American Financial (US:AFG)2026-02-25 20:19Financial Performance - AFG's gross written premiums for 2025 reached $10,694 million, an increase from $10,533 million in 2024 and $9,656 million in 2023[32]. - The net written premiums for 2025 were $7,110 million, slightly down from $7,139 million in 2024, but up from $6,692 million in 2023[32]. - AFG's combined ratio for 2025 was 91.0%, indicating strong underwriting profitability compared to the industry average of 95.0%[32][28]. - The loss and LAE ratio for 2025 was 62.2%, a decrease from 63.3% in 2024, reflecting improved loss experience[32]. - Total losses from current accident year catastrophes were $137 million in 2025, down from $180 million in 2024 and $162 million in 2023[33]. - AFG's statutory combined ratio averaged 90.5% from 2016 to 2025, outperforming the property and casualty commercial lines industry average of 98.1%[28]. Ratings and Competitive Positioning - The company maintains an "A" category rating by A.M. Best, which is crucial for competitive positioning in the insurance market[24]. Business Model and Growth Strategy - AFG's entrepreneurial business model promotes agility and innovative product design, contributing to a double-digit annual growth in book value per share[18]. - The company focuses on specialty businesses where it has expertise, enhancing its growth opportunities in profitable segments[35]. - AFG has implemented risk-sharing alternatives and innovative coverage options to align interests with customers and distribution partners[35]. Premiums by Segment - The property and transportation segment generated $2,771 million in premiums for 2025, down from $2,846 million in 2024 and up from $2,586 million in 2023[40]. - Specialty casualty premiums remained stable at $3,247 million in 2025, compared to $3,246 million in 2024 and $3,169 million in 2023[40]. - Specialty financial premiums increased to $1,092 million in 2025, up from $1,047 million in 2024 and $937 million in 2023[40]. - California accounted for 12.1% of AFG's direct written premiums in 2025, while Texas contributed 8.3% and Florida 8.0%[42]. Reinsurance and Catastrophe Coverage - AFG's catastrophe reinsurance coverage includes $205 million in excess of a $70 million per event primary retention, renewed in January 2026[49]. - The company has additional catastrophe coverage of $350 million for losses exceeding $275 million through December 31, 2028[50]. - Reinsurance ceded in 2025 was $3,584 million, an increase from $3,394 million in 2024 and $2,964 million in 2023[57]. Reserves and Liabilities - The liability for unpaid losses and LAE reported on a GAAP basis was $15,094 million as of December 31, 2025[59]. - AFG's asbestos and environmental reserves at the end of 2025 were $460 million, down from $494 million in 2024[61]. - AFG's property and casualty insurance segment's asbestos and environmental reserves showed no net change following a comprehensive internal review in 2025[63]. Investment Portfolio - AFG's investment portfolio was valued at $17.18 billion as of December 31, 2025, with an earned yield on fixed maturities of 5.1% for 2025, up from 5.0% in 2024 and 4.7% in 2023[79]. - The total return on AFG's fixed maturities was 7.5% for 2025, compared to 6.2% for 2024 and 7.2% for 2023, slightly below the Bloomberg U.S. Universal Bond Index return of 7.6% for 2025[81]. - 97% of AFG's fixed maturity investments held by its insurance companies had a National Association of Insurance Commissioners designation of 1 or 2, indicating high credit quality[83]. - AFG's investment strategy has been consistent over the years, contributing to strong investment results and effective portfolio risk management[78]. Employee Engagement and Retention - AFG's voluntary employee turnover rate was 8.3% in 2025, with an average employee tenure of 10 years, reflecting positive retention trends[69]. - The company conducted an employee engagement survey in 2024, with 92% participation, revealing that 94% of employees agreed on the quality of products and services provided[70]. - The company maintains a competitive benefits package, including six weeks of paid parental leave and wellness programs to support employee health[73]. - The company employs approximately 8,500 individuals, with 7,700 at Great American Insurance Group, and none covered by collective bargaining agreements[68]. Dividends - AFG's insurance subsidiaries can pay up to approximately $1.08 billion in dividends to shareholders in 2026 without seeking prior regulatory approval[91].