American Financial Group Inc. (NYSE:AFG) Q2 2020 Earnings Conference Call - Final Transcript

Aug 05, 2020 • 11:30 am ET

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American Financial Group Inc. (NYSE:AFG) Q2 2020 Earnings Conference Call - Final Transcript

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Q & A
Executive
S. Craig Lindner

around 85% of our mark-to-market assets are recorded with a one quarter lag. So as I look at the various components, certainly, the traditional private equity returns are somewhat related to the stock market. Typically, the private equity firms don't mark investments up as much as the overall stock market and a strong period. And so typically, in a weaker period, they don't also don't rate them down as much as the stock market.

Our real estate investments, as I mentioned, 40% of the total exposure is really focused on multifamily. It has held up extremely well. Both the occupancy and collection rates are very similar to what we experienced prior to the pandemic. We're in excellent markets, frankly, in quite a few markets that are kind of benefiting from people fleeing certain urban areas. Our biggest markets in multifamily are: Denver and Colorado Springs; Florida; Phoenix, Arizona; Dallas, Texas; Atlanta, Georgia. They've held up extremely well. We have not had to give any rate reductions to keep strong occupancy. If anything, what we have experienced is a decline in cap rates on those types of multifamily properties, given the decline in interest rates. So that piece, at least at this point in time, we would expect to hold up very, very well. So that kind of gives you some idea of how I view the major components of marked-to-market on a go-forward basis.

Analyst
Paul Newsom

Great, thanks. Thanks. So may also ask questions. But I appreciate the help.

Operator
Operator

Thank you. [Operator Instructions] Our next question comes from the line of Greg Peters with Raymond James. Your line is open.

Analyst
Greg Peters

Good afternoon. I wanted to switch back to the commentary that you provided, Carl. I wanted to focus on two things: first, the crop commentary; and then the trade credit commentary. When you provided the guidance for the full year for the Property Casualty business, did you assume that crop was going to be better, the same or lower than the previous year? Because in your comments, it certainly seemed to suggest that you had some degree of caution, as it relates to your outlook there.

Executive
Carl H. Lindner

I think it was just the opposite, frankly, Greg. In our guidance, I think I always tell people that we kind of build in an average crop year and average means an average over time in that. I think this year, as I mentioned, shaping up very nicely. Crop conditions are real favorable. There's when you look at the percent of corn and soybeans in good excellent condition, that really looks good. I think the one thing that we're watching as the biggest part of the modal apparel part of the book is revenue based, which is a function of yield and price. We're keeping our eye on the corn prices, in particular. I think as I had mentioned in the past, our insurers choose up deductibles. They're kind of they take the first layer of losses if there are losses on a revenue basis. So