American Financial Group AFG reported third-quarter 2021 core net operating earnings per share of $2.71, which beat the Zacks Consensus Estimate by 37.6%. Also, the bottom line increased 10.6% year over year.The company’s results benefited from growing revenues, improved underwriting profit in Specialty Casualty insurance operations, higher P&C net investment income as well as reduced costs.American Financial Group, Inc. Price, Consensus and EPS Surprise American Financial Group, Inc. price-consensus-eps-surprise-chart | American Financial Group, Inc. QuoteBehind the HeadlinesTotal operating revenues of about $1.7 billion increased 13.3% year over year. This top-line increase can be attributed to higher net investment income and an increase in net earned premiums at its P&C insurance as well as higher other income.Net earned premiums at its P&C insurance increased 10.7% to $1.5 billion. Net investment income of $169 million increased 38.5% year over year.American Financial’s total cost and expenses were $1.5 billion, down 1.9% year over year due to lower other expenses.Segment ResultsSpecialty Property and Casualty Insurance generated $1.7 billion in net premiums written, up 16% year over year, due to an improvement in the economy, new business opportunities and a strong renewal rate environment.Pretax core operating earnings were a record $329 million in the third quarter, up 60% year over year. The upside was due to higher P&C underwriting profit and substantially higher P&C net investment income, primarily due to higher earnings from alternative investments.Underwriting profit of $169 million was up 62.5%, attributable to a higher year-over-year underwriting profit in Specialty Casualty Group and to a lesser extent, Specialty Financial Group.The segment’s combined ratio improved 310 basis points (bps) year over year to 89%, courtesy of an improvement of 870 bps in Specialty Casualty Group and 740 bps in Specialty Financial divisions.While net written premiums in Property & Transportation Group grew 22% year over year to $773 million in the quarter, the same at Specialty Casualty Group increased 14% year over year to $732 million. Further, net written premiums at Specialty Financial and Other divisions improved 8% and 2%, respectively, year over year.Financial UpdateAs of Sep 30, 2021, American Financial had cash and investments of $16.4 billion, which grew 21.4% from the level at 2020 end.As of Sep 30, 2021, long-term debt of $1.9 billion was up 0.05% from the 2020-end level.As of Sep 30, 2021, the company’s book value per share (excluding unrealized gains/losses on fixed maturities) was $59.70, down 6.1% from the figure at 2020 end.Annualized return on equity was 16.6%, up 370 bps year over year. The company had about $3 billion of excess capital as of Sep 30, 2021.Prudent Capital DeploymentThe company declared a special cash dividend of $4 per share, which will be paid on Nov 22, 2021 to shareholders of record as of Nov 15. The aggregate amount of this special dividend will be nearly $340 million. This special dividend is in addition to the company’s regular quarterly cash dividend of 56 cents per share paid out on Oct 25, 2021. The company has declared $24 per share in special dividends in 2021 so far.The company bought back $12 million worth shares in the reported quarter.2021 Guidance UppedAmerican Financial estimates core net operating earnings in the bracket of $10.10-$10.70 per share, an increase from the earlier expectation of $8.40-$9.20.American Financial estimates combined ratio in the range of 86% to 88%, an improvement from the earlier expectation of 88% to 90%.American Financial expects net written premiums to increase 11% to 14% from the $5.0 billion reported in 2020, which marks an increase from the previous expectation of 10% to 13% estimated previously.Discontinued Annuity OperationsOn May 28, 2021, American Financial completed the sale of its Annuity business to Mass Mutual. Initial cash proceeds from the sale were $3.5 billion. The company recognized an after-tax non-core gain on the sale of $656 million in the first half of 2021.Zacks RankAmerican Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Other P&C InsurersOf the insurance industry players that have reported third-quarter results so far, Selective Insurance Group, Inc. SIGI, Arch Capital Group Ltd. ACGL and Cincinnati Financial Corporation CINF beat the respective Zacks Consensus Estimate for earnings. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cincinnati Financial Corporation (CINF): Free Stock Analysis Report American Financial Group, Inc. (AFG): Free Stock Analysis Report Selective Insurance Group, Inc. (SIGI): Free Stock Analysis Report Arch Capital Group Ltd. (ACGL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research