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October 31, 2022 Newswires
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Earnings Document

U.S. Regulated Equity Markets (Alternative Disclosure) via PUBT

FOR IMMEDIATE RELEASE

CNA FINANCIAL ANNOUNCES THIRD QUARTER 2022

NET INCOME OF $0.47 PER SHARE AND CORE INCOME OF $0.78 PER SHARE

  • Net income of $128 million, which includes $85 million of net investment losses, versus net income of $256 million, which includes $19 million of net investment gains, in the prior year quarter.
  • Core income of $213 million versus $237 million in the prior year quarter reflects a $121 million pretax decline in investment income from LPs and common stock, partially offset by a $28 million pretax increase in investment income from fixed income securities and an $85 million pretax increase in P&C underwriting income.
  • P&C core income of $260 million versus $217 million in the prior year quarter reflects higher pretax underwriting income and higher investment income from fixed income securities, partially offset by lower investment income from LPs and common stock.
  • Life & Group core loss of $(22) million versus core income of $41 million in the prior year quarter reflects lower investment income from LPs. Results for the third quarter of 2022 included a favorable impact of $30 million pretax from the annual claim reserve reviews and there was no long term care unlocking event for active life reserves as a result of the gross premium valuation.
  • Corporate & Other core loss of $(25) million versus $(21) million in the prior year quarter.
  • P&C combined ratio of 95.8%, compared with 100.0% in the prior year quarter, including 5.5 points of catastrophe loss impact compared with 9.2 points in the prior year quarter.
  • Pretax catastrophe losses of $114 million, includes $87 million for Hurricane Ian, versus $178 million in the prior year quarter.
  • Underlying combined ratio of 91.1% was consistent with the prior year quarter. The underlying loss ratio was 59.9% and the expense ratio was 30.8%.
  • P&C segments, excluding third party captives, generated gross written premium growth of 9%, or 10% excluding currency fluctuations. Net written premium growth of 8% in the quarter, or 9% excluding currency fluctuations.
  • P&C renewal premium change of +8%, with written rate of +5% and exposure change of +3%. Earned rate of +7% for the quarter.
  • Book value per share of $29.88 was impacted by a decrease in AOCI reflecting the effect of higher interest rates on fixed income securities net unrealized gains and losses; book value per share excluding AOCI of $45.16, a 5% increase from year-end 2021 adjusting for $3.20 of dividends per share.
  • Board of Directors declares regular quarterly cash dividend of $0.40 per share.

1

CHICAGO, October 31, 2022 --- CNA Financial Corporation (NYSE: CNA) today announced third quarter 2022 net income of $128 million, or $0.47 per share, versus $256 million, or $0.94 per share, in the prior year quarter. Net investment losses for the quarter were $85 million, which include losses from fixed income securities as a result of portfolio repositioning, and a $35 million non-economic loss related to the expected novation of a coinsurance agreement in our Life & Group segment and associated funds withheld embedded derivative. Net investment gains were $19 million in the prior year quarter.

Core income for the quarter was $213 million, or $0.78 per share, versus $237 million, or $0.87 per share, in the prior year quarter. Our Property & Casualty segments produced core income of $260 million for the third quarter of 2022, an increase of $43 million compared to the prior year quarter driven by an $85 million pretax increase in underwriting income and a $25 million pretax increase in investment income from fixed income securities, partially offset by a $67 million pretax decline in investment income from LPs and common stock. Property & Casualty segments, excluding third party captives, generated gross written premium growth of 9%, or 10% excluding currency fluctuations, and net written premium growth of 8%, or 9% excluding currency fluctuations, driven by retention of 85%, renewal premium change of +8% and new business growth of 12%.

Our Life & Group segment produced a core loss of $(22) million for the third quarter of 2022, a decrease of $63 million, versus core income of $41 million in the prior year quarter driven by lower investment income from LPs. Results for the third quarter of 2022 included a favorable impact of $30 million pretax from the annual claim reserve reviews versus a favorable impact of $40 million pretax from the annual long term care claim reserve review in the prior year quarter. There was no long term care unlocking event for active life reserves in the quarter and margin increased by $53 million to $125 million, as a result of the gross premium valuation.

Our Corporate & Other segment produced a core loss of $(25) million for the third quarter of 2022, largely consistent with the the prior year quarter.

CNA Financial declared a quarterly dividend of $0.40 per share, payable December 1, 2022 to stockholders of record on November 15, 2022.

Results for the Three Months

Results for the Nine Months

Ended September 30

Ended September 30

($ millions, except per share data)

2022

2021

2022

2021

Net income

$

128

$

256

$

646

$

936

Core income (a)

213

237

774

841

Net income per diluted share

$

0.47

$

0.94

$

2.37

$

3.43

Core income per diluted share

0.78

0.87

2.84

3.08

September 30, 2022

December 31, 2021

Book value per share

$

29.88

$

47.20

Book value per share excluding AOCI

45.16

46.02

  1. 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.

"We are very pleased with our results in the quarter against a backdrop of continued pressure on equity markets and elevated industry catastrophe losses. Core income of $213 million was down $24 million due to a decline in LPs and common stock, offset to a large extent by an increase in our underwriting gain and increased investment income from our fixed income portfolio.

The increased underwriting gain of $85 million was driven by a 4.2 point improvement in the all-in combined ratio to 95.8%. Our extensive re-underwriting over the last several years helped to mitigate our catastrophe losses this quarter which were $114 million pretax, down $64 million from last year. Hurricane Ian accounted for $87 million of the total. P&C gross written premium ex captives grew by 9% this quarter and 10% excluding currency fluctuations. Renewal premium change of 8% remained consistent with last quarter. Written rate increase and the portion of exposure that acts like rate remains above loss cost trends.

