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CNA Financial (CNA) Down 3.2% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for CNA Financial (CNA - Free Report) . Shares have lost about 3.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CNA Financial due for a breakout? 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 Q2 Earnings & Revenues Miss, Fall Y/Y
CNA Financial Corporation reported second-quarter 2022 core earnings of 90 cents per share, which missed the Zacks Consensus Estimate by 9.1%. The bottom line decreased 28% year over year.
The insurer’s results reflect lower investment income from the limited partnership and common stock, partially offset by higher underwriting income and higher income from fixed income securities. The quarter delivered the lowest combined ratio in over five years.
Behind Second-Quarter Headlines
Total operating revenues of CNA Financial were $2.6 billion, down 1.5% year over year due to lower net investment income. The top line missed the Zacks Consensus Estimate by 0.8%.
Net written premiums at Property & Casualty Operations improved 20% year over year to about $2.3 billion, driven by a retention rate of 85% and new business growth of 27%.
Net investment income decreased 26.9% year over year to $432 million. The decrease was due to lower limited partnership and common stock investments, which returned a negative 0.7% in the reported quarter against a positive 8.3% in the year-ago period.
Total claims, benefits and expenses increased 4% to $2.7 billion, primarily due to higher insurance claims and policyholders' benefits, non-insurance warranty expenses and other operating expenses.
Catastrophe losses were $37 million, narrower than losses of $54 million in the year-ago quarter.
The combined ratio improved 60 basis points (bps) year over year to 90.8, the lowest on record.
Core return on equity was 8.1%, down 320 bps. Book value as of Jun 30, 2022 was $35.06 per share, down 25.7% from Dec 31, 2021. Debt to capital deteriorated to 22.6% at the quarter end from 17.8% as of Dec 31, 2021. Statutory surplus decreased 6.1% from 2021 end to $10.6 billion at quarter end.
Segment Results
Specialty’s net written premiums rose 6% year over year to $832 million. The combined ratio deteriorated 20 bps to 88.1.
Commercial’s net written premiums increased 36% year over year to $1.1 billion. The combined ratio improved 640 bps to 93.2.
International’s net written premiums increased 13% year over year to $330 million. The combined ratio improved 140 bps to 91.6.
Life & Group’s net earned premiums were $118 million, down 6.3% year over year. Core income of $6 million plunged 86% year over year due to lower net investment income.
Corporate & Other’s core loss of $78 million was wider than a loss of $53 million in the year-earlier quarter.
Dividend Update
CNA Financial’s board of directors approved a quarterly dividend of 40 cents to be paid out on Sep 1 to shareholders of Aug 15.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -23.68% due to these changes.
VGM Scores
Currently, 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 quintile 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
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise CNA Financial has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
CNA Financial belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, Travelers (TRV - Free Report) , has gained 4.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.
Travelers reported revenues of $9.23 billion in the last reported quarter, representing a year-over-year change of +7%. EPS of $2.57 for the same period compares with $3.45 a year ago.
Travelers is expected to post earnings of $2.34 per share for the current quarter, representing a year-over-year change of -10%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Travelers has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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CNA Financial (CNA) Down 3.2% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for CNA Financial (CNA - Free Report) . Shares have lost about 3.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CNA Financial due for a breakout? 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 Q2 Earnings & Revenues Miss, Fall Y/Y
CNA Financial Corporation reported second-quarter 2022 core earnings of 90 cents per share, which missed the Zacks Consensus Estimate by 9.1%. The bottom line decreased 28% year over year.
The insurer’s results reflect lower investment income from the limited partnership and common stock, partially offset by higher underwriting income and higher income from fixed income securities. The quarter delivered the lowest combined ratio in over five years.
Behind Second-Quarter Headlines
Total operating revenues of CNA Financial were $2.6 billion, down 1.5% year over year due to lower net investment income. The top line missed the Zacks Consensus Estimate by 0.8%.
Net written premiums at Property & Casualty Operations improved 20% year over year to about $2.3 billion, driven by a retention rate of 85% and new business growth of 27%.
Net investment income decreased 26.9% year over year to $432 million. The decrease was due to lower limited partnership and common stock investments, which returned a negative 0.7% in the reported quarter against a positive 8.3% in the year-ago period.
Total claims, benefits and expenses increased 4% to $2.7 billion, primarily due to higher insurance claims and policyholders' benefits, non-insurance warranty expenses and other operating expenses.
Catastrophe losses were $37 million, narrower than losses of $54 million in the year-ago quarter.
The combined ratio improved 60 basis points (bps) year over year to 90.8, the lowest on record.
Core return on equity was 8.1%, down 320 bps. Book value as of Jun 30, 2022 was $35.06 per share, down 25.7% from Dec 31, 2021. Debt to capital deteriorated to 22.6% at the quarter end from 17.8% as of Dec 31, 2021. Statutory surplus decreased 6.1% from 2021 end to $10.6 billion at quarter end.
Segment Results
Specialty’s net written premiums rose 6% year over year to $832 million. The combined ratio deteriorated 20 bps to 88.1.
Commercial’s net written premiums increased 36% year over year to $1.1 billion. The combined ratio improved 640 bps to 93.2.
International’s net written premiums increased 13% year over year to $330 million. The combined ratio improved 140 bps to 91.6.
Life & Group’s net earned premiums were $118 million, down 6.3% year over year. Core income of $6 million plunged 86% year over year due to lower net investment income.
Corporate & Other’s core loss of $78 million was wider than a loss of $53 million in the year-earlier quarter.
Dividend Update
CNA Financial’s board of directors approved a quarterly dividend of 40 cents to be paid out on Sep 1 to shareholders of Aug 15.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -23.68% due to these changes.
VGM Scores
Currently, 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 quintile 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
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise CNA Financial has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
CNA Financial belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, Travelers (TRV - Free Report) , has gained 4.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.
Travelers reported revenues of $9.23 billion in the last reported quarter, representing a year-over-year change of +7%. EPS of $2.57 for the same period compares with $3.45 a year ago.
Travelers is expected to post earnings of $2.34 per share for the current quarter, representing a year-over-year change of -10%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Travelers has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.