UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number 1-5823

CNA FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	36-6169860
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

151 N. Franklin		60606
Chicago,	Illinois	(Zip Code)
(Address of principal executive offices)

(312) 822-5000

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par value $2.50	"CNA"	New York Stock Exchange
		Chicago Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒
Accelerated filer ☐
Non-accelerated filer ☐
Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of July 25, 2024, 270,836,385 shares of common stock were outstanding.

Item Number		Page Number
	PART I
1.	Condensed Consolidated Financial Statements:	3
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 (Unaudited)	3
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2024 and 2023 (Unaudited)	4
	Condensed Consolidated Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023	5
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (Unaudited)	6
	Condensed Consolidated Statements of Stockholders' Equity for the three and six months ended June 30, 2024 and 2023 (Unaudited)	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	44
3.	Quantitative and Qualitative Disclosures About Market Risk	65
4.	Controls and Procedures	65
	PART II
1	Legal Proceedings	66
2	Unregistered Sales of Equity Securities and Use of Proceeds	66
6	Exhibits	66

2

PART I

Item 1. Condensed Consolidated Financial Statements

CNA Financial Corporation

Condensed Consolidated Statements of Operations (Unaudited)

Periods ended June 30	Three Months				Six Months
(In millions, except per share data)	2024		2023		2024		2023
Revenues
Net earned premiums	$	2,498	$	2,347	$	4,939	$	4,595
Net investment income	618		575		1,227		1,100
Net investment losses	(10)		(32)		(32)		(67)
Non-insurance warranty revenue	404		407		811		814
Other revenues	9		7		18		14
Total revenues	3,519		3,304		6,963		6,456
Claims, Benefits and Expenses
Insurance claims and policyholders’ benefits (re-measurement loss of $(25), $(33), $(40) and $(34))	1,882		1,779		3,689		3,432
Amortization of deferred acquisition costs	435		403		879		782
Non-insurance warranty expense	388		384		782		768
Other operating expenses	378		346		715		683
Interest	34		31		69		59
Total claims, benefits and expenses	3,117		2,943		6,134		5,724
Income before income tax	402		361		829		732
Income tax expense	(85)		(78)		(174)		(152)
Net income	$	317	$	283	$	655	$	580
Basic earnings per share	$	1.17	$	1.04	$	2.41	$	2.14
Diluted earnings per share	$	1.17	$	1.04	$	2.40	$	2.13
Weighted Average Outstanding Common Stock and Common Stock Equivalents
Basic	271.6		271.2		271.6		271.2
Diluted	272.6		272.0		272.6		272.1

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).

3

CNA Financial Corporation

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Comprehensive Income
Net income	$	317	$	283	$	655	$	580
Other Comprehensive Income (Loss), net of tax
Changes in:
Net unrealized gains and losses on investments with an allowance for credit losses	—		(1)		2		(9)
Net unrealized gains and losses on other investments	(244)		(413)		(461)		257
Net unrealized gains and losses on investments	(244)		(414)		(459)		248
Impact of changes in discount rates used to measure long-duration contract liabilities	273		256		614		(140)
Foreign currency translation adjustment	(10)		34		(42)		51
Pension and postretirement benefits	6		7		12		14
Other comprehensive income (loss), net of tax	25		(117)		125		173
Total comprehensive income	$	342	$	166	$	780	$	753

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).

4

CNA Financial Corporation

Condensed Consolidated Balance Sheets

(In millions, except share data)	June 30, 2024 (Unaudited)		December 31, 2023
Assets
Investments:
Fixed maturity securities at fair value (amortized cost of $42,993 and $42,414, less allowance for credit loss of $17 and $16)	$	40,403	$	40,425
Equity securities at fair value (cost of $663 and $686)	669		683
Limited partnership investments	2,367		2,174
Other invested assets	73		80
Mortgage loans (less allowance for credit loss of $35 and $35)	986		1,035
Short-term investments	1,747		2,165
Total investments	46,245		46,562
Cash	375		345
Reinsurance receivables (less allowance for uncollectible receivables of $22 and $22)	5,652		5,412
Insurance receivables (less allowance for uncollectible receivables of $25 and $28)	3,816		3,442
Accrued investment income	453		444
Deferred acquisition costs	948		896
Deferred income taxes	941		1,016
Property and equipment at cost (less accumulated depreciation of $308 and $296)	259		253
Goodwill	146		146
Deferred non-insurance warranty acquisition expense	3,598		3,661
Other assets (includes $1 and $23 due from Loews Corporation)	2,761		2,534
Total assets	$	65,194	$	64,711
Liabilities
Insurance reserves:
Claim and claim adjustment expenses	$	23,974	$	23,304
Unearned premiums	7,409		6,933
Future policy benefits	13,211		13,959
Short-term debt	—		550
Long-term debt	2,971		2,481
Deferred non-insurance warranty revenue	4,623		4,694
Other liabilities (includes $16 and $28 due to Loews Corporation)	3,132		2,897
Total liabilities	55,320		54,818
Commitments and contingencies (Notes C and G)
Stockholders' Equity
Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 270,835,170 and 270,881,457 shares outstanding)	683		683
Additional paid-in capital	2,210		2,221
Retained earnings	9,623		9,755
Accumulated other comprehensive loss	(2,547)		(2,672)
Treasury stock (2,205,073 and 2,158,786 shares), at cost	(95)		(94)
Total stockholders’ equity	9,874		9,893
Total liabilities and stockholders' equity	$	65,194	$	64,711

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).

5

CNA Financial Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)

Six months ended June 30
(In millions)	2024		2023
Cash Flows from Operating Activities
Net income	$	655	$	580
Adjustments to reconcile net income to net cash flows provided by operating activities:
Deferred income tax expense	31		21
Trading portfolio activity	(6)		1
Net investment losses	32		67
Equity method investees	(72)		(29)
Net amortization of investments	(105)		(87)
Depreciation and amortization	34		28
Changes in:
Receivables, net	(626)		(497)
Accrued investment income	(10)		(21)
Deferred acquisition costs	(55)		(74)
Insurance reserves	1,255		1,165
Other, net	(13)		(217)
Net cash flows provided by operating activities	1,120		937
Cash Flows from Investing Activities
Dispositions:
Fixed maturity securities - sales	1,611		2,285
Fixed maturity securities - maturities, calls and redemptions	1,109		613
Equity securities	288		121
Limited partnerships	29		79
Mortgage loans	61		78
Purchases:
Fixed maturity securities	(3,338)		(3,506)
Equity securities	(246)		(126)
Limited partnerships	(140)		(245)
Mortgage loans	(12)		(53)
Change in other investments	5		6
Change in short-term investments	461		(62)
Purchases of property and equipment	(39)		(43)
Other, net	2		(5)
Net cash flows used by investing activities	(209)		(858)
Cash Flows from Financing Activities
Dividends paid to common stockholders	(786)		(559)
Proceeds from the issuance of debt	490		395
Repayment of debt	(550)		—
Purchase of treasury stock	(20)		(24)
Other, net	(12)		(12)
Net cash flows used by financing activities	(878)		(200)
Effect of foreign exchange rate changes on cash	(3)		4
Net change in cash	30		(117)
Cash, beginning of year	345		475
Cash, end of period	$	375	$	358

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).

6

CNA Financial Corporation

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Common Stock
Balance, beginning of period	$	683	$	683	$	683	$	683
Balance, end of period	683		683		683		683
Additional Paid-in Capital
Balance, beginning of year	2,201		2,196		2,221		2,220
Stock-based compensation	9		8		(11)		(16)
Balance, end of period	2,210		2,204		2,210		2,204
Retained Earnings
Balance, beginning of period, as previously reported	9,425		9,191		9,755		9,572
Cumulative effect adjustments from changes in accounting guidance, net of tax	—		—		—		(236)
Balance, beginning of period	9,425		9,191		9,755		9,336
Dividends to common stockholders ($0.44, $0.42, $2.88 and $2.04 per share)	(119)		(115)		(787)		(557)
Net income	317		283		655		580
Balance, end of period	9,623		9,359		9,623		9,359
Accumulated Other Comprehensive Loss
Balance, beginning of period, as previously reported	(2,572)		(3,308)		(2,672)		(3,557)
Cumulative effect adjustments from changes in accounting guidance, net of tax	—		—		—		(41)
Balance, beginning of period	(2,572)		(3,308)		(2,672)		(3,598)
Other comprehensive income (loss)	25		(117)		125		173
Balance, end of period	(2,547)		(3,425)		(2,547)		(3,425)
Treasury Stock
Balance, beginning of period	(75)		(95)		(94)		(93)
Stock-based compensation	—		—		19		22
Purchase of treasury stock	(20)		—		(20)		(24)
Balance, end of period	(95)		(95)		(95)		(95)
Total stockholders' equity	$	9,874	$	8,726	$	9,874	$	8,726

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).

7

CNA Financial Corporation

Notes to Condensed Consolidated Financial Statements

Note A. 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 92% of the outstanding common stock of CNAF as of June 30, 2024.

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 (SEC) for the year ended December 31, 2023, 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 June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 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 in accordance with GAAP. 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 November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The updated accounting guidance requires expanded reportable segment disclosures, primarily related to significant segment expenses which are regularly provided to the Company’s Chief Operating Decision Maker (CODM). The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024. Retrospective application is required. The Company is currently evaluating the effect the updated guidance will have on its financial statement disclosures and expects to disclose additional quantitative and qualitative information related to segment expenses regularly provided to the CODM that are included in the Company's measure of segment profit or loss, which is core income (loss).

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The updated accounting guidance requires expanded income tax disclosures, including the disaggregation of existing disclosures related to the tax rate reconciliation and income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024. Prospective application is required, with retrospective application permitted. The Company is currently evaluating the effect the updated guidance will have on the Company's financial statement disclosures.

8

Note B. Earnings (Loss) Per Share Data

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.

The following table presents the income and share data used in the basic and diluted earnings per share computations.

Periods ended June 30	Three Months				Six Months
(In millions, except per share data)	2024		2023		2024		2023
Net income (loss)	$	317	$	283	$	655	$	580
Common Stock and Common Stock Equivalents
Basic
Weighted average shares outstanding	271.6		271.2		271.6		271.2
Diluted
Weighted average shares outstanding	271.6		271.2		271.6		271.2
Dilutive effect of stock-based awards under compensation plans	1.0		0.8		1.0		0.9
Total	272.6		272.0		272.6		272.1
Earnings (loss) per share
Basic	$	1.17	$	1.04	$	2.41	$	2.14
Diluted	$	1.17	$	1.04	$	2.40	$	2.13

Excluded from the calculation of diluted earnings (loss) per share is the impact of potential shares attributable to exercises or conversions into common stock under stock-based employee compensation plans that would have been antidilutive during the respective periods.

The Company repurchased 450,000 and 550,000 shares of CNAF common stock at an aggregate cost of $20 million and $24 million during the six months ended June 30, 2024 and 2023.

9

Note C. Investments

The significant components of Net investment income are presented in the following table.

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Fixed maturity securities	$	511	$	482	$	1,013	$	952
Equity securities	13		21		35		33
Limited partnership investments	74		55		128		80
Mortgage loans	14		14		29		28
Short-term investments	20		13		48		28
Trading portfolio	—		—		1		3
Other	7		9		15		14
Gross investment income	639		594		1,269		1,138
Investment expense	(21)		(19)		(42)		(38)
Net investment income	$	618	$	575	$	1,227	$	1,100
Net investment income (loss) recognized due to the change in fair value of common stock held as of June 30, 2024 and 2023	$	2	$	10	$	11	$	7

Net investment gains (losses) are presented in the following table.

