QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Zip Code) | |||||||||||
(Address of principal executive offices) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | Emerging growth company |
Item Number | Page Number | |||||||
PART I | ||||||||
1. | Condensed Consolidated Financial Statements: | |||||||
Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 (Unaudited) | ||||||||
2. | ||||||||
3. | ||||||||
4. | ||||||||
PART II | ||||||||
1. | ||||||||
2. | ||||||||
6. |
Three months ended March 31 | |||||||||||
(In millions, except per share data) | 2022 | 2021 | |||||||||
Revenues | |||||||||||
Net earned premiums | $ | $ | |||||||||
Net investment income | |||||||||||
Net investment (losses) gains | ( | ||||||||||
Non-insurance warranty revenue | |||||||||||
Other revenues | |||||||||||
Total revenues | |||||||||||
Claims, Benefits and Expenses | |||||||||||
Insurance claims and policyholders’ benefits | |||||||||||
Amortization of deferred acquisition costs | |||||||||||
Non-insurance warranty expense | |||||||||||
Other operating expenses | |||||||||||
Interest | |||||||||||
Total claims, benefits and expenses | |||||||||||
Income before income tax | |||||||||||
Income tax expense | ( | ( | |||||||||
Net income | $ | $ | |||||||||
Basic earnings per share | $ | $ | |||||||||
Diluted earnings per share | $ | $ | |||||||||
Weighted Average Outstanding Common Stock and Common Stock Equivalents | |||||||||||
Basic | |||||||||||
Diluted |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Comprehensive Loss | |||||||||||
Net income | $ | $ | |||||||||
Other Comprehensive Loss, net of tax | |||||||||||
Changes in: | |||||||||||
Net unrealized gains and losses on investments with an allowance for credit losses | ( | ||||||||||
Net unrealized gains and losses on other investments | ( | ( | |||||||||
Net unrealized gains and losses on investments | ( | ( | |||||||||
Foreign currency translation adjustment | ( | ||||||||||
Pension and postretirement benefits | |||||||||||
Other comprehensive loss, net of tax | ( | ( | |||||||||
Total comprehensive loss | $ | ( | $ | ( |
(In millions, except share data) | March 31, 2022 (Unaudited) | December 31, 2021 | |||||||||
Assets | |||||||||||
Investments: | |||||||||||
Fixed maturity securities at fair value (amortized cost of $ | $ | $ | |||||||||
Equity securities at fair value (cost of $ | |||||||||||
Limited partnership investments | |||||||||||
Other invested assets | |||||||||||
Mortgage loans (less allowance for uncollectible receivables of $ | |||||||||||
Short term investments | |||||||||||
Total investments | |||||||||||
Cash | |||||||||||
Reinsurance receivables (less allowance for uncollectible receivables of $ | |||||||||||
Insurance receivables (less allowance for uncollectible receivables of $ | |||||||||||
Accrued investment income | |||||||||||
Deferred acquisition costs | |||||||||||
Deferred income taxes | |||||||||||
Property and equipment at cost (less accumulated depreciation of $ | |||||||||||
Goodwill | |||||||||||
Deferred non-insurance warranty acquisition expense | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities | |||||||||||
Insurance reserves: | |||||||||||
Claim and claim adjustment expenses | $ | $ | |||||||||
Unearned premiums | |||||||||||
Future policy benefits | |||||||||||
Long term debt | |||||||||||
Deferred non-insurance warranty revenue | |||||||||||
Other liabilities (includes $ | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Notes C and F) | |||||||||||
Stockholders' Equity | |||||||||||
Common stock ($ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive (loss) income | ( | ||||||||||
Treasury stock ( | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders' equity | $ | $ |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Cash Flows from Operating Activities | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||||||
Deferred income tax expense | |||||||||||
Trading portfolio activity | ( | ||||||||||
Net investment losses (gains) | ( | ||||||||||
Equity method investees | |||||||||||
Net amortization of investments | ( | ( | |||||||||
Depreciation and amortization | |||||||||||
Changes in: | |||||||||||
Receivables, net | ( | ( | |||||||||
Accrued investment income | ( | ( | |||||||||
Deferred acquisition costs | ( | ( | |||||||||
Insurance reserves | |||||||||||
Other, net | ( | ( | |||||||||
Net cash flows provided by operating activities | |||||||||||
Cash Flows from Investing Activities | |||||||||||
Dispositions: | |||||||||||
Fixed maturity securities - sales | |||||||||||
Fixed maturity securities - maturities, calls and redemptions | |||||||||||
Equity securities | |||||||||||
Limited partnerships | |||||||||||
Mortgage loans | |||||||||||
Purchases: | |||||||||||
Fixed maturity securities | ( | ( | |||||||||
Equity securities | ( | ( | |||||||||
Limited partnerships | ( | ( | |||||||||
Mortgage loans | ( | ( | |||||||||
Change in other investments | ( | ( | |||||||||
Change in short term investments | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Net cash flows (used) provided by investing activities | ( | ||||||||||
Cash Flows from Financing Activities | |||||||||||
Dividends paid to common stockholders | ( | ( | |||||||||
Purchase of treasury stock | ( | ( | |||||||||
Other, net | ( | ( | |||||||||
Net cash flows used by financing activities | ( | ( | |||||||||
Effect of foreign exchange rate changes on cash | ( | ||||||||||
Net change in cash | ( | ||||||||||
Cash, beginning of year | |||||||||||
Cash, end of period | $ | $ |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Common Stock | |||||||||||
Balance, beginning of year | $ | $ | |||||||||
Balance, end of year | |||||||||||
Additional Paid-in Capital | |||||||||||
Balance, beginning of year | |||||||||||
Stock-based compensation | ( | ( | |||||||||
Balance, end of year | |||||||||||
Retained Earnings | |||||||||||
Balance, beginning of year | |||||||||||
Dividends to common stockholders ($ | ( | ( | |||||||||
Net income | |||||||||||
Balance, end of year | |||||||||||
Accumulated Other Comprehensive (Loss) Income | |||||||||||
Balance, beginning of year | |||||||||||
Other comprehensive loss | ( | ( | |||||||||
Balance, end of year | ( | ||||||||||
Treasury Stock | |||||||||||
Balance, beginning of year | ( | ( | |||||||||
Stock-based compensation | |||||||||||
Purchase of treasury stock | ( | ( | |||||||||
Balance, end of year | ( | ( | |||||||||
Total stockholders' equity | $ | $ |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Fixed maturity securities | $ | $ | |||||||||
Equity securities | |||||||||||
Limited partnership investments | |||||||||||
Mortgage loans | |||||||||||
Trading portfolio | |||||||||||
Other | |||||||||||
Gross investment income | |||||||||||
Investment expense | ( | ( | |||||||||
Net investment income | $ | $ |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Net investment gains (losses): | |||||||||||
Fixed maturity securities: | |||||||||||
Gross gains | $ | $ | |||||||||
Gross losses | ( | ( | |||||||||
Net investment gains (losses) on fixed maturity securities | ( | ||||||||||
Equity securities | ( | ||||||||||
Derivatives | |||||||||||
Net investment gains (losses) | $ | ( | $ |
(In millions) | Corporate and other bonds | Asset-backed | Total | ||||||||||||||
Allowance for credit losses: | |||||||||||||||||
Balance as of January 1, 2022 | $ | $ | $ | ||||||||||||||
Additions to the allowance for credit losses: | |||||||||||||||||
Securities for which credit losses were not previously recorded | |||||||||||||||||
Available-for-sale securities accounted for as PCD assets | |||||||||||||||||
Reductions to the allowance for credit losses: | |||||||||||||||||
Securities sold during the period (realized) | |||||||||||||||||
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis | |||||||||||||||||
Write-offs charged against the allowance | |||||||||||||||||
Recoveries of amounts previously written off | |||||||||||||||||
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period | ( | ( | |||||||||||||||
Balance as of March 31, 2022 | $ | $ | $ |
(In millions) | Corporate and other bonds | Asset-backed | Total | ||||||||||||||
Allowance for credit losses: | |||||||||||||||||
Balance as of January 1, 2021 | $ | $ | $ | ||||||||||||||
Additions to the allowance for credit losses: | |||||||||||||||||
Securities for which credit losses were not previously recorded | |||||||||||||||||
Available-for-sale securities accounted for as PCD assets | |||||||||||||||||
Reductions to the allowance for credit losses: | |||||||||||||||||
Securities sold during the period (realized) | |||||||||||||||||
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis | |||||||||||||||||
Write-offs charged against the allowance | |||||||||||||||||
Recoveries of amounts previously written off | |||||||||||||||||
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period | ( | ( | ( | ||||||||||||||
Balance as of March 31, 2021 | $ | $ | $ |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Fixed maturity securities available-for-sale: | |||||||||||
Corporate and other bonds | $ | $ | |||||||||
Asset-backed | ( | ||||||||||
Impairment (gains) losses recognized in earnings | $ | $ |
March 31, 2022 | Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Allowance for Credit Losses | Estimated Fair Value | ||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Fixed maturity securities available-for-sale: | |||||||||||||||||||||||||||||
Corporate and other bonds | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
States, municipalities and political subdivisions | |||||||||||||||||||||||||||||
Asset-backed: | |||||||||||||||||||||||||||||
Residential mortgage-backed | |||||||||||||||||||||||||||||
Commercial mortgage-backed | |||||||||||||||||||||||||||||
Other asset-backed | |||||||||||||||||||||||||||||
Total asset-backed | |||||||||||||||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | |||||||||||||||||||||||||||||
Foreign government | |||||||||||||||||||||||||||||
Redeemable preferred stock | |||||||||||||||||||||||||||||
Total fixed maturity securities available-for-sale | |||||||||||||||||||||||||||||
Total fixed maturity securities trading | — | — | — | ||||||||||||||||||||||||||
Total fixed maturity securities | $ | $ | $ | $ | $ |
December 31, 2021 | Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Allowance for Credit Losses | Estimated Fair Value | ||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Fixed maturity securities available-for-sale: | |||||||||||||||||||||||||||||
Corporate and other bonds | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
States, municipalities and political subdivisions | |||||||||||||||||||||||||||||
Asset-backed: | |||||||||||||||||||||||||||||
Residential mortgage-backed | |||||||||||||||||||||||||||||
Commercial mortgage-backed | |||||||||||||||||||||||||||||
Other asset-backed | |||||||||||||||||||||||||||||
Total asset-backed | |||||||||||||||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | |||||||||||||||||||||||||||||
