Company: AFGC
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001042046-25-000020
Chunk: 96

Company: AMERICAN FINANCIAL GROUP INC
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 8
Chunk 96
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 expected claim frequency and severity in the social services business.

Specialty financial   Net favorable reserve development of $13 million in the first three months of 2025 reflects lower than anticipated claim frequency and severity in the financial institutions business. Net adverse reserve development of $6 million in the first three months of 2024 reflects higher than anticipated claim severity in the innovative markets business, partially offset by lower than anticipated claim frequency in the fidelity business and lower than expected claim frequency and severity in the financial institutions business.

Aggregate   Aggregate net prior accident years reserve development for AFG’s property and casualty insurance segment includes net adverse reserve development of $1 million in the first three months of 2024 related to business outside of the Specialty group that AFG no longer writes.

Catastrophe losses

AFG generally seeks to reduce its exposure to catastrophes (whether resulting from climate change or otherwise) through individual risk selection, including minimizing coastal and known fault-line exposures, and the purchase of reinsurance. AFG currently has comprehensive property catastrophe reinsurance coverage in place (including a $70 million per occurrence net retention) for losses up to $625 million in the vast majority of circumstances. This coverage consists of a combination of $245 million from traditional reinsurance and $310 million of coverage through a fully collateralized catastrophe bond (effective May 1, 2025 for losses occurring through December 31, 2028).Based on data available at December 31, 2024, management estimates that AFG’s exposure to a catastrophic earthquake or windstorm that industry models indicate should statistically occur once in every 500 years is just over 2% of AFG’s Shareholders’ Equity.

Catastrophe losses of $72 million in the first three months of 2025 resulted primarily from California wildfires. Catastrophe losses of $34 million (before $1 million in net reinstatement premiums) in the first three months of 2024 resulted primarily from winter and convective storms in multiple regions of the United States.

Commissions and Other Underwriting Expenses

AFG’s property and casualty commissions and other underwriting expenses (“U/W Exp”) were $521 million in the first three months of 2025 compared to $486 million for the first three months of 2024, an increase of $35 million (7%). AFG’s underwriting expense ratio, calculated as commissions and other underwriting expenses divided by net premiums earned, was 33.0% for the first three