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
SOLID 2ND QUARTER 2004 UNDERWRITING RESULTS
CHICAGO, JULY 29, 2004 --- CNA Financial Corporation (NYSE: CNA) today announced
second quarter of 2004 results, which included the following highlights:
- Profitable underwriting results in the Property and Casualty
Operations as evidenced by a combined ratio of 96.8%.
- Net income for the second quarter of 2004 of $289 million as
compared with net income of $70 million in the second quarter of
2003.
- Improving expense ratios as a result of the Company's expense
initiatives.
RESULTS FOR RESULTS FOR
THE THREE THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30 JUNE 30
- --------------------------------------------------------------------------------
($ MILLIONS, EXCEPT PER SHARE DATA) 2004 2003 2004 2003
- --------------------------------------------------------------------------------
INCOME (LOSS) BEFORE NET REALIZED
INVESTMENT GAINS (LOSSES) $ 171 $(179) $ 379 $ (47)
NET REALIZED INVESTMENT GAINS (LOSSES) 118 249 (215) 200
===============================================================================
NET INCOME $ 289 $ 70 $ 164 $ 153
===============================================================================
NET INCOME PER SHARE RESULTS AVAILABLE TO
COMMON STOCKHOLDERS (a)(b) $1.07 $0.25 $0.52 $0.55
===============================================================================
(a) Included in the weighted average number of common shares for the three and
six months ended June 30, 2004 are the effects of additional common stock
issued 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 and six months ended June 30, 2004 per share results available
to common stockholders are reduced by $16 million and $32 million, or
$0.06 per share and $0.13 per share, of undeclared preferred stock
dividends. The three and six months ended June 30, 2003 per share results
available to common stockholders are reduced by $15 million and $30
million, or $0.07 per share and $0.13 per share, of undeclared preferred
stock dividends.
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Net income for the second quarter of 2004 was $289 million as compared with net
income of $70 million for the same quarter of 2003. The increase was primarily
due to continued improved underwriting results for the Property and Casualty
Operations. The Property and Casualty Operations produced a 96.8 percent
combined ratio in the second quarter of 2004 as compared with 126.9 percent in
the prior year period. The continued improvement in underwriting results was
primarily due to significant unfavorable net prior year development recorded in
the second quarter of 2003, the continued favorable impact of rate increases,
and the Company's focus on underwriting discipline and expense management.
"We are very pleased with the continued strong performance of our core Property
& Casualty Operations," said Steve Lilienthal, Chairman and Chief Executive
Officer of the CNA insurance companies. "Our focus on the business fundamentals
- -- underwriting discipline and expense management - is clearly evident in our
second quarter combined ratio in the 90s."
Net income for the first six months of 2004 was $164 million as compared with
net income of $153 million for the same period in 2003. The increase was
primarily due to the factors noted above for the three month period, offset by
increased net realized losses.
Net realized investment gains were $118 million and $249 million for the three
months ended June 30, 2004 and 2003, respectively. The decline was primarily
driven by unfavorable results in fixed maturity securities, offset partly by
increased gains in the equity and derivatives portfolio, including an after-tax
gain of $105 million related to the June of 2004 sale of the Company's equity
holdings of Canary Wharf Group PLC, a London based real estate investment.
Net realized investment losses were $215 million for the first six months of
2004 as compared with net realized investment gains of $200 million for the same
period in 2003. The net realized investment losses in 2004 were primarily driven
by the impact of the Company's sale of its Individual Life insurance business,
partially offset by the gain on the sale of the Company's Canary Wharf
investment.
On April 30, 2004, CNA completed the sale of its Individual Life insurance
business. The sale resulted in an after-tax realized investment loss of $389
million, which was primarily recognized in the first quarter of 2004 in
anticipation of the pending sale. This sale also resulted in an addition to the
statutory capital of the Company's primary insurance subsidiary in excess of
$550 million. With the closing of the sale of the Individual Life insurance
business, the Company completed its previously disclosed capital plan, which
included substantial support from Loews Corporation (Loews), the owner of
approximately 91% of CNA's outstanding shares. As a result of the sale, the
Company repaid the $300 million Life surplus note purchased in February of 2004
by Loews.
