CNA Profit Rebounds as Investment Income Offsets Underwriting Pressure
Net written-premium growth accelerated to 4% despite softer renewal pricing.
Property-and-casualty insurer CNA Financial (CNA) rebounded in the second quarter, with net income rising to $321 million, or $1.18 a share, from $299 million, or $1.10 a share, a year earlier. Profit had fallen to $211 million, or $0.78 a share, in the first quarter.
The recovery reflected stronger investment returns and fewer catastrophe losses, while underlying underwriting performance remained weaker than a year earlier. Core income climbed to $324 million, or $1.19 a share, from $225 million, or $0.83 a share, in the first quarter, though it remained below the year-earlier $335 million, or $1.23 a share.
Property-and-casualty core income recovered to $426 million from $248 million sequentially but declined from $448 million a year earlier. Net earned premiums rose 3% to $2.66 billion, while the underwriting gain fell to $92 million from $150 million as weaker underlying results offset part of the benefit from higher investment income.
The combined ratio improved to 96.5% from 102.2% in the first quarter as catastrophe losses fell to $60 million from $97 million and an unfavorable prior-period reserve charge did not recur. The ratio nevertheless deteriorated from 94.1% a year earlier, and the underlying loss ratio held at 64.1% for a second quarter, 2.6 points above the prior-year period.
Premium growth strengthened even as pricing softened. New business rose 11% to a record $718 million, while renewal premium change slowed to about 2% and written rate was flat. CNA cut national-accounts property new business by 50% where pricing and terms were unattractive.
Specialty and Commercial each recorded 5% net written-premium growth, though their underlying combined ratios worsened to 96.5% and 92.8%, respectively. International premiums declined 2% to $385 million, and its underlying combined ratio deteriorated 3.3 points to 94.7% as talent, technology and acquisition costs lifted the expense ratio.
Total net investment income increased 6% to $701 million and rose from $610 million in the first quarter, driven by limited-partnership and common-stock income climbing to $131 million from $42 million sequentially. Fixed-income and other investment income was nearly unchanged at $570 million, leaving CNA's earnings recovery dependent on investment gains and lower catastrophe costs while underlying loss pressure persisted.