American Financial Group, Inc.

AFG reported core net operating earnings of $2.82 per share in the second quarter of 2026, up 32% from the prior-year period, and annualized core operating ROE was 19.2%. Specialty P&C posted a 91.5% combined ratio, compared with 93.1% a year ago; favorable prior-year reserve development was 3.4 points versus 0.7 points last year, and catastrophes added 1.8 points versus 2.3 points last year. Gross and net written premiums in Specialty P&C were up 7% and 6% year over year. Net investment income at P&C operations increased 23% year over year, and alternative investments earned about 7.1% annualized versus 1.2% last year. Looking ahead, AFG expects to close the Charleston Harbor Resort and Marina sale in the third quarter and recognize an approximate pretax core operating gain of about $125 million, or $1.20 per share. Management also said the company returned nearly $100 million to shareholders during the quarter, including $26 million of share repurchases and a $0.88 per share regular quarterly dividend.

Carl Lindner said the quarter reflected AFG’s diversified specialty insurance mix, disciplined underwriting, and investment expertise, calling it a new second-quarter record for pretax P&C operating income. He emphasized that roughly three-quarters of businesses posted higher year-over-year premiums through June and that renewal rate increases have continued for 40 consecutive quarters. His tone was confident and constructive, while noting that the company remains mindful of softening in parts of the P&C market and social-inflation-exposed lines.

Craig Lindner highlighted the $2.82 core EPS result, 19.2% core ROE, and the $17.1 billion investment portfolio. He said P&C net investment income rose 23% year over year, with fixed-maturity yields around 5.5% and alternative-investment returns of about 7.1% annualized, and reiterated longer-term expectations for alternatives to average 10% or better. On capital, he noted nearly $100 million returned to shareholders in the quarter and said AFG expects significant excess capital through the rest of 2026, leaving room for acquisitions, special dividends, or share repurchases; book value per share excluding AOCI plus dividends grew 5% in the quarter.

Analysts focused on the uptick in underlying loss ratios, especially in Specialty Casualty and Specialty Financial. Brian Hertzman said the change was mainly mix-driven and reflected growth in businesses with higher expense or loss ratios, while stressing that AFG manages to ROE rather than to a single ratio and remains deliberately cautious on social-inflation-exposed lines. Questions also touched on AI, and Carl Lindner said underwriting use cases are still early-stage, while claims automation, submission processing, and document intelligence are farther along. On pricing and competition, management said many specialty lines are still seeing solid rate increases, while MGA-driven competition is emerging in some longer-tail casualty lines.