- Net earnings per share of $2.56; includes ($0.15) per share
in after-tax non-core items
- Core net operating earnings of $2.71 per share, a 96%
increase from the prior year period
- Third quarter annualized ROE of 16.6%; annualized core
operating ROE of 17.6%
- Parent company cash and investments of approximately $2.7
billion; excess capital of $3.0 billion at September 30,
2021
- Announces special cash dividend of $4.00 per share, payable
November 22, 2021
- Full year 2021 core net operating earnings guidance $10.10 -
$10.70 per share, an increase from previous guidance of $8.40 -
$9.20 per share
American Financial Group, Inc. (NYSE: AFG) today reported 2021
third quarter net earnings attributable to shareholders of $219
million ($2.56 per share) compared to $164 million ($1.86 per
share) for the 2020 third quarter. Net earnings for the 2021 third
quarter included after-tax non-core realized losses on securities
of $12 million ($0.15 per share loss). Comparatively, net earnings
in the 2020 third quarter included net favorable after-tax non-core
items of $43 million ($0.48 per share). Beginning with the first
quarter of 2021 and through the date of sale in May 2021, the
results of AFG’s Annuity operations are reported as discontinued
operations in accordance with generally accepted accounting
principles (GAAP), which included adjusting prior period results to
reflect these operations as discontinued. Other details may be
found in the table below.
AFG’s book value per share was $61.80 at September 30, 2021.
During the third quarter of 2021, AFG declared cash dividends of
$6.50 per share, which included a $2.00 per share special dividend
paid in August and a $4.00 special dividend paid in October. AFG
repurchased $12 million of its common stock at an average price per
share of $125.17 (adjusted for the special dividends). Annualized
return on equity was 16.6% and 12.9% for the third quarters of 2021
and 2020, respectively.
Core net operating earnings were $231 million ($2.71 per share)
for the 2021 third quarter, compared to $121 million ($1.38 per
share) in the 2020 third quarter. Core net operating earnings for
the third quarters of 2021 and 2020 generated annualized returns on
equity of 17.6% and 9.6%, respectively. The year-over-year increase
was primarily the result of substantially higher underwriting
profit in the Specialty Property and Casualty (“P&C”) insurance
operations and significantly higher P&C net investment income,
due to the continued strong performance of AFG’s $1.7 billion
alternative investment portfolio. Additional details for the 2021
and 2020 third quarters may be found in the table below.
Three Months Ended September
30,
Components of
Pretax Core Operating Earnings
2021
2020(a)
2021
2020(a)
2021
2020(a)
Before Impact of
Alternative
Core Net Operating
In millions, except per share amounts
Alternative Investments
Investments, net of DAC
Earnings, as reported
P&C Pretax Core Operating Earnings
$
245
$
177
$
84
$
28
$
329
$
205
Real estate entities and other acquired
from
Annuity operations
-
-
-
3
-
3
Other expenses
(21
)
(29
)
-
-
(21
)
(29
)
Holding company interest expense
(24
)
(24
)
-
-
(24
)
(24
)
Pretax Core Operating Earnings
200
124
84
31
284
155
Related provision for income taxes
35
28
18
6
53
34
Core Net Operating Earnings
$
165
$
96
$
66
$
25
$
231
$
121
Core Net Operating Earnings Per Share
$
1.94
$
1.10
$
0.77
0.28
$
2.71
$
1.38
Weighted Avg Diluted Shares
Outstanding
85.2
88.5
85.2
88.5
85.2
88.5
Footnote (a) is contained in the
accompanying Notes to Financial Schedules at the end of this
release.
Book value per share, excluding unrealized gains related to
fixed maturities, was $59.70 per share at September 30, 2021,
compared to $63.61 at the end of 2020, reflecting the $20.00 per
share in special dividends declared during the first nine months of
2021.
