CNA Financial (CNA) 6 May 242024 Q1 Earnings call transcript

Ladies and gentlemen, good day and welcome to the CNA First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded.

At this time, I'd like to turn the call over to Ralitza Todorova, VP of Investor Relations & Rating Agencies, for opening remarks and introduction of today's speakers. Please go ahead.

Thank you, Jamie. to of welcome XXXX first and results. financial morning, CNA's our discussion quarter Good

earnings presentation the press were quarter first Our release, morning of website, are section released and and available Relations on Investor our www.cna.com. this supplement financial

Chairman Dino Scott Financial will Executive Chief Chief Robusto, today Officer; and Speaking Officer. be and Lindquist,

remarks, open the prepared for questions. their Following line we will

from uncertainties in Today's SEC the risks to forward-looking statements Any non-GAAP financial call measures. results the during may include made press most is actual risks statements forward-looking and that and call. statements differ those recent cause and CNA's in materially the references to concerning release may involve filings. Information earnings contained

only during In or to Monday, of update today, XXXX. this any any addition, statements May statements forward-looking call. obligation the revise speak made as CNA forward-looking X, expressly disclaims

reconciliations supplement other and earnings Regarding the the information press other in non-GAAP and release, SEC. filings provided have measures, GAAP most the our comparable measures financial to been with

and of being call A our the accessed be webcast. on This call may website. is recorded replay

the the are this transcription that not or call, may transcript accuracy, please reviewed you materially reading of of for the could alter it that meaning be may a errors statements. thus contain note If intent transcript

call With Robusto. Chairman over that, turn I and will the our to CEO, Dino

In commercial our strong Ralitza, robust in top income, as investment first you, and strong morning quarter, rate in excellent lines all. achievement retention and higher profitability, results segments. well the line Thank good we with all produced very casualty accelerating as growth

portfolio increased performance, produced a the to income million profitable returns core and last $XX almost our to first $XXX strong year-over-year, pretax million by on growth. equally Net testament our increased overall our fixed of with income. the quarter investment million, $XXX our X the contributing portfolio income to income million of organization, alternatives underwriting core and volume our record. investment quarter for in income on increased income largest record The $XX quarters have Core highest first

was X.X the million ratio first The ratio points to year last of all-in Prior for period points compared favorable or XX.X%, ratio. losses combined points $XX by years. catastrophe with of our X.X P&C year benign in points. X.X pretax or average combined with quarter first relatively on million the the This was X quarter overall more development over last with $XX was line X.X combined of the

Our ratio underlying combined XX%. with quarter underlying an successive This was consecutive was P&C ratio The below underwriting the in XX.X%, pretax XXth loss P&C a the $XXX fourth ratio XX.X% quarter. underlying gain of was million underlying combined the the over with for XX%. quarter is expense and ratio

a lesser The driven up Commercial where a to in the a a the national higher in underlying compared as by recent accounts rate Specialty lines, This loss and, loss which most several degree, management segment, slight negative was quarters and from average. International including mainly liability which is point more to X-quarter within for pressure the remainder puts underlying than several recent increase the little was ratio. greater The casualty quarters shift mix had ratio takes, X.X impacts in growth carry well. lines

up was gross was change Rate written premium. quarter, production X%, net premium with in achieve the and also and quarter. continued fourth performance was X% ex overall point, X.X still point. up rounds from in we In to point exposure to up the captives growth X strong growth X.X premium X%, X% Renewal but written change

than which and In lower U.S. pressure. in the Outside social continues was the in X.X% trends trends as of loss there ex U.S. our the don't U.S., we cost long-run the persistent plus from above X% inflation of X pressure been was be are comp; change renewal point X%, loss U.S., social the to has cost long-run where rate in same plus the inflation, about premium work experience aggregate level

X.X%. So our between loss P&C trend overall long-run remains X% cost and

in continued business units, consistent up quarter retention strong to X% XX% New throughout our this high Overall, business Commercial in with million $XXX growth achieved XXXX. quarter. remained at the as was last with P&C quarter, we

XX.X% Turning combined was quarter record this to was all-in losses ratio. than and X combined point low ratio high. X to gain lower record Commercial a points The $XXX Commercial was last our $XX Cat million year. in business underlying for units. of the underlying X.X million ratio The added XX.X%. combined of of The underwriting a

the loss expense and underlying record. XX%, ratio lowest the The XX.X%, was ratio on was

I quarter, classes to post-pandemic conservative of last social business and med in accident hold loss well excess mentioned continue the for approach mal, in by impacted the auto, years the as casualty, most GL As we ratio initial inflation, a selections. ratios loss took up those

favorable our accident from on more development based For recent loss aggregate, the experienced have ratio initial in the years classes remaining picks. we

recent these we still to years time expectations. any our deviates over monitor from will course, Of continue immature, that initial are emergence and for

ex was net XX%. in premium Gross grew written XX% written growth premium captives the and quarter,

