CNA Financial Corporation (NYSE: CNA), a leading U.S. commercial property and casualty insurance company, has reported its financial results for the second quarter of 2024. The company's performance showcases its ability to navigate the evolving market landscape and deliver consistent profitability.
Financials
For the second quarter of 2024, CNA reported net income of $317 million, or $1.17 per diluted share, compared to $283 million, or $1.04 per diluted share, in the prior-year quarter. On an adjusted basis, the company's core income, which excludes the impact of net investment gains and losses, was $326 million, or $1.19 per diluted share, up from $308 million, or $1.13 per diluted share, in the same period last year.
The company's annual net income for 2023 was $1.205 billion, while its annual revenue reached $13.125 billion. CNA's annual operating cash flow was $2.285 billion, and its annual free cash flow stood at $2.195 billion.
Segment Performance
Diving into the quarterly performance, CNA's Property & Casualty (P&C) operations, which include the Specialty, Commercial, and International segments, generated core income of $380 million, up from $374 million in the prior-year quarter. This increase was driven by higher net investment income, partially offset by higher catastrophe losses.
The Specialty segment reported a combined ratio of 92.7%, compared to 90.9% in the prior-year quarter. The underlying combined ratio, which excludes the impact of catastrophe losses and prior-year reserve development, increased to 93.1% from 91.2% in the same period last year. This was primarily due to an increase in the underlying loss ratio, reflecting continued rate pressure in certain lines of business.
In the Commercial segment, the combined ratio was 97.0%, up from 96.3% in the prior-year quarter. The underlying combined ratio improved to 91.0% from 91.6%, driven by higher net earned premiums and a lower expense ratio, partially offset by an increase in the underlying loss ratio.
The International segment reported a combined ratio of 91.9%, a slight improvement from 92.2% in the prior-year quarter. The underlying combined ratio increased to 90.9% from 89.1%, primarily due to higher employee-related costs and acquisition expenses.
CNA's Life & Group segment reported a core loss of $1 million, compared to a core loss of $20 million in the prior-year quarter. The improvement was mainly attributable to a reduced impact from long-term care policy buyouts and higher net investment income.
The company's Corporate & Other segment reported a core loss of $53 million, compared to a core loss of $46 million in the same period last year. The increase in core loss was primarily due to a $5 million after-tax charge related to office consolidation.
Investment Performance
CNA's net investment income increased by 7% to $618 million in the second quarter of 2024, compared to $575 million in the prior-year quarter. This was driven by higher income from fixed-income securities and favorable returns on the company's alternative investments.
Geographic Breakdown
Regarding the company's geographic breakdown, CNA's operations are primarily focused in the United States, with additional presence in Canada and Europe through its International segment. The company does not provide detailed revenue breakdowns by geography or business line.
Outlook
Looking ahead, CNA provided the following guidance:
- For the third quarter of 2024, the company expects net investment income from fixed-income and other investments to be approximately $540 million, a 7% increase from the third quarter of 2023. - For the full year 2024, CNA expects net investment income from fixed-income and other investments to be around $2.175 billion, a 5% increase compared to the full year 2023.
Liquidity
The company's balance sheet remains strong, with stockholders' equity excluding accumulated other comprehensive income (AOCI) of $12.2 billion, or $45.10 per share, as of the end of the second quarter of 2024. This represents a 2% increase from the end of 2023, adjusting for dividends.
CNA's liquidity position also remains robust, with operating cash flow of $1.120 billion for the first half of 2024, up from $937 million in the same period last year. The company's statutory capital and surplus in the Combined Continental Casualty Companies stood at $11.0 billion as of June 30, 2024, flat compared to the end of 2023.
Risks and Challenges
In terms of risks, CNA's business is subject to various factors, including economic conditions, competitive pressures, regulatory changes, and the potential for catastrophic events. The company's exposure to long-tail lines of business, such as long-term care and asbestos and environmental pollution, also presents inherent uncertainties and risks.
Conclusion
Overall, CNA Financial's second-quarter 2024 results demonstrate the company's ability to navigate the evolving market environment and deliver solid financial performance. The company's focus on disciplined underwriting, prudent risk management, and strategic investments in its core business segments have positioned it well to capitalize on the current favorable market conditions and drive continued profitability.