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American Financial Group (AFG)
NYSE:AFG
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American Financial Group
(NYSE:AFG)
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Rating:78Outperform
Price Target:
$157.00
â–²(11.13% Upside)
American Financial Group's stock score is driven by strong financial performance and technical indicators, supported by a reasonable valuation. The earnings call presents a mixed outlook with both strengths and challenges. The company's attractive dividend yield and stable financials are significant positives, while profitability concerns and cautious earnings guidance temper the overall score.
American Financial Group (AFG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$11.78B
Dividend Yield6.51%
Average Volume (3M)465.77K
Price to Earnings (P/E)15.5
Beta (1Y)0.53
Revenue Growth3.35%
EPS Growth-14.16%
CountryUS
Employees8,700
SectorFinancial
Sector Strength70
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)2.14
Shares Outstanding83,394,480
10 Day Avg. Volume574,531
30 Day Avg. Volume465,769
Financial Highlights & Ratios
PEG Ratio2.55
Price to Book (P/B)2.57
Price to Sales (P/S)1.39
P/FCF Ratio9.97
Enterprise Value/Market Cap1.04
Enterprise Value/Revenue1.48
Enterprise Value/Gross Profit2.89
Enterprise Value/Ebitda10.96
Forecast
1Y Price Target
$133.00Price Target Upside-5.85% Downside
Rating ConsensusHold
Number of Analyst Covering5
American Financial Group Business Overview & Revenue Model
Company DescriptionAmerican Financial Group, Inc., an insurance holding company, provides specialty property and casualty insurance products in the United States. It offers property and transportation insurance products, such as physical damage and liability coverage for buses and trucks, inland and ocean marine, agricultural-related products, and other commercial property and specialty transportation coverages; specialty casualty insurance, including primarily excess and surplus, executive and professional liability, general liability, umbrella and excess liability, and specialty coverage in targeted markets, as well as customized programs for small to mid-sized businesses and workers' compensation insurance; and specialty financial insurance products comprising risk management insurance programs for lending and leasing institutions, fidelity and surety products, and trade credit insurance. The company sells its property and casualty insurance products through independent insurance agents and brokers. American Financial Group, Inc. was founded in 1872 and is headquartered in Cincinnati, Ohio.
How the Company Makes MoneyAmerican Financial Group generates revenue primarily through its insurance underwriting operations, where it earns premiums from policyholders in its specialty property and casualty insurance segment. The company also collects investment income from its sizable investment portfolio, which includes bonds, stocks, and real estate investments. Additionally, AFG earns fees and commissions from the sale of annuities and life insurance products. Key revenue streams include the underwriting profit from insurance premiums minus claims and expenses, as well as returns from invested assets. The company's strategic partnerships with various distribution channels, including independent agents and brokers, further enhance its market reach and revenue generation capabilities.
American Financial Group Earnings Call Summary
Earnings Call Date:Aug 05, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong underwriting margins and premium growth in the Specialty P&C segment, along with increased shareholder returns. However, these positives were offset by decreased core net operating earnings, lower returns on alternative investments, and challenges in certain business lines due to social inflation. The balance between highlights and lowlights suggests a cautious outlook.Q2-2025 Updates
Positive Updates
Strong Underwriting Margins and Investment Income
Underwriting margins in the Specialty Property & Casualty insurance businesses were strong, and higher interest rates increased net investment income, excluding alternatives, by 10% year-over-year.
Shareholder Returns
Returned over $100 million to shareholders through regular dividends and share repurchases in the second quarter of 2025.
Premium Growth in Specialty P&C
Specialty Property & Casualty businesses generated a 93.1% combined ratio, with gross and net written premiums up 10% and 7%, respectively, compared to the second quarter of 2024.
Improved Pricing in Workers' Compensation
Workers' compensation renewal rates in California increased by 5% in the second quarter, with an approved 8.7% increase effective September 2025.
Negative Updates
Decreased Core Net Operating Earnings
Core net operating earnings decreased to $2.14 per share compared to $2.56 per share in the prior year-end period.
Lower Returns on Alternative Investments
Annualized return on alternative investments in the P&C portfolio was approximately 1.2% for the 2025 second quarter compared to 5.1% for the prior year quarter.
Increased Combined Ratio in Specialty P&C
Specialty Property & Casualty businesses reported a combined ratio of 93.1%, 2.6 points higher than the 90.5% reported in the second quarter of last year.
Challenges in Nonprofit and Social Services
Continued nonrenewals in housing and daycare accounts within the social services business due to higher social inflation exposure.
