/C O R R E C T I O N -- American Financial Group, Inc./
27 4월 2006 - 12:10AM
PR Newswire (US)
In the news release, American Financial Group Announces Record
First Quarter Core Net Operating Earnings, issued yesterday, April
25, by American Financial Group, Inc. (NYSE: AFG; Nasdaq) over PR
Newswire, the first paragraph, second sentence, should have read
"The increase results from higher earnings from the company's
insurance operations and net realized gains on investments versus
net realized losses in the 2005 period." That sentence was
incorrectly transmitted by PR Newswire. Complete, corrected release
follows: CINCINNATI, April 25 /PRNewswire-FirstCall/ -- American
Financial Group, Inc. (NYSE:AFG) Nasdaq today reported net earnings
of $101.5 million ($1.27 per share) for the 2006 first quarter
compared to $62.9 million ($.81 per share) reported in the 2005
first quarter. The increase results from higher earnings from the
company's insurance operations and net realized gains on
investments versus net realized losses in the 2005 period.
Investment gains include an after-tax gain of $15.3 million ($.19
per share) from the previously announced sale of the company's
interest in the Cincinnati Reds. (Logo:
http://www.newscom.com/cgi-bin/prnh/20041208/CLW086LOGO) Record
core net operating earnings of $86.1 million ($1.08 per share) for
the first quarter of 2006 were up 23% from the comparable period a
year earlier, reflecting significantly improved results within the
specialty property and casualty insurance ("P&C") operations.
For the 2006 first quarter, this group's underwriting profit was
61% higher than in the 2005 first quarter. AFG's net earnings
include certain items that may not be indicative of its ongoing
core operations. The following table identifies such items and
reconciles net earnings to core net operating earnings, a non-GAAP
financial measure that AFG believes is a useful tool for investors
and analysts in analyzing ongoing operating trends. Three months
ended In millions, except per share amounts March 31, 2006 2005 Net
earnings (see components below) $101.5 $62.9 Components of net
earnings: Core net operating earnings $86.1 $69.9 Realized
investment gains (losses) 18.8(a) (5.9) Other(b) (3.4) (1.1) Net
earnings $101.5 $62.9 Diluted EPS (see components below) $1.27 $81
Components of EPS: Core net operating earnings $1.08 $.90 Realized
investment gains (losses) .23(a) (.08) Other (b) (.04) (.01)
Diluted EPS $1.27 $.81 Footnotes a-b are contained in the
accompanying Notes To Financial Schedules at the end of this
release. Craig Lindner and Carl Lindner III, AFG's Co-Chief
Executive Officers, jointly stated: "We are off to a great start
towards meeting the company's objectives for 2006. Our strong
insurance results reflect underwriting discipline along with solid
investment management. In addition to our strong insurance
operating results, we generated additional income and increased our
book value through the previously announced sale of our investment
in the Cincinnati Reds. During the first quarter, we repurchased
approximately $78 million of long-term debt which, coupled with our
strong earnings, reduced our debt-to-capital ratio to below 25%. We
also maintained a strong liquidity position, ending the quarter
with about $121 million of holding company cash and investments. In
addition, we recently announced that we have a definitive agreement
to sell Chatham Bars Inn in Cape Cod for $166 million and expect to
recognize an after-tax gain of between $27 - 29 million in the 2006
second quarter. This sale will further add to our book value and
provide additional capital to grow our annuity and supplemental
insurance operations. With our excellent first quarter results
exceeding our expectations, we are increasing our 2006 core
earnings guidance to between $4.00 and $4.30 per share, which does
not include the benefit of the Chatham sale." Business Segment
Results The P&C specialty insurance operations generated an
underwriting profit of $69.8 million in the 2006 first quarter,
$26.5 million higher than the same quarter a year earlier. The 2006
combined ratio was 88.0%, 4.1 points better than in the 2005 first
quarter. The 2006 results include approximately $13 million (2.2
points) of catastrophe losses, principally from severe storms in
the Midwest, compared to about $2 million (0.4 points) of such
losses in the same prior year period. Net written premiums for the
2006 first quarter were approximately 5% higher than the 2005 first
quarter. Strong premium growth within the Property and
Transportation group was partly offset by a decline in the
California workers' compensation premiums. Overall average rates in
the 2006 first quarter were down about 2% compared with the same
prior year period. Further details of the P&C Specialty
operations may be found in the accompanying schedules. The Property
and Transportation businesses reported a combined ratio of 79.0%
for the 2006 first quarter, 3.8 points better than in the same 2005
period. The majority of the Midwest storm losses affected this
group but these losses were offset by favorable reserve
development, particularly in the crop insurance operations. The
transportation, marine and equine operations also generated
outstanding underwriting profits. Net written premiums for the 2006
first quarter increased 14% above the 2005 first quarter. New
