CNA FINANCIAL ANNOUNCES FIRST QUARTER 2024 NET INCOME OF $1.24 PER SHARE AND CORE INCOME OF $1.30 PER SHARE
CNA Financial announced first quarter 2024 net income of $338 million, or $1.24 per share, a 14% increase from the prior year. Core income was $355 million, or $1.30 per share, reflecting the best first quarter core income on record. The P&C core income was $372 million, up 9% from the prior year, driven by higher investment income and favorable net prior year development. Net investment income increased 16% to $609 million pretax. The P&C combined ratio was 94.6%. Book value per share was $35.62, a 2% increase from year-end 2023. The Board of Directors declared a quarterly cash dividend of $0.44 per share.
Record first quarter core income of $355 million, benefiting from 16% growth in net investment income.
P&C core income of $372 million reflects higher investment income and favorable net prior year development.
Net written premium growth of 6% and gross written premium growth of 8% for P&C segments, excluding third party captives.
Book value per share increased 2% from year-end 2023, adjusting for dividends.
Declared quarterly cash dividend of $0.44 per share.
P&C combined ratio increased to 94.6% with 3.8 points of catastrophe loss impact.
Underlying combined ratio for P&C was 91.0%, higher than the prior year quarter.
P&C segments experienced higher catastrophe losses and expense ratios.
Corporate & Other segment reported a core loss of $22 million.
Statutory capital and surplus for Combined Continental Casualty Companies was $10.9 billion.
Insights
The disclosed increase in net income and core income for CNA Financial indicates a robust financial performance for the first quarter of 2024, which is reflective of a sound investment strategy and effective cost management. The growth in net investment income, particularly from fixed income securities and limited partnerships, suggests a well-structured investment portfolio capable of exploiting favorable market conditions. Additionally, the consistent dividend payout, despite the slight decrease in book value per share, demonstrates commitment to shareholder returns.
From a financial perspective, the Property & Casualty (P&C) combined ratio exceeding 94% can raise a flag as it nears the breakeven point of 100% above which an insurer is paying out more in claims and expenses than it earns in premiums. However, the underlying combined ratio's maintenance below 92% for thirteen consecutive quarters implies a sustained underwriting discipline. The uptick in catastrophe losses could be an area to monitor, given the potential volatility it can introduce to future earnings.
The P&C underlying combined ratio and its slight increase suggest only a marginal change in claims and expenses relative to premiums. The continued profitability in this sector is a positive sign for CNA's core operations. The gross written premium growth of 8% and net written premium growth of 6%, excluding third party captives, is indicative of a healthy appetite for CNA's insurance offerings and its competitive stance in the insurance market.
The reported growth in Commercial by 17% is quite significant, highlighting the company's strong market position in a favorable property environment. However, the decline in International gross written premiums by 6% warrants attention, as it suggests potential challenges or strategic shifts in international markets. In comparison, the modest improvements in the Life & Group segment, with a shift from a core loss to a core income, are encouraging, though this segment appears to have less impact on the overall performance.
The investor perspective might be intrigued by CNA Financial's reported premium rate increases and retention rates, which reflect the company's pricing power and customer loyalty—key indicators of a healthy business in a competitive industry. Moreover, the reference to 'disciplined execution' by the CEO underscores a strategic focus on sustainable growth.
While short-term impacts like office consolidation charges have led to increased losses in the Corporate & Other segment, they may lead to long-term operational efficiency. The outlook for the remainder of 2024 remains confident with an emphasis on profitable growth and enhanced investment returns. The strategy of balancing underwriting discipline with investment growth appears sound, suggesting that CNA is well-positioned to navigate the economic challenges that may arise.
