Ҵý

Ҵý FINANCIAL ANNOUNCES FIRST QUARTER 2024 NET INCOME OF $1.24 PER SHARE AND CORE INCOME OF $1.30 PER SHARE

  • Net income up 14% to $338 million versus $297 million in the prior year quarter; core income up 9% to$355 million, reflecting the best first quarter core income on record, versus $325 million in the prior year quarter.
  • P&C core income of $372 million versus $346 million, reflects higher investment income and favorablenet prior year development, partially offset by higher catastrophe losses.
  • Net investment income up 16% to $609 million pretax, includes a $44 million increase from fixed income securities and other investments to $541 million and a $40 million increase from limited partnerships and common stock to $68 million.
  • P&C combined ratio of 94.6%, compared with 93.9% in the prior year quarter, including 3.8 points of catastrophe loss impact compared with 2.4 points in the prior year quarter.P&C underlying combined ratio was 91.0% compared with 90.8% in the prior year quarter.P&C underlying loss ratio was 60.5% and the expense ratio was 30.1%.
  • P&C segments, excluding third party captives, generated gross written premium growth of 8% and net written premium growth of 6% for the first quarter of 2024.P&C renewal premium change of +6%, with written rate of +4% and exposure change of +2%.
  • Book value per share of $35.62; book value per share excluding AOCI of $45.10, a 2% increase from year-end 2023 adjusting for $2.44 of dividends per share.
  • Board of Directors declares regular quarterly cash dividend of $0.44 per share.

CHICAGO, May 6, 2024 /PRNewswire/ --ҴýFinancial Corporation (NYSE: Ҵý) today announced first quarter 2024 net income of $338 million, or $1.24 per share, versus $297 million, or $1.09 per share, in the prior year quarter. Net investment losses for the quarter were $17 million compared to $28 million in the prior year quarter. Core income for the quarter was $355 million, or $1.30 per share, versus $325 million, or $1.19 per share, in the prior year quarter.

Our Property & Casualty segments produced core income of $372million for the first quarter of 2024, an increase of $26million compared to the prior year quarter driven by higher investment income and favorable net prior period development, partially offset by higher catastrophe losses.P&C segments, excluding third party captives, generated gross written premium growth of 8% and net written premium growth of 6%, driven by retention of 85%, renewal premium change of +6% and new business growth of 5%.

Our Life & Group segment produced core income of $5 million for the first quarter of 2024 versus core loss of$3million intheprioryearquarter, drivenbyhigher netinvestmentincome.

Our Corporate & Other segment produced a core loss of $22 million for the first quarter of 2024, versus$18million in the prior year quarter, which reflects a $5 million after-tax charge related to office consolidation in the current quarter.

Ҵý Financial declared a quarterly dividend of $0.44 per share payable June 6, 2024 to stockholders of record on May 20, 2024.


ResultsfortheThree MonthsEnded
March 31

($millions,except persharedata)

2024


2023

Գdz

$ 338


$ 297

ǰԳdz (a)

355


325

Գdz perdiluted share

$ 1.24


$ 1.09

ǰԳdzperdilutedshare

1.30


1.19



March31,2024

December31,2023

Bookvalue pershare

$

35.62


$

36.52

BookvaluepershareexcludingAOCI


45.10



46.39



(a)

Management utilizes thecore income (loss) financial measure to monitor the Ҵý's operations.Please refer herein to the Reconciliation of GAAP Measures to Non-GAAP Measures section of this press release for further discussion of this non-GAAP measure.

"We are off to an excellent start with a record first quarter core income of $355 million, which benefited from 16% growth in net investment income and continued strong top and bottom line P&C performance.Theall-in combined ratio was 94.6% and included 3.8 points of catastrophe loss, which is in line with our five-year first quarter average, and the P&C underlying combined ratio of 91.0% represents the thirteenth consecutive quarter below 92%.

