American Financial Group Inc.

11/06/2025 | Press release | Distributed by Public on 11/06/2025 12:47

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
INDEX TO MD&A
Page Page
Forward-Looking Statements
33
Results of Operations
44
Overview
34
General
44
Critical Accounting Policies
34
Results of Operations - Third Quarter
46
Liquidity and Capital Resources
35
Segmented Statement of Earnings
46
Ratios
35
Property and Casualty Insurance
47
Condensed Consolidated Cash Flows
35
Holding Company, Other and Unallocated
56
Parent and Subsidiary Liquidity
36
Results of Operations - First Nine Months
59
Investments
37
Segmented Statement of Earnings
59
Uncertainties
40
Property and Casualty Insurance
60
Managed Investment Entities
41
Holding Company, Other and Unallocated
68
Recent Accounting Standards
70
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Some of the forward-looking statements can be identified by the use of words such as "anticipates", "believes", "expects", "projects", "estimates", "intends", "plans", "seeks", "could", "may", "should", "will" or the negative version of those words or other comparable terminology. Such forward-looking statements include statements relating to: expectations concerning market and other conditions and their effect on future premiums, revenues, earnings, investment activities and the amount and timing of share repurchases and special dividends; 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 the following and the risks and uncertainties AFG describes in the "Risk Factors"section of its most recent Annual Report on Form 10-K, as updated by its other reports filed with the Securities and Exchange Commission.
•changes in financial, political and economic conditions, including changes in interest and inflation rates and impacts from tariffs or other trade actions, 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;
•changes in insurance law or regulation, including changes in statutory accounting rules, including modifications to capital requirements;
•changes in the legal environment affecting AFG or its customers;
•tax law and accounting changes;
•levels of natural catastrophes and severe weather, terrorist activities (including any nuclear, biological, chemical or radiological events), incidents of war or losses resulting from pandemics, civil unrest and other major losses;
•disruption caused by cyber-attacks or other technology breaches or failures by AFG or its business partners and service providers, which could negatively impact AFG's business or reputation and/or expose AFG to litigation;
•development of insurance loss reserves and establishment of other reserves, particularly with respect to amounts associated with asbestos and environmental claims;
•availability of reinsurance and ability of reinsurers to pay their obligations;
•competitive pressures;
•the ability to obtain adequate rates and policy terms;
•changes in AFG's credit ratings or the financial strength ratings assigned by major ratings agencies to AFG's operating subsidiaries; and
•the impact of the conditions in the international financial markets and the global economy relating to AFG's international operations.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
The forward-looking statements herein are made only as of the date of this report. The Company assumes no obligation to publicly update any forward-looking statements.
OBJECTIVE
The objective of Management's Discussion and Analysis is to provide a discussion and analysis of the financial statements and other statistical data that management believes will enhance the understanding of AFG's financial condition, changes in financial condition and results of operations. The tables and narrative that follow are presented in a manner that is consistent with the information that AFG's management uses to make operational decisions and allocate capital resources. They are provided to demonstrate the nature of the transactions and events that could impact AFG's financial results. This discussion should be read in conjunction with the financial statements beginning on page 2.
OVERVIEW
Financial Condition
AFG is organized as a holding company with almost all of its operations being conducted by subsidiaries. AFG, however, has continuing cash needs for administrative expenses, the payment of principal and interest on borrowings, shareholder dividends and taxes. Therefore, certain analyses are most meaningfully presented on a parent only basis while others are best done on a total enterprise basis. In addition, because its businesses are financial in nature, AFG does not prepare its consolidated financial statements using a current-noncurrent format. Consequently, certain traditional ratios and financial analysis tests are not meaningful.
Results of Operations
Through the operations of its subsidiaries, AFG is engaged primarily in property and casualty insurance, focusing on specialized commercial products for businesses.
AFG reported net earnings of $215 million ($2.58 per share, diluted) for the third quarter of 2025 compared to $181 million ($2.16 per share, diluted) for the third quarter of 2024. The increase in the 2025 period reflects higher underwriting profit, higher net investment income and net realized gains on securities in the 2025 quarter compared to net realized losses on securities in the 2024 quarter, partially offset by higher special A&E charges.
AFG reported net earnings of $543 million ($6.50 per share, diluted) for the first nine months of 2025 compared to $632 million ($7.54 per share, diluted) for the first nine months of 2024. The decline in the 2025 period reflects lower underwriting profit, lower net investment income from AFG's alternative investment portfolio and higher special A&E charges, partially offset by the favorable impact on net investment income of higher average balances of investments and higher yields on fixed maturity investments.
Outlook
Management expects premium growth in many of AFG's business units and continued strong underwriting results in the ongoing generally favorable property and casualty insurance market. In addition, management anticipates the elevated interest rate environment (since early 2022) will continue to have a positive impact on investment income on fixed maturity investments into 2026.
AFG's financial condition, results of operations and cash flows are impacted by the economic, legal and regulatory environment. Economic inflation, social inflation, supply chain disruption and other economic conditions may impact premium levels, loss cost trends and investment returns.
Management believes that AFG's strong financial position and current liquidity and capital at its subsidiaries will give AFG the flexibility to continue to effectively address and respond to anticipated and unanticipated challenges. AFG's insurance subsidiaries continue to have capital at or in excess of the levels required by ratings agencies in order to maintain their current ratings, and the parent company does not have any debt maturities until 2030.
CRITICAL ACCOUNTING POLICIES
Significant accounting policies are summarized in Note A - "Accounting Policies" to the financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that can have a significant effect on amounts reported in the financial statements. As more information becomes known,
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
these estimates and assumptions change and, thus, impact amounts reported in the future. The areas where management believes the degree of judgment required to determine amounts recorded in the financial statements is most significant are as follows:
•the valuation of investments, including the determination of impairment allowances,
•the establishment of insurance reserves, especially asbestos and environmental-related reserves,
•the recoverability of reinsurance, and
•the establishment of asbestos and environmental liabilities of former railroad and manufacturing operations.
For a discussion of these policies, see Management's Discussion and Analysis - "Critical Accounting Policies"in AFG's 2024 Form 10-K.
LIQUIDITY AND CAPITAL RESOURCES
Ratios
AFG's debt to total capital ratio on a consolidated basis is shown below (dollars in millions):
December 31,
September 30, 2025 2024 2023
Principal amount of long-term debt $ 1,848 $ 1,498 $ 1,498
Total capital 6,651 6,204 6,075
Ratio of debt to total capital:
Including subordinated debt 27.8 % 24.1 % 24.7 %
Excluding subordinated debt 17.6 % 13.3 % 13.5 %
The ratio of debt to total capital is a non-GAAP measure that management believes is useful for investors, analysts and ratings agencies to evaluate AFG's financial strength and liquidity and to provide insight into how AFG finances its operations. The ratio is calculated by dividing the principal amount of AFG's long-term debt by its total capital, which includes long-term debt and shareholders' equity (excluding accumulated other comprehensive income (loss), net of tax). In addition, maintaining a ratio of debt, excluding subordinated debt and debt secured by real estate (if any), to total capital of 35% or lower is a financial covenant in AFG's bank credit facility.
Condensed Consolidated Cash Flows
AFG's principal sources of cash include insurance premiums, income from its investment portfolio and proceeds from the maturities, redemptions and sales of investments. Insurance premiums in excess of acquisition expenses and operating costs are invested until they are needed to meet policyholder obligations or made available to the parent company through dividends to cover debt obligations and corporate expenses, and to provide returns to shareholders through share repurchases and dividends. Cash flows from operating, investing and financing activities as detailed in AFG's Consolidated Statement of Cash Flows are shown below (in millions):
Nine months ended September 30,
2025 2024
Net cash provided by operating activities $ 749 $ 478
Net cash provided by (used in) investing activities (71) 116
Net cash used in financing activities (242) (497)
Net change in cash and cash equivalents $ 436 $ 97
Net Cash Provided by Operating Activities AFG's property and casualty insurance operations typically produce positive net operating cash flows as premiums collected and investment income exceed policy acquisition costs, claims payments and operating expenses. AFG's net cash provided by operating activities is impacted by the level and timing of premiums, claim and expense payments and recoveries from reinsurers. Cash flows provided by operating activities also include the activity of AFG's managed investment entities (collateralized loan obligations ("CLO")) other than those activities included in investing or financing activities. The changes in the assets and liabilities of the managed investment entities included in operating activities increased cash flows from operating activities by $104 million during the first nine months of 2025 and reduced cash flows from operating activities by $67 million in the first nine months of 2024, accounting for a $171 million increase in cash flows from operating activities in the 2025 period compared to the 2024 period. As discussed in Note A - "Accounting Policies - Managed Investment Entities"to the financial statements, AFG
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
has no right to use the CLO assets and no obligation to pay the CLO liabilities and such assets and liabilities are shown separately in AFG's Balance Sheet. Excluding the impact of the managed investment entities, net cash provided by operating activities was $645 million and $545 million in the first nine months of 2025 and 2024, respectively.
Net Cash Provided by (Used in) Investing Activities AFG's investing activities consist primarily of the investment of funds provided by its property and casualty businesses. Investing activities also include the purchase and disposal of managed investment entity investments, which are presented separately in AFG's Balance Sheet. Net investment activity in the managed investment entities was a $63 million source of cash in the first nine months of 2025 compared to $204 million in the first nine months of 2024, accounting for a $141 million decrease in net cash provided by investing activities in the first nine months of 2025 compared to the 2024 period. See Note A - "Accounting Policies - Managed Investment Entities"and Note G - "Managed Investment Entities"to the financial statements. Investing activities for the first nine months of 2025 include the July acquisition of Radion Insurance Holdings, LLC ("Radion") for $7 million in cash. Excluding the acquisition of Radion and the activity of the managed investment entities, investing activities were a $127 million use of cash in the first nine months of 2025 compared to $88 million in the first nine months of 2024.
Net Cash Used in Financing Activities AFG's financing activities consist primarily of issuances and retirements of long-term debt, issuances and repurchases of common stock and dividend payments. Net cash used in financing activities was $242 million for the first nine months of 2025 compared to $497 million in the first nine months of 2024, a decrease of $255 million. The net proceeds from AFG's issuance of $350 million in 5.00% Senior Notes in September 2025 was a $344 million source of cash in the first nine months of 2025. AFG paid cash dividends totaling $367 million in the first nine months of 2025 compared to $385 million in the first nine months of 2024, accounting for a decrease in cash used in financing activities of $18 million. During the first nine months of 2025, AFG repurchased $98 million of its Common Stock compared to no repurchases in the comparable 2024 period. Financing activities also include issuances and retirements of managed investment entity liabilities, which are nonrecourse to AFG and presented separately in AFG's Balance Sheet. Retirements of managed investment entity liabilities exceeded issuances by $130 million in the first nine months of 2025 compared to $125 million in the first nine months of 2024, accounting for a $5 million increase in net cash used in financing activities in the 2025 period compared to the 2024 period. See Note A - "Accounting Policies - Managed Investment Entities"and Note G - "Managed Investment Entities"to the financial statements.
Parent and Subsidiary Liquidity
Parent Holding Company Liquidity Management believes AFG has sufficient resources to meet its liquidity requirements. If funds generated from operations, including dividends, tax payments and borrowings from subsidiaries, are insufficient to meet fixed charges in any period, AFG would be required to utilize parent company cash and investments or to generate cash through borrowings, sales of other assets or similar transactions.
AFG's operations continue to generate significant excess capital for future returns of capital to shareholders in the form of regular and special cash dividends and through opportunistic share repurchases or to be deployed into its property and casualty businesses as management identifies the potential for profitable organic growth, and opportunities to expand through acquisitions of established businesses or start-ups that meet target return thresholds.
In September 2025, AFG issued $350 million in 5.00% Senior Notes due in September 2035. The net proceeds of this offering will be used for general corporate purposes, which may include repurchases of AFG's outstanding common shares.
During the first nine months of 2025, AFG repurchased 788,134 shares of its Common Stock for $98 million and paid a special cash dividend totaling $167 million ($2.00 per share) in March. On November 4, 2025, AFG declared a special cash dividend of $2.00 per share, payable on November 26, 2025. The aggregate amount of this special dividend will be approximately $167 million.
During 2024, AFG paid special cash dividends totaling $545 million ($2.50 per share in February and $4.00 per share in November).
