Reserves charge hits CNA’s income; underlying combined ratio falls to 94.6%

Chicago-based CNA Financial Corporation reported a sharp fall in net income, but saw its combined ratio remain well under 100%.

Third quarter 2019 net income of $107 million, down from $336 million a year earlier. However, the results were distorted by the inclusion of a $170 million after-tax charge related to unlocking active life reserves to recognize a premium deficiency as a result of the gross premium valuation (GPV) completed in the quarter.

The property & casualty (P&C) operations combined ratio for the third quarter was 97.6 percent, up from 94.2 percent. The company said the underlying combined ratio, excluding catastrophes and development, was 94.6 percent, down from 94.8 percent.

Gross written premiums, excluding third party captives, rose to $1.86 billion, from $1.7 billion.

“Our third quarter results reflect the ongoing strength of our P&C business, which delivered an underlying combined ratio of 94.6%, net written premium growth of 8% and rate increases of 6%,” said Dino E. Robusto, chairman and chief executive. “In addition, the changes made to our Long Term Care assumptions as a part of our annual reserve review reflect our continued prudent management of this runoff portfolio.”

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