8-K
AMERICAN FINANCIAL GROUP INC false 0001042046 0001042046 2023-11-01 2023-11-01 0001042046 us-gaap:CommonStockMember 2023-11-01 2023-11-01 0001042046 afg:Five875SubordinatedDebenturesDueMarch302059Member 2023-11-01 2023-11-01 0001042046 afg:Five125SubordinatedDebenturesDueDecember152059Member 2023-11-01 2023-11-01 0001042046 afg:Five625SubordinatedDebenturesDueJune12060Member 2023-11-01 2023-11-01 0001042046 afg:Four5SubordinatedDebenturesDueSeptember152060Member 2023-11-01 2023-11-01

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 1, 2023

 

 

AMERICAN FINANCIAL GROUP, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Ohio   1-13653   31-1544320
(State or other jurisdiction
of incorporation)
 

(Commission

File Number)

  (IRS Employer
Identification No.)

 

301 East Fourth Street, Cincinnati, OH   45202
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: 513-579-2121

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading
Symbol(s)

 

Name of each exchange

on which registered

Common Stock   AFG   New York Stock Exchange
5.875% Subordinated Debentures due March 30, 2059   AFGB   New York Stock Exchange
5.125% Subordinated Debentures due December 15, 2059   AFGC   New York Stock Exchange
5.625% Subordinated Debentures due June 1, 2060   AFGD   New York Stock Exchange
4.5% Subordinated Debentures due September 15, 2060   AFGE   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


Section 2 – Financial Information

 

Item 2.02

Results Of Operations And Financial Condition.

Reference is made to the press release of American Financial Group, Inc. (the “Company”) relating to the announcement of the Company’s results of operations for the third quarter of 2023 and the availability of the Investor Supplement on the Company’s website. The press release was issued on November 1, 2023. A copy of the press release is furnished as Exhibit 99.1 and a copy of the Investor Supplement is furnished as Exhibit 99.2 and are incorporated herein by reference.

Section 8 – Other Events

 

Item 8.01

Other Events.

In the press release referenced in Item 2.02 above, the Company also announced that its Board of Directors declared a special, one-time cash dividend of $1.50 per share of Company Common Stock. The dividend is payable on November 22, 2023 to holders of record on November 13, 2023.

The information under Item 2.02 and in Exhibits 99.1 and 99.2 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 as amended (the “Exchange Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Section 9 – Financial Statements and Exhibits

 

Item 9.01

Financial Statements and Exhibits.

 

  (a)

Financial statements of business acquired. Not applicable.

 

  (b)

Pro forma financial information. Not applicable.

 

  (c)

Shell company transactions. Not applicable

 

  (d)

Exhibits.

 

Exhibit
 No. 

  

Description

99.1    Earnings Release dated November 1, 2023, reporting American Financial Group Inc. results for the quarter ended September 30, 2023.
99.2    Investor Supplement – Third Quarter 2023
104    Cover page Interactive Date File (embedded within Inline XBRL document)

 

2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    AMERICAN FINANCIAL GROUP, INC.

Date: November 2, 2023

    By:  

/s/ Karl J. Grafe

      Karl J. Grafe
      Vice President

 

3

EX-99.1

Exhibit 99.1

 

LOGO

American Financial Group, Inc. Announces Third Quarter Results and Declares Special Dividend

 

   

Net earnings per share of $2.09; includes ($0.36) per share in after-tax non-core items

 

   

Core net operating earnings $2.45 per share, an increase of 9% from the prior year period

 

   

Third quarter annualized ROE of 15.7%; annualized core operating ROE of 18.3%

 

   

7% overall renewal rate increase excluding workers’ compensation

 

   

Board of Directors declares $1.50 per share special dividend, payable November 22, 2023

 

   

Full year 2023 core net operating earnings guidance unchanged at $10.15 to $11.15 per share

CINCINNATI – November 1, 2023 – American Financial Group, Inc. (NYSE: AFG) today reported 2023 third quarter net earnings of $177 million ($2.09 per share) compared to $165 million ($1.93 per share) in the 2022 third quarter. Net earnings for the 2023 third quarter included net after-tax non-core items that reduced net income by $31 million ($0.36 per share loss). By comparison, net earnings for the 2022 third quarter included after-tax non-core items that reduced net income by $27 million ($0.31 per share loss). Other details may be found in the table on the following page.

Core net operating earnings were $208 million ($2.45 per share) for the 2023 third quarter, compared to $192 million ($2.24 per share) in the 2022 third quarter. The increase was due primarily to higher year-over-year net investment income, which was partially offset by lower underwriting profit in the Specialty Property and Casualty (“P&C”) insurance operations. Additional details for the 2023 and 2022 third quarters may be found in the table below. Core net operating earnings for the third quarters of 2023 and 2022 generated annualized returns on equity of 18.3% and 17.1%, respectively.

 

     Three Months Ended September 30,  

Components of Pretax Core Operating Earnings

   2023     2022     2023      2022      2023     2022  
In millions, except per share amounts    Before Impact of
Alternative Investments
    Alternative
Investments
     Core Net Operating
Earnings, as reported
 

P&C Pretax Core Operating Earnings

   $ 273     $ 253     $ 25      $ 36      $ 298     $ 289  

Other expenses

     (22     (26     —         —         (22     (26

Holding company interest expense

     (19     (19     —         —         (19     (19
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Pretax Core Operating Earnings

     232       208       25        36        257       244  

Related provision for income taxes

     44       44       5        8        49       52  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Core Net Operating Earnings

   $ 188     $ 164     $ 20      $ 28      $ 208     $ 192  
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Core Operating Earnings Per Share

   $ 2.21     $ 1.91     $ 0.24      $ 0.33      $ 2.45     $ 2.24  

Weighted Avg Diluted Shares Outstanding

     84.7       85.4       84.7        85.4        84.7       85.4  

AFG’s book value per share was $47.31 at September 30, 2023. During the third quarter of 2023, AFG paid cash dividends of $0.63 per share and repurchased $86 million of its common stock at an average price per share of $112.28. For the three months ended September 30, 2023, AFG’s growth in book value per share plus dividends was 1.9% and year to date, growth in book value per share plus dividends was 11.9%. Annualized return on equity was 15.7% and 14.7% for the third quarters of 2023 and 2022, respectively.

Adjusted book value per share, which excludes unrealized gains (losses) related to fixed maturities, was $53.90 at September 30, 2023. For the three months ended September 30, 2023, AFG’s growth in adjusted book value per share plus dividends was 3.1%. Year to date, growth in adjusted book value per share plus dividends was 11.3%.

 

Page 1


AFG’s net earnings, 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 to core net operating earnings, a non-GAAP financial measure. AFG believes that its core net operating earnings provides management, financial analysts, ratings agencies, and investors with an understanding of the results from the ongoing operations of the Company by excluding the impact of net realized gains and losses and other 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
September 30,
     Nine months ended
September 30,
 
     2023      2022      2023      2022  

Components of net earnings:

           

Core operating earnings before income taxes

   $ 257      $ 244      $ 823      $ 930  

Pretax non-core items:

           

Realized gains (losses)

     (23      (35      (71      (143

Gain (loss) on retirement of debt

     —         1        1        (10

Special A&E charges

     (15      —         (15      —   
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings before income taxes

     219        210        738        777  

Provision (credit) for income taxes:

           

Core operating earnings

     49        52        166        192  

Non-core items

     (7      (7      (17      (37
  

 

 

    

 

 

    

 

 

    

 

 

 

Total provision for income taxes

     42        45        149        155  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net earnings

   $ 177      $ 165      $ 589      $ 622  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net earnings:

           

Core net operating earnings(a)

   $ 208      $ 192      $ 657      $ 738  

Non-core items:

           

Realized gains (losses)

     (19      (28      (57      (113

Gain (loss) on retirement of debt

     —         1        1        (7

Special A&E charges

     (12      —         (12      —   

Other

     —         —         —         4  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net earnings

   $ 177      $ 165      $ 589      $ 622  
  

 

 

    

 

 

    

 

 

    

 

 

 

Components of earnings per share:

           

Core net operating earnings(a)

   $ 2.45      $ 2.24      $ 7.72      $ 8.65  

Non-core Items:

           

Realized gains (losses)

     (0.21      (0.32      (0.65      (1.32

Gain (loss) on retirement of debt

     —         0.01        0.01        (0.09

Special A&E charges

     (0.15      —         (0.15      —   

Other

     —         —         —         0.05  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted net earnings per share

   $ 2.09      $ 1.93      $ 6.93      $ 7.29  
  

 

 

    

 

 

    

 

 

    

 

 

 

Footnote (a) is contained in the accompanying Notes to Financial Schedules at the end of this release.

