Business Segments

3 Months Ended

Mar. 31, 2014

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, 2013. 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, 2) income or loss from discontinued operations and 3) any cumulative effects of changes in accounting guidance. The calculation of net operating income excludes net realized investment gains or losses because net realized investment gains or losses are largely discretionary, except for some losses related to OTTI, and are generally driven by economic factors that are not necessarily consistent with key drivers of underwriting performance, and are therefore not considered an indication of trends in insurance operations.

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

Three months ended March 31, 2014	CNA Specialty			CNA Commercial			Hardy			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)																Eliminations			Total
Operating revenues
Net earned premiums	$	748		$	822		$	98		$	139		$	—		$	(1	)	$	1,806
Net investment income	151			198			1			171			5			—			526
Other revenues	68			9			1			5			2			—			85
Total operating revenues	967			1,029			100			315			7			(1		)	2,417
Claims, Benefits and Expenses
Net incurred claims and benefits	480			622			38			306			(3		)	—			1,443
Policyholders’ dividends	1			2			—			—			—			—			3
Amortization of deferred acquisition costs	153			140			28			8			—			—			329
Other insurance related expenses	72			139			20			32			—			(1		)	262
Other expenses	61			11			4			1			51			—			128
Total claims, benefits and expenses	767			914			90			347			48			(1		)	2,165
Operating income (loss) before income tax	200			115			10			(32		)	(41		)	—			252
Income tax (expense) benefit on operating income (loss)	(66		)	(37		)	(3		)	30			14			—			(62		)
Net operating income (loss)	134			78			7			(2		)	(27		)	—			190
Net realized investment gains (losses), pretax	12			12			—			16			6			—			46
Income tax (expense) benefit on net realized investment gains (losses)	(4		)	(4		)	—			(6		)	(2		)	—			(16		)
Net realized investment gains (losses)	8			8			—			10			4			—			30
Net income (loss) from continuing operations	$	142		$	86		$	7		$	8		$	(23	)	$	—		$	220

March 31, 2014
(In millions)
Reinsurance receivables	$	555	$	1,050	$	153	$	401	$	2,940	$	—	$	5,099
Insurance receivables	$	794	$	1,134	$	191	$	10	$	3	$	—	$	2,132
Deferred acquisition costs	$	326	$	273	$	53	$	—	$	—	$	—	$	652
Goodwill	$	117	$	—	$	38	$	—	$	—	$	—	$	155
Insurance reserves
Claim and claim adjustment expenses	$	6,786	$	10,574	$	377	$	3,085	$	3,111	$	—	$	23,933
Unearned premiums	1,863		1,583		250		142		—		—		3,838
Future policy benefits	—		—		—		8,254		—		—		8,254
Policyholders’ funds	9		17		—		—		—		—		26

Three months ended March 31, 2013	CNA Specialty			CNA Commercial			Hardy			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)																Eliminations			Total
Operating revenues
Net earned premiums	$	723		$	837		$	64		$	141		$	—		$	(1	)	$	1,764
Net investment income	170			250			1			162			8			—			591
Other revenues	60			10			1			3			3			—			77
Total operating revenues	953			1,097			66			306			11			(1		)	2,432
Claims, Benefits and Expenses
Net incurred claims and benefits	465			600			31			293			4			—			1,393
Policyholders’ dividends	1			2			—			—			—			—			3
Amortization of deferred acquisition costs	150			149			21			8			—			—			328
Other insurance related expenses	71			143			16			32			—			(1		)	261
Other expenses	54			9			7			5			46			—			121
Total claims, benefits and expenses	741			903			75			338			50			(1		)	2,106
Operating income (loss) before income tax	212			194			(9		)	(32		)	(39		)	—			326
Income tax (expense) benefit on operating income (loss)	(72		)	(69		)	1			26			13			—			(101		)
Net operating income (loss)	140			125			(8		)	(6		)	(26		)	—			225
Net realized investment gains (losses), pretax	3			4			1			9			6			—			23
Income tax (expense) benefit on net realized investment gains (losses)	(1		)	(1		)	—			(3		)	(2		)	—			(7		)
Net realized investment gains (losses)	2			3			1			6			4			—			16
Net income (loss) from continuing operations	$	142		$	128		$	(7	)	$	—		$	(22	)	$	—		$	241

December 31, 2013
(In millions)
Reinsurance receivables	$	546	$	1,075	$	197	$	1,203	$	3,067	$	—	$	6,088
Insurance receivables	$	775	$	1,099	$	176	$	11	$	2	$	—	$	2,063
Deferred acquisition costs	$	318	$	257	$	49	$	—	$	—	$	—	$	624
Goodwill	$	117	$	—	$	38	$	—	$	—	$	—	$	155
Insurance reserves
Claim and claim adjustment expenses	$	6,689	$	10,649	$	386	$	3,058	$	3,307	$	—	$	24,089
Unearned premiums	1,805		1,536		249		128		—		—		3,718
Future policy benefits	—		—		—		10,471		—		—		10,471
Policyholders’ funds	9		15		—		92		—		—		116

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

Revenues by Line of Business

Three months ended March 31
(In millions)	2014			2013
CNA Specialty
International	$	64		$	59
Management & Professional Liability	704			700
Surety	122			116
Warranty & Alternative Risks	89			81
CNA Specialty revenues	979			956
CNA Commercial
Commercial Insurance	762			826
International	95			93
Small Business	184			182
CNA Commercial revenues	1,041			1,101
Hardy revenues	100			67
Life & Group Non-Core revenues	331			315
Corporate & Other Non-Core revenues	13			17
Eliminations	(1		)	(1		)
Total revenues	$	2,463		$	2,455