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

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-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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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