Core Viewpoint - American Financial Group (AFG) reported strong third-quarter earnings, beating estimates, but shares have underperformed the S&P 500 in the past month [1][2]. Financial Performance - AFG's Q3 2025 net operating earnings per share were $2.69, exceeding the Zacks Consensus Estimate by 14.5% and reflecting a 16.4% year-over-year increase [2]. - Total revenues for the quarter were $2.2 billion, down 1.4% year over year, primarily due to lower P&C insurance net earned premiums, but still beating the Zacks Consensus Estimate by 8.8% [4]. - Net investment income rose 2.5% year over year to $205 million, surpassing estimates [4]. - Total costs and expenses decreased 3.6% year over year to $2.1 billion, attributed to lower losses and expenses [4]. Segment Analysis - The Specialty P&C Insurance segment reported net written premiums of $2.2 billion, a decline of 4% year over year, with average renewal pricing up approximately 5% [5]. - The Property & Transportation Group saw net written premiums decrease by 9% year over year to $1 billion [5]. - The Specialty Casualty Group's net written premiums decreased by 0.3% year over year to $914 million, while the Specialty Financial segment's premiums increased by 1% to $287 million [6]. Underwriting Profit - Underwriting profit for the Specialty P&C Insurance segment increased by 19% year over year to $139 million, with pre-tax core operating earnings rising 12.7% to $328 million [7]. - Catastrophe losses were significantly reduced to $23 million from $90 million year over year, contributing to improved underwriting profit [8]. Financial Position - AFG ended Q3 with total cash and investments of $16.7 billion, a 5.7% increase from the end of 2024 [12]. - Long-term debt rose 23.4% to $1.8 billion, while book value per share increased by 2.8% to $57.59 [12]. Capital Management - AFG declared a special cash dividend of $2.00 per share, totaling approximately $167 million, in addition to its regular quarterly dividend of 88 cents per share [13]. Market Outlook - Following the earnings release, there has been an upward trend in consensus estimates, with a 5.2% increase noted [14]. - AFG holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [16]. Industry Comparison - AFG operates within the Zacks Insurance - Property and Casualty industry, where Berkshire Hathaway B has reported a 3% gain over the past month, with its own revenues showing a year-over-year increase of 2.1% [17].

Core Insights - Fairfax Financial Holdings Limited reported net earnings of $1,151.7 million ($52.04 per diluted share) for Q3 2025, an increase from $1,030.8 million ($42.62 per diluted share) in Q3 2024, reflecting strong performance in property and casualty insurance and reinsurance operations [1][2][8] - The company's book value per basic share rose to $1,203.65 as of September 30, 2025, up 15.1% from $1,059.60 at the end of 2024, adjusted for dividends [1][8] Financial Performance - Adjusted operating income from property and casualty insurance and reinsurance operations was $1,343.2 million, with a consolidated combined ratio of 92.0% and an undiscounted underwriting profit of $540.3 million [2][10] - Gross premiums written for Q3 2025 were $8,262.8 million, slightly down from $8,302.2 million in Q3 2024, while net premiums written increased to $6,623.8 million from $6,485.0 million [5][10] - Net gains on investments totaled $426.2 million, primarily from common stocks, which generated net gains of $524.6 million [3][11] Strategic Transactions - The company announced the sale of its 80% interest in Eurolife's life insurance operations to Eurobank for approximately $940 million, while acquiring a 45% equity interest in Eurobank's Cyprus-based property and casualty insurance company for about $68 million [4][20] - The transactions are expected to close in Q1 2026 and will allow the company to focus on property and casualty insurance while benefiting from the success of Eurolife [4][20] Investment and Portfolio Management - As of September 30, 2025, the company's portfolio investments totaled $70.9 billion, with $11.8 billion in cash and short-term investments and $32.7 billion in government and high-quality corporate bonds [10][16] - The total debt to total capital ratio, excluding non-insurance companies, increased to 26.5% from 24.8% at the end of 2024, primarily due to the issuance of unsecured senior notes [16][21] Shareholder Returns - The company redeemed all Series G and Series H preferred shares for $179.7 million, and has been actively repurchasing subordinate voting shares [16][20] - The total common shareholders' equity increased to $25.67 billion as of September 30, 2025, compared to $22.96 billion at the end of 2024 [21][24]

