Core Viewpoint - American Financial Group (AFG) reported quarterly earnings of $2.14 per share, exceeding the Zacks Consensus Estimate of $2.08 per share, but down from $2.56 per share a year ago, indicating a mixed performance in earnings [1][2]. Earnings Performance - The earnings surprise for the quarter was +2.88%, while the previous quarter saw a surprise of -16.59% with actual earnings of $1.81 per share against an expectation of $2.17 [1][2]. - Over the last four quarters, AFG has surpassed consensus EPS estimates only once [2]. Revenue Analysis - AFG's revenues for the quarter ended June 2025 were $1.86 billion, missing the Zacks Consensus Estimate by 9.22%, compared to $1.8 billion in the same quarter last year [2]. - The company has exceeded consensus revenue estimates two times in the last four quarters [2]. Stock Performance - AFG shares have declined approximately 9.7% since the beginning of the year, contrasting with the S&P 500's gain of 7.6% [3]. Future Outlook - The company's earnings outlook will be crucial for investors, particularly in light of management's commentary during the earnings call [4]. - Current consensus EPS estimate for the upcoming quarter is $2.75 on revenues of $2.19 billion, and for the current fiscal year, it is $9.88 on revenues of $8.22 billion [7]. Industry Context - The Insurance - Property and Casualty industry, to which AFG belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, indicating potential challenges ahead [8].

Core Insights - American Financial Group, Inc. (AFG) has underperformed compared to its industry and broader market indices over the past year, with a share price increase of 6.5% versus 16.9% for the Finance sector and 21.1% for the Zacks S&P 500 composite [1] - AFG's current market capitalization stands at $10.64 billion, with a recent share price of $127.43, which is 15.1% lower than its 52-week high of $150.19 [2] - The company is trading at a forward 12-month price-to-book ratio of 2.43X, significantly above the industry average of 1.55X, indicating an expensive valuation [3] - The Zacks Consensus Estimate projects AFG's revenues for 2025 to be $8.21 billion, reflecting a year-over-year growth of 2.1% [4] - AFG has maintained a combined ratio better than the industry average for over 20 years, with a target of 92.5% for 2025 [7] - The company has a strong dividend history, with 18 consecutive years of increases and a 10-year compound annual growth rate (CAGR) of 12.4% [16][17] - Analysts have shown bearish sentiment, with three out of four lowering their earnings estimates for 2025 and 2026 over the past 60 days [8] - The average price target from analysts suggests a potential upside of 5.5% from the last closing price, with a target of $132.20 per share [9] - AFG's return on equity (ROE) has improved, currently at 18.3%, compared to the industry average of 7.8% [11] - The company is well-positioned for growth due to new business opportunities, a favorable renewal rate environment, and strategic acquisitions [12][19]

A month has gone by since the last earnings report for American Financial Group (AFG) . Shares have added about 1.5% in that time frame, underperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is American Financial due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.How Have Estimates Been Moving ...

Group 1 - The article highlights investment-grade long-term bonds with yields close to 7.6% as undervalued opportunities in exchange-traded debt securities [1] - The focus is on a company in the insurance sector, indicating a specific sector of interest for potential investments [1] - The service "Trade With Beta" offers features such as frequent picks for mispriced preferred stocks and baby bonds, along with weekly reviews of over 1200 equities [1] Group 2 - The article emphasizes the importance of active investor engagement and provides a platform for discussion among sophisticated traders and investors [1] - The analyst has disclosed a beneficial long position in the shares of AFGC, indicating a vested interest in the company's performance [1]

Group 1 - The articles emphasize the immunity that fixed-income securities provide against everyday market sentiment, highlighting their stability in uncertain market conditions [1] - The focus is on High Dividend Opportunities, which are presented as a reliable investment strategy for generating income [1] Group 2 - The company promotes a portfolio strategy that allows investors to earn income without the need to sell assets, aiming to simplify retirement investing [4] - The Income Method is highlighted as a way to achieve strong returns, targeting a yield of 9-10% [4] - A month-long paid trial is offered at $49, with an additional 5% discount, to attract new investors to their Model Portfolio [4]

