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Here's Why Investors Should Retain CNA Financial (CNA) Stock

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CNA Financial Corporation (CNA - Free Report) is poised to grow on the strength of its solid premium writing underwriting expertise, a sturdy balance sheet and capital deployment. These, coupled with growth projections, make the stock worth retaining in one portfolio.

Shares of this Zacks Rank #3 (Hold) insurer have gained 5.9% in the past three months, outperforming the industry’s increase of 3.2%.

CNA’s return on equity for the trailing 12 months is 14.3%, better than the industry average of 7.8%. This reflects efficiency in utilizing shareholders’ funds. It has a VGM Score of B.

The insurer has a decent history of beating estimates in three of the last four reported quarters and missing in one. CNA’s earnings grew 7% in the last five years.

Zacks Investment Research
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Optimistic Growth Projection

The Zacks Consensus Estimate for CNA Financial’s 2024 earnings is pegged at $4.94 per share, indicating an increase of 4.9% on 5.4% higher revenues of $12.4 billion. The Zacks Consensus Estimate for CNA’s 2025 earnings is pegged at $5.07 per share, indicating an increase of 2.6% on 5.5% higher revenues of $13.1 billion.   

The expected long-term earnings growth rate is currently pegged at 3.3%. We expect the 2026 bottom line to witness a three-year CAGR of 0.8%.

Growth Drivers

CNA Financial’s premiums should continue to grow on solid retention, favorable renewal premium change and new business growth across Specialty, Commercial and International segments. We expect 2026 net premiums written to witness a three-year CAGR of about 9%.

Net investment income should continue to benefit from fixed-income securities and other investments, as well as a rise in income from limited partnership and common stock investments. Favorable reinvestment yields and strong operating cash flows add to the upside. CNA Financial’s fixed-income investment strategy, with the highest allocations to diversified investment grade corporates, as well as highly rated municipal securities, should continue to drive improved investment results. We expect 2026 net investment income to witness a three-year CAGR of 11.4%.

CNA has been able to maintain an underlying combined ratio below 95 for 13 straight quarters, banking on its prudent underwriting expertise.

Solid Balance Sheet

CNA Financial has a solid balance sheet with capital remaining above the target levels required for all ratings. It exited the first quarter of 2024 with $10.9 billion in statutory surplus. CNA Financial continues to maintain a conservative capital structure with a low leverage ratio and a well-balanced debt maturity schedule. It continues to maintain liquidity in the form of cash and short-term investments, which help to sustain business variability.

Impressive Dividend History

Consistent cash flow generation backed by strong underwriting performance supports the insurer in distributing wealth to its shareholders. While CNA has paid special dividends for 10 years, it quarterly dividend rose at a 10-year CAGR of 5.8%. The current dividend yield of 4% is better than the industry average of 0.3%.

Stocks to Consider

Some top-ranked stocks from the insurance industry are HCI Group, Inc. (HCI - Free Report) , Palomar Holdings (PLMR - Free Report) and ProAssurance (PRA - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

HCI Group earnings surpassed estimates in each of the last four quarters, the average beat being 139.15%. In the past year, HCI has rallied 84.5%.

The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies 57.6% and 4.3% year-over-year growth, respectively.

Palomar’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 15.10%. In the past year, PLMR’s stock has surged 55.5%.

The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings indicates 25.8% and 16.1% year-over-year growth, respectively.

ProAssurance earnings surpassed estimates in two of the last four quarters and missed in the other two. In the past year, PRA’s stock has surged 19.7%.

The Zacks Consensus Estimate for PRA’s 2024 and 2025 earnings suggests 371.4% and 71.6% year-over-year growth, respectively.

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