American Financial tops Q3 profit estimates, declares $3.50 special dividend

American Financial Group (AFG) topped third-quarter profit estimates and declared a special dividend, the company said in its results release issued Nov. 3.

Shares fell 1.1% in regular trading as of 10:05 a.m. ET, from a regular-session close of $153.00.

Core net operating earnings were $3.97 per share, above the $3.84 consensus estimate for the quarter. Revenue of $2.58 billion beat the $2.09 billion consensus estimate.

Here's how the company did:

• Core net operating earnings per share: $3.97 vs. $2.69 a year earlier, against the $3.84 consensus estimate
• Diluted earnings per share: $3.40 vs. $2.58 a year earlier
• Revenue: $2.58 billion vs. $2.33 billion a year earlier, against the $2.09 billion consensus estimate
• Net earnings: $282 million vs. $215 million a year earlier

The company said core net operating earnings rose on higher net investment income. Pretax property and casualty operating income reached a third-quarter record of $406 million.

The August sale of Charleston Harbor Resort & Marina generated $126 million in pretax net investment income. The company split that income evenly between its property and casualty operations and the parent, and said the sale contributed $1.21 per share of core net operating earnings.

Specialty insurance results

Gross written premiums rose 8% from a year earlier to $3.96 billion, and net written premiums rose 9% to $2.45 billion.

The specialty combined ratio was 93.8%, against 93.0% a year earlier. Average renewal pricing across the property and casualty group, excluding workers’ compensation, was up approximately 6% for the quarter.

Underwriting profit in the Specialty Financial Group fell to $23 million from $51 million. The company said the decrease reflects an isolated large loss in its European operations and lower favorable prior year development.

Investments and reserves

Annualized return on alternative investments was approximately 6.7%, compared with 6.2% in the prior year quarter.

The company recorded a special charge of $24 million, or $19 million after tax, to increase its environmental liabilities. The increase was due primarily to higher anticipated investigation and remediation costs at a limited number of sites. The asbestos and environmental review resulted in no net change to property and casualty reserves.

Capital returns

The board declared a special cash dividend of $3.50 per share, payable Nov. 25, 2026, to shareholders of record on Nov. 16. The aggregate amount will be approximately $290 million. It is in addition to the regular quarterly dividend of 97 cents per share paid on Oct. 23, 2026. The company has declared $59.00 per share in special dividends since the beginning of 2021.

AFG repurchased $26 million of its common stock during the quarter at an average price of $138.31 per share. Book value per share was $57.12 at Sept. 30, or $62.29 excluding accumulated other comprehensive income.

Co-Chief Executive Officers S. Craig Lindner and Carl H. Lindner III said, “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.”