American Financial declares an extra dividend as underwriting profit falls
The insurer declared an extra $3.50 a share. A previously announced property sale lifted core profit, while underwriting results weakened.
American Financial Group declared a $3.50-a-share special dividend after reporting record third-quarter core earnings. A property sale supplied a substantial part of that earnings result, while profit from underwriting insurance declined.
The special payment is due November 25 to shareholders of record November 16 and will total approximately $290 million. It follows the regular quarterly dividend of $0.97 a share paid October 23.
The record includes a sale already expected in August
Core earnings reached $3.97 a share, including a $1.21 contribution from the sale of Charleston Harbor Resort & Marina. American Financial Group had already forecast that sale's third-quarter gain in its August 4 earnings release.
Research by Ticker Byline shows that subtracting the disclosed sale contribution leaves $2.76 a share, slightly above the prior-year core result of $2.69. That one-item comparison gives a different picture from the record core total.
The sale produced a $126 million pretax gain, split equally between the property and casualty operation and the parent company. Reported GAAP net earnings were $282 million, compared with $215 million a year earlier.
Insurance results were mixed
Specialty underwriting profit fell to $133 million from $139 million. Its combined ratio rose to 93.8% from 93.0%. The ratio measures claims and underwriting expenses against premiums; a lower figure means more underwriting profit from each premium dollar.
The largest setback was in Specialty Financial, where underwriting profit fell to $23 million from $51 million. Management cited a large European loss and less favorable development of earlier claims. Property and Transportation and Specialty Casualty both improved.
Investment income also contributed to earnings growth. Property and casualty investment income increased even after excluding the Charleston sale.
The American Financial Group earnings and capital profile tracks the distinction between insurance results, investment income and shareholder distributions.