AMERICAN FINANCIAL GROUP INC
For the period ended Dec 31, 2024. Filed Feb 25, 2025.
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FY2024 · Filed Feb 25, 2025
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Holding Company, Other and Unallocated
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 $48 million in the fourth quarter of 2024 compared to $53 million in the fourth quarter of 2023, a decrease of $5 million (9%).
The following table details AFG’s loss before income taxes from operations outside of its property and casualty insurance segment for the three months ended December 31, 2024 and 2023 (dollars in millions):
| Three months ended December 31, | |||
|---|---|---|---|
| 2024 | 2023 | % Change | |
| Revenues: | |||
| Net investment income | $7 | $7 | —% |
| Other income — P&C fees | 28 | 42 | (33%) |
| Other income | 6 | 5 | 20% |
| Total revenues | 41 | 54 | (24%) |
| Costs and Expenses: | |||
| Property and casualty insurance — loss adjustment and underwriting expenses | 13 | 28 | (54%) |
| Other expense — expenses associated with P&C fees | 15 | 14 | 7% |
| Other expenses | 42 | 46 | (9%) |
| Costs and expenses, excluding interest charges on borrowed money | 70 | 88 | (20%) |
| Loss before income taxes, excluding realized gains and losses and interest charges on borrowed money | (29) | (34) | (15%) |
| Interest charges on borrowed money | 19 | 19 | —% |
| Loss before income taxes, excluding realized gains and losses | $(48) | $(53) | (9%) |
Holding Company and Other — Net Investment Income
AFG recorded net investment income on investments held outside of its property and casualty insurance segment of $7 million in both the fourth quarter of 2024 and the fourth quarter of 2023.
Holding Company and Other — P&C Fees and Related Expenses
Summit, a workers’ compensation insurance subsidiary, collects fees from a small group of unaffiliated insurers for providing underwriting, policy administration and claims services. In addition, certain of AFG’s property and casualty insurance businesses collect fees from customers for ancillary services such as workplace safety programs and premium financing. In the fourth quarter of 2024, AFG collected $28 million in fees for these services compared to $23 million in the fourth quarter of 2023. Management views this fee income, net of the $15 million in the fourth quarter of 2024 and $14 million in the fourth quarter of 2023 in expenses incurred to generate such fees, as a reduction in the cost of underwriting its property and casualty insurance policies. In addition, AFG’s property and casualty insurance businesses earned $19 million in fees during the fourth quarter of 2023 as compensation for providing services related to the administration of crop insurance business generated by CRS for its former owner prior to AFG’s acquisition of CRS. The expenses related to providing such services are embedded in underwriting expenses. Consistent with internal management reporting, these fees and the related expenses are netted and recorded as a reduction of loss adjustment and other underwriting expenses in AFG’s segmented results.
Holding Company and Other — Other Income
Other income in the table above includes $4 million in both the fourth quarter of 2024 and the fourth quarter of 2023, in management fees paid to AFG by the AFG-managed CLOs (AFG’s consolidated managed investment entities). The management fees are eliminated in consolidation — see the other income line in the Consolidate MIEs column under“Results of Operations — Segmented Statement of Earnings.” Excluding amounts eliminated in consolidation, AFG recorded other income outside of its property and casualty insurance segment of $2 million and $1 million in the fourth quarter of 2024 and the fourth quarter of 2023, respectively.
Holding Company and Other — Other Expenses
AFG’s holding companies and other operations outside of its property and casualty insurance segment recorded other expenses of $42 million in the fourth quarter of 2024 compared to $46 million in the fourth quarter of 2023, a decrease of $4 million (9%). This decrease is due primarily to lower aircraft related expenses in the fourth quarter of 2024 compared to the fourth quarter of 2023.
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 fourth quarter of 2024 and the fourth quarter of 2023.
Realized Gains (Losses) on Securities
AFG’s realized gains (losses) on securities were net losses of $10 million in the fourth quarter of 2024 compared to net gains of $31 million in the fourth quarter of 2023, a change of $41 million (132%). Realized gains (losses) on securities consisted of the following (in millions):
| Three months ended December 31, | ||
|---|---|---|
| 2024 | 2023 | |
| Realized gains (losses) before impairment allowances: | ||
| Disposals | $— | $(2) |
| Change in the fair value of equity securities | 3 | 33 |
| Change in the fair value of derivatives | (3) | 2 |
| — | 33 | |
| Change in allowance for impairments on securities | (10) | (2) |
| Realized gains (losses) on securities | $(10) | $31 |
The $3 million net realized gain from the change in the fair value of equity securities in the fourth quarter of 2024 includes gains of $4 million on investments in technology companies. The $33 million net realized gain from the change in the fair value of equity securities in the fourth quarter of 2023 includes gains of $15 million on investments in banks and financing companies, $6 million on investments in retail companies, $5 million on investments in healthcare companies and $5 million on investments in media companies.
The $10 million change in allowance for impairments on securities in the fourth quarter of 2024 relates primarily to an allowance taken on fixed maturities from a single issuer in the retail sector.
Consolidated Income Taxes
AFG’s consolidated provision for income taxes was $65 million for the fourth quarter of 2024 compared to $72 million in the fourth quarter of 2023, a decrease of $7 million (10%). The following is a reconciliation of income taxes at the statutory rate to the provision for income taxes as shown in the segmented statement of earnings (dollars in millions):
| Three months ended December 31, | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| Amount | % of EBT | Amount | % of EBT | |
| Earnings before income taxes (“EBT”) | $320 | $335 | ||
| Income taxes at statutory rate | $67 | 21% | $70 | 21% |
| Effect of: | ||||
| Tax exempt interest | (2) | (1%) | (1) | —% |
| Employee stock ownership plan dividend paid deduction | (2) | (1%) | (2) | (1%) |
| Stock-based compensation | (1) | —% | — | —% |
| Change in valuation allowance | (1) | —% | — | —% |
| Dividend received deduction | — | —% | (1) | —% |
| Nondeductible expenses | 1 | —% | 3 | 1% |
| Foreign operations | 1 | —% | — | —% |
| Other | 2 | 1% | 3 | —% |
| Provision for income taxes | $65 | 20% | $72 | 21% |
See Note L — “Income Taxes” to the financial statements for an analysis of items affecting AFG’s effective tax rate.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.