CNA Surety Announces Second Quarter 2009 Results CHICAGO, July 31, 2009 -- CNA Surety Corporation (“CNA Surety” or the “Company”) (NYSE:SUR) today reported net income for the second quarter of 2009 of $22.2 million, or $0.50 per diluted share, compared to $24.1 million, or $0.54 per diluted share, for the same period in 2008. Highlights included: A combined ratio of 82.2% in the quarter. An expense ratio of 52.9% in the quarter, down from 53.3% in the second quarter of 2008. Operating cash flow of $31.5 million in the quarter, $65.2 million in the first half of the year. Pre-tax unrealized investment gains of $17.9 million at June 30th. Book value per share of $18.73 at June 30th, up 7.8% from December 31, 2008. "We are pleased to report solid earnings once again this quarter,” said John F. Welch, President and Chief Executive Officer. “Despite significant economic pressures, particularly in the construction industry, we continue with only a modest decline in gross written premiums, a very modest level of claim activity and a declining expense ratio." For the six months ended June 30, 2009, net income was $43.0 million, or $0.97 per diluted share, compared to $47.0 million, or $1.06 per diluted share, for the same period in 2008.   Gross Written Premium (in thousands)   Three Months Ended   Six Months Ended   June 30,   June 30,   2009 2008 2009 2008 Contract $ 76,129 $ 83,396 $143,484 $155,348 Commercial 33,438 33,266 68,416 68,861 Fidelity & other 7,267 7,650 16,059 16,728   $116,834 $124,312 $227,959 $240,937 For the quarter ended June 30, 2009, gross written premiums decreased 6.0% as compared to the quarter ended June 30, 2008. For the six months ended June 30, 2009, gross written premiums decreased 5.4% as compared to the six months ended June 30, 2008. Contract surety gross written premiums decreased 8.7% in the second quarter of 2009 compared to the same period in 2008. For the first six months of 2009, gross written premiums for contract surety decreased 7.6%. These decreases are due to lower demand resulting from fewer new construction projects. Commercial surety gross written premiums increased slightly in the quarter due to selective growth opportunities in the large commercial book of business and continued steady performance of the small commercial business. For the first six months of 2009, gross written premiums for commercial surety decreased 0.6%, reflecting adverse economic conditions.   Net Written Premium (in thousands)   Three Months Ended   Six Months Ended   June 30,   June 30,   2009 2008 2009 2008 Contract $ 70,127 $ 76,206 $131,152 $140,798 Commercial 32,721 32,521 66,923 67,295 Fidelity & other 7,267 7,650 16,059 16,728   $110,115 $116,377 $214,134 $224,821 For the quarter ended June 30, 2009, net written premiums decreased 5.4% as compared to the quarter ended June 30, 2008. For the six months ended June 30, 2009, net written premiums decreased 4.8% as compared to the six months ended June 30, 2008, reflecting the decrease in gross written premiums, offset by lower ceded premium.   Underwriting Ratios   Three Months Ended   Six Months Ended   June 30,   June 30,   2009 2008 2009 2008 Loss ratio* 29.3% 25.2% 29.3% 25.3% Expense ratio 52.9% 53.3% 53.3% 53.6% Combined ratio* 82.2% 78.5% 82.6% 78.9%                 *See note to Press Release Investor Data. Although actual claim activity remains low, the 2009 ratios include a higher loss ratio selection for the current accident year reflecting current economic conditions. Net investment income for the quarter ended June 30, 2009 was $12.6 million compared to $11.7 million during the second quarter of 2008 due to an increase in invested assets, partially offset by lower yields, particularly on short-term investments. The annualized pre-tax yields were 4.3% and 4.5% for the three months ended June 30, 2009 and 2008, respectively. For the six months ended June 30, 2009, net investment income increased 5.6% to $24.8 million compared to $23.5 million for the same period in 2008. The increase reflects the impact of higher overall invested assets. The annualized pre-tax yields were 4.3% and 4.5% for the six months ended June 30, 2009 and 2008, 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 July 31, 2009. 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 888-417-2254. It will also be broadcast live on the Internet or go to the investor relations pages of the CNA Surety web site 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 July 31st until 1:00 p.m. (EDT) on August 14, 2009 by dialing 888-203-1112, pass code 1975064, or over the Internet at the foregoing web sites. 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 Securities and Exchange Commission (“SEC”) filings are available at www.sec.gov or visit us at www.cnasurety.com for a direct link to the SEC web site. CNA is a registered service mark, trade name and domain name of CNA Financial Corporation. "Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: 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 actual closing of contemplated transactions and agreements, the effect of the Company’s accounting policies, and other risks detailed in the Company’s Securities and Exchange Commission filings. No assurance can be given that the actual results of operations and financial condition will conform to the forward-looking statements contained herein. # # # -- Chart follows -- CNA Surety Corporation Press Release Investor Data To view this pdf file, you will need to download Adobe Acrobat Reader. Click on the Adobe icon below to download this free software now.

Top | Home | About CNA Surety | Products | Broker/Agent Services | bONdLINE News | Customer Resources | Contact Us | Search | Site Map

Read Disclaimer

This site and its contents © Copyright 2009 CNA Surety. All rights reserved.