EXHIBIT 99.1
[CNA LOGO]
FOR IMMEDIATE RELEASE
CONTACT:
MEDIA: ANALYSTS:
Charles M. Boesel, 312/822-2592 Dawn M. Jaffray, 312/822-7757
Katrina W. Parker, 312/822-5167
CNA FINANCIAL ANNOUNCES
IMPROVED FIRST QUARTER 2004 UNDERWRITING RESULTS
CHICAGO, APRIL 29, 2004 --- CNA Financial Corporation (NYSE: CNA) today
announced first quarter of 2004 results, which included the following
highlights:
- Improved underwriting results in the Property and Casualty
Operations, evidenced by a combined ratio of 96.8%.
- An impairment loss of $406 million after-tax related to the
previously announced sale of the individual life business.
- Net loss for the first quarter of 2004 of $125 million as
compared to net income of $83 million in the first quarter of
2003.
NET (LOSS) INCOME
RESULTS FOR THE THREE MONTHS ENDED
MARCH 31
---------------------------
($ MILLIONS, EXCEPT PER SHARE DATA) 2004 2003
- ---------------------------------- ------------ ------------
INCOME BEFORE NET REALIZED INVESTMENT LOSSES $ 208 $ 132
NET REALIZED INVESTMENT LOSSES (333) (49)
============ ============
NET (LOSS) INCOME $ (125) $ 83
============ ============
NET (LOSS) INCOME PER SHARE RESULTS AVAILABLE TO
COMMON STOCKHOLDERS (a)(b) $ (0.55) $ 0.30
============ ============
(a) Included in the weighted average number of common shares for the three
months ended March 31, 2004 are the effects of additional common stock
equivalents related to the November of 2003 sale of $750 million of
convertible preferred shares to Loews Corporation. The preferred shares
converted into 32,327,015 shares of CNA common stock on April 20, 2004.
(b) The three months ended March 31, 2004 and 2003 per share results
available to common stockholders are reduced by $16 million and $15
million, or $0.06 per share and $0.07 per share, of undeclared
preferred stock dividends.
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The first quarter of 2004 underwriting results for the Property and Casualty
Operations included a 7-point improvement in the combined ratio as well as
increased limited partnership results. Solid underwriting results, including
rate increases, and the continued focus on underwriting discipline and expense
management contributed to the 96.8% combined ratio for the Property and Casualty
Operations.
"We are pleased with the underlying performance of our core Property & Casualty
Operations. With its combined ratio in the 90s and net income up 147%, we are
executing the fundamentals and continuing the progress made over the last
several years," said Steve Lilienthal, Chairman and Chief Executive Officer of
the CNA insurance companies. "The net loss for the quarter is associated with
the accounting for the sale of our Life business, which is expected to close
tomorrow. The impact of the sale was previously disclosed - a GAAP impairment
loss, additional statutory capital, and a sharpening of CNA's focus on our core
property and casualty businesses."
Net realized investment losses were $333 million and $49 million for the three
months ended March 31, 2004 and 2003, respectively. The investment losses in
2004 were primarily driven by an after-tax impairment loss of $406 million
related to the pending sale of CNA's individual life insurance business to Swiss
Re Life & Health America Inc. (Swiss Re) that was previously announced on
February 5, 2004. The sale is expected to provide additional statutory capital
of approximately $500 million to CNA's principal insurance subsidiary,
Continental Casualty Company (CCC). The sale, which is subject to certain
customary closing conditions, is expected to be completed on April 30, 2004.
Partially offsetting the life impairment loss were realized investment gains
from the investment portfolio.
