American Financial Group, Inc.
) reported second-quarter 2014 operating earnings per share
of $1.07, lagging the Zacks Consensus Estimate of $1.15. This was
due to higher expenses compared to revenue growth.
On a year-over-year basis, earnings increased 11.5%, buoyed by
higher contribution from specialty property and casualty group as
well as earnings strength in the annuity segment.
American Financial Group, Inc - Earnings
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American Financial's total revenue of $1.39 billion was up 22.2%
year over year, and easily surpassed the Zacks Consensus Estimate
of $903 million. The increase was driven by higher premiums and net
investment income, partly offset by lower realized gains.
Net investment income of $379 million was14.2% up year
over year, attributable to higher invested cash that was received
in connection with the Summit acquisition.
Total cost and cost expense of $1.26 billion increased 24.6% year
over year due to higher losses and expenses in both P&C and
Property and Casualty
segment generated $998 million in net premium written, which
increased 33% year over year primarily led by a 49% increase in
premium written in the Specialty Casualty sub-segment along with
10% growth in Property and Transportation, partly offset by 5%
decline in the Specialty Financial sub segment. The segment's
combined ratio improved only 10 basis points year over year to
segment reported $949 million premium which improved 10% year over
year, primarily led by a significant increase of 60% in sale of
single premium in the financial institutions market.
Long-term debt at American Financial as of the end of the second
quarter remained almost unchanged at $912 million compared with
$913 million as of Dec 31, 2013.
As of Jun 30, the company's book value of $47.95 per share
increased 4.5% from the 2013 year-end level.
Core net operating earnings of 9.6% increased slightly from 9.2% at
Share Buyback and Dividend Update
During the second quarter, American Financial spent $20 million on
2014 Guidance Reaffirmed
American Financial reaffirmed its operating earnings expectation of
$4.50 and $4.90 per share. Management expects Annuity premiums for
the full year to be 5% to 10% lower than $4 billion achieved in
2013. For its Property and Casualty segment, the company expects
net written premium of 17% to 21% for the full year.
American Financial carries a Zacks Rank # 3 (Hold).
Other players that reported second-quarter earnings ahead of the
Zacks Consensus Estimate are Aspen Insurance Holdings Ltd. (
), ACE Limited (
) and Assurant Inc. (
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