Foreign government | |||||||||||||||||||||||||||||
Redeemable preferred stock | |||||||||||||||||||||||||||||
Total fixed maturity securities available-for-sale | |||||||||||||||||||||||||||||
Total fixed maturity securities trading | — | — | — | ||||||||||||||||||||||||||
Total fixed maturity securities | $ | $ | $ | $ | $ |
Less than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||||||||||||||
March 31, 2022 | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | |||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||
Fixed maturity securities available-for-sale: | |||||||||||||||||||||||||||||||||||
Corporate and other bonds | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
States, municipalities and political subdivisions | |||||||||||||||||||||||||||||||||||
Asset-backed: | |||||||||||||||||||||||||||||||||||
Residential mortgage-backed | |||||||||||||||||||||||||||||||||||
Commercial mortgage-backed | |||||||||||||||||||||||||||||||||||
Other asset-backed | |||||||||||||||||||||||||||||||||||
Total asset-backed | |||||||||||||||||||||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | |||||||||||||||||||||||||||||||||||
Foreign government | |||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Less than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||||||||||||||
December 31, 2021 | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | |||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||
Fixed maturity securities available-for-sale: | |||||||||||||||||||||||||||||||||||
Corporate and other bonds | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
States, municipalities and political subdivisions | |||||||||||||||||||||||||||||||||||
Asset-backed: | |||||||||||||||||||||||||||||||||||
Residential mortgage-backed | |||||||||||||||||||||||||||||||||||
Commercial mortgage-backed | |||||||||||||||||||||||||||||||||||
Other asset-backed | |||||||||||||||||||||||||||||||||||
Total asset-backed | |||||||||||||||||||||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | |||||||||||||||||||||||||||||||||||
Foreign government | |||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
(In millions) | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | |||||||||||||||||||
U.S. Government, Government agencies and Government-sponsored enterprises | $ | $ | $ | $ | |||||||||||||||||||
AAA | |||||||||||||||||||||||
AA | |||||||||||||||||||||||
A | |||||||||||||||||||||||
BBB | |||||||||||||||||||||||
Non-investment grade | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
(In millions) | Cost or Amortized Cost | Estimated Fair Value | Cost or Amortized Cost | Estimated Fair Value | |||||||||||||||||||
Due in one year or less | $ | $ | $ | $ | |||||||||||||||||||
Due after one year through five years | |||||||||||||||||||||||
Due after five years through ten years | |||||||||||||||||||||||
Due after ten years | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
March 31, 2022 | Mortgage Loans Amortized Cost Basis by Origination Year (1) | ||||||||||||||||||||||||||||||||||||||||
(In millions) | 2022 | 2021 | 2020 | 2019 | 2018 | Prior | Total | ||||||||||||||||||||||||||||||||||
DSCR ≥1.6x | |||||||||||||||||||||||||||||||||||||||||
LTV less than 55% | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
LTV 55% to 65% | |||||||||||||||||||||||||||||||||||||||||
LTV greater than 65% | |||||||||||||||||||||||||||||||||||||||||
DSCR 1.2x - 1.6x | |||||||||||||||||||||||||||||||||||||||||
LTV less than 55% | |||||||||||||||||||||||||||||||||||||||||
LTV 55% to 65% | |||||||||||||||||||||||||||||||||||||||||
LTV greater than 65% | |||||||||||||||||||||||||||||||||||||||||
DSCR ≤1.2 | |||||||||||||||||||||||||||||||||||||||||
LTV less than 55% | |||||||||||||||||||||||||||||||||||||||||
LTV 55% to 65% | |||||||||||||||||||||||||||||||||||||||||
LTV greater than 65% | |||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ |
March 31, 2022 | Total Assets/Liabilities at Fair Value | ||||||||||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Assets | |||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||
Corporate bonds and other | $ | $ | $ | $ | |||||||||||||||||||
States, municipalities and political subdivisions | |||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||
Total fixed maturity securities | |||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||
Common stock | |||||||||||||||||||||||
Non-redeemable preferred stock | |||||||||||||||||||||||
Total equity securities | |||||||||||||||||||||||
Short term and other | |||||||||||||||||||||||
Total assets | $ | $ | $ | $ | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Other liabilities | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Total liabilities | $ | $ | ( | $ | $ | ( |
December 31, 2021 | Total Assets/Liabilities at Fair Value | ||||||||||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Assets | |||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||
Corporate bonds and other | $ | $ | $ | $ | |||||||||||||||||||
States, municipalities and political subdivisions | |||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||
Total fixed maturity securities | |||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||
Common stock | |||||||||||||||||||||||
Non-redeemable preferred stock | |||||||||||||||||||||||
Total equity securities | |||||||||||||||||||||||
Short term and other | |||||||||||||||||||||||
Total assets | $ | $ | $ | $ | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Other liabilities | $ | $ | $ | $ | |||||||||||||||||||
Total liabilities | $ | $ | $ | $ |
Level 3 (In millions) | Corporate bonds and other | States, municipalities and political subdivisions | Asset-backed | Equity securities | Total | ||||||||||||||||||||||||
Balance as of January 1, 2022 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Total realized and unrealized investment gains (losses): | |||||||||||||||||||||||||||||
Reported in Net investment gains (losses) | ( | ( | |||||||||||||||||||||||||||
Reported in Net investment income | |||||||||||||||||||||||||||||
Reported in Other comprehensive income (loss) | ( | ( | ( | ( | |||||||||||||||||||||||||
Total realized and unrealized investment gains (losses) | ( | ( | ( | ( | |||||||||||||||||||||||||
Purchases | |||||||||||||||||||||||||||||
Sales | ( | ( | |||||||||||||||||||||||||||
Settlements | ( | ( | ( | ||||||||||||||||||||||||||
Transfers into Level 3 | |||||||||||||||||||||||||||||
Transfers out of Level 3 | ( | ( | |||||||||||||||||||||||||||
Balance as of March 31, 2022 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2022 recognized in Net income (loss) in the period | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2022 recognized in Other comprehensive income (loss) in the period | ( | ( | ( | ( |
Level 3 (In millions) | Corporate bonds and other | States, municipalities and political subdivisions | Asset-backed | Equity securities | Total | ||||||||||||||||||||||||
Balance as of January 1, 2021 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Total realized and unrealized investment gains (losses): | |||||||||||||||||||||||||||||
Reported in Net investment gains (losses) | ( | ( | |||||||||||||||||||||||||||
Reported in Net investment income | |||||||||||||||||||||||||||||
Reported in Other comprehensive income (loss) | ( | ( | ( | ( | |||||||||||||||||||||||||
Total realized and unrealized investment gains (losses) | ( | ( | ( | ( | |||||||||||||||||||||||||
Purchases | |||||||||||||||||||||||||||||
Sales | |||||||||||||||||||||||||||||
Settlements | ( | ( | ( | ||||||||||||||||||||||||||
Transfers into Level 3 | |||||||||||||||||||||||||||||
Transfers out of Level 3 | ( | ( | |||||||||||||||||||||||||||
Balance as of March 31, 2021 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2021 recognized in Net income (loss) in the period | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2021 recognized in Other comprehensive income (loss) in the period | ( | ( | ( | ( |
March 31, 2022 | Estimated Fair Value (In millions) | Valuation Technique(s) | Unobservable Input(s) | Range (Weighted Average) | |||||||||||||||||||
Fixed maturity securities | $ | Discounted cash flow | Credit spread |
December 31, 2021 | Estimated Fair Value (In millions) | Valuation Technique(s) | Unobservable Input(s) | Range (Weighted Average) | |||||||||||||||||||
Fixed maturity securities | $ | Discounted cash flow | Credit spread |
March 31, 2022 | Carrying Amount | Estimated Fair Value | |||||||||||||||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Mortgage loans | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Long term debt | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
December 31, 2021 | Carrying Amount | Estimated Fair Value | |||||||||||||||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Mortgage loans | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Long term debt | $ | $ | $ | $ | $ |
For the three months ended March 31, 2022 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Reserves, beginning of year: | |||||||||||
Gross | $ | $ | |||||||||
Ceded | |||||||||||
Net reserves, beginning of year | |||||||||||
Reduction of net reserves due to Excess Workers' Compensation Loss Portfolio Transfer | ( | ||||||||||
Net incurred claim and claim adjustment expenses: | |||||||||||
Provision for insured events of current year | |||||||||||
Increase (decrease) in provision for insured events of prior years | ( | ( | |||||||||
Amortization of discount | |||||||||||
Total net incurred (1) | |||||||||||
Net payments attributable to: | |||||||||||
Current year events | ( | ( | |||||||||
Prior year events | ( | ( | |||||||||
Total net payments | ( | ( | |||||||||
Foreign currency translation adjustment and other | ( | ( | |||||||||
Net reserves, end of period | |||||||||||
Ceded reserves, end of period | |||||||||||
Gross reserves, end of period | $ | $ |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Pretax (favorable) unfavorable development: | |||||||||||
Specialty | $ | ( | $ | ( | |||||||
Commercial | ( | ||||||||||
International | |||||||||||
Corporate & Other | |||||||||||
Total pretax (favorable) unfavorable development | $ | ( | $ | ( |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Pretax (favorable) unfavorable development: | |||||||||||
Medical Professional Liability | $ | $ | |||||||||
Other Professional Liability and Management Liability | |||||||||||
Surety | ( | ( | |||||||||
Warranty | ( | ( | |||||||||
Other | |||||||||||
Total pretax (favorable) unfavorable development | $ | ( | $ | ( |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Pretax (favorable) unfavorable development: | |||||||||||
Commercial Auto | $ | $ | |||||||||
General Liability | |||||||||||
Workers' Compensation | ( | ||||||||||
Property and Other | |||||||||||
Total pretax (favorable) unfavorable development | $ | ( | $ |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Net periodic pension cost (benefit) | |||||||||||
Interest cost on projected benefit obligation | $ | $ | |||||||||
Expected return on plan assets | ( | ( | |||||||||
