AFG 10-Q Quarterly Report June 30, 2025

AMERICAN FINANCIAL GROUP INC

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afg-20250630

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2025

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____ to ____

Commission File No. 1-13653

AMERICAN FINANCIAL GROUP, INC.

Incorporated under the Laws of Ohio IRS Employer I.D. No. 31-1544320

301 East Fourth Street , Cincinnati , Ohio 45202

( 513 ) 579-2121

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock

AFG

New York Stock Exchange

5.875% Subordinated Debentures due March 30, 2059

AFGB

New York Stock Exchange

5.625% Subordinated Debentures due June 1, 2060

AFGD

New York Stock Exchange

5.125% Subordinated Debentures due December 15, 2059

AFGC

New York Stock Exchange

4.50% Subordinated Debentures due September 15, 2060

AFGE

New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the Registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months. Yes ☑ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐

Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of August 1, 2025, there were 83,394,479 shares of the Registrant’s Common Stock outstanding, excluding 14.9 million shares owned by subsidiaries.

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

TABLE OF CONTENTS



			Page
Part I — Financial Information
Item 1 — Financial Statements:
Consolidated Balance Sheet			2
Consolidated Statement of Earnings			3
Consolidated Statement of Comprehensive Income			4
Consolidated Statement of Changes in Equity			5
Consolidated Statement of Cash Flows			7
Notes to Consolidated Financial Statements			8
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations			32
Item 3 — Quantitative and Qualitative Disclosure about Market Risk			66
Item 4 — Controls and Procedures			66

Part II — Other Information

Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds			67
Item 5 — Other Information			67
Item 6 — Exhibits			68
Signature			68

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

PART I

ITEM 1. — FINANCIAL STATEMENTS

AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (UNAUDITED)

(Dollars in Millions)


	June 30, 2025		December 31, 2024
Assets:
Cash and cash equivalents	$	1,268	$	1,406
Investments:
Fixed maturities, available for sale at fair value (amortized cost — $ 10,632 and $ 10,687 ; allowance for expected credit losses of $ 15 and $ 34 )	10,489		10,398
Fixed maturities, trading at fair value	82		76
Equity securities, at fair value	800		751
Investments accounted for using the equity method	2,341		2,277
Mortgage loans	909		791
Real estate and other investments	160		153
Total cash and investments	16,049		15,852

Recoverables from reinsurers	4,733		5,176
Prepaid reinsurance premiums	1,256		1,013
Agents’ balances and premiums receivable	1,946		1,532
Deferred policy acquisition costs	345		320
Assets of managed investment entities	3,833		4,140
Other receivables	877		1,123
Other assets	1,325		1,375
Goodwill	305		305
Total assets	$	30,669	$	30,836

Liabilities and Equity:
Unpaid losses and loss adjustment expenses	$	13,834	$	14,179
Unearned premiums	4,026		3,584
Payable to reinsurers	1,152		1,191
Liabilities of managed investment entities	3,685		3,965
Long-term debt	1,476		1,475
Other liabilities	1,980		1,976
Total liabilities	26,153		26,370

Shareholders’ equity:
Common Stock, no par value — 200,000,000 shares authorized — 83,385,661 and 83,978,258 shares outstanding	83		84
Capital surplus	1,414		1,411
Retained earnings	3,151		3,211
Accumulated other comprehensive income (loss), net of tax	( 132 )		( 240 )
Total shareholders’ equity	4,516		4,466


Total liabilities and shareholders’ equity	$	30,669	$	30,836

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)

(In Millions, Except Per Share Data)


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Revenues:
Net earned premiums	$	1,647	$	1,585	$	3,227	$	3,131
Net investment income	184		188		357		386

Realized gains (losses) on securities	2		( 2 )		5		12

Income of managed investment entities:
Investment income	68		98		144		197
Gain (loss) on change in fair value of assets/liabilities	( 4 )		4		( 7 )		14
Other income	27		27		54		66
Total revenues	1,924		1,900		3,780		3,806

Costs and Expenses:
Losses and loss adjustment expenses	1,007		937		1,972		1,849
Commissions and other underwriting expenses	534		506		1,064		1,009
Interest charges on borrowed money	19		19		38		38
Expenses of managed investment entities	60		90		128		182
Other expenses	75		77		152		153
Total costs and expenses	1,695		1,629		3,354		3,231
Earnings before income taxes	229		271		426		575
Provision for income taxes	55		62		98		124




Net Earnings	$	174	$	209	$	328	$	451

Earnings per Common Share:


Total basic earnings	$	2.07	$	2.49	$	3.92	$	5.38



Total diluted earnings	$	2.07	$	2.49	$	3.92	$	5.38
Average number of Common Shares:
Basic	83.5		83.9		83.7		83.8
Diluted	83.5		83.9		83.7		83.9

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

(In Millions)


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Net earnings	$	174	$	209	$	328	$	451

Other comprehensive income (loss), net of tax:
Net unrealized gains (losses) on securities:
Unrealized holding gains (losses) on securities arising during the period	34		( 13 )		89		( 8 )
Reclassification adjustment for realized (gains) losses included in net earnings	6		1		12		5
Total net unrealized gains (losses) on securities	40		( 12 )		101		( 3 )
Net unrealized gains (losses) on cash flow hedges:
Unrealized holding gains (losses) on cash flow hedges arising during the period	—		( 4 )		1		( 14 )
Reclassification adjustment for investment income included in net earnings	2		6		4		11

Total net unrealized gains (losses) on cash flow hedges	2		2		5		( 3 )
Foreign currency translation adjustments	5		( 6 )		2		( 6 )




Other comprehensive income (loss), net of tax	47		( 16 )		108		( 12 )



Comprehensive income	$	221	$	193	$	436	$	439

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

(Dollars in Millions)


		Shareholders’ Equity
	Common Shares	Common Stock and Capital Surplus		Retained Earnings		Accumulated Other Comp. Income (Loss)		Total
Balance at March 31, 2025	83,668,453	$	1,493	$	3,078	$	( 179 )	$	4,392
Net earnings	—	—		174		—		174
Other comprehensive income	—	—		—		47		47
Dividends ($ 0.80 per share)	—	—		( 68 )		—		( 68 )
Shares issued:
Exercise of stock options	—	—		—		—		—
Restricted stock awards	—	—		—		—		—
Other benefit plans	37,907	5		—		—		5
Dividend reinvestment plan	2,076	—		—		—		—
Stock-based compensation expense	—	5		—		—		5
Shares acquired and retired	( 319,736 )	( 6 )		( 33 )		—		( 39 )
Shares exchanged — benefit plans	( 141 )	—		—		—		—
Forfeitures of restricted stock	( 2,898 )	—		—		—		—

Balance at June 30, 2025	83,385,661	$	1,497	$	3,151	$	( 132 )	$	4,516

Balance at March 31, 2024	83,857,354	$	1,466	$	3,089	$	( 315 )	$	4,240

Net earnings	—	—		209		—		209
Other comprehensive loss	—	—		—		( 16 )		( 16 )
Dividends ($ 0.71 per share)	—	—		( 59 )		—		( 59 )
Shares issued:
Exercise of stock options	3,283	—		—		—		—
Restricted stock awards	—	—		—		—		—
Other benefit plans	35,357	5		—		—		5
Dividend reinvestment plan	1,815	—		—		—		—
Stock-based compensation expense	—	5		—		—		5
Shares acquired and retired	—	—		—		—		—
Shares exchanged — benefit plans	( 21 )	—		—		—		—
Forfeitures of restricted stock	( 521 )	—		—		—		—

Balance at June 30, 2024	83,897,267	$	1,476	$	3,239	$	( 331 )	$	4,384

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) — CONTINUED

(Dollars in Millions)


		Shareholders’ Equity
	Common Shares	Common Stock and Capital Surplus		Retained Earnings		Accumulated Other Comp. Income (Loss)		Total
Balance at December 31, 2024	83,978,258	$	1,495	$	3,211	$	( 240 )	$	4,466
Net earnings	—	—		328		—		328
Other comprehensive income	—	—		—		108		108
Dividends ($ 3.60 per share)	—	—		( 302 )		—		( 302 )
Shares issued:
Exercise of stock options	18,932	1		—		—		1
Restricted stock awards	166,297	—		—		—		—
Other benefit plans	53,564	7		—		—		7
Dividend reinvestment plan	9,096	1		—		—		1
Stock-based compensation expense	—	9		—		—		9
Shares acquired and retired	( 782,134 )	( 15 )		( 82 )		—		( 97 )
Shares exchanged — benefit plans	( 42,950 )	( 1 )		( 4 )		—		( 5 )
Forfeitures of restricted stock	( 15,402 )	—		—		—		—

Balance at June 30, 2025	83,385,661	$	1,497	$	3,151	$	( 132 )	$	4,516

Balance at December 31, 2023	83,635,807	$	1,456	$	3,121	$	( 319 )	$	4,258

Net earnings	—	—		451		—		451
Other comprehensive loss	—	—		—		( 12 )		( 12 )
Dividends ($ 3.92 per share)	—	—		( 328 )		—		( 328 )
Shares issued:
Exercise of stock options	96,134	4		—		—		4
Restricted stock awards	157,681	—		—		—		—
Other benefit plans	51,161	7		—		—		7
Dividend reinvestment plan	10,068	1		—		—		1
Stock-based compensation expense	—	9		—		—		9
Shares acquired and retired	—	—		—		—		—
Shares exchanged — benefit plans	( 47,891 )	( 1 )		( 5 )		—		( 6 )
Forfeitures of restricted stock	( 5,693 )	—		—		—		—

Balance at June 30, 2024	83,897,267	$	1,476	$	3,239	$	( 331 )	$	4,384

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

(In Millions)


	Six months ended June 30,
	2025		2024
Operating Activities:
Net earnings	$	328	$	451
Adjustments:
Depreciation and amortization	44		39
Realized (gains) losses on investing activities	( 6 )		( 12 )
Net purchases of trading securities	2		( 12 )
Change in:
Reinsurance and other receivables	45		112
Other assets	2		12
Insurance claims and reserves	97		( 115 )
Payable to reinsurers	( 39 )		( 10 )
Other liabilities	29		( 185 )
Managed investment entities’ assets/liabilities	33		( 239 )
Other operating activities, net	( 2 )		( 22 )
Net cash provided by operating activities	533		19

Investing Activities:
Purchases of:
Fixed maturities	( 1,046 )		( 821 )
Equity securities	( 11 )		( 94 )
Mortgage loans	( 145 )		( 141 )
Other investments	( 122 )		( 94 )
Real estate, property and equipment	( 58 )		( 71 )

Proceeds from:
Maturities and redemptions of fixed maturities	996		930
Repayments of mortgage loans	25		9
Sales of fixed maturities	46		99
Sales of equity securities	15		81
Sales of other investments	26		15
Sales of real estate, property and equipment	2		25


Managed investment entities:
Purchases of investments	( 837 )		( 1,078 )
Proceeds from sales and redemptions of investments	1,170		1,135
Other investing activities, net	( 2 )		( 1 )
Net cash provided by (used in) investing activities	59		( 6 )

Financing Activities:


Issuances of Common Stock	7		10
Repurchases of Common Stock	( 97 )		—
Cash dividends paid on Common Stock	( 301 )		( 327 )
Issuances of managed investment entities’ liabilities	1,119		1,774
Retirements of managed investment entities’ liabilities	( 1,458 )		( 1,574 )

Net cash used in financing activities	( 730 )		( 117 )
Net Change in Cash and Cash Equivalents	( 138 )		( 104 )
Cash and cash equivalents at beginning of period	1,406		1,225
Cash and cash equivalents at end of period	$	1,268	$	1,121

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INDEX TO NOTES

Accounting Policies

Goodwill and Other Intangibles

Segments of Operations

Long-Term Debt

Fair Value Measurements

Shareholders’ Equity

Investments

Income Taxes

Derivatives

Contingencies

Managed Investment Entities

Insurance

A. Accounting Policies

Basis of Presentation The accompanying consolidated financial statements for American Financial Group, Inc. and its subsidiaries (“AFG”) are unaudited; however, management believes that all adjustments (consisting only of normal recurring accruals unless otherwise disclosed herein) necessary for fair presentation have been made. The results of operations for interim periods are not necessarily indicative of results to be expected for the year. The financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary to be in conformity with U.S. generally accepted accounting principles (“GAAP”).

Certain reclassifications have been made to prior periods to conform to the current year’s presentation. All significant intercompany balances and transactions have been eliminated. The results of operations of companies since their formation or acquisition are included in the consolidated financial statements. Events or transactions occurring subsequent to June 30, 2025, and prior to the filing of this Form 10-Q, have been evaluated for potential recognition or disclosure herein.

The preparation of the financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Changes in circumstances could cause actual results to differ materially from those estimates.

Fair Value Measurements Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The standards establish a hierarchy of valuation techniques based on whether the assumptions that market participants would use in pricing the asset or liability (“inputs”) are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect AFG’s assumptions about the assumptions market participants would use in pricing the asset or liability. AFG did not have any material nonrecurring fair value measurements in the first six months of 2025.

Investments Fixed maturity securities classified as “available for sale” are reported at fair value with unrealized gains and losses included in accumulated other comprehensive income (“AOCI”) in AFG’s Balance Sheet. Fixed maturity securities classified as “trading” are reported at fair value with changes in unrealized holding gains or losses during the period included in net investment income. Mortgage loans (net of any allowance) are carried primarily at the aggregate unpaid balance.

Realized gains or losses on the disposal of fixed maturity securities are determined on the specific identification basis. Premiums and discounts on fixed maturity securities are amortized using the effective interest method. Structured securities subject to prepayment risk are amortized over a period based on estimated future principal payments, including prepayments. Prepayment assumptions are reviewed periodically and adjusted to reflect actual prepayments and changes in expectations.

Equity securities are reported at fair value with holding gains and losses generally recorded in realized gains (losses) on securities. However, AFG records holding gains and losses on certain securities classified at purchase as “fair value through net investment income” in net investment income.

Limited partnerships and similar investments are generally accounted for using the equity method of accounting. 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 generally recorded on a quarter lag due to the timing of the receipt

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

of the investee’s financial statements. AFG’s equity in the earnings (losses) of limited partnerships and similar investments is included in net investment income.

Credit Losses on Fixed Maturity Investments When a decline in the value of an available for sale fixed maturity is considered to be other-than-temporary at the balance sheet date, an allowance for credit losses (impairment), including any write-off of accrued interest, is charged to earnings (included in realized gains (losses) on securities). If management can assert that it does not intend to sell the security and it is not more likely than not that it will have to sell it before recovery of its amortized cost basis, then the impairment is separated into two components: (i) the allowance related to credit losses (recorded in earnings) and (ii) the amount related to all other factors (recorded in other comprehensive income). The credit-related portion is measured by comparing a security’s amortized cost (net of any existing allowance) to the present value of its current expected cash flows discounted at its effective yield prior to the charge. The allowance is limited to the difference between a security’s amortized cost basis and its fair value. Subsequent increases or decreases in expected credit losses are recorded immediately in net earnings through realized gains (losses). If management intends to sell an impaired security, or it is more likely than not that it will be required to sell the security before recovery, an impairment is recorded in earnings to reduce the amortized cost of that security to fair value.

Credit Losses on Financial Instruments Measured at Amortized Cost Credit-related impairments for financial instruments measured at amortized cost (mortgage loans, premiums receivable and reinsurance recoverables) reflect estimated credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses considers historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. Expected credit losses, and subsequent increases or decreases in such expected losses, are recorded immediately through net earnings as an allowance that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the balance sheet at the amount expected to be collected.

Derivatives Derivatives included in AFG’s Balance Sheet are recorded at fair value. Changes in fair value of derivatives are included in earnings unless the derivatives are designated and qualify as highly effective cash flow hedges. AFG’s derivatives that do not qualify for hedge accounting under GAAP consist primarily of components of certain fixed maturity securities (convertible fixed maturities and interest-only and principal-only mortgage-backed securities (“MBS”)) and a total return swap related to its deferred compensation obligations to employees.

To qualify for hedge accounting, at the inception of a derivative contract, AFG formally documents the relationship between the terms of the hedge and the hedged items and its risk management objective. This documentation includes defining how hedge effectiveness is evaluated at the inception date and over the life of the derivative.

Changes in the fair value of derivatives that are designated and qualify as highly effective cash flow hedges are recorded in AOCI and are reclassified into earnings when the variability of the cash flows from the hedged items impacts earnings. When the change in the fair value of a qualifying cash flow hedge is included in earnings, it is included in the same line item in the statement of earnings as the cash flows from the hedged item. AFG uses interest rate swaps that are designated and qualify as highly effective cash flow hedges to mitigate interest rate risk related to certain floating-rate securities.

Goodwill Goodwill represents the excess of cost of subsidiaries over AFG’s equity in their underlying net assets at the date of acquisition. Goodwill is not amortized, but is subject to an impairment test at least annually. An entity is not required to complete the quantitative annual goodwill impairment test on a reporting unit if the entity elects to perform a qualitative analysis and determines that it is more likely than not that the reporting unit’s fair value exceeds its carrying amount.

Reinsurance Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies. AFG reports as assets (i) the estimated reinsurance recoverable on paid and unpaid losses, including an estimate for losses incurred but not reported, and (ii) amounts paid or due to reinsurers applicable to the unexpired terms of policies in force. Payable to reinsurers includes ceded premiums due to reinsurers, as well as ceded premiums retained by AFG under contracts to fund ceded losses as they become due. AFG also assumes reinsurance from other companies. Earnings on reinsurance assumed is recognized based on information received from ceding companies.

Deferred Policy Acquisition Costs (“DPAC”) Policy acquisition costs (principally commissions, premium taxes and certain underwriting and policy issuance costs) directly related to the successful acquisition or renewal of an insurance contract are deferred. DPAC is limited based upon recoverability without any consideration for anticipated

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

investment income and is charged against income ratably over the terms of the related policies. A premium deficiency is recognized if the sum of expected claims costs, claims adjustment expenses and unamortized acquisition costs exceed the related unearned premiums. A premium deficiency is first recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. If the premium deficiency is greater than unamortized acquisition costs, a liability is accrued for the excess deficiency and reported with unpaid losses and loss adjustment expenses.