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Net investment gains (losses):
Fixed maturity securities:
Gross gains	$	13	$	8	$	27	$	43
Gross losses	(25)		(35)		(71)		(92)
Net investment gains (losses) on fixed maturity securities	(12)		(27)		(44)		(49)
Equity securities	1		3		12		(11)
Mortgage loans	—		(6)		—		(6)
Short-term investments and other	1		(2)		—		(1)
Net investment gains (losses)	$	(10)	$	(32)	$	(32)	$	(67)
Net investment gains (losses) recognized due to the change in fair value of non-redeemable preferred stock held as of June 30, 2024 and 2023	$	1	$	3	$	12	$	—

10

The available-for-sale impairment losses (gains) recognized in earnings by asset type are presented in the following table. The table includes losses (gains) on securities with an intention to sell and changes in the allowance for credit losses on securities since acquisition date.

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	6	$	9	$	15	$	17
Asset-backed	—		8		5		8
Impairment losses (gains) recognized in earnings	$	6	$	17	$	20	$	25

There were no losses recognized on mortgage loans during the three and six months ended June 30, 2024. There were $6 million of losses recognized on mortgage loans during the three and six months ended June 30, 2023.

11

The following tables present a summary of fixed maturity securities.

June 30, 2024	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	$	25,463	$	401	$	1,496	$	—	$	24,368
States, municipalities and political subdivisions	7,560		269		800		—		7,029
Asset-backed:
Residential mortgage-backed	3,602		8		495		—		3,115
Commercial mortgage-backed	1,798		7		186		8		1,611
Other asset-backed	3,631		17		260		9		3,379
Total asset-backed	9,031		32		941		17		8,105
U.S. Treasury and obligations of government-sponsored enterprises	193		1		3		—		191
Foreign government	742		2		38		—		706
Total fixed maturity securities available-for-sale	42,989		705		3,278		17		40,399
Total fixed maturity securities trading	4		—		—		—		4
Total fixed maturity securities	$	42,993	$	705	$	3,278	$	17	$	40,403

December 31, 2023	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	$	25,020	$	597	$	1,345	$	4	$	24,268
States, municipalities and political subdivisions	7,713		382		703		—		7,392
Asset-backed:
Residential mortgage-backed	3,411		16		425		—		3,002
Commercial mortgage-backed	1,862		7		230		8		1,631
Other asset-backed	3,515		13		256		4		3,268
Total asset-backed	8,788		36		911		12		7,901
U.S. Treasury and obligations of government-sponsored enterprises	152		1		2		—		151
Foreign government	741		6		34		—		713
Total fixed maturity securities available-for-sale	42,414		1,022		2,995		16		40,425
Total fixed maturity securities trading	—		—		—		—		—
Total fixed maturity securities	$	42,414	$	1,022	$	2,995	$	16	$	40,425

12

The following tables present the estimated fair value and gross unrealized losses of available-for-sale 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.

	Less than 12 Months				12 Months or Longer				Total
June 30, 2024	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	$	3,388	$	84	$	13,395	$	1,412	$	16,783	$	1,496
States, municipalities and political subdivisions	899		23		3,257		777		4,156		800
Asset-backed:
Residential mortgage-backed	556		9		2,227		486		2,783		495
Commercial mortgage-backed	170		1		1,153		185		1,323		186
Other asset-backed	372		9		1,904		251		2,276		260
Total asset-backed	1,098		19		5,284		922		6,382		941
U.S. Treasury and obligations of government-sponsored enterprises	117		1		51		2		168		3
Foreign government	160		3		442		35		602		38
Total	$	5,662	$	130	$	22,429	$	3,148	$	28,091	$	3,278

	Less than 12 Months				12 Months or Longer				Total
December 31, 2023	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	$	1,943	$	37	$	13,406	$	1,308	$	15,349	$	1,345
States, municipalities and political subdivisions	598		18		3,104		685		3,702		703
Asset-backed:
Residential mortgage-backed	233		4		2,212		421		2,445		425
Commercial mortgage-backed	200		5		1,184		225		1,384		230
Other asset-backed	392		8		1,869		248		2,261		256
Total asset-backed	825		17		5,265		894		6,090		911
U.S. Treasury and obligations of government-sponsored enterprises	65		1		23		1		88		2
Foreign government	52		1		450		33		502		34
Total	$	3,483	$	74	$	22,248	$	2,921	$	25,731	$	2,995

13

The following table presents the estimated fair value and gross unrealized losses of available-for-sale fixed maturity securities in a gross unrealized loss position for which an allowance for credit loss has not been recorded, by ratings distribution.

	June 30, 2024				December 31, 2023
(In millions)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
U.S. Government, Government agencies and Government-sponsored enterprises	$	2,599	$	378	$	2,273	$	309
AAA	1,841		288		1,524		261
AA	4,371		730		3,817		658
A	6,587		629		5,652		517
BBB	11,813		1,119		11,523		1,095
Non-investment grade	880		134		942		155
Total	$	28,091	$	3,278	$	25,731	$	2,995

Based on current facts and circumstances, the Company believes the unrealized losses presented in the June 30, 2024 securities in a gross unrealized loss position tables above are not indicative of the ultimate collectability of the current amortized cost of the securities, but rather are primarily attributable to changes in risk-free interest rates. In reaching this determination, the Company considered the volatility in risk-free rates and credit 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 June 30, 2024.

14

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 $444 million, $435 million, and $413 million as of June 30, 2024, December 31, 2023, and June 30, 2023 and is excluded from the estimate of expected credit losses and the amortized cost basis in the tables included within this Note.

(In millions)	Corporate and other bonds		Asset-backed		Total
Allowance for credit losses:
Balance as of April 1, 2024	$	3	$	17	$	20
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)	3		1		4
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	—		1		1
Balance as of June 30, 2024	$	—	$	17	$	17

(In millions)	Corporate and other bonds		Asset-backed		Total
Allowance for credit losses:
Balance as of April 1, 2023	$	1	$	1	$	2
Additions to the allowance for credit losses:
Securities for which credit losses were not previously recorded	1		7		8
Available-for-sale securities accounted for as PCD assets	11		—		11
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	—		1		1
Balance as of June 30, 2023	$	13	$	9	$	22

15

(In millions)	Corporate and other bonds		Asset-backed		Total
Allowance for credit losses:
Balance as of January 1, 2024	$	4	$	12	$	16
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)	3		1		4
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis	1		—		1
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	—		6		6
Balance as of June 30, 2024	$	—	$	17	$	17

(In millions)	Corporate and other bonds		Asset-backed		Total
Allowance for credit losses:
Balance as of January 1, 2023	$	—	$	1	$	1
Additions to the allowance for credit losses:
Securities for which credit losses were not previously recorded	1		7		8
Available-for-sale securities accounted for as PCD assets	20		—		20
Reductions to the allowance for credit losses:
Securities sold during the period (realized)	6		—		6
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis	3		—		3
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	1		1		2
Balance as of June 30, 2023	$	13	$	9	$	22

16

Contractual Maturity

The following table presents available-for-sale fixed maturity securities by contractual maturity.

	June 30, 2024				December 31, 2023
(In millions)	Cost or Amortized Cost		Estimated Fair Value		Cost or Amortized Cost		Estimated Fair Value
Due in one year or less	$	1,528	$	1,493	$	1,121	$	1,091
Due after one year through five years	11,521		11,129		11,563		11,180
Due after five years through ten years	13,115		12,225		13,359		12,573
Due after ten years	16,825		15,552		16,371		15,581
Total	$	42,989	$	40,399	$	42,414	$	40,425

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.

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 June 30, 2024, the Company had commitments to purchase or fund approximately $1,765 million and sell approximately $145 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).

June 30, 2024	Mortgage Loans Amortized Cost Basis by Origination Year (1)
(In millions)	2024		2023		2022		2021		2020		Prior		Total
DSCR ≥1.6x
LTV less than 55%	$	—	$	33	$	10	$	2	$	96	$	241	$	382
LTV 55% to 65%	—		—		—		5		—		—		5
LTV greater than 65%	—		—		30		12		—		—		42
DSCR 1.2x - 1.6x
LTV less than 55%	—		28		5		—		13		63		109
LTV 55% to 65%	12		21		36		36		4		31		140
LTV greater than 65%	—		12		64		—		21		—		97
DSCR ≤1.2
LTV less than 55%	—		—		—		—		—		—		—
LTV 55% to 65%	—		32		75		—		—		42		149
LTV greater than 65%	—		—		28		21		—		48		97
Total	$	12	$	126	$	248	$	76	$	134	$	425	$	1,021

(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 June 30, 2024, accrued interest receivable on mortgage loans totaled $4 million and is excluded from the amortized cost basis disclosed in the table above and the estimate of expected credit losses.

17

Note D. 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.

18

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 United States of America (U.S.) Treasury, government-sponsored enterprises, foreign governments and redeemable preferred stock.

June 30, 2024							Total Assets/Liabilities at Fair Value
(In millions)	Level 1		Level 2		Level 3
Assets
Fixed maturity securities:
Corporate bonds and other	$	194	$	23,946	$	1,129	$	25,269
States, municipalities and political subdivisions	—		6,986		43		7,029
Asset-backed	—		7,218		887		8,105
Total fixed maturity securities	194		38,150		2,059		40,403
Equity securities:
Common stock	168		—		12		180
Non-redeemable preferred stock	45		442		2		489
Total equity securities	213		442		14		669
Short-term and other	1,546		25		—		1,571
Total assets	$	1,953	$	38,617	$	2,073	$	42,643
Liabilities
Other liabilities	$	—	$	—	$	—	$	—
Total liabilities	$	—	$	—	$	—	$	—

December 31, 2023							Total Assets/Liabilities at Fair Value
(In millions)	Level 1		Level 2		Level 3
Assets
Fixed maturity securities:
Corporate bonds and other	$	161	$	23,926	$	1,045	$	25,132
States, municipalities and political subdivisions	—		7,348		44		7,392
Asset-backed	—		7,000		901		7,901
Total fixed maturity securities	161		38,274		1,990		40,425
Equity securities:
Common stock	167		—		24		191
Non-redeemable preferred stock	52		440		—		492
Total equity securities	219		440		24		683
Short-term and other	1,976		32		—		2,008
Total assets	$	2,356	$	38,746	$	2,014	$	43,116
Liabilities
Other liabilities	$	—	$	1	$	—	$	1
Total liabilities	$	—	$	1	$	—	$	1

19

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).