In the first quarter of 2004, the Company revised its reportable segment
structure to reflect changes in how CNA manages its core operations and makes
business decisions. CNA now manages its Property and Casualty Operations in two
operating segments which represent CNA's core operations: Standard Lines and
Specialty Lines. The non-core operations are now managed in the Life and Group
Non-Core and Corporate and Other Non-Core segments. Prior period segment
disclosures have been conformed to the current year presentation. The changes
made to the Company's reportable segments were as follows: 1) CNA Global, which
consists of marine and global standard lines, is now included in Standard Lines
(formerly included in Specialty Lines); 2) CNA Guaranty and Credit is currently
in run-off and is now included in the Corporate and Other Non-Core segment
(formerly included in Specialty Lines); 3) CNA Re is currently in run-off and is
also now included in the Corporate and Other Non-Core segment (CNA Re was
formerly a stand-alone property and casualty operating segment); 4) Group
Operations and Life Operations (formerly separate operating segments) have now
been combined into one reportable segment where the run-off of the retained
group and life products will be managed; 5) certain run-off life and group
operations previously included in the Corporate and Other Non-Core segment are
now included in the Life and Group Non-Core segment.
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SEGMENT RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2004
CORPORATE
STANDARD SPECIALTY TOTAL P&C LIFE & GROUP & OTHER
($ MILLIONS) LINES LINES OPS. NON-CORE NON-CORE TOTAL
- ------------ ----------- ----------- ----------- ----------- ----------- ----------
INCOME BEFORE NET REALIZED INVESTMENT GAINS (LOSSES) $ 114 $ 75 $ 189 $ 19 $ - $ 208
NET REALIZED INVESTMENT GAINS (LOSSES) 38 13 51 (401) 17 (333)
----------- ----------- ----------- ----------- ----------- ---------
NET INCOME (LOSS) $ 152 $ 88 $ 240 $ (382) $ 17 $ (125)
=========== =========== =========== =========== =========== =========
SEGMENT RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2003
CORPORATE
STANDARD SPECIALTY TOTAL P&C LIFE & GROUP & OTHER
($ MILLIONS) LINES LINES OPS. NON-CORE NON-CORE TOTAL
- ------------ ----------- ----------- ----------- ----------- ----------- ----------
INCOME BEFORE NET REALIZED INVESTMENT GAINS (LOSSES) $ 44 $ 48 $ 92 $ 29 $ 11 $ 132
NET REALIZED INVESTMENT GAINS (LOSSES) 3 2 5 (68) 14 (49)
----------- ----------- ----------- ----------- ----------- ----------
NET INCOME (LOSS) $ 47 $ 50 $ 97 $ (39) $ 25 $ 83
=========== =========== =========== =========== =========== ==========
PROPERTY & CASUALTY OPERATIONS GROSS WRITTEN PREMIUMS
THREE MONTHS ENDED MARCH 31
---------------------------
($ MILLIONS) 2004 2003
- ------------ ------------ ------------
STANDARD LINES $ 1,565 $ 1,634
SPECIALTY LINES 710 628
------------ ------------
TOTAL P&C OPERATIONS $ 2,275 $ 2,262
============ ============
PROPERTY & CASUALTY OPERATIONS NET WRITTEN PREMIUMS
THREE MONTHS ENDED MARCH 31
---------------------------
($ MILLIONS) 2004 2003
- ------------ ------------ ------------
STANDARD LINES $ 1,265 $ 1,273
SPECIALTY LINES 581 476
------------ ------------
TOTAL P&C OPERATIONS $ 1,846 $ 1,749
============ ============
PROPERTY & CASUALTY CALENDAR YEAR LOSS RATIOS
THREE MONTHS ENDED MARCH 31
---------------------------
2004 2003
---- ----
STANDARD LINES 65.5% 73.3%
SPECIALTY LINES 63.1 66.3
TOTAL P&C OPERATIONS 64.8 71.5
TOTAL P&C COMPANIES (a) 70.4% 75.1%
==== ====
(a) P&C Companies includes Standard Lines, Specialty Lines and P&C business
written in Life and Group Non-Core and Corporate and Other Non-Core,
including CNA Re and asbestos, environmental pollution and mass tort
exposures (APMT).
