CNA Financial CorporationCNA

Morningstar Rating

Stock Research and Analysis

by Drew Woodbury

During the past 15 years, CNA has proved incapable of underwriting profitable insurance. Underwriting effectiveness is a key component to competitive success in the insurance industry, and on the basis of its record, we believe CNA lacks an economic Read more

Bulls Say

CNA has established a fairly strong distribution network within its target market of small and medium-size businesses. The company has found a niche in its distribution to these businesses, which could allow it to write insurance profitably in the future.

CNA has placed its unprofitable reinsurance and life insurance lines into runoff. The company can now focus on its profitable property and casualty line.

New management seems to have clear goals for turning insurance underwriting toward a profit, which include the targeting of expenses. Read more

Bears Say

CNA has shown that it is unable to underwrite insurance profitably. Its average combined ratio during the past 10 years is 125%, and during that time it is never had a combined ratio under 100%.

The returns of CNA's investment portfolio are much less certain going forward, with more than $10 billion of asset-backed securities in the portfolio.

Despite constantly talking about a turnaround, Loews doesn't seem to be particularly interested in CNA making a profit on its insurance underwriting.

Because of poor results, CNA has been forced to receive capital injections from Loews. Future injections could dilute existing shareholders. Read more

Strategy

The company focuses insurance underwriting on small and medium-market businesses, targeting niche markets. Management has begun attempting to decrease insurance expenses in order to write more profitable Read more

Management

We think stewardship at CNA is poor. Loews owns 89% of CNA's equity and therefore controls the company. Loews' control of CNA causes the directors of the company to not be particularly independent: Loews holds three of the eight seats on the board of Read more

Profile

CNA Financial provides insurance and risk-management services to businesses, associations, and individuals. Its primary insurance specialty is property and casualty coverage; Read more

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