Managed Investment Entities A company is considered the primary beneficiary of, and therefore must consolidate, a variable interest entity (“VIE”) based primarily on its ability to direct the activities of the VIE that most significantly impact that entity’s economic performance and the obligation to absorb losses of, or receive benefits from, the entity that could potentially be significant to the VIE.

AFG manages, and has investments in, collateralized loan obligations (“CLOs”) that are VIEs (see Note F — “Managed Investment Entities” ). AFG has determined that it is the primary beneficiary of these CLOs because (i) its role as asset manager gives it the power to direct the activities that most significantly impact the economic performance of the CLOs and (ii) through its investment in the CLO debt tranches, it has exposure to CLO losses (limited to the amount AFG invested) and the right to receive CLO benefits that could potentially be significant to the CLOs.

Because AFG has no right to use the CLO assets and no obligation to pay the CLO liabilities, the assets and liabilities of the CLOs are shown separately in AFG’s Balance Sheet. AFG has elected the fair value option for reporting on the CLO assets and liabilities to improve the transparency of financial reporting related to the CLOs. The net gain or loss from accounting for the CLO assets and liabilities at fair value is presented separately in AFG’s Statement of Earnings.

The fair values of a CLO’s assets may differ from the separately measured fair values of its liabilities even though the CLO liabilities only have recourse to the CLO assets. AFG has set the carrying value of the CLO liabilities equal to the fair value of the CLO assets (which have more observable fair values) as an alternative to reporting those liabilities at a separately measured fair value. CLO earnings attributable to AFG’s shareholders are measured by the change in the fair value of AFG’s investments in the CLOs and management fees earned.

At June 30, 2025, assets and liabilities of managed investment entities included $ 134 million in assets and $ 104 million in liabilities of temporary warehousing entities that were established to provide AFG the ability to form new CLOs. At closing, all warehoused assets will be transferred to the new CLOs and the liabilities will be repaid.

Unpaid Losses and Loss Adjustment Expenses The liabilities stated for unpaid claims and for expenses of investigation and adjustment of unpaid claims represent management’s best estimate and are based upon (i) the accumulation of case estimates for losses reported prior to the close of the accounting period on direct business written; (ii) estimates received from ceding reinsurers and insurance pools and associations; (iii) estimates of unreported losses (including possible development on known claims) based on past experience; (iv) estimates based on experience of expenses for investigating and adjusting claims; and (v) the current state of the law and coverage litigation. Establishing reserves for asbestos, environmental and other mass tort claims involves considerably more judgment than other types of claims due to, among other things, inconsistent court decisions, an increase in bankruptcy filings as a result of asbestos-related liabilities, novel theories of coverage, and judicial interpretations that often expand theories of recovery and broaden the scope of coverage.

Loss reserve liabilities are subject to the impact of changes in claim amounts and frequency and other factors. Changes in estimates of the liabilities for losses and loss adjustment expenses are reflected in the statement of earnings in the period in which determined. Despite the variability inherent in such estimates, management believes that the liabilities for unpaid losses and loss adjustment expenses are adequate and reasonable.

Debt Issuance Costs Debt issuance costs related to AFG’s outstanding debt are presented in its Balance Sheet as a direct reduction in the carrying value of long-term debt and are amortized over the life of the related debt using the effective interest method as a component of interest expense. Debt issuance costs related to AFG’s revolving credit facility are included in other assets in AFG’s Balance Sheet.

Leases Leases for terms of longer than one year are recognized as assets and liabilities for the rights and obligations created by those leases on the balance sheet based on the present value of contractual cash flows.

At June 30, 2025, AFG has a $ 226 million lease liability included in other liabilities and a lease right-of-use asset of $ 205 million included in other assets compared to $ 232 million and $ 212 million, respectively, at December 31, 2024.

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Premium Recognition Property and casualty premiums are earned generally over the terms of the policies on a pro rata basis. Unearned premiums represent that portion of premiums written, which is applicable to the unexpired terms of policies in force. On reinsurance assumed from other insurance companies or written through various underwriting organizations, unearned premiums are based on information received from such companies and organizations.

Income Taxes Deferred income taxes are calculated using the liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases and are measured using enacted tax rates. A valuation allowance is established to reduce total deferred tax assets to an amount that will more likely than not be realized. The effect of a change in tax rates on deferred tax assets and liabilities is recorded in net earnings in the period that includes the enactment date.

AFG recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained under examination by the appropriate taxing authority. Interest and penalties on AFG’s reserve for uncertain tax positions are recognized as a component of tax expense.

Stock-Based Compensation All share-based grants are recognized as compensation expense on a straight-line basis over their vesting periods based on their calculated fair value at the date of grant.

AFG records excess tax benefits or deficiencies for share-based payments through income tax expense in the statement of earnings. In addition, AFG accounts for forfeitures of awards when they occur.

Benefit Plans AFG provides retirement benefits to qualified employees of participating companies through the AFG 401(k) Retirement and Savings Plan, a defined contribution plan. AFG makes all contributions to the retirement fund portion of the plan and matches a percentage of employee contributions to the savings fund. Company contributions are expensed in the year for which they are declared. AFG and many of its subsidiaries provide health care and life insurance benefits to eligible retirees. AFG also provides postemployment benefits to former or inactive employees (primarily those on disability) who were not deemed retired under other company plans. The projected future cost of providing these benefits is expensed over the period employees earn such benefits.

Earnings Per Share Although basic earnings per share only considers shares of common stock outstanding during the period, the calculation of diluted earnings per share includes the following adjustments to weighted average common shares related to stock-based compensation plans: second quarter of both 2025 and 2024 — none ; first six months of 2025 — less than 0.1 million and 2024 — 0.1 million.

There were no anti-dilutive potential common shares for the second quarter or the first six months of 2025 or 2024.

Statement of Cash Flows For cash flow purposes, “investing activities” are defined as making and collecting loans and acquiring and disposing of debt or equity instruments, property and equipment and businesses. “Financing activities” include obtaining resources from owners and providing them with a return on their investments, borrowing money and repaying amounts borrowed. All other activities are considered “operating.” Short-term investments having original maturities of three months or less when purchased are considered to be cash equivalents for purposes of the financial statements.

B. Segments of Operations

AFG manages its business as two segments: Property and casualty insurance and Other, which includes holding company assets and costs.

AFG reports its property and casualty insurance business in the following Specialty sub-segments: (i) Property and transportation, which includes physical damage and liability coverage for buses and trucks and other specialty transportation niches, inland and ocean marine, agricultural-related products and other commercial property coverages, (ii) Specialty casualty, which includes primarily excess and surplus, executive and professional liability, general liability, umbrella and excess liability, specialty coverages in targeted markets, customized programs for small to mid-sized businesses and workers’ compensation insurance, and (iii) Specialty financial, which includes risk management insurance programs for lending and leasing institutions (including equipment leasing and collateral and lender-placed mortgage property insurance), fidelity and surety products and trade credit insurance. AFG’s reportable segments and their components were determined based primarily upon similar economic characteristics, products and services. Historically,

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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, to be consistent with how the Chief Operating Decision Makers (“CODMs”) currently view and evaluate AFG’s Property and casualty sub-segments, the internal reinsurance results are included within the same sub-segments as the ceding businesses. The CODMs believe this presentation better reflects the performance of the underlying operating businesses and enhances the financial reporting. Information from prior periods has been recast for consistent presentation. The impacts of all intercompany transactions between segments have been eliminated.

AFG’s CODMs are its Co-CEOs. The CODMs evaluate the performance of the Property and casualty insurance segm ent based on return on equity and underwriting profit. The CODMs use this measure to allocate resources and make capital decisions.

Sales of property and casualty insurance outside of the United States represented 4 % of AFG’s revenues in both the second quarter and first six months of 2025 and 2024.

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


	June 30, 2025		December 31, 2024
Assets
Property and casualty insurance (*)	$	26,089	$	25,913
Other	4,580		4,923
Total assets	$	30,669	$	30,836

(*) Not allocable to sub-segments.

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	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Revenues
Property and casualty insurance:
Net earned premiums:
Specialty
Property and transportation	$	576	$	552	$	1,076	$	1,072
Specialty casualty	799		791		1,593		1,574
Specialty financial	272		242		558		485


Total net earned premiums	1,647		1,585		3,227		3,131
Net investment income	179		189		349		394
Other income	—		2		3		4
Total property and casualty insurance	1,826		1,776		3,579		3,529
Other	96		126		196		265
Total revenues before realized gains (losses)	1,922		1,902		3,775		3,794
Realized gains (losses) on securities	2		( 2 )		5		12

Total revenues	$	1,924	$	1,900	$	3,780	$	3,806

Earnings Before Income Taxes
Property and casualty insurance:
Underwriting:
Specialty
Property and transportation	$	27	$	40	$	64	$	100
Specialty casualty	49		86		69		147
Specialty financial	38		25		75		58

Other lines	( 1 )		( 1 )		( 1 )		( 2 )
Total underwriting (a)	113		150		207		303
Investment and other income, net (b)	160		169		312		356
Total property and casualty insurance	273		319		519		659
Other (c)	( 46 )		( 46 )		( 98 )		( 96 )
Total earnings before realized gains (losses) and income taxes	227		273		421		563
Realized gains (losses) on securities	2		( 2 )		5		12

Total earnings before income taxes	$	229	$	271	$	426	$	575

(a) Significant segment expenses, which are losses and loss adjustment expenses and commissions and other underwriting expenses, are shown in the table below by sub-segment.

(b) Includes the amortization of intangibles and other miscellaneous expenses.

(c) Includes the expenses of the managed investment entities, interest charges on borrowed money, salaries, depreciation and other general expenses.

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The following table shows the components of underwriting profit, including significant segment expenses, for the Property and casualty insurance segment (in millions):


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Property and casualty insurance:
Specialty:
Property and transportation:
Net earned premiums	$	576	$	552	$	1,076	$	1,072
Losses and loss adjustment expenses	387		351		698		657
Commissions and other underwriting expenses	162		161		314		315
Underwriting profit	$	27	$	40	$	64	$	100

Specialty casualty:
Net earned premiums	$	799	$	791	$	1,593	$	1,574
Losses and loss adjustment expenses	516		483		1,052		985
Commissions and other underwriting expenses	234		222		472		442
Underwriting profit	$	49	$	86	$	69	$	147

Specialty financial:
Net earned premiums	$	272	$	242	$	558	$	485
Losses and loss adjustment expenses	103		102		221		200
Commissions and other underwriting expenses	131		115		262		227
Underwriting profit	$	38	$	25	$	75	$	58







Other lines:
Losses and loss adjustment expenses	$	1	$	1	$	1	$	2
Underwriting profit (loss)	$	( 1 )	$	( 1 )	$	( 1 )	$	( 2 )

Total property and casualty insurance segment:
Net earned premiums	$	1,647	$	1,585	$	3,227	$	3,131
Losses and loss adjustment expenses	1,007		937		1,972		1,844
Commissions and other underwriting expenses	527		498		1,048		984
Underwriting profit	$	113	$	150	$	207	$	303

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C. Fair Value Measurements

Accounting standards for measuring fair value are based on inputs used in estimating fair value. The three levels of the hierarchy are as follows:

Level 1 — Quoted prices for identical assets or liabilities in active markets (markets in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis). AFG’s Level 1 financial instruments consist primarily of publicly traded equity securities, highly liquid government bonds for which quoted market prices in active markets are available and short-term investments of managed investment entities.

Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar assets or liabilities in inactive markets (markets in which there are few transactions, the prices are not current, price quotations vary substantially over time or among market makers, or in which little information is released publicly); and valuations based on other significant inputs that are observable in active markets. AFG’s Level 2 financial instruments consist primarily of fixed maturity securities and investments of managed investment entities priced using observable inputs. Level 2 inputs include benchmark yields, reported trades, corroborated broker/dealer quotes, issuer spreads and benchmark securities. When non-binding broker quotes can be corroborated by comparison to similar securities priced using observable inputs, they are classified as Level 2.

Level 3 — Valuations derived from market valuation techniques generally consistent with those used to estimate the fair values of Level 2 financial instruments in which one or more significant inputs are unobservable or when the market for a security exhibits significantly less liquidity relative to markets supporting Level 2 fair value measurements. The unobservable inputs may include management’s own assumptions about the assumptions market participants would use based on the best information available at the valuation date. Financial instruments whose fair value is estimated based on non-binding broker quotes or internally developed using significant inputs not based on, or corroborated by, observable market information are classified as Level 3.

As discussed in Note A — “Accounting Policies — Managed Investment Entities,” AFG has set the carrying value of its CLO liabilities equal to the fair value of the CLO assets (which have more observable fair values) as an alternative to reporting those liabilities at separately measured fair values. As a result, the CLO liabilities are categorized within the fair value hierarchy on the same basis (proportionally) as the related CLO assets. Since the portion of the CLO liabilities allocated to Level 3 is derived from the fair value of the CLO assets, these amounts are excluded from the progression of Level 3 financial instruments.

AFG’s management is responsible for the valuation process and uses data from outside sources (including nationally recognized pricing services and broker/dealers) in establishing fair value. AFG’s internal investment group includes approximately 20 investment professionals whose primary responsibility is to manage AFG’s investment portfolio. These professionals monitor individual investments as well as overall industries and are active in the financial markets on a daily basis. The group is led by AFG’s chief investment officer, who reports directly to one of AFG’s Co-CEOs. Valuation techniques utilized by pricing services and prices obtained from external sources are reviewed by AFG’s internal investment professionals who are familiar with the securities being priced and the markets in which they trade to ensure the fair value determination is representative of an exit price. To validate the appropriateness of the prices obtained, these investment managers consider widely published indices (as benchmarks), recent trades, changes in interest rates, general economic conditions and the credit quality of the specific issuers. In addition, AFG communicates directly with the pricing services regarding the methods and assumptions used in pricing, including verifying, on a test basis, the inputs used by the service to value specific securities.

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Assets and liabilities measured and carried at fair value in the financial statements are summarized below (in millions):


	Level 1		Level 2		Level 3		Total
June 30, 2025
Assets:
Available for sale (“AFS”) fixed maturities:
U.S. government and government agencies	$	184	$	4	$	—	$	188
States, municipalities and political subdivisions	—		862		6		868
Foreign government	—		255		—		255
Residential MBS	—		2,216		1		2,217
Collateralized loan obligations	—		1,088		—		1,088
Other asset-backed securities	—		2,122		284		2,406
Corporate and other	—		3,006		461		3,467
Total AFS fixed maturities	184		9,553		752		10,489
Trading fixed maturities	—		69		13		82
Equity securities	467		47		286		800
Assets of managed investment entities (“MIE”)	360		3,462		11		3,833
Other assets — derivatives	—		6		—		6
Total assets accounted for at fair value	$	1,011	$	13,137	$	1,062	$	15,210
Liabilities:
Contingent consideration — acquisitions	$	—	$	—	$	1	$	1
Liabilities of managed investment entities	346		3,328		11		3,685
Other liabilities — derivatives	—		7		—		7
Total liabilities accounted for at fair value	$	346	$	3,335	$	12	$	3,693

December 31, 2024
Assets:
Available for sale fixed maturities:
U.S. government and government agencies	$	173	$	—	$	—	$	173
States, municipalities and political subdivisions	—		858		1		859
Foreign government	—		237		—		237
Residential MBS	—		1,988		1		1,989
Collateralized loan obligations	—		1,237		—		1,237
Other asset-backed securities	—		2,111		296		2,407
Corporate and other	12		3,014		470		3,496
Total AFS fixed maturities	185		9,445		768		10,398
Trading fixed maturities	—		50		26		76
Equity securities	419		40		292		751
Assets of managed investment entities	419		3,711		10		4,140
Other assets — derivatives	—		1		—		1
Total assets accounted for at fair value	$	1,023	$	13,247	$	1,096	$	15,366
Liabilities:
Contingent consideration — acquisitions	$	—	$	—	$	2	$	2
Liabilities of managed investment entities	402		3,553		10		3,965
Other liabilities — derivatives	—		18		—		18
Total liabilities accounted for at fair value	$	402	$	3,571	$	12	$	3,985

Approximately 7 % of the total assets carried at fair value at June 30, 2025, were Level 3 assets. Internally developed prices for fixed maturities are estimated using a variety of inputs, including appropriate credit spreads over the treasury yield (of a similar duration), trade information and prices of comparable securities and other security specific features (such as optional early redemption). Internally developed Level 3 asset fair values represent approximately 85 % ($ 897 million) of the total fair value of Level 3 assets at June 30, 2025. Approximately 67 % ($ 605 million) of these internally developed Level 3 assets are priced using a pricing model that uses a discounted cash flow approach to estimate the fair value of fixed maturity securities. The credit spread applied by management is the significant unobservable input of the pricing model. In instances where the security is currently callable at par value and the pricing

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model suggests a higher price, management caps the fair value at par value. The remainder of the internally developed Level 3 investments ($ 292 million) are priced using internal models or inputs from third parties that are not market observable. Management believes that any justifiable changes in unobservable inputs used to determine internally developed fair values would not have resulted in a material change in AFG’s financial position.

Approximately 11 % ($ 118 million) of the Level 3 assets were investments whose prices were determined based on financial information provided by third party asset managers. Approximately 4 % ($ 47 million) of Level 3 assets were priced using non-binding broker quotes or pricing services, for which there is a lack of transparency as to the inputs used to determine fair value.

Changes in balances of Level 3 financial assets and liabilities carried at fair value during the second quarter and first six months of 2025 and 2024 are presented below (in millions). The transfers into and out of Level 3 were due to changes in the availability of market observable inputs. All transfers are reflected in the table at fair value as of the end of the reporting period.


