Business Segments

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

Business Segments

Note J. 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, 2011, other than the accounting for deferred acquisition costs, as further discussed in Note A herein. 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 intersegment 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 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
June 30, 2012	CNA Specialty			CNA Commercial			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)													Eliminations			Total
Operating revenues
Net earned premiums	$	719		$	809		$	139		$	2		$	(1	)	$	1,668
Net investment income	112			151			201			6			—			470
Other revenues	57			11			16			2			—			86
Total operating revenues	888			971			356			10			(1		)	2,224
Claims, Benefits and Expenses
Net incurred claims and benefits	448			591			323			(20		)	—			1,342
Policyholders’ dividends	1			3			2			—			—			6
Amortization of deferred acquisition costs	154			147			8			—			—			309
Other insurance related expenses	77			135			36			1			(1		)	248
Other expenses	50			10			4			47			—			111
Total claims, benefits and expenses	730			886			373			28			(1		)	2,016
Operating income (loss) from continuing operations before income tax	158			85			(17		)	(18		)	—			208
Income tax (expense) benefit on operating income (loss)	(52		)	(28		)	20			4			—			(56		)
Net operating income (loss) from continuing operations attributable to CNA	106			57			3			(14		)	—			152
Net realized investment gains (losses), net of participating policyholders’ interests	8			13			4			(3		)	—			22
Income tax (expense) benefit on net realized investment gains (losses)	(2		)	(5		)	(1		)	—			—			(8		)
Net realized investment gains (losses) attributable to CNA	6			8			3			(3		)	—			14
Net income (loss) from continuing operations attributable to CNA	$	112		$	65		$	6		$	(17	)	$	—		$	166

Three months ended
June 30, 2011	CNA Specialty			CNA Commercial			Life & Group Non-Core			Corporate & Other Non-Core					Total
(In millions)													Eliminations
Operating revenues
Net earned premiums	$	688		$	768		$	141		$	(2	)	$	—	$	1,595
Net investment income	126			193			189			9			—		517
Other revenues	54			12			2			3			—		71
Total operating revenues	868			973			332			10			—		2,183
Claims, Benefits and Expenses
Net incurred claims and benefits	418			621			330			(6		)	—		1,363
Policyholders’ dividends	—			2			2			—			—		4
Amortization of deferred acquisition costs	138			142			6			—			—		286
Other insurance related expenses	77			144			34			2			—		257
Other expenses	52			11			6			43			—		112
Total claims, benefits and expenses	685			920			378			39			—		2,022
Operating income (loss) from continuing operations before income tax	183			53			(46		)	(29		)	—		161
Income tax (expense) benefit on operating income (loss)	(64		)	(16		)	27			11			—		(42		)
Net operating (income) loss, after-tax, attributable to noncontrolling interests	(4		)	(1		)	—			—			—		(5		)
Net operating income (loss) from continuing operations attributable to CNA	115			36			(19		)	(18		)	—		114
Net realized investment gains (losses), net of participating policyholders’ interests	7			11			1			(4		)	—		15
Income tax (expense) benefit on net realized investment gains (losses)	(2		)	(3		)	—			—			—		(5		)
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests	—			—			—			—			—		—
Net realized investment gains (losses) attributable to CNA	5			8			1			(4		)	—		10
Net income (loss) from continuing operations attributable to CNA	$	120		$	44		$	(18	)	$	(22	)	$	—	$	124

Six months ended
June 30, 2012	CNA Specialty			CNA Commercial			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)													Eliminations			Total
Operating revenues
Net earned premiums	$	1,425		$	1,612		$	280		$	1		$	(1	)	$	3,317
Net investment income	287			416			399			16			—			1,118
Other revenues	113			20			14			7			—			154
Total operating revenues	1,825			2,048			693			24			(1		)	4,589
Claims, Benefits and Expenses
Net incurred claims and benefits	916			1,158			659			(13		)	—			2,720
Policyholders’ dividends	(1		)	6			4			—			—			9
Amortization of deferred acquisition costs	302			286			16			—			—			604
Other insurance related expenses	149			279			71			—			(1		)	498
Other expenses	100			17			10			95			—			222
Total claims, benefits and expenses	1,466			1,746			760			82			(1		)	4,053
Operating income (loss) from continuing operations before income tax	359			302			(67		)	(58		)	—			536
Income tax (expense) benefit on operating income (loss)	(121		)	(106		)	51			18			—			(158		)
Net operating income (loss) from continuing operations attributable to CNA	238			196			(16		)	(40		)	—			378
Net realized investment gains (losses), net of participating policyholders’ interests	16			24			17			1			—			58
Income tax (expense) benefit on net realized investment gains (losses)	(4		)	(9		)	(6		)	(1		)	—			(20		)
Net realized investment gains (losses) attributable to CNA	12			15			11			—			—			38
Net income (loss) from continuing operations attributable to CNA	$	250		$	211		$	(5	)	$	(40	)	$	—		$	416