Gross written premiums ex. captives grew by 8% in the quarter with strong growth in Commercial of 17% as the property market remains very favorable given the correction over the last couple of years, and casualty rate increases continue to accelerate.Growth in Specialty and International were each impacted by the protracted competitive pressures in management liability lines and so we continue to tread lightly in those lines.

Renewal premium change was up a point to 6% while retention remained strong at 85%.In the U.S., our renewalpremiumchange excludingworkers' compensationwas8%,whichiscoveringourlosscosttrendsof 6.5%.

We are very pleased with our disciplined execution in the first quarter and we believe the remainder of 2024 willcontinue to afford usrobust opportunities to growprofitably andcontinue to build our investmentreturns," said Dino E. Robusto, Chairman & Chief Executive Officer of Ҵý Financial Corporation.

Property & Casualty Operations


Results for the Three Months Ended
March 31

($millions)

2024



2023


Grosswrittenpremiumsex.3rdpartycaptives

$ 2,936


$

2,724


GWPex.3rdpartycaptiveschange(%year overyear)

8

%




Netwritten premiums

$ 2,390


$

2,247


NWPchange (%yearover year)

6

%




Netearned premiums

$ 2,331


$

2,133


NEPchange (%yearover year)

9

%




Underwriting gain

$ 126


$

130


Netinvestmentincome

$ 357


$

301


ǰԳdz

$ 372


$

346


Underlyingloss ratio

60.5

%


59.8

%

Effectofcatastropheimpacts

3.8



2.4


Effectofdevelopment-relateditems

(0.2)



0.7


Lossratio

64.1

%


62.9

%

Expenseratio

30.1

%


30.7

%







Combinedratio

94.6

%


93.9

%

Underlying combined ratio

91.0

%


90.8

%

  • The underlying combined ratio increased 0.2 points as compared with the prior year quarter. The underlying loss ratio increased 0.7 points as compared with the prior year quarter. The expense ratio improved 0.6 points driven by net earned premium growth of 9%.
  • The combined ratio increased 0.7pointsascompared withtheprior yearquarter.Catastrophelosses were $88million, or 3.8 points of the loss ratio in the quarter compared with $52million, or 2.4 points of the loss ratio, for the prior year quarter.Favorable net prior period development improved the loss ratio by 0.2 points in thecurrent year quarter compared with 0.7 points ofunfavorable net prior period development increasing the loss ratio in the prior year quarter.
  • P&C segments, excluding third party captives, generated gross written premium growth of 8% and net written premium growth of 6%.

Business Operating Highlights

Specialty


Results for the Three Months Ended
March 31


($ millions)

2024



2023


Gross written premiums ex. 3rd party captives

$ 880

$ 886


GWP ex. 3rd party captives change (% year over year)

(1)

%




Net written premiums

$ 792

$ 788


NWP change (% year over year)

1

%




Net earned premiums

$ 814

$ 797


NEP change (% year over year)

2

%




Underwriting gain

$ 76

$ 80


Underlying loss ratio

59.2

%


58.4

%

Effect of catastrophe impacts




Effect of development-related items

(0.6)




Loss ratio

58.6

%


58.4

%

Expense ratio

31.8

%


31.4

%

Combined ratio

90.7

%


90.0

%

Underlying combined ratio

91.3

%


90.0

%

  • The underlying combined ratio increased 1.3 points as compared with the prior year quarter primarily due to a 0.8 point increase in the underlying loss ratio and a 0.4 point increase in the expense ratio.
  • The combined ratio increased 0.7 points as compared withthe prior year quarter.Favorablenet prior period development improved the loss ratio by 0.6 points in the current quarter compared with no net prior period development in the prior year quarter.
  • Gross written premiums, excluding third party captives, declined 1% and net written premiums grew 1% for the first quarter of 2024.

