American Financial Group, Inc. (AFG) has reported a net income of $177 million for the third-quarter of 2023, compared to $165 million in Q3’22.
In Q3, AFG’s net earnings included net after-tax non-core items that reduced net income by $31 million. By comparison, net earnings for the 2022 third quarter included after-tax non-core items that reduced net income by $27 million.
Core net operating earnings were $208 million for Q3’23, compared to $192 million in Q3’22.
AFG attributes the year-over-year increase was due primarily to higher net investment income, which was partially offset by lower underwriting profit in the Specialty Property and Casualty (P&C) insurance operations.
Core net operating earnings for the third quarters of 2023 and 2022 generated annualised returns on equity of 18.3% and 17.1%, respectively, AFG noted.
“We are pleased with AFG’s performance during the third quarter. We achieved an annualized core operating return of over 18% in the quarter, with strong underwriting results despite elevated catastrophe losses during the quarter. These strong results, coupled with meaningfully higher year-over-year investment income and effective capital management, enable us to continue to create value for our shareholders,” S. Craig Lindner and Carl H. Lindner III, AFG’s Co-Chief Executive Officers, commented.
“AFG had approximately $660 million of excess capital at September 30, 2023, which includes parent company cash and investments of $364 million. 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 results reported in the first nine months of the year and expectations for the remainder of the year, we continue to expect AFG’s 2023 core net operating earnings to be in the range of $10.15 to $11.15 per share. Our guidance reflects our updated expectations of a below average crop year, offset by higher-than-previously expected net investment income. At the midpoint of the range, our revised guidance would produce a core return on equity of approximately 20%,” Craig and Carl Lindner continued.
AFG’s board of directors declared $1.50 per share special dividend, payable on November 22, 2023.
