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CNA Financial (CNA) Q2 Earnings Top & Up Y/Y, Premiums Rise

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CNA Financial (CNA) Q2 Earnings Top & Up Y/Y, Premiums Rise

Higher premiums, strong core income growth and an improved combined ratio drive CNA Financial's (CNA) second-quarter results.

CNA Financial Corporation CNA reported second-quarter 2018 core income of 99 cents per share, beating the Zacks Consensus Estimate by 3.1%. Also, the bottom line improved 12.5% 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

Apart from displaying considerable growth in core income, CNA Financial’s first half core income of $2.02 per share marked the highest first-half result for the company in over a decade. Also, the company’s first half underlying combined ratio showed a substantial improvement that will lend an impetus to the company in delivering continued top quartile underwriting results.

This apart, the quarter witnessed improved premiums across its Commercial and International segments.  

Including net realized investment gains, net income of 99 cents per share slipped 1% year over year.

Behind Second-Quarter Headlines

Net investment income grew nearly 21% year over year to $416 million owing to higher limited partnership returns and a lower tax rate.

Net written premiums at Property & Casualty Operations increased 3.9% year over year to $1.8 billion. Core income improved 22.2% year over year to $319 million. Combined ratio deteriorated 30 basis points (bps) on a year-over-year basis to 93.8%.

As of Jun 30, 2018, book value (excluding AOCI) was $44.29 per share, down 1.6% from the level on Dec 31, 2017.

Segment Results

Specialty net written premiums slid 1.9% year over year to $688 million due to higher level of ceded reinsurance and lower retention. However, increase in new business and a positive renewal change partially offset this downside. Combined ratio improved 350 bps to 86.8%.

Commercial net written premiums rose 3.6% year over year to $810 million owing to positive renewal change and higher level of new business. Combined ratio improved 460 bps to 96.6%.

International net written premiums increased 23.7% year over year to $271 million, fueled by higher new business and a positive renewal premium change. Combined ratio deteriorated 460 bps to 104.7%.

Life & Group Non-Core total operating revenues dipped 0.3% year over year to $329 million. Core loss of $10 million compared unfavorably with the core income of $5 million in the year-ago quarter.
 
Corporate & Other Non-Core core loss of $39 million was noticeably wider than the loss of $27 million in the prior-year period.
 
Dividend Update


The board of directors of CNA Financial approved a 17% hike in its quarterly dividend amounting to 35 cents per share, payable Aug 29 to stockholders of record as of Aug 13, 2018.

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 insurance industry, which have already reported second-quarter earnings, the bottom line of The Progressive Corporation PGR and RLI Corp. RLI outpaced the respective Zacks Consensus Estimate while The Travelers Companies, Inc.’s TRV metric missed the same.

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RLI Corp. (RLI) : Free Stock Analysis Report
 
The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
 
The Progressive Corporation (PGR) : Free Stock Analysis Report
 
CNA Financial Corporation (CNA) : Free Stock Analysis Report
 
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