ÃÛÌÒ´«Ã½

• Net income up 49% to $283 million versus $190 million in the prior year quarter; core income up 34% to $308 million versus $230 million in the prior year quarter.
• P&C core income of $374 million versus $317 million in the prior year quarter, reflects higher investment income and record high pretax underlying underwriting income, partially offset by higher catastrophe losses and lower favorable net prior year development.
• Corporate & Other core loss of $46 million versus $78 million in the prior year quarter.
• Net investment income up 33% to $575 million pretax, includes an $83 million increase from limited partnerships and common stock to $68 million and a $60 million increase from fixed income securities and other investments to $507 million.
• P&C combined ratio of 93.8%, compared with 91.0% in the prior year quarter, including 3.1 points of catastrophe loss impact compared with 1.8 points in the prior year quarter. The underlying combined ratio was 91.1% compared with 90.8%, in the prior year quarter. The underlying loss ratio was 59.9% and the expense ratio was 30.9%.
• P&C segments, excluding third party captives, generated gross written premium growth of 12% and net written premium growth of 9%. Excluding currency fluctuations, gross written premiums grew 12% and net written premiums grew 10%. P&C renewal premium change of +7%, with written rate of +5% and exposure change of +2%.
• Book value per share of $32.22; book value per share excluding AOCI of $44.86, a 5% increase from year- end 2022 adjusting for $2.04 of dividends per share.
• Board of Directors declares regular quarterly cash dividend of $0.42 per share.

CHICAGO, July 31, 2023 /PRNewswire/ -- ÃÛÌÒ´«Ã½ Financial Corporation (NYSE: ÃÛÌÒ´«Ã½) today announced second quarter 2023 net income of $283 million, or $1.04 per share, versus $190 million, or $0.69 per share, in the prior year quarter. Net investment losses for the quarter were $25 million compared to $40 million in the prior year quarter. Core income for the quarter was up 34% to $308 million, or $1.13 per share, versus $230 million, or $0.84 per share, in the prior year quarter.

Our Property & Casualty segments produced core income of $374 million for the second quarter of 2023, an increase of $57 million compared to the prior year quarter driven by higher investment income and record high pretax underlying underwriting income, partially offset by higher catastrophe losses and lower favorable net prior year development. P&C segments, excluding third party captives, generated gross written premium growth of 12% and net written premium growth of 9% for the second quarter of 2023 driven by renewal premium change of +7%, including rate of +5%, exposure change of +2% and new business growth of 11%. Excluding currency fluctuations, gross written premiums grew 12% and net written premiums grew 10%.

Our Life & Group segment produced a core loss of $20 million for the second quarter of 2023 versus $9 million in the prior year quarter primarily due to long term care policy buyouts.

Our Corporate & Other segment produced a core loss of $46 million for the second quarter of 2023 versus $78 million in the prior year quarter driven by lower net prior year loss reserve development and higher net investment income.

ÃÛÌÒ´«Ã½ Financial declared a quarterly dividend of $0.42 per share, payable August 31, 2023 to stockholders of record on August 14, 2023.

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"We produced strong results in the quarter with double-digit top-line growth and continued excellent profitability. Core income increased by 34% in the quarter and net investment income was up 33% with significant increases in LPs, common stock, and the fixed income portfolio.

The all-in combined ratio was very strong at 93.8%, with pretax catastrophe losses of $68 million, or 3.1 points of the combined ratio, and 0.4 points of favorable prior period development. The P&C underlying combined ratio of 91.1%Ìýgenerated aÌýrecord $200ÌýmillionÌýof pretax P&C underlyingÌýunderwriting gain.

In the quarter, we achieved very strong production performance with 12% growth in gross written premium ex captives and 9% growth in net written premium. Renewal premium change was 7% for P&C overall and 11% in Commercial, which was up 2 points from the first quarter. Retention remained consistently high at 86% and new business was up 11%, similar to the first quarter.

