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American Financial Group (AFG)
NYSE:AFG
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American Financial Group
(NYSE:AFG)
75Outperform
American Financial Group (AFG) vs. S&P 500 (SPY)
Market Cap
$10.45B
Dividend Yield2.42%
Average Volume (3M)692.35K
Price to Earnings (P/E)11.8
Beta (1Y)0.54
Revenue Growth6.91%
EPS Growth4.97%
CountryUS
Employees8,700
SectorFinancial
Sector Strength86
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)10.57
Shares Outstanding83,668,450
10 Day Avg. Volume610,358
30 Day Avg. Volume692,349
Financial Highlights & Ratios
PEG Ratio2.38
Price to Book (P/B)N/A
Price to Sales (P/S)1.27
Price to Cash Flow (P/CF)3.90
P/FCF Ratio3.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$132.75Price Target Upside5.59% Upside
Rating ConsensusHold
Number of Analyst Covering4
American Financial Group Business Overview & Revenue Model
Company DescriptionAmerican Financial Group, Inc., an insurance holding company, provides specialty property and casualty insurance products in the United States. It offers property and transportation insurance products, such as physical damage and liability coverage for buses and trucks, inland and ocean marine, agricultural-related products, and other commercial property and specialty transportation coverages; specialty casualty insurance, including primarily excess and surplus, executive and professional liability, general liability, umbrella and excess liability, and specialty coverage in targeted markets, as well as customized programs for small to mid-sized businesses and workers' compensation insurance; and specialty financial insurance products comprising risk management insurance programs for lending and leasing institutions, fidelity and surety products, and trade credit insurance. The company sells its property and casualty insurance products through independent insurance agents and brokers. American Financial Group, Inc. was founded in 1872 and is headquartered in Cincinnati, Ohio.
How the Company Makes MoneyAmerican Financial Group generates revenue primarily through the underwriting and sale of insurance policies within its Property and Casualty Insurance and Annuity segments. In the Property and Casualty Insurance segment, AFG earns premiums from policyholders in exchange for coverage against various risks. The company also invests the premiums collected, generating additional income through returns on its investment portfolio. In the Annuity segment, AFG earns money from the sale of fixed and indexed annuities, managing the invested assets to meet future payout obligations while generating investment income. Key factors contributing to AFG's earnings include effective risk assessment, pricing strategies, and a diversified portfolio that mitigates exposure to market fluctuations.
American Financial Group Financial Statement Overview
Summary
American Financial Group demonstrates a strong financial position with consistent revenue growth and effective cash flow management. While profitability remains solid, recent declines in operational efficiency and free cash flow warrant attention. The company's conservative debt usage and effective equity utilization suggest stability, though careful monitoring of operational costs and cash flow sustainability is advisable.Income Statement
American Financial Group shows a solid growth trajectory with a consistent increase in total revenue from $6.55 billion in 2021 to $8.32 billion in 2024. The net profit margin has improved over the years, reaching 10.65% in 2024. However, the decline in EBIT and EBITDA margins in 2024 indicates a possible challenge in maintaining operational efficiency.78
Positive
Balance Sheet
The company's balance sheet is stable with a healthy debt-to-equity ratio of 0.33 in 2024, reflecting a conservative leverage position. The equity ratio has slightly decreased over time, reaching 14.48% in 2024, indicating moderate reliance on liabilities. Return on equity is strong at 19.86%, showcasing effective use of shareholders' equity.72
Positive
Cash Flow
American Financial Group maintains a robust cash flow position with significant operating cash flow of $1.15 billion in 2024. The free cash flow remains strong, and the operating cash flow to net income ratio is favorable at 1.30, indicating effective cash generation from operations. However, a declining trend in free cash flow compared to previous years suggests potential challenges in maintaining cash generation levels.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 8.32B | 7.73B | 7.04B | 6.55B | 7.91B | Gross Profit |
| 8.32B | 7.73B | 7.04B | 6.55B | 7.91B | EBIT |
| 0.00 | 1.20B | 1.21B | 2.14B | 655.00M | EBITDA |
| 0.00 | 1.23B | 1.31B | 1.62B | 726.00M | Net Income Common Stockholders |
| 887.00M | 852.00M | 898.00M | 1.08B | 732.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.41B | 1.75B | 10.97B | 12.49B | 46.02B | Total Assets |
| 30.84B | 29.79B | 28.83B | 28.94B | 73.57B | Total Debt |
| 1.48B | 1.48B | 1.50B | 1.96B | 1.96B | Net Debt |
| 69.00M | 250.00M | 624.00M | -167.00M | -847.00M | Total Liabilities |
| 26.37B | 25.53B | 24.78B | 23.93B | 66.78B | Stockholders Equity |
| 4.47B | 4.26B | 4.05B | 5.01B | 6.79B |
| Cash Flow | Free Cash Flow | |||
| 1.15B | 1.97B | 1.07B | 1.56B | 1.84B | Operating Cash Flow |
| 1.15B | 1.97B | 1.15B | 1.71B | 2.18B | Investing Cash Flow |
| 95.00M | 414.00M | -1.05B | -436.00M | -1.56B | Financing Cash Flow |
| -1.07B | -2.03B | -1.36B | -1.96B | -123.00M |
American Financial Group Technical Analysis
Negative
125.72
Price Trends
125.24
Negative
130.46
Negative
127.14
Negative
Market Momentum
1.41
Negative
68.21
Neutral
83.34
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AFG, the sentiment is Negative. The current price of 125.72 is below the 20-day moving average (MA) of 126.30, above the 50-day MA of 125.24, and below the 200-day MA of 127.14, indicating a bearish trend. The MACD of 1.41 indicates Negative momentum. The RSI at 68.21 is Neutral, neither overbought nor oversold. The STOCH value of 83.34 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AFG.
