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) |
NOT APPLICABLE |
(Former name or former address, if changed since last report.) |
CNA Financial Corporation | ||
(Registrant) | ||
Date: February 8, 2016 | By | /s/ D. Craig Mense |
(Signature) | ||
D. Craig Mense Executive Vice President and Chief Financial Officer |
Exhibit No. | Description | |
CNA Financial Corporation press release, issued February 8, 2016, providing information on the fourth quarter and year ended December 31, 2015 results of operations. | ||
CNA Financial Corporation financial supplement, posted on its website February 8, 2016, providing supplemental financial information on the fourth quarter and year ended December 31, 2015. |
MEDIA: | ANALYSTS: | |
Brandon Davis, 312-822-5167 | James Anderson, 312-822-7757 | |
Sarah Pang, 312-822-6394 | Derek G. Smith, 312-822-6612 | |
Robert Tardella, 312-822-4387 |
• | Q4 NOL OF $52M; NOI OF $171M EX LTC CHARGE & INVESTMENT ACCOUNTING CHANGE |
• | 2015 P&C COMBINED RATIO OF 95.4% VS 97.7% IN 2014 |
• | 12/31/2015 BVPS EX AOCI OF $44.66, UP 4% FOR 2015 ADJUSTED FOR DIVIDENDS |
• | SPECIAL DIVIDEND OF $2.00 PER SHARE; QUARTERLY DIVIDEND OF $0.25 PER SHARE |
Results for the Three Months Ended December 31 | Results for the Year Ended December 31 | ||||||||||||||
($ millions, except per share data) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Net operating (loss) income (a) | $ | (52 | ) | $ | 205 | $ | 515 | $ | 849 | ||||||
Net realized investment (losses) gains | (18 | ) | (7 | ) | (36 | ) | 39 | ||||||||
Loss from discontinued operations, net of tax | — | — | — | (197 | ) | ||||||||||
Net (loss) income | $ | (70 | ) | $ | 198 | $ | 479 | $ | 691 | ||||||
Net operating (loss) income per diluted share | $ | (0.19 | ) | $ | 0.76 | $ | 1.90 | $ | 3.14 | ||||||
Net (loss) income per diluted share | (0.26 | ) | 0.73 | 1.77 | 2.55 |
December 31, 2015 | December 31, 2014 | ||||||
Book value per share | $ | 43.49 | $ | 47.39 | |||
Book value per share excluding AOCI | 44.66 | 45.91 |
(a) | Management utilizes the net operating income financial measure to monitor the Company's operations. Please refer to Note J in the Condensed Consolidated Financial Statements within the September 30, 2015 Form 10-Q for further discussion of this measure. |
Results for the Three Months Ended December 31 | Results for the Year Ended December 31 | ||||||||||||||||||
($ millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
Net written premiums | $ | 1,585 | $ | 1,555 | $ | 6,421 | $ | 6,536 | |||||||||||
NWP change (% year over year) | 2 | % | (8 | ) | % | (2 | ) | % | (4 | ) | % | ||||||||
Net operating income | $ | 202 | $ | 314 | $ | 966 | $ | 1,010 | |||||||||||
Net income | 176 | 322 | 914 | 1,030 | |||||||||||||||
Loss ratio excluding catastrophes and development | 61.7 | % | 61.4 | % | 61.9 | % | 62.8 | % | |||||||||||
Effect of catastrophe impacts | 2.4 | 0.6 | 2.2 | 2.3 | |||||||||||||||
Effect of development-related items | (1.2 | ) | (2.4 | ) | (3.1 | ) | (0.5 | ) | |||||||||||
Loss ratio | 62.9 | % | 59.6 | % | 61.0 | % | 64.6 | % | |||||||||||
Combined ratio | 98.9 | % | 91.8 | % | 95.4 | % | 97.7 | % | |||||||||||
Combined ratio excluding catastrophes and development | 97.7 | % | 93.6 | % | 96.3 | % | 95.9 | % |
Results for the Three Months Ended December 31 | Results for the Year Ended December 31 | ||||||||||||||||||
($ millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
Net written premiums | $ | 704 | $ | 689 | $ | 2,781 | $ | 2,839 | |||||||||||
NWP change (% year over year) | 2 | % | (3) | % | (2 | ) | % | (1) | % | ||||||||||
Net operating income | $ | 109 | $ | 154 | $ | 560 | $ | 634 | |||||||||||
Net income | 98 | 158 | 538 | 644 | |||||||||||||||
Loss ratio excluding catastrophes and development | 63.5 | % | 60.1 | % | 62.3 | % | 61.7 | % | |||||||||||
Effect of catastrophe impacts | (0.3 | ) | — | 0.4 | 0.7 | ||||||||||||||
Effect of development-related items | (0.1 | ) | (2.0 | ) | (5.3 | ) | (5.1 | ) | |||||||||||
Loss ratio | 63.1 | % | 58.1 | % | 57.4 | % | 57.3 | % | |||||||||||
Combined ratio | 95.0 | % | 88.4 | % | 88.7 | % | 87.6 | % | |||||||||||
Combined ratio excluding catastrophes and development | 95.4 | % | 90.4 | % | 93.6 | % | 92.0 | % |
• | Net operating income decreased $45 million for the fourth quarter of 2015 as compared with the prior year quarter, due to less favorable underwriting results and lower net investment income. |
• | The combined ratio increased 6.6 points for the fourth quarter of 2015 as compared with the prior year quarter. The loss ratio increased 5.0 points, due to a higher current accident year loss ratio and less favorable net prior year development. The unfavorable quarter over quarter accident year comparison was driven by a re-evaluation of our 2015 loss ratio that increased the full year by 0.4 points, which resulted in a catch up impact of 1.6 points on the fourth quarter's loss ratio. In 2014, our fourth quarter accident year loss ratio was favorably affected by the re-evaluation of our estimated 2014 full year loss ratio downward by 0.5 points, and the related positive four quarter catch up impact was 2.0 points on the fourth quarter loss ratio. The expense ratio increased 1.5 points for the fourth quarter of 2015 as compared with the prior year quarter primarily driven by increased underwriting expenses. |
• | Net written premiums were consistent as compared with the prior year quarter. Average rate was unchanged for the policies that renewed in the fourth quarter of 2015 while achieving a retention of 87%. |
Results for the Three Months Ended December 31 | Results for the Year Ended December 31 | ||||||||||||||||||
($ millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
Net written premiums | $ | 700 | $ | 684 | $ | 2,818 | $ | 2,817 | |||||||||||
NWP change (% year over year) | 2 | % | (5 | ) | % | — | % | (5 | ) | % | |||||||||
Net operating income | $ | 96 | $ | 132 | $ | 369 | $ | 307 | |||||||||||
Net income | 81 | 136 | 338 | 317 | |||||||||||||||
Loss ratio excluding catastrophes and development | 59.3 | % | 63.0 | % | 61.6 | % | 64.6 | % | |||||||||||
Effect of catastrophe impacts | 2.7 | 0.6 | 3.6 | 4.4 | |||||||||||||||
Effect of development-related items | (1.4 | ) | 0.6 | (0.1 | ) | 6.3 | |||||||||||||
Loss ratio | 60.6 | % | 64.2 | % | 65.1 | % | 75.3 | % | |||||||||||
