SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)

CNA Financial Corporation

Statements of Operations and Comprehensive Income (Loss)



Years ended December 31
(In millions)	2017			2016			2015
Revenues
Net investment income	$	6		$	3		$	1
Net realized investment (losses) gains	(42		)	(7		)	5
Total revenues	(36		)	(4		)	6
Expenses
Administrative and general	2			1			1
Interest	152			155			154
Total expenses	154			156			155
Loss from operations before income taxes and equity in net income of subsidiaries	(190		)	(160		)	(149		)
Income tax benefit	57			41			34
Loss before equity in net income of subsidiaries	(133		)	(119		)	(115		)
Equity in net income of subsidiaries	1,032			978			594
Net income	899			859			479
Equity in other comprehensive income of subsidiaries	205			142			(715		)
Total comprehensive income (loss)	$	1,104		$	1,001		$	(236	)

See accompanying Notes to Condensed Financial Information as well as the

Consolidated Financial Statements and accompanying Notes.

CNA Financial Corporation

Balance Sheets



December 31
(In millions, except share data)	2017			2016
Assets
Investment in subsidiaries	$	14,481		$	14,202
Cash	1			1
Short term investments	638			487
Amounts due from affiliates	4			6
Other assets	1			1
Total assets	$	15,125		$	14,697
Liabilities
Short term debt	$	150		$	—
Long term debt	2,678			2,680
Other liabilities	53			48
Total liabilities	2,881			2,728
Stockholders' Equity
Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 271,205,390 and 270,495,998 shares outstanding)	683			683
Additional paid-in capital	2,175			2,173
Retained earnings	9,414			9,359
Accumulated other comprehensive income	32			(173		)
Treasury stock (1,834,853 and 2,544,245 shares), at cost	(60		)	(73		)
Total stockholders' equity	12,244			11,969
Total liabilities and stockholders' equity	$	15,125		$	14,697

See accompanying Notes to Condensed Financial Information as well as the

Consolidated Financial Statements and accompanying Notes.

CNA Financial Corporation

Statements of Cash Flows



Years ended December 31
(In millions)	2017			2016			2015
Cash Flows from Operating Activities
Net income	$	899		$	859		$	479
Adjustments to reconcile net income to net cash flows provided by operating activities:
Equity in net income of subsidiaries	(1,032		)	(978		)	(594		)
Dividends received from subsidiaries	955			765			900
Net realized investment losses (gains)	42			7			(5		)
Other, net	36			21			4
Total adjustments	1			(185		)	305
Net cash flows provided by operating activities	900			674			784
Cash Flows from Investing Activities
Change in short term investments	(146		)	(9		)	21
Other, net	—			4			7
Net cash flows (used) provided by investing activities	(146		)	(5		)	28
Cash Flows from Financing Activities
Dividends paid to common stockholders	(842		)	(813		)	(811		)
Proceeds from the issuance of debt	496			498			—
Repayment of debt	(391		)	(358		)	—
Stock options exercised	—			—			1
Other, net	(17		)	1			1
Net cash flows used by financing activities	(754		)	(672		)	(809		)
Net change in cash	—			(3		)	3
Cash, beginning of year	1			4			1
Cash, end of year	$	1		$	1		$	4

See accompanying Notes to Condensed Financial Information as well as the

Consolidated Financial Statements and accompanying Notes.

Notes to Condensed Financial Information

A. Summary of Significant Accounting Policies

Basis of Presentation

The condensed financial information of CNA Financial Corporation (CNAF or the Parent Company) should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8 of this Form 10-K. CNAF’s subsidiaries are accounted for using the equity method of accounting. Equity in net income of these subsidiaries is presented on the Condensed Statements of Operations as Equity in net income of subsidiaries. Loews owned approximately 89% of the outstanding common stock of CNAF as of December 31, 2017.

B. Guarantees

As of December 31, 2017 and 2016 CNAF had recorded liabilities of approximately $5 million related to guarantee agreements. The Parent Company believes that it is not likely that any future indemnity claims will be significantly greater than the amounts recorded.

In the course of selling business entities and assets to third parties, CNAF has agreed to guarantee the performance of certain obligations of both a previously owned subsidiary and a current subsidiary. Such obligations include agreement to indemnify purchasers for losses arising out of breaches of representation and warranties with respect to the business entities or assets sold, including, in certain cases, losses arising from undisclosed liabilities or certain named litigation. The guarantee agreements may include provisions that survive indefinitely. As of December 31, 2017, the aggregate amount of quantifiable guarantee agreements in effect for sales of business entities, assets and third-party loans was $625 million. Should the company be required to make payments under the guarantee, it would have the right to seek reimbursement in certain cases from an affiliate of a previously owned subsidiary.

In addition, CNAF has agreed to provide indemnification to third-party purchasers for certain losses associated with sold business entities or assets that are not limited by a contractual monetary amount. As of December 31, 2017, CNAF had outstanding unlimited indemnifications in connection with the sales of certain of its business entities or assets that included tax liabilities arising prior to a purchaser’s ownership of an entity or asset, defects in title at the time of sale, employee claims arising prior to closing and in some cases losses arising from certain litigation and undisclosed liabilities. These indemnification agreements survive until the applicable statutes of limitation expire or until the agreed upon contract terms expire.

CNAF also provided guarantees, if the primary obligor fails to perform, to holders of structured settlement annuities provided by a previously owned subsidiary. As of December 31, 2017, the potential amount of future payments CNAF could be required to pay under these guarantees was approximately $1.8 billion, which will be paid over the lifetime of the annuitants. The Parent Company does not believe a payable is likely under these guarantees, as it is the beneficiary of a trust that must be maintained at a level that approximates the discounted reserves for these annuities.