2014 Q2 8K

0000021175-14-000052.txt : 20140804 0000021175-14-000052.hdr.sgml : 20140804 20140804132040 ACCESSION NUMBER: 0000021175-14-000052 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20140804 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20140804 DATE AS OF CHANGE: 20140804 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CNA FINANCIAL CORP CENTRAL INDEX KEY: 0000021175 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 366169860 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05823 FILM NUMBER: 141012215 BUSINESS ADDRESS: STREET 1: CNA STREET 2: 333 S. WABASH CITY: CHICAGO STATE: IL ZIP: 60604 BUSINESS PHONE: 3128225000 MAIL ADDRESS: STREET 1: CNA STREET 2: 333 S. WABASH CITY: CHICAGO STATE: IL ZIP: 60604 8-K 1 q2148k.htm FORM 8-K 2014 Q2 8K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 4, 2014

CNA FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)



Delaware	1-5823	36-6169860
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)



333 S. Wabash, Chicago, Illinois		60604
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code (312) 822-5000

NOT APPLICABLE

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On August 4, 2014, the registrant issued a press release and posted on its website (www.cna.com) a financial supplement providing information on its results of operations for the second quarter 2014. The press release is furnished as Exhibit 99.1 and the financial supplement is furnished as Exhibit 99.2 to this Form 8-K.

The information under Item 2.02 and in Exhibits 99.1 and 99.2 in this Current Report is being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information under Item 2.02 and in Exhibits 99.1 and 99.2 in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits:

See Exhibit Index.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



		CNA Financial Corporation
		(Registrant)

Date: August 4, 2014	By	/s/ D. Craig Mense
		(Signature)
		D. Craig Mense Executive Vice President and Chief Financial Officer

EXHIBIT INDEX



Exhibit No.		Description
99.1		CNA Financial Corporation press release, issued August 4, 2014, providing information on the second quarter 2014 results of operations.

99.2		CNA Financial Corporation financial supplement, posted on its website August 4, 2014, providing supplemental financial information on the second quarter 2014.

EX-99.1 2 q214exhibit991.htm EX-99.1 Q2-14 Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACT:



MEDIA:		ANALYSTS:
Jennifer Martinez, 312/822-5167		James Anderson, 312/822-7757
Sarah Pang, 312/822-6394		Derek Smith, 312/822-6612
		David Adams, 312/822-2183

CNA FINANCIAL ANNOUNCES SECOND QUARTER 2014 RESULTS


•	NET OPERATING INCOME OF $272 MILLION, OR $1.00 PER SHARE


•	1.7 POINT IMPROVEMENT IN P&C LOSS RATIO, EX CATS AND DEVELOPMENT


•	OPERATING ROE OF 9.0%


•	BOOK VALUE PER SHARE INCREASE OF 4% FOR THE QUARTER, UP 2% EX AOCI


•	QUARTERLY DIVIDEND OF $0.25 PER SHARE

CHICAGO, August 4, 2014 --- CNA Financial Corporation (NYSE: CNA) today announced second quarter 2014 results, which included net operating income of $272 million, or $1.00 per share, and net income of $267 million, or $0.98 per share. Property & Casualty Operations' combined ratio for the second quarter was 101.3%, or 96.3% excluding catastrophes and development.

CNA Financial also declared a quarterly dividend of $0.25 per share, payable September 3, 2014 to stockholders of record on August 18, 2014.



	Results for the Three Months Ended June 30 (a)				Results for the Six Months Ended June 30 (a)
($ millions, except per share data)	2014		2013		2014			2013
Net operating income	$	272	$	199	$	462		$	424
Income (loss) from discontinued operations, net of tax	6		4		(201		)	13
Net income	267		194		280			444

Net operating income per diluted share	$	1.00	$	0.74	$	1.71		$	1.57
Net income per diluted share	0.98		0.72		1.03			1.64

	June 30, 2014		December 31, 2013
Book value per share	$	48.43	$	46.91
Book value per share excluding AOCI	44.87		45.26


(a)	Management utilizes the net operating income financial measure to monitor the Company's operations. Please refer to Note O in the Consolidated Financial Statements within CNA's Annual Report on Form 10-K for the year ended December 31, 2013 for further discussion of this measure.

Property & Casualty Operations' net operating income was $236 million for the second quarter of 2014 as compared with $258 million in the prior year quarter. Improved current accident year underwriting results were substantially offset by unfavorable net prior year development. In addition, 2013 results included a legal settlement benefit of $30 million after-tax. After-tax catastrophe losses were $37 million for the three months ended June 30, 2014, primarily due to U.S. weather-related events, as compared with $43 million for the same period in 2013.

Net operating results increased $95 million for our non-core segments, primarily related to a $56 million after-tax postretirement plan curtailment benefit, as well as improved results in our Life & Group segment.

After-tax net investment income increased to $391 million for the second quarter of 2014 as compared with $368 million in the prior year quarter. Both limited partnerships and fixed maturity securities contributed to the increase.

Property & Casualty Operations

"Our second quarter results reflect strong earnings and continued progress on our underlying loss ratio," said Thomas F. Motamed, Chairman and Chief Executive Officer of CNA Financial Corporation. "We believe our existing strategy, which emphasizes disciplined underwriting and portfolio management, will successfully redefine CNA."



	Results for the Three Months Ended June 30							Results for the Six Months Ended June 30
($ millions)	2014				2013			2014				2013
Net written premiums	$	1,654			$	1,720		$	3,421			$	3,496
NWP Growth (% year over year)	(4		)	%	7		%	(2		)	%	9			%
Net operating income	$	236			$	258		$	455			$	515

Loss ratio excluding catastrophes and development	62.8			%	64.5		%	63.4			%	65.7			%
Effect of catastrophe impacts	3.4				3.9			3.9				3.2
Effect of development-related items	1.6				—			0.7				(1.0		)
Loss ratio	67.8			%	68.4		%	68.0			%	67.9			%

Combined ratio	101.3			%	101.5		%	101.4			%	101.5			%
Combined ratio excluding catastrophes and development	96.3			%	97.6		%	96.8			%	99.3			%

Business Operating Highlights

CNA Specialty



	Results for the Three Months Ended June 30								Results for the Six Months Ended June 30
($ millions)	2014				2013				2014				2013
Net written premiums	$	742			$	756			$	1,538			$	1,559
NWP Growth (% year over year)	(2		)	%	5			%	(1		)	%	5			%
Net operating income	$	182			$	148			$	316			$	288

Loss ratio excluding catastrophes and development	62.5			%	65.8			%	63.1			%	66.4			%
Effect of catastrophe impacts	0.6				0.7				1.0				0.5
Effect of development-related items	(7.3		)		(5.9		)		(4.1		)		(4.5		)
Loss ratio	55.8			%	60.6			%	60.0			%	62.4			%

Combined ratio	86.4			%	90.4			%	90.3			%	92.7			%
Combined ratio excluding catastrophes and development	93.1			%	95.6			%	93.4			%	96.7			%


•	Net operating income increased $34 million for the three months ended June 30, 2014 as compared with the same period in 2013. This increase was primarily due to improved underwriting results.

