American Financial Group, Inc. (NYSE:AFG) Q2 2022 Results Conference Call August 4, 2022 11:30 AM ET Company Participants Diane Weidner - Vice President, Investor Relations Carl Lindner - Co-Chief Executive Officer Craig Lindner - Co-Chief Executive Officer Brian Hertzman - Chief Financial Officer Conference Call Participants Michael Phillips - Morgan Stanley Paul Newsome - Piper Sandler C. Gregory Peters - Raymond James Meyer Shields - KBW Charles Lederer - Wolfe Research Rudy Miller - The Miller Group Ope ...

[Part I — Financial Information](index=2&type=section&id=Part%20I%20%E2%80%94%20Financial%20Information) [Financial Statements](index=2&type=section&id=Item%201%20%E2%80%94%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the quarterly period ended March 31, 2022 [Consolidated Balance Sheet](index=3&type=section&id=Consolidated%20Balance%20Sheet) Total assets slightly decreased to $28.76 billion, while shareholders' equity declined due to comprehensive income losses Consolidated Balance Sheet Summary (in Millions) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$28,762** | **$28,931** | | Total cash and investments | $15,601 | $15,745 | | Goodwill | $246 | $246 | | **Total Liabilities** | **$23,927** | **$23,919** | | Unpaid losses and loss adjustment expenses | $10,986 | $11,074 | | Long-term debt | $1,917 | $1,964 | | **Total Shareholders' Equity** | **$4,835** | **$5,012** | | Retained earnings | $3,541 | $3,478 | | Accumulated other comprehensive income (loss) | $(131) | $119 | [Consolidated Statement of Earnings](index=4&type=section&id=Consolidated%20Statement%20of%20Earnings) Net earnings from continuing operations increased to $290 million, though total net earnings fell due to prior-year discontinued operations Q1 Earnings Summary (in Millions, Except Per Share Data) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Total Revenues | $1,588 | $1,509 | | P&C Insurance Net Earned Premiums | $1,302 | $1,173 | | Net Investment Income | $230 | $188 | | Realized Gains (Losses) on Securities | $(15) | $77 | | Total Costs and Expenses | $1,227 | $1,174 | | **Net Earnings from Continuing Operations** | **$290** | **$267** | | Net Earnings from Discontinued Operations | $— | $152 | | **Net Earnings** | **$290** | **$419** | | **Total Diluted EPS** | **$3.40** | **$4.84** | [Consolidated Statement of Comprehensive Income](index=5&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) Comprehensive income significantly decreased to $40 million, driven by a $250 million other comprehensive loss from unrealized security losses Comprehensive Income Summary (in Millions) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Net Earnings | $290 | $419 | | Other Comprehensive Loss, net of tax | $(250) | $(306) | | *Total net unrealized losses on securities* | *$(245)* | *$(292)* | | **Comprehensive Income** | **$40** | **$113** | [Consolidated Statement of Changes in Equity](index=6&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) Shareholders' equity decreased to $4.84 billion, impacted by comprehensive losses and dividends that outpaced net earnings - Dividends paid in Q1 2022 totaled **$2.56 per share**, amounting to **$217 million**[15](index=15&type=chunk) - Total shareholders' equity stood at **$4.835 billion** as of March 31, 2022, down from $5.012 billion at December 31, 2021[15](index=15&type=chunk) [Consolidated Statement of Cash Flows](index=7&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) Net cash from operations was $503 million, but a net decrease in cash of $950 million resulted from investing and financing activities Cash Flow Summary (in Millions) | Activity | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $503 | $627 | | Net cash used in investing activities | $(1,111) | $(938) | | Net cash used in financing activities | $(342) | $(172) | | **Net Change in Cash and Cash Equivalents** | **$(950)** | **$(483)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail key accounting policies, transactions, segment data, and subsequent events affecting the financial statements - **Discontinued Operations**: The sale of the Annuity business was completed on May 31, 2021, for **$3.57 billion**, realizing a net gain of $656 million in 2021[45](index=45&type=chunk)[47](index=47&type=chunk) - **Acquisition**: AFG acquired Verikai, Inc, a machine learning and AI company, for **$120 million** in cash in December 2021 to support its medical stop loss business[53](index=53&type=chunk) - **Segments**: Following the annuity sale, AFG