CNA Financial (CNA) Q3 Earnings Beat on Underwriting Strength
CNA Financial Corporation CNA reported third-quarter 2023 core earnings of $1.06 per share, which beat the Zacks Consensus Estimate by 15.2%. The bottom line increased 35.9% year over year.
The insurer’s results reflect higher investment income, record high pretax underlying underwriting income and lower catastrophe losses.
Behind Third-Quarter Headlines
Total operating revenues of CNA Financial were $3 billion, up 11.8% year over year due to higher premiums and net investment income. The top line beat the Zacks Consensus Estimate by 3.1%.
CNA Financial Corporation Price, Consensus and EPS Surprise
CNA Financial Corporation price-consensus-eps-surprise-chart | CNA Financial Corporation Quote
Net written premiums of Property & Casualty Operations increased 6% year over year to $2.2 billion, driven by a retention rate of 83% and renewal premium change of 6%, with a written rate of 6%, exposure change of 1% and new business increase of 4%.
Pretax net investment income increased 31% to $553 million pretax, including a $72 million increase from limited partnerships and common stock to $28 million and a $59 million increase from fixed-income securities and other investments to $525 million.
Total claims, benefits and expenses remained almost flat year over year at $3 billion and came in line with our estimate.
Catastrophe losses were $94 million, narrower than a loss of $114 million in the year-ago quarter.
Underwriting income increased 56% year over year to $131 million. The combined ratio improved 150 basis points (bps) year over year to 94.3. The Zacks Consensus Estimate was pegged at 95.
Segment Results
Commercial’s net written premiums increased 11% year over year to $1.1 billion. The combined ratio improved 300 bps to 98.9. The Zacks Consensus Estimate was pegged at 107.
Specialty’s net written premiums decreased 2% year over year to $825 million. The combined ratio deteriorated 140 bps to 90.1. The consensus estimate was pegged at 90.
International’s net written premiums increased 9% year over year to $282 million. The combined ratio improved 610 bps to 88.3. The Zacks Consensus Estimate was pegged at 96.
Life & Group’s net earned premiums were $112 million, down 5.1% year over year. Our estimate was $113.7 million. The core loss was $29 million, much narrower than a loss of $192 million incurred in the year-ago quarter.
Corporate & Other’s core loss of $33 million was wider than a loss of $25 million in the year-ago quarter.
Financial Update
Total assets increased 1.6% from the 2022 end level to $62 billion. Debt level increased 17.7% to $3.3 billion.
The core return on equity was 9.4%, up 800 bps.
Book value excluding AOCI as of Sep 30 was $45.43 per share, up 1.3% from Dec 31, 2022.
Statutory surplus was $10.6 billion at quarter end, up 0.6% from 2022 end level.
Net cash flow provided by operating activities increased 12.3% to $828 million in the quarter.
Dividend Update
CNA Financial’s board of directors approved a quarterly dividend of 42 cents per share.
Zacks Rank
CNA Financial currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
The Travelers Companies TRV reported third-quarter 2023 core income of $1.95 per share, which missed the Zacks Consensus Estimate by 33.4%. The bottom line decreased 11.4% year over year, primarily attributable to higher catastrophe losses and net unfavorable prior-year reserve development. Travelers’ total revenues increased 14% from the year-ago quarter to $10.6 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 1.3%.
Net written premiums increased 14% year over year to a record $10.4 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.4 billion. Travelers witnessed an underwriting gain of $868 million, up 43% year over year, driven by record net earned premiums of $9.7 billion and a consolidated underlying combined ratio, which improved 90.6%.
The Progressive Corporation’s PGR third-quarter 2023 earnings per share of $2.09 beat the Zacks Consensus Estimate of $1.71. The bottom line improved more than fourfold year over year. Net premiums written were $15.6 billion in the quarter, which grew 20% from $13 billion a year ago and beat our estimate of $14.2 billion.
Net premiums earned grew 20% to $14.9 billion, beating our estimate of $13.6 billion and the Zacks Consensus Estimate of $14.8 billion. Net realized losses on securities were $149 million, narrower than a loss of $216.4 million in the year-ago quarter. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 680 bps from the prior-year quarter’s level to 92.4.
RLI Corp. RLI reported third-quarter 2023 operating earnings of 61 cents per share, beating the Zacks Consensus Estimate by 510%. The bottom line improved 22% from the prior-year quarter. Operating revenues for the reported quarter were $350.4 million, up 12.1% year over year, driven by 9.2% higher net premiums earned and 50.3% higher net investment income. The top line, however, missed the Zacks Consensus Estimate by 7.2%.
Gross premiums written increased 11.3% year over year to $449.3 million. Underwriting income of $4.2 million decreased by 52.3%, primarily due to Hawaiian wildfire losses. The combined ratio deteriorated 170 bps year over year to 98.7. Our estimate was 90.8.
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