Business Segments

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Business Segments

Business Segments

The Company's property and casualty commercial insurance operations are managed and reported in three business segments: Specialty, Commercial and International. These three segments are collectively referred to as Property & Casualty Operations. The Company's operations outside of Property & Casualty Operations are managed and reported in two segments: Life & Group and Corporate & Other.

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, 2019. 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, Goodwill and Deferred non-insurance warranty acquisition expense and revenue are readily identifiable for 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 Net investment gains or losses are allocated primarily based on each segment's net carried insurance reserves, as adjusted. All significant intersegment income and expense have 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.

The performance of the Company's insurance operations is monitored by management through core income (loss), which is derived from certain income statement amounts. 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.

Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses and any cumulative effects of changes in accounting guidance. The calculation of core income (loss) excludes net investment gains or losses because net investment gains or losses are generally driven by economic factors that are not necessarily reflective of our primary operations.

Six months ended June 30, 2020	Specialty			Commercial			International			Life & Group			Corporate & Other
(In millions)																Eliminations			Total
Operating revenues
Net earned premiums	$	1,390		$	1,613		$	463		$	253		$	—		$	—		$	3,719
Net investment income	189			224			29			414			7			—			863
Non-insurance warranty revenue	609			—			—			—			—			—			609
Other revenues	1			12			—			—			3			(3		)	13
Total operating revenues	2,189			1,849			492			667			10			(3		)	5,204
Claims, benefits and expenses
Net incurred claims and benefits	913			1,224			330			620			(32		)	—			3,055
Policyholders’ dividends	2			10			—			—			—			—			12
Amortization of deferred acquisition costs	304			291			91			—			—			—			686
Non-insurance warranty expense	566			—			—			—			—			—			566
Other insurance related expenses	142			251			75			51			(1		)	—			518
Other expenses	23			19			11			3			74			(3		)	127
Total claims, benefits and expenses	1,950			1,795			507			674			41			(3		)	4,964
Core income (loss) before income tax	239			54			(15		)	(7		)	(31		)	—			240
Income tax (expense) benefit on core income (loss)	(53		)	(10		)	3			25			2			—			(33		)
Core income (loss)	$	186		$	44		$	(12	)	$	18		$	(29	)	$	—		207
Net investment gains (losses)																			(147		)
Income tax (expense) benefit on net investment gains (losses)																			30
Net investment gains (losses), after tax																			(117		)
Net income (loss)																			$	90

June 30, 2020
(In millions)
Reinsurance receivables	$	897	$	925	$	246	$	407	$	1,984	$	—	$	4,459
Insurance receivables	1,035		1,429		313		10		1		—		2,788
Deferred acquisition costs	315		293		91		—		—		—		699
Goodwill	117		—		28		—		—		—		145
Deferred non-insurance warranty acquisition expense	2,916		—		—		—		—		—		2,916
Insurance reserves
Claim and claim adjustment expenses	5,696		8,830		1,906		3,751		2,087		—		22,270
Unearned premiums	2,424		1,927		517		128		—		—		4,996
Future policy benefits	—		—		—		12,596		—		—		12,596
Deferred non-insurance warranty revenue	3,852		—		—		—		—		—		3,852

Six months ended June 30, 2019	Specialty			Commercial			International			Life & Group			Corporate & Other
(In millions)																Eliminations			Total
Operating revenues
Net earned premiums	$	1,349		$	1,526		$	493		$	260		$	—		$	(1	)	$	3,627
Net investment income	289			344			30			409			14			—			1,086
Non-insurance warranty revenue	566			—			—			—			—			—			566
Other revenues	—			10			1			1			4			(3		)	13
Total operating revenues	2,204			1,880			524			670			18			(4		)	5,292
Claims, benefits and expenses
Net incurred claims and benefits	787			1,017			309			617			(33		)	—			2,697
Policyholders’ dividends	2			10			—			—			—			—			12
Amortization of deferred acquisition costs	299			257			124			—			—			—			680
Non-insurance warranty expense	523			—			—			—			—			—			523
Other insurance related expenses	146			249			59			58			(2		)	(1		)	509
Other expenses	24			18			7			4			73			(3		)	123
Total claims, benefits and expenses	1,781			1,551			499			679			38			(4		)	4,544
Core income (loss) before income tax	423			329			25			(9		)	(20		)	—			748
Income tax (expense) benefit on core income (loss)	(93		)	(70		)	(2		)	26			3			—			(136		)
Core income (loss)	$	330		$	259		$	23		$	17		$	(17	)	$	—		612
Net investment gains (losses)																			13
Income tax (expense) benefit on net investment gains (losses)																			(5		)
Net investment gains (losses), after tax																			8
Net income (loss)																			$	620

December 31, 2019
(In millions)
Reinsurance receivables	$	575	$	855	$	247	$	385	$	2,142	$	—	$	4,204
Insurance receivables	971		1,210		284		16		—		—		2,481
Deferred acquisition costs	311		257		94		—		—		—		662
Goodwill	117		—		30		—		—		—		147
Deferred non-insurance warranty acquisition expense	2,840		—		—		—		—		—		2,840
Insurance reserves
Claim and claim adjustment expenses	5,238		8,656		1,876		3,716		2,234		—		21,720
Unearned premiums	2,337		1,626		495		125		—		—		4,583
Future policy benefits	—		—		—		12,311		—		—		12,311
Deferred non-insurance warranty revenue	3,779		—		—		—		—		—		3,779

The following table presents operating revenue by line of business for each reportable segment.

Periods ended June 30	Three Months						Six Months
(In millions)	2020			2019			2020			2019
Specialty
Management & Professional Liability	$	645		$	629		$	1,213		$	1,265
Surety	153			151			291			290
Warranty & Alternative Risks	348			326			685			649
Specialty revenues	1,146			1,106			2,189			2,204
Commercial
Middle Market	355			351			690			708
Construction (1)	275			241			525			489
Small Business	114			123			226			254
Other Commercial	233			205			408			429
Commercial revenues	977			920			1,849			1,880
International
Canada	68			68			141			134
Europe	94			88			186			179
Hardy	76			103			165			211
International revenues	238			259			492			524
Life & Group revenues	332			335			667			670
Corporate & Other revenues	5			9			10			18
Eliminations	(1		)	(1		)	(3		)	(4		)
Total operating revenues	2,697			2,628			5,204			5,292
Net investment gains (losses)	69			(18		)	(147		)	13
Total revenues	$	2,766		$	2,610		$	5,057		$	5,305

(1)

Effective January 1, 2020, the Construction line of business is presented separately in the Commercial segment to better align with the Company's underwriting expertise and the manner in which the products are sold. Prior period information has been conformed to the new line of business presentation.