Net Written Premiums Increase of 8%, P&C Combined Ratio of 99.1%
Book Value Per Common Share of $43.85, an Increase of 2% from
June 30, 2011
Quarterly Dividend of $0.10 Per Share
CHICAGO--(BUSINESS WIRE)--
CNA Financial Corporation (NYSE: CNA) today announced third quarter 2011
results, which included net operating income of $91 million, or $0.34
per common share, and net income of $75 million, or $0.28 per common
share. Property & Casualty Operations combined ratio for the third
quarter was 99.1%. Book value per common share was $43.85 at
September 30, 2011, as compared to $43.09 at June 30, 2011 and $40.70 at
December 31, 2010.
CNA Financial also announced declaration of a quarterly dividend of
$0.10 per share, payable November 30, 2011 to stockholders of record on
November 14, 2011.
|
| Results for the Three
Months Ended September
30
(a) |
| Results for the Nine
Months Ended September
30
(a) |
| ($ millions) | | 2011 |
| 2010 | | 2011 |
| 2010 |
|
Net operating income (loss):
| | | | | | | | |
|
Net operating income before LPT (b) | |
$
|
91
| | |
$
|
186
| | |
$
|
423
| | |
$
|
678
| |
|
Net loss related to LPT (b) | |
—
|
| |
(344
|
)
| |
—
|
| |
(344
|
)
|
|
Net operating income (loss)
| |
91
| | |
(158
|
)
| |
423
| | |
334
| |
|
Net realized investment gains (losses)
| |
(16
|
)
| |
40
|
| |
2
|
| |
75
|
|
|
Net income (loss) from continuing operations
| |
75
| | |
(118
|
)
| |
425
| | |
409
| |
|
Net income (loss) from discontinued operations
| |
—
|
| |
(22
|
)
| |
(1
|
)
| |
(21
|
)
|
|
Net income (loss)
| |
$
|
75
|
| |
$
|
(140
|
)
| |
$
|
424
|
| |
$
|
388
|
|
(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, 2010 for further
discussion of this measure. |
(b) | | On August 31, 2010, the Company completed a transaction with
National Indemnity Company (NICO), a subsidiary of Berkshire
Hathaway Inc., under which substantially all of the Company's
legacy asbestos and environmental pollution liabilities were ceded
to NICO (Loss Portfolio Transfer or LPT). The Company recognized
an after-tax net loss of $365 million in the third quarter of
2010, of which $344 million related to the Company's continuing
operations and $21 million related to the Company's discontinued
operations. |
| Earnings Per Share Attributable to Common Stockholders |
|
| Results for the Three
Months Ended
September
30 |
| Results for the Nine
Months Ended
September
30 |
| | 2011 |
| 2010 | | 2011 |
| 2010 |
|
Net operating income (loss):
| | | | | | | | |
|
Net operating income before LPT
| |
$
|
0.34
| | |
$
|
0.69
| | |
$
|
1.57
| | |
$
|
2.52
| |
|
Net loss related to LPT
| |
—
|
| |
(1.28
|
)
| |
—
|
| |
(1.28
|
)
|
|
Net operating income (loss)
| |
0.34
| | |
(0.59
|
)
| |
1.57
| | |
1.24
| |
|
2008 Senior Preferred dividend
| |
—
|
| |
(0.07
|
)
| |
—
|
| |
(0.25
|
)
|
|
Net operating income attributable to CNA common stockholders
| |
0.34
| | |
(0.66
|
)
| |
1.57
| | |
0.99
| |
|
Net realized investment gains (losses)
| |
(0.06
|
)
| |
0.15
|
| |
0.01
|
| |
0.28
|
|
|
Net income (loss) from continuing operations
| |
0.28
| | |
(0.51
|
)
| |
1.58
| | |
1.27
| |
|
Net income (loss) from discontinued operations
| |
—
|
| |
(0.08
|
)
| |
—
|
| |
(0.08
|
)
|
|
Net income (loss) attributable to CNA common stockholders
| |
$
|
0.28
|
| |
$
|
(0.59
|
)
| |
$
|
1.58
|
| |
$
|
1.19
|
|
Net operating income for the three months ended September 30, 2011
increased $249 million as compared with the same period in 2010.
