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 Kenneth S. De Vries, 312/822-1111
CNA FINANCIAL ANNOUNCES
4TH QUARTER AND YEAR-END 2004 RESULTS
CHICAGO, FEBRUARY 10, 2005 --- CNA Financial Corporation (NYSE: CNA) today
announced fourth quarter of 2004 results, which included the following items:
- Net income for the fourth quarter of 2004 of $305 million as
compared to $174 million for the same period in 2003.
- Income before net realized investment gains/losses for the fourth
quarter of 2004 of $201 million as compared to $194 million for the
same period in 2003.
- Property and Casualty combined ratio of 96.9%.
- Book value per common share increased to $32.55 from $31.42 at
September 30, 2004.
RESULTS FOR THE THREE MONTHS ENDED RESULTS FOR THE YEAR ENDED
DECEMBER 31 DECEMBER 31
($ MILLIONS, EXCEPT PER SHARE DATA) 2004 2003 2004 2003
- ----------------------------------- ---- ---- ---- ----
INCOME (LOSS) BEFORE NET
REALIZED INVESTMENT GAINS (LOSSES) $ 201 $ 194 $ 594 $(1,718)
NET REALIZED INVESTMENT GAINS (LOSSES) 104 (20) (153) 285
------- ------- ------- -------
NET INCOME (LOSS) $ 305 $ 174 $ 441 $(1,433)
======= ======= ======= =======
NET INCOME (LOSS) PER SHARE
RESULTS AVAILABLE TO COMMON
STOCKHOLDERS (a)(b) $ 1.12 $ 0.67 $ 1.47 $ (6.58)
(a) Included in the weighted average number of common shares 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
effect of the preferred shares has been included in the weighted average
shares since issuance. The preferred shares converted into 32,327,015
shares of CNA common stock on April 20, 2004.
(b) The three months and year ended December 31, 2004 per share results
available to common stockholders are reduced by $17 million and $65
million, or $0.06 per share and $0.25 per share, of undeclared preferred
stock dividends. The three months and year ended December 31, 2003 per
share results available to common stockholders are reduced by $15 million
and $60 million, or $0.06 per share and $0.27 per share, of undeclared
preferred stock dividends.
Page 1 of 8
Net income for the three months ended December 31, 2004 increased $131 million
as compared with the same period in 2003. This improvement in net results was
primarily due to continued improved underwriting results for the Property and
Casualty Operations and improved net realized investment results. The Property
and Casualty Operations produced a combined ratio of 96.9% in the fourth quarter
of 2004 as compared with 98.6% in the prior year period. Also contributing to
the improvement were increased results from the non-core segments. The
improvement in the Life & Group Non-Core segment was principally due to the
absence of the $130 million after-tax loss recorded on the sale of the Group
Benefits business during the fourth quarter of 2003. Additionally, $14 million
after-tax of non-recurring income in the Corporate and Other Non-Core segment
related to a release of real estate related reserves. The fourth quarter 2004
results were adversely impacted by a $36 million after-tax bad debt provision
for insurance receivables. The primary drivers of the provision were the
completion of updated ultimate loss projections on all large account business
where the insured is currently in bankruptcy and a comprehensive review of all
billed balances that are past due.
"2004 marked CNA's return to a more normalized mode of operation," said Steve
Lilienthal, Chairman and Chief Executive Officer of the CNA insurance companies.
"After shedding non-core businesses and strengthening our balance sheet in 2003,
our focus has turned to controlled, orderly execution. This transition is
evident in the performance of our core Property & Casualty Operations, which
have delivered five consecutive quarters of sub-100% combined ratios before
catastrophes."
Net income for the year ended December 31, 2004 was $441 million as compared
with a net loss of $1,433 million for the same period in 2003. This improvement
in net results was primarily due to decreased net unfavorable prior year
development of $1,838 million after-tax and a decrease in bad debt reserves for
insurance and reinsurance receivables of $356 million after-tax, partially
offset by higher losses and related charges from catastrophes of $103 million
after-tax. The catastrophe losses were primarily attributable to hurricanes in
the third quarter. The Company's estimate related to the hurricanes remains
substantially unchanged through the fourth quarter.
Net realized investment gains were $104 million for the three months ended
December 31, 2004 as compared with net realized investment losses of $20 million
for the same period in 2003. The improvement was primarily due to increased
realized investment gains from the fixed maturity securities portfolio and the
absence of the $130 million after-tax loss recorded on the sale of the Group
Benefits business during the fourth quarter of 2003, offset partly by a
previously announced impairment loss of $36 million after-tax related to loans
made under a credit facility to a national contractor.
Net realized investment losses were $153 million for the year ended December 31,
2004 as compared with net realized investment gains of $285 million for the same
period in 2003. The net realized investment losses in 2004 were primarily due to
a $389 million after-tax loss on the sale of the Company's Individual Life
insurance business, losses related to derivative securities, and the fourth
quarter impairment loss of $36 million discussed above, partially offset by
gains from the fixed maturity portfolio and a gain on the sale of the Company's
Canary Wharf investment in the second quarter of 2004.
Page 2 of 8
SEGMENT RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------
STANDARD SPECIALTY TOTAL P&C LIFE & GROUP CORPORATE
& OTHER
($ MILLIONS) LINES LINES OPS. NON-CORE NON-CORE TOTAL
- ------------ ----- ----- ---- -------- -------- -----
INCOME (LOSS) BEFORE NET REALIZED
INVESTMENT GAINS (LOSSES) $ 83 $ 88 $171 $ (9) $ 39 $201
NET REALIZED INVESTMENT GAINS (LOSSES) 74 31 105 -- (1) 104
---- ---- ---- ---- ---- ----
NET INCOME (LOSS) $157 $119 $276 $ (9) $ 38 $305
==== ==== ==== ==== ==== ====
SEGMENT RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------
STANDARD SPECIALTY TOTAL P&C LIFE & GROUP CORPORATE
& OTHER
($ MILLIONS) LINES LINES OPS. NON-CORE NON-CORE TOTAL
- ------------ ----- ----- ---- -------- -------- -----
INCOME BEFORE NET REALIZED
INVESTMENT GAINS (LOSSES) $ 86 $ 65 $ 151 $ 37 $ 6 $ 194
NET REALIZED INVESTMENT GAINS (LOSSES) 73 22 95 (114) (1) (20)
-- -- -- ---- -- ---
NET INCOME (LOSS) $ 159 $ 87 $ 246 $ (77) $ 5 $ 174
===== ===== ===== ===== ===== =====
SEGMENT RESULTS FOR THE YEAR ENDED DECEMBER 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------
STANDARD SPECIALTY TOTAL P&C LIFE & GROUP CORPORATE
& OTHER
($ MILLIONS) LINES LINES OPS. NON-CORE NON-CORE TOTAL
- ------------ ----- ----- ---- -------- -------- -----
INCOME (LOSS) BEFORE NET REALIZED
INVESTMENT GAINS (LOSSES) $ 221 $ 324 $ 545 $ (29) $ 78 $ 594
NET REALIZED INVESTMENT GAINS (LOSSES) 139 54 193 (385) 39 (153)
--- -- --- ---- -- ----
NET INCOME (LOSS) $ 360 $ 378 $ 738 $(414) $ 117 $ 441
===== ===== ===== ===== ===== =====
SEGMENT RESULTS FOR THE YEAR ENDED DECEMBER 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------
