CNA Financial Announces 1st Quarter 2007 Results.CHICAGO -- CNA Financial CNA Financial Corporation (NYSE: CNA) is a financial corporation based in Chicago, Illinois, United States, and noted for its 600 foot tall red headquarters building there. Its principal subsidiary, Continental Casualty Company (CCC) was founded in 1897. Corporation (NYSE NYSE See: New York Stock Exchange :CNA (Certified NetWare Administrator) See Novell certification. ) today announced first quarter of 2007 results, which included the following items: * Net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $307 million. * Net income of $296 million, or $1.09 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. * Property & Casualty Operations combined ratio of 95.1%. * Net operating return on equity of 13.1%. * Book value per common share Book Value Per Common Share A measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly. Formula: of $37.34 at March 31, 2007, as compared to $36.03 at December 31, 2006. * On April 25, 2007, the Board of Directors declared a quarterly cash dividend of $0.10 per share. [TABLE OMITTED] (a) Management utilizes the net operating income financial measure to monitor the Company's operations. Please refer to Note N of the Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge within the 2006 Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for further discussion of this measure. [TABLE OMITTED] (a) The three months ended March 31, 2006 per share results available to common stockholders from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the are reduced by $19 million, or $0.07 per share, of undeclared but accumulated preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. dividends. The undeclared but accumulated preferred stock dividends relate to the Company's Series H Cumulative Preferred Stock Cumulative preferred stock Preferred stock whose dividends accrue, should the issuer not make timely dividend payments. Related: Non-cumulative preferred stock. which was repurchased from Loews Corporation on August 8, 2006. Net operating income from continuing operations for the three months ended March 31, 2007 increased $73 million as compared with the same period in 2006. The improvement in net operating income was due to increased net investment income, favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. net prior year development in the current year as compared to unfavorable net prior year development for the same period in 2006, and lower acquisition expenses. These increases to net operating income were partially offset by increased catastrophe losses. The Property & Casualty Operations produced combined ratios of 95.1% and 96.9% in the first quarter of 2007 and 2006. "CNA came through with a very solid first quarter," said Stephen W. Lilienthal, Chairman and Chief Executive Officer of CNA Financial Corporation. "Along with a 31% increase in net operating income, our core Property & Casualty Operations' combined ratio improved nearly 2 points to 95.1%. We are also very pleased to have announced a common stock dividend for the first time in more than 30 years. Financially and operationally, CNA is stronger now than it has been for many years. This action symbolizes our number one commitment - delivering shareholder value." Net income for the three months ended March 31, 2007 increased $67 million as compared with the same period in 2006. This increase was due to increased net operating income from continuing operations, partially offset by decreased net realized investment results. Net realized investment results decreased by $14 million for the three months ended March 31, 2007 compared with the same period in 2006. The decrease in net realized investment results was primarily driven by an increase in interest rate related other-than-temporary impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. losses. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] (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 asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. , environmental pollution and mass tort A mass tort is a civil action involving numerous plaintiffs against one or a few corporate defendants in state or federal court. As the name implies a mass tort includes many plaintiffs and law firms have used the mass media to reach possible plaintiffs. exposures. [TABLE OMITTED] (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. [TABLE OMITTED] [TABLE OMITTED] 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. This business also includes excess and surplus lines, as well as insurance and risk management products sold to large corporations. * Net written premiums decreased $29 million for the first quarter of 2007 as compared with the same period in 2006. Standard Lines retention declined 1 point to 79% as compared to the same period in 2006. Rates on average decreased 3% during the first quarter of 2007. * Net operating income increased $45 million for the first quarter of 2007 as compared with the same period in 2006. This increase was primarily driven by increased net investment income, favorable net prior year development in 2007 as compared to unfavorable net prior year development in 2006, and lower acquisition expenses. These increases to net operating income were partially offset by increased catastrophe losses of $12 million after-tax compared to the same period in 2006. * Net income for the first quarter of 2007 increased $18 million as compared with the same period in 2006. This improvement was primarily attributable to improved net operating income, partially offset by decreased net realized investment results. Specialty Lines provides a broad array of professional, financial and specialty property and casualty products and services. * Net written premiums increased $2 million for the first quarter of 2007 as compared with the same period in 2006. Specialty Lines retention decreased 2 points to 86% as compared to the same period in 2006. Rates on average decreased 4% during the first quarter of 2007. * Net operating income increased $4 million for the first quarter of 2007 as compared with the same period in 2006. This increase was primarily driven by an increase in net investment income, partially offset by less favorable current accident year results. * Net income decreased $4 million for the first quarter of 2007 as compared with the same period in 2006. This decrease was attributable to reduced net realized investment results, partially offset by increased net operating income. Life and Group Non-Core primarily includes the results of the life and group lines of business that have been placed in run-off. Net earned premiums Earned premium is the portion of an insurance written premium which is considered "earned" by the insurer, based on the part of the policy period that the insurance has been in effect, and during which the insurer has been exposed to loss. relate primarily to the group and individual long term care businesses. * Net results for the first quarter of 2007 increased $13 million as compared with the same period in 2006. This increase was primarily due to improved net realized investment results and an increase in results for life settlement contracts. Corporate and Other Non-Core contains certain corporate expenses such as interest on corporate debt, and losses and expenses related to the centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. 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. * Net results for the first quarter of 2007 increased $32 million as compared with the same period in 2006. The increase in net results was primarily due to improved net realized investment results, increased net investment income and decreased net prior year development. These favorable impacts were partially offset by an increase in interest costs on corporate debt. Net Investment Income Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern net investment income for the first quarter of 2007 increased $38 million over the same period of 2006. The improvement was primarily driven by an increase in the overall invested asset base, improved period over period yields and a reduction of interest expense on funds withheld and other deposits. These increases were partially offset by a decrease in net investment income from limited partnerships and the trading portfolio. The decrease in income from the trading portfolio was largely offset by a corresponding decrease in the policyholders' funds reserves supported by the trading portfolio. About the Company CNA is the country's seventh largest commercial insurance writer and the 13th largest property and casualty company. CNA's insurance products include standard commercial lines, specialty lines, surety An individual who undertakes an obligation to pay a sum of money or to perform some duty or promise for another in the event that person fails to act. surety n. , marine and other property and casualty coverages. CNA services include risk management, information services See Information Systems. , underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. , 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 at 10:00 a.m. ET today. On the conference call will be Stephen W. Lilienthal, Chairman and Chief Executive Officer of CNA Financial Corporation, 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://investor.cna.com or you may go to the investor relations Investor relations The process by which the corporation communicates with its investors. 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 May 7, 2007. The replay can also be accessed by dialing (888) 203-1112 or, for international callers, (719) 457-0820. The replay passcode is 3341936. Financial supplement information related to the first quarter results is available on the investor relations pages of the CNA Website or by contacting David Adams David Adams may refer to:
FORWARD-LOOKING STATEMENT forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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. In evaluating the results of the Standard Lines and Specialty Lines, management utilizes the combined ratio, the loss ratio, the expense ratio and the dividend ratio. These ratios are calculated using accounting principles generally accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) financial results. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios. This press release may also contain financial measures that are not in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with 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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