[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware (State or other jurisdiction of incorporation or organization) | 36-6169860 (I.R.S. Employer Identification No.) |
333 S. Wabash Chicago, Illinois (Address of principal executive offices) | 60604 (Zip Code) |
Large accelerated filer [x] | Accelerated filer [ ] | Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [ ] |
Class | Outstanding at July 26, 2013 | |
Common Stock, Par value $2.50 | 269,698,289 |
Item Number | PART I. Financial Information | Page Number |
1. | ||
2. | ||
3. | ||
4. | ||
PART II. Other Information | ||
1. | ||
4. | ||
6. |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions, except per share data) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Revenues | |||||||||||||||
Net earned premiums | $ | 1,800 | $ | 1,668 | $ | 3,564 | $ | 3,317 | |||||||
Net investment income | 578 | 470 | 1,211 | 1,118 | |||||||||||
Net realized investment gains (losses): | |||||||||||||||
Other-than-temporary impairment losses | (16 | ) | (12 | ) | (34 | ) | (27 | ) | |||||||
Portion of other-than-temporary impairments recognized in Other comprehensive income (loss) | — | (11 | ) | — | (23 | ) | |||||||||
Net other-than-temporary impairment losses recognized in earnings | (16 | ) | (23 | ) | (34 | ) | (50 | ) | |||||||
Other net realized investment gains | 2 | 45 | 48 | 108 | |||||||||||
Net realized investment gains (losses) | (14 | ) | 22 | 14 | 58 | ||||||||||
Other revenues | 129 | 86 | 207 | 154 | |||||||||||
Total revenues | 2,493 | 2,246 | 4,996 | 4,647 | |||||||||||
Claims, Benefits and Expenses | |||||||||||||||
Insurance claims and policyholders’ benefits | 1,521 | 1,348 | 2,950 | 2,729 | |||||||||||
Amortization of deferred acquisition costs | 335 | 309 | 663 | 604 | |||||||||||
Other operating expenses | 320 | 316 | 661 | 635 | |||||||||||
Interest | 41 | 43 | 83 | 85 | |||||||||||
Total claims, benefits and expenses | 2,217 | 2,016 | 4,357 | 4,053 | |||||||||||
Income before income tax | 276 | 230 | 639 | 594 | |||||||||||
Income tax expense | (82 | ) | (64 | ) | (195 | ) | (178 | ) | |||||||
Net income | $ | 194 | $ | 166 | $ | 444 | $ | 416 | |||||||
Basic earnings per share | $ | 0.72 | $ | 0.62 | $ | 1.65 | $ | 1.55 | |||||||
Diluted earnings per share | $ | 0.72 | $ | 0.62 | $ | 1.64 | $ | 1.54 | |||||||
Dividends per share | $ | 0.20 | $ | 0.15 | $ | 0.40 | $ | 0.30 | |||||||
Weighted Average Outstanding Common Stock and Common Stock Equivalents | |||||||||||||||
Basic | 269.7 | 269.4 | 269.6 | 269.4 | |||||||||||
Diluted | 270.1 | 269.8 | 270.0 | 269.7 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Other Comprehensive Income (Loss), Net of Tax | |||||||||||||||
Changes in: | |||||||||||||||
Net unrealized gains (losses) on investments with other-than-temporary impairments | $ | (8 | ) | $ | (3 | ) | $ | 6 | $ | 37 | |||||
Net unrealized gains (losses) on other investments | (585 | ) | 120 | (647 | ) | 337 | |||||||||
Net unrealized gains (losses) on investments | (593 | ) | 117 | (641 | ) | 374 | |||||||||
Foreign currency translation adjustment | (13 | ) | (17 | ) | (74 | ) | 4 | ||||||||
Pension and postretirement benefits | 5 | 3 | 10 | 9 | |||||||||||
Other comprehensive income (loss), net of tax | (601 | ) | 103 | (705 | ) | 387 | |||||||||
Net income | 194 | 166 | 444 | 416 | |||||||||||
Total comprehensive income (loss) | $ | (407 | ) | $ | 269 | $ | (261 | ) | $ | 803 |
June 30, 2013 | December 31, 2012 | ||||||
(In millions, except share data) | |||||||
Assets | |||||||
Investments: | |||||||
Fixed maturity securities at fair value (amortized cost of $38,928 and $38,170) | $ | 41,431 | $ | 42,633 | |||
Equity securities at fair value (cost of $185 and $228) | 199 | 249 | |||||
Limited partnership investments | 2,665 | 2,462 | |||||
Other invested assets | 36 | 59 | |||||
Mortgage loans | 437 | 401 | |||||
Short term investments | 1,531 | 1,832 | |||||
Total investments | 46,299 | 47,636 | |||||
Cash | 121 | 156 | |||||
Reinsurance receivables (less allowance for uncollectible receivables of $71 and $73) | 5,970 | 6,158 | |||||
Insurance receivables (less allowance for uncollectible receivables of $94 and $101) | 2,133 | 1,882 | |||||
Accrued investment income | 446 | 434 | |||||
Deferred acquisition costs | 650 | 598 | |||||
Deferred income taxes | 315 | 93 | |||||
Property and equipment at cost (less accumulated depreciation of $379 and $404) | 327 | 326 | |||||
Goodwill | 152 | 154 | |||||
Other assets (includes $0 and $4 due from Loews Corporation) | 907 | 773 | |||||
Separate account business | 247 | 312 | |||||
Total assets | $ | 57,567 | $ | 58,522 | |||
Liabilities | |||||||
Insurance reserves: | |||||||
Claim and claim adjustment expenses | $ | 24,339 | $ | 24,763 | |||
Unearned premiums | 3,869 | 3,610 | |||||
Future policy benefits | 10,787 | 11,475 | |||||
Policyholders’ funds | 133 | 157 | |||||
Short term debt | 13 | 13 | |||||
Long term debt | 2,558 | 2,557 | |||||
Other liabilities (includes $65 and $0 due to Loews Corporation) | 3,677 | 3,321 | |||||
Separate account business | 247 | 312 | |||||
Total liabilities | 45,623 | 46,208 | |||||
Commitments and contingencies (Notes C, G and J) | |||||||
Stockholders' Equity | |||||||
Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 269,697,889 and 269,399,390 shares outstanding) | 683 | 683 | |||||
Additional paid-in capital | 2,140 | 2,146 | |||||
Retained earnings | 9,110 | 8,774 | |||||
Accumulated other comprehensive income | 126 | 831 | |||||
Treasury stock (3,342,354 and 3,640,853 shares), at cost | (91 | ) | (99 | ) | |||
Notes receivable for the issuance of common stock | (24 | ) | (21 | ) | |||
Total stockholders’ equity | 11,944 | 12,314 | |||||
Total liabilities and stockholders' equity | $ | 57,567 | $ | 58,522 |
Six months ended June 30 | |||||||
(In millions) | 2013 | 2012 | |||||
Cash Flows from Operating Activities | |||||||
Net income | $ | 444 | $ | 416 | |||
Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||
Loss on disposal of property and equipment | — | 1 | |||||
Deferred income tax expense | 122 | 81 | |||||
Trading portfolio activity | (7 | ) | (44 | ) | |||
Net realized investment gains | (14 | ) | (58 | ) | |||
Equity method investees | (151 | ) | (8 | ) | |||
Amortization of investments | (14 | ) | (33 | ) | |||
Depreciation and amortization | 58 | 39 | |||||
Changes in: | |||||||
Receivables, net | (83 | ) | 70 | ||||
Accrued investment income | (12 | ) | (10 | ) | |||
Deferred acquisition costs | (43 | ) | (17 | ) | |||
Insurance reserves | 198 | 121 | |||||
Other assets | (69 | ) | 43 | ||||
Other liabilities | 134 | 12 | |||||
Other, net | 6 | 5 | |||||
Total adjustments | 125 | 202 | |||||
Net cash flows provided by operating activities | $ | 569 | $ | 618 | |||
Cash Flows from Investing Activities | |||||||
Dispositions: | |||||||
Fixed maturity securities - sales | $ | 3,143 | $ | 3,303 | |||
Fixed maturity securities - maturities, calls and redemptions | 1,820 | 1,566 | |||||
Equity securities | 60 | 61 | |||||
Limited partnerships | 77 | 64 | |||||
Mortgage loans | 18 | 5 | |||||
Purchases: | |||||||
Fixed maturity securities | (5,656 | ) | (5,169 | ) | |||
Equity securities | (33 | ) | (27 | ) | |||
Limited partnerships | (103 | ) | (53 | ) | |||
Mortgage loans | (54 | ) | (109 | ) | |||
Change in other investments | — | 2 | |||||
Change in short term investments | 293 | (123 | ) | ||||
Purchases of property and equipment | (42 | ) | (42 | ) | |||
Other, net | 6 | 12 | |||||
Net cash flows used by investing activities | $ | (471 | ) | $ | (510 | ) |
Six months ended June 30 | |||||||
(In millions) | 2013 | 2012 | |||||
Cash Flows from Financing Activities | |||||||
Dividends paid to common stockholders | $ | (108 | ) | $ | (81 | ) | |
Stock options exercised | 1 | 1 | |||||
Other, net | (20 | ) | (3 | ) | |||
Net cash flows used by financing activities | $ | (127 | ) | $ | (83 | ) | |
Effect of foreign exchange rate changes on cash | $ | (6 | ) | $ | — | ||
Net change in cash | $ | (35 | ) | $ | 25 | ||
Cash, beginning of year | 156 | 75 | |||||
Cash, end of period | $ | 121 | $ | 100 |
Six months ended June 30 | |||||||
(In millions) | 2013 | 2012 | |||||
Common Stock | |||||||
Balance, beginning of period | $ | 683 | $ | 683 | |||
Balance, end of period | 683 | 683 | |||||
Additional Paid-in Capital | |||||||
Balance, beginning of period | 2,146 | 2,141 | |||||
Stock-based compensation | (6 | ) | — | ||||
Balance, end of period | 2,140 | 2,141 | |||||
Retained Earnings | |||||||
Balance, beginning of period | 8,774 | 8,308 | |||||
Dividends paid to common stockholders | (108 | ) | (81 | ) | |||
Net income | 444 | 416 | |||||
Balance, end of period | 9,110 | 8,643 | |||||
Accumulated Other Comprehensive Income | |||||||
Balance, beginning of period | 831 | 480 | |||||
Other comprehensive income (loss) | (705 | ) | 387 | ||||
Balance, end of period | 126 | 867 | |||||
Treasury Stock | |||||||
Balance, beginning of period | (99 | ) | (102 | ) | |||
Stock-based compensation | 8 | 3 | |||||
Balance, end of period | (91 | ) | (99 | ) | |||
Notes Receivable for the Issuance of Common Stock | |||||||
Balance, beginning of period | (21 | ) | (22 | ) | |||
(Increase) decrease in notes receivable for the issuance of common stock | (3 | ) | 1 | ||||
Balance, end of period | (24 | ) | (21 | ) | |||
Total Stockholders' Equity | $ | 11,944 | $ | 12,214 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Fixed maturity securities | $ | 498 | $ | 505 | $ | 997 | $ | 1,021 | |||||||
Short term investments | 1 | 2 | 2 | 3 | |||||||||||
Limited partnership investments | 79 | (35 | ) | 210 | 95 | ||||||||||
Equity securities | 3 | 2 | 6 | 6 | |||||||||||
Mortgage loans | 6 | 5 | 11 | 8 | |||||||||||
Trading portfolio (a) | 5 | 4 | 10 | 11 | |||||||||||
Other | — | 2 | 1 | 3 | |||||||||||
Gross investment income | 592 | 485 | 1,237 | 1,147 | |||||||||||