The Company also announced today that its Board of Directors has declared a special cash dividend of $1.50 per share of American Financial Group common stock. The dividend is payable on November 22, 2023, to shareholders of record on November 13, 2023. The aggregate amount of this special dividend will be approximately $126 million. This special dividend is in addition to the Company’s regular quarterly cash dividend of $0.71 per share most recently paid on October 25, 2023. With this special dividend, the Company has declared $5.50 per share in special dividends in 2023.

S. Craig Lindner and Carl H. Lindner III, AFG’s Co-Chief Executive Officers, issued this statement: “We are pleased with AFG’s performance during the third quarter. We achieved an annualized core operating return of over 18% in the quarter, with strong underwriting results despite elevated catastrophe losses during the quarter. These strong results, coupled with meaningfully higher year-over-year investment income and effective capital management, enable us to continue to create value for our shareholders.

“AFG had approximately $660 million of excess capital at September 30, 2023, which includes parent company cash and investments of $364 million. Returning capital to shareholders in the form of regular and special cash dividends and through opportunistic share repurchases is an important and effective component of our capital management strategy. In addition, our excess capital will be deployed into AFG’s core businesses as we identify potential for healthy, profitable organic growth, and opportunities to expand our specialty niche businesses through acquisitions and start-ups that meet our target return thresholds.”

 

Page 2


Craig and Carl Lindner continued, “Based on the results reported in the first nine months of the year and expectations for the remainder of the year, we continue to expect AFG’s 2023 core net operating earnings to be in the range of $10.15 to $11.15 per share. Our guidance reflects our updated expectations of a below average crop year, offset by higher-than-previously expected net investment income. At the midpoint of the range, our revised guidance would produce a core return on equity of approximately 20%.”

AFG’s core earnings per share guidance excludes non-core items such as realized gains and losses and other significant items that are not able to be estimated with reasonable precision, or that may not be indicative of ongoing operations.

Specialty Property and Casualty Insurance Operations

The Specialty P&C insurance operations reported underwriting profit of $143 million in the 2023 third quarter, compared to $158 million in the 2022 third quarter, a 9% decrease. A higher frequency of lower severity convective storms throughout the 2023 period resulted in catastrophes losses of $56 million, compared to $51 million in the prior year period, which included the impact of Hurricane Ian. Higher year-over-year underwriting profit in our Property and Transportation and Specialty Financial Groups was more than offset by lower underwriting profit in our Specialty Casualty Group.

The third quarter 2023 combined ratio was a strong 92.2%, 1.1 points higher than the 91.1% reported in the comparable prior year period and included 3.0 points in catastrophe losses. By comparison, catastrophe losses in the third quarter of 2022 added 2.5 points to the combined ratio. Third quarter 2023 results benefitted from 2.3 points of favorable prior year reserve development, compared to 3.1 points in the third quarter of 2022.

Third quarter 2023 gross written premiums were flat and net written premiums were up 4% when compared to the third quarter of 2022, reflecting a larger percentage of crop insurance premium written in the second quarter of 2023 (rather than the third quarter of 2023 when compared to the 2022 period) due to the earlier planting of corn and soybeans, as well as the impact of lower 2023 spring commodity futures pricing and related volatility. Excluding our crop business, gross and net written premiums grew by 7% and 10%, respectively, when compared to the prior year period. Year-over-year growth was reported within most of our Specialty P&C businesses as a result of a combination of new business opportunities, increased exposures, and a good renewal rate environment. Average renewal pricing across our P&C Group, excluding workers’ compensation, was up approximately 7% for the quarter, two points higher than the previous quarter. Including workers’ compensation, renewal rates were up approximately 5%, one point higher than renewal increases reported in the prior quarter. We are achieving renewal rate increases in excess of prospective loss ratio trends where we need them to meet targeted returns.

The Property and Transportation Group reported 2023 third quarter underwriting profit of $42 million, compared to $39 million in the third quarter of 2022. Higher underwriting profit in our transportation, property & inland marine, and ocean marine businesses was partially offset by lower profitability in our agricultural businesses. Catastrophe losses in this group were $14 million in the third quarter of 2023, compared to $13 million in the comparable 2022 period. Overall, the businesses in the Property and Transportation Group achieved a 94.8% calendar year combined ratio in the third quarter, an improvement of 0.6 points from the comparable period in 2022.

 

Page 3


Gross and net written premiums for the third quarter of 2023 were 8% and 6% lower, respectively, than the comparable 2022 period. The year-over-year decrease reflects the previously discussed impacts of earlier planting of corn and soybeans and spring commodity futures pricing and related volatility on premiums in our crop insurance business. Excluding our crop business, gross and net written premiums grew by 2% and 4%, respectively, when compared to the 2022 third quarter. Most of the businesses in this group reported growth in gross and net written premium during the quarter as the result of higher rates, new business opportunities and organic growth. Overall renewal rates in this group increased 6% on average for the third quarter of 2023, consistent with renewal rates achieved in the second quarter of 2023.

The Specialty Casualty Group reported a 2023 third quarter underwriting profit of $78 million, compared to $118 million in the third quarter of 2022, reflecting lower levels of favorable prior year reserve development in our workers’ compensation businesses and lower underwriting profit in our targeted markets businesses. Underwriting profitability in our workers’ compensation businesses overall continues to be excellent. Catastrophe losses for this group were $17 million and $3 million in the third quarters of 2023 and 2022. The businesses in the Specialty Casualty Group achieved a strong 89.4% calendar year combined ratio overall in the third quarter, 6.8 points higher than the exceptionally strong results achieved in the comparable prior year period.

Third quarter 2023 gross and net written premiums increased 4% and 7%, respectively, when compared to the same prior year period. Factors contributing to the year-over-year growth included payroll growth in our workers’ compensation businesses; new business opportunities, strong policy retention and rate increases in several of our targeted market businesses; and new business opportunities and higher policy renewals in our excess and surplus lines business. This growth was partially offset by lower year-over-year premiums in our mergers & acquisitions liability and executive liability businesses. Excluding workers’ compensation, renewal pricing for this group was up 8% in the third quarter (up 5% including workers’ compensation), a two-point improvement over the renewal pricing in the previous quarter.

The Specialty Financial Group reported an underwriting profit of $29 million in the third quarter of 2023, compared to $15 million in the third quarter of 2022. The year-over-year increase was primarily the result of lower catastrophe losses attributable to our financial institutions business. Catastrophe losses for this group were $22 million in the third quarter of 2023, compared to $34 million in the prior year quarter. This group reported a combined ratio of 87.6% for the third quarter of 2023, an improvement of 3.7 points over the prior year period.

Third quarter 2023 gross and net written premiums in this group were up 39% and 48%, respectively, when compared to the prior year period. While nearly all businesses in this group reported year-over-year growth, our financial institutions business was the primary driver of the higher premiums. Renewal pricing in this group was up 5% for the quarter.

Carl Lindner III stated, “I’m pleased with our third quarter results, which included higher year-over-year operating earnings in our P&C Segment despite the higher frequency of catastrophe losses during the quarter. Underwriting margins continue to be strong, and we are seeing opportunities to grow our Specialty P&C businesses through increasing exposures, new opportunities, and a continued favorable pricing environment. Our diversified portfolio of Specialty P&C businesses continues to meet or exceed targeted returns.

Mr. Lindner added, “Based on results through the first nine months and the updated expectation of a below average crop year, we now expect an overall 2023 calendar year combined ratio in the range of 90% to 92%. We have increased our guidance for net written premiums and now expect net written premiums to be 6% to 8% higher than the $6.2 billion reported in 2022. This compares to our previous guidance of growth in the range of 5% to 8% and will establish a record for net written premiums for the year.”

