CNA FINANCIAL CORP
For the period ended Sep 30, 2024. Filed Nov 4, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 4, 2024
CNA$47.32-1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-29.
0000021175-24-000056
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-04.
0000021175-24-000095
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 143 previous paragraphs and 146 current paragraphs.
88 unchanged; 38 reworded; 17 added; 16 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 16 previous and 23 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
We use underwriting gain (loss), calculated using GAAP financial results, to monitor our insurance operations. Underwriting gain (loss) is deemed to be a non-GAAP measure and is calculated pretax as net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and other insurance related expenses. Net income (loss) is the most directly comparable GAAP measure. Management believes some investors may find this measure useful to evaluate the profitability, before tax, derived from our underwriting activities which are managed separately from our investing activities. Underlying underwriting gain (loss) is deemed to be a non-GAAP measure that represents pretax underwriting gain (loss) excluding catastrophe losses and development-related items. Management believes some investors may find this measure useful to evaluate profitability, before tax, of our underwriting activities, excluding the impact of catastrophe losses which are unpredictable as to timing and amount, and development-related items as they are not indicative of our current year underwriting performance.
Current report
The following tables present a reconciliation of net income to underwriting gain (loss) and underlying underwriting gain (loss):
Current report
The combined ratio of 100.2% increased 1.3 points for the three months ended September 30, 2024 as compared with the same period in 2023 due to a 3.1 point increase in the loss ratio partially offset by a 1.8 point improvement in the expense ratio. The increase in the loss ratio was driven by higher catastrophe losses and an increase in the underlying loss ratio driven by continuation of elevated loss cost trends in commercial auto and mix of business. Catastrophe losses were $127 million, or 9.6 points of the loss ratio, for the three months ended September 30, 2024, as compared with $87 million, or 7.4 points of the loss ratio, for the three months ended September 30, 2023. The improvement in the expense ratio was primarily driven by higher net earned premiums.
Current report
Favorable net prior year loss reserve development of $3 million and $2 million was recorded for the three months ended September 30, 2024 and 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Current report
The combined ratio of 98.3% increased 1.2 points for the nine months ended September 30, 2024 as compared with the same period in 2023 due to a 2.7 point increase in the loss ratio partially offset by a 1.5 point improvement in the expense ratio. The increase in the loss ratio was primarily driven by higher catastrophe losses. Catastrophe losses were $285 million, or 7.5 points of the loss ratio, for the nine months ended September 30, 2024, as compared with $190 million, or 5.7 points of the loss ratio, for the nine months ended September 30, 2023. The improvement in the expense ratio was primarily driven by higher net earned premiums.
Current report
Favorable net prior year loss reserve development of $11 million and $17 million was recorded for the nine months ended September 30, 2024 and 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Current report
Core income decreased $4 million for the three months ended September 30, 2024 as compared with the same period in 2023 primarily driven by lower current accident year underwriting results partially offset by a favorable impact from changes in foreign currency exchange rates.
Current report
The combined ratio of 96.1% increased 7.8 points for the three months ended September 30, 2024 as compared with the same period in 2023 due to a 5.5 point increase in the expense ratio and a 2.3 point increase in the loss ratio. The increase in the expense ratio was driven by a favorable reinsurance acquisition related catch-up adjustment recorded in the prior year quarter and higher employee related costs in the current quarter. The increase in the loss ratio was driven by higher catastrophe losses partially offset by favorable net prior year loss reserve development. Catastrophe losses were $16 million, or 5.1 points of the loss ratio, for the three months ended September 30, 2024, as compared with $7 million, or 2.3 points of the loss ratio, for the three months ended September 30, 2023.
Current report
The combined ratio of 93.7% increased 1.2 points for the nine months ended September 30, 2024 as compared with the same period in 2023 due to a 2.8 point increase in the expense ratio partially offset by a 1.6 point improvement in the loss ratio. The increase in the expense ratio was driven by higher employee related costs and a favorable reinsurance acquisition related catch-up adjustment recorded in the prior year period. The improvement in the loss ratio was driven by favorable net prior year loss reserve development partially offset by higher catastrophe losses. Catastrophe losses were $28 million, or 3.0 points of the loss ratio, for the nine months ended September 30, 2024, as compared with $24 million, or 2.7 points of the loss ratio, for the nine months ended September 30, 2023.
Current report
Core loss improved $20 million for the three months ended September 30, 2024 as compared with the same period in 2023 primarily due to higher net investment income. Both periods are inclusive of assumption updates as a result of the annual reserve reviews completed in the third quarter of each year.
