American Financial Group, Inc. Announces Third Quarter Results
-
Net earnings of
$1.23 per share; includes$0.30 per share A&E reserve strengthening -
Core net operating earnings
$1.51 per share -
Announced special cash dividend of
$1.00 per share, payableDecember 7, 2016 -
Full year 2016 core net operating earnings guidance revised to
$5.55 - $5.75 per share
Core net operating earnings were
During the third quarter of 2016, AFG repurchased approximately 358,000
shares of common stock at an average price per share of
The Company also announced today that it declared a special cash
dividend of
AFG’s 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, rating agencies and investors with an understanding of the results from the ongoing operations of the Company by excluding the impact of net realized investment gains and losses and other special items that are not necessarily indicative of operating trends. AFG’s 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 AFG’s management as a basis for strategic planning and forecasting.
In millions, except per share amounts | Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Components of net earnings attributable to shareholders: | ||||||||||||||||
Core operating earnings before income taxes | $ | 217 | $ | 193 | $ | 574 | $ | 542 | ||||||||
Pretax non-core items: |
||||||||||||||||
Realized gains (losses) on securities | 2 | (16 | ) | (32 | ) | 2 | ||||||||||
Realized gain (loss) on sale of subsidiaries: | ||||||||||||||||
Long-term care business | - | - | 2 | (162 | ) | |||||||||||
Other | - | 5 | - | 5 | ||||||||||||
Gain on sale of apartment property and hotel | - | - | 32 | 51 | ||||||||||||
Special A&E charges(b) |
(41 | ) | (79 | ) | (41 | ) | (79 | ) | ||||||||
Neon exited lines charge |
- | - | (65 | ) | - | |||||||||||
Loss on early retirement of debt |
- | (4 | ) | - | (4 | ) | ||||||||||
Earnings before income taxes | 178 | 99 | 470 | 355 | ||||||||||||
Provision (credit) for income taxes: | ||||||||||||||||
Core operating earnings | 79 | 66 | 202 | 180 | ||||||||||||
Non-core items | (14 | ) | (33 | ) | (12 | ) | (65 | ) | ||||||||
Total provision (credit) for income taxes | 65 | 33 | 190 | 115 | ||||||||||||
Net earnings, including noncontrolling interests | 113 | 66 | 280 | 240 | ||||||||||||
Less net earnings attributable to noncontrolling interests: | ||||||||||||||||
Core operating earnings | 4 | 4 | 14 | 12 | ||||||||||||
Non-core items | - | (1 | ) | 2 | 5 | |||||||||||
Total net earnings attributable to noncontrolling interests | 4 | 3 | 16 | 17 | ||||||||||||
Net earnings attributable to shareholders | $ | 109 | $ | 63 | $ | 264 | $ | 223 | ||||||||
Net earnings: | ||||||||||||||||
Core net operating earnings(a) |
$ | 134 | $ | 123 | $ | 358 | $ | 350 | ||||||||
Non-core items | (25 | ) | (60 | ) | (94 | ) | (127 | ) | ||||||||
Net earnings attributable to shareholders | $ | 109 | $ | 63 | $ | 264 | $ | 223 | ||||||||
Components of Earnings Per Share: | ||||||||||||||||
Core net operating earnings(a) |
$ | 1.51 | $ | 1.38 | $ | 4.04 | $ | 3.92 | ||||||||
Non-core Items: |
||||||||||||||||
Realized gains (losses) on securities | 0.02 | (0.10 | ) | (0.21 | ) | 0.03 | ||||||||||
Realized gain (loss) on sale of subsidiaries: | ||||||||||||||||
Long-term care business | - | - | 0.01 | (1.18 | ) | |||||||||||
Other | - | 0.04 | - | 0.04 | ||||||||||||
Gain on sale of apartment property and hotel | - | - | 0.17 | 0.29 | ||||||||||||
Special A&E charges(b) | (0.30 | ) | (0.58 | ) | (0.30 | ) | (0.58 | ) | ||||||||
Neon exited lines charge | - | - | (0.73 | ) | - | |||||||||||
Loss on early retirement of debt | - | (0.03 | ) | - | (0.03 | ) | ||||||||||
Diluted Earnings Per Share | $ | 1.23 | $ | 0.71 | $ | 2.98 | $ | 2.49 |
Footnotes (a) and (b) are contained in the accompanying Notes to Financial Schedules at the end of this release.
