AFG Stock Forecast & Price Target

American Financial Group is supported by a strong specialty insurance franchise that is still generating growth despite a soft market, with 2Q26 reported EPS of $2.82 versus consensus of $2.37 and premium growth of 6.2% alongside net investment income growth of 23.5%. Its underwriting quality also improved, as the specialty combined ratio of 91.5% beat expectations and benefited from 3.3 points of favorable reserve development, while favorable pricing, rising exposures, and new business opportunities across all three Specialty P&C groups suggest the growth reset is gaining traction. The outlook is further strengthened by 2Q26 alternative investment returns of 7.1% with a long-term expectation of 10% or better, plus disciplined capital deployment through $26 million of buybacks and a $0.88 regular dividend, indicating ample excess capital and shareholder-friendly flexibility.

American Financial Group is facing weakening pricing momentum across key specialty lines, with Specialty P&C renewal pricing flat at +5.0% versus +7.0% in the prior year period and Specialty Casualty and Specialty Financial both deteriorating further. Although Property & Transportation pricing improved to +8.0%, the broader mix remains pressured by lower renewal rates, suggesting less favorable underwriting economics across the portfolio. Management also flagged a rising expense ratio, as growth and success in lender-placed insurance increased underwriting expenses, implying margin pressure even before any broader softening in profitability.