Business Segments

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Business Segments

Note J. Business Segments

The Company's core property and casualty commercial insurance operations are aggregated and reported in three business segments: Specialty, Commercial and International. 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 to the Consolidated Financial Statements within CNAF's Annual Report on Form 10-K for the year ended December 31, 2014. 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 (loss), 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 (losses) because net realized investment gains (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 continuing operations and selected balance sheet items by segment are presented in the following tables.

Three months ended June 30, 2015	Specialty			Commercial			International			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)																Eliminations			Total
Operating revenues
Net earned premiums	$	689		$	703		$	207		$	137		$	—		$	(1	)	$	1,735
Net investment income	134			169			13			179			5			—			500
Other revenues	81			9			(1		)	—			3			—			92
Total operating revenues	904			881			219			316			8			(1		)	2,327
Claims, Benefits and Expenses
Net incurred claims and benefits	416			507			114			344			85			—			1,466
Policyholders’ dividends	1			2			—			—			—			—			3
Amortization of deferred acquisition costs	146			117			45			6			—			—			314
Other insurance related expenses	66			130			31			34			(1		)	(1		)	259
Other expenses	69			5			(5		)	5			47			—			121
Total claims, benefits and expenses	698			761			185			389			131			(1		)	2,163
Operating income (loss) before income tax	206			120			34			(73		)	(123		)	—			164
Income tax (expense) benefit on operating income (loss)	(69		)	(42		)	(12		)	49			42			—			(32		)
Net operating income (loss)	137			78			22			(24		)	(81		)	—			132
Net realized investment gains (losses)	—			2			1			(5		)	2			—			—
Income tax (expense) benefit on net realized investment gains (losses)	—			2			(1		)	6			(1		)	—			6
Net realized investment gains (losses), after tax	—			4			—			1			1			—			6
Net income (loss) from continuing operations	$	137		$	82		$	22		$	(23	)	$	(80	)	$	—		$	138

Three months ended June 30, 2014	Specialty			Commercial			International			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)																Eliminations			Total
Operating revenues
Net earned premiums	$	709		$	732		$	231		$	139		$	—		$	—		$	1,811
Net investment income	153			201			16			173			7			—			550
Other revenues	74			8			—			8			5			(2		)	93
Total operating revenues	936			941			247			320			12			(2		)	2,454
Claims, Benefits and Expenses
Net incurred claims and benefits	404			610			118			304			1			—			1,437
Policyholders’ dividends	1			3			—			—			—			—			4
Amortization of deferred acquisition costs	148			126			54			7			—			—			335
Other insurance related expenses	67			125			36			31			—			—			259
Other expenses	65			7			5			(3		)	(31		)	(2		)	41
Total claims, benefits and expenses	685			871			213			339			(30		)	(2		)	2,076
Operating income (loss) before income tax	251			70			34			(19		)	42			—			378
Income tax (expense) benefit on operating income (loss)	(84		)	(21		)	(14		)	28			(15		)	—			(106		)
Net operating income (loss)	167			49			20			9			27			—			272
Net realized investment gains (losses)	(5		)	(5		)	(3		)	(4		)	3			—			(14		)
Income tax (expense) benefit on net realized investment gains (losses)	1			(2		)	4			1			(1		)	—			3
Net realized investment gains (losses), after tax	(4		)	(7		)	1			(3		)	2			—			(11		)
Net income (loss) from continuing operations	$	163		$	42		$	21		$	6		$	29		$	—		$	261

