Company: AFGC
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0001042046-25-000011
Chunk: 159

Company: AMERICAN FINANCIAL GROUP INC
Filing Date: 2025-02-25
Form: 10-K
Item: Item 7
Chunk 159
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 previous 1%. For example, if a 1% change in cost trends in a line of business would change net earnings by $20 million, a 2% change would change net earnings by approximately $41 million.

The estimated cumulative adverse impact that a 1% change in cost trends in AFG’s more significant long-tail lines of property and casualty business (exceeding 5% of total reserves) would have on net earnings is shown below (in millions).

Effect of 1%Change inCost TrendsLine of businessOther liability — occurrence$78 Workers’ compensation69 Other liability — claims made30 Commercial auto/truck liability/medical18 

The judgments and uncertainties surrounding management’s reserve estimation process and the potential for reasonably possible variability in management’s most recent reserve estimates may also be viewed by looking at how recent historical estimates of reserves have developed. The following table shows (dollars in millions) what the impact on AFG’s net earnings would be on the more significant lines of business if the December 31, 2024, reserves (net of reinsurance) were to develop at the same rate as the average development of the most recent five years.

5-yr. AverageDevelopment (a)(b)Net Reserves (b) December 31, 2024Effect on NetEarnings (a)(b)Other liability — occurrence4.8 %$2,382 $115 Workers’ compensation(5.7 %)2,080 (118)Other liability — claims made(2.2 %)1,024 (23)Commercial auto/truck liability/medical2.2 %892 20 

(a)Adverse (favorable), net of tax effect.

(b)Excludes asbestos and environmental liabilities.

The following discussion describes key assumptions and important variables that affect the estimate of the reserve for loss and LAE of the more significant lines of business and explains what caused them to change from assumptions used in the preceding period.

Other Liability — Occurrence

This long-tail line of business consists of coverages protecting the insured against legal liability resulting from negligence, carelessness, or a failure to act causing property damage or personal injury to others. Some of the important variables affecting estimation of loss reserves for other liability — occurrence include:

•Litigious climate

•Unpredictability of judicial decisions regarding coverage issues

•Magnitude of jury awards

•Outside counsel costs

•Timing of claims reporting

AFG