American Financial Group’s second quarter results were shaped by solid specialty insurance underwriting, but tempered by lower returns from alternative investments and a decline in overall underwriting profit compared to the prior year. Management highlighted strong premium growth, particularly in the lender-placed property and transportation lines, while also noting the impact of earlier crop acreage reporting on premium timing. Co-CEO Carl Lindner III stated, “Underwriting margins in our Specialty Property & Casualty insurance businesses were strong, and higher interest rates increased net investment income, excluding alternatives, by 10% year-over-year.” Persistent headwinds from multifamily investment valuations and social inflation in certain business lines were also acknowledged as drags on profitability.

Is now the time to buy AFG? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From American Financial Group’s Q2 Earnings Call

• Michael David Zaremski (BMO Capital Markets) asked about the sustainability of lender-placed property growth and its correlation with mortgage delinquencies. CEO Carl Lindner III explained the business benefits from economic weakness and market disruption, and recent growth was aided by industry exits and a shift to replacement cost valuation.
• Charles Gregory Peters (Raymond James) questioned the outlook for marine and trade credit lines given tariff uncertainty. Lindner noted that while Ocean Marine and Inland Marine remain profitable, lower shipping volumes could present headwinds if tariffs persist, but current trends show modest growth in trade credit.
• Unidentified Analyst (Jefferies) probed the outlook for crop insurance profitability. Lindner said it is too early to assess, but favorable crop conditions and recent legislative adjustments are positive signs, with profitability outcomes hinging on weather and commodity prices later in the year.
• Meyer Shields (Keefe, Bruyette, & Woods) inquired about pricing adequacy in professional liability lines. Lindner responded that while public company D&O is competitive, rates are stabilizing, and overall professional liability business is experiencing flat to slightly positive pricing.
• Robert Edward Farnam (Janney Montgomery Scott) asked about claim trends related to undocumented workers in workers’ compensation. CFO Brian Hertzman said there was no observable impact yet, but the company would monitor claim patterns as workforce composition evolves.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will track (1) the pace of specialty premium growth, especially in lender-placed property and transportation, (2) evidence of recovery in alternative investment performance as multifamily supply is absorbed, and (3) progress on risk management in social inflation-exposed and excess liability lines. We will also watch for changes in workers’ compensation pricing and capital deployment actions as signals of strategic execution.

American Financial Group currently trades at $131, up from $124.37 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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