With the strong top-line and bottom-line results in the first half of the year and improved investment returns, we areÌýoptimistic about our opportunities through the remainder of 2023," said Dino E. Robusto, Chairman & Chief ExecutiveÌýOfficerÌýofÌýÃÛÌÒ´«Ã½ÌýFinancialÌýCorporation.

PropertyÌý&ÌýCasualty Operations

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• The underlying combined ratio increased 0.3 points as compared with the prior year quarter. The expense ratio increased 0.4 points driven by higher employee related costs. The underlying loss ratio was largely consistent with the prior year quarter.
• The combined ratio increased 2.8 points as compared with the prior year quarter.ÌýCatastrophe lossesÌýwere $68 million, or 3.1 points of the loss ratio in the quarter compared with $37 million, or 1.8 pointsÌýof the loss ratio, for the prior year quarter.ÌýFavorable net prior year development improved the lossÌýratio by 0.4 points in the current quarter as compared with 1.6 points of improvement in the prior yearÌýquarter.
• P&CÌýsegments, excludingÌýthirdÌýpartyÌýcaptives,Ìýgenerated grossÌýwrittenÌýpremium growthÌýofÌý12%ÌýandÌýnetÌýwrittenÌýpremium growthÌýofÌý9%.ÌýExcludingÌýcurrency fluctuations,ÌýgrossÌýwritten premiumsÌýgrewÌý12%ÌýandÌýnetÌýwrittenÌýpremiums grewÌý10%.

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Business Operating Highlights
Specialty

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• The underlying combined ratio increased 2.0 points as compared with the prior year quarter due to an increase in the expense ratio driven by higher employee related and acquisition costs.
• The combined ratio increased 2.8 points as compared with the prior year quarter.ÌýFavorable net priorÌýyear development improved the loss ratio by 0.3 points in the quarter compared with 1.2 points ofÌýimprovementÌýin theÌýpriorÌýyearÌýquarter.
• Gross written premiums, excluding third party captives and net written premiums both declined 1% forÌýtheÌýsecond quarterÌýofÌý2023.

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Commercial

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• The underlying combined ratio improved 0.4 points as compared with the prior year quarter, reflecting the lowest underlying combined ratio on record. The expense ratio improved 0.4 points driven by net earned premium growth of 15%.
• The combined ratio increased 3.1 points as compared with the prior year quarter.ÌýCatastrophe lossesÌýwere $59 million, or 5.2 points of the loss ratio in the quarter compared with $29 million, or 3.0 pointsÌýofÌýtheÌýlossÌýratio,ÌýforÌýtheÌýpriorÌýyearÌýquarter. FavorableÌýnetÌýpriorÌýyearÌýdevelopmentÌýimprovedÌýtheÌýlossÌýratioÌýbyÌý0.5Ìýpoints inÌýtheÌýquarterÌýcomparedÌýwithÌý1.8Ìýpoints of improvementÌýinÌýtheÌýpriorÌýyearÌýquarter.
• Gross written premiums, excluding third party captives grew 21% and net written premiums grew 17%ÌýforÌýtheÌýsecondÌýquarter ofÌý2023.

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International

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• The underlying combined ratio improved 1.5 points as compared with the prior year quarter. The expense ratio improved 0.9 points driven by net earned premium growth of 12% and lower acquisition costs. The underlying loss ratio improved 0.6 points as compared with the prior year quarter.
• The combined ratio increased 0.6 points as compared with the prior year quarter.ÌýCatastrophe lossesÌýwere $9 million, or 3.1 points of the loss ratio in the quarter compared with $7 million, or 2.8 points ofÌýtheÌýlossÌýratio, forÌýtheÌýprior yearÌýquarter.ÌýThereÌýwasÌýnoÌýnetÌýprior yearÌýdevelopmentÌýinÌýtheÌýcurrent quarterÌýcomparedÌýwithÌý1.8ÌýpointsÌýofÌýfavorable developmentÌýimprovingÌýtheÌýlossÌýratio inÌýtheÌýpriorÌýyearÌýquarter.
• Excluding currencyÌýfluctuations,ÌýgrossÌýwritten premiumsÌýgrewÌý12%ÌýandÌýnetÌýwrittenÌýpremiums grewÌý10%ÌýforÌýtheÌýsecond quarterÌýofÌý2023.

