Book Value Per Share of $46.99, an Increase of 4% from June 30, 2012
Quarterly Dividend of $0.15 Per Share
CHICAGO--(BUSINESS WIRE)--
CNA Financial Corporation (NYSE: CNA) today announced third quarter 2012
results, which included net operating income of $216 million, or $0.80
per share, and net income of $221 million, or $0.82 per share. Property
& Casualty Operations combined ratio for the third quarter was 99.7%.
Book value per share was $46.99 at September 30, 2012, as compared with
$45.34 at June 30, 2012 and $42.66 at December 31, 2011.
CNA Financial also announced declaration of a quarterly dividend of
$0.15 per share, payable November 29, 2012 to stockholders of record on
November 13, 2012.
|
| |
| |
| | Results for the Three Months | | Results for the Nine Months |
| | Ended September 30 (a) | | Ended September 30 (a) |
|
($ millions)
| | 2012 |
| 2011 (b) | | 2012 |
| 2011 (b) |
|
Net operating income
| |
$
|
216
| | |
$
|
91
| | |
$
|
594
| | |
$
|
418
| |
|
Net realized investment gains (losses)
| |
5
|
| |
(16
|
)
| |
43
|
| |
2
|
|
|
Net income from continuing operations
| |
221
| | |
75
| | |
637
| | |
420
| |
|
Net loss from discontinued operations
| |
—
|
| |
—
|
| |
—
|
| |
(1
|
)
|
|
Net income
| |
$
|
221
|
| |
$
|
75
|
| |
$
|
637
|
| |
$
|
419
|
|
___________________
(a) References to net operating income (loss), net realized
investment gains (losses), net income (loss) from continuing operations
and net income (loss) used in this press release reflect amounts
attributable to CNA, unless otherwise noted.Management utilizes
the net operating income financial measure to monitor the Company's
operations.Please refer to Note N of the Consolidated Financial
Statements within CNA's Annual Report on Form 10-K for the year ended
December 31, 2011 for further discussion of this measure.
(b) The Company has adjusted its previously reported financial
information included herein to reflect a retrospective change in
accounting guidance for deferred acquisition costs.Financial
information included herein gives effect to this adjustment.For
the three and nine months ended September 30, 2011, the impacts of
adopting the new accounting standard were no impact and a $5 million
decrease in Net operating income and Net income, and no impact and a
$0.02 decrease in Earnings per share.Book value per share at
December 31, 2011 decreased $0.26.
|
|
| Diluted Earnings Per Share Attributable to Common Stockholders |
|
| Results for the Three Months |
| Results for the Nine Months |
| | Ended September 30 | | Ended September 30 |
| | 2012 |
| 2011 | | 2012 |
| 2011 |
|
Net operating income
| |
$
|
0.80
| | |
$
|
0.34
| | |
$
|
2.20
| | |
$
|
1.55
|
|
Net realized investment gains (losses)
| |
0.02
|
| |
(0.06
|
)
| |
0.16
|
| |
0.01
|
|
Net income from continuing operations
| |
0.82
| | |
0.28
| | |
2.36
| | |
1.56
|
|
Net loss from discontinued operations
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
Net income
| |
$
|
0.82
|
| |
$
|
0.28
|
| |
$
|
2.36
|
| |
$
|
1.56
|
| | | | | | | | | | | | | | |
|
Net operating income for the third quarter of 2012 increased $125
million as compared with the same period in 2011. Net operating income
for our core Property & Casualty Operations increased $134 million. This
increase was primarily due to higher net investment income, driven by
significantly favorable limited partnership results, and lower
catastrophe losses. For the third quarter of 2012, catastrophe losses
were $18 million after-tax as compared with $32 million after-tax for
the same period in 2011. Our Property & Casualty Operations produced
third quarter combined ratios of 99.7% and 99.1% in 2012 and 2011.
Excluding the impacts of catastrophe losses and development, the
combined ratio improved to 100.7% from 101.0% for the same periods. Net
operating results decreased $9 million for our non-core segments,
primarily due to unfavorable morbidity in our long term care business.
“We are pleased to report our third quarter results which include a much
improved level of earnings and a continuation of favorable rate and
retention trends in our core P&C business,” said Thomas F. Motamed,
Chairman and Chief Executive Officer of CNA Financial Corporation. “Our
third quarter results reflect the favorable impact of the addition of
the newly acquired Hardy group. Hardy’s combined ratio was 85.8% with
net earned premium of $64 million.”
Pretax net investment income for the third quarter of 2012 increased
$207 million as compared with the same period in 2011, primarily driven
by a significant increase in limited partnership investment results.