Level 3 (In millions)	Corporate bonds and other		States, municipalities and political subdivisions		Asset-backed		Equity securities		Total
Balance as of April 1, 2024	$	1,082	$	43	$	871	$	11	$	2,007
Total realized and unrealized investment gains (losses):
Reported in Net investment gains (losses)	—		—		(3)		—		(3)
Reported in Net investment income	—		—		5		—		5
Reported in Other comprehensive income (loss)	(8)		—		(11)		—		(19)
Total realized and unrealized investment gains (losses)	(8)		—		(9)		—		(17)
Purchases	72		—		55		3		130
Sales	—		—		(5)		—		(5)
Settlements	(17)		—		(25)		—		(42)
Transfers into Level 3	—		—		—		—		—
Transfers out of Level 3	—		—		—		—		—
Balance as of June 30, 2024	$	1,129	$	43	$	887	$	14	$	2,073
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2024 recognized in Net income (loss) in the period	$	—	$	—	$	—	$	—	$	—
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2024 recognized in Other comprehensive income (loss) in the period	(8)		—		(11)		—		(19)

Level 3 (In millions)	Corporate bonds and other		States, municipalities and political subdivisions		Asset-backed		Equity securities		Total
Balance as of April 1, 2023	$	912	$	44	$	859	$	29	$	1,844
Total realized and unrealized investment gains (losses):
Reported in Net investment gains (losses)	—		—		(1)		—		(1)
Reported in Net investment income	—		—		5		(1)		4
Reported in Other comprehensive income (loss)	(15)		(1)		(7)		—		(23)
Total realized and unrealized investment gains (losses)	(15)		(1)		(3)		(1)		(20)
Purchases	68		—		87		—		155
Sales	—		—		—		(2)		(2)
Settlements	(5)		—		(17)		—		(22)
Transfers into Level 3	11		—		—		—		11
Transfers out of Level 3	—		—		(43)		—		(43)
Balance as of June 30, 2023	$	971	$	43	$	883	$	26	$	1,923
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2023 recognized in Net income (loss) in the period	$	—	$	—	$	—	$	(1)	$	(1)
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2023 recognized in Other comprehensive income (loss) in the period	(15)		(1)		(7)		—		(23)

20

Level 3 (In millions)	Corporate bonds and other		States, municipalities and political subdivisions		Asset-backed		Equity securities		Total
Balance as of January 1, 2024	$	1,045	$	44	$	901	$	24	$	2,014
Total realized and unrealized investment gains (losses):
Reported in Net investment gains (losses)	—		—		(7)		—		(7)
Reported in Net investment income	—		—		11		6		17
Reported in Other comprehensive income (loss)	(20)		(1)		(16)		—		(37)
Total realized and unrealized investment gains (losses)	(20)		(1)		(12)		6		(27)
Purchases	146		—		73		3		222
Sales	—		—		(14)		(19)		(33)
Settlements	(53)		—		(42)		—		(95)
Transfers into Level 3	11		—		—		—		11
Transfers out of Level 3	—		—		(19)		—		(19)
Balance as of June 30, 2024	$	1,129	$	43	$	887	$	14	$	2,073
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2024 recognized in Net income (loss) in the period	$	—	$	—	$	—	$	2	$	2
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2024 recognized in Other comprehensive income (loss) in the period	(22)		(1)		(16)		—		(39)

Level 3 (In millions)	Corporate bonds and other		States, municipalities and political subdivisions		Asset-backed		Equity securities		Total
Balance as of January 1, 2023	$	810	$	43	$	788	$	35	$	1,676
Total realized and unrealized investment gains (losses):
Reported in Net investment gains (losses)	—		—		(1)		—		(1)
Reported in Net investment income	—		—		10		(7)		3
Reported in Other comprehensive income (loss)	9		—		—		—		9
Total realized and unrealized investment gains (losses)	9		—		9		(7)		11
Purchases	149		—		142		—		291
Sales	—		—		—		(2)		(2)
Settlements	(8)		—		(26)		—		(34)
Transfers into Level 3	11		—		23		—		34
Transfers out of Level 3	—		—		(53)		—		(53)
Balance as of June 30, 2023	$	971	$	43	$	883	$	26	$	1,923
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2023 recognized in Net income (loss) in the period	$	—	$	—	$	—	$	(7)	$	(7)
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2023 recognized in Other comprehensive income (loss) in the period	9		—		(1)		—		8

Securities may be transferred in or out of levels within the fair value hierarchy based on the availability of observable market information and quoted prices used to determine the fair value of the security. The availability of observable market information and quoted prices varies based on market conditions and trading volume.

21

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 June 30, 2024 and December 31, 2023, there were $67 million and $75 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.

Other Liabilities

Level 2 securities include currency forward contracts valued using observable market forward rates.

22

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.

June 30, 2024	Estimated Fair Value (In millions)		Valuation Technique(s)	Unobservable Input(s)	Range  (Weighted Average)
Fixed maturity securities	$	1,571	Discounted cash flow	Credit spread	1% - 6% (2%)

December 31, 2023	Estimated Fair Value (In millions)		Valuation Technique(s)	Unobservable Input(s)	Range  (Weighted Average)
Fixed maturity securities	$	1,495	Discounted cash flow	Credit spread	1% - 7% (2%)

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.

June 30, 2024	Carrying Amount		Estimated Fair Value
(In millions)			Level 1		Level 2		Level 3		Total
Assets
Mortgage loans	$	986	$	—	$	—	$	944	$	944
Liabilities
Short-term debt	$	—	$	—	$	—	$	—	$	—
Long-term debt	2,971		—		2,841		—		2,841

December 31, 2023	Carrying Amount		Estimated Fair Value
(In millions)			Level 1		Level 2		Level 3		Total
Assets
Mortgage loans	$	1,035	$	—	$	—	$	997	$	997
Liabilities
Short-term debt	$	550	$	—	$	546	$	—	$	546
Long-term debt	2,481		—		2,385		—		2,385

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.

23

Note E. Claim and Claim Adjustment Expense Reserves

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, economic, medical and social 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. Claim and claim adjustment expense reserves are also maintained for the Company's structured settlement obligations. In developing the claim and claim adjustment expense reserve estimates for structured settlement obligations, the Company's actuaries review mortality experience on an annual basis. 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 $82 million and $170 million for the three and six months ended June 30, 2024 and $68 million and $120 million for the three and six months ended June 30, 2023 primarily related to severe weather related events.

24

Liability for Unpaid Claim and Claim Adjustment Expenses

The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves.

For the six months ended June 30
(In millions)	2024		2023
Reserves, beginning of year:
Gross	$	23,304	$	22,120
Ceded	5,141		5,191
Net reserves, beginning of year	18,163		16,929
Net incurred claim and claim adjustment expenses:
Provision for insured events of current year	3,039		2,746
Increase (decrease) in provision for insured events of prior years	19		37
Amortization of discount	20		22
Total net incurred (1)	3,078		2,805
Net payments attributable to:
Current year events	(308)		(287)
Prior year events	(2,259)		(2,014)
Total net payments	(2,567)		(2,301)
Foreign currency translation adjustment and other	(58)		57
Net reserves, end of period	18,616		17,490
Ceded reserves, end of period	5,358		5,312
Gross reserves, end of period	$	23,974	$	22,802

(1) Total net incurred 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, uncollectible reinsurance, benefit expenses related to future policy benefits and policyholders' dividends, 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.

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Pretax (favorable) unfavorable development:
Specialty	$	(3)	$	(4)	$	(8)	$	(4)
Commercial	(6)		(13)		(8)		(15)
International	(3)		—		(3)		15
Corporate & Other	35		35		35		35
Total pretax (favorable) unfavorable development	$	23	$	18	$	16	$	31

Following the second quarter annual review of Corporate & Other reserves, including legacy mass tort exposures, unfavorable development of $35 million was recorded within the Corporate & Other segment for the three and six months ended June 30, 2024 and 2023, largely associated with legacy mass tort abuse claims.

25

Specialty

The following table presents further detail of the development recorded for the Specialty segment.

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Pretax (favorable) unfavorable development:
Medical Professional Liability	$	(2)	$	—	$	(2)	$	9
Other Professional Liability and Management Liability	17		(1)		17		(1)
Surety	(8)		(7)		(26)		(7)
Warranty	—		—		13		(9)
Other	(10)		4		(10)		4
Total pretax (favorable) unfavorable development	$	(3)	$	(4)	$	(8)	$	(4)

Three Months

2024

Unfavorable development in other professional liability and management liability was primarily due to higher than expected claim severity and frequency in the Company's professional errors and omissions (E&O) and cyber businesses.

Favorable development in other was primarily due to favorable loss emergence in casualty coverages associated with healthcare products.

Six Months

2024

Unfavorable development in other professional liability and management liability was primarily due to higher than expected claim severity and frequency in the Company's professional E&O and cyber businesses.

Favorable development in surety was primarily due to lower than expected frequency and lack of systemic activity in multiple accident years.

Unfavorable development in warranty was primarily due to higher than expected frequency and severity in a recent accident year.

Favorable development in other was primarily due to favorable loss emergence in casualty coverages associated with healthcare products.

26

Commercial

The following table presents further detail of the development recorded for the Commercial segment.

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Pretax (favorable) unfavorable development:
Commercial Auto	$	21	$	11	$	21	$	11
General Liability	19		70		19		70
Workers' Compensation	(47)		(96)		(49)		(98)
Property and Other	1		2		1		2
Total pretax (favorable) unfavorable development	$	(6)	$	(13)	$	(8)	$	(15)

Three and Six Months

2024

Unfavorable development in commercial auto was due to higher than expected claim severity in recent accident years.

Unfavorable development in general liability was due to higher than expected claim severity in multiple accident years going back to 2014 and prior.

Favorable development in workers’ compensation was due to favorable medical trends driving lower than expected severity in multiple accident years.

2023

Unfavorable development in commercial auto was due to higher than expected claim severity in the Company’s construction business in a recent accident year.

Unfavorable development in general liability was due to higher than expected claim severity in the Company's construction and middle market businesses across multiple accident years.

Favorable development in workers' compensation was due to favorable medical trends driving lower than expected severity in multiple accident years.

27

International    

The following table presents further detail of the development recorded for the International segment.

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Pretax (favorable) unfavorable development:
Commercial	$	6	$	(3)	$	6	$	(5)
Specialty	(9)		3		(9)		22
Other	—		—		—		(2)
Total pretax (favorable) unfavorable development	$	(3)	$	—	$	(3)	$	15

Six Months

2023

Unfavorable development in specialty was due to higher than expected large loss emergence in the Company's professional liability business in accident year 2017.

28

Asbestos & Environmental Pollution (A&EP) Reserves

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 $4.0 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 $2.0 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 in 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 $13 million and $15 million for the three months ended June 30, 2024 and 2023 and $25 million and $23 million for the six months ended June 30, 2024 and 2023. As of June 30, 2024 and December 31, 2023, the cumulative amounts ceded under the LPT were $3.6 billion. The unrecognized deferred retroactive reinsurance benefit was $392 million and $417 million as of June 30, 2024 and December 31, 2023 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 $2.2 billion as of June 30, 2024. 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.

Credit Risk for Ceded Reserves

The majority of the Company’s outstanding voluntary reinsurance receivables are due from reinsurers with financial strength ratings of A- or higher. Receivables due from reinsurers with lower financial strength ratings are primarily due from captive reinsurers and are backed by collateral arrangements.

29

Note F. Future Policy Benefits Reserves

Future policy benefits reserves are associated with the Company's run-off long-term care business, included in the Life & Group segment, and relate to policyholders that are currently receiving benefits, including claims that have been incurred but are not yet reported, as well as policyholders that are not yet receiving benefits. Future policy benefits reserves are comprised of the liability for future policyholder benefits (LFPB) which is reflected as Insurance reserves: Future policy benefits on the Condensed Consolidated Balance Sheet.

The determination of Future policy benefits reserves requires management to make estimates and assumptions about expected policyholder experience over the remaining life of the policy. Since policies may be in force for several decades, these assumptions are subject to significant estimation risk. As a result of this variability, the Company’s future policy benefits reserves may be subject to material increases if actual experience develops adversely to the Company’s expectations.

