By David Bull

May 5 - (The Insurer) - CNA Financial reported Q1 core income of $281 million that was down from $355 million in the prior-year period and at $1.03 a share missed the Wall Street consensus forecast of $1.14 a share as its underwriting results were hit by cat losses and a commercial auto reserve charge.

The Chicago-based insurer said that P&C core income dropped from $372 million to $311 million, reflecting lower underwriting results that were partially offset by higher net investment income.

Its P&C combined ratio of 98.4% was a deterioration from 94.6% in Q1 2024. The impact of cat losses was the same in both quarters at 3.8 points.

However, the current year quarter was hit by 2.5 points of net prior period development, which the company said was driven by commercial auto in accident year 2024.

In Q1 2024 there had been a favorable impact on the combined ratio of 0.2 points from prior-year development.

CNA’s cat losses total of $97 million before tax included $53 million for the California wildfires. The insurer booked $88 million of cat losses in the prior-year period.

Stripping out cat losses and prior-year development, the insurer’s P&C underlying combine ratio increased from 91.0% to 92.1%, with an underlying loss ratio that worsened by a point to 61.5% and an expense ratio of 30.2% that was 10 basis points up on the prior-year quarter.

CNA’s P&C top line grew 7% in the quarter compared to the prior-year period, with gross premiums written of $3.14 billion, and net premiums written up 9% to $2.61 billion.

Life and group net earned premiums were down from $110 million to $106 million.

Net investment income of $604 million at the group level reflected a $14 million reduction from limited partnerships and common stock to $54 million, partially offset by a $9 million increase from fixed income securities and other investments to $550 million, said the company.

CNA president and CEO Doug Worman said: “We achieved $281 million of core income, our eighth consecutive quarter of pretax underlying underwriting gain of $200 million or greater, and an overall underwriting profit in a substantially elevated industry catastrophe quarter. Each of our operating segments produced solid growth and strong underlying profitability this quarter.”

He also pointed to momentum in pricing at the carrier, with average rate increase up a point in the quarter to 4% and renewal premium change up two points to 6%.

“We continue to achieve significant rate increase in the social inflation impacted classes of business with excess casualty rates up three points this quarter to 14%. Specialty rate increase was up two points to 3% in the quarter. Retention was 86% for P&C and remained strong in all operating segments,” said the executive.

By division, specialty reported a combined ratio that increased from 90.7% to 95.1%, or from 91.3% to 93.8% on an underlying basis; the reported combined ratio in commercial was up from 97.6% to 101.0%, with an underlying ratio that increased from 90.8% to 91.0%; and the international combined ratio was up from 93.3% to 95.5%, or from 91.3% to 91.8% on an underlying basis.