Insurers Report Improved Q3 Earnings

A number of insurers, including Liberty Mutual Holding Company Inc. and Arch Capital Group, cancelled upcoming earnings calls as a result of Hurricane Sandy. Others have released their financial results for Q3 2012. INN will report more results as they become available. The following is a compilation of recent announcements:

CNA Financial Corporation

CNA's Q3 2012 results included net operating income of $216 million, or $0.80 per share, and net income of $221 million, or $0.82 per share. The combined ratio for P&C operations in the third quarter was 99.7 percent. Book value per share was $46.99 at Sept. 30, 2012, as compared with $45.34 at June 30, 2012, and $42.66 at Dec. 31, 2011.

“Our third-quarter results reflect the favorable impact of the addition of the newly acquired Hardy group,” said Thomas Motamed, chairman and CEO. “Hardy’s combined ratio was 85.8 percent with net earned premium of $64 million.”

Net realized investment gains were $5 million, compared with a $16 million loss in the same quarter last year. The company also announced a quarterly dividend of $0.15 per share, payable Nov. 29, 2012, to stockholders of record on Nov. 13, 2012.

CNA Specialty: Compared with Q3 2011, net written premiums decreased 4 percent to $27 million, primarily due to lower new business levels in certain lines, partially offset by continued positive rate achievement. Net income increased $58 million and net operating income increased $53 million Q3 2012, compared to the same period in 2011, primarily due to higher net investment income.

CNA Commercial: Net written premiums decreased $25 million, or 3 percent, for Q3 2012 as compared with the same period in 2011. Net income increased $94 million and net operating income increased $78 million for Q3 2012 as compared with the same period in 2011.

Everest Re Group Ltd.

Everest Re reported Q3 2012 net income of $250.9 million, or $4.82 per diluted common share, compared to $63.1 million, or $1.16 per diluted common share, for the same quarter last year. After-tax operating income was $210.6 million, or $4.05 per diluted common share, for the quarter, compared to $146.7 million, or $2.70 per diluted common share, for the same period last year.

“Our record pace continues with another quarter of comprehensive income in excess of $400 million,” said Joseph Taranto, chairman and CEO. “Through nine months, we have generated almost $1 billion of comprehensive income for our shareholders, resulting in growth in book value per share, adjusted for dividends, of 17.4 percent.”

Other highlights:

• Gross written premiums were $1.2 billion, up 7 percent compared to Q3 2011

• The loss ratio was 59.8 percent, compared to 69.0 percent for the same quarter last year

• The combined ratio was 87.2 percent, compared to 95.6 percent for the same quarter last year

• Net investment income was $152.0 million, down 3 percent compared to last year, primarily driven by declining reinvestment rates

• Net after-tax realized and unrealized capital gains totaled $40.4 million and $118.2 million, respectively, for the quarter

• Cash flow from operations was $174.9 million, compared to $207.9 million for the same period in 2011. Higher underwriting cash flow was partially offset by lower investment income receipts and higher tax payments in the current quarter.

For the nine-month period ending Sept. 30, 2012, net income was $770.2 million, or $14.61 per diluted common share, compared to a net loss of $121.5 million, or $2.24 per common share, for the same period last year. After-tax operating income was $673.5 million, or $12.78 per diluted common share, compared to an after-tax operating loss of $42.9 million or $0.79 per common share, for the same period last year.

Selective Insurance Group

Selective Insurance Group reported Q3 net income was $18.3 million, or $0.33 per diluted share, compared to a net loss of $18.0 million, or $0.33 per diluted share for the same quarter last year. Net investment income, after tax, decreased 13 percent to $23.5 million; and total revenue was $436.9 million, compared to $394.1 million for the same quarter last year. Operating income was $19.0 million, or $0.34 per diluted share, compared to a loss of $16.0 million, or $0.30 per diluted share for the same quarter last year. Total net premiums written increased 14 percent to $450.5 million; catastrophe losses were $9.6 million, pretax, compared to $67.5 million for the same quarter last year.

"For the quarter, our overall statutory combined ratio was 98.4 percent, with improving commercial and personal lines contributing to that positive result," said Gregory Murphy, chairman, president and CEO. "In Personal Lines, renewal pure price increased almost 7 percent, led by higher homeowners' rates. Retention was steady at 87 percent.”

The Travelers Companies Inc.

Travelers reported Q3 net income of $864 million, or $2.21 per diluted share, compared to $333 million, or $0.79 per diluted share, for the same period last year. Operating income for Q3 was $867 million, or $2.22 per diluted share, compared to $332 million, or $0.79$59 million after tax, and $91 million pretax, compared to $394 million after tax, and $606 million pretax, for the same quarter last year.

“Our underwriting performance reflected a GAAP combined ratio of 90.3 percent, which benefited from lower weather-related losses as well as the rate gains we have achieved during the past year. Net investment income benefited from strong results in our non-fixed income portfolio,” said Jay Fishman, chairman and CEO.