AFG may, at any time and from time to time, seek to retire or purchase its outstanding debt through cash purchases or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as management may determine, and will depend on prevailing market conditions, AFG's liquidity requirements, contractual restrictions and other factors.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
At September 30, 2025, AFG (parent) held approximately $625 million in cash and investments. Management believes that AFG's cash balances are held at stable banking institutions, although the amounts of many of these deposits are in excess of federally insured balances. AFG can borrow up to $450 million under its revolving credit facility, which expires in June 2028. Amounts borrowed under this agreement bear interest at rates ranging from 1.00% to 1.75% (based on AFG's credit rating, currently 1.25%) over a SOFR-based floating rate. There were no borrowings under AFG's credit facility, or under any other parent company short-term borrowing arrangements, during 2024 or the first nine months of 2025.
Under a tax allocation agreement with AFG, all 80% (or more) owned U.S. subsidiaries generally pay taxes to (or recover taxes from) AFG based on each subsidiary's contribution to amounts due under AFG's consolidated tax return.
Subsidiary Liquidity The liquidity requirements of AFG's insurance subsidiaries relate primarily to the policyholder claims and underwriting expenses and payments of dividends and taxes to AFG. Historically, cash flows from premiums and investment income have generally provided more than sufficient funds to meet these requirements. Funds received in excess of cash requirements are generally invested in marketable securities. In addition, the insurance subsidiaries generally hold a significant amount of highly liquid, short duration investments.
AFG believes its insurance subsidiaries maintain sufficient liquidity to pay claims and underwriting expenses. In addition, these subsidiaries have sufficient capital to meet commitments in the event of unforeseen reserve deficiencies, inadequate premium rates or reinsurer insolvencies. Management believes that the capital levels in AFG's insurance subsidiaries are adequate to maintain its business and rating agency ratings. Nonetheless, changes in statutory accounting rules, changes in rating agency measures, significant declines in the fair value of the insurance subsidiaries' investment portfolios or significant ratings downgrades on these investments, could create a need for additional capital.
Investments
AFG's investment portfolio at September 30, 2025, contained $10.52 billion in fixed maturity securities classified as available for sale and carried at fair value with unrealized gains and losses included in accumulated other comprehensive income (loss) and $80 million in fixed maturities classified as trading with holding gains and losses included in net investment income. In addition, AFG's investment portfolio includes $550 million in equity securities carried at fair value with holding gains and losses included in realized gains (losses) on securities and $250 million in equity securities carried at fair value with holding gains and losses included in net investment income. AFG's investment portfolio also includes $2.38 billion in investments accounted for using the equity method (limited partnerships and similar investments). Under the equity method, AFG records its share of the earnings or losses of the investee based on when it is reported by the investee in its financial statements rather than in the period in which the investee declares a dividend. AFG's share of the earnings or losses from equity method investments is included in net investment income and is generally recorded on a quarter lag due to the timing of the receipt of the investee's financial statements.
Fair values for AFG's portfolio are determined by AFG's internal investment professionals using data from nationally recognized pricing services, non-binding broker quotes and other market information. Fair values of equity securities are determined by published closing prices when available. For AFG's fixed maturity portfolio, approximately 88% was priced using pricing services at September 30, 2025 and 3% was priced using non-binding broker quotes. The remaining 9% are priced internally using a variety of inputs including credit spreads, trade information, prices of comparable securities, estimates of cash flow and other security specific features. When prices obtained for the same security vary, AFG's internal investment professionals select the price they believe is most indicative of an exit price. For additional information on determination of fair value, see Note D - "Fair Value Measurements"to the financial statements.
The pricing services use a variety of observable inputs to estimate fair value of fixed maturities that do not trade on a daily basis. Based upon information provided by the pricing services, these inputs include, but are not limited to, recent reported trades, benchmark yields, issuer spreads, bids or offers, reference data, and measures of volatility. Included in the pricing of structured securities are estimates of the rate of future prepayments and defaults of principal over the remaining life of the underlying collateral. Due to the lack of transparency in the process that brokers use to develop prices, valuations that are based on brokers' prices are classified as Level 3 in the GAAP hierarchy unless the price can be corroborated, for example, by comparison to similar securities priced using observable inputs.
Valuation techniques utilized by pricing services and prices obtained from external sources are reviewed by AFG's internal investment professionals who are familiar with the securities being priced and the markets in which they trade to ensure the fair value determination is representative of an exit price. To validate the appropriateness of the prices obtained, these investment managers consider widely published indices (as benchmarks), recent trades, changes in interest rates, general economic conditions and the credit quality of the specific issuers. In addition, AFG communicates directly with
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
pricing services regarding the methods and assumptions used in pricing, including verifying, on a test basis, the inputs used by the services to value specific securities.
In general, the fair value of AFG's fixed maturity investments is inversely correlated to changes in interest rates. The following table demonstrates the sensitivity of such fair values to reasonably likely changes in interest rates by illustrating the estimated effect on AFG's fixed maturity portfolio that an immediate increase of 100 basis points in the interest rate yield curve would have had at September 30, 2025 (dollars in millions). Effects of increases or decreases from the 100 basis points illustrated would be approximately proportional.
Fair value of fixed maturity portfolio $ 10,598
Percentage impact on fair value of 100 bps increase in interest rates (3.0 %)
Pretax impact on fair value of fixed maturity portfolio $ (318)
Approximately 96% of the fixed maturities held by AFG at September 30, 2025, were rated "investment grade" (credit rating of AAA to BBB) by nationally recognized rating agencies, 2% were rated "non-investment grade" and 2% were not rated. Investment grade securities generally bear lower yields and lower degrees of risk than those that are unrated and non-investment grade. Management believes that the high-quality investment portfolio should generate a stable and predictable investment return.
AFG has approximately $80 million of direct exposure to office commercial real estate through property ownership, mortgages or equity method investments. AFG's fixed maturity portfolio includes securities (the majority of which are AAA-rated) with a carrying value of approximately $320 million that have minimal exposure to office commercial real estate.
Summarized information for the unrealized gains and losses recorded in AFG's Balance Sheet at September 30, 2025, is shown in the following table (dollars in millions). There were $507 million of available for sale fixed maturity securities with no unrealized gains or losses at September 30, 2025.
Securities
With
Unrealized
Gains 		Securities
With
Unrealized
Losses
Available for Sale Fixed Maturities
Fair value of securities $ 6,044 $ 3,967
Amortized cost of securities, net of allowance for expected credit losses $ 5,877 $ 4,188
Gross unrealized gain (loss) $ 167 $ (221)
Fair value as % of amortized cost 103 % 95 %
Number of security positions 1,070 895
Number individually exceeding $2 million gain or loss 1 28
Concentration of gains (losses) by type or industry (exceeding 5% of unrealized):
Residential mortgage-backed securities
$ 37 $ (113)
Other asset-backed securities 27 (44)
Banking 18 (6)
Asset managers 15 (5)
States and municipalities 8 (32)
Percentage rated investment grade 96 % 96 %
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
The table below sets forth the scheduled maturities of AFG's available for sale fixed maturity securities at September 30, 2025, based on their fair values. Securities with sinking funds are reported at average maturity. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers.
Securities
With
Unrealized
Gains 		Securities
With
Unrealized
Losses
Maturity
One year or less 3 % 13 %
After one year through five years 24 % 18 %
After five years through ten years 19 % 6 %
After ten years 1 % 4 %
47 % 41 %
CLOs and other asset-backed securities (average life of approximately 3 years)
33 % 32 %
Residential mortgage-backed securities (average life of approximately 6 years)
20 % 27 %
100 % 100 %
The table below (dollars in millions) summarizes the unrealized gains and losses on fixed maturity securities by dollar amount:
Aggregate
Fair
Value 		Aggregate
Unrealized
Gain (Loss) 		Fair
Value as
% of Cost
Fixed Maturities at September 30, 2025
Securities with unrealized gains:
Exceeding $500,000 (66 securities)
$ 928 $ 59 107 %
$500,000 or less (1,004 securities)
5,116 108 102 %
$ 6,044 $ 167 103 %
Securities with unrealized losses:
Exceeding $500,000 (94 securities)
$ 1,173 $ (150) 89 %
$500,000 or less (801 securities)
2,794 (71) 98 %
$ 3,967 $ (221) 95 %
The following table (dollars in millions) summarizes the unrealized losses for all securities with unrealized losses by issuer quality and the length of time those securities have been in an unrealized loss position:
Aggregate
Fair
Value 		Aggregate
Unrealized
Loss 		Fair
Value as
% of Cost
Securities with Unrealized Losses at September 30, 2025
Investment grade fixed maturities with losses for:
Less than one year (81 securities)
$ 512 $ (4) 99 %
One year or longer (701 securities)
3,285 (209) 94 %
$ 3,797 $ (213) 95 %
Non-investment grade fixed maturities with losses for:
Less than one year (25 securities)
$ 42 $ (1) 98 %
One year or longer (88 securities)
128 (7) 95 %
$ 170 $ (8) 96 %
When a decline in the value of a specific investment is considered to be other-than-temporary, an allowance for credit losses (impairment) is charged to earnings (accounted for as a realized loss). The determination of whether unrealized losses are other-than-temporary requires judgment based on subjective as well as objective factors as detailed in AFG's 2024 Form 10-K under Management's Discussion and Analysis - "Investments."
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Based on its analysis, management believes AFG will recover its cost basis (net of any allowance) in the fixed maturity securities with unrealized losses and that AFG has the ability to hold the securities until they recover in value and had no intent to sell them at September 30, 2025. Although AFG has the ability to continue holding its fixed maturity investments with unrealized losses, its intent to hold them may change due to deterioration in the issuers' creditworthiness, decisions to lessen exposure to a particular issuer or industry, asset/liability management decisions, market movements, changes in views about appropriate asset allocation or the desire to offset taxable realized gains. Should AFG's ability or intent change regarding a particular security, a charge for impairment would likely be required. While it is not possible to accurately predict if or when a specific security will become impaired, increases in the allowance for credit losses could be material to results of operations in future periods. Significant declines in the fair value of AFG's investment portfolio could have a significant adverse effect on AFG's liquidity. For information on AFG's realized gains (losses) on securities, see "Results of Operations - Realized Gains (Losses) on Securities."
Uncertainties
Management believes that the areas posing the greatest risk of material loss are the adequacy of its insurance reserves and contingencies arising out of its former railroad and manufacturing operations. SeeManagement's Discussion and Analysis - "Uncertainties - Asbestos and Environmental-related ("A&E") Insurance Reserves" in AFG's 2024 Form 10-K.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
MANAGED INVESTMENT ENTITIES
Accounting standards require AFG to consolidate its investments in collateralized loan obligation ("CLO") entities that it manages and owns an interest in (in the form of debt). See Note A - "Accounting Policies - Managed Investment Entities"and Note G - "Managed Investment Entities"to the financial statements. The effect of consolidating these entities is shown in the tables below (in millions). The "Before CLO Consolidation" columns include AFG's investment and earnings in the CLOs on an unconsolidated basis.
CONDENSED CONSOLIDATING BALANCE SHEET
Before CLO
Consolidation 		Managed
Investment
Entities 		Consol.
Entries 		Consolidated
As Reported
September 30, 2025
Assets:
Cash and investments $ 16,899 $ - $ (138) (*) $ 16,761
Assets of managed investment entities - 3,972 - 3,972
Other assets 13,101 - - 13,101
Total assets $ 30,000 $ 3,972 $ (138) $ 33,834
Liabilities:
Unpaid losses and loss adjustment expenses and unearned premiums
$ 19,529 $ - $ - $ 19,529
Liabilities of managed investment entities - 3,964 (130) (*) 3,834
Long-term debt and other liabilities 5,741 - - 5,741
Total liabilities 25,270 3,964 (130) 29,104
Shareholders' equity:
Common Stock and Capital surplus 1,504 8 (8) 1,504
Retained earnings 3,299 - - 3,299
Accumulated other comprehensive income (loss), net of tax (73) - - (73)
Total shareholders' equity 4,730 8 (8) 4,730
Total liabilities and shareholders' equity $ 30,000 $ 3,972 $ (138) $ 33,834
December 31, 2024
Assets:
Cash and investments $ 16,026 $ - $ (174) (*) $ 15,852
Assets of managed investment entities - 4,140 - 4,140
Other assets 10,845 - (1) (*) 10,844
Total assets $ 26,871 $ 4,140 $ (175) $ 30,836
Liabilities:
Unpaid losses and loss adjustment expenses and unearned premiums
$ 17,763 $ - $ - $ 17,763
Liabilities of managed investment entities
- 4,091 (126) (*) 3,965
Long-term debt and other liabilities
4,642 - - 4,642
Total liabilities 22,405 4,091 (126) 26,370
Shareholders' equity:
Common Stock and Capital surplus 1,495 49 (49) 1,495
Retained earnings 3,211 - - 3,211
Accumulated other comprehensive income (loss), net of tax (240) - - (240)
Total shareholders' equity 4,466 49 (49) 4,466
Total liabilities and shareholders' equity $ 26,871 $ 4,140 $ (175) $ 30,836
(*)Elimination of the fair value of AFG's investment in CLOs and related accrued interest.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS
Before CLO
Consol. (a) 		Managed
Investment
Entities 		Consol.
