American Financial Group, Inc. Announces Record 2016 Fourth Quarter and Full Year Results
-
Record net earnings of
$4.33 per share in the fourth quarter and$7.33 per share for the full year -
Record fourth quarter core net operating earnings of
$1.98 per share; up 30% from 2015 -
Record core net operating earnings per share of
$6.03 for the full year; up 11% from 2015 - Full year 2016 ROE of 14.8%; 2016 core operating ROE of 12.2%
-
Full year 2017 core net operating earnings guidance between
$6.20 - $6.70 per share
Core net operating earnings were
During the fourth quarter of 2016, AFG repurchased approximately 116,000
shares of common stock at an average price per share of
AFG’s net earnings attributable to shareholders, determined in accordance with U.S. generally accepted accounting principles (“GAAP”), include certain items that may not be indicative of its ongoing core operations. The table below identifies such items and reconciles net earnings attributable to shareholders to core net operating earnings, a non-GAAP financial measure. AFG believes that its core net operating earnings provides management, financial analysts, rating agencies and investors with an understanding of the results from the ongoing operations of the Company by excluding the impact of net realized investment gains and losses and other special items that are not necessarily indicative of operating trends. AFG’s management uses core net operating earnings to evaluate financial performance against historical results because it believes this provides a more comparable measure of its continuing business. Core net operating earnings is also used by AFG’s management as a basis for strategic planning and forecasting.
In millions, except per share amounts | Three months ended | Twelve months ended | ||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Components of net earnings attributable to shareholders: | ||||||||||||||||||||
Core operating earnings before income taxes | $ | 266 | $ | 220 | $ | 840 | $ | 762 | ||||||||||||
Pretax non-core items: |
||||||||||||||||||||
Realized gains (losses) on securities | 51 | (21 | ) | 19 | (19 | ) | ||||||||||||||
Realized gain (loss) on sale of subsidiaries: | ||||||||||||||||||||
Long-term care business | - | (4 | ) | 2 | (166 | ) | ||||||||||||||
Other | - | - | - | 5 | ||||||||||||||||
Gain on sale of apartment properties and hotel | - | 15 | 32 | 66 | ||||||||||||||||
Special A&E charges | - | - | (41 | ) | (79 | ) | ||||||||||||||
Neon exited lines charge | - | - | (65 | ) | - | |||||||||||||||
Loss on early retirement of debt | - | - | - | (4 | ) | |||||||||||||||
Earnings before income taxes | 317 | 210 | 787 | 565 | ||||||||||||||||
Provision (credit) for income taxes: | ||||||||||||||||||||
Core operating earnings | 88 | 83 | 290 | 263 | ||||||||||||||||
Non-core items: | ||||||||||||||||||||
Tax benefit related to National Interstate merger | (66 | ) | - | (66 | ) | - | ||||||||||||||
Tax benefit related to Neon restructuring | (111 | ) | - | (111 | ) | - | ||||||||||||||
Other | 18 | (3 | ) | 6 | (68 | ) | ||||||||||||||
Total provision (credit) for income taxes | (71 | ) | 80 | 119 | 195 | |||||||||||||||
Net earnings, including noncontrolling interests | 388 | 130 | 668 | 370 | ||||||||||||||||
Less net earnings attributable to noncontrolling interests: | ||||||||||||||||||||
Core operating earnings | 2 | 1 | 16 | 13 | ||||||||||||||||
Non-core items | 1 | - | 3 | 5 | ||||||||||||||||
Total net earnings attributable to noncontrolling interests | 3 | 1 | 19 | 18 | ||||||||||||||||
Net earnings attributable to shareholders | $ | 385 | $ | 129 | $ | 649 | $ | 352 | ||||||||||||
Net earnings: | ||||||||||||||||||||
Core net operating earnings(a) | $ | 176 | $ | 136 | $ | 534 | $ | 486 | ||||||||||||
Non-core items | 209 | (7 | ) | 115 | (134 | ) | ||||||||||||||
Net earnings attributable to shareholders | $ | 385 | $ | 129 | $ | 649 | $ | 352 | ||||||||||||
Components of Earnings Per Share: | ||||||||||||||||||||
