American Financial Q4 Earnings Miss, Revenues Beat Estimates

Core Insights - American Financial Group, Inc. (AFG) reported fourth-quarter 2024 net operating earnings per share of $3.12, missing the Zacks Consensus Estimate by 2.5%, but showing a year-over-year increase of 9.9% [1][2] Financial Performance - Total revenues reached $2.1 billion, reflecting a 7.2% year-over-year increase, driven by higher P&C insurance net earned premiums and net investment income, surpassing the Zacks Consensus Estimate by 3.5% [3] - Net investment income rose 22% year over year to $194 million, exceeding both the internal estimate of $166.9 million and the Zacks Consensus Estimate of $188 million [3] - Total costs and expenses increased by 4.6% year over year to $1.8 billion, attributed to higher P&C insurance losses and expenses, aligning with the internal estimate [4] Segment Analysis - The Specialty P&C Insurance segment generated $2 billion in net written premiums, a 3% increase year over year, supported by new business opportunities and a favorable renewal rate environment [5] - Net written premiums in the Property & Transportation Group decreased by 6% year over year to $399 million, falling short of the internal estimate of $542 million [6] - The Specialty Casualty Group saw a 4% increase in net written premiums to $725 million, exceeding the internal estimate of $679.3 million [6] - The Specialty Financial segment's net written premiums increased by 12% year over year to $279 million, though it was below the internal estimate of $286.6 million [6] - The Specialty P&C Insurance segment's underwriting profit decreased by 3.6% year over year to $204 million, which was lower than the internal estimate of $228.7 million [7] Combined Ratio and Profitability - The combined ratio for the Specialty P&C Insurance segment deteriorated by 130 basis points year over year to 89% [8] - For the full year, net operating earnings per share were $10.75, up 1.8% year over year, with revenues increasing by 6.3% and net premiums written rising by 7% to $7.1 billion [9] Financial Position - As of December 31, 2024, total cash and investments stood at $15.9 billion, a 3.9% increase from the end of 2023 [10] - Long-term debt remained unchanged at $1.5 billion, while book value per share increased by 2.4% to $56.03 [11] - The annualized return on equity for the fourth quarter was 19%, expanding by 20 basis points year over year [11] Capital Management - AFG returned $791 million to shareholders, which included $545 million in special dividends, equating to $6.50 per share [12] Future Outlook - For 2025, AFG projects core operating earnings per share of $10.50, with net written premiums expected to grow by 5% and a combined ratio estimated at 92.5% [13]