CNA Financial Announces Fourth Quarter 2008 Results.Net Operating Loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $21 Million, Net Loss of $336 Million, P&C Operations Combined Ratio of 89.1%; Full Year 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 $533 Million, Net Loss of $299 Million, P&C Operations Combined Ratio of 98.0% 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 2008 results, which included a net operating loss for the fourth quarter of 2008 of $21 million, or ($0.15) per share and net loss for the fourth quarter of 2008 of $336 million, or ($1.31) per share. Net operating income for the full-year 2008 was $533 million, or $1.91 per share. Net loss for the full-year 2008 was $299 million, or ($1.18) per share. The continued disruption and turmoil in the capital markets resulted in significant realized and unrealized investment losses and declines in net investment income. Property & Casualty Operations combined ratios for the fourth quarter and full-year 2008 were 89.1% and 98.0%. 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: was $20.92 at December 31, 2008, as compared to $37.36 at December 31, 2007. [TABLE OMITTED] (a) Management utilizes the net operating income financial measure to monitor the Company's operations. Please refer to Note M 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, 2008 Form 10-Q Form 10-Q See 10-Q. for further discussion of this measure. [TABLE OMITTED] (a) The three and twelve months ended December 31, 2008 per share results available to common stockholders are reduced by approximately $19 million, or $0.07 per share, of 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. Net operating results 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, 2008 decreased $244 million as compared with the same period in 2007. Net operating results for our core Property & Casualty Operations decreased $146 million, while our Non-Core operations decreased $98 million. The overall decrease was primarily driven by significantly lower net investment income. This decrease was partially offset by increased favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. net prior year development. Property & Casualty Operations produced combined ratios of 89.1% and 98.0% in the fourth quarters of 2008 and 2007. "CNA's core Property & Casualty Operations performed well, with a fourth quarter combined ratio of 89.1% and a 98.0% combined ratio for 2008, our third consecutive year with a sub-100% combined ratio," said Thomas F. Motamed, Chairman and Chief Executive Officer of CNA Financial Corporation. "While our core business is strong, our fourth quarter and full-year results reflect the impact of the severe and prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. turmoil in the financial markets on our investment income and realized investment results." Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern net investment income for the three months ended December 31, 2008 decreased $404 million, or 70%, as compared with the same period in 2007. This decline was primarily driven by significant losses from limited partnership investments. Net realized investment losses increased $253 million after-tax for the three months ended December 31, 2008 as compared with the same period in 2007. For the three months ended December 31, 2008, 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. (OTTI OTTI Office of Travel and Tourism Industries OTTI Other Than Temporarily Impaired OTTI Ostbayrisches Technologie Transfer Institut ) losses of $419 million after-tax were recorded primarily in the corporate and other taxable bonds Taxable Bond A debt security whose return to the investor is subject to taxes at the local, state or federal level, or some combination thereof. Notes: The majority of bonds issued are taxable bonds. and asset-backed bond sectors. For the three months ended December 31, 2007, OTTI losses of $188 million after-tax were recorded. Net results for the three months ended December 31, 2008 decreased $500 million as compared with the same period in 2007. This decrease was due to higher net realized investment losses and lower net operating results. Net operating income from continuing operations for the year ended December 31, 2008 decreased $527 million as compared with the same period in 2007. Net operating income for our core Property & Casualty Operations decreased $518 million, while our Non-Core operations decreased $9 million. The decrease was primarily due to lower net investment income and higher catastrophe impacts. The catastrophe impacts were $239 million after-tax for the year ended December 31, 2008, as compared to $51 million after-tax for the same period in 2007. Net operating income in 2007 included an after-tax loss of $108 million in connection with the settlement of an arbitration proceeding related to a run off book of business in the Life & Group Non-Core segment. Property & Casualty Operations produced combined ratios of 98.0% and 94.8% for the years ended December 31, 2008 and 2007. Pretax net investment income for the year ended December 31, 2008 decreased $814 million, or 33%, as compared with the same period in 2007, primarily due to the same factors discussed above for the three month period. Net investment income included a decline in trading portfolio results of $159 million, which was substantially offset by a corresponding decrease in the policyholders' funds reserves supported by the trading portfolio. Net realized investment losses for the year ended December 31, 2008 increased $638 million after-tax as compared with the same period in 2007. For the year ended December 31, 2008, OTTI losses of $965 million after-tax were recorded primarily in the corporate and other taxable bonds, asset-backed bonds and non-redeemable preferred equity securities sectors. For the year ended December 31, 2007, OTTI losses of $481 million after-tax were recorded. Net results for the year ended December 31, 2008 decreased $1,150 million as compared with the same period in 2007. This decrease was due to higher net realized investment losses and lower net operating results. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] (a) P&C Companies includes Standard Lines, Specialty Lines and P&C business written in Life & Group Non-Core and Corporate & Other Non-Core, including CNA Re and asbestos and environmental pollution exposures. [TABLE OMITTED] Business Operating Highlights Standard Lines works with an independent agency distribution system and network of brokers to market a broad range of property and casualty insurance products and services primarily to small, middle-market and large businesses and organizations domestically. * Net written premiums decreased $31 million for the fourth quarter of 2008 as compared with the same period in 2007. Standard Lines averaged rate decreases of 3% for the fourth quarter of 2008, as compared to decreases of 5% for the fourth quarter of 2007 for the contracts that renewed during those periods. Retention rates of 85% and 80% were achieved for those contracts that were available for renewal in each period. * Net operating results decreased $69 million for the fourth quarter of 2008 as compared with the same period in 2007. This decrease was primarily driven by lower net investment income. * Net results for the fourth quarter of 2008 decreased $200 million as compared with the same period in 2007. This decline was primarily attributable to higher net realized investment losses and decreased net operating results. Specialty Lines provides professional, financial and specialty property and casualty products and services, both domestically and abroad, through a network of brokers, managing general underwriters and independent agencies. * Net written premiums decreased $35 million for the fourth quarter of 2008 as compared with the same period in 2007. Specialty Lines averaged rate decreases of 3% for the fourth quarter of 2008, as compared to decreases of 5% for the fourth quarter of 2007 for the contracts that renewed during those periods. Retention rates of 85% and 82% were achieved for those contracts that were available for renewal in each period. * Net operating income decreased $77 million for the fourth quarter of 2008 as compared with the same period in 2007, primarily driven by lower net investment income and decreased current accident year 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. results. These unfavorable results were partially offset by increased favorable net prior year development. * Net results decreased $151 million for the fourth quarter of 2008 as compared with the same period in 2007. This decline was primarily attributable to decreased net operating results and higher net realized investment losses. Life & Group Non-Core primarily includes the results of the life and group lines of business that are 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 loss for the fourth quarter of 2008 increased $30 million as compared with the same period in 2007. This increase was primarily attributable to adverse investment performance on a portion of our pension deposit business and higher net realized investment losses. Certain of the separate account investment contracts related to our pension deposit business guarantee principal and a minimum rate of interest, for which we recorded additional policyholder Policyholder An individual who owns an insurance policy. reserves during the fourth quarter due to the performance of the supporting assets. Corporate & Other Non-Core primarily includes certain corporate expenses, including interest on corporate debt, and the results of certain property and casualty business primarily in run-off, including CNA Re. This segment also includes the results 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 and environmental pollution. * Net loss for the fourth quarter of 2008 increased $116 million as compared with the same period in 2007. The decline in results was primarily due to increased net realized losses Realized Loss A loss recognized when assets are sold for a price lower than the original purchase price. Notes: A portion of the realized loss may be applied against a capital gain or realized profit to reduce taxes. and decreased net investment income. About the Company Serving businesses and professionals since 1897, 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's services include risk management, information services See Information Systems. , underwriting, risk control and claims administration. For more information, please visit CNA at www.cna.com. CNA is a registered trade mark 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 Thomas F. Motamed, Chairman and Chief Executive Officer of CNA Financial Corporation, and other members of senior management. Participants can access the call by dialing (888) 277-7114, or for international callers, (913) 981-5578. 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 through February 16, 2009 by dialing (888) 203-1112, or for international callers, (719) 457-0820. The replay passcode is 7486232. The replay will also be available on CNA's website. Financial supplement information related to the fourth quarter and full-year results is available on the investor relations pages of the CNA website or by contacting David Adams David Adams may refer to:
FINANCIAL MEASURES 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 reference or contain financial measures that are not in accordance with GAAP. For reconciliations of non-GAAP measures to the most comparable GAAP measures, please refer to CNA's filings with the Securities and Exchange Commission, as well as the financial supplement, available at www.cna.com. 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 may include statements which relate to anticipated future events (forward-looking statements) rather than actual present conditions or historical events. These statements are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 and generally 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. Further, 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. |
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