Core Financial Performance - American Financial Group reported fourth quarter net earnings of $299 million ($3.58 per share) for 2025, an increase from $255 million ($3.03 per share) in the fourth quarter of 2024 [1] - Core net operating earnings for the fourth quarter of 2025 were $305 million ($3.65 per share), compared to $262 million ($3.12 per share) in the same period of 2024, reflecting a record quarterly underwriting profit [2] - Full year net earnings for 2025 were $10.08 per share, down from $10.57 per share in 2024, with a return on equity of 17.8% for 2025 compared to 19.0% for 2024 [1][3] Underwriting and Premiums - The Specialty Property and Casualty (P&C) insurance operations achieved a combined ratio of 84.1% in the fourth quarter of 2025, improving from 89.0% in the prior year quarter, with underwriting profit reaching a record $287 million, a 41% increase year-over-year [12][10] - Gross written premiums for the fourth quarter of 2025 increased by 2%, while net written premiums decreased by 1% compared to the same period in 2024 [13] - Average renewal rates across the P&C Group, excluding workers' compensation, were up approximately 5% for the quarter, consistent with the previous quarter [14] Investment Performance - Net investment income for the fourth quarter of 2025 was approximately 12% lower than the comparable 2024 period, primarily due to lower returns from alternative investments [22] - The annualized return on alternative investments was 0.9% for the fourth quarter of 2025, down from 4.9% in the prior year quarter [22] - For the full year 2025, the return on alternative investments was 2.5%, compared to 6.1% in 2024 [23] Shareholder Returns - The company declared a special cash dividend of $1.50 per share, payable on February 25, 2026, in addition to a regular quarterly cash dividend of $0.88 per share [9] - AFG returned over $700 million to shareholders in 2025, including a 10% increase in the quarterly dividend and special dividends totaling $4.00 per share [11] Future Outlook - The company anticipates core operating earnings per share of approximately $11.00 for 2026, with a core operating return on equity excluding AOCI of approximately 18% [10] - Assumptions for 2026 include a growth in net written premiums of 3% to 5% compared to 2025 and a combined ratio of 92.5% [10]

Financial Data and Key Metrics Changes - AFG reported core net operating earnings of $2.69 per share, a 16% increase from $2.31 per share in the prior year period [6] - The annualized core operating return on equity was 19% for the third quarter [4] - Net investment income increased by 5% year over year, attributed to higher interest rates and increased balances of invested assets [6][8] Business Line Data and Key Metrics Changes - Underwriting profit in specialty property and casualty insurance businesses grew 19%, with a combined ratio of 93, improving by 1.3 points from the prior year [13] - Gross and net written premiums in specialty property and casualty businesses decreased by 2% and 4% respectively compared to the previous year [13] - In the specialty financial group, the combined ratio was 81.1, 11.2 percentage points better than the comparable period in 2024, with gross and net written premiums up 3% and 1% respectively [20] Market Data and Key Metrics Changes - Average renewal pricing across the property and casualty group increased approximately 5% in the third quarter [14] - The property and transportation group achieved a combined ratio of 94.1, improving by 2.7 points from the previous year [15] - The specialty casualty group reported a combined ratio of 95.8, 3.7 percentage points higher than the prior year [18] Company Strategy and Development Direction - The company aims to maintain underwriting discipline and prudent growth while exploring new business opportunities and acquisitions [11] - AFG plans to continue generating significant excess capital, providing opportunities for acquisitions, special dividends, or share repurchases [9] - The company is optimistic about the prospects of attractive returns from its alternative investment portfolio, expecting annual returns averaging 10% or better [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of reserves and the overall underwriting profitability in specialty property and casualty businesses [11] - The company anticipates premium growth to rebound in 2026, driven by startups and underwriting actions taken in specialty casualty businesses [12] - Management noted that while some loss ratio trends have improved, others, particularly in social inflation-exposed businesses, require careful pricing adjustments [29] Other Important Information - AFG returned $66 million to shareholders through regular quarterly dividends, with a 10% increase in the quarterly dividend to $0.88 per share [9] - A special dividend of $2 per share was declared, amounting to approximately $167 million [9] Q&A Session Summary Question: Why were there no material buybacks in the quarter? - Management indicated that share repurchases are more active when the stock is trading at a significant discount to its value, and they have retained capital for future opportunities [24] Question: Can you elaborate on pricing trends in relation to prospective loss ratios? - Management stated that a 5% price increase is still exceeding prospective loss ratio trends, with a diverse portfolio mitigating risks [25][26] Question: What is the outlook for crop premium and pricing? - Management suggested that crop pricing should be stable or potentially increasing, depending on trade relationships and market conditions [36] Question: Is there an impact from new participating insurance companies on premiums? - Management noted that the impact is marginal, with new entrants likely taking on less desirable business [44]