CNA Financial Corporation CNA reported fourth-quarter 2023 core earnings of $1.33 per share, which beat the Zacks Consensus Estimate by 27.9%. The bottom line increased 31.7% year over year.
The insurer’s results reflect improved premiums, higher investment income and lower catastrophe losses.
Behind Fourth-Quarter Headlines
Total operating revenues of CNA Financial were $3.1 billion, up 13.1% year over year due to higher premiums and net investment income. The top line beat the Zacks Consensus Estimate by 5.1%.
CNA Financial Corporation Price, Consensus and EPS Surprise
CNA Financial Corporation Price, Consensus and EPS Surprise
Net written premiums of Property & Casualty Operations increased 10% year over year to $2.5 billion, driven by a retention rate of 53% and renewal premium change of 5%, with a written rate of 4%, exposure change of 1% and new business increase of 16%.
Net investment income jumped 21.5% to $611 million, driven by favorable limited partnership returns and higher income from fixed-income securities as a result of the rising interest rate environment. Our estimate was pinned at $569.2 million.
Total claims, benefits and expenses declined 8% year over year to $3 billion. Our estimate was $2.9 billion.
Catastrophe losses were $22 million, narrower than a loss of $76 million in the year-ago quarter.
Underwriting income decreased 14% year over year to $80 million. The combined ratio deteriorated 160 basis points (bps) year over year to 92.1. The Zacks Consensus Estimate was pegged at 94.
Segment Results
Commercial’s net written premiums climbed 18% year over year to $1.3 billion. The combined ratio deteriorated 610 bps to 92.9. The Zacks Consensus Estimate was pegged at 96.
Specialty’s net written premiums increased 3% year over year to $891 million. The combined ratio deteriorated 200 bps to 90.8. The consensus estimate was pegged at 91.
International’s net written premiums remained steady at $325 million. The combined ratio deteriorated 410 bps to 93. The Zacks Consensus Estimate was pegged at 94.
Life & Group’s net earned premiums were $111 million, down 5.1% year over year. Our estimate was $113.7 million. The core income was $4 million against a loss of $25 million incurred in the year-ago quarter.
Corporate & Other’s core loss of $76 million was wider than a loss of $52 million in the year-ago quarter.
Full-Year Highlights
Core net income of $4.71 billion increased 30.7% to $4.71 billion.
Net earned premiums improved 9% to $9.5 billion. P&C renewal premium change rose 7%, with a written rate of 5% and exposure change of 2%.
Underwriting income was $585 million, down 4.7%.
P&C combined ratio of 93.5% deteriorated 30 bps.
Financial Update
Total assets increased 6.1% from the 2022 end level to $64.7 billion. Debt level increased 9% to $3 billion. Stockholders' equity of $9.9 billion improved 16% from year-end 2022.
The core return on equity was 10.4%, up 360 bps.
Book value, excluding AOCI as of Dec 31, was $46.39 per share, up 1% from Dec 31, 2022.
Statutory surplus was $10.9 billion at 2023 end, up 3.5% from 2022 end level.
Net cash flow provided by operating activities rose 1.6% to $520 million in the quarter.
Dividend Update
CNA Financial’s board of directors approved a 5% increase in quarterly dividend to 44 cents per share, to be paid out on Mar 7 to shareholders of record as of Feb 20.
The board also approved a special dividend of $2 per share.
Zacks Rank
CNA Financial currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Insurers
The Travelers Companies TRV reported fourth-quarter 2023 core income of $7.01 per share, which beat the Zacks Consensus Estimate of $5.04. The bottom line more than doubled year over year, driven by higher underlying underwriting gain, lower catastrophe losses and higher net investment income. Travelers’ total revenues increased 13.5% from the year-ago quarter to $10.9 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.2%.
Net written premiums increased 13% year over year to about $10 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.7 billion. TRV witnessed an underwriting gain of $1.4 billion, up more than three-fold year over year, driven by higher business volumes. The combined ratio improved 870 bps year over year to 85.8, driven by a lower underlying combined ratio and catastrophe losses.
The Progressive Corporation’s PGR fourth-quarter 2023 earnings per share of $2.96 beat the Zacks Consensus Estimate of $2.38. The bottom line improved 97.3% year over year. Operating revenues of $16.6 billion beat the Zacks Consensus Estimate by 3% and increased 23.2% year over year.
Net premiums written were $15.1 billion in the quarter, up 21% from $12.5 billion a year ago. PGR’s premiums beat our estimate of $14 billion. Net premiums earned grew 22% to $15.8 billion and beat our estimate of $14.8 billion.
Progressive’s combined ratio improved 520 bps from the prior-year quarter’s level to 88.7.
W.R. Berkley Corporation’s WRB fourth-quarter 2023 operating income of $1.45 per share beat the Zacks Consensus Estimate of $1.35 by 7.4%. The bottom line improved 25% year over year. Operating revenues came in at $3.2 billion, up 9.3% year over year, on the back of higher net premiums earned, as well as improved net investment income. The top line beat the consensus estimate by 1.3%
W.R. Berkley’s net premiums written were $2.7 billion, up 12% year over year. The figure was lower than our estimate of $2.8 billion. Pre-tax underwriting income increased 8.2% to $315.9 million. The consolidated combined ratio remained flat year over year at 88.4.
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