AFG 10-K & 10-Q changes, risk factors and insider trading

Catastrophes can be caused by unpredictable natural events such as hurricanes, windstorms, severe storms, tornadoes, floods, hailstorms, earthquakes, explosions and fire, and by other events, such as war, terrorist attacks and civil unrest, as well as pandemics and other similar outbreaks in many parts of the world. These events may have a material adverse effect on AFG’s workforce and business operations as well as the workforce and operations of AFG’s customerscustomers, business partners and independent agents.

The extent of gross losses for AFG’s insurance operations from a catastrophe event is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. In addition, certain catastrophes could result in both property and non-property claims from the same event. AFG purchases traditional catastrophe reinsurance and has issued a fully collateralized catastrophe bond to mitigate the impact of catastrophe losses. ReinsuranceTraditional reinsurance is subject to the adequacy and counterparty reinsurance risks described below under “The inability to obtain reinsurance or to collect on ceded reinsurance could adversely affect AFG’s results of operations.” A severe catastrophe or a series of catastrophes could result in losses exceeding AFG’s reinsurance protection and may have a material adverse impact on its results of operations or financial condition.

Changing weather patterns, whether as a result of global climate change caused by human activities or otherwise, have added to the unpredictability, frequency and severity of weather-related catastrophes and other losses, such as wildfireswildfires, storms or flooding, incurred by the industry in recent years. For example, in September 2024, Hurricane Helene caused significant damage in non-coastal areas, where such impacts may not have historically been expected. Changing weather patterns also make it more difficult for AFG to predict and model catastrophic events, reducing AFG’s ability to accurately price its exposure to such events and mitigate its risks. In addition, claims for catastrophic events, or an unusual frequency of smaller losses in a particular period, such as from lower severity convective storms, could expose AFG to large losses, cause substantial volatility in its results of operations and could have a material adverse effect on its ability to renew business or write new business if AFG is not able to adequately assess and reserve for the increased frequency and severity of catastrophes resulting from these environmental factors. In addition, any increase in the frequency or severity of catastrophic events may result in losses exceeding AFG’s reinsurance protection or may result in substantial volatility in or materially impact AFG’s results of operations or financial condition.

Operational risk and losses can result from, among other things, fraud, errors, failure to document transactions properly, failure to obtain proper internal authorization, failure to comply with regulatory requirements, information technology failures or other internal or external events.events, whether experienced by AFG or its business partners. AFG continues to enhance its operating procedures and internal controls to effectively support its business and its regulatory and reporting requirements. The NAIC and state legislatures have increased their focus on risks within an insurer’s holding company system that may pose enterprise risk to insurers. AFG must submit an Own Risk and Solvency Assessment Summary Report (“ORSA”) at least annually to its lead state insurance regulator. The ORSA is a confidential internal assessment of the material and relevant risks associated with an insurer’s current business plan and the sufficiency of capital resources to support those risks.

AFG operates within an enterprise risk management (“ERM”) framework designed to assess and monitor risks. However, assuranceAFG cannot assure that AFGit canwill effectively identify, review and monitor all risks orrisks, that all its employees will operate within the ERM framework cannot be guaranteed. Assurancesor that AFG’sits ERM framework will result in the Company accurately identifying all risks and accurately limiting its exposures based on its assessments also cannot be guaranteed.assessments. Any ineffectiveness in AFG’s controlcontrols or procedures or failure to manage these risks may have an adverse effect on AFG’s results of operations and financial condition.

AFG has substantial exposure to unexpected losses resulting from war, acts of terrorism, political unrest and geopolitical instability in many regions of the world. Private sector catastrophe reinsurance is limited and generally unavailable for terrorism losses caused by attacks with nuclear, biological, chemical or radiological weapons. OnIn December 20, 2019, the President of the United States signed the Terrorism Risk Insurance Program Reauthorization Act of 2019 (“TRIP"), extending the program through December 31, 2027. Although TRIP provides benefits in the event of certain acts of terrorism, those benefits are subject to a deductible and to other limitations, which could ultimately leave AFG subject to material adverse financial impacts. AFG cannot predict or eliminate its exposure to events of war, terrorism, political unrest or geopolitical uncertainty, and to the extent that losses from such events occur, AFG’s financial condition and results of operations could be materially adversely affected.

AFG’s reliance on the independent agency market makes it vulnerable to a reduction in the amount of business written by agents. Many of AFG’s competitors also rely significantly on the independent agency market. Some of AFG’s competitors offer a wider variety of products or higher commissions. AFG also faces credit risk with respect to its independent agents, as they may not pay all the premiums owed to AFG and it may be difficult or impossible to recover such amounts. A reduction in the number of independent agencies marketing AFG’s products, the failure of agencies to successfully market AFG’s products, disruption to relationships with agencies, changes in the strategy or operations of agencies (including through agency consolidation or the financing of agencies by private equity or other capital providers), the inability of AFG to collect amounts owed by agencies or the choice of agencies to reduce their writings of AFG products could adversely affect AFG’s revenues and profitability.

Liabilities for unpaid losses and loss adjustment expenses (“LAE”) do not represent an exact calculation of liability but instead represent management estimates of what the ultimate settlement and administration of claims will cost, supported by actuarial expertise and projection techniques, at a given accounting date. The process of estimating unpaid losses and LAE reserves involves a high degree of judgment and is subject to numerous internal and external factors. Variability is introduced by numerous factors, such as changes in claims handling procedures, the impact of general and wage inflation (including impacts on medical costs and property and transportation vehicle parts and values) on loss cost trends, increasing litigation and erosion of causation and coverage defenses for insurance claims, legislative actions, evolving mass tort issues and varying judgments and viewpoints of the individuals involved in the estimation process, among others. The impact of many of these items on ultimate costs for unpaid losses and LAE is inherently uncertain and difficult to estimate. Unpaid losses and LAE reserve estimation difficulties also differ significantly by product line due to differences in claim complexity, the volume of claims, the potential severity of individual claims, the determination of an occurrence date for a claim and lags in the time between damage, loss or injury and when a claim is actually reported to the insurer. In addition, the historic development of AFG’s liability for unpaid losses and LAE may not necessarily reflect future trends in the development of these amounts. To the extent that reserves are inadequate and are strengthened, AFG’s profitability would be adversely affected because the amount of any such increase would be treated as a charge to earnings in the period in which the deficiency is recognized.

AFG uses various modeling techniques and data analytics to analyze and estimate exposures, loss trends and other risks associated with its assets and liabilities. AFG uses the modeled outputs and related analyses to assist in decision-making in areas such as underwriting, claims, reserving, reinsurance and catastrophe risk. The modeled outputs and related analyses are subject to various assumptions, uncertainties, model errors and the inherent limitations of any statistical analysis, including the use of historical internal and industry data. In addition, the modeled outputs and related analyses may from time to time contain inaccuracies, perhaps in material respects, including as a result of inaccurate inputs or applications thereof. Consequently, actual results may differ materially from AFG’s modeled results. AFG may also utilize artificial intelligence or machine learning technologies (“AI”) to assist with modeled outputs and related analyses, the results of which may be unintentionally deficient, arbitrary, inaccurate or misleading. If, based upon these models or other factors, AFG underestimates the frequency and/or severity of loss events or overestimates the risks it is exposed to, new business growth and retention of AFG’s existing business may be adversely affected which could have an adverse effect on AFG’s results of operations and financial condition.

