The Right Time To Buy CNA And Its 7% Dividend Yield?

Executive Summary
On the 28th of October, CNA Financial (CNA) reported its quarterly results for the third quarter of the year. Following two excellent quarters, CNA was adversely impacted by a $170M after-tax charge related to the active life reserve unlocking. In addition, the year-over-year combined ratio worsened by 3.4 points to 97.6% because of run-off losses partially offset by lower catastrophe losses.
Consequently, the insurer reported a $107 million net income for the third quarter, or a 68% decline. The year-to-date net income dropped by $170 million to $727 million, resulting from the poor third-quarter results.
On the positive side, current shareholders might enjoy the juicy dividend ($3.05 per share paid on a YTD basis) and a growing book value per share (+8% from Q4 2018). Even though the current price seems to be attractive with the recent stock price drop, I am still waiting for a better entry point. Nonetheless, investors looking for high-yield stocks might be more than interested in CNA Financial.
Strong Premium Growth Overshadowed By Deteriorated Margins
In Q3 2019, the net written premium grew by 8% to $1.7 billion as compared with the prior year quarter. The premium volume growth was mainly driven by the U.S. segments. The Specialty lines reported a 6% premium growth, mainly due to higher rates (+18% in healthcare, +4% in Management and Professional Liability) combined with a higher retention (an 87% retention vs. 85% in Q3 2018), partially... Read more

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