American Financial Group, Inc. (AFG): Business Model Canvas [Dec-2025 Updated]

You're looking for a sharp, clear breakdown of American Financial Group's (AFG) operational blueprint, and that means cutting through the noise to the nine core building blocks. The takeaway is simple: AFG's strength is its hyper-focused specialty Property & Casualty (P&C) segments, which generate high-margin premiums that fuel a conservative, high-yield investment portfolio. That's the engine.

You want to know how American Financial Group (AFG) consistently delivers strong returns, and the answer is a defintely simple but powerful model: they are a high-margin niche insurer first, and a conservative, large-scale asset manager second. This dual-engine approach relies on generating estimated Net Written Premiums of $8.5 billion in 2025 from complex specialty risks, which then fuels the active management of their substantial $20 billion investment portfolio. That's the core strategy.

American Financial Group, Inc. (AFG) - Canvas Business Model: Key Partnerships

AFG's key partnerships are structured to manage catastrophic risk, distribute specialized products efficiently, and optimize the returns on its substantial investment float. The model leans heavily on a network of independent agents for market access and strategic reinsurance relationships to stabilize underwriting volatility, especially given the expected $60 million to $70 million in wildfire losses factored into the 2025 guidance.

Reinsurers for risk transfer and capital efficiency

Reinsurance partnerships are crucial for AFG's capital management, allowing the company to offload large or volatile risks from its Specialty P&C portfolio. In 2025, the economics of these partnerships shifted, with the company noting a projection for a slight increase in its expense ratio due to lower ceding commissions from reinsurers. This trend indicates a hardening reinsurance market where AFG is retaining more risk or paying more to transfer it, making the quality of its reinsurer relationships even more defintely important.

Reinsurers provide the financial backbone to maintain AFG's strong balance sheet, which reported a book value per share of $54.15 at June 30, 2025. The partnership structure includes both external agreements and internal arrangements, such as the reorganization of its internal reinsurance facility to align with the ceding businesses' reporting in 2025. [cite: 7 in first search]

Independent insurance agents and brokers (distribution)

The primary channel for placing AFG's specialized commercial products is its extensive network of independent insurance agents and brokers. This partnership model provides superior local market expertise, which is essential for underwriting niche risks like equine, trucking, and executive liability. [cite: 6 in third search]

AFG's Great American Insurance Group operates over 35 diversified specialty businesses, each developing distinct distribution strategies to serve their unique markets. [cite: 12 in second search] This decentralized approach, which includes a dedicated 'Alternative Distribution' channel, allows AFG to achieve a projected 5% net written premium growth in 2025 from the $7.1 billion reported in 2024.

Technology vendors for claims processing and data analytics

Strategic technology partnerships, particularly in the InsurTech space, are key to enhancing underwriting precision and operational agility. A major partnership is the 2021 acquisition of Verikai Inc. for approximately $120 million. [cite: 4 in second search, 6 in second search] This firm, now an affiliated partner, uses machine learning (AI) to analyze alternative data, providing a predictive risk tool that optimizes the underwriting process for specialty lines like medical stop loss. [cite: 4 in second search]

Verikai's integration is a clear example of AFG swapping a traditional vendor relationship for a full partnership/ownership model to secure a competitive edge in data analytics.

Specialized underwriting managing general agents (MGAs)

AFG's specialty focus is often executed through its own affiliated program administrators, which function similarly to Managing General Agents (MGAs). These entities act as key partners by providing deep, focused expertise in specific market niches that would be difficult to build in-house from scratch. For example:

• Crop Risk Services Inc.: A major program administrator in the crop insurance market, acquired from American International Group, Inc. (AIG). [cite: 5 in second search]
• ABA Insurance Services Inc.: Focuses on the financial institutions sector. [cite: 2 in second search]
• Professional Risk Brokers Inc.: Provides specialized brokerage and underwriting services. [cite: 2 in second search]

These affiliated MGAs contribute directly to the Specialty P&C segment, which generated a strong underwriting profit of $114 million in the second quarter of 2025.

Banks and custodians for investment portfolio management

The investment side of the business, which manages a portfolio of approximately $15.9 billion, relies on banks and custodians for safekeeping, settlement, and record-keeping of its assets. While the investment strategy is driven by the in-house team, American Money Management Corporation (AMMC), the physical custody of assets is outsourced to major financial institutions. [cite: 10 in third search] The company also partners with Broadridge Corporate Issuer Solutions as its stock transfer agent, handling all registered shareholder services. [cite: 9 in third search]

The portfolio's performance is critical, with AFG projecting an 8% return on its alternative investments portfolio for 2025. The table below summarizes the core functions of these financial partners.

