CNA - Earnings call 3 2023 | CNA Financial Corporation

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Operator

Ladies and gentlemen, good day, and welcome to the CNA Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the call over to Ralitza Todorova, Vice President of Investor Relations and Rating Agencies for opening remarks and introduction of today's speakers. Please go ahead.

Ralitza Todorova

Thank you, Jason. to of welcome XXXX third and results. financial morning, CNA's our discussion quarter Good

earnings presentation the press were quarter third Our release, morning of website, are section released and and available Relations on Investor our www.cna.com. this supplement financial

Chairman Dino Scott Financial will Executive Chief Chief Robusto, today Officer; and Speaking Officer. be and Lindquist,

remarks, open the prepared for questions. their Following line we will

from uncertainties in Today's SEC the risks to forward-looking statements Any non-GAAP financial call measures. results the during may include made press most is actual risks statements forward-looking and that and call. statements differ those recent cause and CNA's in materially the references to concerning release may involve filings. Information earnings contained

only during In or to Monday, of update today, XXXX. this any any addition, statements October statements forward-looking call. obligation the revise speak made as CNA forward-looking XX, expressly disclaims

to and information other press Regarding most non-GAAP have release, filings our measures. other financial with in been Reconciliations measures comparable SEC. earnings GAAP and supplement the provided the

being A and is website. This webcast. our the replay call be on call recorded may accessed of

intent statements. reading not will to a may please meaning the that could call, note transcript errors it Chairman alter this our the I CEO, call contain of transcript that materially the are and accuracy, of transcription reviewed the may With for be Robusto. that, you thus over or turn If Dino

Dino Robusto

Life core significant P&C levels in improved third continued record in & to CNA gain, increase lower In driven produce investment quarter, Thank results loss Ralitza, of the morning strong with good Group. and underwriting you, a all. and by results underlying very catastrophe income, income higher

rate increases across where accelerated. accounts middle and segment inflation. lines, those in be there trend we the lines, that these And excess have rates social as point this driven continued. in we and I saw units. adversely higher market, continued this need prior for We appropriate with rate that inflection continues auto been which construction are specifically production addressed are broad commercial our awareness by line appropriate by national in believe marketplace. push to Commercial quarter, to increasing we quarter, top casualty have that the affected discussed Last in quarters, longer for And and in business for an our success is Our pleased

Drilling Core the year, to quarter, down reserve after quarter accounting. increased review $XX in to in $XXX million a annual third the assumption loss an Group & in essentially in on resulting of the in our million resulted from details year in assumption $XXX prior review for total. quarter. income reflect the reserve We the the conducted Life period. neutral million LDTI Last change adjusted tax considerably

& of XX%. still Group Excluding Life income in periods, reserve both core up was assumption the impacts review

or ratio $XX income the at strong gain X.X ratio pretax with Group results. investment reflecting up compared the XX% with a quarter lower combined was catastrophe was portfolio and a alternatives income in year. and Net XX.X%, investments provide income and P&C Life up a investment in the record gain in portfolio, to higher detail higher Scott will income loss third pretax losses. compared prior combined to was $XXX invested P&C and more XX% points positive greater to points quarter, in losses income, in last due the & assets. all-in or yield on of The underlying volume higher fixed cat of X.X of underwriting our million quarter core year our million

expense development combined was the X.X of record cat P&C and gain. for the loss generating quarter $XXX adjustment XX.X%. underwriting ratio benefited in from International. underlying quarter. in a points underlying XX% catastrophes. catch-up reinsurance the XX.X%, Our was quarter average ratio favorable in underlying ratio X.X was in million also The acquisition-related The by was third quarter below P&C a result pretax The our expense ratio XX-year the points Favorable was

In ex-captive X% profile. in written rate premium reflected net the the year market in underwriting achieved certain prior exposure and the consistent premiums included gross change of with favorable half a hard leveraging quarter of and the quarter, took increase because of growth than conditions first on of Renewal Exposure premium. further written X%. in growth lower we the improve X% quarter change X% X%, change accounts, of we the an the loss is to actions

As an large accounts. certain example, we national attachments on participation reduced and increased

we effect to of had in actions last of impacts high comp act changes portfolio experience we metric to that the quarter. quarter. increases continue increase our is property While masking mid-single-digit includes reducing exposure which it work like in and similar the the report, exposure This these in valuation single-digit exposure the positive rate,

competition. was XXXX to there Retention which with exposure based prior aggregate. we and go. level in the for about down we line our our is retention and the trends, run terms And any months some be points the to rate conditions continue compared let Rate can quarter, that in still on expectations. in renewal acts cost first necessary, deem the mix X.X% like in get And is quarter, X given Year-to-date, which the is fluctuation and of long-run account the the XX%, X of when XX% at can't we'll accounts quarter. loss under same covering