Investment expense | (14 | ) | (15 | ) | (26 | ) | (29 | ) | |||||||
Net investment income | $ | 578 | $ | 470 | $ | 1,211 | $ | 1,118 |
(a) | There were no net unrealized gains (losses) related to changes in fair value of trading securities still held included in net investment income for the three or six months ended June 30, 2013 or 2012. |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Net realized investment gains (losses): | |||||||||||||||
Fixed maturity securities: | |||||||||||||||
Gross realized gains | $ | 37 | $ | 49 | $ | 81 | $ | 118 | |||||||
Gross realized losses | (42 | ) | (32 | ) | (54 | ) | (71 | ) | |||||||
Net realized investment gains (losses) on fixed maturity securities | (5 | ) | 17 | 27 | 47 | ||||||||||
Equity securities: | |||||||||||||||
Gross realized gains | 5 | 2 | 7 | 5 | |||||||||||
Gross realized losses | (7 | ) | (2 | ) | (22 | ) | (4 | ) | |||||||
Net realized investment gains (losses) on equity securities | (2 | ) | — | (15 | ) | 1 | |||||||||
Derivatives | (5 | ) | 1 | (3 | ) | — | |||||||||
Short term investments and other | (2 | ) | 4 | 5 | 10 | ||||||||||
Net realized investment gains (losses) | $ | (14 | ) | $ | 22 | $ | 14 | $ | 58 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Fixed maturity securities available-for-sale: | |||||||||||||||
Corporate and other bonds | $ | 5 | $ | 6 | $ | 8 | $ | 16 | |||||||
Asset-backed: | |||||||||||||||
Residential mortgage-backed | 3 | 15 | 3 | 29 | |||||||||||
Other asset-backed | 1 | — | 1 | — | |||||||||||
Total asset-backed | 4 | 15 | 4 | 29 | |||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | — | — | — | 1 | |||||||||||
Total fixed maturity securities available-for-sale | 9 | 21 | 12 | 46 | |||||||||||
Equity securities available-for-sale: | |||||||||||||||
Common stock | 2 | 2 | 2 | 4 | |||||||||||
Preferred stock | 5 | — | 20 | — | |||||||||||
Total equity securities available-for-sale | 7 | 2 | 22 | 4 | |||||||||||
Net OTTI losses recognized in earnings | $ | 16 | $ | 23 | $ | 34 | $ | 50 |
June 30, 2013 | Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Unrealized OTTI Losses (Gains) | ||||||||||||||
(In millions) | |||||||||||||||||||
Fixed maturity securities available-for-sale: | |||||||||||||||||||
Corporate and other bonds | $ | 20,079 | $ | 1,826 | $ | 147 | $ | 21,758 | $ | — | |||||||||
States, municipalities and political subdivisions | 10,098 | 814 | 173 | 10,739 | — | ||||||||||||||
Asset-backed: | |||||||||||||||||||
Residential mortgage-backed | 5,031 | 153 | 88 | 5,096 | (37 | ) | |||||||||||||
Commercial mortgage-backed | 1,941 | 95 | 27 | 2,009 | (3 | ) | |||||||||||||
Other asset-backed | 933 | 16 | 2 | 947 | — | ||||||||||||||
Total asset-backed | 7,905 | 264 | 117 | 8,052 | (40 | ) | |||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 167 | 9 | — | 176 | — | ||||||||||||||
Foreign government | 528 | 17 | 1 | 544 | — | ||||||||||||||
Redeemable preferred stock | 121 | 13 | 2 | 132 | — | ||||||||||||||
Total fixed maturity securities available-for-sale | 38,898 | 2,943 | 440 | 41,401 | $ | (40 | ) | ||||||||||||
Total fixed maturity securities trading | 30 | — | — | 30 | |||||||||||||||
Equity securities available-for-sale: | |||||||||||||||||||
Common stock | 47 | 10 | — | 57 | |||||||||||||||
Preferred stock | 138 | 4 | — | 142 | |||||||||||||||
Total equity securities available-for-sale | 185 | 14 | — | 199 | |||||||||||||||
Total | $ | 39,113 | $ | 2,957 | $ | 440 | $ | 41,630 |
December 31, 2012 | Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Unrealized OTTI Losses (Gains) | ||||||||||||||
(In millions) | |||||||||||||||||||
Fixed maturity securities available-for-sale: | |||||||||||||||||||
Corporate and other bonds | $ | 19,530 | $ | 2,698 | $ | 21 | $ | 22,207 | $ | — | |||||||||
States, municipalities and political subdivisions | 9,372 | 1,455 | 44 | 10,783 | — | ||||||||||||||
Asset-backed: | |||||||||||||||||||
Residential mortgage-backed | 5,745 | 246 | 71 | 5,920 | (28 | ) | |||||||||||||
Commercial mortgage-backed | 1,692 | 147 | 17 | 1,822 | (3 | ) | |||||||||||||
Other asset-backed | 929 | 23 | — | 952 | — | ||||||||||||||
Total asset-backed | 8,366 | 416 | 88 | 8,694 | (31 | ) | |||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 172 | 11 | 1 | 182 | — | ||||||||||||||
Foreign government | 588 | 25 | — | 613 | — | ||||||||||||||
Redeemable preferred stock | 113 | 13 | 1 | 125 | — | ||||||||||||||
Total fixed maturity securities available-for-sale | 38,141 | 4,618 | 155 | 42,604 | $ | (31 | ) | ||||||||||||
Total fixed maturity securities trading | 29 | — | — | 29 | |||||||||||||||
Equity securities available-for-sale: | |||||||||||||||||||
Common stock | 38 | 14 | — | 52 | |||||||||||||||
Preferred stock | 190 | 7 | — | 197 | |||||||||||||||
Total equity securities available-for-sale | 228 | 21 | — | 249 | |||||||||||||||
Total | $ | 38,398 | $ | 4,639 | $ | 155 | $ | 42,882 |
Less than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||
June 30, 2013 | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | |||||||||||||||||
(In millions) | |||||||||||||||||||||||
Fixed maturity securities available-for-sale: | |||||||||||||||||||||||
Corporate and other bonds | $ | 3,478 | $ | 143 | $ | 33 | $ | 4 | $ | 3,511 | $ | 147 | |||||||||||
States, municipalities and political subdivisions | 2,075 | 130 | 119 | 43 | 2,194 | 173 | |||||||||||||||||
Asset-backed: | |||||||||||||||||||||||
Residential mortgage-backed | 1,462 | 33 | 321 | 55 | 1,783 | 88 | |||||||||||||||||
Commercial mortgage-backed | 593 | 23 | 79 | 4 | 672 | 27 | |||||||||||||||||
Other asset-backed | 235 | 2 | — | — | 235 | 2 | |||||||||||||||||
Total asset-backed | 2,290 | 58 | 400 | 59 | 2,690 | 117 | |||||||||||||||||
Foreign government | 65 | 1 | — | — | 65 | 1 | |||||||||||||||||
Redeemable preferred stock | 39 | 2 | — | — | 39 | 2 | |||||||||||||||||
Total | $ | 7,947 | $ | 334 | $ | 552 | $ | 106 | $ | 8,499 | $ | 440 |
Less than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||
December 31, 2012 | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | |||||||||||||||||
(In millions) | |||||||||||||||||||||||
Fixed maturity securities available-for-sale: | |||||||||||||||||||||||
Corporate and other bonds | $ | 846 | $ | 13 | $ | 108 | $ | 8 | $ | 954 | $ | 21 | |||||||||||
States, municipalities and political subdivisions | 254 | 5 | 165 | 39 | 419 | 44 | |||||||||||||||||
Asset-backed: | |||||||||||||||||||||||
Residential mortgage-backed | 583 | 5 | 452 | 66 | 1,035 | 71 | |||||||||||||||||
Commercial mortgage-backed | 85 | 2 | 141 | 15 | 226 | 17 | |||||||||||||||||
Total asset-backed | 668 | 7 | 593 | 81 | 1,261 | 88 | |||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 23 | 1 | — | — | 23 | 1 | |||||||||||||||||
Redeemable preferred stock | 28 | 1 | — | — | 28 | 1 | |||||||||||||||||
Total | $ | 1,819 | $ | 27 | $ | 866 | $ | 128 | $ | 2,685 | $ | 155 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Beginning balance of credit losses on fixed maturity securities | $ | 92 | $ | 100 | $ | 95 | $ | 92 | |||||||
Additional credit losses for securities for which an OTTI loss was previously recognized | 1 | 10 | 1 | 21 | |||||||||||
Credit losses for securities for which an OTTI loss was not previously recognized | — | 1 | — | 2 | |||||||||||
Reductions for securities sold during the period | (4 | ) | (4 | ) | (7 | ) | (8 | ) | |||||||
Reductions for securities the Company intends to sell or more likely than not will be required to sell | — | (8 | ) | — | (8 | ) | |||||||||
Ending balance of credit losses on fixed maturity securities | $ | 89 | $ | 99 | $ | 89 | $ | 99 |
June 30, 2013 | December 31, 2012 | ||||||||||||||
(In millions) | Cost or Amortized Cost | Estimated Fair Value | Cost or Amortized Cost | Estimated Fair Value | |||||||||||
Due in one year or less | $ | 2,105 | $ | 2,153 | $ | 1,648 | $ | 1,665 | |||||||
Due after one year through five years | 11,450 | 12,078 | 13,603 | 14,442 | |||||||||||
Due after five years through ten years | 10,613 | 10,981 | 8,726 | 9,555 | |||||||||||
Due after ten years | 14,730 | 16,189 | 14,164 | 16,942 | |||||||||||
Total | $ | 38,898 | $ | 41,401 | $ | 38,141 | $ | 42,604 |
June 30, 2013 | Contractual/ Notional Amount | Estimated Fair Value | |||||||||
(In millions) | Asset | (Liability) | |||||||||
Without hedge designation | |||||||||||
Credit default swaps - purchased protection | $ | 20 | $ | — | $ | — | |||||
Currency forwards | 41 | — | — | ||||||||
Equity warrants | 5 | — | — | ||||||||
Total | $ | 66 | $ | — | $ | — |
December 31, 2012 | Contractual/ Notional Amount | Estimated Fair Value | |||||||||
(In millions) | Asset | (Liability) | |||||||||
Without hedge designation | |||||||||||
Credit default swaps - purchased protection | $ | 20 | $ | — | $ | (1 | ) | ||||
Currency forwards | 59 | — | (2 | ) | |||||||
Equity warrants | 5 | — | — | ||||||||
Total | $ | 84 | $ | — | $ | (3 | ) |
June 30, 2013 | Total Assets/(Liabilities) at Fair Value | ||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets | |||||||||||||||
Fixed maturity securities: | |||||||||||||||
Corporate and other bonds | $ | 30 | $ | 21,556 | $ | 202 | $ | 21,788 | |||||||
States, municipalities and political subdivisions | — | 10,599 | 140 | 10,739 | |||||||||||
Asset-backed: | |||||||||||||||
Residential mortgage-backed | — | 4,668 | 428 | 5,096 | |||||||||||
Commercial mortgage-backed | — | 1,844 | 165 | 2,009 | |||||||||||
Other asset-backed | — | 560 | 387 | 947 | |||||||||||
Total asset-backed | — | 7,072 | 980 | 8,052 | |||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 147 | 29 | — | 176 | |||||||||||
Foreign government | 98 | 446 | — | 544 | |||||||||||
Redeemable preferred stock | 49 | 58 | 25 | 132 | |||||||||||
Total fixed maturity securities | 324 | 39,760 | 1,347 | 41,431 | |||||||||||
Equity securities | 134 | 52 | 13 | 199 | |||||||||||