Partner Type	Core Function	2025 Financial Context
Reinsurers (External)	Catastrophe and large-risk transfer	Projected 2025 expense ratio increase due to lower ceding commissions.
Independent Agents/Brokers	Specialty P&C distribution and client access	Supports projected 5% net written premium growth in 2025.
Verikai Inc. (Affiliated InsurTech)	AI/Machine Learning for predictive underwriting	Acquired for $120 million; enhances underwriting efficiency. [cite: 4 in second search]
Specialty Underwriting Units (MGAs)	Niche market access (e.g., Crop Risk Services Inc.)	Contributed to $114 million underwriting profit in Q2 2025.
Custodian Banks/Brokers	Asset safekeeping and transaction settlement	Manages a total investment portfolio of approximately $15.9 billion.
Broadridge Corporate Issuer Solutions	Shareholder record-keeping (Transfer Agent)	Manages registered shareholder services for the NYSE-listed stock. [cite: 9 in third search]

American Financial Group, Inc. (AFG) - Canvas Business Model: Key Activities

The core of American Financial Group's (AFG) operations revolves around two primary, interconnected activities: the expert underwriting of highly specialized insurance risks and the disciplined, active management of the capital generated from those operations. This dual focus is what drives their consistently strong returns.

Specialty P&C underwriting and pricing (core competency)

AFG's primary key activity is the granular, profitable underwriting of specialty Property & Casualty (P&C) insurance, a business where they have consistently demonstrated pricing power. This isn't about volume; it's about margin. For the third quarter of 2025, the specialty P&C segment achieved an underwriting profit growth of 19% year-over-year, which is a clear indicator of this core strength.

The critical metric here is the combined ratio (claims and expenses divided by premiums). AFG's specialty P&C segment reported a combined ratio of 93.0% in Q3 2025, which means they earned 7.0 cents of underwriting profit for every premium dollar collected. For the full 2025 fiscal year, the company projects a combined ratio of approximately 92.5%.

Here's the quick math on pricing: Management confirms they are achieving renewal rate increases that are in excess of prospective loss ratio trends. For example, in Q3 2025, commercial auto rates were up by 11% on average. This continuous focus on rate adequacy is essential for offsetting challenges like social inflation (the rising cost of claims due to increasing litigation and larger jury awards).

Specialty Segment	Q3 2025 Underwriting Profit Change (YoY)	Q3 2025 Combined Ratio
Specialty P&C (Total)	Up 19%	93.0%
Property and Transportation Group	Up (due to lower cat losses)	92.5%
Specialty Financial Group	Strong Growth	81.1%
Specialty Casualty Group	Lower (due to social inflation)	N/A (Q1 2025 was 97.6%)

Active management of a $20 billion investment portfolio (as of 2025 estimate)

The second key activity is the professional management of the float-the premiums collected but not yet paid out in claims. As of September 30, 2025, AFG's investment portfolio totaled $16.8 billion. This capital is actively managed by American Money Management Corporation (AMMC), a subsidiary.

Their strategy is conservative but opportunistic. The fixed maturity portfolio is high-quality, with 97% rated NAIC 1 or 2 (the highest two categories), and it maintains a short duration of only 2.7 years. This short duration allows them to quickly reinvest in a rising interest rate environment, which helped P&C net investment income grow by 5% year-over-year in Q3 2025.

A notable component is the alternative investment portfolio, which includes approximately $1.5 billion in directly-owned multifamily real estate. This segment is targeted for long-term annual returns of 10% or better, but it delivered an annualized return of 6.2% in Q3 2025, reflecting near-term pressure in real estate markets like Florida and Dallas.

Claims handling and loss adjustment

Efficient, specialized claims handling is crucial in specialty insurance to control loss costs and maintain underwriting profitability. AFG's claims operations function as a key activity by providing expert, in-house adjustment and Third-Party Administrator (TPA) services, often through AFG Claims Service.

They focus on complex and large losses, with capacity to manage claims exceeding $80 million (like industrial fires). This expertise is supported by technology and specialized teams:

• Deploy CAT Teams (Catastrophe Teams) for large-scale events.
• Use a Special Investigation Unit (SIU) for fraud detection and complex investigations.
• Employ advanced tools like Drone Technology, Thermal Imaging Cameras, and Matterport 3D Modeling for accurate damage assessment.
• Prioritize subrogation (recovering claims costs from responsible third parties) to control overall loss expense.

Regulatory compliance and capital management

Maintaining a fortress balance sheet and managing capital effectively are non-negotiable activities in the insurance holding company model. AFG maintains financial strength ratings of A+ from A.M. Best and Standard & Poor's, and A1 from Moody's, reflecting above-target capital levels. They have no significant debt maturities until 2030.

The key action here is the consistent return of excess capital to shareholders. Management expects to generate significant excess capital into 2026. This confidence led to the declaration of a special dividend of $2.00 per share in Q3 2025, totaling approximately $167 million in a single payout. Since the start of 2021, AFG has returned an extraordinary $54.00 per share in special dividends.

Product development for niche insurance markets

AFG's business model relies on continually identifying, developing, and refining niche insurance products that fall outside the standard market, allowing them to charge a profitable premium for specialized risk. This is a perpetual product development and market research activity.

The company operates across dozens of specialized lines, which include:

• Commercial Transportation and Agricultural coverages within the Property and Transportation Group.
• Executive Liability and Workers' Compensation within the Specialty Casualty Group.
• Fidelity and Surety Bonds and Mergers & Acquisitions Liability within the Specialty Financial Group.