Combined ratio | 99.6 | % | 96.8 | % | 101.5 | % | 109.3 | % | |||||||||||
Combined ratio excluding catastrophes and development | 98.3 | % | 95.6 | % | 98.0 | % | 98.6 | % |
• | Net operating income decreased $36 million for the fourth quarter of 2015 as compared with the prior year quarter. This decrease was primarily driven by lower net investment income and less favorable current accident year underwriting results, partially offset by favorable development. |
• | The combined ratio increased 2.8 points for the fourth quarter of 2015 as compared with the prior year quarter. The loss ratio improved 3.6 points, due to an improved non-catastrophe current accident year loss ratio and favorable net prior year development, partially offset by higher catastrophe losses. Catastrophe losses were $18 million, or 2.7 points of the loss ratio, for the fourth quarter of 2015 as compared with $4 million, or 0.6 points of the loss ratio, for the prior year quarter. The expense ratio increased 6.3 points for the fourth quarter of 2015 as compared with the prior year quarter. The unfavorable comparison was primarily driven by the increase in loss-based assessment fees related to our prior Defense Based Act workers' compensation writings as well as increased contingent commissions and underwriting expenses. Last year's fourth quarter was helped by the favorable impact of 2014 recoveries on insurance receivables written off in prior years. |
• | Net written premiums increased $16 million for the fourth quarter of 2015 as compared with the prior year quarter, driven by an increased level of new business and improved retention. Average rate increased 1% for the policies that renewed in the fourth quarter of 2015 while achieving a retention of 84%. |
Results for the Three Months Ended December 31 | Results for the Year Ended December 31 | ||||||||||||||||||
($ millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
Net written premiums | $ | 181 | $ | 182 | $ | 822 | $ | 880 | |||||||||||
NWP change (% year over year) | (1 | ) | % | (30 | ) | % | (7 | ) | % | (8 | ) | % | |||||||
Net operating (loss) income | $ | (3 | ) | $ | 28 | $ | 37 | $ | 69 | ||||||||||
Net (loss) income | (3 | ) | 28 | 38 | 69 | ||||||||||||||
Loss ratio excluding catastrophes and development | 63.5 | % | 60.3 | % | 61.7 | % | 60.3 | % | |||||||||||
Effect of catastrophe impacts | 10.7 | 2.2 | 3.3 | 1.0 | |||||||||||||||
Effect of development-related items | (3.9 | ) | (13.3 | ) | (5.5 | ) | (7.8 | ) | |||||||||||
Loss ratio | 70.3 | % | 49.2 | % | 59.5 | % | 53.5 | % | |||||||||||
Combined ratio | 109.9 | % | 86.9 | % | 97.6 | % | 92.4 | % | |||||||||||
Combined ratio excluding catastrophes and development | 103.1 | % | 98.0 | % | 99.8 | % | 99.2 | % |
• | Net operating results decreased $31 million for the fourth quarter of 2015 as compared with the prior year quarter. This decrease was primarily due to decreased underwriting results, partially offset by less unfavorable effects of foreign currency exchange rates. |
• | The combined ratio increased 23.0 points for the fourth quarter of 2015 as compared with the prior year quarter. The loss ratio increased 21.1 points, due to less favorable net prior year loss development, higher catastrophe losses and an increase in large losses. Catastrophe losses were $22 million, or 10.7 points of the loss ratio, for the fourth quarter of 2015 as compared with $5 million, or 2.2 points of the loss ratio, for the prior year quarter. The expense ratio increased 1.9 points, primarily due to the effect of lower net earned premiums. |
• | Net written premiums were consistent for the fourth quarter of 2015 as compared with the prior year quarter. Average rate decreased 1% for the policies that renewed in the fourth quarter of 2015 while achieving a retention of 73%. |
Results for the Three Months Ended December 31 | Results for the Year Ended December 31 | ||||||||||||||||||
($ millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
Total operating revenues | $ | 299 | $ | 324 | $ | 1,259 | $ | 1,272 | |||||||||||
Net operating loss | (243 | ) | (34 | ) | (314 | ) | (69 | ) | |||||||||||
Net loss | (241 | ) | (55 | ) | (306 | ) | (62 | ) |
• | Net operating loss increased $209 million for the fourth quarter of 2015 as compared with the prior year quarter. The increase was driven by a $296 million charge related to recognition of a premium deficiency and a $9 million deficiency in claim reserves in our long term care business. The after-tax impact of both of these items was $198 million. Excluding the effect of these items, results in 2015 were also negatively affected by higher morbidity in our long term care business. |
Results for the Three Months Ended December 31 | Results for the Year Ended December 31 | ||||||||||||||||||
($ millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
Interest expense | $ | 37 | $ | 44 | $ | 154 | $ | 182 | |||||||||||
Net operating loss | (11 | ) | (75 | ) | (137 | ) | (92 | ) | |||||||||||
Net loss | (5 | ) | (69 | ) | (129 | ) | (80 | ) |
• | Net operating loss decreased $64 million for the fourth quarter of 2015 as compared with the prior year quarter. The prior year quarter included a $55 million after-tax lump sum settlement charge. |
Page | |
Consolidated Results | |
Statements of Operations.................................................................................................................................................................................................. | |
Components of Income (Loss), Per Share Data and Return on Equity............................................................................................................................. | |
Selected Balance Sheet Data and Statement of Cash Flows Data............................................................................................................................... | |
Property & Casualty - Results of Operations | |
Property & Casualty........................................................................................................................................................................................................... | |
Specialty.................................................................................................................................................................................................................... | |
