AFG - Earnings call transcript Q3 2024 | American Financial Group, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the American Financial Group Third Quarter 2024 Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded.

I would now like to hand the conference over to your first speaker, Diane Weidner, Vice President of Investor Relations. ahead. go Please

Diane P. Weidner

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

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

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

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

today Some risks of the are cause financial matters forward-looking. that from uncertainties differ forward-looking to our certain be these involve to results and/or discussed condition statements could actual These and materially statements.

of in risks be on and these the Securities our can uncertainties AFG's Commission, with description which also found Exchange and website. A are available filings detailed

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

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

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

Carl Lindner

and XXXX of open I walk Brian morning. to quarter, by through I'll highlights then Q&A, I a which AFG's questions. details. to will your happy for be it where third Good Craig begin remarks respond I more my after will few up and Craig, will sharing

catastrophe Specialty XX%. our great talented in annualized return losses core an particularly net operating Helene and Insurance elevated and Hurricane employees by results. and Craig us up on to higher quarter our God, quarter. thank our equity Casualty Property Underwriting of And increased during I'm helping and rates held management despite investment achieve I businesses pleased from nicely to report the Casualty income margins interest team Property year-over-year. XX% for third

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

Craig Lindner

Thank quarter. Hurricane partially information core Slides earnings share favorable to reported Helene X net of lower the of losses you, third offset to for by reserve higher in development investment turn P&C catastrophe X in were for a and AFG earnings $X.XX quarter. operating summary insurance XXXX Carl. Please related Higher year-over-year operations income. the year prior primarily the per and

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

than impact Looking higher approximately invested balances income higher alternative on reflecting at results the higher for quarter, investment XX% returns net comparable Property impact period, of was assets rising investments. of -- XXXX Casualty the and third the interest rates, and

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

investments from expectation compared the of prior XX% attractive quarter. on portfolio with at for better. averaging annualized regarding alternative Longer third of term, X.X% approximately an year the prospects remain returns quarter or X.X% P&C alternative our to optimistic we continue XXXX investments was The returns return our to annual for the

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

dividend of $XXX and million. to in over record regular returned During previously on $X.XX conjunction dividend In of approximately we XXXX. This per of shareholders XXXX, to November special with a to cash October increased million per which XX, the earnings November our our shareholders special addition will on XX, declared The amount payable special XX, aggregate quarter, be is share the release, recently $X the was dividend quarterly $XX company's of declared dividend regular XXXX. payment we dividends. quarterly the of the through rate to share XX.X% our on paid

$X.XX beginning has With these to this total per component and share $XX company billion return. an shareholder dividends XXXX, consider be in share including per XXXX. special dividend, Carl dividends important $X.X of of the declared the I special since our or in special

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

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

operating effective for create strong continue and entrepreneurial with Our management value us results, operating opportunistic disciplined capital shareholders. and to enable culture coupled our our to philosophy

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

Carl Lindner

Thanks, to webcast, overview third of turn of and our Please include quarter Slides Craig. the X which X an results.

generated No majority noncoastal were in many Carolinas. years. what we losses corporate and Results over catastrophe Specialty of higher served ratio X/X well we in third our these of quarter, reported coastal exposures and has Hurricane and storm XXXX, retention the us of than catastrophe during The our X, losses about combined in XXXX. coastal the Georgia named quarter losses last Slide we believe on see quarter XX.X% our the the in Hurricane of compared Casualty $XX coming in property exposure business Property from represented XXXX points X the cat of year. Losses a you'll by from Helene third points of million third management from careful losses X.X third quarter included incurred exceeded of Helene our quarter. for vast not the As points areas with the to the third quarter X.X driven Insurance

comment like landfall X. will estimated losses in pretax and that to currently remarks results our in Hurricane Hurricane $XX on Although We estimate October made from I'd on Milton focused are our on Florida from reflected be which about will million quarter today, losses quarter Milton, be third fourth results.

