American Financial Group, Inc. Announces First Quarter Earnings
-
Core net operating earnings
$0.86 per share -
Adjusted book value per share
$40.07 ; growth of 4% since year end 2011 - Repurchased 1.5 million shares during the quarter
-
Full year 2012 core net operating earnings guidance increased to
$3.40 - $3.80 per share
Core net operating earnings were
Effective
During the first quarter of 2012, AFG repurchased 1.5 million shares of
common stock at an average price per share of
AFG’s net earnings attributable to shareholders, determined in accordance with generally accepted accounting principles (“GAAP”), include realized investment gains and losses and may not be indicative of its ongoing core operations. The following table reconciles net earnings attributable to shareholders to core net operating earnings, a non-GAAP financial measure that AFG believes is a useful tool for investors and analysts in analyzing ongoing operating trends.
In millions, except per share amounts |
Three months ended
March 31, |
||||||
2012 |
2011
(as adjusted) |
||||||
Components of net earnings attributable to shareholders: | |||||||
Core net operating earnings(a) | $ | 85 | $ | 91 | |||
Realized gains (losses) | 28 | (3 | ) | ||||
Net earnings attributable to shareholders | $ | 113 | $ | 88 | |||
Components of Earnings Per Share: | |||||||
Core net operating earnings | $ | 0.86 | $ | 0.85 | |||
Realized gains (losses) | 0.28 | (0.02 | ) | ||||
Diluted Earnings Per Share | $ | 1.14 | $ | 0.83 | |||
Footnote (a) is contained in the accompanying Notes To Financial Schedules at the end of this release.
“We remain committed to deploying excess capital in an effective manner.
AFG’s share repurchases during the first quarter of 2012 were made at
approximately 95% of the Company’s
“Based on results in our
The P&C specialty insurance operations generated an
underwriting profit of
Gross and net written premiums were up 9% and 4%, respectively, in the 2012 first quarter compared to the same quarter a year earlier, due primarily to increased premiums in our Specialty Casualty segment. Further details of the P&C Specialty operations may be found in the accompanying schedules.
The
The
The Specialty Financial Group reported an underwriting
profit of
Annuity and Supplemental Insurance Results
Statutory premiums of
Investments
AFG recorded first quarter net realized gains of
More information about the components of our investment portfolio may be found in our Financial and Investment Supplements, which are posted on our website.
About
Forward Looking Statements
This press release contains certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements in this press release not dealing with historical results are forward-looking and are based on estimates, assumptions and projections. Examples of such forward-looking statements include statements relating to: the Company's expectations concerning market and other conditions and their effect on future premiums, revenues, earnings and investment activities; recoverability of asset values; expected losses and the adequacy of reserves for asbestos, environmental pollution and mass tort claims; rate changes; and improved loss experience.
Actual results and/or financial condition could differ materially from
those contained in or implied by such forward-looking statements for a
variety of reasons including but not limited to: changes in financial,
political and economic conditions, including changes in interest and
inflation rates, currency fluctuations and extended economic recessions
or expansions in the U.S. and abroad; performance of securities markets;
AFG’s ability to estimate accurately the likelihood, magnitude and
timing of any losses in connection with investments in the non-agency
residential mortgage market; new legislation or declines in credit
quality or credit ratings that could have a material impact on the
valuation of securities in AFG’s investment portfolio; the availability
of capital; regulatory actions (including changes in statutory
accounting rules); changes in the legal environment affecting AFG or its
customers; tax law and accounting changes; levels of natural
catastrophes and severe weather, terrorist activities (including any
nuclear, biological, chemical or radiological events), incidents of war
or losses resulting from civil unrest and other major losses;
development of insurance loss reserves and establishment of other
reserves, particularly with respect to amounts associated with asbestos
and environmental claims; changes in persistency of in-force policies;
availability of reinsurance and ability of reinsurers to pay their
obligations; the unpredictability of possible future litigation if
certain settlements of current litigation do not become effective;
trends in persistency, mortality and morbidity; competitive pressures,
including those in the annuity bank distribution channels, the ability
to obtain adequate rates and policy terms; changes in AFG's credit
ratings or the financial strength ratings assigned by major ratings
agencies to our operating subsidiaries; and other factors identified in
our filings with the
The forward-looking statements herein are made only as of the date of this press release. The Company assumes no obligation to publicly update any forward-looking statements.
