AFG - Earnings call transcript Q4 2017 | American Financial Group, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the American Financial Group 2017 Fourth Quarter and Full Year Results Conference Call. [Operator Instructions].

As a reminder, this call is being recorded. I would now like to turn the call over to Diane Weidner, Assistant Vice President, Investor Relations. Please go ahead, ma'am.

Diane Weidner

you. Thank welcome Call. Group's and Earnings Quarter American Conference Results to morning, Fourth Financial XXXX Good this by, Jeff joined of I'm morning American Lindner, and Financial Co-CEOs Craig Group; and Consolino, CFO. Carl AFG's Lindner III;

release, website. materials today's AFG's call. press posted portions referenced These investor presentation will webcast Our are and on during be of supplement

if that or or errors for transcription reviewed accuracy. earnings alter transcript of may reading be authorized statements. made factual which may X financial Before core earnings the is guarantees website. to statements of it detailed over risks core these uncertainties reconciliation a draw actual considered discussion I not risks in and/or and materially description to webcast. net and finally, are can of or meaning as also the A to earnings, Investors may that shareholders remarks to notes operating net our release. and in to defined call this include XXXX. earnings attention references AFG's And non-GAAP statements. be of Private Securities are that the a these to should the results Reform the questions. Commission, Thus, on Carl, consider you your during differ the in Certain filings not A future forward-looking in We our performance. available statements Securities statements turn of Exchange call, be to with Act or on net please I Slide financial of this cause our may note These responses our would operating could could under like condition found of attributable Litigation contain to measure, uncertainties our intent included from are it materially our

call Now III Carl discuss I turn pleased Lindner to to our am over the to results.

Carl Lindner

year and released yesterday XXXX fourth results We afternoon. morning. good quarter our full Well,

all-time core Slide fourth of for earnings. year for highs X an to please you'd new the overview. slides AFG's full operating and established quarter turn If webcast results

by our the capital Our position in future. and capital AFG's million performance common an our our both during the million November paid representing dividends financial and in our enabled capital And special $XXX year. reflects of strong important in paid returning business, shareholders million $XXX and and results confidence dividends and were May segments financial component strong is management strategy in Casualty of profitability in We of strong stock in management. investment to year, $XXX and Annuity operating effective Property and our regular dividends last

Our shareholder that annualized increased beginning Property Life price of and dividends Casualty to quarterly S&P was return, 'XX. share in over rate Health per of total index exceeding S&P XX%, and the return performance approximately was an and index the in AFG's dividend of the October plus representing $X.XX period. annual X-year the growth XX% by same XXX, share total S&P

report Turning per $X.XX, all-time for quarter another high earnings Slide pleased of share We're quarterly to AFG. X. to fourth core

outperform Property Property the accounting the strong Specialty before These results overall. Casualty businesses a and Annuity industry of to impact quarter our and portfolio very our challenging of segment. value in Our for and earnings Casualty during of year Annuity enabled very diversified profitability include and us record in operations our many has peers and fair

lower $X.XX of tax per was our XX.X% share write asset XX.X% on to compared transaction. a impact noncore for the income a equity charges, P&C per core $X.XX results core which corporate Net share 'XX. significant were and deferred was to the reinsurance-to-close annualized per $X.XX due the Our related operating rate. earnings tax of XXXX down of Neon included quarter included net $X.XX, onetime in share share of Fourth most of per to U.S. return diluted

We pleased since passed XXXX. first comprehensive has for time tax the reform that Congress are very

fair competitors Over team recaps By the our see also closing and wouldn't an I largely our when more earnings. components others need responded affiliate for and well, rate, discuss and a and Foreign particularly items reform as shore. in of results, have been and level and our a talented we low employees the the to great helping of surprise the insurance. time, to he the back tax reinsurance the leveled interest these part tax see our inversion the economy GAAP to U.S., reversal long-term We God, is will us loophole call tax insurance lowering as in XXXX. insureds field. had since does the Craig of navigated environment. disasters embedded it economy, for news non-core corporate good and that's to management a heightened of trend continued later on Jeff natural code moving Congress rate a achieve other companies the Tax welcome tax competition. has playing advantage thank

XXXX $X.XX and AFG each will discuss I We share. of in our guidance per later in the core call. earnings of range guidance business each Craig have for our our for the established $X.XX segment to

earnings rate guidance core XX%. tax of per approximately assumes share Our effective an

include quarter Property to and and of turn to Slide Casualty like X of focus overview X results. our which webcast, the our the I'd operations. an turn Now to Please fourth

same net growth from the strong and earnings you As operating the Harvey, Specialty in increased lower higher underwriting and operations and Property see losses, and operating higher hurricanes Mexico due see quarter. loss XX% very in Irma lower you'll XXXX Property quarter Losses insurance wildfires and Casualty a our healthy premiums reinstatement quarter, on were On results. core Casualty $XX expenses to drivers quarter premiums improved earthquakes respectively earnings gross profit were in Slide and compared produced X.X X, the catastrophe by the will fourth Property net fourth Casualty points Casualty Property X% Slide, during year-over-year. and Maria The and in to the and quarter reinsurance fourth year and quarter earlier. fourth Significantly related written million. X%, other of inclusive was that California. quarter XXXX and during than quarter. pretax catastrophes, the developed the million was the The and XX.X% to of of specifically wildfires, of primarily third included ratio X.X favorably Specialty $XX XXXX two combined in fourth

catastrophe of losses Casualty years Neon's XXXX year. successful our to was our quarter businesses. overall favorable of agreement Overall part continued the X.X the $XX transaction for workers' year the pretax renewal inclusive reinsurance-to-close and account of to points prior on XXXX premiums were and also in strong during largely in of during reinsurance total for included So quarter. due reserve Property in Results and million reinstatement approximately net pricing fourth Specialty the the fourth full and X% up up group average was approximately results compensation X% development

turn to a to each Casualty like from Property to X highlights of and Specialty I'd few review business our Slide Now groups.

in operations. Strong relatively profit period. $XX underwriting year increase and of was operations. reported lower in insurance to offset fourth levels price comparable primarily Catastrophe bond the Our year from as XXXX businesses approximately year operations our increase $X average and profitability increased of to crop which XXXX, was group and in the during this Property Group at the premiums favorable business commodity part albeit than profitability from X% and group prior pricing loss lower the to very quarter. in year-over-year compared quarter. The agri the quarter group higher a premiums our $XX fourth auto full in million written stable this the underwriting coming the rates by partially of higher with contributed quarter XXXX for quarter premiums year. X% operations. this had our respectively also $X from of our offset for as period. most both yields commercial by Ocean transportation Overall, in this million million in quarter, compared profit renewal well net a business, in rates Property, Marine strong premiums renewal Ocean Overall, our This of growth agricultural Transportation an customs profitability fourth X% insurance operations. crop the partially and resulting Higher were fourth Marine lower was exit higher on quarter attributed of in in was impact the million that prior Singapore 'XX losses of gross for in XXXX group fourth fourth to non-crop Fourth our underwriting prior increased

within underwriting reinsurance-to-close to Casualty Neon, business. million Now $XX to the reserve reported primarily the XXXX $XX transaction, attributed quarter higher profit significantly attributed of ongoing prior Specialty year million underwriting year's period. connection profitability to favorable of in lines fourth development Neon's and compared in with the was most prior Group The

the in businesses compared in of and wildfires was the of California businesses compensation our results. business, of overall for businesses 'XX surplus fourth to million environment. profits increased underwriting premiums lines workers' its $XX X% the in with quarter our Renewal the our workers' in all compensation throughout this book group higher lines and targeted offset Gross were flat our $X period, within These fourth and respectively, when same especially the workers' result strong business compensation resulting in excess for to comp and in excess reported workers' XXXX. reported the X% I'm the markets also that businesses. in underwriting surplus classes growth more from and our operations. Catastrophe X%, in of compensation fourth portfolio losses a in were group comparable Rate quarter pricing profitability increases premium growth Florida period. written million in year. in growth profits our the the surplus premiums in lower offset Growth for and this increased prior improved pleased 'XX partially occurred and Neon, We deductible in by by by in results rate of lines declines net workers' quarter primarily the and higher California. response and year and and our targeted excess challenging contributed XXXX high these

