CNA Financial Corporation Third Quarter 2023 Results
October 30, 2023
Notices and Disclaimers
Forward Looking Statements
The statements made in the course of this presentation and/or contained in the presentation materials may include 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 most recent annual report on Form 10-K on file with the Securities and Exchange Commission available at www.cna.com. Any forward-looking statements and other financial information contained in this presentation speak only as of the date hereof. Further, CNA does not have any obligation to update or revise any forward-looking statement made in the course of this presentation and/or contained in the presentation materials even if CNA's expectations or any related events, conditions or circumstances change.
Available Information and Risk Factors
CNA files annual, quarterly and current reports and other information with the SEC. The SEC filings are available on the CNA website (www.cna.com) and at the SEC's website (www.sec.gov). These filings describe some of the more material risks we face and how these risks could lead to events or circumstances that may have a material adverse effect on our business, financial condition, results of operations or cash flows. You should review these filings as they contain important information about CNA and its business.
Non-GAAP Measures
This presentation, along with the presentation materials, may also reference or contain financial measures that are not in accordance with generally accepted accounting principles (GAAP). For reconciliations of non-GAAP measures to the most comparable GAAP measures and other information, please refer to CNA's press release and financial supplement that we have made available in connection with this presentation and our other filings with the Securities and Exchange Commission available at
www.cna.com
"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 © 2023 CNA. All rights reserved.
2
Third Quarter Overview
- Net income of $258 million versus net loss of $42 million in the prior year quarter; core income of $289 million versus $43 million in the prior year quarter.
- Core income up 56% to $291 million versus $186 million in the prior year quarter, excluding the results of the Life & Group annual reserve reviews.
- P&C core income up 35% to $351 million versus $260 million in the prior year quarter, reflects higher net investment income, record high pretax underlying underwriting income and lower catastrophe losses.
- Life & Group core loss of $29 million versus $192 million in the prior year quarter, reflects an unfavorable after- tax impact of $2 million in 2023 and $143 million in 2022 as a result of the annual reserve reviews. Results for the prior year quarter have been adjusted to reflect the application of the LDTI accounting standard.
- Net investment income up 31% to $553 million pretax, includes a $72 million increase from limited partnerships and common stock to $28 million and a $59 million increase from fixed income securities and other investments to $525 million.
- P&C combined ratio of 94.3%, compared with 95.8% in the prior year quarter, including 4.1 points of catastrophe loss impact compared with 5.5 points in the prior year quarter. P&C underlying combined ratio was 90.4% compared with 91.1%, in the prior year quarter. P&C underlying loss ratio was 60.0% and the expense ratio was 30.1%.
- P&C segments, excluding third party captives, generated gross written premium growth of 7% and net written premium growth of 6%. P&C renewal premium change of +6%, with written rate of +5% and exposure change of +1%.
- Book value per share of $31.61; book value per share excluding AOCI of $45.43, a 7% increase from year-end 2022 adjusting for $2.46 of dividends per share.
- Board of Directors declares regular quarterly cash dividend of $0.42 per share.
3
Financial Performance
Core income1 up 56% after excluding impact of Life & Group reserve assumption update in 2023 and 2022
(In millions, except ratios and per share data)
Revenues
Core income 1
Net income
Diluted earnings per common share: Core income
Net income
Third Quarter
2023 | 2022 2 | Change |
$3,336 | $2,957 | 13 % |
289 | 43 | N/M |
258 | (42) | N/M |
$1.06 | $0.16 | N/M |
0.95 | (0.15) | N/M |
Year to Date
2023 | 2022 1 | Change |
$9,792 | $8,768 | 12 % |
922 | 571 | 61 % |
838 | 443 | 89 % |
$3.39 | $2.10 | 61 % |
3.08 | 1.63 | 89 % |
Core ROE
9.4 %
1.4 % 8.0 pts
10.1 %
6.2 % 3.9 pts
- Excluding the impact of the L&G assumption updates, core income was $291 million and $186 million for the third quarter of 2023 and 2022 and $924 million and $714 million for 2023 and 2022 year to date.
- As of January 1, 2023, the Company adopted Accounting Standards Update (ASU) 2018-12, Financial Services-Insurance
(Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI) using the modified retrospective
method applied as of the transition date of January 1, 2021. Prior period amounts have been adjusted to reflect4 application of the new guidance.
