Prepared remarks
Good day, and thank you for standing by. Welcome to the American Financial Group 2025 Fourth Quarter Results Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Diane Weidner, Vice President, Investor Relations. Please go ahead.
Thank you. Good morning, and welcome to American Financial Group's Fourth Quarter and Full Year 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. Joining me this morning are 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 are reading a transcript of this call, please note that it may not be authorized or reviewed for accuracy. 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 Craig Lindner to discuss our results.
Good morning. I'll begin by sharing the highlights of AFG's 2025 fourth quarter and full year results, after which Carl will walk through more details about our P&C operations and share AFG's business plan assumptions for 2026. We'll then open it up for Q&A, where Carl, Brian, and I will respond to your questions. The fourth quarter marked a strong finish to a great year for AFG. Our compelling mix of specialty insurance businesses, entrepreneurial culture, disciplined operating philosophy, and highly skilled team of in-house investment professionals collectively have enabled us to outperform many of our peers and continue to position us well for the future. Carl and I thank God, our talented management team and our great employees for helping us to achieve these results. As you'll see on Slide 3, AFG's core net operating earnings were $10.29 per share for the full year 2025, generating a core operating return on equity of 18.2%. This ROE is calculated using an average of the 5 most recent quarter-end balances of shareholders' equity, excluding AOCI. We closed out the year with an exceptionally strong fourth quarter. As you'll see on Slides 4 and 5, core net operating earnings per share were $3.65 per share, producing an annualized fourth quarter core return on equity of 25.2%. Capital management is one of our highest priorities. Returning capital to our shareholders is a key component of our capital management strategy and reflects our strong financial position and our confidence in AFG's financial future. In 2025, we returned over $700 million to shareholders, which included $334 million or $4 per share in special dividends, $274 million in regular common stock dividends, and $99 million in share repurchases. Over the past 5 years, dividend payments and share repurchases have totaled $6.3 billion. Additionally, we increased our quarterly dividend by 10% to an annual rate of $3.52 per share beginning in October of 2025. Now I'd like to turn to an overview of AFG's investment performance and share a few comments about AFG's financial position, capital, and liquidity. The details surrounding our $17.2 billion portfolio are presented on Slides 6 and 7. Looking at results for the 2025 fourth quarter, Property and Casualty net investment income was approximately 12% lower than the comparable 2024 period as lower returns from alternative investments more than offset the impact of higher interest rates and higher balances of invested assets. For the full year ended December 31, 2025, P&C net investment income, excluding alternative investments, increased 5% year-over-year. Approximately 65% 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 5.25%. The duration of our P&C fixed maturity portfolio, including cash and cash equivalents, was 2.9 years at December 31, 2025. The annualized return on alternative investments in our P&C portfolio was 0.9% for the fourth quarter of 2025 compared to 4.9% for the prior year quarter. Although the overall returns on our multifamily investments continue to be impacted by an excess supply of new properties in some of our targeted markets, we are seeing signs of recovery. New starts have fallen nearly 50% since 2022, and completions peaked in 2024 and are rapidly declining. We continue to believe that in the last half of 2026, the tightening supply and significantly reduced pipeline will drive higher rental and occupancy rates. Importantly, a sizable portion of our portfolio of multifamily properties is located in desirable geographies with strong job and wage growth. 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 8, where you'll find a summary of AFG's financial position at December 31, 2025. During the fourth quarter, we returned $240 million to our shareholders through the payment of a $2 per share special dividend in November and a regular $0.88 per share quarterly dividend. In conjunction with our fourth quarter earnings release, we declared a special dividend of $1.50 per share payable on February 25, 2026, to shareholders of record on February 16, 2026. The aggregate amount of the special dividend will be approximately $125 million. With this special dividend, the company has declared $55.5 per share or $4.7 billion in special dividends since the beginning of 2021. AFG ended the year in a strong capital position. Our leverage ratio was less than 28%. We have no debt maturities until 2030, and our insurance company financial strength ratings are at the A+ level for AM Best and Standard & Poor's. We expect our operations to continue to generate significant excess capital in 2026, which provides ample opportunity for acquisitions, additional special dividends, or share repurchases over the rest of the year. 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 year ended December 31, 2025, AFG's growth in book value per share, excluding AOCI, plus dividends was 17.2%. We're extremely proud of the value we've created for shareholders over time. I'll now turn the call over to Carl to discuss the results of our P&C operations and our business plan assumptions for 2026.