•

The combined ratio decreased 4.0 points for the three months ended June 30, 2014 as compared with the same period in 2013. The loss ratio decreased 4.8 points, due primarily to an improved current accident year loss ratio as well as increased favorable net prior year development. Catastrophe losses were $5 million, or 0.6 points of the loss ratio, for the three months ended June 30, 2014, as compared with $6 million, or 0.7 points of the loss ratio, for the three months ended June 30, 2013.

•

Net written premiums for CNA Specialty for the three months ended June 30, 2014 were largely consistent with the same period in 2013, although the level of new business has declined. Average rate increased 4% for the three months ended June 30, 2014, as compared with an increase of 6% for the three months ended June 30, 2013 for the policies that renewed in each period. Retention of 82% and 85% was achieved in each respective period.

CNA Commercial



	Results for the Three Months Ended June 30							Results for the Six Months Ended June 30
($ millions)	2014				2013			2014				2013
Net written premiums	$	779			$	826		$	1,678			$	1,744
NWP Growth (% year over year)	(6		)	%	(7)		%	(4		)	%	1		%
Net operating income	$	59			$	112		$	137			$	237

Loss ratio excluding catastrophes and development	64.7			%	66.0		%	65.8			%	67.3		%
Effect of catastrophe impacts	5.7				7.1			6.6				5.8
Effect of development-related items	9.9				3.4			5.5				1.0
Loss ratio	80.3			%	76.5		%	77.9			%	74.1		%

Combined ratio	115.0			%	111.7		%	112.4			%	109.3		%
Combined ratio excluding catastrophes and development	99.4			%	101.2		%	100.3			%	102.5		%

•

Net operating income decreased $53 million for the three months ended June 30, 2014 as compared with the same period in 2013. This decrease was due to higher unfavorable net prior year development, partially offset by improved current accident year underwriting results. The majority of the 2014 unfavorable development relates to business classes which have been exited, but also includes Small Business where underwriting actions have been taken in an effort to improve profitability. In addition, 2013 results included a legal settlement benefit of $30 million after-tax.

•

The combined ratio increased 3.3 points for the three months ended June 30, 2014 as compared with the same period in 2013. The loss ratio increased 3.8 points, primarily due to higher unfavorable net prior year development, partially offset by lower catastrophe losses and an improved non-catastrophe current accident year loss ratio. Catastrophe losses were $47 million, or 5.7 points of the loss ratio, for the three months ended June 30, 2014, as compared with $59 million, or 7.1 points of the loss ratio, for the three months ended June 30, 2013.

•

Net written premiums for CNA Commercial decreased $47 million for the three months ended June 30, 2014 as compared with the same period in 2013, primarily driven by underwriting actions taken in certain business classes and a decreased level of new business, partially offset by continued rate increases. Average rate increased 4% for the three months ended June 30, 2014, as compared with an increase of 9% for the three months ended June 30, 2013 for the policies that renewed in each period. Retention of 70% and 75% was achieved in each respective period.

Hardy



	Results for the Three Months Ended June 30								Results for the Six Months Ended June 30
($ millions)	2014				2013				2014				2013
Net written premiums	$	133			$	138			$	205			$	193
NWP growth (% year over year)	(4		)	%					6			%
Net operating income (loss)	$	(5	)		$	(2	)		$	2			$	(10	)

Loss ratio excluding catastrophes and development	49.7			%	36.5			%	45.1			%	41.5			%
Effect of catastrophe impacts	4.6				—				3.9				—
Effect of development-related items	1.9				17.4				(1.8		)		10.0
Loss ratio	56.2			%	53.9			%	47.2			%	51.5			%

Combined ratio	102.9			%	98.4			%	94.7			%	101.6			%
Combined ratio excluding catastrophes and development	96.4			%	81.0			%	92.6			%	91.6			%


•	Net operating loss increased $3 million for the three months ended June 30, 2014 as compared with the same period in 2013, primarily due to underwriting results.

•

The combined ratio increased 4.5 points for the three months ended June 30, 2014 as compared with the same period in 2013. The loss ratio increased 2.3 points due to deterioration in the current accident year loss ratio, including higher catastrophe losses, partially offset by lower unfavorable net prior year development. Catastrophe losses were $4 million, or 4.6 points of the loss ratio, for the three months ended June 30, 2014. There were no catastrophe losses for the three months ended June 30, 2013. The expense ratio increased 2.2 points driven by integration costs and the effect of foreign currency exchange rates.


•	Net written premiums for Hardy for the three months ended June 30, 2014 were largely consistent with the same period in 2013. Average rate decreased 8% for the three months ended June 30, 2014, as compared with a decrease of 1% for the three months ended June 30, 2013 for the policies that renewed in each period. Retention of 67% and 69% was achieved in each respective period.

Life & Group Non-Core



	Results for the Three Months Ended June 30					Results for the Six Months Ended June 30
($ millions)	2014		2013			2014		2013
Operating revenues	$	320	$	303		$	635	$	609
Total claims, benefits and expenses	339		387			686		725
Net operating income (loss)	9		(41		)	7		(47		)

•

Net operating results improved $50 million for the three months ended June 30, 2014 as compared with the same period in 2013, primarily driven by our long term care business which benefited from favorable morbidity and persistency as well as rate increase actions. Results were also affected by higher net investment income, driven by a higher invested asset base, and a gain on a life settlement contract in 2014.

Corporate & Other Non-Core



	Results for the Three Months Ended June 30						Results for the Six Months Ended June 30
($ millions)	2014			2013			2014		2013
Operating revenues	$	10		$	9		$	16	$	19
Total claims, benefits and expenses	(32		)	36			15		85
Net operating income (loss)	27			(18		)	—		(44		)

•

Net operating results for the three months ended June 30, 2014 improved $45 million as compared with the same period in 2013. Results in 2014 included a $56 million after-tax benefit relating to a postretirement plan curtailment. This favorable item was partially offset by higher interest expense from a new debt issuance in February 2014, in advance of the December 2014 maturity of our existing debt. In addition, 2013 results included a release of an allowance established for officer notes receivable.

Sale of Continental Assurance Company

On August 1, 2014, the Company announced the successful completion of the sale of Continental Assurance Company as well as a 100% reinsurance agreement with a Bermuda-based subsidiary of CNA. With the completion of the transaction, CNA has effectively disposed of Life & Group Non-Core gross GAAP insurance reserves of $3.5 billion, or 23%, representing the vast majority of its payout annuity business.

