AFG - Earnings call transcript Q1 2019 | American Financial Group, Inc.

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Operator

Good day, Ladies and gentlemen, and thank you for standing by. Welcome to the American Financial Group 2019 First Quarter Results. At this time, all participants are in a listen-only mode. [Operator Instructions] Now it's my pleasure to turn the call to Diane Weidner, Assistant Vice President of Investor Relations.

Diane Weidner

Good morning and welcome to American Financial Group's First Quarter 2019 Earnings Results Conference Call. by Financial III AFG's Group; morning co-CEOs Craig CFO. this American of and joined Carl and Lindner Lindner, I'm Jeff Consolino,

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

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

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

Carl Lindner

quarter XXXX our released We first results afternoon. morning. yesterday Good

Annuity talented management capital team, component net the earnings core overview. We of significantly compared to for securities. Fair accounting Slide earnings value pretax and was impacted confidence the before annuities you'd had our for included segment. well. businesses $X.XX of our If AFG's earnings value segment our our our $X.XX perform slides in strong reported Craig XXXX. in per a quarterly please shareholders strategy is important the share on established and Casualty X to AFG fixed-indexed fair share our our strong of $X.XX helping very And $X.XX per future. and Property results. realized webcast I earnings new financial our first gains share operating for an high continue to operating and turn and thank to after-tax a Annuity in share quarter accounting and all-time and core per God, these to quarter our first were for capital on reported management comparison. Net insurance in reflects an great financial position quarterly employees strong achieve equity Specialty our return XX.X%. Returning of operations, Annualized per in

share quarterly of in in April XXXX. on on record our shareholders $X.XX share with AFG's in preclude XX, cash is not conjunction will special the the on per Payment May payable earnings And dividend to year. announced of a quarter most XXXX. addition XX to cash special consideration paid dividend recently later dividend regular of of the this dividend special company's XX, $X.XX So of first year of we the release, May per

our for discuss this more segment call. our for maintaining each earnings are in in range $X.XX of business share. of the XXXX will our and operating's, Craig We AFG per detail core $X.XX in guidance guidance later I

operations. focus to turn like to our Property Casualty I'd and our Now

which include of webcast, to turn please first would, results. quarter you If an X of overview the Slide X and

Specialty written underwriting net strong growth margins Our Group healthy in and and well Casualty year-over-year with very premiums. quarter performed the during Property

profit see Transportation you'll operating within on and $XXX Casualty X% primarily and Insurance net Property and our Casualty in of X%, due premiums year respectively, to and X, $XX million XXXX Specialty quarter reported Insurance in below were Property Specialty the generated slightly million first the an period. 'XX, prior in Casualty Casualty Transportation Specialty in underwriting gross earnings first Casualty AFG's first compared $XXX the on profit $XX and the of Group million grew of Operations Higher As Financial profitability year-over-year, and Core Specialty was written to Operations in a offset and Slide million last Insurance Operations underwriting our Groups. X%. by in lower than Groups. and Property Property Specialty the decrease and quarter more the Property our growth by underwriting year, of our quarter in

improved first quarter prior of was combined, quarter the combined year first favorable renewal quarter. Cap X.X Average for from of favorable pricing comparable Property were points X.X included quarter entire of losses XXXX of against XX.X% 'XX year. reserve quarter the comparison by compared in At points cap period. first development first prior in to up results The across our points last 'XX period. year the to the of group year's ratio, points Casualty increased prior losses excluding year the year development combined X% added combined our first ratio X.X accident slightly X Overall, quarter. ratio and caps, prior X.XX% in the

we our sub-segments, XXXX. in remain the results trends businesses, our I'll exceeding achieved and our Comp than slightly whole review the Workers' Loss Property each. keeping that pricing X% interest more inflation year which up cost discuss our and Casualty of more and was in renewal is rates. though the of on detail expectations stable, we're excluding each Specialty improvement pricing over as we eye Now increases Renewal renewal for rate