Other invested assets | — | 36 | — | 36 | |||||||||||
Short term investments | 1,057 | 423 | — | 1,480 | |||||||||||
Life settlement contracts, included in Other assets | — | — | 91 | 91 | |||||||||||
Separate account business | 6 | 239 | 2 | 247 | |||||||||||
Total assets | $ | 1,521 | $ | 40,510 | $ | 1,453 | $ | 43,484 | |||||||
Liabilities | |||||||||||||||
Derivative financial instruments, included in Other liabilities | $ | — | $ | — | $ | — | $ | — | |||||||
Total liabilities | $ | — | $ | — | $ | — | $ | — |
December 31, 2012 | Total Assets/(Liabilities) at Fair Value | ||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets | |||||||||||||||
Fixed maturity securities: | |||||||||||||||
Corporate and other bonds | $ | 6 | $ | 22,011 | $ | 219 | $ | 22,236 | |||||||
States, municipalities and political subdivisions | — | 10,687 | 96 | 10,783 | |||||||||||
Asset-backed: | |||||||||||||||
Residential mortgage-backed | — | 5,507 | 413 | 5,920 | |||||||||||
Commercial mortgage-backed | — | 1,693 | 129 | 1,822 | |||||||||||
Other asset-backed | — | 584 | 368 | 952 | |||||||||||
Total asset-backed | — | 7,784 | 910 | 8,694 | |||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 158 | 24 | — | 182 | |||||||||||
Foreign government | 140 | 473 | — | 613 | |||||||||||
Redeemable preferred stock | 40 | 59 | 26 | 125 | |||||||||||
Total fixed maturity securities | 344 | 41,038 | 1,251 | 42,633 | |||||||||||
Equity securities | 117 | 98 | 34 | 249 | |||||||||||
Other invested assets | — | 58 | 1 | 59 | |||||||||||
Short term investments | 987 | 799 | 6 | 1,792 | |||||||||||
Life settlement contracts, included in Other assets | — | — | 100 | 100 | |||||||||||
Separate account business | 4 | 306 | 2 | 312 | |||||||||||
Total assets | $ | 1,452 | $ | 42,299 | $ | 1,394 | $ | 45,145 | |||||||
Liabilities | |||||||||||||||
Derivative financial instruments, included in Other liabilities | $ | — | $ | (2 | ) | $ | (1 | ) | $ | (3 | ) | ||||
Total liabilities | $ | — | $ | (2 | ) | $ | (1 | ) | $ | (3 | ) |
Level 3 (In millions) | Balance at April 1, 2013 | Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)* | Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss) | Purchases | Sales | Settlements | Transfers into Level 3 | Transfers out of Level 3 | Balance at June 30, 2013 | Unrealized gains (losses) on Level 3 assets and liabilities held at June 30, 2013 recognized in net income (loss)* | |||||||||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||||||||||||||||||
Corporate and other bonds | $ | 302 | $ | 1 | $ | (3 | ) | $ | 13 | $ | (73 | ) | $ | (6 | ) | $ | — | $ | (32 | ) | $ | 202 | $ | (1 | ) | ||||||||||||||
States, municipalities and political subdivisions | 129 | — | 4 | 37 | (32 | ) | (3 | ) | 5 | — | 140 | — | |||||||||||||||||||||||||||
Asset-backed: | |||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed | 450 | (1 | ) | (1 | ) | 50 | (10 | ) | (21 | ) | 4 | (43 | ) | 428 | (2 | ) | |||||||||||||||||||||||
Commercial mortgage-backed | 177 | — | 4 | 5 | — | (2 | ) | 21 | (40 | ) | 165 | — | |||||||||||||||||||||||||||
Other asset-backed | 396 | — | (3 | ) | 38 | (33 | ) | (11 | ) | — | — | 387 | (1 | ) | |||||||||||||||||||||||||
Total asset-backed | 1,023 | (1 | ) | — | 93 | (43 | ) | (34 | ) | 25 | (83 | ) | 980 | (3 | ) | ||||||||||||||||||||||||
Redeemable preferred stock | 26 | — | (1 | ) | — | — | — | — | — | 25 | — | ||||||||||||||||||||||||||||
Total fixed maturity securities | 1,480 | — | — | 143 | (148 | ) | (43 | ) | 30 | (115 | ) | 1,347 | (4 | ) | |||||||||||||||||||||||||
Equity securities | 19 | (5 | ) | (1 | ) | — | — | — | — | — | 13 | (5 | ) | ||||||||||||||||||||||||||
Other invested assets, including derivatives, net | (1 | ) | — | — | — | — | 1 | — | — | — | — | ||||||||||||||||||||||||||||
Short term investments | 5 | — | — | — | (5 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||
Life settlement contracts | 95 | 4 | — | — | — | (8 | ) | — | — | 91 | (1 | ) | |||||||||||||||||||||||||||
Separate account business | 2 | — | — | — | — | — | — | — | 2 | — | |||||||||||||||||||||||||||||
Total | $ | 1,600 | $ | (1 | ) | $ | (1 | ) | $ | 143 | $ | (153 | ) | $ | (50 | ) | $ | 30 | $ | (115 | ) | $ | 1,453 | $ | (10 | ) |
Level 3 (In millions) | Balance at April 1, 2012 | Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)* | Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss) | Purchases | Sales | Settlements | Transfers into Level 3 | Transfers out of Level 3 | Balance at June 30, 2012 | Unrealized gains (losses) on Level 3 assets and liabilities held at June 30, 2012 recognized in net income (loss)* | |||||||||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||||||||||||||||||
Corporate and other bonds | $ | 486 | $ | 3 | $ | 2 | $ | 68 | $ | (27 | ) | $ | (13 | ) | $ | 9 | $ | (40 | ) | $ | 488 | $ | — | ||||||||||||||||
States, municipalities and political subdivisions | 173 | — | 1 | — | — | (85 | ) | — | — | 89 | — | ||||||||||||||||||||||||||||
Asset-backed: | |||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed | 447 | 1 | (18 | ) | 22 | — | (9 | ) | — | — | 443 | — | |||||||||||||||||||||||||||
Commercial mortgage-backed | 105 | 2 | 4 | 87 | (12 | ) | (4 | ) | — | (16 | ) | 166 | — | ||||||||||||||||||||||||||
Other asset-backed | 384 | 2 | (1 | ) | 182 | (99 | ) | (34 | ) | — | — | 434 | — | ||||||||||||||||||||||||||
Total asset-backed | 936 | 5 | (15 | ) | 291 | (111 | ) | (47 | ) | — | (16 | ) | 1,043 | — | |||||||||||||||||||||||||
Redeemable preferred stock | 53 | — | — | — | (26 | ) | — | — | — | 27 | — | ||||||||||||||||||||||||||||
Total fixed maturity securities | 1,648 | 8 | (12 | ) | 359 | (164 | ) | (145 | ) | 9 | (56 | ) | 1,647 | — | |||||||||||||||||||||||||
Equity securities | 74 | — | 19 | 15 | (15 | ) | — | — | — | 93 | (1 | ) | |||||||||||||||||||||||||||
Other invested assets, including derivatives, net | 10 | — | — | — | — | — | — | — | 10 | — | |||||||||||||||||||||||||||||
Short term investments | — | — | — | 4 | — | — | — | — | 4 | — | |||||||||||||||||||||||||||||
Life settlement contracts | 115 | 20 | — | — | — | (19 | ) | — | — | 116 | 3 | ||||||||||||||||||||||||||||
Separate account business | 4 | — | — | — | (1 | ) | — | — | — | 3 | — | ||||||||||||||||||||||||||||
Total | $ | 1,851 | $ | 28 | $ | 7 | $ | 378 | $ | (180 | ) | $ | (164 | ) | $ | 9 | $ | (56 | ) | $ | 1,873 | $ | 2 |
Level 3 (In millions) | Balance at January 1, 2013 | Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)* | Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss) | Purchases | Sales | Settlements | Transfers into Level 3 | Transfers out of Level 3 | Balance at June 30, 2013 | Unrealized gains (losses) on Level 3 assets and liabilities held at June 30, 2013 recognized in net income (loss)* | |||||||||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||||||||||||||||||
Corporate and other bonds | $ | 219 | $ | 1 | $ | (1 | ) | $ | 123 | $ | (90 | ) | $ | (26 | ) | $ | 26 | $ | (50 | ) | $ | 202 | $ | (2 | ) | ||||||||||||||
States, municipalities and political subdivisions | 96 | (3 | ) | 4 | 122 | (79 | ) | (5 | ) | 5 | — | 140 | — | ||||||||||||||||||||||||||
Asset-backed: | |||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed | 413 | 2 | (1 | ) | 111 | (10 | ) | (32 | ) | 4 | (59 | ) | 428 | (2 | ) | ||||||||||||||||||||||||
Commercial mortgage-backed | 129 | 1 | 9 | 78 | — | (9 | ) | 21 | (64 | ) | 165 | — | |||||||||||||||||||||||||||
Other asset-backed | 368 | 3 | (2 | ) | 174 | (132 | ) | (24 | ) | — | — | 387 | (1 | ) | |||||||||||||||||||||||||
Total asset-backed | 910 | 6 | 6 | 363 | (142 | ) | (65 | ) | 25 | (123 | ) | 980 | (3 | ) | |||||||||||||||||||||||||
Redeemable preferred stock | 26 | — | (1 | ) | — | — | — | — | — | 25 | — | ||||||||||||||||||||||||||||
Total fixed maturity securities | 1,251 | 4 | 8 | 608 | (311 | ) | (96 | ) | 56 | (173 | ) | 1,347 | (5 | ) | |||||||||||||||||||||||||
Equity securities | 34 | (20 | ) | — | — | — | — | — | (1 | ) | 13 | (20 | ) | ||||||||||||||||||||||||||
Other invested assets, including derivatives, net | — | — | — | — | (1 | ) | 1 | — | — | — | — | ||||||||||||||||||||||||||||
Short term investments | 6 | — | — | — | (6 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||
Life settlement contracts | 100 | 11 | — | — | — | (20 | ) | — | — | 91 | (1 | ) | |||||||||||||||||||||||||||
Separate account business | 2 | — | — | — | — | — | — | — | 2 | — | |||||||||||||||||||||||||||||
Total | $ | 1,393 | $ | (5 | ) | $ | 8 | $ | 608 | $ | (318 | ) | $ | (115 | ) | $ | 56 | $ | (174 | ) | $ | 1,453 | $ | (26 | ) |
Level 3 (In millions) | Balance at January 1, 2012 | Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)* | Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss) | Purchases | Sales | Settlements | Transfers into Level 3 | Transfers out of Level 3 | Balance at June 30, 2012 | Unrealized gains (losses) on Level 3 assets and liabilities held at June 30, 2012 recognized in net income (loss)* | |||||||||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||||||||||||||||||
Corporate and other bonds | $ | 482 | $ | 6 | $ | 6 | $ | 147 | $ | (113 | ) | $ | (32 | ) | $ | 42 | $ | (50 | ) | $ | 488 | $ | — | ||||||||||||||||
States, municipalities and political subdivisions | 171 | — | 3 | — | — | (85 | ) | — | — | 89 | — | ||||||||||||||||||||||||||||
Asset-backed: | |||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed | 452 | 2 | (22 | ) | 60 | — | (16 | ) | — | (33 | ) | 443 | — | ||||||||||||||||||||||||||
Commercial mortgage-backed | 59 | 2 | 8 | 129 | (12 | ) | (4 | ) | — | (16 | ) | 166 | — | ||||||||||||||||||||||||||
Other asset-backed | 343 | 6 | 3 | 358 | (176 | ) | (59 | ) | — | (41 | ) | 434 | — | ||||||||||||||||||||||||||
Total asset-backed | 854 | 10 | (11 | ) | 547 | (188 | ) | (79 | ) | — | (90 | ) | 1,043 | — | |||||||||||||||||||||||||
