AFG - Earnings call transcript Q1 2024 | American Financial Group, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for standing by, and welcome to American Financial Group's First Quarter 2024 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Diane Weidner, Vice President, Investor Relations. Please go ahead.

Diane P. Weidner

Thank you. Good morning, and welcome to American Financial Group's First Quarter 2024 Earnings Results Conference Call. first yesterday XXXX our released quarter afternoon. results We

of and are Investor CFO. morning posted press during section. release, Co-CEOs AFG's by AFG's presentation American supplement investor portions referenced and be the Our Carl on Lindner joined Craig Hertzman, webcast website Financial materials Group; will call. Brian III today's . I'm These Lindner, this Relations of under and

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

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

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

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

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

Carl Lindner

quarter XXXX First will open questions. AFG's where details. which excellent. Q&A, I'll morning. more to it and remarks after a few my the Quarter, performance begin Brian during I for Good AFG's and of Craig, up by then first financial walk your I was highlights Craig will I through respond will sharing

written X% quarter an XX%, producing on grew annualized year-over-year. by to premiums return of operating addition In first equity net

of management and philosophy within and these Our employees compelling to our our many talented for Craig helping thank operating outperform investment businesses collectively achieve have culture, team us mix entrepreneurial in-house enabled peers and astute I our over God, to professionals, specialty insurance disciplined and time. us of great results.

to us Craig details. now the I'll to over some of the through discussion walk turn

Craig Lindner

and share of of Thanks, core to information in decrease The XXXX per portfolio prior AFG's compared X the Slides Carl. Please in for to performance turn reflects the strong this for AFG lower year to quarter. earnings the quarter. investment earnings $X.XX reported first year-over-year alternative a portfolio the period. return net of X very operating summary when

details Slides AFG and Now I'd comments X. like about of to investment a our are presented portfolio surrounding on position The billion share to turn investment financial AFG's few overview an $XX.X liquidity. and performance, and capital X

Looking X% at first XXXX was net Property approximately period. results lower income than quarter, for investment Casualty & the comparable the

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

X%. X% the in first to Slide As see portfolio Current you'll fixed we're on maturity the approximately reinvestment yields at XXXX. invest approximately fixed invested interest on yield securities current in P&C environment, compare of rate our our to maturities. is fixed In portfolio earned maturities able quarter of rates favorably at during XX% nearly of the X,

interest take XXXX. recent lows. from opportunities portfolio, our cash including X.X We've advantage as duration XX, at P&C years market was rates The March managed maturity of increased strategically have of fixed cash and to equivalents, duration historic

rates compared the offset prior and by of quarter. investments housing, on portfolio headwinds for return equity portfolio. supply annualized investments. Strong to first of returns the from X% approximately continue year the were the traditional quarter XX.X% of multifamily alternative about to private experience represent related which to rental our to impact XXXX investment The half tied was increased these our lower we P&C alternative And on in our leveling investments for on out returns portfolio where

and and average the high may on remainder return ended Longer have X occupancy as headwinds the to investments generate continue positioning we these term, these our expect multifamily of properties We strong the investments -- income geographic rates. operating average remain XXXX. continue in net XX%. calendar desirable was XXXX, housing throughout prospects alternative return optimistic The of regarding years XX, December over annual approximately

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

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

continue to throughout operations capital opportunity ample dividends year. over our next special the additional of expect XXXX, significant generate repurchases remainder or the excess to We for which provides share

view in to plus total over by growth dividends the of important creation continue as an is measured value term. book value measure performance We long

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

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

Carl Lindner

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

compared year Casualty of X.X favorable As 'XX, a Property higher points than quarter in in point X.X first development of our X.X and prior quarter reported Insurance included X, points X of & you'll strong quarter first year's on the first XX.X% reserve in of XXXX generated XXXX. the see the first quarter, to combined businesses last year. Specialty X.X Slide compared ratio the last losses in points Results to the first XX.X% the of points for catastrophe quarter

Casualty year. was for Crop First Risk groups were businesses, Along overall, accelerating and Property up renewal across acquisition, Services excluding a and X% the a crop Including good up rate quarter our result opportunities, in of quarter. net Specialty Workers' Workers' line Casualty each Compensation rates previous exposures renewal X% period & within the from premiums quarter, environment. renewal increased from business Comp Group, growth up X% premiums new quarter. the those were average pricing of our XXXX as X% was to additional compared written the gross reported when Property last same and about lines both previous with the Year-over-year

we to renewal rate quarter targeted rate renewal believe excessive overall increases, loss overall and This XXst prospective ratio returns. report exceed or achieving is consecutive meet increases and we're to trends our

