Close

Form 8-K CNA FINANCIAL CORP For: Apr 21

FREE Breaking News Alerts from StreetInsider.com!

E-mail Address

StreetInsider.com Top Tickers, 4/24/2024

1. TSLA
2. SPY
3. GM
4. SPOT
5. AMZN
6. SHW
7. AAPL
8. MINN
9. NVDA


April 21, 2021 4:58 PM EDT



cnalogoq420191.gif




CNA Financial Corporation
Supplemental Financial Information


Property & Casualty, Commercial, and Corporate & Other Segments Results of Operations
Revised Quarterly and Annual Results for 2020



This report is for informational purposes only and includes financial exhibits that are unaudited. This report should be read in conjunction with documents filed with the U.S. Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.


Table of Contents



Segment Realignment
As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, in the first quarter of 2021 and in connection with the ceding of certain legacy reserves under a retroactive reinsurance agreement executed in February 2021, CNA changed the segment presentation of a legacy portfolio of excess workers’ compensation policies relating to business written in 2007 and prior. This business, which was previously reported as part of the Commercial business segment, is now reported as part of the Corporate & Other business segment. In addition, a determination was made to change the segment presentation of certain legacy mass tort reserves. Similar to the aforementioned excess workers’ compensation legacy business, these legacy mass tort reserves were previously reported in the Commercial business segment and are now reported as part of the Corporate & Other business segment.
Claim and claim adjustment expense reserves of $791 million as of December 31, 2020 which were previously reported in the Commercial business segment are now reported as part of the Corporate & Other business segment.
These changes were made to better reflect the manner in which we are organized for purposes of making operating decisions and assessing performance. There was no change to the Specialty, International and Life & Group business segments. Segment data for prior reporting periods has been adjusted to reflect the new segment reporting.
The reclassification of historical segment information has no effect on the Company's previously reported consolidated results of operations, financial condition or cash flows.


Property & Casualty - Results of Operations
2020
(In millions)Full YearQ4Q3Q2Q1
Gross written premiums$12,399 $3,143 $3,008 $3,165 $3,083 
Gross written premiums ex. 3rd party captives
8,422 2,169 2,014 2,132 2,107 
Net written premiums7,566 1,952 1,821 1,930 1,863 
Net earned premiums7,146 1,853 1,827 1,724 1,742 
Net investment income1,020 307 292 308 113 
Non-insurance warranty revenue1,252 326 317 308 301 
Other revenues26 7 5 5 9 
Total operating revenues9,444 2,493 2,441 2,345 2,165 
Insurance claims and policyholders' benefits4,817 1,134 1,259 1,304 1,120 
Amortization of deferred acquisition costs1,410 364 360 342 344 
Non-insurance warranty expense1,159 300 293 285 281 
Other insurance related expenses922 229 225 236 232 
Other expenses77 12 13 20 32 
Total claims, benefits and expenses8,385 2,039 2,150 2,187 2,009 
Core income (loss) before income tax1,059 454 291 158 156 
Income tax (expense) benefit on core income (loss)(219)(96)(55)(33)(35)
Core income (loss)$840 $358 $236 $125 $121 
Other Performance Metrics
Underwriting gain (loss)$(3)$126 $(17)$(158)$46 
Loss & LAE ratio67.2 %61.2 %68.8 %75.3 %63.8 %
Expense ratio32.6 32.0 31.8 33.6 33.1 
Dividend ratio0.3 0.2 0.3 0.3 0.4 
Combined ratio100.1 %93.4 %100.9 %109.2 %97.3 %
Combined ratio excluding catastrophes and development93.1 %92.6 %92.6 %93.2 %93.7 %
Net accident year catastrophe losses incurred$550 $14 $160 $301 $75 
Effect on loss & LAE ratio7.7 %0.8 %8.7 %17.5 %4.3 %
Net prior year development and other: (favorable) / unfavorable$(39)$5 $(8)$(25)$(11)
Effect on loss & LAE ratio(0.7)%— %(0.4)%(1.5)%(0.7)%

