American Financial Group Inc: Form 10-Q for the period ended Jun 30, 2026

INDEX TO MD&A

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Some of the forward-looking statements can be identified by the use of words such as “anticipates”, “believes”, “expects”, “projects”, “estimates”, “intends”, “plans”, “seeks”, “could”, “may”, “should”, “will” or the negative version of those words or other comparable terminology. Such forward-looking statements include statements relating to: expectations concerning market and other conditions and their effect on future premiums, revenues, earnings, investment activities and the amount and timing of share repurchases and special dividends; recoverability of asset values; expected losses and the adequacy of reserves for asbestos, environmental pollution and mass tort claims; rate changes; and improved loss experience.

Actual results and/or financial condition could differ materially from those contained in or implied by such forward-looking statements for a variety of reasons including but not limited to the following and the risks and uncertainties AFG describes in the “Risk Factors” section of its most recent Annual Report on Form 10-K, as updated by its other reports filed with the Securities and Exchange Commission, including:

• whether or not the sale of Charleston Harbor Resort & Marina closes and AFG’s net gain as a result of the sale;
• changes in financial, political and economic conditions, including changes in interest and inflation rates and impacts from tariffs or other trade actions, currency fluctuations and extended economic recessions or expansions in the U.S. and/or abroad;
• performance of securities markets;
• new legislation or declines in credit quality or credit ratings that could have a material impact on the valuation of securities in AFG’s investment portfolio;
• the availability of capital;
• changes in insurance law or regulation, including changes in statutory accounting rules, including modifications to capital requirements;
• changes in the legal environment affecting AFG or its customers;
• tax law and accounting changes;
• levels of natural catastrophes and severe weather, terrorist activities (including any nuclear, biological, chemical or radiological events), incidents of war or losses resulting from pandemics, civil unrest and other major losses;
• disruption caused by cyber-attacks or other technology breaches or failures by AFG or its business partners and service providers, which could negatively impact AFG’s business or reputation and/or expose AFG to litigation;
• development of insurance loss reserves and establishment of other reserves, particularly with respect to amounts associated with asbestos and environmental claims;
• availability of reinsurance and ability of reinsurers to pay their obligations;
• competitive pressures;
• the ability to obtain adequate rates and policy terms;
• changes in AFG’s credit ratings or the financial strength ratings assigned by major ratings agencies to AFG’s operating subsidiaries; and
• the impact of the conditions in the international financial markets and the global economy relating to AFG’s international operations.

The forward-looking statements herein are made only as of the date of this report. The Company assumes no obligation to publicly update any forward-looking statements.

OBJECTIVE

The objective of Management’s Discussion and Analysis is to provide a discussion and analysis of the financial statements and other statistical data that management believes will enhance the understanding of AFG’s financial condition, changes in financial condition and results of operations. The tables and narrative that follow are presented in a manner that is consistent with the information that AFG’s management uses to make operational decisions and allocate capital resources. They are provided to demonstrate the nature of the transactions and events that could impact AFG’s financial results. This discussion should be read in conjunction with the financial statements beginning on page 2.

OVERVIEW

Financial Condition

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

Results of Operations

Through the operations of its subsidiaries, AFG is engaged primarily in property and casualty insurance, focusing on specialized commercial products for businesses.

AFG reported net earnings of $248 million ($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 six months of 2026 compared to $328 million ($3.92 per share, diluted) for the first six months of 2025. The increases in the 2026 periods reflect higher underwriting profit and higher net investment income from AFG’s alternative investment portfolio.

Outlook

Management expects its diversification and disciplined, opportunistic underwriting culture to produce overall premium growth and strong underwriting results even as some markets in the property and casualty industry 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 in the second half of 2026.

AFG’s financial condition, results of operations and cash flows are impacted by the economic, legal and regulatory environment. Economic inflation, social inflation and other economic conditions may impact premium levels, loss cost trends and investment returns.

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 debt maturities until 2030.

CRITICAL ACCOUNTING POLICIES

Significant accounting policies are summarized in Note A — “Accounting Policies” to the financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that can have a significant effect on amounts reported in the financial statements. As more information becomes known, these estimates and assumptions change and, thus, impact amounts reported in the future. The areas where management believes the degree of judgment required to determine amounts recorded in the financial statements is most significant are as follows:

• the valuation of investments, including the determination of impairment allowances,
• the establishment of insurance reserves, especially asbestos and environmental-related reserves,
• the recoverability of reinsurance, and
• the establishment of asbestos and environmental liabilities of former railroad and manufacturing operations.

For a discussion of these policies, see Management’s Discussion and Analysis — “Critical Accounting Policies” in AFG’s 2025 Form 10-K.

LIQUIDITY AND CAPITAL RESOURCES

Ratios

AFG’s debt to total capital ratio on a consolidated basis is shown below (dollars in millions):

The ratio of debt to total capital is a non-GAAP measure that management believes is useful for investors, analysts and ratings agencies to evaluate AFG’s financial strength and liquidity and to provide insight into how AFG finances its operations. The ratio is calculated by dividing the principal amount of AFG’s long-term debt by its total capital, which includes long-term debt and shareholders’ equity (excluding accumulated other comprehensive income (loss), net of tax). In addition, maintaining a ratio of debt, excluding subordinated debt and debt secured by real estate (if any), to total capital of 35% or lower is a financial covenant in AFG’s bank credit facility.