In values addition businesses we in our pricing, to focus our insured to on ensure property-related reflect renewal considerations. debt that to continue premiums inflationary

included Specialty I'd X turn highlights review each to Now to to our release. like business from groups. and Slide earnings Details in a Casualty few Property are

first here. reported XXXX in results focus improvement businesses on comparable calendar Transportation period. the summary achieved and combined of the in X I'll of XXXX, the an XX year So our Group an in from Property the quarter points overall ratio XX The

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

as were new drivers in well the and business Additional associated opportunities, the Marine strong rate retentions of our in Ocean environment premium CRS favorable increase with premiums. a primary crop and acquisition, businesses commercial account as the auto

Overall where X% X renewal business of increased need previous from group rates quarter. rates I'm XXXX, particularly XX%. in in the renewal line were on this increase with the of pleased in average auto about commercial approximately rates of first liability up points an quarter our that

of in period the the strong first in than reported higher our year. year services comparable ratio Casualty a Group were the in Casualty to quarter Cat added XX.X of X.X quarter part winter X.X calendar the XXXX, ratio country. a the achieved social XXXX large a and first Group XX.X in businesses combined the result The that points Specialty storm last combined affected northwestern Specialty account points of the losses

and Workers' executive liability with very underwriting margins strong pleased Comp the continued our in particularly I'm businesses.

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

the great excess and opportunities growth higher targeted account premiums liability and and first of growth surplus lines result most in in year-over-year excess a business during businesses, While markets resulted businesses businesses higher our as group extent. the reported new from to our rates, growth year-over-year opportunities, this primarily in to contributed of lesser business in several the premium increases quarter, new a retention strong the of the

was X% with about our about measures first pricing Now the for up this businesses, in approximately overall, X% Comp renewal excluding X% was the the in both pricing group, quarter in up renewal and from we Workers' our up of entity, businesses rate excess several particularly I'm public liability pleased and increases XX% of quarter. social the businesses. during including and exposed services previous quarter, that inflation social excess our achieved renewal

underwriting reported XX.X Specialty and first to an slight excellent achieve a margins in from ratio for XXXX. the Financial quarter the comparable improvement group continued combined of XXXX, period

compared net First up quarter to the XX% XX%, XXXX premiums period. when respectively, XXXX same gross and and written were

half of and While most in group growth X% primary of of the driver Renewal our financial in was the reported we products pricing in continuation residential the representing up businesses year-over-year business institutions our premiums, the both business lender-placed growth, second a quarter. of the was in first investor higher in this this reported XXXX. group approximately

for are quarter, first proud of creation. I pleased these and Craig record value to we're strong of long-term the track our proven results report and

in Property billion team well investment both knowledge build our have has navigate and of insurance been their professionals for to Our in-house of positioned Casualty shareholders to and management XXXX long-term value marketplace. experience $XX and continue our to We're the for and our the And exercised skillfully remainder strategic investment Specialty the opportunistic beyond. portfolio.

respond Craig the would lines to open and now call. to Brian of today's happy the questions. and portion Q&A I We'll for be your

Operator

the from first line of Our Charlie Lederer Instructions] [Operator Citigroup. comes of question

Charles Lederer

share can reserve more pieces guess, development quarter, of specifically just Financial moving in the guys about I kind and if the Wondering in Casualty Specialty you the Specialty there?

Brian Hertzman

Brian. Charlie, this is

there. to about the So a There's things first. segment Casualty going on few talk

while accident just number a the don't on out businesses some that's First Executive is increased severity specific Offsetting services as When Social It mentioned in Services of that liability businesses. coming claims a claims. over Comp lower business. all, severity in prior the businesses, and And of a few it's our in increased recent coming comment of in business on we few Carl favorable Workers' year did profitability well is a see some development excess the couple we Liability years. severity our to there, development. continue more through as -- social our the lower

severity property. amount then related business business group, there's a small includes there, innovative of some markets intellectual markets the innovative where coverages increased adverse and seeing of development to The there. And complex related our in little to a that's bit we're financial

Charles Lederer

Got it.

the that on I helpful. if Okay. just commercial guess that, off jumped auto guess XX%. in year I I compare about that that's And to your of page heard the in at increase, Property pricing fourth and -- the impacting that the how liability kind guess should I we on? as And goes did quarter? think earning through Transportation and what margins underlying

Carl Lindner

I very quarter believe XX% I to a But it's think so. XX%. around was all believe definitely around the it positive result. up XXXX, for I fourth of jumped or

goal. I our So the like definitely trends. It's

Auto Commercial quarter loss and liability in Commercial overall part our for small Auto it want performance underwriting business the the solid But the we that. have business We of with last underwriting year. first where isn't in a

combined objective in lower overall it's ratio, in our commercial So our commercial to auto auto liability. particularly

