CNA Financial’s Q4’24 net income impacted by pension settlement

Chicago-based insurer CNA Financial Corporation reported a net income of $21 million for the fourth quarter of 2024, a lower figure compared to the $367 million reported during the same period in 2023.

According to the insurer, the quarter’s net income includes $290 million after-tax loss from a previously announced pension settlement transaction.

In October 2024, CNA Financial announced its pension plan will transfer approximately $1.05 billion in defined benefit pension obligations to Metropolitan Life Insurance through a nonparticipating single premium group annuity contract.

This contract is to cover roughly 7,600 participants and beneficiaries, representing about 60% of the plan’s obligations. The purchase of the annuity contract requires no cash or asset contributions from CNA.

However, the company anticipated recording a one-time, non-cash pre-tax pension settlement charge of approximately $370 million in the fourth quarter. CNA emphasised that this transaction would not impact its core income or cash flow for either the fourth quarter or the full year.

Core income was $342 million, a slight decrease from $362 million in Q4 2023. The company also reported net investment losses of $31 million, compared to net investment gains of $5 million in the same quarter last year.

CNA’s Property & Casualty (P&C) segments delivered core income of $451 million, a $17 million increase year-over-year. This improvement was driven by higher investment income and underlying underwriting income, partially offset by increased catastrophe losses and unfavourable foreign currency exchange rate fluctuations.

The P&C segments, excluding third-party captives, saw gross written premium growth of 9% and net written premium growth of 10%, fuelled by 8% growth in new business, a strong 86% retention rate, and a 4% renewal premium change.

For Q4 2024, P&C combined ratio was 93.1%, up from 92.1% in Q4 2023. This included a 1.8 percentage point impact from catastrophe losses, compared to 1.0 point in the prior year quarter.

The underlying combined ratio for P&C was 91.4%, consistent with the prior year quarter, with an underlying loss ratio of 61.1% and an expense ratio of 30.0%.

The Life & Group segment reported a core loss of $18 million in Q4 2024, compared to core income of $4 million in the same period last year.

The Corporate & Other segment also posted a core loss of $91 million, widening from a $76 million loss in the fourth quarter of 2023.

For the full year of 2024, CNA saw a net income of $959 million, which includes $293 million after-tax loss from pension settlement transactions. This was a decrease compared to the $1,205 million seen in the prior year.

The year also saw a record core income of $1,316 million, versus $1,284 million in the prior year, the firm stated.

P&C core income was $1,549 million, compared to 2023’s $1,505 million. This result reflects higher investment income and record high underlying underwriting income partially offset by higher catastrophe losses.

P&C combined ratio for the year was 94.9%, which compares with 93.5% in 2023. The 2024 CoR includes 3.6 points of catastrophe loss impact compared with 2.6 points in the prior year.

Life & Group core loss in 2024 was $23 million versus core loss of $48 million in 2023. Corporate & Other core loss of $210 million compared to a core loss of $173 million in the prior year.

Douglas M. Worman, President & Chief Executive Officer of CNA Financial Corporation, commented: “In the fourth quarter we continued to produce excellent results with $342 million of core income leading to record core income of $1,316 million for the full year. We achieved record levels of underlying underwriting gain in the quarter and for the full year. Net investment income was up 5% for the quarter and 10% for the year.

“The P&C all-in combined ratio was 93.1% in the quarter and included 1.8 points of catastrophe loss. The underlying combined ratio was 91.4%, which marks 16 consecutive quarters below 92%.

“Gross written premium excluding captives grew 9% in the quarter and net written premium was up 10%, the strongest quarterly growth of the year. New business grew 8% in the quarter and 9% for the year to a record high of nearly $2.3 billion.”

He concluded: “Rate continues to be an area of focus in the lines most impacted by social inflation. In those lines, there is a need for continued pricing discipline and our rate achievement continues to exceed our estimate of long-run loss cost trend. Retention was 86% and was strong in all segments.

“We are extremely pleased with our results for the quarter and the year. Reflective of our consistent strategic execution, AM Best and Moody’s recently revised their outlooks on CNA’s financial strength and debt ratings from stable to positive. CNA is well positioned to capitalize on the market opportunities in 2025 and to continue to deliver sustained, profitable growth,”

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