American Financial Group: Attractive Special Dividend Despite Cat Losses In Q3

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Summary

  • American Financial Group shares rose 5% post-election, despite mixed Q3 results, driven by a special dividend announcement and a favorable interest rate environment.
  • AFG's Q3 adjusted EPS of $2.31 missed estimates by $0.15, with underwriting profits impacted by $90 million in catastrophe losses, but premiums rose a solid 14%.
  • The Company's strong balance sheet, conservative reserving, and disciplined underwriting support a robust capital return strategy, including $6.50 in special dividends this year.
  • I remain bullish on AFG, expecting earnings growth of 5-7% next year and shares to move towards $145-150, driven by premium growth and rental income.

Cincinnati Riverfront Skyline

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Shares of American Financial Group (NYSE:AFG) have been a moderate performer over the past year, gaining about 19%, though concerns about catastrophe losses amid a late hurricane season had caused shares to pullback in recent weeks. On Wednesday, shares

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Analyst’s Disclosure:I/we have a beneficial long position in the shares of AFG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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