-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GjuQ4qXOB82zAXrrh1TEDDwb+aNdcnXYHbe0aoK00LHQ6lD7h3F10Gm/ltte4Llm mYaoThkJAxCYdC4hKifnOA== 0000950137-03-004129.txt : 20030807 0000950137-03-004129.hdr.sgml : 20030807 20030807074740 ACCESSION NUMBER: 0000950137-03-004129 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030807 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030807 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CNA FINANCIAL CORP CENTRAL INDEX KEY: 0000021175 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 366169860 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05823 FILM NUMBER: 03827630 BUSINESS ADDRESS: STREET 1: CNA PLZ STREET 2: 235 CITY: CHICAGO STATE: IL ZIP: 60685 BUSINESS PHONE: 3128225000 MAIL ADDRESS: STREET 1: CNA PLAZA STREET 2: 235 CITY: CHICAGO STATE: IL ZIP: 60685 8-K 1 c78768e8vk.txt CURRENT REPORT ============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) August 7, 2003 ------------------------------------- CNA FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 1-5823 36-6169860 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) CNA PLAZA, CHICAGO, ILLINOIS 60685 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (312) 822-5000 Not Applicable (Former Name or Former Address, if Changed Since Last Report) ============================================================================== Page 1 of 2 Item 7. Financial Statements and Exhibits (c) Exhibits: Exhibit No. Description - ----------- ----------- 99.1 CNA Financial Corporation press release, issued August 7, 2003, providing information on 2nd quarter 2003 results of operations 99.2 CNA Financial Corporation financial supplement, issued August 7, 2003, providing supplemental financial information for the second quarter 2003 Item 12. Results of Operations and Financial Condition The information in this Current Report is being furnished and shall not be deemed "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended. On August 7, 2003 CNA Financial Corporation issued a press release and financial supplement providing information on its results of operations for the second quarter 2003. The press release is furnished as Exhibit 99.1 and the financial supplement is furnished as Exhibit 99.2 to this Form 8-K. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CNA FINANCIAL CORPORATION Dated: August 7, 2003 /s/ Robert V. Deutsch -------------------------------- By: Robert V. Deutsch Its: Executive Vice President and Chief Financial Officer Page 2 of 2 EX-99.1 3 c78768exv99w1.txt PRES RELEASE ISSUED AUGUST 7, 2003 EXHIBIT 99.1 [CNA LOGO] FOR IMMEDIATE RELEASE - -------------------------------------------------------------------------------- CONTACT: MEDIA: ANALYSTS: Charles M. Boesel, 312/822-2592 Dawn M. Jaffray, 312/822-7757 Katrina W. Parker, 312/822-5167 CNA FINANCIAL ANNOUNCES 2ND QUARTER 2003 RESULTS CHICAGO, AUGUST 7, 2003 --- CNA Financial Corporation (NYSE: CNA) today reported net income for the second quarter of 2003 of $70 million, or $0.25 per share, as compared with net income of $31 million, or $0.14 per share, for the same period in 2002. Net income for the six months ended June 30, 2003 was $153 million, or $0.55 per share, compared with net income of $51 million, or $0.23 per share, for the same period in 2002. Results for the second quarter of 2003 included $308 million after-tax of unfavorable net prior year development in the property and casualty operations, of which approximately 80% relates to accident year 2000 and prior. The significant unfavorable net prior year premium and loss development was recorded primarily for workers compensation, directors and officers coverages, and a recent adverse arbitration decision involving a single large property and business interruption loss that occurred in 1995. The results also included increases in the bad debt reserves for reinsurance and insurance receivables, catastrophe losses for the Texas tornados and Midwest rain storms and decreased net investment income. These adverse items were more than offset by increased net realized investment results and strong current accident year results. The current accident year continued to improve within the primary property and casualty businesses as evidenced by strong rate increases of 19% during the quarter and solid production of new business. Gross written premiums increased 19% in the second quarter of 2003 compared with the same period in 2002. The Company has launched a $200 million expense reduction initiative. The primary components of the initiative are a reduction of the current workforce by approximately five percent, lower commissions and other acquisition costs, principally related to workers compensation, and reduced spending in other areas. Strategies to realize such savings are expected to be implemented over the next year. Realized investment results, net of participating policyholders and minority interests, increased $354 million after-tax in the second quarter of 2003 as compared with the same period in 2002. This increase was due primarily to increased gains on sales of fixed maturity securities and a decrease in investment related impairment charges in the second quarter of 2003. After-tax investment related impairment losses were $20 million for the second quarter of 2003 as compared with $190 million for the same period in 2002. Page 1 of 10 "While disappointed with prior year development recorded in the second quarter, we continue to focus on our strategic underwriting efforts to obtain profitable growth," said Stephen W. Lilienthal, Chairman and Chief Executive Officer of the CNA insurance companies. "Our underwriting discipline over the past few years is evidenced by the continued improvement in the current gross accident year results. "Gross accident year loss ratios for Property and Casualty Operations have improved by roughly 7 points compared to 2002. Gross written premiums are up 7% over the first six months of 2002. Underwriting discipline remains strong, rates continue to be robust and our $200 million expense reduction and streamlining will position us for strong results going forward."
- ---------------------------------------------------------------------------------------------------------------------------------- NET INCOME - ---------------------------------------------------------------------------------------------------------------------------------- RESULTS FOR THE THREE MONTHS ENDED RESULTS FOR THE SIX MONTHS ENDED JUNE 30 JUNE 30 - ---------------------------------------------------------------------------------------------------------------------------------- ($ MILLIONS) 2003 2002 (c) 2003 2002 (c) - ---------------------------------------------------------------------------------------------------------------------------------- (LOSS) INCOME BEFORE NET REALIZED INVESTMENT GAINS (LOSSES) $(179) $ 136 $ (47) $ 246 NET REALIZED INVESTMENT GAINS (LOSSES) 249 (105) 200 (103) ------------------------------------------------------------------------------- INCOME FROM CONTINUING OPERATIONS 70 31 153 143 LOSS FROM DISCONTINUED OPERATIONS (a) - - - (35) CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE (b) - - - (57) ================================================================================================================================== NET INCOME $ 70 $ 31 $ 153 $ 51 ==================================================================================================================================
(a) During the first quarter of 2002, CNA Vida, a Chilean-based life insurance company, was sold and reported as discontinued operations in accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. (b) Represents the effect of the adoption of SFAS 142, which was a change in accounting for goodwill and indefinite-lived intangible assets in 2002. (c) The three and six months ended June 30, 2002 results have been restated to reflect an adjustment to the Company's historical accounting for CNA's life settlement contracts and the related revenue recognition. Refer to CNA's 2002 Form 10-K for further information related to this restatement. Page 2 of 10
=============================================================================================================================== PER SHARE RESULTS AVAILABLE TO COMMON STOCKHOLDERS - ------------------------------------------------------------------------------------------------------------------------------- RESULTS FOR THE THREE MONTHS ENDED RESULTS FOR THE SIX MONTHS ENDED JUNE 30 JUNE 30 - ------------------------------------------------------------------------------------------------------------------------------- 2003 2002 (d) 2003 2002 (d) ---------------------------------------------------------------------------- INCOME FROM CONTINUING OPERATIONS (a) $ 0.25 $ 0.14 $ 0.55 $ 0.65 LOSS FROM DISCONTINUED OPERATIONS (b) - - - (0.16) CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE (c) - - - (0.26) ================================================================================================================================ NET INCOME $ 0.25 $ 0.14 $ 0.55 $ 0.23 ================================================================================================================================
(a) The three and six months ended June 30, 2003 per share results available to common stockholders are reduced by $15 million and $30 million, or $0.07 per share and $0.13 per share, of accumulated but undeclared preferred stock dividends. (b) During the first quarter of 2002, CNA Vida, a Chilean-based life insurance company, was sold and reported as discontinued operations in accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. (c) Represents the effect of the adoption of SFAS 142, which was a change in accounting for goodwill and indefinite-lived intangible assets in 2002. (d) The three and six months ended June 30, 2002 results have been restated to reflect an adjustment to the Company's historical accounting for CNA's life settlement contracts and the related revenue recognition. Refer to CNA's 2002 Form 10-K for further information related to this restatement.
================================================================================================================================== SEGMENT RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2003 - ---------------------------------------------------------------------------------------------------------------------------------- STANDARD SPECIALTY P&C CNA P&C GROUP LIFE CORPORATE ($ MILLIONS) LINES LINES OPS. RE SEGMENTS OPS. OPS. & OTHER TOTAL - ---------------------------------------------------------------------------------------------------------------------------------- (LOSS) INCOME BEFORE NET REALIZED INVESTMENT GAINS $(144) $ (58) $(202) $ 13 $(189) $ 26 $ 17 $ (33) $(179) NET REALIZED INVESTMENT GAINS 110 55 165 22 187 13 18 31 249 ================================================================================================================================== NET (LOSS) INCOME $ (34) $ (3) $ (37) $ 35 $ (2) $ 39 $ 35 $ (2) $ 70 ================================================================================================================================== ================================================================================================================================== SEGMENT RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2002 - ---------------------------------------------------------------------------------------------------------------------------------- STANDARD SPECIALTY P&C CNA P&C GROUP LIFE CORPORATE ($ MILLIONS) LINES LINES OPS. RE SEGMENTS OPS. OPS. (c) & OTHER TOTAL - ---------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) BEFORE NET REALIZED INVESTMENT GAINS (LOSSES) $ 40 $ 40 $ 80 $ 24 $ 104 $ 25 $ 27 $ (20) $ 136 NET REALIZED INVESTMENT LOSSES (21) (17) (38) (4) (42) (18) (35) (10) (105) ================================================================================================================================== NET INCOME (LOSS) $ 19 $ 23 $ 42 $ 20 $ 62 $ 7 $ (8) $ (30) $ 31 ==================================================================================================================================
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================================================================================================================================== SEGMENT RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2003 - ---------------------------------------------------------------------------------------------------------------------------------- STANDARD SPECIALTY P&C CNA P&C GROUP LIFE CORPORATE ($ MILLIONS) LINES LINES OPS. RE SEGMENTS OPS. OPS. & OTHER TOTAL - ---------------------------------------------------------------------------------------------------------------------------------- (LOSS) INCOME BEFORE NET REALIZED INVESTMENT GAINS (LOSSES) $(109) $ (12) $(121) $ 38 $ (83) $ 45 $ 27 $ (36) $ (47) NET REALIZED INVESTMENT GAINS (LOSSES) 118 44 162 31 193 (21) (15) 43 200 ================================================================================================================================== NET INCOME (LOSS) $ 9 $ 32 $ 41 $ 69 $ 110 $ 24 $ 12 $ 7 $ 153 ================================================================================================================================== ================================================================================================================================== SEGMENT RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2002 - ---------------------------------------------------------------------------------------------------------------------------------- STANDARD SPECIALTY P&C CNA P&C GROUP LIFE CORPORATE ($ MILLIONS) LINES LINES OPS. RE SEGMENTS OPS. OPS. (c) & OTHER TOTAL - ---------------------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) BEFORE NET REALIZED INVESTMENT GAINS (LOSSES) $ 50 $ 74 $ 124 $ 64 $ 188 $ 43 $ 58 $ (43) $ 246 NET REALIZED INVESTMENT GAINS (LOSSES) (16) (21) (37) 4 (33) (12) (27) (31) (103) ------------------------------------------------------------------------------------------------- INCOME (LOSS) FROM CONTINUING OPERATIONS 34 53 87 68 155 31 31 (74) 143 LOSS FROM DISCONTINUED OPERATIONS (a) - - - - - - (35) - (35) CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE (b) - (48) (48) - (48) - (8) (1) (57) ================================================================================================================================== NET INCOME (LOSS) $ 34 $ 5 $ 39 $ 68 $ 107 $ 31 $ (12) $ (75) $ 51 ==================================================================================================================================
(a) During the first quarter of 2002, CNA Vida, a Chilean-based life insurance company, was sold and reported as discontinued operations in accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. (b) Represents the effect of the adoption of SFAS 142, which was a change in accounting for goodwill and indefinite-lived intangible assets in 2002. (c) The three and six months ended June 30, 2002 results have been restated to reflect an adjustment to the Company's historical accounting for CNA's life settlement contracts and the related revenue recognition. Refer to CNA's 2002 Form 10-K for further information related to this restatement.
================================================================================================================================== PROPERTY & CASUALTY SEGMENTS GROSS WRITTEN PREMIUMS - ---------------------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30 - ---------------------------------------------------------------------------------------------------------------------------------- ($ MILLIONS) 2003 2002 2003 2002 - ---------------------------------------------------------------------------------------------------------------------------------- STANDARD LINES $ 1,422 $ 1,194 $ 2,859 $ 2,804 SPECIALTY LINES 863 729 1,843 1,595 ---------------------------------------------------------------------------------- TOTAL P&C OPERATIONS 2,285 1,923 4,702 4,399 CNA RE 148 171 378 399 ================================================================================================================================== TOTAL P&C SEGMENTS $ 2,433 $ 2,094 $ 5,080 $ 4,798 ==================================================================================================================================
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- ---------------------------------------------------------------------------------------- PROPERTY & CASUALTY SEGMENTS NET WRITTEN PREMIUMS - ---------------------------------------------------------------------------------------- THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30 - ---------------------------------------------------------------------------------------- ($ MILLIONS) 2003 2002 2003 2002 - ---------------------------------------------------------------------------------------- STANDARD LINES $ 890 $ 1,056 $ 1,994 $ 2,139 SPECIALTY LINES 681 572 1,345 1,112 ----------------------------------------------------------- TOTAL P&C OPERATIONS 1,571 1,628 3,339 3,251 CNA RE 123 160 328 327 ======================================================================================== TOTAL P&C SEGMENTS $ 1,694 $ 1,788 $ 3,667 $ 3,578 ========================================================================================
- ---------------------------------------------------------------------------------------- GROUP AND LIFE OPERATIONS NET EARNED PREMIUMS - ---------------------------------------------------------------------------------------- THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30 - ---------------------------------------------------------------------------------------- ($ MILLIONS) 2003 2002 2003 2002 - ---------------------------------------------------------------------------------------- GROUP OPERATIONS (a) $ 329 $ 820 $ 644 $ 1,725 LIFE OPERATIONS 263 234 519 474 ========================================================================================
(a) For the three and six months ended June 30, 2002, net earned premiums include $535 million and $1,151 million of net earned premiums related to the National Postal Mail Handlers Union (Mail Handlers Plan) contract which was transferred on July 1, 2002.
