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Quarterly Operating Results (Unaudited) | 12 Months Ended
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Dec. 31, 2020
Quarterly Financial Information Disclosure [Abstract] |
Quarterly Operating Results (Unaudited) | Quarterly Operating Results (Unaudited) The operations of certain AFG business segments are seasonal in nature. While insurance premiums are recognized on a relatively level basis, claim losses related to adverse weather (snow, hail, hurricanes, severe storms, tornadoes, etc.) may be seasonal. The profitability of AFG’s crop insurance business is primarily recognized during the second half of the year as crop prices and yields are determined. Quarterly results necessarily rely heavily on estimates. These estimates and certain other factors, such as the discretionary sales of assets, cause the quarterly results not to be necessarily indicative of results for longer periods of time. The following are quarterly results of consolidated operations for the two years ended December 31, 2020 (in millions, except per share amounts). Quarterly earnings per share do not add to year-to-date amounts due to changes in shares outstanding.
| 1st Quarter |  | 2nd Quarter |  | 3rd Quarter |  | 4th Quarter |  | Total Year
2020 |  |  |  |  |  |  |  |  |
Revenues | $ | 1,275 |  |  | $ | 1,951 |  |  | $ | 2,060 |  |  | $ | 2,623 |  |  | $ | 7,909 |
Net earnings (loss), including noncontrolling interests | (304) |  |  | 167 |  |  | 164 |  |  | 694 |  |  | 721 |
Net earnings (loss) attributable to shareholders | (301) |  |  | 177 |  |  | 164 |  |  | 692 |  |  | 732 |
Earnings (loss) attributable to shareholders per Common Share: |  |  |  |  |  |  |  |  |
Basic | $ | (3.34) |  |  | $ | 1.98 |  |  | $ | 1.86 |  |  | $ | 7.99 |  |  | $ | 8.25 |
Diluted | (3.34) |  |  | 1.97 |  |  | 1.86 |  |  | 7.93 |  |  | 8.20 |
Average number of Common Shares: |  |  |  |  |  |  |  |  |
Basic | 90.3 |  |  | 89.7 |  |  | 88.2 |  |  | 86.6 |  |  | 88.7 |
Diluted | 90.3 |  |  | 90.0 |  |  | 88.5 |  |  | 87.2 |  |  | 89.2 |
2019 |  |  |  |  |  |  |  |  |
Revenues | $ | 2,024 |  |  | $ | 1,960 |  |  | $ | 2,123 |  |  | $ | 2,130 |  |  | $ | 8,237 |
Net earnings (losses), including noncontrolling interests | 326 |  |  | 209 |  |  | 143 |  |  | 191 |  |  | 869 |
Net earnings (losses) attributable to shareholders | 329 |  |  | 210 |  |  | 147 |  |  | 211 |  |  | 897 |
Earnings (losses) attributable to shareholders per Common Share: |  |  |  |  |  |  |  |  |
Basic | $ | 3.68 |  |  | $ | 2.34 |  |  | $ | 1.64 |  |  | $ | 2.33 |  |  | $ | 9.98 |
Diluted | 3.63 |  |  | 2.31 |  |  | 1.62 |  |  | 2.31 |  |  | 9.85 |
Average number of Common Shares: |  |  |  |  |  |  |  |  |
Basic | 89.4 |  |  | 89.7 |  |  | 90.0 |  |  | 90.2 |  |  | 89.9 |
Diluted | 90.7 |  |  | 91.0 |  |  | 91.1 |  |  | 91.3 |  |  | 91.0 |
Pretax realized gains (losses) on securities were as follows (in millions):
| 1st Quarter |  | 2nd Quarter |  | 3rd Quarter |  | 4th Quarter |  | Total Year
2020 — change in fair value of equity securities | $ | (535) |  |  | $ | 202 |  |  | $ | 30 |  |  | $ | 207 |  |  | $ | (96) |
2020 — other realized gains (losses) | (16) |  |  | 2 |  |  | 15 |  |  | 384 |  |  | 385 |
2019 — change in fair value of equity securities | 182 |  |  | 44 |  |  | (15) |  |  | 67 |  |  | 278 |
2019 — other realized gains (losses) | 2 |  |  | 12 |  |  | (3) |  |  | (2) |  |  | 9 |
Other realized gains in the fourth quarter of 2020 includes realized gains of $369 million (net of DPAC) on investments disposed of in AFG’s annuity block reinsurance transaction. Net investment income, which includes mark-to-market income/(losses) on alternative investments (partnerships and similar investments), was as follows (in millions):
| 1st Quarter |  | 2nd Quarter |  | 3rd Quarter |  | 4th Quarter |  | Total Year
2020 — net investment income before alternative investments | $ | 511 |  |  | $ | 520 |  |  | $ | 511 |  |  | $ | 465 |  |  | $ | 2,007 |
2020 — alternative investments | 33 |  |  | (52) |  |  | 61 |  |  | 83 |  |  | 125 |
2019 — net investment income before alternative investments | 516 |  |  | 531 |  |  | 531 |  |  | 545 |  |  | 2,123 |