Core net operating earnings(a) | $ | 1.98 | $ | 1.52 | $ | 6.03 | $ | 5.44 | ||||||||||||
Non-core Items: |
||||||||||||||||||||
Realized gains (losses) on securities | 0.36 | (0.15 | ) | 0.16 | (0.12 | ) | ||||||||||||||
Realized gain (loss) on sale of subsidiaries: | ||||||||||||||||||||
Long-term care business | - |
(0.03 |
) | 0.01 |
(1.21 |
) | ||||||||||||||
Other | - |
- |
|
- |
0.04 |
|
||||||||||||||
Gain on sale of apartment properties and hotel | - |
(0.11 |
|
0.17 |
0.40 |
|
||||||||||||||
Special A&E charges | - | - | (0.30 | ) | (0.58 | ) | ||||||||||||||
Neon exited lines charge | - | - | (0.73 | ) | - | |||||||||||||||
Loss on early retirement of debt | - | - | - |
(0.03 |
) | |||||||||||||||
Tax benefit related to National Interstate merger | 0.74 | - | 0.74 |
- |
|
|||||||||||||||
Tax benefit related to Neon restructuring | 1.25 | - | 1.25 |
- |
|
|||||||||||||||
Diluted Earnings Per Share | $ | 4.33 | $ | 1.45 | $ | 7.33 | $ | 3.94 | ||||||||||||
Footnote (a) is contained in the accompanying Notes to Financial Schedules at the end of this release. |
||||||||||||||||||||
“AFG had approximately
“Based on current information, we expect core net operating earnings in
2017 to be between
The Specialty P&C insurance operations generated underwriting profit of
Gross and net written premiums were up 6% and 3%, respectively, in the
2016 fourth quarter compared to the same period in 2015. Each of our
Specialty P&C groups reported growth during the quarter. Average renewal
pricing across our entire
The
Fourth quarter 2016 gross and net written premiums in this group were
12% and 4% higher, respectively, than the comparable prior year period.
The increase was primarily attributed to higher crop insurance premiums,
the large majority of which were ceded to the
The
Gross and net written premiums increased 3% and 1%, respectively, for
the fourth quarter of 2016 when compared to the same prior year period.
Higher premiums in our targeted markets and executive liability
businesses were partially offset by lower premiums in our excess and
surplus lines operations, primarily the result of tougher underwriting
standards related to
The
Gross and net written premiums both increased by 1% in the 2016 fourth quarter when compared to the same 2015 period. Renewal pricing in this group decreased approximately 1% on average for both the fourth quarter and for the full year of 2016.
Mr. Lindner continued, “Despite competitive conditions, I’m optimistic about 2017. We are forecasting an overall calendar year combined ratio in the 92% to 94% range, and we are targeting growth in net written premiums in the range of 2% to 6%.”
Further details about AFG’s Specialty P&C operations may be found in the accompanying schedules and in our Quarterly Investor Supplement, which is posted on our website.
Annuity Segment
The Annuity Segment reported a record
Components of Core Annuity Operating Earnings Before Income Taxes |
||||||||||||||||||||||||||
In millions | Three months ended | Pct. | Twelve months ended | Pct. | ||||||||||||||||||||||
December 31, | Change | December 31, | Change | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||
Annuity earnings before fair value accounting for FIAs | $ | 103 | $ | 96 | 7 | % | $ | 395 | $ | 354 | 12 | % | ||||||||||||||
Impact of fair value accounting for FIAs |
29 | 5 |
nm |
(27 | ) | (23 | ) |
nm |
||||||||||||||||||
Pretax Annuity Operating Earnings | $ | 132 | $ | 101 | 31 | % | $ | 368 | $ | 331 | 11 | % | ||||||||||||||
Annuity Earnings Before Fair Value Accounting for FIAs – AFG’s fourth quarter 2016 earnings continued to benefit from favorable investment results, including the continued significant positive impact of certain investments required to be marked to market through earnings. In addition, AFG’s quarterly average annuity investments and reserves grew approximately 11% and 12%, respectively, year-over-year; the benefit of this growth was partially offset by the runoff of higher yielding investments.
