Business Segments

9 Months Ended

Sep. 30, 2022

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.

Three months ended September 30, 2022	Specialty		Commercial		International		Life & Group		Corporate & Other
(In millions)											Eliminations		Total
Operating revenues
Net earned premiums	$	810	$	1,023	$	270	$	118	$	—	$	—	$	2,221
Net investment income	102		112		16		187		5		—		422
Non-insurance warranty revenue	399		—		—		—		—		—		399
Other revenues	(1)		13		—		—		1		(2)		11
Total operating revenues	1,310		1,148		286		305		6		(2)		3,053
Claims, benefits and expenses
Net incurred claims and benefits	459		733		169		310		(13)		—		1,658
Policyholders’ dividends	2		5		—		—		—		—		7
Amortization of deferred acquisition costs	169		163		51		—		—		—		383
Non-insurance warranty expense	371		—		—		—		—		—		371
Other insurance related expenses	88		145		35		29		1		(1)		297
Other expenses	15		3		11		2		47		(1)		77
Total claims, benefits and expenses	1,104		1,049		266		341		35		(2)		2,793
Core income (loss) before income tax	206		99		20		(36)		(29)		—		260
Income tax (expense) benefit on core income (loss)	(45)		(19)		(1)		14		4		—		(47)
Core income (loss)	$	161	$	80	$	19	$	(22)	$	(25)	$	—	213
Net investment gains (losses)													(96)
Income tax (expense) benefit on net investment gains (losses)													11
Net investment gains (losses), after tax													(85)
Net income (loss)													$	128

Three months ended September 30, 2021	Specialty		Commercial		International		Life & Group		Corporate & Other
(In millions)											Eliminations		Total
Operating revenues
Net earned premiums	$	773	$	893	$	271	$	123	$	—	$	(1)	$	2,059
Net investment income	116		141		14		240		2		—		513
Non-insurance warranty revenue	357		—		—		—		—		—		357
Other revenues	1		7		—		(1)		2		(1)		8
Total operating revenues	1,247		1,041		285		362		4		(2)		2,937
Claims, benefits and expenses
Net incurred claims and benefits	446		720		171		296		(6)		—		1,627
Policyholders’ dividends	—		5		—		—		—		—		5
Amortization of deferred acquisition costs	165		148		55		—		—		—		368
Non-insurance warranty expense	330		—		—		—		—		—		330
Other insurance related expenses	71		125		32		27		(1)		(1)		253
Other expenses	13		8		4		1		37		(1)		62
Total claims, benefits and expenses	1,025		1,006		262		324		30		(2)		2,645
Core income (loss) before income tax	222		35		23		38		(26)		—		292
Income tax (expense) benefit on core income (loss)	(49)		(8)		(6)		3		5		—		(55)
Core income (loss)	$	173	$	27	$	17	$	41	$	(21)	$	—	237
Net investment gains (losses)													22
Income tax (expense) benefit on net investment gains (losses)													(3)
Net investment gains (losses), after tax													19
Net income (loss)													$	256

Nine months ended September 30, 2022	Specialty		Commercial		International		Life & Group		Corporate & Other
(In millions)											Eliminations		Total
Operating revenues
Net earned premiums	$	2,376	$	2,901	$	803	$	356	$	(1)	$	—	$	6,435
Net investment income	305		343		44		600		10		—		1,302
Non-insurance warranty revenue	1,173		—		—		—		—		—		1,173
Other revenues	—		25		—		—		4		(5)		24
Total operating revenues	3,854		3,269		847		956		13		(5)		8,934
Claims, benefits and expenses
Net incurred claims and benefits	1,360		1,916		487		884		36		—		4,683
Policyholders’ dividends	5		15		—		—		—		—		20
Amortization of deferred acquisition costs	488		467		146		—		—		—		1,101
Non-insurance warranty expense	1,092		—		—		—		—		—		1,092
Other insurance related expenses	250		409		112		89		4		(1)		863
Other expenses	40		21		25		7		133		(4)		222
Total claims, benefits and expenses	3,235		2,828		770		980		173		(5)		7,981
Core income (loss) before income tax	619		441		77		(24)		(160)		—		953
Income tax (expense) benefit on core income (loss)	(134)		(91)		(14)		31		29		—		(179)
Core income (loss)	$	485	$	350	$	63	$	7	$	(131)	$	—	774
Net investment gains (losses)													(166)
Income tax (expense) benefit on net investment gains (losses)													38
Net investment gains (losses), after tax													(128)
Net income (loss)													$	646

