-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B1F9JtyCn+y0cATIVnw7gr3yZe6xEW63hNiYkRd7oUkGILCwWtgKxH7Mz7QD47Pe iCzJd+coxwIpxOoCt/YVKg== 0000950137-04-003419.txt : 20040430 0000950137-04-003419.hdr.sgml : 20040430 20040430154751 ACCESSION NUMBER: 0000950137-04-003419 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040429 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CNA FINANCIAL CORP CENTRAL INDEX KEY: 0000021175 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 366169860 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05823 FILM NUMBER: 04769768 BUSINESS ADDRESS: STREET 1: CNA PLZ STREET 2: 235 CITY: CHICAGO STATE: IL ZIP: 60685 BUSINESS PHONE: 3128225000 MAIL ADDRESS: STREET 1: CNA PLAZA STREET 2: 235 CITY: CHICAGO STATE: IL ZIP: 60685 8-K 1 c85006e8vk.txt CURRENT REPORT ============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) April 29, 2004 ------------------------------------- CNA FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 1-5823 36-6169860 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) CNA PLAZA, CHICAGO, ILLINOIS 60685 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (312) 822-5000 Not Applicable (Former Name or Former Address, if Changed Since Last Report) ============================================================================== Page 1 of 2 Item 7. Financial Statements and Exhibits (c) Exhibits:
Exhibit No. Description - ----------- ----------- 99.1 CNA Financial Corporation press release, issued April 29, 2004, providing information on first quarter 2004 results of operations 99.2 CNA Financial Corporation financial supplement, issued April 29, 2004, providing supplemental financial information for the first quarter 2004 99.3 CNA Financial Corporation financial supplement appendix, issued April 29, 2004, providing supplemental financial information for prior periods 99.4 CNA Financial Corporation press release, issued April 29, 2004, providing information on Chief Financial Officer, Robert V. Deutsch.
Item 9. Regulation FD On April 29, 2004 CNA Financial Corporation issued a press release and announced that Robert V. Deutsch, its Chief Financial Officer, would be leaving. The press release is furnished as Exhibit 99.4 to this Form 8-K. Item 12. Results of Operations and Financial Condition On April 29, 2004 CNA Financial Corporation issued an earnings press release, financial supplement and financial supplement appendix providing information on its results of operations for the first quarter 2004 and prior periods. The press release is furnished as Exhibit 99.1, the financial supplement is furnished as Exhibit 99.2 and the financial supplement appendix is furnished as Exhibit 99.3 to this Form 8-K. The information in this Current Report is being furnished and shall not be deemed "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CNA FINANCIAL CORPORATION Dated: April 30, 2004 /s/ Robert V. Deutsch -------------------------------- By: Robert V. Deutsch Its: Executive Vice President and Chief Financial Officer Page 2 of 2 EX-99.1 2 c85006exv99w1.txt PRESS RELEASE EXHIBIT 99.1 [CNA LOGO] FOR IMMEDIATE RELEASE CONTACT: MEDIA: ANALYSTS: Charles M. Boesel, 312/822-2592 Dawn M. Jaffray, 312/822-7757 Katrina W. Parker, 312/822-5167 CNA FINANCIAL ANNOUNCES IMPROVED FIRST QUARTER 2004 UNDERWRITING RESULTS CHICAGO, APRIL 29, 2004 --- CNA Financial Corporation (NYSE: CNA) today announced first quarter of 2004 results, which included the following highlights: - Improved underwriting results in the Property and Casualty Operations, evidenced by a combined ratio of 96.8%. - An impairment loss of $406 million after-tax related to the previously announced sale of the individual life business. - Net loss for the first quarter of 2004 of $125 million as compared to net income of $83 million in the first quarter of 2003. NET (LOSS) INCOME
RESULTS FOR THE THREE MONTHS ENDED MARCH 31 --------------------------- ($ MILLIONS, EXCEPT PER SHARE DATA) 2004 2003 - ---------------------------------- ------------ ------------ INCOME BEFORE NET REALIZED INVESTMENT LOSSES $ 208 $ 132 NET REALIZED INVESTMENT LOSSES (333) (49) ============ ============ NET (LOSS) INCOME $ (125) $ 83 ============ ============ NET (LOSS) INCOME PER SHARE RESULTS AVAILABLE TO COMMON STOCKHOLDERS (a)(b) $ (0.55) $ 0.30 ============ ============
(a) Included in the weighted average number of common shares for the three months ended March 31, 2004 are the effects of additional common stock equivalents related to the November of 2003 sale of $750 million of convertible preferred shares to Loews Corporation. The preferred shares converted into 32,327,015 shares of CNA common stock on April 20, 2004. (b) The three months ended March 31, 2004 and 2003 per share results available to common stockholders are reduced by $16 million and $15 million, or $0.06 per share and $0.07 per share, of undeclared preferred stock dividends. Page 1 of 7 The first quarter of 2004 underwriting results for the Property and Casualty Operations included a 7-point improvement in the combined ratio as well as increased limited partnership results. Solid underwriting results, including rate increases, and the continued focus on underwriting discipline and expense management contributed to the 96.8% combined ratio for the Property and Casualty Operations. "We are pleased with the underlying performance of our core Property & Casualty Operations. With its combined ratio in the 90s and net income up 147%, we are executing the fundamentals and continuing the progress made over the last several years," said Steve Lilienthal, Chairman and Chief Executive Officer of the CNA insurance companies. "The net loss for the quarter is associated with the accounting for the sale of our Life business, which is expected to close tomorrow. The impact of the sale was previously disclosed - a GAAP impairment loss, additional statutory capital, and a sharpening of CNA's focus on our core property and casualty businesses." Net realized investment losses were $333 million and $49 million for the three months ended March 31, 2004 and 2003, respectively. The investment losses in 2004 were primarily driven by an after-tax impairment loss of $406 million related to the pending sale of CNA's individual life insurance business to Swiss Re Life & Health America Inc. (Swiss Re) that was previously announced on February 5, 2004. The sale is expected to provide additional statutory capital of approximately $500 million to CNA's principal insurance subsidiary, Continental Casualty Company (CCC). The sale, which is subject to certain customary closing conditions, is expected to be completed on April 30, 2004. Partially offsetting the life impairment loss were realized investment gains from the investment portfolio. In the first quarter of 2004, the Company revised its reportable segment structure to reflect changes in how CNA manages its core operations and makes business decisions. CNA now manages its Property and Casualty Operations in two operating segments which represent CNA's core operations: Standard Lines and Specialty Lines. The non-core operations are now managed in the Life and Group Non-Core and Corporate and Other Non-Core segments. Prior period segment disclosures have been conformed to the current year presentation. The changes made to the Company's reportable segments were as follows: 1) CNA Global, which consists of marine and global standard lines, is now included in Standard Lines (formerly included in Specialty Lines); 2) CNA Guaranty and Credit is currently in run-off and is now included in the Corporate and Other Non-Core segment (formerly included in Specialty Lines); 3) CNA Re is currently in run-off and is also now included in the Corporate and Other Non-Core segment (CNA Re was formerly a stand-alone property and casualty operating segment); 4) Group Operations and Life Operations (formerly separate operating segments) have now been combined into one reportable segment where the run-off of the retained group and life products will be managed; 5) certain run-off life and group operations previously included in the Corporate and Other Non-Core segment are now included in the Life and Group Non-Core segment. Page 2 of 7 SEGMENT RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2004