Entries 		Consolidated
As Reported
Three months ended September 30, 2025
Revenues:
Net earned premiums
$ 2,013 $ - $ - $ 2,013
Net investment income 211 - (6) (b) 205
Realized gains (losses) on:
Securities
12 - - 12
Subsidiaries
1 - - 1
Income of managed investment entities:
Investment income - 70 - 70
Gain (loss) on change in fair value of assets/liabilities - 3 (3) (b) -
Other income 33 - (3) (c) 30
Total revenues 2,270 73 (12) 2,331
Costs and Expenses:
Insurance benefits and expenses 1,884 - - 1,884
Expenses of managed investment entities - 72 (11) (b)(c) 61
Interest charges on borrowed money and other expenses 118 - - 118
Total costs and expenses 2,002 72 (11) 2,063
Earnings before income taxes 268 1 (1) 268
Provision for income taxes 53 - - 53
Net earnings $ 215 $ 1 $ (1) $ 215
Three months ended September 30, 2024
Revenues:
Net earned premiums
$ 2,055 $ - $ - $ 2,055
Net investment income 202 - (2) (b) 200
Realized gains (losses) on securities
(2) - - (2)
Income of managed investment entities:
Investment income - 99 - 99
Gain (loss) on change in fair value of assets/liabilities - (4) (5) (b) (9)
Other income 29 - (3) (c) 26
Total revenues 2,284 95 (10) 2,369
Costs and Expenses:
Insurance benefits and expenses 1,948 - - 1,948
Expenses of managed investment entities - 95 (10) (b)(c) 85
Interest charges on borrowed money and other expenses 107 - - 107
Total costs and expenses 2,055 95 (10) 2,140
Earnings before income taxes 229 - - 229
Provision for income taxes 48 - - 48
Net earnings $ 181 $ - $ - $ 181
(a)Includes income of $6 million in the third quarter of 2025 and $2 million in the third quarter of 2024, representing the change in fair value of AFG's CLO investments and $3 million of income in both the third quarter of 2025 and 2024, in CLO management fees earned.
(b)Elimination of the change in fair value of AFG's investments in the CLOs, including $8 million and $7 million in the third quarter of 2025 and 2024, respectively, in distributions recorded as interest expense by the CLOs.
(c)Elimination of management fees earned by AFG.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS
Before CLO
Consol. (a) 		Managed
Investment
Entities 		Consol.
Entries 		Consolidated
As Reported
Nine months ended September 30, 2025
Revenues:
Net earned premiums
$ 5,240 $ - $ - $ 5,240
Net investment income 572 - (10) (b) 562
Realized gains (losses) on:
Securities
17 - - 17
Subsidiaries
1 - - 1
Income of managed investment entities:
Investment income - 214 - 214
Gain (loss) on change in fair value of assets/liabilities - 8 (15) (b) (7)
Other income 92 - (8) (c) 84
Total revenues 5,922 222 (33) 6,111
Costs and Expenses:
Insurance benefits and expenses 4,920 - - 4,920
Expenses of managed investment entities - 219 (30) (b)(c) 189
Interest charges on borrowed money and other expenses 308 - - 308
Total costs and expenses 5,228 219 (30) 5,417
Earnings before income taxes 694 3 (3) 694
Provision for income taxes 151 - - 151
Net earnings $ 543 $ 3 $ (3) $ 543
Nine months ended September 30, 2024
Revenues:
Net earned premiums
$ 5,186 $ - $ - $ 5,186
Net investment income 611 - (25) (b) 586
Realized gains (losses) on securities 10 - - 10
Income of managed investment entities:
Investment income - 296 - 296
Gain (loss) on change in fair value of assets/liabilities - 9 (4) (b) 5
Other income 101 - (9) (c) 92
Total revenues 5,908 305 (38) 6,175
Costs and Expenses:
Insurance benefits and expenses 4,806 - - 4,806
Expenses of managed investment entities - 301 (34) (b)(c) 267
Interest charges on borrowed money and other expenses 298 - - 298
Total costs and expenses 5,104 301 (34) 5,371
Earnings before income taxes 804 4 (4) 804
Provision for income taxes 172 - - 172
Net earnings $ 632 $ 4 $ (4) $ 632
(a)Includes income of $10 million in the first nine months of 2025 and $25 million in the first nine months of 2024, representing the change in fair value of AFG's CLO investments and $8 million and $9 million of income in the first nine months of 2025 and 2024, respectively, in CLO management fees earned.
(b)Elimination of the change in fair value of AFG's investments in the CLOs, including $22 million and $25 million in the first nine months of 2025 and 2024, respectively, in distributions recorded as interest expense by the CLOs.
(c)Elimination of management fees earned by AFG.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
RESULTS OF OPERATIONS
General
AFG's net earnings, determined in accordance with GAAP, include certain items that may not be indicative of its ongoing core operations. Core net operating earnings excludes realized gains (losses) on securities because such gains and losses are influenced significantly by financial markets, interest rates and the timing of sales. In addition, special charges related to coverage that AFG no longer writes, such as asbestos and environmental exposures, are excluded from core earnings.
The following table (in millions, except per share amounts) identifies non-core items and reconciles net earnings to core net operating earnings, a non-GAAP financial measure. AFG believes core net operating earnings is a useful tool for investors and analysts in analyzing ongoing operating trends and for management to evaluate financial performance against historical results because it believes this provides a more comparable measure of its continuing business.
Three months ended September 30, Nine months ended September 30,
2025 2024 2025 2024
Components of net earnings:
Core operating earnings before income taxes $ 280 $ 245 $ 701 $ 808
Pretax non-core item:
Realized gains (losses) on securities
12 (2) 17 10
Realized gain on subsidiaries
1 - 1 -
Special A&E charges
(25) (14) (25) (14)
Earnings before income taxes 268 229 694 804
Provision for income taxes:
Core operating earnings 56 51 146 168
Non-core items:
Realized gains (losses) on securities
2 - 3 3
Realized gain on subsidiaries
- - - -
Special A&E charges
(5) (3) (5) (3)
Other (*)
- - 7 4
Total provision for income taxes 53 48 151 172
Net earnings $ 215 $ 181 $ 543 $ 632
Net earnings:
Core net operating earnings $ 224 $ 194 $ 555 $ 640
Realized gains (losses) on securities
10 (2) 14 7
Realized gain on subsidiaries
1 - 1 -
Special A&E charges
(20) (11) (20) (11)
Other (*)
- - (7) (4)
Net earnings $ 215 $ 181 $ 543 $ 632
Diluted per share amounts:
Core net operating earnings $ 2.69 $ 2.31 $ 6.65 $ 7.63
Realized gains (losses) on securities
0.12 (0.02) 0.17 0.09
Realized gain on subsidiaries
0.01 - 0.01 -
Special A&E charges
(0.24) (0.13) (0.24) (0.13)
Other (*)
- - (0.09) (0.05)
Net earnings $ 2.58 $ 2.16 $ 6.50 $ 7.54
(*)Adjustments to income tax expense related to sales of subsidiaries in prior years.
Net earnings were $215 million in the third quarter of 2025 compared to $181 million in the third quarter of 2024 reflecting higher core net operating earnings and net realized gains on securities in the 2025 quarter compared to net realized losses on securities in the 2024 quarter, partially offset by higher special A&E charges in the 2025 quarter compared to the 2024 quarter. Core net operating earnings in the third quarter of 2025 increased $30 million compared to the third
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
quarter of 2024 reflecting higher underwriting profit and higher net investment income. Net realized gains on securities in the third quarter of 2025 and net realized losses in the third quarter of 2024 include after-tax gains of $6 million and $8 million, respectively, resulting from the change in fair value of equity securities that were still held at the balance sheet date.
Net earnings were $543 million in the first nine months of 2025 compared to $632 million in the first nine months of 2024 reflecting lower core net operating earnings. Core net operating earnings decreased $85 million compared to the first nine months of 2024 reflecting lower underwriting profit and lower net investment income from AFG's alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs), partially offset by higher investment income outside of alternative investments. Net realized gains on securities in the first nine months of 2025 and 2024 include after-tax gains of $19 million and $20 million, respectively, resulting from the change in fair value of equity securities that were still held at the balance sheet date.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
Segmented Statement of Earnings
AFG reports its operations as two segments: (i) Property and casualty insurance ("P&C") and (ii) Other, which includes holding company costs and income and expenses related to the managed investment entities ("MIEs").
AFG's net earnings, determined in accordance with GAAP, include certain items that may not be indicative of its ongoing core operations. The following tables for the three months ended September 30, 2025 and 2024 identify such items by segment and reconcile net earnings to core net operating earnings, a non-GAAP financial measure that AFG believes is a useful tool for investors and analysts in analyzing ongoing operating trends (in millions):
Other
P&C Consol. MIEs Holding Co., other and unallocated Total Non-core reclass GAAP Total
Three months ended September 30, 2025
Revenues:
Net earned premiums
$ 2,013 $ - $ - $ 2,013 $ - $ 2,013
Net investment income 205 (6) 6 205 - 205
Realized gains (losses) on:
Securities
- - - - 12 12
Subsidiaries
- - - - 1 1
Income of MIEs:
Investment income - 70 - 70 - 70
Gain (loss) on change in fair value of assets/liabilities
- - - - - -
Other income 6 (3) 27 30 - 30
Total revenues 2,224 61 33 2,318 13 2,331
Costs and Expenses:
Losses and loss adjustment expenses 1,355 - - 1,355 - 1,355
Commissions and other underwriting expenses 520 - 9 529 - 529
Interest charges on borrowed money - - 19 19 - 19
Expenses of MIEs - 61 - 61 - 61
Other expenses 21 - 53 74 25 99
Total costs and expenses 1,896 61 81 2,038 25 2,063
Earnings before income taxes 328 - (48) 280 (12) 268
Provision for income taxes 64 - (8) 56 (3) 53
Core Net Operating Earnings 264 - (40) 224
Non-core earnings (loss) (*):
Realized gains (losses) on securities, net of tax
- - 10 10 (10) -
Realized gain on subsidiaries, net of tax
1 - - 1 (1) -
Special A&E charge, net of tax
- - (20) (20) 20 -
Net Earnings $ 265 $ - $ (50) $ 215 $ - $ 215
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Other
P&C Consol. MIEs Holding Co., other and unallocated Total Non-core reclass GAAP Total
Three months ended September 30, 2024
Revenues:
Net earned premiums
$ 2,055 $ - $ - $ 2,055 $ - $ 2,055
Net investment income 195 (2) 7 200 - 200
Realized gains (losses) on securities
- - - - (2) (2)
Income of MIEs:
Investment income - 99 - 99 - 99
Gain (loss) on change in fair value of assets/liabilities
- (9) - (9) - (9)
Other income 2 (3) 27 26 - 26
Total revenues 2,252 85 34 2,371 (2) 2,369
Costs and Expenses:
Losses and loss adjustment expenses 1,430 - - 1,430 - 1,430
Commissions and other underwriting expenses 510 - 8 518 - 518
Interest charges on borrowed money - - 19 19 - 19
Expenses of MIEs - 85 - 85 - 85
Other expenses 21 - 53 74 14 88
Total costs and expenses 1,961 85 80 2,126 14 2,140
Earnings before income taxes 291 - (46) 245 (16) 229
Provision for income taxes 61 - (10) 51 (3) 48
Core Net Operating Earnings 230 - (36) 194
Non-core earnings (loss) (*):
Realized gains (losses) on securities, net of tax
- - (2) (2) 2 -
Special A&E charge, net of tax - - (11) (11) 11 -
Net Earnings $ 230 $ - $ (49) $ 181 $ - $ 181
(*)See the reconciliation of core earnings to GAAP net earnings under "Results of Operations - General" for details on the tax impacts of these reconciling items.
Property and Casualty Insurance Segment - Results of Operations
Performance measures such as underwriting profit or loss and related combined ratios are often used by property and casualty insurers to help users of their financial statements better understand the company's performance. Underwriting profitability is measured by the combined ratio, which is a sum of the ratios of losses and loss adjustment expenses, and commissions and other underwriting expenses to premiums. A combined ratio under 100% indicates an underwriting profit. The combined ratio does not reflect net investment income, other income, other expenses or federal income taxes.
