CNA Reports Third Quarter Earnings, Third Quarter Restructuring Charges and Officer Stock Ownership Plan.CHICAGO--(BUSINESS WIRE)--Nov. 4, 1998--CNA Financial Corporation (NYSE NYSE See: New York Stock Exchange :CNA (Certified NetWare Administrator) See Novell certification. ) announced its financial results for the third quarter. "CNA premium revenues were lower than anticipated because of extremely competitive conditions in commercial property-casualty insurance and our efforts to maintain pricing discipline," said Chairman and Chief Executive Office Dennis Dennis is a male first name derived from the Greco-Roman name Dionysius meaning "servant of Dionysus", the Thracian god of wine, which is ultimately derived from the Greek Dios (Διος, "of Zeus") combined with Nysos or Nysa (Νυσα), where the H. Chookaszian. "Our combined ratio - a key measure of our property-casualty operations - ran high because of increased catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). losses compared to last year, and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and other related charges." Third Quarter Results and Nine-Month Comparisons CNA reported a net loss for the third quarter of 1998 of $14 million, or $0.09 per share, compared with net income of $274 million, or $1.47 per share, for the same quarter in 1997. (The company does not have any dilutive instruments related to its common shares. Accordingly, basic and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of are the same.) In the third quarter of 1998, the company recorded 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. restructuring and other related charges totaling $151 million, or $0.82 per share. Net income, before these charges, for the three month period ended September September: see month. 30, 1998, was $137 million, or $0.73 per share. These charges, as disclosed dis·close 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). August 5, primarily relate to planned reductions in workforce, the consolidation of certain processing centers, the formation of a new claim service organization, the exiting of certain businesses and facilities, and the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of assets related to these activities. Excluding net realized investment gains and restructuring and other related charges, net income for the third quarter of 1998 amounted to $81 million, or $0.43 per share, compared with net income of $121 million, or $0.64 per share, for the same quarter in 1997. After-tax catastrophe losses were $43 million, or $0.23 per share, for the third quarter of 1998 as compared to $2 million, or $0.01 per share, for the same period in 1997. Net realized investment gains for the third quarter of 1998 were $56 million, or $0.30 per share, compared with $153 million, or $0.83 per share, for the comparable period in 1997. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: revenues for the third quarter of 1998 were $4.1 billion, compared with $4.3 billion for the third quarter of 1997. "The third quarter results underscore The underscore character (_) is often used to make file, field and variable names more readable when blank spaces are not allowed. For example, NOVEL_1A.DOC, FIRST_NAME and Start_Routine. (character) underscore - _, ASCII 95. the importance of our restructuring efforts," Chookaszian said. "We are now actively carrying out our initiatives to reorganize re·or·gan·ize v. re·or·gan·ized, re·or·gan·iz·ing, re·or·gan·iz·es v.tr. To organize again or anew. v.intr. To undergo or effect changes in organization. our operations and improve financial performance." 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 Board Chairman Edward Edward killed his father at his mother’s instigation. [Br. Balladry: Edward in Benét, 302] See : Patricide J. Noha noted that, "Throughout all phases of the insurance cycle, CNA's fundamental goal continues to be to maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. shareholder value." Net income for the first nine months of 1998 was $429 million, or $2.29 per share, compared with $687 million, or $3.68 per share, for the first nine months of 1997. Net income, excluding the restructuring and other related charges, was $580 million or $3.11 per share for the nine month period ending September 30, 1998. Excluding net realized investment gains, and restructuring and other related charges, net income for the first nine months of 1998 amounted to $262 million, or $1.39 per share, compared with $383 million, or $2.04 per share, for the first nine months of 1997. After-tax catastrophe losses were $141 million, or $0.76 per share, for the first nine months of 1998, as compared to $51 million, or $0.28 per share, for the same period of 1997. Net realized investment gains were $318 million, or $1.72 per share, for the first nine months of 1998, compared with net realized investment gains of $304 million, or $1.64 per share, for the same period in 1997. Consolidated revenues for the first nine months of 1998 were $12.9 billion as compared to $12.7 billion for the first nine months of 1997. Share Repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. Program & Officer Stock Ownership Plan On August 5, 1998, CNA's board of directors approved a plan to purchase - in the open market or through privately negotiated transactions - its outstanding common stock from time to time, as the company's management deems appropriate. As of November November: see month. 