Condensed Consolidated Cash Flows

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

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 $146 million during the first six months of 2026 and $33 million in the first six months of 2025, accounting for a $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 $420 million and $500 million in the first six 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 $230 million use of cash in the first six months of 2026 compared to a $333 million source of cash in the first six months of 2025, accounting for a $563 million increase in net cash used in investing activities in the first six 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 $352 million use of cash in the first six months of 2026 compared to $274 million in the first six months of 2025, an increase of $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 $273 million for the first six months of 2026 compared to $730 million in the first six months of 2025, a decrease of $457 million. AFG paid cash dividends totaling $271 million in the first six months of 2026 compared to $301 million in the first six months of 2025, resulting in a $30 million decrease in cash used in financing activities in the first six months of 2026 compared to the first six months of 2025. During the first six months of 2026, AFG repurchased $86 million of its Common Stock compared to $97 million in the comparable 2025 period, a decrease in cash used in financing activities of $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 $79 million in the first six months of 2026 compared to retirements exceeding issuances by $339 million in the first six months of 2025, accounting for a $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.

Parent and Subsidiary Liquidity

Parent Holding Company Liquidity Management believes AFG has sufficient resources to meet its liquidity requirements. If funds generated from operations, including dividends, tax payments and borrowings from subsidiaries, are insufficient to meet fixed charges in any period, AFG would be required to utilize parent company cash and investments or to generate cash through borrowings, sales of other assets or similar transactions.

AFG's operations continue to generate significant excess capital for future returns of capital to shareholders in the form of regular and special cash dividends and through opportunistic share repurchases or to be deployed into its property and casualty businesses as management identifies the potential for profitable organic growth, and opportunities to expand through acquisitions of established businesses or start-ups that meet target return thresholds.

During the first six months of 2026, AFG repurchased 667,738 shares of its Common Stock for $86 million and paid a special cash dividend totaling $125 million ($1.50 per share) in February.

In September 2025, AFG issued $350 million in 5.00% Senior Notes due in September 2035.

During 2025, AFG repurchased 799,398 shares of its Common Stock for $99 million and paid special cash dividends totaling $334 million ($2.00 per share in both March and November).

AFG may, at any time and from time to time, seek to retire or purchase its outstanding debt through cash purchases or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as management may determine, and will depend on prevailing market conditions, AFG’s liquidity requirements, contractual restrictions and other factors.

At June 30, 2026, AFG (parent) held approximately $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 six months of 2026.

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

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

AFG believes its insurance subsidiaries maintain sufficient liquidity to pay claims and underwriting expenses and 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.

Investments

AFG’s investment portfolio at June 30, 2026, contained $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 $550 million in equity securities carried at fair value with holding gains and losses included in realized gains (losses) on securities and $229 million in equity securities carried at fair value with holding gains and losses included in net investment income.

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 June 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.

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

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

In general, the fair value of AFG’s fixed maturity investments is inversely correlated to changes in interest rates. The following table demonstrates the sensitivity of such fair values to reasonably likely changes in interest rates by illustrating 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 June 30, 2026 (dollars in millions). Effects of increases or decreases from the 100 basis points illustrated would be approximately proportional.

Approximately 97% of the fixed maturities held by AFG at June 30, 2026, were rated “investment grade” (credit rating of AAA to BBB) by nationally recognized rating agencies, 1% were rated “non-investment grade” and 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 June 30, 2026, is shown in the following table (dollars in millions). There were $391 million of available for sale fixed maturity securities with no unrealized gains or losses at June 30, 2026.

The table below sets forth the scheduled maturities of AFG’s available for sale fixed maturity securities at June 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.

37

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

The following table (dollars in millions) summarizes the unrealized losses for all securities with unrealized losses by issuer quality and the length of time those securities have been in an unrealized loss position:

When a decline in the value of a specific investment is considered to be other-than-temporary, an allowance for credit losses (impairment) is charged to earnings (accounted for as a realized loss). The determination of whether unrealized losses are other-than-temporary requires judgment based on subjective as well as objective factors as detailed in AFG’s 2025 Form 10-K under Management’s Discussion and Analysis — “Investments.”

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 June 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.”

Uncertainties

Management believes that the areas posing the greatest risk of material loss are the adequacy of its insurance reserves and contingencies arising out of its former railroad and manufacturing operations. See Management’s Discussion and Analysis — “Uncertainties — Asbestos and Environmental-related (“A&E”) Insurance Reserves” in AFG’s 2025 Form 10–K.

MANAGED INVESTMENT ENTITIES

Accounting standards require AFG to consolidate its investments in collateralized loan obligation (“CLO”) entities that it manages and owns an interest in (in the form of debt). See Note A — “Accounting Policies — Managed Investment Entities” and Note F — “Managed Investment Entities” to the financial statements. The effect of consolidating these entities is shown in the tables below (in millions). The “Before CLO Consolidation” columns include AFG’s investment and earnings in the CLOs on an unconsolidated basis.

CONDENSED CONSOLIDATING BALANCE SHEET

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

CONDENSED CONSOLIDATING STATEMENT OF EARNINGS

(a) Includes income of $9 million and $2 million in the second quarter of 2026 and 2025, respectively, representing the change in fair value of AFG’s CLO investments and $3 million and $2 million of income in the second quarter 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 $5 million and $6 million in the second quarter of 2026 and 2025, respectively, in distributions recorded as interest expense by the CLOs.

(c) Elimination of management fees earned by AFG.