CORPORATE STANDARD SPECIALTY TOTAL P&C LIFE & GROUP & OTHER ($ MILLIONS) LINES LINES OPS. NON-CORE NON-CORE TOTAL - ------------ ----------- ----------- ----------- ----------- ----------- ---------- INCOME BEFORE NET REALIZED INVESTMENT GAINS (LOSSES) $ 114 $ 75 $ 189 $ 19 $ - $ 208 NET REALIZED INVESTMENT GAINS (LOSSES) 38 13 51 (401) 17 (333) ----------- ----------- ----------- ----------- ----------- --------- NET INCOME (LOSS) $ 152 $ 88 $ 240 $ (382) $ 17 $ (125) =========== =========== =========== =========== =========== =========
SEGMENT RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2003
CORPORATE STANDARD SPECIALTY TOTAL P&C LIFE & GROUP & OTHER ($ MILLIONS) LINES LINES OPS. NON-CORE NON-CORE TOTAL - ------------ ----------- ----------- ----------- ----------- ----------- ---------- INCOME BEFORE NET REALIZED INVESTMENT GAINS (LOSSES) $ 44 $ 48 $ 92 $ 29 $ 11 $ 132 NET REALIZED INVESTMENT GAINS (LOSSES) 3 2 5 (68) 14 (49) ----------- ----------- ----------- ----------- ----------- ---------- NET INCOME (LOSS) $ 47 $ 50 $ 97 $ (39) $ 25 $ 83 =========== =========== =========== =========== =========== ==========
PROPERTY & CASUALTY OPERATIONS GROSS WRITTEN PREMIUMS
THREE MONTHS ENDED MARCH 31 --------------------------- ($ MILLIONS) 2004 2003 - ------------ ------------ ------------ STANDARD LINES $ 1,565 $ 1,634 SPECIALTY LINES 710 628 ------------ ------------ TOTAL P&C OPERATIONS $ 2,275 $ 2,262 ============ ============
PROPERTY & CASUALTY OPERATIONS NET WRITTEN PREMIUMS
THREE MONTHS ENDED MARCH 31 --------------------------- ($ MILLIONS) 2004 2003 - ------------ ------------ ------------ STANDARD LINES $ 1,265 $ 1,273 SPECIALTY LINES 581 476 ------------ ------------ TOTAL P&C OPERATIONS $ 1,846 $ 1,749 ============ ============
PROPERTY & CASUALTY CALENDAR YEAR LOSS RATIOS
THREE MONTHS ENDED MARCH 31 --------------------------- 2004 2003 ---- ---- STANDARD LINES 65.5% 73.3% SPECIALTY LINES 63.1 66.3 TOTAL P&C OPERATIONS 64.8 71.5 TOTAL P&C COMPANIES (a) 70.4% 75.1% ==== ====
(a) P&C Companies includes Standard Lines, Specialty Lines and P&C business written in Life and Group Non-Core and Corporate and Other Non-Core, including CNA Re and asbestos, environmental pollution and mass tort exposures (APMT). Page 3 of 7 PROPERTY & CASUALTY CALENDAR YEAR COMBINED RATIOS
THREE MONTHS ENDED MARCH 31 --------------------------- 2004 2003 ---- ---- STANDARD LINES 99.7% 107.2% SPECIALTY LINES 89.9 95.0 TOTAL P&C OPERATIONS 96.8 104.0 TOTAL P&C COMPANIES (a) 103.6% 107.0% ===== =====
(a) P&C Companies includes Standard Lines, Specialty Lines and P&C business written in Life and Group Non-Core and Corporate and Other Non-Core, including CNA Re and asbestos, environmental pollution and mass tort exposures (APMT). PROPERTY & CASUALTY GROSS ACCIDENT YEAR LOSS RATIOS
ACCIDENT YEAR 2004 ACCIDENT YEAR 2003 ACCIDENT YEAR 2003 EVALUATED AT EVALUATED AT EVALUATED AT MARCH 31, 2004 DECEMBER 31, 2003 MARCH 31, 2004 ----------------- ------------------ ------------------ STANDARD LINES 62.8% 65.4% 64.3% SPECIALTY LINES 62.0 67.1 65.8 TOTAL P&C OPERATIONS 62.6% 65.9% 64.7% ==== ==== ====
PROPERTY & CASUALTY NET ACCIDENT YEAR LOSS RATIOS
ACCIDENT YEAR 2004 ACCIDENT YEAR 2003 ACCIDENT YEAR 2003 EVALUATED AT EVALUATED AT EVALUATED AT MARCH 31, 2004 DECEMBER 31, 2003 MARCH 31, 2004 ----------------- ------------------ ------------------ STANDARD LINES 65.7% 67.8% 67.1% SPECIALTY LINES 63.0 68.9 67.7 TOTAL P&C OPERATIONS 64.9% 68.1% 67.3% ==== ==== ====
BUSINESS OPERATING HIGHLIGHTS STANDARD LINES includes standard property and casualty coverages sold to small and middle market commercial businesses primarily through an independent agency distribution system, and excess and surplus lines, as well as insurance and risk management products sold to large corporations. These services are provided to customers in the U.S. as well as globally. - - Net written premiums decreased $8 million for the first quarter of 2004 as compared with the same period in 2003. Increased rate and retention was achieved across most property and casualty lines of business offset by decreased net written premium from an excess and surplus program covering facilities that provide services to developmentally disabled individuals. - - Standard Lines achieved average rate increases during the first quarter of 2004 of 6 to 7%. - - Net income for the first quarter of 2004 increased $105 million as compared with the same period in 2003, primarily due to improvement in the current net accident year loss ratio, the absence of unfavorable net prior year development and improved investment results. Page 4 of 7 SPECIALTY LINES provides a broad array of professional, financial and specialty property and casualty products and services. - - Net written premiums increased $105 million for the first quarter of 2004 as compared with the same period in 2003, due primarily to new business and continued significant rate increases in the professional liability lines of business. - - Specialty Lines achieved average rate increases during the first quarter of 2004 of 13%, including most professional liability lines of business. - - Net income for the first quarter of 2004 increased $38 million as compared with the same period in 2003, primarily due to improvements in the current net accident year loss ratio and improved investment results. LIFE AND GROUP NON-CORE primarily includes the results of the life and group lines of business that have been sold or placed in run-off. - - Net earned premiums decreased $260 million for the first quarter of 2004 as compared with the same period in 2003, due primarily to the absence of premiums from the Group Benefits business which was sold on December 31, 2003. Partially offsetting this decline were higher earned premiums in the health and life and annuity products. - - Net results for the first quarter of 2004 decreased $343 million as compared with the same period in 2003, principally due to an after-tax impairment loss of $406 million related to the pending sale of the individual life insurance business. Excluding this impairment loss, net income was $24 million for the first quarter of 2004, which included $9 million of net income related to the business that is anticipated to be sold. CORPORATE AND OTHER NON-CORE contains certain corporate expenses such as interest on corporate debt and losses and expenses related to the centralized adjusting and settlement of asbestos, environmental pollution and mass tort