“Returning capital to shareholders in the form of a
“Based on results for the first nine months of 2016, we now estimate
that AFG’s core net operating earnings will be in the range of
The Specialty P&C insurance operations generated an underwriting profit
of
Gross and net written premiums were down 3% and 4%, respectively, for
the third quarter of 2016, when compared to the same period in 2015.
Pricing across our entire
The
Gross and net written premiums for the third quarter of 2016 were 7% and 4% lower, respectively, than the comparable 2015 period. The decrease was largely the result of lower year-over-year premiums in our crop businesses, primarily the result of lower spring commodity pricing and timing differences in the recording of crop premiums. Excluding crop, third quarter 2016 gross and net written premiums were virtually unchanged from the prior year period. Overall renewal rates in this group increased 4% on average for the third quarter of 2016, including a 6% increase in National Interstate’s renewal rates.
The
Gross and net written premiums decreased 2% and 8%, respectively, for the third quarter of 2016 when compared to the same prior year period. Higher premiums in our workers’ compensation businesses were more than offset by Neon’s exit of certain lines of business and implementation of tougher underwriting standards at Neon. In addition, net written premiums were impacted by higher ceded premiums within Neon. Renewal pricing for this group decreased by 1% in the third quarter, including a decrease of approximately 4% in our workers’ compensation businesses. Excluding workers’ compensation, renewal pricing in this group was up approximately 1% for the quarter.
The
Gross and net written premiums increased 13% and 9%, respectively, in the 2016 third quarter when compared to the same 2015 period, primarily as a result of higher premiums in our financial institutions business. Renewal pricing in this group was flat for the quarter.
Further details about AFG’s Specialty P&C operations may be found in the accompanying schedules and in our Quarterly Investor Supplement, which is posted on our website.
Annuity Segment
As shown in the following table, AFG's Annuity Segment contributed a
record
Components of Annuity Operating Earnings Before Income Taxes |
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Dollars in millions | Three months ended | Pct. | Nine months ended | Pct. | ||||||||||||||||||
September 30, | Change | September 30, | Change | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Annuity earnings before fair value accounting for FIAs | $ | 106 | $ | 89 | 19 | % | $ | 292 | $ | 258 | 13 | % | ||||||||||
Impact of fair value accounting for FIAs |
1 |
(22 |
) |
nm |
(56 |
) |
(28 |
) |
nm | |||||||||||||
|
||||||||||||||||||||||
Pretax Annuity Operating Earnings |
$ | 107 | $ | 67 | 60 | % | $ | 236 | $ | 230 | 3 | % | ||||||||||
Annuity Earnings Before Fair Value Accounting for FIAs – AFG’s third quarter 2016 earnings benefited from favorable investment results, including the positive impact of certain investments required to be marked to market through earnings. In addition, AFG’s quarterly average annuity investments and reserves grew 11.3% and 12.7% year-over-year, respectively; however, the benefit of this growth was partially offset by the run-off of higher yielding investments. Furthermore, AFG’s third quarter 2016 earnings were favorably impacted by better stock market performance during the quarter, compared to a negative impact from a significant drop in the stock market in the third quarter of 2015.