AFG’s net earnings attributable to shareholders, determined in
accordance with U.S. generally accepted accounting principles
(GAAP), include certain items that may not be indicative of its
ongoing core operations. The table below identifies such items and
reconciles net earnings attributable to shareholders to core net
operating earnings, a non-GAAP financial measure. AFG believes that
its core net operating earnings provides management, financial
analysts, ratings agencies and investors with an understanding of
the results from the ongoing operations of the Company by excluding
the impact of discontinued operations, net realized gains and
losses, and special items that are not necessarily indicative of
operating trends. AFG’s management uses core net operating earnings
to evaluate financial performance against historical results
because it believes this provides a more comparable measure of its
continuing business. Core net operating earnings is also used by
AFG’s management as a basis for strategic planning and
forecasting.
In millions, except per share amounts
Three months ended
September 30,
Nine months ended
September 30,
2021
2020(a)
2021
2020(a)
Components of net earnings attributable to
shareholders:
Core operating earnings before income
taxes
$
284
$
155
$
794
$
382
Pretax non-core
items:
Realized gains (losses) on securities
(17
)
23
103
(197
)
Neon exited lines(b)
-
(70
)
4
(122
)
Special A&E charges
-
(68
)
-
(68
)
Other
-
-
(11
)
-
Earnings (loss) before income taxes
267
40
890
(5
)
Provision (credit) for income taxes:
Core operating earnings
53
34
152
76
Non-core items
(5
)
(82
)
12
(128
)
Total provision (credit) for income
taxes
48
(48
)
164
(52
)
Net earnings from continuing operations
including noncontrolling interests
219
88
726
47
Discontinued annuity operations
-
76
914
(20
)
Less: net earnings (loss) attributable to
noncontrolling interests:
Non-core items
-
-
-
(13
)
Net earnings attributable to
shareholders
$
219
$
164
$
1,640
$
40
Net earnings:
Core net operating earnings(c)
$
231
$
121
$
642
$
306
Non-core
items:
Realized gains (losses) on securities
(12
)
18
83
(156
)
Neon exited lines(b)
-
3
3
(36
)
Special A&E charges
-
(54
)
-
(54
)
Other
-
-
(2
)
-
Net earnings from continuing
operations
219
88
726
60
Discontinued annuity operations
-
76
914
(20
)
Net earnings attributable to
shareholders
$
219
$
164
$
1,640
$
40
Components of earnings per share:
Core net operating earnings(c)
$
2.71
$
1.38
$
7.48
$
3.40
Non-core
Items:
Realized gains (losses) on securities
(0.15
)
0.20
0.95
(1.72
)
Neon exited lines(b)
-
0.03
0.04
(0.41
)
Special A&E charges
-
(0.61
)
-
(0.61
)
Other
-
-
(0.02
)
-
Diluted net earnings per share from
continuing operations
$
2.56
$
1.00
$
8.45
$
0.66
Discontinued annuity operations
-
0.86
10.66
(0.21
)
Diluted net earnings per share
$
2.56
$
1.86
$
19.11
$
0.45
Footnotes (a), (b), and (c) are contained
in the accompanying Notes to Financial Schedules at the end of this
release.
The Company also announced today that its Board of Directors has
declared a special cash dividend of $4.00 per share of American
Financial Group common stock. The dividend is payable on November
22, 2021 to shareholders of record on November 15, 2021. The
aggregate amount of this special dividend will be approximately
$340 million. This special dividend is in addition to the Company’s
regular quarterly cash dividend of $0.56 per share most recently
paid on October 25, 2021. With this special dividend, the Company
has declared $24.00 per share in special dividends in 2021.
S. Craig Lindner and Carl H. Lindner III, AFG’s Co-Chief
Executive Officers, issued this statement: “We are extremely
pleased with AFG’s performance during the third quarter. Our
Specialty P&C businesses reported outstanding underwriting
margins, and results in our portfolio of alternative investments
continued to exceed our expectations. Annualized core return on
equity was nearly 18%. We believe that our disciplined – yet
opportunistic – operating philosophy, a lower net catastrophe
exposure than our peers, a continued economic recovery and a strong
P&C rate environment all contributed to these outstanding
results.