claims. In addition, this segment includes the results of certain property and casualty insurance run-off operations including CNA Re (formerly a stand-alone property and casualty operating segment). - - Net results for the first quarter of 2004 decreased $8 million as compared with the same period in 2003, primarily due to the decline in operating results attributable to lower premium volume for CNA Re which was placed in run-off during 2003. NET INVESTMENT INCOME Pretax net investment income increased $41 million to $473 million for the first quarter of 2004 as compared with the same period in 2003. The change was primarily due to increased limited partnership income partially offset by lower investment yields on fixed maturity securities. Page 5 of 7 ABOUT THE COMPANY CNA is the country's fourth largest commercial insurance writer and the 11th largest property and casualty company. CNA's insurance products include standard commercial lines, specialty lines, surety, marine and other property and casualty coverages. CNA's services include risk management, information services, underwriting, risk control and claims administration. For more information, please visit CNA at www.cna.com. CNA is a registered service mark, trade name and domain name of CNA Financial Corporation. CONFERENCE CALL AND WEBCAST INFORMATION: A CONFERENCE CALL FOR INVESTORS AND THE PROFESSIONAL INVESTMENT COMMUNITY WILL BE HELD FROM 10:00 A.M. TO 11:00 A.M. EST TODAY. ON THE CONFERENCE CALL WILL BE STEPHEN W. LILIENTHAL, CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF THE CNA INSURANCE COMPANIES, AND OTHER MEMBERS OF SENIOR MANAGEMENT. PARTICIPANTS CAN ACCESS THE CALL BY DIALING (800) 474-8920 OR FOR INTERNATIONAL CALLERS (719) 457-2727. THE CALL WILL ALSO BE BROADCAST LIVE ON THE INTERNET AT HTTP://INVESTORS.CNA.COM OR YOU MAY GO TO THE INVESTOR RELATIONS PAGES OF THE CNA WEBSITE (WWW.CNA.COM) FOR FURTHER DETAILS. THE CALL IS AVAILABLE TO THE MEDIA, BUT QUESTIONS WILL BE RESTRICTED TO INVESTORS AND THE PROFESSIONAL INVESTMENT COMMUNITY. A TAPED REPLAY OF THE CALL WILL BE AVAILABLE ON CNA'S WEBSITE FOR ONE WEEK UNTIL MAY 6, 2004. THE REPLAY CAN ALSO BE ACCESSED BY DIALING (888) 203-1112 OR FOR INTERNATIONAL CALLERS (719) 457-0820 AND USING PASSCODE 438345. FINANCIAL SUPPLEMENT INFORMATION RELATED TO THE FIRST QUARTER RESULTS IS AVAILABLE ON THE INVESTOR RELATIONS PAGES OF THE CNA WEBSITE OR BY CONTACTING DAWN JAFFRAY AT (312) 822-7757. Page 6 of 7 FORWARD-LOOKING STATEMENT This press release includes statements which relate to anticipated future events (forward-looking statements) rather than actual present conditions or historical events. You can identify forward-looking statements because generally they include words such as "believes", "expects", "intends", "anticipates", "estimates", and similar expressions. Forward-looking statements, by their nature, are subject to a variety of inherent risks and uncertainties that could cause actual results to differ materially from the results projected. Many of these risks and uncertainties cannot be controlled by CNA. For a detailed description of these risks and uncertainties please refer to CNA's filings with the Securities and Exchange Commission, available at www.cna.com. Any forward-looking statements made in this press release are made by CNA as of the date of this press release. CNA does not have any obligation to update or revise any forward-looking statement contained in this press release, even if CNA's expectations or any related events, conditions or circumstances change. This press release may also contain financial measures that are not in accordance with generally accepted accounting principles (GAAP). For reconciliations of non-GAAP measures to the most comparable GAAP measures, refer to this press release and the financial supplement posted on the Company's website. # # # Page 7 of 7 EX-99.2 3 c85006exv99w2.txt FINANCIAL SUPPLEMENT Exhibit 99.2 a CNA FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION MARCH 31, 2004 a CNA FINANCIAL CORPORATION TABLE OF CONTENTS MARCH 31, 2004
PAGE ----- Supplemental Financial Information i-iii 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 Segment Aggregation 6 Property & Casualty Results of Operations 7 Life & Group Non-Core and Corporate & Other Non-Core Segments Results of Operations 8 Property & Casualty Operations and Corporate & Other Non-Core Segment Catastrophe Losses 9 Analysis of Pretax Net Investment Income 10 Statutory Data - Preliminary 11 Property & Casualty Operations Loss and LAE Ratio Analysis 12 Life & Group Non-Core Segment - GAAP Results of Operations 13 Asbestos Summary by Policyholder Category 14
a CNA FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION SEGMENT CHANGES In the first quarter of 2004, CNA revised its reportable segment structure to reflect changes in how it manages its core operations and makes business decisions. CNA now manages its Property & Casualty Operations in two operating segments which represent CNA's core operations: Standard Lines and Specialty Lines. The non-core operations are now managed in the Life & Group Non-Core and Corporate & Other Non-Core segments. Standard Lines includes standard property and casualty coverages sold to small and middle market commercial businesses primarily through an independent agency distribution system, and excess and surplus lines, as well as insurance and risk management products sold to large corporations. These services are provided to customers in the U.S. as well as globally. Specialty Lines provides a broad array of professional, financial and specialty property and casualty products and services. Life & Group Non-Core primarily includes the results of the life and group lines of business that have been sold or placed in run-off. Corporate & Other Non-Core contains certain corporate expenses such as interest on corporate debt and losses and expenses related to the centralized adjusting and settlement of asbestos, environmental pollution and mass tort (APMT) claims. In addition, this segment includes the results of certain property and casualty insurance run-off operations including CNA Re (formerly a stand-alone property and casualty operating segment). Prior period segment disclosures have been conformed to the current year presentation. These segment disclosures, provided in the Supplemental Financial Information Appendix, are available on the company's website, for the years ended December 31, 2002 and 2003, including all quarters. The changes made to CNA's reportable segments were as follows: - - CNA Global which consists of marine and global standard lines is now included in Standard Lines (formerly included in Specialty Lines). - - CNA Guaranty and Credit is currently in run-off and is now included in the Corporate & Other Non-Core segment (formerly included in Specialty Lines). - - CNA Re is currently in run-off and is also now included in the Corporate & Other Non-Core segment (CNA Re was formerly a stand-alone property and casualty operating segment). - - Group Operations & Life Operations (formerly separate operating segments) have now been combined into one reportable segment where the run-off of the retained group and life products will be managed. - - Certain run-off life and group operations previously included in the Corporate & Other Non-Core segment are now included in the Life & Group