AFG Reports $25.1 Million in First-Quarter Earnings

Cincinnati-based American Financial Group Inc. reported net earnings for the first quarter of $25.1 million (36 cents per share).

These results include an after-tax loss of $25.6 million on the sale of 61 percent of Infinity Property and Casualty Corp. in a February initial public offering, and a tax benefit of $5.5 million (8 cents per share) related to the company’s basis in Infinity stock. AFG’s net earnings for last year’s first quarter were $1.4 million (2 cents per share).

Core earnings from insurance operations, which exclude the effects of certain items, were $43.8 million (63 cents per share) for the first quarter of 2003, within the range of analyst estimates. Such earnings include $1.4 million of investor earnings from Infinity following the initial public offering in mid February. Reported core earnings from insurance operations for the previous year’s first quarter were $36.9 million (53 cents per share).

The improvement was due to significantly improved underwriting results in the property and casualty insurance operations, partially offset by lower investment income. Details of the financial results may be found in the accompanying schedules.

On April 17, the company announced a proposal to merge with its subsidiary, American Financial Corp. (AFC). This merger would result in the conversion of AFC’s publicly traded preferred stock to AFG common equity. In addition, the merger would eliminate the deferred tax liabilities associated with AFC’s holding of AFG stock. Assuming that the proposed transaction is completed, these changes are expected to result in a 12 percent to 15 percent increase in AFG shareholders’ equity. The company hopes to complete the merger in the third quarter of 2003.

Topics Profit Loss