CNA Financial Corporation (CNA - Free Report) reported first-quarter 2017 operating income of 87 cents per share, which beat the Zacks Consensus Estimate by 10.1%. Also, the bottom line improved 155.9% from the prior-year quarter.
The quarter witnessed higher net investment income alongside better performance by International, Life and Group Non-Core as well as Corporate & Other Non-Core segments.
Including net realized investment gains, net income of 96 cents per share skyrocketed 300% year over year.
Behind First-Quarter Headlines
Net investment income jumped 23.5% year over year to $389 million due to improved limited partnership returns in the quarter.
Net written premiums at Property & Casualty Operations declined 2.2% year over year to $1.6 billion. Net operating income improved 29.5% year over year to $268 million due to higher net investment income and lower underwriting expenses. Unfavorable premium development partially offset the downside. Combined ratio deteriorated 110 basis points (bps) on a year-over-year basis to 97.2%.
As of Mar 31, 2017, book value (excluding AOCI) was $43.49 per share, down 3.1% from Dec 31, 2016.
Segment Results
Specialty net written premiums dipped 0.7% year over year to $679 million. Lesser new business resulted in the downside. Retention was 88% in the reported quarter. Average rate for policies grew 1% year over year. Combined ratio deteriorated 80 bps to 90.2%.
Commercial net written premiums decreased 4.4% year over year to $715 million owing to unfavorable premium development on the back of premium adjustment within Small Business. However, higher new business within middle markets partially offset the downside. Retention was 83% in the quarter under review. Average rate for the policies was remained flat year over year. Combined ratio deteriorated 300 bps to 104.9%.
International net written premiums inched up 0.8% year over year to $238 million. The company achieved retention of 76% in the first quarter. Average rate on policies remained flat year over year. Combined ratio improved 390 bps to 95.1%.
Life & Group Non-Core operating revenues rose 4.1% year over year to $331 million. Net operating income of $4 million compared favorably with the year-ago loss of $2 million.
Corporate & Other Non-Core net operating loss of $37 million was significantly narrower than a loss of $114 million in the year-ago quarter.
Dividend Update
The board of directors of CNA Financial announced a quarterly dividend of 25 cents per share during the reported quarter. The dividend will be paid on May 31, to stockholders on record as of May 15, 2017.
Zacks Rank
CNA Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other P&C Insurers
Among other players from the same space that have reported first-quarter earnings so far, the bottom line at The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) missed their respective Zacks Consensus Estimate.
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CNA Financial Corporation (CNA - Free Report) reported first-quarter 2017 operating income of 87 cents per share, which beat the Zacks Consensus Estimate by 10.1%. Also, the bottom line improved 155.9% from the prior-year quarter.
The quarter witnessed higher net investment income alongside better performance by International, Life and Group Non-Core as well as Corporate & Other Non-Core segments.
Including net realized investment gains, net income of 96 cents per share skyrocketed 300% year over year.
Behind First-Quarter Headlines
Net investment income jumped 23.5% year over year to $389 million due to improved limited partnership returns in the quarter.
Net written premiums at Property & Casualty Operations declined 2.2% year over year to $1.6 billion. Net operating income improved 29.5% year over year to $268 million due to higher net investment income and lower underwriting expenses. Unfavorable premium development partially offset the downside. Combined ratio deteriorated 110 basis points (bps) on a year-over-year basis to 97.2%.
As of Mar 31, 2017, book value (excluding AOCI) was $43.49 per share, down 3.1% from Dec 31, 2016.
Segment Results
Specialty net written premiums dipped 0.7% year over year to $679 million. Lesser new business resulted in the downside. Retention was 88% in the reported quarter. Average rate for policies grew 1% year over year. Combined ratio deteriorated 80 bps to 90.2%.
Commercial net written premiums decreased 4.4% year over year to $715 million owing to unfavorable premium development on the back of premium adjustment within Small Business. However, higher new business within middle markets partially offset the downside. Retention was 83% in the quarter under review. Average rate for the policies was remained flat year over year. Combined ratio deteriorated 300 bps to 104.9%.
International net written premiums inched up 0.8% year over year to $238 million. The company achieved retention of 76% in the first quarter. Average rate on policies remained flat year over year. Combined ratio improved 390 bps to 95.1%.
Life & Group Non-Core operating revenues rose 4.1% year over year to $331 million. Net operating income of $4 million compared favorably with the year-ago loss of $2 million.
Corporate & Other Non-Core net operating loss of $37 million was significantly narrower than a loss of $114 million in the year-ago quarter.
Dividend Update
The board of directors of CNA Financial announced a quarterly dividend of 25 cents per share during the reported quarter. The dividend will be paid on May 31, to stockholders on record as of May 15, 2017.
Zacks Rank
CNA Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other P&C Insurers
Among other players from the same space that have reported first-quarter earnings so far, the bottom line at The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) missed their respective Zacks Consensus Estimate.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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