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Fair Value Measurements | 3 Months Ended
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Mar. 31, 2026
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements Accounting standards for measuring fair value are based on inputs used in estimating fair value. The three levels of the hierarchy are as follows: Level 1 — Quoted prices for identical assets or liabilities in active markets (markets in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis). AFG’s Level 1 financial instruments consist primarily of publicly traded equity securities, highly liquid government bonds for which quoted market prices in active markets are available and short-term investments of managed investment entities. Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar assets or liabilities in inactive markets (markets in which there are few transactions, the prices are not current, price quotations vary substantially over time or among market makers, or in which little information is released publicly); and valuations based on other significant inputs that are observable in active markets. AFG’s Level 2 financial instruments consist primarily of fixed maturity securities and investments of managed investment entities priced using observable inputs. Level 2 inputs include benchmark yields, reported trades, corroborated broker/dealer quotes, issuer spreads and benchmark securities. When non-binding broker quotes can be corroborated by comparison to similar securities priced using observable inputs, they are classified as Level 2. Level 3 — Valuations derived from market valuation techniques generally consistent with those used to estimate the fair values of Level 2 financial instruments in which one or more significant inputs are unobservable or when the market for a security exhibits significantly less liquidity relative to markets supporting Level 2 fair value measurements. The unobservable inputs may include management’s own assumptions about the assumptions market participants would use based on the best information available at the valuation date. Financial instruments whose fair value is estimated based on non-binding broker quotes or internally developed using significant inputs not based on, or corroborated by, observable market information are classified as Level 3. As discussed in Note A — “Accounting Policies — Managed Investment Entities,” AFG has set the carrying value of its CLO liabilities equal to the fair value of the CLO assets (which have more observable fair values) as an alternative to reporting those liabilities at separately measured fair values. As a result, the CLO liabilities are categorized within the fair value hierarchy on the same basis (proportionally) as the related CLO assets. Since the portion of the CLO liabilities allocated to Level 3 is derived from the fair value of the CLO assets, these amounts are excluded from the progression of Level 3 financial instruments. AFG’s management is responsible for the valuation process and uses data from outside sources (including nationally recognized pricing services and broker/dealers) in establishing fair value. AFG’s internal investment group includes approximately 25 investment professionals whose primary responsibility is to manage AFG’s investment portfolio. These professionals monitor individual investments as well as overall industries and are active in the financial markets on a daily basis. The group is led by AFG’s chief investment officer, who reports directly to one of AFG’s Co-CEOs. Valuation techniques utilized by pricing services and prices obtained from external sources are reviewed by AFG’s internal investment professionals who are familiar with the securities being priced and the markets in which they trade to ensure the fair value determination is representative of an exit price. To validate the appropriateness of the prices obtained, these investment managers consider widely published indices (as benchmarks), recent trades, changes in interest rates, general economic conditions and the credit quality of the specific issuers. In addition, AFG communicates directly with the pricing services regarding the methods and assumptions used in pricing, including verifying, on a test basis, the inputs used by the service to value specific securities. Assets and liabilities measured and carried at fair value in the financial statements are summarized below (in millions):
| Level 1 |  | Level 2 |  | Level 3 |  | Total
March 31, 2026 |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |
Available for sale (“AFS”) fixed maturities: |  |  |  |  |  |  |
U.S. government and government agencies | $ | 146 |  |  | $ | 4 |  |  | $ | — |  |  | $ | 150 |
States, municipalities and political subdivisions | — |  |  | 785 |  |  | 6 |  |  | 791 |
