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American Financial (AFG) Up 18.7% in a Year: More Room to Run?
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Shares of American Financial (AFG - Free Report) have gained 18.7% in a year compared with the industry's increase of 8%. The Zacks S&P 500 composite has risen 5.7% in the said time frame. With a market capitalization of $11.7 billion, the average volume of shares traded in the last three months was 0.2 million.
Image Source: Zacks Investment Research
The rally was largely driven by new business opportunities, acquisitions, higher retentions and prudent capital deployment.
This insurer has a solid track record of beating earnings estimates in the last six quarters.
Can AFG Retain the Momentum?
Riding on solid performances across Property and Transportation, Specialty Casualty, and Specialty Financial lines of business, the Property and Casualty Insurance business of American Financial should continue to gain.
Premium growth in the Property and Casualty Insurance segment should gain from new business opportunities, growth in the surplus lines and excess liability businesses, rate increases, and higher retention in the renewal business.
American Financial is actively involved in startups, small-to-medium-sized acquisitions, as well as product launches. The insurer acquired Verikai, an insurance technology company, in January 2022. AFG expects artificial intelligence and machine learning to continue to enhance its insurance operations.
The property and casualty insurer has a solid track record of increasing dividends for 17 straight years and has paid out 18 special dividends in 11 years. The robust operating profitability at the P&C segment, stellar investment performance and effective capital management should continue to support shareholders’ return.
American Financial’s trailing 12-month return on equity (ROE) was 17.6%, which expanded 520 basis points year over year. ROE reflects its efficiency in using its shareholders’ funds.
American Financial carries a Zacks Rank #2 (Buy) and has an impressive Value Score of B that reflects an attractive valuation of the stock. Back-tested results show that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best opportunities in the value investing space.
Net written premiums in the Specialty Property and Casualty Insurance segment are expected to be 8% to 12% higher than $5.6 billion reported in 2021.
AFG continues to expect net written premiums to grow 8% to 12% at Property & Transportation.
Net written premiums at Specialty Casualty are expected to grow 6% to 10%. Net written premiums at Specialty Financial Group are expected to grow 8% and 12%.
The P&C insurer expects 2022 combined ratio between 85% and 87% for the Specialty Property and Casualty Group. For Property and Transportation Group, it is expected to be 87% to 91%. For Specialty Casualty, the combined ratio is expected between 80% and 84%. American Financial expects continued strong renewal pricing in E&S, excess liability and several other longer-tail liability businesses and continued calendar year profitability in workers' compensation businesses overall. For Specialty Financial, the combined ratio is projected to be 84% to 88%.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.53%. In the past year, WRB has rallied 20.6%.
The Zacks Consensus Estimate for 2022 and 2023 earnings has moved 4.9% and 1.5% north, respectively, in the past 60 days. W.R. Berkley’s expected long-term earnings growth rate is pegged at 9%.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, United Fire has declined 21.8%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 30 days.
Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 35.84%. In the past year, Arch Capital has rallied 23.1%.
The Zacks Consensus Estimate for ACGL’s 2022 and 2023 earnings has moved 2.9% and 1.6% north, respectively, in the past seven days. Arch Capital’s expected long-term earnings growth rate is pegged at 10%.
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American Financial (AFG) Up 18.7% in a Year: More Room to Run?
Shares of American Financial (AFG - Free Report) have gained 18.7% in a year compared with the industry's increase of 8%. The Zacks S&P 500 composite has risen 5.7% in the said time frame. With a market capitalization of $11.7 billion, the average volume of shares traded in the last three months was 0.2 million.
Image Source: Zacks Investment Research
The rally was largely driven by new business opportunities, acquisitions, higher retentions and prudent capital deployment.
This insurer has a solid track record of beating earnings estimates in the last six quarters.
Can AFG Retain the Momentum?
Riding on solid performances across Property and Transportation, Specialty Casualty, and Specialty Financial lines of business, the Property and Casualty Insurance business of American Financial should continue to gain.
Premium growth in the Property and Casualty Insurance segment should gain from new business opportunities, growth in the surplus lines and excess liability businesses, rate increases, and higher retention in the renewal business.
American Financial is actively involved in startups, small-to-medium-sized acquisitions, as well as product launches. The insurer acquired Verikai, an insurance technology company, in January 2022. AFG expects artificial intelligence and machine learning to continue to enhance its insurance operations.
The property and casualty insurer has a solid track record of increasing dividends for 17 straight years and has paid out 18 special dividends in 11 years. The robust operating profitability at the P&C segment, stellar investment performance and effective capital management should continue to support shareholders’ return.
American Financial’s trailing 12-month return on equity (ROE) was 17.6%, which expanded 520 basis points year over year. ROE reflects its efficiency in using its shareholders’ funds.
American Financial carries a Zacks Rank #2 (Buy) and has an impressive Value Score of B that reflects an attractive valuation of the stock. Back-tested results show that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best opportunities in the value investing space.
Net written premiums in the Specialty Property and Casualty Insurance segment are expected to be 8% to 12% higher than $5.6 billion reported in 2021.
AFG continues to expect net written premiums to grow 8% to 12% at Property & Transportation.
Net written premiums at Specialty Casualty are expected to grow 6% to 10%. Net written premiums at Specialty Financial Group are expected to grow 8% and 12%.
The P&C insurer expects 2022 combined ratio between 85% and 87% for the Specialty Property and Casualty Group. For Property and Transportation Group, it is expected to be 87% to 91%. For Specialty Casualty, the combined ratio is expected between 80% and 84%. American Financial expects continued strong renewal pricing in E&S, excess liability and several other longer-tail liability businesses and continued calendar year profitability in workers' compensation businesses overall. For Specialty Financial, the combined ratio is projected to be 84% to 88%.
Other Stocks to Consider
Some other top-ranked insurers include W.R. Berkley (WRB - Free Report) , United Fire Group (UFCS - Free Report) and Arch Capital Group (ACGL - Free Report) . While W.R. Berkley and United Fire sport a Zacks Rank #1, Arch Capital carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.53%. In the past year, WRB has rallied 20.6%.
The Zacks Consensus Estimate for 2022 and 2023 earnings has moved 4.9% and 1.5% north, respectively, in the past 60 days. W.R. Berkley’s expected long-term earnings growth rate is pegged at 9%.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, United Fire has declined 21.8%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 30 days.
Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 35.84%. In the past year, Arch Capital has rallied 23.1%.
The Zacks Consensus Estimate for ACGL’s 2022 and 2023 earnings has moved 2.9% and 1.6% north, respectively, in the past seven days. Arch Capital’s expected long-term earnings growth rate is pegged at 10%.