Business Segments

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Business Segments

Note P. Business Segments

The Company's core property and casualty commercial insurance operations are aggregated and reported in three business segments: Specialty, Commercial and International. Specialty provides a broad array of professional, financial and specialty property and casualty products and services, through a network of independent agents, brokers and managing general underwriters. Commercial includes property and casualty coverages sold to small businesses and middle market entities and organizations primarily through an independent agency distribution system. Commercial also includes commercial insurance and risk management products sold to large corporations primarily through insurance brokers. International provides management and professional liability coverages as well as a broad range of other property and casualty insurance products and services abroad through a network of brokers, independent agencies and managing general underwriters, as well as the Lloyd’s marketplace.

The Company's non-core operations are managed in two segments: Life & Group Non-Core and Corporate & Other Non-Core. Life & Group Non-Core primarily includes the results of our individual and group long term care businesses that are in run-off. 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 A&EP.

The accounting policies of the segments are the same as those described in Note A to the Consolidated Financial Statements. 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. Consistent with the Consolidated Balance Sheet presentation, the comparative period continues to reflect CAC assets and liabilities. 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.

Approximately 8.8%, 9.0% and 9.2% of the Company's direct written premiums were derived from outside the United States for the years ended December 31, 2014, 2013 and 2012.

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

Year ended December 31, 2014	Specialty			Commercial			International			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)																Eliminations			Total
Net written premiums	$	2,839		$	2,817		$	880		$	553		$	1		$	(2	)	$	7,088
Operating revenues
Net earned premiums	$	2,838		$	2,906		$	913		$	556		$	1		$	(2	)	$	7,212
Net investment income	560			723			61			700			23			—			2,067
Other revenues	295			38			—			16			12			(5		)	356
Total operating revenues	3,693			3,667			974			1,272			36			(7		)	9,635
Claims, Benefits and Expenses
Net incurred claims and benefits	1,627			2,187			488			1,304			(29		)	—			5,577
Policyholders’ dividends	6			8			—			—			—			—			14
Amortization of deferred acquisition costs	592			493			204			28			—			—			1,317
Other insurance related expenses	262			487			151			130			1			(2		)	1,029
Other expenses	254			31			28			30			210			(5		)	548
Total claims, benefits and expenses	2,741			3,206			871			1,492			182			(7		)	8,485
Operating income (loss) from continuing operations before income tax	952			461			103			(220		)	(146		)	—			1,150
Income tax (expense) benefit on operating income (loss)	(318		)	(154		)	(34		)	151			54			—			(301		)
Net operating income (loss) from continuing operations	634			307			69			(69		)	(92		)	—			849
Net realized investment gains (losses), pretax	15			16			(1		)	7			20			—			57
Income tax (expense) benefit on net realized investment gains (losses)	(5		)	(6		)	1			—			(8		)	—			(18		)
Net realized investment gains (losses)	10			10			—			7			12			—			39
Net income (loss) from continuing operations	$	644		$	317		$	69		$	(62	)	$	(80	)	$	—		$	888

December 31, 2014
(In millions)
Reinsurance receivables	$	567	$	690	$	207	$	525	$	2,753	$	—	$	4,742
Insurance receivables	778		954		250		13		2		—		1,997
Deferred acquisition costs	304		213		83		—		—		—		600
Goodwill	117		—		35		—		—		—		152
Insurance reserves
Claim and claim adjustment expenses	6,229		9,514		1,441		3,183		2,904		—		23,271
Unearned premiums	1,763		1,273		431		125		—		—		3,592
Future policy benefits	—		—		—		9,490		—		—		9,490
Policyholders’ funds	9		18		—		—		—		—		27

