Form 8-K AMERICAN FINANCIAL GROUP For: May 02

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May 3, 2016 1:40 PM EDT

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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): May 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 first quarter of 2016 and the availability of the Investor Supplement on the Company’s website. The press release was issued on May 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 May 2, 2016, reporting American Financial Group Inc. results for the quarterly period ended March 31, 2016.

99.2		Investor Supplement – First Quarter 2016

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.


	AMERICAN FINANCIAL GROUP, INC.

Date: May 3, 2016

	By:	/s/ Karl J. Grafe
		Karl J. Grafe
		Vice President

Exhibit 99.1

LOGO

American Financial Group, Inc. Announces First Quarter Results

•

Net earnings per share of $1.14

•

Core net operating earnings $1.25 per share; matches 2015 first quarter record results

•

First quarter annualized core operating ROE of 10.3%

•

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

CINCINNATI – May 2, 2016 – American Financial Group, Inc. (NYSE: AFG) today reported 2016 first quarter net earnings attributable to shareholders of $101 million ($1.14 per share) compared to $19 million ($0.21 per share) for the 2015 first quarter. Net earnings for the quarter include $10 million ($0.11 per share) in after-tax net realized losses on securities, compared to $12 million ($0.14 per share) in after-tax net realized gains on securities in the prior year period. AFG’s 2015 first quarter results also included an after-tax loss of $105 million ($1.18 per share) related to the sale of its run-off long-term care insurance business. Book value per share, excluding unrealized gains on fixed maturities, increased by $0.44 to $49.77 per share during the quarter.

Core net operating earnings were $111 million ($1.25 per share) for the 2016 first quarter, compared to $112 million ($1.25 per share) in the 2015 first quarter. Higher underwriting profit and higher net investment income in our Specialty Property and Casualty (“P&C”) insurance operations were offset by lower operating earnings in our Annuity and Run-off Long-Term Care and Life segments. Core net operating earnings for the first quarters of 2016 and 2015 generated annualized returns on equity of 10.3% and 10.8%, respectively.

During the first quarter of 2016, AFG repurchased 1.1 million shares of common stock at an average price per share of $67.78.

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 March 31,
	2016			2015
Components of net earnings attributable to shareholders:
Core net operating earnings^(a)	$	111		$	112
Non-Core Items:
Realized gains (losses) on securities		(10	)		12
Loss on sale of subsidiaries		—			(105	)


Net earnings attributable to shareholders	$	101		$	19


Components of Earnings Per Share:
Core net operating earnings^(a)	$	1.25		$	1.25
Non-Core Items:
Realized gains (losses) on securities		(0.11	)		0.14
Loss on sale of subsidiaries		—			(1.18	)


Diluted Earnings Per Share	$	1.14		$	0.21

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

Page 1

S. Craig Lindner and Carl H. Lindner III, AFG’s Co-Chief Executive Officers, issued this statement: “We are pleased to report first quarter core net operating earnings that are consistent with last year’s first quarter record results. The diversity within our portfolio of specialty property and casualty insurance and annuity businesses helps us to deliver consistent, strong core operating earnings, and produce healthy growth across our portfolio of businesses.

“AFG had approximately $900 million of excess capital (including parent company cash of approximately $160 million) at March 31, 2016. Our excess capital will 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 buyback activity during the quarter. We will continue to make opportunistic share repurchases when it makes sense to do so and return capital to shareholders through dividends.

“Based on results for the first three months of the year, we continue to 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 an underwriting profit of $86 million in the 2016 first quarter, compared to $60 million in the first quarter of 2015, an increase of 43%. Higher underwriting profit in our Property and Transportation Group was the driver of the improved year-over-year results.

The first quarter 2016 combined ratio of 91.3% represents a 2.3 point improvement over the prior year period. First quarter 2016 results include 2.7 points of favorable prior year reserve development, compared to 0.8 points of favorable development in the comparable prior year period. Catastrophe losses were 0.8 points in the first quarter of 2016, compared to 0.6 points in the prior year period. Overall renewal pricing was flat during the quarter.

Gross and net written premiums were up 4% and 6%, respectively, in the 2016 first quarter compared to the same quarter a year earlier, with growth reported in each of our Specialty P&C groups. Further details about AFG’s specialty P&C operations may be found in the accompanying schedules.

The Property and Transportation Group reported an underwriting profit of $32 million in the first quarter of 2016 compared to $7 million in the first quarter of 2015, primarily the result of higher profitability in our crop insurance business. Underwriting profits in our transportation and inland marine businesses were also higher year-over-year. Although results in our transportation businesses improved in the first quarter of 2016, National Interstate’s accident year profitability deteriorated by 2 points year-over-year. Catastrophe losses in this group were $6 million in the first quarter of 2016, primarily as a result of winter storms in the month of February, compared to $4 million in the 2015 first quarter.

First quarter 2016 gross and net written premiums in this group were 6% and 8% higher, respectively, than the comparable prior year period. Growth in gross and net written premiums is attributable to our transportation operations and new premium from our Singapore branch, which opened for business in June 2015. Overall renewal rates in this group increased 3% in the first quarter of 2016, including a 5% increase in National Interstate’s renewal rates.

The Specialty Casualty Group reported an underwriting profit of $29 million in the first quarter of 2016 compared to $28 million in the comparable 2015 period. This increase reflects slightly higher profitability

Page 2

in our excess and surplus lines, executive liability, workers’ compensation and general liability businesses. These improved results were partially offset by continued restructuring within our Marketform operations.

Gross and net written premiums for the first quarter of 2016 were up 2% and 4%, respectively, compared to the same period in 2015. Higher premiums in our excess and surplus lines, targeted markets and executive liability businesses were partially offset by lower premiums in our workers’ compensation and general liability businesses. Lower premiums in our general liability business were 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 1% in the first quarter, including a decrease of approximately 4% 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 $23 million in the first quarter of 2016, compared to $22 million in the comparable 2015 period. The increase was driven primarily by higher underwriting profitability in our financial institutions business. All of the businesses in this group continued to achieve excellent underwriting margins.

First quarter 2016 gross and net written premiums were up 7% and 9%, respectively, when compared to the prior year period, primarily as a result of higher premiums in our financial institutions and surety businesses. Pricing in this group was flat for the quarter.

Carl Lindner III noted, “We are off to a very good start in 2016 with healthy growth within each of our Specialty P&C groups during the first quarter and an increase in total P&C operating income of 22% year-over-year.

Based on results during the first three months of the year, we continue to expect an overall 2016 calendar year combined ratio in the range of 92% to 94% and estimate net written premium growth to be between 2% and 6%.”

Annuity Segment

As shown in the following table, AFG’s Annuity Segment contributed $53 million in core pretax operating earnings in the first quarter of 2016 compared to $75 million in the first quarter of 2015; earnings before the impact of fair value accounting on fixed-indexed annuities (FIAs) were $84 million in the first quarter of 2016 compared to $92 million in the first quarter of 2015.


Components of Core Annuity Operating Earnings Before Income Taxes
In millions	Three months ended March 31,						Pct. Change
	2016			2015
Annuity earnings before fair value accounting for FIAs	$	84		$	92			(9	%)
Impact of fair value accounting for FIAs		(31	)		(17	)		nm


Core Pretax Annuity Operating Earnings	$	53		$	75			(29	%)

Annuity Earnings Before Fair Value Accounting for FIAs – AFG’s first quarter 2016 earnings continued to benefit from growth in annuity assets. AFG’s quarterly average annuity investments and reserves grew approximately 14% and 13% year-over-year, respectively; however, the benefit of this growth was more than offset by the runoff of higher yielding investments and the negative impact of certain investments required to be marked to market through earnings.

