May 28, 2022

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AMERICAN FINANCIAL GROUP INC – 10-K – Management’s Discussion and Analysis of Financial Condition and Results of Operations

INDEX TO MD&A
                                                 Page                                                               Page
  Objective                                      29            Results of Operations - Fourth Quarter               51
  Overview                                       29            Segmented Statement of Earnings                      51
  Critical Accounting Policies                   30            Property and Casualty Insurance                      53
  Liquidity and Capital Resources                31            Holding Company, Other and Unallocated               63
                                                               Real Estate 

Entities Acquired from the

  Ratios                                         31          Annuity Operations                                     65
  Condensed Consolidated Cash Flows              31            Discontinued Annuity Operations                      65
  Parent and Subsidiary Liquidity                33
  Condensed Parent Only Cash Flows               34            Results of Operations - Full Year                    66
  Off-Balance Sheet Arrangements                 35            Segmented Statement of Earnings                      66
  Investments                                    35            Property and Casualty Insurance                      68
  Uncertainties                                  38            Holding Company, Other and Unallocated               80
  Managed Investment Entities                                  Real Estate Entities Acquired from the
                                                 44          Annuity Operations                                     84
  Results of Operations                          49            Discontinued Annuity Operations                      84
  General                                        49            Recent     Accounting Standards                      85



OBJECTIVE
The objective of Management's Discussion and Analysis is to provide a discussion
and analysis of the financial statements and other statistical data that
management believes will enhance the understanding of AFG's financial condition,
changes in financial condition and results of operations. The tables and
narrative that follow are presented in a manner that is consistent with the
information that AFG's management uses to make operational decisions and
allocate capital resources. They are provided to demonstrate the nature of the
transactions and events that could impact AFG's financial results. This
discussion should be read in conjunction with the financial statements beginning
on page F-1.

OVERVIEW

Financial Condition
AFG is organized as a holding company with almost all of its operations being
conducted by subsidiaries. AFG, however, has continuing cash needs for
administrative expenses, the payment of principal and interest on borrowings,
shareholder dividends, and taxes. Therefore, certain analyses are most
meaningfully presented on a parent only basis while others are best done on a
total enterprise basis. In addition, because its businesses are financial in
nature, AFG does not prepare its consolidated financial statements using a
current-noncurrent format. Consequently, certain traditional ratios and
financial analysis tests are not meaningful.

At December 31, 2021, AFG (parent) held approximately $1.87 billion in cash and
securities and had $500 million available under a bank line of credit, which
expires in December 2025.

Sale of the Annuity Business
On May 28, 2021, AFG sold its annuity business consisting of Great American Life
Insurance Company ("GALIC") and its two insurance subsidiaries, Annuity
Investors Life Insurance Company and Manhattan National Life Insurance Company,
as well as a broker-dealer affiliate, Great American Advisors, Inc., and
insurance distributor, AAG Insurance Agency, Inc. to Massachusetts Mutual Life
Insurance Company ("MassMutual"). Total proceeds from the sale were
$3.57 billion and AFG realized an after-tax gain on the sale of $656 million.
Beginning with the first quarter of 2021, results of the annuity businesses sold
are reported as discontinued operations, in accordance with generally accepted
accounting principles ("GAAP"), which included adjusting prior period results to
reflect these operations as discontinued.

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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. As discussed above, AFG's former annuity operations are reported as
discontinued operations.

AFG reported net earnings from continuing operations attributable to
shareholders of $355 million ($4.18 per share, diluted) for the fourth quarter
of 2021 compared to $265 million ($3.03 per share, diluted) in the fourth
quarter of 2020 reflecting higher underwriting profit and higher net investment
income in the fourth quarter of 2021 compared to the fourth quarter of 2020,
income from the sale of real estate in the fourth quarter of 2021 and the impact
of the loss on retirement of debt recorded in the fourth quarter of 2020,
partially offset by lower net realized gains in the fourth quarter of 2021
compared to the fourth quarter of 2020.

Full year 2021 net earnings from continuing operations attributable to
shareholders were $1.08 billion ($12.62 per share, diluted) compared to
$325 million ($3.63 per share, diluted) in 2020 reflecting higher underwriting
profit and higher net investment income in 2021 compared to 2020, net realized
gains in 2021 compared to net realized losses in 2020, the impact of special A&E
charges recorded in 2020 and income from the sale of real estate in the fourth
quarter of 2021, partially offset by higher interest charges on borrowed money
and higher holding company expenses.

Outlook

The COVID-19 pandemic began to have a significant impact on global, social and
economic activity during the first quarter of 2020. AFG has taken actions under
its business continuity plan to minimize risk to the Company's employees and to
prevent any significant disruption to AFG's business, agents or policyholders.

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 the ongoing uncertainties presented by the
pandemic. 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 near-term debt maturities.

As a result of the contracted economy, exposures in many of AFG's property and
casualty businesses changed due to workforce reduction, fewer miles driven and
reduced revenue. This has and may continue to lead to lower frequency in certain
lines while there has and may continue to be COVID-19 related increases in claim
frequency in other lines of business.

There is also uncertainty as to potential government decree or legislation that
could alter the coverage landscape, such as the imposition of retroactive
business interruption insurance. Like most of the insurance industry, AFG's
business interruption coverages require direct physical damage to covered
property for business interruption coverage to apply and the vast majority of
AFG's property policies also contain virus exclusions. See Item 1A - "Risk
Factors."

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 related to AFG's
continuing operations where management believes the degree of judgment required
to determine amounts recorded in the financial statements is most significant
are as follows:
•the establishment of insurance reserves, especially asbestos and
environmental-related reserves,
•the recoverability of reinsurance,
•the establishment of asbestos and environmental liabilities of former railroad
and manufacturing operations, and
•the valuation of investments, including the determination of impairment
allowances.

See "Liquidity and Capital Resources - Uncertainties" for a discussion of
insurance reserves, recoverables from reinsurers and contingencies related to
American Premier's former operations and "Liquidity and Capital Resources -
Investments" for a discussion of the allowance for credit losses (impairments)
on investments.

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LIQUIDITY AND CAPITAL RESOURCES

Ratios

AFG's debt to total capital ratio on a consolidated basis is shown below
(dollars in millions). Management intends to maintain the ratio of debt to
capital at or below 30% and intends to maintain the capital of its significant
insurance subsidiaries at or above levels currently indicated by rating agencies
as appropriate for the current ratings.

                                                       December 31,
                                         2021              2020
Principal amount of long-term debt             $ 1,993           $ 1,993
Total capital                                    6,869             7,486
Ratio of debt to total capital:
Including subordinated debt                       29.0  %           26.6  %
Excluding subordinated debt                       19.2  %           17.6  %



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. In addition, maintaining a ratio of debt, excluding
subordinated debt and debt secured by real estate (if any), to total capital of
35% or lower is a financial covenant in AFG's bank credit facility. The 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
unrealized gains (losses) related to fixed maturity investments).

The NAIC’s model law for risk-based capital (“RBC”) applies to property and
casualty companies. RBC formulas determine the amount of capital that an
insurance company needs so that it has an acceptable expectation of not becoming
financially impaired. At December 31, 2021, the capital ratios of all AFG
insurance companies exceeded the RBC requirements.

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Condensed Consolidated Cash Flows
AFG's principal sources of cash include insurance premiums, income from its
investment portfolio and proceeds from the maturities, redemptions and sales of
investments. Insurance premiums in excess of acquisition expenses and operating
costs are invested until they are needed to meet policyholder obligations or
made available to the parent company through dividends to cover debt obligations
and corporate expenses, and to provide returns to shareholders through share
repurchases and dividends. Cash flows from operating, investing and financing
activities as detailed in AFG's Consolidated Statement of Cash Flows are shown
below (in millions):

                                                                Year ended December 31,
                                                            2021          2020         2019
   Net cash provided by operating activities             $   1,714      $ 

2,183 $ 2,456

   Net cash used in investing activities                      (436)      

(1,564) (3,065)

Net cash provided by (used in) financing activities (1,957) (123) 1,408

   Net change in cash and cash equivalents               $    (679)     $   

496 $ 799


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 property and casualty premiums, claim and
expense payments and recoveries from reinsurers. Prior to the May 2021 sale,
AFG's discontinued annuity operations typically produced positive net operating
cash flows as investment income exceeded acquisition costs and operating
expenses. Interest credited on annuity policyholder funds is a non-cash increase
in AFG's annuity benefits accumulated liability and annuity premiums, benefits
and withdrawals are considered financing activities due to the deposit-type
nature of annuities. 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 reduced cash flows from
operating activities by $144 million in 2021 and increased cash flows from
operating activities by $25 million in 2020 and $23 million in 2019, resulting
in a $169 million decrease in cash flows from operating activities in 2021
compared to 2020 and a $2 million increase in cash flows from operating
activities in 2020 compared to 2019. 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
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cash provided by operating activities was $1.86 billion, $2.16 billion and
$2.43 billion in 2021, 2020 and 2019, respectively.

Net Cash Used in Investing Activities  AFG's investing activities consist
primarily of the investment of funds provided by its property and casualty
businesses and, prior to the May 2021 sale, its discontinued annuity operations.
In May 2021, AFG sold its annuity business to MassMutual for cash proceeds of
$3.57 billion (including post-closing adjustments). This increase in cash
provided by investing activities was partially offset by a decrease in cash and
cash equivalents of $2.06 billion representing balances held in the annuity
subsidiaries at the sale date. Excluding the impact of the May 2021 sale of the
annuity business, net cash used in investing activities was $1.95 billion in
2021 compared to $1.56 billion in 2020, an increase of $383 million. As
discussed below (under net cash provided by (used in) financing activities),
AFG's discontinued annuity operations had net cash flows from annuity
policyholders of $477 million in 2021 through the May 31, 2021 effective date of
the sale compared to $351 million in 2020. In addition to the investment of
funds provided by the insurance operations, AFG Parent increased its net
purchases of fixed maturities by $1.19 billion in 2021 compared to 2020 due
primarily to proceeds received from the sale of the annuity business as well as
dividends received from subsidiaries. Investing activities also include the
December 2021 acquisition of Verikai for $120 million in cash and 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 $43 million use of cash in 2021 compared to a
$281 million use of cash in 2020, accounting for a $238 million decrease in net
cash used in investing activities in 2021 compared to 2020. See Note A -
"Accounting Policies - Managed Investment Entities" and Note G - "Managed
Investment Entities" to the financial statements.

Net cash used in investing activities was $1.56 billion in 2020 compared to
$3.07 billion in 2019, a decrease of $1.51 billion. As discussed below (under
net cash provided by (used in) financing activities), AFG's discontinued annuity
operations had net cash flows from annuity policyholders of $351 million in 2020
and $1.66 billion in 2019. Settlements of equity index call options exceeded
purchases by $322 million in 2020 compared to $64 million in 2019, accounting
for a $258 million decrease in cash used in investing activities. On December
31, 2020, AFG completed the sale of GAI Holding Bermuda and its subsidiaries,
comprising the legal entities that owned Neon. The assets sold included
$425 million in cash and cash equivalents, resulting in an increase in cash used
in investing activities in 2020. Net investment activity in the managed
investment entities was an $281 million use of cash in 2020 compared to an
$11 million source of cash in 2019, accounting for a $292 million increase in
net cash used in investing activities in 2020 compared to 2019.

Net Cash Provided by (Used In) Financing Activities  AFG's financing activities
consist primarily of issuances and retirements of long-term debt, issuances and
repurchases of common stock, dividend payments and, prior to the sale of the
annuity business, transactions with annuity policyholders. Net cash used in
financing activities was $1.96 billion in 2021 compared to $123 million in 2020,
an increase in net cash used in financing activities of $1.83 billion. Net
annuity receipts exceeded annuity surrenders, benefits, withdrawals and
transfers by $477 million in 2021 through the May 31, 2021 effective date of the
sale compared to $351 million in 2020, resulting in a $126 million increase in
net cash provided by financing activities in 2021 compared to 2020. In 2020,
GALIC transferred $554 million of cash as part of its reinsurance agreement with
Commonwealth to cede in force traditional fixed and indexed annuities. In 2020,
AFG issued $300 million of 5.25% Senior Notes due in 2030, $150 million of
5.625% Subordinated Debentures due in 2060 and $200 million of 4.50%
Subordinated Debentures due in 2060. The net proceeds of these offerings
contributed $634 million to net cash provided by financing activities in 2020.
The November 2020 redemption of AFG's 6% Subordinated Debentures due in 2055 was
a $150 million use of cash in 2020. In addition to its regular quarterly cash
dividends, AFG paid special cash dividends of $26.00 per share in 2021 and $2.00
per share in 2020, which resulted in total cash dividends of $2.37 billion in
2021 compared to $334 million in 2020. 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. Issuances of
managed investment entity liabilities exceeded retirements by $193 million in
2021 compared to $221 million in 2020, accounting for a $28 million decrease in
net cash provided by financing activities in 2021 compared to 2020. See Note A -
"Accounting Policies - Managed Investment Entities" and Note G - "Managed
Investment Entities" to the financial statements.

Net cash used in financing activities was $123 million in 2020 compared to net
cash provided by financing activities of $1.41 billion in 2019, a decrease in
net cash provided by financing activities of $1.53 billion. Net annuity receipts
exceeded annuity surrenders, benefits, withdrawals and transfers by $351 million
in 2020 compared to $1.66 billion in 2019, resulting in a $1.31 billion decrease
in net cash provided by financing activities in 2020 compared to 2019. In 2020,
GALIC transferred $554 million of cash as part of its reinsurance agreement with
Commonwealth to cede in force traditional fixed and indexed annuities. In 2020,
AFG issued $300 million of 5.25% Senior Notes due in 2030, $150 million of
5.625% Subordinated Debentures due in 2060 and $200 million of 4.50%
Subordinated Debentures due in 2060. The net proceeds of these offerings
contributed $634 million to net cash provided by financing activities in 2020.
The November 2020 redemption of AFG's 6% Subordinated Debentures due in 2055 was
a $150 million use of cash in 2020. In 2019, AFG issued $125 million of 5.875%
Subordinated Debentures due in 2059 and $200 million of 5.125%
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Subordinated Debentures due in 2059, the net proceeds of which contributed
$315 million to net cash provided by financing activities in 2019. The December
2019 redemption of AFG's 6-1/4% Subordinated Debentures was a $150 million use
of cash in 2019. During 2020, AFG repurchased $313 million of its Common Stock
compared to no share repurchases in 2019. In addition to its regular quarterly
cash dividends, AFG paid special cash dividends of $2.00 per share and $3.30 per
share in 2020 and 2019, respectively, which resulted in total cash dividends of
$334 million in 2020 compared to $444 million in 2019. Issuances of managed
investment entity liabilities exceeded retirements by $221 million in 2020
compared to retirements of managed investment entity liabilities exceeding
issuances by $11 million in 2019, accounting for a $232 million increase in net
cash provided by financing activities in 2020 compared to 2019.

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.

As discussed above, AFG sold its annuity business to MassMutual for proceeds of
$3.57 billion (including post-closing adjustments). AFG's capital and liquidity
was significantly enhanced as a result of the transaction. During 2021, AFG
repurchased 2,777,684 shares of its Common Stock for $319 million and paid
special cash dividends of $26.00 per share of AFG Common Stock ($14.00 per share
in June, $2.00 per share in August, $4.00 per share in October, $4.00 per share
in November and $2.00 per share in December) totaling $2.21 billion. Management
will continue to evaluate opportunities for deploying AFG's significant
remaining excess capital, including returning capital to shareholders in the
form of regular and special cash dividends and through opportunistic share
repurchases. In addition, excess capital will be deployed into AFG's core
businesses as management identifies the potential for healthy, profitable
organic growth, and opportunities to expand the Specialty property and casualty
niche businesses through acquisitions and start-ups that meet target return
thresholds.

In December 2021, AFG acquired Verikai, Inc., a machine learning and artificial
intelligence company that utilizes a predictive risk tool for assessing
insurance risk, for $120 million using cash on hand at the parent.

In 2020, AFG repurchased 4,531,394 shares of its Common Stock for $313 million
and paid a special cash dividend of $2.00 per share of AFG Common Stock in
December totaling $173 million.

In 2020, AFG issued $300 million of 5.25% Senior Notes due in April 2030,
$150 million of 5.625% Subordinated Debentures due in June 2060 and $200 million
of 4.50% Subordinated Debentures due in September 2060 to increase liquidity and
provide flexibility at the parent holding company in its response to the
uncertainties of the economic environment. The net proceeds from the offerings
were used for general corporate purposes, which included repurchases of
outstanding common shares and the November 2020 redemption of AFG's $150 million
outstanding principal amount of 6% Subordinated Debentures due in November 2055
at par value.

In 2019, AFG paid special cash dividends of $3.30 per share of AFG Common Stock
($1.50 per share in May and $1.80 per share in November) totaling $297 million.

In December 2019, AFG issued $200 million of 5.125% Subordinated Debentures due
in December 2059. A portion of the net proceeds of the offering were used to
redeem AFG's $150 million outstanding principal amount of 6-1/4% Subordinated
Debentures due in September 2054, at par value, with the remainder used for
general corporate purposes.

In March 2019, AFG issued $125 million of 5.875% Subordinated Debentures due in
March 2059. The net proceeds of the offering were used for general corporate
purposes.

All debentures and notes issued by AFG are rated investment grade by two
nationally recognized rating agencies. Under a currently effective shelf
registration statement, AFG can offer additional equity or debt securities. The
shelf registration provides AFG with flexibility to access the capital markets
from time to time as market and other conditions permit.

AFG can borrow up to $500 million under its revolving credit facility, which
expires in December 2025. Amounts borrowed under this agreement bear interest at
rates ranging from 1.00% to 1.875% (currently 1.375%) over LIBOR based on AFG's
credit rating. The credit facility also includes provisions relating to the
replacement of LIBOR with different floating rates in the event of the
discontinuance of LIBOR. There were no borrowings under this agreement, or under
any other parent company short-term borrowing arrangements, during 2021 or 2020.

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Under a tax allocation agreement with AFG, all 80% (or more) owned U.S.
subsidiaries generally pay taxes to (or recover taxes from) AFG based on each
subsidiary's contribution to amounts due under AFG's consolidated tax return.

Subsidiary Liquidity  The liquidity requirements of AFG's insurance subsidiaries
relate primarily to the policyholder claims and underwriting expenses and
payments of dividends and taxes to AFG. Historically, cash flows from premiums
and investment income have generally provided more than sufficient funds to meet
these requirements. Funds received in excess of cash requirements are generally
invested in marketable securities. In addition, the insurance subsidiaries
generally hold a significant amount of highly liquid, short duration
investments.

For statutory accounting purposes, equity securities of non-affiliates are
generally carried at fair value. At December 31, 2021, AFG's insurance companies
owned publicly traded equity securities with a fair value of $956 million.
Decreases in market prices could adversely affect the insurance group's capital,
potentially impacting the amount of dividends available or necessitating a
capital contribution. Conversely, increases in market prices could have a
favorable impact on the group's dividend-paying capability.

Property and casualty reserves for unpaid losses and loss adjustment expenses
were $11.07 billion at December 31, 2021 and include case reserves and claims
incurred but not reported ("IBNR"). The ultimate amount to be paid to settle
reserves is an estimate, subject to significant uncertainty. Actual payments to
settle claims cannot be determined until a settlement is reached with the
claimant. Final claim settlements may vary significantly from estimated amounts.
See "Uncertainties - Property and Casualty Insurance Reserves" below. The timing
of future payments for the next twelve months and beyond could vary materially
from historical payment patterns due to, among other things, changes in claim
reporting and payment patterns and large unanticipated settlements.

AFG believes its insurance subsidiaries maintain sufficient liquidity to pay
claims and underwriting expenses. In addition, these subsidiaries have
sufficient capital to meet commitments in the event of unforeseen events such as
reserve deficiencies, inadequate premium rates or reinsurer insolvencies. Even
in the current uncertain COVID-19 environment, 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, significant declines in the fair value of the insurance subsidiaries'
investment portfolios or significant ratings downgrades on these investments,
could create a need for additional capital.

Condensed Parent Only Cash Flows
AFG's parent holding company only condensed cash flows from operating, investing
and financing activities are shown below (in millions):

                                                                Year ended 

December 31,

                                                              2021          

2020 2019

 Net cash provided by operating activities             $     833            

$ 483 $ 306

 Net cash provided by (used in) investing activities       2,167            

(294) (56)

 Net cash used in financing activities                    (2,626)           

(140) (242)

 Net change in cash and cash equivalents               $     374            

$ 49 $ 8


Parent Net Cash Provided by Operating Activities  Parent holding company cash
flows from operating activities consist primarily of dividends and tax payments
received from AFG's insurance subsidiaries, reduced by tax payments to the IRS
and holding company interest and other expenses. Parent holding company net cash
provided by operating activities was $833 million in 2021 compared to
$483 million in 2020 and $306 million in 2019. The $350 million increase in net
cash provided by operating activities in 2021 as compared to 2020 and the
$177 million increase in net cash provided by operating activities in 2020 as
compared to 2019 were due primarily to higher dividends received from
subsidiaries.

Parent Net Cash Provided by (Used in) Investing Activities  Parent holding
company investing activities consist of capital contributions to and returns of
capital from subsidiaries and parent company investment activity. Parent holding
company net cash provided by investing activities was $2.17 billion in 2021
compared to net cash used of $294 million in 2020 and $56 million in 2019. The
$2.17 billion in net cash provided by investing activities in 2021 is
substantially higher than the $294 million in net cash used in investing
activities in 2020 due to proceeds of $3.57 billion related to the May 2021 sale
of the annuity business, partially offset by the net purchase of fixed maturity
investments of $1.19 billion in 2021 and the $120 million purchase of Verikai in
December 2021. The $294 million in net cash used in investing activities in 2020
is higher than the $56 million in net cash used in investing activities in 2019
due primarily to higher capital contributions to AFG's property and casualty
subsidiaries in 2020.

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Parent Net Cash Used in Financing Activities  Parent company financing
activities consist primarily of the issuance and retirement of long-term debt,
repurchases of AFG Common Stock, dividends to shareholders, and, to a lesser
extent, proceeds from employee stock option exercises. Significant long-term
debt and common stock transactions are discussed above under "Parent Holding
Company Liquidity." Parent holding company net cash used in financing activities
was $2.63 billion in 2021 compared to $140 million in 2020 and $242 million in
2019. The $2.49 billion increase in net cash used in financing activities in
2021 as compared to 2020 reflects higher dividends paid to shareholders (due
primarily to special dividends of $26.00 per share in 2021 compared to special
dividends of $2.00 per share in 2020) and the impact of net issuances of
long-term debt in 2020. The $102 million decrease in net cash used in financing
activities in 2020 as compared to 2019 reflects the higher net issuances of
long-term debt in 2020 and lower dividends in 2020 (due primarily to special
dividends of $2.00 per share in 2020 compared to special dividends of $3.30 per
share in 2019), partially offset by $313 million in repurchases of outstanding
common shares in 2020 compared to no repurchases in 2019.

Off-Balance Sheet Arrangements
See Note O – “Additional Information – Financial Instruments – Unfunded
Commitments” to the financial statements.

Investments

AFG attempts to optimize investment income while building the value of its
portfolio, placing emphasis upon total long-term performance.

