It has been about a month since the last earnings report for American Financial Group (AFG Quick QuoteAFG - Free Report) . Shares have lost about 0.7% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is American Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

American Financial Q4 Earnings Miss, Revenues Beat Estimates

American Financial Group, Inc. reported fourth-quarter 2024 net operating earnings per share of $3.12, which missed the Zacks Consensus Estimate by 2.5%. The bottom line increased 9.9% year over year.American Financial’s results reflected higher premiums, increased average renewal pricing across the P&C group and improved net investment income. Higher expenses and catastrophe losses were the offsets.

Behind the Headlines 

Total revenues of $2.1 billion increased 7.2% year over year. The growth came on the back of higher P&C insurance net earned premiums and net investment income. The top line beat the Zacks Consensus Estimate by 3.5%. Net investment income climbed 22% year over year to $194 million in the quarter under review. The figure was higher than our estimate of $166.9 million and beat the Zacks Consensus Estimate of $188 million. Total cost and expenses increased 4.6% year over year to $1.8 billion due to higher P&C insurance losses and expenses. Our estimate was also $1.8 billion.

Segmental Update

The Specialty P&C Insurance segment generated $2 billion in net written premiums, which rose 3% year over year. The growth reflects new business opportunities, a good renewal rate environment and increased exposure in many businesses. Average renewal pricing across P&C Group, excluding workers’ compensation, was up approximately 8% in the quarter.

Net written premiums in Property & Transportation Group decreased 6% year over year to $399 million in the quarter. The figure was lower than our estimate of $542 million. Net written premiums at Specialty Casualty Group increased 4% year over year to $725 million. The figure was higher than our estimate of $679.3 million.

Further, net written premiums at Specialty Financial increased 12% year over year to $279 million. The figure was lower than our estimate of $286.6 million. Net written premiums at other divisions dropped 17% year over year to $57 million. The figure was lower than our estimate of $79.5 million. The Specialty P&C Insurance segment’s underwriting profit decreased 3.6% year over year to $204 million in the quarter. The figure was lower than our estimate of $228.7 million.

Higher underwriting profit in Property and Transportation and Specialty Financial Groups was offset by lower year-over-year underwriting profit in the Specialty Casualty Group. The combined ratio deteriorated 130 basis points (bps) year over year to 89% in the segment.

Full-Year Highlights

Net operating earnings per share were $10.75, up 1.8% year over year. Revenues increased 6.3% year over year. Net premiums written increased 7% to $7.1 billion. Combined ratio deteriorated 80 bps to 91%.

Financial Update

American Financial exited 2024 with total cash and investments of $15.9 billion, which increased 3.9% from the 2023-end level. As of Dec. 31, 2024, long-term debt totaled $1.5 billion, which remained unchanged from the level at 2023-end.

As of Dec. 31, 2024, the company’s book value per share, excluding accumulated other comprehensive income (AOCI), was $56.03, up 2.4% from the 2023-end level. Annualized return on equity came in at 19% for the fourth quarter, which expanded 20 bps year over year.

Prudent Capital Deployment

American Financial returned $791 million to shareholders, including $545 million ($6.50 per share) in special dividends.

2025 Expectations

AFG projects core operating earnings per share of $10.50. Net written premiums are expected to grow 5% while combined ratio is estimated to be 92.5%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -21.18% due to these changes.

VGM Scores

At this time, American Financial has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise American Financial has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

American Financial is part of the Zacks Insurance - Property and Casualty industry. Over the past month, Axis Capital (AXS Quick QuoteAXS - Free Report) , a stock from the same industry, has gained 2.4%. The company reported its results for the quarter ended December 2024 more than a month ago.

Axis Capital reported revenues of $1.58 billion in the last reported quarter, representing a year-over-year change of +8.3%. EPS of $2.97 for the same period compares with $2.94 a year ago.

For the current quarter, Axis Capital is expected to post earnings of $2.67 per share, indicating a change of +3.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -7% over the last 30 days.

Axis Capital has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.