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SEGMENT RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2004
CORPORATE
STANDARD SPECIALTY TOTAL P&C LIFE & GROUP & OTHER
($ MILLIONS) LINES LINES OPS. NON-CORE NON-CORE TOTAL
- -------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE NET REALIZED
INVESTMENT GAINS $ 98 $ 81 $179 $(26) $ 18 $171
NET REALIZED INVESTMENT GAINS 50 18 68 14 36 118
=======================================================================================================
NET INCOME (LOSS) $148 $ 99 $247 $(12) $ 54 $289
=======================================================================================================
SEGMENT RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2003
CORPORATE
STANDARD SPECIALTY TOTAL P&C LIFE & GROUP & OTHER
($ MILLIONS) LINES LINES OPS. NON-CORE NON-CORE TOTAL
- --------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE NET REALIZED
INVESTMENT GAINS $(134) $ (7) $(141) $ 38 $ (76) $(179)
NET REALIZED INVESTMENT GAINS 122 38 160 35 54 249
=======================================================================================================
NET INCOME (LOSS) $ (12) $ 31 $ 19 $ 73 $ (22) $ 70
=======================================================================================================
SEGMENT RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2004
CORPORATE
STANDARD SPECIALTY TOTAL P&C LIFE & GROUP & OTHER
($ MILLIONS) LINES LINES OPS. NON-CORE NON-CORE TOTAL
- --------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE NET REALIZED
INVESTMENT GAINS (LOSSES) $ 212 $ 156 $ 368 $ (7) $ 18 $ 379
NET REALIZED INVESTMENT GAINS
(LOSSES) 88 31 119 (387) 53 (215)
=======================================================================================================
NET INCOME (LOSS) $ 300 $ 187 $ 487 $(394) $ 71 $ 164
=======================================================================================================
SEGMENT RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2003
CORPORATE
STANDARD SPECIALTY TOTAL P&C LIFE & GROUP & OTHER
($ MILLIONS) LINES LINES OPS. NON-CORE NON-CORE TOTAL
- --------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE NET REALIZED
INVESTMENT GAINS (LOSSES) $ (90) $ 41 $ (49) $ 67 $ (65) $ (47)
NET REALIZED INVESTMENT GAINS
(LOSSES) 125 40 165 (33) 68 200
=======================================================================================================
NET INCOME $ 35 $ 81 $ 116 $ 34 $ 3 $ 153
=======================================================================================================
PROPERTY & CASUALTY SEGMENTS GROSS WRITTEN PREMIUMS
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
- ---------------------------------------------------------
($ MILLIONS) 2004 2003 2004 2003
- ---------------------------------------------------------
STANDARD LINES $1,508 $1,651 $3,073 $3,285
SPECIALTY LINES 676 614 1,386 1,242
=========================================================
TOTAL P&C OPERATIONS $2,184 $2,265 $4,459 $4,527
=========================================================
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PROPERTY & CASUALTY SEGMENTS NET WRITTEN PREMIUMS
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
- --------------------------------------------------------
($ MILLIONS) 2004 2003 2004 2003
- --------------------------------------------------------
STANDARD LINES $1,209 $1,087 $2,474 $2,360
SPECIALTY LINES 592 487 1,173 963
========================================================
TOTAL P&C OPERATIONS $1,801 $1,574 $3,647 $3,323
========================================================
PROPERTY & CASUALTY CALENDAR YEAR LOSS RATIOS
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
- ---------------------------------------------------------
2004 2003 2004 2003
- ---------------------------------------------------------
STANDARD LINES 70.5% 88.0% 68.0% 80.0%
SPECIALTY LINES 64.2% 87.5% 63.6% 77.3%
TOTAL P&C OPERATIONS 68.6% 87.8% 66.7% 79.2%
TOTAL P&C COMPANIES (a) 74.6% 97.4% 73.0% 85.7%
=======================================================
(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 CALENDAR YEAR COMBINED RATIOS
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
- ------------------------------------------------------------
2004 2003 2004 2003
- ------------------------------------------------------------
STANDARD LINES 99.7% 132.1% 99.7% 118.5%
SPECIALTY LINES 90.0% 115.5% 90.0% 105.6%
TOTAL P&C OPERATIONS 96.8% 126.9% 96.8% 114.8%
TOTAL P&C COMPANIES (a) 101.9% 135.2% 102.8% 120.3%
===========================================================
(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 EVALUATED AT ACCIDENT YEAR 2003 EVALUATED AT ACCIDENT YEAR 2003 EVALUATED AT
JUNE 30, 2004 DECEMBER 31, 2003 JUNE 30, 2004
- ---------------------------------------------------------------------------------------------------------------------------
STANDARD LINES 66.0% 65.4% 63.9%
SPECIALTY LINES 63.6 67.1 65.6
TOTAL P&C OPERATIONS 65.3% 65.9% 64.4%
===============================================================================================================
PROPERTY & CASUALTY NET ACCIDENT YEAR LOSS RATIOS
ACCIDENT YEAR 2004 EVALUATED AT ACCIDENT YEAR 2003 EVALUATED AT ACCIDENT YEAR 2003 EVALUATED AT
JUNE 30, 2004 DECEMBER 31, 2003 JUNE 30, 2004
- ---------------------------------------------------------------------------------------------------------------------------
STANDARD LINES 66.0% 67.8% 66.7%
SPECIALTY LINES 63.1 68.9 65.8
TOTAL P&C OPERATIONS 65.1% 68.1% 66.5%
===============================================================================================================
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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.