development to of compared third X.X Results development year of favorable development points benefited in the our inflation Prior exposed reserve the Property several businesses, businesses quarter in reserve some each selected casualty the X.X along and during from of compensation Specialty other year third XXXX. with than offset and third social quarter. businesses. favorable Casualty our continued prior points groups in development within prior adverse year be to workers' reserve Favorable more quarter

were Risk and Gross premiums, up net third XX%, XXXX gross respectively, Services the insurance, quarter to year-over-year. XXXX, and primarily driven from the quarter written compared written and excluding when acquisition. X% Third premiums premiums Crop by of grew each XX% net crop additional

We exposures continue to a achieve combination result rate and good year-over-year a new premium environment. opportunities, a growth increased of renewal of business as

overall. businesses, Average across in renewal quarter pricing third excluding up Casualty approximately comp up Group, the and our our X% was Property X% approximately and workers'

trends second X% Third loss quarter. exceed quarter in XX and pricing higher rate increases than we the pricing renewal we meet average in consecutive targeted for achieved to about achieving excess increases was of renewal ratio quarters overall returns. believe We've prospective are or rate overall reported overall renewal increases

here. like results in ratio X was a focus than from Property 'XX I'll I'd more agricultural quarter primarily Casualty our XXXX, Now comparable are in losses, profit Hurricane the The highlights and so catastrophe than combined the reported year points business X.X Transportation few a to in each achieved XX.X% release, turn to period. Specialty summary of the offset in by on Details in businesses Property calendar Helene. from Slide overall review underwriting third earnings year-over-year included and XX.X% Group of groups. the our to Higher our higher higher businesses

to extent, lesser of acreage, Risk premium reporting Third later reporting from quarter second in the crop the which higher, and XXXX. than and premiums year. quarter premiums crop net XXXX The some third include of gross Services shifted respectively, to of from prior additional XX% drivers the the group primary the timing Crop the acquisition and growth comparable XX% of of this were a quarter written

in rate marine environment favorable Excluding crop net premiums grew year-over-year exposures written XX% a is each increased and and which group, attributable opportunities, our quarter this gross & premiums, and marine commercial third inland businesses. business new property in to primarily auto, ocean

to the reflecting year is for ratio the into about of in reflected our group represented year of until XXXX, The the the business financial to Consistent the some high overall of the net we majority the growth third had in the from in record combined our premiums crop results. results third this insurance XXs, practice, generally better Crop historical in ratio with CRS quarter our elevates quarter earned the acquisition. combined quarter, and year particularly premiums fourth current statements. a calendar we which, full half crop profitability crop of in visibility extent seasonality

final the claims. crop is which remember crop crops both impact current October, the of an and Yield crops XX% of was is yields insurance spring be variability harvest XX% Harvest over averages. of it's profitability and about the think that optimistic soybeans, we respectively. to considering XX% prices, in settled and price most we're for year, soybean As pricing, the little and our and lower will for than year. deductible to farmer Noting harvest above-average crop corn harvest pricing important revenue results. crop our where average is determined protection that The the important discovery corn ahead of running X-year a about

year Transportation. third XXXX, in were average in third of rates this lower on and the rate in second I'm this commercial the quarter quarter group group achieved our Overall, the with our for XX% line. pleased renewal line achieved the particularly than Property where point pricing This is rates X% auto increases up quarter. about renewal of in in of XXth of Some business liability XXXX. the X increased rates in the

and profit to the businesses a Group in in excess underwriting our our compensation surplus liability executive and businesses. businesses businesses liability Casualty our underwriting workers' Underwriting target profit profitability overall strong achieved executive year-over-year markets continues XX% a comp and calendar to extent, excellent. be in So lesser quarter. in businesses by Higher and more Specialty workers' the lower ratio than our was our combined year offset in third

gross premiums market and prior the of and drivers targeted business. favorable compared Third and businesses our in X%, and respectively, written business opportunities new were same Primary net growth period. several increased X% pricing liability to our when excess quarter of year XXXX renewal

in premiums. lower compensation also growth was tempered from acquisitions workers' Our M&A slightly activity. This increase mergers and business an benefited by

