Good morning. My name is Tina and I will be your conference operator today. At this time, I would like to welcome everyone to the American Financial Group 2011 Fourth Quarter and full-year Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions). Thank you. Mr. Keith Jensen, you may begin.

Thank you. Good morning, and welcome to American Financial Group’s 2011 year-end earnings conference call. I’m joined this morning by Carl Lindner III, and Craig Lindner, Co-CEOs of American Financial Group. If you’re 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, which could cause actual results and/or financial condition 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 in 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 part of ongoing operations. These include net realized gains or losses on investments, the effect of accounting changes, discontinued operations, significant asbestos and environmental charges, and certain other non-recurring items. AFG believes this non-GAAP measure to be a useful for analysts and investors analyzing the 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. Now, I’m pleased to turn the call over to Carl Lindner III, to discuss our results.

Good morning, and thank you, for joining us. We released our 2011 fourth quarter and full-year results yesterday afternoon. Despite a challenging year for the entire insurance industry, Craig and I are pleased to finish the year with solid profitability. Core net operating earnings for the fourth quarter were up $0.03 a share from the comparable 2010 period. Full-year Core net operating earnings per share were $3.53 per share in line with our guidance. With estimated insured catastrophe losses for the industry, toping $100 billion, we’re pleased that our catastrophe losses were only 2 points in our combined ratio for the year, and actually were lower than CAT losses recorded in 2010. In addition, we acknowledge the impact that the continued low interest rate environment has had across all of our businesses. At the very least, these economic conditions, plus the continued global economy uncertainty, require that our underwriting and product pricing continue to be highly focused. We thank God and our talented management team and employees for a successful year and for the financial strength that positions us to take advantage of opportunities going forward. I am assuming all participants on today’s call reviewed our earnings release and supplemental materials posted on the website. I’ll review a few highlights and focus today’s discussion on key issues. I’ll also briefly discuss our outlook for 2012. Let’s start by looking at our 2011 results, summarized on slides three through five of the webcast. Net earnings per share were $1.10 for the quarter, including realized gains of $0.32 and a noncore charge of $0.28, representing a valuation allowance on deferred tax assets associated with losses in our Lloyd Syndicate. Full-year earnings per share were $3.33, realized gains were $0.45 per share included gains from sales of a portion of a remaining interest…

(Operator instructions). Your first question comes from Ryan Burns, Macquarie. Ryan, you line is open.

Hi. Good morning, everyone. Just my first question is with the specialty causality I guess loss ratio. You mentioned in the press release that it was due to I guess lower results on some program business. Can you just talk about, I guess which types of programs are – I guess saw the increase loss ratio? Thanks.

We had numerous programs that came from a number of our operations that we really discontinued pretty much, a lot of them stopped writing and now we’ve had some unfavorable development on those various programs. That’s kind of a good news/bad news. The good news is, we’re not writing much program business at this point. The bad news is, what we did write didn’t produce the kind of profitability that we wanted.

And it wasn’t focused on any certain line? I’m just trying to think of workers’ comp or anything like that, those programs weren’t focused on…

The program business would be a mixture of package comp, general liability, you know, …

Okay, great. And then just quickly, just shifting to workers’ comp, I just want to see what kind of trends you guys are seeing in the fourth quarter in terms of rate increases, what kind of rate increases are needed to get adequate returns and how lost-cost trends are going over there? That’s a bunch of questions there.

Yes, most of our – well, let me start with – to put in perspective, we’re less – we have less workers’ comp business generating, you know, as a percent of our total premium than most at this point. And the biggest portion is related to our California business. Our California business, you know, we achieved between new business pricing, renewal pricing, you know, roughly 80% last year and price because as far as what I think we need – I think we need another 10% in price in order to get to 104 combined ratio or a 12 to 14% return on equity or range. So we have – there continues to be more of a competitive market than I would have thought with industry results at 130 in 2010 and probably I would think the industry might still be 125 if I were to put a guess on 2011 accident year. Republic always runs better. We’re probably running at 114 would be my guess in 2011. But yeah, we’re still good. On top of that 80% overall net rate we got last, we probably could get another 10% plus in order to get back to that kind of returns. On our business outside, for the last quarter or so, we’ve been seeing rates move up also and our strategic – one of our key businesses, you know, outside of California Comp, strategic comp business in the quarter, prices were up 6%. Again, less than 10% of our business mix is comp. So I think sometimes when you compare, you know, the size of our price increase to others, other have a much higher percent of comp and comp seems to be leading the way in the industry pricing increases. Did that answer your question about workmans’ comp?

