CNA earnings hit by subprime, shares fall

NEW YORK (Reuters) - Commercial insurer CNA Financial Corp. (CNA.N) reported lower quarterly earnings on Monday as investment losses increased, partly due to writedowns on bonds linked to subprime mortgages, sending its shares down as much as 12 percent.

CNA, 89 percent-owned by New York conglomerate Loews Corp. LTR.N, said net earnings were $217 million, or 80 cents a share, down from $239 million, or 86 cents a share, a year earlier.

Net realized investment losses increased to $91 million from $64 million.

The losses included $20 million attributable to securities "with exposure to subprime mortgage collateral," CNA officials said in a conference call with analysts.

Shares of CNA, one of the largest U.S. commercial insurers, were down $2.21 to $41.12 in midday trade on the New York Stock Exchange after slumping earlier to $38, their lowest level in more than eight months.

Net operating income rose to $318 million, or $1.17 a share, from $305 million, or $1.11 a share, beating analysts' average forecast of $1.09 a share.

Net written premiums slipped about 1 percent to $1.77 billion.

The company's property and casualty combined ratio was 94.7 percent, down from 95.2 percent. A lower combined ratio means an insurer's underwriting is more profitable.

(Reporting by Christian Plumb and Ed Leefeldt)