CNA Financial Announces Third Quarter 2017 Results
Net income for the nine months ended
Results for the Three Months Ended |
Results for the Nine Months Ended |
||||||||||||||
($ millions, except per share data) |
2017 |
2016 |
2017 |
2016 |
|||||||||||
Net operating income (a) |
$ |
159 |
$ |
311 |
$ |
633 |
$ |
603 |
|||||||
Net realized investment (losses) gains (b) |
(15) |
32 |
43 |
15 |
|||||||||||
Net income |
$ |
144 |
$ |
343 |
$ |
676 |
$ |
618 |
|||||||
Net operating income per diluted share |
$ |
0.58 |
$ |
1.15 |
$ |
2.33 |
$ |
2.22 |
|||||||
Net income per diluted share |
0.53 |
1.26 |
2.48 |
2.28 |
|||||||||||
|
|
||||||||||||||
Book value per share |
$ |
44.88 |
$ |
44.25 |
|||||||||||
Book value per share excluding AOCI |
44.48 |
44.89 |
(a) |
Management utilizes the net operating income financial measure to monitor the Company's operations. Please refer herein and to Note O in the Consolidated Financial Statements within CNA's Annual Report on Form 10-K for the year ended |
(b) |
The after-tax net realized investment loss in the current year quarter included a |
"I am pleased with our third quarter results as catastrophe losses were within expectation and we continued to improve our underlying combined ratio in the quarter and throughout 2017," said
Property & Casualty Operations' net operating income was
Net operating results for our non-core segments improved
Net investment income, after tax, was
Property & Casualty Operations
Results for the Three Months Ended |
Results for the Nine Months Ended |
||||||||||||||||||
($ millions) |
2017 |
2016 |
2017 |
2016 |
|||||||||||||||
Net written premiums |
$ |
1,599 |
$ |
1,624 |
$ |
4,933 |
$ |
4,917 |
|||||||||||
NWP change (% year over year) |
(2) |
% |
6 |
% |
— |
% |
2 |
% |
|||||||||||
Net investment income |
$ |
308 |
$ |
328 |
$ |
927 |
$ |
883 |
|||||||||||
Net operating income |
167 |
329 |
696 |
765 |
|||||||||||||||
Net income |
176 |
349 |
750 |
779 |
|||||||||||||||
Loss ratio excluding catastrophes and development |
60.8 |
% |
61.8 |
% |
61.1 |
% |
62.6 |
% |
|||||||||||
Effect of catastrophe impacts |
16.5 |
1.0 |
7.3 |
2.8 |
|||||||||||||||
Effect of development-related items |
(7.4) |
(8.1) |
(4.5) |
(6.0) |
|||||||||||||||
Loss ratio |
69.9 |
% |
54.7 |
% |
63.9 |
% |
59.4 |
% |
|||||||||||
Combined ratio |
103.7 |
% |
90.4 |
% |
98.2 |
% |
94.6 |
% |
|||||||||||
Combined ratio excluding catastrophes and development |
94.6 |
% |
97.5 |
% |
95.4 |
% |
97.8 |
% |
Business Operating Highlights
Specialty
Results for the Three Months Ended |
Results for the Nine Months Ended |
||||||||||||||||||
($ millions) |
2017 |
2016 |
2017 |
2016 |
|||||||||||||||
Net written premiums |
$ |
705 |
$ |
733 |
$ |
2,100 |
$ |
2,108 |
|||||||||||
NWP change (% year over year) |
(4) |
% |
4 |
% |
— |
% |
1 |
% |
|||||||||||
Net operating income |
$ |
180 |
$ |
195 |
$ |
470 |
$ |
486 |
|||||||||||
Net income |
183 |
201 |
486 |
487 |
|||||||||||||||
Loss ratio excluding catastrophes and development |
61.2 |
% |
62.5 |
% |
61.5 |
% |
62.5 |
% |
|||||||||||
Effect of catastrophe impacts |
5.4 |
0.2 |
2.3 |
0.7 |
|||||||||||||||
Effect of development-related items |
(15.8) |
(15.9) |
(8.3) |
(10.6) |
|||||||||||||||
Loss ratio |
50.8 |
% |
46.8 |
% |
55.5 |
% |
52.6 |
% |
|||||||||||
Combined ratio |
82.3 |
% |
79.9 |
% |
87.4 |
% |
84.9 |
% |
|||||||||||
Combined ratio excluding catastrophes and development |
92.7 |
% |
95.6 |
% |
93.4 |
% |
94.8 |
% |
- Net operating income decreased
$15 million for the third quarter of 2017 as compared with the prior year quarter, primarily due to higher net catastrophe losses partially offset by improved non-catastrophe current accident year underwriting results. - The combined ratio increased 2.4 points, while the combined ratio excluding catastrophes and development improved 2.9 points, as compared with the prior year quarter. The loss ratio increased 4.0 points driven by higher net catastrophe losses which were
$38 million , or 5.4 points of the loss ratio in the third quarter of 2017, as compared to$1 million , or 0.2 points of the loss ratio, for the prior year quarter. The loss ratio excluding catastrophes and development improved 1.3 points. The expense ratio improved 1.2 points as compared with the prior year quarter reflecting both our ongoing efforts to improve productivity and the actions undertaken in last year's third and fourth quarters to reduce expenses. - Net written premiums decreased
$28 million as compared with the prior year quarter largely driven by the timing of certain renewals. Renewal premium change was flat. Retention remained strong at 89% and new business was at relatively consistent levels.
