Business Segments

9 Months Ended

Sep. 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 and reported 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 September 30, 2015	Specialty			Commercial			International			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)																Eliminations			Total
Operating revenues
Net earned premiums	$	706		$	705		$	203		$	137		$	—		$	—		$	1,751
Net investment income	76			82			13			182			1			—			354
Other revenues	86			9			1			(1		)	4			(2		)	97
Total operating revenues	868			796			217			318			5			(2		)	2,202
Claims, Benefits and Expenses
Net incurred claims and benefits	307			427			106			361			(3		)	—			1,198
Policyholders’ dividends	1			1			—			—			—			—			2
Amortization of deferred acquisition costs	150			118			45			6			—			—			319
Other insurance related expenses	67			128			33			35			—			—			263
Other expenses	73			10			9			1			47			(2		)	138
Total claims, benefits and expenses	598			684			193			403			44			(2		)	1,920
Operating income (loss) before income tax	270			112			24			(85		)	(39		)	—			282
Income tax (expense) benefit on operating income (loss)	(91		)	(37		)	(15		)	55			16			—			(72		)
Net operating income (loss)	179			75			9			(30		)	(23		)	—			210
Net realized investment gains (losses)	(22		)	(29		)	(1		)	2			1			—			(49		)
Income tax (expense) benefit on net realized investment gains (losses)	8			8			1			—			—			—			17
Net realized investment gains (losses), after tax	(14		)	(21		)	—			2			1			—			(32		)
Net income (loss) from continuing operations	$	165		$	54		$	9		$	(28	)	$	(22	)	$	—		$	178

Three months ended September 30, 2014	Specialty			Commercial			International			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)																Eliminations			Total
Operating revenues
Net earned premiums	$	725		$	721		$	225		$	139		$	—		$	—		$	1,810
Net investment income	126			157			15			177			5			—			480
Other revenues	76			10			—			(3		)	3			(2		)	84
Total operating revenues	927			888			240			313			8			(2		)	2,374
Claims, Benefits and Expenses
Net incurred claims and benefits	367			549			134			319			(18		)	—			1,351
Policyholders’ dividends	2			1			—			—			—			—			3
Amortization of deferred acquisition costs	151			122			52			7			—			—			332
Other insurance related expenses	65			125			37			33			—			—			260
Other expenses	65			10			8			36			55			(2		)	172
Total claims, benefits and expenses	650			807			231			395			37			(2		)	2,118
Operating income (loss) before income tax	277			81			9			(82		)	(29		)	—			256
Income tax (expense) benefit on operating income (loss)	(93		)	(29		)	(4		)	40			12			—			(74		)
Net operating income (loss)	184			52			5			(42		)	(17		)	—			182
Net realized investment gains (losses)	3			2			1			30			1			—			37
Income tax (expense) benefit on net realized investment gains (losses)	(1		)	3			(2		)	(9		)	(1		)	—			(10		)
Net realized investment gains (losses), after tax	2			5			(1		)	21			—			—			27
Net income (loss) from continuing operations	$	186		$	57		$	4		$	(21	)	$	(17	)	$	—		$	209

Nine months ended September 30, 2015	Specialty			Commercial			International			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)																Eliminations			Total
Operating revenues
Net earned premiums	$	2,075		$	2,086		$	601		$	412		$	—		$	(1	)	$	5,173
Net investment income	365			455			40			540			12			—			1,412
Other revenues	245			27			—			8			9			(3		)	286
Total operating revenues	2,685			2,568			641			960			21			(4		)	6,871
Claims, Benefits and Expenses
Net incurred claims and benefits	1,152			1,388			336			1,045			78			—			3,999
Policyholders’ dividends	3			6			—			—			—			—			9
Amortization of deferred acquisition costs	440			352			125			19			—			—			936
Other insurance related expenses	202			385			101			104			(1		)	(1		)	790
Other expenses	209			23			9			10			140			(3		)	388
Total claims, benefits and expenses	2,006			2,154			571			1,178			217			(4		)	6,122
Operating income (loss) before income tax	679			414			70			(218		)	(196		)	—			749
Income tax (expense) benefit on operating income (loss)	(228		)	(141		)	(30		)	147			70			—			(182		)
Net operating income (loss)	451			273			40			(71		)	(126		)	—			567
Net realized investment gains (losses)	(18		)	(23		)	1			(2		)	3			—			(39		)
Income tax (expense) benefit on net realized investment gains (losses)	7			7			—			8			(1		)	—			21
Net realized investment gains (losses), after tax	(11		)	(16		)	1			6			2			—			(18		)
Net income (loss) from continuing operations	$	440		$	257		$	41		$	(65	)	$	(124	)	$	—		$	549