AFG's investment portfolio at December 31, 2021, contained $10.36 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 and $28 million in fixed maturities classified as trading
with holding gains and losses included in net investment income. In addition,
AFG's investment portfolio includes $715 million in equity securities carried at
fair value with holding gains and losses included in realized gains (losses) on
securities and $327 million in equity securities carried at fair value with
holding gains and losses included in net investment income.

As detailed in Note F - "Investments - Net Unrealized Gain on Fixed Maturity
Securities" to the financial statements, unrealized gains and losses on AFG's
fixed maturity securities are included in shareholders' equity after adjustments
for deferred income taxes.

Fixed income investment funds are generally invested in securities with
intermediate-term maturities with an objective of optimizing total return while
allowing flexibility to react to changes in market conditions. At December 31,
2021, the average life of AFG's fixed maturities was about 3.5 years.

Fair values for AFG's portfolio are determined by AFG's internal investment
professionals using data from nationally recognized pricing services,
non-binding broker quotes and other market information. Fair values of equity
securities are generally based on published closing prices. For AFG's fixed
maturity portfolio, approximately 84% was priced using pricing services at
December 31, 2021 and 10% was priced primarily by using non-binding broker
quotes. 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.

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
mortgage-backed securities ("MBS") are estimates of the rate of future
prepayments and defaults of principal over the remaining life of the underlying
collateral. Due to the lack of transparency in the process that brokers use to
develop prices, valuations that are based on brokers' prices are classified as
Level 3 in the GAAP hierarchy unless the price can be corroborated, for example,
by comparison to similar securities priced using observable inputs.

Valuation techniques utilized by pricing services and prices obtained from
external sources are reviewed by AFG's internal investment professionals who are
familiar with the securities being priced and the markets in which they trade to
ensure the fair value determination is representative of an exit price. To
validate the appropriateness of the prices obtained, these investment managers
consider widely published indices (as benchmarks), recent trades, changes in
interest rates, general economic conditions and the credit quality of the
specific issuers. In addition, AFG communicates directly with pricing services
regarding the methods and assumptions used in pricing, including verifying, on a
test basis, the inputs used by the services to value specific securities.

In general, the fair value of AFG's fixed maturity investments is inversely
correlated to changes in interest rates. The following table demonstrates the
sensitivity of such fair values to reasonably likely changes in interest rates
by illustrating
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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 at
December 31, 2021 (dollars in millions). Effects of increases or decreases from
the 100 basis points illustrated would be approximately proportional.

Fair value of fixed maturity portfolio                                  $ 

10,385

Percentage impact on fair value of 100 bps increase in interest rates (2.0 %)
Pretax impact on fair value of fixed maturity portfolio

                 $   

(208)


Approximately 88% of the fixed maturities held by AFG at December 31, 2021, were
rated "investment grade" (credit rating of AAA to BBB) by nationally recognized
rating agencies, 3% were rated "non-investment grade" and 9% 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.

Municipal bonds represented approximately 18% of AFG's fixed maturity portfolio
at December 31, 2021. AFG's municipal bond portfolio is high quality, with over
99% of the securities rated investment grade at that date. The portfolio is well
diversified across the states of issuance and individual issuers. At
December 31, 2021, approximately 90% of the municipal bond portfolio was held in
revenue bonds, with the remaining 10% held in general obligation bonds.

Summarized information for the unrealized gains and losses recorded in AFG's
Balance Sheet at December 31, 2021, is shown in the following table (dollars in
millions). Approximately $775 million of available for sale fixed maturity
securities had no unrealized gains or losses at December 31, 2021.

                                                                           Securities          Securities
                                                                              With                With
                                                                           Unrealized          Unrealized
                                                                              Gains              Losses
Available for Sale Fixed Maturities
Fair value of securities                                                  $    6,086          $    3,496
Amortized cost of securities                                              $    5,885          $    3,524
Gross unrealized gain (loss)                                              $      201          $      (28)
Fair value as % of amortized cost                                                103  %               99  %
Number of security positions                                                   1,545                 514
Number individually exceeding $2 million gain or loss                              3                   -
Concentration of gains (losses) by type or industry (exceeding 5% of
unrealized):
States and municipalities                                                 $       74          $        -
Mortgage-backed securities                                                        50                  (3)
Other asset-backed securities                                                     17                 (11)
Asset managers                                                                     7                  (2)
Technology                                                                         4                  (2)
Collateralized loan obligations                                                    3                  (2)
U.S. Government and government agencies                                            2                  (2)
Foreign government                                                                 -                  (2)
Percentage rated investment grade                                                 90  %               95  %



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The table below sets forth the scheduled maturities of AFG's available for sale
fixed maturity securities at December 31, 2021, 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                Securities
                                                                              With                      With
                                                                           Unrealized                Unrealized
                                                                              Gains                    Losses
Maturity
One year or less                                                                     13  %                      2  %
After one year through five years                                                    31  %                     17  %
After five years through ten years                                                   12  %                      3  %
After ten years                                                                       5  %                      1  %
                                                                                     61  %                     23  %

Collateralized loan obligations and other asset-backed securities
(average life of approximately 3 years)

                                              31  %                     64  %

Mortgage-backed securities (average life of approximately 3.5 years)

          8  %                     13  %
                                                                                    100  %                    100  %


The table below (dollars in millions) summarizes the unrealized gains and losses
on fixed maturity securities by dollar amount:

                                           Aggregate        Aggregate          Fair
                                              Fair          Unrealized       Value as
                                             Value         Gain (Loss)       % of Cost
Fixed Maturities at December 31, 2021
Securities with unrealized gains:
Exceeding $500,000 (84 securities)        $      946      $         75           109  %
$500,000 or less (1,461 securities)            5,140               126      

103 %

                                          $    6,086      $        201           103  %
Securities with unrealized losses:
Exceeding $500,000 (8 securities)         $      188      $         (5)           97  %
$500,000 or less (506 securities)              3,308               (23)           99  %
                                          $    3,496      $        (28)           99  %



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           Aggregate               Fair
                                                                Fair             Unrealized             Value as
                                                                Value               Loss                % of Cost

Securities with Unrealized Losses at December 31, 2021
Investment grade fixed maturities with losses for:
Less than one year (336 securities)

                         $    3,133          $      (21)                     99  %
One year or longer (53 securities)                                 196                  (3)                     98  %
                                                            $    3,329          $      (24)                     99  %

Non-investment grade fixed maturities with losses for:
Less than one year (80 securities)

                          $      137          $       (2)                     99  %
One year or longer (45 securities)                                  30                  (2)                     94  %
                                                            $      167          $       (4)                     98  %


To evaluate fixed maturities for expected credit losses (impairment), management
considers the following:

a)whether the unrealized loss is credit-driven or a result of changes in market
interest rates,
b)the extent to which fair value is less than cost basis,
c)cash flow projections received from independent sources,
d)historical operating, balance sheet and cash flow data contained in issuer SEC
filings and news releases,
e)near-term prospects for improvement in the issuer and/or its industry,
f)third-party research and communications with industry specialists,
g)financial models and forecasts,
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h)the continuity of interest payments, maintenance of investment grade ratings
and hybrid nature of certain investments,
i)discussions with issuer management, and
j)ability and intent to hold the investment for a period of time sufficient to
allow for anticipated recovery in fair value.

Based on its analysis of the factors listed above, management believes AFG will
recover its cost basis (net of any allowance) in the fixed maturity securities
with unrealized losses and that AFG has the ability to hold the securities until
they recover in value and had no intent to sell them at December 31, 2021.
Although AFG has the ability to continue holding its fixed maturity investments
with unrealized losses, its intent to hold them may change due to deterioration
in the issuers' creditworthiness, decisions to lessen exposure to a particular
issuer or industry, asset/liability management decisions, market movements,
changes in views about appropriate asset allocation or the desire to offset
taxable realized gains. Should AFG's ability or intent change regarding a
particular security, a charge for impairment would likely be required. While it
is not possible to accurately predict if or when a specific security will become
impaired, increases in the allowance for credit losses could be material to
results of operations in future periods. Significant declines in the fair value
of AFG's investment portfolio could have a significant adverse effect on AFG's
liquidity. For information on AFG's realized gains (losses) on securities, see
"Results of Operations - Realized Gains (Losses) on Securities."

Uncertainties

As more fully explained in the following paragraphs, management believes that
the areas posing the greatest risk of material loss are the adequacy of its
insurance reserves and contingencies arising out of its former railroad and
manufacturing operations.

Property and Casualty Insurance Reserves  Estimating the liability for unpaid
losses and loss adjustment expenses ("LAE") is inherently judgmental and is
influenced by factors that are subject to significant variation. Determining the
liability is a complex process incorporating input from many areas of the
Company including actuarial, underwriting, pricing, claims and operations
management.

The estimates of liabilities for unpaid claims and for expenses of investigation
and adjustment of unpaid claims are based upon: (i) the accumulation of case
estimates for losses reported prior to the close of the accounting periods on
direct business written ("case reserves"); (ii) estimates received from ceding
reinsurers and insurance pools and associations; (iii) estimates of claims
incurred but not reported (including possible development on known claims);
(iv) estimates (based on experience) of expense for investigating and adjusting
claims; and (v) the current state of law and coverage litigation.

The process used to determine the total reserve for liabilities involves
estimating the ultimate incurred losses and LAE, adjusted for amounts already
paid on the claims. The IBNR reserve is derived by estimating the ultimate
unpaid reserve liability and subtracting case reserves for loss and LAE. See
Note N - "Insurance - Property and Casualty Insurance Reserves" to the financial
statements for a discussion of the factors considered and actuarial methods used
in determining management's best estimate of the ultimate liability for unpaid
losses and LAE.

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The following table shows (in millions) the breakdown of AFG's property and
casualty insurance reserves between case reserves, IBNR reserves and LAE
reserves (estimated amounts required to adjust, record and settle claims, other
than the claim payments themselves) at December 31, 2021 and gross written
premiums for the year ended December 31, 2021.

                                                                                                   Gross Loss Reserves
                                                                                                                                    Total          Gross Written
                                                                                 Case             IBNR             LAE            Reserves           Premiums
Statutory Line of Business
Other liability - occurrence                                                  $   770          $ 2,645          $   635          $  4,050          $    1,143
Workers' compensation                                                             948            1,277              351             2,576               1,528
Other liability - claims made                                                     226              515              326             1,067                 554
Commercial auto/truck liability/medical                                           375              396              139               910              

842

Special property (fire, allied lines, inland marine, earthquake)                  255              239               28               522              

1,756

Products liability - occurrence                                                    89              238              149               476                 198
Commercial multi-peril                                                            151              126               84               361                 356
Other lines                                                                       215              443              103               761               1,294
Total Statutory                                                                 3,029            5,879            1,815            10,723               7,671
Adjustments for GAAP:
Foreign operations                                                                141              175               34               350                 268
Deferred gains on retroactive reinsurance                                           -               18                -                18                   -
Loss reserve discounting                                                           (5)               -                -                (5)                  -
Other                                                                             (12)               -                -               (12)                  7
Total Adjustments for GAAP                                                        124              193               34               351                 275
Total GAAP Reserves and Premiums                                              $ 3,153          $ 6,072          $ 1,849          $ 11,074          $    7,946


While current factors and reasonably likely changes in variable factors are
considered in estimating the liability for unpaid losses and LAE, there is no
method or system that can eliminate the risk of actual ultimate results
differing from such estimates.

Following is a discussion of certain critical variables affecting the estimation
of loss reserves of the more significant long-tail lines of business (asbestos
and environmental liabilities are separately discussed below). Many other
variables may also impact ultimate claim costs.

An important assumption underlying reserve estimates is that the cost trends
implicitly built into development patterns will continue into the future.
However, future results could vary due to an unexpected change in the underlying
cost trends. This unexpected change could arise from a variety of sources
including a general increase in economic inflation, inflation from social
programs, new medical technologies, or other factors such as those listed below
in connection with AFG's largest lines of business. It is not possible to
isolate and measure the potential impact of just one of these variables, and
future cost trends could be partially impacted by several such variables.
However, it is reasonable to address the sensitivity of the reserves to
potential impact from changes in these variables by measuring the effect of a
possible overall 1% change in future cost trends that may be caused by one or
more variables. Utilizing the effect of a 1% change in overall cost trends
enables changes greater than 1% to be estimated by extrapolation. Each
additional 1% change in the cost trend would increase the effect on net earnings
by an amount slightly (about 5%) greater than the effect of the previous 1%. For
example, if a 1% change in cost trends in a line of business would change net
earnings by $20 million, a 2% change would change net earnings by approximately
$41 million.

The estimated cumulative adverse impact that a 1% change in cost trends in AFG's
more significant lines of property and casualty business (exceeding 5% of total
reserves) would have on net earnings is shown below (in millions).

                                           Effect of 1%
                                            Change in
Line of business                           Cost Trends
Other liability - occurrence              $         55
Workers' compensation                               66
Other liability - claims made                       20
Commercial auto/truck liability/medical             13


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The judgments and uncertainties surrounding management's reserve estimation
process and the potential for reasonably possible variability in management's
most recent reserve estimates may also be viewed by looking at how recent
historical estimates of reserves have developed. The following table shows
(dollars in millions) what the impact on AFG's net earnings would be on the more
significant lines of business if the December 31, 2021, reserves (net of
reinsurance) developed at the same rate as the average development of the most
recent five years.

                                                           5-yr. Average             Net Reserves (b)           Effect on Net
                                                        Development (a)(b) 

December 31, 2021 Earnings (a)(b)
Other liability – occurrence

                                          4.5  %        $         1,808          $             82
Workers' compensation                                                (5.1  %)                 2,171                      (110)
Other liability - claims made                                        (1.6  %)                   795                       (12)
Commercial auto/truck liability/medical                              (1.6  %)                   619                       (10)


(a)Adverse (favorable), net of tax effect.
(b)Excludes asbestos and environmental liabilities.

The following discussion describes key assumptions and important variables that
affect the estimate of the reserve for loss and LAE of the more significant
lines of business and explains what caused them to change from assumptions used
in the preceding period.

Other Liability - Occurrence

This long-tail line of business consists of coverages protecting the insured
against legal liability resulting from negligence, carelessness, or a failure to
act causing property damage or personal injury to others. Some of the important
variables affecting estimation of loss reserves for other liability - occurrence
include:
•Litigious climate
•Unpredictability of judicial decisions regarding coverage issues
•Magnitude of jury awards
•Outside counsel costs
•Timing of claims reporting

AFG recorded adverse prior year reserve development of $39 million in 2021,
$99 million in 2020 and $143 million in 2019 related to its other liability –
occurrence coverage due primarily to continued claim severity increases in
excess and umbrella liability coverages.

While management applies the actuarial methods discussed in Note N - "Insurance
- Property and Casualty Insurance Reserves" to the financial statements, more
judgment is involved in arriving at the final reserve to be held. For recent
accident years, more weight is given to the Bornhuetter-Ferguson method.

Workers’ Compensation

This long-tail line of business provides coverage to employees who may be
injured in the course of employment. Some of the important variables affecting
estimation of loss reserves for workers' compensation include:
•Legislative actions and regulatory and legal interpretations
•Future medical cost inflation
•Economic conditions
•Frequency of reopening claims previously closed
•Advances in medical equipment and processes
•Pace and intensity of employee rehabilitation
•Changes in the use of pharmaceutical drugs
•Changes in mortality trends for permanently injured workers

Approximately 27% and 23% of AFG’s workers’ compensation reserves at
December 31, 2021 relate to policies written in Florida and California,
respectively.

AFG recorded favorable prior year reserve development of $169 million in 2021
related to its workers' compensation coverage due to lower than anticipated
medical severity. AFG recorded favorable prior year reserve development of
$178 million in 2020 due to lower than anticipated medical claim severity and
improving claim closure rates, particularly in the southeastern United States
and California. AFG recorded favorable prior year reserve development of
$180 million in 2019 due to lower than anticipated frequency of lost-time claims
and medical severity.
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Other Liability – Claims Made

This long-tail line of business consists mostly of directors' and officers'
liability ("D&O"). Some of the important variables affecting estimation of loss
reserves for other liability - claims made include:
•Litigious climate
•Economic conditions
•Variability of stock prices
•Magnitude of jury awards

The general state of the economy and the variability of the stock price of the
insured can affect the frequency and severity of shareholder class action suits
and other situations that trigger coverage under D&O policies. For example, from
2008 to 2010, economic conditions led to higher frequency of claims,
particularly in the D&O policies for small account and not-for-profit
organizations. Since then, claim frequency has decreased from its peak in 2010
and has stabilized to near pre-2008 levels.

AFG recorded favorable prior year reserve development of $2 million in 2021,
$8 million in 2020 and $4 million in 2019 on its D&O business as claim frequency
and severity was less than expected across several prior accident years.

Commercial Auto/Truck Liability/Medical

This line of business is a mix of coverage protecting the insured against legal
liability for property damage or personal injury to others arising from the
operation of commercial motor vehicles. The property damage liability exposure
is usually short-tail with relatively quick reporting and settlement of claims.
The bodily injury and medical payments exposures are longer-tailed; although the
claim reporting is relatively quick, the final settlement can take longer to
achieve. Some of the important variables affecting estimation of loss reserves
for commercial auto/truck liability/medical are similar to other liability -
occurrence and include:
•Magnitude of jury awards
•Unpredictability of judicial decisions regarding coverage issues
•Litigious climate and trends
•Change in frequency of severe accidents
•Health care costs and utilization of medical services by injured parties

AFG recorded adverse prior year reserve development of $7 million in 2021 for
this line of business and favorable prior year reserve development of
$16 million in 2020 and $15 million in 2019. While AFG recorded adverse
development in 2021 and severity trends for this line of business continue to be
elevated, the severity has generally been lower than initially projected in
recent years.

Recoverables from Reinsurers and Availability of Reinsurance  AFG is subject to
credit risk with respect to its reinsurers, as reinsurance contracts do not
relieve AFG of its liability to policyholders. To mitigate this risk,
substantially all reinsurance is ceded to companies rated "A" or better by S&P
or is secured by "funds withheld" or other collateral.

The availability and cost of reinsurance are subject to prevailing market
conditions, which are beyond AFG's control and which may affect AFG's level of
business and profitability. Although the cost of certain reinsurance programs
may increase, management believes that AFG will be able to maintain adequate
reinsurance coverage at acceptable rates without a material adverse effect on
AFG's results of operations. AFG's gross and net combined ratios are shown in
the table below.

See Item 1 - Business - "Property and Casualty Insurance Segment - Reinsurance"
for more information on AFG's reinsurance programs. For additional information
on the effect of reinsurance on AFG's historical results of operations see
Note N - "Insurance - Reinsurance" to the financial statements.

The following table illustrates the effect that purchasing property and casualty
reinsurance has had on AFG’s combined ratio over the last three years.

                                2021         2020         2019
Before reinsurance (gross)     87.4  %      97.1  %      95.6  %
Effect of reinsurance          (0.9  %)     (1.6  %)      0.2  %
Actual (net of reinsurance)    86.5  %      95.5  %      95.8  %



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Asbestos and Environmental-related ("A&E") Insurance Reserves  Asbestos and
environmental reserves of the property and casualty group consisted of the
following (in millions):

                                                   December 31,
                                                 2021        2020
Asbestos                                       $   232      $ 239
Environmental                                      176        183

A&E reserves, net of reinsurance recoverable 408 422
Reinsurance recoverable, net of allowance 147 150
Gross A&E reserves

                             $   555      $ 572



Asbestos reserves include claims asserting alleged injuries and damages from
exposure to asbestos. Environmental reserves include claims relating to polluted
sites.

Asbestos claims against manufacturers, distributors or installers of asbestos
products were presented under the products liability section of their policies,
which typically had aggregate limits that capped an insurer's liability. In
addition, asbestos claims are being presented as "non-products" claims, such as
those by installers of asbestos products and by property owners or operators who
allegedly had asbestos on their property, under the premises or operations
section of their policies. Unlike products exposures, these non-products
exposures typically had no aggregate limits, creating greater exposure for
insurers. Further, in an effort to seek additional insurance coverage, some
insureds with installation activities who have substantially eroded their
products coverage are presenting new asbestos claims as non-products operations
claims or attempting to reclassify previously settled products claims as
non-products claims to restore a portion of previously exhausted products
aggregate limits.

Approximately 42% of AFG's net asbestos reserves relate to policies written
directly by AFG subsidiaries. Claims from these policies generally are
product-oriented claims with only a limited amount of non-products exposures and
are dominated by small to mid-sized commercial entities that are mostly regional
policyholders with few national target defendants. The remainder is assumed
reinsurance business that includes exposures from 1954 to 1983. The asbestos and
environmental assumed claims are ceded by various insurance companies under
reinsurance treaties. A majority of the individual assumed claims have exposures
of less than $100,000 to AFG. Asbestos losses assumed include some of the
industry known manufacturers, distributors and installers. Pollution losses
include industry known insured names and sites.

Establishing reserves for A&E claims relating to policies and participations in
reinsurance treaties and former operations is subject to uncertainties that are
significantly greater than those presented by other types of claims. For this
group of claims, traditional actuarial techniques that rely on historical loss
development trends cannot be used and a range of reasonably possible losses
cannot be estimated. Case reserves and expense reserves are established by the
claims department as specific policies are identified. In addition to the case
reserves established for known claims, management establishes additional
reserves for claims not yet known or reported and for possible development on
known claims. These additional reserves are management's best estimate based on
periodic comprehensive studies and internal reviews adjusted for payments and
identifiable changes, supplemented by management's review of industry
information about such claims, with due consideration to individual claim
situations.

Management believes that estimating the ultimate liability for asbestos claims
presents a unique and difficult challenge to the insurance industry due to,
among other things, 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. Environmental claims likewise present challenges in
prediction, due to uncertainty regarding the interpretation of insurance
policies, complexities regarding multi-party involvements at sites, evolving
cleanup standards and protracted time periods required to assess the level of
cleanup required at contaminated sites.

The following factors could impact AFG's A&E reserves and payments:
•There is interest at the state level to attempt to legislatively address
asbestos liabilities and the manner in which asbestos claims are resolved. These
developments are fluid and could result in piecemeal state-by-state solutions.
•The manner by which bankruptcy courts are addressing asbestos liabilities is in
flux.
•AFG's insureds may make claims alleging significant non-products exposures.

While management believes that AFG's reserves for A&E claims are a reasonable
estimate of ultimate liability for such claims, actual results may vary
materially from the amounts currently recorded due to the difficulty in
predicting the number of future claims, the impact of bankruptcy filings and
unresolved issues such as whether coverage exists, whether
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policies are subject to aggregate limits on coverage, how claims are to be
allocated among triggered policies and implicated years and whether claimants
who exhibit no signs of illness will be successful in pursuing their claims. A
1% variation in loss cost trends, caused by any of the factors previously
described, would change net earnings by approximately $35 million.

AFG tracks its A&E claims by policyholder. The following table shows, by type of
claim, the number of policyholders that did not receive any payments in the
calendar year separate from policyholders that did receive a payment.
Policyholder counts represent policies written by AFG subsidiaries and do not
include assumed reinsurance.