Financial Performance Highlights - Net earnings for the third quarter of 2025 were $215 million, compared to $181 million for the same period in 2024[3, 5] - Core net operating earnings for the third quarter of 2025 were $224 million, versus $194 million in 2024[3, 5] - Property and Casualty net written premiums for the third quarter of 2025 reached $2,252 million, slightly lower than the $2,353 million in 2024[3, 8] - Diluted earnings per share were $2.58 for the third quarter of 2025, compared to $2.16 in 2024[3, 6] - Book value per share, excluding AOCI, was $57.59 as of September 30, 2025, a slight decrease from $57.71 on September 30, 2024[3, 12] Property and Casualty Insurance Segment - Underwriting profit for Property and Casualty Insurance in Q3 2025 was $138 million, compared to $115 million in Q3 2024[5, 7] - Net investment income for Property and Casualty Insurance was $205 million in Q3 2025, equal to Q3 2024[5, 17] - The combined ratio for Specialty Property and Casualty was 930% for the third quarter of 2025, compared to 943% for the same period in 2024[3, 7, 8] Investment Portfolio - Total cash and investments amounted to $16,761 million as of September 30, 2025, compared to $15,741 million as of September 30, 2024[3, 16] - Fixed maturities constituted 64% of the total investment portfolio, with a fair value of $10,598 million as of September 30, 2025[20] - Average yield on the overall investment portfolio, net, was 497% for the three months ended September 30, 2025[17]

Financial Data and Key Metrics Changes - The accident year combined ratio improved to 90.4%, resulting in an underwriting profit of $10.2 million, compared to 93.5% last year [7] - Net income for Q3 2025 was $12.5 million, consistent with last year's results, while underlying operating income increased by 19% [8][13] - Book value per share rose from $48.35 to $48.88, with a return to shareholders of 1.8% for the quarter [13] Business Line Data and Key Metrics Changes - Gross written premiums increased by 9% to $108.4 million, with a 13% growth excluding terminated products [15] - The wholesale commercial business grew by 10% to $67.9 million, driven by a 4% average rate increase [15] - Assumed reinsurance gross premiums grew 58% to $15.6 million due to new treaties added [17] Market Data and Key Metrics Changes - The investment income for Q3 2025 was $17.9 million, a 9% increase from the previous year [13] - The total investment return was $14.5 million for Q3 2025, with an annualized return of 4% [17] Company Strategy and Development Direction - The company is focusing on achieving substantial scale in its agency and insurance services segment through organic growth, new product launches, and strategic acquisitions [11] - A new legal and organizational structure was launched, and the company plans to have all existing products on a new system architecture by 2026 [10][11] - The company has rebranded its group to Catalyx and acquired IATA, an AI-enabled digital distribution marketplace [11] Management's Comments on Operating Environment and Future Outlook - Management noted that while the market remains favorable, competition is increasing, particularly as new products are introduced [10][26] - The outlook for 2025 is positive, with expectations of at least double-digit premium growth [18][30] - Corporate expenses are expected to remain higher due to investments in new business opportunities [14] Other Important Information - The board has decided to move the stock listing to NASDAQ, which is seen as more appropriate for the company's new chapter [12] - Discretionary capital was reported at $273 million, up from $260 million [31] Q&A Session Summary Question: Explanation of investment losses - The $4 million loss was a fair value decline on equities, not realized through sale, and is considered short-term [21] Question: Restructuring of investment portfolio - The company has deployed $200 million into corporates and mortgage-backed securities, with only 4% of the portfolio currently in short-term investments [23] Question: Increase in competition - Competition is increasing in small commercial and collectibles sectors, but the company is still achieving expected pricing levels [26] Question: Future premium growth expectations - Management remains optimistic about achieving at least double-digit premium growth [30] Question: Discretionary capital update - Discretionary capital is currently $273 million, an increase from the previous figure [31] Question: Thoughts on implementing a buyback program - The board has decided to focus on growth opportunities rather than stock buybacks in the short term [33]

