American Financial Group (AFG) has reported net earnings of $692 million for the fourth quarter of 2020, compared to $211 million for the same period in 2019.
Q4 earnings included $468 million in realized gains, most of which relate to a transfer of investments associated with AFG’s previously announced annuity block reinsurance transaction.
These were partially offset by $38 million in annuity non-core losses and $7 million in other non-core charges.
Core operating earnings amounted to $269 million in Q4 2020, compared to $203 million previously.
AFG attributed the increase to higher underwriting profit in its Specialty Property and Casualty insurance operations and higher earnings from the its $2.4 billion of alternative investments.
Operating earnings were partially offset by lower other property and casualty net investment income, primarily due to lower short-term interest rates.
Looking at the full year, AFG’s 2020 earnings were slightly down at $732 million, compared with $897 million in 2019.
“We are extremely proud of AFG’s fourth quarter and full year 2020 results, especially in a year fraught with challenges including a global pandemic, related economic disruption and a heightened level of natural disasters,” said S. Craig Lindner and Carl H. Lindner III, AFG’s Co-Chief Executive Officers.
“AFG finished the year on a strong note, generating a core operating ROE for the full year 2020 in excess of 14%. We are very pleased with the recovery in and performance of our alternative investments, which are marked to market through core earnings.”
“Our liquidity and excess capital afford us the flexibility to effectively address and respond to the uncertainties introduced by COVID-19, and we believe our results demonstrate the value of our disciplined operating philosophy and portfolio of diversified specialty insurance businesses,” the CEOs continued.
“AFG had approximately $1.2 billion of excess capital (including parent company cash of approximately $215 million) at December 31, 2020. 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.”