Yahoo Finance CNA Financial (CNA) Q1 Earnings Miss, Revenues Beat Estimates
CNA Financial Corporation CNA reported first-quarter 2023 core earnings of $1.19 per share, which missed the Zacks Consensus Estimate by 0.8%. The bottom line however increased 2.6% year over year and our estimate of $1.04.
The insurer’s results reflected solid top-line growth and strong underwriting profitability.
CNA Financial Corporation Price, Consensus and EPS Surprise
CNA Financial Corporation price-consensus-eps-surprise-chart | CNA Financial Corporation Quote
Behind First-Quarter Headlines
Total operating revenues of CNA Financial were $2.8 billion, up 10.6% year over year due to higher premiums and net investment income. The top line beat the Zacks Consensus Estimate by 0.9% and came in line with our estimate.
Net written premiums of Property & Casualty Operations improved 11% year over year to $2.2 billion, driven by a retention rate of 86% and renewal premium change of 7%.
Net investment income increased 17.2% year over year to $525 million, driven by an increase in income from fixed-income securities and other investments as well as an increase in income from limited partnership and common stock investments. Our estimate of $409.4 million.
Total claims, benefits and expenses decreased 2.8% to $2.8 billion, primarily due to Insurance claims and policyholders' benefits. Our estimate of $2.8 billion.
Catastrophe losses were $52 million, wider than losses of $19 million in the year-ago quarter.
The combined ratio deteriorated 200 basis points (bps) year over year to 93.9.
Segment Results
Specialty’s net written premiums increased 2% year over year to $788 million. Our estimate was $781.3 million. The combined ratio deteriorated 130 bps to 90.
Commercial’s net written premiums increased 19% year over year to $1.2 billion. Our estimate was $1.1 billion. The combined ratio deteriorated 150 bps to 96.
International’s net written premiums increased 8% year over year to $271 million. Our estimate was $271.8 million. The combined ratio deteriorated 480 bps to 97.2.
Life & Group’s net earned premiums were $115 million, down 4.2% year over year. Our estimate was $116.7 million. The core loss was $3 million against $5 million earned in the year-ago quarter, primarily due to long-term care policy buyouts.
Corporate & Other’s core loss of $18 million was narrower than a loss of $28 million in the year-earlier quarter.
Financial Update
The core return on equity was 10.8%, up 110 bps. Book value excluding AOCI as of Mar 31 was $44.21 per share, down 1.8% from Dec 31, 2022. Statutory surplus decreased 0.9% from 2021 end to $10.5 billion at quarter end. Leverage improved 20 basis points to 24.3 at quarter end.
Net cash flows provided by operating activities dropped 32.5% to $436 million at quarter end.
Dividend Update
CNA Financial’s board of directors approved a quarterly dividend of 42 cents per share to be paid out on Jun 1 to shareholders as of May 15.
Zacks Rank
CNA Financial currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
The Travelers Companies TRV reported first-quarter 2023 core income of $4.11 per share, which beat the Zacks Consensus Estimate of $3.64 and our estimate of $3.41. However, the bottom line decreased 2.6% year over year. Travelers’ total revenues increased 10% from the year-ago quarter to $9.7 billion, primarily driven by higher premiums. The top-line figure however missed the Zacks Consensus Estimate of $9.8 billion.
Net written premiums increased 12% year over year to a record $9.4 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $8.9 billion.
Catastrophe losses totaled $422 million, wider than $36 million pre-tax in the prior-year quarter. Catastrophe losses primarily resulted from severe wind and hail storms in multiple states. Travelers witnessed an underwriting gain of $501 million, down 12.9% year over year. The combined ratio deteriorated 410 bps year over year to 95.4.
The Progressive Corporation’s PGR first-quarter 2023 earnings per share of 65 cents missed the Zacks Consensus Estimate of $1.44 as well as our estimate of $1.50. The bottom line declined 20.7% year over year.
Operating revenues were about $14.2 billion, up 15.8% year over year. This improvement was driven by a 15% increase in premiums, 18.5% higher fees and other revenues, a 7.1% increase in service revenues and a 73.2% higher investment income. The top line exceeded the Zacks Consensus Estimate of $14.1 billion and our estimate of $13.1 billion.
Net premiums earned grew 15% to $13.5 billion and beat our estimate of $12.6 billion. The combined ratio deteriorated 450 bps from the prior-year quarter’s level to 99.
RLI Corp. RLI reported first-quarter 2023 operating earnings of $1.63 per share, beating the Zacks Consensus Estimate by 34.7%. The bottom line improved 14% from the prior-year quarter. Operating revenues for the reported quarter were $335 million, up 19.4% year over year, driven by 14.3% higher net premiums earned and 51.5% higher net investment income. The top line however missed the Zacks Consensus Estimate by 2.2%.
Gross premiums written increased 15.6% year over year to $415 million. This uptick can be attributed to the solid performance of the Casualty (up 1%), Property (up 45%) and Surety segments (up 13.6%). Underwriting income of $67.9 million increased 14.1%, primarily due to higher profitability in its Property and Casualty segment. Combined ratio remained flat year over year at 77.9.
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