Thank you, Craig. Please refer to Slides 9 and 10 of the webcast for an overview of our fourth quarter results. Our underwriting profit for the fourth quarter set a new record for AFG, driven by outstanding profitability in our crop insurance operations. Most of our diversified specialty P&C portfolio continues to meet or surpass targeted returns, and we are confident in the strength of our reserves. We have built a diverse portfolio of Specialty Property and Casualty businesses that enables us to manage the fluctuations in the insurance cycle and adapt to changing economic conditions. The lack of correlation between many of our businesses, both among themselves and with the wider insurance market, has been crucial to AFG's strong and consistent performance over the years. Moving to Slide 9, underwriting profit in our Specialty Property and Casualty insurance businesses increased by 41%, with an impressive 84.1% combined ratio in the fourth quarter of 2025, improving nearly 5 points from the same period last year. The fourth quarter results include 2 points related to catastrophe losses compared to 1.1 points in the fourth quarter of 2024. Our fourth quarter 2025 results benefitted from 1.6 points of favorable prior year reserve development, compared to 1.8 points of adverse prior year reserve development in the fourth quarter of 2024. Gross written premiums for Q4 2025 rose by 2%, while net written premiums fell by 1% compared to the previous year. For the entire year, gross written premiums also increased by 2% and net written premiums remained flat. As noted, we benefitted from diversification across our 36 businesses, achieving premium growth in many areas due to a mix of new business opportunities, a favorable renewal rate environment, and increased exposures, all while maintaining a disciplined approach to underwriting profitability in some challenging markets. Average renewal rates across our Property and Casualty Group, excluding workers' compensation, increased by approximately 5% for the quarter, consistent with the preceding quarter. Including workers' compensation, average renewal rates rose by approximately 4% overall. We have experienced renewal rate increases for 38 consecutive quarters, and we believe these increases exceed the prospective loss ratio trends, allowing us to meet or surpass targeted returns. Now turning to Slide 10, I'll summarize a few highlights from each of our Specialty Property and Casualty business groups. The details can be found in our earnings release. The Property and Transportation Group recorded an impressive 70.6% calendar year combined ratio in the fourth quarter of 2025, nearly a 19-point improvement from the comparable period in 2024. Record yields for corn and soybeans, along with favorable commodity pricing, contributed to a very strong crop year and lower year-over-year catastrophe losses in our property-exposed businesses, driving these exceptional results. Gross written premiums in this group increased by 5% in the fourth quarter of 2025 compared to the same period last year, while net written premiums were about 2% lower. The rise in gross written premiums was largely due to growth in our heavily ceded crop products and, to a lesser extent, growth in a transportation captive with higher premium sessions. Overall renewal rates in this group increased by approximately 6% on average in the fourth quarter of 2025, consistent with previous pricing trends, with full-year pricing up by about 7%. In our Specialty Casualty Group, we achieved a 96.7% calendar year combined ratio in the fourth quarter, which is 5.3 points higher than the 91.4% from the same period in 2024. Such combined ratios typically generate returns on equity in the high teens or better. Gross and net written premiums for Q4 2025 increased by 2% and 3%, respectively, compared to the previous year. Growth was primarily driven by new business opportunities and favorable renewal pricing in targeted markets, as well as developments in our mergers and acquisition business. Growth was somewhat hindered by lower year-over-year premiums in our executive liability and excess and surplus lines business due to heightened competition. Overall renewal pricing increased by about 5% in this group during the fourth quarter, with average renewal pricing, excluding workers' compensation, up by 6%. For the full year, pricing excluding workers' compensation rose by approximately 8%. I am pleased that we achieved renewal rate increases of 10% or more during the quarter in several of our social inflation-exposed businesses, including social services and excess liability, with full-year increases ranging from 13% to 15%. Our workers' compensation businesses also saw a modest pricing increase, similar to last quarter. Regarding the Specialty Financial Group, we reported an excellent combined ratio of 83 for the fourth quarter of 2025, which is 2.3 points higher than the prior year. Gross and net written premiums for Q4 2025 in this group decreased by 4% and 10%, respectively, compared to the same prior year period. While our European operations experienced higher premiums, this was offset by decreased premiums in our financial institutions business, which had seen strong growth over recent years. Net written premiums were affected by our decision