September 30, 2015
(In millions)
Reinsurance receivables	$	619	$	664	$	172	$	517	$	2,567	$	—	$	4,539
Insurance receivables	851		996		252		10		2		—		2,111
Deferred acquisition costs	305		216		85		—		—		—		606
Goodwill	117		—		34		—		—		—		151
Insurance reserves
Claim and claim adjustment expenses	6,199		9,283		1,365		3,286		2,734		—		22,867
Unearned premiums	1,817		1,307		455		127		—		—		3,706
Future policy benefits	—		—		—		9,520		—		—		9,520

Nine months ended September 30, 2014	Specialty			Commercial			International			Life & Group Non-Core			Corporate & Other Non-Core
(In millions)																Eliminations			Total
Operating revenues
Net earned premiums	$	2,126		$	2,188		$	697		$	417		$	—		$	(1	)	$	5,427
Net investment income	423			549			46			521			17			—			1,556
Other revenues	218			28			—			10			10			(4		)	262
Total operating revenues	2,767			2,765			743			948			27			(5		)	7,245
Claims, Benefits and Expenses
Net incurred claims and benefits	1,213			1,727			382			929			(20		)	—			4,231
Policyholders’ dividends	4			6			—			—			—			—			10
Amortization of deferred acquisition costs	442			371			161			22			—			—			996
Other insurance related expenses	197			376			113			96			—			(1		)	781
Other expenses	191			25			20			34			75			(4		)	341
Total claims, benefits and expenses	2,047			2,505			676			1,081			55			(5		)	6,359
Operating income (loss) before income tax	720			260			67			(133		)	(28		)	—			886
Income tax (expense) benefit on operating income (loss)	(240		)	(85		)	(26		)	98			11			—			(242		)
Net operating income (loss)	480			175			41			(35		)	(17		)	—			644
Net realized investment gains (losses)	9			7			1			42			10			—			69
Income tax (expense) benefit on net realized investment gains (losses)	(3		)	(1		)	(1		)	(14		)	(4		)	—			(23		)
Net realized investment gains (losses), after tax	6			6			—			28			6			—			46
Net income (loss) from continuing operations	$	486		$	181		$	41		$	(7	)	$	(11	)	$	—		$	690

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 September 30	Three Months						Nine Months
(In millions)	2015			2014			2015			2014
Specialty
Management & Professional Liability	$	605		$	699		$	1,976		$	2,113
Surety	132			133			377			380
Warranty & Alternative Risks	109			98			314			283
Specialty revenues	846			930			2,667			2,776
Commercial
Middle Market	386			404			1,207			1,219
Small Business	144			170			467			535
Other Commercial Insurance	237			316			871			1,018
Commercial revenues	767			890			2,545			2,772
International
Canada	52			69			161			210
CNA Europe	78			83			232			254
Hardy	86			89			249			280
International revenues	216			241			642			744
Life & Group Non-Core revenues	320			343			958			990
Corporate & Other Non-Core revenues	6			9			24			37
Eliminations	(2		)	(2		)	(4		)	(5		)
Total revenues	$	2,153		$	2,411		$	6,832		$	7,314