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CNA Financial (CNA) Q2 Earnings & Revenues Miss, Fall Y/Y
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CNA Financial Corporation (CNA - Free Report) reported second-quarter 2022 core earnings of 90 cents per share, which missed the Zacks Consensus Estimate by 9.1%. The bottom line decreased 28% year over year.
The insurer’s results reflect lower investment income from the limited partnership and common stock, partially offset by higher underwriting income and higher income from fixed income securities. The quarter delivered the lowest combined ratio in over five years.
CNA Financial Corporation Price, Consensus and EPS Surprise
Total operating revenues of CNA Financial were $2.6 billion, down 1.5% year over year due to lower net investment income. The top line missed the Zacks Consensus Estimate by 0.8%.
Net written premiums at Property & Casualty Operations improved 20% year over year to about $2.3 billion, driven by a retention rate of 85% and new business growth of 27%.
Net investment income decreased 26.9% year over year to $432 million. The decrease was due to lower limited partnership and common stock investments, which returned a negative 0.7% in the reported quarter against a positive 8.3% in the year-ago period.
Total claims, benefits and expenses increased 4% to $2.7 billion, primarily due to higher insurance claims and policyholders' benefits, non-insurance warranty expenses and other operating expenses.
Catastrophe losses were $37 million, narrower than losses of $54 million in the year-ago quarter.
The combined ratio improved 60 basis points (bps) year over year to 90.8, the lowest on record.
Core return on equity was 8.1%, down 320 bps. Book value as of Jun 30, 2022 was $35.06 per share, down 25.7% from Dec 31, 2021. Debt to capital deteriorated to 22.6% at the quarter end from 17.8% as of Dec 31, 2021. Statutory surplus decreased 6.1% from 2021 end to $10.6 billion at quarter end.
Segment Results
Specialty’s net written premiums rose 6% year over year to $832 million. The combined ratio deteriorated 20 bps to 88.1.
Commercial’s net written premiums increased 36% year over year to $1.1 billion. The combined ratio improved 640 bps to 93.2.
International’s net written premiums increased 13% year over year to $330 million. The combined ratio improved 140 bps to 91.6.
Life & Group’s net earned premiums were $118 million, down 6.3% year over year. Core income of $6 million plunged 86% year over year due to lower net investment income.
Corporate & Other’s core loss of $78 million was wider than a loss of $53 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 Sep 1 to shareholders of Aug 15.
Of the insurance industry players that have reported second-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) met the mark.
Travelers’ core income of $2.57 per share beat the Zacks Consensus Estimate by 28.5% but decreased 26% year over year. Total revenues increased 7% year over year, primarily due to higher premiums, and beat the consensus estimate by 1.8%. Net written premiums increased 11%, driven by strong retention rates and positive renewal premium changes across all the segments. Underwriting gain of $113 million decreased 65% year over year in the reported quarter.
Travelers’ combined ratio deteriorated 300 bps year over year to 98.3 due to higher catastrophe losses and a higher underlying combined ratio.
RLI’s operating earnings of $1.49 per share beat the Zacks Consensus Estimate by 6.1% and improved 36.7% from the prior-year quarter. Operating revenues were $301.3 million, up 16.9% year over year, driven by 17.3% higher net premiums earned and 10.5% higher net investment income. The top line beat the Zacks Consensus Estimate of $276 million by 0.9%.
RLI’s underwriting income of $56 million increased 53%, primarily due to the strong performance of the Property and Surety segments. The combined ratio improved 460 bps year over year to 80.2.
Progressive’s earnings per share of 95 cents came in line with the Zacks Consensus Estimate. The bottom line declined 37.1% year over year. Progressive’s net premiums written were $12.4 billion in the quarter, up 8% from $11.7 billion a year ago.
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CNA Financial (CNA) Q2 Earnings & Revenues Miss, Fall Y/Y
CNA Financial Corporation (CNA - Free Report) reported second-quarter 2022 core earnings of 90 cents per share, which missed the Zacks Consensus Estimate by 9.1%. The bottom line decreased 28% year over year.
The insurer’s results reflect lower investment income from the limited partnership and common stock, partially offset by higher underwriting income and higher income from fixed income securities. The quarter delivered the lowest combined ratio in over five years.
CNA Financial Corporation Price, Consensus and EPS Surprise
CNA Financial Corporation price-consensus-eps-surprise-chart | CNA Financial Corporation Quote
Behind Second-Quarter Headlines
Total operating revenues of CNA Financial were $2.6 billion, down 1.5% year over year due to lower net investment income. The top line missed the Zacks Consensus Estimate by 0.8%.
Net written premiums at Property & Casualty Operations improved 20% year over year to about $2.3 billion, driven by a retention rate of 85% and new business growth of 27%.
Net investment income decreased 26.9% year over year to $432 million. The decrease was due to lower limited partnership and common stock investments, which returned a negative 0.7% in the reported quarter against a positive 8.3% in the year-ago period.
Total claims, benefits and expenses increased 4% to $2.7 billion, primarily due to higher insurance claims and policyholders' benefits, non-insurance warranty expenses and other operating expenses.
Catastrophe losses were $37 million, narrower than losses of $54 million in the year-ago quarter.
The combined ratio improved 60 basis points (bps) year over year to 90.8, the lowest on record.
Core return on equity was 8.1%, down 320 bps. Book value as of Jun 30, 2022 was $35.06 per share, down 25.7% from Dec 31, 2021. Debt to capital deteriorated to 22.6% at the quarter end from 17.8% as of Dec 31, 2021. Statutory surplus decreased 6.1% from 2021 end to $10.6 billion at quarter end.
Segment Results
Specialty’s net written premiums rose 6% year over year to $832 million. The combined ratio deteriorated 20 bps to 88.1.
Commercial’s net written premiums increased 36% year over year to $1.1 billion. The combined ratio improved 640 bps to 93.2.
International’s net written premiums increased 13% year over year to $330 million. The combined ratio improved 140 bps to 91.6.
Life & Group’s net earned premiums were $118 million, down 6.3% year over year. Core income of $6 million plunged 86% year over year due to lower net investment income.
Corporate & Other’s core loss of $78 million was wider than a loss of $53 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 Sep 1 to shareholders of Aug 15.
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 Some Other P&C Insurers
Of the insurance industry players that have reported second-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation (PGR - Free Report) met the mark.
Travelers’ core income of $2.57 per share beat the Zacks Consensus Estimate by 28.5% but decreased 26% year over year. Total revenues increased 7% year over year, primarily due to higher premiums, and beat the consensus estimate by 1.8%. Net written premiums increased 11%, driven by strong retention rates and positive renewal premium changes across all the segments. Underwriting gain of $113 million decreased 65% year over year in the reported quarter.
Travelers’ combined ratio deteriorated 300 bps year over year to 98.3 due to higher catastrophe losses and a higher underlying combined ratio.
RLI’s operating earnings of $1.49 per share beat the Zacks Consensus Estimate by 6.1% and improved 36.7% from the prior-year quarter. Operating revenues were $301.3 million, up 16.9% year over year, driven by 17.3% higher net premiums earned and 10.5% higher net investment income. The top line beat the Zacks Consensus Estimate of $276 million by 0.9%.
RLI’s underwriting income of $56 million increased 53%, primarily due to the strong performance of the Property and Surety segments. The combined ratio improved 460 bps year over year to 80.2.
Progressive’s earnings per share of 95 cents came in line with the Zacks Consensus Estimate. The bottom line declined 37.1% year over year. Progressive’s net premiums written were $12.4 billion in the quarter, up 8% from $11.7 billion a year ago.