Page 3

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. In the first quarter of 2015, a relatively large decrease (15-30 basis points) in interest rates contributed to the $17 million unfavorable impact on earnings. In the first quarter of 2016, a more significant decrease (40-45 basis points) in interest rates resulted in an even more unfavorable impact on earnings of $31 million. These impacts are included within the “Impact of fair value accounting for FIAs” amounts shown in the table above.

Annuity Premiums – AFG’s Annuity Segment reported statutory premiums of $1.3 billion in the first quarter of 2016, compared to $813 million in the first quarter of 2015, an increase of 58% due primarily to growth in FIA sales in both the Retail and Financial Institutions channels. Management believes AFG’s growth in traditional fixed and FIA sales is consistent with overall growth in the annuity industry, as sales of these annuities have increased while sales of variable annuities have decreased. In addition, AFG’s increase reflects new products, additional staffing, and increased market share within existing financial institutions and national marketing organizations. Furthermore, AFG has reduced the crediting rates on its new annuity sales several times in 2016 due to the decline in interest rates; these reductions, once announced, often lead to a short-term spike in sales in advance of the effective date of the rate decreases.

Craig Lindner stated, “Although the reported earnings are down significantly, it is important to note that we believe the majority of the decrease from last year’s reported earnings is accounting driven and non-economic in nature. Our fundamentals remain very strong, and opportunistic investing in the first quarter enabled us to achieve attractive returns on our near-record level of annuity sales in the first quarter of 2016. Furthermore, net interest spread earned in the first quarter of 2016 was slightly higher than the spread earned in the fourth quarter of 2015, and our balance sheet spread at the end of the first quarter exceeded our plan by several basis points. As a result, our 2016 earnings guidance remains unchanged. If interest rates continue to remain low for an extended period of time, AFG has the ability to reduce the average crediting rate on approximately $20 billion of traditional fixed and FIA annuities without riders by approximately 75 basis points (on a weighted average basis).

“Finally, even though premiums were extremely strong in the first quarter of 2016, we are not increasing our original guidance of a projected 4% to 8% increase in sales in 2016 as compared to 2015. As previously mentioned, we have made several decreases to crediting rates on new business, and expect those decreases to result in a drop in sales, some of which we have already seen in April. Our strategy continues to include a commitment to disciplined product pricing, as well as consumer-friendly product design and careful expense management.”

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.

Department of Labor Rule – On April 6, the Department of Labor (DOL) issued the final version of its fiduciary rule that will impose additional requirements on the sale of certain annuities to retirement accounts, including IRAs. Unlike the draft rule released in April 2015, the final rule made the more stringent fiduciary requirements applicable to the sale of fixed-indexed annuities to these retirement accounts. It is expected that all carriers will experience some impact when the rule takes effect in 2017, including additional compliance costs and temporary sales disruption during a transition period. We are studying the rule and having extensive discussions with our distribution partners to determine appropriate changes to our business model. These changes are likely to include new products and compensation arrangements. Based on our analysis to date, we do not believe the implementation of the final DOL rule will have a material impact on the Company’s results of operations.

Page 4

Investments

AFG recorded first quarter 2016 net realized losses on securities of $10 million after tax and after deferred acquisition costs (DAC), compared to net realized gains of $12 million in the comparable 2015 period. Unrealized gains on fixed maturities were $426 million after tax and after DAC at March 31, 2016, an increase of $148 million since year end. Our portfolio continues to be high quality, with 88% 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 three months ended March 31, 2016, P&C net investment income was approximately 5% higher than the comparable 2015 period.

In April 2016, AFG sold an apartment property in Pittsburgh that was owned and managed by a subsidiary of Great American Insurance Company. AFG expects to recognize a non-core after-tax gain on the sale of approximately $15 million in the second quarter of 2016.

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

Page 5

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; 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 2016 first quarter results at 11:30 a.m. (ET) tomorrow, Tuesday, May 3, 2016. Toll-free telephone access will be available by dialing 1-877-459-8719 (international dial-in 424-276-6843). The conference ID for the live call is 77295288. Please dial in five to ten minutes prior to the scheduled start time of the call.

A replay will be available two hours following the completion of the call and will remain available until 11:59 p.m. (ET) on May 10, 2016. To listen to the replay, dial 1-855-859-2056 (international dial-in 404-537-3406) and provide the conference ID 77295288.

The conference call 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 at the Webcasts and Presentations link.

The archived webcast will be available immediately after the call via the same link on the Investor Relations page until May 10, 2016 at 11:59 p.m. (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.

AFG16-08

Page 6

AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES

SUMMARY OF EARNINGS AND SELECTED BALANCE SHEET DATA

(In Millions, Except Per Share Data)


	Three months ended March 31,
	2016			2015
Revenues
P&C insurance net earned premiums	$	998		$	946
Life, accident & health net earned premiums		6			25
Net investment income		411			388
Realized gains (losses) on:
Securities		(18	)		19
Subsidiaries		—			(162	)
Income (loss) of managed investment entities:
Investment income		45			34
Loss on change in fair value of assets/liabilities		(13	)		(3	)
Other income		46			50

Total revenues		1,475			1,297


Costs and expenses
P&C insurance losses & expenses		915			889
Annuity, life, accident & health benefits & expenses		272			257
Interest charges on borrowed money		18			20
Expenses of managed investment entities		35			24
Other expenses		79			77

Total costs and expenses		1,319			1,267


Earnings before income taxes		156			30
Provision for income taxes^(b)		52			5


Net earnings including noncontrolling interests		104			25

Less: Net earnings attributable to noncontrolling interests		3			6


Net earnings attributable to shareholders	$	101		$	19


Diluted Earnings per Common Share	$	1.14		$	0.21


Average number of diluted shares		88.5			89.4

	March 31, 2016			December 31, 2015
Selected Balance Sheet Data:
Total cash and investments	$	39,437		$	37,736
Long-term debt^(c)	$	998		$	998
Shareholders’ equity^(d)	$	4,755		$	4,592
Shareholders’ equity (excluding unrealized gains/losses on fixed maturities)^(d)	$	4,329		$	4,314
Book Value Per Share	$	54.67		$	52.50
Book Value Per Share (excluding unrealized gains/losses on fixed maturities)	$	49.77		$	49.33

Common Shares Outstanding		87.0			87.5

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

Page 7

AMERICAN FINANCIAL GROUP, INC.

SPECIALTY P&C OPERATIONS

(Dollars in Millions)


	Three months ended March 31,						Pct. Change
	2016			2015

Gross written premiums	$	1,243		$	1,196			4	%


Net written premiums	$	979		$	926			6	%


Ratios (GAAP):
Loss & LAE ratio		58.3	%		60.8	%
Underwriting expense ratio		33.0	%		32.8	%


Specialty Combined Ratio		91.3	%		93.6	%


Supplemental Information:^(e)
Gross Written Premiums:
Property & Transportation	$	398		$	376			6	%
Specialty Casualty		698			683			2	%
Specialty Financial		147			137			7	%

	$	1,243		$	1,196			4	%


Net Written Premiums:
Property & Transportation	$	311		$	288			8	%
Specialty Casualty		519			501			4	%
Specialty Financial		125			115			9	%
Other		24			22			9	%

	$	979		$	926			6	%


Combined Ratio (GAAP):
Property & Transportation		90.6	%		97.7	%
Specialty Casualty		94.3	%		94.2	%
Specialty Financial		82.6	%		81.7	%

Aggregate Specialty Group		91.3	%		93.6	%

	Three months ended March 31,
	2016			2015
Reserve Development (Favorable)/Adverse:
Property & Transportation	$	(17	)	$	3
Specialty Casualty		(4	)		—
Specialty Financial		(4	)		(9	)
Other		(2	)		(1	)

	$	(27	)	$	(7	)

Points on Combined Ratio:
Property & Transportation		(5.2	)		1.1
Specialty Casualty		(0.7	)		—
Specialty Financial		(3.3	)		(7.3	)

Aggregate Specialty Group		(2.7	)		(0.8	)

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

Page 8

AMERICAN FINANCIAL GROUP, INC.

