Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to the American Financial Group 2023 First Quarter Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Diane conference of Weidner, like first to Investor now today, speaker who's would hand over the your Relations. I Vice President have you the Diane, floor.

Diane Weidner

earnings Financial Good first to and call. American morning, quarter welcome XXXX results conference Group's

yesterday We released afternoon. quarter our first XXXX results

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

Hertzman, Financial AFG's III Lindner I'm joined Group; Craig Co-CEOs and of by Brian this and American CFO. Lindner, Carl morning

turn on I to I of Before discussion the Carl, attention webcast. would over your draw to like our Slide to the notes X

differ matters the from detailed A of uncertainties of and forward-looking could filings these statements these today certain description uncertainties which can Securities our the risks to AFG's Some Exchange to website. are also in that forward-looking. Commission, and/or These be are materially be discussed on with results found cause statements. and risks actual and involve condition available financial

core net We of measure, is our responses reconciliation may A operating include references core shareholders to questions. net or earnings net operating our to in remarks in earnings a attributable in to financial earnings included non-GAAP earnings, release. to

meaning of if errors that it could call, you finally, reviewed our contain or transcription a as may of factual or transcript statements. are not a reading materially note And And the that be accuracy. please this may for or authorized result, intent it alter

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

Carl Lindner

I questions. first Brian of share pleased after quarter, which will to to and We're respond morning. XXXX your highlights Good Craig, AFG's

excellent, equity return XX%. financial during of was with core a operating first on AFG's performance the quarter

quarter, investment from returns alternative produced performance we the portfolio, rate quarter. Our and expectations of the exceeded strong higher businesses first our continued to compared underwriting Casualty interest Specialty the be to our with income XXXX during Property pleased benefited margins, environment when investment a & where

Craig continue philosophy to talented in team, exceptionally disciplined and strong God, these and in favorable culture property market opportunistic to I us operating casualty our for a environment. well our serve entrepreneurial helping achieve Our and economic thank us employees dynamic talented results. management a

we benefit before to in this share business a to agreement business. we fit a Crop delighted of continue employees team with great Risk definitive AIG. acquire to earnings quarter from Young, Brian leadership later announced our results, CRS Services Shortly will is insurance bit and crop Great I'll the our first opportunities provide about shared Insurance This to strategic economies scale operations CRS's call. welcome more to his We're Group. in American from CEO, and existing a

I'd over performance like investment Craig turn through at and AFG's to March quarter position XX. to to discussion first our the results, financial us overall walk Now

Craig Lindner

X information X turn to Thanks, summary the of for and Slides earnings Carl. Please quarter. a for

net the first reported The & Property to $X.XX primarily portfolio Specialty year-over-year alternative by these profit AFG offset were insurance quarter. investment AFG's Both items core prior-year net Casualty partially returns this lower other of exceptionally and income. lower strong at earnings the in the operating year-over-year when period underwriting performance compared investment XXXX of operations. our portfolio per of on due share was in to decrease higher

an comments about to like I'd financial capital few Now, position AFG's performance, turn AFG's and a to liquidity. share overview of investment and

and billion on Slides investment X $XX.X are our X. surrounding portfolio details The presented

the million of reflecting rates. were on compared portfolio quarter unrealized fixed of the AFG's decline first end longer-term pre-tax unrealized $XXX end at at losses maturity $XXX in XXXX, of Pre-tax the interest losses to million the

at of portfolio, P&C years XXXX approximately extended XXXX. the equivalents the years interest cash at higher from, March duration of opportunities two have fixed maturity on acted three cash rate We XX, presented including end and our a and to by approximately environment

the current first fixed quarter the yield X%, to rate the compares at of securities of XXXX. environment, earned P&C approximately X.X% portfolio high-quality, favorably duration, In which able invest in on maturity interest yields to on medium we're during maturities our fixed

on XX P&C the the earned compares expect compared year XXXX. by earned in favorably increase to full earned portfolio the fixed yield quarter by first maturity XXXX yield points X.XX% fourth XX about XXXX. basis the of the for to in our We This quarter very X.X% the to to of

compared was the XX.X% an strong first on income of return at return These quarter. quarter comparable exceptionally & period. an XX.X% Looking the of net for the results than annualized XXXX Casualty results first XXXX for Property alternative X% XXXX quarter. included to investment lower in investments the

strong return private investments in XXXX was and XXXX performance return alternative in portfolios. over multifamily five on the alternative first investments was on approximately of result the both equity of years AFG's The the The ended average XX, quarter December the XX%.