Amortization of net actuarial (gain) loss | |||||||||||
Total net periodic pension cost (benefit) | $ | ( | $ | ( |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Non-Service Cost (Benefit): | |||||||||||
Insurance claims and policyholder's benefits | $ | ( | $ | ( | |||||||
Other operating expenses | ( | ( | |||||||||
Total net periodic pension cost (benefit) | $ | ( | $ | ( |
(In millions) | Net unrealized gains (losses) on investments with an allowance for credit losses | Net unrealized gains (losses) on other investments | Pension and postretirement benefits | Cumulative foreign currency translation adjustment | Total | ||||||||||||||||||||||||
Balance as of January 1, 2022 | $ | ( | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ( | ( | |||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $ | ( | ( | ( | ||||||||||||||||||||||||||
Other comprehensive income (loss) net of tax (expense) benefit of $ | ( | ( | ( | ( | |||||||||||||||||||||||||
Balance as of March 31, 2022 | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( |
(In millions) | Net unrealized gains (losses) on investments with an allowance for credit losses | Net unrealized gains (losses) on other investments | Pension and postretirement benefits | Cumulative foreign currency translation adjustment | Total | ||||||||||||||||||||||||
Balance as of January 1, 2021 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ( | ||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $ | ( | ( | |||||||||||||||||||||||||||
Other comprehensive income (loss) net of tax (expense) benefit of $ | ( | ( | |||||||||||||||||||||||||||
Balance as of March 31, 2021 | $ | $ | $ | ( | $ | ( | $ |
Component of AOCI | Condensed Consolidated Statements of Operations Line Item Affected by Reclassifications | |||||||
Net unrealized gains (losses) on investments with an allowance for credit losses and Net unrealized gains (losses) on other investments | Net investment gains (losses) | |||||||
Pension and postretirement benefits | Other operating expenses and Insurance claims and policyholders' benefits |
Three months ended March 31, 2022 | Specialty | Commercial | International | Life & Group | Corporate & Other | ||||||||||||||||||||||||||||||||||||
(In millions) | Eliminations | Total | |||||||||||||||||||||||||||||||||||||||
Operating revenues | |||||||||||||||||||||||||||||||||||||||||
Net earned premiums | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||||||||||||||||||
Non-insurance warranty revenue | |||||||||||||||||||||||||||||||||||||||||
Other revenues | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
Total operating revenues | ( | ||||||||||||||||||||||||||||||||||||||||
Claims, benefits and expenses | |||||||||||||||||||||||||||||||||||||||||
Net incurred claims and benefits | ( | ||||||||||||||||||||||||||||||||||||||||
Policyholders’ dividends | |||||||||||||||||||||||||||||||||||||||||
Amortization of deferred acquisition costs | |||||||||||||||||||||||||||||||||||||||||
Non-insurance warranty expense | |||||||||||||||||||||||||||||||||||||||||
Other insurance related expenses | |||||||||||||||||||||||||||||||||||||||||
Other expenses | ( | ||||||||||||||||||||||||||||||||||||||||
Total claims, benefits and expenses | ( | ||||||||||||||||||||||||||||||||||||||||
Core income (loss) before income tax | ( | ||||||||||||||||||||||||||||||||||||||||
Income tax (expense) benefit on core income (loss) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
Core income (loss) | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
Net investment gains (losses) | ( | ||||||||||||||||||||||||||||||||||||||||
Income tax (expense) benefit on net investment gains (losses) | |||||||||||||||||||||||||||||||||||||||||
Net investment gains (losses), after tax | ( | ||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ |
March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||||||||
Reinsurance receivables | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Insurance receivables | ( | ||||||||||||||||||||||||||||||||||||||||
Deferred acquisition costs | |||||||||||||||||||||||||||||||||||||||||
Goodwill | |||||||||||||||||||||||||||||||||||||||||
Deferred non-insurance warranty acquisition expense | |||||||||||||||||||||||||||||||||||||||||
Insurance reserves | |||||||||||||||||||||||||||||||||||||||||
Claim and claim adjustment expenses | |||||||||||||||||||||||||||||||||||||||||
Unearned premiums | |||||||||||||||||||||||||||||||||||||||||
Future policy benefits | |||||||||||||||||||||||||||||||||||||||||
Deferred non-insurance warranty revenue |
Three months ended March 31, 2021 | Specialty | Commercial | International | Life & Group | Corporate & Other | ||||||||||||||||||||||||||||||||||||
(In millions) | Eliminations | Total | |||||||||||||||||||||||||||||||||||||||
Operating revenues | |||||||||||||||||||||||||||||||||||||||||
Net earned premiums | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||||||||||||||||||
Non-insurance warranty revenue | |||||||||||||||||||||||||||||||||||||||||
Other revenues | ( | ||||||||||||||||||||||||||||||||||||||||
Total operating revenues | ( | ||||||||||||||||||||||||||||||||||||||||
Claims, benefits and expenses | |||||||||||||||||||||||||||||||||||||||||
Net incurred claims and benefits | ( | ||||||||||||||||||||||||||||||||||||||||
Policyholders’ dividends | |||||||||||||||||||||||||||||||||||||||||
Amortization of deferred acquisition costs | |||||||||||||||||||||||||||||||||||||||||
Non-insurance warranty expense | |||||||||||||||||||||||||||||||||||||||||
Other insurance related expenses | |||||||||||||||||||||||||||||||||||||||||
Other expenses | ( | ( | |||||||||||||||||||||||||||||||||||||||
Total claims, benefits and expenses | ( | ||||||||||||||||||||||||||||||||||||||||
Core income (loss) before income tax | ( | ||||||||||||||||||||||||||||||||||||||||
Income tax (expense) benefit on core income (loss) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
Core income (loss) | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
Net investment gains (losses) | |||||||||||||||||||||||||||||||||||||||||
Income tax (expense) benefit on net investment gains (losses) | ( | ||||||||||||||||||||||||||||||||||||||||
Net investment gains (losses), after tax | |||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ |
December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||||||||
Reinsurance receivables | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Insurance receivables | |||||||||||||||||||||||||||||||||||||||||
Deferred acquisition costs | |||||||||||||||||||||||||||||||||||||||||
Goodwill | |||||||||||||||||||||||||||||||||||||||||
Deferred non-insurance warranty acquisition expense | |||||||||||||||||||||||||||||||||||||||||
Insurance reserves | |||||||||||||||||||||||||||||||||||||||||
Claim and claim adjustment expenses | |||||||||||||||||||||||||||||||||||||||||
Unearned premiums | |||||||||||||||||||||||||||||||||||||||||
Future policy benefits | |||||||||||||||||||||||||||||||||||||||||
Deferred non-insurance warranty revenue |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Specialty | |||||||||||
Management & Professional Liability | $ | $ | |||||||||
Surety | |||||||||||
Warranty & Alternative Risks | |||||||||||
Specialty revenues | |||||||||||
Commercial | |||||||||||
Middle Market | |||||||||||
Construction | |||||||||||
Small Business | |||||||||||
Other Commercial | |||||||||||
Commercial revenues | |||||||||||
International | |||||||||||
Canada | |||||||||||
Europe | |||||||||||
Hardy | |||||||||||
International revenues | |||||||||||
Life & Group revenues | |||||||||||
Corporate & Other revenues | |||||||||||
Eliminations | ( | ( | |||||||||
Total operating revenues | |||||||||||
Net investment gains (losses) | ( | ||||||||||
Total revenues | $ | $ |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Operating Revenues | |||||||||||
Net earned premiums | $ | 2,059 | $ | 1,962 | |||||||
Net investment income | 448 | 504 | |||||||||
Non-insurance warranty revenue | 382 | 338 | |||||||||
Other revenues | 7 | 5 | |||||||||
Total operating revenues | 2,896 | 2,809 | |||||||||
Claims, Benefits and Expenses | |||||||||||
Net incurred claims and benefits | 1,449 | 1,500 | |||||||||
Policyholders' dividends | 6 | 6 | |||||||||
Amortization of deferred acquisition costs | 344 | 359 | |||||||||
Non-insurance warranty expense | 354 | 311 | |||||||||
Other insurance related expenses | 291 | 255 | |||||||||
Other expenses | 63 | 57 | |||||||||
Total claims, benefits and expenses | 2,507 | 2,488 | |||||||||
Core income before income tax | 389 | 321 | |||||||||
Income tax expense on core income | (73) | (58) | |||||||||
Core income | 316 | 263 | |||||||||
Net investment (losses) gains | (11) | 57 | |||||||||
Income tax benefit (expense) on net investment (losses) gains | 8 | (8) | |||||||||
Net investment (losses) gains, after tax | (3) | 49 | |||||||||
Net income | $ | 313 | $ | 312 |
Three months ended March 31 | |||||||||||
(In millions, except ratios, rate, renewal premium change and retention) | 2022 | 2021 | |||||||||
Gross written premiums | $ | 1,846 | $ | 1,794 | |||||||
Gross written premiums excluding third-party captives | 885 | 816 | |||||||||
Net written premiums | 771 | 742 | |||||||||
Net earned premiums | 772 | 735 | |||||||||
Net investment income | 103 | 117 | |||||||||
Core income | 163 | 170 | |||||||||
Other performance metrics: | |||||||||||
Loss ratio excluding catastrophes and development | 58.9 | % | 59.4 | % | |||||||
Effect of catastrophe impacts | — | 0.7 | |||||||||
Effect of development-related items | (1.3) | (2.1) | |||||||||
Loss ratio | 57.6 | 58.0 | |||||||||
Expense ratio | 30.9 | 30.6 | |||||||||
Dividend ratio | 0.2 | 0.2 | |||||||||
Combined ratio | 88.7 | % | 88.8 | % | |||||||
Combined ratio excluding catastrophes and development | 90.0 | % | 90.2 | % | |||||||
Rate | 9 | % | 11 | % | |||||||
Renewal premium change | 10 | 12 | |||||||||
Retention | 85 | 86 | |||||||||
New business | $ | 145 | $ | 103 |
(In millions) | March 31, 2022 | December 31, 2021 | |||||||||
Gross case reserves | $ | 1,570 | $ | 1,578 | |||||||
Gross IBNR reserves | 5,053 | 4,855 | |||||||||
Total gross carried claim and claim adjustment expense reserves | $ | 6,623 | $ | 6,433 | |||||||
Net case reserves | $ | 1,348 | $ | 1,338 | |||||||
Net IBNR reserves | 4,035 | 3,927 | |||||||||
Total net carried claim and claim adjustment expense reserves | $ | 5,383 | $ | 5,265 |
Three months ended March 31 | |||||||||||
(In millions, except ratios, rate, renewal premium change and retention) | 2022 | 2021 | |||||||||
Gross written premiums | $ | 1,208 | $ | 1,113 | |||||||
Gross written premiums excluding third-party captives | 1,206 | 1,111 | |||||||||
Net written premiums | 1,001 | 960 | |||||||||
Net earned premiums | 904 | 855 | |||||||||
Net investment income | 118 | 148 | |||||||||
Core income | 132 | 69 | |||||||||
Other performance metrics: | |||||||||||
Loss ratio excluding catastrophes and development | 61.5 | % | 60.8 | % | |||||||
