Core Insights - American Financial Group, Inc. (AFG) is currently trading above its 200-day simple moving average, indicating a short-term bullish trend, with a share price of $139.32, down 7.2% from its 52-week high of $150.19 [1] - The company has a market capitalization of $11.61 billion and has seen a 2% increase in share price over the past year, underperforming the industry average return of 6.4% [2] Valuation and Performance - AFG's forward 12-month price-to-book ratio stands at 2.58X, significantly higher than the industry average of 1.55X, indicating an expensive valuation [3] - The company has maintained a combined ratio that has outperformed the industry average for over 20 years, with a target of 92.5% for 2025 [6] - AFG has achieved 18 consecutive years of dividend increases, with a 10-year compound annual growth rate (CAGR) of 12.4% [6][14] Growth Projections - The Zacks Consensus Estimate projects a 22% increase in earnings per share and a 10.7% increase in revenues for 2026 compared to 2025 estimates [8] - AFG's return on equity (ROE) has improved, currently at 17.4%, compared to the industry average of 7.6% [9] Strategic Positioning - The company is well-positioned for growth due to new business opportunities, a favorable renewal rate environment, and additional crop premiums from its acquisition of Crop Risk Services [10] - AFG has reported 35 consecutive quarters of renewal rate increases, indicating strong pricing power in the property and casualty (P&C) market [11] Financial Stability - AFG's financial stability is reflected in its consistent dividend payments and robust operating profitability in the P&C segment [13] - The dividend yield of 2.3% is notably higher than the industry average of 0.2% [14] Conclusion - Despite an expensive valuation and some bearish sentiment from analysts, AFG is expected to benefit from strategic acquisitions and improved underwriting profits, making it a stock worth holding [16]

Financial Data and Key Metrics Changes - The underlying NPAT was £40.8 million, with statutory NPAT up 21% to £35 million [25] - Gross profit increased by 12% or £15 million, reflecting growth across both distribution and manufacturing [25][30] - Operating expenses totaled $96.6 million, with a normalized second half OpEx of $46 million, down from the first half [26][28] Business Line Data and Key Metrics Changes - Distribution earnings contributed 81% of the business, with gross profit up 10% to $68 million [6][30] - Manufacturing earnings surged 53% to $16 million, driven by scalable processes and prudent risk management [4][30] - Subscription income rose 13% to $21 million, driven by increased adoption of BrokerEngine plus and other value-added services [4] Market Data and Key Metrics Changes - Broker market share increased from 75% to 77%, with expectations to reach 80% [11] - AFG Securities loan book grew 23% to $5.5 billion, with settlements up 65% [3][19] - The residential mortgage book grew by 5% to $211 billion, indicating strong market activity [6][16] Company Strategy and Development Direction - The company focuses on three strategic pillars: growing the broker network, providing market-leading technology, and delivering high margins through the distribution network [8][9] - Investments in technology and strategic acquisitions are aimed at expanding the product suite and enhancing broker relationships [4][8] - The company anticipates continued consolidation within the broker industry, positioning itself to capture future growth opportunities [12][60] Management's Comments on Operating Environment and Future Outlook - The management expressed optimism about the economic environment, citing lower unemployment and cash rate reductions stimulating market activity [3][42] - The company is cautiously optimistic about future growth, supported by favorable macroeconomic conditions and a strong broker network [52] - Management highlighted the importance of brokers in providing competition and choice in the marketplace, with expectations for continued growth in broker share [44][45] Other Important Information - The company maintains a strong capital position with $182 million in investments and liquid assets [4] - The dividend payout ratio for FY '26 and beyond is expected to be between 50-70% of adjusted NPAT, allowing for reinvestment or returning excess cash to shareholders [29] Q&A Session Summary Question: Changes in the approach of major banks towards brokers - Management noted that major banks remain engaged with the broker channel despite their focus on proprietary networks, emphasizing the importance of choice and competition for customers [56][58] Question: Growth potential of the broker industry and AFG's market share - Management believes consolidation will occur in the broker industry, with potential for AFG's market share to increase as they provide additional services to brokers [60][61] Question: Revenue uplift from brokers writing multiple products - Management indicated that while achieving 100% of brokers writing multiple products is unlikely, there is significant potential for growth in this area, enhancing customer experience and revenue [64][65] Question: Impact of white label and securitization on home loan volume - Management clarified that the cessation of the white label program affected July's volume, but new products are expected to drive growth moving forward [70][73] Question: Management of margin versus volume trade-off - Management confirmed a focus on volume growth while being mindful of return on capital, indicating a balanced approach to managing margins [97] Question: Outlook for payout ratio and margin - Management acknowledged a natural ceiling for payout ratios, indicating that the current levels are a function of mix and volume rather than a slowdown in payouts [95][96]

Financial Data and Key Metrics Changes - The underlying NPAT for FY '25 was £40.8 million, with statutory NPAT up 21% to £35 million [26] - Gross profit increased by 12% or £15 million, reflecting growth across both distribution and manufacturing segments [26][32] - Operating expenses totaled $96.6 million, with a normalized second half OpEx of $46 million, down from the first half [27][30] Business Line Data and Key Metrics Changes - Distribution earnings contributed 81% of the business, with gross profit up 10% to $68 million [6][32] - Manufacturing earnings surged 53% to $16 million, driven by a larger loan book and improved net interest margins [4][32] - Subscription income rose 13% to $21 million, supported by increased adoption of BrokerEngine plus and other services [4] Market Data and Key Metrics Changes - Broker market share increased from 75% to 77%, with expectations to reach 80% [12] - AFG Securities loan book grew by 23% to $5.5 billion, with settlements up 65% [3][20] - The residential mortgage book grew by 5% to $211 billion, indicating strong market activity [6][17] Company Strategy and Development Direction - The company focuses on three strategic pillars: growing the broker network, providing market-leading technology, and delivering high margins through the distribution network [8][10] - Investments in technology and strategic acquisitions are aimed at diversifying income sources beyond traditional residential mortgage aggregation [4][10] - The company anticipates continued consolidation within the broker industry, positioning itself to capture future growth opportunities [13][52] Management's Comments on Operating Environment and Future Outlook - The management expressed optimism about the economic environment, citing lower unemployment and cash rate reductions stimulating market activity [3][44] - The company expects strong momentum into FY '26, supported by a record pipeline and improving market conditions [16][44] - Management highlighted the importance of brokers in the marketplace, emphasizing their role in providing competition and choice to consumers [46] Other Important Information - The company maintains a strong capital position with $182 million in investments and liquid assets, allowing for reinvestment where returns are compelling [4][40] - Cash conversion for the year was 90%, with a net cash position of $12 million, providing capacity for growth [40] Q&A Session Summary Question: Changes in the industry approach to brokers - Management noted that major lenders remain engaged with brokers despite their focus on proprietary networks, as brokers provide essential customer choice and competition [58][60] Question: Growth potential of the broker industry - Management believes consolidation will occur, but currently, it is a favorable time for brokers, with opportunities for growth and customer retention through additional services [62][63] Question: Revenue uplift from brokers writing multiple products - Management indicated that while achieving 100% of brokers writing multiple products is unlikely, there is potential for growth beyond the current 58% [65][67] Question: Home loan volume and securitization - Management clarified that the decline in home loan volume was due to the cessation of a white label program, with new products expected to drive future growth [74][76] Question: Net interest margin (NIM) benefits from rate cuts - Management discussed the impact of lower cash rates on NIM, indicating a small improvement alongside ongoing competitive pressures [80][82] Question: Outlook on payout ratios - Management acknowledged a natural ceiling on payout ratios, influenced by the mix of broker activity and overall market conditions [96][97] Question: Margin versus volume trade-off - Management confirmed a focus on volume growth while being mindful of return on capital, indicating a balanced approach to managing margins [98][99]

F Y25 Full Year Results 12 months to 30 June 2025 For personal use only Presentation Outline | Item | Presenter | | Pages | | --- | --- | --- | --- | | FY25 Highlights | David Bailey | 4 – | 6 | | Market & operations update | David Bailey | 7 – | 13 | | Financial update | Luca Pietropiccolo | 14 | | | Outlook | David Bailey | 21 | | | Q&A | | | | | Appendices | | | | For personal use only – 6 – 13 – 20 – 26 2 Significant scale in the finance industry 3 $948B Settlements p.a. in the Australian finance market ...