3, 1998, CNA has repurchased 2,734,800 shares of its common stock at an aggregate cost, including commissions, of $102 million. "The share repurchase program demonstrates our confidence in CNA's long-term prospects and is consistent with our efforts to enhance shareholder value," said Chookaszian. As part of an officer stock ownership plan, CNA sold, 1,229,583 shares of common stock on October October: see month. 9, 1998, at the average market price of the last day's trades, to the senior officers of the company. The shares were previously held as treasury stock. Officers purchased approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 90% of the amount of shares eligible for purchase under the plan. "The Officer Stock Ownership Plan strengthens the link between management and stockholders by providing senior officers the opportunity for increased ownership of CNA stock," Chookaszian said. "A higher level of ownership by senior officers strongly reinforces our focus on accountability The traceability of actions performed on a system to a specific system entity (user, process, device). For example, the use of unique user identification and authentication supports accountability; the use of shared user IDs and passwords destroys accountability. for the company's operating performance." CNA ranked among the top 10 U.S. insurance groups based on 1997 revenues of approximately $17 billion. Headquartered in Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. , CNA is a leading multiline A cable, channel or bus that contains two or more transmission paths (wires or optical fibers). insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. , serving individuals and businesses with a broad range of insurance products and insurance-related services. CNA products and services are marketed through multiple distribution channels, including independent agents, brokers, general agents and direct sales. Since 1897, CNA has built on a foundation of financial strength, stability and commitment to customers and business partners. CNA is the registered service mark and trade name of CNA Financial Corporation. Shares of CNA Financial Corporation have traded at a split-adjusted high of $53 5/16 and a low of $34 1/2 for the 52-week period ending November 3, 1998. TABLES TO FOLLOW
CNA FINANCIAL CORPORATION
(Unaudited)
____________________________________________________________________
1998 1997
_____________________ ___________________
(In millions of
dollars, except In Earnings In Earnings
per share data) Millions Per Share Millions Per Share
----------------------------------------------------------------------
THREE MONTHS ENDED
SEPTEMBER 30
__________________
Revenues $ 4,129 - $ 4,309 -
Net Income Excluding
Net Realized
Investment Gains and
Restructuring Related
Charges $ 81 $ 0.43 $ 121 $ 0.64
Restructuring Related
Charges (151) (0.82) - -
Net Realized
Investment Gains 56 0.30 153 0.83
_______ _______ _______ _______
Net (Loss) Income $ (14) $ (0.09) $ 274 $ 1.47
_______ _______ _______ _______
NINE MONTHS ENDED SEPTEMBER 30
_______________________________
Revenues $12,886 - $12,684 -
Net Income Excluding
Net Realized
Investment Gains and
Restructutring Related
Charges $ 262 $ 1.39 $ 383 $ 2.04
Restructuring Related
Charges (151) (0.82) - -
Net Realized
Investment Gains 318 1.72 304 1.64
_______ _______ _______ _______
Net Income $ 429 $ 2.29 $ 687 $ 3.68
_______ _______ _______ _______
_______ _______ _______ _______
____________________________________________________________________
FINANCIAL POSITION SEPTEMBER 30 DECEMBER 31
1998 1997
(In millions of dollars,
except per share data)
____________________________________________________________________
Assets $62,566 $61,269
Stockholders' Equity 8,973 8,309
Net Unrealized Appreciation
Included in Stockholders'
Equity 893 589
Book Value per Common Share 47.63 44.01
____________________________________________________________________
____________________________________________________________________
SUPPLEMENTAL FINANCIAL DATA THIRD QUARTER NINE MONTHS
PERIOD ENDED SEPTEMBER 30 1998 1997 1998 1997
(In millions of dollars)
____________________________________________________________________
NET INCOME (LOSS)(EXCLUDING NET
REALIZED INVESTMENT GAINS/LOSSES
AND RESTRUCTURING RELATED
CHARGES):
Property and Casualty $ 100 $ 121 $ 300 $ 385
Life 6 24 44 71