CONDENSED CONSOLIDATING STATEMENT OF EARNINGS

(a) Includes a loss of $4 million in the first six months of 2026 and income of $4 million in the first six months of 2025, representing the change in fair value of AFG’s CLO investments and $5 million of income in both the first six months of 2026 and 2025 in CLO management fees earned.

(b) Elimination of the change in fair value of AFG’s investments in the CLOs, including $13 million and $14 million in the first six months of 2026 and 2025, respectively, in distributions recorded as interest expense by the CLOs.

(c) Elimination of management fees earned by AFG.

RESULTS OF OPERATIONS

General

AFG’s net earnings, determined in accordance with GAAP, include certain items that may not be indicative of its ongoing core operations. Core net operating earnings excludes realized gains (losses) on securities because such gains and losses are influenced significantly by financial markets, interest rates and the timing of sales. In addition, special charges related to coverage that AFG no longer writes, such as asbestos and environmental exposures, are excluded from core earnings.

The following table (in millions, except per share amounts) identifies non-core items and reconciles net earnings to core net operating earnings, a non-GAAP financial measure. AFG believes core net operating earnings is a useful tool for investors and analysts in analyzing ongoing operating trends and for management to evaluate financial performance against historical results because it believes this provides a more comparable measure of its continuing business.

(*)Adjustment to income tax expense related to the sale of subsidiaries in a prior year.

Net earnings were $248 million in the second quarter of 2026 compared to $174 million in the second quarter of 2025 reflecting higher core net operating earnings and higher net realized gains on securities in the second quarter of 2026 compared to the second quarter of 2025. Core net operating earnings in the second quarter of 2026 increased $55 million compared to the second quarter of 2025 reflecting higher underwriting profit and higher net investment income from AFG’s alternative investment portfolio. Net realized gains on securities in the second quarter of 2026 and 2025 include after-tax gains of $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.

Net earnings were $439 million in the first six months of 2026 compared to $328 million in the first six months of 2025 reflecting higher core net operating earnings, which increased $109 million compared to the first six months of 2025 reflecting higher underwriting profit and higher net investment income from AFG’s alternative investment portfolio. Net realized losses on securities in the first six months of 2026 include after-tax losses of $1 million and net realized gains on securities in the first six months of 2025 include after-tax gains of $12 million, 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 JUNE 30, 2026 AND 2025

Segmented Statement of Earnings

AFG reports its operations as two segments: (i) Property and casualty insurance (“P&C”) and (ii) Other, which includes holding company costs and income and expenses related to the managed investment entities (“MIEs”).

AFG’s net earnings, 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 June 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):

43

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

(*)See the reconciliation of core earnings to GAAP net earnings under “Results of Operations — General” for details on the tax impacts of these reconciling items.

Property and Casualty Insurance Segment — Results of Operations

Performance measures such as underwriting profit or loss and related combined ratios are often used by property and casualty insurers to help users of their financial statements better understand the company’s performance. Underwriting profitability is measured by the combined ratio, which is a sum of the ratios of losses and loss adjustment expenses, and commissions and other underwriting expenses to premiums. A combined ratio under 100% indicates an underwriting profit. The combined ratio does not reflect net investment income, other income, other expenses or federal income taxes.

AFG’s property and casualty insurance operations contributed $350 million in pretax earnings in the second quarter of 2026 compared to $273 million in the second quarter of 2025, an increase of $77 million (28%), reflecting higher underwriting 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 June 30, 2026 and 2025 (dollars in millions):

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

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

Gross Written Premiums

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

45

Reinsurance Premiums Ceded

Reinsurance premiums ceded (“Ceded”) were 33% of gross written premiums for the second quarter of 2026 compared to 32% for the second quarter of 2025, an increase of 1 percentage point. Detail of reinsurance premiums ceded is shown below (dollars in millions):

Net Written Premiums

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

Net Earned Premiums

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

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

Property and transportation Gross written premiums increased $104 million (8%) in the second quarter of 2026 compared to the second quarter of 2025. This increase was primarily attributable to growth in crop insurance products that are heavily ceded, along with new business opportunities, higher exposures and a favorable rate environment in several of the transportation businesses. Average renewal rates increased approximately 8% for this group in the second quarter of 2026. Reinsurance premiums ceded as a percentage of gross written premiums increased 2 percentage points in the second quarter of 2026 compared to the second quarter of 2025, reflecting growth in the heavily ceded crop insurance 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 $57 million (5%) in the second quarter of 2026 compared to the second quarter of 2025. The primary drivers of growth included new business opportunities, increased exposures and favorable renewal pricing in multiple Specialty casualty businesses. Average renewal rates increased approximately 2% for this group in the second quarter of 2026. Excluding the workers’ compensation businesses, renewal rates for this group increased approximately 4%. Reinsurance premiums ceded as a percentage of gross written premiums in the second quarter of 2026 were comparable to the second quarter of 2025.

Specialty financial Gross written premiums increased $36 million (10%) in the second quarter of 2026 compared to the second quarter of 2025, due primarily to growth in the financial institutions business. Average renewal rates decreased less than 1% for this group in the second quarter of 2026. Reinsurance premiums ceded as a percentage of gross written premiums were comparable in the second quarter of 2026 and the second quarter of 2025.