Net Operating Income (Loss)

	Results for the Three Months Ended June 30						Results for the Six Months Ended June 30
($ millions)	2014			2013			2014		2013
CNA Specialty	$	182		$	148		$	316	$	288
CNA Commercial	59			112			137		237
Hardy	(5		)	(2		)	2		(10		)
Total P&C Operations	236			258			455		515
Life & Group Non-Core	9			(41		)	7		(47		)
Corporate & Other Non-Core	27			(18		)	—		(44		)
Total	$	272		$	199		$	462	$	424

Net Income (Loss)

	Results for the Three Months Ended June 30						Results for the Six Months Ended June 30
($ millions)	2014			2013			2014			2013
CNA Specialty	$	179		$	144		$	321		$	286
CNA Commercial	53			104			139			232
Hardy	(6		)	(2		)	1			(9		)
Total P&C Operations	226			246			461			509
Life & Group Non-Core	6			(40		)	14			(40		)
Corporate & Other Non-Core	29			(16		)	6			(38		)
Discontinued Operations	6			4			(201		)	13
Total	$	267		$	194		$	280		$	444

Property & Casualty Operations Gross Written Premiums

	Results for the Three Months Ended June 30				Results for the Six Months Ended June 30
($ millions)	2014		2013		2014		2013
CNA Specialty	$	1,428	$	1,295	$	2,875	$	2,612
CNA Commercial	840		950		1,765		1,910
Hardy	142		147		264		254
Total P&C Operations	$	2,410	$	2,392	$	4,904	$	4,776

Property & Casualty Operations Net Written Premiums

	Results for the Three Months Ended June 30				Results for the Six Months Ended June 30
($ millions)	2014		2013		2014		2013
CNA Specialty	$	742	$	756	$	1,538	$	1,559
CNA Commercial	779		826		1,678		1,744
Hardy	133		138		205		193
Total P&C Operations	$	1,654	$	1,720	$	3,421	$	3,496

About the Company

Serving businesses and professionals since 1897, CNA is the country's eighth largest commercial insurance writer and the 13^th largest property and casualty company. CNA's insurance products include standard commercial lines, specialty lines, surety, marine and other property and casualty coverages. CNA's services include risk management, information services, underwriting, risk control and claims administration. For more information, please visit CNA at www.cna.com. “CNA” is a service mark registered by CNA Financial Corporation with the United States Patent and Trademark Office. Certain CNA Financial Corporation subsidiaries use the “CNA” service mark in connection with insurance underwriting and claims activities.

Conference Call and Webcast/Presentation Information

A conference call for investors and the professional investment community will be held at 10:00 a.m. (ET) today. On the conference call will be Thomas F. Motamed, Chairman and Chief Executive Officer of CNA Financial Corporation, and other members of senior management. Participants can access the call by dialing (888) 430-8705, or for international callers, (719) 325-2452. The call will also be broadcast live on the internet at http://investor.cna.com or you may go to the investor relations pages of the CNA website (www.cna.com) for further details. A presentation will be posted and available on the CNA website and will provide additional insight into the results.

The call is available to the media, but questions will be restricted to investors and the professional investment community. A taped replay of the call will be available through August 11, 2014 by dialing (888) 203-1112, or for international callers, (719) 457-0820. The replay passcode is 9133719. The replay will also be available on CNA's website. Financial supplement information related to the results is available on the investor relations pages of the CNA website or by contacting David Adams at (312) 822-2183.

Definition of Reported Segments

CNA Specialty provides professional and management liability, surety and other property and casualty coverages and services, which include warranty and service contracts. Specialty products are sold both domestically and abroad, through brokers, independent agencies and managing general underwriters.

CNA Commercial works with an independent agency distribution system and brokers to market a broad range of property and casualty insurance products and services to small, middle-market and large businesses and organizations domestically and abroad.

Hardy, through Lloyd's Syndicate 382, underwrites primarily short-tail exposures in marine and aviation, non-marine property, specialty lines and property treaty reinsurance.

Life & Group Non-Core primarily includes the results of the individual and group long term care business, as well as closed blocks of structured settlement liabilities, group accident and health reinsurance and life settlement contracts.

Corporate & Other Non-Core primarily includes certain corporate expenses, including interest on corporate debt, and the results of certain property and casualty business in run-off, including CNA Re and asbestos and environmental pollution.

Financial Measures

In the evaluation of the results of CNA Specialty, CNA Commercial and Hardy, management utilizes the loss ratio, the expense ratio, the dividend ratio and the combined ratio. These ratios are calculated using financial results prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios.

This press release may also reference or contain financial measures that are not in accordance with GAAP. For reconciliations of non-GAAP measures to the most comparable GAAP measures, please refer herein and/or to CNA's most recent 10-K on file with the Securities and Exchange Commission, as well as the financial supplement, available at www.cna.com.

Forward-Looking Statement

This press release may include statements which relate to anticipated future events (forward-looking statements) rather than actual present conditions or historical events. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes”, “expects”, “intends”, “anticipates”, “estimates” and similar expressions. Forward-looking statements, by their nature, are subject to a variety of inherent risks and uncertainties that could cause actual results to differ materially from the results projected. Many of these risks and uncertainties cannot be controlled by CNA. For a detailed description of these risks and uncertainties affecting CNA, please refer to CNA's most recent 10-K on file with the Securities and Exchange Commission available at www.cna.com.

Any forward-looking statements made in this press release are made by CNA as of the date of this press release. Further, CNA does not have any obligation to update or revise any forward-looking statement contained in this press release, even if CNA's expectations or any related events, conditions or circumstances change.

# # #

EX-99.2 3 q214exhibit992.htm EX-99.2 Q2-14 Exhibit 99.2

CNA Financial Corporation

Supplemental Financial Information

June 30, 2014

This report is for informational purposes only and includes consolidated financial statements and financial exhibits that are unaudited. This report should be read in conjunction with documents filed with the U.S. Securities and Exchange Commission, including the most recent Annual Report on Form 10-K.

Table of Contents



	Page
Consolidated Results
Statements of Operations..................................................................................................................................................................................................	1
Components of Income (Loss), Per Share Data and Return on Equity.............................................................................................................................	2
Selected Balance Sheets Data and Statements of Cash Flows Data...............................................................................................................................	3
Property & Casualty - Results of Operations
Property & Casualty...........................................................................................................................................................................................................	4
CNA Specialty....................................................................................................................................................................................................................	5
CNA Commercial...............................................................................................................................................................................................................	6
Hardy.................................................................................................................................................................................................................................	7
Non-Core - Results of Operations
Life & Group Non-Core......................................................................................................................................................................................................	8
Corporate & Other Non-Core.............................................................................................................................................................................................	9
Investment Information
Investment Summary - Consolidated................................................................................................................................................................................	10
Investment Summary - Property & Casualty and Corporate & Other Non-Core...............................................................................................................	11
Investment Summary - Life & Group Non-Core.................................................................................................................................................................	12
Investments - Fixed Maturity Securities by Credit Rating..................................................................................................................................................	13
Components of Net Investment Income............................................................................................................................................................................	14
Other
Claim & Claim Adjustment Expense Reserve Rollforward................................................................................................................................................	15
Life & Group Non-Core Policyholder Reserves.................................................................................................................................................................	16
Statutory Data - Combined Continental Casualty Companies - Preliminary......................................................................................................................	17
Definitions and Presentation..............................................................................................................................................................................................	18

