American Financial Group, Inc. Announces Second Quarter Results
-
Net earnings per share of
; includes$2.34 per share loss from after-tax non-core items$0.04 -
Second quarter core net operating earnings per share of
$2.38 -
Second quarter annualized ROE of
17.9% ; core operating ROE of18.2% -
Net written premiums up
10% year-over-year;5% renewal rate increases excluding workers’ compensation -
Full year 2023 core net operating earnings guidance revised to
to$10.15 per share, from$11.15 to$11.00 per share estimated previously$12.00
Core net operating earnings were
|
Three Months Ended June 30, |
|||||||||||||||||||||
Components of Pretax Core Operating Earnings |
|
2023 |
|
|
2022 |
|
|
2023 |
|
2022 |
2023 |
2022 |
|
|||||||||
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 |
$ |
244 |
|
$ |
283 |
|
$ |
55 |
$ |
62 |
$ |
299 |
|
$ |
345 |
|
||||||
Other expenses |
|
(22 |
) |
|
(14 |
) |
|
- |
|
- |
|
(22 |
) |
|
(14 |
) |
||||||
Holding company interest expense |
|
(19 |
) |
|
(23 |
) |
|
- |
|
- |
|
(19 |
) |
|
(23 |
) |
||||||
Pretax Core Operating Earnings |
|
203 |
|
|
246 |
|
|
55 |
|
62 |
|
258 |
|
|
308 |
|
||||||
Related provision for income taxes |
|
44 |
|
|
52 |
|
|
12 |
|
13 |
|
56 |
|
|
65 |
|
||||||
Core Net Operating Earnings |
$ |
159 |
|
$ |
194 |
|
$ |
43 |
$ |
49 |
$ |
202 |
|
$ |
243 |
|
||||||
|
|
|
|
|
|
|
||||||||||||||||
Core Operating Earnings Per Share |
$ |
1.87 |
|
$ |
2.28 |
|
$ |
0.51 |
$ |
0.57 |
$ |
2.38 |
|
$ |
2.85 |
|
||||||
|
|
|
|
|
|
|
||||||||||||||||
Weighted Avg Diluted Shares Outstanding |
|
85.2 |
|
|
85.3 |
|
|
85.2 |
|
85.3 |
|
85.2 |
|
|
85.3 |
|
||||||
|
|
|
|
|
|
|
||||||||||||||||
AFG’s book value per share was
Book value per share, excluding unrealized gains (losses) related to fixed maturities, was
AFG’s net earnings, determined in accordance with
In millions, except per share amounts |
Three months ended June 30, |
Six months ended June 30, |
||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Components of net earnings: |
|
|
|
|||||||||||||
Core operating earnings before income taxes |
$ |
258 |
|
$ |
308 |
|
$ |
566 |
|
$ |
686 |
|
||||
Pretax non-core items: |
|
|
|
|
||||||||||||
Realized gains (losses) on securities |
|
(2 |
) |
|
(93 |
) |
|
(48 |
) |
|
(108 |
) |
||||
Gain (loss) on retirement of debt |
|
(1 |
) |
|
(9 |
) |
|
1 |
|
|
(11 |
) |
||||
Earnings before income taxes |
|
255 |
|
|
206 |
|
|
519 |
|
|
567 |
|
||||
Provision (credit) for income taxes: |
|
|
|
|
||||||||||||
Core operating earnings |
|
56 |
|
|
65 |
|
|
117 |
|
|
140 |
|
||||
Non-core items |
|
(1 |
) |
|
(26 |
) |
|
(10 |
) |
|
(30 |
) |
||||
Total provision for income taxes |
|
55 |
|
|
39 |
|
|
107 |
|
|
110 |
|
||||
Net earnings |
$ |
200 |
|
$ |
167 |
|
$ |
412 |
|
$ |
457 |
|
||||
|
|
|
|
|
||||||||||||
Net earnings: |
|
|
|
|
||||||||||||
Core net operating earnings(a) |
$ |
202 |
|
$ |
243 |
|
$ |
449 |
|
$ |
546 |
|
||||
Non-core items: |
|
|
|
|
||||||||||||
Realized gains (losses) on securities |
|
(1 |
) |
|
(73 |
) |
|
(38 |
) |
|
(85 |
) |
||||
Gain (loss) on retirement of debt |
|
(1 |
) |
|
(7 |
) |
|
1 |
|
|
(8 |
) |
||||
Other |
|
- |
|
|
4 |
|
|
- |
|
|
4 |
|
||||
Net earnings |
$ |
200 |
|
$ |
167 |
|
$ |
412 |
|
$ |
457 |
|
||||
|
|
|
|
|
||||||||||||
|
|
|
|
|
||||||||||||
Components of earnings per share: |
||||||||||||||||
Core net operating earnings(a) |
