American Financial Group, Inc. reported 2025 fourth quarter net earnings of $299 million ($3.58 per share), up from $255 million ($3.03 per share) in the 2024 fourth quarter.

American Financial Group, Inc. (NYSE: AFG) today reported 2025 fourth quarter net earnings of $299 million ($3.58 per share) compared to $255 million ($3.03 per share) in the 2024 fourth quarter. Net earnings for the 2025 fourth quarter included net after-tax non-core realized losses of $6 million ($0.07 per share loss). By comparison, net earnings for the 2024 fourth quarter included net after-tax non-core realized losses of $7 million ($0.09 per share loss). Net earnings for the full year of 2025 were $10.08 per share, compared to $10.57 per share in 2024. Return on equity was 17.8% and 19.0% for the full years of 2025 and 2024, respectively, and is calculated excluding accumulated other comprehensive income (AOCI). Other details may be found in the table on the following page.

Core net operating earnings were $305 million ($3.65 per share) for the 2025 fourth quarter, compared to $262 million ($3.12 per share) in the 2024 fourth quarter. The year-over-year increase reflects record quarterly underwriting profit, which was partially offset by lower returns in our alternative investments portfolio. Additional details for the 2025 and 2024 fourth quarters may be found in the table below.

Core net operating earnings generated returns on equity of 18.2% and 19.3% for the full years of 2025 and 2024, respectively, calculated excluding AOCI.

AFG's book value per share was $57.78 at December 31, 2025. AFG paid cash dividends of $2.88 per share during the fourth quarter, which included a $2.00 per share special dividend paid in November. For the three and twelve months ended December 31, 2025, AFG's growth in book value per share plus dividends was 6.9% and 22.3%, respectively.

Book value per share excluding AOCI was $58.38 at December 31, 2025. For the three and twelve months ended December 31, 2025, AFG's growth in book value per share excluding AOCI plus dividends was 6.4% and 17.2%, respectively.

AFG's net earnings, determined in accordance with U.S. generally accepted accounting principles (GAAP), include certain items that may not be indicative of its ongoing core operations. The table below identifies such items and reconciles net earnings to core net operating earnings, a non-GAAP financial measure. AFG believes that its core net operating earnings provides management, financial analysts, ratings agencies, and investors with an understanding of the results from the ongoing operations of the Company by excluding the impact of net realized gains and losses and other items that are not necessarily indicative of operating trends. AFG's management uses core net operating earnings to evaluate financial performance against historical results because it believes this provides a more comparable measure of its continuing business. Core net operating earnings is also used by AFG's management as a basis for strategic planning and forecasting.

The Company also announced today that its Board of Directors has declared a special cash dividend of $1.50 per share of American Financial Group common stock. The dividend is payable on February 25, 2026, to shareholders of record on February 16, 2026. The aggregate amount of this special dividend will be approximately $125 million. This special dividend is in addition to the Company's regular quarterly cash dividend of $0.88 per share most recently paid on January 27, 2026. With this special dividend, the Company has declared $55.50 per share in special dividends since the beginning of 2021.

Carl H. Lindner III and S. Craig Lindner, AFG's Co-Chief Executive Officers, issued this statement: "We are extremely pleased with a strong finish to 2025, reporting fourth quarter underwriting profit that increased an impressive 41% year over year – our highest quarterly underwriting profit ever – and a core operating ROE that exceeded 18% for the full year. We are thankful to God and grateful for our talented insurance and investment professionals who have positioned us well as we enter 2026."

Messrs. Lindner continued: "AFG continued to have significant excess capital at December 31, 2025. Returning capital to shareholders in the form of regular and special cash dividends and through opportunistic share repurchases is an important and effective component of our capital management strategy. In addition, our capital will be deployed into AFG's core businesses as we identify potential for healthy, profitable organic growth, and opportunities to expand our specialty niche businesses through acquisitions and start-ups that meet our target return thresholds. We are proud of our strong record of capital management and returned over $700 million to shareholders in 2025. Over the past year, we increased our quarterly dividend by 10% and paid special dividends of $4.00 per share. Growth in book value per share excluding AOCI plus dividends was an impressive 17% during 2025."