AFG's property and casualty insurance operations contributed $328 million in pretax earnings in the third quarter of 2025 compared to $291 million in the third quarter of 2024, an increase of $37 million (13%), reflecting higher underwriting profit and higher net investment income.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
The following table details AFG's earnings before income taxes from its property and casualty insurance operations for the three months ended September 30, 2025 and 2024 (dollars in millions):
Three months ended September 30,
2025 2024 % Change
Gross written premiums $ 3,665 $ 3,748 (2 %)
Reinsurance premiums ceded (1,413) (1,395) 1 %
Net written premiums 2,252 2,353 (4 %)
Change in unearned premiums (239) (298) (20 %)
Net earned premiums 2,013 2,055 (2 %)
Loss and loss adjustment expenses 1,355 1,430 (5 %)
Commissions and other underwriting expenses 520 510 2 %
Underwriting gain 138 115 20 %
Net investment income 205 195 5 %
Other income and expenses, net (15) (19) (21 %)
Earnings before income taxes
$ 328 $ 291 13 %
Three months ended September 30,
2025 2024 Change
Combined Ratios:
Specialty lines
Loss and LAE ratio 67.2 % 69.5 % (2.3 %)
Underwriting expense ratio 25.8 % 24.8 % 1.0 %
Combined ratio 93.0 % 94.3 % (1.3 %)
Aggregate - including exited lines
Loss and LAE ratio 67.3 % 69.6 % (2.3 %)
Underwriting expense ratio 25.8 % 24.8 % 1.0 %
Combined ratio 93.1 % 94.4 % (1.3 %)
AFG reports the underwriting performance of its Specialty property and casualty insurance business in the following sub-segments: (i) Property and transportation, (ii) Specialty casualty and (iii) Specialty financial.
Historically, AFG reported the results of its internal reinsurance facility (that assumes business from several of AFG's Specialty property and casualty businesses) in an Other Specialty sub-segment. Beginning in 2025, the internal reinsurance results are included within the same sub-segments as the ceding businesses to align with senior management's evolving view of the program. The overall results for AFG's Specialty property and casualty insurance operations are not impacted by this change. Information from prior periods has been recast for consistent presentation.
To understand the overall profitability of particular lines, the timing of claims payments and the related impact of investment income must be considered. Certain "short-tail" lines of business (primarily property coverages) generally have quick loss payouts, which reduce the time funds are held, thereby limiting investment income earned thereon. In contrast, "long-tail" lines of business (primarily liability coverages and workers' compensation) generally have payouts that are either structured over many years or take many years to settle, thereby significantly increasing investment income earned on related premiums received.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Gross Written Premiums
Gross written premiums ("GWP") for AFG's property and casualty insurance segment were $3.67 billion for the third quarter of 2025 compared to $3.75 billion for the third quarter of 2024, a decrease of $83 million (2%). Detail of gross written premiums is shown below (dollars in millions):
Three months ended September 30,
2025 2024
GWP % GWP % % Change
Property and transportation $ 1,975 54 % $ 2,107 56 % (6 %)
Specialty casualty 1,337 36 % 1,297 35 % 3 %
Specialty financial 353 10 % 344 9 % 3 %
$ 3,665 100 % $ 3,748 100 % (2 %)
Reinsurance Premiums Ceded
Reinsurance premiums ceded ("Ceded") for AFG's property and casualty insurance segment were 39% of gross written premiums for the third quarter of 2025 compared to 37% for the third quarter of 2024, an increase of 2 percentage points. Detail of reinsurance premiums ceded is shown below (dollars in millions):
Three months ended September 30,
2025 2024 Change in
Ceded % of GWP Ceded % of GWP % of GWP
Property and transportation $ (924) 47 % $ (956) 45 % 2 %
Specialty casualty (423) 32 % (380) 29 % 3 %
Specialty financial (66) 19 % (59) 17 % 2 %
$ (1,413) 39 % $ (1,395) 37 % 2 %
Net Written Premiums
Net written premiums ("NWP") for AFG's property and casualty insurance segment were $2.25 billion for the third quarter of 2025 compared to $2.35 billion for the third quarter of 2024, a decrease of $101 million (4%). Detail of net written premiums is shown below (dollars in millions):
Three months ended September 30,
2025 2024
NWP % NWP % % Change
Property and transportation $ 1,051 47 % $ 1,151 49 % (9 %)
Specialty casualty 914 40 % 917 39 % - %
Specialty financial 287 13 % 285 12 % 1 %
$ 2,252 100 % $ 2,353 100 % (4 %)
Net Earned Premiums
Net earned premiums ("NEP") for AFG's property and casualty insurance segment were $2.01 billion for the third quarter of 2025 compared to $2.06 billion for the third quarter of 2024, a decrease of $42 million (2%). Detail of net earned premiums is shown below (dollars in millions):
Three months ended September 30,
2025 2024
NEP % NEP % % Change
Property and transportation $ 935 47 % $ 989 48 % (5 %)
Specialty casualty 810 40 % 797 39 % 2 %
Specialty financial 268 13 % 269 13 % - %
$ 2,013 100 % $ 2,055 100 % (2 %)
Gross written premiums for the third quarter of 2025 decreased $83 million (2%) compared to the third quarter of 2024. Earlier reporting of 2025 crop acreage by insureds impacted the timing of the recording of crop premiums and contributed to the year-over-year third quarter decrease, particularly when compared to later reporting of acreage in 2024. Excluding
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
the crop business, gross written premiums increased 3% compared to the third quarter of 2024 as a result of premium growth from new business opportunities, increased exposures and a good renewal rate environment. Overall average renewal rates increased approximately 5% in the third quarter of 2025, both including and excluding the workers' compensation businesses.
Property and transportation Gross written premiums decreased $132 million (6%) in the third quarter of 2025 compared to the third quarter of 2024. This decrease was primarily the result of earlier reporting of 2025 crop acreage, which shifted the timing of reporting of some crop premium from the third quarter to the second quarter. Excluding the crop business, gross written premiums for this group increased 2% compared to the third quarter of 2024, reflecting new business opportunities, a favorable rate environment and increased exposures in the transportation businesses. Average renewal rates increased approximately 6% for this group in the third quarter of 2025. Reinsurance premiums ceded as a percentage of gross written premiums increased 2 percentage points in the third quarter of 2025 compared to the third quarter of 2024, reflecting growth in alternative risk transfer products in the transportation businesses, which cede a higher percentage of premiums than some of the other businesses in the Property and transportation sub-segment and an increase in ceded premiums in the aviation business, partially offset by a decrease in cessions due to the timing of premiums in the crop business.
Specialty casualty Gross written premiums increased $40 million (3%) in the third quarter of 2025 compared to the third quarter of 2024, reflecting new business opportunities and favorable renewal pricing in several of the targeted markets businesses and an increase in mergers and acquisition activity that contributed to growth in the mergers and acquisitions liability business. This growth was tempered by lower premiums in the excess and surplus, executive liability and social services businesses. Average renewal rates increased approximately 7% for this group in the third quarter of 2025. Excluding the workers' compensation businesses, renewal rates for this group increased approximately 8%. Reinsurance premiums ceded as a percentage of gross written premiums increased 3 percentage points in the third quarter of 2025 compared to the third quarter of 2024, reflecting higher cessions and higher reinsurance costs in the excess liability business and growth in the public sector and mergers and acquisitions liability businesses, both of which cede a larger percentage of premiums than some of the other businesses in the Specialty casualty sub-segment.
Specialty financialGross written premiums increased $9 million (3%) in the third quarter of 2025 compared to the third quarter of 2024, due primarily to growth in the financial institutions business and AFG's European operations. Average renewal rates decreased approximately 2% for this group in the third quarter of 2025. Reinsurance premiums ceded as a percentage of gross written premiums increased 2 percentage points in the third quarter of 2025 compared to the third quarter of 2024, reflecting higher cessions in the financial institutions and equipment leasing businesses.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Combined Ratio
The table below (dollars in millions) details the components of the combined ratio for AFG's property and casualty insurance segment:
Three months ended September 30, Three months ended September 30,
2025 2024 Change 2025 2024
Property and transportation
Loss and LAE ratio 77.8 % 79.4 % (1.6 %)
Underwriting expense ratio 16.3 % 17.4 % (1.1 %)
Combined ratio 94.1 % 96.8 % (2.7 %)
Underwriting profit $ 55 $ 33
Specialty casualty
Loss and LAE ratio 66.8 % 65.1 % 1.7 %
Underwriting expense ratio 29.0 % 27.0 % 2.0 %
Combined ratio 95.8 % 92.1 % 3.7 %
Underwriting profit $ 33 $ 63
Specialty financial
Loss and LAE ratio 31.8 % 46.5 % (14.7 %)
Underwriting expense ratio 49.3 % 45.8 % 3.5 %
Combined ratio 81.1 % 92.3 % (11.2 %)
Underwriting profit $ 51 $ 21
Total Specialty
Loss and LAE ratio 67.2 % 69.5 % (2.3 %)
Underwriting expense ratio 25.8 % 24.8 % 1.0 %
Combined ratio 93.0 % 94.3 % (1.3 %)
Underwriting profit $ 139 $ 117
Aggregate - including exited lines
Loss and LAE ratio 67.3 % 69.6 % (2.3 %)
Underwriting expense ratio 25.8 % 24.8 % 1.0 %
Combined ratio 93.1 % 94.4 % (1.3 %)
Underwriting profit $ 138 $ 115
The Specialty property and casualty insurance operations generated an underwriting profit of $139 million in the third quarter of 2025 compared to $117 million in the third quarter of 2024, an increase of $22 million (19%). Higher year-over-year underwriting profit in the Specialty financial and Property and transportation sub-segments was partially offset by lower underwriting profit in the Specialty casualty sub-segment. Overall catastrophe losses were $23 million (1.2 points on the combined ratio) in the third quarter of 2025 compared to $90 million (4.4 points) in the third quarter of 2024.
Property and transportation Underwriting profit for this group was $55 million for the third quarter of 2025 compared to $33 million for the third quarter of 2024, an increase of $22 million (67%), reflecting the impact of lower catastrophe losses. Catastrophe losses were $4 million (0.4 points on the combined ratio) in the third quarter of 2025 compared to $34 million (3.7 points) in the third quarter of 2024.
Specialty casualtyUnderwriting profit for this group was $33 million for the third quarter of 2025 compared to $63 million for the third quarter of 2024, a decrease of $30 million (48%). Higher underwriting profit in the executive liability business was more than offset by lower year-over-year underwriting profit in some of the social inflation exposed businesses and, to a lesser extent, the mergers and acquisitions liability and workers' compensation businesses. Catastrophe losses were $8 million (1.0 points on the combined ratio) in the third quarter of 2025 compared to catastrophe losses of $17 million (2.0 points) in the third quarter of 2024.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Specialty financialUnderwriting profit for this group was $51 million for the third quarter of 2025 compared to $21 million in the third quarter of 2024, an increase of $30 million (143%). This increase was due primarily to improved results in the financial institutions business, largely attributable to lower year-over-year catastrophe losses, and higher underwriting profitability in the surety and fidelity businesses. Catastrophe losses were $11 million (4.1 points on the combined ratio) in the third quarter of 2025 compared to $39 million (14.4 points) in the third quarter of 2024.
