American Financial Group Inc. is placing Lloyd's of London insurer Neon Underwriting Ltd. into runoff.

The decision to exit the Lloyd's insurance market came after American Financial determined that Neon will not meet its return expectations following a review of the latter's anticipated results for 2019 and its 2020 prospects. In 2019, Neon produced approximately 7% of American Financial's property and casualty net written premiums.

The exit from the business is planned for 2020 and will allow American Financial to reallocate capital to its other insurance businesses and opportunities that have the potential to earn targeted returns on investment.

American Financial is estimated to incur a noncore after-tax charge of between $50 million and $60 million in the fourth quarter of 2019 for Neon reserve strengthening and expenses related to costs associated with the runoff. The company expects after-tax earnings of between $60 million and $75 million from other noncore items in the fourth quarter.

The Insurance Insider reported in November 2019 that Neon decided to place its property treaty portfolio into runoff after determining that the line would not be able to offer it a "sustainable and appropriate" risk/reward balance.