American Financial Group Reports Strong Q4 2025 Earnings
American Financial Group, Inc. (AFG) has announced its financial performance for the fourth quarter and full year of 2025, highlighting key metrics in net earnings, core net operating earnings, and return on equity. For Q4 2025, AFG reported net earnings of $299 million or $3.58 per share, an increase compared to $255 million or $3.03 per share in the same period of 2024. Net earnings included after-tax non-core realized losses of $6 million. Full-year net earnings for 2025 were $10.08 per share, a slight decline from $10.57 per share in 2024, with an ROE of 17.8% excluding accumulated other comprehensive income (AOCI).
Core Net Operating Earnings and Underwriting Profits
The core net operating earnings for Q4 2025 surged to $305 million or $3.65 per share, up from $262 million or $3.12 per share in Q4 2024. This improvement was largely driven by substantial underwriting profits, despite lower returns from the alternative investments portfolio. The underlying ROE for core net operating earnings stood at 18.2% in 2025, compared to 19.3% in the previous year.
Book Value and Capital Management
AFG reported a book value per share of $57.78 at the end of 2025, reflecting a 6.9% increase over the quarter and 22.3% over the year, bolstered by dividend contributions. Excluding AOCI, the book value per share was $58.38, marking growth of 6.4% and 17.2% over the quarter and year respectively. As part of its robust capital management strategy, AFG announced a special dividend of $1.50 per share for disbursement on February 25, 2026, alongside its regular quarterly dividend, reinforcing the company's commitment to shareholder returns through dividends and share repurchases.
Specialty P&C Insurance Segment Performance
The Specialty Property and Casualty (P&C) insurance segment showed significant improvement in its combined ratio, achieving 84.1% in Q4 2025, down from 89.0% in the previous year. This advance was attributable to favorable reserve development and minimal catastrophe losses. While gross written premiums in this segment grew by 2% during Q4 2025, net written premiums dropped by 1% compared to Q4 2024.
Investment Income and Forward Outlook
In terms of investments, AFG experienced a 12% decline in net investment income for Q4 2025, primarily due to decreased returns from alternative investments despite elevated interest rates. The return on alternative investments averaged 0.9% for the quarter. AFG projects core operating earnings per share of about $11.00 and a corresponding ROE of approximately 18% for 2026, supported by predicted net written premium growth, targeted combined ratio, and anticipated returns on its alternative investment portfolio.
AFG continues to utilize core net operating earnings, adjusted to exclude non-recurring and non-core items, as a reliable metric to evaluate sustainable operating performance. This measure is instrumental for the company, financial analysts, and investors in assessing results that exclude realized gains and losses not indicative of long-term trends. For more detailed insights, AFG has made its earnings release and quarterly investor supplement available on its website, www.AFGinc.com.