AggregateAggregate underwriting results for AFG's property and casualty insurance segment includes adverse prior year reserve development of $1 million in the third quarter of 2025 and $2 million in the third quarter of 2024 related to business outside of the Specialty group that AFG no longer writes.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Losses and Loss Adjustment Expenses
AFG's overall loss and LAE ratio was 67.3% for the third quarter of 2025 compared to 69.6% for the third quarter of 2024, a decrease of 2.3 percentage points. The components of AFG's property and casualty losses and LAE amounts and ratio are detailed below (dollars in millions):
Three months ended September 30,
Amount Ratio Change in
2025 2024 2025 2024 Ratio
Property and transportation
Current year, excluding catastrophe losses $ 735 $ 764 78.5 % 77.1 % 1.4 %
Prior accident years development (11) (14) (1.1 %) (1.4 %) 0.3 %
Current year catastrophe losses including the impact of net reinstatement premiums 4 34 0.4 % 3.7 % (3.3 %)
Property and transportation losses and LAE and ratio $ 728 $ 784 77.8 % 79.4 % (1.6 %)
Specialty casualty
Current year, excluding catastrophe losses $ 534 $ 496 65.9 % 62.3 % 3.6 %
Prior accident years development (1) 6 (0.1 %) 0.8 % (0.9 %)
Current year catastrophe losses including the impact of net reinstatement premiums 8 17 1.0 % 2.0 % (1.0 %)
Specialty casualty losses and LAE and ratio $ 541 $ 519 66.8 % 65.1 % 1.7 %
Specialty financial
Current year, excluding catastrophe losses $ 86 $ 95 32.4 % 35.4 % (3.0 %)
Prior accident years development (12) (9) (4.7 %) (3.3 %) (1.4 %)
Current year catastrophe losses including the impact of net reinstatement premiums 11 39 4.1 % 14.4 % (10.3 %)
Specialty financial losses and LAE and ratio $ 85 $ 125 31.8 % 46.5 % (14.7 %)
Total Specialty
Current year, excluding catastrophe losses $ 1,355 $ 1,355 67.2 % 65.9 % 1.3 %
Prior accident years development (24) (17) (1.2 %) (0.8 %) (0.4 %)
Current year catastrophe losses including the impact of net reinstatement premiums 23 90 1.2 % 4.4 % (3.2 %)
Total Specialty losses and LAE and ratio $ 1,354 $ 1,428 67.2 % 69.5 % (2.3 %)
Aggregate - including exited lines
Current year, excluding catastrophe losses $ 1,355 $ 1,355 67.2 % 65.9 % 1.3 %
Prior accident years development (23) (15) (1.1 %) (0.7 %) (0.4 %)
Current year catastrophe losses including the impact of net reinstatement premiums 23 90 1.2 % 4.4 % (3.2 %)
Aggregate losses and LAE and ratio $ 1,355 $ 1,430 67.3 % 69.6 % (2.3 %)
Current accident year losses and LAE, excluding catastrophe losses
The current accident year loss and LAE ratio, excluding catastrophe losses, for AFG's Specialty property and casualty insurance operations was 67.2% for the third quarter of 2025 compared to 65.9% for the third quarter of 2024, an increase of 1.3 percentage points.
Property and transportation The 1.4 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects lower earnings in the crop business, partially offset by improved results in the transportation and ocean marine businesses.
Specialty casualty The 3.6 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects higher claim severity in the excess and surplus and social services businesses.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Specialty financial The 3.0 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects improved results in the surety and fidelity businesses.
Net prior year reserve development
AFG's Specialty property and casualty insurance operations recorded net favorable reserve development related to prior accident years of $24 million in the third quarter of 2025 compared to $17 million in the third quarter of 2024, an increase of $7 million (41%).
Property and transportation Net favorable reserve development of $11 million in the third quarter of 2025 reflects lower than anticipated claim severity in the property and inland marine, aviation and ocean marine businesses, partially offset by higher than expected claim severity in the agribusiness operations. Net favorable reserve development of $14 million in the third quarter of 2024 reflects lower than anticipated claim severity in the ocean marine business and, to a lesser extent, lower than expected claim severity in the agribusiness, property and inland marine and aviation businesses.
Specialty casualtyNet favorable reserve development of $1 million in the third quarter of 2025 reflects lower than expected claim severity in the workers' compensation businesses, partially offset by higher than anticipated claim severity in the excess and surplus and social services businesses. Net adverse reserve development of $6 million in the third quarter of 2024 reflects higher than anticipated claim severity in the umbrella and excess liability and public sector businesses, partially offset by lower than anticipated claim severity in the workers' compensation businesses.
Specialty financial Net favorable reserve development of $12 million in the third quarter of 2025 reflects lower than expected claim frequency in the financial institutions business and lower than anticipated claim severity in the surety and fidelity businesses. Net favorable reserve development of $9 million in the third quarter of 2024 reflects lower than anticipated claim severity in the fidelity business and lower than expected claim frequency in the financial institutions business.
Asbestos and environmental reservesDuring the third quarter of 2025, AFG completed an in-depth internal review of its asbestos and environmental exposures relating to the run-off operations of its property and casualty insurance segment and its exposures related to former railroad and manufacturing operations and sites. AFG annually conducts a comprehensive review of its asbestos and environmental reserves. In connection with its annual reviews, AFG engages with outside counsel and, as appropriate, engineering and consulting firms and specialty actuarial firms.
During the 2025 internal review, no new trends were identified and recent claims activity was generally consistent with AFG's expectations resulting from its in-depth internal reviews in the prior four years, and the most recent external study in 2020. As a result, and consistent with the internal review in the third quarter of 2024, the 2025 review resulted in no net change to AFG's property and casualty insurance segment's asbestos and environmental reserves. See Management's Discussion and Analysis - "Uncertainties - Asbestos and Environmental-related ("A&E") Insurance Reserves" in AFG's 2024 Form 10-K.
At September 30, 2025, the property and casualty insurance segment's insurance reserves include A&E reserves of $353 million, net of reinsurance recoverables. At September 30, 2025, the property and casualty insurance segment's three-year survival ratios compare favorably with industry survival ratios published by AM Best (as of December 31, 2024, and adjusted for several large industry portfolio transfers) as detailed in the following table:
Property and Casualty Insurance Reserves
Three-Year Survival Ratio (Times Paid Losses)
Asbestos Environmental Total A&E
AFG (9/30/2025)
22.6 38.5 27.4
Industry (12/31/2024)
8.7 7.5 8.4
In addition, the 2025 and 2024 internal reviews encompassed reserves for asbestos and environmental exposures of AFG's former railroad and manufacturing operations. For a discussion of the $25 million and $14 million pretax non-core special charge increases in AFG's liabilities for those operations recorded in the third quarter of 2025 and the third quarter of 2024, respectively, see "Special A&E Charges"under "Results of Operations - Holding Company, Other and Unallocated," for the quarters ended September 30, 2025 and 2024.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
AggregateAggregate net prior accident years reserve development for AFG's property and casualty insurance segment includes net adverse reserve development of $1 million in the third quarter of 2025 and $2 million in the third quarter of 2024 related to business outside of the Specialty group that AFG no longer writes.
Catastrophe losses
AFG generally seeks to reduce its exposure to catastrophes (whether resulting from climate change or otherwise) through individual risk selection, including minimizing coastal and known fault-line exposures, and the purchase of reinsurance. AFG currently has comprehensive property catastrophe reinsurance coverage in place (including a $70 million per occurrence net retention) for losses up to $625 million in the vast majority of circumstances. This coverage consists of a combination of $245 million from traditional reinsurance and $310 million of coverage through a fully collateralized catastrophe bond. Based on data available at December 31, 2024, management estimates that AFG's exposure to a catastrophic earthquake or windstorm that industry models indicate should statistically occur once in every 500 years is just over 2% of AFG's Shareholders' Equity.
Catastrophe losses of $23 million in the third quarter of 2025 resulted primarily from storms in multiple regions of the United States. Catastrophe losses of $90 million in the third quarter of 2024 resulted primarily from Hurricane Helene.
Commissions and Other Underwriting Expenses
AFG's property and casualty commissions and other underwriting expenses ("U/W Exp") were $520 million in the third quarter of 2025 compared to $510 million for the third quarter of 2024, an increase of $10 million (2%). AFG's underwriting expense ratio, calculated as commissions and other underwriting expenses divided by net premiums earned, was 25.8% for the third quarter of 2025 compared to 24.8% for the third quarter of 2024, an increase of 1.0 percentage points. Detail of AFG's property and casualty commissions and other underwriting expenses and underwriting expense ratios is shown below (dollars in millions):
Three months ended September 30,
2025 2024 Change in
U/W Exp % of NEP U/W Exp % of NEP % of NEP
Property and transportation $ 152 16.3 % $ 172 17.4 % (1.1 %)
Specialty casualty 236 29.0 % 215 27.0 % 2.0 %
Specialty financial 132 49.3 % 123 45.8 % 3.5 %
$ 520 25.8 % $ 510 24.8 % 1.0 %
Property and transportation Commissions and other underwriting expenses as a percentage of net earned premiums decreased 1.1 percentage points in the third quarter of 2025 compared to the third quarter of 2024. The decrease reflects changes in the mix of business, partially offset by higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics and the impact of lower earned premiums in the crop operations on the ratio (which has a lower commissions and other underwriting expense ratio than some of the other businesses in the Property and transportation sub-segment).
Specialty casualty Commissions and other underwriting expenses as a percentage of net earned premiums increased 2.0 percentage points in the third quarter of 2025 compared to the third quarter of 2024 reflecting higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics and an increase in average commission rates in certain excess and surplus businesses resulting from changes in reinsurance treaties.
Specialty financial Commissions and other underwriting expenses as a percentage of net earned premiums increased 3.5 percentage points in the third quarter of 2025 compared to the third quarter of 2024 due primarily to higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics and higher profit-based commissions to agents in the financial institutions business.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Property and Casualty Net Investment Income
Net investment income in AFG's property and casualty insurance operations was $205 million in the third quarter of 2025 compared to $195 million in the third quarter of 2024, an increase of $10 million (5%). The average invested assets and overall yield earned on investments held by AFG's property and casualty insurance operations are provided below (dollars in millions):
Three months ended September 30,
2025 2024 Change % Change
Net investment income:
Net investment income, excluding alternative investments $ 162 $ 159 $ 3 2 %
Alternative investments 43 36 7 19 %
Total net investment income $ 205 $ 195 $ 10 5 %
Average invested assets (at amortized cost) $ 16,095 $ 15,447 $ 648 4 %
Yield on fixed maturities (before investment expenses)
5.12 % 5.06 % 0.06 %
Yield (net investment income as a % of average invested assets) 5.09 % 5.05 % 0.04 %
The increase in the property and casualty insurance segment's net investment income for the third quarter of 2025 compared to the third quarter of 2024 reflects the impact of higher returns on AFG's alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs), higher balances of invested assets and higher returns on fixed maturity investments. The property and casualty insurance segment's overall yield on investments (net investment income as a percentage of average invested assets) was 5.09% for the third quarter of 2025 compared to 5.05% for the third quarter of 2024, an increase of 0.04 percentage points. The annualized return earned on alternative investments was 6.2% in the third quarter of 2025 compared to 5.4% in the comparable prior year period.
Property and Casualty Other Income and Expenses, Net
Other income and expenses, net for AFG's property and casualty insurance operations was a net expense of $15 million for the third quarter of 2025 compared to $19 million for the third quarter of 2024, an improvement of $4 million (21%). The table below details the items included in other income and expenses, net for AFG's property and casualty insurance operations (in millions):
Three months ended September 30,
2025 2024
Other income
$ 6 $ 2
Other expenses:
Amortization of intangibles 5 5
Interest expense on funds withheld 11 13
Other 5 3
Total other expenses 21 21
Other income and expenses, net $ (15) $ (19)
The increase in other income in the third quarter of 2025 compared to the third quarter of 2024 reflects a death benefit received on a company-owned life insurance policy in the third quarter of 2025.
Holding Company, Other and Unallocated - Results of Operations
AFG's net GAAP pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $73 million in the third quarter of 2025 compared to $60 million in the third quarter of 2024, an increase of $13 million (22%). AFG's net core pretax loss outside of its property and casualty insurance segments totaled $48 million in the third quarter of 2025 compared to $46 million in the third quarter of 2024, an increase of $2 million (4%).
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
The following table details AFG's GAAP and core loss before income taxes from operations outside of its property and casualty insurance segment for the three months ended September 30, 2025 and 2024 (dollars in millions):
Three months ended September 30,
2025 2024 % Change
Revenues:
Net investment income $ 6 $ 7 (14 %)
Other income - P&C fees
23 23 - %
Other income
4 4 - %
Total revenues
33 34 (3 %)
Costs and Expenses:
Property and casualty insurance - loss adjustment and underwriting expenses 9 8 13 %
Other expense - expenses associated with P&C fees
14 15 (7 %)
Other expenses (*)
39 38 3 %
Costs and expenses, excluding interest charges on borrowed money
62 61 2 %
Loss before income taxes, excluding realized gains and losses and interest charges on borrowed money (29) (27) 7 %
Interest charges on borrowed money
19 19 - %
Core loss before income taxes, excluding realized gains and losses
(48) (46) 4 %
Pretax non-core special A&E charge
(25) (14) 79 %
GAAP loss before income taxes, excluding realized gains and losses
$ (73) $ (60) 22 %
(*)Excludes pretax non-core special A&E charges of $25 million and $14 million in the third quarters of 2025 and 2024, respectively.