Non-Core segment. ACCOUNTING PRONOUNCEMENTS - - In July of 2003, the Accounting Standards Executive Committee (AcSEC) of the American Institute of Certified Public Accountants (AICPA) issued Statement of Position 03-01, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts (SOP 03-01). SOP 03-01 provides guidance on accounting and reporting by insurance enterprises for certain nontraditional long-duration contracts and for separate accounts. SOP 03-01 is effective for financial statements for fiscal years beginning after December 15, 2003. SOP 03-01 may not be applied retroactively to prior years' financial statements, and initial application should be as of the beginning of an entity's fiscal year, therefore prior year amounts have not been conformed to the current year presentation. CNA adopted SOP 03-01 as of January 1, 2004. The assets and liabilities of certain guaranteed investment contracts and indexed group annuity contracts that were previously segregated and reported as separate accounts no longer qualify for separate account presentation. Prior to the adoption of SOP 03-01, the asset and liability presentation of these affected contracts were categorized as separate account assets and liabilities in the Condensed Consolidated Balance Sheet. The results of operations from separate account business were primarily classified as other revenue in the Consolidated Statement of Operations. In accordance with the provisions of SOP 03-01, the classification and presentation of certain balance sheet and income statement items have been modified within these financial statements. Accordingly, the investment securities previously classified as separate account assets have now been reclassified to the general account and will be reported based on their investment classification whether available-for-sale or trading securities. The investment portfolio for the indexed group annuity contracts is classified as held for trading purposes and is carried at fair value, with both the net realized and unrealized gains (losses) included within net investment income in the Condensed Consolidated Statement of Operations. CNA continues to have contracts that meet the criteria for separate account presentation. The assets and liabilities of these contracts are legally segregated and reported as assets and liabilities of the separate account business. Substantially all assets of the separate account business are carried at fair value. Separate account liabilities are carried at contract values. i a CNA FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION DEFINITIONS AND PRESENTATION - - P&C OPERATIONS includes Standard Lines and Specialty Lines. - - LIFE & GROUP NON-CORE segment primarily includes the results of the life and group lines of business that are held for sale, or have been sold or placed in run-off. - - CORPORATE & OTHER NON-CORE segment includes the results of certain property and casualty lines of business placed in run-off, including CNA Re (formerly a stand-alone property and casualty segment). This segment also includes the results related to the centralized adjusting and settlement of APMT claims. - - P&C COMPANIES includes Standard Lines, Specialty Lines and P&C business written in the Life & Group Non-Core and Corporate & Other Non-Core segments. - - Underwriting results are net earned premiums less net incurred claims, the costs incurred to settle claims, acquisition expenses and underwriting expenses. - - The Loss & loss adjustment expense (LAE) ratio represents claim and claim adjustment expenses as a percentage of net earned premiums. - - The expense ratio is the percentage of underwriting expenses, acquisition expenses and dividends, including the amortization of deferred acquisition costs, to net earned premiums. - - The dividend ratio is the ratio of dividends incurred to net earned premiums. - - Limited partnerships (LPs) are a relatively small portion of CNA's overall investment portfolio. The majority of the LPs 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. - - As a result of the sale of the Group Benefits business in the 4th quarter of 2003, income statement results for 2004 are not comparable to 2003. - - In February of 2004, CNA entered into a definitive agreement to sell its individual life insurance business. The business sold includes term, universal and permanent life insurance policies and individual annuity products. CNA's individual long term care and structured settlement businesses are excluded from the sale. The transaction, which is subject to certain customary closing conditions, is expected to be completed on April 30, 2004. As a result of the pending sale, CNA has classified the assets and liabilities of the individual life insurance business as held for sale at March 31, 2004, and has recorded a related impairment loss of $569 million. - - CNA has initiated a plan to sell CNA Trust, its limited operations bank located in Costa Mesa, California. As a result, CNA has classified the assets and liabilities of its limited operations bank as held for sale at March 31, 2004. The estimated fair value of the assets and liabilities exceeds their carrying value, and therefore no impairment charge was recorded. - - All amounts are in millions, except for per share and ratio information. - - Certain immaterial differences are due to rounding. ii a 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 (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. iii a CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT STATEMENTS OF OPERATIONS
FAV / PERIOD ENDED MARCH 31 THREE MONTHS (UNFAV) (In millions) 2004 2003 % CHANGE - --------------------------------------------------------------------------------- ---------- ---------- ----------- STATEMENTS OF OPERATIONS Revenues: Net earned premiums $ 2,168 $ 2,381 (9)% Net investment income 473 432 9 Realized investment losses, net of participating policyholders' and minority interests (458) (76) N/A Other revenues 82 108 (24) ---------- ---------- Total revenues 2,265 2,845 (20) ---------- ---------- Claims, benefits and expenses: Insurance claims and policyholders' benefits 1,620 1,870 13 Other operating expenses 783 837 6 Interest 35 34 (3) ---------- ---------- Total claims, benefits and expenses 2,438 2,741 11 ---------- ---------- (Loss) income from continuing operations before income tax and minority interest (173) 104 N/A Income tax benefit (expense) 54 (18) N/A Minority interest (6) (3) (100) ---------- ---------- Net (loss) income $ (125) $ 83 N/A% ========== ==========
1 a CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT COMPONENTS OF NET INCOME AND PER SHARE DATA
THREE MONTHS FAV / PERIOD ENDED MARCH 31 (UNFAV) (In millions, except per share data) 2004 2003 % CHANGE - --------------------------------------------------------------------------- ---------- ---------- ----------- COMPONENTS OF NET (LOSS) INCOME Income before net realized investment (losses) gains $ 208 $ 132 58% Net realized investment losses, net of participating policyholders' and minority interests (333) (49) N/A ---------- ---------- Net (loss) income $ (125) $ 83 N/A% ========== ========== BASIC AND DILUTED (LOSS) EARNINGS PER SHARE ---------- ---------- Basic and diluted (loss) earnings per share available to common stockholders $ (0.55) $ 0.30 N/A% ========== ========== Weighted average outstanding common stock and common stock equivalents 255.9 223.6
