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|CNA Financial Announces Second Quarter 2011 Results: Net Operating Income of $116Million, Net Income of $126 Million, Net Written Premiums Increase of 5%, P&C Combined Ratio of 105.7%|
Quarterly Dividend of $0.10 Per Share
CHICAGO, Aug 01, 2011 (BUSINESS WIRE) --
CNA Financial Corporation (NYSE: CNA) today announced second quarter 2011 results, which included net operating income of $116 million, or $0.43 per common share, and net income of $126 million, or $0.47 per common share. Property & Casualty Operations combined ratio for the second quarter was 105.7%. Book value per common share was $43.09 at June 30, 2011, as compared to $41.75 at March 31, 2011 and $40.70 at December 31, 2010.
CNA Financial also announced declaration of a quarterly dividend of $0.10 per share, payable August 31, 2011 to stockholders of record on August 15, 2011.
(a) References to net operating income (loss), net realized investment gains (losses), net income (loss) from continuing operations and net income (loss) used in this press release reflect amounts attributable to CNA, unless otherwise noted. Management utilizes the net operating income financial measure to monitor the Company's operations. Please refer to Note N of the Consolidated Financial Statements within CNA's Annual Report on Form 10-K for the year ended December 31, 2010 for further discussion of this measure.
Net operating income for the three months ended June 30, 2011 decreased $153 million as compared with the same period in 2010. Net operating income for our core Property & Casualty Operations decreased $140 million, primarily due to a lower level of favorable net prior year development and higher catastrophe losses. For the three months ended June 30, 2011, catastrophe losses were $65 million after-tax as compared to $31 million after-tax for the same period in 2010. Our Property & Casualty Operations produced second quarter combined ratios of 105.7% and 89.5% in 2011 and 2010. Excluding the impacts of favorable reserve development and catastrophe losses, our combined ratios were 103.6% and 104.6% for the same comparable periods. Net operating results decreased $13 million for our non-core segments.
"CNA continued to make progress toward our goal of becoming recognized as a winning company in the Property & Casualty industry," said Thomas F. Motamed, Chairman and Chief Executive Officer of CNA Financial Corporation. "We achieved an overall net written premium increase of over 5% with growth across both our Specialty and Commercial segments, driven by new business and higher retention in our targeted customer segments. Rate improved for the third straight quarter. We completed our purchase of the minority shares of CNA Surety."
Net investment income for the three months ended June 30, 2011 decreased $4 million as compared with the same period in 2010. The decrease was primarily driven by a decrease in fixed maturity security income, due to the effective income yield of the fixed maturity portfolio and a lower invested asset base, substantially offset by an increase in limited partnership investment income.
After-tax net realized investment gains decreased $3 million for the three months ended June 30, 2011 as compared with the same period in 2010. Other-than-temporary impairment losses of $40 million after-tax were recognized in earnings for the three months ended June 30, 2011 as compared to $37 million after-tax for the same period in 2010.
Net operating income for the six months ended June 30, 2011 decreased $160 million as compared with the same period in 2010. Net operating income for our core Property & Casualty Operations decreased $105 million, primarily due to the same reasons as discussed above in the three month comparison, partially offset by decreased expenses. For the six months ended June 30, 2011, catastrophe losses were $101 million after-tax as compared to $57 million after-tax for the same period in 2010. Our Property & Casualty Operations produced year-to-date combined ratios of 103.8% and 95.8% in 2011 and 2010. Excluding the impacts of favorable reserve development and catastrophe losses, our combined ratios were 101.9% and 103.4% for the same comparable periods. Net operating results decreased $55 million for our non-core segments.
Net investment income for the six months ended June 30, 2011 increased $26 million as compared with the same period in 2010. The increase was primarily driven by improved results from limited partnership investments, partially offset by a decrease in investment income from fixed maturity and short term investments due primarily to a decrease in the effective income yield of the fixed maturity portfolio and a lower invested asset base.