to cede more coastal exposed property business in our financial institutions division starting in the second quarter of 2025. Looking ahead to 2026, instead of providing formal earnings guidance, we have outlined several key assumptions that form the basis of our business plan for 2026. These include projected net written premium growth of 3% to 5% from last year's $7.1 billion, a combined ratio of approximately 92.5%, a reinvestment rate of around 5.25%, and an anticipated annual return of approximately 8% on our $2.8 billion alternative investments portfolio. We believe that performance in line with these assumptions would lead to core net operating earnings per share of about $11 in 2026 and yield a core operating return on equity, excluding AOCI, of roughly 18%. As we reflect on our growth outlook, we're optimistic about several of our start-up businesses and the nearing completion of various underwriting actions in our Specialty Casualty divisions. However, we are cognizant of areas with softening rates and ongoing competitive pressures, and we will maintain our disciplined focus on the bottom line as we seek profitable growth opportunities in 2026. Our assumptions anticipate an average crop year, so we believe our strong reserves, a sustained healthy rate environment, prudent growth strategy, and our ability to invest at a rate above our current portfolio yield position us well as we head into 2026. Craig and I are pleased to share these impressive results for the fourth quarter and the full year, and we take pride in our proven history of long-term value creation. Our insurance professionals have effectively utilized their Specialty Property and Casualty expertise to navigate the market, while our in-house investment team has strategically managed our $17.2 billion investment portfolio. We look forward to continuing to enhance long-term value for our shareholders this year and beyond. I will now open the floor for questions, and Craig, Brian, and I will be happy to provide answers.
Questions and answers
Our first question comes from Hristian Getsov at Wells Fargo.
My first question is on the 2026 business plan. I guess, what does that business plan assume in terms of rates relative to the 5% P&C renewal pricing excluding comp we saw in Q4, and is there any assumption of prior period releases in the 92.5% combined ratio target?
When we assess our overall combined ratio, we aren't specifically assigning any amounts for prior year development. Historically, AFG has been conservative and has experienced favorable development in most periods. While we are not immune to adverse development, we are optimistic that our reserving strategy will lead to a greater likelihood of favorable rather than adverse development. Looking ahead to 2024 and 2025, we anticipate continued unexpected favorable development in workers' compensation, though this may be offset by some adverse developments related to social inflation exposed businesses as we approach 2026. While we don't have a crystal ball, we believe that workers' compensation may not continue to develop as favorably as it has previously. However, due to the rate and reserving actions we have implemented, we do not expect adverse development from the casualty lines to repeat. Regarding pricing, we are confident that we can continue to secure necessary price increases. In some areas, like our financial institutions business, rate increases have moderated, but these segments remain very profitable and manageable at current levels.
Got it. For the quarter, we noticed a significant increase in the casualty underlying loss ratio. Was there any change in loss estimates, or was this more about being cautious due to ongoing high loss trends? Did something specific occur in the quarter that led to this change? Also, can we expect this estimate to be a reliable rate going forward? Any additional insights would be helpful.
Sure. When looking at the accident year loss ratio, excluding catastrophe losses for the Casualty Group in the quarter, you'll notice a continued caution around our businesses exposed to social inflation, such as our central services, public entity, and certain excess liability sectors, where there have been some intermittent small pockets of adverse developments in recent periods. As a result, we are being cautious in our current selections. Additionally, in our relatively small portfolio of California workers' compensation insurance, considering the legal environment and issues like cumulative trauma, we are also cautious in our accident year selections in that area. Coupled with the rate increases we have achieved and continue to achieve, we are hopeful that these loss selections will position us for a better chance of favorable development in future periods.
Our next question comes from the line of Gregory Peters from Raymond James.
I guess I just wanted to follow up on the workers' comments, Brian. Was there something unusual in the frequency or medical trend in a particular state this year that led to the results you reported, or was this across the book? And I was interested in your comment about cumulative trauma. I know that's popped up and is on the radar for other workers' comp companies. I wonder if you could provide some color on how you're viewing that risk right now.
For the most part, our loss ratio trends continue to be quite stable, with positive developments in frequency and severity. Overall, our workers' compensation results for both the calendar year and accident year in 2025 remain excellent. However, the combined ratio for the overall comp business in '25 was slightly higher than last year, and I have mentioned this issue regularly. We anticipate a similar trend for '26. The positive aspect is that results are strong, and we expect workers' comp to remain a very profitable line, with California being the exception. The industry in California is likely dealing with a combined ratio exceeding 120. There was an approval for a rate increase of about 8.7% in September, which serves as a guideline. In the fourth quarter, we are experiencing a healthy price increase of approximately 10% in California, showing a strengthening competitive environment there. While our combined ratio isn't over 120, we are not satisfied with it and are actively working on improvements. California is probably the only state that stands out as an exception. Cumulative trauma does impact our California comp subsidiary, but we have been accounting for that in our loss reserve estimates for years, so it is not a surprise to us. Last year, our overall workers' comp business grew around 1%. Regarding pricing trends, we noted a modest increase in the fourth quarter. We expect to see some growth this year, possibly around 3% to 5% in workers' comp, which is encouraging. I hope this answers your questions.
Just to add on that same subject, just to size that California workers' comp business, it is less than $200 million of net written premiums for the year.
Yes. It's less than 15%.
It's not a real big portion of our workers' comp business that in our overall business, but we do react to what we're seeing in the environment overall, both in setting our reserve picks and also, more importantly, informing us what we need to do from rate increases, leading to things like the near 10% in the fourth quarter.
During your comments, you also mentioned start-up businesses. Could you take a moment to share more information about what's driving these start-up businesses and what your expectations are, especially considering the current softening rate environment in the broader P&C market? I’m curious about the areas in the market where you see potential opportunities.
Yes. Every year, we make investments and initiate new businesses. After making some investments and navigating the early start-up phase, we are starting to see success and progress in areas such as specialty construction. In our E&S binding business, we expect to see additional premium. We have four or five different start-ups that should begin to show more progress soon. The Embedded Solutions sector is a new area for us that we are excited about, and we believe it will yield some results this year.
My final question, and I know you've commented on this before, but the crop business. Is there any spillover into the first half of '26 from the results of the 2025 crop year?
Yes, there is always a true-up based on area coverage results for a reinsurance year or specific crops. We had a very strong year, and typically there's a true-up in the first quarter. We are optimistic that there will be a positive true-up for the crop reinsurance year. As you know, we are currently in the February discovery period for commodity prices. So far, regarding spring discovery, if prices remain where they are, it appears that corn futures are down by about 3% and soybeans are up by 2%. This stability could be beneficial for the premium base. If this scenario holds, we might even see some growth in the crop business, assuming spring discovery prices stay in their current range.
Our next question comes from the line of Michael Zaremski from BMO.
It's Dan standing in for Mike. My first question is about the Property and Transportation segment. Is the improvement in the current accident year this quarter mainly a result of favorable crop conditions, or are you observing better performance in other areas of that segment as well? I'm trying to get a clearer picture of what the ongoing performance looks like.
Sure. The significant factor contributing to the lower loss ratio and expense ratio in Property and Transportation is the exceptionally strong crop results. Other businesses in that segment have also shown solid performance and stability. When analyzing our annual statements, you'll note that we remain cautious in our loss projections for commercial auto liability due to similar concerns we've discussed regarding casualty. Overall, we are seeing strong results throughout the entire segment. Even in commercial auto liability, where we are cautious about loss projections, we still achieved a small underwriting profit for the year. If you're looking to normalize the situation, the key factor for the strength observed is this year's above-average crop compared to 2024, which is expected to be more average, and considering the outlook for 2026, our models suggest an average crop year as opposed to this year's exceptional crop.
Okay. That's helpful. Then switching gears, maybe to Specialty Financial and specifically on the lender-placed business there. Just curious about what drove the inflection in pricing a little bit sequentially from plus 1 from minus 2 in the prior quarter. And then bigger picture just with increased political focus on personal lines profitability. Is there any concern about that business just from a political lens on the lender placed?
