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Sep 30, 2020
AFG Q3 2020 Earnings Report
American Financial Group reported third quarter results with increased earnings and a strong ROE.
Key Takeaways
American Financial Group, Inc. reported a strong third quarter in 2020, with net earnings attributable to shareholders of $164 million, or $1.86 per share. Core net operating earnings were $217 million, or $2.45 per share. The company's annualized return on equity was 12.9%, and the annualized core operating ROE was 17.1%.
Net earnings per share of $1.86; includes ($0.59) per share in after-tax non-core items
Core net operating earnings of $2.45 per share; includes $0.61 per share in earnings from alternative investments
Third quarter annualized ROE of 12.9%; annualized core operating ROE of 17.1%
Full year 2020 core net operating earnings guidance excluding the impact of alternative investments $7.00 - $7.50 per share, an increase from our previous guidance of $6.60 - $7.40 per share
AFG
AFG
Forward Guidance
AFG has 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, particularly in the first six months of 2020.
Positive Outlook
- AFG now expects its 2020 core net operating earnings per share excluding alternative investments to be in the range of $7.00 to $7.50 per share, an increase from our previous guidance of $6.60 to $7.40 per share.
- P&C pretax core operating earnings, excluding the impact of alternative investments, in the range of $650 million to $690 million, an increase from our previous guidance of $615 million to $675 million.
- We continue to expect an overall 2020 calendar year combined ratio in the range of 92% to 94%.
- 2020 gross annuity premiums will be between $3.7 billion and $4.0 billion, and will result in growth in average assets and reserves of 5% to 7% in 2020.
- Pretax Annuity core operating earnings for the full year of 2020, excluding earnings from alternative investments, are expected to be in the range of $310 million to $325 million, an increase over our most recent guidance of $300 million to $320 million.
Challenges Ahead
- 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
- Our current estimates of the impact of COVID-19 on AFG’s results of operations.
- Net written premiums to be down 5% to 9% when compared to the $5.3 billion reported in 2019, due primarily to the run-off of Neon.