Document
false0000021175Common Stock, Par value $2.50"CNA" 0000021175 2020-02-10 2020-02-10 0000021175 exch:XCHI 2020-02-10 2020-02-10 0000021175 exch:XNYS 2020-02-10 2020-02-10


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) February 10, 2020

CNA FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)

Delaware
 
1-5823
 
36-6169860
(State or other jurisdiction
 
(Commission
 
(IRS Employer
of incorporation)
 
File Number)
 
Identification No.)

151 N. Franklin
Chicago, IL 60606
(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):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, Par value $2.50
 
"CNA"
 
New York Stock Exchange
 
 
 
 
Chicago Stock Exchange
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.
On February 10, 2020, the registrant issued a press release and posted on its website (www.cna.com) a financial supplement providing information on its results of operations for the fourth quarter and year ended December 31, 2019. The press release is furnished as Exhibit 99.1 and the financial supplement is furnished as Exhibit 99.2 to this Form 8-K.
The information under Item 2.02 and in Exhibits 99.1 and 99.2 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 Exhibits 99.1 and 99.2 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 press release, issued February 10, 2020, providing information on the fourth quarter and year ended December 31, 2019 results of operations.
 
 
 
 
CNA Financial Corporation financial supplement, posted on its website February 10, 2020, providing supplemental financial information on the fourth quarter and year ended December 31, 2019.
 
 
 
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:  February 10, 2020
By
/s/ James M. Anderson
 
 
(Signature)
 
 
James M. Anderson
Executive Vice President and
Chief Financial Officer




cnalogoq42019.gif

FOR IMMEDIATE RELEASE
CONTACT:
MEDIA:
 
ANALYSTS:
Brandon Davis, 312-822-5885
 
James Anderson, 312-822-7757
CNA FINANCIAL ANNOUNCES FOURTH QUARTER 2019 RESULTS
•
Q4 NET INCOME OF $273M, $1.00 PER SHARE; FULL YEAR 2019 OF $1 BILLION, $3.67 PER SHARE
•
Q4 CORE INCOME OF $265M, $0.97 PER SHARE; FULL YEAR 2019 OF $979M, $$3.59 PER SHARE
•
Q4 P&C COMBINED RATIO OF 95.6%; Q4 P&C UNDERLYING COMBINED RATIO OF 94.9%
•
FULL YEAR 2019 P&C UNDERLYING COMBINED RATIO OF 94.8% VS 95.4% FULL YEAR 2018
•
P&C NET WRITTEN PREMIUM GROWTH OF 5% IN Q4 & FULL YEAR 2019
•
INCREASED QUARTERLY DIVIDEND TO $0.37 PER SHARE
•
SPECIAL DIVIDEND OF $2.00 PER SHARE
CHICAGO, February 10, 2020 --- CNA Financial Corporation (NYSE: CNA) today announced fourth quarter 2019 net income of $273 million, or $1.00 per share, and core income of $265 million, or $0.97 per share. Net income for the full year 2019 was $1.0 billion, or $3.67 per share, and core income was $979 million, or $3.59 per share. Property & Casualty Operations combined ratio for the fourth quarter was 95.6% and the underlying combined ratio was 94.9%. Net investment income, after tax, was $443 million for the fourth quarter of 2019, including $56 million from limited partnership and common stock investments.
Excluding third party captives, Property & Casualty Operations generated gross written premium growth of 8% and net written premium growth of 6% for the fourth quarter of 2019.
Our Life & Group and Corporate & Other segments produced core losses for the fourth quarter of 2019 of $(4) million and $(68) million, respectively, with the latter driven by a $48 million after-tax non-economic charge related to asbestos and environmental pollution.
CNA Financial declared a quarterly dividend of $0.37 per share and a special dividend of $2.00 per share, payable March 12, 2020 to stockholders of record on February 24, 2020.
 
Results for the Three Months Ended December 31
 
Results for the Year Ended December 31
($ millions, except per share data)
2019
 
2018
 
2019
 
2018
Net income (loss)
$
273

 
$
(84
)
 
$
1,000

 
$
813

Core income (loss) (a)
265

 
(23
)
 
979

 
845

 
 
 
 
 
 
 
 
Net income (loss) per diluted share
$
1.00

 
$
(0.31
)
 
$
3.67

 
$
2.98

Core income (loss) per diluted share
0.97

 
(0.08
)
 
3.59

 
3.10

 
December 31, 2019
 
December 31, 2018
Book value per share
$
45.00
 
 
$
41.32
 
Book value per share excluding AOCI
 
44.81
 
 
 
44.55
 
(a)
Management utilizes the core income (loss) financial measure to monitor the Company's operations. Please refer herein to the Reconciliation of GAAP Measures to Non-GAAP Measures section of this press release for further discussion of this non-GAAP measure.

1

“Our fourth quarter results reflect a strong underwriting quarter in line with a strong underwriting year in which our underlying combined ratio improved for the third consecutive year to 94.9%,” said Dino E. Robusto, Chairman and Chief Executive Officer of CNA Financial Corporation.  “With fourth quarter premium rates increasing to 7% and gross premiums increasing to 8%, CNA is well positioned going into 2020.”
Property & Casualty Operations
 
Results for the Three Months Ended December 31
 
Results for the Year Ended December 31
($ millions)
2019
 
2018
 
2019
 
2018
Gross written premiums ex. 3rd party captives
$
1,892

 
 
$
1,755

 
 
$
7,735

 
 
$
7,252

 
GWP ex. 3rd party captives change (% year over year)
8

%
 
 
 
 
7

%
 
 
 
Net written premiums
$
1,746

 
 
$
1,659

 
 
$
7,134

 
 
$
6,822

 
NWP change (% year over year)
5

%
 
 
 
 
5

%
 
 
 
Net investment income
$
336

 
 
$
127

 
 
$
1,273

 
 
$
996

 
Core income
337

 
 
16

 
 
1,190

 
 
967

 
 
 
 
 
 
 
 
 
 
 
 
 
Loss ratio excluding catastrophes and development
60.9

%
 
64.4

%
 
61.0

%
 
61.8

%
Effect of catastrophe impacts
2.9

 
 
8.6

 
 
2.6

 
 
3.7

 
Effect of development-related items
(2.2
)
 
 
(1.2
)
 
 
(0.7
)
 
 
(2.4
)
 
Loss ratio
61.6

%
 
71.8

%
 
62.9

%
 
63.1

%
 
 
 
 
 
 
 
 
 
 
 
 
Expense ratio
33.7

%
 
33.2

%
 
33.5

%
 
33.2

%
 
 
 
 
 
 
 
 
 
 
 
 
Combined ratio
95.6

%
 
105.4

%
 
96.7

%
 
96.7

%
Combined ratio excluding catastrophes and development
94.9

%
 
98.0

%
 
94.8

%
 
95.4

%
•
The fourth quarter combined ratio excluding catastrophes and development improved 3.1 points as compared with the prior year quarter. The underlying loss ratio improved 3.5 points due to elevated property losses and professional liability in our London operation in the prior year quarter. This was partially offset by a 0.5 point increase in the expense ratio driven by year-end true-ups in acquisition expenses.
•
For the full year, the combined ratio excluding catastrophes and development improved 0.6 points as compared with the prior year.  The underlying loss ratio improved 0.8 points.
•
The fourth quarter combined ratio improved 9.8 points as compared with the prior year quarter. Net catastrophe losses were $51 million, or 2.9 points of the loss ratio in the quarter compared with $146 million, or 8.6 points of the loss ratio, for the prior year quarter. Favorable net prior period development improved the loss ratio by 2.2 points in the quarter compared with a 1.2 point improvement in the prior year quarter.
•
For the full year, the combined ratio was consistent with the prior year.  Net catastrophe losses were $179 million, or 2.6 points of the loss ratio for the full year compared with $252 million, or 3.7 points of the loss ratio, for the prior year.  Favorable net prior period development improved the loss ratio by 0.7 points in the current year compared with a 2.4 point improvement in the prior year.
•
Net written premiums grew 5% in both the fourth quarter and full year while U.S. P&C segments net written premiums grew 6% in the fourth quarter and for the full year.

