Good day, ladies and gentlemen, and welcome to the American Financial Group Q1 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we’ll conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a remainder, this conference call is being recorded. I would now like to turn this conference call to Ms. Diane Weidner, Assistance Vice President of Investor Relations. Ma’am you may begin.

Thank you. Good morning and welcome to American Financial Group’s first quarter 2017 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 EVP and Chief Financial Officer. Our press release, investor supplement and webcast representation are posted on AFG’s website; these materials will be referenced in portions of the call. Before I turn the discussion over to Carl, I’d like to draw your attention to the notes on Slide 2 of our webcast. Certain statements made during this call may be considered forward looking statements as defined under the private Security Litigation Reform Act of 1995. These statements are not guarantees of future performance. Investors should consider the risks and uncertainties that could cause actual results and/or financial condition to differ materially from these statements. A detailed description of these risks and uncertainties can be found on 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 response to questions. A reconciliation of net earnings attributable to shareholders 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 such that 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. We released our 2017 first quarter yesterday afternoon. Please turn to Slide 3 of the webcast slides for an overview. AFG’s results to a establish new first quarter records for earnings. And we are very pleased to reiterate-port core earnings per share of $1.69 share of 35% increase in the prior year period. Improved results were attributable to higher operating earnings and profit and casualty segment and significantly higher year-over-year operating earnings in our annuity segment. First quarter annualized core operating return on equity was 13.1% for 2017 compared to 10.3% in ‘16. Net earnings per diluted share were $1.72 per share which also established the new first quarter record for AFG. These results include $0.03 per share and non-core net realized gains on securities. Craig and I are very pleased that the diversity of our business has enabled us to produce overall consistent strong operating results while also identifying opportunities to grow business in a meaningful way. We thank God, our talented management team and our great employees for helping us to achieve these results. Returning capital to our shareholders is an important component of our capital management strategy and reflects our strong financial position and our confidence in AFG’s financial future. We announced yesterday that our Board of Directors declared a special cash dividend of $1.50 per share of American Financial Group common stock payable in late May. We will evaluate our excess capital position again in the second half of 2017. Strong operating profitability, superior investment performance and effective capital management resulted in growth and adjusted book value plus dividends of 42.18 per share during the quarter, a increase of 4%. We are maintaining our 2017 core operating expenses guidance for AFG in the range of $6.20 and $6.70 per share. Craig and I’ll discuss…

Thank you, Carl. I’ll start with a review of our annuity results for the first quarter beginning on Slide 7. The annuity segment reported $96 million in pretax operating earnings in the 2017 first quarter compared to $53 million in the first quarter of 2016, an increase of 81% year-over-year. Under fair value accounting, variances from expectations of certain items, such as projected interest rates, hedge cost and surrenders, as well as changes in the stock market, have an impact on the accounting for fixed indexed annuities. Although, these accounting adjustments have been recognized through AFG’s recorded core earnings, many of these adjustments are not economic in nature but rather impact the timing of reported results. During the first quarter of 2017, the benefit of a higher stock market was offset by slightly lower interest rates resulting at a $2 million unfavorable impact to annuity operating earnings. In comparison, during the first quarter of 2016, a significant decrease in interest rates was in an unfavorable impact on earnings of $31 million. Annuity earnings before the impact of fair value accounting were $98 million in the first quarter of 2017 compared to $84 million in the first quarter of 2016, an increase of 17%. AFG’s first quarter 2017 earnings and spreads benefited from the positive impact of certain investments required to be mark-to-market through earnings. In addition, as you’ll see on Slide 8, AFG’s quarterly average annuity investments and reserves grew by approximately 11% and 12%, respectively, year-over-year. The benefit of this growth was partially offset by the run-off of higher yielding investments. AFG’s Annuity segment reported statutory premiums of $1.3 billion in the first quarter of 2017, virtually unchanged from the first quarter of 2016. Higher premiums in the financial institutions channel more than offset lower premiums in the retail…