ANNUITY SEGMENT

(Dollars in Millions)

Components of Statutory Premiums


	Three months ended March 31,				Pct. Change
	2016		2015

Annuity Premiums:
Financial Institutions Single Premium	$	653	$	394		66	%
Retail Single Premium		566		361		57	%
Education Market		57		47		21	%
Variable Annuities		9		11		(18	%)

Total Annuity Premiums	$	1,285	$	813		58	%

Components of Core Operating Earnings Before Income Taxes


	Three months ended March 31,				Pct. Change
	2016		2015
Revenues:
Net investment income	$	315	$	292		8	%
Other income		26		27		(4	%)

Total revenues		341		319		7	%

Costs and Expenses:
Annuity benefits		228		184		24	%
Acquisition expenses		34		37		(8	%)
Other expenses		26		23		13	%

Total costs and expenses		288		244		18	%

Core operating earnings before income taxes	$	53	$	75		(29	%)

Supplemental Fixed Annuity Information


	Three months ended March 31,						Pct. Change
	2016			2015
Core operating earnings before impact of fair value accounting on FIAs	$	84		$	92			(9	%)
Impact of fair value accounting		(31	)		(17	)		nm


Core operating earnings before income taxes	$	53		$	75			(29	%)


Average Fixed Annuity Reserves*	$	26,935		$	23,752			13	%

Net Interest Spread		2.54	%		2.67	%
Net Spread Earned before impact of fair value accounting*		1.20	%		1.49	%
Net Spread Earned after impact of fair value accounting		0.74	%		1.21	%

*	Excludes fixed annuity portion of variable annuity business.

Page 9

AMERICAN FINANCIAL GROUP, INC.

Notes to Financial Schedules

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


	Three months ended March 31,
	2016			2015
Core Operating Earnings before Income Taxes:
P&C insurance segment	$	158		$	129
Annuity segment, before impact of fair value accounting		84			92
Impact of fair value accounting		(31	)		(17	)
Run-off long-term care and life segment		(1	)		4
Interest & other corporate expense		(40	)		(41	)


Core operating earnings before income taxes		170			167
Related income taxes		59			55


Core net operating earnings	$	111		$	112

b)	Excluding the impact of the loss on the sale of the long term care business that was recorded in the first quarter of 2015, AFG’s effective tax rate for the three months ended March 31, 2015 was 32%.

December 2015 and prior periods have been adjusted for adoption of FASB Accounting Standard Update 2015-03, which impacted the presentation of debt issue costs and long-term debt. The impact of this adjustment was to reduce the carrying value of long-term debt on AFG’s balance sheet by $22 million at December 31, 2015, from amounts originally reported. Adjustments to the income statement were less than $1 million for the three months ended March 31, 2015.

d)	Shareholders’ Equity at March 31, 2016 includes $426 million ($4.90 per share) in unrealized after-tax gains on fixed maturities. Shareholder’s Equity at December 31, 2015 includes $278 million ($3.17 per share) in unrealized after-tax gains on fixed maturities.

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 10

Exhibit 99.2

American Financial Group, Inc.

Investor Supplement - First Quarter 2016

May 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 - First Quarter 2016


Section	Page

Table of Contents - Investor Supplement - First Quarter 2016		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
	03/31/16			12/31/15			09/30/15			06/30/15			03/31/15			12/31/15			12/31/14

Highlights
Core net operating earnings	$	111		$	136		$	123		$	115		$	112		$	486		$	439
Net earnings		101			129			63			141			19			352			452
Total assets		51,038			49,837			50,540			49,403			48,285			49,837			47,513
Adjusted shareholders’ equity (a)		4,329			4,314			4,279			4,345			4,267			4,314			4,277
Property and Casualty net written premiums		979			1,056			1,319			1,026			926			4,327			4,020
Annuity statutory premiums		1,285			1,107			1,321			899			813			4,140			3,696

Per share data
Core net operating earnings per share	$	1.25		$	1.52		$	1.38		$	1.28		$	1.25		$	5.44		$	4.82
Diluted earnings per share		1.14			1.45			0.71			1.57			0.21			3.94			4.97
Adjusted book value per share (a)		49.77			49.33			49.01			49.63			48.55			49.33			48.76

Cash dividends per common share		0.280			1.280			0.250			0.250			0.250			2.030			1.910

Financial ratios
Annualized core operating return on equity (b)		10.3	%		12.7	%		11.6	%		10.9	%		10.8	%		11.5	%		10.7	%
Annualized return on equity (b)		9.4	%		12.1	%		5.9	%		13.4	%		1.8	%		8.3	%		11.0	%

Property and Casualty combined ratio - Specialty:
Loss & LAE ratio		58.3	%		61.8	%		64.5	%		61.0	%		60.8	%		62.2	%		63.7	%
Underwriting expense ratio		33.0	%		29.2	%		28.4	%		33.9	%		32.8	%		30.9	%		30.2	%

Combined ratio - Specialty		91.3	%		91.0	%		92.9	%		94.9	%		93.6	%		93.1	%		93.9	%


Net spread on fixed annuities:
Net interest spread		2.54	%		2.53	%		2.80	%		2.77	%		2.67	%		2.69	%		2.78	%
Net spread earned:
Before impact of fair value accounting		1.20	%		1.31	%		1.37	%		1.21	%		1.49	%		1.35	%		1.56	%
Impact of fair value accounting (c)		(0.46	%)		0.08	%		(0.35	%)		0.18	%		(0.28	%)		(0.09	%)		(0.15	%)

After impact of fair value accounting		0.74	%		1.39	%		1.02	%		1.39	%		1.21	%		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
	03/31/16			12/31/15			09/30/15			06/30/15			03/31/15			12/31/15			12/31/14
Property and Casualty Insurance
Underwriting profit	$	87		$	100		$	82		$	50		$	60		$	292		$	236
Net investment income		83			74			83			83			79			319			294
Other expense		(12	)		(11	)		(12	)		(12	)		(10	)		(45	)		(54	)

Property and Casualty Insurance operating earnings		158			163			153			121			129			566			476

Annuity earnings		53			101			67			88			75			331			328
Run-off Long-Term Care and Life (losses)/earnings		(1	)		—			6			4			4			14			(10	)
Interest expense of parent holding companies (a)		(18	)		(16	)		(18	)		(20	)		(19	)		(73	)		(70	)
Other expense (a)		(22	)		(29	)		(19	)		(19	)		(22	)		(89	)		(73	)

Pre-tax core operating earnings		170			219			189			174			167			749			651

Income tax expense		59			83			66			59			55			263			212

Core net operating earnings		111			136			123			115			112			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)		(10	)		(14	)		(6	)		—			12			(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	$	101		$	129		$	63		$	141		$	19		$	352		$	452

(a)	December 2015 and prior periods have been adjusted for adoption of FASB Accounting Standard Update 2015-03, which impacted the presentation of debt issue costs and long-term debt.

American Financial Group, Inc.