Combined Ratio

The table below (dollars in millions) details the components of the combined ratio:

The Specialty property and casualty insurance operations generated an underwriting profit of $144 million in the second quarter of 2026 compared to $114 million in the second quarter of 2025, an increase of $30 million (26%), due primarily to higher year-over-year underwriting profit in the Property and transportation group. Overall catastrophe losses were $31 million (1.8 points on the combined ratio) in the second quarter of 2026 compared to $38 million (2.3 points) in the second quarter of 2025.

Property and transportation Underwriting profit for this group was $57 million for the second quarter of 2026 compared to $27 million for the second quarter of 2025, an increase of $30 million (111%), reflecting higher underwriting profit in the transportation and agricultural businesses. Catastrophe losses were $12 million (2.1 points on the combined ratio) in the second quarter of 2026 compared to $12 million (2.0 points) in the second quarter of 2025.

Specialty casualty Underwriting profit for this group was $45 million for the second quarter of 2026 compared to $49 million for the second quarter of 2025, a decrease of $4 million (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 businesses was more than offset by lower underwriting profit in the workers’ compensation and executive and professional liability businesses. Catastrophe losses were $9 million (1.0 points on the combined ratio) in the second quarter of 2026 compared to catastrophe losses of $7 million (0.9 points) in the second quarter of 2025.

Specialty financial Underwriting profit for this group was $42 million for the second quarter of 2026 compared to $38 million in the second quarter of 2025, an increase of $4 million (11%), reflecting higher underwriting profit in the financial institutions, fidelity and crime and surety businesses. Catastrophe losses were $10 million (3.4 points on the combined ratio) in the second quarter of 2026 compared to $19 million (7.3 points) in the second quarter of 2025.

Aggregate Aggregate underwriting results for AFG’s property and casualty insurance segment includes adverse prior year reserve development of $2 million in the second quarter of 2026 and $1 million in the second quarter of 2025 related to business outside of the Specialty group that AFG no longer writes.

Losses and Loss Adjustment Expenses

AFG’s overall loss and LAE ratio was 59.0% for the second quarter of 2026 compared to 61.1% for the second quarter of 2025, a decrease of 2.1 percentage points. The components of losses and LAE amounts and ratio are detailed below (dollars in millions):

Current accident year losses and LAE, excluding catastrophe losses

The current accident year loss and LAE ratio, excluding catastrophe losses, for AFG’s Specialty property and casualty insurance operations was 60.5% for the second quarter of 2026 compared to 59.5% for the second quarter of 2025, an increase of 1.0 percentage point.

Property and transportation The 0.1 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects growth in the crop and transportation businesses, both of which have a higher loss and LAE ratio than some of the other businesses in this sub-segment, partially offset by lower claim frequency in the commercial auto businesses, lower claim severity in the aviation business and growth in the inland marine and ocean marine businesses, both of which have a lower loss and LAE ratio than some of the other businesses in this sub-segment.

Specialty casualty The 1.3 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects growth in the workers’ compensation and public sector businesses, both of which have a higher loss and LAE ratio than some of the other businesses in this sub-segment, and a decrease in net earned premiums in the executive liability and certain excess and surplus lines businesses, both of which have a lower loss and LAE ratio than some of the other businesses in this sub-segment.

Specialty financial The 3.3 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects growth in AFG’s European operations, which has a higher loss and LAE ratio than some of the other businesses in this sub-segment and a decrease in net earned premiums in the surety business, which has a lower loss and LAE ratio than some of the other businesses in this sub-segment. These increases were partially offset by growth in the financial institutions business, which has a lower loss and LAE ratio than some of the other businesses in this sub-segment.

Net prior year reserve development

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

Property and transportation Net favorable reserve development of $42 million in the second quarter of 2026 reflects lower than anticipated losses in the crop business and lower than expected claim severity in the inland marine, commercial auto and equine businesses. Net favorable reserve development of $13 million in the second quarter of 2025 reflects lower than anticipated severity in the aviation, agribusiness and ocean marine businesses.

Specialty casualty Net favorable reserve development of $1 million in the second quarter 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 $10 million in the second quarter of 2025 reflects higher than anticipated claim severity in the excess and 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 $14 million in the second quarter 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 and financial institutions businesses. Net favorable reserve development of $9 million in the second quarter of 2025 reflects lower than expected claim frequency in the financial institutions business and lower than anticipated claim severity in the surety and trade credit businesses.

Aggregate Aggregate net prior accident years reserve development for AFG’s property and casualty insurance segment includes net adverse reserve development of $2 million in the second quarter of 2026 and $1 million in the second quarter of 2025 related to business outside of the Specialty group that AFG no longer writes.

Catastrophe losses

AFG generally seeks to reduce its exposure to catastrophes through individual risk selection, including minimizing coastal and known fault-line exposures, and the purchase of reinsurance. 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 $31 million in the second quarter of 2026 resulted primarily from convective storms in multiple regions of the United States. Catastrophe losses of $38 million in the second quarter of 2025 resulted primarily from storms in multiple regions of the United States.

Commissions and Other Underwriting Expenses

Commissions and other underwriting expenses (“U/W Exp”) were $552 million in the second quarter of 2026 compared to $527 million for the second quarter of 2025, an increase of $25 million (5%). AFG’s underwriting expense ratio, calculated as commissions and other underwriting expenses divided by net premiums earned, was 32.6% for the second quarter of

2026 compared to 32.0% for the second quarter of 2025, an increase of 0.6 percentage points. Detail of commissions and other underwriting expenses and underwriting expense ratios is shown below (dollars in millions):

Property and transportation Commissions and other underwriting expenses as a percentage of net earned premiums decreased 0.3 percentage points in the second quarter of 2026 compared to the second quarter of 2025. This decrease reflects growth in the crop and commercial auto businesses, both of which have a lower commissions and other underwriting expense ratio than some of the other businesses in this sub-segment, partially offset by higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics.

