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American Financial Group, Inc. Announces Third Quarter Results
Net earnings per share of $2.26; includes ($0.24) per share of after-tax A&E reserve strengthening and $0.31 in after-tax realized gains on securities
Record third quarter core net operating earnings of $2.19 per share, an increase of 107% from the prior year period
Third quarter annualized ROE of 16.3%; annualized core operating ROE of 15.8%
Full year 2018 core net operating earnings guidance increased to $8.35 to $8.65 per share from $8.10$8.60 per share
CINCINNATI October 30, 2018 American Financial Group, Inc. (NYSE: AFG) today reported 2018 third quarter net earnings attributable to shareholders of $204 million ($2.26 per share) compared to $11 million ($0.13 per share) for the 2017 third quarter. Net earnings for the quarter includeafter-tax charges of $21 million ($0.24 per share) to strengthen the Companys asbestos and environmental (A&E) reserves, and $27 million ($0.31 per share) in after-tax realized gains on securities. Comparatively, net earnings in the 2017 third quarter included net after-tax non-core charges of $84 million ($0.93 per share). The change in the Federal corporate tax rate from 35% to 21%, enacted by the Tax Cuts and Jobs Act of 2017 and effective January 1, 2018, contributed to a lower effective tax rate in 2018 as compared to 2017. Details may be found in the table below. Book value per share was $57.90 per share at September 30, 2018. Annualized return on equity was 16.3% and 1.0% for the third quarters of 2018 and 2017, respectively.
Core net operating earnings were $198 million ($2.19 per share) for the 2018 third quarter, compared to $95 million ($1.06 per share) in the 2017 third quarter. The $2.19 per share represents a 107% increase over the prior year period, and establishes a new high for AFG third quarter core earnings per share. The increase was primarily the result of higher underwriting profit in our Specialty Property and Casualty (P&C) insurance operations, primarily the result of lower catastrophe losses than in the year-ago quarter, coupled with higher P&C net investment income, higher earnings in our Annuity Segment, and the benefit of a lower effective corporate income tax rate. Book value per share, excluding unrealized gains related to fixed maturities, was $57.22 at September 30, 2018. Core net operating earnings for the third quarters of 2018 and 2017 generated annualized core returns on equity of 15.8% and 8.1%, respectively.
AFGs net earnings attributable to shareholders, determined in accordance with U.S. generally accepted accounting principles (GAAP), include certain items that may not be indicative of its ongoing core operations. The table below identifies such items and reconciles net earnings attributable to shareholders to core net operating earnings, a non-GAAP financial measure. AFG believes that its core net operating earnings provides management, financial analysts, ratings agencies and investors with an understanding of the results from the ongoing operations of the Company by excluding the impact of net realized gains and losses and other special items that are not necessarily indicative of operating trends. AFGs management uses core net operating earnings to evaluate financial performance against historical results because it believes this provides a more comparable measure of its continuing business. Core net operating earnings is also used by AFGs management as a basis for strategic planning and forecasting.
The following information was filed by American Financial Group Inc (AFG) on Wednesday, October 31, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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