Yes, that did. That did.

And the other part of that question about…

Yes, lost-cost trends. I just want to see medical inflation or really that…

Again, you know, California probably would be the biggest indicator for us. [Inaudible] pretty much the – if you look out over the last – on average over the last four years, frequency might be up 3 to 4%. Severity is really pretty benign or pretty flat over the last three years. So there’s nothing there that really concerns us. We feel our reserves are adequate on our California workers’ comp business. I think the encouraging thing is when you take a look at – and we’re pretty tough pricers and you know, we’re about making an underwriting profit. Republic, in the last two quarters, our premium has increased in, you know, kind of a high single-digits. It’s increased for the first time in six years. So that’s a good indicator. I think also in our – the other part of our business outside of Republic in California, we seem to be seeing more market opportunities particularly on some of the more difficult loss rate types of workers’ comp, larger workers’ comp counts that our strategic comp, you know, unit excels at. So I think we’re seeing some more opportunities there. Did I get all the …

Yes. That was very helpful. Thank you. And then I guess I’ll ask one more and then I’ll let others. Just going to the crop book, I just wanted to clarify that you said that the new Farm Aid changes will lower the crop profitability 7%. I was just wondering to see if that was for AFG or that as for the industry as a whole? And then also I just wanted to see if you guys could break out what kind of combined ratio you actually wrote in 2011 crop returns or I guess, ballpark.

We don’t really break that out. I think 7% probably is a pretty good number for us as well as the industry.

Okay.

It could be – and again, you know, the guidance we’re giving you, we’re really kind of basing what our – those changes in our estimate for crop in the – you know, if you look at our combined ratio range and crop range transportation, our crop estimate you know, is also baked into that range.

Okay, thank you.

Your next question comes from J. Cohen, Bank of America/Merrill Lynch. Jeffrey Cohen – BofA/Merrill Lynch: Thank you. A couple question as well. Maybe I’ll first follow up on something Ryan had asked about and that’s the specialty casualty business. And you mentioned some of the profitability issues here and some discontinued programs, but if I look at your results for the fourth quarter, it looks like the accident year loss ratio, excluding development, was about at least 10 points higher than it was in the first three quarters of the year and I’m wondering what explains that because that’s not – that’s X the reserve development.

Well, you know, our international business didn’t have a good quarter also. I think, you know, those two things – the program business development, the international business didn’t have a good quarter. Keith, do you have any perspective on a quarterly accident here?

You’re exactly right, where we took the largest loss year over year in specialty casualty was in the [inaudible] international business that quarter and that delta was, you know, it was north of $20 million. I wouldn’t overreact, you know, to any quarterly change here or there. Jeffrey Cohen – BofA/Merrill Lynch: It certainly seems as if your guidance contemplates a number closer to what you were doing the first part of the year and certainly does not suggest that the fourth quarter number is kind of the run rate? That’s fair?

That’s – again, our guidance really gives you our best expectations, you know, for how we think we’re going to do this year. Jeffrey Cohen – BofA/Merrill Lynch: Okay. Second question, it looks like the excess capital as you defined it increased during 2011 despite the buybacks and the dividends, obviously you made some money as well. At the end of the year, were you surprised by that? Would you have expected at the beginning of the year to eat into some of this excess capital given where your stock had been trading?

