NU Online News Service, Aug. 2, 12:35 p.m. EDT
Favorable prior year loss reserve development and investment results boosted 2010 second-quarter net income for CNA Financial Corp. to $283 million.
The specialty and commercial insurer reported $105 million in net income at this time last year.
CNA said net income was $528 million for the first six months compared with a loss of $90 million in 2009.
Though some executives have said the current soft market was bottoming out, CNA Chief Executive Officer Thomas F. Motamed said he saw "much of the same" in the commercial market in the second quarter.
"Nothing is telling me happy days are here again," he said during a conference call.
Net written premiums in the company's commercial segment decreased $102 million for the second quarter compared to last year as CNA continues to reduce its property portfolio "where we believe pricing is inadequate" and not renew policies if the company cannot get what it considers an appropriate rate, Mr. Motamed added.
CNA's specialty segment saw an $8 million decrease in net written premiums. Net income in specialty increased $94 million compared with 2009 second-quarter results.
Mr. Motamed said CNA will continue to look to growing the specialty segment. The loss ratio in the commercial side needs to be fixed before it can grow, he said. Right now new specialty business is better priced than the company's renewal book while it strives to be more selective with commercial business.
Highlighting the call was talk of CNA's July announcement that it entered into an agreement to transfer its legacy asbestos and environmental pollution liabilities to Berkshire Hathaway Inc.'s National Indemnity Company (NICO).
The deal "puts these [policies] behind us," Mr. Motamed said. It eliminates the reserve risk that has cost CNA $250 million in reserve changes the last two years, said D. Craig Mense, chief financial officer, during the call.
The company will be able to redeploy about $66 million from its decision to sell Argentinean subsidiary CNA Aseguradora de Riesgos del Trabajo to QBE the Americas, Mr. Mense said. Operations in Argentina were "profitable but not our core," he said. More growth opportunities were seen in the U.S., Canada and Europe.
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