                                                       2021      2020      

2019

Number of policyholders with no indemnity payments:
Asbestos                                               100        97        98
Environmental                                          131       116       113
                                                       231       213       211
Number of policyholders with indemnity payments:
Asbestos                                                45        48        46
Environmental                                           20        22        17
                                                        65        70        63
Total                                                  296       283       274


Amounts paid (net of reinsurance recoveries) for asbestos and environmental
claims, including LAE, were as follows (in millions):

                 2021      2020      2019
Asbestos        $  8      $  8      $ 17
Environmental      6         -        13
Total           $ 14      $  8      $ 30



The survival ratio is a measure often used by industry analysts to compare A&E
reserves' strength among companies. This ratio is typically calculated by
dividing reserves for A&E exposures by the three-year average of paid losses,
and therefore measures the number of years that it would take to pay off current
reserves based on recent average payments. Because this ratio can be
significantly impacted by a number of factors such as loss payout variability,
caution should be exercised in attempting to determine reserve adequacy based
simply on the survival ratio. At December 31, 2021, the property and casualty
insurance segment's three-year survival ratios compare favorably with industry
survival ratios published by A.M. Best (as of December 31, 2020, and adjusted
for several large portfolio transfers) as detailed in the following table:

                                     Property and Casualty Insurance Reserves
                                   Three-Year Survival Ratio (Times Paid Losses)
                           Asbestos                 Environmental               Total A&E
AFG (12/31/2021)            21.9                         26.2                        23.6
Industry (12/31/2020)        8.6                          6.9                         8.2



During the third quarter of 2021, AFG completed an in-depth internal review of
its asbestos and environmental exposures relating to the run-off operations of
its property and casualty insurance segment and its exposures related to former
railroad and manufacturing operations and sites. In addition to its ongoing
internal monitoring of asbestos and environmental exposures, AFG has
periodically conducted comprehensive external studies of its asbestos and
environmental reserves with the aid of specialty actuarial, engineering and
consulting firms and outside counsel, with an in-depth internal review during
the intervening years.

During the 2021 internal review, no new trends were identified and recent claims
activity was generally consistent with AFG's expectations resulting from the
2020 external study. As a result, the 2021 review resulted in no net change to
AFG's property and casualty insurance segment's asbestos and environmental
reserves.

A comprehensive external study of AFG’s A&E reserves was completed in the third
quarter of 2020. As a result of the 2020 external study, AFG’s property and
casualty insurance segment recorded a $47 million pretax special charge to
increase its asbestos reserves by $26 million (net of reinsurance) and its
environmental reserves by $21 million (net of reinsurance).

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Over the past few years, the focus of AFG's asbestos claims litigation has
shifted to smaller companies and companies with ancillary exposures. AFG's
insureds with these exposures have been the driver of the property and casualty
segment's asbestos reserve increases in recent years. AFG is seeing modestly
increasing estimates for indemnity and defense compared to prior studies on
certain specific open claims. The increase in property and casualty
environmental reserves in 2020 was primarily associated with updated estimates
of site investigation and remedial costs with respect to existing sites and its
estimate of future, but as yet unreported, claims. AFG has updated its view of
legal defense costs on open environmental claims as well as a number of claims
and sites where the estimated investigation and remediation costs have
increased.

An in-depth internal review of AFG's A&E reserves was completed in the third
quarter of 2019. As a result of the 2019 internal review, AFG's property and
casualty insurance segment recorded an $18 million pretax special charge to
increase its asbestos reserves by $3 million (net of reinsurance) and its
environmental reserves by $15 million (net of reinsurance). The increase in
property and casualty environmental reserves relates to updated estimates of
site investigation and remedial costs with respect to existing sites and newly
identified sites.

Contingencies related to Subsidiaries' Former Operations  The A&E studies and
reviews discussed above encompassed reserves for various environmental and
occupational injury and disease claims and other contingencies arising out of
the railroad operations disposed of by American Premier's predecessor and
certain manufacturing operations disposed of by American Premier and its
subsidiaries and by Great American Financial Resources, Inc. AFG recorded a
minor charge to increase liabilities for those operations as a result of the
2021 internal review, a pretax special charge of $21 million as a result of the
2020 comprehensive external study and a pretax special charge of $11 million as
a result of the 2019 internal review. For a discussion of the charges recorded
for those operations, see "Results of Operations - Holding Company, Other and
Unallocated." Liabilities for claims and contingencies arising from these former
railroad and manufacturing operations totaled $95 million at December 31, 2021.
For a discussion of the uncertainties in determining the ultimate liability, see
Note M - "Contingencies" to the financial statements.

MANAGED INVESTMENT ENTITIES

Accounting standards require AFG to consolidate its investments in
collateralized loan obligation ("CLO") entities that it manages and owns an
interest in (in the form of debt). See Note A - "Accounting Policies - Managed
Investment Entities" and Note G - "Managed Investment Entities" to the financial
statements. The effect of consolidating these entities is shown in the tables
below (in millions). The "Before CLO Consolidation" columns include AFG's
investment and earnings in the CLOs on an unconsolidated basis.
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                     CONDENSED CONSOLIDATING BALANCE SHEET
                                                                                                           Managed
                                                                                   Before CLO             Investment           Consol.                          Consolidated
                                                                                  Consolidation            Entities            Entries                          As Reported
December 31, 2021
Assets:
Cash and investments                                                            $       15,821          $         -          $     (76)         (*)           $      15,745
Assets of managed investment entities                                                        -                5,296                  -                                5,296
Other assets                                                                             7,890                    -                  -          (*)                   7,890
Total assets                                                                    $       23,711          $     5,296          $     (76)                       $      28,931
Liabilities:
Unpaid losses and loss adjustment expenses and unearned premiums                $       14,115          $         -          $       -                        $      14,115
Liabilities of managed investment entities                                                   -                5,296                (76)         (*)                   5,220
Long-term debt and other liabilities                                                     4,584                    -                  -                                4,584
Total liabilities                                                                       18,699                5,296                (76)                              23,919

Shareholders' equity:
Common Stock and Capital surplus                                                         1,415                    -                  -                                1,415
Retained earnings                                                                        3,478                    -                  -                                3,478
Accumulated other comprehensive income, net of tax                                         119                    -                  -                                  119
Total shareholders' equity                                                               5,012                    -                  -                                5,012

Total liabilities and shareholders' equity                                      $       23,711          $     5,296          $     (76)                       $      28,931

December 31, 2020
Assets:
Cash and investments                                                            $       13,550          $         -          $     (56)         (*)           $      13,494
Assets of managed investment entities                                                        -                4,971                  -                                4,971
Other assets                                                                             7,361                    -                 (1)         (*)                   7,360
Assets of discontinued annuity operations                                               47,885                    -                  -                               47,885
Total assets                                                                    $       68,796          $     4,971          $     (57)                       $      73,710
Liabilities:
Unpaid losses and loss adjustment expenses and unearned premiums                $       13,195          $         -          $       -                        $      13,195
Liabilities of managed investment entities                                                   -                4,971                (57)         (*)                   4,914
Long-term debt and other liabilities                                                     4,354                    -                  -                                4,354
Liabilities of discontinued annuity operations                                          44,458                    -                  -                               44,458
Total liabilities                                                                       62,007                4,971                (57)                              66,921

Shareholders' equity:
Common Stock and Capital surplus                                                         1,367                    -                  -                                1,367
Retained earnings                                                                        4,149                    -                  -                                4,149
Accumulated other comprehensive income, net of tax                                       1,273                    -                  -                                1,273
Total shareholders' equity                                                               6,789                    -                  -                                6,789

Total liabilities and shareholders' equity                                      $       68,796          $     4,971          $     (57)                

$ 73,710

(*)Elimination of the fair value of AFG’s investment in CLOs and related accrued
interest.

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                 CONDENSED CONSOLIDATING STATEMENT OF EARNINGS
                                                                                                                Managed
                                                                                      Before CLO               Investment           Consol.                            Consolidated
                                                                                   Consolidation (a)            Entities            Entries                            As Reported
Three months ended December 31, 2021
Revenues:
Property and casualty insurance net earned premiums                              $            1,452          $         -          $      -                           $       1,452
Net investment income                                                                           212                    -                (3)         (b)                        209

Realized gains (losses) on securities                                                             7                    -                 -                                       7

Income of managed investment entities:
Investment income                                                                                 -                   46                 -                                      46
Gain (loss) on change in fair value of assets/liabilities                                         -                    2                (1)         (b)                          1
Other income                                                                                     47                    -                (4)         (c)                         43
Total revenues                                                                                1,718                   48                (8)                                  1,758
Costs and Expenses:
Insurance benefits and expenses                                                               1,182                    -                 -                                   1,182
Expenses of managed investment entities                                                           -                   47                (7)         (b)(c)                      40
Interest charges on borrowed money and other expenses                                            91                    -                 -                                      91
Total costs and expenses                                                                      1,273                   47                (7)                                  1,313
Earnings from continuing operations before income taxes                                         445                    1                (1)                                    445
Provision for income taxes                                                                       90                    -                 -                                      90

Net earnings from continuing operations, including noncontrolling interests

                     355                    1                (1)                                    355

Less: Net earnings (loss) from continuing operations attributable to
noncontrolling interests

                                                                          -                    -                 -                                       -
Net earnings attributable to shareholders                                        $              355          $         1          $     (1)                          $         355

Three months ended December 31, 2020
Revenues:
Property and casualty insurance net earned premiums                              $            1,325          $         -          $      -                           $       1,325
Net investment income                                                                           153                    -                (6)         (b)                        147
Realized gains (losses) on:
Securities                                                                                      122                    -                 -                                     122
Subsidiaries                                                                                     53                    -                 -                                      53
Income of managed investment entities:
Investment income                                                                                 -                   47                 -                                      47
Gain (loss) on change in fair value of assets/liabilities                                         -                   (1)                2          (b)                          1
Other income                                                                                     22                    -                (4)         (c)                         18
Total revenues                                                                                1,675                   46                (8)                                  1,713
Costs and Expenses:
Insurance benefits and expenses                                                               1,220                    -                 -                                   1,220
Expenses of managed investment entities                                                           -                   46                (8)         (b)(c)                      38
Interest charges on borrowed money and other expenses                                           111                    -                 -                                     111
Total costs and expenses                                                                      1,331                   46                (8)                                  1,369
Earnings from continuing operations before income taxes                                         344                    -                 -                                     344
Provision for income taxes                                                                       77                    -                 -                                      77

Net earnings from continuing operations, including noncontrolling interests

                     267                    -                 -                                     267
Net earnings from discontinued operations                                                       427                    -                 -                                     427

Less: Net earnings (loss) from continuing operations attributable to
noncontrolling interests

                                                                          2                    -                 -                                       2
Net earnings attributable to shareholders                                        $              692          $         -          $      -                           $         692


(a)Includes income of $3 million in the fourth quarter of 2021 and $6 million in
the fourth quarter of 2020, representing the change in fair value of AFG's CLO
investments plus $4 million in both the fourth quarter of 2021 and 2020, in CLO
management fees earned.
(b)Elimination of the change in fair value of AFG's investments in the CLOs,
including $3 million and $4 million in the fourth quarter of 2021 and 2020,
respectively, in distributions recorded as interest expense by the CLOs.
(c)Elimination of management fees earned by AFG.


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           CONDENSED CONSOLIDATING STATEMENT OF EARNINGS - CONTINUED
                                                                                   Before               Managed
                                                                                     CLO               Investment           Consol.                            Consolidated
                                                                                 Consol. (a)            Entities            Entries                            As Reported
Year ended December 31, 2021
Revenues:
Property and casualty insurance net earned premiums                            $      5,404          $         -          $      -                           $       5,404
Net investment income                                                                   750                    -               (20)         (b)                        730
Realized gains (losses) on:
Securities                                                                              110                    -                 -                                     110
Subsidiaries                                                                              4                    -                 -                                       4
Income of managed investment entities:
Investment income                                                                         -                  181                 -                                     181
Gain (loss) on change in fair value of assets/liabilities                                 -                    3                 7          (b)                         10
Other income                                                                            129                    -               (16)         (c)                        113
Total revenues                                                                        6,397                  184               (29)                                  6,552
Costs and Expenses:
Insurance benefits and expenses                                                       4,704                    -                 -                                   4,704
Expenses of managed investment entities                                                   -                  183               (28)         (b)(c)                     155
Interest charges on borrowed money and other expenses                                   358                    -                 -                                     358
Total costs and expenses                                                              5,062                  183               (28)                                  5,217
Earnings from continuing operations before income taxes                               1,335                    1                (1)                                  1,335
Provision for income taxes                                                              254                    -                 -                                     254

Net earnings from continuing operations, including noncontrolling interests

           1,081                    1                (1)                                  1,081
Net earnings from discontinued operations                                               914                    -                 -                                     914

Less: Net earnings (loss) from continuing operations attributable to
noncontrolling interests

                                                                  -                    -                 -                                       -
Net earnings attributable to shareholders                                      $      1,995          $         1          $     (1)                          $       1,995

Year ended December 31, 2020
Revenues:
Property and casualty insurance net earned premiums                            $      5,099          $         -          $      -                           $       5,099
Net investment income                                                                   460                    -                 1          (b)                        461
Realized gains (losses) on:
Securities                                                                              (75)                   -                 -                                     (75)
Subsidiaries                                                                             23                    -                 -                                      23
Income of managed investment entities:
Investment income                                                                         -                  201                 -                                     201
Gain (loss) on change in fair value of assets/liabilities                                 -                  (11)               (9)         (b)                        (20)
Other income                                                                             95                    -               (15)         (c)                         80
Total revenues                                                                        5,602                  190               (23)                                  5,769
Costs and Expenses:
Insurance benefits and expenses                                                       4,896                    -                 -                                   4,896
Expenses of managed investment entities                                                   -                  190               (23)         (b)(c)                     167
Interest charges on borrowed money and other expenses                                   367                    -                 -                                     367
Total costs and expenses                                                              5,263                  190               (23)                                  5,430
Earnings from continuing operations before income taxes                                 339                    -                 -                                     339
Provision for income taxes                                                               25                    -                 -                                      25

Net earnings from continuing operations, including noncontrolling interests

             314                    -                 -                                     314
Net earnings from discontinued operations                                               407                    -                 -                                     407

Less: Net earnings (loss) from continuing operations attributable to
noncontrolling interests

                                                                (11)                   -                 -                                     (11)
Net earnings attributable to shareholders                                      $        732          $         -          $      -                      

$ 732

(a)Includes income of $20 million in 2021 and a loss of $1 million in 2020,
representing the change in fair value of AFG's CLO investments plus $16 million
and $15 million in 2021 and 2020, respectively, in CLO management fees earned.
(b)Elimination of the change in fair value of AFG's investments in the CLOs,
including $12 million and $8 million in 2021 and 2020, respectively, in
distributions recorded as interest expense by the CLOs.
(c)Elimination of management fees earned by AFG.

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           CONDENSED CONSOLIDATING STATEMENT OF EARNINGS - CONTINUED

                                                                                     Before               Managed
                                                                                       CLO               Investment           Consol.                             Consolidated
                                                                                   Consol. (a)            Entities            Entries                             As Reported
Year ended December 31, 2019
Revenues:
Property and casualty insurance net earned premiums                              $      5,185          $         -          $       -                           $       5,185
Net investment income                                                                     533                    -                 (1)         (b)                        532
Realized gains (losses) on securities                                                     155                    -                  -                                     155
Income of managed investment entities:
Investment income                                                                           -                  269                  -                                     269
Gain (loss) on change in fair value of assets/liabilities                                   -                   (8)                (6)         (b)                        (14)
Other income                                                                              101                    -                (15)         (c)                         86
Total revenues                                                                          5,974                  261                (22)                                  6,213
Costs and Expenses:
Insurance benefits and expenses                                                         4,996                    -                  -                                   4,996
Expenses of managed investment entities                                                     -                  261                (22)         (b)(c)                     239
Interest charges on borrowed money and other expenses                                     344                    -                  -                                     344
Total costs and expenses                                                                5,340                  261                (22)                                  5,579
Earnings from continuing operations before income taxes                                   634                    -                  -                                     634
Provision for income taxes                                                                143                    -                  -                                     143

Net earnings from continuing operations, including noncontrolling interests

               491                    -                  -                                     491
Net earnings from discontinued operations                                                 378                    -                  -                                     378

Less: Net earnings (loss) from continuing operations attributable to
noncontrolling interests

                                                                  (28)                   -                  -                                     (28)
Net earnings attributable to shareholders                                        $        897          $         -          $       -                  

$ 897

(a)Includes income of $1 million representing the change in fair value of AFG's
CLO investments plus $15 million in CLO management fees earned.
(b)Elimination of the change in fair value of AFG's investments in the CLOs,
including $7 million in distributions recorded as interest expense by the CLOs.
(c)Elimination of management fees earned by AFG.

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RESULTS OF OPERATIONS

General

AFG's net earnings attributable to shareholders, determined in accordance with
GAAP, include certain items that may not be indicative of its ongoing core
operations. In addition to discontinued 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.

In January 2021, AFG entered into a definitive agreement to sell its Annuity
business to MassMutual. Beginning with the first quarter of 2021 and through the
May 31, 2021 effective date of the sale, the results of its annuity segment and
the run-off life and long-term care operations are reported as discontinued
operations, which included adjusting prior period results to reflect these
operations as discontinued.

AFG recorded $914 million in non-core net earnings from the discontinued annuity
operations in 2021, which includes a $656 million after tax gain on the sale,
compared to $407 million and $378 million in 2020 and 2019, respectively. See
"Discontinued Annuity Operations" below for details of the impact of the
discontinued annuity operations on AFG's net earnings attributable to
shareholders for the fourth quarter of 2020 and years end 2021, 2020 and 2019.

In December 2019, AFG initiated actions to exit the Lloyd's of London insurance
market, which included placing its Lloyd's subsidiaries including its Lloyd's
Managing Agency, Neon Underwriting Ltd., into run-off. Neon and its predecessor,
Marketform, have failed to achieve AFG's profitability objectives since AFG's
purchase of Marketform in 2008. Consistent with the treatment of other items
that are not indicative of AFG's ongoing operations (both favorable and
unfavorable), beginning with the first quarter of 2020, AFG's core net operating
earnings for its property and casualty insurance segment excludes the run-off
operations of Neon ("Neon exited lines"). In December 2020, AFG sold GAI Holding
Bermuda and its subsidiaries, comprising the legal entities that own Neon, to
RiverStone Holdings Limited.

AFG recorded $111 million in non-core losses related to the runoff of the Neon
business in 2020, which included a $23 million gain on the sale of the business.
In conjunction with the sale, AFG recognized a tax benefit of $72 million,
resulting in a net $39 million non-core after-tax loss from the Neon exited
lines in 2020. In 2021, AFG recognized a non-core after tax gain of $3 million
related to contingent consideration received from the sale of Neon.

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The following table (in millions, except per share amounts) identifies non-core
items and reconciles net earnings attributable to shareholders to core net
operating earnings, a non-GAAP financial measure. AFG believes core net
operating earnings is a useful tool for investors and analysts in analyzing
ongoing operating trends and for management to evaluate financial performance
against historical results because it believes this provides a more comparable
measure of its continuing business.
                                         Three months ended December 31,                    Year ended December 31,
                                             2021               2020                 2021                2020             2019
Components of net earnings attributable
to shareholders:
Core operating earnings before income
taxes                                    $      438          $    227          $    1,232             $   609          $   589
Pretax non-core items:
Realized gains (losses) on securities             7               122                 110                 (75)             155
Special A&E charges                               -                 -                   -                 (68)             (29)
Neon exited lines (*)                             -                 -                   4                (122)             (76)
Loss on retirement of debt                        -                (5)                  -                  (5)              (5)
Other                                             -                 -                 (11)                  -                -
Earnings before income taxes                    445               344               1,335                 339              634
Provision for income taxes:
Core operating earnings                          87                52                 239                 128              117
Non-core items:
Realized gains (losses) on securities             3                25                  23                 (16)              33
Special A&E charges                               -                 -                   -                 (14)              (6)
Neon exited lines (*)                             -                 1                   1                 (72)               -
Loss on retirement of debt                        -                (1)                  -                  (1)              (1)
Other                                             -                 -                  (9)                  -                -
Total provision for income taxes                 90                77                 254                  25              143
Net earnings from continuing operations,
including noncontrolling interests              355               267               1,081                 314              491
Net earnings from discontinued
operations                                        -               427                 914                 407              378
Less net earnings (loss) attributable to
noncontrolling interests:
Core operating earnings                           -                 -                   -                   -              (10)
Neon exited lines (*)                             -                 2                   -                 (11)             (18)
Total net earnings (loss) attributable
to noncontrolling interests                       -                 2                   -                 (11)             (28)
Net earnings attributable to
shareholders                             $      355          $    692          $    1,995             $   732          $   897

Net earnings:
Core net operating earnings              $      351          $    175          $      993             $   481          $   482
Realized gains (losses) on securities             4                97                  87                 (59)             122
Special A&E charges                               -                 -                   -                 (54)             (23)
Neon exited lines (*)                             -                (3)                  3                 (39)             (58)
Loss on retirement of debt                        -                (4)                  -                  (4)              (4)
Other                                             -                 -                  (2)                  -                -
Net earnings from continuing operations         355               265               1,081                 325              519
Discontinued annuity operations                   -               427                 914                 407              378
Net earnings attributable to
shareholders                             $      355          $    692          $    1,995             $   732          $   897

Diluted per share amounts:
Core net operating earnings              $     4.12          $   2.01          $    11.59             $  5.40          $  5.29
Realized gains (losses) on securities          0.06              1.10                1.01               (0.67)            1.34
Special A&E charges                               -                 -                   -               (0.61)           (0.25)
Neon exited lines (*)                             -             (0.04)               0.04               (0.45)           (0.64)
Loss on retirement of debt                        -             (0.04)                  -               (0.04)           (0.04)
Other                                             -                 -               (0.02)                  -                -
Diluted per share amounts, continuing
operations                                     4.18              3.03               12.62                3.63             5.70
Discontinued annuity operations                   -              4.90               10.68                4.57             4.15
Net earnings attributable to
shareholders                             $     4.18          $   7.93          $    23.30             $  8.20          $  9.85


(*)As discussed above, the Neon run-off operations are considered property and
casualty insurance non-core earnings (losses). In 2021, AFG recognized a
non-core after tax gain of $3 million related to contingent consideration
received from the sale of Neon.

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AFG reported net earnings attributable to shareholders of $355 million in the
fourth quarter of 2021 compared to $692 million in the fourth quarter of 2020
reflecting higher core net operating earnings, the impact of a loss on
retirement of debt in the fourth quarter of 2020, lower net realized gains on
securities in the fourth quarter of 2021 compared to the fourth quarter of 2020
and net earnings from the discontinued annuity operations in the fourth quarter
of 2020. Core net operating earnings for the fourth quarter of 2021 increased
$176 million compared to the fourth quarter of 2020 reflecting higher
underwriting profit, higher net investment income and income from the sale of
real estate in the fourth quarter of 2021.

Net earnings attributable to shareholders were $2.00 billion for the full-year
of 2021 compared to $732 million in 2020 reflecting higher core net operating
earnings, net realized gains on securities in 2021 compared to net realized
losses in 2020, the impact of special A&E charges and non-core losses from the
Neon exited lines in 2020 and higher net earnings from the discontinued annuity
operations in 2021 (through the sale date) compared to 2020. The discontinued
annuity operations includes an after-tax gain from the sale of the annuity
subsidiaries of $656 million in 2021. Core net operating earnings increased
$512 million in 2021 compared to 2020 reflecting higher underwriting profit,
higher net investment income and income from the sale of real estate in the
fourth quarter of 2021, partially offset by higher interest charges on borrowed
money and higher holding company expenses. Realized gains (losses) on securities
in 2021 and 2020 resulted primarily from the change in fair value of equity
securities that were still held at the balance sheet date.