operations Excluding of the increased XXXX XX, and the year-over-year for net by the assets. a ended rates months of income invested impact alternative at of & as result investment of three balances insurance higher Property impact our Casualty interest March XX% rising investments,

X would banking our X. market, industry, provide you'll to real as well thought useful and exposure to it as the which exposure office to estate We be a of see on the summary Slides

well-diversified banking highly our industry the summary, and rated. In exposure to is

asset reflects real size our and direct modest of underweight estate exposure the market this office positioning is in class. Our to historic very

addition, and our securitizations. in the embedded In office and exposure indirect by enhancement is small fixed real well-protected maturity is principally very such credit securitizations to in at portfolio estate

our reflects alternative guidance XXXX on forward, for return portfolio of of a billion approximately X% Looking our investments. $X.X

the very are for we of this on flattening are years in our rates long-term Although multifamily portfolio. confident increases, outlook strong out investments after several rental

primarily regions very with are strong Our growth. population in properties

the an of debt. approximately X.XX%. properties of has underlying assumable attractively XX term addition, In of an rate years fixed interest XX debt priced average rate at average eight weighted have The

guidance earnings the our multifamily XXXX. digit for housing investments year a assumes Our high-single on return related full

where X a at XX, find summary you'll of XXXX. position Slide financial to turn AFG's Please March

XXXX. $X cash XX, company March approximately million. Our This at excess parent included investments number capital and approximately $XXX of was billion

dividend, our $X.XX regular per the the to million share share million per During shareholders of returned special quarter, quarterly a we share $XX our $XXX and dividend repurchases. in $X.XX payment through

Our an excess specialty deploy opportunity serves capital attractive businesses expand this our our nimbleness transaction an nature. and to CRS our of efficiency example executing as acquisition niche of provides to a of and and

the AFG approximately AIG date. assets includes in million, will cash tangible pay which million $XXX closing $XX in at

Following dividends. for the we repurchases will or special significant available excess transaction, capital share have

an special generate end dividends We during of capital return XXXX, shareholders excess to the excess to or XXXX $XXX of operations capital could share the expect XXXX. is repurchases through our addition which additional to of first quarter the of to we that in deploy excess million in significant the point capital for

portion recall, of our of internal total debt-to-capital capital that that And our was excess fixed special and may target you losses view repurchases, available we for capital, by as dividends and gains As unrealized the XX%. by impacted limited is maturities. share on

note that repurchased to $X.XX to important approximately for of dollar up of distribution capital it's frees debt shareholders. excess each However,

For the X%. growth three AFG's share months dividends ended per March XX, plus value in XXXX, was book

of value growth fixed maturities, the losses quarter. per related during plus adjusted book in X.X% achieved to unrealized share dividends first we Excluding

P&C back expectations call our the now operations XXXX. to of and the I'll for to over discuss our results turn Carl

Carl Lindner

include Craig. quarter an results. overview webcast, Please XX our to and Thank of you, XX Slides turn first of which the

underwriting period. XX, operations on Casualty following an to million Casualty Slide the XXXX, profit see As $XXX million profit underwriting with generated year-over-year in first Specialty of $XXX the Property producing Specialty quarter lower prior-year insurance results each of reported groups & the & first the quarter our compared of in record you'll Property

quarter million XXXX in higher X.X was include year of million catastrophe the The losses and for XXXX than the points development. losses prior-year compared to favorable a strong first the points quarter prior combined first XX.X%, a first $X period. X.X prior-year in ratio the reserve period. Catastrophe in X.X Results were in XXXX $XX of quarter points