			Total realized/unrealized gains (losses) included in
	Balance at March 31, 2025		Net earnings (loss)		Other comprehensive income (loss)		Purchases and issuances		Sales and settlements		Transfer into Level 3		Transfer out of Level 3		Balance at June 30, 2025
AFS fixed maturities:

State and municipal	$	4	$	—	$	—	$	—	$	—	$	2	$	—	$	6
Residential MBS	1		—		—		—		—		—		—		1
Collateralized loan obligations	—		—		—		—		—		—		—		—
Other asset-backed securities	281		—		3		6		( 6 )		—		—		284
Corporate and other	462		7		1		25		( 34 )		—		—		461
Total AFS fixed maturities	748		7		4		31		( 40 )		2		—		752
Trading fixed maturities	13		—		—		—		—		—		—		13
Equity securities	297		20		—		3		—		7		( 41 )		286
Assets of MIE	12		( 2 )		—		1		—		—		—		11
Total Level 3 assets	$	1,070	$	25	$	4	$	35	$	( 40 )	$	9	$	( 41 )	$	1,062

Contingent consideration — acquisitions	$	( 1 )	$	—	$	—	$	—	$	—	$	—	$	—	$	( 1 )
Total Level 3 liabilities	$	( 1 )	$	—	$	—	$	—	$	—	$	—	$	—	$	( 1 )


			Total realized/unrealized gains (losses) included in
	Balance at March 31, 2024		Net earnings (loss)		Other comprehensive income (loss)		Purchases and issuances		Sales and settlements		Transfer into Level 3		Transfer out of Level 3		Balance at June 30, 2024
AFS fixed maturities:

State and municipal	$	2	$	—	$	—	$	—	$	—	$	—	$	—	$	2
Residential MBS	2		—		—		—		—		—		—		2
Collateralized loan obligations	1		—		—		—		—		—		—		1
Other asset-backed securities	335		( 1 )		4		9		( 7 )		—		—		340
Corporate and other	402		—		1		15		( 6 )		—		( 1 )		411
Total AFS fixed maturities	742		( 1 )		5		24		( 13 )		—		( 1 )		756
Trading fixed maturities	—		—		—		12		—		—		—		12
Equity securities	545		15		—		48		( 6 )		—		—		602
Assets of MIE	10		( 1 )		—		3		—		—		—		12
Total Level 3 assets	$	1,297	$	13	$	5	$	87	$	( 19 )	$	—	$	( 1 )	$	1,382

Contingent consideration — acquisitions	$	( 2 )	$	—	$	—	$	—	$	—	$	—	$	—	$	( 2 )
Total Level 3 liabilities	$	( 2 )	$	—	$	—	$	—	$	—	$	—	$	—	$	( 2 )

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			Total realized/unrealized gains (losses) included in
	Balance at December 31, 2024		Net earnings (loss)		Other comprehensive income (loss)		Purchases and issuances		Sales and settlements		Transfer into Level 3		Transfer out of Level 3		Balance at June 30, 2025
AFS fixed maturities:

State and municipal	$	1	$	—	$	—	$	—	$	—	$	5	$	—	$	6
Residential MBS	1		—		—		—		—		—		—		1
Collateralized loan obligations	—		—		—		—		—		—		—		—
Other asset-backed securities	296		—		5		16		( 33 )		—		—		284
Corporate and other	470		1		5		39		( 48 )		1		( 7 )		461
Total AFS fixed maturities	768		1		10		55		( 81 )		6		( 7 )		752
Trading fixed maturities	26		1		—		—		( 14 )		—		—		13
Equity securities	292		18		—		16		—		7		( 47 )		286
Assets of MIE	10		( 3 )		—		4		—		—		—		11
Total Level 3 assets	$	1,096	$	17	$	10	$	75	$	( 95 )	$	13	$	( 54 )	$	1,062

Contingent consideration — acquisitions	$	( 2 )	$	—	$	—	$	—	$	1	$	—	$	—	$	( 1 )
Total Level 3 liabilities	$	( 2 )	$	—	$	—	$	—	$	1	$	—	$	—	$	( 1 )


			Total realized/unrealized gains (losses) included in
	Balance at December 31, 2023		Net earnings (loss)		Other comprehensive income (loss)		Purchases and issuances		Sales and settlements		Transfer into Level 3		Transfer out of Level 3		Balance at June 30, 2024
AFS fixed maturities:

State and municipal	$	2	$	—	$	—	$	—	$	—	$	—	$	—	$	2
Residential MBS	2		—		—		—		—		—		—		2
Collateralized loan obligations	1		—		—		—		—		—		—		1
Other asset-backed securities	351		( 1 )		4		24		( 12 )		—		( 26 )		340
Corporate and other	380		( 1 )		1		48		( 12 )		—		( 5 )		411
Total AFS fixed maturities	736		( 2 )		5		72		( 24 )		—		( 31 )		756
Trading fixed maturities	—		—		—		12		—		—		—		12
Equity securities	485		35		—		90		( 8 )		—		—		602
Assets of MIE	9		( 2 )		—		5		—		—		—		12
Total Level 3 assets	$	1,230	$	31	$	5	$	179	$	( 32 )	$	—	$	( 31 )	$	1,382

Contingent consideration — acquisitions	$	( 2 )	$	—	$	—	$	—	$	—	$	—	$	—	$	( 2 )
Total Level 3 liabilities	$	( 2 )	$	—	$	—	$	—	$	—	$	—	$	—	$	( 2 )

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Fair Value of Financial Instruments The carrying value and fair value of financial instruments that are not carried at fair value in the financial statements are summarized below (in millions):


	Carrying Value		Fair Value
			Total		Level 1		Level 2		Level 3
June 30, 2025
Financial assets:
Cash and cash equivalents	$	1,268	$	1,268	$	1,268	$	—	$	—
Mortgage loans	909		881		—		—		881
Total financial assets not accounted for at fair value	$	2,177	$	2,149	$	1,268	$	—	$	881

Long-term debt	$	1,476	$	1,235	$	—	$	1,232	$	3
Total financial liabilities not accounted for at fair value	$	1,476	$	1,235	$	—	$	1,232	$	3

December 31, 2024
Financial assets:
Cash and cash equivalents	$	1,406	$	1,406	$	1,406	$	—	$	—
Mortgage loans	791		754		—		—		754
Total financial assets not accounted for at fair value	$	2,197	$	2,160	$	1,406	$	—	$	754

Long-term debt	$	1,475	$	1,276	$	—	$	1,273	$	3
Total financial liabilities not accounted for at fair value	$	1,475	$	1,276	$	—	$	1,273	$	3

D. Investments

Available for sale fixed maturities at June 30, 2025 and December 31, 2024, consisted of the following (in millions):


	Amortized Cost		Allowance for Expected Credit Losses		Gross Unrealized				Net Unrealized		Fair Value
					Gains		Losses
June 30, 2025
Fixed maturities:
U.S. government and government agencies	$	188	$	—	$	1	$	( 1 )	$	—	$	188
States, municipalities and political subdivisions	910		—		6		( 48 )		( 42 )		868
Foreign government	252		—		3		—		3		255
Residential MBS	2,314		1		32		( 128 )		( 96 )		2,217
Collateralized loan obligations	1,094		4		6		( 8 )		( 2 )		1,088
Other asset-backed securities	2,433		5		25		( 47 )		( 22 )		2,406
Corporate and other	3,441		5		69		( 38 )		31		3,467
Total fixed maturities	$	10,632	$	15	$	142	$	( 270 )	$	( 128 )	$	10,489

December 31, 2024
Fixed maturities:
U.S. government and government agencies	$	176	$	—	$	—	$	( 3 )	$	( 3 )	$	173
States, municipalities and political subdivisions	905		—		3		( 49 )		( 46 )		859
Foreign government	236		—		2		( 1 )		1		237
Residential MBS	2,122		1		22		( 154 )		( 132 )		1,989
Collateralized loan obligations	1,243		4		10		( 12 )		( 2 )		1,237
Other asset-backed securities	2,463		6		19		( 69 )		( 50 )		2,407
Corporate and other	3,542		23		42		( 65 )		( 23 )		3,496
Total fixed maturities	$	10,687	$	34	$	98	$	( 353 )	$	( 255 )	$	10,398

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AMERICAN FINANCIAL GROUP, INC. 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

Equity securities which are reported at fair value with holding gains and losses recognized in net earnings, consisted of the following at June 30, 2025 and December 31, 2024 (in millions):


	June 30, 2025						December 31, 2024
	Actual Cost		Fair Value		Fair Value Over Cost		Actual Cost		Fair Value		Fair Value Over Cost
Common stocks	$	347	$	389	$	42	$	304	$	336	$	32
Perpetual preferred stocks	388		411		23		380		415		35
Total equity securities carried at fair value	$	735	$	800	$	65	$	684	$	751	$	67

The following table summarizes investments accounted for using the equity method, by strategy (in millions):


					Net Investment Income
	Carrying Value				Three months ended June 30,				Six months ended June 30,
	June 30, 2025		December 31, 2024		2025		2024		2025		2024
Real estate-related investments (*)	$	1,413	$	1,392	$	( 16 )	$	11	$	1	$	5
Private equity	838		804		7		1		1		31
Private debt	90		81		3		2		5		3
Total investments accounted for using the equity method	$	2,341	$	2,277	$	( 6 )	$	14	$	7	$	39

(*) 88 % of the carrying value relates to underlying investments in multi-family properties as of June 30, 2025 and December 31, 2024.

The earnings (losses) from these investments are generally reported on a quarter lag due to the timing required to obtain the necessary information from the funds. AFG regularly reviews and discusses fund performance with the fund managers to corroborate the reasonableness of the underlying reported asset values and to assess whether any events have occurred within the lag period that may materially affect the valuation of these investments.

With respect to partnerships and similar investments, AFG had unfunded commitments of $ 492 million and $ 457 million as of June 30, 2025 and December 31, 2024, respectively.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

The following table shows gross unrealized losses (dollars in millions) on available for sale fixed maturities by investment category and length of time that individual securities have been in a continuous unrealized loss position at the following balance sheet dates.


	Less Than Twelve Months						Twelve Months or More
	Unrealized Loss		Fair Value		Fair Value as % of Cost		Unrealized Loss		Fair Value		Fair Value as % of Cost
June 30, 2025
Fixed maturities:
U.S. government and government agencies	$	—	$	30	100	%	$	( 1 )	$	84	99	%
States, municipalities and political subdivisions	( 5 )		129		96	%	( 43 )		469		92	%
Foreign government	—		—		—	%	—		49		100	%
Residential MBS	( 1 )		192		99	%	( 127 )		903		88	%
Collateralized loan obligations	—		58		100	%	( 8 )		204		96	%
Other asset-backed securities	( 1 )		298		100	%	( 46 )		973		95	%
Corporate and other	( 4 )		258		98	%	( 34 )		972		97	%
Total fixed maturities	$	( 11 )	$	965	99	%	$	( 259 )	$	3,654	93	%

December 31, 2024
Fixed maturities:
U.S. government and government agencies	$	—	$	35	100	%	$	( 3 )	$	105	97	%
States, municipalities and political subdivisions	( 5 )		256		98	%	( 44 )		470		91	%
Foreign government	—		98		100	%	( 1 )		50		98	%
Residential MBS	( 6 )		452		99	%	( 148 )		916		86	%
Collateralized loan obligations	—		—		—	%	( 12 )		247		95	%
Other asset-backed securities	( 4 )		332		99	%	( 65 )		1,217		95	%
Corporate and other	( 10 )		605		98	%	( 55 )		1,151		95	%
Total fixed maturities	$	( 25 )	$	1,778	99	%	$	( 328 )	$	4,156	93	%

At June 30, 2025, the gross unrealized losses on fixed maturities of $ 270 million relate to approximately 1,100 securities. Investment grade securities (as determined by nationally recognized rating agencies) represented approximately 96 % of the gross unrealized loss and 96 % of the fair value of securities with unrealized losses.

To evaluate fixed maturities for expected credit losses (impairment), management considers whether the unrealized loss is credit-driven or a result of changes in market interest rates, the extent to which fair value is less than cost basis, historical operating, balance sheet and cash flow data from the issuer, third party research, communications with industry specialists and discussions with issuer management.

AFG analyzes its residential MBS for expected credit losses (impairment) each quarter based upon expected future cash flows. Management estimates expected future cash flows based upon its knowledge of the MBS market, cash flow projections (which reflect loan to collateral values, subordination, vintage and geographic concentration) received from independent sources, implied cash flows inherent in security ratings and analysis of historical payment data.

Management believes AFG will recover its cost basis (net of any allowance) in the 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 June 30, 2025.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

A progression of the allowance for expected credit losses on available for sale fixed maturity securities is shown below (in millions):


	Structured Securities (*)		Corporate and Other		Total
Balance at March 31, 2025	$	11	$	30	$	41

Provision for expected credit losses on securities with no previous allowance	—		1		1
Reductions to previously recognized expected credit losses	( 1 )		—		( 1 )
Reductions due to sales or redemptions	—		( 26 )		( 26 )
Balance at June 30, 2025	$	10	$	5	$	15

Balance at March 31, 2024	$	11	$	—	$	11

Provision for expected credit losses on securities with no previous allowance	—		—		—
Additions (reductions) to previously recognized expected credit losses	—		—		—
Reductions due to sales or redemptions	( 1 )		—		( 1 )
Balance at June 30, 2024	$	10	$	—	$	10

Balance at December 31, 2024	$	11	$	23	$	34

Provision for expected credit losses on securities with no previous allowance	—		3		3
Additions (reductions) to previously recognized expected credit losses	( 1 )		5		4
Reductions due to sales or redemptions	—		( 26 )		( 26 )
Balance at June 30, 2025	$	10	$	5	$	15

Balance at December 31, 2023	$	9	$	3	$	12

Provision for expected credit losses on securities with no previous allowance	1		—		1
Additions to previously recognized expected credit losses	1		—		1
Reductions due to sales or redemptions	( 1 )		( 3 )		( 4 )
Balance at June 30, 2024	$	10	$	—	$	10

(*) Includes residential MBS, CLOs and other asset-backed securities (“ABS”).

In the first six months of 2025 and 2024, AFG did not purchase any securities with expected credit losses.

The table below sets forth the scheduled maturities of AFG’s available for sale fixed maturities as of June 30, 2025 (dollars in millions). 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.


	Amortized		Fair Value
	Cost, net (*)		Amount		%
Maturity
One year or less	$	749	$	735	7	%
After one year through five years	2,516		2,514		24	%
After five years through ten years	1,299		1,320		13	%
After ten years	222		209		2	%
	4,786		4,778		46	%
CLOs and other ABS (average life of approximately 3 years)	3,518		3,494		33	%
Residential MBS (average life of approximately 6 years)	2,313		2,217		21	%
Total	$	10,617	$	10,489	100	%

(*) Amortized cost, net of allowance for expected credit losses.

Certain risks are inherent in fixed maturity securities, including loss upon default, price volatility in reaction to changes in interest rates, and general market factors and risks associated with reinvestment of proceeds due to prepayments or redemptions in a period of declining interest rates.

There were no investments in individual issuers that exceeded 10% of shareholders’ equity at June 30, 2025 or December 31, 2024.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

Net Investment Income The following table shows investment income earned and investment expenses incurred (in millions):


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Investment income:
Fixed maturities:
Interest and amortization	$	141	$	136	$	281	$	270
Change in fair value (*)	7		—		2		—
Equity securities:
Dividends	15		7		21		14
Change in fair value	4		9		4		25
Equity in earnings (losses) of partnerships and similar investments, net	( 6 )		14		7		39
Cash and cash equivalents	10		12		23		24
Other	19		15		32		25
Gross investment income	190		193		370		397
Investment expenses	( 6 )		( 5 )		( 13 )		( 11 )
Net investment income	$	184	$	188	$	357	$	386

(*) The change in the fair value of fixed maturities classified as trading and derivatives embedded in convertible fixed maturities related to limited partnerships and similar investments.

Realized gains (losses) and changes in unrealized appreciation (depreciation) included in AOCI related to fixed maturity securities are summarized as follows (in millions):


	Three months ended June 30, 2025								Three months ended June 30, 2024
	Realized gains (losses)								Realized gains (losses)
	Before Impairments		Impairment Allowance		Total		Change in Unrealized		Before Impairments		Impairment Allowance		Total		Change in Unrealized
Fixed maturities	$	( 8 )	$	—	$	( 8 )	$	51	$	( 1 )	$	—	$	( 1 )	$	( 15 )
Equity securities	10		—		10		—		( 1 )		—		( 1 )		—
Mortgage loans and other investments	—		—		—		—		—		—		—		—
Total pretax	2		—		2		51		( 2 )		—		( 2 )		( 15 )
Tax effects	—		—		—		( 11 )		—		—		—		3
Net of tax	$	2	$	—	$	2	$	40	$	( 2 )	$	—	$	( 2 )	$	( 12 )

	Six months ended June 30, 2025								Six months ended June 30, 2024
	Realized gains (losses)								Realized gains (losses)
	Before Impairments		Impairment Allowance		Total		Change in Unrealized		Before Impairments		Impairment Allowance		Total		Change in Unrealized
Fixed maturities	$	( 7 )	$	( 7 )	$	( 14 )	$	127	$	( 5 )	$	( 2 )	$	( 7 )	$	( 4 )
Equity securities	19		—		19		—		19		—		19		—
Mortgage loans and other investments	—		—		—		—		—		—		—		—
Total pretax	12		( 7 )		5		127		14		( 2 )		12		( 4 )
Tax effects	( 2 )		1		( 1 )		( 26 )		( 3 )		—		( 3 )		1
Net of tax	$	10	$	( 6 )	$	4	$	101	$	11	$	( 2 )	$	9	$	( 3 )

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AMERICAN FINANCIAL GROUP, INC. 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

All equity securities are carried at fair value through net earnings. AFG recorded net holding gains (losses) on equity securities during the second quarter and first six months of 2025 and 2024 on securities that were still owned at June 30, 2025 and June 30, 2024 as follows (in millions):


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Included in realized gains (losses)	$	9	$	( 3 )	$	16	$	17
Included in net investment income	2		9		3		25
	$	11	$	6	$	19	$	42

Gross realized gains and losses (excluding changes in impairment allowance and mark-to-market of derivatives) on available for sale fixed maturity investment transactions consisted of the following (in millions):


	Six months ended June 30,
	2025		2024
Gross gains	$	3	$	—
Gross losses	( 11 )		( 4 )

E. Derivatives

As discussed under “ Derivatives ” in Note A — “Accounting Policies ,” AFG uses derivatives to mitigate certain market risks related to its investment portfolio and deferred compensation obligations to employees.