Commercial


Results for the Three Months Ended
March 31


($ millions)

2024



2023


Gross written premiums ex. 3rd party captives

$ 1,682

$ 1,440


GWP ex. 3rd party captives change (% year over year)

17

%




Net written premiums

$ 1,338

$ 1,188


NWP change (% year over year)

13

%




Net earned premiums

$ 1,202

$ 1,046


NEP change (% year over year)

15

%




Underwriting gain

$ 29

$ 41


Underlying loss ratio

62.0

%


61.5

%

Effect of catastrophe impacts

6.8



4.2


Effect of development-related items




Loss ratio

68.8

%


65.7

%

Expense ratio

28.2

%


29.8

%

Combined ratio

97.6

%


96.0

%

Underlying combined ratio

90.8

%


91.8

%

  • The underlying combined ratio improved 1.0 point as compared with the prior year quarter, reflecting the lowest on record. The expense ratio improved 1.6 points driven by net earned premium growth of 15%. The underlying loss ratio increased 0.5 points as compared with the prior year quarter.
  • The combined ratio increased 1.6pointsascompared withtheprior yearquarter.Catastrophelosses were $82million, or 6.8 points of the loss ratio in the quarter compared with $44million, or 4.2 points of the loss ratio, for the prior year quarter.
  • Gross written premiums, excluding third party captives, grew 17% and net written premiums grew 13% for the first quarter of 2024.

International


ResultsfortheThree MonthsEnded
March 31

($millions)

2024



2023


Grosswrittenpremiums

$ 374

$ 398


GWPchange(%yearover year)

(6)

%




Netwritten premiums

$ 260

$ 271


NWPchange(%yearover year)

(4)

%




Netearned premiums

$ 315

$ 290


NEPchange(%yearover year)

9

%




Underwriting gain

$ 21

$ 9


Underlyingloss ratio

58.1

%


57.5

%

Effectofcatastropheimpacts

2.0



2.8


Effectofdevelopment-relateditems



5.1


Lossratio

60.1

%


65.4

%

Expenseratio

33.2

%


31.8

%

Combinedratio

93.3

%


97.2

%

Underlying combined ratio

91.3

%


89.3

%

  • The underlying combined ratio increased 2.0 points as compared with the prior year quarter. The expense ratio increased 1.4 points driven by higher employee related costs partially offset by net earned premium growth of 9%. The underlying loss ratio increased 0.6 points as compared with the prior year quarter.
  • The combined ratio improved 3.9 points as compared with the prior yearquarter. Catastrophe losses were $6million, or 2.0 points of the loss ratio in the quarter compared with $8million, or 2.8 points of the loss ratio, for the prior year quarter. There was no net prior period development in the current quarter compared with 5.1 points of unfavorable development increasing the loss ratio in the prioryear quarter.
  • Excluding currency fluctuations, gross written premiums declined 8% and net written premiums declined 6% for the first quarter of 2024.

Life & Group


ResultsfortheThree MonthsEnded
March 31

($millions)

2024


2023

Netearned premiums

$ 110


$ 115

Claims,benefitsandexpenses

341


341

Netinvestmentincome

231


214

ǰԳdz(loss)

5


(3)

Core results improved $8 million for the first quarter of 2024 as compared with the prior year quarter primarily due to higher net investment income.

Corporate & Other


ResultsfortheThree MonthsEnded
March 31

($millions)

2024

2023

Insuranceclaims andpolicyholders'benefits

$ (8)

$ (7)

Interestexpense

34

28

Netinvestmentincome

21

10

Coreloss

(22)

(18)

Core loss increased $4 million for the first quarter of 2024 as compared with the prior year quarter. The current quarter includes a $5 million after-tax charge related to office consolidation.

Net Investment Income


ResultsfortheThree MonthsEnded
March 31


2024



2023

Fixedincome securitiesandother

$ 541



$ 497

Limitedpartnershipandcommonstock investments

68



28

Netinvestmentincome

$ 609



$ 525

Net investment income increased $84 million for the first quarter of 2024 as compared with prior year quarter. The increase was driven by favorable limited partnership and common stock returns and higher income from fixed income securities as a result of favorable reinvestment rates.

Stockholders' Equity

Stockholders' equity of $9.7 billion decreased 2% from year-end 2023, primarily due to dividends paid to stockholders, partially offset by net income.

