CNA - Earnings call transcript Q3 2024 | CNA Financial Corporation

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Dino Robusto

[ The transcript was presubmitted by CNA Financial Corporation. No live call was conducted for the third quarter earnings call. ] In the third quarter, we produced very strong results with increased core income, the highest quarterly top-line growth of the year, excellent profitability including the sixth consecutive quarter with pretax underlying underwriting gain of $200 million or greater, higher investment income, and a one point increase in renewal premium change for both Commercial and Specialty compared to the second quarter. On a year-to-date basis, core income is a record high at $974 million with an all-in combined ratio of 95.6% and an underlying combined ratio of 91.5%, up a little over a half point compared to the first nine months of 2023. Drilling down on third quarter, core income was $293 million including a $73 million year-over-year increase in net investment income to $626 million pretax.

Our alternatives portfolio generated over half of the increase, and the growth in our fixed income portfolio was due to both a higher book yield and a larger invested asset base. The P&C all-in combined ratio was 97.2%, with previously announced catastrophe losses of $143 million or 5.8 points of the combined ratio, in line with the third quarter average over the last five years. Prior period development for P&C overall was favorable by 0.2 points of the combined ratio. X% ratio the represents strongest X% quarter, of year combined quarter fifteenth production growth underlying written the XX%. In gross premiums. below we with in P&C net of captives the XX.X% consecutive performance premiums written The excluding in and growth achieved the was for the second U.S. with quarter one at Renewal premium stable up in change X%, point P&C overall the but was a point to to X%, International and down by in X%. increases in the Rate U.S. aggregate while remained negative. International in went stable the slightly in X% at rates P&C premium retention XX% at this quarter an additional even achieved remained high the as point change we of U.S. renewal in

business New the in strongest XX% with the reflecting of growth $XXX new the year million, contributing business growth. was quarterly segment each quarter up operating to positive to

than basis. growth also The as XX% commercial premiums low and is which the three of combined captives quarter. a and in combined the at points we was all-in prior gain up a quarter well recent auto year-to-date grew quarter, a ratio was our underlying of underwriting more of to $XXX shift point national X.X impact XX.X%, in ratio $XXX the this toward embedded the excluding Net The underlying units, as in a Catastrophe was run ratio million. Gross mix was written result was high resulting XX.X%, a the XXX.X%. a remarks low was as trend, of to premiums record quarter business lower growth The ratio XX%. written underlying Commercial points ratio. second the from each loss million addressed accounts quarter. added on of continuation XX% losses XX.X% loss being record last continuing the half activity X.X expense combined of record the for our long the higher of the year Turning than in

accounts XX% points a strongest in improved level market we retention accounts dropped this as our the construction middle second pricing national to change all casualty exposures. XX%, was have XX% were we change quarter, Commercial from dropped year, range X%. was in excess the in Renewal Commercial a and few property Retentions rise from quarter where in in away excluding get the last still workers' the X%. down and premium points premium Commercial point but Commercial the liability to X%, mid-single-digit on was grew continue business was the premium point New healthy walked renewal for but in Renewal compensation auto and XX%. Rate and couldn't quarter. units two one business up were change up to been XX% general compared as rates was rates and high the two a to single-digits. with in this the double-digit year. continue change Primary increase rate necessary points quarter to rates auto in

in results, XX%. but liability was to primarily consecutive rates from commercial expense the the lines, payrolls. Within which quarters rate be now ratio primary negative in quarter XX.X% ratio have pricing beneficial favorable due to continue For second management increases declines. and including general due and to workers' underlying combined rising a experienced we The renewal the casualty, casualty profitable compensation, was premium change quarter lines, the at excess XX.X%, loss from ratio all-in loss In see underlying XX.X%. exposure auto, Specialty, liability ten point was third and very half ratio continued remained pressure of up

quarter adjustments cost as While small in react compression continue of portends loss earn this trends rates in the underlying to estimate with latter compared production protracted quarter the second continues prudently. The best of portfolio in growth future performance the margin the the accident quarter for improved Specialty X% reflect we of growth the in, to our perform to fruition surety quarter achieved premiums period very decreases ratio loss the well, XXXX. Specialty half some several so written Commercial potential and impacts double-digit and in X%. came excluding year written this our We where project captives long-standing this accounts. gross of premiums quarter backlogs below the net with of growth of to