Commercial............................................................................................................................................................................................................... | |
International....................................................................................................................................................................................................................... | |
Non-Core - Results of Operations | |
Life & Group Non-Core...................................................................................................................................................................................................... | |
Corporate & Other Non-Core............................................................................................................................................................................................. | |
Investment Information | |
Investment Summary - Consolidated................................................................................................................................................................................ | |
Investment Summary - Property & Casualty and Corporate & Other Non-Core............................................................................................................... | |
Investment Summary - Life & Group Non-Core................................................................................................................................................................. | |
Investments - Fixed Maturity Securities by Credit Rating.................................................................................................................................................. | |
Components of Net Investment Income................................................................................................................................................................. | |
Other | |
Claim & Claim Adjustment Expense Reserve Rollforward................................................................................................................................................ | |
Life & Group Non-Core Policyholder Reserves................................................................................................................................................................. | |
Definitions and Presentation.............................................................................................................................................................................................. |
Periods ended December 31 | Three Months | Twelve Months | |||||||||||||||||||||
(In millions) | 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||||||
Revenues: | |||||||||||||||||||||||
Net earned premiums | $ | 1,748 | $ | 1,785 | (2 | ) | % | $ | 6,921 | $ | 7,212 | (4 | ) | % | |||||||||
Net investment income | 428 | 511 | (16 | ) | 1,840 | 2,067 | (11 | ) | |||||||||||||||
Net realized investment gains (losses): | |||||||||||||||||||||||
Other-than-temporary impairment (OTTI) losses | (57 | ) | (60 | ) | (156 | ) | (77 | ) | |||||||||||||||
Portion of OTTI recognized in Other comprehensive income (loss) | — | — | — | — | |||||||||||||||||||
Net OTTI losses recognized in earnings | (57 | ) | (60 | ) | (156 | ) | (77 | ) | |||||||||||||||
Other net realized investment gains (losses) | 29 | 48 | 89 | 134 | |||||||||||||||||||
Net realized investment gains (losses) | (28 | ) | (12 | ) | (67 | ) | 57 | ||||||||||||||||
Other revenues | 121 | 94 | 407 | 356 | |||||||||||||||||||
Total revenues | 2,269 | 2,378 | (5 | ) | 9,101 | 9,692 | (6 | ) | |||||||||||||||
Claims, Benefits and Expenses: | |||||||||||||||||||||||
Insurance claims and policyholders' benefits | 1,376 | 1,350 | 5,384 | 5,591 | |||||||||||||||||||
Amortization of deferred acquisition costs | 604 | 321 | 1,540 | 1,317 | |||||||||||||||||||
Other operating expenses | 412 | 410 | 1,473 | 1,394 | |||||||||||||||||||
Interest | 38 | 45 | 155 | 183 | |||||||||||||||||||
Total claims, benefits and expenses | 2,430 | 2,126 | (14 | ) | 8,552 | 8,485 | (1 | ) | |||||||||||||||
Income (loss) before income tax | (161 | ) | 252 | 549 | 1,207 | ||||||||||||||||||
Income tax (expense) benefit | 91 | (54 | ) | (70 | ) | (319 | ) | ||||||||||||||||
Income (loss) from continuing operations | (70 | ) | 198 | (135 | ) | 479 | 888 | (46 | ) | ||||||||||||||
Income (loss) from discontinued operations, net of tax | — | — | — | (197 | ) | ||||||||||||||||||
Net income (loss) | $ | (70 | ) | $ | 198 | (135 | ) | % | $ | 479 | $ | 691 | (31 | ) | % |
Periods ended December 31 | Three Months | Twelve Months | |||||||||||||||
(In millions, except per share data) | 2015 | 2014 | 2015 | 2014 | |||||||||||||
Components of Income (Loss) | |||||||||||||||||
Net operating income (loss) | $ | (52 | ) | $ | 205 | $ | 515 | $ | 849 | ||||||||
Net realized investment gains (losses) | (18 | ) | (7 | ) | (36 | ) | 39 | ||||||||||
Income (loss) from continuing operations | (70 | ) | 198 | 479 | 888 | ||||||||||||
Income (loss) from discontinued operations | — | — | — | (197 | ) | ||||||||||||
Net income (loss) | $ | (70 | ) | $ | 198 | $ | 479 | $ | 691 | ||||||||
Diluted Earnings (Loss) Per Common Share | |||||||||||||||||
Net operating income (loss) | $ | (0.19 | ) | $ | 0.76 | $ | 1.90 | $ | 3.14 | ||||||||
Net realized investment gains (losses) | (0.07 | ) | (0.03 | ) | (0.13 | ) | 0.14 | ||||||||||
Income (loss) from continuing operations | (0.26 | ) | 0.73 | 1.77 | 3.28 | ||||||||||||
Income (loss) from discontinued operations | — | — | — | (0.73 | ) | ||||||||||||
Diluted earnings (loss) per share | $ | (0.26 | ) | $ | 0.73 | $ | 1.77 | $ | 2.55 | ||||||||
Weighted Average Outstanding Common Stock and Common Stock Equivalents | |||||||||||||||||
Basic | 270.3 | 270.0 | 270.2 | 269.9 | |||||||||||||
Diluted | 270.8 | 270.7 | 270.7 | 270.6 | |||||||||||||
Return on Equity | |||||||||||||||||
Net income (loss) (1) | (2.3 | ) | % | 6.1 | % | 3.9 | % | 5.4 | % | ||||||||
Net operating income (loss) (2) | (1.7 | ) | 6.7 | 4.2 | 6.9 |
(In millions, except per share data) | December 31, 2015 | December 31, 2014 | |||||
Total investments | $ | 44,699 | $ | 46,262 | |||
Reinsurance receivables, net of allowance for uncollectible receivables | 4,453 | 4,694 | |||||
