American Financial Group Inc.

02/25/2026 | Press release | Distributed by Public on 02/25/2026 14:20

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
INDEX TO MD&A
Page Page
Objective
31
Results of Operations
48
Overview
31
General
48
Critical Accounting Policies
32
Results of Operations - Fourth Quarter
50
Liquidity and Capital Resources
32
Segmented Statement of Earnings
50
Ratios
32
Property and Casualty Insurance
51
Condensed Consolidated Cash Flows
32
Holding Company, Other and Unallocated
59
Parent and Subsidiary Liquidity
34
Results of Operations - Full Year
62
Condensed Parent Only Cash Flows
35
Segmented Statement of Earnings
62
Off-Balance Sheet Arrangements
35
Property and Casualty Insurance
64
Investments
36
Holding Company, Other and Unallocated
74
Uncertainties
39
Recent Accounting Standards
77
Managed Investment Entities
45
OBJECTIVE
The objective of Management's Discussion and Analysis is to provide a discussion and analysis of the financial statements and other statistical data that management believes will enhance the understanding of AFG's financial condition, changes in financial condition and results of operations. The tables and narrative that follow are presented in a manner that is consistent with the information that AFG's management uses to make operational decisions and allocate capital resources. They are provided to demonstrate the nature of the transactions and events that could impact AFG's financial results. This discussion should be read in conjunction with the financial statements beginning on page F-1.
OVERVIEW
Financial Condition
AFG is organized as a holding company with almost all of its operations being conducted by subsidiaries. AFG, however, has continuing cash needs for administrative expenses, the payment of principal and interest on borrowings, shareholder dividends and taxes. Therefore, certain analyses are most meaningfully presented on a parent only basis while others are best done on a total enterprise basis. In addition, because its businesses are financial in nature, AFG does not prepare its consolidated financial statements using a current-noncurrent format. Consequently, certain traditional ratios and financial analysis tests are not meaningful.
Results of Operations
Through the operations of its subsidiaries, AFG is engaged primarily in property and casualty insurance, focusing on specialized commercial products for businesses.
AFG reported net earnings of $299 million ($3.58 per share, diluted) for the fourth quarter of 2025 compared to $255 million ($3.03 per share, diluted) for the fourth quarter of 2024, reflecting higher underwriting profit, partially offset by lower net investment income from AFG's alternative investment portfolio.
Full year 2025 net earnings were $842 million ($10.08 per share, diluted) compared to $887 million ($10.57 per share, diluted) in 2024. Higher underwriting profit and the favorable impact of higher yields and average balances on net investment income from fixed income investments were more than offset by lower net investment income from alternative investments.
Outlook
Management expects overall premium growth and strong underwriting results in the current property and casualty insurance market. In addition, management anticipates improved returns on alternative investments relative to the 2.5% earned in 2025 will have a positive impact on net investment income beginning in the second half of 2026.
AFG's financial condition, results of operations and cash flows are impacted by the economic, legal and regulatory environment. Economic inflation, social inflation and other economic conditions may impact premium levels, loss cost trends and investment returns. For a more comprehensive list of risks, see "Item 1A - Risk Factors."
Management believes that AFG's strong financial position and current liquidity and capital at its subsidiaries will give AFG the flexibility to continue to effectively address and respond to anticipated and unanticipated challenges. AFG's insurance subsidiaries continue to have capital at or in excess of the levels required by ratings agencies in order to maintain their current ratings, and the parent company does not have any debt maturities until 2030.
CRITICAL ACCOUNTING POLICIES
Significant accounting policies are summarized in Note A - "Accounting Policies"to the financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that can have a significant effect on amounts reported in the financial statements. As more information becomes known, these estimates and assumptions change and, thus, impact amounts reported in the future. The areas where management believes the degree of judgment required to determine amounts recorded in the financial statements is most significant are as follows:
•the valuation of investments, including the determination of impairment allowances,
•the establishment of insurance reserves, especially asbestos and environmental-related reserves,
•the recoverability of reinsurance, and
•the establishment of asbestos and environmental liabilities of former railroad and manufacturing operations.
See "Liquidity and Capital Resources - Uncertainties"for a discussion of insurance reserves, recoverables from reinsurers and contingencies related to APU Consolidated's former operations and "Liquidity and Capital Resources - Investments"for a discussion of the allowance for credit losses (impairments) on investments.
LIQUIDITY AND CAPITAL RESOURCES
Ratios
AFG's debt to total capital ratio on a consolidated basis is shown below (dollars in millions). Management intends to maintain the ratio of debt to capital at or below 30% and intends to maintain the capital of its significant insurance subsidiaries at or above levels currently indicated by rating agencies as appropriate for the current ratings.
December 31,
2025 2024
Principal amount of long-term debt $ 1,848 $ 1,498
Total capital 6,718 6,204
Ratio of debt to total capital:
Including subordinated debt 27.5 % 24.1 %
Excluding subordinated debt 17.5 % 13.3 %
The ratio of debt to total capital is a non-GAAP measure that management believes is useful for investors, analysts and ratings agencies to evaluate AFG's financial strength and liquidity and to provide insight into how AFG finances its operations. The ratio is calculated by dividing the principal amount of AFG's long-term debt by its total capital, which includes long-term debt and shareholders' equity (excluding accumulated other comprehensive income (loss), net of tax). In addition, maintaining a ratio of debt, excluding subordinated debt and debt secured by real estate (if any), to total capital of 35% or lower is a financial covenant in AFG's bank credit facility.
The NAIC's model law for risk-based capital ("RBC") applies to property and casualty companies. RBC formulas determine the amount of capital that an insurance company needs so that it has an acceptable expectation of not becoming financially impaired. At December 31, 2025, the capital ratios of all AFG insurance companies exceeded the RBC requirements.
Condensed Consolidated Cash Flows
AFG's principal sources of cash include insurance premiums, income from its investment portfolio and proceeds from the maturities, redemptions and sales of investments. Insurance premiums in excess of acquisition expenses and operating costs are invested until they are needed to meet policyholder obligations or made available to the parent company through
dividends to cover debt obligations and corporate expenses, and to provide returns to shareholders through share repurchases and dividends. Cash flows from operating, investing and financing activities as detailed in AFG's Consolidated Statement of Cash Flows are shown below (in millions):
Year ended December 31,
2025 2024 2023
Net cash provided by operating activities $ 1,533 $ 1,152 $ 1,970
Net cash provided by (used in) investing activities (835) 95 414
Net cash used in financing activities (377) (1,066) (2,031)
Net change in cash and cash equivalents $ 321 $ 181 $ 353
Net Cash Provided by Operating Activities AFG's property and casualty insurance operations typically produce positive net operating cash flows as premiums collected and investment income exceed policy acquisition costs, claims payments and operating expenses. AFG's net cash provided by operating activities is impacted by the level and timing of premiums, claim and expense payments and recoveries from reinsurers. Cash flows provided by operating activities also include the activity of AFG's managed investment entities (collateralized loan obligations ("CLO")) other than those activities included in investing or financing activities. The changes in the assets and liabilities of the managed investment entities included in operating activities increased cash flows from operating activities by $70 million in 2025, reduced cash flows from operating activities by $80 million in 2024 and increased cash flows from operating activities by $305 million in 2023, resulting in a $150 million increase in cash flows from operating activities in 2025 compared to 2024 and a $385 million decrease in cash flows from operating activities in 2024 compared to 2023. As discussed in Note A - "Accounting Policies - Managed Investment Entities"to the financial statements, AFG has no right to use the CLO assets and no obligation to pay the CLO liabilities and such assets and liabilities are shown separately in AFG's Balance Sheet. Excluding the impact of the managed investment entities, net cash provided by operating activities was $1.46 billion, $1.23 billion and $1.67 billion in 2025, 2024 and 2023, respectively.
Net Cash Provided by (Used in) Investing Activities AFG's investing activities consist primarily of the investment of funds provided by its property and casualty businesses. Investing activities also include the purchase and disposal of managed investment entity investments, which are presented separately in AFG's Balance Sheet. Net investment activity in the managed investment entities was a $10 million use of cash in 2025 compared to a $377 million source of cash in 2024, resulting in a $387 million decrease in net cash provided by investing activities in 2025 compared to 2024. See Note A - "Accounting Policies - Managed Investment Entities"andNote G - "Managed Investment Entities"to the financial statements. Excluding the activity of the managed investment entities, investing activities resulted in uses of cash of $825 million in 2025 and $282 million in 2024, an increase of $543 million reflecting the investment of cash in fixed maturity investments.
Net cash provided by investing activities was $95 million in 2024 compared to $414 million in 2023, a decrease of $319 million. Net investment activity in the managed investment entities was a $377 million source of cash in 2024 compared to $762 million in 2023, resulting in a $385 million decrease in net cash provided by investing activities in 2024 compared to 2023. Investing activities for 2024 include the fourth quarter acquisitions of an insurance agency and a consulting business for $9 million in cash. Investing activities for 2023 include the July 2023 acquisition of Crop Risk Services ("CRS") for $234 million in cash. Excluding these acquisitions and the activity of the managed investment entities, investing activities resulted in uses of cash of $273 million in 2024 and $114 million in 2023.
Net Cash Used in Financing Activities AFG's financing activities consist primarily of issuances and retirements of long-term debt, issuances and repurchases of Common Stock and dividend payments. Net cash used in financing activities was $377 million in 2025 compared to $1.07 billion in 2024, a decrease of $689 million. The net proceeds from AFG's issuance of $350 million in 5.00% Senior Notes in September 2025 was a $344 million source of cash in 2025. AFG paid cash dividends totaling $606 million in 2025 compared to $788 million in 2024, resulting in a $182 million decrease in net cash used in financing activities in 2025 compared to 2024. In 2025, AFG repurchased $99 million of its Common Stock compared to no repurchases in 2024. Financing activities also include issuances and retirements of managed investment entity liabilities, which are nonrecourse to AFG and presented separately in AFG's Balance Sheet. Retirements of managed investment entity liabilities exceeded issuances by $28 million in 2025 compared to $295 million in 2024, resulting in a $267 million decrease in net cash used in financing activities in 2025 compared to 2024. See Note A - "Accounting Policies - Managed Investment Entities" andNote G - "Managed Investment Entities"to the financial statements.
Net cash used in financing activities was $1.07 billion in 2024 compared to $2.03 billion in 2023, a decrease of $965 million. AFG paid cash dividends totaling $788 million in 2024 compared to $684 million in 2023, resulting in a $104 million increase in net cash used in financing activities in 2024 compared to 2023. There were no debt retirements in
2024 compared to $21 million in debt retirements in 2023. In 2024, AFG did not repurchase any of its Common Stock compared to repurchases of $213 million in 2023. Retirements of managed investment entity liabilities exceeded issuances by $295 million in 2024 compared to $1.13 billion in 2023, resulting in an $833 million decrease in net cash used in financing activities in 2024 compared to 2023.
Parent and Subsidiary Liquidity
Parent Holding Company Liquidity Management believes AFG has sufficient resources to meet its liquidity requirements. If funds generated from operations, including dividends, tax payments and borrowings from subsidiaries, are insufficient to meet fixed charges in any period, AFG would be required to utilize parent company cash and investments or to generate cash through borrowings, sales of other assets, or similar transactions.
AFG's operations continue to generate significant excess capital for future returns of capital to shareholders in the form of regular and special cash dividends and through opportunistic share repurchases or to be deployed into its property and casualty businesses as management identifies the potential for profitable organic growth, and opportunities to expand through acquisitions of established businesses or start-ups that meet target return thresholds.
In September 2025, AFG issued $350 million in 5.00% Senior Notes due in September 2035. The net proceeds of this offering were used for general corporate purposes.
During 2025, AFG repurchased 799,398 shares of its Common Stock for $99 million and paid special cash dividends totaling $334 million ($2.00 per share in both March and November). On February 3, 2026, AFG declared a special cash dividend of $1.50 per share, payable on February 25, 2026. The aggregate amount of this special dividend will be approximately $125 million.
During 2024, AFG paid special cash dividends totaling $545 million ($2.50 per share in February and $4.00 per share in November).
During 2023, AFG repurchased 1,872,544 shares of its Common Stock for $213 million and paid special cash dividends totaling $466 million ($4.00 per share in February and $1.50 per share in November).
AFG may, at any time and from time to time, seek to retire or purchase its outstanding debt through cash purchases or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as management may determine, and will depend on prevailing market conditions, AFG's liquidity requirements, contractual restrictions and other factors. During 2023, AFG repurchased $23 million principal amount of its senior notes for $21 million cash.
All debentures and notes issued by AFG are rated investment grade by two nationally recognized rating agencies. AFG maintains a shelf registration statement under which it can offer additional equity or debt securities. The shelf registration provides AFG with flexibility to access the capital markets from time to time as market and other conditions permit.
At December 31, 2025, AFG (parent) held approximately $529 million in cash and investments. Management believes that AFG's cash balances are held at stable banking institutions, although the amounts of many of these deposits are in excess of federally insured balances. AFG can borrow up to $450 million under its revolving credit facility, which expires in June 2028. Amounts borrowed under this agreement bear interest at rates ranging from 1.00% to 1.75% (based on AFG's credit rating, currently 1.25%) over a SOFR-based floating rate. There were no borrowings under AFG's credit facility, or under any other parent company short-term borrowing arrangements, during 2025 or 2024.
Under a tax allocation agreement with AFG, all 80% (or more) owned U.S. subsidiaries generally pay taxes to (or recover taxes from) AFG based on each subsidiary's contribution to amounts due under AFG's consolidated tax return.
Subsidiary Liquidity The liquidity requirements of AFG's insurance subsidiaries relate primarily to the policyholder claims and underwriting expenses and payments of dividends and taxes to AFG. Historically, cash flows from premiums and investment income have generally provided more than sufficient funds to meet these requirements. Funds received in excess of cash requirements are generally invested in marketable securities. In addition, the insurance subsidiaries generally hold a significant amount of highly liquid, short duration investments.
For statutory accounting purposes, equity securities of non-affiliates are generally carried at fair value. At December 31, 2025, AFG's insurance companies owned equity securities with a fair value of $785 million. Decreases in market prices could adversely affect the insurance group's capital, potentially impacting the amount of dividends available or
necessitating a capital contribution. Conversely, increases in market prices could have a favorable impact on the group's dividend-paying capability.
Property and casualty reserves for unpaid losses and loss adjustment expenses were $15.09 billion at December 31, 2025 and include case reserves and claims incurred but not reported ("IBNR"). The ultimate amount to be paid to settle reserves is an estimate, subject to significant uncertainty. Actual payments to settle claims cannot be determined until a settlement is reached with the claimant. Final claim settlements may vary significantly from estimated amounts. See "Uncertainties - Property and Casualty Insurance Reserves"below. The timing of future payments for the next twelve months and beyond could vary materially from historical payment patterns due to, among other things, changes in claim reporting and payment patterns and large unanticipated settlements.
AFG believes its insurance subsidiaries maintain sufficient liquidity to pay claims and underwriting expenses. In addition, these subsidiaries have sufficient capital to meet commitments in the event of unforeseen reserve deficiencies, inadequate premium rates or reinsurer insolvencies. Management believes that the capital levels in AFG's insurance subsidiaries are adequate to maintain its business and rating agency ratings. Nonetheless, changes in statutory accounting rules, changes in rating agency measures, significant declines in the fair value of the insurance subsidiaries' investment portfolios or significant ratings downgrades on these investments, could create a need for additional capital.
Condensed Parent Only Cash Flows
AFG's parent holding company only condensed cash flows from operating, investing and financing activities are shown below (in millions):
Year ended December 31,
2025 2024 2023
Net cash provided by operating activities
$ 582 $ 712 $ 719
Net cash provided by (used in) investing activities (182) 72 225
Net cash used in financing activities (348) (769) (901)
Net change in cash and cash equivalents $ 52 $ 15 $ 43
Parent Net Cash Provided by Operating Activities Parent holding company cash flows from operating activities consist primarily of dividends and tax payments received from AFG's insurance subsidiaries, reduced by tax payments to the IRS and holding company interest and other expenses. Parent holding company net cash provided by operating activities was $582 million in 2025 compared to $712 million in 2024 and $719 million in 2023. The decrease in net cash provided by operating activities in 2025 compared to 2024 and 2023 was due primarily to lower cash dividends received from subsidiaries.
Parent Net Cash Provided by (Used in) Investing Activities Parent holding company investing activities consist of capital contributions to and returns of capital from subsidiaries and parent company investment activity. Parent holding company net cash used in investing activities was $182 million in 2025 compared to net cash provided by investing activities of $72 million in 2024 and $225 million in 2023. The $254 million increase in net cash used in investing activities reflects the investment of cash in fixed maturity securities and lower maturities and redemptions of investments in 2025 compared to 2024. The $153 million decrease in net cash provided by investing activities in 2024 compared to 2023 was due primarily to lower balances of invested assets.
