CNA CEO Robusto ‘Back in the Game,’ Though 2017 Has Room for Improvement

February 6, 2017 by Andrew Simpson

CNA reported fourth-quarter and full-year 2016 results, with its new CEO indicating that while there is a strong foundation at the insurer, the company has work to do in improving underwriting discipline and results, and that is his main focus.

“We need to grow our underwriting profits,” stressed CNA Chairman and CEO Dino Robusto in an earnings call with analysts, adding that this is necessary but not easy to do when market pricing is running below loss cost trends.

Robusto said he is focused on lowering CNA’s expense ratio, which is higher than its peers’ ratio and is a competitive disadvantage, through various initiatives including using more automation and analytics.

CNA Financial Corp.’s fourth-quarter 2016 net income was $241 million, and net operating income was $221 million. Full-year 2016 results were net income of $859 million and net operating income of $824 million.

Property/casualty operations net operating income was $217 million for the fourth quarter of 2016 compared to $202 million the prior year. The increase was driven by higher net investment income.

Dino Robusto

Robusto called the fourth-quarter net operating income of $221 million “a solid result” but stressed that he sees room for improvement.

Robusto, a former Chubb executive, succeeded Thomas Motamed at the top at CNA on Nov. 21. Robusto took about a year off between leaving Chubb and starting at CNA. He said being away from the business was “difficult” for him and “it feels great to be back in the game.”

Robusto said he wants to instill an “expense discipline mindset” so that all employees are thinking about what they are spending and how they can be more productive.

CNA’s professionals “know what is working and what is not” and have the ability to change, Robusto said. He said he appreciates that his predecessor Motamed, who also came from Chubb, built a culture of continuous improvement at CNA that he can build on.

But Robusto stressed that he sees room for improvement. “There is a lot of upside for us to capture,” he told analysts.

On lowering expenses, Craig Mense, executive vice president and chief financial officer, pointed to $50 million in expense reduction expected in 2017 as a result of actions taken in 2016. “But there is more to be done,” he said. “Nobody’s complacent.”

CFO Mense commented that the insurer’s “singular focus” on growing underwriting profits involves improved decision-making and is not dependent upon any changes in corporate taxation that may come out of Washington.

Asked about recruiting new talent at CNA, Robusto said he considers it his personal responsibility to be involved in finding the best talent as well as in taking the talent already at CNA and “making it the best.” He said he is not looking to recruit from just one other carrier but looks “across the entire P/C supply chain” and that he believes there is a growing desire by many professionals to be a part of CNA. “I see it and I can feel it, ” he said.

Property/Casualty Results

P/C operations net operating income was $982 million in 2016 compared to $966 million in the prior year. This increase was due to higher favorable net prior-year reserve development and net investment income, partially offset by an increase in the current accident-year loss ratio and higher underwriting expenses. Catastrophe losses for the full year were $111 million, after tax, as compared to $95 million, after tax, in the prior year.

The P/C combined ratio was 99.9 for fourth-quarter 2016 and 95.9 for the full year. In the fourth quarter of 2015 it was 98.9, while for the full year it was 95.4.

The fourth-quarter result was negatively affected by a strengthening of reserves in the runoff Defense Base Act workers compensation business within the Commercial segment. CNA exited the DBA business in 2012 and recently devoted more resources and a dedicated team in this area to address claims and improve recovery from the government. This business contributed 13 points to the combined ratio for the fourth quarter and thee points for the year.

Fourth-Quarter Specialty and Commercial




CNA’s insurance products include commercial lines, specialty lines, surety, marine and other P/C coverages. CNA’s services include risk management, information services, underwriting, risk control and claims administration.

Source: CNA

*This story appeared previously in our sister publication Insurance Journal.