Financial Highlights Financial Highlights The company reported Q2 2025 net earnings of $174 million and a P&C combined ratio of 93.1% Financial Highlights | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net earnings | $174M | $209M | $328M | $451M | | Core net operating earnings | $179M | $215M | $331M | $446M | | Total assets | $30,669M | $29,913M | $30,669M | $29,913M | | P&C net written premiums | $1,803M | $1,692M | $3,414M | $3,326M | Per Share Data | Per Share Data | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Diluted EPS | $2.07 | $2.49 | $3.92 | $5.38 | | Core net operating EPS | $2.14 | $2.56 | $3.96 | $5.32 | | Book value per share, ex. AOCI | $55.74 | $56.19 | $55.74 | $56.19 | Financial Ratios | Financial Ratios | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Annualized ROE | 15.0% | 18.0% | 14.1% | 19.5% | | Annualized core operating ROE | 15.5% | 18.5% | 14.3% | 19.3% | | P&C Combined ratio - Specialty | 93.1% | 90.5% | 93.6% | 90.2% | Summary of Earnings Summary of Earnings The P&C segment's operating earnings of $273 million drove core net operating earnings of $179 million for Q2 2025 Earnings Component ($ in millions) | Earnings Component ($ in millions) | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | P&C Underwriting profit | $113 | $150 | $207 | $303 | | P&C Net investment income | $179 | $189 | $349 | $394 | | P&C Operating earnings | $273 | $319 | $519 | $659 | | Pretax core operating earnings | $227 | $273 | $421 | $563 | | Core net operating earnings | $179 | $215 | $331 | $446 | | Net earnings | $174 | $209 | $328 | $451 | Earnings Per Share Summary Q2 2025 diluted EPS was $2.07, derived from core net operating EPS of $2.14 adjusted for non-core items EPS Component | EPS Component | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Core net operating EPS | $2.14 | $2.56 | $3.96 | $5.32 | | Realized gains (losses) on securities | $0.02 | ($0.02) | $0.05 | $0.11 | | Other non-core items | ($0.09) | ($0.05) | ($0.09) | ($0.05) | | Diluted EPS | $2.07 | $2.49 | $3.92 | $5.38 | Property and Casualty Insurance Segment Summary of P&C Underwriting Results (GAAP) The P&C segment's underwriting profit fell to $113 million in Q2 2025, with the combined ratio rising to 93.1% Underwriting Profit ($ in millions) | Underwriting Profit ($ in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Property and Transportation | $27 | $40 | | Specialty Casualty | $49 | $86 | | Specialty Financial | $38 | $25 | | Total P&C Insurance | $113 | $150 | - Key factors impacting Q2 2025 underwriting results included $38 million in catastrophe losses and $11 million of favorable prior year reserve development7 Combined Ratio | Combined Ratio | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | P&C Combined Ratio | 93.1% | 90.5% | | P&C Combined Ratio (ex-cat & prior year dev.) | 91.5% | 90.5% | Specialty Group Underwriting Results (GAAP) The Specialty group's underwriting profit was $114 million in Q2 2025, with a combined ratio of 93.1% Key Metrics ($ in millions) | Metric ($ in millions) | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Gross written premiums | $2,653 | $2,406 | +10.3% | | Net written premiums | $1,803 | $1,692 | +6.6% | | Underwriting profit | $114 | $151 | -24.5% | Key Ratios | Ratio | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Loss and LAE ratio | 61.1% | 59.1% | | Underwriting expense ratio | 32.0% | 31.4% | | Combined ratio | 93.1% | 90.5% | Property and Transportation Underwriting Results (GAAP) The Property and Transportation segment's underwriting profit decreased to $27 million as the combined ratio rose to 95.2% Key Metrics ($ in millions) | Metric ($ in millions) | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net written premiums | $759 | $690 | +10.0% | | Underwriting profit | $27 | $40 | -32.5% | | Combined ratio | 95.2% | 92.7% | +2.5 pts | - The segment experienced $12 million in catastrophe losses and $13 million in favorable prior year reserve development in Q2 20259 Specialty Casualty Underwriting Results (GAAP) The Specialty Casualty segment's underwriting profit declined to $49 million, with the combined ratio worsening to 93.9% Key Metrics ($ in millions) | Metric ($ in millions) | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net written premiums | $765 | $753 | +1.6% | | Underwriting profit | $49 | $86 | -43.0% | | Combined ratio | 93.9% | 89.1% | +4.8 pts | - The segment recorded $10 million of adverse prior year loss reserve development in Q2 2025, a key driver of the higher combined ratio10 Specialty Financial Underwriting Results (GAAP) The Specialty Financial segment's underwriting profit grew to $38 million, with an improved combined ratio of 86.1% Key Metrics ($ in millions) | Metric ($ in millions) | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net written premiums | $279 | $249 | +12.0% | | Underwriting profit | $38 | $25 | +52.0% | | Combined ratio | 86.1% | 89.7% | -3.6 pts | - The segment's results included $19 million in catastrophe losses and $9 million in favorable prior year reserve development in Q2 202511 Balance Sheet and Capitalization Consolidated Balance Sheet Total assets were $30.67 billion and shareholders' equity was $4.52 billion as of June 30, 2025 Balance Sheet ($ in millions) | Balance Sheet Item ($ in millions) | 6/30/2025 | 12/31/2024 | | :--- | :--- | :--- | | Total cash and