Financial Data and Key Metrics Changes - Net income for Q3 2025 was $1.1 billion, including $675 million after-tax from the increase in fair value of equity securities [5] - Non-GAAP operating income for Q3 2025 was $449 million, more than doubling from the previous year [5] - The property casualty combined ratio improved to 88.2%, a 9.2 percentage point improvement year-over-year [5][6] - The accident year 2025 combined ratio before catastrophe losses improved by 2.1 percentage points compared to accident year 2024 [6] Business Line Data and Key Metrics Changes - Consolidated property casualty net written premiums grew by 9% in Q3 2025 [7] - Commercial lines net written premiums increased by 5% with a combined ratio of 91.1%, improving by 1.9 percentage points [8] - Personal lines net written premiums grew by 14%, with a combined ratio of 88.2%, improving by 22.1 percentage points [8] - Excess and surplus lines saw an 11% increase in net written premiums with a combined ratio of 89.8%, improving by 5.5 percentage points [8] Market Data and Key Metrics Changes - Cincinnati RE's net written premiums decreased by 2% due to changing conditions in the property market, with a combined ratio of 80.8% [9] - Cincinnati Global's combined ratio was 61.2%, with premium growth of 6% [9] - Life insurance subsidiary reported a 40% net income growth, with term life insurance earned premiums growing by 5% [9] Company Strategy and Development Direction - The company remains confident in its long-term strategy and has seen strong investment income growth due to portfolio rebalancing [5] - The insurer's financial strength ratings were upgraded to AA- by Fitch Ratings, reflecting a decade of profitability and growth [16] - The company aims to continue building strong relationships with agents and policyholders while adapting to evolving market needs [16] Management's Comments on Operating Environment and Future Outlook - Management noted that while growth has slowed, the company is still performing well and remains profitable in commercial auto [20][21] - The company is focused on maintaining a rational and stable competitive environment despite pressures from legal system abuse and social inflation [59] - Management expressed confidence in the underwriting and pricing strategies, emphasizing a long-term view on profitability [60] Other Important Information - The company paid $134 million in dividends during Q3 2025 and repurchased approximately 404,000 shares [14] - The book value reached a record high of $98.76 per share, with $15.4 billion of GAAP consolidated shareholders' equity [15] Q&A Session Summary Question: Insights on commercial auto performance and prior year development - Management discussed favorable development across all lines, with commercial auto showing profitability despite some prior year development concerns [20][21][24] Question: General liability performance in light of industry issues - Management acknowledged pressures from legal system abuse but maintained confidence in their consistent underwriting processes [31][32] Question: New business trends and competitive pricing - Management reported strong new business numbers across all segments, emphasizing a focus on pricing and underwriting strategies [38][42] Question: Catastrophe reinsurance strategy for 2026 - Management confirmed a consistent approach to purchasing property CAT cover for balance sheet protection, with no changes anticipated [77][78]

Financial Data and Key Metrics Changes - Net income for Q3 2025 was $1.1 billion, including $675 million after-tax from the increase in fair value of equity securities still held [5] - Non-GAAP operating income for Q3 2025 was $449 million, more than double compared to the same quarter last year [5] - The property casualty combined ratio improved to 88.2%, a 9.2 percentage point improvement year-over-year, with catastrophe losses decreasing by 9.3 points [5][6] - The accident year 2025 combined ratio before catastrophe losses improved by 2.1 percentage points compared to accident year 2024 [6] Business Line Data and Key Metrics Changes - Consolidated property casualty net written premiums grew by 9% for the quarter [7] - Commercial lines net written premiums increased by 5% with a combined ratio of 91.1%, improving by 1.9 percentage points [8] - Personal lines net written premiums grew by 14%, with a combined ratio of 88.2%, improving by 22.1 percentage points [8] - Excess and surplus lines saw a net written premium growth of 11% and a combined ratio of 89.8%, improving by 5.5 percentage points [8] - Cincinnati RE's net written premiums decreased by 2%, with a combined ratio of 80.8% [9] - Cincinnati Global's combined ratio was 61.2%, with premium growth of 6% [9] - Life insurance subsidiary reported a 40% net income growth, with term life insurance earned premiums growing by 5% [9] Market Data and Key Metrics Changes - Average renewal price increases for most lines of business were lower than Q2 2025 but remained healthy, with