- ---------------------------------------------------------------------------------------- PROPERTY & CASUALTY CALENDAR YEAR LOSS RATIOS - ---------------------------------------------------------------------------------------- THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30 - ---------------------------------------------------------------------------------------- 2003 2002 2003 2002 - ---------------------------------------------------------------------------------------- STANDARD LINES 93.9% 78.1% 82.8% 77.6% SPECIALTY LINES 92.7 70.3 81.4 70.8 TOTAL P&C OPERATIONS 93.4 75.5 82.3 75.3 CNA RE 71.4 81.6 67.4 63.6 TOTAL P&C SEGMENTS 91.6 76.0 81.0 74.3 ======================================================================================== TOTAL P&C COMPANIES 95.1% 81.5% 84.5% 79.9% ========================================================================================
- ---------------------------------------------------------------------------------------- PROPERTY & CASUALTY CALENDAR YEAR COMBINED RATIOS - ---------------------------------------------------------------------------------------- THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30 - ---------------------------------------------------------------------------------------- 2003 2002 2003 2002 - ---------------------------------------------------------------------------------------- STANDARD LINES 139.6% 109.3% 121.8% 110.0% SPECIALTY LINES 124.4 102.8 113.0 103.3 TOTAL P&C OPERATIONS 132.8 107.1 118.2 107.7 CNA RE 103.8 108.9 97.9 96.7 TOTAL P&C SEGMENTS 130.4 107.2 116.5 106.8 ======================================================================================== TOTAL P&C COMPANIES 135.2% 108.4% 120.3% 107.9% ========================================================================================
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- ---------------------------------------------------------------------------------------------------- PROPERTY & CASUALTY GROSS ACCIDENT YEAR LOSS RATIOS - ---------------------------------------------------------------------------------------------------- ACCIDENT YEAR 2003 ACCIDENT YEAR 2002 ACCIDENT YEAR 2002 EVALUATED AT JUNE 30, EVALUATED AT DECEMBER 31, EVALUATED AT JUNE 30, 2003 2002 2003 - ---------------------------------------------------------------------------------------------------- STANDARD LINES 64.2% 74.6% 71.5% SPECIALTY LINES 64.9 68.1 69.4 TOTAL P&C OPERATIONS 64.5 72.1 70.8 CNA RE 59.9 64.2 63.2 ==================================================================================================== TOTAL P&C SEGMENTS 64.2% 71.5% 70.2% ====================================================================================================
- ---------------------------------------------------------------------------------------------------- PROPERTY & CASUALTY NET ACCIDENT YEAR LOSS RATIOS - ---------------------------------------------------------------------------------------------------- ACCIDENT YEAR 2003 ACCIDENT YEAR 2002 ACCIDENT YEAR 2002 EVALUATED AT JUNE 30, EVALUATED AT DECEMBER 31, EVALUATED AT JUNE 30, 2003 2002 2003 - ---------------------------------------------------------------------------------------------------- STANDARD LINES 68.2% 75.3% 74.5% SPECIALTY LINES 66.3 71.7 72.5 TOTAL P&C OPERATIONS 67.5 74.1 73.8 CNA RE 63.5 69.3 69.0 ==================================================================================================== TOTAL P&C SEGMENTS 67.2% 73.6% 73.4% ====================================================================================================
BUSINESS OPERATING HIGHLIGHTS STANDARD LINES includes standard property and casualty coverages sold to small and middle market commercial businesses primarily through an independent agency distribution system, and excess and surplus lines, as well as insurance and risk management products sold to large corporations. o Net written premiums decreased $166 million for the second quarter of 2003 as compared with the same period in 2002, due primarily to additional ceded premiums of approximately $200 million for the corporate aggregate and other reinsurance treaties, partially offset by strong rate increases. o Standard Lines achieved average rate increases during the second quarter of 2003 of 17%. o Results for the second quarter of 2003 included $185 million after-tax of unfavorable net prior year premium and loss development, principally recorded for workers compensation, increased catastrophe losses, decreased net investment income and an increase in the bad debt reserve for insurance receivables. These items were partially offset by improvements in the current net accident year loss ratio. Page 6 of 10 SPECIALTY LINES provides a broad array of professional, financial and specialty property and casualty products and services in the U.S. and abroad. o Net written premiums increased $109 million for the second quarter of 2003 as compared with the same period in 2002, primarily in the professional liability lines. o Specialty Lines achieved average rate increases during the second quarter of 2003 of 24%, primarily across most professional liability lines of business. o Results for the second quarter of 2003 included $123 million after-tax of unfavorable net prior year reserve development recorded for the previously disclosed adverse arbitration decision involving a single large property and business interruption loss, directors and officers coverages and the commutation of certain CNA Health Pro reinsurance treaties. This unfavorable development was partially offset by continued improvement in the current net accident year loss ratio. CNA RE operates globally as a reinsurer in the broker market for treaty products and in the direct market for facultative products. o Net written premiums decreased $37 million for the second quarter of 2003 for CNA Re as compared with the same period in 2002, due primarily to additional ceded premiums related to the corporate aggregate reinsurance treaties and reduced level of premiums from prior underwriting years. o CNA Re achieved average rate increases during the second quarter of 2003 of approximately 7%. o Results for the second quarter of 2003 included $8 million after-tax of unfavorable net prior year reserve development, principally for directors and officers coverages; increased catastrophe losses and decreased net investment income. These items were partially offset by an improvement in the current net accident year loss ratio. GROUP OPERATIONS provides a broad array of group life and group health insurance and investment products and services to employers, affinity groups and other entities that purchase insurance as a group. o Net earned premiums decreased $491 million for the second quarter of 2003 as compared with the same period in 2002, due principally to the transfer of the Mail Handlers Plan, partially offset by premium growth in the disability, life and long term care products within Group Benefits due to increased new sales and rate increases. o Group Operations achieved average rate increases during the second quarter of 2003 of approximately 7%. o Results for the second quarter of 2003 included the positive impact of premium growth within Group Benefits and the absence of unfavorable operating results from variable annuity products, which were sold in 2002. These items were partially offset by the absence of favorable operating results for the Mail Handlers Plan. Page 7 of 10 LIFE OPERATIONS provides financial protection to individuals through a full product line of term life insurance, universal life insurance, individual long term care insurance, annuities and other products. Life Operations has several distribution relationships and partnerships including managing general agencies, other independent agencies working with CNA life sales offices, a network of brokers and dealers, and other independent insurance consultants. o Net earned premiums increased $29 million for the second quarter of 2003 as compared with the same period in 2002, due primarily to higher sales of structured settlement annuities and growth in individual long term care and life insurance products. Based on the Company's decision to significantly reduce new sales, a lower rate of premium growth is expected in its individual long term care product for the remainder of 2003. o Results for the second quarter of 2003 included unfavorable individual long term care morbidity, severance costs and decreased net investment income as compared with the same period in 2002. These items were partially offset by improved results related to life settlement contracts. CORPORATE AND OTHER segment contains certain corporate expenses such as interest on corporate debt and losses and expenses related to the centralized adjusting and settlement of asbestos, environmental pollution and mass tort claims (APMT). In addition, this segment includes the results of certain run-off insurance and non-insurance operations. o Results for the second quarter of 2003 included an increase in the bad debt reserve for reinsurance receivables related to deterioration in the financial strength ratings of several reinsurers, partially offset by decreased eBusiness expenses. Beginning in 2003, expenses related to eBusiness were included within property and casualty operations. NET INVESTMENT INCOME Pretax net investment income decreased $75 million to $427 million for the second quarter of 2003 as compared with the same period in 2002. The change was primarily due to lower investment yields on fixed maturity securities and increased interest costs on funds withheld and other deposits related to certain reinsurance contracts. The interest costs on these reinsurance contracts increased due to additional cessions to the corporate aggregate reinsurance treaties as a result of the unfavorable net prior year reserve development recorded in the second quarter of 2003. These declines were partially offset by improved limited partnership investment results. Page 8 of 10 THIRD QUARTER RESERVE REVIEWS Adverse trends in both APMT and non-APMT property and casualty segments continue to impact the property and casualty insurance industry. The Company reviews its property and casualty claim and claim adjustment expense reserves (reserves) on a regular basis, and as part of these reviews, has noted an increase in reported construction defect claims. The Company expects to complete a comprehensive reserve review of construction defect exposures in the third quarter. In addition, other volatile exposures will also be reviewed on a comprehensive basis in the third quarter. While the Company continues to monitor and evaluate its APMT exposures on a regular basis, the completion of a comprehensive ground up analysis of its APMT exposures, previously scheduled for the second quarter, will be completed in the third quarter of 2003. Significant resources were dedicated to the proposed national asbestos reform legislation and to support the regulatory reviews described below. As such, the Company plans to complete its more formal and comprehensive analysis in the third quarter of 2003. In addition, in connection with routine state regulatory exams of Continental Casualty Company (CCC) and Continental Insurance Company (CIC), an independent actuarial firm is in the process of reviewing the Company's reserves as of December 31, 2001. The Company intends to have the independent actuarial firm update its review to include an assessment of its December 31, 2002 reserves using more recent data. These independent reviews are expected to be completed by December 31, 2003. The Company will consider the results of these independent actuarial reviews in the reserving process. While management believes that the Company's reserves as of June 30, 2003 are appropriate based on information known at this time, the Company, as a result of the third quarter reviews by the Company and the independent actuarial firm and other factors deemed relevant by the Company, may in the future determine that its recorded reserves are not sufficient and may increase its reserves by amounts that may be material, which could adversely affect the Company's business, insurer financial strength and debt ratings and equity. 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. ABOUT THE COMPANY CNA is the country's fourth largest commercial insurance writer, the 11th largest property and casualty company and the 51st largest life insurance organization. CNA's insurance products include standard commercial lines, specialty lines, surety, reinsurance, marine and other property and casualty coverages; life and accident insurance; group long term care, disability and life insurance; and pension products. CNA services include risk management, information services, underwriting, risk control and claims administration. For more information, please visit CNA at www.cna.com. CNA is a registered service mark, trade name and domain name of CNA Financial Corporation. Page 9 of 10 CONFERENCE CALL AND WEBCAST INFORMATION: A CONFERENCE CALL FOR INVESTORS AND THE PROFESSIONAL INVESTMENT COMMUNITY WILL BE HELD FROM 8:00 A.M. TO 9:00 A.M. ET TODAY. ON THE CONFERENCE CALL WILL BE STEPHEN W. LILIENTHAL, CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF THE CNA INSURANCE COMPANIES, AND OTHER MEMBERS OF SENIOR MANAGEMENT. PARTICIPANTS CAN ACCESS THE CALL BY DIALING 800-289-0730 OR FOR INTERNATIONAL CALLERS 913-981-5509. THE CALL WILL ALSO BE BROADCAST LIVE ON THE INTERNET AT HTTP://INVESTORS.CNA.COM OR YOU MAY GO TO THE INVESTOR RELATIONS PAGES OF THE CNA WEBSITE (WWW.CNA.COM) FOR FURTHER DETAILS. THE CALL IS AVAILABLE TO THE MEDIA, BUT QUESTIONS WILL BE RESTRICTED TO INVESTORS AND THE PROFESSIONAL INVESTMENT COMMUNITY. A TAPED REPLAY OF THE CALL WILL BE AVAILABLE UNTIL AUGUST 14, 2003 BY DIALING 888-203-1112 AND USING PASSCODE 160543 OR FOR INTERNATIONAL CALLERS 719-457-0820 AND USING PASSCODE 160543. IT WILL ALSO BE ARCHIVED LATER IN THE DAY FOR REPLAY ON OUR WEBSITE. FINANCIAL SUPPLEMENT INFORMATION RELATED TO THE SECOND QUARTER RESULTS IS AVAILABLE ON THE INVESTOR RELATIONS PAGES OF THE CNA WEBSITE OR BY CONTACTING DAWN JAFFRAY AT 312-822-7757. FORWARD-LOOKING STATEMENT The statements contained in this press release, which are not historical facts, are forward-looking statements. When included in this press release, the words "believes," "expects," "intends," "anticipates," "estimates," and analogous expressions are intended to identify forward-looking statements. Forward-looking statements include expected developments in the insurance business of CNA (the "Company"), including losses for asbestos, environmental pollution and mass