Specialty casualty Commissions and other underwriting expenses as a percentage of net earned premiums increased 0.5 percentage points in the second quarter of 2026 compared to the second quarter of 2025 reflecting higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics and the impact of changes in the mix of business.

Specialty financial Commissions and other underwriting expenses as a percentage of net earned premiums increased 2.0 percentage points in the second quarter of 2026 compared to the second quarter of 2025 due primarily to higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics and higher profit-based commissions to agents in the financial institutions business.

Property and Casualty Net Investment Income

Net investment income in AFG’s property and casualty insurance operations was $221 million in the second quarter of 2026 compared to $179 million in the second quarter of 2025, an increase of $42 million (23%). The average invested assets and overall yield earned on investments held by AFG’s property and casualty insurance operations are provided below (dollars in millions):

The increase in the property and casualty insurance segment’s net investment income for the second quarter of 2026 compared to the second quarter of 2025 reflects the impact of higher returns on AFG’s alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs).

Property and Casualty Other Income and Expenses, Net

Other income and expenses, net for AFG’s property and casualty insurance operations was a net expense of $13 million for the second quarter of 2026 compared to $19 million for the second quarter of 2025, an improvement of $6 million (32%). The table below details the items included in other income and expenses, net for AFG’s property and casualty insurance operations (in millions):

Holding Company, Other and Unallocated — Results of Operations

AFG’s net pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $50 million in the second quarter of 2026 compared to $46 million in the second quarter of 2025, an increase of $4 million (9%).

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

Holding Company and Other — P&C Fees and Related Expenses

Summit, a workers’ compensation insurance subsidiary, collects fees from a small group of unaffiliated insurers for providing underwriting, policy administration and claims services. In addition, certain of AFG’s property and casualty insurance businesses collect fees from customers for ancillary services such as workplace safety programs and premium financing. In the second quarter of 2026, AFG collected $24 million in fees for these services compared to $23 million in the second quarter of 2025. Management views this fee income, net of expenses incurred to generate such fees of $16 million in both the second quarter of 2026 and 2025, as a reduction in the cost of underwriting its property and casualty insurance policies. The expenses related to providing such services are embedded in property and casualty underwriting and claims servicing expenses. Consistent with internal management reporting, these fees and the related expenses are netted and recorded as a reduction of commissions and other underwriting expenses and loss adjustment expenses in AFG’s segmented results.

Holding Company and Other — Other Income

Other income in the table above includes $3 million and $2 million in the second quarter of 2026 and the second quarter of 2025, respectively, in management fees paid to AFG by the AFG-managed CLOs (AFG’s consolidated managed investment entities). The management fees are eliminated in consolidation — see the other income line in the Consolidate MIEs column under “Results of Operations — Segmented Statement of Earnings.”

Holding Company and Other — Interest Charges on Borrowed Money

AFG’s holding companies and other operations outside of its property and casualty insurance segment recorded interest expense of $24 million in the second quarter of 2026 compared to $19 million in the second quarter of 2025, an increase of $5 million (26%), reflecting the issuance of $350 million principal amount of 5.00% Senior Notes in September 2025.

Realized Gains (Losses) on Securities

AFG’s realized gains (losses) on securities were net gains of $16 million in the second quarter of 2026 compared to $2 million in the second quarter of 2025, an increase of $14 million (700%). Realized gains (losses) on securities consisted of the following (in millions):

The $30 million net realized gain from the change in the fair value of equity securities in the second quarter of 2026 includes gains of $18 million on investments in manufacturing companies and $11 million on investments in banks and financing companies. The $10 million net realized gain from the change in the fair value of equity securities in the second quarter of 2025 includes gains of $10 million on investments in manufacturing companies and $6 million on investments in banks and financing companies, partially offset by losses of $2 million on investments in energy companies, $2 million on investments in media companies and $2 million on investments in natural gas companies.

Consolidated Income Taxes

AFG’s consolidated provision for income taxes was $68 million for the second quarter of 2026 compared to $55 million for the second quarter of 2025, an increase of $13 million (24%). See Note J — “Income Taxes” to the financial statements for an analysis of items affecting AFG’s effective tax rate.

RESULTS OF OPERATIONS — SIX MONTHS ENDED JUNE 30, 2026 AND 2025

Segmented Statement of Earnings

AFG reports its operations as two segments: (i) Property and casualty insurance (“P&C”) and (ii) Other, which includes holding company costs and income and expenses related to the managed investment entities (“MIEs”).

AFG’s net earnings, determined in accordance with GAAP, include certain items that may not be indicative of its ongoing core operations. The following tables for the six months ended June 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):

54

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Continued

(*)See the reconciliation of core earnings to GAAP net earnings under “Results of Operations — General” for details on the tax impacts of these reconciling items.

Property and Casualty Insurance Segment — Results of Operations

AFG’s property and casualty insurance operations contributed $659 million in pretax earnings in the first six months of 2026 compared to $519 million in the first six months of 2025, an increase of $140 million (27%), reflecting higher underwriting profit and higher net investment income.

