AFG Q1 Earnings and Revenues Miss, Underwriting Profit Drops

American Financial Group, Inc. AFG reported first-quarter 2025 net operating earnings per share of $1.81, which missed the Zacks Consensus Estimate by 16.6%. The bottom line decreased 34.4% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The results reflected lower property and casualty (P&C) insurance underwriting profit and lower returns from the alternative investment portfolio.

Behind the Headlines 

Total revenues of $1.9 billion decreased 1.4% year over year, attributable to lower net investment income and other income. The top line also missed the Zacks Consensus Estimate by 3.8%.

American Financial Group, Inc. Price, Consensus and EPS Surprise

American Financial Group, Inc. price-consensus-eps-surprise-chart | American Financial Group, Inc. Quote

Net premiums earned increased 2.2% to $1.9 billion.

Net investment income declined 12.6% year over year to $173 million in the quarter under review. Our estimate was $213.7 million. 

Total cost and expenses increased 3.6% year over year to $1.7 billion due to higher P&C insurance losses and expenses. Our estimate was $1.9 billion.

Segmental Update

The Specialty P&C Insurance segment generated $1.6 billion in net written premiums, which declined 1% year over year. The results reflected new business opportunities, a good renewal rate environment and increased exposure. Average renewal pricing across P&C Group, excluding workers’ compensation, was up approximately 7% in the quarter.

Net written premiums in Property & Transportation Group decreased 6% year over year to $563 million in the quarter. The figure was lower than our estimate of $703 million. Net written premiums at Specialty Casualty Group decreased 4% year over year to $772 million. The figure was higher than our estimate of $765 million.

Further, net written premiums at Specialty Financial increased 18% year over year to $276 million. The figure was higher than our estimate of $270 million. 
The Specialty P&C Insurance segment’s underwriting profit decreased 39% year over year to $94 million in the quarter. The figure was lower than our estimate of $133 million.

Higher year-over-year underwriting profit in Specialty Financial Group was offset by lower underwriting profit in Property and Transportation and Specialty Casualty Groups. The combined ratio deteriorated 390 basis points (bps) year over year to 94% in the segment, primarily due to losses from the California wildfires.

Financial Update

American Financial exited the first quarter of 2025 with total cash and investments of $16 billion, which increased 0.9% from the 2024-end level. 

As of March 31, 2025, long-term debt totaled $1.5 billion, which remained unchanged from the level at 2024-end.

As of March 31, 2025, the company’s book value per share, excluding accumulated other comprehensive income, was $54.63, up 2.5% from the 2024-end level. 

Annualized return on equity came in at 13.3% in the first quarter, which contracted 800 bps year over year.

Prudent Capital Deployment

American Financial returned $292 million to shareholders, including $167 million in special dividends and $58 million in share repurchases.

Zacks Rank

AFG 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 Insurers

The Travelers Companies TRV reported first-quarter 2025 core income of $1.91 per share, which beat the Zacks Consensus Estimate of 69 cents. The bottom line, however, declined 29.3% year over year. Travelers’ total revenues increased 6.1% from the year-ago quarter to $11.9 billion, primarily driven by higher premiums, net investment income and other revenues. The top-line figure, however, missed the Zacks Consensus Estimate of $12.1 billion. 

Net written premiums increased 3% year over year to a record $10.5 billion, driven by strong growth across all three segments. Our estimate was $10.2 billion. Underlying underwriting income of $1.6 billion improved more than 30% year over year, driven by strong net earned premiums.The consolidated underlying combined ratio of 84.8 improved 290 bps year over year. The combined ratio deteriorated 860 bps year over year to 102.5 due to higher catastrophe losses. The Zacks Consensus Estimate was pegged at 105.

The Progressive Corporation’s PGR first-quarter 2025 earnings per share of $4.65 missed the Zacks Consensus Estimate of $4.72. The bottom line, however, increased 24.6% year over year. Operating revenues increased 20.7% year over year to $20.6 billion, driven by 20.2% higher net premiums earned, a 31.7% increase in net investment income, a 21.6% rise in fees and 32.1% higher service revenues. The top line beat the Zacks Consensus Estimate of $20.4 billion.

Net premiums earned grew 20% to $19.4 billion. The reported figure surpassed the Zacks Consensus Estimate of $19.2 billion. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 10 bps from the prior-year quarter’s level to 86.

W.R. Berkley Corporation’s WRB first-quarter 2025 operating income of $1.01 per share matched the Zacks Consensus Estimate. The bottom line, however, declined 2.9% year over year. The insurer suffered due to higher catastrophe losses. Operating revenues were $3.5 billion, up 9.3% year over year, on the back of higher net premiums earned as well as improved net investment income, higher insurance service fees and other income. The top line beat the consensus estimate by 2.2%.

W.R. Berkley’s net premiums written were $3.1 billion, up 9.9% year over year. The figure was higher than our estimate of $3 billion. Catastrophe losses of $111.1 million in the quarter were wider than $30 million incurred in the year-ago quarter. The consolidated combined ratio (a measure of underwriting profitability) deteriorated 210 bps year over year to 90.9. The Zacks Consensus Estimate was 91.

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