Prepared remarks
Good morning, and welcome to American Financial Group's Second Quarter 2025 Earnings Results Conference Call. We released our results yesterday afternoon. Our press release, investor supplement and webcast presentation are posted on AFG's website under the Investor Relations section. These materials will be referenced during portions of today's call. I'm joined this morning by Carl Lindner III and Craig Lindner, Co-CEOs of American Financial Group; and Brian Hertzman, AFG's CFO. Before I turn the discussion over to Carl, I would like to draw your attention to the notes on Slide 2 of our webcast. Some of the matters to be discussed today are forward-looking. These forward-looking statements involve certain risks and uncertainties that could cause our actual results and/or financial condition to differ materially from these statements. A detailed description of these risks and uncertainties can be found in AFG's filings with the Securities and Exchange Commission, which are also available on our website.
We may include references to core net operating earnings, a non-GAAP financial measure, in our remarks or in responses to questions. A reconciliation of net earnings to core net operating earnings is included in our earnings release. And finally, if you're reading a transcript of this call, please note that it may not be authorized or reviewed for accuracy. And as a result, it may contain factual or transcription errors that could materially alter the intent or meaning of our statements. Now I'm pleased to turn the call over to Carl Lindner III to discuss our results.
Good morning. I'll begin by sharing a few highlights of AFG's 2025 second quarter results, after which Craig and I will walk through more details. We'll then open it up for Q&A, where Craig and Brian and I'll be happy to respond to your questions. We're pleased to report an annualized core operating return on equity of 15.5% despite quarterly returns from alternative investments that tempered overall results. Underwriting margins in our Specialty Property & Casualty insurance businesses were strong, and higher interest rates increased net investment income, excluding alternatives, by 10% year-over-year. In addition, we returned over $100 million to our shareholders during the second quarter of 2025 through a combination of regular dividends and share repurchases. Our compelling mix of specialty insurance businesses, entrepreneurial culture, disciplined operating philosophy and an astute team of in-house investment professionals continue to serve us well in environments such as these and position us for long-term success. Craig and I thank God, our talented management team and our great employees for helping us to achieve these results. I'll now turn the discussion over to Craig to walk us through some of these details.
Thanks, Carl. Please turn to Slides 3 and 4 for second quarter highlights. AFG reported core net operating earnings of $2.14 per share compared to $2.56 per share in the prior year-end period. Our 2025 results reflect a year-over-year decrease in underwriting profit and lower returns on alternative investments. I'll begin with an overview of AFG's investment performance and share a few comments about AFG's financial position, capital and liquidity. The detail of surrounding our $16 billion portfolio were presented on Slides 5 and 6. Excluding the impact of alternative investments, net investment income at our property and casualty insurance operations for the 3 months ended June 30, 2025, increased 10% year-over-year as a result of higher interest rates and higher balances of invested assets. As you'll see on Slide 6, approximately 2/3 of our portfolio is invested in fixed maturities. In the current interest rate environment, we're able to invest in fixed maturity securities at yields of approximately 5.75%, which compare favorably to the 5.2% yield earned on fixed maturities at our P&C portfolio during the second quarter of 2025.
The annualized return on alternative investments in our P&C portfolio was approximately 1.2% for the 2025 second quarter compared to 5.1% for the prior year quarter. As a result, overall P&C net investment income was approximately 5% lower than the comparable 2024 period. The impact on rental rates and occupancy from a surge in new apartment supply in certain otherwise strong markets reduced the fair value of some multifamily investments. This tempered the performance of our alternative investment portfolio in the second quarter of 2025 by nearly $30 million. Although substantial supply persists, new construction starts have plummeted. We expect current inventory to be absorbed over the next 12 months. Notably, multifamily starts were down approximately 20% year-over-year and down nearly 50% from their 2022 peaks. The combination of tightening supply and a significantly reduced development pipeline is forecast to drive higher rental and occupancy rates over the next several years and should result in stronger returns on our multifamily investments.
Longer term, we continue to remain optimistic regarding the prospects of attractive returns from our overall alternative investment portfolio with an expectation of annual returns averaging 10% or better. Please turn to Slide 7, where you'll find a summary of AFG's financial position at June 30, 2025. During the quarter, we returned over $100 million to our shareholders, including $39 million in share repurchases and our $0.80 per share regular quarterly dividend. We expect our operations to continue to generate significant excess capital throughout the remainder of 2025, which provides ample opportunity for acquisitions, special dividends or share repurchases. We evaluate the best alternatives for capital deployment on a regular basis. We continue to view total value creation as measured by growth in book value plus dividends as an important measure of performance over the long term. For the 6 months ended June 30, 2025, AFG's growth in book value per share, excluding AOCI plus dividends, was 6%.
