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CNA underwriting breaks even in Q3, posts $178mn in catastrophes

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CNA lowered its combined ratio to 100%, benefitting from a lower expense ratio and underlying loss ratio improvement, despite catastrophes rising to $178mn from $160mn in the quarter.

On Monday morning, the Chicago-based carrier reported $0.87 in core income per share, up 22.5% from the $0.71 it earned last year and well ahead of analysts’ $0.60 per-share estimate. Net investment income from its P&C operations fell 7% to $271mn.

CNA results table 2021 Q3.PNG

Improvement in specialty outweighs higher cats in commercial

The company-wide-reported combined ratio was down from 100.9% a year ago, and its underlying combined ratio – which dropped to 91.1% from 92.6% last year – was the company’s third straight quarterly record. CNA lowered its underlying loss ratio by 0.3 points to 60.2%.

Its expense ratio dropped 1.1 points to 30.7%. The insurer said the better expense ratio came from higher earned premiums.

Of the catastrophe losses, $114mn were attributed to Hurricane Ida. Prior-year favorable development was modestly lower, at $5mn, versus $8mn a year ago.

CNA’s specialty division boosted its underwriting profits by 18%, to $91mn, helped by a 0.9-point reduction in its underlying loss ratio to 59.1%. The specialty unit reported an 88.2% combined ratio overall, an improvement from the 89.5% it generated last year.

The underwriting loss in the commercial segment widened to $105mn from $97mn, hurt by the pick-up in catastrophe losses to $166mn from $146mn last year. The commercial division’s underlying loss ratio also rose by 0.7 points to 61.5%.

The underwriting profit in international expanded to $13mn from $3mn last year.

GWP excluding third-party captives +10%

CNA grew gross written premiums (GWP) by 8% to $3.2bn, or by 10% to $2.2bn when excluding third-party captives.

GWP for its specialty business (excluding third-party captives) was up 10% to $943mn, while GWP in the commercial unit similarly grew by 10% to just over $1bn.

Rate increases across all P&C operations were 8%, down from 12% a year ago but in line with the 8% increases in the second quarter.

The rate increases in commercial dropped off to 6% from 11% last year, while rates were up by 9% in specialty, versus 13% last year.

Earned rate increases were 11%, just below 12% in the second quarter.

CNA’s chairman and CEO Dino Robusto called the third-quarter results “very strong” and noted that rate increases over the period were “substantially above long-run loss cost trends”.

“We are well positioned to increasingly capitalize on the favorable market conditions we anticipate into 2022,” he said.

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