Excluding the loss associated with the agreement to cede asbestos and
environmental pollution liabilities in the third quarter of 2010 (Loss
Portfolio Transfer), net operating income decreased $95 million for the
three months ended September 30, 2011 as compared with the same period
in 2010. Net operating income for our core Property & Casualty
Operations decreased $122 million, primarily due to decreased net
investment income and higher catastrophe losses. For the three months
ended September 30, 2011, catastrophe losses were $32 million after-tax
as compared to $8 million after-tax for the same period in 2010. Our
Property & Casualty Operations produced third quarter combined ratios of
99.1% and 98.0% in 2011 and 2010. Excluding the impacts of favorable
reserve development and catastrophe losses, our combined ratio improved
to 101.0% from 103.7% for the same comparable periods.
“While we are pleased to demonstrate continued progress in our
determined efforts to improve the earnings power of our core Property &
Casualty Operations, we recognize that there continues to be much work
to be done,” said Thomas F. Motamed, Chairman and Chief Executive
Officer of CNA Financial Corporation. “Most notably, in the third
quarter we continued to drive improved rate across all our businesses,
further improved our net accident year loss ratio in commercial lines
and increased our net written premiums 8%, our third consecutive quarter
of top line growth.”
Pretax net investment income for the three months ended September 30,
2011 decreased $187 million as compared with the same period in 2010.
The decrease was primarily driven by a significant decrease in limited
partnership results as well as lower fixed maturity security income.
Limited partnerships produced a loss of $93 million for the three months
ended September 30, 2011, as compared to income of $68 million for the
three months ended September 30, 2010.
After-tax net realized investment results decreased $56 million for the
three months ended September 30, 2011 as compared with the same period
in 2010.
Net operating income for the nine months ended September 30, 2011
increased $89 million as compared with the same period in 2010.
Excluding the loss associated with the Loss Portfolio Transfer, net
operating income decreased $255 million for the nine months ended
September 30, 2011 as compared with the same period in 2010. Net
operating income for our core Property & Casualty Operations decreased
$227 million, primarily due to the same reasons as discussed above in
the three month comparison, as well as a lower level of favorable net
prior year development. For the nine months ended September 30, 2011,
catastrophe losses were $133 million after-tax as compared to $65
million after-tax for the same period in 2010. Our Property & Casualty
Operations produced year-to-date combined ratios of 102.1% and 96.6% in
2011 and 2010. Excluding the impacts of favorable reserve development
and catastrophe losses, our combined ratio improved to 101.6% from
103.5% for the same comparable periods.
Pretax net investment income for the nine months ended September 30,
2011 decreased $161 million as compared with the same period in 2010.
The decrease was primarily due to the same reasons discussed above in
the three month comparison.
After-tax net realized investment gains decreased to $2 million for the
nine months ended September 30, 2011 as compared with $75 million for
the same period in 2010.
Business Operating Highlights
CNA Specialty provides professional and management liability as
well as surety and other property and casualty coverages and services,
which include warranty and service contracts. Specialty products are
sold both domestically and abroad, through a network of brokers,
independent agencies and managing general underwriters.
-
Net written premiums increased $44 million for the third quarter of
2011 as compared with the same period in 2010, primarily driven by new
business. Average rate was flat for the third quarter of 2011, as
compared to a decrease of 3% for the same period in 2010 for the
policies that renewed in each period. Retention of 86% was achieved in
each period.
-
Net income decreased $74 million and net operating income decreased
$60 million for the third quarter of 2011 as compared with the same
period in 2010. The decrease in net operating income was primarily due
to decreased net investment income and a lower level of favorable net
prior year development.
-
The combined ratio increased 6.2 points for the third quarter of 2011
as compared with the same period in 2010. The loss ratio increased 7.7
points, primarily due to a lower level of favorable net prior year
development.
-
CNA Specialty produced third quarter combined ratios of 94.7% and
88.5% in 2011 and 2010. Excluding the impacts of favorable reserve
development and catastrophe losses, our combined ratios were 97.3% and
98.2% for the same comparable periods.