X% the was X or of first X% quarter or business million million up $XX $XXX the year. New or months for the in

expense was X.X quarter, XX.X% growth for The was Turning and an was this to the was quarter. Gross premiums this X underlying down which down combined units. underlying to X%, growth XX.X%. X% loss the business and ex-captive XX.X% our XX.X% minus period ratio similar The favorable combined of with ratio minus net ratio written development. all-in includes prior ratio premium points of quarter, was written Specialty second

be the few on such quarters, by to decrease activity and M&A prudent new business business as the to liability lines. approach continues protracted and management opportunities commented business the in driven New last was over our on decline X%, we down

X X% quarter. improved rational we of to [ moderated decreases points the believe that decreases. the price points which and plus the is a third rate round in X pricing up last D&O quarter, Within change second in quarter, reflects price the start driven ] FIML of as by to positive turned the compared quarter Specialty,

hard Although encouraged just by quarter. as result by one a the the mentioned, as know individual to mix I renewing the the can any if be is moderation, accounts quarter, of it too early in is this in inflection impacted

to quarter care Med Mal in in last XX% our up by And to low health Retention the X-month raising Specialty year. successful to X% mid-single year-to-date basis, in remained were and our in in very a strong points X on We XX% in X also quarter rate rates points same programs compared stable business. period continue an to in digits. at affinity increases the additional the produce the XX%

Turning lowest was of improved XX.X% to loss Commercial. X.X the the lowest representing lower combined to in quarterly on the and loss expense X.X The expense XX.X% by all-in ratio stable record. and years. The year of year-over-year the than in last ratio includes XX points was was quarter. underlying combined third the underlying which points in ratio quarter, XX.X% XX.X%, ratio ratio cat The X.X points

up in quarter, XX% quarter grew second premium points ex-captives quarter, earlier. mentioned in in X grew X% rates last to the continued the excellent double fueled X% prior quarter. XX% prior growth commercial Commercial. from Renewal now the business and net of rate XX% And than in quarter, quarter. premiums The growth Gross due I couple underwriting a double-digit strong another in Commercial the of was down double quarter, comparable exposure premium from with plus rates at auto decline written for by had was plus by to X continue to point by digit in are the part, casualty rates new points quarter. We change the that from actions excess the quarter. change the mainly written low Casualty higher improve digit,

the points hard levels. the quarter and increases property were at positive a strong. of their the seen quarterly in were than continuation between the fluctuation have a during double-digit Work of rate Property and continues in slightly market quarter, years. lower In slightly accounts, over national last negative rates comp to the are be pricing prior middle-market we increases levels pricing X very mid-XXs this highest couple low in at rate the

in continued to have below price the Additionally, rise. from growth our remained change several the which as impact the continue medical to assumptions, trend well. last favorably renewal over long-run be trends exposure premiums continue not years. favorable And loss as despite as we cost we increases benefit lowered to Audit trends quarter payrolls positive

decisions our can The the the leveraging evidence in in hard points very few profitability. making underlying XX%, continued with I Commercial underwriters the of our portfolio. comfortable lower retention and and rate on are casualty Commercial business record through consistently the portfolio, the we a strong as optimizing this the solid was well middle the rate new average against as across at accounts they as the seen retention catastrophe market. focus property very be quality while the on increasingly pricing am achieving right this XX-year improvement results down lines, are market, national

last of ratio was X.X the and year XX.X% XX.X% underlying expense loss was For ratio than combined The combined underlying all-in XX.X%. was International. and lower the ratio The is ratio points XX%.

I earlier, ratio quarter. excluding XX.X% the a As our catch-up reinsurance mentioned in International adjustment. acquisition-related And this would benefited be from benefit, International favorable expense the segment

consistent quarter at growth was was written gross premium and International last net premium X%. with written growth X%,

and was line the but year New retention to quarter with business price a prior quarter, basis. on the change similar was million X%, of was strong year-to-date Renewal last $XX down XX%. in at in

to International As contributing before, our growth profitable operation highlighted CNA. consistently is I've

