American Financial Group Announces First Quarter Results

Apr 26, 2001, 01:00 ET from American Financial Group, Inc.

    CINCINNATI, April 26 /PRNewswire/ -- American Financial Group, Inc.
 (NYSE:   AFG) today reported net earnings from insurance businesses of
 $21.8 million ($.32 per share) for the first quarter of 2001 which is an
 improvement over fourth quarter 2000 results of $14.3 million ($.24 per share)
 and slightly exceeds analyst consensus estimates. The first quarter results
 were affected by improving underwriting margins in both personal auto and
 specialty property and casualty insurance ("P&C") operations and improved
 other income. Net earnings for the first quarter of 2001 were $13.1 million
 ($.19 per share) which includes investee losses of $3.4 million and net
 realized losses of $5.3 million.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/19990909/AFGLOGO )
     AFG ended the 2001 first quarter with shareholders' equity of $1.6
 billion, book value per share of $23.43 and cash and investments totaling
 $11.5 billion.
 
     Business Segment Results
     The P&C group benefited from continued rate increases throughout the
 property and casualty markets.  Net written premiums of the P&C group grew 12%
 in the first quarter of 2001 over the same period a year ago, after adjusting
 for the effect of the sale of the Japanese division.  The combined ratio was
 105.6% for the 2001 quarter compared to 106.1% for the 2000 fourth quarter and
 108.0% for the 2000 year. During 2000, underwriting margins deteriorated and
 the group implemented significant rate increases. Both the Specialty and
 Personal lines businesses experienced improving underwriting margins over the
 results of the fourth quarter of 2000.
     During the first quarter of 2001, net written premiums of the Specialty
 Group were 20% above the comparable 2000 period, after adjusting for the
 effect of the sale of the Japanese division. The Specialty Group's combined
 ratio was 100.6% for the 2001 quarter, a 3.7% improvement over the 104.3%
 reported in the 2000 fourth quarter.  The group's combined ratio for the 2000
 year was 107.9%.  Specialty operations, excluding the California workers'
 compensation business, reported a combined ratio of 98.0% for the 2001
 quarter.
     In its California workers' compensation business, the company implemented
 rate increases on renewals during the 2001 first quarter averaging 40%, the
 same level of increase as in the fourth quarter of 2000. The other specialty
 operations achieved rate increases averaging 17% for the 2001 quarter.
 Increases were 25% and 12%, respectively, in 2000.
     The Personal Group's writings for the first quarter of 2001 were 6% above
 the 2000 period reflecting the impact of significant rate increases
 implemented primarily during the last half of 2000 and lower business volume.
 During the 2001 quarter, this group's rate increases were approximately 5%,
 mostly in the nonstandard portion of the business.  The group's combined ratio
 was 108.5% in the 2001 first quarter, a 2.5% improvement over the 111.0%
 reported in the 2000 fourth quarter.  The combined ratio for the 2000 year was
 108.6%
     Carl H. Lindner III, AFG Co-President and head of the P&C business stated,
 "We are encouraged by the improving trends in both areas of our P&C insurance
 businesses. I am especially pleased that most of our specialty operations
 achieved an underwriting profit for this first quarter. We are beginning to
 see some positive earnings impact from the rate and strategic actions taken in
 2000 and continued into 2001.  We expect the average rate increase in our
 personal auto business to be in excess of 10% this year.  We are also seeing
 significant improvement in the underwriting margins of our California workers'
 compensation business and expect rate increases of at least 30% on renewals in
 this business during this upcoming quarter. Even with these rate increases, we
 continue to experience solid retention in most lines of business."
     The operating earnings contribution of AFG's annuity, life and health
 insurance operations for the first quarter of 2001 was up about 6% over the
 2000 period.  Statutory premiums for the 2001 first quarter were 5% below the
 2000 period due primarily to slowing sales of variable annuities.  Premiums
 from all other product lines were up in the 2001 first quarter compared to the
 2000 quarter.
     Through the operations of the Great American Insurance Group, AFG is
 engaged primarily in private passenger automobile and specialty property and
 casualty insurance businesses and in the sale of retirement annuities, life,
 supplemental health and long-term care insurance products.
 
     Forward Looking Statements
     This press release contains certain statements that may be deemed to be
 "forward-looking statements" within the meaning of Section 27A of the
 Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
 All statements in this press release not dealing with historical results are
 forward-looking and are based on estimates, assumptions and projections.
 Actual results could differ materially from those expected by AFG depending on
 certain factors including but not limited to: changes in economic conditions
 including interest rates, performance of securities markets, and the
 availability of capital, regulatory actions, changes in legal environment, tax
 law changes, levels of catastrophes and other major losses, adequacy of loss
 reserves, availability of reinsurance, competitive pressures, including the
 ability to obtain rate increases, driving patterns and other changes in market
 conditions that could affect AFG's insurance operations.
 