2

Business Operating Highlights
Specialty
 
Results for the Three Months Ended December 31
 
Results for the Year Ended December 31
($ millions)
2019
 
2018
 
2019
 
2018
Gross written premiums ex. 3rd party captives
$
752

 
 
$
705

 
 
$
3,015

 
 
$
2,834

 
GWP ex. 3rd party captives change (% year over year)
7

%
 
 
 
 
6

%
 
 
 
Net written premiums
$
705

 
 
$
682

 
 
$
2,848

 
 
$
2,744

 
NWP change (% year over year)
3

%
 
 
 
 
4

%
 
 
 
Core income
$
188

 
 
$
98

 
 
$
671

 
 
$
629

 
 
 
 
 
 
 
 
 
 
 
 
 
Loss ratio excluding catastrophes and development
60.7

%
 
61.1

%
 
60.3

%
 
60.4

%
Effect of catastrophe impacts
(0.2
)
 
 
0.6

 
 
0.5

 
 
1.0

 
Effect of development-related items
(4.9
)
 
 
(3.7
)
 
 
(3.3
)
 
 
(5.5
)
 
Loss ratio
55.6

%
 
58.0

%
 
57.5

%
 
55.9

%
 
 
 
 
 
 
 
 
 
 
 
 
Expense ratio
32.4

%
 
33.0

%
 
32.5

%
 
32.1

%
 
 
 
 
 
 
 
 
 
 
 
 
Combined ratio
88.2

%
 
91.2

%
 
90.2

%
 
88.2

%
Combined ratio excluding catastrophes and development
93.3

%
 
94.3

%
 
93.0

%
 
92.7

%
•
The combined ratio excluding catastrophes and development improved 1.0 point for the fourth quarter of 2019 as compared with the prior year quarter. The expense ratio improved 0.6 points driven by the acquisition ratio. The underlying loss ratio improved 0.4 points.
•
The combined ratio improved 3.0 points for the fourth quarter of 2019 as compared with the prior year quarter. Net catastrophe losses were $(1) million, or (0.2) points of the loss ratio in the quarter compared with $4 million, or 0.6 points of the loss ratio, for the prior year quarter. Favorable net prior period development improved the loss ratio by 4.9 points in the quarter compared with 3.7 points of improvement in the prior year quarter.
•
Net written premiums for Specialty grew 3% for the fourth quarter of 2019 driven by favorable rate.

3

Commercial
 
Results for the Three Months Ended December 31
 
Results for the Year Ended December 31
($ millions)
2019
 
2018
 
2019
 
2018
Gross written premiums ex. 3rd party captives
$
867

 
 
$
784

 
 
$
3,609

 
 
$
3,267

 
GWP ex. 3rd party captives change (% year over year)
11

%
 
 
 
 
10

%
 
 
 
Net written premiums
$
779

 
 
$
721

 
 
$
3,315

 
 
$
3,060

 
NWP change (% year over year)
8

%
 
 
 
 
8

%
 
 
 
Core income (loss)
$
133

 
 
$
(46
)
 
 
$
489

 
 
$
357

 
 
 
 
 
 
 
 
 
 
 
 
 
Loss ratio excluding catastrophes and development
61.4

%
 
63.9

%
 
61.7

%
 
61.2

%
Effect of catastrophe impacts
6.5

 
 
15.7

 
 
4.9

 
 
6.4

 
Effect of development-related items
(1.3
)
 
 
0.7

 
 
0.7

 
 
(0.3
)
 
Loss ratio
66.6

%
 
80.3

%
 
67.3

%
 
67.3

%
 
 
 
 
 
 
 
 
 
 
 
 
Expense ratio
33.6

%
 
32.3

%
 
32.9

%
 
33.1

%
 
 
 
 
 
 
 
 
 
 
 
 
Combined ratio
100.6

%
 
113.3

%
 
100.8

%
 
101.1

%
Combined ratio excluding catastrophes and development
95.4

%
 
96.9

%
 
95.2

%
 
95.0

%
•
The combined ratio excluding catastrophes and development improved 1.5 points for the fourth quarter of 2019 as compared with the prior year quarter. The underlying loss ratio improved 2.5 points driven by a lower level of large property losses. This was partially offset by a 1.3 point increase in the expense ratio driven by a higher acquisition ratio.
•
The combined ratio improved 12.7 points for the fourth quarter of 2019 as compared with the prior year quarter. Net catastrophe losses were $52 million, or 6.5 points of the loss ratio in the fourth quarter of 2019 compared with $120 million, or 15.7 points of the loss ratio, for the prior year quarter. Favorable net prior period development decreased the loss ratio by 1.3 points in the quarter compared with 0.7 points of unfavorable development increasing the loss ratio in the prior year quarter.
•
Net written premiums for Commercial grew 8% for the fourth quarter of 2019 driven by strong retention, higher new business and favorable rate.


4

International
 
Results for the Three Months Ended December 31
 
Results for the Year Ended December 31
($ millions)
2019
 
2018
 
2019
 
2018
Net written premiums
$
262

 
 
$
256

 
 
$
971

 
 
$
1,018

 
NWP change (% year over year)
2

%
 
 
 
 
(5
)
%
 
 
 
Core income (loss)
$
16

 
 
$
(36
)
 
 
$
30

 
 
$
(19
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss ratio excluding catastrophes and development
59.7

%
 
74.9

%
 
60.9

%
 
66.9

%
Effect of catastrophe impacts
—

 
 
8.2

 
 
1.1

 
 
3.3

 
Effect of development-related items
2.6

 
 
0.2

 
 
2.1

 
 
(0.4
)
 
Loss ratio
62.3

%
 
83.3

%
 
64.1

%
 
69.8

%
 
 
 
 
 
 
 
 
 
 
 
 
Expense ratio
38.0

%
 
36.2

%
 
37.7

%
 
36.7

%
 
 
 
 
 
 
 
 
 
 
 
 
Combined ratio
100.3

%
 
119.5

%
 
101.8

%
 
106.5

%
Combined ratio excluding catastrophes and development
97.7

%
 
111.1

%
 
98.6

%
 
103.6

%
•
The combined ratio excluding catastrophes and development improved 13.4 points for the fourth quarter of 2019 as compared with the prior year quarter. The underlying loss ratio improved 15.2 points due to elevated property losses and professional liability in our London operation in the prior year quarter. This was partially offset by a 1.8 point increase in the expense ratio driven by lower net earned premiums.
•
The combined ratio improved 19.2 points for the fourth quarter of 2019 as compared with the prior year quarter. There were no net catastrophe losses recorded for the fourth quarter of 2019, compared with $22 million of net catastrophe losses, an 8.2 point impact on the loss ratio, for the prior year quarter. Unfavorable net prior year development increased the loss ratio by 2.6 points in the quarter compared with 0.2 points in the prior year quarter.
•
Excluding currency fluctuations, net written premiums for International increased 3% for the fourth quarter of 2019 as compared with the prior year quarter driven by growth in Canada and Europe partially offset by the premium reduction from Hardy's strategic exit from certain business classes announced in the fourth quarter of 2018.

5

Life & Group
 
Results for the Three Months Ended December 31
 
Results for the Year Ended December 31
($ millions)
2019
 
2018
 
2019
 
2018
Net investment income
$
204

 
 
$
203

 
 
$
820

 
 
$
801

 
Total operating revenues
334

 
 
337

 
 
1,340

 
 
1,333

 
Core (loss) income
(4
)
 
 
7

 
 
(109
)
 
 
43

 
Due to the recognition of the premium deficiency and resetting of actuarial assumptions in the third quarter of 2019, the operating results for our long term care business now reflect the variance between actual experience and the expected results contemplated in our best estimate reserves.
Corporate & Other
 
Results for the Three Months Ended December 31
 
Results for the Year Ended December 31
($ millions)
2019
 
2018
 
2019
 
2018
Net investment income
$
5

 
 
$
4

 
 
$
25

 
 
$
20

 
Interest expense
32

 
 
34

 
 
131

 
 
135

 
Core loss
(68
)
 
 
(46
)
 
 
(102
)
 
 
(165
)
 
Core loss increased $22 million for the fourth quarter of 2019 as compared with the prior year quarter. The application of retroactive reinsurance accounting to additional cessions to the A&EP Loss Portfolio Transfer in both periods resulted in after-tax non-economic charges of $48 million and $28 million in 2019 and 2018, respectively. The additional cessions in those periods were $125 million and $65 million, respectively.

Net Investment Income
 
Results for the Three Months Ended December 31
 
Results for the Year Ended December 31
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Pretax net investment income
$
545

 
 
$
334

 
 
$
2,118

 
 
$
1,817

 
Net investment income, after tax
443

 
 
279

 
 
1,727

 
 
1,500

 
Net investment income, after tax, increased $164 million for the fourth quarter of 2019 as compared with the prior year quarter. The increase was driven by limited partnership and common stock investments, which returned 3.7%, or $69 million for the fourth quarter of 2019 compared with (5.7)%, or a loss of $138 million in the prior year quarter.

6

About the Company
CNA is one of the largest U.S. commercial property and casualty insurance companies. CNA provides a broad range of standard and specialized property and casualty insurance products and services for businesses and professionals in the U.S., Canada and Europe, backed by more than 120 years of experience and approximately $45 billion of assets.  For more information, please visit CNA at www.cna.com.
Conference Call and Webcast/Presentation Information
A conference call for investors and the professional investment community will be held at 9:00 a.m. (CT) today. On the conference call will be Dino E. Robusto, Chairman and Chief Executive Officer of CNA Financial Corporation, James M. Anderson, Executive Vice President and Chief Financial Officer of CNA Financial Corporation and other members of senior management. Participants can access the call by dialing (800) 289-0571, or for international callers, +1 (720) 543-0206. The call will also be broadcast live on the internet and may be accessed from the Investor Relations page of the CNA website (www.cna.com). A presentation will be posted and available on the CNA website and will provide additional insight into the results.
The call is available to the media, but questions will be restricted to investors and the professional investment community. An online replay will be available on CNA's website following the call. Financial supplement information related to the results is available on the investor relations pages of the CNA website or by contacting [email protected].
Definition of Reported Segments
•
Specialty provides management and professional liability and other coverages through property and casualty products and services using a network of brokers, independent agencies and managing general underwriters.
•
Commercial works with a network of brokers and independent agents to market a broad range of property and casualty insurance products and services to small, middle-market and large businesses.
•
International underwrites property and casualty coverages on a global basis through two insurance companies based in the U.K. and Luxembourg, a branch operation in Canada as well as through our Lloyd's Syndicate.
•
Life & Group primarily includes the results of the individual and group long term care businesses that are in run off.
•
Corporate & Other 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 (A&EP).
Financial Measures
Management utilizes the following metrics in their evaluation of the Property & Casualty Operations. These ratios are calculated using financial results prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
•
Loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums.
•
Underlying loss ratio represents the loss ratio excluding catastrophes and development.
•
Expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums.
•
Dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums.
•
Combined ratio is the sum of the loss, expense and dividend ratios.
•
Underlying combined ratio is the sum of the underlying loss, expense and dividend ratios.
•
Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes.
•
Rate represents the average change in price on policies that renew excluding exposure change. For certain products within Small Business, where quantifiable, rate includes the influence of new business as well.
•
Retention represents the percentage of premium dollars renewed in comparison to the expiring premium dollars from policies available to renew.
•
New business represents premiums from policies written with new customers and additional policies written with existing customers.
Gross written premiums ex. 3rd party captives represents gross written premiums excluding business which is mostly ceded to third party captives, including business related to large warranty programs.
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.

7

Reconciliation of GAAP Measures to Non-GAAP Measures
This press release also contains financial measures that are not in accordance with GAAP.  Management utilizes these financial measures to monitor the Company's insurance operations and investment portfolio. The Company believes the presentation of these measures provides investors with a better understanding of the significant factors that comprise the Company's operating performance. Reconciliations of these measures to the most comparable GAAP measures follow below.
Reconciliation of Net Income (Loss) to Core Income (Loss)
Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of i) net investment gains or losses, ii) income or loss from discontinued operations, iii) any cumulative effects of changes in accounting guidance and iv) deferred tax asset and liability remeasurement as a result of an enacted U.S. Federal tax rate change. 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 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.
 
Results for the Three Months Ended December 31
 
Results for the Year Ended December 31
($ millions)
2019
 
2018
 
2019
 
2018
Net income (loss)
$
273

 
$
(84
)
 
$
1,000

 
$
813

Less: Net investment gains (losses)
8

 
(61
)
 
21

 
(38
)
Less: Net deferred tax asset remeasurement
—

 
—

 
—

 
6

Core income (loss)
$
265

 
$
(23
)
 
$
979

 
$
845

Reconciliation of Net Income (Loss) per Diluted Share to Core Income (Loss) per Diluted Share
Core income (loss) per diluted share provides management and investors with a valuable measure of the Company's operating performance for the same reasons applicable to its underlying measure, core income (loss). Core income (loss) per diluted share is core income (loss) on a per diluted share basis.
 
Results for the Three Months Ended December 31
 
Results for the Year Ended December 31
 
2019
 
2018
 
2019
 
2018
Net income (loss) per diluted share
$
1.00

 
$
(0.31
)
 
$
3.67

 
$
2.98

Less: Net investment gains (losses)
0.03

 
(0.23
)
 
0.08

 
(0.14
)
Less: Net deferred tax asset remeasurement
—

 
—

 
—

 
0.02

Core income (loss) per diluted share
$
0.97

 
$
(0.08
)
 
$
3.59

 
$
3.10

Reconciliation of Book Value per Share to Book Value per Share Excluding AOCI
Book value per share excluding AOCI allows management and investors to analyze the amount of the Company's net worth primarily attributable to the Company's business operations. The Company believes this measurement is useful as it reduces the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates.
 
December 31, 2019
 
December 31, 2018
Book value per share
$
45.00

 
$
41.32

Less: Per share impact of AOCI
0.19

 
(3.23
)
Book value per share excluding AOCI
$
44.81

 
$
44.55


8

Calculation of Return on Equity and Core Return on Equity
Core return on equity provides management and investors with a measure of how effectively the Company is investing the portion of the Company's net worth that is primarily attributable to its business operations.
 
Results for the Three Months Ended December 31
 
Results for the Year Ended December 31
 
($ millions)
2019
 
2018
 
2019
 
2018
 
Annualized net income (loss)
$
1,090

 
$
(336
)
 
$
1,000

 
$
813

 
Average stockholders' equity including AOCI (a)
12,169

 
11,363

 
11,716

 
11,730

 
Return on equity
9.0

%
(3.0
)
%
8.5

%
6.9

%
 
 
 
 
 
 
 
 
 
Annualized core income (loss)
$
1,060

 
$
(91
)
 
$
979

 
$
845

 
Average stockholders' equity excluding AOCI (a)
12,073

 
12,180

 
12,129

 
12,152

 
Core return on equity
8.8

%
(0.7
)
%
8.1

%
7.0

%
(a)
Average stockholders' equity is calculated using a simple average of the beginning and ending balances for the period.
For additional information, please refer to CNA's most recent 10-K on file with the Securities and Exchange Commission, as well as the financial supplement, available at www.cna.com.
Forward-Looking Statements
This press release includes statements that relate to anticipated future events (forward-looking statements) rather than actual present conditions or historical events. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes,” “expects,” “intends,” “anticipates,” “estimates” and similar expressions. Forward-looking statements, by their nature, are subject to a variety of inherent risks and uncertainties that could cause actual results to differ materially from the results projected. Many of these risks and uncertainties cannot be controlled by CNA. For a detailed description of these risks and uncertainties please refer to CNA’s filings with the Securities and Exchange Commission, available at www.cna.com.
Any forward-looking statements made in this press release are made by CNA as of the date of this press release. Further, CNA does not have any obligation to update or revise any forward-looking statement contained in this press release, even if CNA’s expectations or any related events, conditions or circumstances change.
Any descriptions of coverage under CNA policies or programs in this press release are provided for convenience only and are not to be relied upon with respect to questions of coverage, exclusions or limitations. With regard to all such matters, the terms and provisions of relevant insurance policies are primary and controlling. In addition, please note that all coverages may not be available in all states.
“CNA" is a registered trademark of CNA Financial Corporation. Certain CNA Financial Corporation subsidiaries use the "CNA" trademark in connection with insurance underwriting and claims activities. Copyright © 2019 CNA. All rights reserved.

# # #

9



cnalogoq42019.gif

 
 
 
 
 




CNA Financial Corporation
Supplemental Financial Information


December 31, 2019



This report is for informational purposes only and includes consolidated financial statements and 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
Consolidated Results
 
Statements of Operations
Results of Operations
 
International
Investment Information
 
Other
 
Life & Group Policyholder Reserves




Statements of Operations
Periods ended December 31
Three Months
 
 
Twelve Months
 
(In millions)
2019
 
2018
 
Change
 
 
2019
 
2018
 
Change
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earned premiums
$
1,911

 
$
1,859

 
3

%
 
$
7,428

 
$
7,312

 
2

%
Net investment income
545

 
334

 
63

 
 
2,118

 
1,817

 
17

 
Net investment gains (losses):
 
 
 
 
 
 
 
 
 
 
 
 
 
Other-than-temporary impairment (OTTI) losses
(10
)
 
(12
)
 


 
 
(44
)
 
(21
)
 

 
Other net investment gains (losses)
19

 
(65
)
 


 
 
73

 
(31
)
 


 
Net investment gains (losses)
9


(77
)
 


 
 
29

 
(52
)
 


 
Non-insurance warranty revenue
303

 
263

 
 
 
 
1,161

 
1,007

 
 
 
Other revenues
9

 
24

 


 
 
31

 
50

 

 
Total revenues
2,777

 
2,403

 
16

 
 
10,767

 
10,134

 
6

 
Claims, Benefits and Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Insurance claims and policyholders' benefits
1,483

 
1,594

 

 
 
5,806

 
5,572

 


 
Amortization of deferred acquisition costs
358

 
343

 

 
 
1,383

 
1,335

 


 
Non-insurance warranty expense
281

 
247

 
 
 
 
1,082

 
923

 
 
 
Other operating expenses
289

 
299

 

 
 
1,142

 
1,202

 


 
Interest
31

 
34

 

 
 
131

 
138

 


 
Total claims, benefits and expenses
2,442

 
2,517

 
3

 
 
9,544

 
9,170

 
(4
)
 
Income (loss) before income tax
335

 
(114
)
 


 
 
1,223

 
964

 


 
Income tax (expense) benefit
(62
)
 
30

 


 
 
(223
)
 
(151
)
 


 
Net income (loss)
$
273

 
$
(84
)
 
N/M

%
 
$
1,000

 
$
813

 
23

%

1




Components of Income (Loss), Per Share Data and Return on Equity
Periods ended December 31
Three Months
 
 
Twelve Months
 
(In millions, except per share data)
2019
 
2018
 
 
2019
 
2018
 
Components of Income (Loss)
 
 
 
 
 
 
 
 
 
Core income (loss)
$
265

 
$
(23
)
 
 
$
979

 
$
845

 
Net investment gains (losses)
8

 
(61
)
 
 
21

 
(38
)
 
Net deferred tax asset remeasurement
—

 
—

 
 
—

 
6

 
Net income (loss)
$
273

 
$
(84
)
 
 
$
1,000

 
$
813

 
 
 
 
 
 
 
 
 
 
 
Diluted Earnings (Loss) Per Common Share
 
 
 
 
 
 
 
 
 
Core income (loss)
$
0.97

 
$
(0.08
)
 
 
$
3.59

 
$
3.10

 
Net investment gains (losses)
0.03

 
(0.23
)
 
 
0.08

 
(0.14
)
 
Net deferred tax asset remeasurement
—

 
—

 
 
—

 
0.02

 
Diluted earnings (loss) per share
$
1.00

 
$
(0.31
)

 
$
3.67


$
2.98

 
 
 
 
 
 
 
 
 
 
 
Weighted Average Outstanding Common Stock and Common Stock Equivalents
 
 
 
 
 
 
 
 
 
Basic
271.5

 
271.6

 
 
271.6

 
271.5

 
Diluted
272.6

 
272.6

 
 
272.5

 
272.5

 
 
 
 
 
 
 
 
 
 
 
Return on Equity
 
 
 
 
 
 
 
 
 
Net income (loss) (1)
9.0

%
(3.0
)
%
 
8.5

%
6.9

%
Core income (loss) (2)
8.8

 
(0.7
)
 
 
8.1

 
7.0

 
(1) Annualized net income (loss) divided by the average stockholders' equity including accumulated other comprehensive income (loss) (AOCI) for the period. Average equity including AOCI is calculated using a simple average of the beginning and ending balances for the period.
(2) Annualized core income (loss) divided by the average stockholders' equity excluding AOCI for the period. Average equity excluding AOCI is calculated using a simple average of the beginning and ending balances for the period.


2




Selected Balance Sheet Data and Statement of Cash Flows Data
(In millions, except per share data)
December 31, 2019
 
December 31, 2018
Total investments
$
47,744

 
$
44,486

Reinsurance receivables, net of allowance for uncollectible receivables
4,179

 
4,426

Total assets
60,612

 
57,152

Insurance reserves
38,614

 
36,764

Debt
2,679

 
2,680

Total liabilities
48,397

 
45,935

Accumulated other comprehensive income (loss) (1)
51

 
(878
)
Total stockholders' equity
12,215

 
11,217

 
 
 
 
Book value per common share
$
45.00

 
$
41.32

Book value per common share excluding AOCI
$
44.81

 
$
44.55

 
 
 
 
Outstanding shares of common stock (in millions of shares)
271.4

 
271.5

 
 
 
 
Statutory capital and surplus - Combined Continental Casualty Companies (2)
$
10,787

 
$
10,411

Three months ended December 31
2019
 
2018
Net cash flows provided (used) by operating activities
$
160

 
$
359

Net cash flows provided (used) by investing activities
(165
)
 
(257
)
Net cash flows provided (used) by financing activities
(101
)
 
(96
)
Net cash flows provided (used) by operating, investing and financing activities
$
(106
)
 
$
6

Twelve months ended December 31
2019
 
2018
Net cash flows provided (used) by operating activities
$
1,140

 
$
1,227

Net cash flows provided (used) by investing activities
(225
)
 
(177
)
Net cash flows provided (used) by financing activities
(988
)
 
(1,085
)
Net cash flows provided (used) by operating, investing and financing activities
$
(73
)
 
$
(35
)
(1) As of December 31, 2019 and 2018, the net unrealized gains on investments included in AOCI were net of after-tax Shadow Adjustments of $2,198 million and $1,078 million. To the extent that unrealized gains on fixed income securities supporting certain products within the Life & Group segment would result in a premium deficiency if realized, an increase in Insurance reserves are recorded, net of tax, as a reduction of net unrealized gains through Other comprehensive income (loss) (Shadow Adjustments).
(2) Statutory capital and surplus as of December 31, 2019 is preliminary.

3




Property & Casualty - Results of Operations
Periods ended December 31
Three Months
 
 
Twelve Months
 
(In millions)
2019
 
2018
 
Change
 
 
2019
 
2018
 
Change
 
Gross written premiums
$
2,851

 
$
2,735

 
4

%
 
$
11,704

 
$
11,404

 
3

%
Gross written premiums ex. 3rd party captives
1,892

 
1,755

 
8

 
 
7,735

 
7,252

 
7

 
Net written premiums
1,746

 
1,659

 
5

 
 
7,134

 
6,822

 
5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earned premiums
1,780

 
1,727

 
3

 
 
6,909

 
6,783

 
2

 
Net investment income
336

 
127

 


 
 
1,273

 
996

 


 
Non-insurance warranty revenue
303

 
263

 
 
 
 
1,161

 
1,007

 
 
 
Other revenues
9

 
6

 


 
 
30

 
31

 


 
Total operating revenues
2,428

 
2,123

 
14

 
 
9,373

 
8,817

 
6

 
Insurance claims and policyholders' benefits
1,102

 
1,247

 

 
 
4,372

 
4,303

 


 
Amortization of deferred acquisition costs
358

 
343

 


 
 
1,383

 
1,335

 


 
Non-insurance warranty expense
281

 
247

 
 
 
 
1,082

 
923

 
 
 
Other insurance related expenses
244

 
229

 


 
 
927

 
919

 


 
Other expenses
10

 
32

 


 
 
88

 
103

 


 
Total claims, benefits and expenses
1,995

 
2,098

 
5

 
 
7,852

 
7,583

 
(4
)
 
Core income (loss) before income tax
433

 
25

 


 
 
1,521

 
1,234

 


 
Income tax (expense) benefit on core income (loss)
(96
)
 
(9
)
 


 
 
(331
)
 
(267
)
 


 
Core income (loss)
$
337

 
$
16

 
N/M

%
 
$
1,190

 
$
967

 
23

%
 
 
 
 
 


 
 
 
 
 
 


 
Other Performance Metrics
 
 
 
 


 
 
 
 
 
 


 
Underwriting gain (loss)
$
76

 
$
(92
)
 
N/M

%
 
$
227

 
$
226

 
—

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss & LAE ratio
61.6

%
71.8

%
10.2

pts
 
62.9

%
63.1

%
0.2

pts
Expense ratio
33.7

 
33.2

 
(0.5
)
 
 
33.5

 
33.2

 
(0.3
)
 
Dividend ratio
0.3

 
0.4

 
0.1

 
 
0.3

 
0.4

 
0.1

 
Combined ratio
95.6

%
105.4

%
9.8

pts
 
96.7

%
96.7

%
—

pts
Combined ratio excluding catastrophes and development
94.9

%
98.0

%
3.1

pts
 
94.8

%
95.4

%
0.6

pts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net accident year catastrophe losses incurred
$
51

 
$
146

 

 
 
$
179

 
$
252

 

 
Effect on loss & LAE ratio
2.9

%
8.6

%
5.7

pts
 
2.6

%
3.7

%
1.1

pts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net prior year development and other: (favorable) / unfavorable
$
(37
)
 
$
(21
)
 


 
 
$
(44
)
 
$
(163
)
 


 
Effect on loss & LAE ratio
(2.2
)
%
(1.2
)
%
1.0

pts
 
(0.7
)
%
(2.4
)
%
(1.7
)
pts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rate
7

%
3

%
4

pts
 
5

%
2

%
3

pts
Renewal premium change
8

%
4

%
4

pts
 
6

%
5

%
1

pts
Retention
83

%
82

%
1

pts
 
84

%
84

%
—

pts
New business
$
320

 
$
252

 
27

%
 
$
1,323

 
$
1,226

 
8

%


4




Specialty - Results of Operations
Periods ended December 31
Three Months
 
 
Twelve Months
 
(In millions)
2019
 
2018
 
Change
 
 
2019
 
2018
 
Change
 
Gross written premiums
$
1,709

 
$
1,682

 
2

%
 
$
6,900

 
$
6,904

 
—

%
Gross written premiums ex. 3rd party captives
752

 
705

 
7

 
 
3,015

 
2,834

 
6

 
Net written premiums
705

 
682

 
3

 
 
2,848

 
2,744

 
4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earned premiums
712

 
693

 
3

 
 
2,773

 
2,732

 
2

 
Net investment income
146

 
63

 


 
 
556

 
439

 


 
Non-insurance warranty revenue
303

 
263

 
 
 
 
1,161

 
1,007

 
 
 
Other revenues
—

 
1

 


 
 
1

 
2

 


 
Total operating revenues
1,161

 
1,020

 
14

 
 
4,491

 
4,180

 
7

 
Insurance claims and policyholders' benefits
398

 
404

 

 
 
1,600

 
1,531

 


 
Amortization of deferred acquisition costs
156

 
152

 


 
 
610

 
599

 


 
Non-insurance warranty expense
281

 
247

 
 
 
 
1,082

 
923

 
 
 
Other insurance related expenses
75

 
77

 


 
 
292

 
279

 


 
Other expenses
11

 
12

 


 
 
48

 
46

 


 
Total claims, benefits and expenses
921

 
892

 
(3
)
 
 
3,632

 
3,378

 
(8
)
 
Core income (loss) before income tax
240

 
128

 


 
 
859

 
802

 


 
Income tax (expense) benefit on core income (loss)
(52
)
 
(30
)
 


 
 
(188
)
 
(173
)
 


 
Core income (loss)
$
188

 
$
98

 
92

%
 
$
671

 
$
629

 
7

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Performance Metrics
 
 
 
 
 
 
 
 
 
 
 
 
 
Underwriting gain (loss)
$
83

 
$
60

 
38

%
 
$
271

 
$
323

 
(16
)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss & LAE ratio
55.6

%
58.0

%
2.4

pts
 
57.5

%
55.9

%
(1.6
)
pts
Expense ratio
32.4

 
33.0

 
0.6

 
 
32.5

 
32.1

 
(0.4
)
 
Dividend ratio
0.2

 
0.2

 
—

 
 
0.2

 
0.2

 
—

 
Combined ratio
88.2

%
91.2

%
3.0

pts
 
90.2

%
88.2

%
(2.0
)
pts
Combined ratio excluding catastrophes and development
93.3

%
94.3

%
1.0

pts
 
93.0

%
92.7

%
(0.3
)
pts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net accident year catastrophe losses incurred
$
(1
)
 
$
4

 


 
 
$
15

 
$
26

 


 
Effect on loss & LAE ratio
(0.2
)
%
0.6

%
0.8

pts
 
0.5

%
1.0

%
0.5

pts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net prior year development and other: (favorable) / unfavorable
$
(34
)
 
$
(26
)
 


 
 
$
(92
)
 
$
(152
)
 


 
Effect on loss & LAE ratio
(4.9
)
%
(3.7
)
%
1.2

pts
 
(3.3
)
%
(5.5
)
%
(2.2
)
pts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rate
8

%
3

%
5

pts
 
5

%
2

%
3

pts
Renewal premium change
8

%
5

%
3

pts
 
6

%
5

%
1

pts
Retention
84

%
85

%
(1
)
pts
 
87

%
85

%
2

pts
New business
$
93

 
$
87

 
7

%
 
$
367

 
$
353

 
4

%

5




Commercial - Results of Operations
Periods ended December 31
Three Months
 
 
Twelve Months
 
(In millions)
2019
 
2018
 
Change
 
 
2019
 
2018
 
Change
 
Gross written premiums
$
868

 
$
787

 
10

%
 
$
3,693

 
$
3,350

 
10

%
Gross written premiums ex. 3rd party captives
867

 
784

 
11

 
 
3,609

 
3,267

 
10

 
Net written premiums
779

 
721

 
8

 
 
3,315

 
3,060

 
8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earned premiums
823

 
772

 
7

 
 
3,162

 
3,050

 
4

 
Net investment income
174

 
50

 


 
 
654

 
500

 


 
Other revenues
9

 
4

 


 
 
29

 
28

 


 
Total operating revenues
1,006

 
826

 
22

 
 
3,845

 
3,578

 
7

 
Insurance claims and policyholders' benefits
552

 
624

 


 
 
2,148

 
2,073

 


 
Amortization of deferred acquisition costs
146

 
130

 


 
 
537

 
505

 


 
Other insurance related expenses
133

 
119

 


 
 
505

 
505

 


 
Other expenses
5

 
12

 


 
 
32

 
43

 


 
Total claims, benefits and expenses
836

 
885

 
6

 
 
3,222

 
3,126

 
(3
)
 
Core income (loss) before income tax
170

 
(59
)
 


 
 
623

 
452

 


 
Income tax (expense) benefit on core income (loss)
(37
)
 
13

 


 
 
(134
)
 
(95
)
 


 
Core income (loss)
$
133

 
$
(46
)
 
N/M

%
 
$
489

 
$
357

 
37

%
 
 
 
 
 


 
 
 
 
 
 


 
Other Performance Metrics
 
 
 
 


 
 
 
 
 
 


 
Underwriting gain (loss)
$
(8
)
 
$
(101
)
 
92

%
 
$
(28
)
 
$
(33
)
 
15

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss & LAE ratio
66.6

%
80.3

%
13.7

pts
 
67.3

%
67.3

%
—

pts
Expense ratio
33.6

 
32.3

 
(1.3
)
 
 
32.9

 
33.1

 
0.2

 
Dividend ratio
0.4

 
0.7

 
0.3

 
 
0.6

 
0.7

 
0.1

 
Combined ratio
100.6

%
113.3

%
12.7

pts
 
100.8

%
101.1

%
0.3

pts
Combined ratio excluding catastrophes and development
95.4

%
96.9

%
1.5

pts
 
95.2

%
95.0

%
(0.2
)
pts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net accident year catastrophe losses incurred
$
52

 
$
120

 


 
 
$
154

 
$
193

 


 
Effect on loss & LAE ratio
6.5

%
15.7

%
9.2

pts
 
4.9

%
6.4

%
1.5

pts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net prior year development and other: (favorable) / unfavorable
$
(9
)
 