Thank you, Craig. And good morning, on this very busy day for earnings conference call. Line 13 close together the earning takers Carl and Craig share with you. We are very pleased with the year-over-year growth and proud for keeping a record for AFG first quarter. Slide 14, provides a reconciliation of core net operating earnings to net earnings attributable to shareholders. Let me turn to Slide 15. AFG’s adjusted book value per share was $54.98 as of March 31, 2017. As of the same date, adjusted tangible book value per share was $52.34. Our capital adequacy, financial condition and liquidity remains strong, and we maintain sufficient capital in our insurance businesses to meet our commitments to the rating agencies. Our excess capital has grown into approximately $1.1 billion at March 31, 2017. Our strong excess capital position and the absence of share repurchases during the quarter underlie our decision to pay $1.50 per share special dividend in the second quarter. The special dividend is payable on May 25, to shareholders of record on May 15. The aggregate dollar amount and a special dividend will be approximately $132 million. The special dividend is in addition to the company’s regular quarterly cash dividend of $0.3125 per share, which was paid in late April. The payment of the special dividend we announced with our first quarter results will not preclude AFG’s consideration of special dividend later on this-year. In other words, should our capital position and projected uses of capital justified, we remain open to special dividend later in 2017 in the absence of the significant transactions. We returned $27 million to our shareholders through regular dividend during the quarter and approximately $4.1 million shares under our repurchase authorization as of May 1, 2017. As a reminder, we do plan to hold approximately $200 million to $300 million of dry powder to maintain flexibility for opportunity that may arise. We will review all opportunities for deployment capital on a regular basis. On Slide 16, you’ll find a single page summary of our 2017 core earnings guidance. Let me remind you, AFG’s expected 2017 core operating results exclude non-core items such as realized investment gains and losses and other significant items. That may not be indicative of ongoing operations. Now I’d now like to open the line for any questions.

[Operator Instructions] Our first question comes from the line of Jay Cohen from Bank of America. Sir your line is now open.

Two questions. One, under the favorable development that we saw in the Property and Transportation segment, is that largely related to the crop business, true-up from 2016 growing year?

Hi Jay this is Jeff. Certainly, the crop division was a meaningful contributor to that amount. But even excluding that we did see favorable development across the other business unit to make up our Property and Transportation Division.

Got it. And then the second question, I guess on capital management, should we think about these special dividend sort of in lieu of your historic buybacks in other words the stock having appreciated and given evaluation, it’s more efficient or effective to give back money just through special dividends?

This is Carl. Every year it’s a little different. We tried to what we think the highest and best and most effective use, right or wrong or otherwise. We thought that $1.50 special dividend in the first quarter was effective way to manage our capital return excess capital to the shareholders. I think as I said in the past, when our capital gets at $1 billion or above or excess capital gets at $1 billion or above, we get more proactive and how we view things. So every year it’s a little different. Some years are heavier on acquisition side versus others. So each year is a different in a little different mix.

Our next question comes from the line of Amit Kumar with Macquarie. Your line is now open.

Just a quick follow-up questions. And I did miss the opening remarks. So if this has been discussed, so you tell me to look into the transcript. Number one, on the pricing discussion. I know you mentioned the average rates in the slide show. Did you talk about that in a bit more detail in terms of what you’re seeing on the pricing versus lost cost trend on the segmental basis?

It’s a question whether our overall loss ratio tends or ...

Yes, the pricing the renewal pricing by segments and lost cost trends?

Okay. Overall, our pricing is pretty flat. Overall, when you look at the group, our overall loss ratio trend is about 2%. What that’s lost cause offset by exposure change if you look over our old book in that. If you look at business by business, we generate where we think we need rate, we’re taking it in the Property and Transportation part of our business. We got about 3% in rate and certain parts of that segment like National Interstate, where we -- because of the commercial auto liability lost cost trends. Our loss ratio trend in National Interstate, Jeff would be roughly 4% to 5%.

Yes, it will be 4% Carl.

