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

CNA Financial Corporation

Statements of Operations and Comprehensive (Loss) Income



Years ended December 31
(In millions)	2018			2017			2016
Revenues
Net investment income	$	10		$	6		$	3
Net realized investment (losses) gains	—			(42		)	(7		)
Total revenues	10			(36		)	(4		)
Expenses
Administrative and general	1			2			1
Interest	135			152			155
Total expenses	136			154			156
Loss from operations before income taxes and equity in net income of subsidiaries	(126		)	(190		)	(160		)
Income tax benefit	9			57			41
Loss before equity in net income of subsidiaries	(117		)	(133		)	(119		)
Equity in net income of subsidiaries	930			1,032			978
Net income	813			899			859
Equity in other comprehensive income of subsidiaries	(894		)	205			142
Total comprehensive (loss) income	$	(81	)	$	1,104		$	1,001

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)	2018			2017
Assets
Investment in subsidiaries	$	13,427		$	14,481
Cash	1			1
Short term investments	519			638
Amounts due from affiliates	2			4
Other assets	—			1
Total assets	$	13,949		$	15,125
Liabilities
Short term debt	$	—		$	150
Long term debt	2,680			2,678
Other liabilities	52			53
Total liabilities	2,732			2,881
Stockholders' Equity
Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 271,456,978 and 271,205,390 shares outstanding)	683			683
Additional paid-in capital	2,192			2,175
Retained earnings	9,277			9,414
Accumulated other comprehensive income	(878		)	32
Treasury stock (1,583,265 and 1,834,853 shares), at cost	(57		)	(60		)
Total stockholders' equity	11,217			12,244
Total liabilities and stockholders' equity	$	13,949		$	15,125

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)	2018			2017			2016
Cash Flows from Operating Activities
Net income	$	813		$	899		$	859
Adjustments to reconcile net income to net cash flows provided by operating activities:
Equity in net income of subsidiaries	(930		)	(1,032		)	(978		)
Dividends received from subsidiaries	1,026			955			765
Net realized investment losses	—			42			7
Other, net	16			36			21
Total adjustments	112			1			(185		)
Net cash flows provided by operating activities	925			900			674
Cash Flows from Investing Activities
Change in short term investments	130			(146		)	(9		)
Capital contributions to subsidiaries	(2		)	—			—
Other, net	—			—			4
Net cash flows provided (used) by investing activities	128			(146		)	(5		)
Cash Flows from Financing Activities
Dividends paid to common stockholders	(896		)	(842		)	(813		)
Proceeds from the issuance of debt	—			496			498
Repayment of debt	(150		)	(391		)	(358		)
Other, net	(7		)	(17		)	1
Net cash flows used by financing activities	(1,053		)	(754		)	(672		)
Net change in cash	—			—			(3		)
Cash, beginning of year	1			1			4
Cash, end of year	$	1		$	1		$	1

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, 2018.

B. Guarantees

As of December 31, 2018 and 2017 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, 2018, 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, 2018, 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, 2018, 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.