CNA Financial (CNA) AI Stock Analysis

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CNA Financial

(NYSE:CNA)

Rating:70Outperform

Price Target:

$52.00

▲(10.33%Upside)

CNA Financial exhibits solid financial performance and effective cash management, which are the most significant strengths. The stock is fairly valued with an attractive dividend yield, though technical indicators show a lack of momentum. Overall, the company demonstrates financial health with room for improvement in profitability.

Positive Factors

Premium Growth

Total P&C net written premium growth of 9% remained robust and came ahead of the forecast, indicating strong performance in this area.

Underwriting Margins

Favorable P&C underwriting margins contributed to the outperformance compared to projections.

Negative Factors

Legacy Claims

A $17mn reserve charge related to legacy mass tort abuse claims in Corporate & Other is notable, following multiple charges in previous quarters, with expectations of a material reserve charge in the future.

Reserve Development

The adverse development in the Commercial segment, with a reserve development of $53mn, compares unfavorably to estimates and raises concerns about elevated bodily injury loss cost trends in commercial auto.

Warranty Claims

Higher frequency of warranty claims in the Specialty segment led to adverse development of $10mn, which is worse than expected and linked to vehicle owners keeping their vehicles longer post-pandemic.

CNA Financial (CNA) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$12.75B

Dividend Yield3.82%

Average Volume (3M)269.71K

Price to Earnings (P/E)14.4

Beta (1Y)0.25

Revenue Growth6.34%

EPS Growth-28.19%

CountryUS

Employees6,500

SectorFinancial

Sector Strength83

IndustryInsurance - Property & Casualty

Share Statistics

EPS (TTM)1.03

Shares Outstanding270,621,860

10 Day Avg. Volume296,664

30 Day Avg. Volume269,712

Financial Highlights & Ratios

PEG Ratio-2.25

Price to Book (P/B)1.27

Price to Sales (P/S)0.00

P/FCF Ratio5.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$45.00

Price Target Upside-4.52% Downside

Rating ConsensusModerate Sell

Number of Analyst Covering1

CNA Financial Business Overview & Revenue Model

Company DescriptionCNA Financial Corporation provides commercial property and casualty insurance products primarily in the United States. It operates through Specialty, Commercial, International, Life & Group, and Corporate & Other segments. The company offers professional liability coverages and risk management services to various professional firms, including architects, real estate agents, and accounting and law firms; directors and officers, employment practices, fiduciary, and fidelity coverages to small and mid-size firms, public and privately held firms, and not-for-profit organizations; professional and general liability, as well as associated standard property and casualty coverages for healthcare industry; surety and fidelity bonds; and warranty and alternative risks products. It also provides property insurance products, such as property, marine, boiler, and machinery coverages; casualty insurance products comprising workers' compensation, general and product liability, commercial auto, and umbrella coverages; specialized loss-sensitive insurance programs and total risk management services; and run-off long term care policies. In addition, the company offers long-tail exposures comprising commercial automobile liability, workers' compensation, general and medical professional liability, other professional and management liability, and assumed reinsurance run-off and products liability; and short-tail exposures, such as property, commercial automobile physical damage, marine, and surety. It markets its products through independent agents, brokers, and general underwriters to small, medium, and large businesses; insurance companies; associations; professionals; and other groups in the marine, oil and gas, construction, manufacturing, life science, property, financial services, healthcare, and technology industries. The company was founded in 1853 and is headquartered in Chicago, Illinois. CNA Financial Corporation operates as a subsidiary of Loews Corporation.

How the Company Makes MoneyCNA Financial makes money primarily through underwriting insurance policies and investing the premiums collected from these policies. The company's key revenue streams include the sale of property and casualty insurance products, which generate premium income. CNA also earns investment income from the premiums it holds before claims are paid out, investing these funds in a diversified portfolio of bonds, equities, and other financial instruments. Additionally, CNA's strong network of agents and brokers facilitates the distribution of its insurance products, contributing to its revenue. Strategic partnerships and collaborations with reinsurers and other financial entities further enhance CNA's risk management capabilities, supporting its profitability.