Group 1 - The article discusses financial instruments related to American Financial Group, Inc. (NYSE: AFG) and highlights the features of the investing group Trade With Beta, which includes frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of over 1200 equities, IPO previews, hedging strategies, and an actively managed portfolio [1] - The investing group encourages active investors to join for a free trial and participate in discussions with sophisticated traders and investors [1] - The analyst has disclosed a beneficial long position in the shares of AFG, indicating a personal investment interest in the company [1] Group 2 - The article emphasizes that past performance is not indicative of future results and does not provide specific investment recommendations [2] - It clarifies that the views expressed may not reflect those of Seeking Alpha as a whole, and the analysts involved may not be licensed or certified by any regulatory body [2] - The article does not establish any business relationship with the companies mentioned, ensuring an independent perspective [2]

Company Overview - American Financial Group, Inc. (AFG) is positioned for growth due to increased exposures, a favorable renewal rate environment, improved combined ratio, and prudent capital deployment [1][10] - AFG has a strong capital position, traditionally maintaining moderate adjusted financial leverage around 20%, and expects to generate significant excess capital throughout 2025 for acquisitions, special dividends, or share repurchases [5][10] Renewal Rates and Pricing - AFG has reported overall renewal rate increases for 35 consecutive quarters and intends to maintain satisfactory rates in P&C renewal pricing in the future [3][10] - The company expects overall renewal rate increases to exceed prospective loss ratio trends to meet or exceed targeted returns [3][10] Combined Ratio - AFG's combined ratio has been better than the industry average for over two decades, with an expected combined ratio of 92.5% for 2025 [4][10] Dividend History - AFG has increased its dividend for 18 consecutive years, reflecting financial stability from robust operating profitability, stellar investment performance, and effective capital management [6] - The 10-year compound annual growth rate for the company's regular annual dividends stands at 12.4% [6] Industry Context - AFG operates in the property and casualty insurance market, which is characterized by improved industry fundamentals driving overall growth [2] - Other players in the industry include NMI Holdings Inc., Axis Capital Holdings Limited, and Arch Capital Group Ltd. [9]

Group 1 - American Financial Group (NYSE: AFG) shares have been relatively flat this year, with a decline of over 15% from their highs in late 2024 [1] - The company has paid special dividends despite the modest performance of its shares [1] - Concerns regarding property and casualty (P&C) premium inflation are impacting the company's stock performance [1]

[Part I — Financial Information](index=2&type=section&id=Part%20I%20%E2%80%94%20Financial%20Information) This section presents the unaudited consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for American Financial Group, Inc [Item 1 — Financial Statements](index=2&type=section&id=Item%201%20%E2%80%94%20Financial%20Statements) This section provides AFG's unaudited consolidated financial statements and detailed notes on accounting policies, segment operations, and various financial components [Consolidated Balance Sheet](index=3&type=section&id=Consolidated%20Balance%20Sheet) AFG's balance sheet shows a slight asset and liability decrease, with increased equity, driven by changes in cash, fixed maturities, and insurance reserves Total Assets and Liabilities (Millions) | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | | :-------------------------------- | :----------------------- | :-------------------------- | :---------------- | | Total Assets | $30,669 | $30,836 | $(167) | | Total Liabilities | $26,153 | $26,370 | $(217) | | Total Shareholders' Equity | $4,516 | $4,466 | $50 | | Cash and cash equivalents | $1,268 | $1,406 | $(138) | | Fixed maturities, available for sale | $10,489 | $10,398 | $91 | | Unpaid losses and loss adjustment expenses | $13,834 | $14,179 | $(345) | [Consolidated Statement of Earnings](index=4&type=section&id=Consolidated%20Statement%20of%20Earnings) Net earnings decreased for both periods in 2025 due to lower investment income and higher loss expenses, despite increased earned premiums Consolidated Statement of Earnings (Millions, except EPS) | Metric | Three months ended June 30, 2025 (Millions) | Three months ended June 30, 2024 (Millions) | Six months ended June 30, 2025 (Millions) | Six months ended June 30, 2024 (Millions) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net Earned Premiums | $1,647 | $1,585 | $3,227 | $3,131 | | Net Investment Income | $184 | $188 | $357 | $386 | | Total Revenues | $1,924 | $1,900 | $3,780 | $3,806 | | Losses and Loss Adjustment Expenses | $1,007 | $937 | $1,972 | $1,849 | | Total Costs and Expenses | $1,695 | $1,629 | $3,354 | $3,231 | | Net Earnings | $174 | $209 | $328 | $451 | | Diluted EPS | $2.07 | $2.49 | $3.92 | $5.38 | [Consolidated Statement of Comprehensive Income](index=5&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) Comprehensive income increased in 2025, driven by net unrealized gains on securities, offsetting lower net earnings Consolidated Statement of Comprehensive Income (Millions) | Metric | Three months ended June 30, 2025 (Millions) | Three months ended June 30, 2024 (Millions) | Six months ended June 30, 2025 (Millions) | Six months ended June 30, 2024 (Millions) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net Earnings | $174 | $209 | $328 | $451 | | Total net unrealized gains (losses) on securities | $40 | $(12) | $101 | $(3) | | Total net unrealized gains (losses) on cash flow hedges | $2 | $2 | $5 | $(3) | | Other comprehensive income (loss), net of tax | $47 | $(16) | $108 | $(12) | | Comprehensive Income | $221 | $193 | $436 | $439 | [Consolidated Statement of Changes in Equity](index=5&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) Shareholders' equity increased due to net earnings and comprehensive income, partially offset by dividends and share repurchases Consolidated Statement of Changes in Equity (Millions) | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :-------------------------------- | :----------------------- | :-------------------------- | | Total Shareholders' Equity | $4,516 | $4,466 | | Net Earnings (Six months) | $328 | $328 (from Dec 31, 2024 to June 30, 2025) | | Other Comprehensive Income (Six months) | $108 | $108 (from Dec 31, 2024 to June 30, 2025) | | Dividends Paid (Six months) | $(302) | $(302) (from Dec 31, 2024 to June 30, 2025) | | Shares Acquired and Retired (Six months) | $(97) | $(97) (from Dec 31, 2024 to June 30, 2025) | [Consolidated Statement of Cash Flows](index=8&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) Operating cash flow significantly increased in 2025, while financing cash outflow rose due to share repurchases and managed investment entity liabilities Consolidated Statement of Cash Flows (Millions) | Activity | Six months ended June 30, 2025 (Millions) | Six months ended June 30, 2024 (Millions) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | | Net cash provided by operating activities | $533 | $19 | | Net cash provided by (used in) investing activities | $59 | $(6) | | Net cash used in financing activities | $(730) | $(117) | | Net Change in Cash and Cash Equivalents | $(138) | $(104) | | Cash and cash equivalents at end of period | $1,268 | $1,121 | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section details AFG's accounting policies, segment reporting, investments, derivatives, debt, equity, taxes, and insurance reserves [A. Accounting Policies](index=9&type=section&id=A.%20Accounting%20Policies) This section outlines AFG's critical accounting policies, including fair value measurements, goodwill, and consolidation of managed investment entities - AFG consolidates variable interest entities (VIEs) like CLOs where it is the primary beneficiary, electing the fair value option for CLO assets and liabilities to enhance transparency[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - Goodwill is not amortized but is subject to an annual impairment test, which can be qualitative if the fair value is likely to exceed the carrying amount[33](index=33&type=chunk) - Fixed maturity securities are classified as 'available for sale' (fair value to AOCI) or 'trading' (fair value to net investment income)[22](index=22&type=chunk)[24](index=24&type=chunk) [B. Segments of Operations](index=12&type=section&id=B.%20Segments%20of%20Operations) AFG operates in P&C insurance (Property and transportation, Specialty casualty, Specialty financial) and Other segments, with performance evaluated by return on equity and underwriting profit - AFG's Property and Casualty insurance business is segmented into Property and transportation, Specialty casualty, and Specialty financial[57](index=57&type=chunk) - Beginning in 2025, internal reinsurance results are included within the ceding sub-segments for consistent performance evaluation by CODMs[59](index=59&type=chunk) Segment Assets (Millions) | Segment | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Property and casualty insurance | $26,089 | $25,913 | | Other | $4,580 | $4,923 | | **Total assets** | **$30,669** | **$30,836** | Segment Revenues (Three Months Ended June 30, Millions) | Segment | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Property and casualty insurance | $1,826 | $1,776 | | Other | $96 | $126 | | **Total revenues** | **$1,924** | **$1,900** | Segment Earnings Before Income Taxes (Three Months Ended June 30, Millions) | Segment | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Property and casualty insurance | $273 | $319 | | Other | $(46) | $(46) | | **Total earnings before income taxes** | **$229** | **$271** | [C. Fair Value Measurements](index=17&type=section&id=C.