1

Commercial - Results of Operations
2020
(In millions)Full YearQ4Q3Q2Q1
Gross written premiums$4,086 $983 $915 $1,126 $1,062 
Gross written premiums ex. 3rd party captives
3,993 975 915 1,044 1,059 
Net written premiums3,565 862 804 949 950 
Net earned premiums3,323 853 857 795 818 
Net investment income513 159 151 161 42 
Other revenues25 7 5 5 8 
Total operating revenues3,861 1,019 1,013 961 868 
Insurance claims and policyholders' benefits2,393 538 676 619 560 
Amortization of deferred acquisition costs592 151 150 147 144 
Other insurance related expenses506 127 128 124 127 
Other expenses34 9 7 12 6 
Total claims, benefits and expenses3,525 825 961 902 837 
Core income (loss) before income tax336 194 52 59 31 
Income tax (expense) benefit on core income (loss)(69)(40)(11)(10)(8)
Core income (loss)$267 $154 $41 $49 $23 
Other Performance Metrics
Underwriting gain (loss)$(168)$37 $(97)$(95)$(13)
Loss & LAE ratio71.6 %62.9 %78.4 %77.4 %67.8 %
Expense ratio33.0 32.7 32.3 33.9 33.2 
Dividend ratio0.5 0.2 0.6 0.6 0.6 
Combined ratio105.1 %95.8 %111.3 %111.9 %101.6 %
Combined ratio excluding catastrophes and development 93.9 %93.6 %93.7 %93.2 %94.6 %
Net accident year catastrophe losses incurred$358 $4 $146 $151 $57 
Effect on loss & LAE ratio10.7 %0.5 %17.0 %19.0 %7.0 %
Net prior year development and other: (favorable) / unfavorable$23 $19 $6 $(2)$— 
Effect on loss & LAE ratio0.5 %1.7 %0.6 %(0.3)%— %
2

Corporate & Other - Results of Operations
2020
(In millions)Full YearQ4Q3Q2Q1
Net earned premiums$(1)$— $(1)$— $— 
Net investment income64 19 17 20 8 
Other revenues— — 1 — (1)
Total operating revenues63 19 17 20 7 
Insurance claims and policyholders' benefits67 50 (6)34 (11)
Other insurance related expenses(3)— (2)(1)— 
Other expenses136 30 34 35 37 
Total claims, benefits and expenses200 80 26 68 26 
Core income (loss) before income tax(137)(61)(9)(48)(19)
Income tax (expense) benefit on core income (loss)23 12 1 8 2 
Core income (loss)$(114)$(49)$(8)$(40)$(17)

3

Definitions and Presentation
•Collectively, CNA Financial Corporation (CNAF) and its subsidiaries are referred to as CNA or the Company.
•P&C Operations includes Specialty, Commercial and International.
•Corporate & Other segment primarily includes certain corporate expenses including interest on corporate debt and the results of certain property and casualty business in run-off, including CNA Re and asbestos and environmental pollution. Intersegment eliminations are also included in this segment.
•Management uses the core income (loss) financial measure to monitor the Company’s operations. Please refer to Note O to the Consolidated Financial Statements within the December 31, 2020 Form 10-K for further discussion of this non-GAAP financial measure.
•Management uses underwriting results to monitor insurance operations. Underwriting results are pretax and are calculated as net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and other insurance related expenses.
•In the evaluation of the results of Specialty, Commercial and International, management uses the loss ratio, the expense ratio, the dividend ratio and the combined ratio. These ratios are calculated using financial results prepared in accordance with accounting principles generally accepted in the United States of America. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios.
•This financial supplement may also reference or contain financial measures that are not in accordance with GAAP. Management utilizes these financial measures to monitor the Company's insurance operations and investment portfolio. Core income, which is derived from certain income statement amounts, is used by management to monitor performance of the Company's insurance operations. The Company's investment portfolio is monitored by management through analysis of various factors including unrealized gains and losses on securities, portfolio duration and exposure to market and credit risk.
•Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses and any cumulative effects of changes in accounting guidance. The calculation of core income (loss) excludes net investment gains or losses because net investment gains or losses are generally driven by economic factors that are not necessarily reflective of our primary operations. Management monitors core income (loss) for each business segment to assess segment performance. Presentation of consolidated core income (loss) is deemed to be a non-GAAP financial measure. For reconciliations of non-GAAP measures to the most comparable GAAP measures and other information, please refer herein and/or to CNA's most recent 10-K on file with the Securities and Exchange Commission, as well as the press release, available at www.cna.com.
•Gross written premiums ex. 3rd party captives represents gross written premiums excluding business which is ceded to third party captives, including business related to large warranty programs.
•Pretax net prior year development and other includes the effects of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts.
•Certain immaterial differences are due to rounding.

4

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings