American Financial Group, Inc. Q3 FY2025 earnings call

• Core net operating earnings were $2.69 per share, a 16% increase from the prior year.
• Net investment income increased 5% year-over-year due to higher interest rates and invested assets.
• Underwriting margins in Specialty Property and Casualty were strong, with a 19% growth in underwriting profit and a 93% combined ratio.
• Dividends: Regular quarterly dividend increased 10% to $0.88 per share, and a special dividend of $2 per share declared.
• Alternative investments: Annualized return of 6.2% in Q3 2025, with multifamily showing signs of recovery and expectation of 10% or better annual returns long-term.
• P&C operations: Renewal pricing up ~5%, excluding crop, gross written premiums grew, and combined ratios improved in various groups.

American Financial Group reported an annualized core operating return on equity of 19% for the third quarter. In the Specialty Property and Casualty insurance businesses, underwriting margins were strong. Net investment income increased by 5% year-over-year. The investment portfolio has nearly 2/3 invested in fixed maturities, with yields around 5.25% for fixed maturities. The annualized return on alternative investments in the P&C portfolio was approximately 6.2% for Q3 2025. Excluding the crop business, gross written premiums in the Property and Transportation Group grew by 2% and net written premiums were flat. The Specialty and Casualty Group had a 95.8% combined ratio, with 3% growth in gross written premiums. The Specialty Financial Group had a combined ratio of 81.1%, with 3% growth in gross written premiums.

• Expect excess capital throughout 2025 and 2026 for acquisitions, special dividends, or share repurchases.
• Project 2026 premium growth to rebound due to start-ups and completed underwriting actions.
• Anticipate improved results in multifamily properties by end of 2026 as supply tightens and development pipeline reduces.

• Forward-looking statements involve risks and uncertainties that could materially affect results, detailed in SEC filings.

Q: First question on capital management, why no material buybacks?

A: Craig Lindner said they are active in repurchasing when stock is at significant discount, retained dry powder to repurchase if opportunity presents.

Q: Pivoting to P&C operating environment, pricing about 5% with and without comp, comment on loss trends?

A: Carl Lindner said 5% price increase exceeds prospective loss ratio trends due to diverse business mix.

Q: On workers' comp, any other geographies seeing pricing tick up?

A: Carl Lindner said strategic comp business had positive price change, Southeast and Summit had mid-single-digit price decline.

Q: On crop, outlook for intermediate term crop premium and pricing with trade changes?

A: Carl Lindner said trade policies reflected in futures prices, prices likely stable or improving, but actual determined by first quarter 2026 30-day average.

Q: On crop, higher percentage of earned premiums in Property and Transportation?

A: Brian Hertzman said last year had more crop income in Q3, this year half of crop premium earned in Q3, accident year loss ratio improved excluding crop noise.

Q: On new participating insurance company impact on crop premium?

A: Carl Lindner said it impacts marginally, likely getting business they're least excited about.