operates in two segments: Property and casualty insurance, and Other[56](index=56&type=chunk) - **Subsequent Events**: In May 2022, AFG redeemed **$375 million** in Senior Notes and declared a special cash dividend of **$8.00 per share**[126](index=126&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=31&type=section&id=Item%202%20%E2%80%94%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, highlighting strong underwriting performance, capital deployment, and segment operations - Net earnings from continuing operations for Q1 2022 were **$290 million** ($3.40 per diluted share), up from $267 million ($3.08 per diluted share) in Q1 2021[395](index=395&type=chunk) - Core net operating earnings, a non-GAAP measure, increased to **$303 million** in Q1 2022 from $206 million in Q1 2021[443](index=443&type=chunk)[444](index=444&type=chunk) - Management expects continued premium growth and strong underwriting results, with rising interest rates improving investment returns[398](index=398&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position and actively deploys excess capital through dividends and share repurchases - In Q1 2022, AFG repurchased **$5 million** of its Common Stock and paid a special cash dividend of **$2.00 per share** ($170 million total)[411](index=411&type=chunk) - Subsequent to the quarter, AFG announced the redemption of its 3.50% Senior Notes and declared another special dividend of **$8.00 per share** (approx. $680 million)[412](index=412&type=chunk) Debt to Total Capital Ratio | Metric | March 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Ratio of debt to total capital (incl. subordinated) | 28.2% | 29.0% | | Ratio of debt to total capital (excl. subordinated) | 18.4% | 19.2% | [Investments](index=33&type=section&id=Investments) The investment portfolio experienced unrealized losses due to rising interest rates but remains high quality with a focus on fixed maturities - The fixed maturity portfolio is sensitive to interest rate changes; a **100 basis point increase** in rates would decrease its fair value by an estimated **$271 million (2.5%)**[162](index=162&type=chunk)[163](index=163&type=chunk) Fixed Maturities Unrealized Gains/Losses (in Millions) | Status | Fair Value | Gross Unrealized Gain/(Loss) | | :--- | :--- | :--- | | Securities With Unrealized Gains | $3,293 | $82 | | Securities With Unrealized Losses | $6,957 | $(220) | [Results of Operations](index=39&type=section&id=Results%20of%20Operations) P&C insurance segment earnings grew 47% due to strong underwriting profit and higher investment income, improving the combined ratio - Overall P&C renewal rates increased approximately **5%** in Q1 2022, or **8%** excluding workers' compensation[202](index=202&type=chunk) - The P&C segment recorded net favorable prior year reserve development of **$88 million**, an increase from $59 million in the prior-year quarter[215](index=215&type=chunk)[219](index=219&type=chunk) P&C Insurance Segment Performance (Q1 2022 vs Q1 2021) | Metric | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Written Premiums | $1,368M | $1,205M | 14% | | Net Earned Premiums | $1,302M | $1,173M | 11% | | Underwriting Gain | $207M | $134M | 54% | | Net Investment Income | $223M | $159M | 40% | | **Earnings Before Income Taxes** | **$422M** | **$288M** | **47%** | P&C Combined Ratio | Ratio Component | Q1 2022 | Q1 2021 | Change | | :--- | :--- | :--- | :--- | | Loss and LAE ratio | 53.2% | 56.9% | (3.7 pts) | | Underwriting expense ratio | 30.9% | 31.7% | (0.8 pts) | | **Combined ratio** | **84.1%** | **88.6%** | **(4.5 pts)** | [Quantitative and Qualitative Disclosure about Market Risk](index=52&type=section&id=Item%203%20%E2%80%94%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) The company's primary market risk is interest rate risk, with no material changes to disclosures from the 2021 Form 10-K Interest Rate Sensitivity of Fixed Maturity Portfolio (as of March 31, 2022) | Metric | Value | | :--- | :--- | | Fair value of fixed maturity portfolio | $10,839 million | | Percentage impact of 100 bps rate increase | (2.5%) | | Pretax impact of 100 bps rate increase | $(271) million | [Controls and Procedures](index=52&type=section&id=Item%204%20%E2%80%94%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2022 - Management concluded that **disclosure controls and procedures are effective**[250](index=250&type=chunk) - A new general ledger system was implemented in Q1 2022 to enhance efficiency, with **no material impact on