STANDARD SPECIALTY TOTAL P&C LIFE & GROUP CORPORATE
& OTHER
($ MILLIONS) LINES LINES OPS. NON-CORE NON-CORE TOTAL
- ------------ ----- ----- ---- -------- -------- -----
(LOSS) INCOME BEFORE NET REALIZED
INVESTMENT GAINS (LOSSES) $ (951) $ (34) $ (985) $ 113 $ (846) $(1,718)
NET REALIZED INVESTMENT GAINS (LOSSES) 234 74 308 (108) 85 285
--- -- --- ---- -- ---
NET (LOSS) INCOME $ (717) $ 40 $ (677) $ 5 $ (761) $(1,433)
======= ======= ======= ======= ======= =======
PROPERTY & CASUALTY OPERATIONS GROSS WRITTEN PREMIUMS
- ------------------------------------------------------------------------------------------
THREE MONTHS ENDED DECEMBER 31 YEAR ENDED DECEMBER 31
($ MILLIONS) 2004 2003 2004 2003
- ------------ ---- ---- ---- ----
STANDARD LINES $1,441 $1,575 $5,936 $6,486
SPECIALTY LINES 733 670 2,825 2,629
------ ------ ------ ------
TOTAL P&C OPERATIONS $2,174 $2,245 $8,761 $9,115
====== ====== ====== ======
Page 3 of 8
PROPERTY & CASUALTY OPERATIONS NET WRITTEN PREMIUMS
- ------------------------------------------------------------------------------------------
THREE MONTHS ENDED DECEMBER 31 YEAR ENDED DECEMBER 31
($ MILLIONS) 2004 2003 2004 2003
- ------------ ---- ---- ---- ----
STANDARD LINES $1,062 $1,173 $4,582 $4,561
SPECIALTY LINES 619 547 2,391 2,038
------ ------ ------ ------
TOTAL P&C OPERATIONS $1,681 $1,720 $6,973 $6,599
====== ====== ====== ======
PROPERTY & CASUALTY CALENDAR YEAR LOSS RATIOS
- ------------------------------------------------------------------------------------------
THREE MONTHS ENDED DECEMBER 31 YEAR ENDED DECEMBER 31
2004 2003 2004 2003
---- ---- ---- ----
STANDARD LINES 66.9% 67.5% 70.7% 98.1%
SPECIALTY LINES 63.0% 67.7% 63.3% 89.6%
TOTAL P&C OPERATIONS 65.6% 67.5% 68.4% 95.6%
TOTAL P&C COMPANIES (a) 72.2% 76.1% 74.6% 115.4%
(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.
PROPERTY & CASUALTY CALENDAR YEAR COMBINED RATIOS
- ------------------------------------------------------------------------------------------
THREE MONTHS ENDED DECEMBER 31 YEAR ENDED DECEMBER 31
2004 2003 2004 2003
---- ---- ---- ----
STANDARD LINES 101.5% 101.2% 105.5% 143.0%
SPECIALTY LINES 88.2% 92.0% 89.6% 117.4%
TOTAL P&C OPERATIONS 96.9% 98.6% 100.5% 135.6%
TOTAL P&C COMPANIES (a) 103.0% 104.8% 106.3% 154.2%
(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.
PROPERTY & CASUALTY CALENDAR YEAR LOSS AND COMBINED RATIOS BEFORE CATASTROPHES (a)
- ------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 2004
-----------------------------------------------
LOSS RATIOS COMBINED RATIOS
----------- ---------------
STANDARD LINES 65.4% 99.8%
SPECIALTY LINES 62.6% 88.9%
TOTAL P&C OPERATIONS 64.5% 96.4%
(a) The impact of catastrophes on the Property and Casualty calendar year loss
and combined ratios for the year ended December 31, 2003 were not
meaningful given the significant prior year reserve development recorded
in 2003.
