- Net earnings per share of $2.49; includes $0.07 per share
loss from non-core items
- Second quarter core net operating earnings per share of
$2.56, 8% higher than the comparable period
- Second quarter annualized ROE of 18.0%; core operating ROE
of 18.5%
- Second quarter Specialty calendar year combined ratio
improved 1.4 points YOY to 90.5%
- Overall average renewal rate increases excluding workers’
compensation of 8%
American Financial Group, Inc. (NYSE: AFG) today reported 2024
second quarter net earnings of $209 million ($2.49 per share)
compared to $200 million ($2.34 per share) for the 2023 second
quarter. Net earnings for the 2024 second quarter included
after-tax non-core losses of $6 million ($0.07 per share loss). By
comparison, net earnings in the 2023 second quarter included net
after-tax non-core items that reduced net income by $2 million
($0.04 per share loss). Annualized return on equity was 18.0% and
17.9% for the second quarters of 2024 and 2023, respectively, and
is calculated excluding accumulated other comprehensive income
(AOCI). Other details may be found in the table on the following
page.
Core net operating earnings were $215 million ($2.56 per share)
for the 2024 second quarter, compared to $202 million ($2.38 per
share) in the 2023 second quarter, reflecting meaningfully higher
P&C underwriting profit. Additional details for the 2024 and
2023 second quarters may be found in the table below. Core net
operating earnings for the second quarters of 2024 and 2023
generated annualized returns on equity of 18.5% and 18.2%,
respectively, which is calculated excluding AOCI.
Three Months Ended June 30,
Components of
Pretax Core Operating Earnings
2024
2023
2024
2023
2024
2023
In millions, except per share amounts
Before Impact of
Alternative
Core Net Operating
Alternative Investments
Investments
Earnings, as reported
P&C Pretax Core Operating Earnings
$
286
$
244
$
33
$
55
$
319
$
299
Other expenses
(27
)
(22
)
-
-
(27
)
(22
)
Holding company interest expense
(19
)
(19
)
-
-
(19
)
(19
)
Pretax Core Operating Earnings
240
203
33
55
273
258
Related provision for income taxes
51
44
7
12
58
56
Core Net Operating Earnings
$
189
$
159
$
26
$
43
$
215
$
202
Core Operating Earnings Per Share
$
2.25
$
1.87
$
0.31
$
0.51
$
2.56
$
2.38
Weighted Avg Diluted Shares
Outstanding
83.9
85.2
83.9
85.2
83.9
85.2
AFG’s book value per share was $52.25 at June 30, 2024. AFG paid
cash dividends of $0.71 per share during the second quarter. For
the three months ended June 30, 2024, AFG’s growth in book value
per share plus dividends was 4.7% and year to date, growth in book
value per share plus dividends was 10.3%.
Book value per share excluding AOCI was $56.19 at June 30, 2024.
For the three months ended June 30, 2024, AFG’s growth in book
value per share excluding AOCI plus dividends was 4.7%. Year to
date, growth in book value per share excluding AOCI plus dividends
was 9.9%.
AFG’s net earnings, determined in accordance with U.S. generally
accepted accounting principles (GAAP), include certain items that
may not be indicative of its ongoing core operations. The table
below identifies such items and reconciles net earnings to core net
operating earnings, a non-GAAP financial measure. AFG believes that
its core net operating earnings provides management, financial
analysts, ratings agencies, and investors with an understanding of
the results from the ongoing operations of the Company by excluding
the impact of net realized gains and losses and other items that
are not necessarily indicative of operating trends. AFG’s
management uses core net operating earnings to evaluate financial
performance against historical results because it believes this
provides a more comparable measure of its continuing business. Core
net operating earnings is also used by AFG’s management as a basis
for strategic planning and forecasting.