Current report
The cash flow assumption updates from the annual reserve review for the three months ended September 30, 2024 and 2023 resulted in a pretax increase in long-term care reserves of $15 million and $8 million.
Current report
The annual structured settlement reserve review resulted in a pretax reduction in claim reserves of $9 million and $6 million for the three months ended September 30, 2024 and 2023.
Current report
Future Policy Benefit Reserves
Current report
Annually in the third quarter, an actuarial analysis is performed on policyholder morbidity, persistency, premium rate increases and expense experience. This analysis, combined with judgment, informs the setting of updated cash flow assumptions used to estimate the liability for future policyholder benefits (LFPB). See Note A to the Consolidated Financial Statements within CNAF's Annual Report on Form 10-K for the year ended December 31, 2023 for further information on the long-term care reserving process.
Current report
The table below summarizes the estimated pretax impact on our results of operations from various hypothetical revisions to our LFPB reserve assumptions. We have assumed that revisions to such assumptions would occur in each policy type, age and duration within each long-term care product. The impact of each sensitivity is discrete and does not reflect the impact one factor may have on another or the mitigating impact from management actions, which may include additional future premium rate increases. Although such hypothetical revisions are not currently required or anticipated, we believe they could occur based on past variances in experience and our expectations of the ranges of future experience that could reasonably occur. Any actual adjustment would be dependent on the specific policies affected and, therefore, may differ from the estimates summarized below. The estimated impacts to results of operations in the table below are after consideration of any net premium ratio impacts.
Current report
The following table summarizes policyholder reserves for Life & Group.
Current report
As part of the annual reserve review, statutory long term care reserve adequacy is evaluated via premium deficiency testing, by comparing carried statutory reserves with our best estimate reserves, which incorporates best estimate discount rate and liability assumptions in its determination. Statutory margin is the excess of carried reserves over best estimate reserves. As of September 30, 2024, statutory long term care margin increased to $1.4 billion from $1.3 billion, primarily driven by a more favorable interest rate environment resulting in a higher yielding investment portfolio.
Removed paragraphs (16)
Previous report
CATASTROPHES AND RELATED REINSURANCE
Previous report
Various events can cause catastrophe losses. These events can be natural or man-made, including hurricanes, tornadoes, windstorms, earthquakes, hail, severe winter weather, fires, floods, riots, strikes, civil unrest, cyber-attacks, pandemics and acts of terrorism that produce unusually large aggregate losses.
Previous report
Catastrophes are an inherent risk of the property and casualty insurance business and have contributed to material period-to-period fluctuations in our results of operations and/or equity. We use various analyses and methods, including using one of the industry standard natural catastrophe models, to estimate hurricane and earthquake losses at various return periods and to inform underwriting and reinsurance decisions designed to manage our exposure to catastrophic events. We generally seek to manage our exposure through the purchase of catastrophe reinsurance and utilize various reinsurance programs to mitigate catastrophe losses, including excess-of-loss occurrence and aggregate treaties covering property and workers’ compensation, a property quota share treaty and the Terrorism Risk Insurance Program Reauthorization Act of 2019 (TRIPRA), as well as individual risk agreements that reinsure losses from specific classes or lines of business. We conduct an ongoing review of our risk and catastrophe reinsurance coverages and from time to time make changes as we deem appropriate. In the second quarter of 2024, we renewed our excess-of-loss property catastrophe reinsurance as described below:
Previous report
Group North American Property Treaty
Previous report
We purchased corporate catastrophe excess-of-loss treaty reinsurance covering our U.S. states and territories and Canadian property exposures underwritten in our North American and European companies. The treaty has a term of June 1, 2024 to June 1, 2025 and provides coverage for the accumulation of covered losses from catastrophe occurrences above our per occurrence retention of $250 million up to $1.4 billion for all losses. Losses stemming from terrorism events are covered unless they are due to a nuclear, biological or chemical attack. All layers of the treaty provide for one full reinstatement.
Previous report
Group Workers' Compensation Treaty
Previous report
We also purchased corporate Workers' Compensation catastrophe excess-of-loss treaty reinsurance for the period January 1, 2024 to January 1, 2025 providing $275 million of coverage for the accumulation of covered losses related to natural catastrophes above our per occurrence retention of $25 million. The treaty also provides $775 million of coverage for the accumulation of covered losses related to terrorism events above our per occurrence retention of $25 million. Of the $775 million in terrorism coverage, $200 million is provided for nuclear, biological, chemical and radiation events. One full reinstatement is available for the first $275 million above the retention, regardless of the covered peril.