Impact of Fair Value Accounting for FIAs – Variances from expectations of certain items (such as projected interest rates, option costs and surrenders), as well as changes in the stock market, have an impact on the accounting for FIAs; these accounting adjustments are recognized through AFG’s reported core earnings. Many of these adjustments are not economic in nature, but rather impact the timing of reported results. In the third quarter of 2016, the impact from changes in the stock market and interest rates was moderate. Conversely, in the third quarter of 2015, the significant stock market decrease resulted in a large unfavorable impact on annuity earnings. In addition, interest rates decreased during the 2015 third quarter, compared to the expectation that they would rise, which also had a negative impact on annuity earnings in the prior year period. These impacts are included within the “Impact of fair value accounting for FIAs” amounts shown in the table above.
Annuity Premiums – As expected, AFG’s annuity premiums decreased
significantly in the third quarter of 2016 as compared to the third
quarter of 2015. Annuity sales of
“For earnings before the impact of fair value accounting for FIAs, AFG
is increasing its 2016 full year expectations to a range of
“Including the impact of fair value accounting for FIAs, we believe that
full year 2016 pretax annuity operating earnings will be in the range of
“Finally, based on premiums through the first nine months of the year
and our recent levels of sales, we now expect that premiums for the full
year of 2016 will be in line with or slightly higher than the
More information about premiums and the results of operations for our Annuity Segment may be found in AFG’s Quarterly Investor Supplement, which is posted on our website.
A&E Reserves
During the third quarter of 2016, AFG completed an in-depth internal
review of its asbestos and environmental exposures relating to the
run-off operations of its
The P&C Group’s asbestos reserves were increased by
Over the past few years, the focus of AFG’s asbestos claims litigation has shifted to smaller companies and companies with ancillary exposures. AFG’s insureds with these exposures have been the driver of our P&C asbestos reserve increases in recent years. AFG is seeing modestly increasing estimates for indemnity and defense compared to prior studies. Overall, the rate of new asbestos cases received is down modestly.
The increase in P&C environmental reserves was primarily associated with updated estimates of site investigation costs with respect to existing sites and newly identified sites. AFG is seeing increased legal defense costs in environmental claims generally, as well as a number of claims and sites where the estimated investigation and remediation costs have increased. As in past years, there were no new or emerging broad industry trends that were identified in this review.
In addition, the 2016 internal review encompassed reserves for asbestos
and environmental exposures of our former railroad and manufacturing
operations. As a result of the review, AFG increased its reserve for
these asbestos and environmental exposures by
Investments
AFG recorded third quarter 2016 net realized gains of
For the three months ended
More information about the components of our investment portfolio may be found in our Quarterly Investor Supplement, which is posted on our website.
National Interstate Merger
A Definitive Proxy Statement has been mailed in connection with a
special meeting of the shareholders of
About
Forward Looking Statements
This press release contains certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements in this press release not dealing with historical results are forward-looking and are based on estimates, assumptions and projections. Examples of such forward-looking statements include statements relating to: the Company's expectations concerning market and other conditions and their effect on future premiums, revenues, earnings, investment activities and the amount and timing of share repurchases; recoverability of asset values; expected losses and the adequacy of reserves for asbestos, environmental pollution and mass tort claims; rate changes; and improved loss experience.
Actual results and/or financial condition could differ materially from
those contained in or implied by such forward-looking statements for a
variety of reasons including but not limited to: changes in financial,
political and economic conditions, including changes in interest and
inflation rates, currency fluctuations and extended economic recessions
or expansions in the U.S. and/or abroad; performance of securities
markets; new legislation or declines in credit quality or credit ratings
that could have a material impact on the valuation of securities in
AFG’s investment portfolio; the availability of capital; the possibility
that the proposal to acquire all shares of National Interstate
Corporation that are not currently owned by AFG’s wholly-owned
subsidiary,
The forward-looking statements herein are made only as of the date of this press release. The Company assumes no obligation to publicly update any forward-looking statements.
Conference Call
The Company will hold a conference call to discuss 2016 third quarter
results at
A replay will be available two hours following the completion of the
call and will remain available until
The conference call and accompanying webcast slides will also be broadcast live over the Internet. To listen to the call via the Internet, go to the Investor Relations page on AFG’s website, www.AFGinc.com, and follow the instructions at the Webcasts and Presentations link.
