AFG Q3 Net Earnings Jump 18.8% to $215M, Nine-Month Profit Dips

TL;DR

**AFG's Q3 earnings look good, but the year-to-date dip and rising debt mean investors should proceed with caution.**

AI Summary

AMERICAN FINANCIAL GROUP INC (AFG) reported net earnings of $215 million for the three months ended September 30, 2025, an increase of 18.8% from $181 million in the same period of 2024. However, net earnings for the nine months ended September 30, 2025, decreased by 14.1% to $543 million from $632 million in the prior year. Total revenues for the quarter slightly declined to $2,331 million from $2,369 million, while nine-month revenues also saw a modest decrease to $6,111 million from $6,175 million. Net earned premiums decreased to $2,013 million for the quarter from $2,055 million, but increased for the nine-month period to $5,240 million from $5,186 million. The company's total assets grew to $33,834 million as of September 30, 2025, up from $30,836 million at December 31, 2024, driven by increases in cash and cash equivalents, and investments. Long-term debt increased to $1,820 million from $1,475 million, reflecting additional long-term borrowings of $344 million during the nine-month period. Shareholder's equity also increased to $4,730 million from $4,466 million, partly due to net earnings and other comprehensive income.

Why It Matters

AFG's mixed earnings report, with a strong Q3 but a weaker nine-month performance, signals potential volatility for investors. The significant increase in long-term debt by $344 million and the growth in total assets to $33.8 billion suggest strategic expansion or investment, which could impact future profitability and risk profile. For employees, stable operations and a growing asset base could imply job security, while customers might see continued service from a financially robust insurer. In a competitive insurance market, AFG's ability to manage its loss adjustment expenses, which decreased by $75 million in Q3 2025 compared to Q3 2024, is crucial for maintaining its market position and investor confidence.

Risk Assessment

Risk Level: medium — The risk level is medium due to the 14.1% decrease in net earnings for the nine months ended September 30, 2025, to $543 million from $632 million in the prior year, indicating a potential slowdown in overall profitability. Additionally, long-term debt increased by $344 million to $1,820 million, which could increase financial leverage and interest expense, as evidenced by $57 million in interest charges on borrowed money for both nine-month periods.

Analyst Insight

Investors should scrutinize the drivers behind the nine-month earnings decline and the increase in long-term debt. While Q3 showed strength, a deeper dive into underwriting performance and investment income trends is warranted before making significant investment decisions. Consider holding existing positions but deferring new investments until a clearer picture of sustained profitability emerges.

Financial Highlights

debt To Equity

0.38

revenue

$2,331M

operating Margin

N/A

total Assets

$33,834M

total Debt

$1,820M

net Income

$215M

eps

$2.58

gross Margin

N/A

cash Position

$1,842M

revenue Growth

-1.6%

Revenue Breakdown

Key Numbers

• $215M — Net Earnings (Q3 2025, up 18.8% from Q3 2024)
• $543M — Net Earnings (Nine months ended Sept 30, 2025, down 14.1% from prior year)
• $2,013M — Net Earned Premiums (Q3 2025, a slight decrease from Q3 2024)
• $5,240M — Net Earned Premiums (Nine months ended Sept 30, 2025, an increase from prior year)
• $33,834M — Total Assets (As of Sept 30, 2025, up from $30,836M at Dec 31, 2024)
• $1,820M — Long-Term Debt (As of Sept 30, 2025, up from $1,475M at Dec 31, 2024)
• $4,730M — Total Shareholders' Equity (As of Sept 30, 2025, up from $4,466M at Dec 31, 2024)
• $2.58 — Diluted EPS (Q3 2025, up from $2.16 in Q3 2024)
• $6.50 — Diluted EPS (Nine months ended Sept 30, 2025, down from $7.54 in prior year)
• $749M — Net Cash Provided by Operating Activities (Nine months ended Sept 30, 2025, up from $478M in prior year)

Key Players & Entities

• AMERICAN FINANCIAL GROUP INC (company) — Registrant
• Radion Insurance Holdings, LLC (company) — Acquired business
• New York Stock Exchange (regulator) — Exchange where securities are registered
• $215 million (dollar_amount) — Net earnings for Q3 2025
• $181 million (dollar_amount) — Net earnings for Q3 2024
• $543 million (dollar_amount) — Net earnings for nine months ended Sept 30, 2025
• $632 million (dollar_amount) — Net earnings for nine months ended Sept 30, 2024
• $33,834 million (dollar_amount) — Total assets as of Sept 30, 2025
• $1,820 million (dollar_amount) — Long-term debt as of Sept 30, 2025
• $344 million (dollar_amount) — Additional long-term borrowings in nine months ended Sept 30, 2025

