)		91.0	%		92.6	%					94.7	%		94.5	%


Supplemental Information:^(e)
Gross Written Premiums:
Property & Transportation	$	515		$	482			7	%	$	2,455		$	2,342			5	%
Specialty Casualty		661			660			—			2,739			2,529			8	%
Specialty Financial		179			160			12	%		637			605			5	%
Other		1			1			—			1			1			—

	$	1,356		$	1,303			4	%	$	5,832		$	5,477			6	%


Net Written Premiums:
Property & Transportation	$	378		$	373			1	%	$	1,636		$	1,566			4	%
Specialty Casualty		503			498			1	%		2,052			1,864			10	%
Specialty Financial		152			131			16	%		540			488			11	%
Other		23			23			—			99			102			(3	%)

	$	1,056		$	1,025			3	%	$	4,327		$	4,020			8	%


Combined Ratio (GAAP):
Property & Transportation		92.4	%		94.6	%					96.9	%		98.7	%
Specialty Casualty		90.2	%		92.9	%					92.7	%		92.3	%
Specialty Financial		88.7	%		85.6	%					83.1	%		86.5	%

Aggregate Specialty Group		91.0	%		92.6	%					93.1	%		93.9	%


	Three months ended December 31,						Twelve months ended December 31,
	2015			2014			2015			2014
Reserve Development (Favorable)/Adverse:
Property & Transportation	$	8		$	3		$	15		$	16
Specialty Casualty		(7	)		14			(11	)		(7	)
Specialty Financial		(5	)		(4	)		(30	)		(17	)
Other		(1	)		(3	)		(11	)		(11	)

Aggregate Specialty Group Excluding A&E		(5	)		10			(37	)		(19	)
Special A&E Reserve Charge – P&C Run-off		—			—			67			24
Other		—			—			3			1

Total Reserve Development Including A&E	$	(5	)	$	10		$	33		$	6


Points on Combined Ratio:
Property & Transportation		1.8			0.6			0.9			1.0
Specialty Casualty		(1.4	)		2.9			(0.5	)		(0.4	)
Specialty Financial		(3.6	)		(3.3	)		(5.7	)		(3.7	)

Aggregate Specialty Group		(0.4	)		1.0			(0.8	)		(0.5	)

Footnote (e) is contained in the accompanying Notes to Financial Schedules at the end of this release.

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AMERICAN FINANCIAL GROUP, INC.

ANNUITY SEGMENT

(Dollars in Millions)

Components of Statutory Premiums


	Three months ended December 31,				Pct. Change			Twelve months ended December 31,				Pct. Change
	2015		2014					2015		2014

Annuity Premiums:
Retail Single Premium	$	512	$	424		21	%	$	1,934	$	1,634		18	%
Financial Institutions Single Premium		534		487		10	%		1,970		1,821		8	%
Education Market		51		49		4	%		194		194		—	%
Variable Annuities		10		11		(9	%)		42		47		(11	%)

Total Annuity Premiums	$	1,107	$	971		14	%	$	4,140	$	3,696		12	%

Components of Core Operating Earnings Before Income Taxes


	Three months ended December 31,				Pct. Change			Twelve months ended December 31,				Pct. Change
	2015		2014					2015		2014
Revenues:
Net investment income	$	309	$	285		8	%	$	1,224	$	1,136		8	%
Other income		23		33		(30	%)		98		97		1	%

Total revenues		332		318		4	%		1,322		1,233		7	%

Costs and Expenses:
Annuity benefits		189		157		20	%		732		648		13	%
Acquisition expenses		20		59		(66	%)		163		175		(7	%)
Other expenses		22		17		29	%		96		82		17	%

Total costs and expenses		231		233		(1	%)		991		905		10	%

Core operating earnings before income taxes	$	101	$	85		19	%	$	331	$	328		1	%

Supplemental Fixed Annuity Information


	Three months ended December 31,						Pct. Change			Twelve months ended December 31,						Pct. Change
	2015			2014						2015			2014
Core operating earnings before impact of fair value accounting on FIAs	$	96		$	93			3	%	$	354		$	362			(2	%)
Impact of fair value accounting		5			(8	)		nm			(23	)		(34	)		nm


Core operating earnings before income taxes	$	101		$	85			19	%	$	331		$	328			1	%


Average Fixed Annuity Reserves*	$	26,048		$	23,104			13	%	$	24,898		$	22,119			13	%

Net Interest Spread		2.53	%		2.64	%					2.69	%		2.78	%
Net Spread Earned Before Impact of Fair Value Accounting*		1.31	%		1.54	%					1.35	%		1.56	%
Net Spread Earned After Impact of Fair Value Accounting		1.39	%		1.40	%					1.26	%		1.41	%

*	Excludes fixed annuity portion of variable annuity business.

Page 10

AMERICAN FINANCIAL GROUP, INC.

Notes to Financial Schedules

a)	Components of core net operating earnings (in millions):


	Three months ended December 31,						Twelve months ended December 31,
	2015			2014			2015			2014
Core Operating Earnings before Income Taxes:
P&C insurance segment	$	163		$	141		$	566		$	476
Annuity segment, before impact of fair value accounting		96			93			354			362
Impact of fair value accounting		5			(8	)		(23	)		(34	)
Run-off long-term care and life segment		—			(7	)		14			(10	)
Interest & other corporate expense		(45	)		(35	)		(162	)		(143	)


Core operating earnings before income taxes		219			184			749			651
Related income taxes		83			62			263			212


Core net operating earnings	$	136		$	122		$	486		$	439

b)	Reflects the following effects of special A&E charges during the twelve months ended December 31, 2015 and 2014 (dollars in millions, except per share amounts):


	Pretax				After-tax				EPS
A&E Charge:	2015		2014		2015		2014		2015		2014
P&C insurance run-off operations
Asbestos	$	25	$	4	$	17	$	3
Environmental		42		20		27		12

	$	67	$	24	$	44	$	15	$	0.49	$	0.17

Former railroad & manufacturing operations
Asbestos	$	1	$	—	$	—	$	—
Environmental		11		6		8		4

	$	12	$	6	$	8	$	4	$	0.09	$	0.04


Total A&E	$	79	$	30	$	52	$	19	$	0.58	$	0.21

c)	Earnings before income taxes include $4 million and $51 million in non-deductible losses attributable to noncontrolling interests related to managed investment entities in the fourth quarter and full year of 2014.

Shareholders’ Equity at December 31, 2015 includes $278 million ($3.17 per share) in unrealized after-tax gains on fixed maturities. Shareholders’ Equity at December 31, 2014 includes $604 million ($6.89 per share) in unrealized after-tax gains on fixed maturities and ($2) million ($0.03 per share) of retained earnings appropriated to managed investment entities.

e)	Supplemental Notes:

•

Property & Transportation includes primarily physical damage and liability coverage for buses, trucks and recreational vehicles, inland and ocean marine, agricultural-related products and other property coverages.

•

Specialty Casualty includes primarily excess and surplus, general liability, executive liability, professional liability, umbrella and excess liability, specialty coverages in targeted markets, customized programs for small to mid-sized businesses and workers’ compensation insurance.

•

Specialty Financial includes risk management insurance programs for leasing and financing institutions (including collateral and lender-placed mortgage property insurance), surety and fidelity products and trade credit insurance.

•

Other includes an internal reinsurance facility.

