American Financial (AFG) - 2025 Q1 - Quarterly Results

Financial Highlights This section provides an overview of American Financial Group's key financial performance metrics for Q1 2025, highlighting earnings, EPS, and P&C combined ratio trends Q1 2025 Financial Highlights In Q1 2025, American Financial Group reported net earnings of $154 million and core net operating earnings of $152 million. This represents a decrease from Q1 2024, where net earnings were $242 million and core earnings were $231 million. Diluted EPS fell to $1.84 from $2.89 year-over-year. The Property and Casualty (P&C) combined ratio for the Specialty segment increased to 94.0% from 90.1% in the prior year's quarter | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Earnings | $154M | $242M | -36.4% | | Core Net Operating Earnings | $152M | $231M | -34.2% | | Diluted EPS | $1.84 | $2.89 | -36.3% | | Core Net Operating EPS | $1.81 | $2.76 | -34.4% | | P&C Net Written Premiums | $1,611M | $1,634M | -1.4% | | P&C Specialty Combined Ratio | 94.0% | 90.1% | +3.9 pts | Earnings Summary This section provides a detailed breakdown of the company's earnings components, including underwriting profit, net investment income, and earnings per share for Q1 2025 Detailed Earnings Breakdown For Q1 2025, the company's underwriting profit was $94 million, a significant decrease from $153 million in Q1 2024. Net investment income also declined to $170 million from $205 million year-over-year. These factors led to a drop in pretax core operating earnings to $194 million, compared to $290 million in the same period last year | Earnings Component | Q1 2025 ($M) | Q1 2024 ($M) | Change | | :--- | :--- | :--- | :--- | | Underwriting Profit | 94 | 153 | -38.6% | | Net Investment Income | 170 | 205 | -17.1% | | P&C Insurance Operating Earnings | 246 | 340 | -27.6% | | Pretax Core Operating Earnings | 194 | 290 | -33.1% | | Core Net Operating Earnings | 152 | 231 | -34.2% | | Net Earnings | 154 | 242 | -36.4% | Earnings Per Share (EPS) Summary In Q1 2025, core net operating EPS was $1.81, down from $2.76 in Q1 2024. After accounting for a $0.03 per share gain from realized securities, the diluted EPS for the quarter was $1.84. This compares to a diluted EPS of $2.89 in Q1 2024, which included a $0.13 per share gain from securities | EPS Component | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Core net operating earnings per share | $1.81 | $2.76 | | Realized gains (losses) on securities | $0.03 | $0.13 | | Diluted earnings per share | $1.84 | $2.89 | Property and Casualty (P&C) Insurance Segment This section details the underwriting performance of the Property and Casualty insurance segment and its sub-segments, including premiums, profits, and combined ratios P&C Summary Underwriting Results The P&C insurance segment generated an underwriting profit of $94 million in Q1 2025, down from $153 million in Q1 2024. The decline was driven by a significant increase in current accident year catastrophe losses, which rose to $72 million from $34 million. The overall combined ratio deteriorated to 94.1% from 90.1% year-over-year, while the combined ratio excluding catastrophes and prior year development remained relatively stable at 90.8% | Metric | Q1 2025 ($M) | Q1 2024 ($M) | | :--- | :--- | :--- | | Underwriting Profit | 94 | 153 | | Current Accident Year Catastrophe Losses | 72 | 34 | | Prior Year Favorable Reserve Development | (20) | (50) | | Ratio | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Combined Ratio | 94.1% | 90.1% | | P&C combined ratio excl. cats & prior year dev. | 90.8% | 91.1% | Specialty Segment Underwriting Results The Specialty segment's net written premiums were $1.611 billion in Q1 2025, a slight decrease from $1.634 billion in Q1 2024. Underwriting profit fell to $94 million from $154 million, largely due to higher catastrophe losses. The combined ratio for the segment increased to 94.0% from 90.1% year-over-year | Metric | Q1 2025 ($M) | Q1 2024 ($M) | | :--- | :--- | :--- | | Net Written Premiums | $1,611 | $1,634 | | Underwriting Profit | $94 | $154 | | Combined Ratio | 94.0% | 90.1% | Property and Transportation Underwriting Results The Property and Transportation segment reported a decrease in underwriting profit to $37 million in Q1 2025 from $60 million in Q1 2024. Net written premiums decreased