Our strong operating results, coupled with effective capital management at our entrepreneurial opportunistic culture and disciplined operating philosophy enable us to continue to create value for our shareholders. I'll now turn the call over to Carl to discuss the results of our P&C operations.
Thank you, Craig. Please turn to Slides 8 and 9 of the webcast, which include an overview of our second quarter results. Overall, underwriting profitability was strong in our Specialty P&C businesses in the second quarter of 2025 and we remain confident about the strength of our reserves. A continued favorable pricing environment, increased exposures and new business opportunities enabled us to grow our Specialty Property & Casualty businesses, and we continue to expect premium growth for the full year in 2025. Looking at a few details, you'll see on Slide 8 that our Specialty Property & Casualty Insurance businesses generated a 93.1% combined ratio in the second quarter of 2025, 2.6 points higher than the 90.5% reported in the second quarter of last year. Results for the 2025 second quarter include 2.3 points related to catastrophe losses consistent with results in the 2024 second quarter.
Second quarter 2025 results benefited from 0.7 point of favorable prior year reserve development compared to 2.3 points in the second quarter of 2024. Second quarter 2025 gross and net written premiums were up 10% and 7%, respectively, when compared to the second quarter of 2024. Earlier reporting of crop acreage by insureds impacted the timing of the recording of crop premiums and contributed to the year-over-year increase, particularly when compared to later reporting of acreage the previous year. So if you exclude the crop business, our gross and net written premiums grew 6% and 5%, respectively. Average renewal pricing across our Property & Casualty Group, excluding our workers' comp businesses, was up approximately 7% in the second quarter, consistent with pricing increases achieved in the first quarter, including workers' compensation, renewal rates were up approximately 6% overall, about 1 point higher than in the previous quarter.
We reported overall renewal rate increases for 36 consecutive quarters, and we believe we're achieving overall renewal rate increases in excess of prospective loss ratio trends to meet or exceed our targeted returns. Now I'd like to turn to Slide 9 to review a few highlights from each of our Specialty Property & Casualty business groups. Details are included in our earnings release, so I'll focus on summary results here. The businesses in the Property & Transportation Group achieved a 95.2% calendar year combined ratio overall in the second quarter of 2025, 2.5 points higher than the 92.7% reported in the comparable 2024 period. The second quarter 2025 combined ratio benefited from 2.2 points of favorable prior year reserve development compared to 6.3 points in the 2024 second quarter, particularly reflecting especially strong results for our crop business in the prior year period. Second quarter 2025 gross and net written premiums in this group were up 15% and 10% higher, respectively, than the comparable prior year.
As mentioned before, earlier reporting of crop acreage compared to 2024, which impacts the timing of crop premiums contributed to higher second quarter premiums in this group. Again, when you exclude the crop business, gross and net written premiums in this group grew by 6% and 5%, respectively. Increased exposures, new business opportunities and a favorable rate environment contributed to our growth in our transportation businesses. Overall renewal rates in this group increased approximately 8% in the second quarter of 2025, a point higher than the pricing achieved in this group for the first quarter 2025. We continue to remain focused on rate adequacy, particularly in our commercial auto liability line of business where rates were up approximately 15% in the second quarter. In terms of our crop business, commodity futures pricing remains in acceptable ranges relative to spring discovery prices.
And based on the most recent crop progress reports, overall corn and soybean conditions are slightly better than last year at this time. We believe that there's been adequate moisture to date in those areas so that the excessive heat in recent weeks shouldn't be problematic. However, moisture levels through August and early September remain important. Now the businesses in our Specialty Casualty Group achieved a solid 93.9% calendar year combined ratio overall in the second quarter, 4.8 points higher than the very strong 89.1% reported in the comparable period in 2024. Second quarter 2025 gross and net written premiums increased 4% and 2%, respectively when compared to the same prior year period. Higher year-over-year premiums in our mergers and acquisitions business and growth across a variety of other businesses in the group, resulting from new business opportunities, higher rates and strong policy retention were partially offset by lower premiums due to a challenging market in our Directors and Officers Liability business.
