Hurricane Helene drives $90m cat losses for AFG in Q3, Specialty P&C CoR hits 94.3%

American Financial Group’s (AFG’s) Specialty property & casualty (P&C) insurance operations reported underwriting profit of $117 million in the third quarter of 2024, compared to $143 million in the prior year period, while catastrophe losses sat at $90 million, which were primarily driven by Hurricane Helene.

The firm’s cat losses in the comparable 2023 period were $56 million.

Based on information available at this time, AFG’s pretax losses from Hurricane Milton are estimated to be approximately $30 million and will be reflected in the company’s fourth quarter results.

The Specialty P&C combined ratio was 94.3% for Q3 2024, in comparison to the 92.2% reported in the comparable prior year period, which included 4.4 points in catastrophe losses. By comparison, catastrophe losses in the third quarter of 2023 added 3.0 points to the combined ratio.

In addition, gross and net written premiums were up 19% and 14%, respectively, when compared to the third quarter of 2023, which AFG noted was driven primarily by additional premiums from the Crop Risk Services acquisition. Gross and net written premiums excluding crop insurance each grew 7% year over year, the firm stated.

Meanwhile, AFG also recorded $181 million in net earnings for the quarter, compared to $177 million from the prior year quarter.

From what we understand, net earnings for Q3 2024 included net after-tax non-core items that reduced net income by $13 million. By comparison, net earnings for the 2023 third quarter included net after-tax non-core items that reduced net income by $31 million.

AFG also posted $194 million in core net operating earnings for the quarter, a decrease compared to the $208 million figure that the firm posted last year.

The company attributed the decrease towards higher year-over-year catastrophe losses related primarily to Helene and lower favorable prior year reserve development in the Specialty P&C insurance operations, which were partially offset by higher investment income.

S. Craig Lindner and Carl H. Lindner III, AFG’s Co-Chief Executive Officers, commented: “We are pleased with AFG’s performance during the third quarter. We achieved an annualized core operating return of 16%, with solid underwriting profitability despite elevated catastrophe losses during the quarter. P&C net investment income increased by nearly 15% year over year. These results, coupled with effective capital management, enable us to continue to create value for our shareholders.”

Messrs. Lindner continued, “AFG continued to have significant excess capital at September 30, 2024. Returning capital to shareholders in the form of regular and special cash dividends and through opportunistic share repurchases is an important and effective component of our capital management strategy. In addition, our excess capital will be deployed into AFG’s core businesses as we identify potential for healthy, profitable organic growth, and opportunities to expand our specialty niche businesses through acquisitions and start-ups that meet our target return thresholds.”

Carl Lindner III stated, “Although catastrophe losses, specifically Hurricane Helene, impacted our third quarter operating earnings in our P&C Segment, nearly all of our Specialty P&C businesses are meeting or exceeding targeted returns, and we continue to feel confident about the strength of our reserves. Our third quarter results also reflect an element of seasonality, as most of our crop insurance premiums are recorded in AFG’s third quarter. This business is booked at a more conservative combined ratio until the fourth quarter when we have a better view of profitability for the year. Based on what we know at this time, we are optimistic about an above average crop year. I’m pleased that we continued to grow our Specialty P&C businesses through increasing exposures, new business opportunities, and a continued overall favorable pricing environment.”

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