CHICAGO, April 29, 2011 /PRNewswire/ -- CNA Surety
Corporation ("CNA Surety" or the "Company") (NYSE: SUR) today
reported net income for the first quarter of 2011 of $20.8 million, or $0.46 per diluted share, compared to $20.8 million, or $0.47 per diluted share, for the same period in
2010.
Highlights included:
- Combined ratio of 83.1%.
- Operating cash flow of $20.9
million.
- Book value per share of $24.20 at
March 31, 2011, an increase of 1.3%
from December 31, 2010.
"Overall, our first quarter results were solid," said
John F. Welch, President and Chief
Executive Officer. "Our business operations generated a
modest increase in results, but that was offset by costs associated
with the evaluation of CNA Financial Corporation's ("CNA") proposal
to acquire the remaining outstanding shares of CNA Surety.
While our premium production reflects the continuing
headwinds confronting the construction industry, we continue to
expand our market reach, underwrite carefully, reserve prudently
and manage our costs."
"The evaluation of the CNA proposal concluded last week when our
respective boards of directors approved a merger agreement,"
Welch continued. "The action of the CNA Surety board followed
an affirmative recommendation from the special committee of the
board that was established to evaluate the proposal. There
are more steps ahead to complete the merger, but we will remain
focused on meeting the needs of our producers and customers."
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Gross
Written Premium
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(in
thousands)
|
|
|
|
|
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Three Months
Ended
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
Contract
|
|
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|
$ 66,212
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|
$ 68,457
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|
Commercial
|
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|
34,994
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|
35,221
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Fidelity and
other
|
|
8,885
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|
8,849
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|
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|
$ 110,091
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$112,527
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For the quarter ended March 31,
2011, gross written premiums decreased 2.2% as compared to
the quarter ended March 31, 2010.
Contract surety gross written premiums decreased 3.3% in the
first quarter of 2011 compared to the same period in 2010, due to
continued challenges in the construction industry.
Commercial surety gross written premiums decreased 0.6% in the
first quarter of 2011 compared to the same period in 2010.
This decrease reflects a modest decline in the small
commercial market, partially offset by selective growth in the
corporate commercial market.
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Net Written
Premium
|
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(in
thousands)
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Three Months
Ended
|
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March
31,
|
|
|
|
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
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|
Contract
|
|
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$ 61,439
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|
$ 63,313
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Commercial
|
|
|
34,306
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|
34,498
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Fidelity and
other
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|
8,885
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|
8,849
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|
|
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$ 104,630
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$106,660
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For the quarter ended March 31,
2011, net written premiums decreased 1.9% as compared to the
quarter ended March 31, 2010,
reflecting the decrease in gross written premiums, offset by lower
reinsurance costs.
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Underwriting
Ratios
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Three Months
Ended
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March 31,
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2011
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2010
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Loss ratio
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29.0%
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29.1%
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Expense ratio
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54.1%
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53.7%
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Combined ratio
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83.1%
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82.8%
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The expense ratio for the first quarter of 2011 was 54.1%, an
increase of 0.4 percentage points compared to the same period in
2010, due to a 1.6% decrease in net earned premium.
In the first quarter of 2011, the Company incurred expenses of
$2.0 million related to the
evaluation of the proposal by CNA (NYSE: CNA) to
acquire all of the outstanding shares of common stock of the
Company that are not currently owned by subsidiaries of CNA.
These expenses are shown as "Other expense" in Operating
Results in the accompanying Press Release Investor Data and are not
included in the expense ratio shown in the table above.
Net investment income for the quarter ended March 31, 2011 was $14.4
million compared to $13.4
million during the first quarter of 2010. The increase
reflects the impact of higher overall invested assets, partially
offset by lower yields. The annualized pre-tax yields were 4.1% and
4.2% for the three months ended March 31,
2011 and 2010, respectively.
Business Environment
The Company's business is subject to certain risks and
uncertainties associated with the current economic environment and
corporate credit conditions. In the past, the Company's
performance has been materially impacted by a significant increase
in corporate defaults on a worldwide basis. Because the nature of
the business is to insure against non-performance, future results
of operations could be negatively impacted by adverse trends in
corporate defaults.
Earnings Conference Call
A conference call for investors and the professional investment
community will be held at 11:00 a.m.
(EDT) on April 29, 2011. On
the conference call will be John F.
Welch, President and Chief Executive Officer of CNA Surety
Corporation, and John F. Corcoran,
Chief Financial Officer of CNA Surety Corporation. The call may be
accessed by dialing 888-298-3451. It will also be broadcast live at
http://www.videonewswire.com/event.asp?id=78819 or go to the
investor relations pages of the CNA Surety website
(www.cnasurety.com) for further details. The call is available to
the media, but questions will be restricted to investors and the
professional investment community. A taped replay of the call will
be available beginning at 1:00 p.m.
(EDT) on April 29th until
1:00 p.m. (EDT) on May 13, 2011 by dialing 888-203-1112, pass code
5529262, or over the Internet at the foregoing websites.