2 a CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT SELECTED BALANCE SHEET DATA AND CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS DATA
MARCH 31, DECEMBER 31, (In millions, except per share data) 2004 2003 ------------------------------------ ----------- ----------- Assets related to businesses held for sale $ 6,291 $ - Total assets 67,560 68,503 Insurance reserves 42,372 45,383 Debt 2,244 1,904 Liabilities related to businesses held for sale 5,471 - Total liabilities 58,387 59,295 Minority interest 263 256 Accumulated other comprehensive income 924 841 Total stockholders' equity 8,910 8,952 Book value per common share $ 31.58 $ 31.80 Book value per common share excluding unrealized gain or loss on fixed maturity securities $ 28.38 $ 28.98 Outstanding shares of common stock (in millions of shares) (1) 255.9 255.9
THREE MONTHS ENDED MARCH 31 (In millions) 2004 2003 ------------------- ---------- ---------- Net cash flows provided by operating activities $ 37 $ 45 Net cash flows (used) provided by investing activities (441) 132 Net cash flows provided (used) by financing activities 346 (137) ---------- ---------- Net cash flows $ (58) $ 40 ========== ==========
(1) Included in the outstanding shares of common stock for the three months ended March 31, 2004 are the effects of additional common stock equivalents related to the November of 2003 sale of $750 million of convertible preferred shares to Loews Corporation. The preferred shares are convertible into 32.3 million shares of CNA common stock. The conversion occurred on April 20, 2004. 3 a CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY INSURANCE CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVE DATA
CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVES (1) STANDARD LINES SPECIALTY LINES P&C OPERATIONS (In millions) -------------------------------------------------------------- As of March 31, 2004 Gross $ 14,134 $ 4,287 $ 18,421 Ceded 5,231 1,311 6,542 Net 8,903 2,976 11,879 As of December 31, 2003 Gross $ 14,282 $ 4,200 $ 18,482 Ceded 5,315 1,281 6,596 Net 8,967 2,919 11,886
CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVES (1) LIFE & GROUP CORPORATE & OTHER (In millions) NON-CORE (1) (2) NON-CORE TOTAL OPERATIONS -------------------------------------------------------------- As of March 31, 2004 Gross $ 3,460 $ 9,302 $ 31,183 Ceded 1,653 5,798 13,993 Net 1,807 3,504 17,190 As of December 31, 2003 Gross $ 3,576 $ 9,672 $ 31,730 Ceded 1,685 5,935 14,216 Net 1,891 3,737 17,514
(1) Gross reserves as of March 31, 2004 and December 31, 2003 include $321 million and $448 million of life company reserves, which are primarily related to accident and health business. Net reserves as of March 31, 2004 and December 31, 2003 include $118 million and $230 million of life company reserves, which are primarily related to accident and health business. (2) In February of 2004, CNA entered into a definitive agreement to sell its individual life insurance business. As a result of the pending sale, $64 million of net claim & claim adjustment expense reserves in life companies have been reclassified on the Condensed Consolidated Balance Sheet to liabilities related to businesses held for sale. 4 a CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY INSURANCE CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVE ROLLFORWARD (1)
PERIOD ENDED MARCH 31, 2004 THREE MONTHS (In millions) ENDED ------------------------------ ------------ Claim & claim adjustment expense reserves, beginning of period Gross $ 31,730 Ceded 14,216 --------- Net 17,514 --------- Net incurred claim & claim adjustment expenses 1,514 Net claim & claim adjustment expense payments (1,774) Net reserves transferred to liabilities related to businesses held for sale (2) (64) Claim & claim adjustment expense reserves, end of period Net 17,190 Ceded 13,993 --------- Gross $ 31,183 =========
(1) Gross reserves as of March 31, 2004 and December 31, 2003 include $321 million and $448 million of life company reserves, which are primarily related to accident and health business. Net reserves as of March 31, 2004 and December 31, 2003 include $118 million and $230 million of life company reserves, which are primarily related to accident and health business. (2) In February of 2004, CNA entered into a definitive agreement to sell its individual life insurance business. As a result of the pending sale, $64 million of net claim & claim adjustment expense reserves in life companies have been reclassified on the Condensed Consolidated Balance Sheet to liabilities related to businesses held for sale. 5 a CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT INVESTMENTS BY SEGMENT AGGREGATION
MARCH 31, 2004 DECEMBER 31, 2003 (In millions) BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE ---------------- ------------- ------------- ------------- ------------- PROPERTY & CASUALTY AND CORPORATE & OTHER NON-CORE: Fixed Maturities - Taxable $ 11,842 $ 12,241 $ 11,623 $ 11,893 Fixed Maturities - Tax Exempt 8,058 8,223 6,848 7,004 Equities 191 444 225 448 Short-term 5,252 5,253 6,689 6,689 Limited Partnership Investments 1,194 1,194 1,113 1,113 Mortgage Loans & Other 21 29 48 58 ------------- ------------- ------------- ------------- Subtotal 26,558 27,384 26,546 27,205 Securities Lending Collateral 295 295 307 307 ------------- ------------- ------------- ------------- TOTAL INVESTMENTS $ 26,853 $ 27,679 $ 26,853 $ 27,512 ------------- ------------- ------------- ------------- LIFE & GROUP NON-CORE (1) (2): Fixed Maturities - Taxable $ 6,564 $ 7,223 $ 8,155 $ 8,815 Fixed Maturities - Tax Exempt 968 1,004 939 966 Equities 48 60 68 79 Short-term 518 518 419 419 Limited Partnership Investments 465 465 4 4 Mortgage Loans & Other 23 11 197 182 ------------- ------------- ------------- ------------- Subtotal 8,586 9,281 9,782 10,465 Securities Lending Collateral 61 61 123 123 ------------- ------------- ------------- ------------- TOTAL INVESTMENTS $ 8,647 $ 9,342 $ 9,905 $ 10,588 ------------- ------------- ------------- ------------- TOTAL INVESTMENTS $ 35,500 $ 37,021 $ 36,758 $ 38,100 ============= ============= ============= =============
(1) As a result of SOP 03-01, the following investments are included in Life & Group Non-Core as of March 31, 2004 and are included in the March 31, 2004 column above. As of December 31, 2003, the investments were reflected within separate accounts in the Condensed Consolidated Balance Sheet and are not included in the December 31, 2003 column above. In accordance with the requirements of SOP 03-01, the December 31, 2003 column has not been conformed to reflect this change. Refer to page i for further discussion on SOP 03-01.
MARCH 31, 2004 BOOK VALUE FAIR VALUE ----------- ---------- Fixed Maturities - Taxable $ 1,457 1,584 Equities 5 4 Short-term 417 417 Limited Partnership Investments 463 463 ----------- --------- TOTAL INVESTMENTS $ 2,342 2,468 =========== =========
(2) The following balances have been transferred to assets related to businesses held for sale as of March 31, 2004 and are not included in the March 31, 2004 column above. As of December 31, 2003, the balances were reflected within investments in the Condensed Consolidated Balance Sheet and are included in the December 31, 2003 column above. Refer to page ii for further discussion on the pending life sale.
