Business Segments

9 Months Ended

Sep. 30, 2011

Segment Reporting [Abstract]

Business Segments

Business Segments

The Company's core property and casualty commercial insurance operations are reported in two business segments: CNA Specialty and CNA Commercial. The Company's non-core operations are managed in two segments: Life & Group Non-Core and Corporate & Other Non-Core.

The accounting policies of the segments are the same as those described in Note A of the Consolidated Financial Statements within CNAF's Annual Report on Form 10-K for the year ended December 31, 2010. The Company manages most of its assets on a legal entity basis, while segment operations are conducted across legal entities. As such, only insurance and reinsurance receivables, insurance reserves and deferred acquisition costs are readily identifiable by individual segment. Distinct investment portfolios are not maintained for each individual segment; accordingly, allocation of assets to each segment is not performed. Therefore, net investment income and realized investment gains or losses are allocated primarily based on each segment's net carried insurance reserves, as adjusted. All significant intrasegment income and expense has been eliminated. Income taxes have been allocated on the basis of the taxable income of the segments.

In the following tables, certain financial measures are presented to provide information used by management to monitor the Company's operating performance. Management utilizes these financial measures to monitor the Company's insurance operations and investment portfolio. Net operating 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 interest rate, market and credit risk. Based on such analyses, the Company may recognize an OTTI loss on an investment security in accordance with its policy, or sell a security, which may produce realized gains and losses.

Net operating income (loss) is calculated by excluding from net income (loss) attributable to CNA the after-tax effects of 1) net realized investment gains or losses, 2) income or loss from discontinued operations and 3) any cumulative effects of changes in accounting guidance. The calculation of net operating income excludes net realized investment gains or losses because net realized investment gains or losses are largely discretionary, except for some losses related to OTTI, and 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.

The significant components of the Company's continuing operations and selected balance sheet items are presented in the following tables.

Three months ended
September 30, 2011	CNA Specialty			CNA Commercial			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)													Eliminations			Total
Operating revenues
Net earned premiums	$	741		$	848		$	142		$	2		$	(1	)	$	1,732
Net investment income	85			115			190			4			—			394
Other revenues	56			14			6			—			—			76
Total operating revenues	882			977			338			6			(1		)	2,202
Claims, Benefits and Expenses
Net incurred claims and benefits	485			583			332			(1		)	—			1,399
Policyholders’ dividends	(4		)	3			2			—			—			1
Amortization of deferred acquisition costs	170			181			5			—			—			356
Other insurance related expenses	51			106			36			1			(1		)	193
Other expenses	48			10			2			42			—			102
Total claims, benefits and expenses	750			883			377			42			(1		)	2,051
Operating income (loss) from continuing operations before income tax	132			94			(39		)	(36		)	—			151
Income tax (expense) benefit on operating income (loss)	(48		)	(47		)	25			11			—			(59		)
Net operating (income) loss, after-tax, attributable to noncontrolling interests	—			(1		)	—			—			—			(1		)
Net operating income (loss) from continuing operations attributable to CNA	84			46			(14		)	(25		)	—			91
Net realized investment losses, net of participating policyholders’ interests	(8		)	(15		)	(4		)	—			—			(27		)
Income tax benefit on net realized investment losses	3			5			1			1			—			10
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests	—			1			—			—			—			1
Net realized investment gains (losses) attributable to CNA	(5		)	(9		)	(3		)	1			—			(16		)
Net income (loss) from continuing operations attributable to CNA	$	79		$	37		$	(17	)	$	(24	)	$	—		$	75

Three months ended
September 30, 2010	CNA Specialty			CNA Commercial			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)													Eliminations			Total
Operating revenues
Net earned premiums	$	679		$	819		$	145		$	3		$	(1	)	$	1,645
Net investment income	148			216			182			35			—			581
Other revenues	57			15			4			(1		)	—			75
Total operating revenues	884			1,050			331			37			(1		)	2,301
Claims, Benefits and Expenses
Net incurred claims and benefits	393			578			354			12			—			1,337
Policyholders’ dividends	2			4			1			—			—			7
Amortization of deferred acquisition costs	162			183			6			—			—			351
Other insurance related expenses	45			104			41			9			(1		)	198
Other expenses	47			14			7			569			—			637
Total claims, benefits and expenses	649			883			409			590			(1		)	2,530
Operating income (loss) from continuing operations before income tax	235			167			(78		)	(553		)	—			(229		)
Income tax (expense) benefit on operating income (loss)	(80		)	(54		)	23			198			—			87
Net operating (income) loss, after-tax, attributable to noncontrolling interests	(11		)	(5		)	—			—			—			(16		)
Net operating income (loss) from continuing operations attributable to CNA	144			108			(55		)	(355		)	—			(158		)
Net realized investment gains, net of participating policyholders’ interests	15			21			20			6			—			62
Income tax expense on net realized investment gains	(6		)	(8		)	(7		)	(2		)	—			(23		)
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests	—			1			—			—			—			1
Net realized investment gains attributable to CNA	9			14			13			4			—			40
Net income (loss) from continuing operations attributable to CNA	$	153		$	122		$	(42	)	$	(351	)	$	—		$	(118	)

