Good day, ladies and gentlemen, and welcome to American Financial Group 2013 fourth quarter and yearend results conference call. (Operator Instructions) I would now like to introduce your host for today's conference, Diane Weidner, Assistant Vice President of Investor Relations. Ma'am, you may begin.

Thank you, Sam. Good morning and welcome to American Financial Group's fourth quarter 2013 earnings results conference call. I'm joined this morning by Carl Lindner III and Craig Lindner Co-CEOs of American Financial Group; and Jeff Consolino, AFG's Chief Financial Officer. If you are viewing the webcast from our website, you can follow along with the slide presentation if you'd like. Certain statements made during this call are not historical facts and may be considered forward-looking statements and are based on estimates, assumptions, and projections, which management believes are reasonable, but by their nature subject to risks and uncertainties. The factors, which could cause actual results and/or financial conditions to differ materially from those suggested by such forward-looking statements include, but are not limited to those discussed or identified from time-to-time in AFG's filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K and quarterly reports on Form 10-Q. We do not promise to update such forward-looking statements to reflect actual results or changes and assumptions or other factors that could affect these statements. Core net operating earnings is a non-GAAP financial measure, which sets aside significant items that are generally not considered to be part of ongoing operations, such as net realized gains and losses, discontinued operations and certain non-recurring items. AFG believes this non-GAAP measure is a useful tool for analysts and investors in analyzing ongoing operating trends and will be discussed for various periods during this call. A reconciliation of net earnings attributable to shareholders to core net operating earnings is included in our earnings release. If you are reading a transcript of this call, please note that it may not be authorized or reviewed for accuracy, plus it may contain factual or transcription errors that could materially alter the intent or meaning of our statement. Now, I'm pleased to turn the call over to Carl Lindner III to discuss our results.

Good morning. We released our 2013 fourth quarter results yesterday afternoon. I'm assuming that our participants have reviewed our earnings release and the investor supplement posted on the website. We're pleased to report record core net operating earnings per share of $1.28, reflecting a 90% increase in the core pre-tax operating earnings in our Property and Casualty Insurance segment and a 35% increase in core pre-tax operating earnings in our Annuity segment. Annualized core operating return on equity was 11.5% for the 2013 fourth quarter compared to 6.4% for the fourth quarter of 2012. Net earnings were $1.73 per diluted share and include $0.45 per share of realized gains. Annualized return on equity was 15.5%. Adjusted book value was $45.90 at December 31, 2013. We ended 2013 with a strong fourth quarter and reported record net earnings per share for the year. Craig and I, thank God, and our management team and our employees for helping to achieve these results. We also focused on returning capital to shareholders over the course of the year. If you turn to Slide 4, you'll a few highlights. We paid $161 million in dividends during the year, representing $72 million in regular common stock dividends and an $89 million special dividend paid in December of 2013. Our quarterly dividend was increased by 13% to an annual rate of $0.88 per share beginning in October of last year. We repurchased $70 million of AFG's common shares at an average price per share of $48.17. Growth in adjusted book value per share was 8% for the year. Total value creation measured by growth in book value plus dividends was $5.19 per share or 12% during 2013. AFG's annualized total five-year shareholder return, representing growth in share price plus dividends was just over 23%. This substantially exceeds…

Thank you, Carl. The Annuity segment reported recorded core pre-tax operating earnings of $92 million in the 2013 fourth quarter compared to $68 million in the comparable 2012 period, a 35% increase as shown on Slide 8. Annuity premiums were $1.4 billion in the 2013 fourth quarter, were a 147% higher than the fourth quarter of 2012. This record premium reflects successful distribution channel expansion as well as new product offerings. We believe that AFG has benefited from its strong ratings and that the annuity industry has benefited from the rise in interest rates in 2013. Full year 2013 annuity premiums were up 35% from the prior year. For the first time in its history, AFG has exceeded $4 billion of annuity sales in a year, while achieving record annuity group profitability. Our team was well-positioned to act on opportunities to grow our business at favorable returns, while remaining committed to consumer centric product design and disciplined pricing. Turning to Slide 9, you'll see that the higher pre-tax core earnings reflect a higher net spread earned on a growing asset base. AFG's fourth quarter average balance of fixed annuity investments and amortized cost grew by 17% year-over-year. Our net interest spread was 286 basis points during the fourth quarter of 2013, a decrease of 32 basis points from the comparable prior year period. The decrease was due primarily to the runoff of higher yielding investments. Net spread earned during the fourth quarter of 2013 increased by 18 basis points from the comparable prior year period. The negative impact of the runoff of higher yielding investments was more than offset by the favorable impact of certain items, including changes in interest rates. For example, since certain indexed annuity reserves are discounted using current market rates, the significant increase in interest rates…