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.

 

Page 4


A&E Reserves

During the third quarter of 2023, AFG conducted an in-depth comprehensive review of its asbestos and environmental (A&E) exposures relating to the run-off operations of its P&C Group. During the 2023 review, no new trends were identified, and recent claims activity was generally consistent with our expectations resulting from our in-depth reviews in 2022 and 2021 and our most recent external study in 2020. As a result, and consistent with the internal review in the third quarter of 2022, the 2023 review resulted in no net change to the P&C Group’s A&E reserves.

At September 30, 2023, the P&C Group’s insurance reserves include A&E reserves of $374 million, net of reinsurance recoverables. At September 30, 2023, the property and casualty insurance segment’s three-year survival ratios were 22.7 times paid losses for asbestos reserves, 18.9 times paid losses for environmental reserves and 20.8 times paid losses for total A&E reserves. These ratios compare favorably with industry data compiled by S&P Global Market Intelligence as of December 31, 2022, which indicate that industry survival ratios were 8.6 times paid losses for asbestos, 7.3 times paid losses for environmental, and 8.3 times paid losses for total A&E reserves.

The 2023 in-depth comprehensive review also encompassed reserves for asbestos and environmental exposures of our former railroad and manufacturing operations. As a result of the study, AFG recorded a special non-core A&E charge to increase its liabilities for environmental exposures by $15 million ($12 million after-tax), due primarily to changes in the scope and costs of investigation and an increase in estimated remediation costs at a limited number of sites.

Investments

Net Investment Income – For the quarter ended September 30, 2023, property and casualty net investment income was approximately 17% higher than the comparable 2022 period. Excluding the impact of alternative investments, net investment income in our property and casualty insurance operations for the three months ended September 30, 2023, increased 33% year-over-year as a result of the impact of rising interest rates and higher balances of invested assets. The annualized return on alternative investments was approximately 4.2% for the 2023 third quarter compared to 7.1% for the prior year quarter. Earnings from alternative investments may vary from quarter to quarter based on the reported results of the underlying investments, and generally are reported on a quarter lag. The average annual return on alternative investments over the five calendar years ended December 31, 2022, was approximately 14%. Our guidance for the full year 2023 continues to assume a return of approximately 9% on alternative investments.

Non-Core Net Realized Gains (Losses) – AFG recorded third quarter 2023 net realized losses of $19 million ($0.21 per share loss) after tax, which included $6 million ($0.07 per share loss) in after-tax net losses to adjust equity securities that the Company continued to own at September 30, 2023, to fair value. AFG recorded net realized losses of $28 million ($0.32 per share loss) in the comparable 2022 period.

After-tax unrealized losses related to fixed maturities were $555 million at September 30, 2023. Our portfolio continues to be high quality, with 93% of our fixed maturity portfolio rated investment grade and 96% of our P&C fixed maturity portfolio with a National Association of Insurance Commissioners’ designation of NAIC 1 or 2, its highest two categories.

More information about the components of our investment portfolio may be found in our Quarterly Investor Supplement, which is posted on our website.

About American Financial Group, Inc.

American Financial Group is an insurance holding company, based in Cincinnati, Ohio. Through the operations of Great American Insurance Group, AFG is engaged primarily in property and casualty insurance, focusing on specialized commercial products for businesses. Great American Insurance Group’s roots go back to 1872 with the founding of its flagship company, Great American Insurance Company.

 

Page 5


Forward Looking Statements

This press release, and any related oral statements, 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 or special dividends; 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: the risks and uncertainties AFG describes in the “Risk Factors” section of its most recent Annual Report on Form 10-K, as updated by its other reports filed with the Securities and Exchange Commission; 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; changes in insurance law or regulation, including changes in statutory accounting rules, including modifications to capital requirements; 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 pandemics, civil unrest and other major losses; disruption caused by cyber-attacks or other technology breaches or failures by AFG or its business partners and service providers, which could negatively impact AFG’s business and/or expose AFG to litigation; 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; 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 AFG’s operating subsidiaries; the impact of the conditions in the international financial markets and the global economy relating to AFG’s international operations; and effects on AFG’s reputation, including as a result of environmental, social and governance matters.

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 2023 third quarter results at 11:30 a.m. (ET) tomorrow, Thursday, November 2, 2023. Simplified event registration and access provides two ways to access the call.

Participants should register for the call here now, or any time up to and during the time of the call, and will immediately receive the dial-in number and a unique PIN to access the call. While you may register at any time up to and during the time of the call, you are encouraged to join the call 10 minutes prior to the start of the event.

The conference call and accompanying webcast slides will also be broadcast live over the internet. To access the event, click the following link: https://www.afginc.com/news-and-events/event-calendar. Alternatively, you can choose Events from the Investor Relations page at www.AFGinc.com.

A replay of the webcast will be available via the same link on our website approximately two hours after the completion of the call.

 

Page 6


Contact:

Diane P. Weidner, IRC

Vice President – Investor & Media Relations

513-369-5713

Websites:

www.AFGinc.com

www.GreatAmericanInsuranceGroup.com

# # #

(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.

AFG2023-20

 

Page 7


AMERICAN FINANCIAL GROUP, INC., AND SUBSIDIARIES

SUMMARY OF EARNINGS AND SELECTED BALANCE SHEET DATA

(In Millions, Except Per Share Data)

 

     Three months ended
September 30,
    Nine months ended
September 30,
 
     2023     2022     2023     2022  

Revenues

        

P&C insurance net earned premiums

   $ 1,855     $ 1,767     $ 4,799     $ 4,462  

Net investment income

     168       151       583       549  

Realized gains (losses) on:

        

Securities

     (19     (35     (67     (143

Subsidiaries

     (4     —        (4     —   

Income of managed investment entities:

        

Investment income

     105       75       321       175  

Gain (loss) on change in fair value of assets/liabilities

     16       (5     12       (25

Other income

     43       31       100       93  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     2,164       1,984       5,744       5,111  

Costs and expenses

        

P&C insurance losses & expenses

     1,736       1,621       4,419       3,934  

Interest charges on borrowed money

     19       19       57       65  

Expenses of managed investment entities

     105       62       303       148  

Other expenses

     85       72       227       187  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     1,945       1,774       5,006       4,334  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings before income taxes

     219       210       738       777  

Provision for income taxes

     42       45       149       155  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings

   $ 177     $ 165     $ 589     $ 622  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per common share

   $ 2.09     $ 1.93     $ 6.93     $ 7.29  
  

 

 

   

 

 

   

 

 

   

 

 

 

Average number of diluted shares

     84.7       85.4       85.1       85.3  

 

Selected Balance Sheet Data:

   September 30,
2023
     December 31,
2022
 

Total cash and investments

   $ 14,794      $ 14,512  

Long-term debt

   $ 1,474      $ 1,496  

Shareholders’ equity(b)

   $ 3,981      $ 4,052  

Shareholders’ equity (excluding unrealized gains/losses related to fixed maturities)(b)

   $ 4,536      $ 4,578  

Book value per share(b)

   $ 47.31      $ 47.56  

Book value per share (excluding unrealized gains/losses related to fixed maturities)(b)

   $ 53.90      $ 53.73  

Common Shares Outstanding

     84.1        85.2  

Footnote (b) is contained in the accompanying Notes to Financial Schedules at the end of this release.

 

Page 8


AMERICAN FINANCIAL GROUP, INC.