See Note A to the Consolidated Financial Statements within CNAF's Annual Report on Form 10-K for the year ended December 31, 2023 for further information on the long-term care reserving process.

30

The following table summarizes balances and changes in the LFPB.

(In millions)	2024		2023
Present value of future net premiums
Balance, January 1	$	3,710	$	3,993
Effect of changes in discount rate	(125)		(74)
Balance, January 1, at original locked in discount rate	3,585		3,919
Effect of changes in cash flow assumptions (1)	—		—
Effect of actual variances from expected experience (1)	(29)		(85)
Adjusted balance, January 1	3,556		3,834
Interest accrual	92		103
Net premiums: earned during period	(212)		(225)
Balance, end of period at original locked in discount rate	3,436		3,712
Effect of changes in discount rate	11		78
Balance, June 30	$	3,447	$	3,790
Present value of future benefits & expenses
Balance, January 1	$	17,669	$	17,472
Effect of changes in discount rate	(578)		(125)
Balance, January 1, at original locked in discount rate	17,091		17,347
Effect of changes in cash flow assumptions (1)	—		—
Effect of actual variances from expected experience (1)	11		(51)
Adjusted balance, January 1	17,102		17,296
Interest accrual	461		482
Benefit & expense payments	(592)		(629)
Balance, end of period at original locked in discount rate	16,971		17,149
Effect of changes in discount rate	(313)		307
Balance, June 30	$	16,658	$	17,456
Net LFPB	$	13,211	$	13,666

(1) As of June 30, 2024 and 2023 the re-measurement gain (loss) of $(40) million and $(34) million presented parenthetically on the Condensed Consolidated Statement of Operations is comprised of the effect of changes in cash flow assumptions and the effect of actual variances from expected experience.

31

The following table presents earned premiums and interest expense associated with the Company’s long-term care business recognized on the Condensed Consolidated Statement of Operations.

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Earned premiums	$	109	$	113	$	219	$	228
Interest expense	185		189		369		379

The following table presents undiscounted expected future benefit and expense payments, and undiscounted expected future gross premiums.

	As of June 30
(In millions)	2024		2023
Expected future benefit and expense payments	$	32,212	$	33,287
Expected future gross premiums	5,149		5,536

Discounted expected future gross premiums at the upper-medium grade fixed income instrument yield discount rate were $3,546 million and $3,853 million as of June 30, 2024 and 2023.

The weighted average effective duration of the LFPB calculated using the original locked in discount rate was 11 years and 12 years as of June 30, 2024 and 2023.

The weighted average interest rates in the table below are calculated based on the rate used to discount all future cash flows.

	As of June 30				As of December 31
	2024		2023		2023
Original locked in discount rate	5.21	%	5.25	%	5.22	%
Upper-medium grade fixed income instrument discount rate	5.43		5.10		4.94

For the three and six months ended June 30, 2024, immediate charges to net income resulting from adverse development that caused the Net Premium Ratio (NPR) to exceed 100% for certain cohorts were $24 million and $44 million. For the three and six months ended June 30, 2023, immediate charges to net income resulting from adverse development that caused the NPR to exceed 100% were $29 million and $42 million.

For the three and six months ended June 30, 2024, the portion of losses recognized in a prior period due to NPR exceeding 100% for certain cohorts which, due to favorable development, was reversed through net income was $6 million and $8 million. For the three and six months ended June 30, 2023, the portion of losses recognized in a prior period due to NPR exceeding 100% which, due to favorable development, was reversed through net income was less than $1 million and $11 million.

32

Note G. 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 June 30, 2024, the potential amount of future payments the Company could be required to pay under these guarantees was approximately $1.4 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.

33

Note H. Benefit Plans

The components of net periodic pension cost (benefit) are presented in the following table.

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Net periodic pension cost (benefit)
Interest cost on projected benefit obligation	$	22	$	24	$	44	$	49
Expected return on plan assets	(29)		(30)		(58)		(60)
Amortization of net actuarial loss	7		9		14		17
Total net periodic pension cost (benefit)	$	—	$	3	$	—	$	6

The following table indicates the line items in which the non-service cost (benefit) is presented in the Condensed Consolidated Statements of Operations.

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Non-Service Cost (Benefit):
Insurance claims and policyholder's benefits	$	—	$	—	$	—	$	1
Other operating expenses	—		3		—		5
Total net periodic pension cost (benefit)	$	—	$	3	$	—	$	6

34

Note I. Accumulated Other Comprehensive Income (Loss) by Component

The tables below display the changes in Accumulated other comprehensive income (loss) by component.

(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 impact of changes in discount rates used to measure long duration contracts		Cumulative foreign currency translation adjustment		Total
Balance as of April 1, 2024	$	(10)	$	(1,830)	$	(519)	$	(18)	$	(195)	$	(2,572)
Other comprehensive income (loss) before reclassifications	(4)		(250)		—		273		(10)		9
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $1, $1, $1, $—, $— and $3	(4)		(6)		(6)		—		—		(16)
Other comprehensive income (loss) net of tax (expense) benefit of $—, $66, $(1), $(72), $— and $(7)	—		(244)		6		273		(10)		25
Balance as of June 30, 2024	$	(10)	$	(2,074)	$	(513)	$	255	$	(205)	$	(2,547)

(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 impact of changes in discount rates used to measure long duration contracts		Cumulative foreign currency translation adjustment		Total
Balance as of April 1, 2023	$	(15)	$	(2,068)	$	(584)	$	(437)	$	(204)	$	(3,308)
Other comprehensive income (loss) before reclassifications	(8)		(427)		—		256		34		(145)
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $2, $4, $2, $—, $— and $8	(7)		(14)		(7)		—		—		(28)
Other comprehensive income (loss) net of tax (expense) benefit of $—, $112, $(2), $(68), $— and $42	(1)		(413)		7		256		34		(117)
Balance as of June 30, 2023	$	(16)	$	(2,481)	$	(577)	$	(181)	$	(170)	$	(3,425)

35

(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 impact of changes in discount rates used to measure long duration contracts		Cumulative foreign currency translation adjustment		Total
Balance as of January 1, 2024	$	(12)	$	(1,613)	$	(525)	$	(359)	$	(163)	$	(2,672)
Other comprehensive income (loss) before reclassifications	(5)		(489)		—		614		(42)		78
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $2, $7, $2, $—, $— and $11	(7)		(28)		(12)		—		—		(47)
Other comprehensive income (loss) net of tax (expense) benefit of $(1), $124, $(2), $(163), $— and $(42)	2		(461)		12		614		(42)		125
Balance as of June 30, 2024	$	(10)	$	(2,074)	$	(513)	$	255	$	(205)	$	(2,547)

(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 impact of changes in discount rates used to measure long duration contracts		Cumulative foreign currency translation adjustment		Total
Balance as of January 1, 2023, as previously reported	$	(7)	$	(2,738)	$	(591)	$	—	$	(221)	$	(3,557)
Cumulative effect adjustment from changes in accounting guidance, net of tax (expense) benefit of $—, $—, $—, $11, $— and $11	—		—		—		(41)		—		(41)
Balance as of January 1, 2023	(7)		(2,738)		(591)		(41)		(221)		(3,598)
Other comprehensive income (loss) before reclassifications	(16)		225		—		(140)		51		120
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $2, $8, $4, $—, $— and $14	(7)		(32)		(14)		—		—		(53)
Other comprehensive income (loss) net of tax (expense) benefit of $2, $(68), $(4), $37, $— and $(33)	(9)		257		14		(140)		51		173
Balance as of June 30, 2023	$	(16)	$	(2,481)	$	(577)	$	(181)	$	(170)	$	(3,425)

Amounts reclassified from Accumulated other comprehensive income (loss) shown above are reported in Net income (loss) as follows:

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

36

Note J. 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, 2023. 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 the Company's primary operations.

37

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

Three months ended June 30, 2024	Specialty		Commercial		International		Life & Group		Corporate & Other
(In millions)											Eliminations		Total
Operating revenues
Net earned premiums	$	831	$	1,247	$	311	$	109	$	—	$	—	$	2,498
Net investment income	154		175		32		239		18		—		618
Non-insurance warranty revenue	404		—		—		—		—		—		404
Other revenues	(1)		10		—		—		3		(3)		9
Total operating revenues	1,388		1,432		343		348		21		(3)		3,529
Claims, benefits and expenses
Net incurred claims and benefits	492		846		184		325		27		—		1,874
Policyholders’ dividends	3		5		—		—		—		—		8
Amortization of deferred acquisition costs	180		199		56		—		—		—		435
Non-insurance warranty expense	388		—		—		—		—		—		388
Other insurance related expenses	96		158		46		29		—		—		329
Other expenses	13		13		1		1		58		(3)		83
Total claims, benefits and expenses	1,172		1,221		287		355		85		(3)		3,117
Core income (loss) before income tax	216		211		56		(7)		(64)		—		412
Income tax (expense) benefit on core income (loss)	(47)		(44)		(12)		6		11		—		(86)
Core income (loss)	$	169	$	167	$	44	$	(1)	$	(53)	$	—	326
Net investment gains (losses)													(10)
Income tax (expense) benefit on net investment gains (losses)													1
Net investment gains (losses), after tax													(9)
Net income (loss)													$	317

38

Three months ended June 30, 2023	Specialty		Commercial		International		Life & Group		Corporate & Other
(In millions)											Eliminations		Total
Operating revenues
Net earned premiums	$	812	$	1,120	$	302	$	113	$	—	$	—	$	2,347
Net investment income	142		165		25		229		14		—		575
Non-insurance warranty revenue	407		—		—		—		—		—		407
Other revenues	—		6		1		—		2		(2)		7
Total operating revenues	1,361		1,291		328		342		16		(2)		3,336
Claims, benefits and expenses
Net incurred claims and benefits	474		740		185		344		29		—		1,772
Policyholders’ dividends	2		5		—		—		—		—		7
Amortization of deferred acquisition costs	168		175		60		—		—		—		403
Non-insurance warranty expense	384		—		—		—		—		—		384
Other insurance related expenses	94		158		35		31		—		—		318
Other expenses	12		10		(5)		—		44		(2)		59
Total claims, benefits and expenses	1,134		1,088		275		375		73		(2)		2,943
Core income (loss) before income tax	227		203		53		(33)		(57)		—		393
Income tax (expense) benefit on core income (loss)	(50)		(44)		(15)		13		11		—		(85)
Core income (loss)	$	177	$	159	$	38	$	(20)	$	(46)	$	—	308
Net investment gains (losses)													(32)
Income tax (expense) benefit on net investment gains (losses)													7
Net investment gains (losses), after tax													(25)
Net income (loss)													$	283