In millions, except per share amounts
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
Components of net earnings:
Core operating earnings before income
taxes
$
273
$
258
$
563
$
566
Pretax non-core
items:
Realized gains (losses) on securities
(2
)
(2
)
12
(48
)
Gain (loss) on retirement of debt
-
(1
)
-
1
Earnings before income taxes
271
255
575
519
Provision (credit) for income taxes:
Core operating earnings
58
56
117
117
Non-core items
4
(1
)
7
(10
)
Total provision for income taxes
62
55
124
107
Net earnings
$
209
$
200
$
451
$
412
Net earnings:
Core net operating earnings(a)
$
215
$
202
$
446
$
449
Non-core
items:
Realized gains (losses) on securities
(2
)
(1
)
9
(38
)
Other
(4
)
(1
)
(4
)
1
Net earnings
$
209
$
200
$
451
$
412
Components of earnings per share:
Core net operating earnings(a)
$
2.56
$
2.38
$
5.32
$
5.27
Non-core
Items:
Realized gains (losses) on securities
(0.02
)
(0.02
)
0.11
(0.45
)
Other
(0.05
)
(0.02
)
(0.05
)
0.01
Diluted net earnings per share
$
2.49
$
2.34
$
5.38
$
4.83
Footnote (a) is contained in the
accompanying Notes to Financial Schedules at the end of this
release.
Carl H. Lindner III and S. Craig Lindner, AFG’s Co-Chief
Executive Officers, issued this statement: “We are pleased to
report a second quarter annualized core operating return on equity
of 18.5%. Underwriting margins in our specialty P&C insurance
businesses were strong, and higher interest rates increased net
investment income, excluding alternatives, by 15% year over year.
These results, coupled with effective capital management and our
entrepreneurial, opportunistic culture and disciplined operating
philosophy enable us to continue to create value for our
shareholders.
Messrs. Lindner continued: “AFG continued to have significant
excess capital at June 30, 2024. Returning capital to shareholders
in the form of regular and special cash dividends and through
opportunistic share repurchases is an important and effective
component of our capital management strategy. In addition, our
capital will be deployed into AFG’s core businesses as we identify
the potential for healthy, profitable organic growth, and
opportunities to expand our specialty niche businesses through
acquisitions and start-ups that meet our target return
thresholds.”
Specialty Property and Casualty
Insurance Operations
The Specialty P&C insurance operations generated a strong
90.5% combined ratio in the second quarter of 2024, an improvement
of 1.4 points from the 91.9% reported in the second quarter of
2023. Second quarter 2024 results include 2.3 points related to
catastrophe losses, compared to 3.5 points in the 2023 second
quarter. Second quarter 2024 results benefited from 2.3 points of
favorable prior year reserve development, compared to 4.0 points in
the second quarter of 2023. Underwriting profit was $151 million
for the 2024 second quarter compared to $123 million in the second
quarter of the prior period.
Second quarter 2024 gross and net written premiums were up 2%
and 1%, respectively, when compared to the second quarter of 2023.
We continue to achieve year-over-year premium growth as a result of
a combination of new business opportunities, increased exposures,
and a good renewal rate environment, which was partially offset by
later reporting of crop premiums. Tempered growth in the quarter
also reflects the Company’s proactive and intentional approach to
managing exposure in several of our social inflation-exposed
businesses.
Average renewal pricing across our P&C Group, excluding
workers’ compensation, was up approximately 8% for the quarter, and
up approximately 6% overall, consistent with pricing increases
achieved in the first quarter. We believe we are achieving overall
renewal rate increases in excess of prospective loss ratio trends
to meet or exceed targeted returns.
The Property and Transportation Group reported an
underwriting profit of $39 million in the second quarter of 2024,
compared to $32 million in the second quarter of 2023. Higher
year-over-year underwriting profits in our property & inland
marine and crop insurance businesses were partially offset by lower
underwriting profitability in our transportation businesses.