SPECIALTY P&C OPERATIONS

(Dollars in Millions)

 

     Three months ended
September 30,
    Pct.
Change
    Nine months ended
September 30,
    Pct.
Change
 
     2023     2022           2023     2022        

Gross written premiums

   $ 3,140     $ 3,153         $ 7,664     $ 7,212       6
  

 

 

   

 

 

     

 

 

   

 

 

   

Net written premiums

   $ 2,061     $ 1,984       4   $ 5,247     $ 4,868       8
  

 

 

   

 

 

     

 

 

   

 

 

   

Ratios (GAAP):

            

Loss & LAE ratio

     66.7     66.4       61.8     59.1  

Underwriting expense ratio

     25.5     24.7       29.5     28.3  
  

 

 

   

 

 

     

 

 

   

 

 

   

Specialty Combined Ratio

     92.2     91.1       91.3     87.4  
  

 

 

   

 

 

     

 

 

   

 

 

   

Combined Ratio – P&C Segment

     92.3     91.2       91.3     87.5  
  

 

 

   

 

 

     

 

 

   

 

 

   

Supplemental Information:(c)

            

Gross Written Premiums:

            

Property & Transportation

   $ 1,592     $ 1,737       (8 %)    $ 3,523     $ 3,459       2

Specialty Casualty

     1,226       1,184       4     3,299       3,108       6

Specialty Financial

     322       232       39     842       645       31
  

 

 

   

 

 

     

 

 

   

 

 

   
   $ 3,140     $ 3,153         $ 7,664     $ 7,212       6
  

 

 

   

 

 

     

 

 

   

 

 

   

Net Written Premiums:

            

Property & Transportation

   $ 905     $ 959       (6 %)    $ 2,125     $ 2,092       2

Specialty Casualty

     829       777       7     2,244       2,073       8

Specialty Financial

     261       176       48     685       512       34

Other

     66       72       (8 %)      193       191       1
  

 

 

   

 

 

     

 

 

   

 

 

   
   $ 2,061     $ 1,984       4   $ 5,247     $ 4,868       8
  

 

 

   

 

 

     

 

 

   

 

 

   

Combined Ratio (GAAP):

            

Property & Transportation

     94.8     95.4       93.6     92.2  

Specialty Casualty

     89.4     82.6       87.8     81.1  

Specialty Financial

     87.6     91.3       89.6     83.9  

Aggregate Specialty Group

     92.2     91.1       91.3     87.4  

 

     Three months ended
September 30,
    Nine months ended
September 30,
 
     2023     2022     2023     2022  

Reserve Development (Favorable)/Adverse:

        

Property & Transportation

   $ (14   $ (15   $ (72   $ (79

Specialty Casualty

     (22     (42     (73     (140

Specialty Financial

     (10     (11     (24     (39

Other Specialty

     2       12       —        27  
  

 

 

   

 

 

   

 

 

   

 

 

 

Specialty Group

     (44     (56     (169     (231

Other

     1       3       1       5  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Reserve Development

   $ (43   $ (53   $ (168   $ (226
  

 

 

   

 

 

   

 

 

   

 

 

 

Points on Combined Ratio:

        

Property & Transportation

     (1.7     (1.8     (3.9     (4.4

Specialty Casualty

     (2.9     (6.3     (3.4     (7.1

Specialty Financial

     (4.2     (6.3     (3.8     (7.8

Aggregate Specialty Group

     (2.3     (3.1     (3.5     (5.2

Total P&C Segment

     (2.3     (3.0     (3.5     (5.1

Footnote (c) is contained in the accompanying Notes to Financial Schedules at the end of this release.

 

Page 9


AMERICAN FINANCIAL GROUP, INC.

Notes to Financial Schedules

 

a)

Components of core net operating earnings (dollars in millions):

 

     Three months ended
September 30,
     Nine months ended
September 30,
 
     2023      2022      2023      2022  

Core Operating Earnings before Income Taxes:

           

P&C insurance segment

   $ 298      $ 289      $ 947      $ 1,056  

Interest and other corporate expenses

     (41      (45      (124      (126
  

 

 

    

 

 

    

 

 

    

 

 

 

Core operating earnings before income taxes

     257        244        823        930  

Related income taxes

     49        52        166        192  
  

 

 

    

 

 

    

 

 

    

 

 

 

Core net operating earnings

   $ 208      $ 192      $ 657      $ 738  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

b)

Shareholders’ Equity at September 30, 2023, includes $555 million ($6.59 per share) in unrealized after-tax losses related to fixed maturities compared to $526 million ($6.17 per share) in unrealized after-tax losses related to fixed maturities at December 31, 2022.

 

c)

Supplemental Notes:

 

   

Property & Transportation includes primarily physical damage and liability coverage for buses and trucks and other specialty transportation niches, inland and ocean marine, agricultural-related products, and other commercial 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 lending and leasing institutions (including equipment leasing and collateral and lender-placed mortgage property insurance), surety and fidelity products and trade credit insurance.

 

   

Other includes an internal reinsurance facility.

 

Page 10

EX-99.2

Exhibit 99.2

 

LOGO   

American Financial Group, Inc.

 

Investor Supplement - Third Quarter 2023

 

November 1, 2023

 

American Financial Group, Inc.

Corporate Headquarters

Great American Insurance Group Tower

301 E Fourth Street

Cincinnati, OH 45202

513 579 6739


American Financial Group, Inc.

Table of Contents - Investor Supplement - Third Quarter 2023

   LOGO

 

Section

   Page  

Table of Contents - Investor Supplement - Third Quarter 2023

     2  

Financial Highlights

     3  

Summary of Earnings

     4  

Earnings Per Share Summary

     5  

Property and Casualty Insurance Segment

  

Property and Casualty Insurance - Summary Underwriting Results (GAAP)

     6  

Specialty - Underwriting Results (GAAP)

     7  

Property and Transportation - Underwriting Results (GAAP)

     8  

Specialty Casualty - Underwriting Results (GAAP)

     9  

Specialty Financial - Underwriting Results (GAAP)

     10  

Other Specialty - Underwriting Results (GAAP)

     11  

Consolidated Balance Sheet / Book Value / Debt

  

Consolidated Balance Sheet

     12  

Book Value Per Share and Price / Book Summary

     13  

Capitalization

     14  

Additional Supplemental Information

     15  

Consolidated Investment Supplement

  

Total Cash and Investments

     16  

Net Investment Income

     17  

Alternative Investments

     18  

Fixed Maturities - By Security Type - AFG Consolidated

     19  

Appendix

  

A. Fixed Maturities by Credit Rating & NAIC Designation by Type 9/30/2023

     20  

B. Fixed Maturities by Credit Rating & NAIC Designation by Type 12/31/2022

     21  

C. Corporate Securities by Credit Rating & NAIC Designation by Industry 9/30/2023

     22  

D. Corporate Securities by Credit Rating & NAIC Designation by Industry 12/31/2022

     23  

E. Asset-Backed Securities by Credit Rating & NAIC Designation by Collateral Type 9/30/2023

     24  

F. Asset-Backed Securities by Credit Rating & NAIC Designation by Collateral Type 12/31/2022

     25  

G. Real Estate-Related Investments 9/30/2023

     26  

H. Real Estate-Related Investments 12/31/2022

     27  

 

Page 2


American Financial Group, Inc.

Financial Highlights

(in millions, except per share information)

   LOGO

 

     Three Months Ended     Nine Months Ended  
     9/30/23     6/30/23     3/31/23     12/31/22     9/30/22     9/30/23     9/30/22  

Highlights

              

Net earnings

   $ 177     $ 200     $ 212     $ 276     $ 165     $ 589     $ 622  

Core net operating earnings

     208       202       247       255       192       657       738  

Total assets

     30,825       29,048       28,481       28,831       29,532       30,825       29,532  

Adjusted shareholders’ equity (a)

     4,536       4,490       4,375       4,578       4,515       4,536       4,515  

Property and Casualty net written premiums

     2,061       1,667       1,519       1,338       1,984       5,247       4,868  

Per share data

              

Diluted earnings per share

   $ 2.09     $ 2.34     $ 2.49     $ 3.24     $ 1.93     $ 6.93     $ 7.29  

Core net operating earnings per share

     2.45       2.38       2.89       2.99       2.24       7.72       8.65  

Adjusted book value per share (a)

     53.90       52.90       51.37       53.73       53.03       53.90       53.03  

Dividends per common share

     0.63       0.63       4.63       2.63       0.56       5.89       11.68  

Financial ratios

              

Annualized return on equity (b)

     15.7     17.9     18.9     24.2     14.7     17.4     17.6

Annualized core operating return on equity (b)

     18.3     18.2     22.0     22.3     17.1     19.4     20.9

Property and Casualty combined ratio - Specialty:

              

Loss & LAE ratio

     66.7     60.2     57.0     60.8     66.4     61.8     59.1

Underwriting expense ratio

     25.5     31.7     32.2     25.8     24.7     29.5     28.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio - Specialty

     92.2     91.9     89.2     86.6     91.1     91.3     87.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Excludes unrealized gains (losses) related to fixed maturity investments, a reconciliation to the GAAP measure is on page 13.