Net earnings attributable to shareholders decreased $165 million for the
full-year of 2020 compared to the same period in 2019 due primarily to net
realized losses on securities in 2020 compared to net realized gains in 2019 and
higher special A&E charges in 2020 compared to 2019, partially offset by higher
earnings from the discontinued annuity operations and lower losses from the Neon
exited lines in 2020 compared to 2019. Core net operating earnings decreased
$1 million in 2020 compared to 2019 reflecting higher interest charges on
borrowed money and lower investment income due to lower market interest rates,
lower dividend income and the negative impact of the COVID-19 pandemic on
partnerships and similar investments and AFG-managed CLOs, partially offset by
higher underwriting profit and lower holding company expenses.

RESULTS OF OPERATIONS – QUARTERS ENDED DECEMBER 31, 2021 AND 2020

Segmented Statement of Earnings
Subsequent to the agreement to sell the Annuity subsidiaries, AFG reports its
continuing 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").
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AFG's net earnings attributable to shareholders, determined in accordance with
GAAP, include certain items that may not be indicative of its ongoing core
operations. The following tables for the three months ended December 31, 2021
and 2020 identify such items by segment and reconcile net earnings attributable
to shareholders 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
                                                                                                                                    Holding Co., other
                                                                              P&C             Annuity          Consol. MIEs           and unallocated           Total            Non-core reclass           GAAP Total
Three months ended December 31, 2021
Revenues:
Property and casualty insurance net earned premiums                        $ 1,452          $      -          $          -          $              -          $ 1,452          $               -          $     1,452
Net investment income                                                          196                 -                    (3)                       16              209                          -                  209

Realized gains (losses) on securities                                            -                 -                     -                         -                -                          7                    7

Income of MIEs:
Investment income                                                                -                 -                    46                         -               46                          -                   46
Gain (loss) on change in fair value of assets/liabilities                        -                 -                     1                         -                1                          -                    1
Other income                                                                    18                 -                    (4)                       29               43                          -                   43
Total revenues                                                               1,666                 -                    40                        45            1,751                          7                1,758

Costs and Expenses:
Property and casualty insurance:
Losses and loss adjustment expenses                                            822                 -                     -                         -              822                          -                  822
Commissions and other underwriting expenses                                    351                 -                     -                         9              360                          -                  360
Interest charges on borrowed money                                               -                 -                     -                        23               23                          -                   23
Expenses of MIEs                                                                 -                 -                    40                         -               40                          -                   40
Other expenses                                                                   8                 -                     -                        60               68                          -                   68
Total costs and expenses                                                     1,181                 -                    40                        92            1,313                          -                1,313
Earnings (loss) from continuing operations before income taxes                 485                 -                     -                       (47)             438                          7                  445
Provision (credit) for income taxes                                            102                 -                     -                       (15)              87                          3                   90

Net earnings from continuing operations, including noncontrolling
interests

                                                                      383                 -                     -                       (32)             351                          4                  355
Less: Net earnings (loss) from continuing operations attributable to
noncontrolling interests                                                         -                 -                     -                         -                -                          -                    -
Core Net Operating Earnings                                                    383                 -                     -                       (32)             351

Non-core earnings attributable to shareholders (a):
Realized gains (losses) on securities, net of tax

     -                 -                     -                         4                4                         (4)                   -

Net Earnings Attributable to Shareholders                                  $   383          $      -          $          -          $            (28)         $   355          $               -          $       355


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                                                                                                                 Other
                                                                                                                                 Holding Co.,
                                                                                                                                   other and                                                       Neon exited
                                                                          P&C             Annuity          Consol. MIEs           unallocated           Total            Non-core reclass           lines (b)            GAAP Total
Three months ended December 31, 2020
Revenues:
Property and casualty insurance net earned premiums                    $ 1,299          $      -          $          -          $          -          $ 1,299          $               -          $        26          $     1,325
Net investment income                                                      122                20                    (6)                   11              147                          -                    -                  147
Realized gains (losses) on:
Securities                                                                   -                 -                     -                     -                -                        122                    -                  122
Subsidiaries                                                                 -                 -                     -                     -                -                          -                   53                   53
Income of MIEs:
Investment income                                                            -                 -                    47                     -               47                          -                    -                   47
Gain (loss) on change in fair value of assets/liabilities                    -                 -                     1                     -                1                          -                    -                    1
Other income                                                                 -                 -                    (4)                   22               18                          -                    -                   18
Total revenues                                                           1,421                20                    38                    33            1,512                        122                   79                1,713

Costs and Expenses:
Property and casualty insurance:
Losses and loss adjustment expenses                                        778                 -                     -                     -              778                          -                   52                  830
Commissions and other underwriting expenses                                358                 -                     -                     5              363                          -                   27                  390
Interest charges on borrowed money                                           -                 -                     -                    24               24                          -                    -                   24
Expenses of MIEs                                                             -                 -                    38                     -               38                          -                    -                   38
Other expenses                                                              11                11                     -                    60               82                          5                    -                   87
Total costs and expenses                                                 1,147                11                    38                    89            1,285                          5                   79                1,369
Earnings (loss) from continuing operations before income taxes             274                 9                     -                   (56)             227                        117                    -                  344
Provision (credit) for income taxes                                         58                 2                     -                    (8)              52                         24                    1                   77

Net earnings from continuing operations, including noncontrolling
interests

                                                                  216                 7                     -                   (48)             175                         93                   (1)                 267
Less: Net earnings (loss) from continuing operations attributable to
noncontrolling interests                                                     -                 -                     -                     -                -                          -                    2                    2
Core Net Operating Earnings                                                216                 7                     -                   (48)             175

Non-core earnings (loss) attributable to shareholders (a):
Realized gains (losses) on securities, net of tax

                            -                 -                     -                    97               97                        (97)                   -                    -
Discontinued operations, net of tax                                          -               429                     -                    (2)             427                          -                    -                  427
Neon exited lines (b)                                                       (3)                -                     -                     -               (3)                         -                    3                    -
Loss on retirement of debt, net of tax                                       -                 -                     -                    (4)              (4)                         4                    -                    -
Net Earnings Attributable to Shareholders                              $   213          $    436          $          -          $         43          $   692          $               -          $         -          $       692


(a)See the reconciliation of core earnings to GAAP net earnings under "Results
of Operations - General" for details on the tax and noncontrolling interest
impacts of these reconciling items.
(b)As discussed under "Results of Operations - General," the Neon run-off
operations are considered property and casualty insurance non-core earnings
(losses).

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 $485 million in
GAAP and core pretax earnings in the fourth quarter of 2021 compared to
$274 million in the fourth quarter of 2020, an increase of $211 million (77%).
The increase in GAAP and core pretax earnings reflects higher underwriting
profit and significantly higher net investment income in the fourth quarter of
2021 compared to the fourth quarter of 2020 and income for the sale of real
estate in the fourth quarter of 2021. Improved results from alternative
investments (partnerships and similar investments and AFG-managed CLOs) were
partially offset by lower other net investment income, due primarily to lower
market interest rates.
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The following table details AFG's GAAP and core earnings before income taxes
from its property and casualty insurance operations for the three months ended
December 31, 2021 and 2020 (dollars in millions):
                                                          Three months 

ended December 31,

                                                             2021                 2020             % Change
Gross written premiums                                   $    1,737          $     1,707                2  %
Reinsurance premiums ceded                                     (467)                (491)              (5  %)
Net written premiums                                          1,270                1,216                4  %
Change in unearned premiums                                     182                   83              119  %
Net earned premiums                                           1,452                1,299               12  %
Loss and loss adjustment expenses                               822                  778                6  %
Commissions and other underwriting expenses                     351                  358               (2  %)
Core underwriting gain                                          279                  163               71  %

Net investment income                                           196                  122               61  %
Other income and expenses, net                                   10                  (11)            (191  %)
Core earnings before income taxes                               485                  274               77  %
Pretax non-core Neon exited lines (*)                             -                    -                -  %

GAAP earnings before income taxes and noncontrolling
interests

                                                $      485          $       274               77  %
(*)In December 2019, AFG initiated actions to exit the Lloyd's of London insurance market, which included
placing its Lloyd's subsidiaries including its Lloyd's Managing Agency, Neon Underwriting Ltd. ("Neon"), into
run-off. As discussed under "Results of Operations - General," following the December 2019 decision to exit
the Lloyd's of London insurance market, the results from the Neon exited lines are treated as non-core
earnings (losses). Each line item in the table above has been adjusted to remove the impact from the Neon
run-off operations in 2020. The following table details the impact of the Neon exited lines to each component
of earnings (loss) before income taxes in the property and casualty insurance operations for the three months
ended December 31, 2020 (in millions):

                                                                 Three 

months ended December 31, 2020

                                                           Excluding
                                                             Neon                 Neon
                                                         exited lines         exited lines           Total
Gross written premiums                                   $    1,707          $        14          $ 1,721
Reinsurance premiums ceded                                     (491)                  (1)            (492)
Net written premiums                                          1,216                   13            1,229
Change in unearned premiums                                      83                   13               96
Net earned premiums                                           1,299                   26            1,325
Loss and loss adjustment expenses                               778                   52              830
Commissions and other underwriting expenses                     358                   27              385
Underwriting gain (loss)                                        163                  (53)             110

Net investment income                                           122                    -              122
Gain on sale of subsidiaries                                      -                   53               53
Other income and expenses, net                                  (11)                   -              (11)
Earnings before income taxes and noncontrolling
interests                                                $      274          $         -          $   274

                                                          Three months ended December 31,
Combined Ratios:                                             2021                 2020              Change
Specialty lines
Loss and LAE ratio                                             56.5  %              58.6  %          (2.1  %)
Underwriting expense ratio                                     24.2  %              27.6  %          (3.4  %)
Combined ratio                                                 80.7  %      

86.2 % (5.5 %)

Aggregate - including exited lines
Loss and LAE ratio                                             56.6  %              62.6  %          (6.0  %)
Underwriting expense ratio                                     24.2  %              29.0  %          (4.8  %)
Combined ratio                                                 80.8  %              91.6  %         (10.8  %)



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Starting in 1986, AFG's statutory combined ratio has been better than the U.S.
industry average for 34 of the 36 years. Management believes that AFG's
insurance operations have performed better than the industry as a result of its
specialty niche focus, product line diversification, stringent underwriting
discipline and alignment of compensation incentives.

AFG reports the underwriting performance of its Specialty property and casualty
insurance business in the following sub-segments: (i) Property and
transportation, (ii) Specialty casualty and (iii) Specialty financial.

To understand the overall profitability of particular lines, the timing of
claims payments and the related impact of investment income must be considered.
Certain "short-tail" lines of business (primarily property coverages) generally
have quick loss payouts, which reduce the time funds are held, thereby limiting
investment income earned thereon. In contrast, "long-tail" lines of business
(primarily liability coverages and workers' compensation) generally have payouts
that are either structured over many years or take many years to settle, thereby
significantly increasing investment income earned on related premiums received.

Gross Written Premiums
Gross written premiums ("GWP") for AFG's property and casualty insurance segment
were $1.74 billion for the fourth quarter of 2021 compared to $1.72 billion for
the fourth quarter of 2020, an increase of $16 million (1%). Detail of AFG's
property and casualty gross written premiums is shown below (dollars in
millions):

                                                                     Three months ended December 31,
                                                                  2021                              2020
                                                           GWP               %              GWP               %              % Change
Property and transportation                            $    558              32  %       $   647              38  %               (14  %)
Specialty casualty                                          968              56  %           865              50  %                12  %
Specialty financial                                         211              12  %           195              11  %                 8  %
Total specialty                                           1,737             100  %         1,707              99  %                 2  %
Neon exited lines                                             -               -  %            14               1  %              (100  %)
Aggregate                                              $  1,737             100  %       $ 1,721             100  %                 1  %



Reinsurance Premiums Ceded
Reinsurance premiums ceded ("Ceded") for AFG's property and casualty insurance
segment were 27% of gross written premiums for the fourth quarter of 2021
compared to 29% of gross written premiums for the fourth quarter of 2020, a
decrease of 2 percentage points. Detail of AFG's property and casualty
reinsurance premiums ceded is shown below (dollars in millions):

                                                                           

Three months ended December 31,

                                                                     2021                                    2020                        Change in
                                                         Ceded              % of GWP             Ceded             % of GWP               % of GWP
Property and transportation                           $    (141)                   25  %       $  (207)                   32  %                 (7  %)
Specialty casualty                                         (340)                   35  %          (300)                   35  %                  -  %
Specialty financial                                         (38)                   18  %           (32)                   16  %                  2  %
Other specialty                                              52                                     48
Total specialty                                            (467)                   27  %          (491)                   29  %                 (2  %)
Neon exited lines                                             -                     -  %            (1)                    7  %                 (7  %)
Aggregate                                             $    (467)                   27  %       $  (492)                   29  %                 (2  %)



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Net Written Premiums
Net written premiums ("NWP") for AFG's property and casualty insurance segment
were $1.27 billion for the fourth quarter of 2021 compared to $1.23 billion for
the fourth quarter of 2020, an increase of $41 million (3%). Detail of AFG's
property and casualty net written premiums is shown below (dollars in millions):

                                                                     Three months ended December 31,
                                                                  2021                              2020
                                                           NWP               %              NWP               %              % Change
Property and transportation                            $    417              33  %       $   440              36  %                (5  %)
Specialty casualty                                          628              49  %           565              46  %                11  %
Specialty financial                                         173              14  %           163              13  %                 6  %
Other specialty                                              52               4  %            48               4  %                 8  %
Total specialty                                           1,270             100  %         1,216              99  %                 4  %
Neon exited lines                                             -               -  %            13               1  %              (100  %)
Aggregate                                              $  1,270             100  %       $ 1,229             100  %                 3  %



Net Earned Premiums
Net earned premiums ("NEP") for AFG's property and casualty insurance segment
were $1.45 billion for the fourth quarter of 2021 compared to $1.33 billion for
the fourth quarter of 2020, an increase of $127 million (10%). Detail of AFG's
property and casualty net earned premiums is shown below (dollars in millions):

                                                                     Three months ended December 31,
                                                                  2021                              2020
                                                           NEP               %              NEP               %              % Change
Property and transportation                            $    597              41  %       $   521              39  %                15  %
Specialty casualty                                          636              44  %           572              43  %                11  %
Specialty financial                                         165              11  %           158              12  %                 4  %
Other specialty                                              54               4  %            48               4  %                13  %
Total specialty                                           1,452             100  %         1,299              98  %                12  %
Neon exited lines                                             -               -  %            26               2  %              (100  %)
Aggregate                                              $  1,452             100  %       $ 1,325             100  %                10  %



The $16 million (1%) increase in gross written premiums in the fourth quarter of
2021 compared to the fourth quarter of 2020 reflects an increase in the
Specialty casualty and Specialty financial sub-segments, partially offset by a
decrease in the Property and transportation sub-segment. Overall average renewal
rates increased approximately 7% in the fourth quarter of 2021.

Property and transportation Gross written premiums decreased $89 million (14%)
in the fourth quarter of 2021 compared to the fourth quarter of 2020. This
decrease was due primarily to the timing of premium in the crop business and the
timing of the renewal of a large account in the transportation business. Average
renewal rates increased 6% for this group in the fourth quarter of 2021.
Reinsurance premiums ceded as a percentage of gross written premiums decreased
7 percentage points for the fourth quarter of 2021 compared to the fourth
quarter of 2020 reflecting lower cessions in the crop insurance operations,
partially offset by higher cessions in the transportation businesses.

Specialty casualty Gross written premiums increased $103 million (12%) in the
fourth quarter of 2021 compared to the fourth quarter of 2020. Significant
renewal rate increases and increased exposures contributed to higher premiums in
the excess liability and excess and surplus businesses. The mergers and
acquisitions liability and executive liability businesses also contributed
meaningfully to the year-over-year growth. Average renewal rates for this group
increased approximately 7% in the fourth quarter of 2021. Excluding rate
decreases in the workers' compensation business, renewal rates for this group
increased approximately 11%. Reinsurance premiums ceded as a percentage of gross
written premiums were comparable in the fourth quarter of 2021 and the fourth
quarter of 2020.

Specialty financial Gross written premiums increased $16 million (8%) in the
fourth quarter of 2021 compared to the fourth quarter of 2020 due primarily to
the favorable impact of economic recovery in the surety business and strong rate
increases and new business opportunities in the fidelity business. Average
renewal rates for this group increased approximately 7% in the fourth quarter of
2021. Reinsurance premiums ceded as a percentage of gross written premiums
increased 2 percentage points in the fourth quarter of 2021 compared to the
fourth quarter of 2020 reflecting higher cessions in the innovative markets
business.

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Other specialty The amounts shown as reinsurance premiums ceded represent
business assumed by AFG's internal reinsurance program from the operations that
make up AFG's other Specialty property and casualty insurance sub-segments.
Reinsurance premiums assumed increased $4 million (8%) in the fourth quarter of
2021 compared to the fourth quarter of 2020 reflecting an increase in premiums
retained, primarily from businesses in the Specialty casualty sub-segment.

Combined Ratio
Performance measures such as the combined ratio are often used by property and
casualty insurers to help users of their financial statements better understand
the company's performance. The combined ratio is the sum of the loss and loss
adjustment expenses ("LAE") and underwriting expense ratios. These ratios are
calculated by dividing each of the respective expenses by net earned premiums.
The table below (dollars in millions) details the components of the combined
ratio for AFG's property and casualty insurance segment:

                                         Three months ended December 31,                                      Three months ended December 31,
                                           2021                    2020                 Change                    2021                   2020
Property and transportation
Loss and LAE ratio                             66.0  %                63.3  %               2.7  %
Underwriting expense ratio                     14.5  %                22.5  %              (8.0  %)
Combined ratio                                 80.5  %                85.8  %              (5.3  %)
Underwriting profit                                                                                       $             116          $      74

Specialty casualty
Loss and LAE ratio                             53.5  %                59.0  %              (5.5  %)
Underwriting expense ratio                     24.5  %                25.0  %              (0.5  %)
Combined ratio                                 78.0  %                84.0  %              (6.0  %)
Underwriting profit                                                                                       $             140          $      91

Specialty financial
Loss and LAE ratio                             31.7  %                35.6  %              (3.9  %)
Underwriting expense ratio                     53.8  %                51.2  %               2.6  %
Combined ratio                                 85.5  %                86.8  %              (1.3  %)
Underwriting profit                                                                                       $              24          $      20

Total Specialty
Loss and LAE ratio                             56.5  %                58.6  %              (2.1  %)
Underwriting expense ratio                     24.2  %                27.6  %              (3.4  %)
Combined ratio                                 80.7  %                86.2  %              (5.5  %)
Underwriting profit                                                                                       $             281          $     179

Aggregate - including exited lines
Loss and LAE ratio                             56.6  %                62.6  %              (6.0  %)
Underwriting expense ratio                     24.2  %                29.0  %              (4.8  %)
Combined ratio                                 80.8  %                91.6  %             (10.8  %)
Underwriting profit                                                                                       $             279          $     110



The Specialty property and casualty insurance operations generated an
underwriting profit of $281 million for the fourth quarter of 2021 compared to
$179 million in the fourth quarter of 2020, an increase of $102 million (57%).
The higher underwriting profit in the fourth quarter of 2021 reflects higher
underwriting profits in each of the Specialty property and casualty
sub-segments. Overall catastrophe losses were $25 million (1.8 points on the
combined ratio) in the fourth quarter of 2021 compared to catastrophe losses of
$20 million (1.5 points) and related net reinstatement premium recoveries of
$3 million in the fourth quarter of 2020.

Property and transportation Underwriting profit for this group was $116 million
for the fourth quarter of 2021 compared to $74 million in the fourth quarter of
2020, an increase of $42 million (57%). Higher underwriting profitability in the
crop operations more than offset lower underwriting profits in the
transportation businesses. Catastrophe losses for this group were $15 million
(2.5 points on the combined ratio) in the fourth quarter of 2021 compared to
$6 million (1.2 points) in the fourth quarter of 2020.

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Specialty casualty Underwriting profit for this group was $140 million for the
fourth quarter of 2021 compared to $91 million in the fourth quarter of 2020, an
increase of $49 million (54%). This increase reflects higher underwriting
profitability in the workers' compensation, excess liability, excess and
surplus, targeted markets and executive liability businesses in the fourth
quarter of 2021 compared to the fourth quarter of 2020. Catastrophe losses were
$3 million (0.6 points on the combined ratio) in the fourth quarter of 2021
compared to catastrophe losses of $5 million (0.8 points) and related net
reinstatement premium recoveries of $3 million in the fourth quarter of 2020.

Specialty financial Underwriting profit for this group was $24 million for the
fourth quarter of 2021 compared to $20 million in the fourth quarter of 2020, an
increase of $4 million (20%). This increase reflects higher underwriting
profitability in the trade credit, surety and fidelity businesses. Catastrophe
losses were $6 million (3.7 points on the combined ratio) in the fourth quarter
of 2021 compared to $7 million (4.5 points) in the fourth quarter of 2020.

Other specialty This group reported an underwriting profit of $1 million for the
fourth quarter of 2021 compared to an underwriting loss of $6 million in the
fourth quarter of 2020, a change of $7 million (117%), reflecting lower losses
in the business assumed by AFG's internal reinsurance program from the
operations that make up AFG's other Specialty sub-segments in the fourth quarter
of 2021 compared to the fourth quarter of 2020.

Neon exited lines In December 2019, AFG initiated actions to exit the Lloyd's of
London insurance market, which included placing its Lloyd's subsidiaries
including its Lloyd's Managing Agency, Neon Underwriting Ltd., into run-off. In
December 2020, AFG completed the sale of GAI Holding Bermuda and its
subsidiaries, comprising the legal entities that own Neon. AFG recorded
$53 million in non-core underwriting losses (including $8 million of net adverse
prior year reserve development) related to this business in the fourth quarter
of 2020. These losses were offset by a $53 million gain on the sale of Neon
recorded in the fourth quarter of 2020.

Consistent with the treatment of other items that are not indicative of AFG's
ongoing operations (both favorable and unfavorable), the $53 million
underwriting loss at Neon and offsetting gain on sale in the fourth quarter of
2020 are treated as non-core.

Aggregate Aggregate underwriting results for AFG's property and casualty
insurance segment include an underwriting loss of $53 million at Neon in the
fourth quarter of 2020, due primarily to catastrophe losses and several large
claims. Aggregate underwriting results for AFG's property and casualty insurance
segment also include adverse prior year reserve development of $2 million in the
fourth quarter of 2021 and $16 million in the fourth quarter of 2020 related to
business outside of the Specialty group that AFG no longer writes.

