On May 23, we issued an updated research report on
American Financial Group Inc.
). The company reported first-quarter 2014 operating earnings per
share of $1.00, a couple of cents ahead of the Zacks Consensus
On a year-over-year basis, earnings increased 8.7%. The earnings
beat came on the back of significantly higher underwriting
profitability in its Specialty Property and Casualty insurance
operations, partly offset by lower earnings in the Annuity
American Financial is a niche player in the U.S. property and
casualty market. The company boasts solid financial fundamentals,
including consistent profitability. It is also a key player in
diverse specialty businesses.
The company proactively ventures into new businesses,
undertaking small-to-medium sized acquisitions and rolling out new
products. Over the past decade, the company has successfully made
more than 10 acquisitions and ventured into several startups. The
recently concluded acquisition of Summit Holdings, launch of the
aviation division and purchase of renewal rights to expand its
Public Sector Division would broaden its footprint in the property
and casualty market.
American Financial is also experiencing favorable pricing trends
in its property and casualty business which has seen price
increases in the past 10 quarters consecutively. Along with price
increase, favorable loss cost trends offer consistent growth
American Financial has also exhibited superior underwriting
profitability by maintaining its combined ratio at a considerably
lower level compared with the property and casualty industry over
However, headwinds such as low interest rates, exposure to
catastrophes and increasing total costs are likely to keep
near-term earnings under pressure.
Nevertheless, American Financial's strong balance sheet,
consistent dividend hikes and intelligent use of capital are some
other positives that make us optimistic about the company's future
American Financial carries a Zacks Rank # 3 (Hold). However,
better-ranked players include
Allied World Assurance Company Holdings, AG
Aspen Insurance Holdings Ltd.
). All these stocks sport Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
AMER FINL GROUP (AFG): Free Stock Analysis
ASPEN INS HLDGS (AHL): Free Stock Analysis
ALLIED WORLD AS (AWH): Free Stock Analysis
BERKLEY (WR) CP (WRB): Free Stock Analysis
To read this article on Zacks.com click here.