In addition, we continued to nonrenew certain housing and daycare accounts in our social services businesses. Excluding our workers' comp businesses, renewal rates for this group were up 8% in the second quarter. Pricing in this group, including workers' comp was up about 6%. I'm pleased that we achieved renewal rate increases in the mid-teens in our most social inflation exposed businesses, including our social services and excess liability businesses. The Specialty Financial group continued to achieve excellent underwriting margins and reported a combined ratio of 86.1% for the second quarter of 2025, 3.6 points better than the 89.7% reported in the comparable period in 2024. These results reflect higher year-over-year underwriting profitability in our financial institutions and surety businesses. Second quarter 2025 gross and written net premiums in this group were up 15%, 12%, respectively, when compared to the prior year period, due primarily to growth in our financial institutions business.
Renewal pricing in this group was flat in the second quarter. Craig and I are proud of our history of long-term value creation. We have years of experience navigating economic and insurance cycles. Our insurance professionals continue to exercise their Specialty Property and Casualty knowledge and expertise to successfully compete in a dynamic marketplace. Our in-house investment team has been both strategic and opportunistic in the management of our $16 billion investment portfolio. One of our greatest strengths is finding opportunities in times of uncertainty. We feel we're well positioned to continue to build long-term value for our shareholders for the remainder of 2025 and beyond. I will now open the lines for the Q&A portion of today's call. Craig and Brian and I would be happy to respond to your questions.
Questions and answers
Our first question comes from Michael Zaremski at BMO Capital Markets.
My first question is about the lender-placed business within Specialty Financial. I believe it may be contributing to the ongoing strong growth this quarter. Could you help us understand how this market grows? Does it correlate with mortgage delinquencies or the dynamics of a hard versus soft market? Additionally, could you provide more insight into how you might have gained market share in this area?
Thank you. The lender-placed property business has relatively few competitors. Currently, this business generates around $700 million in gross written premium, making it significant for us. I believe this sector presents more opportunities during an economic downturn when individuals may default on payments and their insurance goes unpaid. This situation tends to drive growth in the business. It primarily relies on relationships with large financial institutions. Disruptions in the market over the past couple of years have allowed us to capitalize on the struggles of some competitors, contributing to our growth in this area. Additionally, until this year, we, like others in the property sector, implemented considerable price increases. A further advantage for us has been the shift in our business model from insuring unpaid mortgage balances to focusing on replacement cost values, which many in the industry are adopting. As more clients transition to this approach, it positively impacts how we value our business. I aimed to provide an overview of the business.
Carl, would the lender-placed also be excellent margins in the segment? Is that also what's driving the pricing power kind of to decel?
Yes. I think this business is very profitable for us, again, made up of large accounts. I think pricing is in this business through 6 months is prices are up about 1%. The loss ratio trends are very low single digit in this business. And I think, again, the last thing I mentioned as far as a move from unpaid mortgage balance as a basis for premiums to move to replacement cost values. I think that helps offset the difference between the price increase and the loss ratio trend, if that makes sense.
My follow-up question relates to what I see as the more socially inflationary lines of business. You've mentioned some nonrenewals in certain areas. I’m assuming that nonrenewals are a regular occurrence, but you’re highlighting them because they seem to be at a higher level than what AFG typically expects. I understand that loss cost inflation is always fluctuating, but could you provide a general overview? Specifically, how do AFG's remediation actions compare across commercial auto and other sectors like housing and daycare? Also, do you feel confident about pricing in relation to loss trends? That concludes my questions.
That's a complex question considering we operate in 36 different businesses, but I'll attempt to address it. In our nonprofit Specialty Human Services sector, specifically regarding housing and daycare, we have largely completed the nonrenewal process for housing accounts, which was part of an earlier $50 million initiative, with approximately $20 million related to housing. Currently, we do not provide property or liability insurance for any low-income or affordable housing accounts. For daycare, we anticipate finishing the nonrenewal of about $9 million to $10 million of accounts by the end of this year. We began this effort earlier in the year and are confident it will be completed as planned. We still underwrite many YMCAs that provide daycare services, maintaining a number of strong business relationships in that sector. Although we continue to write daycare coverage for specific risks, a substantial part of our unprofitable daycare business will conclude by year-end.
