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CNA 1Q profit down 76%
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May 5, 1999: 1:06 p.m. ET
Second-biggest U.S. business insurer blames price-slashing for weak results
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NEW YORK (CNNfn) - Fierce competition to slash premiums for businesses caused CNA Financial Corp., the second-biggest U.S. business insurer, to post a 76-percent drop in first-quarter operating profits Wednesday.
The company's earnings from operations before a restructuring charge were $51 million, or 25 cents a diluted share, matching the consensus of analysts surveyed by First Call.
Including the charge, the earnings from operations were $28 million, or 13 cents a diluted share, down from $117 million, or 62 cents, a year earlier.
Net loss for the quarter, including realized investment gains and a charge for changes in the firm's accounting practices, was $5 million, or 5 cents a diluted share. In the 1998 quarter, CNA (CNA) net income was $233 million, or $1.25 a share.
Revenue was almost unchanged at $4.2 billion compared with $4.17 billion in the first three months of 1998.
The company said severely competitive pricing on commercial and personal property-casualty insurance hammered first-quarter results, particularly as companies themselves scaled back expenses and renegotiated more competitive premiums.
At the same time, CNA's overall business remains profitable, "and there are early signs of renewals at more favorable terms," the Chicago-based insurer said.
CNA is 85 percent owned by New York-based Loews, a holding company controlled by the Tisch family. Loews also owns Lorillard Tobacco, watch maker Bulova and oil rig operator Diamond Offshore Drilling. Loews last month said it has no immediate plans to sell off any of its subsidiaries.
Separarely, Loews (LTR) said its first-quarter operating profit rose 4.5 percent to $172.4 million, or $1.54 a diluted share, from $165.0 million, or $1.43.
The company said first-quarter investing profits were reduced by its bets that certain equity investments would decline during the quarter, most notably the S&P 500 index. The S&P 500 advanced 4.6 percent in the quarter.
CNA shares were down 11/16 to 41 in Wednesday afternoon trading. Loews advanced 3/16 to 74-3/4. 
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CNA Financial
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