CNA FINANCIAL CORPORATION CHICAGO, May 4, 2015 /PRNewswire/ -- CNA Financial Corporation (NYSE: CNA) today announced first quarter 2015 net operating income of $225 million, or $0.83 per share, and net income of $233 million, or $0.86 per share. Property & Casualty Operations combined ratio for the first quarter was 98.9%, or 96.7% excluding catastrophes and development.
CNA Financial also declared a quarterly dividend of $0.25 per share, payable June 3, 2015 to stockholders of record on May 18, 2015.
Results for the Three
Months Ended
March 31
--------
($ millions, except per
share data) 2015 2014
---- ----
Net operating income (a) $225 $190
Net realized investment
gains 8 30
Loss from discontinued
operations, net of tax - (207)
--- ----
Net income $233 $13
==== ===
Net operating income per
diluted share $0.83 $0.70
Net income per diluted
share 0.86 0.05
March 31, December 31,
2015 2014
---------- ------------
Book value per share $46.02 $47.39
Book value per share
excluding AOCI 44.47 45.91
(a) Management utilizes the net
operating income financial measure
to monitor the Company's
operations. Please refer to Note
P in the Consolidated Financial
Statements within CNA's Annual
Report on Form 10-K for the year
ended December 31, 2014 for
further discussion of this
measure.
Property & Casualty Operations' net operating income was $264 million for the first quarter of 2015 as compared with $219 million in the prior year quarter. This increase was driven by improved current accident year underwriting results as well as higher net investment income. Catastrophe losses for the first quarter of 2015 were $19 million after tax as compared with $48 million after tax in the prior year quarter, primarily due to U.S. weather-related events.
After-tax net investment income improved to $394 million for the first quarter of 2015 as compared with $371 million in the prior year quarter. This increase was driven by limited partnerships, which returned 3.9% as compared with 2.7% in the prior year quarter.
Net income in the prior year quarter included Loss from discontinued operations, net of tax, of $207 million related to Continental Assurance Company, our former life insurance subsidiary, which was sold in the third quarter of 2014.
Property & Casualty Operations
"Our Property & Casualty operations continue to show improving accident year profitability," said Thomas F. Motamed, Chairman and Chief Executive Officer of CNA Financial Corporation. "While we are pleased that decreased catastrophe activity and strong investment income contributed positively to our results, our primary focus remains improving the underlying loss ratio."
Results for the Three Months Ended
March 31
--------
($ millions) 2015 2014
---- ----
Net written
premiums $1,669 $1,767
NWP change (% year
over year) (6)% (1)%
Net operating
income $264 $219
Net income 269 235
Loss ratio
excluding
catastrophes and
development 62.3% 63.9%
Effect of
catastrophe
impacts 1.9 4.5
Effect of
development-
related items 0.3 (0.1)
--- ----
Loss ratio 64.5% 68.3%
==== ====
Combined ratio 98.9% 101.6%
Combined ratio
excluding
catastrophes and
development 96.7% 97.2%
Business Operating Highlights
Specialty
Results for the Three Months Ended
March 31
--------
($ millions) 2015 2014
---- ----
Net written
premiums $698 $713
NWP change (% year
over year) (2)% (2)%
Net operating
income $135 $129
Net income 138 137
Loss ratio
excluding
catastrophes and
development 62.2% 63.3%
Effect of
catastrophe
impacts 1.1 1.6
Effect of
development-
related items (0.2) (1.0)
---- ----
Loss ratio 63.1% 63.9%
==== ====
Combined ratio 94.6% 94.1%
Combined ratio
excluding
catastrophes and
development 93.7% 93.5%
-- The combined ratio increased 0.5 points for the first quarter of 2015 as
compared with the prior year quarter. The loss ratio improved 0.8 points
due to an improved current accident year loss ratio, partially offset by
less favorable net prior year development. The expense ratio increased
1.3 points for the first quarter of 2015 as compared with the prior year
quarter, primarily driven by increased underwriting expenses.
-- Net written premiums for the first quarter of 2015 declined $15 million
from the prior year period, primarily due to lower retention. Average
rate increased 2% for the policies that renewed in the first quarter of
2015 while achieving retention of 84%.