Parent Net Cash Used in Financing Activities Parent company financing activities consist primarily of the issuance and retirement of long-term debt, repurchases of AFG Common Stock and dividends to shareholders. Significant long-term debt and Common Stock transactions are discussed above under "Parent Holding Company Liquidity."Parent holding company net cash used in financing activities was $348 million in 2025 compared to $769 million in 2024 and $901 million in 2023. The $421 million decrease in net cash used in financing activities in 2025 compared to 2024 reflects $344 million in net proceeds from AFG's issuance of $350 million in 5.00% Senior Notes in September 2025 and lower dividends paid to shareholders (due primarily to special dividends of $4.00 per share in 2025 compared to special dividends of $6.50 per share in 2024), partially offset by $99 million in repurchases of Common Stock in 2025 compared to no repurchases in 2024. The $132 million decrease in net cash used in financing activities in 2024 compared to 2023 reflects no repurchases of Common Stock in 2024 compared to repurchases of Common Stock of $213 million in 2023, partially offset by higher dividends paid to shareholders (due primarily to special dividends of $6.50 per share in 2024 compared to special dividends of $5.50 per share in 2023).
Off-Balance Sheet Arrangements
See Note O - "Additional Information - Financial Instruments - Unfunded Commitments"to the financial statements.
Investments
AFG attempts to optimize investment income while building the value of its portfolio, placing emphasis upon total long-term performance.
AFG's investment portfolio at December 31, 2025, contained $11.05 billion in fixed maturity securities classified as available for sale and carried at fair value with unrealized gains and losses included in accumulated other comprehensive income (loss) and $91 million in fixed maturities classified as trading with holding gains and losses included in net investment income. In addition, AFG's investment portfolio includes $567 million in equity securities carried at fair value with holding gains and losses included in realized gains (losses) on securities and $218 million in equity securities carried at fair value with holding gains and losses included in net investment income. AFG's investment portfolio also includes $2.42 billion in investments accounted for using the equity method (limited partnerships and similar investments). Under the equity method, AFG records its share of the earnings or losses of the investee based on when it is reported by the investee in its financial statements rather than in the period in which the investee declares a dividend. AFG's share of the earnings or losses from equity method investments is included in net investment income and is generally recorded on a quarter lag due to the timing of the receipt of the investee's financial statements.
Unrealized gains and losses on AFG's fixed maturity securities are included in shareholders' equity after adjustments for deferred income taxes.
Fixed income investment funds are generally invested in securities with intermediate-term maturities with an objective of optimizing total return while allowing flexibility to react to changes in market conditions. At December 31, 2025, the average life of AFG's fixed maturities was about 4.4 years.
Fair values for AFG's portfolio are determined by AFG's internal investment professionals using data from nationally recognized pricing services, non-binding broker quotes and other market information. Fair values of equity securities are determined by published closing prices when available. For AFG's fixed maturity portfolio, approximately 90% was priced using pricing services at December 31, 2025 and 3% was priced using non-binding broker quotes. The remaining 7% was priced internally using a variety of inputs including credit spreads, trade information, prices of comparable securities, estimates of cash flow and other security specific features. When prices obtained for the same security vary, AFG's internal investment professionals select the price they believe is most indicative of an exit price. For additional information on determination of fair value, see Note D - "Fair Value Measurements"to the financial statements.
The pricing services use a variety of observable inputs to estimate fair value of fixed maturities that do not trade on a daily basis. Based upon information provided by the pricing services, these inputs include, but are not limited to, recent reported trades, benchmark yields, issuer spreads, bids or offers, reference data, and measures of volatility. Included in the pricing of structured securities are estimates of the rate of future prepayments and defaults of principal over the remaining life of the underlying collateral. Due to the lack of transparency in the process that brokers use to develop prices, valuations that are based on brokers' prices are classified as Level 3 in the GAAP hierarchy unless the price can be corroborated, for example, by comparison to similar securities priced using observable inputs.
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 pricing services regarding the methods and assumptions used in pricing, including verifying, on a test basis, the inputs used by the services to value specific securities.
In general, the fair value of AFG's fixed maturity investments is inversely correlated to changes in interest rates. The following table demonstrates the sensitivity of such fair values to reasonably likely changes in interest rates by illustrating the estimated effect on AFG's fixed maturity portfolio that an immediate increase of 100 basis points in the interest rate yield curve would have had at December 31, 2025 (dollars in millions). Effects of increases or decreases from the 100 basis points illustrated would be approximately proportional.
Fair value of fixed maturity portfolio $ 11,143
Percentage impact on fair value of 100 bps increase in interest rates (3.0 %)
Pretax impact on fair value of fixed maturity portfolio $ (334)
Approximately 96% of the fixed maturities held by AFG at December 31, 2025, were rated "investment grade" (credit rating of AAA to BBB) by nationally recognized rating agencies, 2% were rated "non-investment grade" and 2% were not
rated. Investment grade securities generally bear lower yields and lower degrees of risk than those that are unrated and non-investment grade. Management believes that the high-quality investment portfolio should generate a stable and predictable investment return.
AFG has approximately $80 million of direct exposure to office commercial real estate through property ownership, mortgages or equity method investments. AFG's fixed maturity portfolio includes securities (the majority of which are AAA-rated) with a carrying value of approximately $280 million that have minimal exposure to office commercial real estate.
Summarized information for the unrealized gains and losses recorded in AFG's Balance Sheet at December 31, 2025, is shown in the following table (dollars in millions). There were $484 million of available for sale fixed maturity securities with no unrealized gains or losses at December 31, 2025.
Securities
With
Unrealized
Gains 		Securities
With
Unrealized
Losses
Available for Sale Fixed Maturities
Fair value of securities $ 6,526 $ 4,042
Amortized cost of securities, net of allowance for expected credit losses $ 6,361 $ 4,235
Gross unrealized gain (loss) $ 165 $ (193)
Fair value as % of amortized cost 103 % 95 %
Number of security positions 1,102 858
Number individually exceeding $2 million gain or loss 2 22
Concentration of gains (losses) by type or industry (exceeding 5% of unrealized):
Residential mortgage-backed securities $ 43 $ (103)
Other asset-backed securities 29 (38)
Banking 18 (5)
Asset managers 13 (4)
States and municipalities 8 (26)
Percentage rated investment grade 97 % 96 %
The table below sets forth the scheduled maturities of AFG's available for sale fixed maturity securities at December 31, 2025, based on their fair values. Securities with sinking funds are reported at average maturity. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers.
Securities
With
Unrealized
Gains 		Securities
With
Unrealized
Losses
Maturity
One year or less 3 % 10 %
After one year through five years 22 % 18 %
After five years through ten years 18 % 7 %
After ten years 1 % 4 %
44 % 39 %
CLOs and other asset-backed securities (average life of approximately 3.5 years)
32 % 34 %
Residential mortgage-backed securities (average life of approximately 6 years)
24 % 27 %
100 % 100 %
The table below (dollars in millions) summarizes the unrealized gains and losses on fixed maturity securities by dollar amount:
Aggregate
Fair
Value 		Aggregate
Unrealized
Gain (Loss) 		Fair
Value as
% of Cost
Fixed Maturities at December 31, 2025
Securities with unrealized gains:
Exceeding $500,000 (68 securities)
$ 924 $ 61 107 %
$500,000 or less (1,034 securities)
5,602 104 102 %
$ 6,526 $ 165 103 %
Securities with unrealized losses:
Exceeding $500,000 (85 securities)
$ 1,090 $ (133) 89 %
$500,000 or less (773 securities)
2,952 (60) 98 %
$ 4,042 $ (193) 95 %
The following table (dollars in millions) summarizes the unrealized losses for all securities with unrealized losses by issuer quality and the length of time those securities have been in an unrealized loss position:
Aggregate
Fair
Value 		Aggregate
Unrealized
Loss 		Fair
Value as
% of Cost
Securities with Unrealized Losses at December 31, 2025
Investment grade fixed maturities with losses for:
Less than one year (100 securities)
$ 851 $ (5) 99 %
One year or longer (633 securities)
3,013 (180) 94 %
$ 3,864 $ (185) 95 %
Non-investment grade fixed maturities with losses for:
Less than one year (34 securities)
$ 58 $ (2) 97 %
One year or longer (91 securities)
120 (6) 95 %
$ 178 $ (8) 96 %
To evaluate fixed maturities for expected credit losses (impairment), management considers the following:
(a)whether the unrealized loss is credit-driven or a result of changes in market interest rates,
(b)the extent to which fair value is less than cost basis,
(c)cash flow projections received from independent sources,
(d)historical operating, balance sheet and cash flow data contained in issuer SEC filings and news releases,
(e)near-term prospects for improvement in the issuer and/or its industry,
(f)third-party research and communications with industry specialists,
(g)financial models and forecasts,
(h)the continuity of interest payments, maintenance of investment grade ratings and hybrid nature of certain investments,
(i)discussions with issuer management, and
(j)ability and intent to hold the investment for a period of time sufficient to allow for anticipated recovery in fair value.
Based on its analysis of the factors listed above, management believes AFG will recover its cost basis (net of any allowance) in the fixed maturity securities with unrealized losses and that AFG has the ability to hold the securities until they recover in value and had no intent to sell them at December 31, 2025. Although AFG has the ability to continue holding its fixed maturity investments with unrealized losses, its intent to hold them may change due to deterioration in the issuers' creditworthiness, decisions to lessen exposure to a particular issuer or industry, asset/liability management decisions, market movements, changes in views about appropriate asset allocation or the desire to offset taxable realized gains. Should AFG's ability or intent change regarding a particular security, a charge for impairment would likely be required. While it is not possible to accurately predict if or when a specific security will become impaired, increases in the allowance for credit losses could be material to results of operations in future periods. Significant declines in the fair value of AFG's investment portfolio could have a significant adverse effect on AFG's liquidity. For information on AFG's realized gains (losses) on securities, see "Results of Operations - Realized Gains (Losses) on Securities."
Uncertainties
As more fully explained in the following paragraphs, management believes that the areas posing the greatest risk of material loss are the adequacy of its insurance reserves and contingencies arising out of its former railroad and manufacturing operations.
Property and Casualty Insurance Reserves Estimating the liability for unpaid losses and loss adjustment expenses ("LAE") is inherently judgmental and is influenced by factors that are subject to significant variation. Determining the liability is a complex process incorporating input from many areas of the Company including actuarial, underwriting, pricing, claims and operations management.
The estimates of liabilities for unpaid claims and for expenses of investigation and adjustment of unpaid claims are based upon: (i) the accumulation of case estimates for losses reported prior to the close of the accounting periods on direct business written ("case reserves"); (ii) estimates received from ceding reinsurers and insurance pools and associations; (iii) estimates of claims incurred but not reported (including possible development on known claims); (iv) estimates (based on experience) of expense for investigating and adjusting claims; and (v) the current state of law and coverage litigation.
The process used to determine the total reserve for liabilities involves estimating the ultimate incurred losses and LAE, adjusted for amounts already paid on the claims. The IBNR reserve is derived by estimating the ultimate unpaid reserve liability and subtracting case reserves for loss and LAE. See Note N - "Insurance - Insurance Reserves"to the financial statements for a discussion of the factors considered and actuarial methods used in determining management's best estimate of the ultimate liability for unpaid losses and LAE.
The following table shows (in millions) the breakdown of AFG's property and casualty insurance reserves between case reserves, IBNR reserves and LAE reserves (estimated amounts required to adjust, record and settle claims, other than the claim payments themselves) at December 31, 2025 and gross written premiums for the year ended December 31, 2025.
Gross Loss Reserves
Case IBNR LAE Total
Reserves 		Gross Written Premiums
Statutory Line of Business
Other liability - occurrence $ 1,096 $ 4,166 $ 848 $ 6,110 $ 1,941
Workers' compensation 1,050 1,140 364 2,554 1,394
Other liability - claims made 345 699 484 1,528 856
Commercial auto/truck liability/medical 599 808 194 1,601 933
Special property (fire, allied lines, inland marine, earthquake) 447 525 42 1,014 3,062
Products liability - occurrence 120 312 202 634 240
Commercial multi-peril 205 149 85 439 398
Other lines 292 648 212 1,152 1,796
Total Statutory 4,154 8,447 2,431 15,032 10,620
Adjustments for GAAP:
Foreign subsidiaries
35 26 - 61 92
Deferred gains on retroactive reinsurance - 4 - 4 -
Loss reserve discounting (4) - - (4) -
Other - - 1 1 (18)
Total Adjustments for GAAP 31 30 1 62 74
Total GAAP Reserves and Premiums $ 4,185 $ 8,477 $ 2,432 $ 15,094 $ 10,694
While current factors and reasonably likely changes in variable factors are considered in estimating the liability for unpaid losses and LAE, there is no method or system that can eliminate the risk of actual ultimate results differing from such estimates.
Following is a discussion of certain critical variables affecting the estimation of loss reserves of the more significant long-tail lines of business (asbestos and environmental liabilities are separately discussed below). Many other variables may also impact ultimate claim costs.
An important assumption underlying reserve estimates is that the cost trends implicitly built into development patterns will continue into the future. However, future results could vary due to an unexpected change in the underlying cost trends. This unexpected change could arise from a variety of sources including a general increase in economic inflation, social inflation, new medical technologies, or other factors such as those listed below in connection with AFG's largest lines of
business. It is not possible to isolate and measure the potential impact of just one of these variables, and future cost trends could be partially impacted by several such variables. However, it is reasonable to address the sensitivity of the reserves to potential impact from changes in these variables by measuring the effect of a possible overall 1% change in future cost trends that may be caused by one or more variables. Utilizing the effect of a 1% change in overall cost trends enables changes greater than 1% to be estimated by extrapolation. Each additional 1% change in the cost trend would increase the effect on net earnings by an amount slightly (about 5%) greater than the effect of the previous 1%. For example, if a 1% change in cost trends in a line of business would change net earnings by $20 million, a 2% change would change net earnings by approximately $41 million.
The estimated cumulative adverse impact that a 1% change in cost trends in AFG's more significant long-tail lines of property and casualty business (exceeding 5% of total reserves) would have on net earnings is shown below (in millions).
Effect of 1%
Change in
Cost Trends
Line of business
Other liability - occurrence $ 94
Workers' compensation 68
Other liability - claims made 32
Commercial auto/truck liability/medical 21
The judgments and uncertainties surrounding management's reserve estimation process and the potential for reasonably possible variability in management's most recent reserve estimates may also be viewed by looking at how recent historical estimates of reserves have developed. The following table shows (dollars in millions) what the impact on AFG's net earnings would be on the more significant lines of business if the December 31, 2025, reserves (net of reinsurance) were to develop at the same rate as the average development of the most recent five years.
5-yr. Average
Development (a)(b) 		Net Reserves (b) December 31, 2025 Effect on Net
Earnings (a)(b)
Other liability - occurrence 5.0 % $ 2,672 $ 133
Workers' compensation (5.2 %) 2,064 (108)
Other liability - claims made (2.0 %) 1,068 (21)
Commercial auto/truck liability/medical 2.3 % 1,017 23
(a)Adverse (favorable), net of tax effect.
(b)Excludes asbestos and environmental liabilities.
The following discussion describes key assumptions and important variables that affect the estimate of the reserve for loss and LAE of the more significant lines of business and explains what caused them to change from assumptions used in the preceding period.
Other Liability - Occurrence
This long-tail line of business consists of coverages protecting the insured against legal liability resulting from negligence, carelessness, or a failure to act causing property damage or personal injury to others. Some of the important variables affecting estimation of loss reserves for other liability - occurrence include:
•Litigious climate
•Unpredictability of judicial decisions regarding coverage issues
•Magnitude of jury awards
•Outside counsel costs
•Timing of claims reporting
AFG recorded adverse prior year reserve development of $175 million in 2025, $210 million in 2024 and $96 million in 2023 related to its other liability - occurrence coverage due primarily to continued claim severity increases in excess and umbrella liability coverages.
While management applies the actuarial methods discussed inNote N - "Insurance - Insurance Reserves"to the financial statements, more judgment is involved in arriving at the final reserve to be held. For recent accident years, more weight is given to the Bornhuetter-Ferguson method.
Workers' Compensation
This long-tail line of business provides coverage to employees who may be injured in the course of employment. Some of the important variables affecting estimation of loss reserves for workers' compensation include:
•Legislative actions and regulatory and legal interpretations
•Future medical cost inflation
•Economic conditions
•Frequency of reopening claims previously closed
•Advances in medical equipment and processes
•Pace and intensity of employee rehabilitation
•Changes in the use of pharmaceutical drugs
•Changes in mortality trends for permanently injured workers
Approximately 21% and 25% of AFG's workers' compensation reserves at December 31, 2025 relate to policies written in Florida and California, respectively.
AFG recorded favorable prior year reserve development of $108 million in 2025, $128 million in 2024 and $116 million in 2023, related to its workers' compensation coverage due to lower than anticipated medical severity.
