v3.26.3
Derivatives
 9 Months Ended
Sep. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Derivatives
As discussed under “Derivatives” in Note A — “Accounting Policies,” AFG uses derivatives to mitigate certain market risks related to its investment portfolio and deferred compensation obligations to employees.

The following table presents the classification of derivative assets and liabilities included in AFG’s Balance Sheet at fair value (in millions):
September 30, 2026December 31, 2025
Balance Sheet LineAssetLiabilityAssetLiability
Derivatives designated and qualifying as cash flow hedges:
Interest rate swapsOther assets/Other liabilities$— $27 $1 $3 
Derivatives not designated as hedging instruments:
Fixed maturities with embedded derivativesFixed maturities67 — 53 — 
Total return swapOther assets/Other liabilities— 3 — — 
$67 $30 $54 $3 

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

Under the terms of the swaps, which expire between October 2026 and October 2034, AFG receives fixed-rate interest payments in exchange for variable interest payments based on SOFR. The total outstanding notional amount of AFG’s interest rate swaps was $1.33 billion at September 30, 2026 compared to $464 million at December 31, 2025, reflecting new swaps entered into in the first nine months of 2026 ($997 million notional amount at issuance), partially offset by scheduled amortization. Amounts reclassified from AOCI to net investment income were losses of less than $1 million and $3 million in the third quarter of 2026 and 2025 and losses of $2 million and $8 million in the first nine months of 2026 and 2025, respectively. Based on a forward interest rate curve at September 30, 2026, management estimates that it will reclassify approximately $5 million of pre-tax net losses on interest rate swaps from AOCI to net investment income over the next twelve months. The actual amount will vary based on changes in SOFR. A collateral receivable supporting these swaps of $50 million and $10 million at September 30, 2026 and December 31, 2025, respectively, is included in other assets in AFG’s Balance Sheet.
The fixed maturities with embedded derivatives consist of convertible fixed maturity securities and certain structured securities. AFG records the change in the fair value of these securities in net earnings. These investments are part of AFG’s overall investment strategy and represent a small component of AFG’s overall investment portfolio.

AFG is exposed to fair value changes from certain equity and fixed maturity market-based exposures related to its deferred compensation obligations to certain employees. To mitigate this risk, AFG entered into a total return swap. AFG’s Balance Sheet includes a $3 million receivable for collateral posted related to the swap (included in other assets) at September 30, 2026, and a liability of less than $1 million to return collateral related to the swap (included in other liabilities) at December 31, 2025.

The following table summarizes the gains (losses) included in AFG’s Statement of Earnings for changes in the fair value of derivatives (in millions):
Three months ended September 30,Nine months ended September 30,
Statement of Earnings Line2026202520262025
Qualifying cash flow hedges:
Interest rate swapsNet investment income$— $(3)$(2)$(8)
Non-designated hedges:
Fixed maturities with embedded derivatives
Realized gains (losses) on securities
(6)1 (16)2 
Fixed maturities with embedded derivativesNet investment income— 4 — 6 
Total return swapOther expenses(2)6 8 12 
Earnings (losses) on non-designated hedges(8)11 (8)20 
Total earnings (losses) on derivatives$(8)$8 $(10)$12