(b)

Excludes accumulated other comprehensive income.

 

Page 3


American Financial Group, Inc.

Summary of Earnings

($ in millions)

   LOGO

 

     Three Months Ended     Nine Months Ended  
     9/30/23     6/30/23     3/31/23     12/31/22     9/30/22     9/30/23     9/30/22  

Property and Casualty Insurance

              

Underwriting profit

   $ 142     $ 124     $ 154     $ 218     $ 155     $ 420     $ 558  

Net investment income

     170       191       207       159       145       568       524  

Other income (expense)

     (14     (16     (11     (14     (11     (41     (26
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Property and Casualty Insurance operating earnings

     298       299       350       363       289       947       1,056  

Interest expense of parent holding companies

     (19     (19     (19     (20     (19     (57     (65

Other expense

     (22     (22     (23     (25     (26     (67     (61
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pretax core operating earnings

     257       258       308       318       244       823       930  

Income tax expense

     49       56       61       63       52       166       192  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Core net operating earnings

     208       202       247       255       192       657       738  

Non-core items, net of tax:

              

Realized gains (losses) on securities

     (15     (1     (37     21       (28     (53     (113

Realized loss on subsidiaries

     (4     —        —        —        —        (4     —   

Special A&E charges - Former Railroad and Manufacturing operations

     (12     —        —        —        —        (12     —   

Gain (loss) on retirement of debt

     —        (1     2       —        1       1       (7

Other non-core items

     —        —        —        —        —        —        4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings

   $ 177     $ 200     $ 212     $ 276     $ 165     $ 589     $ 622  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 4


American Financial Group, Inc.

Earnings Per Share Summary

(in millions, except per share information)

   LOGO

 

     Three Months Ended     Nine Months Ended  
     9/30/23     6/30/23     3/31/23     12/31/22      9/30/22     9/30/23     9/30/22  

Core net operating earnings

   $ 208     $ 202     $ 247     $ 255      $ 192     $ 657     $ 738  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Net earnings

   $ 177     $ 200     $ 212     $ 276      $ 165     $ 589     $ 622  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Average number of diluted shares

     84.745       85.172       85.378       85.350        85.365       85.096       85.315  

Diluted earnings per share:

               

Core net operating earnings per share

   $ 2.45     $ 2.38     $ 2.89     $ 2.99      $ 2.24     $ 7.72     $ 8.65  

Realized gains (losses) on securities

     (0.17     (0.02     (0.42     0.25        (0.32     (0.61     (1.32

Realized loss on subsidiaries

     (0.04     —        —        —         —        (0.04     —   

Special A&E charges - Former Railroad and Manufacturing operations

     (0.15     —        —        —         —        (0.15     —   

Gain (loss) on retirement of debt

     —        (0.02     0.02       —         0.01       0.01       (0.09

Other non-core items

     —        —        —        —         —        —        0.05  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Diluted earnings per share

   $ 2.09     $ 2.34     $ 2.49     $ 3.24      $ 1.93     $ 6.93     $ 7.29  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

Page 5


American Financial Group, Inc.

Property and Casualty Insurance - Summary Underwriting Results (GAAP)

($ in millions)

   LOGO

 

     Three Months Ended     Nine Months Ended  
     9/30/23     6/30/23     3/31/23     12/31/22     9/30/22     9/30/23     9/30/22  

Property and Transportation

   $ 42     $ 32     $ 43     $ 68     $ 39     $ 117     $ 140  

Specialty Casualty

     78       95       88       128       118       261       372  

Specialty Financial

     29       10       26       33       15       65       81  

Other Specialty

     (6     (14     (2     (12     (14     (22     (30
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Underwriting profit - Specialty

     143       123       155       217       158       421       563  

Other core charges, included in loss and LAE

     (1     1       (1     1       (3     (1     (5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Underwriting profit - Property and Casualty Insurance

   $ 142     $ 124     $ 154     $ 218     $ 155     $ 420     $ 558  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Included in results above:

              

Current accident year catastrophe losses:

              

Catastrophe reinstatement premium

   $ —      $ 2     $ —      $ (13   $ 18     $ 2     $ 18  

Catastrophe losses

     56       51       31       24       33       138       64  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current accident year catastrophe losses

   $ 56     $ 53     $ 31     $ 11     $ 51     $ 140     $ 82  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Prior year loss reserve development (favorable) / adverse

   $ (43   $ (62   $ (63   $ (59   $ (53   $ (168   $ (226
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio:

              

Property and Transportation

     94.8     94.2     91.0     90.0     95.4     93.6     92.2

Specialty Casualty

     89.4     86.6     87.5     81.3     82.6     87.8     81.1

Specialty Financial

     87.6     95.0     86.5     83.1     91.3     89.6     83.9

Other Specialty

     109.8     122.2     103.5     118.1     122.7     111.9     116.9

Combined ratio - Specialty

     92.2     91.9     89.2     86.6     91.1     91.3     87.4

Other core charges

     0.1     (0.2 %)      0.1     (0.1 %)      0.1     0.0     0.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio

     92.3     91.7     89.3     86.5     91.2     91.3     87.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

P&C combined ratio excl. catastrophe losses and prior year reserve development

     91.5     92.4     91.5     89.3     91.7     91.9     90.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss and LAE components:

              

Current accident year, excluding catastrophe losses

     66.0     60.7     59.3     63.5     67.0     62.4     62.6

Current accident year catastrophe losses

     3.1     3.5     2.2     0.8     2.5     2.9     1.7

Prior accident year loss reserve development

     (2.3 %)      (4.2 %)      (4.4 %)      (3.6 %)      (3.0 %)      (3.5 %)      (5.1 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss and LAE ratio

     66.8     60.0     57.1     60.7     66.5     61.8     59.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 6


American Financial Group, Inc.

Specialty - Underwriting Results (GAAP)

($ in millions)

   LOGO

 

     Three Months Ended     Nine Months Ended  
     9/30/23     6/30/23     3/31/23     12/31/22     9/30/22     9/30/23     9/30/22  

Gross written premiums

   $ 3,140     $ 2,369     $ 2,155     $ 1,845     $ 3,153     $ 7,664     $ 7,212  

Ceded reinsurance premiums

     (1,079     (702     (636     (507     (1,169     (2,417     (2,344
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net written premiums

     2,061       1,667       1,519       1,338       1,984       5,247       4,868  

Change in unearned premiums

     (206     (160     (82     285       (217     (448     (406
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earned premiums

     1,855       1,507       1,437       1,623       1,767       4,799       4,462  

Loss and LAE

     1,238       906       819       987       1,173       2,963       2,638  

Underwriting expense

     474       478       463       419       436       1,415       1,261  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Underwriting profit

   $ 143     $ 123     $ 155     $ 217     $ 158     $ 421     $ 563  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Included in results above:

              

Current accident year catastrophe losses:

              

Catastrophe reinstatement premium

   $ —      $ 2     $ —      $ (13   $ 18     $ 2     $ 18  

Catastrophe losses

     56       51       31       24       33       138       64  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current accident year catastrophe losses

   $ 56     $ 53     $ 31     $ 11     $ 51     $ 140     $ 82  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Prior year loss reserve development (favorable) / adverse

   $ (44   $ (61   $ (64   $ (58   $ (56   $ (169   $ (231
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio:

              

Loss and LAE ratio

     66.7     60.2     57.0     60.8     66.4     61.8     59.1

Underwriting expense ratio

     25.5     31.7     32.2     25.8     24.7     29.5     28.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio

     92.2     91.9     89.2     86.6     91.1     91.3     87.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Specialty combined ratio excl. catastrophe losses and prior year reserve development

     91.5     92.4     91.5     89.3     91.7     91.9     90.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss and LAE components:

              

Current accident year, excluding catastrophe losses

     66.0     60.7     59.3     63.5     67.0     62.4     62.6

Current accident year catastrophe losses

     3.0     3.5     2.2     0.9     2.5     2.9     1.7

Prior accident year loss reserve development

     (2.3 %)      (4.0 %)      (4.5 %)      (3.6 %)      (3.1 %)      (3.5 %)      (5.2 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss and LAE ratio

     66.7     60.2     57.0     60.8     66.4     61.8     59.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 7


American Financial Group, Inc.