The following table presents the classification of derivative assets and liabilities included in AFG’s Balance Sheet at fair value (in millions):


		June 30, 2025				December 31, 2024
	Balance Sheet Line	Asset		Liability		Asset		Liability
Derivatives designated and qualifying as cash flow hedges:
Interest rate swaps	Other assets/Other liabilities	$	1	$	7	$	1	$	14

Derivatives not designated as hedging instruments:
Fixed maturities with embedded derivatives	Fixed maturities	75		—		81		—
Total return swap	Other assets/Other liabilities	5		—		—		4
		$	81	$	7	$	82	$	18

AFG’s interest rate swaps are designated and qualify as highly effective cash flow hedges to mitigate interest rate risk related to certain floating-rate securities included in AFG’s portfolio of fixed maturity securities. The purpose of each of these swaps is to effectively convert a portion of AFG’s floating-rate fixed maturity securities to fixed rates by offsetting the variability in cash flows attributable to changes in the applicable Secured Overnight Financing Rate (“SOFR”).

Under the terms of the swaps, AFG receives fixed-rate interest payments in exchange for variable interest payments based on SOFR. The notional amounts of the interest rate swaps generally decline over each swap’s respective life (the swaps expire between July 2025 and October 2034) in anticipation of the expected decline in AFG’s portfolio of fixed maturity securities with floating interest rates based on SOFR. The total outstanding notional amount of AFG’s interest rate swaps was $ 768 million at June 30, 2025 compared to $ 1.05 billion at December 31, 2024, reflecting scheduled amortization, partially offset by one new swap entered into in the first six months of 2025 ($ 12 million notional amount at issuance). Amounts reclassified from AOCI to net earnings were losses of $ 2 million and $ 7 million in the second quarter of 2025 and 2024 and losses of $ 5 million and $ 14 million in the first six months of 2025 and 2024, respectively. Based on forward interest rate curves at June 30, 2025, management estimates that it will reclassify approximately $ 6 million of pre-tax net losses on interest rate swaps in AOCI to net investment income over the next twelve months. The actual amount will vary based on changes in SOFR. A collateral receivable supporting these swaps of $ 17 million and $ 27 million at June 30, 2025 and December 31, 2024, respectively, is included in other assets in AFG’s Balance Sheet.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

The fixed maturities with embedded derivatives consist of convertible fixed maturity securities and interest-only and principal-only MBS. AFG records the change in the fair value of these securities in net earnings. These investments are part of AFG’s overall investment strategy and represent a small component of AFG’s overall investment portfolio.

AFG is exposed to fair value changes from certain equity and fixed maturity market-based exposures related to its deferred compensation obligations to certain employees. To mitigate this risk, AFG entered into a total return swap. AFG’s Balance Sheet includes a $ 3 million liability to return collateral related to the swap (included in other liabilities) and a $ 4 million receivable for collateral posted related to the swap (included in other assets) at June 30, 2025 and December 31, 2024, respectively.

The following table summarizes the gains (losses) included in AFG’s Statement of Earnings for changes in the fair value of derivatives (in millions):


		Three months ended June 30,				Six months ended June 30,
	Statement of Earnings Line	2025		2024		2025		2024
Qualifying cash flow hedges:
Interest rate swaps	Net investment income	$	( 2 )	$	( 7 )	$	( 5 )	$	( 14 )

Non-designated hedges:
Fixed maturities with embedded derivatives	Realized gains (losses) on securities	—		—		1		( 1 )
Fixed maturities with embedded derivatives	Net investment income	7		1		2		1
Total return swap	Other expenses	9		—		6		6
Earnings (losses) on non-designated hedges		16		1		9		6
Total earnings (losses) on derivatives		$	14	$	( 6 )	$	4	$	( 8 )

F. Managed Investment Entities

AFG is the investment manager and it has investments ranging from 5.4 % to 100 % of the most subordinate debt tranche of thirteen active CLOs, which are considered variable interest entities. AFG also owns portions of the senior debt tranches of certain of these CLOs. Upon formation, these entities issued securities in various senior and subordinate classes and invested the proceeds primarily in secured bank loans, which serve as collateral for the debt securities issued by each CLO. None of the collateral was purchased from AFG. AFG’s investments in the subordinate debt tranches of these entities receive residual income from the CLOs only after the CLOs pay expenses (including management fees to AFG) and interest on and returns of capital to senior levels of debt securities. There are no contractual requirements for AFG to provide additional funding for these entities. AFG has not provided and does not intend to provide any financial support to these entities.

AFG’s maximum exposure to economic loss on the CLOs that it manages is limited to its investment in those CLOs, which had an aggregate fair value of $ 148 million (including $ 101 million invested in the most subordinate tranches and $ 30 million invested in temporary warehousing entities) at June 30, 2025.

In February 2025, AFG formed one new CLO, which issued $ 406 million face amount of liabilities (including $ 40 million face amount purchased by AFG). In the first six months of 2024, AFG formed two new CLOs, which issued $ 813 million face amount of liabilities (including $ 73 million face amount purchased by AFG). In the first six months of 2025, one CLO was substantially liquidated in accordance with the CLO indenture.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

The following table shows a progression of the fair value of AFG's investment in CLO tranches and temporary warehousing entities (in millions):


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Balance at beginning of period	$	122	$	201	$	175	$	177
Purchases	40		45		75		84
Sales	( 9 )		( 81 )		( 88 )		( 100 )
Distributions	( 7 )		( 15 )		( 18 )		( 25 )
CLO earnings attributable to AFG	2		9		4		23
Balance at end of period	$	148	$	159	$	148	$	159

The revenues and expenses of the CLOs are separately identified in AFG’s Statement of Earnings, after the elimination of management fees and earnings attributable to AFG as measured by the change in the fair value of AFG’s investments in the CLOs. Selected financial information related to the CLOs is shown below (in millions):


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Gains (losses) on change in fair value of assets/liabilities (*):
Assets	$	12	$	( 15 )	$	( 45 )	$	( 3 )
Liabilities	( 16 )		19		38		17
Management fees paid to AFG	2		3		5		6
CLO earnings attributable to AFG	2		9		4		23

(*) Included in revenues in AFG’s Statement of Earnings.

The aggregate unpaid principal balance of the CLOs’ fixed maturity investments exceeded the fair value of the investments by $ 73 million and $ 66 million at June 30, 2025 and December 31, 2024, respectively. The aggregate unpaid principal balance of the CLOs’ debt exceeded its carrying value by $ 198 million and $ 172 million at those dates, respectively. At June 30, 2025, the CLOs assets did not include any loans in default for which the CLOs are not accruing interest compared to an aggregate fair value of $ 3 million of loans in default (with an aggregate unpaid principal balance of $ 5 million) at December 31, 2024.

In addition to the CLOs that it manages, AFG had investments in CLOs that are managed by third parties (therefore not consolidated), which are included in available for sale fixed maturity securities and had a fair value of $ 1.09 billion at June 30, 2025 and $ 1.24 billion December 31, 2024.

G. Goodwill and Other Intangibles

There were no changes in the goodwill balance of $ 305 million during the first six months of 2025.

Included in other assets in AFG’s Balance Sheet is $ 193 million at June 30, 2025 and $ 203 million at December 31, 2024 in amortizable intangible assets related to acquisitions. These amounts are net of accumulated amortization of $ 69 million and $ 59 million, respectively. Amortization of intangibles was $ 5 million and $ 4 million in the second quarter of 2025 and 2024 and $ 10 million and $ 9 million in the first six months of 2025 and 2024, respectively.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

H. Long-Term Debt

Long-term debt consisted of the following (in millions):


	June 30, 2025						December 31, 2024
	Principal		Discount and Issue Costs		Carrying Value		Principal		Discount and Issue Costs		Carrying Value
Direct Senior Obligations of AFG:
4.50 % Senior Notes due June 2047	$	567	$	( 1 )	$	566	$	567	$	( 1 )	$	566
5.25 % Senior Notes due April 2030	253		( 3 )		250		253		( 4 )		249
Other	3		—		3		3		—		3
	823		( 4 )		819		823		( 5 )		818

Direct Subordinated Obligations of AFG:
4.50 % Subordinated Debentures due September 2060	200		( 5 )		195		200		( 5 )		195
5.125 % Subordinated Debentures due December 2059	200		( 5 )		195		200		( 5 )		195
5.625 % Subordinated Debentures due June 2060	150		( 4 )		146		150		( 4 )		146
5.875 % Subordinated Debentures due March 2059	125		( 4 )		121		125		( 4 )		121
	675		( 18 )		657		675		( 18 )		657
	$	1,498	$	( 22 )	$	1,476	$	1,498	$	( 23 )	$	1,475

Scheduled principal payments on debt for the balance of 2025, the subsequent five years and thereafter are as follows: 2025 — none ; 2026 — none ; 2027 — none ; 2028 — none ; 2029 — none ; 2030 — $ 253 million and thereafter — $ 1.25 billion.

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 % (currently 1.25 %) over a SOFR -based floating rate. No amounts were borrowed under this facility at June 30, 2025 or December 31, 2024.

I. Shareholders’ Equity

AFG is authorized to issue 12.5 million shares of Voting Preferred Stock and 12.5 million shares of Nonvoting Preferred Stock, each without par value.

Accumulated Other Comprehensive Income (Loss), Net of Tax (“AOCI”) Comprehensive income is defined as all changes in shareholders’ equity except those arising from transactions with shareholders. Comprehensive income includes net earnings and other comprehensive income (loss), which consists primarily of changes in net unrealized gains or losses on available for sale fixed maturity securities.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

The progression of the components of accumulated other comprehensive income (loss) is as follows (in millions):


			Other Comprehensive Income (Loss)
	AOCI Beginning Balance		Pretax		Tax		Net of tax		AOCI Ending Balance
Quarter ended June 30, 2025
Net unrealized gains (losses) on securities:
Unrealized holding gains (losses) on securities arising during the period			$	43	$	( 9 )	$	34
Reclassification adjustment for realized (gains) losses included in net earnings (*)			8		( 2 )		6
Total net unrealized gains (losses) on securities	$	( 141 )	51		( 11 )		40		$	( 101 )
Net unrealized gains (losses) on cash flow hedges:
Unrealized holding gains (losses) on cash flow hedges arising during the period			1		( 1 )		—
Reclassification adjustment for investment income included in net earnings (*)			2		—		2
Total net unrealized gains (losses) on cash flow hedges	( 7 )		3		( 1 )		2		( 5 )
Foreign currency translation adjustments	( 33 )		4		1		5		( 28 )
Pension and other postretirement plan adjustments	2		—		—		—		2
Total	$	( 179 )	$	58	$	( 11 )	$	47	$	( 132 )

Quarter ended June 30, 2024
Net unrealized gains (losses) on securities:
Unrealized holding gains (losses) on securities arising during the period			$	( 16 )	$	3	$	( 13 )
Reclassification adjustment for realized (gains) losses included in net earnings (*)			1		—		1
Total net unrealized gains (losses) on securities	$	( 278 )	( 15 )		3		( 12 )		$	( 290 )
Net unrealized gains (losses) on cash flow hedges:
Unrealized holding gains (losses) on cash flow hedges arising during the period			( 5 )		1		( 4 )
Reclassification adjustment for investment income included in net earnings (*)			7		( 1 )		6
Total net unrealized gains (losses) on cash flow hedges	( 22 )		2		—		2		( 20 )
Foreign currency translation adjustments	( 17 )		( 5 )		( 1 )		( 6 )		( 23 )
Pension and other postretirement plan adjustments	2		—		—		—		2
Total	$	( 315 )	$	( 18 )	$	2	$	( 16 )	$	( 331 )

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AMERICAN FINANCIAL GROUP, INC. 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED


			Other Comprehensive Income (Loss)
	AOCI Beginning Balance		Pretax		Tax		Net of tax		AOCI Ending Balance
Six months ended June 30, 2025
Net unrealized gains (losses) on securities:
Unrealized holding gains (losses) on securities arising during the period			$	112	$	( 23 )	$	89
Reclassification adjustment for realized (gains) losses included in net earnings (*)			15		( 3 )		12
Total net unrealized gains (losses) on securities	$	( 202 )	127		( 26 )		101		$	( 101 )
Net unrealized gains (losses) on cash flow hedges:
Unrealized holding gains (losses) on cash flow hedges arising during the period			2		( 1 )		1
Reclassification adjustment for investment income included in net earnings (*)			5		( 1 )		4
Total net unrealized gains (losses) on cash flow hedges	( 10 )		7		( 2 )		5		( 5 )
Foreign currency translation adjustments	( 30 )		1		1		2		( 28 )
Pension and other postretirement plan adjustments	2		—		—		—		2
Total	$	( 240 )	$	135	$	( 27 )	$	108	$	( 132 )

Six months ended June 30, 2024
Net unrealized gains (losses) on securities:
Unrealized holding gains (losses) on securities arising during the period			$	( 10 )	$	2	$	( 8 )
Reclassification adjustment for realized (gains) losses included in net earnings (*)			6		( 1 )		5
Total net unrealized gains (losses) on securities	$	( 287 )	( 4 )		1		( 3 )		$	( 290 )
Net unrealized gains (losses) on cash flow hedges:
Unrealized holding gains (losses) on cash flow hedges arising during the period			( 18 )		4		( 14 )
Reclassification adjustment for investment income included in net earnings (*)			14		( 3 )		11
Total net unrealized gains (losses) on cash flow hedges	( 17 )		( 4 )		1		( 3 )		( 20 )
Foreign currency translation adjustments	( 17 )		( 5 )		( 1 )		( 6 )		( 23 )
Pension and other postretirement plan adjustments	2		—		—		—		2
Total	$	( 319 )	$	( 13 )	$	1	$	( 12 )	$	( 331 )

(*) The reclassification adjustments affected the following lines in AFG’s Statement of Earnings:

OCI component

Affected line in the statement of earnings

Pretax - Net unrealized gains (losses) on securities

Realized gains (losses) on securities

Pretax - Net unrealized gains (losses) on cash flow hedges

Net investment income

Tax

Provision for income taxes

Stock Incentive Plans Under AFG’s stock incentive plans, employees of AFG and its subsidiaries are eligible to receive equity awards in the form of stock options, stock appreciation rights, restricted stock awards, restricted stock units and stock awards. In the first six months of 2025, AFG issued 166,297 shares of restricted Common Stock (fair value of $ 121.89 per share) under the stock incentive plans.

Total compensation expense related to stock incentive plans of AFG and its subsidiaries was $ 5 million in both the second quarter of 2025 and 2024 and $ 9 million in both the first six months of 2025 and 2024, respectively.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

J. Income Taxes

The following is a reconciliation of income taxes at the statutory rate of 21 % to the provision for income taxes as shown in AFG’s Statement of Earnings (dollars in millions):


	Three months ended June 30,								Six months ended June 30,
	2025				2024				2025				2024
	Amount		% of EBT		Amount		% of EBT		Amount		% of EBT		Amount		% of EBT
Earnings before income taxes (“EBT”)	$	229			$	271			$	426			$	575

Income taxes at statutory rate	$	48	21	%	$	57	21	%	$	89	21	%	$	121	21	%
Effect of:
Employee stock ownership plan dividend paid deduction	—		—	%	—		—	%	( 2 )		( 1	%)	( 2 )		—	%
Tax exempt interest	( 1 )		—	%	( 1 )		—	%	( 2 )		( 1	%)	( 2 )		( 1	%)
Stock-based compensation	—		—	%	—		—	%	( 1 )		—	%	( 2 )		—	%

Dividends received deduction	( 1 )		—	%	( 1 )		—	%	( 1 )		—	%	( 1 )		—	%
Nondeductible expenses	3		1	%	2		1	%	6		1	%	4		1	%
Adjustment related to sale of subsidiary	7		3	%	4		1	%	7		2	%	4		1	%

Foreign operations	1		—	%	—		—	%	3		1	%	—		—	%

Other	( 2 )		( 1	%)	1		—	%	( 1 )		—	%	2		—	%
Provision for income taxes as shown in the statement of earnings	$	55	24	%	$	62	23	%	$	98	23	%	$	124	22	%

In the second quarter of 2025, AFG recorded $ 7 million in net tax expense related to a pending state income tax examination regarding the sale of a subsidiary in a prior year. 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 different subsidiary in a prior year.

The One Big Beautiful Bill Act (enacted on July 4, 2025), among other things, extends many of the federal tax provisions of the 2017 Tax Cuts and Jobs Act and contains provisions that will accelerate the timing of certain tax deductions beginning in 2025 with an offsetting impact to deferred taxes and no impact on total income tax expense. While management is still evaluating the full impact of the bill, there was no impact on AFG’s financial statements at June 30, 2025 and the tax provisions of the bill are not expected to be material to AFG’s results of operations in future periods.

K. Contingencies

There have been no significant changes to the matters discussed and referred to in Note M — “Contingencies” of AFG’s 2024 Form 10-K, which covers property and casualty insurance reserves for claims related to environmental exposures, asbestos and other mass tort claims and environmental and occupational injury and disease claims of subsidiaries’ former railroad and manufacturing operations.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

L. Insurance

Insurance Reserves The following table provides an analysis of changes in the liability for losses and loss adjustment expenses during the first six months of 2025 and 2024 (in millions):


	Six months ended June 30,
	2025		2024
Balance at beginning of year	$	14,179	$	13,087
Less reinsurance recoverables, net of allowance	4,957		4,288
Net liability at beginning of year	9,222		8,799
Provision for losses and LAE occurring in the current period	2,003		1,934


Net decrease in the provision for claims of prior years	( 31 )		( 85 )
Total losses and LAE incurred	1,972		1,849
Payments for losses and LAE of:
Current year	( 448 )		( 425 )
Prior years	( 1,450 )		( 1,533 )
Total payments	( 1,898 )		( 1,958 )
Foreign currency translation and other	( 10 )		( 1 )
Net liability at end of period	9,286		8,689
Add back reinsurance recoverables, net of allowance	4,548		3,918
Gross unpaid losses and LAE included in the balance sheet at end of period	$	13,834	$	12,607

The net decrease in the provision for claims of prior years during the first six months of 2025 reflects (i) lower than anticipated losses in the crop business, lower than anticipated claim severity in the aviation and agribusiness operations and lower than expected claim frequency in the property and inland marine business (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency in the financial institutions business and lower than expected claim severity in the trade credit, surety and fidelity businesses (within the Specialty financial sub-segment). This favorable development was partially offset by higher than anticipated claim severity in the excess and surplus and social services businesses (within the Specialty casualty sub-segment).

