AFG Q2 2023 Earnings Report
Key Takeaways
American Financial Group's Q2 2023 net earnings increased to $200 million ($2.34 per share) compared to $167 million ($1.96 per share) in Q2 2022. However, core net operating earnings decreased to $202 million ($2.38 per share) from $243 million ($2.85 per share) in the prior year, primarily due to elevated catastrophe losses and lower prior year reserve development in the Specialty P&C insurance operations. The company revised its full-year 2023 core net operating earnings guidance to $10.15 to $11.15 per share.
Net earnings per share were $2.34, including a $0.04 per share loss from after-tax non-core items.
Core net operating earnings per share were $2.38.
Annualized ROE was 17.9%, with a core operating ROE of 18.2%.
Net written premiums increased by 10% year-over-year.
AFG
AFG
Forward Guidance
AFG revised its full year 2023 core net operating earnings guidance to $10.15 to $11.15 per share.
Positive Outlook
- The higher interest rate environment contributed to meaningfully higher year-over-year investment income.
- The company is pleased with the performance of its alternative investment portfolio, where returns exceeded expectations during the quarter.
- New business opportunities contributed to double-digit growth in premiums during the quarter.
- A continued favorable pricing environment contributed to double-digit growth in premiums during the quarter.
- Payroll growth contributed to double-digit growth in premiums during the quarter.
Challenges Ahead
- Elevated catastrophe losses are expected to continue for the second half of the year.
- Lower profitability in the Specialty Casualty Group is expected to continue.
- Lower favorable prior year reserve development in workers’ compensation is expected to continue.
- The impact of social inflation on selected businesses is expected to continue.
- Overall 2023 calendar year combined ratio is now expected in the range of 89% to 91%, revised upward from previous guidance.