Business Segments

3 Months Ended

Mar. 31, 2013

Segment Reporting [Abstract]

Business Segments

Note K. Business Segments

The Company's core property and casualty commercial insurance operations are reported in three business segments: CNA Specialty, CNA Commercial and Hardy. 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, 2012. The Company manages most of its assets on a legal entity basis, while segment operations are generally conducted across legal entities. As such, only insurance and reinsurance receivables, insurance reserves, deferred acquisition costs and goodwill are readily identifiable for all individual segments. Distinct investment portfolios are not maintained for every individual segment; accordingly, allocation of assets to each segment is not performed. Therefore, a significant portion of 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) the after-tax effects of 1) net realized investment gains or losses and 2) 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 Company's results of operations and selected balance sheet items by segment are presented in the following tables.

Three months ended March 31, 2013	CNA Specialty			CNA Commercial			Hardy			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)																Eliminations			Total
Operating revenues
Net earned premiums	$	723		$	837		$	64		$	141		$	—		$	(1	)	$	1,764
Net investment income	170			250			1			204			8			—			633
Other revenues	60			10			1			4			3			—			78
Total operating revenues	953			1,097			66			349			11			(1		)	2,475
Claims, Benefits and Expenses
Net incurred claims and benefits	465			600			31			325			4			—			1,425
Policyholders’ dividends	1			2			—			1			—			—			4
Amortization of deferred acquisition costs	150			149			21			8			—			—			328
Other insurance related expenses	71			143			16			33			—			(1		)	262
Other expenses	54			9			7			5			46			—			121
Total claims, benefits and expenses	741			903			75			372			50			(1		)	2,140
Operating income (loss) before income tax	212			194			(9		)	(23		)	(39		)	—			335
Income tax (expense) benefit on operating income (loss)	(72		)	(69		)	1			23			13			—			(104		)
Net operating income (loss)	140			125			(8		)	—			(26		)	—			231
Net realized investment gains (losses)	3			4			1			14			6			—			28
Income tax (expense) benefit on net realized investment gains (losses)	(1		)	(1		)	—			(5		)	(2		)	—			(9		)
Net realized investment gains (losses), after-tax	2			3			1			9			4			—			19
Net income (loss)	$	142		$	128		$	(7	)	$	9		$	(22	)	$	—		$	250

March 31, 2013
(In millions)
Reinsurance receivables	$	662	$	1,170	$	251	$	1,273	$	2,781	$	—		$	6,137
Insurance receivables	$	707	$	1,168	$	181	$	13	$	3	$	—		$	2,072
Deferred acquisition costs	$	313	$	287	$	41	$	—	$	—	$	—		$	641
Goodwill	$	117	$	—	$	34	$	—	$	—	$	—		$	151
Insurance reserves
Claim and claim adjustment expenses	$	6,807	$	11,105	$	470	$	3,031	$	3,098	$	—		$	24,511
Unearned premiums	1,770		1,629		218		143		—		(1		)	3,759
Future policy benefits	—		—		—		11,469		—		—			11,469
Policyholders’ funds	9		14		—		131		—		—			154

Three months ended March 31, 2012	CNA Specialty			CNA Commercial			Hardy	Life & Group Non-Core			Corporate & Other Non-Core
(In millions)														Eliminations		Total
Operating revenues
Net earned premiums	$	706		$	803			$	141		$	(1	)	$	—	$	1,649
Net investment income	175			265				198			10			—		648
Other revenues	56			9				(2		)	5			—		68
Total operating revenues	937			1,077				337			14			—		2,365
Claims, Benefits and Expenses
Net incurred claims and benefits	468			567				336			7			—		1,378
Policyholders’ dividends	(2		)	3				2			—			—		3
Amortization of deferred acquisition costs	148			139				8			—			—		295
Other insurance related expenses	72			144				35			(1		)	—		250
Other expenses	50			7				6			48			—		111
Total claims, benefits and expenses	736			860				387			54			—		2,037
Operating income (loss) before income tax	201			217				(50		)	(40		)	—		328
Income tax (expense) benefit on operating income (loss)	(69		)	(78		)		31			14			—		(102		)
Net operating income (loss)	132			139				(19		)	(26		)	—		226
Net realized investment gains (losses)	8			11				13			4			—		36
Income tax (expense) benefit on net realized investment gains (losses)	(2		)	(4		)		(5		)	(1		)	—		(12		)
Net realized investment gains (losses), after-tax	6			7				8			3			—		24
Net income (loss)	$	138		$	146			$	(11	)	$	(23	)	$	—	$	250

December 31, 2012
(In millions)
Reinsurance receivables	$	665	$	1,155	$	294	$	1,273	$	2,844	$	—	$	6,231
Insurance receivables	$	673	$	1,116	$	181	$	9	$	4	$	—	$	1,983
Deferred acquisition costs	$	300	$	269	$	29	$	—	$	—	$	—	$	598
Goodwill	$	117	$	—	$	37	$	—	$	—	$	—	$	154
Insurance reserves
Claim and claim adjustment expenses	$	6,748	$	11,326	$	521	$	3,006	$	3,162	$	—	$	24,763
Unearned premiums	1,685		1,569		222		134		—		—		3,610
Future policy benefits	—		—		—		11,475		—		—		11,475
Policyholders’ funds	8		15		—		134		—		—		157

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.

Revenues by Line of Business

Three months ended March 31
(In millions)	2013			2012
CNA Specialty
International	$	59		$	57
Professional & Management Liability	700			694
Surety	116			119
Warranty & Alternative Risks	81			75
CNA Specialty revenues	956			945
CNA Commercial
Commercial Insurance	826			835
International	93			91
Small Business	182			162
CNA Commercial revenues	1,101			1,088
Hardy revenues	67
Life & Group Non-Core
Health	298			291
Life & Annuity	61			60
Other	4			(1		)
Life & Group Non-Core revenues	363			350
Corporate & Other Non-Core revenues	17			18
Eliminations	(1		)	—
Total revenues	$	2,503		$	2,401