Foreign government | — |  |  | 237 |  |  | — |  |  | 237 |
Residential MBS | — |  |  | 3,157 |  |  | 3 |  |  | 3,160 |
Collateralized loan obligations | — |  |  | 1,180 |  |  | — |  |  | 1,180 |
Other asset-backed securities | — |  |  | 2,219 |  |  | 356 |  |  | 2,575 |
Corporate and other | 1 |  |  | 2,923 |  |  | 380 |  |  | 3,304 |
Total AFS fixed maturities | 147 |  |  | 10,505 |  |  | 745 |  |  | 11,397 |
Trading fixed maturities | — |  |  | 67 |  |  | 13 |  |  | 80 |
Equity securities | 461 |  |  | 50 |  |  | 242 |  |  | 753 |
Assets of managed investment entities (“MIE”) | 168 |  |  | 3,804 |  |  | 15 |  |  | 3,987 |
Other assets — derivatives | — |  |  | 1 |  |  | — |  |  | 1 |
Total assets accounted for at fair value | $ | 776 |  |  | $ | 14,427 |  |  | $ | 1,015 |  |  | $ | 16,218 |
Liabilities: |  |  |  |  |  |  |
Contingent consideration — acquisitions | $ | — |  |  | $ | — |  |  | $ | 3 |  |  | $ | 3 |
Liabilities of managed investment entities | 163 |  |  | 3,676 |  |  | 15 |  |  | 3,854 |
Other liabilities — derivatives | — |  |  | 11 |  |  | — |  |  | 11 |
Total liabilities accounted for at fair value | $ | 163 |  |  | $ | 3,687 |  |  | $ | 18 |  |  | $ | 3,868 |
December 31, 2025 |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |
Available for sale fixed maturities: |  |  |  |  |  |  |
U.S. government and government agencies | $ | 157 |  |  | $ | 4 |  |  | $ | — |  |  | $ | 161 |
States, municipalities and political subdivisions | — |  |  | 831 |  |  | 4 |  |  | 835 |
Foreign government | — |  |  | 238 |  |  | — |  |  | 238 |
Residential MBS | — |  |  | 2,744 |  |  | 3 |  |  | 2,747 |
Collateralized loan obligations | — |  |  | 1,160 |  |  | — |  |  | 1,160 |
Other asset-backed securities | — |  |  | 2,215 |  |  | 310 |  |  | 2,525 |
Corporate and other | 1 |  |  | 2,990 |  |  | 395 |  |  | 3,386 |
Total AFS fixed maturities | 158 |  |  | 10,182 |  |  | 712 |  |  | 11,052 |
Trading fixed maturities | — |  |  | 66 |  |  | 25 |  |  | 91 |
Equity securities | 478 |  |  | 51 |  |  | 256 |  |  | 785 |
Assets of managed investment entities | 310 |  |  | 3,725 |  |  | 15 |  |  | 4,050 |
Other assets — derivatives | — |  |  | 1 |  |  | — |  |  | 1 |
Total assets accounted for at fair value | $ | 946 |  |  | $ | 14,025 |  |  | $ | 1,008 |  |  | $ | 15,979 |
Liabilities: |  |  |  |  |  |  |
Contingent consideration — acquisitions | $ | — |  |  | $ | — |  |  | $ | 3 |  |  | $ | 3 |
Liabilities of managed investment entities | 298 |  |  | 3,594 |  |  | 15 |  |  | 3,907 |
Other liabilities — derivatives | — |  |  | 3 |  |  | — |  |  | 3 |
Total liabilities accounted for at fair value | $ | 298 |  |  | $ | 3,597 |  |  | $ | 18 |  |  | $ | 3,913 |
Approximately 6% of the total assets carried at fair value at March 31, 2026, were Level 3 assets. Internally developed prices for fixed maturities are estimated using a variety of inputs, including appropriate credit spreads over the treasury yield (of a similar duration), trade information and prices of comparable securities and other security specific features (such as optional early redemption). Internally developed Level 3 asset fair values represent approximately 88% ($894 million) of the total fair value of Level 3 assets at March 31, 2026. Approximately 68% ($612 million) of these internally developed Level 3 assets are priced using a pricing model that uses a discounted cash flow approach to estimate the fair value of fixed maturity securities. The credit spread applied by management is the significant unobservable input of the pricing model. In instances where the security is currently callable at par value and the pricing model suggests a higher price, management caps the fair value at par value. The remainder of the internally developed Level 3 investments ($282 million) are priced using internal models or inputs from third parties that are not market observable. Management believes that any justifiable changes in unobservable inputs used to determine internally developed fair values would not have resulted in a material change in AFG’s financial position. Approximately 9% ($92 million) of the Level 3 assets were investments whose prices were determined based on financial information provided by third party asset managers. Approximately 3% ($29 million) of Level 3 assets were priced using non-binding broker quotes or pricing services, for which there is a lack of transparency as to the inputs used to determine fair value. Changes in balances of Level 3 financial assets and liabilities carried at fair value during the first three months of 2026 and 2025 are presented below (in millions). The transfers into and out of Level 3 were due to changes in the availability of market observable inputs. All transfers are reflected in the table at fair value as of the end of the reporting period.
