International Performance and Rate Reductions
CNA Financial's international segment, which incorporates its UK and European operations, recorded a combined ratio that improved to 86.1% from 91.8% in the third quarter. The result benefited from 10.1 points of favourable prior-year reserve development. Net written premiums rose 4%, or 6% when excluding currency movements. However, underlying performance showed some softening, with the underlying loss ratio climbing 1.3 points across most lines and the expense ratio increasing by 1.6 points due to higher acquisition costs, bringing the underlying combined ratio to 94.1%. CNA stated that it is implementing rate cuts within its International segment as well as in US property and workers' compensation.
Wider Group Pressures
Across the wider CNA property and casualty business, the combined ratio worsened to 97.0% from 92.8%, hampered by a 2.2-point increase in the underlying loss ratio to 64.1% and written rate increases of just 2%. The US Commercial segment neared the break-even point with a combined ratio of 99.7%, driven higher by catastrophe losses, adverse reserve development, and excess casualty and workers' compensation losses. Chief executive Douglas Worman noted that the firm walked away from portfolio areas where market conditions failed to support appropriate pricing and terms. Overall net income dropped to $196 million from $403 million, affected by a $137 million after-tax long-term care reserve charge in the run-off life business.