internal controls**[251](index=251&type=chunk) [Part II — Other Information](index=53&type=section&id=Part%20II%20%E2%80%94%20Other%20Information) [Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202%20%E2%80%94%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) AFG repurchased 35,201 shares of its Common Stock for approximately $5 million during the first quarter of 2022 Q1 2022 Share Repurchases | Month | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | January | — | $— | | February | 30,000 | $130.37 | | March | 5,201 | $134.99 | | **Total** | **35,201** | **$131.05** | [Exhibits](index=54&type=section&id=Item%206%20%E2%80%94%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including required CEO and CFO certifications - Exhibits filed include certifications from the Co-Chief Executive Officers and Chief Financial Officer pursuant to the **Sarbanes-Oxley Act of 2002**[256](index=256&type=chunk)

American Financial Group, Inc. (NYSE:AFG) Q1 2022 Earnings Conference Call May 5, 2022 11:30 AM ET Company Participants Diane Weidner - Vice President, Investor Relations Carl Lindner - Co-Chief Executive Officer Craig Lindner - Co-Chief Executive Officer Brian Hertzman - Chief Financial Officer Conference Call Participants Paul Newsome - Piper Sandler James Bach - KBW Rudy Miller - Miller Capital John Hanson - Private Investor Operator Good day and thank you for standing by. Welcome to the American Financi ...

American Financial Group, Inc. (NYSE:AFG) Q4 2021 Earnings Conference Call February 10, 2022 11:30 AM ET Company Participants Diane Weidner – Vice President-Investor Relations Carl Lindner III – Co-Chief Executive Officer Craig Lindner – Co-Chief Executive Officer Conference Call Participants Derek Han – KBW Mike Zaremski – Wolfe Research Operator Good day and thank you for standing by. Welcome to the American Financial Group 2021 Fourth Quarter and Full Year Results Conference Call. At this time, all parti ...

Financial Highlights - Net earnings for the three months ended September 30, 2021, were $219 million [5] - Core net operating earnings for the three months ended September 30, 2021, were $231 million [5] - Property and Casualty net written premiums for the three months ended September 30, 2021, were $1,729 million [5] - Diluted earnings per share for the three months ended September 30, 2021, were $256 [5] - Core net operating earnings per share for the three months ended September 30, 2021, were $271 [5] - Adjusted book value per share was $5970 [5] - Dividends per common share were $65000 [5] Property and Casualty Insurance - Underwriting profit for Property and Casualty Insurance for the three months ended September 30, 2021, was $168 million [6] - Net investment income for Property and Casualty Insurance for the three months ended September 30, 2021, was $165 million [6] - The combined ratio for Specialty for the three months ended September 30, 2021, was 890% [5] - The loss and LAE ratio for Specialty for the three months ended September 30, 2021, was 624% [5]

[Part I — Financial Information](index=2&type=section&id=Part%20I%20%E2%80%94%20Financial%20Information) [Item 1 — Financial Statements](index=2&type=section&id=Item%201%20%E2%80%94%20Financial%20Statements) AFG's Q3 2021 unaudited consolidated financial statements reflect a transformed balance sheet post-annuity sale, with net earnings surging to $1.64 billion [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) AFG's consolidated financial statements reflect a transformed balance sheet post-annuity sale, with total assets decreasing and net earnings significantly increasing Consolidated Balance Sheet Highlights (in Millions) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$29,942** | **$73,710** | | Total Cash and Investments | $16,387 | $13,494 | | Assets of Discontinued Annuity Operations | $0 | $47,885 | | **Total Liabilities** | **$24,702** | **$66,921** | | Liabilities of Discontinued Annuity Operations | $0 | $44,458 | | **Total Equity** | **$5,240** | **$6,789** | Consolidated Earnings Highlights (in Millions) | Metric | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Total Revenues | $4,794 | $4,056 | | Net Earnings from Continuing Operations | $726 | $47 | | Net Earnings (Loss) from Discontinued Operations | $914 | $(20) | | **Net Earnings Attributable to Shareholders** | **$1,640** | **$40** | Consolidated Cash Flow Highlights (in Millions) | Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $1,425 | $1,696 | | Net Cash from Investing Activities | $(103) | $(772) | | Net Cash from Financing Activities | $(1,299) | $509 | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies, the $3.57 billion annuity business sale, updated segments, and the high-quality investment portfolio - On May 28, 2021, AFG completed the sale of its Annuity business for proceeds of **$3.57 billion**, realizing a net gain of **$656 million**; results are now reported as discontinued operations[49](index=49&type=chunk) - Following the annuity sale, AFG's business is managed in two segments: Property and casualty insurance, and Other, with P&C further divided into sub-segments[62](index=62&type=chunk)[63](index=63&type=chunk) - The company's investment portfolio is primarily composed of fixed maturity securities, with **88%** rated as investment grade as of September 30, 2021[189](index=189&type=chunk) - For the nine months of 2021, the company recorded a net decrease in the provision for claims of prior years of **$208 million**, indicating **favorable reserve development**[149](index=149&type=chunk) [Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202%20%E2%80%94%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses AFG's financial condition and results, emphasizing the strategic annuity business sale, enhanced capital, and strong P&C performance [Overview](index=36&type=section&id=Overview) AFG's primary business is now specialized commercial P&C insurance post-annuity sale, with net earnings from continuing operations significantly increasing in Q3 and YTD 2021 - On May 28, 2021, AFG sold its annuity business for **$3.57 billion**, realizing an after-tax gain of **$656 million**; results are now reported as discontinued operations[161](index=161&type=chunk) Net Earnings from Continuing Operations (attributable to shareholders) | Period | 2021 | 2020 | | :--- | :--- | :--- | | **Q3** | $219M ($2.56/share) | $88M ($1.00/share) | | **First Nine Months** | $726M ($8.45/share) | $60M ($0.66/share) | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) AFG maintains strong liquidity, enhanced by the annuity sale proceeds, actively deploying capital through repurchases and dividends, while maintaining a 28.2% debt-to-total capital ratio Debt to Total Capital Ratio | Date | Ratio (including subordinated debt) | | :--- | :--- | | Sep 30, 2021 | 28.2% | | Dec 31, 2020 | 26.6% | - Following the annuity sale, AFG deployed significant capital, repurchasing **2.8 million shares** for **$318 million** and declaring special dividends totaling **$1.70 billion** in the first nine months of 2021[179](index=179&type=chunk) - AFG has access to a **$500 million** revolving credit facility expiring in December 2025, which remained **undrawn** during 2020 and the first nine months of 2021[181](index=181&type=chunk) [Investments](index=40&type=section&id=Investments) AFG's investment portfolio includes **$10.43 billion** in high-quality fixed maturities, with **88%** investment grade, and is sensitive to interest rate changes, with a 100 bps increase impacting fair value by **$209 million** - The investment portfolio at September 30, 2021, included **$10.43 billion** in available-for-sale fixed maturities and **$29 million** in trading fixed maturities[184](index=184&type=chunk) - Approximately **88%** of the fixed maturity portfolio was rated investment grade, with municipal bonds representing **19%** of the portfolio and being **99%** investment grade[189](index=189&type=chunk)[190](index=190&type=chunk) Interest Rate Sensitivity of Fixed Maturity Portfolio | Metric | Value | | :--- | :--- | | Fair Value of Portfolio | $10,456 million | | Pretax Impact of 100 bps Rate Increase | $(209) million (-2.0%) | [Results of Operations](index=47&type=section&id=Results%20of%20Operations) This section analyzes AFG's operating results for Q3 and YTD 2021, introducing 'core net operating earnings' and detailing strong P&C segment performance driven by premium growth and underwriting profit - The company uses **"core net operating earnings"**, a **non-GAAP** measure, to provide a clearer view of ongoing operational performance by excluding realized gains/losses, discontinued operations, and special charges[213](index=213&type=chunk)[218](index=218&type=chunk) - The run-off operations of Neon (Lloyd's of London business exited in 2020) are **excluded** from core net operating earnings for the property and casualty segment[215](index=215&type=chunk) [Results of Operations — Third Quarter](index=49&type=section&id=Results%20of%20Operations%20%E2%80%94%20Third%20Quarter) For