- Net Operating Income of $231 Million
- P&C Net Written Premium Growth of 10%
- Book Value Per Share Excluding AOCI of $43.30, an Increase of 2%
- Operating ROE of 8%
- Quarterly Dividend of $0.20 Per Share
CHICAGO--(BUSINESS WIRE)--
CNA Financial Corporation (NYSE: CNA) today announced first quarter 2013
results, which included net operating income of $231 million, or $0.86
per share, and net income of $250 million, or $0.93 per share. Property
& Casualty Operations' combined ratio for the first quarter was 101.5%.
CNA Financial also declared a quarterly dividend of $0.20 per share,
payable May 29, 2013 to stockholders of record on May 13, 2013.
|
|
| |
|
| |
| | | Results for the Three Months | | | |
| | | Ended March 31(a) | | | |
($ millions, except per share data)
| | | 2013 |
|
| 2012 | | | |
Net operating income
| | |
$
|
231
| | | |
$
|
226
| | | | |
Net income
| | |
250
| | | |
250
| | | | |
| | | | | | | | |
|
Net operating income per diluted share
| | |
0.86
| | | |
0.84
| | | | |
Net income per diluted share
| | |
0.93
| | | |
0.93
| | | | |
| | | | | | | | | | |
|
| | | March 31, 2013 | | | December 31, 2012 | | | Change |
| | | | | | |
Book value per share
| | |
$
|
46.00
| | | |
$
|
45.71
| | | |
1
|
%
|
Book value per share excluding AOCI
| | |
43.30
| | | |
42.62
| | | |
2
|
%
|
| | | | | | | | | | | |
|
(a) |
| Management utilizes the net operating income financial measure
to monitor the Company's operations. Please refer to Note O in the
Consolidated Financial Statements within CNA's Annual Report on
Form 10-K for the year ended December 31, 2012 for further
discussion of this measure. |
| |
|
Property & Casualty Operations' net operating income was $257 million
for the first quarter of 2013 as compared with $271 million in the prior
year quarter. Improved non-catastrophe current accident year
underwriting results were more than offset by lower net investment
income, higher catastrophe losses and decreased favorable net prior year
development. Net written premiums grew 10% year over year, primarily due
to increased rates across both CNA Specialty and CNA Commercial.
Net operating results for our non-core segments improved $19 million as
compared with the prior year quarter. Results in the Life & Group
Non-Core segment improved primarily due to favorable experience in our
long term care business.
Pretax net investment income decreased to $633 million for the first
quarter of 2013 as compared with $648 million in the prior year quarter.
The decrease was primarily driven by lower fixed maturity securities
income due to the effect of purchasing investments at lower interest
rates, partially offset by a higher invested asset base. Our limited
partnership portfolio produced consistently superior returns in both
periods.
After-tax net realized investment gains decreased to $19 million for the
first quarter of 2013 as compared with $24 million for the prior year
quarter, driven by lower realized gains on sales of securities,
partially offset by lower other-than-temporary-impairment (OTTI) losses
recognized in earnings.
Property & Casualty Operations
“While we are encouraged by our growth momentum, our primary focus
remains the need to drive improvement in our underwriting margins, which
improved modestly in the first quarter. We expect to accelerate our
progress through the remainder of 2013 and into 2014 as sustained rate
increases and non-rate underwriting actions continue to improve our
results,” said Thomas F. Motamed, Chairman and Chief Executive Officer
of CNA Financial Corporation.
|
|
| Results for the Three Months Ended |
| | | March 31 |
($ millions)
| | | 2013 |
|
| 2012 |
Net written premiums
| | |
$
|
1,776
| | | | |
$
|
1,608
| | |
NWP Growth (% year over year)
| | |
10
| |
%
| | |
3
| |
%
|
Net operating income
| | |
$
|
257
| | | | |
$
|
271
| | |
| | | | | | | |
|
Loss ratio
| | |
67.5
| |
%
| | |
68.6
| |
%
|
Effect of catastrophe impacts
| | |
(2.4
|
)
| | | |
(1.9
|
)
| |
Effect of development-related items
| | |
1.9
|
| | | |
2.1
|
| |
Loss ratio excluding catastrophes and development
| | |
67.0
|
|
%
| | |
68.8
|
|
%
|
| | | | | | | |
|
Combined ratio
| | |
101.5
| |
%
| | |
102.0
| |
%
|
Combined ratio excluding catastrophes and development
| | |
101.0
| |
%
| | |
102.2
| |
%
|
| | | | | | | | | |
|
Business Operating Highlights |
|
CNA Specialty |
|
|
|
| Results for the Three Months Ended |
| | | March 31 |
($ millions)
| | | 2013 |
|
| 2012 |
Net written premiums
| | |
$
|
803
| | | | |
$
|
765
| | |
NWP Growth (% year over year)
| | |
5
| |
%
| | |
4
| |
%
|
Net operating income
| | |
$
|
140
| | | | |
$
|
132
| | |
| | | | | | | |
|
Loss ratio
| | |
64.3
| |
%
| | |
66.3
| |
%
|
Effect of catastrophe impacts
| | |
(0.2
|
)
| | | |
(0.2
|
)
| |
Effect of development-related items
| | |
2.9
|
| | | |
1.7
|
| |
Loss ratio excluding catastrophes and development
| | |
67.0
|
|
%
| | |
67.8
|
|
%
|
| | | | | | | |
|
Combined ratio
| | |
95.0
| |
%
| | |
97.3
| |
%
|
Combined ratio excluding catastrophes and development
| | |
97.7
| |
%
| | |
98.8
| |
%
|
| | | | | | | | | |
|
-
Net written premiums increased $38 million for the first quarter of
2013 as compared with the prior year quarter. This increase was
primarily driven by increased rate. Average rate increased 7% for the
first quarter of 2013 as compared with an increase of 3% for the prior
year quarter for the policies that renewed in each period. Retention
of 86% was achieved in each period.