The focus is on organic growth, with management citing optimism around new business start-ups in their specialty lines as a future driver of premium growth. You need to defintely keep an eye on their new business pipeline.

American Financial Group, Inc. (AFG) - Canvas Business Model: Key Resources

You're looking for the bedrock assets that let American Financial Group, Inc. (AFG) consistently outperform in the specialty insurance market. The key resources aren't just capital; they're the intellectual and human capital that drive superior risk selection, plus a conservative investment portfolio that provides a stable funding base. It's a classic insurance model: underwrite well, invest wisely, and let the compound returns do the heavy lifting.

Highly specialized underwriting expertise and intellectual capital

AFG's core strength is its deep, decentralized underwriting expertise, which allows it to thrive in niche, complex commercial Property and Casualty (P&C) lines where generalist carriers struggle. This specialization is housed across over 35 diversified businesses in three major groups: Property and Transportation, Specialty Casualty, and Specialty Financial.

This focus translates directly into superior underwriting results. For the first nine months of 2025, AFG's Specialty P&C operations maintained a strong combined ratio (a measure of underwriting profitability, where a number below 100% means a profit) of approximately 93.1% for the second quarter and a stellar 81.1% for the Specialty Financial Group in the third quarter. This discipline allows them to capture strong rate increases, with average renewal pricing up approximately 5% in the third quarter of 2025. That's how they generate underwriting profit, not just premium volume.

Strong financial strength ratings (e.g., A from A.M. Best)

In the insurance world, a strong rating is a non-negotiable key resource; it's the trust that allows you to sell long-term promises. AFG's principal operating subsidiaries, the Great American Insurance Companies, hold a Financial Strength Rating (FSR) of A+ (Superior) from A.M. Best. This rating is a massive competitive advantage, signaling to brokers and policyholders that the company has the capital to pay claims, which is especially critical in specialty lines. The holding company, American Financial Group, Inc., also maintains a solid Long-Term Issuer Credit Rating (ICR) of 'a- (Excellent)' with a stable outlook, as affirmed in September 2025.

Here's a quick look at the key ratings as of late 2025:

Entity	Rating Agency	Rating (2025)	Rating Level
Great American Insurance Companies (Operating Subsidiaries)	A.M. Best	A+ (Superior)	FSR (Financial Strength Rating)
American Financial Group, Inc. (Holding Company)	A.M. Best	a- (Excellent)	Long-Term ICR

A conservative, high-quality fixed-income investment portfolio

AFG's investment portfolio is the engine that generates the second stream of profit. It's managed conservatively to protect the policyholder float (premiums collected before claims are paid). The total investment portfolio was approximately $15.85 billion as of December 31, 2024.

The vast majority of this capital is deployed in high-quality, fixed-income securities. As of June 30, 2025, fixed maturities (bonds) had a book value of $10.699 billion, representing 66% of the total consolidated investment portfolio. This conservative structure, coupled with a short P&C portfolio duration of approximately 3.0 years as of Q2 2025, positions AFG to benefit quickly from higher interest rates, which is a major tailwind in the current environment.

Proprietary data models for risk assessment

The intellectual capital extends beyond just human expertise and into proprietary technology. AFG utilizes advanced risk modeling and analytics to sharpen its underwriting edge, a necessity for pricing complex specialty risks correctly. The company uses both advanced predictive modeling techniques and proprietary risk scoring algorithms to assist in decision-making across underwriting, claims, reserving, and reinsurance.

A key example of this resource is the 2021 acquisition of Verikai, Inc., a machine learning and artificial intelligence company. This acquisition brought a predictive risk tool into the Great American Insurance Group ecosystem, specifically to optimize the underwriting process and help them enter new markets like medical stop loss with a focus on small and underserved risks. This is a defintely a crucial resource for maintaining superior risk selection.

A skilled, tenured management team

The final, and arguably most important, resource is the stability and experience of the leadership. The average tenure of AFG's management team is an impressive 11.8 years. This long tenure ensures a consistent, disciplined culture that prioritizes underwriting profitability and capital preservation over short-term volume growth.

Key leaders have decades of experience with the company:

• Co-CEO Carl H. Lindner III has served as Co-CEO since January 2005, with a tenure of over 20 years.
• Co-CEO S. Craig Lindner has been in various roles since 1977, overseeing the investment portfolios.
• CFO Brian S. Hertzman has been with AFG for over 30 years, joining in 1991.

This kind of stability is rare in the financial services industry, and it underpins the entire conservative, long-term strategy. That's a huge competitive moat.

American Financial Group, Inc. (AFG) - Canvas Business Model: Value Propositions

The core value proposition of American Financial Group is simple: we take on the complex, specialty risks that most insurers avoid, and we do it profitably. You get access to deep, decentralized expertise, which translates into stability and superior returns-a combined ratio of 93.0% for Specialty P&C in Q3 2025 proves the discipline is real.