We had strong top-line and bottom-line performance in our P&C segments and we remain optimistic about our growth opportunities with continued strong pricing and terms and conditions," said Dino E. Robusto, Chairman & Chief Executive Officer of CNA Financial Corporation.

2

Property & Casualty Operations

Results for the Three Months

Results for the Nine Months

Ended September 30

Ended September 30

($ millions)

2022

2021

2022

2021

Gross written premiums ex. 3rd party captives

$

2,430

$

2,224

$

7,560

$

6,790

GWP ex. 3rd party captives change (% year over year)

9

%

11

%

Net written premiums

$

2,060

$

1,909

$

6,379

$

5,755

NWP change (% year over year)

8

%

11

%

Net investment income

$

230

$

271

$

692

$

872

Core income

260

217

898

831

Loss ratio excluding catastrophes and development

59.9

%

60.2

%

60.0

%

59.9

%

Effect of catastrophe impacts

5.5

9.2

2.8

6.3

Effect of development-related items

(0.8)

(0.3)

(0.9)

(0.4)

Loss ratio

64.6

%

69.1

%

61.9

%

65.8

%

Expense ratio

30.8

%

30.7

%

30.8

%

31.3

%

Combined ratio

95.8

%

100.0

%

93.0

%

97.4

%

Combined ratio excluding catastrophes and development

91.1

%

91.1

%

91.1

%

91.5

%

  • The underlying combined ratio was consistent with the prior year quarter. The underlying loss ratio improved 0.3 points and the expense ratio increased 0.1 points as compared to the prior year quarter.
  • The combined ratio improved 4.2 points as compared with the prior year quarter. Catastrophe losses were $114 million, or 5.5 points of the loss ratio in the quarter compared with $178 million, or 9.2 points of the loss ratio, for the prior year quarter. Catastrophe losses in the third quarter of 2022 include $87 million for Hurricane Ian. Favorable net prior period development improved the loss ratio by 0.8 points in the current quarter compared with 0.3 points of improvement in the prior year quarter.
  • P&C segments, excluding third party captives, generated gross written premium growth of 9%, or 10% excluding currency fluctuations, and net written premium growth of 8%, or 9% excluding currency fluctuations.

3

Business Operating Highlights

Specialty

Results for the Three Months

Results for the Nine Months

Ended September 30

Ended September 30

($ millions)

2022

2021

2022

2021

Gross written premiums ex. 3rd party captives

$

958

$

943

$

2,816

$

2,656

GWP ex. 3rd party captives change (% year over year)

2

%

6

%

Net written premiums

$

840

$

822

$

2,443

$

2,350

NWP change (% year over year)

2

%

4

%

Core income

$

161

$

173

$

485

$

531

Loss ratio excluding catastrophes and development

58.4

%

59.1

%

58.6

%

59.1

%

Effect of catastrophe impacts

0.2

0.4

0.1

0.4

Effect of development-related items

(1.9)

(1.8)

(1.4)

(1.7)

Loss ratio

56.7

%

57.7

%

57.3

%

57.8

%

Expense ratio

31.7

%

30.6

%

31.0

%

30.4

%

Combined ratio

88.7

%

88.2

%

88.5

%

88.3

%

Combined ratio excluding catastrophes and development

90.4

%

89.6

%

89.8

%

89.6

%

  • The underlying combined ratio increased 0.8 points as compared with the prior year quarter. The expense ratio increased 1.1 points as compared with the prior year quarter driven by higher underwriting expenses. The underlying loss ratio improved 0.7 points as compared with the prior year quarter.
  • The combined ratio increased 0.5 points as compared with the prior year quarter. Favorable net prior period development improved the loss ratio by 1.9 points in the quarter compared with 1.8 points of improvement in the prior year quarter.
  • Gross written premiums, excluding third party captives, grew 2% and net written premiums grew 2% for the third quarter of 2022.

4

Commercial

Results for the Three Months

Results for the Nine Months

Ended September 30

Ended September 30

($ millions)

2022

2021

2022

2021

Gross written premiums ex. 3rd party captives

$

1,184

$

1,005

$

3,711

$

3,176

GWP ex. 3rd party captives change (% year over year)

18

%

17

%

Net written premiums

$

962

$

831

$

3,097

$

2,622

NWP change (% year over year)

16

%

18

%

Core income

$

80

$

27

$

350

$

233

Loss ratio excluding catastrophes and development

61.5

%

61.5

%

61.5

%

60.8

%

Effect of catastrophe impacts

10.0

18.6

5.0

12.6

Effect of development-related items

-

0.5

(0.5)

0.6

Loss ratio

71.5

%

80.6

%

66.0

%

74.0

%

Expense ratio

29.9

%

30.4

%

30.1

%

31.4

%

Combined ratio

101.9

%

111.6

%

96.6

%

106.0

%

Combined ratio excluding catastrophes and development

91.9

%

92.5

%

92.1

%

92.8

%

  • The underlying combined ratio improved 0.6 points as compared with the prior year quarter, reflecting the lowest underlying combined ratio on record. The expense ratio improved 0.5 points driven by net earned premium growth of 15%. The underlying loss ratio was consistent with the prior year quarter.
  • The combined ratio improved 9.7 points as compared with the prior year quarter. Catastrophe losses were $103 million, or 10.0 points of the loss ratio in the third quarter of 2022 compared with $166 million, or 18.6 points of the loss ratio, for the prior year quarter. There was no impact on the loss ratio from net prior year development for the current quarter compared with 0.5 points of unfavorable development increasing the loss ratio in the prior year quarter.
  • Gross written premiums, excluding third party captives, grew 18% and net written premiums grew 16% for the third quarter of 2022.

5

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Disclaimer

CNA Financial Corporation published this content on 31 October 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 October 2022 10:16:10 UTC.

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