Q2 Earnings Surpass Estimates Driven by Higher Premiums

American Financial Group, Inc. Reports Second-Quarter 2025 Results

American Financial Group, Inc. (AFG) reported second-quarter 2025 net operating earnings per share of $2.14, which exceeded the Zacks Consensus Estimate by 2.9%. Despite this positive surprise, the bottom line declined by 16.4% year over year. The decrease was attributed to a reduction in underwriting profit and lower returns on alternative investments.

The company’s performance reflected higher premiums across its segments. However, this was partially offset by lower underwriting profit in the Specialty Casualty and Property and Transportation Groups, reduced net investment income, and increased catastrophe losses.

Revenue Growth and Missed Estimates

Total revenues for the quarter reached $1.8 billion, representing a 3.2% increase year over year. This growth was driven by higher property & casualty (P&C) insurance net earned premiums. Nevertheless, the top line fell short of the Zacks Consensus Estimate by 9.2%.

Net investment income for the quarter decreased by 2.1% year over year to $184 million. While this figure surpassed the company's estimate of $180.2 million, it still missed the Zacks Consensus Estimate of $188 million.

Total cost and expenses rose 4% year over year to $1.7 billion, primarily due to higher losses and loss adjustment expenses, as well as commissions and other underwriting expenses. This figure was slightly below the company’s estimate of $1.8 billion.

Segmental Performance

The Specialty P&C Insurance segment generated $1.8 billion in net written premiums, marking a 7% increase year over year. This growth was observed across the Property & Transportation Group, Specialty Casualty Group, and Specialty Financial within the Specialty P&C groups. Factors contributing to this growth included new business opportunities, a favorable renewal rate environment, and increased exposures.

Average renewal pricing across the P&C Group, excluding workers’ compensation, rose by approximately 7% for the quarter.

Net written premiums in the Property & Transportation Group grew 10% year over year to $759 million. However, this figure fell below the company’s estimate of $853.3 million.

Similarly, net written premiums at the Specialty Casualty Group increased by 2% year over year to $765 million, which was below the estimated $795.9 million. Net written premiums at the Specialty Financial Group rose 12% year over year to $279 million, but this also fell short of the projected $284.2 million.

Pre-tax core operating earnings for the P&C Insurance segment declined by 14.4% year over year to $273 million. The Specialty P&C Insurance segment’s underwriting profit dropped 24.5% year over year to $114 million, primarily due to lower underwriting profit in the Specialty Casualty and Property and Transportation Groups. This result was below the company’s estimate of $151.1 million.

The combined ratio for the Specialty Group worsened by 260 basis points (bps) year over year to 93.1%, driven by a deterioration of 250 bps in the Property & Transportation Group and 480 bps in the Specialty Casualty Group. These declines were partially offset by an improvement of 630 bps in the Specialty Financial Group.

Catastrophe losses for the quarter totaled $38 million, compared to $36 million in the same period last year.

Financial Position and Capital Deployment

As of June 30, 2025, American Financial Group had total cash and investments of $16 billion, reflecting a 1.2% increase from the end of 2024. This amount exceeded the company’s estimate of $15.8 billion.

Long-term debt remained unchanged at $1.5 billion as of June 30, 2025, consistent with the level at the end of 2024.

The company’s book value per share (excluding accumulated other comprehensive income) stood at $55.74, down 0.5% from the 2024-end level. The annualized return on equity for the second quarter was 15%, a contraction of 300 basis points year over year.

In terms of capital deployment, American Financial paid cash dividends of 80 cents per share during the second quarter.

Zacks Rank and Competitive Landscape

American Financial currently holds a Zacks Rank of #3 (Hold). Investors seeking stronger buy recommendations can explore today’s list of Zacks #1 Rank stocks.

Other major P&C insurers also reported their second-quarter results:

• Cincinnati Financial Corporation (CINF): Operating income of $1.97 per share surpassed the Zacks Consensus Estimate by 41.7%, with a 52.7% year-over-year increase in the bottom line. Total operating revenues rose 15.3% to $2.8 billion.

• Chubb Limited (CB): Core operating income of $6.14 per share exceeded the Zacks Consensus Estimate by 4.2%, with a 14.1% year-over-year increase in the bottom line. Net premiums written improved 6.3% to $14.2 billion.

• Kinsale Capital Group (KNSL): Net operating earnings of $4.78 per share outperformed the Zacks Consensus Estimate by 8.4%, with a 27.5% year-over-year increase in the bottom line. Operating revenues rose 22.2% to $470 million.