Business Segments

12 Months Ended

Dec. 31, 2021

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 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, A&EP, a legacy portfolio of EWC policies and certain legacy mass tort reserves.

Effective January 1, 2021, and in connection with the ceding of certain legacy reserves under a retroactive reinsurance agreement executed in February 2021, management changed the segment presentation of a legacy portfolio of excess workers’ compensation policies relating to business written in 2007 and prior. This business, which was previously reported as part of the Commercial business segment, is now reported as part of the Corporate & Other business segment. Further information on this retroactive reinsurance agreement is provided in Note E. In addition, a determination was made to change the segment presentation of certain legacy mass tort reserves. Similar to the aforementioned excess workers’ compensation legacy business, these legacy mass tort reserves were previously reported in the Commercial business segment and are now reported as part of the Corporate & Other business segment. These changes were made to better reflect the manner in which the Company is organized for purposes of making operating decisions and assessing performance. Prior period information has been conformed to the new segment presentation.

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 10%, 9% and 9% of the Company's direct written premiums were derived from outside the United States for the years ended December 31, 2021, 2020 and 2019.

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, 2021	Specialty		Commercial		International		Life & Group		Corporate & Other
(In millions)											Eliminations		Total
Net written premiums	$	3,225	$	3,595	$	1,101	$	485	$	—	$	(1)	$	8,405
Operating revenues
Net earned premiums	$	3,076	$	3,552	$	1,057	$	491	$	—	$	(1)	$	8,175
Net investment income	497		624		57		966		15		—		2,159
Non-insurance warranty revenue	1,430		—		—		—		—		—		1,430
Other revenues	1		23		—		—		6		(6)		24
Total operating revenues	5,004		4,199		1,114		1,457		21		(7)		11,788
Claims, benefits and expenses
Net incurred claims and benefits	1,787		2,540		652		1,239		109		—		6,327
Policyholders’ dividends	3		19		—		—		—		—		22
Amortization of deferred acquisition costs	643		594		206		—		—		—		1,443
Non-insurance warranty expense	1,328		—		—		—		—		—		1,328
Other insurance related expenses	296		511		144		103		9		(1)		1,062
Other expenses	47		38		(2)		10		155		(6)		242
Total claims, benefits and expenses	4,104		3,702		1,000		1,352		273		(7)		10,424
Core income (loss) before income tax	900		497		114		105		(252)		—		1,364
Income tax (expense) benefit on core income (loss)	(196)		(103)		(28)		21		48		—		(258)
Core income (loss)	$	704	$	394	$	86	$	126	$	(204)	$	—	1,106
Net investment gains (losses)													120
Income tax (expense) benefit on net investment gains (losses)													(24)
Net investment gains (losses), after tax													96
Net income (loss)													$	1,202

December 31, 2021
(In millions)
Reinsurance receivables	$	1,200	$	923	$	381	$	401	$	2,579	$	—	$	5,484
Insurance receivables	1,136		1,488		340		6		4		—		2,974
Deferred acquisition costs	363		278		96		—		—		—		737
Goodwill	117		—		31		—		—		—		148
Deferred non-insurance warranty acquisition expense	3,476		—		—		—		—		—		3,476
Insurance reserves
Claim and claim adjustment expenses	6,433		8,890		2,280		3,754		2,817		—		24,174
Unearned premiums	3,001		2,066		585		109		—		—		5,761
Future policy benefits	—		—		—		13,236		—		—		13,236
Deferred non-insurance warranty revenue	4,503		—		—		—		—		—		4,503

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		513		58		851		64		—		1,935
Non-insurance warranty revenue	1,252		—		—		—		—		—		1,252
Other revenues	1		25		—		—		5		(5)		26
Total operating revenues	4,585		3,861		998		1,355		69		(6)		10,862
Claims, benefits and expenses
Net incurred claims and benefits	1,792		2,375		629		1,286		67		—		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		506		136		109		(2)		(1)		1,028
Other expenses	50		34		(7)		7		141		(5)		220
Total claims, benefits and expenses	3,905		3,525		955		1,402		206		(6)		9,987
Core income (loss) before income tax	680		336		43		(47)		(137)		—		875
Income tax (expense) benefit on core income (loss)	(145)		(69)		(5)		56		23		—		(140)
Core income (loss)	$	535	$	267	$	38	$	9	$	(114)	$	—	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	$	848	$	302	$	390	$	2,052	$	—	$	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		8,250		2,091		3,743		2,874		—		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				Life & Group		Corporate & Other
(In millions)					International						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		605		63		820		74		—		2,118
Non-insurance warranty revenue	1,161		—		—		—		—		—		1,161
Other revenues	1		29		—		—		6		(5)		31
Total operating revenues	4,491		3,796		1,037		1,340		81		(7)		10,738
Claims, benefits and expenses
Net incurred claims and benefits	1,595		2,086		624		1,416		62		—		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		3,178		998		1,539		204		(7)		9,544
Core income (loss) before income tax	859		618		39		(199)		(123)		—		1,194
Income tax (expense) benefit on core income (loss)	(188)		(138)		(9)		90		30		—		(215)
Core income (loss)	$	671	$	480	$	30	$	(109)	$	(93)	$	—	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

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

Years ended December 31
(In millions)	2021		2020		2019
Specialty
Management & Professional Liability	$	2,776	$	2,577	$	2,572
Surety	604		596		596
Warranty & Alternative Risks	1,624		1,412		1,323
Specialty revenues	5,004		4,585		4,491
Commercial
Middle Market	1,508		1,444		1,439
Construction	1,322		1,120		1,043
Small Business	558		482		504
Other Commercial	811		815		810
Commercial revenues	4,199		3,861		3,796
International
Canada	344		291		277
Europe	473		389		363
Hardy	297		318		397
International revenues	1,114		998		1,037
Life & Group revenues	1,457		1,355		1,340
Corporate & Other revenues	21		69		81
Eliminations	(7)		(6)		(7)
Total operating revenues	11,788		10,862		10,738
Net investment gains (losses)	120		(54)		29
Total revenues	$	11,908	$	10,808	$	10,767