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Investments (Tables) | 9 Months Ended
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Sep. 30, 2017
Investments, Debt and Equity Securities [Abstract] |
Available for sale fixed maturities and equity securities | Available for sale fixed maturities and equity securities at September 30, 2017 and December 31, 2016, consisted of the following (in millions):
| September 30, 2017 |  | December 31, 2016
Amortized Cost |  | Gross Unrealized |  | Net Unrealized |  | Fair Value |  | Amortized Cost |  | Gross Unrealized |  | Net Unrealized |  | Fair Value
Gains |  | Losses |  | Gains |  | Losses
Fixed maturities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government and government agencies | $ | 257 |  |  | $ | 2 |  |  | $ | (2 | ) |  | $ | — |  |  | $ | 257 |  |  | $ | 315 |  |  | $ | 3 |  |  | $ | (3 | ) |  | $ | — |  |  | $ | 315 |
States, municipalities and political subdivisions | 6,761 |  |  | 259 |  |  | (23 | ) |  | 236 |  |  | 6,997 |  |  | 6,650 |  |  | 200 |  |  | (69 | ) |  | 131 |  |  | 6,781 |
Foreign government | 141 |  |  | 3 |  |  | — |  |  | 3 |  |  | 144 |  |  | 131 |  |  | 5 |  |  | — |  |  | 5 |  |  | 136 |
Residential MBS | 3,062 |  |  | 341 |  |  | (7 | ) |  | 334 |  |  | 3,396 |  |  | 3,367 |  |  | 281 |  |  | (13 | ) |  | 268 |  |  | 3,635 |
Commercial MBS | 967 |  |  | 44 |  |  | (1 | ) |  | 43 |  |  | 1,010 |  |  | 1,446 |  |  | 49 |  |  | (2 | ) |  | 47 |  |  | 1,493 |
Asset-backed securities | 7,268 |  |  | 143 |  |  | (15 | ) |  | 128 |  |  | 7,396 |  |  | 5,962 |  |  | 43 |  |  | (46 | ) |  | (3 | ) |  | 5,959 |
Corporate and other | 17,956 |  |  | 699 |  |  | (37 | ) |  | 662 |  |  | 18,618 |  |  | 15,864 |  |  | 473 |  |  | (112 | ) |  | 361 |  |  | 16,225 |
Total fixed maturities | $ | 36,412 |  |  | $ | 1,491 |  |  | $ | (85 | ) |  | $ | 1,406 |  |  | $ | 37,818 |  |  | $ | 33,735 |  |  | $ | 1,054 |  |  | $ | (245 | ) |  | $ | 809 |  |  | $ | 34,544 |
Equity Securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stocks | $ | 830 |  |  | $ | 251 |  |  | $ | (27 | ) |  | $ | 224 |  |  | $ | 1,054 |  |  | $ | 879 |  |  | $ | 160 |  |  | $ | (23 | ) |  | $ | 137 |  |  | $ | 1,016 |
Perpetual preferred stocks | 482 |  |  | 44 |  |  | (1 | ) |  | 43 |  |  | 525 |  |  | 472 |  |  | 21 |  |  | (7 | ) |  | 14 |  |  | 486 |
Total equity securities | $ | 1,312 |  |  | $ | 295 |  |  | $ | (28 | ) |  | $ | 267 |  |  | $ | 1,579 |  |  | $ | 1,351 |  |  | $ | 181 |  |  | $ | (30 | ) |  | $ | 151 |  |  | $ | 1,502 |
Available for sale securities in a continuous unrealized loss position | The following tables show gross unrealized losses (dollars in millions) on fixed maturities and equity securities by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2017 and December 31, 2016.