$
5

 


 
 
$
28

 
$
(7
)
 


 
Effect on loss & LAE ratio
(1.3
)
%
0.7

%
2.0

pts
 
0.7

%
(0.3
)
%
(1.0
)
pts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rate
5

%
2

%
3

pts
 
3

%
1

%
2

pts
Renewal premium change
6

%
3

%
3

pts
 
5

%
5

%
—

pts
Retention
85

%
84

%
1

pts
 
86

%
85

%
1

pts
New business
$
161

 
$
105

 
53

%
 
$
683

 
$
566

 
21

%

6




International - Results of Operations
Periods ended December 31
Three Months
 
 
Twelve Months
 
(In millions)
2019
 
2018
 
Change
 
 
2019
 
2018
 
Change
 
Gross written premiums
$
274

 
$
266

 
3

%
 
$
1,111

 
$
1,150

 
(3
)
%
Net written premiums
262

 
256

 
2

 
 
971

 
1,018

 
(5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earned premiums
245

 
262

 
(6
)
 
 
974

 
1,001

 
(3
)
 
Net investment income
16

 
14

 


 
 
63

 
57

 


 
Other revenues
—

 
1

 


 
 
—

 
1

 


 
Total operating revenues
261

 
277

 
(6
)
 
 
1,037

 
1,059

 
(2
)
 
Insurance claims and policyholders' benefits
152

 
219

 


 
 
624

 
699

 


 
Amortization of deferred acquisition costs
56

 
61

 


 
 
236

 
231

 


 
Other insurance related expenses
36

 
33

 


 
 
130

 
135

 


 
Other expenses
(6
)
 
8

 


 
 
8

 
14

 


 
Total claims, benefits and expenses
238

 
321

 
26

 
 
998

 
1,079

 
8

 
Core income (loss) before income tax
23

 
(44
)
 


 
 
39

 
(20
)
 


 
Income tax (expense) benefit on core income (loss)
(7
)
 
8

 


 
 
(9
)
 
1

 


 
Core income (loss)
$
16

 
$
(36
)
 
N/M

%
 
$
30

 
$
(19
)
 
N/M

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Performance Metrics
 
 
 
 
 
 
 
 
 
 
 
 
 
Underwriting gain (loss)
$
1

 
$
(51
)
 
102

%
 
$
(16
)
 
$
(64
)
 
75

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss & LAE ratio
62.3

%
83.3

%
21.0

pts
 
64.1

%
69.8

%
5.7

pts
Expense ratio
38.0

 
36.2

 
(1.8
)
 
 
37.7

 
36.7

 
(1.0
)
 
Dividend ratio
—

 
—

 
—

 
 
—

 
—

 
—

 
Combined ratio
100.3

%
119.5

%
19.2

pts
 
101.8

%
106.5

%
4.7

pts
Combined ratio excluding catastrophes and development
97.7

%
111.1

%
13.4

pts
 
98.6

%
103.6

%
5.0

pts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net accident year catastrophe losses incurred
$
—

 
$
22

 


 
 
$
10

 
$
33

 


 
Effect on loss & LAE ratio
—

%
8.2

%
8.2

pts
 
1.1

%
3.3

%
2.2

pts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net prior year development and other: (favorable) / unfavorable
$
6

 
$
—

 


 
 
$
20

 
$
(4
)
 


 
Effect on loss & LAE ratio
2.6

%
0.2

%
(2.4
)
pts
 
2.1

%
(0.4
)
%
(2.5
)
pts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rate
13

%
5

%
8

pts
 
8

%
4

%
4

pts
Renewal premium change
14

%
6

%
8

pts
 
7

%
6

%
1

pts
Retention
72

%
70

%
2

pts
 
71

%
77

%
(6
)
pts
New business
$
66

 
$
60

 
10

%
 
$
273

 
$
307

 
(11
)
%

7




Life & Group - Results of Operations
Periods ended December 31
Three Months
 
Twelve Months
(In millions)
2019
 
2018
 
2019
 
2018
Net earned premiums
$
130

 
$
132

 
$
520

 
$
530

Net investment income
204

 
203

 
820

 
801

Other revenues
—

 
2

 
—

 
2

Total operating revenues
334

 
337

 
1,340

 
1,333

Insurance claims and policyholders' benefits
323

 
311

 
1,416

 
1,218

Other insurance related expenses
28

 
31

 
115

 
122

Other expenses
3

 
2

 
8

 
7

Total claims, benefits and expenses
354

 
344

 
1,539

 
1,347

Core income (loss) before income tax
(20
)
 
(7
)
 
(199
)
 
(14
)
Income tax (expense) benefit on core income (loss)
16

 
14

 
90

 
57

Core income (loss)
$
(4
)
 
$
7

 
$
(109
)
 
$
43



8




Corporate & Other - Results of Operations
Periods ended December 31
Three Months
 
Twelve Months
(In millions)
2019
 
2018
 
2019
 
2018
Net earned premiums
$
1

 
—

 
$
(1
)
 
$
(1
)
Net investment income
5

 
4

 
25

 
20

Other revenues
—

 
16

 
1

 
17

Total operating revenues
6

 
20

 
25

 
36

Insurance claims and policyholders' benefits
58

 
36

 
18

 
51

Other insurance related expenses
—

 
—

 
(4
)
 
(2
)
Other expenses
35

 
39

 
139

 
191

Total claims, benefits and expenses
93

 
75

 
153

 
240

Core income (loss) before income tax
(87
)
 
(55
)
 
(128
)
 
(204
)
Income tax (expense) benefit on core income (loss)
19

 
9

 
26

 
39

Core income (loss)
$
(68
)
 
$
(46
)
 
$
(102
)
 
$
(165
)


9




Investment Summary - Consolidated
 
December 31, 2019

September 30, 2019

December 31, 2018
(In millions)
Carrying Value
 
Net Unrealized Gains (Losses)
 
Carrying Value
 
Net Unrealized Gains (Losses)
 
Carrying Value
 
Net Unrealized Gains (Losses)
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
22,069

 
$
2,260

 
$
22,032

 
$
2,221

 
$
19,164

 
$
396

States, municipalities and political subdivisions:
 
 
 
 
 
 
 
 
 
 
 
Tax-exempt
7,804

 
1,155

 
7,870

 
1,181

 
7,874

 
733

Taxable
2,848

 
404

 
2,925

 
460

 
2,874

 
334

Total states, municipalities and political subdivisions
10,652

 
1,559

 
10,795

 
1,641

 
10,748

 
1,067

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
RMBS
4,519

 
132

 
4,874

 
156

 
4,826

 
11

CMBS
2,346

 
81

 
2,180

 
114

 
2,196

 
(4
)
Other ABS
1,962

 
37

 
1,926

 
42

 
1,962

 
(13
)
Total asset-backed
8,827

 
250

 
8,980

 
312

 
8,984

 
(6
)
U.S. Treasury and obligations of government-sponsored enterprises
145

 
(1
)
 
131

 
7

 
159

 
3

Foreign government
504

 
13

 
511

 
20

 
481

 
1

Redeemable preferred stock
10

 
—

 
10

 
—

 
10

 
—

Total fixed maturity securities
42,207

 
4,081

 
42,459

 
4,201

 
39,546

 
1,461

Equities:
 
 
 
 
 
 
 
 
 
 
 
Common stock
142

 
—

 
120

 
—

 
148

 
—

Non-redeemable preferred stock
723

 
—

 
721

 
—

 
632

 
—

Total equities
865

 
—

 
841


—


780


—

Limited partnership investments
1,752

 
—

 
1,758

 
—

 
1,982

 
—

Other invested assets
65

 
—

 
60

 
—

 
53

 
—

Mortgage loans
994

 
—

 
923

 
—

 
839

 
—

Short term investments
1,861

 
—

 
1,494

 
—

 
1,286

 
(1
)
Total investments
$
47,744


$
4,081


$
47,535


$
4,201


$
44,486


$
1,460

 
 
 
 
 
 
 
 
 
 
 
 
Net receivable/(payable) on investment activity
$
37

 
 
 
$
(16
)
 
 
 
$
176

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective duration (in years)
6.0

 
 
 
6.0

 
 
 
6.0

 
 
Weighted average rating
A

 
 
 
A

 
 
 
 A

 
 