39

Six months ended June 30, 2024	Specialty		Commercial		International		Life & Group		Corporate & Other
(In millions)											Eliminations		Total
Operating revenues
Net earned premiums	$	1,645	$	2,449	$	626	$	219	$	—	$	—	$	4,939
Net investment income	304		351		63		470		39		—		1,227
Non-insurance warranty revenue	811		—		—		—		—		—		811
Other revenues	—		18		—		—		6		(6)		18
Total operating revenues	2,760		2,818		689		689		45		(6)		6,995
Claims, benefits and expenses
Net incurred claims and benefits	969		1,674		373		637		19		—		3,672
Policyholders’ dividends	5		12		—		—		—		—		17
Amortization of deferred acquisition costs	358		399		122		—		—		—		879
Non-insurance warranty expense	782		—		—		—		—		—		782
Other insurance related expenses	177		296		85		58		—		—		616
Other expenses	28		25		3		1		117		(6)		168
Total claims, benefits and expenses	2,319		2,406		583		696		136		(6)		6,134
Core income (loss) before income tax	441		412		106		(7)		(91)		—		861
Income tax (expense) benefit on core income (loss)	(95)		(87)		(25)		11		16		—		(180)
Core income (loss)	$	346	$	325	$	81	$	4	$	(75)	$	—	681
Net investment gains (losses)													(32)
Income tax (expense) benefit on net investment gains (losses)													6
Net investment gains (losses), after tax													(26)
Net income (loss)													$	655

June 30, 2024
(In millions)
Reinsurance receivables	$	1,513	$	1,306	$	487	$	90	$	2,278	$	—	$	5,674
Insurance receivables	1,020		2,375		441		4		1		—		3,841
Deferred acquisition costs	405		407		136		—		—		—		948
Goodwill	117		—		29		—		—		—		146
Deferred non-insurance warranty acquisition expense	3,598		—		—		—		—		—		3,598
Insurance reserves
Claim and claim adjustment expenses	7,319		10,617		2,783		651		2,604		—		23,974
Unearned premiums	3,197		3,318		787		107		—		—		7,409
Future policy benefits	—		—		—		13,211		—		—		13,211
Deferred non-insurance warranty revenue	4,623		—		—		—		—		—		4,623

40

Six months ended June 30, 2023	Specialty		Commercial		International		Life & Group		Corporate & Other
(In millions)											Eliminations		Total
Operating revenues
Net earned premiums	$	1,609	$	2,166	$	592	$	228	$	—	$	—	$	4,595
Net investment income	271		314		48		443		24		—		1,100
Non-insurance warranty revenue	814		—		—		—		—		—		814
Other revenues	—		13		1		—		5		(5)		14
Total operating revenues	2,694		2,493		641		671		29		(5)		6,523
Claims, benefits and expenses
Net incurred claims and benefits	939		1,428		374		655		22		—		3,418
Policyholders’ dividends	3		11		—		—		—		—		14
Amortization of deferred acquisition costs	333		344		105		—		—		—		782
Non-insurance warranty expense	768		—		—		—		—		—		768
Other insurance related expenses	180		300		82		60		1		—		623
Other expenses	26		16		(4)		1		85		(5)		119
Total claims, benefits and expenses	2,249		2,099		557		716		108		(5)		5,724
Core income (loss) before income tax	445		394		84		(45)		(79)		—		799
Income tax (expense) benefit on core income (loss)	(97)		(84)		(22)		22		15		—		(166)
Core income (loss)	$	348	$	310	$	62	$	(23)	$	(64)	$	—	633
Net investment gains (losses)													(67)
Income tax (expense) benefit on net investment gains (losses)													14
Net investment gains (losses), after tax													(53)
Net income (loss)													$	580

December 31, 2023
(In millions)
Reinsurance receivables	$	1,281	$	1,218	$	468	$	93	$	2,374	$	—	$	5,434
Insurance receivables	1,053		2,024		388		5		—		—		3,470
Deferred acquisition costs	392		371		133		—		—		—		896
Goodwill	117		—		29		—		—		—		146
Deferred non-insurance warranty acquisition expense	3,661		—		—		—		—		—		3,661
Insurance reserves
Claim and claim adjustment expenses	7,131		10,103		2,709		675		2,686		—		23,304
Unearned premiums	3,227		2,858		749		99		—		—		6,933
Future policy benefits	—		—		—		13,959		—		—		13,959
Deferred non-insurance warranty revenue	4,694		—		—		—		—		—		4,694

41

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

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Specialty
Management & Professional Liability	$	733	$	718	$	1,462	$	1,423
Surety	196		183		378		351
Warranty & Alternative Risks	459		460		920		920
Specialty revenues	1,388		1,361		2,760		2,694
Commercial
Middle Market	427		419		859		817
Construction	483		420		938		805
Small Business	157		160		311		310
Other Commercial	365		292		710		561
Commercial revenues	1,432		1,291		2,818		2,493
International
Canada	99		96		197		189
Europe	147		135		290		262
Hardy	97		97		202		190
International revenues	343		328		689		641
Life & Group revenues	348		342		689		671
Corporate & Other revenues	21		16		45		29
Eliminations	(3)		(2)		(6)		(5)
Total operating revenues	3,529		3,336		6,995		6,523
Net investment gains (losses)	(10)		(32)		(32)		(67)
Total revenues	$	3,519	$	3,304	$	6,963	$	6,456

42

Note K. Non-Insurance Revenues from Contracts with Customers

The Company had a deferred non-insurance warranty revenue balance of $4.6 billion and $4.7 billion reported under Liabilities as of June 30, 2024 and December 31, 2023. For the three and six months ended June 30, 2024, the Company recognized $0.4 billion and $0.7 billion of revenues in each period that were included in the deferred revenue balance as of January 1, 2024. For the three and six months ended June 30, 2023, the Company recognized $0.2 billion and $0.6 billion of revenues that were included in the deferred revenue balance as of January 1, 2023. For the three and six months ended June 30, 2024 and 2023, 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 $0.8 billion of the deferred revenue in the remainder of 2024, $1.2 billion in 2025, $0.9 billion in 2026 and $1.7 billion thereafter.

43

Item 2. Management's Discussion and Analysis (MD&A) of Financial Conditions and Results of Operations

OVERVIEW

The following discussion highlights significant factors affecting the Company. References to “we,” “our,” “us” or like terms refer to the business of CNA.

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements included under Part I, Item 1 of this Form 10-Q and Item 1A Risk Factors and Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations, which are included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2023.

We utilize the core income (loss) financial measure to monitor our operations. 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. Management monitors core income (loss) for each business segment to assess segment performance. Presentation of consolidated core income (loss) is deemed to be a non-GAAP financial measure and management believes some investors may find this measure useful to evaluate our primary operations. See further discussion regarding how we manage our business in Note J to the Condensed Consolidated Financial Statements included under Part I, Item 1. For reconciliations of non-GAAP measures to the most comparable GAAP measures and other information, please refer herein and/or to CNA's most recent Annual Report on Form 10-K on file with the Securities and Exchange Commission.

In evaluating the results of our Specialty, Commercial and International segments, we utilize the loss ratio, the underlying loss ratio, the expense ratio, the dividend ratio, the combined ratio and the underlying combined ratio. These ratios are calculated using GAAP financial results. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The underlying loss ratio excludes the impact of catastrophe losses and development-related items from the loss ratio. Development-related items represents net prior year loss reserve and premium development, and includes the effects of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios. The underlying combined ratio is the sum of the underlying loss ratio, the expense ratio and the dividend ratio. In addition, we also utilize renewal premium change, rate, retention and new business in evaluating operating trends. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes. Rate represents the average change in price on policies that renew excluding exposure change. Exposure represents the measure of risk used in the pricing of the insurance product. The change in exposure represents the change in premium dollars on policies that renew as a result of the change in risk of the policy. Retention represents the percentage of premium dollars renewed, excluding rate and exposure changes, in comparison to the expiring premium dollars from policies available to renew. New business represents premiums from policies written with new customers and additional policies written with existing customers. Gross written premiums, excluding third-party captives, excludes business which is ceded to third-party captives, including business related to large warranty programs. We use underwriting gain (loss), calculated using GAAP financial results, to monitor our insurance operations. Underwriting gain (loss) is pretax and is calculated as net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and other insurance related expenses. Underlying underwriting gain (loss) represents underwriting results excluding catastrophe losses and development-related items.

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 within this MD&A. These changes can be favorable or unfavorable. Net prior year loss reserve development does not include the effect of any related acquisition expenses. Further information on our reserves is provided in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

44

CRITICAL ACCOUNTING ESTIMATES

The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires us 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 amount of revenues and expenses reported during the period. Actual results may differ from those estimates.

Our Condensed Consolidated Financial Statements and accompanying notes have been prepared in accordance with GAAP applied on a consistent basis. We continually evaluate the accounting policies and estimates used to prepare the Condensed Consolidated Financial Statements. In general, our estimates are based on historical experience, evaluation of current trends, information from third-party professionals and various other assumptions that are believed to be reasonable under the known facts and circumstances.

The accounting estimates discussed below are considered by us to be critical to an understanding of our Condensed Consolidated Financial Statements as their application places the most significant demands on our judgment:

•Insurance Reserves

•Long-Term Care Reserves

•Reinsurance and Insurance Receivables

•Valuation of Investments and Impairment of Securities

Due to the inherent uncertainties involved with these types of judgments, actual results could differ significantly from our estimates and may have a material adverse impact on our results of operations, financial condition, equity, business, and insurer financial strength and corporate debt ratings. See the Critical Accounting Estimates section of our Management's Discussion and Analysis of Financial Condition and Results of Operations included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 for further information.

45

CATASTROPHES AND RELATED REINSURANCE

Various events can cause catastrophe losses. These events can be natural or man-made, including hurricanes, tornadoes, windstorms, earthquakes, hail, severe winter weather, fires, floods, riots, strikes, civil unrest, cyber-attacks, pandemics and acts of terrorism that produce unusually large aggregate losses.

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. We use various analyses and methods, including using one of the industry standard natural catastrophe models, to estimate hurricane and earthquake losses at various return periods and to inform underwriting and reinsurance decisions designed to manage our exposure to catastrophic events. We generally seek to manage our exposure through the purchase of catastrophe reinsurance and utilize various reinsurance programs to mitigate catastrophe losses, including excess-of-loss occurrence and aggregate treaties covering property and workers’ compensation, a property quota share treaty and the Terrorism Risk Insurance Program Reauthorization Act of 2019 (TRIPRA), as well as individual risk agreements that reinsure losses from specific classes or lines of business. We conduct an ongoing review of our risk and catastrophe reinsurance coverages and from time to time make changes as we deem appropriate. In the second quarter of 2024, we renewed our excess-of-loss property catastrophe reinsurance as described below:

Group North American Property Treaty

We purchased corporate catastrophe excess-of-loss treaty reinsurance covering our U.S. states and territories and Canadian property exposures underwritten in our North American and European companies. The treaty has a term of June 1, 2024 to June 1, 2025 and provides coverage for the accumulation of covered losses from catastrophe occurrences above our per occurrence retention of $250 million up to $1.4 billion for all losses. Losses stemming from terrorism events are covered unless they are due to a nuclear, biological or chemical attack. All layers of the treaty provide for one full reinstatement.

Group Workers' Compensation Treaty

We also purchased corporate Workers' Compensation catastrophe excess-of-loss treaty reinsurance for the period January 1, 2024 to January 1, 2025 providing $275 million of coverage for the accumulation of covered losses related to natural catastrophes above our per occurrence retention of $25 million. The treaty also provides $775 million of coverage for the accumulation of covered losses related to terrorism events above our per occurrence retention of $25 million. Of the $775 million in terrorism coverage, $200 million is provided for nuclear, biological, chemical and radiation events. One full reinstatement is available for the first $275 million above the retention, regardless of the covered peril.

46

CONSOLIDATED OPERATIONS

Results of Operations

The following table includes the consolidated results of our operations including our financial measure, core income (loss). For more detailed components of our business operations and a discussion of the core income (loss) financial measure, see the Segment Results section within this MD&A. For further discussion of Net investment income and Net investment gains or losses, see the Investments section of this MD&A.

