CNA profit hit by accounting chargePosted On: May. 2, 2016 12:00 AM CST
CNA Financial Corp. reported Monday that its profit fell in the first quarter, due partly to an accounting charge, but its combined ratio in its property/casualty operations improved.
The company reported $66 million in net income in the first quarter vs. the comparable quarter a year ago, a 71.7% decrease. CNA's net operating income was $91 million, a 59.6% decrease.
During an analysts call Monday, chairman and CEO Thomas F. Motamed said net operating results were hit by an $83 million accounting charge related to a 2010 loss portfolio agreement with Berkshire Hathaway Inc., as well as lower limited partnership income that was partially offset by improved underwriting.
In July, 2010, CNA paid $2 billion to have Berkshire Hathaway's National Indemnity Co. take on asbestos and pollution risks held by CNA.
However, “Our property/casualty business had a solid first quarter,” reporting a 96.1% combined ratio vs. a 98.9% combined ratio for the comparable period a year ago, said Mr. Motamed.
He said the improved combined ratio reflected favorable loss development across all property/casualty segments and sustained improvement in the underlying loss ratio that was partially offset by an improved underwriting loss ratio that was partially offset by a higher expense ratio.
“We remain steadfast in our commitment in being among the very best in selecting and pricing risk,” said Mr. Motamed. While in the near term short term, investments in talent and systems pressure the expense ratio, “We see it as short-term pain.”
Net premiums written declined slightly to $1.668 billion vs. $1.669 billion for the comparable period a year ago.