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American Financial Beats on Q4 Earnings, Declares Special Dividend
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Key Takeaways
P&C underwriting profit soared 41% to $287M, driven by Property & Transportation.
AFG returned $707M to owners in 2025 and declared a fresh $1.50 special dividend.
AFG targets $11.00 EPS and 18% ROE, with 3-5% premium growth expected next year.
American Financial Group, Inc. (AFG - Free Report) reported fourth-quarter 2025 net operating earnings per share of $3.65, which beat the Zacks Consensus Estimate by 14.8%. The bottom line increased 17% year over year on underwriting income.
AFG’s robust fourth-quarter earnings were driven by strong underwriting profit, led primarily by the property and transportation segment. The bottom line also benefited from minimal catastrophe impact. These gains were partially offset by lower returns in the alternative investments portfolio and lower investment income.
American Financial Group, Inc. Price, Consensus and EPS Surprise
Total revenues of $2 billion decreased 2.7% year over year. The decline was due to lower net investment income. The top line also missed the Zacks Consensus Estimate by 1.4%.
Net earned premiums declined 2.4% year over to $1.81 billion. The figure marginally missed the Zacks Consensus Estimate of $1.82 billion and our estimate of $1.83 billion.
Net investment income declined 5.7% year over year to $183 million in the quarter under review. The figure was lower than our estimate of $192 million and missed the Zacks Consensus Estimate of $196 million.
Total costs and expenses decreased 7.9% year over year to $1.7 billion due to lower losses & loss adjustment expenses and expenses of managed investment entities. The figure was lower than our estimate of $1.8 billion.
Segmental Update
The Specialty P&C Insurance segment generated $1.4 billion in net written premiums, which declined 1% year over year. Net written premiums in the Property & Transportation Group decreased 2% year over year to $398 million in the quarter. The figure was lower than our estimate of $421.2 million.
Net written premiums at the Specialty Casualty Group increased 3% year over year to $796 million. The figure was higher than our estimate of $758 million. Further, net written premiums at Specialty FinancialGroup decreased 10% year over year to $250 million. The figure was lower than our estimate of $291.8 million.
The Specialty P&C Insurance segment’s underwriting profit increased 41% year over year to $287 million in the quarter. Higher underwriting profit in Property and Transportation Group was partially offset by lower year-over-year underwriting profit in Specialty Casualty and Specialty FinancialGroups. The figure was higher than our estimate of $178.8 million. Pre-tax core operating earnings before income taxes of the P&C Insurance segment of $440 million increased 16.4% year over year.
Catastrophe losses totaled $4 million in the reported quarter, narrower than the year-ago loss of $21 million. In the Property and Transportation Group, higher year-over-year underwriting profit can be attributed to lower catastrophe losses.
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 current combined ratio of 83.0% was 230 basis points higher than the year-ago figure of 80.7%. The results benefited from favorable prior-year reserve development.
Full-Year Highlights
Net operating EPS was $10.29, down 4.3% year over year. Revenues decreased 1.8% year over year to $8.3 billion. Net premiums written remained flat year over year at $7.1 billion. The combined ratio improved 20 bps to 91%.
Financial Update
American Financial exited 2025 with total cash and investments of $17.2 billion, which increased 8.4% from the 2024-end level. Long-term debt rose to $1.82 billion in 2025, reflecting an increase of 23.4% from the 2024-end level.
As of Dec. 31, 2025, the company’s book value per share, excluding accumulated other comprehensive income (AOCI), was $58.38 compared with $56.03 a year ago. Annualized return on equity was 17.8% for the full year, down 120 bps from the prior-year level.
Prudent Capital Deployment
American Financial returned $707 million to shareholders, including $334 million in special dividends and $99 million in share repurchases. AFG also declared a $1.50 per share special dividend, payable on Feb. 25, 2026.
2026 Expectations
AFG projects core operating EPS of $11 and a core operating ROE, excluding AOCI, of approximately 18%. Net written premiums are expected to grow 3-5% while the combined ratio is estimated to be 92.5%.
AXIS Capital Holdings Limited (AXS - Free Report) reported fourth-quarter 2025 operating income of $3.25 per share, which outpaced the Zacks Consensus Estimate by 9.4% and rose 9.4% year over year.
Total operating revenues of $1.7 billion beat the Zacks Consensus Estimate by 5.2%. The top line rose nearly 9% year over year on higher premiums earned. Net premiums written rose 13% to $1.4 billion, with an increase of 14% in the Insurance segment, and growth of 5% in the Reinsurance segment.
Selective Insurance Group (SIGI - Free Report) reported fourth-quarter 2025 operating income of $2.57 per share, which marginally beat the Zacks Consensus Estimate by 0.3%. The bottom line increased 59% year over year.
Total revenues of $1.4 billion increased 8.3% from the year-ago quarter’s level, driven primarily by higher net premiums earned and net investment income. The top line marginally exceeded the Zacks Consensus Estimate by 0.1%.
Chubb Limited (CB - Free Report) reported fourth-quarter 2025 core operating income of $7.52 per share, which beat the Zacks Consensus Estimate by 13.9%. The bottom line improved 24.9% year over year.