I don't believe we have any concerns on the political front. The farm bill has been extended until September 2026 and has support from both Republicans and Democrats. Regarding pricing, our customers consist of various large property groups, and pricing can fluctuate from quarter to quarter based on factors like the presence of coastal properties, which may necessitate higher prices compared to other accounts. There is likely to be some variability in pricing. However, this business remains highly profitable, and I believe rates have stabilized. We are also focused on aligning the majority of our business with replacement cost value rather than unpaid mortgage balances, which is a positive development. Last year, we decided to cede more of our coastal exposed property business, which affected the latter half of the year. This year, we anticipate low single-digit growth in this sector, considering all factors.
Our next question comes from the line of Paul Newsome from Piper Sandler.
I was hoping if you could give us a little bit more color about some of the social inflation related businesses that you are remediating in the last year. So it sounds like those businesses are maybe stabilized. Are you in a position where you can now grow those businesses? Or are they just sort of stabilized? So maybe little bit of thoughts on that and whether those businesses, they take a little longer before they go back to a growth potential.
Yes. As we've mentioned before, we believe we have navigated through a series of corrective measures in our nonprofit and excess liability sectors, including restructuring to reduce average limits and adjusting pricing. If you observed, Specialty Casualty experienced low single-digit growth in the fourth quarter, which is encouraging. Additionally, the overall growth in the excess liability business suggests potential for mid-single-digit growth this year in both the excess liability and nonprofit sectors. Therefore, we expect to see these businesses start to grow again and seize opportunities in Specialty Casualty overall.
Makes sense. I wanted to ask a little bit of an extra question on the alternative investment portfolio. You're obviously hoping for expecting a higher return this next year, but maybe not quite as high as it's historically been. Are there certain maybe macroeconomic things or particular things about the portfolio that as an outsider we should be looking towards that would signal that extra couple of percent back to normal.
Paul, this is Craig. As I think you know, around 50% of the alternative portfolio is in multifamily. And there has been a big oversupply the last couple of years of new multifamily properties that have been delivered. The absorption rate is actually very strong, but we think it's probably going to take another couple of quarters to get back to a more normal environment. Historically, even with the poor returns in the recent past, over the last 5 years, we've still earned between 10% and 11% total return on our multifamily investments and Goodyear's significantly above that. To get back to the historical levels of returns on the alternatives, it is going to require the multifamily properties to have a better rate environment, which, as I said in the conference call script, we're seeing clearly a bottoming, and we're seeing some favorable signs in terms of absorption and new stores at a 10- or 12-year low. So we think sometime in the last half of the year, we're going to see a better environment in 2027 and going forward for some number of years. We think it's going to be a pretty favorable environment for multifamily. But that's what is going to be required to get back to our historical return levels on alternatives.
So the insights.
The group is mentioning that regarding the question about lender-placed property and political exposure, I was referring to the lender side of the business. Looking at the regulation of that sector, it has been primarily state-based. However, I don't see significant political risk associated with lender-placed property. It serves the lenders by providing necessary services, especially since much of this business arises from a homeowner's insurer canceling coverage. It effectively acts as a solid safeguard for financial institutions to ensure there is coverage. Therefore, I don't perceive much political risk in that area.
Our next question comes from Meyer Shields from KBW.
My first question is on the premium growth. You mentioned the assumption of 3% to 5%. Just curious if you guys could elaborate on which specific business lines are seeing the most favorable pricing getting into 2026? And what do you see the greatest opportunities for profitable growth within our 3% to 5% premium growth assumption?
Yes. I think the good news is that at this point, for the vast majority of our businesses, we think we have an opportunity for premium growth this year. I think also when you look at the profitability of our businesses, almost all of our businesses are really meeting or exceeding the targeted returns that we require. So I think we'd love to have as much opportunity as we can get within pretty much all of our businesses.
Got it. My second question will be on the Specialty Financial Group. You guys reported a decline in net written premium due to the increase in ceding of coastal exposed property business in the financial institutions. Just curious if you can provide more color on the reinsurance strategy change made there and whether this level of session is expected going forward in 2026.
