CNA Financial Corp. reported a 2005 fourth-quarter loss of $217 million, compared with earnings of $303 million in the comparable 2004 period.
The Chicago-based company also announced a restatement of financial earnings in the 2001-2004 period to correct accounting for businesses reported as discontinued operations. The restatement will reduce shareholders' equity as of Dec. 2004 by $204 million.
The fourth-quarter loss stems in part from a net loss of $223 million from commutations of significant finite reinsurance contracts and other adverse development of $139 million.
In addition, $37 million of catastrophe losses related primarily to Hurricane Wilma also contributed to the red ink.
The p-c combined ratio for the quarter was 101.4 before the 20 points added from the commutation and other losses.
For the full year, the company reported net income of $264 million, compared with restated net income of $425 million for 2004. The 2005 combined ratio was 98.4 before 11 points were added for commutations and catastrophe costs.
Stephen Lillienthal, company chief executive officer, said the below 100 combined ratio for the year, excluding the special charges, represents disciplined underwriting. “Going forward, the earnings power of our business will be much more evident now that we have removed the drag of commuted reinsurance contracts,” he said.
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