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

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

Gross Written Premiums

Gross written premiums (“GWP”) were $5.29 billion for the first six months of 2026 compared to $4.94 billion for the first six months of 2025, an increase of $341 million (7%). Detail of gross written premiums is shown below (dollars in millions):

56

Reinsurance Premiums Ceded

Reinsurance premiums ceded (“Ceded”) were 32% of gross written premiums in the first six months of 2026 compared to 31% of gross written premiums for the first six months of 2025, an increase of 1.0 percentage point. Detail of reinsurance premiums ceded is shown below (dollars in millions):

Net Written Premiums

Net written premiums (“NWP”) were $3.58 billion for the first six months of 2026 compared to $3.41 billion for the first six months of 2025, an increase of $165 million (5%). Detail of net written premiums is shown below (dollars in millions):

Net Earned Premiums

Net earned premiums (“NEP”) were $3.30 billion for the first six months of 2026 compared to $3.23 billion for the first six months of 2025, an increase of $76 million (2%). Detail of net earned premiums is shown below (dollars in millions):

Gross written premiums for the first six months of 2026 increased $341 million (7%) compared to the first six months of 2025. The Specialty property and casualty insurance operations continue to achieve year-over-year premium growth as a result of new business opportunities, a favorable renewal rate environment and increased exposures. Overall average renewal rates increased approximately 4% in the first six months of 2026. Excluding the workers’ compensation businesses, renewal pricing increased approximately 5%.

Property and transportation Gross written premiums increased $206 million (10%) in the first six months of 2026 compared to the first six months of 2025. This increase was due primarily to growth in crop insurance products that are heavily ceded, and to a lesser extent, new business opportunities, higher exposures and a favorable rate environment in the transportation businesses. Average renewal rates increased approximately 7% for this group in the first six months of 2026. Reinsurance premiums ceded as a percentage of gross written premiums increased 3 percentage points in the first six months of 2026 compared to the first six months of 2025, reflecting growth in the heavily ceded crop insurance 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 $78 million (4%) in the first six months of 2026 compared to the first six months of 2025, reflecting new business opportunities and favorable renewal pricing in the targeted markets and workers’ compensation businesses, higher year-over-year premiums in the mergers and acquisitions liability business and growth across several other businesses in this sub-segment. Average renewal rates increased approximately 2% for this group in the first six months of 2026. Excluding the workers’ compensation businesses, renewal rates for this group increased approximately 5%. Reinsurance premiums ceded as a percentage of gross written premiums in the first six months of 2026 were comparable to the first six months of 2025.

Specialty financial Gross written premiums increased $57 million (9%) in the first six months of 2026 compared to the first six months of 2025, due primarily to growth in the lender services businesses. Average renewal rates were flat for this group in the first six months of 2026. Reinsurance premiums ceded as a percentage of gross written premiums increased 3 percentage points in the first six months of 2026 compared to the first six months of 2025, reflecting higher cessions of catastrophe exposed business in the financial institutions business.

Combined Ratio

The table below (dollars in millions) details the components of the combined ratio:

The Specialty property and casualty insurance operations generated an underwriting profit of $300 million for the first six months of 2026 compared to $208 million for the first six months of 2025, an increase of $92 million (44%), reflecting higher year-over-year underwriting profit in each of the Specialty sub-segments. Overall catastrophe losses were $66 million (2.0 points on the combined ratio) in the first six months of 2026 compared to catastrophe losses of $110 million (3.4 points) in the first six months of 2025.

Property and transportation Underwriting profit for this group was $122 million for the first six months of 2026 compared to $64 million for the first six months of 2025, an increase of $58 million (91%), reflecting higher underwriting profit in the agricultural and transportation businesses. Catastrophe losses were $24 million (2.2 points on the combined ratio) in the first six months of 2026 compared to $22 million (2.1 points) in the first six months of 2025.

Specialty casualty Underwriting profit for this group was $79 million for the first six months of 2026 compared to $69 million for the first six months of 2025, an increase of $10 million (14%). Higher underwriting profit in the general liability businesses focused on energy, construction and environmental risks as well as the targeted markets and excess and surplus businesses was partially offset by lower underwriting profit in the workers’ compensation and the mergers and acquisitions liability business. Catastrophe losses were $20 million (1.3 points on the combined ratio) in the first six months of 2026 compared to catastrophe losses of $34 million (2.1 points) in the first six months of 2025.

Specialty financial Underwriting profit for this group was $99 million for the first six months of 2026 compared to $75 million for the first six months of 2025, an increase of $24 million (32%), reflecting higher underwriting profit in the financial institutions and fidelity and crime businesses. Catastrophe losses were $22 million (3.8 points on the combined ratio) in the first six months of 2026 compared to $54 million (9.7 points) in the first six months of 2025.

Aggregate Aggregate underwriting results for AFG’s property and casualty insurance segment includes adverse prior year reserve development of $2 million in the first six months of 2026 and $1 million in the first six months of 2025 related to business outside of the Specialty group that AFG no longer writes.

Losses and Loss Adjustment Expenses

AFG’s overall loss and LAE ratio was 57.7% for the first six months of 2026 compared to 61.1% for the first six months of 2025, a decrease of 3.4 percentage points. The components of losses and LAE amounts and ratio are detailed below (dollars in millions):

59

Current accident year losses and LAE, excluding catastrophe losses

The current accident year loss and LAE ratio, excluding catastrophe losses, for AFG’s Specialty property and casualty insurance operations was 59.5% for the first six months of 2026 compared to 58.7% for the first six months of 2025, an increase of 0.8 percentage points.

