Le Lézard
Classified in: Business, Covid-19 virus
Subjects: ERN, CCA, DIV

CNA Financial Announces First Quarter 2020 Results


CHICAGO, May 4, 2020 /PRNewswire/ -- CNA Financial Corporation (NYSE: CNA) today announced a first quarter 2020 net loss of $61 million, or $(0.23) per share, and core income of $108 million, or $0.40 per share.  Results for the quarter reflected financial market volatility amid the events of COVID-19. This included Net investment losses of $169 million and a decrease in Net investment income to $279 million, reflecting stable earnings from fixed income and other investments of $378 million offset by a $99 million loss from limited partnership and common stock investments during the period.  Property & Casualty Operations combined ratio for the first quarter was 97.5% and the underlying combined ratio was 93.9%.  The combined ratio includes charges of $15 million pretax associated with COVID-19.

The U.S. P&C segments, excluding third party captives, generated gross written premium growth of 8% and net written premium growth of 6%.  Excluding third party captives, gross written premiums grew 6% and net written premiums grew 3% for P&C overall.

Our Life & Group and Corporate & Other segments produced core income (loss) for the first quarter of 2020 of $4 million and $(18) million, respectively.

CNA Financial declared a quarterly dividend of $0.37 per share, payable June 4, 2020 to stockholders of record on May 18, 2020.


Results for the Three Months Ended
March 31

($ millions, except per share data)

2020


2019

Net (loss) income

$

(61)



$

342


Core income (a)

108



318






Net (loss) income per diluted share

$

(0.23)



$

1.25


Core income per diluted share

0.40



1.17




March 31, 2020


December 31, 2019

Book value per share

$

38.18



$

45.00


Book value per share excluding AOCI


42.12




44.81



(a)

Management utilizes the core income (loss) financial measure to monitor the Company's operations. Please refer herein to the Reconciliation of GAAP Measures to Non-GAAP Measures section of this press release for further discussion of this non-GAAP measure.


"Our first quarter financial results reflected strong underwriting performance, and included an underlying combined ratio of 93.9%, a one point improvement from a year ago, along with net written premium growth of 6% in the U.S. and 3% overall.  These results were adversely impacted by disruption in the financial markets due to COVID-19, which led to unfavorable returns on our alternative investments and equity holdings while our fixed income investments generated steady earnings in line with the last four quarters," said Dino E. Robusto, Chairman and Chief Executive Officer of CNA Financial Corporation.  "As we look ahead at these unprecedented and challenging times our thoughts go out to those most affected by the COVID-19 pandemic, and we are tremendously grateful for all the medical professionals and first responders who put their lives on the line every day."

Property & Casualty Operations


Results for the Three Months Ended
March 31

($ millions)

2020


2019

Gross written premiums ex. 3rd party captives

$

2,107




$

1,987



GWP ex. 3rd party captives change (% year over year)

6


%




Net written premiums

$

1,863




$

1,806



NWP change (% year over year)

3


%




Net investment income

$

118




$

360



Core income

122




314









Loss ratio excluding catastrophes and development

60.4


%


60.7


%

Effect of catastrophe impacts

4.3




3.4



Effect of development-related items

(0.7)




(0.5)



Loss ratio

64.0


%


63.6


%







Expense ratio

33.1


%


33.8


%







Combined ratio

97.5


%


97.8


%

Combined ratio excluding catastrophes and development

93.9


%


94.9


%

Business Operating Highlights

Specialty


Results for the Three Months Ended
March 31

($ millions)

2020


2019

Gross written premiums ex. 3rd party captives

$

741




$

730



GWP ex. 3rd party captives change (% year over year)

2


%




Net written premiums

$

694




$

698



NWP change (% year over year)

(1)


%




Core income

$

96




$

169









Loss ratio excluding catastrophes and development

59.5


%


60.5


%

Effect of catastrophe impacts

1.1




1.8



Effect of development-related items

(1.5)




(3.0)



Loss ratio

59.1


%


59.3


%







Expense ratio

32.0


%


32.8


%







Combined ratio

91.3


%


92.3


%

Combined ratio excluding catastrophes and development

91.7


%


93.5


%

Commercial


Results for the Three Months Ended
March 31

($ millions)

2020


2019

Gross written premiums ex. 3rd party captives

$

1,059




$

932



GWP ex. 3rd party captives change (% year over year)

14


%




Net written premiums

$

950




$

849



NWP change (% year over year)

12


%




Core income

$

24




$

139









Loss ratio excluding catastrophes and development

61.1


%


62.1


%

Effect of catastrophe impacts

7.0




5.2



Effect of development-related items

?




