American Financial Group, Inc. (AFG) has reported a net income of $242 million for the first quarter of 2024, reflecting an increase from $212 million reported in Q1’23.
In Q1, AFG’s net earnings included after-tax non-core net realised gains on securities totaling $11 million. In contrast, the first quarter of 2023 saw after-tax non-core net realised losses on securities of $37 million, along with a $2 million gain on debt retirement.
Core net operating earnings declined to $231 million for Q1’24, down from $247 million in the previous year. AFG attributes this decrease to lower returns in its alternative investment portfolio compared to the strong performance of the same portfolio in the prior year period.
The Specialty Property & Casualty (P&C) insurance operations generated an underwriting profit of $154 million in Q1’24, slightly lower than the $155 million reported in the previous year.
It also reported a robust 90.1% combined ratio for Q1 2024, which is 0.9 points higher than the 89.2% reported in the first quarter of 2023. This includes 2.3 points related to catastrophe losses and 3.3 points attributed to favourable prior year reserve development.
Furthermore, both gross and net written premiums experienced an 8% increase in Q1.
S. Craig Lindner and Carl H. Lindner III, AFG’s Co-Chief Executive Officers, commented, “We are pleased to report a first quarter annualised core operating return on equity of 20% and year-over-year growth in net written premiums of 8%.
“In addition to strong underwriting margins in our specialty P&C insurance businesses, higher interest rates increased net investment income, excluding alternatives.
“We continue to be pleased with the performance of our alternative investment portfolio, where returns exceeded our expectations during the quarter. Our entrepreneurial, opportunistic culture and disciplined operating philosophy continue to serve us well as we start the year.”
Messrs. Lindner added, “AFG continued to have significant excess capital at March 31, 2024. Returning capital to shareholders in the form of regular and special cash dividends and through opportunistic share repurchases is an important and effective component of our capital management strategy.”
In addition, our capital will be deployed into AFG’s core businesses as we identify the potential for healthy, profitable organic growth, and opportunities to expand our specialty niche businesses through acquisitions and start-ups that meet our target return thresholds.”