| Less Than Twelve Months |  | Twelve Months or More
Unrealized Loss |  | Fair Value |  | Fair Value as % of Cost |  | Unrealized Loss |  | Fair Value |  | Fair Value as % of Cost
September 30, 2017 |  |  |  |  |  |  |  |  |  |  |
Fixed maturities: |  |  |  |  |  |  |  |  |  |  |
U.S. Government and government agencies | $ | — |  |  | $ | 97 |  |  | 100 | % |  | $ | (2 | ) |  | $ | 57 |  |  | 97 | %
States, municipalities and political subdivisions | (18 | ) |  | 1,099 |  |  | 98 | % |  | (5 | ) |  | 160 |  |  | 97 | %
Residential MBS | (2 | ) |  | 163 |  |  | 99 | % |  | (5 | ) |  | 189 |  |  | 97 | %
Commercial MBS | (1 | ) |  | 69 |  |  | 99 | % |  | — |  |  | — |  |  | — | %
Asset-backed securities | (7 | ) |  | 828 |  |  | 99 | % |  | (8 | ) |  | 245 |  |  | 97 | %
Corporate and other | (24 | ) |  | 1,744 |  |  | 99 | % |  | (13 | ) |  | 310 |  |  | 96 | %
Total fixed maturities | $ | (52 | ) |  | $ | 4,000 |  |  | 99 | % |  | $ | (33 | ) |  | $ | 961 |  |  | 97 | %
Equity securities: |  |  |  |  |  |  |  |  |  |  |
Common stocks | $ | (27 | ) |  | $ | 141 |  |  | 84 | % |  | $ | — |  |  | $ | — |  |  | — | %
Perpetual preferred stocks | — |  |  | 23 |  |  | 100 | % |  | (1 | ) |  | 13 |  |  | 93 | %
Total equity securities | $ | (27 | ) |  | $ | 164 |  |  | 86 | % |  | $ | (1 | ) |  | $ | 13 |  |  | 93 | %
December 31, 2016 |  |  |  |  |  |  |  |  |  |  |
Fixed maturities: |  |  |  |  |  |  |  |  |  |  |
U.S. Government and government agencies | $ | (1 | ) |  | $ | 153 |  |  | 99 | % |  | $ | (2 | ) |  | $ | 8 |  |  | 80 | %
States, municipalities and political subdivisions | (64 | ) |  | 2,289 |  |  | 97 | % |  | (5 | ) |  | 44 |  |  | 90 | %
Residential MBS | (7 | ) |  | 502 |  |  | 99 | % |  | (6 | ) |  | 162 |  |  | 96 | %
Commercial MBS | (2 | ) |  | 121 |  |  | 98 | % |  | — |  |  | — |  |  | — | %
Asset-backed securities | (29 | ) |  | 1,737 |  |  | 98 | % |  | (17 | ) |  | 634 |  |  | 97 | %
Corporate and other | (93 | ) |  | 3,849 |  |  | 98 | % |  | (19 | ) |  | 312 |  |  | 94 | %
Total fixed maturities | $ | (196 | ) |  | $ | 8,651 |  |  | 98 | % |  | $ | (49 | ) |  | $ | 1,160 |  |  | 96 | %
Equity securities: |  |  |  |  |  |  |  |  |  |  |
Common stocks | $ | (23 | ) |  | $ | 215 |  |  | 90 | % |  | $ | — |  |  | $ | — |  |  | — | %
Perpetual preferred stocks | (6 | ) |  | 135 |  |  | 96 | % |  | (1 | ) |  | 6 |  |  | 86 | %
Total equity securities | $ | (29 | ) |  | $ | 350 |  |  | 92 | % |  | $ | (1 | ) |  | $ | 6 |  |  | 86 | %
Roll forward of cumulative credit portion of other-than-temporary impairments on fixed maturity securities | A progression of the credit portion of other-than-temporary impairments on fixed maturity securities for which the non-credit portion of an impairment has been recognized in other comprehensive income is shown below (in millions):
| 2017 |  | 2016
Balance at June 30 | $ | 145 |  |  | $ | 157 |
Additional credit impairments on: |  |  |
Previously impaired securities | — |  |  | — |
Securities without prior impairments | 3 |  |  | — |
Reductions due to sales or redemptions | (1 | ) |  | (2 | )
Balance at September 30 | $ | 147 |  |  | $ | 155 |
Balance at January 1 | $ | 153 |  |  | $ | 160 |
Additional credit impairments on: |  |  |
Previously impaired securities | 1 |  |  | 2 |
Securities without prior impairments | 3 |  |  | — |
Reductions due to sales or redemptions | (10 | ) |  | (7 | )
Balance at September 30 | $ | 147 |  |  | $ | 155 |
Available for sale fixed maturity securities by contractual maturity date | The table below sets forth the scheduled maturities of available for sale fixed maturities as of September 30, 2017 (dollars in millions). Securities with sinking funds are reported at average maturity. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers.