premium volume from the recent acquisition of Farmers Crop
Insurance Alliance, higher commodity prices used to establish crop
insurance coverages and solid growth in the inland marine
businesses were the primary drivers of the increase. The California
Workers' Compensation business continued to report strong
profitability with a combined ratio of 83.9% in the 2006 quarter
compared to 85.1% in the same period a year earlier. This business'
underwriting margins continue to benefit from an improved claims
environment resulting from the workers' compensation reforms
enacted in California. Net written premiums for the 2006 quarter
were about 15% below the 2005 first quarter, reflecting the effect
of lower rates, partly offset by good business retention and volume
growth. Continued rate reductions in California are evidence of the
positive effects of the reform legislation in lowering workers'
compensation costs. The Specialty Casualty group reported a solid
underwriting profit for the 2006 first quarter with a combined
ratio of 92.3%, an improvement of 4.1 points compared to the same
2005 period. This improvement reflects a significant decrease in
adverse reserve development in the executive liability operations
compared to a year earlier. In addition, the excess and surplus and
targeted markets businesses continue to produce very strong
underwriting profits. Net written premiums for the 2006 first
quarter were 9% higher than in the 2005 first quarter due primarily
to volume growth as well as lower premiums ceded under reinsurance
agreements, principally in the executive liability and excess and
surplus lines. The Specialty Financial group reported a small
underwriting profit in the first quarter of 2006. The group's
combined ratio was 99.1%, an improvement of 5.2 points compared to
the 2005 first quarter, reflecting a significant reduction in
losses from the residual value business. The fidelity and crime,
trade credit and financial institutions operations continued to
generate strong profitability. Net written premiums were about 4%
lower as more premiums were ceded in the 2006 period under residual
value reinsurance agreements. The residual value business is being
discontinued in 2006 as the remaining contracts expire. Carl
Lindner III stated: "As we expected, all four of our major
specialty groups generated underwriting profits during the first
quarter of 2006. Our property and casualty insurance segment's
combined ratio of 88% was the best in AFG's history. We've
continued to follow our strategy of being a specialty insurance
player and building franchise value in markets where we can be
recognized as leaders. Our sustained profitable results demonstrate
our ability to execute on this strategy and our ongoing focus on
sound pricing and underwriting discipline. We continue to closely
monitor our rate adequacy in all our markets and will sacrifice
volume as appropriate to achieve appropriate returns." The Annuity
and Supplemental Insurance Group, managed by Great American
Financial Resources, Inc. ("GAFRI"), reported, in their separate
earnings release today, core net operating earnings of $18.3
million for the 2006 first quarter compared to $14.3 million for
the 2005 first quarter, which exclude $3.6 million in net earnings
of the Puerto Rican subsidiary ("GA-PR") that was sold in January
2006. The increase primarily reflects improvement in the fixed
annuity and life operations, as well as the investment of dividends
received in 2005 from GA-PR and proceeds related to the sale of
that company. AFG's core net operating earnings include its share
of GA-PR's results through the date of sale. Statutory premiums of
nearly $300 million in the first quarter of 2006 were 12% lower
than in 2005. Premiums in the first quarter of 2005 include
approximately $100 million of traditional fixed annuity premiums
from policyholders of an unaffiliated company in rehabilitation who
chose to transfer their funds to GAFRI in the first quarter of
2005. Excluding the $100 million, premiums in the first quarter of
2006 were 25% higher than the same period in 2005 due primarily to
re-entering the indexed-annuity market and higher 403(b) annuity
sales. Craig Lindner commented, "GAFRI's core lines of business
continue to perform well. We remain committed to growing these
lines and believe that our financial and operational strengths will
allow us to capitalize on opportunities in these areas through
organic growth and acquisitions. The success of our introduction of
indexed-annuities last year is clearly demonstrated by the first
quarter premiums and we expect to generate significant premiums as
we further penetrate this market. We also anticipate introducing
several new products during the balance of 2006 which should
contribute to additional premium growth." A reconciliation of this
group's "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 81% of GFR common stock and a proportional
share of its earnings is included in AFG's results. 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 and
supplemental 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
persistency, mortality and morbidity, competitive pressures,
including the ability to obtain rate increases, and changes in debt
and claims paying ratings. Conference Call The company will hold a
conference call to discuss 2006 first quarter results at 11:30 a.m.