Earnings Per Share Summary

(in millions, except per share information)


	Three Months Ended														Twelve Months Ended
	03/31/16			12/31/15			09/30/15			06/30/15		03/31/15			12/31/15			12/31/14

Core net operating earnings	$	111		$	136		$	123		$	115	$	112		$	486		$	439


Net earnings	$	101		$	129		$	63		$	141	$	19		$	352		$	452


Average number of diluted shares		88.488			89.228			89.343			89.503		89.377			89.362			90.960

Diluted earnings per share:
Core net operating earnings per share	$	1.25		$	1.52		$	1.38		$	1.28	$	1.25		$	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)		(0.11	)		(0.15	)		(0.06	)		—		0.14			(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	$	1.14		$	1.45		$	0.71		$	1.57	$	0.21		$	3.94		$	4.97

American Financial Group, Inc.

Property and Casualty Insurance - Summary Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	03/31/16			12/31/15			09/30/15			06/30/15			03/31/15			12/31/15			12/31/14

Property and Transportation	$	32		$	34		$	20		$	(13	)	$	7		$	48		$	21
Specialty Casualty		29			50			31			37			28			146			136
Specialty Financial		23			15			26			24			22			87			64
Other Specialty		2			1			7			3			3			14			16

Underwriting profit - Specialty		86			100			84			51			60			295			237

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

Underwriting profit - Core		87			100			82			50			60			292			236

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

Underwriting profit - Property and Casualty Insurance	$	87		$	100		$	15		$	50		$	60		$	225		$	212


Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe loss		8			9			10			10			6			35			28

Total current accident year catastrophe losses	$	8		$	9		$	10		$	10		$	6		$	35		$	28


Prior year loss reserve development (favorable) / adverse	$	(28	)	$	(5	)	$	55		$	(10	)	$	(7	)	$	33		$	6


Combined ratio:
Property and Transportation		90.6	%		92.4	%		96.2	%		104.0	%		97.7	%		96.9	%		98.7	%
Specialty Casualty		94.3	%		90.2	%		93.8	%		92.7	%		94.2	%		92.7	%		92.3	%
Specialty Financial		82.6	%		88.7	%		80.6	%		81.0	%		81.7	%		83.1	%		86.5	%
Other Specialty		89.7	%		97.1	%		67.3	%		88.0	%		89.3	%		85.5	%		83.4	%
Combined ratio - Specialty		91.3	%		91.0	%		92.9	%		94.9	%		93.6	%		93.1	%		93.9	%

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

Combined ratio		91.2	%		91.0	%		98.7	%		94.9	%		93.7	%		94.7	%		94.5	%


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


Loss and LAE components - property and casualty insurance
Current accident year, excluding catastrophe loss		60.2	%		61.4	%		64.8	%		61.1	%		61.0	%		62.2	%		63.5	%
Prior accident year loss reserve development		(2.8	%)		(0.4	%)		4.6	%		(1.1	%)		(0.7	%)		0.8	%		0.1	%
Current accident year catastrophe loss		0.8	%		0.8	%		0.9	%		1.0	%		0.6	%		0.8	%		0.7	%

Loss and LAE ratio		58.2	%		61.8	%		70.3	%		61.0	%		60.9	%		63.8	%		64.3	%

American Financial Group, Inc.

Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	03/31/16			12/31/15			09/30/15			06/30/15			03/31/15			12/31/15			12/31/14

Gross written premiums	$	1,243		$	1,356		$	1,962		$	1,318		$	1,196		$	5,832		$	5,477
Ceded reinsurance premiums		(264	)		(300	)		(643	)		(292	)		(270	)		(1,505	)		(1,457	)

Net written premiums		979			1,056			1,319			1,026			926			4,327			4,020
Change in unearned premiums		19			64			(146	)		(41	)		20			(103	)		(142	)

Net earned premiums		998			1,120			1,173			985			946			4,224			3,878

Loss and LAE		582			693			756			600			576			2,625			2,469
Underwriting expense		330			327			333			334			310			1,304			1,172

Underwriting profit	$	86		$	100		$	84		$	51		$	60		$	295		$	237


Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe loss		8			9			10			10			6			35			28

Total current accident year catastrophe losses	$	8		$	9		$	10		$	10		$	6		$	35		$	28


Prior year loss reserve development (favorable) / adverse	$	(27	)	$	(5	)	$	(14	)	$	(11	)	$	(7	)	$	(37	)	$	(19	)


Combined ratio:
Loss and LAE ratio		58.3	%		61.8	%		64.5	%		61.0	%		60.8	%		62.2	%		63.7	%
Underwriting expense ratio		33.0	%		29.2	%		28.4	%		33.9	%		32.8	%		30.9	%		30.2	%

Combined ratio		91.3	%		91.0	%		92.9	%		94.9	%		93.6	%		93.1	%		93.9	%


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


Loss and LAE components:
Current accident year, excluding catastrophe loss		60.2	%		61.4	%		64.8	%		61.1	%		61.0	%		62.2	%		63.5	%
Prior accident year loss reserve development		(2.7	%)		(0.4	%)		(1.2	%)		(1.1	%)		(0.8	%)		(0.8	%)		(0.5	%)
Current accident year catastrophe loss		0.8	%		0.8	%		0.9	%		1.0	%		0.6	%		0.8	%		0.7	%

Loss and LAE ratio		58.3	%		61.8	%		64.5	%		61.0	%		60.8	%		62.2	%		63.7	%

American Financial Group, Inc.

Property and Transportation - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	03/31/16			12/31/15			09/30/15			06/30/15			03/31/15			12/31/15			12/31/14

Gross written premiums	$	398		$	515		$	1,064		$	500		$	376		$	2,455		$	2,342
Ceded reinsurance premiums		(87	)		(137	)		(456	)		(138	)		(88	)		(819	)		(776	)

Net written premiums		311			378			608			362			288			1,636			1,566
Change in unearned premiums		28			64			(91	)		(35	)		25			(37	)		(22	)

Net earned premiums		339			442			517			327			313			1,599			1,544

Loss and LAE		211			317			391			240			211			1,159			1,155
Underwriting expense		96			91			106			100			95			392			368

Underwriting profit (loss)	$	32		$	34		$	20		$	(13	)	$	7		$	48		$	21


Included in results above:
Current accident year catastrophe losses:
Catastrophe reinstatement premium	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe loss		6			3			7			7			4			21			20

Total current accident year catastrophe losses	$	6		$	3		$	7		$	7		$	4		$	21		$	20


Prior year loss reserve development (favorable) / adverse	$	(17	)	$	8		$	(2	)	$	6		$	3		$	15		$	16


Combined ratio:
Loss and LAE ratio		62.2	%		71.7	%		75.7	%		73.2	%		67.5	%		72.4	%		74.9	%
Underwriting expense ratio		28.4	%		20.7	%		20.5	%		30.8	%		30.2	%		24.5	%		23.8	%

Combined ratio		90.6	%		92.4	%		96.2	%		104.0	%		97.7	%		96.9	%		98.7	%


Combined ratio excl. catastrophe and prior year development		94.1	%		89.9	%		95.1	%		100.2	%		95.4	%		94.7	%		96.4	%


Loss and LAE components:
Current accident year, excluding catastrophe loss		65.7	%		69.2	%		74.6	%		69.4	%		65.2	%		70.2	%		72.6	%
Prior accident year loss reserve development		(5.2	%)		1.8	%		(0.4	%)		1.7	%		1.1	%		0.9	%		1.0	%
Current accident year catastrophe loss		1.7	%		0.7	%		1.5	%		2.1	%		1.2	%		1.3	%		1.3	%

Loss and LAE ratio		62.2	%		71.7	%		75.7	%		73.2	%		67.5	%		72.4	%		74.9	%

American Financial Group, Inc.