%20Fair%20Value%20Measurements) AFG classifies fair value measurements into a three-level hierarchy, with Level 3 assets representing approximately 7% of total fair value assets - AFG's Level 3 assets, representing approximately **7% of total assets** carried at fair value at June 30, 2025, are primarily valued using internally developed prices (85% of Level 3 assets), with the significant unobservable input being the credit spread in discounted cash flow models[74](index=74&type=chunk) Total Assets Accounted for at Fair Value (Millions) | Level | June 30, 2025 | December 31, 2024 | | :---- | :------------ | :---------------- | | Level 1 | $1,011 | $1,023 | | Level 2 | $13,137 | $13,247 | | Level 3 | $1,062 | $1,096 | | **Total** | **$15,210** | **$15,366** | Total Liabilities Accounted for at Fair Value (Millions) | Level | June 30, 2025 | December 31, 2024 | | :---- | :------------ | :---------------- | | Level 1 | $346 | $402 | | Level 2 | $3,335 | $3,571 | | Level 3 | $12 | $12 | | **Total** | **$3,693** | **$3,985** | [D. Investments](index=21&type=section&id=D.%20Investments) AFG's investment portfolio, primarily fixed maturities, shows $270 million in gross unrealized losses, while net investment income decreased due to lower alternative investment returns Available for Sale Fixed Maturities (June 30, 2025, Millions) | Category | Amortized Cost | Allowance for Expected Credit Losses | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | | :-------------------------------- | :------------- | :----------------------------------- | :--------------------- | :---------------------- | :--------- | | Total fixed maturities | $10,632 | $15 | $142 | $(270) | $10,489 | - At June 30, 2025, gross unrealized losses on fixed maturities totaled **$270 million** across approximately 1,100 securities, with **96% being investment grade**[93](index=93&type=chunk)[96](index=96&type=chunk) - Management believes AFG will recover its cost basis and has no intent to sell these securities[96](index=96&type=chunk) Net Investment Income (Millions) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross investment income | $190 | $193 | $370 | $397 | | Investment expenses | $(6) | $(5) | $(13) | $(11) | | **Net investment income** | **$184** | **$188** | **$357** | **$386** | [E. Derivatives](index=26&type=section&id=E.%20Derivatives) AFG uses derivatives, mainly interest rate swaps, for risk mitigation, reporting net gains of $14 million in Q2 2025 - AFG's interest rate swaps, designated as highly effective cash flow hedges, had a total outstanding notional amount of **$768 million** at June 30, 2025, down from $1.05 billion at December 31, 2024, reflecting scheduled amortization and one new swap[108](index=108&type=chunk) Fair Value of Derivative Assets and Liabilities (Millions) | Derivative Type | June 30, 2025 (Asset) | June 30, 2025 (Liability) | December 31, 2024 (Asset) | December 31, 2024 (Liability) | | :-------------------------------- | :-------------------- | :---------------------- | :------------------------ | :------------------------ | | Interest rate swaps | $1 | $7 | $1 | $14 | | Fixed maturities with embedded derivatives | $75 | — | $81 | — | | Total return swap | $5 | — | — | $4 | | **Total** | **$81** | **$7** | **$82** | **$18** | Earnings (Losses) on Derivatives (Millions) | Period | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Three months ended June 30, | $14 | $(6) | | Six months ended June 30, | $4 | $(8) | [F. Managed Investment Entities](index=27&type=section&id=F.%20Managed%20Investment%20Entities) AFG consolidates thirteen CLOs, with maximum loss exposure limited to its $148 million investment, and formed one new CLO in 6M 2025 - AFG's maximum exposure to economic loss on the CLOs it manages is limited to its investment, which was **$148 million** at June 30, 2025, including **$101 million** in subordinate tranches and **$30 million** in temporary warehousing entities[114](index=114&type=chunk) - In the first six months of 2025, AFG formed one new CLO (**$406 million** liabilities) and substantially liquidated another, while in 2024, two new CLOs were formed (**$813 million** liabilities)[115](index=115&type=chunk) Progression of Fair Value of AFG's Investment in CLO Tranches (Millions) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Balance at beginning of period | $122 | $201 | $175 | $177 | | Purchases | $40 | $45 | $75 | $84 | | Sales | $(9) | $(81) | $(88) | $(100) | | Distributions | $(7) | $(15) | $(18) | $(25) | | CLO earnings attributable to AFG | $2 | $9 | $4 | $23 | | **Balance at end of period** | **$148** | **$159** | **$148** | **$159** | [G. Goodwill and Other Intangibles](index=28&type=section&id=G.%20Goodwill%20and%20Other%20Intangibles) Goodwill remained stable at $305 million, while net amortizable intangible assets slightly decreased to $193 million - Goodwill balance remained stable at **$305 million** in the first six months of 2025[120](index=120&type=chunk) Amortizable Intangible Assets (Millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Amortizable intangible assets (net) | $193 | $203 | | Accumulated amortization | $69 | $59 | | Amortization of intangibles (Q2) | $5 | $4 | | Amortization of intangibles (6M) | $10 | $9 | [H. Long-Term Debt](index=29&type=section&id=H.%20Long-Term%20Debt) Long-term debt remained stable at $1.476 billion, with no principal payments until 2030 and an undrawn $450 million credit facility Long-Term Debt (Millions) | Category | June 30, 2025 (Carrying Value) | December 31, 2024 (Carrying Value) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Direct Senior Obligations | $819 | $818 | | Direct Subordinated Obligations | $657 | $657 | | **Total Long-Term Debt** | **$1,476** | **$1,475** | - AFG has no scheduled principal payments on debt until **2030**, when **$253 million** is due, with the remaining **$1.25 billion** due thereafter[122](index=122&type=chunk) - AFG has an undrawn **$450 million** revolving credit facility expiring in June 2028, with interest rates ranging from **1.00% to 1.75%** over a SOFR-based floating rate[123](index=123&type=chunk) [I. Shareholders' Equity](index=29&type=section&id=I.%20Shareholders%27%20Equity) Shareholders' equity improved, driven by a significant reduction in AOCI loss due to unrealized gains on securities Accumulated Other Comprehensive Income (Loss) (AOCI) Progression (Millions) | Metric | Beginning Balance (Dec 31, 2024) | Other Comprehensive Income (6M 2025) | Ending Balance (June 30, 2025) | | :-------------------------------- | :------------------------------- | :----------------------------------- | :----------------------------- | | Net unrealized gains (losses) on securities | $(202) | $101 | $(101) | | Net unrealized gains (losses) on cash flow hedges | $(10) | $5 | $(5) | | Foreign currency translation adjustments | $(30) | $2 | $(28) | | Pension and other postretirement plan adjustments | $2 | — | $2 | | **Total AOCI** | **$(240)** | **$108** | **$(132)** | Stock-Based Compensation Expense (Millions) | Period | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Second quarter | $5 | $5 | | First six months | $9 | $9 | [J. Income Taxes](index=32&type=section&id=J.%20Income%20Taxes) Income tax provision decreased in Q2 and 6M 2025, with a Q2 effective tax rate of 24% influenced by a state tax examination Provision for Income Taxes (Millions) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Earnings before income taxes (EBT) | $229 | $271 | $426 | $575 | | Income taxes at statutory rate (21%) | $48 | $57 | $89 | $121 | | Provision for income taxes | $55 | $62 | $98 | $124 | | Effective Tax Rate | 24% | 23% | 23% | 22% | - In Q2 2025, AFG recorded **$7 million** in net tax expense related to a pending state income tax examination from a prior subsidiary sale[133](index=133&type=chunk) - A similar **$4 million** expense was recorded in Q2 2024 for an IRS settlement[133](index=133&type=chunk) - The recently enacted One Big Beautiful Bill Act, effective 2025, is not expected to materially impact AFG's future results of operations or financial condition, despite accelerating certain tax deductions[134](index=134&type=chunk) [K. Contingencies](index=32&type=section&id=K.%20Contingencies) No significant changes to previously disclosed contingencies, including insurance reserves for environmental, asbestos, and mass tort claims - No significant changes to contingencies related to insurance reserves for environmental exposures, asbestos, mass tort claims, and occupational injury/disease claims from former operations[135](index=135&type=chunk) [L. Insurance](index=33&type=section&id=L.