Property and transportation The 0.1 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects growth in the crop and transportation businesses, both of which have a higher loss and LAE ratio than some of the other businesses in this sub-segment, partially offset by lower claim frequency in the commercial auto businesses, lower claim severity in the aviation business and growth in the inland marine and ocean marine businesses, both of which have a lower loss and LAE ratio than some of the other businesses in this sub-segment.

Specialty casualty The 0.8 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects growth in the workers’ compensation and public sector businesses, both of which have a higher loss and LAE ratio than some of the other businesses in this sub-segment, and a decrease in net earned premiums in the executive liability and certain excess and surplus lines businesses, both of which have a lower loss and LAE ratio than some of the other businesses in this sub-segment.

Specialty financial The 2.3 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects growth in AFG’s European operations, which has a higher loss and LAE ratio than some of the other businesses in this sub-segment, and a decrease in net earned premiums in the surety business, which has a lower loss and LAE ratio than some of the other businesses in this sub-segment. These increases were partially offset by growth in the financial institutions business, which has a lower loss and LAE ratio than some of the other businesses in this sub-segment.

Net prior year reserve development

AFG’s Specialty property and casualty insurance operations recorded net favorable reserve development related to prior accident years of $127 million in the first six months of 2026 compared to $32 million in the first six months of 2025, an increase of $95 million (297%).

Property and transportation Net favorable reserve development of $89 million in the first six months of 2026 reflects lower than anticipated losses in the crop business, lower than expected claim severity and frequency in the inland marine business and lower than anticipated claim severity in the commercial auto, aviation and ocean marine businesses. Net favorable reserve development of $32 million in the first six months of 2025 reflects lower than anticipated losses in the crop business, lower than anticipated claim severity in the aviation and agribusiness operations and lower than expected claim frequency in the inland marine business.

Specialty casualty Net favorable reserve development of $1 million in the first six months of 2026 reflects lower than anticipated claim severity in the workers’ compensation businesses, partially offset by higher than anticipated severity in certain social inflation exposed businesses. Net adverse reserve development of $22 million in the first six months of 2025 reflects higher than anticipated claim severity in the excess and 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 $37 million in the first six months 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 and financial institutions businesses. Net favorable reserve development of $22 million in the first six months of 2025 reflects lower than anticipated claim frequency in the financial institutions business and lower than expected claim severity in the trade credit, surety and fidelity businesses.

Aggregate Aggregate net prior accident years reserve development for AFG’s property and casualty insurance segment includes net adverse reserve development of $2 million in the first six months of 2026 and $1 million in the first six months of 2025 related to business outside the Specialty group that AFG no longer writes.

Catastrophe losses

Catastrophe losses of $66 million in the first six months of 2026 resulted primarily from winter and convective storms in multiple regions of the United States. Catastrophe losses of $110 million in the first six months of 2025 resulted primarily from California wildfires and storms in multiple regions of the United States.

Commissions and Other Underwriting Expenses

Commissions and other underwriting expenses (“U/W Exp”) were $1.10 billion in the first six months of 2026 compared to $1.05 billion for the first six months of 2025, an increase of $51 million (5%). AFG’s underwriting expense ratio was 33.3% for the first six months of 2026 compared to 32.5% for the first six months of 2025, an increase of 0.8 percentage points. Detail of commissions and other underwriting expenses and underwriting expense ratios is shown below (dollars in millions):

Property and transportation Commissions and other underwriting expenses as a percentage of net earned premiums decreased 0.1 percentage points in the first six months of 2026 compared to the first six months of 2025. This decrease reflects growth in the crop and commercial auto businesses, both of which have a lower commissions and other underwriting expense ratio than some of the other businesses in this sub-segment, partially offset by higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics.

Specialty casualty Commissions and other underwriting expenses as a percentage of net earned premiums increased 0.8 percentage points in the first six months of 2026 compared to the first six months of 2025 reflecting higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics and the impact of changes in the mix of business.

Specialty financial Commissions and other underwriting expenses as a percentage of net earned premiums increased 2.5 percentage points in the first six months of 2026 compared to the first six months of 2025 due primarily to higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics and higher profit-based commissions to agents in the financial institutions business.

Property and Casualty Net Investment Income

Net investment income in AFG’s property and casualty insurance operations was $389 million in the first six months of 2026 compared to $349 million in the first six months of 2025, an increase of $40 million (11%). The average invested assets and overall yield earned on investments held by AFG’s property and casualty insurance operations are provided below (dollars in millions):

The increase in the property and casualty insurance segment’s net investment income for the first six months of 2026 compared to the first six months of 2025 reflects the impact of higher returns on AFG’s alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs) and higher balances of invested assets.

Property and Casualty Other Income and Expenses, Net

Other income and expenses, net for AFG’s property and casualty insurance operations was a net expense of $28 million for the first six months of 2026 compared to $37 million for the first six months of 2025, an improvement of $9 million (24%). The table below details the items included in other income and expenses, net for AFG’s property and casualty insurance operations (in millions):

Holding Company, Other and Unallocated — Results of Operations

AFG’s net pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $102 million in the first six months of 2026 compared to $98 million in the first six months of 2025, an increase of $4 million (4%).