Other Liability - Claims Made
This long-tail line of business includes coverage for directors' and officers' liability, errors and omissions, cyber, and mergers and acquisitions liability. Some of the important variables affecting estimation of loss reserves for other liability - claims made include:
•Economic conditions
•Variability of stock prices or company valuations
•New or expanded theories of liability
•Trends in jury awards
•Changes in the propensity to settle a claim
•Changes in the legal climate requiring higher levels of spending for the insured's defense
AFG recorded favorable prior year reserve development of $18 million in 2025, adverse prior year reserve development of $9 million in 2024 and $47 million of favorable prior year reserve development in 2023, related to its other liability - claims made coverage. AFG has generally experienced lower than anticipated claim frequency and severity in its executive and professional liability businesses. However, during 2024, an increase in claim severity for one specific book of business more than offset the favorable experience in other products.
Commercial Auto/Truck Liability/Medical
This line of business is a mix of coverage protecting the insured against legal liability for property damage or personal injury to others arising from the operation of commercial motor vehicles. The property damage liability exposure is usually short-tail with relatively prompt reporting and settlement of claims. The bodily injury and medical payments exposures are longer-tailed; although the claim reporting is relatively prompt, the final settlement can take longer to achieve. Some of the important variables affecting estimation of loss reserves for commercial auto/truck liability/medical are similar to other liability - occurrence and include:
•Magnitude of jury awards
•Unpredictability of judicial decisions regarding coverage issues
•Litigious climate and trends
•Change in frequency of severe accidents
•Health care costs and utilization of medical services by injured parties
AFG recorded favorable prior year reserve development of $1 million in 2025 for this line of business. In 2024 and 2023, AFG recorded adverse prior year reserve development of $36 million and $29 million, respectively, for this line of business due to higher than anticipated claim severity.
Recoverables from Reinsurers and Availability of Reinsurance AFG is subject to credit risk with respect to its reinsurers, as reinsurance contracts do not relieve AFG of its liability to policyholders. To mitigate this risk, substantially all reinsurance is ceded to companies rated "A" or better by S&P or is secured by "funds withheld" or other collateral.
The availability and cost of reinsurance are subject to prevailing market conditions, which are beyond AFG's control and may affect AFG's level of business and profitability. Although the cost of certain reinsurance programs may increase,
management believes that AFG will be able to maintain adequate reinsurance coverage at acceptable rates without a material adverse effect on AFG's results of operations. AFG's gross and net combined ratios are shown in the table below.
See Item 1 - Business - "Property and Casualty Insurance Segment - Reinsurance"for more information on AFG's reinsurance programs. For additional information on the effect of reinsurance on AFG's historical results of operations see Note N - "Insurance - Reinsurance" to the financial statements.
The following table illustrates the effect that purchasing property and casualty reinsurance has had on AFG's combined ratio over the last three years.
2025 2024 2023
Before reinsurance (gross) 93.1 % 98.2 % 92.8 %
Effect of reinsurance (2.1 %) (7.0 %) (2.4 %)
Actual (net of reinsurance) 91.0 % 91.2 % 90.4 %
Asbestos and Environmental-related ("A&E") Insurance Reserves Asbestos and environmental reserves of the property and casualty group consisted of the following (in millions):
December 31,
2025 2024
Asbestos $ 197 $ 197
Environmental 150 162
A&E reserves, net of reinsurance recoverable 347 359
Reinsurance recoverable, net of allowance 113 135
Gross A&E reserves $ 460 $ 494
Asbestos reserves include claims asserting alleged injuries and damages from exposure to asbestos. Environmental reserves include claims relating to polluted sites.
Asbestos claims against manufacturers, distributors or installers of asbestos products were presented under the products liability section of their policies, which typically had aggregate limits that capped an insurer's liability. In addition, asbestos claims are being presented as "non-products" claims, such as those by installers of asbestos products and by property owners or operators who allegedly had asbestos on their property, under the premises or operations section of their policies. Unlike products exposures, these non-products exposures typically had no aggregate limits, creating greater exposure for insurers. Further, in an effort to seek additional insurance coverage, some insureds with installation activities who have substantially eroded their products coverage are presenting new asbestos claims as non-products operations claims or attempting to reclassify previously settled products claims as non-products claims to restore a portion of previously exhausted products aggregate limits.
Approximately one-half of AFG's net asbestos reserves relate to policies written directly by AFG subsidiaries. Claims from these policies generally are product-oriented claims with only a limited amount of non-products exposures and are dominated by small to mid-sized commercial entities that are mostly regional policyholders with few national target defendants. The remainder is assumed reinsurance business that includes exposures from 1954 to 1983. The asbestos and environmental assumed claims are ceded by various insurance companies under reinsurance treaties. A majority of the individual assumed claims have exposures of less than $100,000 to AFG. Asbestos losses assumed include some of the industry known manufacturers, distributors and installers. Pollution losses include industry known insured names and sites.
Establishing reserves for A&E claims relating to policies and participations in reinsurance treaties and former operations is subject to uncertainties that are significantly greater than those presented by other types of claims. For this group of claims, traditional actuarial techniques that rely on historical loss development trends cannot be used and a range of reasonably possible losses cannot be estimated. Case reserves and expense reserves are established by the claims department as specific policies are identified. In addition to the case reserves established for known claims, management establishes additional reserves for claims not yet known or reported and for possible development on known claims. These additional reserves are management's best estimate based on periodic comprehensive studies and internal reviews adjusted for payments and identifiable changes, supplemented by management's review of industry information about such claims, with due consideration to individual claim situations.
Management believes that estimating the ultimate liability for asbestos claims presents a unique and difficult challenge to the insurance industry due to, among other things, difficulty in predicting the number of future claims, inconsistent court
decisions, an increase in bankruptcy filings as a result of asbestos-related liabilities, unresolved issues such as whether coverage exists, novel theories of coverage, how claims are to be allocated among triggered policies and implicated years, whether claimants who exhibit no signs of illness will be successful in pursuing their claims and judicial interpretations that often expand theories of recovery and broaden the scope of coverage. Environmental claims likewise present challenges in prediction, due to uncertainty regarding the interpretation of insurance policies, complexities regarding multi-party involvements at sites, evolving cleanup standards and protracted time periods required to assess the level of cleanup required at contaminated sites.
While management believes that AFG's reserves for A&E claims are a reasonable estimate of ultimate liability for such claims, actual results may vary materially from the amounts currently recorded due to the factors listed above. A 1% variation in loss cost trends, caused by any of the factors previously described, would change net earnings by approximately $26 million.
The following factors could impact AFG's A&E reserves and payments:
•There is interest at the state level to attempt to legislatively address asbestos liabilities and the manner in which asbestos claims are resolved. These developments are fluid and could result in piecemeal state-by-state solutions.
•The manner by which bankruptcy courts are addressing asbestos liabilities is in flux.
•AFG's insureds may make claims alleging significant non-products exposures.
AFG tracks its A&E claims by policyholder. The following table shows, by type of claim, the number of policyholders that did not receive any payments in the calendar year separate from policyholders that did receive a payment. Policyholder counts represent policies written by AFG subsidiaries and do not include assumed reinsurance.
2025 2024 2023
Number of policyholders with no indemnity payments:
Asbestos 81 77 98
Environmental 96 99 84
177 176 182
Number of policyholders with indemnity payments:
Asbestos 47 51 46
Environmental 16 15 21
63 66 67
Total 240 242 249
Amounts paid (net of reinsurance recoveries) for asbestos and environmental claims, including LAE, were as follows (in millions):
2025 2024 2023
Asbestos $ 11 $ 6 $ 13
Environmental - 5 2
Total $ 11 $ 11 $ 15
The survival ratio is a measure often used by industry analysts to compare A&E reserves' strength among companies. This ratio is typically calculated by dividing reserves for A&E exposures by the three-year average of paid losses, and therefore measures the number of years that it would take to pay off current reserves based on recent average payments. Because this ratio can be significantly impacted by a number of factors such as loss payout variability, caution should be exercised in attempting to determine reserve adequacy based simply on the survival ratio. At December 31, 2025, the property and casualty insurance segment's three-year survival ratios compare favorably with industry survival ratios published by A.M. Best (as of December 31, 2024, and adjusted for several large portfolio transfers) as detailed in the following table:
Property and Casualty Insurance Reserves
Three-Year Survival Ratio (Times Paid Losses)
Asbestos Environmental Total A&E
AFG (12/31/2025) 20.0 56.3 27.7
Industry (12/31/2024) 8.3 7.8 8.2
During the third quarter of 2025, AFG completed an in-depth internal review of its asbestos and environmental exposures relating to the run-off operations of its property and casualty insurance segment. AFG annually conducts a comprehensive
review of its asbestos and environmental reserves. In connection with its annual reviews, AFG engages with outside counsel and, as appropriate, engineering and consulting firms and specialty actuarial firms.
During the 2025 internal review, no new trends were identified and recent claims activity was generally consistent with AFG's expectations resulting from its in-depth internal reviews in the prior four years, and the most recent external study in 2020. As a result, and consistent with the internal review in the third quarter of 2024, the 2025 review resulted in no net change to AFG's property and casualty insurance segment's asbestos and environmental reserves.
Contingencies related to Subsidiaries' Former Operations The A&E reviews and external study discussed above also encompassed reserves for various environmental and occupational injury and disease claims and other contingencies arising out of the railroad operations disposed of by APU Consolidated's predecessor and certain manufacturing operations disposed of by APU Consolidated and its subsidiaries and by Great American Financial Resources, Inc. AFG recorded pretax special non-core A&E charges of $25 million in 2025, $14 million in 2024 and $15 million in 2023 to increase liabilities for those operations as a result of the internal reviews. Liabilities for claims and contingencies arising from these former railroad and manufacturing operations totaled $109 million at December 31, 2025. For a discussion of the uncertainties in determining the ultimate liability, see Note M - "Contingencies"to the financial statements.
MANAGED INVESTMENT ENTITIES
Accounting standards require AFG to consolidate its investments in collateralized loan obligation ("CLO") entities that it manages and owns an interest in (in the form of debt). See Note A - "Accounting Policies - Managed Investment Entities"and Note G - "Managed Investment Entities"to the financial statements. The effect of consolidating these entities is shown in the tables below (in millions). The "Before CLO Consolidation" columns include AFG's investment and earnings in the CLOs on an unconsolidated basis.
CONDENSED CONSOLIDATING BALANCE SHEET
Before CLO
Consolidation 		Managed
Investment
Entities 		Consol.
Entries 		Consolidated
As Reported
December 31, 2025
Assets:
Cash and investments $ 17,325 $ - $ (143) (*) $ 17,182
Assets of managed investment entities - 4,050 - 4,050
Other assets 11,410 - - (*) 11,410
Total assets $ 28,735 $ 4,050 $ (143) $ 32,642
Liabilities:
Unpaid losses and loss adjustment expenses and unearned premiums
$ 18,830 $ - $ - $ 18,830
Liabilities of managed investment entities - 4,050 (143) (*) 3,907
Long-term debt and other liabilities 5,085 - - 5,085
Total liabilities 23,915 4,050 (143) 27,822
Shareholders' equity:
Common Stock and Capital surplus 1,513 - - 1,513
Retained earnings 3,357 - - 3,357
Accumulated other comprehensive income (loss), net of tax (50) - - (50)
Total shareholders' equity 4,820 - - 4,820
Total liabilities and shareholders' equity $ 28,735 $ 4,050 $ (143) $ 32,642
December 31, 2024
Assets:
Cash and investments $ 16,026 $ - $ (174) (*) $ 15,852
Assets of managed investment entities - 4,140 - 4,140
Other assets 10,845 - (1) (*) 10,844
Total assets $ 26,871 $ 4,140 $ (175) $ 30,836
Liabilities:
Unpaid losses and loss adjustment expenses and unearned premiums
$ 17,763 $ - $ - $ 17,763
Liabilities of managed investment entities - 4,091 (126) (*) 3,965
Long-term debt and other liabilities 4,642 - - 4,642
Total liabilities 22,405 4,091 (126) 26,370
Shareholders' equity:
Common Stock and Capital surplus 1,495 49 (49) 1,495
Retained earnings 3,211 - - 3,211
Accumulated other comprehensive income (loss), net of tax (240) - - (240)
Total shareholders' equity 4,466 49 (49) 4,466
Total liabilities and shareholders' equity $ 26,871 $ 4,140 $ (175) $ 30,836
(*)Elimination of the fair value of AFG's investment in CLOs and related accrued interest.
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS
Before CLO
Consolidation (a) 		Managed
Investment
Entities 		Consol.
Entries 		Consolidated
As Reported
Three months ended December 31, 2025
Revenues:
Net earned premiums
$ 1,806 $ - $ - $ 1,806
Net investment income 178 - 5 (b) 183
Realized gains (losses) on securities (7) - - (7)
Income of managed investment entities:
Investment income - 69 - 69
Gain (loss) on change in fair value of assets/liabilities - 1 (20) (b) (19)
Other income 34 - (3) (c) 31
Total revenues 2,011 70 (18) 2,063
Costs and Expenses:
Insurance benefits and expenses 1,527 - - 1,527
Expenses of managed investment entities - 69 (17) (b)(c) 52
Interest charges on borrowed money and other expenses 105 - - 105
Total costs and expenses 1,632 69 (17) 1,684
Earnings before income taxes 379 1 (1) 379
Provision for income taxes 80 - - 80
Net earnings $ 299 $ 1 $ (1) $ 299
Three months ended December 31, 2024
Revenues:
Net earned premiums
$ 1,850 $ - $ - $ 1,850
Net investment income 202 - (8) (b) 194
Realized gains (losses) on securities (10) - - (10)
Income of managed investment entities:
Investment income - 84 - 84
Gain (loss) on change in fair value of assets/liabilities - 3 (4) (b) (1)
Other income 36 - (4) (c) 32
Total revenues 2,078 87 (16) 2,149
Costs and Expenses:
Insurance benefits and expenses 1,661 - - 1,661
Expenses of managed investment entities - 87 (16) (b)(c) 71
Interest charges on borrowed money and other expenses 97 - - 97
Total costs and expenses 1,758 87 (16) 1,829
Earnings before income taxes 320 - - 320
Provision for income taxes 65 - - 65
Net earnings $ 255 $ - $ - $ 255
(a)Includes a loss of $5 million in the fourth quarter of 2025 and income of $8 million in the fourth quarter of 2024, representing the change in fair value of AFG's CLO investments and $3 million and $4 million of income in the fourth quarter of 2025 and 2024, respectively, in CLO management fees earned.
(b)Elimination of the change in fair value of AFG's investments in the CLOs, including $14 million and $12 million in the fourth quarter of 2025 and 2024, respectively, in distributions recorded as interest expense by the CLOs.
(c)Elimination of management fees earned by AFG.
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS - CONTINUED
Before
CLO
Consol. (a) 		Managed
Investment
Entities 		Consol.
Entries 		Consolidated
As Reported
Year ended December 31, 2025
Revenues:
Net earned premiums
$ 7,046 $ - $ - $ 7,046
Net investment income 750 - (5) (b) 745
Realized gains (losses) on:
Securities 10 - - 10
Subsidiaries 1 - - 1
Income of managed investment entities:
Investment income - 283 - 283
Gain (loss) on change in fair value of assets/liabilities - 9 (35) (b) (26)
Other income 126 - (11) (c) 115
Total revenues 7,933 292 (51) 8,174
Costs and Expenses:
Insurance benefits and expenses 6,447 - - 6,447
Expenses of managed investment entities - 288 (47) (b)(c) 241
Interest charges on borrowed money and other expenses 413 - - 413
Total costs and expenses 6,860 288 (47) 7,101
Earnings before income taxes
1,073 4 (4) 1,073
Provision for income taxes 231 - - 231
Net earnings
$ 842 $ 4 $ (4) $ 842
Year ended December 31, 2024
Revenues:
Net earned premiums
$ 7,036 $ - $ - $ 7,036
Net investment income 813 - (33) (b) 780
Realized gains (losses) on securities
- - - -
Income of managed investment entities:
Investment income - 380 - 380
Gain (loss) on change in fair value of assets/liabilities - 12 (8) (b) 4
Other income 137 - (13) (c) 124
Total revenues 7,986 392 (54) 8,324
Costs and Expenses:
Insurance benefits and expenses 6,467 - - 6,467
Expenses of managed investment entities - 388 (50) (b)(c) 338
Interest charges on borrowed money and other expenses 395 - - 395
Total costs and expenses 6,862 388 (50) 7,200
Earnings before income taxes
1,124 4 (4) 1,124
Provision for income taxes 237 - - 237
Net earnings
$ 887 $ 4 $ (4) $ 887
(a)Includes income of $5 million in 2025 and $33 million in 2024, representing the change in fair value of AFG's CLO investments and $11 million and $13 million of income in 2025 and 2024, respectively, in CLO management fees earned.
(b)Elimination of the change in fair value of AFG's investments in the CLOs, including $36 million and $37 million in 2025 and 2024, respectively, in distributions recorded as interest expense by the CLOs.
(c)Elimination of management fees earned by AFG.
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS - CONTINUED
Before
CLO
Consol. (a) 		Managed
Investment
Entities 		Consol.