investments | $16,049 | $15,852 | | Total assets | $30,669 | $30,836 | | Unpaid losses and loss adjustment expenses | $13,834 | $14,179 | | Long-term debt | $1,476 | $1,475 | | Total liabilities | $26,153 | $26,370 | | Total shareholders' equity | $4,516 | $4,466 | Book Value Per Share and Price / Book Summary Book value per share excluding AOCI was $55.74 as of June 30, 2025, with a price-to-book ratio of 2.26x Per Share Metrics | Per Share Metric | 6/30/2025 | 6/30/2024 | | :--- | :--- | :--- | | Book value per share | $54.15 | $52.25 | | Book value per share, excluding AOCI | $55.74 | $56.19 | | Tangible book value per share, excluding AOCI | $49.77 | $50.13 | - The company's market capitalization was $10.52 billion based on the closing share price of $126.21 on June 30, 202513 Capitalization The company's debt-to-total capital ratio (excluding AOCI) was 24.4% with total capital of $6.15 billion Capitalization ($ in millions) | Capitalization ($ in millions) | 6/30/2025 | 12/31/2024 | | :--- | :--- | :--- | | Total principal amount of long-term debt | $1,498 | $1,498 | | Shareholders' equity | $4,516 | $4,466 | | Total capital, excluding AOCI | $6,146 | $6,204 | Capital Ratios | Ratio | 6/30/2025 | 12/31/2024 | | :--- | :--- | :--- | | Debt to total capital, ex. AOCI (incl. subordinated) | 24.4% | 24.1% | | Debt to total capital, ex. AOCI (excl. subordinated) | 13.4% | 13.3% | Additional Supplemental Information Additional Supplemental Information The P&C segment had paid losses of $931 million in Q2 2025 and dividend capacity of $1.00 billion - Property and Casualty Insurance paid losses (GAAP) were $931 million in Q2 2025, compared to $969 million in Q2 202415 - As of June 30, 2025, the Property and Casualty Insurance subsidiaries had the capacity to pay $1.004 billion in dividends to the parent company without requiring prior regulatory approval15 Investment Portfolio Total Cash and Investments Total cash and investments reached $16.05 billion, with fixed maturities comprising 65% of the portfolio Investment Portfolio Composition ($ in millions) | Investment Type ($ in millions) | Carrying Value 6/30/2025 | % of Portfolio | Carrying Value 12/31/2024 | % of Portfolio | | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $1,268 | 8% | $1,406 | 9% | | Fixed maturities - Available for sale | $10,489 | 65% | $10,398 | 66% | | Investments using equity method | $2,341 | 15% | $2,277 | 14% | | Mortgage loans | $909 | 6% | $791 | 5% | | Total cash and investments | $16,049 | 100% | $15,852 | 100% | Net Investment Income P&C net investment income decreased to $179 million in Q2 2025 due to lower alternative investment returns P&C Net Investment Income ($ in millions) | P&C Net Investment Income ($ in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Fixed maturities | $140 | $133 | | Alternative investments | $8 | $33 | | Other investments | $38 | $28 | | Investment expenses | ($7) | ($5) | | Total net investment income | $179 | $189 | - The average yield on the P&C fixed maturities portfolio before investment expenses increased to 5.24% in Q2 2025 from 5.04% in Q2 202417 Alternative Investments Alternative investment income fell to $8 million in Q2 2025, yielding an annualized return of 1.2% P&C Alternative Investments | P&C Alternative Investments | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Investment Income | $8M | $33M | | Total Investments (Carrying Value) | $2,774M | $2,614M | | Annualized Return | 1.2% | 5.1% | Fixed Maturities by Security Type The $10.57 billion fixed maturities portfolio was well-diversified with a duration of 3.0 years Fixed Maturities by Security Type | Security Type | Fair Value 6/30/2025 ($M) | % of Fair Value | | :--- | :--- | :--- | | Corporate and other bonds | $3,482 | 33% | | Other asset-backed securities | $2,406 | 23% | | Residential mortgage-backed securities | $2,217 | 21% | | Collateralized loan obligations | $1,088 | 10% | | States, municipalities, etc. | $868 | 8% | | Total AFG consolidated | $10,571 | 100% | - The approximate duration of the Property & Casualty fixed income portfolio was 3.0 years as of June 30, 2025, slightly down from 3.1 years at year-end 202421 Appendix Appendix A: Fixed Maturities by Credit Rating (6/30/2025) The fixed maturities portfolio maintained high credit quality, with 95% of assets rated investment grade - 95% of the fixed maturities portfolio is rated investment grade23 Credit Rating Breakdown | Credit Rating | Fair Value ($ in millions) | % of Total | | :--- | :--- | :--- | | AAA | $4,238 | 40% | | AA | $1,482 | 14% | | A | $1,747 | 17% | | BBB | $2,553 | 24% | | Subtotal - Investment Grade | $10,020 | 95% | Appendix G: Real Estate-Related Investments (6/30/2025) Real estate investments were concentrated in multi-family properties, which showed strong occupancy and collection rates Real Estate Investments by Category | Investment Category | Book Value ($ in millions) | | :--- | :--- | | Investments accounted for using equity method | $1,413 | | Mortgage Loans | $909 | | Real Estate (Direct) | $101 | - The multi-family equity method investments, the largest component of real estate exposure, maintained a high occupancy rate of 92% and a collection rate of 97% for the second quarter3639 - No mortgage loans were receiving interest deferral through forbearance agreements38
American Financial (AFG) - 2025 Q2 - Quarterly Results