DOW JONES NEWSWIRES
American Financial Group Inc.'s (AFG) third-quarter earnings
rose 3.9% on greater realized gains as the property and casualty
specialty insurer's core profit held flat, countering analysts'
expectations for a drop.
The company also raised its core earnings outlook for 2010 to a
range of $3.70 and $3.90 a share from its August view of $3.55 and
$3.85.
American Financial's property and casualty unit, its main source
of revenue, saw its underwriting earnings slump 37% as it had
higher losses from catastrophes. The prior year also benefited from
a larger favorable reserve effect. The segment's combined ratio,
which represent the percentage of every dollar in premiums paid out
in claims, rose to 91% from 83%.
However, American Financial had improved results in fixed
annuities and supplemental insurance.
Last month, Standard & Poor's Ratings Services upgraded
American Financial, saying the company's property-and-casualty
business has performed much better than peers and is expected to
remain a market leader. It also noted it has minimal hurricane and
earthquake exposure and relatively low net policy limits, although
offsetting the strengths are exposure to the weak economy,
reinsurance recoverable and asbestos and environmental
exposures.
In the latest period, American Financial posted a profit of $132
million, or $1.21 a share, from $127 million, or $1.09 per share.
Operating earnings, which exclude investment gains and losses, were
flat at $1.07. Analysts surveyed by Thomson Reuters had expected
$1.01.
Revenue jumped 15% to $1.26 billion. P&C premiums climbed
18%, while premiums for life, accident and health insurance were
steady. Investment income fell 1.7%.
Costs and expenses also jumped 18%.
American Financial shares closed Monday at $30.77 and weren't
active after the earnings report. Through the close, the stock has
risen 23% so far this year, better than the broader market.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com