retention and grew business growth private new business financial quarter, quarter. this last liability institution quarter, officers digits digits similar from were healthcare in Our grew Specialty, (D&O). Within management our and in this flat directors to strong and mid-single and business rates aggregate mid-single double-digit

increases We continue rate single-digit high secure healthcare business. in our to

about rate single-digit this years. continue attachment through continue programs and liability level two financial affinity a institutions Retention still limits selection while point continue recent Our over more declines, to the by this in optimize and at Notwithstanding basis, points. rates on rate stable our to for fluctuate management improved we low remained and Specialty portfolio managing produce quarter. quarterly increases, negative, to a stable and was XX% has risk and in and

The in to in underlying catch-up higher currency was or to be for employee aggregate International, including all-in and ratio down International in strong X% prior there and to the premiums points low are current product, flat points resulting to and or excluding to and grow in allowed compared and very reinsurance strong continues growth segment an favorable turned adjustment be differences business the of single-digit XX%. pricing the premiums. ratio increase costs driven in at by geography underlying the XX.X% in which but negative expense combined X.X written International us in in in Rates a combined gross ratio quarter were quarter. Competition to ratio XX% continue written year improve fluctuation. quarter; two $XX competition our X%, prior by primarily was this continues by catastrophe new retention quarter. quarter Net an expense of by million related quarter, related acquisition XX.X% For loss XX.X%, year the the in of XX.X%, XX.X% ratio with losses. The

Scott Lindquist

core X% best up of investment and which core XX.X% to CNA's prior third annualized year million $XXX an the record million, is underwriting another quarter slightly while to return reflects and equity of income translates strong of core results. quarter $XXX on a quarter, is above income year to date of

management majority attributable to accident unfavorable casualty development the commercial Commercial prior in Our years and related multiple P&C quarter earned of current net in the third this the liability development to in was year XXXX. the largely for in expense A and In back ratio period the in higher was favorable is period across development prior is by by attributable the was adjustment quarter accident on offset in auto overall, and International segment, XXXX was unfavorable development liability in period quarter. segment, workers' to the to impact by X.X year years, net was accident which quarter. premiums acquisition offset excess unfavorable the slightly XX.X% development prior Specialty compensation, development in year quarter. was prior slightly the neutral flat reinsurance surety In favorable about years favorable ratio mostly in and current general segment, was related development driven In P&C combined XXXX. to period prior in favorable points International recent with favorable the favorable development prior, prior overall accident quarter. The the catch-up development

a the the We million negligible and review Group $X environmental prior our policy to to loss to core $XX reflected related $XX in a the has a include in after-tax related & year year in recorded Life core efforts the investment earnings results quarter. to annual the have $XX prior for prior of pretax current prior our related be quarter $XX compared that, mass buyouts. third driven the of of a Our million planned million a the a reserve include of quarter, million $XX amortization Corporate million and third results the compared segment the year our transfer, will pollution $XX and asbestos million a core segment, fourth charge quarter we in cash million segment Group development the million loss million associated compared in to quarter. million $XX gain of loss to deferred produced the disclosed environmental the a charge in year $X primarily segment. In prior unfavorable quarter, as compared compared Corporate also the the million $XX after-tax recent loss year The The from we by quarter, note after-tax for Life $XX includes years, income tort previously. a Corporate income asbestos abuse period impact from largely while of to quarter results prior quarter. claims, was with office charge legacy loss to in been quarter the underwriting case performance, consolidation in up & portfolio alternatives

underlying In addition, Care & a reserve both third XXXX XXXX. Each impact we quarter, undertake by Targeted the periods structured for favorable, reserves. analysis LTC updates The Duration settlements the (LDTI) includes which and assumption were future unfavorable $X in impact impacted and million and in our reserve of Group, our aftertax under LTC reserving into being with our assumption for deferred updates, Long-Term favorability unfavorable year assumptions a periods accounting. (LTC) the $X Improvements were settlement annual for reviews Life structured million Long

for reserves reviews & an of essentially reserve The earnings Life our Taken reviews presentation. results together, resulted the our annual Group. on quarter are impact to third of neutral Slide XX highlighted in