%20Insurance) Net liability for losses increased to $9.286 billion, with a $31 million net decrease in prior year claims provision due to favorable development Changes in Liability for Losses and Loss Adjustment Expenses (Millions) | Metric | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net liability at beginning of year | $9,222 | $8,799 | | Provision for current period losses and LAE | $2,003 | $1,934 | | Net decrease in prior years claims provision | $(31) | $(85) | | Total losses and LAE incurred | $1,972 | $1,849 | | Total payments for losses and LAE | $(1,898) | $(1,958) | | **Net liability at end of period** | **$9,286** | **$8,689** | - The **$31 million** net decrease in prior year claims provision for 6M 2025 was driven by lower than anticipated losses in crop, aviation, agribusiness, property, inland marine, workers' compensation, financial institutions, trade credit, and surety/fidelity businesses[136](index=136&type=chunk) - This was partially offset by higher claim severity in excess and surplus and social services[136](index=136&type=chunk) Allowance for Expected Credit Losses (Millions) | Category | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Recoverables from Reinsurers | $9 | $10 | | Premiums Receivable | $19 | $18 | [Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&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, operations, and cash flows, including critical accounting policies, liquidity, investments, and segment performance [Forward-Looking Statements](index=34&type=section&id=Forward-Looking%20Statements) This section cautions that forward-looking statements are subject to risks from economic conditions, market performance, regulatory changes, and natural catastrophes - Forward-looking statements are subject to risks including changes in financial, political, and economic conditions (interest/inflation rates, tariffs, currency, recessions), securities market performance, new legislation, capital availability, insurance law/regulation changes, legal environment, tax/accounting changes, natural catastrophes, cyber-attacks, and insurance loss reserve development[142](index=142&type=chunk) [Overview](index=36&type=section&id=Overview) AFG reported decreased net earnings in Q2 and 6M 2025 due to lower underwriting profit and alternative investment income, but expects continued premium growth Net Earnings and Diluted EPS (Millions, except per share) | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :---------------- | :------ | :------ | :------ | :------ | | Net Earnings | $174 | $209 | $328 | $451 | | Diluted EPS | $2.07 | $2.49 | $3.92 | $5.38 | - The decline in 2025 net earnings reflects lower underwriting profit and reduced net investment income from AFG's alternative investment portfolio, partially offset by higher average investment balances and yields on fixed maturity investments[149](index=149&type=chunk) - Management expects continued premium growth and strong underwriting results in the P&C market, with elevated interest rates positively impacting fixed maturity investment income in 2025[150](index=150&type=chunk) [Critical Accounting Policies](index=36&type=section&id=Critical%20Accounting%20Policies) AFG's critical accounting policies involve significant judgment in investment valuation, insurance reserves, reinsurance recoverability, and environmental liabilities - Critical accounting policies include valuation of investments and impairment allowances, establishment of insurance reserves (especially asbestos and environmental-related), recoverability of reinsurance, and asbestos/environmental liabilities of former operations[153](index=153&type=chunk)[158](index=158&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) AFG maintains strong liquidity and capital, with a stable debt-to-capital ratio and increased operating cash flow, supporting shareholder returns and policyholder obligations [Ratios](index=37&type=section&id=Ratios) AFG's consolidated debt to total capital ratio remained stable at 24.4% at June 30, 2025 Debt to Total Capital Ratio | Metric | June 30, 2025 | December 31, 2024 | December 31, 2023 | | :-------------------------- | :------------ | :---------------- | :---------------- | | Principal amount of long-term debt | $1,498 | $1,498 | $1,498 | | Total capital | $6,146 | $6,204 | $6,075 | | Ratio of debt to total capital (including subordinated debt) | 24.4% | 24.1% | 24.7% | | Ratio of debt to total capital (excluding subordinated debt) | 13.4% | 13.3% | 13.5% | [Condensed Consolidated Cash Flows](index=37&type=section&id=Condensed%20Consolidated%20Cash%20Flows) Operating cash flow significantly increased to $533 million in 6M 2025, while financing cash outflow rose to $730 million due to share repurchases Condensed Consolidated Cash Flows (Millions) | Activity | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $533 | $19 | | Net cash provided by (used in) investing activities | $59 | $(6) | | Net cash used in financing activities | $(730) | $(117) | | Net change in cash and cash equivalents | $(138) | $(104) | - The **$272 million** increase in operating cash flows in 6M 2025 compared to 6M 2024 was primarily due to the activity of managed investment entities[157](index=157&type=chunk) - Net cash used in financing activities increased by **$613 million** in 6M 2025, driven by **$97 million** in common stock repurchases (vs. none in 2024) and a **$539 million** increase in net cash used for managed investment entity liabilities[161](index=161&type=chunk) [Parent and Subsidiary Liquidity](index=39&type=section&id=Parent%20and%20Subsidiary%20Liquidity) AFG's parent company maintains strong liquidity with $349 million in cash and an undrawn credit facility, supporting shareholder returns and subsidiary obligations - AFG (parent) held approximately **$349 million** in cash and investments at June 30, 2025, and has access to an undrawn **$450 million** revolving credit facility[166](index=166&type=chunk) - In 6M 2025, AFG repurchased **782,134 shares** for **$97 million** and paid a special cash dividend of **$167 million** (**$2.00 per share**)[164](index=164&type=chunk) - AFG's insurance subsidiaries maintain sufficient liquidity and capital to pay claims, underwriting expenses, and dividends to the parent, with capital levels adequate to maintain business and rating agency ratings[170](index=170&type=chunk) [Investments](index=40&type=section&id=Investments) AFG's $10.49 billion fixed maturity portfolio, 95% investment grade, is sensitive to interest rates and holds $270 million in recoverable unrealized losses - AFG's investment portfolio at June 30, 2025, included **$10.49 billion** in available-for-sale fixed maturities, **$82 million** in trading fixed maturities, **$800 million** in equity securities, and **$2.34 billion** in equity method investments[171](index=171&type=chunk) Sensitivity of Fixed Maturity Portfolio to Interest Rate Changes (Millions) | Metric | Value | | :---------------------------------------- | :------ | | Fair value of fixed maturity portfolio | $10,571 | | Percentage impact of 100 bps increase in interest rates | (3.0%) | | Pretax impact on fair value | $(317) | - Approximately **95%** of fixed maturities were rated 'investment grade' at June 30, 2025[177](index=177&type=chunk) - Gross unrealized losses on fixed maturities totaled **$270 million**, with **96%** of these losses on investment-grade securities[177](index=177&type=chunk)[180](index=180&type=chunk) - Management believes these losses are recoverable and intends to hold the securities[185](index=185&type=chunk) [Uncertainties](index=43&type=section&id=Uncertainties) The greatest risks of material loss are the adequacy of insurance reserves and contingencies from former railroad and manufacturing operations - The greatest risks of material loss are the adequacy of insurance reserves and contingencies from former railroad and manufacturing operations[186](index=186&type=chunk) [Managed Investment Entities](index=44&type=section&id=Managed%20Investment%20Entities) AFG consolidates managed CLOs, impacting financial statements by eliminating direct investments and management fees to show full CLO assets and liabilities - AFG consolidates its managed CLO entities, which are variable interest entities where AFG owns an interest[189](index=189&type=chunk) - The 'Consol. Entries' in the financial statements eliminate AFG's investment in CLOs and related accrued interest[191](index=191&type=chunk) Condensed Consolidating Balance Sheet Impact (June 30, 2025, Millions) | Category | Before CLO Consolidation | Managed Investment Entities | Consolidation Entries | Consolidated As Reported | | :-------------------------------- | :----------------------- | :-------------------------- | :-------------------- | :----------------------- | | Cash and investments | $16,197 | — | $(148) | $16,049 | | Assets of managed investment entities | — | $3,833 | — | $3,833 | | Liabilities of managed investment entities | — | $3,803 | $(118) | $3,685 | | Total Assets | $26,984 | $3,833 | $(148) | $30,669 | | Total Liabilities | $22,468 | $3,803 | $(118) | $26,153 | Condensed Consolidating Statement of Earnings Impact (Q2 2025, Millions) | Category | Before CLO Consolidation | Managed Investment Entities | Consolidation Entries | Consolidated As Reported | | :-------------------------------- | :----------------------- | :-------------------------- | :-------------------- | :----------------------- | | Net investment income | $186 | — | $(2) | $184 | | Income of managed investment entities: Investment income | — | $68 | — | $68 | | Income of managed investment entities: Gain (loss) on change in fair value of assets/liabilities | — | $(4) | — | $(4) | | Other income | $29 | — | $(2) | $27 | | Expenses of managed investment entities | — | $68 | $(8) | $60 | | **Net Earnings** | **$174** | **—** | **—** | **$174** | [Results of Operations](index=47&type=section&id=Results%20of%20Operations) AFG's net earnings and core operating earnings declined in Q2 and 6M 2025 due to lower underwriting profit and alternative investment income [General](index=47&type=section&id=General) Net earnings and diluted EPS decreased in Q2 and 6M 2025, primarily due to lower underwriting profit and alternative investment income Net Earnings and Core Net Operating Earnings (Millions, except per share) | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Net Earnings | $174 | $209 | $328 | $451 | | Core Net Operating Earnings | $179 | $215 | $331 | $446 | | Diluted EPS (Net Earnings) | $2.07 | $2.49 | $3.92 | $5.38 | | Diluted EPS (Core Net Operating Earnings) | $2.14 | $2.56 | $3.96 | $5.32 | - The decrease in net earnings for Q2 and 6M 2025 was primarily due to lower core net operating earnings, reflecting reduced underwriting profit and lower net investment income from AFG's alternative investment portfolio, partially offset by higher investment income outside of alternative investments[204](index=204&type=chunk)[205](index=205&type=chunk) [Results of Operations — Second Quarter](index=48&type=section&id=Results%20of%20Operations%20%E2%80%94%20Second%20Quarter) Q2 2025 pretax earnings decreased 14% due to lower underwriting profit and alternative investment income, with the combined ratio rising to 