Effect of catastrophe impacts | 1.8 | 13.4 | |||||||||
Effect of development-related items | — | 0.5 | |||||||||
Loss ratio | 63.3 | 74.7 | |||||||||
Expense ratio | 30.7 | 31.4 | |||||||||
Dividend ratio | 0.5 | 0.6 | |||||||||
Combined ratio | 94.5 | % | 106.7 | % | |||||||
Combined ratio excluding catastrophes and development | 92.7 | % | 92.8 | % | |||||||
Rate | 5 | % | 10 | % | |||||||
Renewal premium change | 8 | 11 | |||||||||
Retention | 85 | 83 | |||||||||
New business | $ | 228 | $ | 211 |
(In millions) | March 31, 2022 | December 31, 2021 | |||||||||
Gross case reserves | $ | 3,102 | $ | 3,184 | |||||||
Gross IBNR reserves | 5,832 | 5,706 | |||||||||
Total gross carried claim and claim adjustment expense reserves | $ | 8,934 | $ | 8,890 | |||||||
Net case reserves | $ | 2,796 | $ | 2,850 | |||||||
Net IBNR reserves | 5,315 | 5,215 | |||||||||
Total net carried claim and claim adjustment expense reserves | $ | 8,111 | $ | 8,065 |
Three months ended March 31 | |||||||||||
(In millions, except ratios, rate, renewal premium change and retention) | 2022 | 2021 | |||||||||
Gross written premiums | $ | 363 | $ | 343 | |||||||
Net written premiums | 251 | 235 | |||||||||
Net earned premiums | 264 | 252 | |||||||||
Net investment income | 14 | 14 | |||||||||
Core income | 26 | 24 | |||||||||
Other performance metrics: | |||||||||||
Loss ratio excluding catastrophes and development | 58.6 | % | 59.6 | % | |||||||
Effect of catastrophe impacts | 1.2 | 2.0 | |||||||||
Effect of development-related items | — | (0.1) | |||||||||
Loss ratio | 59.8 | 61.5 | |||||||||
Expense ratio | 32.6 | 34.4 | |||||||||
Combined ratio | 92.4 | % | 95.9 | % | |||||||
Combined ratio excluding catastrophes and development | 91.2 | % | 94.0 | % | |||||||
Rate | 9 | % | 14 | % | |||||||
Renewal premium change | 10 | 12 | |||||||||
Retention | 73 | 75 | |||||||||
New business | $ | 78 | $ | 80 |
(In millions) | March 31, 2022 | December 31, 2021 | |||||||||
Gross case reserves | $ | 829 | $ | 859 | |||||||
Gross IBNR reserves | 1,487 | 1,421 | |||||||||
Total gross carried claim and claim adjustment expense reserves | $ | 2,316 | $ | 2,280 | |||||||
Net case reserves | $ | 718 | $ | 744 | |||||||
Net IBNR reserves | 1,251 | 1,196 | |||||||||
Total net carried claim and claim adjustment expense reserves | $ | 1,969 | $ | 1,940 |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Net earned premiums | $ | 120 | $ | 120 | |||||||
Net investment income | 212 | 219 | |||||||||
Core income before income tax | 16 | 32 | |||||||||
Income tax benefit on core income | 7 | 4 | |||||||||
Core income | 23 | 36 |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Net investment income | $ | 1 | $ | 6 | |||||||
Interest expense | 28 | 28 | |||||||||
Core loss | (28) | (36) |
(In millions) | March 31, 2022 | December 31, 2021 | |||||||||
Gross case reserves | $ | 1,580 | $ | 1,551 | |||||||
Gross IBNR reserves | 1,183 | 1,266 | |||||||||
Total gross carried claim and claim adjustment expense reserves | $ | 2,763 | $ | 2,817 | |||||||
Net case reserves | $ | 139 | $ | 146 | |||||||
Net IBNR reserves | 144 | 148 | |||||||||
Total net carried claim and claim adjustment expense reserves | $ | 283 | $ | 294 |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Fixed income securities: | |||||||||||
Taxable fixed income securities | $ | 368 | $ | 359 | |||||||
Tax-exempt fixed income securities | 73 | 80 | |||||||||
Total fixed income securities | 441 | 439 | |||||||||
Limited partnership and common stock investments | 8 | 61 | |||||||||
Other, net of investment expense | (1) | 4 | |||||||||
Net investment income | $ | 448 | $ | 504 | |||||||
Effective income yield for the fixed income securities portfolio | 4.3 | % | 4.4 | % | |||||||
Limited partnership and common stock return | 0.4 | % | 3.4 | % |
Three months ended March 31 | |||||||||||
(In millions) | 2022 | 2021 | |||||||||
Fixed maturity securities: | |||||||||||
Corporate and other bonds | $ | 3 | $ | 36 | |||||||
States, municipalities and political subdivisions | 3 | (1) | |||||||||
Asset-backed | (8) | 3 | |||||||||
Total fixed maturity securities | (2) | 38 | |||||||||
Non-redeemable preferred stock | (38) | 2 | |||||||||
Short term and other | 29 | 17 | |||||||||
Net investment (losses) gains | (11) | 57 | |||||||||
Income tax benefit (expense) on net investment (losses) gains | (8) | ||||||||||
Net investment (losses) gains, after tax | $ | (3) | $ | 49 |
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
(In millions) | Estimated Fair Value | Net Unrealized Gains (Losses) | Estimated Fair Value | Net Unrealized Gains (Losses) | |||||||||||||||||||
U.S. Government, Government agencies and Government-sponsored enterprises | $ | 2,497 | $ | (107) | $ | 2,600 | $ | 42 | |||||||||||||||
AAA | 3,513 | 97 | 3,784 | 360 | |||||||||||||||||||
AA | 7,243 | 160 | 7,665 | 823 | |||||||||||||||||||
A | 9,062 | 366 | 9,511 | 1,087 | |||||||||||||||||||
BBB | 17,497 | 552 | 18,458 | 2,043 | |||||||||||||||||||
Non-investment grade | 2,133 | (34) | 2,362 | 91 | |||||||||||||||||||
Total | $ | 41,945 | $ | 1,034 | $ | 44,380 | $ | 4,446 |
March 31, 2022 | |||||||||||
(In millions) | Estimated Fair Value | Gross Unrealized Losses | |||||||||
U.S. Government, Government agencies and Government-sponsored enterprises | $ | $ | |||||||||
AAA | |||||||||||
AA | |||||||||||
A | |||||||||||
BBB | |||||||||||
Non-investment grade | |||||||||||
Total | $ | $ | |||||||||
March 31, 2022 | |||||||||||
(In millions) | Estimated Fair Value | Gross Unrealized Losses | |||||||||
Due in one year or less | 238 | 4 | |||||||||
Due after one year through five years | 3,081 | 97 | |||||||||
Due after five years through ten years | 7,754 | 465 | |||||||||
Due after ten years | 5,451 | 591 | |||||||||
Total | $ | 16,524 | $ | 1,157 |
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
(In millions) | Estimated Fair Value | Effective Duration (In years) | Estimated Fair Value | Effective Duration (In years) | |||||||||||||||||||
Investments supporting Life & Group | $ | 16,868 | 8.9 | $ | 18,458 | 9.2 | |||||||||||||||||
Other investments | 27,045 | 5.0 | 28,915 | 4.9 | |||||||||||||||||||
Total | $ | 43,913 | 6.5 | $ | 47,373 | 6.6 |
Period | (a) Total number of shares purchased | (b) Average price paid per share | (c) Total number of shares purchased as part of publicly announced plans or programs | (d) Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (in millions) | ||||||||||||||||||||||
February 1, 2022 - February 28, 2022 | 50,679 | $ | 45.85 | N/A | N/A | |||||||||||||||||||||
March 1, 2022 - March 31, 2022 | 394,321 | $ | 46.57 | N/A | N/A | |||||||||||||||||||||
Total | 445,000 | N/A | N/A |
CNA Financial Corporation | ||||||||
Dated: May 2, 2022 | By | /s/ Scott R. Lindquist | ||||||
Scott R. Lindquist Executive Vice President and Chief Financial Officer (Duly authorized officer and principal financial officer) |
Description of Exhibit | Exhibit Number | ||||
10.1 | |||||
10.2 | |||||
31.1 | |||||
31.2 | |||||
32.1 | |||||
32.2 | |||||
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | 101.INS | ||||
Inline XBRL Taxonomy Extension Schema | 101.SCH | ||||
Inline XBRL Taxonomy Extension Calculation Linkbase | 101.CAL | ||||
Inline XBRL Taxonomy Extension Definition Linkbase | 101.DEF | ||||
Inline XBRL Taxonomy Label Linkbase | 101.LAB | ||||
Inline XBRL Taxonomy Extension Presentation Linkbase | 101.PRE | ||||
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | 104.1 |
/s/ Kevin Smith | March 14, 2022 | |||||||
Kevin Smith, Employee | Date | |||||||
/s/ Elizabeth A. Aguinaga | By | March 14, 2022 | ||||||
Elizabeth A. Aguinaga Executive Vice President and Chief Human Resources Officer for CNA Financial Corporation | Date |
/s/ Kevin Leidwinger | March 30, 2022 | |||||||
Kevin Leidwinger, Employee | Date | |||||||
/s/ Elizabeth A. Aguinaga | By | April 4, 2022 | ||||||
Elizabeth A. Aguinaga Executive Vice President and Chief Human Resources Officer for CNA Financial Corporation | Date |
Dated: | May 2, 2022 | By | /s/ Dino E. Robusto | |||||||||||
Dino E. Robusto | ||||||||||||||
Chief Executive Officer |
Dated: | May 2, 2022 | By | /s/ Scott R. Lindquist | |||||||||||
Scott R. Lindquist | ||||||||||||||
Chief Financial Officer |
Dated: | May 2, 2022 | By | /s/ Dino E. Robusto | |||||||||||
Dino E. Robusto | ||||||||||||||
Chief Executive Officer |
Dated: | May 2, 2022 | By | /s/ Scott R. Lindquist | |||||||||||
Scott R. Lindquist | ||||||||||||||
Chief Financial Officer |
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2022 |
Mar. 31, 2021 |
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Net income | $ 313 | $ 312 |
Other Comprehensive Loss, net of tax | ||
Net unrealized gains and losses on investments | (1,615) | (627) |
Foreign currency translation adjustment | (14) | 2 |
Pension and postretirement benefits | 6 | 9 |
Other comprehensive loss, net of tax | (1,623) | (616) |
Total comprehensive loss | (1,310) | (304) |
Investments | ||
Other Comprehensive Loss, net of tax | ||
Net unrealized gains and losses on investments | (4) | 0 |
Net unrealized gains and losses on other investments | ||
Other Comprehensive Loss, net of tax | ||
Net unrealized gains and losses on investments | $ (1,611) | $ (627) |
Condensed Consolidated Balance Sheets - (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2022 |
Dec. 31, 2021 |
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Statement of Financial Position [Abstract] | ||
Fixed maturities securities at amortized cost | $ 40,928 | $ 39,952 |
Marketable securities fixed maturities allowance for credit loss | 17 | 18 |
Equity securities at cost | 965 | 964 |
Mortgage loans on real estate commercial and consumer allowance for credit loss | 16 | 16 |
Allowance for uncollectible reinsurance | 22 | 21 |
Allowance for uncollectible insurance receivables | 28 | 29 |
Accumulated depreciation on property and equipment | 264 | 255 |
Due to related parties | $ 85 | $ 56 |
Common stock, par value (in usd per share) | $ 2.50 | $ 2.50 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 273,040,243 | 273,040,243 |
Common stock, shares outstanding (in shares) | 271,293,966 | 271,363,999 |
Treasury stock, shares (in shares) | 1,746,277 | 1,676,244 |
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - (Parenthetical) - $ / shares |
3 Months Ended | |
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Mar. 31, 2022 |
Mar. 31, 2021 |
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Statement of Stockholders' Equity [Abstract] | ||
Dividends declared per share (usd per share) | $ 2.40 | $ 1.13 |
General |
3 Months Ended |
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Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