Total assets | 55,047 | 55,566 | |||||
Insurance reserves | 36,486 | 36,380 | |||||
Debt | 2,562 | 2,559 | |||||
Total liabilities | 43,291 | 42,772 | |||||
Accumulated other comprehensive income (loss) (2) | (315 | ) | 400 | ||||
Total stockholders' equity | 11,756 | 12,794 | |||||
Book value per common share | $ | 43.49 | $ | 47.39 | |||
Book value per common share excluding AOCI | $ | 44.66 | $ | 45.91 | |||
Outstanding shares of common stock (in millions of shares) | 270.3 | 270.0 | |||||
Statutory capital and surplus - Combined Continental Casualty Companies (3) | $ | 10,723 | $ | 11,155 |
Three months ended December 31 | 2015 | 2014 | |||||
Net cash flows provided (used) by operating activities | $ | 342 | $ | 393 | |||
Net cash flows provided (used) by investing activities | (118 | ) | 169 | ||||
Net cash flows provided (used) by financing activities | (68 | ) | (614 | ) | |||
Net cash flows provided (used) by operating, investing and financing activities | $ | 156 | $ | (52 | ) |
Twelve months ended December 31 | 2015 | 2014 | |||||
Net cash flows provided (used) by operating activities | $ | 1,387 | $ | 1,440 | |||
Net cash flows provided (used) by investing activities | (372 | ) | (918 | ) | |||
Net cash flows provided (used) by financing activities | (807 | ) | (519 | ) | |||
Net cash flows provided (used) by operating, investing and financing activities | $ | 208 | $ | 3 |
Periods ended December 31 | Three Months | Twelve Months | |||||||||||||||||||||
(In millions) | 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||||||
Gross written premiums | $ | 2,547 | $ | 2,334 | 9 | % | $ | 10,124 | $ | 9,558 | 6 | % | |||||||||||
Net written premiums | 1,585 | 1,555 | 2 | 6,421 | 6,536 | (2 | ) | ||||||||||||||||
Net earned premiums | 1,612 | 1,646 | (2 | ) | 6,374 | 6,657 | (4 | ) | |||||||||||||||
Net investment income | 259 | 326 | 1,119 | 1,344 | |||||||||||||||||||
Other revenues | 120 | 87 | 392 | 333 | |||||||||||||||||||
Total operating revenues | 1,991 | 2,059 | (3 | ) | 7,885 | 8,334 | (5 | ) | |||||||||||||||
Insurance claims and policyholders' benefits | 1,017 | 984 | 3,902 | 4,316 | |||||||||||||||||||
Amortization of deferred acquisition costs | 309 | 315 | 1,226 | 1,289 | |||||||||||||||||||
Other insurance related expenses | 266 | 214 | 954 | 900 | |||||||||||||||||||
Other expenses | 100 | 77 | 341 | 313 | |||||||||||||||||||
Total claims, benefits and expenses | 1,692 | 1,590 | (6 | ) | 6,423 | 6,818 | 6 | ||||||||||||||||
Operating income (loss) before income tax | 299 | 469 | 1,462 | 1,516 | |||||||||||||||||||
Income tax (expense) benefit on operating income (loss) | (97 | ) | (155 | ) | (496 | ) | (506 | ) | |||||||||||||||
Net operating income (loss) | $ | 202 | $ | 314 | (36 | ) | % | $ | 966 | $ | 1,010 | (4 | ) | % | |||||||||
Other Performance Metrics | |||||||||||||||||||||||
Underwriting gain (loss) | $ | 20 | $ | 133 | (85 | ) | % | $ | 292 | $ | 152 | 92 | % | ||||||||||
Loss & LAE ratio | 62.9 | % | 59.6 | % | (3.3 | ) | pts | 61.0 | % | 64.6 | % | 3.6 | pts | ||||||||||
Acquisition expense ratio | 20.3 | 17.6 | (2.7 | ) | 19.4 | 19.0 | (0.4 | ) | |||||||||||||||
Underwriting expense ratio | 15.5 | 14.4 | (1.1 | ) | 14.8 | 13.9 | (0.9 | ) | |||||||||||||||
Expense ratio | 35.8 | 32.0 | (3.8 | ) | 34.2 | 32.9 | (1.3 | ) | |||||||||||||||
Dividend ratio | 0.2 | 0.2 | — | 0.2 | 0.2 | — | |||||||||||||||||
Combined ratio | 98.9 | % | 91.8 | % | (7.1 | ) | 95.4 | % | 97.7 | % | 2.3 | ||||||||||||
Combined ratio excluding catastrophes and development | 97.7 | % | 93.6 | % | (4.1 | ) | pts | 96.3 | % | 95.9 | % | (0.4 | ) | pts | |||||||||
Net accident year catastrophe losses incurred | $ | 38 | $ | 9 | $ | 141 | $ | 156 | |||||||||||||||
Effect on loss & LAE ratio | 2.4 | % | 0.6 | % | (1.8 | ) | pts | 2.2 | % | 2.3 | % | 0.1 | pts | ||||||||||
Net prior year development and other: (favorable) / unfavorable | $ | (17 | ) | $ | (39 | ) | $ | (199 | ) | $ | (43 | ) | |||||||||||
Effect on loss & LAE ratio | (1.2 | ) | % | (2.4 | ) | % | (1.2 | ) | pts | (3.1 | ) | % | (0.5 | ) | % | 2.6 | pts | ||||||
Rate | — | % | 3 | % | (3 | ) | pts | 1 | % | 3 | % | (2 | ) | pts | |||||||||
Retention | 84 | % | 79 | % | 5 | pts | 81 | % | 78 | % | 3 | pts | |||||||||||
New Business | $ | 231 | $ | 192 | 20 | % | $ | 942 | $ | 915 | 3 | % |
Periods ended December 31 | Three Months | Twelve Months | |||||||||||||||||||||
(In millions) | 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||||||
Gross written premiums | $ | 1,623 | $ | 1,415 | 15 | % | $ | 6,242 | $ | 5,608 | 11 | % | |||||||||||
Net written premiums | 704 | 689 | 2 | 2,781 | 2,839 | (2 | ) | ||||||||||||||||
Net earned premiums | 707 | 712 | (1 | ) | 2,782 | 2,838 | (2 | ) | |||||||||||||||
Net investment income | 109 | 137 | 474 | 560 | |||||||||||||||||||
Other revenues | 111 | 77 | 356 | 295 | |||||||||||||||||||
Total operating revenues | 927 | 926 | — | 3,612 | 3,693 | (2 | ) | ||||||||||||||||
Insurance claims and policyholders' benefits | 446 | 416 | 1,601 | 1,633 | |||||||||||||||||||
Amortization of deferred acquisition costs | 149 | 150 | 589 | 592 | |||||||||||||||||||
Other insurance related expenses | 76 | 65 | 278 | 262 | |||||||||||||||||||
Other expenses | 92 | 63 | 301 | 254 | |||||||||||||||||||
Total claims, benefits and expenses | 763 | 694 | (10 | ) | 2,769 | 2,741 | (1 | ) | |||||||||||||||
Operating income (loss) before income tax | 164 | 232 | 843 | 952 | |||||||||||||||||||
Income tax (expense) benefit on operating income (loss) | (55 | ) | (78 | ) | (283 | ) | (318 | ) | |||||||||||||||
Net operating income (loss) | $ | 109 | $ | 154 | (29 | ) | % | $ | 560 | $ | 634 | (12 | ) | % | |||||||||
Other Performance Metrics | |||||||||||||||||||||||
Underwriting gain (loss) | 36 | 81 | (56 | ) | % | 314 | 351 | (11 | ) | % | |||||||||||||
Loss & LAE ratio | 63.1 | % | 58.1 | % | (5.0 | ) | pts | 57.4 | % | 57.3 | % | (0.1 | ) | pts | |||||||||
Acquisition expense ratio | 20.1 | 19.5 | (0.6 | ) | 19.8 | 19.7 | (0.1 | ) | |||||||||||||||
Underwriting expense ratio | 11.6 | 10.7 | (0.9 | ) | 11.3 | 10.4 | (0.9 | ) | |||||||||||||||
Expense ratio | 31.7 | 30.2 | (1.5 | ) | 31.1 | 30.1 | (1.0 | ) | |||||||||||||||
Dividend ratio | 0.2 | 0.1 | (0.1 | ) | 0.2 | 0.2 | — | ||||||||||||||||
Combined ratio | 95.0 | % | 88.4 | % | (6.6 | ) | 88.7 | % | 87.6 | % | (1.1 | ) | |||||||||||
