v3.25.2
Fair Value Measurements
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Accounting standards for measuring fair value are based on inputs used in estimating fair value. The three levels of the hierarchy are as follows:

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

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

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

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

AFG’s management is responsible for the valuation process and uses data from outside sources (including nationally recognized pricing services and broker/dealers) in establishing fair value. AFG’s internal investment group includes approximately 20 investment professionals whose primary responsibility is to manage AFG’s investment portfolio. These professionals monitor individual investments as well as overall industries and are active in the financial markets on a daily basis. The group is led by AFG’s chief investment officer, who reports directly to one of AFG’s Co-CEOs. Valuation techniques utilized by pricing services and prices obtained from external sources are reviewed by AFG’s internal investment professionals who are familiar with the securities being priced and the markets in which they trade to ensure the fair value determination is representative of an exit price. To validate the appropriateness of the prices obtained, these investment managers consider widely published indices (as benchmarks), recent trades, changes in interest rates, general economic conditions and the credit quality of the specific issuers. In addition, AFG communicates directly with the pricing services regarding the methods and assumptions used in pricing, including verifying, on a test basis, the inputs used by the service to value specific securities.
Assets and liabilities measured and carried at fair value in the financial statements are summarized below (in millions):
Level 1Level 2Level 3Total
June 30, 2025
Assets:
Available for sale (“AFS”) fixed maturities:
U.S. government and government agencies$184 $4 $— $188 
States, municipalities and political subdivisions— 862 6 868 
Foreign government— 255 — 255 
Residential MBS— 2,216 1 2,217 
Collateralized loan obligations— 1,088 — 1,088 
Other asset-backed securities— 2,122 284 2,406 
Corporate and other— 3,006 461 3,467 
Total AFS fixed maturities184 9,553 752 10,489 
Trading fixed maturities— 69 13 82 
Equity securities467 47 286 800 
Assets of managed investment entities (“MIE”)360 3,462 11 3,833 
Other assets — derivatives— 6 — 6 
Total assets accounted for at fair value$1,011 $13,137 $1,062 $15,210 
Liabilities:
Contingent consideration — acquisitions$— $— $1 $1 
Liabilities of managed investment entities346 3,328 11 3,685 
Other liabilities — derivatives— 7 — 7 
Total liabilities accounted for at fair value$346 $3,335 $12 $3,693 
December 31, 2024
Assets:
Available for sale fixed maturities:
U.S. government and government agencies$173 $— $— $173 
States, municipalities and political subdivisions— 858 1 859 
Foreign government— 237 — 237 
Residential MBS— 1,988 1 1,989 
Collateralized loan obligations— 1,237 — 1,237 
Other asset-backed securities— 2,111 296 2,407 
Corporate and other12 3,014 470 3,496 
Total AFS fixed maturities185 9,445 768 10,398 
Trading fixed maturities— 50 26 76 
Equity securities419 40 292 751 
Assets of managed investment entities419 3,711 10 4,140 
Other assets — derivatives— 1 — 1 
Total assets accounted for at fair value$1,023 $13,247 $1,096 $15,366 
Liabilities:
Contingent consideration — acquisitions$— $— $2 $2 
Liabilities of managed investment entities402 3,553 10 3,965 
Other liabilities — derivatives— 18 — 18 
Total liabilities accounted for at fair value$402 $3,571 $12 $3,985 

Approximately 7% of the total assets carried at fair value at June 30, 2025, were Level 3 assets. Internally developed prices for fixed maturities are estimated using a variety of inputs, including appropriate credit spreads over the treasury yield (of a similar duration), trade information and prices of comparable securities and other security specific features (such as optional early redemption). Internally developed Level 3 asset fair values represent approximately 85% ($897 million) of the total fair value of Level 3 assets at June 30, 2025. Approximately 67% ($605 million) of these internally developed Level 3 assets are priced using a pricing model that uses a discounted cash flow approach to estimate the fair value of fixed maturity securities. The credit spread applied by management is the significant unobservable input of the pricing model. In instances where the security is currently callable at par value and the pricing
model suggests a higher price, management caps the fair value at par value. The remainder of the internally developed Level 3 investments ($292 million) are priced using internal models or inputs from third parties that are not market observable. Management believes that any justifiable changes in unobservable inputs used to determine internally developed fair values would not have resulted in a material change in AFG’s financial position.

