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CNA Financial (CNA) Q4 Earnings Beat Estimates, Increase Y/Y

Zacks

CNA Financial Corporation CNA reported fourth-quarter 2017 core income of $1.05 per share, beating the Zacks Consensus Estimate by 28%. Also, the bottom line improved 28% from the year-ago quarter.

CNA Financial Corporation Price, Consensus and EPS Surprise


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

Despite being the costliest year in terms of catastrophe loss, CNA Financial delivered a significant amount of core income that marked the highest level in almost a decade. Also, the figure was 12% higher than the same in 2016.

Moreover, the quarter witnessed improved premiums across its segments — Commercial and International.

Including net realized investment gains and net deferred tax asset remeasurement, net income of 82 cents per share declined 7.9% year over year.

Full-Year Highlights

For 2017, CNA Financial reported core income per share of $3.38, surpassing the consensus mark by 4.9% and also improving 11.2% year over year.

Behind Fourth-Quarter Headlines

Net investment income declined about 3.4% year over year to $366 million due to decrease in fixed income securities and limited partnership returns in the quarter.

Net written premiums at Property & Casualty Operations improved 4.9% year over year to $1.6 billion. Core income jumped about 21.2% year over year to $263 million, driven by higher favorable net prior-period loss reserve development and improved current accident year underwriting results.

Combined ratio improved 590 basis points (bps) on a year-over-year basis to 94%.

As of Dec 31, 2017, book value (excluding AOCI) was $45.02 per share, up 0.3% from Dec 31, 2016.

Segment Results

Specialty net written premiums dipped 0.1% year over year to $671million. Combined ratio deteriorated 400 bps to 89.6%.

Commercial net written premiums rose 6.6% year over year to $713 million, driven by higher new business within the Middle Markets as well as a positive renewal change. Retention came in at 86% in the quarter under review. Combined ratio deteriorated 2060 bps to 97.4%.

International net written premiums increased 17.9% year over year to $217 million, fueled by higher new business, retention and renewal premium change. Combined ratio deteriorated 1060 bps to 96.7%.

Life & Group Non-Core operating revenues slipped 0.9% year over year to $331 million. Core income soared 55% year over year to $31 million owing to higher release of long-term care claim reserves from the prior-year quarter.

Corporate & Other Non-Core core loss of $8 million was considerably narrower than the loss of $16 million in the year-ago quarter. A release of unallocated loss adjustment expense reserves in the reported quarter led to the improvement.

Dividend Update

The board of directors of CNA Financial announced a dividend of 30 cents per share and a special dividend of $2 during the reported quarter. Both the dividends will be paid on Mar 14 to stockholders of record as of Feb 26, 2018.

Zacks Rank

CNA Financial carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank 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 of The Progressive Corporation PGR, The Travelers Companies, Inc. TRV and RLI Corp. RLI exceeded the respective Zacks Consensus Estimate.

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