American Financial Group, Inc. Announces Change in Reporting of its Annuity Segment Results
June 20 2019 - 5:00PM
Business Wire
- Change will take effect commencing with the reporting
of second quarter results
- No change to latest annuity guidance
American Financial Group, Inc. (NYSE: AFG) announced today that
it is changing the way it defines the components of its core
annuity operating earnings, beginning with the reporting of its
second quarter 2019 financial results.
Going forward, AFG’s core annuity operating earnings will
exclude the impact of items that are not necessarily indicative of
operating trends, such as: the impact of fair value accounting for
fixed-indexed annuities (FIAs), unlockings, and other items related
to changes in the stock market and interest rates. Also going
forward, core operating earnings will now include an expense for
the amortization of FIA option costs, which is a better measure of
the cost of funds for FIAs.
The Company believes these changes will provide investors with a
better view of the fundamental performance of the business, and a
more comparable measure of the Annuity Segment’s business compared
to its peers. Core operating earnings will continue to also exclude
realized gains and losses on investments.
After giving effect to the change, AFG still expects its 2019
pretax core annuity earnings to remain within its most recent
guidance range of $365 million to $425 million.
S. Craig Lindner, Co-CEO of American Financial Group, commented,
“As noted in our most recent investor conference call, we have been
reviewing alternatives related to the reporting of our Annuity
Segment core operating earnings for some time. After studying
various approaches and considering questions and feedback from
investors, analysts and rating agencies, we believe that this
change will provide investors with a better view of the fundamental
performance of the annuity business. This approach removes much of
the volatility, both positive and negative, that results from the
impact of interest rate and stock market fluctuations on our
fixed-indexed annuity business, as well as the impact of other
non-operating items.”
About American Financial Group, Inc.
American Financial Group is an insurance holding company, based
in Cincinnati, Ohio with assets over $65 billion. Through the
operations of Great American Insurance Group, AFG is engaged
primarily in property and casualty insurance, focusing on
specialized commercial products for businesses, and in the sale of
traditional fixed, fixed-indexed and variable-indexed annuities in
the retail, financial institutions, broker-dealer and registered
investment advisor markets. Great American Insurance Group’s roots
go back to 1872 with the founding of its flagship company, Great
American Insurance Company.
Forward Looking
Statements
This press release contains certain statements that may be
deemed to be "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements in this press
release not dealing with historical results are forward-looking and
are based on estimates, assumptions and projections. Examples of
such forward-looking statements include statements relating to: the
Company's expectations concerning market and other conditions and
their effect on future premiums, revenues, earnings, investment
activities and the amount and timing of share repurchases;
recoverability of asset values; expected losses and the adequacy of
reserves for asbestos, environmental pollution and mass tort
claims; rate changes; and improved loss experience.
Actual results and/or financial condition could differ
materially from those contained in or implied by such
forward-looking statements for a variety of reasons including, but
not limited to: changes in financial, political and economic
conditions, including changes in interest and inflation rates,
currency fluctuations and extended economic recessions or
expansions in the U.S. and/or abroad; performance of securities
markets, including the cost of equity index options; new
legislation or declines in credit quality or credit ratings that
could have a material impact on the valuation of securities in
AFG’s investment portfolio; the availability of capital; changes in
insurance law or regulation, including changes in statutory
accounting rules and changes in regulation of the Lloyd’s market,
including modifications to the establishment of capital
requirements for and approval of business plans for syndicate
participation; changes in the legal environment affecting AFG or
its customers; tax law and accounting changes, including the impact
of recent changes in U.S. corporate tax law; levels of natural
catastrophes and severe weather, terrorist activities (including
any nuclear, biological, chemical or radiological events),
incidents of war or losses resulting from civil unrest and other
major losses; disruption caused by cyber-attacks or other
technology breaches or failures by AFG or its business partners and
service providers, which could negatively impact AFG’s business
and/or expose AFG to litigation; development of insurance loss
reserves and establishment of other reserves, particularly with
respect to amounts associated with asbestos and environmental
claims; availability of reinsurance and ability of reinsurers to
pay their obligations; trends in persistency and mortality;
competitive pressures; the ability to obtain adequate rates and
policy terms; changes in AFG’s credit ratings or the financial
strength ratings assigned by major ratings agencies to AFG’s
operating subsidiaries; the impact of the conditions in the
international financial markets and the global economy relating to
AFG’s international operations; and other factors identified in
AFG’s filings with the Securities and Exchange Commission.
The forward-looking statements herein are made only as of the
date of this press release. The Company assumes no obligation to
publicly update any forward-looking statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20190620005726/en/
Diane P. Weidner, IRC Asst. Vice President - Investor Relations
513-369-5713 Websites: www.AFGinc.com
www.GreatAmericanInsuranceGroup.com
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