Business Segments

12 Months Ended

Dec. 31, 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. Specialty provides management and professional liability and other coverages through property and casualty products and services using a network of brokers, independent agencies and managing general underwriters. Commercial works with a network of brokers and independent agents to market a broad range of property and casualty insurance products to all types of insureds targeting small business, construction, middle markets and other commercial customers. The International segment underwrites property and casualty coverages on a global basis through a branch operation in Canada, a European business consisting of two insurance companies based in the U.K. and Luxembourg and Hardy, the Company's Lloyd's syndicate.

The Company's operations outside of Property & Casualty Operations are managed and reported in two segments: Life & Group and Corporate & Other. Life & Group primarily includes the results of the long term care business that is in run-off. Corporate & Other 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 A&EP.

The accounting policies of the segments are the same as those described in Note A to the Consolidated Financial Statements. 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.

Approximately 9% of the Company's direct written premiums were derived from outside the United States for the years ended December 31, 2020, 2019 and 2018.

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.

The Company's results of operations and selected balance sheet items by segment are presented in the following tables.

Year ended December 31, 2020	Specialty		Commercial		International		Life & Group		Corporate & Other
(In millions)											Eliminations		Total
Net written premiums	$	3,040	$	3,565	$	961	$	494	$	—	$	(1)	$	8,059
Operating revenues
Net earned premiums	$	2,883	$	3,323	$	940	$	504	$	—	$	(1)	$	7,649
Net investment income	449		565		58		851		12		—		1,935
Non-insurance warranty revenue	1,252		—		—		—		—		—		1,252
Other revenues	1		25		—		—		5		(5)		26
Total operating revenues	4,585		3,913		998		1,355		17		(6)		10,862
Claims, benefits and expenses
Net incurred claims and benefits	1,792		2,436		629		1,286		6		—		6,149
Policyholders’ dividends	3		18		—		—		—		—		21
Amortization of deferred acquisition costs	621		592		197		—		—		—		1,410
Non-insurance warranty expense	1,159		—		—		—		—		—		1,159
Other insurance related expenses	280		505		136		109		(1)		(1)		1,028
Other expenses	50		34		(7)		7		141		(5)		220
Total claims, benefits and expenses	3,905		3,585		955		1,402		146		(6)		9,987
Core income (loss) before income tax	680		328		43		(47)		(129)		—		875
Income tax (expense) benefit on core income (loss)	(145)		(67)		(5)		56		21		—		(140)
Core income (loss)	$	535	$	261	$	38	$	9	$	(108)	$	—	735
Net investment gains (losses)													(54)
Income tax (expense) benefit on net investment gains (losses)													9
Net investment gains (losses), after tax													(45)
Net income (loss)													$	690

December 31, 2020
(In millions)
Reinsurance receivables	$	886	$	922	$	302	$	390	$	1,978	$	—	$	4,478
Insurance receivables	1,052		1,254		328		4		2		—		2,640
Deferred acquisition costs	330		281		97		—		—		—		708
Goodwill	117		—		31		—		—		—		148
Deferred non-insurance warranty acquisition expense	3,068		—		—		—		—		—		3,068
Insurance reserves
Claim and claim adjustment expenses	5,748		9,041		2,091		3,743		2,083		—		22,706
Unearned premiums	2,635		1,824		546		114		—		—		5,119
Future policy benefits	—		—		—		13,318		—		—		13,318
Deferred non-insurance warranty revenue	4,023		—		—		—		—		—		4,023

