CNA Financial Announces Second Quarter 2018 Results
Net income for the six months ended
Results for the Three Months |
Results for the Six Months |
||||||||||||||
($ millions, except per share data) |
2018 |
2017 |
2018 |
2017 |
|||||||||||
Net income(a) |
$ |
270 |
$ |
272 |
$ |
561 |
$ |
532 |
|||||||
Core income (a)(b) |
270 |
239 |
551 |
474 |
|||||||||||
Net income per diluted share |
$ |
0.99 |
$ |
1.00 |
$ |
2.06 |
$ |
1.96 |
|||||||
Core income per diluted share |
0.99 |
0.88 |
2.02 |
1.74 |
|||||||||||
|
|
||||||||||||||
Book value per share |
$ |
42.06 |
$ |
45.15 |
|||||||||||
Book value per share excluding AOCI |
44.29 |
45.02 |
(a) |
Results in 2018 benefited from the reduction of the |
(b) |
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. |
"I am pleased with the second quarter's strong core income of
Property & Casualty Operations |
|||||||||||||||||||
Results for the Three Months |
Results for the Six Months |
||||||||||||||||||
($ millions) |
2018 |
2017 |
2018 |
2017 |
|||||||||||||||
Net written premiums |
$ |
1,769 |
$ |
1,702 |
$ |
3,582 |
$ |
3,334 |
|||||||||||
NWP change (% year over year) |
4 |
% |
5 |
% |
7 |
% |
1 |
% |
|||||||||||
Net investment income |
$ |
302 |
$ |
276 |
$ |
587 |
$ |
619 |
|||||||||||
Core income |
319 |
261 |
646 |
529 |
|||||||||||||||
Loss ratio excluding catastrophes and development |
61.4 |
% |
60.5 |
% |
60.7 |
% |
61.3 |
% |
|||||||||||
Effect of catastrophe impacts |
1.6 |
2.4 |
1.8 |
2.3 |
|||||||||||||||
Effect of development-related items |
(3.1) |
(3.5) |
(2.6) |
(2.9) |
|||||||||||||||
Loss ratio |
59.9 |
% |
59.4 |
% |
59.9 |
% |
60.7 |
% |
|||||||||||
Expense ratio |
33.5 |
% |
33.8 |
% |
33.2 |
% |
34.3 |
% |
|||||||||||
Combined ratio |
93.8 |
% |
93.5 |
% |
93.5 |
% |
95.3 |
% |
|||||||||||
Combined ratio excluding catastrophes and development |
95.3 |
% |
94.6 |
% |
94.3 |
% |
95.9 |
% |
- The combined ratio excluding catastrophes and development increased 0.7 points for the second quarter of 2018 as compared with the prior year quarter driven by a 0.9 point increase in the underlying loss ratio primarily due to a higher number of large property losses. This was partially offset by a 0.3 point improvement in the expense ratio driven by higher net earned premiums.
For the year-to-date period, the combined ratio excluding catastrophes and development improved 1.6 points as compared with the prior year period driven by 0.6 points of improvement in the underlying loss ratio, as property losses were within expectations, and a 1.1 point improvement in the expense ratio primarily due to higher net earned premiums. - The combined ratio increased 0.3 points for the second quarter of 2018 as compared with the prior year quarter. Net catastrophe losses were
$26 million , or 1.6 points of the loss ratio in the quarter as compared with$39 million , or 2.4 points of the loss ratio, for the prior year quarter. Favorable net prior year development improved the loss ratio by 3.1 points in the quarter as compared with a 3.5 point improvement in the prior year quarter.
For the year-to-date period, the combined ratio improved 1.8 points as compared with the prior year period. Net catastrophe losses were$60 million , or 1.8 points of the loss ratio in the current year-to-date period as compared with$73 million , or 2.3 points of the loss ratio, for the prior year period. Favorable net prior year development improved the loss ratio by 2.6 points in the current year-to-date period as compared with a 2.9 point improvement in the prior year period. - Net written premiums grew 4% as compared with the prior year quarter. For the year-to-date period, net written premiums grew 7%.
