Alternative Investments

AFG records “exceptional” Q4 performance

Insurance and investments holding company, American Financial Group (AFG), saw its annual net earnings increase by roughly 172% last year following a fourth quarter that its Co-CEOs dubbed as an “exceptional” period for financial performance.

Net earnings for the year increased from $732 million in 2020 to $1,995 million in 2021, while core net operating earnings for the Q4 period came to $351 million, versus $175 million for the same period in the previous year.

Q4 net earnings actually decreased from $692 million to $355 million, but AFG notes that earnings in 2020 included $517 million in after-tax non-core items, including discontinued operations.

The company attributes the year-over-year increase in core operating earnings to significantly higher underwriting profit in the Specialty Property and Casualty (P&C) insurance operations.

It also credited substantially higher P&C net investment income, due to the continued strong performance of its $1.8 billion alternative investment portfolio.

Pre-tax core operating earnings in AFG’s P&C Insurance Segment were a record $485 million in Q4 of 2021, compared to $274 million in the prior year period, an increase of $211 million, or 77%.

The Specialty P&C insurance operations likewise generated record underwriting profit of $281 million for the 2021 fourth quarter compared to $179 million in the fourth quarter of 2020.

Its combined ratio was 80.7% and net written premiums were up 4% for the quarter, while average renewal pricing across the entire P&C Group was up approximately 7%.

“AFG’s financial performance during the fourth quarter was exceptional,” Co-CEOs Carl H. Lindner III and S. Craig Lindner said in a statement. “We are very pleased with the outstanding underwriting margins produced by our Specialty P&C businesses and returns in our portfolio of alternative investments that continued to exceed our expectations.”

“Our diversified portfolio of specialty insurance operations, an entrepreneurial culture and disciplined operating philosophy have positioned us well in a hard P&C market and an improving economy.”

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