CNA Lags Industry, Trades at a Discount: Time to Hold or Buy?

Shares of CNA Financial Corporation CNA have lost 9.6% in the past month compared with the industry's fall of 1%.

CNA shares have weakened because investors are concerned that premium growth is not translating into stronger underwriting profitability, as reflected in the deterioration of the underlying combined ratio and lower core earnings. Weakness in Life & Group adds to the pressure. However, selective underwriting, rising investment income, technology discipline, resilient capital and shareholder returns support CNA’s long-term earnings.

Shares of other industry players like RenaissanceRe Holdings Ltd. RNR and First American Financial Corporation FAF have lost 1.7% and 4.5%, respectively, in the past month, while NMI Holdings Inc. NMIH has gained 5.7% in the same time frame.

1-Year Price Performance: CNA, RNR, FAF, NMIH & Industry

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CNA Shares Are Affordable

CNA Financial shares are trading at a discount compared to the industry. Its trailing 12-month price-to-book value of 1.19X is lower than the industry average of 1.40X. The insurer has a Value Score of A.

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Shares of other insurers like RNR, NMIH and FAF are also trading at a discount to the industry average.

CNA’s Growth Projection

The Zacks Consensus Estimate for CNA Financial’s 2026 revenues is pegged at $13.92 billion, implying a year-over-year improvement of 3.1%. The consensus estimate for earnings per share (EPS) indicates a year-over-year decrease of 15%. The consensus estimate for 2027 earnings and revenues indicates an increase of 14.1% and 3.7%, respectively, from the corresponding 2026 estimates.

Mixed Analyst Sentiment on CNA

The company has witnessed two upward earnings estimate revisions for 2026 with no downward revisions, while the 2027 earnings estimate has one downward revision over the past 30 days. Thus, the Zacks Consensus Estimate for 2026 earnings has moved up 2.7%, while 2027 earnings remained unchanged over the same period.

CNA’s Efficient Use of Shareholder Capital

Return on equity (ROE) for the trailing 12 months was 11.3%, which compared favorably with the industry’s 7.5%, reflecting its efficiency in utilizing shareholders’ funds.

Factors Favoring CNA

CNA Financial’s premiums should continue to grow on solid retention, favorable renewal premium change and new business growth across Specialty, Commercial and International segments. In the second quarter of 2026, P&C net written premiums (NWP) increased 4% year over year, while new business grew 11% to a record $718 million. Retention remained solid at 83%, with a renewal premium change of 2%. Continued premium growth should support future revenues and earnings.

Investment income remains an important earnings driver. Net investment income increased to $701 million in the second quarter, supported by higher income from fixed-income investments, limited partnerships and common stocks. Strong investment income should help offset pressure from underwriting results.

CNA’s key businesses, Specialty and Commercial, continued to expand. In the second quarter of 2026, net written premiums of Specialty and Commercial increased 5% year over year. Growth in Specialty is particularly positive given the segment’s potential to generate attractive returns through disciplined underwriting. CNA continues to prioritize profitability over premium growth and is willing to decline business that does not meet its return requirements.

CNA is increasingly using AI to improve productivity and efficiency. While the benefits are likely to emerge gradually, greater use of AI could help lower expenses and support margins over the long term. Management continues to view an expense ratio around 30% as a reasonable run-rate for full-year 2026.

CNA Financial maintains a strong balance sheet and conservative capital structure, with capital above target levels for all ratings. Its solid financial position supports shareholder-friendly actions, including dividend increases. The company delivered a 6.3% dividend CAGR from 2015-2025, while its 3.6% yield remains well above the industry average of 0.2%.

Risks for CNA

CNA remains exposed to higher claims costs in long-tail businesses. In the second quarter of 2026, the P&C underlying loss ratio rose to 64.1%, while unfavorable reserve development in casualty lines hurt results. A $77 million after-tax charge related largely to legacy mass tort claims and social inflation also weighed on results. Persistent casualty severity could pressure reserves and underwriting returns.

Competition remains strong across commercial lines, limiting pricing power. In the second quarter of 2026, P&C written rates were flat, while international rates fell 5%. Softer pricing in some businesses could pressure margins if claims costs remain high.

End Notes

Premium Growth, solid retention, strong investment income and new business growth across its segments will continue to drive growth for CNA Financial. An impressive dividend history, technology discipline and strong capital position are other positives. However, casualty claims and softer pricing pose risks.

Selective underwriting, higher return on equity and attractive valuation also add to the upside. The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

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This article originally published on Zacks Investment Research (zacks.com).

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