tort claims; the Company's expectations concerning its revenues, earnings, expenses and investment activities; expected cost savings and other results from the Company's expense reduction and restructuring activities; and the Company's proposed actions in response to trends in its business. Such statements, and the financial condition and results of operations of the Company and the price of the Company's common stock, are subject to a variety of inherent risks and uncertainties. These risks and uncertainties could cause actual results to differ materially from those projected. Such risks and uncertainties include, among others: general economic and business conditions, including inflationary pressures on medical care costs, construction costs and other economic sectors that increase the severity of claims; changes in financial markets such as fluctuations in interest rates, long-term periods of low interest rates, credit conditions and currency, commodity and stock prices; the effects of corporate bankruptcies, such as Enron and WorldCom, on surety bond claims, as well as on capital markets and on the markets for directors & officers and errors & omissions coverages; changes in foreign or domestic political, social and economic conditions; regulatory initiatives and compliance with governmental regulations; judicial decisions and rulings, including interpretation of policy provisions, decisions regarding coverage and theories of liability, trends in litigation and the outcome of any litigation involving the Company; changes in tax laws and regulations; regulatory limitations and restrictions upon the Company and its insurance subsidiaries; the impact of competitive products, policies and pricing and the competitive environment in which the Company operates, including changes in the Company's books of business; product and policy availability and demand and market responses, including the level of ability to obtain rate increases and decline or non-renew underpriced accounts, to achieve premium targets and profitability and to realize growth and retention estimates; development of claims and the impact on loss reserves, including changes in claim settlement practices; the effectiveness of current initiatives by claims management to reduce loss and expense ratio through more efficacious claims handling techniques; the performance of reinsurance companies under reinsurance contracts with the Company; results of financing efforts, including the availability of bank credit facilities; changes in the Company's composition of operating segments; weather and other natural physical events, including the severity and frequency of storms, hail, snowfall and other winter conditions, as well as of natural disasters such as hurricanes and earthquakes; man-made disasters, including the possible occurrence of terrorist attacks and the effect of the absence of applicable terrorism legislation on coverages; the occurrence of epidemics; exposure to liabilities due to claims made by insureds and others relating to asbestos remediation and health-based asbestos impairments, and exposure to liabilities for environmental pollution and other mass tort claims; whether a national privately financed trust to replace litigation of asbestos claims with payments to claimants from the trust will be established or approved through federal legislation, or, if established and approved, whether it will contain funding requirements in excess of the Company's established loss reserves or carried loss reserves; the sufficiency of the Company's loss reserves and the possibility of future increases in reserves; the level of success in integrating acquired businesses and operations, and in consolidating existing ones; the possibility of changes in the Company's 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; the actual closing of contemplated transactions and agreements; and various other matters and risks (many of which are beyond the Company's control) detailed in the Company's Securities and Exchange Commission filings. These forward-looking statements speak only as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release any updates or revisions to any forward-looking statement contained in this press release to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based. # # # Page 10 of 10 EX-99.2 4 c78768exv99w2.txt FINANCIAL SUPPLEMENT EXHIBIT 99.2 CNA FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION JUNE 30, 2003 CNA FINANCIAL CORPORATION TABLE OF CONTENTS JUNE 30, 2003
PAGE ---- Supplemental Financial Information i-ii Statements of Operations 1 Components of Net Income and Per Share Data 2 Selected Balance Sheet Data and Condensed Consolidated Statement of Cash Flows Data 3 Property & Casualty Insurance Claim & Claim Adjustment Expense Reserve Data 4 Property & Casualty Insurance Claim & Claim Adjustment Expense Reserve Rollforward 5 Investments by Asset Class 6 Operating Results and Other Financial Data by Segment: Property & Casualty Segments 7-10 Catastrophe Losses 11 Group & Life Segments and Corporate & Other 12-13 Analysis of Pretax Net Investment Income 14-15 Statutory Data - Preliminary 16 Property & Casualty Segments Loss and LAE Ratio Analysis 17 Impact of Prior Year Development 18-25 Summary of Development by Segment and Line of Business 26 Gross Loss and ALAE Ratios by Segment and Line of Business 27 Net Loss and ALAE Ratios by Segment and Line of Business 28
CNA FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION DEFINITIONS AND PRESENTATION o P&C OPERATIONS includes Standard Lines and Specialty Lines. o P&C SEGMENTS includes Standard Lines, Specialty Lines and CNA Re. o CORPORATE & OTHER is comprised primarily of losses and expenses related to the centralized adjusting and settlement of asbestos, environmental pollution and mass tort claims, certain run-off insurance and non-insurance operations. The Corporate & Other segment results also include interest expense on corporate borrowings. o P&C COMPANIES includes Standard Lines, Specialty Lines, CNA Re and P&C business written in Group Operations, Life Operations and Corporate & Other. o The results from discontinued operations relate to CNA Vida, CNA's Chilean-based life insurer, which was sold in the first quarter of 2002. CNA Vida's results of operations, including the loss on sale, are reported as discontinued operations in all periods presented as required by SFAS 144. o Underwriting results are net earned premiums less net incurred claims, the costs incurred to settle claims, acquisition expenses and underwriting expenses. o The Loss & LAE ratio represents claim and claim adjustment expenses as a percentage of net earned premiums. o The expense ratio is the percentage of underwriting expenses, acquisition expenses and dividends, including the amortization of deferred acquisition costs, to net earned premiums. o The dividend ratio is the ratio of dividends incurred to net earned premiums. o Limited partnerships (LP's) are a relatively small portion of CNA's overall investment portfolio. The majority of the LP's invest in a substantial number of securities that are readily marketable. CNA is a passive investor in such partnerships and does not have influence over the partnerships' management, who are committed to operate them according to established guidelines and strategies. These strategies may include the use of leverage and hedging techniques that potentially introduce more volatility and risk to the partnerships. o All amounts are in millions, except for per share and ratio information. o Certain immaterial differences are due to rounding. ACCOUNTING PRONOUNCEMENTS o During the third quarter of 2002, the Company completed its initial goodwill impairment testing under SFAS 142, Goodwill and Other Intangible Assets, and recorded a $57 million after-tax impairment charge. The impairment was recorded as a cumulative effect of a change in accounting principle as of January 1, 2002, primarily in Specialty Lines, Life Operations and Corporate & Other. i CNA FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION NON-GAAP FINANCIAL MEASURES This financial supplement presents certain GAAP and non-GAAP financial measures to provide information used by management to monitor the Company's operating performance. Management utilizes various financial measures to monitor the Company's insurance operations and investment portfolio. Underwriting results, which are derived from certain income statement amounts, are considered non-GAAP financial measures and are used by management to monitor performance of the Company's insurance operations. The Company's investment portfolio is monitored through analysis of various quantitative and qualitative factors and certain decisions related to the sale or impairment of investments produce realized gains and losses. Net realized investment gains and losses, which are comprised of after-tax realized investment gains and losses net of participating policyholders' and minority interest are a non-GAAP financial measure. Underwriting results are computed as net earned premiums less net incurred claims and the cost incurred to settle these claims, acquisition expenses and underwriting expenses. Management uses underwriting results and operating ratios to monitor insurance operations' results without the impact of certain factors, including investment income, other revenues, other expenses, minority interest, income tax benefit (expense) and net realized investment gains or losses. Management excludes these factors in order to analyze the direct relationship between the net earned premiums and the related claims and the cost incurred to settle these claims, acquisition expenses and underwriting expenses. Management excludes after-tax net realized investment gains or losses when analyzing the insurance operations because net realized investment gains or losses related to the Company's available-for-sale investment portfolio are largely discretionary, except for losses related to other-than-temporary impairments, and are generally driven by economic factors that are not necessarily consistent with key drivers of underwriting performance. Operating ratios are calculated using insurance results and are used by the insurance industry and regulators such as state departments of insurance and the National Association of Insurance Commissioners for financial regulation and as a basis of comparison among companies. The ratios presented in this financial supplement are calculated using GAAP financial results and include the loss and loss adjustment expense ratio (loss ratio) as well as the expense, dividend and combined ratios. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The expense ratio is the percentage of underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios. The Company's investment portfolio is monitored by management through analyses of various factors including unrealized gains and losses on securities, portfolio duration and exposure to interest rate, market and credit risk. Based on such analyses, the Company may impair an investment security in accordance with its policy, or sell a security. Such activities will produce realized gains and losses. While management uses various non-GAAP financial measures to monitor various aspects of the Company's performance, relying on any measure other than net income, which is the most directly comparable GAAP measure to underwriting results and realized gains and losses, is not a complete representation of financial performance. Management believes that its process of evaluating performance through the use of these non-GAAP financial measures provides a basis for understanding the operations and the impact to net income as a whole. Management also believes that investors find these non-GAAP financial measures described above useful to help interpret the underlying trends and performance, as well as to provide visibility into the significant components of net income. ii CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------------ PERIOD ENDED JUNE 30 THREE MONTHS SIX MONTHS FAV / FAV / (UNFAV) (UNFAV) (In millions) 2003 2002 (1) % CHANGE 2003 2002 (1) % CHANGE - ------------------------------------------------------------------------------------------------------------------------------------ STATEMENTS OF OPERATIONS Revenues: Net earned premiums $ 2,197 $ 2,826 (22)% $ 4,578 $ 5,663 (19)% Net investment income 427 502 (15) 859 928 (7) Realized investment gains (losses), net of participating policyholders' and minority interests 378 (162) N/A 302 (161) N/A Other revenues 97 146 (34) 205 328 (38) ------- ------- ------- ------- Total revenues 3,099 3,312 (6) 5,944 6,758 (12) ------- ------- ------- ------- Claims, benefits and expenses: Insurance claims and policyholders' benefits 2,067 2,382 13 3,937 4,692 16 Other operating expenses 922 854 (8) 1,759 1,785 1 Interest 33 38 13 67 75 11 ------- ------- ------- ------- Total claims, benefits and expenses 3,022 3,274 8 5,763 6,552 12 ------- ------- ------- ------- Income from continuing operations before income tax and minority interest 77 38 103 181 206 (12) Income tax expense (5) (2) (150) (23) (53) 57 Minority interest (2) (5) 60 (5) (10) 50 ------- ------- ------- ------- Income from continuing operations before cumulative effect of a change in accounting principle 70 31 126 153 143 7 Loss from discontinued operations, net of tax - - N/A - (35) N/A Cumulative effect of a change in accounting principle, net of tax - - N/A - (57) N/A ------- ------- ------- ------- Net income $ 70 $ 31 126 % $ 153 $ 51 200 % ======= ======= ======= ======= - ------------------------------------------------------------------------------------------------------------------------------------
(1) The three months and six months ended June 30, 2002 results have been restated to reflect an adjustment to the Company's historical accounting for CNA's life settlement contracts and the related revenue recognition. Refer to CNA's 2002 Form 10-K for further information related to this restatement. 1 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT COMPONENTS OF NET INCOME AND PER SHARE DATA