Entries 		Consolidated
As Reported
Year ended December 31, 2023
Revenues:
Net earned premiums
$ 6,531 $ - $ - $ 6,531
Net investment income 769 - (27) (b) 742
Realized gains (losses) on:
Securities (36) - - (36)
Subsidiaries (4) - - (4)
Income of managed investment entities:
Investment income - 421 - 421
Gain (loss) on change in fair value of assets/liabilities - 29 (2) (b) 27
Other income 162 - (16) (c) 146
Total revenues 7,422 450 (45) 7,827
Costs and Expenses:
Insurance benefits and expenses 5,968 - - 5,968
Expenses of managed investment entities - 450 (45) (b)(c) 405
Interest charges on borrowed money and other expenses 381 - - 381
Total costs and expenses 6,349 450 (45) 6,754
Earnings before income taxes
1,073 - - 1,073
Provision for income taxes 221 - - 221
Net earnings
$ 852 $ - $ - $ 852
(a)Includes income of $27 million representing the change in fair value of AFG's CLO investments and $16 million in CLO management fees earned.
(b)Elimination of the change in fair value of AFG's investments in the CLOs, including $29 million in distributions recorded as interest expense by the CLOs.
(c)Elimination of management fees earned by AFG.
RESULTS OF OPERATIONS
General
AFG's net earnings, determined in accordance with GAAP, include certain items that may not be indicative of its ongoing core operations. Core net operating earnings excludes realized gains (losses) on securities because such gains and losses are influenced significantly by financial markets, interest rates and the timing of sales. In addition, special charges related to coverage that AFG no longer writes, such as asbestos and environmental exposures, are excluded from core earnings.
The following table (in millions, except per share amounts) identifies non-core items and reconciles net earnings to core net operating earnings, a non-GAAP financial measure. AFG believes core net operating earnings is a useful tool for investors and analysts in analyzing ongoing operating trends and for management to evaluate financial performance against historical results because it believes this provides a more comparable measure of its continuing business.
Three months ended December 31, Year ended December 31,
2025 2024 2025 2024 2023
Components of net earnings:
Core operating earnings before income taxes $ 386 $ 330 $ 1,087 $ 1,138 $ 1,127
Pretax non-core items:
Realized gains (losses) on securities (7) (10) 10 - (36)
Realized gain (loss) on subsidiaries - - 1 - (4)
Special A&E charges - - (25) (14) (15)
Gain on retirement of debt - - - - 1
Other - - - - -
Earnings before income taxes
379 320 1,073 1,124 1,073
Provision for income taxes:
Core operating earnings 81 68 227 236 232
Non-core items:
Realized gains (losses) on securities (1) (3) 2 - (8)
Realized gain (loss) on subsidiaries
- - - - -
Special A&E charges - - (5) (3) (3)
Gain on retirement of debt - - - - -
Other (*) - - 7 4 -
Total provision for income taxes 80 65 231 237 221
Net earnings
$ 299 $ 255 $ 842 $ 887 $ 852
Net earnings:
Core net operating earnings $ 305 $ 262 $ 860 $ 902 $ 895
Realized gains (losses) on securities (6) (7) 8 - (28)
Realized gain (loss) on subsidiaries
- - 1 - (4)
Special A&E charges - - (20) (11) (12)
Gain on retirement of debt - - - - 1
Other (*) - - (7) (4) -
Net earnings
$ 299 $ 255 $ 842 $ 887 $ 852
Diluted per share amounts:
Core net operating earnings $ 3.65 $ 3.12 $ 10.29 $ 10.75 $ 10.56
Realized gains (losses) on securities (0.07) (0.09) 0.11 - (0.33)
Realized gain (loss) on subsidiaries
- - 0.01 - (0.04)
Special A&E charges - - (0.24) (0.13) (0.15)
Gain on retirement of debt - - - - 0.01
Other (*) - - (0.09) (0.05) -
Net earnings
$ 3.58 $ 3.03 $ 10.08 $ 10.57 $ 10.05
(*)Adjustments to income tax expense related to sales of subsidiaries in prior years.
Net earnings were $299 million in the fourth quarter of 2025 compared to $255 million in the fourth quarter of 2024 reflecting higher core net operating earnings. Core net operating earnings for the fourth quarter of 2025 increased $43 million compared to the fourth quarter of 2024 reflecting higher underwriting profit, partially offset by lower net investment income from AFG's alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs). Net realized losses on securities in the fourth quarter of 2025 and 2024 include $2 million and $1 million of after-tax losses, respectively, resulting from the change in fair value of equity securities that were still held at the balance sheet date.
Net earnings were $842 million for the full-year of 2025 compared to $887 million in 2024 reflecting lower core net operating earnings. Core net operating earnings for 2025 decreased $42 million compared to 2024 reflecting lower net investment income from AFG's alternative investment portfolio, partially offset by higher underwriting profit and higher investment income outside of alternative investments. Net realized gains on securities in 2025 of $8 million and 2024 of
less than $1 million include after-tax gains of $15 million and $19 million, respectively, resulting from the change in fair value of equity securities that were still held at the balance sheet date.
Net earnings were $887 million for the full-year of 2024 compared to $852 million in 2023 reflecting the impact of net realized losses on securities in 2023 and higher core net operating earnings. Core net operating earnings for 2024 increased $7 million compared to 2023. Higher investment income outside of alternative investments was partially offset by lower returns on AFG's alternative investment portfolio and lower underwriting profit. Net realized gains on securities of less than $1 million in 2024 and net realized losses on securities of $28 million in 2023 include $19 million of after-tax gains and $2 million of after-tax losses, respectively, resulting from the change in fair value of equity securities that were still held at the balance sheet date.
RESULTS OF OPERATIONS - THREE MONTHS ENDED DECEMBER 31, 2025 AND 2024
Segmented Statement of Earnings
AFG reports its operations as two segments: (i) Property and casualty insurance ("P&C") and (ii) Other, which includes holding company costs and income and expenses related to the managed investment entities ("MIEs").
AFG's net earnings, determined in accordance with GAAP, include certain items that may not be indicative of its ongoing core operations. The following tables for the three months ended December 31, 2025 and 2024 identify such items by segment and reconcile net earnings to core net operating earnings, a non-GAAP financial measure that AFG believes is a useful tool for investors and analysts in analyzing ongoing operating trends (in millions):
Other
P&C Consol. MIEs Holding Co., other and unallocated Total Non-core reclass GAAP Total
Three months ended December 31, 2025
Revenues:
Net earned premiums
$ 1,806 $ - $ - $ 1,806 $ - $ 1,806
Net investment income 171 5 7 183 - 183
Realized gains (losses) on securities - - - - (7) (7)
Income of MIEs:
Investment income - 69 - 69 - 69
Gain (loss) on change in fair value of assets/liabilities
- (19) - (19) - (19)
Other income 3 (3) 31 31 - 31
Total revenues 1,980 52 38 2,070 (7) 2,063
Costs and Expenses:
Losses and loss adjustment expenses 1,061 - - 1,061 - 1,061
Commissions and other underwriting expenses 461 - 5 466 - 466
Interest charges on borrowed money - - 23 23 - 23
Expenses of MIEs - 52 - 52 - 52
Other expenses 18 - 64 82 - 82
Total costs and expenses 1,540 52 92 1,684 - 1,684
Earnings before income taxes 440 - (54) 386 (7) 379
Provision for income taxes 92 - (11) 81 (1) 80
Core Net Operating Earnings
348 - (43) 305
Non-core earnings (loss) (*):
Realized gains (losses) on securities, net of tax - - (6) (6) 6 -
Net Earnings $ 348 $ - $ (49) $ 299 $ - $ 299
Other
P&C Consol. MIEs Holding Co., other and unallocated Total Non-core reclass GAAP Total
Three months ended December 31, 2024
Revenues:
Net earned premiums
$ 1,850 $ - $ - $ 1,850 $ - $ 1,850
Net investment income 195 (8) 7 194 - 194
Realized gains (losses) on securities - - - - (10) (10)
Income of MIEs:
Investment income - 84 - 84 - 84
Gain (loss) on change in fair value of assets/liabilities
- (1) - (1) - (1)
Other income 2 (4) 34 32 - 32
Total revenues 2,047 71 41 2,159 (10) 2,149
Costs and Expenses:
Losses and loss adjustment expenses 1,181 - - 1,181 - 1,181
Commissions and other underwriting expenses 467 - 13 480 - 480
Interest charges on borrowed money - - 19 19 - 19
Expenses of MIEs - 71 - 71 - 71
Other expenses 21 - 57 78 - 78
Total costs and expenses 1,669 71 89 1,829 - 1,829
Earnings before income taxes 378 - (48) 330 (10) 320
Provision for income taxes 81 - (13) 68 (3) 65
Core Net Operating Earnings
297 - (35) 262
Non-core earnings (loss) (*):
Realized gains (losses) on securities, net of tax - - (7) (7) 7 -
Net Earnings $ 297 $ - $ (42) $ 255 $ - $ 255
(*)See the reconciliation of core earnings to GAAP net earnings under "Results of Operations - General" for details on the tax impacts of these reconciling items.
Property and Casualty Insurance Segment - Results of Operations
Performance measures such as underwriting profit or loss and related combined ratios are often used by property and casualty insurers to help users of their financial statements better understand the company's performance. Underwriting profitability is measured by the combined ratio, which is a sum of the ratios of losses and loss adjustment expenses, and commissions and other underwriting expenses to premiums. A combined ratio under 100% indicates an underwriting profit. The combined ratio does not reflect net investment income, other income, other expenses or federal income taxes.
AFG's property and casualty insurance operations contributed $440 million in pretax earnings in the fourth quarter of 2025 compared to $378 million in the fourth quarter of 2024, an increase of $62 million (16%). The increase in pretax earnings reflects higher underwriting profit, partially offset by lower investment income from AFG's alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs).
The following table details AFG's earnings before income taxes from its property and casualty insurance operations for the three months ended December 31, 2025 and 2024 (dollars in millions):
Three months ended December 31,
2025 2024 % Change
Gross written premiums $ 2,085 $ 2,043 2 %
Reinsurance premiums ceded (641) (583) 10 %
Net written premiums 1,444 1,460 (1 %)
Change in unearned premiums 362 390 (7 %)
Net earned premiums 1,806 1,850 (2 %)
Loss and loss adjustment expenses 1,061 1,181 (10 %)
Commissions and other underwriting expenses 461 467 (1 %)
Underwriting gain 284 202 41 %
Net investment income 171 195 (12 %)
Other income and expenses, net (15) (19) (21 %)
Earnings before income taxes $ 440 $ 378 16 %
Three months ended December 31,
Combined Ratios: 2025 2024 Change
Specialty lines
Loss and LAE ratio 58.6 % 63.7 % (5.1 %)
Underwriting expense ratio 25.5 % 25.3 % 0.2 %
Combined ratio 84.1 % 89.0 % (4.9 %)
Aggregate - including exited lines
Loss and LAE ratio 58.8 % 63.8 % (5.0 %)
Underwriting expense ratio 25.5 % 25.3 % 0.2 %
Combined ratio 84.3 % 89.1 % (4.8 %)
AFG's statutory combined ratio has been better than the U.S. industry average for 38 of the most recent 40 years. Management believes that AFG's insurance operations have performed better than the industry as a result of its specialty niche focus, product line diversification, stringent underwriting discipline and alignment of compensation incentives.
AFG reports the underwriting performance of its Specialty property and casualty insurance business in the following sub-segments: (i) Property and transportation, (ii) Specialty casualty and (iii) Specialty financial.
Historically, AFG reported the results of its internal reinsurance facility (that assumes business from several of AFG's Specialty property and casualty businesses) in an Other Specialty sub-segment. Beginning in 2025, the internal reinsurance results are included within the same sub-segments as the ceding businesses to align with senior management's evolving view of the program. The overall results for AFG's Specialty property and casualty insurance operations are not impacted by this change. Information from prior periods has been recast for consistent presentation.
To understand the overall profitability of particular lines, the timing of claims payments and the related impact of investment income must be considered. Certain "short-tail" lines of business (primarily property coverages) generally have quick loss payouts, which reduce the time funds are held, thereby limiting investment income earned thereon. In contrast, "long-tail" lines of business (primarily liability coverages and workers' compensation) generally have payouts that are either structured over many years or take many years to settle, thereby significantly increasing investment income earned on related premiums received.
Gross Written Premiums
Gross written premiums ("GWP") for AFG's property and casualty insurance segment were $2.09 billion for the fourth quarter of 2025 compared to $2.04 billion for the fourth quarter of 2024, an increase of $42 million (2%). Detail of AFG's property and casualty gross written premiums is shown below (dollars in millions):
Three months ended December 31,
2025 2024
GWP % GWP % % Change
Property and transportation $ 612 29 % $ 585 29 % 5 %
Specialty casualty 1,153 55 % 1,126 55 % 2 %
Specialty financial 320 16 % 332 16 % (4 %)
$ 2,085 100 % $ 2,043 100 % 2 %
Reinsurance Premiums Ceded
Reinsurance premiums ceded ("Ceded") for AFG's property and casualty insurance segment were 31% of gross written premiums for the fourth quarter of 2025 compared to 29% of gross written premiums for the fourth quarter of 2024, an increase of 2 percentage points. Detail of AFG's property and casualty reinsurance premiums ceded is shown below (dollars in millions):
Three months ended December 31,
2025 2024 Change in % of GWP
Ceded % of GWP Ceded % of GWP
Property and transportation $ (214) 35 % $ (177) 30 % 5 %
Specialty casualty (357) 31 % (353) 31 % - %
Specialty financial (70) 22 % (53) 16 % 6 %
$ (641) 31 % $ (583) 29 % 2 %
Net Written Premiums
Net written premiums ("NWP") for AFG's property and casualty insurance segment were $1.44 billion for the fourth quarter of 2025 compared to $1.46 billion for the fourth quarter of 2024, a decrease of $16 million (1%). Detail of AFG's property and casualty net written premiums is shown below (dollars in millions):
Three months ended December 31,
2025 2024
NWP % NWP % % Change
Property and transportation $ 398 28 % $ 408 28 % (2 %)
Specialty casualty 796 55 % 773 53 % 3 %
Specialty financial 250 17 % 279 19 % (10 %)
$ 1,444 100 % $ 1,460 100 % (1 %)
Net Earned Premiums
Net earned premiums ("NEP") for AFG's property and casualty insurance segment were $1.81 billion for the fourth quarter of 2025 compared to $1.85 billion for the fourth quarter of 2024, a decrease of $44 million (2%). Detail of AFG's property and casualty net earned premiums is shown below (dollars in millions):
Three months ended December 31,
2025 2024
NEP % NEP % % Change
Property and transportation $ 735 41 % $ 765 41 % (4 %)
Specialty casualty 812 45 % 805 44 % 1 %
Specialty financial 259 14 % 280 15 % (8 %)
$ 1,806 100 % $ 1,850 100 % (2 %)
Gross written premiums for the fourth quarter of 2025 increased $42 million (2%) compared to the fourth quarter of 2024 driven primarily by new business opportunities, a good renewal rate environment and increased exposures. Overall average renewal rates increased approximately 4% in the fourth quarter of 2025. Excluding the workers' compensation businesses, renewal pricing increased approximately 5%.
Property and transportation Gross written premiums increased $27 million (5%) in the fourth quarter of 2025 compared to the fourth quarter of 2024. This increase was due primarily to growth in crop products that are heavily ceded, and to a lesser extent, growth in a transportation alternative risk transfer program with higher premium cessions. Average renewal rates increased approximately 6% for this group in the fourth quarter of 2025. Reinsurance premiums ceded as a percentage of gross written premiums increased 5 percentage points in the fourth quarter of 2025 compared to the fourth quarter of 2024, reflecting higher cessions in the crop and aviation businesses and growth in certain programs in the transportation businesses which cede a higher percentage of premiums than some of the other businesses in the Property and transportation sub-segment.
Specialty casualty Gross written premiums increased $27 million (2%) in the fourth quarter of 2025 compared to the fourth quarter of 2024. The primary drivers of growth included new business opportunities and favorable renewal pricing in the targeted markets businesses, new business opportunities in the mergers and acquisitions liability business, growth in the workers' compensation businesses and new premiums from a start-up business. This growth was tempered by lower year-over-year premiums in the executive liability and excess and surplus businesses. Average renewal rates for this group increased approximately 5% in the fourth quarter of 2025. Excluding workers' compensation businesses, renewal rates for this group increased approximately 6%. Reinsurance premiums ceded as a percentage of gross written premiums for the fourth quarter of 2025 were comparable to the fourth quarter of 2024.
Specialty financialGross written premiums decreased $12 million (4%) in the fourth quarter of 2025 compared to the fourth quarter of 2024. Higher premiums in AFG's European operations were more than offset by lower premiums in the financial institutions business. Average renewal rates for this group increased approximately 1% in the fourth quarter of 2025. Reinsurance premiums ceded as a percentage of gross written premiums increased 6 percentage points in the fourth quarter of 2025 compared to the fourth quarter of 2024, reflecting higher cessions of catastrophe exposed business in the financial institutions business.
