CNA Financial Announces 4th Quarter and Year-End 2006 Results.Insurer Also Announces Election of Jose Montemayor as Director 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 fourth quarter and year-end 2006 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. for the fourth quarter of 2006 of $248 million. * Net income for the fourth quarter of 2006 of $329 million, or $1.22 per diluted share. * Net operating income and net income for the full-year 2006 of $1.1 billion. * Property & Casualty Operations combined ratio for the fourth quarter and full-year 2006 of 99.0% and 96.4%. * Net operating return on equity for the fourth quarter and full-year 2006 of 11.0% and 12.0%. * 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 $36.03 at December 31, 2006, as compared to $31.26 at December 31, 2005. [TABLE OMITTED] (a) Management utilizes the net operating income financial measure to monitor the Company's operations. Please refer to Note O of the Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. 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 September 30, 2006 Form 10-Q Form 10-Q See 10-Q. for further discussion of this measure. [TABLE OMITTED] (a) The year ended December 31, 2006 per share results available to common stockholders are reduced by $46 million, or $0.17 per share, of undeclared 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 three months and year ended December 31, 2005 per share results available to common stockholders are reduced by $18 million and $70 million, or $0.07 per share and $0.27 per share, of undeclared preferred stock 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 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 for the three months ended December 31, 2006 increased $420 million as compared with the same period in 2005. The Property & Casualty Operations produced combined ratios of 95.1% and 101.4% in the fourth quarter of 2006 and 2005, before the 3.9 and 20.0 point impacts of significant commutations and catastrophes. Additionally, net investment income increased significantly. "This was a very good year for CNA," said Stephen W. Lilienthal, Chairman and Chief Executive Officer of CNA Financial Corporation. "Earnings were strong and return on equity was much improved. Our core P&C Operations performed very well. Investment income was strong. We continued to strengthen our balance sheet, and our runoff Runoff The procedure of printing the end-of-day prices for every stock on an exchange onto ticker tape. Notes: If the "tape is late" then it can take a long time to print off all the closing prices. businesses performed in a controlled and orderly fashion. A fourth quarter reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. commutation was the last in a series of commutations that effectively eliminated an interest cost drag on Verb 1. drag on - last unnecessarily long drag out last, endure - persist for a specified period of time; "The bad weather lasted for three days" 2. earnings that exceeded $300 million just three years ago. Overall, CNA delivered in 2006 and is positioned for consistent, sustainable performance going forward." Net income for the three months ended December 31, 2006 increased $546 million as compared with the same period in 2005. This increase was due to the improved net operating results and increased net realized investment results. Net loss from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. includes a $29 million impairment loss related to the anticipated sale of a portion of the run-off business. Net operating income from continuing operations for the year ended December 31, 2006 increased $817 million as compared with the same period in 2005. The increase was due to significantly decreased catastrophe impacts in 2006 as compared to 2005, as well as the favorable full-year impacts of the items discussed in the three month comparison above. The Property & Casualty Operations produced a combined ratio of 95.0% and 98.4% for the year ended December 31, 2006 and 2005, before the 1.4 and 11.6 point impacts of significant commutations and catastrophes. Net income for the year ended December 31, 2006 increased $844 million as compared with the same period in 2005. This increase was primarily due to improved net operating income and net realized investment results, partially offset by unfavorable results from discontinued operations. [TABLE OMITTED] [TABLE OMITTED] [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, 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] [TABLE OMITTED] [TABLE OMITTED] (a) The 2006 net accident year loss ratio evaluated at December 31, 2006 includes 1.3 points, 0.2 points and 0.9 points related to catastrophe losses for Standard Lines, Specialty Lines, and P&C Operations. The 2005 net accident year loss ratio evaluated at December 31, 2006 includes 11.1 points, 1.1 points, and 7.4 points related to catastrophe losses for Standard Lines, Specialty Lines, and P&C Operations. [TABLE OMITTED] [TABLE OMITTED] [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 increased $9 million for the fourth quarter of 2006 as compared with the same period in 2005. Standard Lines retention remained flat at 81% as compared to the same period in 2005. Rates on average decreased 1% during the fourth quarter of 2006. * Net operating income increased $252 million for the fourth quarter of 2006 as compared with the same period in 2005. Operating results improved in the fourth quarter of 2006 due to decreased impacts from significant commutations and catastrophes as compared to the same period