“AFG had approximately $3.0 billion of excess capital (including
parent company cash and investments of approximately $2.7 billion)
at September 30, 2021. Returning capital to shareholders in the
form of regular and special cash dividends and through
opportunistic share repurchases is an important and effective
component of our capital management strategy. In addition, our
excess capital will be deployed into AFG’s core businesses as we
identify potential for healthy, profitable organic growth, and
opportunities to expand our specialty niche businesses through
acquisitions and start-ups that meet our target return
thresholds.
“Based on the strong results reported in the first nine months
of the year, we now expect AFG’s core net operating earnings in
2021 to be in the range of $10.10 to $10.70, an increase from our
previous range of $8.40 to $9.20 per share. Our core earnings per
share guidance excludes non-core items such as results of
discontinued operations, realized gains and losses and other
significant items that are not able to be estimated with reasonable
precision, or that may not be indicative of ongoing operations.
Furthermore, the above guidance reflects the expectation of an
above-average crop year and an annualized return of approximately
10% on alternative investments in the fourth quarter of 2021.”
Property and Casualty Insurance
Operations
Pretax core operating earnings in AFG’s P&C Insurance
Segment were a record $329 million in the third quarter of 2021,
$124 million higher and a 60% increase from the comparable prior
year period. The year-over-year improvement was the result of
significantly higher P&C underwriting profit and substantially
higher P&C net investment income, primarily due to higher
earnings from alternative investments.
The Specialty P&C insurance operations generated an
underwriting profit of $169 million in the 2021 third quarter,
compared to $104 million in the third quarter of 2020, driven
primarily by higher year-over-year underwriting profit in our
Specialty Casualty Group and to a lesser extent, our Specialty
Financial Group. Pretax catastrophe losses, net of reinsurance and
inclusive of reinstatement premiums, were $31 million, primarily as
a result of losses related to Hurricane Ida. By comparison,
catastrophe losses in the comparable prior year period were $57
million. The third quarter 2021 combined ratio was a very strong
89.0%, improving 3.1 points from the 92.1% reported in the
comparable prior year period, and includes 2.0 points in
catastrophe losses. By comparison, catastrophe losses in the third
quarter of 2020 added 2.7 points to the combined ratio. Third
quarter 2021 results included 5.4 points of favorable prior year
reserve development, compared to 3.7 points in the third quarter of
2020.
AFG recorded $3 million in losses related to COVID-19 related to
accident year 2021 in the third quarter of 2021 and recorded
favorable reserve development of approximately $3 million related
to accident year 2020 COVID-19 reserves based on loss experience.
Given the uncertainties surrounding the ultimate number and scope
of claims relating to the pandemic, approximately 63% of the $96
million in AFG’s cumulative COVID-19 related losses are held as
incurred but not reported (IBNR) reserves at September 30,
2021.
Third quarter 2021 gross and net written premiums were up 19%
and 16%, respectively, when compared to the third quarter of 2020.
Strong year-over-year growth was reported within each of the
Specialty P&C groups as a result of an improving economy, new
business opportunities and a strong renewal rate environment.
Average renewal pricing across our entire P&C Group was up
approximately 11% for the quarter. Excluding our workers’
compensation business, renewal pricing was up approximately 13%.
Both measures are an improvement over the rate increases reported
in the second quarter of 2021. With the exception of workers’
compensation, we are continuing to achieve strong renewal rate
increases in the vast majority of our businesses.
Further details about AFG’s Specialty P&C operations may be
found in the accompanying schedules.
The Property and Transportation Group reported 2021 third
quarter underwriting profit of $45 million, compared to $47 million
in the third quarter of 2020. Higher underwriting profits in our
crop business and Singapore Branch were more than offset by lower
underwriting profit in our transportation, property & inland
marine and non-crop agricultural businesses. Catastrophe losses in
this group, net of reinsurance and inclusive of reinstatement
premiums, were $14 million in the third quarter of 2021, compared
to $18 million in the comparable 2020 period.
