In This Article:
It has been about a month since the last earnings report for American Financial Group (AFG). Shares have lost about 0.7% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is American Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
American Financial Q4 Earnings Miss, Revenues Beat Estimates
American Financial Group, Inc. reported fourth-quarter 2024 net operating earnings per share of $3.12, which missed the Zacks Consensus Estimate by 2.5%. The bottom line increased 9.9% year over year.American Financial’s results reflected higher premiums, increased average renewal pricing across the P&C group and improved net investment income. Higher expenses and catastrophe losses were the offsets.
Behind the Headlines
Total revenues of $2.1 billion increased 7.2% year over year. The growth came on the back of higher P&C insurance net earned premiums and net investment income. The top line beat the Zacks Consensus Estimate by 3.5%. Net investment income climbed 22% year over year to $194 million in the quarter under review. The figure was higher than our estimate of $166.9 million and beat the Zacks Consensus Estimate of $188 million. Total cost and expenses increased 4.6% year over year to $1.8 billion due to higher P&C insurance losses and expenses. Our estimate was also $1.8 billion.
Segmental Update
The Specialty P&C Insurance segment generated $2 billion in net written premiums, which rose 3% year over year. The growth reflects new business opportunities, a good renewal rate environment and increased exposure in many businesses. Average renewal pricing across P&C Group, excluding workers’ compensation, was up approximately 8% in the quarter.
Net written premiums in Property & Transportation Group decreased 6% year over year to $399 million in the quarter. The figure was lower than our estimate of $542 million. Net written premiums at Specialty Casualty Group increased 4% year over year to $725 million. The figure was higher than our estimate of $679.3 million.
Further, net written premiums at Specialty Financial increased 12% year over year to $279 million. The figure was lower than our estimate of $286.6 million. Net written premiums at other divisions dropped 17% year over year to $57 million. The figure was lower than our estimate of $79.5 million. The Specialty P&C Insurance segment’s underwriting profit decreased 3.6% year over year to $204 million in the quarter. The figure was lower than our estimate of $228.7 million.
Higher underwriting profit in Property and Transportation and Specialty Financial Groups was offset by lower year-over-year underwriting profit in the Specialty Casualty Group. The combined ratio deteriorated 130 basis points (bps) year over year to 89% in the segment.