Year ended December 31, 2019	Specialty		Commercial		International		Life & Group		Corporate & Other
(In millions)											Eliminations		Total
Net written premiums	$	2,848	$	3,315	$	971	$	523	$	1	$	(2)	$	7,656
Operating revenues
Net earned premiums	$	2,773	$	3,162	$	974	$	520	$	1	$	(2)	$	7,428
Net investment income	556		654		63		820		25		—		2,118
Non-insurance warranty revenue	1,161		—		—		—		—		—		1,161
Other revenues	1		29		—		—		6		(5)		31
Total operating revenues	4,491		3,845		1,037		1,340		32		(7)		10,738
Claims, benefits and expenses
Net incurred claims and benefits	1,595		2,130		624		1,416		18		—		5,783
Policyholders’ dividends	5		18		—		—		—		—		23
Amortization of deferred acquisition costs	610		537		236		—		—		—		1,383
Non-insurance warranty expense	1,082		—		—		—		—		—		1,082
Other insurance related expenses	292		505		130		115		(2)		(2)		1,038
Other expenses	48		32		8		8		144		(5)		235
Total claims, benefits and expenses	3,632		3,222		998		1,539		160		(7)		9,544
Core income (loss) before income tax	859		623		39		(199)		(128)		—		1,194
Income tax (expense) benefit on core income (loss)	(188)		(134)		(9)		90		26		—		(215)
Core income (loss)	$	671	$	489	$	30	$	(109)	$	(102)	$	—	979
Net investment gains (losses)													29
Income tax (expense) benefit on net investment gains (losses)													(8)
Net investment gains (losses), after tax													21
Net income (loss)													$	1,000

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

Year ended December 31, 2018	Specialty		Commercial				Life & Group		Corporate & Other
(In millions)					International						Eliminations		Total
Net written premiums	$	2,744	$	3,060	$	1,018	$	524	$	—	$	(1)	$	7,345
Operating revenues
Net earned premiums	$	2,732	$	3,050	$	1,001	$	530	$	—	$	(1)	$	7,312
Net investment income	439		500		57		801		20		—		1,817
Non-insurance warranty revenue	1,007		—		—		—		—		—		1,007
Other revenues	2		28		1		2		19		(2)		50
Total operating revenues	4,180		3,578		1,059		1,333		39		(3)		10,186
Claims, benefits and expenses
Net incurred claims and benefits	1,526		2,053		699		1,218		51		—		5,547
Policyholders’ dividends	5		20		—		—		—		—		25
Amortization of deferred acquisition costs	599		505		231		—		—		—		1,335
Non-insurance warranty expense	923		—		—		—		—		—		923
Other insurance related expenses	279		505		135		122		(1)		(1)		1,039
Other expenses	46		43		14		7		193		(2)		301
Total claims, benefits and expenses	3,378		3,126		1,079		1,347		243		(3)		9,170
Core income (loss) before income tax	802		452		(20)		(14)		(204)		—		1,016
Income tax (expense) benefit on core income (loss)	(173)		(95)		1		57		39		—		(171)
Core income (loss)	$	629	$	357	$	(19)	$	43	$	(165)	$	—	845
Net investment gains (losses)													(52)
Income tax (expense) benefit on net investment gains (losses)													14
Net investment gains (losses), after tax													(38)
Net deferred tax asset remeasurement													6
Net income (loss)													$	813

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

Years ended December 31
(In millions)	2020		2019		2018
Specialty
Management & Professional Liability	$	2,577	$	2,572	$	2,440
Surety	596		596		571
Warranty & Alternative Risks	1,412		1,323		1,169
Specialty revenues	4,585		4,491		4,180
Commercial
Middle Market	1,447		1,439		1,306
Construction(1)	1,120		1,043		955
Small Business	482		504		501
Other Commercial	864		859		816
Commercial revenues	3,913		3,845		3,578
International
Canada	291		277		255
Europe	389		363		363
Hardy	318		397		441
International revenues	998		1,037		1,059
Life & Group revenues	1,355		1,340		1,333
Corporate & Other revenues	17		32		39
Eliminations	(6)		(7)		(3)
Total operating revenues	10,862		10,738		10,186
Net investment gains (losses)	(54)		29		(52)
Total revenues	$	10,808	$	10,767	$	10,134

(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.