American Financial Group Reports Strong Second Quarter 2026 Results Driven by Higher Underwriting Profit and Investment Performance
American Financial Group, Inc. (NYSE: AFG) has announced strong financial results for the second quarter of 2026, highlighting significant growth in earnings, improved underwriting performance, healthy premium expansion, and stronger returns from its alternative investment portfolio. The company also continued its disciplined capital management strategy by returning capital to shareholders through dividends and share repurchases while maintaining substantial excess capital to support future growth opportunities.
The Cincinnati-based insurance holding company reported net earnings of $248 million, or $2.99 per diluted share, for the second quarter ended June 30, 2026. This represents a substantial improvement from $174 million, or $2.07 per diluted share, reported during the same quarter of 2025.
The quarterly results included after-tax non-core gains of $14 million ($0.17 per share), primarily related to realized investment gains. In comparison, the second quarter of 2025 included after-tax non-core losses of $5 million ($0.07 per share loss).
The company also generated an annualized return on equity (ROE) of 20.3%, excluding accumulated other comprehensive income (AOCI), compared with 15.0% in the prior-year quarter. The improvement reflects the strength of AFG’s underwriting operations, disciplined expense management, and higher investment income.
Core Operating Earnings Show Significant Growth
AFG’s core net operating earnings, which exclude realized gains, losses, and other non-recurring items to better reflect ongoing business performance, reached $234 million, or $2.82 per diluted share, during the second quarter of 2026.
This compares with $179 million, or $2.14 per share, during the second quarter of 2025, representing a year-over-year increase of more than 30%.
Management attributed the increase primarily to:
- Higher underwriting profit across the Specialty Property and Casualty insurance operations.
- Improved returns from the company’s alternative investment portfolio.
- Higher investment income.
- Continued premium growth across specialty insurance businesses.
Core operating earnings generated an annualized core operating ROE of 19.2%, compared with 15.5% during the second quarter of last year.
Before considering alternative investment performance, pretax core operating earnings totaled $250 million, compared with $219 million in the prior-year period.
Alternative investments contributed $50 million of pretax earnings during the quarter, significantly above the $8 million contributed during the second quarter of 2025.
Combined, pretax core operating earnings increased to $300 million, compared with $227 million one year earlier.
Six-Month Financial Performance Also Improves
AFG’s strong quarterly performance contributed to improved results for the first six months of 2026.
For the six-month period ended June 30, 2026:
- Net earnings totaled $439 million, compared with $328 million during the first half of 2025.
- Core net operating earnings reached $440 million, compared with $331 million in the previous year.
- Diluted earnings per share increased to $5.28, compared with $3.92.
- Core operating earnings per share improved to $5.29, versus $3.96 last year.
These results demonstrate continued momentum across the company’s insurance and investment operations.
Strong Book Value Growth Continues
American Financial Group continued to create shareholder value during the quarter through growth in book value alongside consistent capital returns.
Book value per share reached $58.14 as of June 30, 2026.
Excluding accumulated other comprehensive income, book value per share increased to $59.85.
Including dividends paid during the period:
- Book value plus dividends increased 4.8% during the second quarter.
- Book value excluding AOCI plus dividends grew 5.0% during the quarter.
- For the first six months of 2026, book value plus dividends increased 6.3%.
- Book value excluding AOCI plus dividends grew 8.1%.
These metrics demonstrate the company’s continued ability to generate long-term shareholder value while maintaining financial flexibility.
Shareholder Returns Remain a Priority
AFG continued its shareholder-friendly capital allocation strategy throughout the second quarter.
During the quarter, the company:
- Repurchased $26 million of common stock.
- Purchased shares at an average price of $129.85.
- Paid regular cash dividends totaling $0.88 per share.
Management reiterated that capital returns remain an important component of the company’s overall strategy alongside investments in future business growth.
Management Highlights Strong Quarter
Co-Chief Executive Officers Carl H. Lindner III and S. Craig Lindner credited the company’s outstanding underwriting performance and disciplined business strategy for the strong quarterly results.
According to management, record pretax property and casualty operating income during the second quarter was driven by:
- Strong underwriting margins.
- Healthy premium growth.
- Higher property and casualty investment income.
- Effective capital management.
- Disciplined underwriting practices.
- Entrepreneurial operating culture.
The executives emphasized that these factors continue to support long-term shareholder value creation despite evolving insurance market conditions.
Significant Excess Capital Supports Future Growth
Management noted that American Financial Group maintained significant excess capital as of June 30, 2026.
The company intends to continue deploying this capital through several channels, including:
- Regular quarterly dividends.
- Special cash dividends when appropriate.
- Opportunistic share repurchases.
- Organic expansion within existing specialty businesses.
- Strategic acquisitions.
- Launching new specialty insurance operations when attractive opportunities arise.
Management indicated that any capital deployment decisions will continue to be guided by disciplined return thresholds.
Specialty Property and Casualty Business Delivers Outstanding Results
AFG’s Specialty Property and Casualty (P&C) insurance operations remained the primary earnings driver during the quarter.
The segment produced an excellent combined ratio of 91.5%, improving from 93.1% reported in the second quarter of 2025.
