CNA(CNA) - 2025 Q2 - Quarterly Results

Financial Highlights CNA Financial reported mixed Q2 2025 results with decreased net income but increased core income, driven by strong P&C performance and higher net investment income Overall Performance Summary In the second quarter of 2025, CNA Financial reported a net income of $299 million ($1.10 per share), a decrease from $317 million ($1.17 per share) in the prior year quarter. However, core income, a key non-GAAP metric, rose by 3% to $335 million ($1.23 per share), driven by strong performance in the Property & Casualty segment and higher net investment income Q2 & H1 2025 Key Financial Results | ($ millions, except per share data) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $299 | $317 | $573 | $655 | | Core income | $335 | $326 | $616 | $681 | | Net income per diluted share | $1.10 | $1.17 | $2.10 | $2.40 | | Core income per diluted share | $1.23 | $1.19 | $2.26 | $2.50 | - The CEO highlighted the strong performance, noting the ninth consecutive quarter with an underlying underwriting gain of $200 million or more and a 7% increase in net investment income[8][11] Key Performance Indicators The company's performance was characterized by strong P&C core income of $448 million, offset by a significant core loss of $114 million in the Corporate & Other segment due to legacy mass tort charges. The P&C combined ratio improved to 94.1%, aided by lower catastrophe losses. The company also saw 6% growth in net written premiums and declared a quarterly dividend of $0.46 per share Q2 2025 Core Income by Segment | Segment | Q2 2025 Core Income (Loss) | Q2 2024 Core Income (Loss) | | :--- | :--- | :--- | | P&C | $448 million | $380 million | | Life & Group | $1 million | ($1 million) | | Corporate & Other | ($114 million) | ($53 million) | P&C Underwriting and Premium Metrics (Q2 2025) | Metric | Value | Prior Year Value | | :--- | :--- | :--- | | Combined Ratio | 94.1% | 94.8% | | Underlying Combined Ratio | 91.7% | 91.6% | | Catastrophe Loss Impact | 2.4 pts | 3.5 pts | | Gross Written Premium Growth | 5% | N/A | | Net Written Premium Growth | 6% | N/A | Shareholder Value Metrics (as of Q2 2025) | Metric | Value | Change from YE 2024 | | :--- | :--- | :--- | | Book value per share | $39.39 | Up from $38.82 | | Book value per share (ex-AOCI) | $45.25 | 4% increase (adj. for dividends) | | Quarterly Dividend | $0.46/share | N/A | Business Segment Performance CNA's business segments showed varied performance, with strong P&C core income and premium growth, offset by a significant loss in Corporate & Other Property & Casualty (P&C) Operations The Property & Casualty (P&C) Operations delivered a strong quarter with core income rising to $448 million from $380 million in the prior year. The combined ratio improved by 0.7 points to 94.1%, primarily due to lower catastrophe losses. Net written premiums grew by 6%, reflecting healthy business expansion P&C Operations Highlights (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Core income | $448M | $380M | | Net written premiums | $2,846M | $2,674M | | Underwriting gain | $150M | $124M | | Combined ratio | 94.1% | 94.8% | | Underlying combined ratio | 91.7% | 91.6% | | Expense ratio | 29.8% | 30.7% | - The improvement in the combined ratio was driven by catastrophe losses falling to $62 million (2.4 points) from $82 million (3.5 points) in the prior year quarter[14] - The expense ratio improved by 0.9 points, attributed to an 8% growth in net earned premiums and a favorable acquisition ratio[14] Specialty The Specialty segment reported a 4% growth in net written premiums. However, the underwriting gain decreased slightly to $53 million, and the combined ratio increased by 0.9 points to 93.6%, driven by a higher underlying loss ratio and the absence of prior year favorable development Specialty Segment (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net written premiums | $892M | $857M | | Underwriting gain | $53M | $60M | | Combined ratio | 93.6% | 92.7% | | Underlying loss ratio | 60.1% | 59.6% | - The underlying combined ratio increased by 0.5 points compared to the prior year quarter, reflecting a 0.5 point increase in the underlying loss ratio[15] Commercial The Commercial segment demonstrated strong performance with a 7% increase in net written premiums and a significant improvement in its combined ratio, which fell 2.2 points to 94.8%. This was largely due to lower catastrophe losses and a 1.3 point improvement in the expense ratio, despite elevated loss trends in commercial auto Commercial Segment (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net written premiums | $1,563M | $1,458M | | Underwriting gain | $74M | $39M | | Combined ratio | 94.8% | 97.0% | | Expense ratio | 27.2% | 28.5% | - Catastrophe losses were significantly lower at $57 million (4.2 points of the loss ratio) compared to $76 million (6.1 points) in the prior year quarter, driving the combined ratio improvement[18] - The underlying combined ratio improved by 0.4 points, as a 1.3 point improvement in the expense ratio more than offset a 0.9 point increase in the underlying loss ratio from commercial auto trends[17] International The International segment achieved 9% growth in net written premiums (7% excluding currency fluctuations). The combined ratio increased slightly by 0.9 points to 92.8%, as the current quarter did not benefit from the favorable prior period development seen in Q2 2024 International Segment (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net written premiums | $391M | $359M | | Underwriting gain | $23M | $25M | | Combined ratio | 92.8% | 91.9% | | Underlying combined ratio | 91.4% | 90.9% | - The combined ratio increased primarily because there was no net prior period development in the current quarter, compared to 1.0 point of favorable development in the prior year quarter[21] Life & Group The Life & Group segment reported a core income of $1 million for the second quarter of 2025, a slight improvement from a core loss of $1 million in the prior year quarter. The result was generally consistent, reflecting favorable