EX-99.2 4 c80816exv99w2.txt FINANCIAL SUPPLEMENT, ISSUED 11/12/03 EXHIBIT 99.2 (CNA LOGO) CNA FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION SEPTEMBER 30, 2003 (CNA LOGO) CNA FINANCIAL CORPORATION TABLE OF CONTENTS SEPTEMBER 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 Group & Life Segments and Corporate & Other 11-12 Catastrophe Losses 13 Analysis of Pretax Net Investment Income 14-15 Statutory Data - Preliminary 16 Property & Casualty Segments Loss and LAE Ratio Analysis 17 Impact of Significant Items 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 LOGO) 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, in Specialty Lines, Life Operations and Corporate & Other. i (CNA LOGO) 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 LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------------------------------------------------------- PERIOD ENDED SEPTEMBER 30 THREE MONTHS NINE MONTHS FAV/ FAV/ (UNFAV) (UNFAV) (In millions) 2003 2002 (1) % CHANGE 2003 2002 (1) % CHANGE --------------------------------------------------------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS Revenues: Net earned premiums $ 2,126 $ 2,262 (6)% $ 6,704 $ 7,925 (15)% Net investment income 352 364 (3) 1,211 1,292 (6) Realized investment gains (losses), net of participating policyholders' and minority interests 164 24 N/A 466 (137) N/A Other revenues 83 137 (39) 288 465 (38) ------- ------- -------- ------- Total revenues 2,725 2,787 (2) 8,669 9,545 (9) ------- ------- -------- ------- Claims, benefits and expenses: Insurance claims and policyholders' benefits 4,032 1,850 (118) 7,969 6,542 (22) Other operating expenses 1,440 823 (75) 3,199 2,608 (23) Interest 33 37 11 100 112 11 ------- ------- -------- ------- Total claims, benefits and expenses 5,505 2,710 (103) 11,268 9,262 (22) ------- ------- -------- ------- (Loss) income from continuing operations before income tax and minority interest (2,780) 77 N/A (2,599) 283 N/A Income tax benefit (expense) 1,006 (22) N/A 983 (75) N/A Minority interest 14 (1) N/A 9 (11) 182 ------- ------- -------- ------- (Loss) income from continuing operations before cumulative effect of a change in accounting principle (1,760) 54 N/A (1,607) 197 N/A 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 (loss) income $(1,760) $ 54 N/A % $ (1,607) $ 105 N/A % ======= ======= ======== ======= ---------------------------------------------------------------------------------------------------------------------------------
(1) The three months and nine months ended September 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 LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT COMPONENTS OF NET INCOME AND PER SHARE DATA
---------------------------------------------------------------------------------------------------------------------------------- PERIOD ENDED SEPTEMBER 30 THREE MONTHS NINE MONTHS FAV/ FAV/ (UNFAV) (UNFAV) (In millions, except per share data) 2003 2002 (1) % CHANGE 2003 2002 (1) % CHANGE ---------------------------------------------------------------------------------------------------------------------------------- COMPONENTS OF NET (LOSS) INCOME (Loss) income before net realized investment gains (losses) $(1,865) $38 N/A % $(1,912) $ 284 N/A % Net realized investment gains (losses), net of participating policyholders' and minority interests 105 16 N/A 305 (87) N/A ------- ----- ------- ------ (Loss) income from continuing operations (1,760) 54 N/A (1,607) 197 N/A 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 (loss) income $(1,760) $54 N/A % $(1,607) $ 105 N/A % ======= ===== ======= ====== BASIC AND DILUTED (LOSS) EARNINGS PER SHARE (Loss) income from continuing operations (2) $ (7.94) $0.24 N/A $ (7.39) $ 0.89 N/A 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 (loss) earnings per share available to common stockholders $ (7.94) $0.24 N/A % $ (7.39) $ 0.47 N/A % ======= ===== ======= ====== Weighted average outstanding common stock and common stock equivalents 223.6 223.6 223.6 223.6 ----------------------------------------------------------------------------------------------------------------------------------
(1) The three months and nine months ended September 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 nine months ended September 30, 2003 were reduced by $15 million and $45 million, or $0.07 per share and $0.20 per share, of accumulated but undeclared preferred stock dividends. 2 (CNA LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT SELECTED BALANCE SHEET DATA AND CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS DATA
----------------------------------------------------------------------------------------- SEPTEMBER 30, DECEMBER 31, (In millions, except per share data) 2003 2002 ----------------------------------------------------------------------------------------- Total assets $67,850 $61,731 Insurance reserves 46,053 40,179 Debt 2,153 2,292 Total liabilities 59,404 52,074 Minority interest 245 256 Accumulated other comprehensive income 1,013 604 Total stockholders' equity 8,201 9,401 Book value per common share $ 33.11 $ 38.68 Book value per common share excluding unrealized gain or loss on fixed maturity securities $ 29.29 $ 36.53 Outstanding shares of common stock (in millions of shares) 223.6 223.6 -----------------------------------------------------------------------------------------
------------------------------------------------------------------------- THREE MONTHS ENDED SEPTEMBER 30 (In millions) 2003 2002 ------------------------------------------------------------------------- Net cash flows provided by operating activities $ 1,367 $ 371 Net cash flows used by investing activities (1,318) (225) Net cash flows used by financing activities (11) (32) ------- ----- Net cash flows $ 38 $ 114 ======= ===== -------------------------------------------------------------------------
------------------------------------------------------------------------- NINE MONTHS ENDED SEPTEMBER 30 (In millions) 2003 2002 ------------------------------------------------------------------------- Net cash flows provided by operating activities $ 1,482 $ 806 Net cash flows used by investing activities (1,270) (635) Net cash flows used by financing activities (160) (54) ------- ----- Net cash flows $ 52 $ 117 ======= ===== -------------------------------------------------------------------------
3 (CNA LOGO) 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 September 30, 2003 Gross $13,153 $6,417 $19,570 $2,336 $21,906 Ceded 4,994 2,452 7,446 1,061 8,507 Net 8,159 3,965 12,124 1,275 13,399 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 September 30, 2003 Gross $1,493 $1,479 $7,386 $32,264 Ceded 91 83 4,628 13,309 Net 1,402 1,396 2,758 18,955 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 September 30, 2003 and December 31, 2002 include $1,774 million ($1,431 million in Group Operations, $138 million in Life Operations and $205 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 September 30, 2003 and December 31, 2002 include $1,636 million ($1,415 million in Group Operations, $59 million in Life Operations and $162 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 LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY INSURANCE CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVE ROLLFORWARD (1)
------------------------------------------------------------------------------------------------------- PERIOD ENDED SEPTEMBER 30, 2003 THREE MONTHS NINE MONTHS ENDED ENDED (In millions) ------------------------------------------------------------------------------------------------------- Claim & claim adjustment expense reserves, beginning of period Gross $ 27,944 $ 27,370 Ceded 11,485 10,727 -------- -------- Net 16,459 16,643 -------- -------- Net incurred claim & claim adjustment expenses 3,802 7,463 Net claim & claim adjustment expense payments (1,306) (5,151) Claim & claim adjustment expense reserves, end of period Net 18,955 18,955 Ceded 13,309 13,309 -------- -------- Gross $ 32,264 $ 32,264 ======== ======== -------------------------------------------------------------------------------------------------------
(1) Gross reserves as of September 30, 2003 and December 31, 2002 include $1,774 million and $1,722 million of Life & Group company reserves, which are primarily related to accident and health business. Net reserves as of September 30, 2003 and December 31, 2002 include $1,636 million and $1,578 million of Life & Group company reserves, which are primarily related to accident and health business. 5 (CNA LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT INVESTMENTS BY ASSET CLASS
------------------------------------------------------------------------------------------------------------------ SEPTEMBER 30, 2003 DECEMBER 31, 2002 BOOK MARKET BOOK MARKET (In millions) VALUE VALUE VALUE VALUE ------------------------------------------------------------------------------------------------------------------ PROPERTY & CASUALTY AND OTHER COMPANIES Investments: Fixed maturity securities $19,237 $19,951 $17,673 $18,172 Equity securities 308 513 467 614 Short-term investments 5,258 5,258 5,780 5,778 Limited partnership investments 1,209 1,209 1,055 1,055 Mortgage loans and other invested assets 44 34 61 73 ------- ------- ------- ------- Subtotal 26,056 26,965 25,036 25,692 Securities lending collateral 698 698 399 399 ------- ------- ------- ------- Total investments $26,754 $27,663 $25,435 $26,091 ------- ------- ------- ------- LIFE AND GROUP COMPANIES Investments: Fixed maturity securities $ 8,197 $ 8,796 $ 7,860 $ 8,103 Equity securities 52 62 52 52 Short-term investments 918 918 686 686 Limited partnership investments 4 4 5 5 Mortgage loans, policy loans and other invested assets 202 189 210 211 ------- ------- ------- ------- Subtotal 9,373 9,969 8,813 9,057 Securities lending collateral 170 170 145 145 ------- ------- ------- ------- Total investments $ 9,543 $10,139 $ 8,958 $ 9,202 ------- ------- ------- ------- TOTAL INVESTMENTS $36,297 $37,802 $34,393 $35,293 ======= ======= ======= ======= ------------------------------------------------------------------------------------------------------------------
6 (CNA LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY SEGMENTS - OPERATING RESULTS
