Chicago-based insurer CNA says rate increases helped push net operating income up by 2 percent, or by $5 million in 2013′s first quarter, driven primarily by P&C net premium growth of 10 percent.
First-quarter net income remained unchanged at $250 million compared to the same period a year ago.
The company says P&C net written premiums grew $168 million to $1.78 billion, with rate increases achieved across its specialty and commercial lines.
During a conference call with financial analysts today, Chairman and CEO Thomas F. Motamed says rate increases and stable retentions produced positive earnings. However, he says there is "still work to do" on the combined ratio, which improved 0.5 points, but still came in at 101.5.
"But we believe our strategies are coming together," Motamed said.
Overall, rates increased 8 percent in the quarter. Specialty business delivered a Q1 combined ratio of 95, 2.3 points better than the same period last year with average rate increases of 7 percent. Commercial did even better, with rate increases averaging 9 percent, but the combined ratio rose slightly by 0.6 points to 106.8 primarily due to higher catastrophe losses and decreased reserve releases. Excluding cats, the commercial combined ratio stood at 103.7, an improvement of 1.7 points. Motamed says small and middle market business saw double digit rate increases and represents 64 percent of the total commercial book.
Hardy, a specialty Lloyd's of London underwriter CNA acquired last year, saw a net operating loss of $8 million on net written premiums of $55 million and a combined ratio of 105.5. During the call, analysts expressed surprise at Hardy's results. Motamed and Chief Financial Officer D. Craig Mense explained that integration and expense costs continue to run through Hardy. Mense says CNA expects Hardy to make meaningful contribution to the carrier's results by late this year and into early next year.
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