American Financial Group: Q4 Earnings Snapshot - A Mixed Bag

American Financial Group (AFG) reported its fourth-quarter and full-year 2024 earnings on Tuesday, February 4, 2025. The company's results were a mixed bag, with some positive developments and others that fell short of expectations. Here's a snapshot of the key takeaways:

Fourth Quarter Earnings:

* Net earnings per share (EPS) of $3.03, down from $3.13 in the same period last year.
* Core net operating earnings per share of $3.12, up from $2.84 in the 2023 fourth quarter.
* Revenue of $2.15 billion, up 3.2% from the same period last year.

Full Year Earnings:

* Net earnings per share of $10.57, up from $10.05 in 2023.
* Core net operating earnings per share of $10.75, up from $10.05 in 2023.
* Return on equity (ROE) of 19.0%, up from 18.8% in 2023.
* Core operating ROE of 19.3%, up from 19.8% in 2023.

Renewal Rate Increases:

* Overall average renewal rate increases, excluding workers' compensation, of 8%.

Capital Management:

* Returned approximately $791 million to shareholders in 2024, including $545 million in special dividends.
* Growth in adjusted book value per share plus dividends of 3.4% and 23.0% for the three and twelve months ended December 31, 2024, respectively.

Challenges and Opportunities:

* The company's fourth-quarter EPS of $3.03 did not meet Wall Street expectations, with the average estimate of four analysts surveyed by Zacks Investment Research being $3.20 per share.
* Lower P&C underwriting profit partially offset by higher P&C net investment income, including improved returns on alternative investments.

American Financial Group's fourth-quarter earnings were a mixed bag, with core net operating earnings per share and full-year earnings showing improvement, while fourth-quarter EPS fell short of expectations. The company's renewal rate increases and capital management strategies contributed to its strong financial performance. However, the lower P&C underwriting profit is a concern that investors should monitor closely. As the company looks ahead to 2025, it will be crucial for AFG to maintain its disciplined operating philosophy and effective capital management strategies to continue generating value for shareholders.