So very is rate welcome that point. increases achieving at at level this

Operator

comes Our Michael Zaremski from next of the of question BMO. line

Michael Zaremski

Specialty -- has -- segment, then on guess Casualty bit. hand, seems it should profitability dissipate the of on some which of be AFG's power and lines going a decelerating, business Comp If of the is how north focus sense, the kind be the releases industries as moving or growth given I guess Workers I line And been top right? it the reserve we not makes appears great is. great other have you growth overall pricing other as to pricing like

to being like direction kind does obviously And the with industry also cycle certain like it So bit? a missing is going I just or up in guess, does, the it pricing right is way, trying are playing this just noncomp just of out? as seeing get margins cycle right feel lines that are it's got Is given the of -- guess, the turning kind -- because in downwards the I does turning of the right guess feel kind profits? a I but this way, comp the

Carl Lindner

Workers' business, up the just part first bit. When Comp flat to to at the a quarter -- the premium roughly Yes. of address side, little you is look the growth

when in that to exclude businesses, on the getting in businesses, Comp is So a segment, you mentioned, Social past see positive. we're increase Specialty inflation-exposed a about really Casualty on I those growing Workers' the just about which I've as talked double-digit we're of that's the glad price number and real X%.

claims the of going are position social those because think of I our success But regardless lot for in guys us to a on. trying of environment continued inflation lines, the that's

with retentions certain businesses substantially of some pools some our moving the businesses of up increasing I've talked limits which over in and excess -- the the like increasing municipal I think in towers, public the in we're sector business smaller that. and past and -- writing liability

have our are those the very of continued us environment our position So been guys success that. kind for -- for guys in forward trying liability going are businesses there profitable businesses, excess to in us, but this

Continued Comp first to Workers' overall results be very in pleased with quarter. the the

So that's a that. and then positive

Michael Zaremski

Okay. on profitable. Comp, of a Workers' good That's given a just remained And sorry. helpful. that's at maybe business part to is we look when -- very -- your And there stay follow-up been it's

Carl Lindner

year. and corn of the I'm better Mike, that told of the I Plannings with And wheat exceeds -- rainfall, crop last right existed good. being was year than some than last average, very concerns prices have the mentioned but business, it's Western in year. pace have drought while potentially is that. Corn of better, of drought about one much of claims reduced be preventative the Despite much which soybeans X-year across belt out conditions business last is a it the at when solid. performing much significant better also at crop early, the above-average other we very corn work, don't winter And with April U.S. problems to we're planning monitor look floods the now, seems you what year. type drought or in is overall that the last starting soybean proceeding stable, the been that happy are and

the starting out very -- we're us. like business a on but way there early, for extremely pretty like a So significant

Michael Zaremski

can winter the of wheat, Comp. us? percentage Workers' and have remind follow-up I on And did you as wheat portfolio, winter a a The if your

Carl Lindner

or maybe X% I like that. think it's something

I XX% that. think all is wheat or maybe something around

Michael Zaremski

as combined my profitable If a and American I look on when big your follow-up which we -- If but Financial profitable, your an extremely actually looking still was all. ratio comp, but basis was last and Group at trends much was became just showed versus -- profitable I'm the workers And improvement, business a at just kind -- Comp on decelerated. a more Workers' for And industry year-over-year. of which Okay. less you and may, releases were business it high, reserve industry we year, is just overall surprise.

of has you what you states those reflect your very the XXXX, is to to than there are nature more But in concentrated certain relative just experience your due to the curious -- being book, specific of when just industry? book actions on it took was in been maybe some the that your different

Carl Lindner

there's I'm not sure a that in that. difference significant of

have We continue result year. last great to

be Our Workers' results are first quarter to excellent for Comp. continued

very and our business business, strategic in are think business, our well. National comp high Workers' Interstate's I Summit deductible all performing our Comp

of year the California an Our part the both is business last quarter. business loss, first has in that underrating the and

impact. could -- small that. relatively have that's part that in So some suppose I Workers' our smaller Comp But of business

comp as in a is So year the do won't We the think reason the we're significant of One subsidiaries good quarter. one that year. that previous good results be Florida, profitability the is getting large for start, a first this state our Summit. have comp rate XX% in decline as which excellent

Operator

Our Peters of next C. question Gregory the from Raymond line comes of James.

