American Financial Group, Inc. Announces Record 2016 Fourth Quarter and Full Year Results

By a News Reporter-Staff News Editor at Insurance Weekly News -- American Financial Group, Inc. (NYSE: AFG) reported record 2016 fourth quarter net earnings attributable to shareholders of $385 million ($4.33 per share) compared to $129 million ($1.45 per share) for the 2015 fourth quarter. Results for the fourth quarter of 2016 include non-core tax benefits of $111 million ($1.25 per share) as a result of the restructuring of Neon, our Lloyd's insurer, and $66 million ($0.74 per share) related to the merger with National Interstate, as well as $32 million ($0.36 per share) in after-tax realized gains. Comparatively, net earnings in the 2015 fourth quarter included non-core losses of $7 million ($0.07 per share). Details may be found in the table below. Net earnings attributable to shareholders for the year were $7.33 per share, compared to $3.94 per share in 2015. Due to the impact of rising interest rates on our fixed maturity portfolio, book value per share decreased by $2.90 to $56.55 per share during the fourth quarter of 2016. Return on equity was 14.8% and 8.3% for 2016 and 2015, respectively.

Core net operating earnings were $176 million ($1.98 per share) for the 2016 fourth quarter, compared to $136 million ($1.52 per share) in the 2015 fourth quarter. The $1.98 per share established an all-time high for AFG's quarterly core EPS. The improved results were attributable to higher underwriting profit in our Specialty Property and Casualty ("P&C") insurance segment and significantly higher operating earnings in our Annuity Segment. Book value per share, excluding unrealized gains related to fixed maturities, increased by $1.43 to $53.11 per share during the fourth quarter of 2016. Core net operating earnings for the fourth quarters of 2016 and 2015 generated annualized returns on equity of 15.7% and 12.7%, respectively. Core operating return on equity was 12.2% and 11.5% for 2016 and 2015, respectively.

During the fourth quarter of 2016, AFG repurchased approximately 116,000 shares of common stock at an average price per share of $75.09. During 2016, AFG repurchased 1.9 million shares for $133 million, at an average price per share of $69.47.

AFG's net earnings attributable to shareholders, determined in accordance with U.S. generally accepted accounting principles ("GAAP"), include certain items that may not be indicative of its ongoing core operations. The table below identifies such items and reconciles net earnings attributable to shareholders to core net operating earnings, a non-GAAP financial measure. AFG believes that its core net operating earnings provides management, financial analysts, rating agencies and investors with an understanding of the results from the ongoing operations of the Company by excluding the impact of net realized investment gains and losses and other special items that are not necessarily indicative of operating trends. AFG's management uses core net operating earnings to evaluate financial performance against historical results because it believes this provides a more comparable measure of its continuing business. Core net operating earnings is also used by AFG's management as a basis for strategic planning and forecasting.

In millions, except per share amounts

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December 31,

December 31, 2016

2015 2016

Keywords for this news article include: Financial Companies, Property and Casualty Insurance Companies.

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