American Financial Group Announces Strong Growth in Earnings From Insurance Operations in First Quarter
27 4월 2005 - 7:01AM
PR Newswire (US)
American Financial Group Announces Strong Growth in Earnings From
Insurance Operations in First Quarter CINCINNATI, April 26
/PRNewswire-FirstCall/ -- American Financial Group, Inc. (NYSE:AFG)
today reported net earnings for the 2005 first quarter of $62.9
million ($.81 per share), reflecting significantly higher earnings
from the insurance operations compared to the same period a year
ago. The results for 2005 included $5.9 million ($.08 per share) of
net realized losses on investments. Net earnings for the 2004 first
quarter of $73.2 million ($.98 per share) included $22.3 million
($.30 per share) of net realized gains. (Logo:
http://www.newscom.com/cgi-bin/prnh/20041208/CLW086LOGO ) In
addition to net earnings, AFG has consistently utilized "core
earnings", a non-GAAP financial measure commonly used in the
insurance industry, as an economic measure. Many investors and
analysts focus on this non-GAAP measure which sets aside items that
may not be indicative of core operations, such as net realized
gains (losses) on investments, discontinued operations, cumulative
effect of accounting changes and other non recurring items. AFG
believes that excluding the impact of these items is useful in
analyzing operating trends. A reconciliation of this non-GAAP
measure to net earnings is included in the accompanying summary of
earnings. Core earnings from insurance operations were $69.9
million ($.90 per share) for the 2005 first quarter, 31% above the
previous year's first quarter of $53.4 million ($.72 per share).
The increase results primarily from higher underwriting profits
within the property and casualty ("P&C") insurance operations
as well as improved operating earnings within the annuity,
supplemental insurance and life group. Details of the financial
results may be found in the accompanying schedules. Craig Lindner
and Carl Lindner III, AFG's Co-Chief Executive Officers, jointly
stated that, first quarter results were above expectations and
provide an excellent start for meeting the company's objectives for
the year. Continued growth in core earnings from insurance
operations is expected in 2005 compared to 2004. While first
quarter results were very strong and well above the range of
analysts' estimates, management believes it is premature to adjust
2005 core earnings guidance of $3.15 to $3.40 per share. The
P&C specialty insurance operations generated an underwriting
profit of $43.3 million in the 2005 first quarter, 33% above the
same quarter last year. The combined ratio improved to 92.1%, 1.2
points better than the 2004 first quarter. Gross written premiums
for the 2005 quarter grew approximately 6% compared with the same
period a year ago, reflecting solid volume growth and continuing
moderation in rate increases. Average rates in the 2005 first
quarter were at about the same level as a year earlier. Net written
premiums for the 2005 quarter were 10% above the 2004 period,
reflecting the underlying business growth coupled with continued
reductions in premiums ceded under reinsurance agreements. Further
details of the P&C Specialty operations may be found in the
accompanying schedules. Carl Lindner III commented: "We are pleased
with the sustained strong underwriting performance of our P&C
Specialty Group in the 2005 quarter. Despite the more competitive
pricing environment, we experienced solid growth in net written
premiums largely due to volume growth in the property and
transportation and California workers' compensation groups, coupled
with our decision not to reinsure as much of our business. Most of
our businesses continue to report substantial underwriting profits
as a result of strong underwriting and pricing discipline and
prudent claims management. In this softer market, we will focus on
maintaining rate adequacy even if it means limiting or reducing
business volume in certain lines of business. We believe our
overall average rate will remain relatively flat for the remainder
of the year." The Property and Transportation businesses continued
to report outstanding results with a combined ratio of 82.8% for
the 2005 first quarter, 0.7 points better than the 2004 first
quarter. Nearly every business line generated a solid underwriting
profit. Gross and net written premiums grew 16% and 38%,
respectively, over the 2004 first quarter primarily due to volume
growth in our transportation and marine insurance businesses. The
higher growth in net written premiums was attributable to lower
premiums ceded under reinsurance agreements principally within the
inland marine operation. The California Workers' Compensation
business also generated higher underwriting profits in the 2005
quarter due to the effects of improving claims results. Gross
written premiums grew 8% over the 2004 period, reflecting solid
volume growth partly offset by lower rates. Rate decreases averaged
about 6% for the 2005 quarter. Claims results continued to benefit
from the workers' compensation reforms enacted in 2003 and 2004 in
California. The Specialty Casualty group reported an underwriting
profit for the 2005 quarter, with a combined ratio of 96.4%, 2.6
points higher than the comparable 2004 period but a considerable
improvement over the last two quarters of 2004. The excess and
surplus businesses generated outstanding underwriting profits which
were partly offset by $12.7 million of unfavorable development
within the executive and professional liability operations. Gross
written premiums declined modestly as expected, compared to the
2004 period. The Specialty Financial businesses' increase in gross
premiums during the 2005 quarter was driven primarily by growth in
the dealer services and fidelity and crime businesses. The combined
ratio for the 2005 quarter was 3.4 points above the same period a
year ago, but improved significantly over the last quarter of 2004.