|  |  | Total realized/unrealized gains (losses) included in |  |  |  |  |  |  |  |  |  |
Balance at December 31, 2025 |  | Net earnings |  | Other comprehensive income (loss) |  | Purchases and issuances |  | Sales and settlements |  | Transfer into Level 3 |  | Transfer out of Level 3 |  | Balance at March 31, 2026
AFS fixed maturities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State and municipal | $ | 4 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2 |  |  | $ | — |  |  | $ | 6 |
Residential MBS | 3 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3 |
Other asset-backed securities | 310 |  |  | — |  |  | — |  |  | 29 |  |  | (10) |  |  | 27 |  |  | — |  |  | 356 |
Corporate and other | 395 |  |  | (4) |  |  | — |  |  | 18 |  |  | (37) |  |  | 8 |  |  | — |  |  | 380 |
Total AFS fixed maturities | 712 |  |  | (4) |  |  | — |  |  | 47 |  |  | (47) |  |  | 37 |  |  | — |  |  | 745 |
Trading fixed maturities | 25 |  |  | 1 |  |  | — |  |  | — |  |  | (13) |  |  | — |  |  | — |  |  | 13 |
Equity securities | 256 |  |  | (14) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 242 |
Assets of MIE | 15 |  |  | (1) |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | 15 |
Total Level 3 assets | $ | 1,008 |  |  | $ | (18) |  |  | $ | — |  |  | $ | 48 |  |  | $ | (60) |  |  | $ | 37 |  |  | $ | — |  |  | $ | 1,015 |
Contingent consideration — acquisitions | $ | (3) |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (3) |
Total Level 3 liabilities | $ | (3) |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (3) |
|  |  | Total realized/unrealized gains (losses) included in |  |  |  |  |  |  |  |  |  |
Balance at December 31, 2024 |  | Net earnings |  | Other comprehensive income (loss) |  | Purchases and issuances |  | Sales and settlements |  | Transfer into Level 3 |  | Transfer out of Level 3 |  | Balance at March 31, 2025
AFS fixed maturities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State and municipal | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 3 |  |  | $ | — |  |  | $ | 4 |
Residential MBS | 1 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1 |
Collateralized loan obligations | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Other asset-backed securities | 296 |  |  | — |  |  | 2 |  |  | 10 |  |  | (27) |  |  | — |  |  | — |  |  | 281 |
Corporate and other | 470 |  |  | (6) |  |  | 4 |  |  | 14 |  |  | (14) |  |  | 1 |  |  | (7) |  |  | 462 |
Total AFS fixed maturities | 768 |  |  | (6) |  |  | 6 |  |  | 24 |  |  | (41) |  |  | 4 |  |  | (7) |  |  | 748 |
Trading fixed maturities | 26 |  |  | 1 |  |  | — |  |  | — |  |  | (14) |  |  | — |  |  | — |  |  | 13 |
Equity securities | 292 |  |  | (2) |  |  | — |  |  | 13 |  |  | — |  |  | — |  |  | (6) |  |  | 297 |
Assets of MIE | 10 |  |  | (1) |  |  | — |  |  | 3 |  |  | — |  |  | — |  |  | — |  |  | 12 |
Total Level 3 assets | $ | 1,096 |  |  | $ | (8) |  |  | $ | 6 |  |  | $ | 40 |  |  | $ | (55) |  |  | $ | 4 |  |  | $ | (13) |  |  | $ | 1,070 |
Contingent consideration — acquisitions | $ | (2) |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | (1) |
Total Level 3 liabilities | $ | (2) |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | (1) |
Fair Value of Financial Instruments The carrying value and fair value of financial instruments that are not carried at fair value in the financial statements are summarized below (in millions):
| Carrying Value |  | Fair Value
|  | Total |  | Level 1 |  | Level 2 |  | Level 3
March 31, 2026 |  |  |  |  |  |  |  |  |
Financial assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 1,353 |  |  | $ | 1,353 |  |  | $ | 1,353 |  |  | $ | — |  |  | $ | — |
Mortgage loans | 961 |  |  | 953 |  |  | — |  |  | — |  |  | 953 |
Total financial assets not accounted for at fair value | $ | 2,314 |  |  | $ | 2,306 |  |  | $ | 1,353 |  |  | $ | — |  |  | $ | 953 |
Long-term debt | $ | 1,820 |  |  | $ | 1,552 |  |  | $ | — |  |  | $ | 1,549 |  |  | $ | 3 |
Total financial liabilities not accounted for at fair value | $ | 1,820 |  |  | $ | 1,552 |  |  | $ | — |  |  | $ | 1,549 |  |  | $ | 3 |
December 31, 2025 |  |  |  |  |  |  |  |  |
Financial assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 1,727 |  |  | $ | 1,727 |  |  | $ | 1,727 |  |  | $ | — |  |  | $ | — |
Mortgage loans | 947 |  |  | 937 |  |  | — |  |  | — |  |  | 937 |
Total financial assets not accounted for at fair value | $ | 2,674 |  |  | $ | 2,664 |  |  | $ | 1,727 |  |  | $ | — |  |  | $ | 937 |
Long-term debt | $ | 1,820 |  |  | $ | 1,609 |  |  | $ | — |  |  | $ | 1,606 |  |  | $ | 3 |
Total financial liabilities not accounted for at fair value | $ | 1,820 |  |  | $ | 1,609 |  |  | $ | — |  |  | $ | 1,606 |  |  | $ | 3 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (bbb)(1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 3: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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