American Financial Group beats estimates, declares $1.50 special dividend
Record underwriting profit and 41% YoY growth drive strong Q4 performance as insurer returns capital to shareholders
American Financial Group delivered a strong fourth-quarter performance that beat analyst expectations, reporting core net operating earnings per share of $3.65 on revenue of $2.06 billion. The specialty property and casualty insurer also declared a $1.50 per share special dividend, continuing its pattern of returning excess capital to shareholders.
The Cincinnati-based company's underwriting profit surged 41% year-over-year to $287 million, marking a record quarterly performance. This strength drove the specialty combined ratio to 84.1%, a significant improvement from the prior year and well below the 100% break-even threshold. The Property and Transportation Group led the way with a 70.6% combined ratio, followed by the Specialty Financial Group at 83.0% and Specialty Casualty Group at 96.7%.
According to the company's earnings announcement, full-year 2025 net earnings reached $10.08 per share on total revenue of $8.17 billion. The full-year specialty combined ratio settled at 91.0%, with a return on equity of 17.8% and core operating ROE of 18.2%. Throughout 2025, American Financial Group returned $707 million in capital to shareholders, including $334 million in special dividends and $99 million in share repurchases.
The $1.50 per share special dividend, payable February 25, 2026 to shareholders of record February 16, 2026, adds to the regular quarterly dividend of $0.88 per share. The company has now declared $55.50 per share in special dividends since the beginning of 2021, demonstrating consistent capital returns through various market cycles.
Co-Chief Executive Officers Carl H. Lindner III and S. Craig Lindner highlighted the company's strong finish to 2025, noting the record fourth-quarter underwriting profit and full-year core operating ROE exceeding 18%. Management emphasized that American Financial Group entered 2026 with significant excess capital, positioning it to continue shareholder returns while pursuing growth opportunities.
For 2026, the company provided business plan assumptions targeting core operating earnings per share of approximately $11.00 and core operating ROE of about 18%. The outlook includes projected net written premium growth of 3% to 5%, a calendar year combined ratio target of 92.5%, and expected returns of approximately 8% on its $2.8 billion alternative investment portfolio.
American Financial Group shares currently trade at $130.25, giving the company a market capitalization of $10.85 billion. The stock carries a price-to-earnings ratio of 13.66 and a forward P/E of 11.41, with analysts maintaining a target price of $142.20. The company's 52-week range spans $114.73 to $150.02, reflecting the stock's performance amid broader insurance sector volatility.
Founded in 1872, American Financial Group operates as a diversified specialty insurance holding company, selling its property and casualty products through independent agents and brokers. The company focuses on niche markets including transportation, agricultural, excess and surplus lines, and specialty financial insurance products.