American Financial Group, Inc. (AFG) Cash Flow Statement

The OCF/NI ratio of 0.37 in Q2 2026 is the lowest in the trailing year, indicating that net income was not fully backed by cash generation in that quarter. However, the cumulative OCF over the past four quarters ($1.57B) comfortably exceeds net income ($1.13B), implying that underwriting cash flows are generally robust. The dip may reflect timing of premium collections or elevated claim payments, but the overall trend suggests a healthy float generation.

The data shows that claims payments are a significant cash outflow, often exceeding OCF in the same quarter. For instance, in Q3 2025, claims were $1.9B against OCF of $216M, a gap that was likely funded by investment sales or existing cash. This pattern suggests that AFG's underwriting cash generation is not sufficient to cover claims in some quarters, relying on portfolio liquidity. The stability of claims payments around $1.5-2.0B per quarter indicates a predictable liability stream, but the variability in OCF highlights the need for careful liquidity management.

The investment portfolio appears to be actively managed to generate liquidity, with sales exceeding purchases in every quarter. In Q2 2026, sales were $1.0B against purchases of $960M, a modest net positive. Over the trailing year, net sales totaled approximately $1.2B, which helped offset periods of weak OCF. This suggests that AFG is willing to liquidate investments to meet cash needs, which may indicate a strategic shift towards shorter-duration assets or a need to fund capital returns. The $1.7B cash pile provides an additional buffer, but the reliance on portfolio sales warrants monitoring.

The capital return program appears well-supported by operating cash flow, with total dividends and buybacks of $1.1B over the trailing year against OCF of $1.57B. However, the Q2 2026 dividend of $73M was lower than the typical quarterly amount, possibly reflecting management's caution after the EPS miss. The special dividend history suggests a willingness to return excess capital, but the recent earnings volatility may lead to a more conservative approach. Investors should monitor whether future capital returns remain covered by cash generation, especially if claims payments increase.

The wide fluctuation in OCF/NI suggests that non-cash items, such as reserve releases or accruals, significantly impact net income. For example, in Q2 2024, OCF was negative while net income was positive, implying that earnings were supported by non-cash gains or that cash outflows for claims were unusually high. Conversely, in Q4 2025, OCF was 2.6 times net income, indicating strong cash collection relative to earnings. This volatility underscores the importance of analyzing cash flows separately from earnings, particularly for an insurer with complex reserve accounting.