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CNA Financial's (CNA) Q3 Earnings & Revenues Top Estimates

CNA Financial Corporation CNA reported third-quarter 2022 core earnings of 78 cents per share, which beat the Zacks Consensus Estimate by 27.9%. The bottom line however decreased 10.3% year over year.

The insurer’s results reflected a decline in LPs and common stock as well as higher catastrophe loss, partially offset by an increase in underwriting gain and increased investment income from the fixed income portfolio.

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

Behind Third-Quarter Headlines

Total operating revenues of CNA Financial were $2.7 billion, up 2.9% year over year due to higher premiums. The top line beat the Zacks Consensus Estimate by 0.9%.

Net written premiums of Property & Casualty Operations improved 8% year over year to about $2.2 billion, driven by a retention rate of 85%, renewal premium change of 8% and new business growth of 12%.

Net investment income decreased 18% year over year to $422 million. The decrease was due to lower limited partnership and common stock investments, partially offset by an increase in investment income from fixed income securities.

Total claims, benefits and expenses increased 6% to $2.8 billion, primarily due to higher insurance claims and policyholders' benefits, non-insurance warranty expenses and other operating expenses.

Catastrophe losses were $114 million, narrower than losses of $178 million in the year-ago quarter.

The combined ratio improved 420 basis points (bps) year over year to 95.8.

Core return on equity was 6.9%, down 80 bps. Book value excluding AOCI as of Sep 30 was $45.00 per share, down 1.9% from Dec 31, 2021. Statutory surplus decreased 8.3% from 2021 end to $10.3 billion at quarter end.

Segment Results

Specialty’s net written premiums rose 2% year over year to $840 million. The combined ratio deteriorated 50 bps to 88.7.

Commercial’s net written premiums increased 16% year over year to $962 million.  The combined ratio improved 970 bps to 93.2.

International’s net written premiums increased 1% year over year to $258 million.  The combined ratio improved 110 bps to 94.4.

Life & Group’s net earned premiums were $118 million, down 4.1% year over year. The core loss was $22 million against $41 million earned in the year-ago quarter due to lower net investment income.

Corporate & Other’s core loss of $25 million was wider than a loss of $21 million in the year-earlier quarter.

Dividend Update

CNA Financial’s board of directors approved a quarterly dividend of 40 cents per share to be paid out on Dec 1 to shareholders of Nov 15.

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 Some Other P&C Insurers

Of the insurance industry players that have reported third-quarter results so far, The Travelers Companies TRV and RLI Corporation RLI beat the respective Zacks Consensus Estimate for earnings, while The Progressive Corporation PGR missed the mark.

Travelers’ third-quarter 2022 core income of $2.20 per share beat the Zacks Consensus Estimate by 24.3% but decreased 15.4% year over year.  Total revenues increased 6.8% from the year-ago quarter to $9.4 billion and beat the Zacks Consensus Estimate by 2.5%.

TRV’s net written premiums increased 110% year over year to $9.2 billion. Underwriting gain of $115 million increased 53.3% year over year in the reported quarter. The combined ratio improved 40 bps year over year to 98.2.

RLI’s third-quarter 2022 operating earnings of 50 cents per share beat the Zacks Consensus Estimate by 51.5% but declined 23.1% from the prior-year quarter. Operating revenues were $312.7 million, up 15.3% year over year but missed the Zacks Consensus Estimate by 1.3%.

RLI’s gross written premiums increased 13.3% year over year to $403.8 million. Underwriting income of $8.8 million decreased 35.8% while the combined ratio deteriorated 240 bps year over year to 97.

Progressive’s earnings per share of 49 cents missed the Zacks Consensus Estimate of $1.24 as well as our estimate of $1.38. The bottom line, however, improved more than threefold from 14 cents earned in the year-ago quarter.

PGR’s net written premiums were $13 billion in the quarter, up 5% from $11.7 billion a year ago but missed our estimate of $14.2 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 120 bps from the prior-year quarter’s level to 99.2.


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