93.1% P&C Segment Key Financials (Q2, Millions) | Metric | 2025 | 2024 | % Change | | :-------------------------------- | :--- | :--- | :------- | | Gross written premiums | $2,653 | $2,406 | 10% | | Net written premiums | $1,803 | $1,692 | 7% | | Net earned premiums | $1,647 | $1,585 | 4% | | Underwriting gain | $113 | $150 | (25%) | | Net investment income | $179 | $189 | (5%) | | Earnings before income taxes | $273 | $319 | (14%) | P&C Segment Combined Ratios (Q2) | Metric | 2025 | 2024 | Change | | :-------------------------------- | :--- | :--- | :----- | | Loss and LAE ratio | 61.1% | 59.1% | 2.0% | | Underwriting expense ratio | 32.0% | 31.4% | 0.6% | | **Combined ratio** | **93.1%** | **90.5%** | **2.6%** | [Segmented Statement of Earnings (Q2)](index=48&type=section&id=Segmented%20Statement%20of%20Earnings%20%28Q2%29) P&C segment contributed $218 million to core net operating earnings, while the Holding Company segment incurred a $(39) million loss Core Net Operating Earnings by Segment (Q2, Millions) | Segment | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Property and Casualty Insurance | $218 | $252 | | Holding Co., other and unallocated | $(39) | $(37) | | **Total Core Net Operating Earnings** | **$179** | **$215** | [Property and Casualty Insurance Segment — Results of Operations (Q2)](index=49&type=section&id=Property%20and%20Casualty%20Insurance%20Segment%20%E2%80%94%20Results%20of%20Operations%20%28Q2%29) P&C pretax earnings decreased 14% to $273 million, with underwriting profit down 25% and combined ratio up to 93.1% [Gross Written Premiums (Q2)](index=51&type=section&id=Gross%20Written%20Premiums%20%28Q2%29) P&C gross written premiums increased 10% to $2.65 billion, driven by crop reporting and business growth, with 6% renewal rate increases Gross Written Premiums by Sub-segment (Q2, Millions) | Sub-segment | 2025 GWP | 2024 GWP | % Change | | :-------------------------- | :------- | :------- | :------- | | Property and transportation | $1,247 | $1,084 | 15% | | Specialty casualty | $1,062 | $1,023 | 4% | | Specialty financial | $344 | $299 | 15% | | **Total** | **$2,653** | **$2,406** | **10%** | - Excluding the crop business, gross written premiums increased **6%** in Q2 2025, reflecting new business, a good renewal rate environment, and increased exposures[222](index=222&type=chunk) - Overall average renewal rates increased approximately **6%**[224](index=224&type=chunk) [Reinsurance Premiums Ceded (Q2)](index=51&type=section&id=Reinsurance%20Premiums%20Ceded%20%28Q2%29) Reinsurance premiums ceded increased to 32% of GWP, driven by higher cessions in crop, alternative risk transfer, and excess/M&A liability Reinsurance Premiums Ceded by Sub-segment (Q2, Millions) | Sub-segment | 2025 Ceded | % of GWP | 2024 Ceded | % of GWP | Change in % of GWP | | :-------------------------- | :--------- | :--------- | :--------- | :--------- | :------------------- | | Property and transportation | $(488) | 39% | $(394) | 36% | 3% | | Specialty casualty | $(297) | 28% | $(270) | 26% | 2% | | Specialty financial | $(65) | 19% | $(50) | 17% | 2% | | **Total** | **$(850)** | **32%** | **$(714)** | **30%** | **2%** | [Net Written Premiums (Q2)](index=51&type=section&id=Net%20Written%20Premiums%20%28Q2%29) P&C net written premiums increased 7% to $1.80 billion, with Property and transportation and Specialty financial showing strong growth Net Written Premiums by Sub-segment (Q2, Millions) | Sub-segment | 2025 NWP | % | 2024 NWP | % | % Change | | :-------------------------- | :------- | :-- | :------- | :-- | :------- | | Property and transportation | $759 | 42% | $690 | 41% | 10% | | Specialty casualty | $765 | 42% | $753 | 44% | 2% | | Specialty financial | $279 | 16% | $249 | 15% | 12% | | **Total** | **$1,803** | **100%** | **$1,692** | **100%** | **7%** | [Net Earned Premiums (Q2)](index=52&type=section&id=Net%20Earned%20Premiums%20%28Q2%29) P&C net earned premiums increased 4% to $1.65 billion, with Specialty financial leading growth at 12% Net Earned Premiums by Sub-segment (Q2, Millions) | Sub-segment | 2025 NEP | % NEP | 2024 NEP | % NEP | % Change | | :-------------------------- | :------- | :------ | :------- | :------ | :------- | | Property and transportation | $576 | 35% | $552 | 35% | 4% | | Specialty casualty | $799 | 48% | $791 | 50% | 1% | | Specialty financial | $272 | 17% | $242 | 15% | 12% | | **Total** | **$1,647** | **100%** | **$1,585** | **100%** | **4%** | [Combined Ratio (Q2)](index=53&type=section&id=Combined%20Ratio%20%28Q2%29) The Specialty combined ratio increased to 93.1%, leading to a 25% decrease in underwriting profit, despite stable catastrophe losses Combined Ratios and Underwriting Profit by Sub-segment (Q2) | Sub-segment | 2025 Combined Ratio | 2024 Combined Ratio | Change | 2025 Underwriting Profit (Millions) | 2024 Underwriting Profit (Millions) | | :-------------------------- | :------------------ | :------------------ | :----- | :---------------------------------- | :---------------------------------- | | Property and transportation | 95.2% | 92.7% | 2.5% | $27 | $40 | | Specialty casualty | 93.9% | 89.1% | 4.8% | $49 | $86 | | Specialty financial | 86.1% | 89.7% | (3.6%) | $38 | $25 | | **Total Specialty** | **93.1%** | **90.5%** | **2.6%** | **$114** | **$151** | - Overall catastrophe losses were **$38 million** (**2.3 points** on the combined ratio) in Q2 2025, comparable to **$36 million** (**2.3 points**) in Q2 2024[230](index=230&type=chunk)[249](index=249&type=chunk) [Losses and Loss Adjustment Expenses (Q2)](index=54&type=section&id=Losses%20and%20Loss%20Adjustment%20Expenses%20%28Q2%29) The loss and LAE ratio increased to 61.1%, with favorable prior year reserve development significantly decreasing due to higher claim severity Losses and LAE Ratios (Q2) | Metric | 2025 Ratio | 2024 Ratio | Change in Ratio | | :-------------------------------- | :--------- | :--------- | :-------------- | | Current year, excluding catastrophe losses | 59.5% | 59.1% | 0.4% | | Prior accident years development | (0.7%) | (2.3%) | 1.6% | | Current year catastrophe losses | 2.3% | 2.3% | —% | | **Aggregate losses and LAE ratio** | **61.1%** | **59.1%** | **2.0%** | - Net favorable prior year reserve development for Specialty P&C operations decreased by **$24 million** (**67%**) to **$12 million** in Q2 2025, compared to **$36 million** in Q2 2024[243](index=243&type=chunk) - Specialty casualty experienced net adverse reserve development of **$10 million** in Q2 2025 due to higher claim severity in excess and surplus and social services businesses[245](index=245&type=chunk) [Commissions and Other Underwriting Expenses (Q2)](index=55&type=section&id=Commissions%20and%20Other%20Underwriting%20Expenses%20%28Q2%29) Underwriting expenses increased 6% to $527 million, with the expense ratio rising to 32.0% due to higher IT costs and commission rates Underwriting Expenses and Ratios by Sub-segment (Q2, Millions) | Sub-segment | 2025 U/W Exp | % of NEP | 2024 U/W Exp | % of NEP | Change in % of NEP | | :-------------------------- | :----------- | :--------- | :----------- | :--------- | :------------------- | | Property and transportation | $162 | 28.0% | $161 | 29.0% | (1.0%) | | Specialty casualty | $234 | 29.4% | $222 | 28.1% | 1.3% | | Specialty financial | $131 | 48.0% | $115 | 47.6% | 0.4% | | **Total** | **$527** | **32.0%** | **$498** | **31.4%** | **0.6%** | - Increased costs for software and other expenses related to IT security, customer experience, and data analytics initiatives contributed to higher underwriting expenses across segments[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) [Property and Casualty Net Investment Income (Q2)](index=56&type=section&id=Property%20and%20Casualty%20Net%20Investment%20Income%20%28Q2%29) P&C net investment income decreased 5% to $179 million, primarily due to a 76% drop in alternative investment returns P&C Net Investment Income (Q2, Millions) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------------- | :--- | :--- | :----- | :------- | | Net investment income, excluding alternative investments | $171 | $156 | $15 | 10% | | Alternative investments | $8 | $33 | $(25) | (76%) | | **Total net investment income** | **$179** | **$189** | **$(10)** | **(5%)** | - The annualized return on alternative investments was **1.2%** in Q2 2025, down from **5.1%** in Q2 2024, impacted by reduced fair value of multi-family investments due to new apartment supply[255](index=255&type=chunk)[257](index=257&type=chunk) [Property and Casualty Other Income and Expenses, Net (Q2)](index=57&type=section&id=Property%20and%20Casualty%20Other%20Income%20and%20Expenses%2C%20Net%20%28Q2%29) P&C net other expenses slightly decreased to $19 million, driven by lower interest expense on funds withheld P&C Other Income and Expenses, Net (Q2, Millions) | Metric | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Other income | $0 | $2 | | Amortization of intangibles | $5 | $4 | | Interest expense on funds withheld | $12 | $13 | | Other expenses | $2 | $5 | | **Other income and expenses, net** | **$(19)** | **$(20)** | [Holding Company, Other and Unallocated — Results of Operations (Q2)](index=57&type=section&id=Holding%20Company%2C%20Other%20and%20Unallocated%20%E2%80%94%20Results%20of%20Operations%20%28Q2%29) This segment reported a consistent $46 million pretax loss, with decreased net investment income offset by increased other income from real estate sales Holding Company, Other and Unallocated Pretax Loss (Q2, Millions) | Metric | 2025 | 2024 | % Change | | :-------------------------------- | :--- | :--- | :------- | | Net investment income | $7 | $8 | (13%) | | Other income — P&C fees | $23 | $24 | (4%) | | Other income | $6 | $4 | 50% | | Total revenues | $36 | $36 | —% | | Costs and expenses, excluding interest charges | $63 | $63 | —% | | Interest charges on borrowed money | $19 | $19 | —% | | **Loss before income taxes, excluding realized gains and losses** | **$(46)** | **$(46)** | **—%** | - Other