American Financial Group, Inc. AFG reported fourth-quarter 2024 net operating earnings per share of $3.12, which missed the Zacks Consensus Estimate by 2.5%. The bottom line increased 9.9% year over year. 

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American Financial’s results reflected higher premiums, increased average renewal pricing across the P&C group and improved net investment income. Higher expenses and catastrophe losses were the offsets.

Behind the Headlines  

Total revenues of $2.1 billion increased 7.2% year over year. The growth came on the back of higher P&C insurance net earned premiums and net investment income. The top line beat the Zacks Consensus Estimate by 3.5%. 

Net investment income climbed 22% year over year to $194 million in the quarter under review. The figure was higher than our estimate of $166.9 million and beat the Zacks Consensus Estimate of $188 million.

Total cost and expenses increased 4.6% year over year to $1.8 billion due to higher P&C insurance losses and expenses. Our estimate was also $1.8 billion.

Segmental Update

The Specialty P&C Insurance segment generated $2 billion in net written premiums, which rose 3% year over year. The growth reflects new business opportunities, a good renewal rate environment and increased exposure in many businesses. Average renewal pricing across P&C Group, excluding workers’ compensation, was up approximately 8% in the quarter.

Net written premiums in Property & Transportation Group decreased 6% year over year to $399 million in the quarter. The figure was lower than our estimate of $542 million. Net written premiums at Specialty Casualty Group increased 4% year over year to $725 million. The figure was higher than our estimate of $679.3 million.

Further, net written premiums at Specialty Financial increased 12% year over year to $279 million. The figure was lower than our estimate of $286.6 million.

Net written premiums at other divisions dropped 17% year over year to $57 million. The figure was lower than our estimate of $79.5 million.

The Specialty P&C Insurance segment’s underwriting profit decreased 3.6% year over year to $204 million in the quarter. The figure was lower than our estimate of $228.7 million. 

Higher underwriting profit in Property and Transportation and Specialty Financial Groups was offset by lower year-over-year underwriting profit in the Specialty Casualty Group. The combined ratio deteriorated 130 basis points (bps) year over year to 89% in the segment.

Full-Year Highlights

Net operating earnings per share were $10.75, up 1.8% year over year. 

Revenues increased 6.3% year over year. Net premiums written increased 7% to $7.1 billion.

Combined ratio deteriorated 80 bps to 91%.

Financial Update

American Financial exited 2024 with total cash and investments of $15.9 billion, which increased 3.9% from the 2023-end level. 

As of Dec. 31, 2024, long-term debt totaled $1.5 billion, which remained unchanged from the level at 2023-end. 

As of Dec. 31, 2024, the company’s book value per share, excluding accumulated other comprehensive income (AOCI), was $56.03, up 2.4% from the 2023-end level.

Annualized return on equity came in at 19% for the fourth quarter, which expanded 20 bps year over year.

Prudent Capital Deployment

American Financial returned $791 million to shareholders, including $545 million ($6.50 per share) in special dividends.

2025 Expectations

AFG projects core operating earnings per share of $10.50. Net written premiums are expected to grow 5% while combined ratio is estimated to be 92.5%.

Zacks Rank

AFG currently carries a Zacks Rank #4 (Sell).

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Performance of Other Insurers

The Travelers Companies TRV reported fourth-quarter 2024 core income of $9.15 per share, which beat the Zacks Consensus Estimate by 39.3% and improved 30.5% year over year. Travelers’ total revenues increased 10.4% from the year-ago quarter to $11.9 billion. The top-line figure beat the Zacks Consensus Estimate by 1%.

Net written premiums increased 7% year over year to a record $10.7 billion, driven by strong growth across all three segments. Our estimate was $10.8 billion. The Zacks Consensus Estimate was pegged at $926 million. TRV witnessed an underwriting gain of $1.4 billion, up 30.5% year over year. The consolidated underlying combined ratio of 84% improved 190 bps year over year.

RLI Corp. RLI reported fourth-quarter 2024 operating earnings of 41 cents per share, which missed the Zacks Consensus Estimate by 14.5%. The bottom line decreased 46.8% from the prior-year quarter. Operating revenues for the reported quarter were $436 million, up 15.3% year over year, driven by higher net premiums earned and net investment income. The top line matched the Zacks Consensus Estimate.

Gross premiums written increased 9% year over year to $473.2 million. This uptick can be attributed to the solid performance of the Casualty segment (up 18.3%). Our estimate was $550 million. Underwriting income of $22.2 million decreased 62.8% year over year. The combined ratio deteriorated 1,170 bps year over year to 94.4%. The Zacks Consensus Estimate for the metric was pegged at 96%, while our estimate was 102%.

W.R. Berkley Corporation’s WRB fourth-quarter 2024 operating income of $1.13 per share beat the Zacks Consensus Estimate by 20.2%. The bottom line improved 17.7% year over year. Operating revenues were $3.5 billion, up 9.2% year over year. The top line beat the consensus estimate by 4.2%.

W.R. Berkley’s net premiums written were $2.9 billion, up 8% year over year. The figure was lower than our estimate of $3 billion. The consolidated combined ratio (a measure of underwriting profitability) deteriorated 180 bps year over year to 90.2%. The Zacks Consensus Estimate was 91%.

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