commercial lines averaging mid-single-digit increases and E&S lines in the high single-digit range [7] - Personal lines included homeowner in the low double-digit range and personal auto in the high single-digit range [7] Company Strategy and Development Direction - The company remains confident in the long-term direction and strategy of its insurance business, focusing on pricing and risk segmentation [5][16] - The company aims to continue building strong relationships with independent insurance agents and enhancing underwriting decisions [5][16] - The insurer financial strength ratings were upgraded to AA- by Fitch Ratings, reflecting a decade of profitability and growth [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operating performance and long-term strategy, highlighting strong investment income growth and effective risk management [5][16] - The company is focused on maintaining a stable and consistent market presence, particularly in California, while adapting to updated risk models following significant fire losses [43][44] Other Important Information - The company paid $134 million in dividends during Q3 2025 and repurchased approximately 404,000 shares at an average price of $149.75 [14] - The quarter-end book value reached a record high of $98.76 per share, with $15.4 billion of GAAP consolidated shareholders' equity [15] Q&A Session Summary Question: Insights on commercial auto performance and prior year development - Management noted favorable development across all lines, with commercial auto showing profitability despite some prior year development concerns [20][21] Question: Concerns regarding large claims in commercial lines - Management indicated that while large losses increased, there was no unexpected concentration of large losses, and the overall trend remains manageable [25][26] Question: General liability performance compared to commercial auto - Management reiterated confidence in casualty lines, citing a consistent process and favorable development across accident years [31][32] Question: Changes in credit quality of the investment portfolio - Management confirmed a focus on high-quality bonds, maintaining a conservative approach to credit quality [34] Question: New business trends and competitive pricing environment - Management expressed optimism about new business growth across segments, emphasizing a disciplined approach to pricing and underwriting [38][39] Question: Catastrophe reinsurance strategy for 2026 - Management stated that the strategy for purchasing property CAT cover will remain consistent, focusing on balance sheet protection [77][78]

Financial Performance Highlights - Net earnings for the three months ended June 30, 2025 were $174 million, while core net operating earnings were $179 million[3] - Diluted earnings per share for the three months ended June 30, 2025 were $207, and core net operating earnings per share were $214[3] - Property and Casualty net written premiums for the three months ended June 30, 2025 were $1803 million[3] - The annualized return on equity was 150%, and the annualized core operating return on equity was 155% for the three months ended June 30, 2025[3] Property and Casualty Insurance Segment - Underwriting profit for Property and Casualty Insurance was $113 million for the three months ended June 30, 2025[5] - Net investment income for Property and Casualty Insurance was $179 million for the three months ended June 30, 2025[5] - The combined ratio for Specialty Property and Casualty was 931% for the three months ended June 30, 2025[3] Balance Sheet and Capitalization - Total assets as of June 30, 2025 were $30669 million[3] - Shareholders' equity, excluding AOCI, was $4648 million as of June 30, 2025[3] - The book value per share, excluding AOCI, was $5574 as of June 30, 2025[3] - Total principal amount of long-term debt was $1498 million as of June 30, 2025[14] Investment Portfolio - Total cash and investments were $16049 million as of June 30, 2025, with fixed maturities representing 66% of the investment portfolio[16, 20] - Average yield on the overall portfolio, net, was 450% for the three months ended June 30, 2025[17]