Previous report
Favorable net prior year loss reserve development of $3 million and $4 million was recorded for the three months ended June 30, 2024 and 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Previous report
The combined ratio of 97.0% increased 0.7 points for the three months ended June 30, 2024 as compared with the same period in 2023 due to a 1.8 point increase in the loss ratio partially offset by a 1.1 point improvement in the expense ratio. The increase in the loss ratio was primarily driven by higher catastrophe losses, an increase in the underlying loss ratio and lower favorable net prior year loss reserve development. Catastrophe losses were $76 million, or 6.1 points of the loss ratio, for the three months ended June 30, 2024, as compared with $59 million, or 5.2 points of the loss ratio, for the three months ended June 30, 2023. The improvement in the expense ratio was primarily driven by higher net earned premiums partially offset by higher acquisition costs.
Previous report
Core income increased $15 million for the six months ended June 30, 2024 as compared with the same period in 2023, driven by improved underlying underwriting results and higher net investment income partially offset by higher catastrophe losses.
Previous report
The combined ratio of 97.3% increased 1.1 points for the six months ended June 30, 2024 as compared with the same period in 2023 due to a 2.5 point increase in the loss ratio partially offset by a 1.4 point improvement in the expense ratio. The increase in the loss ratio was primarily driven by higher catastrophe losses. Catastrophe losses were $158 million, or 6.4 points of the loss ratio, for the six months ended June 30, 2024, as compared with $103 million, or 4.7 points of the loss ratio, for the six months ended June 30, 2023. The improvement in the expense ratio was primarily driven by higher net earned premiums partially offset by higher employee related costs.
Previous report
Favorable net prior year loss reserve development of $8 million and $15 million was recorded for the six months ended June 30, 2024 and 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Previous report
The combined ratio of 91.9% improved 0.3 points for the three months ended June 30, 2024 as compared with the same period in 2023 due to a 1.9 point improvement in the loss ratio partially offset by a 1.6 point increase in the expense ratio. The improvement in the loss ratio was driven by lower catastrophe losses and favorable net prior year loss reserve development. Catastrophe losses were $6 million, or 2.0 points of the loss ratio, for the three months ended June 30, 2024, as compared with $9 million, or 3.1 points of the loss ratio, for the three months ended June 30, 2023. The increase in the expense ratio was driven by higher employee related costs and acquisition costs.
Previous report
The combined ratio of 92.6% improved 2.0 points for the six months ended June 30, 2024 as compared with the same period in 2023 due to a 3.5 point improvement in the loss ratio partially offset by a 1.5 point increase in the expense ratio. The improvement in the loss ratio was driven by favorable net prior year loss reserve development and lower catastrophe losses. Catastrophe losses were $12 million, or 2.0 points of the loss ratio, for the six months ended June 30, 2024, as compared with $17 million, or 2.9 points of the loss ratio, for the six months ended June 30, 2023. The increase in the expense ratio was driven by higher employee related costs partially offset by higher net earned premiums.
Previous report
Favorable net prior year loss reserve development of $3 million was recorded for the six months ended June 30, 2024 compared to unfavorable net prior year loss reserve development of $15 million for the six months ended June 30, 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part 1, Item 1.
Previous report
Core loss improved $19 million for the three months ended June 30, 2024 as compared with the same period in 2023 primarily due to a reduced impact from long-term care policy buyouts and higher net investment income.
Reworded paragraphs (38)
Previous wording
We utilize the core income (loss) financial measure to monitor our operations. Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses. The calculation of core income (loss) excludes net investment gains or losses because net investment gains or losses are generally driven by economic factors that are not necessarily reflective of our primary operations. Management monitors core income (loss) for each business segment to assess segment performance. Presentation of consolidated core income (loss) is deemed to be a non-GAAP financial measure and management believes some investors may find this measure useful to evaluate our primary operations. See further discussion regarding how we manage our business in Note J to the Condensed Consolidated Financial Statements included under Part I, Item 1. For reconciliations of non-GAAP measures to the most comparable GAAP measures and other information, please refer herein and/or to CNA's most recent Annual Report on Form 10-K on file with the Securities and Exchange Commission.
Current wording
We utilize the core income (loss) financial measure to monitor our operations. Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses and gains or losses resulting from pension settlement transactions. Net investment gains or losses are excluded from the calculation of core income (loss) because they are generally driven by economic factors that are not necessarily reflective of our primary operations. The calculation of core income (loss) excludes gains or losses resulting from pension settlement transactions as they result from decisions regarding our defined benefit pension plans which are unrelated to our primary operations. Presentation of consolidated core income (loss) is deemed to be a non-GAAP financial measure and management believes some investors may find this measure useful to evaluate our primary operations. See further discussion regarding how we manage our business in Note J to the Condensed Consolidated Financial Statements included under Part I, Item 1. For reconciliations of non-GAAP measures to the most comparable GAAP measures and other information, please refer herein and/or to CNA's most recent Annual Report on Form 10-K on file with the Securities and Exchange Commission.