Combined Ratio
Performance measures such as the combined ratio are often used by property and casualty insurers to help users of their financial statements better understand the company's performance. The combined ratio is the sum of the loss and loss adjustment expenses ("LAE") and underwriting expense ratios. These ratios are calculated by dividing each of the respective expenses by net earned premiums. The table below (dollars in millions) details the components of the combined ratio and underwriting profit for AFG's property and casualty insurance segment:
Three months ended December 31, Three months ended December 31,
2025 2024 Change 2025 2024
Property and transportation
Loss and LAE ratio 56.8 % 69.5 % (12.7 %)
Underwriting expense ratio 13.8 % 20.0 % (6.2 %)
Combined ratio 70.6 % 89.5 % (18.9 %)
Underwriting profit $ 216 $ 81
Specialty casualty
Loss and LAE ratio 68.7 % 67.2 % 1.5 %
Underwriting expense ratio 28.0 % 24.2 % 3.8 %
Combined ratio 96.7 % 91.4 % 5.3 %
Underwriting profit $ 27 $ 69
Specialty financial
Loss and LAE ratio 32.0 % 38.1 % (6.1 %)
Underwriting expense ratio 51.0 % 42.6 % 8.4 %
Combined ratio 83.0 % 80.7 % 2.3 %
Underwriting profit $ 44 $ 54
Total Specialty
Loss and LAE ratio 58.6 % 63.7 % (5.1 %)
Underwriting expense ratio 25.5 % 25.3 % 0.2 %
Combined ratio 84.1 % 89.0 % (4.9 %)
Underwriting profit $ 287 $ 204
Aggregate - including exited lines
Loss and LAE ratio 58.8 % 63.8 % (5.0 %)
Underwriting expense ratio 25.5 % 25.3 % 0.2 %
Combined ratio 84.3 % 89.1 % (4.8 %)
Underwriting profit $ 284 $ 202
The Specialty property and casualty insurance operations generated an underwriting profit of $287 million in the fourth quarter of 2025 compared to $204 million in the fourth quarter of 2024, an increase of $83 million (41%). Higher underwriting profit in the Property and transportation sub-segment was partially offset by lower year-over-year underwriting profit in the Specialty casualty and Specialty financial sub-segments. Overall catastrophe losses were $4 million (0.2 points on the combined ratio) in the fourth quarter of 2025 compared to $21 million (1.1 points), including $1 million in net reinstatement premiums in the fourth quarter of 2024.
Property and transportationUnderwriting profit for this group was $216 million for the fourth quarter of 2025 compared to $81 million in the fourth quarter of 2024, an increase of $135 million (167%), reflecting higher underwriting profitability in the crop insurance operations resulting from record yields for corn and soybeans and favorable commodity pricing trends throughout the growing season. Catastrophe losses for this group were a favorable impact of less than $1 million (0.1 points on the combined ratio) in the fourth quarter of 2025 compared to catastrophe losses of $10 million (1.3 points), including $1 million in net reinstatement premiums in the fourth quarter of 2024.
Specialty casualtyUnderwriting profit for this group was $27 million for the fourth quarter of 2025 compared to $69 million in the fourth quarter of 2024, a decrease of $42 million (61%). Higher year-over-year underwriting profit in certain excess and surplus businesses and the executive liability business were more than offset by lower underwriting results in several social inflation exposed businesses and the workers' compensation and general liability businesses. Catastrophe losses for this group had favorable impacts of $3 million (0.3 points on the combined ratio) in the fourth
quarter of 2025 and $6 million (0.7 points) in the fourth quarter of 2024. Catastrophe losses in the fourth quarter of 2024 include the favorable impact from lower than previously estimated losses from Hurricane Helene.
Specialty financial Underwriting profit for this group was $44 million for the fourth quarter of 2025 compared to $54 million in the fourth quarter of 2024, a decrease of $10 million (19%). Higher underwriting profit in the fidelity business was more than offset by lower underwriting profit in the financial institutions business. Catastrophe losses were $7 million (2.5 points on the combined ratio) in the fourth quarter of 2025 compared to $17 million (6.2 points) in the fourth quarter of 2024.
Aggregate Aggregate underwriting results for AFG's property and casualty insurance segment include adverse prior year reserve development of $3 million in the fourth quarter of 2025 and $2 million in the fourth quarter of 2024 related to business outside of the Specialty group that AFG no longer writes.
Losses and Loss Adjustment Expenses
AFG's overall loss and LAE ratio was 58.8% for the fourth quarter of 2025 compared to 63.8% for the fourth quarter of 2024, a decrease of 5.0 percentage points. The components of AFG's property and casualty losses and LAE amounts and ratio are detailed below (dollars in millions):
Three months ended December 31,
Amount Ratio
Change in Ratio
2025 2024 2025 2024
Property and transportation
Current year, excluding catastrophe losses
$ 437 $ 524 59.6 % 68.5 % (8.9 %)
Prior accident years development (20) (2) (2.7 %) (0.3 %) (2.4 %)
Current year catastrophe losses including the impact of net reinstatement premiums - 9 (0.1 %) 1.3 % (1.4 %)
Property and transportation losses and LAE and ratio $ 417 $ 531 56.8 % 69.5 % (12.7 %)
Specialty casualty
Current year, excluding catastrophe losses
$ 562 $ 503 69.1 % 62.5 % 6.6 %
Prior accident years development (1) 44 (0.1 %) 5.4 % (5.5 %)
Current year catastrophe losses including the impact of net reinstatement premiums (3) (6) (0.3 %) (0.7 %) 0.4 %
Specialty casualty losses and LAE and ratio $ 558 $ 541 68.7 % 67.2 % 1.5 %
Specialty financial
Current year, excluding catastrophe losses
$ 85 $ 98 32.5 % 34.9 % (2.4 %)
Prior accident years development (9) (8) (3.0 %) (3.0 %) - %
Current year catastrophe losses including the impact of net reinstatement premiums 7 17 2.5 % 6.2 % (3.7 %)
Specialty financial losses and LAE and ratio $ 83 $ 107 32.0 % 38.1 % (6.1 %)
Total Specialty
Current year, excluding catastrophe losses
$ 1,084 $ 1,125 60.0 % 60.8 % (0.8 %)
Prior accident years development (30) 34 (1.6 %) 1.8 % (3.4 %)
Current year catastrophe losses including the impact of net reinstatement premiums 4 20 0.2 % 1.1 % (0.9 %)
Total Specialty losses and LAE and ratio $ 1,058 $ 1,179 58.6 % 63.7 % (5.1 %)
Aggregate - including exited lines
Current year, excluding catastrophe losses
$ 1,084 $ 1,125 60.0 % 60.8 % (0.8 %)
Prior accident years development (27) 36 (1.5 %) 1.9 % (3.4 %)
Current year catastrophe losses including the impact of net reinstatement premiums 4 20 0.3 % 1.1 % (0.8 %)
Aggregate losses and LAE and ratio $ 1,061 $ 1,181 58.8 % 63.8 % (5.0 %)
Current accident year losses and LAE, excluding catastrophe losses
The current accident year loss and LAE ratio, excluding catastrophe losses for AFG's Specialty property and casualty insurance operations was 60.0% for the fourth quarter of 2025 compared to 60.8% in the fourth quarter of 2024, a decrease of 0.8 percentage points.
Property and transportation The 8.9 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects very strong earnings in the crop business, partially offset by higher claim severity in certain transportation businesses.
Specialty casualty The 6.6 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects higher than anticipated claim severity in the excess and surplus, social services and California workers' compensation businesses.
Specialty financial The 2.4 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects improved claim severity in the surety and fidelity businesses.
Net prior year reserve development
AFG's Specialty property and casualty insurance operations recorded net favorable reserve development related to prior accident years of $30 million in the fourth quarter of 2025 compared to net adverse reserve development related to prior accident years of $34 million in the fourth quarter of 2024, a change of $64 million (188%).
Property and transportation Net favorable reserve development of $20 million in the fourth quarter of 2025 reflects lower than anticipated losses in the crop business and lower than anticipated claim severity in the commercial auto, property and inland marine and ocean marine businesses. Net favorable reserve development of $2 million in the fourth quarter of 2024 reflects lower than anticipated losses in the crop business and lower than expected claim severity in the property and inland marine business, partially offset by higher than anticipated claim severity in the commercial auto business.
Specialty casualty Net favorable reserve development of $1 million in the fourth quarter of 2025 reflects lower than expected claim severity in the workers' compensation, executive liability and social inflation exposed businesses, partially offset by higher than anticipated claim severity in the excess and surplus, excess liability and public sector businesses. Net adverse reserve development of $44 million in the fourth quarter of 2024 reflects higher than anticipated claim frequency and severity in the umbrella and excess liability businesses and higher than expected claim severity in the social services and general liability businesses, partially offset by lower than expected claim severity in the workers' compensation businesses.
Specialty financial Net favorable reserve development of $9 million in the fourth quarter of 2025 reflects lower than anticipated claim severity in the trade credit and surety businesses and lower than anticipated claim frequency in the financial institutions business. Net favorable reserve development of $8 million in the fourth quarter of 2024 reflects lower than anticipated claim frequency and severity in the financial institutions business and lower than expected claim severity in the fidelity business.
AggregateAggregate net prior accident years reserve development for AFG's property and casualty insurance segment includes net adverse reserve development of $3 million in the fourth quarter of 2025 and $2 million in the fourth quarter of 2024 related to business outside of the Specialty group that AFG no longer writes.
Catastrophe losses
AFG generally seeks to reduce its exposure to catastrophes (whether resulting from climate change or otherwise) through individual risk selection, including minimizing coastal and known fault-line exposures, and the purchase of reinsurance. Based on data available at December 31, 2025, management estimates that AFG's exposure to a catastrophic earthquake or windstorm that industry models indicate should statistically occur once in every 500 years is less than 3% of AFG's Shareholders' Equity.
Catastrophe losses of $4 million in the fourth quarter of 2025 resulted primarily from storms in multiple regions of the United States. Catastrophe losses of $20 million (before $1 million in net reinstatement premiums) in the fourth quarter of 2024 resulted primarily from Hurricane Milton.
Commissions and Other Underwriting Expenses
AFG's property and casualty commissions and other underwriting expenses ("U/W Exp") were $461 million in the fourth quarter of 2025 compared to $467 million for the fourth quarter of 2024, a decrease of $6 million (1%). AFG's underwriting expense ratio, calculated as commissions and other underwriting expenses divided by net premiums earned, was 25.5% for the fourth quarter of 2025 compared to 25.3% for the fourth quarter of 2024, an increase of 0.2 percentage points. Detail of AFG's property and casualty commissions and other underwriting expenses and underwriting expense ratios is shown below (dollars in millions):
Three months ended December 31,
2025 2024
Change in % of NEP
U/W Exp % of NEP U/W Exp % of NEP
Property and transportation $ 102 13.8 % $ 153 20.0 % (6.2 %)
Specialty casualty 227 28.0 % 195 24.2 % 3.8 %
Specialty financial 132 51.0 % 119 42.6 % 8.4 %
$ 461 25.5 % $ 467 25.3 % 0.2 %
Property and transportation Commissions and other underwriting expenses as a percentage of net earned premiums decreased 6.2 percentage points in the fourth quarter of 2025 compared to the fourth quarter of 2024. The improvement reflects higher ceding commissions from reinsurers resulting from very strong crop insurance results, partially offset by higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics.
Specialty casualty Commissions and other underwriting expenses as a percentage of net earned premiums increased 3.8 percentage points in the fourth quarter of 2025 compared to the fourth quarter of 2024 reflecting an increase in average commission rates in certain excess and surplus businesses resulting from changes in reinsurance treaties, higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics and changes in the mix of business.
Specialty financial Commissions and other underwriting expenses as a percentage of net earned premiums increased 8.4 percentage points in the fourth quarter of 2025 compared to the fourth quarter of 2024 reflecting higher profit-based commissions to agents in the financial institutions business and higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics.
Property and Casualty Net Investment Income
Net investment income in AFG's property and casualty insurance operations was $171 million in the fourth quarter of 2025 compared to $195 million in the fourth quarter of 2024, a decrease of $24 million (12%). The average invested assets and overall yield earned on investments held by AFG's property and casualty insurance operations are provided below (dollars in millions):
Three months ended December 31, %
2025 2024 Change Change
Net investment income:
Net investment income, excluding alternative investments $ 165 $ 162 $ 3 2 %
Alternative investments 6 33 (27) (82 %)
Total net investment income $ 171 $ 195 $ (24) (12 %)
Average invested assets (at amortized cost) $ 16,520 $ 15,718 $ 802 5 %
Yield on fixed maturities (before investment expenses) 5.11 % 5.09 % 0.02 %
Yield (net investment income as a % of average invested assets) 4.14 % 4.96 % (0.82 %)
The decrease in the property and casualty insurance segment's net investment income for the fourth quarter of 2025 compared to the fourth quarter of 2024 reflects the impact of lower returns on AFG's alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs), partially offset by higher balances of invested assets and higher returns on fixed income investments. The property and casualty insurance segment's overall yield on investments (net investment income as a percentage of average invested assets) was 4.14% for the fourth quarter of 2025 compared to 4.96% for the fourth quarter of 2024, a decrease of 0.82 percentage points. The annualized return
earned on alternative investments was 0.9% in the fourth quarter of 2025 compared to 4.9% in the comparable prior year period.
Property and Casualty Other Income and Expenses, Net
Other income and expenses, net for AFG's property and casualty insurance operations was a net expense of $15 million for the fourth quarter of 2025 compared to $19 million for the fourth quarter of 2024, an improvement of $4 million (21%). The table below details the items included in other income and expenses, net for AFG's property and casualty insurance operations (in millions):
Three months ended December 31,
2025 2024
Other income
$ 3 $ 2
Other expenses:
Amortization of intangibles 5 6
Interest expense on funds withheld 11 12
Other 2 3
Total other expenses 18 21
Other income and expenses, net $ (15) $ (19)
Holding Company, Other and Unallocated - Results of Operations
AFG's net pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $54 million in the fourth quarter of 2025 compared to $48 million in the fourth quarter of 2024, an increase of $6 million (13%).
The following table details AFG's loss before income taxes from operations outside of its property and casualty insurance segment for the three months ended December 31, 2025 and 2024 (dollars in millions):
Three months ended December 31,
2025 2024 % Change
Revenues:
Net investment income $ 7 $ 7 - %
Other income - P&C fees 27 28 (4 %)
Other income 4 6 (33 %)
Total revenues 38 41 (7 %)
Costs and Expenses:
P&C - loss adjustment and underwriting expenses
5 13 (62 %)
Other expense - expenses associated with P&C fees 22 15 47 %
Other expenses
42 42 - %
Costs and expenses, excluding interest charges on borrowed money 69 70 (1 %)
Loss before income taxes, excluding realized gains and losses and interest charges on borrowed money (31) (29) 7 %
Interest charges on borrowed money 23 19 21 %
Loss before income taxes, excluding realized gains and losses
$ (54) $ (48) 13 %
Holding Company and Other - Net Investment Income
AFG recorded net investment income on investments held outside of its property and casualty insurance segment of $7 million in both the fourth quarter of 2025 and 2024.
Holding Company and Other - P&C Fees and Related Expenses
Summit, a workers' compensation insurance subsidiary, collects fees from a small group of unaffiliated insurers for providing underwriting, policy administration and claims services. In addition, certain of AFG's property and casualty insurance businesses collect fees from customers for ancillary services such as workplace safety programs and premium financing. In the fourth quarter of 2025, AFG collected $27 million in fees for these services compared to $28 million in the fourth quarter of 2024. Management views this fee income, net of the $22 million in the fourth quarter of 2025 and $15 million in the fourth quarter of 2024 in expenses incurred to generate such fees, as a reduction in the cost of underwriting its property and casualty insurance policies. The expenses related to providing such services are embedded in property and casualty underwriting expenses. Consistent with internal management reporting, these fees and the
related expenses are netted and recorded as a reduction of commissions and other underwriting expenses in AFG's segmented results.
Holding Company and Other - Other Income
Other income in the table above includes $3 million and $4 million in the fourth quarter of 2025 and the fourth quarter of 2024, respectively, in management fees paid to AFG by the AFG-managed CLOs (AFG's consolidated managed investment entities). The management fees are eliminated in consolidation - see the other income line in the Consolidate MIEs column under "Results of Operations - Segmented Statement of Earnings."Excluding amounts eliminated in consolidation, AFG recorded other income outside of its property and casualty insurance segment of $1 million and $2 million in the fourth quarter of 2025 and the fourth quarter of 2024, respectively.
Holding Company and Other - Other Expenses
AFG's holding companies and other operations outside of its property and casualty insurance segment recorded other expenses of $42 million in both the fourth quarter of 2025 and 2024.
Holding Company and Other - Interest Charges on Borrowed Money
AFG's holding companies and other operations outside of its property and casualty insurance segment recorded interest expense of $23 million in the fourth quarter of 2025 compared to $19 million in the fourth quarter of 2024, an increase of $4 million (21%) reflecting the issuance of $350 million principal amount of 5.00% Senior Notes in September 2025.
