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Mar 31, 2020
AFG Q1 2020 Earnings Report
American Financial Group reported a net loss for Q1 2020, impacted by non-core items, while core operating earnings decreased slightly year-over-year.
Key Takeaways
American Financial Group, Inc. reported a net loss attributable to shareholders of $301 million ($3.34 per share loss) for the first quarter of 2020, compared to earnings of $329 million ($3.63 per share) for the first quarter of 2019. Core net operating earnings were $171 million ($1.88 per share) for the first quarter of 2020, compared to $184 million ($2.02 per share) in the first quarter of 2019. The results were impacted by after-tax non-core items and adjustments to investments marked to market.
Net loss per share was $3.34, including a $5.22 per share loss in after-tax non-core items.
Core net operating earnings were $1.88 per share, including a $0.08 per share loss from investments marked-to-market through core operating earnings.
First quarter annualized ROE was (23.1%), while core operating ROE was 13.2%.
Parent company cash was $485 million post April debt offering; excess capital of $610 million at March 31, 2020.
Revenue by Segment
Forward Guidance
AFG continues to expect its 2020 core net operating earnings per share excluding MTM investments to be in the range of $6.45 to $7.25.
Positive Outlook
- Recent opportunistic purchases of fixed income securities will have a positive impact on core operating earnings.
- More aggressive renewal rate actions on annuity policies near or after the end of their surrender charge period will have a positive impact on core operating earnings.
- Specialty P&C Group performed exceptionally well during the first quarter, with excellent underwriting margins.
- Healthy year-over-year growth in net written premiums.
- Very strong renewal pricing that is exceeding objectives.
Challenges Ahead
- Lower short-term interest rates will have a negative impact on the Annuity Segment’s approximately $4.1 billion net investment in cash and floating rate securities.
- Decline in property and casualty premiums as compared to original expectations.
- COVID-19 is expected to have a much bigger impact on sales in the second quarter, and possibly beyond.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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