Property and casualty insurer CNA Financial Corp. (CNA) on Monday reported a 34 percent increase in profit for the second quarter, reflecting lower catastrophe losses and improved non-catastrophe current accident year underwriting results. These were partly offset by lower net investment income due to a significant decrease in limited partnership investment results.
Chicago, Illinois-based CNA Financial is a subsidiary of Loews Corp. (L).
Net operating income for the company's core property & casualty operations rose $12 million from the year-ago period, reflecting lower catastrophe losses and improved non-catastrophe current accident year underwriting results. These were partly offset by lower net investment income due to a significant decrease in limited partnership investment results.
Catastrophe losses for the quarter were $44 million, compared to catastrophe losses of $65 million in the same period last year.
Property & casualty operations' combined ratio was 101.7 percent, compared to 106.0 percent in the year-ago period. Excluding the impacts of catastrophe losses and development, combined ratio improved to 101.2 percent from 103.9 percent last year.
CNA Specialty net income declined 6 percent from last year, while net operating income decreased 8 percent primarily due to lower favorable net prior year development and decreased net investment income. This was partially offset by the inclusion of the surety business on a wholly-owned basis in 2012.
CNA Commercial net income and net operating income rose $21 million each for the quarter compared with the year-ago period. The increase reflects lower catastrophe losses, improved non-catastrophe current accident year underwriting results and increased favorable net prior year development, partially offset by decreased net investment income.
Life & Group non-core net results for the quarter increased $24 million from last year, primarily due to favorable experience in the company's long term care business and a significant gain related to a benefit on a life settlement contract.
CNA Financial's second-quarter net income rose to $166 million or $0.62 per share from $124 million or $0.46 per share in the year-ago period.
The latest quarter's results include net realized investment gains of $14 million or $0.06 per share, up from $10 million or $0.04 per share in the prior-year period.
Net operating income rose to $152 million or $0.56 per share from $114 million or $0.42 per share in the prior-year period.
On average, four analysts polled by Thomson Reuters expected the company to earn $0.56 per share for the quarter. Analysts' estimates typically exclude special items.
CNA Financial said it has adjusted its previously reported financial information to reflect a retrospective change in accounting guidance for deferred acquisition costs.
For the prior-year quarter, adoption of the new accounting standard resulted in a decrease of $2 million and $5 million in net operating income and net income, and a decrease of $0.01 and $0.02 in earnings per share.
The company declared a quarterly dividend of $0.15 per share, payable on August 29, 2012 to stockholders of record on August 13, 2012.
CNA is currently trading at $26.77, down $0.23 or 0.85 percent on a volume of 33,383 shares.
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