Q2 2026 American Financial Group Inc Earnings Call Transcript
Key Points
- Record second-quarter pre-tax property and casualty operating income driven by strong underwriting margins, healthy premium growth, and higher net investment income.
- Core net operating earnings per share increased 32% year-over-year, with an annualized core operating return on equity of 19.2%.
- Net investment income at P&C operations rose 23% year-over-year, with alternative investments returning 7.1% in the quarter and expectations of 10%+ long-term.
- Underwriting profit increased 44% in the first half of the year, with renewal rate increases (excluding workers' comp) around 5% for four consecutive quarters.
- Commercial auto liability achieved a small underwriting profit for the second consecutive quarter, with renewal rates up 15%.
- Expects to recognize a pre-tax core operating gain of approximately $125 million ($1.20 per share) from the sale of Charleston Harbor Resort & Marina in Q3 2026.
- Specialty Casualty combined ratio increased 0.6 points to 94.5% due to higher loss ratios from growth in workers' comp and targeted markets.
- Workers' comp pricing declined about 2% in the quarter and 3% year-to-date, with poor underwriting results in California (14% of the book).
- Specialty Financial renewal pricing decreased less than 1%, reflecting competitive pressures and a shift in business mix.
- Underlying loss ratios in Specialty Casualty and Financial were impacted by intentional growth in higher loss ratio businesses, such as European operations.
- Increased competition from MGAs and fronting-backed capital in Specialty Casualty, particularly in excess liability and umbrella lines, poses a risk to pricing and profitability.
- Crop insurance results remain uncertain, with profitability dependent on harvest yields and prices in the second half of the year.
Good day and thank you for standing by. Welcome to the American Financial Group 2026 second-quarter results conference call.
(Operator Instructions)
Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Diane Weidner, Vice President, Investor Relations. Diane, please go ahead.
Good morning and welcome to American Financial Group second-quarter 2026 earnings results conference call. We released our results yesterday afternoon. Our press release, investor supplement and webcast presentation are posted on AFG's website under the Investor Relations section. These materials will be referenced during portions of today's call.
Joining me this morning are Carl Lindner III and Craig Lindner, Co-CEOs of American Financial Group; and Brian Hertzman, AFG's CFO.
Before I turn the discussion over to Carl, I would like to draw your attention to the notes on slide 2 of our
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