CNA Financial Announces Improved First Quarter 2004 Underwriting Results.Business Editors CHICAGO--(BUSINESS WIRE)--April 29, 2004 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 2004 results, which included the following highlights: -- Improved 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 in the Property and Casualty Operations, evidenced by a combined ratio of 96.8%. -- An 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. loss of $406 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. related to the previously announced sale of the individual life business. -- Net loss for the first quarter of 2004 of $125 million as compared to net income of $83 million in the first quarter of 2003.
Net (Loss) Income
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Results for the
Three Months Ended
March 31
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($ millions, except per share data) 2004 2003
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Income before net realized investment losses $208 $132
Net realized investment losses (333) (49)
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Net (loss) income $(125) $83
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Net (loss) income per share results available to
common stockholders (a)(b) $(0.55) $0.30
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(a) Included in the weighted average number of common shares for
the three months ended March 31, 2004 are the effects of additional
common stock equivalents related to the November of 2003 sale of $750
million of convertible preferred shares to Loews Corporation. The
preferred shares converted into 32,327,015 shares of CNA common stock
on April 20, 2004.
(b) The three months ended March 31, 2004 and 2003 per share
results available to common stockholders are reduced by $16 million
and $15 million, or $0.06 per share and $0.07 per share, of undeclared
preferred stock dividends.
The first quarter of 2004 underwriting results for the Property and Casualty Operations included a 7-point improvement in the combined ratio as well as increased limited partnership results. Solid underwriting results, including rate increases, and the continued focus on underwriting discipline and expense management contributed to the 96.8% combined ratio for the Property and Casualty Operations. "We are pleased with the underlying performance of our core Property & Casualty Operations. With its combined ratio in the 90s and net income up 147%, we are executing the fundamentals and continuing the progress made over the last several years," said Steve v. t. 1. To pack or stow, as cargo in a ship's hold. See Steeve. Lilienthal Lilienthal may refer to:
tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). - a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). impairment loss, additional statutory capital, and a sharpening For image sharpening, see . Sharpening is the process of creating or refining a sharp edge on a tool or implement. The term has a wide application but can be expressed as the creation of two intersecting planes which produce an edge that is sharp enough to cut through the target of CNA's focus on our core property and casualty businesses." Net realized investment losses were $333 million and $49 million for the three months ended March 31, 2004 and 2003, respectively. The investment losses in 2004 were primarily driven by an after-tax impairment loss of $406 million related to the pending sale of CNA's individual life insurance business to Swiss Re Swiss Re is the world’s largest reinsurer, now that it has acquired GE Insurance Solutions (Ligi 2006). Founded in 1863, Swiss Re now operates in more than 30 countries. General Electric owns 8.9% of the firm. Life & Health America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. Inc. (Swiss Re) that was previously announced on February February: see month. 5, 2004. The sale is expected to provide additional statutory capital of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $500 million to CNA's principal insurance subsidiary, Continental Casualty Company (CCC CCC A very speculative grade assigned to a debt obligation by a rating agency. Such a rating indicates default or considerable doubt that interest will be paid or principal repaid. Also called Caa. ). The sale, which is subject to certain customary closing conditions, is expected to be completed on April 30, 2004. Partially offsetting the life impairment loss were realized investment gains from the investment portfolio. In the first quarter of 2004, the Company revised its reportable segment structure to reflect changes in how CNA manages its core operations and makes business decisions. CNA now manages its Property and Casualty Operations in two operating segments which represent CNA's core operations: Standard Lines and Specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. Lines. The non-core operations are now managed in the Life and Group Non-Core and Corporate and Other Non-Core segments. Prior period segment disclosures have been conformed to the current year presentation. The changes made to the Company's reportable segments were as follows: 1) CNA Global, which consists of marine and global standard lines, is now included in Standard Lines (formerly included in Specialty Lines); 2) CNA Guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. and Credit is currently in run-off run-off n (in contest, election) → desempate m (= extra race); carrera de desempate run-off n (in contest, election) → and is now included in the Corporate and Other Non-Core segment (formerly included in Specialty Lines); 3) CNA Re is currently in run-off and is also now included in the Corporate and Other Non-Core segment (CNA Re was formerly a stand-alone (jargon) stand-alone - Capable of operating without other programs, libraries, computers, hardware, networks, etc. Exactly what is absent is presumed to be obvious from context. "We only run Windows on stand-alone PCs because it's too dangerous to run it on networked ones." property and casualty operating segment); 4) Group Operations and Life Operations (formerly separate operating segments) have now been combined into one reportable segment where the run-off of the retained group and life products will be managed; 5) certain run-off life and group operations previously included in the Corporate and Other Non-Core segment are now included in the Life and Group Non-Core segment.