MARCH 31, 2004 BOOK VALUE FAIR VALUE ----------- ---------- Fixed Maturities - Taxable $ 3,425 $ 3,701 Equities 10 13 Short-term 234 234 Mortgage Loans & Other 172 172 ----------- --------- TOTAL INVESTMENTS $ 3,841 $ 4,120 =========== =========
6 a CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY RESULTS OF OPERATIONS
THREE MONTHS ENDED STANDARD LINES SPECIALTY LINES March 31 FAV/(UNFAV) FAV/(UNFAV) (In millions) 2004 2003 % CHANGE 2004 2003 % CHANGE - --------------------------------------------------------------------------------------------------------------------------- Gross written premiums $ 1,565 $ 1,634 (4)% $ 710 $ 628 13% Net written premiums 1,265 1,273 (1) 581 476 22 Net earned premiums 1,258 1,219 3 529 428 24 Claim and claim adjustment expenses 823 893 8 334 284 (18) Acquisition expenses 271 238 (14) 97 79 (23) Underwriting expenses 152 160 5 43 43 - Policyholders' dividends 9 15 40 2 1 (100) --------- --------- --------- --------- Underwriting income (loss) 3 (87) 103 53 21 152 --------- --------- --------- --------- Net investment income 138 129 7 62 49 27 Other revenues 40 71 (44) 25 17 47 Other expenses 31 63 51 27 13 (108) --------- --------- --------- --------- Income before income tax, minority interest and net realized investment gains 150 50 200 113 74 53 Income tax expense (34) (5) N/A (34) (24) (42) Minority interest (2) (1) (100) (4) (2) (100) --------- --------- --------- --------- Income before net realized investment gains 114 44 159 75 48 56 Realized investment gains 57 7 N/A 20 3 N/A Income tax expense on realized investment gains (19) (4) N/A (7) (1) N/A --------- --------- --------- --------- Net income $ 152 $ 47 N/A% $ 88 $ 50 76% ========= ========= ========= ========= FINANCIAL RATIOS Loss & LAE 65.5 % 73.3 % 63.1 % 66.3 % Acquisition expense 21.6 19.5 18.4 18.4 Underwriting expense 11.9 13.2 8.0 10.2 Dividends 0.7 1.2 0.4 0.1 --------- --------- --------- --------- Expense ratio, including dividends 34.2 33.9 26.8 28.7 --------- --------- --------- --------- Combined ratio 99.7 % 107.2 % 89.9 % 95.0 % ========= ========= ========= ========= THREE MONTHS ENDED P&C OPERATIONS MARCH 31 FAV/(UNFAV) (In millions) 2004 2003 % CHANGE - ---------------------------------------------------------------------------------- Gross written premiums $ 2,275 $ 2,262 1% Net written premiums 1,846 1,749 6 Net earned premiums 1,787 1,647 9 Claim and claim adjustment expenses 1,157 1,177 2 Acquisition expenses 368 317 (16) Underwriting expenses 195 203 4 Policyholders' dividends 11 16 31 --------- --------- Underwriting income (loss) 56 (66) 185 --------- --------- Net investment income 200 178 12 Other revenues 65 88 (26) Other expenses 58 76 24 --------- --------- Income before income tax, minority interest and net realized investment gains 263 124 112 Income tax expense (68) (29) (134) Minority interest (6) (3) (100) --------- --------- Income before net realized investment gains 189 92 105 Realized investment gains 77 10 N/A Income tax expense on realized investment gains (26) (5) N/A --------- --------- Net income $ 240 $ 97 147% ========= ========= FINANCIAL RATIOS Loss & LAE 64.8 % 71.5 % Acquisition expense 20.6 19.2 Underwriting expense 10.8 12.3 Dividends 0.6 1.0 --------- --------- Expense ratio, including dividends 32.0 32.5 --------- --------- Combined ratio 96.8 % 104.0 % ========= =========
7 a CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT LIFE & GROUP NON-CORE AND CORPORATE & OTHER NON-CORE SEGMENTS RESULTS OF OPERATIONS
THREE MONTHS ENDED LIFE & GROUP NON-CORE MARCH 31 P&C OPERATIONS FAV/(UNFAV) (In millions) 2004 2003 2004 2003 % CHANGE ------- ------- ------- ------- ------- Net earned premiums $ 1,787 $ 1,647 $ 326 $ 586 (44)% Insurance claims & policyholders' benefits 1,157 1,177 407 561 27 Policyholders' dividends 11 16 6 2 (200) Insurance related expenses 563 520 108 200 46 Net investment income 200 178 206 203 1 Other revenues 65 88 34 41 (17) Other expenses 58 76 21 24 13 ------- ------- ------- ------- Income (loss) before income tax, minority interest and net realized investment gains (losses) 263 124 24 43 (44) Income tax (expense) benefit (68) (29) (5) (14) 64 Minority interest (6) (3) -- -- N/A ------- ------- ------- ------- Income before net realized investment gains (losses) 189 92 19 29 (34) Realized investment gains (losses) 77 10 (562) (104) N/A Income tax (expense) benefit on realized investment gains (losses) (26) (5) 161 36 N/A ------- ------- ------- ------- Net income (loss) $ 240 $ 97 $ (382) $ (39) N/A% ======= ======= ======= ======= THREE MONTHS ENDED CORPORATE & OTHER NON-CORE TOTAL OPERATIONS MARCH 31 FAV/(UNFAV) FAV/(UNFAV) (In millions) 2004 2003 % CHANGE 2004 2003 % CHANGE ------- ------- ------- ------- ------- -------- Net earned premiums $ 55 $ 148 (63)% $ 2,168 $ 2,381 (9)% Insurance claims & policyholders' benefits 39 114 66 1,603 1,852 13 Policyholders' dividends 1 -- N/A 18 18 -- Insurance related expenses 45 48 6 716 768 7 Net investment income 67 51 31 473 432 9 Other revenues (17) (21) 19 82 108 (24) Other expenses 22 3 N/A 101 103 2 ------- ------- ------- ------- Income (loss) before income tax, minority interest and net realized investment gains (losses) (2) 13 (115) 285 180 58 Income tax (expense) benefit 2 (2) 200 (71) (45) (58) Minority interest -- -- N/A (6) (3) (100) ------- ------- ------- ------- Income before net realized investment gains (losses) -- 11 N/A 208 132 58 Realized investment gains (losses) 27 18 50 (458) (76) N/A Income tax (expense) benefit on realized investment gains (losses) (10) (4) (150) 125 27 N/A ------- ------- ------- ------- Net income (loss) $ 17 $ 25 (32)% $ (125) $ 83 N/A% ======= ======= ======= =======
OTHER FINANCIAL DATA LIFE & GROUP NON-CORE PROPERTY & CASUALTY COMPANY INFORMATION P&C OPERATIONS FAV/(UNFAV) 2004 2003 2004 2003 % CHANGE ------- ------- ------- ------- -------- Gross written premiums $ 2,275 $ 2,262 $ 319 $ 351 (9)% Net written premiums 1,846 1,749 176 137 28 Net earned premiums 1,787 1,647 166 130 28 Underwriting income (loss) 56 (66) (101) (58) (74)% FINANCIAL RATIOS Loss & LAE 64.8% 71.5 % 128.5% 114.6% Acquisition expense 20.6 19.2 17.3 16.2 Underwriting expense 10.8 12.3 15.0 14.1 Dividends 0.6 1.0 -- -- ------- ------ ------ ------- Expense ratio, including dividends 32.0 32.5 32.3 30.3 ------- ------ ------ ------- Combined ratio 96.8% 104.0 % 160.8% 144.9% ======= ====== ====== ======= OTHER FINANCIAL DATA CORPORATE & OTHER NON-CORE TOTAL OPERATIONS PROPERTY & CASUALTY COMPANY INFORMATION FAV/(UNFAV) FAV/(UNFAV) 2004 2003 % CHANGE 2004 2003 % CHANGE ------- ------- -------- ------- ------- -------- Gross written premiums $ 637 $ 803 (21)% $ 3,231 $ 3,416 (5)% Net written premiums (16) 214 (107) 2,006 2,100 (4) Net earned premiums 71 171 (58) 2,024 1,948 4 Underwriting income (loss) (29) (12) (142)% (74) (136) 46% FINANCIAL RATIOS Loss & LAE 77.3% 79.7% 70.4% 75.1% Acquisition expense 55.0 24.9 21.6 19.5 Underwriting expense 9.3 2.5 11.0 11.6 Dividends -- -- 0.6 0.8 ------ ------- ------- ------- Expense ratio, including dividends 64.3 27.4 33.2 31.9 ------ ------- ------- ------- Combined ratio 141.6% 107.1% 103.6% 107.0% ====== ======= ======= =======