The following table details AFG’s loss before income taxes from operations outside of its property and casualty insurance segment for the six months ended June 30, 2026 and 2025 (dollars in millions):

Holding Company and Other — Net Investment Income

AFG recorded net investment income on investments held outside of its property and casualty insurance segment of $15 million in the first six months of 2026 compared to $12 million in the first six months of 2025, an increase of $3 million (25%) reflecting the impact of higher average investment balances.

Holding Company and Other — P&C Fees and Related Expenses

Summit, a workers’ compensation insurance subsidiary, collects fees from a small group of unaffiliated insurers for providing underwriting, policy administration and claims services. In addition, certain of AFG’s property and casualty insurance businesses collect fees from customers for ancillary services such as workplace safety programs and premium financing. In the first six months of 2026, AFG collected $49 million in fees for these services compared to $48 million in the first six months of 2025. Management views this fee income, net of expenses incurred to generate such fees of $32 million in both the first six months of 2026 and 2025, as a reduction in the cost of underwriting its property and casualty insurance policies. The expenses related to providing such services are embedded in property and casualty underwriting and claims servicing expenses. Consistent with internal management reporting, these fees and the related expenses are netted and recorded as a reduction of commissions and other underwriting expenses and loss adjustment expenses in AFG’s segmented results.

Holding Company and Other — Other Income

Other income in the table above includes $5 million in both the first six months of 2026 and the first six months of 2025 in management fees paid to AFG by the AFG-managed CLOs (AFG’s consolidated managed investment entities). The management fees are eliminated in consolidation — see the other income line in the Consolidate MIEs column under “Results of Operations — Segmented Statement of Earnings.” Excluding amounts eliminated in consolidation, AFG recorded other income outside of its property and casualty insurance segment of $2 million in the first six months of 2026 compared to $3 million in the first six months of 2025, a decrease of $1 million (33%).

Holding Company and Other — Other Expenses

AFG’s holding companies and other operations outside of its property and casualty insurance segment recorded other expenses of $77 million in the first six months of 2026 compared to $80 million in the first six months of 2025, a decrease of $3 million (4%). Other expenses in the first six months of 2025 include a $4 million charge to increase liabilities related to AFG’s former railroad and manufacturing operations.

Holding Company and Other — Interest Charges on Borrowed Money

AFG’s holding companies and other operations outside of its property and casualty insurance segment recorded interest expense of $47 million in the first six months of 2026 compared to $38 million in the first six months of 2025, an increase of $9 million (24%), reflecting the issuance of $350 million principal amount of 5.00% Senior Notes in September 2025.

Realized Gains (Losses) on Securities

AFG’s realized gains (losses) on securities were net losses of $2 million in the first six months of 2026 compared to net gains of $5 million in the first six months of 2025, a change of $7 million (140%). Realized gains (losses) on securities consisted of the following (in millions):

The $18 million net realized gain from the change in the fair value of equity securities in the first six months of 2026 includes gains of $15 million on manufacturing companies, $8 million on investments in banks and financing companies, $6 million on investments in natural gas companies and $5 million on investments in energy companies, partially offset by losses of $7 million on investments in media companies and $4 million on investments in asset managers. The $19 million net realized gain from the change in the fair value of equity securities in the first six months of 2025 includes gains of $10 million on investments in manufacturing companies, $6 million on investments in banks and financing companies and $3 million on investments in media companies.

Consolidated Income Taxes

AFG’s consolidated provision for income taxes was $116 million for the first six months of 2026 compared to $98 million for the first six months of 2025, an increase of $18 million (18%). See Note J — “Income Taxes” to the financial statements for an analysis of items affecting AFG’s effective tax rate.

ACCOUNTING STANDARDS TO BE ADOPTED

In November 2024, the FASB issued ASU No. 2024-03 (“ASU 2024-03”), Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 requires additional information and disaggregation of specified expense categories in the notes to financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted and applied either prospectively or retrospectively. As of June 30, 2026, AFG has not adopted ASU 2024-03. Management is evaluating the impact of the standard to AFG’s income statement expense disclosures. Since ASU 2024-03 only requires additional disclosures, the adoption of this guidance will not have an impact on AFG’s results of operations or financial condition.

As of June 30, 2026, there were no material changes to the information provided in Item 7A — Quantitative and Qualitative Disclosures about Market Risk of AFG’s 2025 Form 10-K.

Consistent with the discussion in Item 2 — Management’s Discussion and Analysis — “Investments,” the following table demonstrates the sensitivity of the fair value of AFG’s fixed maturity portfolio 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 June 30, 2026 (based on the duration of the portfolio, dollars in millions). Effects of increases or decreases from the 100 basis points illustrated would be approximately proportional.

AFG’s management, with participation of its Co-Chief Executive Officers and its Chief Financial Officer, has evaluated AFG’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15) as of the end of the period covered by this report. Based on that evaluation, AFG’s Co-CEOs and CFO concluded that the controls and procedures are effective. There have been no changes in AFG’s internal control over financial reporting during the second fiscal quarter of 2026 that materially affected, or are reasonably likely to materially affect, AFG’s internal control over financial reporting.

In the ordinary course of business, AFG and its subsidiaries routinely enhance their information systems by either upgrading current systems or implementing new systems. There have been no changes in AFG’s business processes and procedures during the second fiscal quarter of 2026 that have materially affected, or are reasonably likely to materially affect, AFG’s internal control over financial reporting.

PART II

OTHER INFORMATION