Although AFG does not provide earnings guidance, we expect that performance in line with assumptions underlying our 2026 business plan would result in 2026 core operating earnings per share of approximately $11.00 and generate a core operating return on equity excluding AOCI of approximately 18%. These assumptions include growth in net written premiums of 3% to 5% when compared to 2025, a 92.5% calendar year combined ratio, a reinvestment rate of approximately 5.25%, and a return of approximately 8% on our $2.8 billion portfolio of alternative investments.

Specialty Property and Casualty Insurance Operations

The Specialty P&C insurance operations generated an outstanding 84.1% combined ratio in the fourth quarter of 2025, a 4.9 point improvement from the 89.0% reported in the prior year quarter. Fourth quarter results include 0.2 points related to catastrophe losses compared to 1.1 points in the 2024 fourth quarter. Fourth quarter 2025 results benefitted from 1.6 points of favorable prior year reserve development, compared to 1.8 points of adverse prior year reserve development in the fourth quarter of 2024. Underwriting profit was a record $287 million for the 2025 fourth quarter compared to $204 million in the fourth quarter of 2024, a 41% increase. Higher underwriting profit in our Property and Transportation Group was partially offset by lower year-over-year underwriting profit in our Specialty Casualty and Specialty Financial Groups.

Fourth quarter 2025 gross written premiums were up 2% and net written premiums were down 1% when compared to the same period in 2024. Gross written premiums increased 2% and net written premiums were approximately flat for the full year 2025. We continued to benefit from the diversification across our 36 businesses and achieved premium growth in many of them as a result of a combination of new business opportunities, a good renewal rate environment, and increased exposures – while remaining disciplined and focused on underwriting profitability.

Average renewal rates across our P&C Group, excluding workers' compensation, were up approximately 5% for the quarter, in line with the previous quarter. Average renewal rates including workers' compensation were up approximately 4% overall. We believe we are achieving overall renewal rate increases in excess of prospective loss ratio trends, allowing us to meet or exceed targeted returns.

The Property and Transportation Group reported an underwriting profit of $216 million in the fourth quarter of 2025, compared to $81 million in the comparable prior year period, an increase of 167%. These exceptionally strong results were attributable to higher profitability in our crop insurance operations which benefitted from record yields for corn and soybeans and favorable commodity pricing trends throughout the growing season. Catastrophe losses in this group were less than $1 million in the fourth quarter of 2025, compared to $10 million in the prior year period. The businesses in the Property and Transportation Group achieved an outstanding 70.6% calendar year combined ratio overall in the fourth quarter, an improvement of 18.9 points over the 89.5% achieved in the comparable period in 2024.

Fourth quarter 2025 gross written premiums in this group increased 5% from the comparable prior year period, while net written premiums were approximately 2% lower year-over-year. The increase in gross written premiums was due primarily to growth in crop products that are heavily ceded, and to a lesser extent, growth in a transportation captive with higher premium cessions. Overall renewal rates in this group increased approximately 6% on average for the fourth quarter of 2025, consistent with pricing in the previous quarter. Pricing for the full year for this group was up approximately 7% overall.

The Specialty Casualty Group reported an underwriting profit of $27 million in the 2025 fourth quarter compared to $69 million in the comparable 2024 period. Higher year-over-year underwriting profits in certain excess and surplus businesses and our executive liability business were more than offset by lower underwriting profitability in several of our social inflation-exposed businesses, and in our workers' compensation and general liability businesses. Underwriting profitability in our workers' compensation businesses overall continues to be excellent. The businesses in the Specialty Casualty Group achieved a 96.7% calendar year combined ratio overall in the fourth quarter, 5.3 points higher than the 91.4% reported in the comparable period in 2024.

