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CNA Financial (CNA) Reinsures Excess Workers' Compensation

CNA Financial Corporation’s CNA subsidiary, Continental Casualty Company has inked a reinsurance deal with Cavello Bay Reinsurance Limited. Per the agreement with Cavello Bay, a subsidiary of Enstar Group Limited will reinsure a legacy portfolio of CNA Financial’s excess workers' compensation policies.

Effective Jan 1, 2020, this Zacks Rank #3 (Hold) property and casualty insurer will cede about $690 million of net excess workers compensation liabilities relating to business written in 2007 and prior under a retroactive reinsurance agreement with an aggregate limit of $1 billion.

However, CNA Financial estimates loss of about $12 million. Nonetheless, this transaction is a strategic move to focus more on its core property and casualty insurance business. A reinsurance agreement is a kind of reimbursement program for an insurance company. Programs such as these lower the financial exposure of the company. Thus, the company cedes insurance to reinsurers to limit its loss, provide greater diversification of risk, minimize exposure to larger risks and to exit certain lines of business.

CNA Financial remains committed to grow its property & casualty underwriting profits on a sustained basis. It has been able to maintain underlying combined ratio below 95% for six straight quarters. Moreover, leveraging targeted portfolio management strategies, the company made progress in repositioning the portfolio underwritten via Lloyd’s syndicate in its effort to improve overall underwriting results of its International operation.

Shares of CNA Financial have lost 14.2% compared with the industry’s decline of 2% year to date. Nonetheless, a compelling product portfolio, better retention, improving pricing, and new business growth should help the stock rebound.

Stocks to Consider

Some better-ranked companies from the same space are Alleghany Y, American Financial Group AFG and The Allstate Corporation ALL.    

Alleghany delivered an earnings surprise of 195.85% in the last reported quarter. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Financial Group delivered an earnings surprise of 58.06% in the last reported quarter. It currently carries a Zacks Rank #2 (Buy).

Allstate delivered an earnings surprise of 66.10% in the last reported quarter. It currently carries a Zacks Rank #2.

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million of net excess workers compensation liabilities relating to business written in 2007 and prior under a retroactive reinsurance agreement with an aggregate limit of $1 billion. However, CNA Financial estimates loss of about $12 million. Nonetheless, this transaction is a strategic move to focus more on its core property and casualty insurance business. A reinsurance agreement is a kind of reimbursement program for an insurance company. Programs such as these lower the financial exposure of the company. Thus, the company cedes insurance to reinsurers to limit its loss, provide greater diversification of risk, minimize exposure to larger risks and to exit certain lines of business. CNA Financial remains committed to grow its property & casualty underwriting profits on a sustained basis. It has been able to maintain underlying combined ratio below 95% for six straight quarters. Moreover, leveraging targeted portfolio management strategies, the company made progress in repositioning the portfolio underwritten via Lloyd???s syndicate in its effort to improve overall underwriting results of its International operation. Shares of CNA Financial have lost 14.2% compared with the industry???s decline of 2% year to date. Nonetheless, a compelling product portfolio, better retention, improving pricing, and new business growth should help the stock rebound. Stocks to Consider Some better-ranked companies from the same space are Alleghany (Y), The Hanover Insurance Group (THG) and The Allstate Corporation (ALL). Alleghany delivered an earnings surprise of 195.85% in the last reported quarter. It sports a Zacks Rank #1 at present. You can see the complete list of today???s Zacks #1 Rank. The Hanover Insurance Group delivered an earnings surprise of 9.85% in the last reported quarter. It currently carries a Zacks Rank #2. Allstate delivered an earnings surprise of 66.10% in the last reported quarter. It currently carries a Zacks Rank #2. Legal Marijuana: An Investor???s Dream Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027. Although marijuana stocks did better as the pandemic took hold than the market as a whole, they???ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks??? Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration. Download Marijuana Moneymakers FREE >>">Download Marijuana Moneymakers FREE >>


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The Allstate Corporation (ALL): Free Stock Analysis Report
 
CNA Financial Corporation (CNA): Free Stock Analysis Report
 
American Financial Group, Inc. (AFG): Free Stock Analysis Report
 
Alleghany Corporation (Y): Free Stock Analysis Report
 
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