Page 11

Exhibit 99.2


		American Financial Group, Inc. Investor Supplement - Fourth Quarter 2015 February 2, 2016 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 - Fourth Quarter 2015


Section	Page

Table of Contents - Investor Supplement - Fourth Quarter 2015		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 (GAAP)		12
Detail of Annuity Benefits Expense (GAAP)		13
Net Spread on Fixed Annuities (GAAP)		14
Annuity Premiums (Statutory)		15
Fixed Annuity Benefits Accumulated (GAAP)		16

Consolidated Balance Sheet / Book Value / Debt
Consolidated Balance Sheet		17
Book Value Per Share and Price / Book Summary		18
Capitalization		19
Additional Supplemental Information		20

Consolidated Investment Supplement
Total Cash and Investments		21
Net Investment Income		22
Fixed Maturities - By Security Type - AFG Consolidated		23
Fixed Maturities - By Security Type Portfolio		24
Fixed Maturities - Credit Rating		25
Mortgage-Backed Securities - AFG Consolidated		26
Mortgage-Backed Securities Portfolio		27
Mortgage-Backed Securities - Credit Rating		28

Appendix
A. Fixed Maturities - Credit Rating by Type		29

American Financial Group, Inc.

Financial Highlights

(in millions, except per share information)


	Three Months Ended															Twelve Months Ended
	12/31/15			09/30/15			06/30/15			03/31/15			12/31/14			12/31/15			12/31/14

Highlights
Core net operating earnings	$	136		$	123		$	115		$	112		$	122		$	486		$	439
Net earnings		129			63			141			19			127			352			452
Total assets		49,859			50,557			49,424			48,307			47,535			49,859			47,535
Adjusted shareholders’ equity (a)		4,314			4,279			4,345			4,267			4,277			4,314			4,277
Property and Casualty net written premiums		1,056			1,319			1,026			926			1,025			4,327			4,020
Annuity statutory premiums		1,107			1,321			899			813			971			4,140			3,696

Per share data
Core net operating earnings per share	$	1.52		$	1.38		$	1.28		$	1.25		$	1.35		$	5.44		$	4.82
Diluted earnings per share		1.45			0.71			1.57			0.21			1.41			3.94			4.97
Adjusted book value per share (a)		49.33			49.01			49.63			48.55			48.76			49.33			48.76

Cash dividends per common share		1.280			0.250			0.250			0.250			1.250			2.030			1.910

Financial ratios
Annualized core operating return on equity (b)		12.7	%		11.6	%		10.9	%		10.8	%		11.7	%		11.5	%		10.7	%
Annualized return on equity (b)		12.1	%		5.9	%		13.4	%		1.8	%		12.1	%		8.3	%		11.0	%

Property and Casualty combined ratio - Specialty:
Loss & LAE ratio		61.8	%		64.5	%		61.0	%		60.8	%		64.0	%		62.2	%		63.7	%
Underwriting expense ratio		29.2	%		28.4	%		33.9	%		32.8	%		28.6	%		30.9	%		30.2	%

Combined ratio - Specialty		91.0	%		92.9	%		94.9	%		93.6	%		92.6	%		93.1	%		93.9	%


Net spread on fixed annuities:
Net interest spread		2.53	%		2.80	%		2.77	%		2.67	%		2.64	%		2.69	%		2.78	%
Net spread earned:
Before impact of fair value accounting		1.31	%		1.37	%		1.21	%		1.49	%		1.54	%		1.35	%		1.56	%
Impact of fair value accounting (c)		0.08	%		(0.35	%)		0.18	%		(0.28	%)		(0.14	%)		(0.09	%)		(0.15	%)

After impact of fair value accounting		1.39	%		1.02	%		1.39	%		1.21	%		1.40	%		1.26	%		1.41	%

(a)	Excludes appropriated retained earnings and unrealized gains related to fixed maturity investments.

(b)	Excludes appropriated retained earnings and accumulated other comprehensive income.

(c)	Change in fair value of derivatives offset by the estimated related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs.

American Financial Group, Inc.

Summary of Earnings

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/15			09/30/15			06/30/15			03/31/15			12/31/14			12/31/15			12/31/14
Property and Casualty Insurance
Underwriting profit	$	100		$	82		$	50		$	60		$	79		$	292		$	236
Net investment income		74			83			83			79			75			319			294
Other expense		(11	)		(12	)		(12	)		(10	)		(13	)		(45	)		(54	)

Property and Casualty Insurance operating earnings		163			153			121			129			141			566			476

Annuity earnings		101			67			88			75			85			331			328
Run-off Long-Term Care and Life (losses)/earnings		—			6			4			4			(7	)		14			(10	)
Interest expense of parent holding companies		(16	)		(18	)		(19	)		(19	)		(19	)		(72	)		(69	)
Other expense		(29	)		(19	)		(20	)		(22	)		(16	)		(90	)		(74	)

Pre-tax core operating earnings		219			189			174			167			184			749			651

Income tax expense		83			66			59			55			62			263			212

Core net operating earnings		136			123			115			112			122			486			439

Non-core items, net of tax:
Loss on sale of long-term care business		(3	)		—			—			(105	)		—			(108	)		—
Gain on sale of hotel and apartment property		10			—			26			—			—			36			—
Other realized gains (losses)		(14	)		(6	)		—			12			5			(8	)		32
Significant A&E charges:
Property and Casualty Insurance run-off operations		—			(44	)		—			—			—			(44	)		(15	)
Former Railroad and Manufacturing operations		—			(8	)		—			—			—			(8	)		(4	)
Other		—			(2	)		—			—			—			(2	)		—

Net earnings	$	129		$	63		$	141		$	19		$	127		$	352		$	452

American Financial Group, Inc.

Earnings Per Share Summary

(in millions, except per share information)


	Three Months Ended													Twelve Months Ended
	12/31/15			09/30/15			06/30/15		03/31/15			12/31/14		12/31/15			12/31/14

Core net operating earnings	$	136		$	123		$	115	$	112		$	122	$	486		$	439


Net earnings	$	129		$	63		$	141	$	19		$	127	$	352		$	452


Average number of diluted shares		89.228			89.343			89.503		89.377			89.772		89.362			90.960

Diluted earnings per share:
Core net operating earnings per share	$	1.52		$	1.38		$	1.28	$	1.25		$	1.35	$	5.44		$	4.82

Loss on sale of long-term care business		(0.03	)		—			—		(1.18	)		—		(1.21	)		—
Gain on sale of hotel and apartment property		0.11			—			0.29		—			—		0.40			—
Other realized gains (losses)		(0.15	)		(0.06	)		—		0.14			0.06		(0.08	)		0.36
Significant A&E charges:
Property and Casualty Insurance run-off operations		—			(0.49	)		—		—			—		(0.49	)		(0.17	)
Former Railroad and Manufacturing operations		—			(0.09	)		—		—			—		(0.09	)		(0.04	)
Other		—			(0.03	)		—		—			—		(0.03	)		—

Diluted earnings per share	$	1.45		$	0.71		$	1.57	$	0.21		$	1.41	$	3.94		$	4.97

American Financial Group, Inc.