Property & Casualty Operations
Continued strong profitability
(In millions, except ratios)
GWP ex. 3rd party captives
GWP change (% year over year)
Net written premium
NWP change (% year over year)
Net earned premium
NEP change (% year over year)
Underwriting gain
Loss ratio excl. catastrophes and development Impact of catastrophes
Impact of development-related items
Loss ratio
Expense ratio
Combined ratio
Combined ratio excl. catastrophes and development
Third Quarter
2023 | 2022 |
$2,595 | $2,430 |
7 % | |
$2,178 | $2,060 |
6 % | |
$2,295 | $2,103 |
9 % | |
$131 | $84 |
60.0 % | 59.9 % |
4.1 % | 5.5 % |
(0.2)% | (0.8)% |
63.9 % | 64.6 % |
30.1 % | 30.8 % |
94.3 % | 95.8 % |
90.4 % | 91.1 % |
Year to Date
2023 | 2022 |
$8,305 | $7,560 |
10 % | |
$6,938 | $6,379 |
9 % | |
$6,662 | $6,080 |
10 % | |
$399 | $425 |
59.9 % | 60.0 % |
3.2 % | 2.8 % |
- % | (0.9)% |
63.1 % | 61.9 % |
30.6 % | 30.8 % |
94.0 % | 93.0 % |
90.8 % | 91.1 % |
5
Property & Casualty Production Metrics
Continue to manage rate/retention dynamic effectively
Property & Casualty Rate & Retention | |
2022 | 2023 |
Q1 Q2 Q3 Q4
Q1
Q2 Q3
84% | 86% | 86% | 86% | 86% | 86% | 84% |
Retention
Renewal Premium Change
Rate
10% | 8% | 8% | 7% | 7% | 7% | |
6% | ||||||
7% | 6% | 5% | 4% | 5% | 5% | 5% |
GWP ex. 3rd party captives ($M) | $2,454 | $2,676 | $2,430 | $2,704 | $2,724 | $2,986 | $2,595 |
New Business ($M) | $451 | $500 | $455 | $470 | $503 | $555 | $475 |
Specialty | |||||||
Rate | 10% | 7% | 5% | 3% | 2% | (1)% | 1% |
Retention | 84% | 85% | 88% | 88% | 88% | 89% | 87% |
Commercial | |||||||
Rate | 5% | 5% | 4% | 5% | 7% | 8% | 8% |
Retention | 87% | 87% | 86% | 86% | 86% | 85% | 83% |
International | |||||||
Rate | 9% | 6% | 6% | 4% | 4% | 4% | 2% |
Retention | 73% | 84% | 83% | 84% | 83% | 83% | 84% |
6
Specialty
Continued excellent all-in and underlying combined ratio
(In millions, except ratios)
GWP ex. 3rd party captives
GWP change (% year over year)
Net written premium
NWP change (% year over year)
Net earned premium
NEP change (% year over year)
Underwriting gain
Loss ratio excl. catastrophes and development Impact of catastrophes
Impact of development-related items
Loss ratio
Expense ratio
Combined ratio
Combined ratio excl. catastrophes and development
Third Quarter
2023 | 2022 |
$949 | $958 |
(1)% | |
$825 | $840 |
(2)% | |
$829 | $810 |
2 % | |
$83 | $92 |
58.6 % | 58.4 % |
- % | 0.2 % |
(0.6)% | (1.9)% |
58.0 % | 56.7 % |
31.8 % | 31.7 % |
90.1 % | 88.7 % |
90.7 % | 90.4 % |
Year to Date
2023 2022
$2,796 | $2,816 |
(1)% | |
$2,438 | $2,443 |
- % | |
$2,438 | $2,376 |
3 % | |
$237 | $273 |
58.5 % | 58.6 % |
- % | 0.1 % |
(0.3)% | (1.4)% |
58.2 % | 57.3 % |
31.9 % | 31.0 % |
90.3 % | 88.5 % |
90.6 % | 89.8 % |
7
Specialty Production Metrics
Rate reductions moderated considerably in Financial Institutions and Management Liability
Specialty Rate & Retention | |||||||
2022 | 2023 | ||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |
84% | 85% | 88% | 88% | 88% | 89% | 87% | |
Retention | |||||||
Renewal Premium Change | 11% | 9% | |||||
6% | |||||||
