Terms

Series

5.125% Subordinated Debentures due 2059

Liquidation Preference

$25.00

Coupon Rate

5.125%

Rate Type

Fixed

Payment Frequency

Quarterly

Cumulative

Yes

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

December 15, 2024

First Call Price

$25.00

Mandatory Redemption Date

December 15, 2059

Capital Stack Ranking

Junior To: All Current And Future Senior Indebtedness (Including 4.500% Senior Notes Due 2047, 3.500% Senior Notes Due 2026), All Liabilities Of Subsidiaries (Structurally Subordinated); Pari Passu With: Indebtedness Ranking On A Parity (Including 6% Subordinated Debentures Due 2055, 5.875% Subordinated Debentures Due 2059, Trade Creditors In Ordinary Course); Senior To: Indebtedness Ranking Junior To The Debentures, Capital Stock (Common And Preferred)

Regulatory (Basel III) Call

No

Tax Classification

Ordinary

Qualifies for QDI

No

Qualifies for DRD

No

Shares Offered

8,000,000

Prospectus Summary

American Financial Group, Inc. (AFG), an Ohio-based insurance holding company, is offering $200 million of 5.125% Subordinated Debentures due December 15, 2059, priced at $25 per debenture and listed on the NYSE under 'AFGC.' These are fixed-rate debt instruments, not preferred shares, paying interest quarterly on March 15, June 15, September 15, and December 15, beginning March 15, 2020. The debentures are callable at par on or after December 15, 2024. Although structured as debt, interest is de facto cumulative in that any deferred interest accrues at 5.125% compounded quarterly and must be paid in full before AFG can resume any capital distributions. The debentures are unsecured subordinated obligations of the AFG holding company, ranking junior to approximately $1.015 billion of Senior Indebtedness (including 4.5% Senior Notes due 2047 and 3.5% Senior Notes due 2026) and pari passu with roughly $425 million of existing subordinated debentures. Because AFG is a holding company with no direct insurance operations, the debentures are also structurally subordinated to all liabilities of its insurance subsidiaries — which carry approximately $53.7 billion in insurance reserves — meaning subsidiary creditors have first claim on subsidiary assets before any funds flow up to AFG debenture holders. There is no regulatory capital call; however, AFG may redeem early (at 102% of par) within 90 days of a 'rating agency event' that reduces the equity credit assigned to these debentures. At the $25 offering price, the debentures yield 5.125% annually, or approximately $0.3203 per debenture per quarter. Interest is taxable as ordinary income — not as qualified dividend income — and does not qualify for the 15%/20% QDI preferential rate or the corporate dividends-received deduction. Record dates fall on March 1, June 1, September 1, and December 1. The key income risk is AFG's right to defer interest for up to five consecutive years; during any deferral, AFG cannot pay dividends on common or preferred stock or service parity/junior debt (with limited exceptions). If deferral occurs, the debentures are treated as issued with OID, requiring holders to accrue taxable income before receiving cash.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If AFG defers interest payments on the debentures, it is prohibited from paying dividends or making distributions on any of its capital stock (common or preferred) or making payments on parity or junior debt until all deferred interest (including compounded interest) has been paid in full.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 73 (Strong)