I'll Scott. over And turn with that, it to

Scott Lindquist

Thank our will morning, some Dino Dino, provide information additional good as indicated. I results everyone. you, and on

core core in compares million the last income On and $XX is $XXX million to of our a $XXX of record quarter high. return basis, a Core million equity on year-to-date was X.X%. income year,

ratio last reduced The when expense reinsurance quarter catch-up ratio favorable current third X.X as as P&C in expense lower quarter is by P&C result ratio which year of third a a compared which the acquisition-related is total in the earned year's adjustment well ratio Our segment, expense XX.X%. points. higher expense premium was the International the net XX.X%, decrease of to

that run We a believe reasonable continue rate expense ratio is XX% going forward. to a

development ratio favorable liability. by prior points. offset the X.XX the The P&C impact period management in both development was favorable partially unfavorable quarter on and was a P&C on The year-to-date In development Specialty paid-to-incurred ratio net combined the current professional for was and segment, in surety X.X basis. with

segment results compared $XX produced tort associated of in prior abuse loss quarter. third Our the related period million mass a loss year legacy claims. million largely Corporate million include core in $XX a Corporate prior development, unfavorable segment a quarter to $XX The the charge after-tax to with

environmental our fourth reserves every As a reminder, quarter. and reviewed specialists are

loss essentially In neutral million Group, by to $XXX third for core year. & unfavorable $XX loss we after-tax had update our a XXXX, assumption annual and million core of $XXX impact quarter Both reserve for and million million Life periods impacted impact of the a XXXX. were last $X unfavorable compared QX

unfavorable earlier an this in reflect to estimated million have policy quarter. Life noted underwriting adoption care during year. year was business, prior limited adopted compared while been from quarter, our the XXXX this have calls up $X the we partnership for income mostly results include Group of adjusted investment pretax performance, accounting to $XX driven by which & of the results for $XX million we million cash buyouts long-term pretax quarter impact the year, earlier LDTI As

quarter's underwriting Group Excluding policy the buyouts, the prior compared Life flat of and to results & reserve year. this assumption impact are updates

year, are structured of reserve and quarter, results on long-term result we GAAP of highlighted to XX includes our our The review year's Slide settlement Each earnings reviews reserving analysis reserves. Life in Group, assumptions essentially neutral & key the reserves. a undertake Life The for presentation. of the this which that underlying our impact third of is update Group care &

assumptions, persistency increase review all thorough and of a morbidity, involves inflation, analysis rate including our cost Our of reserving care, of assumptions.

policy LDTI or under favorable into our future defer long-term into that was Note XXXX of The the impacted. future net net or the some periods. unfavorable on deferral of adjustment favorability The an the assumption into premium periods, of updates accounting, which periods. premium can cohort defers ratio results depending to $X after $XX future unfavorable ratio, result million care reserves million favorability the lowered

XX would on have the of rate where we to like approach combined the care to a current million managing Finally, care, to block. adjustment while Slide mostly this $X update more on reserves, structured will earnings rate business. topic has block last higher our environment a proactive considerably long-term due our long-term favorable this to point interest settlement We I XX And for believe outlook the over of months business favorable assumptions. we to our presentation, provide with the interest you improved

As been and group closed a has closed our reminder, block has business fully since XXXX. since individual our XXXX been

in at achieved longer-duration achieving policy And the in investment duration liability meaningful of have business to has rate counts able favorable we this then, securities since increases environment coupons rate the been benefit and the substantial XXXX support reduction the We while have as to on side, of high-quality, improved since the interest early underlying economics business. attractive reductions. lock

more policies. the block block with we is have average including an XX% with richer age attained drill of derisking presentation, policy inflation individual believe some is LTC since to Slide by characteristics. generally average initiatives an decline an to on hit majority well We rate years discount -- of that and XXXX have using the claim The features policies age Turning and begun and benefits, through block earnings of assumptions. point of open counts. down and mature riders reserves stable on benefits XX into this inflection lifetime This locked-in the individual underway counts in-force XX

X% XX, block, policies and policy individual and The relative pricing. block, believe group the of is block block level years the at features age Only inflation in We feature the appropriate due more modest looking will less reserves and attained On group group has lower and group to more at primarily to appropriately Slide lifetime exposure is significantly priced. the currently rich benefit to peak to relatively characteristics. the benefits. mid-XXXXs lower the features block benefits, compared individual the a XX a

The to by Turning in to loss gain million $XX the net year pretax million driven quarter. in prior $XX investments. to common third $XXX income quarter. and returned which partnership third limited compared a portfolios, the our investment the in Total increased stock quarter XX% was million increase a