Combined ratio excluding catastrophes and development | 95.4 | % | 90.4 | % | (5.0 | ) | pts | 93.6 | % | 92.0 | % | (1.6 | ) | pts | |||||||||
Net accident year catastrophe losses incurred | $ | (2 | ) | $ | — | $ | 13 | $ | 21 | ||||||||||||||
Effect on loss & LAE ratio | (0.3 | ) | % | — | % | 0.3 | pts | 0.4 | % | 0.7 | % | 0.3 | pts | ||||||||||
Net prior year development and other: (favorable) / unfavorable | $ | (1 | ) | $ | (14 | ) | $ | (152 | ) | $ | (149 | ) | |||||||||||
Effect on loss & LAE ratio | (0.1 | ) | % | (2.0 | ) | % | (1.9 | ) | pts | (5.3 | ) | % | (5.1 | ) | % | 0.2 | pts | ||||||
Rate | — | % | 3 | % | (3 | ) | pts | 1 | % | 3 | % | (2 | ) | pts | |||||||||
Retention | 87 | % | 86 | % | 1 | pts | 86 | % | 87 | % | (1 | ) | pts | ||||||||||
New Business | $ | 73 | $ | 70 | 4 | % | $ | 279 | $ | 309 | (10 | ) | % |
Periods ended December 31 | Three Months | Twelve Months | |||||||||||||||||||||
(In millions) | 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||||||
Gross written premiums | $ | 726 | $ | 714 | 2 | % | $ | 2,967 | $ | 2,959 | — | % | |||||||||||
Net written premiums | 700 | 684 | 2 | 2,818 | 2,817 | — | |||||||||||||||||
Net earned premiums | 702 | 718 | (2 | ) | 2,788 | 2,906 | (4 | ) | |||||||||||||||
Net investment income | 138 | 174 | 593 | 723 | |||||||||||||||||||
Other revenues | 10 | 10 | 37 | 38 | |||||||||||||||||||
Total operating revenues | 850 | 902 | (6 | ) | 3,418 | 3,667 | (7 | ) | |||||||||||||||
Insurance claims and policyholders' benefits | 428 | 462 | 1,822 | 2,195 | |||||||||||||||||||
Amortization of deferred acquisition costs | 117 | 122 | 469 | 493 | |||||||||||||||||||
Other insurance related expenses | 153 | 111 | 538 | 487 | |||||||||||||||||||
Other expenses | 5 | 6 | 28 | 31 | |||||||||||||||||||
Total claims, benefits and expenses | 703 | 701 | — | 2,857 | 3,206 | 11 | |||||||||||||||||
Operating income (loss) before income tax | 147 | 201 | 561 | 461 | |||||||||||||||||||
Income tax (expense) benefit on operating income (loss) | (51 | ) | (69 | ) | (192 | ) | (154 | ) | |||||||||||||||
Net operating income (loss) | $ | 96 | $ | 132 | (27 | ) | % | $ | 369 | $ | 307 | 20 | % | ||||||||||
Other Performance Metrics | |||||||||||||||||||||||
Underwriting gain (loss) | $ | 4 | $ | 23 | (83 | ) | % | $ | (41 | ) | $ | (269 | ) | 85 | % | ||||||||
Loss & LAE ratio | 60.6 | % | 64.2 | % | 3.6 | pts | 65.1 | % | 75.3 | % | 10.2 | pts | |||||||||||
Acquisition expense ratio | 19.9 | 15.0 | (4.9 | ) | 18.2 | 17.0 | (1.2 | ) | |||||||||||||||
Underwriting expense ratio | 18.7 | 17.3 | (1.4 | ) | 17.9 | 16.7 | (1.2 | ) | |||||||||||||||
Expense ratio | 38.6 | 32.3 | (6.3 | ) | 36.1 | 33.7 | (2.4 | ) | |||||||||||||||
Dividend ratio | 0.4 | 0.3 | (0.1 | ) | 0.3 | 0.3 | — | ||||||||||||||||
Combined ratio | 99.6 | % | 96.8 | % | (2.8 | ) | 101.5 | % | 109.3 | % | 7.8 | ||||||||||||
Combined ratio excluding catastrophes and development | 98.3 | % | 95.6 | % | (2.7 | ) | pts | 98.0 | % | 98.6 | % | 0.6 | pts | ||||||||||
Net accident year catastrophe losses incurred | $ | 18 | $ | 4 | $ | 101 | $ | 125 | |||||||||||||||
Effect on loss & LAE ratio | 2.7 | % | 0.6 | % | (2.1 | ) | pts | 3.6 | % | 4.4 | % | 0.8 | pts | ||||||||||
Net prior year development and other: (favorable) / unfavorable | $ | (9 | ) | $ | 5 | $ | (10 | ) | $ | 177 | |||||||||||||
Effect on loss & LAE ratio | (1.4 | ) | % | 0.6 | % | 2.0 | pts | (0.1 | ) | % | 6.3 | % | 6.4 | pts | |||||||||
Rate | 1 | % | 4 | % | (3 | ) | pts | 2 | % | 5 | % | (3 | ) | pts | |||||||||
Retention | 84 | % | 76 | % | 8 | pts | 79 | % | 73 | % | 6 | pts | |||||||||||
New Business | $ | 130 | $ | 95 | 37 | % | $ | 552 | $ | 491 | 12 | % |
Periods ended December 31 | Three Months | Twelve Months | |||||||||||||||||||||
(In millions) | 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||||||
Gross written premiums | $ | 198 | $ | 205 | (3 | ) | % | $ | 915 | $ | 991 | (8 | ) | % | |||||||||
Net written premiums | 181 | 182 | (1 | ) | 822 | 880 | (7 | ) | |||||||||||||||
Net earned premiums | 203 | 216 | (6 | ) | 804 | 913 | (12 | ) | |||||||||||||||
Net investment income | 12 | 15 | 52 | 61 | |||||||||||||||||||
Other revenues | (1 | ) | — | (1 | ) | — | |||||||||||||||||
Total operating revenues | 214 | 231 | (7 | ) | 855 | 974 | (12 | ) | |||||||||||||||
Insurance claims and policyholders' benefits | 143 | 106 | 479 | 488 | |||||||||||||||||||
Amortization of deferred acquisition costs | 43 | 43 | 168 | 204 | |||||||||||||||||||
Other insurance related expenses | 37 | 38 | 138 | 151 | |||||||||||||||||||
Other expenses | 3 | 8 | 12 | 28 | |||||||||||||||||||
Total claims, benefits and expenses | 226 | 195 | (16 | ) | 797 | 871 | 8 | ||||||||||||||||
Operating income (loss) before income tax | (12 | ) | 36 | 58 | 103 | ||||||||||||||||||
Income tax (expense) benefit on operating income (loss) | 9 | (8 | ) | (21 | ) | (34 | ) | ||||||||||||||||
Net operating income (loss) | $ | (3 | ) | $ | 28 | (111 | ) | % | $ | 37 | $ | 69 | (46 | ) | % | ||||||||
Other Performance Metrics | |||||||||||||||||||||||
Underwriting gain (loss) | $ | (20 | ) | $ | 29 | (169 | ) | % | $ | 19 | $ | 70 | (73 | ) | % | ||||||||
Loss & LAE ratio | 70.3 | % | 49.2 | % | (21.1 | ) | pts | 59.5 | % | 53.5 | % | (6.0 | ) | pts | |||||||||
Acquisition expense ratio | 22.1 | 19.8 | (2.3 | ) | 22.0 | 22.9 | 0.9 | ||||||||||||||||
Underwriting expense ratio | 17.5 | 17.9 | 0.4 | 16.1 | 16.0 | (0.1 | ) | ||||||||||||||||
Expense ratio | 39.6 | 37.7 | (1.9 | ) | 38.1 | 38.9 | 0.8 | ||||||||||||||||
Dividend ratio | — | — | — | — | — | — | |||||||||||||||||
Combined ratio | 109.9 | % | 86.9 | % | (23.0 | ) | 97.6 | % | 92.4 | % | (5.2 | ) | |||||||||||
Combined ratio excluding catastrophes and development | 103.1 | % | 98.0 | % | (5.1 | ) | pts | 99.8 | % | 99.2 | % | (0.6 | ) | pts | |||||||||
Net accident year catastrophe losses incurred | $ | 22 | $ | 5 | $ | 27 | $ | 10 | |||||||||||||||
Effect on loss & LAE ratio | 10.7 | % | 2.2 | % | (8.5 | ) | pts | 3.3 | % | 1.0 | % | (2.3 | ) | pts | |||||||||
Net prior year development and other: (favorable) / unfavorable | $ | (7 | ) | $ | (30 | ) | $ | (37 | ) | $ | (71 | ) | |||||||||||
Effect on loss & LAE ratio | (3.9 | ) | % | (13.3 | ) | % | (9.4 | ) | pts | (5.5 | ) | % | (7.8 | ) | % | (2.3 | ) | pts | |||||
Rate | (1 | ) | % | — | % | (1 | ) | pts | (1 | ) | % | (1 | ) | % | — | pts | |||||||
