We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
American Financial Q3 Earnings Miss on Higher Catastrophe Losses
Read MoreHide Full Article
American Financial Group, Inc. (AFG - Free Report) reported third-quarter 2024 net operating earnings per share of $2.31, which missed the Zacks Consensus Estimate by 7.9%. The bottom line decreased 5.7% year over year. The decrease was due to higher year-over-year catastrophe losses related primarily to Hurricane Helene and lower favorable prior-year reserve development in the Specialty Property and Casualty (P&C) insurance operations, partially offset by higher investment income.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
American Financial’s results reflected higher premiums, increased average renewal pricing across the P&C group and improved net investment income. Higher expenses and catastrophe losses were the offsets.
American Financial Group, Inc. Price, Consensus and EPS Surprise
Total revenues of $2.2 billion increased 10.4% year over year. The growth came on the back of higher P&C insurance net earned premiums and net investment income. The top line beat the Zacks Consensus Estimate by 10.7%.
Net investment income climbed 19% year over year to $200 million in the quarter under review. The figure was higher than our estimate of $164.7 million and beat the Zacks Consensus Estimate of $183 million.
Total cost and expenses increased 10% year over year to $2.1 billion due to higher P&C insurance losses and expenses and other expenses. The figure was higher than our estimate of $1.9 billion.
Segmental Update
The Specialty P&C Insurance segment generated $2.3 billion in net written premiums, which rose 14% year over year. The growth reflected additional premiums from the Crop Risk Services acquisition. Average renewal pricing across P&C Group, excluding workers’ compensation, was up approximately 8% in the third quarter and 7% overall.
Net written premiums in Property & Transportation Group increased 26% year over year to $1.1 billion in the quarter. The figure was higher than our estimate of $934.5 million.
Net written premiums at Specialty Casualty Group increased 4% year over year to $863 million. The figure was lower than our estimate of $868.3 million.
Further, net written premiums at Specialty Financial increased 9% year over year to $284 million. The figure was lower than our estimate of $327.5 million. Net written premiums at other divisions remained unchanged year over year at $66 million. The figure was lower than our estimate of $70.5 million.
The Specialty P&C Insurance segment’s underwriting profit decreased 18.2% year over year to $117 million in the quarter. The figure was lower than our estimate of $163.8 million.
Catastrophe losses were $90 million in the reported quarter, wider than the year-ago loss of $56 million. The losses primarily resulted from Hurricane Helene.
In the Property and Transportation Group, higher year-over-year underwriting profit in the agricultural businesses was more than offset by higher catastrophe losses. In the Specialty Casualty Group, higher underwriting profit in targeted markets businesses was more than offset by lower year-over-year underwriting profit in excess and surplus businesses and, to a lesser extent, workers’ compensation and executive liability businesses.
The combined ratio deteriorated 210 basis points (bps) year over year to 94.3% in the segment.
Financial Update
American Financial exited the third quarter with total cash and investments of $15.7 billion, which increased 3.1% from the 2023-end level. The figure is lower than our estimate of $16.3 billion.
As of Sept. 30, 2024, long-term debt totaled $1.5 billion, which remained unchanged from the level at 2023-end.
As of Sept. 30, 2024, the company’s book value per share, excluding accumulated other comprehensive income, was $57.71, up 5.5% from the 2023-end level.
Annualized return on equity came in at 15.2% for the third quarter, which contracted 50 bps year over year.
Prudent Capital Deployment
American Financial declared a special cash dividend of $4.00 per share in the third quarter. The dividend will be paid out on Nov. 26 to shareholders of record at the close of business as of Nov. 15, 2024. The aggregate amount of this special dividend will be approximately $335 million. With this special dividend, AFG has declared $50.00 per share in special dividends since the beginning of 2021, including $6.50 per share in 2024.
AXIS Capital Holdings Limited (AXS - Free Report) posted third-quarter 2024 operating income of $2.71 per share, beating the Zacks Consensus Estimate by 8.4%. The bottom line increased 16% year over year. Total operating revenues of $1.5 billion beat the Zacks Consensus Estimate by 0.4%. The top line rose 6.2% year over year on higher net investment income and higher premiums earned.
Net premiums written increased 27% to $1.2 billion, attributable to a 10% increase in the insurance segment and 189% in the reinsurance segment. Net investment income increased 33% year over year to $205 million. The Zacks Consensus Estimate was pegged at $179 million. Our estimate was $175 million. Total expenses in the quarter under review increased 13% year over year to $1.4 billion. Our estimate was pegged at $1.3 billion.
Chubb Limited (CB - Free Report) reported third-quarter 2024 core operating income of $5.72 per share, which outpaced the Zacks Consensus Estimate by 16%. The bottom line increased 15.6% year over year. Net premiums written improved 5.5% year over year to $13.8 billion in the quarter. Our estimate and the Zacks Consensus Estimate were both pegged at $14.3 billion.
Pre-tax net investment income was $1.5 billion, up 14.7% year over year. The figure matched both the Zacks Consensus Estimate as well as our estimate. Revenues of $15 billion missed the consensus estimate by 1.5% and improved 6.5% year over year. P&C underwriting income was $1.4 billion, up 11.7% year over year. The Zacks Consensus Estimate was pegged at $1.1 billion.
Kinsale Capital Group (KNSL - Free Report) delivered third-quarter 2024 net operating earnings of $4.20 per share, which outpaced the Zacks Consensus Estimate by 13.5%. The bottom line increased 26.9% year over year. Operating revenues jumped 33.1% year over year to $418 million. The growth can primarily be attributed to a rise in premiums, fee income, higher net investment income and other income. Revenues beat the consensus estimate by 4.2%.
Gross written premiums of $448.6 million rose 18.8% year over year. Our estimate was $475.1 million. Net written premiums climbed 18.9% year over year to $349.9 million in the quarter. Our estimate was pegged at $370.2 million. Net investment income increased 46.4% year over year to $39.6 million in the quarter and beat our estimate of $38.6 million. The Zacks Consensus Estimate was pegged at $37.7 million.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
American Financial Q3 Earnings Miss on Higher Catastrophe Losses
American Financial Group, Inc. (AFG - Free Report) reported third-quarter 2024 net operating earnings per share of $2.31, which missed the Zacks Consensus Estimate by 7.9%. The bottom line decreased 5.7% year over year. The decrease was due to higher year-over-year catastrophe losses related primarily to Hurricane Helene and lower favorable prior-year reserve development in the Specialty Property and Casualty (P&C) insurance operations, partially offset by higher investment income.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
American Financial’s results reflected higher premiums, increased average renewal pricing across the P&C group and improved net investment income. Higher expenses and catastrophe losses were the offsets.
American Financial Group, Inc. Price, Consensus and EPS Surprise
American Financial Group, Inc. price-consensus-eps-surprise-chart | American Financial Group, Inc. Quote
Behind the Headlines
Total revenues of $2.2 billion increased 10.4% year over year. The growth came on the back of higher P&C insurance net earned premiums and net investment income. The top line beat the Zacks Consensus Estimate by 10.7%.
Net investment income climbed 19% year over year to $200 million in the quarter under review. The figure was higher than our estimate of $164.7 million and beat the Zacks Consensus Estimate of $183 million.
Total cost and expenses increased 10% year over year to $2.1 billion due to higher P&C insurance losses and expenses and other expenses. The figure was higher than our estimate of $1.9 billion.
Segmental Update
The Specialty P&C Insurance segment generated $2.3 billion in net written premiums, which rose 14% year over year. The growth reflected additional premiums from the Crop Risk Services acquisition. Average renewal pricing across P&C Group, excluding workers’ compensation, was up approximately 8% in the third quarter and 7% overall.
Net written premiums in Property & Transportation Group increased 26% year over year to $1.1 billion in the quarter. The figure was higher than our estimate of $934.5 million.
Net written premiums at Specialty Casualty Group increased 4% year over year to $863 million. The figure was lower than our estimate of $868.3 million.
Further, net written premiums at Specialty Financial increased 9% year over year to $284 million. The figure was lower than our estimate of $327.5 million.
Net written premiums at other divisions remained unchanged year over year at $66 million. The figure was lower than our estimate of $70.5 million.
The Specialty P&C Insurance segment’s underwriting profit decreased 18.2% year over year to $117 million in the quarter. The figure was lower than our estimate of $163.8 million.
Catastrophe losses were $90 million in the reported quarter, wider than the year-ago loss of $56 million. The losses primarily resulted from Hurricane Helene.
In the Property and Transportation Group, higher year-over-year underwriting profit in the agricultural businesses was more than offset by higher catastrophe losses. In the Specialty Casualty Group, higher underwriting profit in targeted markets businesses was more than offset by lower year-over-year underwriting profit in excess and surplus businesses and, to a lesser extent, workers’ compensation and executive liability businesses.
The combined ratio deteriorated 210 basis points (bps) year over year to 94.3% in the segment.
Financial Update
American Financial exited the third quarter with total cash and investments of $15.7 billion, which increased 3.1% from the 2023-end level. The figure is lower than our estimate of $16.3 billion.
As of Sept. 30, 2024, long-term debt totaled $1.5 billion, which remained unchanged from the level at 2023-end.
As of Sept. 30, 2024, the company’s book value per share, excluding accumulated other comprehensive income, was $57.71, up 5.5% from the 2023-end level.
Annualized return on equity came in at 15.2% for the third quarter, which contracted 50 bps year over year.
Prudent Capital Deployment
American Financial declared a special cash dividend of $4.00 per share in the third quarter. The dividend will be paid out on Nov. 26 to shareholders of record at the close of business as of Nov. 15, 2024. The aggregate amount of this special dividend will be approximately $335 million. With this special dividend, AFG has declared $50.00 per share in special dividends since the beginning of 2021, including $6.50 per share in 2024.
Zacks Rank
American Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Property & Casualty Insurers
AXIS Capital Holdings Limited (AXS - Free Report) posted third-quarter 2024 operating income of $2.71 per share, beating the Zacks Consensus Estimate by 8.4%. The bottom line increased 16% year over year. Total operating revenues of $1.5 billion beat the Zacks Consensus Estimate by 0.4%. The top line rose 6.2% year over year on higher net investment income and higher premiums earned.
Net premiums written increased 27% to $1.2 billion, attributable to a 10% increase in the insurance segment and 189% in the reinsurance segment. Net investment income increased 33% year over year to $205 million. The Zacks Consensus Estimate was pegged at $179 million. Our estimate was $175 million. Total expenses in the quarter under review increased 13% year over year to $1.4 billion. Our estimate was pegged at $1.3 billion.
Chubb Limited (CB - Free Report) reported third-quarter 2024 core operating income of $5.72 per share, which outpaced the Zacks Consensus Estimate by 16%. The bottom line increased 15.6% year over year. Net premiums written improved 5.5% year over year to $13.8 billion in the quarter. Our estimate and the Zacks Consensus Estimate were both pegged at $14.3 billion.
Pre-tax net investment income was $1.5 billion, up 14.7% year over year. The figure matched both the Zacks Consensus Estimate as well as our estimate. Revenues of $15 billion missed the consensus estimate by 1.5% and improved 6.5% year over year. P&C underwriting income was $1.4 billion, up 11.7% year over year. The Zacks Consensus Estimate was pegged at $1.1 billion.
Kinsale Capital Group (KNSL - Free Report) delivered third-quarter 2024 net operating earnings of $4.20 per share, which outpaced the Zacks Consensus Estimate by 13.5%. The bottom line increased 26.9% year over year. Operating revenues jumped 33.1% year over year to $418 million. The growth can primarily be attributed to a rise in premiums, fee income, higher net investment income and other income. Revenues beat the consensus estimate by 4.2%.
Gross written premiums of $448.6 million rose 18.8% year over year. Our estimate was $475.1 million. Net written premiums climbed 18.9% year over year to $349.9 million in the quarter. Our estimate was pegged at $370.2 million. Net investment income increased 46.4% year over year to $39.6 million in the quarter and beat our estimate of $38.6 million. The Zacks Consensus Estimate was pegged at $37.7 million.