- ------------------------------------------------------------------------------------------------------------------------------------ PERIOD ENDED JUNE 30 THREE MONTHS SIX MONTHS FAV / FAV / (UNFAV) (UNFAV) (In millions, except per share data) 2003 2002 (1) % CHANGE 2003 2002 (1) % CHANGE - ------------------------------------------------------------------------------------------------------------------------------------ COMPONENTS OF NET INCOME (Loss) income before net realized investment gains (losses) $(179) $ 136 N/A % $ (47) $ 246 (119)% Net realized investment gains (losses), net of participating policyholders' and minority interests 249 (105) N/A 200 (103) N/A ----- ----- ----- ----- Income from continuing operations 70 31 126 153 143 7 Loss from discontinued operations, net of tax - - N/A - (35) N/A Cumulative effect of a change in accounting principle, net of tax - - N/A - (57) N/A ----- ----- ----- ----- Net income $ 70 $ 31 126 % $ 153 $ 51 200 % ===== ===== ===== ===== BASIC AND DILUTED EARNINGS PER SHARE Income from continuing operations (2) $0.25 $0.14 79 $0.55 $0.65 (15) Loss from discontinued operations, net of tax - - N/A - (0.16) N/A Cumulative effect of a change in accounting principle, net of tax - - N/A - (0.26) N/A ----- ----- ----- ----- Basic and diluted earnings per share available to common stockholders $0.25 $0.14 79 % $0.55 $0.23 139 % ===== ===== ===== ===== Weighted average outstanding common stock and common stock equivalents 223.6 223.6 223.6 223.6 - ------------------------------------------------------------------------------------------------------------------------------------
(1) The three months and six months ended June 30, 2002 results have been restated to reflect an adjustment to the Company's historical accounting for CNA's life settlement contracts and the related revenue recognition. Refer to CNA's 2002 Form 10-K for further information related to this restatement. (2) The per share results available to common stockholders for the three months and six months ended June 30, 2003 were reduced by $15 million and $30 million, or $0.07 per share and $0.13 per share, of accumulated but undeclared preferred stock dividends. 2 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT SELECTED BALANCE SHEET DATA AND CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS DATA
- ----------------------------------------------------------------------------------------- JUNE 30, DECEMBER 31, (In millions, except per share data) 2003 2002 - ----------------------------------------------------------------------------------------- Total assets $65,324 $61,731 Insurance reserves 41,451 40,179 Debt 2,158 2,292 Total liabilities 54,741 52,074 Minority interest 265 256 Accumulated other comprehensive income 1,370 604 Total stockholders' equity 10,318 9,401 Book value per common share $ 42.65 $ 38.68 Book value per common share excluding unrealized gain or loss on fixed maturity securities $ 37.43 $ 36.53 Outstanding shares of common stock (in millions of shares) 223.6 223.6 - -----------------------------------------------------------------------------------------
- --------------------------------------------------------------------- THREE MONTHS ENDED JUNE 30 (In millions) 2003 2002 - --------------------------------------------------------------------- Net cash flows provided by operating activities $ 70 $ 513 Net cash flows used by investing activities (84) (445) Net cash flows used by financing activities (12) (17) ----- ----- Net cash flows $ (26) $ 51 ===== ===== - ---------------------------------------------------------------------
- -------------------------------------------------------------------------- SIX MONTHS ENDED JUNE 30 (In millions) 2003 2002 - -------------------------------------------------------------------------- Net cash flows provided by operating activities $ 115 $ 435 Net cash flows provided (used) by investing activities 48 (410) Net cash flows used by financing activities (149) (22) ----- ----- Net cash flows $ 14 $ 3 ===== ===== - --------------------------------------------------------------------------
3 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY INSURANCE CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVE DATA
- ------------------------------------------------------------------------------------------------------------------------------------ CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVES (1) TOTAL P&C (In millions) STANDARD LINES SPECIALTY LINES P&C OPERATIONS CNA RE SEGMENTS - ------------------------------------------------------------------------------------------------------------------------------------ As of June 30, 2003 Gross $11,793 $ 6,085 $17,878 $2,064 $19,942 Ceded 4,666 2,618 7,284 847 8,131 Net 7,127 3,467 10,594 1,217 11,811 As of December 31, 2002 Gross $11,576 $ 5,874 $17,450 $2,264 $19,714 Ceded 4,314 2,501 6,815 902 7,717 Net 7,262 3,373 10,635 1,362 11,997 - ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------- CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVES (1) (In millions) GROUP OPERATIONS LIFE OPERATIONS CORPORATE & OTHER TOTAL OPERATIONS - --------------------------------------------------------------------------------------------------------------------- As of June 30, 2003 Gross $ 1,468 $ 1,457 $ 5,077 $27,944 Ceded 89 84 3,181 11,485 Net 1,379 1,373 1,896 16,459 As of December 31, 2002 Gross $ 1,400 $ 1,409 $ 4,847 $27,370 Ceded 85 80 2,845 10,727 Net 1,315 1,329 2,002 16,643 - ---------------------------------------------------------------------------------------------------------------------
(1) Gross reserves as of June 30, 2003 and December 31, 2002 include $1,762 million ($1,415 million in Group Operations, $141 million in Life Operations and $206 million in Corporate & Other) and $1,722 million ($1,350 million in Group Operations, $133 million in Life Operations and $239 million in Corporate & Other) of Life & Group company reserves, which are primarily related to accident and health business. Net reserves as of June 30, 2003 and December 31, 2002 include $1,622 million ($1,402 million in Group Operations, $61 million in Life Operations and $159 million in Corporate & Other) and $1,578 million ($1,337 million in Group Operations, $56 million in Life Operations and $185 million in Corporate & Other) of Life & Group company reserves, which are primarily related to accident and health business. 4 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY INSURANCE CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVE ROLLFORWARD (1)
- ----------------------------------------------------------------------------------------------------- THREE MONTHS SIX MONTHS ENDED ENDED (In millions) JUNE 30, 2003 JUNE 30, 2003 - ----------------------------------------------------------------------------------------------------- Claim & claim adjustment expense reserves, beginning of period Gross $ 27,446 $ 27,370 Ceded 11,217 10,727 -------- -------- Net 16,229 16,643 -------- -------- Net incurred claim & claim adjustment expenses 1,935 3,661 Net claim & claim adjustment expense payments (1,705) (3,845) Claim & claim adjustment expense reserves, end of period Net 16,459 16,459 Ceded 11,485 11,485 -------- -------- Gross $ 27,944 $ 27,944 ======== ======== - -----------------------------------------------------------------------------------------------------
(1) Gross reserves as of June 30, 2003 and December 31, 2002 include $1,762 million and $1,722 million of Life & Group company reserves, which are primarily related to accident and health business. Net reserves as of June 30, 2003 and December 31, 2002 include $1,622 million and $1,578 million of Life & Group company reserves, which are primarily related to accident and health business. 5 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT INVESTMENTS BY ASSET CLASS
- ----------------------------------------------------------------------------------------------------------------------- JUNE 30, 2003 DECEMBER 31, 2002 BOOK MARKET BOOK MARKET (In millions) VALUE VALUE VALUE VALUE - ----------------------------------------------------------------------------------------------------------------------- PROPERTY & CASUALTY AND OTHER COMPANIES Investments: Fixed maturity securities $20,131 $21,148 $17,673 $18,172 Equity securities 368 577 467 614 Short-term investments 3,921 3,923 5,780 5,778 Limited partnership investments 1,141 1,141 1,055 1,055 Mortgage loans and other invested assets 50 38 61 73 ------- ------- ------- ------- Subtotal 25,611 26,827 25,036 25,692 Securities lending collateral 611 611 399 399 ------- ------- ------- ------- Total investments $26,222 $27,438 $25,435 $26,091 ------- ------- ------- ------- LIFE AND GROUP COMPANIES Investments: Fixed maturity securities $ 8,560 $ 9,339 $ 7,860 $ 8,103 Equity securities 58 70 52 52 Short-term investments 436 436 686 686 Limited partnership investments 5 5 5 5 Mortgage loans, policy loans and other invested assets 197 193 210 211 ------- ------- ------- ------- Subtotal 9,256 10,043 8,813 9,057 Securities lending collateral 365 365 145 145 ------- ------- ------- ------- Total investments $ 9,621 $10,408 $ 8,958 $ 9,202 ------- ------- ------- ------- TOTAL INVESTMENTS $35,843 $37,846 $34,393 $35,293 ======= ======= ======= ======= - -----------------------------------------------------------------------------------------------------------------------
6 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY SEGMENTS - OPERATING RESULTS
- ------------------------------------------------------------------------------------------------------------------------------------ THREE MONTHS ENDED STANDARD LINES SPECIALTY LINES P&C OPERATIONS JUNE 30 FAV / (UNFAV) FAV / (UNFAV) FAV / (UNFAV) (In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE 2003 2002 % CHANGE - ------------------------------------------------------------------------------------------------------------------------------------ Gross written premiums $ 1,422 $ 1,194 19 % $ 863 $ 729 18 % $ 2,285 $ 1,923 19 % Net written premiums 890 1,056 (16) 681 572 19 1,571 1,628 (4) Net earned premiums 823 1,032 (20) 664 535 24 1,487 1,567 (5) Claim and claim adjustment expenses 773 805 4 616 377 (63) 1,389 1,182 (18) Acquisition expenses 222 186 (19) 137 109 (26) 359 295 (22) Underwriting expenses 143 121 (18) 73 63 (16) 216 184 (17) Policyholders' dividends 11 15 27 - 1 N/A 11 16 31 ------- ------- ----- ------- ------- ------- Underwriting loss (326) (95) N/A (162) (15) N/A (488) (110) N/A ------- ------- ----- ------- ------- ------- Net investment income 84 134 (37) 79 75 5 163 209 (22) Other revenues 59 80 (26) 26 33 (21) 85 113 (25) Other expenses 57 70 19 27 25 (8) 84 95 12 ------- ------- ----- ------- ------- ------- (Loss) income before income tax, minority interest and net realized investment gains (losses) (240) 49 N/A (84) 68 N/A (324) 117 N/A Income tax benefit (expense) 96 (9) N/A 28 (23) N/A 124 (32) N/A Minority interest - - N/A (2) (5) 60 (2) (5) 60 ------- ------- ----- ------- ------- ------- (Loss) income before net realized investment gains (losses) (144) 40 N/A (58) 40 N/A (202) 80 N/A Realized investment gains (losses) 169 (31) N/A 79 (26) N/A 248 (57) N/A Income tax (expense) benefit on realized investment gains (losses) (59) 10 N/A (24) 9 N/A (83) 19 N/A ------- ------- ----- ------- ------- ------- (Loss) income from continuing operations (34) 19 N/A (3) 23 (113) (37) 42 (188) Cumulative effect of a change in accounting principle - - N/A - - N/A - - N/A ------- ------- ----- ------- ------- ------- Net (loss) income $ (34) $ 19 N/A % $ (3) $ 23 (113)% $ (37) $ 42 (188)% ======= ======= ===== ======= ======= ======= FINANCIAL RATIOS Loss & LAE 93.9 % 78.1 % 92.7 % 70.3 % 93.4 % 75.5 % Acquisition expense 26.9 18.0 20.7 20.3 24.1 18.8 Underwriting expense 17.5 11.7 10.9 12.1 14.5 11.8 Dividends 1.3 1.5 0.1 0.1 0.8 1.0 ------- ------- ----- ------- ------- ------- Expense ratio, including dividends 45.7 31.2 31.7 32.5 39.4 31.6 ------- ------- ----- ------- ------- ------- Combined ratio 139.6 % 109.3 % 124.4 % 102.8 % 132.8 % 107.1 % ======= ======= ===== ======= ======= ======= - ------------------------------------------------------------------------------------------------------------------------------------
7 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY SEGMENTS - OPERATING RESULTS
- ---------------------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED CNA RE TOTAL P&C SEGMENTS JUNE 30 FAV / (UNFAV) FAV / (UNFAV) (In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE - ---------------------------------------------------------------------------------------------------------------------------------- Gross written premiums $ 148 $ 171 (13)% $ 2,433 $ 2,094 16 % Net written premiums 123 160 (23) 1,694 1,788 (5) Net earned premiums 134 168 (20) 1,621 1,735 (7) Claim and claim adjustment expenses 95 138 31 1,484 1,320 (12) Acquisition expenses 29 31 6 388 326 (19) Underwriting expenses 15 14 (7) 231 198 (17) Policyholders' dividends - - N/A 11 16 31 ------- ------- ------- ------- Underwriting loss (5) (15) 67 (493) (125) N/A ------- ------- ------- ------- Net investment income 22 48 (54) 185 257 (28) Other revenues - - N/A 85 113 (25) Other expenses - - N/A 84 95 12 ------- ------- ------- ------- Income (loss) before income tax, minority interest and net realized investment gains (losses) 17 33 (48) (307) 150 N/A Income tax (expense) benefit (4) (9) 56 120 (41) N/A Minority interest - - N/A (2) (5) 60 ------- ------- ------- ------- Income (loss) before net realized investment gains (losses) 13 24 (46) (189) 104 N/A Realized investment gains (losses) 33 (6) N/A 281 (63) N/A Income tax (expense) benefit on realized investment gains (losses) (11) 2 N/A (94) 21 N/A ------- ------- ------- ------- Income (loss) from continuing operations 35 20 75 (2) 62 (103) Cumulative effect of a change in accounting principle - - N/A - - N/A ------- ------- ------- ------- Net income (loss) $ 35 $ 20 75 % $ (2) $ 62 (103)% ======= ======= ======= ======= FINANCIAL RATIOS Loss & LAE 71.4 % 81.6 % 91.6 % 76.0 % Acquisition expense 21.9 18.2 23.9 18.7 Underwriting expense 10.5 9.1 14.2 11.6 Dividends - - 0.7 0.9 ------- ------- ------- ------- Expense ratio, including dividends 32.4 27.3 38.8 31.2 ------- ------- ------- ------- Combined ratio 103.8 % 108.9 % 130.4 % 107.2 % ======= ======= ======= ======= - ----------------------------------------------------------------------------------------------------------------------------------
8 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY SEGMENTS - OPERATING RESULTS