In the fourth quarters of 2016 and 2015, AFG conducted detailed reviews
(“unlocking”) of the major actuarial assumptions underlying its annuity
operations. The review resulted in a positive unlocking of
Impact of Fair Value Accounting for FIAs – Variances from expectations of certain items (such as projected interest rates, option costs and surrenders), as well as changes in the stock market, have an impact on the accounting for FIAs; these accounting adjustments are recognized through AFG’s reported core earnings. Many of these adjustments are not economic in nature, but rather impact the timing of reported results.
In the fourth quarter of 2016, a significant increase in interest rates, as well as an increase in the stock market, resulted in a large favorable impact on annuity earnings. This compares to a relatively small favorable impact on annuity earnings in the fourth quarter of 2015, primarily the result of the increase in the stock market.
Annuity Premiums – AFG’s Annuity Segment reported statutory
premiums of
Assuming the rule is effective in
2017 Annuity Outlook – AFG expects that 2017 annuity sales will
be flat to down 10% compared to the
This guidance assumes (i) the
More information about premiums and the results of operations for our Annuity Segment may be found in AFG’s Quarterly Investor Supplement, which is posted on our website.
Investments
AFG recorded fourth quarter 2016 net realized gains of
For the three months ended
More information about the components of our investment portfolio may be found in our Quarterly Investor Supplement, which is posted on our website.
Tax Benefit Related to National Interstate Merger
As previously announced, on
Tax Benefit Related to Neon Restructuring
During
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, investment activities and the amount and timing of share repurchases; 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/or abroad; performance of securities
markets; 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; availability
of reinsurance and ability of reinsurers to pay their obligations;
trends in persistency and mortality; competitive pressures; 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; the impact of the conditions in
the international financial markets and the global economy (including
those associated 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 2016 fourth quarter
and full year results at
A replay will be available approximately two hours following the
completion of the call and will remain available until
The conference and accompanying webcast slides will also be broadcast live over the Internet. To listen to the call via the Internet, go to the Investor Relations page on AFG’s website, www.AFGinc.com, and follow the instructions under Webcasts and Presentations.
The archived webcast will be available immediately after the call via
the same link on the Investor Relations page until
(Financial summaries follow)
This earnings release and AFG’s Quarterly Investor Supplement are available in the Investor Relations section of AFG’s website: www.AFGinc.com.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES | |||||||||||||||||||
SUMMARY OF EARNINGS AND SELECTED BALANCE SHEET DATA | |||||||||||||||||||
(In Millions, Except Per Share Data) | |||||||||||||||||||
Three months ended | Twelve months ended | ||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Revenues |
|||||||||||||||||||
P&C insurance net earned premiums | $ | 1,144 | $ | 1,120 | $ | 4,328 | $ | 4,224 | |||||||||||
Life, accident & health net earned premiums | 6 | 24 | 24 | 104 | |||||||||||||||
Net investment income | 429 | 416 | 1,696 | 1,633 | |||||||||||||||
Realized gains (losses) on: | |||||||||||||||||||
