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Mar 31, 2022
AFG Q1 2022 Earnings Report
American Financial Group, Inc. reported strong first-quarter results, driven by record core net operating earnings and excellent underwriting profitability in the Specialty P&C businesses.
Key Takeaways
American Financial Group, Inc. (AFG) reported a strong first quarter in 2022, with core net operating earnings of $303 million, or $3.56 per share, a 50% increase from the prior year period. The company's Specialty P&C businesses achieved outstanding underwriting margins, and net investment income increased substantially due to the strong performance of AFG's alternative investment portfolio. AFG increased its full-year 2022 core net operating earnings guidance to $10.50 - $11.50 per share.
Core net operating earnings per share increased by 50% year-over-year to $3.56.
Specialty P&C businesses produced outstanding underwriting margins with a combined ratio of 84.0%.
Net investment income increased substantially due to the strong performance of the alternative investment portfolio.
Full-year 2022 core net operating earnings guidance increased to $10.50 - $11.50 per share.
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.comOther Income Revenue
CapyFin.com Forward Guidance
AFG expects core net operating earnings per share in 2022 to be in the range of $10.50 to $11.50. This guidance reflects higher than previously expected net investment income due to the deployment of cash in a rising interest rate environment, a higher return on AFG’s cash and floating rate securities, and the strong performance of our alternative asset portfolio in the first quarter of 2022.
Positive Outlook
- Strong underwriting margins in Specialty P&C businesses.
- Favorable positioning of investment portfolio in an increasing interest rate environment.
- Continued strong performance of the alternative investment portfolio.
- Market expected to remain firm throughout 2022.
- Expect net written premiums to be up 8% to 12% when compared to the $5.6 billion reported in 2021.
Challenges Ahead
- Excludes non-core items such as realized gains and losses.
- Expects after-tax non-core losses of approximately $5 million ($0.06 per share loss) during the second quarter of 2022 related to the make whole premium and other related expenses.
- Guidance continues to reflect an average crop year.
- Potential impact of financial, political, and economic conditions.
- Potential impact of levels of natural catastrophes and severe weather.
Revenue & Expenses
Visualization of income flow from segment revenue to net income