X% with New trends. improved and exposure increases Rate XX%, continuing Renewal rate X%. retention and change up excluding in XX%, quarter. by long-run grew to premium premium change were Commercial X comp respectively, XX% in loss business and was up exceed X% work to points the renewal X%, and cost

premium in at for due commercial mid-single rising have rate increases digit payrolls. we in and for pricing U.S. up is commercial success were our were These liability digit single revenues general pushing repeatedly And area to auto they are lines. primary double rate what X quarters change excess ago. up higher and XX% with renewal An increases first up highlighted was quarter, casualty our the you casualty high of XX%, was

the increases on overall rate have given is national the rate of the a large to change. accounts are which points down Our function fourth quarter-to-quarter quarter, a individual few compared mainly accounts can variability impact

continue. overall renewal we rate early seeing lower second still premium low in trend decreases. work about offsetting comp, is change exposure with quarter quarter, in Although the the to that flat In are not mid-single-digit increase

X.X in the period development, XX.X% was first loss was points XX ratio quarter, quarters an prior including combined all-in expense straight below ratio XX.X% the ratio XX.X%, of combined ratio was favorable the and with Specialty, underlying making this underlying of The XX%. Within XX.X%.

care our liability Gross pricing in decision written was up opportunities quarter, we lines ex in capitalized Specialty but environment. was down partially of on growth net X. premium see some offset our until premium the and captives by was growth We management to prudent in improvement this X% for written growth this further remain health our portfolio, portions plus

up this a reflecting from rate slightly management declines improvement only aggregate and fourth D&O rates was were plus in financial last of classes X% moderated X quarters. Specialty, in our the Within negative, quarter, improving liability public quarter, and this in the institutions X-point The quarter. each

care digits. and high the single are continue rates health improve in to Our

And the this hard rate cumulative again. conditions allowing we the terms to and and profitably achieved improved grow over is business market us years

straight Programs or in quarter, at continue stable slightly and this to produce the retentions been to Retention profitable at by above very rate XX% is mix remained low- in change quarter, seasonality. X for strong years. mid-single-digit program impacted Specialty the Our for Affinity almost which have XX% range, down

the combined below XX.X%, The an was underlying underlying International the expense losses. The million ratio XX.X% ratio for XX combined of International, and $X including quarters. with in points ratio combined consecutive has ratio cat was XX.X% loss or all-in was in ratio underlying been For the quarter, of X XX.X%. XX%

liability quarter. in X%, the International remained written premiums Similar were which to lines, down new down gross written our X% our net Specialty management business we actions, in limited and premiums the U.S. were opportunities. prudent

had fourth exposure, we quarter. a X-point non-renew also in the on retention underwriting from to We actions political impact initiated our violence which our

International are fourth the down from in X% Rates at quarter. point X

Given operations years, consistent we profitable extensive the rate cumulative to several our to increasingly overall an last our the re-underwriting we contributor for and be International growth. expect increases took actions

I with turn to And it that, will over Scott.

XX.X% million and you, first and income last morning, of $XXX compared the of Core leading on up equity results. underwriting another to reflects and core Thank to X% of a quarter good year, strong investment is return quarter Dino, of everyone.

to premium. ratio higher Our reflecting amount this ] have year, certain in a P&C was XX.X% quarter [ expense earned to quarter-to-quarter the XX.X% ratio. compared tend (sic) variability last for We of net XX.X% first

XXXX, Accordingly, we For ended. we quarter on spend of ratio believe of XX.X% run expect full higher and the balance to to an year. just the technology last is reasonable expense rate closer quarter talent the compared ratio as for a first year's

X.X impact Specialty offset was the on warranty. by development was quarter. by ratio current favorable was combined in prior the Favorable in partially P&C in and surety development driven the points The development segment unfavorable net period

noninsurance prices an durations frequency ownership, business, warranty rates and same to car and in up park warranty, severity, auto to In flat resulting warranty labor while impacting leads car dynamic auto which costs increase of This are compared driving our is quarter. in higher related higher were XXXX of as are X%, revenues lengthier higher claims. are first while which car rates cost interest claims in

operations these see the our line can Specialty You financial items in in of results supplement.

