Insurance holding company American Financial Group (NYSE: AFG) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 9.7% year on year to $1.92 billion. Its non-GAAP profit of $2.14 per share was 1.7% above analysts’ consensus estimates.

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Company Overview

With roots dating back to 1872 and a business model that empowers local decision-making, American Financial Group (NYSE: AFG) is an insurance holding company that specializes in commercial property and casualty insurance products for businesses through its Great American Insurance Group.

Revenue Growth

Insurers earn revenue three ways. The core insurance business itself, often called underwriting and represented in the income statement as premiums earned, is one way. Investment income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities is the second way. Fees from various sources such as policy administration, annuities, or other value-added services is the third.

Thankfully, American Financial Group’s 7.7% annualized revenue growth over the last five years was decent. Its growth was slightly above the average insurance company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. American Financial Group’s recent performance shows its demand has slowed as its annualized revenue growth of 6.4% over the last two years was below its five-year trend. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, American Financial Group reported year-on-year revenue growth of 9.7%, and its $1.92 billion of revenue exceeded Wall Street’s estimates by 1.7%.

Net premiums earned made up 90.5% of the company’s total revenue during the last five years, meaning American Financial Group lives and dies by its underwriting activities because non-insurance operations barely move the needle.

Our experience and research show the market cares primarily about an insurer’s net premiums earned growth as investment and fee income are considered more susceptible to market volatility and economic cycles.

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Book Value Per Share (BVPS)

Insurers are balance sheet businesses, collecting premiums upfront and paying out claims over time. Premiums collected but not yet paid out, often referred to as the float, are invested and create an asset base supported by a liability structure. Book value per share (BVPS) captures this dynamic by measuring these assets (investment portfolio, cash, reinsurance recoverables) less liabilities (claim reserves, debt, future policy benefits). BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality because it reflects long-term capital growth and is harder to manipulate than more commonly-used metrics like EPS.

American Financial Group’s BVPS declined at a 4.8% annual clip over the last five years. However, BVPS growth has accelerated recently, growing by 7.3% annually over the last two years from $47.05 to $54.15 per share.

Over the next 12 months, Consensus estimates call for American Financial Group’s BVPS to grow by 10.3% to $54.36, decent growth rate.

Key Takeaways from American Financial Group’s Q2 Results

It was encouraging to see American Financial Group beat analysts’ revenue, EPS, and efficiency ratio expectations this quarter. On the other hand, its net premiums earned missed. Overall, this was a mixed quarter. The stock traded down 1.2% to $122.90 immediately after reporting.

American Financial Group underperformed this quarter, but does that create an opportunity to invest right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.