Specialty Casualty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	03/31/16			12/31/15			09/30/15			06/30/15			03/31/15			12/31/15			12/31/14

Gross written premiums	$	698		$	661		$	734		$	661		$	683		$	2,739		$	2,529
Ceded reinsurance premiums		(179	)		(158	)		(189	)		(158	)		(182	)		(687	)		(665	)

Net written premiums		519			503			545			503			501			2,052			1,864
Change in unearned premiums		(17	)		12			(42	)		—			(11	)		(41	)		(99	)

Net earned premiums		502			515			503			503			490			2,011			1,765

Loss and LAE		313			315			323			311			316			1,265			1,107
Underwriting expense		160			150			149			155			146			600			522

Underwriting profit	$	29		$	50		$	31		$	37		$	28		$	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	$	(4	)	$	(7	)	$	3		$	(7	)	$	—		$	(11	)	$	(7	)


Combined ratio:
Loss and LAE ratio		62.4	%		61.1	%		64.2	%		61.9	%		64.4	%		62.9	%		62.7	%
Underwriting expense ratio		31.9	%		29.1	%		29.6	%		30.8	%		29.8	%		29.8	%		29.6	%

Combined ratio		94.3	%		90.2	%		93.8	%		92.7	%		94.2	%		92.7	%		92.3	%


Combined ratio excl. catastrophe and prior year development		94.9	%		91.4	%		92.9	%		94.0	%		93.9	%		93.0	%		92.5	%


Loss and LAE components:
Current accident year, excluding catastrophe loss		63.0	%		62.3	%		63.3	%		63.2	%		64.1	%		63.2	%		62.9	%
Prior accident year loss reserve development		(0.7	%)		(1.4	%)		0.6	%		(1.4	%)		0.0	%		(0.5	%)		(0.4	%)
Current accident year catastrophe loss		0.1	%		0.2	%		0.3	%		0.1	%		0.3	%		0.2	%		0.2	%

Loss and LAE ratio		62.4	%		61.1	%		64.2	%		61.9	%		64.4	%		62.9	%		62.7	%

American Financial Group, Inc.

Specialty Financial - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	03/31/16			12/31/15			09/30/15			06/30/15			03/31/15			12/31/15			12/31/14

Gross written premiums	$	147		$	179		$	164		$	157		$	137		$	637		$	605
Ceded reinsurance premiums		(22	)		(27	)		(27	)		(21	)		(22	)		(97	)		(117	)

Net written premiums		125			152			137			136			115			540			488
Change in unearned premiums		7			(15	)		(6	)		(7	)		5			(23	)		(19	)

Net earned premiums		132			137			131			129			120			517			469

Loss and LAE		45			46			36			36			36			154			159
Underwriting expense		64			76			69			69			62			276			246

Underwriting profit	$	23		$	15		$	26		$	24		$	22		$	87		$	64


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

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


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


Combined ratio:
Loss and LAE ratio		34.0	%		32.8	%		27.7	%		27.7	%		30.4	%		29.7	%		33.9	%
Underwriting expense ratio		48.6	%		55.9	%		52.9	%		53.3	%		51.3	%		53.4	%		52.6	%

Combined ratio		82.6	%		88.7	%		80.6	%		81.0	%		81.7	%		83.1	%		86.5	%


Combined ratio excl. catastrophe and prior year development		84.8	%		88.8	%		85.8	%		85.2	%		88.5	%		87.1	%		89.5	%


Loss and LAE components:
Current accident year, excluding catastrophe loss		36.2	%		32.9	%		32.9	%		31.9	%		37.2	%		33.7	%		36.9	%
Prior accident year loss reserve development		(3.3	%)		(3.6	%)		(5.8	%)		(6.2	%)		(7.3	%)		(5.7	%)		(3.7	%)
Current accident year catastrophe loss		1.1	%		3.5	%		0.6	%		2.0	%		0.5	%		1.7	%		0.7	%

Loss and LAE ratio		34.0	%		32.8	%		27.7	%		27.7	%		30.4	%		29.7	%		33.9	%

American Financial Group, Inc.

Other Specialty - Underwriting Results (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	03/31/16			12/31/15			09/30/15			06/30/15			03/31/15			12/31/15			12/31/14

Gross written premiums	$	—		$	1		$	—		$	—		$	—		$	1		$	1
Ceded reinsurance premiums		24			22			29			25			22			98			101

Net written premiums		24			23			29			25			22			99			102
Change in unearned premiums		1			3			(7	)		1			1			(2	)		(2	)

Net earned premiums		25			26			22			26			23			97			100

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

Underwriting profit	$	2		$	1		$	7		$	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	$	(2	)	$	(1	)	$	(7	)	$	(2	)	$	(1	)	$	(11	)	$	(11	)


Combined ratio:
Loss and LAE ratio		52.1	%		61.0	%		29.4	%		52.4	%		54.4	%		49.4	%		47.9	%
Underwriting expense ratio		37.6	%		36.1	%		37.9	%		35.6	%		34.9	%		36.1	%		35.5	%

Combined ratio		89.7	%		97.1	%		67.3	%		88.0	%		89.3	%		85.5	%		83.4	%


Combined ratio excl. catastrophe and prior year development		96.0	%		98.1	%		97.6	%		93.2	%		96.6	%		96.4	%		92.8	%

American Financial Group, Inc.

Annuity Earnings (GAAP)

($ in millions)


	Three Months Ended													Twelve Months Ended
	03/31/16			12/31/15		09/30/15			06/30/15		03/31/15			12/31/15			12/31/14

Net investment income	$	315		$	309	$	317		$	306	$	292		$	1,224		$	1,136
Guaranteed withdrawal benefit fees		12			12		11			10		10			43			34
Policy charges and other miscellaneous income		14			11		13			14		17			55			63


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

Annuity benefits expense		228			189		208			151		184			732			648
Acquisition expenses		34			20		44			62		37			163			175
Other expenses		26			22		22			29		23			96			82


Total costs and expenses		288			231		274			242		244			991			905


Core Annuity earnings before income taxes	$	53		$	101	$	67		$	88	$	75		$	331		$	328


Detail of core Annuity earnings before income taxes
Core earnings before income taxes and impact of fair value accounting	$	84		$	96	$	89		$	77	$	92		$	354		$	362
Impact of fair value accounting (a)		(31	)		5		(22	)		11		(17	)		(23	)		(34	)

Core Annuity earnings before income taxes	$	53		$	101	$	67		$	88	$	75		$	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
	03/31/16		12/31/15			09/30/15			06/30/15			03/31/15			12/31/15			12/31/14

Detail of annuity benefits expense:
Interest credited - fixed	$	139	$	138		$	135		$	131		$	128		$	532		$	497
Interest credited - fixed component of variable annuities		1		1			2			2			1			6			6
Change in expected death and annuitization reserve		5		5			5			5			4			19			18
Amortization of sales inducements		5		6			6			7			7			26			26
Guaranteed withdrawal benefit reserve (a)		16		15			20			16			12			63			41
Change in other benefit reserves		5		5			3			12			2			22			12
Unlockings (b)		—		19			—			—			—			19			(11	)

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

Embedded derivative mark-to-market (c)		17		88			(130	)		(19	)		50			(11	)		240
Equity option mark-to-market		40		(88	)		167			(3	)		(20	)		56			(181	)

Subtotal impact of fair value accounting		57		—			37			(22	)		30			45			59


Total annuity benefits expense	$	228	$	189		$	208		$	151		$	184		$	732		$	648

(a)	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. In total, AFG recorded an unlocking expense reduction of $10 million and $1 million in 2015 and 2014, respectively.

