Ratios Following the Mergers, AFC and American Premier retired or replaced with lower cost financing over one billion dollars in debt and preferred stock reducing AFG's interest expense and preferred dividend requirements by approximately $110 million annually. AFG's debt to total capital ratio at the parent holding company level improved from nearly 60% at the date of the Mergers to approximately 25% at December 31, 1999.
Traditional fixed annuity receipts totaled approximately $320 million in 1999, $375 million in 1998 and $410 million in 1997. AAG believes that the success of the stock market and the recent interest rate environment have resulted in decreased sales and persistency of traditional fixed annuities. Sales of annuity products linked to the performance of the stock market (equity-indexed and variable annuities) more than offset this decrease.
Financial Statements and Supplementary Data ------------------------------------------- Page ---- Report of Independent Auditors
We have audited the accompanying consolidated balance sheet of American Financial Group, Inc. and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of earnings, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 1999. Our audits also included the financial statement schedules listed in the Index at Item 14(a). These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.
C. Segments of Operations AFG's property and casualty group is engaged primarily in private passenger automobile and specialty insurance businesses. The Personal group writes nonstandard and preferred/standard private passenger auto and other personal insurance coverage. The Specialty group includes a highly diversified group of specialty business units. Some of the more significant areas are inland and ocean marine, California workers' compensation, agricultural-related coverages, executive and professional liability, U.S.-based operations of Japanese companies, fidelity and surety bonds, collateral protection, and umbrella and excess coverages. AFG's annuity and life business markets primarily retirement products as well as life and supplemental health insurance. AFG's businesses operate throughout the United States. In 1999 and 1998, AFG derived less than 2% of its revenues from the sale of life and supplemental health products in Puerto Rico and less than 1% of its revenues from the sale of property and casualty insurance in Canada, Mexico, Europe and Asia. In addition, AFG owns a significant portion of the voting equity securities of Chiquita Brands International, Inc. (an investee corporation - see Note E).
---- Realized 11,542 34,464 (16,102) 29,904 Change in Unrealized 222,188 107,600 (115,426) 214,362
Provision for losses and LAE occurring in the current year 1,691 2,059 2,045 Net increase (decrease) in provision for claims of prior years (102) 156 31 ------ ------ ------ 1,589 2,215 2,076 Payments for losses and LAE of: Current year (780) (885) (840) Prior years (958) (1,110) (1,151) ------ ------ ------ (1,738) (1,995) (1,991)
Minority Interest: Trust preferred securities $ 320 $ 297 $ 325 $ 336 AFC preferred stock 72 69 72 80
Deferred taxes 197.2 (205.8) (8.6) Minority interest (493.5) (28.3) (521.8) ------
Condensed Balance Sheet ----------------------- December 31, ----------------------- 1999 1998 ---- ---- Assets: Cash and short-term investments $ 1,612 $ 6,777 Receivables from affiliates 370,218 270,500 Investment in subsidiaries 1,404,653 1,612,674 Other assets 53,935 44,502 ---------- ---------- $1,830,418 $1,934,453 ========== ========== Liabilities and Shareholders' Equity: Accounts payable, accrued expenses and other liabilities $ 4,995 $ 1,659 Payables to affiliates 105,079 116,617 Long-term debt 380,366 100,000 Shareholders' equity 1,339,978 1,716,177 ---------- ---------- $1,830,418 $1,934,453 ========== ==========
Financing Activities: Additional long-term borrowings 344,938 - 98,987 Reductions of long-term debt (63,179) - - Issuances of common stock 7,389 13,238 13,845 Repurchases of common stock (88,597) (20,651) (97,320) Cash dividends paid (78,199) (79,457) (77,941) -------- -------- -------- 122,352 (86,870) (62,429) -------- -------- --------