Business Segments

3 Months Ended

Mar. 31, 2023

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, 2022. 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. 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 March 31, 2023	Specialty		Commercial		International		Life & Group		Corporate & Other
(In millions)											Eliminations		Total
Operating revenues
Net earned premiums	$	797	$	1,046	$	290	$	115	$	—	$	—	$	2,248
Net investment income	129		149		23		214		10		—		525
Non-insurance warranty revenue	407		—		—		—		—		—		407
Other revenues	—		7		—		—		3		(3)		7
Total operating revenues	1,333		1,202		313		329		13		(3)		3,187
Claims, benefits and expenses
Net incurred claims and benefits	465		688		189		311		(7)		—		1,646
Policyholders’ dividends	1		6		—		—		—		—		7
Amortization of deferred acquisition costs	165		169		45		—		—		—		379
Non-insurance warranty expense	384		—		—		—		—		—		384
Other insurance related expenses	86		142		47		29		1		—		305
Other expenses	14		6		1		1		41		(3)		60
Total claims, benefits and expenses	1,115		1,011		282		341		35		(3)		2,781
Core income (loss) before income tax	218		191		31		(12)		(22)		—		406
Income tax (expense) benefit on core income (loss)	(47)		(40)		(7)		9		4		—		(81)
Core income (loss)	$	171	$	151	$	24	$	(3)	$	(18)	$	—	325
Net investment gains (losses)													(35)
Income tax (expense) benefit on net investment gains (losses)													7
Net investment gains (losses), after tax													(28)
Net income (loss)													$	297

March 31, 2023
(In millions)
Reinsurance receivables	$	1,419	$	1,118	$	442	$	102	$	2,425	$	—	$	5,506
Insurance receivables	1,008		1,754		388		5		—		—		3,155
Deferred acquisition costs	394		338		120		—		—		—		852
Goodwill	117		—		28		—		—		—		145
Deferred non-insurance warranty acquisition expense	3,671		—		—		—		—		—		3,671
Insurance reserves
Claim and claim adjustment expenses	6,976		9,528		2,502		704		2,699		—		22,409
Unearned premiums	3,188		2,558		713		123		—		(1)		6,581
Future policy benefits	—		—		—		13,976		—		—		13,976
Deferred non-insurance warranty revenue	4,710		—		—		—		—		—		4,710

Three months ended March 31, 2022	Specialty		Commercial		International		Life & Group (1)		Corporate & Other
(In millions)											Eliminations		Total (1)
Operating revenues
Net earned premiums	$	772	$	904	$	264	$	120	$	(1)	$	—	$	2,059
Net investment income	103		118		14		212		1		—		448
Non-insurance warranty revenue	382		—		—		—		—		—		382
Other revenues	1		8		(1)		(1)		2		(2)		7
Total operating revenues	1,258		1,030		277		331		2		(2)		2,896
Claims, benefits and expenses
Net incurred claims and benefits	445		573		158		304		(8)		—		1,472
Policyholders’ dividends	1		5		—		—		—		—		6
Amortization of deferred acquisition costs	157		148		39		—		—		—		344
Non-insurance warranty expense	354		—		—		—		—		—		354
Other insurance related expenses	81		130		47		31		2		—		291
Other expenses	13		7		1		3		41		(2)		63
Total claims, benefits and expenses	1,051		863		245		338		35		(2)		2,530
Core income (loss) before income tax	207		167		32		(7)		(33)		—		366
Income tax (expense) benefit on core income (loss)	(44)		(35)		(6)		12		5		—		(68)
Core income (loss)	$	163	$	132	$	26	$	5	$	(28)	$	—	298
Net investment gains (losses)													(11)
Income tax (expense) benefit on net investment gains (losses)													8
Net investment gains (losses), after tax													(3)
Net income (loss)													$	295

December 31, 2022
(In millions)
Reinsurance receivables	$	1,384	$	1,062	$	414	$	101	$	2,477	$	—	$	5,438
Insurance receivables	1,082		1,728		369		8		—		—		3,187
Deferred acquisition costs	381		321		104		—		—		—		806
Goodwill	117		—		27		—		—		—		144
Deferred non-insurance warranty acquisition expense	3,671		—		—		—		—		—		3,671
Insurance reserves
Claim and claim adjustment expenses	6,878		9,395		2,403		695		2,749		—		22,120
Unearned premiums	3,193		2,425		653		103		—		—		6,374
Future policy benefits	—		—		—		13,480		—		—		13,480
Deferred non-insurance warranty revenue	4,714		—		—		—		—		—		4,714

(1) As of January 1, 2023, the Company adopted ASU 2018-12 using the modified retrospective method applied as of the transition date of January 1, 2021. Prior period amounts in the financial statements have been adjusted to reflect application of the new guidance. See Note A to the Condensed Consolidated Financial Statements for additional information.

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

Three months ended March 31
(In millions)	2023		2022
Specialty
Management & Professional Liability	$	705	$	673
Surety	168		148
Warranty & Alternative Risks	460		437
Specialty revenues	1,333		1,258
Commercial
Middle Market	398		362
Construction	385		324
Small Business	150		138
Other Commercial	269		206
Commercial revenues	1,202		1,030
International
Canada	93		88
Europe	127		120
Hardy	93		69
International revenues	313		277
Life & Group revenues	329		331
Corporate & Other revenues	13		2
Eliminations	(3)		(2)
Total operating revenues	3,187		2,896
Net investment gains (losses)	(35)		(11)
Total revenues	$	3,152	$	2,885