Property and Transportation - Underwriting Results (GAAP)

($ in millions)

   LOGO

 

     Three Months Ended     Nine Months Ended  
     9/30/23     6/30/23     3/31/23     12/31/22     9/30/22     9/30/23     9/30/22  

Gross written premiums

   $ 1,592     $ 1,059     $ 872     $ 601     $ 1,737     $ 3,523     $ 3,459  

Ceded reinsurance premiums

     (687     (391     (320     (178     (778     (1,398     (1,367
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net written premiums

     905       668       552       423       959       2,125       2,092  

Change in unearned premiums

     (77     (134     (77     259       (102     (288     (287
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earned premiums

     828       534       475       682       857       1,837       1,805  

Loss and LAE

     636       346       289       489       663       1,271       1,246  

Underwriting expense

     150       156       143       125       155       449       419  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Underwriting profit

   $ 42     $ 32     $ 43     $ 68     $ 39     $ 117     $ 140  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Included in results above:

              

Current accident year catastrophe losses:

              

Catastrophe reinstatement premium

   $ —      $ —      $ —      $ (1   $ 4     $ —      $ 4  

Catastrophe losses

     14       15       19       8       9       48       34  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current accident year catastrophe losses

   $ 14     $ 15     $ 19     $ 7     $ 13     $ 48     $ 38  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Prior year loss reserve development (favorable) / adverse

   $ (14   $ (21   $ (37   $ (13   $ (15   $ (72   $ (79
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio:

              

Loss and LAE ratio

     76.8     64.8     60.9     71.8     77.3     69.2     69.0

Underwriting expense ratio

     18.0     29.4     30.1     18.2     18.1     24.4     23.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio

     94.8     94.2     91.0     90.0     95.4     93.6     92.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio excl. catastrophe losses and prior year reserve development

     94.8     95.1     94.8     90.8     95.8     94.8     94.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss and LAE components:

              

Current accident year, excluding catastrophe losses

     76.8     65.7     64.7     72.6     77.7     70.4     71.4

Current accident year catastrophe losses

     1.7     2.9     4.0     1.0     1.4     2.7     2.0

Prior accident year loss reserve development

     (1.7 %)      (3.8 %)      (7.8 %)      (1.8 %)      (1.8 %)      (3.9 %)      (4.4 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss and LAE ratio

     76.8     64.8     60.9     71.8     77.3     69.2     69.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 8


American Financial Group, Inc.

Specialty Casualty - Underwriting Results (GAAP)

($ in millions)

   LOGO

 

     Three Months Ended     Nine Months Ended  
     9/30/23     6/30/23     3/31/23     12/31/22     9/30/22     9/30/23     9/30/22  

Gross written premiums

   $ 1,226     $ 1,012     $ 1,061     $ 1,007     $ 1,184     $ 3,299     $ 3,108  

Ceded reinsurance premiums

     (397     (319     (339     (352     (407     (1,055     (1,035
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net written premiums

     829       693       722       655       777       2,244       2,073  

Change in unearned premiums

     (95     18       (18     31       (100     (95     (100
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earned premiums

     734       711       704       686       677       2,149       1,973  

Loss and LAE

     463       421       417       381       374       1,301       1,072  

Underwriting expense

     193       195       199       177       185       587       529  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Underwriting profit

   $ 78     $ 95     $ 88     $ 128     $ 118     $ 261     $ 372  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Included in results above:

              

Current accident year catastrophe losses:

              

Catastrophe reinstatement premium

   $ —      $ 2     $ —      $ (1   $ 1     $ 2     $ 1  

Catastrophe losses

     17       6       3       8       2       26       3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current accident year catastrophe losses

   $ 17     $ 8     $ 3     $ 7     $ 3     $ 28     $ 4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Prior year loss reserve development (favorable) / adverse

   $ (22   $ (24   $ (27   $ (50   $ (42   $ (73   $ (140
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio:

              

Loss and LAE ratio

     63.1     59.2     59.2     55.4     55.3     60.5     54.3

Underwriting expense ratio

     26.3     27.4     28.3     25.9     27.3     27.3     26.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio

     89.4     86.6     87.5     81.3     82.6     87.8     81.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio excl. catastrophe losses and prior year reserve development

     90.0     89.0     90.9     87.5     88.5     90.0     88.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss and LAE components:

              

Current accident year, excluding catastrophe losses

     63.7     61.6     62.6     61.6     61.2     62.7     61.3

Current accident year catastrophe losses

     2.3     1.0     0.4     1.1     0.4     1.2     0.1

Prior accident year loss reserve development

     (2.9 %)      (3.4 %)      (3.8 %)      (7.3 %)      (6.3 %)      (3.4 %)      (7.1 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss and LAE ratio

     63.1     59.2     59.2     55.4     55.3     60.5     54.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 9


American Financial Group, Inc.

Specialty Financial - Underwriting Results (GAAP)

($ in millions)

   LOGO

 

     Three Months Ended     Nine Months Ended  
     9/30/23     6/30/23     3/31/23     12/31/22     9/30/22     9/30/23     9/30/22  

Gross written premiums

   $ 322     $ 298     $ 222     $ 237     $ 232     $ 842     $ 645  

Ceded reinsurance premiums

     (61     (58     (38     (38     (56     (157     (133
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net written premiums

     261       240       184       199       176       685       512  

Change in unearned premiums

     (29     (45     12       (6     (5     (62     (7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earned premiums

     232       195       196       193       171       623       505  

Loss and LAE

     93       79       71       66       80       243       172  

Underwriting expense

     110       106       99       94       76       315       252  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Underwriting profit

   $ 29     $ 10     $ 26     $ 33     $ 15     $ 65     $ 81  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Included in results above:

              

Current accident year catastrophe losses:

              

Catastrophe reinstatement premium

   $ —      $ —      $ —      $ (10   $ 13     $ —      $ 13  

Catastrophe losses

     22       19       4       7       21       45       26  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current accident year catastrophe losses

   $ 22     $ 19     $ 4     $ (3   $ 34     $ 45     $ 39  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Prior year loss reserve development (favorable) / adverse

   $ (10   $ (11   $ (3   $ (8   $ (11   $ (24   $ (39
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio:

              

Loss and LAE ratio

     39.8     40.9     36.0     33.8     47.2     39.0     34.1

Underwriting expense ratio

     47.8     54.1     50.5     49.3     44.1     50.6     49.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio

     87.6     95.0     86.5     83.1     91.3     89.6     83.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio excl. catastrophe losses and prior year reserve development

     82.5     91.1     85.7     85.3     82.4     86.2     85.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss and LAE components:

              

Current accident year, excluding catastrophe losses

     34.7     37.0     35.2     36.0     38.3     35.6     35.9

Current accident year catastrophe losses

     9.3     9.6     2.2     1.9     15.2     7.2     6.0

Prior accident year loss reserve development

     (4.2 %)      (5.7 %)      (1.4 %)      (4.1 %)      (6.3 %)      (3.8 %)      (7.8 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss and LAE ratio

     39.8     40.9     36.0     33.8     47.2     39.0     34.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 10


American Financial Group, Inc.