Property and Casualty Insurance - Summary Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/15			09/30/15			06/30/15			03/31/15			12/31/14			12/31/15			12/31/14

Property and Transportation	$	34		$	20		$	(13	)	$	7		$	22		$	48		$	21
Specialty Casualty		50			31			37			28			36			146			136
Specialty Financial		15			26			24			22			18			87			64
Other Specialty		1			7			3			3			3			14			16

Underwriting profit - Specialty		100			84			51			60			79			295			237

Other core charges, included in loss and LAE		—			2			1			—			—			3			1

Underwriting profit - Core		100			82			50			60			79			292			236

Special A&E charges, included in loss and LAE		—			(67	)		—			—			—			(67	)		(24	)

Underwriting profit - Property and Casualty Insurance	$	100		$	15		$	50		$	60		$	79		$	225		$	212


Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe loss		9			10			10			6			3			35			28

Total current accident year catastrophe losses	$	9		$	10		$	10		$	6		$	3		$	35		$	28


Prior year loss reserve development (favorable) / adverse	$	(5	)	$	55		$	(10	)	$	(7	)	$	10		$	33		$	6


Combined ratio:
Property and Transportation		92.4	%		96.2	%		104.0	%		97.7	%		94.6	%		96.9	%		98.7	%
Specialty Casualty		90.2	%		93.8	%		92.7	%		94.2	%		92.9	%		92.7	%		92.3	%
Specialty Financial		88.7	%		80.6	%		81.0	%		81.7	%		85.6	%		83.1	%		86.5	%
Other Specialty		97.1	%		67.3	%		88.0	%		89.3	%		86.9	%		85.5	%		83.4	%
Combined ratio - Specialty		91.0	%		92.9	%		94.9	%		93.6	%		92.6	%		93.1	%		93.9	%

Other core charges		0.0	%		0.1	%		0.0	%		0.1	%		0.0	%		0.0	%		0.0	%
Special A&E charges		0.0	%		5.7	%		0.0	%		0.0	%		0.0	%		1.6	%		0.6	%

Combined ratio		91.0	%		98.7	%		94.9	%		93.7	%		92.6	%		94.7	%		94.5	%


Combined ratio excl. catastrophe and prior year development		90.6	%		93.2	%		95.0	%		93.8	%		91.4	%		93.1	%		93.7	%


Loss and LAE components - property and casualty insurance
Current accident year, excluding catastrophe loss		61.4	%		64.8	%		61.1	%		61.0	%		62.8	%		62.2	%		63.5	%
Prior accident year loss reserve development		(0.4	%)		4.6	%		(1.1	%)		(0.7	%)		1.0	%		0.8	%		0.1	%
Current accident year catastrophe loss		0.8	%		0.9	%		1.0	%		0.6	%		0.2	%		0.8	%		0.7	%

Loss and LAE ratio		61.8	%		70.3	%		61.0	%		60.9	%		64.0	%		63.8	%		64.3	%

American Financial Group, Inc.

Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/15			09/30/15			06/30/15			03/31/15			12/31/14			12/31/15			12/31/14

Gross written premiums	$	1,356		$	1,962		$	1,318		$	1,196		$	1,303		$	5,832		$	5,477
Ceded reinsurance premiums		(300	)		(643	)		(292	)		(270	)		(278	)		(1,505	)		(1,457	)

Net written premiums		1,056			1,319			1,026			926			1,025			4,327			4,020
Change in unearned premiums		64			(146	)		(41	)		20			36			(103	)		(142	)

Net earned premiums		1,120			1,173			985			946			1,061			4,224			3,878

Loss and LAE		693			756			600			576			679			2,625			2,469
Underwriting expense		327			333			334			310			303			1,304			1,172

Underwriting profit	$	100		$	84		$	51		$	60		$	79		$	295		$	237


Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe loss		9			10			10			6			3			35			28

Total current accident year catastrophe losses	$	9		$	10		$	10		$	6		$	3		$	35		$	28


Prior year loss reserve development (favorable) / adverse	$	(5	)	$	(14	)	$	(11	)	$	(7	)	$	10		$	(37	)	$	(19	)


Combined ratio:
Loss and LAE ratio		61.8	%		64.5	%		61.0	%		60.8	%		64.0	%		62.2	%		63.7	%
Underwriting expense ratio		29.2	%		28.4	%		33.9	%		32.8	%		28.6	%		30.9	%		30.2	%

Combined ratio		91.0	%		92.9	%		94.9	%		93.6	%		92.6	%		93.1	%		93.9	%


Combined ratio excl. catastrophe and prior year development		90.6	%		93.2	%		95.0	%		93.8	%		91.4	%		93.1	%		93.7	%


Loss and LAE components:
Current accident year, excluding catastrophe loss		61.4	%		64.8	%		61.1	%		61.0	%		62.8	%		62.2	%		63.5	%
Prior accident year loss reserve development		(0.4	%)		(1.2	%)		(1.1	%)		(0.8	%)		1.0	%		(0.8	%)		(0.5	%)
Current accident year catastrophe loss		0.8	%		0.9	%		1.0	%		0.6	%		0.2	%		0.8	%		0.7	%

Loss and LAE ratio		61.8	%		64.5	%		61.0	%		60.8	%		64.0	%		62.2	%		63.7	%

American Financial Group, Inc.

Property and Transportation - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/15			09/30/15			06/30/15			03/31/15			12/31/14			12/31/15			12/31/14

Gross written premiums	$	515		$	1,064		$	500		$	376		$	482		$	2,455		$	2,342
Ceded reinsurance premiums		(137	)		(456	)		(138	)		(88	)		(109	)		(819	)		(776	)

Net written premiums		378			608			362			288			373			1,636			1,566
Change in unearned premiums		64			(91	)		(35	)		25			42			(37	)		(22	)

Net earned premiums		442			517			327			313			415			1,599			1,544

Loss and LAE		317			391			240			211			299			1,159			1,155
Underwriting expense		91			106			100			95			94			392			368

Underwriting profit (loss)	$	34		$	20		$	(13	)	$	7		$	22		$	48		$	21


Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe loss		3			7			7			4			2			21			20

Total current accident year catastrophe losses	$	3		$	7		$	7		$	4		$	2		$	21		$	20


Prior year loss reserve development (favorable) / adverse	$	8		$	(2	)	$	6		$	3		$	3		$	15		$	16


Combined ratio:
Loss and LAE ratio		71.7	%		75.7	%		73.2	%		67.5	%		72.2	%		72.4	%		74.9	%
Underwriting expense ratio		20.7	%		20.5	%		30.8	%		30.2	%		22.4	%		24.5	%		23.8	%

Combined ratio		92.4	%		96.2	%		104.0	%		97.7	%		94.6	%		96.9	%		98.7	%


Combined ratio excl. catastrophe and prior year development		89.9	%		95.1	%		100.2	%		95.4	%		93.7	%		94.7	%		96.4	%


Loss and LAE components:
Current accident year, excluding catastrophe loss		69.2	%		74.6	%		69.4	%		65.2	%		71.3	%		70.2	%		72.6	%
Prior accident year loss reserve development		1.8	%		(0.4	%)		1.7	%		1.1	%		0.6	%		0.9	%		1.0	%
Current accident year catastrophe loss		0.7	%		1.5	%		2.1	%		1.2	%		0.3	%		1.3	%		1.3	%

Loss and LAE ratio		71.7	%		75.7	%		73.2	%		67.5	%		72.2	%		72.4	%		74.9	%

American Financial Group, Inc.

Specialty Casualty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/15			09/30/15			06/30/15			03/31/15			12/31/14			12/31/15			12/31/14

Gross written premiums	$	661		$	734		$	661		$	683		$	660		$	2,739		$	2,529
Ceded reinsurance premiums		(158	)		(189	)		(158	)		(182	)		(162	)		(687	)		(665	)

Net written premiums		503			545			503			501			498			2,052			1,864
Change in unearned premiums		12			(42	)		—			(11	)		1			(41	)		(99	)

Net earned premiums		515			503			503			490			499			2,011			1,765

Loss and LAE		315			323			311			316			325			1,265			1,107
Underwriting expense		150			149			155			146			138			600			522

Underwriting profit	$	50		$	31		$	37		$	28		$	36		$	146		$	136


Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe loss		1			1			1			1			1			4			4

Total current accident year catastrophe losses	$	1		$	1		$	1		$	1		$	1		$	4		$	4


Prior year loss reserve development (favorable) / adverse	$	(7	)	$	3		$	(7	)	$	—		$	14		$	(11	)	$	(7	)


Combined ratio:
Loss and LAE ratio		61.1	%		64.2	%		61.9	%		64.4	%		65.1	%		62.9	%		62.7	%
Underwriting expense ratio		29.1	%		29.6	%		30.8	%		29.8	%		27.8	%		29.8	%		29.6	%

Combined ratio		90.2	%		93.8	%		92.7	%		94.2	%		92.9	%		92.7	%		92.3	%


Combined ratio excl. catastrophe and prior year development		91.4	%		92.9	%		94.0	%		93.9	%		89.9	%		93.0	%		92.5	%


Loss and LAE components:
Current accident year, excluding catastrophe loss		62.3	%		63.3	%		63.2	%		64.1	%		62.1	%		63.2	%		62.9	%
Prior accident year loss reserve development		(1.4	%)		0.6	%		(1.4	%)		0.0	%		2.9	%		(0.5	%)		(0.4	%)
Current accident year catastrophe loss		0.2	%		0.3	%		0.1	%		0.3	%		0.1	%		0.2	%		0.2	%

Loss and LAE ratio		61.1	%		64.2	%		61.9	%		64.4	%		65.1	%		62.9	%		62.7	%

American Financial Group, Inc.