Net operating income for the nine months ended September 30, 2012
increased $176 million as compared with the same period in 2011. Net
operating income for our core Property & Casualty Operations increased
$159 million. This increase was primarily due to higher net investment
income, driven by favorable limited partnership income, and lower
catastrophe losses. For the nine months ended September 30, 2012,
catastrophe losses were $80 million after-tax as compared with $133
million after-tax for the same period in 2011. Our Property & Casualty
Operations produced combined ratios of 101.1% and 102.3% for the nine
months ended September 30, 2012 and 2011. Excluding the impacts of
catastrophe losses and development, the combined ratio improved to
101.3% from 101.8% for the same periods. Net operating results improved
$17 million for our non-core segments, driven by results in our Life and
Group Non-Core segment.
Pretax net investment income for the nine months ended September 30,
2012 increased $188 million as compared with the same period in 2011,
primarily driven by a significant increase in limited partnership
investment income and an increase in fixed maturity securities income.
Business Operating Highlights
CNA Specialty provides professional and management liability,
surety and other property and casualty coverages and services, which
include warranty and service contracts. Specialty products are sold both
domestically and abroad, through brokers, independent agencies and
managing general underwriters.
-
Net written premiums decreased $27 million, or 4%, for the third
quarter of 2012 as compared with the same period in 2011, primarily
due to lower new business levels in certain lines, partially offset by
continued positive rate achievement. Average rate increased 5% for the
third quarter of 2012, as compared with flat average rate for the same
period in 2011 for the policies that renewed in each period. Retention
of 86% and 87% was achieved in each respective period.
-
Net income increased $58 million and net operating income increased
$53 million for the third quarter of 2012 as compared with the same
period in 2011, primarily due to higher net investment income.
-
The combined ratio decreased 1.0 point for the third quarter of 2012
as compared with the same period in 2011. The loss ratio decreased 3.0
points, due to the impact of increased favorable net prior year
development and an improved current accident year loss ratio. The
expense ratio increased 1.2 points, primarily due to the impact of
favorable premium development in 2011.
-
CNA Specialty produced third quarter combined ratios of 93.7% and
94.7% in 2012 and 2011. Excluding the impacts of catastrophe losses
and development, the combined ratios were 98.6% and 97.3% for the same
comparable periods.
CNA Commercial works with an independent agency distribution
system and brokers to market a broad range of property and casualty
insurance products and services to small, middle-market and large
businesses and organizations domestically and abroad.
-
Net written premiums decreased $25 million, or 3%, for the third
quarter of 2012 as compared with the same period in 2011. Excluding
the impact of First Insurance Company of Hawaii (FICOH), which was
sold in the fourth quarter of 2011, net written premiums increased 2%.
Average rate increased 8% for the third quarter of 2012, as compared
with an increase of 2% for the third quarter of 2011 for the policies
that renewed in each period. Retention of 79% was achieved in each
respective period.
-
Net income increased $94 million and net operating income increased
$78 million for the third quarter of 2012 as compared with the same
period in 2011. This increase was primarily due to higher net
investment income and lower catastrophe losses. These favorable
impacts were partially offset by decreased favorable net prior year
development. Furthermore, income tax expense of $22 million was
recorded in 2011 due to an increase in the tax rate applicable to the
undistributed earnings of FICOH, which was under contract for sale.
-
The combined ratio increased 3.1 points for the third quarter of 2012
as compared with the same period in 2011. The loss ratio increased 1.8
points, primarily due to the impacts of less favorable net prior year
development, partially offset by lower catastrophe losses and an
improved current accident year non-catastrophe loss ratio. The expense
ratio increased 1.4 points, primarily due to higher underwriting
expenses and the favorable impact of recoveries in 2011 on insurance
receivables written off in prior years.
-
CNA Commercial produced third quarter combined ratios of 106.0% and
102.9% in 2012 and 2011. Excluding the impacts of catastrophe losses
and development, the combined ratios were 102.9% and 104.0% for the
same periods.
Hardy, a specialized Lloyd's of London (Lloyd's) underwriter, was
acquired on July 2, 2012. Through Lloyd's Syndicate 382, Hardy
underwrites primarily short-tail exposures in marine and aviation,
non-marine property, specialty lines and property treaty reinsurance.
The results of Hardy for the period from July 2, 2012 to September 30,
2012 are included in the results of our core property and casualty
insurance operations as a separate segment.
-
Net written premiums were $56 million for the third quarter of 2012.
