American Financial Group has reported “disappointing” results for 2000, with net earnings from insurance businesses of $42.3 million ($.71 per share) for 2000 compared to $150.4 million ($2.50 per share) for 1999. The 2000 results include after-tax charges of $22.8 million ($.39 per share) for strengthening the loss reserves of AFG’s California workers’ compensation business in the 2000 third quarter and special litigation charges of $23.3 million ($.39 per share) in the 2000 second quarter primarily attributable to certain legal matters affecting AFG’s life and annuity subsidiary, Great American Financial Resources Inc.
“While we believe the underwriting results of our property and casualty insurance operations continue to outperform the industry, we are very disappointed with our 2000 results,” said Carl H. Lindner, AFG chairman and chief executive. “We are encouraged by the growth opportunities and improving trends in our specialty businesses. Even though our personal auto insurance business experienced unsatisfactory underwriting results during 2000, we expect that our aggressive rate actions taken in 2000 will have positive earnings impact in 2001.”
AFG’s net loss for 2000 of $56.0 million ($.95 per share) included losses of $91.4 million ($1.55 per share) for the previously announced write-down to market value of the company’s investment in Chiquita Brands International, Inc. and investee losses primarily related to Chiquita.
At Dec. 31, 2000, the investment in Chiquita was $24 million. The write-down has no significant impact on the liquidity, capital or operating earnings of AFG’s insurance subsidiaries nor on the company’s overall financial condition.
The 2000 results also included a one-time charge of $9.1 million for an accounting change and net realized gains of $2.2 million, reduced by a net loss of approximately $7 million, recorded in the fourth quarter, on the previously announced sale of the company’s Japanese division to Mitsui Marine and Fire Insurance Company, LTD. of Japan. AFG’s net earnings for 1999 were $141.4 million ($2.35 per share). AFG ended the year with shareholders’ equity of $1.5 billion, book value per share of $23 and cash and investments of approximately $11.5 billion.
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