(0.4)



Loss ratio

68.1


%


66.9


%







Expense ratio

33.2


%


33.8


%







Combined ratio

101.9


%


101.3


%

Combined ratio excluding catastrophes and development

94.9


%


96.5


%

International


Results for the Three Months Ended
March 31

($ millions)

2020


2019

Gross written premiums

$

307




$

324



GWP change (% year over year)

(5)


%




Net written premiums

$

219




$

259



NWP change (% year over year)

(15)


%




Core income

$

2




$

6









Loss ratio excluding catastrophes and development

60.3


%


57.0


%

Effect of catastrophe impacts

4.3




2.3



Effect of development-related items

(0.1)




5.5



Loss ratio

64.5


%


64.8


%







Expense ratio

35.4


%


37.1


%







Combined ratio

99.9


%


101.9


%

Combined ratio excluding catastrophes and development

95.7


%


94.1


%

Life & Group


Results for the Three Months Ended
March 31

($ millions)

2020


2019

Net investment income

$

208




$

204



Total operating revenues

335




335



Core income

4




10



Core income of $4 million for the three months ended March 31, 2020 is in line with expectations.

Corporate & Other


Results for the Three Months Ended
March 31

($ millions)

2020


2019

Net investment income

$

3




$

7



Interest expense

31




34



Core loss

(18)




(6)



Core loss increased $12 million for the first quarter of 2020 primarily driven by lower amortization of the deferred gain related to the A&EP Loss Portfolio Transfer.

Net Investment Income


Results for the Three Months Ended
March 31


2020



2019


Pretax net investment income

$

329




$

571



Net investment income, after tax

279




465



Net investment income, after tax, decreased $186 million as compared with the prior year quarter.  Stable earnings from fixed income and other investments of $454 million pretax was offset by losses from limited partnership and common stock investments, which returned (7.0)%, or $(125) million for the first quarter of 2020 compared with 4.5%, or $96 million, in the prior year quarter.

About the Company

CNA is one of the largest U.S. commercial property and casualty insurance companies.  CNA provides a broad range of standard and specialized property and casualty insurance products and services for businesses and professionals in the U.S., Canada and Europe, backed by more than 120 years of experience and approximately $45 billion of assets.  For more information, please visit CNA at www.cna.com.

Conference Call and Webcast/Presentation Information

A conference call for investors and the professional investment community will be held at 9:00 a.m. (CT) today.  On the conference call will be Dino E. Robusto, Chairman and Chief Executive Officer of CNA Financial Corporation, Al Miralles, Executive Vice President and Chief Financial Officer of CNA Financial Corporation and other members of senior management.  Participants can access the call by dialing (800) 289-0571, or for international callers, +1 (720) 543-0206.  The call will also be broadcast live on the internet and may be accessed from the Investor Relations page of the CNA website (www.cna.com).  A presentation will be posted and available on the CNA website and will provide additional insight into the results.

The call is available to the media, but questions will be restricted to investors and the professional investment community. An online replay will be available on CNA's website following the call.  Financial supplement information related to the results is available on the investor relations pages of the CNA website or by contacting [email protected].

Definition of Reported Segments

Financial Measures

Management utilizes the following metrics in their evaluation of the Property & Casualty Operations.  These ratios are calculated using financial results prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).

Gross written premiums ex. 3rd party captives represents gross written premiums excluding business which is mostly ceded to third party captives, including business related to large warranty programs.

The Company's investment portfolio is monitored by management through analysis of various factors including unrealized gains and losses on securities, portfolio duration and exposure to market and credit risk.

Reconciliation of GAAP Measures to Non-GAAP Measures

This press release also contains financial measures that are not in accordance with GAAP.  Management utilizes these financial measures to monitor the Company's insurance operations and investment portfolio.  The Company believes the presentation of these measures provides investors with a better understanding of the significant factors that comprise the Company's operating performance.  Reconciliations of these measures to the most comparable GAAP measures follow below.