General economic, financial market and political conditions and conditions in the markets in which AFG operates could have a material adverse effect on its results of operations and financial condition. Limited availability of credit, deteriorations of the domestic or global equity, debt, mortgage and real estate markets; declines in consumer confidence and consumer spending; increases in prices or in the rate of inflation; periods of high unemploymentunemployment, labor supply shortages or low labor force participation; lower business investment; persistently low orlow, rapidly increasing or volatile interest rates; disruptive actions or policies by the U.S. or foreign governments; disruptive geopolitical events and other events outside of AFG’s control, such as a major epidemic or another pandemic, could contribute to increased volatility and diminished expectations for the economy and the financial markets, including the value of AFG’s investment portfolio and the market for its stock.

AFG has invested, and intends to continue to invest in, alternative investments, such as limited partnerships and subordinate tranches of collateralized loan obligationsobligations, for which changes in value are reported in net earnings. These and other similar investments may have different, more significant risk characteristics than investments in fixed maturity securities, lack quoted prices, may be subject to changing tax laws and regulatory oversight, may be more volatile and may be illiquid due to restrictions on sales, transfers and redemption terms, all of which could negatively affect AFG’s investment income and overall portfolio liquidity.

Businesses in the United States and in other countries have increasingly become the targets of “cyber-attacks,” “ransomware,” “phishing,” “hackinghacking,” “social engineering” or similar illegal or unauthorized intrusions into computer systems and networks. Such events are often highly publicized, can result in significant disruptions to information technology systems and the theft of significant amounts of information as well as funds from online financial accounts, and can cause negative publicity and extensive damage to the reputation of the targeted business, in addition to leading to significant expenses associated with investigation, remediation andremediation, customer protection measures.measures and potential litigation. The sophistication of cybersecurity threats, including through the use of AI, continues to increase and proliferate.proliferate, increasing and intensifying the potential risks. Like others in the insurance industry, AFG experiences cyber-attacks and other attempts to gain unauthorized access to its systems on a regular basis and anticipates continuing to be subject to such attempts. AFG’s administrative and technical controls as well as other preventative actions used to reduce the risk of cyber incidents and protect AFG’s information may be insufficient to detect or prevent future unauthorized access, other physical and electronic break-ins, cyber-attacks or other security breaches to AFG’s computer systems or those of third parties with whom AFG does business. Third parties with which AFG conducts business have also experienced, and may experience in the future, similar illegal or unauthorized intrusions into their computer systems and networks, which could adversely affect AFG’s ability to conduct business, its results of operations and reputation, in addition to exposing it to legal liability or regulatory action.

AFG and its business partners collect and store sensitive data in the ordinary course of AFG’s and their business, including personalpersonally identificationidentifiable information of our and their employees and customers, vendors,business partners, investors and other third parties and may include health information.information (collectively, “confidential information”). Laws and regulations in this area are evolving at an international, national and state level and are generally becoming more rigorous, including through the adoption of more stringent subject matter-specific laws, such as the California Consumer Privacy Act of 2018 (as amended by the California Privacy Rights Act of 2020), the New York Department of Financial Services’ Cybersecurity Regulation and Ohio’s insurance data security law, which regulate the collection and use of data and security and data breach obligations. The use of AI by AFG or its business partners may also result in potential breaches of existing or future laws or regulations related to privacy or data security. If any disruption or security breach suffered by AFG or its business partners results in a loss or damage to AFG’s data, or inappropriate disclosure of AFG’s confidential information or that of others,others — whether by AFG or its business partners — it could damage AFG’s reputation, affect its relationships with customers, clients, business partners and regulators, lead to claims against AFG, result in regulatory action and harm AFG’s business. In addition, AFG may be required to incur significant costs to mitigate the damage caused by any security breach or to protect against future damage.

Financial strength ratings are an important factor in establishing the competitive position of insurance companies and may have an effect on an insurance company’s sales. A downgrade out of the “A” category in AFG’s insurers’insurance subsidiaries’ claims-paying and financial strength ratings could significantly reduce AFG’s business volumes in certain lines of business, adversely impact AFG’s ability to access the capital markets and increase AFG’s borrowing costs.

In addition to the financial strength ratings of AFG’s principal insurance company subsidiaries, various rating agencies also publish credit ratings for AFG. Credit ratings are indicators of a debt issuer’s ability to meet the terms of debt obligations in a timely manner, are part of AFG’s overall financial profile and affect AFG’s ability to access and the associated cost of certain types of capital. A downgrade in AFG’s credit ratings could have a material adverse effect on AFG’s financial condition and results of operations and cash flows in a number of ways, including adversely limiting access to capital markets, potentially increasing the cost of debt or increasing borrowing costs under AFG’s current revolving credit facility.facility, and subjecting AFG to more restrictive debt and revolving credit facility terms in the future.

AFG may suffer losses from litigation, including from effects of emerging claim and coverage issuesissues, which could materially and adversely affect AFG’s financial condition and business operations.

AFG is involved in routine legal proceedings incidental to its insurance operations and litigation related to asbestos and environmental claims from its historical operations. Litigation by nature is unpredictable, and the outcome of any case is uncertain and could result in liabilities that vary from the amounts AFG has currently recorded. Pervasive or significant changes in the judicial environment relating to matters such as trends in the size of jury awards, developments in the law relating to the liability of insurers or tort defendants, and rulings concerning the availability or amount of certain types of damages could cause AFG’s ultimate liabilities to change from current expectations. As industry practices and legal, judicial, legislative, social and other environmental conditions change, unexpected and unintended issuesexposures related to claims and coverage may emerge. These issuesexposures may adversely affect AFG’s business, including by extending coverage beyond contractual terms,terms or underwriting intentintent, extending or eliminating statutes of limitation, or by increasing the number, size or types of claims as a result of, among other things, plaintiffs targeting property and casualty insurers in purported class action litigation relating to claims-handling and other practices; increased claims or exposures due to third party funding of litigation; and social inflation and legal system abuse influencing trends like more frequent claims, judgments that are unfavorable for insurers and an increase in “nuclear verdicts” leading to higher juryjudgments awards.and settlements. Changes in the federal or state tort litigation lawsenvironments or other applicable lawlaws could have a similar effect. It is not possible to predict changes in the judicial and legislative environment, including in connection with asbestos and environmental claims. In addition, potential exposure to losses related to emerging exposures such as PFAS, whether through AFG’s insurance operations or its former railroad and manufacturing operations, are inherently difficult to forecast or estimate, as many factors could influence potential liability for any such losses. These factors may include developments in PFAS-related litigation, including the establishment or expansion of theories of causation and liability; new or enhanced rules, regulations and enforcement actions by the U.S. federal government and its agencies, including the Environmental Protection Agency, as well as state governments and agencies; and medical or research findings pertaining to actual or potential harm or illness to human health resulting from PFAS. New technology, including AI, could also create unforeseen exposures or coverage issues under policies written by AFG, as well as increase and aggravate claims fraud and cybercrime. AFG’s business, financial condition, results of operations and liquidity could also be adversely affected if judicial, legislative or other anticipated developments cause AFG’s ultimate liabilities to increase from current expectations.

The Company may be subject to increasing regulation imposing mandatory disclosure of sustainability and climate-related data. For example,data in Octoberthe 2023,United California adopted climate-related bills that require companies doing business in California that meet certain revenue thresholds to publicly disclose certain greenhouse gas emissions dataStates and climate-relatedforeign financial risk reports.jurisdictions. Compliance with such requirements willmay require significant effort and resources. AFG is subject to complex and changing laws, regulation and public policy debates relating to climate change whichthat are difficult to predict and quantify and may have an adverse impact on its business. Changes in regulations relating to climate change may result in an increase in the cost of doing business or a decrease in premiums in certain lines of business.