underwriting Property by million in and of Casualty Now million $XX profit comparable our prior ocean Specialty was businesses branch. to Slide an to business X group quarter in lower profit our businesses highlights I'd partially property in Transportation quarter and XXXX Higher million offset our agricultural like $XX first to Transportation the Property turn few XXXX from in in inland period. groups. compared of $X Catastrophe year were a in Singapore The the $X marine the our profit first losses period. the underwriting as of comparable to Group reported of as in this review each marine, million well and and underwriting 'XX

new gross group pleased Transportation in Overall, XXXX primarily our opportunities was X% quarter in and gross businesses. premiums and respectively, period. gross business renewal to X% X% The premiums in higher, of written were First comparable rate and than first our written the net renewal this achieved group attributable average over the increased I liability on rates rate And increases in auto commercial quarter in in am improvement businesses. especially this 'XX, year. Aviation strengthening with last an

monitoring establishing that we Now the this impacted technology, in our its of of spring in have Midwest did the only approximately in through our impact we to an and the community the closely insurance agricultural we use funding specifically and are strategy flood use region. in potential opportunity And the flooding acreage information located mapping window region of X.XXXXX% runs determined on June. technology from mid-April planning. this Though, the window. the current early can insurers a planting corn May. runs the soybean April XX-day with end end of much planting and window of the complete to late to current through region planning to throughout And from also, The speaking, Generally of our the April. equipment, the flood-impacted within within majority is X-

for this Surplus premiums addition an ABA pricing of quarter our higher in partially X% and year $XX the as in to and X% The Group and net Despite first achieve in profitability we our Sector this alternative the and Lines premium lower premiums. Higher Surplus group Compensation ground are quarter Specialty our businesses well hopeful and million than from same million $XX 'XX the and year-over-year Higher Workers' early we written were Lines to more $X were really businesses. season, in underwriting getting our our premiums Services, Insurance down reported were the period. lower Renewal report to Specialty of as from proceeding integration underwriting operations, these within underwriting in of up in growth. We'll premiums successful Services details retentions drivers of were Neon, and $XX the the and excellent the in million be offset profit businesses XXXX. million 'XX to improved losses incremental Excess that results. Compensation higher in the frames. the for these Services continue we Catastrophe an primary written quarter Excess Public growing first XXXX net period Group the in market, XXXX. XXXX and period. profit premiums ABA year-over-year comparable anticipate compared definitely compared this was first in share million it's within businesses of crops to pricing by Workers' planned, continue respectively, Gross first when during to businesses, as Casualty in business Casualty gross Workers' written the quarter. Compensation quarter and time is second Human Specialty So margins. offset million Insurance more will in growers $XX of in profit in our the the Lower $X X%, for our have their in comparable

decreases Now up exclude XXXX. in renewal increases group an the Workers' businesses, achieved renewal were that from this rate rate we by actually when in X%, you in the Comp rates improvement

were year the XXXX year. underwriting million the first liability, We XXXX's reported in 'XX Financial are first in was XXXX driven Institutions of lower our business profit the public primarily excess this of quarter compared of profitability $XX D&O an in benefited Financial as umbrella reductions million losses for after to underwriting quarter prior first in seeing first 'XX. act and Catastrophe by pricing million from Specialty in $XX of to of compared quarter million in $X $X surplus quarter. decrease strong lines group commission the the quarter momentum catastrophe our The businesses. Group

businesses. our surety written leasing quarter the pricing lower which period were up X%. and Net were X%, prior premiums Renewal offset businesses, our in year quarter. written Crime primarily group by in were for respectively, lending a premiums down to this and up was Fidelity First in compared the gross of and premiums result X% when higher as premiums

our outlook for turn Specialty and please review to Slide some X XXXX Now Property Casualty for of operations. the

a Property Group XX%. expect and the We to continue XX% combined Specialty overall ratio between XXXX for and Casualty

Group Transportation in continue the looking net growth a combined estimate at X% growth in Property XX% premiums to was each between X% and up of to ratio range year. written and in year. we to guidance the Our in X% for for XX% our also flat and net the for premiums of in And written unchanged the segment, range