Redeemable preferred stock | — | — | — | 53 | (26 | ) | — | — | — | 27 | — | ||||||||||||||||||||||||||||
Total fixed maturity securities | 1,507 | 16 | (2 | ) | 747 | (327 | ) | (196 | ) | 42 | (140 | ) | 1,647 | — | |||||||||||||||||||||||||
Equity securities | 67 | — | 16 | 26 | (16 | ) | — | — | — | 93 | (3 | ) | |||||||||||||||||||||||||||
Other invested assets, including derivatives, net | 10 | — | — | — | — | — | — | — | 10 | — | |||||||||||||||||||||||||||||
Short term investments | 27 | — | — | 16 | — | (39 | ) | — | — | 4 | — | ||||||||||||||||||||||||||||
Life settlement contracts | 117 | 23 | — | — | — | (24 | ) | — | — | 116 | 3 | ||||||||||||||||||||||||||||
Separate account business | 23 | — | — | — | (20 | ) | — | — | — | 3 | — | ||||||||||||||||||||||||||||
Total | $ | 1,751 | $ | 39 | $ | 14 | $ | 789 | $ | (363 | ) | $ | (259 | ) | $ | 42 | $ | (140 | ) | $ | 1,873 | $ | — |
Major Category of Assets and Liabilities | Condensed Consolidated Statements of Operations Line Items | |
Fixed maturity securities available-for-sale | Net realized investment gains (losses) | |
Fixed maturity securities trading | Net investment income | |
Equity securities | Net realized investment gains (losses) | |
Other invested assets - Derivative financial instruments held in a trading portfolio | Net investment income | |
Other invested assets - Derivative financial instruments not held in a trading portfolio | Net realized investment gains (losses) | |
Other invested assets - Overseas deposits | Net investment income | |
Life settlement contracts | Other revenues |
Assets (In millions) | Fair Value at June 30, 2013 | Valuation Technique(s) | Unobservable Input(s) | Range (Weighted Average) | |||||
Fixed maturity securities | $ | 106 | Discounted cash flow | Expected call date | 1.6 - 3.5 years (3.1 years) | ||||
Credit spread | 1.95% - 7.95% (2.67%) | ||||||||
$ | 83 | Market approach | Private offering price | $36.32 - $113.76 ($101.70) | |||||
Equity securities | $ | 13 | Market approach | Private offering price | $33.73 - $4,017.00 per share ($936.89 per share) | ||||
Life settlement contracts | $ | 91 | Discounted cash flow | Discount rate risk premium | 9% | ||||
Mortality assumption | 69% - 883% (209.2%) |
Assets (In millions) | Fair Value at December 31, 2012 | Valuation Technique(s) | Unobservable Input(s) | Range (Weighted Average) | |||||
Fixed maturity securities | $ | 121 | Discounted cash flow | Expected call date | 3.3 - 5.3 years (4.3 years) | ||||
Credit spread adjustment | 0.02% - 0.48% (0.17%) | ||||||||
$ | 72 | Market approach | Private offering price | $42.39 - $102.32 ($100.11) | |||||
Equity securities | $ | 34 | Market approach | Private offering price | $4.54 - $3,842.00 per share ($571.17 per share) | ||||
Life settlement contracts | $ | 100 | Discounted cash flow | Discount rate risk premium | 9% | ||||
Mortality assumption | 69% - 883% (208.9%) |
June 30, 2013 | Carrying Amount | Estimated Fair Value | |||||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Financial assets | |||||||||||||||||||
Notes receivable for the issuance of common stock | $ | 24 | $ | — | $ | — | $ | 24 | $ | 24 | |||||||||
Mortgage loans | 437 | — | — | 449 | 449 | ||||||||||||||
Financial liabilities | |||||||||||||||||||
Premium deposits and annuity contracts | $ | 75 | $ | — | $ | — | $ | 76 | $ | 76 | |||||||||
Short term debt | 13 | — | 13 | — | 13 | ||||||||||||||
Long term debt | 2,558 | — | 2,912 | — | 2,912 |
December 31, 2012 | Carrying Amount | Estimated Fair Value | |||||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Financial assets | |||||||||||||||||||
Notes receivable for the issuance of common stock | $ | 21 | $ | — | $ | — | $ | 21 | $ | 21 | |||||||||
Mortgage loans | 401 | — | — | 418 | 418 | ||||||||||||||
Financial liabilities | |||||||||||||||||||
Premium deposits and annuity contracts | $ | 100 | $ | — | $ | — | $ | 104 | $ | 104 | |||||||||
Short term debt | 13 | — | 13 | — | 13 | ||||||||||||||
Long term debt | 2,557 | — | 3,016 | — | 3,016 |
Three months ended June 30, 2013 | |||||||||||||||||||
(In millions) | CNA Specialty | CNA Commercial | Hardy | Corporate & Other Non-Core | Total | ||||||||||||||
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development | $ | (41 | ) | $ | 27 | $ | 12 | $ | (3 | ) | $ | (5 | ) | ||||||
Pretax (favorable) unfavorable premium development | (5 | ) | (5 | ) | 2 | — | (8 | ) | |||||||||||
Total pretax (favorable) unfavorable net prior year development | $ | (46 | ) | $ | 22 | $ | 14 | $ | (3 | ) | $ | (13 | ) |
Three months ended June 30, 2012 | |||||||||||||||
(In millions) | CNA Specialty | CNA Commercial | Corporate & Other Non-Core | Total | |||||||||||
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development | $ | (35 | ) | $ | (13 | ) | $ | (4 | ) | $ | (52 | ) | |||
Pretax (favorable) unfavorable premium development | (5 | ) | (19 | ) | 1 | (23 | ) | ||||||||
Total pretax (favorable) unfavorable net prior year development | $ | (40 | ) | $ | (32 | ) | $ | (3 | ) | $ | (75 | ) |
Six months ended June 30, 2013 | |||||||||||||||||||
(In millions) | CNA Specialty | CNA Commercial | Hardy | Corporate & Other Non-Core | Total | ||||||||||||||
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development | $ | (56 | ) | $ | 16 | $ | 11 | $ | (2 | ) | $ | (31 | ) | ||||||
Pretax (favorable) unfavorable premium development | (13 | ) | (15 | ) | 6 | 1 | (21 | ) | |||||||||||
Total pretax (favorable) unfavorable net prior year development | $ | (69 | ) | $ | 1 | $ | 17 | $ | (1 | ) | $ | (52 | ) |
Six months ended June 30, 2012 | |||||||||||||||
(In millions) | CNA Specialty | CNA Commercial | Corporate & Other Non-Core | Total | |||||||||||
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development | $ | (41 | ) | $ | (27 | ) | $ | (2 | ) | $ | (70 | ) | |||
Pretax (favorable) unfavorable premium development | (14 | ) | (36 | ) | 2 | (48 | ) | ||||||||
Total pretax (favorable) unfavorable net prior year development | $ | (55 | ) | $ | (63 | ) | $ | — | $ | (118 | ) |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development: | |||||||||||||||
Medical Professional Liability | $ | (17 | ) | $ | (9 | ) | $ | (20 | ) | $ | (15 | ) | |||
Other Professional Liability | (23 | ) | (6 | ) | (24 | ) | (2 | ) | |||||||
Surety | 1 | — | 2 | 1 | |||||||||||
Warranty | — | — | — | (1 | ) | ||||||||||
Other | (2 | ) | (20 | ) | (14 | ) | (24 | ) | |||||||
Total pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development | $ | (41 | ) | $ | (35 | ) | $ | (56 | ) | $ | (41 | ) |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development: | |||||||||||||||
Commercial Auto | $ | 2 | $ | 2 | $ | (3 | ) | $ | 2 | ||||||
General Liability | 15 | (13 | ) | (6 | ) | (5 | ) | ||||||||
Workers' Compensation | 45 | 8 | 70 | (11 | ) | ||||||||||
Property and Other | (35 | ) | (10 | ) | (45 | ) | (13 | ) | |||||||
Total pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development | $ | 27 | $ | (13 | ) | $ | 16 | $ | (27 | ) |
Periods ended June 30, 2013 | |||||||
(In millions) | Three Months | Six Months | |||||
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development: | |||||||
Marine and Aviation | $ | 4 | $ | 3 | |||
Non-Marine Property | 7 | 7 | |||||
Property Treaty | 2 | 2 | |||||
Specialty | (1 | ) | (1 | ) | |||
Total pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development | $ | 12 | $ | 11 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Pension cost (benefit) | |||||||||||||||
Service cost | $ | 3 | $ | 3 | $ | 6 | $ | 6 | |||||||
Interest cost on projected benefit obligation | 30 | 33 | 60 | 67 | |||||||||||
Expected return on plan assets | (45 | ) | (42 | ) | (90 | ) | (85 | ) | |||||||
Amortization of net actuarial (gain) loss | 12 | 9 | 24 | 19 | |||||||||||
Net periodic pension cost (benefit) | $ | — | $ | 3 | $ | — | $ | 7 | |||||||
Postretirement cost (benefit) | |||||||||||||||
Interest cost on projected benefit obligation | $ | 1 | $ | 1 | $ | 1 | $ | 1 | |||||||
Amortization of prior service credit | (5 | ) | (5 | ) | (9 | ) | (9 | ) | |||||||
Net periodic postretirement cost (benefit) | $ | (4 | ) | $ | (4 | ) | $ | (8 | ) | $ | (8 | ) |
June 30, 2013 | December 31, 2012 | ||||||||||||||
(In millions) | Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | |||||||||||
Finite-lived intangible assets: | |||||||||||||||
Value of business acquired | $ | 59 | $ | 57 | $ | 62 | $ | 43 | |||||||
Trade name | 8 | 1 | 8 | — | |||||||||||
Distribution channel | 12 | 1 | 13 | — | |||||||||||
Total finite-lived intangible assets | 79 | 59 | 83 | 43 | |||||||||||
Indefinite-lived intangible assets | 69 | 73 | |||||||||||||
Total other intangible assets | $ | 148 | $ | 59 | $ | 156 | $ | 43 |
Three months ended June 30, 2013 | CNA Specialty | CNA Commercial | Hardy | Life & Group Non-Core | Corporate & Other Non-Core | ||||||||||||||||||||||
(In millions) | Eliminations | Total | |||||||||||||||||||||||||
Operating revenues | |||||||||||||||||||||||||||
Net earned premiums | $ | 746 | $ | 840 | $ | 76 | $ | 138 | $ | — | $ | — | $ | 1,800 | |||||||||||||
Net investment income | 151 | 211 | 1 | 207 | 8 | — | 578 | ||||||||||||||||||||
Other revenues | 63 | 65 | (1 | ) | 1 | 2 | (1 | ) | 129 | ||||||||||||||||||
Total operating revenues | 960 | 1,116 | 76 | 346 | 10 | (1 | ) | 2,507 | |||||||||||||||||||
Claims, Benefits and Expenses | |||||||||||||||||||||||||||
Net incurred claims and benefits | 452 | 644 | 41 | 380 | (2 | ) | — | 1,515 | |||||||||||||||||||
Policyholders’ dividends | 1 | 2 | — | 3 | — | — | 6 | ||||||||||||||||||||
Amortization of deferred acquisition costs | 156 | 153 | 20 | 6 | — | — | 335 | ||||||||||||||||||||
Other insurance related expenses | 65 | 142 | 13 | 33 | — | — | 253 | ||||||||||||||||||||
Other expenses | 60 | 2 | 6 | 2 | 39 | (1 | ) | 108 | |||||||||||||||||||