     Conference Call
     The company will hold a conference call to discuss 2001 first quarter
 results at 2:00 p.m. (EST) today.  Toll-free telephone access will be
 available by dialing 1-800-289-0518.  Please dial in 5 to 10 minutes prior to
 the scheduled start time of the call.  A replay of the call will also be
 available after 4:00 p.m. (EST) today by dialing 1-888-203-1112 and providing
 the confirmation code 648307.  The conference call will also be broadcast over
 the internet.  To listen to the call via the internet, go to AFG's website,
 www.amfnl.com , and follow the instructions at the Webcast link.
 
                          (Financial summaries follow)
     This earnings release and additional Financial Supplements are available
 at AFG's web site: www.amfnl.com .
 
                AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
                             SUMMARY OF EARNINGS
                      (In Millions, Except Per Share Data)
 
                                              Three months ended
                                         March     December      March
                                          2001       2000        2000
 
     Operating revenues                  $980.7     $982.5      $885.5
     Costs and expenses                   943.9      963.0       826.0
        Total                              36.8       19.5        59.5
     Related income taxes                  15.0        5.2        21.2
 
     Earnings from insurance businesses    21.8       14.3        38.3
 
     Net earning (losses) from investee
        corporations                       (3.4)     (87.2)        7.0
     Realized investment losses, net of
        taxes                              (5.3)     (12.9)        (.6)
     Cumulative effect of
       accounting change                      -       (9.1)          -
 
     Net earnings (loss)                  $13.1     $(94.9)      $44.7
 
     Diluted earnings (loss) per
       Common Share:
       Insurance businesses                $.32       $.24        $.65
       Investee corporations               (.05)     (1.45)        .12
       Realized investment losses          (.08)      (.22)       (.01)
       Cumulative effect of
         accounting change                    -       (.15)          -
 
       Net earnings (loss)                 $.19     $(1.58)       $.76
 
     Average number of Diluted Shares      67.9       60.1        58.5
 
     Supplemental Earnings Data
     (In Millions)
 
                                                 Three months ended
                                            March     December     March
                                            2001        2000        2000
     Property and Casualty
       Insurance Operations
 
       Net premiums earned                 $644.7      $638.0      $572.1
 
       Underwriting losses                 $(36.5)     $(39.1)     $(23.9)
       Investment income                     87.1        85.2        86.3
       Other income (expense), net            2.8        (3.3)        7.2
 
     P & C operating earnings               $53.4       $42.8       $69.6
 
     Annuities, Life & Health operating
       earnings                             $24.9       $20.7       $23.6
 
     Interest expense of Parent Holding
       Companies                           $(10.5)     $(10.7)      $(9.6)
 
 
                         AMERICAN FINANCIAL GROUP, INC.
                   PROPERTY AND CASUALTY INSURANCE OPERATIONS
                    UNDERWRITING RESULTS BY BUSINESS SEGMENT
                                 (In Millions)
 
                                                   Three months ended
                                             March    December      March
                                              2001      2000         2000
 
     P&C Insurance Operations:
 
         Net premiums written               $727(a)     $666         $647
 
         Ratios (GAAP):
           Loss & LAE ratio                 76.9%       78.0%        73.0%
           Expense ratio                    28.5%       28.0%        31.1%
           Policyholder dividend ratio        .2%         .1%          .1%
 
           Combined Ratio(b)               105.6%(c)   106.1%       104.2%
 
     Business Segment Data:
 
         Personal:
           Net premiums written             $370        $314         $350
 
           Ratios (GAAP):
             Loss & LAE ratio               82.4%       87.0%        78.8%
             Expense ratio                  26.1%       24.0%        24.9%
 
             Combined Ratio                108.5%      111.0%       103.7%
 
         Specialty:
           Net premiums written             $357(a)     $349         $298
 
           Ratios (GAAP):
             Loss & LAE ratio               69.2%       72.1%        65.9%
             Expense ratio                  31.0%       32.1%        37.7%
             Policyholder dividend ratio      .4%         .1%          .2%
 
             Combined Ratio                100.6%      104.3%       103.8%
 
     (a) Excludes the effect of the reversal of unearned premiums relating to
         the Japanese division sale.
     (b) Includes discontinued lines.
     (c) 2001 includes approximately 1.0% of adverse development relating to
            discontinued operations.
 