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Life & Group

Excluding the impacts of long term care policy buyouts,ÌýyearÌýtoÌýdateÌý2023ÌýunderwritingÌýresults areÌýgenerallyÌýinÌýline with expectations.

CorporateÌý&ÌýOther

Core loss decreased $32 million for the second quarter of 2023 as compared with the prior year quarterÌýdriven by lower net prior year loss reserve development and higher net investment income.ÌýThe currentÌýquarter includes a $28 million after-tax charge related to unfavorable prior year development largelyÌýassociatedÌýwithÌýlegacyÌýmassÌýtortÌýclaims comparedÌýwithÌýaÌý$51Ìýmillion after-taxÌýchargeÌýinÌýtheÌýsecondÌýquarterÌýofÌý2022.

NetÌýInvestmentÌýIncome

Net investment income increased $143 million for the second quarter of 2023 as compared with the prior year quarter. The increase was driven by an $83 million increase in income from limited partnership and common stock investments and a $60 million increase in income from fixed income securities and other investments.

Stockholders'ÌýEquity

Stockholders' equity of $8.7 billion improved 2% from year-end 2022 primarily due to net income partially offset by dividends paid to stockholders.

BookÌývalueÌýperÌýshareÌýexÌýAOCI of $44.86 increased 5% from year-end 2022 adjusting for $2.04 of dividends per share.

As of June 30, 2023, statutory capital and surplus for the Combined Continental Casualty Companies was $10.5 billion.

AccountingÌýStandardsÌýUpdate

In August 2018, the FASB issued ASU 2018-12, Financial Services-Insurance (Topic 944): TargetedÌýImprovements to the Accounting for Long-Duration Contracts (LDTI). The updated accounting guidance requires changes to the measurement and disclosure of long-duration contracts. For the ÃÛÌÒ´«Ã½, this includes the run-off long term care business in the Life & Group segment. The ÃÛÌÒ´«Ã½ adopted the new guidance effective January 1, 2023, using the modified retrospective method applied as of the transition date of January 1, 2021. All prior period amounts have been adjusted to reflect application of the new guidance. While the requirements of the new guidance represent a material change from legacy accounting, the new guidance does not impact capital and surplus under statutory accounting practices, cash flows or the underlying economics of the business. Additional information regarding the ÃÛÌÒ´«Ã½'s adoption ofÌýASU 2018-12 and the impact to historical financial results is contained in the ÃÛÌÒ´«Ã½'s Q1Ìý2023 Financial Supplement, furnished on Form 8-K, on May 1, 2023 with the Securities and ExchangeÌýCommission.

AboutÌýthe ÃÛÌÒ´«Ã½

ÃÛÌÒ´«Ã½ is one of the largest U.S. commercial property and casualty insurance companies.ÌýBacked by more than 125 years ofÌýexperience, ÃÛÌÒ´«Ã½ provides a broad range of standard and specialized insurance products and services for businesses andÌýprofessionalsÌýinÌýthe U.S.,ÌýCanadaÌýand Europe.ÌýForÌýmoreÌýinformation,Ìýplease visitÌýÃÛÌÒ´«Ã½Ìýat

Contact

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Conference Call and Webcast/Presentation Information