Retention | 73 | % | 66 | % | 7 | pts | 76 | % | 74 | % | 2 | pts | |||||||||||
New Business | 28 | 27 | — | % | 111 | 115 | (3 | ) | % |
Periods ended December 31 | Three Months | Twelve Months | |||||||||||||||||||||
(In millions) | 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||||||
Net earned premiums | $ | 136 | $ | 139 | (2 | ) | % | $ | 548 | $ | 556 | (1 | ) | % | |||||||||
Net investment income | 164 | 179 | 704 | 700 | |||||||||||||||||||
Other revenues | (1 | ) | 6 | 7 | 16 | ||||||||||||||||||
Total operating revenues | 299 | 324 | (8 | ) | 1,259 | 1,272 | (1 | ) | |||||||||||||||
Insurance claims and policyholders' benefits | 376 | 375 | 1,421 | 1,304 | |||||||||||||||||||
Amortization of deferred acquisition costs | 295 | 6 | 314 | 28 | |||||||||||||||||||
Other insurance related expenses | 38 | 34 | 142 | 130 | |||||||||||||||||||
Other expenses | 1 | (4 | ) | 11 | 30 | ||||||||||||||||||
Total claims, benefits and expenses | 710 | 411 | (73 | ) | 1,888 | 1,492 | (27 | ) | |||||||||||||||
Operating income (loss) before income tax | (411 | ) | (87 | ) | (629 | ) | (220 | ) | |||||||||||||||
Income tax (expense) benefit on operating income (loss) | 168 | 53 | 315 | 151 | |||||||||||||||||||
Net operating income (loss) | $ | (243 | ) | $ | (34 | ) | N/M | % | $ | (314 | ) | $ | (69 | ) | N/M | % |
Periods ended December 31 | Three Months | Twelve Months | |||||||||||||||||||||
(In millions) | 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||||||
Net earned premiums | $ | — | $ | — | $ | (1 | ) | $ | (1 | ) | |||||||||||||
Net investment income | 5 | 6 | 17 | 23 | |||||||||||||||||||
Other revenues | 2 | 1 | 8 | 7 | |||||||||||||||||||
Total operating revenues | 7 | 7 | — | % | 24 | 29 | (17 | ) | % | ||||||||||||||
Insurance claims and policyholders' benefits | (17 | ) | (9 | ) | 61 | (29 | ) | ||||||||||||||||
Amortization of deferred acquisition costs | — | — | — | — | |||||||||||||||||||
Other insurance related expenses | (1 | ) | — | (3 | ) | (1 | ) | ||||||||||||||||
Other expenses | 46 | 134 | 183 | 205 | |||||||||||||||||||
Total claims, benefits and expenses | 28 | 125 | 78 | 241 | 175 | (38 | ) | ||||||||||||||||
Operating income (loss) before income tax | (21 | ) | (118 | ) | (217 | ) | (146 | ) | |||||||||||||||
Income tax (expense) benefit on operating income (loss) | 10 | 43 | 80 | 54 | |||||||||||||||||||
Net operating income (loss) | $ | (11 | ) | $ | (75 | ) | 85 | % | $ | (137 | ) | $ | (92 | ) | (49 | ) | % |
December 31, 2015 | September 30, 2015 | December 31, 2014 | |||||||||||||||||||||
(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 | $ | 17,760 | $ | 677 | $ | 18,188 | $ | 1,030 | $ | 18,889 | $ | 1,660 | |||||||||||
States, municipalities and political subdivisions: | |||||||||||||||||||||||
Tax-exempt | 10,114 | 1,076 | 10,203 | 911 | 9,802 | 988 | |||||||||||||||||
Taxable | 3,060 | 369 | 3,094 | 408 | 2,938 | 467 | |||||||||||||||||
Total states, municipalities and political subdivisions | 13,174 | 1,445 | 13,297 | 1,319 | 12,740 | 1,455 | |||||||||||||||||
Asset-backed: | |||||||||||||||||||||||
RMBS | 5,072 | 137 | 5,041 | 191 | 5,233 | 205 | |||||||||||||||||
CMBS | 2,197 | 43 | 2,251 | 68 | 2,144 | 88 | |||||||||||||||||
Other ABS | 921 | (2 | ) | 1,016 | 7 | 1,235 | 1 | ||||||||||||||||
Total asset-backed | 8,190 | 178 | 8,308 | 266 | 8,612 | 294 | |||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 67 | 5 | 29 | 5 | 31 | 5 | |||||||||||||||||
Foreign government | 346 | 12 | 344 | 11 | 454 | 16 | |||||||||||||||||
Redeemable preferred stock | 35 | 2 | 35 | 2 | 42 | 3 | |||||||||||||||||
Total fixed maturity securities | 39,572 | 2,319 | 40,201 | 2,633 | 40,768 | 3,433 | |||||||||||||||||
Equities | 197 | 6 | 212 | 5 | 222 | 12 | |||||||||||||||||
Limited partnership investments | 2,548 | — | 2,738 | — | 2,937 | — | |||||||||||||||||
Other invested assets | 44 | — | 45 | — | 41 | — | |||||||||||||||||
Mortgage loans | 678 | — | 640 | — | 588 | — | |||||||||||||||||
Short term investments | 1,660 | — | 1,482 | — | 1,706 | (1 | ) | ||||||||||||||||
Total investments | $ | 44,699 | $ | 2,325 | $ | 45,318 | $ | 2,638 | $ | 46,262 | $ | 3,444 | |||||||||||
Net receivable/(payable) on investment activity | $ | 82 | $ | (92 | ) | $ | (58 | ) | |||||||||||||||
Effective portfolio duration (in years) | 6.2 | 6.5 | 6.3 | ||||||||||||||||||||
Weighted average rating of fixed maturity securities | A | A | A |
December 31, 2015 | September 30, 2015 | December 31, 2014 | |||||||||||||||||||||
(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 | $ | 12,594 | $ | 96 | $ | 12,926 | $ | 276 | $ | 13,444 | $ | 542 | |||||||||||
States, municipalities and political subdivisions: | |||||||||||||||||||||||
Tax-exempt | 2,441 | 133 | 2,663 | 112 | 2,561 | 127 | |||||||||||||||||
Taxable | 1,579 | 132 | 1,647 | 156 | 1,454 | 169 | |||||||||||||||||
Total states, municipalities and political subdivisions | 4,020 | 265 | 4,310 | 268 | 4,015 | 296 | |||||||||||||||||
Asset-backed: | |||||||||||||||||||||||
RMBS | 4,828 | 131 | 4,921 | 183 | 5,101 | 196 | |||||||||||||||||
CMBS | 2,038 | 37 | 2,079 | 60 | 1,985 | 78 | |||||||||||||||||
Other ABS | 837 | (1 | ) | 931 | 7 | 1,144 | 2 | ||||||||||||||||
Total asset-backed | 7,703 | 167 | 7,931 | 250 | 8,230 | 276 | |||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 42 | — | 4 | — | 7 | (1 | ) | ||||||||||||||||
Foreign government | 346 | 12 | 344 | 11 | 449 | 15 | |||||||||||||||||
Redeemable preferred stock | 13 | 1 | 13 | 1 | 13 | 2 | |||||||||||||||||
Total fixed maturity securities | 24,718 | 541 | 25,528 | 806 | 26,158 | 1,130 | |||||||||||||||||
Equities | 87 | 1 | 104 | 2 | 87 | 9 | |||||||||||||||||
Limited partnership investments | 2,548 | — | 2,738 | — | 2,937 | — | |||||||||||||||||
Other invested assets | 44 | — | 45 | — | 41 | — | |||||||||||||||||
Mortgage loans | 622 | — | 584 | — | 531 | — | |||||||||||||||||
Short term investments | 1,513 | — | 1,390 | — | 1,586 | (1 | ) | ||||||||||||||||
Total investments | $ | 29,532 | $ | 542 | $ | 30,389 | $ | 808 | $ | 31,340 | $ | 1,138 | |||||||||||
Net receivable/(payable) on investment activity | $ | 204 | $ | (41 | ) | $ | 4 | ||||||||||||||||
Effective portfolio duration (in years) | 4.3 | 4.4 | 4.0 | ||||||||||||||||||||
Weighted average rating of fixed maturity securities | A | A | A |
