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CNA Property & Casualty Operations combined ratio at 95.9% for full-year 2016


February 7, 2017   by Canadian Underwriter


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CNA Financial Corporation has reported a Property & Casualty Operations combined ratio for 2016 of 95.9%, similar to 95.4% for the 12 months ending Dec. 31 2015, and a combined ratio of 99.9% for the fourth quarter of 2016 ending Dec. 31, compared to 98.9% in the prior-year quarter.

CNA released its financial results on Monday, reporting a fourth quarter 2016 net income of US$241 million and net operating income of US$221 million. Full-year 2016 results were net income of US$859 million and net operating income of US$824 million, CNA said in a statement.

“Led by very good performance in our Specialty and International segments, fourth quarter net operating income of US$221 million was a solid result despite reserve strengthening in the run-off Defense Base Act business within Commercial,” said Dino E. Robusto, chairman and chief executive officer of CNA Financial Corporation.

P&C Operations’ net operating income was US$217 million for the fourth quarter of 2016 compared to US$202 million in the prior-year quarter. The increase was driven by higher net investment income, CNA reported. Catastrophe losses of US$18 million for the fourth quarter were primarily from weather-related events in the United States, compared to US$27 million after tax in the prior-year quarter.

P&C Operations’ net written premiums (NWP) for the full year were US$6.44 billion compared to US$6.42 billion in 2015. For the most recent quarter, NWP were US$1.53 billion compared to US$1.59 billion in Q4 2015.

The Specialty segment reported a net operating income increase of US$55 million for Q4 2016 to US$164 million, driven by higher favourable net prior-year reserve development. The combined ratio improved 9.4 points to 85.6% for Q4 2016 and 3.7 points for the full year to 85%. NWPs decreased $32 million as compared with the prior-year quarter due to a lower level of new business and slightly lower retention due to underwriting actions undertaken in certain business lines, CNA reported in the statement.

In the Commercial segment, net operating income decreased US$65 million for Q4 2016 compared to the prior-year quarter, primarily due to the “unfavourable period over period effect of net prior-year reserve development, partially offset by an increase in net investment income.” The combined ratio for the quarter increased 18.4 points to 118%. “The unfavourable net prior year development reflects a US$90 million increase in reserves related to the Defense Base Act workers’ compensation program that the company began to run-off in 2012,” the statement pointed out. Commercial NWPs decreased US$31 million compared to the prior-year quarter due to a decrease in new business as well as premium adjustments in CNA’s small business unit.

For International, net operating results improved US$25 million for Q4 2016, primarily due to lower cat losses and higher favourable net prior-year reserve development. The combined ratio improved 23.8 points to 86.1%, with the loss ratio improving 22 points primarily due to a decrease in cat losses and higher favourable net prior-year reserve developments. Cat losses were US$3 million of the loss ratio compared to US$22 million in the prior-year quarter. NWPs increased US$3 million to US$184 million, which included favourable period-over-period premium development of US$5 million.

CNA is the eighth largest commercial insurance writer and the 14th largest P&C company in the United States, the statement said. CNA’s products include standard commercial lines, specialty lines, surety, marine and other property and casualty coverages. Its services include risk management, information services, underwriting, risk control and claims administration.