Core Viewpoint - American Financial Group, Inc. (AFG) is experiencing a short-term bullish trend despite a recent decline in share price, with potential growth driven by strategic acquisitions and improved underwriting performance [1][18]. Price Movement - AFG's share price is currently $127.14, down 15.3% from its 52-week high of $150.19, while trading above its 50-day simple moving average (SMA) [1]. Valuation - AFG's forward 12-month price-to-book ratio stands at 2.41X, exceeding the industry average of 1.58X, indicating an expensive valuation [4]. Price Performance - Over the past year, AFG shares have decreased by 4.2%, contrasting with the industry's growth of 22.5%, the Finance sector's return of 18.1%, and the S&P 500's appreciation of 11.6% [5][6]. Growth Projections - The Zacks Consensus Estimate projects AFG's 2025 revenues at $8.21 billion, reflecting a year-over-year increase of 2.1%, with further growth anticipated in 2026 [8]. Analyst Sentiment - Analyst sentiment has turned bearish, with the consensus estimate for 2025 earnings down by 0.5% and for 2026 down by 0.7% over the past 30 days [9]. Return on Capital - AFG's return on equity (ROE) for the trailing 12 months is 18.3%, significantly higher than the industry average of 7.8%, indicating effective use of shareholders' funds [10]. Growth Factors - AFG is well-positioned for growth due to new business opportunities, a favorable renewal rate environment, and strategic acquisitions, particularly in the Crop Risk Services segment [11][12]. Combined Ratio - AFG has maintained a combined ratio better than the industry average for over two decades, with an expected combined ratio of 92.5% for 2025 [13]. Dividend Distribution - The company has increased its dividend for 18 consecutive years, reflecting financial stability and robust operating profitability, with a dividend yield of 2.5%, surpassing the industry average of 0.2% [14][16]. Conclusion - Despite an expensive valuation and bearish analyst sentiment, AFG's strategic initiatives and favorable growth estimates make it an attractive stock to hold [17][18].