| Amortized |  | Fair Value
Cost |  | Amount |  | %
Maturity |  |  |  |  |
One year or less | $ | 927 |  |  | $ | 939 |  |  | 2 | %
After one year through five years | 6,521 |  |  | 6,787 |  |  | 18 | %
After five years through ten years | 13,074 |  |  | 13,527 |  |  | 36 | %
After ten years | 4,593 |  |  | 4,763 |  |  | 13 | %
| 25,115 |  |  | 26,016 |  |  | 69 | %
ABS (average life of approximately 5 years) | 7,268 |  |  | 7,396 |  |  | 19 | %
MBS (average life of approximately 4-1/2 years) | 4,029 |  |  | 4,406 |  |  | 12 | %
Total | $ | 36,412 |  |  | $ | 37,818 |  |  | 100 | %
Components of the net unrealized gain on securities, included in Accumulated Other Comprehensive Income | The following table shows (in millions) the components of the net unrealized gain on securities that is included in AOCI in AFG’s Balance Sheet.
| Pretax |  | Deferred Tax |  | Net
September 30, 2017 |  |  |  |  |
Net unrealized gain on: |  |  |  |  |
Fixed maturities — annuity segment (*) | $ | 1,131 |  |  | $ | (396 | ) |  | $ | 735 |
Fixed maturities — all other | 275 |  |  | (96 | ) |  | 179 |
Total fixed maturities | 1,406 |  |  | (492 | ) |  | 914 |
Equity securities | 267 |  |  | (94 | ) |  | 173 |
Total investments | 1,673 |  |  | (586 | ) |  | 1,087 |
Deferred policy acquisition costs — annuity segment | (465 | ) |  | 163 |  |  | (302 | )
Annuity benefits accumulated | (141 | ) |  | 49 |  |  | (92 | )
Unearned revenue | 20 |  |  | (7 | ) |  | 13 |
Total net unrealized gain on marketable securities | $ | 1,087 |  |  | $ | (381 | ) |  | $ | 706 |
December 31, 2016 |  |  |  |  |
Net unrealized gain on: |  |  |  |  |
Fixed maturities — annuity segment (*) | $ | 640 |  |  | $ | (224 | ) |  | $ | 416 |
Fixed maturities — all other | 169 |  |  | (59 | ) |  | 110 |
Total fixed maturities | 809 |  |  | (283 | ) |  | 526 |
Equity securities | 151 |  |  | (53 | ) |  | 98 |
Total investments | 960 |  |  | (336 | ) |  | 624 |
Deferred policy acquisition costs — annuity segment | (273 | ) |  | 96 |  |  | (177 | )
Annuity benefits accumulated | (78 | ) |  | 27 |  |  | (51 | )
Unearned revenue | 13 |  |  | (5 | ) |  | 8 |
Total net unrealized gain on marketable securities | $ | 622 |  |  | $ | (218 | ) |  | $ | 404 |
(*) | Net unrealized gains on fixed maturity investments supporting AFG’s annuity benefits accumulated.
Net investment income earned and investment expenses incurred | The following table shows (in millions) investment income earned and investment expenses incurred.