Unknown Analyst

on is Greg. for Sid This

you should just seeing feels as remarks, get continue. But a a change Financial. the growth. of sense there's provide business? on on a the Just trying if more like to in follow in this up you're bit growth to in know you area attractive what your we expect been that could step I'm highlighted It prepared Specialty in I if curious institutions. financial information wanted the to the little

Carl Lindner

solid expect we think this growth year. I

think strong quarter that. very was in the first I

a replacement into Florida, insured well other significant the been written. called are values, business, With replacement I balance, talk that to not appraised focused very value things principal think states sure would industry of with with the long anybody leaning over property X%, it we've opportunities. number what's period [indiscernible] which there a This different companies that about like have is proper the could that this underwriting doing be getting value, time going up that's that pricing states business done could an moving on -- a profitability. was in somebody's policy last maybe replacement to are that just cost cost known coverage doing -- homeowners value insured making or are be cost, of

of allowed and So to competitors both that that were particular that price an a value a and number lumps. to in one account, been faltered when year continuing is insured benefit comes up getting you overall competitively. lose lumpy in have have There us We'll on up pick this in last significant that it a an we accounts, if have impact have business can decent -- from. or your proper see account pick

opportunity So additional some same accounts, continue we're that we hoping some maybe to by to token. have the pick up

-- are know our You on catastrophe how exposed. what business that's too thoughts

too are may if or or with decide we forward much catastrophe So some. we go that are accounts don't have to think exposure there maybe performing not

is think business and out, with growth bottom getting. is starting And excited increase profitable, how really insured momentum pleased line we're above about we're this we're the price that business. the So value I very good

Unknown Analyst

the right performance annualized if exceeded said the in anymore, not of quarter as or XXXX? still follow-up, the know release, for the use providing Okay. expectations change And portfolio X% if the the the you bogey I results for to believe your in press year but I expected guidance curious my this investment first the the And then quarter. just view detailed returns for you're on portfolio is return alternative

Craig Lindner

conference for up made year, last a about and X% into a our that properties return for plan assumption is -- when is went our with call, return low a account on that at multifamily single-digit was performing on about on about On what our that would of our assumptions the And talked total Craig. I alternatives half is This on in return the talked which of we say multifamily investments. line Sure. much stronger other expectations. portfolio pretty we

single-digit pretty changed we a We to the a on to pretty got much when that were kind that you that, We're what piece. think given in said the see on outlook expecting were on year don't lumpy. we can on with or we as we the low But thoughts portfolio. guided alternative using to line our kind I multifamily. of of the of returns balance know, start. that the balance for of very off good very good We low had return be

I think we benefit calendar return In XXXX. margin report of the very quarter in year we strong quarter did market delayed XXXX, from the basis. fourth the a

the in I so work in very the to is the market strong do think of year. Hard last the early the the going from we year. predict And balance benefited first what year. to It's quarter,

at the this So not change return assumed would in for point the X% time, we year.

Operator

from Our Andrew line Jefferies. next question comes Andersen . the of of

Andrew Andersen

quarterly you Comp. due not releases 'XXs touch release, to developed Workers' that with Workers' improved year-over-year on I of to the and a in pointed stronger press to seasonality Am on profitability And you that, maybe correct how perhaps the could thinking due is Comp loss the In basis? on ratio? underlying

Carl Lindner

actually ratio well is So the ratio as the development. the combined as in similar fairly Workers' Comp in combined quarter-over-quarter --

can it some but -- there lumpiness this -- of first bit in business. were the quarter in some the ratios to quarter There was in similar the be but was first XXXX, there similar of year, Comp loss in growth XXXX. of Workers' was little a development, underlying So the this that

we increased press release had there. think our an I said margins

strong my we said earlier we I think a just was did And think well. quarter. what had I comment that I that's

Andrew Andersen

trend . kind other claims And accident Schedule improve for help have made But occurrence the Okay. us looking for liability bit accident maybe would of thought year of some these guess can you environment. at year maybe P conservatism seem to given just flat kind here? year-over-year a I think year-over-year I picks little more 'XX. through and loss there'd be then picks was

Brian Hertzman

Sure.

deductibles. businesses, can attachment general on I be have business. our liability So then been in like been know it's increases occurrence, getting looking we also important And And at of think there and there. still points higher excess changes of mix the higher we've rate to in also some

impact So of be favorable a mutes on to kind made, loss conservative sets the there. claims there's up then we more on really changes. In tend that's happening of and business pick change mix of for early the us that of the development changes that

Operator

Our of the question next line from & Meyer of Bruyette Keefe, Shields Woods. comes

Meyer Shields

comments, programs cat opposed auto. should we I And XX% commercial talked in rate plus insurance solutions to about think about you the that I'm demand earlier, think same have? in Carl, your that as maintaining wondering impacting increases for how companies