CNA Commercial works with an independent agency distribution
system and network of 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 increased $73 million for the third quarter of
2011 as compared with the same period in 2010. This increase was
driven by continued positive rate achievement, improved economic
conditions reflected in insured exposures, as well as improved
reinsurance costs and new business levels in certain business lines.
Average rate increased 2% for the third quarter of 2011 and was flat
for the third quarter of 2010 for the policies that renewed in each
period. Retention of 79% and 81% were achieved in each period.
-
Net income decreased $85 million and net operating income decreased
$62 million for the third quarter of 2011 as compared with the same
period in 2010. The decrease in net operating income was primarily due
to lower net investment income and higher catastrophe losses,
partially offset by improved non-catastrophe current accident year
underwriting results and increased favorable net prior year
development. Additionally, income tax expense of $22 million was
recorded due to an increase in the tax rate applicable to the
undistributed earnings of a 50% owned subsidiary now under contract
for sale.
-
The combined ratio improved 2.8 points for the third quarter of 2011
as compared with the same period in 2010. The loss ratio improved 1.6
points, primarily due to increased favorable net prior year
development and an improved current accident year non-catastrophe loss
ratio, partially offset by higher catastrophe losses.
-
CNA Commercial produced third quarter combined ratios of 103.0% and
105.8% in 2011 and 2010. Excluding the impacts of favorable reserve
development and catastrophe losses, our combined ratios were 104.1%
and 108.3% for the same comparable periods.
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 decreased $25 million for the third quarter of 2011 as
compared with the same period in 2010. This improvement was primarily
due to a $39 million pretax and after-tax increase to payout annuity
benefit reserves recognized during the third quarter of 2010.
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 (A&EP).
-
Net loss decreased $327 million for the third quarter of 2011 as
compared with the same period in 2010, primarily driven by the
after-tax net loss of $344 million as a result of the Loss Portfolio
Transfer consummated in the third quarter of 2010. Net results were
also affected by lower net investment income partially offset by lower
net incurred claims. Under the Loss Portfolio Transfer, approximately
$1.6 billion of net A&EP claim and claim adjustment expense reserves
were ceded under a retroactive reinsurance agreement. As a result of
the Loss Portfolio Transfer, the investment income allocated to the
Corporate & Other Non-Core segment decreased because of the lower net
reserve base and associated risk capital. Claim adjustment expenses
are lower because the counterparty to the Loss Portfolio Transfer is
responsible for the A&EP claims handling.
| Segment Results for the Three Months Ended September 30, 2011 |
| ($ millions) |
| CNA Specialty |
| CNA
Commercial |
| Total P&C
Operations |
| Life & Group
Non-Core |
| Corporate &
Other Non-Core |
| Total |
|
Net operating income (loss)
| |
$
|
84
| | |
$
|
46
| | |
$
|
130