Commercial
Results for the Three Months
Ended
March 31
--------
($ millions) 2015 2014
---- ----
Net written premiums $759 $807
NWP change (% year over
year) (6)% (3)%
Net operating income $120 $74
Net income 121 82
Loss ratio excluding
catastrophes and
development 64.1% 67.2%
Effect of catastrophe
impacts 2.8 8.4
Effect of development-
related items - 1.5
--- ---
Loss ratio 66.9% 77.1%
==== ====
Combined ratio 103.3% 111.3%
Combined ratio excluding
catastrophes and
development 100.5% 101.4%
-- Net operating income increased $46 million for the first quarter of 2015
as compared with the prior year quarter due to improved underwriting
results.
-- The combined ratio improved 8.0 points for the first quarter of 2015 as
compared with the prior year quarter. The loss ratio improved 10.2
points, primarily due to an improved current accident year loss ratio.
Catastrophe losses were $19 million, or 2.8 points of the loss ratio,
for the first quarter of 2015 as compared with $60 million, or 8.4
points of the loss ratio, for the prior year quarter. The expense ratio
increased 2.1 points for the first quarter of 2015 as compared with the
prior year quarter, primarily due to the unfavorable effect of lower net
earned premiums.
-- Net written premiums decreased $48 million for the first quarter of 2015
as compared with the prior year quarter, primarily driven by
underwriting actions taken in certain business classes and a lower level
of new business, reflecting competitive market conditions, partially
offset by positive rate and higher retention. Average rate increased 3%
for the policies that renewed in the first quarter of 2015 while
achieving a retention of 76%.
International
Results for the Three Months
Ended
March 31
--------
($ millions) 2015 2014
---- ----
Net written premiums $212 $247
NWP change (% year over
year) (14)% 15%
Net operating income $9 $16
Net income 10 16
Loss ratio excluding
catastrophes and
development 56.7% 55.8%
Effect of catastrophe
impacts 1.3 1.2
Effect of development-
related items 2.7 (2.8)
--- ----
Loss ratio 60.7% 54.2%
==== ====
Combined ratio 98.3% 93.5%
Combined ratio excluding
catastrophes and
development 94.3% 95.1%
-- Net operating income decreased $7 million for the first quarter of 2015
as compared with the prior year quarter, primarily due to the lower
level of net earned premiums. Reinsurance commutations in the first
quarter of 2014 reduced ceded losses from prior years and resulted in a
release of the related allowance for uncollectible reinsurance.
-- The combined ratio increased 4.8 points for the first quarter of 2015 as
compared with the prior year quarter. The loss ratio increased 6.5
points, due to the unfavorable effect of net prior year development and
a higher current accident year loss ratio. The prior year quarter
benefited from the favorable impact of commutations. The expense ratio
improved 1.7 points due to decreased expenses, partially offset by the
unfavorable effect of lower net earned premiums.
-- Net written premiums decreased $35 million for the first quarter of 2015
as compared with the prior year quarter. The decrease was primarily
driven by the unfavorable effect of foreign currency exchange rates,
unfavorable premium development at Hardy and the 2014 termination of a
managing general underwriter relationship in Canada. Average rate
decreased 1% for the policies that renewed in the first quarter of 2015
while achieving a retention of 76%.
Life & Group Non-Core
Results for the Three Months
Ended
March 31
--------
($ millions) 2015 2014
---- ----
Total operating revenues $326 $315
Net operating loss $(17) $(2)
Net income (loss) (14) 8
-- Net operating loss increased $15 million for the first quarter of 2015
as compared with the prior year quarter. The increase was driven by
unfavorable morbidity in our long term care business.
Corporate & Other Non-Core
Results for the Three Months
Ended
March 31
--------
($ millions) 2015 2014
---- ----
Interest expense $39 $44
Net operating loss (22) (27)
Net loss (22) (23)
-- Results in 2015 included lower interest expense due to the maturity of
higher coupon debt in the fourth quarter of 2014.
About the Company
Serving businesses and professionals since 1897, CNA is the country's eighth largest commercial insurance writer and the 13(th) 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) 551-9020, or for international callers, (719) 457-2638. 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 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 11, 2015 by dialing (888) 203-1112, or for international callers, (719) 457-0820. The replay passcode is 5337219. 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 Robert Tardella at 312-822-4387.
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 in Canada, the United Kingdom and Continental Europe as well as globally through its operations at Lloyd's of London.
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 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 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.
CONTACT:
MEDIA: ANALYSTS:
Brandon Davis, 312-822-5167 James Anderson, 312-822-7757
Sarah Pang, 312-822-6394 Derek G. Smith, 312-822-6612
Robert Tardella, 312-822-4387
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SOURCE CNA Financial Corporation