General | General Basis of Presentation The Condensed Consolidated Financial Statements include the accounts of CNA Financial Corporation (CNAF) and its subsidiaries. Collectively, CNAF and its subsidiaries are referred to as CNA or the Company. Loews Corporation (Loews) owned approximately 89.6% of the outstanding common stock of CNAF as of March 31, 2022. The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). Intercompany amounts have been eliminated. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, including certain financial statement notes, is not required for interim reporting purposes and has been condensed or omitted. These statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in CNAF's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2021, including the summary of significant accounting policies in Note A. The preparation of Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. The interim financial data as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 is unaudited. However, in the opinion of management, the interim data includes all adjustments, including normal recurring adjustments, necessary for a fair statement of the Company's results for the interim periods. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Accounting Standards Pending Adoption In August 2018, the FASB issued , Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The updated accounting guidance requires changes to the measurement and disclosure of long-duration contracts. For the Company, this includes the Long term care and fully-ceded single premium immediate annuity business. Entities will be required to review, and update if there is a change, cash flow assumptions (including morbidity and persistency) at least annually, and to update discount rate assumptions quarterly using an upper-medium grade fixed-income instrument yield. The effect of changes in cash flow assumptions will be recorded in the Company's results of operations and the effect of changes in discount rate assumptions will be recorded in Other comprehensive income. The guidance is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted, and may be applied using either a modified retrospective transition method or a full retrospective transition method. Financial statements for prior periods presented shall be adjusted to reflect the effects of applying the new accounting guidance. The Company will adopt the new guidance effective January 1, 2023, using the modified retrospective method applied as of the transition date of January 1, 2021. The Company will use a published spot rate curve constructed from A+, A and A- rated U.S. dollar denominated corporate bonds matched to the duration of the corresponding insurance liabilities, to calculate discount rates. The Company will group its long-duration contracts into calendar year cohorts based on the contract issue date and product line. Long term care contracts will be grouped separately from the Company’s fully-ceded single premium immediate annuity contracts. The most significant impact at the transition date will be the effect of updating the discount rate assumption to reflect an upper-medium grade fixed-income instrument yield, which will be partially offset by the de-recognition of Shadow Adjustments associated with long-duration contracts. The Company expects the net impact of these changes will be a $2.2 billion - $2.5 billion decrease in Accumulated other comprehensive income as of the transition date of January 1, 2021. There is a minimal transition impact expected to retained earnings. The requirement to review, and update if there is a change, cash flow assumptions at least annually is expected to change the pattern of earnings being recognized. Adoption will also significantly expand the Company’s disclosures, and will impact systems, processes, and controls. While the requirements of the new guidance represent a material change from existing GAAP, the new guidance will not impact capital and surplus under statutory accounting practices, cash flows, or the underlying economics of the business. The Company continues to make progress in connection with these matters and is in process of refining key accounting policy decisions, technology solutions and updates to internal controls associated with adoption of the new guidance. These in-progress activities include modifications of actuarial valuation systems, data sourcing, analytical procedures and reporting processes.
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Earnings (Loss) Per Share |
3 Months Ended |
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Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Note B. Earnings (Loss) Per Share Earnings (loss) per share is based on weighted average number of outstanding common shares. Basic earnings (loss) per share excludes the impact of dilutive securities and is computed by dividing Net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the three months ended March 31, 2022 and 2021, approximately 1.1 million and 1.0 million potential shares attributable to exercises or conversions into common stock under stock-based employee compensation plans were included in the calculation of diluted earnings per share. For those same periods, less than 1 thousand and approximately 120 thousand potential shares attributable to exercises or conversions into common stock under stock-based employee compensation plans were not included in the calculation of diluted earnings per share, because the effect would have been antidilutive. The Company repurchased 445,000 and 66,000 shares of CNAF common stock at an aggregate cost of $21 million and $3 million during the three months ended March 31, 2022 and 2021.
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Investments |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments The significant components of Net investment income are presented in the following table.
During the three months ended March 31, 2022 and 2021, $(5) million and $13 million of Net investment (loss) income was recognized due to the change in fair value of common stock still held as of March 31, 2022 and 2021. Net investment gains (losses) are presented in the following table.
The following tables present the activity related to the allowance on available-for-sale securities with credit impairments and purchased credit-deteriorated (PCD) assets. Accrued interest receivable on available-for-sale fixed maturity securities totaled $389 million, $369 million, and $389 million as of March 31, 2022, December 31, 2021 and March 31, 2021 and is excluded from the estimate of expected credit losses and the amortized cost basis in the tables included within this Note.
The components of available-for-sale impairment losses recognized in earnings by asset type are presented in the following table. The table includes losses on securities with an intention to sell and changes in the allowance for credit losses on securities since acquisition date.
There were no losses recognized on mortgage loans during the three months ended March 31, 2022 or 2021. The following tables present a summary of fixed maturity securities.
The net unrealized gains on investments included in the tables above are recorded as a component of Accumulated other comprehensive income (AOCI). When presented in AOCI, these amounts are net of tax and any required Shadow Adjustments. To the extent that unrealized gains on fixed income securities supporting certain products within the Life & Group segment would result in a premium deficiency, or would impact the reserve balance if realized, a related increase in Insurance reserves is recorded, net of tax, as a reduction of net unrealized gains through Other comprehensive income (loss) (Shadow Adjustments). As of March 31, 2022 and December 31, 2021, the net unrealized gains on investments included in AOCI were correspondingly reduced by Shadow Adjustments of $1,394 million and $2,477 million. The following tables present the estimated fair value and gross unrealized losses of fixed maturity securities in a gross unrealized loss position for which an allowance for credit loss has not been recorded, by the length of time in which the securities have continuously been in that position.
The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities in a gross unrealized loss position for which an allowance for credit loss has not been recorded, by ratings distribution.
Based on current facts and circumstances, the Company believes the unrealized losses presented in the March 31, 2022 securities in a gross unrealized loss position tables above are not indicative of the ultimate collectibility of the current amortized cost of the securities, but rather are primarily attributable to changes in risk-free interest rates, and to a lesser extent credit spreads. In reaching this determination, the Company considered the recent volatility in risk-free rates and spreads as well as the fact that its unrealized losses are concentrated in investment grade issuers. Additionally, the Company has no current intent to sell securities with unrealized losses, nor is it more likely than not that it will be required to sell prior to recovery of amortized cost; accordingly, the Company has determined that there are no additional impairment losses to be recorded as of March 31, 2022. Contractual Maturity The following table presents available-for-sale fixed maturity securities by contractual maturity.
Actual maturities may differ from contractual maturities because certain securities may be called or prepaid. Securities not due at a single date are allocated based on weighted average life. Derivative Financial Instruments The Company holds an embedded derivative on a funds withheld liability with a notional value of $268 million and $270 million and a fair value of $16 million and $(12) million as of March 31, 2022 and December 31, 2021. The embedded derivative on the funds withheld liability is accounted for separately and reported with the funds withheld liability in Other liabilities on the Condensed Consolidated Balance Sheets. Investment Commitments As part of its overall investment strategy, the Company invests in various assets which require future purchase, sale or funding commitments. These investments are recorded once funded, and the related commitments may include future capital calls from various third-party limited partnerships, signed and accepted mortgage loan applications, and obligations related to private placement securities. As of March 31, 2022, the Company had commitments to purchase or fund approximately $1,280 million and sell approximately $65 million under the terms of these investments. Mortgage Loans The following table presents the amortized cost basis of mortgage loans for each credit quality indicator by year of origination. The primary credit quality indicators utilized are debt service coverage ratios (DSCR) and loan-to-value ratios (LTV).
(1) The values in the table above reflect DSCR on a standardized amortization period and LTV based on the most recent appraised values trended forward using changes in a commercial real estate price index. As of March 31, 2022, accrued interest receivable on mortgage loans totaled $3 million and is excluded from the amortized cost basis disclosed in the table above and the estimate of expected credit losses.