Tailored insurance solutions for complex, niche risks

You aren't buying a generic policy; you're getting a solution crafted for your specific, often unique, risk profile. American Financial Group focuses on over 30 specialty property and casualty (P&C) businesses, where deep underwriting expertise is the competitive edge. This focus lets us price risk accurately, even in volatile segments like Excess Liability or Environmental, instead of relying on broad market averages.

For example, in the third quarter of 2025, the Specialty Financial Group, which includes financial institutions and surety, achieved an exceptional combined ratio of just 81.1%. That figure tells you we understand those niche markets defintely well. This is not a volume play; it's an expertise play.

• Aviation: Specialized coverage for aircraft and related operations.
• Environmental: Protecting against pollution and remediation costs.
• Specialty Construction: Tailored policies for unique building projects.
• Financial Institution Services: Coverage for banks, credit unions, and other financial entities.

Financial stability and certainty for policyholders

An insurance policy is a promise, and its value is only as good as the financial strength behind it. Our promise is backed by a fortress balance sheet. For you, the policyholder, this means certainty that a claim-even a large one-will be paid promptly. The core P&C subsidiaries, operating under the Great American Insurance Group brand, hold a Financial Strength Rating (FSR) of A+ (Superior) from A.M. Best, affirmed in late 2024. Standard & Poor's also affirmed its 'A+' financial strength rating on the core P&C subsidiaries as recently as March 2025. That is a top-tier rating.

High-quality, responsive claims service

The true test of an insurer is the claims process. With American Financial Group, our claims service is managed by specialists who understand the complexity of your niche policy, not just a general adjuster. This specialized knowledge speeds up resolution and reduces friction. While we don't publish average claim cycle times, the financial results speak to the quality of our claims and reserving process.

Here's the quick math: in the third quarter of 2025, our Specialty P&C operations benefited from 1.2 points of favorable prior year reserve development. This favorable development means we consistently set aside the right amount of money for claims initially, which is a sign of excellent claims handling and reserving discipline. You want an insurer whose initial loss estimate is accurate, not one that has to constantly adjust reserves upward.

Deep industry knowledge across multiple specialty markets

Our value comes from having over 30 distinct specialty businesses, each run by entrepreneurial teams who are experts in their specific market. This decentralized model ensures that the person underwriting your policy understands your business better than a generalist ever could. This is why our underwriting performance remains strong even when the broader P&C market faces headwinds.

The combined ratio for the overall Specialty P&C segment was 93.0% in Q3 2025. A combined ratio below 100% means the underwriting operation is profitable before considering investment income. This consistent profitability is a direct result of our deep, specialized knowledge across a wide range of niche markets.

Consistent, strong returns for shareholders

For investors, the value proposition centers on disciplined capital management and superior returns. Our strategy is to generate strong core operating earnings and return excess capital through special dividends. The 2025 core net operating Earnings Per Share (EPS) is projected to be approximately $10.50. This performance drives shareholder value.

The company declared a special cash dividend of $2.00 per share in November 2025, reflecting the continued strong financial results. This focus on returning capital is a key differentiator.

Key 2025 Financial Metric	Value/Projection	Value Proposition Link
Projected Core Net Operating EPS (2025)	Approximately $10.50	Consistent, Strong Returns for Shareholders
Special Dividend Declared (Nov 2025)	$2.00 per share	Consistent, Strong Returns for Shareholders
Core P&C Subsidiary A.M. Best FSR	A+ (Superior)	Financial Stability and Certainty for Policyholders
Specialty P&C Combined Ratio (Q3 2025)	93.0%	Tailored Solutions & Deep Industry Knowledge
Specialty Financial Group Combined Ratio (Q3 2025)	81.1%	Deep Industry Knowledge Across Specialty Markets

American Financial Group, Inc. (AFG) - Canvas Business Model: Customer Relationships

American Financial Group, Inc. (AFG) maintains a dual-pronged customer relationship strategy: high-touch, expert-driven service for its complex commercial specialty clients and distribution partners, complemented by efficient digital self-service tools for routine administration.

This hybrid model is essential to support the Specialty Property & Casualty (P&C) operations, which generated an underwriting profit of $139 million in the third quarter of 2025, demonstrating the value of specialized, long-term relationships in niche markets.

Direct relationships with large commercial clients

AFG's focus on specialized commercial P&C products means relationships with large clients are direct and consultative, moving beyond transactional sales. This is not a mass-market, low-touch model; it's built on deep industry knowledge and customized risk solutions.

The business model empowers local decision-making across the over 35 diversified businesses within the Specialty P&C Group, which facilitates an agile and personalized relationship with businesses facing unique financial risk exposures.

Long-term, high-touch support for brokers and agents

The primary distribution channel for AFG's specialty products is independent agents and brokers, so the relationship model is designed to make them highly effective. This support is long-term and focuses on deep product expertise.

For instance, the Crop Division provides agents with a comprehensive training program offering over 400 classes in multiple locations to ensure they stay current in the ever-changing crop insurance industry. This investment in agent capability is a core relationship strategy.