(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
	03/31/16			12/31/15			09/30/15			06/30/15			03/31/15			12/31/15			12/31/14

Average fixed annuity investments (at amortized cost)	$	27,186		$	26,401		$	25,642		$	24,711		$	23,943		$	25,174		$	22,391
Average annuity benefits accumulated		26,935			26,048			25,316			24,474			23,752			24,898			22,119

Investments in excess of annuity benefits accumulated	$	251		$	353		$	326		$	237		$	191		$	276		$	272


As % of average annuity benefits accumulated (except as noted)
Net investment income (as % of investments)		4.60	%		4.65	%		4.92	%		4.91	%		4.83	%		4.83	%		5.03	%
Interest credited		(2.06	%)		(2.12	%)		(2.12	%)		(2.14	%)		(2.16	%)		(2.14	%)		(2.25	%)

Net interest spread on fixed annuities		2.54	%		2.53	%		2.80	%		2.77	%		2.67	%		2.69	%		2.78	%

Policy charges and other miscellaneous income		0.16	%		0.15	%		0.16	%		0.17	%		0.24	%		0.18	%		0.18	%
Other annuity benefit expenses, net		(0.27	%)		(0.31	%)		(0.36	%)		(0.49	%)		(0.25	%)		(0.35	%)		(0.28	%)
Acquisition expenses		(0.47	%)		(0.75	%)		(0.65	%)		(0.98	%)		(0.59	%)		(0.74	%)		(0.67	%)
Other expenses		(0.38	%)		(0.32	%)		(0.34	%)		(0.43	%)		(0.36	%)		(0.36	%)		(0.34	%)
Change in fair value of derivatives		(0.84	%)		0.02	%		(0.59	%)		0.35	%		(0.50	%)		(0.18	%)		(0.27	%)
Unlockings		0.00	%		0.07	%		0.00	%		0.00	%		0.00	%		0.02	%		0.01	%

Net spread earned on fixed annuities - core		0.74	%		1.39	%		1.02	%		1.39	%		1.21	%		1.26	%		1.41	%


Average annuity benefits accumulated	$	26,935		$	26,048		$	25,316		$	24,474		$	23,752		$	24,898		$	22,119
Net spread earned on fixed annuities		0.74	%		1.39	%		1.02	%		1.39	%		1.21	%		1.26	%		1.41	%

Earnings on fixed annuity benefits accumulated	$	50		$	91		$	65		$	85		$	72		$	313		$	312

Investments in excess of annuity benefits accumulated	$	251		$	353		$	326		$	237		$	191		$	276		$	272
Net investment income (as % of investments)		4.60	%		4.65	%		4.92	%		4.91	%		4.83	%		4.83	%		5.03	%

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

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

Earnings before income taxes - core	$	53		$	101		$	67		$	88		$	75		$	331		$	328


Detail of net spread earned on fixed annuities - core
Net spread earned core - before impact of fair value accounting		1.20	%		1.31	%		1.37	%		1.21	%		1.49	%		1.35	%		1.56	%
Impact of fair value accounting (a)		(0.46	%)		0.08	%		(0.35	%)		0.18	%		(0.28	%)		(0.09	%)		(0.15	%)

Net spread earned core - after impact of fair value accounting		0.74	%		1.39	%		1.02	%		1.39	%		1.21	%		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
	03/31/16		12/31/15		09/30/15		06/30/15		03/31/15		12/31/15		12/31/14

Retail single premium annuities - indexed	$	546	$	494	$	617	$	404	$	349	$	1,864	$	1,533
Retail single premium annuities - fixed		20		18		22		18		12		70		101
Financial institutions single premium annuities - indexed		534		462		554		369		356		1,741		1,489
Financial institutions single premium annuities - fixed		119		72		71		48		38		229		332
Education market - fixed and indexed annuities		57		51		47		49		47		194		194

Subtotal fixed annuity premiums		1,276		1,097		1,311		888		802		4,098		3,649

Variable annuities		9		10		10		11		11		42		47

Total annuity premiums	$	1,285	$	1,107	$	1,321	$	899	$	813	$	4,140	$	3,696

American Financial Group, Inc.

Fixed Annuity Benefits Accumulated (GAAP)

($ in millions)


	Three Months Ended															Twelve Months Ended
	03/31/16			12/31/15			09/30/15			06/30/15			03/31/15			12/31/15			12/31/14

Beginning fixed annuity reserves	$	26,371		$	25,725		$	24,906		$	24,042		$	23,462		$	23,462		$	20,679
Premiums		1,276			1,097			1,311			888			802			4,098			3,649
Federal Home Loan Bank advances		150			45			—			300			—			345			—
Surrenders, benefits and other withdrawals		(483	)		(515	)		(526	)		(471	)		(420	)		(1,932	)		(1,673	)
Sale of subsidiaries		—			(261	)		—			—			—			(261	)		—
Interest and other annuity benefit expenses:
Interest credited		139			138			135			131			128			532			497
Embedded derivative mark-to-market		17			88			(130	)		(19	)		50			(11	)		240
Change in other benefit reserves		29			31			29			35			20			115			81
Unlockings		—			23			—			—			—			23			(11	)

Ending fixed annuity reserves	$	27,499		$	26,371		$	25,725		$	24,906		$	24,042		$	26,371		$	23,462


Reconciliation to annuity benefits accumulated:
Ending fixed annuity reserves	$	27,499		$	26,371		$	25,725		$	24,906		$	24,042		$	26,371		$	23,462
Impact of unrealized investment gains on reserves		127			64			113			107			179			64			111
Fixed component of variable annuities		186			187			188			190			190			187			191

Annuity benefits accumulated per balance sheet	$	27,812		$	26,622		$	26,026		$	25,203		$	24,411		$	26,622		$	23,764


Annualized surrenders and other withdrawals as a % of beginning reserves		7.3	%		8.0	%		8.4	%		7.8	%		7.2	%		8.2	%		8.1	%

American Financial Group, Inc.

Consolidated Balance Sheet

($ in millions)


	03/31/16			12/31/15			09/30/15			06/30/15			03/31/15			12/31/14
Assets:
Total cash and investments	$	39,437		$	37,736		$	38,132		$	37,644		$	37,384		$	36,210
Recoverables from reinsurers		2,561			2,636			3,151			3,075			3,046			3,238
Prepaid reinsurance premiums		475			480			604			499			475			469
Agents’ balances and premiums receivable		936			937			976			959			864			889
Deferred policy acquisition costs		1,055			1,184			993			965			756			821
Assets of managed investment entities		3,906			4,047			3,613			3,629			3,279			3,108
Other receivables		693			820			1,241			660			641			910
Variable annuity assets (separate accounts)		595			608			595			655			667			662
Other assets (a)		1,181			1,190			1,034			1,116			972			1,005
Goodwill		199			199			201			201			201			201

Total assets	$	51,038		$	49,837		$	50,540		$	49,403		$	48,285		$	47,513


Liabilities and Equity:
Unpaid losses and loss adjustment expenses	$	8,108		$	8,127		$	8,061		$	7,744		$	7,636		$	7,872
Unearned premiums		2,051			2,060			2,238			2,004			1,936			1,956
Annuity benefits accumulated		27,812			26,622			26,026			25,203			24,411			23,764
Life, accident and health reserves		708			705			2,159			2,156			2,195			2,175
Payable to reinsurers		501			591			724			511			494			645
Liabilities of managed investment entities		3,656			3,781			3,287			3,309			2,952			2,819
Long-term debt (a)		998			998			863			1,003			1,039			1,039
Variable annuity liabilities (separate accounts)		595			608			595			655			667			662
Other liabilities		1,672			1,575			1,681			1,834			1,855			1,527

Total liabilities	$	46,101		$	45,067		$	45,634		$	44,419		$	43,185		$	42,459

Shareholders’ equity:
Common stock	$	87		$	87		$	87		$	88		$	88		$	88
Capital surplus		1,218			1,214			1,195			1,183			1,173			1,152
Appropriated retained earnings		—			—			—			—			—			(2	)
Unappropriated retained earnings		3,002			2,987			2,981			2,968			2,886			2,914
Unrealized gains - fixed maturities		426			278			445			457			656			604
Unrealized gains - equities		40			54			44			130			143			139
Other comprehensive income, net of tax		(18	)		(28	)		(28	)		(24	)		(23	)		(16	)

Total shareholders’ equity		4,755			4,592			4,724			4,802			4,923			4,879

Noncontrolling interests		182			178			182			182			177			175

Total liabilities and equity	$	51,038		$	49,837		$	50,540		$	49,403		$	48,285		$	47,513

(a)	December 2015 and prior periods have been adjusted for adoption of FASB Accounting Standard Update 2015-03, which impacted the presentation of debt issue costs and long-term debt.

