AFG Stock Forecast & Price Target

American Financial Group is well positioned by strong specialty underwriting execution, with a 2Q26 specialty combined ratio of 91.5% versus the 93.3% estimate, supported by 3.3 points of favorable reserve development and relatively modest catastrophe losses. Premium growth also accelerated, with reported gains of 6.2% and net investment income up 23.5%, reflecting new business, a favorable renewal environment, and higher exposures across its Specialty P&C groups, while reported EPS of $2.82 beat consensus of $2.37. Shareholder returns remain attractive as the company repurchased $26 million of stock in 2Q and returned nearly $100 million through buybacks and its regular dividend, with excess capital still available for acquisitions, special dividends, or further repurchases.

American Financial Group is facing a weakening pricing backdrop across key specialty lines, with Specialty P&C renewal pricing flat, Specialty Casualty down to +4.0% from +6.0% last quarter, and Specialty Financial slipping to below -1.0% from +1.0%, signaling less favorable rate momentum versus the prior year periods. While Property & Transportation improved to +8.0%, that strength appears concentrated and may not offset broad-based pressure in the more profitable segments, limiting confidence in sustained underwriting improvement. At the same time, underwriting expenses are rising from growth and profit-based commissions in lender-placed and other replaced insurance, which can lift the expense ratio and squeeze margins even if revenue holds up.