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable. Level 1 - Quoted prices for identical instruments in active markets. Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets. Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are not observable. Prices may fall within Level 1, 2 or 3 depending upon the methodology and inputs used to estimate fair value for each specific security. In general, the Company seeks to price securities using third-party pricing services. Securities not priced by pricing services are submitted to independent brokers for valuation and, if those are not available, internally developed pricing models are used to value assets using a methodology and inputs the Company believes market participants would use to value the assets. Prices obtained from third-party pricing services or brokers are not adjusted by the Company. The Company performs control procedures over information obtained from pricing services and brokers to ensure prices received represent a reasonable estimate of fair value and to confirm representations regarding whether inputs are observable or unobservable. Procedures may include i) the review of pricing service methodologies or broker pricing qualifications, ii) back-testing, where past fair value estimates are compared to actual transactions executed in the market on similar dates, iii) exception reporting, where period-over-period changes in price are reviewed and challenged with the pricing service or broker based on exception criteria, and iv) deep dives, where the Company performs an independent analysis of the inputs and assumptions used to price individual securities. Assets and Liabilities Measured at Fair Value Assets and liabilities measured at fair value on a recurring basis are presented in the following tables. Corporate bonds and other includes obligations of the U.S. Treasury, government-sponsored enterprises, foreign governments and redeemable preferred stock.
The tables below present a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3).
Valuation Methodologies and Inputs The following section describes the valuation methodologies and relevant inputs used to measure different financial instruments at fair value, including an indication of the level in the fair value hierarchy in which the instruments are generally classified. Fixed Maturity Securities Level 1 securities include highly liquid government securities and exchange traded bonds, valued using quoted market prices. Level 2 securities include most other fixed maturity securities as the significant inputs are observable in the marketplace. All classes of Level 2 fixed maturity securities are valued using a methodology based on information generated by market transactions involving identical or comparable assets, a discounted cash flow methodology, or a combination of both when necessary. Common inputs for all classes of fixed maturity securities include prices from recently executed transactions of similar securities, marketplace quotes, benchmark yields, spreads off benchmark yields, interest rates and U.S. Treasury or swap curves. Specifically for asset-backed securities, key inputs include prepayment and default projections based on past performance of the underlying collateral and current market data. Fixed maturity securities are primarily assigned to Level 3 in cases where broker/dealer quotes are significant inputs to the valuation and there is a lack of transparency as to whether these quotes are based on information that is observable in the marketplace. Level 3 securities also include private placement debt securities whose fair value is determined using internal models with some inputs that are not market observable. Equity Securities Level 1 equity securities include publicly traded securities valued using quoted market prices. Level 2 securities are primarily valued using pricing for similar securities, recently executed transactions and other pricing models utilizing market observable inputs. Level 3 securities are primarily priced using broker/dealer quotes and internal models with some inputs that are not market observable. Short Term and Other Invested Assets Securities that are actively traded or have quoted prices are classified as Level 1. These securities include money market funds and treasury bills. Level 2 primarily includes non-U.S. government securities, for which all inputs are market observable. Fixed maturity securities purchased within one year of maturity are classified consistent with fixed maturity securities discussed above. Short term investments as presented in the tables above differ from the amounts presented on the Condensed Consolidated Balance Sheets because certain short term investments, such as time deposits, are not measured at fair value. As of March 31, 2022 and December 31, 2021, there were $79 million and $74 million of overseas deposits within Other invested assets, which can be redeemed at net asset value in 90 days or less. Overseas deposits are excluded from the fair value hierarchy because their fair value is recorded using the net asset value per share (or equivalent) practical expedient. Derivative Financial Investments The embedded derivative on funds withheld liability is valued using the change in fair value of the assets supporting the funds withheld liability, which are fixed maturity securities primarily valued with observable inputs. Significant Unobservable Inputs The following tables present quantitative information about the significant unobservable inputs utilized by the Company in the fair value measurements of Level 3 assets. Valuations for assets and liabilities not presented in the tables below are primarily based on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. The quantitative detail of these unobservable inputs is neither provided nor reasonably available to the Company. The weighted average rate is calculated based on fair value.
For fixed maturity securities, an increase to the credit spread assumptions would result in a lower fair value measurement. Financial Assets and Liabilities Not Measured at Fair Value The carrying amount and estimated fair value of the Company's financial assets and liabilities which are not measured at fair value on the Condensed Consolidated Balance Sheets are presented in the following tables.
The carrying amounts reported on the Condensed Consolidated Balance Sheets for Cash, Short term investments not carried at fair value, Accrued investment income and certain Other assets and Other liabilities approximate fair value due to the short term nature of these items. These assets and liabilities are not listed in the tables above.
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Claim and Claim Adjustment Expense Reserves |
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Liability for Claims and Claims Adjustment Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Claim and Claim Adjustment Expense Reserves | Claim and Claim Adjustment Expense Reserves Property and casualty insurance claim and claim adjustment expense reserves represent the estimated amounts necessary to resolve all outstanding claims, including incurred but not reported (IBNR) claims as of the reporting date. The Company's reserve projections are based primarily on detailed analysis of the facts in each case, the Company's experience with similar cases and various historical development patterns. Consideration is given to historical patterns such as claim reserving trends and settlement practices, loss payments, pending levels of unpaid claims and product mix, as well as court decisions and economic conditions, including inflation, and public attitudes. All of these factors can affect the estimation of claim and claim adjustment expense reserves. Establishing claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves for catastrophic events that have occurred, is an estimation process. Many factors can ultimately affect the final settlement of a claim and, therefore, the necessary reserve. Changes in the law, results of litigation, medical costs, the cost of repair materials and labor rates can affect ultimate claim costs. In addition, time can be a critical part of reserving determinations since the longer the span between the incidence of a loss and the payment or settlement of the claim, the more variable the ultimate settlement amount can be. Accordingly, short-tail claims, such as property damage claims, tend to be more reasonably estimable than long-tail claims, such as workers' compensation, general liability and professional liability claims. Adjustments to prior year reserve estimates, if necessary, are reflected in the results of operations in the period that the need for such adjustments is determined. There can be no assurance that the Company's ultimate cost for insurance losses will not exceed current estimates. Catastrophes are an inherent risk of the property and casualty insurance business and have contributed to material period-to-period fluctuations in our results of operations and/or equity. The Company reported catastrophe losses, net of reinsurance, of $19 million and $125 million for the three months ended March 31, 2022 and 2021. Catastrophe losses for the three months ended March 31, 2022 were primarily related to severe weather related events. Catastrophe losses for the three months ended March 31, 2021 were primarily driven by Winter Storms Uri and Viola. Liability for Unpaid Claim and Claim Adjustment Expenses The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves of the Life & Group segment.
(1) Total net incurred above does not agree to Insurance claims and policyholders' benefits as reflected on the Condensed Consolidated Statements of Operations due to amounts related to retroactive reinsurance deferred gain accounting, the loss on the Excess Workers' Compensation Loss Portfolio Transfer, uncollectible reinsurance and benefit expenses related to future policy benefits, which are not reflected in the table above. Net Prior Year Development Changes in estimates of claim and claim adjustment expense reserves, net of reinsurance, for prior years are defined as net prior year loss reserve development (development). These changes can be favorable or unfavorable. The following table presents development recorded for the Specialty, Commercial, International and Corporate & Other segments.
Specialty The following table presents further detail of the development recorded for the Specialty segment.
2021 Favorable development in surety was primarily due to lower than expected frequency and lack of systemic activity in recent accident years. The following table presents further detail of the development recorded for the Commercial segment.
International There was no development recorded in the International segment for the three months ended March 31, 2022 and 2021. In 2010, Continental Casualty Company (CCC) together with several of the Company’s insurance subsidiaries completed a transaction with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc., under which substantially all of the Company’s legacy A&EP liabilities were ceded to NICO through a Loss Portfolio Transfer (LPT). At the effective date of the transaction, the Company ceded approximately $1.6 billion of net A&EP claim and allocated claim adjustment expense reserves to NICO under a retroactive reinsurance agreement with an aggregate limit of $4 billion. The $1.6 billion of claim and allocated claim adjustment expense reserves ceded to NICO was net of $1.2 billion of ceded claim and allocated claim adjustment expense reserves under existing third-party reinsurance contracts. The NICO LPT aggregate reinsurance limit also covers credit risk on the existing third-party reinsurance related to these liabilities. The Company paid NICO a reinsurance premium of $2 billion and transferred to NICO billed third-party reinsurance receivables related to A&EP claims with a net book value of $215 million, resulting in total consideration of $2.2 billion. In years subsequent to the effective date of the LPT, the Company recognized adverse prior year development on its A&EP reserves resulting in additional amounts ceded under the LPT. As a result, the cumulative amounts ceded under the LPT have exceeded the $2.2 billion consideration paid, resulting in the NICO LPT moving into a gain position, requiring retroactive reinsurance accounting. Under retroactive reinsurance accounting, this gain is deferred and only recognized in earnings in proportion to actual paid recoveries under the LPT. Over the life of the contract, there is no economic impact as long as any additional losses incurred are within the limit of the LPT. In a period in which the Company recognizes a change in the estimate of A&EP reserves that increases or decreases the amounts ceded under the LPT, the proportion of actual paid recoveries to total ceded losses is affected and the change in the deferred gain is recognized in earnings as if the revised estimate of ceded losses was available at the effective date of the LPT. The effect of the deferred retroactive reinsurance benefit is recorded in Insurance claims and policyholders' benefits on the Condensed Consolidated Statements of Operations. The impact of the LPT on the Condensed Consolidated Statements of Operations was the recognition of a retroactive reinsurance benefit of $12 million and $10 million for the three months ended March 31, 2022 and 2021. As of March 31, 2022 and December 31, 2021, the cumulative amounts ceded under the LPT were $3.4 billion. The unrecognized deferred retroactive reinsurance benefit was $417 million and $429 million as of March 31, 2022 and December 31, 2021 and is included within Other liabilities on the Condensed Consolidated Balance Sheets. NICO established a collateral trust account as security for its obligations to the Company. The fair value of the collateral trust account was $3.1 billion as of March 31, 2022. In addition, Berkshire Hathaway Inc. guaranteed the payment obligations of NICO up to the aggregate reinsurance limit as well as certain of NICO’s performance obligations under the trust agreement. NICO is responsible for claims handling and billing and collection from third-party reinsurers related to the majority of the Company’s A&EP claims.