Gross and net written premiums for the third quarter of 2021
were 26% and 22% higher, respectively, than the comparable 2020
period, with growth reported in all businesses in this group. The
growth came primarily from our crop insurance business – primarily
the result of higher commodity futures pricing and rate increases –
and our transportation businesses, primarily the result of new
accounts, combined with strong renewals. Excluding the impact of
crop insurance, third quarter 2021 gross and net written premiums
increased 14% and 13%, respectively when compared to the 2020 third
quarter. Overall renewal rates in this group increased 5% on
average for the third quarter of 2021.
The Specialty Casualty Group reported a 2021 third
quarter underwriting profit of $110 million, compared to $53
million in the third quarter of 2020, primarily the result of
higher profitability in our workers’ compensation, excess and
surplus lines, excess liability, and general liability businesses.
Underwriting profitability in our workers’ compensation businesses
overall continues to be excellent. The businesses in the Specialty
Casualty Group achieved a very strong 82.0% calendar year combined
ratio overall in the third quarter, an improvement of 8.7 points
from the comparable period in 2020. Catastrophe losses for this
group were $3 million and $8 million in the third quarters of 2021
and 2020, respectively.
Third quarter 2021 gross and net written premiums increased 15%
and 14%, respectively, when compared to the same prior year period.
Excluding workers’ compensation, gross and net written premiums
grew by 18% and 20%, respectively year-over-year. Nearly all the
businesses in this group achieved strong renewal pricing and
reported premium growth during the third quarter. Significant
renewal rate increases and new business opportunities contributed
to higher premiums in our excess & surplus lines business.
Renewal rate increases, strong account retention and new business
opportunities contributed to higher premiums in our targeted
markets businesses. Our mergers and acquisitions liability and
executive liability businesses also contributed meaningfully to the
year-over-year growth. Renewal pricing for this group was up 13% in
the third quarter. Excluding our workers’ compensation businesses,
renewal rates in this group were up approximately 18%. Both
measures are improvements from the rate increases achieved in the
second quarter of 2021.
The Specialty Financial Group reported an underwriting
profit of $26 million in the third quarter of 2021, compared to $13
million in the third quarter of 2020, primarily as a result of
higher year-over-year underwriting profit in our surety and
financial institutions businesses. Catastrophe losses for this
group, net of reinsurance and inclusive of reinstatement premiums,
were $14 million in the third quarter of 2021, compared to $13
million in the prior year quarter. This group continued to achieve
excellent underwriting margins and reported an 84.2% combined ratio
for the third quarter of 2021.
Third quarter 2021 gross and net written premiums in this group
were up 9% and 8%, respectively, when compared to the prior year
period. Nearly all businesses in this group reported growth,
including our surety, fidelity & crime and lender services
businesses. Renewal pricing in this group was up approximately 8%
for the quarter, consistent with results in the second quarter of
2021.
Carl Lindner III stated, “For the third quarter in a row, AFG
achieved record P&C operating earnings. Underwriting margins
across our portfolio of businesses were excellent, with an overall
Specialty P&C combined ratio of 89%. Catastrophe losses were
manageable, we are continuing to achieve strong renewal pricing,
each of our Specialty P&C groups reported healthy growth and we
are projecting an above average crop year.
Mr. Lindner added, “Based on results through the first nine
months and higher than expected crop earnings, we now expect an
overall 2021 calendar year combined ratio in the range of 86% to
88%, an improvement from the range of 88% to 90% estimated
previously, and we now expect net written premiums to be 11% to 14%
higher than the $5.0 billion reported in 2020, which is an increase
from the range of +10% to +13% estimated previously. We expect the
market to remain firm throughout the remainder of the year,
allowing us to act on business opportunities and achieve solid
renewal rate increases.”
Further details about AFG’s Specialty P&C operations may be
found in the accompanying schedules and in our Quarterly Investor
Supplement, which is posted on our website.