Previous wording
In evaluating the results of our Specialty, Commercial and International segments, we utilize the loss ratio, the underlying loss ratio, the expense ratio, the dividend ratio, the combined ratio and the underlying combined ratio. These ratios are calculated using GAAP financial results. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The underlying loss ratio excludes the impact of catastrophe losses and development-related items from the loss ratio. Development-related items represents net prior year loss reserve and premium development, and includes the effects of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios. The underlying combined ratio is the sum of the underlying loss ratio, the expense ratio and the dividend ratio. In addition, we also utilize renewal premium change, rate, retention and new business in evaluating operating trends. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes. Rate represents the average change in price on policies that renew excluding exposure change. Exposure represents the measure of risk used in the pricing of the insurance product. The change in exposure represents the change in premium dollars on policies that renew as a result of the change in risk of the policy. Retention represents the percentage of premium dollars renewed, excluding rate and exposure changes, in comparison to the expiring premium dollars from policies available to renew. New business represents premiums from policies written with new customers and additional policies written with existing customers. Gross written premiums, excluding third-party captives, excludes business which is ceded to third-party captives, including business related to large warranty programs. We use underwriting gain (loss), calculated using GAAP financial results, to monitor our insurance operations. Underwriting gain (loss) is pretax and is calculated as net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and other insurance related expenses. Underlying underwriting gain (loss) represents underwriting results excluding catastrophe losses and development-related items.
Current wording
In evaluating the results of our Specialty, Commercial and International segments, we utilize the loss ratio, the underlying loss ratio, the expense ratio, the dividend ratio, the combined ratio and the underlying combined ratio. These ratios are calculated using GAAP financial results. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The underlying loss ratio excludes the impact of catastrophe losses and development-related items from the loss ratio. Development-related items represents net prior year loss reserve and premium development, and includes the effects of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios. The underlying combined ratio is the sum of the underlying loss ratio, the expense ratio and the dividend ratio. The underlying loss ratio and the underlying combined ratio are deemed to be non-GAAP financial measures, and management believes some investors may find these ratios useful to evaluate our underwriting performance since they remove the impact of catastrophe losses which are unpredictable as to timing and amount, and development-related items as they are not indicative of our current year underwriting performance.
Previous wording
Core income increased $48 million for the six months ended June 30, 2024 as compared with the same period in 2023. Core income for our Property & Casualty Operations increased $32 million driven by higher net investment income and favorable net prior year loss reserve development partially offset by higher catastrophe losses. Core results for our Life & Group segment improved $27 million, while core loss for our Corporate & Other segment increased $11 million.
Current wording
Core income increased $4 million for the three months ended September 30, 2024 as compared with the same period in 2023. Core income for our Property & Casualty Operations decreased $5 million primarily driven by the largely offsetting impacts of higher catastrophe losses and higher net investment income. Core loss for our Life & Group segment improved $20 million, while core loss for our Corporate & Other segment increased $11 million.
Previous wording
Catastrophe losses were $82 million and $68 million for the three months ended June 30, 2024 and 2023. Unfavorable net prior year loss reserve development of $23 million and $18 million was recorded for the three months ended June 30, 2024 and 2023 related to our Specialty, Commercial, International and Corporate & Other segments. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Current wording
Catastrophe losses were $143 million and $94 million for the three months ended September 30, 2024 and 2023, primarily related to severe weather related events. Catastrophe losses for the three months ended September 30, 2024 included $55 million for Hurricane Helene. Unfavorable net prior year loss reserve development of $17 million and $13 million was recorded for the three months ended September 30, 2024 and 2023 related to our Specialty, Commercial, International and Corporate & Other segments. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Previous wording
Core income increased $18 million for the three months ended June 30, 2024 as compared with the same period in 2023. Core income for our Property & Casualty Operations increased $6 million driven by higher net investment income partially offset by higher catastrophe losses. Core results for our Life & Group segment improved $19 million, while core loss for our Corporate & Other segment increased $7 million.
Current wording
Core income increased $52 million for the nine months ended September 30, 2024 as compared with the same period in 2023. Core income for our Property & Casualty Operations increased $27 million primarily driven by higher net investment income partially offset by higher catastrophe losses. Core loss for our Life & Group segment improved $47 million, while core loss for our Corporate & Other segment increased $22 million.