Total operating revenues also improved 7.4% year over year to $15.3 billion. The top line beat the Zacks Consensus Estimate by 1.7%. Chubb’s strong performance was driven by solid underwriting profit, robust premium growth and record investment income.
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American Financial Beats on Q4 Earnings, Declares Special Dividend
Key Takeaways
American Financial Group, Inc. (AFG - Free Report) reported fourth-quarter 2025 net operating earnings per share of $3.65, which beat the Zacks Consensus Estimate by 14.8%. The bottom line increased 17% year over year on underwriting income.
AFG’s robust fourth-quarter earnings were driven by strong underwriting profit, led primarily by the property and transportation segment. The bottom line also benefited from minimal catastrophe impact. These gains were partially offset by lower returns in the alternative investments portfolio and lower investment income.
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 billion decreased 2.7% year over year. The decline was due to lower net investment income. The top line also missed the Zacks Consensus Estimate by 1.4%.
Net earned premiums declined 2.4% year over to $1.81 billion. The figure marginally missed the Zacks Consensus Estimate of $1.82 billion and our estimate of $1.83 billion.
Net investment income declined 5.7% year over year to $183 million in the quarter under review. The figure was lower than our estimate of $192 million and missed the Zacks Consensus Estimate of $196 million.
Total costs and expenses decreased 7.9% year over year to $1.7 billion due to lower losses & loss adjustment expenses and expenses of managed investment entities. The figure was lower than our estimate of $1.8 billion.
Segmental Update
The Specialty P&C Insurance segment generated $1.4 billion in net written premiums, which declined 1% year over year. Net written premiums in the Property & Transportation Group decreased 2% year over year to $398 million in the quarter. The figure was lower than our estimate of $421.2 million.
Net written premiums at the Specialty Casualty Group increased 3% year over year to $796 million. The figure was higher than our estimate of $758 million. Further, net written premiums at Specialty Financial Group decreased 10% year over year to $250 million. The figure was lower than our estimate of $291.8 million.
The Specialty P&C Insurance segment’s underwriting profit increased 41% year over year to $287 million in the quarter. Higher underwriting profit in Property and Transportation Group was partially offset by lower year-over-year underwriting profit in Specialty Casualty and Specialty Financial Groups. The figure was higher than our estimate of $178.8 million. Pre-tax core operating earnings before income taxes of the P&C Insurance segment of $440 million increased 16.4% year over year.
Catastrophe losses totaled $4 million in the reported quarter, narrower than the year-ago loss of $21 million. In the Property and Transportation Group, higher year-over-year underwriting profit can be attributed to lower catastrophe losses.
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 current combined ratio of 83.0% was 230 basis points higher than the year-ago figure of 80.7%. The results benefited from favorable prior-year reserve development.
Full-Year Highlights
Net operating EPS was $10.29, down 4.3% year over year. Revenues decreased 1.8% year over year to $8.3 billion. Net premiums written remained flat year over year at $7.1 billion. The combined ratio improved 20 bps to 91%.
Financial Update
American Financial exited 2025 with total cash and investments of $17.2 billion, which increased 8.4% from the 2024-end level. Long-term debt rose to $1.82 billion in 2025, reflecting an increase of 23.4% from the 2024-end level.
As of Dec. 31, 2025, the company’s book value per share, excluding accumulated other comprehensive income (AOCI), was $58.38 compared with $56.03 a year ago. Annualized return on equity was 17.8% for the full year, down 120 bps from the prior-year level.
Prudent Capital Deployment
American Financial returned $707 million to shareholders, including $334 million in special dividends and $99 million in share repurchases. AFG also declared a $1.50 per share special dividend, payable on Feb. 25, 2026.
2026 Expectations
AFG projects core operating EPS of $11 and a core operating ROE, excluding AOCI, of approximately 18%. Net written premiums are expected to grow 3-5% while the combined ratio is estimated to be 92.5%.
Zacks Rank
American Financial currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
AXIS Capital Holdings Limited (AXS - Free Report) reported fourth-quarter 2025 operating income of $3.25 per share, which outpaced the Zacks Consensus Estimate by 9.4% and rose 9.4% year over year.
Total operating revenues of $1.7 billion beat the Zacks Consensus Estimate by 5.2%. The top line rose nearly 9% year over year on higher premiums earned. Net premiums written rose 13% to $1.4 billion, with an increase of 14% in the Insurance segment, and growth of 5% in the Reinsurance segment.
Selective Insurance Group (SIGI - Free Report) reported fourth-quarter 2025 operating income of $2.57 per share, which marginally beat the Zacks Consensus Estimate by 0.3%. The bottom line increased 59% year over year.
Total revenues of $1.4 billion increased 8.3% from the year-ago quarter’s level, driven primarily by higher net premiums earned and net investment income. The top line marginally exceeded the Zacks Consensus Estimate by 0.1%.
Chubb Limited (CB - Free Report) reported fourth-quarter 2025 core operating income of $7.52 per share, which beat the Zacks Consensus Estimate by 13.9%. The bottom line improved 24.9% year over year.
Total operating revenues also improved 7.4% year over year to $15.3 billion. The top line beat the Zacks Consensus Estimate by 1.7%. Chubb’s strong performance was driven by solid underwriting profit, robust premium growth and record investment income.