After-tax net realized investment gains decreased $17 million for the six months ended June 30, 2011 as compared with the same period in 2010. Results in 2011 include a $6 million after-tax loss on the early extinguishment of debt. Other-than-temporary impairment losses of $67 million after-tax were recognized in earnings for the six months ended June 30, 2011 as compared to $76 million after-tax for the same period in 2010.
Business Operating Highlights
CNA Specialty provides professional and management liability as well as surety and other property and casualty coverages and services, which include warranty and service contracts. Specialty products are sold both domestically and abroad, through a network of brokers, independent agencies and managing general underwriters.
CNA Commercial works with an independent agency distribution system and network of brokers to market a broad range of property and casualty insurance products and services to small, middle-market and large businesses and organizations domestically and abroad.
Life & Group Non-Core primarily includes the results of the life and group lines of business that are in run-off. Net earned premiums relate primarily to the individual and group long term care businesses.
Corporate & Other Non-Core primarily includes certain corporate expenses, including interest on corporate debt, and the results of certain property and casualty business in run-off, including CNA Re and asbestos and environmental pollution (A&EP). In 2010, substantially all of our legacy A&EP liabilities were transferred to National Indemnity Company through a loss portfolio transfer reinsurance treaty.
About the Company
Serving businesses and professionals since 1897, CNA is the country's seventh largest commercial insurance writer and the 13th largest property and casualty company. CNA's insurance products include standard commercial lines, specialty lines, surety, marine and other property and casualty coverages. CNA's services include risk management, information services, underwriting, risk control and claims administration. For more information, please visit CNA at www.cna.com. CNA is a registered trademark of CNA Financial Corporation.
Conference Call and Webcast Information:
A conference call for investors and the professional investment community will be held at 10:00 a.m. (ET) today. On the conference call will be Thomas F. Motamed, Chairman and Chief Executive Officer of CNA Financial Corporation, and other members of senior management. Participants can access the call by dialing (888) 312-9865, or for international callers, (719) 325-2336. The call will also be broadcast live on the internet at http://investor.cna.com or you may go to the investor relations pages of the CNA website (www.cna.com) for further details.
The call is available to the media, but questions will be restricted to investors and the professional investment community. A taped replay of the call will be available through August 8, 2011 by dialing (888) 203-1112, or for international callers, (719) 457-0820. The replay passcode is 8154398. The replay will also be available on CNA's website. Financial supplement information related to the results is available on the investor relations pages of the CNA website or by contacting David Adams at (312) 822-2183.
In evaluating the results of CNA Specialty and CNA Commercial, management utilizes the combined ratio, the loss ratio, the expense ratio and the dividend ratio. These ratios are calculated using accounting principles generally accepted in the United States of America (GAAP) financial results. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios.
This press release may also reference or contain financial measures that are not in accordance with GAAP. For reconciliations of non-GAAP measures to the most comparable GAAP measures, please refer herein and/or to CNA's most recent 10-K on file with the Securities and Exchange Commission, as well as the financial supplement, available at www.cna.com.
This press release may include statements which relate to anticipated future events (forward-looking statements) rather than actual present conditions or historical events. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as "believes", "expects", "intends", "anticipates", "estimates" and similar expressions. Forward-looking statements, by their nature, are subject to a variety of inherent risks and uncertainties that could cause actual results to differ materially from the results projected. Many of these risks and uncertainties cannot be controlled by CNA. For a detailed description of these risks and uncertainties affecting CNA, please refer to CNA's most recent 10-K on file with the Securities and Exchange Commission available at www.cna.com.
Any forward-looking statements made in this press release are made by CNA as of the date of this press release. Further, CNA does not have any obligation to update or revise any forward-looking statement contained in this press release, even if CNA's expectations or any related events, conditions or circumstances change.
SOURCE: CNA Financial Corporation
CNA Financial Corporation