BookvaluepershareexAOCIof$45.10increased2%fromyear-end 2023adjustingfor$2.44of dividends per share.

As of March 31, 2024, statutory capital and surplus for the Combined Continental Casualty Companies was $10.9 billion.

About the Ҵý

Ҵý is one of the largest U.S. commercial property and casualty insurance companies.Backed by more than 125 years of experience, Ҵý provides a broad range of standard and specialized insurance products and services for businesses and professionals in the U.S., Canada and Europe.For more information, please visit Ҵýat

Contacts

Media:

Analysts:

KellyMessina |VicePresident,Marketing

RalitzaK.Todorova|Vice President,
Investor Relations & RatingAgencies

872-817-0350

312-822-3834

ConferenceCallandWebcast/PresentationInformation

A conference call for investors and the professional investment community will be held at 8:00 a.m. (CT) today.On the conference call will be Dino E. Robusto, Chairman and Chief Executive Officer of ҴýFinancial Corporation, Scott R. Lindquist, Executive Vice President and Chief Financial Officer of Ҵý Financial Corporation and other members of senior management. Participantscanaccessthecallbydialing(844)481-2830(USAToll Free)or+1(412)317-1850 (International).Thecallwillalso be broadcast live on the internet and may be accessed from the Investor Relations page of the Ҵýwebsite ).A presentation will be posted and available on the Ҵýwebsite that will provide additional insight into the results.

The call is available to the media, but questions will be restricted to investors and the professional investment community.An online replay will be available on Ҵý's website following the call.Financial supplement information related to the results is available on the investor relations pages of the Ҵýwebsite or by contacting investor.relations@cna.com.

Definition of Reported Segments

  • Specialty provides management and professional liability and other coverages through property and casualty products and services using a network of brokers, independent agencies and managing general underwriters.
  • Commercial works with a network of brokers and independent agents to market a broad range of property and casualty insurance products to all types of insureds targeting small business, construction, middle markets and other commercial customers.
  • International underwrites property and casualty coverages on a global basis through a branch operation in Canada, a Europeanbusiness consistingofinsurancecompaniesbasedintheU.KandLuxembourgandHardy,ourLloyd'sSyndicate.
  • Life & Group includes the individual and group run-off long-term care businesses as well as structured settlement obligations not funded by annuities related to certain property and casualty claimants.
  • Corporate & Other primarily includes certain corporate expenses, including interest on corporate debt, and the results of certain property and casualty business in run-off, includingҴýRe, asbestos and environmental pollution (A&EP), a legacy portfolio of excess workers' compensation (EWC) policies and legacy mass tort reserves.

Financial Measures

Managementutilizes thefollowingmetrics intheirevaluationoftheProperty &CasualtyOperations.

Theseratios are calculated using financial results prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).

  • Lossratioisthepercentageofnetincurred claimandclaimadjustmentexpenses tonetearnedpremiums.
  • Underlyinglossratiorepresentsthelossratioexcludingcatastrophelossesanddevelopment-relateditems.
  • Expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums.
  • Dividendratioistheratio ofpolicyholders'dividends incurredtonetearnedpremiums.
  • Combinedratio isthesumoftheloss,expenseanddividendratios.
  • Underlyingcombined ratiois thesumoftheunderlyingloss,expenseanddividendratios.

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.For certain products within Small Business, where quantifiable, rate includes the influence of new business as well.

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 ex. 3rdparty captives represents gross written premiums excluding business which is ceded to third party captives, including business related to large warranty programs.

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.

Underwriting gain (loss) represents net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and other insurance related expenses, pre-tax.

Underlying underwriting gain (loss) represents underwriting results excluding catastrophe losses and development-related items.

Statutory capital and surplus represents the excess of an insurance company's admitted assets over its liabilities, including loss reserves, as determined in accordance with statutory accounting practices.Statutory capital and surplus as of the current period is preliminary.

The Ҵý's investment portfolio is monitored by management through analysis of various factors including unrealized gains and losses on securities, portfolio duration and exposure to market and credit risk.