Yes, around 4%. So and the commercial auto liability in the passenger side and our traditional transportation business we’re getting double-digit increases in that part of our business for instance. It’s just offset a little bit by our captive business and our workers comp business, we’re not getting a lot of rates. So the combination of the two for National Interstate put us at about 6% in the first quarter. So I think most of that rate increase in the specialty Property and Transportation was focused on National Interstate and in that part of our business. Specialty Casualty business, the rates were pretty flat workers comp at Florida workers comp rates are up, as we expect it and it’s offset -- those are offset a little bit by rate declines in our California workers comp business, and some rate declines in our strategic comp part of the business. And when you put all that together, our workers comp rates were flattish to down just a little bit in that. So the good news is when you look at the California trends, the industry and our accident year combined ratios for the previous year’s keep improving some. So naturally, that means good things generally on that front. So in the specialty financial part of our business rates were down 4% that’s primarily -- there’s a number of larger state regulators that feel that the lender place property rates in that part of our business or excessive and there has been some regulatory actions. I think -- you’ve seen that some of the commentary from insurance other companies. So we’ve had some adjustments in rates on our lender placed mortgage property business that is the main thing behind the 4% decline in rate there. Lost cost trends, are really pretty denying when you look at the specialty financial part of our business in that. In our business model, when our lender place property, I think part of that great decline is soft and by how we do business, where we have sliding scales commission, where at the walking out for instance, if the loss ratio is higher the commission gets adjusted. So in our case, not all of a decline in rate goes takes away from the bottom line if you understand what I’m saying.

Yes. Makes sense. The only of the question that I have is I guess going back to Jay’s question on the special dividend. If I understood the opening remarks correctly, potentially or hypothetically we’re talking about a Q4 time line or is that a Q3 timeline. I just wanted to be short year and are you talking about what is we actually talking about?

I think last half of the year. We generally -- we get into the third quarter some time. The no -- we start to get an idea what are next year’s business plan is, what type of acquisition activity we have on our plate and some idea on our model excess capital. So we’ll see where we are and will take another look at it in the last half.

This is Jeff. Just go back over history we have paid a fourth quarter special dividend in each of the last five years. So I don’t think we want to commit ourselves to any one particular course of action on special dividend. But that has been the pattern over the last five years.

Got it. The final question I have is I’ll stop after this I think this call will be complete without asking you about your agriculture book. I haven’t seen anything out there, which would raise concern maybe you can give a quick update and then I’ll stop.

Sure. This is Carl. It’s really early when we start seeing that. I think overall, we remain optimistic so far, but what you’re seeing in that. There has been in a few places the spring planting progress made a little bit slow, it’s about on par if you look a five year average. The excess rainfall over the weekend will pride away thing to the Mississippi Valley a little bit. There is some freezing temperatures in Kansas, Oklahoma and Texas and some -- but we don’t expect significant damage from that. So when you look at the conditions, I think it’s early but it seems to be okay. The other thing is commodity prices the other factor in revenue product is commodity prices or behaving. Others may -- if you look at the spring, discovery prices that generally slight decreases from the spring discovery prices when you look at corn and soybeans. So when you put those two perspectives together, I think we are optimistic at ‘17 should be a solid year so far.

I would be remiss if would -- one thing that did change in our Property and Transportation guidance one of the drivers is we went from thinking that our crop business was going to be flattish to maybe down a little bit. Now we expect are crop premiums to be up around 9%. So that was kind of a positive change in our respective and what happened there was there is a year-on-year change to base rate there was a positive change on the volatility factors and commodity prices from the previous spring in year discovery prices were up 3% on corn and up 15% on soybeans. So all those things changed our perspective.

[Operator Instructions] And our next question comes from the line of Jay Cohen with Bank of America. Sir, your line is now open.

Just a follow up. Other property-casualty earnings obviously, that number was a bit better than had been running. Real estate gain help even if you take that out that number was a gain quite a bit better. Anything else unusual in there, one. And then secondly, without National Interstate, can you guys give any sort of range for what we should expect that number to be?

Jay this is Jeff Consolino. I’m very pleased you were able to answer a part of your question on that line item other income expense for property and casualty insurance is also, where we have historically have recorded National Interstate minority interest and that’s no longer going to teach you going forward. So I wouldn’t call that unusual because it’s going to be the norm going forward. I would think your adjusted for the real estate gains in that line item and the absence of National Interstate minority interest being recorded there. That would be so-called the new normal for that line item.

And I’m showing no further questions and I would like to turn call back over to Diane Weidner for any further remarks.

Thank you, all for joining us this morning to discuss our first quarter results. This now conclude today’s call.