Previous wording
Catastrophe losses were $170 million and $120 million for the six months ended June 30, 2024 and 2023. Unfavorable net prior year loss reserve development of $16 million and $31 million was recorded for the six months ended June 30, 2024 and 2023 related to our Specialty, Commercial, International and Corporate & Other segments. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Current wording
Catastrophe losses were $313 million and $214 million for the nine months ended September 30, 2024 and 2023, primarily related to severe weather related events. Catastrophe losses for the nine months ended September 30, 2024 included $55 million for Hurricane Helene. Unfavorable net prior year loss reserve development of $33 million and $44 million was recorded for the nine months ended September 30, 2024 and 2023 related to our Specialty, Commercial, International and Corporate & Other segments. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Previous wording
The following table details the results of operations for Specialty.
Current wording
The following table details the results of operations for Specialty and provides the components to reconcile the combined ratio and loss ratio to the underlying combined ratio and underlying loss ratio.
Previous wording
Gross written premiums, excluding third-party captives, for Specialty increased $17 million for the six months ended June 30, 2024 as compared with the same period in 2023 driven by favorable renewal premium change and retention. Net written premiums for Specialty increased $36 million for the six months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.
Current wording
Gross written premiums, excluding third-party captives, for Specialty increased $33 million for the three months ended September 30, 2024 as compared with the same period in 2023 driven by retention and higher new business. Net written premiums for Specialty increased $37 million for the three months ended September 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.
Previous wording
Core income decreased $8 million for the three months ended June 30, 2024 as compared with the same period in 2023 primarily due to lower underlying underwriting results and higher claim costs in our non-insurance auto warranty business, partially offset by higher net investment income.
Current wording
Core income decreased $7 million for the three months ended September 30, 2024 as compared with the same period in 2023 primarily due to lower underlying underwriting results and higher claim costs in our non-insurance auto warranty business, partially offset by higher net investment income.
Previous wording
The combined ratio of 91.7% increased 1.3 points for the six months ended June 30, 2024 as compared with the same period in 2023 primarily due to a 0.6 point increase in the expense ratio and a 0.6 point increase in the loss ratio. The increase in the expense ratio was driven by higher acquisition costs. The increase in the loss ratio was due to an increase in the underlying loss ratio primarily driven by continued rate pressure over the last several quarters partially offset by favorable net prior year loss reserve development. There were no catastrophe losses for six months ended June 30, 2024 and 2023.
Current wording
The combined ratio of 93.0% increased 2.9 points for the three months ended September 30, 2024 as compared with the same period in 2023 primarily due to a 2.1 point increase in the loss ratio and a 0.9 point increase in the expense ratio. The increase in the loss ratio was primarily due to an increase in the underlying loss ratio primarily driven by continued pricing pressure in management liability lines over the last several quarters. There was no net prior year loss reserve development recorded for three months ended September 30, 2024 compared to favorable net prior year loss reserve development of $5 million for the three months ended September 30, 2023. The increase in the expense ratio was primarily driven by higher employee related costs. There were no catastrophe losses for three months ended September 30, 2024 and 2023.
Previous wording
Gross written premiums, excluding third-party captives, for Specialty increased $23 million for the three months ended June 30, 2024 as compared with the same period in 2023 driven by favorable renewal premium change and retention. Net written premiums for Specialty increased $32 million for the three months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.
Current wording
Gross written premiums, excluding third-party captives, for Specialty increased $50 million for the nine months ended September 30, 2024 as compared with the same period in 2023 driven by retention and favorable renewal premium change. Net written premiums for Specialty increased $73 million for the nine months ended September 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.
Previous wording
Core income decreased $2 million for the six months ended June 30, 2024 as compared with the same period in 2023 primarily due to lower underlying underwriting results and higher claim costs in our non-insurance auto warranty business partially offset by higher net investment income.
Current wording
Core income decreased $9 million for the nine months ended September 30, 2024 as compared with the same period in 2023 primarily due to lower underlying underwriting results and higher claim costs in our non-insurance auto warranty business partially offset by higher net investment income.
Previous wording
The combined ratio of 92.7% increased 1.8 points for the three months ended June 30, 2024 as compared with the same period in 2023 primarily due to a 0.9 point increase in the loss ratio and a 0.8 point increase in the expense ratio. The increase in the loss ratio was due to an increase in the underlying loss ratio primarily driven by continued rate pressure over the last several quarters. The increase in the expense ratio was driven by higher acquisition costs. There were no catastrophe losses for three months ended June 30, 2024 and 2023.