FAQ

Risk Factors

• Credit Risk on Investments [medium — financial]: AFG holds significant investments in fixed maturities, equity securities, and mortgage loans. Declines in market value or credit quality of these investments, particularly in the available-for-sale portfolio where unrealized losses are recognized in AOCI, could negatively impact financial condition. The allowance for credit losses on fixed maturity investments was $16 million as of September 30, 2025, down from $34 million at December 31, 2024.
• Interest Rate Sensitivity [medium — financial]: Changes in interest rates can affect the fair value of AFG's investment portfolio, particularly fixed maturity securities. Rising interest rates can lead to unrealized losses on existing bond holdings, impacting AOCI. Conversely, falling rates can reduce investment income.
• Insurance Underwriting and Claims [high — operational]: The company's core insurance operations are subject to risks associated with underwriting accuracy and the adequacy of loss reserves. Unforeseen increases in claims frequency or severity, or inadequate reserving, could lead to significant financial losses. Unpaid losses and loss adjustment expenses stood at $15,079 million as of September 30, 2025.
• Regulatory Compliance [medium — regulatory]: As a financial services company, AFG is subject to extensive regulation at both state and federal levels. Changes in regulations, particularly those related to capital requirements, consumer protection, or accounting standards, could increase compliance costs or impact business operations.
• Leverage and Debt Obligations [medium — financial]: AFG's long-term debt increased to $1,820 million as of September 30, 2025, from $1,475 million at December 31, 2024. While the debt-to-equity ratio remains manageable, significant increases in debt could increase financial risk and impact the company's ability to service its obligations.
• Managed Investment Entities (VIEs) [low — operational]: AFG consolidates certain variable interest entities (VIEs), such as collateralized loan obligations (CLOs), where it acts as an asset manager. While these are reported separately, significant volatility or underperformance in these entities could indirectly impact AFG's financial results and reputation.

Industry Context

The property and casualty insurance industry, where American Financial Group operates, is characterized by intense competition and sensitivity to economic cycles and catastrophic events. Key trends include increasing digitalization, evolving customer expectations, and a focus on data analytics for underwriting and claims management. Insurers are also navigating a complex investment environment with fluctuating interest rates and market volatility.

Regulatory Implications

AFG operates in a highly regulated environment. Potential changes in insurance regulations, capital requirements, or accounting standards could necessitate adjustments to business practices or increase compliance costs. The company must remain vigilant in adhering to evolving state and federal regulations to avoid penalties and maintain operational integrity.

What Investors Should Do

1. Monitor investment portfolio performance
2. Analyze underwriting profitability
3. Assess impact of managed investment entities
4. Evaluate debt levels and interest coverage

Key Dates

• 2025-09-30: Quarterly Financial Reporting — AFG reported Q3 2025 results, showing increased net earnings but slightly lower revenues compared to the prior year.
• 2025-09-30: Balance Sheet Date — Total assets grew to $33,834 million, while long-term debt increased to $1,820 million.
• 2024-12-31: Previous Year-End Balance Sheet — Provided a baseline for comparison, with total assets at $30,836 million and long-term debt at $1,475 million.
• 2024-09-30: Prior Year Quarter Comparison — Q3 2024 net earnings were $181 million, with diluted EPS of $2.16, serving as a benchmark for Q3 2025 performance.

Glossary

Net earned premiums

The portion of insurance premiums that relates to insurance coverage provided during a specific period. (A key revenue driver for insurance companies, indicating the value of services rendered.)

Deferred policy acquisition costs (DPAC)

Costs incurred in acquiring new insurance policies that are capitalized and amortized over the life of the policy. (Impacts profitability by spreading acquisition costs over the policy term.)

Accumulated other comprehensive income (loss) (AOCI)

A component of shareholders' equity that includes unrealized gains and losses on certain investments and other items not recognized in net income. (Reflects the impact of market fluctuations on certain assets, particularly available-for-sale securities.)

Variable Interest Entity (VIE)

An entity in which equity investors do not have the characteristics of a controlling financial interest or the equity is insufficient to finance the entity's activities. (AFG consolidates certain VIEs, like CLOs, impacting its balance sheet and financial reporting.)

Fair value option

An accounting election that allows certain financial assets and liabilities to be reported at fair value, with changes recognized in earnings. (Used by AFG for CLO assets and liabilities to enhance transparency.)

