American Financial Group, Inc. Updates Its 2020 Core Net Operating Earnings Guidance Before Earnings or Losses from Marked-to-Market Investments and Announces Details Regarding Its 2020 First Quarter Results Conference Call and Webcast

American Financial Group, Inc. (NYSE: AFG) announced today revised earnings guidance for 2020.

As previously indicated, AFG’s original core net operating earnings guidance of $8.75 to $9.25 per share assumed a 10% annualized return on the Company’s $2.2 billion of investments that are marked to market through core operating earnings (“MTM investments”). This return assumption was consistent with the returns earned in 2018 and 2019 and with our long-term expectations for these investments.

Since providing 2020 guidance, the COVID-19 pandemic has had widespread financial and economic impacts, including a significant decrease in both equity and credit markets. As a result, the Company now believes the return on MTM investments in 2020 will be significantly lower than its previous expectations and returns in the second quarter of 2020 could be negative. Because the majority of AFG’s investments impacted by mark-to-market accounting are limited partnerships and similar investments accounted for using the equity method and reported on a quarter lag, these second quarter returns will reflect March 31, 2020 valuations provided by third party sources and will incorporate the downturn in financial markets during the first quarter. While AFG continues to expect an attractive return on its MTM investments over the long term, due to ongoing volatility and uncertainty it is difficult to forecast accurately the ultimate MTM returns in 2020.

As a result, the following guidance for 2020 reflects AFG’s core net operating earnings before earnings or losses from MTM investments. This guidance demonstrates the continued underlying strength of AFG’s insurance businesses.

Updated 2020 Full Year Guidance*
				2020 Guidance*			2019 Actual*
	P&C pretax core operating earnings*			$640 - $700 million			$679 million
	Annuity pretax core operating earnings*			$275 - $305 million			$298 million
	AFG core net operating earnings per share*			$6.45 - $7.25 per share			$7.11 per share

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*Before earnings or losses from AFG’s MTM investments, which are included as a component of core operating earnings. For the 12 months ended December 31, 2019, MTM investments generated pretax net investment income before DAC of $197 million, representing a 10.2% yield. At March 31, 2020, AFG’s carrying value of these MTM investments was approximately $2.2 billion.

The above guidance reflects the impacts of (i) recent opportunistic purchases of fixed income securities, (ii) lower short-term interest rates than previously assumed, (iii) a decline in property and casualty premiums as compared to our original expectations, (iv) recent renewal rate actions taken on annuity policies near or at the end of their surrender charge period, and (v) other items related to the impact of COVID-19.