NU Online News Service, Aug. 2, 2:30 p.m. – CNA Financial Corp., Chicago, is reporting a $1.8 billion net loss for the second quarter on $2.7 billion in revenue, down from $330 million in net income on $3.8 billion in revenue for the second quarter of 2000.
The net operating loss, which excludes $313 million in net gains on investments sold during the quarter, was $2.1 billion, down from a net operating profit of $154 million.
CNA sells property-casualty insurance and reinsurance as well as some life insurance and groups benefits products. The company is attributing its mammoth second-quarter operating loss to problems with asbestos claims, environmental claims and mass tort claims on the property-casualty side.
The company hopes to make up for the loss by raising $1 billion through a rights offering.
The group benefits unit, which sells group life and group health insurance products, is reporting $16 million in net operating income for the quarter on $876 in premium, investment and miscellaneous revenue, compared with $15 million in net operating income on $931 million in revenue for the second quarter of 2000.
Revenue is down because CNA sold a life reinsurance operation that was part of the unit in 2000. But droping unprofitable medical-related lines of business and ending unprofitable contracts with independent underwriting agencies helped increase the operating profits, CNA says.
The life unit, which sells term life, universal life, annuities and long-term care insurance, is reporting $27 million in net operating income on $442 million in revenue, compared with $49 million in net operating income on $431 million in revenue.
The effects of the stock market slump and interest rate cuts hurt investment income, and an increase in the death rate hurt the life insurance results, CNA says.
But premiums on the growing block of in-force long-term care insurance business and growing sales of guaranteed investment contracts sold to institutional customers helped offset the effects of the investment slump and the claims expenses, CNA says.