Important Information and Where To Find It
This press release is neither an offer to purchase nor a
solicitation of an offer to sell securities. The offer to buy
shares of CNA Surety common stock referenced in this press release
has not yet commenced. At the time the tender offer is commenced,
CNA will file a tender offer statement on Schedule TO with the
United States Securities and Exchange Commission (the "SEC") and
CNA Surety will file a solicitation/recommendation statement on
Schedule 14D-9. Investors and stockholders are urged to read the
Schedule TO, the Schedule 14D-9 and the other relevant
materials before making any investment decision with respect to the
tender offer because they will contain important information,
including the terms and conditions of the tender offer. These
materials and any other documents filed by CNA Surety or CNA with
the SEC may be obtained free of charge at the SEC's website at
www.sec.gov. These materials and any other documents filed by CNA
with the SEC will be made available to the Company's shareholders
at no expense to them (when available) from CNA at www.cna.com or
at 333 South Wabash Avenue, Chicago,
Illinois 60604 and the documents that are filed by CNA
Surety with the SEC (when available) will be made available at no
charge from CNA Surety at www.cnasurety.com or at 333 South Wabash
Avenue, Chicago, Illinois
60604.
Safe Harbor for Forward-Looking Statements
The statements which are not historical facts contained in this
release are forward-looking statements that involve risks and
uncertainties, including, but not limited to: product and
policy demand and market response risks, the effect of economic
conditions, the impact of significant increases in corporate
defaults on a national or global basis, the impact of competitive
products, policies and pricing, product and policy development,
regulatory changes and conditions including underwriting
limitations imposed by the U.S. Department of Treasury, rating
agency policies and practices, development of claims and the effect
on loss reserves, the performance of reinsurance companies under
reinsurance contracts with the Company, the cost and availability
of reinsurance contracts on reasonable terms, investment portfolio
developments and reaction to market conditions, the results of
financing efforts, the effect of the Company's accounting policies,
and other risks detailed in the Company's SEC filings. No
assurance can be given that the actual results of operations and
financial condition will conform to the forward-looking statements
contained herein. There can be no assurances that the
transaction between CNA Surety and CNA will be consummated; that
the expected benefits of the transaction will materialize; that the
transaction will be timely completed, if at all; that, prior to the
completion of the offer, if at all, CNA Surety will satisfy the
conditions to the offer; or that the transaction merger agreement
will not be terminated. CNA Surety undertakes no obligation
to update these forward-looking statements except to the extent
otherwise required by law.
About CNA Surety
CNA Surety Corporation is the largest publicly traded surety
company in the country. Through its principal subsidiary, Western
Surety Company, CNA Surety provides surety and fidelity bonds in
all 50 states through a combined network of approximately 37,000
independent agencies. The Company's SEC filings are available at
www.sec.gov or visit us at www.cnasurety.com for a direct
link to the SEC website.
CNA is a registered service mark, trade name and domain name of
CNA Financial Corporation.
- Chart Follows--
CNA Surety
Corporation
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Press Release Investor
Data
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(Amounts in thousands, except
per share data)
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Three Months
Ended
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March
31,
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2011
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2010
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Operating
Results:
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Gross written
premiums
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$ 110,091
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$ 112,527
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Net written
premiums
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$ 104,630
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$ 106,660
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Revenues:
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Net earned
premiums
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$ 96,658
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$ 98,252
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Net
investment income
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14,435
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13,377
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Net realized
investment gains
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313
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323
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Total revenues
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$ 111,406
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$ 111,952
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Expenses:
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Net losses
and loss adjustment expenses
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$ 28,031
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$ 28,581
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Net
commissions, brokerage and
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other underwriting expenses
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52,266
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52,788
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Interest
expense
|
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284
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|
281
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Other
expense
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2,027
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-
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Total expenses
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$ 82,608
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$ 81,650
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Income before
income taxes
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28,798
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30,302
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Income tax
expense
|
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8,041
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9,497
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Net
income
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$ 20,757
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$ 20,805
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Basic earnings per
common share
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$
0.46
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$
0.47
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Diluted earnings
per common share
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$
0.46
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$
0.47
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Basic weighted
average shares outstanding
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44,810
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44,280
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Diluted weighted
average shares outstanding
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45,157
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44,421
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Cash Flow Data:
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Net cash flow
provided by operations
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$
20,911
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$
26,312
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CNA Surety
Corporation
|
|
Press Release Investor
Data
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(Amounts in thousands, except
per share data)
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March
31,
|
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December
31,
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Consolidated Balance Sheet
Data:
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2011
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2010
|
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Invested assets and
cash
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$
1,481,811
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$ 1,466,693
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Deferred policy
acquisition costs
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101,365
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98,572
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Insurance
receivables
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84,417
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74,831
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Goodwill and other
intangible assets, net
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138,785
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138,785
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Total
assets
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1,857,635
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1,837,734
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Unpaid losses and
loss adjustment expenses
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401,103
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389,089
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Unearned
premiums
|
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253,946
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245,986
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Debt
|
|
30,930
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|
30,930
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Accumulated other
comprehensive income
|
|
28,440
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|
32,436
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Total stockholders'
equity
|
|
1,088,075
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1,068,733
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Book value per
share
|
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$
24.20
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$
23.88
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Outstanding
shares
|
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44,970
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44,748
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SOURCE CNA Surety Corporation