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CNA Financial's (CNA) Q4 Earnings in Line with Estimates
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CNA Financial Corporation (CNA - Free Report) reported fourth-quarter 2016 operating income of 82 cents per share, in line with the Zacks Consensus Estimate. The bottom line compared favorably with an operating loss of 19 cents per share in the year-ago quarter.
The quarter witnessed higher net investment income, as well as better performance in Specialty and International segments.
Including net realized investment gains, net income of 89 cents per share, compared favorably with the year-ago loss of 26 cents per share.
For full-year 2016, net operating income came in at $3.04 per share, up 60% from 2015. Net income, including net realized investment losses, grew 79.1% year over year to $3.17 per share.
Behind the Fourth-Quarter Headlines
Net investment income jumped 20.7% year over year to $379 million due to improved limited partnership returns, and absence of charges related to an investment income accounting change in the reported quarter.
Net written premiums at Property & Casualty Operations deteriorated 3.8% year over year to $1.5 billion. Net operating income rose 7.4% year over year to $217 million due to higher net investment income. Combined ratio deteriorated 100 basis points (bps) to 99.9% on a year-over-year basis.
As of Dec 31, 2016, book value (excluding AOCI) was $44.89 per share, up 0.5% from that as of Dec 31, 2015.
Segment Results
Specialty net written premiums declined 4.5% year over year to $672 million. Lower level of new business and reduced retention due to underwriting actions undertaken in certain business lines, resulted in the downside. Retention was 86% in the reported quarter. Average rate for policies remained flat year over year. Combined ratio improved 940 bps to 85.6%.
Commercial net written premiums decreased 4.4% year over year to $669 million, owing to a decrease in new business as well as premium adjustments in the company’s small business unit. Retention was 84% in the quarter under review. Average rate for the policies was down 1% year over year. Combined ratio deteriorated 1840 bps to 118.0%.
International net written premiums inched up 1.7% year over year to $184 million. The company achieved retention of 71% in the fourth quarter. Average rate on policies dipped 1% year over year. Combined ratio improved 2380 bps to 86.1%.
Life & Group Non-Core operating revenues climbed 11.7% year over year to $334 million. Net operating income of $20 million compared favorably with the year-ago loss of $243 million.
Corporate & Other Non-Core net operating loss of $16 million was wider than a loss of $11 million in the year-ago quarter.
Dividend Update
The board of directors of CNA Financial announced a quarterly dividend of 25 cents per share during the reported quarter. The dividend will be paid on Mar 8, 2017, to stockholders on record as of Feb 20, 2017.
Notably, the board of directors declared a special dividend of $2.00 per share in the fourth quarter.
CNA Financial Corporation Price, Consensus and EPS Surprise
Among the other players from the same space that have reported their fourth-quarter earnings so far, the bottom line at The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat their respective Zacks Consensus Estimate.
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CNA Financial's (CNA) Q4 Earnings in Line with Estimates
CNA Financial Corporation (CNA - Free Report) reported fourth-quarter 2016 operating income of 82 cents per share, in line with the Zacks Consensus Estimate. The bottom line compared favorably with an operating loss of 19 cents per share in the year-ago quarter.
The quarter witnessed higher net investment income, as well as better performance in Specialty and International segments.
Including net realized investment gains, net income of 89 cents per share, compared favorably with the year-ago loss of 26 cents per share.
For full-year 2016, net operating income came in at $3.04 per share, up 60% from 2015. Net income, including net realized investment losses, grew 79.1% year over year to $3.17 per share.
Behind the Fourth-Quarter Headlines
Net investment income jumped 20.7% year over year to $379 million due to improved limited partnership returns, and absence of charges related to an investment income accounting change in the reported quarter.
Net written premiums at Property & Casualty Operations deteriorated 3.8% year over year to $1.5 billion. Net operating income rose 7.4% year over year to $217 million due to higher net investment income. Combined ratio deteriorated 100 basis points (bps) to 99.9% on a year-over-year basis.
As of Dec 31, 2016, book value (excluding AOCI) was $44.89 per share, up 0.5% from that as of Dec 31, 2015.
Segment Results
Specialty net written premiums declined 4.5% year over year to $672 million. Lower level of new business and reduced retention due to underwriting actions undertaken in certain business lines, resulted in the downside. Retention was 86% in the reported quarter. Average rate for policies remained flat year over year. Combined ratio improved 940 bps to 85.6%.
Commercial net written premiums decreased 4.4% year over year to $669 million, owing to a decrease in new business as well as premium adjustments in the company’s small business unit. Retention was 84% in the quarter under review. Average rate for the policies was down 1% year over year. Combined ratio deteriorated 1840 bps to 118.0%.
International net written premiums inched up 1.7% year over year to $184 million. The company achieved retention of 71% in the fourth quarter. Average rate on policies dipped 1% year over year. Combined ratio improved 2380 bps to 86.1%.
Life & Group Non-Core operating revenues climbed 11.7% year over year to $334 million. Net operating income of $20 million compared favorably with the year-ago loss of $243 million.
Corporate & Other Non-Core net operating loss of $16 million was wider than a loss of $11 million in the year-ago quarter.
Dividend Update
The board of directors of CNA Financial announced a quarterly dividend of 25 cents per share during the reported quarter. The dividend will be paid on Mar 8, 2017, to stockholders on record as of Feb 20, 2017.
Notably, the board of directors declared a special dividend of $2.00 per share in the fourth quarter.
CNA Financial Corporation Price, Consensus and EPS Surprise
CNA Financial Corporation Price, Consensus and EPS Surprise | CNA Financial Corporation Quote
Zacks Rank
CNA Financial currently sports a Zacks Rank #1 (Strong). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance by Other P&C Insurers
Among the other players from the same space that have reported their fourth-quarter earnings so far, the bottom line at The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat their respective Zacks Consensus Estimate.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>