Holding Company and Other - Net Investment Income
AFG recorded net investment income on investments held outside of its property and casualty insurance segment of $6 million in the third quarter of 2025 compared to $7 million in the third quarter of 2024, a decrease of $1 million (14%).
Holding Company and Other - P&C Fees and Related Expenses
Summit, a workers' compensation insurance subsidiary, collects fees from a small group of unaffiliated insurers for providing underwriting, policy administration and claims services. In addition, certain of AFG's property and casualty insurance businesses collect fees from customers for ancillary services such as workplace safety programs and premium financing. In the third quarter of 2025 and the third quarter of 2024, AFG collected $23 million in fees for these services. Management views this fee income, net of the $14 million in the third quarter of 2025 and $15 million in the third quarter of 2024 in expenses incurred to generate such fees, as a reduction in the cost of underwriting its property and casualty insurance policies. The expenses related to providing such services are embedded in property and casualty underwriting expenses. Consistent with internal management reporting, these fees and the related expenses are netted and recorded as a reduction of commissions and other underwriting expenses in AFG's segmented results.
Holding Company and Other - Other Income
Other income in the table above includes $3 million in both the third quarter of 2025 and the third quarter of 2024 in management fees paid to AFG by the AFG-managed CLOs (AFG's consolidated managed investment entities). The management fees are eliminated in consolidation - see the other income line in the Consolidate MIEs column under "Results of Operations - Segmented Statement of Earnings." Excluding amounts eliminated in consolidation, AFG recorded other income outside of its property and casualty insurance segment of $1 million in both the third quarter of 2025 and the third quarter of 2024.
Holding Company and Other - Other Expenses
Excluding the non-core special A&E charges recorded in the third quarters of 2025 and 2024 discussed below, AFG's holding companies and other operations outside of its property and casualty insurance segment recorded other expenses of $39 million in the third quarter of 2025 compared to $38 million in the third quarter of 2024, an increase of $1 million (3%).
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Holding Company and Other - Special A&E Charges
During the third quarters of 2025 and 2024, AFG performed in-depth internal reviews of A&E exposures as discussed under "Asbestos and environmental reserves" under "Results of Operations - Property and Casualty Insurance Segment - Net prior year reserve development." As a result of the 2025 and 2024 reviews, AFG's holding companies and other operations outside of its property and casualty insurance operations recorded pretax special non-core A&E charges of $25 million in the third quarter of 2025 and $14 million in the third quarter of 2024 to increase liabilities related to the A&E exposures of AFG's former railroad and manufacturing operations. The charges in both periods reflect changes in the scope and costs of investigation and an increase in estimated remediation costs at a limited number of sites.
Holding Company and Other - Interest Charges on Borrowed Money
AFG's holding companies and other operations outside of its property and casualty insurance segment recorded interest expense of $19 million in both the third quarter of 2025 and the third quarter of 2024.
Realized Gains (Losses) on Securities
AFG's realized gains (losses) on securities were net gains of $12 million in the third quarter of 2025 compared to net losses of $2 million in the third quarter of 2024, a change of $14 million (700%). Realized gains (losses) on securities consisted of the following (in millions):
Three months ended September 30,
2025 2024
Realized gains (losses) before impairment allowances:
Disposals $ (1) $ -
Change in the fair value of equity securities 13 10
Change in the fair value of derivatives 1 3
13 13
Change in allowance for impairments on securities (1) (15)
Realized gains (losses) on securities $ 12 $ (2)
The $13 million net realized gain from the change in the fair value of equity securities in the third quarter of 2025 includes gains of $11 million on investments in media companies and $6 million on investments in banks and financing companies, partially offset by losses of $10 million on investments in manufacturing companies. The $10 million net realized gain from the change in the fair value of equity securities in the third quarter of 2024 includes gains of $6 million on investments in banks and financing companies and $3 million on investments in media companies.
The $15 million change in allowance for impairments on securities in the third quarter of 2024 relates primarily to an allowance taken on corporate bonds from a single issuer in the financial sector.
Realized Gain on Subsidiaries
During the third quarter of 2025, AFG recorded a $3 million pretax realized gain resulting from the remeasurement of its existing investment in Radion Holdings, LLC to fair value (see Note B - "Acquisition of Business" to the financial statements) and a $2 million pretax realized loss on the write-off of certain intangible assets (see Note H - "Goodwill and Other Intangibles" to the financial statements).
Consolidated Income Taxes
AFG's consolidated provision for income taxes was $53 million for the third quarter of 2025 compared to $48 million for the third quarter of 2024, an increase of $5 million (10%). See Note K - "Income Taxes" to the financial statements for an analysis of items affecting AFG's effective tax rate.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
Segmented Statement of Earnings
AFG reports its operations as two segments: (i) Property and casualty insurance ("P&C") and (ii) Other, which includes holding company costs and income and expenses related to the managed investment entities ("MIEs").
AFG's net earnings, determined in accordance with GAAP, include certain items that may not be indicative of its ongoing core operations. The following tables for the nine months ended September 30, 2025 and 2024 identify such items by segment and reconcile net earnings to core net operating earnings, a non-GAAP financial measure that AFG believes is a useful tool for investors and analysts in analyzing ongoing operating trends (in millions):
Other
P&C Consol. MIEs Holding Co., other and unallocated Total Non-core reclass GAAP Total
Nine months ended September 30, 2025
Revenues:
Net earned premiums
$ 5,240 $ - $ - $ 5,240 $ - $ 5,240
Net investment income 554 (10) 18 562 - 562
Realized gains (losses) on:
Securities
- - - - 17 17
Subsidiaries
- - - - 1 1
Income of MIEs:
Investment income - 214 - 214 - 214
Gain (loss) on change in fair value of assets/liabilities
- (7) - (7) - (7)
Other income 9 (8) 83 84 - 84
Total revenues 5,803 189 101 6,093 18 6,111
Costs and Expenses:
Losses and loss adjustment expenses 3,327 - - 3,327 - 3,327
Commissions and other underwriting expenses 1,568 - 25 1,593 - 1,593
Interest charges on borrowed money - - 57 57 - 57
Expenses of MIEs - 189 - 189 - 189
Other expenses 61 - 165 226 25 251
Total costs and expenses 4,956 189 247 5,392 25 5,417
Earnings before income taxes 847 - (146) 701 (7) 694
Provision for income taxes 172 - (26) 146 5 151
Core Net Operating Earnings 675 - (120) 555
Non-core earnings (loss) (*):
Realized gains (losses) on securities, net of tax
- - 14 14 (14) -
Realized gain on subsidiaries, net of tax
1 - - 1 (1) -
Special A&E charge, net of tax
- - (20) (20) 20 -
Other
- - (7) (7) 7 -
Net Earnings $ 676 $ - $ (133) $ 543 $ - $ 543
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Other
P&C Consol. MIEs Holding Co., other and unallocated Total Non-core reclass GAAP Total
Nine months ended September 30, 2024
Revenues:
Net earned premiums
$ 5,186 $ - $ - $ 5,186 $ - $ 5,186
Net investment income 589 (25) 22 586 - 586
Realized gains (losses) on securities
- - - - 10 10
Income of MIEs:
Investment income - 296 - 296 - 296
Gain (loss) on change in fair value of assets/liabilities
- 5 - 5 - 5
Other income 6 (9) 95 92 - 92
Total revenues 5,781 267 117 6,165 10 6,175
Costs and Expenses:
Losses and loss adjustment expenses 3,274 - 5 3,279 - 3,279
Commissions and other underwriting expenses 1,494 - 33 1,527 - 1,527
Interest charges on borrowed money - - 57 57 - 57
Expenses of MIEs - 267 - 267 - 267
Other expenses 63 - 164 227 14 241
Total costs and expenses 4,831 267 259 5,357 14 5,371
Earnings before income taxes 950 - (142) 808 (4) 804
Provision for income taxes 198 - (30) 168 4 172
Core Net Operating Earnings 752 - (112) 640
Non-core earnings (loss) (*):
Realized gains (losses) on securities, net of tax
- - 7 7 (7) -
Special A&E charge, net of tax
- - (11) (11) 11 -
Other
(4) - - (4) 4 -
Net Earnings $ 748 $ - $ (116) $ 632 $ - $ 632
(*)See the reconciliation of core earnings to GAAP net earnings under "Results of Operations - General"for details on the tax impacts of these reconciling items.
Property and Casualty Insurance Segment - Results of Operations
AFG's property and casualty insurance operations contributed $847 million in pretax earnings in the first nine months of 2025 compared to $950 million in the first nine months of 2024, a decrease of $103 million (11%). The decrease in pretax earnings reflects lower underwriting profit and lower investment income from AFG's alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs), partially offset by higher investment income outside of alternative investments in the first nine months of 2025 compared to the first nine months of 2024.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
The following table details AFG's earnings before income taxes from its property and casualty insurance operations for the nine months ended September 30, 2025 and 2024 (dollars in millions):
Nine months ended September 30,
2025 2024 % Change
Gross written premiums $ 8,609 $ 8,490 1 %
Reinsurance premiums ceded (2,943) (2,811) 5 %
Net written premiums 5,666 5,679 - %
Change in unearned premiums (426) (493) (14 %)
Net earned premiums 5,240 5,186 1 %
Loss and loss adjustment expenses 3,327 3,274 2 %
Commissions and other underwriting expenses 1,568 1,494 5 %
Underwriting gain 345 418 (17 %)
Net investment income 554 589 (6 %)
Other income and expenses, net (52) (57) (9 %)
Earnings before income taxes
$ 847 $ 950 (11 %)
Nine months ended September 30,
2025 2024 Change
Combined Ratios:
Specialty lines
Loss and LAE ratio 63.4 % 63.1 % 0.3 %
Underwriting expense ratio 29.9 % 28.8 % 1.1 %
Combined ratio 93.3 % 91.9 % 1.4 %
Aggregate - including exited lines
Loss and LAE ratio 63.5 % 63.1 % 0.4 %
Underwriting expense ratio 29.9 % 28.8 % 1.1 %
Combined ratio 93.4 % 91.9 % 1.5 %
AFG reports the underwriting performance of its Specialty property and casualty insurance business in the following sub-segments: (i) Property and transportation, (ii) Specialty casualty and (iii) Specialty financial.
Historically, AFG reported the results of its internal reinsurance facility (that assumes business from several of AFG's Specialty property and casualty businesses) in an Other Specialty sub-segment. Beginning in 2025, the internal reinsurance results are included within the same sub-segments as the ceding businesses to align with senior management's evolving view of the program. The overall results for AFG's Specialty property and casualty insurance operations are not impacted by this change. Information from prior periods has been recast for consistent presentation.
Gross Written Premiums
Gross written premiums ("GWP") for AFG's property and casualty insurance segment were $8.61 billion for the first nine months of 2025 compared to $8.49 billion for the first nine months of 2024, an increase of $119 million (1%). Detail of AFG's property and casualty gross written premiums is shown below (dollars in millions):
Nine months ended September 30,
2025 2024
GWP % GWP % % Change
Property and transportation $ 4,119 48 % $ 4,150 49 % (1 %)
Specialty casualty 3,467 40 % 3,417 40 % 1 %
Specialty financial 1,023 12 % 923 11 % 11 %
$ 8,609 100 % $ 8,490 100 % 1 %
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Reinsurance Premiums Ceded
Reinsurance premiums ceded ("Ceded") for AFG's property and casualty insurance segment were 34% of gross written premiums in the first nine months of 2025 compared to 33% of gross written premiums for the first nine months of 2024, an increase of 1 percentage point. Detail of AFG's property and casualty reinsurance premiums ceded is shown below (dollars in millions):
Nine months ended September 30,
2025 2024 Change in
Ceded % of GWP Ceded % of GWP % of GWP
Property and transportation $ (1,746) 42 % $ (1,712) 41 % 1 %
Specialty casualty (1,016) 29 % (944) 28 % 1 %
Specialty financial (181) 18 % (155) 17 % 1 %
$ (2,943) 34 % $ (2,811) 33 % 1 %
Net Written Premiums
Net written premiums ("NWP") for AFG's property and casualty insurance segment were $5.67 billion for the first nine months of 2025 compared to $5.68 billion for the first nine months of 2024, a decrease of $13 million. Detail of AFG's property and casualty net written premiums is shown below (dollars in millions):
Nine months ended September 30,
2025 2024
NWP % NWP % % Change
Property and transportation $ 2,373 42 % $ 2,438 43 % (3 %)
Specialty casualty 2,451 43 % 2,473 44 % (1 %)
Specialty financial 842 15 % 768 13 % 10 %
$ 5,666 100 % $ 5,679 100 % - %
Net Earned Premiums
Net earned premiums ("NEP") for AFG's property and casualty insurance segment were $5.24 billion for the first nine months of 2025 compared to $5.19 billion for the first nine months of 2024, an increase of $54 million (1%). Detail of AFG's property and casualty net earned premiums is shown below (dollars in millions):
Nine months ended September 30,
2025 2024
NEP % NEP % % Change
Property and transportation $ 2,011 38 % $ 2,061 40 % (2 %)
Specialty casualty 2,403 46 % 2,371 46 % 1 %
Specialty financial 826 16 % 754 14 % 10 %
$ 5,240 100 % $ 5,186 100 % 1 %
Gross written premiums for the first nine months of 2025 increased $119 million (1%) compared to the first nine months of 2024. The Specialty property and casualty insurance operations continue to achieve year-over-year premium growth as a result of new business opportunities, a good renewal rate environment and increased exposures. Overall average renewal rates increased approximately 5% in the first nine months of 2025. Excluding the workers' compensation businesses, renewal pricing increased approximately 6%.