Statements of Operations



Periods ended June 30	Three Months								Six Months
(In millions)	2014			2013			Change		2014			2013			Change
Revenues:
Net earned premiums	$	1,811		$	1,800		1	%	$	3,617		$	3,564		1		%
Net investment income	550			534			3		1,076			1,125			(4	)
Net realized investment gains (losses):
Other-than-temporary impairment (OTTI) losses	(5		)	(16		)			(7		)	(34		)
Portion of OTTI recognized in Other comprehensive income (loss)	—			—					—			—
Net OTTI losses recognized in earnings	(5		)	(16		)			(7		)	(34		)
Other net realized investment gains (losses)	(9		)	2					39			43
Net realized investment gains (losses)	(14		)	(14		)			32			9
Other revenues	93			130					178			207
Total revenues	2,440			2,450			—		4,903			4,905			—
Claims, Benefits and Expenses:
Insurance claims and policyholders' benefits	1,441			1,485					2,887			2,881
Amortization of deferred acquisition costs	335			335					664			663
Other operating expenses	254			319					600			659
Interest	46			41					90			83
Total claims, benefits and expenses	2,076			2,180			5		4,241			4,286			1
Income (loss) from continuing operations before income tax	364			270			35		662			619			7
Income tax (expense) benefit	(103		)	(80		)			(181		)	(188		)
Income (loss) from continuing operations	261			190			37		481			431			12
Income (loss) from discontinued operations, net of tax	6			4					(201		)	13
Net income (loss)	$	267		$	194		38	%	$	280		$	444		(37	)	%

Components of Income (Loss), Per Share Data and Return on Equity



Periods ended June 30	Three Months								Six Months
(In millions, except per share data)	2014				2013				2014				2013
Components of Income (Loss)
Net operating income (loss)	$	272			$	199			$	462			$	424
Net realized investment gains (losses)	(11		)		(9		)		19				7
Income (loss) from continuing operations	261				190				481				431
Income (loss) from discontinued operations	6				4				(201		)		13
Net income (loss)	$	267			$	194			$	280			$	444

Diluted Earnings (Loss) Per Common Share
Net operating income (loss)	$	1.00			$	0.74			$	1.71			$	1.57
Net realized investment gains (losses)	(0.03		)		(0.03		)		0.07				0.03
Income (loss) from continuing operations	0.97				0.71				1.78				1.60
Income (loss) from discontinued operations	0.01				0.01				(0.75		)		0.04
Diluted earnings (loss) per share	$	0.98			$	0.72			$	1.03			$	1.64

Weighted Average Outstanding Common Stock and Common Stock Equivalents
Basic	269.9				269.7				269.9				269.6
Diluted	270.6				270.1				270.5				270.0

Return on Equity
Net income (loss) ⁽¹⁾	8.3			%	6.4			%	4.4			%	7.3		%
Net operating income (loss) ⁽²⁾	9.0				6.8				7.6				7.3

(1) Annualized net income (loss) divided by the average stockholders' equity including accumulated other comprehensive income (loss) (AOCI) for the period. Average equity including AOCI is calculated using a simple average of the beginning and ending balances for the period.

(2) Annualized net operating income (loss) divided by the average stockholders' equity excluding AOCI for the period. Average equity excluding AOCI is calculated using a simple average of the beginning and ending balances for the period.

Selected Balance Sheets Data and Statements of Cash Flows Data



(In millions, except per share data)	June 30, 2014		December 31, 2013
Total assets	$	59,437	$	57,194
Insurance reserves	36,570		38,394
Debt	3,107		2,560
Total liabilities	46,363		44,543
Accumulated other comprehensive income (loss) ⁽¹⁾	962		442
Total stockholders' equity	13,074		12,651

Book value per common share	$	48.43	$	46.91
Book value per common share excluding AOCI	$	44.87	$	45.26

Outstanding shares of common stock (in millions of shares)	269.9		269.7



Three months ended June 30	2014			2013
Net cash flows provided (used) by operating activities	$	419		$	378
Net cash flows provided (used) by investing activities	(380		)	(310		)
Net cash flows provided (used) by financing activities	(47		)	(71		)
Net cash flows provided (used) by operating, investing and financing activities	$	(8	)	$	(3	)



Six months ended June 30	2014			2013
Net cash flows provided (used) by operating activities	$	587		$	569
Net cash flows provided (used) by investing activities	(734		)	(471		)
Net cash flows provided (used) by financing activities	163			(127		)
Net cash flows provided (used) by operating, investing and financing activities	$	16		$	(29	)

(1) At June 30, 2014 and December 31, 2013, the net unrealized gains on investments included in AOCI were net of after-tax Shadow Adjustments of $937 million and $532 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).

Property & Casualty - Results of Operations



Periods ended June 30	Three Months											Six Months
(In millions)	2014				2013				Change			2014				2013				Change
Gross written premiums	$	2,410			$	2,392			1		%	$	4,904			$	4,776			3		%
Net written premiums	1,654				1,720				(4	)		3,421				3,496				(2	)
Net earned premiums	1,672				1,662				1			3,340				3,286				2
Net investment income	370				363							720				784
Other revenues	82				127							160				198
Total operating revenues	2,124				2,152				(1	)		4,220				4,268				(1	)
Insurance claims and policyholders' benefits	1,136				1,140							2,279				2,239
Amortization of deferred acquisition costs	328				329							649				649
Other insurance related expenses	228				220							459				450
Other expenses	77				68							153				138
Total claims, benefits and expenses	1,769				1,757				(1	)		3,540				3,476				(2	)
Operating income (loss) before income tax	355				395				(10	)		680				792				(14	)
Income tax (expense) benefit on operating income (loss)	(119		)		(137		)					(225		)		(277		)
Net operating income (loss)	$	236			$	258			(9	)	%	$	455			$	515			(12	)	%

Loss & LAE	67.8			%	68.4			%	0.6		pts	68.0			%	67.9			%	(0.1	)	pts
Acquisition expense	19.3				19.5				0.2			19.4				19.4				—
Underwriting expense	14.0				13.4				(0.6	)		13.8				14.0				0.2
Expense	33.3				32.9				(0.4	)		33.2				33.4				0.2
Dividend	0.2				0.2				—			0.2				0.2				—
Combined ratio	101.3				101.5				0.2			101.4				101.5				0.1
Combined ratio excluding catastrophes and development	96.3			%	97.6			%	1.3		pts	96.8			%	99.3			%	2.5		pts

Pretax net accident year catastrophe losses incurred	$	56			$	65						$	130			$	104
Impact on loss & LAE ratio	3.4			%	3.9			%	0.5		pts	3.9			%	3.2			%	(0.7	)	pts

Pretax net prior year development and other ⁽¹⁾: (favorable) / unfavorable	$	28			$	(4	)					$	15			$	(39	)
Impact on loss & LAE ratio	1.6			%	—			%	(1.6	)	pts	0.7			%	(1.0		)	%	(1.7	)	pts

Rate	3			%	7			%	(4	)	pts	4			%	7			%	(3	)	pts
Retention	74			%	78			%	(4	)	pts	77			%	79			%	(2	)	pts
New Business (CNA Specialty and CNA Commercial only)	$	230			$	284			(19	)	%	$	499			$	592			(16	)	%

(1) Other includes the impacts of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts.

