CNA says US P&C rate increases accelerate to 5% in Q1 as overall loss cost trend steady at 6.5%

By David Bull

May 5 - (The Insurer) – CNA CEO Doug Worman has provided detailed commentary on pricing across the carrier’s P&C book, with the overall rate increase picking up by a point to 4% and hitting its highest level in six quarters at 5% in the U.S., where said the effect of social inflation has been greatest.

The rate increases lagged the company’s view of long-run loss cost trend, which it estimated at 6.5% in the aggregate across all its lines of business.

In prepared remarks after the Chicago-based company reported a Q1 earnings miss, Worman said the rate increases seen in the U.S. were fueled by excess casualty, which was up 3 points, and commercial auto, which was up 1 point.

The stock market reaction to earnings was neutral, with shares in the company trading up just 0.25% at around 10:00 a.m. ET in New York.

In its earnings, CNA revealed its combined ratio, which deteriorated by 3.8 points to 98.4%, included a 2.5 point impact from adverse prior-year development driven by its commercial auto book.

“We continue to observe elevated bodily injury loss cost trends in commercial auto in recent periods. This higher level of claim severity was the primary catalyst for both the unfavorable prior year reserve development as well as the increase in the underlying loss ratio for the commercial segment,” said Worman.

This more than offset underlying loss ratio improvement in the remainder of the casualty portfolio compared to the prior-year quarter, as the underlying combined ratio increased 20 basis points to 91.0%.

“In response to these dynamics, we are pushing for more rate and obtained a rate increase of 18% in the first quarter. In addition, we continue to optimize our underwriting appetite and other terms and conditions across geographies,” said the executive.

He said that there were “puts and takes” on long-run loss costs across the carrier’s specialty, commercial and international segments.

“The balance of those changes is that the long-run loss cost trend remains around 6.5% in aggregate across all of CNA’s classes of business,” Worman continued.

In commercial, he said the overall rate increase was 6%, with renewal premium change of 7%, both in line with the fourth quarter.

Stripping out workers’ compensation, the rate increase was 8%, with renewal premium change of 9%.

Excess casualty rate increases picked up by three points to 14 percent in the quarter while commercial casualty classes in the aggregate saw rate increases up a point to low double-digit levels, which Worman said remains in excess of increased long-run loss cost trend assumptions.

The rate increase in specialty was 3% in Q1, up two points compared to Q4 2024 and the strongest quarterly rate since 2022, said the executive.

“The improvement is mostly due to improving rate levels in aggregate within financial and management liability lines. After many quarters of rate declines, public D&O and cyber rates turned slightly positive this quarter,” he reported.