Page 4 of 8
PROPERTY & CASUALTY GROSS ACCIDENT YEAR LOSS RATIOS
- ---------------------------------------------------------------------------------
ACCIDENT YEAR 2004 ACCIDENT YEAR 2003 ACCIDENT YEAR 2003
EVALUATED AT EVALUATED AT EVALUATED AT
DECEMBER 31, 2004 DECEMBER 31, 2003 DECEMBER 31, 2004
----------------- ----------------- -----------------
STANDARD LINES 67.2% 65.4% 62.1%
SPECIALTY LINES 64.1 67.1 65.0
TOTAL P&C OPERATIONS 66.3% 65.9% 63.0%
PROPERTY & CASUALTY NET ACCIDENT YEAR LOSS RATIOS
- ---------------------------------------------------------------------------------
ACCIDENT YEAR 2004 ACCIDENT YEAR 2003 ACCIDENT YEAR 2003
EVALUATED AT EVALUATED AT EVALUATED AT
DECEMBER 31, 2004 DECEMBER 31, 2003 DECEMBER 31, 2004
----------------- ----------------- -----------------
STANDARD LINES 69.2% 67.8% 64.0%
SPECIALTY LINES 63.5 68.9 64.9
TOTAL P&C OPERATIONS 67.4% 68.1% 64.3%
Page 5 of 8
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.
- - Net written premiums decreased $111 million for the fourth quarter of 2004 as
compared with the same period in 2003, primarily due to lower new business as
competition increases and carriers protect renewals, as well as intentional
underwriting actions in business classified as high hazard.
- - Standard Lines achieved average rate increases during the fourth quarter of
2004 of 0.8%.
- - Net income for the fourth quarter of 2004 decreased $2 million as compared
with the same period in 2003. Fourth quarter results were adversely impacted
by a $36 million after-tax bad debt provision for insurance receivables. This
item was partially offset by improved current net accident year loss ratios.
SPECIALTY LINES provides a broad array of professional, financial and specialty
property and casualty products and services.
- - Net written premiums increased $72 million for the fourth quarter of 2004 as
compared with the same period in 2003, primarily due to increases in rate in
the professional liability lines of business.
- - Specialty Lines achieved average rate increases during the fourth quarter of
2004 of 6.3%, primarily across professional liability lines.
- - Net income for the fourth quarter of 2004 increased $32 million as compared
with the same period in 2003, primarily due to increased production, improved
current net accident year loss ratios and improved net investment results.
Page 6 of 8
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 $365 million for the fourth 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 in the fourth quarter of 2003 were $353
million.
- - Net results for the fourth quarter of 2004 increased $68 million as compared
with the same period in 2003, principally due to the absence of the $130
million after-tax loss recorded on the sale of the Group Benefits business
during the fourth quarter of 2003. Additionally, the absence of $27 million
after-tax of reserve strengthening recorded in the fourth quarter of 2003 for
the individual long term care products contributed to the improvement in net
results. These improvements were partially offset by the absence of favorable
results from the sold businesses and the stranded overhead expenses related
to these businesses.
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 fourth quarter of 2004 increased $33 million as compared
with the same period in 2003, primarily due to $14 million after-tax of
non-recurring income and a decrease in the bad debt provision for reinsurance
receivables. These items were partially offset by lower operating income from
CNA Re, which was placed in run-off in October of 2003.
NET INVESTMENT INCOME
Pretax investment income increased $26 million to $462 million for the fourth
quarter of 2004 as compared with the same period in 2003, due in part to
increased limited partnership income, the inclusion within net investment income
of separate account income previously reflected within other revenues, and
improved overall performance on the core bond portfolio. These increases were
partially offset by declines associated with higher interest expense on funds
withheld and other deposits, and reduced investment income resulting from the
sale of the group benefits and individual life businesses.
Page 7 of 8
ABOUT THE COMPANY
CNA is the country's seventh 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.
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) 810-0924 OR FOR INTERNATIONAL CALLERS (913) 981-4900. 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 FEBRUARY 17, 2005. THE REPLAY CAN
ALSO BE ACCESSED BY DIALING (888) 203-1112 OR FOR INTERNATIONAL CALLERS (719)
457-0820 AND USING PASSCODE 227455. FINANCIAL SUPPLEMENT INFORMATION RELATED TO
THE FOURTH QUARTER RESULTS IS AVAILABLE ON THE INVESTOR RELATIONS PAGES OF THE
CNA WEBSITE OR BY CONTACTING KEN DE VRIES AT (312) 822-1111.
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.
# # #
Page 8 of 8