gross quarter net third X% year-over-year. written in grew premiums compensation, both workers' group Excluding and this

we XX% approximately measures up Excluding the and X our were Workers' renewal in XX% Workers' Compensation public entity this continue to social renewal services, points to rate continue renewal and Comp. rates inflation for during excess including improved quarter. better Both I our And our the X% or the third several achieve pricing increases including businesses, in about pleased the liability of of quarter quarter that group up businesses, in social exposed businesses. be previous from

ratio 'XX excellent continued Financial the quarter achieve combined margins reported third the X.X combined prior year to the X.X compared to third for in the XXXX, points to points contributed of third Specialty and XX.X period. quarter Cat underwriting quarter. higher than prior year losses Group ratio a points XX.X%

our Surety were in our than lower and services in more business lender results offset Improved businesses. profitability Fidelity by

consistent written net previous and up was gross our quarter. primarily respectively, to up year compared in and in when period, this XXXX due financial group the quarter prior were with business. for pricing growth Renewal X% to X%, premiums the X% quarter, the Third the institutions

at To months return conclude, in year-to-date. is third first above the year our we're equity of pleased is XX%. time. Property where Specialty XXXX, calendar annualized with at X.X and ratio the on core in this combined last Casualty business year excellent quarter The X XX.X%, were and our points the results Through operating we

to strong. for be for businesses Specialty beyond. value rate, exceeding our healthy we're pricing well addition, our positioned to at investment shareholders is remainder build long-term continue and of performance continues selectively expectations We're growing the to XXXX In and a

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

Operator

Zaremski comes Our from of Instructions] question [Operator BMO. Michael first

Michael Zaremski

line, of proactively especially A bucket kind ratio. is high-level lines. or in have on they've the trend number handful rising been of sorry, IBNR, question incurred been reported, over First their past to companies a companies, light of a so loss of of a social or of in the reserves just that question year but kind X disclosing not adding inflationary

-- or Just of of has able AFG of that us a historical whether Group has bucket curious flavor percentage kind been that also American if of a to be Financial American you'd adding and to as kind great willing give levels?

Brian Hertzman

look So addition our them unit the unit inflation social really to there. a at rate business for when by looking it's business exposure business as you in getting and businesses, increases in

We conditions. also terms and have some changed

So it attachment is example, be it an a the the point little analyze in before. could IBNR to maybe different business, for when, was tricky excess than

there's losses our new pick, to so and in did quarter, see and umbrella into have to to not action quickly, can it's all would development reserve cause book a number. it information and that our for information periods. in as favorable think and So particularly reserves, business can might liability at negative in we you just some position quarter news. business the those unit That of previous that adverse elevated This the us give unit I very seen exactly But we we some development each But large to in process [indiscernible] a lots picks just new each what any have any can, we reflect looking at can't of and same in We've businesses best excess versus adverse year that quarter. fortunate IBNR into years. elevate reacted the product every favorable IBNR. in you really particular our going the been that react business of more then or factors to look case unit, result

Michael Zaremski

appreciate there's Okay. lot Got I a moving Yes. it. of parts.

investment get correct I'm Craig, back can remarks gears returns, can remarks a I if XX% alternative bit, portfolio but -- saying me made to switching maybe Okay, you believe you think eventually plus prepared you wrong. the

the is to -- is of is to in And that for -- the real quarters becoming that returns? that fundamentals confident of get you'll in back kind curious, kind of normalizing just more Just terms estate? a you're market incrementally target the come,

Craig Lindner

Sure.

of private -- start out predict should on my view me favor equity the but Let more a private strong the by returns, equity certainly the market to stock traditional marks you investments. giving investments. market Hard traditional

my Now let me switch to you multifamily, I give view.