Commercial
Results for the Three Months Ended |
Results for the Nine Months Ended |
||||||||||||||||||
($ millions) |
2017 |
2016 |
2017 |
2016 |
|||||||||||||||
Net written premiums |
$ |
687 |
$ |
684 |
$ |
2,169 |
$ |
2,172 |
|||||||||||
NWP change (% year over year) |
— |
% |
7 |
% |
— |
% |
3 |
% |
|||||||||||
Net operating income |
$ |
25 |
$ |
114 |
$ |
234 |
$ |
280 |
|||||||||||
Net income |
28 |
123 |
258 |
282 |
|||||||||||||||
Loss ratio excluding catastrophes and development |
59.9 |
% |
61.1 |
% |
60.5 |
% |
61.4 |
% |
|||||||||||
Effect of catastrophe impacts |
23.9 |
1.6 |
11.1 |
4.6 |
|||||||||||||||
Effect of development-related items |
(1.4) |
(0.5) |
(1.5) |
(1.4) |
|||||||||||||||
Loss ratio |
82.4 |
% |
62.2 |
% |
70.1 |
% |
64.6 |
% |
|||||||||||
Combined ratio |
117.2 |
% |
99.8 |
% |
105.9 |
% |
101.7 |
% |
|||||||||||
Combined ratio excluding catastrophes and development |
94.7 |
% |
98.7 |
% |
96.3 |
% |
98.5 |
% |
- Net operating income decreased
$89 million for the third quarter of 2017 as compared with the prior year quarter driven by higher net catastrophe losses. - The combined ratio increased 17.4 points and the combined ratio excluding catastrophes and development improved 4.0 points as compared with the prior year quarter. The loss ratio increased 20.2 points driven by higher net catastrophe losses partially offset by improved non-catastrophe current accident year underwriting results. Net catastrophe losses were
$173 million , or 23.9 points of the loss ratio, in the third quarter of 2017 as compared to$12 million , or 1.6 points of the loss ratio, for the prior year quarter. Catastrophe-related reinsurance reinstatement premium was$1 million for the third quarter of 2017. The loss ratio excluding catastrophes and development improved 1.2 points. The expense ratio improved 2.8 points as compared with the prior year quarter reflecting both our ongoing efforts to improve productivity and the actions undertaken in last year's third and fourth quarters to reduce expenses. - Net written premiums increased
$3 million as compared with the prior year quarter, driven by higher new business within Middle Markets, as well as strong retention of 85% and positive renewal premium change.