- ------------------------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED STANDARD LINES SPECIALTY LINES P&C OPERATIONS JUNE 30 FAV / (UNFAV) FAV / (UNFAV) FAV / (UNFAV) (In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE 2003 2002 % CHANGE - ------------------------------------------------------------------------------------------------------------------------------------ Gross written premiums $ 2,859 $ 2,804 2 % $ 1,843 $ 1,595 16 % $ 4,702 $ 4,399 7 % Net written premiums 1,994 2,139 (7) 1,345 1,112 21 3,339 3,251 3 Net earned premiums 1,862 2,048 (9) 1,288 1,043 23 3,150 3,091 2 Claim and claim adjustment expenses 1,542 1,589 3 1,049 739 (42) 2,591 2,328 (11) Acquisition expenses 420 385 (9) 265 211 (26) 685 596 (15) Underwriting expenses 280 247 (13) 141 126 (12) 421 373 (13) Policyholders' dividends 26 31 16 1 2 50 27 33 18 ------- ------- ------- ------- ------- ------- Underwriting loss (406) (204) (99) (168) (35) N/A (574) (239) (140) ------- ------- ------- ------- ------- ------- Net investment income 194 237 (18) 149 135 10 343 372 (8) Other revenues 130 163 (20) 46 87 (47) 176 250 (30) Other expenses 117 141 17 44 56 21 161 197 18 ------- ------- ------- ------- ------- ------- (Loss) income before income tax, minority interest and net realized investment gains (losses) (199) 55 N/A (17) 131 (113) (216) 186 N/A Income tax benefit (expense) 90 (5) N/A 10 (47) 121 100 (52) N/A Minority interest - - N/A (5) (10) 50 (5) (10) 50 ------- ------- ------- ------- ------- ------- (Loss) income before net realized investment gains (losses) (109) 50 N/A (12) 74 (116) (121) 124 (198) Realized investment gains (losses) 182 (24) N/A 66 (31) N/A 248 (55) N/A Income tax (expense) benefit on realized investment gains (losses) (64) 8 N/A (22) 10 N/A (86) 18 N/A ------- ------- ------- ------- ------- ------- Income from continuing operations 9 34 (74) 32 53 (40) 41 87 (53) Cumulative effect of a change in accounting principle - - N/A - (48) N/A - (48) N/A ------- ------- ------- ------- ------- ------- Net income $ 9 $ 34 (74)% $ 32 $ 5 N/A % $ 41 $ 39 5 % ======= ======= ======= ======= ======= ======= FINANCIAL RATIOS Loss & LAE 82.8 % 77.6 % 81.4 % 70.8 % 82.3 % 75.3 % Acquisition expense 22.5 18.8 20.6 20.2 21.7 19.3 Underwriting expense 15.1 12.1 10.9 12.2 13.3 12.0 Dividends 1.4 1.5 0.1 0.1 0.9 1.1 ------- ------- ------- ------- ------- ------- Expense ratio, including dividends 39.0 32.4 31.6 32.5 35.9 32.4 ------- ------- ------- ------- ------- ------- Combined ratio 121.8 % 110.0 % 113.0 % 103.3 % 118.2 % 107.7 % ======= ======= ======= ======= ======= ======= - ------------------------------------------------------------------------------------------------------------------------------------
9 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY SEGMENTS - OPERATING RESULTS
- ---------------------------------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED CNA RE TOTAL P&C SEGMENTS JUNE 30 FAV / (UNFAV) FAV / (UNFAV) (In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE - ---------------------------------------------------------------------------------------------------------------------------------- Gross written premiums $ 378 $ 399 (5)% $ 5,080 $ 4,798 6 % Net written premiums 328 327 0 3,667 3,578 2 Net earned premiums 287 305 (6) 3,437 3,396 1 Claim and claim adjustment expenses 193 194 1 2,784 2,522 (10) Acquisition expenses 61 69 12 746 665 (12) Underwriting expenses 27 32 16 448 405 (11) Policyholders' dividends - - N/A 27 33 18 ------- ------- ------- ------- Underwriting income (loss) 6 10 (40) (568) (229) (148) ------- ------- ------- ------- Net investment income 46 81 (43) 389 453 (14) Other revenues 1 1 0 177 251 (29) Other expenses - - N/A 161 197 18 ------- ------- ------- ------- Income (loss) before income tax, minority interest and net realized investment gains (losses) 53 92 (42) (163) 278 (159) Income tax (expense) benefit (15) (28) 46 85 (80) N/A Minority interest - - N/A (5) (10) 50 ------- ------- ------- ------- Income (loss) before net realized investment gains (losses) 38 64 (41) (83) 188 (144) Realized investment gains (losses) 42 3 N/A 290 (52) N/A Income tax (expense) benefit on realized investment gains (losses) (11) 1 N/A (97) 19 N/A ------- ------- ------- ------- Income from continuing operations 69 68 1 110 155 (29) Cumulative effect of a change in accounting principle - - N/A - (48) N/A ------- ------- ------- ------- Net income $ 69 $ 68 1 % $ 110 $ 107 3 % ======= ======= ======= ======= FINANCIAL RATIOS Loss & LAE 67.4 % 63.6 % 81.0 % 74.3 % Acquisition expense 21.3 22.6 21.7 19.6 Underwriting expense 9.2 10.5 13.0 11.9 Dividends - - 0.8 1.0 ------- ------- ------- ------- Expense ratio, including dividends 30.5 33.1 35.5 32.5 ------- ------- ------- ------- Combined ratio 97.9 % 96.7 % 116.5 % 106.8 % ======= ======= ======= ======= - ----------------------------------------------------------------------------------------------------------------------------------
10 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY SEGMENTS - CATASTROPHE LOSSES
- -------------------------------------------------------------------------------------------------------------------------- CATASTROPHE LOSSES (PRETAX) (In millions) STANDARD LINES SPECIALTY LINES P&C OPERATIONS CNA RE TOTAL P&C SEGMENTS - -------------------------------------------------------------------------------------------------------------------------- Three months ended June 30, 2003 $48 $ 1 $49 $11 $60 Six months ended June 30, 2003 61 3 64 11 75 Three months ended June 30, 2002 $ 6 $ 2 $ 8 $ - $ 8 Six months ended June 30, 2002 9 2 11 - 11 - --------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------- CATASTROPHE LOSSES (AFTER-TAX) (In millions) STANDARD LINES SPECIALTY LINES P&C OPERATIONS CNA RE TOTAL P&C SEGMENTS - ----------------------------------------------------------------------------------------------------------------------------------- Three months ended June 30, 2003 $31 $ 1 $32 $ 7 $39 Six months ended June 30, 2003 40 2 42 7 49 Three months ended June 30, 2002 $ 4 $ 1 $ 5 $ - $ 5 Six months ended June 30, 2002 6 1 7 - 7 - -----------------------------------------------------------------------------------------------------------------------------------
11 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT GROUP & LIFE AND CORPORATE & OTHER SEGMENTS - OPERATING RESULTS
- ------------------------------------------------------------------------------------------------------------------------------------ THREE MONTHS ENDED TOTAL P&C GROUP LIFE CORPORATE & TOTAL JUNE 30 SEGMENTS OPERATIONS (1) OPERATIONS (3) OTHER OPERATIONS (3) (In millions) 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $1,621 $1,735 $329 $820 $263 $ 234 $(16) $ 37 $2,197 $2,826 Insurance claims & policyholders' benefits 1,484 1,320 254 724 301 266 15 54 2,054 2,364 Policyholders' dividends 11 16 - - 6 5 (4) (3) 13 18 Insurance related expenses 619 524 115 137 71 65 40 (2) 845 724 Net investment income 185 257 70 62 133 137 39 46 427 502 Other revenues 85 113 15 26 19 25 (22) (18) 97 146 Other expenses 84 95 8 10 14 18 4 45 110 168 ------ ------ ---- ---- ---- ----- ---- ---- ------ ------ (Loss) income before income tax, minority interest and net realized investment gains (losses) (307) 150 37 37 23 42 (54) (29) (301) 200 Income tax benefit (expense) 120 (41) (11) (12) (6) (15) 21 9 124 (59) Minority interest (2) (5) - - - - - - (2) (5) ------ ------ ---- ---- ---- ----- ---- ---- ------ ------ (Loss) income before net realized investment gains (losses) (189) 104 26 25 17 27 (33) (20) (179) 136 Realized investment gains (losses) 281 (63) 20 (27) 28 (53) 49 (19) 378 (162) Income tax (expense) benefit on realized investment gains (losses) (94) 21 (7) 9 (10) 18 (18) 9 (129) 57 ------ ------ ---- ---- ---- ----- ---- ---- ------ ------ (Loss) income from continuing operations (2) 62 39 7 35 (8) (2) (30) 70 31 Loss from discontinued operations - - - - - - - - - - Cumulative effect of a change in accounting principle - - - - - - - - - - ------ ------ ---- ---- ---- ----- ---- ---- ------ ------ Net (loss) income $ (2) $ 62 $ 39 $ 7 $ 35 $ (8) $ (2) $(30) $ 70 $ 31 ====== ====== ==== ==== ==== ===== ==== ==== ====== ======
- ------------------------------------------------------------------------------------------------------------------------------------ OTHER FINANCIAL DATA TOTAL P&C SEGMENTS GROUP LIFE OPERATIONS CORPORATE & OTHER TOTAL OPERATIONS PROPERTY & CASUALTY OPERATIONS(1)(2) COMPANY INFORMATION 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------------ Gross written premiums $ 2,433 $ 2,094 $ 193 $ 741 $ 131 $ 123 $ 505 $ 482 $ 3,262 $ 3,440 Net written premiums 1,694 1,788 - 535 131 122 1 - 1,826 2,445 Net earned premiums 1,621 1,735 - 535 130 118 (3) 2 1,748 2,390 Underwriting (loss) income (493) (125) (1) 3 (61) (39) (61) (39) (616) (200) FINANCIAL RATIOS Loss & LAE 91.6 % 76.0 % N/A % 89.5 % 121.7 % 109.8 % N/A % N/A % 95.1 % 81.5 % Acquisition expense 23.9 18.7 N/A 0.6 14.2 13.8 N/A N/A 25.5 14.4 Underwriting expense 14.2 11.6 N/A 9.2 10.6 9.9 N/A N/A 14.0 11.8 Dividends 0.7 0.9 N/A - - - N/A N/A 0.6 0.7 -------- -------- ------ ----- ----- ----- ------- ------ -------- -------- Expense ratio, including dividends 38.8 31.2 N/A 9.8 24.8 23.7 N/A N/A 40.1 26.9 -------- -------- ------ ----- ----- ----- ------- ------ -------- -------- Combined ratio 130.4 % 107.2 % N/A % 99.3 % 146.5 % 133.5 % N/A % N/A % 135.2 % 108.4 % ======== ======== ====== ===== ===== ===== ======= ====== ======== ======== - ------------------------------------------------------------------------------------------------------------------------------------
(1) Included in gross written, net written and earned premiums for 2002 is $535 million relating to the National Postal Mail Handlers Union contract, which was transferred on July 1, 2002. (2) Included in gross written premiums for 2003 and 2002 is $185 million and $195 million of business ceded to CNA Group Life Assurance Company. (3) The three months ended June 30, 2002 results have been restated to reflect an adjustment to the Company's historical accounting for CNA's life settlement contracts and the related revenue recognition. Refer to CNA's 2002 Form 10-K for further information related to this restatement. 12 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT GROUP & LIFE AND CORPORATE & OTHER SEGMENTS - OPERATING RESULTS
- ------------------------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED TOTAL P&C GROUP LIFE CORPORATE TOTAL JUNE 30 SEGMENTS OPERATIONS (1) OPERATIONS (3) & OTHER OPERATIONS (3) (In millions) 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $3,437 $3,396 $644 $1,725 $519 $474 $(22) $ 68 $4,578 $5,663 Insurance claims & policyholders' benefits 2,784 2,522 498 1,499 596 539 28 97 3,906 4,657 Policyholders' dividends 27 33 - - 9 6 (5) (4) 31 35 Insurance related expenses 1,194 1,070 231 314 152 128 36 (7) 1,613 1,505 Net investment income 389 453 133 123 264 271 73 81 859 928 Other revenues 177 251 33 45 43 55 (48) (23) 205 328 Other expenses 161 197 15 16 31 37 6 105 213 355 ------ ------ ---- ------ ---- ---- ---- ---- ------ ------ (Loss) income before income tax, minority interest and net realized investment gains (losses) (163) 278 66 64 38 90 (62) (65) (121) 367 Income tax benefit (expense) 85 (80) (21) (21) (11) (32) 26 22 79 (111) Minority interest (5) (10) - - - - - - (5) (10) ------ ------ ---- ------ ---- ---- ---- ---- ------ ------ (Loss) income before net realized investment gains (losses) (83) 188 45 43 27 58 (36) (43) (47) 246 Realized investment gains (losses) 290 (52) (32) (17) (23) (42) 67 (50) 302 (161) Income tax (expense) benefit on realized investment gains (losses) (97) 19 11 5 8 15 (24) 19 (102) 58 ------ ------ ---- ------ ---- ---- ---- ---- ------ ------ Income (loss) from continuing operations 110 155 24 31 12 31 7 (74) 153 143 Loss from discontinued operations - - - - - (35) - - - (35) Cumulative effect of a change in accounting principle - (48) - - - (8) - (1) - (57) ------ ------ ---- ------ ---- ---- ---- ---- ------ ------ Net income (loss) $ 110 $ 107 $ 24 $ 31 $ 12 $(12) $ 7 $(75) $ 153 $ 51 ====== ====== ==== ====== ==== ==== ==== ==== ====== ======
- ------------------------------------------------------------------------------------------------------------------------------------ OTHER FINANCIAL DATA TOTAL P&C SEGMENTS GROUP LIFE OPERATIONS CORPORATE & OTHER TOTAL OPERATIONS PROPERTY & CASUALTY OPERATIONS(1)(2) COMPANY INFORMATION 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------------ Gross written premiums $ 5,080 $4,798 $ 404 $1,569 $ 268 $ 247 $ 926 $ 501 $ 6,678 $ 7,115 Net written premiums 3,667 3,578 - 1,151 267 246 (8) 3 3,926 4,978 Net earned premiums 3,437 3,396 - 1,151 260 234 (1) 6 3,696 4,787 Underwriting (loss) income (568) (229) 1 8 (115) (79) (70) (79) (752) (379) FINANCIAL RATIOS Loss & LAE 81.0 % 74.3 % N/A % 87.9 % 117.8 % 108.7 % N/A % N/A % 84.5 % 79.9 % Acquisition expense 21.7 19.6 N/A 0.2 14.9 15.0 N/A N/A 22.3 14.7 Underwriting expense 13.0 11.9 N/A 11.2 11.4 10.0 N/A N/A 12.8 12.6 Dividends 0.8 1.0 N/A - - - N/A N/A 0.7 0.7 -------- ------ ----- ------ ------ ------ ----- ----- ------- ------- Expense ratio, including dividends 35.5 32.5 N/A 11.4 26.3 25.0 N/A N/A 35.8 28.0 -------- ------ ----- ------ ------ ------ ----- ----- ------- ------- Combined ratio 116.5 % 106.8 % N/A % 99.3 % 144.1 % 133.7 % N/A % N/A % 120.3 % 107.9 % ======== ====== ===== ====== ====== ====== ===== ===== ======= ======= - ------------------------------------------------------------------------------------------------------------------------------------
(1) Included in gross written, net written and earned premiums for 2002 is $1,151 million relating to the National Postal Mail Handlers Union contract, which was transferred on July 1, 2002. (2) Included in gross written premiums for 2003 and 2002 is $385 million and $394 million of business ceded to CNA Group Life Assurance Company. (3) The six months ended June 30, 2002 results have been restated to reflect an adjustment to the Company's historical accounting for CNA's life settlement contracts and the related revenue recognition. Refer to CNA's 2002 Form 10-K for further information related to this restatement. 13 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT ANALYSIS OF PRETAX NET INVESTMENT INCOME