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Losses and Loss Adjustment Expenses
AFG's overall loss and LAE ratio was 56.6% for the fourth quarter of 2021
compared to 62.6% for fourth quarter of 2020, a decrease of 6.0 percentage
points. The components of AFG's property and casualty losses and LAE amounts and
ratio are detailed below (dollars in millions):

                                                                     Three 

months ended December 31,

                                                              Amount                                 Ratio                        Change in
                                                       2021               2020             2021                2020                 Ratio
Property and transportation
Current year, excluding COVID-19 related and
catastrophe losses                                $        381          $ 352               63.9  %             67.5  %                (3.6  %)
Prior accident years development                            (2)           (29)              (0.4  %)            (5.6  %)                5.2  %
Current year COVID-19 related losses                         -              -                  -  %              0.2  %                (0.2  %)
Current year catastrophe losses                             15              6                2.5  %              1.2  %                 1.3  %
Property and transportation losses and LAE and
ratio                                             $        394          $ 329               66.0  %             63.3  %                 2.7  %

Specialty casualty
Current year, excluding COVID-19 related and
catastrophe losses                                $        391          $ 336               61.3  %             59.0  %                 2.3  %
Prior accident years development                           (55)            (6)              (8.6  %)            (1.1  %)               (7.5  %)
Current year COVID-19 related losses                         1              2                0.2  %              0.3  %                (0.1  %)
Current year catastrophe losses                              3              5                0.6  %              0.8  %                (0.2  %)

Specialty casualty losses and LAE and ratio $ 340 $ 337

               53.5  %             59.0  %                (5.5  %)

Specialty financial
Current year, excluding COVID-19 related and
catastrophe losses                                $         58          $  58               35.5  %             36.5  %                (1.0  %)
Prior accident years development                           (13)            (6)              (8.2  %)            (3.6  %)               (4.6  %)
Current year COVID-19 related losses                         1             (3)               0.7  %             (1.8  %)                2.5  %
Current year catastrophe losses                              6              7                3.7  %              4.5  %                (0.8  %)

Specialty financial losses and LAE and ratio $ 52 $ 56

               31.7  %             35.6  %                (3.9  %)

Total Specialty
Current year, excluding COVID-19 related and
catastrophe losses                                $        866          $ 774               59.5  %             59.5  %                   -  %
Prior accident years development                           (73)           (32)              (5.0  %)            (2.4  %)               (2.6  %)
Current year COVID-19 related losses                         2              -                0.2  %                -  %                 0.2  %
Current year catastrophe losses                             25             20                1.8  %              1.5  %                 0.3  %

Total Specialty losses and LAE and ratio $ 820 $ 762

               56.5  %             58.6  %                (2.1  %)

Aggregate - including exited lines
Current year, excluding COVID-19 related and
catastrophe losses                                $        866          $ 797               59.6  %             60.1  %                (0.5  %)
Prior accident years development                           (71)            (8)              (5.0  %)            (0.6  %)               (4.4  %)
Current year COVID-19 related losses                         2              -                0.2  %                -  %                 0.2  %
Current year catastrophe losses                             25             41                1.8  %              3.1  %                (1.3  %)
Aggregate losses and LAE and ratio                $        822          $ 830               56.6  %             62.6  %                (6.0  %)



Current accident year losses and LAE, excluding COVID-19 related and catastrophe
losses
The current accident year loss and LAE ratio, excluding COVID-19 related and
catastrophe losses for AFG's Specialty property and casualty insurance
operations was 59.5% for both the fourth quarter of 2021 and the fourth quarter
of 2020.

Property and transportation The 3.6 percentage points decrease in the loss and
LAE ratio for the current year, excluding COVID-19 related and catastrophe
losses reflects a decrease in the loss and LAE ratio in the crop operations.

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Specialty casualty  The 2.3 percentage points increase in the loss and LAE ratio
for the current year, excluding COVID-19 related and catastrophe losses reflects
an increase in the loss and LAE ratios of the targeted markets and general
liability businesses.

Specialty financial The 1.0 percentage points decrease in the loss and LAE
ratio for the current year, excluding COVID-19 related and catastrophe losses
reflects a decrease in the loss and LAE ratio of the fidelity business,
partially offset by an increase in the loss and LAE ratio of the surety,
equipment leasing and trade credit businesses.

Net prior year reserve development
AFG's Specialty property and casualty insurance operations recorded net
favorable reserve development related to prior accident years of $73 million in
the fourth quarter of 2021 compared to $32 million in the fourth quarter of
2020, an increase of $41 million (128%).

Property and transportation  Net favorable reserve development of $2 million in
the fourth quarter of 2021 reflects lower than expected claim frequency in the
aviation business and lower than anticipated claim severity in the ocean marine
business, partially offset by higher than expected claim severity in the
property and inland marine business. Net favorable reserve development of
$29 million in the fourth quarter of 2020 reflects lower than anticipated claim
frequency and severity in the aviation, transportation and agricultural
businesses.

Specialty casualty  Net favorable reserve development of $55 million in the
fourth quarter of 2021 reflects lower than anticipated claim severity in the
workers' compensation businesses. Net favorable reserve development of
$6 million in the fourth quarter of 2020 reflects lower than anticipated claim
severity in the workers' compensation businesses, partially offset by higher
than expected claim severity in general liability contractor claims and the
public sector and excess liability businesses.

Specialty financial  Net favorable reserve development of $13 million in the
fourth quarter of 2021 reflects lower than anticipated claim frequency in the
surety and trade credit businesses. Net favorable reserve development of
$6 million in the fourth quarter of 2020 reflects lower than anticipated claim
frequency and severity in the fidelity and surety businesses and lower than
expected claim severity in the financial institutions business.

Other specialty In addition to the development discussed above, total Specialty
prior year reserve development includes net favorable reserve development of
$3 million in the fourth quarter of 2021 and net adverse reserve development of
$9 million in the fourth quarter of 2020, which includes adverse reserve
development of $11 million in the fourth quarter of 2020 associated with AFG's
internal reinsurance program. Both periods include the amortization of deferred
gains on the retroactive reinsurance transactions entered into in connection
with the sale of businesses in 1998 and 2001.

Aggregate Aggregate net prior accident years reserve development for AFG's
property and casualty insurance segment for the fourth quarter of 2021 and 2020
includes net adverse reserve development of $8 million in the fourth quarter of
2020 related to Neon exited lines discussed above under "Neon exited lines."
Aggregate net prior accident years reserve development for AFG's property and
casualty insurance segment also includes net adverse reserve development of
$2 million in the fourth quarter of 2021 and $16 million in the fourth quarter
of 2020 related to business outside the Specialty group that AFG no longer
writes.

Catastrophe losses
AFG generally seeks to reduce its exposure to catastrophes through individual
risk selection, including minimizing coastal and known fault-line exposures, and
the purchase of reinsurance. Based on data available at December 31, 2021, AFG's
exposure to a catastrophic earthquake or windstorm that industry models indicate
should statistically occur once in every 100, 250 or 500 years as a percentage
of AFG's Shareholders' Equity is shown below:

                          Approximate impact of modeled loss
    Industry Model          on AFG's Shareholders' Equity
    100-year event                        1%
    250-year event                        1%
    500-year event                        2%



AFG maintains comprehensive property catastrophe reinsurance coverage for its
property and casualty insurance operations, including a $20 million per
occurrence net retention, for losses up to $125 million in the vast majority of
circumstances. In certain unlikely events, AFG's ultimate loss under this
coverage could be as high as $39 million for a
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single occurrence. AFG further maintains supplemental fully collateralized
reinsurance coverage up to 94% of $325 million for catastrophe losses in excess
of $125 million of traditional catastrophe reinsurance through a catastrophe
bond.

Catastrophe losses of $25 million in the fourth quarter of 2021 resulted
primarily from storms in multiple regions of the United States, Kentucky
tornadoes and Colorado fires. Catastrophe losses of $41 million in the fourth
quarter of 2020 resulted primarily from Hurricanes Delta, Laura, Sally and Zeta
and the Nashville explosion.

Commissions and Other Underwriting Expenses
AFG's property and casualty commissions and other underwriting expenses ("U/W
Exp") were $351 million in the fourth quarter of 2021 compared to $385 million
for the fourth quarter of 2020, a decrease of $34 million (9%). AFG's
underwriting expense ratio, calculated as commissions and other underwriting
expenses divided by net premiums earned, was 24.2% for the fourth quarter of
2021 compared to 29.0% for the fourth quarter of 2020, a decrease of
4.8 percentage points. Detail of AFG's property and casualty commissions and
other underwriting expenses and underwriting expense ratios is shown below
(dollars in millions):

                                                                            

Three months ended December 31,

                                                                        2021                                      2020                        Change in
                                                            U/W Exp               % of NEP            U/W Exp            % of NEP              % of NEP
Property and transportation                            $           87                 14.5  %       $    118                 22.5  %               (8.0  %)
Specialty casualty                                                156                 24.5  %            144                 25.0  %               (0.5  %)
Specialty financial                                                89                 53.8  %             82                 51.2  %                2.6  %
Other specialty                                                    19                 36.3  %             14                 36.7  %               (0.4  %)
Total Specialty                                                   351                 24.2  %            358                 27.6  %               (3.4  %)
Neon exited lines                                                   -                                     27
Aggregate                                              $          351                 24.2  %       $    385                 29.0  %               (4.8  %)



Property and transportation  Commissions and other underwriting expenses as a
percentage of net earned premiums decreased 8.0 percentage points in the fourth
quarter of 2021 compared to the fourth quarter of 2020 reflecting higher
profitability-based ceding commissions received from reinsurers in the crop
business and the impact of higher premiums on the ratio in the property and
inland marine business.

Specialty casualty  Commissions and other underwriting expenses as a percentage
of net earned premiums decreased 0.5 percentage points in the fourth quarter of
2021 compared to the fourth quarter of 2020 reflecting higher ceding commissions
received from reinsurers as a result of growth in the excess liability business.

Specialty financial  Commissions and other underwriting expenses as a percentage
of net earned premiums increased 2.6 percentage points in the fourth quarter of
2021 compared to the fourth quarter of 2020 reflecting higher underwriting
expenses in the surety and equipment leasing businesses and higher
profitability-based ceding commissions paid in the fidelity business.

Aggregate  Aggregate commissions and other underwriting expenses for AFG's
property and casualty insurance segment includes $27 million in the fourth
quarter of 2020 related to the Neon exited lines. See "Neon exited lines" above
for information about AFG's exit from the Lloyd's of London insurance market in
2020.

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Property and Casualty Net Investment Income
Net investment income in AFG's property and casualty insurance operations was
$196 million in the fourth quarter of 2021 compared to $122 million (excluding
the Neon exited lines) in the fourth quarter of 2020, an increase of $74 million
(61%). The average invested assets and overall yield earned on investments held
by AFG's property and casualty insurance operations are provided below (dollars
in millions):

                                                   Three months ended December 31,                                 %
                                                       2021                   2020             Change            Change
Net investment income:
Net investment income excluding alternative
investments                                     $            80           $      81          $    (1)               (1  %)
Alternative investments                                     116                  41               75               183  %
Total net investment income                     $           196           $     122          $    74                61  %

Average invested assets (at amortized cost)     $        13,552           $  12,135          $ 1,417                12  %

Yield (net investment income as a % of average
invested assets)                                           5.79  %             4.02  %          1.77  %

Tax equivalent yield (*)                                   5.92  %             4.12  %          1.80  %

(*)Adjusts the yield on equity securities and tax-exempt bonds to the fully
taxable equivalent yield.

The property and casualty insurance segment's increase in net investment income
for the fourth quarter of 2021 compared to the fourth quarter of 2020 reflects
the impact of growth in the property and casualty insurance segment and higher
earnings from alternative investments, partially offset by the effect of lower
market interest rates. The property and casualty insurance segment's overall
yield on investments (net investment income as a percentage of average invested
assets) was 5.79% for the fourth quarter of 2021 compared to 4.02% for the
fourth quarter of 2020, an increase of 1.77 percentage points. The annualized
return earned on alternative investments (partnerships and similar investments
and AFG-managed CLOs) was 26.3% in the fourth quarter of 2021 compared to 17.0%
in the prior year period.

In addition to the property and casualty segment's net investment income from
ongoing operations discussed above, the Neon exited lines reported less than
$1 million in net investment income in the fourth quarter of 2020.

Property and Casualty Other Income and Expenses, Net
Other income and expenses, net for AFG's property and casualty insurance
operations was net income of $10 million for the fourth quarter of 2021 compared
to a net expense of $11 million for the fourth quarter of 2020, a change of
$21 million (191%). The table below details the items included in other income
and expenses, net for AFG's property and casualty insurance operations (in
millions):

                                                Three months ended December 31,
                                                        2021                       2020
Other income:
Income from the sale of real estate    $            12                            $   -
Other                                                6                                -
Total other income                                  18                                -
Other expenses:
Amortization of intangibles                          1                                3
Interest expense on funds withheld                   6                                6
Other                                                1                                2
Total other expenses                                 8                               11

Other income and expenses, net         $            10                      

$ (11)


In addition to the property and casualty segment's other income and expenses,
net from ongoing operations discussed above, the Neon exited lines incurred a
net expense of less than $1 million in other income and expenses, net in the
fourth quarter of 2020.

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Holding Company, Other and Unallocated - Results of Operations
AFG's net GAAP pretax loss outside of its property and casualty insurance
segment (excluding realized gains and losses) totaled $47 million for the fourth
quarter of 2021 compared to $61 million for the fourth quarter of 2020, a
decrease of $14 million (23%). AFG's net core pretax loss outside of its
property and casualty insurance segment (excluding realized gains and losses)
totaled $47 million for the fourth quarter of 2021 compared to $56 million for
the fourth quarter of 2020, a decrease of $9 million (16%).

The following table details AFG's GAAP and core loss from continuing operations
before income taxes from operations outside of its property and casualty
insurance segment for the three months ended December 31, 2021 and 2020 (dollars
in millions):

                                                            Three months ended December 31,
                                                                2021                   2020              % Change
Revenues:
Net investment income                                   $              16          $      11                   45  %
Other income - P&C fees                                                22                 17                   29  %
Other income                                                            7                  5                   40  %
Total revenues                                                         45                 33                   36  %

Costs and Expenses:
Property and casualty insurance – commissions and other
underwriting expenses

                                                   9                  5                   80  %
Other expense - expenses associated with P&C fees                      13                 12                    8  %
Other expenses (*)                                                     47                 48                   (2  %)
Costs and expenses, excluding interest charges on
borrowed money                                                         69                 65                    6  %

Loss before income taxes, excluding realized gains and
losses and interest charges on borrowed money

                         (24)               (32)                 (25  %)
Interest charges on borrowed money                                     23                 24                   (4  %)

Core loss from continuing operations before income
taxes, excluding realized gains and losses

                            (47)               (56)                 (16  %)
Pretax non-core loss on retirement of debt                              -                 (5)                (100  %)

GAAP loss from continuing operations before income
taxes, excluding realized gains and losses

              $             (47)         $     (61)                 (23  %)


(*)Excludes a pretax non-core loss on retirement of debt of $5 million in the
fourth quarter of 2020.

Holding Company and Other - Net Investment Income
AFG recorded net investment income on investments held outside of its property
and casualty insurance segment of $16 million in the fourth quarter of 2021
compared to $11 million in the fourth quarter of 2020, an increase of $5 million
(45%), reflecting income in the fourth quarter of 2021 from purchases of fixed
maturity investments at the holding company and the impact of the stock market
performance on a small portfolio of securities held by the parent company that
are carried at fair value through net investment income. These securities
increased in value by $7 million in the fourth quarter of 2021 compared to
$9 million in the fourth quarter of 2020.

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 2021,
AFG collected $19 million in fees for these services compared to $17 million in
the fourth quarter of 2020. Management views this fee income, net of the
$13 million in the fourth quarter of 2021 and $12 million in the fourth quarter
of 2020, 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 collected $3 million in fees from
AFG's disposed annuity operations during the fourth quarter of 2021 as
compensation for certain services provided under a transition services
agreement. 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.

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Holding Company and Other - Other Income
Other income in the table above includes $4 million in both the fourth quarter
of 2021 and the fourth quarter of 2020, 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 and
$1 million in the fourth quarter of 2021 and the fourth quarter of 2020,
respectively.

Holding Company and Other - Other Expenses
Excluding the non-core loss on retirement of debt discussed below, AFG's holding
companies and other operations outside of its property and casualty insurance
segment recorded other expenses of $47 million in the fourth quarter of 2021
compared to $48 million in the fourth quarter of 2020, a decrease of $1 million
(2%). This decrease is due primarily to the impact of lower holding company
expenses related to employee benefit plans that are tied to stock market
performance in the fourth quarter of 2021 compared to the fourth quarter of
2020, partially offset by higher expenses associated with certain incentive
compensation plans that are tied to AFG's financial performance.

Holding Company and Other - Interest Charges on Borrowed Money
AFG's holding companies and other operations outside of its property and
casualty insurance segment recorded interest expense of $23 million in the
fourth quarter of 2021 compared to $24 million in the fourth quarter of 2020, a
decrease of $1 million (4%). The decrease in interest expense for the fourth
quarter of 2021 as compared to the fourth quarter of 2020 reflects the
redemption of $150 million of 6% Subordinated Debentures in November 2020.

Holding Company and Other - Loss on Retirement of Debt
In November 2020, AFG redeemed its $150 million outstanding principal amount of
6% Subordinated Debentures due in 2055 and wrote off unamortized debt issuance
costs of $5 million.

Realized Gains (Losses) on Securities
AFG's realized gains (losses) on securities were net gains of $7 million in the
fourth quarter of 2021 compared to $122 million in the fourth quarter of 2020, a
decrease of $115 million (94%). Realized gains (losses) on securities consisted
of the following (in millions):

                                                                   Three 

months ended December 31,

                                                                       2021                 2020
Realized gains (losses) before impairments:
Disposals                                                         $          3          $       2
Change in the fair value of equity securities                                6                120
Change in the fair value of derivatives                                     (2)                (1)
                                                                             7                121

Change in allowance for impairments on securities                            -                  1
Realized gains (losses) on securities                             $         

7 $ 122


The $6 million net realized gain from the change in the fair value of equity
securities in the fourth quarter of 2021 includes gains of $12 million on
investments in capital goods companies and $2 million on investments in energy
and natural gas companies, partially offset by losses of $5 million on
investments in healthcare companies, $2 million on investments in banks and
financing companies and $3 million on investments in media companies. The
$120 million net realized gain from the change in the fair value of equity
securities in the fourth quarter of 2020 includes gains of $28 million on
investments in banks and financing companies, $23 million on investments in
media companies, $15 million on investments in energy and natural gas companies,
$12 million on investments in technology companies, $9 million on investments in
retail companies and $5 million on investments in real estate investment trusts.

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Realized Gains (Losses) on Subsidiaries
On September 28, 2020, AFG announced that it had reached a definitive agreement
to sell GAI Holding Bermuda and its subsidiaries, comprising the legal entities
that own Neon, to RiverStone Holdings Limited. AFG recorded a $30 million loss
in the third quarter of 2020 to establish a liability equal to the excess of the
net carrying value of the assets and liabilities to be disposed over the
estimated net sale proceeds. In the fourth quarter of 2020, the estimated loss
was adjusted at the closing date to a gain of $23 million based on the final
proceeds and the final net assets disposed, which reflects $53 million of
non-core losses in the fourth quarter of 2020 at Neon. See Note C -
"Acquisitions and Sale of Businesses" to the financial statements.

Consolidated Income Taxes on Continuing Operations
AFG's consolidated provision for income taxes was $90 million for the fourth
quarter of 2021 compared to $77 million in the fourth quarter of 2020, an
increase of $13 million (17%). 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,

                                                                    2021                                       2020
                                                       Amount                % of EBT             Amount              % of EBT
Earnings before income taxes ("EBT")               $        445                                 $    344

Income taxes at statutory rate                     $         93                    21  %        $     72                    21  %
Effect of:
Employee stock ownership plan dividend paid
deduction                                                    (6)                   (1  %)             (1)                    -  %
Stock-based compensation                                     (1)                    -  %              (1)                    -  %
Tax exempt interest                                          (2)                    -  %              (3)                   (1  %)
Change in valuation allowance                                (5)                   (1  %)           (148)                  (43  %)
Dividend received deduction                                  (1)                    -  %               -                     -  %
Tax benefit related to sale of Neon                           -                     -  %               1                     -  %
Nondeductible expenses                                        2                     -  %               1                     -  %
Foreign operations                                            -                     -  %             152                    44  %
Other                                                        10                     1  %               4                     1  %
Provision for income taxes                         $         90                    20  %        $     77                    22  %


See Note L – “Income Taxes” to the financial statements for an analysis of items
affecting AFG’s effective tax rate.

Consolidated Noncontrolling Interests in Continuing Operations
AFG’s consolidated net earnings (loss) from continuing operations attributable
to noncontrolling interests was net earnings of $2 million for the fourth
quarter of 2020 reflecting earnings at Neon, which was sold in December 2020.

Real Estate Entities Acquired from the Annuity Operations
Beginning with the first quarter of 2021, the results of the annuity businesses
sold are reported as discontinued operations, in accordance with GAAP, which
included adjusting prior period results to reflect these operations as
discontinued. Prior to the completion of the sale, AFG's property and casualty
insurance operations acquired approximately $480 million in real estate-related
partnerships and AFG parent acquired approximately $100 million of directly
owned real estate from those operations. GAAP pretax earnings from continuing
operations includes the earnings from these entities through the May 31, 2021
effective date of the sale and certain other expenses that were retained from
the annuity operations.

Discontinued Annuity Operations
AFG's discontinued annuity operations, which were sold in May 2021, contributed
$540 million in GAAP pretax earnings in the fourth quarter of 2020.