December 31, 2015 | September 30, 2015 | December 31, 2014 | |||||||||||||||||||||
(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 | $ | 5,166 | $ | 581 | $ | 5,262 | $ | 754 | $ | 5,445 | $ | 1,118 | |||||||||||
States, municipalities and political subdivisions: | |||||||||||||||||||||||
Tax-exempt | 7,673 | 943 | 7,540 | 799 | 7,241 | 861 | |||||||||||||||||
Taxable | 1,481 | 237 | 1,447 | 252 | 1,484 | 298 | |||||||||||||||||
Total states, municipalities and political subdivisions | 9,154 | 1,180 | 8,987 | 1,051 | 8,725 | 1,159 | |||||||||||||||||
Asset-backed: | |||||||||||||||||||||||
RMBS | 244 | 6 | 120 | 8 | 132 | 9 | |||||||||||||||||
CMBS | 159 | 6 | 172 | 8 | 159 | 10 | |||||||||||||||||
Other ABS | 84 | (1 | ) | 85 | — | 91 | (1 | ) | |||||||||||||||
Total asset-backed | 487 | 11 | 377 | 16 | 382 | 18 | |||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 25 | 5 | 25 | 5 | 24 | 6 | |||||||||||||||||
Foreign government | — | — | — | — | 5 | 1 | |||||||||||||||||
Redeemable preferred stock | 22 | 1 | 22 | 1 | 29 | 1 | |||||||||||||||||
Total fixed maturity securities | 14,854 | 1,778 | 14,673 | 1,827 | 14,610 | 2,303 | |||||||||||||||||
Equities | 110 | 5 | 108 | 3 | 135 | 3 | |||||||||||||||||
Limited partnership investments | — | — | — | — | — | — | |||||||||||||||||
Other invested assets | — | — | — | — | — | — | |||||||||||||||||
Mortgage loans | 56 | — | 56 | — | 57 | — | |||||||||||||||||
Short term investments | 147 | — | 92 | — | 120 | — | |||||||||||||||||
Total investments | $ | 15,167 | $ | 1,783 | $ | 14,929 | $ | 1,830 | $ | 14,922 | $ | 2,306 | |||||||||||
Net receivable/(payable) on investment activity | $ | (122 | ) | $ | (51 | ) | $ | (62 | ) | ||||||||||||||
Effective portfolio duration (in years) | 9.6 | 10.3 | 10.5 | ||||||||||||||||||||
Weighted average rating of fixed maturity securities | A | A+ | A+ |
December 31, 2015 | 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 | $ | — | $ | — | $ | 86 | $ | 6 | $ | 752 | $ | 33 | $ | 4,604 | $ | 409 | $ | 10,485 | $ | 297 | $ | 1,833 | $ | (68 | ) | $ | 17,760 | $ | 677 | ||||||||||||||||||||||||||
States, municipalities and political subdivisions: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax-exempt | — | — | 798 | 72 | 5,219 | 594 | 3,906 | 398 | 132 | 7 | 59 | 5 | 10,114 | 1,076 | |||||||||||||||||||||||||||||||||||||||||
Taxable | — | — | 298 | 30 | 2,148 | 251 | 554 | 90 | 17 | (2 | ) | 43 | — | 3,060 | 369 | ||||||||||||||||||||||||||||||||||||||||
Total states, municipalities and political subdivisions | — | — | 1,096 | 102 | 7,367 | 845 | 4,460 | 488 | 149 | 5 | 102 | 5 | 13,174 | 1,445 | |||||||||||||||||||||||||||||||||||||||||
Asset-backed: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
RMBS | 3,779 | 96 | 94 | — | 49 | (1 | ) | 122 | — | 75 | 1 | 953 | 41 | 5,072 | 137 | ||||||||||||||||||||||||||||||||||||||||
CMBS | 64 | — | 493 | 11 | 475 | 15 | 314 | 8 | 597 | 4 | 254 | 5 | 2,197 | 43 | |||||||||||||||||||||||||||||||||||||||||
Other ABS | — | — | 93 | — | 25 | — | 525 | (1 | ) | 278 | (1 | ) | — | — | 921 | (2 | ) | ||||||||||||||||||||||||||||||||||||||
Total asset-backed | 3,843 | 96 | 680 | 11 | 549 | 14 | 961 | 7 | 950 | 4 | 1,207 | 46 | 8,190 | 178 | |||||||||||||||||||||||||||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | 67 | 5 | — | — | — | — | — | — | — | — | — | — | 67 | 5 | |||||||||||||||||||||||||||||||||||||||||
Foreign government | — | — | 76 | 4 | 251 | 8 | 19 | — | — | — | — | — | 346 | 12 | |||||||||||||||||||||||||||||||||||||||||
Redeemable preferred stock | — | — | — | — | — | — | — | — | 11 | 1 | 24 | 1 | 35 | 2 | |||||||||||||||||||||||||||||||||||||||||
Total fixed maturity securities | $ | 3,910 | $ | 101 | $ | 1,938 | $ | 123 | $ | 8,919 | $ | 900 | $ | 10,044 | $ | 904 | $ | 11,595 | $ | 307 | $ | 3,166 | $ | (16 | ) | $ | 39,572 | $ | 2,319 | ||||||||||||||||||||||||||
Percentage of total fixed maturity securities | 10 | % | 5 | % | 23 | % | 25 | % | 29 | % | 8 | % | 100 | % |
Consolidated | ||||||||||||||||
Periods ended December 31 | Three Months | Twelve Months | ||||||||||||||
(In millions) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Taxable fixed maturities, prior to accounting change | $ | 341 | $ | 345 | $ | 1,381 | $ | 1,399 | ||||||||
Tax-exempt fixed maturities, prior to accounting change | 105 | 102 | 409 | 404 | ||||||||||||
Total fixed maturity securities, prior to accounting change | 446 | 447 | 1,790 | 1,803 | ||||||||||||
Impact of accounting change (1) | (39 | ) | — | (39 | ) | — | ||||||||||
Total fixed maturity securities | 407 | 447 | 1,751 | 1,803 | ||||||||||||
Limited partnership investments | 23 | 64 | 92 | 263 | ||||||||||||
Other, net of investment expense | (2 | ) | — | (3 | ) | 1 | ||||||||||
Net investment income | $ | 428 | $ | 511 | $ | 1,840 | $ | 2,067 | ||||||||
Fixed maturity securities, after tax | $ | 296 | $ | 322 | $ | 1,264 | $ | 1,298 | ||||||||
Net investment income, after tax | $ | 314 | $ | 365 | $ | 1,329 | $ | 1,473 | ||||||||
Effective income yield for the fixed maturity securities portfolio, pretax | 4.3 | % | 4.8 | % | 4.7 | % | 4.8 | % | ||||||||
Effective income yield for the fixed maturity securities portfolio, after tax | 3.2 | % | 3.4 | % | 3.4 | % | 3.5 | % |
Property & Casualty and Corporate & Other Non-Core | ||||||||||||||||
Periods ended December 31 | Three Months | Twelve Months | ||||||||||||||
(In millions) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Taxable fixed maturities | $ | 232 | $ | 244 | $ | 965 | $ | 992 | ||||||||
Tax-exempt fixed maturities | 8 | 23 | $ | 74 | 107 | |||||||||||
Total fixed maturity securities | 240 | 267 | 1,039 | 1,099 | ||||||||||||
Limited partnership investments | 23 | 64 | 92 | 263 | ||||||||||||
Other, net of investment expense | 1 | 1 | 5 | 5 | ||||||||||||
Net investment income | $ | 264 | $ | 332 | $ | 1,136 | $ | 1,367 | ||||||||
Fixed maturity securities, after tax | $ | 163 | $ | 181 | $ | 705 | $ | 751 | ||||||||
Net investment income, after tax | $ | 182 | $ | 224 | $ | 772 | $ | 926 | ||||||||
Effective income yield for the fixed maturity securities portfolio, pretax | 3.9 | % | 4.2 | % | 4.2 | % | 4.3 | % | ||||||||
Effective income yield for the fixed maturity securities portfolio, after tax | 2.7 | % | 2.8 | % | 2.9 | % | 3.0 | % |
Life & Group Non-Core | ||||||||||||||||