Securities | 51 | (21 | ) | 19 | (19 | ) | |||||||||||||
Subsidiaries | - | (4 | ) | 2 | (161 | ) | |||||||||||||
Income (loss) of managed investment entities: | |||||||||||||||||||
Investment income | 49 | 43 | 190 | 155 | |||||||||||||||
Gain (loss) on change in fair value of assets/liabilities |
6 | (18 | ) | 15 | (34 | ) | |||||||||||||
Other income | 52 | 58 | 224 | 243 | |||||||||||||||
Total revenues | 1,737 | 1,618 | 6,498 | 6,145 | |||||||||||||||
Costs and expenses |
|||||||||||||||||||
P&C insurance losses & expenses | 1,040 | 1,026 | 4,111 | 4,015 | |||||||||||||||
Annuity, life, accident & health benefits & expenses | 222 | 247 | 1,019 | 1,042 | |||||||||||||||
Interest charges on borrowed money | 21 | 17 | 77 | 75 | |||||||||||||||
Expenses of managed investment entities | 42 | 32 | 151 | 112 | |||||||||||||||
Other expenses | 95 | 86 | 353 | 336 | |||||||||||||||
Total costs and expenses | 1,420 | 1,408 | 5,711 | 5,580 | |||||||||||||||
Earnings before income taxes |
317 |
210 |
787 |
565 |
|||||||||||||||
Provision for income taxes(b) | (71 | ) | 80 | 119 | 195 | ||||||||||||||
Net earnings including noncontrolling interests | 388 | 130 | 668 | 370 | |||||||||||||||
Less: Net earnings (loss) attributable to noncontrolling interests |
3 |
1 |
19 |
18 |
|||||||||||||||
Net earnings attributable to shareholders | $ | 385 | $ | 129 | $ | 649 | $ | 352 | |||||||||||
Diluted earnings per Common Share | $ | 4.33 | $ | 1.45 | $ | 7.33 | $ | 3.94 | |||||||||||
Average number of diluted shares | 88.8 | 89.2 | 88.5 | 89.4 | |||||||||||||||
December 31, | December 31, | |||||
Selected Balance Sheet Data: |
2016 | 2015 | ||||
Total cash and investments | $ | 41,433 | $ | 37,736 | ||
Long-term debt(c) | $ | 1,283 | $ | 998 | ||
Shareholders’ equity(d) | $ | 4,916 | $ | 4,592 | ||
Shareholders’ equity (excluding unrealized gains/losses related to fixed maturities)(d) |
$ |
4,617 |
$ |
4,313 |
||
Book value per share |
$ | 56.55 | $ | 52.50 | ||
Book value per share (excluding unrealized gains/losses related to fixed maturities) |
$ | 53.11 | $ | 49.32 | ||
Common Shares Outstanding |
86.9 |
87.5 |
||||
Footnotes (b), (c) and (d) are contained in the accompanying Notes to Financial Schedules at the end of this release. |
||||||
AMERICAN FINANCIAL GROUP, INC. | ||||||||||||||||||||||||||||
SPECIALTY P&C OPERATIONS | ||||||||||||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||||||||||
Three months ended | Pct. | Twelve months ended | Pct. | |||||||||||||||||||||||||
December 31, | Change | December 31, | Change | |||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||
Gross written premiums | $ | 1,441 | $ | 1,356 | 6 | % | $ | 5,981 | $ | 5,832 | 3 | % | ||||||||||||||||
Net written premiums | $ | 1,083 | $ | 1,056 | 3 | % | $ | 4,386 | $ | 4,327 | 1 | % | ||||||||||||||||
Ratios (GAAP): | ||||||||||||||||||||||||||||
Loss & LAE ratio | 63.7 | % | 61.8 | % | 61.7 | % | 62.2 | % | ||||||||||||||||||||
Underwriting expense ratio | 26.7 | % | 29.2 | % | 30.6 | % | 30.9 | % | ||||||||||||||||||||
Specialty Combined Ratio | 90.4 | % | 91.0 | % | 92.3 | % | 93.1 | % | ||||||||||||||||||||
Combined Ratio – P&C Segment |
90.4 |
% |
91.0 |
% |
94.5 |
% |
94.7 |
% |
||||||||||||||||||||
Supplemental Information:(e) |
||||||||||||||||||||||||||||
Gross Written Premiums: | ||||||||||||||||||||||||||||
Property & Transportation | $ | 577 | $ | 515 | 12 | % | $ | 2,504 | $ | 2,455 | 2 | % | ||||||||||||||||
Specialty Casualty | 684 | 661 | 3 | % | 2,792 | 2,739 | 2 | % | ||||||||||||||||||||
Specialty Financial | 180 | 179 | 1 | % | 685 | 637 | 8 | % | ||||||||||||||||||||
Other | - | 1 | na | - | 1 | na | ||||||||||||||||||||||