As a participant in the federal crop insurance program, AFG could also be impacted by regulatoryregulatory, executive and legislative actions or changes affectingthat directly or indirectly affect that program. For example, the reinsurance levels that the federal government provides to authorized carriers could be reduced by future legislation. AFG will continue to monitor new and changing federal regulations and the potential impact, if any, on its insurance company subsidiaries.

Both state and federal regulators in the U.S., as well as regulators in foreign jurisdictions, including the EU (whetherand underother itsforeign regulatory framework proposed in April 2021 or otherwise),jurisdictions, have enacted and will continue to evaluate and assess potential laws and regulations relating to limit and restrict companies’ use of AI, and enact new and expanding bases of liability for businesses utilizing AI. Such laws and regulations may limit or prevent AFG’s development and use of AI applications, create potential legal and compliance issues or may eliminate or restrict the confidentiality of ourAFG’s proprietary technology, which could adversely affect AFG’sthe business, operations and financial results,Company, including by reducing the utility of AFG’s products, increasing AFG’sits costs and exposing AFGthe Company to litigation or other liabilities.

Statutory capital requirements set by the NAIC and the various state insurance regulatory bodies establish regulations that provide minimum capitalization requirements based on risk-based capital (“RBC”) ratios for insurance companies. Statutory surplus and RBC ratios may change in a given year based on a number of factors, including statutory earnings/losses, reserve changes, excess capital held to support growth, equity market and interest rate changes, the value of investment securities and changes to the RBC formulas. Increases in the amount of capital or reserves that AFG’s larger insurance subsidiaries are required to hold could reduce the amount of future dividends such subsidiaries are able to distribute to the holding company or require capital contributions. Any reduction in the RBC ratios of AFG’s insurance subsidiaries could also adversely affect their financial strength ratings as determined by rating agencies. A downgrade or change in the measurement of the insurance subsidiaries’ financial strength ratings could adversely impact their business and limit their ability to make dividends or other distributions to AFG, which could materially adversely affect AFG’s financial condition and results of operations.

Changes in domestic or foreign tax laws or interpretations of such laws could increase AFG’s corporate taxes and reduce earnings. For example, on August 16, 2022, the U.S. government enacted the Inflation Reduction Act (“IRA”) which, among other changes, created a new corporate alternative minimum tax (“CAMT”) based on adjusted financial statement income and imposed a 1% excise tax on corporate stock repurchases. Many of the key individual tax provisions from the 2017 Tax Cuts and Jobs Act are set to expire on December 31, 2025. Legislation to extend or modify the provisions is expected to be addressed by the U.S. Congress in 2025 and such legislation could include provisions that impact the taxation of corporations on their domestic and foreign income. Any changes in federal income tax laws could adversely affect the federal income taxation of AFG’s ongoing operations and have a material adverse impact on its financial condition and results of operations.

As a U.S.-based SEC registrant, AFG prepares its financial statements in accordance with GAAP, as promulgated by the Financial Accounting Standards Board, subject to the accounting-related rules and interpretations of the SEC. New accounting rules or changes in accounting standards, particularly those that specifically apply to insurance company operations, may impact AFG’s reported financial results and could cause increased volatility in reported earnings, resultingresult in other adverse impacts on AFG’s ratings and cost of capital, and decrease the understandability of AFG’s financial results as well as the comparability of AFG’s reported results with other insurers.

The expertise and experience of AFG’s employees is a critical component of the Company’s success. The continuation of such success depends, in large part, on AFG’s ability to attract and retain key individuals. There can be intense competition for qualified candidates in the activities that AFG conducts and in the markets that it serves, both within the insurance industry and from businesses outside the industry. This is particularly acute in certain specialized positions and areas of expertise, such as underwriting, claims, data and analytics and AI-relatedAI and technologytechnology-related fields. Competition for employees may increase AFG’s expenses and may result in the company not being able to hire key employees or retain them.key employees. If AFG is unable to hire qualified candidates or retain its key personnel, AFG may be unable to execute its business strategies and may suffer material adverse consequences to its business, operations and financial condition.

The price of AFG Common Stock, which is listed on the NYSE, constantly changes. AFG’s Common Stock price could materially fluctuate or decrease in response to a number of events or factors discussed in this section in addition to other events or factors, including quarterly variations in AFG’s operating results; operating and stock price performance of comparable companies; and negative publicity relating to AFG or its competitors. In addition, broad market and industry fluctuations may materially and adversely affect the trading price or volume of AFG Common Stock, regardless of AFG’s actualbusiness, operating performance.performance or 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,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.

FullAFG year 2024reported net earnings wereof $887$299 million ($10.57$3.58 per share, diluted) for the fourth quarter of 2025 compared to $852$255 million ($10.05$3.03 per share, diluted) in 2023. The year-over-year increase was due primarily tofor the impactfourth on net investment incomequarter of 2024, reflecting higher yieldsunderwriting on fixed maturity investments coupled with the impact of net realized losses on securities in 2023. These items wereprofit, partially offset by lower net investment income from AFG’s alternative investment portfolio and lower underwriting profit.portfolio.

Management expects continuedoverall premium growth and strong underwriting results in the ongoing generally favorablecurrent property and casualty insurance market. In addition, management anticipates theimproved deploymentreturns ofon cashalternative duringinvestments relative to the elevated2.5% interestearned ratein environment (since early 2022)2025 will continue to have a positive impact on net investment income on fixed maturity investmentsbeginning in 2025.the second half of 2026.

Management believes that AFG’s strong financial position and current liquidity and capital at its subsidiaries will give AFG the flexibility to continue to effectively address and respond to anticipated and unanticipated challenges. AFG’s insurance subsidiaries continue to have capital at or in excess of the levels required by ratings agencies in order to maintain their current ratings, and the parent company does not have any near-term debt maturities.maturities until 2030.

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. Cash flows provided by operating activities also include the activity of AFG’s managed investment entities (collateralized loan obligations (“CLO”)) other than those activities included in investing or financing activities. The changes in the assets and liabilities of the managed investment entities included in operating activities increased cash flows from operating activities by $70 million in 2025, reduced cash flows from operating activities by $80 million in 2024,2024 and increased cash flows from operating activities by $305 million in 20232023, andresulting reducedin a $150 million increase in cash flows from operating activities by $183 million in 2022,2025 resultingcompared into 2024 and a $385 million decrease in cash flows from operating activities in 2024 compared to 2023 and a $488 million increase in cash flows from operating activities in 2023 compared to 2022.2023. As discussed in Note A — “Accounting Policies — Managed Investment Entities” to the financial statements, AFG has no right to use the CLO assets and no obligation to pay the CLO liabilities and such assets and liabilities are shown separately in AFG’s Balance Sheet. Excluding the impact of the managed investment entities, net cash provided by operating activities was $1.46 billion, $1.23 billion,billion and $1.67 billion and $1.34 billion in 2024,2025, 20232024 and 2022,2023, respectively.

Net Cash Provided by (Used in) Investing Activities AFG’s investing activities consist primarily of the investment of funds provided by its property and casualty businesses. Investing activities also include the purchase and disposal of managed investment entity investments, which are presented separately in AFG’s Balance Sheet. Net investment activity in the managed investment entities was a $10 million use of cash in 2025 compared to a $377 million source of cash in 2024 compared to $762 million in 2023,2024, resulting in a $385$387 million decrease in net cash provided by investing activities in 20242025 compared to 2023.2024. See Note A — “Accounting Policies — Managed Investment Entities” and Note G — “Managed Investment Entities” to the financial statements. Investing activities for 2024 include the fourth quarter acquisitions of an insurance agency and a consulting business for $9 million in cash. Investing activities for 2023 include the July 2023 acquisition of Crop Risk Services (“CRS”) for $234 million in cash. Excluding these acquisitions and the activity of the managed investment entities, investing activities resulted in uses of cash of $273$825 million in 20242025 and $114$282 million in 2023.2024, an increase of $543 million reflecting the investment of cash in fixed maturity investments.