Current wording
The combined ratio of 92.1% increased 1.8 points for the nine months ended September 30, 2024 as compared with the same period in 2023 primarily due to a 1.1 point increase in the loss ratio and a 0.6 point increase in the expense ratio. The increase in the loss ratio was due to an increase in the underlying loss ratio primarily driven by continued pricing pressure in management liability lines over the last several quarters. The increase in the expense ratio was driven by higher acquisition costs. There were no catastrophe losses for nine months ended September 30, 2024 and 2023.
Previous wording
Favorable net prior year loss reserve development of $8 million and $4 million was recorded for the six months ended June 30, 2024 and 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Current wording
Favorable net prior year loss reserve development of $8 million and $9 million was recorded for the nine months ended September 30, 2024 and 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Previous wording
The following table details the results of operations for Commercial.
Current wording
The following table details the results of operations for Commercial and provides the components to reconcile the combined ratio and loss ratio to the underlying combined ratio and underlying loss ratio.
Previous wording
Gross written premiums for Commercial increased $208 million for the three months ended June 30, 2024 as compared with the same period in 2023 driven by rate and higher new business. Net written premiums for Commercial increased $129 million for the three months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.
Current wording
Gross written premiums for Commercial increased $204 million for the three months ended September 30, 2024 as compared with the same period in 2023 driven by favorable renewal premium change and higher new business. Net written premiums for Commercial increased $150 million for the three months ended September 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.
Previous wording
Core income increased $6 million for the three months ended June 30, 2024 as compared with the same period in 2023 primarily driven by higher net investment income.
Current wording
Core income increased $6 million for the three months ended September 30, 2024 as compared with the same period in 2023, driven by higher net investment income and improved underlying underwriting results partially offset by higher catastrophe losses.
Previous wording
Gross written premiums for Commercial increased $452 million for the six months ended June 30, 2024 as compared with the same period in 2023 driven by rate and higher new business. Net written premiums for Commercial increased $279 million for the six months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.
Current wording
Gross written premiums for Commercial increased $656 million for the nine months ended September 30, 2024 as compared with the same period in 2023 driven by favorable renewal premium change and higher new business. Net written premiums for Commercial increased $429 million for the nine months ended September 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.
Previous wording
Core income increased $8 million for the three months ended June 30, 2024 as compared with the same period in 2023, driven by improved underlying underwriting results and higher net investment income partially offset by higher catastrophe losses.
Current wording
Core income increased $21 million for the nine months ended September 30, 2024 as compared with the same period in 2023, primarily driven by improved underlying underwriting results and higher net investment income partially offset by higher catastrophe losses.
Previous wording
The following table details the results of operations for International.
Current wording
The following table details the results of operations for International and provides the components to reconcile the combined ratio and loss ratio to the underlying combined ratio and underlying loss ratio.
Previous wording
Gross written premiums for International decreased $4 million for the three months ended June 30, 2024 as compared with the same period in 2023. Excluding the effect of foreign currency exchange rates, gross written premiums decreased $4 million driven by lower new business. Net written premiums for International were consistent with the prior year quarter. Excluding the effect of foreign currency exchange rates, net written premiums increased $1 million for the three months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters.
Current wording
Gross written premiums and gross written premiums excluding the effect of foreign currency exchange rates for International, for the three months ended September 30, 2024, were largely consistent with the same period in 2023. Net written premiums for International decreased $5 million for the three months ended September 30, 2024 as compared with the same period in 2023. Excluding the effects of foreign currency exchange rates, net written premiums decreased $4 million for the three months ended September 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters.
Previous wording
Favorable net prior year loss reserve development of $3 million was recorded for the three months ended June 30, 2024 compared to no net prior year loss reserve development for the three months ended June 30, 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part 1, Item 1.
Current wording
Favorable net prior year loss reserve development of $2 million was recorded for the three months ended September 30, 2024 compared to no net prior year loss reserve development for the three months ended September 30, 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part 1, Item 1.
Previous wording
Gross written premiums for International decreased $28 million for the six months ended June 30, 2024 as compared with the same period in 2023. Excluding the effect of foreign currency exchange rates, gross written premiums decreased $35 million driven by lower new business. Net written premiums for International decreased $11 million for the six months ended June 30, 2024 as compared with the same period in 2023. Excluding the effect of foreign currency exchange rates, net written premiums decreased $15 million for the six months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters.
Current wording
Gross written premiums for International decreased $29 million for the nine months ended September 30, 2024 as compared with the same period in 2023. Excluding the effect of foreign currency exchange rates, gross written premiums decreased $37 million driven by lower new business. Net written premiums for International decreased $16 million for the nine months ended September 30, 2024 as compared with the same period in 2023. Excluding the effect of foreign currency exchange rates, net written premiums decreased $20 million for the nine months ended September 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters.