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Operating Revenues
Net earned premiums	$	2,498	$	2,347	$	4,939	$	4,595
Net investment income	618		575		1,227		1,100
Non-insurance warranty revenue	404		407		811		814
Other revenues	9		7		18		14
Total operating revenues	3,529		3,336		6,995		6,523
Claims, Benefits and Expenses
Net incurred claims and benefits (re-measurement gain (loss) of $(25), $(33), $(40) and $(34))	1,874		1,772		3,672		3,418
Policyholders' dividends	8		7		17		14
Amortization of deferred acquisition costs	435		403		879		782
Non-insurance warranty expense	388		384		782		768
Other insurance related expenses	329		318		616		623
Other expenses	83		59		168		119
Total claims, benefits and expenses	3,117		2,943		6,134		5,724
Core income before income tax	412		393		861		799
Income tax expense on core income	(86)		(85)		(180)		(166)
Core income	326		308		681		633
Net investment losses	(10)		(32)		(32)		(67)
Income tax benefit on net investment losses	1		7		6		14
Net investment losses, after tax	(9)		(25)		(26)		(53)
Net income	$	317	$	283	$	655	$	580

Three Month Comparison

Core income increased $18 million for the three months ended June 30, 2024 as compared with the same period in 2023. Core income for our Property & Casualty Operations increased $6 million driven by higher net investment income partially offset by higher catastrophe losses. Core results for our Life & Group segment improved $19 million, while core loss for our Corporate & Other segment increased $7 million.

Catastrophe losses were $82 million and $68 million for the three months ended June 30, 2024 and 2023. Unfavorable net prior year loss reserve development of $23 million and $18 million was recorded for the three months ended June 30, 2024 and 2023 related to our Specialty, Commercial, International and Corporate & Other segments. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

47

Six Month Comparison

Core income increased $48 million for the six months ended June 30, 2024 as compared with the same period in 2023. Core income for our Property & Casualty Operations increased $32 million driven by higher net investment income and favorable net prior year loss reserve development partially offset by higher catastrophe losses. Core results for our Life & Group segment improved $27 million, while core loss for our Corporate & Other segment increased $11 million.

Catastrophe losses were $170 million and $120 million for the six months ended June 30, 2024 and 2023. Unfavorable net prior year loss reserve development of $16 million and $31 million was recorded for the six months ended June 30, 2024 and 2023 related to our Specialty, Commercial, International and Corporate & Other segments. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

48

SEGMENT RESULTS

The following discusses the results of operations for our business segments. Our property and casualty commercial insurance operations are managed and reported in three business segments: Specialty, Commercial and International, which we refer to collectively as Property & Casualty Operations. Our operations outside of Property & Casualty Operations are managed and reported in two segments: Life & Group and Corporate & Other.

49

Specialty

The following table details the results of operations for Specialty.

Periods ended June 30	Three Months						Six Months
(In millions, except ratios, rate, renewal premium change and retention)	2024			2023			2024			2023
Gross written premiums	$	1,728		$	1,769		$	3,410		$	3,549
Gross written premiums excluding third-party captives	984			961			1,864			1,847
Net written premiums	857			825			1,649			1,613
Net earned premiums	831			812			1,645			1,609
Underwriting gain	60			74			136			154
Net investment income	154			142			304			271
Core income	169			177			346			348
Other performance metrics:
Underlying loss ratio	59.6		%	58.6		%	59.4		%	58.5		%
Effect of catastrophe impacts	—			—			—			—
Effect of development-related items	(0.4)			(0.3)			(0.5)			(0.2)
Loss ratio	59.2			58.3			58.9			58.3
Expense ratio	33.2			32.4			32.5			31.9
Dividend ratio	0.3			0.2			0.3			0.2
Combined ratio	92.7		%	90.9		%	91.7		%	90.4		%
Underlying combined ratio	93.1		%	91.2		%	92.2		%	90.6		%
Rate	—		%	(1)		%	1		%	—		%
Renewal premium change	1			—			2			2
Retention	90			89			89			89
New business	$	118		$	120		$	212		$	228

Three Month Comparison

Gross written premiums, excluding third-party captives, for Specialty increased $23 million for the three months ended June 30, 2024 as compared with the same period in 2023 driven by favorable renewal premium change and retention. Net written premiums for Specialty increased $32 million for the three months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.

Core income decreased $8 million for the three months ended June 30, 2024 as compared with the same period in 2023 primarily due to lower underlying underwriting results and higher claim costs in our non-insurance auto warranty business, partially offset by higher net investment income.

The combined ratio of 92.7% increased 1.8 points for the three months ended June 30, 2024 as compared with the same period in 2023 primarily due to a 0.9 point increase in the loss ratio and a 0.8 point increase in the expense ratio. The increase in the loss ratio was due to an increase in the underlying loss ratio primarily driven by continued rate pressure over the last several quarters. The increase in the expense ratio was driven by higher acquisition costs. There were no catastrophe losses for three months ended June 30, 2024 and 2023.

Favorable net prior year loss reserve development of $3 million and $4 million was recorded for the three months ended June 30, 2024 and 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

50

Six Month Comparison

Gross written premiums, excluding third-party captives, for Specialty increased $17 million for the six months ended June 30, 2024 as compared with the same period in 2023 driven by favorable renewal premium change and retention. Net written premiums for Specialty increased $36 million for the six months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.

Core income decreased $2 million for the six months ended June 30, 2024 as compared with the same period in 2023 primarily due to lower underlying underwriting results and higher claim costs in our non-insurance auto warranty business partially offset by higher net investment income.

The combined ratio of 91.7% increased 1.3 points for the six months ended June 30, 2024 as compared with the same period in 2023 primarily due to a 0.6 point increase in the expense ratio and a 0.6 point increase in the loss ratio. The increase in the expense ratio was driven by higher acquisition costs. The increase in the loss ratio was due to an increase in the underlying loss ratio primarily driven by continued rate pressure over the last several quarters partially offset by favorable net prior year loss reserve development. There were no catastrophe losses for six months ended June 30, 2024 and 2023.

Favorable net prior year loss reserve development of $8 million and $4 million was recorded for the six months ended June 30, 2024 and 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

The following table summarizes the gross and net carried reserves for Specialty.

(In millions)	June 30, 2024		December 31, 2023
Gross case reserves	$	1,893	$	1,604
Gross IBNR reserves	5,426		5,527
Total gross carried claim and claim adjustment expense reserves	$	7,319	$	7,131
Net case reserves	$	1,607	$	1,392
Net IBNR reserves	4,305		4,524
Total net carried claim and claim adjustment expense reserves	$	5,912	$	5,916

51

Commercial

The following table details the results of operations for Commercial.

Periods ended June 30	Three Months						Six Months
(In millions, except ratios, rate, renewal premium change and retention)	2024			2023			2024			2023
Gross written premiums	$	1,927		$	1,719		$	3,613		$	3,161
Gross written premiums excluding third-party captives	1,802			1,604			3,484			3,044
Net written premiums	1,458			1,329			2,796			2,517
Net earned premiums	1,247			1,120			2,449			2,166
Underwriting gain	39			42			68			83
Net investment income	175			165			351			314
Core income	167			159			325			310
Other performance metrics:
Underlying loss ratio	62.0		%	61.5		%	62.0		%	61.5		%
Effect of catastrophe impacts	6.1			5.2			6.4			4.7
Effect of development-related items	(0.1)			(0.5)			—			(0.3)
Loss ratio	68.0			66.2			68.4			65.9
Expense ratio	28.5			29.6			28.4			29.8
Dividend ratio	0.5			0.5			0.5			0.5
Combined ratio	97.0		%	96.3		%	97.3		%	96.2		%
Underlying combined ratio	91.0		%	91.6		%	90.9		%	91.8		%
Rate	7		%	8		%	7		%	8		%
Renewal premium change	7			11			8			10
Retention	84			85			84			85
New business	$	405		$	343		$	772		$	653

Three Month Comparison

Gross written premiums for Commercial increased $208 million for the three months ended June 30, 2024 as compared with the same period in 2023 driven by rate and higher new business. Net written premiums for Commercial increased $129 million for the three months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.

Core income increased $8 million for the three months ended June 30, 2024 as compared with the same period in 2023, driven by improved underlying underwriting results and higher net investment income partially offset by higher catastrophe losses.

The combined ratio of 97.0% increased 0.7 points for the three months ended June 30, 2024 as compared with the same period in 2023 due to a 1.8 point increase in the loss ratio partially offset by a 1.1 point improvement in the expense ratio. The increase in the loss ratio was primarily driven by higher catastrophe losses, an increase in the underlying loss ratio and lower favorable net prior year loss reserve development. Catastrophe losses were $76 million, or 6.1 points of the loss ratio, for the three months ended June 30, 2024, as compared with $59 million, or 5.2 points of the loss ratio, for the three months ended June 30, 2023. The improvement in the expense ratio was primarily driven by higher net earned premiums partially offset by higher acquisition costs.

Favorable net prior year loss reserve development of $6 million and $13 million was recorded for the three months ended June 30, 2024 and 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

52

Six Month Comparison

Gross written premiums for Commercial increased $452 million for the six months ended June 30, 2024 as compared with the same period in 2023 driven by rate and higher new business. Net written premiums for Commercial increased $279 million for the six months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.

Core income increased $15 million for the six months ended June 30, 2024 as compared with the same period in 2023, driven by improved underlying underwriting results and higher net investment income partially offset by higher catastrophe losses.

The combined ratio of 97.3% increased 1.1 points for the six months ended June 30, 2024 as compared with the same period in 2023 due to a 2.5 point increase in the loss ratio partially offset by a 1.4 point improvement in the expense ratio. The increase in the loss ratio was primarily driven by higher catastrophe losses. Catastrophe losses were $158 million, or 6.4 points of the loss ratio, for the six months ended June 30, 2024, as compared with $103 million, or 4.7 points of the loss ratio, for the six months ended June 30, 2023. The improvement in the expense ratio was primarily driven by higher net earned premiums partially offset by higher employee related costs.

Favorable net prior year loss reserve development of $8 million and $15 million was recorded for the six months ended June 30, 2024 and 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

The following table summarizes the gross and net carried reserves for Commercial.

(In millions)	June 30, 2024		December 31, 2023
Gross case reserves	$	3,350	$	3,291
Gross IBNR reserves	7,267		6,812
Total gross carried claim and claim adjustment expense reserves	$	10,617	$	10,103
Net case reserves	$	2,948	$	2,878
Net IBNR reserves	6,485		6,143
Total net carried claim and claim adjustment expense reserves	$	9,433	$	9,021

53

International

The following table details the results of operations for International.