Specialty Financial - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/15			09/30/15			06/30/15			03/31/15			12/31/14			12/31/15			12/31/14

Gross written premiums	$	179		$	164		$	157		$	137		$	160		$	637		$	605
Ceded reinsurance premiums		(27	)		(27	)		(21	)		(22	)		(29	)		(97	)		(117	)

Net written premiums		152			137			136			115			131			540			488
Change in unearned premiums		(15	)		(6	)		(7	)		5			(10	)		(23	)		(19	)

Net earned premiums		137			131			129			120			121			517			469

Loss and LAE		46			36			36			36			42			154			159
Underwriting expense		76			69			69			62			61			276			246

Underwriting profit	$	15		$	26		$	24		$	22		$	18		$	87		$	64


Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe loss		5			1			2			1			—			9			3

Total current accident year catastrophe losses	$	5		$	1		$	2		$	1		$	—		$	9		$	3


Prior year loss reserve development (favorable) / adverse	$	(5	)	$	(8	)	$	(8	)	$	(9	)	$	(4	)	$	(30	)	$	(17	)


Combined ratio:
Loss and LAE ratio		32.8	%		27.7	%		27.7	%		30.4	%		34.5	%		29.7	%		33.9	%
Underwriting expense ratio		55.9	%		52.9	%		53.3	%		51.3	%		51.1	%		53.4	%		52.6	%

Combined ratio		88.7	%		80.6	%		81.0	%		81.7	%		85.6	%		83.1	%		86.5	%


Combined ratio excl. catastrophe and prior year development		88.8	%		85.8	%		85.2	%		88.5	%		88.8	%		87.1	%		89.5	%


Loss and LAE components:
Current accident year, excluding catastrophe loss		32.9	%		32.9	%		31.9	%		37.2	%		37.7	%		33.7	%		36.9	%
Prior accident year loss reserve development		(3.6	%)		(5.8	%)		(6.2	%)		(7.3	%)		(3.3	%)		(5.7	%)		(3.7	%)
Current accident year catastrophe loss		3.5	%		0.6	%		2.0	%		0.5	%		0.1	%		1.7	%		0.7	%

Loss and LAE ratio		32.8	%		27.7	%		27.7	%		30.4	%		34.5	%		29.7	%		33.9	%

American Financial Group, Inc.

Other Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/15			09/30/15			06/30/15			03/31/15			12/31/14			12/31/15			12/31/14

Gross written premiums	$	1		$	—		$	—		$	—		$	1		$	1		$	1
Ceded reinsurance premiums		22			29			25			22			22			98			101

Net written premiums		23			29			25			22			23			99			102
Change in unearned premiums		3			(7	)		1			1			3			(2	)		(2	)

Net earned premiums		26			22			26			23			26			97			100

Loss and LAE		15			6			13			13			13			47			48
Underwriting expense		10			9			10			7			10			36			36

Underwriting profit	$	1		$	7		$	3		$	3		$	3		$	14		$	16


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

Total current accident year catastrophe losses	$	—		$	1		$	—		$	—		$	—		$	1		$	1


Prior year loss reserve development (favorable) / adverse	$	(1	)	$	(7	)	$	(2	)	$	(1	)	$	(3	)	$	(11	)	$	(11	)


Combined ratio:
Loss and LAE ratio		61.0	%		29.4	%		52.4	%		54.4	%		49.6	%		49.4	%		47.9	%
Underwriting expense ratio		36.1	%		37.9	%		35.6	%		34.9	%		37.3	%		36.1	%		35.5	%

Combined ratio		97.1	%		67.3	%		88.0	%		89.3	%		86.9	%		85.5	%		83.4	%


Combined ratio excl. catastrophe and prior year development		98.1	%		97.6	%		93.2	%		96.6	%		97.4	%		96.4	%		92.8	%

American Financial Group, Inc.

Annuity Earnings (GAAP)

($ in millions)


	Three Months Ended													Twelve Months Ended
	12/31/15		09/30/15			06/30/15		03/31/15			12/31/14			12/31/15			12/31/14

Net investment income	$	309	$	317		$	306	$	292		$	285		$	1,224		$	1,136
Guaranteed withdrawal benefit fees		12		11			10		10			9			43			34
Policy charges and other miscellaneous income		11		13			14		17			24			55			63


Total revenues		332		341			330		319			318			1,322			1,233

Annuity benefits expense		189		208			151		184			157			732			648
Acquisition expenses		20		44			62		37			59			163			175
Other expenses		22		22			29		23			17			96			82


Total costs and expenses		231		274			242		244			233			991			905


Core Annuity earnings before income taxes	$	101	$	67		$	88	$	75		$	85		$	331		$	328


Detail of core Annuity earnings before income taxes
Core earnings before income taxes and impact of fair value accounting	$	96	$	89		$	77	$	92		$	93		$	354		$	362
Impact of fair value accounting (a)		5		(22	)		11		(17	)		(8	)		(23	)		(34	)

Core Annuity earnings before income taxes	$	101	$	67		$	88	$	75		$	85		$	331		$	328

(a)	Change in fair value of derivatives offset by the estimated related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs.

American Financial Group, Inc.

Detail of Annuity Benefits Expense (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/15			09/30/15			06/30/15			03/31/15			12/31/14			12/31/15			12/31/14

Detail of annuity benefits expense:
Interest credited - fixed	$	138		$	135		$	131		$	128		$	127		$	532		$	497
Interest credited - fixed component of variable annuities		1			2			2			1			1			6			6
Change in expected death and annuitization reserve		5			5			5			4			4			19			18
Amortization of sales inducements		6			6			7			7			6			26			26
Guaranteed withdrawal benefit reserve (a)		15			20			16			12			11			63			41
Change in other benefit reserves		5			3			12			2			1			22			12
Unlockings (b)		19			—			—			—			(11	)		19			(11	)

Subtotal before impact of fair value accounting		189			171			173			154			139			687			589

Embedded derivative mark-to-market (c)		88			(130	)		(19	)		50			87			(11	)		240
Equity option mark-to-market		(88	)		167			(3	)		(20	)		(69	)		56			(181	)

Subtotal impact of fair value accounting		—			37			(22	)		30			18			45			59


Total annuity benefits expense	$	189		$	208		$	151		$	184		$	157		$	732		$	648

(a)	3rd quarter of 2015 increase relates to a significant change in the stock market.

(b)

Includes unlockings for fixed indexed annuity embedded derivative reserves, sales inducement asset and other reserves. Does not include unlocking income of $29 million in 2015 and charge of $10 million in 2014 for deferred policy acquisition costs and unearned revenue reserves. These unlockings are included in acquisition expenses and other income, respectively. In total, AFG recorded an unlocking expense reduction of $10 million in 2015 and $1 million in 2014.

