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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.
AFG
AFG
AFG Revenue by Segment
Revenue by Segment
Net Investment Income Revenue
CapyFin.comRealized Gains on Securities Revenue
CapyFin.comManaged Investment Entities: Investment Income Revenue
CapyFin.comManaged Investment Entities: Gains on FV Changes of Assets/Liabilities Revenue
CapyFin.com 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.
- Net written premiums are expected to be down 8% to 14% when compared to the $5.3 billion reported in 2019, primarily due to the run-off of Neon.
- Uncertainty of the implications of COVID-19 and the resulting volatility in the financial markets.
Revenue & Expenses
Visualization of income flow from segment revenue to net income