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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Reconciliation of income taxes at the statutory rate and income taxes shown in the Statement of Earnings

The following is a reconciliation of income taxes at the statutory rate of 35% to the provision for income taxes as shown in AFG’s Statement of Earnings (dollars in millions):

	2017							2016							2015
	Amount				% of EBT			Amount				% of EBT			Amount				% of EBT
Earnings before income taxes (“EBT”)	$	724						$	787						$	565
Income taxes at statutory rate	$	253			35	%		$	275			35	%		$	198			35	%
Effect of:
Tax exempt interest	(23		)		(3	%)		(24		)		(3	%)		(27		)		(5	%)
Dividend received deduction	(8		)		(1	%)		(7		)		(1	%)		(8		)		(1	%)
Stock-based compensation	(16		)		(2	%)		(9		)		(1	%)		1				—	%
Employee stock ownership plan dividend paid deduction	(5		)		(1	%)		(2		)		—	%		(1		)		—	%
Foreign operations	21				3	%		5				—	%		3				1	%
Change in valuation allowance (excluding change in tax rate)	(7		)		(1	%)		52				7	%		23				4	%
Subsidiaries not in AFG’s tax return	—				—	%		3				—	%		2				—	%
Neon restructuring	(56		)		(8	%)		(111		)		(14	%)		—				—	%
Change in U.S corporate tax rate	83				11	%		—				—	%		—				—	%
Acquisition of noncontrolling interest in NATL	—				—	%		(66		)		(8	%)		—				—	%
Other	5				1	%		3				—	%		4				1	%
Provision for income taxes as shown in the statement of earnings	$	247			34	%		$	119			15	%		$	195			35	%

Components of income tax provision (credit)

The total income tax provision (credit) consists of (in millions):

	2017				2016				2015
Current taxes:
Federal	$	153			$	299			$	216
State	6				12				8
Deferred taxes:
Federal	5				(192		)		(29		)
Impact of change in U.S. corporate tax rate	83				—				—
Total Federal deferred taxes	88				(192		)		(29		)
Provision for income taxes	$	247			$	119			$	195

Summary of operating loss carryforwards

For income tax purposes, AFG and its subsidiaries had the following carryforwards available at December 31, 2017 (in millions):

	Expiring		Amount
Operating Loss – U.S.	2018 - 2022		$	130
Operating Loss – United Kingdom	indefinite		252			(*)
Capital Loss – U.S.	2022		109

(*) £186 million

Components of deferred tax assets and liabilities

Deferred income tax assets and liabilities reflect temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes. The significant components of deferred tax assets and liabilities included in AFG’s Balance Sheet at December 31 were as follows (in millions):

	2017												2016
	Excluding Unrealized Gains				Impact of Unrealized Gains				Total				Excluding Unrealized Gains				Impact of Unrealized Gains				Total
Deferred tax assets:
Federal net operating loss carryforwards	$	27			$	—			$	27			$	50			$	—			$	50
Foreign underwriting losses	80				—				80				120				—				120
Capital loss carryforwards	32				—				32				83				—				83
Insurance claims and reserves	665				29				694				774				27				801
Employee benefits	84				—				84				131				—				131
Other, net	48				(3		)		45				85				(5		)		80
Total deferred tax assets before valuation allowance	936				26				962				1,243				22				1,265
Valuation allowance against deferred tax assets	(109		)		—				(109		)		(173		)		—				(173		)
Total deferred tax assets	827				26				853				1,070				22				1,092
Deferred tax liabilities:
Investment securities	(1		)		(340		)		(341		)		29				(336		)		(307		)
Deferred policy acquisition costs	(293		)		91				(202		)		(448		)		96				(352		)
Insurance claims and reserves transition liability	(128		)		—				(128		)		—				—				—
Real estate, property and equipment	(35		)		—				(35		)		(45		)		—				(45		)
Total deferred tax liabilities	(457		)		(249		)		(706		)		(464		)		(240		)		(704		)
Net deferred tax asset (liability)	$	370			$	(223	)		$	147			$	606			$	(218	)		$	388

Progression of the liability for uncertain tax positions, excluding interest and penalties

A progression of the liability for uncertain tax positions, excluding interest and penalties, follows (in millions):

	2017				2016				2015
Balance at January 1	$	1			$	1			$	—
Additions for tax positions of prior years	—				—				1
Reductions for tax positions of prior years	—				—				—
Additions for tax positions of current year	—				—				—
Settlements	(1		)		—				—
Balance at December 31	$	—			$	1			$	1

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure for tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities and other income tax contingencies. Includes, but is not limited to, interest and penalties, reconciliation of unrecognized tax benefits, unrecognized tax benefits that would affect the effective tax rate, tax years that remain subject to examination by tax jurisdictions, and information about positions for which it is reasonably possible that amounts unrecognized will significantly change within 12 months.

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