Summary of AFGC Q4 2025 Earnings Call

1Key Financial Results and Metrics

Core Net Operating Earnings: $10.29 per share for the full year 2025, with Q4 earnings at $3.65 per share.

Return on Equity (ROE): Full year ROE at 18.2%, with Q4 annualized ROE at 25.2%.

Capital Returned to Shareholders: Over $700 million in 2025, including $334 million in special dividends, $274 million in regular dividends, and $99 million in share repurchases.

Combined Ratio: 84.1% for Q4 2025, improved by nearly 5 points year-over-year.

Net Investment Income: P&C net investment income down 12% year-over-year in Q4, but up 5% for the full year (excluding alternative investments).

2Strategic Updates and Business Highlights

Strong Underwriting Performance: Record underwriting profit in Q4, particularly in crop insurance operations.

Diversified Portfolio: AFG's specialty insurance businesses continue to perform well, with nearly all segments meeting or exceeding targeted returns.

Investment Portfolio: $17.2 billion portfolio with 65% in fixed maturities, yielding approximately 5.25%.

Dividend Increase: Quarterly dividend increased by 10% to an annual rate of $3.52 per share.

3Forward Guidance and Outlook

2026 Business Plan Assumptions:

Net written premium growth of 3% to 5%.

Combined ratio target of approximately 92.5%.

Expected core net operating earnings per share of approximately $11.

Market Conditions: Anticipated average crop year and continued focus on disciplined underwriting amid competitive pressures.

4Bad News, Challenges, or Points of Concern

Investment Returns: Decline in alternative investment returns, particularly in multifamily properties due to oversupply.

Workers' Compensation: Concerns over potential adverse development in California workers' compensation, which has a combined ratio exceeding 120%.

Competitive Pressures: Heightened competition in certain lines, particularly in executive liability and excess and surplus lines, affecting premium growth.

5Notable Q&A Insights

Underwriting Actions: AFG has largely completed corrective underwriting actions in social inflation-exposed businesses, with expectations for modest growth in 2026.

California Workers' Comp: The company remains cautious about the California market, which is underperforming relative to other states.

Alternative Investments: Expectations for improved returns hinge on the recovery of the multifamily market, with signs of stabilization noted.

Capital Management: No share repurchases in Q4 were noted, with management indicating a strategic decision to maintain liquidity for potential future buybacks. Overall, AFGC's Q4 2025 results reflect strong operational performance and a solid financial position, though challenges in investment returns and competitive pressures warrant attention as the company moves into 2026.