Business Operating Highlights |
|||||||||||||||||||
Specialty |
|||||||||||||||||||
Results for the Three Months |
Results for the Six Months |
||||||||||||||||||
($ millions) |
2018 |
2017 |
2018 |
2017 |
|||||||||||||||
Net written premiums |
$ |
688 |
$ |
701 |
$ |
1,374 |
$ |
1,371 |
|||||||||||
NWP change (% year over year) |
(2) |
% |
3 |
% |
— |
% |
1 |
% |
|||||||||||
Core income |
$ |
183 |
$ |
131 |
$ |
354 |
$ |
268 |
|||||||||||
Loss ratio excluding catastrophes and development |
60.5 |
% |
61.0 |
% |
60.4 |
% |
61.9 |
% |
|||||||||||
Effect of catastrophe impacts |
0.5 |
0.9 |
0.5 |
0.7 |
|||||||||||||||
Effect of development-related items |
(6.4) |
(3.8) |
(5.5) |
(3.0) |
|||||||||||||||
Loss ratio |
54.6 |
% |
58.1 |
% |
55.4 |
% |
59.6 |
% |
|||||||||||
Expense ratio |
32.0 |
% |
32.0 |
% |
31.6 |
% |
32.0 |
% |
|||||||||||
Combined ratio |
86.8 |
% |
90.3 |
% |
87.2 |
% |
91.7 |
% |
|||||||||||
Combined ratio excluding catastrophes and development |
92.7 |
% |
93.2 |
% |
92.2 |
% |
94.0 |
% |
- The combined ratio excluding catastrophes and development improved 0.5 points for the second quarter of 2018 as compared with the prior year quarter driven by a 0.5 point improvement in the underlying loss ratio. For the year-to-date period, the combined ratio excluding catastrophes and development improved 1.8 points.
- The combined ratio improved 3.5 points for the second quarter of 2018 as compared with the prior year quarter. Favorable net prior year development improved the loss ratio by 6.4 points in the quarter as compared with a 3.8 point improvement in the prior year quarter. For the year-to-date period, the combined ratio improved 4.5 points.
- Net written premiums for Specialty decreased 2% for the second quarter of 2018 as compared with the prior year quarter driven by a higher level of ceded reinsurance to support growth in management liability and lower retention partially offset by higher new business and positive renewal premium change. For the year-to-date period, net written premiums were consistent.
Commercial |
|||||||||||||||||||
Results for the Three Months |
Results for the Six Months |
||||||||||||||||||
($ millions) |
2018 |
2017 |
2018 |
2017 |
|||||||||||||||
Net written premiums |
$ |
810 |
$ |
782 |
$ |
1,642 |
$ |
1,506 |
|||||||||||
NWP change (% year over year) |
4 |
% |
4 |
% |
9 |
% |
— |
% |
|||||||||||
Core income |
$ |
143 |
$ |
120 |
$ |
276 |
$ |
231 |
|||||||||||
Loss ratio excluding catastrophes and development |
60.8 |
% |
59.0 |
% |
60.3 |
% |
60.6 |
% |
|||||||||||
Effect of catastrophe impacts |
2.5 |
4.7 |
3.2 |
4.3 |
|||||||||||||||
Effect of development-related items |
(0.9) |
(4.1) |
(0.8) |
(3.2) |
|||||||||||||||
Loss ratio |
62.4 |
% |
59.6 |
% |
62.7 |
% |
61.7 |
% |
|||||||||||
Expense ratio |
33.5 |
% |
34.4 |
% |
33.4 |
% |
35.8 |
% |
|||||||||||
Combined ratio |
96.6 |
% |
94.6 |
% |
96.8 |
% |
98.0 |
% |
|||||||||||
Combined ratio excluding catastrophes and development |
95.0 |
% |
94.0 |
% |
94.4 |
% |
96.9 |
% |
- The combined ratio excluding catastrophes and development increased 1.0 point for the second quarter of 2018 as compared with the prior year quarter driven by a 1.8 point increase in the underlying loss ratio, primarily due to a higher number of large property losses. This was partially offset by 0.9 points of improvement in the expense ratio driven by lower IT spend, lower employee costs and higher net earned premiums. For the year-to-date period, the combined ratio excluding catastrophes and development improved 1.7 points after adjusting for the Small Business premium rate adjustment in the prior period.