$ | 1,441 | $ | 1,356 | 6 | % | $ | 5,981 | $ | 5,832 | 3 | % | |||||||||||||||||
Net Written Premiums: | ||||||||||||||||||||||||||||
Property & Transportation | $ | 394 | $ | 378 | 4 | % | $ | 1,672 | $ | 1,636 | 2 | % | ||||||||||||||||
Specialty Casualty | 510 | 503 | 1 | % | 2,036 | 2,052 | (1 | %) | ||||||||||||||||||||
Specialty Financial | 154 | 152 | 1 | % | 572 | 540 | 6 | % | ||||||||||||||||||||
Other | 25 | 23 | 9 | % | 106 | 99 | 7 | % | ||||||||||||||||||||
$ | 1,083 | $ | 1,056 | 3 | % | $ | 4,386 | $ | 4,327 | 1 | % | |||||||||||||||||
Combined Ratio (GAAP): | ||||||||||||||||||||||||||||
Property & Transportation | 83.9 | % | 92.4 | % | 90.0 | % | 96.9 | % | ||||||||||||||||||||
Specialty Casualty | 97.4 | % | 90.2 | % | 96.1 | % | 92.7 | % | ||||||||||||||||||||
Specialty Financial | 86.0 | % | 88.7 | % | 84.9 | % | 83.1 | % | ||||||||||||||||||||
Aggregate Specialty Group | 90.4 | % | 91.0 | % | 92.3 | % | 93.1 | % | ||||||||||||||||||||
Three months ended | Twelve months ended | ||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||
Reserve Development (Favorable)/Adverse: | |||||||||||||||||||||||
Property & Transportation | $ | 13 | $ | 8 | $ | (21 | ) | $ | 15 | ||||||||||||||
Specialty Casualty | 3 | (7 | ) | (13 | ) | (11 | ) | ||||||||||||||||
Specialty Financial | (6 | ) | (5 | ) | (23 | ) | (30 | ) | |||||||||||||||
Other | - | (1 | ) | (4 | ) | (11 | ) | ||||||||||||||||
Specialty Group Excluding A&E and Neon Charge | 10 | (5 | ) | (61 | ) | (37 | ) | ||||||||||||||||
Special A&E Reserve Charge – P&C Run-off | - | - | 36 | 67 | |||||||||||||||||||
Neon Exited Lines Charge and Other | - | - | 57 | 3 | |||||||||||||||||||
Total Reserve Development | $ | 10 | $ | (5 | ) | $ | 32 | $ | 33 | ||||||||||||||
Points on Combined Ratio: |
|||||||||||||||||||||||
Property & Transportation | 3.0 | 1.8 | (1.2 | ) | 0.9 | ||||||||||||||||||
Specialty Casualty | 0.5 | (1.4 | ) | (0.7 | ) | (0.5 | ) | ||||||||||||||||
Specialty Financial | (4.5 | ) | (3.6 | ) | (4.0 | ) | (5.7 | ) | |||||||||||||||
Aggregate Specialty Group | 0.9 | (0.4 | ) | (1.4 | ) | (0.8 | ) | ||||||||||||||||
Total P&C Segment | 0.9 | (0.4 | ) | 0.7 | 0.8 | ||||||||||||||||||
Footnote (e) is contained in the accompanying Notes to Financial Schedules at the end of this release. |
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AMERICAN FINANCIAL GROUP, INC. | ||||||||||||||||||||||||
ANNUITY SEGMENT | ||||||||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||||||
Components of Statutory Premiums |
||||||||||||||||||||||||
Three months ended | Pct. | Twelve months ended | Pct. | |||||||||||||||||||||
December 31, | Change | December 31, | Change | |||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||
Annuity Premiums: |
||||||||||||||||||||||||
Financial Institutions | $ | 626 | $ | 534 | 17 | % | $ | 2,418 | $ | 1,970 | 23 | % | ||||||||||||
Retail | 437 | 512 | (15 | %) | 1,796 | 1,934 | (7 | %) | ||||||||||||||||
Education Market | 40 | 51 | (22 | %) | 184 | 194 | (5 | %) | ||||||||||||||||
Variable Annuities | 8 | 10 | (20 | %) | 37 | 42 | (12 | %) | ||||||||||||||||
Total Annuity Premiums | $ | 1,111 | $ | 1,107 | - | % | $ | 4,435 | $ | 4,140 | 7 | % |
Components of Operating Earnings Before Income Taxes |
||||||||||||||||||||||||
Three months ended | Pct. | Twelve months ended | Pct. | |||||||||||||||||||||
December 31, | Change | December 31, | Change | |||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Net investment income | $ | 346 | $ | 309 | 12 | % | $ | 1,356 | $ | 1,224 | 11 | % | ||||||||||||
Other income | 27 | 23 | 17 | % | 103 | 98 | 5 | % | ||||||||||||||||
Total revenues | ||||||||||||||||||||||||
373 | 332 | 12 | % | 1,459 | 1,322 | 10 | % | |||||||||||||||||