Property and transportation Gross written premiums decreased $31 million (1%) in the first nine months of 2025 compared to the first nine months of 2024. This decrease was primarily the result of the impact of lower commodity prices on crop insurance premiums, partially offset by growth in the transportation businesses as a result of increased exposures, new business opportunities and a favorable rate environment. Average renewal rates increased approximately 7% for this group in the first nine months of 2025. Reinsurance premiums ceded as a percentage of gross written premiums increased 1 percentage point in the first nine months of 2025 compared to the first nine months of 2024 reflecting growth in alternative risk transfer and excess liability products in the transportation businesses, which cede a higher percentage of premiums than some of the other businesses in the Property and transportation sub-segment, and higher cessions in the crop business.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Specialty casualty Gross written premiums increased $50 million (1%) in the first nine months of 2025 compared to the first nine months of 2024, reflecting higher year-over-year premiums in the mergers and acquisitions liability business and growth across several of the targeted markets businesses resulting from new business opportunities, higher rates and strong policy retention. These items were partially offset by lower premiums in the excess and surplus businesses and lower premiums due to a challenging market in the directors' and officers' liability business as well as the continued non-renewal of certain housing and daycare accounts in the social services businesses. Average renewal rates increased approximately 6% for this group in the first nine months of 2025. Excluding overall rate decreases in the workers' compensation businesses, renewal rates for this group increased approximately 8%. Reinsurance premiums ceded as a percentage of gross written premiums increased 1 percentage point in the first nine months of 2025 compared to the first nine months of 2024 reflecting higher cessions, higher reinsurance costs and higher reinstatement premiums paid to reinsurers in the excess liability business and growth in the public sector and mergers and acquisitions liability businesses, both of which cede a larger percentage of premiums than some of the other businesses in the Specialty casualty sub-segment.
Specialty financialGross written premiums increased $100 million (11%) in the first nine months of 2025 compared to the first nine months of 2024 due primarily to growth in the financial institutions business and AFG's European operations. Average renewal rates decreased approximately 1% for this group in the first nine months of 2025. Reinsurance premiums ceded as a percentage of gross written premiums increased 1 percentage point in the first nine months of 2025 compared to the first nine months of 2024 reflecting higher cessions in the financial institutions business.
Combined Ratio
The table below (dollars in millions) details the components of the combined ratio and underwriting profit for AFG's property and casualty insurance segment:
Nine months ended September 30, Nine months ended September 30,
2025 2024 Change 2025 2024
Property and transportation
Loss and LAE ratio 70.9 % 69.9 % 1.0 %
Underwriting expense ratio 23.2 % 23.6 % (0.4 %)
Combined ratio 94.1 % 93.5 % 0.6 %
Underwriting profit $ 119 $ 133
Specialty casualty
Loss and LAE ratio 66.3 % 63.4 % 2.9 %
Underwriting expense ratio 29.4 % 27.7 % 1.7 %
Combined ratio 95.7 % 91.1 % 4.6 %
Underwriting profit $ 102 $ 210
Specialty financial
Loss and LAE ratio 37.1 % 43.1 % (6.0 %)
Underwriting expense ratio 47.7 % 46.4 % 1.3 %
Combined ratio 84.8 % 89.5 % (4.7 %)
Underwriting profit $ 126 $ 79
Total Specialty
Loss and LAE ratio 63.4 % 63.1 % 0.3 %
Underwriting expense ratio 29.9 % 28.8 % 1.1 %
Combined ratio 93.3 % 91.9 % 1.4 %
Underwriting profit $ 347 $ 422
Aggregate - including exited lines
Loss and LAE ratio 63.5 % 63.1 % 0.4 %
Underwriting expense ratio 29.9 % 28.8 % 1.1 %
Combined ratio 93.4 % 91.9 % 1.5 %
Underwriting profit $ 345 $ 418
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
The Specialty property and casualty insurance operations generated an underwriting profit of $347 million for the first nine months of 2025 compared to $422 million for the first nine months of 2024, a decrease of $75 million (18%). Higher year-over-year underwriting profit in the Specialty financial sub-segment was more than offset by lower underwriting profit in the Property and transportation and Specialty casualty sub-segments. Overall catastrophe losses were $133 million (2.5 points on the combined ratio) in the first nine months of 2025 compared to catastrophe losses of $161 million (3.1 points), including $1 million in net reinstatement premiums in the first nine months of 2024.
Property and transportation Underwriting profit for this group was $119 million for the first nine months of 2025 compared to $133 million for the first nine months of 2024, a decrease of $14 million (11%), reflecting the impact of lower year-over-year underwriting profit in the property and inland marine business. Catastrophe losses were $26 million (1.3 points on the combined ratio) in the first nine months of 2025 compared to $56 million (2.7 points) in the first nine months of 2024.
Specialty casualtyUnderwriting profit for this group was $102 million for the first nine months of 2025 compared to $210 million for the first nine months of 2024, a decrease of $108 million (51%), reflecting lower underwriting profit in the directors' and officers' liability, excess and surplus, mergers and acquisitions liability and workers' compensation businesses. Catastrophe losses were $42 million (1.7 points on the combined ratio) in the first nine months of 2025 compared to catastrophe losses of $41 million (1.7 points), including $1 million in net reinstatement premiums in the first nine months of 2024.
Specialty financialUnderwriting profit for this group was $126 million for the first nine months of 2025 compared to $79 million for the first nine months of 2024, an increase of $47 million (59%), reflecting favorable prior year reserve development and improved accident year results. Catastrophe losses were $65 million (7.9 points on the combined ratio) in the first nine months of 2025 compared to $64 million (8.5 points) in the first nine months of 2024.
AggregateAggregate underwriting results for AFG's property and casualty insurance segment includes adverse prior year reserve development of $2 million in the first nine months of 2025 and $4 million in the first nine months of 2024 related to business outside of the Specialty group that AFG no longer writes.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Losses and Loss Adjustment Expenses
AFG's overall loss and LAE ratio was 63.5% for the first nine months of 2025 compared to 63.1% for the first nine months of 2024, an increase of 0.4 percentage points. The components of AFG's property and casualty losses and LAE amounts and ratio are detailed below (dollars in millions):
Nine months ended September 30,
Amount Ratio Change in
2025 2024 2025 2024 Ratio
Property and transportation
Current year, excluding catastrophe losses $ 1,443 $ 1,479 71.7 % 71.8 % (0.1 %)
Prior accident years development (43) (94) (2.1 %) (4.6 %) 2.5 %
Current year catastrophe losses including the impact of net reinstatement premiums 26 56 1.3 % 2.7 % (1.4 %)
Property and transportation losses and LAE and ratio $ 1,426 $ 1,441 70.9 % 69.9 % 1.0 %
Specialty casualty
Current year, excluding catastrophe losses $ 1,530 $ 1,471 63.7 % 62.0 % 1.7 %
Prior accident years development 21 (7) 0.9 % (0.3 %) 1.2 %
Current year catastrophe losses including the impact of net reinstatement premiums 42 40 1.7 % 1.7 % - %
Specialty casualty losses and LAE and ratio $ 1,593 $ 1,504 66.3 % 63.4 % 2.9 %
Specialty financial
Current year, excluding catastrophe losses $ 275 $ 264 33.4 % 35.0 % (1.6 %)
Prior accident years development (34) (3) (4.2 %) (0.4 %) (3.8 %)
Current year catastrophe losses including the impact of net reinstatement premiums 65 64 7.9 % 8.5 % (0.6 %)
Specialty financial losses and LAE and ratio $ 306 $ 325 37.1 % 43.1 % (6.0 %)
Total Specialty
Current year, excluding catastrophe losses $ 3,248 $ 3,214 62.0 % 62.0 % - %
Prior accident years development (56) (104) (1.1 %) (2.0 %) 0.9 %
Current year catastrophe losses including the impact of net reinstatement premiums 133 160 2.5 % 3.1 % (0.6 %)
Total Specialty losses and LAE and ratio $ 3,325 $ 3,270 63.4 % 63.1 % 0.3 %
Aggregate - including exited lines
Current year, excluding catastrophe losses $ 3,248 $ 3,214 62.0 % 62.0 % - %
Prior accident years development (54) (100) (1.0 %) (1.9 %) 0.9 %
Current year catastrophe losses including the impact of net reinstatement premiums 133 160 2.5 % 3.0 % (0.5 %)
Aggregate losses and LAE and ratio $ 3,327 $ 3,274 63.5 % 63.1 % 0.4 %
Current accident year losses and LAE, excluding catastrophe losses
The current accident year loss and LAE ratio, excluding catastrophe losses, for AFG's Specialty property and casualty insurance operations was 62.0% for both the first nine months of 2025 and the first nine months of 2024.
Property and transportation The 0.1 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects growth and improved results in the property and inland marine business, which has a lower loss and LAE ratio than some of the other businesses in the Property and transportation sub-segment, improved results in the transportation businesses and the impact of a large property loss in the first quarter of 2024, partially offset by higher claim severity in the aviation business and lower earnings in the crop business.
Specialty casualty The 1.7 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects higher claim severity in the excess and surplus and social services businesses.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Specialty financial The 1.6 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects improved results in the surety and fidelity businesses and growth in the financial institutions business, which has a lower loss and LAE ratio than some of the other businesses in the Specialty financial sub-segment, partially offset by growth in AFG's European operations, which has a higher loss and LAE ratio than some of the other businesses in the Specialty financial sub-segment.
Net prior year reserve development
AFG's Specialty property and casualty insurance operations recorded net favorable reserve development related to prior accident years of $56 million in the first nine months of 2025 compared to $104 million in the first nine months of 2024, a decrease of $48 million (46%).
Property and transportationNet favorable reserve development of $43 million in the first nine months of 2025 reflects lower than anticipated losses in the crop business, lower than anticipated claim severity in the aviation business and lower than expected claim frequency and severity in the property and inland marine business. Net favorable reserve development of $94 million in the first nine months of 2024 reflects lower than anticipated losses in the crop business, lower than expected claim severity in the property and inland marine and aviation businesses and lower than anticipated claim severity and frequency in the ocean marine business.
Specialty casualtyNet adverse reserve development of $21 million in the first nine months of 2025 reflects higher than expected claim severity in the excess and surplus, social services, excess liability, public sector and general liability businesses, partially offset by lower than anticipated claim severity in the workers' compensation and executive liability businesses. Net favorable reserve development of $7 million in the first nine months of 2024 reflects lower than anticipated claim severity in the workers' compensation businesses and lower than expected claim frequency and severity in the executive liability business, partially offset by higher than anticipated claim severity in the umbrella and excess liability businesses, public sector and general liability businesses and higher than expected claim frequency and severity in the social services business.
Specialty financial Net favorable reserve development of $34 million in the first nine months of 2025 reflects lower than anticipated claim frequency in the financial institutions business and lower than expected claim severity in the surety, fidelity and trade credit businesses. Net favorable reserve development of $3 million in the first nine months of 2024 reflects lower than anticipated claim frequency and severity in the fidelity and financial institutions businesses and lower than expected claim frequency in the trade credit business, partially offset by higher than anticipated claim severity in the innovative markets and surety businesses.
AggregateAggregate net prior accident years reserve development for AFG's property and casualty insurance segment includes net adverse reserve development of $2 million in the first nine months of 2025 and $4 million in the first nine months of 2024 related to business outside the Specialty group that AFG no longer writes.