Periods ended June 30	Three Months						Six Months
(In millions, except ratios, rate, renewal premium change and retention)	2024			2023			2024			2023
Gross written premiums	$	417		$	421		$	791		$	819
Net written premiums	359			359			619			630
Net earned premiums	311			302			626			592
Underwriting gain	25			22			46			31
Net investment income	32			25			63			48
Core income	44			38			81			62
Other performance metrics:
Underlying loss ratio	58.1		%	57.9		%	58.1		%	57.7		%
Effect of catastrophe impacts	2.0			3.1			2.0			2.9
Effect of development-related items	(1.0)			—			(0.5)			2.5
Loss ratio	59.1			61.0			59.6			63.1
Expense ratio	32.8			31.2			33.0			31.5
Combined ratio	91.9		%	92.2		%	92.6		%	94.6		%
Underlying combined ratio	90.9		%	89.1		%	91.1		%	89.2		%
Rate	0		%	4		%	0		%	4		%
Renewal premium change	2			7			3			7
Retention	80			83			81			83
New business	$	72		$	92		$	140		$	177

Three Month Comparison

Gross written premiums for International decreased $4 million for the three months ended June 30, 2024 as compared with the same period in 2023. Excluding the effect of foreign currency exchange rates, gross written premiums decreased $4 million driven by lower new business. Net written premiums for International were consistent with the prior year quarter. Excluding the effect of foreign currency exchange rates, net written premiums increased $1 million for the three months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters.

Core income increased $6 million for the three months ended June 30, 2024 as compared with the same period in 2023 primarily driven by higher net investment income.

The combined ratio of 91.9% improved 0.3 points for the three months ended June 30, 2024 as compared with the same period in 2023 due to a 1.9 point improvement in the loss ratio partially offset by a 1.6 point increase in the expense ratio. The improvement in the loss ratio was driven by lower catastrophe losses and favorable net prior year loss reserve development. Catastrophe losses were $6 million, or 2.0 points of the loss ratio, for the three months ended June 30, 2024, as compared with $9 million, or 3.1 points of the loss ratio, for the three months ended June 30, 2023. The increase in the expense ratio was driven by higher employee related costs and acquisition costs.

Favorable net prior year loss reserve development of $3 million was recorded for the three months ended June 30, 2024 compared to no net prior year loss reserve development for the three months ended June 30, 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part 1, Item 1.

54

Six Month Comparison

Gross written premiums for International decreased $28 million for the six months ended June 30, 2024 as compared with the same period in 2023. Excluding the effect of foreign currency exchange rates, gross written premiums decreased $35 million driven by lower new business. Net written premiums for International decreased $11 million for the six months ended June 30, 2024 as compared with the same period in 2023. Excluding the effect of foreign currency exchange rates, net written premiums decreased $15 million for the six months ended June 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters.

Core income increased $19 million for the six months ended June 30, 2024 as compared with the same period in 2023 driven by unfavorable net prior year loss reserve development recorded in the prior year quarter and higher net investment income partially offset by lower underlying underwriting results.

The combined ratio of 92.6% improved 2.0 points for the six months ended June 30, 2024 as compared with the same period in 2023 due to a 3.5 point improvement in the loss ratio partially offset by a 1.5 point increase in the expense ratio. The improvement in the loss ratio was driven by favorable net prior year loss reserve development and lower catastrophe losses. Catastrophe losses were $12 million, or 2.0 points of the loss ratio, for the six months ended June 30, 2024, as compared with $17 million, or 2.9 points of the loss ratio, for the six months ended June 30, 2023. The increase in the expense ratio was driven by higher employee related costs partially offset by higher net earned premiums.

Favorable net prior year loss reserve development of $3 million was recorded for the six months ended June 30, 2024 compared to unfavorable net prior year loss reserve development of $15 million for the six months ended June 30, 2023. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part 1, Item 1.

The following table summarizes the gross and net carried reserves for International.

(In millions)	June 30, 2024		December 31, 2023
Gross case reserves	$	829	$	864
Gross IBNR reserves	1,954		1,845
Total gross carried claim and claim adjustment expense reserves	$	2,783	$	2,709
Net case reserves	$	692	$	708
Net IBNR reserves	1,648		1,568
Total net carried claim and claim adjustment expense reserves	$	2,340	$	2,276

55

Life & Group

The following table summarizes the results of operations for Life & Group.

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Net earned premiums	$	109	$	113	$	219	$	228
Claims, benefits and expenses	355		375		696		716
Net investment income	239		229		470		443
Core (loss) income	(1)		(20)		4		(23)

Three Month Comparison

Core loss improved $19 million for the three months ended June 30, 2024 as compared with the same period in 2023 primarily due to a reduced impact from long-term care policy buyouts and higher net investment income.

Six Month Comparison

Results for the six months ended June 30, 2024 were generally consistent with the three month summary above.

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Corporate & Other

The following table summarizes the results of operations for the Corporate & Other segment, including intersegment eliminations.

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Net investment income	$	18	$	14	$	39	$	24
Insurance claims and policyholders' benefits	27		29		19		22
Interest expense	35		30		69		58
Core loss	(53)		(46)		(75)		(64)

Three Month Comparison

Core loss increased $7 million for the three months ended June 30, 2024 as compared with the same period in 2023. The current quarter includes a $5 million after-tax charge related to office consolidation. The current and prior year quarter each include a $28 million after-tax charge related to unfavorable prior year loss reserve development largely associated with legacy mass tort abuse claims. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

Six Month Comparison

Core loss increased $11 million for the six months ended June 30, 2024 as compared with the same period in 2023. The current period includes $10 million of after-tax charges related to office consolidation.

The following table summarizes the gross and net carried reserves for Corporate & Other.

(In millions)	June 30, 2023		December 31, 2023
Gross case reserves	$	1,308	$	1,353
Gross IBNR reserves	1,296		1,333
Total gross carried claim and claim adjustment expense reserves	$	2,604	$	2,686
Net case reserves	$	116	$	129
Net IBNR reserves	254		239
Total net carried claim and claim adjustment expense reserves	$	370	$	368

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INVESTMENTS

Net Investment Income

The significant components of Net investment income are presented in the following table. Fixed income securities, as presented, include both fixed maturity securities and non-redeemable preferred stock.

Periods ended June 30	Three Months						Six Months
(In millions)	2024			2023			2024			2023
Fixed income securities:
Taxable fixed income securities	$	484		$	444		$	956		$	874
Tax-exempt fixed income securities	36			46			74			95
Total fixed income securities	520			490			1,030			969
Limited partnership and common stock investments	78			68			146			96
Other, net of investment expense	20			17			51			35
Net investment income	$	618		$	575		$	1,227		$	1,100
Effective income yield for the fixed income securities portfolio	4.8		%	4.6		%	4.8		%	4.6		%
Limited partnership and common stock return	3.1		%	3.1		%	6.1		%	4.5		%

Net investment income increased $43 million and $127 million for the three and six months ended June 30, 2024 as compared with the same periods in 2023 driven by higher income from fixed income securities as a result of favorable reinvestment rates and a larger invested asset base, as well as favorable limited partnership and common stock returns.

Net Investment (Losses) Gains

The components of Net investment (losses) gains are presented in the following table.

Periods ended June 30	Three Months				Six Months
(In millions)	2024		2023		2024		2023
Fixed maturity securities:
Corporate bonds and other	$	(4)	$	(12)	$	(21)	$	(35)
States, municipalities and political subdivisions	(2)		(3)		(2)		7
Asset-backed	(6)		(12)		(21)		(21)
Total fixed maturity securities	(12)		(27)		(44)		(49)
Non-redeemable preferred stock	1		3		12		(11)
Derivatives, short-term and other	1		(2)		—		(1)
Mortgage loans	—		(6)		—		(6)
Net investment losses	(10)		(32)		(32)		(67)
Income tax benefit on net investment losses	1		7		6		14
Net investment losses, after tax	$	(9)	$	(25)	$	(26)	$	(53)

Pretax net investment losses decreased $22 million for the three months ended June 30, 2024 as compared with the same period in 2023 which reflects lower impairment losses.

Pretax net investment losses decreased $35 million for the six months ended June 30, 2024 as compared with the same period in 2023 driven by the favorable change in fair value of non-redeemable preferred stock and lower impairment losses.

Further information on our investment gains and losses is set forth in Note C to the Condensed Consolidated Financial Statements included under Part 1, Item 1.

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Portfolio Quality

The following table presents the estimated fair value and net unrealized gains (losses) of our fixed maturity securities by rating distribution.

	June 30, 2024				December 31, 2023
(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	$	2,841	$	(374)	$	2,795	$	(298)
AAA	2,886		(225)		2,727		(169)
AA	6,323		(559)		6,444		(420)
A	10,126		(426)		9,910		(223)
BBB	16,314		(884)		16,670		(744)
Non-investment grade	1,913		(105)		1,879		(119)
Total	$	40,403	$	(2,573)	$	40,425	$	(1,973)

As of June 30, 2024 and December 31, 2023, 1% of our fixed maturity portfolio was rated internally. AAA rated securities included $0.2 billion of prefunded municipal bonds as of June 30, 2024 and December 31, 2023.

The following table presents available-for-sale fixed maturity securities in a gross unrealized loss position by ratings distribution.

	June 30, 2024
(In millions)	Estimated Fair Value		Gross Unrealized Losses
U.S. Government, Government agencies and Government-sponsored enterprises	$	2,599	$	378
AAA	1,841		288
AA	4,371		730
A	6,587		629
BBB	11,813		1,119
Non-investment grade	880		134
Total	$	28,091	$	3,278

The following table presents the maturity profile for these available-for-sale fixed maturity securities. Securities not due to mature on a single date are allocated based on weighted average life.

	June 30, 2024
(In millions)	Estimated Fair Value		Gross Unrealized Losses
Due in one year or less	$	1,308	$	38
Due after one year through five years	8,384		458
Due after five years through ten years	8,280		1,084
Due after ten years	10,119		1,698
Total	$	28,091	$	3,278

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Duration

A primary objective in the management of the investment portfolio is to optimize return relative to the corresponding liabilities and respective liquidity needs. Our views on the current interest rate environment, tax regulations, asset class valuations, specific security issuer and broader industry segment conditions as well as domestic and global economic conditions, are some of the factors that enter into an investment decision. We also continually monitor exposure to issuers of securities held and broader industry sector exposures and may from time to time adjust such exposures based on our views of a specific issuer or industry sector.

A further consideration in the management of the investment portfolio is the characteristics of the corresponding liabilities and the ability to align the duration of the portfolio to those liabilities and to meet future liquidity needs, minimize interest rate risk and maintain a level of income sufficient to support the underlying insurance liabilities. For portfolios where future liability cash flows are determinable and typically long-term in nature, we segregate investments for asset/liability management purposes. The segregated investments support the long-term care and structured settlement liabilities in the Life & Group segment.

The effective durations of fixed income securities and short-term investments are presented in the following table. Amounts presented are net of payable and receivable amounts for securities purchased and sold, but not yet settled.

	June 30, 2024			December 31, 2023
(In millions)	Estimated Fair Value		Effective Duration (In years)	Estimated Fair Value		Effective Duration (In years)
Life & Group	$	15,055	9.9	$	15,137	10.2
Property & Casualty and Corporate & Other	27,578		4.4	27,981		4.5
Total	$	42,633	6.4	$	43,118	6.5

The investment portfolio is periodically analyzed for changes in duration and related price risk. Certain securities have duration characteristics that are variable based on market interest rates, credit spreads and other factors that may drive variability in the amount and timing of cash flows. Additionally, we periodically review the sensitivity of the portfolio to the level of foreign exchange rates and other factors that contribute to market price changes. A summary of these risks and specific analysis on changes is included in the Quantitative and Qualitative Disclosures About Market Risk included under Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2023.

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LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Our primary operating cash flow sources are premiums and investment income. Our primary operating cash flow uses are payments for claims, policy benefits and operating expenses, including interest expense on corporate debt. Additionally, cash may be paid or received for income taxes.