Costs and Expenses: | ||||||||||||||||||||||||
Annuity benefits | 160 | 189 | (15 | %) | 800 | 732 | 9 | % | ||||||||||||||||
Acquisition expenses | 54 | 20 | 170 | % | 181 | 163 | 11 | % | ||||||||||||||||
Other expenses | 27 | 22 | 23 | % | 110 | 96 | 15 | % | ||||||||||||||||
Total costs and expenses | 241 | 231 | 4 | % | 1,091 | 991 | 10 | % | ||||||||||||||||
Operating earnings before income taxes |
$ | 132 | $ | 101 | 31 | % | $ | 368 | $ | 331 | 11 | % |
Supplemental Annuity Information |
||||||||||||||||||||||||||||
Three months ended | Pct. | Twelve months ended | Pct. | |||||||||||||||||||||||||
December 31, | Change | December 31, | Change | |||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||
Operating earnings before impact of fair value accounting on FIAs |
$ |
103 |
$ |
96 |
7 |
% |
$ |
395 |
$ |
354 |
12 |
% |
||||||||||||||||
Impact of fair value accounting |
29 | 5 | nm | (27 | ) | (23 | ) | nm | ||||||||||||||||||||
Operating earnings before income taxes |
$ |
132 |
$ |
101 |
31 |
% |
$ |
368 |
$ |
331 |
11 |
% |
||||||||||||||||
Average Fixed Annuity Reserves* | $ | 29,250 | $ | 26,048 | 12 | % | $ | 28,146 | $ | 24,898 | 13 | % | ||||||||||||||||
Net Interest Spread* | 2.70 | % | 2.53 | % | 2.73 | % | 2.69 | % | ||||||||||||||||||||
Net Spread Earned Before Impact of Fair Value Accounting* |
1.42 |
% |
1.31 |
% |
1.39 |
% |
1.35 |
% |
||||||||||||||||||||
Net Spread Earned After Impact of Fair Value Accounting* |
1.82 |
% |
1.39 |
% |
1.29 |
% |
1.26 |
% |
||||||||||||||||||||
* Excludes fixed annuity portion of variable annuity business. |
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Notes to Financial
Schedules
a) Components of core net operating earnings (in millions):
Three months ended | Twelve months ended | ||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||
Core Operating Earnings before Income Taxes: |
|||||||||||||||||||||||
P&C insurance segment | $ | 180 | $ | 163 | $ | 630 | $ | 566 | |||||||||||||||
Annuity segment, before impact of fair value accounting |
103 | 96 | 395 | 354 | |||||||||||||||||||
Impact of fair value accounting | 29 | 5 | (27 | ) | (23 | ) | |||||||||||||||||
Run-off long-term care and life segment | 2 | - | 2 | 14 | |||||||||||||||||||
Interest & other corporate expense | (50 | ) | (45 | ) | (176 | ) | (162 | ) | |||||||||||||||
Core operating earnings before income taxes | 264 | 219 | 824 | 749 | |||||||||||||||||||
Related income taxes | 88 | 83 | 290 | 263 | |||||||||||||||||||
Core net operating earnings | $ | 176 | $ | 136 | $ | 534 | $ | 486 | |||||||||||||||
b) Excluding the impact of the Neon Exited Lines Charge that was
reported in the second quarter of 2016, the Tax Benefit related to the
National Interstate Merger and the Tax Benefit Related to the Neon
Restructuring reported in the fourth quarter of 2016, AFG’s effective
tax rate for the fourth quarter and twelve months ended
c)
d) Shareholders’ Equity at
e) 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, professional liability, umbrella and excess liability, specialty coverages in targeted markets, customized programs for small to mid-sized businesses and workers’ compensation insurance.
- Specialty Financial includes risk management insurance programs for leasing and financing institutions (including collateral and lender-placed mortgage property insurance), surety and fidelity products and trade credit insurance.
- Other includes an internal reinsurance facility.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170201006322/en/
Source:
American Financial Group, Inc.
Diane P. Weidner, 513-369-5713
Asst.
Vice President - Investor Relations
Websites:
www.AFGinc.com
www.GreatAmericanInsuranceGroup.com