$ |
2.38 |
|
$ |
2.85 |
|
$ |
5.27 |
|
$ |
6.41 |
|
||||
Non-core Items: |
|
|
|
|
||||||||||||
Realized gains (losses) on securities |
|
(0.02 |
) |
|
(0.86 |
) |
|
(0.45 |
) |
|
(1.00 |
) |
||||
Gain (loss) on retirement of debt |
|
(0.02 |
) |
|
(0.08 |
) |
|
0.01 |
|
|
(0.10 |
) |
||||
Other |
|
- |
|
|
0.05 |
|
|
- |
|
|
0.05 |
|
||||
Diluted net earnings per share |
$ |
2.34 |
|
$ |
1.96 |
|
$ |
4.83 |
|
$ |
5.36 |
|
||||
|
||||||||||||||||
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 an annualized core operating return greater than
“AFG had approximately
Messrs. Lindner continued, “Based on the results reported in the first half of the year and expectations for the remainder of the year, we now expect AFG’s core net operating earnings in 2023 to be in the range of
AFG’s core earnings per share guidance excludes non-core items such as realized gains and losses and other significant items that are not able to be estimated with reasonable precision, or that may not be indicative of ongoing operations.
Specialty Property and Casualty Insurance Operations
Second quarter 2023 gross and net written premiums were up
AFG’s Specialty P&C insurance operations reported underwriting profit of
The second quarter 2023 combined ratio was
The Property and Transportation Group reported an underwriting profit of
Second quarter 2023 gross and net written premiums in this group were
The Specialty Casualty Group reported an underwriting profit of
Second quarter 2023 gross and net written premiums both increased
The Specialty Financial Group reported an underwriting profit of
Second quarter 2023 gross and net written premiums in this group were up
Carl Lindner III stated, “I am pleased with the underwriting profitability in our Specialty P&C businesses in the second quarter of 2023, especially considering the challenges presented by the higher frequency of industry catastrophe losses during the quarter. New business opportunities, a continued favorable pricing environment and payroll growth contributed to double-digit growth in premiums during the quarter and through the first half of the year. Importantly, we continued to achieve pricing increases that enable us to meet or exceed targeted returns across our portfolio of Specialty P&C businesses.”
Mr. Lindner added, “Our underwriting results through the first six months of 2023 included elevated catastrophe losses and lower profitability in the Specialty Casualty Group, primarily due to lower favorable prior year reserve development in workers’ compensation and the impact of social inflation on selected businesses. Based on these results and our view that these trends will continue for the second half of the year, we now expect an overall 2023 calendar year combined ratio in the range of
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, 2023, property and casualty net investment income was approximately
Non-Core Net Realized Gains (Losses) – AFG recorded second quarter 2023 net realized losses on securities of
After-tax unrealized losses related to fixed maturities were
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
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
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 2023 second quarter results at 11:30 a.m. (ET) tomorrow, Thursday, August 3, 2023. 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.
