Correcting and Replacing Previous Earnings Release, BW1268 CNA-EARNINGS.CHICAGO--(BUSINESS WIRE)--Aug. 5, 1998-- CNA (Certified NetWare Administrator) See Novell certification. Reports Second Quarter Earnings and Estimate of Reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. Charges Board of Directors Approves 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 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. Corp. (NYSE NYSE See: New York Stock Exchange :CNA) announced its earnings for the second quarter and an estimated range of charges related to reorganization activities in several of its businesses. Second Quarter Results and Six-Month Comparisons Net income for the second quarter of 1998 was $210 million, or $1.12 per share, compared with $235 million, or $1.26 per share, for the same quarter in 1997. Excluding net realized investment gains and losses, net income for the second quarter of 1998 amounted to $64 million, or $0.33 per share, compared with $126 million, or $0.67 per share, for the same quarter in 1997. Net realized investment gains for the second quarter of 1998 were $146 million, or $0.79 per share, compared with $109 million, or $0.59 per share, for the comparable period in 1997. (The company does not have any dilutive instruments related to its common shares. Accordingly, basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. earnings are the same.) Catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). losses had an unfavorable impact on earnings of $82 million after tax, or $0.44 per share, for the second quarter of 1998 as compared to an unfavorable impact of $29 million, or $0.16 per share, for the second quarter of 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 second quarter of 1998 were $4.4 billion compared with $4.2 billion for the second quarter of 1997. "CNA's results reflect continued soft market conditions, as well as higher catastrophe losses compared to last year," said CNA Chairman and Chief Executive Officer 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. "As a market leader in many lines of insurance, CNA is taking decisive action to increase both customer satisfaction and shareholder value as we continue to face intense price competition." Net income for the first six months of 1998 was $443 million, or $2.37 per share, compared with $412 million, or $2.21 per share, for the first six months of 1997. Excluding net realized investment gains and losses, net income for the first six months of 1998 amounted to $181 million, or 96 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , compared with $262 million, or $1.40 per share, for the first six months of 1997. Net realized investment gains were $262 million, or $1.41 per share, for the first half of 1998, compared with net realized investment gains of $150 million, or 81 cents per share, for the same period in 1997. Catastrophe losses were $98 million after tax, or 53 cents per share, for the first six months of 1998, as compared to $49 million, or 27 cents per share, for the comparable period of 1997. Consolidated revenues for the first six months of 1998 were $8.8 billion, compared to $8.4 billion for the first six months of 1997. Estimated Reorganization Charges Separately, CNA announced current estimates of the financial implications of its initiatives to achieve world-class world-class adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order: a world-class figure skater. 2. performance. The announcement encompasses all of its 29 strategic business units (SBUs), as well as corporate support areas. The company anticipates finalizing its plan by year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 1998 and estimates that it will record a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge of $100 million to $140 million for 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). costs. Also, over the next 12 to 18 months, the company expects additional pre-tax transition costs of $200 million to $260 million related to the restructuring. The pre-tax impact on third-quarter earnings from these reorganization charges is estimated to be $175 million to $260 million. "World-class companies continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. innovate in·no·vate v. in·no·vat·ed, in·no·vat·ing, in·no·vates v.tr. To begin or introduce (something new) for or as if for the first time. v.intr. To begin or introduce something new. and change. CNA is committed to providing quality products and service, and being a leader in our chosen markets," said Chookaszian. "Most of our SBUs are market leaders today and are growing. Over the past three years, CNA has achieved record shareholder equity, net income, and premium revenue," Chookaszian said. "We are building