Financial Data and Key Metrics Changes - The underlying return on equity for Q2 2025 was 17%, exceeding the target range of 12% to 15% [5] - The core combined ratio improved by 3.8 points year-over-year to 89.5%, marking the eleventh consecutive quarter of underwriting profit [6][9] - Gross written premiums increased by 10% in Q2 and 14% in the first half of the year, with net premium growth of 8% in Q2 [6][20] - Book value per diluted share increased by 4% in Q2 and 10% year-to-date [13] Business Line Data and Key Metrics Changes - The insurance and services segment saw net premium growth of 15% in Q2, driven by strong performance in accident and health, property, and other specialty lines [6][24] - The combined ratio for the insurance and services segment improved to 89.3%, a 6.7 point improvement from the prior year [24] - The reinsurance segment experienced a 5% increase in gross premiums written, but net premiums written decreased by 1% in Q2 [32] Market Data and Key Metrics Changes - The accident and health business provided stable underwriting profit, with premiums up 14% in the first half of the year [26] - Casualty premiums decreased by 10% in the first half of the year as the company allocated capital to more attractive opportunities [27] - The pricing environment in aviation reinsurance remains stable, with major airline renewals seeing 5% to 10% increases [29] Company Strategy and Development Direction - The company aims to grow its insurance business more than its reinsurance business, focusing on selective capital allocation [7] - The strategy includes deepening long-term relationships with MGAs and rejecting over 80% of opportunities presented [8] - The company is committed to maintaining a lower volatility approach to its portfolio while seeking profitable growth [55] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance despite challenges in the aviation and casualty markets [5][6] - The company anticipates continued strong performance in the second half of 2025, supported by disciplined underwriting and targeted growth [14] - Management highlighted the importance of employee engagement and culture in driving business success [11] Other Important Information - The company won the program insurer of the year award at the program manager awards in New York [8] - The net promoter score increased by 16 points year-over-year, indicating improved employee engagement [11] - The company maintains a strong capital position with a BSCR ratio of 223% [10][41] Q&A Session Summary Question: Impact of new programs on top line growth - Management indicated that the impact of new programs is assessed on a case-by-case basis, with a focus on net premiums as relationships mature [47][49] Question: Growth in the insurance segment despite external market conditions - Management confirmed that accident and health is a key growth area, providing stability and allowing for risk-taking in other segments [52][54] Question: Differences between MGAs in London and the US - Management noted that the London market has seen a strategic investment to leverage expertise and grow business, contrasting with previous declines [61][63] Question: Net investment income guidance - Management stated that the guidance remains conservative, considering potential interest rate cuts in the latter half of the year [68][70] Question: Reserve development in accident and health - Management explained that the A&H business has a shorter tail, allowing for more immediate recognition of reserve development compared to casualty lines [74][76]

Financial Data and Key Metrics Changes - The company achieved net income of $58 million and a return on equity of 12.9%, with year-over-year increases in core gross and net premiums written [19][20] - The combined ratio for the core business was 95.4%, impacted by $59 million in losses from California wildfires, which was below the previous estimate [8][20] - The company reported a 12% year-over-year growth in gross written premiums and a 20% increase in net written premiums [10][19] Business Line Data and Key Metrics Changes - The Insurance and Services segment saw gross written premiums increase by $111 million or 21%, driven by growth in accident and health, property, and other specialty lines [27] - The Reinsurance segment experienced a slight decrease in gross premiums written by $2 million, with casualty premiums decreasing in double digits [35] - The accident and health business provided stable underwriting profit, with premiums up 19% in the first quarter [28] Market Data and Key Metrics Changes - The company noted double-digit rate hardening in U.S. Medical while U.S. Non-medical pricing remained largely flat [29] - Casualty rates remained elevated due to current loss trends, with positive rate changes exceeding loss costs [30] - The pricing environment within accident and health continues to meet the company's risk and return profile, with growth opportunities identified [30] Company Strategy and Development Direction - The company aims to become a high-performing specialty underwriter, focusing on stable and consistent returns for shareholders [17] - A deliberate strategy to retain a greater proportion of profitable underwriting books is in place, with a focus on underwriting margin [11] - The company is investing in data capabilities in the MGA space to enhance its competitive edge [12] Management's Comments on Operating Environment