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CNA Financial Corporation’s P&C Operations’ combined ratio improves to 85.7% in Q3 2015 from 96.1%


November 2, 2015   by Canadian Underwriter


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CNA Financial Corporation has reported Property & Casualty Operations’ combined ratio for the third quarter of 2015 was 85.7%, down from 96.1% from the third quarter of 2014.

CNA announced its third quarter results on Monday, noting in a statement that P&C Operations’ net operating income for the third quarter ending Sept. 30 was US$264 million, compared with US$241 million in the prior year quarter. Overall Q3 2015 net operating income was US$210 million, while net income for the quarter was US$178 million. [click image below to enlarge]

Overall Q3 2015 net operating income was US$210 million, while net income for the quarter was US$178 million

“Each of our segments achieved a solid underwriting result in the quarter, highlighted by a P&C combined ratio of 85.7%,” said Thomas F. Motamed, chairman and CEO of CNA Financial Corporation, in the statement. “Most importantly, our loss ratio excluding catastrophes and development continues to step in the right direction, particularly in the Commercial segment where we achieved a 3-point improvement from the same prior year period.”

CNA serves businesses and professionals in the United States, Canada, Europe and Asia. Its insurance products include commercial lines, specialty lines, surety, marine and other property and casualty coverages. Services also include risk management, information services, underwriting, risk control and claims administration.

For CNA’s Commercial segment, net operating income increased US$23 million for Q3 2015 as compared with the prior year quarter, due to improved underwriting results and partially offset by lower net investment income, the company said in the statement. The combined ratio improved 14.9 points for the third quarter of 2015, as compared with the prior year quarter. The loss ratio also improved 15.3 points, due to favourable net prior year development in the current year quarter as compared to unfavourable net prior year development for the prior year quarter and an improved current accident year loss ratio. Catastrophe losses were US$10 million for the third quarter of 2015, as compared with US$14 million for the prior year quarter, the statement said. [click image below to enlarge]

P&C combined ratio for the third quarter of 2015 was 85.7%, down from 96.1% from the third quarter of 2014

Net written premiums for Commercial increased US$8 million for the third quarter of 2015 as compared with the prior year quarter, the statement noted. Higher new business and retention as well as positive rate were substantially offset by the residual effect of previous underwriting actions undertaken in certain business classes.

Net operating income for CNA’s Specialty line decreased US$5 million for Q3 2015 as compared with Q3 2014. Improved underwriting results were more than offset by lower net investment income. The combined ratio improved 6.4 points for the third quarter of 2015 as compared with the prior year quarter. The loss ratio improved 7.2 points, driven by higher favourable net prior year development. Catastrophe losses were US$3 million for Q3 2015 as compared with US$5 million for the prior year quarter. Net written premiums for the Specialty line in Q3 2015 decreased US$29 million as compared with the Q3 2014, driven by lower new business, the statement added.

For the International line, net operating income increased US$4 million for Q3 2015 compared to Q3 2014, due to improved underwriting results driven by higher favourable net prior year development. The combined ratio improved 8.6 points for Q3 as compared with the prior year quarter; the loss ratio improved 7.3 points. This improvement was due to higher favourable net prior year development, partially offset by a higher current accident year loss ratio, CNA reported. The deterioration in the current accident year loss ratio was driven by large losses, including losses related to the explosions in Tianjin, China. Net written premiums decreased US$10 million for the third quarter of 2015 as compared with the prior year quarter. Excluding the effect of foreign currency exchange rates, net written premiums increased 5% for the third quarter of 2015 as compared with the prior year quarter, driven by higher new business.