David Fried, who focuses on corporate repurchases, has added two financial services firms to the model portfolio at his Buyback Letter.

American Financial Group (AFG) is an insurance holding company based in Cincinnati, Ohio with assets in excess of $35 billion.

Through the operations of Great American Insurance Group, AFG sells property and casualty insurance, focusing on specialized commercial products for businesses. It also sells fixed and fixed-indexed annuities in the retail, financial institutions and education markets.

It's a component of the Russell 3000, and actually has a larger market cap than the smaller end of the S&P 500. Market cap, of course, is important because it gives a true comparison of the value attributed by the stock market to a given company's stock.

In late August, AFG increased its annual dividend by 12.8%. The company will now pay an annual dividend of 88 cents per share, which translates into a quarterly cash dividend of 22 cents per share, up from 19 cents per share paid on July 25, 2013. This is the eighth consecutive year of dividend hikes.

Additionally, the company has been buying back shares and during the first six months of 2013, AFG repurchased 1.4 million shares for $70 million, which leaves 6.1 million shares to be bought under the present authorization.

Cash and cash equivalents at the end of Q2 2013 were $ 1.3 billion. AFG has reduced shares outstanding by 5.3% in the past 12 months.

Meanwhile, we have dabbled in Lincoln National Corp. (LNC) several times in the last couple of years, realizing a total 24.08% gain in our three trades.

You'll recall that Lincoln is a seller of life insurance and annuities, and a Fortune 200 American holding company, and has multiple insurance and retirement businesses in the US.

It sells a range of wealth protection, accumulation, and retirement income products. With headquarters near Philadelphia, it had assets under management of $189 billion, as of June 30, 2013.

While the S&P 500 is off to a strong start to 2013, the S&P 500 Life & Health Index has more than doubled the return of the broad market index year-to-date, producing a 43% total return so far.

Six of the seven constituents have produced returns more than double the S&P 500, with Lincoln at the head of the pack.

In early August, Lincoln reported Q2 2013 operating earnings of $1.27 per share, which outpaced the prior-year quarter's earnings of $1.09 a share. Operating net income increased 10% year-over-year to $351 million, total revenue climbed 3.5% over the prior-year quarter to $3.0 billion.

The upside was said to be driven by benefits from product pricing, claims management, risk management, and distribution expansion along with higher sales across segments.

In that quarter, Lincoln also bought back 4.3 million shares for $150 million. In the last 12 months, management has reduced shares outstanding by 5.3%. Analysts consider it a stock with deep value and cash flow.

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