Catastrophe losses in this group were $13 million in the second
quarter of 2024, compared to $15 million in the second quarter of
2023. Overall, the businesses in the Property and Transportation
Group achieved a 92.9% calendar year combined ratio in the second
quarter, improving 1.3 points from the comparable period in
2023.
Second quarter 2024 gross and net written premiums in this group
were both 2% higher than the comparable prior year. Year-over-year
premium growth was primarily attributed to new business
opportunities, a favorable rate environment and increased exposures
in our commercial auto businesses. Later reporting of crop acreage,
which impacts the timing of crop premiums, more than offset
additional crop premium associated with the CRS acquisition.
Excluding crop, gross and net written premiums in this group grew
by 7% and 5%, respectively. Overall renewal rates in this group
increased 8% on average in the second quarter of 2024, about a
point lower than the pricing achieved in this group for the first
quarter of 2024.
The Specialty Casualty Group achieved an excellent 85.4%
calendar year combined ratio overall in the second quarter of 2024,
an improvement of 1.2 points over the very strong 86.6% reported in
the second quarter of 2023. Underwriting profit was $108 million in
the second quarter of 2024, compared to $95 million in the second
quarter of 2023. Higher year-over-year profitability in our
targeted markets and workers’ compensation businesses and improved
results in several other Specialty Casualty businesses were
partially offset by lower levels of favorable prior year reserve
development in our executive liability business and adverse
development in our excess liability business. Catastrophe losses
for this group were $5 million in the second quarter of 2024
compared to $8 million in the prior year quarter.
Second quarter 2024 gross and net written premiums increased 1%
and 2%, respectively, when compared to the same prior year period.
Approximately two-thirds of the businesses in this group reported
year-over-year growth as a result of new business opportunities,
higher rates and strong policy retention. This growth was partially
offset by non-renewal of several large accounts and other
underwriting actions taken in several of our targeted markets
businesses. Excluding our workers’ compensation businesses, renewal
rates for this group were up approximately 7% in the second
quarter, about a point lower than the first quarter. Overall
renewal rates in this group including workers’ compensation were up
about 5% and consistent with the first quarter of 2024.
The Specialty Financial Group reported an underwriting
profit of $25 million in the second quarter of 2024, compared to
$10 million in the second quarter of 2023. The increase was
primarily the result of higher underwriting profit in our financial
institutions business. Catastrophe losses for this group were $17
million in the second quarter of 2024 compared to $19 million in
the prior year quarter. This group continued to achieve excellent
underwriting margins and reported a combined ratio of 89.7% for the
second quarter of 2024, 5.3 points better than the 95.0% reported
in the comparable period in 2023.
Second quarter 2024 gross written premiums were flat and net
written premiums were up 3% in this group, respectively, when
compared to the prior year period. Growth in our financial
institutions business was partially offset by a decision to pause
writing of new intellectual property-related coverage in our
Innovative Markets business. Renewal pricing in this group was up
approximately 6% for the quarter, about 1 point lower than the
previous quarter.
Carl Lindner III stated, “Underwriting profitability was very
strong in our Specialty P&C businesses in the second quarter of
2024, and we continue to feel confident about the strength of our
reserves. A continued favorable pricing environment and new
business opportunities enabled us to selectively grow our Specialty
P&C businesses. Growth in net written premium was about 4% for
the first six months of the year, as timing of acreage reporting by
farmers and underwriting actions in a few of our businesses
tempered growth in the second quarter. We expect growth in net
written premiums to be approximately 7% for the full year in
2024.”
Further details about AFG’s Specialty P&C operations may be
found in the accompanying schedules and in our Quarterly Investor
Supplement, which is posted on our website.