For the six months ended June 30, 2024, net cash provided by operating activities was $1,120 million as compared with $937 million for the same period in 2023. The increase in cash provided by operating activities was driven by an increase in premiums collected and higher earnings from fixed income securities, partially offset by an increase in net claim payments and higher operating expenses.

Cash flows from investing activities include the purchase and disposition of financial instruments, excluding those held as trading, and may include the purchase and sale of businesses, equipment and other assets not generally held for resale.

For the six months ended June 30, 2024, net cash used by investing activities was $209 million as compared with $858 million for the same period in 2023. Net cash used or provided by investing activities is primarily driven by cash available from operations and by other factors, such as financing activities.

Cash flows from financing activities may include proceeds from the issuance of debt and equity securities, and outflows for stockholder dividends, repayment of debt and purchases of our common stock.

For the six months ended June 30, 2024, net cash used by financing activities was $878 million as compared with $200 million for the same period in 2023. Financing activities for the periods presented include:

•In the second quarter of 2024, we repaid the $550 million outstanding aggregate principal balance of our 3.95% senior notes which came due May 15, 2024.

•In the first quarter of 2024, we issued $500 million of 5.125% notes due February 15, 2034.

•During the six months ended June 30, 2024, we paid dividends of $786 million and repurchased 450,000 shares of common stock at an aggregate cost of $20 million

•In the second quarter of 2023, we issued $400 million of 5.50% senior notes due June 15, 2033.

•During the six months ended June 30, 2023, we paid dividends of $559 million and repurchased 550,000 shares of our common stock at an aggregate cost of $24 million.

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Common Stock Dividends

Cash dividends of $2.88 per share on our common stock, including a special cash dividend of $2.00 per share, were declared and paid during the six months ended June 30, 2024. On July 26, 2024, our Board of Directors declared a quarterly cash dividend of $0.44 per share, payable August 29, 2024 to stockholders of record on August 12, 2024. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend on many factors, including our earnings, financial condition, business needs and regulatory constraints.

Liquidity

We believe that our present cash flows from operating, investing and financing activities are sufficient to fund our current and expected working capital and debt obligation needs and we do not expect this to change in the near term. There are currently no amounts outstanding under our $250 million senior unsecured revolving credit facility and no borrowings outstanding through our membership in the Federal Home Loan Bank of Chicago (FHLBC).

Dividends from Continental Casualty Company (CCC) are subject to the insurance holding company laws of the State of Illinois, the domiciliary state of CCC. Under these laws, ordinary dividends, or dividends that do not require prior approval by the Illinois Department of Insurance, are determined based on the greater of the prior year's statutory net income or 10% of statutory surplus as of the end of the prior year, as well as timing and amount of dividends paid in the preceding twelve months. Additionally, ordinary dividends may only be paid from earned surplus, which is calculated by removing unrealized gains from unassigned surplus. As of June 30, 2024 CCC was in a positive earned surplus position. CCC paid dividends of $490 million and $660 million to CNAF during the six months ended June 30, 2024 and 2023. The actual level of dividends paid in any year is determined after an assessment of available dividend capacity, holding company liquidity and cash needs as well as the impact the dividends will have on the statutory surplus of the applicable insurance company.

We have an effective shelf registration statement on file with the Securities and Exchange Commission under which we may publicly issue an unspecified amount of debt, equity or hybrid securities from time to time.

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ACCOUNTING STANDARDS UPDATE

For a discussion of Accounting Standards, see Note A to the Condensed Consolidated Financial Statements included under Part I, Item 1.

FORWARD-LOOKING STATEMENTS

This report contains a number of forward-looking statements which relate to anticipated future events rather than actual present conditions or historical events. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes,” “expects,” “intends,” “anticipates,” “estimates” and similar expressions. Forward-looking statements in this report include any and all statements regarding expected developments in our insurance business, including losses and loss reserves (note that loss reserves for long-term care, A&EP and other mass tort claims are more uncertain, and therefore more difficult to estimate than loss reserves respecting traditional property and casualty exposures); the impact of routine ongoing insurance reserve reviews we conduct; our expectations concerning our revenues, earnings, expenses and investment activities; volatility in investment returns; and our proposed actions in response to trends in our business. Forward-looking statements, by their nature, are subject to a variety of inherent risks and uncertainties that could cause actual results to differ materially from the results projected in the forward-looking statements. We cannot control many of these risks and uncertainties. These risks and uncertainties include, but are not limited to, the following as well as those risks contained in the Risk Factors section of our 2023 Annual Report on Form 10-K:

Company-Specific Factors

•the risks and uncertainties associated with our insurance reserves, as outlined in the Critical Accounting Estimates sections of our 2023 Annual Report on Form 10-K and this report, and the Reserves - Estimates and Uncertainties section of our 2023 Annual Report on Form 10-K, including the sufficiency of the reserves and the possibility for future increases, which would be reflected in the results of operations in the period that the need for such adjustment is determined;

•the risk that the other parties to the transactions in which, subject to certain limitations, we ceded our legacy A&EP and excess workers' compensation (EWC) liabilities, respectively, will not fully perform their respective obligations to CNA, the uncertainty in estimating loss reserves for A&EP and EWC liabilities and the possible continued exposure of CNA to liabilities for A&EP and EWC claims that are not covered under the terms of the respective transactions; and

•the performance of reinsurance companies under reinsurance contracts with us.

Industry and General Market Factors

•general economic and business conditions, including recessionary conditions that may decrease the size and number of our insurance customers and create losses to our lines of business and inflationary pressures on medical care costs, construction costs and other economic sectors;

•the effects of social inflation, including frequency of nuclear verdicts and increased litigation activity, on the severity of claims;

•the effects on the frequency of claims of reviver statutes that extend, or eliminate, the statute of limitations for the reporting of claims, including statutes passed in certain states with respect to sexual molestation and sexual abuse;

•the impact of competitive products, policies and pricing and the competitive environment in which we operate, including changes in our book of business;

•product and policy availability and demand and market responses, including the level of ability to obtain rate increases;

•the COVID-19 pandemic, including new or emerging variants, other potential pandemics and related measures to mitigate the spread of the foregoing may continue to result in increased claims and related litigation risk across our enterprise;

•conditions in the capital and credit markets, including uncertainty and instability in these markets, as well as the overall economy, and their impact on the returns, types, liquidity and valuation of our investments;

•conditions in the capital and credit markets that may limit our ability to raise significant amounts of capital on favorable terms; and

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•the possibility of changes in our ratings by ratings agencies, including the inability to access certain markets or distribution channels and the required collateralization of future payment obligations as a result of such changes, and changes in rating agency policies and practices.

Regulatory, Legal and Operational Factors

•regulatory and legal initiatives and compliance with governmental regulations and other legal requirements, which are increasing in complexity and number, change frequently, sometimes conflict, and could expose us to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more jurisdictions, including regulations related to cybersecurity protocols (which continue to evolve in breadth, sophistication and maturity in response to an ever-evolving threat landscape), legal inquiries by state authorities, judicial interpretations within the regulatory framework, including interpretation of policy provisions, decisions regarding coverage and theories of liability, legislative actions that increase claimant activity, including those revising applicability of statutes of limitations, trends in litigation and the outcome of any litigation involving us and rulings and changes in tax laws and regulations;

•regulatory limitations, impositions and restrictions upon us, including with respect to our ability to increase premium rates, and the effects of assessments and other surcharges for guaranty funds and second-injury funds, other mandatory pooling arrangements and future assessments levied on insurance companies;

•regulatory limitations and restrictions, including limitations upon our ability to receive dividends from our insurance subsidiaries, imposed by regulatory authorities, including regulatory capital adequacy standards;

•breaches of our or our vendors' data security infrastructure resulting in unauthorized access to systems and information, and/or interruption of operations; and

•regulatory and legal implications relating to the sophisticated cyber incident sustained by the Company in March 2021 that may arise.

Impact of Natural and Man-Made Disasters and Mass Tort Claims

•weather and other natural physical events, including the severity and frequency of storms, hail, snowfall and other winter conditions, natural disasters such as hurricanes, tornados and earthquakes, as well as climate change, including effects on global weather patterns, greenhouse gases, sea, land and air temperatures, sea levels, wildfires, rain, hail and snow;

•regulatory requirements imposed by coastal state regulators in the wake of hurricanes or other natural disasters, including limitations on the ability to exit markets or to non-renew, cancel or change terms and conditions in policies, as well as mandatory assessments to fund any shortfalls arising from the inability of quasi-governmental insurers to pay claims;

•man-made disasters, including the possible occurrence of terrorist attacks, the unpredictability of the nature, targets, severity or frequency of such events, and the effect of the absence or insufficiency of applicable terrorism legislation on coverages;

•the occurrence of epidemics and pandemics; and

•mass tort claims, including those related to exposure to potentially harmful products or substances such as glyphosate, lead paint, per- and polyfluoroalkyl substances (PFAS) and opioids; sexual abuse and molestation claims; and claims arising from changes that repeal or weaken tort reforms.

Our forward-looking statements speak only as of the date of the filing of this Quarterly Report on Form 10-Q and we do not undertake any obligation to update or revise any forward-looking statement to reflect events or circumstances after the date of the statement, even if our expectations or any related events or circumstances change.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There were no material changes in our market risk components for the three months ended June 30, 2024. See the Quantitative and Qualitative Disclosures About Market Risk included in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2023 for further information. Additional information related to portfolio duration is discussed in the Investments section of our Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part I, Item 2.

Item 4. Controls and Procedures

The Company maintains a system of disclosure controls and procedures which are designed to ensure that information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including this report, is recorded, processed, summarized and reported on a timely basis. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed under the Exchange Act is accumulated and communicated to the Company's management on a timely basis to allow decisions regarding required disclosure.

As of June 30, 2024, the Company's management, including the Company's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, the CEO and CFO have concluded that the Company's disclosure controls and procedures are effective as of June 30, 2024.

There has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15 (f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2024 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. Other Information

Item 1. Legal Proceedings

Information on our legal proceedings is set forth in Note G to the Condensed Consolidated Financial Statements included under Part I, Item 1.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Items 2 (a) and (b) are not applicable

(c) The table below details the repurchases of our common stock made during the three months ended June 30, 2024.

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)
May 1, 2024 - May 31, 2024	450,000	$	44.67	N/A	N/A
Total	450,000			N/A	N/A

Item 6. Exhibits

See Exhibit Index.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		CNA Financial Corporation
Dated: July 29, 2024	By	/s/ Scott R. Lindquist
		Scott R. Lindquist Executive Vice President and Chief Financial Officer (Duly authorized officer and principal financial officer)

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EXHIBIT INDEX

Description of Exhibit	Exhibit Number
Certificate of Amendment of Certificate of Incorporation dated, May 1, 2024	3.1.3
Employment Agreement, dated June 5, 2024, between CNA Financial Corporation and Dino E. Robusto	10.1
Employment Agreement, dated June 5, 2024, between CNA Financial Corporation and Douglas M. Worman	10.2
Certification of Chief Executive Officer	31.1
Certification of Chief Financial Officer	31.2
Written Statement of the Chief Executive Officer of CNA Financial Corporation Pursuant to 18 U.S.C. Section 1350 (As adopted by Section 906 of the Sarbanes-Oxley Act of 2002)	32.1
Written Statement of the Chief Financial Officer of CNA Financial Corporation Pursuant to 18 U.S.C. Section 1350 (As adopted by Section 906 of the Sarbanes-Oxley Act of 2002)	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

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