Our the XXXX to 'XX. $XX an compared Specialty of $XX in of fourth of Financial quarter fourth profit million underwriting an million the in quarter Group reported profit of underwriting

achieved was net quarter compared XX% $X group in margins. a this group the Gross from were which the largely excellent and businesses, during XXXX and third impact Higher fourth group written fourth developed quarter ceded, XXXX in million for premiums of Renewal the year, when a leasing underwriting by pricing the increased this was in of Catastrophe the businesses increase. premiums X%, catastrophes quarter this lending the and down the loss had million driver fourth 'XX same it losses favorably. period. for to were the about flat in of losses fourth respectively, favorable as compared in in $X to primary the All and XXXX quarter quarter, our X%.

Now the of and please turn a our summary X view Slide to Casualty Specialty XXXX Property outlook for operations. for

the up We a to X% of written ratio growth to and a Group, look specialty written and ratio the be for XX% to of each and We range combined range and XX% combined between at Property Property XX%, group subsegments. expect our X%. overall. in a expect And XX% in X% estimate net Transportation to and Casualty of in X% in taking the net the premiums premiums then

premiums we Property Casualty overall and range our and Group to to in do estimate in combined be expected group estimated up written And X%. Our of XX%, written range is to expected and Specialty of renewal to XX%. X%. combined in finally, Property Specialty year-over-year. in Group the the are in investment produce in XX% in a to X% ratio income grow premiums X%. XXXX to X% X% between of this pricing Casualty be Casualty XX% range and XXXX to to a to Net ratio X% is We be Financial we the growth to expect up X% expect And net

segment and our tax year. discussion believe of components loss to past Specialty in of the Our can to a goal in environment, what are performance. pricing impact domestic price, businesses. be investment the be to this cost operating price. the each slide. so increases of Tax we will new I'll costs Property the Craig and run long excess the review our on our P&C for Annuity is of extent Specialty along in determine AFG's And driver will in over we continue results and with of Details our primary to and groups be the We, now the in tax Casualty foreign it's turn found competitors, difficult what to one many reform secure achieved

Craig Lindner

$X results record pretax Annuity This quarter finds annuities XXXX. appropriate GAAP to record market million on accreted the achieving earnings quarter attractive. in cash X. quarter had fair and impact this $XXX embedded the Carl. consumer-friendly of derivative our is before the returns future to new Slide flows. year, of commitment of another annuities estimated of AFG's the our in you, XXXX accounting totaling the ability fourth fourth our result XXXX. the fixed-indexed business value I'll fair products were derivative billion. Annuity segment of million for that quarter beginning Thank $XX of in and considered embedded $XXX reserve, deliver interest based expected achieving fixed-indexed portion demonstrates XXXX is review start on The the certain an value income on and of to million fourth recorded fourth of present Annuity the Under fourth with of a be a in reserves taxes million $X rules, for Annuity quarter for to includes compared at value earnings on

the value by the earnings used from In assumptions benefit of current segment projected fair generally not in Presumptions this and withdrawals changes the interest rates in but $XX as than rates, higher also this fair a in the by than expected in as in these derivative. of a of fourth Annuity stock interest well quarter earnings. an in rather In changes well as Variances results. for in timing of net comparison, lower more unfavorable other interest to quarter rates, stock the Annuity would a reported market XXXX, value. include, impact market high the in the period, surrenders, mortality. are economic annuities to was offset stock impacts calculating significant nature By fourth the new market million value fair impacted as the interest, embedded on increase accounting from change the the XXXX, costs, resulting in for in fourth fair Annuity before option were reporting year quarter favorable in addition these a are large adjustments XXXX, up value result Many all-time resulted establishing impact the Annuity in AFG. of of of period, X% on earnings prior earnings. of impact $XXX million the fixed-indexed increase

Slide quarterly and and respectively, X, and average investments you'll on grew reserves As see Annuity approximately XX%, XX% year-over-year.

