CONSOLIDATED SUBSIDIARY OVERVIEW
CHICAGO, Feb. 12, 2018 /PRNewswire/ -- CNA Financial Corporation (NYSE: CNA) today announced fourth quarter 2017 net income of $223 million, or $0.82 per share, and full year 2017 net income of $899 million, or $3.30 per share. Net income in the quarter included a charge of $83 million relating to the remeasurement of net deferred tax assets as a result of the passage of the Tax Cuts and Jobs Act.
Fourth quarter 2017 core income (formerly referred to as net operating income) was $286 million, or $1.05 per share, and full year 2017 core income was $919 million, or $3.38 per share. Net investment income, after tax, was $366 million for the fourth quarter of 2017 and $1,462 million for the full year. Property & Casualty Operations combined ratio for the fourth quarter and full year was 94.0% and 97.1%, respectively.
CNA Financial declared a quarterly dividend of $0.30 per share and a special dividend of $2.00 per share, payable March 14, 2018 to stockholders of record on February 26, 2018.
Results for the Three Months Ended December 31
Results for the Year Ended December 31
($ millions, except per share data)
Net income per diluted share
Core income per diluted share
December 31, 2017
December 31, 2016
What we previously referred to as "Net operating income (loss)" in our public disclosures, we now refer to as "Core income (loss)." Additionally, the related financial measures of "Net operating income (loss) per diluted share" and "Net operating income (loss) return on equity" have also been changed accordingly. The fourth quarter 2017 increase in income tax expense from the remeasurement of our net deferred tax asset as a result of the enacted U.S. Federal income tax rate change has been excluded from Core income. There were no other changes to the calculation of Core income and related measures. With this terminology change, we also removed "Non-Core" from the titles of our Life & Group and Corporate & Other segments to avoid confusion.
"CNA generated $919 million of core income, the highest level in almost a decade and 12% higher than 2016, despite one of the largest catastrophe loss years in the industry's history," said Dino E. Robusto, Chairman and Chief Executive Officer of CNA Financial Corporation. "The strength of our fourth quarter and full year results combined with our heightened underwriting focus and execution provide excellent momentum going into 2018."
Property & Casualty Operations
Net written premiums
NWP change (% year over year)
Net investment income
Loss ratio excluding catastrophes and development
Effect of catastrophe impacts
Effect of development-related items
Combined ratio excluding catastrophes and development
Fourth Quarter 2017 Results - Property & Casualty Operations
Full Year 2017 Results - Property & Casualty Operations
Business Operating Highlights
Life & Group
Total operating revenues
Corporate & Other
Net Investment Income
Net investment income, after tax, was $366 million for the fourth quarter of 2017 as compared with $379 million in the prior year quarter. The decrease was driven by fixed income securities, which had an after-tax return of 3.4% in the current quarter as compared with 3.5% in the prior year quarter. Limited partnerships returned 2.2% in the fourth quarter compared with 2.4% in the prior year quarter.
Net investment income, after tax, was $1,462 million for the full year 2017 as compared with $1,427 million in the prior year. This increase was primarily driven by limited partnerships, which returned 9.1% in 2017 as compared with 6.3% in the prior year.
About the Company
CNA is the eighth largest commercial insurer in the United States. CNA provides a broad range of standard and specialized property and casualty insurance products and services for businesses and professionals in the U.S., Canada, Europe and Asia, backed by 120 years of experience and more than $45 billion of assets. For more information about CNA, visit our website at www.cna.com. "CNA" is a service mark registered by CNA Financial Corporation with the United States Patent and Trademark Office. Certain CNA Financial Corporation subsidiaries use the "CNA" service mark in connection with insurance underwriting and claims activities.
Conference Call and Webcast/Presentation Information
A conference call for investors and the professional investment community will be held at 10:00 a.m. (ET) today. On the conference call will be Dino E. Robusto, Chairman and Chief Executive Officer of CNA Financial Corporation, and other members of senior management. Participants can access the call by dialing (888) 572-7025, or for international callers, (719) 325-2420. The call will also be broadcast live on the internet at http://investor.cna.com or you may go to the investor relations pages of the CNA website (www.cna.com) for further details. A presentation will be posted and available on the CNA website and will provide additional insight into the results.
