Cna Financial Corp 8-K, filed Apr 21, 2021
Cna Financial Corp (CNA)
8-K
2021-04-21
For: 2021-04-21
View Original
Added on
April 11, 2026
About this 8-K
Cna Financial Corp filed this 8-K on April 21, 2021.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 21, 2021
| (Exact name of registrant as specified in its charter) | ||
| (State or other jurisdiction | (Commission | (IRS Employer | ||||||||||||
| of incorporation) | File Number) | Identification No.) | ||||||||||||
(Address of principal executive offices) (Zip Code)
(312 ) 822-5000
(Registrant's telephone number, including area code)
| NOT APPLICABLE | ||
| (Former name or former address, if changed since last report.) | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, in the first quarter of 2021 and in connection with the ceding of certain legacy reserves under a retroactive reinsurance agreement executed in February 2021, the registrant changed the segment presentation of a legacy portfolio of excess workers’ compensation policies relating to business written in 2007 and prior. This business, which was previously reported as part of the Commercial business segment, is now reported as part of the Corporate & Other business segment. In addition, a determination was made to change the segment presentation of certain legacy mass tort reserves. Similar to the aforementioned excess workers’ compensation legacy business, these legacy mass tort reserves were previously reported in the Commercial business segment and are now reported as part of the Corporate & Other business segment.
These changes were made to better reflect the manner in which we are organized for purposes of making operating decisions and assessing performance. There was no change to the Specialty, International and Life & Group business segments. Segment data for prior reporting periods has been adjusted to reflect the new segment reporting.
The reclassification of historical segment information has no effect on the Company's previously reported consolidated results of operations, financial condition or cash flows.
On April 21, 2021, the registrant posted on its website (www.cna.com) a financial supplement providing quarterly and annual information for 2020 on its revised Commercial and Corporate & Other business segments as if the segment change occurred as of the beginning of the earliest period presented. The financial supplement is furnished as Exhibit 99.1 to this Form 8-K.
The information under Item 2.02 and in Exhibit 99.1 in this Current Report is being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information under Item 2.02 and in Exhibit 99.1 in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits:
See Exhibit Index.
EXHIBIT INDEX
| Exhibit No. | Description | |||||||
| CNA Financial Corporation financial supplement, posted on its website April 21, 2021, providing supplemental financial information on its revised Commercial and Corporate & Other business segments. | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CNA Financial Corporation | ||||||||
| (Registrant) | ||||||||
| Date: April 21, 2021 | By | /s/ Albert J. Miralles | ||||||
| (Signature) | ||||||||
| Albert J. Miralles Executive Vice President and Chief Financial Officer | ||||||||
CNA Financial Corporation
Supplemental Financial Information
Property & Casualty, Commercial, and Corporate & Other Segments Results of Operations
Revised Quarterly and Annual Results for 2020
This report is for informational purposes only and includes financial exhibits that are unaudited. This report should be read in conjunction with documents filed with the U.S. Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
Table of Contents
| Page | |||||
| Results of Operations | |||||
Segment Realignment
As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, in the first quarter of 2021 and in connection with the ceding of certain legacy reserves under a retroactive reinsurance agreement executed in February 2021, CNA changed the segment presentation of a legacy portfolio of excess workers’ compensation policies relating to business written in 2007 and prior. This business, which was previously reported as part of the Commercial business segment, is now reported as part of the Corporate & Other business segment. In addition, a determination was made to change the segment presentation of certain legacy mass tort reserves. Similar to the aforementioned excess workers’ compensation legacy business, these legacy mass tort reserves were previously reported in the Commercial business segment and are now reported as part of the Corporate & Other business segment.
Claim and claim adjustment expense reserves of $791 million as of December 31, 2020 which were previously reported in the Commercial business segment are now reported as part of the Corporate & Other business segment.