the buyouts. $X & the core core for For activities we prior of partnership rate had policy year reflecting Group, investments. compared from in-force offers limited including for filings, to loss Active quarter quarter, risk-mitigation earnings Life million and higher benefit-reduction continue, first a management income million $X

to of The cash pretax current $XX buyouts. related quarter results million include policy a $X loss million

buyouts XXXX offering the activities with from elections. varying of on to continue We such buyout timing expect impact in quarter-to-quarter, mix and to earnings depending

in Corporate in in last a compared ongoing Included earnings activities to loss after-tax million charge to consolidation of loss related of million produced office the a previewed first an quarter our call. quarter first core in I $XX quarter results first Our is the XXXX. quarter's segment $X the million $XX

as expect second of previously pretax third each million and the and $X office Looking additional forward we of consolidation in quarters. mentioned, charges

segment. review Finally, will will second the tort during recorded in Corporate ground-up mass a results which of of the our annual quarter, reminder legacy be that be the we exposures undertaking

compared million Turning to driven Total quarter. and other or in $XX return million quarter common investments returned and a net gain or X.X% gain year quarter million Limited million fixed return to The compared partnership stocks and in stock by $XXX was limited our to X.X% was year $XX a the prior a portfolios. partnerships quarter. investments. the increase $XXX the well in in as prior current our income equally the common first a investment as pretax almost income

investments $XXX prior income, to and up X% Fixed year income quarter. million of compared the other generated

increasing fixed effective year reinvestment Our quarter. which consistent portfolio to as cash strong to income, The X.X% prior in portfolio quarter been of favorable yield consolidated operations. from income X.X% produce result our of flows compared first a was continues and the the has income in rates

and X.X% modestly yields the above end our yield Group more our reinvestment of income the effective quarter, Group with A Life interest yield to the rate of & As above well effective X.X%. longer-duration first portfolio & is be comparable of to today's reminder P&C portfolio of embedded portfolio that environment. continue Life income a rates

Looking XXXX, from we which ahead, will other million expect XXXX, year be a in investments of income or about increase portfolio compared for a total be billion in And we of year as from $X.XXX the end fixed X% yield income X.X% by the second full $XXX would to currently the approach quarter, the quarter X% result XXXX. which effective second the XXXX. to increase currently about and the expect to full

from share, At an equity equity $X.X billion AOCI $XX.XX excluding of $XX.X be stockholders' with XXXX increase was to quarter-end, continues sheet dividends. X% per or very billion balance AOCI adjusting or of for share. per Stockholders' including solid $XX.XX year-end our

of result as a income rising our billion fixed in is As quarter, during of unrealized net the the portfolio interest now quarter-end. rates at $X.X loss

again and million quarter the cash during policy which with $XX of Casualty strong ended higher in for quarter fixed long-term buyouts once Combined quarter, reflecting billion, results was is statutory our flat year-end $XXX income and the flow XXXX. despite the we portfolio. underwriting earnings Finally, $XX.X the million Continental in with from strong capital cash surplus Companies care Operating at both

was quarter taxes. The core on line XXXX first expectations. for to tax in Turning which year income with is XX.X%, our full rate effective the

on to pleased dividend XXXX. quarterly record are of our announce XX, we X, to May to be paid Finally, on of $X.XX per regular June share XXXX, shareholders

With that, will back Dino. to turn it I

rates premium strong core levels ex Thanks, the We business by is growth retention watermark the most of although to XXXX, business. In XX%. income in continue start in their continue our to opportunities. written casualty commercial with excellent The single-digit XXXX individual Scott. the property and in of offer rates, driven off strong to classes rational income achieved investment with net of in rates strong classes in off great of high business CNA new from very performance. reflective high and substantial U.S., dynamics then the improve. at remains underwriting an market various lines remains impacting captives, gross And

And and so we that, as successfully well as to continue we navigate the the our grow about favorable be to questions. optimistic market build take will ability remain happy our to returns. With investment profitably company your dynamics

[Operator Josh America. Shanker comes Instructions] from And first today Bank our question of from

piece second, in there there. can might mixed let's me less that how this didn't now? And market. that maybe that's good in was there? How years it universally good machine has market. was that a -- But and mixed than will Are If just on It never quarter were, have say, but things is go probably and to they indulge XXXX, point there market business for of a I competitors they more a a out some time today. market out that it more of XXXX? throw some are good a and know or there some the so gotten a a of leaves be right -- and written back have XX been should all -- margins, ago, it gotten granular is that every single out things conservatism you did, I have sophistication hard mixed and

approach. you the is almost agree prior that And very cycles, you Josh, we highlighted take mini-cycle without indeed with and it's than a it. of advantage that is Dino. favorable, the very, nuanced, to and continue We a a it's issue doubt. that market different But also

casualty you each increase conditions, And and think they about one opportunities navigate market, some saw you continue also, when there. Management we entrants, reality competition, to expect property, changes, think notwithstanding we also we of national market. rate the maybe in valuation rate liability, very will all And too XX% the new cumulative the of that the so start since middle has as that accordingly. On to give continue I strong have in hard been as the others well us casualty, rate, opportunities the we will still accounts, is particular increases, get continue. terms from of aggressive. as about to and as On see expressed the it of good favorable is a XX% cumulative by

