At December 31, 2003, AFG's material contractual obligations in the next five years and for all years thereafter detailed by type of obligation were as follows (in millions):
Other income increased $11.0 million (4%) in 2003 compared to 2002 due primarily to increased revenues earned by the Specialty group's growing warranty business and higher fee income in certain other specialty insurance operations, partially offset by the absence of income from Infinity (following its sale in mid-February)and decreased gains on the sale of real estate.
The vast majority of GAFRI's DPAC asset relates to its fixed annuity, variable annuity and life insurance lines of business. Continued spread compression, decreases in the stock market and adverse mortality could lead to write-offs of DPAC in the future. However, absent significant deterioration in those factors, GAFRI does not anticipate any material write-offs in the foreseeable future.
ITEM 12 Security Ownership of Certain Beneficial Owners and Management and
SFAS No. 144, "Accounting For the Impairment or Disposal of Long-Lived Assets," broadens the definition of what constitutes a discontinued operation to include a component of an entity (rather than a segment of a business). A component of an entity may be a reportable segment, a subsidiary or an asset group. Under SFAS No. 144, future operating losses of discontinued entities are no longer recognized before they occur.
Prior to the sale of its remaining interest in Infinity in the fourth quarter of 2003, AFG separated its property and casualty insurance segment into two components or sub-segments, the Specialty group and the Personal group. The Personal group wrote nonstandard and preferred/standard private passenger auto and other personal insurance coverage. Since AFG has disposed of substantially all of its Personal group business, it has revised its reporting of the Specialty sub-segment into the following components: (i) Property and Transportation which includes inland and ocean marine, agricultural-related business and commercial automobile, (ii) Specialty Casualty which includes executive and professional liability, umbrella and excess liability and excess and surplus, (iii) Specialty Financial which includes fidelity and surety bonds and collateral protection and (iv) California Workers' Compensation. AFG's reportable segments and their components were determined based primarily upon similar economic characteristics, products and services.
impairment charges of $36.7 million, $87.5 million and $51.9 million in 2003,
The only investment (other than U.S. Treasury Notes) which exceeds 10% of Shareholders' Equity is an equity investment in Provident Financial Group, Inc., having a market value of $227 million and $189 million at December 31, 2003 and 2002, respectively. See Note R - "Subsequent Event".
At December 31, 2003, sinking fund and other scheduled principal payments on debt for the subsequent five years were as follows (in millions):
In accordance with FIN 46, variable interest entities that issued preferred securities subsequent to January 31, 2003, are not consolidated for reporting purposes. Beginning December 31, 2003, previously consolidated subsidiary trusts were deconsolidated for reporting purposes under FIN 46. Accordingly, the subordinated debt due the trusts is shown as a liability in AFG's Balance Sheet instead of the preferred securities which were previously reported as minority interest. The preferred securities supported by the payable to subsidiary trusts consisted of the following at December 31, 2003 (in thousands):
At December 31, 2003, the shares of AFG Common Stock outstanding included 1,361,711 shares held by American Premier, its subsidiary, for possible distribution to certain creditors and other claimants upon proper claim presentation and settlement pursuant to the 1978 plan of reorganization of its predecessor, The Penn Central Corporation. Shares being held for distribution are not eligible to vote, but otherwise are accounted for as issued and outstanding. AFG is authorized to issue 12.5 million shares of Voting Preferred Stock and 12.5 million shares of Nonvoting Preferred Stock, each without par value.
Cash payments for income taxes, net of refunds, were $50.2 million, $30.0 million and $6.6 million for 2003, 2002 and 2001, respectively.
AFG expensed approximately $20 million in both 2003 and 2002 and $19 million in 2001 for its retirement and employee savings plans.