American Financial Group Risk Analysis
American Financial Group disclosed 27 risk factors in its most recent earnings report. American Financial Group reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
American Financial Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
83 Outperform | $11.09B | 26.90 | 32.28% | 0.13% | 30.65% | 34.04% | |
82 Outperform | $7.19B | 7.32 | 19.06% | 1.93% | 6.10% | 206.71% | |
82 Outperform | $5.65B | 13.40 | 16.03% | 2.24% | 4.07% | 1110.92% | |
78 Outperform | $12.98B | 13.66 | 9.40% | 3.73% | 7.30% | -20.49% | |
75 Outperform | $10.45B | 11.82 | 20.33% | 2.42% | 6.91% | 4.97% | |
75 Outperform | $7.01B | 20.41 | 23.56% | 0.77% | 18.31% | 13.13% | |
64 Neutral | $13.21B | 9.26 | 9.39% | 4.87% | 16.14% | -8.87% |
* Financial Sector Average
Performance Comparison
AFG
American Financial Group
125.72
6.07
5.07%
AXS
Axis Capital
92.90
32.29
53.28%
CNA
CNA Financial
47.49
7.45
18.61%
RLI
RLI
76.52
9.94
14.93%
THG
Hanover Insurance
156.10
30.72
24.50%
KNSL
Kinsale Capital Group
482.34
32.01
7.11%
American Financial Group Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: -6.10% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong financial performance with a significant return on equity, record net investment income, and shareholder returns. However, it also acknowledged challenges such as impacts from the California wildfires, adverse development in certain business areas, and an anticipated increase in the expense ratio.Highlights
Strong Core Operating Return on Equity
AFG produced an annual core operating return on equity in excess of 19% in 2024, with core net operating earnings of $10.75 per share and a return on equity of 19.3%.
Significant Shareholder Returns
AFG returned $791 million to shareholders in 2024, including $545 million in special dividends and $246 million in regular dividends. The quarterly dividend increased by 12.7% to an annual rate of $3.20 per share.
Record Net Investment Income
Property & Casualty net investment income reached $784 million, approximately 8% higher than 2023, setting a new record for AFG.
Specialty Financial Group Combined Ratio
The Specialty Financial group achieved an excellent combined ratio of 80.7% for the fourth quarter of 2024.
Lowlights
Impact of California Wildfires
AFG anticipates losses of $60 million to $70 million due to the Southern California wildfires, impacting the 2025 business plan.
Adverse Development in Social Inflation Exposed Businesses
The fourth quarter saw adverse development in social inflation exposed businesses leading to an overall adverse development for AFG, primarily in the Specialty Casualty Group.
Higher Expense Ratio
The expense ratio is expected to rise in 2025 due to growth in product offerings with higher broker commissions and lower ceding commissions from reinsurers.
Company Guidance
During the American Financial Group's fourth quarter 2024 earnings call, several key metrics were highlighted. The company achieved a core net operating earnings per share of $10.75 for the year, resulting in a core operating return on equity of 19.3%. Net written premiums grew by 7% during the year, while the company's capital management strategies returned $791 million to shareholders, including $545 million in special dividends. The fourth quarter core net operating earnings per share was $3.12, producing an annualized fourth quarter core return on equity of 21.9%. For 2024, Property & Casualty net investment income reached a record of $784 million, up 8% from the previous year. The Specialty Property and Casualty businesses reported a combined ratio of 89% for the fourth quarter, with growth in book value per share, excluding AOCI, plus dividends, reaching 19.6% for the full year. Looking ahead to 2025, AFG anticipates a 5% growth in net written premiums and a combined ratio of approximately 92.5%, with an expected core net operating earnings per share of $10.50, generating a core operating return on equity of about 18%.American Financial Group Corporate Events
M&A TransactionsFinancial Disclosures
American Financial Group Sells Charleston Harbor Resort
Positive
Apr 2, 2025
On March 31, 2025, American Financial Group announced that its subsidiary reached agreements to sell the Charleston Harbor Resort & Marina in Charleston, South Carolina. The transaction, expected to close in the second or third quarter of 2025, could result in a net after-tax gain of approximately $100 million for AFG, impacting its financial performance positively.
Executive/Board ChangesShareholder Meetings
American Financial Group Elects New Board Members
Neutral
Feb 20, 2025
On February 19, 2025, American Financial Group announced the election of Craig Lindner Jr. and David L. Thompson Jr. to its Board of Directors, highlighting their extensive experience in real estate and insurance, respectively. Concurrently, James E. Evans announced his decision not to seek re-election at the 2025 Annual Meeting, although he will continue to serve as an Executive Consultant, ensuring a seamless transition and continued strategic guidance for the company.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.