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third to million gain, in other by $XX quarter. the total compared net million income quarter. Fixed million to an investment driven our investments, compared in up the income of with an gain, prior year income, was increase prior investments quarter pretax quarter, or quarter or X% the of current in the in X.X%, year generated which a portfolio, X.X%, the $XXX The compared $XX returned Turning and $XXX to $XXX prior million million alternatives primarily increase was XX%. year

quarter. compared from favorable core yield investments solid income with consolidated fixed and X.X% to from was flow have to be the sheet in yield of income the our reinvestment billion rate income, third income of a $XX.XX fixed was year full increase & AOCI $XX.XX quarter, from fourth the or income X.X% and Our of equity billion, to XX, per including The to we prior yield to portfolio very share, effective share, our or our $X,XXX expect line other steadily (AOCI) fixed continue about and $XX.X in because about per X.X% income million, full portfolio or an Life our portfolio rates rates for in effective portfolio quarter of balance environment, to dividends after consistent XXXX contributions X% the accumulated cash increasing which on with operations. continues strong excluding X.X%. Based year in interest XXXX. At XXXX from $XXX comprehensive current Stockholders' million other fairly XXXX. effective income up above of equity $XX.X P&C at of been year Reinvestment continues Group end, are provide X% increase stockholders' year-end adjusting quarter, September be paid. income the bringing be the figure to as income

falling quarter-end. unrealized of As net reduced was income $X.X during the to of as loss our a billion result rates fixed the portfolio interest in quarter,

our excluding of next debt-to-capital of first Our remains just AOCI the million and maturity under quarter debt in due XXXX. XX% is $XXX

earnings Companies dividends holding reflecting XXXX surplus of billion, for we the capital company. Operating cash Continental Finally, was from net statutory ended up $XXX of the paid our strong combined prior the investment flow premium reflect The quarter quarter cash results modestly with as and $XX.X year-end compared Casualty to million to strong statutory $XXX at fourth million cash quarter. strong in in year ceded reinsurance reflecting operating underwriting Despite this, results. remains payments occurred flow the current year's strong and quarter. certain flow that quarter's for last

on period, transaction annuity with Company. accomplishes full the risk taxes, a and we billion, expectations. We XX.X% to purchase previously transferred pension XXXX, core for pension to line $X XX.X% fourth our obligations the results. our closed while plan rate October transfer our on a that of effective Turning of obligations transaction year pension the on will the year-to-date impact income our U.S. contract, of the This XX%, for tax protecting is third in legacy group XXXX or XX, was Through over participants. approximately announced significant quarter, which Life Metropolitan legacy Insurance de-risking quarter

transaction the loss million pretax one-time, This result fourth recognition tax) ($XXX will accelerated is from this non-cash, noted, previously the XXXX. we of charge the quarter largely in of actuarial settlement of by $XXX equity. other impact As This pension driven finalization in assumptions. will net of of the charge a cash for The income, impact which comprehensive not fourth flow charge of acceleration or depend charge core income actual and net does other accumulated actuarial not XXXX. will stockholders' quarter on such income into million,

to information Form further please For XX-Q. quarter refer on this XXXX third transaction, our

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

Dino Robusto

four-quarter CNA a for levels of Record first income third underwriting period. record has most profitable and prudent quarter an reflective following of core excellent on year-to-date gross on had are from half, levels disciplined two in a our underlying generated and up net basis strong the recent and core quarter very up income catastrophe X% investment second and which points and achieved of management, the written is growth strongest high growth of premiums excluding execution We represents the captives, year. income. quarter,

trends. We which continue are achieving cost exceed strong the in renewal long-run pricing inflation, lines loss impacted by most social increases to

remains XX%, quarter at successfully market and the look retention secure to highest to new to our ability on allow us navigate to while strong even forward stepping in competitive opportunities performance, any of quarter to this growth optimistic and providing was you to Our continue capitalize business quarter. year-to-date we required remain our landscape our very year. We returns. Building about the the next profitably, production when best hesitation our grow back the comments without on doesn't the

