On July 29, 2024, CNA Financial Corp (CNA, Financial) released its 8-K filing for the second quarter of 2024. CNA Financial Corporation (CNAF) is an insurance holding company that provides commercial property and casualty insurance. The company operates under five segments: Specialty, Commercial, International, Life and Group, and Corporate and Other. CNAF, through its segments, provides professional, financial, specialty property, and casualty products to small businesses and medium-scale organizations across Continental Europe, the United Kingdom, and Canada. The majority of the revenues are generated from the Specialty and Commercial segments of the business.
Performance Overview
For the second quarter of 2024, CNA Financial Corp (CNA, Financial) reported net income of $317 million, or $1.17 per share, compared to $283 million, or $1.04 per share, in the prior year quarter. Core income for the quarter was $326 million, or $1.19 per share, versus $308 million, or $1.13 per share, in the prior year quarter. Despite the growth in net income and core income, the reported earnings per share (EPS) of $1.17 fell short of the analyst estimate of $1.23.
Key Financial Achievements
Net investment income increased by 7% to $618 million, driven by a $33 million increase from fixed income securities and other investments, and a $10 million increase from limited partnerships and common stock. The Property & Casualty (P&C) segments generated core income of $380 million, reflecting higher investment income partially offset by higher catastrophe losses.
We produced outstanding results in the quarter with an $18 million increase in core income to $326 million, leading to record core income in the first half of 2024. Net investment income was up 7% as yields in our fixed income portfolio increased again this quarter and our alternatives portfolio generated strong returns," said Dino E. Robusto, Chairman & Chief Executive Officer of CNA Financial Corporation.
Income Statement Highlights
| ($ millions, except per share data) | 2024 | 2023 |
|---|---|---|
| Net income | $317 | $283 |
| Core income | $326 | $308 |
| Net income per diluted share | $1.17 | $1.04 |
| Core income per diluted share | $1.19 | $1.13 |
Balance Sheet and Cash Flow Highlights
Book value per share stood at $36.46, while book value per share excluding accumulated other comprehensive income (AOCI) was $45.86, a 5% increase from year-end 2023 after adjusting for $2.88 of dividends per share. The company declared a regular quarterly cash dividend of $0.44 per share, payable on August 29, 2024, to stockholders of record on August 12, 2024.
Challenges and Future Outlook
The P&C combined ratio increased to 94.8% from 93.8% in the prior year quarter, including 3.5 points of catastrophe loss impact compared to 3.1 points in the prior year quarter. The underlying combined ratio was 91.6%, up from 91.1% in the prior year quarter. Despite these challenges, the company managed to achieve a gross written premium growth of 7% and net written premium growth of 6% for the second quarter of 2024.
Despite the elevated industry catastrophe losses, the all-in combined ratio for overall P&C was 94.8%, inclusive of pretax catastrophe losses of $82 million or 3.5 points which was consistent with our recent five-year average," added Robusto.
Conclusion
CNA Financial Corp (CNA, Financial) has demonstrated resilience and growth in its core income and net investment income despite facing higher catastrophe losses. The company's ability to maintain strong premium growth and investment returns positions it well for future performance. However, the slight miss on EPS compared to analyst estimates highlights the challenges in the current market environment.
Explore the complete 8-K earnings release (here) from CNA Financial Corp for further details.