- Net income up
14% to$338 million $297 million 9% to$355 million , reflecting the best first quarter core income on record, versus$325 million - P&C core income of
$372 million $346 million - Net investment income up
16% to$609 million $44 million $541 million $40 million $68 million - P&C combined ratio of
94.6% , compared with93.9% in the prior year quarter, including 3.8 points of catastrophe loss impact compared with 2.4 points in the prior year quarter. P&C underlying combined ratio was91.0% compared with90.8% in the prior year quarter. P&C underlying loss ratio was60.5% and the expense ratio was30.1% . - P&C segments, excluding third party captives, generated gross written premium growth of
8% and net written premium growth of6% for the first quarter of 2024. P&C renewal premium change of +6% , with written rate of +4% and exposure change of +2% . - Book value per share of
$35.62 $45.10 2% increase from year-end 2023 adjusting for$2.44 - Board of Directors declares regular quarterly cash dividend of
$0.44
Our Property & Casualty segments produced core income of
Our Life & Group segment produced core income of
Our Corporate & Other segment produced a core loss of
CNA Financial declared a quarterly dividend of
Results for the Three Months Ended | |||
($ millions, except per share data) | 2024 | 2023 | |
Net income | $ 338 | $ 297 | |
Core income (a) | 355 | 325 | |
Net income per diluted share | $ 1.24 | $ 1.09 | |
Core income per diluted share | 1.30 | 1.19 | |
March 31, 2024 | December 31, 2023 | ||||
Book value per share | $ | 35.62 | $ | 36.52 | |
Book value per share excluding AOCI | 45.10 | 46.39 | |||
(a) | 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 off to an excellent start with a record first quarter core income of
Gross written premiums ex. captives grew by
Renewal premium change was up a point to
We are very pleased with our disciplined execution in the first quarter and we believe the remainder of 2024 will continue to afford us robust opportunities to grow profitably and continue to build our investment returns," said Dino E. Robusto, Chairman & Chief Executive Officer of CNA Financial Corporation.
Property & Casualty Operations
Results for the Three Months Ended | |||||
($ millions) | 2024 | 2023 | |||
Gross written premiums ex. 3rd party captives | $ 2,936 | $ | 2,724 | ||
GWP ex. 3rd party captives change (% year over year) | 8 | % | |||
Net written premiums | $ 2,390 | $ | 2,247 | ||
NWP change (% year over year) | 6 | % | |||
Net earned premiums | $ 2,331 | $ | 2,133 | ||
NEP change (% year over year) | 9 | % | |||
Underwriting gain | $ 126 | $ | 130 | ||
Net investment income | $ 357 | $ | 301 | ||
Core income | $ 372 | $ | 346 | ||
Underlying loss ratio | 60.5 | % | 59.8 | % | |
Effect of catastrophe impacts | 3.8 | 2.4 | |||
Effect of development-related items | (0.2) | 0.7 | |||
Loss ratio | 64.1 | % | 62.9 | % | |
Expense ratio |
30.1 |
% |
30.7 |
% | |
Combined ratio | 94.6 | % | 93.9 | % | |
Underlying combined ratio | 91.0 | % | 90.8 | % | |
- The underlying combined ratio increased 0.2 points as compared with the prior year quarter. The underlying loss ratio increased 0.7 points as compared with the prior year quarter. The expense ratio improved 0.6 points driven by net earned premium growth of
9% . - The combined ratio increased 0.7 points as compared with the prior year quarter. Catastrophe losses were
$88 million , or 3.8 points of the loss ratio in the quarter compared with$52 million , or 2.4 points of the loss ratio, for the prior year quarter. Favorable net prior period development improved the loss ratio by 0.2 points in the current year quarter compared with 0.7 points of unfavorable net prior period development increasing the loss ratio in the prior year quarter. - P&C segments, excluding third party captives, generated gross written premium growth of
8% and net written premium growth of6% .
Business Operating Highlights
Specialty
Results for the Three Months Ended | |||||
($ millions) | 2024 | 2023 | |||
Gross written premiums ex. 3rd party captives | $ 880 | $ 886 | |||
GWP ex. 3rd party captives change (% year over year) | (1) | % | |||
Net written premiums | $ 792 | $ 788 | |||
NWP change (% year over year) | 1 | % | |||
Net earned premiums | $ 814 | $ 797 | |||
NEP change (% year over year) | 2 | % | |||
Underwriting gain | $ 76 | $ 80 | |||
Underlying loss ratio | 59.2 | % | 58.4 | % | |
Effect of catastrophe impacts | — | — | |||
Effect of development-related items | (0.6) | — | |||
Loss ratio | 58.6 | % | 58.4 | % | |
Expense ratio |
31.8 |
% |
31.4 |
% | |
Combined ratio | 90.7 | % | 90.0 | % | |
Underlying combined ratio | 91.3 | % | 90.0 | % | |
- The underlying combined ratio increased 1.3 points as compared with the prior year quarter primarily due to a 0.8 point increase in the underlying loss ratio and a 0.4 point increase in the expense ratio.
- The combined ratio increased 0.7 points as compared with the prior year quarter. Favorable net prior period development improved the loss ratio by 0.6 points in the current quarter compared with no net prior period development in the prior year quarter.
- Gross written premiums, excluding third party captives, declined
1% and net written premiums grew1% for the first quarter of 2024.