Catastrophe losses
Catastrophe losses of $133 million in the first nine months of 2025 resulted primarily from California wildfires and storms in multiple regions of the United States. Catastrophe losses of $160 million in the first nine months of 2024 (before $1 million in net reinstatement premiums) resulted primarily from Hurricane Helene and storms in multiple regions of the United States.
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Commissions and Other Underwriting Expenses
AFG's property and casualty commissions and other underwriting expenses ("U/W Exp") were $1.57 billion in the first nine months of 2025 compared to $1.49 billion for the first nine months of 2024, an increase of $74 million (5%). AFG's underwriting expense ratio was 29.9% for the first nine months of 2025 compared to 28.8% for the first nine months of 2024, an increase of 1.1 percentage points. Detail of AFG's property and casualty commissions and other underwriting expenses and underwriting expense ratios is shown below (dollars in millions):
Nine months ended September 30,
2025 2024 Change in
U/W Exp % of NEP U/W Exp % of NEP % of NEP
Property and transportation $ 466 23.2 % $ 487 23.6 % (0.4 %)
Specialty casualty 708 29.4 % 657 27.7 % 1.7 %
Specialty financial 394 47.7 % 350 46.4 % 1.3 %
$ 1,568 29.9 % $ 1,494 28.8 % 1.1 %
Property and transportation Commissions and other underwriting expenses as a percentage of net earned premiums decreased 0.4 percentage points in the first nine months of 2025 compared to the first nine months of 2024 reflecting changes in the mix of business, partially offset by higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics and the impact of lower earned premiums in the crop operations on the ratio (which has a lower commissions and other underwriting expense ratio than some of the other businesses in the Property and transportation sub-segment).
Specialty casualty Commissions and other underwriting expenses as a percentage of net earned premiums increased 1.7 percentage points in the first nine months of 2025 compared to the first nine months of 2024 reflecting higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics and an increase in average commission rates in certain excess and surplus businesses resulting from changes in reinsurance treaties.
Specialty financial Commissions and other underwriting expenses as a percentage of net earned premiums increased 1.3 percentage points in the first nine months of 2025 compared to the first nine months of 2024 reflecting higher costs for software and other expenses associated with certain initiatives in IT security, customer experience and data analytics and higher profit-based commissions to agents in the financial institutions business, partially offset by the impact of higher earned premiums in the financial institutions business on the ratio and a change in the mix of business towards products with lower commission rates.
Property and Casualty Net Investment Income
Net investment income in AFG's property and casualty insurance operations was $554 million in the first nine months of 2025 compared to $589 million in the first nine months of 2024, a decrease of $35 million (6%). The average invested assets and overall yield earned on investments held by AFG's property and casualty insurance operations are provided below (dollars in millions):
Nine months ended September 30,
2025 2024 Change % Change
Net investment income:
Net investment income, excluding alternative investments $ 491 $ 464 $ 27 6 %
Alternative investments 63 125 (62) (50 %)
Total net investment income $ 554 $ 589 $ (35) (6 %)
Average invested assets (at amortized cost) $ 15,988 $ 15,389 $ 599 4 %
Yield on fixed maturities (before investment expenses)
5.17 % 5.01 % 0.16 %
Yield (net investment income as a % of average invested assets) 4.62 % 5.10 % (0.48 %)
The decrease in the property and casualty insurance segment's net investment income for the first nine months of 2025 compared to the first nine months of 2024 reflects the impact of lower returns on AFG's alternative investments portfolio (partnerships and similar investments and AFG-managed CLOs), partially offset by higher balances of invested assets
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
and higher returns on fixed maturity investments. The property and casualty insurance segment's overall yield on investments (net investment income as a percentage of average invested assets) was 4.62% for the first nine months of 2025 compared to 5.10% for the first nine months of 2024, a decrease of 0.48 percentage points. The annualized return earned on alternative investments (partnerships and similar investments and AFG-managed CLOs) was 3.0% in the first nine months of 2025 compared to 6.5% in the prior year period. The impact on rental rates and occupancy from a surge in new apartment supply in certain otherwise strong markets reduced the fair value of certain multi-family investments and tempered the performance of AFG's alternative investment portfolio in the 2025 period.
Property and Casualty Other Income and Expenses, Net
Other income and expenses, net for AFG's property and casualty insurance operations was a net expense of $52 million for the first nine months of 2025 compared to $57 million for the first nine months of 2024, an improvement of $5 million (9%). The table below details the items included in other income and expenses, net for AFG's property and casualty insurance operations (in millions):
Nine months ended September 30,
2025 2024
Other income
$ 9 $ 6
Other expenses:
Amortization of intangibles 15 14
Interest expense on funds withheld 34 38
Other
12 11
Total other expenses 61 63
Other income and expenses, net $ (52) $ (57)
The increase in other income in the first nine months of 2025 compared to the first nine months of 2024 reflects a death benefit received on a company-owned life insurance policy in the third quarter of 2025.
Holding Company, Other and Unallocated - Results of Operations
AFG's net GAAP pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $171 million in the first nine months of 2025 compared to $156 million in the first nine months of 2024, an increase of $15 million (10%). AFG's net core pretax loss outside of its property and casualty insurance segment totaled $146 million in the first nine months of 2025 compared to $142 million in the first nine months of 2024, an increase of $4 million (3%).
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
The following table details AFG's GAAP and core loss before income taxes from operations outside of its property and casualty insurance segment for the nine months ended September 30, 2025 and 2024 (dollars in millions):
Nine months ended September 30,
2025 2024 % Change
Revenues:
Net investment income
$ 18 $ 22 (18 %)
Other income - P&C fees
71 83 (14 %)
Other income
12 12 - %
Total revenues
101 117 (14 %)
Costs and Expenses:
Property and casualty insurance - loss adjustment and underwriting expenses 25 38 (34 %)
Other expense - expenses associated with P&C fees
46 45 2 %
Other expenses (*)
119 119 - %
Costs and expenses, excluding interest charges on borrowed money
190 202 (6 %)
Loss before income taxes, excluding realized gains and losses and interest charges on borrowed money (89) (85) 5 %
Interest charges on borrowed money
57 57 - %
Core loss before income taxes, excluding realized gains and losses (146) (142) 3 %
Pretax non-core special A&E charge
(25) (14) 79 %
GAAP loss before income taxes, excluding realized gains and losses
$ (171) $ (156) 10 %
(*)Excludes pretax non-core special A&E charges of $25 million and $14 million in the first nine months of 2025 and 2024, respectively.
Holding Company and Other - Net Investment Income
AFG recorded net investment income on investments held outside of its property and casualty insurance segment of $18 million in the first nine months of 2025 compared to $22 million in the first nine months of 2024, a decrease of $4 million (18%) reflecting lower income on fixed maturity investments.
Holding Company and Other - P&C Fees and Related Expenses
Summit, a workers' compensation insurance subsidiary, collects fees from a small group of unaffiliated insurers for providing underwriting, policy administration and claims services. In addition, certain of AFG's property and casualty insurance businesses collect fees from customers for ancillary services such as workplace safety programs and premium financing. In the first nine months of 2025, AFG collected $71 million in fees for these services compared to $72 million in the first nine months of 2024. Management views this fee income, net of the $46 million in the first nine months of 2025 and $45 million in the first nine months of 2024 in expenses incurred to generate such fees, as a reduction in the cost of underwriting its property and casualty insurance policies. In addition, AFG's property and casualty insurance businesses earned $11 million during the first nine months of 2024 in fees as compensation for providing services related to the administration of crop insurance business generated by Crop Risk Services for its former owner prior to the acquisition date. The expenses related to providing such services are embedded in property and casualty underwriting expenses. Consistent with internal management reporting, these fees and the related expenses are netted and recorded as a reduction of commissions and other underwriting expenses in AFG's segmented results.
Holding Company and Other - Other Income
Other income in the table above includes $8 million and $9 million in the first nine months of 2025 and the first nine months of 2024, respectively, in management fees paid to AFG by the AFG-managed CLOs (AFG's consolidated managed investment entities). The management fees are eliminated in consolidation - see the other income line in the Consolidate MIEs column under"Results of Operations - Segmented Statement of Earnings."Excluding amounts eliminated in consolidation, AFG recorded other income outside of its property and casualty insurance segment of $4 million in the first nine months of 2025 compared to $3 million in the first nine months of 2024, an increase of $1 million (33%).
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
Holding Company and Other - Other Expenses
Excluding the non-core special A&E charges discussed below, AFG's holding companies and other operations outside of its property and casualty insurance segment recorded other expenses of $119 million in both the first nine months of 2025 and the first nine months of 2024.
Holding Company and Other - Interest Charges on Borrowed Money
AFG's holding companies and other operations outside of its property and casualty insurance segment recorded interest expense of $57 million in both the first nine months of 2025 and the first nine months of 2024.
Holding Company and Other - Special A&E Charges
See "Holding Company and Other - Special A&E Charges" under "Results of Operations - Holding Company, Other and Unallocated"for the quarters ended September 30, 2025 and 2024 for a discussion of the $25 million and $14 million pretax non-core special A&E charges recorded in the third quarter of 2025 and the third quarter of 2024, respectively.
Realized Gains (Losses) on Securities
AFG's realized gains (losses) on securities were net gains of $17 million in the first nine months of 2025 compared to $10 million in the first nine months of 2024, an increase of $7 million (70%). Realized gains (losses) on securities consisted of the following (in millions):
Nine months ended September 30,
2025 2024
Realized gains (losses) before impairment allowances:
Disposals $ (9) $ (4)
Change in the fair value of equity securities 32 29
Change in the fair value of derivatives 2 2
25 27
Change in allowance for impairments on securities (8) (17)
Realized gains (losses) on securities $ 17 $ 10
The $32 million net realized gain from the change in the fair value of equity securities in the first nine months of 2025 includes gains of $14 million on investments in media companies and $12 million on investments in banks and financing companies. The $29 million net realized gain from the change in the fair value of equity securities in the first nine months of 2024 includes gains of $19 million on investments in banks and financing companies, $5 million on investments in natural gas companies and $5 million on investments in healthcare companies.
The $17 million change in allowance for impairments on securities in the first nine months of 2024 relates primarily to an allowance taken on corporate bonds from a single issuer in the financial sector.
Realized Gain on Subsidiaries
During the third quarter of 2025, AFG recorded a $3 million pretax realized gain resulting from the remeasurement of its existing investment in Radion Holdings, LLC to fair value (see Note B - "Acquisition of Business" to the financial statements) and a $2 million pretax realized loss on the write-off of certain intangible assets (see Note H - "Goodwill and Other Intangibles" to the financial statements).
Consolidated Income Taxes
AFG's consolidated provision for income taxes was $151 million for the first nine months of 2025 compared to $172 million for the first nine months of 2024, a decrease of $21 million (12%). See Note K - "Income Taxes" to the financial statements for an analysis of items affecting AFG's effective tax rate.
RECENTLY ADOPTED ACCOUNTING STANDARDS
See Note C - "Segments of Operations"to the financial statements for accounting guidance adopted in the fourth quarter of 2024, which requires enhanced disclosures about significant segment expenses and a description of the composition of other segment expenses by business segment. The title and position of the chief operating decision maker ("CODM") and
AMERICAN FINANCIAL GROUP, INC. 10-Q
Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued
an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources is also required to be disclosed.
ACCOUNTING STANDARDS TO BE ADOPTED
In December 2023, the FASB issued ASU No. 2023-09 ("ASU 2023-09"), Improvements to Income Tax Disclosures. ASU 2023-09 is intended to improve income tax disclosures by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation presented in both dollar and percentage terms; (ii) the disaggregation of income taxes paid (net of refunds received), income (loss) before income taxes and income taxes by jurisdiction (federal, state and foreign taxes); and (iii) further disaggregation of income taxes paid by any individual jurisdiction equal to or exceeding five percent of total income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application. As of September 30, 2025, AFG has not adopted ASU 2023-09. Management is evaluating the impact of the standard to AFG's income tax disclosures. Since ASU 2023-09 only requires additional disclosure, the adoption of this guidance will not have an impact on AFG's results of operations or financial condition.
In November 2024, the FASB issued ASU No. 2024-03 ("ASU 2024-03"), Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 requires additional information and disaggregation of specified expense categories in the notes to financial statements. ASU 2024-04 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted and applied either prospectively or retrospectively. As of September 30, 2025, AFG has not adopted ASU 2024-03. Management is evaluating the impact of the standard to AFG's income statement expense disclosures. Since ASU 2024-03 only requires additional disclosures, the adoption of this guidance will not have an impact on AFG's results of operations or financial condition.
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