rate and Average approximately approximately overall. Gross good and exposures each a & were as renewal compared was increased Casualty within was the quarter. across net Year-over-year in quarter and a XXXX comp, for workers' Specialty excluding up both Property pricing written combination new growth up quarter reported business the groups prior-year of X% up group, of to first Property our the renewal XX% opportunities, X% premiums the Casualty environment. &

adequate specialty book D&O, higher for for entire We've across some been ratio where quarters. for liability and trends, areas on auto XXXX commercial liability, needed, particularly time, achieving as focused layers have rate writing public we XXth such our increases pricing compare there some accounts. and straight where When prospective achieved rates overall Fortune we're loss the more excess are to pricing

looking to excluding that at prospective comp, workers' comp, is in generally we stay business-by-business overall loss trends -- our The with on that adequacy book we're confident overtime pricing ahead ratio excluding our of rate reserves. loss basis. helps a our of essential cumulative it's to increases trends, While of has us guidance, in this us overall feel prospective line the impact ratio enabled and

of Importantly, of we & Casualty quarter nearly XXXX. Specialty achieving exceeding all the returns our were targeted in in in first Property successful businesses or

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

inland lower businesses, the profitability was profit offset the group very the across of and Property quarter the of of our Higher to in agricultural quarter lower compared losses profitability and $XX year-over-year was businesses recorded to in the much underwriting attributable first States. storms property in to XXXX. which of of an primarily Crop catastrophe was transportation United the profit in XXXX also Transportation underwriting marine XXXX. February and $XX elevated quarter of reported & compared year-over-year, in million result results March than strong the first first million by our more insurance

the group first XXXX the million compared Catastrophe were period. $X $XX losses in in comparable million in to this quarter

premiums comparable XX% gross the First than group in prior-year were quarter written period. higher, XX% and XXXX net respectively, this and

were increased crop from with higher commercial arising coupled businesses the rates our increase in exposures opportunities business and the New in sessions, drivers transportation sales premiums. with insurance of of primary products

X% in in the year quarter in XXXX, rates consistent full Overall, of with this for group achieved renewal increased in on the the average first group XXXX. this pricing

the about time. areas is solid we our start. averages The to book five-year are improved of on concerns historical with based plantings business, over this crop soybean Corn in and at a and winter, have plantings running year impacted Drought drought off don't are conditions ahead. line

expect X%, been California, don't corn -- with there spring acceptable so XX% commodity heavy and we with pleased what in our an very is While Commodity rainfall results. It's but approximately soybeans to impact far. still and from pricing we're down see early, range, has we respectively, acceptable an this in prices.

be Services business. Risk on Crop overview we crop subject While of insurance, helpful we're thought the to it'd of a brief provide

written premiums release agent is approximately They based As based in our Decatur, of insurance provider crop with on $X.X CRS the gross billion. press of largest general seventh XXXX noted, multi-peril States primary crop XXXX the premiums. in United Illinois, are insurance the a

of insurance or insurance provided total approved is accounts XX% the insurance in crop and crop Multi-peril US of over total providers, by XX for a AIPs.

US Great of the US-owned the Following multi-peril of fifth the United closing crop insurance remain in writer transaction, insurance American the States and the crop program. largest will participant largest

the strong ours, split to similar CRS the XXXX states, writes organic where many of are on coverage business mix premium track-record about growth in of We're CRS' the and especially focus and same XX excited states. with performance. of offerings that

with MPCI Indiana forma billion, year about Dakota. and December ended Kansas, premium and for generated the XX, Texas, of combined the South of gross XXXX, this a the by pro states AFG basis, written half would been Iowa, Illinois, have premium CRS $X.X from On

currently With crop year the due to quarter, AFG crop price, stay generate interest premiums CRS XXXX the net approximately expect for negatively million per we third otherwise with to will majority purchase written business impact the CRS post to earned have by an in in share absence income XXXX the cents. closing in expect on We anticipated closing. the XXXX few written acquisition And would a the the for core that AIG. $XX earnings of we of

to per add to bond CRS approximately to expect over XXXX, Looking to more to to per double-digit to funds to When sharing CRS long-run $X.XX returns CRS compared incremental in we as continuing ramp-up to to share in to this an hold we compared look $X.XX continuing to to beginning used forward CRS, about our the earnings, business portfolio. share in the expect funds the core to XXXX, portfolio. And earnings, hold this work used XXXX. our to fully $X.XX forward integrated post integrate bond the $X.XX We core acquire in closing. business we add to business then, acquire