Commercial
Results for the Three Months Ended | |||||
($ millions) | 2024 | 2023 | |||
Gross written premiums ex. 3rd party captives | $ 1,682 | $ 1,440 | |||
GWP ex. 3rd party captives change (% year over year) | 17 | % | |||
Net written premiums | $ 1,338 | $ 1,188 | |||
NWP change (% year over year) | 13 | % | |||
Net earned premiums | $ 1,202 | $ 1,046 | |||
NEP change (% year over year) | 15 | % | |||
Underwriting gain | $ 29 | $ 41 | |||
Underlying loss ratio | 62.0 | % | 61.5 | % | |
Effect of catastrophe impacts | 6.8 | 4.2 | |||
Effect of development-related items | — | — | |||
Loss ratio | 68.8 | % | 65.7 | % | |
Expense ratio |
28.2 |
% |
29.8 |
% | |
Combined ratio | 97.6 | % | 96.0 | % | |
Underlying combined ratio | 90.8 | % | 91.8 | % | |
- The underlying combined ratio improved 1.0 point as compared with the prior year quarter, reflecting the lowest on record. The expense ratio improved 1.6 points driven by net earned premium growth of
15% . The underlying loss ratio increased 0.5 points as compared with the prior year quarter. - The combined ratio increased 1.6 points as compared with the prior year quarter. Catastrophe losses were
$82 million , or 6.8 points of the loss ratio in the quarter compared with$44 million , or 4.2 points of the loss ratio, for the prior year quarter. - Gross written premiums, excluding third party captives, grew
17% and net written premiums grew13% for the first quarter of 2024.
International
Results for the Three Months Ended | |||||
($ millions) | 2024 | 2023 | |||
Gross written premiums | $ 374 | $ 398 | |||
GWP change (% year over year) | (6) | % | |||
Net written premiums | $ 260 | $ 271 | |||
NWP change (% year over year) | (4) | % | |||
Net earned premiums | $ 315 | $ 290 | |||
NEP change (% year over year) | 9 | % | |||
Underwriting gain | $ 21 | $ 9 | |||
Underlying loss ratio | 58.1 | % | 57.5 | % | |
Effect of catastrophe impacts | 2.0 | 2.8 | |||
Effect of development-related items | — | 5.1 | |||
Loss ratio | 60.1 | % | 65.4 | % | |
Expense ratio |
33.2 |
% |
31.8 |
% | |
Combined ratio | 93.3 | % | 97.2 | % | |
Underlying combined ratio | 91.3 | % | 89.3 | % | |
- The underlying combined ratio increased 2.0 points as compared with the prior year quarter. The expense ratio increased 1.4 points driven by higher employee related costs partially offset by net earned premium growth of
9% . The underlying loss ratio increased 0.6 points as compared with the prior year quarter. - The combined ratio improved 3.9 points as compared with the prior year quarter. Catastrophe losses were
$6 million , or 2.0 points of the loss ratio in the quarter compared with$8 million , or 2.8 points of the loss ratio, for the prior year quarter. There was no net prior period development in the current quarter compared with 5.1 points of unfavorable development increasing the loss ratio in the prior year quarter. - Excluding currency fluctuations, gross written premiums declined
8% and net written premiums declined6% for the first quarter of 2024.
Life & Group
Results for the Three Months Ended | |||
($ millions) | 2024 | 2023 | |
Net earned premiums | $ 110 | $ 115 | |
Claims, benefits and expenses | 341 | 341 | |
Net investment income | 231 | 214 | |
Core income (loss) | 5 | (3) | |
Core results improved
Corporate & Other
Results for the Three Months Ended | ||
($ millions) | 2024 | 2023 |
Insurance claims and policyholders' benefits | $ (8) | $ (7) |
Interest expense | 34 | 28 |
Net investment income | 21 | 10 |
Core loss | (22) | (18) |
Core loss increased
Net Investment Income
Results for the Three Months Ended | ||||
2024 | 2023 | |||
Fixed income securities and other | $ 541 | $ 497 | ||
Limited partnership and common stock investments | 68 | 28 | ||
Net investment income | $ 609 |
$ 525 | ||
Net investment income increased
Stockholders' Equity
Stockholders' equity of
Book value per share ex AOCI of
As of March 31, 2024, statutory capital and surplus for the Combined Continental Casualty Companies was
About the Company
CNA is one of the largest
Contacts
Media: | Analysts: |
Kelly Messina | Vice President, Marketing | Ralitza K. Todorova | Vice President, |
872-817-0350 | 312-822-3834 |
Conference Call and Webcast/Presentation Information
A conference call for investors and the professional investment community will be held at 8:00 a.m. (CT) today. On the conference call will be Dino E. Robusto, Chairman and Chief Executive Officer of CNA Financial Corporation, Scott R. Lindquist, Executive Vice President and Chief Financial Officer of CNA Financial Corporation and other members of senior management. Participants can access the call by dialing (844) 481-2830 (USA Toll Free) or +1 (412) 317-1850 (International). The call will also be broadcast live on the internet and may be accessed from the Investor Relations page of the CNA website (www.cna.com). A presentation will be posted and available on the CNA website that will provide additional insight into the results.