CNA Specialty - Results of Operations



Periods ended June 30	Three Months											Six Months
(In millions)	2014				2013				Change			2014				2013				Change
Gross written premiums	$	1,428			$	1,295			10		%	$	2,875			$	2,612			10		%
Net written premiums	742				756				(2	)		1,538				1,559				(1	)
Net earned premiums	763				746				2			1,511				1,469				3
Net investment income	161				151							312				321
Other revenues	74				63							142				123
Total operating revenues	998				960				4			1,965				1,913				3
Insurance claims and policyholders' benefits	427				453							908				919
Amortization of deferred acquisition costs	158				156							311				306
Other insurance related expenses	74				65							146				136
Other expenses	65				60							126				114
Total claims, benefits and expenses	724				734				1			1,491				1,475				(1	)
Operating income (loss) before income tax	274				226				21			474				438				8
Income tax (expense) benefit on operating income (loss)	(92		)		(78		)					(158		)		(150		)
Net operating income (loss)	$	182			$	148			23		%	$	316			$	288			10		%

Loss & LAE	55.8			%	60.6			%	4.8		pts	60.0			%	62.4			%	2.4		pts
Acquisition expense	19.8				19.4				(0.4	)		19.7				19.6				(0.1	)
Underwriting expense	10.7				10.3				(0.4	)		10.5				10.5				—
Expense	30.5				29.7				(0.8	)		30.2				30.1				(0.1	)
Dividend	0.1				0.1				—			0.1				0.2				0.1
Combined ratio	86.4				90.4				4.0			90.3				92.7				2.4
Combined ratio excluding catastrophes and development	93.1			%	95.6			%	2.5		pts	93.4			%	96.7			%	3.3		pts

Pretax net accident year catastrophe losses incurred	$	5			$	6						$	16			$	7
Impact on loss & LAE ratio	0.6			%	0.7			%	0.1		pts	1.0			%	0.5			%	(0.5	)	pts

Pretax net prior year development and other ⁽¹⁾: (favorable) / unfavorable	$	(56	)		$	(46	)					$	(66	)		$	(69	)
Impact on loss & LAE ratio	(7.3		)	%	(5.9		)	%	1.4		pts	(4.1		)	%	(4.5		)	%	(0.4	)	pts

Rate	4			%	6			%	(2	)	pts	4			%	7			%	(3	)	pts
Retention	82			%	85			%	(3	)	pts	83			%	85			%	(2	)	pts
New Business	$	80			$	99			(19	)	%	$	182			$	199			(9	)	%

(1) Other includes the impacts of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts.

CNA Commercial - Results of Operations



Periods ended June 30	Three Months											Six Months
(In millions)	2014				2013				Change			2014				2013				Change
Gross written premiums	$	840			$	950			(12	)	%	$	1,765			$	1,910			(8	)	%
Net written premiums	779				826				(6	)		1,678				1,744				(4	)
Net earned premiums	817				840				(3	)		1,639				1,677				(2	)
Net investment income	208				211							406				461
Other revenues	9				65							18				75
Total operating revenues	1,034				1,116				(7	)		2,063				2,213				(7	)
Insurance claims and policyholders' benefits	657				646							1,281				1,248
Amortization of deferred acquisition costs	144				153							284				302
Other insurance related expenses	138				142							277				285
Other expenses	8				2							19				11
Total claims, benefits and expenses	947				943				—			1,861				1,846				(1	)
Operating income (loss) before income tax	87				173				(50	)		202				367				(45	)
Income tax (expense) benefit on operating income (loss)	(28		)		(61		)					(65		)		(130		)
Net operating income (loss)	$	59			$	112			(47	)	%	$	137			$	237			(42	)	%

Loss & LAE	80.3			%	76.5			%	(3.8	)	pts	77.9			%	74.1			%	(3.8	)	pts
Acquisition expense	17.9				18.9				1.0			17.9				18.6				0.7
Underwriting expense	16.5				16.0				(0.5	)		16.3				16.4				0.1
Expense	34.4				34.9				0.5			34.2				35.0				0.8
Dividend	0.3				0.3				—			0.3				0.2				(0.1	)
Combined ratio	115.0				111.7				(3.3	)		112.4				109.3				(3.1	)
Combined ratio excluding catastrophes and development	99.4			%	101.2			%	1.8		pts	100.3			%	102.5			%	2.2		pts

Pretax net accident year catastrophe losses incurred	$	47			$	59						$	107			$	97
Impact on loss & LAE ratio	5.7			%	7.1			%	1.4		pts	6.6			%	5.8			%	(0.8	)	pts

Pretax net prior year development and other (1): (favorable) / unfavorable	$	80			$	28						$	84			$	13
Impact on loss & LAE ratio	9.9			%	3.4			%	(6.5	)	pts	5.5			%	1.0			%	(4.5	)	pts

Rate	4			%	9			%	(5	)	pts	5			%	9			%	(4	)	pts
Retention	70			%	75			%	(5	)	pts	73			%	76			%	(3	)	pts
New Business	$	150			$	185			(19	)	%	$	317			$	393			(19	)	%

(1) Other includes the impacts of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts.

Hardy - Results of Operations



Periods ended June 30	Three Months											Six Months
(In millions)	2014				2013				Change			2014				2013				Change
Gross written premiums	$	142			$	147			(3	)	%	$	264			$	254			4		%
Net written premiums	133				138				(4	)		205				193				6
Net earned premiums	92				76				21			190				140				36
Net investment income	1				1							2				2
Other revenues	(1		)		(1		)					—				—
Total operating revenues	92				76				21			192				142				35
Insurance claims and policyholders' benefits	52				41							90				72
Amortization of deferred acquisition costs	26				20							54				41
Other insurance related expenses	16				13							36				29
Other expenses	4				6							8				13
Total claims, benefits and expenses	98				80				(23	)		188				155				(21	)
Operating income (loss) before income tax	(6		)		(4		)		(50	)		4				(13		)		131
Income tax (expense) benefit on operating income (loss)	1				2							(2		)		3
Net operating income (loss)	$	(5	)		$	(2	)		(150	)	%	$	2			$	(10	)		120		%

Loss & LAE	56.2			%	53.9			%	(2.3	)	pts	47.2			%	51.5			%	4.3		pts
Acquisition expense	28.8				26.1				(2.7	)		29.1				28.2				(0.9	)
Underwriting expense	17.9				18.4				0.5			18.4				21.9				3.5
Expense	46.7				44.5				(2.2	)		47.5				50.1				2.6
Dividend	—				—				—			—				—				—
Combined ratio	102.9				98.4				(4.5	)		94.7				101.6				6.9
Combined ratio excluding catastrophes and development	96.4			%	81.0			%	(15.4	)	pts	92.6			%	91.6			%	(1.0	)	pts

Pretax net accident year catastrophe losses incurred	$	4			$	—						$	7			$	—
Impact on loss & LAE ratio	4.6			%	—			%	(4.6	)	pts	3.9			%	—			%	(3.9	)	pts

Pretax net prior year development and other ⁽¹⁾: (favorable) / unfavorable	$	4			$	14						$	(3	)		$	17
Impact on loss & LAE ratio	1.9			%	17.4			%	15.5		pts	(1.8		)	%	10.0			%	11.8		pts

Rate	(8		)	%	(1		)	%	(7	)	pts	(5		)	%	—			%	(5	)	pts
Retention	67			%	69			%	(2	)	pts	72			%	70			%	2		pts

(1) Other includes the impacts of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts.