The development million large isolated group continues period. by certain and $XX reserve favorable was exposed was in profit development to lower the higher executive loss reported comparable XXXX million social of underwriting $XXX The lower social reserve primarily favorable and businesses. year businesses businesses. workers' due underwriting to levels our first Specialty compared workers' in inflation in This Casualty in an year-over-year be 'XX our the quarter in of liability profit of and prior partially levels businesses compensation Underwriting activity profitability environmental comp services, year prior excellent. our offset to

The group businesses in XX.X% points in the prior-year comparable achieved X.X the quarter, achieved higher combined in XX.X% overall the the than calendar Specialty exceptionally period. Casualty strong a first ratio year strong

and compared First XX%, quarter respectively, the when prior-year period. same increased XXXX premiums gross to and net X% written

business in acquisitions in business The offset was E&S the group from comp quarter, and and higher operations. strong retention executive new by business, liability account increased this premium businesses. our workers' in While -- in during businesses, our partially first liability in growth growth accounts, our reported new exposures payroll businesses premiums and healthy most the additional the social primarily mergers services from year-over-year growth resulted lower and our of premiums businesses opportunities

of first X% comp workers' group, the the this this in businesses our was approximately group in strong Renewal quarter overall. up for the renewal pricing during achieved majority and The pricing first X% was excluding businesses quarter.

due XXXX. the an an of decrease lower this Financial quarter in in million $X in was of our of quarter compared first-quarter and for year-over-year Catastrophe profit in profitability the Specialty million to quarter. compared fidelity group losses XXXX XXXX prior-year of the the $XX The were surety $X first The reported primarily first million group profit underwriting underwriting million businesses. of $XX to underwriting to in

XX%, Renewal -- gross XXXX primarily commercial approximately leasing prior-year growth respectively, and compared first equipment premiums net and our the due to up written quarter this in to financial up institution period, group was businesses. XX% in and the First when were surety due services, for X% pricing quarter.

XX, you'll property an full both with to market growth from where summary see continue opportunities please outlook. exposure turn Slide and ongoing XXXX for expect we favorable our rate a and Now Overall, growth. arising casualty to continued increases of

Based to AFG's over which produces of midpoint. the reported in return-on-equity per on be in results expect first the range net the quarter, we of to continue the XX% earnings $XX strong core XXXX core in share, $XX to at operating a

guidance XXXX and return an average year in X% expectations regarding income, Our XX.X% XXXX. our achieved investments to current reflects in alternative assumptions on investment crop estimated and compared including at an

at the We midpoint range previous increase overall XX% Casualty now expect X XX% between point shared for XXXX previously. Specialty XX%, group Property an XX% & the combined the our of of and and of ratio

million this now $X.X of -- growth top compared X%, X%, expected Our end net to premiums the of for is the to in $X.X XXXX. when of in written to to be reported X% increase our range at X% range an billion

what X% Excluding in expect challenging expect growth environment. the to X% a to crop, we economic more in be of range we

each at for losses, guidance subsegment. quarter, results for continues the range to assume of earnings to level guidance Property Transportation we've average looking which elevated This of first our included Group. XX% year. our Now ratio on crop XX% combined the to an & our in catastrophe narrowed Based a

X%, this for previous growth premiums net is modest now X%. from the group to decrease in range We written guidance a to which range expect to flat X% that of our of up in assume be a

pricing in related premiums business. the rates, impact year-over-year exposure volatility growth crop our guidance and related commodity crop premium and negatively futures which and of Our impact on factors

are which in written now additional net As a of premiums we crop down by offset CRS, expect from premium to factors, be business year-over-year. our insurance X% result X% these to

in As a the of portion crop quarter. the largest our booked reminder, are third premiums

the be $XX growth to related crop, of about in net or in to premiums Growth group expected to in is of underperforming this accounts tampered range written will in Excluding by premiums programs. be X%. the X% million non-renewal

to our increase in guidance conservative an a regards our the of more X combined of our to reflection expect businesses. the midpoint of XX%, with points to XX% and now of ratio very loss Specialty range a We inflation Casualty previous produce group social exposed picks strong at

to continues workers' but assume prior our results in calendar businesses strong combined higher at profitability year guidance ratio to overall, the when Our the exceptional comp in a year. compared reported