The net decrease in the provision for claims of prior years during the first six months of 2024 reflects (i) lower than anticipated losses in the crop business and lower than expected claim severity in the property and inland marine business (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses and lower than expected claim frequency in the executive liability business (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency in the fidelity and trade credit businesses and lower than expected claim frequency and severity in the financial institutions business (within the Specialty financial sub-segment). This favorable development was partially offset by (i) higher than anticipated claim severity in the excess and surplus businesses and higher than expected claim frequency and severity in the social services business (within the Specialty casualty sub-segment) and (ii) higher than anticipated claim severity in the innovative markets and surety businesses (within the Specialty financial sub-segment).

Recoverables from Reinsurers and Premiums Receivable Progressions of the 2025 and 2024 allowance for expected credit losses on recoverables from reinsurers and premiums receivable are shown below (in millions):


	Recoverables from Reinsurers				Premiums Receivable
	2025		2024		2025		2024
Balance at March 31	$	10	$	10	$	18	$	15
Provision (credit) for expected credit losses	( 1 )		—		1		4
Write-offs charged against the allowance	—		—		—		( 1 )
Balance at June 30	$	9	$	10	$	19	$	18

Balance at December 31	$	11	$	10	$	19	$	15
Provision (credit) for expected credit losses	( 2 )		—		—		4
Write-offs charged against the allowance	—		—		—		( 1 )
Balance at June 30	$	9	$	10	$	19	$	18

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AMERICAN FINANCIAL GROUP, INC. 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations


INDEX TO MD&A
	Page		Page
Forward-Looking Statements	32	Results of Operations	43
Overview	33	General	43
Critical Accounting Policies	33	Results of Operations — Second Q uarter	44
Liquidity and Capital Resources	34	Segmented Statement of Earnings	44
Ratios	34	Property and Casualty Insurance	45
Condensed Consolidated Cash Flows	34	Holding Company, Other and Unallocated	53
Parent and Subsidiary Liquidity	35	Results of Operations — First Six Months	55
Investments	36	Segmented Statement of Earnings	55
Uncertainties	39	Property and Casualty Insurance	56
Managed Investment Entities	40	Holding Company, Other and Unallocated	64
		Recent Accounting Standards	65

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Some of the forward-looking statements can be identified by the use of words such as “anticipates”, “believes”, “expects”, “projects”, “estimates”, “intends”, “plans”, “seeks”, “could”, “may”, “should”, “will” or the negative version of those words or other comparable terminology. Such forward-looking statements include statements relating to: expectations concerning market and other conditions and their effect on future premiums, revenues, earnings, investment activities and the amount and timing of share repurchases and special dividends; recoverability of asset values; expected losses and the adequacy of reserves for asbestos, environmental pollution and mass tort claims; rate changes; and improved loss experience.

Actual results and/or financial condition could differ materially from those contained in or implied by such forward-looking statements for a variety of reasons including but not limited to the following and the risks and uncertainties AFG describes in the “Risk Factors” section of its most recent Annual Report on Form 10-K, as updated by its other reports filed with the Securities and Exchange Commission.

• changes in financial, political and economic conditions, including changes in interest and inflation rates and impacts from tariffs or other trade actions, currency fluctuations and extended economic recessions or expansions in the U.S. and/or abroad;

• performance of securities markets;

• new legislation or declines in credit quality or credit ratings that could have a material impact on the valuation of securities in AFG’s investment portfolio;

• the availability of capital;

• changes in insurance law or regulation, including changes in statutory accounting rules, including modifications to capital requirements;

• changes in the legal environment affecting AFG or its customers;

• tax law and accounting changes;

• levels of natural catastrophes and severe weather, terrorist activities (including any nuclear, biological, chemical or radiological events), incidents of war or losses resulting from pandemics, civil unrest and other major losses;

• disruption caused by cyber-attacks or other technology breaches or failures by AFG or its business partners and service providers, which could negatively impact AFG’s business or reputation and/or expose AFG to litigation;

• development of insurance loss reserves and establishment of other reserves, particularly with respect to amounts associated with asbestos and environmental claims;

• availability of reinsurance and ability of reinsurers to pay their obligations;

• competitive pressures;

• the ability to obtain adequate rates and policy terms;

• changes in AFG’s credit ratings or the financial strength ratings assigned by major ratings agencies to AFG’s operating subsidiaries; and

• the impact of the conditions in the international financial markets and the global economy relating to AFG’s international operations.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

The forward-looking statements herein are made only as of the date of this report. The Company assumes no obligation to publicly update any forward-looking statements.

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 2 .

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 $174 million ($2.07 per share, diluted) for the second quarter of 2025 compared to $209 million ($2.49 per share, diluted) for the second quarter of 2024 and $328 million ($3.92 per share, diluted) for the first six months of 2025 compared to $451 million ($5.38 per share, diluted) for the first six months of 2024. The decline in the 2025 periods reflects lower underwriting profit and lower net investment income from AFG’s alternative investment portfolio, partially offset by the favorable impact on net investment income of higher average balances of investments and higher yields on fixed maturity investments.

Outlook

Management expects premium growth in many of AFG’s business units and continued strong underwriting results in the ongoing generally favorable property and casualty insurance market. In addition, management anticipates the elevated interest rate environment (since early 2022) will continue to have a positive impact on investment income on fixed maturity investments in 2025.

AFG’s financial condition, results of operations and cash flows are impacted by the economic, legal and regulatory environment. Economic inflation, social inflation, supply chain disruption and other economic conditions may impact premium levels, loss cost trends and investment returns.

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,

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

• 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.

For a discussion of these policies, see Management’s Discussion and Analysis — “Critical Accounting Policies” in AFG’s 2024 Form 10-K.

LIQUIDITY AND CAPITAL RESOURCES

Ratios

AFG’s debt to total capital ratio on a consolidated basis is shown below (dollars in millions):


					December 31,
	June 30, 2025			2024	2023
Principal amount of long-term debt	$	1,498			$	1,498		$	1,498
Total capital	6,146				6,204			6,075
Ratio of debt to total capital:
Including subordinated debt	24.4		%		24.1		%	24.7		%
Excluding subordinated debt	13.4		%		13.3		%	13.5		%

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.

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):


	Six months ended June 30,
	2025		2024
Net cash provided by operating activities	$	533	$	19
Net cash provided by (used in) investing activities	59		(6)
Net cash used in financing activities	(730)		(117)
Net change in cash and cash equivalents	$	(138)	$	(104)

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 $33 million during the first six months of 2025 and reduced cash flows from operating activities by $239 million in the first six months of 2024, accounting for a $272 million increase in cash flows from operating activities in the 2025 period compared to the 2024 period. 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 $500 million and $258 million in the first six months of 2025 and 2024, respectively.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

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 $333 million source of cash in the first six months of 2025 compared to $57 million in the first six months of 2024, accounting for a $276 million increase in net cash provided by investing activities in the first six months of 2025 compared to the 2024 period. See Note A — “Accounting Policies — Managed Investment Entities” and Note F — “Managed Investment Entities” to the financial statements. Excluding the activity of the managed investment entities, investing activities were a $274 million use of cash in the first six months of 2025 compared to $63 million in the first six months of 2024.

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 $730 million for the first six months of 2025 compared to $117 million in the first six months of 2024, an increase of $613 million. AFG paid cash dividends totaling $301 million in the first six months of 2025 compared to $327 million in the first six months of 2024, a decrease in cash used by financing activities of $26 million. During the first six months of 2025, AFG repurchased $97 million of its Common Stock compared to no repurchases in the comparable 2024 period. 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 $339 million in the first six months of 2025 compared to issuances exceeding retirements by $200 million in the first six months of 2024, accounting for a $539 million increase in net cash used in financing activities in the 2025 period compared to the 2024 period. See Note A — “Accounting Policies — Managed Investment Entities” and Note F — “Managed Investment Entities” to the financial statements.

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.

During the first six months of 2025, AFG repurchased 782,134 shares of its Common Stock for $97 million and paid a special cash dividend totaling $167 million ($2.00 per share) in March.

During 2024, AFG paid special cash dividends totaling $545 million ($2.50 per share in February and $4.00 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.

At June 30, 2025, AFG (parent) held approximately $349 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 2024 or the first six months of 2025.

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

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

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.

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.

Investments

AFG’s investment portfolio at June 30, 2025, contained $10.49 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 $82 million in fixed maturities classified as trading with holding gains and losses included in net investment income. In addition, AFG’s investment portfolio includes $560 million in equity securities carried at fair value with holding gains and losses included in realized gains (losses) on securities and $240 million in equity securities carried at fair value with holding gains and losses included in net investment income. AFG’s investment portfolio also includes $2.34 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.

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 89% was priced using pricing services at June 30, 2025 and 3% was priced using non-binding broker quotes. The remaining 8% are 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 C — “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.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

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 June 30, 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	$	10,571
Percentage impact on fair value of 100 bps increase in interest rates	(3.0		%)
Pretax impact on fair value of fixed maturity portfolio	$	(317)

Approximately 95% of the fixed maturities held by AFG at June 30, 2025, were rated “investment grade” (credit rating of AAA to BBB) by nationally recognized rating agencies, 2% were rated “non-investment grade” and 3% 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 $75 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 $350 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 June 30, 2025, is shown in the following table (dollars in millions). There were $446 million of available for sale fixed maturity securities with no unrealized gains or losses at June 30, 2025.


	Securities With Unrealized Gains			Securities With Unrealized Losses
Available for Sale Fixed Maturities
Fair value of securities	$	5,424		$	4,619
Amortized cost of securities, net of allowance for expected credit losses	$	5,282		$	4,889
Gross unrealized gain (loss)	$	142		$	(270)
Fair value as % of amortized cost	103		%	94		%
Number of security positions	942			1,084
Number individually exceeding $2 million gain or loss	2			33
Concentration of gains (losses) by type or industry (exceeding 5% of unrealized):
Residential mortgage-backed securities	$	32		$	(128)
Other asset-backed securities	25			(47)
Banking	14			(7)
Asset managers	12			(9)
States and municipalities	6			(48)






Percentage rated investment grade	95		%	96		%

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

The table below sets forth the scheduled maturities of AFG’s available for sale fixed maturity securities at June 30, 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	2	%	11	%
After one year through five years	26	%	20	%
After five years through ten years	17	%	8	%
After ten years	1	%	4	%
	46	%	43	%
CLOs and other asset-backed securities (average life of approximately 3 years)	34	%	33	%
Residential mortgage-backed securities (average life of approximately 6 years)	20	%	24	%
	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 June 30, 2025
Securities with unrealized gains:
Exceeding $500,000 (53 securities)	$	829	$	48	106	%
$500,000 or less (889 securities)	4,595		94		102	%
	$	5,424	$	142	103	%
Securities with unrealized losses:
Exceeding $500,000 (114 securities)	$	1,339	$	(178)	88	%
$500,000 or less (970 securities)	3,280		(92)		97	%
	$	4,619	$	(270)	94	%

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 June 30, 2025
Investment grade fixed maturities with losses for:
Less than one year (162 securities)	$	907	$	(9)	99	%
One year or longer (766 securities)	3,532		(250)		93	%
	$	4,439	$	(259)	94	%
Non-investment grade fixed maturities with losses for:
Less than one year (40 securities)	$	58	$	(2)	97	%
One year or longer (116 securities)	122		(9)		93	%
	$	180	$	(11)	94	%

When a decline in the value of a specific investment is considered to be other-than-temporary, an allowance for credit losses (impairment) is charged to earnings (accounted for as a realized loss). The determination of whether unrealized losses are other-than-temporary requires judgment based on subjective as well as objective factors as detailed in AFG’s 2024 Form 10-K under Management’s Discussion and Analysis — “Investments.”

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

Based on its analysis, 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 June 30, 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

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. See Management’s Discussion and Analysis — “Uncertainties — Asbestos and Environmental-related (“A&E”) Insurance Reserves ” in AFG’s 2024 Form 10–K.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

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 F — “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
June 30, 2025
Assets:
Cash and investments	$	16,197	$	—	$	(148)	(*)	$	16,049
Assets of managed investment entities	—		3,833		—			3,833
Other assets	10,787		—		—			10,787
Total assets	$	26,984	$	3,833	$	(148)		$	30,669
Liabilities:
Unpaid losses and loss adjustment expenses and unearned premiums	$	17,860	$	—	$	—		$	17,860
Liabilities of managed investment entities	—		3,803		(118)		(*)	3,685
Long-term debt and other liabilities	4,608		—		—			4,608
Total liabilities	22,468		3,803		(118)			26,153

Shareholders’ equity:
Common Stock and Capital surplus	1,497		30		(30)			1,497
Retained earnings	3,151		—		—			3,151
Accumulated other comprehensive income (loss), net of tax	(132)		—		—			(132)
Total shareholders’ equity	4,516		30		(30)			4,516
Total liabilities and shareholders’ equity	$	26,984	$	3,833	$	(148)		$	30,669

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.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

CONDENSED CONSOLIDATING STATEMENT OF EARNINGS


	Before CLO Consol. (a)		Managed Investment Entities		Consol. Entries			Consolidated As Reported
Three months ended June 30, 2025
Revenues:
Net earned premiums	$	1,647	$	—	$	—		$	1,647
Net investment income	186		—		(2)		(b)	184

Realized gains (losses) on securities	2		—		—			2
Income of managed investment entities:
Investment income	—		68		—			68
Gain (loss) on change in fair value of assets/liabilities	—		—		(4)		(b)	(4)
Other income	29		—		(2)		(c)	27
Total revenues	1,864		68		(8)			1,924
Costs and Expenses:
Insurance benefits and expenses	1,541		—		—			1,541
Expenses of managed investment entities	—		68		(8)		(b)(c)	60
Interest charges on borrowed money and other expenses	94		—		—			94
Total costs and expenses	1,635		68		(8)			1,695
Earnings before income taxes	229		—		—			229
Provision for income taxes	55		—		—			55
Net earnings	$	174	$	—	$	—		$	174

Three months ended June 30, 2024
Revenues:
Net earned premiums	$	1,585	$	—	$	—		$	1,585
Net investment income	197		—		(9)		(b)	188

Realized gains (losses) on securities	(2)		—		—			(2)

Income of managed investment entities:
Investment income	—		98		—			98
Gain (loss) on change in fair value of assets/liabilities	—		7		(3)		(b)	4
Other income	30		—		(3)		(c)	27
Total revenues	1,810		105		(15)			1,900
Costs and Expenses:
Insurance benefits and expenses	1,443		—		—			1,443
Expenses of managed investment entities	—		102		(12)		(b)(c)	90
Interest charges on borrowed money and other expenses	96		—		—			96
Total costs and expenses	1,539		102		(12)			1,629
Earnings before income taxes	271		3		(3)			271
Provision for income taxes	62		—		—			62
Net earnings	$	209	$	3	$	(3)		$	209

(a) Includes income of $2 million in the second quarter of 2025 and $9 million in the second quarter of 2024, representing the change in fair value of AFG’s CLO investments and $2 million and $3 million of income in the second 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 $6 million and $9 million in the second quarter of 2025 and 2024, respectively, in distributions recorded as interest expense by the CLOs.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

CONDENSED CONSOLIDATING STATEMENT OF EARNINGS


	Before CLO Consol. (a)		Managed Investment Entities		Consol. Entries			Consolidated As Reported
Six months ended June 30, 2025
Revenues:
Net earned premiums	$	3,227	$	—	$	—		$	3,227
Net investment income	361		—		(4)		(b)	357

Realized gains (losses) on securities	5		—		—			5
Income of managed investment entities:
Investment income	—		144		—			144
Gain (loss) on change in fair value of assets/liabilities	—		5		(12)		(b)	(7)
Other income	59		—		(5)		(c)	54
Total revenues	3,652		149		(21)			3,780
Costs and Expenses:
Insurance benefits and expenses	3,036		—		—			3,036
Expenses of managed investment entities	—		147		(19)		(b)(c)	128
Interest charges on borrowed money and other expenses	190		—		—			190
Total costs and expenses	3,226		147		(19)			3,354
Earnings before income taxes	426		2		(2)			426
Provision for income taxes	98		—		—			98


Net earnings	$	328	$	2	$	(2)		$	328

Six months ended June 30, 2024
Revenues:
Net earned premiums	$	3,131	$	—	$	—		$	3,131
Net investment income	409		—		(23)		(b)	386

Realized gains (losses) on securities	12		—		—			12

Income of managed investment entities:
Investment income	—		197		—			197
Gain (loss) on change in fair value of assets/liabilities	—		13		1		(b)	14
Other income	72		—		(6)		(c)	66
Total revenues	3,624		210		(28)			3,806
Costs and Expenses:
Insurance benefits and expenses	2,858		—		—			2,858
Expenses of managed investment entities	—		206		(24)		(b)(c)	182
Interest charges on borrowed money and other expenses	191		—		—			191
Total costs and expenses	3,049		206		(24)			3,231
Earnings before income taxes	575		4		(4)			575
Provision for income taxes	124		—		—			124


Net earnings	$	451	$	4	$	(4)		$	451

(a) Includes income of $4 million in the first six months of 2025 and $23 million in the first six months of 2024, representing the change in fair value of AFG’s CLO investments and $5 million and $6 million of income in the first six months 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 $18 million in the first six months of 2025 and 2024, respectively, in distributions recorded as interest expense by the CLOs.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

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 June 30,				Six months ended June 30,
	2025		2024		2025		2024
Components of net earnings:
Core operating earnings before income taxes	$	227	$	273	$	421	$	563
Pretax non-core item:
Realized gains (losses) on securities	2		(2)		5		12




Earnings before income taxes	229		271		426		575
Provision for income taxes:
Core operating earnings	48		58		90		117
Non-core items:
Realized gains (losses) on securities	—		—		1		3
Other (*)	7		4		7		4



Total provision for income taxes	55		62		98		124
Net earnings	$	174	$	209	$	328	$	451

Net earnings:
Core net operating earnings	$	179	$	215	$	331	$	446
Realized gains (losses) on securities	2		(2)		4		9
Other (*)	(7)		(4)		(7)		(4)



Net earnings	$	174	$	209	$	328	$	451

Diluted per share amounts:
Core net operating earnings	$	2.14	$	2.56	$	3.96	$	5.32
Realized gains (losses) on securities	0.02		(0.02)		0.05		0.11
Other (*)	(0.09)		(0.05)		(0.09)		(0.05)



Net earnings	$	2.07	$	2.49	$	3.92	$	5.38

(*) Adjustments to income tax expense related to sales of subsidiaries in prior years.