- - Gross written premiums decreased $143 million for the second quarter of
2004 as compared with the same period in 2003. The decrease was primarily
due to intentional underwriting actions, including reductions in certain
excess and surplus lines programs, habitational construction business,
silica-related risks, and workers compensation policies classified as high
hazard.
- - Net written premiums increased $122 million for the second quarter of 2004
as compared with the same period in 2003, primarily due to favorable
premium development of $90 million recorded in the second quarter of 2004
as compared with unfavorable premium development of $221 million recorded
in the same period in 2003. The unfavorable premium development recorded
in the second quarter of 2003 was primarily due to additional ceded
premiums related to the corporate aggregate and other reinsurance
treaties.
- - Standard Lines achieved average rate increases during the second quarter
of 2004 of 5%.
- - Net income for the second quarter of 2004 increased $160 million as
compared with the same period in 2003, primarily due to lower unfavorable
net prior year development, lower catastrophe losses, and decreased
expenses primarily due to the Company's expense initiatives. These items
were partially offset by decreased net investment results.
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 second quarter of 2004
as compared with the same period in 2003, primarily due to increases in
rate and new business in the professional liability lines of business.
- - Specialty Lines achieved average rate increases during the second quarter
of 2004 of 10%, primarily across professional liability lines.
- - Net income for the second quarter of 2004 increased $68 million as
compared with the same period in 2003, primarily due to lower unfavorable
net prior year development, improvements in the current net accident year
loss ratio, a decrease in the provision for uncollectible reinsurance
receivables and decreased underwriting expenses primarily due to the
Company's expense initiatives. These items were partially offset by
decreased net investment results.
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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. The Group Benefits
business was sold on December 31, 2003 and the Individual Life business was sold
on April 30, 2004.
- - Net earned premiums decreased $401 million for the second quarter of 2004
as compared with the same period in 2003, due primarily to the absence of
premiums from the Group Benefits and Individual Life businesses. Net
earned premiums for these businesses were $10 million and $368 million for
the second quarter of 2004 and 2003.
- - Net results for the second quarter of 2004 decreased $85 million as
compared with the same period in 2003, principally due to the absence of
favorable results from the Group Benefits and Individual Life businesses
and due to stranded overhead expenses related to these businesses. Net
income for these sold businesses was $0.2 million and $40 million for the
second quarter of 2004 and 2003. Net results decreased in the second
quarter of 2004 as compared with the same period in 2003 as a result of a
$22 million after-tax increase in insurance and uncollectible reinsurance
reserves related to the Company's past participation in accident and
health reinsurance programs.
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 second quarter of 2004 increased $76 million as
compared with the same period in 2003, primarily due to lower unfavorable
net prior year development and a decrease in the provision for
uncollectible reinsurance receivables. These items were partially offset
by the decline in operating results attributable to lower premium volume
for CNA Re, which was placed in run-off in October of 2003.
NET INVESTMENT INCOME
Pretax net investment income decreased $47 million to $380 million for the
second quarter of 2004 as compared with the same period in 2003. The change was
primarily due to a lower asset base associated with the sale of the Company's
Individual Life and Group Benefits businesses, lower investment yields on fixed
maturity securities and decreased limited partnership income. These items were
partially offset by reduced interest expense on funds withheld and other
deposits. The higher interest expense on funds withheld and other deposits in
second quarter of 2003 was due to additional premiums ceded to the corporate
aggregate and other finite reinsurance treaties.
ABOUT THE COMPANY
CNA is the country's fourth largest commercial insurance writer and the 14th
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.
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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. ET 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) 289-0518 OR FOR INTERNATIONAL CALLERS (913) 981-5532. 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 THROUGH AUGUST 5, 2004. THE REPLAY CAN ALSO
BE ACCESSED BY DIALING (888) 203-1112 OR FOR INTERNATIONAL CALLERS (719)
457-0820 AND USING PASSCODE 552526. FINANCIAL SUPPLEMENT INFORMATION RELATED TO
THE SECOND QUARTER RESULTS IS AVAILABLE ON THE INVESTOR RELATIONS PAGES OF THE
CNA WEBSITE OR BY CONTACTING DAWN JAFFRAY AT (312) 822-7757.
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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