(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. SUMMARY OF EARNINGS AND SELECTED BALANCE SHEET DATA (In Millions, Except Per Share Data) |
|||||||||||||||
|
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|||
Revenues |
|
|
|
|
|||||||||||
P&C insurance net earned premiums |
$ |
1,507 |
|
$ |
1,393 |
|
$ |
2,944 |
|
$ |
2,695 |
|
|||
Net investment income |
|
198 |
|
|
168 |
|
|
415 |
|
|
398 |
|
|||
Realized gains (losses) on securities |
|
(2 |
) |
|
(93 |
) |
|
(48 |
) |
|
(108 |
) |
|||
Income of managed investment entities: |
|
|
|
|
|||||||||||
Investment income |
|
112 |
|
|
54 |
|
|
216 |
|
|
100 |
|
|||
Gain (loss) on change in fair value of |
|
|
|
|
|||||||||||
assets/liabilities |
|
- |
|
|
(15 |
) |
|
(4 |
) |
|
(20 |
) |
|||
Other income |
|
25 |
|
|
32 |
|
|
57 |
|
|
62 |
|
|||
Total revenues |
|
1,840 |
|
|
1,539 |
|
|
3,580 |
|
|
3,127 |
|
|||
|
|
|
|||||||||||||
Costs and expenses |
|
|
|
||||||||||||
P&C insurance losses & expenses |
|
1,390 |
|
|
1,206 |
|
|
2,683 |
|
|
2,313 |
|
|||
Interest charges on borrowed money |
|
19 |
|
|
23 |
|
|
38 |
|
|
46 |
|
|||
Expenses of managed investment entities |
|
103 |
|
|
47 |
|
|
198 |
|
|
86 |
|
|||
Other expenses |
|
73 |
|
|
57 |
|
|
142 |
|
|
115 |
|
|||
Total costs and expenses |
|
1,585 |
|
|
1,333 |
|
|
3,061 |
|
|
2,560 |
|
|||
|
|
||||||||||||||
Earnings before income taxes |
|
255 |
|
|
206 |
|
|
519 |
|
|
567 |
|
|||
Provision for income taxes |
|
55 |
|
|
39 |
|
|
107 |
|
|
110 |
|
|||
|
|
|
|
|
|||||||||||
Net earnings |
$ |
200 |
|
$ |
167 |
|
$ |
412 |
|
$ |
457 |
|
|||
|
|
|
|
|
|||||||||||
Diluted earnings per common share |
$ |
2.34 |
|
$ |
1.96 |
|
$ |
4.83 |
|
$ |
5.36 |
|
|||
|
|
|
|
|
|||||||||||
Average number of diluted shares |
|
85.2 |
|
|
85.3 |
|
|
85.3 |
|
|
85.3 |
|
|||
|
|
|
|
|
|
June 30, |
December 31, |
||||
Selected Balance Sheet Data: |
2023 |
2022 |
||||
Total cash and investments |
|
$ |
14,489 |
$ |
14,512 |
|
Long-term debt |
|
$ |
1,474 |
$ |
1,496 |
|
Shareholders’ equity(b) |
|
$ |
3,993 |
$ |
4,052 |
|
Shareholders’ equity (excluding unrealized |
|
|
|
|||
gains/losses related to fixed maturities)(b) |
|
$ |
4,490 |
$ |
4,578 |
|
|
|
|
|
|||
Book value per share(b) |
|
$ |
47.06 |
$ |
47.56 |
|
Book value per share (excluding unrealized |
|
|
|
|||
gains/losses related to fixed maturities)(b) |
|
$ |
52.90 |
$ |
53.73 |
|
Common Shares Outstanding |
|
|
84.9 |
|
85.2 |
|
|
|
|
|
|||
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 |
||||||||||||
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
|
||
|
|
|
|
|
|
|
||||||||||
Gross written premiums |
$ |
2,369 |
|
$ |
2,123 |
|
|
$ |
4,524 |
|
$ |
4,059 |
|
|
||
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
||||||||||
Net written premiums |
$ |
1,667 |
|
$ |
1,516 |
|
|
$ |
3,186 |
|
$ |
2,884 |
|
|
||
|
|
|
|
|
|
|
||||||||||
Ratios (GAAP): |
|
|
|
|
|
|
||||||||||
Loss & LAE ratio |
|
60.2 |
% |
|
55.4 |
% |
|
|
58.6 |
% |
|
54.3 |
% |
|
||
Underwriting expense ratio |
|
31.7 |
% |
|
30.4 |
% |
|
|
32.0 |
% |
|
30.6 |
% |
|
||
|
|
|
|
|
|
|
||||||||||
Specialty Combined Ratio |
|
91.9 |
% |
|
85.8 |
% |
|
|
90.6 |
% |
|
84.9 |
% |
|
||
|
|
|
||||||||||||||
Combined Ratio – P&C Segment |
|
91.7 |
% |
|
86.0 |
% |
|
|
90.5 |
% |
|
85.0 |
% |
|
||
|
|
|
||||||||||||||
