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01/11 16:18
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates strong financial performance with record core income, increased net investment income, and stable combined ratios. The Q&A session highlighted a favorable market outlook and strategic focus on specialty underwriting, although uncertainties around PFAS exposures were noted. Dividend increases and strong cash flow further support positive sentiment. Despite some challenges in international and specialty segments, overall growth and profitability signals suggest a positive stock price movement.
Core Income $355 million, up $30 million (9%) year-over-year, attributed to strong underwriting performance and investment results.
Net Investment Income $609 million pretax, up $84 million year-over-year, driven by contributions from both alternatives and fixed income portfolios.
All-in Combined Ratio 94.6%, with pretax catastrophe losses of $88 million (3.8 points), compared to $52 million (2.4 points) last year, reflecting a return to average levels.
P&C Underlying Combined Ratio 91%, with an underlying underwriting gain over $200 million for the fourth consecutive quarter, maintaining a strong performance.
Underlying Loss Ratio 60.5%, up slightly by more than 0.5 points compared to the recent 4-quarter average, mainly due to a mix shift in the Commercial segment.
P&C Expense Ratio 30.1%, slightly up from 30.0% last year, reflecting higher net earned premium.
Gross Written Premium (ex-captives) 8% growth in the quarter, indicating strong production performance.
Net Written Premium 6% growth in the quarter, reflecting robust top-line growth.
New Business $529 million, up 5% in the quarter, driven by strong growth in Commercial business units.
P&C Retention Rate 85%, consistent with the previous quarter.
Commercial Combined Ratio 97.6%, with catastrophe losses of $82 million adding 6.8 points, but an underlying combined ratio of 90.8%, a record low.
Specialty Combined Ratio 90.7%, with an underlying combined ratio of 91.3%, reflecting strong retention and rate improvements.
International Combined Ratio 93.3%, with an underlying combined ratio of 91.3%, despite a decrease in gross and net written premiums.
Operating Cash Flow $504 million for the quarter, reflecting strong underwriting results and higher earnings from the fixed income portfolio.
Stockholders' Equity (excluding AOCI) $12.2 billion or $45.10 per share, a 2% increase from year-end 2023.
Statutory Capital and Surplus $10.9 billion, flat with year-end 2023.
Effective Tax Rate on Core Income 20.9%, in line with full year 2024 expectations.
Quarterly Dividend $0.44 per share, to be paid on June 6, 2024.
New Business Growth: New business was up 5% in the quarter to $529 million with continued strong growth in our Commercial business units.
Investment Income: Net investment income of $609 million pretax increased $84 million year-over-year.
Gross Written Premium Growth: 8% growth in gross written premium ex-captives and 6% growth in net written premium.
Retention Rate: P&C retention remained high at 85% this quarter, consistent with last quarter.
Rate Change in Commercial Lines: In the U.S., commercial auto rate increases were up 14%, excess casualty was up 11%.
Combined Ratio: The all-in combined ratio was 94.6%, with pretax catastrophe losses of $88 million.
Expense Ratio: The P&C expense ratio for the first quarter was 30.1%.
Office Consolidation: Expect additional office consolidation charges of $7 million pretax in each of the second and third quarters.
Catastrophe Losses: Pretax catastrophe losses were $88 million, contributing 3.8 points to the combined ratio, which is higher than the previous year's $52 million.
Social Inflation: Persistent pressure from social inflation in the U.S. is affecting rates, with a noted increase in renewal premium change.
Management Liability Lines: Negative rate pressure in management liability lines is impacting Specialty and International segments.
Auto Warranty Claims: Higher labor rates and car part costs are driving an increase in severity of auto warranty claims.
Political Violence Exposure: Underwriting actions to non-renew political violence exposure impacted retention in the International segment.
Economic Factors: Rising interest rates have resulted in a net unrealized loss of $2.3 billion in the fixed income portfolio.
Office Consolidation Charges: Ongoing office consolidation activities are expected to incur additional charges of $7 million pretax in the upcoming quarters.
Long-Term Care Cash Policy Buyouts: The company expects variability in earnings due to ongoing cash policy buyouts, which had a $29 million impact this quarter.
Core Income: Core income increased by $30 million in the first quarter to $355 million, the highest first quarter core income on record.
Net Investment Income: Net investment income of $609 million pretax increased $84 million year-over-year.
Combined Ratio: The all-in combined ratio was 94.6%, with pretax catastrophe losses of $88 million.
Retention Rate: P&C retention remained high at 85% this quarter.
New Business Growth: New business was up 5% in the quarter to $529 million.
Commercial Segment Performance: The underlying combined ratio of 90.8% was a record low and 1 point lower than last year.
Rate Increases: Commercial auto rate increases were up 14%, excess casualty was up 11%.
Expense Ratio: Expect an expense ratio closer to last year's first quarter ratio of 30.7% for the full year.
Investment Income Expectations: Expect income from fixed income and other investments to be about $540 million in Q2 2024.
Full Year Investment Income: Expect about $2.175 billion for the full year 2024, a 5% increase compared to 2023.
Dividend Announcement: Regular quarterly dividend of $0.44 per share to be paid on June 6, 2024.
Core Return on Equity: Core return on equity of 11.5% reflects strong underwriting and investment results.
Quarterly Dividend: CNA announced a regular quarterly dividend of $0.44 per share to be paid on June 6, 2024, to shareholders of record on May 20, 2024.
Shareholder Return Plan: No share buyback program was mentioned during the call.
Despite strong core income and underwriting results, the company faces challenges from competitive pressures, declining rates, and uncertainties in loss cost trends. While the dividend and investment income are positives, these are counterbalanced by risks in the LTC portfolio and social inflation impacts. The Q&A section did not provide additional clarity, leaving the overall sentiment neutral.
The earnings call indicates strong financial performance with record core income, increased net investment income, and stable combined ratios. The Q&A session highlighted a favorable market outlook and strategic focus on specialty underwriting, although uncertainties around PFAS exposures were noted. Dividend increases and strong cash flow further support positive sentiment. Despite some challenges in international and specialty segments, overall growth and profitability signals suggest a positive stock price movement.
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