A&E Reserves
During the third quarter of 2021, AFG conducted an in-depth
comprehensive review of its asbestos and environmental (A&E)
exposures relating to the run-off operations of its P&C Group
and its exposures related to former railroad and manufacturing
operations and sites. During the review, no new trends were
identified and recent claims activity was generally consistent with
our expectations resulting from our 2020 external study. As a
result, the review resulted in no net change to the P&C Group’s
A&E reserves, and a minor increase in AFG’s liabilities for the
environmental exposures of its former railroad and manufacturing
operations. This minor adjustment is included in AFG’s core
operating earnings for the three months ended September 30,
2021.
At September 30, 2021, the P&C Group’s insurance reserves
include A&E reserves of $414 million, net of reinsurance
recoverables. At September 30, 2021, the property and casualty
insurance segment’s three-year survival ratios were 25.7 times paid
losses for asbestos reserves, 24.4 times paid losses for
environmental reserves and 25.1 times paid losses for total A&E
reserves. These ratios compare favorably with industry data
compiled by A.M. Best as of December 31, 2020, which indicate that
industry survival ratios were 7.9 for asbestos, 8.5 for
environmental, and 8.1 for total A&E reserves.
Investments
P&C Net Investment Income – For the nine months ended
September 30, 2021, P&C net investment income was approximately
66% higher than the comparable 2020 period and included
significantly higher earnings from alternative investments.
Earnings from alternative investments may vary from quarter to
quarter based on the reported results of the underlying
investments, and generally are reported on a quarter lag. The
annualized return on alternative investments in the third quarter
of 2021 was 20.3%. The cumulative return on these investments over
the past five calendar years was approximately 10%. Excluding the
impact of alternative investments, P&C net investment income
for the nine months ended September 30, 2021 decreased 8%
year-over-year, reflecting lower market interest rates. Assuming an
annualized return of approximately 10% on our $1.7 billion of
alternative investments in the fourth quarter would result in an
annual return on this portfolio of approximately 20% in 2021.
Non-Core Net Realized Gains (Losses) – AFG recorded third
quarter 2021 net realized losses on securities of $12 million
($0.15 loss per share) after tax, which included $12 million ($0.15
per share) in after-tax net losses to adjust equity securities that
the Company continued to own at September 30, 2021, to fair value.
By comparison, AFG recorded third quarter 2020 net realized gains
on securities of $18 million ($0.20 per share) after tax. Prior
period results have been adjusted to reflect the reclassification
of AFG’s annuity operations to discontinued operations. See the
table below under “Discontinued Annuity Operations” for additional
information.
After-tax unrealized gains on fixed maturities were $178 million
at September 30, 2021. Our portfolio continues to be high quality,
with 88% of our fixed maturity portfolio rated investment grade and
97% of our P&C fixed maturity portfolio with a National
Association of Insurance Commissioners’ designation of NAIC 1 or 2,
its highest two categories.
More information about the components of our investment
portfolio may be found in our Quarterly Investor Supplement, which
is posted on our website.
Discontinued Annuity
Operations
On May 28, 2021, AFG completed the sale of its Annuity business
to Mass Mutual. Initial cash proceeds from the sale (based on the
preliminary closing balance sheet) were $3.5 billion. AFG
recognized an after-tax non-core gain on the sale of $656 million
($7.62 per AFG share) in the first half of 2021. Both the proceeds
and the gain are subject to post-closing adjustments, which are not
expected to be material. Beginning with the first quarter of 2021
and through the sale date, AFG reported the results of its Annuity
operations as discontinued operations, in accordance with generally
accepted accounting principles (GAAP), which included adjusting
prior period results to reflect these operations as discontinued. A
reconciliation of amounts as previously presented to amounts
reported as Discontinued Annuity Operations for the nine-month
period ended September 30, 2021 (through the May 2021 sale date)
and the three- and nine-month periods ended September 30, 2020
appears in our Quarterly Investor Supplement, which is posted on
our website.
About American Financial Group, Inc.
American Financial Group is an insurance holding company, based
in Cincinnati, Ohio. Through the operations of Great American
Insurance Group, AFG is engaged primarily in property and casualty
insurance, focusing on specialized commercial products for
businesses. Great American Insurance Group’s roots go back to 1872
with the founding of its flagship company, Great American Insurance
Company.
