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Jun 30, 2020
AFG Q2 2020 Earnings Report
American Financial Group reported mixed results for Q2 2020. Net earnings were impacted by non-core items, while core operating earnings decreased due to alternative investment adjustments and COVID-19 related losses. The company increased its full-year core net operating earnings guidance, excluding alternative investments.
Key Takeaways
American Financial Group (AFG) reported net earnings attributable to shareholders of $177 million, or $1.97 per share, for the second quarter of 2020, compared to $210 million, or $2.31 per share, in the second quarter of 2019. Core net operating earnings were $95 million, or $1.05 per share, compared to $192 million, or $2.12 per share, in the prior year. The company increased its full-year 2020 core net operating earnings guidance, excluding the impact of alternative investments, to $6.60-$7.40 per share.
Net earnings per share were $1.97, including $0.92 per share in after-tax non-core items.
Core net operating earnings before the impact of alternative investments were $1.53 per share, including $0.75 per share in COVID-19 related losses.
Core net operating earnings were $1.05 per share, including $0.48 per share loss from alternative investments and $0.75 per share in COVID-19 related losses.
Overall Specialty P&C renewal rates were up 13%, excluding workers’ compensation.
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 provided full year 2020 core net operating earnings per share guidance excluding earnings or losses from alternative investments (marked-to-market through core operating earnings), due to the uncertainty of the implications of COVID-19 and the resulting volatility in the financial markets. AFG now expects its 2020 core net operating earnings per share excluding alternative investments to be in the range of $6.60 to $7.40 per share, an increase from our previous guidance of $6.45 to $7.25 per share.
Positive Outlook
- Overall Specialty P&C Group underwriting margins were excellent.
- Exceptionally strong renewal pricing is exceeding objectives.
- P&C pretax core operating earnings, excluding the impact of alternative investments, are expected to be in the range of $615 million to $675 million.
- Annuity core operating earnings, excluding earnings from alternative investments, are expected to be in the range of $300 million to $320 million.
- AFG has the ability to lower the crediting rates on $32 billion of annuity reserves by an average of 114 basis points.
Challenges Ahead
- The continued negative impact of low interest rates.
- A decline in property and casualty premiums.
- Renewal rate actions taken on annuity policies near or after the end of their surrender charge period.
- The impact of COVID-19 on AFG’s results of operations.
- Uncertainties associated with loss exposures resulting from COVID-19.
Revenue & Expenses
Visualization of income flow from segment revenue to net income