- --------------------------------------------------------------------------------------------------------------------- (In millions) STANDARD LINES - --------------------------------------------------------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 2002 1Q03 2Q03 YTD 2003 ---- ---- ---- ---- ---- ---- ---- -------- Limited partnership income $ 3 $ 20 $ (39) $ (2) $ (18) $ 13 $ 40 $ 53 Interest on funds withheld and other deposits (38) (44) (36) (56) (174) (34) (76) (110) Other investment income 138 158 142 152 590 131 120 251 -------------------------------------------------------------------- Net investment income $ 103 $ 134 $ 67 $ 94 $ 398 $ 110 $ 84 $ 194 ==================================================================== ---------------------------------------------------------------------- SPECIALTY LINES ---------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 2002 1Q03 2Q03 YTD 2003 ---- ---- ---- ---- ---- ---- ---- -------- Limited partnership income $ 1 $ 8 $ (14) $ (1) $ (6) $ 5 $ 17 $ 22 Interest on funds withheld and other deposits (9) (7) (11) (7) (34) (6) (7) (13) Other investment income 68 74 74 77 293 71 69 140 -------------------------------------------------------------------- Net investment income $ 60 $ 75 $ 49 $ 69 $ 253 70 $ 79 $ 149 ==================================================================== ---------------------------------------------------------------------- P&C OPERATIONS ---------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 2002 1Q03 2Q03 YTD 2003 ---- ---- ---- ---- ---- ---- ---- -------- Limited partnership income $ 4 $ 28 $ (53) $ (3) $ (24) $ 18 $ 57 $ 75 Interest on funds withheld and other deposits (47) (51) (47) (63) (208) (40) (83) (123) Other investment income 206 232 216 229 883 202 189 391 -------------------------------------------------------------------- Net investment income $ 163 $ 209 $ 116 $ 163 $ 651 $ 180 $ 163 $ 343 ==================================================================== ---------------------------------------------------------------------- CNA RE ---------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 2002 1Q03 2Q03 YTD 2003 ---- ---- ---- ---- ---- ---- ---- -------- Limited partnership income $ 1 $ 5 $ (9) $ (1) $ (4) $ 2 $ 8 $ 10 Interest on funds withheld and other deposits (11) (6) (6) (6) (29) (6) (10) (16) Other investment income 43 49 43 42 177 28 24 52 -------------------------------------------------------------------- Net investment income $ 33 $ 48 $ 28 $ 35 $ 144 $ 24 $ 22 $ 46 ==================================================================== ---------------------------------------------------------------------- TOTAL P&C SEGMENTS ---------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 2002 1Q03 2Q03 YTD 2003 ---- ---- ---- ---- ---- ---- ---- -------- Limited partnership income $ 5 $ 33 $ (62) $ (4) $ (28) $ 20 $ 65 $ 85 Interest on funds withheld and other deposits (58) (57) (53) (69) (237) (46) (93) (139) Other investment income 249 281 259 271 1,060 230 213 443 -------------------------------------------------------------------- Net investment income $ 196 $ 257 $ 144 $ 198 $ 795 $ 204 $ 185 $ 389 ====================================================================
14 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT ANALYSIS OF PRETAX NET INVESTMENT INCOME
- ------------------------------------------------------------------------------------------------------------------------------------ (In millions) TOTAL P&C SEGMENTS - ------------------------------------------------------------------------------------------------------------------------------------ 1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 YTD 2003 ---- ---- ---- ---- -------- ---- ---- -------- Limited partnership income $ 5 $ 33 $ (62) $ (4) $ (28) $ 20 $ 65 $ 85 Interest on funds withheld and other deposits (58) (57) (53) (69) (237) (46) (93) (139) Other investment income 249 281 259 271 1,060 230 213 443 ----------------------------------------------------------------------------------- Net investment income $ 196 $ 257 $ 144 $ 198 $ 795 $ 204 $ 185 $ 389 =================================================================================== ----------------------------------------------------------------------- GROUP OPERATIONS ----------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 YTD 2003 ---- ---- ---- ---- -------- ---- ---- -------- Limited partnership income $ - $ - $ - $ - $ - $ - $ - $ - Interest on funds withheld and other deposits - - - - - - - - Other investment income 61 62 65 64 252 63 70 133 --------------------------------------------------------------------- Net investment income $ 61 $ 62 $ 65 $ 64 $252 $ 63 $ 70 $133 ===================================================================== ------------------------------------------------------------------ LIFE OPERATIONS ------------------------------------------------------------------ 1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 YTD 2003 ---- ---- ---- ---- -------- ---- ---- -------- Limited partnership income $ - $ - $ (1) $ (1) $ (2) $ - $ - $ - Interest on funds withheld and other deposits - - - - - - - - Other investment income 134 137 132 139 542 131 133 264 ---------------------------------------------------------------- Net investment income $ 134 $137 $ 131 $ 138 $ 540 $131 $ 133 $ 264 ================================================================ ---------------------------------------------------------------- CORPORATE & OTHER ---------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 YTD 2003 ---- ---- ---- ---- -------- ---- ---- -------- Limited partnership income $ 2 $ 5 $ (10) $ (1) $ (4) $ 3 $ 10 $ 13 Interest on funds withheld and other deposits - - - (2) (2) (1) - (1) Other investment income 33 41 34 41 149 32 29 61 ---------------------------------------------------------------- Net investment income $ 35 $ 46 $ 24 $ 38 $ 143 $ 34 $ 39 $ 73 ================================================================ ------------------------------------------------------------------- TOTAL OPERATIONS ------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 YTD 2003 ---- ---- ---- ---- -------- ---- ---- -------- Limited partnership income $ 7 $ 38 $ (73) $ (6) $ (34) $ 23 $ 75 $ 98 Interest on funds withheld and other deposits (58) (57) (53) (71) (239) (47) (93) (140) Other investment income 477 521 490 515 2,003 456 445 901 ------------------------------------------------------------------ Net investment income $ 426 $ 502 $ 364 $ 438 $1,730 $ 432 $ 427 $ 859 ==================================================================
15 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT STATUTORY DATA - PRELIMINARY
- -------------------------------------------------------------------------------------------------------------------------- PERIOD ENDED JUNE 30 THREE MONTHS SIX MONTHS INCOME STATEMENT (PRELIMINARY) FAV / (UNFAV) (PRELIMINARY) FAV / (UNFAV) (In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE - -------------------------------------------------------------------------------------------------------------------------- PROPERTY & CASUALTY COMPANIES Gross written premiums $ 3,486 $ 3,553 (2)% $ 7,131 $ 8,043 (11)% Net written premiums 1,820 2,433 (25) 3,891 4,933 (21) Net earned premiums 1,655 2,306 (28) 3,522 4,632 (24) Claim and claim adjustment expenses 1,581 1,881 16 2,972 3,697 20 Acquisition expenses 358 392 9 770 780 1 Underwriting expenses 294 258 (14) 544 587 7 Policyholders' dividends 15 11 (36) 41 35 (17) Restructuring and other related costs - - N/A - - N/A ------- ------- ------- ------- Underwriting loss (593) (236) (151) (805) (467) (72) Net investment income 296 360 (18) 594 706 (16) Other revenue (87) (56) (55) (124) (111) (12) Income tax benefit (expense) 54 (15) N/A 46 (25) N/A Net realized gains (losses) 287 (10) N/A 304 25 N/A ------- ------- ------- ------- Net (loss) income $ (43) $ 43 (200)% $ 15 $ 128 (88)% ======= ======= ======= ======= FINANCIAL RATIOS Loss and LAE 95.5 % 81.6 % 84.4 % 79.8 % Acquisition expense 19.6 16.1 19.8 15.8 Underwriting expense 16.2 10.5 13.9 11.9 Policyholders' dividends 0.9 0.5 1.2 0.8 ------- ------- ------- ------- Expense ratio 36.7 27.1 34.9 28.5 ------- ------- ------- ------- Combined ratio 132.2 % 108.7 % 119.3 % 108.3 % ======= ======= ======= ======= LIFE COMPANIES Premium income 488 466 980 962 - -------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------ SUPPLEMENTAL STATUTORY DATA (PRELIMINARY) (In millions) JUNE 30, 2003 DECEMBER 31, 2002 - ------------------------------------------------------------------------------------------------ PROPERTY & CASUALTY COMPANIES Statutory surplus (1) $ 6,995 $ 6,836 LIFE COMPANIES Statutory surplus $ 1,529 $ 1,645 Gross life insurance in force 434,781 437,751 - ------------------------------------------------------------------------------------------------
(1) Surplus includes the Property & Casualty Companies' equity ownership of the life insurance subsidiaries. 16 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY SEGMENTS LOSS AND LAE RATIO ANALYSIS
-------------------------------------------- --------------------------------------------- STANDARD LINES CNA RE -------------------------------------------- --------------------------------------------- 2003 YTD 2002 YTD 2002 FY 2003 YTD 2002 YTD 2002 FY EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT 6/30/03 12/31/02 6/30/03 6/30/03 12/31/02 6/30/03 ------------ ------------ ------------ ------------ ------------ ------------ Gross Accident Year 64.2 % 74.6 % 71.5 % 59.9 % 64.2 % 63.2 % Impact of Finite Reinsurance - (0.1) 0.0 - 0.2 0.1 Impact of Other Reinsurance 4.0 0.8 3.0 3.6 4.9 5.7 ---------- ---------- ------- ------- ------- ------ Net Accident Year 68.2 75.3 74.5 % 63.5 69.3 69.0 % ======= ====== Impact of Corporate Covers (5.6) - (5.5) (6.4) Impact of World Trade Center - - - 1.3 Impact of Development 20.2 (3.3) 9.4 14.1 ---------- ---------- ------- ------- Net Calendar Year 82.8 % 72.0 % 67.4 % 78.3 % ========== ========== ======= ======= -------------------------------------------- --------------------------------------------- -------------------------------------------- --------------------------------------------- SPECIALTY LINES P&C SEGMENTS -------------------------------------------- --------------------------------------------- 2003 YTD 2002 YTD 2002 FY 2003 YTD 2002 YTD 2002 FY EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT 6/30/03 12/31/02 6/30/03 6/30/03 12/31/02 6/30/03 ------------ ------------ ------------ ------------ ------------ ------------ Gross Accident Year 64.9 % 68.1 % 69.4 % 64.2 % 71.5 % 70.2 % Impact of Finite Reinsurance - - - - - - Impact of Other Reinsurance 1.4 3.6 3.1 3.0 2.1 3.2 ---------- ---------- ------- ------- ------- ------ Net Accident Year 66.3 71.7 72.5 % 67.2 73.6 73.4 % ======= ====== Impact of Corporate Covers - (1.2) (3.6) (1.1) Impact of World Trade Center - - - 0.1 Impact of Development 15.1 6.6 17.4 1.5 ---------- ---------- ------- ------- Net Calendar Year 81.4 % 77.1 % 81.0 % 74.1 % ========== ========== ======= ======= -------------------------------------------- --------------------------------------------- -------------------------------------------- P&C OPERATIONS -------------------------------------------- 2003 YTD 2002 YTD 2002 FY EVALUATED AT EVALUATED AT EVALUATED AT 6/30/03 12/31/02 6/30/03 ------------ ------------ ------------ Gross Accident Year 64.5 % 72.1 % 70.8 % Impact of Finite Reinsurance - - 0.0 Impact of Other Reinsurance 3.0 2.0 3.0 ---------- ---------- ------- Net Accident Year 67.5 74.1 73.8 % ======= Impact of Corporate Covers (3.4) (0.4) Impact of World Trade Center - - Impact of Development 18.2 0.2 ---------- ---------- Net Calendar Year 82.3 % 73.9 % ========== ========== --------------------------------------------
17 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT IMPACT OF PRIOR YEAR DEVELOPMENT (1)
- ------------------------------------------------------------------------------------------------------------------------------------ THREE MONTHS ENDED STANDARD LINES SPECIALTY LINES JUNE 30, 2003 2003 RESULTS 2003 RESULTS BEFORE PRIOR PREMIUM CORPORATE BEFORE PRIOR PREMIUM CORPORATE YEAR AND LOSS AGGREGATE 2003 YEAR AND LOSS AGGREGATE 2003 (In millions) DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 1,044 $ (116) $ (105) $ 823 $ 672 $ (8) $ - $ 664 Claim and claim adjustment expenses 710 243 (180) 773 434 182 - 616 Acquisition expenses 222 - - 222 137 - - 137 Underwriting expenses 143 - - 143 73 - - 73 Policyholders' dividends 11 - - 11 - - - - ------- ------- ------- ------- ------- ------- ----- ------- Underwriting (loss) income (42) (359) 75 (326) 28 (190) - (162) ------- ------- ------- ------- ------- ------- ----- ------- Net investment income (loss) 108 - (24) 84 79 - - 79 Other revenues 59 - - 59 26 - - 26 Other expenses 57 - - 57 27 - - 27 ------- ------- ------- ------- ------- ------- ----- ------- Income (loss) before income tax, minority interest and net realized investment gains 68 (359) 51 (240) 106 (190) - (84) Income tax (expense) benefit (12) 126 (18) 96 (39) 67 - 28 Minority interest - - - - (2) - - (2) ------- ------- ------- ------- ------- ------- ----- ------- Income (loss) before net realized investment gains 56 (233) 33 (144) 65 (123) - (58) Realized investment gains 169 - - 169 79 - - 79 Income tax expense on realized investment gains (59) - - (59) (24) - - (24) ------- ------- ------- ------- ------- ------- ----- ------- Income (loss) from continuing operations 166 (233) 33 (34) 120 (123) - (3) Cumulative effect of a change in accounting principle - - - - - - - - ------- ------- ------- ------- ------- ------- ----- ------- Net income (loss) $ 166 $ (233) $ 33 $ (34) $ 120 $ (123) $ - $ (3) ======= ======= ======= ======= ======= ======= ===== ======= FINANCIAL RATIOS Loss & LAE 93.9% 92.7% Acquisition expense 26.9 20.7 Underwriting expense 17.5 10.9 Dividends 1.3 0.1 ------ ------- Expense ratio, including dividends 45.7 31.7 ------ ------- Combined ratio 139.6% 124.4% ====== ======= - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ P&C OPERATIONS 2003 RESULTS BEFORE PRIOR PREMIUM CORPORATE YEAR AND LOSS AGGREGATE 2003 DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $1,716 $ (124) $ (105) $1,487 Claim and claim adjustment expenses 1,144 425 (180) 1,389 Acquisition expenses 359 - - 359 Underwriting expenses 216 - - 216 Policyholders' dividends 11 - - 11 ------ ------ ------ ------ Underwriting (loss) income (14) (549) 75 (488) ------ ------ ------ ------ Net investment income (loss) 187 - (24) 163 Other revenues 85 - - 85 Other expenses 84 - - 84 ------ ------ ------ ------ Income (loss) before income tax, minority interest and net realized investment gains 174 (549) 51 (324) Income tax (expense) benefit (51) 193 (18) 124 Minority interest (2) - - (2) ------ ------ ------ ------ Income (loss) before net realized investment gains 121 (356) 33 (202) Realized investment gains 248 - - 248 Income tax expense on realized investment gains (83) - - (83) ------ ------ ------ ------ Income (loss) from continuing operations 286 (356) 33 (37) Cumulative effect of a change in accounting principle - - - - ------ ------ ------ ------ Net income (loss) $ 286 $ (356) $ 33 $ (37) ====== ====== ====== ====== FINANCIAL RATIOS Loss & LAE 93.4 % Acquisition expense 24.1 Underwriting expense 14.5 Dividends 0.8 ------ Expense ratio, including dividends 39.4 ------ Combined ratio 132.8 % ====== - ------------------------------------------------------------------------------------------------------------------------------------
