Company: AFGC
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0001042046-25-000011
Chunk: 55

Company: AMERICAN FINANCIAL GROUP INC
Filing Date: 2025-02-25
Form: 10-K
Item: Item 9C
Chunk 55
---
 be significantly affected by changing contract interpretation and the legal environment. Therefore, the estimation of loss reserves for these classes is more complex and subject to a higher degree of variability.The level of detail in which data is analyzed varies among the different lines of business. Data is generally analyzed by major product or by coverage within product, using countrywide data; however, in some situations, data may be reviewed by state or region. Appropriate segmentation of the data is determined based on data credibility, homogeneity of development patterns, mix of business, and other actuarial considerations.Supplementary statistical information is also reviewed to determine which methods are most appropriate to use or if adjustments are needed to particular methods. Such information includes:•Open and closed claim counts•Average case reserves and average incurred on open claims•Closure rates and statistics related to closed and open claim percentages•Average closed claim severity•Ultimate claim severity•Reported loss ratios•Projected ultimate loss ratios•Loss payment patternsWithin each business, results of individual methods are reviewed, supplementary statistical information is analyzed, and data from underwriting, operating and claim management are considered in deriving management’s best estimate of the ultimate liability. This estimate may be the result of one method, a weighted average of several methods, or a judgmental selection as the management team determines is appropriate.

F-35

Table of ContentsAMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

The liability for losses and LAE for a very limited number of claims with long-term scheduled payments under certain workers’ compensation policies has been discounted at 4.5% at both December 31, 2024 and December 31, 2023, which represents an approximation of long-term investment yields. Because of the limited amount of claims involved, the net impact of discounting did not materially impact AFG’s total liability for unpaid losses and loss adjustment expenses (net reductions from discounting of $8 million at December 31, 2024 and $9 million at December 31, 2023).The following table provides an analysis of changes in the liability for losses and loss adjustment expenses over the past three years (in millions):202420232022Balance at beginning of period$13,087 $11,974 $11,074 Less reinsurance recoverables, net of allowance4,288 3,767 3,419 Net liability at beginning of period8,799 8,