Net cash provided by investing activities was $95 million in 2024 compared to $414 million in 20232023, compareda to net cash used by investing activitiesdecrease of $1.05$319 billion in 2022, an increase in cash provided by investing activities of $1.47 billion.million. Net investment activity in the managed investment entities was a $762$377 million source of cash in 20232024 compared to a $180$762 million use of cash in 2022,2023, resulting in a $942$385 million increasedecrease in net cash provided by investing activities in 20232024 compared to 2022.2023. ExcludingInvesting activities for 2024 include the fourth quarter acquisitions of an insurance agency and a consulting business for $9 million in cash. Investing activities for 2023 include the July 2023 acquisition of Crop Risk Services (“CRS”) for $234 million in 2023cash. Excluding these acquisitions and the activity of the managed investment entities, investing activities resulted in uses of cash of $273 million in 2024 and $114 million in 2023 and $871 million in 2022, reflecting the opportunistic investment of cash on hand in the property and casualty operations during the rising interest rate environment in 2022.2023.

Net Cash Used Inin Financing Activities AFG’s financing activities consist primarily of issuances and retirements of long-term debt, issuances and repurchases of commonCommon stockStock and dividend payments. Net cash used in financing activities was $377 million in 2025 compared to $1.07 billion in 2024 compared to $2.03 billion in 2023,2024, a decrease of $965$689 million. The net proceeds from AFG’s issuance of $350 million in 5.00% Senior Notes in September 2025 was a $344 million source of cash in 2025. AFG paid cash dividends totaling $606 million in 2025 compared to $788 million in 2024 compared to $684 million in 2023,2024, resulting in a $104$182 million increasedecrease in net cash used in financing activities in 20242025 compared to 2023. There were no debt retirements in 2024 compared to $21 million in debt retirements in 2023.2024. In 2024,2025, AFG didrepurchased not$99 repurchase anymillion of its Common Stock compared to no repurchases of $213 million in 2023.2024. Financing activities also include issuances and retirements of managed investment entity liabilities, which are nonrecourse to AFG and presented separately in AFG’s Balance Sheet. Retirements of managed investment entity liabilities exceeded issuances by $28 million in 2025 compared to $295 million in 2024 compared to $1.13 billion in 2023,2024, resulting in ana $833$267 million decrease in net cash used in financing activities in 20242025 compared to 2023.2024. 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 $1.07 billion in 2024 compared to $2.03 billion in 2023 compared to $1.36 billion in 2022, an increase of $670 million. Debt retirements were a $21 million use of cash in 2023 compared to $477 million in 2022,2023, a decrease of $456$965 million. In 2023, AFG repurchasedpaid $213cash dividends totaling $788 million ofin its Common Stock2024 compared to $11$684 million in 2022,2023, resulting in a $202$104 million increase in net cash used in financing activities in 20232024 compared to 2022.2023. AFGThere paidwere cashno dividendsdebt totalingretirements $684in 2024 compared to $21 million in 2023debt retirements in 2023. In 2024, AFG did not repurchase any of its Common Stock compared to $1.21repurchases of $213 million in 2023. Retirements of managed investment entity liabilities exceeded issuances by $295 million in 2024 compared to $1.13 billion in 2022,2023, resulting in aan $529$833 million decrease in net cash used in financing activities in 20232024 compared to 2022. Retirements of managed investment entity liabilities exceeded issuances by $1.13 billion in 2023 compared to issuances exceeding retirements by $324 million in 2022, resulting in a $1.45 billion increase in net cash used in financing activities in 2023 compared to 2022.2023.

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 $582 million in 2025 compared to $712 million in 2024 compared toand $719 million in 2023 and $327 million in 2022.2023. The $7 million decrease in net cash provided by operating activities in 2024 as2025 compared to 20232024 and the $392 million increase in net cash provided by operating activities in 2023 as compared to 2022 werewas due primarily to higherlower cash dividends received from subsidiaries in 2023 compared to the other periods.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 used in investing activities was $182 million in 2025 compared to net cash provided by investing activities wasof $72 million in 2024,2024 and $225 million in 20232023. The $254 million increase in net cash used in investing activities reflects the investment of cash in fixed maturity securities and $992lower millionmaturities and redemptions of investments in 2022.2025 compared to 2024. The $153 million decrease in net cash provided by investing activities in 2024 as compared to 2023 was due primarily to lower balances of invested assets. The $767 million decrease in net cash provided by investing activities in 2023 as compared to 2022 was due to the increase in capital contributions to subsidiaries to fund the purchase of CRS in July 2023 and lower balances of invested assets.

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,Stock and dividends to shareholders, and, to a lesser extent, proceeds from employee stock option exercises.shareholders. Significant long-term debt and commonCommon stockStock transactions are discussed above under “Parent Holding Company Liquidity.” Parent holding company net cash used in financing activities was $348 million in 2025 compared to $769 million in 2024 compared toand $901 million in 20232023. The $421 million decrease in net cash used in financing activities in 2025 compared to 2024 reflects $344 million in net proceeds from AFG’s issuance of $350 million in 5.00% Senior Notes in September 2025 and $1.68lower billiondividends paid to shareholders (due primarily to special dividends of $4.00 per share in 2022.2025 compared to special dividends of $6.50 per share in 2024), partially offset by $99 million in repurchases of Common Stock in 2025 compared to no repurchases in 2024. The $132 million decrease in net cash used in financing activities in 2024 as compared to 2023 reflects no repurchases of commonCommon stockStock in 2024 compared to repurchases of commonCommon stockStock of $213 million in 2023, partially offset by higher dividends paid to shareholders (due primarily to special dividends of $6.50 per share in 2024 compared to special dividends of $5.50 per share in 2023). The $782 million decrease in net cash used in financing activities in 2023 as compared to 2022 reflects lower dividends paid to shareholders (due primarily to special dividends of $5.50 per share in 2023 compared to special dividends of $12.00 per share in 2022) and lower net retirements of long-term debt in 2023 compared to 2022.

Fair values for AFG’s portfolio are determined by AFG’s internal investment professionals using data from nationally recognized pricing services, non-binding broker quotes and other market information. Fair values of equity securities are determined by published closing prices when available. For AFG’s fixed maturity portfolio, approximately 88%90% was priced using pricing services at December 31, 20242025 and 4%3% was priced using non-binding broker quotes. The remaining 7% was priced internally using a variety of inputs including credit spreads, trade information, prices of comparable securities, estimates of cash flow and other security specific features. When prices obtained for the same security vary, AFG’s internal investment professionals select the price they believe is most indicative of an exit price. For additional information on determination of fair value, see Note D — “Fair Value Measurements” to the financial statements.

The pricing services use a variety of observable inputs to estimate fair value of fixed maturities that do not trade on a daily basis. Based upon information provided by the pricing services, these inputs include, but are not limited to, recent reported trades, benchmark yields, issuer spreads, bids or offers, reference data, and measures of volatility. Included in the pricing of mortgage-backedstructured 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.

Summarized information for the unrealized gains and losses recorded in AFG’s Balance Sheet at December 31, 2024,2025, is shown in the following table (dollars in millions). ApproximatelyThere $345were $484 million of available for sale fixed maturity securities hadwith no unrealized gains or losses at December 31, 2024.2025.