These changes were made to better reflect the manner in which we are organized for purposes of making operating decisions and assessing performance. There was no change to the Specialty, International and Life & Group business segments. Segment data for prior reporting periods has been adjusted to reflect the new segment reporting.
The reclassification of historical segment information has no effect on the Company's previously reported consolidated results of operations, financial condition or cash flows.
Property & Casualty - Results of Operations
| 2020 | ||||||||||||||||||||||||||||||||
| (In millions) | Full Year | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||||||||
| Gross written premiums | $ | 12,399 | $ | 3,143 | $ | 3,008 | $ | 3,165 | $ | 3,083 | ||||||||||||||||||||||
Gross written premiums ex. 3rd party captives | 8,422 | 2,169 | 2,014 | 2,132 | 2,107 | |||||||||||||||||||||||||||
| Net written premiums | 7,566 | 1,952 | 1,821 | 1,930 | 1,863 | |||||||||||||||||||||||||||
| Net earned premiums | 7,146 | 1,853 | 1,827 | 1,724 | 1,742 | |||||||||||||||||||||||||||
| Net investment income | 1,020 | 307 | 292 | 308 | 113 | |||||||||||||||||||||||||||
| Non-insurance warranty revenue | 1,252 | 326 | 317 | 308 | 301 | |||||||||||||||||||||||||||
| Other revenues | 26 | 7 | 5 | 5 | 9 | |||||||||||||||||||||||||||
| Total operating revenues | 9,444 | 2,493 | 2,441 | 2,345 | 2,165 | |||||||||||||||||||||||||||
| Insurance claims and policyholders' benefits | 4,817 | 1,134 | 1,259 | 1,304 | 1,120 | |||||||||||||||||||||||||||
| Amortization of deferred acquisition costs | 1,410 | 364 | 360 | 342 | 344 | |||||||||||||||||||||||||||
| Non-insurance warranty expense | 1,159 | 300 | 293 | 285 | 281 | |||||||||||||||||||||||||||
| Other insurance related expenses | 922 | 229 | 225 | 236 | 232 | |||||||||||||||||||||||||||
| Other expenses | 77 | 12 | 13 | 20 | 32 | |||||||||||||||||||||||||||
| Total claims, benefits and expenses | 8,385 | 2,039 | 2,150 | 2,187 | 2,009 | |||||||||||||||||||||||||||
| Core income (loss) before income tax | 1,059 | 454 | 291 | 158 | 156 | |||||||||||||||||||||||||||
| Income tax (expense) benefit on core income (loss) | (219) | (96) | (55) | (33) | (35) | |||||||||||||||||||||||||||
| Core income (loss) | $ | 840 | $ | 358 | $ | 236 | $ | 125 | $ | 121 | ||||||||||||||||||||||
| Other Performance Metrics | ||||||||||||||||||||||||||||||||
| Underwriting gain (loss) | $ | (3) | $ | 126 | $ | (17) | $ | (158) | $ | 46 | ||||||||||||||||||||||
| Loss & LAE ratio | 67.2 | % | 61.2 | % | 68.8 | % | 75.3 | % | 63.8 | % | ||||||||||||||||||||||
| Expense ratio | 32.6 | 32.0 | 31.8 | 33.6 | 33.1 | |||||||||||||||||||||||||||
| Dividend ratio | 0.3 | 0.2 | 0.3 | 0.3 | 0.4 | |||||||||||||||||||||||||||
| Combined ratio | 100.1 | % | 93.4 | % | 100.9 | % | 109.2 | % | 97.3 | % | ||||||||||||||||||||||
| Combined ratio excluding catastrophes and development | 93.1 | % | 92.6 | % | 92.6 | % | 93.2 | % | 93.7 | % | ||||||||||||||||||||||
| Net accident year catastrophe losses incurred | $ | 550 | $ | 14 | $ | 160 | $ | 301 | $ | 75 | ||||||||||||||||||||||
| Effect on loss & LAE ratio | 7.7 | % | 0.8 | % | 8.7 | % | 17.5 | % | 4.3 | % | ||||||||||||||||||||||
| Net prior year development and other: (favorable) / unfavorable | $ | (39) | $ | 5 | $ | (8) | $ | (25) | $ | (11) | ||||||||||||||||||||||
| Effect on loss & LAE ratio | (0.7) | % | — | % | (0.4) | % | (1.5) | % | (0.7) | % | ||||||||||||||||||||||
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Commercial - Results of Operations
| 2020 | ||||||||||||||||||||||||||||||||
| (In millions) | Full Year | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||||||||
| Gross written premiums | $ | 4,086 | $ | 983 | $ | 915 | $ | 1,126 | $ | 1,062 | ||||||||||||||||||||||
Gross written premiums ex. 3rd party captives | 3,993 | 975 | 915 | 1,044 | 1,059 | |||||||||||||||||||||||||||
| Net written premiums | 3,565 | 862 | 804 | 949 | 950 | |||||||||||||||||||||||||||
| Net earned premiums | 3,323 | 853 | 857 | 795 | 818 | |||||||||||||||||||||||||||
| Net investment income | 513 | 159 | 151 | 161 | 42 | |||||||||||||||||||||||||||
| Other revenues | 25 | 7 | 5 | 5 | 8 | |||||||||||||||||||||||||||
| Total operating revenues | 3,861 | 1,019 | 1,013 | 961 | 868 | |||||||||||||||||||||||||||
| Insurance claims and policyholders' benefits | 2,393 | 538 | 676 | 619 | 560 | |||||||||||||||||||||||||||
| Amortization of deferred acquisition costs | 592 | 151 | 150 | 147 | 144 | |||||||||||||||||||||||||||
| Other insurance related expenses | 506 | 127 | 128 | 124 | 127 | |||||||||||||||||||||||||||
| Other expenses | 34 | 9 | 7 | 12 | 6 | |||||||||||||||||||||||||||
| Total claims, benefits and expenses | 3,525 | 825 | 961 | 902 | 837 | |||||||||||||||||||||||||||
| Core income (loss) before income tax | 336 | 194 | 52 | 59 | 31 | |||||||||||||||||||||||||||
| Income tax (expense) benefit on core income (loss) | (69) | (40) | (11) | (10) | (8) | |||||||||||||||||||||||||||
| Core income (loss) | $ | 267 | $ | 154 | $ | 41 | $ | 49 | $ | 23 | ||||||||||||||||||||||
| Other Performance Metrics | ||||||||||||||||||||||||||||||||
| Underwriting gain (loss) | $ | (168) | $ | 37 | $ | (97) | $ | (95) | $ | (13) | ||||||||||||||||||||||
| Loss & LAE ratio | 71.6 | % | 62.9 | % | 78.4 | % | 77.4 | % | 67.8 | % | ||||||||||||||||||||||
| Expense ratio | 33.0 | 32.7 | 32.3 | 33.9 | 33.2 | |||||||||||||||||||||||||||
| Dividend ratio | 0.5 | 0.2 | 0.6 | 0.6 | 0.6 | |||||||||||||||||||||||||||
| Combined ratio | 105.1 | % | 95.8 | % | 111.3 | % | 111.9 | % | 101.6 | % | ||||||||||||||||||||||
| Combined ratio excluding catastrophes and development | 93.9 | % | 93.6 | % | 93.7 | % | 93.2 | % | 94.6 | % | ||||||||||||||||||||||
| Net accident year catastrophe losses incurred | $ | 358 | $ | 4 | $ | 146 | $ | 151 | $ | 57 | ||||||||||||||||||||||
| Effect on loss & LAE ratio | 10.7 | % | 0.5 | % | 17.0 | % | 19.0 | % | 7.0 | % | ||||||||||||||||||||||
| Net prior year development and other: (favorable) / unfavorable | $ | 23 | $ | 19 | $ | 6 | $ | (2) | $ | — | ||||||||||||||||||||||
| Effect on loss & LAE ratio | 0.5 | % | 1.7 | % | 0.6 | % | (0.3) | % | — | % | ||||||||||||||||||||||
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Corporate & Other - Results of Operations
| 2020 | |||||||||||||||||||||||||||||
| (In millions) | Full Year | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
| Net earned premiums | $ | (1) | $ | — | $ | (1) | $ | — | $ | — | |||||||||||||||||||
| Net investment income | 64 | 19 | 17 | 20 | 8 | ||||||||||||||||||||||||
| Other revenues | — | — | 1 | — | (1) | ||||||||||||||||||||||||
| Total operating revenues | 63 | 19 | 17 | 20 | 7 | ||||||||||||||||||||||||
| Insurance claims and policyholders' benefits | 67 | 50 | (6) | 34 | (11) | ||||||||||||||||||||||||
| Other insurance related expenses | (3) | — | (2) | (1) | — | ||||||||||||||||||||||||
| Other expenses | 136 | 30 | 34 | 35 | 37 | ||||||||||||||||||||||||
| Total claims, benefits and expenses | 200 | 80 | 26 | 68 | 26 | ||||||||||||||||||||||||
| Core income (loss) before income tax | (137) | (61) | (9) | (48) | (19) | ||||||||||||||||||||||||
| Income tax (expense) benefit on core income (loss) | 23 | 12 | 1 | 8 | 2 | ||||||||||||||||||||||||
| Core income (loss) | $ | (114) | $ | (49) | $ | (8) | $ | (40) | $ | (17) | |||||||||||||||||||
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Definitions and Presentation
•Collectively, CNA Financial Corporation (CNAF) and its subsidiaries are referred to as CNA or the Company.
•P&C Operations includes Specialty, Commercial and International.
•Corporate & Other segment primarily includes certain corporate expenses including interest on corporate debt and the results of certain property and casualty business in run-off, including CNA Re and asbestos and environmental pollution. Intersegment eliminations are also included in this segment.
•Management uses the core income (loss) financial measure to monitor the Company’s operations. Please refer to Note O to the Consolidated Financial Statements within the December 31, 2020 Form 10-K for further discussion of this non-GAAP financial measure.
•Management uses underwriting results to monitor insurance operations. Underwriting results are pretax and are calculated as net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and other insurance related expenses.
•In the evaluation of the results of Specialty, Commercial and International, management uses the loss ratio, the expense ratio, the dividend ratio and the combined ratio. These ratios are calculated using financial results prepared in accordance with accounting principles generally accepted in the United States of America. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios.
•This financial supplement may also reference or contain financial measures that are not in accordance with GAAP. Management utilizes these financial measures to monitor the Company's insurance operations and investment portfolio. Core income, which is derived from certain income statement amounts, is used by management to monitor performance of the Company's insurance operations. The Company's investment portfolio is monitored by management through analysis of various factors including unrealized gains and losses on securities, portfolio duration and exposure to market and credit risk.
•Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses and any cumulative effects of changes in accounting guidance. The calculation of core income (loss) excludes net investment gains or losses because net investment gains or losses are generally driven by economic factors that are not necessarily reflective of our primary operations. Management monitors core income (loss) for each business segment to assess segment performance. Presentation of consolidated core income (loss) is deemed to be a non-GAAP financial measure. For reconciliations of non-GAAP measures to the most comparable GAAP measures and other information, please refer herein and/or to CNA's most recent 10-K on file with the Securities and Exchange Commission, as well as the press release, available at www.cna.com.
•Gross written premiums ex. 3rd party captives represents gross written premiums excluding business which is ceded to third party captives, including business related to large warranty programs.
•Pretax net prior year development and other includes the effects of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts.
•Certain immaterial differences are due to rounding.
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