_______ _______ _______ _______
Total Insurance 106 145 344 456
Interest Expense
and Other (25) (24) (82) (73)
_______ _______ _______ _______
$ 81 $ 121 $ 262 $ 383
_______ _______ _______ _______
_______ _______ _______ _______
NET(LOSS) INCOME (EXCLUDING NET
REALIZED INVESTMENT GAINS/LOSSES):
Property and Casualty $ (25) $ 121 $ 176 $ 385
Life (20) 24 18 71
_______ _______ _______ ______
Total Insurance (45) 145 193 458
Interest Expense
and Other (25) (24) (82) (73)
_______ _______ _______ ______
$ (70) $ 121 $ 111 $ 383
_______ _______ _______ ______
_______ _______ _______ ______
NET(LOSS) INCOME
Property and
Casualty $ 30 $ 247 $ 438 $ 606
Life (18) 53 74 144
________ ________ _______ _______
Total Insurance 12 300 512 750
________ ________ _______ _______
Interest Expense
and Other (26) (26) (83) (63)
________ ________ _______ _______
$ (14) $ 274 $ 429 $ 687
________ ________ _______ _______
________ ________ _______ _______
CNA FINANCIAL CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS
(Unaudited)
______________________________________________________________________
PERIOD ENDED SEPTEMBER 30 THIRD QUARTER NINE MONTHS
1998 1997 1998 1997
(In millions of dollars,
except per share data)
_________________________________________________________________
Revenues:
Premiums $ 3,300 $ 3,336 $ 10,135 $ 10,031
Net investment income 521 530 1,641 1,641
Realized investment gains 97 237 512 475
Other 211 206 598 537
________ ________ ________ ________
4,129 4,309 12,886 12,684
________ ________ ________ ________
Benefits and expenses:
Insurance claims and
policyholders' benefits 2,774 2,854 8,561 8,607
Other operating expenses 1,381 1,062 3,736 3,114
________ ________ ________ ________
4,155 3,916 12,297 11,721
________ ________ ________ ________
(Loss) income before
income tax (26) 393 589 963
Income tax (benefit)
expense (12) 119 160 276
________ ________ ________ ________
Net (loss) income $ (14) $ 274 $ 429 $ 687
________ ________ ________ ________
________ ________ ________ ________
EARNINGS PER SHARE
Net income(loss) $ (0.09) $ 1.47 $ 2.29 $ 3.68
________ ________ ________ ________
________ ________ ________ ________
Weighted average
outstanding shares of
common stock (in millions
of shares) 185.2 185.4 185.2 185.4
_____________________________________________________________________
_____________________________________________________________________
CNA FINANCIAL CORPORATION
(Unaudited)
----------------------------------------------------------------------
SUPPLEMENTAL STATUTORY DATA-
OPERATIONS
PERIOD ENDED THIRD QUARTER NINE MONTHS
SEPTEMBER 30 1998 1997 1998 1997
(In millions of dollars, except ratios)
----------------------------------------------------------------------
Property/Casualty Companies:
Premiums written $ 2,404 $ 2,557 $ 8,222 $ 8,063
Premiums earned 2,518 2,508 7,706 7,540
Underwriting loss (285) (214) (972) (874)
Investment income 413 415 1,258 1,287
Trade ratios:
Loss 76.7% 77.3% 77.9% 78.5%
Combined (before policyholder
dividends) 111.8% 106.9% 109.6% 108.5%
Dividends to policyholders 1.0% 1.1% 1.0% 0.9%
Life Companies:
Premium income 849 920 2,626 2,769
CNA Insurance Net Premium Volume
--------------------------------
Property/Casualty:
Commercial $ 1,941 $ 2,140 $ 6,639 $ 6,797
Personal 501 451 1,489 1,387
Involuntary Risks (38) (34) 94 (121)
Life:
Individual 181 222 610 671
Group 668 698 2,016 2,098
------- -------- ------- -------
$ 3,253 $ 3,477 $10,848 $10,832
======= ======== ======= =======
----------------------------------------------------------------------
----------------------------------------------------------------------
SUPPLEMENTAL STATUTORY DATA -
FINANCIAL POSITION SEPTEMBER 30 DECEMBER 31
(In millions of dollars, except ratios) 1998 1997
----------------------------------------------------------------------
Property/Casualty Companies:
Estimated statutory surplus $ 7,119 $ 7,123
Estimated written to surplus ratio 1.5 1.4
Claim and claim expense reserves $ 23,820 $ 24,088
Ratio of reserves to twelve months
premium revenue 2.3 2.4
Life Companies:
Statutory surplus $ 1,181 $ 1,224
Life insurance in force 367,209 311,598
----------------------------------------------------------------------
NOTE: A conference call for the investment community will be held from 3:00 to 3:30 p.m. Eastern Standard Time today. On the conference call will be Dennis Chookaszian, chairman and chief executive officer of CNA, and W. James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. MacGinnitie, chief financial officer of CNA. Participants can access the call by dialing 800-754-1053. The call is available to the media, but questions will be restricted to the investment community. A taped replay of the call will be available, beginning one hour after the call ends, until 6:00 p.m. Eastern Standard Time on Thursday Thursday: see week. , November 5, 1998, by dialing 888-891-7924. |
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