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RESULTS OF OPERATIONS - YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019

Segmented Statement of Earnings
Subsequent to the agreement to sell the Annuity subsidiaries, AFG reports its
continuing 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 attributable to shareholders, determined in accordance with
GAAP, include certain items that may not be indicative of its ongoing core
operations. The following tables for the years ended December 31, 2021, 2020 and
2019 identify such items by segment and reconcile net earnings attributable to
shareholders 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
                                                                                                                                    Holding Co., other
                                                                              P&C             Annuity          Consol. MIEs           and unallocated           Total            Non-core reclass           GAAP Total
Year ended December 31, 2021
Revenues:
Property and casualty insurance net earned premiums                        $ 5,404          $      -          $          -          $              -          $ 5,404          $               -          $     5,404
Net investment income                                                          663                51                   (20)                       36              730                          -                  730
Realized gains (losses) on:
Securities                                                                       -                 -                     -                         -                -                        110                  110
Subsidiaries                                                                     -                 -                     -                         -                -                          4                    4
Income of MIEs:
Investment income                                                                -                 -                   181                         -              181                          -                  181
Gain (loss) on change in fair value of assets/liabilities                        -                 -                    10                         -               10                          -                   10
Other income                                                                    27                 -                   (16)                      102              113                          -                  113
Total revenues                                                               6,094                51                   155                       138            6,438                        114                6,552

Costs and Expenses:
Property and casualty insurance:
Losses and loss adjustment expenses                                          3,157                 -                     -                         -            3,157                          -                3,157
Commissions and other underwriting expenses                                  1,514                 -                     -                        33            1,547                          -                1,547
Interest charges on borrowed money                                               -                 -                     -                        94               94                          -                   94
Expenses of MIEs                                                                 -                 -                   155                         -              155                          -                  155
Other expenses                                                                  33                 1                     -                       219              253                         11                  264
Total costs and expenses                                                     4,704                 1                   155                       346            5,206                         11                5,217
Earnings (loss) from continuing operations before income taxes               1,390                50                     -                      (208)           1,232                        103                1,335
Provision (credit) for income taxes                                            279                11                     -                       (51)             239                         15                  254

Net earnings from continuing operations, including noncontrolling
interests

                                                                    1,111                39                     -                      (157)             993                         88                1,081
Less: Net earnings (loss) from continuing operations attributable to
noncontrolling interests                                                         -                 -                     -                         -                -                          -                    -
Core Net Operating Earnings                                                  1,111                39                     -                      (157)             993

Non-core earnings (loss) attributable to shareholders (a):
Realized gains (losses) on securities, net of tax

     -                 -                     -                        87               87                        (87)                   -
Discontinued operations, net of tax                                              -               914                     -                         -              914                          -                  914
Neon exited lines (b)                                                            3                 -                     -                         -                3                         (3)                   -

Other, net of tax                                                                -                 -                     -                        (2)              (2)                         2                    -
Net Earnings Attributable to Shareholders                                  $ 1,114          $    953          $          -          $            (72)         $ 1,995          $               -          $     1,995


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                                                                                                                  Other
                                                                                                                               Holding Co., other                                                    Neon exited
                                                                         P&C             Annuity          Consol. MIEs           and unallocated           Total            Non-core reclass          lines (b)           GAAP Total
Year ended December 31, 2020
Revenues:
Property and casualty insurance net earned premiums                   $ 4,899          $      -          $          -          $              -          $ 4,899          $               -          $     200          $     5,099
Net investment income                                                     404                49                     1                        12              466                          -                 (5)                 461
Realized gains (losses) on:
Securities                                                                  -                 -                     -                         -                -                        (75)                 -                  (75)
Subsidiaries                                                                -                 -                     -                         -                -                          -                 23                   23
Income of MIEs:
Investment income                                                           -                 -                   201                         -              201                          -                  -                  201
Gain (loss) on change in fair value of assets/liabilities                   -                 -                   (20)                        -              (20)                         -                  -                  (20)
Other income                                                                8                 1                   (15)                       86               80                          -                  -                   80
Total revenues                                                          5,311                50                   167                        98            5,626                        (75)               218                5,769

Costs and Expenses:
Property and casualty insurance:
Losses and loss adjustment expenses                                     3,006                 -                     -                         -            3,006                         47                218               

3,271

Commissions and other underwriting expenses                             1,487                 -                     -                        21            1,508                          -                117               

1,625

Interest charges on borrowed money                                          -                 -                     -                        88               88                          -                  -                   88
Expenses of MIEs                                                            -                 -                   167                         -              167                          -                  -                  167
Other expenses                                                             42                31                     -                       175              248                         26                  5                  279
Total costs and expenses                                                4,535                31                   167                       284            5,017                         73                340                5,430
Earnings (loss) from continuing operations before income taxes            776                19                     -                      (186)             609                       (148)              (122)                

339

Provision (credit) for income taxes                                       164                 4                     -                       (40)             128                        (31)               (72)                 

25

Net earnings from continuing operations, including noncontrolling
interests

                                                                 612                15                     -                      (146)             481                       (117)               (50)                

314

Less: Net earnings (loss) from continuing operations attributable to
noncontrolling interests                                                    -                 -                     -                         -                -                          -                (11)                 (11)
Core Net Operating Earnings                                               612                15                     -                      (146)             481

Non-core earnings (loss) attributable to shareholders (a):
Realized gains (losses) on securities, net of tax

                           -                 -                     -                       (59)             (59)                        59                  -                    -
Discontinued operations, net of tax                                         -               413                     -                        (6)             407                          -                  -                  407
Neon exited lines (b)                                                     (39)                -                     -                         -              (39)                         -                 39                    -
Special A&E charges, net of tax                                           (37)                -                     -                       (17)             (54)                        54                  -                    -
Loss on retirement of debt, net of tax                                      -                 -                     -                        (4)              (4)                         4                  -                    -
Net Earnings Attributable to Shareholders                             $   536          $    428          $          -          $           (232)         $   732          $               -          $       -          $       732


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                                                                                                                       Other
                                                                                                                                    Holding Co., other
                                                                              P&C             Annuity          Consol. MIEs           and unallocated           Total            Non-core reclass           GAAP Total
Year ended December 31, 2019
Revenues:
Property and casualty insurance net earned premiums                        $ 5,185          $      -          $          -          $              -          $ 5,185          $               -          $     5,185
Net investment income                                                          472                37                    (1)                       24              532                          -                  532
Realized gains (losses) on securities                                            -                 -                     -                         -                -                        155                  155
Income of MIEs:
Investment income                                                                -                 -                   269                         -              269                          -                  269
Gain (loss) on change in fair value of assets/liabilities                        -                 -                   (14)                        -              (14)                         -                  (14)
Other income                                                                    11                 -                   (15)                       90               86                          -                   86
Total revenues                                                               5,668                37                   239                       114            6,058                        155                6,213

Costs and Expenses:
Property and casualty insurance:
Losses and loss adjustment expenses                                          3,207                 -                     -                         -            3,207                         64                3,271
Commissions and other underwriting expenses                                  1,672                 -                     -                        23            1,695                         30                1,725
Interest charges on borrowed money                                               -                 -                     -                        68               68                          -                   68
Expenses of MIEs                                                                 -                 -                   239                         -              239                          -                  239
Other expenses                                                                  46                16                     -                       198              260                         16                  276
Total costs and expenses                                                     4,925                16                   239                       289            5,469                        110                5,579
Earnings (loss) from continuing operations before income taxes                 743                21                     -                      (175)             589                         45                  634
Provision (credit) for income taxes                                            150                 4                     -                       (37)             117                         26                  143

Net earnings from continuing operations, including noncontrolling
interests

                                                                      593                17                     -                      (138)             472                         19                  491
Less: Net earnings (loss) from continuing operations attributable to
noncontrolling interests                                                       (10)                -                     -                         -              (10)                       (18)                 (28)
Core Net Operating Earnings                                                    603                17                     -                      (138)             482

Non-core earnings (loss) attributable to shareholders (a):
Realized gains (losses) on securities, net of tax

     -                 -                     -                       122              122                       (122)                   -
Discontinued operations, net of tax                                              -               377                     -                         1              378                          -                  378
Special A&E charges, net of tax                                                (14)                -                     -                        (9)             (23)                        23                    -
Neon exited lines charge                                                       (58)                -                     -                         -              (58)                        58                    -
Loss on retirement of debt, net of tax                                           -                 -                     -                        (4)              (4)                         4                    -
Net Earnings Attributable to Shareholders                                  $   531          $    394          $          -          $            (28)         $   897          $               -          $       897


(a)See the reconciliation of core earnings to GAAP net earnings under "Results
of Operations - General" for details on the tax and noncontrolling interest
impacts of these reconciling items.
(b)As discussed under "Results of Operations - General," the Neon run-off
operations are considered property and casualty insurance non-core earnings
(losses).

Property and Casualty Insurance Segment - Results of Operations
AFG's property and casualty insurance operations contributed $1.39 billion in
GAAP pretax earnings in 2021 compared to $607 million in 2020, an increase of
$787 million (130%). Property and casualty core pretax earnings were
$1.39 billion in 2021 compared to $776 million in 2020, an increase of
$614 million (79%). The increase in GAAP pretax earnings reflects higher core
pretax earnings and the impact of losses in the Neon exited lines in 2020. The
increase in GAAP pretax earnings also reflects the impact of a pretax non-core
special A&E charge of $47 million in 2020. The increase in core pretax earnings
reflects higher core underwriting profit and significantly higher net investment
income in 2021 compared to 2020 and income from the sale of real estate in the
fourth quarter of 2021. Improved results from alternative investments
(partnerships and similar investments and AFG-managed CLOs) were partially
offset by lower other net investment income, due primarily to lower interest
rates.

AFG's property and casualty insurance operations contributed $607 million in
GAAP pretax earnings in 2020 compared to $649 million in 2019, a decrease of
$42 million (6%). Property and casualty core pretax earnings were $776 million
in 2020 compared to $743 million in 2019, an increase of $33 million (4%). The
decrease in GAAP pretax earnings reflects pretax non-core special A&E charges of
$47 million in 2020 compared to $18 million in 2019 and higher non-core losses
in
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the Neon exited lines, partially offset by higher core pretax earnings. The
increase in core pretax earnings reflects higher core underwriting results,
partially offset by lower net investment income in 2020 compared to 2019.

The following table details AFG's GAAP and core earnings before income taxes
from its property and casualty insurance operations for the years ended December
31, 2021, 2020 and 2019 (dollars in millions):

                                                        Year ended December 31,                                   % Change
                                            2021              2020                 2019               2021 - 2020          2020 - 2019
Gross written premiums                   $  7,946          $  6,995          $        7,299                  14  %                (4  %)
Reinsurance premiums ceded                 (2,373)           (2,003)                 (1,957)                 18  %                 2  %
Net written premiums                        5,573             4,992                   5,342                  12  %                (7  %)
Change in unearned premiums                  (169)              (93)                   (157)                 82  %               (41  %)
Net earned premiums                         5,404             4,899                   5,185                  10  %                (6  %)
Loss and loss adjustment expenses (a)       3,157             3,006                   3,207                   5  %                (6  %)
Commissions and other underwriting
expenses                                    1,514             1,487                   1,672                   2  %               (11  %)
Core underwriting gain                        733               406                     306                  81  %                33  %

Net investment income                         663               404                     472                  64  %               (14  %)
Other income and expenses, net                 (6)              (34)                    (35)                (82  %)               (3  %)
Core earnings before income taxes           1,390               776                     743                  79  %                 4  %
Pretax non-core special A&E charges             -               (47)                    (18)               (100  %)              161  %
Pretax non-core Neon exited lines (b)           4              (122)                    (76)               (103  %)               61  %
GAAP earnings before income taxes and
noncontrolling interests                 $  1,394          $    607          $          649                 130  %                (6  %)

(a)Excludes pretax non-core special A&E charges of $47 million and $18 million in 2020 and 2019, respectively.
(b)In December 2019, AFG initiated actions to exit the Lloyd’s of London insurance market, which included placing its Lloyd’s
subsidiaries including its Lloyd’s Managing Agency, Neon Underwriting Ltd. (“Neon”), into run-off. As discussed under “Results of
Operations – General,” following the December 2019 decision to exit the Lloyd’s of London insurance market, the results from the Neon
exited lines are treated as non-core earnings (losses). Each line item in the table above has been adjusted to remove the impact from
the Neon run-off operations in 2020. The following table details the impact of the Neon exited lines to each component of earnings
(loss) before income taxes in the property and casualty insurance operations for the year ended December 31, 2020 (in millions):

                                                                                                  December 31, 2020
                                                                              Excluding Neon              Neon
                                                                               exited lines           exited lines            Total
Gross written premiums                                                       $        6,995          $       92           $    7,087
Reinsurance premiums ceded                                                           (2,003)                (71)              (2,074)
Net written premiums                                                                  4,992                  21                5,013
Change in unearned premiums                                                             (93)                179                   86
Net earned premiums                                                                   4,899                 200                5,099
Loss and loss adjustment expenses                                                     3,006                 218                3,224
Commissions and other underwriting
expenses                                                                              1,487                 117                1,604
Underwriting gain (loss)                                                                406                (135)                 271

Net investment income                                                                   404                  (5)                 399
Gain on sale of subsidiaries                                                              -                  23                   23
Other income and expenses, net                                                          (34)                 (5)                 (39)
Earnings (loss) before income taxes and noncontrolling interests                        776                (122)                 654
Pretax non-core special A&E charges                                                     (47)                  -                  (47)

GAAP earnings (loss) before income taxes and noncontrolling interests

$ 729 $ (122) $ 607

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                                                          Year ended December 31,                                           Change
Combined Ratios:                             2021                  2020                  2019                2021 - 2020             2020 - 2019
Specialty lines
Loss and LAE ratio                              58.4  %               60.9  %               61.5  %                (2.5  %)                 (0.6  %)
Underwriting expense ratio                      28.0  %               30.4  %               32.2  %                (2.4  %)                 (1.8  %)
Combined ratio                                  86.4  %               91.3  %               93.7  %                (4.9  %)                 (2.4  %)

Aggregate - including exited lines
Loss and LAE ratio                              58.5  %               64.1  %               63.0  %                (5.6  %)                  1.1  %
Underwriting expense ratio                      28.0  %               31.4  %               32.8  %                (3.4  %)                 (1.4  %)
Combined ratio                                  86.5  %               95.5  %               95.8  %                (9.0  %)                 (0.3  %)


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.

Gross Written Premiums
Gross written premiums ("GWP") for AFG's property and casualty insurance segment
were $7.95 billion in 2021 compared to $7.09 billion in 2020, an increase of
$859 million (12%). GWP decreased $212 million (3%) in 2020 compared to 2019.
Detail of AFG's property and casualty gross written premiums is shown below
(dollars in millions):

                                                                       Year ended December 31,                                                        % Change
                                                2021                             2020                             2019                     2021 - 2020          2020 - 2019
                                        GWP               %              GWP               %              GWP               %
Property and transportation          $ 3,263              41  %       $ 2,813              40  %       $ 2,759              38  %                  16  %               2  %
Specialty casualty                     3,890              49  %         3,444              49  %         3,768              52  %                  13  %              (9  %)
Specialty financial                      793              10  %           738              10  %           772              10  %                   7  %              (4  %)
Total specialty                        7,946             100  %         6,995              99  %         7,299             100  %                  14  %              (4  %)
Neon exited lines                          -               -  %            92               1  %             -               -  %                (100  %)              -  %
Aggregate                            $ 7,946             100  %       $ 7,087             100  %       $ 7,299             100  %                  12  %              (3  %)



Reinsurance Premiums Ceded
Reinsurance premiums ceded ("Ceded") for AFG's property and casualty insurance
segment were 30% of gross written premiums for the year ended December 31, 2021,
29% for the year ended December 31, 2020 and 27% for the year ended December 31,
2019, an increase of 1 percentage point for 2021 compared to 2020 and
2 percentage points for 2020 compared to 2019. Detail of AFG's property and
casualty reinsurance premiums ceded is shown below (dollars in millions):

                                                                                Year ended December 31,                                                          Change in % of GWP
                                                   2021                                   2020                                   2019                      2021 - 2020        2020 - 2019
                                        Ceded             % of GWP             Ceded             % of GWP             Ceded             % of GWP
Property and transportation          $ (1,106)                  34  %       $   (926)                  33  %       $   (883)                  32  %               1  %               1  %
Specialty casualty                     (1,350)                  35  %         (1,140)                  33  %         (1,067)                  28  %               2  %               5  %
Specialty financial                      (135)                  17  %           (134)                  18  %           (155)                  20  %              (1  %)             (2  %)
Other specialty                           218                                    197                                    148
Total specialty                        (2,373)                  30  %         (2,003)                  29  %         (1,957)                  27  %               1  %               2  %
Neon exited lines                           -                    -  %            (71)                  77  %              -                    -  %             (77  %)             77  %
Aggregate                            $ (2,373)                  30  %       $ (2,074)                  29  %       $ (1,957)                  27  %               1  %               2  %



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Net Written Premiums
Net written premiums ("NWP") for AFG's property and casualty insurance segment
were $5.57 billion in 2021 compared to $5.01 billion in 2020, an increase of
$560 million (11%). NWP decreased $329 million (6%) in 2020 compared to 2019.
Detail of AFG's property and casualty net written premiums is shown below
(dollars in millions):

                                                                       Year ended December 31,                                                           % Change
                                                2021                             2020                             2019                     2021 - 2020             2020 - 2019
                                        NWP               %              NWP               %              NWP               %
Property and transportation          $ 2,157              40  %       $ 1,887              38  %       $ 1,876              35  %                  14  %                     1  %
Specialty casualty                     2,540              46  %         2,304              46  %         2,701              51  %                  10  %                   (15  %)
Specialty financial                      658              12  %           604              12  %           617              12  %                   9  %                    (2  %)
Other specialty                          218               4  %           197               4  %           148               2  %                  11  %                    33  %
Total specialty                        5,573             102  %         4,992             100  %         5,342             100  %                  12  %                    (7  %)
Neon exited lines                          -               -  %            21               -  %             -               -  %                (100  %)                    -  %
Aggregate                            $ 5,573             100  %       $ 5,013             100  %       $ 5,342             100  %                  11  %                    (6  %)



Net Earned Premiums
Net earned premiums ("NEP") for AFG's property and casualty insurance segment
were $5.40 billion in 2021 compared to $5.10 billion in 2020, an increase of
$305 million (6%). NEP decreased $86 million (2%) in 2020 compared to 2019.
Detail of AFG's property and casualty net earned premiums is shown below
(dollars in millions):

                                                                       Year ended December 31,                                                           % Change
                                                2021                             2020                             2019                     2021 - 2020             2020 - 2019
                                        NEP               %              NEP               %              NEP               %
Property and transportation          $ 2,144              40  %       $ 1,871              37  %       $ 1,828              35  %                  15  %                     2  %
Specialty casualty                     2,408              44  %         2,235              44  %         2,597              50  %                   8  %                   (14  %)
Specialty financial                      642              12  %           613              12  %           610              12  %                   5  %                     -  %
Other specialty                          210               4  %           180               3  %           150               3  %                  17  %                    20  %
Total specialty                        5,404             100  %         4,899              96  %         5,185             100  %                  10  %                    (6  %)
Neon exited lines                          -               -  %           200               4  %             -               -  %                (100  %)                    -  %
Aggregate                            $ 5,404             100  %       $ 5,099             100  %       $ 5,185             100  %                   6  %                    (2  %)



The $859 million (12%) increase in gross written premiums in 2021 compared to
2020 reflects an increase in each of the Specialty property and casualty
sub-segments due primarily to an improving economy, new business opportunities,
higher renewal rates and increased exposures. Overall average renewal rates
increased approximately 9% in 2021. Excluding the workers' compensation
business, renewal pricing increased nearly 12%.

The $212 million (3%) decrease in gross written premiums in 2020 compared to
2019 reflects a decrease in the Specialty casualty and Specialty financial
sub-segments, partially offset by an increase in the Property and transportation
sub-segment. Overall average renewal rates increased approximately 11% in 2020.
Excluding rate decreases in the workers' compensation business, renewal pricing
increased nearly 15%.

Property and transportation Gross written premiums increased $450 million (16%)
in 2021 compared to 2020, due primarily to higher premiums in the crop insurance
business as a result of higher commodity futures pricing and rate increases,
higher premiums in the transportation businesses as a result of new accounts,
combined with strong renewals and increased exposures in the alternative risk
transfer business. Average renewal rates increased approximately 6% for this
group in 2021. Reinsurance premiums ceded as a percentage of gross written
premiums increased 1 percentage point in 2021 compared to 2020 reflecting growth
in the crop insurance operations, which cede a larger percentage of premiums
than the other businesses in the Property and transportation sub-segment and the
impact of reinstatement premiums in 2021 related to winter storms in Texas and a
large property loss.

Gross written premiums increased $54 million (2%) in 2020 compared to 2019, due
primarily to growth and new business opportunities in the property and inland
marine and ocean marine businesses, partially offset by lower premiums in the
transportation businesses, primarily from the return of premiums and reduced
exposures as a result of the COVID-19 pandemic and premium reductions in two
large national accounts. Average renewal rates increased nearly 6% for this
group in 2020. Reinsurance premiums ceded as a percentage of gross written
premiums increased 1 percentage point in 2020 compared to 2019 reflecting higher
cessions in the transportation businesses.

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Specialty casualty Gross written premiums increased $446 million (13%) in 2021
compared to 2020. Significant renewal rate increases and new business
opportunities contributed to higher premiums in the excess and surplus
businesses and renewal rate increases, strong account retention and new business
opportunities contributed to premium growth in the targeted markets businesses.
The mergers and acquisitions liability and executive liability businesses also
contributed meaningfully to the year-over-year growth. Average renewal rates
increased approximately 11% for this group in 2021. Excluding rate decreases in
the workers' compensation business, renewal rates for this group increased
approximately 17% in 2021. Reinsurance premiums ceded as a percentage of gross
written premiums increased 2 percentage points in 2021 compared to 2020
reflecting growth in the excess and surplus, mergers and acquisitions liability
and environmental businesses, which cede a larger percentage of premiums than
the other businesses in the Specialty casualty sub-segment.

Gross written premiums decreased $324 million (9%) in 2020 compared to 2019 due
primarily to the run-off of Neon. Excluding the $567 million in gross written
premiums from the Neon exited lines in 2019, gross written premiums increased
approximately 8% in 2020 compared to 2019. This increase reflects growth in the
excess and surplus, excess liability, targeted markets and directors and
officers businesses, primarily the result of renewal rate increases, new
business opportunities and higher retentions on renewal business, partially
offset by lower premiums in the workers' compensation businesses due to reduced
exposures as a result of the COVID-19 pandemic coupled with renewal rate
decreases. Average renewal rates increased approximately 14% for this group in
2020. Excluding rate decreases in the workers' compensation business, renewal
rates for this group increased nearly 24% in 2020. Reinsurance premiums ceded as
a percentage of gross written premiums increased 5 percentage points in 2020
compared to 2019 reflecting growth in the excess and surplus and public sector
businesses, which cede a larger percentage of premiums than many of the
businesses in the Specialty casualty sub-segment and higher cessions in the
professional liability business.

Specialty financial Gross written premiums increased $55 million (7%) in 2021
compared to 2020 due primarily to renewal rate increases and new business
opportunities within the lender services and fidelity businesses and the
favorable impact of economic recovery in the surety business. Average renewal
rates for this group increased approximately 7% in 2021. Reinsurance premiums
ceded as a percentage of gross written premiums decreased 1 percentage point in
2021 compared to 2020 reflecting lower cessions in the financial institutions
business due to reduced premiums from certain collateral protection insurance
that is 100% reinsured.

Gross written premiums decreased $34 million (4%) in 2020 compared to 2019 due
primarily to lower premiums from the impact of various state regulations
regarding policy cancellations and the placement of forced coverage in the
financial institutions business and COVID-related economic impacts on the surety
business and heightened risk selection that has reduced new business in the
trade credit business, partially offset by higher premiums in the fidelity
business. Average renewal rates for this group increased nearly 8% in 2020.
Reinsurance premiums ceded as a percentage of gross written premiums decreased
2 percentage points in 2020 compared to 2019 reflecting lower cessions in the
financial institutions business.

Other specialty The amounts shown as reinsurance premiums ceded represent
business assumed by AFG's internal reinsurance program from the operations that
make up AFG's other Specialty property and casualty insurance sub-segments.
Reinsurance premiums assumed increased $21 million (11%) in 2021 compared to
2020 reflecting an increase in premiums retained, primarily from businesses in
the Specialty casualty sub-segment.

