CNA’s fourth quarter net profit declines but increases 74% for full year 2021

CNA Financial Corp. said fourth-quarter 2021 net income was down more than 30% to $266 million from the same period a year earlier.

There was a decline in net investment income in the last three months of 2021 to $1 million from $52 million in 2020.

In the fourth quarter, CNA’s P&C base revenue was relatively flat at $353 million, compared to $358 million a year earlier. Net premiums written increased 11% to $2.17 billion.

CEO Dino E. Robusto said, “We achieved the lowest quarterly and annual combined ratio in five years at 92.9 and 96.2, respectively. In 2020, the combined ratio for the fourth quarter was 93.4. It was 100.1 for the whole of 2020.

Net income for 2021 was more than 74% higher than 2020 – $1.2 billion versus $690 million.

Looking ahead on an earnings conference call, Robusto said CNA sees “pricing remains supportive with headline rate increases persisting above long-term loss cost trends for most of 2022. in light of the oft-cited headwinds of social inflation and economic inflation, and high [catastrophe] activity. The headwinds are still present and there has been no significant change since the last quarter.

Uncertainty about the future trends in loss costs remains as court activity has not returned to the levels before the pandemic because of the Omicron-19 variant Covid added Robusto.

If loss costs become higher, the rate increases that CNA has taken over the past 8-10 quarters could become insufficient. “And that’s why we’re focused on increasing the rate and, if necessary, further improving the terms and conditions,” Robusto said.

Rates increase significantly in specialized financial lines and small businesses. Asked to elaborate, Robusto said financial lines included cyber insurance and CNA took triple-digit rate increases in the fourth quarter. “Other lines had more stable behavior,” he added.

Robusto said the change in exposure in commercial lines was more than 2% in the fourth quarter “due to increased payrolls and sales volumes as the economy continues to improve.”

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