Additionally, we've been reducing umbrella capacity from $15 million to $5 million, and we currently have around $20 million of umbrella coverage exceeding $5 million, which we expect to be reduced to zero by year-end. These efforts are primarily in our nonprofit sector, which has been subject to greater social inflation risks than many of our other businesses. In the public sector, we have increased retentions and are continuing to adjust rates, and we foresee more opportunities as we move past that cycle. In the excess liability sector, some of our units are still implementing mid double-digit price increases. We've made adjustments such as lowering limits and not renewing accounts with higher commercial auto liability exposure. In our Fortune 1000 sector, we believe we have completed the adjustments needed, allowing us to pursue growth opportunities. For commercial auto, although it hasn't been a focus in our Specialty Casualty business, we've experienced healthy growth recently, outperforming the industry by approximately 8 points.
Our goal is to achieve underwriting profit in the commercial auto liability sector, and with a 15% price increase, we are starting to see more possibilities. We're aware of one MGA potentially exiting a segment of the commercial auto business, which we view as an opportunity in the coming months. I hope this addresses your questions adequately.
Our next question comes from Gregory Peters at Raymond James.
I would like to start by discussing the Inland Marine and Ocean Marine businesses, as well as the trade credit sector. I've noticed that some others in the specialty market are identifying growth opportunities in these areas. My question is how you are positioned for growth in that aspect. Additionally, since the trade credit business involves marine cargo along with both export and domestic trade, I’m interested in understanding how the current volatility and tariffs could impact that business until things stabilize.
Yes, Greg, we have a strong Ocean Marine business in both the U.S. and our Singapore office. We are highly focused on Ocean Marine. Our Inland Marine business is also solid, although we are trying to concentrate more on Inland Marine builders' risk coverage rather than just large property placements. Both segments have been beneficial for us, with Ocean Marine offering growth opportunities over the last few years, which we appreciate. On the property and Inland Marine side, the builders' risk market hasn't provided many opportunities recently, potentially due to economic factors, including tariffs. This may have moderated our property Inland Marine business, as our main focus is on builders' risk and traditional Inland Marine products. Historically, both segments have been very profitable for us. It is challenging to predict the exact impact of tariffs, but I've noted previously that both Ocean and Inland Marine could face effects from decreased shipping and cargo transport volumes. Currently, we aren't observing significant changes, but the larger concern is how things will evolve as tariff percentages are finalized for different countries. That summarizes my perspective at this moment.
Would you say the same thing about the trade credit business too as it relates to tariffs?
Actually, our trade credit business is growing. I think there's been a little bit of hardening in that market. It's a very, very small specialty business for us. But yes, I do think, depending on who gets what tariff and what country it could have some impact, probably more on the premium side at some point. But right now, if anything, we're seeing some growth there.
I want to revisit some of the points you made in your opening remarks, particularly regarding mergers and acquisitions. I'm curious if there has been a change in market conditions or if you are seeing a larger pipeline now compared to a year or two ago. It seems like you are consistently active in the market, so when you mentioned it during the call, it made me wonder if there is something developing. I would like your insights on the M&A aspect, as you highlighted it in your comments.
Sure. M&A is a $100 million business for us. It can be somewhat volatile depending on the M&A environment in this country. This year, there seems to be significant activity, while last year was quieter, resulting in a smaller business. However, this year we have observed substantial activity, and we have a skilled group of underwriters in this area. It has been a very profitable business for us. Others have ventured into some of the riskier aspects of this business, which we have generally avoided. We focus primarily on the representations and warranties, tax indemnity, and credit insurance aspects. We have a solid reputation and are recognized as strong specialists in this field.
Our next question comes from Andrew Andersen at Jefferies.
Yes, this is indiscernible on for Andrew. A crop peer suggested that 2025 could be good to very good for crop profitability. In your prepared remarks, there seem to be some positive indicators. I'm just wondering if we should still consider this year as average, or if it's still too early to tell.
I believe it's still early for us to categorize this year definitively as average. However, based on the commodity futures pricing, it remains within acceptable ranges compared to spring discovery prices. From what I gathered recently, corn prices have decreased by about 14%, while soybeans have fallen by a little under 6%. The average deductible for farmers in our portfolio, excluding rainfall products, is projected to be around 20.5% this year. For losses to surpass this deductible, there needs to be either a significant loss or a combination of falling commodity prices and losses. The latest crop progress reports indicate that corn and soybean conditions are slightly better than they were last year. While there has been some concern regarding excessive heat, adequate moisture so far suggests it is not a major issue. It’s crucial for moisture levels to remain good through August and early September. Additionally, the Big Beautiful Bill has led to an increased loss adjustment expense payment for states with over a 120% loss ratio, raising the LAE payment from 1.5% to 6%. While there are always some minor negative adjustments in such programs, the trend appears to lean more positively over time. The Farm Bill has been extended until September of this year.
Okay. And then just pivoting, I think your workers' comp book is slightly skewed to specialty workers' comp. So just curious how the pricing environment is in that end of the market. And if you expect any positive momentum on the workers' comp front? And also I think California is the largest state for workers' comp for you. So just curious if you're seeing any different loss experience there.
California represents approximately 15% of our workers' compensation business, while Florida is likely larger. Workers' compensation accounts for about 13.5% of our total gross written premium. Our overall results for the second quarter and the first six months remain strong, although the combined rate for the first half of the year is slightly higher than last year's. National Interstate, which focuses on transportation-related workers' comp, along with our Southeastern operations and large deductible strategic comp, have all shown good underwriting results this calendar and accident year. However, Republic, our California workers' compensation entity, reported an underwriting loss in the second quarter. We believe our reserve position is solid. Regarding pricing, we have observed a moderating trend in workers' compensation rates. Overall, prices decreased by about 1% in the second quarter and over the first half of the year.
In Florida, where we have our largest operations, the 1% reduction implemented in January marked the smallest decrease in seven years. In California, we achieved about a 5% price increase in the second quarter, leading to a 1% increase year-to-date. Additionally, California has approved an 8.7% increase effective September 1, 2025, which is the first increase in a decade, and is much needed given that the industry's combined ratio is in the 120s. We typically perform better than the industry, and I am encouraged by the current comp pricing environment. While the market remains competitive, it does seem that a firmer market is emerging in California, particularly.
Our next question comes from Meyer Shields at Keefe, Bruyette, & Woods.
Carl, I was hoping if you could dig a little bit deeper into what you're seeing in terms of pricing and rate adequacy and professional lines. I'm asking because you sounded somewhat cautious, and we've heard a couple of other carriers talk about maybe green shoots are bottoming. And I just want to get your perspective on that, please.
Sure. From an overall macro perspective, we have achieved good results in the second quarter and over the past six months for our D&O business and our banking-related D&O product, ABIS, which is significant for us at $400 million. Including other professional liability business, we exceed $0.5 billion. Net written premiums decreased in the second quarter and over six months. The public company business remains competitive, though I’m encouraged that prices only dropped 1.6% in the second quarter. When examining our overall D&O executive liability businesses, rates were flat in the second quarter and year-to-date 2025, which aligns with our expectations for the entire year. I’m pleased to see public company pricing stabilize somewhat, although public D&O comprises only 15% of our D&O premium, making us more opportunistic in that area. Our ABIS product, including financial or related D&O, saw pricing increase about 4% over the first six months of this year. While public D&O remains competitive, there are clear indications of stabilization, particularly with primary policies. I hope that's helpful.
It is very much so. And I just want to confirm because I'm trying to get my head around the impact of the earlier crop reporting. Should we think of some portion of the premium losses and related expenses that showed up last year in the third quarter as moving to the second quarter this year? Is that how that plays out?
Brian here. On the premium side for the full year, we expect crop premiums to be slightly lower than last year due to lower commodity prices during the discovery period. However, what offsets this in the second quarter is the earlier planting and reporting of acreage. We estimate that this shift in premiums is about $100 million gross and $40 million net when comparing quarter-over-quarter. This amount represents premiums that would typically be reported in the third quarter but are instead reported in the second quarter because of the early reporting. So, if you think about the transition between quarters, $40 million in net written premium reflects that shift. Regarding profitability, we typically report close to no profits in the crop business during the second quarter. The profit that may materialize in that quarter is mainly from developments in prior periods since most crops remain in the field. We generally report the majority of profitability in the crop business in the fourth quarter, with some in the third, and it may carry over favorably into the next year. Therefore, if you look at our numbers, you can expect our combined ratio in crop to be closer to $100 million in the second quarter. If it is profitable, this usually helps improve our combined ratio in the fourth quarter. So, while there isn’t a significant impact on profits, there is on written premiums.
Okay. That's helpful. But just take it one step for this. That means that whatever the earned premium component of that $40 million that's producing a higher combined ratio than the rest of Property and Transportation, that's moved from the third quarter to the second quarter. So there's a little bit less of that 100% combined ratio earned premium in the third quarter. That's what I'm trying to get at like...