a interest segment fourth of included of discipline fourth relatively unlocking million low the earnings Annuity of accounting million offset fair quarter periods of impact review assumptions However, Unlocking in detailed and fourth XXXX runoff resulting decrease quarterly the investment of benefit unusual rate statutory conducted pricing unplanned other of of compared Both XXXX. Annuity quarter the this and and quarter higher-than-expected the fixed-indexed events. The In major XXXX, in AFG required $X $X for in adherence as well to quarters of growth to income premiums as early operations. from AFG's of XXXX charge $XXX from fourth XXXX its compared amounts was marked unlocking Annuity an stock redemptions fourth quarter in the investments. reported a positive to investments through the the reviews the resulted actuarial certain positive to resulted annuities. be $X.X from value strong were a from to XXXX. by million and of income unlocking earnings market included AFG's of billion partially a This higher-yielding market in environment. before the in underlying

XXXX, full sales given year of X% were Although be for with result, the satisfied industry very fixed continue in estimated nearly I'm that we believe this sales down down our annuities to for are positioned of indexed been X% and We to the Annuity future. have well XXXX.

to website. summary Slide can on Annuity at outlook Please found the our segment. a of AFG's turn for the information Additional also Quarterly posted Investor Supplement XXXX XX for be

$XXX $XXX the to expect range on million value we before impact the XXXX, of be to For accounting of in million. earnings annuities fair fixed-indexed

Annuity compared in to our earnings million expect be $XXX $XXX XXXX. to We XXXX reported in range million million $XXX the of to

rates rise Our remainder the market and XXXX. XXXX moderately guidance assumes for stock of interest the

expect normalized required stock to lead our securities. significant also market Fluctuations as expectations prepayment investments Annuity income certain in and be income and/or or returns income lower earnings the market on from rates to results. investments a on changes could in to more or impact from positive marked the as segment's in negative impacts interest compared We unusual investment to such through of fixed XXXX items these

after to XXXX $XX billion on realized our XXXX of XXXX. quarter XX compared investment expect reported X% for period. Annuity the $XX premiums Slide net fourth $X turn regarding $X.X of We million gains in securities comparable highlights deferred to up portfolio. after-tax the securities Please few costs net from realized to AFG gains year reported be prior X% acquisition and a to billion million in on

December of after on As fixed unrealized gains $XXX million DAC, maturities on XX, were XXXX, million unrealized after-tax. gains $XXX after-tax, and equities were

As the you'll and website. investment with an fourth a maturity Jeff, high our an about XX, capital various comments consolidated see of to continues the We've of highest Investor two share Quarterly two, NAIC and its categories. results be who Supplement over Slide segments our I our comments few on the XX% our on fixed in will will investment portfolio with on XXXX turn liquidity. up quarter now discussion our wrap overview with designation rated to of detailed XX% or portfolio provided one of additional quality, grade, portfolio our information and

Joseph Consolino

Thank you, Craig.

AFG's pleased This AFG's $X.XX a Craig and have on EPS. operating core XXXX in high establishes of core summarizes Carl core all-time The of fourth million. earnings new quarterly is based results covered. the for $X.XX. Slide $XXX the For that XX report quarter earnings net operating to EPS quarter, we're

year-on-year quarter. Specialty You on of our Page the XX% detailed fourth and were and profit X flat of Casualty due in up Property XX% most can see Property Specialty This and increase the components was Transportation when subsegment Supplement. our the profit. Financial. is to Investor view compared especially XXXX to a in pretax operating more significantly underwriting Quarterly in Underwriting improved earnings

a greatest several our transaction, quarter operations. businesses, with and Casualty businesses compensation significant losses Excess showed increase to quarter, third thanks the Casualty along of profit. our year's Neon, the subsegment Specialty losses. Surplus made last the our with workers' contribution, quarter in Our development Specialty and due on including underwriting reinsurance-to-close cat in Catastrophe other were favorable level to Lines

our Net core another year. to XX% operating $X a announced a earnings of the early or reconciliation quarter. company share had strong XX million adjustments. earnings X-X/X% million Annuity further share interest a gains $X during retirement previously also We million. per November provides XXXX of the to very We million on on in fair quarter accounting Pretax operating which $X.XX the $XX net loss Parent debt senior crop XXXX notes, look to or $XX $XX after this XXXX. We'd Slide and securities of refinancing. decreased net due were million, fourth decline were expense retirement unrealized earnings. for in by was of AFG's decrease per value

during $X.XX of per share tax quarter. onetime deferred equal $XX of reform, fourth our million to write-down tax the or a impact noted Carl earlier, net asset As recorded AFG due the to

a also benefit fourth recorded million a of Neon quarter. from $X.XX per We during the share $XX or tax restructuring

with Part liquidation required quarter. Neon's loss purposes AFG was minority the that in the reported of that XXXX. tax fourth loss in recall restructuring deferred may of U.S. a to XXXX of You be deferred. loss indirect component an parent to for in connection had of resulted the fourth executives of sale interest quarter the the certain recognition of the in The Neon fourth XXXX quarter

