American Financial Group

Amid record high economic inflation, continuing supply chain issues and proliferating nuclear verdicts, carrier CEOs have emphasized the need to keep rate above loss costs during Q3 conference calls.

On a call with analysts, Lindner said AFG is assuming commercial auto liability loss cost trends at 7%.

The company’s top line grew 18.7% to $3.15bn, primarily due to growth in the crop insurance business.

Loss cost trends have been approximately 5% for AFG’s specialty P&C businesses, excluding workers' compensation, and approximately 3% overall throughout 2022.

The company’s top line grew 9.6% to $2.1bn, but the speed of growth was smaller compared to Q1.

The sector was hit by a rough first half of 2022, with more to come in the second half of the year.

Insurers could face pressure if interest rate and recession fears intersect with worsening loss cost trends.

The firm anticipates renewal rates to rise between 5% and 7% in its specialty P&C operations overall and 6%-8% excluding workers’ comp.

Specialty P&C NWP in Q1 rose up 13.5% year-over-year to almost $1.4bn, accelerating from a 4.4% increase in Q4.

The insurer said it still had financial flexibility to grow even after making the dividend of roughly $170mn.

Co-CEO Carl Lindner said his company has made “some adjustments” in staff compensation in response to higher inflation rates.

The P&C segment’s fourth quarter combined ratio dropped 10.8 points to 80.8%, compared to 91.6% last year.