Carl Lindner

On one the struggling is that auto other. way I be the don't has price specific the the if an social in better, great it allowing and liability some is haven't the results higher. or that accounts some marketplace parts the lower experience think businesses it market probably got probably had inflation that side. The of big increases then I XX%. with whole wouldn't those impact -- And captive accounts, and commercial mean, some now. increases is

Meyer Shields

Okay.

this instead more in the of clients a being profit guess as should then emerge basically risk? writing typical offset increases significantly So rate by earn with to in fashion retaining sort improving just infer on those is that of I

Carl Lindner

to and auto as it's Again, driven I probably auto, casualty commercial business. least very or at getting points or underwriting serious returns about X we're Yes. I next by X the and outperforming the company. overall X lines, liability right on market -- combined the we're some we're profit having that in specialty mean the mentioned and over results. hence, commercial improve ratios That's goal the commercial of in year our stronger

improving X. pricing selection anything, changes our part I'd our of getting of of the terms on and that guys the the year business on or serious next if say business, goal that So are over things achieves the

than focused definitely, right would now. our guys So result ton improving on that a more growing be

Meyer Shields

growth likely can switch the gears carry the you Specialty reinsurance want of rest Financial to for I impact briefly. amount if to And the Is that the of in year? Perfect. Okay.

Carl Lindner

that that that grown, we that's as business are Definite, has monitoring. something -- we definitely

we're looking bond we purchasing the and that in have. think, some at tower cover fact, I gap between our underlying the insurance gap catastrophe I to cat believe

Operator

comes Our from the line Instructions] of [Operator Lederer next Charlie question Citigroup. of

Charles Lederer

Just follow-up. one

markets bit. a about peers it's little small if kind certain scaling for I back have specialty dollars know changed can losses business We've alternative you. the that share you heard your curious of after on whether it relatively experiencing thoughts mentioned You But there. business.

Brian Hertzman

I assume you're referring to the innovative about markets business, having where we talked

Charles Lederer

alternative. the Yes. I business. I misspoke. said Yes, IP innovative sorry, markets,

Brian Hertzman

about So we evaluating some business, opportunities no those there the in. Charlie, programs are to have earlier of prior new context, at while we're also that you put coming in coverage from operating that in on that I when Casualty, looking question development that it we're losses particular the the in it's think important those Specialty results. your things you're and longer were in year where

some still in, are businesses profitable that at businesses look those development adverse you had we us. when very the for So

year full a of For social more there. businesses of profit underwriting the one some the wasn't double had them most example, digits. And only on equity a for our counter had noise return that XXXX despite of inflation exposed

and you those when at all in our overall, XXXX. surplus year had fact, businesses calendar -- look above ROEs X excess XX% In of

are very generally number to some years. good over in remember development a it profitable thought businesses might just that that be of lumps prior you're thinking the about are those So when of in I

Operator

BMO. comes of from Zaremski of Our the Michael line next question

Michael Zaremski

private appreciate I a Craig. don't on a are for I -- equity on does is but think sometimes how the follow-up, other it and private Just -- there? work? parties. I mark probably real remind Does you this, estate estate how how equity Or appreciate lag and fully I But can your I should portfolio? created which a third us know some that, probably that it. does firms how the all quick mark-to-market think we marks we guess real returns. how think works are But the

Craig Lindner

basis equity them partners basis. -- multifamily the quarterly the a similar general market our is investments on valuation review to to in the that private mark multifamily a quarterly and our It Sure. investments, on with and

Michael Zaremski

Okay. Got it.

from so there's rate be way real So estate, there to on the volatility just it's high-level could maybe be historically, just be -- came I come that a follow-up, real estate, -- so usually -- about from can there thinking whether of the size PE up thought lumpy -- has should kind we a private it some there the there whereas interest quarters been if as actually or equity? more maybe

Craig Lindner

properties in somewhat rates. with environment with a I interest look over operating income -- been pleased in multifamily rates. an continues but very increase a strong. returns interest if in very very The the large mean, the cap months increase in of moved obviously performance, We're the is Yes. rates We of have of time, period predictable. have up because last X very have actually, there you multifamily been long a unusual here the X,

Operator

like back I Madam? for conference Thank turn remarks. Weidner to you. to the Diane now would closing

Diane P. Weidner

Thank a all you We us forward first look quarter results. our again for you joining today as day. and you great discussed next quarter, to hope all have we talking to

Operator

for you Thank call. conference participating. today's concludes This

You may now disconnect.

American Financial (AFG) 2 May 242024 Q1 Earnings call transcript