an even stronger future with our customers and distribution partners from this position of strength." Among the actions expected as part of the organizational changes are: - closing several facilities - consolidating certain processing locations - reducing CNA's current workforce of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 24,000 employees by about 10 percent, net positions. - enhancing its computer systems While the company has not finalized See finalization. its analysis of anticipated costs savings, it estimates that its world-class initiatives, which include the restructuring plan as well as revenue growth and operating efficiencies, will result in anticipated reductions of approximately 200 basis points in the company's expense ratio, and savings of approximately $300 million to $350 million on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis. The company expects a portion of the anticipated savings will be realized beginning in the latter part of 1998 and to achieve this reduced expense level within 18 months. "We regret Regret See also Remorse. Epimetheus Pandora’s husband; regretted opening box. [Gk. Myth.: Kravitz, 90] Hale, Nathan (1755–1776) American Revolutionary spy, hanged by British; regretted only having one life to give for the impact that job losses will have on our employees who are affected," Chookaszian said. "We are committed to treating them professionally during this transition." CNA Financial Corp. Board Chairman Edward Edward killed his father at his mother’s instigation. [Br. Balladry: Edward in Benét, 302] See : Patricide J. Noha said. "Over the past 20 years CNA has responded successfully to significant challenges in the insurance marketplace while maintaining an unshakable commitment to financial strength." Share Repurchase Program Approved The board of directors has today approved a plan to purchase, in open market or privately negotiated transactions, its outstanding common stock from time to time as market conditions warrant. "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. CNA ranks among the top 10 U.S. insurance groups with 1997 revenues of $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 Corp. Shares of CNA Financial Corp. have traded at a split-adjusted high of $53.260 and a low of $36.460 for the 52-week period ending Aug. 4, 1998. FORWARD LOOKING STATEMENT The statements contained in this press release which are not historical facts are forward-looking statements 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. that involve risks and uncertainties, including, but not limited to, product and policy demand and market responses, the effect of economic conditions, the impact of competitive products, policies and pricing, product and policy development, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. changes and conditions, rating agency policies and practices, development of claims and the effect on loss reserves, the performance of 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. companies under reinsurance contracts with the company, investment portfolio developments and reaction to market conditions, the results of financing efforts, the actual closing of contemplated transactions and agreements and other risks detailed in the company's Securities and Exchange Commission filings. No assurance can be given that the actual results of operations and financial condition will conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the forward-looking statements contained herein. TABLES TO FOLLOW NOTE: A conference call for the investment community will be held from 3:00 to 3:30 P.M. Eastern Daylight For other uses, see Daylight (disambiguation). Daylight or the light of day is the combination of all direct and indirect sunlight outdoors during the daytime (and perhaps twilight). Time today. On the conference call will be Dennis Chookaszian, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. 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 Daylight Time on Thursday Thursday: see week. , August 6, 1998, by dialing 888-893-5820.
CNA FINANCIAL CORPORATION
____________________________________________________________________
1998 1997
_____________________ ___________________
(In millions of
dollars, except In Earnings In Earnings
per share data) Millions Per Share Millions Per Share
----------------------------------------------------------------------
THREE MONTHS ENDED
JUNE 30
__________________
Revenues $ 4,430 - $ 4,243 -
Net Income Excluding
Net Realized
Investment
Gains/Losses $ 64 $ 0.33 126 $ 0.67
Net Realized
Investment Gains 146 0.79 109 0.59
_______ _______ _______ _______
Net Income $ 210 $ 1.12 $ 235 $ 1.26
_______ _______ _______ _______
SIX MONTHS ENDED JUNE 30
