CNA Financial Corporation CNAhas made a name for itself in the property and casualty (P&C) market with a robust product and service portfolio, which includes commercial P&C insurance items. The insurer prides on a solid track record when it comes to successful servicing of its clients by catering to their diverse needs.
Historically, the clients have gained a lot from the company’s bouquet of diverse insurance products and services and by retaining this favorable buzz among investors, the Zacks Rank #3 (Hold) P&C insurer continues to evolve stronger over time and looks set to retain its momentum in the near future.Growth Drivers
CNA Financial has been witnessing premium growth over a considerable period of time, primarily driven by improving premiums across the company’s business lines. We expect the trend to be consistent on the back of increase in new business as well as a solid retention.
Despite a tough environment, CNA Financial has been able to maintain a favorable combined ratio, representing a stellar underwriting discipline. Going forward, the metric is expected to improve given the company’s prudent underwriting standards.
Given the increasing interest rates as well as stable fixed income returns, the company has been witnessing a better investment outcome. Moreover, on the back of better-than-expected investment results and a rising premium performance, the P&C insurer has displayed top-line growth over the past few years and we anticipate this positive streak to continue in the near term.
A strong liquidity position has allowed CNA Financial to fund its current and expected working capital as well as debt obligation needs. A solid financial position is likely to protect the company from market volatility and allow it to invest in new businesses and globally diversified platforms.
Further, a solid capital position has enabled the company to enhance shareholder value via dividend payouts including special dividends. With respect to dividend payment, the P&C insurer has registered a five-year CAGR (2012-2017) of nearly 38.9%. The insurer has also been paying special dividends since the past couple of years, the latest announced on Feb 9, 2018, amounting to $2 per share. Hence, these shareholder-friendly moves continue to raise optimism among investors.
Shares of CNA Financial have gained 5.5% in a year’s time, underperforming the industry’s 14.4% rally. However, we anticipate the company’s aforementioned strengths to turn the stock around in the near term.