We did accept [inaudible]. If you think about the excess capital and just [inaudible], company cash plus official borrowings that we can take on and stay with a leverage commitment in the major market. So if you look over the last two or three years, we’ve been generating a lot of capital and each year, at the beginning of the year, we make an estimate that will come out of excess capital by means of dividends, by means of share buybacks, by means of deployment. We have talked consistently about keeping pattern [inaudible]. We talked about that in the 200 million to 300 million type of range. So to the extent that we don’t make business acquisitions that are in line with what we made at the beginning of the year, that’s going to affect where excess capital is. But this number, in terms of what we expected [inaudible] for the calendar year 2011, that’s very close to the ballpark where we thought it was at that point. Jeffrey Cohen – BofA/Merrill Lynch: Okay.

We probably ended up repurchasing, you know, a bit under kind of what our, you know, repurchasing shares maybe a little bit less than what we thought we were going to do. Probably one positive thing, you know, that would risk stock prices intended to partner really well and we – for instance, we probably wouldn’t have had that in our financial model. All those things kind of impact things in that. And ask Keith mentioned, we would have hoped to maybe have done at least another one more transaction than what we did, or found a few more opportunities. Jeffrey Cohen – BofA/Merrill Lynch: Got it. But it sounds as if going into 2012, you clearly have as much financial flexibility as you had a year ago?

Yes. That’s fair. That’s for sure. And again, you know, there’s still the – the economy is still kind of slowly coming on and I think the industry went through a tough time this year. Craig and I like where we’re positioned. We like having a little extra capacity both for opportunities and as you think – if you think rates continue, you know, rate traction, pricing traction continues to move up, you want to have capital – you want to have the capital necessary to take advantage of opportunities to [inaudible].

One of the ways to think of it, Jay, if we’ve got 750 in excess capital in the beginning with 200 of it as a minimum we want to have in terms of [inaudible], we’ve got 550 if we [inaudible] a little last year, which is what we indicated we’re looking at, that would be 300. If that 300 could be turned into share buybacks or business acquisition, that’s an opportunity. We look at it was [inaudible] in excess of 500 million cap available for deployment. Jeffrey Cohen – BofA/Merrill Lynch: It seems special dividend doesn’t really come up as an option.

We’re always looking at and considering anything that we think is a good decision for shareholders long term. At this point, we feel that share repurchases are a better value in creating value particularly where our stock is traded. You know, which has been under book value and even at a discount in a lot of cases, tangible book value. We’re always looking at all the options. Jeffrey Cohen – BofA/Merrill Lynch: Got it. And then one last question, more of a number’s question. The other line, other pre-tax have been running 15 to 18 million a quarter. This quarter was 26 million. Is there anything unusual there?

Not really. Nothing significant. There’s two or three relatively minor items that hit that quarter. Jeffrey Cohen – BofA/Merrill Lynch: Okay. Can you offer any sort of guidance as far as that line item because it does jump around a bit, what a normalized number might be for us?

I would think, you know, you talked about 15 compared to – I think 15 to 20 is a reasonable rate. Jeffrey Cohen – BofA/Merrill Lynch: Okay, that’s great. Thank you.

Your next question comes from Rob Bothman, Capital Returns. Rob Bothman – Capital Returns: I had a couple of questions. The – I think specialty casualty, I assume your professional liability business is in there and I was wondering if you could talk, Carl or whoever, about rate actions there of late as compared to maybe the last year or so.

Sure. I’d be happy to. Our book of business, again, in our D&O and professional liability is a little bit different than just, you know, small private business, you know, non-profit, Canadian and smaller accounts make up a much bigger part of the business and Fortune 500 risks. That said, we’re pleased that we’re getting some rate increase, you know, on our business and it’s mainly, I think in the fourth quarter we probably got around 3% price change and we did achieve an increase for the year there. We’re pleased with the trends. Rob Bothman – Capital Returns: Plus three in the fourth quarter, I’m sorry, when you said an increase for the year, do you mean a volume increase or how did the 3% compare to the third or the second quarter?