Total claims, benefits and expenses | 734 | 943 | 80 | 424 | 37 | (1 | ) | 2,217 | |||||||||||||||||||
Operating income (loss) before income tax | 226 | 173 | (4 | ) | (78 | ) | (27 | ) | — | 290 | |||||||||||||||||
Income tax (expense) benefit on operating income (loss) | (78 | ) | (61 | ) | 2 | 42 | 9 | — | (86 | ) | |||||||||||||||||
Net operating income (loss) | 148 | 112 | (2 | ) | (36 | ) | (18 | ) | — | 204 | |||||||||||||||||
Net realized investment gains (losses), pre-tax | (6 | ) | (12 | ) | 1 | — | 3 | — | (14 | ) | |||||||||||||||||
Income tax (expense) benefit on net realized investment gains (losses) | 2 | 4 | (1 | ) | — | (1 | ) | — | 4 | ||||||||||||||||||
Net realized investment gains (losses) | (4 | ) | (8 | ) | — | — | 2 | — | (10 | ) | |||||||||||||||||
Net income (loss) | $ | 144 | $ | 104 | $ | (2 | ) | $ | (36 | ) | $ | (16 | ) | $ | — | $ | 194 |
Three months ended June 30, 2012 | CNA Specialty | CNA Commercial | Hardy | 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) 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) | 106 | 57 | 3 | (14 | ) | — | 152 | ||||||||||||||||||
Net realized investment gains (losses), pre-tax | 8 | 13 | 4 | (3 | ) | — | 22 | ||||||||||||||||||
Income tax (expense) benefit on net realized investment gains (losses) | (2 | ) | (5 | ) | (1 | ) | — | — | (8 | ) | |||||||||||||||
Net realized investment gains (losses) | 6 | 8 | 3 | (3 | ) | — | 14 | ||||||||||||||||||
Net income (loss) | $ | 112 | $ | 65 | $ | 6 | $ | (17 | ) | $ | — | $ | 166 |
Six months ended June 30, 2013 | CNA Specialty | CNA Commercial | Hardy | Life & Group Non-Core | Corporate & Other Non-Core | ||||||||||||||||||||||
(In millions) | Eliminations | Total | |||||||||||||||||||||||||
Operating revenues | |||||||||||||||||||||||||||
Net earned premiums | $ | 1,469 | $ | 1,677 | $ | 140 | $ | 279 | $ | — | $ | (1 | ) | $ | 3,564 | ||||||||||||
Net investment income | 321 | 461 | 2 | 411 | 16 | — | 1,211 | ||||||||||||||||||||
Other revenues | 123 | 75 | — | 5 | 5 | (1 | ) | 207 | |||||||||||||||||||
Total operating revenues | 1,913 | 2,213 | 142 | 695 | 21 | (2 | ) | 4,982 | |||||||||||||||||||
Claims, Benefits and Expenses | |||||||||||||||||||||||||||
Net incurred claims and benefits | 917 | 1,244 | 72 | 705 | 2 | — | 2,940 | ||||||||||||||||||||
Policyholders’ dividends | 2 | 4 | — | 4 | — | — | 10 | ||||||||||||||||||||
Amortization of deferred acquisition costs | 306 | 302 | 41 | 14 | — | — | 663 | ||||||||||||||||||||
Other insurance related expenses | 136 | 285 | 29 | 66 | — | (1 | ) | 515 | |||||||||||||||||||
Other expenses | 114 | 11 | 13 | 7 | 85 | (1 | ) | 229 | |||||||||||||||||||
Total claims, benefits and expenses | 1,475 | 1,846 | 155 | 796 | 87 | (2 | ) | 4,357 | |||||||||||||||||||
Operating income (loss) before income tax | 438 | 367 | (13 | ) | (101 | ) | (66 | ) | — | 625 | |||||||||||||||||
Income tax (expense) benefit on operating income (loss) | (150 | ) | (130 | ) | 3 | 65 | 22 | — | (190 | ) | |||||||||||||||||
Net operating income (loss) | 288 | 237 | (10 | ) | (36 | ) | (44 | ) | — | 435 | |||||||||||||||||
Net realized investment gains (losses), pre-tax | (3 | ) | (8 | ) | 2 | 14 | 9 | — | 14 | ||||||||||||||||||
Income tax (expense) benefit on net realized investment gains (losses) | 1 | 3 | (1 | ) | (5 | ) | (3 | ) | — | (5 | ) | ||||||||||||||||
Net realized investment gains (losses) | (2 | ) | (5 | ) | 1 | 9 | 6 | — | 9 | ||||||||||||||||||
Net income (loss) | $ | 286 | $ | 232 | $ | (9 | ) | $ | (27 | ) | $ | (38 | ) | $ | — | $ | 444 |
June 30, 2013 | |||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||
Reinsurance receivables | $ | 698 | $ | 1,146 | $ | 235 | $ | 1,258 | $ | 2,704 | $ | — | $ | 6,041 | |||||||||||||
Insurance receivables | $ | 786 | $ | 1,219 | $ | 208 | $ | 11 | $ | 3 | $ | — | $ | 2,227 | |||||||||||||
Deferred acquisition costs | $ | 317 | $ | 277 | $ | 56 | $ | — | $ | — | $ | — | $ | 650 | |||||||||||||
Goodwill | $ | 117 | $ | — | $ | 35 | $ | — | $ | — | $ | — | $ | 152 | |||||||||||||
Insurance reserves | |||||||||||||||||||||||||||
Claim and claim adjustment expenses | $ | 6,877 | $ | 10,973 | $ | 447 | $ | 3,031 | $ | 3,011 | $ | — | $ | 24,339 | |||||||||||||
Unearned premiums | 1,787 | 1,682 | 265 | 136 | — | (1 | ) | 3,869 | |||||||||||||||||||
Future policy benefits | — | — | — | 10,787 | — | — | 10,787 | ||||||||||||||||||||
Policyholders’ funds | 9 | 14 | — | 110 | — | — | 133 |
Six months ended June 30, 2012 | CNA Specialty | CNA Commercial | Hardy | 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) 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) | 238 | 196 | (16 | ) | (40 | ) | — | 378 | |||||||||||||||||
Net realized investment gains (losses), pre-tax | 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) | 12 | 15 | 11 | — | — | 38 | |||||||||||||||||||
Net income (loss) | $ | 250 | $ | 211 | $ | (5 | ) | $ | (40 | ) | $ | — | $ | 416 |
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 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
CNA Specialty | |||||||||||||||
International | $ | 59 | $ | 53 | $ | 118 | $ | 110 | |||||||
Professional & Management Liability | 687 | 645 | 1,387 | 1,339 | |||||||||||
Surety | 123 | 121 | 239 | 240 | |||||||||||
Warranty & Alternative Risks | 85 | 77 | 166 | 152 | |||||||||||
CNA Specialty revenues | 954 | 896 | 1,910 | 1,841 | |||||||||||
CNA Commercial | |||||||||||||||
Commercial Insurance | 827 | 736 | 1,653 | 1,571 | |||||||||||
International | 90 | 90 | 183 | 181 | |||||||||||
Small Business | 187 | 158 | 369 | 320 | |||||||||||
CNA Commercial revenues | 1,104 | 984 | 2,205 | 2,072 | |||||||||||
Hardy revenues | 77 | 144 | |||||||||||||
Life & Group Non-Core | |||||||||||||||
Health | 287 | 287 | 585 | 578 | |||||||||||
Life & Annuity | 58 | 57 | 119 | 117 | |||||||||||
Other | 1 | 16 | 5 | 15 | |||||||||||
Life & Group Non-Core revenues | 346 | 360 | 709 | 710 | |||||||||||
Corporate & Other Non-Core revenues | 13 | 7 | 30 | 25 | |||||||||||
Eliminations | (1 | ) | (1 | ) | (2 | ) | (1 | ) | |||||||
Total revenues | $ | 2,493 | $ | 2,246 | $ | 4,996 | $ | 4,647 |
(In millions) | Net unrealized gains (losses) on investments with OTTI losses | Net unrealized gains (losses) on other investments | Pension and postretirement benefits | Cumulative foreign currency translation adjustment | Total | ||||||||||||||
Balance at April 1, 2013 | $ | 34 | $ | 1,309 | $ | (716 | ) | $ | 100 | $ | 727 | ||||||||
Other comprehensive income (loss) before reclassifications | (8 | ) | (589 | ) | — | (13 | ) | (610 | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) after tax (expense) benefit of $0, $3, $2, $0, and $5 | — | (4 | ) | (5 | ) | — | (9 | ) | |||||||||||
Other comprehensive income (loss) after tax (expense) benefit of $4, $314, $(2), $0, and $316 | (8 | ) | (585 | ) | 5 | (13 | ) | (601 | ) | ||||||||||
Balance at June 30, 2013 | $ | 26 | $ | 724 | $ | (711 | ) | $ | 87 | $ | 126 |
(In millions) | Net unrealized gains (losses) on investments with OTTI losses | Net unrealized gains (losses) on other investments | Pension and postretirement benefits | Cumulative foreign currency translation adjustment | Total | ||||||||||||||
Balance at January 1, 2013 | $ | 20 | $ | 1,371 | $ | (721 | ) | $ | 161 | $ | 831 | ||||||||
Other comprehensive income (loss) before reclassifications | 6 | (638 | ) | — | (74 | ) | (706 | ) | |||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) after tax (expense) benefit of $0, $(3), $5, $0, and $2 | — | 9 | (10 | ) | — | (1 | ) | ||||||||||||
Other comprehensive income (loss) after tax (expense) benefit of $(3), $349, $(5), $0, and $341 | 6 | (647 | ) | 10 | (74 | ) | (705 | ) | |||||||||||
Balance at June 30, 2013 | $ | 26 | $ | 724 | $ | (711 | ) | $ | 87 | $ | 126 |
Component of AOCI | Condensed Consolidated Statements of Operations Line Item Affected by Reclassifications | |
Net unrealized gains (losses) on investments with OTTI losses | Net realized investment gains (losses) | |
Net unrealized gains (losses) on other investments | Net realized investment gains (losses) | |
Pension and postretirement benefits | Other operating expenses |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Operating Revenues | |||||||||||||||
Net earned premiums | $ | 1,800 | $ | 1,668 | $ | 3,564 | $ | 3,317 | |||||||
Net investment income | 578 | 470 | 1,211 | 1,118 | |||||||||||
Other revenues | 129 | 86 | 207 | 154 | |||||||||||
Total operating revenues | 2,507 | 2,224 | 4,982 | 4,589 | |||||||||||
Claims, Benefits and Expenses | |||||||||||||||
Net incurred claims and benefits | 1,515 | 1,342 | 2,940 | 2,720 | |||||||||||
Policyholders' dividends | 6 | 6 | 10 | 9 | |||||||||||
Amortization of deferred acquisition costs | 335 | 309 | 663 | 604 | |||||||||||
Other insurance related expenses | 253 | 248 | 515 | 498 | |||||||||||
Other expenses | 108 | 111 | 229 | 222 | |||||||||||
Total claims, benefits and expenses | 2,217 | 2,016 | 4,357 | 4,053 | |||||||||||
Operating income before income tax | 290 | 208 | 625 | 536 | |||||||||||
Income tax expense on operating income | (86 | ) | (56 | ) | (190 | ) | (158 | ) | |||||||
Net operating income | 204 | 152 | 435 | 378 | |||||||||||
Net realized investment gains (losses), pre-tax | (14 | ) | 22 | 14 | 58 | ||||||||||
Income tax (expense) benefit on net realized investment gains (losses) | 4 | (8 | ) | (5 | ) | (20 | ) | ||||||||
Net realized investment gains (losses) | (10 | ) | 14 | 9 | 38 | ||||||||||
Net income | $ | 194 | $ | 166 | $ | 444 | $ | 416 |
• | Insurance Reserves |
• | Reinsurance and Insurance Receivables |
• | Valuation of Investments and Impairment of Securities |
• | Long Term Care Products and Payout Annuity Contracts |
• | Pension and Postretirement Benefit Obligations |
• | Income Taxes |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions, except ratios) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Net written premiums | $ | 756 | $ | 718 | $ | 1,559 | $ | 1,483 | |||||||