Casualty account. negotiated it's Neon's previous as from in pertains it account development of new $X.XX and successfully per generated the Neon transaction XXXX and legacy of now lines and million prior preceding favorable of its all exited through $XX subsegment as arrival XXXX XXXX reserves This or has the of $XX business. to its covering noncore our years the reinsurance-to-close million share, Neon recognized of Neon a Additionally, Specialty in plus management of years from team. to close its eliminated reinsured years year loss

of Slide XX, as XXXX. AFG's book on XX, adjusted $XX.XX per As was value share indicated December

dividends commitments during the resulting to Parent paid sufficient have cash meet book December million at insurance during year, tangible plus value XXXX. of $X.XX capital to share XXXX. our share in book We maintained was in end Adjusted share the rating value $XXX at XXXX. We agencies. year per per was X.X% per $XX.XX businesses growth our of XX, in dividends

a to quarter. excess Our our million $XXX million plan XXXX. million flexibility powder remain dividends capital arise. $XXX of We closing, shareholders regular shares on for $XXX approximately stood that $XXX of as Page to approximately earnings the to all core Please In at Approximately we repurchase as our year-end to a of opportunities guidance. at returned page capital presents during for under X.X remember, opportunities basis. We February maintain through XX million single authorization XXXX summary X. our may million the hold review deployment dry

approximately operating realized results earnings may and earnings. be operations. assumes AFG's items exclude rate guidance expected Our not for pretax significant an such XX% of now effective tax as items core of and non-core year core that losses on ongoing operating gains full other XXXX XXXX indicative

any for Now lines to we'd questions. open like the

Operator

Instructions]. [Operator

is question from of first Peters Raymond James. Our Greg

Charles Peters

the not component of what the thinking Just for a you crop questions around XXXX? the your provide detail I year number is 'XX but hoping was full might I comments the outlook and couple only about noted for results, you're for you. for additional crop

Carl Lindner

is run year a year, consider years turned in report we for out those don't of good separately to very normal was year we extraordinary would This a crop. Both Last Again, an be crop rate. probably what to XXXX 'XX, Greg. are Carl. also. Hi, above be crop.

more rate, a run our crop normal assumes if guidance that's operating So helpful. in income XXXX,

Charles Peters

look come just XXXX. your Maybe guess. this from and different at accident If looking anticipating I supplement. deteriorated at of versus erosion points. basis basis results, you're XXXX accident guess, guess year looks at loss can wondering XXX-plus if just just in like then. your I'm year X current It full a I is perspective, Page ratio consolidated from this I your the stabilize? your point the pick I I'm another will pricing year accident loss XXX Or loss changing the it I about when is current enough environment think And and pick? where XXXX,

Joseph Consolino

I kind guess, discussing, pricing Consolino. ratio would that Greg, guidance an Jeff only of lines gave you. not overarching we've this is as I considered all that our first we've objectives in within statement of business but the trends give combined Carl crop of been specialty and

that's best to estimate current of wind up. So we're where our going

don't of focus to Now I deterioration, like of in kind terms overall.

X of subsegments I cats, looking we versus combined and in had, XXXX accident ratio points. at is the for year XXXX, a Transportation the appropriate. movement up example, in more X.X And, think, Property subsegment, the

that we While had year very crop crop at up, XXXX, see you year was year currently. just is as fully satisfying that a X/X fact the that we the move a and XXXX superior is to of XXXX look move in

our I ratio mind around. the use our focus kind would on as your rather So and the word good get or this just deterioration two the out, what hard heels of totality contrary of to guidance is, best to of a current pretty the to than combined thing years estimate. trying to overall But that's driver on say parcel even this

