CNA Financial Announces Second Quarter 2009 Results: Net Operating Income of $305 Million, Net Income of $105 Million, P&C Operations Combined Ratio of 98.1%.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 $27.53, an Increase of 28% from March 31, 2009 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 second quarter 2009 results, which included 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 $305 million, or $1.02 per common share, and net income of $105 million, or $0.27 per common share. Net income reflects the impact of 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 in the investment portfolio. The combined ratio for Property & Casualty Operations was 98.1% for the quarter. Book value per common share was $27.53 at June 30, 2009, as compared to $21.57 at March 31, 2009 and $20.92 at December 31, 2008. [TABLE OMITTED] (a) References to net operating income (loss), net realized investment gains (losses) and net income (loss) used in this press release reflect amounts attributable to CNA Financial Corporation (CNAF CNAF Caisse Nationale des Allocations Familiales (French: national family allowances fund) CNAF Commander, Naval Air Forces CNAF Canadian Native Arts Foundation CNAF Combined Name and Address File ), unless otherwise noted. 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 2008 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] Net operating income for the three months ended June 30, 2009 increased $55 million as compared with the same period in 2008. Net operating income for our core Property & Casualty Operations increased $49 million, while results for our non-core operations increased $6 million. These increases were primarily due to higher net investment income. Our Property & Casualty Operations produced second quarter combined ratios of 98.1% and 97.7% in 2009 and 2008, with current period 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 reflecting lower losses and higher expenses as compared to the prior period. "We are pleased to report a 22% increase in second quarter net operating income," said Thomas F. Motamed, Chairman and Chief Executive Officer of CNA Financial Corporation. "Our core Property & Casualty Operations had another solid quarter, delivering a 98.1% combined ratio, and our investment income rebounded nicely." "In the second quarter, CNA's investment portfolio values and book value per share improved substantially, and our lead operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , Continental Casualty Company, improved its already strong capital position," said Mr. Motamed. Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern net investment income for the second quarter of 2009 increased $99 million as compared with the same period in 2008. This increase was primarily driven by improved results from limited partnership investments. After-tax net realized investment losses increased $128 million for the three months ended June 30, 2009 as compared with the same period in 2008. In the second quarter of 2009, other-than-temporary impairment (OTTI OTTI Office of Travel and Tourism Industries OTTI Other Than Temporarily Impaired OTTI Ostbayrisches Technologie Transfer Institut ) losses of $257 million after-tax were primarily driven by the actual and anticipated impact of difficult economic conditions on residential and commercial mortgage-backed securities Commercial mortgage-backed securities (CMBS) are a type of bond commonly issued in American security markets. They are a type of Mortgage-backed security which are backed by mortgages on commercial rather than residential real estate. . OTTI losses of $111 million after-tax were recorded in the second quarter of 2008. Net income for the three months ended June 30, 2009 decreased $76 million as compared with the same period in 2008. This decrease was due to higher net realized investment losses, partially offset by improved net operating income. Net operating income for the six months ended June 30, 2009 decreased $17 million as compared with the same period in 2008. Net operating income for our core Property & Casualty Operations increased $10 million, while results for our non-core operations decreased $27 million. Our Property & Casualty Operations produced combined ratios of 98.1% and 97.9% for the six months ended June 30, 2009 and 2008, with current period underwriting results reflecting lower losses and higher expenses as compared to the prior period. The catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). impacts were $36 million after-tax for the six months ended June 30, 2009, as compared to $65 million after-tax for the same period in 2008. Pretax net investment income for the six months ended June 30, 2009 increased $85 million as compared with the same period in 2008. Excluding trading portfolio losses of $81 million in 2008, net investment income increased $4 million. These trading portfolio losses were related to our indexed group 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. business and were substantially offset by a corresponding decrease in the policyholders' funds reserves supported by this trading portfolio. We exited the indexed group annuity business in 2008. After-tax net realized investment losses increased $439 million for the six months ended June 30, 2009 as compared with the same period in 2008. For the six months ended June 30, 2009, OTTI losses of $656 million after-tax were primarily driven by credit issues in the financial sector and the impact of difficult economic conditions on residential and commercial mortgage-backed securities. OTTI losses of $166 million after-tax were recorded for the six months ended June 30, 2008. Net results for the six months ended June 30, 2009 decreased $458 million as compared with the same period in 2008. This decrease was primarily due to higher net realized investment losses. 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 $87 million for the second quarter of 2009 as compared with the same period in 2008. The current economic conditions have led to decreased industry insured exposures. Standard Lines averaged rate decreases of 1% for the second quarter of 2009, as compared to decreases of 5% for the second quarter of 2008 for the contracts that renewed during those periods. Retention rates of 80% and 81% were achieved for those contracts that were available for renewal in each period. * Net operating income improved $21 million for the second quarter of 2009 as compared with the same period in 2008. This improvement was primarily due to higher net investment income, partially offset by decreased underwriting results. * The combined ratio increased 2.3 points for the second quarter of 2009 as compared with the same period in 2008. The loss ratio improved 2.4 points primarily due to favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. loss development. The expense ratio increased 5.4 points, primarily related to higher underwriting expenses and the lower net earned premium 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. base. Underwriting expenses increased primarily due to higher employee-related costs. * Net income for the second quarter of 2009 decreased $50 million as compared with the same period in 2008. This decline was primarily attributable to higher net realized investment losses, partially offset by improved net operating income. 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 $26 million for the second quarter of 2009 as compared with the same period in 2008. Specialty Lines averaged rate decreases of 1% for the second quarter of 2009, as compared to decreases of 3% for the second quarter of 2008 for the contracts that renewed during those periods. Retention rates of 84% were achieved for those contracts that were available for renewal in both periods. * Net operating income improved $28 million for the second quarter of 2009 as compared with the same period in 2008. This improvement was primarily due to higher net investment income and a $14 million favorable income tax adjustment related to our European operation. * The combined ratio improved 0.8 points for the second quarter of 2009 as compared with the same period in 2008. The loss ratio improved 2.7 points, primarily due to favorable net prior year development. This was partially offset by higher current accident year loss ratios recorded in several lines of business. The expense ratio increased 1.6 points, primarily related to higher underwriting expenses and the lower net earned premium base. * Net income decreased $21 million for the second quarter of 2009 as compared with the same period in 2008. This decline was primarily attributable to higher net realized investment losses, partially offset by increased net operating income. Life & Group Non-Core primarily includes the results of the life and group lines of business that are in run-off. Net earned premiums relate primarily to the group and individual long term care businesses. * Net loss for the second quarter of 2009 decreased $17 million as compared with the same period in 2008. The decrease was due to favorable performance on our remaining pension deposit business and improved net realized investment results. Partially offsetting these favorable items was a $28 million after-tax legal accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. recorded in the second quarter of 2009 related to a previously held limited partnership investment. 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 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. and environmental pollution. * Net results decreased $19 million for the second quarter of 2009 as compared with the same period in 2008. The decrease was primarily due to higher net realized investment losses. [TABLE OMITTED] [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 & Group Non-Core and Corporate & Other Non-Core, including CNA Re and asbestos and environmental pollution exposures. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] 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 (800) 289-0507, or for international callers, (913) 312-0837. 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 August 10, 2009 by dialing (888) 203-1112, or for international callers, (719) 457-0820. The replay passcode is 1151654. The replay will also be available on CNA's website. Financial supplement information related to the second quarter 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 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, 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 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. |
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