CNA Financial Earnings Call Summary

Earnings Call Date:May 05, 2025

(Q4-2024)

% Change Since: -1.65%|

Next Earnings Date:Aug 04, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong performance for CNA Financial Corporation with record underwriting and investment income gains, despite some challenges such as increased catastrophe losses and foreign exchange impacts. The positive results in premium growth, core income, and improved expense ratios indicate a favorable outlook.

Q4-2024 Updates

Positive Updates

Record Underlying Underwriting Gain

Achieved a record high underlying underwriting gain of $222 million in the fourth quarter, marking a 10% increase and demonstrating strong underwriting results.

Highest Quarterly Net Written Premium Growth

Net written premium growth reached 10% for the fourth quarter, the highest of the year, indicating strong production performance.

Strong Investment Income Growth

Net investment income increased by 10% for the full year, reaching a record $2,497 million, driven by fixed income and limited partnerships.

Record Core Income for Full Year 2024

CNA achieved record core income of $1,316 million for 2024, a $32 million increase over 2023, reflecting robust underwriting and investment performance.

Improved Expense Ratio

The expense ratio improved to 30.0% in Q4 and 30.2% for the full year, the lowest since 2008, benefiting from higher net earned premiums.

Strong Operating Cash Flow

Operating cash flow for the year increased 13% to a record $2.6 billion, reflecting strong underwriting and investment results.

Increased Dividends

Announced a 5% increase in regular quarterly dividend and a special dividend of $2.00 per share, indicating strong financial health.

Negative Updates

Higher Catastrophe Losses

Catastrophe losses increased to $45 million in Q4, impacting the combined ratio by 1.8 points, primarily due to Hurricane Milton.

Core Loss in Corporate Segment

The Corporate segment reported a core loss of $91 million in Q4, including charges related to asbestos and environmental pollution reserves.

Foreign Exchange Loss in International Segment

The International segment experienced a $15 million foreign currency exchange loss in Q4, compared to a $6 million gain in the prior year quarter.

Decline in Life & Group Segment Performance

The Life & Group segment recorded a core loss of $18 million in Q4 due to unfavorable morbidity experience, down from a $4 million core income in the prior year quarter.

Company Guidance

In the fourth quarter earnings report for fiscal year 2024, CNA Financial Corporation showcased impressive financial performance with several record-setting metrics. The company reported a core income of $342 million, contributing to a full-year core income of $1,316 million, the highest on record, resulting in a core return on equity of 10.5%. Net investment income for the quarter rose by 5% to $644 million, leading to a total of $2,497 million for the year, a 10% increase from 2023. The P&C all-in combined ratio was 93.1% for the quarter, with an underlying combined ratio of 91.4%, marking sixteen consecutive quarters below 92%. Notably, net written premiums grew by 10% in the quarter, driven by strong performances across all segments, including a 12% growth in the Commercial segment. The expense ratio for the quarter was at a historical low of 30.0%, attributed to higher net earned premiums and disciplined expense management. Furthermore, CNA announced a 5% increase in its regular quarterly dividend to $0.46 per share, along with a special dividend of $2.00 per share, reflecting confidence in their financial stability and future prospects.

CNA Financial Financial Statement Overview

Summary

CNA Financial shows solid performance across its financial statements with strong revenue growth and effective cash management. The income statement reflects a strong gross profit margin but indicates some pressure on net profitability. The balance sheet is stable with manageable leverage levels, while cash flow performance is robust. Overall, the company demonstrates financial health and resilience, with potential areas for improvement in profitability.

Income Statement

Positive

The company has demonstrated solid revenue growth, with a 6.73% increase from 2023 to the TTM period. Gross profit margin remains strong at 94.78% for the TTM, indicating efficient cost control. However, the net profit margin has decreased to 6.76% in the TTM, suggesting pressure on profitability. EBIT and EBITDA margins are healthy at 9.09% and 25.33%, respectively, showing good operational efficiency.