Part I [Financial Statements](index=3&type=section&id=Item%201%20%E2%80%94%20Financial%20Statements) This section presents the unaudited consolidated financial statements for American Financial Group, Inc. for the quarter ended March 31, 2025 [Consolidated Balance Sheet](index=3&type=section&id=Consolidated%20Balance%20Sheet) Total assets decreased to **$30.29 billion** at March 31, 2025, from **$30.84 billion** at year-end 2024, with liabilities and equity also declining Consolidated Balance Sheet Highlights (in Millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$30,294** | **$30,836** | | Total Cash and Investments | $15,994 | $15,852 | | Recoverables from reinsurers | $4,945 | $5,176 | | **Total Liabilities** | **$25,902** | **$26,370** | | Unpaid losses and loss adjustment expenses | $13,970 | $14,179 | | Long-term debt | $1,476 | $1,475 | | **Total Shareholders' Equity** | **$4,392** | **$4,466** | [Consolidated Statement of Earnings](index=4&type=section&id=Consolidated%20Statement%20of%20Earnings) Net earnings for Q1 2025 decreased to **$154 million** ($1.84 per diluted share) from **$242 million** ($2.89 per diluted share) in Q1 2024 Q1 Earnings Summary (in Millions, Except Per Share Data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Earned Premiums | $1,580 | $1,546 | | Net Investment Income | $173 | $198 | | Total Revenues | $1,856 | $1,906 | | Total Costs and Expenses | $1,659 | $1,602 | | Earnings Before Income Taxes | $197 | $304 | | **Net Earnings** | **$154** | **$242** | | **Total Diluted Earnings Per Share** | **$1.84** | **$2.89** | [Consolidated Statement of Comprehensive Income](index=5&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) Comprehensive income for Q1 2025 decreased to **$215 million** from **$246 million** in Q1 2024, partially offset by increased other comprehensive income Comprehensive Income Summary (in Millions) | Component | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Earnings | $154 | $242 | | Other Comprehensive Income, net of tax | $61 | $4 | | **Comprehensive Income** | **$215** | **$246** | [Consolidated Statement of Changes in Equity](index=6&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) Shareholders' equity decreased from **$4.47 billion** at year-end 2024 to **$4.39 billion** at March 31, 2025, primarily due to dividends and share repurchases - Key activities impacting equity in Q1 2025 included **$154 million** in net earnings, offset by **$234 million** in dividends and **$58 million** in share repurchases[12](index=12&type=chunk) [Consolidated Statement of Cash Flows](index=7&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) Net cash from operating activities increased to **$342 million** in Q1 2025, with financing activities using **$495 million**, resulting in a **$130 million** net decrease in cash Cash Flow Summary (in Millions) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $342 | $107 | | Net Cash from (used in) Investing Activities | $23 | ($155) | | Net Cash used in Financing Activities | ($495) | ($90) | | **Net Change in Cash** | **($130)** | **($138)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on accounting policies, segment operations, and other financial details - Beginning in 2025, the results of the internal reinsurance facility are included within the same sub-segments as the ceding businesses, aligning with how management evaluates performance. Prior period information has been recast for consistency[57](index=57&type=chunk)[59](index=59&type=chunk) - AFG consolidates Collateralized Loan Obligations (CLOs) that it manages, as it is deemed the primary beneficiary. The assets and liabilities of these CLOs are shown separately on the balance sheet, and AFG has no right to the assets or obligation for the liabilities[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - The net decrease in the provision for claims of prior years (favorable development) was **$20 million** in Q1 2025, compared to **$50 million** in Q1 2024. This was driven by better-than-expected outcomes in crop, trucking, workers' compensation, and financial institutions businesses, partially offset by adverse development in excess liability[127](index=127&type=chunk)[129](index=129&type=chunk) [Management's Discussion and Analysis (MD&A)](index=30&type=section&id=Item%202%20%E2%80%94%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and results of operations for Q1 2025, covering financial performance, liquidity, and segment results - Q1 2025 net earnings were **$154 million** (**$1.84/share**), down from **$242 million** (**$2.89/share**) in Q1 2024. The decrease was attributed to lower underwriting profit and reduced net investment income from the alternative investment portfolio[143](index=143&type=chunk) - Management expects continued premium growth and strong underwriting results in a generally favorable P&C market. The elevated interest rate environment is anticipated to positively impact fixed maturity investment income in 2025[144](index=144&type=chunk) Reconciliation to Core Net Operating Earnings (in Millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Earnings | $154 | $242 | | *Less: Realized gains on securities, net of tax* | ($2) | ($11) | | **Core Net Operating Earnings** | **$152** | **$231** | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with a **24.7%** debt-to-total capital ratio and substantial available cash and credit facilities Debt to Total Capital Ratio | Metric | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Ratio of debt to total capital (incl. subordinated) | 24.7% | 24.1% | | Ratio of debt to total capital (excl. subordinated) | 13.6% | 13.3% | - In Q1 2025, AFG repurchased **462,398 shares** for **$58 million** and paid a special dividend of **$2.00 per share**, totaling **$167 million**[158](index=158&type=chunk) - At March 31, 2025, the parent company held approximately **$323 million** in cash and investments and had full availability under its **$450 million** revolving credit facility[160](index=160&type=chunk) [Investments](index=36&type=section&id=Investments) The investment portfolio, including **$10.57 billion** in fixed maturities, is high quality with **95%** investment grade and minimal direct office commercial real estate exposure - Approximately **95%** of the fixed maturities held at March 31, 2025, were rated 'investment grade'[171](index=171&type=chunk) - The company has approximately **$75 million** of direct exposure to office commercial real estate through property, mortgages, or equity investments, with an additional **$415 million** in fixed income securities having minimal exposure[174](index=174&type=chunk) Interest Rate Sensitivity of Fixed Maturity Portfolio | Metric | Value (in Millions) | | :--- | :--- | | Fair value of fixed maturity portfolio | $10,639 | | Pretax impact on fair value of 100 bps rate increase | ($319) | [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Core net operating earnings decreased in Q1 2025 due to lower P&C underwriting profit and alternative investment income, with the P&C combined ratio increasing to **94.1%** - The Property & Casualty insurance segment's pretax earnings decreased **28%** to **$246 million** in Q1 2025 from **$340 million** in Q1 2024, due to lower underwriting profit and alternative investment income[199](index=199&type=chunk) P&C Insurance Combined Ratio | Component | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Loss and LAE ratio | 61.1% | 58.6% | +2.5 pts | | Underwriting expense ratio | 33.0% | 31.5% | +1.5 pts | | **Combined ratio** | **94.1%** | **90.1%** | **+4.0 pts** | - Catastrophe losses were **$72 million** (**4.5 points** on the combined ratio) in Q1 2025, compared to **$35 million** (**2.3 points**) in Q1 2024[216](index=216&type=chunk) [Quantitative and Qualitative Disclosure about Market Risk](index=54&type=section&id=Item%203%20%E2%80%94%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) The company reports no material changes to market risk disclosures, noting a 100 basis point interest rate increase would decrease fixed maturity portfolio fair value by **$319 million** - There were no material changes to the market risk information provided in the 2024 Form 10-K[258](index=258&type=chunk) Interest Rate Sensitivity Analysis | Metric | Value (in Millions) | | :--- | :--- | | Fair value of fixed maturity portfolio | $10,639 | | Pretax impact on fair value of 100 bps rate increase | ($319) | [Controls and Procedures](index=54&type=section&id=Item%204%20%E2%80%94%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - Based on an evaluation as of the end of the reporting period, the Co-CEOs and CFO concluded that the company's disclosure controls and procedures are effective[261](index=261&type=chunk) Part II [Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202%20%E2%80%94%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, AFG repurchased **462,398** shares at **$123.86** per share, with **5,266,612** shares remaining available for repurchase Q1 2025 Share Repurchases | Month | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | January | — | $— | | February | 399,706 | $123.83 | | March | 62,692 | $124.12 | | **Total** | **462,398** | **$123.86** | [Other Information](index=55&type=section&id=Item%205%20%E2%80%94%20Other%20Information) No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[265](index=265&type=chunk) [Exhibits](index=56&type=section&id=Item%206%20%E2%80%94%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by Co-CEOs and CFO, and XBRL data files

