American Financial (AFG) Q1 Earnings Miss on Higher Expenses

Core Viewpoint - American Financial Group, Inc. (AFG) reported a decline in net operating earnings per share for Q1 2024, missing estimates due to lower investment income and higher expenses [1][2] Financial Performance - AFG's total revenues reached $1.8 billion, reflecting a 5.1% year-over-year increase, but fell short of estimates by 0.2% [2] - The net investment income decreased by 8.7% year over year to $198 million, which was below the expected $226.8 million [2] - Total costs and expenses rose by 8.5% year over year to $1.6 billion, lower than the estimate of $1.7 billion [2] Segment Analysis - The Specialty P&C Insurance segment generated $1.6 billion in net written premiums, an 8% increase year over year, driven by strong performance in various sub-segments [3] - Net written premiums in the Property & Transportation Group grew by 7% to $591 million, while the Specialty Casualty Group saw a 4% increase to $751 million [3] - Specialty Financial net written premiums surged by 27% year over year, contrasting with a 5% decline in other divisions [3] Underwriting and Losses - Pre-tax core operating earnings for the P&C Insurance segment were $340 million, down 2.8% year over year [4] - The underwriting profit decreased by 0.6% to $154 million, primarily due to lower profits in the Specialty Casualty Group [4] - Catastrophe losses amounted to $34 million, compared to $31 million in the previous year [4] Financial Position - AFG's cash and investments totaled $15.2 billion, a slight decline of 0.05% from the end of 2023 [5] - Long-term debt remained flat at $1.4 billion as of March 31, 2024 [5] - The book value per share was $54.32, down 0.7% from the end of 2023, with an annualized return on equity of 21.2%, an increase of 230 basis points year over year [5] Dividend Declaration - AFG declared cash dividends of $3.21 per share in Q1 2024, which included a special dividend of $2.50 per share paid in February [6]