------------------------------------------------------------------------------------------------------------------------------------ THREE MONTHS ENDED STANDARD LINES SPECIALTY LINES P&C OPERATIONS SEPTEMBER 30 FAV/(UNFAV) FAV/(UNFAV) FAV/(UNFAV) (In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE 2003 2002 % CHANGE ------------------------------------------------------------------------------------------------------------------------------------ Gross written premiums $ 1,406 $ 1,213 16 % $ 944 $ 889 6 % $ 2,350 $ 2,102 12 % Net written premiums 834 1,033 (19) 719 628 14 1,553 1,661 (7) Net earned premiums 802 992 (19) 660 551 20 1,462 1,543 (5) Claim and claim adjustment expenses 1,563 602 (160) 727 499 (46) 2,290 1,101 (108) Acquisition expenses 498 151 N/A 238 122 (95) 736 273 (170) Underwriting expenses 151 132 (14) 73 69 (6) 224 201 (11) Policyholders' dividends 60 26 (131) 1 - N/A 61 26 (135) ------- ------- ----- ----- ------- ------- Underwriting (loss) income (1,470) 81 N/A (379) (139) (173) (1,849) (58) N/A ------- ------- ----- ----- ------- ------- Net investment income 42 67 (37) 64 49 31 106 116 (9) Other revenues 35 80 (56) 35 33 6 70 113 (38) Other expenses 38 75 49 29 31 6 67 106 37 ------- ------- ----- ----- ------- ------- (Loss) income before income tax, minority interest and net realized investment gains (losses) (1,431) 153 N/A (309) (88) N/A (1,740) 65 N/A Income tax benefit (expense) 514 (48) N/A 115 24 N/A 629 (24) N/A Minority interest - - N/A 14 (1) N/A 14 (1) N/A ------- ------- ----- ----- ------- ------- (Loss) income before net realized investment gains (losses) (917) 105 N/A (180) (65) (177) (1,097) 40 N/A Realized investment gains (losses) 54 (27) N/A 28 (15) N/A 82 (42) N/A Income tax (expense) benefit on realized investment gains (losses) (19) 10 N/A (12) 4 N/A (31) 14 N/A ------- ------- ----- ----- ------- ------- (Loss) income from continuing operations (882) 88 N/A (164) (76) (116) (1,046) 12 N/A Cumulative effect of a change in accounting principle - - N/A - - N/A - - N/A ------- ------- ----- ----- ------- ------- Net (loss) income $ (882) $ 88 N/A % $(164) $ (76) (116)% $(1,046) $ 12 N/A % ======= ======= ===== ===== ======= ======= FINANCIAL RATIOS Loss & LAE 194.8 % 60.6 % 110.1 % 90.7 % 156.6 % 71.3 % Acquisition expense 62.1 15.3 35.9 22.0 50.3 17.7 Underwriting expense 18.9 13.3 11.2 12.4 15.3 13.0 Dividends 7.5 2.6 0.2 0.2 4.2 1.7 ------- ------- ----- ----- ------- ------- Expense ratio, including dividends 88.5 31.2 47.3 34.6 69.8 32.4 ------- ------- ----- ----- ------- ------- Combined ratio 283.3 % 91.8 % 157.4 % 125.3 % 226.4 % 103.7 % ======= ======= ===== ===== ======= ======= ------------------------------------------------------------------------------------------------------------------------------------
7 (CNA LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY SEGMENTS - OPERATING RESULTS
----------------------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED CNA RE TOTAL P&C SEGMENTS SEPTEMBER 30 FAV/(UNFAV) FAV/(UNFAV) (In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE ----------------------------------------------------------------------------------------------------------------------------------- Gross written premiums $ 150 $ 179 (16)% $ 2,500 $ 2,281 10 % Net written premiums 109 167 (35) 1,662 1,828 (9) Net earned premiums 84 157 (46) 1,546 1,700 (9) Claim and claim adjustment expenses 178 181 2 2,468 1,282 (93) Acquisition expenses 26 34 24 762 307 (148) Underwriting expenses 17 14 (21) 241 215 (12) Policyholders' dividends - - N/A 61 26 (135) ----- ----- ------- ------- Underwriting loss (137) (72) (90) (1,986) (130) N/A ----- ----- ------- ------- Net investment income 9 28 (68) 115 144 (20) Other revenues - 1 N/A 70 114 (39) Other expenses - 2 N/A 67 108 38 ----- ----- ------- ------- (Loss) income before income tax, minority interest and net realized investment gains (losses) (128) (45) (184) (1,868) 20 N/A Income tax benefit (expense) 47 20 135 676 (4) N/A Minority interest - - N/A 14 (1) N/A ----- ----- ------- ------- (Loss) income before net realized investment gains (losses) (81) (25) N/A (1,178) 15 N/A Realized investment gains (losses) 12 (5) N/A 94 (47) N/A Income tax (expense) benefit on realized investment gains (losses) (5) 4 N/A (36) 18 N/A ----- ----- ------- ------- Loss from continuing operations (74) (26) (185) (1,120) (14) N/A Cumulative effect of a change in accounting principle - - N/A - - N/A ----- ----- ------- ------- Net loss $ (74) $ (26) (185)% $(1,120) $ (14) N/A % ===== ===== ======= ======= FINANCIAL RATIOS Loss & LAE 211.4 % 115.4 % 159.6 % 75.4 % Acquisition expense 31.4 22.0 49.3 18.1 Underwriting expense 20.5 8.6 15.5 12.6 Dividends - - 4.0 1.5 ----- ----- ------- ------- Expense ratio, including dividends 51.9 30.6 68.8 32.2 ----- ----- ------- ------- Combined ratio 263.3 % 146.0 % 228.4 % 107.6 % ===== ===== ======= ======= -----------------------------------------------------------------------------------------------------------------------------------
8 (CNA LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY SEGMENTS - OPERATING RESULTS
------------------------------------------------------------------------------------------------------------------------------------ NINE MONTHS ENDED STANDARD LINES SPECIALTY LINES P&C OPERATIONS SEPTEMBER 30 FAV/(UNFAV) FAV/(UNFAV) FAV/(UNFAV) (In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE 2003 2002 % CHANGE ------------------------------------------------------------------------------------------------------------------------------------ Gross written premiums $ 4,265 $ 4,017 6 % $ 2,787 $ 2,484 12 % $ 7,052 $ 6,501 8 % Net written premiums 2,828 3,172 (11) 2,064 1,740 19 4,892 4,912 (0) Net earned premiums 2,664 3,040 (12) 1,948 1,594 22 4,612 4,634 (0) Claim and claim adjustment expenses 3,105 2,191 (42) 1,776 1,238 (43) 4,881 3,429 (42) Acquisition expenses 918 536 (71) 503 333 (51) 1,421 869 (64) Underwriting expenses 431 379 (14) 215 195 (10) 646 574 (13) Policyholders' dividends 86 57 (51) 2 2 0 88 59 (49) ------- ------- ------- ------- ------- ------- Underwriting loss (1,876) (123) N/A (548) (174) N/A (2,424) (297) N/A ------- ------- ------- ------- ------- ------- Net investment income 236 304 (22) 213 184 16 449 488 (8) Other revenues 165 243 (32) 81 120 (33) 246 363 (32) Other expenses 155 216 28 72 87 17 227 303 25 ------- ------- ------- ------- ------- ------- (Loss) income before income tax, minority interest and net realized investment gains (losses) (1,630) 208 N/A (326) 43 N/A (1,956) 251 N/A Income tax benefit (expense) 604 (53) N/A 125 (23) N/A 729 (76) N/A Minority interest - - N/A 9 (11) 182 9 (11) 182 ------- ------- ------- ------- ------- ------- (Loss) income before net realized investment gains (losses) (1,026) 155 N/A (192) 9 N/A (1,218) 164 N/A Realized investment gains (losses) 236 (51) N/A 94 (46) N/A 330 (97) N/A Income tax (expense) benefit on realized investment gains (losses) (83) 18 N/A (34) 14 N/A (117) 32 N/A ------- ------- ------- ------- ------- ------- (Loss) income from continuing operations (873) 122 N/A (132) (23) N/A (1,005) 99 N/A Cumulative effect of a change in accounting principle - - N/A - (48) N/A - (48) N/A ------- ------- ------- ------- ------- ------- Net (loss) income $ (873) $ 122 N/A % $ (132) $ (71) (86)% $(1,005) $ 51 N/A % ======= ======= ======= ======= ======= ======= FINANCIAL RATIOS Loss & LAE 116.6 % 72.1 % 91.2 % 77.6 % 105.8 % 74.0 % Acquisition expense 34.5 17.6 25.8 20.9 30.8 18.8 Underwriting expense 16.1 12.4 11.0 12.3 14.1 12.3 Dividends 3.2 1.9 0.1 0.1 1.9 1.3 ------- ------- ------- ------- ------- ------- Expense ratio, including dividends 53.8 31.9 36.9 33.3 46.8 32.4 ------- ------- ------- ------- ------- ------- Combined ratio 170.4 % 104.0 % 128.1 % 110.9 % 152.6 % 106.4 % ======= ======= ======= ======= ======= ======= ------------------------------------------------------------------------------------------------------------------------------------
9 (CNA LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY SEGMENTS - OPERATING RESULTS
----------------------------------------------------------------------------------------------------------------------------------- NINE MONTHS ENDED CNA RE TOTAL P&C SEGMENTS SEPTEMBER 30 FAV/(UNFAV) FAV/(UNFAV) (In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE ----------------------------------------------------------------------------------------------------------------------------------- Gross written premiums $ 528 $ 578 (9)% $ 7,580 $ 7,079 7 % Net written premiums 437 494 (12) 5,329 5,406 (1) Net earned premiums 371 462 (20) 4,983 5,096 (2) Claim and claim adjustment expenses 371 375 1 5,252 3,804 (38) Acquisition expenses 87 103 16 1,508 972 (55) Underwriting expenses 44 46 4 690 620 (11) Policyholders' dividends - - N/A 88 59 (49) ----- ----- ------- ------- Underwriting loss (131) (62) (111) (2,555) (359) N/A ----- ----- ------- ------- Net investment income 55 109 (50) 504 597 (16) Other revenues 1 2 (50) 247 365 (32) Other expenses - 2 N/A 227 305 26 ----- ----- ------- ------- (Loss) income before income tax, minority interest and net realized investment gains (losses) (75) 47 N/A (2,031) 298 N/A Income tax benefit (expense) 32 (8) N/A 761 (84) N/A Minority interest - - N/A 9 (11) 182 ----- ----- ------- ------- (Loss) income before net realized investment gains (losses) (43) 39 N/A (1,261) 203 N/A Realized investment gains (losses) 54 (2) N/A 384 (99) N/A Income tax (expense) benefit on realized investment gains (losses) (16) 5 N/A (133) 37 N/A ----- ----- ------- ------- (Loss) income from continuing operations (5) 42 (112) (1,010) 141 N/A Cumulative effect of a change in accounting principle - - N/A - (48) N/A ----- ----- ------- ------- Net (loss) income $ (5) $ 42 (112)% $(1,010) $ 93 N/A % ===== ===== ======= ======= FINANCIAL RATIOS Loss & LAE 100.0 % 81.2 % 105.4 % 74.6 % Acquisition expense 23.6 22.4 30.3 19.1 Underwriting expense 11.7 9.8 13.8 12.1 Dividends - - 1.8 1.2 ----- ----- ------- ------- Expense ratio, including dividends 35.3 32.2 45.9 32.4 ----- ----- ------- ------- Combined ratio 135.3 % 113.4 % 151.3 % 107.0 % ===== ===== ======= ======= -----------------------------------------------------------------------------------------------------------------------------------