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PROPERTY & CASUALTY CALENDAR YEAR COMBINED RATIOS
THREE MONTHS ENDED MARCH 31
---------------------------
2004 2003
---- ----
STANDARD LINES 99.7% 107.2%
SPECIALTY LINES 89.9 95.0
TOTAL P&C OPERATIONS 96.8 104.0
TOTAL P&C COMPANIES (a) 103.6% 107.0%
===== =====
(a) P&C Companies includes Standard Lines, Specialty Lines and P&C business
written in Life and Group Non-Core and Corporate and Other Non-Core,
including CNA Re and asbestos, environmental pollution and mass tort
exposures (APMT).
PROPERTY & CASUALTY GROSS ACCIDENT YEAR LOSS RATIOS
ACCIDENT YEAR 2004 ACCIDENT YEAR 2003 ACCIDENT YEAR 2003
EVALUATED AT EVALUATED AT EVALUATED AT
MARCH 31, 2004 DECEMBER 31, 2003 MARCH 31, 2004
----------------- ------------------ ------------------
STANDARD LINES 62.8% 65.4% 64.3%
SPECIALTY LINES 62.0 67.1 65.8
TOTAL P&C OPERATIONS 62.6% 65.9% 64.7%
==== ==== ====
PROPERTY & CASUALTY NET ACCIDENT YEAR LOSS RATIOS
ACCIDENT YEAR 2004 ACCIDENT YEAR 2003 ACCIDENT YEAR 2003
EVALUATED AT EVALUATED AT EVALUATED AT
MARCH 31, 2004 DECEMBER 31, 2003 MARCH 31, 2004
----------------- ------------------ ------------------
STANDARD LINES 65.7% 67.8% 67.1%
SPECIALTY LINES 63.0 68.9 67.7
TOTAL P&C OPERATIONS 64.9% 68.1% 67.3%
==== ==== ====
BUSINESS OPERATING HIGHLIGHTS
STANDARD LINES includes standard property and casualty coverages sold to small
and middle market commercial businesses primarily through an independent agency
distribution system, and excess and surplus lines, as well as insurance and risk
management products sold to large corporations. These services are provided to
customers in the U.S. as well as globally.
- - Net written premiums decreased $8 million for the first quarter of 2004
as compared with the same period in 2003. Increased rate and retention
was achieved across most property and casualty lines of business offset
by decreased net written premium from an excess and surplus program
covering facilities that provide services to developmentally disabled
individuals.
- - Standard Lines achieved average rate increases during the first quarter
of 2004 of 6 to 7%.
- - Net income for the first quarter of 2004 increased $105 million as
compared with the same period in 2003, primarily due to improvement in
the current net accident year loss ratio, the absence of unfavorable
net prior year development and improved investment results.
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SPECIALTY LINES provides a broad array of professional, financial and specialty
property and casualty products and services.
- - Net written premiums increased $105 million for the first quarter of
2004 as compared with the same period in 2003, due primarily to new
business and continued significant rate increases in the professional
liability lines of business.
- - Specialty Lines achieved average rate increases during the first
quarter of 2004 of 13%, including most professional liability lines of
business.
- - Net income for the first quarter of 2004 increased $38 million as
compared with the same period in 2003, primarily due to improvements in
the current net accident year loss ratio and improved investment
results.
LIFE AND GROUP NON-CORE primarily includes the results of the life and group
lines of business that have been sold or placed in run-off.
- - Net earned premiums decreased $260 million for the first quarter of
2004 as compared with the same period in 2003, due primarily to the
absence of premiums from the Group Benefits business which was sold on
December 31, 2003. Partially offsetting this decline were higher earned
premiums in the health and life and annuity products.
- - Net results for the first quarter of 2004 decreased $343 million as
compared with the same period in 2003, principally due to an after-tax
impairment loss of $406 million related to the pending sale of the
individual life insurance business. Excluding this impairment loss, net
income was $24 million for the first quarter of 2004, which included $9
million of net income related to the business that is anticipated to be
sold.