(EDT) tomorrow, Wednesday, April 26, 2006. Toll-free telephone
access will be available by dialing 1-866-356-3093 (international
dial in 617-597-5381). Please dial in five to ten minutes prior to
the scheduled start time of the call. A replay of the call will
also be available at approximately 1:30 p.m. (EDT) on April 26,
2006 until 11:59 p.m. on May 3, 2006. To listen to the replay, dial
1-888-286-8010 (international dial in 617-801-6888) and provide the
confirmation code 83054586. 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 within the Investor Relations
section. (Financial summaries follow) This earnings release and
additional Financial Supplements are available in the Investor
Relations section of 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,
2006 2005 Revenues P&C insurance premiums $579.1 $549.1 Life,
accident & health premiums 82.0 92.1 Investment income 231.9
214.2 Realized investment gains (losses) 29.8(c) (5.5) Other income
74.8 82.1 997.6 932.0 Costs and expenses (d) P&C insurance
losses & expenses 510.4 507.3 Annuity, life, accident &
health benefits & expenses 183.5 185.0 Interest & other
financing expenses 18.5 19.6 Other expenses 116.2 115.8 828.6 827.7
Operating earnings before income taxes 169.0 104.3 Related income
taxes 59.3 35.1 Net operating earnings 109.7 69.2 Minority interest
expense (7.8) (5.9) Investee losses, net of tax (.4) (.4) Net
earnings $101.5 $62.9 Diluted Earnings per Common Share $1.27 $.81
Average number of Diluted Shares 79.6 77.8 March 31, December 31,
Selected Balance Sheet Data: 2006 2005 Total Cash and Investments
$16,450 $16,224 Long-term Debt, Including Payable to Subsidiary
Trusts $914 $1,000 Shareholders' Equity $2,449 $2,458 Shareholders'
Equity (Excluding unrealized gains (losses) on fixed maturities)
$2,558 $2,442 Book Value Per Share $31.20 $31.48 Book Value Per
Share (Excluding unrealized gains (losses) on fixed maturities)
$32.60 $31.28 Common Shares Outstanding 78.5 78.1 Footnotes are
contained in the accompanying Notes to Financial Schedules.
AMERICAN FINANCIAL GROUP, INC. P&C SPECIALTY GROUP UNDERWRITING
RESULTS (In Millions) Three months ended % March 31, Change 2006
2005 Gross written premiums $894 $856 5% Net written premiums $623
$593 5% Ratios (GAAP): Loss & LAE ratio 58.1% 63.3% Expense
ratio 29.8% 28.6% Policyholder dividend ratio .1% .2% Combined
Ratio 88.0% 92.1% Supplemental: Gross Written Premiums: Property
& Transportation $318 $277 15% Specialty Casualty 375 358 5%
Specialty Financial 119 116 3% California Workers' Compensation 85
104 (19%) Other (3) 1 NA $894 $856 5% Net Written Premiums:
Property & Transportation $231 $203 14% Specialty Casualty 202
186 9% Specialty Financial 93 96 (4%) California Workers'
Compensation 80 93 (15%) Other 17 15 21% $623 $593 5% Combined
Ratio (GAAP): Property & Transportation 79.0% 82.8% Specialty
Casualty 92.3% 96.4% Specialty Financial 99.1% 104.3% California
Workers' Compensation 83.9% 85.1% Aggregate Specialty Group 88.0%
92.1% Supplemental 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 products 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 primarily an internal
reinsurance facility. AMERICAN FINANCIAL GROUP, INC. Notes To
Financial Schedules GAAP to Non GAAP Reconciliation: a) Includes a
$15.3 million ($.19 per share) after-tax gain on the sale of the
company's investment in the Cincinnati Reds. b) Primarily includes
losses from non-insurance investees and retirement of debt. Summary
Of Earnings: c) Includes a $23.6 million pre-tax gain on the sale
of the company's investment in the Cincinnati Reds. d) Includes
$1.8 million for the expensing of employee stock options which
began in 2006.
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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