Q3 2021, AFG's core net operating earnings increased to **$231 million**, driven by a **63%** rise in P&C core underwriting profit and an improved combined ratio of **89.0%**, with gross written premiums growing **19%** Q3 2021 vs. Q3 2020 Core Net Operating Earnings (in Millions) | Metric | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Core Net Operating Earnings | $231 | $121 | | Diluted Core EPS | $2.71 | $1.38 | Q3 Property & Casualty Insurance Performance | Metric | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Gross Written Premiums | $2,656 M | $2,223 M | | Core Underwriting Gain | $168 M | $103 M | | Combined Ratio (Specialty) | 89.0% | 92.1% | - Overall average renewal rates for P&C insurance increased approximately **11%** in Q3 2021[247](index=247&type=chunk) [Results of Operations — First Nine Months](index=66&type=section&id=Results%20of%20Operations%20%E2%80%94%20First%20Nine%20Months) For the first nine months of 2021, core net operating earnings reached **$642 million**, driven by an **87%** growth in P&C core underwriting profit and a **17%** increase in gross written premiums, with discontinued annuity operations contributing **$914 million** YTD 2021 vs. YTD 2020 Core Net Operating Earnings (in Millions) | Metric | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | | Core Net Operating Earnings | $642 | $306 | | Diluted Core EPS | $7.48 | $3.40 | YTD Property & Casualty Insurance Performance | Metric | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | | Gross Written Premiums | $6,209 M | $5,288 M | | Core Underwriting Gain | $454 M | $243 M | | Combined Ratio (Specialty) | 88.4% | 93.2% | - The discontinued annuity operations contributed **$914 million** to net earnings for the first nine months of 2021, which includes a **$656 million** after-tax gain on the sale[214](index=214&type=chunk) [Item 3 — Quantitative and Qualitative Disclosure about Market Risk](index=80&type=section&id=Item%203%20%E2%80%94%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) No material changes to market risk disclosures from the 2020 Form 10-K, except for the fixed maturity portfolio reduction post-annuity sale, with a 100 bps rate increase impacting fair value by **$209 million** - The primary change in market risk exposure is the **decline** in the size of the fixed maturity portfolio due to the May 2021 sale of the annuity business[390](index=390&type=chunk) Interest Rate Sensitivity Analysis (as of Sep 30, 2021) | Metric | Value | | :--- | :--- | | Fair value of fixed maturity portfolio | $10,456 million | | Percentage impact of 100 bps rate increase | (2.0%) | | Pretax impact of 100 bps rate increase | $(209) million | [Item 4 — Controls and Procedures](index=80&type=section&id=Item%204%20%E2%80%94%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of Q3 2021, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of September 30, 2021, the Co-CEOs and CFO concluded that the company's disclosure controls and procedures are **effective**[392](index=392&type=chunk) - There were **no changes** in internal control over financial reporting during the third quarter of 2021 that materially affected, or are reasonably likely to materially affect, these controls[392](index=392&type=chunk) [Part II — Other Information](index=81&type=section&id=Part%20II%20%E2%80%94%20Other%20Information) [Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds](index=81&type=section&id=Item%202%20%E2%80%94%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) AFG repurchased **2,769,182 shares** at **$114.75** per share in the first nine months of 2021, with approximately **7.7 million shares** remaining available for repurchase Issuer Purchases of Equity Securities (Q3 2021) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | July | 10,973 | $120.01 | | August | — | — | | September | 83,987 | $129.67 | - For the first nine months of 2021, a total of **2,769,182 shares** were repurchased at an average price of **$114.75** per share[395](index=395&type=chunk) [Item 6 — Exhibits](index=82&type=section&id=Item%206%20%E2%80%94%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications as required by Sarbanes-Oxley, and Inline XBRL documents - Exhibits filed include **CEO and CFO certifications** pursuant to sections 302(a) and 906 of the **Sarbanes-Oxley Act**[397](index=397&type=chunk) - The filing includes **XBRL Instance Documents** and various **taxonomy extension documents** for interactive data[397](index=397&type=chunk)