Conference Call
The Company will hold a conference call to discuss 2012 first quarter
results at
A replay will also be available two hours following the completion of
the call and will remain available until
(Financial summaries follow)
This earnings release and additional Financial and Investment Supplements are available in the Investor Relations section of AFG's website: www.AFGinc.com.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES |
||||||||
Three months ended
March 31, |
||||||||
2012 |
2011
(as adjusted) |
|||||||
Revenues | ||||||||
P&C insurance premiums | $ | 603 | $ | 599 | ||||
Life, accident & health premiums | 105 | 110 | ||||||
Investment income | 322 | 300 | ||||||
Realized gains (losses) | 44 | (3 | ) | |||||
Income (loss) of managed investment entities: | ||||||||
Investment income | 29 | 25 | ||||||
Loss on change in fair value of assets/liabilities |
(29 | ) | (33 | ) | ||||
Other income | 39 | 41 | ||||||
1,113 | 1,039 | |||||||
Costs and expenses | ||||||||
P&C insurance losses & expenses | 555 | 544 | ||||||
Annuity, life, accident & health benefits & expenses |
269 |
262 |
||||||
Interest on borrowed money | 21 | 21 | ||||||
Expenses of managed investment entities | 19 | 18 | ||||||
Other operating and general expenses | 103 | 92 | ||||||
967 | 937 | |||||||
Operating earnings before income taxes |
146 |
102 |
||||||
Provision for income taxes(b) | 58 | 48 | ||||||
Net earnings including noncontrolling Interests |
88 |
54 |
||||||
Less: Net earnings (loss) attributable to noncontrolling interests |
(25 |
) |
(34 |
) |
||||
Net earnings attributable to shareholders | $ | 113 | $ | 88 | ||||
Diluted Earnings per Common Share | $ | 1.14 | $ | .83 | ||||
Average number of Diluted Shares | 99.4 | 106.2 | ||||||
|
||||||||
Selected Balance Sheet Data: |
March 31,
2012 |
December 31, (as adjusted) |
||||||
Total Cash and Investments | $ | 26,478 | $ | 25,577 | ||||
Long-term Debt |
$ |
931 |
$ |
934 |
||||
Shareholders’ Equity(c) | $ | 4,580 | $ | 4,411 | ||||
Shareholders’ Equity (Excluding appropriated retained earnings & unrealized gains/losses on fixed maturities)(c) |
$ |
3,894 |
$ |
3,779 |
||||
Book Value Per Share: | ||||||||
Excluding appropriated retained earnings | $ | 45.65 | $ | 43.32 | ||||
Excluding appropriated retained earnings and unrealized gains/losses on fixed maturities |
$ | 40.07 | $ | 38.63 | ||||
Common Shares Outstanding | 97.2 | 97.8 | ||||||
Footnotes (b) and (c) are contained in the accompanying Notes To Financial schedules at the end of this release.