income increased by **$3 million** (**300%**) in Q2 2025, reflecting income from the sale of certain real estate assets[264](index=264&type=chunk) [Holding Company and Other — Net Investment Income (Q2)](index=57&type=section&id=Holding%20Company%20and%20Other%20%E2%80%94%20Net%20Investment%20Income%20%28Q2%29) Net investment income for this segment decreased 13% to $7 million due to lower average investments - Net investment income for the Holding Company and Other segment decreased by **$1 million** (**13%**) to **$7 million** in Q2 2025, primarily due to a decrease in average investments[260](index=260&type=chunk) [Holding Company and Other — P&C Fees and Related Expenses (Q2)](index=57&type=section&id=Holding%20Company%20and%20Other%20%E2%80%94%20P%26C%20Fees%20and%20Related%20Expenses%20%28Q2%29) P&C fees collected and related expenses remained stable at $23 million and $16 million, respectively - AFG collected **$23 million** in P&C fees in Q2 2025 (vs. **$24 million** in Q2 2024) for services like underwriting, policy administration, claims, workplace safety, and premium financing[261](index=261&type=chunk) - Related expenses were **$16 million** in both periods[261](index=261&type=chunk) [Holding Company and Other — Other Income (Q2)](index=58&type=section&id=Holding%20Company%20and%20Other%20%E2%80%94%20Other%20Income%20%28Q2%29) Other income for this segment increased 300% to $4 million, primarily from real estate asset sales - Excluding consolidated CLO management fees, other income for the Holding Company and Other segment increased by **$3 million** (**300%**) to **$4 million** in Q2 2025, driven by income from real estate asset sales[264](index=264&type=chunk) [Holding Company and Other — Other Expenses (Q2)](index=58&type=section&id=Holding%20Company%20and%20Other%20%E2%80%94%20Other%20Expenses%20%28Q2%29) Other expenses for this segment increased slightly by $1 million (3%) to $40 million - Other expenses for the Holding Company and Other segment increased by **$1 million** (**3%**) to **$40 million** in Q2 2025[265](index=265&type=chunk) [Holding Company and Other — Interest Charges on Borrowed Money (Q2)](index=58&type=section&id=Holding%20Company%20and%20Other%20%E2%80%94%20Interest%20Charges%20on%20Borrowed%20Money%20%28Q2%29) Interest charges on borrowed money remained stable at $19 million in Q2 2025 - Interest charges on borrowed money for the Holding Company and Other segment remained stable at **$19 million** in Q2 2025 and Q2 2024[266](index=266&type=chunk) [Realized Gains (Losses) on Securities (Q2)](index=58&type=section&id=Realized%20Gains%20%28Losses%29%20on%20Securities%20%28Q2%29) AFG reported $2 million in net realized gains on securities, a $4 million improvement, driven by equity securities fair value changes Realized Gains (Losses) on Securities (Q2, Millions) | Metric | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Realized gains (losses) before impairment allowances: Disposals | $(8) | $(1) | | Realized gains (losses) before impairment allowances: Change in fair value of equity securities | $10 | $(1) | | **Realized gains (losses) on securities** | **$2** | **$(2)** | - The **$10 million** net realized gain from equity securities in Q2 2025 included gains of **$10 million** from manufacturing companies and **$6 million** from banks/financing companies, partially offset by losses in energy, media, and natural gas companies[267](index=267&type=chunk) [Consolidated Income Taxes (Q2)](index=58&type=section&id=Consolidated%20Income%20Taxes%20%28Q2%29) Consolidated income tax provision decreased 11% to $55 million in Q2 2025 - Consolidated provision for income taxes decreased by **$7 million** (**11%**) to **$55 million** in Q2 2025[268](index=268&type=chunk) [Results of Operations — First Six Months](index=59&type=section&id=Results%20of%20Operations%20%E2%80%94%20First%20Six%20Months) 6M 2025 pretax earnings decreased 21% to $519 million, with underwriting profit down 32% and combined ratio up to 93.6% P&C Segment Key Financials (6M, Millions) | Metric | 2025 | 2024 | % Change | | :-------------------------------- | :--- | :--- | :------- | | Gross written premiums | $4,944 | $4,742 | 4% | | Net written premiums | $3,414 | $3,326 | 3% | | Net earned premiums | $3,227 | $3,131 | 3% | | Underwriting gain | $207 | $303 | (32%) | | Net investment income | $349 | $394 | (11%) | | Earnings before income taxes | $519 | $659 | (21%) | P&C Segment Combined Ratios (6M) | Metric | 2025 | 2024 | Change | | :-------------------------------- | :--- | :--- | :----- | | Loss and LAE ratio | 61.1% | 58.9% | 2.2% | | Underwriting expense ratio | 32.5% | 31.4% | 1.1% | | **Combined ratio** | **93.6%** | **90.3%** | **3.3%** | [Segmented Statement of Earnings (6M)](index=59&type=section&id=Segmented%20Statement%20of%20Earnings%20%286M%29) P&C segment contributed $411 million to core net operating earnings, while the Holding Company segment incurred an $(80) million loss Core Net Operating Earnings by Segment (6M, Millions) | Segment | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Property and Casualty Insurance | $411 | $522 | | Holding Co., other and unallocated | $(80) | $(76) | | **Total Core Net Operating Earnings** | **$331** | **$446** | [Property and Casualty Insurance Segment — Results of Operations (6M)](index=60&type=section&id=Property%20and%20Casualty%20Insurance%20Segment%20%E2%80%94%20Results%20of%20Operations%20%286M%29) P&C pretax earnings decreased 21% to $519 million, with underwriting profit down 32% and combined ratio up to 93.6% [Gross Written Premiums (6M)](index=61&type=section&id=Gross%20Written%20Premiums%20%286M%29) P&C gross written premiums increased 4% to $4.94 billion, driven by crop reporting, new business, and 6% renewal rate increases Gross Written Premiums by Sub-segment (6M, Millions) | Sub-segment | 2025 GWP | % | 2024 GWP | % | % Change | | :-------------------------- | :------- | :-- | :------- | :-- | :------- | | Property and transportation | $2,144 | 43% | $2,043 | 43% | 5% | | Specialty casualty | $2,130 | 43% | $2,120 | 45% | —% | | Specialty financial | $670 | 14% | $579 | 12% | 16% | | **Total** | **$4,944** | **100%** | **$4,742** | **100%** | **4%** | - Overall average renewal rates increased approximately **6%** in 6M 2025, with Property and transportation at **7%** and Specialty casualty (excluding workers' compensation) at **9%**[282](index=282&type=chunk)[283](index=283&type=chunk)[286](index=286&type=chunk) [Reinsurance Premiums Ceded (6M)](index=62&type=section&id=Reinsurance%20Premiums%20Ceded%20%286M%29) Reinsurance premiums ceded increased to 31% of GWP, driven by growth in alternative risk transfer and crop business Reinsurance Premiums Ceded by Sub-segment (6M, Millions) | Sub-segment | 2025 Ceded | % of GWP | 2024 Ceded | % of GWP | Change in % of GWP | | :-------------------------- | :--------- | :--------- | :--------- | :--------- | :------------------- | | Property and transportation | $(822) | 38% | $(756) | 37% | 1% | | Specialty casualty | $(593) | 28% | $(564) | 27% | 1% | | Specialty financial | $(115) | 17% | $(96) | 17% | —% | | **Total** | **$(1,530)** | **31%** | **$(1,416)** | **30%** | **1%** | [Net Written Premiums (6M)](index=62&type=section&id=Net%20Written%20Premiums%20%286M%29) P&C net written premiums increased 3% to $3.41 billion, with Specialty financial showing the strongest growth at 15% Net Written Premiums by Sub-segment (6M, Millions) | Sub-segment | 2025 NWP | % | 2024 NWP | % | % Change | | :-------------------------- | :------- | :-- | :------- | :-- | :------- | | Property and transportation | $1,322 | 39% | $1,287 | 39% | 3% | | Specialty casualty | $1,537 | 45% | $1,556 | 47% | (1%) | | Specialty financial | $555 | 16% | $483 | 14% | 15% | | **Total** | **$3,414** | **100%** | **$3,326** | **100%** | **3%** | [Net Earned Premiums (6M)](index=63&type=section&id=Net%20Earned%20Premiums%20%286M%29) P&C net earned premiums increased 3% to $3.23 billion, with Specialty financial experiencing 15% growth Net Earned Premiums by Sub-segment (6M, Millions) | Sub-segment | 2025 NEP | % NEP | 2024 NEP | % NEP | % Change | | :-------------------------- | :------- | :------ | :------- | :------ | :------- | | Property and transportation | $1,076 | 33% | $1,072 | 34% | —% | | Specialty casualty | $1,593 | 50% | $1,574 | 50% | 1% | | Specialty financial | $558 | 17% | $485 | 16% | 15% | | **Total** | **$3,227** | **100%** | **$3,131** | **100%** | **3%** | [Combined Ratio (6M)](index=64&type=section&id=Combined%20Ratio%20%286M%29) The Specialty combined ratio increased to 93.6%, resulting in a 32% decrease in underwriting profit, with catastrophe losses rising to $110 million Combined Ratios and Underwriting Profit by Sub-segment (6M) | Sub-segment | 2025 Combined Ratio | 2024 Combined Ratio | Change | 2025 Underwriting Profit (Millions) | 2024 Underwriting Profit (Millions) | | :-------------------------- | :------------------ | :------------------ | :----- | :---------------------------------- | :---------------------------------- | | Property and transportation | 94.0% | 90.6% | 3.4% | $64 | $100 | | Specialty casualty | 95.8% | 90.7% | 5.1% | $69 | $147 | | Specialty financial | 86.5% | 88.1% | (1.6%) | $75 | $58 | | **Total Specialty** | **93.6%** | **90.2%** | **3.4%** | **$208** | **$305** | - Overall catastrophe losses increased to **$110 million** (**3.4 points** on the combined ratio) in 6M 2025, up from **$71 million** (**2.3 points**) in 6M 2024, primarily due to California wildfires and storms[290](index=290&type=chunk)[307](index=307&type=chunk) [Losses and Loss Adjustment Expenses (6M)](index=67&type=section&id=Losses%20and%20Loss%20Adjustment%20Expenses%20%286M%29) The loss and LAE ratio increased to 61.1%, with favorable prior year reserve development significantly decreasing due to higher claim severity Losses and LAE Ratios (6M) | Metric | 2025 Ratio | 2024 Ratio | Change in Ratio | | :-------------------------------- | :--------- | :--------- | :-------------- | | Current