The archived webcast will be available immediately after the call via
the same link on the Investor Relations page until
(Financial summaries follow)
This earnings release and AFG’s Quarterly Investor Supplement are available in the Investor Relations section of AFG’s website: www.AFGinc.com.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES | ||||||||||||||||
SUMMARY OF EARNINGS AND SELECTED BALANCE SHEET DATA | ||||||||||||||||
(In Millions, Except Per Share Data) | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenues | ||||||||||||||||
P&C insurance net earned premiums | $ | 1,159 | $ | 1,173 | $ | 3,184 | $ | 3,104 | ||||||||
Life, accident & health net earned premiums | 6 | 28 | 18 | 80 | ||||||||||||
Net investment income | 433 | 425 | 1,267 | 1,217 | ||||||||||||
Realized gains (losses) on: | ||||||||||||||||
Securities | 2 | (16 | ) | (32 | ) | 2 | ||||||||||
Subsidiaries | - | 5 | 2 | (157 | ) | |||||||||||
Income (loss) of managed investment entities: | ||||||||||||||||
Investment income | 48 | 40 | 141 | 112 | ||||||||||||
Gain (loss) on change in fair value of assets/liabilities |
11 | (11 | ) | 9 | (16 | ) | ||||||||||
Other income | 46 | 43 | 172 | 185 | ||||||||||||
Total revenues | 1,705 | 1,687 | 4,761 | 4,527 | ||||||||||||
Costs and expenses |
||||||||||||||||
P&C insurance losses & expenses | 1,121 | 1,161 | 3,071 | 2,989 | ||||||||||||
Annuity, life, accident & health benefits & expenses | 251 | 288 | 797 | 795 | ||||||||||||
Interest charges on borrowed money | 19 | 18 | 56 | 58 | ||||||||||||
Expenses of managed investment entities | 38 | 28 | 109 | 80 | ||||||||||||
Other expenses | 98 | 93 | 258 | 250 | ||||||||||||
Total costs and expenses | 1,527 | 1,588 | 4,291 | 4,172 | ||||||||||||
Earnings before income taxes |
178 |
99 |
470 |
355 |
||||||||||||
Provision for income taxes(c) | 65 | 33 | 190 | 115 | ||||||||||||
Net earnings including noncontrolling interests |
113 |
66 |
280 |
240 |
||||||||||||
Less: Net earnings attributable to noncontrolling interests |
|
4 |
3 |
16 |
17 |
|||||||||||
Net earnings attributable to shareholders | $ | 109 | $ | 63 | $ | 264 | $ | 223 | ||||||||
Diluted earnings per common share | $ | 1.23 | $ | 0.71 | $ | 2.98 | $ | 2.49 | ||||||||
Average number of diluted shares | 88.5 | 89.3 | 88.4 | 89.4 |
September 30, | December 31, | ||||||||
Selected Balance Sheet Data: |
2016 | 2015 | |||||||
Total cash and investments | $ | 41,805 | $ | 37,736 | |||||
Long-term debt(d) | $ | 1,300 | $ | 998 | |||||
Shareholders’ equity(e) | $ | 5,161 | $ | 4,592 | |||||
Shareholders’ equity (excluding unrealized gains/losses on fixed maturities)(e) |
$ |
4,492 |
$ |
4,314 |
|||||
Book value per share | $ | 59.45 | $ | 52.50 | |||||
Book value per share (excluding unrealized gains/losses on fixed maturities) |
$ | 51.73 | $ | 49.33 | |||||
Common Shares Outstanding |
86.8 |
87.5 |
Footnotes (c), (d) and (e) are contained in the accompanying Notes to Financial Schedules at the end of this release.