8 a CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY OPERATIONS AND CORPORATE & OTHER NON-CORE SEGMENT - CATASTROPHE LOSSES
- -------------------------------------------------------------------------------------------------------------------------------- CATASTROPHE LOSSES (PRETAX) CORPORATE & OTHER (In millions) STANDARD LINES SPECIALTY LINES P&C OPERATIONS NON-CORE TOTAL - -------------------------------------------------------------------------------------------------------------------------------- Three months ended March 31, 2004 $ 6 $ 2 $ 8 $ - $ 8 Three months ended March 31, 2003 $ 14 $ 1 $ 15 $ - $ 15 - --------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------- CATASTROPHE LOSSES (AFTER-TAX) CORPORATE & OTHER (In millions) STANDARD LINES SPECIALTY LINES P&C OPERATIONS NON-CORE TOTAL - -------------------------------------------------------------------------------------------------------------------------------- Three months ended March 31, 2004 $ 4 $ 1 $ 5 $ - $ 5 Three months ended March 31, 2003 $ 9 $ 1 $ 10 $ - $ 10 - --------------------------------------------------------------------------------------------------------------------------------
9 a CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT ANALYSIS OF PRETAX NET INVESTMENT INCOME
(In millions) STANDARD LINES - ---------------------------------------------------------------------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003 1Q04 ---- ---- ---- ---- -------- ---- ---- ---- ---- -------- ---- Limited partnership income $ 4 $ 21 $ (41) $ (3) $ (19) $ 13 $ 43 $ 35 $ 35 $ 126 $ 37 Interest on funds withheld and other deposits (39) (45) (38) (57) (179) (34) (77) (115) (43) (269) (38) Other investment income 154 178 165 176 673 150 139 135 126 550 139 ----------------------------------------------------------------------------------------------- Net investment income $ 119 $ 154 $ 86 $ 116 $ 475 $ 129 $ 105 $ 55 $ 118 $ 407 $ 138 ===============================================================================================
SPECIALTY LINES ----------------------------------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003 1Q04 ---- ---- ---- ---- -------- ---- ---- ---- ---- -------- ---- Limited partnership income $ 1 $ 6 $ (12) $ - $ (5) $ 4 $ 14 $ 11 $ 11 $ 40 $ 13 Interest on funds withheld and other deposits (8) (6) (9) (6) (29) (5) (7) (11) (2) (25) (2) Other investment income 49 54 51 52 206 50 46 47 43 186 51 ----------------------------------------------------------------------------------------------- Net investment income $ 42 $ 54 $ 30 $ 46 $ 172 $ 49 $ 53 $ 47 $ 52 $ 201 $ 62 ===============================================================================================
P&C OPERATIONS ----------------------------------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003 1Q04 ---- ---- ---- ---- -------- ---- ---- ---- ---- -------- ---- Limited partnership income $ 5 $ 27 $ (53) $ (3) $ (24) $ 17 $ 57 $ 46 $ 46 $ 166 $ 50 Interest on funds withheld and other deposits (47) (51) (47) (63) (208) (39) (84) (126) (45) (294) (40) Other investment income 203 232 216 228 879 200 185 182 169 736 190 ----------------------------------------------------------------------------------------------- Net investment income $ 161 $ 208 $ 116 $ 162 $ 647 $ 178 $ 158 $ 102 $ 170 $ 608 $ 200 ===============================================================================================
LIFE & GROUP NON-CORE ----------------------------------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003 1Q04 ---- ---- ---- ---- -------- ---- ---- ---- ---- -------- ---- Limited partnership income $ - $ 1 $ (2) $ (2) $ (3) $ 1 $ - $ 1 $ 1 $ 3 $ 1 Interest on funds withheld and other deposits - - - - - - - - - - - Income from trading securities (1) - - - - - - - - - - 28 Other investment income 202 205 205 212 824 202 211 203 202 818 177 ----------------------------------------------------------------------------------------------- Net investment income (2) $ 202 $ 206 $ 203 $ 210 $ 821 $ 203 $ 211 $ 204 $ 203 $ 821 $ 206 ===============================================================================================
CORPORATE & OTHER NON-CORE ----------------------------------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003 1Q04 ---- ---- ---- ---- -------- ---- ---- ---- ---- -------- ---- Limited partnership income $ 2 $ 9 $ (17) $ (1) $ (7) $ 5 $ 18 $ 14 $ 15 $ 52 $ 16 Interest on funds withheld and other deposits (11) (6) (6) (9) (32) (8) (9) (22) (11) (50) (10) Other investment income 72 85 68 76 301 54 49 54 59 216 61 ----------------------------------------------------------------------------------------------- Net investment income $ 63 $ 88 $ 45 $ 66 $ 262 $ 51 $ 58 $ 46 $ 63 $ 218 $ 67 ===============================================================================================
TOTAL OPERATIONS ----------------------------------------------------------------------------------------------- 1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003 1Q04 ---- ---- ---- ---- -------- ---- ---- ---- ---- -------- ---- Limited partnership income $ 7 $ 37 $ (72) $ (6) $ (34) $ 23 $ 75 $ 61 $ 62 $ 221 $ 67 Interest on funds withheld and other deposits (58) (57) (53) (72) (240) (47) (93) (148) (56) (344) (50) Income from trading securities (1) - - - - - - - - - - 28 Other investment income 477 522 489 516 2,004 456 445 439 430 1,770 428 ----------------------------------------------------------------------------------------------- Net investment income (2) $ 426 $ 502 $ 364 $ 438 $ 1,730 $ 432 $ 427 $ 352 $ 436 $ 1,647 $ 473 ===============================================================================================