year, excluding catastrophe losses | 58.7% | 59.3% | (0.6%) | | Prior accident years development | (1.0%) | (2.7%) | 1.7% | | Current year catastrophe losses | 3.4% | 2.3% | 1.1% | | **Aggregate losses and LAE ratio** | **61.1%** | **58.9%** | **2.2%** | - Net favorable prior year reserve development for Specialty P&C operations decreased by **$55 million** (**63%**) to **$32 million** in 6M 2025, compared to **$87 million** in 6M 2024[302](index=302&type=chunk) - Specialty casualty experienced net adverse reserve development of **$22 million** in 6M 2025 due to higher claim severity in excess and surplus and social services businesses[304](index=304&type=chunk) [Commissions and Other Underwriting Expenses (6M)](index=68&type=section&id=Commissions%20and%20Other%20Underwriting%20Expenses%20%286M%29) Underwriting expenses increased 7% to $1.05 billion, with the expense ratio rising to 32.5% due to higher IT costs and commission rates Underwriting Expenses and Ratios by Sub-segment (6M, Millions) | Sub-segment | 2025 U/W Exp | % of NEP | 2024 U/W Exp | % of NEP | Change in % of NEP | | :-------------------------- | :----------- | :--------- | :----------- | :--------- | :------------------- | | Property and transportation | $314 | 29.1% | $315 | 29.4% | (0.3%) | | Specialty casualty | $472 | 29.7% | $442 | 28.1% | 1.6% | | Specialty financial | $262 | 46.9% | $227 | 46.8% | 0.1% | | **Total** | **$1,048** | **32.5%** | **$984** | **31.4%** | **1.1%** | - Increased costs for software and other expenses related to IT security, customer experience, and data analytics initiatives contributed to higher underwriting expenses across segments[310](index=310&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk) [Property and Casualty Net Investment Income (6M)](index=70&type=section&id=Property%20and%20Casualty%20Net%20Investment%20Income%20%286M%29) P&C net investment income decreased 11% to $349 million, primarily due to a 78% drop in alternative investment returns P&C Net Investment Income (6M, Millions) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------------- | :--- | :--- | :----- | :------- | | Net investment income, excluding alternative investments | $329 | $305 | $24 | 8% | | Alternative investments | $20 | $89 | $(69) | (78%) | | **Total net investment income** | **$349** | **$394** | **$(45)** | **(11%)** | - The annualized return on alternative investments was **1.5%** in 6M 2025, down from **7.0%** in 6M 2024[313](index=313&type=chunk) [Property and Casualty Other Income and Expenses, Net (6M)](index=71&type=section&id=Property%20and%20Casualty%20Other%20Income%20and%20Expenses%2C%20Net%20%286M%29) P&C net other expenses slightly decreased to $37 million, driven by lower interest expense on funds withheld P&C Other Income and Expenses, Net (6M, Millions) | Metric | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Other income | $3 | $4 | | Amortization of intangibles | $10 | $9 | | Interest expense on funds withheld | $23 | $25 | | Other expenses | $7 | $8 | | **Other income and expenses, net** | **$(37)** | **$(38)** | [Holding Company, Other and Unallocated — Results of Operations (6M)](index=71&type=section&id=Holding%20Company%2C%20Other%20and%20Unallocated%20%E2%80%94%20Results%20of%20Operations%20%286M%29) This segment reported a $98 million pretax loss, a slight increase, with decreased net investment income and stable P&C fees Holding Company, Other and Unallocated Pretax Loss (6M, Millions) | Metric | 2025 | 2024 | % Change | | :-------------------------------- | :--- | :--- | :------- | | Net investment income | $12 | $15 | (20%) | | Other income — P&C fees | $48 | $60 | (20%) | | Other income | $8 | $8 | —% | | Total revenues | $68 | $83 | (18%) | | Costs and expenses, excluding interest charges | $128 | $141 | (9%) | | Interest charges on borrowed money | $38 | $38 | —% | | **Loss before income taxes, excluding realized gains and losses** | **$(98)** | **$(96)** | **2%** | [Holding Company and Other — Net Investment Income (6M)](index=71&type=section&id=Holding%20Company%20and%20Other%20%E2%80%94%20Net%20Investment%20Income%20%286M%29) Net investment income for this segment decreased 20% to $12 million due to lower average investment balances - Net investment income for the Holding Company and Other segment decreased by **$3 million** (**20%**) to **$12 million** in 6M 2025, due to lower average investment balances[318](index=318&type=chunk) [Holding Company and Other — P&C Fees and Related Expenses (6M)](index=72&type=section&id=Holding%20Company%20and%20Other%20%E2%80%94%20P%26C%20Fees%20and%20Related%20Expenses%20%286M%29) P&C fees collected decreased to $48 million, while related expenses remained stable at $32 million - AFG collected **$48 million** in P&C fees in 6M 2025 (vs. **$60 million** in 6M 2024) for services like underwriting, policy administration, and claims[319](index=319&type=chunk) - Related expenses were **$32 million** in 6M 2025 (vs. **$30 million** in 6M 2024)[319](index=319&type=chunk) [Holding Company and Other — Other Income (6M)](index=72&type=section&id=Holding%20Company%20and%20Other%20%E2%80%94%20Other%20Income%20%286M%29) Other income for this segment increased 50% to $3 million, excluding consolidated CLO management fees - Excluding consolidated CLO management fees, other income for the Holding Company and Other segment increased by **$1 million** (**50%**) to **$3 million** in 6M 2025[322](index=322&type=chunk) [Holding Company and Other — Other Expenses (6M)](index=72&type=section&id=Holding%20Company%20and%20Other%20%E2%80%94%20Other%20Expenses%20%286M%29) Other expenses for this segment decreased slightly by $1 million (1%) to $80 million - Other expenses for the Holding Company and Other segment decreased by **$1 million** (**1%**) to **$80 million** in 6M 2025[323](index=323&type=chunk) [Holding Company and Other — Interest Charges on Borrowed Money (6M)](index=72&type=section&id=Holding%20Company%20and%20Other%20%E2%80%94%20Interest%20Charges%20on%20Borrowed%20Money%20%286M%29) Interest charges on borrowed money remained stable at $38 million in 6M 2025 - Interest charges on borrowed money for the Holding Company and Other segment remained stable at **$38 million** in 6M 2025 and 6M 2024[324](index=324&type=chunk) [Realized Gains (Losses) on Securities (6M)](index=72&type=section&id=Realized%20Gains%20%28Losses%29%20on%20Securities%20%286M%29) AFG reported $5 million in net realized gains on securities, a $7 million decrease, primarily due to increased impairment allowances Realized Gains (Losses) on Securities (6M, Millions) | Metric | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Realized gains (losses) before impairment allowances: Disposals | $(8) | $(4) | | Realized gains (losses) before impairment allowances: Change in fair value of equity securities | $19 | $19 | | Realized gains (losses) before impairment allowances: Change in fair value of derivatives | $1 | $(1) | | Change in allowance for impairments on securities | $(7) | $(2) | | **Realized gains (losses) on securities** | **$5** | **$12** | - The **$19 million** net realized gain from equity securities in 6M 2025 included gains from manufacturing, banks/financing, and media companies[325](index=325&type=chunk) [Consolidated Income Taxes (6M)](index=72&type=section&id=Consolidated%20Income%20Taxes%20%286M%29) Consolidated income tax provision decreased 21% to $98 million in 6M 2025 - Consolidated provision for income taxes decreased by **$26 million** (**21%**) to **$98 million** in 6M 2025[326](index=326&type=chunk) [Recently Adopted Accounting Standards](index=72&type=section&id=Recently%20Adopted%20Accounting%20Standards) AFG adopted new accounting guidance in Q4 2024, requiring enhanced disclosures on segment expenses and CODM's use of performance measures - New accounting guidance adopted in Q4 2024 requires enhanced disclosures on significant segment expenses, composition of other segment expenses, and how the CODM uses segment profit/loss measures[327](index=327&type=chunk) [Accounting Standards to Be Adopted](index=74&type=section&id=Accounting%20Standards%20to%20Be%20Adopted) AFG is evaluating new FASB ASUs on income tax and expense disclosures, not expecting material impact on financial results - ASU 2023-09 (Income Tax Disclosures), effective after December 15, 2024, requires consistent categories and greater disaggregation of income tax information[329](index=329&type=chunk) - AFG is evaluating its impact on disclosures[329](index=329&type=chunk) - ASU 2024-03 (Disaggregation of Income Statement Expenses), effective after December 15, 2026, requires additional information and disaggregation of specified expense categories[330](index=330&type=chunk) - AFG is evaluating its impact on disclosures[330](index=330&type=chunk) - Both ASU 2023-09 and ASU 2024-03 are disclosure-only standards and are not expected to impact AFG's results of operations or financial condition[329](index=329&type=chunk)[330](index=330&type=chunk) [Item 3 — Quantitative and Qualitative Disclosure about Market Risk](index=74&type=section&id=Item%203%20%E2%80%94%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) No material changes to market risk disclosures, with fixed maturity portfolio sensitive to interest rate changes (3.0% impact for 100 bps increase) - No material changes to market risk disclosures as of June 30, 2025[331](index=331&type=chunk) Sensitivity of Fixed Maturity Portfolio to Interest Rate Changes (Millions) | Metric | Value | | :---------------------------------------- | :------ | | Fair value of fixed maturity portfolio | $10,571 | | Percentage impact of 100 bps increase in interest rates | (3.0%) | | Pretax impact on fair value | $(317) | [Item 4 — Controls and Procedures](index=74&type=section&id=Item%204%20%E2%80%94%20Controls%20and%20Procedures) AFG's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - AFG's disclosure controls and procedures were effective as of June 30, 2025[334](index=334&type=chunk) - No