AMERICAN FINANCIAL GROUP, INC. |
|||||||||||
Three months ended | % | ||||||||||
March 31, | Change | ||||||||||
2012 | 2011 | ||||||||||
Gross written premiums | $ | 823 | $ | 753 | 9 | % | |||||
Net written premiums | $ | 607 | $ | 584 | 4 | % | |||||
Ratios (GAAP)- as adjusted: | |||||||||||
Loss & LAE ratio | 57 | % | 57 | % | |||||||
Expense ratio | 35 | % | 34 | % | |||||||
Combined Ratio | 92 | % | 91 | % | |||||||
|
|||||||||||
Supplemental: (d) |
|||||||||||
Gross Written Premiums: | |||||||||||
Property & Transportation | $ | 328 | $ | 318 | 3 | % | |||||
Specialty Casualty | 366 | 319 | 15 | % | |||||||
Specialty Financial | 129 | 116 | 11 | % | |||||||
Other | - | - | - | ||||||||
$ | 823 | $ | 753 | 9 | % | ||||||
Net Written Premiums: | |||||||||||
Property & Transportation | $ | 250 | $ | 254 | (2 | %) | |||||
Specialty Casualty | 247 | 214 | 15 | % | |||||||
Specialty Financial | 93 | 98 | (5 | %) | |||||||
Other | 17 | 18 | - | ||||||||
$ | 607 | $ | 584 | 4 | % | ||||||
Combined Ratio (GAAP)– as adjusted: | |||||||||||
Property & Transportation | 90 | % | 86 | % | |||||||
Specialty Casualty | 98 | % | 99 | % | |||||||
Specialty Financial | 85 | % | 86 | % | |||||||
Aggregate Specialty Group | 92 | % | 91 | % | |||||||
|
Three months ended |
Three months ended |
||||||||||
2012 |
Points on
Combined |
2011 |
Points on |
|||||||||
Reserve Development Favorable/(Unfavorable): | ||||||||||||
Property & Transportation | $ | 10 | 4 | $ | 22 | 9 | ||||||
Specialty Casualty | 1 | 1 | - | - | ||||||||
Specialty Financial | 7 | 7 | (4 | ) | (4 | ) | ||||||
Other | 1 | - | 3 | - | ||||||||
$ | 19 | 3 | $ | 21 | 4 |
Footnote (d) is contained in the accompanying Notes To Financial schedules at the end of this release.
AMERICAN FINANCIAL GROUP, INC. |
|||||||||
Three months ended
March 31, |
%
Change |
||||||||
2012 | 2011 | ||||||||
Retirement annuity premiums: | |||||||||
Fixed annuities | $ | 82 | $ | 101 | (19 | %) | |||
Indexed annuities | 431 | 281 | 53 | % | |||||
Bank annuities | 275 | 271 | 1 | % | |||||
Variable annuities | 15 | 19 | (21 | %) | |||||
803 | 672 | 19 | % | ||||||
Supplemental insurance | 95 | 98 | (3 | %) | |||||
Life insurance | 8 | 9 | (11 | %) | |||||
Total statutory premiums | $ | 906 | $ | 779 | 16 | % | |||
AMERICAN FINANCIAL GROUP, INC. |
||||||||
a) GAAP to Non GAAP Reconciliation-Components of core net operating earnings: |
||||||||
In millions |
Three months ended
March 31, |
|||||||
2012 |
2011
(as adjusted) |
|||||||
P&C operating earnings | $ | 100 | $ | 123 | ||||
Annuity & supplemental insurance operating earnings |
67 | 54 | ||||||
Interest & other corporate expense | (39 | ) | (38 | ) | ||||
Core operating earnings before income taxes | 128 | 139 | ||||||
Related income taxes | 43 | 48 | ||||||
Core net operating earnings | $ | 85 | $ | 91 | ||||
b) Operating income before income taxes includes
c) Shareholders’ Equity at
d) Supplemental Notes:
- Property & Transportation includes primarily physical damage and liability coverage for buses, trucks and recreational vehicles, inland and ocean marine, agricultural-related products and other property coverages.
- Specialty Casualty includes primarily excess and surplus, general liability, executive liability, umbrella and excess liability, customized programs for small to mid-sized businesses and workers’ compensation insurance.
- Specialty Financial includes risk management insurance programs for lending and leasing institutions (including collateral and mortgage protection insurance), surety and fidelity products and trade credit insurance.
- Other includes an internal reinsurance facility.
Source:
American Financial Group, Inc.
Diane P. Weidner, Assistant Vice
President - Investor Relations, 513-369-5713
or
Websites:
www.AFGinc.com
www.GreatAmericanInsuranceGroup.com
www.GAFRI.com