| | |
$
|
(14
|
)
| |
$
|
(25
|
)
| |
$
|
91
| |
|
Net realized investment gains (losses)
| |
(5
|
)
| |
(9
|
)
| |
(14
|
)
| |
(3
|
)
| |
1
|
| |
(16
|
)
|
|
Net income (loss) from continuing operations
| |
$
|
79
|
| |
$
|
37
|
| |
$
|
116
|
| |
$
|
(17
|
)
| |
$
|
(24
|
)
| |
$
|
75
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
|
| Segment Results for the Three Months Ended September 30, 2010 |
| ($ millions) |
| CNA Specialty |
| CNA
Commercial |
| Total P&C
Operations |
| Life & Group
Non-Core |
| Corporate &
Other Non-Core |
| Total |
|
Net operating income (loss)
| |
$
|
144
| | |
$
|
108
| | |
$
|
252
| | |
$
|
(55
|
)
| |
$
|
(355
|
)
| |
$
|
(158
|
)
|
|
Net realized investment gains (losses)
| |
9
|
| |
14
|
| |
23
|
| |
13
|
| |
4
|
| |
40
|
|
|
Net income (loss) from continuing operations
| |
$
|
153
|
| |
$
|
122
|
| |
$
|
275
|
| |
$
|
(42
|
)
| |
$
|
(351
|
)
| |
$
|
(118
|
)
|
| | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
|
| Segment Results for the Nine Months Ended September 30, 2011 |
| ($ millions) |
| CNA Specialty |
| CNA
Commercial |
| Total P&C
Operations |
| Life & Group
Non-Core |
| Corporate &
Other Non-Core |
| Total |
|
Net operating income (loss)
| |
$
|
328
| | |
$
|
216
| | |
$
|
544
| | |
$
|
(51
|
)
| |
$
|
(70
|
)
| |
$
|
423
|
|
Net realized investment gains (losses)
| |
5
|
| |
9
|
| |
14
|
| |
(5
|
)
| |
(7
|
)
| |
2
|
|
Net income (loss) from continuing operations
| |
$
|
333
|
| |
$
|
225
|
| |
$
|
558
|
| |
$
|
(56
|
)
| |
$
|
(77
|
)
| |
$
|
425
|
| | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | |
|
| Segment Results for the Nine Months Ended September 30, 2010 |
| ($ millions) |
| CNA Specialty |
| CNA
Commercial |
| Total P&C
Operations |
| Life & Group
Non-Core |
| Corporate &
Other Non-Core |
| Total |
|
Net operating income (loss)
| |
$
|
440
| | |
$
|
331
| | |
$
|
771
| | |
$
|
(72
|
)
| |
$
|
(365
|
)
| |
$
|
334
|
|
Net realized investment gains (losses)
| |
39
|
| |
14
|
| |
53
|
| |
8
|
| |
14
|
| |
75
|
|
Net income (loss) from continuing operations
| |
$
|
479
|
| |
$
|
345
|
| |
$
|
824
|
| |
$
|
(64
|
)
| |
$
|
(351
|
)
| |
$
|
409
|
| | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | |
|
| Property & Casualty Operations Gross Written Premiums |
|
| Three Months Ended September 30 |
| Nine Months Ended September 30 |
| ($ millions) | | 2011 |
| 2010 | | 2011 |
| 2010 |
|
CNA Specialty
| |
$
|
1,139
| | |
$
|
1,087
| | |
$
|
3,348
| | |
$
|
3,180
|
|
CNA Commercial
| |
882
|
| |
825
|
| |
2,740
|
| |
2,673
|
|
Total P&C Operations
| |
$
|
2,021
|
| |
$
|
1,912
|
| |
$
|
6,088
|
| |
$
|
5,853
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
| Property & Casualty Operations Net Written Premiums |
| Three Months Ended September 30 |
| Nine Months Ended September 30 |
| ($ millions) | 2011 |
| 2010 | | 2011 |
| 2010 |
|
CNA Specialty
|
$
|
750
| | |
$
|
706
| | |
$
|
2,172
| | |
$
|
2,009
|
|
CNA Commercial
|
836
|
| |
763
|
| |
2,544
|
| |
2,430
|
|
Total P&C Operations
|
$
|
1,586
|
| |
$
|
1,469
|
| |
$
|
4,716
|
| |
$
|
4,439
|
| | | | | | | | | | | | | |
|
| | | | | | | | | | | | | |
|
| Property & Casualty Calendar Year Loss Ratios |
|
| Three Months Ended September 30 |
| Nine Months Ended September 30 |
| | 2011 |
| 2010 | | 2011 |
| 2010 |
|
CNA Specialty
| |
65.5
|
%
| |
57.8
|
%