Reinsurance premiums assumed increased $49 million (33%) in 2020 compared to
2019 reflecting an increase in premiums retained, primarily from businesses in
the Specialty casualty sub-segment.
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Combined Ratio
The table below (dollars in millions) details the components of the combined
ratio for AFG's property and casualty insurance segment for 2021, 2020 and 2019:

                                                    Year ended December 31,                                       Change                                  Year ended December 31,
                                           2021               2020               2019              2021 - 2020             2020 - 2019               2021             2020           2019
Property and transportation
Loss and LAE ratio                          65.1  %            64.6  %            71.0  %                 0.5  %                  (6.4  %)
Underwriting expense ratio                  22.0  %            25.8  %            24.7  %                (3.8  %)                  1.1  %
Combined ratio                              87.1  %            90.4  %            95.7  %                (3.3  %)                 (5.3  %)
Underwriting profit                                                                                                                              $     279          $ 181          $  79

Specialty casualty
Loss and LAE ratio                          58.1  %            62.5  %            61.1  %                (4.4  %)                  1.4  %
Underwriting expense ratio                  26.2  %            27.5  %            32.2  %                (1.3  %)                 (4.7  %)
Combined ratio                              84.3  %            90.0  %            93.3  %                (5.7  %)                 (3.3  %)
Underwriting profit                                                                                                                              $     377          $ 223          $ 175

Specialty financial
Loss and LAE ratio                          33.2  %            39.5  %            31.5  %                (6.3  %)                  8.0  %
Underwriting expense ratio                  51.9  %            52.3  %            53.5  %                (0.4  %)                 (1.2  %)
Combined ratio                              85.1  %            91.8  %            85.0  %                (6.7  %)                  6.8  %
Underwriting profit                                                                                                                              $      96          $  50          $  92

Total Specialty
Loss and LAE ratio                          58.4  %            60.9  %            61.5  %                (2.5  %)                 (0.6  %)
Underwriting expense ratio                  28.0  %            30.4  %            32.2  %                (2.4  %)                 (1.8  %)
Combined ratio                              86.4  %            91.3  %            93.7  %                (4.9  %)                 (2.4  %)
Underwriting profit                                                                                                                              $     737          $ 426          $ 325

Aggregate - including exited lines
Loss and LAE ratio                          58.5  %            64.1  %            63.0  %                (5.6  %)                  1.1  %
Underwriting expense ratio                  28.0  %            31.4  %            32.8  %                (3.4  %)                 (1.4  %)
Combined ratio                              86.5  %            95.5  %            95.8  %                (9.0  %)                 (0.3  %)
Underwriting profit                                                                                                                              $     733          $ 224          $ 212



The Specialty property and casualty insurance operations generated an
underwriting profit of $737 million in 2021 compared to $426 million in 2020, an
increase of $311 million (73%). The higher underwriting profit in 2021 reflects
higher underwriting profits in each of the Specialty property and casualty
sub-segments. Underwriting results for the Specialty property and casualty
insurance operations include $16 million in COVID-19 related losses (0.3 points
on the combined ratio) in 2021 compared to $95 million (1.9 points) in 2020.
Overall catastrophe losses were $86 million (1.6 points on the combined ratio)
and related net reinstatement premiums were $12 million for 2021 compared to
catastrophe losses of $91 million (1.9 points) and related net reinstatement
premiums of $2 million for 2020.

The Specialty property and casualty insurance operations generated an
underwriting profit of $426 million in 2020 compared to $325 million in 2019, an
increase of $101 million (31%), reflecting higher underwriting profits in the
Property and transportation and Specialty casualty sub-segments, partially
offset by lower underwriting profit in the Specialty financial sub-segment.
Underwriting results for the Specialty property and casualty insurance
operations include $95 million in COVID-19 related losses (1.9 points on the
combined ratio) in 2020. Overall catastrophe losses were $91 million (1.9 points
on the combined ratio) and related net reinstatement premiums were $2 million
for 2020 compared to catastrophe losses of $60 million (1.2 points) and related
net reinstatement premiums of $1 million for 2019.

Property and transportation Underwriting profit for this group was $279 million
in 2021 compared to $181 million in 2020, an increase of $98 million (54%). This
increase reflects higher underwriting profitability in the crop and ocean marine
businesses. COVID-19 related losses for this group were $7 million (0.4 points
on the combined ratio) in 2020. Catastrophe losses were $49 million (2.3 points
on the combined ratio), primarily the result of winter storms in Texas,
Hurricane Ida and Kentucky tornadoes, and related net reinstatement premiums
were $9 million in 2021 compared to catastrophe losses of $47 million
(2.5 points) in 2020.
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Underwriting profit for this group was $181 million in 2020 compared to
$79 million in 2019, an increase of $102 million (129%). This increase reflects
higher underwriting profitability in the crop operations following record levels
of prevented planting claims in 2019 and, to a lesser extent, higher favorable
prior year reserve development in the transportation businesses and improved
underwriting results in the aviation business and the Singapore branch. COVID-19
related losses for this group were $7 million (0.4 points on the combined ratio)
in 2020. Catastrophe losses were $47 million (2.5 points on the combined ratio)
in 2020 compared to $32 million (1.8 points) in 2019.

Specialty casualty Underwriting profit for this group was $377 million in 2021
compared to $223 million in 2020, an increase of $154 million (69%). This
increase reflects higher underwriting profitability in the excess and surplus,
excess liability, workers' compensation, targeted markets and general liability
businesses in 2021 compared to 2020. COVID-19 related losses were $9 million
(0.4 points on the combined ratio) in 2021 compared to $60 million (2.7 points)
in 2020, primarily in the workers' compensation and executive liability
businesses. Catastrophe losses were $9 million (0.4 points on the combined
ratio) and related net reinstatement premiums were $1 million in 2021 compared
to catastrophe losses of $14 million (0.6 points) and related net reinstatement
premiums of $2 million in 2020.

Underwriting profit for this group was $223 million in 2020 compared to
$175 million in 2019, an increase of $48 million (27%). This increase reflects
higher year-over-year underwriting profitability in the excess and surplus and
excess liability businesses and the impact of $36 million of underwriting losses
at Neon in 2019, partially offset by lower year-over-year underwriting profits
in the targeted markets and workers' compensation businesses. See "Neon exited
lines" under "Property and Casualty Insurance Segment - Results of Operations"
for the quarters ended December 31, 2021 and 2020 for information about AFG's
exit from the Lloyd's of London insurance market in 2020. COVID-19 related
losses were $60 million (2.7 points on the combined ratio) in 2020, primarily in
the workers' compensation and executive liability businesses. Catastrophe losses
were $14 million (0.6 points on the combined ratio) and related net
reinstatement premiums were $2 million in 2020 compared to catastrophe losses of
$17 million (0.7 points) and related net reinstatement premiums of $1 million in
2019.

Specialty financial Underwriting profit for this group was $96 million in 2021
compared to $50 million in 2020, an increase of $46 million (92%) due primarily
to higher year-over-year underwriting profitability in the surety, financial
institutions, innovative markets and trade credit businesses. COVID-19 related
losses were $7 million (1.1 points on the combined ratio) in 2021 compared to
$26 million (4.3 points) in 2020, primarily related to trade credit insurance.
Catastrophe losses were $26 million (4.0 points on the combined ratio) and
related net reinstatement premiums were $2 million in 2021 compared to
catastrophe losses of $26 million (4.3 points) in 2020.

Underwriting profit for this group was $50 million in 2020 compared to
$92 million in 2019, a decrease of $42 million (46%) due primarily to lower
underwriting profitability in the trade credit, surety and innovative markets
businesses and higher year-over year catastrophe losses in the financial
institutions business. COVID-19 related losses were $26 million (4.3 points on
the combined ratio) in 2020 primarily related to trade credit insurance.
Catastrophe losses were $26 million (4.3 points on the combined ratio) in 2020
compared to $10 million (1.6 points) in 2019.

Other specialty This group reported an underwriting loss of $15 million in 2021
compared to $28 million in 2020, a decrease of $13 million (46%). This decrease
reflects lower losses in the business assumed by AFG's internal reinsurance
program from the operations that make up AFG's other Specialty sub-segments in
2021 compared to 2020.

This group reported an underwriting loss of $28 million in 2020 compared to
$21 million in 2019, an increase of $7 million (33%). This increase reflects
higher losses in the business assumed by AFG's internal reinsurance program from
the operations that make up AFG's other Specialty sub-segments in 2020 compared
to 2019.

Aggregate Aggregate underwriting results for AFG's property and casualty
insurance segment include asbestos and environmental reserve charges of
$47 million in 2020 and $18 million in 2019, an underwriting loss of
$135 million at Neon in 2020, due primarily to catastrophe losses, COVID-19
related charges and several large claims, and the $76 million Neon exited lines
charge in 2019. See "Asbestos and Environmental-related ("A&E") Insurance
Reserves," under "Uncertainties" and "Neon exited lines" under "Property and
Casualty Insurance Segment - Results of Operations" for the quarters ended
December 31, 2021 and 2020. Aggregate underwriting results for AFG's property
and casualty insurance segment also include adverse prior year reserve
development of $4 million in 2021, $20 million in 2020 and $19 million in 2019,
related to business outside of the Specialty group that AFG no longer writes.
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Losses and Loss Adjustment Expenses
AFG's overall loss and LAE ratio was 58.5%, 64.1% and 63.0% in 2021, 2020 and
2019, respectively. The components of AFG's property and casualty losses and LAE
amounts and ratio are detailed below (dollars in millions):

                                                                           Year ended December 31,
                                                       Amount                                                Ratio                                         Change in Ratio
                                       2021             2020             2019              2021               2020               2019            2021 - 2020           2020 - 2019
Property and transportation
Current year, excluding COVID-19
related and catastrophe losses      $ 1,448          $ 1,261          $ 1,332              67.6  %            67.4  %            72.8  %              0.2  %                 (5.4  %)
Prior accident years development       (103)            (107)             (67)             (4.8  %)           (5.7  %)           (3.6  %)             0.9  %                 (2.1  %)
Current year COVID-19 related
losses                                    -                7                -                 -  %             0.4  %               -  %             (0.4  %)                 0.4  %
Current year catastrophe losses          49               47               32               2.3  %             2.5  %             1.8  %             (0.2  %)                 0.7  %
Property and transportation losses
and LAE and ratio                   $ 1,394          $ 1,208          $ 1,297              65.1  %            64.6  %            71.0  %              0.5  %                 (6.4  %)

Specialty casualty
Current year, excluding COVID-19
related and catastrophe losses      $ 1,521          $ 1,419          $ 1,657              63.2  %            63.5  %            63.8  %             (0.3  %)                (0.3  %)
Prior accident years development       (140)             (97)             (88)             (5.9  %)           (4.3  %)           (3.4  %)            (1.6  %)                (0.9  %)
Current year COVID-19 related
losses                                    9               60                -               0.4  %             2.7  %               -  %             (2.3  %)                 2.7  %
Current year catastrophe losses           9               14               17               0.4  %             0.6  %             0.7  %             (0.2  %)                (0.1  %)
Specialty casualty losses and LAE
and ratio                           $ 1,399          $ 1,396          $ 1,586              58.1  %            62.5  %            61.1  %             (4.4  %)                 1.4  %

Specialty financial
Current year, excluding COVID-19
related and catastrophe losses      $   231          $   218          $   220              36.1  %            35.4  %            36.2  %              0.7  %                 (0.8  %)
Prior accident years development        (51)             (28)             (38)             (8.0  %)           (4.5  %)           (6.3  %)            (3.5  %)                 1.8  %
Current year COVID-19 related
losses                                    7               26                -               1.1  %             4.3  %               -  %             (3.2  %)                 4.3  %
Current year catastrophe losses          26               26               10               4.0  %             4.3  %             1.6  %             (0.3  %)                 2.7  %
Specialty financial losses and LAE
and ratio                           $   213          $   242          $   192              33.2  %            39.5  %            31.5  %             (6.3  %)                 8.0  %

Total Specialty
Current year, excluding COVID-19
related and catastrophe losses      $ 3,334          $ 3,013          $ 3,315              61.7  %            61.5  %            64.0  %              0.2  %                 (2.5  %)
Prior accident years development       (283)            (213)            (187)             (5.2  %)           (4.4  %)           (3.7  %)            (0.8  %)                (0.7  %)
Current year COVID-19 related
losses                                   16               95                -               0.3  %             1.9  %               -  %             (1.6  %)                 1.9  %
Current year catastrophe losses          86               91               60               1.6  %             1.9  %             1.2  %             (0.3  %)                 0.7  %
Total Specialty losses and LAE and
ratio                               $ 3,153          $ 2,986          $ 3,188              58.4  %            60.9  %            61.5  %             (2.5  %)                (0.6  %)

Aggregate - including exited lines
Current year, excluding COVID-19
related and catastrophe losses      $ 3,334          $ 3,155          $ 3,354              61.7  %            61.9  %            64.6  %             (0.2  %)                (2.7  %)
Prior accident years development       (279)            (127)            (143)             (5.1  %)           (2.5  %)           (2.8  %)            (2.6  %)                 0.3  %
Current year COVID-19 related
losses                                   16              115                -               0.3  %             2.2  %               -  %             (1.9  %)                 2.2  %
Current year catastrophe losses          86              128               60               1.6  %             2.5  %             1.2  %             (0.9  %)                 1.3  %
Aggregate losses and LAE and ratio  $ 3,157          $ 3,271          $ 3,271              58.5  %            64.1  %            63.0  %             (5.6  %)                 1.1  %



Current accident year losses and LAE, excluding COVID-19 related and catastrophe
losses
The current accident year loss and LAE ratio, excluding COVID-19 related and
catastrophe losses for AFG's Specialty property and casualty insurance
operations was 61.7% in 2021, 61.5% in 2020 and 64.0% in 2019.

Property and transportation  The 0.2 percentage points increase in the loss and
LAE ratio for the current year, excluding COVID-19 related and catastrophe
losses in 2021 compared to 2020 reflects an increase in the loss and LAE ratio
in the property and inland marine business, partially offset by a decrease in
the loss and LAE ratio in the crop operations.

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The 5.4 percentage points decrease in the loss and LAE ratio for the current
year, excluding COVID-19 related and catastrophe losses in 2020 compared to 2019
reflects a decrease in the loss and LAE ratio in the crop operations due to a
high level of prevented planting claims resulting from excess rain in 2019 and,
to a lesser extent, lower loss and LAE ratios in the aviation and transportation
businesses due primarily to rate increases and lower claim frequency in 2020,
and lower loss and LAE ratios in non-crop agricultural businesses and the
Singapore branch in 2020 compared to 2019.

Specialty casualty  The 0.3 percentage points decrease in the loss and LAE ratio
for the current year, excluding COVID-19 related and catastrophe losses in 2021
compared to 2020 reflects a decrease in the loss and LAE ratios of the excess
and surplus businesses, partially offset by an increase in the loss and LAE
ratios of the targeted markets businesses.

The 0.3 percentage points decrease in the loss and LAE ratio for the current
year, excluding COVID-19 related and catastrophe losses in 2020 compared to 2019
reflects a decrease in the loss and LAE ratios of the workers' compensation,
targeted markets, executive liability and excess and surplus businesses,
partially offset by the impact of the Neon exited lines in 2019, which has a
lower loss and LAE ratio than many of the other businesses in the Specialty
casualty group. Excluding the impact of the Neon exited lines, the loss and LAE
ratio for the current year, excluding COVID-19 related and catastrophe losses
decreased 2.1 percentage points in 2020 compared to 2019.

Specialty financial The 0.7 percentage points increase in the loss and LAE
ratio for the current year, excluding COVID-19 related and catastrophe losses in
2021 compared to 2020 reflects an increase in the loss and LAE ratio of the
financial institutions and trade credit businesses, partially offset by a
decrease in the loss and LAE ratio of the fidelity business.

The 0.8 percentage points decrease in the loss and LAE ratio for the current
year, excluding COVID-19 related and catastrophe losses in 2020 compared to 2019
reflects a decrease in the loss and LAE ratio of the financial institutions
business, partially offset by an increase in the loss and LAE ratio of the
fidelity business.

Net prior year reserve development
AFG's Specialty property and casualty insurance operations recorded net
favorable reserve development related to prior accident years of $283 million in
2021 compared to $213 million in 2020 and $187 million in 2019, an increase of
$70 million (33%) and an increase of $26 million (14%), respectively.

Property and transportation Net favorable reserve development of $103 million in
2021 reflects lower than anticipated claim frequency and severity in the
transportation businesses, lower than expected losses in the crop business,
lower than expected claim severity in the ocean marine business and lower than
expected claim frequency in the aviation business.

Net favorable reserve development of $107 million in 2020 reflects lower than
expected claim frequency and severity in the aviation, transportation and
agricultural businesses.

Net favorable reserve development of $67 million in 2019 reflects lower than
expected claim frequency and severity at National Interstate and lower than
expected losses in the crop business.

Specialty casualty Net favorable reserve development of $140 million in 2021
reflects lower than anticipated claim severity in the workers' compensation
businesses, partially offset by higher than anticipated claim severity in the
general liability and targeted markets businesses.

Net favorable reserve development of $97 million in 2020 reflects lower than
anticipated claim severity in the workers' compensation businesses and lower
than anticipated claim frequency in the executive liability business, partially
offset by higher than expected claim frequency and severity in general liability
contractor claims and the excess and surplus and excess liability businesses and
higher than anticipated claim severity in the targeted markets businesses.

Net favorable reserve development of $88 million in 2019 reflects lower than
anticipated claim frequency and severity in the workers’ compensation
businesses, partially offset by higher than expected claim severity in the
excess and surplus businesses and higher than expected claim frequency in
product liability contractor claims.

Specialty financial Net favorable reserve development of $51 million in 2021
reflects lower than anticipated claim frequency in the surety and trade credit
businesses and lower than expected claim frequency and severity in the financial
institutions business.

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Net favorable reserve development of $28 million in 2020 reflects lower than
anticipated claim frequency in the trade credit business and lower than
anticipated claim frequency and severity in the financial institutions, fidelity
and surety businesses.

Net favorable reserve development of $38 million in 2019 reflects lower than
expected claim frequency and severity in the surety and financial institutions
businesses and lower than anticipated claim severity in the trade credit
business.

Other specialty In addition to the reserve development discussed above, total
Specialty prior year reserve development includes net adverse reserve
development of $11 million, $19 million and $6 million in 2021, 2020, and 2019,
respectively. The net adverse reserve development reflects $16 million,
$24 million and $12 million in 2021, 2020 and 2019, respectively, of adverse
development associated with AFG's internal reinsurance program, partially offset
by the amortization of the deferred gains on the retroactive reinsurance
transactions entered into in connection with the sale of businesses in 1998 and
2001.

Asbestos and environmental reserve charges  As previously discussed under
"Uncertainties - Asbestos and Environmental-related ("A&E") Insurance Reserves,"
AFG has established property and casualty reserves for claims related to
environmental exposures and asbestos claims. While there was no charge recorded
in the property and casualty business in 2021, total charges recorded to
increase reserves (net of reinsurance recoverable) for A&E exposures of AFG's
property and casualty group (included in loss and loss adjustment expenses) were
$47 million in 2020 and $18 million in 2019.

Neon exited lines AFG recorded net adverse prior year reserve development of
$19 million in 2020 and $7 million in 2019 related to Neon's exited lines of
business (included in loss and loss adjustment expenses). See "Neon exited
lines" under "Property and Casualty Insurance Segment - Results of Operations"
for the quarters ended December 31, 2021 and 2020 for information about AFG's
exit of the Lloyd's of London insurance market in 2020.

Aggregate Aggregate net prior accident years reserve development for AFG's
property and casualty insurance segment includes the special A&E charges and
reserve development related to the Neon exited lines mentioned above and net
adverse reserve development of $4 million, $20 million and $19 million in 2021,
2020 and 2019, respectively, related to business outside the Specialty group
that AFG no longer writes.

Covid-19 related losses
AFG's Specialty property and casualty insurance operations recorded $16 million
in reserve charges related to COVID-19 in 2021 primarily related to the workers'
compensation and trade credit businesses, and recorded favorable development of
approximately $19 million of accident year 2020 reserves primarily based on loss
experience in the trade credit and executive liability businesses. Underwriting
results for AFG's Specialty property and casualty insurance operations in 2020
include $95 million of reserve charges related to COVID-19. Approximately 70% of
AFG's 2020 COVID-19 related losses were reported in the workers' compensation,
executive liability and trade credit businesses, with the remainder spread
across numerous other businesses. Given the uncertainties surrounding the
ultimate number and scope of claims relating to the pandemic, approximately 61%
of the $92 million in cumulative COVID-19 related losses are held as incurred
but not reported reserves at December 31, 2021.

In addition, underwriting results for the Neon exited lines includes $20 million
of COVID-19 related losses in 2020.

Catastrophe losses
AFG generally seeks to reduce its exposure to catastrophes through individual
risk selection, including minimizing coastal and known fault-line exposures, and
the purchase of reinsurance. AFG recorded net catastrophe losses of $86 million
in 2021 primarily from winter storms in Texas in the first quarter; storms in
multiple regions of the United States in the second, third and fourth quarters;
Hurricane Ida in the third quarter and Kentucky tornadoes and Colorado fires in
the fourth quarter.

Catastrophe losses of $128 million in 2020 resulted primarily from storms and
tornadoes in multiple regions of the United States in the first quarter; storms
and tornadoes in multiple regions of the United States and civil unrest in the
second quarter; Hurricanes Hanna, Laura and Sally, Tropical Storm Isaias, storms
and tornadoes in multiple regions of the United States and multiple wildfires in
west coast states in the third quarter and Hurricanes Laura, Sally, Delta and
Zeta and the Nashville explosion in the fourth quarter.

Catastrophe losses of $60 million in 2019 resulted primarily from winter storms
in multiple regions of the United States in the first quarter; storms and
tornadoes in multiple regions of the United States in the second quarter;
Hurricane Dorian and Tropical Storm Imelda in the third quarter and Typhoons
Faxai and Hagibis, storms and tornadoes in the south-central United States and
the Kincade fire in California in the fourth quarter.
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Commissions and Other Underwriting Expenses
AFG's property and casualty commissions and other underwriting expenses ("U/W
Exp") were $1.51 billion in 2021 compared to $1.60 billion in 2020, a decrease
of $90 million (6%). AFG's underwriting expense ratio was 28.0% in 2021 compared
to 31.4% in 2020, a decrease of 3.4 percentage points.

AFG’s property and casualty U/W Exp were $1.60 billion in 2020 compared to
$1.70 billion in 2019, a decrease of $98 million (6%). AFG’s underwriting
expense ratio was 31.4% in 2020 compared to 32.8% in 2019, a decrease of
1.4 percentage points.

Detail of AFG’s property and casualty commissions and other underwriting
expenses and underwriting expense ratios is shown below (dollars in millions):

                                                                               Year ended December 31,                                                           Change in % of NEP
                                                  2021                                  2020                                  2019                      2021 - 2020            2020 - 2019
                                      U/W Exp            % of NEP           U/W Exp            % of NEP           U/W Exp            % of NEP
Property and transportation          $   471                 22.0  %       $   482                 25.8  %       $   452                 24.7  %             (3.8  %)                  1.1  %
Specialty casualty                       632                 26.2  %           616                 27.5  %           836                 32.2  %             (1.3  %)                 (4.7  %)
Specialty financial                      333                 51.9  %           321                 52.3  %           326                 53.5  %             (0.4  %)                 (1.2  %)
Other specialty                           78                 37.2  %            68                 38.5  %            58                 37.9  %             (1.3  %)                  0.6  %
Total Specialty                        1,514                 28.0  %         1,487                 30.4  %         1,672                 32.2  %             (2.4  %)                 (1.8  %)
Neon exited lines                          -                                   117                                    30
Total Aggregate                      $ 1,514                 28.0  %       $ 1,604                 31.4  %       $ 1,702                 32.8  %             (3.4  %)                 (1.4  %)



Property and transportation  Commissions and other underwriting expenses as a
percentage of net earned premiums decreased 3.8 percentage points in 2021
compared to 2020 reflecting higher profitability-based ceding commissions
received from reinsurers in the crop business and the impact of higher premiums
on the ratio in the property and inland marine business in 2021 compared to
2020.