and Future Outlook - Management highlighted the increased uncertainty due to tariff changes but remains proactive in monitoring impacts and adjusting strategies as needed [15][16] - Inflation is a primary focus, with readiness to react quickly if necessary [15] - The company expects continued strong premium growth and aims for double-digit net premium growth for fiscal year 2025 [21] Other Important Information - The company completed a $753 million shareholder repurchase agreement and participated in a secondary offering, both of which were accretive for shareholders [7] - The company received positive outlook revisions from Fitch and AM Best, affirming its ratings [14][49] - The investment portfolio remains strong, with net investment income of $71 million for the quarter [43] Q&A Session Summary Question: What is the outlook for premium growth in 2025? - The company expects double-digit net premium growth for fiscal year 2025, driven by strong performance across various lines of business [21] Question: How is the company managing the impact of inflation? - Management stated that inflation remains a top focus, and the company is prepared to react quickly to any changes in the operating environment [15] Question: What are the expectations for the underwriting margin? - The company aims to maintain a strong underwriting margin, with a focus on retaining profitable books and disciplined underwriting practices [11]

Financial Data and Key Metrics Changes - The company achieved a net income of $58 million and a return on equity of 12.9% for Q1 2025, marking a year-over-year increase in core gross and net premiums written [19][20] - The combined ratio for the core business was reported at 95.4%, impacted by $59 million in losses from California wildfires, which was below the previous estimate of $60 million to $70 million [8][20] - The company reported a 12% year-over-year growth in gross written premiums and a 20% increase in net written premiums [9][10] Business Line Data and Key Metrics Changes - The accident and health segment saw a 19% increase in premiums, contributing significantly to overall growth, while casualty premiums decreased slightly as the company prioritized underwriting discipline [26][29] - The insurance and services segment achieved a combined ratio of 94%, reflecting a 4.4 point improvement from the prior year [27] - The reinsurance segment experienced a decrease in gross premiums written by $2 million, with casualty premiums decreasing in double digits [34] Market Data and Key Metrics Changes - The company noted double-digit rate hardening in U.S. Medical, while U.S. Non-medical pricing remained largely flat [28] - The pricing environment within accident and health continues to meet the company's risk and return profile, with growth opportunities identified [29] - The reinsurance segment's combined ratio was 97.1%, remaining profitable despite catastrophe losses [35] Company Strategy and Development Direction - The company aims to become a high-performing specialty underwriter, focusing on stable and consistent returns for shareholders [17] - A deliberate strategy to retain a greater proportion of profitable underwriting books is in place, with an emphasis on underwriting margin [11] - The company is investing in data capabilities within the MGA space to enhance its competitive edge [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased global uncertainty due to tariff changes but emphasized proactive monitoring and readiness to adjust pricing and risk appetite [15][16] - Inflation remains a primary focus, with the company prepared to react quickly if necessary [15] - The company expressed confidence in maintaining double-digit net premium growth for fiscal year 2025 [21] Other Important Information - The company completed a $753 million shareholder repurchase agreement and participated in a secondary offering, both of which were accretive for shareholders [6][7] - The company received positive outlook revisions from Fitch and AM Best, affirming its ratings [14][46] - The investment portfolio remains strong, with net investment income of $71 million for the quarter [42] Q&A Session Summary Question: What is the outlook for premium growth in 2025? - The company expects to maintain double-digit net premium growth for fiscal year 2025, driven by strong performance across various lines of business [21] Question: How is the company addressing the impact of inflation? - Management stated that inflation is a primary focus and the company is prepared to react quickly to any changes in the environment [15] Question: What are the expectations for the underwriting margin? - The company emphasized that underwriting margin remains the number one priority, with a disciplined approach yielding positive results [11]