2019 — alternative investments | 26 |  |  | 49 |  |  | 57 |  |  | 48 |  |  | 180 |
The decline in net investment income before alternative investments in the fourth quarter of 2020 reflects primarily the disposition of fixed maturity investments in October 2020 related to the block reinsurance transaction. FIAs provide policyholders with a crediting rate tied, in part, to the performance of an existing stock market or other financial index. AFG attempts to mitigate the risk in the index-based component of these products through the purchase and sale of call and put options on the appropriate index. AFG’s strategy is designed so that the change in the fair value of the call and put options will generally offset the economic change in the liabilities from the index participation. Both the index-based component of the annuities and the related call and put options are considered derivatives that must be marked-to-market through earnings each period. Fluctuations in interest rates and the stock market, among other factors, can cause volatility in the periodic measurement of these derivatives and other FIA liabilities over or under the cost of the equity index options purchased to mitigate the risk in the index-based component of those FIAs. The impact of unlocking, changes in the fair value of derivatives related to FIAs, and other impacts of changes in the stock market and interest rates on the accounting for FIAs over or under the cost of the equity index options purchased to mitigate the risk in the index-based component of those FIAs, and beginning with the fourth quarter of 2020, the impact of the block reinsurance transaction entered into in October 2020 were as follows, net of the related acceleration/deceleration of the amortization of deferred policy acquisition costs and deferred sales inducements (in millions):
| 1st Quarter |  | 2nd Quarter |  | 3rd Quarter |  | 4th Quarter |  | Total Year
2020 | $ | (38) |  |  | $ | (59) |  |  | $ | (43) |  |  | $ | (48) |  |  | $ | (188) |
2019 | (11) |  |  | (33) |  |  | (27) |  |  | 24 |  |  | (47) |
Favorable prior year development of AFG’s liability for property and casualty losses and loss adjustment expenses (”LAE”) was as follows (in millions):
| 1st Quarter |  | 2nd Quarter |  | 3rd Quarter |  | 4th Quarter |  | Total Year
2020 | $ | 42 |  |  | $ | 77 |  |  | $ | — |  |  | $ | 8 |  |  | $ | 127 |
2019 | 45 |  |  | 41 |  |  | 12 |  |  | 45 |  |  | 143 |
Prior year development in the third quarters of 2020 and 2019 includes pretax special charges of $47 million and $18 million, respectively, to strengthen property and casualty insurance A&E reserves. AFG’s property and casualty operations recorded catastrophe losses, including reinstatement premiums, as follows (in millions):
| 1st Quarter |  | 2nd Quarter |  | 3rd Quarter |  | 4th Quarter |  | Total Year
2020 | $ | (9) |  |  | $ | (26) |  |  | $ | (57) |  |  | $ | (38) |  |  | $ | (130) |
2019 | (12) |  |  | (12) |  |  | (22) |  |  | (15) |  |  | (61) |
Catastrophe losses include $37 million and $13 million in 2020 and 2019, respectively, at Neon. AFG’s property and casualty operations recorded $10 million and $105 million in COVID-19 related losses in the first and second quarters of 2020, respectively, which includes $20 million at Neon. Results for the third quarter of 2020 and 2019 include pretax special charges of $21 million and $11 million, respectively, to strengthen reserves for A&E exposures related to AFG’s former railroad and manufacturing operations. AFG recorded pretax losses on the retirement of debt of $5 million in both the fourth quarter 2020 and 2019, respectively.

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- Definition The entire disclosure for quarterly financial data. Includes, but is not limited to, tabular presentation of financial information for fiscal quarters, effect of year-end adjustments, and an explanation of matters or transactions that affect comparability of the information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 270 -URI http://asc.fasb.org/topic&trid=2126967 + Details
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