Realized Gains (Losses) on Securities
AFG's realized gains (losses) on securities were net losses of $7 million in the fourth quarter of 2025 compared to $10 million in the fourth quarter of 2024, a decrease of $3 million (30%). Realized gains (losses) on securities consisted of the following (in millions):
Three months ended December 31,
2025 2024
Realized gains (losses) before impairment allowances:
Disposals $ 2 $ -
Change in the fair value of equity securities (1) 3
Change in the fair value of derivatives - (3)
1 -
Change in allowance for impairments on securities (8) (10)
Realized gains (losses) on securities $ (7) $ (10)
The $3 million net realized gain from the change in the fair value of equity securities in the fourth quarter of 2024 includes gains of $4 million on investments in technology companies.
The $8 million change in allowance for impairments on securities in the fourth quarter of 2025 relates primarily to allowances on fixed maturities related to commercial real estate funds.
The $10 million change in allowance for impairments on securities in the fourth quarter of 2024 relates primarily to an allowance taken on fixed maturities from a single issuer in the retail sector.
Consolidated Income Taxes
AFG's consolidated provision for income taxes was $80 million for the fourth quarter of 2025 compared to $65 million in the fourth quarter of 2024, an increase of $15 million (23%). The following is a reconciliation of income taxes at the statutory rate to the provision for income taxes as shown in the segmented statement of earnings (dollars in millions):
Three months ended December 31,
2025 2024
Amount % of EBT Amount % of EBT
Earnings before income taxes ("EBT") $ 379 $ 320
Income taxes at statutory rate $ 79 21 % $ 67 21 %
Effect of:
State and local income taxes, net of federal income tax effect 1 - % 3 1 %
Cross-border tax laws
1 - % - - %
Impact of nontaxable or nondeductible items:
Tax preference investments
(1) - % (2) (1 %)
Other - - % (3) (1 %)
Provision for income taxes $ 80 21 % $ 65 20 %
See Note L - "Income Taxes"to the financial statements for an analysis of items affecting AFG's effective tax rate.
RESULTS OF OPERATIONS - YEARS ENDED DECEMBER 31, 2025, 2024 AND 2023
Segmented Statement of Earnings
AFG reports its operations as two segments: (i) Property and casualty insurance ("P&C") and (ii) Other, which includes holding company costs and income and expenses related to the managed investment entities ("MIEs").
AFG's net earnings, determined in accordance with GAAP, include certain items that may not be indicative of its ongoing core operations. The following tables for the years ended December 31, 2025, 2024 and 2023 identify such items by segment and reconcile net earnings to core net operating earnings, a non-GAAP financial measure that AFG believes is a useful tool for investors and analysts in analyzing ongoing operating trends (in millions):
Other
P&C Consol. MIEs Holding Co., other and unallocated Total Non-core reclass GAAP Total
Year ended December 31, 2025
Revenues:
Net earned premiums
$ 7,046 $ - $ - $ 7,046 $ - $ 7,046
Net investment income 725 (5) 25 745 - 745
Realized gains (losses) on:
Securities - - - - 10 10
Subsidiaries - - - - 1 1
Income of MIEs:
Investment income - 283 - 283 - 283
Gain (loss) on change in fair value of assets/liabilities
- (26) - (26) - (26)
Other income 12 (11) 114 115 - 115
Total revenues 7,783 241 139 8,163 11 8,174
Costs and Expenses:
Losses and loss adjustment expenses 4,388 - - 4,388 - 4,388
Commissions and other underwriting expenses 2,029 - 30 2,059 - 2,059
Interest charges on borrowed money - - 80 80 - 80
Expenses of MIEs - 241 - 241 - 241
Other expenses 79 - 229 308 25 333
Total costs and expenses 6,496 241 339 7,076 25 7,101
Earnings before income taxes
1,287 - (200) 1,087 (14) 1,073
Provision for income taxes 264 - (37) 227 4 231
Core Net Operating Earnings 1,023 - (163) 860
Non-core earnings (loss) (*):
Realized gains (losses) on securities, net of tax
- - 8 8 (8) -
Realized gain on subsidiaries, net of tax 1 - - 1 (1) -
Special A&E charge, net of tax
- - (20) (20) 20 -
Other - - (7) (7) 7 -
Net Earnings
$ 1,024 $ - $ (182) $ 842 $ - $ 842
Other
P&C Consol. MIEs Holding Co., other and unallocated Total Non-core reclass GAAP Total
Year ended December 31, 2024
Revenues:
Net earned premiums
$ 7,036 $ - $ - $ 7,036 $ - $ 7,036
Net investment income 784 (33) 29 780 - 780
Realized gains (losses) on securities - - - - - -
Income of MIEs:
Investment income - 380 - 380 - 380
Gain (loss) on change in fair value of assets/liabilities
- 4 - 4 - 4
Other income 8 (13) 129 124 - 124
Total revenues 7,828 338 158 8,324 - 8,324
Costs and Expenses:
Losses and loss adjustment expenses 4,455 - 5 4,460 - 4,460
Commissions and other underwriting expenses 1,961 - 46 2,007 - 2,007
Interest charges on borrowed money - - 76 76 - 76
Expenses of MIEs - 338 - 338 - 338
Other expenses 84 - 221 305 14 319
Total costs and expenses 6,500 338 348 7,186 14 7,200
Earnings before income taxes
1,328 - (190) 1,138 (14) 1,124
Provision for income taxes 279 - (43) 236 1 237
Core Net Operating Earnings
1,049 - (147) 902
Non-core earnings (loss) (*):
Realized gains (losses) on securities, net of tax
- - - - - -
Special A&E charge, net of tax - - (11) (11) 11 -
Other
(4) - - (4) 4 -
Net Earnings
$ 1,045 $ - $ (158) $ 887 $ - $ 887
Other
P&C Consol. MIEs Holding Co., other and unallocated Total Non-core reclass GAAP Total
Year ended December 31, 2023
Revenues:
Net earned premiums
$ 6,531 $ - $ - $ 6,531 $ - $ 6,531
Net investment income 729 (27) 40 742 - 742
Realized gains (losses) on:
Securities
- - - - (36) (36)
Subsidiary - - - - (4) (4)
Income of MIEs:
Investment income - 421 - 421 - 421
Gain (loss) on change in fair value of assets/liabilities
- 27 - 27 - 27
Other income 16 (16) 146 146 - 146
Total revenues 7,276 405 186 7,867 (40) 7,827
Costs and Expenses:
Losses and loss adjustment expenses 4,017 - 16 4,033 - 4,033
Commissions and other underwriting expenses 1,883 - 52 1,935 - 1,935
Interest charges on borrowed money - - 76 76 - 76
Expenses of MIEs - 405 - 405 - 405
Other expenses 72 - 219 291 14 305
Total costs and expenses 5,972 405 363 6,740 14 6,754
Earnings before income taxes
1,304 - (177) 1,127 (54) 1,073
Provision for income taxes 265 - (33) 232 (11) 221
Core Net Operating Earnings
1,039 - (144) 895
Non-core earnings (loss) (*):
Realized gains (losses) on securities, net of tax
- - (28) (28) 28 -
Realized loss on subsidiary (4) - - (4) 4 -
Special A&E charge, net of tax - - (12) (12) 12 -
Gain on retirement of debt, net of tax - - 1 1 (1) -
Net Earnings
$ 1,035 $ - $ (183) $ 852 $ - $ 852
(*)See the reconciliation of core earnings to GAAP net earnings under "Results of Operations - General"for details on the tax impacts of these reconciling items.
Property and Casualty Insurance Segment - Results of Operations
AFG's property and casualty insurance operations contributed $1.29 billion in GAAP pretax earnings in 2025 compared to $1.33 billion in 2024, a decrease of $40 million (3%). Property and casualty core pretax earnings were $1.29 billion in 2025 compared to $1.33 billion in 2024, a decrease of $41 million (3%). The decrease in GAAP and core pretax earnings in 2025 compared to 2024 reflects lower net investment income from AFG's alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs), partially offset by higher underwriting profit and higher investment income outside of alternative investments.
AFG's property and casualty insurance operations contributed $1.33 billion in GAAP pretax earnings in 2024 compared to $1.30 billion in 2023, an increase of $28 million (2%). Property and casualty core pretax earnings were $1.33 billion in 2024 compared to $1.30 billion in 2023, an increase of $24 million (2%). The increase in GAAP and core pretax earnings in 2024 compared to 2023 reflects higher investment income outside of alternative investments, partially offset by lower investment income from AFG's alternative investment portfolio and lower underwriting profit.
The following table details AFG's GAAP and core earnings before income taxes from its property and casualty insurance operations for the years ended December 31, 2025, 2024 and 2023 (dollars in millions):
Year ended December 31, % Change
2025 2024 2023 2025 - 2024 2024 - 2023
Gross written premiums $ 10,694 $ 10,533 $ 9,656 2 % 9 %
Reinsurance premiums ceded (3,584) (3,394) (2,964) 6 % 15 %
Net written premiums 7,110 7,139 6,692 - % 7 %
Change in unearned premiums (64) (103) (161) (38 %) (36 %)
Net earned premiums 7,046 7,036 6,531 - % 8 %
Loss and loss adjustment expenses
4,388 4,455 4,017 (2 %) 11 %
Commissions and other underwriting expenses 2,029 1,961 1,883 3 % 4 %
Underwriting gain
629 620 631 1 % (2 %)
Net investment income 725 784 729 (8 %) 8 %
Other income and expenses, net (67) (76) (56) (12 %) 36 %
Core earnings before income taxes 1,287 1,328 1,304 (3 %) 2 %
Realized gain (loss) on subsidiaries
1 - (4) - % (100 %)
GAAP earnings before income taxes
$ 1,288 $ 1,328 $ 1,300 (3 %) 2 %
Year ended December 31, Change
Combined Ratios: 2025 2024 2023 2025 - 2024 2024 - 2023
Specialty lines
Loss and LAE ratio 62.2 % 63.3 % 61.5 % (1.1 %) 1.8 %
Underwriting expense ratio 28.8 % 27.9 % 28.8 % 0.9 % (0.9 %)
Combined ratio 91.0 % 91.2 % 90.3 % (0.2 %) 0.9 %
Aggregate - including exited lines
Loss and LAE ratio 62.2 % 63.3 % 61.6 % (1.1 %) 1.7 %
Underwriting expense ratio 28.8 % 27.9 % 28.8 % 0.9 % (0.9 %)
Combined ratio 91.0 % 91.2 % 90.4 % (0.2 %) 0.8 %
AFG reports the underwriting performance of its Specialty property and casualty insurance business in the following sub-segments: (i) Property and transportation, (ii) Specialty casualty and (iii) Specialty financial.
Historically, AFG reported the results of its internal reinsurance facility (that assumes business from several of AFG's Specialty property and casualty businesses) in an Other Specialty sub-segment. Beginning in 2025, the internal reinsurance results are included within the same sub-segments as the ceding businesses to align with senior management's evolving view of the program. The overall results for AFG's Specialty property and casualty insurance operations are not impacted by this change. Information from prior periods has been recast for consistent presentation.
Gross Written Premiums
Gross written premiums ("GWP") for AFG's property and casualty insurance segment were $10.69 billion in 2025 compared to $10.53 billion in 2024, an increase of $161 million (2%). GWP increased $877 million (9%) in 2024 compared to 2023. Detail of AFG's property and casualty gross written premiums is shown below (dollars in millions):
Year ended December 31, % Change
2025 2024 2023 2025 - 2024 2024 - 2023
GWP % GWP % GWP %
Property and transportation $ 4,731 44 % $ 4,735 45 % $ 4,146 43 % - % 14 %
Specialty casualty 4,620 43 % 4,543 43 % 4,368 45 % 2 % 4 %
Specialty financial 1,343 13 % 1,255 12 % 1,142 12 % 7 % 10 %
$ 10,694 100 % $ 10,533 100 % $ 9,656 100 % 2 % 9 %
Reinsurance Premiums Ceded
Reinsurance premiums ceded ("Ceded") for AFG's property and casualty insurance segment were 34% of gross written premiums for the year ended December 31, 2025, 32% for year ended December 31, 2024 and 31% December 31, 2023, an increase of 2 percentage points for 2025 compared to 2024 and an increase of 1 percentage point for 2024 compared to 2023. Detail of AFG's property and casualty reinsurance premiums ceded is shown below (dollars in millions):
Year ended December 31, Change in % of GWP
2025 2024 2023 2025 - 2024 2024 - 2023
Ceded % of GWP Ceded % of GWP Ceded % of GWP
Property and transportation $ (1,960) 41 % $ (1,889) 40 % $ (1,560) 38 % 1 % 2 %
Specialty casualty (1,373) 30 % (1,297) 29 % (1,199) 27 % 1 % 2 %
Specialty financial (251) 19 % (208) 17 % (205) 18 % 2 % (1 %)
$ (3,584) 34 % $ (3,394) 32 % $ (2,964) 31 % 2 % 1 %
Net Written Premiums
Net written premiums ("NWP") for AFG's property and casualty insurance segment were $7.11 billion in 2025 compared to $7.14 billion in 2024, a decrease of $29 million. NWP increased $447 million (7%) in 2024 compared to 2023. Detail of AFG's property and casualty net written premiums is shown below (dollars in millions):
Year ended December 31, % Change
2025 2024 2023 2025 - 2024 2024 - 2023
NWP % NWP % NWP %
Property and transportation $ 2,771 39 % $ 2,846 40 % $ 2,586 39 % (3 %) 10 %
Specialty casualty 3,247 46 % 3,246 45 % 3,169 47 % - % 2 %
Specialty financial 1,092 15 % 1,047 15 % 937 14 % 4 % 12 %
$ 7,110 100 % $ 7,139 100 % $ 6,692 100 % - % 7 %
Net Earned Premiums
Net earned premiums ("NEP") for AFG's property and casualty insurance segment were $7.05 billion in 2025 compared to $7.04 billion in 2024, an increase of $10 million. NEP increased $505 million (8%) in 2024 compared to 2023. Detail of AFG's property and casualty net earned premiums is shown below (dollars in millions):
Year ended December 31, % Change
2025 2024 2023 2025 - 2024 2024 - 2023
NEP % NEP % NEP %
Property and transportation $ 2,746 39 % $ 2,826 40 % $ 2,550 39 % (3 %) 11 %
Specialty casualty 3,215 46 % 3,176 45 % 3,112 48 % 1 % 2 %
Specialty financial 1,085 15 % 1,034 15 % 869 13 % 5 % 19 %
$ 7,046 100 % $ 7,036 100 % $ 6,531 100 % - % 8 %
Gross written premiums increased $161 million (2%) in 2025 compared to 2024. The Specialty property and casualty insurance operations continue to achieve year-over-year premium growth as a result of new business opportunities, a good renewal rate environment and increased exposures. Overall average renewal rates increased approximately 5% in 2025. Excluding the workers' compensation businesses, renewal pricing increased approximately 6%.
The $877 million (9%) increase in gross written premiums in 2024 compared to 2023 reflects growth in each of the Specialty property and casualty sub-segments as a result of additional crop premiums from the CRS acquisition in the Property and transportation sub-segment and new business opportunities, increased exposures and a good renewal rate environment. Overall average renewal rates increased approximately 7% in 2024. Excluding the workers' compensation businesses, renewal pricing increased approximately 8%.
Property and transportation Gross written premiums decreased $4 million in 2025 compared to 2024. This decrease was primarily the result of the impact of lower commodity prices on crop insurance premiums, partially offset by growth in the transportation businesses as a result of increased exposures, new business opportunities and a favorable rate environment. Average renewal rates increased approximately 7% for this group in 2025. Reinsurance premiums ceded as a percentage of gross written premiums increased 1 percentage point in 2025 compared to 2024, reflecting growth in certain programs in the transportation businesses which cede a higher percentage of premiums than some of the other businesses in the Property and transportation sub-segment and higher cessions in the crop and aviation businesses.
Gross written premiums increased $589 million (14%) in 2024 compared to 2023. Year-over-year premium growth resulted from additional crop premium associated with the CRS acquisition as well as new business opportunities, a favorable rate environment and increased exposures in the commercial auto businesses. The year-over-year premium growth was tempered by the impact of lower year-over-year commodity pricing on winter wheat premiums, coupled with elevated pricing competition and the non-renewal of certain under-performing accounts in the transportation businesses. Excluding crop premium, gross and net written premiums in this group grew by 5% and 4%, respectively. Average renewal rates increased approximately 8% for this group in 2024. Reinsurance premiums ceded as a percentage of gross written premiums increased 2 percentage points in 2024 compared to 2023, reflecting the impact of higher cessions in the crop business and growth in certain programs in the transportation businesses which cede a larger percentage of premiums than some of the other businesses in the Property and transportation sub-segment.
Specialty casualty Gross written premiums increased $77 million (2%) in 2025 compared to 2024. The higher-year-over-year premiums resulted primarily from the mergers and acquisitions liability business and growth across several of the targeted markets businesses resulting from new business opportunities, higher rates and strong policy retention and growth in the workers' compensation businesses. These items were partially offset by lower premiums in the excess and surplus businesses and lower premiums due to a challenging market in the directors' and officers' liability business as well as the continued non-renewal of certain housing and daycare accounts in the social services businesses. Average renewal rates increased approximately 6% for this group in 2025. Excluding workers' compensation businesses, renewal rates for this group increased approximately 8% in 2025. Reinsurance premiums ceded as a percentage of gross written premiums increased 1 percentage point in 2025 compared to 2024, reflecting higher cessions and higher reinsurance costs in the excess liability business and growth in the public sector and mergers and acquisitions liability businesses, both of which cede a larger percentage of premiums than some of the other businesses in the Specialty casualty sub-segment.