Net earnings were $174 million in the second quarter of 2025 compared to $209 million in the second quarter of 2024 reflecting lower core net operating earnings, which decreased $36 million compared to the second quarter of 2024 reflecting lower underwriting profit and lower net investment income from AFG’s alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs), partially offset by higher investment income outside of alternative investments. Net realized gains on securities in the second quarter of 2025 and 2024 include after-tax gains of $7 million and after-tax losses of $2 million, respectively, resulting from the change in fair value of equity securities that were still held at the balance sheet date.

Net earnings were $328 million in the first six months of 2025 compared to $451 million in the first six months of 2024 reflecting lower core net operating earnings, which decreased $115 million compared to the first six months of 2024 reflecting lower underwriting profit and lower net investment income from AFG’s alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs), partially offset by higher investment income outside of alternative investments. Net realized gains on securities in the first six months of 2025 and 2024 include after-tax gains of

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

$12 million and $14 million, 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 JUNE 30, 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 June 30, 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 June 30, 2025
Revenues:
Net earned premiums	$	1,647	$	—	$	—	$	1,647	$	—	$	1,647
Net investment income	179		(2)		7		184		—		184
Realized gains (losses) on securities	—		—		—		—		2		2
Income of MIEs:
Investment income	—		68		—		68		—		68
Gain (loss) on change in fair value of assets/liabilities	—		(4)		—		(4)		—		(4)
Other income	—		(2)		29		27		—		27
Total revenues	1,826		60		36		1,922		2		1,924

Costs and Expenses:
Losses and loss adjustment expenses	1,007		—		—		1,007		—		1,007
Commissions and other underwriting expenses	527		—		7		534		—		534
Interest charges on borrowed money	—		—		19		19		—		19
Expenses of MIEs	—		60		—		60		—		60
Other expenses	19		—		56		75		—		75
Total costs and expenses	1,553		60		82		1,695		—		1,695
Earnings before income taxes	273		—		(46)		227		2		229
Provision for income taxes	55		—		(7)		48		7		55
Core Net Operating Earnings	218		—		(39)		179
Non-core earnings (loss) (*):
Realized gains (losses) on securities, net of tax	—		—		2		2		(2)		—
Other	—		—		(7)		(7)		7		—

Net Earnings	$	218	$	—	$	(44)	$	174	$	—	$	174

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued


			Other
	P&C		Consol. MIEs		Holding Co., other and unallocated		Total		Non-core reclass		GAAP Total
Three months ended June 30, 2024
Revenues:
Net earned premiums	$	1,585	$	—	$	—	$	1,585	$	—	$	1,585
Net investment income	189		(9)		8		188		—		188

Realized gains (losses) on securities	—		—		—		—		(2)		(2)

Income of MIEs:
Investment income	—		98		—		98		—		98
Gain (loss) on change in fair value of assets/liabilities	—		4		—		4		—		4
Other income	2		(3)		28		27		—		27
Total revenues	1,776		90		36		1,902		(2)		1,900

Costs and Expenses:
Losses and loss adjustment expenses	937		—		—		937		—		937
Commissions and other underwriting expenses	498		—		8		506		—		506
Interest charges on borrowed money	—		—		19		19		—		19
Expenses of MIEs	—		90		—		90		—		90
Other expenses	22		—		55		77		—		77
Total costs and expenses	1,457		90		82		1,629		—		1,629
Earnings before income taxes	319		—		(46)		273		(2)		271
Provision for income taxes	67		—		(9)		58		4		62
Core Net Operating Earnings	252		—		(37)		215
Non-core earnings (loss) (*):
Realized gains (losses) on securities, net of tax	—		—		(2)		(2)		2		—
Other	(4)		—		—		(4)		4		—


Net Earnings	$	248	$	—	$	(39)	$	209	$	—	$	209

(*) 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 $273 million in pretax earnings in the second quarter of 2025 compared to $319 million in the second quarter of 2024, a decrease of $46 million (14%). The decrease in pretax earnings reflects lower underwriting profit and lower investment income from AFG’s alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs), partially offset by higher investment income outside of alternative investments in the second quarter of 2025 compared to the second quarter of 2024.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

The following table details AFG’s earnings before income taxes from its property and casualty insurance operations for the three months ended June 30, 2025 and 2024 (dollars in millions):


	Three months ended June 30,
	2025			2024			% Change
Gross written premiums	$	2,653		$	2,406		10	%
Reinsurance premiums ceded	(850)			(714)			19	%
Net written premiums	1,803			1,692			7	%
Change in unearned premiums	(156)			(107)			46	%
Net earned premiums	1,647			1,585			4	%
Loss and loss adjustment expenses	1,007			937			7	%
Commissions and other underwriting expenses	527			498			6	%
Underwriting gain	113			150			(25	%)

Net investment income	179			189			(5	%)
Other income and expenses, net	(19)			(20)			(5	%)


Earnings before income taxes	$	273		$	319		(14	%)


	Three months ended June 30,
	2025			2024			Change
Combined Ratios:
Specialty lines
Loss and LAE ratio	61.1		%	59.1		%	2.0	%
Underwriting expense ratio	32.0		%	31.4		%	0.6	%
Combined ratio	93.1		%	90.5		%	2.6	%

Aggregate — including exited lines
Loss and LAE ratio	61.1		%	59.1		%	2.0	%
Underwriting expense ratio	32.0		%	31.4		%	0.6	%
Combined ratio	93.1		%	90.5		%	2.6	%

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.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

Gross Written Premiums

Gross written premiums (“GWP”) for AFG’s property and casualty insurance segment were $2.65 billion for the second quarter of 2025 compared to $2.41 billion for the second quarter of 2024, an increase of $247 million (10%). Detail of gross written premiums is shown below (dollars in millions):


	Three months ended June 30,
	2025				2024
	GWP		%		GWP		%		% Change
Property and transportation	$	1,247	47	%	$	1,084	45	%	15	%
Specialty casualty	1,062		40	%	1,023		43	%	4	%
Specialty financial	344		13	%	299		12	%	15	%

	$	2,653	100	%	$	2,406	100	%	10	%

Reinsurance Premiums Ceded

Reinsurance premiums ceded (“Ceded”) for AFG’s property and casualty insurance segment were 32% of gross written premiums for the second quarter of 2025 compared to 30% for the second quarter of 2024, an increase of 2 percentage points. Detail of reinsurance premiums ceded is shown below (dollars in millions):


	Three months ended June 30,
	2025				2024				Change in
	Ceded		% of GWP		Ceded		% of GWP		% of GWP
Property and transportation	$	(488)	39	%	$	(394)	36	%	3	%
Specialty casualty	(297)		28	%	(270)		26	%	2	%
Specialty financial	(65)		19	%	(50)		17	%	2	%

	$	(850)	32	%	$	(714)	30	%	2	%

Net Written Premiums

Net written premiums (“NWP”) for AFG’s property and casualty insurance segment were $1.80 billion for the second quarter of 2025 compared to $1.69 billion for the second quarter of 2024, an increase of $111 million (7%). Detail of net written premiums is shown below (dollars in millions):


	Three months ended June 30,
	2025				2024
	NWP		%		NWP		%		% Change
Property and transportation	$	759	42	%	$	690	41	%	10	%
Specialty casualty	765		42	%	753		44	%	2	%
Specialty financial	279		16	%	249		15	%	12	%

	$	1,803	100	%	$	1,692	100	%	7	%

Net Earned Premiums

Net earned premiums (“NEP”) for AFG’s property and casualty insurance segment were $1.65 billion for the second quarter of 2025 compared to $1.59 billion for the second quarter of 2024, an increase of $62 million (4%). Detail of net earned premiums is shown below (dollars in millions):


	Three months ended June 30,
	2025				2024
	NEP		%		NEP		%		% Change
Property and transportation	$	576	35	%	$	552	35	%	4	%
Specialty casualty	799		48	%	791		50	%	1	%
Specialty financial	272		17	%	242		15	%	12	%

	$	1,647	100	%	$	1,585	100	%	4	%

Gross written premiums for the second quarter of 2025 increased $247 million (10%) compared to the second quarter of 2024. Earlier reporting of crop acreage by insureds impacted the timing of the recording of crop premiums and contributed to the year-over-year increase, particularly when compared to later reporting of acreage in the previous year. Excluding

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

the crop business, gross written premiums increased 6% compared to the second quarter of 2024 as a result of year-over-year premium growth from new business opportunities, a good renewal rate environment, and increased exposures. Overall average renewal rates increased approximately 6% in the second quarter of 2025. Excluding the workers’ compensation businesses, renewal rates increased approximately 7%.

Property and transportation Gross written premiums increased $163 million (15%) in the second quarter of 2025 compared to the second quarter of 2024. This increase was primarily the result of earlier reporting of crop acreage in the second quarter of 2025 compared to 2024, which impacts the timing of crop premiums. Excluding the crop business, gross written premiums for this group increased 6% compared to the second quarter of 2024, reflecting increased exposures, new business opportunities and a favorable rate environment in the transportation businesses. Average renewal rates increased approximately 8% for this group in the second quarter of 2025. Reinsurance premiums ceded as a percentage of gross written premiums increased 3 percentage points in the second quarter of 2025 compared to the second quarter of 2024, reflecting higher premiums in the crop business and growth in alternative risk transfer products in the transportation businesses, both of 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 $39 million (4%) in the second quarter of 2025 compared to the second quarter of 2024, reflecting higher year-over-year premiums in the mergers and acquisitions liability business and growth across a variety of other businesses in the Specialty casualty sub-segment resulting from new business opportunities, higher rates and strong policy retention. These items were partially offset by 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 the second quarter of 2025. Excluding the workers’ compensation businesses, renewal rates for this group increased approximately 8%. Reinsurance premiums ceded as a percentage of gross written premiums increased 2 percentage points in the second quarter of 2025 compared to the second quarter of 2024, reflecting higher cessions and higher reinsurance costs in the excess liability business and growth in the mergers and acquisitions liability business, which cedes a larger percentage of premiums than some of the other businesses in the Specialty casualty sub-segment.

Specialty financial Gross written premiums increased $45 million (15%) in the second quarter of 2025 compared to the second quarter of 2024 due primarily to growth in the financial institutions business. Reinsurance premiums ceded as a percentage of gross written premiums increased 2 percentage points in the second quarter of 2025 compared to the second quarter of 2024, reflecting higher cessions in the financial institutions business.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

Combined Ratio

The table below (dollars in millions) details the components of the combined ratio for AFG’s property and casualty insurance segment:


	Three months ended June 30,						Three months ended June 30,
	2025		2024		Change		2025		2024
Property and transportation
Loss and LAE ratio	67.2	%	63.7	%	3.5	%
Underwriting expense ratio	28.0	%	29.0	%	(1.0	%)
Combined ratio	95.2	%	92.7	%	2.5	%
Underwriting profit							$	27	$	40

Specialty casualty
Loss and LAE ratio	64.5	%	61.0	%	3.5	%
Underwriting expense ratio	29.4	%	28.1	%	1.3	%
Combined ratio	93.9	%	89.1	%	4.8	%
Underwriting profit							$	49	$	86

Specialty financial
Loss and LAE ratio	38.1	%	42.1	%	(4.0	%)
Underwriting expense ratio	48.0	%	47.6	%	0.4	%
Combined ratio	86.1	%	89.7	%	(3.6	%)
Underwriting profit							$	38	$	25

Total Specialty
Loss and LAE ratio	61.1	%	59.1	%	2.0	%
Underwriting expense ratio	32.0	%	31.4	%	0.6	%
Combined ratio	93.1	%	90.5	%	2.6	%
Underwriting profit							$	114	$	151

Aggregate — including exited lines
Loss and LAE ratio	61.1	%	59.1	%	2.0	%
Underwriting expense ratio	32.0	%	31.4	%	0.6	%
Combined ratio	93.1	%	90.5	%	2.6	%
Underwriting profit							$	113	$	150

The Specialty property and casualty insurance operations generated an underwriting profit of $114 million in the second quarter of 2025 compared to $151 million in the second quarter of 2024, a decrease of $37 million (25%). Higher year-over-year underwriting profit in the Specialty financial sub-segment was more than offset by lower underwriting profit in the Property and transportation and Specialty casualty sub-segments. Overall catastrophe losses were $38 million (2.3 points on the combined ratio) in the second quarter of 2025 compared to catastrophe losses of $36 million (2.3 points) in the second quarter of 2024.

Property and transportation Underwriting profit for this group was $27 million for the second quarter of 2025 compared to $40 million for the second quarter of 2024, a decrease of $13 million (33%), reflecting the impact of particularly strong crop results in the second quarter of 2024. Catastrophe losses were $12 million (2.0 points on the combined ratio) in the second quarter of 2025 compared to $13 million (2.4 points) in the second quarter of 2024.

Specialty casualty Underwriting profit for this group was $49 million for the second quarter of 2025 compared to $86 million for the second quarter of 2024, a decrease of $37 million (43%), reflecting lower underwriting profit in the excess and surplus and social services businesses. Catastrophe losses were $7 million (0.9 points on the combined ratio) in the second quarter of 2025 compared to catastrophe losses of $5 million (0.6 points) in the second quarter of 2024.

Specialty financial Underwriting profit for this group was $38 million for the second quarter of 2025 compared to $25 million in the second quarter of 2024, an increase of $13 million (52%). This increase was due primarily to higher

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

year-over-year underwriting profitability in the financial institutions and surety businesses. Catastrophe losses were $19 million (7.3 points on the combined ratio) in the second quarter of 2025 compared to $18 million (7.2 points) in the second quarter of 2024.

Aggregate Aggregate underwriting results for AFG’s property and casualty insurance segment includes adverse prior year reserve development of $1 million in both the second quarter of 2025 and the second 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 61.1% for the second quarter of 2025 compared to 59.1% for the second quarter of 2024, an increase of 2.0 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 June 30,
	Amount				Ratio				Change in
	2025		2024		2025		2024		Ratio
Property and transportation
Current year, excluding catastrophe losses	$	388	$	372	67.4	%	67.6	%	(0.2	%)
Prior accident years development	(13)		(34)		(2.2	%)	(6.3	%)	4.1	%
Current year catastrophe losses including the impact of net reinstatement premiums	12		13		2.0	%	2.4	%	(0.4	%)
Property and transportation losses and LAE and ratio	$	387	$	351	67.2	%	63.7	%	3.5	%

Specialty casualty
Current year, excluding catastrophe losses	$	499	$	480	62.4	%	60.6	%	1.8	%
Prior accident years development	10		(2)		1.2	%	(0.2	%)	1.4	%
Current year catastrophe losses including the impact of net reinstatement premiums	7		5		0.9	%	0.6	%	0.3	%
Specialty casualty losses and LAE and ratio	$	516	$	483	64.5	%	61.0	%	3.5	%

Specialty financial
Current year, excluding catastrophe losses	$	93	$	84	34.0	%	34.8	%	(0.8	%)
Prior accident years development	(9)		—		(3.2	%)	0.1	%	(3.3	%)
Current year catastrophe losses including the impact of net reinstatement premiums	19		18		7.3	%	7.2	%	0.1	%
Specialty financial losses and LAE and ratio	$	103	$	102	38.1	%	42.1	%	(4.0	%)

Total Specialty
Current year, excluding catastrophe losses	$	980	$	936	59.5	%	59.1	%	0.4	%
Prior accident years development	(12)		(36)		(0.7	%)	(2.3	%)	1.6	%
Current year catastrophe losses including the impact of net reinstatement premiums	38		36		2.3	%	2.3	%	—	%
Total Specialty losses and LAE and ratio	$	1,006	$	936	61.1	%	59.1	%	2.0	%

Aggregate — including exited lines
Current year, excluding catastrophe losses	$	980	$	936	59.5	%	59.1	%	0.4	%
Prior accident years development	(11)		(35)		(0.7	%)	(2.2	%)	1.5	%
Current year catastrophe losses including the impact of net reinstatement premiums	38		36		2.3	%	2.2	%	0.1	%
Aggregate losses and LAE and ratio	$	1,007	$	937	61.1	%	59.1	%	2.0	%

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 59.5% for the second quarter of 2025 compared to 59.1% for the second quarter of 2024, an increase of 0.4 percentage points.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

Property and transportation The 0.2 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects growth 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 losses in the aviation business.

Specialty casualty The 1.8 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects higher claim severity in the excess and surplus and social services businesses, partially offset by improved results in the workers’ compensation businesses.

Specialty financial The 0.8 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects improved results 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.

Net prior year reserve development

AFG’s Specialty property and casualty insurance operations recorded net favorable reserve development related to prior accident years of $12 million in the second quarter of 2025 compared to $36 million in the second quarter of 2024, a decrease of $24 million (67%).

Property and transportation Net favorable reserve development of $13 million in the second quarter of 2025 reflects lower than anticipated severity in the aviation, agribusiness and ocean marine businesses. Net favorable reserve development of $34 million in the second 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.

Specialty casualty Net adverse reserve development of $10 million in the second quarter of 2025 reflects higher than anticipated claim severity in the excess and surplus and social services businesses, partially offset by lower than anticipated claim severity in the workers’ compensation businesses. Net favorable reserve development of $2 million in the second quarter of 2024 reflects lower than anticipated claim severity in the workers’ compensation businesses and lower than expected claim frequency in the executive liability business, partially offset by higher than anticipated claim severity in the excess and surplus businesses.

Specialty financial Net favorable reserve development of $9 million in the second quarter of 2025 reflects lower than expected claim frequency in the financial institutions business and lower than anticipated claim severity in the surety and trade credit businesses. Net reserve development of less than $1 million in the second quarter of 2024 reflects lower than anticipated claim frequency in the trade credit and fidelity businesses and lower than expected claim frequency and severity in the financial institutions business, offset by higher than anticipated claim severity in certain other businesses.

Aggregate Aggregate net prior accident years reserve development for AFG’s property and casualty insurance segment includes net adverse reserve development of $1 million in both the second quarter of 2025 and the second 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. AFG currently has comprehensive property catastrophe reinsurance coverage in place (including a $70 million per occurrence net retention) for losses up to $625 million in the vast majority of circumstances. This coverage consists of a combination of $245 million from traditional reinsurance and $310 million of coverage through a fully collateralized catastrophe bond. Based on data available at December 31, 2024, 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 just over 2% of AFG’s Shareholders’ Equity.