-
Net operating income increased $8 million for the first quarter of
2013 as compared with the prior year quarter. This increase was
primarily due to improved underwriting results, partially offset by
lower net investment income.
-
The combined ratio improved 2.3 points for the first quarter of 2013
as compared with the prior year quarter. The loss ratio decreased 2.0
points, due to both higher favorable net prior year development and an
improved current accident year loss ratio. The expense ratio improved
0.8 point, primarily due to the impact of a higher net earned premium
base.
|
CNA Commercial |
|
|
|
| Results for the Three Months Ended |
| | | March 31 |
($ millions)
| | | 2013 |
|
| 2012 |
Net written premiums
| | |
$
|
918
| | | | |
$
|
843
| | |
NWP Growth (% year over year)
| | |
9
| |
%
| | |
2
| |
%
|
Net operating income
| | |
$
|
125
| | | | |
$
|
139
| | |
| | | | | | | |
|
Loss ratio
| | |
71.7
| |
%
| | |
70.7
| |
%
|
Effect of catastrophe impacts
| | |
(4.6
|
)
| | | |
(3.3
|
)
| |
Effect of development-related items
| | |
1.5
|
| | | |
2.5
|
| |
Loss ratio excluding catastrophes and development
| | |
68.6
|
|
%
| | |
69.9
|
|
%
|
| | | | | | | |
|
Combined ratio
| | |
106.8
| |
%
| | |
106.2
| |
%
|
Combined ratio excluding catastrophes and development
| | |
103.7
| |
%
| | |
105.4
| |
%
|
| | | | | | | | | |
|
-
Net written premiums increased $75 million for the first quarter of
2013 as compared with the prior year quarter. This increase was
primarily driven by increased rate. Average rate increased 9% for the
first quarter of 2013, as compared with an increase of 5% for the
prior year quarter for the policies that renewed in each period.
Retention of 78% and 77% was achieved in each period.
-
Net operating income decreased $14 million for the first quarter of
2013 as compared with the prior year quarter. This decrease was
primarily due to lower net investment income, higher catastrophe
losses and decreased favorable net prior year development. These
unfavorable impacts were partially offset by improved non-catastrophe
current accident year underwriting results.
-
The combined ratio increased 0.6 point for the first quarter of 2013
as compared with the prior year quarter. The loss ratio increased 1.0
point, primarily due to the impacts of higher catastrophe losses and
decreased favorable net prior year development, partially offset by an
improved current accident year non-catastrophe loss ratio.
|
Hardy |
|
|
|
| Results for the Three |
| | | Months Ended March 31 |
($ millions)
| | | 2013 |
Net written premiums
| | |
$
|
55
| | |
Net operating loss
| | |
(8
|
)
| |
| | | |
|
Loss ratio
| | |
48.7
| |
%
|
Effect of catastrophe impacts
| | |
—
| | |
Effect of development-related items
| | |
(1.4
|
)
| |
Loss ratio excluding catastrophes and development
| | |
47.3
|
|
%
|
| | | |
|
Combined ratio
| | |
105.5
| |
%
|
Combined ratio excluding catastrophes and development
| | |
104.1
| |
%
|
| | | | |
|
-
Hardy, a specialized Lloyd's of London underwriter, was acquired on
July 2, 2012.
-
Net written premiums were $55 million for the first quarter of 2013.
Average rate increased 1% for the first quarter of 2013 for the
policies that renewed in the period. Retention of 70% was achieved in
the period.
-
Results included non-run rate purchase accounting expenses of $3
million and foreign currency transaction losses of $2 million. No
catastrophe losses were incurred in the period.