Gross written premiums increased $175 million (4%) in 2024 compared to 2023. The higher year-over-year premiums resulted primarily from growth in the excess and surplus, excess liability and certain targeted markets businesses as a result of rate increases, new business opportunities and strong policy retention. The mergers and acquisitions liability business also benefited from an increase in mergers and acquisition activity. This growth was tempered by lower year-over-year workers' compensation premiums. Average renewal rates increased approximately 6% for this group in 2024. Excluding overall rate decreases in the workers' compensation businesses, renewal rates for this group increased approximately 9% in 2024. Reinsurance premiums ceded as a percentage of gross written premiums increased 2 percentage points in 2024 compared to 2023, reflecting the impact of higher premiums in the excess and surplus and mergers and acquisitions liability businesses, which cede a larger percentage of premiums than some of the other businesses in the Specialty casualty sub-segment and higher cessions in the public sector business, partially offset by lower cessions in certain more heavily reinsured products in the social services business.
Specialty financialGross written premiums increased $88 million (7%) in 2025 compared to 2024 due primarily to growth in the financial institutions business and AFG's European operations. Average renewal rates decreased approximately 1% for this group in 2025. Reinsurance premiums ceded as a percentage of gross written premiums increased 2 percentage points in 2025 compared to 2024, reflecting higher cessions of catastrophe exposed business in the financial institutions business, partially offset by the impact of lower reinstatement premiums paid to reinsurers in the fidelity and surety businesses.
Gross written premiums increased $113 million (10%) in 2024 compared to 2023. Year-over-year growth in the financial institutions business was partially offset by a decision to pause writing of new intellectual property-related coverage. Average renewal rates for this group increased approximately 6% in 2024. Reinsurance premiums ceded as a percentage of gross written premiums decreased 1 percentage point in 2024 compared to 2023, reflecting lower gross written premiums in the innovative markets business, which cedes a larger percentage of premiums than some of the other businesses in the Specialty financial sub-segment, partially offset by the impact of higher reinstatement premiums paid to reinsurers in the fidelity and surety businesses.
Combined Ratio
The table below (dollars in millions) details the components of the combined ratio and underwriting profit for AFG's property and casualty insurance segment for 2025, 2024 and 2023:
Year ended December 31, Change Year ended December 31,
2025 2024 2023 2025 - 2024 2024 - 2023 2025 2024 2023
Property and transportation
Loss and LAE ratio 67.1 % 69.8 % 69.5 % (2.7 %) 0.3 %
Underwriting expense ratio 20.7 % 22.6 % 23.6 % (1.9 %) (1.0 %)
Combined ratio 87.8 % 92.4 % 93.1 % (4.6 %) (0.7 %)
Underwriting profit $ 335 $ 214 $ 174
Specialty casualty
Loss and LAE ratio 66.9 % 64.4 % 61.5 % 2.5 % 2.9 %
Underwriting expense ratio 29.1 % 26.8 % 27.3 % 2.3 % (0.5 %)
Combined ratio 96.0 % 91.2 % 88.8 % 4.8 % 2.4 %
Underwriting profit $ 129 $ 279 $ 348
Specialty financial
Loss and LAE ratio 35.9 % 41.8 % 37.8 % (5.9 %) 4.0 %
Underwriting expense ratio 48.5 % 45.4 % 49.4 % 3.1 % (4.0 %)
Combined ratio 84.4 % 87.2 % 87.2 % (2.8 %) - %
Underwriting profit $ 170 $ 133 $ 111
Total Specialty
Loss and LAE ratio 62.2 % 63.3 % 61.5 % (1.1 %) 1.8 %
Underwriting expense ratio 28.8 % 27.9 % 28.8 % 0.9 % (0.9 %)
Combined ratio 91.0 % 91.2 % 90.3 % (0.2 %) 0.9 %
Underwriting profit $ 634 $ 626 $ 633
Aggregate - including exited lines
Loss and LAE ratio 62.2 % 63.3 % 61.6 % (1.1 %) 1.7 %
Underwriting expense ratio 28.8 % 27.9 % 28.8 % 0.9 % (0.9 %)
Combined ratio 91.0 % 91.2 % 90.4 % (0.2 %) 0.8 %
Underwriting profit $ 629 $ 620 $ 631
The Specialty property and casualty insurance operations generated an underwriting profit of $634 million in 2025 compared to $626 million in 2024, an increase of $8 million (1%). Higher underwriting profit in the Property and transportation and Specialty financial sub-segments was partially offset by lower underwriting profit in the Specialty casualty sub-segment. Overall catastrophe losses were $137 million (2.0 points on the combined ratio) for 2025 compared to catastrophe losses of $182 million (2.6 points), including $2 million in net reinstatement premiums, for 2024.
The Specialty property and casualty insurance operations generated an underwriting profit of $626 million in 2024 compared to $633 million in 2023, a decrease of $7 million (1%). Higher underwriting profit in the Property and transportation and Specialty financial sub-segments was more than offset by lower underwriting profit in the Specialty casualty sub-segment. Overall catastrophe losses were $182 million (2.6 points on the combined ratio), including $2 million in net reinstatement premiums, for 2024 compared to catastrophe losses of $165 million (2.5 points), including $3 million in net reinstatement premiums, for 2023.
Property and transportationUnderwriting profit for this group was $335 million in 2025 compared to $214 million in 2024, an increase of $121 million (57%) reflecting higher underwriting profitability in the crop insurance operations which benefitted from record yields for corn and soybeans and favorable commodity pricing trends throughout the growing season, partially offset by lower year-over-year underwriting profit in the property and inland marine business and transportation businesses. Catastrophe losses were $26 million (1.0 points on the combined ratio) in 2025 compared to catastrophe losses of $66 million (2.3 points), including $1 million in net reinstatement premiums, in 2024.
Underwriting profit for this group was $214 million in 2024 compared to $174 million in 2023, an increase of $40 million (23%). Higher year-over-year underwriting profit in the property and inland marine and crop insurance operations was
partially offset by lower underwriting profitability in the transportation businesses. Catastrophe losses were $66 million (2.3 points on the combined ratio), including $1 million in net reinstatement premiums, in 2024 compared to catastrophe losses of $56 million (2.1 points), including $2 million in net reinstatement premiums, in 2023.
Specialty casualtyUnderwriting profit for this group was $129 million in 2025 compared to $279 million in 2024, a decrease of $150 million (54%), reflecting lower underwriting profit in the directors' and officers' liability, excess and surplus, mergers and acquisitions liability and workers' compensation businesses. Catastrophe losses were $39 million (1.3 points on the combined ratio) in 2025 compared to catastrophe losses of $35 million (1.0 point), including $1 million in net reinstatement premiums, in 2024.
Underwriting profit for this group was $279 million in 2024 compared to $348 million in 2023, a decrease of $69 million (20%). Higher year-over-year underwriting profit in the targeted markets businesses was more than offset by lower levels of favorable prior year reserve development in the executive liability business and social inflation driven adverse development in the umbrella and excess business. Catastrophe losses were $35 million (1.0 point on the combined ratio), including $1 million in net reinstatement premiums, in 2024 compared to catastrophe losses of $59 million (1.9 points), including $1 million in net reinstatement premiums, in 2023.
Specialty financial Underwriting profit for this group was $170 million in 2025 compared to $133 million in 2024, an increase of $37 million (28%). This year-over-year increase reflects higher underwriting profit in the surety, fidelity and financial institutions businesses. Catastrophe losses were $72 million (6.6 points on the combined ratio) in 2025 compared to catastrophe losses of $81 million (7.9 points) in 2024.
Underwriting profit for this group was $133 million in 2024 compared to $111 million in 2023, an increase of $22 million (20%). This year-over-year increase reflects higher underwriting profit in the financial institutions business, partially offset by lower profitability resulting from the pause in writing of intellectual property-related coverage. Catastrophe losses were $81 million (7.9 points on the combined ratio) in 2024 compared to catastrophe losses of $50 million (5.7 points) in 2023.
AggregateAggregate underwriting results for AFG's property and casualty insurance segment include adverse prior year reserve development of $5 million in 2025, $6 million in 2024 and $2 million in 2023, related to business outside of the Specialty group that AFG no longer writes.
Losses and Loss Adjustment Expenses
AFG's overall loss and LAE ratio was 62.2%, 63.3% and 61.6% in 2025, 2024 and 2023, respectively. The components of AFG's property and casualty losses and LAE amounts and ratio are detailed below (dollars in millions):
Year ended December 31,
Amount Ratio Change in Ratio
2025 2024 2023 2025 2024 2023 2025 - 2024 2024 - 2023
Property and transportation
Current year, excluding catastrophe losses
$ 1,880 $ 2,003 $ 1,801 68.4 % 70.9 % 70.6 % (2.5 %) 0.3 %
Prior accident years development (63) (96) (82) (2.3 %) (3.4 %) (3.2 %) 1.1 % (0.2 %)
Current year catastrophe losses including the impact of net reinstatement premiums 26 65 54 1.0 % 2.3 % 2.1 % (1.3 %) 0.2 %
Property and transportation losses and LAE and ratio
$ 1,843 $ 1,972 $ 1,773 67.1 % 69.8 % 69.5 % (2.7 %) 0.3 %
Specialty casualty
Current year, excluding catastrophe losses
$ 2,092 $ 1,974 $ 1,967 65.0 % 62.2 % 63.2 % 2.8 % (1.0 %)
Prior accident years development 20 37 (111) 0.6 % 1.2 % (3.6 %) (0.6 %) 4.8 %
Current year catastrophe losses including the impact of net reinstatement premiums 39 34 58 1.3 % 1.0 % 1.9 % 0.3 % (0.9 %)
Specialty casualty losses and LAE and ratio
$ 2,151 $ 2,045 $ 1,914 66.9 % 64.4 % 61.5 % 2.5 % 2.9 %
Specialty financial
Current year, excluding catastrophe losses
$ 360 $ 362 $ 311 33.2 % 35.0 % 35.8 % (1.8 %) (0.8 %)
Prior accident years development (43) (11) (33) (3.9 %) (1.1 %) (3.7 %) (2.8 %) 2.6 %
Current year catastrophe losses including the impact of net reinstatement premiums 72 81 50 6.6 % 7.9 % 5.7 % (1.3 %) 2.2 %
Specialty financial losses and LAE and ratio
$ 389 $ 432 $ 328 35.9 % 41.8 % 37.8 % (5.9 %) 4.0 %
Total Specialty
Current year, excluding catastrophe losses
$ 4,332 $ 4,339 $ 4,079 61.4 % 61.7 % 62.4 % (0.3 %) (0.7 %)
Prior accident years development (86) (70) (226) (1.2 %) (1.0 %) (3.4 %) (0.2 %) 2.4 %
Current year catastrophe losses including the impact of net reinstatement premiums 137 180 162 2.0 % 2.6 % 2.5 % (0.6 %) 0.1 %
Total Specialty losses and LAE and ratio $ 4,383 $ 4,449 $ 4,015 62.2 % 63.3 % 61.5 % (1.1 %) 1.8 %
Aggregate - including exited lines
Current year, excluding catastrophe losses
$ 4,332 $ 4,339 $ 4,079 61.5 % 61.7 % 62.4 % (0.2 %) (0.7 %)
Prior accident years development (81) (64) (224) (1.1 %) (0.9 %) (3.4 %) (0.2 %) 2.5 %
Current year catastrophe losses including the impact of net reinstatement premiums 137 180 162 1.8 % 2.5 % 2.6 % (0.7 %) (0.1 %)
Aggregate losses and LAE and ratio $ 4,388 $ 4,455 $ 4,017 62.2 % 63.3 % 61.6 % (1.1 %) 1.7 %
Current accident year losses and LAE, excluding catastrophe losses
The current accident year loss and LAE ratio, excluding catastrophe losses for AFG's Specialty property and casualty insurance operations was 61.4% in 2025, 61.7% in 2024 and 62.4% in 2023.
Property and transportation The 2.5 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses in 2025 compared to 2024, reflects very strong earnings in the crop business and growth and improved results in the property and inland marine business, which has a lower loss and LAE ratio than some of the other businesses in the Property and transportation sub-segment, partially offset by higher claim severity in the aviation business.
The 0.3 percentage point increase in the loss and LAE ratio for the current year, excluding catastrophe losses in 2024 compared to 2023, reflects growth in the crop business, which has a higher loss and LAE ratio than some of the other businesses in the Property and transportation sub-segment and higher reported claim severity in the commercial auto business, partially offset by the impact of improved profitability in the property and inland marine business.
Specialty casualty The 2.8 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses in 2025 compared to 2024, reflects higher than anticipated claim severity in the excess and surplus and social services businesses.
The 1.0 percentage point decrease in the loss and LAE ratio for the current year, excluding catastrophe losses in 2024 compared to 2023, reflects improved results in the workers' compensation and targeted markets businesses, partially offset by higher claim severity in the excess and surplus business.
Specialty financial The 1.8 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses in 2025 compared to 2024, reflects improved results in the surety and fidelity businesses and growth in the financial institutions business, which has a lower loss and LAE ratio than some of the other businesses in the Specialty financial sub-segment, partially offset by growth in AFG's European operations, which has a higher loss and LAE ratio than some of the other businesses in the Specialty financial sub-segment.
The 0.8 percentage point decrease in the loss and LAE ratio for the current year, excluding catastrophe losses in 2024 compared to 2023, reflects growth in the financial institutions business, which has a lower loss and LAE ratio than some of the other businesses in the Specialty financial sub-segment, partially offset by higher reported losses and lower premiums in the fidelity and surety businesses.
Net prior year reserve development
AFG's Specialty property and casualty insurance operations recorded net favorable reserve development related to prior accident years of $86 million in 2025, $70 million in 2024 and $226 million in 2023, an increase of $16 million (23%) in 2025 compared to 2024 and a decrease of $156 million (69%) in 2024 compared to 2023.
Property and transportationNet favorable reserve development of $63 million in 2025 reflects lower than anticipated losses in the crop business, lower than expected claim severity in the aviation and ocean marine businesses and lower than anticipated claim frequency and severity in the property and inland marine business.
Net favorable reserve development of $96 million in 2024 reflects lower than anticipated losses in the crop business, lower than expected claim severity in the property and inland marine and aviation businesses and lower than anticipated claim frequency and severity in the ocean marine business.
Net favorable reserve development of $82 million in 2023 reflects lower than anticipated losses in the crop business, lower than expected claim frequency and severity across the transportation businesses and lower than anticipated claim frequency in the property and inland marine and ocean marine businesses and in the Singapore operations.
Specialty casualtyNet adverse reserve development of $20 million in 2025 reflects higher than expected claim severity in the excess and surplus, social services, excess liability, public sector and general liability businesses, partially offset by lower than anticipated claim severity in the workers' compensation and executive liability businesses.
Net adverse reserve development of $37 million in 2024 reflects higher than anticipated claim frequency and severity in the umbrella and excess liability and social services businesses and higher than expected claim severity in the public sector and general liability businesses, partially offset by lower than anticipated claim severity in the workers' compensation businesses and lower than expected claim frequency and severity in the executive liability business.
Net favorable reserve development of $111 million in 2023 reflects lower than anticipated claim severity in the workers' compensation businesses, lower than expected claim frequency in the executive liability and environmental businesses and favorable reserve development related to COVID-19 losses across several businesses, partially offset by higher than anticipated claim severity in the public sector business and higher than expected claim frequency and severity in the excess liability and general liability businesses.
Specialty financial Net favorable reserve development of $43 million in 2025 reflects lower than anticipated claim frequency in the financial institutions business and lower than expected claim severity in the surety, fidelity and trade credit businesses.
Net favorable reserve development of $11 million in 2024 reflects lower than anticipated claim frequency and severity in the financial institutions and fidelity businesses and lower than expected claim frequency in the trade credit business, partially offset by higher than anticipated claim severity in the innovative markets and surety businesses.
Net favorable reserve development of $33 million in 2023 reflects lower than anticipated claim frequency in the trade credit, financial institutions and surety businesses and lower than expected claim frequency and severity in the fidelity business.
AggregateAggregate net prior accident years reserve development for AFG's property and casualty insurance segment includes net adverse prior year reserve development of $5 million in 2025, $6 million in 2024 and $2 million in 2023 related to business outside the Specialty group that AFG no longer writes.
Catastrophe losses
AFG generally seeks to reduce its exposure to catastrophes (whether resulting from climate change or otherwise) through individual risk selection, including minimizing coastal and known fault-line exposures, and the purchase of reinsurance. AFG recorded net catastrophe losses of $137 million in 2025 primarily from California wildfires and storms in multiple regions of the United States.
Catastrophe losses of $180 million in 2024 (before $2 million in net reinstatement premiums) resulted primarily from winter and convective storms in multiple regions of the United States in the first and second quarters, Hurricane Helene in the third quarter and Hurricane Milton in the fourth quarter.
