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Acquisitions and Sale of Businesses (Tables) | 9 Months Ended
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Sep. 30, 2020
Business Combinations [Abstract] |
Information on sale of Neon | The impact of Neon exited lines on AFG’s net earnings for the three months ended September 30, 2020 is shown below (in millions):
Underwriting gain (loss) | $ | (38) |
Net investment income | 1 |
Other income and expenses, net | (3) |
Pretax loss from operations | (40) |
Estimated loss on sale of subsidiaries | (30) |
Total pretax loss from Neon exited lines | (70) |
Tax benefit related to sale of subsidiaries | 73
Net earnings from Neon exited lines | $ | 3 |
The estimated loss on the pending sale of Neon, which was recorded in AFG’s financial statements as of September 30, 2020, is shown below (in millions):
Estimated sale proceeds, net of expenses | $ | 4 |
Assets of businesses to be sold: |
Cash and investments | $ | 461 |
Recoverables from reinsurers | 198 |
Prepaid reinsurance premiums | 30 |
Agents’ balances and premiums receivable | 48 |
Other assets | 73 |
Total assets | 810 |
Liabilities of businesses to be sold: |
Unpaid losses and loss adjustment expenses | 598 |
Unearned premiums | 83 |
Payable to reinsurers | 39 |
Other liabilities | 47 |
Total liabilities | 767 |
Reclassify accumulated other comprehensive income | (9) |
Net assets of businesses to be sold | $ | 34 |
Pretax loss on subsidiaries recorded in the third quarter of 2020 | $ | (30) |
Revenues, costs and expenses, and earnings before income taxes for the subsidiaries to be sold were (in millions):
| Three months ended September 30, |  | Nine months ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Net earned premiums | $ | 42 |  |  | $ | 97 |  |  | $ | 174 |  |  | $ | 274 |
Loss and loss adjustment expenses | 60 |  |  | 66 |  |  | 166 |  |  | 172 |
Commissions and other underwriting expenses | 20 |  |  | 50 |  |  | 90 |  |  | 135 |
Underwriting loss | (38) |  |  | (19) |  |  | (82) |  |  | (33) |
Net investment income | 1 |  |  | 2 |  |  | (5) |  |  | 5 |
Other income and expenses, net | (3) |  |  | (3) |  |  | (5) |  |  | (8) |
Loss before income taxes and noncontrolling interests | $ | (40) |  |  | $ | (20) |  |  | $ | (92) |  |  | $ | (36) |
As discussed in Note L — “Income Taxes,” the pending sale of Neon allowed AFG to recognize a $73 million tax benefit.

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