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Here's Why You Should Add American Financial (AFG) to Your Kitty
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American Financial Group, Inc.’s (AFG - Free Report) business opportunities, higher retentions in the renewal business and effective capital deployment along with improved guidance make it a good investment choice.
Earnings Surprise History
American Financial has a solid record of beating earnings estimates in the last six quarters.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2022 and 2023 earnings has moved 3.3% and 8.2% north, respectively, in the past 60 days. This should instill investors' confidence in the AFG stock.
Zacks Rank & Price Performance
American Financial currently carries a Zacks Rank #2 (Buy). In the past year, the stock has rallied 24.1% outperforming the industry’s growth of 17.4%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
American Financial’s ROE for the trailing 12 months is 17.6%, better than the industry average of 5.9%. The same expanded 520 basis points year over year. This reflects its efficiency in utilizing shareholders’ funds.
Business Tailwinds
Banking on solid performances across Property and Transportation, Specialty Casualty, and Specialty Financial lines of business, the Property and Casualty Insurance business of American Financial should continue to gain.
The Property and Casualty Insurance segment of American Financial should benefit from business opportunities, growth in the surplus lines and excess liability businesses, rate increases, and higher retentions in renewal business, which boost premium growth.
American Financial is actively involved in start-ups, small-to-medium-sized acquisitions, and product launches. The insurer acquired Verikai, an insurance technology company, in January 2022. AFG expects artificial intelligence and machine learning to continue to enhance its insurance operations.
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $10.50, indicating a year-over-year increase of 5%.
Impressive Dividend History
The property and casualty insurer has a solid record of increasing dividends for 17 straight years and has paid out 18 special dividends in 11 years. Its dividend yield of 1.5% surpassed the industry average of 0.3%.
Upbeat Guidance
Net written premiums in the Specialty Property and Casualty Insurance segment are expected to be 8-12% higher than the $5.6 billion reported in 2021.
AFG continues to expect net written premiums to grow 8-12% at Property & Transportation.
Net written premiums at Specialty Casualty are expected to grow 6-10%. Net written premiums at Specialty Financial Group are expected to grow 8-12%.
The P&C insurer expects the 2022 combined ratio between 85% and 87% for the Specialty Property and Casualty Group. For Property and Transportation Group, it is expected to be 87-91%. For Specialty Casualty, the combined ratio is expected between 80% and 84%.
American Financial expects continued strong renewal pricing in E&S, excess liability and several other longer-tail liability businesses and continued calendar year profitability in workers' compensation businesses overall. For Specialty Financial, the combined ratio is projected to be 84-88%.
The bottom line of Cincinnati Financial surpassed earnings estimates in each of the last four quarters, the average being 38.48%. In the past year, the CINF stock has rallied 30.4%.
The Zacks Consensus Estimate for Cincinnati Financial’s 2022 and 2023 earnings has moved 5.7% and 5.5% north, respectively, in the past 60 days.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, the UFCS stock has declined 11.1%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. In the past year, KNSL has rallied 37.9%.
The Zacks Consensus Estimate for Kinsale Capital’s 2022 and 2023 earnings has moved 5.9% and 8.2% north, respectively, in the past 60 days.
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Here's Why You Should Add American Financial (AFG) to Your Kitty
American Financial Group, Inc.’s (AFG - Free Report) business opportunities, higher retentions in the renewal business and effective capital deployment along with improved guidance make it a good investment choice.
Earnings Surprise History
American Financial has a solid record of beating earnings estimates in the last six quarters.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2022 and 2023 earnings has moved 3.3% and 8.2% north, respectively, in the past 60 days. This should instill investors' confidence in the AFG stock.
Zacks Rank & Price Performance
American Financial currently carries a Zacks Rank #2 (Buy). In the past year, the stock has rallied 24.1% outperforming the industry’s growth of 17.4%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
American Financial’s ROE for the trailing 12 months is 17.6%, better than the industry average of 5.9%. The same expanded 520 basis points year over year. This reflects its efficiency in utilizing shareholders’ funds.
Business Tailwinds
Banking on solid performances across Property and Transportation, Specialty Casualty, and Specialty Financial lines of business, the Property and Casualty Insurance business of American Financial should continue to gain.
The Property and Casualty Insurance segment of American Financial should benefit from business opportunities, growth in the surplus lines and excess liability businesses, rate increases, and higher retentions in renewal business, which boost premium growth.
American Financial is actively involved in start-ups, small-to-medium-sized acquisitions, and product launches. The insurer acquired Verikai, an insurance technology company, in January 2022. AFG expects artificial intelligence and machine learning to continue to enhance its insurance operations.
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $10.50, indicating a year-over-year increase of 5%.
Impressive Dividend History
The property and casualty insurer has a solid record of increasing dividends for 17 straight years and has paid out 18 special dividends in 11 years. Its dividend yield of 1.5% surpassed the industry average of 0.3%.
Upbeat Guidance
Net written premiums in the Specialty Property and Casualty Insurance segment are expected to be 8-12% higher than the $5.6 billion reported in 2021.
AFG continues to expect net written premiums to grow 8-12% at Property & Transportation.
Net written premiums at Specialty Casualty are expected to grow 6-10%. Net written premiums at Specialty Financial Group are expected to grow 8-12%.
The P&C insurer expects the 2022 combined ratio between 85% and 87% for the Specialty Property and Casualty Group. For Property and Transportation Group, it is expected to be 87-91%. For Specialty Casualty, the combined ratio is expected between 80% and 84%.
American Financial expects continued strong renewal pricing in E&S, excess liability and several other longer-tail liability businesses and continued calendar year profitability in workers' compensation businesses overall. For Specialty Financial, the combined ratio is projected to be 84-88%.
Other Stocks to Consider
Some other top-ranked stocks from the insurance sector are Cincinnati Financial Corporation (CINF - Free Report) , United Fire Group, Inc. (UFCS - Free Report) and Kinsale Capital Group, Inc. (KNSL - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Cincinnati Financial surpassed earnings estimates in each of the last four quarters, the average being 38.48%. In the past year, the CINF stock has rallied 30.4%.
The Zacks Consensus Estimate for Cincinnati Financial’s 2022 and 2023 earnings has moved 5.7% and 5.5% north, respectively, in the past 60 days.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, the UFCS stock has declined 11.1%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. In the past year, KNSL has rallied 37.9%.
The Zacks Consensus Estimate for Kinsale Capital’s 2022 and 2023 earnings has moved 5.9% and 8.2% north, respectively, in the past 60 days.