CONSOLIDATED SUBSIDIARY OVERVIEW
CHICAGO, Feb. 10, 2020 /PRNewswire/ -- CNA Financial Corporation (NYSE: CNA) today announced fourth quarter 2019 net income of $273 million, or $1.00 per share, and core income of $265 million, or $0.97 per share. Net income for the full year 2019 was $1.0 billion, or $3.67 per share, and core income was $979 million, or $3.59 per share. Property & Casualty Operations combined ratio for the fourth quarter was 95.6% and the underlying combined ratio was 94.9%. Net investment income, after tax, was $443 million for the fourth quarter of 2019, including $56 million from limited partnership and common stock investments.
Excluding third party captives, Property & Casualty Operations generated gross written premium growth of 8% and net written premium growth of 6% for the fourth quarter of 2019.
Our Life & Group and Corporate & Other segments produced core losses for the fourth quarter of 2019 of $(4) million and $(68) million, respectively, with the latter driven by a $48 million after-tax non-economic charge related to asbestos and environmental pollution.
CNA Financial declared a quarterly dividend of $0.37 per share and a special dividend of $2.00 per share, payable March 12, 2020 to stockholders of record on February 24, 2020.
Results for the Three Months
Ended December 31
Results for the Year Ended
($ millions, except per share data)
Net income (loss)
Core income (loss) (a)
Net income (loss) per diluted share
Core income (loss) per diluted share
December 31, 2019
December 31, 2018
Book value per share
Book value per share excluding AOCI
Management utilizes the core income (loss) financial measure to monitor the Company's operations. Please refer herein to the Reconciliation of GAAP Measures to Non-GAAP Measures section of this press release for further discussion of this non-GAAP measure.
"Our fourth quarter results reflect a strong underwriting quarter in line with a strong underwriting year in which our underlying combined ratio improved for the third consecutive year to 94.9%," said Dino E. Robusto, Chairman and Chief Executive Officer of CNA Financial Corporation. "With fourth quarter premium rates increasing to 7% and gross premiums increasing to 8%, CNA is well positioned going into 2020."
Property & Casualty Operations
Results for the Three
Months Ended December 31
Gross written premiums ex. 3rd party captives
GWP ex. 3rd party captives change (% year over year)
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
Business Operating Highlights
Core income (loss)
Life & Group
Total operating revenues
Core (loss) income
Due to the recognition of the premium deficiency and resetting of actuarial assumptions in the third quarter of 2019, the operating results for our long term care business now reflect the variance between actual experience and the expected results contemplated in our best estimate reserves.
Corporate & Other
Core loss increased $22 million for the fourth quarter of 2019 as compared with the prior year quarter. The application of retroactive reinsurance accounting to additional cessions to the A&EP Loss Portfolio Transfer in both periods resulted in after-tax non-economic charges of $48 million and $28 million in 2019 and 2018, respectively. The additional cessions in those periods were $125 million and $65 million, respectively.
Net Investment Income
Pretax net investment income
Net investment income, after tax
Net investment income, after tax, increased $164 million for the fourth quarter of 2019 as compared with the prior year quarter. The increase was driven by limited partnership and common stock investments, which returned 3.7%, or $69 million for the fourth quarter of 2019 compared with (5.7)%, or a loss of $138 million in the prior year quarter.
About the Company
CNA is one of the largest U.S. commercial property and casualty insurance companies. 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 and Europe, backed by more than 120 years of experience and approximately $45 billion of assets. For more information, please visit CNA at www.cna.com.
Conference Call and Webcast/Presentation Information
A conference call for investors and the professional investment community will be held at 9:00 a.m. (CT) today. On the conference call will be Dino E. Robusto, Chairman and Chief Executive Officer of CNA Financial Corporation, James M. Anderson, Executive Vice President and Chief Financial Officer of CNA Financial Corporation and other members of senior management. Participants can access the call by dialing (800) 289-0571, or for international callers, +1 (720) 543-0206. The call will also be broadcast live on the internet and may be accessed from the Investor Relations page of the CNA website (www.cna.com). 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 email@example.com.
Definition of Reported Segments
Management utilizes the following metrics in their evaluation of the Property & Casualty Operations. These ratios are calculated using financial results prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
Gross written premiums ex. 3rd party captives represents gross written premiums excluding business which is mostly ceded to third party captives, including business related to large warranty programs.
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 (Loss) to Core Income (Loss)
Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of i) net 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 investment gains or losses because net investment gains or losses are generally driven by economic factors that are not reflective of our primary 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 investment gains (losses)
Less: Net deferred tax asset remeasurement
Reconciliation of Net Income (Loss) per Diluted Share to Core Income (Loss) 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 (loss) per diluted share is core income (loss) 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.
Less: Per share impact of 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.
Results for the Year Ended
Annualized net income (loss)
Average stockholders' equity including AOCI (a)
Return on equity
Annualized core income (loss)
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 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 includes statements that 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 please refer to CNA's filings 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.
Any descriptions of coverage under CNA policies or programs in this press release are provided for convenience only and are not to be relied upon with respect to questions of coverage, exclusions or limitations. With regard to all such matters, the terms and provisions of relevant insurance policies are primary and controlling. In addition, please note that all coverages may not be available in all states.
"CNA" is a registered trademark of CNA Financial Corporation. Certain CNA Financial Corporation subsidiaries use the "CNA" trademark in connection with insurance underwriting and claims activities. Copyright © 2019 CNA. All rights reserved.
Brandon Davis, 312-822-5885
James Anderson, 312-822-7757
SOURCE CNA Financial Corporation