Catastrophe losses of $162 million in 2023 (before $3 million in net reinstatement premiums) resulted primarily from February and March storms across much of the United States in the first quarter and storms in multiple regions of the United States in the second, third and fourth quarters.
Commissions and Other Underwriting Expenses
AFG's property and casualty commissions and other underwriting expenses ("U/W Exp") were $2.03 billion in 2025 compared to $1.96 billion in 2024, an increase of $68 million (3%). AFG's underwriting expense ratio was 28.8% in 2025 compared to 27.9% in 2024, an increase of 0.9 percentage points.
AFG's property and casualty U/W Exp were $1.96 billion in 2024 compared to $1.88 billion in 2023, an increase of $78 million (4%). AFG's underwriting expense ratio was 27.9% in 2024 compared to 28.8% in 2023, a decrease of 0.9 percentage points.
Detail of AFG's property and casualty commissions and other underwriting expenses and underwriting expense ratios is shown below (dollars in millions):
Year ended December 31, Change in % of NEP
2025 2024 2023 2025 - 2024 2024 - 2023
U/W Exp % of NEP U/W Exp % of NEP U/W Exp % of NEP
Property and transportation $ 568 20.7 % $ 640 22.6 % $ 603 23.6 % (1.9 %) (1.0 %)
Specialty casualty 935 29.1 % 852 26.8 % 850 27.3 % 2.3 % (0.5 %)
Specialty financial 526 48.5 % 469 45.4 % 430 49.5 % 3.1 % (4.1 %)
$ 2,029 28.8 % $ 1,961 27.9 % $ 1,883 28.8 % 0.9 % (0.9 %)
Property and transportation Commissions and other underwriting expenses as a percentage of net earned premiums decreased 1.9 percentage points in 2025 compared to 2024 reflecting higher ceding commissions from reinsurers resulting from very strong crop insurance results, partially offset by higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics.
Commissions and other underwriting expenses as a percentage of net earned premiums decreased 1.0 percentage points in 2024 compared to 2023 reflecting the impact on the ratio of higher earned premiums, including in the crop business which has a lower commissions and other underwriting expense ratio compared to some of the other businesses in the Property and transportation sub-segment and lower average commission rates in the transportation businesses due to a change in the mix of business.
Specialty casualty Commissions and other underwriting expenses as a percentage of net earned premiums increased 2.3 percentage points in 2025 compared to 2024 reflecting an increase in average commission rates in certain excess and surplus businesses resulting from changes in reinsurance treaties, higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics and changes in the mix of business.
Commissions and other underwriting expenses as a percentage of net earned premiums decreased 0.5 percentage points in 2024 compared to 2023 reflecting a change in the mix of business towards products with lower commission rates, partially offset by lower ceding commissions received in the workers' compensation businesses.
Specialty financial Commissions and other underwriting expenses as a percentage of net earned premiums increased 3.1 percentage points in 2025 compared to 2024 reflecting higher profit-based commissions to agents in the financial institutions business and higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics, partially offset by a change in the mix of business towards products with lower commission rates.
Commissions and other underwriting expenses as a percentage of net earned premiums decreased 4.1 percentage points in 2024 compared to 2023 due primarily to the impact on the ratio of higher earned premiums in the financial institutions business and a change in the mix of business towards products with lower commission rates.
Property and Casualty Net Investment Income
Net investment income in AFG's property and casualty insurance operations was $725 million in 2025 compared to $784 million in 2024, a decrease of $59 million (8%). Net investment income in AFG's property and casualty insurance operations was $784 million in 2024 compared to $729 million in 2023, an increase of $55 million (8%). The average invested assets and overall yield earned on investments held by AFG's property and casualty insurance operations are provided below (dollars in millions):
Year ended December 31, 2025 - 2024 2024 - 2023
2025 2024 2023 Change % Change Change % Change
Net investment income:
Net investment income, excluding alternative investments $ 656 $ 626 $ 566 $ 30 5 % $ 60 11 %
Alternative investments 69 158 163 (89) (56 %) (5) (3 %)
Total net investment income $ 725 $ 784 $ 729 $ (59) (8 %) $ 55 8 %
Average invested assets (at amortized cost) $ 16,144 $ 15,479 $ 14,753 $ 665 4 % $ 726 5 %
Yield on fixed maturities (before investment expenses)
5.13 % 5.02 % 4.67 % 0.11 % 0.35 %
Yield (net investment income as a % of average invested assets) 4.49 % 5.06 % 4.94 % (0.57 %) 0.12 %
The decrease in the property and casualty insurance segment's net investment income in 2025 compared to 2024 reflects the impact of lower returns on AFG's alternative investments portfolio (partnerships and similar investments and AFG-managed CLOs), partially offset by higher balances of invested assets and higher returns on fixed income investments. The property and casualty insurance segment's overall yield on investments (net investment income as a percentage of average invested assets) was 4.49% in 2025 compared to 5.06% in 2024, a decrease of 0.57 percentage points. The annualized return earned on alternative investments was 2.5% in 2025 compared to 6.1% in 2024.
The increase in net investment income in 2024 compared to 2023 reflects the impact of higher balances of invested assets and higher returns on fixed maturity investments, partially offset by lower returns on AFG's alternative investments portfolio. The property and casualty insurance segment's overall yield on investments was 5.06% in 2024 compared to 4.94% in 2023, an increase of 0.12 percentage points. The annualized return earned on alternative investments was 6.1% in 2024 compared to 7.0% in 2023.
Property and Casualty Other Income and Expenses, Net
Other income and expenses, net for AFG's property and casualty insurance operations was a net expense of $67 million in 2025, $76 million in 2024 and $56 million in 2023, an improvement of $9 million (12%) in 2025 compared to 2024 and an increase of $20 million (36%) in 2024 compared to 2023. The table below details the items included in other income and expenses, net for AFG's property and casualty insurance operations (in millions):
Year ended December 31,
2025 2024 2023
Other income $ 12 $ 8 $ 16
Other expenses:
Amortization of intangibles 20 20 15
Interest expense on funds withheld 45 50 41
Acquisition expenses related to CRS - - 3
Other (*) 14 14 13
Total other expenses 79 84 72
Other income and expenses, net $ (67) $ (76) $ (56)
(*)Includes $7 million in 2025 and $9 million of expenses in 2024 and 2023 related to certain technology initiatives.
The increase in other income in 2025 compared to 2024 and the decrease in other income in 2024 compared to 2023 reflects death benefits received on a company-owned life insurance policy in 2025 and 2023. The $5 million (10%) decrease in interest expense on funds withheld in 2025 compared to 2024 reflects the impact of lower balances and lower interest rates paid on funds withheld.
The higher amortization of intangibles in 2024 compared to 2023 reflects the acquisition of CRS in July 2023. The $9 million (22%) increase in interest expense on funds withheld in 2024 compared to 2023 reflects the impact of higher balances and higher interest rates paid on funds withheld.
Holding Company, Other and Unallocated - Results of Operations
AFG's net GAAP pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $225 million in 2025 compared to $204 million in 2024, an increase of $21 million (10%). AFG's net core pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $200 million in 2025 compared to $190 million in 2024, an increase of $10 million (5%).
AFG's net GAAP pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $204 million in 2024 compared to $191 million in 2023, an increase of $13 million (7%). AFG's net core pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $190 million in 2024 compared to $177 million in 2023, an increase of $13 million (7%).
The following table details AFG's GAAP and core loss before income taxes from operations outside of its property and casualty insurance segment in 2025, 2024 and 2023 (dollars in millions):
Year ended December 31, % Change
2025 2024 2023 2025 - 2024 2024 - 2023
Revenues:
Net investment income $ 25 $ 29 $ 40 (14 %) (28 %)
Other income - P&C fees 98 111 125 (12 %) (11 %)
Other income 16 18 21 (11 %) (14 %)
Total revenues 139 158 186 (12 %) (15 %)
Costs and Expenses:
P&C - loss adjustment and underwriting expenses
30 51 68 (41 %) (25 %)
Other expense - expenses associated with P&C fees 68 60 57 13 % 5 %
Other expenses (*) 161 161 162 - % (1 %)
Costs and expenses, excluding interest charges on borrowed money 259 272 287 (5 %) (5 %)
Loss before income taxes, excluding realized gains and losses and interest charges on borrowed money (120) (114) (101) 5 % 13 %
Interest charges on borrowed money 80 76 76 5 % - %
Core loss before income taxes, excluding realized gains and losses
(200) (190) (177) 5 % 7 %
Pretax non-core special A&E charge
(25) (14) (15) 79 % (7 %)
Pretax non-core gain on retirement of debt
- - 1 - % (100 %)
GAAP loss before income taxes, excluding realized gains and losses
$ (225) $ (204) $ (191) 10 % 7 %
(*)Excludes pretax non-core special A&E charges of $25 million, $14 million and $15 million in 2025, 2024 and 2023, respectively, and a pretax non-core gain on retirement of debt of $1 million in 2023.
Holding Company and Other - Net Investment Income
AFG recorded net investment income on investments held outside of its property and casualty insurance segment of $25 million, $29 million and $40 million in 2025, 2024 and 2023, respectively. The $4 million (14%) decrease in 2025 compared to 2024 reflects lower income on fixed maturity investments. The $11 million (28%) decrease in 2024 compared to 2023 reflects the impact of lower average investment balances.
Holding Company and Other - P&C Fees and Related Expenses
Summit, a workers' compensation insurance subsidiary, collects fees from a small group of unaffiliated insurers for providing underwriting, policy administration and claims services. In addition, certain of AFG's property and casualty insurance businesses collect fees from customers for ancillary services such as workplace safety programs and premium financing. In 2025, AFG collected $98 million in fees for these services compared to $100 million in 2024 and $91 million in 2023. Management views this fee income, net of the $68 million in 2025, $60 million in 2024 and $57 million in 2023, in expenses incurred to generate such fees, as a reduction in the cost of underwriting its property and casualty insurance policies. In addition, AFG's property and casualty insurance businesses earned $11 million in 2024 and $34 million in 2023 in fees as compensation for providing services related to the administration of crop insurance business generated by CRS for its former owner prior to the acquisition date. The expenses related to providing such services are embedded in property and casualty underwriting expenses. Consistent with internal management reporting, these fees and the related expenses are netted and recorded as a reduction of commissions and other underwriting expenses in AFG's segmented results.
Holding Company and Other - Other Income
Other income in the table above includes $11 million in 2025, $13 million in 2024 and $16 million in 2023, in management fees paid to AFG by the AFG-managed CLOs (AFG's consolidated managed investment entities). The management fees are eliminated in consolidation - see the other income line in the Consolidate MIEs column under "Results of Operations - Segmented Statement of Earnings."Excluding amounts eliminated in consolidation, AFG recorded other income outside of its property and casualty insurance segment of $5 million in 2025, 2024 and 2023.
Holding Company and Other - Other Expenses
Excluding the non-core special A&E charges discussed below, AFG's holding companies and other operations outside of its property and casualty insurance segment recorded other expenses of $161 million in both 2025 and 2024.
Excluding the non-core special A&E charges and the non-core gain on retirement of debt discussed below, AFG's holding companies and other operations outside of its property and casualty insurance segment recorded other expenses of $161 million in 2024 compared to $162 million in 2023, a decrease of $1 million (1%).
Holding Company and Other - Interest Charges on Borrowed Money
AFG's holding companies and other operations outside of its property and casualty insurance segment recorded interest expense of $80 million in 2025 and $76 million in both 2024 and 2023. The $4 million (5%) increase in interest expense in 2025 compared to 2024 and 2023 reflects the issuance of $350 million principal amount of 5.00% Senior Notes in September 2025.
Holding Company and Other - Special A&E Charges
As a result of the in-depth internal reviews of A&E exposures discussed under "Uncertainties - Asbestos and Environmental-related ("A&E") Insurance Reserves," AFG's holding companies and other operations outside of its property and casualty insurance segment recorded pretax non-core special charges of $25 million in 2025, $14 million in 2024 and $15 million in 2023 to increase liabilities related to the A&E exposures of AFG's former railroad and manufacturing operations. The charges in all periods reflect changes in the scope and costs of investigation and an increase in estimated remediation costs at a limited number of sites. AFG has also increased its reserve for asbestos and toxic substance exposures arising out of these operations. Total charges recorded to increase liabilities for A&E exposures of AFG's former railroad and manufacturing operations (included in other expenses) were $35 million in 2025, $24 million in 2024, and $22 million in 2023.
Holding Company and Other - Gain on Retirement of Debt
During 2023, AFG repurchased $23 million principal amount of its senior notes, which resulted in a $2 million pretax non-core gain and recorded a $1 million pretax non-core loss related to the write-off of debt issue costs associated with its previous revolving credit facility, which was replaced in June 2023.
Realized Gains (Losses) on Securities
AFG's realized gains (losses) on securities were net gains of $10 million in 2025 compared to less than $1 million in 2024, an increase of $10 million. AFG's consolidated realized gains (losses) on securities were net gains of less than $1 million in 2024 compared to net losses of $36 million in 2023, a change of $36 million. Realized gains (losses) on securities consisted of the following (in millions):
Year ended December 31,
2025 2024 2023
Realized gains (losses) before impairment allowances:
Disposals $ (7) $ (4) $ (33)
Change in the fair value of equity securities 31 32 10
Change in the fair value of derivatives 2 (1) (2)
26 27 (25)
Change in allowance for impairments on securities (16) (27) (11)
Realized gains (losses) on securities $ 10 $ - $ (36)
The $33 million net realized loss from disposals in 2023 includes losses of $15 million from the sale of investments in banks and $5 million from the sale of municipal bonds.
The $31 million net realized gain from the change in the fair value of equity securities in 2025 includes gains of $16 million on investments in banks and financing companies and $14 million on investments in media companies, partially offset by losses of $7 million on investments in healthcare companies.
The $32 million net realized gain from the change in the fair value of equity securities in 2024 includes gains of $21 million on investments in banks and financing companies, $8 million on investments in natural gas companies and $5 million on investments in technology companies, partially offset by losses of $6 million on investments in energy companies.
The $10 million net realized gain from the change in the fair value of equity securities in 2023 includes gains of $8 million on investments in retail companies, $7 million on investments in banks and financing companies, $5 million on investments in capital goods companies and $4 million on investments in natural gas companies, partially offset by losses of $8 million on investments in media companies and $6 million on investments in energy companies.
The $16 million change in allowance for impairments on securities in 2025 reflects $7 million in new allowances on fixed
maturities related to commercial real estate funds and additional $7 million of changes in allowances for various securities and mortgage loans that were previously impaired.
The $27 million change in allowance for impairments on securities in 2024 relates primarily to allowances taken on corporate bonds from a single issuer in the financial sector and fixed maturities from a single issuer in the retail sector.
Realized Gain (Loss) on Subsidiaries
During the third quarter of 2025, AFG recorded a $3 million pretax realized gain resulting from the remeasurement of its existing investment in Radion to fair value (see Note B - "Acquisitions of Businesses"to the financial statements) and a $2 million pretax realized loss on the write-off of certain intangible assets (see Note H - "Goodwill and Other Intangibles" to the financial statements).
In the second quarter of 2024, AFG recorded $4 million in net tax expense related to a pending IRS settlement regarding the sale of a subsidiary in a prior year.
In the third quarter of 2023, AFG recorded a realized loss on subsidiary of $4 million, consisting of a $26 million goodwill impairment charge, partially offset by a $22 million reduction in the fair value of a contingent consideration liability, both related to AFG's investment in Verikai. See Note D - "Fair Value Measurements"andNote H - "Goodwill and Other Intangibles" to the financial statements.
Consolidated Income Taxes
AFG's consolidated provision for income taxes was $231 million in 2025 compared to $237 million in 2024, a decrease of $6 million (3%). AFG's consolidated provision for income taxes was $237 million in 2024 compared to $221 million in 2023, an increase of $16 million (7%). See Note L - "Income Taxes" to the financial statements for an analysis of items affecting AFG's effective tax rate.
RECENTLY ADOPTED ACCOUNTING STANDARDS
SeeNote L - "Income Taxes" to the financial statements for accounting guidance adopted on January 1, 2025, which expanded income tax disclosures by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation presented in both dollar and percentage terms; (ii) the disaggregation of income taxes paid (net of refunds received), income (loss) before income taxes and income taxes by jurisdiction (federal, state and foreign taxes); and (iii) further disaggregation of income taxes paid by any individual jurisdiction equal to or exceeding five percent of total income taxes paid.
ACCOUNTING STANDARDS TO BE ADOPTED
In November 2024, the FASB issued ASU No. 2024-03 ("ASU 2024-03"), Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 requires additional information and disaggregation of specified expense categories in the notes to financial statements. ASU 2024-04 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted and applied either prospectively or retrospectively. As of December 31, 2025, AFG has not adopted ASU 2024-03. Management is evaluating the impact of the standard to AFG's income statement expense disclosures. Since ASU 2024-03 only requires additional disclosures, the adoption of this guidance will not have an impact on AFG's results of operations or financial condition.
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