will continueinvesting in talent and technology for its businesses despite the impact of ahigher expense ratio on near-term results, Chairman and CEO Tom Motamed saidduring a May 2 earnings call.
TheCEO said investments in talents, analytics and underwriting tools resulted inhigher expense ratio during the first quarter, which affected CNA Financial'searnings results. However, Motamed said the long-term positive impact of the investmentsoutweighs the negative pressure from having a higher expense ratio.
"Whilein the near term, these investments in talent and systems pressure our expenseratio, they are necessary in order to achieve improved margins for the longterm," he said. "While we are not happy with the first-quarterexpense ratio, we see it as a short-term pain."
Thecompany's property and casualty, specialty business, commercial andinternational businesses all saw higher expense ratios in the first quarter,compared with the prior-year quarter, according to an earnings presentation. Inthe P&C and specialty businesses, greater underwriting expenses contributedto higher expense ratios. The company's commercial and international businessessaw movements in both acquisition and underwriting expenses, which impacted thebusinesses' expense ratios.
Motamedsaid expense ratio exerted some pressure in the combined ratio of CNAFinancial's property and casualty and commercial businesses, even as the twobusinesses both posted improved combined ratios during the quarter. The CEOsaid the impact would not dissuade the company from investing in its businesses.
"Youcan expect that we will continue to invest in the business while simultaneouslyexecuting on our plan to further improve loss and expense results,"Motamed said.