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, investment
activities and the amount and timing of share repurchases;
recoverability of asset values; expected losses and the adequacy of
reserves for asbestos, environmental pollution and mass tort
claims; rate changes; and improved loss experience.
Actual results and/or financial condition could differ
materially from those contained in or implied by such
forward-looking statements for a variety of reasons including, but
not limited to: changes in financial, political and economic
conditions, including changes in interest and inflation rates,
currency fluctuations and extended economic recessions or
expansions in the U.S. and/or abroad; performance of securities
markets; new legislation or declines in credit quality or credit
ratings that could have a material impact on the valuation of
securities in AFG’s investment portfolio; the availability of
capital; changes in insurance law or regulation, including changes
in statutory accounting rules, including modifications to capital
requirements; the effects of the COVID-19 outbreak, including the
effects on the international and national economy and credit
markets, legislative or regulatory developments affecting the
insurance industry, quarantines or other travel or health-related
restrictions; changes in the legal environment affecting AFG or its
customers; tax law and accounting changes; levels of natural
catastrophes and severe weather, terrorist activities (including
any nuclear, biological, chemical or radiological events),
incidents of war or losses resulting from pandemics, civil unrest
and other major losses; disruption caused by cyber-attacks or other
technology breaches or failures by AFG or its business partners and
service providers, which could negatively impact AFG’s business
and/or expose AFG to litigation; development of insurance loss
reserves and establishment of 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; the ability to obtain
adequate rates and policy terms; changes in AFG’s credit ratings or
the financial strength ratings assigned by major ratings agencies
to AFG’s operating subsidiaries; the impact of the conditions in
the international financial markets and the global economy relating
to AFG’s international operations; and other factors identified in
AFG’s filings with the Securities and Exchange Commission.
The forward-looking statements herein are made only as of the
date of this press release. The Company assumes no obligation to
publicly update any forward-looking statements.
Conference Call
The Company will hold a conference call to discuss 2021 third
quarter results at 11:30 a.m. (ET) tomorrow, Wednesday, November 3,
2021. Toll-free telephone access will be available by dialing
1-877-459-8719 (international dial-in 424-276-6843). The conference
ID for the live call is 1653603. Please dial in five to ten minutes
prior to the scheduled start time of the call.
A replay will be available two hours following the completion of
the call and will remain available until November 10, 2021. To
listen to the replay, dial 1-855-859-2056 (international dial-in
404-537-3406) and provide the conference ID 1653603.
The conference call and accompanying webcast slides will also be
broadcast live over the Internet. To access the event, click the
following link:
https://www.afginc.com/news-and-events/event-calendar.
Alternatively, you can choose Events from the Investor
Relations page at www.AFGinc.com.
An archived webcast will be available immediately after the call
via the same link on our website until November 10, 2021.
(Financial summaries follow)
This earnings release and AFG’s Quarterly Investor Supplement
are available in the Investor Relations section of AFG’s website:
www.AFGinc.com.
AMERICAN FINANCIAL GROUP, INC.