Supplemental Information:(c) |
|
|
|
|
|
|
||||||||||
Gross Written Premiums: |
|
|
|
|
|
|
||||||||||
Property & Transportation |
$ |
1,059 |
|
$ |
962 |
|
|
$ |
1,931 |
|
$ |
1,722 |
|
|
||
Specialty Casualty |
|
1,012 |
|
|
948 |
|
|
|
2,073 |
|
|
1,924 |
|
|
||
Specialty Financial |
|
298 |
|
|
213 |
|
|
|
520 |
|
|
413 |
|
|
||
|
$ |
2,369 |
|
$ |
2,123 |
|
|
$ |
4,524 |
|
$ |
4,059 |
|
|
||
|
|
|
|
|
|
|
||||||||||
Net Written Premiums: |
|
|
|
|
|
|
||||||||||
Property & Transportation |
$ |
668 |
|
$ |
632 |
|
|
$ |
1,220 |
|
$ |
1,133 |
|
|
||
Specialty Casualty |
|
693 |
|
|
646 |
|
|
|
1,415 |
|
|
1,296 |
|
|
||
Specialty Financial |
|
240 |
|
|
177 |
|
|
|
424 |
|
|
336 |
|
|
||
Other |
|
66 |
|
|
61 |
|
|
|
127 |
|
|
119 |
|
|
||
|
$ |
1,667 |
|
$ |
1,516 |
|
|
$ |
3,186 |
|
$ |
2,884 |
|
|
||
|
|
|
|
|
|
|
||||||||||
Combined Ratio (GAAP): |
|
|
|
|
|
|
||||||||||
Property & Transportation |
|
94.2 |
% |
|
92.4 |
% |
|
|
92.6 |
% |
|
89.3 |
% |
|
||
Specialty Casualty |
|
86.6 |
% |
|
80.1 |
% |
|
|
87.1 |
% |
|
80.4 |
% |
|
||
Specialty Financial |
|
95.0 |
% |
|
78.4 |
% |
|
|
90.8 |
% |
|
80.1 |
% |
|
||
|
|
|
|
|
|
|
||||||||||
Aggregate Specialty Group |
|
91.9 |
% |
|
85.8 |
% |
|
|
90.6 |
% |
|
84.9 |
% |
|
|
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|||
Reserve Development (Favorable)/Adverse: |
|
|
|
||||||||||||
Property & Transportation |
$ |
(21 |
) |
$ |
(30 |
) |
$ |
(58 |
) |
$ |
(64 |
) |
|||
Specialty Casualty |
|
(24 |
) |
|
(49 |
) |
|
(51 |
) |
|
(98 |
) |
|||
Specialty Financial |
|
(11 |
) |
|
(15 |
) |
|
(14 |
) |
|
(28 |
) |
|||
Other Specialty |
|
(5 |
) |
|
8 |
|
|
(2 |
) |
|
15 |
|
|||
Specialty Group |
|
(61 |
) |
|
(86 |
) |
|
(125 |
) |
|
(175 |
) |
|||
Other |
|
(1 |
) |
|
1 |
|
|
- |
|
|
2 |
|
|||
Total Reserve Development |
$ |
(62 |
) |
$ |
(85 |
) |
$ |
(125 |
) |
$ |
(173 |
) |
|||
|
|||||||||||||||
Points on Combined Ratio: |
|
|
|
||||||||||||
Property & Transportation |
|
(3.8 |
) |
|
(6.0 |
) |
|
(5.7 |
) |
|
(6.8 |
) |
|||
Specialty Casualty |
|
(3.4 |
) |
|
(7.5 |
) |
|
(3.6 |
) |
|
(7.5 |
) |
|||
Specialty Financial |
|
(5.7 |
) |
|
(8.9 |
) |
|
(3.5 |
) |
|
(8.5 |
) |
|||
|
|
|
|
|
|||||||||||
Aggregate Specialty Group |
|
(4.0 |
) |
|
(6.2 |
) |
|
(4.2 |
) |
|
(6.5 |
) |
|||
Total P&C Segment |
|
(4.2 |
) |
|
(6.1 |
) |
|
(4.3 |
) |
|
(6.4 |
) |
|||
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, |
|||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
2022 |
|||
Core Operating Earnings before Income Taxes: |
|
|
|
||||||||||
P&C insurance segment |
$ |
299 |
|
$ |
345 |
|
$ |
649 |
$ |
767 |
|||
Interest and other corporate expenses |
|
(41 |
) |
|
(37 |
) |
|
(83) |
|
(81) |
|||
|
|
|
|
|
|||||||||
Core operating earnings before income taxes |
|
258 |
|
|
308 |
|
|
566 |
|
686 |
|||
Related income taxes |
|
56 |
|
|
65 |
|
|
117 |
|
140 |
|||
|
|||||||||||||
Core net operating earnings |
$ |
202 |
|
$ |
243 |
|
$ |
449 |
$ |
546 |
b) |
Shareholders’ Equity at June 30, 2023 includes |
|
|
c) |
Supplemental Notes: |
|
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230802277109/en/
Diane P. Weidner, IRC
Vice President – Investor & Media Relations
513-369-5713
Websites:
www.AFGinc.com
www.GreatAmericanInsuranceGroup.com
Source: American Financial Group, Inc.