Segments of Operations

AFG manages its business as three segments: (i) Property and casualty insurance, (ii) Annuity and (iii) Other, which includes holding company costs, revenues and costs of AFG’s limited insurance operations outside of property and casualty insurance and annuities, and operations attributable to the noncontrolling interests of the managed investment entities.

AFG reports its property and casualty insurance business in the following Specialty sub-segments: (i) Property and transportation, which includes physical damage and liability coverage for buses, trucks and recreational vehicles, inland and ocean marine, agricultural-related products and other property coverages, (ii) Specialty casualty, which includes primarily excess and surplus, general liability, executive liability, professional liability, umbrella and excess liability, specialty coverage in targeted markets, customized programs for small to mid-sized businesses and workers’ compensation insurance, and (iii) Specialty financial, which includes risk management insurance programs for leasing and financing institutions (including equipment leasing and collateral and lender-placed mortgage property insurance), surety and fidelity products and trade credit insurance. Premiums and underwriting profit included under Other specialty represent business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty sub-segments and amortization of deferred gains on retroactive reinsurance transactions related to the sales of businesses in prior years. AFG’s annuity business markets traditional fixed, fixed-indexed and variable-indexed annuities in the retail, financial institutions, registered investment advisor and education markets. AFG’s reportable segments and their components were determined based primarily upon similar economic characteristics, products and services. Effective January 1, 2018, the results of AFG’s run-off long-term care and life businesses are included in the “Other” segment instead of as a separate reportable segment based on the immaterial size of the remaining operations. Prior period amounts were reclassified for consistent presentation.

The following tables (in millions) show AFG’s revenues and earnings before income taxes by segment and sub-segment.



	Three months ended September 30,					Nine months ended September 30,
	2018		2017			2018			2017
Revenues
Property and casualty insurance:
Premiums earned:
Specialty
Property and transportation	$	526	$	527		$	1,250		$	1,226
Specialty casualty	616		568			1,790			1,613
Specialty financial	149		142			457			435
Other specialty	36		30			98			80
Total premiums earned	1,327		1,267			3,595			3,354
Net investment income	108		94			323			276
Other income (a)	4		1			8			21
Total property and casualty insurance	1,439		1,362			3,926			3,651
Annuity:
Net investment income	413		375			1,219			1,082
Other income	27		26			80			79
Total annuity	440		401			1,299			1,161
Other	95		84			263			246
Total revenues before realized gains (losses)	1,974		1,847			5,488			5,058
Realized gains (losses) on securities	34		(12		)	(28		)	(1		)
Total revenues	$	2,008	$	1,835		$	5,460		$	5,057



Earnings Before Income Taxes
Property and casualty insurance:
Underwriting:
Specialty
Property and transportation	$	—		$	6		$	56		$	70
Specialty casualty	49			2			119			46
Specialty financial	9			(3		)	46			42
Other specialty	(3		)	4			(1		)	3
Other lines (b)	(17		)	(90		)	(19		)	(92		)
Total underwriting	38			(81		)	201			69
Investment and other income, net (a)	101			87			300			271
Total property and casualty insurance	139			6			501			340
Annuity	117			102			341			283
Other (c)	(46		)	(67		)	(136		)	(165		)
Total earnings before realized gains (losses) and income taxes	210			41			706			458
Realized gains (losses) on securities	34			(12		)	(28		)	(1		)
Total earnings before income taxes	$	244		$	29		$	678		$	457


(a)	Includes income of $13 million (before noncontrolling interest) from the sale of a hotel in the first quarter of 2017.


(b)	Includes special charges of $18 million and $89 million in the third quarter of 2018 and 2017, respectively, to increase asbestos and environmental (“A&E”) reserves.


(c)	Includes holding company interest and expenses, including losses on retirement of debt of $4 million in the third quarter of 2017 and $7 million in the second quarter of 2017, and special charges of $9 million and $24 million in the third quarter of 2018 and 2017, respectively, to increase A&E reserves related to AFG’s former railroad and manufacturing operations.