Cincinnati, OH – American Financial Group, Inc. (NYSE: AFG) recently reported 2023 third quarter net earnings of $177 million ($2.09 per share) compared to $165 million ($1.93 per share) in the 2022 third quarter. Net earnings for the 2023 third quarter included net after-tax non-core items that reduced net income by $31 million ($0.36 per share loss). By comparison, net earnings for the 2022 third quarter included after-tax non-core items that reduced net income by $27 million ($0.31 per share loss). Other details may be found in the table on the following page.
Core net operating earnings were $208 million ($2.45 per share) for the 2023 third quarter, compared to $192 million ($2.24 per share) in the 2022 third quarter. The increase was due primarily to higher year-over-year net investment income, which was partially offset by lower underwriting profit in the Specialty Property and Casualty (“P&C”) insurance operations. Additional details for the 2023 and 2022 third quarters may be found in the table below. Core net operating earnings for the third quarters of 2023 and 2022 generated annualized returns on equity of 18.3% and 17.1%, respectively.
AFG’s book value per share was $47.31 at September 30, 2023. During the third quarter of 2023, AFG paid cash dividends of $0.63 per share and repurchased $86 million of its common stock at an average price per share of $112.28. For the three months ended September 30, 2023, AFG’s growth in book value per share plus dividends was 1.9% and year to date, growth in book value per share plus dividends was 11.9%. Annualized return on equity was 15.7% and 14.7% for the third quarters of 2023 and 2022, respectively.
Adjusted book value per share, which excludes unrealized gains (losses) related to fixed maturities, was $53.90 at September 30, 2023. For the three months ended September 30, 2023, AFG’s growth in adjusted book value per share plus dividends was 3.1%. Year to date, growth in adjusted book value per share plus dividends was 11.3%.
AFG’s net earnings, determined in accordance with U.S. generally accepted accounting principles (GAAP), include certain items that may not be indicative of its ongoing core operations. The table below identifies such items and reconciles net earnings to core net operating earnings, a non-GAAP financial measure. AFG believes that its core net operating earnings provides management, financial analysts, ratings agencies, and investors with an understanding of the results from the ongoing operations of the Company by excluding the impact of net realized gains and losses and other items that are not necessarily indicative of operating trends. AFG’s management uses core net operating earnings to evaluate financial performance against historical results because it believes this provides a more comparable measure of its continuing business. Core net operating earnings is also used by AFG’s management as a basis for strategic planning and forecasting.
The Company also announced that its Board of Directors has declared a special cash dividend of $1.50 per share of American Financial Group common stock. The dividend is payable on November 22, 2023, to shareholders of record on November 13, 2023. The aggregate amount of this special dividend will be approximately $126 million. This special dividend is in addition to the Company’s regular quarterly cash dividend of $0.71 per share most recently paid on October 25, 2023. With this special dividend, the Company has declared $5.50 per share in special dividends in 2023.
S. Craig Lindner and Carl H. Lindner III, AFG’s Co-Chief Executive Officers, issued this statement: “We are pleased with AFG’s performance during the third quarter. We achieved an annualized core operating return of over 18% in the quarter, with strong underwriting results despite elevated catastrophe losses during the quarter. These strong results, coupled with meaningfully higher year-over-year investment income and effective capital management, enable us to continue to create value for our shareholders.
“AFG had approximately $660 million of excess capital at September 30, 2023, which includes parent company cash and investments of $364 million. 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 excess capital will be deployed into AFG’s core businesses as we identify 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.”
Craig and Carl Lindner continued, “Based on the results reported in the first nine months of the year and expectations for the remainder of the year, we continue to expect AFG’s 2023 core net operating earnings to be in the range of $10.15 to $11.15 per share. Our guidance reflects our updated expectations of a below average crop year, offset by higher-than-previously expected net investment income. At the midpoint of the range, our revised guidance would produce a core return on equity of approximately 20%.”
AFG’s core earnings per share guidance excludes non-core items such as realized gains and losses and other significant items that are not able to be estimated with reasonable precision, or that may not be indicative of ongoing operations.
The complete results release is available here: American Financial Group, Inc. Announces Third Quarter 2023 Results, Declares Special Dividend
Source: AFG Inc