Other Specialty - Underwriting Results (GAAP)

($ in millions)

   LOGO

 

     Three Months Ended     Nine Months Ended  
     9/30/23     6/30/23     3/31/23     12/31/22     9/30/22     9/30/23     9/30/22  

Gross written premiums

   $ —      $ —      $ —      $ —      $ —      $ —      $ —   

Ceded reinsurance premiums

     66       66       61       61       72       193       191  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net written premiums

     66       66       61       61       72       193       191  

Change in unearned premiums

     (5     1       1       1       (10     (3     (12
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earned premiums

     61       67       62       62       62       190       179  

Loss and LAE

     46       60       42       51       56       148       148  

Underwriting expense

     21       21       22       23       20       64       61  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Underwriting profit (loss)

   $ (6   $ (14   $ (2   $ (12   $ (14   $ (22   $ (30
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Included in results above:

              

Current accident year catastrophe losses:

              

Catastrophe reinstatement premium

   $ —      $ —      $ —      $ (1   $ —      $ —      $ —   

Catastrophe losses

     3       11       5       1       1       19       1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current accident year catastrophe losses

   $ 3     $ 11     $ 5     $ —      $ 1     $ 19     $ 1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Prior year loss reserve development (favorable) / adverse

   $ 2     $ (5   $ 3     $ 13     $ 12     $ —      $ 27  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio:

              

Loss and LAE ratio

     76.2     91.1     69.0     83.3     89.3     78.9     82.2

Underwriting expense ratio

     33.6     31.1     34.5     34.8     33.4     33.0     34.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio

     109.8     122.2     103.5     118.1     122.7     111.9     116.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio excl. catastrophe losses and prior year reserve development

     101.2     111.7     92.0     98.5     100.7     101.7     100.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss and LAE components:

              

Current accident year, excluding catastrophe losses

     67.6     80.6     57.5     63.7     67.3     68.7     66.1

Current accident year catastrophe losses

     4.9     18.0     7.5     0.7     1.1     10.3     0.4

Prior accident year loss reserve development

     3.7     (7.5 %)      4.0     18.9     20.9     (0.1 %)      15.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss and LAE ratio

     76.2     91.1     69.0     83.3     89.3     78.9     82.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 11


American Financial Group, Inc.

Consolidated Balance Sheet

($ in millions)

   LOGO

 

     9/30/23     6/30/23     3/31/23     12/31/22     9/30/22     6/30/22  

Assets:

            

Total cash and investments

   $ 14,794     $ 14,489     $ 14,451     $ 14,512     $ 14,322     $ 14,268  

Recoverables from reinsurers

     4,421       3,852       3,838       3,977       4,108       3,567  

Prepaid reinsurance premiums

     1,223       1,112       1,021       917       1,180       1,006  

Agents’ balances and premiums receivable

     2,088       1,796       1,459       1,339       1,698       1,623  

Deferred policy acquisition costs

     324       316       285       288       292       293  

Assets of managed investment entities

     4,871       5,235       5,391       5,447       5,099       5,218  

Other receivables

     1,377       721       637       886       1,328       740  

Other assets

     1,422       1,281       1,153       1,219       1,259       1,123  

Goodwill

     305       246       246       246       246       246  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 30,825     $ 29,048     $ 28,481     $ 28,831     $ 29,532     $ 28,084  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and Equity:

            

Unpaid losses and loss adjustment expenses

   $ 12,891     $ 11,925     $ 11,761     $ 11,974     $ 12,067     $ 11,201  

Unearned premiums

     3,997       3,686       3,435       3,246       3,785       3,397  

Payable to reinsurers

     1,398       1,038       911       1,035       1,366       971  

Liabilities of managed investment entities

     4,728       5,098       5,258       5,332       5,002       5,133  

Long-term debt

     1,474       1,474       1,478       1,496       1,533       1,542  

Other liabilities

     2,356       1,834       1,697       1,696       1,847       1,773  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

   $ 26,844     $ 25,055     $ 24,540     $ 24,779     $ 25,600     $ 24,017  

Shareholders’ equity:

            

Common stock

   $ 84     $ 85     $ 85     $ 85     $ 85     $ 85  

Capital surplus

     1,372       1,377       1,374       1,368       1,358       1,351  

Retained earnings

     3,095       3,042       2,933       3,142       3,091       2,979  

Unrealized gains (losses) - fixed maturities

     (521     (464     (413     (497     (554     (326

Unrealized gains (losses) - fixed maturity-related cash flow hedges

     (34     (33     (21     (29     (29     (8

Other comprehensive income (loss), net of tax

     (15     (14     (17     (17     (19     (14
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     3,981       3,993       3,941       4,052       3,932       4,067  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and equity

   $ 30,825     $ 29,048     $ 28,481     $ 28,831     $ 29,532     $ 28,084  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 12


American Financial Group, Inc.  

Book Value Per Share and Price / Book Summary  

(in millions, except per share information)  

   LOGO

 

     9/30/23     6/30/23     3/31/23     12/31/22     9/30/22     6/30/22  

Shareholders’ equity

   $ 3,981     $ 3,993     $ 3,941     $ 4,052     $ 3,932     $ 4,067  

Unrealized (gains) losses related to fixed maturities

     555       497       434       526       583       334  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted shareholders’ equity

     4,536       4,490       4,375       4,578       4,515       4,401  

Goodwill

     (305     (246     (246     (246     (246     (246

Intangibles

     (217     (102     (105     (108     (111     (101
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible adjusted shareholders’ equity

   $ 4,014     $ 4,142     $ 4,024     $ 4,224     $ 4,158     $ 4,054  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common shares outstanding

     84.136       84.859       85.172       85.204       85.141       85.154  

Book value per share:

            

Book value per share

   $ 47.31     $ 47.06     $ 46.27     $ 47.56     $ 46.18     $ 47.76  

Adjusted (a)

     53.90       52.90       51.37       53.73       53.03       51.68  

Tangible, adjusted (b)

     47.71       48.80       47.25       49.58       48.84       47.60  

Market capitalization

            

AFG’s closing common share price

   $  111.67     $ 118.75     $ 121.50     $ 137.28     $ 122.93     $  138.81  

Market capitalization

   $ 9,395     $  10,077     $  10,348     $  11,697     $  10,466     $ 11,820  

Price / Adjusted book value ratio

     2.07       2.24       2.37       2.56       2.32       2.69  

 

(a)

Excludes unrealized gains (losses) related to fixed maturity investments.

(b)

Excludes unrealized gains (losses) related to fixed maturity investments, goodwill and intangibles.

 

Page 13


American Financial Group, Inc.

Capitalization

($ in millions)

   LOGO

 

     9/30/23     6/30/23     3/31/23     12/31/22     9/30/22     6/30/22  

AFG senior obligations

   $ 823     $ 823     $ 828     $ 846     $ 884     $ 893  

Borrowings drawn under credit facility

     —        —        —        —        —        —   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Debt excluding subordinated debt

   $ 823     $ 823     $ 828     $ 846     $ 884     $ 893  

AFG subordinated debentures

     675       675       675       675       675       675  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total principal amount of long-term debt

   $ 1,498     $ 1,498     $ 1,503     $ 1,521     $ 1,559     $ 1,568  

Shareholders’ equity

     3,981       3,993       3,941       4,052       3,932       4,067  

Less:

            

Unrealized (gains) losses related to fixed maturity investments

     555       497       434       526       583       334  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total adjusted capital

   $ 6,034     $ 5,988     $ 5,878     $ 6,099     $ 6,074     $ 5,969  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratio of debt to total adjusted capital:

            

Including subordinated debt

     24.8     25.0     25.6     24.9     25.7     26.3

Excluding subordinated debt

     13.6     13.7     14.1     13.9     14.6     15.0

 

Page 14


American Financial Group, Inc.

Additional Supplemental Information

($ in millions)

   LOGO

 

     Three Months Ended      Nine Months Ended  
     9/30/23      6/30/23      3/31/23      12/31/22      9/30/22      9/30/23      9/30/22  

Property and Casualty Insurance

                    

Paid Losses (GAAP)

   $ 805      $ 802      $ 881      $ 914      $ 776      $ 2,488      $ 2,168  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     9/30/23     6/30/23     3/31/23     12/31/22     9/30/22     6/30/22  

GAAP Equity (excluding AOCI)

            

Property and Casualty Insurance

   $ 5,786     $ 5,581     $ 5,392     $ 5,433     $ 5,527     $ 5,399  

Parent and other subsidiaries

     (1,235     (1,077     (1,000     (838     (993     (984
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

AFG GAAP Equity (excluding AOCI)

   $ 4,551     $ 4,504     $ 4,392     $ 4,595     $ 4,534     $ 4,415  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowable dividends without regulatory approval

            

Property and Casualty Insurance

   $ 887     $ 887     $ 887     $ 887     $ 843     $ 843  

 

Page 15


American Financial Group, Inc.