AND SUBSIDIARIES SUMMARY OF EARNINGS AND SELECTED BALANCE SHEET
DATA (In Millions, Except Per Share Data)
Three months ended
September 30,
Nine months ended
September 30,
2021
2020
2021
2020
Revenues
P&C insurance net earned premiums
$
1,529
$
1,381
$
3,952
$
3,774
Net investment income
169
122
521
314
Realized gains (losses) on:
Securities
(17
)
23
103
(197
)
Subsidiaries
-
(30
)
4
(30
)
Income of managed investment entities:
Investment income
45
46
135
154
Gain (loss) on change in fair value of
assets/liabilities
1
(5
)
9
(21
)
Other income
27
19
70
62
Total revenues
1,754
1,556
4,794
4,056
Costs and expenses
P&C insurance losses &
expenses
1,371
1,369
3,522
3,676
Interest charges on borrowed money
24
24
71
64
Expenses of managed investment
entities
37
34
115
129
Other expenses
55
89
196
192
Total costs and expenses
1,487
1,516
3,904
4,061
Earnings (loss) from continuing operations
before income taxes
267
40
890
(5
)
Provision (credit) for income taxes
48
(48
)
164
(52
)
Net earnings from continuing operations,
including noncontrolling interests
219
88
726
47
Net earnings (loss) from discontinued
operations
-
76
914
(20
)
Net earnings, including controlling
interests
219
164
1,640
27
Less: Net earnings (loss) from continuing
operations attributable to noncontrolling interests
-
-
-
(13
)
Net earnings attributable to
shareholders
$
219
$
164
$
1,640
$
40
Earnings (loss) attributable to
shareholders per diluted common share:
Continuing operations
$
2.56
$
1.00
$
8.45
$
0.66
Discontinued operations
-
0.86
10.66
(0.21
)
Diluted earnings attributable to
shareholders
$
2.56
$
1.86
$
19.11
$
0.45
Average number of diluted shares
85.2
88.5
85.8
89.9
AMERICAN FINANCIAL GROUP, INC.
AND SUBSIDIARIES SUMMARY OF EARNINGS AND SELECTED BALANCE SHEET
DATA (In Millions, Except Per Share Data)
September 30,
December 31,
Selected Balance
Sheet Data:
2021
2020
Total cash and investments
$
16,387
$
13,494
Long-term debt
$
1,964
$
1,963
Shareholders’ equity(c)
$
5,240
$
6,789
Shareholders’ equity (excluding
unrealized
gains/losses related to fixed
maturities)(c)
$
5,062
$
5,493
Book value per share
$
61.80
$
78.62
Book value per share (excluding unrealized
gains/losses related to fixed maturities)
$
59.70
$
63.61
Common Shares Outstanding
84.8
86.3
Footnote (c) is contained in the
accompanying Notes to Financial Schedules at the end of this
release.
AMERICAN FINANCIAL GROUP, INC.
SPECIALTY P&C OPERATIONS (Dollars in Millions)
Three months ended
September 30,
Pct.
Change
Nine months ended
September 30,
Pct.
Change
2021
2020
2021
2020
Gross written premiums
$
2,656
$
2,223
19
%
$
6,209
$
5,288
17
%
Net written premiums
$
1,729
$
1,488
16
%
$
4,303
$
3,776
14
%
Ratios (GAAP):
Loss & LAE ratio
62.4
%
63.8
%
59.0
%
61.8
%
Underwriting expense ratio
26.6
%
28.3
%
29.4
%
31.4
%
Specialty Combined Ratio
89.0
%
92.1
%
88.4
%
93.2
%
Combined Ratio – P&C
Segment
89.0
%
98.8
%
88.4
%
97.0
%
Supplemental
Information:(d)
Gross Written Premiums:
Property & Transportation
$
1,334
$
1,061
26
%
$
2,705
$
2,166
25
%
Specialty Casualty
1,121
978
15
%
2,922
2,579
13
%
Specialty Financial
201
184
9
%
582
543
7
%
$
2,656
$
2,223
19
%
$
6,209
$
5,288
17
%
Net Written Premiums:
Property & Transportation
$
773
$
635
22
%
$
1,740
$
1,447
20
%
Specialty Casualty
732
642
14
%
1,912
1,739
10
%
Specialty Financial
165
153
8
%
485
441
10
%
Other
59
58
2
%
166
149
11
%
$
1,729
$
1,488
16
%
$
4,303
$
3,776
14
%
Combined Ratio (GAAP):
Property & Transportation
93.5
%
91.9
%
89.6
%
92.1
%
Specialty Casualty
82.0
%
90.7
%
86.6
%
92.1
%
Specialty Financial
84.2
%
91.6
%
84.9
%
93.5
%
Aggregate Specialty Group
89.0
%
92.1
%
88.4
%
93.2
%
Three months ended
September 30,
Nine months ended
September 30,
2021
2020
2021
2020
Reserve Development
(Favorable)/Adverse:
Property & Transportation
$
(18
)
$
(26
)
$
(101
)
$
(78
)
Specialty Casualty
(56
)
(16
)
(85
)
(91
)
Specialty Financial
(18
)
(9
)
(38
)
(22
)
Other Specialty
9
3
14
10
Specialty Group
(83
)
(48
)
(210
)
(181
)
Special A&E Reserve Charge – P&C
Run-off
-
47
-
47
Other
1
1
2
15
Total Reserve Development
$
(82
)
$
-
$
(208
)
$
(119
)
Points on Combined Ratio:
Property & Transportation
(2.5
)
(4.5
)
(6.5
)
(5.8
)
Specialty Casualty
(9.1
)
(2.9
)
(4.8
)
(5.5
)
Specialty Financial
(11.2
)
(5.7
)
(7.9
)
(4.8
)
Aggregate Specialty Group
(5.4
)
(3.7
)
(5.3
)
(5.0
)
Total P&C Segment
(5.4
)
-
(5.2
)
(3.1
)
Footnote (d) is contained in the
accompanying Notes to Financial Schedules at the end of this
release.