- The combined ratio increased 2.0 points for the second quarter of 2018 as compared with the prior year quarter. Net catastrophe losses were
$19 million , or 2.5 points of the loss ratio, for the second quarter of 2018, as compared to$35 million , or 4.7 points of the loss ratio, for the prior year quarter. Favorable net prior year development improved the loss ratio by 0.9 points in the quarter as compared with a 4.1 point improvement in the prior year quarter. For the year-to-date period, the combined ratio increased 1.3 points after adjusting for the Small Business premium rate adjustment in the prior period. - Net written premiums for Commercial were 4% higher for the second quarter of 2018 as compared with the prior year quarter driven by positive renewal premium change and higher new business. For the year-to-date period, net written premiums grew 6% after adjusting for the Small Business premium rate adjustment in the prior period.
International |
|||||||||||||||||||
Results for the Three Months |
Results for the Six Months |
||||||||||||||||||
($ millions) |
2018 |
2017 |
2018 |
2017 |
|||||||||||||||
Net written premiums |
$ |
271 |
$ |
219 |
$ |
566 |
$ |
457 |
|||||||||||
NWP change (% year over year) |
24 |
% |
13 |
% |
24 |
% |
6 |
% |
|||||||||||
Core (loss) income |
$ |
(7) |
$ |
10 |
$ |
16 |
$ |
30 |
|||||||||||
Loss ratio excluding catastrophes and development |
65.9 |
% |
63.8 |
% |
62.9 |
% |
61.7 |
% |
|||||||||||
Effect of catastrophe impacts |
1.6 |
(0.5) |
1.3 |
0.6 |
|||||||||||||||
Effect of development-related items |
(0.7) |
(0.5) |
(0.5) |
(1.7) |
|||||||||||||||
Loss ratio |
66.8 |
% |
62.8 |
% |
63.7 |
% |
60.6 |
% |
|||||||||||
Expense ratio |
37.9 |
% |
37.3 |
% |
37.1 |
% |
37.1 |
% |
|||||||||||
Combined ratio |
104.7 |
% |
100.1 |
% |
100.8 |
% |
97.7 |
% |
|||||||||||
Combined ratio excluding catastrophes and development |
103.8 |
% |
101.1 |
% |
100.0 |
% |
98.8 |
% |
- The combined ratio excluding catastrophes and development increased 2.7 points for the second quarter of 2018 as compared with the prior year quarter primarily due to a 2.1 point increase in the underlying loss ratio driven by a higher number of large property losses mainly in Canada. For the year-to-date period, the combined ratio excluding catastrophes and development increased 1.2 points.
- The combined ratio increased 4.6 points for the second quarter of 2018 as compared with the prior year quarter. Net catastrophe losses were
$4 million , or 1.6 points of the loss ratio, for the second quarter of 2018. There were no net catastrophe losses for the three months endedJune 30, 2017 . Favorable net prior year development improved the loss ratio by 0.7 points in the quarter as compared with a 0.5 point improvement in the prior year quarter. For the year-to-date period, the combined ratio increased 3.1 points. - Net written premiums for International increased 19% excluding currency fluctuations, for the second quarter of 2018 as compared with the prior year quarter driven by positive renewal premium change and higher new business. For the year-to-date period, net written premiums grew 16% excluding currency fluctuations.
|
|||||||||||||||||||
Results for the Three Months |
Results for the Six Months |
||||||||||||||||||
($ millions) |
2018 |
2017 |
2018 |
2017 |
|||||||||||||||
Net investment income |
$ |
198 |
$ |
195 |
$ |
398 |
$ |
392 |
|||||||||||
Total operating revenues |
329 |
330 |
664 |
661 |
|||||||||||||||
Core (loss) income |
(10) |
5 |
4 |
9 |
Core results decreased
Corporate & Other |
|||||||||||||||||||
Results for the Three Months |
Results for the Six Months |
||||||||||||||||||
($ millions) |
2018 |
2017 |
2018 |
2017 |
|||||||||||||||
Net investment income |
$ |
6 |
$ |
4 |
$ |
11 |
$ |
9 |
|||||||||||
Interest expense |
34 |
39 |
68 |
77 |
|||||||||||||||
Core loss |
(39) |
(27) |
(99) |
(64) |
Core loss increased
Net Investment Income
Pretax net investment income increased
About the Company
CNA is the eighth largest commercial insurer in the United States. CNA provides a broad range of standard and specialized property and casualty insurance products and services for businesses and professionals in the
Conference Call and Webcast/Presentation Information
A conference call for investors and the professional investment community will be held at
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
- Specialty provides management and professional liability and other coverages through property and casualty products and services using a network of brokers, independent agencies and managing general underwriters.
