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CF

CNA FINANCIAL CORP (CNA)·Q3 2025 Earnings Summary

Executive Summary

  • Record core income of $409 million and core EPS of $1.50; GAAP EPS $1.48. Revenues rose 6% year over year to $3.817 billion, underpinned by stronger underwriting and investment income .
  • P&C combined ratio improved to 92.8% (vs. 97.2% last year), with catastrophe losses down to $41 million (1.5 pts) from $143 million (5.8 pts) YoY; underlying combined ratio 91.3% and expense ratio 29.1% .
  • Segments delivered broad-based improvement: Commercial CR 92.7% (from 100.2%), Specialty CR 93.3%, International CR 91.8%; underwriting gain totaled $194 million (vs. $68 million last year) .
  • Net investment income $638 million pretax (fixed income $567 million), book value per share ex-AOCI $46.30; Board declared a $0.46 dividend .
  • Likely stock reaction catalysts: record core income/underlying underwriting gain, sharply lower cat losses, expense ratio below 30%, and continued investment income strength .

What Went Well and What Went Wrong

What Went Well

  • Record core income ($409 million) on strong underwriting gain ($194 million) and higher net investment income; “tenth consecutive quarter” with underlying underwriting gain above $200 million ($235 million) .
  • Commercial segment delivered a record-low underlying combined ratio (90.0%) with expense ratio improvement (-1.6 pts YoY), driving combined ratio down to 92.7% .
  • Catastrophe losses fell to $41 million (1.5 pts), well below five-year Q3 average per management commentary, reducing all-in CR materially YoY .

What Went Wrong

  • Specialty underlying loss ratio rose 0.5 pts YoY (to 60.6%) as financial institutions and management liability rates remain flat-to-negative, pressuring margins .
  • International rate declines (-6%) amid intensifying competition; retention held, but softer pricing is a headwind even as profitability remains consistent .
  • Life & Group core loss widened to $22 million (vs. $9 million last year), driven by lower limited partnership investment income and a $7 million unfavorable after-tax impact from annual assumption updates .

Financial Results

Multi-period headline metrics (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$3.627 $3.717 $3.817
Core EPS ($)$1.03 $1.23 $1.50
GAAP EPS ($)$1.00 $1.10 $1.48
P&C Combined Ratio (%)98.4 94.1 92.8
Underlying Combined Ratio (%)92.1 91.7 91.3
Catastrophe Losses ($mm)$97 $62 $41
Net Investment Income ($mm)$604 $662 $638
P&C Underwriting Gain ($mm)$40 $150 $194
Consensus EPS Mean ($)*1.03*0.88*1.32*
EPS Beat/(Miss) vs Consensus ($)*$0.00*$0.35*$0.18*

*Values retrieved from S&P Global.

Q3 year-over-year comparison (Q3 2024 → Q3 2025)

MetricQ3 2024Q3 2025
Revenue ($USD Billions)$3.618 $3.817
Core EPS ($)$1.08 $1.50
GAAP EPS ($)$1.04 $1.48
P&C Combined Ratio (%)97.2 92.8
Underlying Combined Ratio (%)91.6 91.3
Catastrophe Losses ($mm)$143 $41
Net Investment Income ($mm)$626 $638
P&C Underwriting Gain ($mm)$68 $194

Segment breakdown

SegmentNEP ($mm) Q3 2024NEP ($mm) Q3 2025Underwriting Gain ($mm) Q3 2024Underwriting Gain ($mm) Q3 2025Combined Ratio (%) Q3 2024Combined Ratio (%) Q3 2025Underlying Combined Ratio (%) Q3 2024Underlying Combined Ratio (%) Q3 2025
Specialty848 881 59 60 93.0 93.3 93.0 93.3
Commercial1,325 1,453 (3) 106 100.2 92.7 90.7 90.0
International311 344 12 28 96.1 91.8 91.7 91.2

KPIs

KPI (P&C)Q2 2025Q3 2025
Rate (%)3 3
Renewal Premium Change (%)5 4
Retention (%)83 81
New Business ($mm)$645 $549