International
Results for the Three Months Ended |
Results for the Nine Months Ended |
||||||||||||||||||
($ millions) |
2017 |
2016 |
2017 |
2016 |
|||||||||||||||
Net written premiums |
$ |
207 |
$ |
207 |
$ |
664 |
$ |
637 |
|||||||||||
NWP change (% year over year) |
— |
% |
15 |
% |
4 |
% |
(1) |
% |
|||||||||||
Net operating (loss) income |
$ |
(38) |
$ |
20 |
$ |
(8) |
$ |
(1) |
|||||||||||
Net (loss) income |
(35) |
25 |
6 |
10 |
|||||||||||||||
Loss ratio excluding catastrophes and development |
62.4 |
% |
61.9 |
% |
62.0 |
% |
66.5 |
% |
|||||||||||
Effect of catastrophe impacts |
27.5 |
1.5 |
10.3 |
4.7 |
|||||||||||||||
Effect of development-related items |
(1.5) |
(8.0) |
(1.7) |
(6.0) |
|||||||||||||||
Loss ratio |
88.4 |
% |
55.4 |
% |
70.6 |
% |
65.2 |
% |
|||||||||||
Combined ratio |
125.9 |
% |
93.2 |
% |
107.8 |
% |
103.4 |
% |
|||||||||||
Combined ratio excluding catastrophes and development |
99.9 |
% |
99.7 |
% |
99.2 |
% |
104.7 |
% |
- Net operating results decreased
$58 million for the third quarter of 2017 as compared with the prior year quarter driven by higher net catastrophe losses and lower favorable net prior year loss reserve development. - The combined ratio increased 32.7 points and the combined ratio excluding catastrophes and development increased 0.2 points as compared with the prior year quarter. The loss ratio increased 33.0 points driven by higher net catastrophe losses and lower favorable net prior year loss reserve development. Net catastrophe losses were
$58 million , or 27.5 points of the loss ratio in the third quarter of 2017 as compared to$3 million , or 1.5 points of the loss ratio, for the prior year quarter. Catastrophe-related reinsurance reinstatement premium was$5 million for the third quarter of 2017. The loss ratio excluding catastrophes and development was 0.5 points higher than the prior year quarter. The expense ratio improved 0.3 points as compared with the prior year quarter. - Net written premiums for the third quarter of 2017 were consistent as compared with the prior year quarter.
Life & Group Non-Core
Results for the Three Months Ended |
Results for the Nine Months Ended |
||||||||||||||||||
($ millions) |
2017 |
2016 |
2017 |
2016 |
|||||||||||||||
Total operating revenues |
$ |
331 |
$ |
322 |
$ |
992 |
$ |
967 |
|||||||||||
Net investment income |
195 |
192 |
587 |
567 |
|||||||||||||||
Net operating income |
10 |
6 |
19 |
— |
|||||||||||||||
Net income |
12 |
17 |
31 |
3 |
- Net operating income improved
$4 million for the third quarter of 2017 as compared with the prior year quarter. Our long term care business continued to produce results generally in line with our 2015 reset assumptions.
Corporate & Other Non-Core
Results for the Three Months Ended |
Results for the Nine Months Ended |
||||||||||||||||||
($ millions) |
2017 |
2016 |
2017 |
2016 |
|||||||||||||||
Net investment income |
$ |
6 |
$ |
4 |
$ |
15 |
$ |
11 |
|||||||||||
Interest expense |
39 |
39 |
116 |
119 |
|||||||||||||||
Net operating loss |
(18) |
(24) |
(82) |
(162) |
|||||||||||||||
Net loss |
(44) |
(23) |
(105) |
(164) |
- Net operating loss improved
$6 million for the third quarter of 2017 as compared with the same period in 2016.
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
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
Life & Group Non-Core primarily includes the results of the individual and group long term care businesses that are in run off.
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 Specialty, Commercial and International, 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
This press release may also reference or contain financial measures that are not in accordance with GAAP. Management utilizes these financial measures to monitor the Company's insurance operations and investment portfolio. Net operating income, which is derived from certain income statement amounts, is used by management to monitor performance of the Company's insurance operations. 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. Based on such analyses, the Company may recognize an other-than-temporary impairment (OTTI) loss on an investment security in accordance with its policy, or sell a security, which may produce realized gains and losses.
Net operating 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 and iii) any cumulative effects of changes in accounting guidance. The calculation of net operating income excludes net realized investment gains or losses because net realized investment gains or losses are largely discretionary, except for some losses related to OTTI, and are generally driven by economic factors that are not necessarily consistent with key drivers of underwriting performance, and are therefore not considered an indication of trends in insurance operations. Management monitors net operating income (loss) for each business segment to assess segment performance. Presentation of consolidated net operating income (loss) is deemed to be a non-GAAP financial measure.
For reconciliations of non-GAAP measures to the most comparable GAAP measures and other 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: |
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ANALYSTS: |
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