Thank you, Craig. Good morning, everyone. Slide 13 shows highlights of our consolidated income statement. For the three months period ended December 31, 2013, and 2012 by sources of earnings, this table summarizes the segment results that Carl and Craig just reviewed for you, and highlights other key items impacting AFG's consolidated operating results. Core net operating earnings per share were $1.28 for the quarter, representing a 91% increase from the fourth quarter of 2012. Core net operating earnings for the 2013 fourth quarter were $117 million compared to $61 million in the prior year's quarter, increasing by 92%. Looking at segment results. Our P&C segment operating earnings were $131 million in the fourth quarter of 2013 compared to $69 million in the 2012 fourth quarter. This is an increase of $62 million or nearly double. Carl has discussed the factors impacting underwriting income in the Specialty P&C Group, where underwriting profit rose from $15 million in the 2012 fourth quarter to $75 million in the 2013 fourth quarter. These consisted higher accident year underwriting profitability in each of our Specialty P&C sub-segment and the lower level of cat losses year-over-year. P&C pre-tax net investment income declined by $2 million year-over-year from $69 million in Q4 2012 to $67 million in Q4 2013. As Craig described, our Annuity segment core pre-tax operating earnings were up $24 million or 35% during the fourth quarter through a record $92 million. Results in our run-off long-term care and life operations improved by $9 million in the 2013 fourth quarter, but still came in at a negative $3 million. Interest expense was $17 million in both periods. Other expense increased by $4 million in the 2013 fourth quarter. And finally, annualized core operating return on equity was 11.5% for the 2013 fourth quarter compared…

(Operator Instructions) Our first question comes from Vincent DeAugustino - Keefe, Bruyette & Woods. Vincent DeAugustino - Keefe, Bruyette & Woods: First question I guess I have is just looking at the planned renewal rate increases for 2014, if I'm looking at that the right way, they're probably about in line with loss cost inflation. So I'm just curious, if you'd expect maybe on some of your non-rate driven margin improvement initiatives for those to be able to overcome some of the favorable impact of weather in 2013. And if we kind of normalize that, can we kind of still shake out what is your net margin improvement with kind of all those moving parts?

I might address that a couple of different ways. First of all, and in our Specialty Casualty and Financial businesses, they have outstanding profitability and returns, high returns today in that. So we don't need as much rate increase there. Property and Transportation, some of our transportation businesses are the ones that are in the need in property and inland marine, probably have been in the need of most of the increase, and we would continue to be pushing for rate. You made a comment about our overall loss cost. As a company, our overall loss costs are a little under 3%. So I think that our goal is to definitely cover our loss cost, and maybe as again with heavier rate in the Property and Transportation side, definitely we'd be trying to exceed loss cost on that. We always have initiatives in each of our businesses aside from rate to improve our profitability. We've been focusing on predictive analytics to continue to be more sophisticated on the rate segmentation of our business and our underwriting approaches and appetites for business. So that's an ongoing effort that impacts our business in that also. So Specialty Financial, generally it's not had a lot of rate, hasn't really needed it. The perspective for this year is probably for, again, not much rate in Specialty Financial. So keep in mind the 3% or 4% is overall, which means that other than Specialty Financial businesses maybe a little higher than that. Vincent DeAugustino - Keefe, Bruyette & Woods: And just to I guess continue on the same, with the transportation book. I'm just curious, if in your opinion, if some of the pressure is perhaps economic related as we bounced off the bottom in the recession. And if that actually implies the second derivative economic growth slows, if that might imply emerging, would you see more benign loss cost trends in 2014?

Maybe Jeff and I will take a crack at this. On the great American side or great American physical -- our truck physical damage business is performing fairly well. I think definitely the economy as it improves would definitely help that business as well as revenue and I think profitability on the national interstate side. And maybe let Jeff comment.