Net earned premiums | 746 | 719 | 1,469 | 1,425 | |||||||||||
Net investment income | 151 | 112 | 321 | 287 | |||||||||||
Net operating income | 148 | 106 | 288 | 238 | |||||||||||
Net realized investment gains (losses) | (4 | ) | 6 | (2 | ) | 12 | |||||||||
Net income | 144 | 112 | 286 | 250 | |||||||||||
Ratios | |||||||||||||||
Loss and loss adjustment expense | 60.6 | % | 62.2 | % | 62.4 | % | 64.2 | % | |||||||
Expense | 29.7 | 32.1 | 30.1 | 31.7 | |||||||||||
Dividend | 0.1 | 0.1 | 0.2 | (0.1 | ) | ||||||||||
Combined | 90.4 | % | 94.4 | % | 92.7 | % | 95.8 | % |
June 30, 2013 | December 31, 2012 | ||||||
(In millions) | |||||||
Gross Case Reserves | $ | 2,320 | $ | 2,292 | |||
Gross IBNR Reserves | 4,557 | 4,456 | |||||
Total Gross Carried Claim and Claim Adjustment Expense Reserves | $ | 6,877 | $ | 6,748 | |||
Net Case Reserves | $ | 2,035 | $ | 2,008 | |||
Net IBNR Reserves | 4,156 | 4,104 | |||||
Total Net Carried Claim and Claim Adjustment Expense Reserves | $ | 6,191 | $ | 6,112 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions, except ratios) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Net written premiums | $ | 826 | $ | 889 | $ | 1,744 | $ | 1,732 | |||||||
Net earned premiums | 840 | 809 | 1,677 | 1,612 | |||||||||||
Net investment income | 211 | 151 | 461 | 416 | |||||||||||
Net operating income | 112 | 57 | 237 | 196 | |||||||||||
Net realized investment gains (losses) | (8 | ) | 8 | (5 | ) | 15 | |||||||||
Net income | 104 | 65 | 232 | 211 | |||||||||||
Ratios | |||||||||||||||
Loss and loss adjustment expense | 76.5 | % | 72.9 | % | 74.1 | % | 71.8 | % | |||||||
Expense | 34.9 | 34.8 | 35.0 | 35.0 | |||||||||||
Dividend | 0.3 | 0.4 | 0.2 | 0.4 | |||||||||||
Combined | 111.7 | % | 108.1 | % | 109.3 | % | 107.2 | % |
(In millions) | June 30, 2013 | December 31, 2012 | |||||
Gross Case Reserves | $ | 6,059 | $ | 6,146 | |||
Gross IBNR Reserves | 4,914 | 5,180 | |||||
Total Gross Carried Claim and Claim Adjustment Expense Reserves | $ | 10,973 | $ | 11,326 | |||
Net Case Reserves | $ | 5,542 | $ | 5,611 | |||
Net IBNR Reserves | 4,331 | 4,600 | |||||
Total Net Carried Claim and Claim Adjustment Expense Reserves | $ | 9,873 | $ | 10,211 |
Periods ended June 30, 2013 | |||||||
(In millions, except ratios) | Three Months | Six Months | |||||
Net written premiums | $ | 138 | $ | 193 | |||
Net earned premiums | 76 | 140 | |||||
Net investment income | 1 | 2 | |||||
Net operating income (loss) | (2 | ) | (10 | ) | |||
Net realized investment gains (losses) | — | 1 | |||||
Net income (loss) | (2 | ) | (9 | ) | |||
Ratios | |||||||
Loss and loss adjustment expense | 53.9 | % | 51.5 | % | |||
Expense | 44.5 | 50.1 | |||||
Dividend | — | — | |||||
Combined | 98.4 | % | 101.6 | % |
(In millions) | June 30, 2013 | December 31, 2012 | |||||
Gross Case Reserves | $ | 304 | $ | 333 | |||
Gross IBNR Reserves | 143 | 188 | |||||
Total Gross Carried Claim and Claim Adjustment Expense Reserves | $ | 447 | $ | 521 | |||
Net Case Reserves | $ | 168 | $ | 192 | |||
Net IBNR Reserves | 82 | 82 | |||||
Total Net Carried Claim and Claim Adjustment Expense Reserves | $ | 250 | $ | 274 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Net earned premiums | $ | 138 | $ | 139 | $ | 279 | $ | 280 | |||||||
Net investment income | 207 | 201 | 411 | 399 | |||||||||||
Net operating income (loss) | (36 | ) | 3 | (36 | ) | (16 | ) | ||||||||
Net realized investment gains (losses) | — | 3 | 9 | 11 | |||||||||||
Net income (loss) | (36 | ) | 6 | (27 | ) | (5 | ) |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Net investment income | $ | 8 | $ | 6 | $ | 16 | $ | 16 | |||||||
Net operating income (loss) | (18 | ) | (14 | ) | (44 | ) | (40 | ) | |||||||
Net realized investment gains (losses) | 2 | (3 | ) | 6 | — | ||||||||||
Net income (loss) | (16 | ) | (17 | ) | (38 | ) | (40 | ) |
(In millions) | June 30, 2013 | December 31, 2012 | |||||
Gross Case Reserves | $ | 1,195 | $ | 1,207 | |||
Gross IBNR Reserves | 1,816 | 1,955 | |||||
Total Gross Carried Claim and Claim Adjustment Expense Reserves | $ | 3,011 | $ | 3,162 | |||
Net Case Reserves | $ | 283 | $ | 292 | |||
Net IBNR Reserves | 204 | 220 | |||||
Total Net Carried Claim and Claim Adjustment Expense Reserves | $ | 487 | $ | 512 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Fixed maturity securities | $ | 498 | $ | 505 | $ | 997 | $ | 1,021 | |||||||
Short term investments | 1 | 2 | 2 | 3 | |||||||||||
Limited partnership investments | 79 | (35 | ) | 210 | 95 | ||||||||||
Equity securities | 3 | 2 | 6 | 6 | |||||||||||
Mortgage loans | 6 | 5 | 11 | 8 | |||||||||||
Trading portfolio | 5 | 4 | 10 | 11 | |||||||||||
Other | — | 2 | 1 | 3 | |||||||||||
Gross investment income | 592 | 485 | 1,237 | 1,147 | |||||||||||
Investment expense | (14 | ) | (15 | ) | (26 | ) | (29 | ) | |||||||
Net investment income | $ | 578 | $ | 470 | $ | 1,211 | $ | 1,118 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Fixed maturity securities: | |||||||||||||||
Corporate and other bonds | $ | 15 | $ | 20 | $ | 46 | $ | 43 | |||||||
States, municipalities and political subdivisions | — | 12 | (2 | ) | 27 | ||||||||||
Asset-backed | (21 | ) | (17 | ) | (18 | ) | (29 | ) | |||||||
U.S. Treasury and obligations of government-sponsored enterprises | — | 1 | — | 2 | |||||||||||
Foreign government | 1 | 1 | 1 | 4 | |||||||||||
Total fixed maturity securities | (5 | ) | 17 | 27 | 47 | ||||||||||
Equity securities | (2 | ) | — | (15 | ) | 1 | |||||||||
Derivative securities | (5 | ) | 1 | (3 | ) | — | |||||||||
Short term investments and other | (2 | ) | 4 | 5 | 10 | ||||||||||
Net realized investment gains (losses), pre-tax | (14 | ) | 22 | 14 | 58 | ||||||||||
Income tax (expense) benefit on net realized investment gains (losses) | 4 | (8 | ) | (5 | ) | (20 | ) | ||||||||
Net realized investment gains (losses) | $ | (10 | ) | $ | 14 | $ | 9 | $ | 38 |
(In millions) | June 30, 2013 | % | December 31, 2012 | % | |||||||||
U.S. Government, Government agencies and Government-sponsored enterprises | $ | 3,670 | 9 | % | $ | 4,540 | 11 | % | |||||
AAA rated | 3,048 | 7 | 3,224 | 8 | |||||||||
AA and A rated | 19,482 | 47 | 19,305 | 45 | |||||||||
BBB rated | 11,460 | 28 | 11,997 | 28 | |||||||||
Non-investment grade | 3,771 | 9 | 3,567 | 8 | |||||||||
Total | $ | 41,431 | 100 | % | $ | 42,633 | 100 | % |
(In millions) | June 30, 2013 | % | December 31, 2012 | % | |||||||||
BB | $ | 1,622 | 43 | % | $ | 1,529 | 43 | % | |||||
B | 1,191 | 32 | 1,075 | 30 | |||||||||
CCC - C | 679 | 18 | 724 | 20 | |||||||||
D | 279 | 7 | 239 | 7 | |||||||||
Total | $ | 3,771 | 100 | % | $ | 3,567 | 100 | % |
June 30, 2013 | Estimated Fair Value | % | Gross Unrealized Losses | % | |||||||||
(In millions) | |||||||||||||
U.S. Government, Government agencies and Government-sponsored enterprises | $ | 1,216 | 14 | % | $ | 65 | 15 | % | |||||
AAA | 640 | 8 | 21 | 5 | |||||||||
AA | 1,555 | 18 | 133 | 30 | |||||||||
A | 1,605 | 19 | 61 | 14 | |||||||||
BBB | 2,346 | 28 | 126 | 29 | |||||||||
Non-Investment Grade | 1,137 | 13 | 34 | 7 | |||||||||
Total | $ | 8,499 | 100 | % | $ | 440 | 100 | % |
June 30, 2013 | Estimated Fair Value | % | Gross Unrealized Losses | % | |||||||||
Due in one year or less | $ | 246 | 3 | % | $ | 4 | 1 | % | |||||
Due after one year through five years | 1,448 | 17 | 35 | 8 | |||||||||
Due after five years through ten years | 3,939 | 46 | 182 | 41 | |||||||||
Due after ten years | 2,866 | 34 | 219 | 50 | |||||||||
Total | $ | 8,499 | 100 | % | $ | 440 | 100 | % |
June 30, 2013 | December 31, 2012 | ||||||||||||
(In millions) | Fair Value | Effective Duration (In years) | Fair Value | Effective Duration (In years) | |||||||||
Investments supporting Life & Group Non-Core | $ | 14,986 | 11.2 | $ | 15,590 | 11.3 | |||||||
Other interest sensitive investments | 27,790 | 4.3 | 28,855 | 3.9 | |||||||||
Total | $ | 42,776 | 6.7 | $ | 44,445 | 6.5 |
(In millions) | June 30, 2013 | December 31, 2012 | |||||
Short term investments: | |||||||
Commercial paper | $ | 374 | $ | 751 | |||
U.S. Treasury securities | 836 | 617 | |||||
Money market funds | 164 | 301 | |||||
Other | 157 | 163 | |||||
Total short term investments | $ | 1,531 | $ | 1,832 |
• | the risks and uncertainties associated with our loss reserves, as outlined in the Critical Accounting Estimates and the Reserves - Estimates and Uncertainties sections of our Annual Report on Form 10-K, including the sufficiency of the reserves and the possibility for future increases, which would be reflected in the results of operations in the period that the need for such adjustment is determined; |
• | the risk that the other parties to the transaction in which, subject to certain limitations, we ceded our legacy A&EP liabilities will not fully perform their obligations to CNA, the uncertainty in estimating loss reserves for A&EP liabilities and the possible continued exposure of CNA to liabilities for A&EP claims that are not covered under the terms of the transaction; |
• | the performance of reinsurance companies under reinsurance contracts with us; and |
• | the consummation of contemplated transactions and the successful integration of acquired operations. |
• | the impact of competitive products, policies and pricing and the competitive environment in which we operate, including changes in our book of business; |
• | product and policy availability and demand and market responses, including the level of ability to obtain rate increases and decline or non-renew under priced accounts, to achieve premium targets and profitability and to realize growth and retention estimates; |