Additionally, fixed compared income and quarter. $XX to prior other favorable million was from investments the income year

flow continues portfolio increasing consistent operations. from favorable income strong produce income, steadily fixed has Our to interest of a which as result been rates and cash

second consolidated our X.X% quarter. to effective third year X.X% in income The quarter the was compared X.X% and in of prior the yield portfolio quarter in the

yield & As our significantly to of end yields yield, our of have quarter, rate embedded the effective which today's environment. duration third income now portfolio reinvestment continue Life more rates the to with be is above P&C longer portfolio and Group effective surpassed comparable interest income a

year-end largely the million continues of solid modest per equity, in $XX $XX.XX of X% portfolio, modest with end, quarter very increase including losses or $XX.XX our were AOCI, losses investment in from dividends. balance an Stockholders' billion equity, Net share, At maturity were share. a AOCI portfolio to which $X.X sheet be adjusting stockholders' and amount or XXXX, quarter was security fixed of repositioning. $XX.X of reflective per excluding billion our included for

the rates fixed With at third the the $X.X billion increase loss interest about in net unrealized income portfolio our in during stood at investment quarter end. quarter,

AOCI in LDTI investment of to single the of future portion policy million at the unrealized our liability $XXX a income loss interest adjustment served end. However, offset quarter rate benefits for A by

capital and low leverage schedule. debt maintain to conservative a a We continue well-balanced structure maturity a ratio with

remains of maturities position May we and us the cash very During XXXX. flow November issued in upcoming Operating million senior strong. help notes of year, successfully $XXX to debt the have ahead XXXX

operating highest cash XXXX. the quarter since fact, flow In

operations from third in million, year's the third quarter, quarter. million $XXX was $XXX last from up flow During cash

quarter. The in effective to core XX.X% noted taxes. an rate looking was recent to I on forward, calls, for Turning income effective the as tax expect about XX%. be And have rate we

briefly another topic. Turning to

to related optimize take the million real to expect to post-pandemic in We our impairment Corporate footprint work opportunities environment. segment fourth $XX quarter the in a charge some estate of pretax

to utilize our savings to us technology, additional for future estate continue analytics. evaluate own allow investments expect used which opportunities We portfolio to will make to talent optimization real and further in

quarterly pleased to share our of XXXX. we XXXX, regular to to November XX, shareholders $X.XX on XX, record Finally, of November dividend are announce paid per on be

that, to I with it Dino. turn will And back

Dino Robusto

levels Scott. XXXX, our in Thanks, continued and investment income quarter underlying CNA strong underwriting core income will increased recap, into excellent be management. The P&C with core by driven net going to of a of had tailwind an net income, prudent cat which and improvement levels continue

We accounts improvement high elevated high persistent in need given higher the the historically national in believe which to pricing business, losses. pricing quarter Property longer. at cat watermark we continued in remains for experienced is industry the a package areas our stay in levels and of rational large

runoff care social we'd as most by XX% And pricing inflation Commercial finally, liability improvements our to questions. quarter. policy And had derisk a participants. down improved dedicated Specialty Med block the impact new back impacted has with happy overall, casualty positive since focus And are closed be counts further lines, in more portfolio and the turned major to than pricing long-term the Mal. was take to in management that, the on your

Operator

[Operator Bank of comes Shanker Instructions] America. Josh question Our from from first

Joshua Shanker

ratio are industry. combined in excellent P&C the the look, results So

us You've X better a get years combined can business How with this long underwrite been doing at we right years where now? XX time. for now, to years you what X we from experience are XX, now, this Can about years should ratios be Can the bottom? markets, we compared XX in of frame from thinking are now?

Dino Robusto

Josh. Josh, lower actually with the there back And to about some equities, financial in particular, require I I think crisis, similar insurance a Thanks question, a say have is skepticism for a was mean, would heck considerable best of industry faced for start there 'XX, I can on ratios. a interest generate There's the clearly and whether rates was decrease think a lot longer, strong then could concern industry in all continue combined the it of after players and the Okay. of return the that I responded. in 'XX, question.

years, pricing better specifically what and from for in the going I us to the loss the that we do you its clearly our years to happen pushing do in now, impact things with in And cats or over literally Josh. the industry, XX was discipline think X social or to guess inflation of and it's better I effectively you. resiliency tell long-run And one reasonable few of started and needs It we as cost see think, the guess, I doesn't offer can But terms X in to trends along that it the surprised last reflects elevated I doubled look conditions. XXXX industry, the responded, increased last returns. to I best years this maintain in what's X it that's of