AÌýconferenceÌýcallÌýforÌýinvestorsÌýandÌýtheÌýprofessionalÌýinvestmentÌýcommunityÌýwillÌýbeÌýheldÌýatÌý8:00Ìýa.m.Ìý(CT)Ìýtoday.ÌýOnÌýtheÌýconferenceÌýcall will be Dino E. Robusto, Chairman and Chief Executive Officer of ÃÛÌÒ´«Ã½ Financial Corporation, Scott R. Lindquist, ExecutiveÌýVice President and Chief Financial Officer of ÃÛÌÒ´«Ã½ Financial Corporation and other members of senior management. ParticipantsÌýcan access the call by dialing (844) 481-2830 (USA Toll Free) or +1 (412) 317-1850 (International). The call will also be broadcastÌýlive on the internet and may be accessed from the Investor Relations page of the ÃÛÌÒ´«Ã½ website ().ÌýA presentationÌýwillÌýbeÌýposted andÌýavailableÌýonÌýtheÌýÃÛÌÒ´«Ã½Ìýwebsite thatÌýwillÌýprovide additionalÌýinsightÌýinto the results.

The call is available to the media, but questions will be restricted to investors and the professional investment community.ÌýAnÌýonline replay will be available on ÃÛÌÒ´«Ã½'s website following the call. Financial supplement information related to the results is available on the investor relations pages of the ÃÛÌÒ´«Ã½Ìýwebsite orÌýbyÌýcontactingÌýinvestor.relations@cna.com.

DefinitionÌýofÌýReported 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 European business consisting of insurance companies based in the U.K and Luxembourg and Hardy, our Lloyd's Syndicate.
• 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, including ÃÛÌÒ´«Ã½ Re, asbestos and environmental pollution (A&EP), a legacy portfolio of excess workers' compensation (EWC) policies and certain legacy mass tort reserves.

Financial Measures

Management utilizes the following metrics in their evaluation of the Property & Casualty Operations.

These ratios are calculated using financial results prepared in accordance with accounting principles generally accepted in theÌýUnited StatesÌýofÌýAmerica (GAAP).

• Loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums.
• Underlying loss ratio represents the loss ratio excluding catastrophe losses and development-related items.
• Expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums.
• Dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums.
• Combined ratio is the sum of the loss, expense and dividend ratios.
• Underlying combined ratio is the sum of the underlying loss, expense and dividend ratios.

Renewal premium change represents the estimated change in average premium on policies that renew, including rate andÌýexposureÌýchanges.

RateÌýrepresents 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.ÌýThe change in exposure represents theÌýchange inÌýpremiumÌýdollars onÌýpolicies that renewÌýasÌýaÌýresult of theÌýchangeÌýinÌýriskÌýofÌýtheÌýpolicy.

Retention represents the percentage of premium dollars renewed, excluding rate and exposure changes, in comparison to theÌýexpiringÌýpremium dollars fromÌýpoliciesÌýavailable to renew.

New business represents premiums from policies written with new customers and additional policies written with existingÌýcustomers.

Gross written premiums ex. 3rd party captives represents gross written premiums excluding business which is ceded to thirdÌýpartyÌýcaptives,Ìýincluding businessÌýrelated toÌýlarge warrantyÌýprograms.

Development-relatedÌýitems representsÌýnetÌýpriorÌýyearÌýlossÌýreserveÌýandÌýpremiumÌýdevelopment,ÌýandÌýincludesÌýtheÌýeffectsÌýofÌýinterestÌýaccretionÌýand changeÌýin allowanceÌýforÌýuncollectibleÌýreinsuranceÌýandÌýdeductibleÌýamounts.

Underwriting gain (loss) represents net earned premiums less total insurance expenses, which includes insurance claims andÌýpolicyholders'Ìýbenefits, amortizationÌýof deferredÌýacquisitionÌýcostsÌýandÌýotherÌýinsuranceÌýrelated expenses, pre-tax.

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

StatutoryÌýcapitalÌýandÌýsurplusÌýrepresentsÌýtheÌýexcessÌýofÌýanÌýinsuranceÌýcompany'sÌýadmittedÌýassets overÌýitsÌýliabilities,ÌýincludingÌýlossÌýreserves, as determined in accordance with statutory accounting practices.ÌýStatutory capital and surplus as of the current period is preliminary.