It’s, you know, we kind of started the year kind of soft where, you know, rates where down a little bit and moving into the last half of the year our rates when positive in that area. So we’ve – we like the trend. Rob Bothman – Capital Returns: Okay. I want to follow up on the first – I forgot who it was, the first questioner and you were talking about workers’ comp and you said – I think you were only talking about California, you know, you think you need another 10 points of rate to get down to like a 104 combined and then I think you provided sort of an ROE pair in effect that I think you were sort of saying in a 104 combined, the ROE would be a certain level. But I’m surprised that the ROE you cited was so high given where new money rates are. So if I heard you right, it didn’t make sense to me.

Rob, you’ve got a longer tail on that business. You still have the capital portion of what you’re riding at your existing portfolio rates, it’s, you know, the new cash, cash from the new premium gets [inaudible] at lower new indicated money rates and that’s – that’s why I gave you a range, you know, a range, 12 to 14%. Rob Bothman – Capital Returns: And I’ve not done the math, but I mean, writing at a 104 combined and putting new money to work at, I don’t know, 3%, you can get a double digit – albeit 10, you can get a double digit ROE?

Yes. Rob Bothman – Capital Returns: In workers’ comp with that combination?

That’s what our financial guys tell me. Rob Bothman – Capital Returns: Okay. I trust Keith.

[Inaudible] of it as an issue around the tail and you know, when we look at new money rate when you’re investing, you’re not going to invest your long tail money rate at a short term return. Rob Bothman – Capital Returns: I’m sorry, Keith, I didn’t under – I had trouble hearing you. Could you say it again slower?

All I’m saying is that the return is somewhat of a function of what the duration is on the reserves, either long duration reserves which means you’re going to invest in a longer-term rate than a money market rate and our average across the [inaudible] assets so we’ve been in new money in the 3 ½ range. But it is very much an issue around tail. Rob Bothman – Capital Returns: Okay. Thanks a lot.

Your next question comes from Matt Rohrmann, KBW. Matthew Rohrmann – Keefe Bruyette & Woods: Carl, Keith, good morning. Just one quick question going back to crop real quick. Your friends at [inaudible] of the day said you know, pricing was up nicely in wheat, you know, relative to where corn and soybean were at and expect it to go. Is there any opportunity there? I know you guys are more corn/soybean heavy.

Well, yeah, we write – we don’t – we write – we have wheat exposures too and you know, if it looks like, compared to 2011 base prices they’re right, it looks like it’s up about 9%. Yeah, we have to see where the corn and soybean discovery prices kind of go to to really kind of see where we’re going to end up. Right now, corn is down 4%, soybeans down 10%, so you know, we’re heavier corn and soybeans mix than maybe some others in that. So maybe it doesn’t quite impact us as much. Matthew Rohrmann – Keefe Bruyette & Woods: Is it possible to say if you thought that wheat was a better opportunity to switch a material amount of your business to that crop as opposed to corn and soybean?

Well, I think it would be more a matter of whether we retained, you know, whether we put it in the bucket where we retained more of the wheat business in a given year versus seed more to the government. Matthew Rohrmann – Keefe Bruyette & Woods: Got you. Okay, great. Thank you, guys.

Yeah, I think that’s – it’s really more of our decision around that, how much we have – we have flexibility in how much we retain year to year. Matthew Rohrmann – Keefe Bruyette & Woods: Thanks.

You have a follow up question from Ryan Burns, Macquarie

Hi, guys. Just one quick one. Last week a large private DNO underwriter noted that they had started seeing I guess increases in employment practices in crime claims and kind of adjusted their lostics. I just wanted to see if personally, you guys write that type of business as well and if you are seeing any kind of increase claim activity on those two lines?

We do write some [inaudible] and crime. We are seeing some increase, not dramatic but there’s definitely directionally an increase in the claims level. You’re talking about private equity?

No, no, they were noting – well, I thought they were noting just in their private and non-profit book that they were seeing increased employment practices and crime claims.

The answer is, yes, we’re experiencing some but not dramatic.

Okay. Great, thank you, guys.

There are no further questions at this time.

All right. Thank you very much. We appreciate you joining us and we’ll look forward to vising with you again when we report the first quarter.