Company Guidance
During the American Financial Group's 2025 Second Quarter Earnings Results Conference Call, the company reported an annualized core operating return on equity of 15.5%, despite challenges from alternative investments. Core net operating earnings were $2.14 per share, a decrease from $2.56 per share in the same period last year. The quarter saw a 10% year-over-year increase in net investment income, excluding alternative investments, due to higher interest rates and increased invested assets. Specialty Property & Casualty insurance businesses achieved a combined ratio of 93.1%, with 2.3 points related to catastrophe losses. Gross and net written premiums increased by 10% and 7% year-over-year, respectively. AFG returned over $100 million to shareholders through dividends and share repurchases. Despite a decrease in returns from alternative investments, the company remains optimistic about achieving annual returns averaging 10% or better and expects the current inventory of multifamily investments to be absorbed over the next 12 months.American Financial Group Financial Statement Overview
Summary
American Financial Group demonstrates strong revenue growth and a stable balance sheet, but faces challenges in profitability and cash conversion. The company's financials reflect a solid foundation with opportunities for enhancing operational efficiency and cash flow management.Income Statement
American Financial Group has shown strong revenue growth, particularly in the TTM period with a 46.1% increase. The gross profit margin remains healthy, although the net profit margin has slightly decreased in the TTM. The EBIT margin has turned negative in the TTM, indicating potential operational challenges. Overall, the income statement reflects strong revenue growth but with some profitability concerns.75
Positive
Balance Sheet
The company's balance sheet is stable with a moderate debt-to-equity ratio of 0.33 in the TTM, indicating a balanced approach to leverage. The return on equity remains strong, although it has slightly decreased compared to previous years. The equity ratio is healthy, suggesting a solid capital structure. Overall, the balance sheet reflects financial stability with manageable leverage.80
Positive
Cash Flow
The cash flow statement shows a positive free cash flow growth rate of 21.9% in the TTM, indicating improved cash generation. However, the operating cash flow to net income ratio is low, suggesting potential issues in converting income to cash. The free cash flow to net income ratio is strong, reflecting efficient cash management. Overall, the cash flow statement indicates good cash generation with some areas for improvement.70
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 8.28B | 8.28B | 7.73B | 6.77B | 6.23B | 5.65B |
| Gross Profit | 4.23B | 3.82B | 7.45B | 3.14B | 3.07B | 5.58B |
| EBITDA | 1.11B | 1.28B | 1.23B | 1.31B | 1.62B | 726.00M |
| Net Income | 764.00M | 887.00M | 852.00M | 898.00M | 2.00B | 732.00M |
Balance Sheet | ||||||
| Total Assets | 30.67B | 30.84B | 29.79B | 28.83B | 28.94B | 73.57B |
| Cash, Cash Equivalents and Short-Term Investments | 2.00B | 1.95B | 1.75B | 10.97B | 12.49B | 10.75B |
| Total Debt | 1.48B | 1.48B | 1.67B | 1.61B | 1.96B | 1.96B |
| Total Liabilities | 26.15B | 26.37B | 25.53B | 24.78B | 23.93B | 66.78B |
| Stockholders Equity | 4.52B | 4.47B | 4.26B | 4.05B | 5.01B | 6.79B |
Cash Flow | ||||||
| Free Cash Flow | 1.74B | 1.15B | 1.90B | 1.07B | 1.56B | 1.84B |
| Operating Cash Flow | 1.67B | 1.15B | 1.97B | 1.15B | 1.71B | 2.18B |
| Investing Cash Flow | 160.00M | 95.00M | 414.00M | -1.05B | -436.00M | -1.56B |
| Financing Cash Flow | -1.68B | -1.07B | -2.03B | -1.36B | -1.96B | -123.00M |
American Financial Group Technical Analysis
Positive
141.27
Price Trends
131.86
Positive
127.93
Positive
127.73
Positive
Market Momentum
2.45
Positive
66.88
Neutral
78.10
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AFG, the sentiment is Positive. The current price of 141.27 is above the 20-day moving average (MA) of 137.80, above the 50-day MA of 131.86, and above the 200-day MA of 127.73, indicating a bullish trend. The MACD of 2.45 indicates Positive momentum. The RSI at 66.88 is Neutral, neither overbought nor oversold. The STOCH value of 78.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AFG.
American Financial Group Risk Analysis
American Financial Group disclosed 27 risk factors in its most recent earnings report. American Financial Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
American Financial Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | 6.25B | 11.51 | 17.27% | 2.06% | 4.47% | 102.98% | |
78 Outperform | $11.78B | 15.50 | 17.17% | 6.51% | 3.35% | -14.16% | |
76 Outperform | 5.93B | 18.48 | 22.72% | 4.05% | 10.29% | -4.70% | |
75 Outperform | 4.71B | 12.67 | 11.39% | 1.96% | 12.27% | 66.53% | |
74 Outperform | 9.99B | 22.38 | 27.96% | 0.15% | 21.51% | 20.03% | |
66 Neutral | 12.32B | 14.14 | 8.23% | 8.39% | 6.12% | -31.43% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% |
* Financial Sector Average
Performance Comparison
AFG
American Financial Group
141.27
13.49
10.56%
CNA
CNA Financial
45.51
-0.47
-1.02%
RLI
RLI
64.61
-10.10
-13.52%
SIGI
Selective Insurance Group
77.43
-12.43
-13.83%
THG
Hanover Insurance
174.85
29.78
20.53%
KNSL
Kinsale Capital Group
428.71
-33.79
-7.31%
American Financial Group Corporate Events
M&A TransactionsBusiness Operations and Strategy
American Financial Group Halts Charleston Resort Sale Plans
Neutral
Jun 11, 2025
On June 6, 2025, American Financial Group announced the termination of agreements to sell the Charleston Harbor Resort & Marina, a premier property in Charleston, South Carolina. The company will continue to explore strategic alternatives for the resort, which includes two hotels, a marina, and other amenities. This decision could impact AFG’s operations and market positioning as they reassess their strategy for this asset.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.