Posted on 09 Feb 2010
CNA Financial Corporation has reported a net income of $246m for the fourth quarter of 2009, compared with a net income loss of $336m in the fourth quarter of last year.
Full year 2009 results included a net income of $419m, compared to the 2008 full year net income loss of $299m.
Net operating income for CNA’s property/casualty operations improved $205m in the fourth quarter of 2009. Property/casualty combined ratios for the fourth quarter and full year 2009 were 90.3% and 96.9%, respectively.
Gross written premiums for the property/casualty operations were $1.9bn in the fourth quarter of 2009, compared with $2.0bn in the same period last year. Gross written premiums for the entire year of 2009 were $8.0bn, a decrease from $8.5bn in 2008.
AM Best has revised its outlook on CNA to stable from negative and affirmed the financial strength rating of A (Excellent) and issuer credit ratings of “a” of CNA Insurance Companies and its members. AM Best has also revised the outlook to stable from negative and affirmed the issuer credit ratings of “bbb” and debt ratings of CNA Financial Corporation.
CNA’s ratings reflect its improved risk-adjusted capitalization, continued solid underwriting fundamentals, adequate liquidity and good business position as a leading writer within the commercial lines segment of the property/casualty industry, said AM Best.
In addition, the ratings recognise CNA’s underwriting and other operating initiatives to improve operating performance; its improved technological infrastructure and greater focus on enterprise risk management.
Partially offsetting these positive factors are the group’s investment losses in 2007 and 2008, incurred catastrophe losses in recent years and the drag from the run-off of long-term care and other long-term liabilities, including those associated with the group’s life, asbestos/environmental and other mass torts.
CNA is also vulnerable as a result of its above average exposure to structured securities, including residential and commercial mortgage-backed securities, and below investment-grade securities. In addition, AM Best expects the continued soft pricing and continued competitive forces in the US commercial lines market will likely pressure underwriting margins over the near term.
“We are pleased to report solid net operating income for the quarter and year,” said Thomas Motamed, chairman and chief executive officer of CNA Financial Corporation. “In our core property/casualty operations, the specialty segment continued to deliver very strong performance. In the commercial segment, our underwriting improvement strategies are starting to show in the form of fourth quarter renewal rate increases, higher submission volume and hit ratios in our target classes of business.
“The sluggish economy and competitive insurance marketplace continue to put pressure on revenues and margins across our property/casualty portfolio. However, we continue to believe that focusing our appetite on specific industry segments, shifting our mix of business and expanding our geographic reach will help us manage through this environment until there is sustained improvement in the underlying economy,” said Motamed.