Carl Lindner

of liability commercial is to commercial problems the achieve X% part business trucking I think our Interstate year, the business commercial where past auto, auto other Transportation will where Property industry price an think part decent we is, in the increase I that one and in this have so. place did Great continues the that, thing the and in the increase segment in have, of significant particularly is market, get some a to price our auto to continue National American also. That and opportunity

Charles Peters

accident the result. emphasize year I great year don't you mean current year mean, to I result. end a over had full

I Property, tax commissioners So and Property Casualty, have department maybe a looking other that on On of through states. benefit insurance of have benefits one for reform couple Casualty, the for lower just called question Craig. the then to noticed question of from I tax federal and states their a consumers pass one

So question listen businesses. then I'll if other outlook have I'm for on for any of your impact And wondering then in in indexed I know your in there's result if if just and annuities, you've just to a -- I'm any marketplace reform? some are change tax to Craig, just wondering there? any change seen just the Craig, the competitive there's was and in any, competitors the answers. sales going any your as wondering of that's put of posture I'll offshore, if I'm even your curious I noted

Carl Lindner

reform, were in lot talk it's entities about a of kind our when of hard specialty In -- you're Greg, tax all for prior that there's Plus our taxpaying piece. the that competitors so not rate, also kind some lines in to moving very markets benefits there's away of environment. a to where competing need the question. industry, year first on So difficult of

cost, the that only returns, really are different history, one be Tax the trends, to Frankly, same reinsurance and of expenses, some needed price risk there important yield, impacts Just maintain rate may the factors those in more investment loss is selection on factors. many loss that. factors pricing.

So that's take on our things.

Charles Peters

comment you could annuity sales? Craig, And Okay. on

Craig Lindner

reform going an to as have on would early tax us Sure. the whether environment. the too a is is Greg, probably competitive opinion what give for I of impact it's to big say

advantage I given they companies, I First have was several to companies going a very weren't accept that an that of that targeting were would of all, were have for they tax U.S.-based we think that field, tax little were now believe I I believe significant what wouldn't paying are pricing. positive to on impact to going same the to I extremely now pleased to taking think is their accept with that have long-term, playing the of return points outcome, be that they the as the think the the is U.S.-based companies the what loophole. paying going that below before. -- don't are leveling

So the competitive I that longer have it would some environment. impact hope would term, on

Operator

Amit next Research. Buckingham Kumar is from Our question of

Amit Kumar

few A questions.

The first and question sort the of discussion the the numbers. goes book back to on agriculture previous

more when a run is a statement you run that number it's rate. normal rate? a used normal exactly What You say in

Craig Lindner

looking adjust to the of Well, adjusted results any trying at what XX to for more the for in we're program X in over changes year time, period changes your are of a itself, program.

years the big of money, a make we -- going to you is you're made a where make As going a industry bit to be or business, know, this didn't where any amount there didn't of little years have drought, were in the year of money. And different. smaller industry lot where each money

think I looking years in don't can great a, drought, think drought, we have way And at where and change there forward, of what that that we is the best can lot, prices you In there's where a rate. be than run years more. heavy is and looking then project we that. lower conditions that at the that's normalized consider business be to the and a So changes could

year's got exactly whole have the you've those In until don't know and this answers, usually January, don't out. we you December things the where the what and hit of business, Some time you we so. all know,

Amit Kumar

ratio? the rephrase XX% XX% historical was should below I to numbers trying handy me, is can probably wondering I an check. Sorry. What front remember, in those go Or and was always to number? and I a I numbers was combined had on XX% I that if you back don't the of like that But have basis. question.

Joseph Consolino

them really is to my of don't handy. in don't investor Jeff. any we This Amit. I our knowledge, have those numbers information. present Hi, And

Amit Kumar

always, can guess, using statements. One them Okay. I the compute

discussion the loss to can is commercial the Just you auto. right cetera? perspective. us give maybe, And update a Jeff, download on a the direction, on on quick versus now et give historical quick in trends the Moving just how us are? it cost