with that We will new multifamily less a did little negative the have half up year, for with investments. And held coming the So market, the We're supply represents alternative our than incur marks. operations of fine. flattish even projecting just year. NOI some be the into last our

debt of And Our having that did higher properties some marks rates on months general fixed partners booked from of because we do March cap very we every rate interest properties. do year. quarter that first in XX we -- negative increased the the X benefit driven by that we've XX We attractively are rates, our invested in. priced on of the incur

is those XX XX X% loans properties I think around of on just the average rate properties, or over X%. out the

have -- in different the that we in that have we financing we're do in others protection because than of we're place. have like some So -- good

you the starts are multifamily Multifamily of now my XX- view low. a at or me give XX-year business. Let

of a of had we've in a new of new So the couple lot coming building stream. years, on lot supply last

peak the think multifamily is of is third quarter probably of right that the now, and the probably peak fourth completions. I quarter

is the toward low, where of Given couple and to pricing that we're or have going strong power. XX-year new to, in point again, a the time new absorbed, end at are been starts year next probably very going there's a once XX- be of supply

is that that will to strong. end hitting the supply or year, X probably months, So think toward to that's little the very of months on power do absorb next going new pricing the market. new when be supply the another think the takes very coming market, it there so again I XX be

property signed are that we sell of we some We That One time other to And of an NOI, attractive. significant upon just a that we months our changed the X.XX% a there has Colorado, seeing which here multifamily agreed pretty changed thing last buying are months. there trailing in properties sell in clearly, in again. couple agreement interest It's now recently cap while. for a rate transactions is to in -- here XX has is first found properties. one the based at

of and or kind in year that's next the of of kind so. what view my So expect multifamily we

Michael Zaremski

That's comprehensive. on And the just Property Insurance the lastly, specifically I'm and back operations kind pivoting to of and environment Casualty pricing. competitive

fairly points been kind we exposed lines. sequentially I meaningfully. that don't accelerated your going increases us the So I might see data market in Casualty, have I seeing running like comments social it assume on were we've that. I'm from know any of have to auto have commercial coming well Specialty from -- peers. kind rate pricing update. given if that feel the in an inflationary like in feels I I don't you Transportation, of your that's if from that Property of, the know quarters. been recent and know you your excess think,

you of how trending. there, auto I lines down of see just curious pricing was kind a Specialty inflationary If on some exposed sequentially can pricing the for the But Casualty social stuff. bit and environment too. little remind that's us commercial of like kind that the

Carl Lindner

Yes.

earlier about lines. year-to-date. believe good I third price particularly environment, the another the increase Commercial pricing XX% we I I got feel to that continued number quarter. favorable the social with I auto think inflation that in mentioned XX% liability, is exposed

both when So at sector, businesses have, the look quarter. that to excess then plus of number. some in same. much XX% is exposed more we the And increases year-to-date, lines in quarter-by-quarter. social the it's that public strong you pretty in nonprofit double-digit continue Things what liability a in those third the businesses are And businesses favorable vary our like good can lines,

the that that, good and about I favorable So pricing continued we're feel environment in.

Operator

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

Andrew Andersen

some on action was that had talk inflation and mentioned what development social from maybe please years You adverse Could about the magnitude? you lines. size

Brian Hertzman

Brian. is This

if I thing Casualty XX% XX.X% look in those kinds that's at kind our think ROEs or in we But overall, anchor is a the we really as development, you X of and over Comp, large our good focus ratios, first have there development still some offset results results and ratio that continued where is businesses. it out our months. social they're the the a Casualty the And Casualty high first of development noted, for quarter Workers' that number XXs on of overall you exposed businesses. combined Group just businesses, the to favorable good of on when to for third want favorable have activity by for combined so did of the think I but loss in the on years. has we inflation better, With favorable of

is good. but that the run. it it little some in happen, not overall, favorable feel And on about really we're XXs So not very bit general in things is from our more talking in come business the can't we because with a results the years, We're ROEs long with are recent reserves, that's just the know what development it's it in we the years. confident older our of but now good that reducing with

Andrew Andersen

of maybe drivers on the loss notable And talk just some Could maybe The there? improvement you ratio just segment. the some year-over-year. had Casualty sticking about underlying pretty

Brian Hertzman

Sure.

year in Sector targeted as in out targeted terms we or like prior the those business in have much adverse Human action have where seeing there's wise getting in ones in periods, ones pricing like things significant some results Workers' Specialty had and taken we're both and results development, we business and Services where of results particularly have that where and our those seeing books some So we appetite-wise, consistent and business, Public the improved markets conditions improvements been of markets there we're action rate the wise we Comp. would

Operator

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

Meyer Shields

inflation about if a requiring very that quick any question, reserve optimistic I'm a social one you auto, commercial Carl, reserve faced was that whether can. So adjustment? I Because wondering sounded line

Brian Hertzman

-- the you asking auto Are of adverse the liability? was development to related the if us any -- if commercial

Meyer Shields

Yes.