• | general economic and business conditions, including recessionary conditions that may decrease the size and number of our insurance customers and create additional losses to our lines of business, especially those that provide management and professional liability insurance, as well as surety bonds, to businesses engaged in real estate, financial services and professional services, and inflationary pressures on medical care costs, construction costs and other economic sectors that increase the severity of claims; |
• | conditions in the capital and credit markets, including continuing uncertainty and instability in these markets, as well as the overall economy, and their impact on the returns, types, liquidity and valuation of our investments; |
• | conditions in the capital and credit markets that may limit our ability to raise significant amounts of capital on favorable terms, as well as restrictions on the ability or willingness of Loews to provide additional capital support to us; and |
• | the possibility of changes in our ratings by ratings agencies, including the inability to access certain markets or distribution channels and the required collateralization of future payment obligations as a result of such changes, and changes in rating agency policies and practices. |
• | regulatory initiatives and compliance with governmental regulations, judicial interpretations within the regulatory framework, including interpretation of policy provisions, decisions regarding coverage and theories of liability, trends in litigation and the outcome of any litigation involving us, and rulings and changes in tax laws and regulations; |
• | regulatory limitations, impositions and restrictions upon us, including the effects of assessments and other surcharges for guaranty funds and second-injury funds, other mandatory pooling arrangements and future assessments levied on insurance companies as well as the new federal financial regulatory reform of the insurance industry established by the Dodd-Frank Wall Street Reform and Consumer Protection Act; |
• | increased operating costs and underwriting losses arising from the Patient Protection and Affordable Care Act and the related amendments in the Health Care and Education Reconciliation Act, as well as health care reform proposals at the state level; and |
• | regulatory limitations and restrictions, including limitations upon our ability to receive dividends from our insurance subsidiaries, imposed by regulatory authorities, including regulatory capital adequacy standards. |
• | weather and other natural physical events, including the severity and frequency of storms, hail, snowfall and other winter conditions, natural disasters such as hurricanes and earthquakes, as well as climate change, including effects on weather patterns, greenhouse gases, sea, land and air temperatures, sea levels, rain and snow; |
• | regulatory requirements imposed by coastal state regulators in the wake of hurricanes or other natural disasters, including limitations on the ability to exit markets or to non-renew, cancel or change terms and conditions in policies, as well as mandatory assessments to fund any shortfalls arising from the inability of quasi-governmental insurers to pay claims; |
• | man-made disasters, including the possible occurrence of terrorist attacks and the effect of the absence or insufficiency of applicable terrorism legislation on coverages; |
• | the unpredictability of the nature, targets, severity or frequency of potential terrorist events, as well as the uncertainty as to our ability to contain our terrorism exposure effectively; and |
• | the occurrence of epidemics. |
CNA Financial Corporation | ||
Dated: July 30, 2013 | By | /s/ D. Craig Mense |
D. Craig Mense Executive Vice President and Chief Financial Officer |
Description of Exhibit | Exhibit Number |
Certification of Chief Executive Officer | 31.1 |
Certification of Chief Financial Officer | 31.2 |
Written Statement of the Chief Executive Officer of CNA Financial Corporation Pursuant to 18 U.S.C. Section 1350 (As adopted by Section 906 of the Sarbanes-Oxley Act of 2002) | 32.1 |
Written Statement of the Chief Financial Officer of CNA Financial Corporation Pursuant to 18 U.S.C. Section 1350 (As adopted by Section 906 of the Sarbanes-Oxley Act of 2002) | 32.2 |
XBRL Instance Document | 101.INS |
XBRL Taxonomy Extension Schema | 101.SCH |
XBRL Taxonomy Extension Calculation Linkbase | 101.CAL |
XBRL Taxonomy Extension Definition Linkbase | 101.DEF |
XBRL Taxonomy Label Linkbase | 101.LAB |
XBRL Taxonomy Extension Presentation Linkbase | 101.PRE |
1. | I have reviewed this quarterly report on Form 10-Q of CNA Financial Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: | July 30, 2013 | By | /s/ Thomas F. Motamed | |
Thomas F. Motamed | ||||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of CNA Financial Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: | July 30, 2013 | By | /s/ D. Craig Mense | |
D. Craig Mense | ||||
Chief Financial Officer |
• | the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2013 filed on the date hereof with the Securities and Exchange Commission (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | July 30, 2013 | By | /s/ Thomas F. Motamed | |
Thomas F. Motamed | ||||
Chief Executive Officer |
• | the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2013 filed on the date hereof with the Securities and Exchange Commission (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | July 30, 2013 | By | /s/ D. Craig Mense | |
D. Craig Mense | ||||
Chief Financial Officer |
Commitments, Contingencies, and Guarantees
|
6 Months Ended |
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Jun. 30, 2013
|
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies, and Guarantees | Note J. Commitments, Contingencies, and Guarantees Commitments and Contingencies The Company holds an investment in a real estate joint venture. In the normal course of business, the Company, on a joint and several basis with other unrelated insurance company shareholders, has committed to continue funding the operating deficits of this joint venture. Additionally, the Company and the other unrelated shareholders, on a joint and several basis, have guaranteed an operating lease for an office building, which expires in 2016. The guarantee of the operating lease is a parallel guarantee to the commitment to fund operating deficits; consequently, the separate guarantee to the lessor is not expected to be triggered as long as the joint venture continues to be funded by its shareholders which provide liquidity to make its annual lease payments. In the event that the other parties to the joint venture are unable to meet their commitments in funding the operations of this joint venture, the Company would be required to assume the obligation for the entire office building operating lease. The Company does not believe it is likely that it will be required to do so. However, the maximum potential future lease payments and other related costs at June 30, 2013 that the Company could be required to pay under this guarantee, in excess of amounts already recorded, were approximately $92 million. If the Company were required to assume the entire lease obligation, the Company would have the right to pursue reimbursement from the other shareholders and the right to all sublease revenues. Guarantees In the course of selling business entities and assets to third parties, the Company has agreed to indemnify purchasers for losses arising out of breaches of representation and warranties with respect to the business entities or assets being sold, including, in certain cases, losses arising from undisclosed liabilities or certain named litigation. Such indemnification provisions generally survive for periods ranging from nine months following the applicable closing date to the expiration of the relevant statutes of limitation. As of June 30, 2013, the aggregate amount of quantifiable indemnification agreements in effect for sales of business entities, assets and third party loans was $724 million. In addition, the Company has agreed to provide indemnification to third party purchasers for certain losses associated with sold business entities or assets that are not limited by a contractual monetary amount. As of June 30, 2013, the Company had outstanding unlimited indemnifications in connection with the sales of certain of its business entities or assets that included tax liabilities arising prior to a purchaser's ownership of an entity or asset, defects in title at the time of sale, employee claims arising prior to closing and in some cases losses arising from certain litigation and undisclosed liabilities. These indemnification agreements survive until the applicable statutes of limitation expire or until the agreed upon contract terms expire. As of June 30, 2013 and December 31, 2012, the Company had recorded liabilities of approximately $7 million related to indemnification agreements and management believes that it is not likely that any future indemnity claims will be significantly greater than the amounts recorded. |
Commitments, Contingencies, and Guarantees (Narrative) (Detail) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Maximum potential future lease payments and other related costs under guarantee on a real estate joint venture | $ 92 | |
Aggregate amount of quantifiable indemnification agreements in effect for sales of business entities, assets and third party loans | 724 | |
Recorded liabilities related to indemnification agreements | $ 7 | $ 7 |
Investments
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Note C. Investments The significant components of net investment income are presented in the following table. Net Investment Income
Net realized investment gains (losses) are presented in the following table. Net Realized Investment Gains (Losses)
The components of net other-than-temporary impairment (OTTI) losses recognized in earnings by asset type are summarized in the following table.