Average rate increased 1% for the third quarter of 2012 for the
policies that renewed in the period. Retention of 72% was achieved in
the period.
-
Net income was $2 million and net operating income was $3 million for
the third quarter of 2012. No catastrophe losses were incurred in the
period.
-
Hardy produced a third quarter combined ratio of 85.8%. Excluding the
impact of development, the combined ratio was 94.7%.
Life & Group Non-Core primarily includes the results of the
life and group lines of business that are in run-off. Net earned
premiums relate primarily to the individual and group long term care
businesses.
-
Net loss increased $7 million for the third quarter of 2012 as
compared with the same period in 2011. This increase was primarily due
to unfavorable morbidity in our long term care business.
Corporate & Other Non-Core primarily includes certain
corporate expenses, including interest on corporate debt, and the
results of certain property and casualty business in run-off, including
CNA Re and asbestos and environmental pollution.
-
Net loss increased $1 million for the third quarter of 2012 as
compared with the same period in 2011. Results in 2011 benefited from
the $10 million impact of a release of a previously established
allowance for uncollectible reinsurance receivables arising from a
change in estimate.
|
|
| Segment Results for the Three Months Ended September 30, 2012 |
|
| |
| |
| |
| |
| |
| Corporate & |
| |
| | CNA | | CNA | | | | Total P&C | | Life & Group | | Other Non- | | |
|
($ millions)
| | Specialty | | Commercial | | Hardy | | Operations | | Non-Core | | Core | | Total |
|
Net operating income (loss)
| |
$
|
136
| | |
$
|
125
| | |
$
|
3
| | |
$
|
264
| | |
$
|
(22
|
)
| |
$
|
(26
|
)
| |
$
|
216
|
|
Net realized investment gains (losses)
| |
—
|
| |
7
|
| |
(1
|
)
| |
6
|
| |
(2
|
)
| |
1
|
| |
5
|
|
Net income (loss) from continuing operations
| |
$
|
136
|
| |
$
|
132
|
| |
$
|
2
|
| |
$
|
270
|
| |
$
|
(24
|
)
| |
$
|
(25
|
)
| |
$
|
221
|
|
|
| Segment Results for the Three Months Ended September 30, 2011 |
|
| |
| |
| |
| |
| Corporate & |
| |
| | | | CNA | | Total P&C | | Life & Group | | Other Non- | | |
|
($ millions)
| | CNA Specialty | | Commercial | | Operations | | Non-Core | | Core | | Total |
|
Net operating income (loss)
| |
$
|
83
| | |
$
|
47
| | |
$
|
130
| | |
$
|
(14
|
)
| |
$
|
(25
|
)
| |
$
|
91
| |
|
Net realized investment gains (losses)
| |
(5
|
)
| |
(9
|
)
| |
(14
|
)
| |
(3
|
)
| |
1
|
| |
(16
|
)
|
|
Net income (loss) from continuing operations
| |
$
|
78
|
| |
$
|
38
|
| |
$
|
116
|
| |
$
|
(17
|
)
| |
$
|
(24
|
)
| |
$
|
75
|
|
|
|
| Segment Results for the Nine Months Ended September 30, 2012 |
|
| |
| |
| |
| |
| |
| Corporate & |
| |
| | CNA | | CNA | | | | Total P&C | | Life & Group | | Other Non- | | |
|
($ millions)
| | Specialty | | Commercial | | Hardy | | Operations | | Non-Core | | Core | | Total |
|
Net operating income (loss)
| |
$
|
374
| | |
$
|
321
| | |
$
|
3
| | |
$
|
698
| | |
$
|
(38
|
)
| |
$
|
(66
|
)
| |
$
|
594
|
|
Net realized investment gains (losses)
| |
12
|
| |
22
|
| |
(1
|
)
| |
33
|
| |
9
|
| |
1
|
| |
43
|
|
Net income (loss) from continuing operations
| |
$
|
386
|
| |
$
|
343
|
| |
$
|
2
|
| |
$
|
731
|
| |
$
|
(29
|
)
| |
$
|
(65
|
)
| |
$
|
637
|
|
|
| Segment Results for the Nine Months Ended September 30, 2011 |
|
| |
| |
| |
| |
| Corporate & |
| |
| | | | CNA | | Total P&C | | Life & Group | | Other Non- | | |
|
($ millions)
| | CNA Specialty | | Commercial | | Operations | | Non-Core | | Core | | Total |
|
Net operating income (loss)
| |
$
|
326
| | |
$
|
213
| | |
$
|
539
| | |
$
|
(51
|
)
| |
$
|
(70
|
)
| |
$
|
418
|
|