Life & Group Non-Core - Results of Operations



Periods ended June 30	Three Months								Six Months
(In millions)	2014			2013			Change		2014			2013			Change
Net earned premiums	$	139		$	138		1	%	$	278		$	279		—	%
Net investment income	173			163			6		344			325			6
Other revenues	8			2					13			5
Total operating revenues	320			303			6		635			609			4
Insurance claims and policyholders' benefits	304			347					610			640
Amortization of deferred acquisition costs	7			6					15			14
Other insurance related expenses	31			32					63			64
Other expenses	(3		)	2					(2		)	7
Total claims, benefits and expenses	339			387			12		686			725			5
Operating income (loss) before income tax	(19		)	(84		)	77		(51		)	(116		)	56
Income tax (expense) benefit on operating income (loss)	28			43					58			69
Net operating income (loss)	$	9		$	(41	)	122	%	$	7		$	(47	)	115	%

Corporate & Other Non-Core - Results of Operations



Periods ended June 30	Three Months								Six Months
(In millions)	2014			2013			Change		2014			2013			Change
Net earned premiums	$	—		$	—				$	(1	)	$	(1	)
Net investment income	7			8					12			16
Other revenues	3			1					5			4
Total operating revenues	10			9			11	%	16			19			(16	)	%
Insurance claims and policyholders' benefits	1			(2		)			(2		)	2
Amortization of deferred acquisition costs	—			—					—			—
Other insurance related expenses	—			—					(1		)	(1		)
Other expenses	(33		)	38					18			84
Total claims, benefits and expenses	(32		)	36			189		15			85			82
Operating income (loss) before income tax	42			(27		)	N/M		1			(66		)	102
Income tax (expense) benefit on operating income (loss)	(15		)	9					(1		)	22
Net operating income (loss)	$	27		$	(18	)	N/M		$	—		$	(44	)	N/M

Investment Summary - Consolidated



	June 30, 2014					March 31, 2014					December 31, 2013
(In millions)	Carrying Value			Net Unrealized Gains (Losses)		Carrying Value			Net Unrealized Gains (Losses)		Carrying Value		Net Unrealized Gains (Losses)
Fixed maturity securities:
Corporate and other bonds	$	19,119		$	1,822	$	18,836		$	1,556	$	20,898	$	1,510
States, municipalities and political subdivisions:
Tax-exempt	9,411			707		9,009			427		8,432		41
Taxable	2,926			401		2,846			315		3,125		235
Total states, municipalities and political subdivisions	12,337			1,108		11,855			742		11,557		276
Asset-backed:
RMBS	5,070			188		4,944			90		4,971		31
CMBS	2,099			100		2,053			79		2,063		68
Other ABS	1,185			13		976			10		955		10
Total asset-backed	8,354			301		7,973			179		7,989		109
U.S. Treasury and obligations of government-sponsored enterprises	66			5		141			6		144		5
Foreign government	550			17		576			17		543		12
Redeemable preferred stock	42			3		34			2		102		10
Total fixed maturity securities	40,468			3,256		39,415			2,502		41,233		1,922
Equities	194			19		174			11		185		6
Limited partnership investments	2,831			—		2,799			—		2,720		—
Other invested assets	45			—		55			—		54		—
Mortgage loans	518			—		495			—		508		—
Short term investments	2,024			—		2,070			—		1,407		(1		)
Total investments	$	46,080		$	3,275	$	45,008		$	2,513	$	46,107	$	1,927

Net receivable/(payable) on investment activity	$	(145	)	$	—	$	(294	)	$	—	$	135	$	—

Effective portfolio duration (in years)	6.6					6.6					6.9
Weighted average rating of fixed maturity securities	A					A					A

RMBS - Residential mortgage-backed securities

CMBS - Commercial mortgage-backed securities

Other ABS - Other asset-backed securities

Investment Summary - Property & Casualty and Corporate & Other Non-Core



	June 30, 2014						March 31, 2014					December 31, 2013
(In millions)	Carrying Value			Net Unrealized Gains (Losses)			Carrying Value			Net Unrealized Gains (Losses)		Carrying Value		Net Unrealized Gains (Losses)
Fixed maturity securities:
Corporate and other bonds	$	13,682		$	707		$	13,429		$	606	$	13,590	$	509
States, municipalities and political subdivisions:
Tax-exempt	2,769			120			3,169			112		3,176		36
Taxable	1,634			177			1,573			137		1,570		89
Total states, municipalities and political subdivisions	4,403			297			4,742			249		4,746		125
Asset-backed:
RMBS	4,984			182			4,676			78		4,641		22
CMBS	1,962			89			1,898			69		1,793		54
Other ABS	1,089			12			881			9		853		9
Total asset-backed	8,035			283			7,455			156		7,287		85
U.S. Treasury and obligations of government-sponsored enterprises	43			(1		)	118			—		121		(1		)
Foreign government	545			16			571			16		538		11
Redeemable preferred stock	13			1			6			1		5		—
Total fixed maturity securities	26,721			1,303			26,321			1,028		26,287		729
Equities	81			16			61			9		61		9
Limited partnership investments	2,831			—			2,799			—		2,720		—
Other invested assets	45			—			55			—		54		—
Mortgage loans	499			—			476			—		489		—
Short term investments	1,934			—			1,979			—		1,339		(1		)
Total investments	$	32,111		$	1,319		$	31,691		$	1,037	$	30,950	$	737

Net receivable/(payable) on investment activity	$	(134	)	$	—		$	(283	)	$	—	$	140	$	—

Effective portfolio duration (in years)	4.2						4.3					4.4
Weighted average rating of fixed maturity securities	A						A					A