This long-tail line of business consistsincludes mostlycoverage offor directors’ and officers’ liabilityliability, (“D&O”).errors and omissions, cyber, and mergers and acquisitions liability. Some of the important variables affecting estimation of loss reserves for other liability — claims made include:

•Variability of stock prices or company valuations

•MagnitudeTrends ofin jury awards

•Health care costs and utilization of medical services by injured parties AFG recorded favorable prior year reserve development of $1 million in 2025 for this line of business. In 2024 and 2023, AFG recorded adverse prior year reserve development of $36 million in 2024,and $29 millionmillion, in 2023 and $32 million in 2022respectively, for this line of business due to higher than anticipated claim severity.

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.

Approximately 48%one-half 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.

During the third quarter of 2024,2025, 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. AFG annually conducts a comprehensive review of its asbestos and environmental reserves. In connection with theseits annual reviews, AFG engages with outside counsel and, as appropriate, engineering and consulting firms and specialty actuarial firms.

During the 20242025 internal review, no new trends were identified and recent claims activity was generally consistent with AFG’s expectations resulting from its in-depth internal reviews in the prior threefour years, and the most recent external study in 2020. As a result, and consistent with the internal review in the third quarter of 2023,2024, the 20242025 review resulted in no net change to AFG’s property and casualty insurance segment’s asbestos and environmental reserves.

Contingencies related to Subsidiaries’ Former Operations The A&E reviews and external study discussed above also encompassed reserves for various environmental and occupational injury and disease claims and other contingencies arising out of the railroad operations disposed of by APU Consolidated’s predecessor and certain manufacturing operations disposed of by APU Consolidated and its subsidiaries and by Great American Financial Resources, Inc. AFG recorded pretax special non-core A&E charges of $25 million in 2025, $14 million in 2024 and $15 million in 2023 to increase liabilities for those operations as a result of the internal reviews. Liabilities for claims and contingencies arising from these former railroad and manufacturing operations totaled $91$109 million at December 31, 2024.2025. For a discussion of the uncertainties in determining the ultimate liability, see Note M — “Contingencies” to the financial statements.

(a)Includes a loss of $5 million in the fourth quarter of 2025 and income of $8 million in the fourth quarter of 2024 and $9 million in the fourth quarter of 2023,2024, representing the change in fair value of AFG’s CLO investments and $3 million and $4 million of income in both the fourth quarter of 20242025 and 2023,2024, respectively, in CLO management fees earned.

(a)Includes a lossincome of $10$27 million representing the change in fair value of AFG’s CLO investments and $17$16 million of income in CLO management fees earned.

Net earnings were $887$299 million forin the full-yearfourth quarter of 2025 compared to $255 million in the fourth quarter of 2024 compared to $852 million in 2023 reflecting the impact of net realized losses on securities in 2023 and higher core net operating earnings. Core net operating earnings for 2024the fourth quarter of 2025 increased $7$43 million compared to 2023.the Higherfourth investment income outsidequarter of alternative2024 investmentsreflecting washigher underwriting profit, partially offset by lower returnsnet oninvestment income from AFG’s alternative investment portfolio and lower underwriting profit. Net realized gains on securities of less than $1 million in 2024(partnerships and netsimilar investments and AFG-managed CLOs). Net realized losses on securities in the fourth quarter of $282025 and 2024 include $2 million in 2023 include $19 million of after-tax gains and $2$1 million of after-tax losses, respectively, resulting from the change in fair value of equity securities that were still held at the balance sheet date.

Net earnings were $852$842 million for the full-year of 20232025 compared to $898$887 million in 20222024 reflecting lower core net operating earnings and a special A&E charge recorded in the third quarter of 2023, partially offset by lower net realized losses on securities in 2023 compared to 2022.earnings. Core net operating earnings for 20232025 decreased $98$42 million compared to 20222024 reflecting lower returnsnet oninvestment income from AFG’s alternative investment portfolio when compared to the strong performance of this portfolio in 2022 and lower underwriting profit,portfolio, partially offset by higher underwriting profit and higher investment income outside of alternative investments. Net realized lossesgains on securities in 2025 of $28 million in 2023 and $92 million in 2022 include $2$8 million and $752024 of less than $1 million include after-tax gains of $15 million and $19 million, respectively, of after-tax lossesresulting from the change in fair value of equity securities that were still held at the balance sheet date.

AFG’s property and casualty insurance operations contributed $378$440 million in pretax earnings in the fourth quarter of 20242025 compared to $357$378 million in the fourth quarter of 2023,2024, an increase of $21$62 million (6%16%). asThe aincrease resultin ofpretax earnings reflects higher netunderwriting investment income which wasprofit, partially offset by lower underwritinginvestment profit.income from AFG’s alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs).

Net written premiums (“NWP”) for AFG’s property and casualty insurance segment were $1.44 billion for the fourth quarter of 2025 compared to $1.46 billion for the fourth quarter of 20242024, compareda to $1.45 billion for the fourth quarterdecrease of 2023, an increase of $15$16 million (1%). Detail of AFG’s property and casualty net written premiums is shown below (dollars in millions):

Net earned premiums (“NEP”) for AFG’s property and casualty insurance segment were $1.81 billion for the fourth quarter of 2025 compared to $1.85 billion for the fourth quarter of 20242024, compareda to $1.73 billion for the fourth quarterdecrease of 2023, an increase of $118$44 million (7%2%). Detail of AFG’s property and casualty net earned premiums is shown below (dollars in millions):

Gross written premiums for the fourth quarter of 20242025 increased $51$42 million (3%2%) compared to the fourth quarter of 20232024 driven primarily by new business opportunities, a good renewal rate environment and increased exposures. Overall average renewal rates increased approximately 7%4% in the fourth quarter of 2024.2025. Excluding overall rate decreases in the workers’ compensation businesses, renewal ratespricing increased approximately 8%.5%.

SpecialtyProperty financialand transportation Gross written premiums increased $32$27 million (11%5%) in the fourth quarter of 20242025 compared to the fourth quarter of 20232024. This increase was due primarily to growth in thecrop financialproducts institutionsthat business.are heavily ceded, and to a lesser extent, growth in a transportation alternative risk transfer program with higher premium cessions. Average renewal rates increased approximately 6% for this group increased approximately 3% in the fourth quarter of 2024.2025. Reinsurance premiums ceded as a percentage of gross written premiums decreasedincreased 15 percentage pointpoints in the fourth quarter of 20242025 compared to the fourth quarter of 20232024, reflecting thehigher impact of lower gross written premiumscessions in the innovativecrop marketsand business,aviation businesses and growth in certain programs in the transportation businesses which cedescede a largerhigher percentage of premiums than some of the other businesses in the SpecialtyProperty financialand transportation sub-segment.

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 and underwriting profit for AFG’s property and casualty insurance segment:

The Specialty property and casualty insurance operations generated an underwriting profit of $287 million in the fourth quarter of 2025 compared to $204 million in the fourth quarter of 20242024, comparedan to $212 million in the fourth quarterincrease of 2023, a decrease of $8$83 million (4%41%). Higher underwriting profit in the Property and transportation and Specialty financial sub-segmentssub-segment was more thanpartially offset by lower year-over-year underwriting profit in the Specialty casualty sub-segment,and whichSpecialty wasfinancial impacted by net adverse prior year reserve development in certain social inflation exposed businesses.sub-segments. Overall catastrophe losses were $21$4 million (1.10.2 points on the combined ratio), including $1 million in net reinstatement premiums in the fourth quarter of 20242025 compared to catastrophe losses of $25$21 million (1.41.1 points), including $1 million in net reinstatement premiums in the fourth quarter of 2023.2024.