Reconciliation of Net (Loss) Income to Core Income

Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses and any cumulative effects of changes in accounting guidance.  The calculation of core income (loss) excludes net investment gains or losses because net investment gains or losses are generally driven by economic factors that are not necessarily reflective of our primary operations.  Management monitors core income (loss) for each business segment to assess segment performance.  Presentation of consolidated core income (loss) is deemed to be a non-GAAP financial measure.


Results for the Three Months Ended
March 31

($ millions)

2020


2019

Net (loss) income

$

(61)



$

342


Less: Net investment (losses) gains

(169)



24


Core income

$

108



$

318


Reconciliation of Net (Loss) Income per Diluted Share to Core Income per Diluted Share

Core income (loss) per diluted share provides management and investors with a valuable measure of the Company's operating performance for the same reasons applicable to its underlying measure, core income (loss).  Core income (loss) per diluted share is core income (loss) on a per diluted share basis.


Results for the Three Months Ended
March 31


2020


2019

Net (loss) income per diluted share

$

(0.23)



$

1.25


Less: Net investment (losses) gains

(0.63)



0.08


Core income per diluted share

$

0.40



$

1.17


Reconciliation of Book Value per Share to Book Value per Share Excluding AOCI

Book value per share excluding AOCI allows management and investors to analyze the amount of the Company's net worth primarily attributable to the Company's business operations.  The Company believes this measurement is useful as it reduces the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates.


March 31,
2020


December 31,
2019

Book value per share

$

38.18



$

45.00


Less: Per share impact of AOCI

(3.94)



0.19


Book value per share excluding AOCI

$

42.12



$

44.81


Calculation of Return on Equity and Core Return on Equity

Core return on equity provides management and investors with a measure of how effectively the Company is investing the portion of the Company's net worth that is primarily attributable to its business operations.


Results for the Three Months
Ended March 31


($ millions)

2020


2019


Annualized net (loss) income

$

(245)



$

1,366



Average stockholders' equity including AOCI (a)

11,288



11,336



Return on equity

(2.2)


%

12.1


%






Annualized core income

$

433



$

1,271



Average stockholders' equity excluding AOCI (a)

11,797



11,937



Core return on equity

3.7


%

10.7


%



(a)

Average stockholders' equity is calculated using a simple average of the beginning and ending balances for the period.

For additional information, please refer to CNA's most recent 10-K on file with the Securities and Exchange Commission, as well as the financial supplement, available at www.cna.com.

Forward-Looking Statements

This press release includes statements that relate to anticipated future events (forward-looking statements) rather than actual present conditions or historical events. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as "believes," "expects," "intends," "anticipates," "estimates" and similar expressions. Forward-looking statements, by their nature, are subject to a variety of inherent risks and uncertainties that could cause actual results to differ materially from the results projected. Many of these risks and uncertainties cannot be controlled by CNA. For a detailed description of these risks and uncertainties please refer to CNA's filings with the Securities and Exchange Commission, available at www.cna.com.

Any forward-looking statements made in this press release are made by CNA as of the date of this press release. Further, CNA does not have any obligation to update or revise any forward-looking statement contained in this press release, even if CNA's expectations or any related events, conditions or circumstances change.

Any descriptions of coverage under CNA policies or programs in this press release are provided for convenience only and are not to be relied upon with respect to questions of coverage, exclusions or limitations. With regard to all such matters, the terms and provisions of relevant insurance policies are primary and controlling. In addition, please note that all coverages may not be available in all states.

"CNA" is a registered trademark of CNA Financial Corporation. Certain CNA Financial Corporation subsidiaries use the "CNA" trademark in connection with insurance underwriting and claims activities. Copyright © 2020 CNA. All rights reserved.

 

CONTACT:

 



MEDIA:


ANALYSTS:

Brandon Davis, 312-822-5885


Al Miralles, 312-822-5605

 

 

CNA logo. (PRNewsFoto/CNA Financial Corporation) (PRNewsfoto/CNA)

 

SOURCE CNA Financial Corporation


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