10 (CNA LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT GROUP & LIFE AND CORPORATE & OTHER SEGMENTS - OPERATING RESULTS
------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED TOTAL P&C GROUP LIFE CORPORATE TOTAL SEPTEMBER 30 SEGMENTS OPERATIONS OPERATIONS (2) & OTHER OPERATIONS (2) (In millions) 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002 ---------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,546 $ 1,700 $ 338 $ 292 $ 264 $ 236 $ (22) $ 34 $ 2,126 $ 2,262 Insurance claims & policyholders' benefits 2,468 1,282 262 222 315 271 922 44 3,967 1,819 Policyholders' dividends 61 26 1 - 5 4 (2) 1 65 31 Insurance related expenses 1,003 522 111 102 69 60 203 7 1,386 691 Net investment income 115 144 67 65 129 131 41 24 352 364 Other revenues 70 114 13 21 21 34 (21) (32) 83 137 Other expenses 67 108 7 8 13 19 - 34 87 169 ------- ------- ----- ----- ----- ----- ----- ---- ------- ------- (Loss) income before income tax, minority interest and net realized investment gains (losses) (1,868) 20 37 46 12 47 (1,125) (60) (2,944) 53 Income tax benefit (expense) 676 (4) (12) (16) (2) (16) 403 22 1,065 (14) Minority interest 14 (1) - - - - - - 14 (1) ------- ------- ----- ----- ----- ----- ----- ---- ------- ------- (Loss) income before net realized investment gains (losses) (1,178) 15 25 30 10 31 (722) (38) (1,865) 38 Realized investment gains (losses) 94 (47) 25 5 33 (20) 12 86 164 24 Income tax (expense) benefit on realized investment gains (losses) (36) 18 (8) (1) (12) 6 (3) (31) (59) (8) ------- ------- ----- ----- ----- ----- ----- ---- ------- ------- (Loss) income from continuing operations (1,120) (14) 42 34 31 17 (713) 17 (1,760) 54 Loss from discontinued operations - - - - - - - - - - Cumulative effect of a change in accounting principle - - - - - - - - - - ------- ------- ----- ----- ----- ----- ----- ---- ------- ------- Net (loss) income $(1,120) $ (14) $ 42 $ 34 $ 31 $ 17 $(713) $ 17 $(1,760) $ 54 ======= ======= ===== ===== ===== ===== ===== ==== ======= ======= ----------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------ OTHER FINANCIAL DATA PROPERTY & CASUALTY COMPANY INFORMATION TOTAL P&C GROUP LIFE CORPORATE TOTAL SEGMENTS OPERATIONS (1) OPERATIONS & OTHER OPERATIONS (1) 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002 ------------------------------------------------------------------------------------------------------------------------------ Gross written premiums $ 2,500 $ 2,281 $ 185 $ 218 127 $ 124 $ 490 $ 446 $ 3,302 $ 3,069 Net written premiums 1,662 1,828 - (2) 127 124 1 (26) 1,790 1,924 Net earned premiums 1,546 1,700 - - 129 122 (3) (19) 1,672 1,803 Underwriting (loss) income (1,986) (130) 3 7 (66) (50) (1,138) (55) (3,187) (228) FINANCIAL RATIOS Loss & LAE 159.6 % 75.4 % N/A % N/A % 124.0 % 118.1 % N/A % N/A % 212.1 % 79.0 % Acquisition expense 49.3 18.1 N/A N/A 19.2 13.7 N/A N/A 58.6 17.4 Underwriting expense 15.5 12.6 N/A N/A 7.9 9.2 N/A N/A 16.3 14.8 Dividends 4.0 1.5 - N/A - - N/A N/A 3.7 1.4 -------- -------- ----- ----- -------- ------ -------- ------ -------- -------- Expense ratio, including dividends 68.8 32.2 N/A N/A 27.1 22.9 N/A N/A 78.6 33.6 -------- -------- ----- ----- -------- ------ -------- ------ -------- -------- Combined ratio 228.4 % 107.6 % N/A % N/A % 151.1 % 141.0 % N/A % N/A % 290.7 % 112.6 % ======== ======== ===== ===== ======== ====== ======== ====== ======== ======== ------------------------------------------------------------------------------------------------------------------------------
(1) Included in gross written premiums for 2003 and 2002 is $177 million and $209 million of business ceded to CNA Group Life Assurance Company. (2) The three months ended September 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. 11 (CNA LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT GROUP & LIFE AND CORPORATE & OTHER SEGMENTS - OPERATING RESULTS
------------------------------------------------------------------------------------------------------------------------------------ NINE MONTHS ENDED TOTAL P&C GROUP LIFE CORPORATE TOTAL SEPTEMBER 30 SEGMENTS OPERATIONS (1) OPERATIONS (3) & OTHER OPERATIONS (1)(3) (In millions) 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002 ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 4,983 $ 5,096 $ 982 $ 2,017 $ 783 $ 710 $ (44) $ 102 $ 6,704 $ 7,925 Insurance claims & policyholders' benefits 5,252 3,804 760 1,721 911 810 950 141 7,873 6,476 Policyholders' dividends 88 59 1 - 14 10 (7) (3) 96 66 Insurance related expenses 2,198 1,592 342 416 221 188 238 - 2,999 2,196 Net investment income 504 597 200 188 393 402 114 105 1,211 1,292 Other revenues 247 365 46 66 64 89 (69) (55) 288 465 Other expenses 227 305 22 24 44 56 7 139 300 524 ------- ------- ----- ------- ----- ----- ------- ----- ------- ------- (Loss) income before income tax, minority interest and net realized investment gains (losses) (2,031) 298 103 110 50 137 (1,187) (125) (3,065) 420 Income tax benefit (expense) 761 (84) (33) (37) (13) (48) 429 44 1,144 (125) Minority interest 9 (11) - - - - - - 9 (11) ------- ------- ----- ------- ----- ----- ------- ----- ------- ------- (Loss) income before net realized investment gains (losses) (1,261) 203 70 73 37 89 (758) (81) (1,912) 284 Realized investment gains (losses) 384 (99) (7) (12) 10 (62) 79 36 466 (137) Income tax (expense) benefit on realized investment gains (losses) (133) 37 3 4 (4) 21 (27) (12) (161) 50 ------- ------- ----- ------- ----- ----- ------- ----- ------- ------- (Loss) income from continuing operations (1,010) 141 66 65 43 48 (706) (57) (1,607) 197 Loss from discontinued operations - - - - - (35) - - - (35) Cumulative effect of a change in accounting principle - (48) - - - (8) - (1) - (57) ------- ------- ----- ------- ----- ----- ------- ----- ------- ------- Net (loss) income $(1,010) $ 93 $ 66 $ 65 $ 43 $ 5 $ (706) $ (58) $(1,607) $ 105 ======= ======= ===== ======= ===== ===== ======= ===== ======= ======= ------------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------- OTHER FINANCIAL DATA TOTAL P&C GROUP LIFE CORPORATE TOTAL PROPERTY & CASUALTY SEGMENTS OPERATIONS (1)(2) OPERATIONS & OTHER OPERATIONS (1)(2) COMPANY INFORMATION 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002 ---------------------------------------------------------------------------------------------------------------------------------- Gross written premiums $ 7,580 $ 7,079 $ 589 $ 1,787 $ 395 $ 371 $ 1,416 $1,349 $ 9,980 $10,586 Net written premiums 5,329 5,406 - 1,149 394 370 (7) (23) 5,716 6,902 Net earned premiums 4,983 5,096 - 1,151 389 356 (4) (13) 5,368 6,590 Underwriting (loss) income (2,555) (359) 4 15 (181) (129) (1,208) (134) (3,940) (607) FINANCIAL RATIOS Loss & LAE 105.4 % 74.6 % N/A % 87.7 % 119.9 % 111.9 % N/A % N/A % 124.3 % 79.6 % Acquisition expense 30.3 19.1 N/A (0.6) 16.4 14.5 N/A N/A 33.6 15.5 Underwriting expense 13.8 12.1 N/A 11.6 10.2 9.8 N/A N/A 13.8 13.2 Dividends 1.8 1.2 - - - - N/A N/A 1.7 0.9 -------- -------- ----- -------- ------- ------ -------- ------ -------- ------- Expense ratio, including dividends 45.9 32.4 N/A 11.0 26.6 24.3 N/A N/A 49.1 29.6 -------- -------- ----- -------- ------- ------ -------- ------ -------- ------- Combined ratio 151.3 % 107.0 % N/A % 98.7 % 146.5 % 136.2 % N/A % N/A % 173.4 % 109.2 % ======== ======== ===== ======== ======= ====== ======== ====== ======== ======= ----------------------------------------------------------------------------------------------------------------------------------
(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 $562 million and $603 million of business ceded to CNA Group Life Assurance Company. (3) The nine months ended September 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 LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY SEGMENTS - CATASTROPHE LOSSES
-------------------------------------------------------------------------------------------------------------------------------- CATASTROPHE LOSSES (PRETAX) STANDARD SPECIALTY P&C TOTAL P&C (In millions) LINES LINES OPERATIONS CNA RE SEGMENTS -------------------------------------------------------------------------------------------------------------------------------- Three months ended September 30, 2003 $34 $13 $ 47 $10 $ 57 Nine months ended September 30, 2003 95 16 111 21 132 Three months ended September 30, 2002 $ 5 $17 $ 22 $17 $ 39 Nine months ended September 30, 2002 14 19 33 17 50 --------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------- CATASTROPHE LOSSES (AFTER-TAX) STANDARD SPECIALTY P&C TOTAL P&C (In millions) LINES LINES OPERATIONS CNA RE SEGMENTS -------------------------------------------------------------------------------------------------------------------------------- Three months ended September 30, 2003 $22 $ 8 $30 $ 7 $37 Nine months ended September 30, 2003 62 10 72 14 86 Three months ended September 30, 2002 $ 3 $11 $14 $11 $25 Nine months ended September 30, 2002 9 12 21 11 32 --------------------------------------------------------------------------------------------------------------------------------
13 (CNA LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT ANALYSIS OF PRETAX NET INVESTMENT INCOME
----------------------------------------------------------------------------------------------------------------------------------- (In millions) STANDARD LINES ----------------------------------------------------------------------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 2002 1Q03 2Q03 3Q03 YTD 2003 ---- ---- ---- ---- ---- ---- ---- ---- -------- Limited partnership income $ 3 $ 20 $(39) $ (2) $ (18) $ 13 $ 40 $ 33 $ 86 Interest on funds withheld and other deposits (38) (44) (36) (56) (174) (34) (76) (114) (224) Other investment income 138 158 142 152 590 131 120 123 374 ------------------------------------------------------------------------------- Net investment income $103 $134 $ 67 $ 94 $ 398 $110 $ 84 $ 42 $ 236 =============================================================================== ------------------------------------------------------------------------------- SPECIALTY LINES ------------------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 2002 1Q03 2Q03 3Q03 YTD 2003 ---- ---- ---- ---- ---- ---- ---- ---- -------- Limited partnership income $ 1 $ 8 $(14) $ (1) $ (6) $ 5 $17 $ 13 $ 35 Interest on funds withheld and other deposits (9) (7) (11) (7) (34) (6) (7) (12) (25) Other investment income 68 74 74 77 293 71 69 63 203 ------------------------------------------------------------------------------- Net investment income $ 60 $ 75 $ 49 $ 69 $ 253 $70 $79 $ 64 $213 =============================================================================== ------------------------------------------------------------------------------- P&C OPERATIONS ------------------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 2002 1Q03 2Q03 3Q03 YTD 2003 ---- ---- ---- ---- ---- ---- ---- ---- -------- Limited partnership income $ 4 $ 28 $(53) $ (3) $ (24) $ 18 $ 57 $ 46 $ 121 Interest on funds withheld and other deposits (47) (51) (47) (63) (208) (40) (83) (126) (249) Other investment income 206 232 216 229 883 202 189 186 577 ------------------------------------------------------------------------------- Net investment income $163 $209 $116 $163 $ 651 $180 $163 $ 106 $ 449 =============================================================================== ------------------------------------------------------------------------------- CNA RE ------------------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 2002 1Q03 2Q03 3Q03 YTD 2003 ---- ---- ---- ---- ---- ---- ---- ---- -------- Limited partnership income $ 1 $ 5 $(9) $(1) $ (4) $ 2 $ 8 $ 7 $ 17 Interest on funds withheld and other deposits (11) (6) (6) (6) (29) (6) (10) (22) (38) Other investment income 43 49 43 42 177 28 24 24 76 ------------------------------------------------------------------------------- Net investment income $ 33 $ 48 $28 $35 $144 $24 $ 22 $ 9 $ 55 =============================================================================== ------------------------------------------------------------------------------- TOTAL P&C SEGMENTS ------------------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 2002 1Q03 2Q03 3Q03 YTD 2003 ---- ---- ---- ---- ---- ---- ---- ---- -------- Limited partnership income $ 5 $ 33 $(62) $ (4) $ (28) $ 20 $ 65 $ 53 $ 138 Interest on funds withheld and other deposits (58) (57) (53) (69) (237) (46) (93) (148) (287) Other investment income 249 281 259 271 1,060 230 213 210 653 ------------------------------------------------------------------------------- Net investment income $196 $257 $144 $198 $ 795 $ 204 $185 $ 115 $ 504 ===============================================================================
14 (CNA LOGO) 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 3Q03 YTD 2003 ---- ---- ---- ---- -------- ---- ---- ---- -------- Limited partnership income $ 5 $ 33 $(62) $ (4) $ (28) $ 20 $ 65 $ 53 $ 138 Interest on funds withheld and other deposits (58) (57) (53) (69) (237) (46) (93) (148) (287) Other investment income 249 281 259 271 1,060 230 213 210 653 ------------------------------------------------------------------------------------ Net investment income $196 $257 $144 $198 $ 795 $204 $ 185 $ 115 $ 504 ==================================================================================== ------------------------------------------------------------------------------------ GROUP OPERATIONS ------------------------------------------------------------------------------------ 1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 YTD 2003 ---- ---- ---- ---- -------- ---- ---- ---- -------- Limited partnership income $-- $-- $-- $-- $ -- $-- $-- $-- $ -- Interest on funds withheld and other deposits -- -- -- -- -- -- -- -- -- Other investment income 61 62 65 64 252 63 70 67 200 ------------------------------------------------------------------------------------ Net investment income $61 $62 $65 $64 $252 $63 $70 $67 $200 ==================================================================================== ------------------------------------------------------------------------------------ LIFE OPERATIONS ------------------------------------------------------------------------------------ 1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 YTD 2003 ---- ---- ---- ---- -------- ---- ---- ---- -------- Limited partnership income $ -- $ -- $ (1) $ (1) $ (2) $ -- $ -- $ 1 $ 1 Interest on funds withheld and other deposits -- -- -- -- -- -- -- -- -- Other investment income 134 137 132 139 542 131 133 128 392 ------------------------------------------------------------------------------------ Net investment income $134 $137 $131 $138 $540 $131 $133 $129 $393 ==================================================================================== ------------------------------------------------------------------------------------ CORPORATE & OTHER ------------------------------------------------------------------------------------ 1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 YTD 2003 ---- ---- ---- ---- -------- ---- ---- ---- -------- Limited partnership income $ 2 $ 5 $(10) $(1) $ (4) $ 3 $10 $ 7 $ 20 Interest on funds withheld and other deposits -- -- -- (2) (2) (1) -- -- (1) Other investment income 33 41 34 41 149 32 29 34 95 ------------------------------------------------------------------------------------ Net investment income $35 $46 $ 24 $38 $143 $34 $39 $41 $114 ==================================================================================== ------------------------------------------------------------------------------------ TOTAL OPERATIONS ------------------------------------------------------------------------------------ 1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 YTD 2003 ---- ---- ---- ---- -------- ---- ---- ---- -------- Limited partnership income $ 7 $ 38 $(73) $ (6) $ (34) $ 23 $ 75 $ 61 $ 159 Interest on funds withheld and other deposits (58) (57) (53) (71) (239) (47) (93) (148) (288) Other investment income 477 521 490 515 2,003 456 445 439 1,340 ------------------------------------------------------------------------------------ Net investment income $426 $502 $364 $438 $1,730 $432 $427 $ 352 $1,211 ====================================================================================
15 CNA FINANCIAL CORPORATION (CNA LOGO) FINANCIAL SUPPLEMENT STATUTORY DATA - PRELIMINARY
------------------------------------------------------------------------------------------------------------------------------------ PERIOD ENDED SEPTEMBER 30 THREE MONTHS NINE MONTHS INCOME STATEMENT (PRELIMINARY) FAV / (UNFAV) (PRELIMINARY) FAV / (UNFAV) (In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE ------------------------------------------------------------------------------------------------------------------------------------ PROPERTY & CASUALTY COMPANIES Gross written premiums $ 3,449 $ 2,875 20 % $ 10,580 $ 10,919 (3)% Net written premiums 1,763 1,894 (7) 5,654 6,828 (17) Net earned premiums 1,563 1,737 (10) 5,085 6,369 (20) Claim and claim adjustment expenses 3,445 1,424 (142) 6,417 5,121 (25) Acquisition expenses 377 362 (4) 1,147 1,142 (0) Underwriting expenses 296 285 (4) 840 872 4 Policyholders' dividends 13 27 52 53 62 15 Restructuring and other related costs - - N/A - - N/A ------- ------- -------- -------- Underwriting loss (2,568) (361) N/A (3,372) (828) N/A Net investment income 374 341 10 969 1,047 (7) Other revenue (280) (52) N/A (404) (163) (148) Income tax benefit (expense) 695 (39) N/A 739 (64) N/A Net realized gains (losses) 141 (89) N/A 445 (64) N/A ------- ------- -------- -------- Net loss $(1,638) $ (200) N/A % $ (1,623) $ (72) N/A % ======= ======= ======== ======== FINANCIAL RATIOS Loss and LAE 220.3 % 82.0 % 126.2 % 80.4 % Acquisition expense 21.4 19.1 20.3 16.7 Underwriting expense 16.8 15.1 14.9 12.8 Policyholders' dividends 0.8 1.5 1.0 1.0 ------- ------- -------- -------- Expense ratio 39.0 35.7 36.2 30.5 ------- ------- -------- -------- Combined ratio 259.3 % 117.7 % 162.4 % 110.9 % ======= ======= ======== ======== LIFE COMPANIES Premium income $ 496 $ 454 $ 1,476 $ 1,415 ------------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- SUPPLEMENTAL STATUTORY DATA (PRELIMINARY) SEPTEMBER 30, DECEMBER 31, (In millions) 2003 2002 -------------------------------------------------------------------------------- PROPERTY & CASUALTY COMPANIES Statutory surplus (1) $ 5,213 $ 6,836 LIFE COMPANIES Statutory surplus $ 1,597 $ 1,645 Gross life insurance in force 432,606 437,751 --------------------------------------------------------------------------------
(1) Surplus includes the Property & Casualty Companies' equity ownership of the life insurance subsidiaries. 16 CNA FINANCIAL CORPORATION (CNA LOGO) FINANCIAL SUPPLEMENT PROPERTY & CASUALTY SEGMENTS LOSS AND LAE RATIO ANALYSIS
------------------------------------------- ------------------------------------------- STANDARD LINES CNA RE ------------------------------------------- ------------------------------------------- 2003 YTD 2002 FY 2002 FY 2003 YTD 2002 FY 2002 FY EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT 9/30/03 12/31/02 9/30/03 9/30/03 12/31/02 9/30/03 ------------------------------------------- ------------------------------------------- Gross Accident Year 65.4 % 74.6 % 66.6 % 59.7 % 64.2 % 61.2 % Impact of Finite Reinsurance - (0.1) - - 0.2 0.2 Impact of Other Reinsurance 3.0 0.8 4.0 4.2 4.9 0.6 ----- ----- ----- ----- ----- ----- Net Accident Year 68.4 75.3 70.6 % 63.9 69.3 62.0 % ===== ===== Impact of Corporate Covers (10.4) - (19.1) (6.4) Impact of Development 58.6 (3.3) 55.2 15.4 ----- ----- ----- ----- Net Calendar Year 116.6 % 72.0 % 100.0 % 78.3 % ===== ===== ===== ===== ------------------------------------------- -------------------------------------------
------------------------------------------- ------------------------------------------- SPECIALTY LINES P&C SEGMENTS ------------------------------------------- ------------------------------------------- 2003 YTD 2002 FY 2002 FY 2003 YTD 2002 FY 2002 FY EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT 9/30/03 12/31/02 9/30/03 9/30/03 12/31/02 9/30/03 ------------------------------------------- ------------------------------------------- Gross Accident Year 64.9 % 68.1 % 68.6 % 64.8 % 71.5 % 66.9 % Impact of Finite Reinsurance - - - - - - Impact of Other Reinsurance 3.8 3.6 4.4 3.3 2.1 3.7 ----- ----- ----- ----- ----- ----- Net Accident Year 68.7 71.7 73.0 % 68.1 73.6 70.6 % ===== ===== Impact of Corporate Covers (2.0) (1.2) (7.8) (1.1) Impact of Development 24.5 6.6 45.1 1.6 ----- ----- ----- ----- Net Calendar Year 91.2 % 77.1 % 105.4 % 74.1 % ===== ===== ===== ===== ------------------------------------------- -------------------------------------------
------------------------------------------- P&C OPERATIONS ------------------------------------------- 2003 YTD 2002 FY 2002 FY EVALUATED AT EVALUATED AT EVALUATED AT 9/30/03 12/31/02 9/30/03 ------------------------------------------- Gross Accident Year 65.2 % 72.1 % 67.4 % Impact of Finite Reinsurance - - - Impact of Other Reinsurance 3.3 2.0 4.0 ----- ----- ----- Net Accident Year 68.5 74.1 71.4 % ===== Impact of Corporate Covers (7.0) (0.4) Impact of Development 44.3 0.2 ----- ----- Net Calendar Year 105.8 % 73.9 % ===== ===== -------------------------------------------
17 CNA FINANCIAL CORPORATION (CNA LOGO) FINANCIAL SUPPLEMENT IMPACT OF SIGNIFICANT ITEMS
------------------------------------------------------------------------------------------------------------------------------ THREE MONTHS ENDED STANDARD LINES SEPTEMBER 30, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003 (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 1,092 $ (130) $ (160) $ - $ - $ 802 Claim and claim adjustment expenses 758 1,105 (300) - - 1,563 Acquisition expenses 240 - - 55 203 498 Underwriting expenses 151 - - - - 151 Policyholders' dividends 14 46 - - - 60 ------- --------- ------- ----- ------ ------- Underwriting (loss) income (71) (1,281) 140 (55) (203) (1,470) ------- --------- ------- ----- ------ ------- Net investment income (loss) 95 - (53) - - 42 Other revenues 35 - - - - 35 Other expenses 38 - - - - 38 ------- --------- ------- ----- ------ ------- Income (loss) before income tax, minority interest and net realized investment gains 21 (1,281) 87 (55) (203) (1,431) Income tax benefit (expense) 6 448 (30) 19 71 514 Minority interest - - - - - - ------- --------- ------- ----- ------ ------- Income (loss) before net realized investment gains 27 (833) 57 (36) (132) (917) Realized investment gains 54 - - - - 54 Income tax expense on realized investment gains (19) - - - - (19) ------- --------- ------- ----- ------ ------- Income (loss) from continuing operations 62 (833) 57 (36) (132) (882) Cumulative effect of a change in accounting principle - - - - - - ------- --------- ------- ----- ------ ------- Net income (loss) $ 62 $ (833) $ 57 $ (36) $ (132) $ (882) ======= ========= ======= ===== ====== ======= FINANCIAL RATIOS Loss & LAE 194.8 % Acquisition expense 62.1 Underwriting expense 18.9 Dividends 7.5 ------- Expense ratio, including dividends 88.5 ------- Combined ratio 283.3 % =======
------------------------------------------------------------------------------------------------------------------------------------ SPECIALTY LINES 2003 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003 ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 691 $ 1 $ (32) $ - $ - $ 660 Claim and claim adjustment expenses 504 282 (59) - - 727 Acquisition expenses 159 - - 79 - 238 Underwriting expenses 73 - - - - 73 Policyholders' dividends 1 - - - - 1 ----- ------ ----- ------ ----- ------- Underwriting (loss) income (46) (281) 27 (79) - (379) ----- ------ ----- ------ ----- ------- Net investment income (loss) 74 - (10) - - 64 Other revenues 35 - - - - 35 Other expenses 29 - - - - 29 ----- ------ ----- ------ ----- ------- Income (loss) before income tax, minority interest and net realized investment gains 34 (281) 17 (79) - (309) Income tax benefit (expense) (5) 98 (6) 28 - 115 Minority interest 5 9 - - - 14 ----- ------ ----- ------ ----- ------- Income (loss) before net realized investment gains 34 (174) 11 (51) - (180) Realized investment gains 28 - - - - 28 Income tax expense on realized investment gains (12) - - - - (12) ----- ------ ----- ------ ----- ------- Income (loss) from continuing operations 50 (174) 11 (51) - (164) Cumulative effect of a change in accounting principle - - - - - - ----- ------ ----- ------ ----- ------- Net income (loss) $ 50 $ (174) $ 11 $ (51) $ - $ (164) ===== ====== ===== ====== ===== ======= FINANCIAL RATIOS Loss & LAE 110.1 % Acquisition expense 35.9 Underwriting expense 11.2 Dividends 0.2 ------- Expense ratio, including dividends 47.3 ------- Combined ratio 157.4 % =======
------------------------------------------------------------------------------------------------------------------------------------ P&C OPERATIONS 2003 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003 ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 1,783 $ (129) $ (192) $ - $ - $ 1,462 Claim and claim adjustment expenses 1,262 1,387 (359) - - 2,290 Acquisition expenses 399 - - 134 203 736 Underwriting expenses 224 - - - - 224 Policyholders' dividends 15 46 - - - 61 ------- -------- ------ ---- ----- -------- Underwriting (loss) income (117) (1,562) 167 (134) (203) (1,849) ------- -------- ------ ---- ----- -------- Net investment income (loss) 169 - (63) - - 106 Other revenues 70 - - - - 70 Other expenses 67 - - - - 67 ------- -------- ------ ---- ----- -------- Income (loss) before income tax, minority interest and net realized investment gains 55 (1,562) 104 (134) (203) (1,740) Income tax benefit (expense) 1 546 (36) 47 71 629 Minority interest 5 9 - - - 14 ------- -------- ------ ---- ----- -------- Income (loss) before net realized investment gains 61 (1,007) 68 (87) (132) (1,097) Realized investment gains 82 - - - - 82 Income tax expense on realized investment gains (31) - - - - (31) ------- -------- ------ ---- ----- -------- Income (loss) from continuing operations 112 (1,007) 68 (87) (132) (1,046) Cumulative effect of a change in accounting principle - - - - - - ------- -------- ------ ---- ----- -------- Net income (loss) $ 112 $ (1,007) $ 68 $(87) $(132) $ (1,046) ======= ======== ====== ==== ===== ======== FINANCIAL RATIOS Loss & LAE 156.6 % Acquisition expense 50.3 Underwriting expense 15.3 Dividends 4.2 -------- Expense ratio, including dividends 69.8 -------- Combined ratio 226.4 % ========
(1) Includes net prior year development for premiums, claims and allocated claim adjustment expense reserves, dividends, and change in reserves for unallocated claim adjustment expenses. (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 (CNA LOGO) FINANCIAL SUPPLEMENT IMPACT OF SIGNIFICANT ITEMS
------------------------------------------------------------------------------------------------------------------------------------ THREE MONTHS ENDED CNA RE SEPTEMBER 30, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003 (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 121 $ 6 $(43) $ - $ - $ 84 Claim and claim adjustment expenses 79 179 (80) - - 178 Acquisition expenses 24 - - 2 - 26 Underwriting expenses 17 - - - - 17 Policyholders' dividends - - - - - - ----- ----- ---- ---- ---- ----- Underwriting income (loss) 1 (173) 37 (2) - (137) ----- ----- ---- ---- ---- ----- Net investment income (loss) 23 - (14) - - 9 Other revenues - - - - - - Other expenses - - - - - - ----- ----- ---- ---- ---- ----- Income (loss) before income tax, minority interest and net realized investment gains 24 (173) 23 (2) - (128) Income tax (expense) benefit (7) 61 (8) 1 - 47 Minority interest - - - - - - ----- ----- ---- ---- ---- ----- Income (loss) before net realized investment gains 17 (112) 15 (1) - (81) Realized investment gains 12 - - - - 12 Income tax expense on realized investment gains (5) - - - - (5) ----- ----- ---- ---- ---- ----- Income (loss) from continuing operations 24 (112) 15 (1) - (74) Cumulative effect of a change in accounting principle - - - - - - ----- ----- ---- ---- ---- ----- Net income (loss) $ 24 $(112) $ 15 $ (1) $ - $ (74) ===== ===== ==== ==== ==== ===== FINANCIAL RATIOS Loss & LAE 211.4 % Acquisition expense 31.4 Underwriting expense 20.5 Dividends - ----- Expense ratio, including dividends 51.9 ----- Combined ratio 263.3 % =====
------------------------------------------------------------------------------------------------------------------------------------ TOTAL P&C SEGMENTS 2003 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003 ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 1,904 $ (123) $ (235) $ - $ - $ 1,546 Claim and claim adjustment expenses 1,341 1,566 (439) - - 2,468 Acquisition expenses 423 - - 136 203 762 Underwriting expenses 241 - - - - 241 Policyholders' dividends 15 46 - - - 61 -------- -------- ------ ---- ----- -------- Underwriting income (loss) (116) (1,735) 204 (136) (203) (1,986) -------- -------- ------ ---- ----- -------- Net investment income (loss) 192 - (77) - - 115 Other revenues 70 - - - - 70 Other expenses 67 - - - - 67 -------- -------- ------ ---- ----- -------- Income (loss) before income tax, minority interest and net realized investment gains 79 (1,735) 127 (136) (203) (1,868) Income tax (expense) benefit (6) 607 (44) 48 71 676 Minority interest 5 9 - - - 14 -------- -------- ------ ---- ----- -------- Income (loss) before net realized investment gains 78 (1,119) 83 (88) (132) (1,178) Realized investment gains 94 - - - - 94 Income tax expense on realized investment gains (36) - - - - (36) -------- -------- ------ ---- ----- -------- Income (loss) from continuing operations 136 (1,119) 83 (88) (132) (1,120) Cumulative effect of a change in accounting principle - - - - - - -------- -------- ------ ---- ----- -------- Net income (loss) $ 136 $ (1,119) $ 83 $(88) $(132) $ (1,120) ======== ======== ====== ==== ===== ======== FINANCIAL RATIOS Loss & LAE 159.6 % Acquisition expense 49.3 Underwriting expense 15.5 Dividends 4.0 -------- Expense ratio, including dividends 68.8 -------- Combined ratio 228.4 % ==========
(1) Includes net prior year development for premiums, claims and allocated claim adjustment expense reserves, dividends, and change in reserves for unallocated claim adjustment expenses. (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 (CNA LOGO) FINANCIAL SUPPLEMENT IMPACT OF SIGNIFICANT ITEMS
