CNA suffers steep loss as COVID-19 drags down investment returns

Commercial insurer CNA Financial Corporation's relatively strong underwriting performance was dragged down by its investment returns in the first quarter, driven by the financial market volatility created by COVID-19.

The insurer posted a net loss of $61 million in Q1 2020, compared with a net income of $342 million in the first quarter of 2019.

CNA revealed net investment losses of $169 million and a decrease in net investment income to $279 million.

Property & Casualty combined ratio for the first quarter was 97.5 percent and the underlying combined ratio was 93.9 percent. The combined ratio includes charges of $15 million pre-tax associated with COVID-19.

The US P&C segments, excluding third party captives, generated gross written premium growth of 8 percent. Excluding third party captives, gross written premiums grew 6 percent for P&C overall. Catastrophe losses in the segment included $13 million for COVID-19 claims related activity.

The company's Life & Group produced a core income of $4 million and Corporate & Other segments produced a core loss of $18 million for the first quarter of 2020.

CNA's speciality unit posted a core income of $96 million, compared with $169 million in the same period a year ago. A similar trend was noticed in the commercial segment where the core income reduced from $139 million in Q1 2019 to barely $24 million in Q1 2020. The combined ratio for the unit was 1010.9 percent. However, Gross written premiums, excluding third party captives, grew 14 percent due to higher new business and favorable rate.

In the international segment, gross written premiums decreased 5 percent driven by a change in the timing of ceded reinsurance contract renewals, and the continued impact of the strategic exit from certain Lloyd's business classes, offset by growth in Canada.

"Our first quarter financial results reflected strong underwriting performance, and included an underlying combined ratio of 93.9%, a one point improvement from a year ago, along with net written premium growth of 6% in the U.S. and 3% overall. These results were adversely impacted by disruption in the financial markets due to COVID-19, which led to unfavorable returns on our alternative investments and equity holdings while our fixed income investments generated steady earnings in line with the last four quarters," said Dino Robusto, chairman and chief executive officer of CNA Financial Corporation.

Robusto added: "As we look ahead at these unprecedented and challenging times our thoughts go out to those most affected by the COVID-19 pandemic, and we are tremendously grateful for all the medical professionals and first responders who put their lives on the line every day.”