Net realized investment gains (losses)
| |
5
|
| |
9
|
| |
14
|
| |
(5
|
)
| |
(7
|
)
| |
2
|
|
Net income (loss) from continuing operations
| |
$
|
331
|
| |
$
|
222
|
| |
$
|
553
|
| |
$
|
(56
|
)
| |
$
|
(77
|
)
| |
$
|
420
|
|
|
| Property & Casualty Operations Gross Written Premiums |
|
| Three Months Ended September 30 |
| Nine Months Ended September 30 |
|
($ millions)
| | 2012 |
| 2011 | | 2012 |
| 2011 |
|
CNA Specialty
| |
$
|
1,211
| | |
$
|
1,139
| | |
$
|
3,670
| | |
$
|
3,348
|
|
CNA Commercial
| |
864
| | |
882
| | |
2,715
| | |
2,740
|
|
Hardy
| |
87
|
| |
| |
87
|
| |
|
|
Total P&C Operations
| |
$
|
2,162
|
| |
$
|
2,021
|
| |
$
|
6,472
|
| |
$
|
6,088
|
|
|
| Property & Casualty Operations Net Written Premiums |
|
| Three Months Ended September 30 |
| Nine Months Ended September 30 |
|
($ millions)
| | 2012 |
| 2011 | | 2012 |
| 2011 |
|
CNA Specialty
| |
$
|
723
| | |
$
|
750
| | |
$
|
2,206
| | |
$
|
2,172
|
|
CNA Commercial
| |
811
| | |
836
| | |
2,543
| | |
2,544
|
|
Hardy
| |
56
|
| |
| |
56
|
| |
|
|
Total P&C Operations
| |
$
|
1,590
|
| |
$
|
1,586
|
| |
$
|
4,805
|
| |
$
|
4,716
|
|
|
| Property & Casualty Calendar Year Loss Ratios | |
|
| Three Months Ended September 30 |
|
| Nine Months Ended September 30 |
|
| | 2012 |
| 2011 | | 2012 |
| 2011 |
|
CNA Specialty
| |
62.5
|
%
| |
65.5
|
%
| |
63.6
|
%
| |
63.6
|
%
|
|
CNA Commercial
| |
70.5
|
%
| |
68.7
|
%
| |
71.3
|
%
| |
74.7
|
%
|
|
Hardy
| |
33.3
|
%
| | | |
33.3
|
%
| | |
|
Total P&C Operations
| |
65.4
|
%
| |
67.2
|
%
| |
67.3
|
%
| |
69.5
|
%
|
|
|
| Property & Casualty Calendar Year Combined Ratios | |
|
| Three Months Ended September 30 |
|
| Nine Months Ended September 30 |
|
| | 2012 |
| 2011 | | 2012 |
| 2011 |
|
CNA Specialty
| |
93.7
|
%
| |
94.7
|
%
| |
95.1
|
%
| |
94.0
|
%
|
|
CNA Commercial
| |
106.0
|
%
| |
102.9
|
%
| |
106.8
|
%
| |
109.5
|
%
|
|
Hardy
| |
85.8
|
%
| | | |
85.8
|
%
| | |
|
Total P&C Operations
| |
99.7
|
%
| |
99.1
|
%
| |
101.1
|
%
| |
102.3
|
%
|
|
|
| CNA Specialty Effect of Catastrophe Impacts and
Development-Related Items | |
|
| Three Months Ended September 30 |
|
| Nine Months Ended September 30 |
|
| | 2012 |
| 2011 | | 2012 |
| 2011 |
|
Combined ratio excluding the effect of catastrophe impacts and
development-related items
| |
98.6
|
%
| |
97.3
|
%
| |
98.9
|
%
| |
98.0
|
%
|
|
Effect of catastrophe impacts
| |
0.5
| | |
0.5
| | |
0.4
| | |
0.5
| |
|
Effect of development-related items
| |
(5.4
|
)
| |
(3.1
|
)
| |
(4.2
|
)
| |
(4.5
|
)
|
|
Combined ratio
| |
93.7
|
%
| |
94.7
|
%
| |
95.1
|
%
| |
94.0
|
%
|
|
|
| CNA Commercial Effect of Catastrophe Impacts and
Development-Related Items | |
|
| Three Months Ended September 30 |
|
| Nine Months Ended September 30 |
|
| | 2012 |
| 2011 | | 2012 |
| 2011 |
|
Combined ratio excluding the effect of catastrophe impacts and
development-related items
| |
102.9
|
%
| |
104.0
|
%
| |
103.8
|
%
| |
104.8
|
%
|
|
Effect of catastrophe impacts
| |
2.8
| | |
5.5
| | |
4.7
| | |
8.1
| |
|
Effect of development-related items
| |
0.3
|
| |
(6.6
|
)
| |
(1.7
|
)
| |
(3.4
|
)
|
|
Combined ratio
| |
106.0
|
%
| |
102.9
|
%
| |
106.8
|
%
| |
109.5
|
%
|
|
|
| Hardy Effect of Catastrophe Impacts and Development-Related Items |
|
| Three Months Ended September 30 |
| Nine Months Ended September 30 |
| | 2012 |
| 2011 | | 2012 |
| 2011 |
|
Combined ratio excluding the effect of catastrophe impacts and
development-related items
| |
94.7
|
%
| | | |
94.7
|
%
| | |
|
Effect of catastrophe impacts
| |
—
| | | | |
—
| | | |
|
Effect of development-related items
| |
(8.9
|
)
| |
| |
(8.9
|
)
| |
|
|
Combined ratio
| |
85.8
|
%
| |
| |
85.8
|
%
| |
|
|
|
| Property & Casualty Operations Effect of Catastrophe Impacts and