Investments
Net Investment Income – For the quarter ended June 30,
2024, property and casualty net investment income was approximately
1% lower than the comparable 2023 period. Excluding the impact of
alternative investments, net investment income in our property and
casualty insurance operations for the three months ended June 30,
2024, increased 15% year-over-year as a result of the impact of
higher interest rates and higher balances of invested assets. The
annualized return on alternative investments was approximately 5.1%
for the 2024 second quarter compared to 9.6% for the prior year
quarter. Earnings from alternative investments may vary from
quarter to quarter based on the reported results of the underlying
investments, and generally are reported on a quarter lag. The
average annual return on alternative investments over the five
calendar years ended December 31, 2023, was approximately 13%.
Non-Core Net Realized Gains (Losses) – AFG recorded
second quarter 2024 net realized losses on securities of $2 million
($0.02 per share loss) after tax, which included $2 million ($0.02
per share loss) in after-tax net losses to adjust equity securities
that the Company continued to own at June 30, 2024, to fair value.
By comparison, AFG recorded net realized losses on securities of $1
million ($0.02 per share loss) in the comparable 2023 period.
After-tax unrealized losses related to fixed maturities were
$310 million at June 30, 2024. Our portfolio continues to be high
quality, with 94% of our fixed maturity portfolio rated investment
grade and 96% of our P&C fixed maturity portfolio with a
National Association of Insurance Commissioners’ designation of
NAIC 1 or 2, its highest two categories.
More information about the components of our investment
portfolio may be found in our Quarterly Investor Supplement, which
is posted on our website.
About American Financial
Group, Inc.
American Financial Group is an insurance holding company, based
in Cincinnati, Ohio. Through the operations of Great American
Insurance Group, AFG is engaged primarily in property and casualty
insurance, focusing on specialized commercial products for
businesses. Great American Insurance Group’s roots go back to 1872
with the founding of its flagship company, Great American Insurance
Company.
Forward Looking
Statements
This press release, and any related oral statements, contains
certain statements that may be deemed to be "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934. All
statements in this press release not dealing with historical
results are forward-looking and are based on estimates,
assumptions, and projections. Examples of such forward-looking
statements include statements relating to: the Company's
expectations concerning market and other conditions and their
effect on future premiums, revenues, earnings, investment
activities and the amount and timing of share repurchases or
special dividends; recoverability of asset values; expected losses
and the adequacy of reserves for asbestos, environmental pollution
and mass tort claims; rate changes; and improved loss
experience.
Actual results and/or financial condition could differ
materially from those contained in or implied by such
forward-looking statements for a variety of reasons including, but
not limited to: the risks and uncertainties AFG describes in the
“Risk Factors” section of its most recent Annual Report on Form
10-K, as updated by its other reports filed with the Securities and
Exchange Commission; changes in financial, political and economic
conditions, including changes in interest and inflation rates,
currency fluctuations and extended economic recessions or
expansions in the U.S. and/or abroad; performance of securities
markets; new legislation or declines in credit quality or credit
ratings that could have a material impact on the valuation of
securities in AFG’s investment portfolio; the availability of
capital; changes in insurance law or regulation, including changes
in statutory accounting rules, including modifications to capital
requirements; changes in the legal environment affecting AFG or its
customers; tax law and accounting changes; levels of natural
catastrophes and severe weather, terrorist activities (including
any nuclear, biological, chemical or radiological events),
incidents of war or losses resulting from pandemics, civil unrest
and other major losses; disruption caused by cyber-attacks or other
technology breaches or failures by AFG or its business partners and
service providers, which could negatively impact AFG’s business
and/or expose AFG to litigation; development of insurance loss
reserves and establishment of other reserves, particularly with
respect to amounts associated with asbestos and environmental
claims; availability of reinsurance and ability of reinsurers to
pay their obligations; competitive pressures; the ability to obtain
adequate rates and policy terms; changes in AFG’s credit ratings or
the financial strength ratings assigned by major ratings agencies
to AFG’s operating subsidiaries; the impact of the conditions in
the international financial markets and the global economy relating
to AFG’s international operations; and effects on AFG’s reputation,
including as a result of environmental, social and governance
matters.