(c)	Excludes unlocking impact of $28 million in 2015 and ($58) million in 2014.

American Financial Group, Inc.

Net Spread on Fixed Annuities (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/15			09/30/15			06/30/15			03/31/15			12/31/14			12/31/15			12/31/14

Average fixed annuity investments (at amortized cost)	$	26,401		$	25,642		$	24,711		$	23,943		$	23,334		$	25,174		$	22,391
Average annuity benefits accumulated		26,048			25,316			24,474			23,752			23,104			24,898			22,119

Investments in excess of annuity benefits accumulated	$	353		$	326		$	237		$	191		$	230		$	276		$	272


As % of average annuity benefits accumulated (except as noted)
Net investment income (as % of investments)		4.65	%		4.92	%		4.91	%		4.83	%		4.85	%		4.83	%		5.03	%
Interest credited		(2.12	%)		(2.12	%)		(2.14	%)		(2.16	%)		(2.21	%)		(2.14	%)		(2.25	%)

Net interest spread on fixed annuities		2.53	%		2.80	%		2.77	%		2.67	%		2.64	%		2.69	%		2.78	%

Policy charges and other miscellaneous income		0.15	%		0.16	%		0.17	%		0.24	%		0.18	%		0.18	%		0.18	%
Other annuity benefit expenses, net		(0.31	%)		(0.36	%)		(0.49	%)		(0.25	%)		(0.20	%)		(0.35	%)		(0.28	%)
Acquisition expenses		(0.75	%)		(0.65	%)		(0.98	%)		(0.59	%)		(0.65	%)		(0.74	%)		(0.67	%)
Other expenses		(0.32	%)		(0.34	%)		(0.43	%)		(0.36	%)		(0.28	%)		(0.36	%)		(0.34	%)
Change in fair value of derivatives		0.02	%		(0.59	%)		0.35	%		(0.50	%)		(0.31	%)		(0.18	%)		(0.27	%)
Unlockings		0.07	%		0.00	%		0.00	%		0.00	%		0.02	%		0.02	%		0.01	%

Net spread earned on fixed annuities - core		1.39	%		1.02	%		1.39	%		1.21	%		1.40	%		1.26	%		1.41	%


Average annuity benefits accumulated	$	26,048		$	25,316		$	24,474		$	23,752		$	23,104		$	24,898		$	22,119
Net spread earned on fixed annuities		1.39	%		1.02	%		1.39	%		1.21	%		1.40	%		1.26	%		1.41	%

Earnings on fixed annuity benefits accumulated	$	91		$	65		$	85		$	72		$	81		$	313		$	312

Investments in excess of annuity benefits accumulated	$	353		$	326		$	237		$	191		$	230		$	276		$	272
Net investment income (as % of investments)		4.65	%		4.92	%		4.91	%		4.83	%		4.85	%		4.83	%		5.03	%

Earnings on investments in excess of annuity benefits accumulated	$	4		$	4		$	3		$	2		$	3		$	13			14

Variable annuity earnings		6			(2	)		—			1			1			5			2

Earnings before income taxes - core	$	101		$	67		$	88		$	75		$	85		$	331		$	328


Detail of net spread earned on fixed annuities - core
Net spread earned core - before impact of fair value accounting		1.31	%		1.37	%		1.21	%		1.49	%		1.54	%		1.35	%		1.56	%
Impact of fair value accounting (a)		0.08	%		(0.35	%)		0.18	%		(0.28	%)		(0.14	%)		(0.09	%)		(0.15	%)

Net spread earned core - after impact of fair value accounting		1.39	%		1.02	%		1.39	%		1.21	%		1.40	%		1.26	%		1.41	%

(a)	Change in fair value of derivatives offset by the estimated related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs.

American Financial Group

Annuity Premiums (Statutory)

($ in millions)


	Three Months Ended										Twelve Months Ended
	12/31/15		09/30/15		06/30/15		03/31/15		12/31/14		12/31/15		12/31/14

Retail single premium annuities - indexed	$	494	$	617	$	404	$	349	$	405	$	1,864	$	1,533
Retail single premium annuities - fixed		18		22		18		12		19		70		101
Financial institutions single premium annuities - indexed		462		554		369		356		426		1,741		1,489
Financial institutions single premium annuities - fixed		72		71		48		38		61		229		332
Education market - fixed and indexed annuities		51		47		49		47		49		194		194

Subtotal fixed annuity premiums		1,097		1,311		888		802		960		4,098		3,649

Variable annuities		10		10		11		11		11		42		47

Total annuity premiums	$	1,107	$	1,321	$	899	$	813	$	971	$	4,140	$	3,696

American Financial Group, Inc.

Fixed Annuity Benefits Accumulated (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/15			09/30/15			06/30/15			03/31/15			12/31/14			12/31/15			12/31/14

Beginning fixed annuity reserves	$	25,725		$	24,906		$	24,042		$	23,462		$	22,745		$	23,462		$	20,679
Premiums		1,097			1,311			888			802			960			4,098			3,649
Federal Home Loan Bank advances		45			—			300			—			—			345			—
Surrenders, benefits and other withdrawals		(515	)		(526	)		(471	)		(420	)		(464	)		(1,932	)		(1,673	)
Sale of subsidiaries		(261	)		—			—			—			—			(261	)		—
Interest and other annuity benefit expenses:
Interest credited		138			135			131			128			127			532			497
Embedded derivative mark-to-market		88			(130	)		(19	)		50			87			(11	)		240
Change in other benefit reserves		35			29			35			20			18			119			81
Unlockings		19			—			—			—			(11	)		19			(11	)

Ending fixed annuity reserves	$	26,371		$	25,725		$	24,906		$	24,042		$	23,462		$	26,371		$	23,462


Reconciliation to annuity benefits accumulated:
Ending fixed annuity reserves	$	26,371		$	25,725		$	24,906		$	24,042		$	23,462		$	26,371		$	23,462
Impact of unrealized investment gains on reserves		64			113			107			179			111			64			111
Fixed component of variable annuities		187			188			190			190			191			187			191

Annuity benefits accumulated per balance sheet	$	26,622		$	26,026		$	25,203		$	24,411		$	23,764		$	26,622		$	23,764


Annualized surrenders and other withdrawals as a % of beginning reserves		8.0	%		8.4	%		7.8	%		7.2	%		8.2	%		8.2	%		8.1	%

American Financial Group, Inc.

Consolidated Balance Sheet

($ in millions)


	12/31/15			09/30/15			06/30/15			03/31/15			12/31/14			09/30/14
Assets:
Total cash and investments	$	37,736		$	38,132		$	37,644		$	37,384		$	36,210		$	35,151
Recoverables from reinsurers		2,636			3,151			3,075			3,046			3,238			3,134
Prepaid reinsurance premiums		480			604			499			475			469			587
Agents’ balances and premiums receivable		937			976			959			864			889			901
Deferred policy acquisition costs		1,184			993			965			756			821			858
Assets of managed investment entities		4,047			3,613			3,629			3,279			3,108			2,946
Other receivables		820			1,241			660			641			910			1,140
Variable annuity assets (separate accounts)		608			595			655			667			662			649
Other assets		1,212			1,051			1,137			994			1,027			985
Goodwill		199			201			201			201			201			201