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Legal Proceedings, Contingencies and Guarantees |
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Legal Proceedings, Commitments and Contingencies, and Guarantees [Abstract] | |
Legal Proceedings, Contingencies and Guarantees | Legal Proceedings, Contingencies and Guarantees The Company is a party to various claims and litigation incidental to its business, which, based on the facts and circumstances currently known, are not material to the Company's results of operations or financial position. Guarantees The Company has provided guarantees, if the primary obligor fails to perform, to holders of structured settlement annuities issued by a previously owned subsidiary. As of March 31, 2022, the potential amount of future payments the Company could be required to pay under these guarantees was approximately $1.6 billion, which will be paid over the lifetime of the annuitants. The Company does not believe any payment is likely under these guarantees, as the Company is the beneficiary of a trust that must be maintained at a level that approximates the discounted reserves for these annuities.
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Benefit Plans |
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Benefit Plans | Benefit Plans The components of net periodic pension cost (benefit) are presented in the following table.
The following table indicates the line items in which the non-service cost (benefit) is presented in the Condensed Consolidated Statements of Operations.
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Accumulated Other Comprehensive Income (Loss) by Component |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) by Component | Accumulated Other Comprehensive Income (Loss) by Component The tables below display the changes in Accumulated other comprehensive income (loss) by component.
Amounts reclassified from Accumulated other comprehensive income (loss) shown above are reported in Net income (loss) as follows:
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Business Segments |
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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, 2021. 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. The Company's results of operations and selected balance sheet items by segment are presented in the following tables.
The following table presents operating revenues by line of business for each reportable segment.
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Non-Insurance Revenues from Contracts with Customers |
3 Months Ended |
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Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Non-Insurance Revenues from Contracts with Customers | Non-Insurance Revenues from Contracts with CustomersThe Company had deferred non-insurance warranty revenue balances of $4.5 billion reported in Deferred non-insurance warranty revenue as of March 31, 2022 and December 31, 2021. For the three months ended March 31, 2022 and 2021, the Company recognized $0.4 billion and $0.3 billion of revenues that were included in the deferred revenue balance as of January 1, 2022 and 2021. For the three months ended March 31, 2022 and 2021, Non-insurance warranty revenue recognized from performance obligations related to prior periods due to a change in estimate was not material. The Company expects to recognize approximately $1.0 billion of the deferred revenue in the remainder of 2022, $1.1 billion in 2023, $0.9 billion in 2024 and $1.5 billion thereafter. |
General (Policies) |
3 Months Ended |
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Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The Condensed Consolidated Financial Statements include the accounts of CNA Financial Corporation (CNAF) and its subsidiaries. Collectively, CNAF and its subsidiaries are referred to as CNA or the Company. Loews Corporation (Loews) owned approximately 89.6% of the outstanding common stock of CNAF as of March 31, 2022.The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). Intercompany amounts have been eliminated |
Use of Estimates | The preparation of Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates |
Accounting Standards Pending Adoption | Accounting Standards Pending Adoption In August 2018, the FASB issued , Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The updated accounting guidance requires changes to the measurement and disclosure of long-duration contracts. For the Company, this includes the Long term care and fully-ceded single premium immediate annuity business. Entities will be required to review, and update if there is a change, cash flow assumptions (including morbidity and persistency) at least annually, and to update discount rate assumptions quarterly using an upper-medium grade fixed-income instrument yield. The effect of changes in cash flow assumptions will be recorded in the Company's results of operations and the effect of changes in discount rate assumptions will be recorded in Other comprehensive income. The guidance is effective for interim and annual periods beginning after December 15, 2022, with early adoption permitted, and may be applied using either a modified retrospective transition method or a full retrospective transition method. Financial statements for prior periods presented shall be adjusted to reflect the effects of applying the new accounting guidance. The Company will adopt the new guidance effective January 1, 2023, using the modified retrospective method applied as of the transition date of January 1, 2021. The Company will use a published spot rate curve constructed from A+, A and A- rated U.S. dollar denominated corporate bonds matched to the duration of the corresponding insurance liabilities, to calculate discount rates. The Company will group its long-duration contracts into calendar year cohorts based on the contract issue date and product line. Long term care contracts will be grouped separately from the Company’s fully-ceded single premium immediate annuity contracts. The most significant impact at the transition date will be the effect of updating the discount rate assumption to reflect an upper-medium grade fixed-income instrument yield, which will be partially offset by the de-recognition of Shadow Adjustments associated with long-duration contracts. The Company expects the net impact of these changes will be a $2.2 billion - $2.5 billion decrease in Accumulated other comprehensive income as of the transition date of January 1, 2021. There is a minimal transition impact expected to retained earnings. The requirement to review, and update if there is a change, cash flow assumptions at least annually is expected to change the pattern of earnings being recognized. Adoption will also significantly expand the Company’s disclosures, and will impact systems, processes, and controls. While the requirements of the new guidance represent a material change from existing GAAP, the new guidance will not impact capital and surplus under statutory accounting practices, cash flows, or the underlying economics of the business. The Company continues to make progress in connection with these matters and is in process of refining key accounting policy decisions, technology solutions and updates to internal controls associated with adoption of the new guidance. These in-progress activities include modifications of actuarial valuation systems, data sourcing, analytical procedures and reporting processes.
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Earnings (Loss) Per Share | Earnings (Loss) Per ShareEarnings (loss) per share is based on weighted average number of outstanding common shares. Basic earnings (loss) per share excludes the impact of dilutive securities and is computed by dividing Net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. |
Investments (Tables) |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | The significant components of Net investment income are presented in the following table.
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Net realized investment gains (losses) | Net investment gains (losses) are presented in the following table.
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Debt securities, available-for-sale, allowance for credit loss | Accrued interest receivable on available-for-sale fixed maturity securities totaled $389 million, $369 million, and $389 million as of March 31, 2022, December 31, 2021 and March 31, 2021 and is excluded from the estimate of expected credit losses and the amortized cost basis in the tables included within this Note.
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Components of net other than temporary impairment losses recognized in earnings by asset type | The table includes losses on securities with an intention to sell and changes in the allowance for credit losses on securities since acquisition date.
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Summary of fixed maturity securities | The following tables present a summary of fixed maturity securities.
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Securities in a gross unrealized loss position | The following tables present the estimated fair value and gross unrealized losses of fixed maturity securities in a gross unrealized loss position for which an allowance for credit loss has not been recorded, by the length of time in which the securities have continuously been in that position.
The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities in a gross unrealized loss position for which an allowance for credit loss has not been recorded, by ratings distribution.
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Contractual maturity | The following table presents available-for-sale fixed maturity securities by contractual maturity.
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Financing receivable credit quality indicators | The following table presents the amortized cost basis of mortgage loans for each credit quality indicator by year of origination. The primary credit quality indicators utilized are debt service coverage ratios (DSCR) and loan-to-value ratios (LTV).
(1) The values in the table above reflect DSCR on a standardized amortization period and LTV based on the most recent appraised values trended forward using changes in a commercial real estate price index.
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Fair Value (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis | Assets and liabilities measured at fair value on a recurring basis are presented in the following tables. Corporate bonds and other includes obligations of the U.S. Treasury, government-sponsored enterprises, foreign governments and redeemable preferred stock.
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Table of reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs | The tables below present a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3).
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Quantitative information about significant unobservable inputs in the fair value measurement of level 3 assets | The following tables present quantitative information about the significant unobservable inputs utilized by the Company in the fair value measurements of Level 3 assets. Valuations for assets and liabilities not presented in the tables below are primarily based on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. The quantitative detail of these unobservable inputs is neither provided nor reasonably available to the Company. The weighted average rate is calculated based on fair value.
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Carrying amount and estimated fair value of financial instrument assets and liabilities not measured at fair value | The carrying amount and estimated fair value of the Company's financial assets and liabilities which are not measured at fair value on the Condensed Consolidated Balance Sheets are presented in the following tables.
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Claim and Claim Adjustment Expense Reserves (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-duration Insurance Contracts, Net Incurred Claim and Claim Adjustment Expenses [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of liability for unpaid claims and claims adjustment expense | The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves of the Life & Group segment.
(1) Total net incurred above does not agree to Insurance claims and policyholders' benefits as reflected on the Condensed Consolidated Statements of Operations due to amounts related to retroactive reinsurance deferred gain accounting, the loss on the Excess Workers' Compensation Loss Portfolio Transfer, uncollectible reinsurance and benefit expenses related to future policy benefits, which are not reflected in the table above.
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Net prior year development | The following table presents development recorded for the Specialty, Commercial, International and Corporate & Other segments.
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Specialty | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-duration Insurance Contracts, Net Incurred Claim and Claim Adjustment Expenses [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net prior year claim and allocated claim adjustment expense reserve development | The following table presents further detail of the development recorded for the Specialty segment.
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Commercial | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-duration Insurance Contracts, Net Incurred Claim and Claim Adjustment Expenses [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net prior year claim and allocated claim adjustment expense reserve development | The following table presents further detail of the development recorded for the Commercial segment.
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Benefit Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net periodic cost (benefit) | The components of net periodic pension cost (benefit) are presented in the following table.
The following table indicates the line items in which the non-service cost (benefit) is presented in the Condensed Consolidated Statements of Operations.
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Accumulated Other Comprehensive Income (Loss) by Component (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) by Component | The tables below display the changes in Accumulated other comprehensive income (loss) by component.
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Reclassification out of Accumulated Other Comprehensive Income | Amounts reclassified from Accumulated other comprehensive income (loss) shown above are reported in Net income (loss) as follows:
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Business Segments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant components of the Company's continuing operations and selected balance sheet items | The Company's results of operations and selected balance sheet items by segment are presented in the following tables.
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Revenues by line of business | The following table presents operating revenues by line of business for each reportable segment.
