Monday after the bell, American Financial Group, Inc. (AFG) reported a sharp increase in profit for the third quarter, primarily due to realized gains from investment compared to a huge loss from investment in the year-ago quarter. Earnings for the quarter were above analysts' consensus. The company also raised its full year 2009 core earnings guidance.
American Financial profit surged to $127 million or $1.09 per share from $21 million or $0.18 per share in the year-ago period due to realized investment gains of $4 million this quarter, compared to realized investment losses of $150 million in the year-ago quarter.
Core net operating earnings went up 8% to $124 million from $115 million in the prior-year period due to improved underwriting results in the specialty property and casualty insurance or P&C operations, said the company. On a per share basis, core earnings increased to $1.07 from $0.98 in the year-earlier quarter. Analysts polled by Thomson Reuters expected earnings of $0.92 for the quarter. Analysts' estimates typically exclude one-time items.
The increase in earnings reflects improved underwriting results in the specialty property and casualty insurance operations.
AFG's gross written premiums declined by 16% to $1.36 billion from $1.62 billion, while net written premiums went down by 35% to $620 million from $959 million in the year-ago period due to increased cessions under crop reinsurance agreements.
Company's investment income went up to $301 million from $283 million in the year-ago period and AFG's shareholders' equity grew by $1.2 billion since 2008.
Total income for the quarter was $1.09 billion, compared to $1.17 billion in the same period last year.
Segment-wise, P&C specialty insurance operations generated an underwriting profit of $108 million, up by $36 million from the year-ago period. The Property and Transportation group reported an underwriting profit of $46 million, up by $34 million from the year-ago quarter.
The Specialty Casualty group reported an underwriting profit of $30 million, lower by $17 million from the year-earlier quarter, while The Specialty Financial group reported underwriting income of $29 million for the quarter, compared to a loss of $2 million in the year-ago period. Run-off RVI operations recorded underwriting profit of $30 million due to favourable trends in used car sales, while Annuity and Supplemental Insurance Group generated earnings of $46 million; lower than the year-ago period.
For the nine-month period, net earnings went up to $358 million or $3.07 per share from $157 million or $1.34 per share in the year-ago period. The results include realized losses of $14 million for the first nine months of 2009 and realized losses of $187 million for comparable year-ago period. Core net operating earnings were $372 million or $3.19 per share, compared with $354 million or $3.03 per share in the year-ago period.
Looking forward, the company has increased its core net operating earnings guidance for the full year to $4.05 - $4.25 per share, up from earlier guidance in the range of $3.80 - $4.10 per share. The company expects its core earnings in 2010 to be in the range of $3.10 to $3.50 per share. Analysts expect full year earnings of $3.95 per share for 2009 and $3.78 for 2010.
AFG will record a fourth quarter after-tax gain of approximately $50 million on the sale of a portion of its common stock investment in Verisk Analytics, Inc. (VRSK), which went public in an IPO transaction earlier this month.
The company has also approved a 6% increase in the company's annual dividend for 2010 from $0.52 to $0.55 per share of common stock. The increased dividend, when declared, will be paid on a quarterly basis of $0.1375 per share of common stock.
AFG closed Monday's regular trading session at $25.42, down $0.77 on the NYSE.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.