SpecialtyProperty financialand transportation Underwriting profit for this group was $54$216 million for the fourth quarter of 20242025 compared to $45$81 million in the fourth quarter of 2023,2024, an increase of $9$135 million (20%167%)., This year-over-year increase reflectsreflecting higher underwriting profitprofitability in the financialcrop institutionsinsurance business.operations resulting from record yields for corn and soybeans and favorable commodity pricing trends throughout the growing season. Catastrophe losses for this group were $17a favorable impact of less than $1 million (6.20.1 points on the combined ratio) in the fourth quarter of 20242025 compared to $4catastrophe losses of $10 million (2.01.3 points), including $1 million in net reinstatement premiums in the fourth quarter of 2023.2024.

AFG reported net earnings of $191$248 million ($2.29$2.99 per share, diluted) for the second quarter of 2026 compared to $174 million ($2.07 per share, diluted) for the second quarter of 2025 and $439 million ($5.28 per share, diluted) for the first threesix months of 2026 compared to $154$328 million ($1.84$3.92 per share, diluted) for the first threesix months of 2025,2025. reflectingThe increases in the 2026 periods reflect higher underwriting profit.profit and higher net investment income from AFG’s alternative investment portfolio.

Management expects its diversification and disciplined, opportunistic underwriting culture to produce overall premium growth and strong underwriting results even as some markets in the current property and casualty insuranceindustry market.have softened. In addition, management anticipates improved returns on alternative investments, relative to the returns earned in 2025 and the first quarter of 2026, will continue to have a positive impact on net investment income beginning in the second half of 2026.

Net Cash Provided by Operating Activities AFG’s property and casualty insurance operations typically produce positive net operating cash flows as premiums collected and investment income exceed policy acquisition costs, claims payments and operating expenses. AFG’s net cash provided by operating activities is impacted by the level and timing of premiums, claim and expense payments and recoveries from reinsurers. Cash flows provided by operating activities also include the activity of AFG’s managed investment entities (collateralized loan obligations (“CLO”)) other than those activities included in investing or financing activities. The changes in the assets and liabilities of the managed investment entities included in operating activities increased cash flows from operating activities by $162$146 million during the first threesix months of 2026 and $42$33 million in the first threesix months of 2025, accounting for a $120$113 million increase in cash flows from operating activities in the 2026 period compared to the 2025 period. As discussed in Note A — “Accounting Policies — Managed Investment Entities” to the financial statements, AFG has no right to use the CLO assets and no obligation to pay the CLO liabilities and such assets and liabilities are shown separately in AFG’s Balance Sheet. Excluding the impact of the managed investment entities, net cash provided by operating activities was $312$420 million and $300$500 million in the first threesix months of 2026 and 2025, respectively.

Net Cash Provided by (Used in) Investing Activities AFG’s investing activities consist primarily of the investment of funds provided by its property and casualty businesses. Investing activities also include the purchase and disposal of managed investment entity investments, which are presented separately in AFG’s Balance Sheet. Net investment activity in the managed investment entities was a $173$230 million use of cash in the first threesix months of 2026 compared to a $218$333 million source of cash in the first threesix months of 2025, accounting for a $391$563 million increase in net cash used in investing activities in the first threesix months of 2026 compared to the 2025 period. See Note A — “Accounting Policies — Managed Investment Entities” and Note F — “Managed Investment Entities” to the financial statements. Excluding the activity of the managed investment entities, investing activities were a $440$352 million use of cash in the first threesix months of 2026 compared to $195$274 million in the first threesix months of 2025, an increase of $245$78 million reflecting the investment of cash provided by operations, primarily in fixed maturity investments.

Net Cash Used in Financing Activities AFG’s financing activities consist primarily of issuances and retirements of long-term debt, issuances and repurchases of Common Stock and dividend payments. Net cash used in financing activities was $235$273 million for the first threesix months of 2026 compared to $495$730 million in the first threesix months of 2025, a decrease of $260$457 million. AFG paid cash dividends totaling $198$271 million in the first threesix months of 2026 compared to $233$301 million in the first threesix months of 2025, resulting in a $35$30 million decrease in cash used in financing activities in the first six months of 2026 quarter compared to the 2025first quarter.six months of 2025. During the first threesix months of 2026, AFG repurchased $60$86 million of its Common Stock compared to $58$97 million in the comparable 2025 period, ana increasedecrease in cash used in financing activities of $2$11 million. 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 $21$79 million in the first threesix months of 2026 compared to retirements exceeding issuances by $207$339 million in the first threesix months of 2025, accounting for a $228$418 million decrease in net cash used in financing activities in the 2026 period compared to the 2025 period. See Note A — “Accounting Policies — Managed Investment Entities” and Note F — “Managed Investment Entities” to the financial statements.

During the first threesix months of 2026, AFG repurchased 466,097667,738 shares of its Common Stock for $60$86 million and paid a special cash dividend totaling $125 million ($1.50 per share) in February.

At MarchJune 31,30, 2026, AFG (parent) held approximately $408$406 million in cash and investments. Management believes that AFG’s cash balances are held at stable banking institutions, although the amounts of many of these deposits are in excess of federally insured balances. AFG can borrow up to $450 million under its revolving credit facility, which expires in June 2028. Amounts borrowed under this agreement bear interest at rates ranging from 1.00% to 1.75% (based on AFG’s credit rating, currently 1.25%) over a SOFR-based floating rate. There were no borrowings under AFG’s credit facility, or under any other parent company short-term borrowing arrangements, during 2025 or the first threesix months of 2026.

AFG believes its insurance subsidiaries maintain sufficient liquidity to pay claims and underwriting expenses.expenses Inand addition,that these subsidiaries have sufficient capital to meet commitments in the event of unforeseen reserve deficiencies, inadequate premium rates or reinsurer insolvencies. Management believes that the capital levels in AFG’s insurance subsidiaries are adequate to maintain its business and rating agency ratings. Nonetheless, changes in statutory accounting rules, changes in rating agency measures, significant declines in the fair value of the insurance subsidiaries’ investment portfolios or significant ratings downgrades on these investments, could create a need for additional capital.

AFG’s investment portfolio at MarchJune 31,30, 2026, contained $11.40$11.26 billion in fixed maturity securities classified as available for sale and carried at fair value with unrealized gains and losses included in accumulated other comprehensive income (loss) and $80 million in fixed maturities classified as trading with holding gains and losses included in net investment income. In addition, AFG’s investment portfolio includes $555$550 million in equity securities carried at fair value with holding gains and losses included in realized gains (losses) on securities and $198$229 million in equity securities carried at fair value with holding gains and losses included in net investment income. AFG’s investment portfolio also includes $2.44 billion in investments accounted for using the equity method (limited partnerships and similar investments). Under the equity method, AFG records its share of the earnings or losses of the investee based on when it is reported by the investee in its financial statements rather than in the period in which the investee declares a dividend. AFG’s share of the earnings or losses from equity method investments is included in net investment income and is generally recorded on a quarter lag due to the timing of the receipt of the investee’s financial statements.

Fair values for AFG’s portfolio are determined by AFG’s internal investment professionals using data from nationally recognized pricing services, non-binding broker quotes and other market information. Fair values of equity securities are determined by published closing prices when available. For AFG’s fixed maturity portfolio, approximately 91% was priced using pricing services at MarchJune 31,30, 2026 and 2% was priced using non-binding broker quotes. The remaining 7% was priced internally using a variety of inputs including credit spreads, trade information, prices of comparable securities, estimates of cash flow and other security specific features. When prices obtained for the same security vary, AFG’s internal investment professionals select the price they believe is most indicative of an exit price. For additional information on determination of fair value, see Note C — “Fair Value Measurements” to the financial statements.

