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CNA Financial (CNA) Q2 Earnings In Line, Premiums Rise Y/Y

Zacks Equity Research
·3 min read

CNA Financial Corporation CNA reported second-quarter 2020 core earnings of 36 cents per share, which matched the Zacks Consensus Estimate. The bottom line decreased 66.7% year over year.
 
The quarterly results suffered substantially from catastrophe losses attributable to COVID-19, civil unrest and weather-related events.  Nonetheless, the company benefited from accelerating P&C rate momentum and stable new business.

Behind Second-Quarter Headlines

Net written premiums at Property & Casualty Operations improved about 3% year over year to $1.9 billion driven by rate increase and higher new business.

Net investment income increased 6.9% year over year to $324 million driven by limited partnership and common stock investments.

Catastrophe losses of $301 million pretax, including $182 million related to COVID-19, $61 million related to civil unrest and $58 million primarily related to severe weather-related events.

Combined ratio deteriorated 1660 basis points year over year to 112.3%.

Book value as of Jun 30, 2020 was $42.91 per share, down 4.6% from Dec 31, 2019.

Core return on equity was 3.4%, down 650 basis points (bps).

CNA Financial Corporation Price, Consensus and EPS Surprise

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

CNA Financial Corporation price-consensus-eps-surprise-chart | CNA Financial Corporation Quote

Segment Results

Specialty’s net written premiums rose nearly 4% year over year to $742 million, driven by solid rate.  Combined ratio deteriorated 1350 bps to 104.2%.

Commercial’s net written premiums increased 4% year over year to $949 million, driven by higher new business and favorable rate. Combined ratio deteriorated 1880 bps to 118.5%.

International’s net written premiums declined 4% year over year to $239 million, attributable to continued impact of the strategic exit from certain Lloyd's business classes, offset by growth in Europe. Combined ratio deteriorated 1780 bps to 115.3%.

Life & Group’s total operating revenues were $332 million, down 0.9% year over year. Core income of $14 million doubled year over year driven by better-than-expected persistency.

Corporate & Other’s core loss of $11 million was flat year over year.

Dividend Update

CNA Financial’s board of directors approved a quarterly dividend of 35 cents to be paid out on Sep 3, 2020 to stockholders of record as of Aug 17.

Zacks Rank

CNA Financial currently 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

Of the insurance industry players that have reported second-quarter results so far, The Progressive Corporation PGR, Cincinnati Financial CINF and RLI Corp. RLI beat the respective Zacks Consensus Estimate for earnings.

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