American Financial Group, Inc.

What they do

AFG underwrites specialized commercial property and casualty insurance through 36 businesses within Great American Insurance Group. The company operates a decentralized model where each business manages underwriting, claims, and policy servicing autonomously. AFG also manages a diversified investment portfolio that contributes to earnings. In 2025, the property and casualty operations wrote approximately $10.7 billion in gross premiums.

Revenue drivers

• Specialty Property & Casualty Insurance — Core business generated $10.7 billion in 2025 gross written premiums, with over 55% of premiums in lines where AFG ranks in the top 10 competitors.
• Great American Insurance Group — Largest subsidiary wrote $8.2 billion in 2025 gross premiums and holds A+ ratings from A.M. Best and S&P, contributing the majority of P&C revenue.
• National Interstate — A+ rated subsidiary wrote $1.3 billion in 2025 gross premiums, focusing on transportation-related commercial coverages.
• Alternative Investments — A component of net investment income; lower returns in 2025 hurt earnings, but management expects improved performance starting in the second half of 2026.

Recent performance

In Q2 2026, AFG reported net earnings of $248 million ($2.99 per share) versus $174 million ($2.07 per share) a year earlier, with core net operating earnings of $234 million ($2.82 per share). The increase was driven by higher underwriting profit and stronger alternative investment returns. Full-year 2025 net earnings were $842 million ($10.08 per share), down from $887 million ($10.57 per share) in 2024, largely due to lower alternative investment income. Quarterly revenue was $2.03 billion at June 30, 2026. Book value per share excluding AOCI stood at $59.85, and the company repurchased $26 million of stock in Q2 2026.

Strategy

AFG sharpens its focus on niche commercial P&C lines through organic growth, selective acquisitions, start-ups, and dispositions. Each business unit operates autonomously to respond to local market conditions while benefiting from centralized investment and administrative support. Maintaining A-category financial strength ratings is considered critical to compete. Management aims to grow book value per share at a double-digit annual rate over time. The parent company has no debt maturities until 2030.

Risks

• Catastrophe exposure — Natural and man-made catastrophes, including severe weather and climate change, could cause losses exceeding reinsurance protection.
• Reinsurance counterparty risk — If reinsurers fail to pay or coverage becomes unavailable, AFG's results could be materially harmed.
• Investment portfolio volatility — Lower returns from alternative investments negatively impacted 2025 earnings, and performance depends on market conditions.
• Reserve estimation risk — Asbestos and environmental liabilities, especially from former railroad and manufacturing operations, require significant judgment and could develop adversely.

Outlook

Management expects overall premium growth and strong underwriting results in the current P&C market. They anticipate improved returns on alternative investments, relative to the 2.5% earned in 2025, to positively impact net investment income beginning in the second half of 2026. The company also faces forward-looking uncertainties including the closing of the Charleston Harbor Resort & Marina sale, and potential impacts from tariffs, inflation, and regulatory changes.