RMBS - Residential mortgage-backed securities
CMBS - Commercial mortgage-backed securities
Other ABS - Other asset-backed securities

10




Investment Summary - Property & Casualty and Corporate & Other
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
(In millions)
Carrying Value
 
Net Unrealized Gains (Losses)
 
Carrying Value
 
Net Unrealized Gains (Losses)
 
Carrying Value
 
Net Unrealized Gains (Losses)
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
13,925

 
$
738

 
$
13,977

 
$
709

 
$
12,844

 
$
(180
)
States, municipalities and political subdivisions:
 
 
 
 
 
 
 
 
 
 
 
Tax-exempt
646

 
37

 
647

 
39

 
661

 
25

Taxable
1,077

 
71

 
1,131

 
84

 
1,198

 
68

Total states, municipalities and political subdivisions
1,723

 
108

 
1,778

 
123

 
1,859

 
93

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
RMBS
4,441

 
128

 
4,767

 
150

 
4,671

 
8

CMBS
2,264

 
77

 
2,088

 
108

 
2,093

 
(4
)
Other ABS
1,842

 
29

 
1,812

 
34

 
1,840

 
(11
)
Total asset-backed
8,547

 
234

 
8,667

 
292

 
8,604

 
(7
)
U.S. Treasury and obligations of government-sponsored enterprises
143

 
(1
)
 
130

 
7

 
133

 
3

Foreign government
498

 
12

 
505

 
19

 
481

 
1

Redeemable preferred stock
5

 
—

 
5

 
—

 
5

 
—

Total fixed maturity securities
24,841

 
1,091

 
25,062

 
1,150

 
23,926

 
(90
)
Equities:
 
 
 
 
 
 
 
 
 
 
 
Common stock
142

 
—

 
120

 
—

 
148

 
—

Non-redeemable preferred stock
181

 
—

 
179

 
—

 
164

 
—

Total equities
323

 
—

 
299

 
—

 
312

 
—

Limited partnership investments
1,752

 
—

 
1,758

 
—

 
1,982

 
—

Other invested assets
65

 
—

 
60

 
—

 
53

 
—

Mortgage loans
715

 
—

 
662

 
—

 
631

 
—

Short term investments
1,774

 
—

 
1,459

 
—

 
1,232

 
(1
)
Total investments
$
29,470


$
1,091


$
29,300


$
1,150


$
28,136


$
(91
)
 
 
 
 
 
 
 
 
 
 
 
 
Net receivable/(payable) on investment activity
$
17

 
 
 
$
(45
)
 
 
 
$
106

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective duration (in years)
4.1

 
 
 
4.1

 
 
 
4.4

 
 
Weighted average rating
A-

 
 
 
A-

 
 
 
 A-

 
 

11




Investment Summary - Life & Group
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
(In millions)
Carrying Value
 
Net Unrealized Gains (Losses)
 
Carrying Value
 
Net Unrealized Gains (Losses)
 
Carrying Value
 
Net Unrealized Gains (Losses)
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
8,144

 
$
1,522

 
$
8,055

 
$
1,512

 
$
6,320

 
$
576

States, municipalities and political subdivisions:
 
 
 
 
 
 
 
 
 
 
 
Tax-exempt
7,158

 
1,118

 
7,223

 
1,142

 
7,213

 
708

Taxable
1,771

 
333

 
1,794

 
376

 
1,676

 
266

Total states, municipalities and political subdivisions
8,929

 
1,451

 
9,017

 
1,518

 
8,889

 
974

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
RMBS
78

 
4

 
107

 
6

 
155

 
3

CMBS
82

 
4

 
92

 
6

 
103

 
—

Other ABS
120

 
8

 
114

 
8

 
122

 
(2
)
Total asset-backed
280

 
16

 
313

 
20

 
380

 
1

U.S. Treasury and obligations of government-sponsored enterprises
2

 
—

 
1

 
—

 
26

 
—

Foreign government
6

 
1

 
6

 
1

 
—

 
—

Redeemable preferred stock
5

 
—

 
5

 
—

 
5

 
—

Total fixed maturity securities
17,366

 
2,990

 
17,397

 
3,051

 
15,620

 
1,551

Equities:
 
 
 
 
 
 
 
 
 
 
 
Common stock
—

 
—

 
—

 
—

 
—

 
—

Non-redeemable preferred stock
542

 
—

 
542

 
—

 
468

 
—

Total equities
542


—


542


—


468


—

Limited partnership investments
—

 
—

 
—

 
—

 
—

 
—

Other invested assets
—

 
—

 
—

 
—

 
—

 
—

Mortgage loans
279

 
—

 
261

 
—

 
208

 
—

Short term investments
87

 
—

 
35

 
—

 
54

 
—

Total investments
$
18,274


$
2,990


$
18,235


$
3,051


$
16,350


$
1,551

 
 
 
 
 
 
 
 
 
 
 
 
Net receivable/(payable) on investment activity
$
20

 
 
 
$
29

 
 
 
$
70

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective duration (in years)
8.9

 
 
 
9.0

 
 
 
8.4

 
 
Weighted average rating
A

 
 
 
A

 
 
 
 A

 
 

12




Investments - Fixed Maturity Securities by Credit Rating  
December 31, 2019
U.S. Government, Government agencies and Government-sponsored enterprises
 
AAA
 
AA
 
A
 
BBB
 
Non-investment grade
 
Total
(In millions)
Fair Value
 
Net Unrealized Gains (Losses)
 
Fair Value
 
Net Unrealized Gains (Losses)
 
Fair Value
 
Net Unrealized Gains (Losses)
 
Fair Value
 
Net Unrealized Gains (Losses)
 
Fair Value
 
Net Unrealized Gains (Losses)
 
Fair Value
 
Net Unrealized Gains (Losses)
 
Fair Value
 
Net Unrealized Gains (Losses)
Corporate and other bonds
$
—

 
$
—

 
$
47

 
$
1

 
$
541

 
$
43

 
$
4,708

 
$
601

 
$
15,083

 
$
1,554

 
$
1,690

 
$
61

 
$
22,069

 
$
2,260

States, municipalities and political subdivisions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax-exempt
—

 
—

 
1,920

 
291

 
3,291

 
486

 
2,217

 
284

 
360

 
93

 
16

 
1

 
7,804

 
1,155

Taxable
—

 
—

 
515

 
35

 
1,630

 
226

 
682

 
142

 
21

 
1

 
—

 
—

 
2,848

 
404

Total states, municipalities and political subdivisions
—

 
—

 
2,435

 
326

 
4,921

 
712

 
2,899

 
426

 
381

 
94

 
16

 
1

 
10,652

 
1,559

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RMBS
3,954

 
97

 
218

 
1

 
18

 
1

 
52

 
—

 
11

 
1

 
266

 
32

 
4,519

 
132

CMBS
37

 
—

 
327

 
17

 
810

 
38

 
290

 
7

 
616

 
14

 
266

 
5

 
2,346

 
81

Other ABS
—

 
(1
)
 
80

 
1

 
114

 
1

 
1,041

 
14

 
712

 
20

 
15

 
2

 
1,962

 
37

Total asset-backed
3,991

 
96

 
625

 
19

 
942

 
40

 
1,383

 
21

 
1,339

 
35

 
547

 
39

 
8,827

 
250

U.S. Treasury and obligations of government-sponsored enterprises
145

 
(1
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
145

 
(1
)
Foreign government
—

 
—

 
147

 
3

 
259

 
6

 
72

 
3

 
26

 
1

 
—

 
—

 
504

 
13

Redeemable preferred stock
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
10

 
—

 
—

 
—

 
10

 
—

Total fixed maturity securities
$
4,136

 
$
95

 
$
3,254

 
$
349

 
$
6,663

 
$
801

 
$
9,062

 
$
1,051

 
$
16,839

 
$
1,684

 
$
2,253

 
$
101

 
$
42,207

 
$
4,081

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of total fixed maturity securities
10
%
 
 
 
8
%
 
 
 
16
%
 
 
 
21
%
 
 
 
40
%
 
 
 
5
%
 
 
 
100
%
 
 

