American Financial (US:AFG)2021-08-06 16:29Financial Performance - Net earned premiums for property and casualty insurance increased to $1,250 million for the three months ended June 30, 2021, compared to $1,184 million for the same period in 2020, representing a growth of 5.6%[10] - Total revenues for the six months ended June 30, 2021, were $3,040 million, up from $2,500 million in the same period of 2020, indicating a year-over-year increase of 21.6%[10] - Net earnings attributable to shareholders for the three months ended June 30, 2021, were $1,002 million, compared to a loss of $137 million in the same period of 2020[10] - Earnings per diluted share from continuing operations increased to $2.81 for the six months ended June 30, 2021, compared to a loss of $0.31 in the same period of 2020[10] - Net earnings for the three months ended June 30, 2021, were $1,002 million, compared to $167 million for the same period in 2020, representing a significant increase[12] - Net earnings for the six months ended June 30, 2021, were $1,421 million, compared to a net loss of $137 million for the same period in 2020[20] - Total comprehensive income for the three months ended June 30, 2021, was $225 million, down from $1,188 million in the prior year, primarily due to other comprehensive losses[12] Assets and Liabilities - Total assets decreased from $73,710 million in December 2020 to $28,780 million in June 2021, a decline of approximately 61%[7] - Total liabilities decreased from $66,921 million in December 2020 to $23,179 million in June 2021, a reduction of approximately 65%[7] - Shareholders' equity decreased from $6,789 million in December 2020 to $5,601 million in June 2021, a decline of approximately 17.5%[7] - The company’s total cash and investments increased from $13,494 million in December 2020 to $16,125 million in June 2021, an increase of approximately 19.5%[7] Investment Income - The company reported net investment income of $164 million for the three months ended June 30, 2021, compared to $88 million for the same period in 2020, reflecting an increase of 86.4%[10] - Net investment income for the three months ended June 30, 2021, was $299 million, down from $382 million for the same period in 2020, a decrease of 21.7%[56] - Net investment income for the property and casualty insurance segment was $143 million for the three months ended June 30, 2021, compared to $72 million for the same period in 2020, an increase of 98.6%[70] Cash Flow - Net cash provided by operating activities was $970 million for the six months ended June 30, 2021, down from $1,087 million in 2020[20] - Net cash provided by investing activities was $661 million in 2021, a significant improvement from $(1,296) million in 2020[20] - Net cash used in financing activities was $1.08 billion for the first six months of 2021, a decrease of $1.67 billion compared to net cash provided of $593 million in the same period of 2020[179] Shareholder Returns - Dividends paid during the period were $1,232 million, equating to $14.50 per share[15] - AFG paid a special cash dividend of $14.00 per share in June 2021, totaling approximately $1.19 billion, compared to $81 million in the first six months of 2020[180] - AFG repurchased 2,674,222 shares of its Common Stock for $306 million during the first six months of 2021, compared to $137 million in the same period of 2020[182] Discontinued Operations - AFG completed the sale of its Annuity business to MassMutual for $3.57 billion, realizing a net gain of $656 million from the transaction[53] - The Annuity business results have been reported as discontinued operations starting from Q1 2021, with prior periods adjusted accordingly[53] - Cash proceeds from the sale of the annuity business amounted to $3,537 million, with total net proceeds reaching $3,561 million after related expenses[59] Insurance Reserves and Claims - The establishment of insurance reserves, particularly for asbestos and environmental-related claims, remains a critical accounting policy for AFG[170] - The company experienced a net decrease in the provision for claims of prior years due to lower than anticipated claim frequency and severity in various business segments[151] - AFG's total unpaid losses and LAE included in the balance sheet at the end of the period was $10,498 million, compared to $10,321 million in the previous period[151] Debt and Capital Structure - Long-term debt increased from $1.96 billion at December 31, 2020, to $2.29 billion, representing a rise of 16.8%[94] - The ratio of debt to total capital, including subordinated debt, was 27.0% as of June 30, 2021, compared to 26.6% in 2020[173] - AFG has a revolving credit facility allowing borrowing up to $500 million, with no amounts borrowed as of June 30, 2021[134] Market and Economic Conditions - The company anticipates continued impacts from the COVID-19 pandemic, affecting claim frequency and business operations[168] - AFG's insurance subsidiaries maintained capital at or above levels required by ratings agencies, ensuring financial stability amid ongoing pandemic uncertainties[167] Fair Value Measurements - Approximately 5% of total assets of continuing operations carried at fair value as of June 30, 2021, were classified as Level 3 assets[84] - The total assets of continuing operations accounted for at fair value were $15.809 billion as of June 30, 2021[83] - The company reported a total unrealized gain on fixed maturities of $205 million for the three months ended June 30, 2021[118]