Yahoo Finance Why Is CNA Financial (CNA) Up 2% Since Last Earnings Report?
A month has gone by since the last earnings report for CNA Financial (CNA). Shares have added about 2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CNA Financial due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
CNA Financial Q1 Earnings Miss on Higher Expenses
CNA Financial Corporation reported first-quarter 2024 core earnings of $1.30 per share, which missed the Zacks Consensus Estimate by 5.1%. The bottom line, however, increased 9.2% year over year.
The insurer’s results reflected improved premiums and investment income, offset by higher catastrophe losses and expenses.
Behind First-Quarter Headlines
Total operating revenues of CNA Financial were $3 billion, up 10% year over year, driven by higher premiums, net investment income and other revenues. The top line beat the Zacks Consensus Estimate by 4.1%.
Net written premiums of Property & Casualty Operations improved 6.4% year over year to $2.3 billion. Our estimate was pegged at $2.4 billion.
Net investment income jumped 16% year over year to $609 million. The increase was driven by favorable limited partnership and common stock returns and higher income from fixed income securities as a result of favorable reinvestment rates. Our estimate was $585.7 million.
Total claims, benefits and expenses rose 5.4% to $3 billion, primarily due to higher insurance claims and policyholders' benefits, amortization of deferred acquisition costs, non-insurance warranty expense and interest. Our estimate was pinned at $2.8 billion.
Underwriting income decreased 3% year over year to $126 million. Catastrophe losses were $88 million, wider than a loss of $52 million in the year-ago quarter.
The combined ratio deteriorated 70 basis points (bps) year over year to 94.6.
Segment Results
Specialty’s net written premiums increased 1% year over year to $792 million. Our estimate was $774.6 million. The combined ratio deteriorated 70 bps to 90.7.
Commercial’s net written premiums climbed 13% year over year to $1.3 billion. The figure matched our estimate. The combined ratio deteriorated 160 bps to 96.
International’s net written premiums decreased 6% year over year to $260 million. Our estimate was $294.2 million. The combined ratio improved 390 bps to 93.3.
Life & Group’s net earned premiums were $110 million, down 4.3% year over year. Our estimate was $112.6 million. The core income was $5 million against a core loss of $3 million in the year-ago quarter, primarily due to higher net investment income.
Corporate & Other’s core loss of $22 million was wider than a loss of $18 million in the year-ago quarter. It reflected a $5 million after-tax charge related to office consolidation in the reported quarter.
Financial Update
Total assets increased 0.5% from the end of 2023 to $65 billion. Stockholders' equity of $9.7 billion decreased 2.3% from the 2023-end level. The core return on equity was 11.5%, which expanded 70 bps. Book value, excluding AOCI, was $45.10 per share, down 2.7% from the previous quarter’s figure. Statutory surplus remained flat at $10.9 billion quarter over quarter. Debt-to-capital deteriorated 320 bps to 26.7. Net cash flows provided by operating activities increased 15.6% from the previous quarter’s level to $504 million.
Dividend Update
CNA Financial’s board of directors approved a quarterly dividend of 44 cents per share to be paid out on Jun 6 to shareholders as of May 20.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
The consensus estimate has shifted -9.4% due to these changes.
VGM Scores
At this time, CNA Financial has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
CNA Financial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
CNA Financial is part of the Zacks Insurance - Property and Casualty industry. Over the past month, Axis Capital (AXS), a stock from the same industry, has gained 4.8%. The company reported its results for the quarter ended March 2024 more than a month ago.
Axis Capital reported revenues of $1.43 billion in the last reported quarter, representing a year-over-year change of +5.1%. EPS of $2.57 for the same period compares with $2.33 a year ago.
For the current quarter, Axis Capital is expected to post earnings of $2.60 per share, indicating a change of +16.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.2% over the last 30 days.
Axis Capital has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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CNA Financial Corporation (CNA) : Free Stock Analysis Report
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