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Why Is American Financial (AFG) Down 2.6% Since Last Earnings Report?
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It has been about a month since the last earnings report for American Financial Group (AFG - Free Report) . Shares have lost about 2.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is American Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.
American Financial Q3 Earnings Beat on Higher Underwriting Show
American Financial Group, Inc. reported third-quarter 2025 net operating earnings per share of $2.69, which beat the Zacks Consensus Estimate by 14.5%. The bottom line increased 16.4% year over year. The increase was due to higher year-over-year underwriting profit and higher net investment income. American Financial’s results reflected increased average renewal pricing across the P&C group, lower catastrophe losses and improved net investment income, and lower expenses, offset by lower premiums.
Behind the Headlines
Total revenues of $2.2 billion decreased 1.4% year over year. The decline was due to lower P&C insurance net earned premiums. However, the top line beat the Zacks Consensus Estimate by 8.8%. Net investment income climbed 2.5% year over year to $205 million in the quarter under review. The figure was higher than our estimate of $193.2 million and beat the Zacks Consensus Estimate of $191 million. Total cost and expenses decreased 3.6% year over year to $2.1 billion due to lower losses & loss adjustment expenses, and expenses of managed investment entities. The figure was higher than our estimate of $1.9 billion.
Segmental Update
The Specialty P&C Insurance segment generated $2.2 billion in net written premiums, which declined 4% year over year. Average renewal pricing across the entire P&C Group was up around 5% in the reported quarter, both including and excluding workers’ compensation businesses. Net written premiums in Property & Transportation Group decreased 9% year over year to $1 billion in the quarter. The figure was higher than our estimate of $939.8 million.
Net written premiums at Specialty Casualty Group decreased 0.3% year over year to $914 million. The figure was higher than our estimate of $904.1 million. Further, net written premiums at Specialty Financial increased 1% year over year to $287 million. The figure was higher than our estimate of $286.8 million.
The Specialty P&C Insurance segment’s underwriting profit increased 19% year over year to $139 million in the quarter. Higher underwriting profit in the Property and Transportation, and Specialty Financial Groups was partially offset by lower underwriting profit in the Specialty Casualty Group. The figure was higher than our estimate of $100.3 million. Pre-tax core operating earnings before income taxes of the P&C Insurance segment of $328 million in the third quarter increased 12.7% year over year.
Catastrophe losses were $23 million in the reported quarter, narrower than the year-ago loss of $90 million. In the Property and Transportation Group, higher year-over-year underwriting profit was primarily due to lower catastrophe losses. In the Specialty Casualty Group, higher underwriting profit in executive liability business was more than offset by lower year-over-year underwriting profit in some of the social inflation-exposed businesses and, to a lesser extent, our mergers & acquisitions and workers’ compensation businesses.
In the Specialty Financial Group, higher year-over-year underwriting profit was primarily due to improved results in the financial institutions business and higher profitability in surety and fidelity businesses. The combined ratio improved 130 basis points (bps) year over year to 93% in the segment. The results benefited from favorable prior-year reserve development.
Financial Update
American Financial exited the third quarter with total cash and investments of $16.7 billion, which increased 5.7% from the 2024-end level. The figure is higher than our estimate of $16.4 billion. As of Sept. 30, 2025, long-term debt totaled $1.8 billion, which increased 23.4% from the level at 2024-end. As of Sept. 30, 2025, the company’s book value per share, excluding accumulated other comprehensive income (AOCI), was $57.59, up 2.8% from the 2024-end level. Annualized return on equity came in at 18.2% for the third quarter, which expanded 300 bps year over year.
Prudent Capital Deployment
American Financial declared a special cash dividend of $2.00 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. 17, 2025. The aggregate amount of this special dividend will be approximately $167 million. With this special dividend, AFG has declared $54.00 per share in special dividends since the beginning of 2021. This special dividend is in addition to AFG’s regular quarterly cash dividend of 88 cents per share, most recently paid on Oct. 24, 2025.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in fresh estimates.
The consensus estimate has shifted 5.2% due to these changes.
VGM Scores
Currently, American Financial has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock has a score of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, American Financial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
American Financial is part of the Zacks Insurance - Property and Casualty industry. Over the past month, Berkshire Hathaway B (BRK.B - Free Report) , a stock from the same industry, has gained 3%. The company reported its results for the quarter ended September 2025 more than a month ago.
Berkshire Hathaway B reported revenues of $94.97 billion in the last reported quarter, representing a year-over-year change of +2.1%. EPS of $6.26 for the same period compares with $4.68 a year ago.
Berkshire Hathaway B is expected to post earnings of $4.89 per share for the current quarter, representing a year-over-year change of -27.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -31.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Berkshire Hathaway B. Also, the stock has a VGM Score of F.