Fourth quarter 2025 gross and net written premiums in this group increased 2% and 3%, respectively, when compared to the same prior year period. The primary drivers of growth included new business opportunities and favorable renewal pricing in our targeted markets businesses, new business opportunities in our mergers & acquisitions business, growth in our workers' compensation businesses and new premiums from one of our start-up businesses. This growth was tempered by lower year-over-year premiums in our executive liability and excess and surplus businesses. Excluding workers' compensation, renewal pricing for this group was up 6% in the fourth quarter. Pricing in this group, including workers' compensation, was up about 5%. For the full year, pricing excluding workers' compensation was up 8%.

The Specialty Financial Group reported an underwriting profit of $44 million in the fourth quarter of 2025, compared to $54 million in the fourth quarter of 2024. Higher underwriting profit in our fidelity businesses was more than offset by lower underwriting profit in our financial institutions business. Catastrophe losses for this group were $7 million in the fourth quarter of 2025, compared to $17 million in the fourth quarter of 2024. This group continued to achieve excellent underwriting margins and reported an excellent 83.0% combined ratio for the fourth quarter of 2025, 2.3 points higher than the prior year period.

Gross and net written premiums in this group decreased by 4% and 10%, respectively, in the 2025 fourth quarter when compared to the same 2024 period. Higher year-over-year premiums in our European operations were more than offset by lower premiums in our financial institutions business, which has produced very strong growth over the past several years. Net written premiums were tempered by our decision to cede more of the coastal-exposed property business in our financial institutions business beginning in the second quarter of 2025. Renewal pricing in this group was up about 1% in the fourth quarter and down approximately 1% for the full year of 2025, reflecting the strong margins overall earned on these businesses.

Carl Lindner III stated, "Our fourth quarter results were outstanding, with an overall Specialty P&C combined ratio of 84.1%. Nearly all the businesses in our diversified Specialty P&C portfolio continue to meet or exceed targeted returns, and we continue to feel confident about the strength of our reserves. I am especially pleased with the discipline and focus our leaders exemplified throughout the year; their actions position us to grow profitably as we enter 2026."

Further details about AFG's Specialty P&C operations may be found in the accompanying schedules and in our Quarterly Investor Supplement, which is posted on our website.

Investments

Net Investment Income – For the quarter ended December 31, 2025, property and casualty net investment income was approximately 12% lower than the comparable 2024 period as lower returns from alternative investments more than offset the impact of higher interest rates and higher balances of invested assets. The annualized return on alternative investments was 0.9% for the 2025 fourth quarter compared to 4.9% for the prior year quarter.

For the twelve months ended December 31, 2025, P&C net investment income was approximately 8% lower than the comparable 2024 period due to lower returns on alternative investments. The return on alternative investments was 2.5% for 2025 compared to 6.1% in 2024.

Earnings from alternative investments may vary from quarter to quarter based on the reported results of the underlying investments and generally are reported on a quarter lag. The average annual return on alternative investments over the five calendar years ended December 31, 2025, was approximately 11%. We continue to remain optimistic regarding the prospects of attractive returns over the long term from our alternative investment portfolio, with an expectation of annual returns averaging 10% or better.

Non-Core Net Realized Gains (Losses) – AFG recorded fourth quarter 2025 net realized losses of $6 million ($0.07 per share loss) after tax, which included $2 million ($0.02 per share loss) in after-tax net losses to adjust equity securities that the Company continued to own at December 31, 2025, to fair value. AFG recorded net realized losses of $7 million ($0.09 per share loss) after tax in the comparable 2024 period.

After-tax unrealized losses related to fixed maturities were $24 million at December 31, 2025. Our portfolio continues to be high quality, with 96% of our fixed maturity portfolio rated investment grade and 97% of our P&C fixed maturity portfolio with a National Association of Insurance Commissioners' designation of NAIC 1 or 2, its highest two categories.

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