| |
63.6
|
%
| |
55.8
|
%
|
|
CNA Commercial
| |
68.7
|
%
| |
70.3
|
%
| |
74.7
|
%
| |
68.5
|
%
|
|
Total P&C Operations
| |
67.2
|
%
| |
64.7
|
%
| |
69.5
|
%
| |
62.8
|
%
|
| | | | | | | | | | | |
|
| | | | | | | | | | | |
|
| Property & Casualty Calendar Year Combined Ratios |
| Three Months Ended September 30 |
| Nine Months Ended September 30 |
| 2011 |
| 2010 | | 2011 |
| 2010 |
|
CNA Specialty
|
94.7
|
%
| |
88.5
|
%
| |
93.9
|
%
| |
86.6
|
%
|
|
CNA Commercial
|
103.0
|
%
| |
105.8
|
%
| |
109.3
|
%
| |
104.7
|
%
|
|
Total P&C Operations
|
99.1
|
%
| |
98.0
|
%
| |
102.1
|
%
| |
96.6
|
%
|
| | | | | | | | | | |
|
| | | | | | | | | | |
|
| CNA Specialty Effect of Catastrophe Impacts and
Development-Related Items |
|
| Three Months Ended September 30 |
| Nine Months Ended September 30 |
| | 2011 |
| 2010 | | 2011 |
| 2010 |
|
Combined ratio excluding the effect of
| | | | | | | | | | | | |
|
catastrophe impacts and development-
| | | | | | | | | | | | |
|
related items
| |
97.3
|
%
| |
98.2
|
%
| |
97.9
|
%
| |
97.2
|
%
|
|
Effect of catastrophe impacts
| |
0.5
|
%
| |
0.1
|
%
| |
0.5
|
%
| |
0.3
|
%
|
|
Effect of development-related items
| |
(3.1
|
)%
| |
(9.8
|
)%
| |
(4.5
|
)%
| |
(10.9
|
)%
|
|
Combined ratio
| |
94.7
|
%
| |
88.5
|
%
| |
93.9
|
%
| |
86.6
|
%
|
| | | | | | | | | | | |
|
| | | | | | | | | | | |
|
| CNA Commercial Effect of Catastrophe Impacts and
Development-Related Items |
|
| Three Months Ended September 30 |
| Nine Months Ended September 30 |
| | 2011 |
| 2010 | | 2011 |
| 2010 |
|
Combined ratio excluding the effect of
| | | | | | | | | | | | |
|
catastrophe impacts and development-
| | | | | | | | | | | | |
|
related items
| |
104.1
|
%
| |
108.3
|
%
| |
104.6
|
%
| |
108.5
|
%
|
|
Effect of catastrophe impacts
| |
5.5
|
%
| |
1.4
|
%
| |
8.1
|
%
| |
3.9
|
%
|
|
Effect of development-related items
| |
(6.6
|
)%
| |
(3.9
|
)%
| |
(3.4
|
)%
| |
(7.7
|
)%
|
|
Combined ratio
| |
103.0
|
%
| |
105.8
|
%
| |
109.3
|
%
| |
104.7
|
%
|
| | | | | | | | | | | |
|
| | | | | | | | | | | |
|
| Property & Casualty Operations Effect of Catastrophe Impacts and
Development-Related Items |
| Three Months Ended September 30 |
| Nine Months Ended September 30 |
| 2011 |
| 2010 | | 2011 |
| 2010 |
|
Combined ratio excluding the effect of
| | | | | | | | | | | |
|
catastrophe impacts and development-
| | | | | | | | | | | |
|
related items
|
101.0
|
%
| |
103.7
|
%
| |
101.6
|
%
| |
103.5
|
%
|
|
Effect of catastrophe impacts
|
3.1
|
%
| |
0.8
|
%
| |
4.5
|
%
| |
2.3
|
%
|
|
Effect of development-related items
|
(5.0
|
)%
| |
(6.5
|
)%
| |
(4.0
|
)%
| |
(9.2
|
)%
|
|
Combined ratio
|
99.1
|
%
| |
98.0
|
%
| |
102.1
|
%
| |
96.6
|
%
|
| | | | | | | | | | |
|
| | | | | | | | | | |
|
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) 334-3020, or for
international callers, (719) 325-2340. 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 7, 2011 by dialing (888)
203-1112, or for international callers, (719) 457-0820. The replay
passcode is 2444520. 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 and CNA Commercial,
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:
Katrina W. Parker,
312/822-5167
Sarah J. Pang, 312/822-6394
or
ANALYSTS:
Nancy
M. Bufalino, 312/822-7757
Marie Hotza, 312/822-4278
David C.
Adams, 312/822-2183
Source: CNA Financial Corporation