Core Viewpoint - American Financial Group, Inc. (AFG) reported disappointing first-quarter 2025 results, with net operating earnings per share of $1.81, missing estimates by 16.6% and reflecting a 34.4% year-over-year decline [1] Financial Performance - Total revenues for the quarter were $1.9 billion, down 1.4% year over year, missing estimates by 3.8% due to lower net investment income and other income [2] - Net premiums earned increased by 2.2% to $1.9 billion [2] - Net investment income fell by 12.6% year over year to $173 million, below the estimate of $213.7 million [2] Cost and Expenses - Total costs and expenses rose by 3.6% year over year to $1.7 billion, driven by higher property and casualty (P&C) insurance losses and expenses [3] Segmental Update - The Specialty P&C Insurance segment generated $1.6 billion in net written premiums, a decline of 1% year over year, despite a favorable renewal rate environment and increased exposure [4] - Net written premiums in the Property & Transportation Group decreased by 6% year over year to $563 million, lower than the estimate of $703 million [5] - Specialty Casualty Group's net written premiums decreased by 4% year over year to $772 million, slightly above the estimate of $765 million [5] - Specialty Financial's net written premiums increased by 18% year over year to $276 million, exceeding the estimate of $270 million [5] Underwriting Profit - The underwriting profit for the Specialty P&C Insurance segment decreased by 39% year over year to $94 million, below the estimate of $133 million [6] - The combined ratio for the segment deteriorated by 390 basis points year over year to 94%, primarily due to losses from California wildfires [6] Financial Update - As of March 31, 2025, total cash and investments stood at $16 billion, a 0.9% increase from the end of 2024 [7] - Long-term debt remained unchanged at $1.5 billion [7] - Book value per share, excluding accumulated other comprehensive income, was $54.63, up 2.5% from the end of 2024 [7] - Annualized return on equity was 13.3%, contracting by 800 basis points year over year [8] Capital Deployment - The company returned $292 million to shareholders, which included $167 million in special dividends and $58 million in share repurchases [10]