Carl Lindner

combined Interstate points progress X.X our on Yes, that, but can improved ratio. think I auto be that if for would I'll XX.X National our helpful. calendar about let business, Jeff XXXX combined year a you give report to ratio commercial

have it more compensation is to an but combined we're underwriting profit that. Interstate, very there our long costs Overall, rate with objectives profitable. National a loss making pleased year, went for National rates level you any frankly to So needs meets Interstate? ratio, X%. the still do the Jeff, on was up very term. Commercial Workers' for for auto return to get about thoughts that

Joseph Consolino

well. Sure, and as broadly our business maybe be trucking for more

watching more. neighborhood So business for X.X loss trends the severity Interstate's started carefully, unexpected have measure little into a clearly would plus minus, National long-term when We XXXX loss to creep in maybe of trend the been since points or and we somewhere the bit business. we're

the damage liability, that kind On around side, physical was more points. auto down it's of X.X commercial muted

Carl Lindner

mainly piece, results great American Great and 'XX, Yes. is increase our a had of is operator in to there which speaking that, we last got year. We've trucking Jeff bit price business. owner our there, little X%

Joseph Consolino

there's ahead understand very and this hearing respected and been we're stay in to to of in season and we raising been XXXX at you it. great rates try lot We've We've work commercial companies since of trend, are going -- of and competitors do them from auto. to earnings still a keep have, and many

Craig Lindner

commercial as some what does. and work Particularly well to industry the as do in -- auto we liability, got

I opportunities, and I exit think, about quicker I provided companies about get some quarter as in think hope we right opportunities that. that from know business, little know, fourth that more I spoke that. backyard. so. we're I the which improving like it get than truck opportunities National some -- took our we was retrench Interstate's maybe peers, Hoping And other some that I maybe Westfield's a we

Amit Kumar

separate there really That's the the cleanup I'll sale was know LTC a of piece reserves. like of I And This one question. it. a business, Got small is after and re-queue. helpful.

I think or minute what's it a the would just was update as quick like XX-K. or $XX Has great. so number? XXXX million been Maybe salient, that on reserve already be that one piece of

Carl Lindner

hands stats Let on tiny, the me here. get let my tiny stats the piece, get It's on it. a me but

a second. Just

Operator

Instructions]. [Operator

is Sandler next Our Newsome question of from O'Neill. Paul

Jon Newsome

whether wanted form the in this of for, to at, looking change question you're about looking you M&A, ask and tax respectively. of or a I sort philosophical changes things not kinds

Craig Lindner

helped in have I that beat the narrow, change had changes say competitors but They to provisions really we're eliminate at. would foreign tax advantage things situations, M&A an it it. to in that think the potential of narrow that helped so. don't not looking I the bidding probably embedded kinds

I a think that advantage narrow provisions probably the beat bit. little

can and we're thoughtful but standpoint, And careful, right we demand fix a something or that that from fairly get double-digit returns think so for return. me accretive, just that's going buying acquirers the it of that's business -- immediately versus and that, accretive just quick

as because help little So I we the could change, beat provisions, that a where bit have we the bar for -- maybe been hadn't probably our competitive that of think the high ourselves. us

Jon Newsome

we're all? do are this at secondly, mean change lot about of you're I not companies, roll how you back necessarily states changed by taxes. in your regulatory at but obviously, signal affected hearing opinion? talk has think does of insurance And rates But to this, because trying regulators environment looking in a the

Craig Lindner

to an tax really the it's kind of law on new, really of so that, early is say assessment I'd too have so. much as

think some have that on I where that results past floor, I made you that, of great blood the year. lot a earlier comments weren't this

I influences things. think that

of rates. think, trends expenses you than one price only your rate's when all histories properly your tax and piece, and important the as how factors important your set loss far probably that to factors, trying tax, analytics in bets and that, and use the I are predictive and you're again, as more

Operator

have And it Kumar looks follow-up like Research. we with Amit Buckingham from a

Amit Kumar

Jeff. then -- be go to the to closer might And you I want back think consolidation. discussion it even Paul's This when I question. to was on

apart in I the activity AIG about also et cetera. could Validus, a make recent at look curious, AFG process, acquiring or capital, thematic you you using do was acquisition, think If talked the of terms thought from with third-party market at thought look it work do on they make on currency, to has does too stock mean, it have the based I it that make -- difficult front? just on is the or current changed process you something your based Or multiple. just sense, something work?