Investment Summary - Life & Group Non-Core



	June 30, 2014					March 31, 2014					December 31, 2013
(In millions)	Carrying Value			Net Unrealized Gains (Losses)		Carrying Value			Net Unrealized Gains (Losses)		Carrying Value			Net Unrealized Gains (Losses)
Fixed maturity securities:
Corporate and other bonds	$	5,437		$	1,115	$	5,407		$	950	$	7,308		$	1,001
States, municipalities and political subdivisions:
Tax-exempt	6,642			587		5,840			315		5,256			5
Taxable	1,292			224		1,273			178		1,555			146
Total states, municipalities and political subdivisions	7,934			811		7,113			493		6,811			151
Asset-backed:
RMBS	86			6		268			12		330			9
CMBS	137			11		155			10		270			14
Other ABS	96			1		95			1		102			1
Total asset-backed	319			18		518			23		702			24
U.S. Treasury and obligations of government-sponsored enterprises	23			6		23			6		23			6
Foreign government	5			1		5			1		5			1
Redeemable preferred stock	29			2		28			1		97			10
Total fixed maturity securities	13,747			1,953		13,094			1,474		14,946			1,193
Equities	113			3		113			2		124			(3		)
Limited partnership investments	—			—		—			—		—			—
Other invested assets	—			—		—			—		—			—
Mortgage loans	19			—		19			—		19			—
Short term investments	90			—		91			—		68			—
Total investments	$	13,969		$	1,956	$	13,317		$	1,476	$	15,157		$	1,190

Net receivable/(payable) on investment activity	$	(11	)	$	—	$	(11	)	$	—	$	(5	)	$	—

Effective portfolio duration (in years)	11.4					11.5					11.3
Weighted average rating of fixed maturity securities	A					A					A

Investments - Fixed Maturity Securities by Credit Rating



June 30, 2014	U.S. Government, Government agencies and Government-sponsored enterprises					AAA					AA					A					BBB					Non-investment grade					Total
(In millions)	Fair Value			Net Unrealized Gains (Losses)		Fair Value			Net Unrealized Gains (Losses)		Fair Value			Net Unrealized Gains (Losses)		Fair Value			Net Unrealized Gains (Losses)		Fair Value			Net Unrealized Gains (Losses)		Fair Value			Net Unrealized Gains (Losses)		Fair Value			Net Unrealized Gains (Losses)
Corporate and other bonds	$	—		$	—	$	228		$	7	$	1,271		$	79	$	6,017		$	683	$	10,037		$	952	$	1,566		$	101	$	19,119		$	1,822
States, municipalities and political subdivisions:
Tax-exempt	—			—		1,039			97		5,187			392		3,053			216		95			1		37			1		9,411			707
Taxable	—			—		391			44		2,084			280		451			77		—			—		—			—		2,926			401
Total states, municipalities and political subdivisions	—			—		1,430			141		7,271			672		3,504			293		95			1		37			1		12,337			1,108
Asset-backed:
RMBS	3,549			118		144			—		102			2		197			2		93			2		985			64		5,070			188
CMBS	78			1		512			22		422			25		381			18		449			18		257			16		2,099			100
Other ABS	—			—		334			2		191			2		550			7		110			2		—			—		1,185			13
Total asset-backed	3,627			119		990			24		715			29		1,128			27		652			22		1,242			80		8,354			301
U.S. Treasury and obligations of government-sponsored enterprises	66			5		—			—		—			—		—			—		—			—		—			—		66			5
Foreign government	—			—		177			7		218			4		155			6		—			—		—			—		550			17
Redeemable preferred stock	—			—		—			—		—			—		—			—		18			2		24			1		42			3
Total fixed maturity securities	$	3,693		$	124	$	2,825		$	179	$	9,475		$	784	$	10,804		$	1,009	$	10,802		$	977	$	2,869		$	183	$	40,468		$	3,256

Percentage of total fixed maturity securities	9		%			7		%			23		%			27		%			27		%			7		%			100		%

The ratings presented are based on a ratings methodology that takes into account ratings from Standard & Poor's and Moody's Investors Services, Inc. in that order of preference. If a security is not rated by these rating agencies, an internal rating is formulated. For securities with credit support from third party guarantees, the rating reflects the greater of the underlying rating of the issuer or the insured rating.

Components of Net Investment Income



	Consolidated
Periods ended June 30	Three Months						Six Months
(In millions)	2014			2013			2014			2013
Taxable fixed maturities	$	350		$	383		$	702		$	771
Tax-exempt fixed maturities	101			71			201			140
Total fixed maturity securities	451			454			903			911
Limited partnership investments	97			79			170			210
Other, net of investment expense	2			1			3			4
Pretax net investment income	$	550		$	534		$	1,076		$	1,125

After-tax fixed maturity securities	$	325		$	317		$	649		$	634
After-tax net investment income	$	391		$	368		$	762		$	773

Effective income yield for the fixed maturity securities portfolio, pretax ⁽¹⁾	4.9		%	5.0		%	4.9		%	5.0		%
Effective income yield for the fixed maturity securities portfolio, after tax ⁽¹⁾	3.5		%	3.5		%	3.5		%	3.5		%



	Property & Casualty and Corporate & Other Non-Core
Periods ended June 30	Three Months						Six Months
(In millions)	2014			2013			2014			2013
Taxable fixed maturities	$	249		$	269		$	496		$	545
Tax-exempt fixed maturities	28			20			61			40
Total fixed maturity securities	277			289			557			585
Limited partnership investments	97			78			170			209
Other, net of investment expense	3			4			5			6
Pretax net investment income	$	377		$	371		$	732		$	800

After-tax fixed maturity securities	$	190		$	194		$	382		$	392
After-tax net investment income	$	254		$	247		$	495		$	532

Effective income yield for the fixed maturity securities portfolio, pretax ⁽¹⁾	4.4		%	4.6		%	4.4		%	4.6		%
Effective income yield for the fixed maturity securities portfolio, after tax ⁽¹⁾	3.0		%	3.1		%	3.0		%	3.1		%



	Life & Group Non-Core
Periods ended June 30	Three Months								Six Months
(In millions)	2014				2013				2014				2013
Taxable fixed maturities	$	101			$	114			$	206			$	226
Tax-exempt fixed maturities	73				51				140				100
Total fixed maturity securities	174				165				346				326
Limited partnership investments	—				1				—				1
Other, net of investment expense	(1		)		(3		)		(2		)		(2		)
Pretax net investment income	$	173			$	163			$	344			$	325

After-tax fixed maturity securities	$	135			$	123			$	267			$	242
After-tax net investment income	$	137			$	121			$	267			$	241

Effective income yield for the fixed maturity securities portfolio, pretax ⁽¹⁾	5.9			%	6.0			%	6.0			%	6.1			%
Effective income yield for the fixed maturity securities portfolio, after tax ⁽¹⁾	4.6			%	4.5			%	4.6			%	4.5			%

(1) Annualized yields based on the average amortized cost of the fixed maturity securities portfolio.