Yes. We started that in the second quarter, '25. So that book would have rolled on a different reinsurance basis through the first half of this year. If you're familiar with us, historically, we're a company that's had a relatively lower catastrophe exposure than our peers, and we've had lower appetite right or wrong or otherwise for coastal property, pure earthquake risk, etc. So I think we carefully manage FIS, which is probably the business that has our biggest property exposure. So we carefully manage that to what our coastal exposures are to what our overall company philosophy is. And when you look at our 1 in 250 or 1 in 500 exposure to capital, Brian, 1 in 500 exposure today for hurricane.
Yes, it's less than 3%. So compared to industry numbers that might be closer to double digits.
Our next question comes from Andrew Andersen from Jefferies.
You had previously been doing some re-underwriting on Casualty around social services and I think within some pockets of E&S. Are you done with these underwriting actions as we head into 2026 and they're no longer a headwind?
Yes. For the most part, we anticipate a few million dollars in business that will not be renewed this year, especially in the daycare segment. We are mostly finished with the non-renewal actions in housing accounts, so last year, the premium was lower. This year, as I mentioned earlier, we expect some modest growth in premiums for this business.
And then, Brian, if we go back to Specialty Casualty and the underlying loss ratio there, I'm just trying to understand the $69 million in the quarter. Was there an intra-year catch-up in the fourth quarter? I suppose I'm just trying to get a better color on what was the true underlying trend and what is maybe the kicking-off point for '26 underlying?
Sure. So we look at our loss picks every quarter and make adjustments throughout the year. So in some of those units, things haven't been adjusted all year. The one that probably had a larger adjustment in the fourth quarter was the California workers' comp. But again, that's on the business that for the full year is less than $100 million of premium. So I wouldn't say that that's a run rate. I think the California workers' comp adjustment probably elevates the loss ratio a little bit. I think if you look at the full year loss ratio for casualty, that's probably a better indication of like a run rate type of number.
Okay. And then maybe one more. Just looking at the expense ratio, I think as we came into '25, there was maybe some business mix shift headwind and some commission changes. Have those kind of found their level now and perhaps we could see some improvement into '26?
Yes, there will always be a mix of business impacts. As Carl mentioned, our embedded insurance could lead to growth in that area. When assessing our businesses, we consider the overall return on equity and the combined ratios that drive those returns. If we expand in a business with a higher expense ratio, it could negatively affect our results. We are still investing in the future of the company through initiatives focused on customer experience and data analytics, including AI and machine learning, as well as IT security. While these may have a short-term negative impact, they are positioning us for strong returns in the long term. We may experience some fluctuations, but I believe we will be in a good position overall. It's also important to note that in some of our businesses, we receive ceding commissions that fluctuate with profitability. For instance, in the fourth quarter, the expense ratio for our property transportation segment appeared low due to a strong crop year, which raised the ceding commission and lowered underwriting expenses. Conversely, in our financial segment where we have a highly profitable business, the commissions paid to brokers and agents also vary based on long-term profitability. As we achieve strong performance consistently in that sector, those profit-based commissions increase, leading to improved loss ratios. However, this can also result in a slightly higher expense ratio due to the increase in broker commissions.
Our next question comes from the line of Michael Zaremski from BMO.
Just one more for me on capital management. I see the special dividend announcement. But just curious why there are no buybacks or material amount this quarter. You've done buybacks at valuation levels in previous quarters. Just wondering, should we think about share repurchases to resume in 2026? Or how should we be thinking about that?
Yes, Mike, this is Craig. I wouldn't read too much into no share repurchases in the fourth quarter. We said previously, we're opportunistic in terms of repurchase programs. And when our shares are trading at a meaningful discount, we like to keep enough dry powder on hand to be in a position to buy a significant amount of shares. I would comment that we did make a decision to reduce the special dividend that we're paying in the first quarter by $0.50 versus the previous year to save a little more dry powder for other alternatives, including the potential for share repurchases.
Thank you. At this time, I would now like to turn the conference back over to Diane Weidner for closing remarks.
Thank you all for joining us this morning and for the great opportunity to answer your questions and share a little bit more about AFG's story. So we look forward to chatting with you all again next quarter when we share our first quarter results. Hope you all have a great day.
This concludes today's conference call. Thank you for participating. You may now disconnect.