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SOURCE American Financial Group, Inc.
    CINCINNATI, April 26 /PRNewswire/ -- American Financial Group, Inc.
 (NYSE:   AFG) today reported net earnings from insurance businesses of
 $21.8 million ($.32 per share) for the first quarter of 2001 which is an
 improvement over fourth quarter 2000 results of $14.3 million ($.24 per share)
 and slightly exceeds analyst consensus estimates. The first quarter results
 were affected by improving underwriting margins in both personal auto and
 specialty property and casualty insurance ("P&C") operations and improved
 other income. Net earnings for the first quarter of 2001 were $13.1 million
 ($.19 per share) which includes investee losses of $3.4 million and net
 realized losses of $5.3 million.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/19990909/AFGLOGO )
     AFG ended the 2001 first quarter with shareholders' equity of $1.6
 billion, book value per share of $23.43 and cash and investments totaling
 $11.5 billion.
 
     Business Segment Results
     The P&C group benefited from continued rate increases throughout the
 property and casualty markets.  Net written premiums of the P&C group grew 12%
 in the first quarter of 2001 over the same period a year ago, after adjusting
 for the effect of the sale of the Japanese division.  The combined ratio was
 105.6% for the 2001 quarter compared to 106.1% for the 2000 fourth quarter and
 108.0% for the 2000 year. During 2000, underwriting margins deteriorated and
 the group implemented significant rate increases. Both the Specialty and
 Personal lines businesses experienced improving underwriting margins over the
 results of the fourth quarter of 2000.
     During the first quarter of 2001, net written premiums of the Specialty
 Group were 20% above the comparable 2000 period, after adjusting for the
 effect of the sale of the Japanese division. The Specialty Group's combined
 ratio was 100.6% for the 2001 quarter, a 3.7% improvement over the 104.3%
 reported in the 2000 fourth quarter.  The group's combined ratio for the 2000
 year was 107.9%.  Specialty operations, excluding the California workers'
 compensation business, reported a combined ratio of 98.0% for the 2001
 quarter.
     In its California workers' compensation business, the company implemented
 rate increases on renewals during the 2001 first quarter averaging 40%, the
 same level of increase as in the fourth quarter of 2000. The other specialty
 operations achieved rate increases averaging 17% for the 2001 quarter.
 Increases were 25% and 12%, respectively, in 2000.
     The Personal Group's writings for the first quarter of 2001 were 6% above
 the 2000 period reflecting the impact of significant rate increases
 implemented primarily during the last half of 2000 and lower business volume.
 During the 2001 quarter, this group's rate increases were approximately 5%,
 mostly in the nonstandard portion of the business.  The group's combined ratio
 was 108.5% in the 2001 first quarter, a 2.5% improvement over the 111.0%
 reported in the 2000 fourth quarter.  The combined ratio for the 2000 year was
 108.6%
     Carl H. Lindner III, AFG Co-President and head of the P&C business stated,
 "We are encouraged by the improving trends in both areas of our P&C insurance
 businesses. I am especially pleased that most of our specialty operations
 achieved an underwriting profit for this first quarter. We are beginning to
 see some positive earnings impact from the rate and strategic actions taken in
 2000 and continued into 2001.  We expect the average rate increase in our
 personal auto business to be in excess of 10% this year.  We are also seeing
 significant improvement in the underwriting margins of our California workers'
 compensation business and expect rate increases of at least 30% on renewals in
 this business during this upcoming quarter. Even with these rate increases, we
 continue to experience solid retention in most lines of business."
     The operating earnings contribution of AFG's annuity, life and health
 insurance operations for the first quarter of 2001 was up about 6% over the
 2000 period.  Statutory premiums for the 2001 first quarter were 5% below the
 2000 period due primarily to slowing sales of variable annuities.  Premiums
 from all other product lines were up in the 2001 first quarter compared to the
 2000 quarter.
     Through the operations of the Great American Insurance Group, AFG is
 engaged primarily in private passenger automobile and specialty property and
 casualty insurance businesses and in the sale of retirement annuities, life,
 supplemental health and long-term care insurance products.
 
     Forward Looking Statements
     This press release contains certain statements that may be deemed to be
 "forward-looking statements" within the meaning of Section 27A of the
 Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
 All statements in this press release not dealing with historical results are
 forward-looking and are based on estimates, assumptions and projections.
 Actual results could differ materially from those expected by AFG depending on
 certain factors including but not limited to: changes in economic conditions
 including interest rates, performance of securities markets, and the
 availability of capital, regulatory actions, changes in legal environment, tax
 law changes, levels of catastrophes and other major losses, adequacy of loss
 reserves, availability of reinsurance, competitive pressures, including the
 ability to obtain rate increases, driving patterns and other changes in market
 conditions that could affect AFG's insurance operations.
 