---------------------------------------------------------------------------------------------------------------------------- NINE MONTHS ENDED STANDARD LINES SEPTEMBER 30, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003 (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ---------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 3,138 $ (209) $(265) $ - $ - $ 2,664 Claim and claim adjustment expenses 2,172 1,413 (480) - - 3,105 Acquisition expenses 621 - - 55 242 918 Underwriting expenses 431 - - - - 431 Policyholders' dividends 40 46 - - - 86 ------- -------- ----- ---- ----- ------- Underwriting (loss) income (126) (1,668) 215 (55) (242) (1,876) ------- -------- ----- ---- ----- ------- Net investment income (loss) 313 - (77) - - 236 Other revenues 165 - - - - 165 Other expenses 155 - - - - 155 ------- -------- ----- ---- ----- ------- Income (loss) before income tax, minority interest and net realized investment gains 197 (1,668) 138 (55) (242) (1,630) Income tax (expense) benefit (36) 584 (48) 19 85 604 Minority interest - - - - - - ------- -------- ----- ---- ----- ------- Income (loss) before net realized investment gains 161 (1,084) 90 (36) (157) (1,026) Realized investment gains 236 - - - - 236 Income tax expense on realized investment gains (83) - - - - (83) ------- -------- ----- ---- ----- ------- Income (loss) from continuing operations 314 (1,084) 90 (36) (157) (873) Cumulative effect of a change in accounting principle - - - - - - ------- -------- ----- ---- ----- ------- Net income (loss) $ 314 (1,084) $ 90 $(36) $(157) $ (873) ======= ======== ===== ==== ===== ======= FINANCIAL RATIOS Loss & LAE 116.6 % Acquisition expense 34.5 Underwriting expense 16.1 Dividends 3.2 ------- Expense ratio, including dividends 53.8 ------- Combined ratio 170.4 % ======= ----------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------- SPECIALTY LINES 2003 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003 ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS -------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,964 $ 16 $ (32) $ - $ - $ 1,948 Claim and claim adjustment expenses 1,348 487 (59) - - 1,776 Acquisition expenses 424 - - 79 - 503 Underwriting expenses 215 - - - - 215 Policyholders' dividends 2 - - - - 2 ------- ------- ------ ---- ---- ------- Underwriting (loss) income (25) (471) 27 (79) - (548) ------- ------- ------ ---- ---- ------- Net investment income (loss) 223 - (10) - - 213 Other revenues 81 - - - - 81 Other expenses 72 - - - - 72 ------- ------- ------ ---- ---- ------- Income (loss) before income tax, minority interest and net realized investment gains 207 (471) 17 (79) - (326) Income tax (expense) benefit (63) 166 (6) 28 - 125 Minority interest - 9 - - - 9 ------- ------- ------ ---- ---- ------- Income (loss) before net realized 144 (296) 11 (51) - (192) investment gains Realized investment gains 94 - - - - 94 Income tax expense on realized investment gains (34) - - - - (34) ------- ------- ------ ---- ---- ------- Income (loss) from continuing operations 204 (296) 11 (51) - (132) Cumulative effect of a change in accounting principle - - - - - - ------- ------- ------ ---- ---- ------- Net income (loss) $ 204 $ (296) $ 11 $(51) $ - $ (132) ======= ======= ====== ==== ==== ======= FINANCIAL RATIOS Loss & LAE 91.2 % Acquisition expense 25.8 Underwriting expense 11.0 Dividends 0.1 Expense ratio, including dividends ------- Combined ratio 36.9 ------- 128.1 % ======= --------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------- P&C OPERATIONS 2003 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003 ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS --------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 5,102 $ (193) $ (297) $ - $ - $ 4,612 Claim and claim adjustment expenses 3,520 1,900 (539) - - 4,881 Acquisition expenses 1,045 - - 134 242 1,421 Underwriting expenses 646 - - - - 646 Policyholders' dividends 42 46 - - - 88 ------- ------- ------ ----- ----- ------- Underwriting (loss) income (151) (2,139) 242 (134) (242) (2,424) ------- ------- ------ ----- ----- ------- Net investment income (loss) 536 - (87) - - 449 Other revenues 246 - - - - 246 Other expenses 227 - - - - 227 ------- ------- ------ ----- ----- ------- Income (loss) before income tax, minority interest and net realized investment gains 404 (2,139) 155 (134) (242) (1,956) Income tax (expense) benefit (99) 750 (54) 47 85 729 Minority interest - 9 - - - 9 ------- ------- ------ ----- ----- ------- Income (loss) before net realized investment gains 305 (1,380) 101 (87) (157) (1,218) Realized investment gains 330 - - - - 330 Income tax expense on realized investment gains (117) - - - - (117) ------- ------- ------ ----- ----- ------- Income (loss) from continuing operations 518 (1,380) 101 (87) (157) (1,005) Cumulative effect of a change in accounting principle - - - - - - ------- ------- ------ ----- ----- ------- Net income (loss) $ 518 $(1,380) $ 101 $ (87) $(157) $(1,005) ======= ======= ====== ===== ===== ======= FINANCIAL RATIOS Loss & LAE 105.8 % Acquisition expense 30.8 Underwriting expense 14.1 Dividends 1.9 ------- Expense ratio, including dividends 46.8 ------- Combined ratio 152.6 % ======= ---------------------------------------------------------------------------------------------------------------------------------
(1) Includes net prior year development for premiums, claims and allocated claim adjustment expense reserves, dividends, and change in reserves for unallocated claim adjustment expenses. (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 LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT IMPACT OF SIGNIFICANT ITEMS
------------------------------------------------------------------------------------------------------------------------------------ NINE MONTHS ENDED CNA RE SEPTEMBER 30, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003 (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 410 $ 18 $ (57) $ - $ - $ 371 Claim and claim adjustment expenses 262 213 (104) - - 371 Acquisition expenses 85 - - 2 - 87 Underwriting expenses 44 - - - - 44 Policyholders' dividends - - - - - - ----- ------ --- --- ---- ------ Underwriting income (loss) 19 (195) 47 (2) - (131) ----- ------ --- --- ---- ------ Net investment income (loss) 72 - (17) - - 55 Other revenues 1 - - - - 1 Other expenses - - - - - - ----- ------ --- --- ---- ------ Income (loss) before income tax, minority interest and net realized investment gains 92 (195) 30 (2) - (75) Income tax (expense) benefit (26) 68 (11) 1 - 32 Minority interest - - - - - - ----- ------ --- --- ---- ------ Income (loss) before net realized investment gains 66 (127) 19 (1) - (43) Realized investment gains 54 - - - - 54 Income tax expense on realized investment gains (16) - - - - (16) ----- ------ --- --- ---- ------ Income (loss) from continuing operations 104 (127) 19 (1) - (5) Cumulative effect of a change in accounting principle - - - - - - ----- ------ --- --- ---- ------ Net income (loss) $ 104 $ (127) $ 19 $(1) $ - $ (5) ===== ====== ===== === ==== ====== FINANCIAL RATIOS Loss & LAE 100.0 % Acquisition expense 23.6 Underwriting expense 11.7 Dividends - ------ Expense ratio, including dividends 35.3 ------ Combined ratio 135.3 % ====== -------------------------------------------------------------------------------------------------------------------------
TOTAL P&C SEGMENTS 2003 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003 ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 5,512 $ (175) $ (354) $ - $ - $ 4,983 Claim and claim adjustment expenses 3,782 2,113 (643) - - 5,252 Acquisition expenses 1,130 - - 136 242 1,508 Underwriting expenses 690 - - - - 690 Policyholders' dividends 42 46 - - - 88 ------- ------- ------ ---- ----- ------- Underwriting income (loss) (132) (2,334) 289 (136) (242) (2,555) ------- ------- ------ ---- ----- ------- Net investment income (loss) 608 - (104) - - 504 Other revenues 247 - - - - 247 Other expenses 227 - - - - 227 ------- ------- ------ ---- ----- ------- Income (loss) before income tax, 496 (2,334) 185 (136) (242) (2,031) minority interest and net realized investment gains (125) 818 (65) 48 85 761 Income tax (expense) benefit - 9 - - - 9 Minority interest ------- ------- ------ ---- ----- ------- Income (loss) before net realized investment gains 371 (1,507) 120 (88) (157) (1,261) Realized investment gains 384 - - - - 384 Income tax expense on realized investment gains (133) - - - - (133) ------- ------- ------ ---- ----- ------- Income (loss) from continuing operations 622 (1,507) 120 (88) (157) (1,010) Cumulative effect of a change in accounting principle - - - - - - ------- ------- ------ ---- ----- ------- Net income (loss) $ 622 $(1,507) $ 120 $(88) $(157) $(1,010) ======= ======= ====== ==== ===== ======= FINANCIAL RATIOS Loss & LAE 105.4 % Acquisition expense 30.3 Underwriting expense 13.8 Dividends 1.8 ------- Expense ratio, including dividends 45.9 ------- Combined ratio 151.3 % ======= -------------------------------------------------------------------------------------------------------------------------
(1) Includes net prior year development for premiums, claims and allocated claim adjustment expense reserves, dividends, and change in reserves for unallocated claim adjustment expenses. (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 (CNA LOGO) IMPACT OF SIGNIFICANT ITEMS
