American Financial Group’s third quarter was marked by strong performance in its Specialty Property and Casualty insurance operations, with management emphasizing robust underwriting margins and stable investment income as key contributors. The company’s annualized core operating return on equity reached 19%, and management pointed to improved profitability across most insurance lines. Notably, a disciplined approach to underwriting and selective growth allowed American Financial Group to benefit from favorable pricing trends, especially in commercial auto liability and specialty casualty businesses. Co-CEO Carl Lindner highlighted, “Our compelling mix of Specialty Insurance businesses and disciplined operating philosophy continue to position us well for the future.”
Is now the time to buy AFG? Find out in our full research report (it’s free for active Edge members).
American Financial Group (AFG) Q3 CY2025 Highlights:
- Revenue: $2.20 billion vs analyst estimates of $2.17 billion (1.3% year-on-year decline, 1.8% beat)
- Adjusted EPS: $2.69 vs analyst estimates of $2.51 (7.2% beat)
- Adjusted Operating Income: $328 million (14.9% margin, 12.7% year-on-year growth)
- Market Capitalization: $11.86 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From American Financial Group’s Q3 Earnings Call
- Michael Zaremski (BMO Capital Markets) asked about the decision to favor special dividends over share buybacks this quarter. Co-CEO Craig Lindner explained that buybacks are pursued only when shares trade at a significant discount, and the company maintains flexibility for future repurchases.
- Michael Zaremski (BMO Capital Markets) questioned the sustainability of rate increases exceeding loss trends. Co-CEO Carl Lindner responded that the company’s business mix and benign workers’ compensation trends support this dynamic, even as industry peers see higher loss trends.
- Michael Zaremski (BMO Capital Markets) pressed on price and loss trends in social inflation-exposed lines. Lindner acknowledged some plateauing in lender-placed property pricing but emphasized continued discipline and rate increases in other specialty casualty areas.
- Andrew Andersen (Jefferies) sought insight into workers’ compensation pricing across geographies. Lindner noted positive trends in California and strategic comp business, but ongoing mid-single-digit declines in the Southeast.
- Meyer Shields (Keefe, Bruyette & Woods) queried whether timing of crop premium earnings influenced loss ratios. CFO Brian Hertzman clarified that seasonality affected the timing, but underlying transportation and marine loss ratios improved when crop impacts are excluded.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will focus on (1) the rebound in premium growth from new business start-ups and recovery in specialty lines, (2) sustained underwriting profitability amid evolving loss trends and social inflation exposure, and (3) evidence of improved investment yields as multifamily real estate supply tightens. Execution on capital deployment—whether through acquisitions, special dividends, or opportunistic buybacks—will also be a key indicator of management’s strategic flexibility.
American Financial Group currently trades at $142.25, up from $131.43 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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