Segment Results for the Three Months Ended March 31, 2004
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Total Life & Corporate
Standard Specialty P&C Group & Other
($ millions) Lines Lines Ops. Non- Core Non-Core Total
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Income before net
realized investment
gains (losses) $114 $75 $189 $19 $- $208
Net realized
investment gains
(losses) 38 13 51 (401) 17 (333)
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Net income (loss) $152 $88 $240 $(382) $17 $(125)
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Segment Results for the Three Months Ended March 31, 2003
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Total Life & Corporate
Standard Specialty P&C Group & Other
($ millions) Lines Lines Ops. Non- Core Non-Core Total
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Income before net
realized investment
gains (losses) $44 $48 $92 $29 $11 $132
Net realized
investment gains
(losses) 3 2 5 (68) 14 (49)
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Net income (loss) $47 $50 $97 $(39) $25 $83
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Property & Casualty Operations Gross Written Premiums
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Three months ended March 31
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($ millions) 2004 2003
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Standard Lines $1,565 $1,634
Specialty Lines 710 628
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Total P&C Operations $2,275 $2,262
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Property & Casualty Operations Net Written Premiums
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Three months ended March 31
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($ millions) 2004 2003
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Standard Lines $1,265 $1,273
Specialty Lines 581 476
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Total P&C Operations $1,846 $1,749
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Property & Casualty Calendar Year Loss Ratios
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Three months ended March 31
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2004 2003
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Standard Lines 65.5% 73.3%
Specialty Lines 63.1 66.3
Total P&C Operations 64.8 71.5
Total P&C Companies (a) 70.4% 75.1%
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(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 (APMT).
Property & Casualty Calendar Year Combined Ratios
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Three months ended March 31
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2004 2003
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Standard Lines 99.7% 107.2%
Specialty Lines 89.9 95.0
Total P&C Operations 96.8 104.0
Total P&C Companies (a) 103.6% 107.0%
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(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 (APMT).
Property & Casualty Gross Accident Year Loss Ratios
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Accident year Accident year Accident year
2004 2003 2003
evaluated at evaluated at evaluated at
March 31, December 31, March 31,
2004 2003 2004
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Standard Lines 62.8% 65.4% 64.3%
Specialty Lines 62.0 67.1 65.8
Total P&C Operations 62.6% 65.9% 64.7%
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Property & Casualty Net Accident Year Loss Ratios
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Accident year Accident year Accident year
2004 2003 2003
evaluated at evaluated at evaluated at
March 31, December 31, March 31,
2004 2003 2004
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Standard Lines 65.7% 67.8% 67.1%
Specialty Lines 63.0 68.9 67.7
Total P&C Operations 64.9% 68.1% 67.3%
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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, and excess and surplus lines, as well as insurance and risk management products sold to large corporations. These services are provided to customers in the U.S. as well as globally. -- Net written premiums decreased $8 million for the first quarter of 2004 as compared with the same period in 2003. Increased rate and retention was achieved across most property and casualty lines of business offset by decreased net written premium from an excess and surplus program covering facilities that provide services to developmentally disabled individuals. -- Standard Lines achieved average rate increases during the first quarter of 2004 of 6 to 7%. -- Net income for the first quarter of 2004 increased $105 million as compared with the same period in 2003, primarily due to improvement in the current net accident year loss ratio, the absence of unfavorable net prior year development and improved investment results. Specialty Lines provides a broad array of professional, financial and specialty property and casualty products and services. -- Net written premiums increased $105 million for the first quarter of 2004 as compared with the same period in 2003, due primarily to new business and continued significant rate increases in the professional liability lines of business. -- Specialty Lines achieved average rate increases during the first quarter of 2004 of 13%, including most professional liability lines of business. -- Net income for the first quarter of 2004 increased $38 million as compared with the same period in 2003, primarily due to improvements in the current net accident year loss ratio and improved investment results. Life and Group Non-Core primarily includes the results of the life and group lines of business that have 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. decreased $260 million for the first quarter of 2004 as compared with the same period in 2003, due primarily to the absence of premiums from the Group Benefits business which was sold on December December: see month. 31, 2003. Partially offsetting this decline were higher earned premiums in the health and life and annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. products. -- Net results for the first quarter of 2004 decreased $343 million as compared with the same period in 2003, principally due to an after-tax impairment loss of $406 million related to the pending sale of the individual life insurance business. Excluding this impairment loss, net income was $24 million for the first quarter of 2004, which included $9 million of net income related to the business that is anticipated to be sold. 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 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. claims. In addition, this segment includes the results of certain property and casualty insurance run-off operations including CNA Re (formerly a stand-alone property and casualty operating segment). -- Net results for the first quarter of 2004 decreased $8 million as compared with the same period in 2003, primarily due to the decline in operating results attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to lower premium volume for CNA Re which was placed in run-off during 2003. Net Investment Income Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern net investment income increased $41 million to $473 million for the first quarter of 2004 as compared with the same period in 2003. The change was primarily due to increased limited partnership income partially offset by lower investment yields on fixed maturity securities. About the Company CNA is the country's fourth largest commercial insurance writer and the 11th 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 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 from 10:00 a.m. to 11:00 a.m. ET today. On the conference call will be Stephen Stephen, 1097?–1154, king of England (1135–54). The son of Stephen, count of Blois and Chartres, and Adela, daughter of William I of England, he was brought up by his uncle, Henry I of England, who presented him with estates in England and France and W. Lilienthal, Chairman and Chief Executive Officer of the CNA insurance companies, and other members of senior management. Participants can access the call by dialing (800) 474-8920 or for international callers (719) 457-2727. The call will also be broadcast live on the internet at http://investors.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 for one week until May 6, 2004. The replay can also be accessed by dialing (888) 203-1112 or for international callers (719) 457-0820 and using passcode 438345. Financial supplement information related to the first quarter results is available on the investor relations pages of the CNA Website or by contacting Dawn Jaffray at (312) 822-7757. 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or change. 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 generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (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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