American Financial Group, Inc. Announces Block Reinsurance Agreement With Global Atlantic; Expected to Result in $375 Million to $400 Million of Additional Excess Capital at AFG - Seite 2

In addition, as a result of the assets and reserves transferred in this transaction, this agreement is expected to free up between $300 million and $325 million of GALIC’s statutory capital in the fourth quarter of 2020. The transaction is expected to create $375 million to $400 million of additional excess capital for AFG.

AFG will recognize the following after-tax non-core items in the periods indicated (in millions):

		After-tax Non-Core		Recognition period under GAAP
Realized gains(1)		$275 - $300		Upon execution of transaction in Q4 2020
Deferred loss(2)		($70) - ($80)		Over lifetime of ceded reserves(3)
Negative ceding commission		($35) - ($40)		Over lifetime of ceded reserves(3)
Unamortized DAC		($30) - ($35)		Over lifetime of ceded reserves(3)

_________________
(1) Difference between market value and amortized cost of investments transferred, net of DAC
(2) Difference between market value of investments transferred and carrying value of reserves transferred
(3) Expected to be 7 - 10 years

In addition, over the next 12 months, AFG will receive approximately $50 million from Commonwealth in exchange for the value at expiration of the options associated with the fixed indexed annuity policies ceded. Any gains or losses on these will be determined based on the market values of the options upon their expiration and will be recorded as a non-core item each month. At September 30, 2020, the market value of these options was approximately $130 million.