Total assets	$	49,859		$	50,557		$	49,424		$	48,307		$	47,535		$	46,552


Liabilities and Equity:
Unpaid losses and loss adjustment expenses	$	8,127		$	8,061		$	7,744		$	7,636		$	7,872		$	7,645
Unearned premiums		2,060			2,238			2,004			1,936			1,956			2,114
Annuity benefits accumulated		26,622			26,026			25,203			24,411			23,764			23,044
Life, accident and health reserves		705			2,159			2,156			2,195			2,175			2,098
Payable to reinsurers		591			724			511			494			645			673
Liabilities of managed investment entities		3,781			3,287			3,309			2,952			2,819			2,625
Long-term debt		1,020			880			1,024			1,061			1,061			1,062
Variable annuity liabilities (separate accounts)		608			595			655			667			662			649
Other liabilities		1,575			1,681			1,834			1,855			1,527			1,564

Total liabilities	$	45,089		$	45,651		$	44,440		$	43,207		$	42,481		$	41,474

Shareholders’ equity:
Common stock	$	87		$	87		$	88		$	88		$	88		$	88
Capital surplus		1,214			1,195			1,183			1,173			1,152			1,150
Appropriated retained earnings		—			—			—			—			(2	)		2
Unappropriated retained earnings		2,987			2,981			2,968			2,886			2,914			2,946
Unrealized gains - fixed maturities		278			445			457			656			604			602
Unrealized gains - equities		54			44			130			143			139			124
Other comprehensive income, net of tax		(28	)		(28	)		(24	)		(23	)		(16	)		(8	)

Total shareholders’ equity		4,592			4,724			4,802			4,923			4,879			4,904

Noncontrolling interests		178			182			182			177			175			174

Total liabilities and equity	$	49,859		$	50,557		$	49,424		$	48,307		$	47,535		$	46,552

American Financial Group, Inc.

Book Value Per Share and Price / Book Summary

(in millions, except per share information)


	12/31/15			09/30/15			06/30/15			03/31/15			12/31/14			09/30/14

Shareholders’ equity	$	4,592		$	4,724		$	4,802		$	4,923		$	4,879		$	4,904
Appropriated retained earnings		—			—			—			—			2			(2	)

Shareholders’ equity, excluding appropriated retained earnings		4,592			4,724			4,802			4,923			4,881			4,902
Unrealized (gains) on fixed maturities		(278	)		(445	)		(457	)		(656	)		(604	)		(602	)

Adjusted shareholders’ equity		4,314			4,279			4,345			4,267			4,277			4,300
Goodwill		(199	)		(201	)		(201	)		(201	)		(201	)		(201	)
Intangibles		(49	)		(51	)		(53	)		(55	)		(57	)		(63	)

Tangible adjusted shareholders’ equity	$	4,066		$	4,027		$	4,091		$	4,011		$	4,019		$	4,036


Common shares outstanding		87.474			87.327			87.540			87.886			87.709			88.491

Book value per share:
Excluding appropriated retained earnings (a)	$	52.50		$	54.10		$	54.86		$	56.01		$	55.65		$	55.39
Adjusted (b)		49.33			49.01			49.63			48.55			48.76			48.59
Tangible, adjusted (c)		46.49			46.12			46.73			45.63			45.82			45.61

Market capitalization

AFG’s closing common share price	$	72.08		$	68.91		$	65.04		$	64.15		$	60.72		$	57.89

Market capitalization	$	6,305		$	6,018		$	5,694		$	5,638		$	5,326		$	5,123

Price / Adjusted book value ratio		1.46			1.41			1.31			1.32			1.25			1.19

(a)	Excludes appropriated retained earnings.

(b)	Excludes appropriated retained earnings and unrealized gains related to fixed maturity investments.

(c)	Excludes appropriated retained earnings, unrealized gains related to fixed maturity investments, goodwill and intangibles.

American Financial Group, Inc.

Capitalization

($ in millions)


	12/31/15			09/30/15			06/30/15			03/31/15			12/31/14			09/30/14

AFG senior obligations	$	708		$	708		$	840		$	840		$	840		$	840
Borrowings drawn under credit facility		—			—			—			—			—			—
Obligations of subsidiaries - other		12			12			12			12			12			12

Debt excluding subordinated debt & debt secured by real estate	$	720		$	720		$	852		$	852		$	852		$	852

AFG subordinated debentures		300			150			150			150			150			150
Obligations of subsidiaries - secured by real estate		—			10			22			59			59			60
Payable to subsidiary trusts - subordinated		—			—			—			—			—			—

Total Long-term debt	$	1,020		$	880		$	1,024		$	1,061		$	1,061		$	1,062

Shareholders’ equity		4,592			4,724			4,802			4,923			4,879			4,904
Noncontrolling interests		178			182			182			177			175			174
Less:
Appropriated retained earnings		—			—			—			—			2			(2	)
Unrealized gains related to fixed maturity investments		(278	)		(445	)		(457	)		(656	)		(604	)		(602	)

Total adjusted capital	$	5,512		$	5,341		$	5,551		$	5,505		$	5,513		$	5,536


Less:
Obligations of subsidiaries - secured by real estate		—			(10	)		(22	)		(59	)		(59	)		(60	)

Total adjusted capital excluding obligations secured by real estate	$	5,512		$	5,331		$	5,529		$	5,446		$	5,454		$	5,476


Ratio of debt to total adjusted capital:
Including subordinated debt & debt secured by real estate		18.5	%		16.5	%		18.4	%		19.3	%		19.2	%		19.2	%
Excluding subordinated debt & debt secured by real estate		13.1	%		13.5	%		15.4	%		15.6	%		15.6	%		15.6	%

American Financial Group, Inc.

Additional Supplemental Information

($ in millions)


	Three Months Ended										Twelve Months Ended
	12/31/15		09/30/15		06/30/15		03/31/15		12/31/14		12/31/15		12/31/14
Property and Casualty Insurance

Paid Losses (GAAP)	$	675	$	585	$	526	$	617	$	562	$	2,403	$	2,130


	12/31/15		09/30/15		06/30/15		03/31/15		12/31/14		09/30/14
Statutory Surplus

Property and Casualty Insurance	$	2,488	$	2,356	$	2,399	$	2,340	$	2,286	$	2,206

AFG’s principal annuity subsidiaries (total adjusted capital)	$	1,918	$	1,816	$	1,911	$	1,861	$	1,822	$	1,818

Allowable dividends without regulatory approval

Property and Casualty Insurance	$	434	$	315	$	315	$	315	$	315	$	335
Annuity and Run-off		375		358		358		358		358		275

Total	$	809	$	673	$	673	$	673	$	673	$	610

American Financial Group, Inc.

Total Cash and Investments

($ in millions)


	Carrying Value - December 31, 2015
	Property and Casualty Insurance		Annuity and Run-off			Parent and Other Non- Insurance		Consolidate CLOs			Total AFG Consolidated		% of Investment Portfolio
Total cash and investments:
Cash and cash equivalents	$	708	$	282		$	230	$	—		$	1,220		3	%
Fixed maturities - Available for sale		6,784		25,486			14		—			32,284		85	%
Fixed maturities - Trading		140		114			—		—			254		1	%
Equity securities		1,182		488			49		—			1,719		5	%
Policy loans		—		201			—		—			201		0	%
Mortgage loans		191		876			—		—			1,067		3	%
Real estate and other investments		457		781			18		(265	)		991		3	%

Total cash and investments	$	9,462	$	28,228		$	311	$	(265	)	$	37,736		100	%


Unrealized gain/(loss) on equity securities	$	87	$	(3	)	$	—	$	—		$	84

	Carrying Value - December 31, 2014
	Property and Casualty Insurance		Annuity and Run-off			Parent and Other Non- Insurance		Consolidate CLOs			Total AFG Consolidated		% of Investment Portfolio
Total cash and investments:
Cash and cash equivalents	$	693	$	320		$	330	$	—		$	1,343		4	%
Fixed maturities - Available for sale		6,409		24,313			12		—			30,734		85	%
Fixed maturities - Trading		138		128			—		—			266		1	%
Equity securities		1,190		460			46		—			1,696		4	%
Policy loans		—		228			—		—			228		1	%
Mortgage loans		229		888			—		—			1,117		3	%
Real estate and other investments		358		747			10		(289	)		826		2	%

Total cash and investments	$	9,017	$	27,084		$	398	$	(289	)	$	36,210		100	%


Unrealized gain/(loss) on equity securities	$	169	$	49		$	—	$	—		$	218

American Financial Group, Inc.