The ÃÛÌÒ´«Ã½'s investment portfolio is monitored by management through analysis of various factors including unrealized gainsÌýandÌýlossesÌýonÌýsecurities, portfolioÌýdurationÌýandÌýexposure toÌýmarketÌýand credit risk.

Reconciliation ofÌýGAAPÌýMeasures toÌýNon-GAAPÌýMeasures

This press release also contains financial measures that are not in accordance with GAAP.ÌýManagement utilizes these financialÌýmeasures to monitor the ÃÛÌÒ´«Ã½'s insurance operations and investment portfolio.ÌýThe ÃÛÌÒ´«Ã½ believes the presentation ofÌýthese measures provides investors with a better understanding of the significant factors that comprise the ÃÛÌÒ´«Ã½'s operatingÌýperformance.ÌýReconciliationsÌýofÌýtheseÌýmeasures toÌýtheÌýmostÌýcomparableÌýGAAPÌýmeasuresÌýfollow below.

Core income (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.

Core income (loss) per diluted shareÌýprovidesÌýmanagementÌýandÌýinvestorsÌýwithÌýaÌývaluable measureÌýofÌýtheÌýÃÛÌÒ´«Ã½'sÌýoperating performance for the same reasons applicable to its underlying measure, core income (loss). Core income (loss) per diluted shareÌýis coreÌýincomeÌý(loss)Ìýon aÌýperÌýdilutedÌýshare basis.

Book value per share excluding AOCI allows management and investors to analyze the amount of the ÃÛÌÒ´«Ã½'s net worth primarily attributable to the ÃÛÌÒ´«Ã½'s business operations. The ÃÛÌÒ´«Ã½ 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.

CoreÌýreturnÌýonÌýequity provides management and investors with a measure of how effectively the ÃÛÌÒ´«Ã½ is investing the portion of the ÃÛÌÒ´«Ã½'s net worth that is primarily attributable to its business operations.

ForÌýadditional information, pleaseÌýrefer toÌýÃÛÌÒ´«Ã½'sÌýmostÌýrecentÌý10-KÌýonÌýfileÌýwithÌýtheÌýSecurities andÌýExchangeÌýCommission,ÌýasÌýwellÌýas the financial supplement,Ìýavailable atÌý

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 ÃÛÌÒ´«Ã½. For a detailed description of these risks and uncertainties, please refer to ÃÛÌÒ´«Ã½'sÌýfilingsÌýwithÌýtheÌýSecuritiesÌýandÌýExchangeÌýCommission,Ìýavailable at

Any forward-looking statements made in this press release are made by ÃÛÌÒ´«Ã½ as of the date of this press release.ÌýFurther, ÃÛÌÒ´«Ã½Ìýdoes not have any obligation to update or revise any forward-looking statement contained in this press release, even if ÃÛÌÒ´«Ã½'sÌýexpectations orÌýanyÌýrelatedÌýevents, conditions orÌýcircumstancesÌýchange.

AnyÌýdescriptionsÌýofÌýcoverageÌýunder ÃÛÌÒ´«Ã½ÌýpoliciesÌýorÌýprogramsÌýinÌýthisÌýpress releaseÌýareÌýprovided forÌýconvenienceÌýonlyÌýandÌýareÌýnotÌýto be relied upon with respect to questions of coverage, exclusions or limitations.ÌýWith regard to all such matters, the terms andÌýprovisions of relevant insurance policies are primary and controlling.ÌýIn addition, please note that all coverages may not beÌýavailableÌýin all states.

"ÃÛÌÒ´«Ã½" is a registered trademark of ÃÛÌÒ´«Ã½ Financial Corporation. Certain ÃÛÌÒ´«Ã½ Financial Corporation subsidiaries use the "ÃÛÌÒ´«Ã½" trademark in connection with insurance underwriting and claims activities. Copyright © 2023 ÃÛÌÒ´«Ã½. All rights reserved.

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