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 investor.relations@cna.com.
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 a network of brokers and independent agents to market a broad range of property and casualty insurance products to all types of insureds targeting small business, construction, middle markets and other commercial customers.
- International underwrites property and casualty coverages on a global basis through a branch operation in
Canada , a European business consisting of insurance companies based in the U.K and Luxembourg and Hardy, our Lloyd's Syndicate. - Life & Group includes the individual and group run-off long-term care businesses as well as structured settlement obligations not funded by annuities related to certain property and casualty claimants.
- 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, asbestos and environmental pollution (A&EP), a legacy portfolio of excess workers' compensation (EWC) policies and legacy mass tort reserves.
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 t he
- 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 catastrophe losses and development-related items.
- 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. For certain products within Small Business, where quantifiable, rate includes the influence of new business as well.
Exposure represents the measure of risk used in the pricing of the insurance product. The change in exposure represents the change in premium dollars on policies that renew as a result of the change in risk of the policy.
Retention represents the percentage of premium dollars renewed, excluding rate and exposure changes, 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.
Gross written premiums ex. 3rd party captives represents gross written premiums excluding business which is ceded to third party captives, including business related to large warranty programs.
Development-related items represents net prior year loss reserve and premium development, and includes the effects of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts.
Underwriting gain (loss) represents net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and other insurance related expenses, pre-tax.
Underlying underwriting gain (loss) represents underwriting results excluding catastrophe losses and development-related items.
Statutory capital and surplus represents the excess of an insurance company's admitted assets over its liabilities, including loss reserves, as determined in accordance with statutory accounting practices. Statutory capital and surplus as of the current period is preliminary.
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 (Loss) to Core Income (Loss)
Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses. The calculation of core income (loss) excludes net investment gains or losses because net investment gains or losses are generally driven by economic factors that are not necessarily reflective of our primary operations. Management monitors core income (loss) for each business segment to assess segment performance. Presentation of consolidated core income (loss) is deemed to be a non-GAAP financial measure.
Results for the Three Months | |||
($ millions) | 2024 | 2023 | |
Net income | $ 338 | $ 297 | |
Less: Net investment losses | (17) | (28) | |
Core income | $ 355 | $ 325 | |
Reconciliation of Net Income (Loss) per Diluted Share to Core Income (Loss) 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 (loss) per diluted share is core income (loss) on a per diluted share basis.
Results for the Three Months | |||
2024 | 2023 | ||
Net income per diluted share | $ 1.24 | $ 1.09 | |
Less: Net investment losses | (0.06) | (0.10) | |
Core income per diluted share | $ 1.30 | $ 1.19 | |
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.
March 31, 2024 | December 31, 2023 | ||
Book value per share | $ 35.62 | $ 36.52 | |
Less: Per share impact of AOCI | (9.48) | (9.87) | |
Book value per share excluding AOCI | $ 45.10 | $ 46.39 |
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 | ||||
($ millions) | 2024 | 2023 | ||
Annualized net income | $ 1,351 | $ 1,189 | ||
Average stockholders' equity including AOCI (a) | 9,778 | 8,607 | ||
Return on equity | 13.8 | % | 13.8 | % |
Annualized core income |
$ 1,420 |
$ 1,299 | ||
Average stockholders' equity excluding AOCI (a) | 12,400 | 12,060 | ||
Core return on equity | 11.5 | % | 10.8 | % |
(a) | Average stockholders' equity is calculated using a simple average of the beginning and ending balances for the period. |
For additional information, please refer 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 Statements
This press release includes statements that 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, please refer to CNA's filings 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.
Any descriptions of coverage under CNA policies or programs in this press release are provided for convenience only and are not to be relied upon with respect to questions of coverage, exclusions or limitations. With regard to all such matters, the terms and provisions of relevant insurance policies are primary and controlling. In addition, please note that all coverages may not be available in all states.
"CNA" is a registered trademark of CNA Financial Corporation. Certain CNA Financial Corporation subsidiaries use the "CNA" trademark in connection with insurance underwriting and claims activities. Copyright © 2024 CNA. All rights reserved.
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SOURCE CNA
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