CNA Financial Corp. saw its 2020 second quarter net income sliced almost by half compared to the previous year due to “considerable catastrophe losses” from COVID-19, civil unrest and weather-related events.
The Chicago-based commercial property/casualty insurer booked $151 million in net income for Q2, or $0.55 per diluted share. That compares to $278 million in net income, or $1.02 per diluted share over the same period in 2019.
Dino Robusto, CNA’s chairman and CEO, said in prepared remarks that the insurer did well despite the challenges, due to “stable new business,” rate increases and a combined ratio that was solid aside from the added catastrophe loss costs.
CNA announced previously it booked $301 million of pretax net catastrophe losses in the second quarter, of which $182 million involved COVID-19 costs. Another $61 million stemmed from civil unrest and $58 million related mostly to severe weather-related events.
Regarding CNA’s COVID-19 costs, $103 million came from Specialty, $43 million from Commercial and $36 million stemmed from International. The insurer said specific losses were driven by healthcare professional liability with added impacts coming from workers compensation, management liability, commercial property, trade credit and surety. The insurer noted as well that due to the timing of the pandemic, “emergence pattern of claims and long tail nature of certain exposures the losses are substantially classified as incurred but not reported reserves.”
CNA said its property/casualty business produced a 112.3 combined ratio including catastrophe costs, compared to 95.7 in the 2019 second quarter. Without catastrophes, the combined ratio for the business would have been 93.4, versus 94.6 a year ago.
CNA’s U.S. P/C segments, excluding third party captives, produced 8 percent growth in gross written premiums and 4 percent growth in net written premium. Take third party captives out of the mix, and gross written premiums grew 7 percent during the quarter, net written premiums ticked 3 percent higher for P/C overall.
Other Q2 Highlights:
- CNA specialty insurance landed with a 104.2 combined ratio in Q2, compared to a 90.7 combined ratio in the 2019 second quarter. Excluding catastrophes, the combined ratio was 92.1 during the quarter, compared to 93.2 a year ago. Most of that increase came from COVID-19 costs.
- Specialty insurance gross written premiums, excluding third party captives, grew 7 percent during the quarter. Net written premiums expanded by 4 percent in Q2, thanks to rate increases.
- Commercial insurance gross written premiums, excluding third party captives, grew by 9 percent during Q2. Net written premiums expanded by 4 percent, a trend CNA credited to strong rate increases and higher new business.
- The commercial insurance combined ratio climbed to 118.5, compared to 99.7 in the 2019 second quarter. Excluding catastrophe losses, it was 93.5, versus 94.9 a year ago.
- Pretax net investment income hit $534 million, compared to $515 million in the same, year-ago quarter. CNA credited the result to solid returns from limited partnership and common stock investments.
- CNA’s International gross written premiums were $277 million, down from $287 million in the 2019 second quarter. Net written premiums reached $239 million, versus $249 million last year. The insurer blamed the dips due to a strategic exit from some Lloyd’s business, offset by growth in Europe.
- The International combined ratio surpassed 115 in the 2019 second quarter, compared to 97.5 last year. Without catastrophe costs, the numbers would have been 96.6 and 97.4, respectively.