Craig Lindner

little to question. a too difficult of make? Is I'm the unclear what

Amit Kumar

Or some removed any a from look segment se? far sense? you smaller, thematically, if per at are of This guess, you the that Is, nonstarter think entities so partners, reinsurance as looking were from Bermuda makes is I Day AFG to like X. do at

Craig Lindner

is appetite Amit, of of something so because one and our we well reasons selection careful Yes, around and underwriting the you did know catastrophe business.

So I think correct. you're

to primary has I us on who's or property wouldn't D&F cat the think it that appetite to business for hard big overexposed a be that. -- a or on acquire exposures would integrate property property, large or integrate we have

play property I team D&F with and of team the take to put is is, market give that a business, have we today, -- in we've cat quality side, think other team help marketplace. us have really our Neon to opportunities a us aspect in put in the reinsurance quality the we've -- advantage on we the that part place in of that a the place

good with So the an talent that have probably we as what we to we'd quality in and, have write have appetite or much frankly, talent, little ability as for.

other Bermuda that acquire to much any way, to entity really, doesn't us add entity is a heavily So exposed or really it so. that

Carl Lindner

material At policy stats immaterial the total. And business, those. of of remaining recently first in the had the if located care, and all end a $XX five reserves long-term certainly of I in company Florida, is future. AFG charges which have million company doesn't expect XX-year have to the received the LTC the increases rate of plan, you'd I'd size Because also in years. in on like Amit, business hear to the for any year, included remaining mentioned the do the approval the that rate the

Operator

Peters next Our of is Raymond Greg James. question from

Charles Peters

could channel. top color I view And by for is independent you've an maybe just already the channel everything if update on more provided those results have what for where, your in Craig. guidance in sales wondering us that's results. on channels year's on you effect provide bank if agent on And of for Annuity of It's any, DOL? I'm And XXXX? the wanted each to sales versus last additional going color XXXX?

Craig Lindner

an think, and Okay. had would end moving looming certainly up, was distractions have I in all impact about XXXX, premiums, is the industry that in it over distribution Greg, my on think rule, that concerned DOL place where some I clearly, opinion.

being was can implemented light, As insurance-only DOL know, be agents. by until what been delayed of you July has sold still XXXX. ended FIAs up and

sales on it on without had in think second I doubt our industry sales. -- and an had half the the impact clearly, XXXX distraction that a of

estimated be are and the down As sales to X%. indexed I mentioned, of fixed in annuities XXXX

that this noise hope. will gone in will industry some and Our premiums. be certainly stronger hope is but that is of our will tell, the year, that around result Time

consumer-centric oversight, there's There's against a to of rule future. accounts, likely and client's the act near requires nonqualified, DOL the going rule. to As likely it Labor and kind between vulnerable I less best quite some makes and conformity all It to some rule SEC kind SEC in a provisions. -- will to us qualified We think our in support of fiduciary that the that will that both you to that. we any tell any probably pretty of apply need propose brokerage It's argue be Department agents the that interest. relates hard will a [indiscernible] any bit to

subject. kind that's on where of out I that So come

believe or of annuity and we -- more that indexed That like... so. -- certainly the In color environment. interest a of rate environment Or you terms the fixed be beginning in question? answering rising should positive sales, Is we're your would of that for

Charles Peters

maybe glad comment follow-up channel That's I channel. I'm I and down assume bank -- you, great independent more, than color. through the on the number the asked more you rippled was of could X% the

go maybe ahead. So --

Craig Lindner

Yes.

-- Greg. information my I on more the Clearly, looking see that I'm hands at just institutions brick. year. Greg, retail. [indiscernible] is the and that that I'm in have last one in down booking way information break a impacted financial could major me, retail looking put second, I schedule Hang Let that that of on if at doesn't versus least in it front was me

Operator

that the does for over And now like back further you. call to turn I for conclude question-and-answer would any today. to Thank remarks. Diane Weidner our

Diane Weidner

day, again you Have Thank you end the good next quarter. speaking for us everyone. this of morning. a to joining look all our We forward at with

Operator

and the in all participating conference. disconnect. for This day. you today's does thank gentlemen, and may you a Ladies great conclude have Everyone, program

American Financial (AFG) 1 Feb 182017 Q4 Earnings call transcript