Total Cash and Investments

($ in millions)

   LOGO

 

     Carrying Value - September 30, 2023  
     Property and
Casualty
Insurance
     Parent &
Other
     Consolidate
CLOs
    Total AFG
Consolidated
     % of
Investment
Portfolio
 

Total cash and investments:

             

Cash and cash equivalents

   $ 1,074      $ 147      $ —      $ 1,221        8

Fixed maturities - Available for sale

     9,761        170        —        9,931        67

Fixed maturities - Trading

     51        —         —        51        1

Equity securities - Common stocks

     588        —         —        588        4

Equity securities - Perpetual preferred

     419        —         —        419        3

Investments accounted for using the equity method

     1,806        1        —        1,807        12

Mortgage loans

     644        —         —        644        4

Real estate and other investments

     181        95        (143     133        1
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total cash and investments

   $ 14,524      $ 413      $ (143   $ 14,794        100
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

     Carrying Value - December 31, 2022  
     Property and
Casualty
Insurance
     Parent &
Other
     Consolidate
CLOs
    Total AFG
Consolidated
     % of
Investment
Portfolio
 

Total cash and investments:

             

Cash and cash equivalents

   $ 622      $ 250      $ —      $ 872        6

Fixed maturities - Available for sale

     9,505        590        —        10,095        70

Fixed maturities - Trading

     32        —         —        32        0

Equity securities - common stocks

     553        —         —        553        4

Equity securities - perpetual preferred

     457        —         —        457        3

Investments accounted for using the equity method

     1,699        1        —        1,700        12

Mortgage loans

     676        —         —        676        4

Real estate and other investments

     153        89        (115     127        1
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total cash and investments

   $ 13,697      $ 930      $ (115   $ 14,512        100
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

Page 16


American Financial Group, Inc.

 

Net Investment Income

 

($ in millions)

   LOGO

 

     Three Months Ended     Nine Months Ended  
     9/30/23     6/30/23     3/31/23     12/31/22     9/30/22     9/30/23     9/30/22  

Property and Casualty Insurance:

              

Gross investment income excluding alternative investments

              

Fixed maturities

   $ 121     $ 117     $ 112     $ 107     $ 93     $ 350     $ 250  

Equity securities

     8       8       9       13       8       25       23  

Other investments (a)

     19       16       13       14       12       48       26  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross investment income excluding alternative investments

     148       141       134       134       113       423       299  

Gross investment income from alternative investments (b)

     25       55       78       28       36       158       237  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total gross investment income

     173       196       212       162       149       581       536  

Investment expenses

     (3     (5     (5     (3     (4     (13     (12
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net investment income

   $ 170     $ 191     $ 207     $ 159     $ 145     $ 568     $ 524  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average cash and investments (c)

   $ 14,899     $ 14,498     $ 14,350     $ 14,304     $ 14,105     $ 14,624     $ 13,981  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average yield - fixed maturities before inv expenses (d)

     4.68     4.62     4.40     4.15     3.73     4.56     3.43

Average yield - overall portfolio, net (d)

     4.56     5.27     5.77     4.45     4.11     5.18     5.00

Average tax equivalent yield - overall portfolio, net (d)

     4.63     5.34     5.83     4.53     4.21     5.25     5.10

AFG consolidated net investment income:

              

Property & Casualty core

   $ 170     $ 191     $ 207     $ 159     $ 145     $ 568     $ 524  

Parent & other

     10       12       11       9       10       33       15  

Consolidate CLOs

     (12     (5     (1     —        (4     (18     10  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net investment income

   $ 168     $ 198     $ 217     $ 168     $ 151     $ 583     $ 549  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average cash and investments (c)

   $ 15,264     $ 15,025     $ 15,058     $ 15,083     $ 14,852     $ 15,161     $ 15,254  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average yield - overall portfolio, net (d)

     4.40     5.27     5.76     4.46     4.07     5.13     4.80

Average yield - fixed maturities before inv expenses (d)

     4.74     4.67     4.43     4.19     3.74     4.60     3.32

 

(a)

Includes income from mortgage loans, real estate, short-term investments, and cash equivalents.  

 

(b)

Investment income on alternative investments is detailed on page 18.  

 

(c)

Average cash and investments is the average of the beginning and ending quarter balances, or the average of the five quarters balances.

 

(d)

Average yield is calculated by dividing investment income for the period by the average balance.  

 

Page 17


American Financial Group, Inc.

Alternative Investments

($ in millions)

   LOGO

 

    Three Months Ended     Nine Months
Ended
 
    9/30/23     6/30/23     3/31/23     12/31/22     9/30/22     9/30/23     9/30/22  

Property and Casualty Insurance:

             

Net Investment Income

             

Convertible fixed maturities MTM through investment income

    $ (11   $ 8     $ 4     $ —      $ —      $ 1     $ —   

Equity securities MTM through investment income (a)

    7       14       16       7       (5     37       1  

Investments accounted for using the equity method (b)

    17       28       57       21       37       102       246  

AFG managed CLOs (eliminated in consolidation)

    12       5       1       —        4       18       (10
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Property & Casualty

  $ 25     $ 55     $ 78     $ 28     $ 36     $ 158     $ 237  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Investments

             

Convertible fixed maturities MTM through investment income

  $ 17     $ 28     $ 19     $ —      $ —      $ 17     $ —   

Equity securities MTM through investment income (a)

    411       423       377       332       289       411       289  

Investments accounted for using the equity method (b)

    1,806       1,755       1,732       1,699       1,661       1,806       1,661  

AFG managed CLOs (eliminated in consolidation)

    143       136       132       115       97       143       97  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Property & Casualty

  $ 2,377     $ 2,342     $ 2,260     $ 2,146     $ 2,047     $ 2,377     $ 2,047  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Annualized Return—Property & Casualty

    4.2     9.6     14.2     5.3     7.1     9.2     16.1

AFG Consolidated:

             

Net Investment Income

             

Convertible fixed maturities MTM through investment income

    $ (11   $ 8     $ 4     $ —      $ —      $ 1     $ —   

Equity securities MTM through investment income (a)

    7       14       16       7       (5     37       1  

Investments accounted for using the equity method (b)

    17       28       57       21       37       102       246  

AFG managed CLOs (eliminated in consolidation)

    12       5       1       —        4       18       (10
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total AFG Consolidated

  $ 25     $ 55     $ 78     $ 28     $ 36     $ 158     $ 237  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Investments

             

Convertible fixed maturities MTM through investment income

  $ 17     $ 28     $ 19     $ —      $ —      $ 17     $ —   

Equity securities MTM through investment income (a)

    411       423       377       332       289       411       289  

Investments accounted for using the equity method (b)

    1,807       1,756       1,733       1,700       1,661       1,807       1,661  

AFG managed CLOs (eliminated in consolidation)

    143       136       132       115       97       143       97  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total AFG Consolidated

  $ 2,378     $ 2,343     $ 2,261     $ 2,147     $ 2,047     $ 2,378     $ 2,047  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Annualized Return—AFG Consolidated

    4.2     9.6     14.2     5.3     7.1     9.2     16.1

 

(a)

AFG records holding gains and losses in net investment income on its portfolio of limited partnerships and similar investments that do not qualify for equity method accounting and certain other securities classified at purchase as “fair value through net investment income.”

(b)

The majority of AFG’s investments accounted for using the equity method mark their underlying assets to market through net income.

 

Page 18


American Financial Group, Inc.

Fixed Maturities - By Security Type - AFG Consolidated

($ in millions )

   LOGO

 

September 30, 2023

   Book Value
(a)
     Fair Value      Unrealized
Gain (Loss)
    % of Fair
Value
    % of
Investment
Portfolio
 

US Government and government agencies

   $ 240      $ 229      $ (11     2     2

States, municipalities and political subdivisions

     986        911        (75     9     6

Foreign government

     274        264        (10     3     2

Residential mortgage-backed securities

     1,813        1,619        (194     16     11

Commercial mortgage-backed securities

     78        76        (2     1     1

Collateralized loan obligations

     1,754        1,723        (31     17     12

Other asset-backed securities

     2,436        2,277        (159     23     15

Corporate and other bonds

     3,060        2,883        (177     29     19
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total AFG consolidated

   $ 10,641      $ 9,982