- Commercial works with an independent agency distribution system and a 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.
- International provides property and casualty insurance and specialty coverages on a global basis through its operations in
Canada , theUnited Kingdom , Continental Europe andSingapore as well as through its presence atLloyd's of London . Life & Group primarily includes the results of the individual and group long term care businesses that are in run off.- Corporate & Other 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
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
- Loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums.
- Underlying loss ratio represents the loss ratio excluding catastrophes and development.
- Expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums.
- Dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums.
- Combined ratio is the sum of the loss, expense and dividend ratios.
- Underlying combined ratio is the sum of the underlying loss, expense and dividend ratios.
- Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes.
- Rate represents the average change in price on policies that renew excluding exposure change.
- Retention represents the percentage of premium dollars renewed in comparison to the expiring premium dollars from policies available to renew.
- New business represents premiums from policies written with new customers and additional policies written with existing customers.
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 Income to Core Income
Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of i) net realized investment gains or losses, ii) income or loss from discontinued operations, iii) any cumulative effects of changes in accounting guidance and iv) deferred tax asset and liability remeasurement as a result of an enacted
Results for the Three Months |
Results for the Six Months |
||||||||||||||
($ millions) |
2018 |
2017 |
2018 |
2017 |
|||||||||||
Net income |
$ |
270 |
$ |
272 |
$ |
561 |
$ |
532 |
|||||||
Less: Net realized investment gains |
— |
33 |
10 |
58 |
|||||||||||
Core income |
$ |
270 |
$ |
239 |
$ |
551 |
$ |
474 |
Reconciliation of Net 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 per diluted share is core income on a per diluted share basis.
Results for the Three Months |
Results for the Six Months |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Net income per diluted share |
$ |
0.99 |
$ |
1.00 |
$ |
2.06 |
$ |
1.96 |
|||||||
Less: Net realized investment gains |
— |
0.12 |
0.04 |
0.22 |
|||||||||||
Core income per diluted share |
$ |
0.99 |
$ |
0.88 |
$ |
2.02 |
$ |
1.74 |
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.
|
|
||||||
Book value per share |
$ |
42.06 |
$ |
45.15 |
|||
Less: Per share impact of AOCI |
(2.23) |
0.13 |
|||||
Book value per share excluding AOCI |
$ |
44.29 |
$ |
45.02 |
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 |
Results for the Six Months |
|||||||||||||||
($ millions) |
2018 |
2017 |
2018 |
2017 |
||||||||||||
Annualized net income |
$ |
1,078 |
$ |
1,090 |
$ |
1,122 |
$ |
1,064 |
||||||||
Average stockholders' equity including AOCI (a) |
11,420 |
11,861 |
11,830 |
11,999 |
||||||||||||
Return on equity |
9.4 |
% |
9.2 |
% |
9.5 |
% |
8.9 |
% |
||||||||
Annualized core income |
$ |
1,080 |
$ |
956 |
$ |
1,101 |
$ |
948 |
||||||||
Average stockholders' equity excluding AOCI (a) |
11,922 |
11,890 |
12,115 |
12,068 |
||||||||||||
Core return on equity |
9.1 |
% |
8.0 |
% |
9.1 |
% |
7.9 |
% |
(a) |
Average stockholders' equity is calculated using a simple average of the beginning and ending balances for the period. |
For additional information, please refer herein and/or to CNA's most recent 10-K on file with the
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
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.
CONTACT: |
||||||
MEDIA: |
ANALYSTS: |
|||||
|
|
View original content with multimedia:http://www.prnewswire.com/news-releases/cna-financial-announces-second-quarter-2018-results-300688196.html
SOURCE
Midterm Elections Could Shape Future Of U.S. Health Care, Expert Says
Aleph Capital and Crestview Partners Agree to €260M Equity Funding Commitment in DARAG to Support Global Growth Ambitions
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News