The call is available to the media, but questions will be restricted to investors and the professional investment community. An online replay will be available on CNA's website following the call. Financial supplement information related to the results is available on the investor relations pages of the CNA website or by contacting Robert Tardella at 312-822-4387.
Definition of Reported Segments
Management utilizes the following metrics in their evaluation of the Property and Casualty Operations. These ratios are calculated using financial results prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
The Company's investment portfolio is monitored by management through analysis of various factors including unrealized gains and losses on securities, portfolio duration and exposure to market and credit risk.
Reconciliation of GAAP Measures to Non-GAAP Measures
This press release also contains financial measures that are not in accordance with GAAP. Management utilizes these financial measures to monitor the Company's insurance operations and investment portfolio. The Company believes the presentation of these measures provides investors with a better understanding of the significant factors that comprise the Company's operating performance. Reconciliations of these measures to the most comparable GAAP measures follow below.
Reconciliation of Net Income to Core Income
Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of i) net realized investment gains or losses, ii) income or loss from discontinued operations, iii) any cumulative effects of changes in accounting guidance and iv) deferred tax asset and liability remeasurement as a result of an enacted U.S. Federal tax rate change. The calculation of core income (loss) excludes net realized investment gains or losses because net realized investment gains or losses are generally driven by economic factors that are not necessarily consistent with key drivers of underwriting performance, and are therefore not considered an indication of trends in insurance operations. Management monitors core income (loss) for each business segment to assess segment performance. Presentation of consolidated core income (loss) is deemed to be a non-GAAP financial measure.
Less: Net realized investment gains
Less: Net deferred tax asset remeasurement
Reconciliation of Net Income per Diluted Share to Core Income per Diluted Share
Core income (loss) per diluted share provides management and investors with a valuable measure of the Company's operating performance for the same reasons applicable to its underlying measure, core income (loss). Core income per diluted share is core income on a per diluted share basis.
Reconciliation of Book Value per Share to Book Value per Share Excluding AOCI
Book value per share excluding AOCI allows management and investors to analyze the amount of the Company's net worth primarily attributable to the Company's business operations. The Company believes this measurement is useful as it reduces the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates.
December 31, 2017
December 31, 2016
Book value per share
Less: Per share impact of AOCI
Book value per share excluding AOCI
Calculation of Return on Equity and Core Return on Equity
Core return on equity provides management and investors with a measure of how effectively the Company is investing the portion of the Company's net worth that is primarily attributable to its business operations.
Annualized net income
Average stockholders' equity including AOCI (a)
Return on equity
Annualized core income
Average stockholders' equity excluding AOCI (a)
Core return on equity
Average stockholders' equity is calculated using a simple average of the beginning and ending balances for the period.
For additional information, please refer herein and/or to CNA's most recent 10-K on file with the Securities and Exchange Commission, as well as the financial supplement, available at www.cna.com.
This press release may include statements which relate to anticipated future events (forward-looking statements) rather than actual present conditions or historical events. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as "believes," "expects," "intends," "anticipates," "estimates" and similar expressions. Forward-looking statements, by their nature, are subject to a variety of inherent risks and uncertainties that could cause actual results to differ materially from the results projected. Many of these risks and uncertainties cannot be controlled by CNA. For a detailed description of these risks and uncertainties affecting CNA, please refer to CNA's most recent 10-K on file with the Securities and Exchange Commission available at www.cna.com.
Any forward-looking statements made in this press release are made by CNA as of the date of this press release. Further, CNA does not have any obligation to update or revise any forward-looking statement contained in this press release, even if CNA's expectations or any related events, conditions or circumstances change.
Sarah Pang, 312-822-6394
James Anderson, 312-822-7757
SOURCE CNA Financial Corporation