I think taking a step back and looking at the commercial auto segment in totality for the industry, we had four or five years running of decreasing rate. We had therefore several calendar years most recently, where the line as a whole failed to make an underwriting profit. So I would tend to believe that the problems for the class in general broader than just AFG or any one company, is excessive competition, too much rate competition. Ideally, we're seeing an abatement of that as certain competitors are forced to exit the market or behave more rationally, and that may well help turn the business. Certainly, the rate increases that we feel like we need are rate increases that the market is accepting. And so I think as that line of business for the industry gets healthier, we will benefit from that. But I would lay this mainly at the feet of excessive competition.

And your next question comes from Dan O'Brien of Janney Capital.

Just quickly wanted to talk about the capital management philosophy going forward. Obviously, you guys had repurchased in the past two quarters, so I'm guessing that above kind of adjusted, I guess or excess in book, first thing you have is special dividends. Is that the right way to think about it?

We're continually evaluating what are the highest and best uses for our capital and that every year is a little bit different, based off of the opportunities that we have. Here recently we're focused on a pretty sizable acquisition, Summit. We have paid extraordinary dividends in the last two years. So that's always in the handbag. So every year it's a little bit different. Again, we're really looking for how to use our excess capital in the most effective way, to generate not only the accretive, but to get the right returns on equity as we make the investments. And then return an appropriate amount to the shareholders through dividends and/or share repurchase, if that makes sense.

And then just shifting over to I guess the republic workers comp book. I just wanted to figure, obviously, you guys have started growing that now and as you guys mentioned kind of 8% to 9% rate increases. Where are you guys booking that book right now from a combined ratio standpoint? And what are the expected I guess ROEs for the business right now?

We don't really separately pull that out in that, but I can give you a little bit of an outlook in that for it. The republic writes business in a number of states other than California, not that significant. But we did and California only achieved about a 10% renewal price increase in last year, on top of achieving some decent rate in the previous year. So I can tell you that 2013's estimated accident year at this point, we believe has moved to underwriting profitability. If you looked over a long period of time, republic has generally outperformed the industry by a pretty significant margin, probably in the 6 point to 10 point range in that. So keep in mind, that the industry combined ratio in 2012 was about 120, and republic probably was, we estimate it somewhere in 105 to 108 in 2012. So the rate increases that we've been taking have moved our estimates of republic's profit to what we consider to move to underwriting profitability last year. We filed 6.5% in price increase I think effective in January of this year. So we'll get probably mid-single digit type of increase is kind of what our objective is. We think our loss cost trends in republic are probably in the 2% to 3% range, somewhere in there. We feel good about our reserves. We achieved double-digit growth last year. We'd expect to achieve double-digit growth this year.

And then, just my last one quickly with crop. I guess a two-part, the first part obviously is kind of the delayed planting of the winter wheat, and I'm just trying to figure out what kind of revenue adjustments I need to think about for first quarter? And then secondly, just wanted to get I guess, how your crop book results were for 2013 overall, if you guys are able to share that information?

The winter wheat's not a real big percent of our business. So we're not talking about big dollars as far as the impact in the first quarter of this year, and that's not really. Corn and soybeans are the vast majority of what we do. So I don't think that there's not much of an impact. As far as AFG's crop results this past year in 2013, our crop results did meet our expectations, due to the significant decrease in corn prices and the late season freeze that damaged the California citrus crop. That said, we did report a solid underwriting profit for our crop business last year. So probably lower than historical mainly due to the change in commodity prices in that.

Our next question comes from Jay Cohen of Bank of America.

Couple of questions, I guess really on the kind of the growth areas within Specialty Casualty. On the E&S side, can you talk about your submission activity? Obviously, some of your competitors have had some challenges. Have you seen an uptick in your submission activity in the lines of business that you operate in?

I think we probably have seen some change in our casualty binding flow and in some of our E&S companies in that. And our primary opportunity has kind of been the New York contractors opportunity over the past year or so. But I think we are seeing an improvement in opportunities submissions and opportunities within our overall E&S business.

The other business you've mentioned, which I don't think you talked too much about was the agency captive business. Can you talk about what you're doing there? And how big a business that is for you?

Not if I have that handy. I can probably have Diane get back to you around the size there.

What's in general, what's that business like? What exactly are you doing there?

We're partnering with agents to share and -- the agency cap is, larger agents have the ability to have a way to retain and share in the underwriting result and investment income over time of a particular book of business.