Mr. Lindner continued, "I expect continuing strong underwriting
performance from our Property and Transportation and Workers'
Compensation businesses. I am optimistic that the 2005 underwriting
margins in our Specialty Casualty and Financial groups will improve
as compared to the 2004 results. We will continue to allocate
capital within our very diverse businesses to achieve the highest
returns. We are well-positioned to meet the challenges of our
target markets within the commercial insurance industry and to
contribute to the company's continuing earnings growth." The
Annuity, Supplemental Insurance and Life Group reported core net
operating earnings of $18.3 million for the first quarter of 2005
compared to $14.4 million for the 2004 period. The increase was due
to improved results in each of this group's business lines.
Statutory premiums were 34% higher in the 2005 quarter than in the
same period a year ago as a result of increased sales of single
premium fixed annuities. Premiums in 2005 included approximately
$100 million of fixed annuity premiums from policyholders of an
unaffiliated company in rehabilitation who chose to transfer their
funds to our company. Craig Lindner commented, "We are pleased with
our group's increase in core net operating earnings for the 2005
first quarter over the 2004 period. Our supplemental insurance
operations continue to produce excellent results. The results of
our fixed annuity operations continue to improve as the general
level of interest rates have begun to moderate from the
historically low levels which existed over the last two years. The
recent introduction of a number of fixed annuity products that are
designed to meet the needs of the kindergarten through 12th grade
teacher market demonstrate our continued commitment to that market.
We have also introduced a series of new products designed to meet
the needs of our single premium market. We continue to benefit from
the operational improvements and cost efficiencies that have been
implemented over the last several years. We have an infrastructure
that will support significant growth with minimal marginal costs.
As a result, we continue to pursue growth both organically and
through targeted acquisitions." A reconciliation of "core net
operating earnings", a non-GAAP measure, to net income as well as
further details may also be found in the earnings release issued
today by Great American Financial Resources, Inc. (NYSE:GFR). AFG
owns 82% of GFR common stock and a proportional share of its
earnings is included in AFG's results. Through the operations of
the Great American Insurance Group, AFG is engaged primarily in
property and casualty insurance, focusing on specialized commercial
products for businesses, and in the sale of retirement annuities,
supplemental insurance and life products. Forward Looking
Statements This press release contains certain statements that may
be deemed to be "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements in this press
release not dealing with historical results are forward-looking and
are based on estimates, assumptions and projections. Examples of
such forward-looking statements include statements relating to: the
Company's expectations concerning market and other conditions,
future premiums, revenues and earnings, and rate increases. Actual
results could differ materially from those expected by AFG
depending on certain factors including but not limited to: the
unpredictability of possible future litigation if certain
settlements do not become effective, changes in economic conditions
including interest rates, performance of securities markets, and
the availability of capital, regulatory actions, changes in legal
environment, judicial decisions and rulings, tax law changes,
levels of catastrophes and other major losses, adequacy of loss
reserves of the insurance businesses and 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,
including the ability to obtain rate increases, changes in debt and
claims paying ratings and other changes in market conditions that
could affect AFG's insurance operations. The forward-looking
statements are made only as of this date. The Company assumes no
obligation to publicly update any forward-looking statements.