Our guidance earnings. of level assumes a crop normal

lower XX% mentioned premiums the I We up estimate as guidance. be ABA to assumes to premium These to to expect Compensation the from combined our will XX% from We down revised in in Neon's premiums, Services. by to premiums our written continue X% initial and a Workers' items Net our businesses. be premiums, ratio upward from range Group Specialty guidance range XX%. reinsurance XX% of our ceded are Net offset produce Financial to expected of increased to Group XX%. Insurance expected before, the in Casualty with combined Specialty resulting in to be from XX%, written now lower consistent full X%, initial ratio year XXXX

projection continues be X%. to growth X% in written the range to net Our of in premiums for

institutions expect expect by end rate of this also we group. modest business all businesses in We this year. the our financial growth double-digit our increases of in And across

XXXX expected is up Our primarily results to regard investments, of we strong in limited due partnerships the investment in net year-over-year. flat don't were guidance Keep to results strong with mind, in which similar to performance X% to to XXXX expect and be income exceptionally unchanged with continue.

to over renewal Property X%, Workers' we renewal in be AFG's broad-based up and from excluding up the pricing performance. Comp, our the expect discussion expect review X% be and Craig rate the Specialty X% many you. Casualty Property we Annuity improvements X% Thank to to the renewal range the to previous across XXXX. investment And and the of pricing increases businesses, levels. results in now our of in segment I'll to Casualty overall noted Given turn to now in already

Craig Lindner

A channel. a year-over-year from $X.X of institutions of review with XX% an on the period. Statutory Thank year I'll you, for financial quarter start higher results of Carl. premiums our X. in the increase fixed by Annuity prior the beginning billion the Annuity Slide increase sales first were of annuities was in quarter first traditional XXXX, nearly driven

While we're interest we've response decreases several these slow implemented months, last sales. first to in quarter, over are pleased rate and through the several to with expected the very market in rates premiums decreases actions

earnings Annuity of million $XXX XXXX. the compared first of pretax compared had of first to a fixed-indexed Turning the in of in accounting in quarter $XX XXXX earnings are, impact quarter million to $XX first XXXX results to were million XXXX value quarter Fair of first in unfavorable quarter. $XX for an favorable impact million the the annuities

Slide to Turning X.

fair and the before You fixed-indexed XXXX, in will period. the XXXX. The of certain stock a portion performance by The or earnings of rates annuities estimated are in costs. first fixed-indexed share. value a GAAP, quarter fair quarter quarterly expected $XX year The for embedded recorded an derivative per of of increased Annuity see favorably strong FIAs, were XX% strong unfavorable by of shown annuities components flows. the increase is Under considered guaranteed impact fair for value favorable on for fair S&P market, value record X. of the value offset future be XXX impacted by present is accounting accounting prior reserves were earnings at and million XX% Slide of business $XXX the before the particularly pretax results the benefits, with accounting value first FIAs in that and on pretax These cash the partially crediting FIAs very impact of based market stock $X.XX primarily an over option a higher driven growth for Index Annuity million to by

for interest fair impact market value of this is as interest include FIA-embedded surrenders, the these a for derivative impact accreted ongoing the timing fair such in mortality. rate, stock as are in the amount result results. embedded in option economic an Annuity reserve. on used in change will in as the interest accounting derivative and stock current accreted includes The the assumptions interest performance the changes nature well generally The rather size period based in reporting generally annuities Items but of costs, not rates. period of interest reported of of value for value. and in Variances fixed-indexed calculating projected expense Assumptions on the the fair current and any market changes withdrawals rates from

interest the expect for XX to $X.XX items in $XX rise, both the the noneconomic corporate first liability. majority X Index S&P XXXX. size the is contributed embedded of We of AX share approximately per these the the first offset accounting XXXX, in in embedded reverse the This quarter or derivative over XXX fair a interest market the significantly In to in of impact quarter the time. XXXX, of is that value of and fair of value share. rates to the The was a of $XX million higher-than-expected comparison, impact unfavorable increase interest a expectation rates market. resulting benefit continued contributed by on compared first and of the impact expected favorable By of XX% million minimally quarter would basis increases comparison, the derivative by they to decrease a rates of stock By difference in decreased $X.XX or impact significant year-end to increase. points per accounting

supplement, on For is see website. quarterly AFG's value additional posted our analysis fair of accounting, investor which