Rate | 3% | 4% | 2% | ||||
10% | 7% | 5% | -% | ||||
3% | |||||||
2% | (1)% | 1% | |||||
GWP ex. 3rd party captives | $885 | $973 | $958 | $998 | $886 | $961 | $949 |
New Business ($M) | $145 | $132 | $130 | $141 | $108 | $120 | $121 |
FI & Mgmt Liability | |||||||
Rate | 20% | 10% | 6% | -% | (3)% | (9)% | (4)% |
Retention | 89% | 90% | 89% | 88% | 89% | 91% | 88% |
Affinity Professional E&O | |||||||
Rate | 2% | 3% | 3% | 4% | 3% | 4% | 3% |
Retention | 90% | 90% | 91% | 92% | 88% | 89% | 89% |
Medical Malpractice | |||||||
Rate | 9% | 6% | 7% | 7% | 6% | 5% | 7% |
Retention | 71% | 68% | 82% | 84% | 84% | 85% | 84% |
Surety | |||||||
Net Written Premiums | $149 | $162 | $153 | $130 | $178 | $170 | $157 |
Warranty & Alt. Risks | |||||||
Revenues | $437 | $444 | $451 | $454 | $460 | $460 | $460 |
8
Commercial
Continued double-digit growth and record underlying combined ratio
(In millions, except ratios)
GWP ex. 3rd party captives
GWP change (% year over year)
Net written premium
NWP change (% year over year)
Net earned premium
NEP change (% year over year)
Underwriting gain (loss)
Loss ratio excl. catastrophes and development Impact of catastrophes
Impact of development-related items
Loss ratio
Expense ratio
Combined ratio
Combined ratio excl. catastrophes and development
Third Quarter
2023 | 2022 |
$1,340 | $1,184 |
13 % | |
$1,071 | $962 |
11 % | |
$1,170 | $1,023 |
14 % | |
$13 | ($23) |
61.5 % | 61.5 % |
7.4 % | 10.0 % |
- % | - % |
68.9 % | 71.5 % |
29.5 % | 29.9 % |
98.9 % | 101.9 % |
91.5 % | 91.9 % |
Year to Date
2023 | 2022 |
$4,384 | $3,711 |
18 % | |
$3,588 | $3,097 |
16 % | |
$3,336 | $2,901 |
15 % | |
$96 | $94 |
61.5 % | 61.5 % |
5.7 % | 5.0 % |
(0.2)% | (0.5)% |
67.0 % | 66.0 % |
29.6 % | 30.1 % |
97.1 % | 96.6 % |
91.6 % | 92.1 % |
9
Commercial Production Metrics
New business growth of 19% and rate of 8% which remains above long-run loss cost trend
Commercial Rate & Retention
Retention
Renewal Premium Change
Rate
2022 | 2023 | |||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
87% | 87% | 86% | 86% | 86% | 85% | 83% |
8% | 9% | 9% | 11% | 9% | ||
7% | 7% | |||||
5% | 5% | 4% | 5% | 7% | 8% | 8% |
GWP ex. 3rd party captives | $1,206 | $1,321 | $1,184 | $1,345 | $1,440 | $1,604 | $1,340 |
New Business ($M) | $228 | $280 | $246 | $255 | $310 | $343 | $292 |
Middle Market | |||||||
Rate | 3% | 3% | 2% | 3% | 4% | 6% | 5% |
Retention | 83% | 87% | 87% | 85% | 85% | 86% | 83% |
Construction | |||||||
Rate | 5% | 5% | 4% | 5% | 5% | 6% | 7% |
Retention | 90% | 90% | 83% | 88% | 86% | 84% | 85% |
National Accounts | |||||||
Rate | 11% | 10% | 8% | 11% | 17% | 20% | 18% |
Retention | 85% | 86% | 88% | 88% | 90% | 84% | 80% |
Small Business | |||||||
Rate | 3% | 3% | 2% | 2% | 2% | 2% | 3% |
Retention | 85% | 84% | 85% | 85% | 85% | 84% | 84% |
Marine / Other | |||||||
Net Written Premium | $72 | $101 | $82 | $78 | $87 | $101 | $78 |
10
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
CNA Financial Corporation published this content on 27 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 October 2023 10:13:46 UTC.