Conference Call The company will hold a conference call to discuss
2005 first quarter results at 10:00 a.m. (EDT) tomorrow, April 27,
2005. Toll-free telephone access will be available by dialing
1-800-260-8140. Please dial in 5 to 10 minutes prior to the
scheduled start time of the call. A replay of the call will also be
available at around 1:00 p.m. (EDT) on April 27, 2005 until 8:00
p.m. on May 4, 2005. To listen to the replay, dial 1-888-286-8010
and provide the confirmation code 91207414. The conference call
will also be broadcast over the Internet. To listen to the call via
the Internet, go to AFG's website, http://www.afginc.com/ and
follow the instructions at the Webcast link. (Financial summaries
follow) This earnings release and additional Financial Supplements
are available at AFG's web site: http://www.afginc.com/ . AMERICAN
FINANCIAL GROUP, INC. AND SUBSIDIARIES SUMMARY OF EARNINGS (In
Millions, Except Per Share Data) Three months ended March 31, 2005
2004 Operating revenues $ 936.9 $ 833.2 Costs and expenses 831.9
754.8 105.0 78.4 Related income taxes 35.1 25.0 Core earnings from
insurance operations 69.9 53.4 Non-core items, net of tax: Realized
investment gains (losses) (5.9) 22.3 Other (1.1) (.7) Cumulative
effect of an accounting change(a) - (1.8) Net earnings $62.9 $73.2
Diluted Earnings (Loss) per Common Share: Core from insurance
operations $.90 $.72 Realized investment gains (losses) (.08) .30
Other (.01) (.01) Cumulative effect of an accounting change(a) -
(.03) Net earnings available to common Shares $.81 $.98 Average
number of Diluted Shares 77.8 74.3 (a) Reflects the implementation
of an accounting change related to long duration contracts mandated
by Statement of Position 03-1. March 31, December 31, 2005 2004
Selected Balance Sheet Data: Total Cash and Investments $15,722
$15,637 Long-term Debt $ 1,015 $ 1,029 Payable to Subsidiary Trusts
(Issuers of preferred securities) $78 $78 Shareholders' Equity $
2,359 $ 2,431 Book Value Per Share $ 30.65 $ 31.72 Book Value Per
Share (Excluding unrealized gains on fixed maturities) $ 29.73 $
29.35 Common Shares Outstanding 77.0 76.6 AMERICAN FINANCIAL GROUP,
INC. P&C SPECIALTY GROUP UNDERWRITING RESULTS (In Millions)
Three months ended March 31, Percentage 2005 2004 Change Gross
written premiums $856 $807 6% Net written premiums $593 $537 10%
Ratios (GAAP): Loss & LAE ratio 63.3% 63.0% Expense ratio 28.6%
30.1% Policyholder dividend ratio .2% .2% Combined Ratio 92.1% 3.3%
Supplemental: Gross Written Premiums: Property & Transportation
$277 $240 16% Specialty Casualty 358 363 (2%) Specialty Financial
116 107 9% California Workers' Compensation 104 96 8% Other 1 1 -
$856 $807 6% Net Written Premiums: Property & Transportation
$203 $147 38% Specialty Casualty 186 198 (6%) Specialty Financial
96 91 6% California Workers' Compensation 93 84 11% Other 15 17
(13%) $593 $537 10% Combined Ratio (GAAP): Property &
Transportation 82.8% 83.5% Specialty Casualty 96.4% 93.8% Specialty
Financial 104.3% 100.9% California Workers' Compensation 85.1%
95.2% Aggregate Specialty Group 92.1% 93.3% Notes: 1. Property
& Transportation includes primarily physical damage and
liability coverage for buses, trucks and recreational vehicles,
inland and ocean marine, agricultural-related products and other
property coverages. 2. Specialty Casualty includes primarily excess
and surplus, general liability, executive and professional
liability and customized programs for small to mid-sized
businesses. 3. Specialty Financial includes risk management
insurance programs for lending and leasing institutions, surety and
fidelity bonds and trade credit insurance. 4. California Workers'
Compensation consists of a subsidiary that writes workers'
compensation insurance primarily in the state of California. 5.
Other includes an internal reinsurance facility and discontinued
lines. http://www.newscom.com/cgi-bin/prnh/20041208/CLW086LOGO
http://photoarchive.ap.org/ DATASOURCE: American Financial Group,
Inc. CONTACT: Anne N. Watson, Vice President-Investor Relations of
American Financial Group, Inc., +1-513-579-6652 Web site:
http://www.afginc.com/ http://greatamericaninsurance.com/
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