Periods ended December 31 | Three Months | Twelve Months | ||||||||||||||
(In millions) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Taxable fixed maturities | $ | 103 | 101 | $ | 410 | $ | 407 | |||||||||
Tax-exempt fixed maturities | 64 | 79 | 302 | 297 | ||||||||||||
Total fixed maturity securities | 167 | 180 | 712 | 704 | ||||||||||||
Limited partnership investments | — | — | — | — | ||||||||||||
Other, net of investment expense | (3 | ) | (1 | ) | (8 | ) | (4 | ) | ||||||||
Net investment income | $ | 164 | $ | 179 | $ | 704 | $ | 700 | ||||||||
Fixed maturity securities, after tax | $ | 133 | $ | 141 | $ | 559 | $ | 547 | ||||||||
Net investment income, after tax | $ | 132 | $ | 141 | $ | 557 | $ | 547 | ||||||||
Effective income yield for the fixed maturity securities portfolio, pretax | 5.2 | % | 5.9 | % | 5.6 | % | 5.9 | % | ||||||||
Effective income yield for the fixed maturity securities portfolio, after tax | 4.1 | % | 4.6 | % | 4.4 | % | 4.6 | % |
Three months ended December 31, 2015 (In millions) | Specialty | Commercial | International | P&C Operations | Life & Group Non-Core | Corporate & Other Non-Core | Total Operations | ||||||||||||||||||||
Claim & claim adjustment expense reserves, beginning of period | |||||||||||||||||||||||||||
Gross | $ | 6,199 | $ | 9,283 | $ | 1,365 | $ | 16,847 | $ | 3,286 | $ | 2,734 | $ | 22,867 | |||||||||||||
Ceded | 611 | 634 | 151 | 1,396 | 310 | 2,436 | 4,142 | ||||||||||||||||||||
Net | 5,588 | 8,649 | 1,214 | 15,451 | 2,976 | 298 | 18,725 | ||||||||||||||||||||
Net incurred claim & claim adjustment expenses | 445 | 426 | 144 | 1,015 | 239 | 1 | 1,255 | ||||||||||||||||||||
Net claim & claim adjustment expense payments | (465 | ) | (499 | ) | (110 | ) | (1,074 | ) | (184 | ) | (15 | ) | (1,273 | ) | |||||||||||||
Foreign currency translation adjustment and other | — | — | (29 | ) | (29 | ) | (101 | ) | (1 | ) | (131 | ) | |||||||||||||||
Claim & claim adjustment expense reserves, end of period | |||||||||||||||||||||||||||
Net | 5,568 | 8,576 | 1,219 | 15,363 | 2,930 | 283 | 18,576 | ||||||||||||||||||||
Ceded | 701 | 607 | 128 | 1,436 | 290 | 2,361 | 4,087 | ||||||||||||||||||||
Gross | $ | 6,269 | $ | 9,183 | $ | 1,347 | $ | 16,799 | $ | 3,220 | $ | 2,644 | $ | 22,663 |
Twelve months ended December 31, 2015 (In millions) | Specialty | Commercial | International | P&C Operations | Life & Group Non-Core | Corporate & Other Non-Core | Total Operations | ||||||||||||||||||||
Claim & claim adjustment expense reserves, beginning of period | |||||||||||||||||||||||||||
Gross | $ | 6,229 | $ | 9,514 | $ | 1,441 | $ | 17,184 | $ | 3,183 | $ | 2,904 | $ | 23,271 | |||||||||||||
Ceded | 574 | 661 | 180 | 1,415 | 340 | 2,589 | 4,344 | ||||||||||||||||||||
Net | 5,655 | 8,853 | 1,261 | 15,769 | 2,843 | 315 | 18,927 | ||||||||||||||||||||
Net incurred claim & claim adjustment expenses | 1,597 | 1,815 | 480 | 3,892 | 949 | 4 | 4,845 | ||||||||||||||||||||
Net claim & claim adjustment expense payments | (1,684 | ) | (2,092 | ) | (403 | ) | (4,179 | ) | (734 | ) | (32 | ) | (4,945 | ) | |||||||||||||
Foreign currency translation adjustment and other | — | — | (119 | ) | (119 | ) | (128 | ) | (4 | ) | (251 | ) | |||||||||||||||
Claim & claim adjustment expense reserves, end of period | |||||||||||||||||||||||||||
Net | 5,568 | 8,576 | 1,219 | 15,363 | 2,930 | 283 | 18,576 | ||||||||||||||||||||
Ceded | 701 | 607 | 128 | 1,436 | 290 | 2,361 | 4,087 | ||||||||||||||||||||
Gross | $ | 6,269 | $ | 9,183 | $ | 1,347 | $ | 16,799 | $ | 3,220 | $ | 2,644 | $ | 22,663 |
December 31, 2015 | |||||||||||
(In millions) | Claim and claim adjustment expenses | Future policy benefits | Total | ||||||||
Long term care | $ | 2,229 | $ | 8,335 | $ | 10,564 | |||||
Structured settlement annuities | 581 | — | 581 | ||||||||
Other | 21 | — | 21 | ||||||||
Total | 2,831 | 8,335 | 11,166 | ||||||||
Shadow adjustments | 99 | 1,610 | 1,709 | ||||||||
Ceded reserves | 290 | 207 | 497 | ||||||||
Total gross reserves | $ | 3,220 | $ | 10,152 | $ | 13,372 |
December 31, 2014 | |||||||||||
(In millions) | Claim and claim adjustment expenses | Future policy benefits | Total | ||||||||
Long term care | $ | 2,064 | $ | 7,782 | $ | 9,846 | |||||
Structured settlement annuities | 606 | — | 606 | ||||||||
Other | 28 | 1 | 29 | ||||||||
Total | 2,698 | 7,783 | 10,481 | ||||||||
Shadow adjustments (1) | 145 | 1,522 | 1,667 | ||||||||
Ceded reserves | 340 | 185 | 525 | ||||||||
Total gross reserves | $ | 3,183 | $ | 9,490 | $ | 12,673 |
• | Collectively, CNA Financial Corporation (CNAF) and its subsidiaries are referred to as CNA or the Company. |
• | P&C Operations includes Specialty, Commercial and International. |
• | Life & Group Non-Core segment primarily includes the results of long term care businesses that are in run-off. |
• | 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. |
• | Management uses the net operating income (loss) financial measure to monitor the Company’s operations. Please refer to Note J to the Condensed Consolidated Financial Statements within the September 30, 2015 Form 10-Q for further discussion of this measure. |
• | Management uses underwriting results to monitor insurance operations. Underwriting results are pretax and are calculated as net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and other insurance related expenses. |
• | In the evaluation of the results of Specialty, Commercial and International, management uses 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. In addition, management also utilizes rate, retention and new business in evaluating operating trends. Rate represents the average change in price on policies that renew excluding exposure change. Retention represents the percentage of premium dollars renewed in comparison to the expiring premium dollars from policies available to renew. New business represents premiums from policies written with new customers and additional policies written with existing customers. |
• | Pretax net prior year development and other includes the effects of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts. |
• | The majority of our limited partnership investments employ hedge fund strategies that generate returns primarily through investing in marketable securities in the public 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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