_______________________________
Revenues $ 8,757 - $ 8,375 -
Net Income Excluding
Net Realized
Investment
Gains/losses $ 181 $ 0.96 $ 262 $ 1.40
Net Realized
Investment Gains 262 1.41 150 0.81
_______ _______ _______ _______
Net Income $ 443 $ 2.37 $ 412 $ 2.21
_______ _______ _______ _______
____________________________________________________________________
FINANCIAL POSITION JUNE 30 DECEMBER 31
1998 1997
(In millions of dollars,
except per share data)
____________________________________________________________________
Stockholders' Equity $ 8,787 $ 8,309
Net Unrealized Appreciation
Included in Stockholders'
Equity 627 589
Book Value per Common Share 46.59 44.01
Weighted average outstanding
shares of common stock 185.4 185.4
____________________________________________________________________
____________________________________________________________________
SUPPLEMENTAL FINANCIAL DATA SECOND QUARTER SIX MONTHS
PERIOD ENDED JUNE 30 1998 1997 1998 1997
(In millions of dollars)
____________________________________________________________________
NET INCOME (EXCLUDING NET
REALIZED INVESTMENT
GAINS/LOSSES):
Property and Casualty $ 74 $ 125 $ 200 $ 264
Life 20 24 38 47
_______ _______ _______ _______
Total insurance 94 149 238 311
Interest expense
and other (30) (23) (57) (49)
_______ _______ _______ _______
$ 64 $ 126 $ 181 $ 262
_______ _______ _______ _______
_______ _______ _______ _______
REALIZED INVESTMENT
GAINS (LOSSES),
NET OF TAX AND
POLICYHOLDERS'
INTEREST:
Property and Casualty $ 122 $ 82 $ 208 $ 94
Life 25 26 55 44
_______ _______ _______ ______
Total Insurance 147 108 263 138
Other (1) 1 (1) 12
_______ _______ _______ ______
$ 146 $ 109 $ 262 $ 150
_______ _______ _______ ______
_______ _______ _______ ______
CNA FINANCIAL CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS
PERIOD ENDED JUNE 30 SECOND QUARTER SIX MONTHS
1998 1997 1998 1997
(In millions of dollars,
except per share data)
_________________________________________________________________
Revenues:
Premiums $ 3,467 $ 3,348 $ 6,835 $ 6,695
Net investment income 558 547 1,120 1,111
Realized investment gains 232 172 415 238
Other 172 176 387 331
________ ________ ________ ________
4,429 4,243 8,757 8,375
________ ________ ________ ________
Benefits and expenses:
Insurance claims and
policyholders' benefits 2,937 2,860 5,787 5,752
Other operating expenses 1,208 1,041 2,355 2,053
________ ________ ________ ________
4,145 3,901 8,142 7,805
________ ________ ________ ________
Income before income
tax 284 342 615 570
Income tax expense 74 107 172 158
________ ________ ________ ________
Net income $ 210 $ 235 $ 443 $ 412
________ ________ ________ ________
________ ________ ________ ________
EARNINGS PER SHARE
Net income $ 1.12 $ 1.26 $ 2.37 $ 2.21
________ ________ ________ ________
________ ________ ________ ________
Weighted average
outstanding shares of
common stock (in millions
of shares) 185.4 185.4 185.4 185.4
_____________________________________________________________________
_____________________________________________________________________
CNA FINANCIAL CORPORATION
SUPPLEMENTAL STATUTORY DATA-
OPERATIONS SECOND QUARTER SIX MONTHS
PERIOD ENDED JUNE 30 1998 1997 1998 1997
(In millions of dollars,
except ratios)
Property/Casualty Companies
Premiums written $ 2,846 $ 2,834 $ 5,818 $ 5,506
Premiums earned 2,638 2,565 5,189 5,031
Underwriting loss (349) (308) (687) (660)
Investment income 420 444 645 872
Trade ratios:
Loss 79.1% 78.6% 77.5% 79.00%
Combined (before
policyholder dividends) 109.6% 107.7% 108.7% 109.1%
Dividends to policyholders 1.0% 0.7% 0.9% 0.9%
Life Companies
Premium income 876 890 1,777 1,849
CNA Insurance Net Premium
Volume
_________________________
Property/Casualty:
Commercial $ 2,298 $ 2,502 $ 4,698 $ 4,657
Personal 479 478 988 936
Involuntary Risks 69 (146) 132 (87)
Life:
Individual 197 218 429 449
Group 679 672 1,348 1,400
________ ________ ________ ________
$ 3,722 $ 3,724 $ 7,595 $ 7,355
________ ________ ________ ________
________ ________ ________ ________
SUPPLEMENTAL STATUTORY DATA - FINANCIAL POSITION
JUNE 30 DECEMBER 31
1998 1997
___________ ___________
(In millions of dollars,
except ratios)
_____________________________________________________________________
Property/Casualty Companies:
Estimated statutory surplus $ 7,019 $ 7,123
Estimated written to
surplus ratio 1.5 1.4
Claim and claim expense
reserves $ 24,948 $ 24,088
Ratio of reserves to twelve
months premium revenue 2.5 2.4
Life Companies:
Statutory surplus $ 1,281 $ 1,224
Life insurance in force 351,347 311,598
_____________________________________________________________________
CONTACT: CNA Financial Corporation, Chicago
Roger Morris (media), 312/822-4195
Deborah Kamp (analysts), 312/822-7752
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