X% increase We and previously. now results, range XXXX expect an to written higher of from than X% premiums net X% to be X% provided the

New business exposures business. our be this opportunities increased of in experience which and book, the are comp favorable tampered by line workers' of in decreases loss result will rate

this workers' range in of comp, to in group premiums X% Excluding the XX% XXXX. we in to grow expect

this the of previous points range first estimate recorded of in written be to range to from Financial XX% from be to range to projected -- group XX%, group's isolated net on to Specialty quarter. across XX% is reflecting premiums loss now in all in We X this X% the the ratio of range group. an the our businesses nearly previous up up in range of expected XX%, Growth for our the our growth XX%, combined X%, based large to in X%

of is Specialty results our year, to in through to first And X% X renewal now X% operations previous the increase based Property of between point our three Casualty than & expect rates we higher overall, guidance. which the on months the midpoint

expect be X%. rate range we the comp, in to to X% increases workers' Excluding renewal of

financial year. and creation. strong our for balance our of culture, well I value remainder for and pleased opportunistic combined are first very results track-record strong position with the the quarter, us to of and long-term that our this flexibility, these sheet entrepreneurial, of very report proven exceptionally believe Craig We proud we're

we're happy for the portion your and lines of today's answer open to Q&A questions. now call, the We'll

Operator

comes Paul, Paul of Our question from with question. your Instructions] [Operator first Piper Newsome go you. Thank ahead Sandler.

Paul Newsome

us Good it the or it there there, what really beat is exceptionally morning. a I'm that made missing? but little could sort the more, year-over-year bit in sorry of to is comparison remind so else And year-over-year crop you comparison, that the something on issue on for strong? we're

Brian Hertzman

So, XXXX that first are would of about business crop of been the In first quarter remnants talking XXXX the of quarter XXXX, of you the first XXXX? for have profitable. the very versus year that very, the the calendar was quarter --

more of a XXXX the XXXX. exceptionally had quarter quarter normal strong first we So of to first the results result compared in in

ratios Transportation, particularly in ratio at Looking XXXX the ratios year expense year-over-year, Property expense accident real quarter. level ratio, the current the the loss higher there & and in crop the loss the of profitability and underwriting are drivers

Paul Newsome

mentioned of the inflation In is really that parts the area, issue. social being change? causing book that workers' there Is is comp margin Specialty other you an Casualty or just that

Carl Lindner

comp have excellent our to book No, workers' results. continues

results a what -- remain Our was I year, the really combined of good, were at prior year. but higher think point they in this ratio probably my that than they

that I our an a in I think reflect in for Specialty in of think is, picks one the we we social our severity -- The inflation development, And favorable of businesses, -- statement. to was Speciality one quarter. we're trying had our had some had we less, some business. Casualty our Casualty lower -- have point was environment

Paul Newsome

could I if one more then, And squeeze in.

seen the what have if in banks? some is we on And obviously with continue there? that the of community the day. book results we banks might thoughts topical see a the we've real issue issues of to D&O the Any Your

Carl Lindner

Yeah. $XXX our in year, good about of made. the we've with reach. is geographic wrote last unit of with the I It's well standpoint. write terms diversified starting an We progress and premium. year almost gross that pleased million We're -- on about calendar off year accident both we the ABIS mean, year written results

billion That limits, be banks we be is hyper-focused less depositor in -- And $X might million. lower diverse base. assets. in more of most I'm a average that insured a industry with And real have book banks of in about net policy on -- in Our a base diverse deposit deploy limits ratios use probably serve much book that. tech depositor banks higher our than on generally, and that the have important. book not $X.X read pretty star-ups headliner that the that. and any Clearly, risks being aware or would you much. us doesn't lower Generally,

Paul Newsome

the Great. help Always you very much. Thank very much. appreciate

Operator

next our for question. Standby

next Our you from Michael, comes question BMO. with have Zaremski floor. Michael the

Michael Zaremski

Okay, great.