Financial Data and Key Metrics Changes - AFG reported core net operating earnings of $1.81 per share for Q1 2025, reflecting a year-over-year decrease due to lower property and casualty (P&C) insurance underwriting profit and lower returns on the alternative investment portfolio [8][10] - The company returned over $290 million to shareholders in Q1 2025 through dividends and share repurchases [6][12] - AFG's growth in book value per share, excluding AOCI plus dividends, was 2.5% for the quarter [12] Business Line Data and Key Metrics Changes - Specialty Property and Casualty businesses had a combined ratio of 94% in Q1 2025, which is 3.9 points higher than the 90.1% reported in Q1 2024, driven by higher catastrophe losses [14][15] - Gross and net written premiums for Specialty Property and Casualty were 21% lower compared to Q1 2024, but excluding the impact of nonrenewed large accounts, gross written premiums grew by 2% year over year [16][17] - The Specialty Casualty Group reported a combined ratio of 97.6% in Q1 2025, which is 5.4 points higher than the previous year, with gross and net written premiums decreasing by 34% [21][22] Market Data and Key Metrics Changes - The average renewal pricing across the P&C Group, excluding workers' compensation, increased by approximately 7% in Q1 2025 [16] - The company achieved overall renewal rate increases for 35 consecutive quarters, indicating strong pricing discipline [16] Company Strategy and Development Direction - AFG's management emphasized maintaining underwriting discipline and strategic decisions to optimize long-term results, including the nonrenewal of underperforming accounts [16][25] - The company is focused on capital deployment opportunities, including acquisitions and special dividends, as it expects to generate significant excess capital throughout 2025 [12][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged elevated economic uncertainty and its potential impact on returns from the alternative investment portfolio in 2025 [10][11] - The company remains optimistic about long-term returns from its alternative investment portfolio, expecting annual returns averaging 10% or better [11] Other Important Information - AFG announced the sale of the Charleston Harbor Resort and Marina, expecting to recognize an after-tax core operating gain of approximately $100 million or $1.2 per share from the transaction [11] Q&A Session Summary Question: Inquiry about expense ratio changes - Management noted that changes in the expense ratio are influenced by the mix of business and investments in IT initiatives, which were anticipated in the business plan [28][30][31] Question: Clarification on catastrophe losses - Catastrophe losses from California wildfires were at the low end of expectations, with minimal additional smaller catastrophes impacting the quarter [32] Question: Discussion on premium growth and market cycle - Management expressed a desire to grow across businesses but acknowledged competitive pressures and strategic decisions that may temper growth in the near term [34][36] Question: EPS guidance and impact of Charleston Harbor sale - Management indicated that the sale would provide an incremental benefit to EPS, but uncertainty in alternative investment returns complicates predictions for the year [41][43] Question: Future premium growth expectations - Management suggested that premium growth would likely be lower than the previously guided 5%, but still expects positive growth for the year [45] Question: Review of property and transportation premium trends - Management confirmed ongoing reviews of accounts for profitability, which may lead to continued pressure on written premiums [47] Question: Addressing elevated social inflation in specialty casualty - Management is actively monitoring loss trends and has made adjustments to address adverse developments in social inflation-exposed businesses [50][52]

| Section | Page | | --- | --- | | Table of Contents - Investor Supplement - First Quarter 2025 | 2 | | Financial Highlights | 3 | | Summary of Earnings. | イ | | Earnings Per Share Summary | 5 | | Property and Casualty Insurance Segment | | | Property and Casualty Insurance - Summary Underwiting Results (GAAP) | | | Specialty - Underwriting Results (GAAP). | 7 | | Property and Transportation - Underwriting Results (GAAP). | 8 | | Specialty Casualty - Underwriting Results (GAAP) . | 9 | | Specialty Financial ...