Brian Hertzman

in didn't really I of it What was we wasn't a our segment. in a Casualty, that commercial bit liability, businesses development little So some the our there of big say of but driver have Transportation adverse [indiscernible] numbers. program would in

Meyer Shields

Okay. That's helpful.

don't reassessing an exposure to after want an Second you suggest -- how to exposure like non-coastal talk of you again, catastrophes noncoastal about talked Carl this? to about question, But and overreaction. about think when I issue do Hurricane the Helene, sort

Carl Lindner

our catastrophe some inland you it. and Hugo always Even tighten I fault our learn Meyer, they Northridge, during you from be learn where of that always in or to can. try in where marine. when you think. the than in things do is we each we're it's every weren't think supposed like that going lender-placed I that the things loss think I has where is interesting things change always can even from California so career, then in had, my property again, what to up And kinds back property charging, and there lines -- you like believe more the event to the earthquakes they price of And

can you to. flood more You limit if exposure always want

approach levers pull customize of lots that side. to within your can kind of property there's the So you

have to sense we look changes in the at time we our event, try an Every me. and believe So numbers, we we approach. learn make and

Meyer Shields

for Perfect. if think rates. response longer Craig. question Okay. quick wondering of portfolio the allocation for in can X market I how like investment duration interest should about in higher is And throughout throw we asset was And today terms portfolio? It anticipating the or I looks the

Craig Lindner

see of of right long-duration or the didn't didn't duration portfolio buying Meyer, was short. we think We kept lots securities. value as lot it to time you the we have be know, intentionally the fairly of just a

going rate think interest of a a be to beneficiary higher we're I certainly environment.

have X.X% could in last X% reported X.X%, to call, about a say way quarter. yield they today. be reinvestment that which I'd the conference we over the rates talked the the On rate compares I with something it up moving

positioned very environment. we're a rate think well for higher I interest So

think coming with longer-term We're short-duration a would not. I we from are yields move here, we're if a but think not, in to are to position short-term certainly rates today, benefit rates much do position that. And down, rates our that are portfolio. very from pleased

Operator

Our question comes from of next Andersen again Andrew Jefferies.

Andrew Andersen

this crop about some Just we and profitability. $XX go metrics? the then business kind above-average year ratio of comment expect relative EPS If of of the both back the plan XX.X% thinking to and of those cats you similar including underlying a to still higher to you beginning combined about had assumptions, year, in XXXX. Do achieve

Carl Lindner

plan we're Well, perspective changing business now. not our our on right

I think more we still can fourth -- have the you quarter. in catastrophes

that Our it reasonable year Milton of then crop of good our into a point. down up to of business numbers a now year-end year-end, through matter average that of through in really claims, at claims, projected kind and model seeing thing of we losses end seem and in having this through And gets within just that. to kind kind and what it's kind of be And January. the actual of how claims, the

think have much and better overall sure. our it of just next time is profitability good report crop a how feel I we'll we for the

Operator

turn Investor closing time, this Relations no call President, the now would I showing questions. like Weidner, Diane to back At further I'm Vice to for remarks.

Diane P. Weidner

of to with great you talking again thanks good us a quarter, recap of today, we quarter you for all hope look I appreciate all rest forward have questions and your your day. as this results. you, joining morning and the and our We time next Thank third

Operator

does Thank you and participation now for today's disconnect. This your you conclude the may in program, conference.

American Financial (AFG) 6 Nov 242024 Q3 Earnings call transcript