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

Changes in balances of Level 3 financial assets and liabilities carried at fair value during the second quarter and first six months of 2025 and 2024 are presented below (in millions). The transfers into and out of Level 3 were due to changes in the availability of market observable inputs. All transfers are reflected in the table at fair value as of the end of the reporting period.
Total realized/unrealized
gains (losses) included in
Balance at March 31, 2025Net
earnings (loss)		Other comprehensive income (loss)Purchases
and
issuances		Sales and
settlements		Transfer
into
Level 3		Transfer
out of
Level 3		Balance at June 30, 2025
AFS fixed maturities:
State and municipal$4 $— $— $— $— $2 $— $6 
Residential MBS1 — — — — — — 1 
Collateralized loan obligations— — — — — — — — 
Other asset-backed securities
281 — 3 6 (6)— — 284 
Corporate and other462 7 1 25 (34)— — 461 
Total AFS fixed maturities748 7 4 31 (40)2 — 752 
Trading fixed maturities
13 — — — — — — 13 
Equity securities297 20 — 3 — 7 (41)286 
Assets of MIE12 (2)— 1 — — — 11 
Total Level 3 assets$1,070 $25 $4 $35 $(40)$9 $(41)$1,062 
Contingent consideration — acquisitions$(1)$— $— $— $— $— $— $(1)
Total Level 3 liabilities$(1)$— $— $— $— $— $— $(1)
Total realized/unrealized
gains (losses) included in
Balance at March 31, 2024Net
earnings (loss)		Other comprehensive income (loss)Purchases
and
issuances		Sales and
settlements		Transfer
into
Level 3		Transfer
out of
Level 3		Balance at June 30, 2024
AFS fixed maturities:
State and municipal$2 $— $— $— $— $— $— $2 
Residential MBS2 — — — — — — 2 
Collateralized loan obligations1 — — — — — — 1 
Other asset-backed securities
335 (1)4 9 (7)— — 340 
Corporate and other402 — 1 15 (6)— (1)411 
Total AFS fixed maturities742 (1)5 24 (13)— (1)756 
Trading fixed maturities
— — — 12 — — — 12 
Equity securities545 15 — 48 (6)— — 602 
Assets of MIE10 (1)— 3 — — — 12 
Total Level 3 assets$1,297 $13 $5 $87 $(19)$— $(1)$1,382 
Contingent consideration — acquisitions$(2)$— $— $— $— $— $— $(2)
Total Level 3 liabilities$(2)$— $— $— $— $— $— $(2)
Total realized/unrealized
gains (losses) included in
Balance at December 31, 2024Net
earnings (loss)		Other comprehensive income (loss)Purchases
and
issuances		Sales and
settlements		Transfer
into
Level 3		Transfer
out of
Level 3		Balance at June 30, 2025
AFS fixed maturities:
State and municipal$1 $— $— $— $— $5 $— $6 
Residential MBS1 — — — — — — 1 
Collateralized loan obligations— — — — — — — — 
Other asset-backed securities
296 — 5 16 (33)— — 284 
Corporate and other470 1 5 39 (48)1 (7)461 
Total AFS fixed maturities768 1 10 55 (81)6 (7)752 
Trading fixed maturities
26 1 — — (14)— — 13 
Equity securities292 18 — 16 — 7 (47)286 
Assets of MIE10 (3)— 4 — — — 11 
Total Level 3 assets$1,096 $17 $10 $75 $(95)$13 $(54)$1,062 
Contingent consideration — acquisitions$(2)$— $— $— $1 $— $— $(1)
Total Level 3 liabilities$(2)$— $— $— $1 $— $— $(1)
Total realized/unrealized
gains (losses) included in
Balance at December 31, 2023Net
earnings (loss)		Other comprehensive income (loss)Purchases
and
issuances		Sales and
settlements		Transfer
into
Level 3		Transfer
out of
Level 3		Balance at June 30, 2024
AFS fixed maturities:
State and municipal$2 $— $— $— $— $— $— $2 
Residential MBS2 — — — — — — 2 
Collateralized loan obligations1 — — — — — — 1 
Other asset-backed securities
351 (1)4 24 (12)— (26)340 
Corporate and other380 (1)1 48 (12)— (5)411 
Total AFS fixed maturities
736 (2)5 72 (24)— (31)756 
Trading fixed maturities— — — 12 — — — 12 
Equity securities485 35 — 90 (8)— — 602 
Assets of MIE9 (2)— 5 — — — 12 
Total Level 3 assets$1,230 $31 $5 $179 $(32)$— $(31)$1,382 
Contingent consideration — acquisitions$(2)$— $— $— $— $— $— $(2)
Total Level 3 liabilities$(2)$— $— $— $— $— $— $(2)
Fair Value of Financial Instruments   The carrying value and fair value of financial instruments that are not carried at fair value in the financial statements are summarized below (in millions):
Carrying Value
Fair Value
TotalLevel 1Level 2Level 3
June 30, 2025
Financial assets:
Cash and cash equivalents$1,268 $1,268 $1,268 $— $— 
Mortgage loans909 881 — — 881 
Total financial assets not accounted for at fair value
$2,177 $2,149 $1,268 $— $881 
Long-term debt$1,476 $1,235 $— $1,232 $3 
Total financial liabilities not accounted for at fair value
$1,476 $1,235 $— $1,232 $3 
December 31, 2024
Financial assets:
Cash and cash equivalents$1,406 $1,406 $1,406 $— $— 
Mortgage loans791 754 — — 754 
Total financial assets not accounted for at fair value
$2,197 $2,160 $1,406 $— $754 
Long-term debt$1,475 $1,276 $— $1,273 $3 
Total financial liabilities not accounted for at fair value
$1,475 $1,276 $— $1,273 $3