Development-Related Items | |
|
| Three Months Ended September 30 |
|
| Nine Months Ended September 30 |
|
| | 2012 |
| 2011 | | 2012 |
| 2011 |
|
Combined ratio excluding the effect of catastrophe impacts and
development-related items
| |
100.7
|
%
| |
101.0
|
%
| |
101.3
|
%
| |
101.8
|
%
|
|
Effect of catastrophe impacts
| |
1.6
| | |
3.1
| | |
2.6
| | |
4.5
| |
|
Effect of development-related items
| |
(2.6
|
)
| |
(5.0
|
)
| |
(2.8
|
)
| |
(4.0
|
)
|
|
Combined ratio
| |
99.7
|
%
| |
99.1
|
%
| |
101.1
|
%
| |
102.3
|
%
|
About the Company
Serving businesses and professionals since 1897, CNA is the country's
seventh largest commercial insurance writer and the 13th
largest property and casualty company. CNA's insurance products include
standard commercial lines, specialty lines, surety, marine and other
property and casualty coverages. CNA's services include risk management,
information services, underwriting, risk control and claims
administration. For more information, please visit CNA at www.cna.com.
CNA is a registered trademark of CNA Financial Corporation.
Conference Call and Webcast Information:
A conference call for investors and the professional investment
community will be held at 10:00 a.m. (ET) today. On the conference call
will be Thomas F. Motamed, Chairman and Chief Executive Officer of CNA
Financial Corporation, and other members of senior management.
Participants can access the call by dialing (888) 417-8465, or for
international callers, (719) 457-2627. The call will also be broadcast
live on the internet at http://investor.cna.com
or you may go to the investor relations pages of the CNA website (www.cna.com)
for further details.
The call is available to the media, but questions will be restricted to
investors and the professional investment community. A taped replay of
the call will be available through November 5, 2012 by dialing (888)
203-1112, or for international callers, (719) 457-0820. The replay
passcode is 8296646. The replay will also be available on CNA's website.
Financial supplement information related to the results is available on
the investor relations pages of the CNA website or by contacting David
Adams at (312) 822-2183.
Financial Measures
In evaluating the results of CNA Specialty, CNA Commercial and Hardy,
management utilizes the combined ratio, the loss ratio, the expense
ratio and the dividend ratio. These ratios are calculated using
financial results prepared in accordance with accounting principles
generally accepted in the United States of America (GAAP). The loss
ratio is the percentage of net incurred claim and claim adjustment
expenses to net earned premiums. The expense ratio is the percentage of
insurance underwriting and acquisition expenses, including the
amortization of deferred acquisition costs, to net earned premiums. The
dividend ratio is the ratio of policyholders' dividends incurred to net
earned premiums. The combined ratio is the sum of the loss, expense and
dividend ratios.
This press release may also reference or contain financial measures that
are not in accordance with GAAP. For reconciliations of non-GAAP
measures to the most comparable GAAP measures, please refer herein
and/or 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 Statement
This press release may include statements which 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 affecting CNA, please refer to CNA's most
recent 10-K on file 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.
CNA Financial Corporation
MEDIA:
Jennifer Martinez,
312/822-5167
Sarah Pang, 312/822-6394
or
ANALYSTS:
Marie
Hotza, 312/822-4278
David Adams, 312/822-2183
Source: CNA Financial Corporation