Joshua Shanker

they in in those a who of rate on changes terms? block. sort the terms know, I great at maybe policies looking the But take-up to I the maybe long-term quarter are the when terms of results maybe the mean, or long-term I'm lot I past. gears, the are alternatives guess, are and in what offered P&C of the Are ongoing, reserve policy? that, as the percentage third as a Switching changing being review what's And of in care book offered extent Okay. with care a

Scott Lindquist

Josh, here. it's the Thanks Scott question. for

reduction are buyouts the years And We year. actions, those increases. options. rate they in really we few with conjunction last with started back in a connection started offered So rate increases. late the do rate benefit Same We again, with actually. those policy

our several We significant going to state. year. by So for in activity vary had amount states it's large group of this earlier business state

I It's business, just take X%. the X% to still go. we've in group offers. early higher, the very as as the midst X% the rates But somewhat far individual, would head, to these days top of X% off much rates take still we're say, on of seen

a been buyouts. offered, really Again, about I policies so. piece, right benefit Some or say reductions now, small are policy have it's been numbers these proportion of ago and the relatively just we still of right developing. would started that a buyout year

continue runway forward. to our forward buyout and some programs that. year expect we in go So rate options fairly we expect ongoing. on this -- continue achieving still going those are were to increases, We're that have We and going rate offer successful to increase to

Joshua Shanker

only to benefit look Just understand, policies in been offered these single-digit at buyout it's to have I small a percentage reduction? taking amount the options? or a of the the either of policies, when the up, a percentage And

Scott Lindquist

That's correct. correct. That's

Joshua Shanker

the my your when the someone position? it is a or benefit. And when I'll limit when economics years Or of position reduction, to CNA your immediately payout are beneficial your says, that somebody balance takes happens benefit I'll what to sheet, capital for of What occurs? capital cap number

Scott Lindquist

our statutory improvement. GAAP. and an both that's a reserves, that's I So in mean, reduction

So that it's, policy in when that obviously, reflective results of going the lower our reflected risk that's and happens. forward, in

Joshua Shanker

Premium goes goes Is down, I but capital that guess. up, right?

Scott Lindquist

down. Reserves because correct, the reserve will come effect, may down, too. come In

Operator

[Operator next Shields Meyer from Instructions] question comes KBW. from Our

Meyer Shields

question on One can. care, if long-term Great. I

So that notes that for higher are premium XX% period? trend Slide XXXX. the corresponding rates than What's over number loss XX

Scott Lindquist

that? I'm sorry, loss just can trend? you and Corresponding repeat

Meyer Shields

to Yes, XX%. the the corresponds loss trend that

Scott Lindquist

head. off-line, so have follow-up that for on of that top the that We my you. we Yes. number take I can don't get can

Meyer Shields

small do. of will And questions. other then Perfect, Yes. couple a

I gross premium to First, just And but written almost impact has has going on that third-party trying an understand I was been X understand there. underwriting years. results, declining what's that, captive on been for not

Dino Robusto

Meyer. we -- Yes. cell It's captive so all to a the on and there, some phone premium the there's merger the phone it respect been and capital. is, cell with business, lost and That's really is

Meyer Shields

and up loss this industry that issue? it's problem with are then CNA-centric, And What being no to but auto with trends, absolutely an hear is not not perpetual has That's to you anything able long seem time, great has increases the commercial that struggling rate been catch Okay. longer a so accelerating. of and differently final this is helpful. question, for do

Dino Robusto

though a the that's in don't on even been thing commercial it similar commercial complex auto. inflation to personal think issue Yes. we some the same impact seems impacts it It to auto, tend around casualty catch-up seems It's But it, sort The of is really trends big be auto. be you have -- I clearly the quicker game has results of lines. impact. had to on sort BI losses. a it than excess a big impacting, on social see And

so to this to but And it's continuing And off a be longer. it seems And game. a going catch-up think it I up trend just momentum. picking started slowly, for think I really is do be

And more in to do. just and And do something really, you particularly the second that's why we on whenever in an And like It that's it what quarter we And have seen this increase that, to needs been quarter. pricing. we've it. you. third focused highlight we've

because Now quicker. keep the impacts inflation, social just we got I pushing to it think,

Operator

over [Operator Robusto Instructions] to This conference would I remarks. There Dino back are like closing no any more turn questions concludes in to for the question-and-answer queue. the session. our

Dino Robusto

today, No, great. everyone, us you and quarter. in talk we'll to for that's Thank joining you, a

Operator

Conference Thank attending concluded. has you today's for presentation. now

You may disconnect. now

CNA Financial (CNA) 30 Oct 232023 Q3 Earnings call transcript