Catastrophe losses of $38 million in the second quarter of 2025 and $36 million in the second quarter of 2024 resulted primarily from storms in multiple regions of the United States.

Commissions and Other Underwriting Expenses

AFG’s property and casualty commissions and other underwriting expenses (“U/W Exp”) were $527 million in the second quarter of 2025 compared to $498 million for the second quarter of 2024, an increase of $29 million (6%). AFG’s underwriting expense ratio, calculated as commissions and other underwriting expenses divided by net premiums earned, was 32.0% for the second quarter of 2025 compared to 31.4% for the second quarter of 2024, an increase of

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

0.6 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 June 30,
	2025				2024				Change in
	U/W Exp		% of NEP		U/W Exp		% of NEP		% of NEP
Property and transportation	$	162	28.0	%	$	161	29.0	%	(1.0	%)
Specialty casualty	234		29.4	%	222		28.1	%	1.3	%
Specialty financial	131		48.0	%	115		47.6	%	0.4	%



	$	527	32.0	%	$	498	31.4	%	0.6	%

Property and transportation Commissions and other underwriting expenses as a percentage of net earned premiums decreased 1.0 percentage points in the second quarter of 2025 compared to the second quarter of 2024. The decrease reflects the impact of higher earned premiums in the crop operations on the ratio (which has a lower commissions and other underwriting expense ratio compared to some of the other businesses in the Property and transportation sub-segment), 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 1.3 percentage points in the second quarter of 2025 compared to the second quarter of 2024 reflecting higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics and an increase in average commission rates in the excess and surplus business resulting from changes in reinsurance treaties.

Specialty financial Commissions and other underwriting expenses as a percentage of net earned premiums increased 0.4 percentage points in the second quarter of 2025 compared to the second quarter of 2024 due primarily to higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics, partially offset by the impact of higher earned premiums in the financial institutions business on the ratio and lower average commission rates in certain businesses.

Property and Casualty Net Investment Income

Net investment income in AFG’s property and casualty insurance operations was $179 million in the second quarter of 2025 compared to $189 million in the second quarter of 2024, a decrease of $10 million (5%). 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 June 30,
	2025			2024			Change			% Change
Net investment income:
Net investment income, excluding alternative investments	$	171		$	156		$	15		10	%
Alternative investments	8			33			(25)			(76	%)
Total net investment income	$	179		$	189		$	(10)		(5	%)

Average invested assets (at amortized cost)	$	15,921		$	15,346		$	575		4	%

Yield on fixed maturities (before investment expenses)	5.24		%	5.04		%	0.20		%

Yield (net investment income as a % of average invested assets)	4.50		%	4.93		%	(0.43		%)

The decrease in the property and casualty insurance segment’s net investment income for the second quarter of 2025 compared to the second 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 the impact of higher balances of invested assets and higher returns on fixed maturity investments. The property and casualty insurance segment’s overall yield on investments (net investment income as a percentage of average invested assets) was 4.50% for the second quarter of 2025 compared to 4.93% for the second quarter of 2024, a decrease of 0.43 percentage points. The annualized return earned on alternative investments was 1.2% in the second quarter of 2025 compared to 5.1% in the comparable prior year period. The impact on rental rates and occupancy from a surge in new apartment supply in certain otherwise

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

strong markets reduced the fair value of certain multi-family investments and tempered the performance of AFG’s alternative investment portfolio in the second quarter of 2025.

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 $19 million for the second quarter of 2025 compared to $20 million for the second quarter of 2024, a decrease of $1 million (5%). 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 June 30,
	2025		2024



Other income	$	—	$	2
Other expenses:
Amortization of intangibles	5		4
Interest expense on funds withheld	12		13

Other	2		5
Total other expenses	19		22
Other income and expenses, net	$	(19)	$	(20)

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 $46 million in both the second quarter of 2025 and the second quarter of 2024.

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 June 30, 2025 and 2024 (dollars in millions):


	Three months ended June 30,
	2025		2024		% Change
Revenues:
Net investment income	$	7	$	8	(13	%)
Other income — P&C fees	23		24		(4	%)
Other income	6		4		50	%
Total revenues	36		36		—	%

Costs and Expenses:
Property and casualty insurance — loss adjustment and underwriting expenses	7		8		(13	%)
Other expense — expenses associated with P&C fees	16		16		—	%
Other expenses	40		39		3	%
Costs and expenses, excluding interest charges on borrowed money	63		63		—	%
Loss before income taxes, excluding realized gains and losses and interest charges on borrowed money	(27)		(27)		—	%
Interest charges on borrowed money	19		19		—	%



Loss before income taxes, excluding realized gains and losses	$	(46)	$	(46)	—	%

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 the second quarter of 2025 compared to $8 million in the second quarter of 2024, a decrease of $1 million (13%), reflecting a decrease in average investments.

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 second quarter of 2025, AFG collected $23 million in fees for these services compared to $24 million in the second quarter of 2024. Management views this fee income, net of the $16 million in both the second quarter of 2025 and the second quarter of 2024 in expenses incurred to generate such fees, as a reduction in the cost of underwriting its

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

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 $2 million in the second quarter of 2025 and $3 million in the second quarter of 2024 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 $4 million in the second quarter of 2025 compared to $1 million in the second quarter of 2024, an increase of $3 million (300%), reflecting income from the sale of certain real estate assets.

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 $40 million in the second quarter of 2025 compared to $39 million in the second quarter of 2024, an increase of $1 million (3%).

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 $19 million in both the second quarter of 2025 and the second quarter of 2024.

Realized Gains (Losses) on Securities

AFG’s realized gains (losses) on securities were net gains of $2 million in the second quarter of 2025 compared to net losses of $2 million in the second quarter of 2024, a change of $4 million (200%). Realized gains (losses) on securities consisted of the following (in millions):


	Three months ended June 30,
	2025		2024
Realized gains (losses) before impairment allowances:
Disposals	$	(8)	$	(1)
Change in the fair value of equity securities	10		(1)
Change in the fair value of derivatives	—		—

	2		(2)

Change in allowance for impairments on securities	—		—

Realized gains (losses) on securities	$	2	$	(2)

The $10 million net realized gain from the change in the fair value of equity securities in the second quarter of 2025 includes gains of $10 million on investments in manufacturing companies and $6 million on investments in banks and financing companies, partially offset by losses of $2 million on investments in energy companies, $2 million on investments in media companies and $2 million on investments in natural gas companies. The $1 million net realized loss from the change in the fair value of equity securities in the second quarter of 2024 includes losses of $4 million on investments in media companies, partially offset by gains of $3 million on investments in healthcare companies.

Consolidated Income Taxes

AFG’s consolidated provision for income taxes was $55 million for the second quarter of 2025 compared to $62 million for the second quarter of 2024, a decrease of $7 million (11%). See Note J — “Income Taxes” to the financial statements for an analysis of items affecting AFG’s effective tax rate.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

RESULTS OF OPERATIONS — SIX MONTHS ENDED JUNE 30, 2025 AND 2024

Segmented Statement of Earnings

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 six months ended June 30, 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
Six months ended June 30, 2025
Revenues:
Net earned premiums	$	3,227	$	—	$	—	$	3,227	$	—	$	3,227
Net investment income	349		(4)		12		357		—		357
Realized gains (losses) on securities	—		—		—		—		5		5
Income of MIEs:
Investment income	—		144		—		144		—		144
Gain (loss) on change in fair value of assets/liabilities	—		(7)		—		(7)		—		(7)
Other income	3		(5)		56		54		—		54
Total revenues	3,579		128		68		3,775		5		3,780

Costs and Expenses:
Losses and loss adjustment expenses	1,972		—		—		1,972		—		1,972
Commissions and other underwriting expenses	1,048		—		16		1,064		—		1,064
Interest charges on borrowed money	—		—		38		38		—		38
Expenses of MIEs	—		128		—		128		—		128
Other expenses	40		—		112		152		—		152
Total costs and expenses	3,060		128		166		3,354		—		3,354
Earnings before income taxes	519		—		(98)		421		5		426
Provision for income taxes	108		—		(18)		90		8		98
Core Net Operating Earnings	411		—		(80)		331
Non-core earnings (loss) (*):
Realized gains (losses) on securities, net of tax	—		—		4		4		(4)		—
Other	—		—		(7)		(7)		7		—

Net Earnings	$	411	$	—	$	(83)	$	328	$	—	$	328

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued


			Other
	P&C		Consol. MIEs		Holding Co., other and unallocated		Total		Non-core reclass		GAAP Total
Six months ended June 30, 2024
Revenues:
Net earned premiums	$	3,131	$	—	$	—	$	3,131	$	—	$	3,131
Net investment income	394		(23)		15		386		—		386

Realized gains (losses) on securities	—		—		—		—		12		12

Income of MIEs:
Investment income	—		197		—		197		—		197
Gain (loss) on change in fair value of assets/liabilities	—		14		—		14		—		14
Other income	4		(6)		68		66		—		66
Total revenues	3,529		182		83		3,794		12		3,806

Costs and Expenses:
Losses and loss adjustment expenses	1,844		—		5		1,849		—		1,849
Commissions and other underwriting expenses	984		—		25		1,009		—		1,009
Interest charges on borrowed money	—		—		38		38		—		38
Expenses of MIEs	—		182		—		182		—		182
Other expenses	42		—		111		153		—		153
Total costs and expenses	2,870		182		179		3,231		—		3,231
Earnings before income taxes	659		—		(96)		563		12		575
Provision for income taxes	137		—		(20)		117		7		124
Core Net Operating Earnings	522		—		(76)		446
Non-core earnings (loss) (*):
Realized gains (losses) on securities, net of tax	—		—		9		9		(9)		—
Other	(4)		—		—		(4)		4		—


Net Earnings	$	518	$	—	$	(67)	$	451	$	—	$	451

(*) 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 $519 million in pretax earnings in the first six months of 2025 compared to $659 million in the first six months of 2024, a decrease of $140 million (21%). The decrease in pretax earnings reflects lower underwriting profit and lower investment income from AFG’s alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs), partially offset by higher investment income outside of alternative investments in the first six months of 2025 compared to the first six months of 2024.

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

The following table details AFG’s earnings before income taxes from its property and casualty insurance operations for the six months ended June 30, 2025 and 2024 (dollars in millions):


	Six months ended June 30,
	2025			2024			% Change
Gross written premiums	$	4,944		$	4,742		4	%
Reinsurance premiums ceded	(1,530)			(1,416)			8	%
Net written premiums	3,414			3,326			3	%
Change in unearned premiums	(187)			(195)			(4	%)
Net earned premiums	3,227			3,131			3	%
Loss and loss adjustment expenses	1,972			1,844			7	%
Commissions and other underwriting expenses	1,048			984			7	%
Underwriting gain	207			303			(32	%)

Net investment income	349			394			(11	%)
Other income and expenses, net	(37)			(38)			(3	%)


Earnings before income taxes	$	519		$	659		(21	%)

	Six months ended June 30,
	2025			2024			Change
Combined Ratios:
Specialty lines
Loss and LAE ratio	61.1		%	58.8		%	2.3	%
Underwriting expense ratio	32.5		%	31.4		%	1.1	%
Combined ratio	93.6		%	90.2		%	3.4	%

Aggregate — including exited lines
Loss and LAE ratio	61.1		%	58.9		%	2.2	%
Underwriting expense ratio	32.5		%	31.4		%	1.1	%
Combined ratio	93.6		%	90.3		%	3.3	%

Gross Written Premiums

Gross written premiums (“GWP”) for AFG’s property and casualty insurance segment were $4.94 billion for the first six months of 2025 compared to $4.74 billion for the first six months of 2024, an increase of $202 million (4%). Detail of AFG’s property and casualty gross written premiums is shown below (dollars in millions):


	Six months ended June 30,
	2025				2024
	GWP		%		GWP		%		% Change
Property and transportation	$	2,144	43	%	$	2,043	43	%	5	%
Specialty casualty	2,130		43	%	2,120		45	%	—	%
Specialty financial	670		14	%	579		12	%	16	%



	$	4,944	100	%	$	4,742	100	%	4	%

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

Reinsurance Premiums Ceded

Reinsurance premiums ceded (“Ceded”) for AFG’s property and casualty insurance segment were 31% of gross written premiums in the first six months of 2025 compared to 30% of gross written premiums for the first six months of 2024, an increase of 1 percentage point. Detail of AFG’s property and casualty reinsurance premiums ceded is shown below (dollars in millions):


	Six months ended June 30,
	2025				2024				Change in
	Ceded		% of GWP		Ceded		% of GWP		% of GWP
Property and transportation	$	(822)	38	%	$	(756)	37	%	1	%
Specialty casualty	(593)		28	%	(564)		27	%	1	%
Specialty financial	(115)		17	%	(96)		17	%	—	%



	$	(1,530)	31	%	$	(1,416)	30	%	1	%

Net Written Premiums

Net written premiums (“NWP”) for AFG’s property and casualty insurance segment were $3.41 billion for the first six months of 2025 compared to $3.33 billion for the first six months of 2024, an increase of $88 million (3%). Detail of AFG’s property and casualty net written premiums is shown below (dollars in millions):


	Six months ended June 30,
	2025				2024
	NWP		%		NWP		%		% Change
Property and transportation	$	1,322	39	%	$	1,287	39	%	3	%
Specialty casualty	1,537		45	%	1,556		47	%	(1	%)
Specialty financial	555		16	%	483		14	%	15	%



	$	3,414	100	%	$	3,326	100	%	3	%

Net Earned Premiums

Net earned premiums (“NEP”) for AFG’s property and casualty insurance segment were $3.23 billion for the first six months of 2025 compared to $3.13 billion for the first six months of 2024, an increase of $96 million (3%). Detail of AFG’s property and casualty net earned premiums is shown below (dollars in millions):


	Six months ended June 30,
	2025				2024
	NEP		%		NEP		%		% Change
Property and transportation	$	1,076	33	%	$	1,072	34	%	—	%
Specialty casualty	1,593		50	%	1,574		50	%	1	%
Specialty financial	558		17	%	485		16	%	15	%



	$	3,227	100	%	$	3,131	100	%	3	%

Gross written premiums for the first six months of 2025 increased $202 million (4%) compared to the first six months of 2024. Earlier reporting of crop acreage by insureds impacted the timing of the recording of crop premiums and contributed to the year-over-year increase. 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 6% in the first six months of 2025. Excluding the workers’ compensation businesses, renewal pricing increased approximately 7%.

Property and transportation Gross written premiums increased $101 million (5%) in the first six months of 2025 compared to the first six months of 2024. This increase was primarily the result of earlier reporting of crop acreage in the second quarter of 2025 compared to 2024, which impacts the timing of crop premiums. In addition, increased exposures, new business opportunities and a favorable rate environment contributed to growth in the transportation businesses. Average renewal rates increased approximately 7% for this group in the first six months of 2025. Reinsurance premiums ceded as a percentage of gross written premiums increased 1 percentage point in the first six months of 2025 compared to the first six months of 2024 reflecting growth in the alternative risk transfer products in the transportation businesses and higher premiums in the crop business, which cede a higher percentage of premiums than some of the other businesses in the Property and transportation sub-segment.

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

Specialty casualty Gross written premiums increased $10 million in the first six months of 2025 compared to the first six months of 2024, reflecting higher year-over-year premiums in the mergers and acquisitions liability business and growth across several other businesses in the Specialty casualty sub-segment resulting from new business opportunities, higher rates and strong policy retention. These items were partially offset by 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 the first six months of 2025. Excluding overall rate decreases in the workers’ compensation businesses, renewal rates for this group increased approximately 9%. Reinsurance premiums ceded as a percentage of gross written premiums increased 1 percentage point in the first six months of 2025 compared to the first six months of 2024 reflecting higher cessions, higher reinsurance costs and higher reinstatement premiums paid to reinsurers in the excess liability business and growth in the mergers and acquisitions liability business, which cedes a larger percentage of premiums than some of the other businesses in the Specialty casualty sub-segment.

Specialty financial Gross written premiums increased $91 million (16%) in the first six months of 2025 compared to the first six months of 2024 due primarily to growth in the financial institutions business. Average renewal rates increased approximately 1% for this group in the first six months of 2025. Reinsurance premiums ceded as a percentage of gross written premiums were comparable in the first six months of 2025 and the first six months of 2024.

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:


	Six months ended June 30,						Six months ended June 30,
	2025		2024		Change		2025		2024
Property and transportation
Loss and LAE ratio	64.9	%	61.2	%	3.7	%
Underwriting expense ratio	29.1	%	29.4	%	(0.3	%)
Combined ratio	94.0	%	90.6	%	3.4	%
Underwriting profit							$	64	$	100

Specialty casualty
Loss and LAE ratio	66.1	%	62.6	%	3.5	%
Underwriting expense ratio	29.7	%	28.1	%	1.6	%
Combined ratio	95.8	%	90.7	%	5.1	%
Underwriting profit							$	69	$	147

Specialty financial
Loss and LAE ratio	39.6	%	41.3	%	(1.7	%)
Underwriting expense ratio	46.9	%	46.8	%	0.1	%
Combined ratio	86.5	%	88.1	%	(1.6	%)
Underwriting profit							$	75	$	58

Total Specialty
Loss and LAE ratio	61.1	%	58.8	%	2.3	%
Underwriting expense ratio	32.5	%	31.4	%	1.1	%
Combined ratio	93.6	%	90.2	%	3.4	%
Underwriting profit							$	208	$	305

Aggregate — including exited lines
Loss and LAE ratio	61.1	%	58.9	%	2.2	%
Underwriting expense ratio	32.5	%	31.4	%	1.1	%
Combined ratio	93.6	%	90.3	%	3.3	%
Underwriting profit							$	207	$	303

The Specialty property and casualty insurance operations generated an underwriting profit of $208 million for the first six months of 2025 compared to $305 million for the first six months of 2024, a decrease of $97 million (32%). Higher year-over-year underwriting profit in the Specialty financial sub-segment was more than offset by lower underwriting profit in the

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

Property and transportation and Specialty casualty sub-segments. Overall catastrophe losses were $110 million (3.4 points on the combined ratio) in the first six months of 2025 compared to catastrophe losses of $71 million (2.3 points), including $1 million in net reinstatement premiums in the first six months of 2024.