September 30, 2022
(In millions)
Reinsurance receivables	$	1,511	$	952	$	385	$	453	$	2,420	$	—	$	5,721
Insurance receivables	1,061		1,640		309		4		—		—		3,014
Deferred acquisition costs	379		315		93		—		—		—		787
Goodwill	117		—		25		—		—		—		142
Deferred non-insurance warranty acquisition expense	3,653		—		—		—		—		—		3,653
Insurance reserves
Claim and claim adjustment expenses	6,925		9,172		2,262		3,645		2,696		—		24,700
Unearned premiums	3,144		2,364		576		111		—		—		6,195
Future policy benefits	—		—		—		10,454		—		—		10,454
Deferred non-insurance warranty revenue	4,706		—		—		—		—		—		4,706

Nine months ended September 30, 2021	Specialty		Commercial		International		Life & Group		Corporate & Other
(In millions)											Eliminations		Total
Operating revenues
Net earned premiums	$	2,270	$	2,629	$	789	$	369	$	—	$	(1)	$	6,056
Net investment income	367		463		42		724		12		—		1,608
Non-insurance warranty revenue	1,054		—		—		—		—		—		1,054
Other revenues	1		17		1		(1)		5		(4)		19
Total operating revenues	3,692		3,109		832		1,092		17		(5)		8,737
Claims, benefits and expenses
Net incurred claims and benefits	1,312		1,947		485		899		23		—		4,666
Policyholders’ dividends	2		16		—		—		—		—		18
Amortization of deferred acquisition costs	478		449		157		—		—		—		1,084
Non-insurance warranty expense	973		—		—		—		—		—		973
Other insurance related expenses	212		376		106		77		9		(1)		779
Other expenses	36		28		(4)		5		119		(4)		180
Total claims, benefits and expenses	3,013		2,816		744		981		151		(5)		7,700
Core income (loss) before income tax	679		293		88		111		(134)		—		1,037
Income tax (expense) benefit on core income (loss)	(148)		(60)		(21)		9		24		—		(196)
Core income (loss)	$	531	$	233	$	67	$	120	$	(110)	$	—	841
Net investment gains (losses)													117
Income tax (expense) benefit on net investment gains (losses)													(22)
Net investment gains (losses), after tax													95
Net income (loss)													$	936

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

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

Periods ended September 30	Three Months				Nine Months
(In millions)	2022		2021		2022		2021
Specialty
Management & Professional Liability	$	688	$	684	$	2,041	$	2,044
Surety	171		157		481		454
Warranty & Alternative Risks	451		406		1,332		1,194
Specialty revenues	1,310		1,247		3,854		3,692
Commercial
Middle Market	397		363		1,133		1,119
Construction	372		345		1,046		978
Small Business	149		144		430		413
Other Commercial	230		189		660		599
Commercial revenues	1,148		1,041		3,269		3,109
International
Canada	93		87		272		253
Europe	112		123		350		349
Hardy	81		75		225		230
International revenues	286		285		847		832
Life & Group revenues	305		362		956		1,092
Corporate & Other revenues	6		4		13		17
Eliminations	(2)		(2)		(5)		(5)
Total operating revenues	3,053		2,937		8,934		8,737
Net investment gains (losses)	(96)		22		(166)		117
Total revenues	$	2,957	$	2,959	$	8,768	$	8,854