slightly to $563 million. The combined ratio worsened to 92.5% from 88.5% in the prior year's quarter | Metric | Q1 2025 ($M) | Q1 2024 ($M) | | :--- | :--- | :--- | | Net Written Premiums | $563 | $597 | | Underwriting Profit | $37 | $60 | | Combined Ratio | 92.5% | 88.5% | Specialty Casualty Underwriting Results The Specialty Casualty segment's underwriting profit dropped significantly to $20 million in Q1 2025 from $61 million in Q1 2024. Net written premiums were down to $772 million from $803 million. The combined ratio increased to 97.6% from 92.2%, impacted by higher catastrophe losses ($27 million vs. $18 million) and adverse prior year reserve development of $12 million compared to a favorable development of $11 million in Q1 2024 | Metric | Q1 2025 ($M) | Q1 2024 ($M) | | :--- | :--- | :--- | | Net Written Premiums | $772 | $803 | | Underwriting Profit | $20 | $61 | | Combined Ratio | 97.6% | 92.2% | | Catastrophe Losses | $27 | $18 | | Prior Year Reserve Development | $12 (Adverse) | $(11) (Favorable) | Specialty Financial Underwriting Results The Specialty Financial segment showed improved performance, with underwriting profit increasing to $37 million in Q1 2025 from $33 million in Q1 2024. Net written premiums grew to $276 million from $234 million. Despite higher catastrophe losses ($35 million vs. $7 million), the combined ratio improved slightly to 87.0% from 86.6%, aided by favorable prior year reserve development | Metric | Q1 2025 ($M) | Q1 2024 ($M) | | :--- | :--- | :--- | | Net Written Premiums | $276 | $234 | | Underwriting Profit | $37 | $33 | | Combined Ratio | 87.0% | 86.6% | | Catastrophe Losses | $35 | $7 | Balance Sheet and Capitalization This section outlines the company's financial position, including consolidated balance sheet figures, book value per share, and capitalization structure as of March 31, 2025 Consolidated Balance Sheet As of March 31, 2025, total assets were $30.29 billion, a slight decrease from $30.84 billion at year-end 2024. Total liabilities also decreased to $25.90 billion from $26.37 billion. Total shareholders' equity stood at $4.39 billion | Balance Sheet Item | 3/31/2025 ($B) | 12/31/2024 ($B) | | :--- | :--- | :--- | | Total Cash and Investments | 16.0 | 15.9 | | Total Assets | 30.3 | 30.8 | | Total Liabilities | 25.9 | 26.4 | | Total Shareholders' Equity | 4.4 | 4.5 | Book Value Per Share Book value per share, excluding accumulated other comprehensive income (AOCI), was $54.63 as of March 31, 2025, down from $56.03 at the end of 2024. The closing share price of $131.34 resulted in a Price to Book Value (ex-AOCI) multiple of 2.40x | Metric | 3/31/2025 | 12/31/2024 | | :--- | :--- | :--- | | Shareholders' equity, excluding AOCI | $4,571M | $4,706M | | Book value per share, excluding AOCI | $54.63 | $56.03 | | Price / Book value per share, excluding AOCI | 2.40x | 2.44x | Capitalization The company's capital structure remained stable, with total long-term debt at $1.5 billion as of March 31, 2025. The ratio of debt to total capital (excluding AOCI) was 24.7%, consistent with the prior year-end | Metric | 3/31/2025 ($M) | 12/31/2024 ($M) | | :--- | :--- | :--- | | Total principal amount of long-term debt | $1,498 | $1,498 | | Total capital, excluding AOCI | $6,069 | $6,204 | | Ratio of debt to total capital, excluding AOCI | 24.7% | 24.1% | Investment Portfolio This section analyzes the company's investment portfolio, detailing its composition, net investment income, and performance of various asset classes Composition of Cash and Investments Total cash and investments increased slightly to $15.99 billion at the end of Q1 2025 from $15.85 billion at year-end 2024. The portfolio is predominantly composed of fixed maturities (66%), with investments accounted for using the equity method making up the next largest portion (15%) | Investment Type | Carrying Value 3/31/25 ($B) | % of Portfolio | | :--- | :--- | :--- | | Fixed maturities | 10.64 | 66% | | Investments accounted for using the equity method | 2.33 | 15% | | Mortgage loans | 0.83 | 5% | | Other | 2.19 | 14% | | Total | 15.99 | 100% | Net Investment Income Analysis Total net investment income for the P&C segment was $170 million in Q1 2025, a decrease from $205 million in Q1 2024. The decline was primarily due to lower income from alternative investments, which fell to $12 million