Allowance for credit losses

An estimate of expected credit losses on financial assets, deducted from the carrying amount of the asset. (Reflects the anticipated losses on loans and receivables due to credit risk.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, American Financial Group's net earnings have decreased by 14.1% to $543 million, despite a slight increase in net earned premiums. While Q3 2025 saw a 18.8% increase in net earnings ($215 million) driven by improved EPS, the nine-month trend highlights challenges. Total assets have grown significantly to $33,834 million, supported by increases in cash and investments, but long-term debt has also risen by $345 million to $1,820 million. Key risks remain centered around investment portfolio performance and insurance underwriting, with no new major risk factors emerging in this filing.

Filing Documents

• afg-20250930.htm (10-Q) — 3632KB
• afg-2025930xex31a.htm (EX-31.A) — 11KB
• afg-2025930xex31b.htm (EX-31.B) — 11KB
• afg-2025930xex31c.htm (EX-31.C) — 11KB
• afg-2025930xex32.htm (EX-32) — 10KB
• afg-20250930_g1.jpg (GRAPHIC) — 40KB
• 0001042046-25-000035.txt ( ) — 16177KB
• afg-20250930.xsd (EX-101.SCH) — 72KB
• afg-20250930_cal.xml (EX-101.CAL) — 124KB
• afg-20250930_def.xml (EX-101.DEF) — 411KB
• afg-20250930_lab.xml (EX-101.LAB) — 921KB
• afg-20250930_pre.xml (EX-101.PRE) — 667KB
• afg-20250930_htm.xml (XML) — 3554KB

— Financial Information

Part I — Financial Information

— Financial Statements

Item 1 — Financial Statements: Consolidated Balance Sheet 2 Consolidated Statement of Earnings 3 Consolidated Statement of Comprehensive Income 4 Consolidated Statement of Changes in Equity 5 Consolidated Statement of Cash Flows 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8

— Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations 33

— Quantitative and Qualitative Disclosure about Market Risk

Item 3 — Quantitative and Qualitative Disclosure about Market Risk 71

— Controls and Procedures

Item 4 — Controls and Procedures 71

— Other Information

Part II — Other Information

— Unregistered Sales of Equity Securities and Use of Proceeds

Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds 72

— Other Information

Item 5 — Other Information 72

— Exhibits

Item 6 — Exhibits 73 Signature 73 Table of Contents AMERICAN FINANCIAL GROUP, INC. 10-Q PART I

— FINANCIAL STATEMENTS

ITEM 1. — FINANCIAL STATEMENTS AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED) (Dollars in Millions) September 30, 2025 December 31, 2024 Assets: Cash and cash equivalents $ 1,842 $ 1,406 Investments: Fixed maturities, available for sale at fair value (amortized cost — $ 10,588 and $ 10,687 ; allowance for expected credit losses of $ 16 and $ 34 ) 10,518 10,398 Fixed maturities, trading at fair value 80 76 Equity securities, at fair value 800 751 Investments accounted for using the equity method 2,383 2,277 Mortgage loans 975 791 Real estate and other investments 163 153 Total cash and investments 16,761 15,852 Recoverables from reinsurers 5,565 5,176 Prepaid reinsurance premiums 1,443 1,013 Agents' balances and premiums receivable 2,034 1,532 Deferred policy acquisition costs 349 320 Assets of managed investment entities 3,972 4,140 Other receivables 2,075 1,123 Other assets 1,308 1,375 Goodwill 327 305 Total assets $ 33,834 $ 30,836 Liabilities and Equity: Unpaid losses and loss adjustment expenses $ 15,079 $ 14,179 Unearned premiums 4,450 3,584 Payable to reinsurers 1,578 1,191 Liabilities of managed investment entities 3,834 3,965 Long-term debt 1,820 1,475 Other liabilities 2,343 1,976 Total liabilities 29,104 26,370 Shareholders' equity: Common Stock, no par value — 200,000,000 shares authorized — 83,401,430 and 83,978,258 shares outstanding 83 84 Capital surplus 1,421 1,411 Retained earnings 3,299 3,211 Accumulated other comprehensive income (loss), net of tax ( 73 ) ( 240 ) Total shareholders' equity 4,730 4,466 Total liabilities and shareholders' equity $ 33,834 $ 30,836 2 Table of Contents AMERICAN FINANCIAL GROUP, INC. 10-Q AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED) (In Millions, Except Per Share Data) Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Revenues: Net earne