Balance Sheet

Positive

CNA Financial's balance sheet shows a moderate debt-to-equity ratio of 0.28, indicating manageable leverage levels. The equity ratio is 15.81%, suggesting a stable capital structure. However, the return on equity is relatively low at 9.12%, reflecting moderate returns on shareholder investments.

Cash Flow

Positive

The company exhibits strong cash flow performance, with a 12.81% growth in free cash flow from 2023 to the TTM period. The operating cash flow to net income ratio of 2.68 indicates robust cash generation relative to net income. Additionally, the free cash flow to net income ratio is high at 2.58, underscoring effective cash management.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
14.38B	14.00B	13.30B	11.88B	11.88B	11.91B
	Gross Profit
13.64B	14.00B	13.13B	11.88B	11.88B	11.91B
	EBIT
850.00M	1.21B	13.30B	-525.00M	1.14B	30.00M
	EBITDA
933.00M	1.41B	1.72B	977.00M	1.65B	1.00B
	Net Income Common Stockholders
895.00M	959.00M	1.21B	682.00M	894.00M	1.20B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.66B	2.56B	2.51B	2.31B	2.31B	2.53B
	Total Assets
63.79B	66.49B	64.71B	60.93B	48.55B	54.15B
	Total Debt
2.78B	2.97B	3.03B	2.78B	2.78B	2.78B
	Net Debt
2.42B	2.50B	2.69B	2.31B	2.31B	2.24B
	Total Liabilities
52.98B	55.98B	54.82B	52.10B	52.10B	7.28B
	Stockholders Equity
10.82B	10.51B	9.89B	8.82B	-3.56B	320.00M
Cash Flow		Free Cash Flow
2.61B	2.48B	2.19B	2.45B	2.45B	1.97B
	Operating Cash Flow
2.71B	2.57B	2.29B	2.50B	2.50B	2.00B
	Investing Cash Flow
-980.00M	-1.32B	-1.84B	-1.51B	-1.51B	-1.23B
	Financing Cash Flow
-1.65B	-1.12B	-577.00M	-1.03B	-1.03B	-648.00M

CNA Financial Technical Analysis

Technical Analysis Sentiment

Negative

Last Price47.13

Price Trends

50DMA

47.81

Negative

100DMA

47.46

Negative

200DMA

46.73

Positive

Market Momentum

MACD

-0.13

Positive

RSI

45.42

Neutral

STOCH

23.38

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CNA, the sentiment is Negative. The current price of 47.13 is below the 20-day moving average (MA) of 47.75, below the 50-day MA of 47.81, and above the 200-day MA of 46.73, indicating a neutral trend. The MACD of -0.13 indicates Positive momentum. The RSI at 45.42 is Neutral, neither overbought nor oversold. The STOCH value of 23.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CNA.

CNA Financial Risk Analysis

CNA Financial disclosed 21 risk factors in its most recent earnings report. CNA Financial reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

CNA Financial Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AXS	82 Outperform	$8.41B	10.47	15.43%	1.65%	6.76%	54.56%
THG	79 Outperform	$6.29B	14.59	15.74%	2.00%	3.09%	168.29%
RLI	76 Outperform	$6.97B	24.98	17.99%	0.79%	9.18%	-16.06%
SIGI	71 Outperform	$5.31B	23.84	7.48%	1.70%	13.37%	-35.09%
CNA	70 Outperform	$12.75B	14.36	8.98%	3.82%	6.34%	-28.19%
AFG	66 Neutral	$10.45B	13.14	18.51%	2.48%	3.76%	-9.12%
Sector *	64 Neutral	$12.85B	9.81	7.59%	16985.65%	12.30%	-7.71%

* Financial Sector Average

Performance Comparison

CNA

CNA Financial

47.13

6.08

14.81%

AFG

American Financial Group

125.16

6.26

5.26%

AXS

Axis Capital

106.93

37.18

53.30%

RLI

75.93

7.45

10.88%

SIGI

Selective Insurance Group

87.42

-5.34

-5.76%

THG

Hanover Insurance

175.12

50.67

40.72%

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.