persistency offset by lower net investment income Life & Group Results (Q2 2025 vs Q2 2024) | ($ millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net earned premiums | $106 | $109 | | Net investment income | $235 | $239 | | Core income (loss) | $1 | ($1) | Corporate & Other The Corporate & Other segment's core loss significantly increased to $114 million from $53 million in the prior year quarter. This was primarily driven by an $88 million after-tax charge related to unfavorable prior period development for legacy mass tort claims - The core loss more than doubled, increasing by $61 million compared to the prior year quarter[24] - The main driver for the increased loss was an $88 million after-tax charge for legacy mass tort development, compared to a smaller $28 million charge in Q2 2024[24] Investment & Capital Management Net investment income increased due to higher fixed income and limited partnership returns, contributing to modest growth in stockholders' equity Net Investment Income Net investment income for Q2 2025 increased by 7% to $662 million, up from $618 million in the prior year quarter. The growth was driven by higher income from both fixed income securities, due to a larger asset base and better reinvestment rates, and favorable returns from limited partnership and common stock investments Net Investment Income Breakdown (Q2 2025 vs Q2 2024) | ($ millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Fixed income securities and other | $562 | $540 | | Limited partnership and common stock | $100 | $78 | | Total Net investment income | $662 | $618 | Stockholders' Equity Stockholders' equity increased by 1% from year-end 2024 to $10.7 billion. Book value per share excluding AOCI, a key metric of operational net worth, increased 4% from year-end 2024 after adjusting for dividends paid. The company maintained a strong statutory capital and surplus of $11.2 billion Book Value Per Share | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Book value per share | $39.39 | $38.82 | | Book value per share ex AOCI | $45.25 | $46.16 | - The Board of Directors declared a regular quarterly cash dividend of $0.46 per share[2][6] Non-GAAP Financial Measures & Reconciliations This section reconciles key non-GAAP financial measures like Core Income and Underwriting Gain to provide a clearer view of operational performance Reconciliation of Net Income to Core Income This section reconciles GAAP Net Income to the non-GAAP measure of Core Income. Core Income is used by management to assess segment performance by excluding the after-tax effects of net investment gains or losses, which are often driven by economic factors not reflective of primary operations Reconciliation of Net Income to Core Income (Q2 2025) | ($ millions) | Value | | :--- | :--- | | Net income | $299 | | Less: Net investment losses | ($36) | | Core income | $335 | Reconciliation of Net Income per Share to Core Income per Share (Q2 2025) | Per Diluted Share | Value | | :--- | :--- | | Net income per diluted share | $1.10 | | Less: Net investment losses | ($0.13) | | Core income per diluted share | $1.23 | Reconciliation of Net Income to Underwriting Gain This section provides a reconciliation from Net Income to Underwriting Gain and Underlying Underwriting Gain for the P&C segments. Underwriting Gain measures pre-tax profitability from underwriting activities, while Underlying Underwriting Gain further excludes unpredictable catastrophe losses and prior-period development to show current year performance P&C Underwriting Gain Reconciliation (Q2 2025) | ($ millions) | Value | | :--- | :--- | | Core income | $448 | | Less: Net investment income & other items | ($235) | | Underwriting gain | $150 | | Effect of catastrophe losses | $62 | | Effect of unfavorable development | $1 | | Underlying underwriting gain | $213 | Reconciliation of Book Value and ROE The report provides reconciliations for book value and return on equity. Book value per share excluding AOCI is presented to reduce the impact of interest rate fluctuations on net worth. Similarly, Core Return on Equity is calculated to measure how effectively the company invests the portion of net worth attributable to its core business operations Reconciliation of Book Value per Share (June 30, 2025) | Metric | Value | | :--- | :--- | | Book value per share | $39.39 | | Less: Per share impact of AOCI | ($5.86) | | Book value per share excluding AOCI | $45.25 | Return on Equity (Annualized for Q2) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Return on equity | 11.4% | 13.0% | | Core return on equity | 11.0% | 10.6% | Definitions and Forward-Looking Statements This section defines the company's segments and financial measures, including non-GAAP metrics, and provides forward-looking statements Definition of Segments and Financial Measures This section defines the company's reported business segments (Specialty, Commercial, International, Life & Group, Corporate & Other) and key financial metrics. It clarifies the calculation of GAAP-based ratios like the loss and expense ratio, as well as non-GAAP measures such as the underlying loss ratio and underlying combined ratio, which exclude catastrophe losses and prior-period development - The company's operations are divided into five segments: Specialty, Commercial, International, Life & Group, and Corporate & Other[33] - Key non-GAAP measures like 'underlying loss ratio' and 'underlying combined ratio' are used to evaluate underwriting performance by removing the unpredictable impact of catastrophe losses and prior year development[31] Forward-Looking Statements The report includes a standard safe harbor statement, cautioning that the press release contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially. CNA states it has no obligation to update these statements - The press release contains forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which are subject to inherent risks and uncertainties[52] - CNA does not have an obligation to update or revise any forward-looking statements, even if its expectations or related circumstances change[53]