The forward-looking statements herein are made only as of the
date of this press release. The Company assumes no obligation to
publicly update any forward-looking statements.
Conference Call
The Company will hold a conference call to discuss 2024 second
quarter results at 11:30 a.m. (ET) tomorrow, Wednesday, August 7,
2024. New, simplified event registration and access provides two
ways to access the call.
Participants should register for the call here now or any time
up to and during the time of the call, and will immediately receive
the dial-in number and a unique PIN to access the call. While you
may register at any time up to and during the time of the call, you
are encouraged to join the call 10 minutes prior to the start of
the event.
The conference call and accompanying webcast slides will also be
broadcast live over the internet. To access the event, click the
following link:
https://www.afginc.com/news-and-events/event-calendar.
Alternatively, you can choose Events from the Investor
Relations page at www.AFGinc.com.
A replay of the webcast will be available via the same link on
our website approximately two hours after the completion of the
call.
Websites: www.AFGinc.com
www.GreatAmericanInsuranceGroup.com
(Financial summaries follow)
This earnings release and AFG’s Quarterly Investor Supplement
are available in the Investor Relations section of AFG’s website:
www.AFGinc.com.
AMERICAN FINANCIAL GROUP, INC.
AND SUBSIDIARIES
SUMMARY OF EARNINGS AND
SELECTED BALANCE SHEET DATA
(In Millions, Except Per Share
Data)
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
Revenues
P&C insurance net earned premiums
$
1,585
$
1,507
$
3,131
$
2,944
Net investment income
188
198
386
415
Realized gains (losses) on securities
(2
)
(2
)
12
(48
)
Income of managed investment entities:
Investment income
98
112
197
216
Gain (loss) on change in fair value of
assets/liabilities
4
-
14
(4
)
Other income
27
25
66
57
Total revenues
1,900
1,840
3,806
3,580
Costs and expenses
P&C insurance losses &
expenses
1,443
1,390
2,858
2,683
Interest charges on borrowed money
19
19
38
38
Expenses of managed investment
entities
90
103
182
198
Other expenses
77
73
153
142
Total costs and expenses
1,629
1,585
3,231
3,061
Earnings before income taxes
271
255
575
519
Provision for income taxes
62
55
124
107
Net earnings
$
209
$
200
$
451
$
412
Diluted earnings per common share
$
2.49
$
2.34
$
5.38
$
4.83
Average number of diluted shares
83.9
85.2
83.9
85.3
Selected Balance
Sheet Data:
June 30, 2024
December 31, 2023
Total cash and investments
$
15,261
$
15,263
Long-term debt
$
1,475
$
1,475
Shareholders’ equity(b)
$
4,384
$
4,258
Shareholders’ equity (excluding AOCI)
$
4,715
$
4,577
Book value per share(b)
$
52.25
$
50.91
Book value per share (excluding AOCI)
$
56.19
$
54.72
Common Shares Outstanding
83.9
83.6
Footnote (b) is contained in the
accompanying Notes to Financial Schedules at the end of this
release.
AMERICAN FINANCIAL GROUP,
INC.
SPECIALTY P&C
OPERATIONS
(Dollars in Millions)
Three months ended
June 30,
Pct.
Change
Six months ended
June 30,
Pct.