Previous wording
Core income increased $19 million for the six months ended June 30, 2024 as compared with the same period in 2023 driven by unfavorable net prior year loss reserve development recorded in the prior year quarter and higher net investment income partially offset by lower underlying underwriting results.
Current wording
Core income increased $15 million for the nine months ended September 30, 2024 as compared with the same period in 2023 driven by higher net investment income and favorable net prior year loss reserve development in the current year period compared with unfavorable development in the prior year period, partially offset by lower underlying underwriting results. Favorable net prior year loss reserve development of $5 million was recorded for the nine months ended September 30, 2024 compared to unfavorable net prior year loss reserve development of $15 million for the nine months ended September 30, 2023.
Previous wording
Results for the six months ended June 30, 2024 were generally consistent with the three month summary above.
Current wording
Results for the nine months ended September 30, 2024 were generally consistent with the three month summary above.
Previous wording
Core loss increased $7 million for the three months ended June 30, 2024 as compared with the same period in 2023. The current quarter includes a $5 million after-tax charge related to office consolidation. The current and prior year quarter each include a $28 million after-tax charge related to unfavorable prior year loss reserve development largely associated with legacy mass tort abuse claims. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Current wording
Core loss increased $11 million for the three months ended September 30, 2024 as compared with the same period in 2023 primarily driven by $3 million after-tax lower amortization of the deferred gain related to the asbestos and environmental pollution (A&EP) Loss Portfolio Transfer (LPT) and a $3 million after-tax charge related to office consolidation. The current and prior year quarters include a $17 million and $16 million after-tax charge related to unfavorable prior year loss reserve development largely associated with legacy mass tort abuse claims. Further information on the A&EP LPT and net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Previous wording
Core loss increased $11 million for the six months ended June 30, 2024 as compared with the same period in 2023. The current period includes $10 million of after-tax charges related to office consolidation.
Current wording
Core loss increased $22 million for the nine months ended September 30, 2024 as compared with the same period in 2023. The current year period includes $13 million of after-tax charges related to office consolidation.
Previous wording
Net investment income increased $43 million and $127 million for the three and six months ended June 30, 2024 as compared with the same periods in 2023 driven by higher income from fixed income securities as a result of favorable reinvestment rates and a larger invested asset base, as well as favorable limited partnership and common stock returns.
Current wording
Net investment income increased $73 million and $200 million for the three and nine months ended September 30, 2024 as compared with the same periods in 2023 driven by favorable limited partnership and common stock returns, as well as higher income from fixed income securities as a result of favorable reinvestment rates and a larger invested asset base.
Previous wording
Pretax net investment losses decreased $35 million for the six months ended June 30, 2024 as compared with the same period in 2023 driven by the favorable change in fair value of non-redeemable preferred stock and lower impairment losses.
Current wording
Pretax net investment losses decreased $28 million for the three months ended September 30, 2024 as compared with the same period in 2023 driven by lower net losses on disposals of fixed maturity securities and the favorable change in fair value of non-redeemable preferred stock.
Previous wording
Pretax net investment losses decreased $22 million for the three months ended June 30, 2024 as compared with the same period in 2023 which reflects lower impairment losses.
Current wording
Pretax net investment losses decreased $63 million for the nine months ended September 30, 2024 as compared with the same period in 2023 driven by the favorable change in fair value of non-redeemable preferred stock, lower impairment losses and lower net losses on disposals of fixed maturity securities.
Previous wording
For the six months ended June 30, 2024, net cash provided by operating activities was $1,120 million as compared with $937 million for the same period in 2023. The increase in cash provided by operating activities was driven by an increase in premiums collected and higher earnings from fixed income securities, partially offset by an increase in net claim payments and higher operating expenses.
Current wording
For the nine months ended September 30, 2024, net cash provided by operating activities was $1,868 million as compared with $1,765 million for the same period in 2023. The increase in cash provided by operating activities was driven by an increase in premiums collected and higher earnings from fixed income securities, partially offset by an increase in net claim payments and higher operating expenses.
Previous wording
For the six months ended June 30, 2024, net cash used by investing activities was $209 million as compared with $858 million for the same period in 2023. Net cash used or provided by investing activities is primarily driven by cash available from operations and by other factors, such as financing activities.
Current wording
For the nine months ended September 30, 2024, net cash used by investing activities was $762 million as compared with $1,537 million for the same period in 2023. Net cash used or provided by investing activities is primarily driven by cash available from operations and by other factors, such as financing activities.