Since a combined ratio below 100% indicates underwriting profitability, the improvement reflects stronger underwriting discipline and favorable claims experience.
Several factors contributed to the improved combined ratio:
- Lower catastrophe losses.
- Greater favorable reserve development.
- Strong underwriting execution.
- Continued pricing discipline.
Catastrophe losses represented 1.8 percentage points of the combined ratio compared with 2.3 points one year earlier.
Meanwhile, favorable prior-year reserve development contributed 3.4 points, significantly above the 0.7 points recorded during the prior-year quarter.
Underwriting Profit Climbs
Total underwriting profit increased to $144 million during the second quarter of 2026 compared with $114 million during the same period of 2025.
The increase was driven primarily by improved performance within the Property and Transportation Group.
The stronger underwriting results highlight the effectiveness of AFG’s diversified specialty insurance portfolio despite softening conditions in certain commercial insurance markets.
Premium Growth Remains Healthy
American Financial Group continued to generate premium growth across its specialty insurance platform.
During the second quarter:
- Gross written premiums increased 7%.
- Net written premiums increased 6%.
Management noted that growth occurred across each of the company’s three Specialty P&C operating groups.
The premium expansion was supported by:
- New customer opportunities.
- Favorable renewal pricing.
- Increased insured exposures.
- Continued underwriting discipline.
The company emphasized that its diversified portfolio of 36 specialty insurance businesses provides resilience even as certain insurance markets become more competitive.
Renewal Pricing Continues to Support Profitability
Pricing remained favorable across much of AFG’s portfolio.
During the second quarter:
- Renewal pricing excluding workers’ compensation increased approximately 5%.
- Including workers’ compensation, average renewal pricing increased roughly 4%.
Management believes these pricing improvements remain sufficient to achieve or exceed targeted underwriting returns.
Property and Transportation Group Produces Major Improvement
The Property and Transportation Group delivered one of the strongest performances within the organization.
Quarterly underwriting profit increased dramatically to $57 million, compared with $27 million during the second quarter of 2025.
Improved profitability was largely driven by:
- Transportation insurance operations.
- Agricultural insurance businesses.
The group reported a combined ratio of 90.3%, improving by 4.9 percentage points year over year.
Gross written premiums increased 8%, while net written premiums rose 5%.
Growth was primarily driven by:
- Higher crop insurance premiums.
- New transportation business.
- Increased customer exposures.
- Favorable market pricing.
Renewal rates within this segment increased approximately 8%, exceeding pricing improvements achieved during the first quarter.
Specialty Casualty Group Maintains Strong Performance
The Specialty Casualty Group generated underwriting profit of $45 million, compared with $49 million in the prior year.
Although underwriting profit declined modestly, overall profitability remained strong.
Improved performance in several business lines—including energy, construction, environmental liability, excess and surplus lines, and targeted markets—helped offset lower profitability in workers’ compensation and executive liability operations.
The segment achieved a healthy 94.5% combined ratio, compared with 93.9% in the prior-year quarter.
Premium growth also remained solid:
- Gross written premiums increased 5%.
- Net written premiums rose 6%.
Management attributed growth to strong new business production, increased customer exposures, and higher renewal pricing.
Specialty Financial Group Continues Strong Momentum
The Specialty Financial Group also delivered another strong quarter.
Underwriting profit increased to $42 million, compared with $38 million one year earlier.
Higher profitability came primarily from:
- Financial institutions insurance.
- Fidelity and crime coverage.
- Surety operations.
Catastrophe losses declined significantly, falling to $10 million from $19 million in the second quarter of 2025.
The segment reported an outstanding combined ratio of 85.6%, improving slightly from 86.1% last year.
Premium growth remained particularly impressive:
- Gross written premiums increased 10%.
- Net written premiums also increased 10%.
Growth was led by expansion within the financial institutions business.
Although renewal pricing declined by less than 1%, management noted that pricing remains appropriate given the exceptionally strong underwriting margins generated by these businesses.
Alternative Investments Boost Earnings
AFG also benefited from significantly stronger returns from its alternative investment portfolio.
Alternative investments contributed $50 million to pretax operating earnings during the second quarter compared with only $8 million during the same period last year.
The improved investment performance was an important contributor to the company’s higher overall earnings and return on equity.
Carl H. Lindner III expressed optimism regarding the remainder of the year, noting that underwriting profit during the first six months increased by 44% compared with the prior-year period.
He stated that AFG’s insurance teams continue to identify profitable growth opportunities while maintaining underwriting discipline and achieving pricing increases that support targeted returns.
Management believes these favorable trends position the company well for continued growth during the second half of 2026.
American Financial Group enters the second half of 2026 with strong financial momentum, supported by disciplined underwriting, premium growth, robust investment income, and a solid capital position. The company’s diversified specialty insurance platform continues to deliver consistent profitability despite evolving market conditions, while effective capital management enables continued investments in growth alongside meaningful shareholder returns.
With healthy underwriting margins, expanding premium volumes, improved investment performance, and substantial excess capital available for future opportunities, AFG remains well positioned to pursue profitable expansion and enhance long-term value for shareholders throughout the remainder of 2026.
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