Six months ended June 30, 2015	Specialty			Commercial			International			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)																Eliminations			Total
Operating revenues
Net earned premiums	$	1,369		$	1,381		$	398		$	275		$	—		$	(1	)	$	3,422
Net investment income	289			373			27			358			11			—			1,058
Other revenues	159			18			(1		)	9			5			(1		)	189
Total operating revenues	1,817			1,772			424			642			16			(2		)	4,669
Claims, Benefits and Expenses
Net incurred claims and benefits	845			961			230			684			81			—			2,801
Policyholders’ dividends	2			5			—			—			—			—			7
Amortization of deferred acquisition costs	290			234			80			13			—			—			617
Other insurance related expenses	135			257			68			69			(1		)	(1		)	527
Other expenses	136			13			—			9			93			(1		)	250
Total claims, benefits and expenses	1,408			1,470			378			775			173			(2		)	4,202
Operating income (loss) before income tax	409			302			46			(133		)	(157		)	—			467
Income tax (expense) benefit on operating income (loss)	(137		)	(104		)	(15		)	92			54			—			(110		)
Net operating income (loss)	272			198			31			(41		)	(103		)	—			357
Net realized investment gains (losses)	4			6			2			(4		)	2			—			10
Income tax (expense) benefit on net realized investment gains (losses)	(1		)	(1		)	(1		)	8			(1		)	—			4
Net realized investment gains (losses), after tax	3			5			1			4			1			—			14
Net income (loss) from continuing operations	$	275		$	203		$	32		$	(37	)	$	(102	)	$	—		$	371

June 30, 2015
(In millions)
Reinsurance receivables	$	697	$	660	$	192	$	534	$	2,619	$	—		$	4,702
Insurance receivables	862		1,068		302		10		3		—			2,245
Deferred acquisition costs	306		224		91		—		—		—			621
Goodwill	117		—		36		—		—		—			153
Insurance reserves
Claim and claim adjustment expenses	6,365		9,391		1,401		3,248		2,788		—			23,193
Unearned premiums	1,794		1,384		506		132		—		(1		)	3,815
Future policy benefits	—		—		—		9,360		—		—			9,360

Six months ended June 30, 2014	Specialty			Commercial			International			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)																Eliminations			Total
Operating revenues
Net earned premiums	$	1,401		$	1,467		$	472		$	278		$	—		$	(1	)	$	3,617
Net investment income	297			392			31			344			12			—			1,076
Other revenues	142			18			—			13			7			(2		)	178
Total operating revenues	1,840			1,877			503			635			19			(3		)	4,871
Claims, Benefits and Expenses
Net incurred claims and benefits	846			1,178			248			610			(2		)	—			2,880
Policyholders’ dividends	2			5			—			—			—			—			7
Amortization of deferred acquisition costs	291			249			109			15			—			—			664
Other insurance related expenses	132			251			76			63			—			(1		)	521
Other expenses	126			15			12			(2		)	20			(2		)	169
Total claims, benefits and expenses	1,397			1,698			445			686			18			(3		)	4,241
Operating income (loss) before income tax	443			179			58			(51		)	1			—			630
Income tax (expense) benefit on operating income (loss)	(147		)	(56		)	(22		)	58			(1		)	—			(168		)
Net operating income (loss)	296			123			36			7			—			—			462
Net realized investment gains (losses)	6			5			—			12			9			—			32
Income tax (expense) benefit on net realized investment gains (losses)	(2		)	(4		)	1			(5		)	(3		)	—			(13		)
Net realized investment gains (losses), after tax	4			1			1			7			6			—			19
Net income (loss) from continuing operations	$	300		$	124		$	37		$	14		$	6		$	—		$	481

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

The following table presents revenue by line of business for each reportable segment. Revenues are comprised of Operating revenues and Net realized investment gains and losses.

Periods ended June 30	Three Months						Six Months
(In millions)	2015			2014			2015			2014
Specialty
Management & Professional Liability	$	674		$	710		$	1,371		$	1,414
Surety	125			125			245			247
Warranty & Alternative Risks	105			96			205			185
Specialty revenues	904			931			1,821			1,846
Commercial
Middle Market	412			412			821			815
Small Business	158			181			323			365
Other Commercial Insurance	313			343			634			702
Commercial revenues	883			936			1,778			1,882
International
Canada	54			70			109			141
CNA Europe	77			83			154			171
Hardy	89			91			163			191
International revenues	220			244			426			503
Life & Group Non-Core revenues	311			316			638			647
Corporate & Other Non-Core revenues	10			15			18			28
Eliminations	(1		)	(2		)	(2		)	(3		)
Total revenues	$	2,327		$	2,440		$	4,679		$	4,903