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01/11 16:22
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Core Income $409 million, up from $293 million in the prior year, reflecting strong underwriting results, lower catastrophe losses, and excellent investment results.
Year-to-date Core Income Exceeded $1 billion for the first time on record, driven by strong underwriting gains and higher net investment income.
Underwriting Income $194 million, nearly triple the prior year quarter, benefiting from benign catastrophe losses.
Net Investment Income $638 million, increased by $12 million year-over-year, driven by higher fixed income results.
P&C All-in Combined Ratio 92.8%, including $41 million or 1.5 points of catastrophe losses, which is substantially lower than the third quarter average over the past five years.
P&C Underlying Combined Ratio 91.3%, with an underlying loss ratio of 61.9%, 0.8 points higher than the third quarter of 2024, reflecting prudent philosophy on loss ratio based on market conditions.
Net Written Premiums Grew 3% in the quarter, driven by tailored renewal strategies and strong underwriting discipline.
Commercial Segment All-in Combined Ratio 92.7%, a 7.5 point improvement from the prior year quarter, with catastrophe losses of $39 million, representing a 6.9 point improvement.
Specialty Segment All-in Combined Ratio 93.3%, with an expense ratio of 32.5% and an underlying loss ratio of 60.6%, up 0.5 points year-over-year due to flat to negative rate in certain portfolios.
International Segment All-in Combined Ratio 91.8%, including $2 million or 0.6 points of catastrophe loss, compared to 5.1 points in the prior year quarter.
Operating Cash Flow $720 million for the quarter, compared to $748 million in the prior year quarter, while year-to-date operating cash flow is up 3% to $1,920 million.
Stockholders' Equity Excluding AOCI $12.5 billion, or $46.30 per share, an increase of 8% from year-end 2024 adjusting for dividends.
Cardinal E&S offering: CNA continues to capitalize on multiple opportunities in the excess and surplus (E&S) lines market through its Cardinal E&S offering. As E&S becomes a larger proportion of the overall P&C market, CNA expects it to represent a growing portion of its business.
International segment growth: Net written premiums in the International segment were up 15% (12% excluding currency fluctuations). Gross written premiums increased by 6% (3% excluding currency fluctuations). New business grew by 29% to $94 million, driven by niche opportunities.
Record core income: CNA achieved record core income of $409 million for Q3 2025, driven by strong underwriting gains and higher net investment income. Year-to-date core income exceeded $1 billion for the first time.
Expense ratio improvement: The P&C expense ratio was 29.1% for Q3 2025, reflecting effective management and higher net earned premiums. This is below 30% for both the quarter and year-to-date.
Investment income growth: Net investment income increased to $638 million in Q3 2025, up $12 million year-over-year, driven by higher fixed income results.
Prudent underwriting adjustments: CNA continues to adjust underwriting strategies in response to market dynamics, particularly in areas like financial institutions and management liability. The company is also repositioning its commercial auto portfolio to address market trajectory and loss drivers.
Technology and AI investment: CNA is increasing its investment in talent and technology, including the use of artificial intelligence in certain parts of its business to enhance operations.
Social inflation impact on loss cost trends: The dynamics underpinning social inflation have not abated, leading to higher loss cost trends in certain lines. CNA is maintaining a prudent reserving philosophy, particularly in lines most impacted by social inflation, which could affect profitability.
Competitive pressures in International segment: Rates declined by 6% in the International segment due to escalating competition, which could impact profitability and growth in this segment.
Flat to negative rate environment in Specialty segment: The financial institutions and management liability portfolio in the Specialty segment is experiencing flat to negative rate trends, which could challenge profitability.
Lower retention in Commercial segment: Retention in the Commercial segment was 79%, impacted by efforts to reposition the commercial auto portfolio due to unfavorable market conditions and granular loss drivers.
Declining property rates in national accounts: National accounts property rates declined by 1% compared to the second quarter, though still achieving appropriate returns. This trend could impact future profitability.
Uncertainty in loss cost trends: Slightly higher loss ratios in Commercial and Specialty segments reflect uncertainty in loss cost trends as the accident year matures, which could impact financial performance.
Life & Group segment core loss: The Life & Group segment recorded a core loss of $22 million in the third quarter, driven by lower investment income and unfavorable reserve assumption updates, which could impact overall financial results.
Escalating catastrophe losses: Although catastrophe losses were lower this quarter, they remain a significant risk factor, as evidenced by the $41 million in catastrophe losses recorded in Q3 2025.
Regulatory and reserve risks in LTC portfolio: The Long-Term Care (LTC) portfolio faces risks from cost of care inflation, morbidity, and persistency assumptions, despite proactive management and favorable interest rate environments.
P&C Expense Ratio: The P&C expense ratio is expected to remain in the range of the two most recent quarters for Q4 2025.
Fixed Income Investment Income: Income from fixed income and other investments is projected to be approximately $570 million for Q4 2025, based on the current interest rate environment.
International Segment Growth: The International segment is expected to continue contributing meaningfully to both top and bottom lines, despite softer market conditions, as the company capitalizes on favorable opportunities.
E&S Lines Market: CNA expects the excess and surplus (E&S) lines market to represent a growing portion of its business as it scales and grows its E&S operations.
LTC Reserves: The Individual LTC reserves are expected to decline over the next ten years, with policy counts projected to decrease by 65%. The Group LTC reserves are expected to peak in the mid-2030s, with policy counts projected to decline by 25% over the next ten years.
Quarterly Dividend: $0.46 per share to be paid on December 4, 2025 to stockholders of record on November 17, 2025.
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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