American Financial Group, Inc.

Book Value Per Share and Price / Book Summary

(in millions, except per share information)


	03/31/16			12/31/15			09/30/15			06/30/15			03/31/15			12/31/14

Shareholders’ equity	$	4,755		$	4,592		$	4,724		$	4,802		$	4,923		$	4,879
Appropriated retained earnings		—			—			—			—			—			2

Shareholders’ equity, excluding appropriated retained earnings		4,755			4,592			4,724			4,802			4,923			4,881
Unrealized (gains) on fixed maturities		(426	)		(278	)		(445	)		(457	)		(656	)		(604	)

Adjusted shareholders’ equity		4,329			4,314			4,279			4,345			4,267			4,277
Goodwill		(199	)		(199	)		(201	)		(201	)		(201	)		(201	)
Intangibles		(47	)		(49	)		(51	)		(53	)		(55	)		(57	)

Tangible adjusted shareholders’ equity	$	4,083		$	4,066		$	4,027		$	4,091		$	4,011		$	4,019


Common shares outstanding		86.966			87.474			87.327			87.540			87.886			87.709

Book value per share:
Excluding appropriated retained earnings (a)	$	54.67		$	52.50		$	54.10		$	54.86		$	56.01		$	55.65
Adjusted (b)		49.77			49.33			49.01			49.63			48.55			48.76
Tangible, adjusted (c)		46.94			46.49			46.12			46.73			45.63			45.82

Market capitalization

AFG’s closing common share price	$	70.37		$	72.08		$	68.91		$	65.04		$	64.15		$	60.72

Market capitalization	$	6,120		$	6,305		$	6,018		$	5,694		$	5,638		$	5,326

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

(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)


	03/31/16			12/31/15			09/30/15			06/30/15			03/31/15			12/31/14

AFG senior obligations (a)	$	708		$	708		$	708		$	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		$	720		$	852		$	852		$	852

AFG subordinated debentures		300			300			150			150			150			150
Obligations of subsidiaries - secured by real estate		—			—			10			22			59			59

Total principal amount of long-term debt	$	1,020		$	1,020		$	880		$	1,024		$	1,061		$	1,061

Shareholders’ equity		4,755			4,592			4,724			4,802			4,923			4,879
Noncontrolling interests		182			178			182			182			177			175
Less:
Appropriated retained earnings		—			—			—			—			—			2
Unrealized gains related to fixed maturity investments		(426	)		(278	)		(445	)		(457	)		(656	)		(604	)

Total adjusted capital	$	5,531		$	5,512		$	5,341		$	5,551		$	5,505		$	5,513


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

Total adjusted capital excluding obligations secured by real estate	$	5,531		$	5,512		$	5,331		$	5,529		$	5,446		$	5,454


Ratio of debt to total adjusted capital:
Including subordinated debt & debt secured by real estate		18.4	%		18.5	%		16.5	%		18.4	%		19.3	%		19.2	%
Excluding subordinated debt & debt secured by real estate		13.0	%		13.1	%		13.5	%		15.4	%		15.6	%		15.6	%

(a)	December 2015 and prior periods have been adjusted for adoption of FASB Accounting Standard Update 2015-03, which impacted the presentation of debt issue costs and long-term debt.

American Financial Group, Inc.

Additional Supplemental Information

($ in millions)


	Three Months Ended										Twelve Months Ended
	03/31/16		12/31/15		09/30/15		06/30/15		03/31/15		12/31/15		12/31/14
Property and Casualty Insurance

Paid Losses (GAAP)	$	547	$	675	$	585	$	526	$	617	$	2,403	$	2,130


	03/31/16		12/31/15		09/30/15		06/30/15		03/31/15		12/31/2014
Statutory Surplus

Property and Casualty Insurance	$	2,574	$	2,488	$	2,356	$	2,399	$	2,340	$	2,286

AFG’s principal annuity subsidiaries (total adjusted capital)	$	2,032	$	1,918	$	1,816	$	1,911	$	1,861	$	1,822

Allowable dividends without regulatory approval

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

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

American Financial Group, Inc.

Total Cash and Investments

($ in millions)


	Carrying Value - March 31, 2016
	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	$	727	$	305		$	199	$	—		$	1,231		3	%
Fixed maturities - Available for sale		7,021		26,886			14		—			33,921		85	%
Fixed maturities - Trading		134		115			—		—			249		1	%
Equity securities		1,107		495			46		—			1,648		4	%
Policy loans		—		198			—		—			198		1	%
Mortgage loans		198		899			—		—			1,097		3	%
Real estate and other investments		479		845			17		(248	)		1,093		3	%

Total cash and investments	$	9,666	$	29,743		$	276	$	(248	)	$	39,437		100	%


Unrealized gain/(loss) on equity securities	$	56	$	5		$	—				$	61

	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

American Financial Group, Inc.

Net Investment Income

($ in millions)


	Three Months Ended															Twelve Months Ended
	03/31/16			12/31/15			09/30/15			06/30/15			03/31/15			12/31/15			12/31/14
Property and Casualty Insurance:
Gross Investment Income
Fixed maturities - Available for sale	$	64		$	63		$	62		$	62		$	61		$	248		$	223
Fixed maturities - Trading		1			—			—			—			4			4			8
Equity securities		13			14			12			12			10			48			40
Equity in investees		6			(1	)		7			3			1			10			8
Other investments		1			—			4			8			5			17			22

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

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


Average cash and investments (a)	$	9,366		$	9,113		$	8,984		$	8,956		$	8,775		$	8,956		$	7,849


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

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

Gross investment income		315			309			318			306			292			1,225			1,130
Investment expenses		(3	)		(2	)		(3	)		(2	)		(3	)		(10	)		(4	)

Total net investment income	$	312		$	307		$	315		$	304		$	289		$	1,215		$	1,126


Average cash and investments (a)	$	27,186		$	26,401		$	25,642		$	24,711		$	23,943		$	25,174		$	22,391


Average yield (b)		4.60	%		4.65	%		4.92	%		4.91	%		4.83	%		4.83	%		5.03	%

AFG consolidated net investment income:
Property & Casualty	$	83		$	74		$	83		$	83		$	79		$	319		$	294
Annuity and Run-off:
Fixed Annuity		312			307			315			304			289			1,215			1,126
Variable Annuity		3			2			2			2			3			9			10
Run-off		5			19			20			21			20			80			82
Other		1			3			2			(1	)		—			4			6
Consolidate CLOs		7			11			3			(5	)		(3	)		6			(17	)

Total net investment income	$	411		$	416		$	425		$	404		$	388		$	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)


