Tags: CNA | Financial | shares | losses

CNA Financial Shares Hit by Losses

By    |   Friday, 28 Oct 2011 11:20 AM

CNA Financial (CNA) is one of the largest property & casualty (P&C) insurance companies in the United States. The P&C insurance business is occasionally hit by catastrophic losses. CNA suffered such losses in the first half of 2011 and the share price dropped as a result. There has been no positive news since to instigate a share price recovery.

CNA Financial divides its business into the segments of specialty and commercial insurance products. Specialty covers professional and management liability coverage plus service and warranty insurance. The commercial insurance lines are property and casualty insurance products for small, medium and large businesses. CNA's products are sold through a network of independent insurance brokers.

For the 2011 second quarter the company reported net income of $126 million, down from $283 million a year earlier. On a per share basis, net operating income was 43 cents, compared to earnings of $1 in the second quarter of 2010.

Net income declined in the quarter for both segments plus net realized investment gains also dropped year-over-year. For the second quarter, the consensus earnings estimate was 51 cents per share, so the actual results were a 16 percent miss. The CNA share price fell from a trading range near $30 to the low $20s and has remained at those lower levels.

Recovery setback

Like the majority of insurance companies, CNA Financial realized some large portfolio losses due to the financial crisis, which triggered price declines in many of the types of debt securities typically held by insurance companies.

In February, the company reinstated the payment of a dividend after almost three years with no distributions. Second quarter financial performance appears to have put the market into a wait-and-see position concerning future results of CNA.

The consensus forecast for the third quarter is earnings of 36 cents compared to a 66 cent loss in 2010. For the fourth quarter the estimate is 65 cents compared to a $1.21 profit a year earlier.

Only four Wall Street analysts follow CNA and currently they are split between buy and hold ratings.

The company next reports on Oct. 31.

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CNA Financial (CNA) is one of the largest property casualty (P C) insurance companies in the United States. The P C insurance business is occasionally hit by catastrophic losses. CNA suffered such losses in the first half of 2011 and the share price dropped as a result....
CNA,Financial,shares,losses
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2011-20-28
Friday, 28 Oct 2011 11:20 AM
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