13




Components of Net Investment Income
 
Consolidated
 
Periods ended December 31
Three Months
 
Twelve Months
 
(In millions)
2019
 
2018
 
2019
 
2018
 
    Taxable fixed income securities
$
387

 
$
379

 
$
1,538

 
$
1,449

 
    Tax-exempt fixed income securities
77

 
86

 
318

 
384

 
Total fixed income securities
464

 
465

 
1,856

 
1,833

 
Limited partnership and common stock investments
69

 
(138
)
 
226

 
(42
)
 
Other, net of investment expense
12

 
7

 
36

 
26

 
Pretax net investment income
$
545

 
$
334

 
$
2,118

 
$
1,817

 
Fixed income securities, after tax
$
380

 
$
382

 
$
1,520

 
$
1,512

 
Net investment income, after tax
443

 
279

 
1,727

 
1,500

 
 
 
 
 
 
 
 
 
 
Effective income yield for fixed income securities, pretax
4.7

%
4.8

%
4.8

%
4.7

%
Effective income yield for fixed income securities, after tax
3.9

 
3.9

 
3.9

 
3.9

 
Limited partnership and common stock return
3.7

 
(5.7
)
 
11.7

 
(1.9
)
 
 
Property & Casualty and Corporate & Other
 
Periods ended December 31
Three Months
 
Twelve Months
 
(In millions)
2019
 
2018
 
2019
 
2018
 
    Taxable fixed income securities
$
255

 
$
256

 
$
1,010

 
$
977

 
    Tax-exempt fixed income securities
5

 
6

 
22

 
50

 
Total fixed income securities
260

 
262

 
1,032

 
1,027

 
Limited partnership and common stock investments
69

 
(138
)
 
226

 
(42
)
 
Other, net of investment expense
12

 
7

 
40

 
31

 
Pretax net investment income
$
341

 
$
131

 
$
1,298

 
$
1,016

 
Fixed income securities, after tax
$
206

 
$
209

 
$
819

 
$
821

 
Net investment income, after tax
270

 
105

 
1,030

 
812

 
 
 
 
 
 
 
 
 
 
Effective income yield for fixed income securities, pretax
4.3

%
4.3

%
4.3

%
4.2

%
Effective income yield for fixed income securities, after tax
3.4

 
3.4

 
3.4

 
3.4

 
 
 
 
 
 
 
 
 
 
 
Life & Group
 
Periods ended December 31
Three Months
 
Twelve Months
 
(In millions)
2019
 
2018
 
2019
 
2018
 
    Taxable fixed income securities
$
132

 
$
123

 
$
528

 
$
472

 
    Tax-exempt fixed income securities
72

 
80

 
296

 
334

 
Total fixed income securities
204

 
203

 
824

 
806

 
Limited partnership and common stock investments
—

 
—

 
—

 
—

 
Other, net of investment expense
—

 
—

 
(4
)
 
(5
)
 
Pretax net investment income
$
204

 
$
203

 
$
820

 
$
801

 
Fixed income securities, after tax
$
174

 
$
173

 
$
701

 
$
691

 
Net investment income, after tax
173

 
174

 
697

 
688

 
 
 
 
 
 
 
 
 
 
Effective income yield for fixed income securities, pretax
5.5

%
5.6

%
5.6

%
5.6

%
Effective income yield for fixed income securities, after tax
4.7

 
4.8

 
4.7

 
4.8

 
 
 
 
 
 
 
 
 
 

14




Claim & Claim Adjustment Expense Reserve Rollforward
Three months ended December 31, 2019
(In millions)

Specialty
 

Commercial
 
International
 
P&C Operations
 
Life & Group
 
Corporate & Other
 
Total Operations
Claim & claim adjustment expense reserves, beginning of period
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross
$
5,285

 
$
8,610

 
$
1,802

 
$
15,697

 
$
3,707

 
$
2,192

 
$
21,596

Ceded
580

 
705

 
240

 
1,525

 
167

 
2,010

 
3,702

Net
4,705

 
7,905


1,562


14,172


3,540


182


17,894

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net incurred claim & claim adjustment expenses
397

 
548

 
153

 
1,098

 
268

 
1

 
1,367

Net claim & claim adjustment expense payments
(425
)
 
(605
)
 
(143
)
 
(1,173
)
 
(249
)
 
(8
)
 
(1,430
)
Foreign currency translation adjustment and other
(1
)
 
1

 
56

 
56

 
(2
)
 
—

 
54

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Claim & claim adjustment expense reserves, end of period
 
 
 
 
 
 
 
 
 
 
 
 
 
Net
4,676

 
7,849

 
1,628

 
14,153

 
3,557

 
175

 
17,885

Ceded
562

 
807

 
248

 
1,617

 
159

 
2,059

 
3,835

Gross
$
5,238

 
$
8,656

 
$
1,876

 
$
15,770

 
$
3,716

 
$
2,234

 
$
21,720

Twelve months ended December 31, 2019
(In millions)

Specialty
 
 
Commercial
 
International
 
P&C Operations
 
Life & Group
 
Corporate & Other
 
Total Operations
Claim & claim adjustment expense reserves, beginning of period
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross
$
5,465

 
$
8,743

 
$
1,750

 
$
15,958

 
$
3,601

 
$
2,425

 
$
21,984

Ceded
634

 
745

 
226

 
1,605

 
181

 
2,233

 
4,019

Net
4,831

 
7,998

 
1,524

 
14,353

 
3,420

 
192


17,965

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net incurred claim & claim adjustment expenses
1,595

 
2,129

 
625

 
4,349

 
1,060

 
4

 
5,413

Net claim & claim adjustment expense payments
(1,750
)
 
(2,276
)
 
(552
)
 
(4,578
)
 
(975
)
 
(23
)
 
(5,576
)
Foreign currency translation adjustment and other
—

 
(2
)
 
31

 
29

 
52

 
2

 
83

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Claim & claim adjustment expense reserves, end of period
 
 
 
 
 
 
 
 
 
 
 
 
 
Net
4,676

 
7,849

 
1,628

 
14,153

 
3,557

 
175

 
17,885

Ceded
562

 
807

 
248

 
1,617

 
159

 
2,059

 
3,835

Gross
$
5,238

 
$
8,656

 
$
1,876

 
$
15,770

 
$
3,716

 
$
2,234


$
21,720


15




Life & Group Policyholder Reserves
December 31, 2019
 
 
 
 
 
(In millions)
Claim and claim adjustment expenses
 
Future policy benefits
 
Total
Long term care
$
2,863

 
$
9,470

 
$
12,333

Structured settlement annuities
515

 
—

 
515

Other
12

 
—

 
12

Total
3,390

 
9,470

 
12,860

Shadow adjustments
167

 
2,615

 
2,782

Ceded reserves
159

 
226

 
385

Total gross reserves
$
3,716

 
$
12,311

 
$
16,027

December 31, 2018
 
 
 
 
 
(In millions)
Claim and claim adjustment expenses
 
Future policy benefits
 
Total
Long term care
$
2,761

 
$
9,113

 
$
11,874

Structured settlement annuities
530

 
—

 
530

Other
14

 
—

 
14

Total
3,305

 
9,113

 
12,418

Shadow adjustments
115

 
1,250

 
1,365

Ceded reserves
181

 
234

 
415

Total gross reserves
$
3,601

 
$
10,597

 
$
14,198


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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.
•
Life & Group segment primarily includes the results of long term care businesses that are in run-off.
•
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, 2019 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. In addition, management also utilizes renewal premium change, rate, retention and new business in evaluating operating trends. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes. Rate represents the average change in price on policies that renew excluding exposure change. For certain products within Small Business, where quantifiable, rate includes the influence of new business as well. Exposure represents the measure of risk used in the pricing of the insurance product. Retention represents the percentage of premium dollars renewed in comparison to the expiring premium dollars from policies available to renew. Rate, renewal premium change and retention presented for the prior year is updated to reflect subsequent activity on policies written in the period. New business represents premiums from policies written with new customers and additional policies written with existing customers.
•
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.

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•
Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of i) net investment gains or losses, ii) income or loss from discontinued operations, iii) any cumulative effects of changes in accounting guidance and iv) deferred tax asset and liability remeasurement as a result of an enacted U.S. Federal tax rate change. 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 consistent with key drivers of underwriting performance, and are therefore not considered an indication of trends in insurance 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 mostly 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.
•
Net investment income from fixed income securities, as presented, includes both fixed maturity securities and non-redeemable preferred stock.
•
Certain immaterial differences are due to rounding.
•
N/M = Not Meaningful


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