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Why Is CNA Financial (CNA) Up 2.6% Since Last Earnings Report?
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It has been about a month since the last earnings report for CNA Financial (CNA - Free Report) . Shares have added about 2.6% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
CNA Financial Q3 Earnings Beat on Underwriting Strength
CNA Financial Corporation reported third-quarter 2023 core earnings of $1.06 per share, which beat the Zacks Consensus Estimate by 15.2%. The bottom line increased 35.9% year over year.
The insurer’s results reflect higher investment income, record high pretax underlying underwriting income and lower catastrophe losses.
Behind Third-Quarter Headlines
Total operating revenues of CNA Financial were $3 billion, up 11.8% year over year due to higher premiums and net investment income. The top line beat the Zacks Consensus Estimate by 3.1%.
Net written premiums of Property & Casualty Operations increased 6% year over year to $2.2 billion, driven by a retention rate of 83% and renewal premium change of 6%, with a written rate of 6%, exposure change of 1% and new business increase of 4%. Pretax net investment income increased 31% to $553 million pretax, including a $72 million increase from limited partnerships and common stock to $28 million and a $59 million increase from fixed-income securities and other investments to $525 million.
Total claims, benefits and expenses remained almost flat year over year at $3 billion and came in line with our estimate. Catastrophe losses were $94 million, narrower than a loss of $114 million in the year-ago quarter. Underwriting income increased 56% year over year to $131 million. The combined ratio improved 150 basis points (bps) year over year to 94.3. The Zacks Consensus Estimate was pegged at 95.
Segment Results
Commercial’s net written premiums increased 11% year over year to $1.1 billion. The combined ratio improved 300 bps to 98.9. The Zacks Consensus Estimate was pegged at 107.
Specialty’s net written premiums decreased 2% year over year to $825 million. The combined ratio deteriorated 140 bps to 90.1. The consensus estimate was pegged at 90.
International’s net written premiums increased 9% year over year to $282 million. The combined ratio improved 610 bps to 88.3. The Zacks Consensus Estimate was pegged at 96.
Life & Group’s net earned premiums were $112 million, down 5.1% year over year. Our estimate was $113.7 million. The core loss was $29 million, much narrower than a loss of $192 million incurred in the year-ago quarter.
Corporate & Other’s core loss of $33 million was wider than a loss of $25 million in the year-ago quarter.
Financial Update
Total assets increased 1.6% from the 2022 end level to $62 billion. Debt level increased 17.7% to $3.3 billion. The core return on equity was 9.4%, up 800 bps.
Book value excluding AOCI as of Sep 30 was $45.43 per share, up 1.3% from Dec 31, 2022. Statutory surplus was $10.6 billion at quarter end, up 0.6% from 2022 end level. Net cash flow provided by operating activities increased 12.3% to $828 million in the quarter.
Dividend Update
CNA Financial’s board of directors approved a quarterly dividend of 42 cents per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
At this time, CNA Financial has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
CNA Financial has a Zacks Rank #1 (Strong Buy). We expect an above average 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, RLI Corp. (RLI - Free Report) , has gained 2% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
RLI Corp. reported revenues of $350.37 million in the last reported quarter, representing a year-over-year change of +12%. EPS of $0.61 for the same period compares with $0.50 a year ago.
For the current quarter, RLI Corp. is expected to post earnings of $1.39 per share, indicating a change of -9.2% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.7% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for RLI Corp. Also, the stock has a VGM Score of D.
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Why Is CNA Financial (CNA) Up 2.6% Since Last Earnings Report?
It has been about a month since the last earnings report for CNA Financial (CNA - Free Report) . Shares have added about 2.6% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
CNA Financial Q3 Earnings Beat on Underwriting Strength
CNA Financial Corporation reported third-quarter 2023 core earnings of $1.06 per share, which beat the Zacks Consensus Estimate by 15.2%. The bottom line increased 35.9% year over year.
The insurer’s results reflect higher investment income, record high pretax underlying underwriting income and lower catastrophe losses.
Behind Third-Quarter Headlines
Total operating revenues of CNA Financial were $3 billion, up 11.8% year over year due to higher premiums and net investment income. The top line beat the Zacks Consensus Estimate by 3.1%.
Net written premiums of Property & Casualty Operations increased 6% year over year to $2.2 billion, driven by a retention rate of 83% and renewal premium change of 6%, with a written rate of 6%, exposure change of 1% and new business increase of 4%. Pretax net investment income increased 31% to $553 million pretax, including a $72 million increase from limited partnerships and common stock to $28 million and a $59 million increase from fixed-income securities and other investments to $525 million.
Total claims, benefits and expenses remained almost flat year over year at $3 billion and came in line with our estimate. Catastrophe losses were $94 million, narrower than a loss of $114 million in the year-ago quarter. Underwriting income increased 56% year over year to $131 million. The combined ratio improved 150 basis points (bps) year over year to 94.3. The Zacks Consensus Estimate was pegged at 95.
Segment Results
Commercial’s net written premiums increased 11% year over year to $1.1 billion. The combined ratio improved 300 bps to 98.9. The Zacks Consensus Estimate was pegged at 107.
Specialty’s net written premiums decreased 2% year over year to $825 million. The combined ratio deteriorated 140 bps to 90.1. The consensus estimate was pegged at 90.
International’s net written premiums increased 9% year over year to $282 million. The combined ratio improved 610 bps to 88.3. The Zacks Consensus Estimate was pegged at 96.
Life & Group’s net earned premiums were $112 million, down 5.1% year over year. Our estimate was $113.7 million. The core loss was $29 million, much narrower than a loss of $192 million incurred in the year-ago quarter.
Corporate & Other’s core loss of $33 million was wider than a loss of $25 million in the year-ago quarter.
Financial Update
Total assets increased 1.6% from the 2022 end level to $62 billion. Debt level increased 17.7% to $3.3 billion. The core return on equity was 9.4%, up 800 bps.
Book value excluding AOCI as of Sep 30 was $45.43 per share, up 1.3% from Dec 31, 2022. Statutory surplus was $10.6 billion at quarter end, up 0.6% from 2022 end level. Net cash flow provided by operating activities increased 12.3% to $828 million in the quarter.
Dividend Update
CNA Financial’s board of directors approved a quarterly dividend of 42 cents per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
At this time, CNA Financial has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
CNA Financial has a Zacks Rank #1 (Strong Buy). We expect an above average 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, RLI Corp. (RLI - Free Report) , has gained 2% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
RLI Corp. reported revenues of $350.37 million in the last reported quarter, representing a year-over-year change of +12%. EPS of $0.61 for the same period compares with $0.50 a year ago.
For the current quarter, RLI Corp. is expected to post earnings of $1.39 per share, indicating a change of -9.2% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.7% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for RLI Corp. Also, the stock has a VGM Score of D.