Previous wording
For the six months ended June 30, 2024, net cash used by financing activities was $878 million as compared with $200 million for the same period in 2023. Financing activities for the periods presented include:
Current wording
For the nine months ended September 30, 2024, net cash used by financing activities was $998 million as compared with $218 million for the same period in 2023. Financing activities for the periods presented include:
Previous wording
•During the six months ended June 30, 2024, we paid dividends of $786 million and repurchased 450,000 shares of common stock at an aggregate cost of $20 million
Current wording
•During the nine months ended September 30, 2024, we paid dividends of $906 million and repurchased 450,000 shares of common stock at an aggregate cost of $20 million.
Previous wording
•In the second quarter of 2023, we issued $400 million of 5.50% senior notes due June 15, 2033.
Current wording
•In the second quarter of 2023, we issued $400 million of 5.50% senior notes due June 15, 2033, and in the third quarter of 2023, we issued an additional $100 million of 5.50% senior notes due June 15, 2033.
Previous wording
•During the six months ended June 30, 2023, we paid dividends of $559 million and repurchased 550,000 shares of our common stock at an aggregate cost of $24 million.
Current wording
•During the nine months ended September 30, 2023, we paid dividends of $673 million and repurchased 550,000 shares of our common stock at an aggregate cost of $24 million.
Previous wording
Cash dividends of $2.88 per share on our common stock, including a special cash dividend of $2.00 per share, were declared and paid during the six months ended June 30, 2024. On July 26, 2024, our Board of Directors declared a quarterly cash dividend of $0.44 per share, payable August 29, 2024 to stockholders of record on August 12, 2024. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend on many factors, including our earnings, financial condition, business needs and regulatory constraints.
Current wording
Cash dividends of $3.32 per share on our common stock, including a special cash dividend of $2.00 per share, were declared and paid during the nine months ended September 30, 2024. On November 1, 2024, our Board of Directors declared a quarterly cash dividend of $0.44 per share, payable December 5, 2024 to stockholders of record on November 18, 2024. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend on many factors, including our earnings, financial condition, business needs and regulatory constraints.
Previous wording
Dividends from Continental Casualty Company (CCC) are subject to the insurance holding company laws of the State of Illinois, the domiciliary state of CCC. Under these laws, ordinary dividends, or dividends that do not require prior approval by the Illinois Department of Insurance, are determined based on the greater of the prior year's statutory net income or 10% of statutory surplus as of the end of the prior year, as well as timing and amount of dividends paid in the preceding twelve months. Additionally, ordinary dividends may only be paid from earned surplus, which is calculated by removing unrealized gains from unassigned surplus. As of June 30, 2024 CCC was in a positive earned surplus position. CCC paid dividends of $490 million and $660 million to CNAF during the six months ended June 30, 2024 and 2023. The actual level of dividends paid in any year is determined after an assessment of available dividend capacity, holding company liquidity and cash needs as well as the impact the dividends will have on the statutory surplus of the applicable insurance company.
Current wording
Dividends from Continental Casualty Company (CCC) are subject to the insurance holding company laws of the State of Illinois, the domiciliary state of CCC. Under these laws, ordinary dividends, or dividends that do not require prior approval by the Illinois Department of Insurance, are determined based on the greater of the prior year's statutory net income or 10% of statutory surplus as of the end of the prior year, as well as timing and amount of dividends paid in the preceding twelve months. Additionally, ordinary dividends may only be paid from earned surplus, which is calculated by removing unrealized gains from unassigned surplus. As of September 30, 2024 CCC was in a positive earned surplus position. CCC paid dividends of $635 million and $770 million to CNAF during the nine months ended September 30, 2024 and 2023. The actual level of dividends paid in any year is determined after an assessment of available dividend capacity, holding company liquidity and cash needs as well as the impact the dividends will have on the statutory surplus of the applicable insurance company.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
In addition, we also utilize renewal premium change, rate, retention and new business in evaluating operating trends. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes. Rate represents the average change in price on policies that renew excluding exposure change. Exposure represents the measure of risk used in the pricing of the insurance product. The change in exposure represents the change in premium dollars on policies that renew as a result of the change in risk of the policy. Retention represents the percentage of premium dollars renewed, excluding rate and exposure changes, in comparison to the expiring premium dollars from policies available to renew. New business represents premiums from policies written with new customers and additional policies written with existing customers. Gross written premiums, excluding third-party captives, excludes business which is ceded to third-party captives, including business related to large warranty programs.
Current report — wording carried from elsewhere
Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Current report — wording carried from elsewhere
Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part 1, Item 1.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Favorable net prior year loss reserve development of $6 million and $13 million was recorded for the three months ended June 30, 2024 and 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.