American Financial Group Reports Strong Q4 2025 Earnings and Outlook
American Financial Group Inc (NYSE: AFG) has announced its impressive financial results for the fourth quarter and full year of 2025, highlighting robust core net operating earnings and strong underwriting activities. For 2025, the company reported core net operating earnings of $10.29 per share, achieving a core operating return on equity of 18.2%. In the fourth quarter alone, these earnings reached $3.65 per share.
During the year, AFG demonstrated its commitment to shareholder value by returning over $700 million. This included $334 million in special dividends, $274 million in regular dividends, and $99 million in share repurchases. Notably, the company increased its quarterly dividend by 10%, bringing the annual rate to $3.52 per share.
The Property and Casualty (P&C) segment experienced mixed performance, with a 12% decrease in investment income during the fourth quarter of 2025 compared to 2024, largely due to lower returns from alternative investments. Nonetheless, the P&C net investment income, excluding alternative investments, increased by 5% for the full year over 2024 figures.
Underwriting and Premium Growth
Underwriting profits in the Specialty Property and Casualty insurance sector surged by 41% in Q4, achieving a combined ratio of 84.1%. Gross written premiums rose by 2%, though net written premiums fell by 1% year-over-year in Q4 2025. AFG anticipates competitive pressures into 2026, with some areas experiencing rate softening that may impact growth. Yet, they project net written premium growth to land between 3% and 5%, aiming for a combined ratio of 92.5% and core net operating earnings of approximately $11 per share in 2026.
The Specialty Casualty Group reported a combined ratio of 96.7% in Q4 2025, indicating challenges in longer-tailed lines of business. The Specialty Financial Group, meanwhile, saw a 4% decline in gross written premiums and a 10% reduction in net written premiums, affected by adjustments in coastal exposed property business.
Strategic Outlook
In strategic developments, AFG is expanding its portfolio with investments in specialty construction, excess and surplus (E&S) lines, and embedded solutions, despite an overarching softening rate environment. The company's solid capital foundation is supported by a leverage ratio below 28% and A+ financial strength ratings from AM Best and Standard & Poor’s, with no debt maturing until 2030.
For industry practitioners tracking AFG's strategic positioning, the company's disciplined operating philosophy, diversified portfolio, and shareholder commitment underpin its strong financial results and favorable outlook. Further insights and operational strategies can be reviewed in their full earnings call transcript.