The following tables provide a summary of fixed maturity and equity securities. Summary of Fixed Maturity and Equity Securities
The net unrealized gains on investments included in the tables above are recorded as a component of Accumulated other comprehensive income (AOCI). When presented in AOCI, these amounts are net of tax and any required Shadow Adjustments. At June 30, 2013 and December 31, 2012, the net unrealized gains on investments included in AOCI were net of after-tax Shadow Adjustments of $883 million and $1,511 million. To the extent that unrealized gains on fixed income securities supporting certain products within the Life & Group Non-Core segment would result in a premium deficiency if realized, a related decrease in Deferred acquisition costs and/or increase in Insurance reserves are recorded, net of tax, as a reduction of net unrealized gains through Other comprehensive income (loss) (Shadow Adjustments). The following tables summarize the estimated fair value and gross unrealized losses of available-for-sale fixed maturity and equity securities in a gross unrealized loss position by the length of time in which the securities have continuously been in that position. Securities in a Gross Unrealized Loss Position
The amount of pretax net realized losses on available-for-sale securities reclassified out of AOCI into earnings was $7 million for the three months ended June 30, 2013, and the amount of pretax net realized gains on available-for-sale securities reclassified out of AOCI into earnings was $12 million for the six months ended June 30, 2013. The amount of pretax net realized gains on available-for-sale securities reclassified out of AOCI into earnings was $15 million and $47 million for the three and six months ended June 30, 2012. Based on current facts and circumstances, the Company believes the unrealized losses presented in the June 30, 2013 Securities in a Gross Unrealized Loss Position table above, are primarily attributable to broader economic conditions, changes in interest rates and credit spreads, market illiquidity and other market factors, but are not indicative of the ultimate collectibility of the current amortized cost of the securities. The investments with longer duration, primarily included within the states, municipalities and political subdivision asset category, were more significantly impacted by changes in market interest rates. The Company has no current intent to sell these securities, nor is it more likely than not that it will be required to sell prior to recovery of amortized cost; accordingly, the Company has determined that there are no additional OTTI losses to be recorded at June 30, 2013. The following table summarizes the activity for the three and six months ended June 30, 2013 and 2012 related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held at June 30, 2013 and 2012 for which a portion of an OTTI loss was recognized in Other comprehensive income (loss).
Contractual Maturity The following table summarizes available-for-sale fixed maturity securities by contractual maturity at June 30, 2013 and December 31, 2012. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid with or without call or prepayment penalties. Securities not due at a single date are allocated based on weighted average life. Contractual Maturity
Investment Commitments As of June 30, 2013, the Company had committed approximately $372 million to future capital calls from various third-party limited partnership investments in exchange for an ownership interest in the related partnerships. The Company invests in various privately placed debt securities, including bank loans, as part of its overall investment strategy and has committed to additional future purchases, sales and funding. As of June 30, 2013, the Company had commitments to purchase or fund additional amounts of $160 million and sell $150 million under the terms of such securities. |
Benefit Plans (Tables)
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net periodic cost (benefit) | Net Periodic Cost (Benefit)
|
Business Segments (Revenues by Line of Business) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
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Revenues | $ 2,493 | $ 2,246 | $ 4,996 | $ 4,647 |
CNA Specialty [Domain]
|
||||
Revenues | 954 | 896 | 1,910 | 1,841 |
International - Specialty [Member]
|
||||
Revenues | 59 | 53 | 118 | 110 |
Professional & Management Liability [Member]
|
||||
Revenues | 687 | 645 | 1,387 | 1,339 |
Surety [Member]
|
||||
Revenues | 123 | 121 | 239 | 240 |
Warranty & Alternative Risks [Member]
|
||||
Revenues | 85 | 77 | 166 | 152 |
CNA Commercial [Domain]
|
||||
Revenues | 1,104 | 984 | 2,205 | 2,072 |
Commercial Insurance [Member]
|
||||
Revenues | 827 | 736 | 1,653 | 1,571 |
International - Commercial [Member]
|
||||
Revenues | 90 | 90 | 183 | 181 |
Small Business [Member]
|
||||
Revenues | 187 | 158 | 369 | 320 |
Hardy [Domain]
|
||||
Revenues | 77 | 144 | ||
Life & Group Non-Core [Domain]
|
||||
Revenues | 346 | 360 | 709 | 710 |
Health [Member]
|
||||
Revenues | 287 | 287 | 585 | 578 |
Life & Annuity [Member]
|
||||
Revenues | 58 | 57 | 119 | 117 |
Other
|
||||
Revenues | 1 | 16 | 5 | 15 |
Corporate and Other Non-Core revenues [Member]
|
||||
Revenues | 13 | 7 | 30 | 25 |
Eliminations [Member]
|
||||
Revenues | $ (1) | $ (1) | $ (2) | $ (1) |
Business Segments
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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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.
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
|
Claim and Claim Adjustment Expense Reserves (Net prior year claim and allocated claim adjustment expense reserve development for CNA Commercial segment) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
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Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development, excluding Life & Group | $ (5) | $ (52) | $ (31) | $ (70) |
CNA Commercial [Member]
|
||||
Commercial Auto | 2 | 2 | (3) | 2 |
General Liability | 15 | (13) | (6) | (5) |
Workers' Compensation | 45 | 8 | 70 | (11) |
Property and Other | (35) | (10) | (45) | (13) |
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development, excluding Life & Group | $ 27 | $ (13) | $ 16 | $ (27) |
Derivative Financial Instruments (Narrative) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
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Derivative transactions entered into | $ 1,443 | $ 447 | $ 2,047 | $ 779 |
Derivative transactions terminated | $ 1,523 | $ 391 | $ 2,065 | $ 712 |
Changes in Accumulated Other Comprehensive Income (Loss) by Component (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Changes in Accumulated Other Comprehensive Income (Loss) by Component [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | Changes in Accumulated Other Comprehensive Income (Loss)
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Business Segments (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant components of the Company's continuing operations and selected balance sheet items |
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Revenues by line of business | Revenues by Line of Business
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Fair Value (Narrative) (Details) (USD $)
|
Jun. 30, 2013
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Jun. 30, 2012
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---|---|---|
Fair Value Disclosures [Abstract] | ||
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount | ||
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount |
Claim and Claim Adjustment Expense Reserves (Net prior year claim and allocated claim adjustment expense reserve development for CNA Hardy segment) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
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Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development, excluding Life & Group | $ (5) | $ (52) | $ (31) | $ (70) |
Hardy [Member]
|
||||
Marine and Aviation | 4 | 3 | ||
Non-Marine Property | 7 | 7 | ||
Property Treaty | 2 | 2 | ||
Specialty | (1) | (1) | ||
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development, excluding Life & Group | $ 12 | $ 11 |
Investments (Net investment income) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Gross investment income | $ 592 | $ 485 | $ 1,237 | $ 1,147 |
Investment expense | (14) | (15) | (26) | (29) |
Net investment income | 578 | 470 | 1,211 | 1,118 |
Fixed maturity securities [Member]
|
||||
Gross investment income | 498 | 505 | 997 | 1,021 |
Short term investments [Member]
|
||||
Gross investment income | 1 | 2 | 2 | 3 |
Limited partnership investments [Member]
|
||||
Gross investment income | 79 | (35) | 210 | 95 |
Equity securities [Member]
|
||||
Gross investment income | 3 | 2 | 6 | 6 |
Mortgage loans [Member]
|
||||
Gross investment income | 6 | 5 | 11 | 8 |
Trading portfolio [Member]
|
||||
Gross investment income | 5 | 4 | 10 | 11 |
Other [Member]
|
||||
Gross investment income | $ 2 | $ 1 | $ 3 |
Fair Value (Quantitative information about significant unobservable inputs in the fair value measurement of level 3 assets) (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Fixed maturity securities [Member] | Income Approach Valuation Technique [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Assets, Fair Value Disclosure | $ 106 | $ 121 |
Fixed maturity securities [Member] | Income Approach Valuation Technique [Member] | Minimum [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Expected call date | 1.6 | 3.3 |
Credit spread adjustment | 0.02% | |
Credit spread | 1.95% | |
Fixed maturity securities [Member] | Income Approach Valuation Technique [Member] | Maximum [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Expected call date | 3.5 | 5.3 |
Credit spread adjustment | 0.48% | |
Credit spread | 7.95% | |
Fixed maturity securities [Member] | Income Approach Valuation Technique [Member] | Weighted Average [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Expected call date | 3.1 | 4.3 |
Credit spread adjustment | 0.17% | |
Credit spread | 2.67% | |
Fixed maturity securities [Member] | Market approach valuation technique [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Assets, Fair Value Disclosure | 83 | 72 |
Fixed maturity securities [Member] | Market approach valuation technique [Member] | Minimum [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Private offering price | $ 36.32 | $ 42.39 |
Fixed maturity securities [Member] | Market approach valuation technique [Member] | Maximum [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Private offering price | $ 113.76 | $ 102.32 |
Fixed maturity securities [Member] | Market approach valuation technique [Member] | Weighted Average [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Private offering price | $ 101.70 | $ 100.11 |
Equity securities [Member] | Market approach valuation technique [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Assets, Fair Value Disclosure | 13 | 34 |
Equity securities [Member] | Market approach valuation technique [Member] | Minimum [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Private offering price | $ 33.73 | $ 4.54 |
Equity securities [Member] | Market approach valuation technique [Member] | Maximum [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Private offering price | $ 4,017.00 | $ 3,842.00 |
Equity securities [Member] | Market approach valuation technique [Member] | Weighted Average [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Private offering price | $ 936.89 | $ 571.17 |
Life settlement contracts [Member] | Income Approach Valuation Technique [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Assets, Fair Value Disclosure | $ 91 | $ 100 |
Life settlement contracts [Member] | Income Approach Valuation Technique [Member] | Minimum [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Mortality assumption | 69.00% | 69.00% |
Life settlement contracts [Member] | Income Approach Valuation Technique [Member] | Maximum [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Mortality assumption | 883.00% | 883.00% |
Life settlement contracts [Member] | Income Approach Valuation Technique [Member] | Weighted Average [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Mortality assumption | 209.20% | 208.90% |
Life settlement contracts [Member] | Income Approach Valuation Technique [Member] | Rate [Member]
|
||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Discount rate risk premium | 9.00% | 9.00% |
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