Property and transportation Underwriting profit for this group was $64 million for the first six months of 2025 compared to $100 million for the first six months of 2024, a decrease of $36 million (36%). This decrease was due primarily to the impact of particularly strong crop insurance business results in the first six months of 2024 and lower year-over-year underwriting profit in the property and inland marine business. Catastrophe losses were $22 million (2.1 points on the combined ratio) in the first six months of 2025 compared to $22 million (2.0 points) in the first six months of 2024.

Specialty casualty Underwriting profit for this group was $69 million for the first six months of 2025 compared to $147 million for the first six months of 2024, a decrease of $78 million (53%), reflecting lower underwriting profit in the directors’ and officers’ liability, excess and surplus and workers’ compensation businesses as well as higher catastrophe losses. Catastrophe losses were $34 million (2.1 points on the combined ratio) in the first six months of 2025 compared to catastrophe losses of $24 million (1.5 points), including $1 million in net reinstatement premiums in the first six months of 2024.

Specialty financial Underwriting profit for this group was $75 million for the first six months of 2025 compared to $58 million for the first six months of 2024, an increase of $17 million (29%). Favorable prior year reserve development and improved accident year results were partially offset by higher year-over-year catastrophe losses. Catastrophe losses were $54 million (9.7 points on the combined ratio) in the first six months of 2025 compared to $25 million (5.2 points) in the first six months of 2024.

Aggregate Aggregate underwriting results for AFG’s property and casualty insurance segment includes adverse prior year reserve development of $1 million in the first six months of 2025 and $2 million in the first six months of 2024 related to business outside of the Specialty group that AFG no longer writes.

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

Losses and Loss Adjustment Expenses

AFG’s overall loss and LAE ratio was 61.1% for the first six months of 2025 compared to 58.9% for the first six months of 2024, an increase of 2.2 percentage points. The components of AFG’s property and casualty losses and LAE amounts and ratio are detailed below (dollars in millions):


	Six months ended June 30,
	Amount				Ratio				Change in
	2025		2024		2025		2024		Ratio
Property and transportation
Current year, excluding catastrophe losses	$	708	$	715	65.8	%	66.7	%	(0.9	%)
Prior accident years development	(32)		(80)		(3.0	%)	(7.5	%)	4.5	%
Current year catastrophe losses including the impact of net reinstatement premiums	22		22		2.1	%	2.0	%	0.1	%
Property and transportation losses and LAE and ratio	$	698	$	657	64.9	%	61.2	%	3.7	%

Specialty casualty
Current year, excluding catastrophe losses	$	996	$	975	62.6	%	61.9	%	0.7	%
Prior accident years development	22		(13)		1.4	%	(0.8	%)	2.2	%
Current year catastrophe losses including the impact of net reinstatement premiums	34		23		2.1	%	1.5	%	0.6	%
Specialty casualty losses and LAE and ratio	$	1,052	$	985	66.1	%	62.6	%	3.5	%

Specialty financial
Current year, excluding catastrophe losses	$	189	$	169	33.8	%	34.8	%	(1.0	%)
Prior accident years development	(22)		6		(3.9	%)	1.3	%	(5.2	%)
Current year catastrophe losses including the impact of net reinstatement premiums	54		25		9.7	%	5.2	%	4.5	%
Specialty financial losses and LAE and ratio	$	221	$	200	39.6	%	41.3	%	(1.7	%)

Total Specialty
Current year, excluding catastrophe losses	$	1,893	$	1,859	58.7	%	59.3	%	(0.6	%)
Prior accident years development	(32)		(87)		(1.0	%)	(2.8	%)	1.8	%
Current year catastrophe losses including the impact of net reinstatement premiums	110		70		3.4	%	2.3	%	1.1	%
Total Specialty losses and LAE and ratio	$	1,971	$	1,842	61.1	%	58.8	%	2.3	%

Aggregate — including exited lines
Current year, excluding catastrophe losses	$	1,893	$	1,859	58.7	%	59.3	%	(0.6	%)
Prior accident years development	(31)		(85)		(1.0	%)	(2.7	%)	1.7	%
Current year catastrophe losses including the impact of net reinstatement premiums	110		70		3.4	%	2.3	%	1.1	%
Aggregate losses and LAE and ratio	$	1,972	$	1,844	61.1	%	58.9	%	2.2	%

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 58.7% for the first six months of 2025 compared to 59.3% for the first six months of 2024, a decrease of 0.6 percentage points.

Property and transportation The 0.9 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects improved results and growth in the property and inland marine and ocean marine businesses, which have lower loss and LAE ratios than some of the other businesses in the Property and transportation sub-segment and the impact of a large property loss in the first quarter of 2024, partially offset by higher claim severity in the aviation business.

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

Specialty casualty The 0.7 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects higher claim severity in the excess and surplus and social services businesses, partially offset by improved results in the workers’ compensation businesses.

Specialty financial The 1.0 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects improved results 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.

Net prior year reserve development

AFG’s Specialty property and casualty insurance operations recorded net favorable reserve development related to prior accident years of $32 million in the first six months of 2025 compared to $87 million in the first six months of 2024, a decrease of $55 million (63%).

Property and transportation Net favorable reserve development of $32 million in the first six months of 2025 reflects lower than anticipated losses in the crop business, lower than anticipated claim severity in the aviation and agribusiness operations and lower than expected claim frequency in the property and inland marine business. Net favorable reserve development of $80 million in the first six months of 2024 reflects lower than anticipated losses in the crop business and lower than expected claim severity in the property and inland marine business.

Specialty casualty Net adverse reserve development of $22 million in the first six months of 2025 reflects higher than anticipated claim severity in the excess and surplus and social services businesses, partially offset by lower than anticipated claim severity in the workers’ compensation businesses. Net favorable reserve development of $13 million in the first six months of 2024 reflects lower than anticipated claim severity in the workers’ compensation businesses and lower than expected claim frequency in the executive liability business, partially offset by higher than anticipated claim severity in the excess and surplus businesses and higher than expected claim frequency and severity in the social services business.

Specialty financial Net favorable reserve development of $22 million in the first six months of 2025 reflects lower than anticipated claim frequency in the financial institutions business and lower than expected claim severity in the trade credit, surety and fidelity businesses. Net adverse reserve development of $6 million in the first six months of 2024 reflects higher than anticipated claim severity in the innovative markets and surety businesses, partially offset by lower than anticipated claim frequency in the fidelity and trade credit businesses and lower than expected claim frequency and severity in the financial institutions business.

Aggregate Aggregate net prior accident years reserve development for AFG’s property and casualty insurance segment includes net adverse reserve development of $1 million in the first six months of 2025 and $2 million in the first six months of 2024 related to business outside the Specialty group that AFG no longer writes.

Catastrophe losses

Catastrophe losses of $110 million in the first six months of 2025 resulted primarily from California wildfires and storms in multiple regions of the United States. Catastrophe losses of $70 million in the first six months of 2024 (before $1 million in net reinstatement premiums) resulted primarily from storms in multiple regions of the United States.

Commissions and Other Underwriting Expenses

AFG’s property and casualty commissions and other underwriting expenses (“U/W Exp”) were $1.05 billion in the first six months of 2025 compared to $984 million for the first six months of 2024, an increase of $64 million (7%). AFG’s underwriting expense ratio was 32.5% for the first six months of 2025 compared to 31.4% for the first six months of 2024, an increase of 1.1 percentage points. Detail of AFG’s property and casualty commissions and other underwriting expenses and underwriting expense ratios is shown below (dollars in millions):


	Six months ended June 30,
	2025				2024				Change in
	U/W Exp		% of NEP		U/W Exp		% of NEP		% of NEP
Property and transportation	$	314	29.1	%	$	315	29.4	%	(0.3	%)
Specialty casualty	472		29.7	%	442		28.1	%	1.6	%
Specialty financial	262		46.9	%	227		46.8	%	0.1	%



	$	1,048	32.5	%	$	984	31.4	%	1.1	%

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

Property and transportation Commissions and other underwriting expenses as a percentage of net earned premiums decreased 0.3 percentage points in the first six months of 2025 compared to the first six months of 2024 reflecting changes in the mix of business, 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 1.6 percentage points in the first six months of 2025 compared to the first six months of 2024 reflecting higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics and an increase in average commission rates in the excess and surplus business resulting from changes in reinsurance treaties.

Specialty financial Commissions and other underwriting expenses as a percentage of net earned premiums increased 0.1 percentage points in the first six months of 2025 compared to the first six months of 2024 reflecting higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics, partially offset by the impact of higher earned premiums in the financial institutions business on the ratio 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 $349 million in the first six months of 2025 compared to $394 million in the first six months of 2024, a decrease of $45 million (11%). 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):


	Six months ended June 30,
	2025			2024			Change			% Change
Net investment income:
Net investment income, excluding alternative investments	$	329		$	305		$	24		8	%
Alternative investments	20			89			(69)			(78	%)
Total net investment income	$	349		$	394		$	(45)		(11	%)

Average invested assets (at amortized cost)	$	15,894		$	15,321		$	573		4	%

Yield on fixed maturities (before investment expenses)	5.19		%	4.99		%	0.20		%

Yield (net investment income as a % of average invested assets)	4.39		%	5.14		%	(0.75		%)

The decrease in the property and casualty insurance segment’s net investment income for the first six months of 2025 compared to the first six months of 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 maturity investments. The property and casualty insurance segment’s overall yield on investments (net investment income as a percentage of average invested assets) was 4.39% for the first six months of 2025 compared to 5.14% for the first six months of 2024, a decrease of 0.75 percentage points. The annualized return earned on alternative investments (partnerships and similar investments and AFG-managed CLOs) was 1.5% in the first six months of 2025 compared to 7.0% in the prior year period.

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

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 $37 million for the first six months of 2025 compared to $38 million for the first six months of 2024, a decrease of $1 million (3%). The table below details the items included in other income and expenses, net for AFG’s property and casualty insurance operations (in millions):


	Six months ended June 30,
	2025		2024



Other income	$	3	$	4
Other expenses:
Amortization of intangibles	10		9
Interest expense on funds withheld	23		25

Other	7		8
Total other expenses	40		42
Other income and expenses, net	$	(37)	$	(38)

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 $98 million in the first six months of 2025 compared to $96 million in the first six months of 2024, an increase of $2 million (2%).

The following table details AFG’s loss before income taxes from operations outside of its property and casualty insurance segment for the six months ended June 30, 2025 and 2024 (dollars in millions):


	Six months ended June 30,
	2025		2024		% Change
Revenues:
Net investment income	$	12	$	15	(20	%)
Other income — P&C fees	48		60		(20	%)
Other income	8		8		—	%
Total revenues	68		83		(18	%)

Costs and Expenses:
Property and casualty insurance — loss adjustment and underwriting expenses	16		30		(47	%)
Other expense — expenses associated with P&C fees	32		30		7	%
Other expenses	80		81		(1	%)
Costs and expenses, excluding interest charges on borrowed money	128		141		(9	%)
Loss before income taxes, excluding realized gains and losses and interest charges on borrowed money	(60)		(58)		3	%
Interest charges on borrowed money	38		38		—	%



Loss before income taxes, excluding realized gains and losses	$	(98)	$	(96)	2	%

Holding Company and Other — Net Investment Income

AFG recorded net investment income on investments held outside of its property and casualty insurance segment of $12 million in the first six months of 2025 compared to $15 million in the first six months of 2024, a decrease of $3 million (20%) reflecting 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 the first six months of 2025, AFG collected $48 million in fees for these services compared to $49 million in the first six months of 2024. Management views this fee income, net of the $32 million in the first six months of 2025 and $30 million in the first six months of 2024 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 during the first six months of 2024 in fees as compensation for providing services related to the

Table of Contents

AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

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 $5 million and $6 million in the first six months of 2025 and the first six months 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 $3 million in the first six months of 2025 compared to $2 million in the first six months of 2024, an increase of $1 million (50%).

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 $80 million in the first six months of 2025 compared to $81 million in the first six months of 2024, 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 $38 million in both the first six months of 2025 and the first six months of 2024.

Realized Gains (Losses) on Securities

AFG’s realized gains (losses) on securities were net gains of $5 million in the first six months of 2025 compared to $12 million in the first six months of 2024, a decrease of $7 million (58%). Realized gains (losses) on securities consisted of the following (in millions):


	Six months ended June 30,
	2025		2024
Realized gains (losses) before impairment allowances:
Disposals	$	(8)	$	(4)
Change in the fair value of equity securities	19		19
Change in the fair value of derivatives	1		(1)

	12		14

Change in allowance for impairments on securities	(7)		(2)
Realized gains (losses) on securities	$	5	$	12

The $19 million net realized gain from the change in the fair value of equity securities in the first six months of 2025 includes gains of $10 million on investments in manufacturing companies, $6 million on investments in banks and financing companies and $3 million on investments in media companies. The $19 million net realized gain from the change in the fair value of equity securities in the first six months of 2024 includes gains of $13 million on investments in banks and financing companies, $5 million on investments in natural gas companies and $4 million on investments in healthcare companies, partially offset by losses of $4 million on investments in media companies.

Consolidated Income Taxes

AFG’s consolidated provision for income taxes was $98 million for the first six months of 2025 compared to $124 million for the first six months of 2024, a decrease of $26 million (21%). See Note J — “Income Taxes” to the financial statements for an analysis of items affecting AFG’s effective tax rate.

RECENTLY ADOPTED ACCOUNTING STANDARDS

See Note B — “Segments of Operations” to the financial statements for accounting guidance adopted in the fourth quarter of 2024, which requires enhanced disclosures about significant segment expenses and a description of the composition of other segment expenses by business segment. The title and position of the chief operating decision maker (“CODM”) and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources is also required to be disclosed.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

ACCOUNTING STANDARDS TO BE ADOPTED

In December 2023, the FASB issued ASU No. 2023-09 (“ASU 2023-09”), Improvements to Income Tax Disclosures . ASU 2023-09 is intended to improve 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. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application. As of June 30, 2025, AFG has not adopted ASU 2023-09. Management is evaluating the impact of the standard to AFG’s income tax disclosures. Since ASU 2023-09 only requires additional disclosure, the adoption of this guidance will not have an impact on AFG’s results of operations or financial condition.

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 June 30, 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.

ITEM 3. Quantitative and Qualitative Disclosure about Market Risk

As of June 30, 2025, there were no material changes to the information provided in Item 7A — Quantitative and Qualitative Disclosures about Market Risk of AFG’s 2024 Form 10-K.

Consistent with the discussion in Item 2 — Management’s Discussion and Analysis — “Investments,” the following table demonstrates the sensitivity of the fair value of AFG’s fixed maturity portfolio 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 June 30, 2025 (based on the duration of the portfolio, dollars in millions). Effects of increases or decreases from the 100 basis points illustrated would be approximately proportional.


Fair value of fixed maturity portfolio	$	10,571
Percentage impact on fair value of 100 bps increase in interest rates	(3.0		%)
Pretax impact on fair value of fixed maturity portfolio	$	(317)

ITEM 4. Controls and Procedures

AFG’s management, with participation of its Co-Chief Executive Officers and its Chief Financial Officer, has evaluated AFG’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15) as of the end of the period covered by this report. Based on that evaluation, AFG’s Co-CEOs and CFO concluded that the controls and procedures are effective. There have been no changes in AFG’s internal control over financial reporting during the second fiscal quarter of 2025 that materially affected, or are reasonably likely to materially affect, AFG’s internal control over financial reporting.

In the ordinary course of business, AFG and its subsidiaries routinely enhance their information systems by either upgrading current systems or implementing new systems. There have been no changes in AFG’s business processes and procedures during the second fiscal quarter of 2025 that have materially affected, or are reasonably likely to materially affect, AFG’s internal control over financial reporting.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

PART II

OTHER INFORMATION

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities AFG repurchased shares of its Common Stock during 2025 as follows:


	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (*)
First quarter	462,398	$	123.86	462,398	5,266,612



Second quarter:
April	158,899	$	118.75	158,899	5,107,713
May	94,152	122.04		94,152	5,013,561
June	66,685	122.93		66,685	4,946,876




Total	782,134	$	122.53	782,134

(*) Represents the remaining shares that may be repurchased until December 31, 2025 under the Plan authorized by AFG’s Board of Directors in May 2021.

In connection with its stock incentive plans, AFG acquired 42,809 shares (at an average of $120.66 per share) in the first quarter of 2025 and 141 shares (at $124.75 per share) in June 2025.

ITEM 5. Other Information

During the three months ended June 30, 2025, none of the Company’s directors or officers adopted , terminated or modified a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

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AMERICAN FINANCIAL GROUP, INC. 10-Q

ITEM 6. Exhibits


Number						Exhibit Description
31(a)						Certification of Co-Chief Executive Officer pursuant to section 302(a) of the Sarbanes-Oxley Act of 2002.
31(b)						Certification of Co-Chief Executive Officer pursuant to section 302(a) of the Sarbanes-Oxley Act of 2002.
31(c)						Certification of Chief Financial Officer pursuant to section 302(a) of the Sarbanes-Oxley Act of 2002.
32						Certification of Co-Chief Executive Officers and Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document.
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	American Financial Group, Inc.

August 7, 2025	By:	/s/ Brian S. Hertzman
		Brian S. Hertzman
		Senior Vice President and Chief Financial Officer

TABLE OF CONTENTS

Part I Item 1. Financial Statements Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosure About Market Risk Item 7A Quantitative and Qualitative Disclosures About Market Risk Item 2 Management S Discussion and Analysis Investments,Item 4. Controls and Procedures Part II Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 5. Other Information Item 6. Exhibits

Exhibits

31(a) Certification of Co-Chief Executive Officer pursuant to section 302(a) of the Sarbanes-Oxley Actof 2002. 31(b) Certification of Co-Chief Executive Officer pursuant to section 302(a) of the Sarbanes-Oxley Act of 2002. 31(c) Certification of Chief Financial Officer pursuant to section 302(a) of the Sarbanes-Oxley Actof 2002. 32 Certification of Co-Chief Executive Officers and Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

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AFG 10-Q Quarter ended June 30, 2025

Exhibits