Claim & Claim Adjustment Expense Reserve Rollforward



Three months ended June 30, 2014	CNA Specialty			CNA Commercial			Hardy			P&C Operations			Life & Group Non-Core			Corporate & Other Non-Core			Total Operations
(In millions)
Claim & claim adjustment expense reserves, beginning of period
Gross	$	6,786		$	10,574		$	377		$	17,737		$	3,085		$	3,111		$	23,933
Ceded	549			998			136			1,683			401			2,770			4,854
Net	6,237			9,576			241			16,054			2,684			341			19,079

Net incurred claim & claim adjustment expenses	426			654			52			1,132			195			3			1,330
Net claim & claim adjustment expense payments	(390		)	(693		)	(39		)	(1,122		)	(166		)	(10		)	(1,298		)
Foreign currency translation adjustment and other	10			12			3			25			11			—			36

Claim & claim adjustment expense reserves, end of period
Net	6,283			9,549			257			16,089			2,724			334			19,147
Ceded	656			988			129			1,773			368			2,708			4,849
Gross	$	6,939		$	10,537		$	386		$	17,862		$	3,092		$	3,042		$	23,996



Six months ended June 30, 2014	CNA Specialty			CNA Commercial			Hardy			P&C Operations			Life & Group Non-Core			Corporate & Other Non-Core			Total Operations
(In millions)
Claim & claim adjustment expense reserves, beginning of period
Gross	$	6,689		$	10,649		$	386		$	17,724		$	3,058		$	3,307		$	24,089
Ceded	523			1,022			152			1,697			435			2,840			4,972
Net	6,166			9,627			234			16,027			2,623			467			19,117

Net incurred claim & claim adjustment expenses	906			1,276			103			2,285			396			3			2,684
Net claim & claim adjustment expense payments	(792		)	(1,359		)	(83		)	(2,234		)	(326		)	(136		)	(2,696		)
Foreign currency translation adjustment and other	3			5			3			11			31			—			42

Claim & claim adjustment expense reserves, end of period
Net	6,283			9,549			257			16,089			2,724			334			19,147
Ceded	656			988			129			1,773			368			2,708			4,849
Gross	$	6,939		$	10,537		$	386		$	17,862		$	3,092		$	3,042		$	23,996

Life & Group Non-Core Policyholder Reserves



June 30, 2014	Claim and claim adjustment expenses		Future policy benefits		Policyholders' funds		Separate account business		Total
(In millions)	Claim and claim adjustment expenses		Future policy benefits		Policyholders' funds		Separate account business		Total
Long term care	$	1,969	$	7,543	$	—	$	—	$	9,512
Structured settlement annuities	597		185		—		—		782
Institutional markets	—		—		—		—		—
Other	29		—		—		—		29
Total	2,595		7,728		—		—		10,323
Shadow adjustments ⁽¹⁾	129		968		—		—		1,097
Ceded reserves	368		—		—		—		368
Total gross reserves	$	3,092	$	8,696	$	—	$	—	$	11,788



December 31, 2013	Claim and claim adjustment expenses		Future policy benefits		Policyholders' funds		Separate account business		Total
(In millions)	Claim and claim adjustment expenses		Future policy benefits		Policyholders' funds		Separate account business		Total
Long term care	$	1,889	$	7,329	$	—	$	—	$	9,218
Annuities, including structured settlements	613		1,990		—		—		2,603
Institutional markets	1		9		57		181		248
Other	37		4		—		—		41
Total	2,540		9,332		57		181		12,110
Shadow adjustments ⁽¹⁾	83		406		—		—		489
Ceded reserves	435		733		35		—		1,203
Total gross reserves	$	3,058	$	10,471	$	92	$	181	$	13,802

(1) To the extent that unrealized gains on fixed income securities supporting long term care products and payout annuity contracts would result in a premium deficiency if those gains were 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 Shadow adjustments presented above do not include $326 million and $342 million related to Deferred acquisition costs at June 30, 2014 and December 31, 2013.

Statutory Data - Combined Continental Casualty Companies - Preliminary



Periods ended June 30	Three Months											Six Months
Income Statements	(Preliminary)											(Preliminary)
(In millions)	2014				2013				Change			2014				2013				Change

Gross written premiums	$	2,221			$	2,196			1		%	$	4,511			$	4,409			2		%
Net written premiums	1,476				1,532				(4	)		3,097				3,195				(3	)

Net earned premiums	1,434				1,422				1			2,808				2,789				1
Claim and claim adjustment expenses	1,211				1,272							2,430				2,443
Acquisition expenses	256				265							534				555
Underwriting expenses	205				207							408				417
Policyholders' dividends	2				2							2				4
Underwriting income (loss)	(240		)		(324		)		26			(566		)		(630		)		10
Net investment income	500				463							1,098				895
Other income (loss)	66				80							63				85
Income tax (expense) benefit	(13		)		(12		)					(15		)		(15		)
Net realized gains (losses)	(54		)		(49		)					(8		)		(35		)
Net income (loss)	$	259			$	158			64		%	$	572			$	300			91		%

Financial Ratios
Loss and LAE	84.4			%	89.5			%				86.5			%	87.6			%
Acquisition expense	17.4				17.3							17.2				17.4
Underwriting expense	13.9				13.4							13.2				13.1
Expense	31.3				30.7							30.4				30.5
Dividend	0.1				0.2							0.1				0.1
Combined ratio	115.8			%	120.4			%				117.0			%	118.2			%




Supplemental Statutory Data
(In billions)	(Preliminary)
	June 30, 2014		December 31, 2013
Statutory surplus	$	11.2	$	11.1

Definitions and Presentation


•	Collectively, CNA Financial Corporation (CNAF) and its subsidiaries are referred to as CNA or the Company.


•	P&C Operations include CNA Specialty, CNA Commercial and Hardy.

•

The Life & Group Non-Core segment primarily includes the results of our individual and group long term care business, as well as closed blocks of structured settlement liabilities, group accident and health reinsurance and life settlement contracts. These businesses are being managed as a run-off operation. Our group long term care business, while considered non-core, continues to accept new employees in existing groups.


•	Corporate & Other Non-Core segment primarily includes certain corporate expenses including interest on corporate debt and the results of certain property and casualty business in run-off, including CNA Re and asbestos and environmental pollution. Intersegment eliminations are also included in this segment.

•

On August 1, 2014, the Company closed the previously announced sale of the majority of its run-off annuity and pension deposit business through the sale of the common stock of CAC. The business sold, which was previously reported within the Life & Group Non-Core segment, is reported as discontinued operations and assets and liabilities held for sale. In connection with the then pending sale, the Company recorded an estimated after-tax impairment loss of $214 million in the first quarter of 2014, which is reflected in Income (loss) from discontinued operations.


•	Management utilizes the net operating income financial measure to monitor the Company’s operations. Please refer to Note O to the Consolidated Financial Statements within the 2013 Form 10-K for further discussion of this measure.

•

In the evaluation of the results of CNA Specialty, CNA Commercial and Hardy, management utilizes the loss ratio, the expense ratio, the dividend ratio and the combined ratio. These ratios are calculated using financial results prepared in accordance with accounting principles generally accepted in the United States of America. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios. The statutory expense ratio reported on page 17 is the percentage of acquisition and underwriting expenses to net written premiums in accordance with statutory accounting practices.

•

The majority of our limited partnership investments employ hedge fund strategies that generate returns primarily through investing in the fixed income and equity markets. While the Company generally does not invest in highly leveraged partnerships, there are risks which may result in losses due to short-selling, derivatives or other speculative investment practices. The use of leverage increases volatility generated by the underlying investment strategies.


•	Certain immaterial differences are due to rounding.


•	N/M = Not Meaningful

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