Net Investment Income

($ in millions)


	Three Months Ended															Twelve Months Ended
	12/31/15			09/30/15			06/30/15			03/31/15			12/31/14			12/31/15			12/31/14
Property and Casualty Insurance:
Gross Investment Income
Fixed maturities - Available for sale	$	63		$	62		$	62		$	61		$	58		$	248		$	223
Fixed maturities - Trading		—			—			—			4			2			4			8
Equity securities		14			12			12			10			11			48			40
Equity in investees		(1	)		7			3			1			1			10			8
Other investments		—			4			8			5			5			17			22

Gross investment income		76			85			85			81			77			327			301
Investment expenses		(2	)		(2	)		(2	)		(2	)		(2	)		(8	)		(7	)

Total net investment income	$	74		$	83		$	83		$	79		$	75		$	319		$	294


Average cash and investments (a)	$	9,113		$	8,984		$	8,956		$	8,775		$	8,485		$	8,956		$	7,849


Average yield (b)		3.25	%		3.70	%		3.71	%		3.60	%		3.54	%		3.56	%		3.75	%

Fixed Annuity:
Gross Investment Income
Fixed maturities - Available for sale	$	294		$	288		$	277		$	267		$	264		$	1,126		$	1,037
Fixed maturities - Trading		—			—			—			—			—			—			—
Equity securities		6			5			5			5			4			21			16
Equity in investees		2			11			1			2			2			16			68
Other investments		7			14			23			18			14			62			9

Gross investment income		309			318			306			292			284			1,225			1,130
Investment expenses		(2	)		(3	)		(2	)		(3	)		(1	)		(10	)		(4	)

Total net investment income	$	307		$	315		$	304		$	289		$	283		$	1,215		$	1,126


Average cash and investments (a)	$	26,401		$	25,642		$	24,711		$	23,943		$	23,334		$	25,174		$	22,391


Average yield (b)		4.65	%		4.92	%		4.91	%		4.83	%		4.85	%		4.83	%		5.03	%

AFG consolidated net investment income:
Property & Casualty	$	74		$	83		$	83		$	79		$	75		$	319		$	294
Annuity and Run-off:
Fixed Annuity		307			315			304			289			283			1,215			1,126
Variable Annuity		2			2			2			3			2			9			10
Run-off		19			20			21			20			20			80			82
Other		3			2			(1	)		—			3			4			6
Consolidate CLOs		11			3			(5	)		(3	)		1			6			(17	)

Total net investment income	$	416		$	425		$	404		$	388		$	384		$	1,633		$	1,501

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

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

American Financial Group, Inc.

Fixed Maturities - By Security Type - AFG Consolidated

($ in millions)


December 31, 2015	Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Investment Portfolio
US Government and government agencies	$	319		$	321	$	2			1	%		1	%
States, municipalities and political subdivisions		6,671			6,885		214			21	%		18	%
Foreign government		225			232		7			1	%		1	%
Residential mortgage-backed securities		3,241			3,534		293			11	%		9	%
Commercial mortgage-backed securities		2,112			2,188		76			7	%		6	%
Asset-backed securities		4,961			4,934		(27	)		15	%		13	%
Corporate and other bonds		14,290			14,444		154			44	%		38	%

Total AFG consolidated	$	31,819		$	32,538	$	719			100	%		86	%


Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.74	%
Net of investment expense (a)		4.69	%

Approximate average life and duration:
Approximate average life		6.5 years
Approximate duration		5 years

December 31, 2014	Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Investment Portfolio
US Government and government agencies	$	361		$	367	$	6			1	%		1	%
States, municipalities and political subdivisions		6,423			6,777		354			22	%		19	%
Foreign government		267			277		10			1	%		1	%
Residential mortgage-backed securities		4,053			4,449		396			14	%		12	%
Commercial mortgage-backed securities		2,300			2,457		157			8	%		7	%
Asset-backed securities		3,874			3,889		15			13	%		11	%
Corporate and other bonds		12,062			12,784		722			41	%		35	%

Total AFG consolidated	$	29,340		$	31,000	$	1,660			100	%		86	%


Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.75	%
Net of investment expense (a)		4.71	%

Approximate average life and duration:
Approximate average life		6.5 years
Approximate duration		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.

American Financial Group, Inc.

Fixed Maturities - By Security Type Portfolio

($ in millions)


	December 31, 2015											December 31, 2014
	Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value			Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value
Property and Casualty Insurance:
US Government and government agencies	$	255		$	257	$	2			4	%	$	276		$	280	$	4			4	%
States, municipalities and political subdivisions		2,807			2,891		84			42	%		2,624			2,726		102			42	%
Foreign government		213			219		6			3	%		250			257		7			4	%
Residential mortgage-backed securities		893			932		39			13	%		973			1,032		59			16	%
Commercial mortgage-backed securities		209			213		4			3	%		243			252		9			4	%
Asset-backed securities		1,453			1,442		(11	)		21	%		1,059			1,057		(2	)		16	%
Corporate and other bonds		979			970		(9	)		14	%		916			943		27			14	%

Property and Casualty Insurance	$	6,809		$	6,924	$	115			100	%	$	6,341		$	6,547	$	206			100	%


Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		3.82	%										3.81	%
Net of investment expense (a)		3.71	%										3.71	%
Tax equivalent, net of investment expense (b)		4.31	%										4.33	%

Approximate average life and duration:
Approximate average life		5 years											4.5 years
Approximate duration		4 years											3.5 years

	December 31, 2015											December 31, 2014
	Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value			Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value
Annuity and Run-off:
US Government and government agencies	$	62		$	62	$	—			0	%	$	85		$	87	$	2			0	%
States, municipalities and political subdivisions		3,864			3,994		130			15	%		3,799			4,051		252			17	%
Foreign government		12			13		1			0	%		17			20		3			0	%
Residential mortgage-backed securities		2,347			2,590		243			10	%		3,079			3,405		326			14	%
Commercial mortgage-backed securities		1,903			1,975		72			8	%		2,057			2,205		148			9	%
Asset-backed securities		3,508			3,492		(16	)		14	%		2,815			2,832		17			12	%
Corporate and other bonds		13,311			13,474		163			53	%		11,146			11,841		695			48	%

Total Annuity and Run-off	$	25,007		$	25,600	$	593			100	%	$	22,998		$	24,441	$	1,443			100	%


Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.98	%										5.00	%
Net of investment expense (a)		4.94	%										4.98	%

Approximate average life and duration:
Approximate average life		6.5 years											7 years
Approximate duration		5.5 years											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.

American Financial Group, Inc.

Fixed Maturities - Credit Rating

($ in millions)


	December 31, 2015
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value
Investment grade
AAA	$	6,519	$	6,655	$	136			20	%
AA		6,785		6,954		169			21	%
A		7,780		7,969		189			25	%
BBB		7,478		7,507		29			23	%

Subtotal - Investment grade		28,562		29,085		523			89	%

BB		790		765		(25	)		3	%
B		438		417		(21	)		1	%
Other (b)		2,029		2,271		242			7	%

Total	$	31,819	$	32,538	$	719			100	%

97% of the fixed maturity portfolio is NAIC designated 1 or 2.