AMERICAN FINANCIAL GROUP, INC. | ||||||||||||||||||||||
SPECIALTY P&C OPERATIONS | ||||||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||||
Three months ended | Pct. | Nine months ended | Pct. | |||||||||||||||||||
September 30, | Change | September 30, | Change | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Gross written premiums | $ | 1,899 | $ | 1,962 | (3 | %) | $ | 4,540 | $ | 4,476 | 1 | % | ||||||||||
Net written premiums | $ | 1,268 | $ | 1,319 | (4 | %) | $ | 3,303 | $ | 3,271 | 1 | % | ||||||||||
Ratios (GAAP): | ||||||||||||||||||||||
Loss & LAE ratio | 62.9 | % | 64.5 | % | 61.0 | % | 62.2 | % | ||||||||||||||
Underwriting expense ratio | 30.3 | % | 28.4 | % | 31.9 | % | 31.5 | % | ||||||||||||||
Specialty Combined Ratio | 93.2 | % | 92.9 | % | 92.9 | % | 93.7 | % | ||||||||||||||
Combined Ratio – P&C Segment |
96.3 |
% |
98.7 |
% |
96.0 |
% |
96.0 |
% |
||||||||||||||
Supplemental Information:(f) |
||||||||||||||||||||||
Gross Written Premiums: | ||||||||||||||||||||||
Property & Transportation | $ | 991 | $ | 1,064 | (7 | %) | $ | 1,927 | $ | 1,940 | (1 | %) | ||||||||||
Specialty Casualty | 722 | 734 | (2 | %) | 2,108 | 2,078 | 1 | % | ||||||||||||||
Specialty Financial | 186 | 164 | 13 | % | 505 | 458 | 10 | % | ||||||||||||||
$ | 1,899 | $ | 1,962 | (3 | %) | $ | 4,540 | $ | 4,476 | 1 | % | |||||||||||
Net Written Premiums: | ||||||||||||||||||||||
Property & Transportation | $ | 585 | $ | 608 | (4 | %) | $ | 1,278 | $ | 1,258 | 2 | % | ||||||||||
Specialty Casualty | 504 | 545 | (8 | %) | 1,526 | 1,549 | (1 | %) | ||||||||||||||
Specialty Financial | 149 | 137 | 9 | % | 418 | 388 | 8 | % | ||||||||||||||
Other | 30 | 29 | 3 | % | 81 | 76 | 7 | % | ||||||||||||||
$ | 1,268 | $ | 1,319 | (4 | %) | $ | 3,303 | $ | 3,271 | 1 | % | |||||||||||
Combined Ratio (GAAP): | ||||||||||||||||||||||
Property & Transportation | 91.1 | % | 96.2 | % | 92.4 | % | 98.7 | % | ||||||||||||||
Specialty Casualty | 97.4 | % | 93.8 | % | 95.7 | % | 93.6 | % | ||||||||||||||
Specialty Financial | 86.4 | % | 80.6 | % | 84.5 | % | 81.0 | % | ||||||||||||||
Aggregate Specialty Group | 93.2 | % | 92.9 | % | 92.9 | % | 93.7 | % |
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Reserve Development (Favorable)/Adverse: | |||||||||||||||||
Property & Transportation | $ | (5 | ) | $ | (2 | ) | $ | (34 | ) | $ | 7 | ||||||
Specialty Casualty | (2 | ) | 3 | (16 | ) | (4 | ) | ||||||||||
Specialty Financial | (6 | ) | (8 | ) | (17 | ) | (25 | ) | |||||||||
Other |
(1 | ) | (7 | ) | (4 | ) | (10 | ) | |||||||||
Specialty Group Excluding A&E and Neon Charge | (14 | ) | (14 | ) | (71 | ) | (32 | ) | |||||||||
Special A&E Reserve Charge - P&C Run-off |
36 | 67 | 36 | 67 | |||||||||||||
Neon Exited Lines Charge and Other |
- | 2 | 57 | 3 | |||||||||||||
Total Reserve Development | $ | 22 | $ | 55 | $ | 22 | $ | 38 | |||||||||
Points on Combined Ratio: |
|
|
|
|
|||||||||||||
Property & Transportation | (1.2 | ) | (0.4 | ) | (2.8 | ) | 0.5 | ||||||||||
Specialty Casualty | (0.3 | ) | 0.6 | (1.1 | ) | (0.2 | ) | ||||||||||
Specialty Financial | (3.9 | ) | (5.8 | ) | (4.0 | ) | (6.5 | ) | |||||||||
Aggregate Specialty Group | (1.1 | ) | (1.2 | ) | (2.1 | ) | (1.0 | ) | |||||||||
Total P&C Segment | 2.0 | 4.6 | 0.7 | 1.3 |
Footnote (f) is contained in the accompanying Notes to Financial Schedules at the end of this release.
