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CNA Financial (CNA) Q3 Earnings Beat, Revenues Rise Y/Y

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CNA Financial Corporation (CNA - Free Report) reported third-quarter 2020 core earnings of 71 cents per share, which beat the Zacks Consensus Estimate of 62 cents by 14.5%. However, the bottom line decreased 38.8% year over year.
 
The quarter witnessed higher premiums across most of its segments and increased net investment income, which were offset by elevated expenses.

CNA Financial Corporation Price, Consensus and EPS Surprise

  CNA Financial Corporation Price, Consensus and EPS Surprise

Behind Third-Quarter Headlines

Total operating revenues of CNA Financial were nearly $2.5 billion, up about 3.8% year over year on the back of higher net investment income, premiums and non-insurance warranty revenues. However, the top line missed the Zacks Consensus Estimate by 0.6%.

Net written premiums at Property & Casualty Operations improved about 6.6% year over year to $1.8 billion driven by strong rate and higher new business.

Pretax net investment income increased 6.2% year over year to $517 million driven by limited partnership and common stock investments, partially offset by lower yields in fixed income portfolio.

Total claims, benefits and expenses increased 6% to $2.1 billion, primarily due to higher insurance claims and policyholders' benefits, amortization of deferred acquisition costs and non-insurance warranty expense.

Catastrophe losses of $160 million surged 400% from the year-ago quarter, driven by severe weather-related events, primarily Hurricanes Laura, Isaias and Sally, and the Midwest derecho.

Combined ratio deteriorated 330 basis points year over year to 100.9%.
Book value as of Sep 30, 2020 was $44.30 per share, down 1.6% from Dec 31, 2019.

Core return on equity was 6.7%, up 330 basis points (bps).

Segment Results

Specialty’s net written premiums rose nearly 9% year over year to $795 million, driven by strong rate and higher new business.  Combined ratio improved 30 bps to 89.5%.

Commercial’s net written premiums increased 4% year over year to $804 million, driven by strong rate. Combined ratio deteriorated 990 bps to 111.5%.

International’s net written premiums increased 10% year over year to $222 million, driven by growth in Europe and Canada, partially offset by the continued impact of the strategic exit from certain Lloyd’s business classes. Combined ratio improved 930 bps to 98.1%.

Life & Group’s total operating revenues were $335 million, down 0.3% year over year. Core loss of $35 million was narrower than loss of $122 million in the year-earlier quarter.

Corporate & Other’s core loss of $19 million was wider than loss of $17 million in the year-earlier quarter.

Dividend Update

CNA Financial’s board of directors approved a quarterly dividend of 37 cents to be paid out on Dec 3, 2020 to stockholders of record as of Nov 16.

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 Insurers

Third-quarter earnings of Willis Towers Watson Public Limited Company , AXIS Capital Holdings Limited (AXS - Free Report) , and Markel Corporation (MKL - Free Report) beat the respective Zacks Consensus Estimate.

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