CORPORATE AND OTHER NON-CORE contains certain corporate expenses such as
interest on corporate debt and losses and expenses related to the centralized
adjusting and settlement of asbestos, environmental pollution and mass tort
claims. In addition, this segment includes the results of certain property and
casualty insurance run-off operations including CNA Re (formerly a stand-alone
property and casualty operating segment).
- - Net results for the first quarter of 2004 decreased $8 million as
compared with the same period in 2003, primarily due to the decline in
operating results attributable to lower premium volume for CNA Re which
was placed in run-off during 2003.
NET INVESTMENT INCOME
Pretax net investment income increased $41 million to $473 million for the first
quarter of 2004 as compared with the same period in 2003. The change was
primarily due to increased limited partnership income partially offset by lower
investment yields on fixed maturity securities.
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ABOUT THE COMPANY
CNA is the country's fourth largest commercial insurance writer and the 11th
largest property and casualty company. CNA's insurance products include standard
commercial lines, specialty lines, surety, marine and other property and
casualty coverages. CNA's services include risk management, information
services, underwriting, risk control and claims administration. For more
information, please visit CNA at www.cna.com. CNA is a registered service mark,
trade name and domain name of CNA Financial Corporation.
CONFERENCE CALL AND WEBCAST INFORMATION:
A CONFERENCE CALL FOR INVESTORS AND THE PROFESSIONAL INVESTMENT COMMUNITY WILL
BE HELD FROM 10:00 A.M. TO 11:00 A.M. EST TODAY. ON THE CONFERENCE CALL WILL BE
STEPHEN W. LILIENTHAL, CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF THE CNA INSURANCE
COMPANIES, AND OTHER MEMBERS OF SENIOR MANAGEMENT. PARTICIPANTS CAN ACCESS THE
CALL BY DIALING (800) 474-8920 OR FOR INTERNATIONAL CALLERS (719) 457-2727. THE
CALL WILL ALSO BE BROADCAST LIVE ON THE INTERNET AT HTTP://INVESTORS.CNA.COM OR
YOU MAY GO TO THE INVESTOR RELATIONS PAGES OF THE CNA WEBSITE (WWW.CNA.COM) FOR
FURTHER DETAILS.
THE CALL IS AVAILABLE TO THE MEDIA, BUT QUESTIONS WILL BE RESTRICTED TO
INVESTORS AND THE PROFESSIONAL INVESTMENT COMMUNITY. A TAPED REPLAY OF THE CALL
WILL BE AVAILABLE ON CNA'S WEBSITE FOR ONE WEEK UNTIL MAY 6, 2004. THE REPLAY
CAN ALSO BE ACCESSED BY DIALING (888) 203-1112 OR FOR INTERNATIONAL CALLERS
(719) 457-0820 AND USING PASSCODE 438345. FINANCIAL SUPPLEMENT INFORMATION
RELATED TO THE FIRST QUARTER RESULTS IS AVAILABLE ON THE INVESTOR RELATIONS
PAGES OF THE CNA WEBSITE OR BY CONTACTING DAWN JAFFRAY AT (312) 822-7757.
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FORWARD-LOOKING STATEMENT
This press release includes statements which relate to anticipated future events
(forward-looking statements) rather than actual present conditions or historical
events. You can identify forward-looking statements because generally they
include words such as "believes", "expects", "intends", "anticipates",
"estimates", and similar expressions. Forward-looking statements, by their
nature, are subject to a variety of inherent risks and uncertainties that could
cause actual results to differ materially from the results projected. Many of
these risks and uncertainties cannot be controlled by CNA. For a detailed
description of these risks and uncertainties please refer to CNA's filings with
the Securities and Exchange Commission, available at www.cna.com.
Any forward-looking statements made in this press release are made by CNA as of
the date of this press release. CNA does not have any obligation to update or
revise any forward-looking statement contained in this press release, even if
CNA's expectations or any related events, conditions or circumstances change.
This press release may also contain financial measures that are not in
accordance with generally accepted accounting principles (GAAP). For
reconciliations of non-GAAP measures to the most comparable GAAP measures, refer
to this press release and the financial supplement posted on the Company's
website.
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