     Conference Call
     The company will hold a conference call to discuss 2001 first quarter
 results at 2:00 p.m. (EST) today.  Toll-free telephone access will be
 available by dialing 1-800-289-0518.  Please dial in 5 to 10 minutes prior to
 the scheduled start time of the call.  A replay of the call will also be
 available after 4:00 p.m. (EST) today by dialing 1-888-203-1112 and providing
 the confirmation code 648307.  The conference call will also be broadcast over
 the internet.  To listen to the call via the internet, go to AFG's website,
 www.amfnl.com , and follow the instructions at the Webcast link.
 
                          (Financial summaries follow)
     This earnings release and additional Financial Supplements are available
 at AFG's web site: www.amfnl.com .
 
                AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
                             SUMMARY OF EARNINGS
                      (In Millions, Except Per Share Data)
 
                                              Three months ended
                                         March     December      March
                                          2001       2000        2000
 
     Operating revenues                  $980.7     $982.5      $885.5
     Costs and expenses                   943.9      963.0       826.0
        Total                              36.8       19.5        59.5
     Related income taxes                  15.0        5.2        21.2
 
     Earnings from insurance businesses    21.8       14.3        38.3
 
     Net earning (losses) from investee
        corporations                       (3.4)     (87.2)        7.0
     Realized investment losses, net of
        taxes                              (5.3)     (12.9)        (.6)
     Cumulative effect of
       accounting change                      -       (9.1)          -
 
     Net earnings (loss)                  $13.1     $(94.9)      $44.7
 
     Diluted earnings (loss) per
       Common Share:
       Insurance businesses                $.32       $.24        $.65
       Investee corporations               (.05)     (1.45)        .12
       Realized investment losses          (.08)      (.22)       (.01)
       Cumulative effect of
         accounting change                    -       (.15)          -
 
       Net earnings (loss)                 $.19     $(1.58)       $.76
 
     Average number of Diluted Shares      67.9       60.1        58.5
 
     Supplemental Earnings Data
     (In Millions)
 
                                                 Three months ended
                                            March     December     March
                                            2001        2000        2000
     Property and Casualty
       Insurance Operations
 
       Net premiums earned                 $644.7      $638.0      $572.1
 
       Underwriting losses                 $(36.5)     $(39.1)     $(23.9)
       Investment income                     87.1        85.2        86.3
       Other income (expense), net            2.8        (3.3)        7.2
 
     P & C operating earnings               $53.4       $42.8       $69.6
 
     Annuities, Life & Health operating
       earnings                             $24.9       $20.7       $23.6
 
     Interest expense of Parent Holding
       Companies                           $(10.5)     $(10.7)      $(9.6)
 
 
                         AMERICAN FINANCIAL GROUP, INC.
                   PROPERTY AND CASUALTY INSURANCE OPERATIONS
                    UNDERWRITING RESULTS BY BUSINESS SEGMENT
                                 (In Millions)
 
                                                   Three months ended
                                             March    December      March
                                              2001      2000         2000
 
     P&C Insurance Operations:
 
         Net premiums written               $727(a)     $666         $647
 
         Ratios (GAAP):
           Loss & LAE ratio                 76.9%       78.0%        73.0%
           Expense ratio                    28.5%       28.0%        31.1%
           Policyholder dividend ratio        .2%         .1%          .1%
 
           Combined Ratio(b)               105.6%(c)   106.1%       104.2%
 
     Business Segment Data:
 
         Personal:
           Net premiums written             $370        $314         $350
 
           Ratios (GAAP):
             Loss & LAE ratio               82.4%       87.0%        78.8%
             Expense ratio                  26.1%       24.0%        24.9%
 
             Combined Ratio                108.5%      111.0%       103.7%
 
         Specialty:
           Net premiums written             $357(a)     $349         $298
 
           Ratios (GAAP):
             Loss & LAE ratio               69.2%       72.1%        65.9%
             Expense ratio                  31.0%       32.1%        37.7%
             Policyholder dividend ratio      .4%         .1%          .2%
 
             Combined Ratio                100.6%      104.3%       103.8%
 
     (a) Excludes the effect of the reversal of unearned premiums relating to
         the Japanese division sale.
     (b) Includes discontinued lines.
     (c) 2001 includes approximately 1.0% of adverse development relating to
            discontinued operations.
 
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 SOURCE  American Financial Group, Inc.