CNA Financial Corporation SWOT and PESTLE Analysis

Strength

1. 120+ years of experience in Insurance, serving a diversified client base with strong customer retention: CNA is one of the largest U.S. Commercial Property and Casualty insurance companies with more than 120 years of experience. The company provides a broad range of standard and specialized insurance products and services for businesses and professionals in the U.S., Canada and Europe. CNA’s business segment is divided into Commercial and Specialty service; Commercial Clientele includes a vast number of industries such as Construction, Marine, Middle Markets, Small Businesses, National Accounts Property and Casualty. Specialty services clientele consists of industries such as HealthCare, Surety, Financial Lines, Affinity Business, Warranty and individuals. The company enhances engagement across the board to enable growth while maximizing business opportunities for over 1 million businesses and professionals insured by it. CNA Insurance, with its strong reputation and established operations has been successful in retaining its customers. CNA Insurance achieved 9% Gross Written Premium growth (excluding Captives) and 6% Net Written Premium growth. This robust growth was driven by strong customer retention and new business, both achieving significantly improved pricing and terms and conditions.

2. Diverse range of standard and specialized insurance products and services in U.S. and globally: CNA provides a wide range of standard and specialized insurance services in the U.S, Canada and Europe. Its services include casualty, small business owner’s policy, commercial auto, commercial package, cyber, equipment breakdown, general liability, management and professional liability, marine, property, umbrella and excess casualty, warranty and alternative risks and workers’ compensation. CNA has a large client base that includes small, medium and large businesses, insurance companies, associations, professionals and many other businesses. Through its expert services and customizable business insurance solutions, the Group supports businesses in diversified industries to manage and minimize their exposures and loss.

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Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Subsidiary exposure to Asbestos and Environmental Claims: Exposures related to asbestos and environmental pollution (A&EP) result in liabilities and claims which can be harmful for the reputation of the company and financial condition. On August 2010, CNA completed the transaction of radioactive reinsurance through which the company's A&EP liabilities are transferred to National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc., and is subjected to a limit of $4 billion (Loss Portfolio Transfer). As of December 2020, the aggregate amount transferred under Loss Portfolio Transfer amounts to $3.3 billion. If the amount exceeds the limited reserve, or the claims are not covered by the Loss Portfolio Transfer, or the other party fails to perform their obligation, CNA might need to increase their net reserve which could impact the profitability of the company.

2. Frequency of extreme weather, Hurricanes and other natural disasters is rising: Catastrophes are of two types, man-made and natural; and these includes events such as hurricane, windstorm, earthquakes, hail, fires, floods, riots, strikes, civil unrest, cyber-attack, pandemics and terrorism. The frequency and severity of these catastrophes is unpredictable and these events are changing over time. In addition, climate change is also causing rise in temperature and other changes in the weather pattern due to greenhouse gases. As a result, CNA incurs significant loses depending on the total amount of its insured exposures in the affected area, frequency and severity of event, reinsurance coverage, etc. It takes a very long time to determine the losses and there are numerous other factors such as general liabilities and pollution exposures, infrastructure disruption, business interruption and reinsurance collectability that can result in additional expenses.