American Financial Group Announces Agreement to Sell Puerto Rico Subsidiary and Increased Earnings Guidance
20 12월 2005 - 6:34AM
PR Newswire (US)
CINCINNATI, Dec. 19 /PRNewswire-FirstCall/ -- American Financial
Group, Inc. (NYSE:AFG) Nasdaq today announced that its 82% owned
subsidiary, Great American Financial Resources, Inc. ("GAFRI"), has
reached an agreement to sell Great American Life Assurance Company
of Puerto Rico ("GA-PR") to Triple-S Management Corporation, also
of Puerto Rico. The sale is expected to close in the first quarter
of 2006, subject to customary conditions including regulatory
approvals. AFG does not expect to record a material after-tax gain
or loss on the sale. (Logo:
http://www.newscom.com/cgi-bin/prnh/20041208/CLW086LOGO) S. Craig
Lindner, GAFRI's Chief Executive Officer and AFG Co-CEO, commented,
"Our investment in Great American Life of Puerto Rico has been very
profitable and represents another example of our ability to create
shareholder value through successful acquisitions. Since its
acquisition in 1997 for approximately $50 million, we have recorded
more than $81 million in GAAP earnings from GA-PR. We expect this
transaction to be dilutive to AFG's annual operating earnings by
about $0.07 to $0.10 per share until the proceeds are reinvested in
an acquisition or otherwise deployed at appropriate returns.
However, we believe the sale provides us with significant capital
to invest in GAFRI's core U. S. operations and allows the company
to focus on its expertise in the annuity, supplemental and life
insurance operations. Each of these core lines of business is
projected to produce operating earnings growth in 2006. Following
the sale of Great American Life of Puerto Rico, we expect GAFRI to
have approximately $200 million of excess capital available for
acquisitions, organic growth, or other transactions designed to
increase shareholder value. The financial strength and liquidity of
both GAFRI and AFG have never been higher. GAFRI is currently
pursuing several opportunities to grow its core lines of business
organically and through acquisitions." AFG also announced that it
is pursuing the commutation of certain residual value exposures
within its property and casualty insurance operations as part of a
current strategic review of its residual value business. In
addition, AFG expects greater than anticipated profits from its
crop insurance businesses in the fourth quarter of 2005. Carl H.
Lindner III, AFG Co-CEO, stated, "While our operating results are
generally developing as expected for 2005, we are revising our
earnings guidance to between $3.65 and $3.70 per share to reflect
an adverse effect from the pending commutation and better than
expected crop results." Management's previous guidance was between
$3.55 and $3.70 per share. Guidance excludes the benefit from real
estate and asset sales as well as the impact of a 2005 third
quarter asbestos and environmental reserve charge and, as disclosed
today by GAFRI in its news release, any potential write-offs of
deferred acquisition costs. Looking forward, Mr. Lindner III
stated, "We are revising our earnings guidance upward for 2006 to
between $3.80 and $4.15 per share from $3.70 and $4.00 per share.
This change is primarily due to an improved outlook for our
Specialty Financial Group as a result of the commutation of the
residual value business, partially offset by the potential earnings
dilution from the GA-PR sale. We now expect the Specialty Financial
Group to achieve underwriting profitability beginning in the first
quarter of 2006." About American Financial Group, Inc. 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 and life insurance 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 and their effect on future premiums,
revenues, earnings and investment activities; recoverability of
asset values; expected losses and the adequacy of reserves for
asbestos, environmental pollution and mass tort claims; rate
increases and improved loss experience. 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, the availability of capital,
regulatory actions and changes in the legal environment affecting
AFG or its customers, tax law changes, levels of natural
catastrophes, terrorist activities, including any nuclear,
biological, chemical or radiological events, incidents of war and
other major losses, development of insurance loss reserves 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, trends in
mortality and morbidity, competitive pressures, including the
ability to obtain rate increases, and changes in debt and claims
paying ratings.
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://www.greatamericaninsurance.com/
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