in 2005. Also favorably impacting net operating results was an increase in net investment income. * Net results for the fourth quarter of 2006 increased $344 million as compared with the same period in 2005. This improvement was attributable to increases in net operating income and 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 $23 million for the fourth quarter of 2006 as compared with the same period in 2005. Specialty Lines retention improved 1 point to 88% as compared to the same period in 2005. Rates on average decreased 2% during the fourth quarter of 2006. * Net operating income increased $53 million for the fourth quarter of 2006 as compared with the same period in 2005. This increase was primarily driven by an increase in net investment income. In addition, the 2005 results were adversely impacted by a loss related to significant commutations. * Net income increased $80 million for the fourth quarter of 2006 as compared with the same period in 2005. This increase was attributable to increased net operating income and net realized investment results. Life and Group Non-Core primarily includes the results of the life and group lines of business that have either been sold or 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 fourth quarter of 2006 increased $39 million as compared with the same period in 2005. This increase was primarily driven by increases in net investment income and net realized investment results. 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 fourth quarter of 2006 increased $119 million as compared with the same period in 2005. The 2006 results benefited from a decrease in unfavorable net prior year development, including the impact of commutations, and increased net investment income. Net prior year development recorded in 2006 included $63 million pre-tax related to mass tort exposures. 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 fourth quarter of 2006 increased $143 million over the same period of 2005. The improvement was primarily driven by interest rate increases across fixed maturity securities and short term investments, an increase in the overall invested asset base resulting from improved cashflow, improved results from limited partnerships and a reduction of interest expense on funds withheld and other deposits. During 2006 and 2005, we commuted several significant finite reinsurance Finite Reinsurance A type of reinsurance that transfers over only a finite or limited amount of risk. Risk is reduced through accounting or financial methods, along with the actual transfer of economic risk. contracts, which contained interest crediting provisions. As a result, interest expense on funds withheld has declined significantly. Election of Jose Montemayor as Director CNA also announced today that Jose Montemayor joined its Board of Directors on February 7, 2007. Mr. Montemayor will serve on the board's Executive and Finance Committees and also as a financial expert on its Audit Committee. "We are pleased to welcome Jose to our Board," said Stephen Lilienthal. "He brings to us a very strong background of industry knowledge and financial expertise, and we look forward to his counsel and support." Mr. Montemayor is a Principal of Black Diamond Capital Partners. After retiring from the Air Force in 1993 with the rank of major, he spent twelve years with the Texas Department of Insurance. He served two years as Director of Insurer Services and from 1995 until being appointed Commissioner, he served as Senior Associate Commissioner for the Financial Program, overseeing the licensing, solvency and market conduct of more than 2,000 insurers and health maintenance organizations doing business in Texas. He was Commissioner from 1999 to 2005. Mr. Montemayor is a 1975 graduate of St. Edward's University
The school was founded by the Rev. Edward Sorin, CSC , Superior General of the Congregation of Holy Cross, who also founded the University of Notre Dame in Indiana. and a 1988 Kellogg Foundation Kellogg Foundation, philanthropic institution established (1930) at Battle Creek, Mich., by food manufacturer W. K. Kellogg (1860–1951). Kellogg eventually gave the institution a total of $47 million, and by 1990 its endowment had increased to more than $3. fellow. He received a master of accountancy Master of Accountancy (MAcc, MAc, or MAcy), alternatively Master of Professional Accountancy (MPAcy or MPA) or Master Science in Accountancy (MSAcy from Southwest Texas State University in 1996. He is a member of the Texas Society of Public Accountants, the American Institute of Certified Public Accountants With over 330,525 CPA members (in August 2006), the American Institute of Certified Public Accountants (AICPA) is the largest professional organization of Certified Public Accountants (CPAs) in the United States of America. and the Society of Financial Examiners. 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, 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. EST EST electroshock therapy. EST abbr. electroshock therapy 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 (888) 515-2235 or for international callers, (719) 457-2601. 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 February 19, 2007. The replay can also be accessed by dialing (888) 203-1112 or for international callers, (719) 457-0820. The replay passcode is 3604225. Financial supplement information related to the fourth 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 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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