(1) Total development for the Property & Casualty Segments is comprised of Premium and Loss Development and the impact of the Corporate Aggregate Covers. (2) Pretax benefit of Aggregate Corporate Covers represents the current period ceded premiums and losses and associated interest expense. Interest expense on the funds withheld related to prior cessions to the Corporate Aggregate Covers is not presented on this schedule, but is included in the Analysis of Pretax Net Investment Income on pages 14 and 15. 18 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT IMPACT OF PRIOR YEAR DEVELOPMENT (1)
- ------------------------------------------------------------------------------------------------------------------------------------ THREE MONTHS ENDED CNA RE TOTAL P&C SEGMENTS JUNE 30, 2003 2003 RESULTS 2003 RESULTS BEFORE PRIOR PREMIUM CORPORATE BEFORE PRIOR PREMIUM CORPORATE YEAR AND LOSS AGGREGATE 2003 YEAR AND LOSS AGGREGATE 2003 (In millions) DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 136 $ 12 $ (14) $ 134 $ 1,852 $ (112) $ (119) $ 1,621 Claim and claim adjustment expenses 86 33 (24) 95 1,230 458 (204) 1,484 Acquisition expenses 29 - - 29 388 - - 388 Underwriting expenses 15 - - 15 231 - - 231 Policyholders' dividends - - - - 11 - - 11 ------- ------- ------- ------- ------- ------- ------- ------- Underwriting income (loss) 6 (21) 10 (5) (8) (570) 85 (493) ------- ------- ------- ------- ------- ------- ------- ------- Net investment income (loss) 25 - (3) 22 212 - (27) 185 Other revenues - - - - 85 - - 85 Other expenses - - - - 84 - - 84 ------- ------- ------- ------- ------- ------- ------- ------- Income (loss) before income tax, minority interest and net realized investment gains 31 (21) 7 17 205 (570) 58 (307) Income tax (expense) benefit (10) 8 (2) (4) (61) 201 (20) 120 Minority interest - - - - (2) - - (2) ------- ------- ------- ------- ------- ------- ------- ------- Income (loss) before net realized investment gains 21 (13) 5 13 142 (369) 38 (189) Realized investment gains 33 - - 33 281 - - 281 Income tax expense on realized investment gains (11) - - (11) (94) - - (94) ------- ------- ------- ------- ------- ------- ------- ------- Income (loss) from continuing operations 43 (13) 5 35 329 (369) 38 (2) Cumulative effect of a change in accounting principle - - - - - - - - ------- ------- ------- ------- ------- ------- ------- ------- Net income (loss) $ 43 $ (13) $ 5 $ 35 $ 329 $ (369) $ 38 $ (2) ======= ======= ======= ======= ======= ======= ======= ======= FINANCIAL RATIOS Loss & LAE 71.4 % 91.6% Acquisition expense 21.9 23.9 Underwriting expense 10.5 14.2 Dividends - 0.7 ------- ------- Expense ratio, including dividends 32.4 38.8 ------- ------- Combined ratio 103.8 % 130.4% ======= ======= - ------------------------------------------------------------------------------------------------------------------------------------
(1) Total development for the Property & Casualty Segments is comprised of Premium and Loss Development and the impact of the Corporate Aggregate Covers. (2) Pretax benefit of Aggregate Corporate Covers represents the current period ceded premiums and losses and associated interest expense. Interest expense on the funds withheld related to prior cessions to the Corporate Aggregate Covers is not presented on this schedule, but is included in the Analysis of Pretax Net Investment Income on pages 14 and 15. 19 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT IMPACT OF PRIOR YEAR DEVELOPMENT (1)
- ------------------------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED STANDARD LINES SPECIALTY LINES JUNE 30, 2003 2003 RESULTS 2003 RESULTS BEFORE PRIOR PREMIUM CORPORATE BEFORE PRIOR PREMIUM CORPORATE YEAR AND LOSS AGGREGATE 2003 YEAR AND LOSS AGGREGATE 2003 (In millions) DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 2,046 $ (79) $ (105) $ 1,862 $ 1,273 $ 15 $ - $ 1,288 Claim and claim adjustment expenses 1,414 308 (180) 1,542 844 205 - 1,049 Acquisition expenses 420 - - 420 265 - - 265 Underwriting expenses 280 - - 280 141 - - 141 Policyholders' dividends 26 - - 26 1 - - 1 ------- ------- ------- ------- ------- ------- ------ ------- Underwriting (loss) income (94) (387) 75 (406) 22 (190) - (168) ------- ------- ------- ------- ------- ------- ------ ------- Net investment income (loss) 218 - (24) 194 149 - - 149 Other revenues 130 - - 130 46 - - 46 Other expenses 117 - - 117 44 - - 44 ------- ------- ------- ------- ------- ------- ------ ------- Income (loss) before income tax, minority interest and net realized investment gains 137 (387) 51 (199) 173 (190) - (17) Income tax (expense) benefit (27) 135 (18) 90 (54) 64 - 10 Minority interest - - - - (5) - - (5) ------- ------- ------- ------- ------- ------- ------ ------- Income (loss) before net realized investment gains 110 (252) 33 (109) 114 (126) - (12) Realized investment gains 182 - - 182 66 - - 66 Income tax expense on realized investment gains (64) - - (64) (22) - - (22) ------- ------- ------- ------- ------- ------- ------ ------- Income (loss) from continuing operations 228 (252) 33 9 158 (126) - 32 Cumulative effect of a change in accounting principle - - - - - - - - ------- ------- ------- ------- ------- ------- ------ ------- Net income (loss) $ 228 $ (252) $ 33 $ 9 $ 158 $ (126) $ - $ 32 ======= ======= ======= ======= ======= ======= ====== ======= FINANCIAL RATIOS Loss & LAE 82.8 % 81.4% Acquisition expense 22.5 20.6 Underwriting expense 15.1 10.9 Dividends 1.4 0.1 ------- ------- Expense ratio, including dividends 39.0 31.6 ------- ------- Combined ratio 121.8 % 113.0% ======= ======= - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ P&C OPERATIONS 2003 RESULTS BEFORE PRIOR PREMIUM CORPORATE YEAR AND LOSS AGGREGATE 2003 DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 3,319 $ (64) $ (105) $ 3,150 Claim and claim adjustment expenses 2,258 513 (180) 2,591 Acquisition expenses 685 - - 685 Underwriting expenses 421 - - 421 Policyholders' dividends 27 - - 27 ------- ------- ------- ------- Underwriting (loss) income (72) (577) 75 (574) ------- ------- ------- ------- Net investment income (loss) 367 - (24) 343 Other revenues 176 - - 176 Other expenses 161 - - 161 ------- ------- ------- ------- Income (loss) before income tax, minority interest and net realized investment gains 310 (577) 51 (216) Income tax (expense) benefit (81) 199 (18) 100 Minority interest (5) - - (5) ------- ------- ------- ------- Income (loss) before net realized investment gains 224 (378) 33 (121) Realized investment gains 248 - - 248 Income tax expense on realized investment gains (86) - - (86) ------- ------- ------- ------- Income (loss) from continuing operations 386 (378) 33 41 Cumulative effect of a change in accounting principle - - - - ------- ------- ------- ------- Net income (loss) $ 386 $ (378) $ 33 $ 41 ======= ======= ======= ======= FINANCIAL RATIOS Loss & LAE 82.3 % Acquisition expense 21.7 Underwriting expense 13.3 Dividends 0.9 ------- Expense ratio, including dividends 35.9 ------- Combined ratio 118.2 % ======= - ------------------------------------------------------------------------------------------------------------------------------------
(1) Total development for the Property & Casualty Segments is comprised of Premium and Loss Development and the impact of the Corporate Aggregate Covers. (2) Pretax benefit of Aggregate Corporate Covers represents the current period ceded premiums and losses and associated interest expense. Interest expense on the funds withheld related to prior cessions to the Corporate Aggregate Covers is not presented on this schedule, but is included in the Analysis of Pretax Net Investment Income on pages 14 and 15. 20 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT IMPACT OF PRIOR YEAR DEVELOPMENT (1)
- ------------------------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED CNA RE TOTAL P&C SEGMENTS JUNE 30, 2003 2003 RESULTS 2003 RESULTS BEFORE PRIOR PREMIUM CORPORATE BEFORE PRIOR PREMIUM CORPORATE YEAR AND LOSS AGGREGATE 2003 YEAR AND LOSS AGGREGATE 2003 (In millions) DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 289 $ 12 $ (14) $ 287 $ 3,608 $ (52) $ (119) $ 3,437 Claim and claim adjustment expenses 183 34 (24) 193 2,441 547 (204) 2,784 Acquisition expenses 61 - - 61 746 - - 746 Underwriting expenses 27 - - 27 448 - - 448 Policyholders' dividends - - - - 27 - - 27 ------- ------- ------- ------- ------- ------- ------- ------- Underwriting income (loss) 18 (22) 10 6 (54) (599) 85 (568) ------- ------- ------- ------- ------- ------- ------- ------- Net investment income (loss) 49 - (3) 46 416 - (27) 389 Other revenues 1 - - 1 177 - - 177 Other expenses - - - - 161 - - 161 ------- ------- ------- ------- ------- ------- ------- ------- Income (loss) before income tax, minority interest and net realized investment gains 68 (22) 7 53 378 (599) 58 (163) Income tax (expense) benefit (21) 8 (2) (15) (102) 207 (20) 85 Minority interest - - - - (5) - - (5) ------- ------- ------- ------- ------- ------- ------- ------- Income (loss) before net realized investment gains 47 (14) 5 38 271 (392) 38 (83) Realized investment gains 42 - - 42 290 - - 290 Income tax expense on realized investment gains (11) - - (11) (97) - - (97) ------- ------- ------- ------- ------- ------- ------- ------- Income (loss) from continuing operations 78 (14) 5 69 464 (392) 38 110 Cumulative effect of a change in accounting principle - - - - - - - - ------- ------- ------- ------- ------- ------- ------- ------- Net income (loss) $ 78 $ (14) $ 5 $ 69 $ 464 $ (392) $ 38 $ 110 ======= ======= ======= ======= ======= ======= ======= ======= FINANCIAL RATIOS Loss & LAE 67.4 % 81.0 % Acquisition expense 21.3 21.7 Underwriting expense 9.2 13.0 Dividends - 0.8 ------- ------- Expense ratio, including dividends 30.5 35.5 ------- ------- Combined ratio 97.9 % 116.5 % ======= ======= - ------------------------------------------------------------------------------------------------------------------------------------
(1) Total development for the Property & Casualty Segments is comprised of Premium and Loss Development and the impact of the Corporate Aggregate Covers. (2) Pretax benefit of Aggregate Corporate Covers represents the current period ceded premiums and losses and associated interest expense. Interest expense on the funds withheld related to prior cessions to the Corporate Aggregate Covers is not presented on this schedule, but is included in the Analysis of Pretax Net Investment Income on pages 14 and 15. 21 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT IMPACT OF PRIOR YEAR DEVELOPMENT (1)
- ------------------------------------------------------------------------------------------------------------------------------------ THREE MONTHS ENDED STANDARD LINES SPECIALTY LINES JUNE 30, 2002 2002 RESULTS 2002 RESULTS BEFORE PRIOR PREMIUM CORPORATE BEFORE PRIOR PREMIUM CORPORATE YEAR AND LOSS AGGREGATE 2002 YEAR AND LOSS AGGREGATE 2002 (In millions) DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 1,034 $ (2) $ - $ 1,032 $ 539 $ (4) $ - $ 535 Claim and claim adjustment expenses 775 30 - 805 381 (4) - 377 Acquisition expenses 186 - - 186 109 - - 109 Underwriting expenses 121 - - 121 63 - - 63 Policyholders' dividends 15 - - 15 1 - - 1 ------- ------- ------- ------- ------- ------- ---------- ------- Underwriting loss (63) (32) - (95) (15) - - (15) ------- ------- ------- ------- ------- ------- ---------- ------- Net investment income 134 - - 134 75 - - 75 Other revenues 80 - - 80 33 - - 33 Other expenses 70 - - 70 25 - - 25 ------- ------- ------- ------- ------- ------- ---------- ------- Income (loss) before income tax, minority interest and net realized investment losses 81 (32) - 49 68 - - 68 Income tax (expense) benefit (20) 11 - (9) (23) - - (23) Minority interest - - - - (5) - - (5) ------- ------- ------- ------- ------- ------- ---------- ------- Income (loss) before net realized investment losses 61 (21) - 40 40 - - 40 Realized investment losses (31) - - (31) (26) - - (26) Income tax benefit on realized investment losses 10 - - 10 9 - - 9 ------- ------- ------- ------- ------- ------- ---------- ------- Income (loss) from continuing operations 40 (21) - 19 23 - - 23 Cumulative effect of a change in accounting principle - - - - - - - - ------- ------- ------- ------- ------- ------- ---------- ------- Net income (loss) $ 40 $ (21) $ - $ 19 $ 23 $ - $ - $ 23 ======= ======= ======= ======= ======= ======= ========== ======= FINANCIAL RATIOS Loss & LAE 78.1 % 70.3 % Acquisition expense 18.0 20.3 Underwriting expense 11.7 12.1 Dividends 1.5 0.1 ------- ------- Expense ratio, including dividends 31.2 32.5 ------- ------- Combined ratio 109.3 % 102.8 % ======= ======= - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ P&C OPERATIONS 2002 RESULTS BEFORE PRIOR PREMIUM CORPORATE YEAR AND LOSS AGGREGATE 2002 DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 1,573 $ (6) $ - $ 1,567 Claim and claim adjustment expenses 1,156 26 - 1,182 Acquisition expenses 295 - - 295 Underwriting expenses 184 - - 184 Policyholders' dividends 16 - - 16 ------- ------- -------- ------- Underwriting loss (78) (32) - (110) ------- ------- -------- ------- Net investment income 209 - - 209 Other revenues 113 - - 113 Other expenses 95 - - 95 ------- ------- -------- ------- Income (loss) before income tax, minority interest and net realized investment losses 149 (32) - 117 Income tax (expense) benefit (43) 11 - (32) Minority interest (5) - - (5) ------- ------- -------- ------- Income (loss) before net realized investment losses 101 (21) - 80 Realized investment losses (57) - - (57) Income tax benefit on realized investment losses 19 - - 19 ------- ------- -------- ------- Income (loss) from continuing operations 63 (21) - 42 Cumulative effect of a change in accounting principle - - - - ------- ------- -------- ------- Net income (loss) $ 63 $ (21) $ - $ 42 ======= ======= ======== ======= FINANCIAL RATIOS Loss & LAE 75.5 % Acquisition expense 18.8 Underwriting expense 11.8 Dividends 1.0 ------- Expense ratio, including dividends 31.6 ------- Combined ratio 107.1 % ======= - ------------------------------------------------------------------------------------------------------------------------------------