As work announced across CNA, in of our the the last record I to Officer continue am has Board profitable an and the Doug CNA. role on that who serve X,XXX at Executive Company, drive to It talented I President of of Executive together members team forward. continue growth. me to absolute the CNA's build CNA approximately extremely CEO been X closely of to going the track of as part because with pleasure transitioning will the the forward effective my will the large will success with for to as organization years, over and earlier new the confident in leadership January remarkable team we Chairman role becomes of XXXX, be look X, year, in I Chief Doug, the to Worman opportunity

Operator

each as questions have we well management focus and CNA for questions and timely shareholders our earnings quarter's topical invite address and as submit we release. to in received for some Below of analysts industry. advance We areas some

Unknown Analyst

Are differently you you that the on anything seeing makes about workers' feel compensation line?

Unknown Executive

about Though up medical below cost are trends to profitable. be much continue they workers' trend We continue few a averages cost years inflation, This due loss ago that historical little never loss feel were line long-run based a lowered. bit higher to great remains we to our compensation. where they on longer-run from assumptions

Unknown Analyst

increased on claims? casualty plaintiff Are you seeing attorney representation

Unknown Executive

over years aggressive to drivers we attorney play the has The Yes, in bar been our last continue the dynamic several social higher representation book. this major of one lines increasingly and inflation out. see plaintiffs' on casualty of

Unknown Analyst

risk impact on will to As expenses what run-rate be pension a on transaction, the transfer basis? the

Unknown Executive

on income. this the of closed pro-rata transfer in ago earnings into will our transaction This weeks record for actuarial reflects that defined we actuarial approximate which earnings, unamortized outside accounting charge fourth billion benefit settlement course (after-tax) into unamortized net of of We AOCI core in risk years our We a amortized pension be an obligation. future pension $X.X off. portion several be would runs non-cash otherwise loss obligation a In incur loss pension normal our about that net earnings. resides previously where million will disclosed approximately $XXX XX% of one-time, quarter in we as

forward, component the expense at look for of by into pension H XX% minimal Each our expenses Note the expense to excluding the net expect all by in equal. (as you we roughly the see you settlement If so reduced and charges. to XXXX be our going roughly now pension the be of our actuarial the will impact on insignificant assets year, loss else pension obligation we've third continue would supporting XX-Q, XXXX quarter financials reduced XX%) is pension,

will on interest including XXXX total are in December we results. go-forward regarding information our disclosing assumption As additional and moving there first effect assets. pension where our this expected a determine other of that Accordingly, return and XXXX assumptions XXXX, the on parts expense anticipate rates precise updated pension transaction of XX, are reminder, quarter

Unknown Analyst

portfolio half Property In Life this balance CNA's limited Corporate of to Supplement, and to you partnership about shift Financial like & Casualty review looks it recently & allocation? in in of & speak you Other. Can reallocated the Group the

Unknown Executive

in portfolio for Group second our our aid investments the management yields objectives. we reduced $XXX high duration Life portfolio quality, with further & securities allocation the attractive fixed exchange long partnership million. our in by in asset-liability During These quarter that P&C income were limited will redeployed

result extend we also & our Group liabilities Over reinvestment years has the of activity of past cumulative that take of the yields interest achieving the under the maturity significantly higher reserving The this year. of and block, advantage fixed able one risk rates with to Life reduced between gap have level while in duration two assets assumptions. this surpassed our income been our now to portfolio

Unknown Analyst

the there you a line, Supplement, of segment loss International variance happening year, last the a a review for Financial Other me is to this what can in year In $XX CNA's gain million expenses from is here? tell

Unknown Executive

dollar was by favorably of impacted pretax the during pretax International in was the quarter (FX) The expenses line. The third to pound the exchange approximately a the approximately quarter weakening segment's income Other of drove of quarter. million U.S. gain $X driven a the foreign against FX core loss in British compared which $X currency by variance the gain million this XXXX,

has Our denominated reserves is other stockholders' hedging Note revalue that dollar, this the risk the of through dollar syndicate's functional our Lloyd's currency U.S. change syndicate the effectively British and pound thus comprehensive currency in that portfolio within economically Lloyd's income equity. statement. U.S. also reflected the our investment income is to through insurance

CNA Financial (CNA) 4 Nov 242024 Q3 Earnings call transcript