Casualty segment. The first question on the Specialty

and results maybe AFG's back if looking we -- is that the ratio excellent basis than over an I on just, and lower much on has step it average. back was model plus historically combined been last the the appreciate and currently absolute Just in are decade

You also excellent that wrong, inflation on -- segment of Specialty not of -- businesses, me pricing moving some just And Carl, I'm for results higher if a more? of what loss just inflation Casualty touching also fact moving is cost in correct industry? -- Is you did on just but the in because are the that made the can the much that, social comments, could bit some you too elaborate exposed maybe Thanks. lines? maybe

Carl Lindner

our to. in happy varies look you at excluding quarter. comp, achieved That we again, pricing to X% when about get continuing We're the -- workers' line-by-line. Sure,

to increase. we're So, achieve continuing price

in declines D&O D&O. think, book. on pricing trends, I on the areas we're that ratio keeping our else, I I'm the everybody prospective happy seeing rate public Like couple with loss of not public of up call, mentioned

think, of probably D&O about of X% is D&O XX% the count. thing that's our I is one different book public only policy us and about

a D&O book. even D&O, business profit public small you case, excellent and So, have our we in and a D&O in very at our 'XX. 'XX -- we look diversified In make results have real with pleased might when underwriting

in growing like Fortune we're increase So, are And we're to D&O, we more in higher not now D&O. of because price lot there liability particularly to kind book, seems some continue get area, that accounts. growing a competitors, of I of kind XXXX competition. public as just public kind in There -- of and lot because mentioned, a not but the the public be, of competition excess particularly the D&O,

take that what area I would and on prospective look on ratio trend. ratio our loss book, loss plus at be excess our an use -- prospective you we would using trends that we're umbrella a XX% when So

we're if increases increases So, digit mid-single overall work. doesn't that only long-term digit getting that think I book, on or that's low-single

our our our liability results, In you when results -- outstanding. umbrella E&S case, our our look excess again, and are at

I'm long-term. over not tells be of My and me the the more would jumping It So gut that too the short-term. the D&O in new all competitors public excess worried in liability are of them to ratio this burned. lot going a is to rate -- going burned get of a phenomenon are on And short-term more trend. loss get being below prospective

of I -- new burnt, think as capacity as I see you'll two our some reenergize that sectors chance those there's gets think the rates a as in happens.

Michael Zaremski

just the specific helpful. it certain but are could social is regards specifically most That's there just was sorry... but a did -- or to it. I sorry, some uptick side -- through long-winded was competition conservative but loss the of transcript, listening you seems comments there you estimates question, in inflation. of on about know is your seeing are with in asked I in pricing certain you lines, in more loss a Got costs an -- lines regarding costs I -- answer -- regarding bit excess the I saying

Carl Lindner

we're review Yeah, pricing quarter-by-quarter business the and adjustments and and making every we all that, reserving time. on

are. feel to ratio what necessary up businesses -- more loss or we to the Yes, our stay that try of as -- in the trends we those in particular we that. severity loss I some in ahead business think would picks saw with we're adjust

Michael Zaremski

is the for as at crop looking bad the looks things underwriting -- on you Is that's will portfolio, on turn current so Got follow-up your into we hasn't portfolio guys that current on that will able crop portfolio, acquisition. to it its a of profitable? acquiring, thrown the the ratio that be us, merge hasn't been When there's into more tell on If of the it. which do? kind that and be in is AFG able look the color. to we're you owner the kind but ownership, all can it portfolio is information Thanks data, the able that noise that of expense much off statutory correct, may -- do income. -- meaningfully ways at some maybe insurance And to directionally under you're that like --