(1) Total development for the Property & Casualty Segments is comprised of Premium and Loss Development and the impact of the Corporate Aggregate Covers. (2) Pretax benefit of Aggregate Corporate Covers represents the current period ceded premiums and losses and associated interest expense. Interest expense on the funds withheld related to prior cessions to the Corporate Aggregate Covers is not presented on this schedule, but is included in the Analysis of Pretax Net Investment Income on pages 14 and 15. 22 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT IMPACT OF PRIOR YEAR DEVELOPMENT (1)
- ------------------------------------------------------------------------------------------------------------------------------------ THREE MONTHS ENDED CNA RE TOTAL P&C SEGMENTS JUNE 30, 2002 2002 RESULTS 2002 RESULTS BEFORE PRIOR PREMIUM CORPORATE BEFORE PRIOR PREMIUM CORPORATE YEAR AND LOSS AGGREGATE 2002 YEAR AND LOSS AGGREGATE 2002 (In millions) DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 160 $ 8 $ - $ 168 $ 1,733 $ 2 $ - $ 1,735 Claim and claim adjustment expenses 113 25 - 138 1,269 51 - 1,320 Acquisition expenses 31 - - 31 326 - - 326 Underwriting expenses 14 - - 14 198 - - 198 Policyholders' dividends - - - - 16 - - 16 ------- ------- ---- ------- ------- ------- --------- ------- Underwriting income (loss) 2 (17) - (15) (76) (49) - (125) ------- ------- ---- ------- ------- ------- --------- ------- Net investment income 48 - - 48 257 - - 257 Other revenues - - - - 113 - - 113 Other expenses - - - - 95 - - 95 ------- ------- ---- ------- ------- ------- --------- ------- Income (loss) before income tax, minority interest and net realized investment losses 50 (17) - 33 199 (49) - 150 Income tax (expense) benefit (3) (6) - (9) (46) 5 - (41) Minority interest - - - - (5) - - (5) ------- ------- ---- ------- ------- ------- --------- ------- Income (loss) before net realized investment losses 47 (23) - 24 148 (44) - 104 Realized investment losses (6) - - (6) (63) - - (63) Income tax benefit on realized investment losses 2 - - 2 21 - - 21 ------- ------- ---- ------- ------- ------- --------- ------- Income (loss) from continuing operations 43 (23) - 20 106 (44) - 62 Cumulative effect of a change in accounting principle - - - - - - - - ------- ------- ---- ------- ------- ------- --------- ------- Net income (loss) $ 43 $ (23) $ - $ 20 $ 106 $ (44) $ - $ 62 ======= ======= ==== ======= ======= ======= ========= ======= FINANCIAL RATIOS Loss & LAE 81.6 % 76.0% Acquisition expense 18.2 18.7 Underwriting expense 9.1 11.6 Dividends - 0.9 ------- ------- Expense ratio, including dividends 27.3 31.2 ------- ------- Combined ratio 108.9 % 107.2% ======= ======= - ------------------------------------------------------------------------------------------------------------------------------------
(1) Total development for the Property & Casualty Segments is comprised of Premium and Loss Development and the impact of the Corporate Aggregate Covers. (2) Pretax benefit of Aggregate Corporate Covers represents the current period ceded premiums and losses and associated interest expense. Interest expense on the funds withheld related to prior cessions to the Corporate Aggregate Covers is not presented on this schedule, but is included in the Analysis of Pretax Net Investment Income on pages 14 and 15. 23 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT IMPACT OF PRIOR YEAR DEVELOPMENT (1)
- ------------------------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED STANDARD LINES SPECIALTY LINES JUNE 30, 2002 2002 RESULTS 2002 RESULTS BEFORE PRIOR PREMIUM CORPORATE BEFORE PRIOR PREMIUM CORPORATE YEAR AND LOSS AGGREGATE 2002 YEAR AND LOSS AGGREGATE 2002 (In millions) DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 2,052 $ (4) $ - $ 2,048 $ 1,053 $ (10) $ - $ 1,043 Claim and claim adjustment expenses 1,560 29 - 1,589 747 (8) - 739 Acquisition expenses 385 - - 385 211 - - 211 Underwriting expenses 247 - - 247 126 - - 126 Policyholders' dividends 31 - - 31 2 - - 2 ------- ------- ----- ------- ------- ------- ------- ------- Underwriting loss (171) (33) - (204) (33) (2) - (35) ------- ------- ----- ------- ------- ------- ------- ------- Net investment income 237 - - 237 135 - - 135 Other revenues 163 - - 163 87 - - 87 Other expenses 141 - - 141 56 - - 56 ------- ------- ----- ------- ------- ------- ------- ------- Income (loss) before income tax, minority interest and net realized investment losses 88 (33) - 55 133 (2) - 131 Income tax (expense) benefit (17) 12 - (5) (48) 1 - (47) Minority interest - - - - (10) - - (10) ------- ------- ----- ------- ------- ------- ------- ------- Income (loss) before net realized investment losses 71 (21) - 50 75 (1) - 74 Realized investment losses (24) - - (24) (31) - - (31) Income tax benefit on realized investment losses 8 - - 8 10 - - 10 ------- ------- ----- ------- ------- ------- ------- ------- Income (loss) from continuing operations 55 (21) - 34 54 (1) - 53 Cumulative effect of a change in accounting principle - - - - (48) - - (48) ------- ------- ----- ------- ------- ------- ------- ------- Net income (loss) $ 55 $ (21) $ - $ 34 $ 6 $ (1) $ - $ 5 ======= ======= ===== ======= ======= ======= ======= ======= FINANCIAL RATIOS Loss & LAE 77.6 % 70.8 % Acquisition expense 18.8 20.2 Underwriting expense 12.1 12.2 Dividends 1.5 0.1 -------- ------- Expense ratio, including dividends 32.4 32.5 -------- ------- Combined ratio 110.0 % 103.3 % ======== ======= - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ P&C OPERATIONS 2002 RESULTS BEFORE PRIOR PREMIUM CORPORATE YEAR AND LOSS AGGREGATE 2002 DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 3,105 $ (14) $ - $ 3,091 Claim and claim adjustment expenses 2,307 21 - 2,328 Acquisition expenses 596 - - 596 Underwriting expenses 373 - - 373 Policyholders' dividends 33 - - 33 ------- ------- -------- ------- Underwriting loss (204) (35) - (239) ------- ------- -------- ------- Net investment income 372 - - 372 Other revenues 250 - - 250 Other expenses 197 - - 197 ------- ------- -------- ------- Income (loss) before income tax, minority interest and net realized investment losses 221 (35) - 186 Income tax (expense) benefit (65) 13 - (52) Minority interest (10) - - (10) ------- ------- -------- ------- Income (loss) before net realized investment losses 146 (22) - 124 Realized investment losses (55) - - (55) Income tax benefit on realized investment losses 18 - - 18 ------- ------- -------- ------- Income (loss) from continuing operations 109 (22) - 87 Cumulative effect of a change in accounting principle (48) - - (48) ------- ------- -------- ------- Net income (loss) $ 61 $ (22) $ - $ 39 ======= ======= ======== ======= FINANCIAL RATIOS Loss & LAE 75.3 % Acquisition expense 19.3 Underwriting expense 12.0 Dividends 1.1 ------- Expense ratio, including dividends 32.4 ------- Combined ratio 107.7 % ======= - ------------------------------------------------------------------------------------------------------------------------------------
(1) Total development for the Property & Casualty Segments is comprised of Premium and Loss Development and the impact of the Corporate Aggregate Covers. (2) Pretax benefit of Aggregate Corporate Covers represents the current period ceded premiums and losses and associated interest expense. Interest expense on the funds withheld related to prior cessions to the Corporate Aggregate Covers is not presented on this schedule, but is included in the Analysis of Pretax Net Investment Income on pages 14 and 15. 24 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT IMPACT OF PRIOR YEAR DEVELOPMENT (1)
- ------------------------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED CNA RE TOTAL P&C SEGMENTS JUNE 30, 2002 2002 RESULTS 2002 RESULTS BEFORE PRIOR PREMIUM CORPORATE BEFORE PRIOR PREMIUM CORPORATE YEAR AND LOSS AGGREGATE 2002 YEAR AND LOSS AGGREGATE 2002 (In millions) DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS DEVELOPMENT DEVELOPMENT COVERS (2) RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 288 $ 78 $ (61) $ 305 $ 3,393 $ 64 $ (61) $ 3,396 Claim and claim adjustment expenses 202 85 (93) 194 2,509 106 (93) 2,522 Acquisition expenses 69 - - 69 665 - - 665 Underwriting expenses 32 - - 32 405 - - 405 Policyholders' dividends - - - - 33 - - 33 ------- ------- ------- ------- ------- ------- ------- ------- Underwriting (loss) income (15) (7) 32 10 (219) (42) 32 (229) ------- ------- ------- ------- ------- ------- ------- ------- Net investment income (loss) 86 - (5) 81 458 - (5) 453 Other revenues 1 - - 1 251 - - 251 Other expenses - - - - 197 - - 197 ------- ------- ------- ------- ------- ------- ------- ------- Income (loss) before income tax, minority interest and net realized investment gains (losses) 72 (7) 27 92 293 (42) 27 278 Income tax (expense) benefit (21) 2 (9) (28) (86) 15 (9) (80) Minority interest - - - - (10) - - (10) ------- ------- ------- ------- ------- ------- ------- ------- Income (loss) before net realized investment gains (losses) 51 (5) 18 64 197 (27) 18 188 Realized investment gains (losses) 3 - - 3 (52) - - (52) Income tax benefit on realized investment gains (losses) 1 - - 1 19 - - 19 ------- ------- ------- ------- ------- ------- ------- ------- Income (loss) from continuing operations 55 (5) 18 68 164 (27) 18 155 Cumulative effect of a change in accounting principle - - - - (48) - - (48) ------- ------- ------- ------- ------- ------- ------- ------- Net income (loss) $ 55 $ (5) $ 18 $ 68 $ 116 $ (27) $ 18 $ 107 ======= ======= ======= ======= ======= ======= ======= ======= FINANCIAL RATIOS Loss & LAE 63.6 % 74.3 % Acquisition expense 22.6 19.6 Underwriting expense 10.5 11.9 Dividends - 1.0 ------- ------- Expense ratio, including dividends 33.1 32.5 ------- ------- Combined ratio 96.7 % 106.8 % ======= ======= - ------------------------------------------------------------------------------------------------------------------------------------
(1) Total development for the Property & Casualty Segments is comprised of Premium and Loss Development and the impact of the Corporate Aggregate Covers. (2) Pretax benefit of Aggregate Corporate Covers represents the current period ceded premiums and losses and associated interest expense. Interest expense on the funds withheld related to prior cessions to the Corporate Aggregate Covers is not presented on this schedule, but is included in the Analysis of Pretax Net Investment Income on pages 14 and 15. 25 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY AND CASUALTY BUSINESS SUMMARY OF DEVELOPMENT BY SEGMENT AND LINE OF BUSINESS
- ------------------------------------------------------------------------------------------------------------------------------------ THREE MONTHS ENDED ACCIDENT YEAR JUNE 30 (In millions) 2002 2001 2000 1999 1998 & P TOTAL - ------------------------------------------------------------------------------------------------------------------------------------ BY SEGMENT Standard Lines (1) $ 5 $ (51) $ (51) $ (95) $(102) $(294) Specialty Lines (24) (21) (29) (52) (64) (190) CNA Re 12 (18) (13) 10 (3) (12) Corporate & Other - - - 1 (8) (7) ----- ----- ----- ----- ----- ----- Total $ (7) $ (90) $ (93) $(136) $(177) $(503) ===== ===== ===== ===== ===== ===== BY LINE OF BUSINESS Commercial Automobile Liability $ 27 $ (32) $ 5 $ (30) $ 7 $ (23) Workers Compensation (1) 11 (12) (51) (85) (94) (231) Commercial Multiple-Peril (2) 5 9 (19) (16) (23) Medical Malpractice 3 (10) 4 (12) 9 (6) Special Liability 2 1 (7) 4 (10) (10) Other Liability (63) (23) (38) 45 41 (38) Special Property - (8) 2 (1) (77) (84) Fidelity/Surety (2) 1 9 (19) 4 (7) Reinsurance A, B, C 15 (11) (20) (13) (28) (57) Products Liability (1) (1) (9) (8) (12) (31) Other 3 - 3 2 (1) 7 ----- ----- ----- ----- ----- ----- Total $ (7) $ (90) $ (93) $(136) $(177) $(503) ===== ===== ===== ===== ===== ===== Total development before corporate cover impact $ (7) $(126) $(142) $(136) $(177) $(588) ===== ===== ===== ===== ===== ===== - ------------------------------------------------------------------------------------------------------------------------------------
(1) Includes $10 million of interest accretion. 26 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT GROSS LOSS AND ALAE RATIOS BY SEGMENT AND LINE OF BUSINESS CCC, CIC AND GALWAY
- ------------------------------------------------------------------------------------------------------------------------------ JUNE 30, 2003 ACCIDENT YEAR 2003 2002 2001 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------ BY SEGMENT Standard Lines 59 % 66 % 87 % 90 % 105 % 90 % 78 % 72 % Specialty Lines 64 69 112 100 97 89 86 74 CNA Re 61 63 166 81 117 122 87 80 P&C Segments 61 67 100 92 104 92 80 73 Corporate & Other 77 68 67 84 73 79 58 72 Total 64 % 67 % 92 % 90 % 98 % 89 % 76 % 73 % BY LINE OF BUSINESS Commercial Automobile Liability 62 % 73 % 94 % 99 % 101 % 93 % 89 % 74 % Workers Compensation 64 69 83 85 103 89 72 63 Commercial Multiple-Peril 61 67 77 88 103 85 75 79 Medical Malpractice 63 68 94 120 129 115 129 117 Special Liability 60 60 156 95 97 71 78 75 Other Liability 67 73 89 104 126 124 88 71 Special Property 45 56 91 59 65 75 59 76 Auto Physical Damage 63 55 64 75 69 67 62 65 Reinsurance A, B and C 60 68 228 87 125 110 68 72 Other 75 70 80 94 72 69 63 71 Total 64 % 67 % 92 % 90 % 98 % 89 % 76 % 73 % - ------------------------------------------------------------------------------------------------------------------------------
27 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT NET LOSS AND ALAE RATIOS BY SEGMENT AND LINE OF BUSINESS CCC, CIC AND GALWAY
- ------------------------------------------------------------------------------------------------------------------------------ JUNE 30, 2003 ACCIDENT YEAR 2003 2002 2001 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------ BY SEGMENT Standard Lines 62 % 68 % 61 % 76 % 90 % 89 % 77 % 73 % Specialty Lines 67 74 84 98 105 97 84 77 CNA Re 65 66 91 82 115 126 92 86 P&C Segments 63 69 69 82 96 94 80 75 Corporate & Other (1) N/A N/A N/A N/A 77 79 67 71 Total 63 % 69 % 69 % 81 % 93 % 91 % 77 % 74 % BY LINE OF BUSINESS Commercial Automobile Liability 64 % 70 % 85 % 85 % 96 % 96 % 92 % 80 % Workers Compensation 65 70 39 65 91 90 72 63 Commercial Multiple-Peril 63 70 67 81 95 87 80 81 Medical Malpractice 61 66 90 124 145 125 134 120 Special Liability 58 63 70 89 81 69 76 62 Other Liability 69 75 63 88 106 115 86 75 Special Property 46 53 112 63 60 76 64 81 Auto Physical Damage 53 54 68 71 70 73 64 66 Reinsurance A, B and C 65 73 175 91 128 113 74 80 Other 56 61 98 107 81 74 62 70 Total 63 % 69 % 69 % 81 % 93 % 91 % 77 % 74 % - ------------------------------------------------------------------------------------------------------------------------------
(1) Ratios subsequent to 1999 are not meaningful. 28 -----END PRIVACY-ENHANCED MESSAGE-----