American Financial Group reports rise in 2019 FY earnings

American Financial Group’s (AFG) core net operating earnings rose significantly in 2019 with the firm’s co-chief executives pointing to the full year results as a demonstration of the “strength of our portfolio”.

The firm’s P&C and specialty segments saw a rise in gross written premiums but the combined ratio for each of these segments deteriorated by 2 percent.

The company reported core net operating earnings of $784 million, up from £761 million in 2018.

Gross written premiums for the group’s specialty P&C operations 2019 were $7.2 billion, up 7 percent from $6.8 billion in 2018. The combined ratio for the P&C segment was 95.8 percent in 2019, representing a deterioration from 93.8 percent the year before.

The combined ratio for specialty also worsened to 93.7 percent in 2019 from 93.4 percent in 2018.

Carl Lindner and Craig Lindner, AFG’s co-chief executive officers, commented: “We are very pleased with AFG’s continued strong core operating earnings, which generated an impressive core operating return on equity of 15 percent in 2019. We believe these results demonstrate the strength of our portfolio of diversified specialty insurance businesses, and the value of our in-house investment management team, American Money Management.

“AFG had approximately $1.1 billion of excess capital (including parent company cash of approximately $165 million) at December 31, 2019. 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.

“In addition, returning capital to shareholders in the form of regular and special cash dividends and opportunistic share repurchases is also an important and effective component of our capital management strategy. Over the past year, we increased our quarterly dividend by 12.5 percent and paid special dividends of $3.30 per share. We expect AFG’s core net operating earnings in 2020 to be between $8.75 and $9.25 per share. Our core earnings per share guidance excludes non-core items such as realised gains and losses, annuity non-core earnings 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.”