Brian Hertzman

Brian. is a to some I'll to One This There's AIG's recent is, Mike. years going improvements Hi, business. try made has their of in couple private that significant under ownership, you. answer things product on. for CRS

more years results probably than in going the the recent stronger So, are that. than back further

Beyond that, are AFG's integrate book, book of things also, know. work as CRS' we to to and a important that couple

we're that, corn focus same the the lot at states is same of and there soybeans in of One a on type our and as existing business.

business the business. itself Great is fairly similar American's to So

to them potentially be those would at As services. some transition of the and have there for overtime reduce been economies will overhead expenses we AIG of Great American, compared our we what charging applying scale the type of that had they

reinsurance that, we will retentions. existing our what Net of put our in our retentions we structure through top will be On have lower. it similar to business,

written there enhances which business, also a about with the periods. the And we component, look retained reinsurance things XX% you if gross our at CRS then in structure, go is sharing well, same on thing premiums. historical If We'd the returns XXXX. expect beginning in our good profit of

profitability So, we done in that reinsurance think be past on overall, couple will scale, as between the applying program, years. economies what and our beyond of use the enhanced of the has already well own CRS the as reinsurance their program our of federal

Michael Zaremski

ROE been profile be this company's last you ROE for the one say, a was We timeframe, at know, uplift math today if helpful. top Life P&C profile. life any because asked get at maybe, is a the your guys might you. you AFG's the more peer-leading Life, head, just Brian, today historically? over one mostly And and don't of you any drag? Okay, there That's most know longer basis return-on-equity than look it is from included the which If is that lot you about Or of the great. the lower. we Is I points gone? Would have much if -- has has mostly Insurance it of -- amount profitable off ROE was X quantification was

Carl Lindner

-- one-year, as XX-year Property we're think, I on a the and on returns & on that. pretty this at you period a When time, top XX-year is of a look much five-year, a Carl. pre-tax of Casualty outside progressive, we're --

impacts [indiscernible] of that's the sale the yeah, clearly per not think, annuity AFG. I So data, ours. do business, overall

that's our we we So investor really property kind pre-tax towards Casualty & the -- why of returns. -- Property in decks, point

Michael Zaremski

Thank Okay. you.

Operator

Gregory from Peters next comes Our question Raymond with James.

Gregory Peters

Afternoon, Carl, Craig, Brian, Diane.

your a reinsurance pricing, before And I'm retentions, reinsurance. hacked into been to follow-up, has if some It perspective -- as losses CRS the just spill-over and step the provide I sectors. from the Brian, reinsurance have Just back Can -- just about things crop? conditions, conditions crop pricing crops higher answer some like with curious spill-over and/or us seems there costs property guess higher for multiple a hit on and have like in you that?

Brian Hertzman

Our crop parties. time multi-year program period reinsurance a of both been program is profitable long very a over has for and

or conditions not increased significant seeing costs challenging changes reinsurance. on terms and we're crop So, our

Gregory Peters

to it's reset CRS? a increased do premium with does have program, Or your it the multi-year the contract with you automatically reinsurance partners? if So compensate for

Brian Hertzman

partners reinsurance into very -- it's our with as program. same worked going terms it come similar it to a on ultimately to have We incorporate the

being So, CRS I we've what would think of had with historically. XXXX as same terms the

Gregory Peters

Great, thank you.

to is auto. report your ratio perhaps And us remarks, it, underlying but the seen pivoting some know some I some commercial prepared your about commercial commercial in basic in Carl, you you uptick in some about auto give performing how Just We've color more comments expectations? relative companies to provided business could loss auto.