Change
2024
2023
2024
2023
Gross written premiums
$
2,406
$
2,369
2
%
$
4,742
$
4,524
5
%
Net written premiums
$
1,692
$
1,667
1
%
$
3,326
$
3,186
4
%
Ratios (GAAP):
Loss & LAE ratio
59.1
%
60.2
%
58.8
%
58.6
%
Underwriting expense ratio
31.4
%
31.7
%
31.4
%
32.0
%
Specialty Combined Ratio
90.5
%
91.9
%
90.2
%
90.6
%
Combined Ratio – P&C
Segment
90.5
%
91.7
%
90.3
%
90.5
%
Supplemental
Information:(c)
Gross Written Premiums:
Property & Transportation
$
1,084
$
1,059
2
%
$
2,043
$
1,931
6
%
Specialty Casualty
1,023
1,012
1
%
2,120
2,073
2
%
Specialty Financial
299
298
-
%
579
520
11
%
$
2,406
$
2,369
2
%
$
4,742
$
4,524
5
%
Net Written Premiums:
Property & Transportation
$
681
$
668
2
%
$
1,272
$
1,220
4
%
Specialty Casualty
704
693
2
%
1,455
1,415
3
%
Specialty Financial
248
240
3
%
482
424
14
%
Other
59
66
(11
%)
117
127
(8
%)
$
1,692
$
1,667
1
%
$
3,326
$
3,186
4
%
Combined Ratio (GAAP):
Property & Transportation
92.9
%
94.2
%
91.0
%
92.6
%
Specialty Casualty
85.4
%
86.6
%
87.7
%
87.1
%
Specialty Financial
89.7
%
95.0
%
88.1
%
90.8
%
Aggregate Specialty Group
90.5
%
91.9
%
90.2
%
90.6
%
Three months ended
June 30,
Six months ended
June 30,
2024
2023
2024
2023
Reserve Development
(Favorable)/Adverse:
Property & Transportation
$
(33
)
$
(21
)
$
(76
)
$
(58
)
Specialty Casualty
(25
)
(24
)
(42
)
(51
)
Specialty Financial
-
(11
)
6
(14
)
Other Specialty
22
(5
)
25
(2
)
Specialty Group
(36
)
(61
)
(87
)
(125
)
Other
1
(1
)
2
-
Total Reserve Development
$
(35
)
$
(62
)
$
(85
)
$
(125
)
Points on Combined Ratio:
Property & Transportation
(6.2
)
(3.8
)
(7.2
)
(5.7
)
Specialty Casualty
(3.5
)
(3.4
)
(2.9
)
(3.6
)
Specialty Financial
0.1
(5.7
)
1.2
(3.5
)
Aggregate Specialty Group
(2.3
)
(4.0
)
(2.8
)
(4.2
)
Total P&C Segment
(2.2
)
(4.2
)
(2.7
)
(4.3
)
Footnote (c) is contained in the
accompanying Notes to Financial Schedules at the end of this
release.
AMERICAN FINANCIAL GROUP, INC. Notes
to Financial Schedules
a) Components of core net operating earnings (in millions):
Three months ended June 30,
Six months ended June 30,
2024
2023
2024
2023
Core Operating
Earnings before Income Taxes:
P&C insurance segment
$
319
$
299
$
659
$
649
Interest and other corporate expenses
(46
)
(41
)
(96
)
(83
)
Core operating earnings before income
taxes
273
258
563
566
Related income taxes
58
56
117
117
Core net operating earnings
$
215
$
202
$
446
$
449
b) Shareholders’ Equity at June 30, 2024, includes ($331
million) ($3.94 per share loss) in Accumulated Other Comprehensive
Income (Loss) compared to ($319 million) ($3.81 per share loss) at
December 31, 2023.
c) Supplemental Notes:
- Property & Transportation includes primarily
physical damage and liability coverage for buses and trucks and
other specialty transportation niches, inland and ocean marine,
agricultural-related products and other commercial property
coverages.
- Specialty Casualty includes primarily excess and
surplus, general liability, executive liability, professional
liability, umbrella and excess liability, specialty coverages in
targeted markets, customized programs for small to mid-sized
businesses and workers’ compensation insurance.
- Specialty Financial includes risk management insurance
programs for lending and leasing institutions (including equipment
leasing and collateral and lender-placed mortgage property
insurance), surety and fidelity products and trade credit
insurance.
- Other includes an internal reinsurance facility.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240806215147/en/
Diane P. Weidner, IRC, CPA (inactive) Vice President – Investor
& Media Relations 513-369-5713
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