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CNA Financial (CNA) Q1 Earnings Top, Investment Income Up

Zacks Equity Research

CNA Financial Corporation CNA reported first-quarter 2019 core earnings of $1.17 per share, which beat the Zacks Consensus Estimate of $1.04. Also, the bottom line increased 13.6% year over year.
 
In the quarter, P&C segments generated modest gross premium growth. Premium rate increased across many major lines. Investment income rebounded favorably and long-term care generated positive core income.

Including net realized investment gain, net income was $1.25 per share, up from $1.07 in the year-ago quarter.

CNA Financial Corporation Price, Consensus and EPS Surprise

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

Behind First-Quarter Headlines

Net investment income improved 26.3% year over year to $360 million.

Net written premiums at Property & Casualty Operations declined 0.4% year over year to $1.8 billion.

Combined ratio deteriorated 470 basis points year over year to 97.8%.

Book value as of Mar 31, 2019 was $43.38 per share, down 2.6% from Dec 31, 2018.

Core return on equity was 10.7%, up 140 basis points (bps).

Segment Results

Specialty’s net written premiums rose nearly 2% year over year to $698 million, driven by strong retention, higher new business and positive renewal premium change.  Combined ratio deteriorated 200 bps to 93.5%, attributable to 180 bps-point increase in expense ratio driven by an unusually low acquisition ratio in the first quarter of 2018 and lower earned premium.

Commercial’s net written premiums increased nearly 2% year over year to $849 million, driven by positive renewal premium change, partially offset by a higher level of ceded reinsurance. Combined ratio deteriorated 260 bps to 96.5%.

International’s net written premiums dropped nearly 12% year over year to $259 million. Combined ratio improved 200 bps to 94.1% due to improvement in underlying loss ratio, partially offset by a 90 bps-point increase in expense ratio due to higher acquisition costs.

Life & Group’s total operating revenues were $335 million, flat year over year. Core income of $10 million plunged 28.6% from the year-ago period.
 
Corporate & Other’s core loss of $6 million was substantially narrower than a loss of $60 million in the prior-year period.
 
Dividend Update

CNA Financial’s board of directors approved a quarterly dividend of 35 cents to be paid on May 30, 2019 to stockholders of record as of May 14, 2019.

Zacks Rank

CNA Financial currently carries a Zacks Rank #3 (Hold).

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

Performance of Other P&C Insurers

Among the other players from the same space that have reported first-quarter earnings so far, the bottom line of The Travelers Companies Inc. TRV, The Progressive Corp.’s PGR and RLI Corp. RLI beat the respective Zacks Consensus Estimate.

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