CNA Financial (CNA) AI Stock Analysis

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CNA Financial

(NYSE:CNA)

78Outperform

CNA Financial's overall stock score reflects its strong financial health, positive technical momentum, and impressive recent earnings performance. The company shows robust revenue and cash flow growth, balanced by moderate net profit margins. While the valuation is fair, the attractive dividend yield enhances its investment appeal. The earnings call underscored significant strengths, such as record premium growth and investment income, which bolster confidence in its future prospects. However, challenges such as higher catastrophe losses and foreign exchange impacts were noted, but these are outweighed by the company's overall solid position.

Positive Factors

Favorable Underwriting Margins

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

Premium Growth

Healthy premium growth exceeded expectations across Specialty, Commercial, and International segments.

Negative Factors

Core Loss Ratios

The core loss ratios remain high, indicating potential challenges in managing losses effectively.

Exposure to Catastrophes

Management expects increased exposure to the LA fires, leading to a higher catastrophe estimate.

Pricing Pressure

Management highlights pricing pressure in management liability lines, echoing sentiments from prior quarters.

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

Market Cap

$12.18B

Dividend Yield3.95%

Average Volume (3M)465.90K

Price to Earnings (P/E)12.8

Beta (1Y)0.25

Revenue Growth7.30%

EPS Growth-20.49%

CountryUS

Employees6,500

SectorFinancial

Sector Strength82

IndustryInsurance - Property & Casualty

Share Statistics

EPS (TTM)3.52

Shares Outstanding270,161,650

10 Day Avg. Volume459,468

30 Day Avg. Volume465,905

Financial Highlights & Ratios

PEG Ratio0.51

Price to Book (P/B)N/A

Price to Sales (P/S)0.93

Price to Cash Flow (P/CF)4.70

P/FCF Ratio4.50

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$43.00

Price Target Upside-5.83% Downside

Rating ConsensusModerate Sell

Number of Analyst Covering1

CNA Financial Business Overview & Revenue Model

Company DescriptionCNA Financial Corporation is a leading commercial property and casualty insurance company based in Chicago, Illinois. Established in 1897, CNA offers a broad range of standard and specialized insurance products and services for businesses and professionals in the United States and internationally. The company operates through its primary business segments: Specialty, Commercial, and International. CNA specializes in providing tailored insurance solutions, including professional liability, workers' compensation, property, and casualty coverage, among others.

How the Company Makes MoneyCNA Financial makes money primarily through the underwriting and sale of insurance policies across its various business segments. The company generates revenue from the premiums customers pay for insurance coverage. Additionally, CNA earns income through investments made from its insurance reserves, which include bonds, equities, and other financial instruments. Key revenue streams include commercial property and casualty insurance, specialty insurance lines such as professional liability and cyber insurance, and international operations. CNA's earnings are influenced by factors such as underwriting profitability, investment performance, and strategic partnerships with brokers and agents that help distribute its insurance products.

CNA Financial Financial Statement Overview

Summary

CNA Financial demonstrates solid financial performance with strong revenue growth and effective cash management. The income statement shows a healthy increase in revenue and operational efficiency, although net profit margins are under pressure. The balance sheet indicates manageable leverage and a stable capital structure, while cash flow remains robust, highlighting effective cash generation and management.

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.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
14.00B	13.30B	11.88B	11.88B	11.91B
	Gross Profit
14.00B	13.13B	11.88B	11.88B	11.91B
	EBIT
0.00	13.30B	-525.00M	1.14B	30.00M
	EBITDA
1.41B	1.72B	977.00M	1.65B	1.00B
	Net Income Common Stockholders
959.00M	1.21B	682.00M	894.00M	1.20B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.56B	2.51B	2.31B	2.31B	2.53B
	Total Assets
66.49B	64.71B	60.93B	48.55B	54.15B
	Total Debt
2.97B	3.03B	2.78B	2.78B	2.78B
	Net Debt
2.50B	2.69B	2.31B	2.31B	2.24B
	Total Liabilities
55.98B	54.82B	52.10B	52.10B	7.28B
	Stockholders Equity
10.51B	9.89B	8.82B	-3.56B	320.00M
Cash Flow		Free Cash Flow
2.48B	2.19B	2.45B	2.45B	1.97B
	Operating Cash Flow
2.57B	2.29B	2.50B	2.50B	2.00B
	Investing Cash Flow
-1.32B	-1.84B	-1.51B	-1.51B	-1.23B
	Financing Cash Flow
-1.12B	-577.00M	-1.03B	-1.03B	-648.00M

CNA Financial Technical Analysis

Technical Analysis Sentiment

Negative

Last Price45.66

Price Trends

50DMA

48.09

Negative

100DMA

47.12

Negative

200DMA

46.39

Negative

Market Momentum

MACD

0.81

Negative

RSI

64.97

Neutral

STOCH

72.95

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 45.66 is below the 20-day moving average (MA) of 49.11, below the 50-day MA of 48.09, and below the 200-day MA of 46.39, indicating a bearish trend. The MACD of 0.81 indicates Negative momentum. The RSI at 64.97 is Neutral, neither overbought nor oversold. The STOCH value of 72.95 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	$6.86B	6.98	19.06%	2.02%	6.10%	206.71%
THG	82 Outperform	$5.43B	12.87	16.03%	2.32%	4.07%	1110.92%
CNA	78 Outperform	$12.18B	12.82	9.40%	3.95%	7.30%	-20.49%
AFG	75 Outperform	$9.82B	11.06	20.33%	2.58%	6.91%	4.97%
RLI	75 Outperform	$6.65B	19.37	23.56%	0.81%	18.31%	13.13%
SIGI	75 Outperform	$5.01B	25.51	6.82%	1.77%	15.35%	-44.64%
Sector *	64 Neutral	$12.70B	9.08	9.19%	4.89%	16.29%	-8.64%

* Financial Sector Average

Performance Comparison

CNA

CNA Financial

45.66

4.92

12.08%

AFG

American Financial Group

117.13

-5.30

-4.33%

AXS

Axis Capital

88.57

26.28

42.19%

RLI

72.76

4.08

5.94%

SIGI

Selective Insurance Group

83.11

-18.81

-18.46%

THG

Hanover Insurance

152.69

25.22

19.79%

CNA Financial Earnings Call Summary

Earnings Call Date: Feb 10, 2025 | % Change Since: -1.93% | Next Earnings Date: May 5, 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.

Highlights

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.

Lowlights

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.

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.