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Jun 30, 2022
AFG Q2 2022 Earnings Report
American Financial Group reported strong Q2 2022 results with increased core net operating earnings and a record underwriting profit in the Specialty P&C segment.
Key Takeaways
American Financial Group (AFG) reported a net income of $167 million ($1.96 per share) for Q2 2022, compared to $1.0 billion ($11.70 per share) in Q2 2021. Core net operating earnings were $243 million ($2.85 per share), up from $205 million ($2.39 per share) in the prior year. The Specialty P&C operations achieved a record underwriting profit, and the company increased its full-year core net operating earnings guidance.
Net earnings per share were $1.96, including a negative impact of $0.89 from after-tax non-core items.
Core net operating earnings per share increased by 19% year-over-year to $2.85.
The annualized return on equity was 14.3%, with a core operating ROE of 20.7%.
Full-year 2022 core net operating earnings guidance was raised to $10.75—$11.75 per share.
AFG
AFG
AFG Revenue by Segment
Revenue by Segment
P&C Insurance Net Earned Premiums Revenue
CapyFin.comNet 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 in 2022 to be in the range of $10.75 to $11.75 per share. The guidance reflects higher expected underwriting profit in Specialty Casualty and Specialty Financial Groups, the current interest rate environment, and an overall annual yield of 10%-12% on alternative investments for the full year.
Positive Outlook
- Higher expected underwriting profit in Specialty Casualty and Specialty Financial Groups.
- Impact of the current interest rate environment on investment income.
- Overall annual yield of 10%-12% on alternative investments for the full year.
- Market remains firm throughout 2022, allowing AFG to act on business opportunities.
- Expect net written premiums to be 9% to 13% higher than the $5.6 billion reported in 2021.
Challenges Ahead
- Minimal income from alternative investments in the second half of 2022.
- Continued strong performance of multi-family housing investments will offset weaker performance of traditional private equity investments.
- Guidance continues to reflect an average crop year.
- Core earnings per share guidance excludes non-core items such as realized gains and losses.
- Other significant items that are not able to be estimated with reasonable precision.
Revenue & Expenses
Visualization of income flow from segment revenue to net income