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Should You Retain CNA Financial (CNA) in Your Portfolio?
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CNA Financial Corporation (CNA - Free Report) has been favored by investors on the back of new business growth, improved current accident year underwriting results and effective capital deployment.
Optimistic Growth Projections
The consensus estimate for 2023 earnings is pegged at $4.15, indicating a 12.5% increase from the year-ago reported figure on estimated 6.1% higher revenues of $11 billion. The expected long-term earnings growth rate is pegged at 5%.
Earnings Surprise History
CNA Financial has a solid track record of beating earnings estimates in five of the last seven quarters.
Zacks Rank & Price Performance
CNA Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 4.5% against the industry’s increase of 7%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
CNA Financial’s ROE for the trailing 12 months is 10.1%, expanding 70 basis points year over year. This compares favorably with the industry average of 6.7%. ROE reflects the insurer’s efficiency in using shareholders’ funds.
Style Score
CNA Financial has a favorable VGM Score of B. The VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
Business Tailwinds
CNA Financial remains well poised to gain from a rise in new businesses, strong rate, lower net catastrophe losses, improved non-catastrophe current accident year underwriting results and higher net earned premium, which contribute to premium growth across its Specialty, Commercial and International segments.
The fixed-income portfolio continues to provide consistent earnings. Higher returns in the limited partnership portfolio, improved current accident year underwriting results and growth in invested asset base are likely to contribute to its net investment income.
Both loss and expense ratios stand to gain from lower net catastrophe losses, higher net earned premiums, lower acquisition costs, lower underwriting expenses and improved non-catastrophe current accident year underwriting results.
CNA Financial has been witnessing substantial improvement in the combined ratio over the past few years. Its combined ratio reflects its underwriting profitability. The company has been able to maintain an underlying combined ratio below 95 for 11 straight quarters. A lower expense ratio as well as an underlying loss ratio is expected to improve the underlying combined ratio.
The property and casualty insurer maintains a conservative capital structure and continues to sustain capital above target levels in support of the ratings. CNA maintains liquidity in the form of cash and short-term investments, which together provide sufficient liquidity to meet financial obligations.
A strong balance sheet and cash flows enable the company to engage in shareholder-friendly moves like dividend hikes. CNA raised its dividend at a nine-year CAGR (2014-2022) of 5.4%.
American Financial’s earnings surpassed estimates in all the last four quarters, the average beat being 28.16%. In the past year, American Financial has lost 0.8%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings indicates a respective year-over-year increase of 0.2% and 2.9%.
Root delivered a trailing four-quarter average earnings surprise of 22.44%. In the past year, ROOT has lost 90.5%.
The Zacks Consensus Estimate for ROOT’s 2022 and 2023 earnings indicates a respective year-over-year increase of 44.8% and 23.8%.
Kinsale Capital’s earnings surpassed estimates in all the last four quarters, the average being 15.16%. In the past year, Kinsale Capital has gained 32.9%.
The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings implies a respective year-over-year rise of 27.5% and 21.9%.
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Should You Retain CNA Financial (CNA) in Your Portfolio?
CNA Financial Corporation (CNA - Free Report) has been favored by investors on the back of new business growth, improved current accident year underwriting results and effective capital deployment.
Optimistic Growth Projections
The consensus estimate for 2023 earnings is pegged at $4.15, indicating a 12.5% increase from the year-ago reported figure on estimated 6.1% higher revenues of $11 billion. The expected long-term earnings growth rate is pegged at 5%.
Earnings Surprise History
CNA Financial has a solid track record of beating earnings estimates in five of the last seven quarters.
Zacks Rank & Price Performance
CNA Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 4.5% against the industry’s increase of 7%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
CNA Financial’s ROE for the trailing 12 months is 10.1%, expanding 70 basis points year over year. This compares favorably with the industry average of 6.7%. ROE reflects the insurer’s efficiency in using shareholders’ funds.
Style Score
CNA Financial has a favorable VGM Score of B. The VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
Business Tailwinds
CNA Financial remains well poised to gain from a rise in new businesses, strong rate, lower net catastrophe losses, improved non-catastrophe current accident year underwriting results and higher net earned premium, which contribute to premium growth across its Specialty, Commercial and International segments.
The fixed-income portfolio continues to provide consistent earnings. Higher returns in the limited partnership portfolio, improved current accident year underwriting results and growth in invested asset base are likely to contribute to its net investment income.
Both loss and expense ratios stand to gain from lower net catastrophe losses, higher net earned premiums, lower acquisition costs, lower underwriting expenses and improved non-catastrophe current accident year underwriting results.
CNA Financial has been witnessing substantial improvement in the combined ratio over the past few years. Its combined ratio reflects its underwriting profitability. The company has been able to maintain an underlying combined ratio below 95 for 11 straight quarters. A lower expense ratio as well as an underlying loss ratio is expected to improve the underlying combined ratio.
The property and casualty insurer maintains a conservative capital structure and continues to sustain capital above target levels in support of the ratings. CNA maintains liquidity in the form of cash and short-term investments, which together provide sufficient liquidity to meet financial obligations.
A strong balance sheet and cash flows enable the company to engage in shareholder-friendly moves like dividend hikes. CNA raised its dividend at a nine-year CAGR (2014-2022) of 5.4%.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are American Financial Group, Inc. (AFG - Free Report) , Root, Inc. (ROOT - Free Report) and Kinsale Capital Group, Inc. (KNSL - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Financial’s earnings surpassed estimates in all the last four quarters, the average beat being 28.16%. In the past year, American Financial has lost 0.8%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings indicates a respective year-over-year increase of 0.2% and 2.9%.
Root delivered a trailing four-quarter average earnings surprise of 22.44%. In the past year, ROOT has lost 90.5%.
The Zacks Consensus Estimate for ROOT’s 2022 and 2023 earnings indicates a respective year-over-year increase of 44.8% and 23.8%.
Kinsale Capital’s earnings surpassed estimates in all the last four quarters, the average being 15.16%. In the past year, Kinsale Capital has gained 32.9%.
The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings implies a respective year-over-year rise of 27.5% and 21.9%.