CNA posts essentially flat Q1 profit

CNA Financial Corp. on Monday reported first-quarter net income of $313 million, compared with $312 million in the year-earlier period, as its top executive said the insurer is bullish about 2022 but keeping a close eye on economic and social inflation.

Speaking on CNA’s quarterly earnings call with analysts, Dino Robusto, chairman and CEO, described market conditions as “excellent” despite recent rate moderation and upward pressure on loss cost trends.

Rate increases hit their peak in the fourth quarter of 2020 and have moderated at a measured pace of about 1 point per quarter to 7% in the first quarter of this year, Mr. Robusto said.

“With written rate increases still in excess of loss cost trends and earned rates at 9%, this should portend positive margin persisting through 2022,” though there could be further upward pressure on loss cost trends, Mr. Robusto said.

Economic inflation is increasing, and as the courts have started to reopen and clear the backlog in their dockets social inflation remains a factor, he said.

“Economic and social inflationary pressures may continue to increase or persist longer than anticipated, making it difficult to know at this time how actual margin will materialize over time,” he said.

CNA saw its net investment income fall to $448 million pretax in the first quarter, from $504 million in the year-earlier period, driven by lower returns from limited partnership and common stock investments. Net investment losses for the quarter of $3 million compared with net investment gains of $49 million in the year-earlier period.

Catastrophe losses, net of reinsurance, fell to $19 million, compared with $125 million in the prior-year period, leading to an improved combined ratio of 91.9% for the quarter, compared with 98.1% a year earlier.

In its core property/casualty business, CNA reported net written premium of $2.02 billion, up 4% from $1.94 billion in the prior-year period.

The impact of the Ukraine conflict is expected to be “di minimus,” since CNA is not a big writer of the business lines affected, Mr. Robusto said.