Turning to XX. Slide

favorable a crediting The the million very quarter of XXXX. reflecting Please reflects spread segment. high expect in AFG's AFG's AX Supplement. rates of earned investments now are grew on net the Annuity strong stock changes through a on both Annuity certain XXXX achieved of $XXX You impact FIA's to changes the market. Based in an Slide in value page in increase by from of accounting range spread year-over-year. Corporate first $XXX we rates in interest earned investments FIAs summary net of net the range XXXX the Index, fair XXXX, details yield interest option net XXXX spread investments. approximately interest Quarterly respectively, certain earnings. impact impact rates for XXXX, $XXX accounting first XX%, million, was in the performance quarter to higher market for quarterly XXX Investor and outlook also higher sensitivities value net before Annuity on $XXX new earnings periods. to and incremental the added of in to the operating million spread in changes XX than average The lower Annuity the interest reflects reflects XXXX costs. in be for will was turn returns the see than to million mark-to-market XXXX exceptionally previously the of for AFG's in XX% earnings of in and spread our the unlocking strong in reserves that before in AFG's estimated stock fair that in of date a here Included S&P changes been as These and to provided. and are

products Finally, returns the decreases new believe, on announced year. modifying recently appropriate however, first we implemented focus to temper guidance on that on months committed new pricing sales previously of we remain We will based sales through and our premium Annuity discipline X a on are the our as contingent business. Annuity rate achieving

will record slightly $X.X now premiums XXXX. our of the expect Annuity down that XXXX result, reported billion a in be we sales from As flat to

and in This first million hold posted the to gains acquisition securities at on of Supplement for Please to the billion March net after-tax on reported XX our realized our net compares on can Slide at earnings, portfolio. realized turn a recorded XXXX. million segment's on regarding gains deferred XXXX realized XXXX securities Approximately, XXXX. investment reserves Investor million $XXX of $XX that of few the $XX premiums, continued Quarterly $XXX first first losses highlights AFG's investments after XX, Annuity AFG found of to costs. quarter and quarter the information of quarter pertain AFG securities Additional to be in website.

XX, since March DAC, after-tax, million $XXX As of gains on unrealized $XXX maturities after fixed million XXXX, an of increase were year-end. net

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

Jeff Consolino

company of and which corporate you, this by our and the which XXXX, securities, on negative In XXXX. to quarter hybrid net quarter million XXXX X.XXX% the or QX Slide were core will expenses core the the the earnings. nearly in detailed in January quarter of a realized XXXX was March unchanged impact as operating requires guidance Parent reported interest be Accounting call. XX amount per summarizes year-over-year. consolidated expenses million. recognized on decrease losses of to XX-year, subordinated were on recognized relatively $X first of $X.XX other Interest and Thank earnings, results, net for segment's in you XXXX, adopted in net primarily of XXXX were significantly Craig value quarter of due volatility XXXX. earnings. securities in principal $X.XX holding GAAP AFG in X, core share in XXXX AFG result XX million accounting EPS fair equity million earnings Craig. to contribute $XXX expense a debentures first from Slide reconciliation XX% $XXX Core results. increased year-over-year. after-tax reported Annuity earlier to earnings operating and $XXX core net reversing the first net in The of issuance provides of earnings earnings AFG's QX operating year-over-year result flat QX mark-to-market. gains Other gains the

March XX% in returned special of be plus dividend Slide paid our the rating XX, to was at month. Annualized our rebound $XX.XX in was equity XXXX. of on growth this $XXX regular will as markets. quarterly our million impressive quarter was approximately per to the businesses announced levels end with the an capital by of share quarter. We payment be book meet in million in of million the at indicated Parent maintained As per AFG's book $XXX dividends dividend. the The first the cash share XXXX to the of aggregate quarter shareholders first $XX XX, adjusted We value insurance the amount commitments the powered in agencies. yesterday first end will the and of of solid our value

Our approximately to $XXX at $XXX issuance to maintain of hybrid due powder and plan We to capital for they opportunities to the our approximately arise. flexibility $X.X an XX, earnings stood the our GAAP of XXXX, excess dry as XXXX million million may quarter. strong first million $XXX in hold billion at March X.XXX%

opportunities earnings our Page guidance. updated single on Our page for of presentation a XXXX basis. all regular Wrapping management team up, core XX the deployment shows a of reviews capital

indicative assumes pretax ongoing results With core for guidance noncore exclude expected and earnings. approximately the of items, as any to an effective items other operations. operating Our that on open may questions. core realized tax AFG's that, not XXXX we'd rate such and like now be losses XX% gains significant operating of lines

Operator

Raymond And is Greg Peters James. Instructions] with our [Operator question first from

Greg Peters

I combined later commercial the your with expect up, of also, Craig, said color small in some Maybe to a book Property think just you And in ratio in I in In have you questions. to also Casualty was expectations just of on comment if And wondering the that institutions, you was I comments add to business, that XX%. the go XX% on National on Transportation could performing? I auto year. think financial financial Interstate? is business, rate the Property couple institutions how said I XX% environment square like trying your the the you business then,

I question then Annuity on So, have and your a business.

Carl Lindner

still rate in a are pretty this to X% correction commercial Happy the commercial pleased industry trucking National auto trends, commercial great increase American ratio business that position severity targets mode take with a very of the our give little to business. we've on achieving house is and combined Actually, the business. business, take in of on that so Greg, feel auto National Interstate We we'll performance set. Interstate's market I severity and our we're liability take continue part a in about very solid causing rate that. a good. even color Carl. to for on trends in of That of part our to auto our part our, our are said, Overall, advantage business. our to continue on good order, that the got with price that's the in feel and us of

that's think good I So I a market order, with house advantage a a position we're take I correction And our in feel to of about business. mode. in again, in our think

Financial, business. Yes. Specialty to our comment about you in Financial the double-digit On was, think I referring were increases expecting a Institutions it

expect to think by throughout on the that to double-digit rate see this year-end comes, do going pricing think we're book. able we that the And I think, on book. to, I levels I be year, time to escalate achieve

positive. a that's think I So

on into we as rate have Specialty as and Naturally exacting to of be that so to ratio next help is can. we try good part business year. combined increases our of going to that business our overall Financial that Our get, magnitude

So...

Greg Peters

looking can results reflection peers there? you lower some might be forward. Right, I your about XX, in your going of I the comments I Carl. and Annuity your aggressive and to Switching a Page competitive how sales rates business. where it sequentially looking noting just XX, was Page of add some the noted market Craig, broker-dealer more changing was at color assume but might business, a additional on Annuity affect single-premium I that's maybe

Craig Lindner

that on of be one just really we is What and Part successful competitors penetrate on pretty made segment our competitive some reflection I of our of as the of focusing of answer, that a weren't the Sure, segment marketplace Since Greg. really potential, I we that growing that's pretty say major think distribution. have to that it who segment think right Greg. business a then, in of players were it priority having that's I a focused segment in way. is would the, early now. a And to

Operator

next Campbell is KBW. our And question with Christopher from

Christopher Campbell

My capital management. is first question on

disclosed quarter million, the $X So uses special $X.X the still capital close excess leaves up to dividend based in billion billion about on only $XXX which you at end.

just So sometime I guess, this, inorganic to happen something given soon? you're retaining should expect we

Craig Lindner

will with said push be feel, billion. think dividend $X under the paid, the past to I that's in sensitive it, or we've our gets when we're, we it $X over capital it that, more billion that we're to be special aggressive in using

in that every wouldn't or assume every No, year, on the table but there different mixture. deal anything. little I is a As right big year's now some

historically, you this if over, look think I normal. is very

earlier, of preclude as this the at another flexibility doesn't side. special year, declared we've one us end prior we opportunities towards mentioned to plenty We to have on I And as declaring the the acquisition done dividend in of from years continue look also.

I managers think pretty time. So over we're good capital

earned of Interstate, the Summit, Some like those transactions significant of on very rest returns that, bringing double-digit and in all acquisitions equity. the National

and just we're the things those way to that buyers, in hope we're Tougher color. that picky. things. little are do that's we them, the don't kinds at things just looking that do and a to So look We fairly I do. of you gives

Christopher Campbell

the thinking commercial in had about you interested are think be being if questions came would And of competitors interested You up? auto? Would in mentioned to response pursuing it that definitely. I Yes, it I'm one the you be something a does, auto, in that problems prior lot know, of having. commercial given

Jeff Consolino

sure. the Right Well, sure. opportunity house more and an side the on now, great if market have we're today that or feel opportunities what we If made order, in mean there's organically. could, probably our in we that us, sense acquisition could it there's growth for assuming than organic

So that helps. hope

Christopher Campbell

free some just, Lloyd's, disposing That is that be AFG's pricing might were And at occur, on at? Neon rumor that capital could books And hardening make about, then there's considering that seen to much Does articles guys like Neon. sense. how if of a does existing I've then what of that sitting any And the calculus? you change up?

Jeff Consolino

is Jeff this Consolino. Chris,

Neon Just we at one speculation is to X. market or whether selling don't Overall, our effectively pertains the start other, on way it businesses. buying to with, comment or on books

is of at most capital letters Lloyd's the of in capital. of credit so tangible rather provided our than And form

Christopher Campbell

Okay, And one on just of my you to certainly expert peers is got this it why kind one life make doesn't not, fair cleaner. just follow last not approach? give could then earnings, that AFG understanding on of But guess, adjustments most I the us is of I'm an net the it. report on annuities, value color it. the

Craig Lindner

studied is time Craig. to time something This we've continue that from we'll study. It's and to

define actually with earnings I We we peers think some very were different of a the do. core first in operating than way pleased our do quarter.

It $XX by with is in the has decline returns in the able the purely interest earnings to strong nothing through which earnings business. economics. impacted issue. timing a had quarter. The at a fundamentals, we do derivatives, really embedded an a that, were that were hit at resulted on premium you or to some hit If It the they We targeted by returns in underlying way very exceed rates flow underlying major the targeted look million. were increase We very earnings new strong. which

with of we So pleased normalize things, when were actually the you kind very quarter.

say earnings, study our definition operating to that. not to whether core are continuing of or it makes sense just We change

Christopher Campbell

Great. you increased P&C update, Okay. and the on then helpful. like the on on very end. about one just one, bps pricing. the That's last And Looks guidance the that XXX upper lower

I'm of all. wondering, just So underwriting guidance at kind didn't the change

why cost of is view So isn't would up, that getting better but is assessment creeping your rates fair of guidance a also be are loss inflation changing?

Jeff Consolino

time, impact today, almost earn through periods. do most you a, things at this Well, point. you the of XX-month over policies period future really year we're In halfway

disability about change reflect or on cost the it claims side. loss any not, we're perspective no, So our doesn't side in

I D&O seeing that folks now, like We of from to like make and where rest of parts April think our our final pricing pricing our right and stats of have more us seeing. D&O for is public as optimistic getting direction the a the outlook in I'm year. business but snippets. and optimistic, that enthusiastic company all our we're it businesses other that businesses more of to excerpts as don't to in go some in the going pricing We're reflects

that So think more optimism. I reflects it of

Operator

Sandler with Our comes from next Newsome Paul O'Neill. question

Paul Newsome

X I just left. got

please? or to just great been would, you from shareholder a special about But I'm if timely process dividends see And the map on that stock about changed curious returning about not might repurchase? a switch basis. whether You've that we enough money has talk

Craig Lindner

of I that's something month-by-month, special we're dividends. something, to we're think quarter-by-quarter, acquiring capital repurchases, whether capital, growth, in uses that's that best always, excess always find form organic for the the trying our returning share

indication a an wrong positive is right effective, quarter's that very form strategy. dividends or we to special first of in shareholders or returning think that continue to I the our the otherwise capital feel

Paul Newsome

it's how some that should things positive, think where stock there's arguing better just be point Is Or sort you but you dividends? regular an than repurchase of to not just the valuation of it's where the of decide is a on there done kind give is inflection basis? down. I'm dividend stock the point