And that's a little tricky just because we did have some growth in our earlier season products, which were more profitable in the first half of the year, and there were changes in how much we've ceded. The earned premium is still higher for additional reasons in the second quarter. I would say the main factor for profit recognition will be the weather in the upcoming months and whether it leads us to be above average or average. As Carl mentioned, the conditions look promising, but we want to be cautious in making any commitments too early.
Our next question comes from Bob Farnam at Janney Montgomery Scott.
I have a follow-up question regarding workers' compensation. I have received some inquiries about undocumented workers and whether this impacts the types of classes you write. The question is whether you have noticed or anticipate any changes in claim patterns as undocumented workers are replaced by citizens or documented workers. It is believed that undocumented workers are less likely to file workers' compensation claims due to concerns about their immigration status.
This is Brian. When we insure our companies, we cover all of their workers, regardless of their documentation status, and we will pay any claims that arise. If your question is whether a reduction in undocumented workers, replaced by documented workers, will have an impact, we haven't noticed any changes so far. We will continue to fulfill all claims and collect appropriate premiums for the existing payrolls, no matter if the workers are documented or undocumented.
Yes. The question was whether undocumented workers do not file claims due to concerns about their status. Are you anticipating an increase in reported claims as these workers are replaced by documented ones? That was the inquiry.
Yes. At the moment, we're not expecting that, but it's obviously something we'll keep an eye on as we price our business and set reserves going forward.
Okay. And so I also have some questions on the excess liability business. You've had modest adverse development over the last several quarters. Is that related to any particular accident years or particular lines of business or classes of business. I'm just kind of curious if what you saw this quarter? Is it similar to what you saw in for most of last year and in the first quarter of this year?
This is Brian. First, it's important to note that our reserves are developing positively, with $11 million in favorable development for the quarter. In the Casualty Group, we experienced $10 million in adverse development, primarily due to increased severity in certain areas prone to social inflation, especially in the excess and surplus sectors and our nonprofit social services. In these areas, we observed an increase in settlements, so we adjusted our case reserves for known claims and raised our IBNR for similar potential liabilities. Claims in businesses exposed to social inflation can be unpredictable, and when examining the adverse development by accident year, it is distributed across multiple years rather than concentrated in one. Consequently, you might notice that in our current accident year selections, we have prudently increased some amounts for these reasons. We are continually learning from our observations and are adjusting both our loss estimates and pricing in real time to maintain or improve our strong results.
This is Brian. First, it's important to note that our reserves continue to improve overall, and we had $11 million in net favorable development this quarter. However, in the Casualty Group, there was $10 million of adverse development, primarily due to increased severity in some of our businesses exposed to social inflation, particularly in excess and surplus lines and our nonprofit social services. In these areas, we noticed a rise in settlements, prompting us to adjust our case reserves for known claims and increase reserves for similar potential liabilities. Claims in these inflation-exposed businesses can be unpredictable. When examining the adverse development by accident year, it is spread across many years rather than resulting from one significant issue or year. You might also see that we prudently raised some of our current accident year estimates for similar reasons. We are continually learning from our experiences and adjusting our loss estimates and pricing in real time to maintain or enhance our strong results.
Our next question comes from Michael Zaremski at BMO Capital Markets.
My question is on the previous $10.50 '25 guide. Obviously, the Street is lower due partially to the first quarter investment returns. I guess my question is focused on the maybe the year-to-date reserve releases of about 1 point down 65% approximately year-over- year. Still obviously a very good guide, releases, great to see. Would you be able to share whether that reserve release ratio is better or worse in line with what you had contemplated when putting that guide together, the $10.50 guide?
With so many different lines of business and products, it's really hard to say. I think if you remember, we talked about when we gave our business plan assumptions at the beginning of the year, we did talk about an expectation of lower levels of favorable development. Now all the reasons behind that ended up not necessarily being exactly what we thought in the beginning. But we did anticipate and I think, hopefully did share that we thought that some of the favorable development we would have been seeing would diminish a bit, and that we're optimistic about improvements in the accident year ex-cat loss ratio, which we did see improvements other than where we were more prudent on some of the social inflation exposed businesses. So I think overall, it's pretty much in line with what we were expecting but not necessarily business unit by business unit, but within a range, I'd say, yes.
This concludes the question-and-answer session. I would now like to turn it back to Diane for closing remarks.
Thank you all for joining us this morning and for the great discussion and good questions. We look forward to talking with you all next quarter when we share results for the third quarter. I hope you have a great day.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.