sidelines still on fine surety, that have are we in so And just the be it growth rate about, those good Specialty pursue I areas to as can care health so wait do, Commercial. we a on side or, and we the whether as the in be in talked it

it it's overall, very you down I'd favorable to think and it mini-cycle to of consider a continue I But to point and have So market, market, your nuanced going act accordingly. in a 'XX. gets

affect where to you would it is appetite price? Or you want ability as want And -- have increased, much do that your it? if the capture business you as

say migration would we last a over we've specialties to them we those years, from a underwriter. particular talked successfully. focus our X X, quite commercial extensively is, I specialist the Josh, underwriter in about on So penetrate And what generalist the years, and

But market areas as indicated lot of a I've in relatively small. share remains before, those our

technology, So there opportunity, we're you're going is see talent. our continue as specialties. one reasons, to continue we're going additional of Scott investments, that plenty penetrate then after to it. to of It divert go to the to indicated, is going to and And

So plenty of opportunity. we see

review. that completely, torts we're guidance there you are that or Is get expect see mass going And more legacy but that environmental? as we in to that in usual, just a in as not terms that evolved a Or just warning the torts other XQ, of, in XQ? Scott, mentioned mass reviewed a warning, [ -- ] should

So yes, thanks, here. Josh. It's Scott

we've happen mass take at the predict just over the fourth past going of in quarter. probably historically, I'd past done couple at over years past and in abuse you that. point. the work general cases been the team a The some a at say hate to quarter. this this done refreshes what that's And ago, if all quarter, few doing what's look on would second A years. of the kind years. years too, archdiocese to it's I So of look is of But the kind still take But the cases, few history couple tort. we've I

mass one PFAS. anything is per se, press, And tort detail think a but a of can tell lot there on Is lot about how you that that a thoughts of lot it? or news there's gets on about you not your certainly, us of

Yes ahead. -- oh, go

No, no, ahead. go

have to right no out is really we else say, that mean was in comments that. than nothing other I there going have specific now. what reserves I I see No, our to on I on say And

and agree points What with early have, as limited information. in Scott. is out, Totally Scott we reserves. It's the

question next comes KBW. from Our Instructions] [Operator from Shields Meyer

had [ patterns Jane I for in recent years share on is on please? see This casualty like within Meyer. for ] please a you lines? for reserves on you that, changes reserves. any view Do question just Can some

back, doubling and was still is our them We've the more actually Dino. last and trend social several really last to actions years. casualty loss that our reserves, the we expected particular, put of transparent cost we highly few all in the strengthen the and block X than been the XXXX considerable pressure few over have years, we outlined a have quite And significant, on commented maybe inflation, albeit a biggest in It's XXXX. to detail over trends years in on in severity which done classes

that's we've what seen. main of essence the So

to contributing expecting profitability. operations, the overall second Got it. mentioned My question on is International you

add on Just you curious color more that? please your strategy there, can

taken, reduce now. to syndicate underwriting have of International, also, quarters our particular, relative we to years, the for that we the the described all profitable actions So exposure. few have on been quite catastrophe It has in the a over

for in going particular, that very As International the we organization. forward, I liability had consider Canada, before profitable remarks, from also that good indicated conditions. we some U.K. to it contribute the rate. market violence. But on is a that and growth like additional our remove decision in being prudent of in prepared the quarter growth being point reasons to improved management starting cumulative political we've good even indicated, very to and on to and first We the when some in pressure hard my market expect the very we're segments added very, got We already terms on segments, operations, feel the about middle profitable. We you continue

So as operation International you forward. can on tell, we quite going are bullish our

now remarks. And today's ladies turn closing will I'd conclude question-and-answer over to floor Robusto like Dino back and for gentlemen, session. that to the

much. very Thanks time this have around. I some do

future in In transcript answer future quarters, in a hosting are incorporate of earnings the that submitted we participation industry also simply light you of -- years, are recent level an include well us closing, to reduced will intended to as select update transcript to like areas to calls and our focus CNA. call. questions for I'd call as that answers Q&As hearing place are we and will live to The earnings detail to we will continue advance. CNA accustomed and as the to in our remarks. questions address topical will timely transcript in post post for give analyst In of in The

always, to need ever as to always are, We clarification, out Relations any course, we we remaining to if as further Investor as team. been. encourage transparent And you you committed reach our of have

as us with have And dialogue we in past, to to all today. community. joining investor investor attending look the the analyst we forward we and Finally, the in and conferences done look thank forward you for future the industry continuing

thank for conclude Ladies call We joining. with today's you and conference that, and gentlemen, we'll presentation.

You may now your lines. disconnect