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Fixed income & other investment income ($mm)Q4 2025~$565mm for Q3 and ~$2,250mm FY 2025 (as of Q2) “About $570 million” for Q4 based on current rates Raised (Q4)
P&C expense ratio (%)Q4 2025“~30% for the balance of 2025” (Q2) Expect Q4 expense ratio “in the range” of the last two quarters (≈29–30%) Maintained
Effective tax rate on core income (%)FY 2025~21.4% full-year expectation (Q2) Q3 21.3%; YTD 21.4%; in line with full-year Maintained
Dividend per share ($)Quarterly$0.46 declared in Q2 $0.46 declared (Dec 4 payment) Maintained
A&E reserves reviewQ4 2025Intend to review in Q4 (Q2) Intend to review in Q4 (reaffirmed) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Social inflation & reservingRaised commercial auto long-run loss cost trend; continued prudence in Specialty financial lines Maintaining prudent underlying loss ratios in lines impacted by social inflation; underlying loss ratio up modestly Persistent headwind
AI/technology investmentsNot highlighted Q1/Q2Increasing investment in talent and technology, including AI Expanding
E&S expansion (Cardinal E&S)Launch and strong distributor support Expect it to represent a growing portion of business Growing
Reinsurance treatiesVery successful renewals on June 1 Not a Q3 focus; benefit seen via lower cat losses Supportive backdrop
International market conditionsProfitability with rate pressure; retention strong Rates declined (-6%); retention 83%; 21st consecutive profitable quarter Softer pricing, stable profit
Tariffs/macroPotential impacts on claim costs and valuations (Q&A) Not directly addressed in Q3 remarksWatchlist

Management Commentary

  • “Record core income of $409 million… record underlying underwriting gain of $235 million, the tenth consecutive quarter above $200 million” — Douglas Worman, CEO .
  • “Underlying reserving philosophy remains prudent… dynamics underpinning social inflation have not abated” — CEO on Commercial lines .
  • “Expect fixed income and other investments to be about $570 million for the fourth quarter” — Scott Lindquist, CFO .
  • “Effective tax rate on core income was 21.3% in Q3 and 21.4% YTD; in line with full-year expectations” — CFO .
  • “We are increasing investments in talent and technology, including the use of artificial intelligence” — CEO .

Q&A Highlights

  • No live earnings call; CNA posted prepared earnings remarks. Key clarifications: Q4 expense ratio outlook “in the range” of recent quarters; Q4 investment income ~$570mm; reaffirmed A&E review timing; and details on Life & Group assumption updates and LTC statutory margin ($1.5 billion) .
  • Life & Group: net favorable assumption updates deferred across cohorts resulted in a $7 million unfavorable GAAP LTC reserve adjustment; structured settlement reserve +$2 million .
  • Capital actions: issued $500 million senior notes in Q3 ahead of 2026 maturity; BVPS ex-AOCI $46.30; regular dividend declared .

Estimates Context

  • EPS vs S&P Global consensus: Q3 2025 EPS $1.50 vs $1.32 consensus — bold beat (+$0.18); Q2 2025 $1.23 vs $0.88 — bold beat (+$0.35); Q1 2025 $1.03 in line with $1.03 consensus (values from S&P Global)*.
  • Revenue consensus estimates were unavailable from S&P Global for comparison; actual revenues: Q3 $3.817B, Q2 $3.717B, Q1 $3.627B (company reported) .
  • Implications: Upward pressures on forward EPS estimates likely from lower cat losses, improving expense ratio, and steady investment income guidance; Specialty margin compression warrants cautious assumptions in financial lines .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Strong quarter quality: record core income and substantial YoY improvement in combined ratio driven by sharply lower catastrophe losses and disciplined expense management .
  • Commercial execution: record-low underlying combined ratio and improved expense ratio suggest durable margin recovery despite persistent social inflation headwinds .
  • Specialty caution: continued flat/negative rates in financial/management liability indicate margin pressure; underwriting prudence offsets but limits near-term growth .
  • Investment income tailwinds: favorable reinvestment rates, strong cash flows, and Q4 guidance (~$570mm) support earnings resilience into year-end .
  • Capital strength and shareholder returns: BVPS ex-AOCI up 8% YTD (adjusted for dividends), statutory surplus at a record $11.5B, dividend maintained .
  • International profitability intact despite softer pricing; retention strategy and niche opportunities underpin consistent contributions .
  • Near-term trading setup: catalysts include earnings beats vs consensus, visibly lower cat losses, and below-30% expense ratio; watch Specialty rate trajectory and Q4 A&E reserve review timing .