Jeff Consolino

we the company it stocks The should course say, never outstanding this Paul, Consolino. shares has Jeff aggressive X/X various points. you're at is say. of us phrasing never, purchaser of about a kind way past, the invites of This very retiring in to of question, the been which

part a process. got we've picture that the future and And power repurchase our a our thought of in confidence would or of so Clearly, earnings dividends. much neutral always very really that's be across

repurchase Carl and out things that the be the like that dividend, looking go years will and the evaluating on As return first to share return But like. special with always to a and back investment merit that capital said, goes on are shareholders. and the of pay all and quarter will significant CEOs

don't would line trigger excess a of significant to preparing think we're capital. you capital. we our with I do just bright We the circumstances tell that. have return So can as evaluation what It's

on significant it. a of opportunity retire investment, share, the a arose return to if we'd past component shares good outstanding a our at to So ready do action be

Operator

Amit And Research. Kumar with our Buckingham is from question next

Amit Kumar

reverse should the Or be Paul's about QX, should special another to capital what cash the management. Maybe remains does, surprised not think special special I'll I this on take strong dividend trying in was Does following dividend? excess up the dividend expect to that see was we a question the how point? timing? remember order, in at if capital timing Should dividend, we not QX? in I that

Jeff Consolino

a $X.XX year, whether think have this benefit then the support I pursued growth to only not process either quarter, initiatives for payable evaluated last other announced the which want or you're always get time picture second the other you business quarter, having fourth a organic you of you and clear was things. We're special of the the have year-end. Amit, to year, things. gone of special dividend $X.XX options evaluating capital when dividend planning But in we year do and the them much through can you in and not, how in fourth and

paid. again, kind split you second of look years, quarter-fourth When there's dividends at of special couple the approach. been a no last significant quarter cookie-cutter between we've it's So the

Amit Kumar

Got it, helpful. so that's

protective ask to in had you Maybe commercial think order Is just XX other for answer. was, talk think the about versus ago? better question job maybe or over to The relative it about, auto maybe months to successes has I a everyone's was X there space? a of And or Chris about Or else, environment. commercial better someone a talk had, because trying you've just you talking that about which or enough than you auto past won't I this, can commercial today year regarding others, environment sure, attractiveness the way differently? improved maybe I'm I insurance, the think do months months X

Carl Lindner

side think still the once year I we've that. pretty high We're taking before, also on last the that. in order that our in are house we within commercial kind We're the got liability because National combined at trends ratio targets mentioned of as severity Amit, the meeting the still Interstate industry really rate, in auto I whole year set. complete was

our So like is a a of the house because we're in is advantage order, position what's take correction we what's marketplace understand in we're meeting still that. you a when in see mode feel to our I you going, happening in market targets when think and in that I definitely mentioned

being all price corrective others. by that. of actions of lots and So re-underwriting Lots taken

others So that but opportunities for disciplined. increase. should organic acquisitions, rate taken very than our things. in approach probably we've to for we're that our provide us we're We've of X We, potentially seventh, different growth, we're in probably out, just that's years been

it market, trends. turnaround is guess. took while wasn't, at a be So my And of the rest the seventh as because this wasn't guess quick their in It the would not Interstate. definitely of National increase, a year of they're rate my severity

be may or or or whatever. year Some first in year fourth their second

things industry better. to the, from results think I get for it's to, So going take a while to

Amit Kumar

seamless heard National you. that that, out Interstate know I and Jeff And agree. for that phenomenal, his budget maxed I I was change

clearly we was agricultural discussion. The the was correctly, I back I in yet there different seen ag the I flooding you refresh help other start why I do of of and numbers? impact on the planting in zones, trying understand the of it going an X%, coming the the those most be et to, basis there comment cetera, On had we worsen, things of as when ground? wasn't of to think line bureaus. much And time agricultural I minimus. completely it's, is out us was points better happens, XX And us made said, some when seeing that call, maybe have question guess, if to flood you that's what already, heard exactly floodplains, And was so a happens, going commentary also can planting delayed so when impact, another do

Craig Lindner

Okay.

