Chicago-based insurer CNA Financial Corporation has improved its net income to $368 million for the second quarter of 2021, due to new business generation, strong investment results, and lower levels of catastrophe losses.
The result is more than double the $151 million that CNA posted in Q2 of last year, when the company was heavily impacted by the COVID pandemic.
Specifically, the insurer’s property and casualty (P&C) segments produced core income of $351 million for Q2 2021, an increase of $226 million compared to the prior year quarter primarily due to lower net catastrophe losses and improved non-catastrophe current accident year underwriting results.
This resulted in a combined ratio for the P&C segments of 94.0%, down from 109.2% previously.
Net catastrophe losses were $54 million, or 2.8 points of the loss ratio in the quarter compared with $301 million, or 17.5 points of the loss ratio, for the prior year quarter.
Catastrophe losses in the second quarter of 2021 were driven by severe weather related events, while the 2020 figures included $182 million related to COVID-19, $61 million related to civil unrest and $58 million related primarily to severe weather related events.
During the second quarter, CNA also added a quota share treaty to its property reinsurance program, which covers policies written during the treaty term and in-force as of June 1, 2021.
As a result of the coverage of in-force policies, net written premiums were reduced by $122 million during the quarter for the one-time catch-up.
Overall, the P&C segments, excluding third party captives, generated gross written premium growth of 8%, or 5% when excluding the impact of the premium catch-up.
“CNA produced record core income in the quarter resulting from improvement in the underlying combined ratio, very strong investment results and a lower level of catastrophe losses” said Dino E. Robusto, Chairman & Chief Executive Officer of CNA Financial Corporation.
“We recorded a rate increase of +10%, the fifth consecutive quarter of double-digit rate increase. Earned rate is now just shy of +12% and well above our long run loss cost trend,” he continued.
“In the first part of the quarter transactional limitations resulting from the cyber incident had an impact on production. But we were able to quickly regain momentum and finish the quarter with a very strong June. This enabled us to grow our gross written premium by 8% and new business by 10% for the quarter. We are well positioned to continue capitalizing on the favorable market conditions we anticipate in the latter half of 2021.”