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS INDEX TO NOTES A. Accounting Policies H. Goodwill and Other Intangibles B. Acquisition of Business I. Long-Term Debt C. Segments of Operations J. Shareholders' Equity D. Fair Value Measurements K. Income Taxes E. Investments L. Contingencies F. Derivatives M. Insurance G. Managed Investment Entities A. Accounting Policies Basis of Presentation The accompanying consolidated financial statements for American Financial Group, Inc. and its subsidiaries ("AFG") are unaudited; however, management believes that all adjustments (consisting only of normal recurring accruals unless otherwise disclosed herein) necessary for fair presentation have been made. The results of operations for interim periods are not necessarily indicative of results to be expected for the year. The financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary to be in conformity with U.S. generally accepted accounting principles ("GAAP"). Certain reclassifications have been made to prior periods to conform to the current year's presentation. All significant intercompany balances and transactions have been eliminated. The results of operations of companies since their formation or acquisition are included in the consolidated financial statements. Events or transactions occurring subsequent to September 30, 2025, and prior to the filing of this Form 10-Q, have been evaluated for potential recognition or disclosure herein. The preparation of the financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Changes in circumstances could cause actual results to differ materially from those estimates. Fair Value Measurements Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED investee in its financial statements rather than in the period in which the investee declares a dividend. AFG's share of the earnings or losses from equity method investments is generally recorded on a quarter lag due to the timing of the receipt of the investee's financial statements. AFG's equity in the earnings (losses) of limited partnerships and similar investments is included in net investment income. Credit Losses on Fixed Maturity Investments When a decline in the value of an available for sale fixed maturity is considered to be other-than-temporary at the balance sheet date, an allowance for credit losses (impairment), including any write-off of accrued interest, is charged to earnings (included in realized gains (losses) on securities). If management can assert that it does not intend to sell the security and it is not more likely than not that it will have to sell it before recovery of its amortized cost basis, then the impairment is separated into two components: (i) the allowance related to credit losses (recorded in earnings) and (ii) the amount related to all other factors (recorded in other comprehensive income). The credit-related portion is measured by comparing a security's amortized cost (net of any existing allowance) to the present value of its current expected cash flows discounted at its effective yield prior to the charge. The allowance is limited to the difference between a security's amortized cost basis and its fair value. Subsequent increases or decreases in expected credit losses are recorded immediately in net earnings through realized gains (losses). If management intends to sell an impaired security, or it is more likely than not that it will be required to sell the security before recovery, an impairment is recorded in earnings to reduce the amortized cost of that security to fair value. Credit Losses on Financial Instruments Measured at Amortized Cost Credit-related impai

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED Deferred Policy Acquisition Costs ("DPAC") Policy acquisition costs (principally commissions, premium taxes and certain underwriting and policy issuance costs) directly related to the successful acquisition or renewal of an insurance contract are deferred. DPAC is limited based upon recoverability without any consideration for anticipated investment income and is charged against income ratably over the terms of the related policies. A premium deficiency is recognized if the sum of expected claims costs, claims adjustment expenses and unamortized acquisition costs exceed the related unearned premiums. A premium deficiency is first recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. If the premium deficiency is greater than unamortized acquisition costs, a liability is accrued for the excess deficiency and reported with unpaid losses and loss adjustment expenses. Managed Investment Entities A company is considered the primary beneficiary of, and therefore must consolidate, a variable interest entity ("VIE") based primarily on its ability to direct the activities of the VIE that most significantly impact that entity's economic performance and the obligation to absorb losses of, or receive benefits from, the entity that could potentially be significant to the VIE. AFG manages, and has investments in, collateralized loan obligations ("CLOs") that are VIEs (see Note G — "Managed Investment Entities" ). AFG has determined that it is the primary beneficiary of these CLOs because (i) its role as asset manager gives it the power to direct the activities that most significantly impact the economic performance of the CLOs and (ii) through its investment in the CLO debt tranches, it has exposure to CLO losses (limited to the amount AFG invested) and the right to receive CLO benefits that could potentially be significant to the CLOs. Because AFG has n

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED At September 30, 2025, AFG has a $ 224 million lease liability included in other liabilities and a lease right-of-use asset of $ 201 million included in other assets compared to $ 232 million and $ 212 million, respectively, at December 31, 2024. Premium Recognition Property and casualty premiums are earned generally over the terms of the policies on a pro rata basis. Unearned premiums represent that portion of premiums written, which is applicable to the unexpired terms of policies in force. On reinsurance assumed from other insurance companies or written through various underwriting organizations, unearned premiums are based on information received from such companies and organizations. Income Taxes Deferred income taxes are calculated using the liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases and are measured using enacted tax rates. A valuation allowance is established to reduce total deferred tax assets to an amount that will more likely than not be realized. The effect of a change in tax rates on deferred tax assets and liabilities is recorded in net earnings in the period that includes the enactment date. AFG recognizes the tax benefits of uncertain tax positions only when the position is more likely than not t

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