from $56 million year-over-year. Income from the core fixed maturity portfolio remained stable | P&C Net Investment Income Source | Q1 2025 ($M) | Q1 2024 ($M) | | :--- | :--- | :--- | | Fixed maturities | 137 | 131 | | Alternative investments | 12 | 56 | | Other | 27 | 24 | | Investment expenses | (6) | (6) | | Total Net Investment Income | 170 | 205 | - The average yield on the overall P&C portfolio decreased to 4.28% in Q1 2025 from 5.35% in Q1 2024, driven by the lower returns from alternative investments[17] Alternative Investments Performance Net investment income from the P&C segment's alternative investments totaled $12 million in Q1 2025, a sharp drop from $56 million in Q1 2024. The annualized return on these investments was 1.8% for the quarter, compared to 9.0% in the prior-year period. The total carrying value of these investments was $2.73 billion | P&C Alternative Investments | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Investment Income ($M) | $12 | $56 | | Total Investments ($M) | $2,728 | $2,557 | | Annualized Return | 1.8% | 9.0% | Fixed Maturity Portfolio by Security Type As of March 31, 2025, the consolidated fixed maturity portfolio had a fair value of $10.64 billion. The portfolio is well-diversified, with the largest allocations to Corporate and other bonds (33%), Other asset-backed securities (22%), and Residential mortgage-backed securities (20%). The approximate duration of the P&C portfolio was 3.0 years | Security Type | Fair Value 3/31/25 ($B) | % of Fair Value | | :--- | :--- | :--- | | Corporate and other bonds | 3.51 | 33% | | Other asset-backed securities | 2.38 | 22% | | Residential mortgage-backed securities | 2.12 | 20% | | Collateralized loan obligations | 1.24 | 12% | | Other | 1.39 | 13% | | Total | 10.64 | 100% | - The approximate duration of the P&C fixed maturity portfolio was 3.0 years (2.8 years including cash) as of March 31, 2025[21] Appendix: Detailed Portfolio Breakdowns This appendix provides detailed breakdowns of the company's investment portfolio, including fixed maturities by credit quality, corporate securities by industry, and asset-backed securities by collateral type Fixed Maturities Portfolio Quality This section provides a detailed breakdown of the fixed maturities portfolio by credit rating and NAIC designation as of March 31, 2025, and December 31, 2024. The portfolio maintains a high credit quality, with the vast majority of holdings rated as investment grade - As of March 31, 2025, 95% of the fixed maturity portfolio, with a total fair value of $10.6 billion, was rated investment grade[23] - Based on NAIC designations, 96% of the insurance companies' fixed maturity portfolio was in the top two categories (NAIC 1 and 2), indicating strong regulatory capital treatment[23] Corporate Securities Portfolio by Industry This section details the corporate securities portfolio, breaking it down by industry, credit rating, and NAIC designation. The portfolio is diversified across various industries with a concentration in financial services - As of March 31, 2025, the largest industry exposures in the $3.5 billion corporate securities portfolio were Asset Managers (24%), Banking (13%), Insurance (7%), and Technology (7%)[27] Asset-Backed Securities (ABS) Portfolio by Collateral This section provides a granular view of the Asset-Backed Securities (ABS) portfolio, categorized by collateral type and credit rating. The portfolio is high quality and diversified across various collateral types - As of March 31, 2025, the $2.38 billion ABS portfolio was 97% investment grade. Key collateral types include Whole Business ($516M), Commercial Real Estate ($233M), TruPS ($232M), and Triple Net Lease ($230M)[35] Real Estate-Related Investments This section details the company's real estate-related investments, including equity method investments, directly owned real estate, and mortgage loans. The portfolio is heavily weighted towards multi-family properties - The mortgage loan portfolio of $827 million has a conservative loan-to-value ratio of 64%, with 73% of the portfolio in multifamily properties. No loans are currently receiving interest deferral[40] - Investments accounted for via the equity method in real estate total $1.43 billion, with 88% invested in multi-family properties that have a 92% occupancy rate and 97% collection rate[39]