material changes in AFG's internal control over financial reporting during Q2 2025, despite routine enhancements to information systems[334](index=334&type=chunk)[335](index=335&type=chunk) [Part II — Other Information](index=75&type=section&id=Part%20II%20%E2%80%94%20Other%20Information) This section covers unregistered sales of equity securities, other information, and a list of exhibits filed with the Form 10-Q [Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202%20%E2%80%94%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) AFG repurchased 782,134 shares for $97 million in 6M 2025, with 4.9 million shares remaining for repurchase Issuer Purchases of Equity Securities (2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :---------------- | :----------------------------- | :--------------------------- | | First quarter | 462,398 | $123.86 | | April | 158,899 | $118.75 | | May | 94,152 | $122.04 | | June | 66,685 | $122.93 | | **Total (6M)** | **782,134** | **$122.53** | - As of June 30, 2025, **4,946,876 shares** remained available for repurchase under the plan authorized by AFG's Board of Directors in May 2021[336](index=336&type=chunk) - AFG acquired **42,809 shares** in Q1 2025 and **141 shares** in June 2025 in connection with its stock incentive plans[337](index=337&type=chunk) [Item 5 — Other Information](index=75&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 in Q2 2025 - No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025[338](index=338&type=chunk) [Item 6 — Exhibits](index=76&type=section&id=Item%206%20%E2%80%94%20Exhibits) This section lists exhibits filed with the Form 10-Q, including SOX certifications and XBRL documents - Exhibits include certifications from Co-CEOs and CFO under Sarbanes-Oxley Act Sections 302(a) and 906, and various XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase, and Cover Page Interactive Data File)[340](index=340&type=chunk) [Signature](index=76&type=section&id=Signature) The report was signed by Brian S. Hertzman, Senior Vice President and CFO, on August 7, 2025 - The report was signed by Brian S. Hertzman, Senior Vice President and Chief Financial Officer, on August 7, 2025[343](index=343&type=chunk)

Financial Data and Key Metrics Changes - AFG reported core net operating earnings of $2.14 per share, a decrease from $2.56 per share in the prior year period [9] - The annualized core operating return on equity was reported despite tempered overall results from alternative investments [6] - Net investment income, excluding alternatives, increased by 10% year over year due to higher interest rates [6][10] - The company returned over $100 million to shareholders through dividends and share repurchases [7][12] Business Line Data and Key Metrics Changes - Specialty Property and Casualty Insurance businesses generated a combined ratio of 93.1%, up from 90.5% in the prior year [15] - Gross and net written premiums in the Specialty Property and Casualty group were up 107% year over year, with a 65% increase when excluding the crop business [16] - The Specialty Casualty Group achieved a combined ratio of 93.9%, 4.8 points higher than the previous year, with gross and net written premiums increasing by 42% [20] - The Specialty Financial Group reported a combined ratio of 86.1, an improvement from 89.7 in the prior year, with gross and net written premiums up 15% and 12% respectively [22] Market Data and Key Metrics Changes - Multifamily construction starts are down approximately 20% year over year, indicating a tightening supply which is expected to drive higher rental and occupancy rates [12] - The overall renewal rate increases for the Property and Casualty Group were approximately 6%, with a 7% increase excluding workers' compensation [17] Company Strategy and Development Direction - The company continues to focus on disciplined operating philosophy and capital management to create long-term value for shareholders [13][23] - AFG is optimistic about the prospects of attractive returns from its alternative investment portfolio, expecting annual returns averaging 10% or better [12] - The company is evaluating opportunities for acquisitions, special dividends, or share repurchases as it generates significant excess capital [13] Management's Comments on Operating Environment and Future Outlook - Management noted a favorable pricing environment and increased exposures contributing to growth in Specialty Property and Casualty businesses [15] - The company remains cautious about social inflation impacts and has taken steps to non-renew certain accounts in its social services businesses [34] - Management expressed optimism regarding the crop business, citing better conditions compared to the previous year, although it is still early to predict profitability [56] Other Important Information - The company has a $16 billion investment portfolio, with approximately two-thirds invested in fixed maturities [10] - The annualized return on alternative investments was approximately 1.2% for the second quarter, down from 5.1% in the prior year [11] Q&A Session Summary Question: Insights on lender placed business within Specialty Financial - Management indicated that the lender placed property business is significant and tends to grow in a weak economy, with opportunities arising from market disruptions [27][28] Question: Comments on social inflation and non-renewals - Management confirmed that they have completed non-renewals in housing accounts and are nearing completion in daycare accounts, focusing on profitable segments [34] Question: Positioning in inland marine and trade credit business - Management noted growth opportunities in ocean marine and trade credit, although tariffs may impact the business [43][48] Question: Crop profitability outlook - Management stated it is too early to determine if the year will be above average for crop profitability, but conditions appear favorable [56] Question: Workers' compensation pricing environment - Management reported a slight decrease in overall workers' compensation pricing but noted a firming market in California [62] Question: Pricing and rate adequacy in professional lines - Management expressed cautious optimism about stabilizing pricing in public D&O business, with overall rates remaining flat [68]

Financial Data and Key Metrics Changes - AFG reported core net operating earnings of $2.14 per share, a decrease from $2.56 per share in the prior year period [8] - The annualized core operating return on equity was reported despite tempered overall results from alternative investments [6] - Net investment income, excluding alternatives, increased by 10% year over year due to higher interest rates [6][10] Business Line Data and Key Metrics Changes - Specialty Property and Casualty Insurance businesses generated a combined ratio of 93.1%, up from 90.5% in the prior year [15] - Gross and net written premiums in the Specialty Property and Casualty businesses were up 107% year over year, with a 65% increase when excluding the crop business [16] - The Specialty Casualty Group achieved a combined ratio of 93.9%, 4.8 points higher than the previous year, with gross and net written premiums increasing by 42% [20] Market Data and Key Metrics Changes - Multifamily construction starts are down approximately 20% year over year, indicating a tightening supply which is expected to drive higher rental and occupancy rates [12] - The overall renewal rate increases for the Property and Casualty Group were approximately 6%, with a 7% increase excluding workers' compensation [17] Company Strategy and Development Direction - AFG continues to focus on disciplined operating philosophy and capital management to create long-term value for shareholders [13] - The company is optimistic about the prospects of attractive returns from its alternative investment portfolio, expecting annual returns averaging 10% or better [12] - AFG is evaluating opportunities for acquisitions, special dividends, or share repurchases due to expected significant excess capital generation [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of reserves and the favorable pricing environment in the Specialty Property and Casualty businesses [15] - The company anticipates premium growth for the full year in 2025, driven by increased exposures and new business opportunities [15] - Management noted that the current economic environment presents opportunities for growth, particularly in the lender-placed property business [28] Other Important Information - AFG returned over $100 million to shareholders during the quarter, including $39 million in share repurchases and a $0.80 per share dividend [12] - The company reported a 5% decrease in overall P&C net investment income compared to the previous year due to lower returns on alternative investments [11] Q&A Session Summary Question: Insights on lender-placed business growth - Management indicated that the lender-placed property business is significant and tends to grow in weak economic conditions, with a gross written premium of about $700 million [28] Question: Nonrenewals in social inflationary lines - Management confirmed that they are completing nonrenewals in housing accounts and expect to finish nonrenewals in daycare accounts by year-end [34] Question: Growth opportunities in inland marine and trade credit - Management expressed confidence in growth opportunities in ocean marine and trade credit, despite potential impacts from tariffs [45][49] Question: Crop profitability outlook - Management stated it is too early to determine if 2025 will be above average for crop profitability, but conditions appear favorable [58] Question: Workers' compensation pricing environment - Management noted a moderating price trend in workers' compensation, with California seeing its first price increase in a decade [66] Question: Pricing and rate adequacy in professional lines - Management reported flat pricing in public D&O business but noted signs of stabilization [72]