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Why Is American Financial (AFG) Down 2.6% Since Last Earnings Report?
It has been about a month since the last earnings report for American Financial Group (AFG - Free Report) . Shares have lost about 2.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is American Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.
American Financial Q3 Earnings Beat on Higher Underwriting Show
American Financial Group, Inc. reported third-quarter 2025 net operating earnings per share of $2.69, which beat the Zacks Consensus Estimate by 14.5%. The bottom line increased 16.4% year over year. The increase was due to higher year-over-year underwriting profit and higher net investment income.
American Financial’s results reflected increased average renewal pricing across the P&C group, lower catastrophe losses and improved net investment income, and lower expenses, offset by lower premiums.
Behind the Headlines
Total revenues of $2.2 billion decreased 1.4% year over year. The decline was due to lower P&C insurance net earned premiums. However, the top line beat the Zacks Consensus Estimate by 8.8%. Net investment income climbed 2.5% year over year to $205 million in the quarter under review. The figure was higher than our estimate of $193.2 million and beat the Zacks Consensus Estimate of $191 million. Total cost and expenses decreased 3.6% year over year to $2.1 billion due to lower losses & loss adjustment expenses, and expenses of managed investment entities. The figure was higher than our estimate of $1.9 billion.
Segmental Update
The Specialty P&C Insurance segment generated $2.2 billion in net written premiums, which declined 4% year over year. Average renewal pricing across the entire P&C Group was up around 5% in the reported quarter, both including and excluding workers’ compensation businesses. Net written premiums in Property & Transportation Group decreased 9% year over year to $1 billion in the quarter. The figure was higher than our estimate of $939.8 million.
Net written premiums at Specialty Casualty Group decreased 0.3% year over year to $914 million. The figure was higher than our estimate of $904.1 million.
Further, net written premiums at Specialty Financial increased 1% year over year to $287 million. The figure was higher than our estimate of $286.8 million.
The Specialty P&C Insurance segment’s underwriting profit increased 19% year over year to $139 million in the quarter. Higher underwriting profit in the Property and Transportation, and Specialty Financial Groups was partially offset by lower underwriting profit in the Specialty Casualty Group. The figure was higher than our estimate of $100.3 million. Pre-tax core operating earnings before income taxes of the P&C Insurance segment of $328 million in the third quarter increased 12.7% year over year.
Catastrophe losses were $23 million in the reported quarter, narrower than the year-ago loss of $90 million. In the Property and Transportation Group, higher year-over-year underwriting profit was primarily due to lower catastrophe losses.
In the Specialty Casualty Group, higher underwriting profit in executive liability business was more than offset by lower year-over-year underwriting profit in some of the social inflation-exposed businesses and, to a lesser extent, our mergers & acquisitions and workers’ compensation businesses.
In the Specialty Financial Group, higher year-over-year underwriting profit was primarily due to improved results in the financial institutions business and higher profitability in surety and fidelity businesses. The combined ratio improved 130 basis points (bps) year over year to 93% in the segment. The results benefited from favorable prior-year reserve development.
Financial Update
American Financial exited the third quarter with total cash and investments of $16.7 billion, which increased 5.7% from the 2024-end level. The figure is higher than our estimate of $16.4 billion. As of Sept. 30, 2025, long-term debt totaled $1.8 billion, which increased 23.4% from the level at 2024-end. As of Sept. 30, 2025, the company’s book value per share, excluding accumulated other comprehensive income (AOCI), was $57.59, up 2.8% from the 2024-end level. Annualized return on equity came in at 18.2% for the third quarter, which expanded 300 bps year over year.
Prudent Capital Deployment
American Financial declared a special cash dividend of $2.00 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. 17, 2025. The aggregate amount of this special dividend will be approximately $167 million. With this special dividend, AFG has declared $54.00 per share in special dividends since the beginning of 2021. This special dividend is in addition to AFG’s regular quarterly cash dividend of 88 cents per share, most recently paid on Oct. 24, 2025.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in fresh estimates.
The consensus estimate has shifted 5.2% due to these changes.
VGM Scores
Currently, American Financial has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock has a score of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, American Financial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
American Financial is part of the Zacks Insurance - Property and Casualty industry. Over the past month, Berkshire Hathaway B (BRK.B - Free Report) , a stock from the same industry, has gained 3%. The company reported its results for the quarter ended September 2025 more than a month ago.
Berkshire Hathaway B reported revenues of $94.97 billion in the last reported quarter, representing a year-over-year change of +2.1%. EPS of $6.26 for the same period compares with $4.68 a year ago.
Berkshire Hathaway B is expected to post earnings of $4.89 per share for the current quarter, representing a year-over-year change of -27.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -31.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Berkshire Hathaway B. Also, the stock has a VGM Score of F.