What lines of business are we talking there?

A pretty broad array of package liability, commercial auto, kind of the normal commercial lines type of business.

Our next question is a follow-up from Vincent DeAugustino of Keefe, Bruyette & Woods. Vincent DeAugustino - Keefe, Bruyette & Woods: It's just a couple quick ones. You guys had mentioned that winter wheat is not a big crop, but you had also mentioned some of the temperature issues with the citrus crop. So I'm just curious, if delayed winter wheat planting has any potential impacts from the recent harsh weather as far as temperatures were any of the other maybe southern crops might be impacted? Clearly not the farmer, but just curious with the temperatures that we're seeing, if there is anything we should be on a look out for?

I think winter wheat went into dormancy this winter in pretty good shape. Wheat under cover of snow is a good thing generally in that. So I think the damage that there will be to the wheat crop would be from the extremely cold temperatures in areas that lack snow cover in that. And I know that's a generalization, but I think overall it could get very region specific or acreage specific in that. But all-in-all, I think we remain optimistic with regard to the wheat crop. Vincent DeAugustino - Keefe, Bruyette & Woods: And just one last one for Craig, just looking at the annuity business and your expectations for 20 basis points to 25 basis points of spread compression. I'm just curious maybe off your baseline, your 10 year expectation, what you'd be kind of thinking about next year, just so we can kind of gauge as that moves around. How that might be relative to your expectations?

I mean our earnings are very sensitive to market interest rates. I mentioned in my conference call script that under FAS 133 GAAP accounting, we'll require to discount certain index in annuity reserves. And so obviously, when rates are lower that hits our earnings. When rates move up, we benefit from that, because we use a higher discount rate. We use a discount rate that's tied to the A2 corporate rate. We benefited greatly last year from the much larger increase and people were expecting at the beginning of the year. Basically, what we do, when we put a budget together is we look at the forward curve, we look at the future's market and assume that the market is correct and their assumption on an increase in rates. For 2014, when we put our budget together, the forward curve basically assumed that the 10 year would move up by 60 basis points or so during the calendar year. Now, the reality is the beginning of the year has gone, so far this year it's gone the other direction. I think we're down 35 basis points or some number close to that so far year-to-date. Our expectation would be that you see rates trend back up, but not to the level that we would have guessed at the beginning of the year. And certainly would expect to end the year with higher treasury rates and corporate rates, and what we're looking at today. But I think we have reduced our expectations for the increase in rates versus what we were looking at a month ago. Vincent DeAugustino - Keefe, Bruyette & Woods: On the alternatives?

On the alternative markets, agency captive related business, that's about $116 million of gross premium and about $56 million of net premium. And the larger competitors, the top competitors in that market would be Hartford, Sparta, would be couple of examples there.

Our next question comes from Amit Kumar of Macquarie.

Just a few I guess follow-ups to the earlier question. So just going back to the discussion on crop, I think you mentioned that you had a profit in the book. What are the sort of ending combined ratio on that book versus what you had previously?

Below a 100.

I mean, can you share like more details on that?

We don't necessarily break out the crop business in our disclosures. So that's the most I can really give you at this point.

Can you share like what the points delta might be versus 2012?

There was an improvement in profitability in 2013 versus 2012. 2012, obviously had the drought to compare with.

I guess moving on, the only other question I had was on the discussion regarding the farm bill. I don't know if I missed this, but do you view the discussion on SCO and STAX. I mean is that a bigger deal for 2014 or does that add to demand on the fringes? How do you think about those changes being discussed at farm bill?

It's obviously pretty early to conjecture on something like that. I think generally, it's positive. I'm not sure that we're expecting some huge amount, a huge impact from it, but generally probably a positive. The thing we don't know is, one question is, how much the new programs might displace the current coverage written at the 80% to 85% level in that. That's probably we are know. On the farm bill itself, I think it's very much a positive for crop insurers in that. The big cuts I think are really on direct farm aid and food stamp program, and it basically reinforces the crop program, as being lifeblood to the agricultural industry. So I think it was a very much a positive in that.

Thank you. And at this time, I'm not showing any further questions. I would like to turn the call back to management for any further comment.

Thank you, Sam, and thank you for joining us this morning. We look forward to speaking with you again, when we release our first quarter 2014 results.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a wonderful day.