AMERICAN FINANCIAL GROUP, INC. Notes to
Financial Schedules
a)
On May 28, 2021, AFG completed the sale of
its Annuity business to MassMutual. The results of AFG’s Annuity
operations are reported as discontinued operations beginning with
the first quarter of 2021 and through the date of sale, in
accordance with generally accepted accounting principles (GAAP),
which included adjusting prior period results to reflect these
operations as discontinued.
b)
In January 2020, AFG announced its plans
to exit the Lloyd’s of London insurance market and actions it had
initiated to place its Lloyd’s subsidiaries including its Lloyd’s
Managing Agency, Neon Underwriting Ltd., into run-off. AFG recorded
a net favorable $3 million ($0.03 per share) non-core, after-tax
impact from Neon Exited Lines in the third quarter of 2020. AFG
sold the legal entities that owned its Lloyd’s of London insurer,
Neon, to RiverStone Holdings Limited in a transaction that closed
in the fourth quarter of 2020. In the second quarter of 2021, AFG
recognized an after-tax non-core gain of $3 million ($0.03 per
share) related to contingent consideration received on the sale of
Neon.
c)
Components of core net operating earnings
(dollars in millions):
Three months ended
September 30,
Nine months ended
September 30,
2021
2020
2021
2020
Core Operating
Earnings before Income Taxes:
P&C insurance segment
$
329
$
205
$
905
$
502
Real estate entities and other acquired
from
Annuity operations
-
3
50
10
Interest and other corporate expenses
(45
)
(53
)
(161
)
(130
)
Core operating earnings before income
taxes
284
155
794
382
Related income taxes
53
34
152
76
Core net operating earnings
$
231
$
121
$
642
$
306
d)
Shareholders’ Equity at September 30, 2021
includes $178 million ($2.10 per share) in unrealized after-tax
gains on fixed maturities. Shareholders’ Equity at December 31,
2020 includes $1.3 billion ($14.54 per share) in unrealized
after-tax gains on fixed maturities and $41 million ($0.47 per
share) in unrealized after-tax gains on fixed maturity-related cash
flow hedges.
e)
Supplemental
Notes:
- Property & Transportation includes primarily
physical damage and liability coverage for buses and trucks, inland
and ocean marine, agricultural-related products and other
commercial property coverages.
- Specialty Casualty includes primarily excess and
surplus, general liability, executive liability, professional
liability, umbrella and excess liability, specialty coverages in
targeted markets, customized programs for small to mid-sized
businesses and workers’ compensation insurance.
- Specialty Financial includes risk management insurance
programs for lending and leasing institutions (including equipment
leasing and collateral and lender-placed mortgage property
insurance), surety and fidelity products and trade credit
insurance.
- Other includes an internal reinsurance facility.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211102006347/en/
Diane P. Weidner, IRC Vice President – Investor & Media
Relations (513) 369-5713
Websites: www.AFGinc.com
www.GreatAmericanInsuranceGroup.com
American Financial (NYSE:AFG)
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