American Financial Group Inc Earnings
American Financial Group Inc (NYSE: AFG) has reported its second-quarter earnings for 2025, announcing a net income of $174 million, translating to $2.07 per share. This result, while substantial, shows a decline from the $209 million, or $2.49 per share, recorded in the second quarter of 2024. Despite facing challenges such as lower underwriting profits and diminished returns on alternative investments, the company has delivered a robust performance, achieving an annualized return on equity (ROE) of 15.0%.
American Financial Group Inc Results
The company's core net operating earnings stood at $179 million, or $2.14 per share, compared to $215 million ($2.56 per share) in the previous year. This decline is reflective of reduced profitability in underwriting and alternative investment returns.
| Metrics | Q2 2025 | Q2 2024 | Year-over-Year Change |
|---|---|---|---|
| Net Earnings | $174 million | $209 million | -16.7% |
| EPS (Earnings per Share) | $2.07 | $2.49 | -16.9% |
| Core Net Operating Earnings | $179 million | $215 million | -16.7% |
| Core Net Operating EPS | $2.14 | $2.56 | -16.4% |
| Annualized ROE | 15.0% | 18.0% | -3.0 percentage points |
Revenue Breakdown
American Financial Group's revenue is driven by its Specialty Property and Casualty (P&C) insurance operations, which include the Specialty Financial Group, Specialty Casualty Group, and Property and Transportation Group. The overall performance of these segments in the second quarter is summarized below:
| Segment | Q2 2025 Underwriting Profit | Q2 2024 Underwriting Profit | Year-over-Year Change |
|---|---|---|---|
| Specialty P&C Insurance | $114 million | $151 million | -24.5% |
| Property and Transportation Group | $27 million | $40 million | -32.5% |
| Specialty Casualty Group | $49 million | $86 million | -43.0% |
| Specialty Financial Group | $38 million | $25 million | +52.0% |
Segment Performance Analysis
The Specialty P&C insurance operations reported a combined ratio of 93.1%, slightly higher than the 90.5% in Q2 2024, indicating greater claims and expenses relative to premium income. Despite this, some segments like the Specialty Financial Group showed impressive growth, with a 52% increase in underwriting profit year-over-year, largely attributed to strong performance in the financial institutions and surety businesses.
Conversely, the Specialty Casualty Group experienced a decline in underwriting profit due to pressures in the excess and surplus lines and social services businesses, which faced a challenging market environment.
Key Developments
Significant developments in the quarter included a 10% increase in gross written premiums, propelled by stronger reporting of crop premiums. NULLtheless, underwriting profit across segments was variable, influenced by disparities in catastrophe losses and prior year reserve developments, particularly in the Property and Transportation Group.
Comments from Company Officers
Carl H. Lindner III and S. Craig Lindner, Co-CEOs, emphasized the firm's commitment to delivering shareholder value despite muted returns from alternative investments. "We are pleased to report an annualized core operating return on equity of 15.5% despite muted quarterly returns from alternative investments," said Carl H. Lindner III.
Dividends and Share Repurchases
AFG's capital management strategy includes regular returns to shareholders, comprising $39 million in share repurchases and $0.80 per share in cash dividends during the quarter. Additionally, AFG's growth in book value per share plus dividends for the full year has shown impressive progress, achieving an 8.6% increase year-to-date.
American Financial Group Inc Stock Forecast
Given the financial performance and ongoing strategic initiatives, projections for AFG's stock price depend on a myriad of factors including growth in premium revenues, profitability from niche businesses, and capital returns to shareholders.
- High Projection : $152.00, based on continued robust performance in core insurance segments and favorable underwriting profits exceeding current estimates.
- Low Projection : $140.00, if economic headwinds intensify and alternative investment returns continue to underperform, impacting the overall earnings growth.
These projections take into account AFG's market capitalization of approximately $10.5 billion, its effective capital management policies, and strategic expansion into profitable niches. They offer a balanced estimate reflective of both potential upsides and inherent risks tied to market conditions.
