AMERICAN FINANCIAL GROUP INC

Financial Condition

AFG is organized as a holding company with almost all of its operations being conducted by subsidiaries. AFG, however, has continuing cash needs for administrative expenses, the payment of principal and interest on borrowings, shareholder dividends, and taxes. Therefore, certain analyses are most meaningfully presented on a parent only basis while others are best done on a total enterprise basis. In addition, because its businesses are financial in nature, AFG does not prepare its consolidated financial statements using a current-noncurrent format. Consequently, certain traditional ratios and financial analysis tests are not meaningful.

Through the operations of its subsidiaries, AFG is engaged primarily in property and casualty insurance, focusing on specialized commercial products for businesses.

AFG reported net earnings of $255 million ($3.03 per share, diluted) for the fourth quarter of 2024 compared to $263 million ($3.13 per share, diluted) in the fourth quarter of 2023. Higher net investment income was more than offset by net realized losses on securities in the fourth quarter of 2024 compared to net realized gains on securities in the fourth quarter of 2023 and lower underwriting profit.

Full year 2024 net earnings were $887 million ($10.57 per share, diluted) compared to $852 million ($10.05 per share, diluted) in 2023. The year-over-year increase was due primarily to the impact on net investment income of higher yields on fixed maturity investments coupled with the impact of net realized losses on securities in 2023. These items were partially offset by lower net investment income from AFG’s alternative investment portfolio and lower underwriting profit.

Outlook

Management expects continued premium growth and strong underwriting results in the ongoing generally favorable property and casualty insurance market. In addition, management anticipates the deployment of cash during the elevated interest rate environment (since early 2022) will continue to have a positive impact on investment income on fixed maturity investments in 2025.

AFG’s financial condition, results of operations and cash flows are impacted by the economic, legal and regulatory environment. Economic inflation, social inflation and other economic conditions may impact premium levels, loss cost trends and investment returns. For a more comprehensive list of risks, see“Item 1A — Risk Factors.”

Management believes that AFG’s strong financial position and current liquidity and capital at its subsidiaries will give AFG the flexibility to continue to effectively address and respond to anticipated and unanticipated challenges. AFG’s insurance subsidiaries continue to have capital at or in excess of the levels required by ratings agencies in order to maintain their current ratings, and the parent company does not have any near-term debt maturities.