-
The combined ratio excluding catastrophes and prior year development
was 104.1% for the first quarter of 2013. The expense ratio was 56.8%
for the first quarter of 2013, which was adversely affected by the
level of premiums, including unfavorable premium development of $4
million.
|
Life & Group Non-Core |
|
|
|
| Results for the Three Months Ended |
| | | March 31 |
($ millions)
| | | 2013 |
|
| 2012 |
Operating revenues
| | |
$
|
349
|
| | | |
$
|
337
| |
Total claims, benefits and expenses
| | |
372
| | | | |
387
| |
Net operating income (loss)
| | |
—
| | | | |
(19
|
)
|
| | | | | | | | |
|
-
Net operating results improved $19 million for the first quarter of
2013 as compared with the prior year quarter. While the improved
results reflect favorable mortality outcomes across all of our life
businesses, they were primarily attributable to favorable morbidity
and persistency in our long term care business.
|
Corporate & Other Non-Core |
|
|
|
| Results for the Three Months Ended |
| | | March 31 |
($ millions)
| | | 2013 |
|
| 2012 |
Operating revenues
| | |
$
|
10
| | | | |
$
|
14
| |
Total claims, benefits and expenses
| | |
49
| | | | |
54
| |
Net operating loss
| | |
(26
|
)
| | | |
(26
|
)
|
| | | | | | | | |
|
-
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 A&EP. Results in 2013 were comparable to the prior year period.
|
Net Operating Income (Loss) |
|
|
|
| Results for the Three |
| | | Months Ended March 31 |
($ millions)
| | | 2013 |
|
| 2012 |
CNA Specialty
| | |
$
|
140
| | | |
$
|
132
| |
CNA Commercial
| | |
125
| | | |
139
| |
Hardy
| | |
(8
|
)
| | |
|
Total P&C Operations
| | |
257
| | | |
271
| |
Life & Group Non-Core
| | |
—
| | | |
(19
|
)
|
Corporate & Other Non-Core
| | |
(26
|
)
| | |
(26
|
)
|
Total
| | |
$
|
231
|
| | |
$
|
22
|
|
|
Net Income (Loss) |
|
| | | Results for the Three |
| | | Months Ended March 31 |
($ millions)
| | | 2013 | | | 2012 |
CNA Specialty
| | |
$
|
142
| | | |
$
|
138
| |
CNA Commercial
| | |
128
| | | |
146
| |
Hardy
| | |
(7
|
)
| | |
|
Total P&C Operations
| | |
263
| | | |
284
| |
Life & Group Non-Core
| | |
9
| | | |
(11
|
)
|
Corporate & Other Non-Core
| | |
(22
|
)
| | |
(23
|
)
|
Total
| | |
$
|
250
|
| | |
$
|
250
|
|
|
Property & Casualty Operations Gross Written Premiums |
|
| | | Results for the Three |
| | | Months Ended March 31 |
($ millions)
| | | 2013 | | | 2012 |
CNA Specialty
| | |
$
|
1,317
| | | |
$
|
1,273
| |
CNA Commercial
| | |
960
| | | |
887
| |
Hardy
| | |
107
|
| | |
|
Total P&C Operations
| | |
$
|
2,384
|
| | |
$
|
2,160
|
|
|
Property & Casualty Operations Net Written Premiums |
|
| | | Results for the Three |
| | | Months Ended March 31 |
($ millions)
| | | 2013 | | | 2012 |
CNA Specialty
| | |
$
|
803
| | | |
$
|
765
| |
CNA Commercial
| | |
918
| | | |
843
| |
Hardy
| | |
55
|
| | |
|
Total P&C Operations
| | |
$
|
1,776
|
| | |
$
|
1,608
|
|
| | | | | | | | | |
|
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 service mark registered by CNA Financial Corporation with
the United States Patent and Trademark Office. Certain CNA Financial
Corporation subsidiaries use the "CNA" service mark in connection with
insurance underwriting and claims activities.
Conference Call and Webcast/Presentation 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) 438-5524, or for
international callers, (719) 325-2464. 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. A presentation will be posted and available on the
CNA website and will provide additional insight into the first quarter
results.
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 May 6, 2013 by dialing (888)
203-1112, or for international callers, (719) 457-0820. The replay
passcode is 8072004. 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.
Definition of Reported Segments
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.
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.
Hardy, a specialized Lloyd's of London 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.
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.
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.
Financial Measures
In the evaluation of the results of CNA Specialty, CNA Commercial and
Hardy, management utilizes the loss ratio, the expense ratio, the
dividend ratio and the combined 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:
James
Anderson, 312/822-7757
David Adams, 312/822-2183
Source: CNA Financial Corporation