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Earnings (Loss) Per Share (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
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Earnings Per Share [Abstract] | ||
Incremental common shares attributable to dilutive effect of share-based payment arrangements (in shares) | 1,100,000 | 1,000,000 |
Antidilutive securities excluded from computation of earnings (in shares) | 1,000 | 120,000 |
Treasury stock, shares, acquired (in shares) | 445,000 | 66,000 |
Purchase of treasury stock | $ 21 | $ 3 |
Investments (Net investment income) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
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Net Investment Income [Line Items] | ||
Gross investment income | $ 465 | $ 521 |
Investment expense | (17) | (17) |
Net investment income | 448 | 504 |
Fixed maturity securities | ||
Net Investment Income [Line Items] | ||
Gross investment income | 429 | 428 |
Equity securities | ||
Net Investment Income [Line Items] | ||
Gross investment income | 2 | 29 |
Limited partnership investments | ||
Net Investment Income [Line Items] | ||
Gross investment income | 18 | 43 |
Mortgage loans | ||
Net Investment Income [Line Items] | ||
Gross investment income | 15 | 14 |
Trading portfolio | ||
Net Investment Income [Line Items] | ||
Gross investment income | 1 | 5 |
Other | ||
Net Investment Income [Line Items] | ||
Gross investment income | $ 0 | $ 2 |
Investments (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
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Gain (Loss) on Securities [Line Items] | |||
Reduction of net unrealized gains on investments included in AOCI due to shadow adjustments | $ 1,394 | $ 2,477 | |
Notional value | 268 | 270 | |
Derivative liability, fair value, gross liability | 16 | 12 | |
Commitments to purchase or fund privately placed debt securities | 1,280 | ||
Commitments to sell various privately placed debt securities | 65 | ||
Common Stock | |||
Gain (Loss) on Securities [Line Items] | |||
Equity securities, FV-NI, gain (loss) | (5) | $ 13 | |
Non-redeemable preferred stock | |||
Gain (Loss) on Securities [Line Items] | |||
Equity securities, FV-NI, gain (loss) | 38 | 2 | |
Mortgage loans | |||
Gain (Loss) on Securities [Line Items] | |||
Financing receivable, accrued interest, after allowance for credit loss | 3 | ||
Fixed maturity securities | |||
Gain (Loss) on Securities [Line Items] | |||
Debt securities, available-for-sale, accrued interest, after allowance for credit loss | $ 389 | $ 389 | $ 369 |
Investments (Net realized investment gains (losses)) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Fixed maturity securities: | ||
Gross gains | $ 26 | $ 58 |
Gross losses | (28) | (20) |
Net investment gains (losses) on fixed maturity securities | (2) | 38 |
Equity securities | (38) | 2 |
Derivatives | 29 | 17 |
Net investment gains (losses) | $ (11) | $ 57 |
Investments (Components of other-than-temporary impairment losses recognized in earnings) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
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Debt Securities, Available-for-sale [Line Items] | ||
Impairment (gains) losses recognized in earnings | $ 10 | $ 6 |
Corporate and other bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Impairment (gains) losses recognized in earnings | 8 | 7 |
Asset-backed | ||
Debt Securities, Available-for-sale [Line Items] | ||
Impairment (gains) losses recognized in earnings | $ 2 | $ (1) |
Investments (Contractual maturity) (Details) - USD ($) $ in Millions |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Investments [Abstract] | ||
Due in one year or less, cost or amortized cost | $ 1,533 | $ 1,603 |
Due after one year through five years, cost or amortized cost | 10,206 | 10,637 |
Due after five years through ten years, cost or amortized cost | 14,040 | 13,294 |
Due after ten years, cost or amortized cost | 15,143 | 14,411 |
Cost or Amortized Cost | 40,922 | 39,945 |
Due in one year or less, estimated fair value | 1,546 | 1,624 |
Due after one year through five years, estimated fair value | 10,337 | 11,229 |
Due after five years through ten years, estimated fair value | 14,032 | 14,338 |
Due after ten years, estimated fair value | 16,024 | 17,182 |
Estimated Fair Value | $ 41,939 | $ 44,373 |
Fair Value (Narrative) (Details) - USD ($) $ in Millions |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Other invested assets overseas deposit | $ 79 | $ 74 |
Fair Value (Quantitative information about significant unobservable inputs in the fair value measurement of level 3 assets) (Details) $ in Millions |
Mar. 31, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
---|---|---|
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Estimated fair value | $ 44,099 | $ 47,287 |
Fixed maturity securities | Discounted cash flow | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Estimated fair value | $ 1,198 | $ 1,225 |
Credit spread | Discounted cash flow | Minimum | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Debt securities, available-for-sale, measurement Input | 0.01 | 0.01 |
Credit spread | Discounted cash flow | Maximum | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Debt securities, available-for-sale, measurement Input | 0.07 | 0.07 |
Credit spread | Discounted cash flow | Weighted Average | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Debt securities, available-for-sale, measurement Input | 0.03 | 0.02 |
Fair Value (Carrying amount and estimated fair value of financial instrument assets and liabilities which are not measured at fair value) (Details) - USD ($) $ in Millions |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Assets | ||
Mortgage loans | $ 942 | $ 973 |
Liabilities | ||
Long term debt | 2,779 | 2,779 |
Carrying Amount | ||
Assets | ||
Mortgage loans | 942 | 973 |
Liabilities | ||
Long term debt | 2,779 | 2,779 |
Estimated Fair Value | ||
Assets | ||
Mortgage loans | 940 | 1,018 |
Liabilities | ||
Long term debt | 2,795 | 2,978 |
Level 1 | Estimated Fair Value | ||
Assets | ||
Mortgage loans | 0 | 0 |
Liabilities | ||
Long term debt | 0 | 0 |
Level 2 | Estimated Fair Value | ||
Assets | ||
Mortgage loans | 0 | 0 |
Liabilities | ||
Long term debt | 2,795 | 2,978 |
Level 3 | Estimated Fair Value | ||
Assets | ||
Mortgage loans | 940 | 1,018 |
Liabilities | ||
Long term debt | $ 0 | $ 0 |
Claim and Claim Adjustment Expense Reserves (Reconciliation of claim and claim adjustment expense reserves) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Reserves, beginning of year: | ||
Gross | $ 24,174 | $ 22,706 |
Ceded | 4,969 | 4,005 |
Net reserves, beginning of year | 19,205 | 18,701 |
Reduction of net reserves due to Excess Workers' Compensation Loss Portfolio Transfer | 0 | (632) |
Net incurred claim and claim adjustment expenses: | ||
Provision for insured events of current year | 1,448 | 1,474 |
Increase (decrease) in provision for insured events of prior years | (45) | (54) |
Amortization of discount | 47 | 50 |
Total net incurred | 1,450 | 1,470 |
Net payments attributable to: | ||
Current year events | (70) | (85) |
Prior year events | (1,147) | (1,067) |
Total net payments | (1,217) | (1,152) |
Foreign currency translation adjustment and other | (92) | (32) |
Net reserves, end of period | 19,346 | 18,355 |
Ceded reserves, end of period | 5,002 | 4,701 |
Gross reserves, end of period | $ 24,348 | $ 23,056 |
Claim and Claim Adjustment Expense Reserves (Net prior year development) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Segment Reporting Information [Line Items] | ||
Pretax (favorable) unfavorable premium development, excluding Life & Group | $ (12) | $ (15) |
Specialty | ||
Segment Reporting Information [Line Items] | ||
Pretax (favorable) unfavorable premium development, excluding Life & Group | (10) | (15) |
Commercial | ||
Segment Reporting Information [Line Items] | ||
Pretax (favorable) unfavorable premium development, excluding Life & Group | (2) | 0 |
International | ||
Segment Reporting Information [Line Items] | ||
Pretax (favorable) unfavorable premium development, excluding Life & Group | 0 | 0 |
Corporate & Other | ||
Segment Reporting Information [Line Items] | ||
Pretax (favorable) unfavorable premium development, excluding Life & Group | $ 0 | $ 0 |
Claim and Claim Adjustment Expense Reserves (Specialty - Net prior year claim and allocated claim adjustment expense reserve development) (Details) - Specialty - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Medical Professional Liability | $ 8 | $ 8 |
Other Professional Liability and Management Liability | 0 | 0 |
Surety | (9) | (15) |
Warranty | (9) | (8) |
Other | 0 | 0 |
Total pretax (favorable) unfavorable development | $ (10) | $ (15) |
Claim and Claim Adjustment Expense Reserves (Commercial - Net prior year claim and allocated claim adjustment expense reserve development) (Details) - Commercial - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Commercial Auto | $ 0 | $ 0 |
General Liability | 0 | 0 |
Workers' Compensation | (2) | 0 |
Property and Other | 0 | 0 |
Total pretax (favorable) unfavorable development | $ (2) | $ 0 |
Legal Proceedings, Contingencies and Guarantees (Narrative) (Details) $ in Billions |
Mar. 31, 2022
USD ($)
|
---|---|
Guarantee Obligations | |
Legal Proceedings, Commitments and Contingencies, and Guarantees [Line Items] | |
Guarantor obligations, maximum exposure, undiscounted | $ 1.6 |
Benefit Plans (Components of net periodic cost (benefit)) (Details) - Pension Plan - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
Interest cost on projected benefit obligation | $ 17 | $ 15 |
Expected return on plan assets | (38) | (38) |
Amortization of net actuarial (gain) loss | 7 | 12 |
Total net periodic pension cost (benefit) | $ (14) | $ (11) |
Benefit Plans (Summary of non-service cost (benefit) in the condensed consolidated statements of operations (Details) - Pension Plan - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Total net periodic pension cost (benefit) | $ (14) | $ (11) |
Insurance claims and policyholder's benefits | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Net periodic defined benefits expense (reversal of expense), excluding service cost component | (4) | (3) |
Other operating expenses | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Net periodic defined benefits expense (reversal of expense), excluding service cost component | $ (10) | $ (8) |
Business Segments (Narrative) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2022
segment
| |
Core Segments - Specialty, Commercial and International | |
Segment Reporting Information [Line Items] | |
Number of operating segments | 3 |
Non-Core Segments - Life & Group and Corporate & Other | |
Segment Reporting Information [Line Items] | |
Number of operating segments | 2 |
Non-Insurance Revenues from Contracts with Customers (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
Revenue from Contract with Customer [Abstract] | |||
Deferred non-insurance warranty revenue | $ 4,528 | $ 4,503 | |
Contract with customer, liability, revenue recognized | $ 400 | $ 300 |
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