	December 31, 2014
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value
Investment grade
AAA	$	6,680	$	6,936	$	256		22	%
AA		6,053		6,342		289		21	%
A		7,526		7,966		440		26	%
BBB		5,289		5,603		314		18	%

Subtotal - Investment grade		25,548		26,847		1,299		87	%

BB		807		834		27		3	%
B		428		440		12		1	%
Other (b)		2,557		2,879		322		9	%

Total	$	29,340	$	31,000	$	1,660		100	%

97% 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 Appendix A (pg 29) for more information.

American Financial Group, Inc.

Mortgage-Backed Securities - AFG Consolidated

($ in millions)


December 31, 2015	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Investment Portfolio
Residential
Agency	$	260	$	269	$	9		5	%		1	%
Prime (Non-Agency)		1,489		1,651		162		29	%		4	%
Alt-A		794		872		78		15	%		2	%
Subprime		698		742		44		13	%		2	%
Commercial		2,112		2,188		76		38	%		6	%

Total AFG consolidated	$	5,353	$	5,722	$	369		100	%		15	%

•

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 77%; Subprime 85%; CMBS 99%.

•

The average FICO score of our residential MBS securities is - Prime 741; Alt-A 711; Subprime 637.

•

99.7% of our Commercial MBS portfolio is investment-grade rated (85% AAA) and the average subordination for this group of assets is 40%.

•

The approximate average life by collateral type is - Residential 4.5 years; Commercial 3 years.


December 31, 2014	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Investment Portfolio
Residential
Agency	$	315	$	327	$	12		5	%		1	%
Prime (Non-Agency)		1,923		2,135		212		31	%		6	%
Alt-A		948		1,054		106		15	%		3	%
Subprime		867		933		66		13	%		2	%
Commercial		2,300		2,457		157		36	%		7	%

Total AFG consolidated	$	6,353	$	6,906	$	553		100	%		19	%

American Financial Group, Inc.

Mortgage-Backed Securities Portfolio

($ in millions)


Property and Casualty Insurance:	December 31, 2015
	Amortized				Unrealized		% of			% of Inv
By Asset Type	Cost		Fair Value		Gain (Loss)		Fair Value			Portfolio
Residential
Agency	$	151	$	153	$	2		13	%		2	%
Prime (Non-Agency)		218		231		13		20	%		2	%
Alt-A		241		257		16		23	%		3	%
Subprime		283		291		8		25	%		3	%
Commercial		209		213		4		19	%		2	%

Total	$	1,102	$	1,145	$	43		100	%		12	%


	December 31, 2014
	Amortized				Unrealized		% of			% of Inv
By Asset Type	Cost		Fair Value		Gain (Loss)		Fair Value			Portfolio
Residential
Agency	$	185	$	189	$	4		15	%		2	%
Prime (Non-Agency)		238		255		17		20	%		3	%
Alt-A		250		272		22		21	%		3	%
Subprime		300		316		16		24	%		3	%
Commercial		243		252		9		20	%		3	%

Total	$	1,216	$	1,284	$	68		100	%		14	%


Annuity and Run-off:	December 31, 2015
	Amortized				Unrealized		% of			% of Inv
By Asset Type	Cost		Fair Value		Gain (Loss)		Fair Value			Portfolio
Residential
Agency	$	109	$	116	$	7		3	%		0	%
Prime (Non-Agency)		1,270		1,408		138		31	%		5	%
Alt-A		553		615		62		13	%		2	%
Subprime		415		451		36		10	%		2	%
Commercial		1,903		1,975		72		43	%		7	%

Total	$	4,250	$	4,565	$	315		100	%		16	%


	December 31, 2014
	Amortized				Unrealized		% of			% of Inv
By Asset Type	Cost		Fair Value		Gain (Loss)		Fair Value			Portfolio
Residential
Agency	$	130	$	138	$	8		3	%		1	%
Prime (Non-Agency)		1,684		1,868		184		33	%		7	%
Alt-A		698		782		84		14	%		3	%
Subprime		567		617		50		11	%		2	%
Commercial		2,057		2,205		148		39	%		8	%

Total	$	5,136	$	5,610	$	474		100	%		21	%

American Financial Group, Inc.

Mortgage-Backed Securities - Credit Rating

($ in millions)


	December 31, 2015
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value
Investment grade
AAA	$	2,409	$	2,494	$	85		43	%
AA		255		263		8		5	%
A		329		345		16		6	%
BBB		272		292		20		5	%

Subtotal - investment grade		3,265		3,394		129		59	%

BB		253		258		5		5	%
B		305		311		6		5	%
Other		1,530		1,759		229		31	%

Total	$	5,353	$	5,722	$	369		100	%

97% of the mortgage-backed security portfolio has an NAIC 1 designation.


	December 31, 2014
	Amortized				Unrealized		% of
By Credit Rating (a)	Cost		Fair Value		Gain (Loss)		Fair Value
Investment grade
AAA	$	2,764	$	2,932	$	168		43	%
AA		346		362		16		5	%
A		484		512		28		7	%
BBB		216		235		19		3	%

Subtotal - investment grade		3,810		4,041		231		58	%

BB		334		347		13		5	%
B		368		380		12		6	%
Other		1,841		2,138		297		31	%

Total	$	6,353	$	6,906	$	553		100	%

97% 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.

Appendix A

American Financial Group, Inc.

Fixed Maturities - Credit Rating by Type

($ in millions)


	Fair Value - December 31, 2015
By Credit Rating (a)	US Gov		Munis		Frgn gov		RMBS		CMBS		ABS		Corp/Oth		Total		% Total
Investment grade
AAA	$	262	$	1,607	$	138	$	640	$	1,854	$	1,986	$	168	$	6,655		20	%
AA		44		4,488		32		151		112		1,239		888		6,954		21	%
A		—		569		62		173		172		1,252		5,741		7,969		25	%
BBB		—		92		—		248		44		429		6,694		7,507		23	%

Subtotal - Investment grade		306		6,756		232		1,212		2,182		4,906		13,491		29,085		89	%

BB		—		20		—		258		—		14		473		765		3	%
B		—		—		—		306		6		2		103		417		1	%
CCC, CC, C		—		9		—		894		—		4		11		918		3	%
D		—		—		—		445		—		—		3		448		1	%

Subtotal - Non-Investment grade		—		29		—		1,903		6		20		590		2,548		8	%

Not Rated		15		100		—		419		—		8		363		905		3	%


Total	$	321	$	6,885	$	232	$	3,534	$	2,188	$	4,934	$	14,444	$	32,538		100	%


	Fair Value - December 31, 2014
By Credit Rating (a)	US Gov		Munis		Frgn gov		RMBS		CMBS		ABS		Corp/Oth		Total		% Total
Investment grade
AAA	$	308	$	1,510	$	167	$	838	$	2,094	$	1,852	$	167	$	6,936		22	%
AA		59		4,250		39		238		123		834		799		6,342		21	%
A		—		789		65		323		190		871		5,728		7,966		26	%
BBB		—		101		6		192		43		220		5,041		5,603		18	%

Subtotal - Investment grade		367		6,650		277		1,591		2,450		3,777		11,735		26,847		87	%

BB		—		17		—		347		—		18		452		834		3	%
B		—		—		—		373		7		1		59		440		1	%
CCC, CC, C		—		—		—		1,167		—		7		9		1,183		4	%
D		—		—		—		429		—		—		—		429		1	%

Subtotal - Non-Investment grade		—		17		—		2,316		7		26		520		2,886		9	%

Not Rated		—		110		—		542		—		86		529		1,267		4	%


Total	$	367	$	6,777	$	277	$	4,449	$	2,457	$	3,889	$	12,784	$	31,000		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.

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