June 30, 2012
(In millions)
Reinsurance receivables	$	837	$	1,149	$	1,323	$	2,513	$	—		$	5,822
Insurance receivables	$	711	$	1,182	$	8	$	3	$	—		$	1,904
Deferred acquisition costs	$	308	$	276	$	—	$	—	$	—		$	584
Insurance reserves
Claim and claim adjustment expenses	$	6,925	$	11,316	$	2,901	$	2,865	$	—		$	24,007
Unearned premiums	1,708		1,626		145		—		(1		)	3,478
Future policy benefits	—		—		10,352		—		—			10,352
Policyholders’ funds	13		13		141		—		—			167

Six months ended
June 30, 2011	CNA Specialty			CNA Commercial			Life & Group Non-Core			Corporate & Other Non-Core						Total
(In millions)													Eliminations
Operating revenues
Net earned premiums	$	1,357		$	1,570		$	285		$	(1	)	$	(1	)	$	3,210
Net investment income	286			454			377			20			—			1,137
Other revenues	108			26			—			4			—			138
Total operating revenues	1,751			2,050			662			23			(1		)	4,485
Claims, Benefits and Expenses
Net incurred claims and benefits	848			1,224			653			1			—			2,726
Policyholders’ dividends	—			2			3			—			—			5
Amortization of deferred acquisition costs	281			290			12			—			—			583
Other insurance related expenses	141			259			72			3			(1		)	474
Other expenses	92			27			12			87			—			218
Total claims, benefits and expenses	1,362			1,802			752			91			(1		)	4,006
Operating income (loss) from continuing operations before income tax	389			248			(90		)	(68		)	—			479
Income tax (expense) benefit on operating income (loss)	(134		)	(81		)	53			23			—			(139		)
Net operating (income) loss, after-tax, attributable to noncontrolling interests	(12		)	(1		)	—			—			—			(13		)
Net operating income (loss) from continuing operations attributable to CNA	243			166			(37		)	(45		)	—			327
Net realized investment gains (losses), net of participating policyholders’ interests	15			28			(3		)	(12		)	—			28
Income tax (expense) benefit on net realized investment gains (losses)	(5		)	(9		)	1			4			—			(9		)
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests	—			(1		)	—			—			—			(1		)
Net realized investment gains (losses) attributable to CNA	10			18			(2		)	(8		)	—			18
Net income (loss) from continuing operations attributable to CNA	$	253		$	184		$	(39	)	$	(53	)	$	—		$	345

December 31, 2011
(In millions)
Reinsurance receivables	$	852	$	1,188	$	1,375	$	2,677	$	—	$	6,092
Insurance receivables	$	670	$	1,047	$	8	$	1	$	—	$	1,726
Deferred acquisition costs	$	300	$	252	$	—	$	—	$	—	$	552
Insurance reserves
Claim and claim adjustment expenses	$	6,840	$	11,509	$	2,825	$	3,129	$	—	$	24,303
Unearned premiums	1,629		1,480		141		—		—		3,250
Future policy benefits	—		—		9,810		—		—		9,810
Policyholders’ funds	15		10		166		—		—		191

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 June 30	Three Months					Six Months
(In millions)	2012			2011		2012			2011
CNA Specialty
International	$	53		$	54	$	110		$	105
Professional & Management Liability	645			626		1,339			1,286
Surety	121			119		240			230
Warranty & Alternative Risks	77			76		152			145
CNA Specialty revenues	896			875		1,841			1,766
CNA Commercial
CNA Select Risk	66			67		139			138
Commercial Insurance	670			641		1,432			1,393
International	90			130		181			257
Small Business	158			146		320			290
CNA Commercial revenues	984			984		2,072			2,078
Life & Group Non-Core
Health	287			274		578			544
Life & Annuity	57			59		117			115
Other	16			—		15			—
Life & Group Non-Core revenues	360			333		710			659
Corporate & Other Non-Core revenues	7			6		25			11
Eliminations	(1		)	—		(1		)	(1		)
Total revenues	$	2,246		$	2,198	$	4,647		$	4,513