Year ended December 31, 2013	Specialty			Commercial			International			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)																Eliminations			Total
Net written premiums	$	2,880		$	2,960		$	959		$	552		$	(1	)	$	(2	)	$	7,348
Operating revenues
Net earned premiums	$	2,795		$	3,004		$	916		$	559		$	(1	)	$	(2	)	$	7,271
Net investment income	629			899			60			662			32			—			2,282
Other revenues	257			96			—			(4		)	12			(2		)	359
Total operating revenues	3,681			3,999			976			1,217			43			(4		)	9,912
Claims, Benefits and Expenses
Net incurred claims and benefits	1,593			2,259			489			1,261			191			—			5,793
Policyholders’ dividends	6			7			—			—			—			—			13
Amortization of deferred acquisition costs	585			526			223			28			—			—			1,362
Other insurance related expenses	250			498			140			130			(3		)	(2		)	1,013
Other expenses	237			32			12			13			183			(2		)	475
Total claims, benefits and expenses	2,671			3,322			864			1,432			371			(4		)	8,656
Operating income (loss) from continuing operations before income tax	1,010			677			112			(215		)	(328		)	—			1,256
Income tax (expense) benefit on operating income (loss)	(342		)	(229		)	(43		)	141			118			—			(355		)
Net operating income (loss) from continuing operations	668			448			69			(74		)	(210		)	—			901
Net realized investment gains (losses), pretax	(5		)	(15		)	5			26			9			—			20
Income tax (expense) benefit on net realized investment gains (losses)	2			5			(2		)	(8		)	(3		)	—			(6		)
Net realized investment gains (losses)	(3		)	(10		)	3			18			6			—			14
Net income (loss) from continuing operations	$	665		$	438		$	72		$	(56	)	$	(204	)	$	—		$	915

December 31, 2013
(In millions)
Reinsurance receivables	$	500	$	1,024	$	294	$	1,203	$	3,067	$	—	$	6,088
Insurance receivables	732		1,019		299		11		2		—		2,063
Deferred acquisition costs	299		226		99		—		—		—		624
Goodwill	117		—		38		—		—		—		155
Insurance reserves
Claim and claim adjustment expenses	6,058		10,091		1,575		3,058		3,307		—		24,089
Unearned premiums	1,710		1,374		506		128		—		—		3,718
Future policy benefits	—		—		—		10,471		—		—		10,471
Policyholders’ funds	9		15		—		92		—		—		116

Year ended December 31, 2012	Specialty			Commercial						Life & Group Non-Core			Corporate & Other Non-Core
(In millions)							International(a)									Eliminations			Total
Net written premiums	$	2,733		$	3,033		$	648		$	553		$	(1	)	$	(2	)	$	6,964
Operating revenues
Net earned premiums	$	2,709		$	2,968		$	647		$	559		$	—		$	(2	)	$	6,881
Net investment income	564			826			59			629			32			—			2,110
Other revenues	231			41			(1		)	33			16			(1		)	319
Total operating revenues	3,504			3,835			705			1,221			48			(3		)	9,310
Claims, Benefits and Expenses
Net incurred claims and benefits	1,746			2,370			361			1,255			(16		)	—			5,716
Policyholders’ dividends	2			11			—			—			—			—			13
Amortization of deferred acquisition costs	574			520			152			28			—			—			1,274
Other insurance related expenses	278			532			94			142			3			(2		)	1,047
Other expenses	207			37			7			22			183			(1		)	455
Total claims, benefits and expenses	2,807			3,470			614			1,447			170			(3		)	8,505
Operating income (loss) from continuing operations before income tax	697			365			91			(226		)	(122		)	—			805
Income tax (expense) benefit on operating income (loss)	(235		)	(120		)	(40		)	134			41			—			(220		)
Net operating income (loss) from continuing operations	462			245			51			(92		)	(81		)	—			585
Net realized investment gains (losses), pretax	18			34			7			(9		)	4			—			54
Income tax (expense) benefit on net realized investment gains (losses)	(8		)	(11		)	(1		)	3			(2		)	—			(19		)
Net realized investment gains (losses)	10			23			6			(6		)	2			—			35
Net income (loss) from continuing operations	$	472		$	268		$	57		$	(98	)	$	(79	)	$	—		$	620

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(a) International includes Hardy from the date of acquisition.

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

Years ended December 31
(In millions)	2014			2013			2012
Specialty
Management & Professional Liability	$	2,818		$	2,836		$	2,723
Surety	509			490			485
Warranty & Alternative Risks	381			350			314
Specialty revenues	3,708			3,676			3,522
Commercial
Middle Market	1,631			1,642			1,560
Small Business	709			754			669
Other Commercial Insurance	1,343			1,588			1,640
Commercial revenues	3,683			3,984			3,869
International
Canada	273			289			276
CNA Europe	335			326			313
Hardy	365			366			123
International revenues	973			981			712
Life & Group Non-Core revenues	1,279			1,243			1,212
Corporate & Other Non-Core revenues	56			52			52
Eliminations	(7		)	(4		)	(3		)
Total revenues	$	9,692		$	9,932		$	9,364