CNA Financial Corporation (CNA) Q3 2022 Earnings Call Transcript

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

[Call starts abruptly]

International gross written premiums grew 4% and 12%, excluding currency fluctuation. Net written premiums grew 1% or 8% excluding currency fluctuation. Renewal premium change in international was plus 12% with rate and exposure, both up 6%. Retention was also strong at 82%. We are very pleased with our international operation as it increasingly contributes to the success of the overall company.

And with that, I will turn it over to Scott.

Scott Lindquist

Thank you, Dino and good morning, everyone. As Dino noted, we are pleased with our third quarter results, highlighted by a 95.8% combined ratio with outstanding underlying fundamentals, coupled with strong gross written premium ex captives growth of 9%.

Before providing more information on the financials, I will first discuss Life & Group. As you know, each year in the third quarter, we undertake our annual reserve reviews for the Life & Group segment. These reviews include the annual review of assumptions underlying our long-term care active life reserves which we also refer to as the gross premium valuation, or GPV, as well as our long-term care and structured settlements claim reserves.

I would like to point you to Slides 12 through 14 in our earnings presentation. Slide 12 contains key demographic information about both our individual and group long-term care blocks. As a reminder, both blocks are closed with no new policies issued for individual since 2004 and no new group certificates since 2016. As a result, the average attained age for the individual block is 81 years old and the group block is 68. While the group block is less mature in age, you can see from the table in the top right of Slide 12 that the benefits features on average for the group block are considerably narrower than the features for the individual block. As we have discussed in past calls, we have proactively reduced risk in both blocks over the years while obtaining meaningful rate increases and using a prudent approach in setting assumptions in our reserve analyses both for active life and claim reserves.

One clear result of our efforts is the 38% reduction in policy count since 2015 which is shown on the bottom left graph on Slide 12. As we continue to file for rate increases, we also offer benefit reduction options to our policyholders as a means to mitigate the impact of rate increases. This reduces the cost of future claims while providing a viable option for our policyholders.