March 31, 2016	Amortized Cost			Fair Value		Unrealized Gain (Loss)			% of Fair Value			% of Investment Portfolio
US Government and government agencies	$	345		$	350	$	5			1	%		1	%
States, municipalities and political subdivisions		6,720			7,081		361			21	%		18	%
Foreign government		214			222		8			1	%		1	%
Residential mortgage-backed securities		3,513			3,777		264			11	%		10	%
Commercial mortgage-backed securities		2,046			2,136		90			6	%		5	%
Asset-backed securities		5,172			5,130		(42	)		15	%		13	%
Corporate and other bonds		14,988			15,474		486			45	%		38	%

Total AFG consolidated	$	32,998		$	34,170	$	1,172			100	%		86	%


Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.52	%
Net of investment expense (a)		4.47	%

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

(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)


	March 31, 2016											December 31, 2015
	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	$	282		$	286	$	4			4	%	$	255		$	257	$	2			4	%
States, municipalities and political subdivisions		2,799			2,901		102			40	%		2,807			2,891		84			42	%
Foreign government		203			209		6			3	%		213			219		6			3	%
Residential mortgage-backed securities		1,017			1,050		33			15	%		893			932		39			13	%
Commercial mortgage-backed securities		205			210		5			3	%		209			213		4			3	%
Asset-backed securities		1,503			1,488		(15	)		21	%		1,453			1,442		(11	)		21	%
Corporate and other bonds		1,007			1,011		4			14	%		979			970		(9	)		14	%

Property and Casualty Insurance	$	7,016		$	7,155	$	139			100	%	$	6,809		$	6,924	$	115			100	%


Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		3.76	%										3.82	%
Net of investment expense (a)		3.66	%										3.71	%
Tax equivalent, net of investment expense (b)		4.23	%										4.31	%

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

	March 31, 2016											December 31, 2015
	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	$	61		$	62	$	1			0	%	$	62		$	62	$	—			0	%
States, municipalities and political subdivisions		3,921			4,180		259			16	%		3,864			3,994		130			15	%
Foreign government		11			13		2			0	%		12			13		1			0	%
Residential mortgage-backed securities		2,495			2,715		220			10	%		2,347			2,590		243			10	%
Commercial mortgage-backed securities		1,841			1,926		85			7	%		1,903			1,975		72			8	%
Asset-backed securities		3,669			3,642		(27	)		13	%		3,508			3,492		(16	)		14	%
Corporate and other bonds		13,981			14,463		482			54	%		13,311			13,474		163			53	%

Total Annuity and Run-off	$	25,979		$	27,001	$	1,022			100	%	$	25,007		$	25,600	$	593			100	%


Annualized yield on available for sale fixed maturities:
Excluding investment expense (a)		4.73	%										4.98	%
Net of investment expense (a)		4.69	%										4.94	%

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


	March 31, 2016
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value
Investment grade
AAA	$	6,577	$	6,776	$	199			20	%
AA		6,893		7,197		304			21	%
A		7,954		8,265		311			24	%
BBB		7,684		7,886		202			23	%

Subtotal - Investment grade		29,108		30,124		1,016			88	%

BB		957		919		(38	)		3	%
B		485		453		(32	)		1	%
Other (b)		2,448		2,674		226			8	%

Subtotal - Non-Investment grade		3,890		4,046		156			12	%

Total	$	32,998	$	34,170	$	1,172			100	%

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


	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			22	%
A		7,780		7,969		189			25	%
BBB		7,478		7,507		29			23	%

Subtotal - Investment grade		28,562		29,085		523			90	%

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

Subtotal - Non-Investment grade		3,257		3,453		196			10	%

Total	$	31,819	$	32,538	$	719			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 page 28 and 29 for more information.

American Financial Group, Inc.

Mortgage-Backed Securities - AFG Consolidated

($ in millions)


March 31, 2016	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Investment Portfolio
Residential
Agency	$	203	$	209	$	6		4	%		1	%
Prime (Non-Agency)		1,566		1,721		155		29	%		4	%
Alt-A		991		1,060		69		18	%		3	%
Subprime		753		787		34		13	%		2	%
Commercial		2,046		2,136		90		36	%		5	%

Total AFG consolidated	$	5,559	$	5,913	$	354		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 78%; Subprime 85%; CMBS 99%.

•

The average FICO score of our residential MBS securities is - Prime 740; Alt-A 712; Subprime 640.

•

99% of our Commercial MBS portfolio is investment-grade rated (84% AAA) and the average subordination for this group of assets is 40%.

•

The approximate average life by collateral type is - Residential 5 years; Commercial 3 years.


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	%

American Financial Group, Inc.

Mortgage-Backed Securities Portfolio

($ in millions)


Property and Casualty Insurance:	March 31, 2016
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Inv Portfolio
Residential
Agency	$	144	$	148	$	4		12	%		2	%
Prime (Non-Agency)		244		255		11		20	%		3	%
Alt-A		320		333		13		26	%		3	%
Subprime		309		314		5		25	%		3	%
Commercial		205		210		5		17	%		2	%

Total	$	1,222	$	1,260	$	38		100	%		13	%


	December 31, 2015
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Inv 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	%


Annuity and Run-off:	March 31, 2016
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Inv Portfolio
Residential
Agency	$	59	$	61	$	2		1	%		0	%
Prime (Non-Agency)		1,321		1,454		133		31	%		5	%
Alt-A		671		727		56		16	%		2	%
Subprime		444		473		29		10	%		2	%
Commercial		1,841		1,926		85		42	%		6	%

Total	$	4,336	$	4,641	$	305		100	%		15	%


	December 31, 2015
By Asset Type	Amortized Cost		Fair Value		Unrealized Gain (Loss)		% of Fair Value			% of Inv 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	%

American Financial Group, Inc.

Mortgage-Backed Securities - Credit Rating

($ in millions)


	March 31, 2016
By Credit Rating (a)	Amortized Cost		Fair Value		Unrealized Gain (Loss)			% of Fair Value
Investment grade
AAA	$	2,255	$	2,357	$	102			40	%
AA		254		261		7			5	%
A		354		372		18			6	%
BBB		230		246		16			4	%

Subtotal - investment grade		3,093		3,236		143			55	%

BB		281		282		1			5	%
B		312		311		(1	)		5	%
Other		1,873		2,084		211			35	%

Total	$	5,559	$	5,913	$	354			100	%

98% of the mortgage-backed security portfolio has an NAIC 1 designation.


	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.

(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 - March 31, 2016
By Credit Rating (a)	US Gov		Munis		Frgn gov		RMBS		CMBS		ABS		Corp/Oth		Total		% Total
Investment grade
AAA	$	301	$	1,698	$	140	$	561	$	1,796	$	2,086	$	194	$	6,776		20	%
AA		46		4,621		22		168		93		1,283		964		7,197		21	%
A		—		546		60		202		170		1,304		5,983		8,265		24	%
BBB		—		92		—		197		49		410		7,138		7,886		23	%

Subtotal - Investment grade		347		6,957		222		1,128		2,108		5,083		14,279		30,124		88	%

BB		—		4		—		260		22		14		619		919		3	%
B		—		8		—		305		6		2		132		453		1	%
CCC, CC, C		—		8		—		936		—		4		32		980		3	%
D		—		—		—		753		—		—		3		756		2	%

Subtotal - Non-Investment grade		—		20		—		2,254		28		20		786		3,108		9	%

Not Rated		3		104		—		395		—		27		409		938		3	%


Total	$	350	$	7,081	$	222	$	3,777	$	2,136	$	5,130	$	15,474	$	34,170		100	%


	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	%

(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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