In general, the fair value of AFG’s fixed maturity investments is inversely correlated to changes in interest rates. The following table demonstrates the sensitivity of such fair values to reasonably likely changes in interest rates by illustrating the estimated effect on AFG’s fixed maturity portfolio that an immediate increase of 100 basis points in the interest rate yield curve would have had at MarchJune 31,30, 2026 (dollars in millions). Effects of increases or decreases from the 100 basis points illustrated would be approximately proportional.

Approximately 96%97% of the fixed maturities held by AFG at MarchJune 31,30, 2026, were rated “investment grade” (credit rating of AAA to BBB) by nationally recognized rating agencies, 1% were rated “non-investment grade” and 3%2% 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.

Summarized information for the unrealized gains and losses recorded in AFG’s Balance Sheet at MarchJune 31,30, 2026, is shown in the following table (dollars in millions). There were $451$391 million of available for sale fixed maturity securities with no unrealized gains or losses at MarchJune 31,30, 2026.

The table below sets forth the scheduled maturities of AFG’s available for sale fixed maturity securities at MarchJune 31,30, 2026, 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.

Based on its analysis, management believes AFG will recover its cost basis (net of any allowance) in the fixed maturity securities with unrealized losses and that AFG has the ability to hold the securities until they recover in value and had no intent to sell them at MarchJune 31,30, 2026. 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.”

(a)Includes a lossincome of $13$9 million in the first three months of 2026 and income of $2 million in the firstsecond three monthsquarter of 2026 and 2025, respectively, representing the change in fair value of AFG’s CLO investments and $2$3 million and $3$2 million of income in the firstsecond three monthsquarter of 2026 and 2025, respectively, in CLO management fees earned.

(b)Elimination of the change in fair value of AFG’s investments in the CLOs, including $8$5 million and $6 million in both the firstsecond three monthsquarter of 2026 and 2025, respectively, in distributions recorded as interest expense by the CLOs.

Net earnings were $191$248 million in the firstsecond three monthsquarter of 2026 compared to $154$174 million in the firstsecond three monthsquarter of 2025 reflecting higher core net operating earnings partiallyand offset by net realized losses on securities in the first three months of 2026 compared tohigher net realized gains on securities in the firstsecond threequarter monthsof 2026 compared to the second quarter of 2025. Core net operating earnings in the firstsecond three monthsquarter of 2026 increased $54$55 million compared to the firstsecond three monthsquarter of 2025 reflecting higher underwriting profit. Net realized losses on securities in the first three months of 2026 include after-tax losses of $13 millionprofit and higher net investment income from AFG’s alternative investment portfolio. Net realized gains on securities in the firstsecond three monthsquarter of 2026 and 2025 include after-tax gains of $5$10 million and $7 million, respectively, resulting from the change in fair value of equity securities that were still held at the balance sheet date.

RESULTS OF OPERATIONS — THREE MONTHS ENDED MARCHJUNE 31,30, 2026 AND 2025

AFG’s net earnings, determined in accordance with GAAP, include certain items that may not be indicative of its ongoing core operations. The following tables for the three months ended MarchJune 31,30, 2026 and 2025 identify such items by segment and reconcile net earnings to core net operating earnings, a non-GAAP financial measure that AFG believes is a useful tool for investors and analysts in analyzing ongoing operating trends (in millions):

AFG’s property and casualty insurance operations contributed $309$350 million in pretax earnings in the firstsecond three monthsquarter of 2026 compared to $246$273 million in the firstsecond three monthsquarter of 2025, an increase of $63$77 million (26%28%), reflecting higher underwriting profit.profit and higher net investment income from AFG’s alternative investment portfolio.

The following table details AFG’s earnings before income taxes from its property and casualty insurance operations for the three months ended MarchJune 31,30, 2026 and 2025 (dollars in millions):

Gross written premiums (“GWP”) were $2.44$2.85 billion for the firstsecond three monthsquarter of 2026 compared to $2.29$2.65 billion for the firstsecond three monthsquarter of 2025, an increase of $144$197 million (6%7%). Detail of gross written premiums is shown below (dollars in millions):

Reinsurance premiums ceded (“Ceded”) were 32%33% of gross written premiums for the firstsecond three monthsquarter of 2026 compared to 30%32% for the firstsecond three monthsquarter of 2025, an increase of 21 percentage points.point. Detail of reinsurance premiums ceded is shown below (dollars in millions):

Net written premiums (“NWP”) were $1.66$1.92 billion for the firstsecond three monthsquarter of 2026 compared to $1.61$1.80 billion for the firstsecond three monthsquarter of 2025, an increase of $53$112 million (3%6%). Detail of net written premiums is shown below (dollars in millions):

Net earned premiums (“NEP”) were $1.61$1.69 billion for the firstsecond three monthsquarter of 2026 compared to $1.58$1.65 billion for the firstsecond three monthsquarter of 2025, an increase of $29$47 million (2%3%). Detail of net earned premiums is shown below (dollars in millions):

Gross written premiums for the firstsecond three monthsquarter of 2026 increased $144$197 million (6%7%) compared to the firstsecond three monthsquarter of 2025 driven primarily by new business opportunities, a goodfavorable renewal rate environment and increased exposures. Overall average renewal rates increased approximately 3%4% in the firstsecond three monthsquarter of 2026. Excluding the workers’ compensation businesses, renewal pricing increased approximately 5%.

Property and transportation Gross written premiums increased $102$104 million (11%8%) in the firstsecond three monthsquarter of 2026 compared to the firstsecond three monthsquarter of 2025. This increase was dueprimarily primarilyattributable to growth in crop insurance products that are heavily ceded, andalong to a lesser extent,with new business opportunities, higher exposures and a favorable rate environment in several of the transportation businesses. Average renewal rates increased approximately 6%8% for this group in the firstsecond three monthsquarter of 2026. Reinsurance premiums ceded as a percentage of gross written premiums increased 32 percentage points in the firstsecond three monthsquarter of 2026 compared to the firstsecond three monthsquarter of 2025, reflecting growth in the heavily ceded crop insurance products.products and growth in certain alternative risk transfer products in the transportation businesses, which cede a higher percentage of premiums than some of the other businesses in this sub-segment.

Specialty casualty Gross written premiums increased $21$57 million (2%5%) in the firstsecond three monthsquarter of 2026 compared to the firstsecond three monthsquarter of 2025. The primary drivers of growth included new business opportunitiesopportunities, increased exposures and favorable renewal pricing in themultiple targetedSpecialty markets and workers’ compensationcasualty businesses. This growth was tempered by heightened competitive conditions in the excess and surplus lines business. Average renewal rates increased approximately 3%2% for this group in the firstsecond three monthsquarter of 2026. Excluding the workers’ compensation businesses, renewal rates for this group increased approximately 6%.4%. Reinsurance premiums ceded as a percentage of gross written premiums in the firstsecond three monthsquarter of 2026 were comparable to the firstsecond three monthsquarter of 2025.

Specialty financial Gross written premiums increased $21$36 million (6%10%) in the firstsecond three monthsquarter of 2026 compared to the firstsecond three monthsquarter of 2025, due primarily to growth in the lenderfinancial servicesinstitutions businesses.business. Average renewal rates increaseddecreased approximatelyless than 1% for this group in the firstsecond three monthsquarter of 2026. Reinsurance premiums ceded as a percentage of gross written premiums increasedwere 5 percentage pointscomparable in the firstsecond three monthsquarter of 2026 compared toand the firstsecond three monthsquarter of 2025, reflecting higher cessions of catastrophe exposed business in the financial institutions business.2025.