------------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED STANDARD LINES SEPTEMBER 30, 2002 2002 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002 (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,032 $ (40) $ - $ - $ - $ 992 Claim and claim adjustment expenses 780 (178) - - - 602 Acquisition expenses 151 - - - - 151 Underwriting expenses 132 - - - - 132 Policyholders' dividends 20 6 - - - 26 ------- ------- --- --- --- ----- Underwriting (loss) income (51) 132 - - - 81 ------- ------- --- --- --- ----- Net investment income 67 - - - - 67 Other revenues 80 - - - - 80 Other expenses 75 - - - - 75 ------- ------- --- --- --- ----- Income (loss) before income tax, minority interest and net realized investment losses 21 132 - - - 153 Income tax (expense) benefit (2) (46) - - - (48) Minority interest - - - - - - ------- ------- --- --- --- ----- Income (loss) before net realized investment losses 19 86 - - - 105 Realized investment losses (27) - - - - (27) Income tax benefit on realized investment losses 10 - - - - 10 ------- ------- --- --- --- ----- Income (loss) from continuing operations 2 86 - - - 88 Cumulative effect of a change in accounting principle - - - - - - ------- ------- --- --- --- ----- Net income (loss) $ 2 $ 86 $ - $ - $ - $ 88 ======= ======= === === === ===== FINANCIAL RATIOS Loss & LAE 60.6 % Acquisition expense 15.3 Underwriting expense 13.3 Dividends 2.6 ----- Expense ratio, including dividends 31.2 ----- Combined ratio 91.8 % ===== -------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------- SPECIALTY LINES 2002 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002 ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 588 $ 2 $ (39) $ - $ - $ 551 Claim and claim adjustment expenses 451 103 (55) - - 499 Acquisition expenses 122 - - - - 122 Underwriting expenses 69 - - - - 69 Policyholders' dividends - - - - - - ----- ----- ----- --- --- ----- Underwriting (loss) income (54) (101) 16 - - (139) ----- ----- ----- --- --- ----- Net investment income 54 - (5) - - 49 Other revenues 33 - - - - 33 Other expenses 31 - - - - 31 ----- ----- ----- --- --- ----- Income (loss) before income tax, minority interest and net realized investment losses 2 (101) 11 - - (88) Income tax (expense) benefit (7) 35 (4) - - 24 Minority interest (1) - - - - (1) ----- ----- ----- --- --- ----- Income (loss) before net realized investment losses (6) (66) 7 - - (65) Realized investment losses (15) - - - - (15) Income tax benefit on realized investment losses 4 - - - - 4 ----- ----- ----- --- --- ----- Income (loss) from continuing operations (17) (66) 7 - - (76) Cumulative effect of a change in accounting principle - - - - - - ----- ----- ----- --- --- ----- Net income (loss) $ (17) $ (66) $ 7 $ - $ - $ (76) ===== ===== ===== === === ===== FINANCIAL RATIOS Loss & LAE 90.7 % Acquisition expense 22.0 Underwriting expense 12.4 Dividends 0.2 ----- Expense ratio, including dividends 34.6 ----- Combined ratio 125.3 % ===== -------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------- P&C OPERATIONS 2002 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002 ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,620 $ (38) $ (39) $ - $ - $ 1,543 Claim and claim adjustment expenses 1,231 (75) (55) - - 1,101 Acquisition expenses 273 - - - - 273 Underwriting expenses 201 - - - - 201 Policyholders' dividends 20 6 - - - 26 ------- ------- ------ --- --- ------- Underwriting (loss) income (105) 31 16 - - (58) ------- ------- ------ --- --- ------- Net investment income (loss) 121 - (5) - - 116 Other revenues 113 - - - - 113 Other expenses 106 - - - - 106 ------- ------- ------ --- --- ------- Income before income tax, minority interest and net realized investment losses 23 31 11 - - 65 Income tax (expense) (9) (11) (4) - - (24) Minority interest (1) - - - - (1) ------- ------- ------ --- --- ------- Income before net realized investment losses 13 20 7 - - 40 Realized investment losses (42) - - - - (42) Income tax benefit on realized investment losses 14 - - - - 14 ------- ------- ------ --- --- ------- (Loss) income from continuing operations (15) 20 7 - - 12 Cumulative effect of a change in accounting principle - - - - - ------- ------- ------ --- --- ------- Net (loss) income $ (15) $ 20 $ 7 $ - $ - $ 12 ======= ======= ====== === === ======= FINANCIAL RATIOS Loss & LAE 71.3 % Acquisition expense 17.7 Underwriting expense 13.0 Dividends 1.7 ------- Expense ratio, including dividends 32.4 ------- Combined ratio 103.7 % ======= -------------------------------------------------------------------------------------------------------------------------
(1) Includes net prior year development for premiums, claims and allocated claim adjustment expense reserves, dividends, and change in reserves for unallocated claim adjustment expenses. (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 (CNA LOGO) IMPACT OF SIGNIFICANT ITEMS
------------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED CNA RE SEPTEMBER 30, 2002 2002 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002 (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 132 $ 25 $ - $ - $ - $ 157 Claim and claim adjustment expenses 89 92 - - - 181 Acquisition expenses 34 - - - - 34 Underwriting expenses 14 - - - - 14 Policyholders' dividends - - - - - - ----- ----- ---- --- --- ----- Underwriting (loss) income (5) (67) - - - (72) ----- ----- ---- --- --- ----- Net investment income (loss) 28 - - - - 28 Other revenues 1 - - - - 1 Other expenses 2 - - - - 2 ----- ----- ---- --- --- ----- Income (loss) before income tax, minority interest and net realized investment losses 22 (67) - - - (45) Income tax (expense) benefit (3) 23 - - - 20 Minority interest - - - - - - ----- ----- ---- --- --- ----- Income (loss) before net realized investment losses 19 (44) - - - (25) Realized investment losses (5) - - - - (5) Income tax benefit on realized investment losses 4 - - - - 4 ----- ----- ---- --- --- ----- Income (loss) from continuing operations 18 (44) - - - (26) Cumulative effect of a change in accounting principle - - - - - - ----- ----- ---- --- --- ----- Net income (loss) $ 18 $ (44) $ - $ - $ - $ (26) ===== ===== ==== === === ===== FINANCIAL RATIOS Loss & LAE 115.4 % Acquisition expense 22.0 Underwriting expense 8.6 Dividends - ----- Expense ratio, including dividends 30.6 ----- Combined ratio 146.0 % ===== -------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------- TOTAL P&C SEGMENTS 2002 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002 ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,752 $ (13) $ (39) $ - $ - $ 1,700 Claim and claim adjustment expenses 1,320 17 (55) - - 1,282 Acquisition expenses 307 - - - - 307 Underwriting expenses 215 - - - - 215 Policyholders' dividends 20 6 - - - 26 ------- ------- ------- --- --- ------- Underwriting (loss) income (110) (36) 16 - - (130) ------- ------- ------- --- --- ------- Net investment income (loss) 149 - (5) - - 144 Other revenues 114 - - - - 114 Other expenses 108 - - - - 108 ------- ------- ------- --- --- ------- Income (loss) before income tax, minority interest and net realized investment losses 45 (36) 11 - - 20 Income tax (expense) benefit (12) 12 (4) - - (4) Minority interest (1) - - - - (1) ------- ------- ------- --- --- ------- Income (loss) before net realized investment losses 32 (24) 7 - - 15 Realized investment losses (47) - - - - (47) Income tax benefit on realized investment losses 18 - - - - 18 ------- ------- ------- --- --- ------- Income (loss) from continuing operations 3 (24) 7 - - (14) Cumulative effect of a change in accounting principle - - - - - - ------- ------- ------- --- --- ------- Net income (loss) $ 3 $ (24) $ 7 $ - $ - $ (14) ======= ======= ======= === === ======= FINANCIAL RATIOS Loss & LAE 75.4 % Acquisition expense 18.1 Underwriting expense 12.6 Dividends 1.5 ------- Expense ratio, including dividends 32.2 ------- Combined ratio 107.6 % ======= -------------------------------------------------------------------------------------------------------------------------
(1) Includes net prior year development for premiums, claims and allocated claim adjustment expense reserves, dividends, and change in reserves for unallocated claim adjustment expenses. (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 LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT IMPACT OF SIGNIFICANT ITEMS
------------------------------------------------------------------------------------------------------------------------- NINE MONTHS ENDED STANDARD LINES SEPTEMBER 30, 2002 2002 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002 (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 3,084 $ (44) $ - $ - $ - $ 3,040 Claim and claim adjustment expenses 2,340 (149) - - - 2,191 Acquisition expenses 536 - - - - 536 Underwriting expenses 379 - - - - 379 Policyholders' dividends 51 6 - - - 57 ------- ------- ------- --- --- ------- Underwriting (loss) income (222) 99 - - - (123) ------- ------- ------- --- --- ------- Net investment income (loss) 304 - - - - 304 Other revenues 243 - - - - 243 Other expenses 216 - - - - 216 ------- ------- ------- --- --- ------- Income (loss) before income tax, minority interest and net realized investment losses 109 99 - - - 208 Income tax (expense) benefit (18) (35) - - - (53) Minority interest - - - - - - ------- ------- ------- --- --- ------- Income (loss) before net realized investment losses 91 64 - - - 155 Realized investment losses (51) - - - - (51) Income tax benefit on realized investment losses 18 - - - - 18 ------- ------- ------- --- --- ------- Income (loss) from continuing operations 58 64 - - - 122 Cumulative effect of a change in accounting principle - - - - - - ------- ------- ------- --- --- ------- Net income (loss) $ 58 $ 64 $ - $ - $ - $ 122 ======= ======= ======= === === ======= FINANCIAL RATIOS Loss & LAE 72.1 % Acquisition expense 17.6 Underwriting expense 12.4 Dividends 1.9 ------- Expense ratio, including dividends 31.9 ------- Combined ratio 104.0 % ======= -------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------- SPECIALTY LINES 2002 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002 ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,640 $ (7) $ (39) $ - $ - $ 1,594 Claim and claim adjustment expenses 1,198 95 (55) - - 1,238 Acquisition expenses 333 - - - - 333 Underwriting expenses 195 - - - - 195 Policyholders' dividends 2 - - - - 2 ------- ------- ------ --- --- ------- Underwriting (loss) income (88) (102) 16 - - (174) ------- ------- ------ --- --- ------- Net investment income (loss) 189 - (5) - - 184 Other revenues 120 - - - - 120 Other expenses 87 - - - - 87 ------- ------- ------ --- --- ------- Income (loss) before income tax, minority interest and net realized investment losses 134 (102) 11 - - 43 Income tax (expense) benefit (53) 34 (4) - - (23) Minority interest (11) - - - - (11) ------- ------- ------ --- --- ------- Income (loss) before net realized investment losses 70 (68) 7 - - 9 Realized investment losses (46) - - - - (46) Income tax benefit on realized investment losses 14 - - - - 14 ------- ------- ------ --- --- ------- Income (loss) from continuing operations 38 (68) 7 - - (23) Cumulative effect of a change in accounting principle (48) - - - - (48) ------- ------- ------ --- --- ------- Net income (loss) $ (10) $ (68) $ 7 $ - $ - $ (71) ======= ======= ====== === === ======= FINANCIAL RATIOS Loss & LAE 77.6 % Acquisition expense 20.9 Underwriting expense 12.3 Dividends 0.1 ------- Expense ratio, including dividends 33.3 ------- Combined ratio 110.9 % ======= ------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------ P&C OPERATIONS 2002 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002 ITEMS DEVELOPMENT(1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 4,724 $ (51) $ (39) $ - $ - $ 4,634 Claim and claim adjustment expenses 3,538 (54) (55) - - 3,429 Acquisition expenses 869 - - - - 869 Underwriting expenses 574 - - - - 574 Policyholders' dividends 53 6 - - - 59 ------- ------- ------ --- --- ------- Underwriting (loss) income (310) (3) 16 - - (297) ------- ------- ------ --- --- ------- Net investment income (loss) 493 - (5) - - 488 Other revenues 363 - - - - 363 Other expenses 303 - - - - 303 ------- ------- ------ --- --- ------- Income (loss) before income tax, minority interest and net realized investment losses 243 (3) 11 - - 251 Income tax expense (71) (1) (4) - - (76) Minority interest (11) - - - - (11) ------- ------- ------ --- --- ------- Income (loss) before net realized investment losses 161 (4) 7 - - 164 Realized investment losses (97) - - - - (97) Income tax benefit on realized investment losses 32 - - - - 32 ------- ------- ------ --- --- ------- Income (loss) from continuing operations 96 (4) 7 - - 99 Cumulative effect of a change in accounting principle (48) - - - - (48) ------- ------- ------ --- --- ------- Net income (loss) $ 48 $ (4) $ 7 $ - $ - $ 51 ======= ======= ====== === === ======= FINANCIAL RATIOS Loss & LAE 74.0 % Acquisition expense 18.8 Underwriting expense 12.3 Dividends 1.3 ------- Expense ratio, including dividends 32.4 ------- Combined ratio 106.4 % ======= -------------------------------------------------------------------------------------------------------------------------
(1) Includes net prior year development for premiums, claims and allocated claim adjustment expense reserves, dividends, and change in reserves for unallocated claim adjustment expenses. (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 LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT IMPACT OF SIGNIFICANT ITEMS
------------------------------------------------------------------------------------------------------------------------- NINE MONTHS ENDED CNA RE SEPTEMBER 30, 2002 2002 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002 (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 420 $ 103 $ (61) $ - $ - $ 462 Claim and claim adjustment expenses 291 177 (93) - - 375 Acquisition expenses 103 - - - - 103 Underwriting expenses 46 - - - - 46 Policyholders' dividends - - - - - - ----- ------ ----- --- --- ----- Underwriting (loss) income (20) (74) 32 - - (62) ----- ------ ----- --- --- ----- Net investment income (loss) 114 - (5) - - 109 Other revenues 2 - - - - 2 Other expenses 2 - - - - 2 ----- ------ ----- --- --- ----- Income (loss) before income tax, minority interest and net realized investment losses 94 (74) 27 - - 47 Income tax (expense) benefit (25) 26 (9) - - (8) Minority interest - - - - - - ----- ------ ----- --- --- ----- Income (loss) before net realized investment losses 69 (48) 18 - - 39 Realized investment losses (2) - - - - (2) Income tax benefit on realized investment losses 5 - - - - 5 ----- ------ ----- --- --- ----- Income (loss) from continuing operations 72 (48) 18 - - 42 Cumulative effect of a change in accounting principle - - - - - - ----- ------ ----- --- --- ----- Net income (loss) $ 72 $ (48) $ 18 $ - $ - $ 42 ===== ====== ===== === === ===== FINANCIAL RATIOS Loss & LAE 81.2 % Acquisition expense 22.4 Underwriting expense 9.8 Dividends - ----- Expense ratio, including dividends 32.2 ----- Combined ratio 113.4 % ===== ---------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------- TOTAL P&C SEGMENTS 2002 RESULTS BEFORE CORPORATE REINSURANCE INSURANCE SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002 ITEMS DEVELOPMENT (1) COVERS (2) PROVISION PROVISION RESULTS ------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 5,144 $ 52 $ (100) $ - $ - $ 5,096 Claim and claim adjustment expenses 3,829 123 (148) - - 3,804 Acquisition expenses 972 - - - - 972 Underwriting expenses 620 - - - - 620 Policyholders' dividends 53 6 - - - 59 ------- ------- ------ --- --- ------- Underwriting (loss) income (330) (77) 48 - - (359) ------- ------- ------ --- --- ------- Net investment income (loss) 607 - (10) - - 597 Other revenues 365 - - - - 365 Other expenses 305 - - - - 305 ------- ------- ------ --- --- ------- Income (loss) before income tax, minority interest and net realized investment losses 337 (77) 38 - - 298 Income tax (expense) benefit (96) 25 (13) - - (84) Minority interest (11) - - - - (11) ------- ------- ------ --- --- ------- Income (loss) before net realized investment losses 230 (52) 25 - - 203 Realized investment losses (99) - - - - (99) Income tax benefit on realized investment losses 37 - - - - 37 ------- ------- ------ --- --- ------- Income (loss) from continuing operations 168 (52) 25 - - 141 Cumulative effect of a change in accounting principle (48) - - - - (48) ------- ------- ------ --- --- ------- Net income (loss) $ 120 $ (52) $ 25 $ - $ - $ 93 ======= ======= ======= === === ======== FINANCIAL RATIOS Loss & LAE 74.6 % Acquisition expense 19.1 Underwriting expense 12.1 Dividends 1.2 -------- 32.4 Expense ratio, including dividends -------- Combined ratio 107.0 % ======== --------------------------------------------------------------------------------------------------------------------------
(1) Includes net prior year development for premiums, claims and allocated claim adjustment expense reserves, dividends, and change in reserves for unallocated claim adjustment expenses. (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 LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY AND CASUALTY BUSINESS SUMMARY OF LOSS, ALAE AND DIVIDEND DEVELOPMENT BY SEGMENT AND LINE OF BUSINESS
--------------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED ACCIDENT YEAR SEPTEMBER 30 (In millions) 2002 2001 2000 1999 1998 & P TOTAL --------------------------------------------------------------------------------------------------------------------------- BY SEGMENT Standard Lines (1) $ 158 $ 46 $ (200) $ (144) $ (1,004) $ (1,144) Specialty Lines (9) (80) (55) (18) (64) (226) CNA Re 42 (44) (42) (22) (70) (136) Corporate & Other - - - 8 (854) (846) ------- ------- ------ ------- -------- -------- Total $ 191 $ (78) $ (297) $ (176) $ (1,992) $ (2,352) ======= ======= ====== ======= ======== ======== BY LINE OF BUSINESS Commercial Automobile Liability $ 20 $ 37 $ (17) $ (14) $ (32) $ (6) Workers Compensation 48 58 (147) 7 (404) (438) Commercial Multiple-Peril 66 (19) (32) (85) (304) (374) Medical Malpractice (6) (35) (18) 2 (44) (101) Special Liability 19 (1) (13) (6) 4 3 Other Liability (32) (107) (9) (49) (863) (1,060) Special Property 52 40 (18) (14) (12) 48 Fidelity/Surety (23) (15) 19 9 13 3 Reinsurance A, B, C 52 (23) (31) (4) (145) (151) Products Liability (11) (15) (36) (33) (148) (243) Other 6 2 5 11 (57) (33) ------- ------- ------ ------- -------- -------- Total $ 191 $ (78) $ (297) $ (176) $ (1,992) $ (2,352) ======= ======= ====== ======= ======== ======== ---------------------------------------------------------------------------------------------------------------------------
(1) Includes $9 million of interest accretion and $46 million of dividend development. 26 (CNA LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT GROSS LOSS AND ALAE RATIOS BY SEGMENT AND LINE OF BUSINESS CCC, CIC AND GALWAY
------------------------------------------------------------------------------------------------------------------- SEPTEMBER 30, 2003 ACCIDENT YEAR 2003 2002 2001 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------- BY SEGMENT Standard Lines 60 % 61 % 88 % 99 % 109 % 95 % 81 % 74 % Specialty Lines 62 67 114 102 98 89 87 72 CNA Re 61 61 173 94 120 124 91 83 P&C Segments 61 63 102 99 108 96 83 74 Corporate & Other 77 68 66 82 73 80 58 72 Total 64 % 64 % 93 % 96 % 101 % 92 % 78 % 74 % BY LINE OF BUSINESS Commercial Automobile Liability 63 % 66 % 92 % 102 % 103 % 95 % 90 % 74 % Workers Compensation 64 66 80 96 104 95 75 65 Commercial Multiple-Peril 62 62 80 96 110 92 80 83 Medical Malpractice 63 66 103 124 127 116 136 118 Special Liability 56 55 161 93 98 72 78 75 Other Liability 65 72 96 111 133 126 90 72 Special Property 52 49 87 63 68 79 59 76 Auto Physical Damage 63 54 64 74 69 67 62 65 Reinsurance A, B and C 58 64 N/A 101 125 112 73 75 Other 75 70 79 94 74 69 63 67 Total 64 % 64 % 93 % 96 % 101 % 92 % 78 % 74 % -------------------------------------------------------------------------------------------------------------------
27 (CNA LOGO) CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT NET LOSS AND ALAE RATIOS BY SEGMENT AND LINE OF BUSINESS CCC, CIC AND GALWAY
------------------------------------------------------------------------------------------------------------------- SEPTEMBER 30, 2003 ACCIDENT YEAR 2003 2002 2001 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------- BY SEGMENT Standard Lines 62 % 64 % 59 % 81 % 94 % 95 % 80 % 76 % Specialty Lines 66 74 87 103 106 97 85 78 CNA Re 65 59 105 90 118 129 97 90 P&C Segments 63 66 69 87 100 98 83 77 Corporate & Other (1) N/A N/A N/A N/A 77 80 67 71 Total 63 % 66 % 69 % 86 % 95 % 94 % 79 % 76 % BY LINE OF BUSINESS Commercial Automobile Liability 64 % 68 % 79 % 88 % 99 % 98 % 93 % 80 % Workers Compensation 64 68 31 76 90 97 75 65 Commercial Multiple-Peril 65 64 68 83 102 94 86 85 Medical Malpractice 62 69 116 135 144 127 142 122 Special Liability 58 58 70 93 83 70 76 62 Other Liability 67 77 73 87 111 118 87 77 Special Property 47 36 90 70 65 81 64 81 Auto Physical Damage 52 52 65 70 70 73 64 66 Reinsurance A, B and C 63 61 193 101 129 115 80 84 Other 55 71 97 118 82 74 62 71 Total 63 % 66 % 69 % 86 % 95 % 94 % 79 % 76 % -------------------------------------------------------------------------------------------------------------------
(1) Ratios subsequent to 1999 are not meaningful. 28