Key digital tools support this agent-centric model:

• Agent Portal: Provides 24/7 access for agents to retrieve, save, and email policy documents, print client loss runs, and view billing information.
• GreatAg® and GreatAg® Mobile: Secure portals for crop insurance agents to access policy terms, claims, CIMS (Crop Insurance Management System), and generate quotes on-the-go.

Personalized service for complex claims

For specialty commercial insurance, the moment of truth is the claim, especially for complex losses like excess casualty or professional liability. AFG maintains a highly specialized claims team to handle these intricate issues.

Great American Custom Claims Services staff emphasizes personal, specialized service, with experienced claims staff averaging over 27 years in the industry. They are licensed, specialized claims professionals who can handle claims in all 50 states and globally. That's defintely a high bar for expertise.

This specialized service is critical for managing the higher loss exposures in the Specialty Casualty Group, which reported an underwriting profit of $49 million in Q2 2025.

Dedicated account managers for key accounts

The specialization across AFG's divisions-Property and Transportation, Specialty Casualty, and Specialty Financial-necessitates dedicated underwriting and account management teams who understand specific niche risks.

The divisional structure, like Great American Custom, is explicitly focused on long-term client relationships and provides a single point of contact for customized business solutions, particularly for complex coverages like excess casualty and umbrella.

Digital self-service tools for basic policy administration

While the core relationship is high-touch, AFG uses digital tools to automate routine tasks, freeing up specialty underwriters and agents to focus on complex risk management.

The company has invested over $50 million in digital transformation initiatives to enhance customer experiences and improve operational efficiency. This investment supports 24/7 online claim reporting platforms across various divisions, making the initial claim submission easy for both agents and policyholders.

A tangible example of this digital service is the policyholder payment system. Effective December 1, 2025, policyholders using the Pay My Bill service via credit card will incur a 2.99% processing fee, a clear operational detail of the digital service cost structure.

Relationship Type	Primary Mechanism	2025 Operational/Financial Impact
Direct Commercial Client	Consultative, Specialized Underwriting	Supports Specialty P&C Underwriting Profit of $139 million (Q3 2025)
Broker/Agent Support	Agent Portal, GreatAg® Mobile, Training Programs	Over 400 training classes offered to agents (Crop Division)
Complex Claims	Specialized Claims Professionals	Claims staff averages over 27 years of industry experience
Basic Administration	Online Claim Reporting, Pay My Bill Portal	Credit card payment processing fee of 2.99% effective December 1, 2025

American Financial Group, Inc. (AFG) - Canvas Business Model: Channels

American Financial Group's (AFG) channels are a deliberately specialized, multi-pronged distribution network built to handle the complexity of niche commercial property and casualty (P&C) risks. The core strategy is to maintain a vast, high-touch independent agent network while simultaneously leveraging wholesale and digital channels to drive efficiency and access hard-to-place business.

This hybrid approach is critical for AFG to achieve its projected 5% growth in net written premiums (NWP) for the 2025 fiscal year, aiming for approximately $7.455 billion in total NWP, up from the $7.1 billion reported in 2024. The channel mix is the engine for that profitable growth.

Network of over 2,500 independent agents and brokers

The backbone of the Great American Insurance Group's distribution is its extensive network of independent agents and brokers. This channel is primarily responsible for placing the majority of AFG's standard and specialized commercial P&C business, relying on the agent's local knowledge and client relationship to select profitable risks.

This network, which consists of well over 2,500 appointed agencies, provides the necessary local presence to service the company's 35+ niche businesses. The independent agent model is a significant capital-light advantage, allowing AFG to maintain a broad geographic footprint without the overhead of a fully captive sales force. To be fair, managing a network this large requires constant training and technology support to keep underwriting quality high.

Wholesale brokers for hard-to-place risks

AFG utilizes wholesale brokers and excess and surplus (E&S) lines specialists to access risks that fall outside the appetite or capacity of its standard independent retail agents. This is a crucial channel for maintaining underwriting discipline in volatile or unique markets.

The Specialty Casualty Group, for instance, often relies on this channel for higher-hazard or complex liability placements. This channel allows the company to participate in high-margin, specialized business while maintaining a strong overall combined ratio, which stood at 93.0% for Specialty P&C operations in the third quarter of 2025. This focus on underwriting profit is defintely a core competency.

Direct sales force for specific large accounts

While AFG is primarily an agency carrier, a focused, internal direct sales force is maintained for specific large accounts, particularly within certain specialty divisions. This direct channel is often reserved for high-premium, highly technical lines or for businesses where a direct relationship is mandated by the client's structure, such as certain captive insurance programs or large financial institutions.

The Specialty Financial Group, which saw a 16% increase in gross written premiums in Q1 2025, benefits from this direct access model, especially for its financial institutions business, where direct engagement with corporate risk managers is essential.

Digital platforms for agent-facing policy management

AFG's digital channel is focused entirely on empowering its agents and brokers, not bypassing them. The primary tool is the Great American Agent Portal, a single sign-on platform that streamlines the entire policy lifecycle for the independent agent.