The Specialty property and casualty insurance operations generated an underwriting profit of $156$144 million in the firstsecond three monthsquarter of 2026 compared to $94$114 million in the firstsecond three monthsquarter of 2025, an increase of $62$30 million (66%26%), reflectingdue primarily to higher year-over-year underwriting profit in each of the SpecialtyProperty sub-segments.and transportation group. Overall catastrophe losses were $35$31 million (2.21.8 points on the combined ratio) in the firstsecond three monthsquarter of 2026 compared to $72$38 million (4.52.3 points) in the firstsecond three monthsquarter of 2025.

Property and transportation Underwriting profit for this group was $65$57 million for the firstsecond three monthsquarter of 2026 compared to $37$27 million for the firstsecond three monthsquarter of 2025, an increase of $28$30 million (76%111%), reflecting higher underwriting profit in the agricultural, transportation and ocean marineagricultural businesses. Catastrophe losses were $12 million (2.22.1 points on the combined ratio) in the firstsecond three monthsquarter of 2026 compared to $10$12 million (2.0 points) in the firstsecond three monthsquarter of 2025.

Specialty casualty Underwriting profit for this group was $34$45 million for the firstsecond three monthsquarter of 2026 compared to $20$49 million for the firstsecond three monthsquarter of 2025, ana increasedecrease of $14$4 million (70%8%). Higher underwriting profit in the general liability businesses focused on energy, construction and environmental risks, along with higher underwriting profit in the excess and surplus and targeted markets,markets businesses was more than offset by lower underwriting profit in the workers’ compensation and executive and professional liability businesses were the principal drivers of these improved results.businesses. Catastrophe losses were $11$9 million (1.41.0 points on the combined ratio) in the firstsecond three monthsquarter of 2026 compared to catastrophe losses of $27$7 million (3.40.9 points) in the firstsecond three monthsquarter of 2025.

Specialty financial Underwriting profit for this group was $57$42 million for the firstsecond three monthsquarter of 2026 compared to $37$38 million in the firstsecond three monthsquarter of 2025, an increase of $20$4 million (54%11%), reflecting higher underwriting profit in the financial institutions andinstitutions, fidelity and crime and surety businesses. Catastrophe losses were $12$10 million (4.23.4 points on the combined ratio) in the firstsecond three monthsquarter of 2026 compared to $35$19 million (11.97.3 points) in the firstsecond three monthsquarter of 2025.

AFG’s overall loss and LAE ratio was 56.4%59.0% for the firstsecond three monthsquarter of 2026 compared to 61.1% for the firstsecond three monthsquarter of 2025, a decrease of 4.72.1 percentage points. The components of losses and LAE amounts and ratio are detailed below (dollars in millions):

The current accident year loss and LAE ratio, excluding catastrophe losses, for AFG’s Specialty property and casualty insurance operations was 58.5%60.5% for the firstsecond three monthsquarter of 2026 compared to 57.8%59.5% for the firstsecond three monthsquarter of 2025, an increase of 0.71.0 percentage points.point.

SpecialtyProperty casualtyand transportation The 0.70.1 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects growth in the workers’ compensationcrop and public sectortransportation businesses, both of which have a higher loss and LAE ratio than some of the other businesses in thethis Specialtysub-segment, casualtypartially sub-segmentoffset andby alower decreaseclaim in net earned premiumsfrequency in the executivecommercial liabilityauto businesses, lower claim severity in the aviation business and growth in the excessinland marine and surplusocean linesmarine businesses, both of which have a lower loss and LAE ratio than some of the other businesses in the Specialty casualtythis sub-segment.

Specialty financialcasualty The 1.11.3 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects growth in AFG’sthe Europeanworkers’ operations,compensation and public sector businesses, both of which hashave a higher loss and LAE ratio than some of the other businesses in thethis Specialty financial sub-segmentsub-segment, and a decrease in net earned premiums in the suretyexecutive business,liability and certain excess and surplus lines businesses, both of which hashave a lower loss and LAE ratio than some of the other businesses in the Specialty financialthis sub-segment.

AFG’s Specialty property and casualty insurance operations recorded net favorable reserve development related to prior accident years of $70$57 million in the firstsecond three monthsquarter of 2026 compared to $20$12 million in the firstsecond three monthsquarter of 2025, an increase of $50$45 million (250%375%).

Property and transportation Net favorable reserve development of $47$42 million in the firstsecond three monthsquarter of 2026 reflects lower than anticipated losses in the crop business and lower than expected claim severity in the oceaninland marine andmarine, commercial auto and equine businesses. Net favorable reserve development of $19$13 million in the firstsecond three monthsquarter of 2025 reflects lower than anticipated losses in the crop business and lower than anticipated claim frequency and severity in the truckingaviation, business.agribusiness and ocean marine businesses.

Specialty casualty Net favorable reserve development of less than $1 million in the firstsecond three monthsquarter of 2026 reflects lower than anticipated claim severity in the workers’ compensation businesses, partially offset by higher than anticipated claim severity in certain social inflation exposed businesses. Net adverse reserve development of $12$10 million in the firstsecond three monthsquarter of 2025 reflects higher than anticipated claim severity in the excess liabilityand surplus and social services businesses, partially offset by lower than anticipated claim severity in the workers' compensation businesses.

Specialty financial Net favorable reserve development of $23$14 million in the firstsecond three monthsquarter of 2026 reflects lower than anticipated claim frequency and severity in the fidelity and crime business and lower than expected claim severity in the surety business.and financial institutions businesses. Net favorable reserve development of $13$9 million in the firstsecond three monthsquarter of 2025 reflects lower than anticipatedexpected claim frequency and severity in the financial institutions business.business and lower than anticipated claim severity in the surety and trade credit businesses.

AFG generally seeks to reduce its exposure to catastrophes (whether resulting from climate change or otherwise) through individual risk selection, including minimizing coastal and known fault-line exposures, and the purchase of reinsurance. AFG currently has comprehensive property catastrophe reinsurance coverage in place (including a $70 million per occurrence net retention) for losses up to $625 million in the vast majority of circumstances. This coverage consists of a combination of $205 million from traditional reinsurance and $350 million of coverage through a fully collateralized catastrophe bond. Based on data available at December 31, 2025, management estimates that AFG’s exposure to a catastrophic earthquake or windstorm that industry models indicate should statistically occur once in every 500 years is less than 3% of AFG’s Shareholders’ Equity.

Catastrophe losses of $35$31 million in the firstsecond three monthsquarter of 2026 resulted primarily from winter and convective storms in multiple regions of the United States. Catastrophe losses of $72$38 million in the firstsecond three monthsquarter of 2025 resulted primarily from Californiastorms wildfires.in multiple regions of the United States.

Commissions and Other Underwriting ExpenseExpenses

Commissions and other underwriting expenses (“U/W Exp”) were $547$552 million in the firstsecond three monthsquarter of 2026 compared to $521$527 million for the firstsecond three monthsquarter of 2025, an increase of $26$25 million (5%). AFG’s underwriting expense ratio, calculated as commissions and other underwriting expenses divided by net premiums earned, was 34.0%32.6% for the firstsecond three monthsquarter of 2026 compared to 33.0%32.0% for the firstsecond three monthsquarter of 2025, an increase of 1.00.6 percentage points. Detail of commissions and other underwriting expenses and underwriting expense ratios is shown below (dollars in millions):