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Why Is CNA Financial (CNA) Up 1.2% Since Last Earnings Report?

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A month has gone by since the last earnings report for CNA Financial (CNA - Free Report) . Shares have added about 1.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is CNA Financial due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

CNA Financial Q1 Earnings & Revenues Lag Estimates

CNA Financial Corporation reported first-quarter 2022 core earnings of $1.16 per share, which missed the Zacks Consensus Estimate by 0.8%. The bottom line however increased 20.8% year over year.

The insurer’s results reflect higher premiums, lower expenses and improved combined ratio, offset by lower net investment income. The quarter delivered the lowest combined ratio in over five years.

Behind First-Quarter Headlines

Total operating revenues of CNA Financial were nearly $2.5 billion, up 1.7% year over year on the back of higher net earned premiums and non-insurance warranty revenues. The top line however missed the Zacks Consensus Estimate by 3.7%.

Net written premiums at Property & Casualty Operations improved 4.4% year over year to about $2 billion, driven by a written rate of +7% and new business growth of 14%.

Net investment income decreased 11.1% year over year to $448 million. The decrease was driven by limited partnership and common stock investments, which returned 0.4% in the current quarter compared with 3.4% in the year-ago period.

Total claims, benefits and expenses increased 0.8% to $2.5 billion, primarily due to higher non-insurance warranty expense. Pretax net catastrophe losses were $19 million, narrower than losses of $125 million in the year-ago quarter.
The combined ratio improved 620 basis points (bps) year over year to 91.9.
Core return on equity was 10.3%, expanded 150 bps. Book value as of Mar 31, 2022 was $39.87 per share, down 15.5% from Dec 31, 2021.

Segment Results

Specialty’s net written premiums rose nearly 3.9% year over year to $771 million. The  combined ratio improved 10 bps to 88.7.

Commercial’s net written premiums increased 4.3% year over year to $1 billion.  The  combined ratio improved 1220 bps to 94.5.

International’s net written premiums increased 6.8% year over year to $251 million.  The  combined ratio improved 350 bps to 92.4.

Life & Group’s net earned premiums were $120 million, unchanged year over year. Core income of $23 million decreased 36.1% year over year due to lower net investment income and higher expenses.

Corporate & Other’s core loss of $28 million was narrower than a loss of $36 million in the year-earlier quarter.

Dividend Update

CNA Financial’s board of directors approved a quarterly dividend of 40 cents to be paid out on Jun 2 to shareholders of May 16.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -20.25% due to these changes.

VGM Scores

At this time, CNA Financial has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, CNA Financial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

CNA Financial belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, Markel (MKL - Free Report) , has gained 1.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Markel reported revenues of $2.96 billion in the last reported quarter, representing a year-over-year change of +24.9%. EPS of $11.33 for the same period compares with $10.12 a year ago.

Markel is expected to post earnings of $21.54 per share for the current quarter, representing a year-over-year change of +12.5%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Markel. Also, the stock has a VGM Score of A.


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