The platform provides self-service capabilities for the agent, including:

• Quoting, binding, and issuing policies for select lines.
• Accessing policy documents and loss runs.
• Checking real-time billing and claims status.

Additionally, the company offers a Developer Portal that provides Application Programming Interfaces (APIs) to allow large agency partners to integrate Great American Insurance Group's systems directly into their own agency management systems, increasing efficiency and reducing errors.

Strategic partnerships with MGAs

Strategic partnerships with Managing General Agents (MGAs) and Managing General Underwriters (MGUs) are a critical part of AFG's Alternative Distribution strategy, allowing for rapid entry into new niche markets. These partnerships leverage the MGA's specialized underwriting expertise and distribution reach without AFG having to build the infrastructure from scratch.

A prime example is the acquisition of Crop Risk Services in 2023, a major crop insurance general agent. This move cemented Great American Insurance Group's position as the fifth largest provider of multi-peril crop insurance in the U.S., a business line that significantly impacts the Property and Transportation Group's premium volume and growth figures.

Here's a quick map of the channel structure and its financial impact:

Channel Type	Primary Function	Target Customer Segment	2025 Financial Context (Q3)
Independent Agents (Retail)	Standard and Niche P&C Placement	Small to Mid-Sized Businesses (SMBs)	Drives the majority of the projected $7.455 billion NWP.
Wholesale Brokers / E&S	Accessing Hard-to-Place/Complex Risks	High-Hazard, Unique, or Large Commercial Accounts	Supports the Specialty Casualty Group's profitability, contributing to a 93.0% combined ratio.
Strategic Partnerships (MGAs/MGUs)	Niche Market Entry and Expertise Leverage	Specialized Industries (e.g., Crop, Transportation)	The Crop business, run through a general agent model, is a major contributor to the Property and Transportation Group.
Direct Sales Force	Large, Technical Account Servicing	Financial Institutions, Large Corporate Risks	Critical for the Specialty Financial Group, which saw 16% GWP growth in Q1 2025.

For your next step, you should analyze how the $167 million special dividend declared in November 2025, funded by this profitable channel mix, impacts AFG's capital flexibility for future MGA acquisitions.

American Financial Group, Inc. (AFG) - Canvas Business Model: Customer Segments

You're looking to understand exactly who American Financial Group, Inc. (AFG) serves, and the answer is clear: AFG targets businesses with complex, non-standard risks that the general insurance market often avoids. This focus on specialty property and casualty (P&C) insurance allows them to command better pricing and achieve superior underwriting margins, which is why their annualized core operating return on equity hit an impressive 19.0% in Q3 2025.

The entire business model hinges on deep expertise within niche markets, meaning their customer segments are highly defined and require specialized coverage-it's less about volume and more about the quality of the risk they take on. This targeted approach is evident in the performance of their three core segments, which collectively generated an underwriting profit of $139 million in the third quarter of 2025.

Here's a quick look at the core segments and their Q3 2025 underwriting profitability, showing where AFG is making its money right now:

Specialty P&C Group	Q3 2025 Underwriting Profit (in millions)	Key Customer Focus
Property and Transportation	$55 million	Commercial Transportation, Marine, Agriculture, Commercial Property
Specialty Casualty	$33 million	Mid-to-Large Commercial, Executive/Professional Liability, Workers' Compensation
Specialty Financial	$51 million	Lending/Leasing Institutions, Surety, Trade Credit

To be fair, the Specialty Casualty Group saw its underwriting profit drop by over 47% from the prior year's quarter, down to $33 million, due to continued pressure from social inflation in excess liability lines, so they are defintely focused on re-pricing that risk.

Mid-to-large-sized commercial businesses with unique risk profiles

This is AFG's bread and butter-companies that need coverage beyond what the standard (admitted) market offers, often found in the excess and surplus (E&S) lines. They are looking for tailored policies for specific, often hard-to-place risks. The Specialty Casualty Group, which includes E&S lines, targets these accounts, providing general liability, professional liability, and umbrella/excess liability.

Their focus is on customized programs for small- to mid-sized businesses, but the real margin is in the larger, more complex accounts that require significant limits. This segment's underwriting profit of $33 million in Q3 2025, despite being lower than prior periods, still reflects the value of their specialized underwriting expertise in these complex commercial lines.

Transportation, marine, and energy companies

These customers are primarily served by the Property and Transportation Group. They require specific coverage for assets constantly in motion or in high-risk environments. This group delivered a strong underwriting profit of $55 million in Q3 2025, a significant 66.7% increase year-over-year, partly due to lower catastrophe losses.

The target customers here include:

• Commercial trucking and bus operators needing physical damage and liability coverage.
• Companies operating in inland and ocean marine, covering cargo and hulls.
• Energy and other commercial property coverages that fall into specialty niches.

This segment's net written premiums saw a slight decrease in Q3 2025, indicating AFG's strategic non-renewal of underperforming accounts to maintain profitability, which is a classic specialty insurer move.

