American Financial Showers Cash on Investors


In an extraordinary move to dole out more cash to its shareholders, property and casualty insurer, American Financial Group Inc. (AFG) announced payment of a special one-time dividend. The $90 million one-time dividend payment, which comes to $1.00 for each share, will be paid on Dec 24, 2013 to shareholders of record on Dec 16, 2013.

This one-time dividend is an addition to the regular dividend of 22 cents per share which was recently paid by American Financial on Oct 25, 2013.

During Aug 2013, American Financial  increased its annual dividend by 12.8% to 88 cents per share, which represented the eighth consecutive year of dividend hikes.

The move by this Zacks Rank #3 (Hold) insurer reflects its solid financial position and adequate financial flexibility. The company had excess capital of approximately $900 million at Sep30, 2013. American Financial Group has been able to add to its cash pile, given a quieter catastrophe season this year, which saved million of dollars in claims losses. Moreover, the company has also been witnessing a favorable operating climate in most of its business lines, allowing it to write more business.  

American Financial is also diligent in managing its capital by way of share buyback from time to time.

Favorable operating trends have seen similar moves by other industry players. Last month RLI Corp. (RLI) with Zacks Rank #1 (Strong Buy) announced an extraordinary cash dividend of $3.00 per share, While other players EMC Insurance Group Inc. (EMCI) and Aspen Insurance Holdings Ltd. (AHL) also increased quarterly dividend by 9.5% and 5.9% respectively.

Given excess capacity available with insurers, we expect more treats for the shareholders of this industry.

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Read the Full Research Report on AHL

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