I we regions. the insured the with use mapping that things. acreage about flood-impacted impacted, think kind the of pretty couple technology of flood thoroughly determined that, in is I think past over X.XXXXX% and in located we But of I addressed months, our statistics, the

that strategy. that to your information So use we of take funding technology, every that this an, you much companies had in we our want had we establishing that you, you risk strategy, business, within because choose the opportunity can funding to of in year, use how got an funding,

So able to that we use information. were

the it's plenty window only flood farmers planting farmers kind corn It are will the if corn May, the windows plant windows X- missed, June. them you point. you think that of to versus to, sometimes plant. soybeans not And of that to understand planning soybean understand a when would preventative again, end corn, impact, flexibility until planting it So I when to at end is seem much XX-day and takes is to the rally technology of it like thing. takes choose with there the still only bigger-picture maybe so and some of also, extend really extends But planning then

So it's is. what really early impact to really try to prognosticate the

Amit Kumar

RPP? And it's mostly

Craig Lindner

in kind over, exactly we we know quarter report of earnings, June, the know stand. we'll as we'll think more where by of more second, the I second end

Amit Kumar

or And it's yield? protection booked mostly revenue

Craig Lindner

Crop-Hail information. the on our your to we're that. doesn't for Commodity keeping much business the on flood, revenue of of think we're, coverage. concerning. and really that's is It's business too is I say, business coverage Most going prices seem revenue just early be Actually eye it. and there like doesn't include Most I

that think something X% I it down, like prices, may that. today, glanced was, it X%, they X% at Soybean was I XX%, to I be think, to

XX% we start get, into until side, the too concerned don't getting don't in changes really get up prices. decent, yields XX% you price to if the commodity commodity we So are on

Operator

from with Lomas next Capital. Our is Instructions] [Operator McIntosh question Ronald

Ronald McIntosh

Two quick One questions. numbers' question.

bps year Your of that fair range before Annuity I spreads the XXX guiding in balance the value. to business, for think XXX to of your

fine your underneath that's outset yield lower this question very ROE. year XX.X% ago money can I a a rate you under than be about a in why and spreads pressure? little bit quarter the At on think mentioned second quarter. ROE. Is see and bps you And would then curve, that XX that new unlocking, were get you what

stewards I range implies RO XX% cost envelope, back that are of with for long accounting capital term X, X, X, term, earning life. is think noted a correct? specially in XX% both you cost, the the a XX%? acceptable GAAP roughly the kind capital, Number number for is roughly of earlier, as a and a that businesses? if lumpy or XX% quick Number range that P&C on above And is long

Craig Lindner

So that's questions. lot a of

was rates economic I around out hit million can decline a not first return just business tell but interest discounting with, to is the you, of result XX% embedded a really lower start Annuity on and Let derivative rate. it's it in nature, the at incurring that in something related the quarter me in after $XX the the is a

business. So gets if think you Annuity as back you things, to on P&C to make some adjustment, you of return returns, I it relates very Jeff, And the if it kind a you to... acceptable want normalize

Jeff Consolino

fair of the go after-tax the total, I ahead close course and just capital to the Craig's quarter. XX% in many elements, on for out comment, annuity business up exceeds in item complicated which return Ron, made strip you accounting guess if is the on Sure. of of off effect a value

any not So earning of capital is that I cost not think business correct. inference its is the

Craig Lindner

neighborhood of you would the a in again, look unleveraged. And result at midpoint of the return the XX% guidance if something for year, after-tax that in

Jeff Consolino

And or GAAP basis that for XX% we in business. on XX% like a feel return a about earning we're P&C after-tax

would when the that with Craig consistent said be so whole we And for what rolled up company.

Ronald McIntosh

of And spreads? decreasing terms in

Craig Lindner

of impacting little up The were rate, impacts the targeted rate today have earn are slightly bit. to tax that. that the we consideration There of the a to a have gone you don't home a to into do though, things have up going interest obviously loan things that. the those a rates A return, higher lower with some option couple spread federal costs thing impacting historically. is than are funds we of bit, are One borrowings, rate bank of been have couple earn lower same take cost tax they have

are that today. do rate we were earn were take tax need the but cost to few lower consideration return the you a affecting of don't into targeted So our of funds there have that spread things because to rates same

Operator

in I call And her for to Weidner other final questions the remarks. any Diane turn like showing to I'm back the not further would queue.

Diane Weidner

We Thank you results. look with we morning. for us quarter share you this you, talking to again forward second joining Carmen, thank all when our

Operator

and you with ladies program disconnect. gentlemen, And Have a participating thank may that, wonderful concludes in for This you we and the today's all conference. day.

American Financial (AFG) 5 May 192019 Q1 Earnings call transcript