AMERICAN FINANCIAL GROUP, INC. | ||||||||||||||||||
ANNUITY SEGMENT | ||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||
Components of Statutory Premiums |
||||||||||||||||||
Three months ended | Pct. | Nine months ended | Pct. | |||||||||||||||
September 30, | Change | September 30, | Change | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Annuity Premiums: |
||||||||||||||||||
Financial Institutions | $ | 532 | $ | 625 | (15 | %) | $ | 1,792 | $ | 1,436 | 25 | % | ||||||
Retail | 358 | 639 | (44 | %) | 1,359 | 1,422 | (4 | %) | ||||||||||
Education Market | 42 | 47 | (11 | %) | 144 | 143 | 1 | % | ||||||||||
Variable Annuities | 9 | 10 | (10 | %) | 29 | 32 | (9 | %) | ||||||||||
Total Annuity Premiums | $ | 941 | $ | 1,321 | (29 | %) | $ | 3.324 | $ | 3,033 | 10 | % |
Components of Operating Earnings Before Income Taxes |
||||||||||||||||||
Three months ended | Pct. | Nine months ended | Pct. | |||||||||||||||
September 30, | Change | September 30, | Change | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Revenues: | ||||||||||||||||||
Net investment income | $ | 351 | $ | 317 | 11 | % | $ | 1,010 | $ | 915 | 10 | % | ||||||
Other income | 26 | 24 | 8 | % | 76 | 75 | 1 | % | ||||||||||
Total revenues |
377 | 341 | 11 | % | 1,086 | 990 | 10 | % | ||||||||||
Costs and Expenses: | ||||||||||||||||||
Annuity benefits | 189 | 208 | (9 | %) | 640 | 543 | 18 | % | ||||||||||
Acquisition expenses | 53 | 44 | 20 | % | 127 | 143 | (11 | %) | ||||||||||
Other expenses | 28 | 22 | 27 | % | 83 | 74 | 12 | % | ||||||||||
Total costs and expenses | 270 | 274 | (1 | %) | 850 | 760 | 12 | % | ||||||||||
Operating earnings | ||||||||||||||||||
before income taxes | $ | 107 | $ | 67 | 60 | % | $ | 236 | $ | 230 | 3 | % |
Supplemental Fixed Annuity Information |
||||||||||||||||||||||
Three months ended | Pct. | Nine months ended | Pct. | |||||||||||||||||||
September 30, | Change | September 30, | Change | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
|
||||||||||||||||||||||
Operating earnings before impact | ||||||||||||||||||||||
of fair value accounting on FIAs | $ | 106 | $ | 89 | 19 | % | $ | 292 | $ | 258 | 13 | % | ||||||||||
Impact of fair value accounting |
1 |
(22 |
) |
nm |
(56 |
) |
(28 |
) |
nm | |||||||||||||
Operating earnings before income taxes |
$ | 107 | $ | 67 | 60 | % | $ | 236 | $ | 230 | 3 | % | ||||||||||
Average Fixed Annuity Reserves* | $ | 28,538 | $ | 25,316 | 13 | % | $ | 27,778 | $ | 24,514 | 13 | % | ||||||||||
Net Interest Spread* |
2.85 | % | 2.80 | % | 2.75 | % | 2.75 | % | ||||||||||||||
Net Spread Earned Before Impact of | ||||||||||||||||||||||
Fair Value Accounting* | 1.46 | % | 1.37 | % | 1.37 | % | 1.36 | % | ||||||||||||||
Net Spread Earned After Impact of | ||||||||||||||||||||||
Fair Value Accounting* | 1.47 | % | 1.02 | % | 1.10 | % | 1.21 | % |
* Excludes fixed annuity portion of variable annuity business.