Nine months ended
September 30, 2011	CNA Specialty			CNA Commercial			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)													Eliminations			Total
Operating revenues
Net earned premiums	$	2,098		$	2,418		$	427		$	1		$	(2	)	$	4,942
Net investment income	371			569			567			24			—			1,531
Other revenues	164			40			6			4			—			214
Total operating revenues	2,633			3,027			1,000			29			(2		)	6,687
Claims, Benefits and Expenses
Net incurred claims and benefits	1,333			1,807			985			—			—			4,125
Policyholders’ dividends	(4		)	5			5			—			—			6
Amortization of deferred acquisition costs	495			539			17			—			—			1,051
Other insurance related expenses	147			291			108			4			(2		)	548
Other expenses	140			37			14			129			—			320
Total claims, benefits and expenses	2,111			2,679			1,129			133			(2		)	6,050
Operating income (loss) from continuing operations before income tax	522			348			(129		)	(104		)	—			637
Income tax (expense) benefit on operating income (loss)	(182		)	(129		)	78			34			—			(199		)
Net operating (income) loss, after-tax, attributable to noncontrolling interests	(12		)	(3		)	—			—			—			(15		)
Net operating income (loss) from continuing operations attributable to CNA	328			216			(51		)	(70		)	—			423
Net realized investment gains (losses), net of participating policyholders’ interests	7			13			(7		)	(12		)	—			1
Income tax (expense) benefit on net realized investment gains (losses)	(2		)	(4		)	2			5			—			1
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests	—			—			—			—			—			—
Net realized investment gains (losses) attributable to CNA	5			9			(5		)	(7		)	—			2
Net income (loss) from continuing operations attributable to CNA	$	333		$	225		$	(56	)	$	(77	)	$	—		$	425

September 30, 2011
(In millions)
Reinsurance receivables	$	874	$	1,850	$	1,411	$	2,687	$	—		$	6,822
Insurance receivables	$	650	$	1,161	$	8	$	9	$	—		$	1,828
Deferred acquisition costs	$	351	$	338	$	94	$	—	$	—		$	783
Insurance reserves
Claim and claim adjustment expenses	$	7,000	$	12,116	$	2,748	$	3,167	$	—		$	25,031
Unearned premiums	1,639		1,604		144		—		(1		)	3,386
Future policy benefits	—		—		9,258		—		—			9,258
Policyholders’ funds	16		10		150		—		—			176

Nine months ended
September 30, 2010	CNA Specialty			CNA Commercial			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)													Eliminations			Total
Operating revenues
Net earned premiums	$	1,998		$	2,432		$	436		$	5		$	(3	)	$	4,868
Net investment income	420			621			531			120			—			1,692
Other revenues	162			49			10			5			—			226
Total operating revenues	2,580			3,102			977			130			(3		)	6,786
Claims, Benefits and Expenses
Net incurred claims and benefits	1,115			1,668			949			48			—			3,780
Policyholders’ dividends	6			11			2			—			—			19
Amortization of deferred acquisition costs	471			552			15			—			—			1,038
Other insurance related expenses	139			318			137			10			(3		)	601
Other expenses	141			42			13			641			—			837
Total claims, benefits and expenses	1,872			2,591			1,116			699			(3		)	6,275
Operating income (loss) from continuing operations before income tax	708			511			(139		)	(569		)	—			511
Income tax (expense) benefit on operating income (loss)	(238		)	(165		)	67			204			—			(132		)
Net operating (income) loss, after-tax, attributable to noncontrolling interests	(30		)	(15		)	—			—			—			(45		)
Net operating income (loss) from continuing operations attributable to CNA	440			331			(72		)	(365		)	—			334
Net realized investment gains, net of participating policyholders’ interests	60			30			15			20			—			125
Income tax expense on net realized investment gains	(21		)	(17		)	(7		)	(6		)	—			(51		)
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests	—			1			—			—			—			1
Net realized investment gains attributable to CNA	39			14			8			14			—			75
Net income (loss) from continuing operations attributable to CNA	$	479		$	345		$	(64	)	$	(351	)	$	—		$	409

December 31, 2010
(In millions)
Reinsurance receivables	$	906	$	1,973	$	1,502	$	2,823	$	—	$	7,204
Insurance receivables	$	654	$	1,050	$	9	$	4	$	—	$	1,717
Deferred acquisition costs	$	330	$	315	$	434	$	—	$	—	$	1,079
Insurance reserves
Claim and claim adjustment expenses	$	6,793	$	12,522	$	2,739	$	3,442	$	—	$	25,496
Unearned premiums	1,543		1,526		132		2		—		3,203
Future policy benefits	—		—		8,718		—		—		8,718
Policyholders’ funds	16		13		144		—		—		173

The following table provides revenue by line of business for each reportable segment. Revenues are comprised of operating revenues and net realized investment gains and losses, net of participating policyholders’ interests.

Revenues by Line of Business

Periods ended September 30	Three Months						Nine Months
(In millions)	2011			2010			2011			2010
CNA Specialty
International	$	54		$	51		$	159		$	150
Professional & Management Liability	623			650			1,909			1,915
Surety	123			124			353			357
Warranty & Alternative Risks	74			74			219			218
CNA Specialty revenues	874			899			2,640			2,640
CNA Commercial
CNA Select Risk	65			69			203			195
Commercial Insurance	622			737			2,015			2,147
International	133			123			390			367
Small Business	142			142			432			423
CNA Commercial revenues	962			1,071			3,040			3,132
Life & Group Non-Core
Health	274			276			818			796
Life & Annuity	55			69			170			185
Other	5			6			5			11
Life & Group Non-Core revenues	334			351			993			992
Corporate & Other Non-Core revenues	6			43			17			150
Eliminations	(1		)	(1		)	(2		)	(3		)
Total revenues	$	2,175		$	2,363		$	6,688		$	6,911