Carl Lindner

'XX, National our written Yeah, it's pleased the when year it's of last price book, commercial that. year. direct at premiums quarter I'm the Great talking in in last I'm happy performance way. increase with look Trucking put with And about Vanliner, commercial want and that auto, to. Interstate, American commercial primarily year. in things our we auto overall of stay XX% about to continued auto first and When Kind you of this perspective, of

of first part be commercial be We guess I'm the commercial auto of part the XXX-ish coverage. -- in would liability year. where it the one breakeven to and still we The quarter not last in my -- that want to is run is auto

around So, Interstate auto first commercial X.X% X% trend in got the XX% with quarter, Vanliner strong that. X% loss ratio versus price increase I fact, we're Vanliner, overall we compared that. think X% in to market price first is Interstate still think liability and we the we liability I auto increases, trend on to and for the getting commercial book in ratio about price prospective Overall, of, we the in think we got -- overall continue increases loss a -- struggling, and quarter National take it's in National

settle that's frequency rate We've by still continuing seems to we matters order -- the to the resolution to seen inflation in trying is, and impacted try on think, think returned, be. quarter, we to we've high-single kind claims pre-pandemic -- aren't quickly. to and more we growth. of early to an take in it That's definitely continue of less place continue it's digit claims things auto liability severity, first levels. why want had we're I why we're social Elevated where is Clearly, than to but commercial them where on emphasis

digit low- rate will the to year we're, again, on mid-single I the commercial grow as probably auto liability. whole business, think, emphasizing for

So, hope that's helpful.

Gregory Peters

don't great ask -- I literally kind this I'm color. question, want Specialty but it, large loss in to of Financial. guess out you. final That embarrassed called I was you Thank to the

on get just really And before. loss as that something event? we Specialty you large I one-off just view a the Is bothersome this to don't system wanted in a loss I remember focus so the or is there should itself. I calling to to in -- want out you just don't single

Carl Lindner

event. it as a more of kind a one-off of probably I'd view

Gregory Peters

enough. Fair for your Thanks answers.

Operator

Standby for our next question.

Our comes Jing KBW. next from question Li of

Jing Li

[indiscernible] question.

So on, can some side. just amount wondering We year-over-year. increased color expense for that on seems have to you this expense the ratio add see

forward? what you expect So, do going

Brian Hertzman

you overall? Are asking our ratio, about expense

Jing Li

Yes.

Brian Hertzman

So, bounce if quarter-to-quarter at look for you ratio -- expense can us.

from otherwise can only our of they reinsurers. the reinsurer but is also the the than change, of business higher of pass And not commissions a when One would. business ceding our in ceding mix many lines of commission they have profit-based things profitable, would business,

cause So from to bounce numbers time-to-time. around the that can

in XXXX, first first ceding had XXXX. quarter in the we profit than the did commissions base higher of example, we crop For our business in of quarter

slightly in slightly across look happened the you lower later expect If we than that the that the full replaced expect be wouldn't We profit-sharing crop -- lower would in in first a year, to quarter. quarters.

So that will impact the full year.

We the that also have benefit bit, run. that ultimately will quarter us up driving little both going in the on a -- IT are several long and in year, for the expenses do we initiatives

lower and in year ratio that in first business little So, because be IT from a a initiatives. the year of relative last for and some crop just quarter to impact be the of would an of profit-sharing the bit expense the the elevated the then could

Jing Li

-- you Got the bank any the it. in current you're about D&O days? seeing What's the trends these pricing? Also, can Thanks. issues talk

Carl Lindner

quarter Yeah. overall increase price getting from in the about D&O On -- standpoint, a a book. overall, we're in pricing our X% first

which though, I quarter. about the as think, that. price lines is is decline what competitive and more before, -- the call had be that's than of mentioned Public in in D&O, I it our a mentioned public business, earlier D&O, one of and the as XX% should XX% I

very no company, book, large lines, equity I focus cautious non-profit account to specs EPL. have continued D&O were We the public as private account approach over more small much on practically We of Our to probably, couple would have company, as before, and years. private a probably, -- those. than past a written business mentioned

other little companies. of a is than price book still probably some our different That's one bit reason So, why lot increase. a getting we're

Jing Li

color. the for you Thank Okay.

Operator

Diane would for now it like our over portion. to back to This closing I Weidner concludes turn Q&A remarks.

Diane Weidner

the results us all, quarter look you, we have all second joining a as share speaking recapped for day. morning Thank forward our first again we to with We and care, our quarter. for as you this Take great results.

Operator

your conference. conclude today's program. does the for This in participation you Thank

You now disconnect. may

American Financial (AFG) 3 May 232023 Q1 Earnings call transcript