AMERICAN FINANCIAL GROUP, INC. | ||||||||||||||||
Notes to Financial Schedules | ||||||||||||||||
a) Components of core net operating earnings (in millions): |
||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Core Operating Earnings before Income Taxes: |
||||||||||||||||
P&C insurance segment | $ | 153 | $ | 153 | $ | 450 | $ | 403 | ||||||||
Annuity segment, before impact of fair value accounting |
106 | 89 | 292 | 258 | ||||||||||||
Impact of fair value accounting | 1 | (22 | ) | (56 | ) | (28 | ) | |||||||||
Run-off long-term care and life segment | 1 | 6 | - | 14 | ||||||||||||
Interest & other corporate expense | (48 | ) | (37 | ) | (126 | ) | (117 | ) | ||||||||
Core operating earnings before income taxes | 213 | 189 | 560 | 530 | ||||||||||||
Related income taxes | 79 | 66 | 202 | 180 | ||||||||||||
Core net operating earnings | $ | 134 | $ | 123 | $ | 358 | $ | 350 | ||||||||
b) Reflects the following effects of special A&E charges during the third quarter and first nine months of 2016 and 2015 (dollars in millions, except per share amounts):
Pretax | After-tax | EPS | ||||||||||||||||
A&E Charges: | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||
P&C insurance run-off operations | ||||||||||||||||||
Asbestos | $ | 5 | $ | 25 | $ | 3 | $ | 17 | ||||||||||
Environmental | 31 | 42 | 20 | 27 | ||||||||||||||
$ | 36 | $ | 67 | $ | 23 | $ | 44 | $ | 0.26 | $ | 0.49 | |||||||
Former railroad & manufacturing operations | ||||||||||||||||||
Asbestos | $ | - | $ | 1 | $ | - | $ | - | ||||||||||
Environmental | 5 | 11 | 3 | 8 | ||||||||||||||
$ | 5 | $ | 12 | $ | 3 | $ | 8 | $ | 0.04 | $ | 0.09 | |||||||
Total A&E | $ | 41 | $ | 79 | $ | 26 | $ | 52 | $ | 0.30 | $ | 0.58 |
c) Excluding the impact of the Neon Exited Lines Charge that was
reported in the second quarter of 2016, AFG’s effective tax rate for the
nine months ended
d)
e) Shareholders’ Equity at
f) Supplemental Notes:
- Property & Transportation includes primarily physical damage and liability coverage for buses, trucks and recreational vehicles, inland and ocean marine, agricultural-related products and other property coverages.
- Specialty Casualty includes primarily excess and surplus, general liability, executive liability, professional liability, umbrella and excess liability, specialty coverages in targeted markets, customized programs for small to mid-sized businesses and workers’ compensation insurance.
- Specialty Financial includes risk management insurance programs for leasing and financing institutions (including collateral and lender-placed mortgage property insurance), surety and fidelity products and trade credit insurance.
- Other includes an internal reinsurance facility.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161101006855/en/
Source:
American Financial Group, Inc.
Diane P. Weidner, 513-369-5713
Asst.
Vice President – Investor Relations
or
Websites:
www.AFGinc.com
www.GreatAmericanInsuranceGroup.com