American Financial Group AFG recently resorted to wealth distribution to shareholders via a special dividend. The board approved a special dividend of $2 per share, testifying to the insurer’s strong financial position and long-term growth prospects.

The special dividend, totaling $170 million, will be paid on March 28, 2025, to shareholders of record on March 17, 2025. This special dividend is in addition to the quarterly cash dividend of 80 cents per share paid on Jan. 24, 2025. With this special dividend, AFG has declared $52 per share in special dividends since the beginning of 2021, including $6.50 per share in 2024.

Strong Capital Management of AFG

American Financial has traditionally maintained moderate adjusted financial leverage around 20%, with good cash flow and interest coverage ratio. AFG ended 2024 in a strong capital position and expects its operations to continue to generate significant excess capital in 2025, which provides ample opportunity for effective capital deployment, including acquisitions, special dividends or share repurchases.

S. Craig Lindner and Carl H. Lindner III, AFG’s Co-Chief Executive Officers, stated, “our 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."

Banking on operational expertise, AFG returned $791 million to shareholders during 2024, which included $545 million in special dividends and $246 million in regular dividends. This apart, AFG also bought back shares worth $50 million year to date through Feb. 27, 2025.

Dividend payments and share repurchases totaled $6.3 billion over the last five years. The robust operating profitability at the P&C segment, a stellar investment performance and effective capital management support effective shareholders return.

Notably, AFG has successfully increased its dividends in the last 19 years. Its dividend of 2.5% betters the industry average of 0.3%, as well as other insurers like W. R. Berkley Corporation WRB, Cincinnati Financial Corporation CINF and Assurant Inc. AIZ.

Wealth Distribution by Insurers

W. R. Berkley Corporation

A strong capital position helps W.R. Berkley in wealth distribution via share repurchases, special dividends and dividend hikes that enhance shareholders’ value. In June 2024, W.R. Berkley approved a 9.1% hike in its quarterly dividend, marking an increase every year since 2005. The company paid $412.3 million of special dividends and $119.6 million of regular dividends in 2024. Its dividend yield of 0.5% is higher than the industry average of 0.2%.

With respect to share buyback, the board has increased the share repurchase authorization to 15 million shares in December 2023. During the year ended Dec. 31, 2024, the company repurchased shares of its common stock for $303.7 million. A steady insurance business, growing international business ensures consistent cash flow that should help this nation’s largest commercial lines property casualty insurance provider make steady wealth distribution.

Cincinnati Financial Corporation

Cincinnati Financial’s consistent cash flow helped it return capital to shareholders through share buybacks, regular cash dividends, as well as special dividends. The board of directors had increased the annual cash dividend rate for 65 consecutive years, a record which is believed to be matched by only seven other U.S. publicly traded companies. The dividend increases reflected strong operating performance and signaled management's and the board's positive outlook and confidence in outstanding capital, liquidity and financial flexibility.

Its dividend yield of 2.4% is better than the industry average of 0.2%, making the stock an attractive pick for yield-seeking investors.
The expansion of Cincinnati Re, better pricing, strong renewal, solid retention and exposure growth, and an agent-focused business model should help consistent cash flow, which strengthens liquidity and supports shareholder-friendly actions.

Assurant Inc.

Assurant has a solid capital management policy. In November 2024, the board approved a dividend hike of 11%, which is the 20th consecutive year of increase. For 2024, share repurchases and dividends totaled $456 million.
Assurant repurchased 1.5 million shares for $300 million and paid $156 million in dividends. From January 1 through Feb. 7, 2025, the company repurchased shares for $24 million. As of now, $351 million remains under the current repurchase authorization. AIZ remains focused on maintaining balance and flexibility to support new business growth while returning excess capital to shareholders. From a share repurchase perspective, Assurant’s expected range for 2025 is between $200 million and $300 million, subject to M&A as well as market and other conditions.

Banking on solid performance at its business segments and a focus on growing fee-based capital-light businesses, AIZ expects to continue to generate meaningful cash flows.

Stock Price Performance of AFG and Zacks Rank

Shares of AFG have lost 10% year to date against the property and casualty insurance industry’s growth of 12%.
 

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Consistent price increases in the property and casualty business, impressive inorganic growth, prudent investment in businesses, a high renewal ratio and a favorable combined ratio should continue to drive AFG.

New business opportunities, increased exposures and a good renewal rate environment in the P&C group bode well.

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

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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W.R. Berkley Corporation (WRB) : Free Stock Analysis Report

Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

Assurant, Inc. (AIZ) : Free Stock Analysis Report

American Financial Group, Inc. (AFG) : Free Stock Analysis Report

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