Financial institutions requiring specialized liability coverage

The Specialty Financial Group is the primary home for these customers, and it was AFG's strongest performer in Q3 2025, with an underwriting profit of $51 million. This was a massive 142.9% increase from the prior year, driven by strong performance in financial institutions and surety businesses.

The customers are lending and leasing institutions that need protection for their financial products and collateral. This includes:

• Lending and leasing institutions needing risk management insurance programs.
• Banks and other institutions requiring collateral and lender-placed mortgage property insurance.
• Businesses that rely on surety and fidelity products for contractual or legal obligations.

The Specialty Casualty Group also serves financial institutions indirectly through executive liability (Directors & Officers insurance) and professional liability (Errors & Omissions insurance) coverages.

Individuals with high-value assets (through certain subsidiaries)

While AFG's main focus is commercial, they do touch the high-net-worth (HNW) individual market through specialty lines that cover unique, high-value personal risks. This is often done via their excess and surplus lines within the Specialty Casualty Group, which is a growing market for HNW insurance globally, expected to reach $115.41 billion in 2025.

These customers are looking for:

• Umbrella liability insurance with very high limits, protecting against major lawsuits.
• High-value homeowners insurance for luxury properties and unique collections.
• Specialty coverages like yacht and aviation insurance, which align with AFG's transportation niches.

AFG's ability to underwrite complex, non-standard risks makes them a natural fit for the unique needs of wealthy clients who often find standard coverage insufficient.

Agricultural and construction sectors

AFG segments these customers across two different groups. The agricultural customers, primarily farmers and agribusinesses, are a key part of the Property and Transportation Group, relying on AFG for crop insurance and other agricultural-related products.

The construction sector is a major consumer of two other AFG products:

• Surety Bonds: Handled by the Specialty Financial Group, these guarantee performance on construction contracts.
• Workers' Compensation: A core offering of the Specialty Casualty Group, providing mandatory coverage for construction employees.

The workers' compensation business within Specialty Casualty continues to be a strong performer, even as other lines in that group face challenges, helping to stabilize the overall segment's profitability.

American Financial Group, Inc. (AFG) - Canvas Business Model: Cost Structure

You need to see where every dollar goes to truly understand American Financial Group, Inc.'s (AFG) profitability, and in the insurance business, the cost structure is all about managing risk and distribution. AFG's model is not about being the low-cost provider; it's about being a high-value, specialty underwriter, so its costs are naturally concentrated in claims, commissions, and the talent needed to price complex risks correctly. The expense ratio for their Specialty P&C operations stood at 32% in the second quarter of 2025, a slight increase from the prior year, which tells you the cost of doing business is rising.

Here's the quick math on AFG's primary cost drivers for the first half of the 2025 fiscal year, which frames your near-term risk assessment:

Cost Category	Amount (Six Months Ended June 30, 2025)	Notes
Losses & Loss Adjustment Expenses	$1,972 million	The largest variable cost, driven by claim severity and catastrophe events.
Commissions & Other Underwriting Expenses	$1,064 million	Includes agent/broker commissions and policy acquisition costs.
Expenses of Managed Investment Entities	$128 million	Direct costs associated with managing the investment portfolio.
Other Expenses (Regulatory, IT, General)	$153 million	Includes compliance, technology, and administrative overhead.

Significant underwriting expenses (agent commissions, policy acquisition)

The cost of acquiring and servicing a policy-the underwriting expense-is a major fixed-variable cost. For the first six months of 2025, AFG reported $1,064 million in Commissions and other underwriting expenses. This number is defintely tied to their net earned premiums of approximately $3.23 billion for the same period. The expense ratio is projected to increase slightly for the full year 2025, a key trend to watch, due to two factors: higher broker commissions and lower ceding commissions from reinsurers. This means AFG is paying more to distribution channels and retaining more risk/premium, which shifts the cost balance.

Claims and loss adjustment expenses

This is the single largest and most volatile cost component. For the first half of 2025, Losses and loss adjustment expenses totaled $1,972 million. This expense is the core of the insurance business, covering the actual payouts on claims and the administrative costs of processing them (Loss Adjustment Expenses). The major near-term risk here is catastrophe exposure.

• Full-year 2025 guidance includes an estimated $60 million to $70 million in losses specifically from California wildfires.
• The combined ratio-a measure of underwriting profitability-was 93.1% in Q2 2025, up 2.6 points year-over-year, largely due to higher catastrophe losses.
• Social inflation, or the rising cost of claims due to factors like larger jury awards, is also driving up loss severity, particularly in older accident years, forcing AFG to increase reserves.

Compensation for highly specialized underwriters and analysts

While a specific line item for 'specialized compensation' isn't broken out, AFG's business model depends on niche expertise, which means high labor costs are embedded in their overall expense base. They aren't selling simple, commoditized policies; they are pricing complex, specialty risks in areas like executive liability and financial institutions. The need for top-tier underwriters and actuaries who can accurately price these risks is non-negotiable, and their compensation is a significant driver of the expense ratio.