| Three months ended September 30, |  | Nine months ended September 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
Investment income: |  |  |  |  |  |  |
Fixed maturities | $ | 405 |  |  | $ | 378 |  |  | $ | 1,191 |  |  | $ | 1,126 |
Equity securities | 17 |  |  | 20 |  |  | 57 |  |  | 59 |
Equity in earnings of partnerships and similar investments | 20 |  |  | 16 |  |  | 51 |  |  | 31 |
Other | 33 |  |  | 23 |  |  | 80 |  |  | 64 |
Gross investment income | 475 |  |  | 437 |  |  | 1,379 |  |  | 1,280 |
Investment expenses | (4 | ) |  | (4 | ) |  | (13 | ) |  | (13 | )
Net investment income | $ | 471 |  |  | $ | 433 |  |  | $ | 1,366 |  |  | $ | 1,267 |
Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments | Realized gains (losses) and changes in unrealized appreciation (depreciation) related to fixed maturity and equity security investments are summarized as follows (in millions):
| Three months ended September 30, 2017 |  | Three months ended September 30, 2016
| Realized gains (losses) |  |  |  | Realized gains (losses) |  |
| Before Impairments |  | Impairments |  | Total |  | Change in Unrealized |  | Before Impairments |  | Impairments |  | Total |  | Change in Unrealized
Fixed maturities | $ | 9 |  |  | $ | (15 | ) |  | $ | (6 | ) |  | $ | 133 |  |  | $ | 5 |  |  | $ | (2 | ) |  | $ | 3 |  |  | $ | 52 |
Equity securities | 19 |  |  | (29 | ) |  | (10 | ) |  | 24 |  |  | 14 |  |  | (16 | ) |  | (2 | ) |  | 89 |
Mortgage loans and other investments | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Other (*) | (2 | ) |  | 6 |  |  | 4 |  |  | (53 | ) |  | (1 | ) |  | 2 |  |  | 1 |  |  | (5 | )
Total pretax | 26 |  |  | (38 | ) |  | (12 | ) |  | 104 |  |  | 18 |  |  | (16 | ) |  | 2 |  |  | 136 |
Tax effects | (9 | ) |  | 13 |  |  | 4 |  |  | (37 | ) |  | (7 | ) |  | 5 |  |  | (2 | ) |  | (48 | )
Noncontrolling interests | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 1 |  |  | (1 | )
Net of tax and noncontrolling interests | $ | 17 |  |  | $ | (25 | ) |  | $ | (8 | ) |  | $ | 67 |  |  | $ | 11 |  |  | $ | (10 | ) |  | $ | 1 |  |  | $ | 87 |
| Nine months ended September 30, 2017 |  | Nine months ended September 30, 2016
| Realized gains (losses) |  |  |  | Realized gains (losses) |  |
| Before Impairments |  | Impairments |  | Total |  | Change in Unrealized |  | Before Impairments |  | Impairments |  | Total |  | Change in Unrealized
Fixed maturities | $ | 25 |  |  | $ | (16 | ) |  | $ | 9 |  |  | $ | 597 |  |  | $ | 36 |  |  | $ | (37 | ) |  | $ | (1 | ) |  | $ | 1,089 |
Equity securities | 29 |  |  | (49 | ) |  | (20 | ) |  | 116 |  |  | 46 |  |  | (83 | ) |  | (37 | ) |  | 77 |
Mortgage loans and other investments | 3 |  |  | — |  |  | 3 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Other (*) | (5 | ) |  | 12 |  |  | 7 |  |  | (248 | ) |  | (7 | ) |  | 13 |  |  | 6 |  |  | (478 | )
Total pretax | 52 |  |  | (53 | ) |  | (1 | ) |  | 465 |  |  | 75 |  |  | (107 | ) |  | (32 | ) |  | 688 |
Tax effects | (18 | ) |  | 18 |  |  | — |  |  | (163 | ) |  | (27 | ) |  | 38 |  |  | 11 |  |  | (241 | )
Noncontrolling interests | — |  |  | — |  |  | — |  |  | — |  |  | (1 | ) |  | 3 |  |  | 2 |  |  | (7 | )
Net of tax and noncontrolling interests | $ | 34 |  |  | $ | (35 | ) |  | $ | (1 | ) |  | $ | 302 |  |  | $ | 47 |  |  | $ | (66 | ) |  | $ | (19 | ) |  | $ | 440 |
(*) | Primarily adjustments to deferred policy acquisition costs and reserves related to the annuity business.
Gross realized gains and losses on available for sale fixed maturity and equity security investments | Gross realized gains and losses (excluding impairment write-downs and mark-to-market of derivatives) on available for sale fixed maturity and equity security investment transactions consisted of the following (in millions):
| Nine months ended September 30,
2017 |  | 2016
Fixed maturities: |  |  |
Gross gains | $ | 32 |  |  | $ | 44 |
Gross losses | (4 | ) |  | (8 | )
Equity securities: |  |  |
Gross gains | 36 |  |  | 49 |
Gross losses | (6 | ) |  | (3 | )

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