Reconciliation of GAAP Measures to Non-GAAP Measures

This press release also contains financial measures that are not in accordance with GAAP.Management utilizes these financial measures to monitor the Ҵý's insurance operations and investment portfolio.The Ҵý believes the presentation of these measures provides investors with a better understanding of the significant factors that comprise the Ҵý's operating performance.Reconciliations of these measures to the most comparable GAAP measures follow below.

Reconciliation of Net Income (Loss) to Core Income (Loss)

ǰԳdz(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.


ResultsfortheThree Months
EndedMarch 31

($millions)

2024


2023

Գdz

$ 338


$ 297

Less:Net investmentlosses

(17)


(28)

ǰԳdz

$ 355


$ 325

ReconciliationofNetIncome(Loss)perDiluted SharetoCoreIncome(Loss)perDiluted Share

Core income (loss) per diluted shareprovides management and investors with a valuable measure of the Ҵý's operating performance for the same reasons applicable to its underlying measure, core income (loss). Core income (loss) per diluted share is core income (loss) on a per diluted share basis.


ResultsfortheThree Months
Ended March 31


2024


2023

Գdz perdilutedshare

$ 1.24


$ 1.09

Less:Net investmentlosses

(0.06)


(0.10)

ǰԳdz perdilutedshare

$ 1.30


$ 1.19

ReconciliationofBookValue perSharetoBookValueperShareExcludingAOCI

Book value per share excludingAOCI allows management and investors to analyze the amount of the Ҵý's net worth primarily attributable to the Ҵý's business operations. The Ҵý believes this measurement is useful as it reduces the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates.


March31,

2024


December31,

2023

Bookvalue pershare

$ 35.62


$ 36.52

Less:Pershareimpact ofAOCI

(9.48)


(9.87)

Bookvalue pershareexcludingAOCI

$ 45.10


$ 46.39

CalculationofReturnonEquityandCoreReturn onEquity

Core return on equityprovides management and investors with a measure of how effectively the Ҵý is investing the portion of the Ҵý's net worth that is primarily attributable to its business operations.


ResultsfortheThree Months
Ended March 31


($millions)

2024

2023


Annualizednetincome

$ 1,351

$ 1,189


Averagestockholders'equityincludingAOCI (a)

9,778

8,607


Returnonequity

13.8

%

13.8

%

Annualizedcoreincome

$ 1,420

$ 1,299


Averagestockholders'equityexcludingAOCI (a)

12,400

12,060


Corereturn onequity

11.5

%

10.8

%



(a)

Average stockholders' equity is calculated using a simple average of the beginning and ending balances for the period.

For additional information, please refer toҴý's most recent 10-K on file with the Securities and Exchange Commission,as well as the financial supplement, available at

Forward-Looking Statements

This press release includes statements that relate to anticipated future events (forward-looking statements) rather than actual present conditions or historical events.These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as "believes," "expects," "intends," "anticipates," "estimates" and similar expressions.Forward-looking statements, by their nature, are subject to a variety of inherent risks and uncertainties that could cause actual results to differ materially from the results projected.Many of these risks and uncertainties cannot be controlled by Ҵý.For a detailed description of these risks and uncertainties, please refer to Ҵý's filings with the Securities and Exchange Commission, available at

Any forward-looking statements made in this press release are made by Ҵýas of the date of this press release.Further, Ҵý does not have any obligation to update or revise any forward-looking statement contained in this press release, even if Ҵý's expectations or any related events, conditions or circumstances change.

Any descriptions of coverage under Ҵý policies or programs in this press release are provided for convenience only and arenot to be relied upon with respect to questions of coverage, exclusions or limitations.With regard to all such matters, the terms and provisions of relevant insurance policies are primary and controlling.In addition, please note that all coverages may not be available in all states.

"Ҵý" is a registered trademark of Ҵý Financial Corporation.Certain Ҵý Financial Corporation subsidiaries use the "Ҵý" trademark in connection with insurance underwriting and claims activities.Copyright © 2024 Ҵý.All rights reserved.

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