• AFG's underwriting success is a direct function of this highly-paid talent.
• The compensation is a fixed-to-variable cost, with base salaries being fixed and performance bonuses (tied to underwriting profit) being variable.

Investment management fees for the $20 billion portfolio

AFG is a major investor as well as an insurer. While the prompt mentions a $20 billion portfolio, the actual reported size of the investment portfolio was approximately $15.9 billion as of late 2024. Managing a portfolio of this size, which includes a significant portion in alternative investments, is expensive. The direct cost is captured in the Expenses of managed investment entities, which totaled $128 million for the first six months of 2025. This cost is the fee paid to external and internal managers to generate the net investment income, which is a crucial component of AFG's overall profit.

Regulatory compliance and IT infrastructure costs

These are the necessary, largely fixed overhead costs for operating a modern, regulated financial firm. They fall primarily under the 'Other expenses' line item, which amounted to approximately $153 million for the first half of 2025. Given the increasing complexity of data privacy laws and cybersecurity threats, plus the ongoing regulatory scrutiny in the insurance sector, you should expect this cost to trend upward. This is an area where AFG must spend to stay compliant and competitive.

• IT infrastructure upgrades are essential to support the sophisticated modeling used by specialty underwriters.
• Compliance costs are non-discretionary.

American Financial Group, Inc. (AFG) - Canvas Business Model: Revenue Streams

The revenue streams for American Financial Group, Inc. (AFG) are fundamentally two-fold: the core underwriting profits from its specialty insurance business and the substantial income generated by its diversified investment portfolio. For 2025, the company's revenue is heavily weighted toward premium growth and a solid, high-quality fixed-income portfolio.

You need to look at both the insurance side and the investment side; they are equally critical to AFG's financial strength. The total revenue for the twelve months ending June 30, 2025, was approximately $8.298 billion, showing a 3.04% increase year-over-year.

Net written premiums from specialty P&C segments, estimated at $8.5 billion in 2025

The primary revenue engine for American Financial Group is the collection of net written premiums (NWP) from its Specialty Property & Casualty (P&C) segments, which operate through the Great American Insurance Group. The company's 2025 business plan projected a 5% growth in NWP from the 2024 reported total of $7.1 billion.

Here's the quick math: that 5% growth target puts the 2025 projected NWP at approximately $7.455 billion. This premium growth is driven by increased exposures, new business opportunities, and a favorable rate environment, especially in the transportation businesses.

The first half of 2025 already showed strong premium generation, with the P&C segment reporting a total of $3.414 billion in net written premiums through June 30, 2025. The Specialty P&C segments are broken down into three main groups, each contributing to the total premium stream:

• Property and Transportation Group: Focuses on niche property, marine, and transportation lines.
• Specialty Casualty Group: Includes workers' compensation and excess liability.
• Specialty Financial Group: Covers executive liability and financial institutions business.

Net investment income from fixed-income and equity holdings

The second major revenue stream comes from the 'float'-the premiums collected but not yet paid out as claims-which American Financial Group invests conservatively. The net investment income (NII) for the first six months of 2025 totaled approximately $349 million. For the second quarter of 2025 alone, NII was $179 million.

The portfolio is managed to prioritize capital preservation and liquidity, which is why 65% of the $16.049 billion investment portfolio as of June 30, 2025, is allocated to investment-grade fixed maturities. Higher interest rates have been a tailwind; net investment income, excluding the volatile alternative investments, increased 10% year-over-year in the second quarter of 2025.

The company's 2025 business plan assumes a reinvestment rate of approximately 5.75%, a key factor in projecting future NII.

Realized investment gains from the portfolio

Realized investment gains are a non-core, but still significant, component of total earnings, stemming from the sale of invested assets. These gains can be volatile, but they provide a capital boost. For the first half of 2025, American Financial Group recorded a total of $4 million in after-tax net realized gains, with $2 million in Q1 2025 and another $2 million in Q2 2025.

Here is a snapshot of the realized gains for the first two quarters of 2025:

Period	After-Tax Net Realized Gains (Losses)
Q1 2025	$2 million
Q2 2025	$2 million
Year-to-Date (H1 2025)	$4 million

The alternative investments portfolio, which includes real estate funds and private equity, is a key driver of potential gains, with a long-term expectation of annual returns averaging 10% or better, although the annualized return was a muted 1.2% for the 2025 second quarter.

Fee income from certain services or joint ventures

While the vast majority of revenue is from premiums and investments, American Financial Group also generates fee income. This stream is minor compared to the core insurance and investment operations, but it still contributes to overall revenue. These fees are typically derived from services like policy administration or other value-added services. We don't have a specific 2025 dollar amount, but it's a standard, ancillary income source for an insurer of this scale.

Foreign exchange gains (minor)

Foreign exchange gains are a minor, non-core component of revenue, primarily resulting from the revaluation of foreign-denominated assets and liabilities. Given the company's primary focus on the US specialty P&C market, this revenue stream is typically small and subject to currency fluctuations, so it defintely doesn't move the needle like premiums do.