CNA Financial (CNA) Estimates Q2 Catastrophe Loss of $301M

CNA Financial Corporation CNA estimates second-quarter catastrophe loss of $301 million pre-tax. The loss estimate can be attributed to COVID-19 pandemic, severe weather-related events in the United States, as well as civil unrest-related losses in the United States.

While COVID-19 pandemic losses are expected to amount to $182 million, natural catastrophe losses are likely to be $58 million. Civil unrest-related losses are expected to be $61 million.

Concurrently, as part of its annual review of mass tort exposures, CNA Financial anticipates to recognize unfavorable prior period development of $50 million pretax, mainly attributable to New York reviver statute-related claims.

The Zacks Consensus Estimate for CNA Financial’s second-quarter earnings is currently pegged at 92 cents, indicating a decline of 14.8% from the year-ago quarter reported figure. We expect estimates to move further south once analysts start incorporating loss estimates into their numbers.

Being one of the largest property and casualty insurer in the United States, CNA Financial has substantial exposure to loss from natural disasters, man-made catastrophes and other catastrophic events. Pretax underwriting loss is expected to be $210 million in the second quarter of 2020.  Including the favorable impact from limited partnerships, common stock and non-redeemable preferred stock investments and taking into account the equity market rebound during the period, CNA Financial projects net income of $151 million and core income of $99 million for the soon-to-be-reported quarter.

Nonetheless, this Zacks Rank #3 (Hold) insurer has a history of maintaining combined ratio, a measure of underwriting profitability, at favorable levels — even in a tough operating environment — which along with sustained better pricing indicates its superior underwriting discipline. CNA Financial has been able to maintain underlying combined ratio below 95% for straight seven quarters.

Shares of CNA Financial have lost 27.6% year to date compared with the industry’s decrease of 16.6%. Solid underwriting discipline and effective capital deployment should help shares bounce back.


Several property and casualty insurers are coming up with their second-quarter catastrophe loss estimates. Chubb Limited CB estimates global net catastrophe loss of about $1.51 billion, net of reinsurance including reinstatement premiums. The Travelers Companies TRV estimates catastrophe losses of $673 million after-tax, net of reinsurance while W. R. Berkley Corporation WRB expects net catastrophe losses of about $145 million.

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