Commissions and other underwriting expenses as a percentage of net earned
premiums increased 1.1 percentage points in 2020 compared to 2019 reflecting
lower profitability-based ceding commissions received from reinsurers in the
crop business.

Specialty casualty  Commissions and other underwriting expenses as a percentage
of net earned premiums decreased 1.3 percentage points in 2021 compared to 2020
reflecting higher ceding commissions received from reinsurers as a result of
growth in the excess liability businesses.

Commissions and other underwriting expenses as a percentage of net earned
premiums decreased 4.7 percentage points in 2020 compared to 2019 due to the
runoff of Neon. Neon has a higher expense ratio than many of the other
businesses in the Specialty casualty sub-segment. Excluding Neon exited lines,
the underwriting expense ratio decreased 1.5 percentage points in 2020 compared
to 2019 reflecting higher ceding commissions received from reinsurers as a
result of growth in the excess liability business.

Specialty financial  Commissions and other underwriting expenses as a percentage
of net earned premiums decreased 0.4 percentage points in 2021 compared to 2020
reflecting the impact of higher premiums on the ratio in 2021 compared to 2020.

Commissions and other underwriting expenses as a percentage of net earned
premiums decreased 1.2 percentage points in 2020 compared to 2019 reflecting the
impact of higher premiums on the ratio in the fidelity and equipment leasing
businesses and lower travel expenses.

Aggregate  Aggregate commissions and other underwriting expenses for AFG's
property and casualty insurance segment includes $117 million of underwriting
expenses in the Neon run-off operations in 2020 and $30 million related to the
Neon exited lines charge in 2019 representing contractual employee severance
benefits and other incurred exit costs. See "Neon exited lines" under "Property
and Casualty Insurance Segment - Results of Operations" for the quarters ended
December 31, 2021 and 2020.

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Property and Casualty Net Investment Income
Net investment income in AFG's property and casualty insurance operations was
$663 million in 2021 compared to $404 million (excluding the Neon exited lines)
in 2020, an increase of $259 million (64%). Net investment income in AFG's
property and casualty operations was $404 million (excluding the Neon exited
lines) in 2020 compared to $472 million in 2019, a decrease of $68 million
(14%). The average invested assets and overall yield earned on investments held
by AFG's property and casualty insurance operations are provided below (dollars
in millions):

                                            Year ended December 31,                              2021 - 2020                             2020 - 2019
                                   2021              2020              2019             Change             % Change             Change             % Change
Net investment income:
Net investment income excluding
alternative investments         $    323          $    345          $    398          $    (22)                  (6  %)       $   (53)                  (13  %)
Alternative investments              340                59                74               281                  476  %            (15)                  (20  %)
Total net investment income     $    663          $    404          $    472          $    259                   64  %        $   (68)                  (14  %)

Average invested assets (at
amortized cost)                 $ 12,944          $ 11,760          $ 11,348          $  1,184                   10  %        $   412                     4  %

Yield (net investment income as
a % of average invested assets)     5.12  %           3.44  %           4.16  %           1.68  %                               (0.72  %)

Tax equivalent yield (*)            5.25  %           3.56  %           4.32  %           1.69  %                               (0.76  %)

(*)Adjusts the yield on equity securities and tax-exempt bonds to the fully
taxable equivalent yield.

The property and casualty insurance segment's increase in net investment income
in 2021 compared to 2020 reflects significantly higher earnings from alternative
investments (partnerships and similar investments and AFG-managed CLOs),
partially offset by the effect of lower fixed maturity yields, lower short-term
interest rates and lower dividend income. The property and casualty insurance
segment's overall yield on investments (net investment income as a percentage of
average invested assets) was 5.12% in 2021 compared to 3.44% in 2020, an
increase of 1.68 percentage points. The annualized return earned on alternative
investments was 25.3% in 2021 compared to 6.6% in 2020.

The decrease in net investment income in 2020 compared to 2019 reflects lower
earnings from alternative investments in 2020 as a result of the negative impact
of the COVID-19 pandemic on financial markets, lower short-term interest rates
and lower dividend income, partially offset by growth in the property and
casualty insurance segment. The property and casualty insurance segment's
overall yield on investments was 3.44% in 2020 compared to 4.16% in 2019, a
decrease of 0.72 percentage points. The annualized return earned on alternative
investments was 6.6% in 2020 compared to 10.3% in 2019.

In addition to the property and casualty segment's net investment income from
ongoing operations discussed above, the Neon exited lines reported a $5 million
loss in 2020 in net investment income, primarily from changes in the fair value
of equity securities.

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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 $6 million in 2021, $34 million in 2020, and
$35 million in 2019, a decrease of $28 million (82%) in 2021 compared to 2020
and $1 million (3%) in 2020 compared to 2019. The table below details the items
included in other income and expenses, net for AFG's property and casualty
insurance operations (in millions):

                                               Year ended December 31,
                                              2021            2020       

2019

Other income:
Income from the sale of real estate    $    10               $   -      $   -
Other                                       17                   8         11
Total other income                          27                   8         11
Other expenses:
Amortization of intangibles                  6                  12         11
Interest expense on funds withheld          25                  24         24
Other                                        2                   6         11
Total other expenses                        33                  42         46
Other income and expenses, net         $    (6)              $ (34)     $ 

(35)


In addition to the property and casualty segment's other income and expenses,
net from ongoing operations discussed above, the Neon exited lines incurred a
net expense of $5 million in other income and expenses, net during 2020.

Holding Company, Other and Unallocated - Results of Operations
AFG's net GAAP pretax loss outside of its property and casualty insurance
segment (excluding realized gains and losses) totaled $219 million in 2021
compared to $212 million in 2020, an increase of $7 million (3%). AFG's net core
pretax loss outside of its property and casualty insurance segment (excluding
realized gains and losses) totaled $208 million in 2021 compared to $186 million
in 2020, an increase of $22 million (12%).

AFG's net GAAP pretax loss outside of its property and casualty insurance
segment (excluding realized gains and losses) totaled $212 million in 2020
compared to $191 million in 2019, an increase of $21 million (11%). AFG's net
core pretax loss outside of its property and casualty insurance segment
(excluding realized gains and losses) totaled $186 million in 2020 compared to
$175 million in 2019, an increase of $11 million (6%).
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The following table details AFG’s GAAP and core loss from continuing operations
before income taxes from operations outside of its property and casualty
insurance segment in 2021, 2020 and 2019 (dollars in millions):

                                                             Year ended December 31,                                     % Change
                                                       2021               2020            2019             2021 - 2020             2020 - 2019
Revenues:
Net investment income                            $      36              $   12          $   24                    200  %                   (50  %)
Other income - P&C fees                                 80                  67              69                     19  %                    (3  %)
Other income                                            22                  19              21                     16  %                   (10  %)
Total revenues                                         138                  98             114                     41  %                   (14  %)

Costs and Expenses:
Property and casualty insurance - commissions
and other underwriting expenses                         33                  21              23                     57  %                    (9  %)
Other expense - expenses associated with P&C
fees                                                    47                  46              46                      2  %                     -  %
Other expenses (*)                                     172                 129             152                     33  %                   (15  %)
Costs and expenses, excluding interest charges
on borrowed money                                      252                 196             221                     29  %                   (11  %)
Loss before income taxes, excluding realized
gains and losses and interest charges on
borrowed money                                        (114)                (98)           (107)                    16  %                    (8  %)
Interest charges on borrowed money                      94                  88              68                      7  %                    29  %
Core loss from continuing operations before
income taxes, excluding realized gains and
losses                                                (208)               (186)           (175)                    12  %                     6  %
Pretax non-core special A&E charges                      -                 (21)            (11)                  (100  %)                   91  %
Pretax non-core loss on retirement of debt               -                  (5)             (5)                  (100  %)                    -  %
Pretax non-core loss on pension settlement             (11)                  -               -                      -  %                     -  %
GAAP loss from continuing operations before
income taxes, excluding realized gains and
losses                                           $    (219)             $ (212)         $ (191)                     3  %                    11  %


(*)Excludes a pretax non-core loss of $11 million related to the settlement of
pension liabilities of a small former manufacturing operation in 2021, pretax
non-core special A&E charges of $21 million and $11 million in 2020 and 2019,
respectively, and a pretax non-core loss on retirement of debt of $5 million in
both 2020 and 2019.

Holding Company and Other - Net Investment Income
AFG recorded net investment income on investments held outside of its property
and casualty insurance segment of $36 million, $12 million and $24 million in
2021, 2020 and 2019, respectively. The $24 million (200%) increase in 2021
compared to 2020 and the $12 million (50%) decrease in 2020 compared to 2019 are
due primarily to the impact of the stock market performance on a small portfolio
of securities held by the parent company that are carried at fair value through
net investment income. These securities increased in value by $14 million,
$5 million and $13 million in 2021, 2020 and 2019, respectively. The increase in
net investment income in 2021 also reflects income from directly owned real
estate acquired from the annuity group prior to the sale of the annuity business
and purchases of fixed maturity investments at the holding company.

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 2021, AFG collected
$73 million in fees for these services compared to $67 million in 2020 and
$69 million in 2019. Management views this fee income, net of the $47 million in
2021 and $46 million in 2020 and 2019, 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 collected $7 million in fees from AFG's disposed annuity operations
subsequent to the May 2021 sale as compensation for certain services provided
under a transition services agreement. 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 $16 million in 2021 and $15 million in
both 2020 and 2019, 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 Consolidated MIEs
column under "Results of Operations -
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Segmented Statement of Earnings." Excluding amounts eliminated in consolidation,
AFG recorded other income outside of its property and casualty insurance segment
of $6 million in 2021, $4 million in 2020 and $6 million in 2019.

Holding Company and Other - Other Expenses
Excluding the non-core special A&E charges, the non-core loss on retirement of
debt and the non-core loss on pension settlement discussed below, AFG's holding
companies and other operations outside of its property and casualty insurance
segment recorded other expenses of $172 million in 2021 compared to $129 million
in 2020, an increase of $43 million (33%). This increase reflects higher holding
company expenses related to employee benefit plans that are tied to stock market
performance and higher expenses associated with certain incentive compensation
plans that are tied to AFG's financial performance in 2021 compared to 2020.

Excluding the non-core special A&E charges and the non-core loss on retirement
of debt discussed below, AFG's holding companies and other operations outside of
its property and casualty insurance segment recorded other expenses of
$129 million in 2020 compared to $152 million in 2019, a decrease of $23 million
(15%). This decrease reflects lower holding company expenses related to employee
benefit plans that are tied to stock market performance and lower expenses
associated with certain incentive compensation plans in 2020 compared to 2019.

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 $94 million in 2021,
$88 million in 2020 and $68 million in 2019. The $6 million (7%) increase in
interest expense in 2021 compared to 2020 and the $20 million (29%) increase in
interest expense in 2020 compared to 2019 reflect higher average indebtedness.
The following table details the principal amount of AFG's long-term debt
balances as of December 31, 2021, December 31, 2020 and December 31, 2019
(dollars in millions):

                                                                                                             December 31,
                                                          December 31, 2021         December 31, 2020            2019
Direct obligations of AFG:
4.50% Senior Notes due June 2047                         $            590          $            590          $      590
3.50% Senior Notes due August 2026                                    425                       425                 425
5.25% Senior Notes due April 2030                                     300                       300                   -
5.125% Subordinated Debentures due December 2059                      200                       200                 200
4.50% Subordinated Debentures due September 2060                      200                       200                   -
6% Subordinated Debentures due November 2055                            -                         -                 150
5.625% Subordinated Debentures due June 2060                          150                       150                   -
5.875% Subordinated Debentures due March 2059                         125                       125                 125
Other                                                                   3                         3                   3
Total principal amount of Holding Company Debt           $          1,993   

$ 1,993 $ 1,493

Weighted Average Interest Rate                                        4.6  %                    4.6  %              4.6  %



The increase in interest expense in 2021 compared to 2020 and in 2020 compared
to 2019 reflect the following financial transactions completed by AFG between
January 1, 2019 and December 31, 2021:
•Issued $125 million of 5.875% Subordinated Debentures in March 2019
•Issued $200 million of 5.125% Subordinated Debentures in December 2019
•Redeemed $150 million of 6-1/4% Subordinated Debentures in December 2019
•Issued $300 million of 5.25% Senior Notes in April 2020
•Issued $150 million of 5.625% Subordinated Debentures in May 2020
•Issued $200 million of 4.50% Subordinated Debentures in September 2020
•Redeemed $150 million of 6% Subordinated Debentures in November 2020

Holding Company and Other - Special A&E Charges
As a result of the in-depth internal reviews and comprehensive external study of
A&E exposures discussed under "Uncertainties - Asbestos and
Environmental-related ("A&E") Insurance Reserves," AFG's holding companies and
other operations outside of its property and casualty insurance segment recorded
a minor charge in 2021, which is included in AFG's core operating earnings,
compared to pretax non-core special charges of $21 million in 2020 and
$11 million in 2019 to increase liabilities related to the A&E exposures of
AFG's former railroad and manufacturing operations. The charges are due to
relatively small movements across several sites that reflect changes in the
scope and costs of investigation and an increase in estimated ongoing operation
and maintenance costs. AFG has also increased its reserve for asbestos and toxic
substance exposures arising out of these operations. Total charges recorded to
increase liabilities
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for A&E exposures of AFG's former railroad and manufacturing operations
(included in other expenses) were $9 million in 2021, $28 million in 2020 and
$19 million in 2019.

Holding Company and Other - Loss on Retirement of Debt
In November 2020, AFG redeemed its $150 million outstanding principal amount of
6% Subordinated Debentures due in 2055 and wrote off unamortized debt issuance
costs of $5 million. In December 2019, AFG redeemed its $150 million outstanding
principal amount of 6-1/4% Subordinated Debentures due in 2054 at par value and
wrote off unamortized debt issuance costs of $5 million.

Holding Company and Other – Loss on Pension Settlement
In the second quarter of 2021, AFG settled pension liabilities related to a
small former manufacturing operation resulting in a pretax non-core loss of
$11 million.

Realized Gains (Losses) on Securities
AFG's realized gains (losses) on securities were net gains of $110 million in
2021 compared to net losses of $75 million in 2020, a change of $185 million
(247%). AFG's consolidated realized gains (losses) on securities were net losses
of $75 million in 2020 compared to net gains of $155 million in 2019, a change
of $230 million (148%). Realized gains (losses) on securities consisted of the
following (in millions):
                                                             Year ended December 31,
                                                           2021             2020       2019
Realized gains (losses) before impairments:
Disposals                                           $       5              $   8      $   4
Change in the fair value of equity securities             110                (69)       155
Change in the fair value of derivatives                    (6)              

(1) 4

                                                          109               

(62) 163

Change in allowance and impairments on securities           1                (13)        (8)
Realized gains (losses) on securities               $     110              

$ (75) $ 155


The $110 million net realized gain from the change in the fair value of equity
securities in 2021 includes gains of $29 million on investments in energy and
natural gas companies, $18 million on investments in banks and financing
companies, $17 million on investments in media companies, $14 million on
investments in healthcare companies and $9 million on investments in capital
goods companies.

The $69 million net realized loss from the change in the fair value of equity
securities in 2020 includes losses of $24 million on investments in banks and
financing companies, $31 million on investments in energy and natural gas
companies, $14 million on real estate investment trusts, $11 million from
investments in media companies and $5 million on investments in insurance
companies.

The $155 million net realized gain from the change in the fair value of equity
securities in 2019 includes gains of $64 million on investments in banks and
financing companies, $19 million on investments in media companies, $16 million
on investments in technology companies, $14 million on investments in insurance
companies, $7 million on investments in healthcare companies and $6 million on
investments in real estate investment trusts.

Realized Gains (Losses) on Subsidiaries
In 2021, AFG recognized a pretax gain on sale of subsidiary of $4 million
related to contingent consideration received on the sale of Neon. See "Results
of Operations - General" for the discussion of the December 2019 decision to
exit the Lloyd's of London insurance market.

On September 28, 2020, AFG announced that it had reached a definitive agreement
to sell GAI Holding Bermuda and its subsidiaries, comprising the legal entities
that own Neon, to RiverStone Holdings Limited. AFG recorded a $30 million loss
in the third quarter of 2020 to establish a liability equal to the excess of the
net carrying value of the assets and liabilities to be disposed over the
estimated net sale proceeds. In the fourth quarter of 2020, the estimated loss
was adjusted at the closing date to a gain of $23 million based on the final
proceeds and the final net assets disposed, which reflects $53 million of
non-core losses in the fourth quarter of 2020 at Neon. See Note C -
"Acquisitions and Sale of Businesses" to the financial statements.

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Consolidated Income Taxes on Continuing Operations
AFG's consolidated provision for income taxes on continuing operations was
$254 million in 2021 compared to $25 million in 2020, an increase of
$229 million (916%). AFG's consolidated provision for income taxes on continuing
operations was $25 million in 2020 compared to $143 million in 2019, a decrease
of $118 million (83%). See Note L - "Income Taxes" to the financial statements
for an analysis of items affecting AFG's effective tax rate.

Consolidated Noncontrolling Interests in Continuing Operations
AFG's consolidated net earnings (loss) from continuing operations attributable
to noncontrolling interests was a net loss of $11 million in 2020 compared to
$28 million in 2019, a decrease of $17 million (61%). Each period reflects
losses at Neon, AFG's United-Kingdom-based Lloyd's insurer, which was sold in
December 2020. See Note C - "Acquisitions and Sale of Businesses" to the
financial statements.

Net losses from continuing operations attributable to noncontrolling interests
in 2019 includes $18 million related to the $76 million non-core charge for
costs associated with AFG's plans to exit the Lloyd's of London insurance market
in 2020. See "Neon exited lines" under "Property and Casualty Insurance Segment
- Results of Operations" for the quarters ended December 31, 2021 and 2020.

Real Estate Entities Acquired from the Annuity Operations
Beginning with the first quarter of 2021, the results of the annuity businesses
to be sold are reported as discontinued operations, in accordance with GAAP,
which included adjusting prior period results to reflect these operations as
discontinued. Prior to the completion of the sale, AFG's property and casualty
insurance operations acquired approximately $480 million in real estate-related
partnerships and AFG parent acquired approximately $100 million of directly
owned real estate from those operations. GAAP pretax earnings from continuing
operations includes the earnings from these entities through the May 31, 2021
effective date of the sale and certain other expenses that will be retained from
the annuity operations.

The retained real estate entities contributed $51 million in GAAP pretax
earnings through the May 31, 2021 effective date of the sale compared to
$49 million in 2020, an increase of $2 million (4%). This increase reflects
higher earnings from the real estate-related partnerships through the sale date
compared to 2020.

The retained real estate entities contributed $49 million in GAAP pretax
earnings in 2020 compared to $37 million in 2019, an increase of $12 million
(32%). This increase reflects higher earnings from the real estate-related
partnerships in 2020 compared to 2019.

Discontinued Annuity Operations
AFG's discontinued annuity operations, which were sold on May 31, 2021,
contributed $324 million in GAAP pretax earnings (excluding the gain on the sale
of the annuity operations) in 2021 compared to $509 million in 2020, a decrease
of $185 million (36%), reflecting the following:
•lower net realized gains on securities through the date of the sale in May 2021
compared to 2020,
•significantly higher earnings from partnerships and similar investments,
•the negative impact from the run-off of higher yielding investments and lower
short-term interest rates,
•the positive impact of strong stock market performance in 2021,
•the negative impact of lower than expected interest rates in both 2021 and 2020
on the accounting for fixed indexed annuities ("FIAs"),
•the negative impact of unlocking actuarial assumptions in the third quarter of
2020, and
•the negative impact of the amortization of the deferred loss related to the
annuity block reinsurance transaction entered into in the fourth quarter of 2020
and other reinsurance impacts in 2021.

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AFG's discontinued annuity operations contributed $509 million in GAAP pretax
earnings in 2020 compared to $474 million in 2019, an increase of $35 million
(7%), reflecting the following:
•higher net realized gains on securities in 2020 compared to 2019,
•lower earnings from partnerships and similar investments,
•the positive impact of strong stock market performance in 2019,
•the negative impact of significantly lower than expected interest rates in both
2020 and 2019 on the accounting for FIAs,
•higher charges from the unlocking of actuarial assumptions in the third quarter
of 2020 compared to the third quarter of 2019, and
•the negative impact of the amortization of the deferred loss related to the
annuity block reinsurance transaction entered into in the fourth quarter of
2020.

The following table details AFG's earnings before and after income taxes and the
gain on the sale from its discontinued annuity operations for the years ended
December 31, 2021, 2020 and 2019 (dollars in millions):

                                                          Year ended December 31,                                  % Change
                                                   2021 (*)           2020           2019            2021 - 2020             2020 - 2019
Pretax annuity earnings historically reported as
core operating earnings:
Pretax annuity earnings before items below       $     106          $ 325          $ 311                    (67  %)                    5  %
Earnings on partnerships and similar investments       139             15             77                    827  %                   (81  %)
Total pretax annuity earnings historically
reported as core operating earnings                    245            340            388                    (28  %)                  (12  %)

Pretax amounts previously reported outside of
annuity core earnings:
Unlocking                                                -            (46)            (1)                  (100  %)                4,500  %
Impact of reinsurance, derivatives related to
FIAs and other impacts of changes in the stock
market and interest rates on FIAs over or under
option costs                                           (33)          (142)           (46)                   (77  %)                  209  %
Realized gains on securities                           112            365            132                    (69  %)                  177  %
Run-off life and long-term care                          -             (8)             1                   (100  %)                 (900  %)
Total pretax amounts previously reported outside
of annuity core earnings                                79            169             86                    (53  %)                   97  %
GAAP pretax earnings from discontinued annuity
operations, excluding the gain on the sale of
the discontinued annuity operations                    324            509            474                    (36  %)                    7  %
Provision for income taxes                              66            102             96                    (35  %)                    6  %
GAAP net earnings from discontinued annuity
operations, excluding the sale of the
discontinued annuity operations                        258            407            378                    (37  %)                    8  %
Gain on sale of discontinued annuity operations,
net of tax                                             656              -              -                      -  %                     -  %
GAAP net earnings from discontinued annuity
operations                                       $     914          $ 407          $ 378                    125  %                     8  %


(*)Results through the May 31, 2021 effective date of the sale.

RECENTLY ADOPTED ACCOUNTING STANDARDS

See Note A - "Accounting Policies - Credit Losses on Financial Instruments" to
the financial statements for a discussion of accounting guidance adopted on
January 1, 2020, which provides a new credit loss model for determining
credit-related impairments for financial instruments measured at amortized cost
(mortgage loans, premiums receivable and reinsurance recoverables) and requires
an entity to estimate the credit losses expected over the life of an exposure or
pool of exposures.

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