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CNA Financial (CNA) Q4 Earnings Miss Estimates, Premiums Up

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CNA Financial Corporation (CNA - Free Report) incurred fourth-quarter 2018 core loss of 8 cents per share versus the Zacks Consensus Estimate of core income of 81 cents. Also, the bottom line came in against the year-ago quarter’s core income of $1.05 per share.
 
Limited partnership investment returns and catastrophe losses affected the fourth-quarter results.

Including net realized investment losses, net loss of 31 cents per share came in against the prior-year quarter’s net income of 82 cents.

Full-Year Highlights

For 2018, CNA Financial reported core income of $3.10 per share, missing the Zacks Consensus Estimate by 22.7%. Also, the bottom line declined 8.3% from the year-ago quarter.

Nonetheless, the company witnessed a significant progress in 2018. This property and casualty (P&C) insurer displayed improvement in both combined and underlying combined ratios while achieving considerable premium growth.

CNA Financial Corporation Price, Consensus and EPS Surprise

 

CNA Financial Corporation Price, Consensus and EPS Surprise | CNA Financial Corporation Quote

Behind Fourth-Quarter Headlines

Net investment income dropped 23.8% year over year to $279 million.

Net written premiums at Property & Casualty Operations improved 3.6% year over year to $1.7 billion. Core income plummeted nearly 94% year over year to $16 million. Combined ratio deteriorated 1140 basis points (bps) on a year-over-year basis to 105.4%.

As of Dec 31, 2018, book value (excluding AOCI) was $44.55 per share, dipping 1% from the level on Dec 31, 2017.

Segment Results

Specialty’s net written premiums rose 2.6% year over year to $682 million. Increase in new business and a positive renewal premium change were responsible for the upside. However, lower retention partially offset this improvement. Combined ratio deteriorated 260 bps to 91.2%.

Commercial’s net written premiums inched up 0.3% year over year to $721 million. Combined ratio improved 1510 bps to 113.3%.

International’s net written premiums increased nearly 18% year over year to $256 million, attributable to positive renewal premium change and a favorable change in estimate of ultimate premium. However, lower retention and new business partially offset this upside. Combined ratio improved 2280 bps to 119.5%.

Life & Group’s total operating revenues rose 1.8% year over year to $337 million. Core income of $7 million plunged 77.4% from the year-ago period.
 
Corporate & Other’s core loss of $46 million was substantially wider than the loss of $8 million in the prior-year period.
 
Dividend Update

CNA Financial’s board of directors approved a quarterly dividend of 35 cents and a special dividend of $2 per share. Both dividends will be paid on Mar 14, 2019 to stockholders of record as of Feb 25, 2019.

Zacks Rank

CNA Financial carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other P&C Insurers

Among other players from the same space having reported fourth-quarter earnings so far, the bottom-line figures of MGIC Investment Corp. (MTG - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate while The Progressive Corp.’s (PGR - Free Report) metric missed the same.

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