CNA reports lower Q3 profit as underwriting results weaken

CNA Insurance reported third-quarter net income of $196 million, down from $403 million a year earlier, as weaker underwriting results, higher catastrophe losses and long-term care reserve updates weighed on earnings.

Core income fell to $203 million from $409 million. The quarter included a $137 million after-tax charge from annual long-term care reserve assumption updates, primarily reflecting higher expected care costs and morbidity. CNA said recent investment portfolio actions are expected to almost entirely offset the economic impact, though those benefits will be recognized through investment income over time.

P&C net written premiums increased 3% to $2.51 billion, with renewal premium growth of 3%, rate increases of 2% and retention of 83%.

The P&C combined ratio deteriorated to 97% from 92.8%, while underwriting profit fell to $82 million from $194 million. Catastrophe losses rose to $78 million from $41 million. Excluding catastrophes and development-related items, the underlying combined ratio increased to 94.2% from 91.3%.

Commercial underwriting profit fell to $3 million from $106 million, with a combined ratio of 99.7%. Specialty posted a 96.8% combined ratio, while International improved to 86.1%, helped by favorable prior-year reserve development.

“While we continue to see opportunities for growth, there are areas across many portions of the portfolio where we chose to walk away given current market conditions do not support appropriate pricing, terms and conditions.” – CEO Douglas Worman

Net investment income was relatively flat at $635 million. CNA declared a quarterly dividend of $0.48 per share.