(1) Includes $8 million related to limited partnership investment income that supports indexed group annuity contracts. (2) Net investment income at March 31, 2004 includes income from trading securities. See Accounting Pronouncements for the discussion of SOP 03-01 on page i. 10 a CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT STATUTORY DATA - PRELIMINARY
PERIOD ENDED MARCH 31 THREE MONTHS INCOME STATEMENT (PRELIMINARY) FAV / (UNFAV) (In millions) 2004 2003 % CHANGE - ----------------------------------------------------------------------------------------------------- PROPERTY & CASUALTY COMPANIES Gross written premiums $ 3,691 $ 4,593 (20)% Net written premiums 1,822 1,918 (5) Net earned premiums 1,702 1,722 - Claim and claim adjustment expenses 1,272 1,328 4 Acquisition expenses 324 369 12 Underwriting expenses 215 218 1 Policyholders' dividends 12 25 52 Restructuring and other related costs - - N/A -------- -------- Underwriting loss (121) (218) 44 Net investment income 303 282 7 Other expense (59) (37) (59) Income tax expense (112) (5) N/A Net realized gains 165 37 N/A -------- -------- Net income $ 176 $ 59 198% ======== ======== FINANCIAL RATIOS Loss and LAE 74.7% 77.1% Acquisition expense 17.8 19.2 Underwriting expense 11.8 11.5 Policyholders' dividends 0.7 1.4 -------- -------- Expense ratio 30.3 32.1 -------- -------- Combined ratio 105.0% 109.2% ======== ======== LIFE COMPANIES Earned premium $ 179 $ 492
SUPPLEMENTAL STATUTORY DATA
(PRELIMINARY) (In millions) MARCH 31, 2004 DECEMBER 31, 2003 - --------------------------------------------------------------------------------------------- PROPERTY & CASUALTY COMPANIES Statutory surplus (1) $ 6,606 $ 6,170 LIFE COMPANIES Statutory surplus $ 719 $ 707 Gross life insurance in force 378,858 388,968
(1) Surplus includes the Property & Casualty Companies' equity ownership of the life insurance subsidiaries. 11 a CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT PROPERTY & CASUALTY OPERATIONS LOSS AND LAE RATIO ANALYSIS
STANDARD LINES ------------------------------------------------------ 2004 YTD 2003 FY 2003 FY EVALUATED AT EVALUATED AT EVALUATED AT 3/31/04 12/31/03 3/31/04 ------------ -------------- ------------ Gross Accident Year 62.8% 65.4% 64.3% Impact of Other Reinsurance 2.9 2.4 2.8 -------- -------- ------- Net Accident Year 65.7 67.8 67.1% ======= Impact of Corporate Covers - (6.4) Impact of Development (0.2) 35.4 -------- -------- Net Calendar Year 65.5% 96.8% ======== ========
SPECIALTY LINES ------------------------------------------------------ 2004 YTD 2003 FY 2003 FY EVALUATED AT EVALUATED AT EVALUATED AT 3/31/04 12/31/03 3/31/04 ------------ -------------- ------------ Gross Accident Year 62.0% 67.1% 65.8% Impact of Other Reinsurance 1.0 1.8 1.9 -------- -------- ------- Net Accident Year 63.0 68.9 67.7% ======= Impact of Corporate Covers - (1.9) Impact of Development 0.1 18.4 -------- -------- Net Calendar Year 63.1% 85.4% ======== ========
P&C OPERATIONS ------------------------------------------------------ 2004 YTD 2003 FY 2003 FY EVALUATED AT EVALUATED AT EVALUATED AT 3/31/04 12/31/03 3/31/04 ------------ -------------- ------------ Gross Accident Year 62.6% 65.9% 64.7% Impact of Other Reinsurance 2.3 2.2 2.6 -------- -------- ------- Net Accident Year 64.9 68.1 67.3% ======= Impact of Corporate Covers - (5.1) Impact of Development (0.1) 30.6 -------- -------- Net Calendar Year 64.8% 93.6% ======== ========
12 a CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT LIFE & GROUP NON-CORE SEGMENT - GAAP RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2004 LIFE & GROUP NON-CORE LIFE & GROUP NON-CORE TOTAL LIFE & GROUP EXCLUDING BUSINESSES BUSINESSES TO BE SOLD NON-CORE (In millions) TO BE SOLD (1) (2) (3) AS REPORTED - --------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 221 $ 105 $ 326 Insurance claims & policyholders' benefits 301 106 407 Policyholders' dividends - 6 6 Insurance related expenses 73 35 108 Net investment income 154 52 206 Other revenues 25 9 34 Other expenses 13 8 21 ---------- -------- ----- Income before income tax and net realized investment gains (losses) 13 11 24 Income tax expense (1) (4) (5) ---------- -------- ----- Income before net realized investment gains (losses) 12 7 19 Realized investment gains (losses) 6 (568) (562) Income tax (expense) benefit on realized investment gains (losses) (2) 163 161 ---------- -------- ----- Net income (loss) $ 16 $ (398) $(382) ========== ======== =====
THREE MONTHS ENDED MARCH 31, 2003 LIFE & GROUP NON-CORE LIFE & GROUP NON-CORE TOTAL LIFE & GROUP EXCLUDING BUSINESSES BUSINESSES NON-CORE (In millions) TO BE SOLD (1) TO BE SOLD AS REPORTED - --------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 223 $ 363 $ 586 Insurance claims & policyholders' benefits 261 300 561 Policyholders' dividends (2) 4 2 Insurance related expenses 65 135 200 Net investment income 117 86 203 Other revenues 26 15 41 Other expenses 15 9 24 --------- ------- ----- Income before income tax and net realized investment losses 27 16 43 Income tax expense (8) (6) (14) --------- ------- ----- Income before net realized investment losses 19 10 29 Realized investment losses (64) (40) (104) Income tax benefit on realized investment losses 26 10 36 --------- ------- ----- Net (loss) income $ (19) $ (20) $ (39) ========= ======= =====
(1) Retained life and group businesses principally include group and individual long term care, structured settlements, institutional markets and specialty medical. (2) For three months ended March 31, 2004, net realized investment losses for Life & Group Non-Core businesses to be sold include an estimated pretax impairment loss of $569 million ($406 million after-tax), related to the individual life business. (3) Life and group businesses to be sold include individual life business and CNA Trust. 13 a CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT ASBESTOS SUMMARY BY POLICYHOLDER CATEGORY
MARCH 31, 2004 PERCENT OF NUMBER OF NET PAID NET ASBESTOS ASBESTOS NET (In millions) POLICYHOLDERS LOSSES IN 2004 RESERVES RESERVES - --------------------------------------------------------------------------------------------------------------------- POLICYHOLDERS WITH SETTLEMENT AGREEMENTS Structured Settlements 10 $ 41 $ 175 10% Wellington 5 6 17 1 Coverage in Place 34 10 109 7 Fibreboard 1 - 54 3 ----- ------ ------ ---- TOTAL WITH SETTLEMENT AGREEMENTS 50 57 355 21 OTHER POLICYHOLDERS WITH ACTIVE ACCOUNTS Large Asbestos Accounts 163 4 418 24 Small Asbestos Accounts 1,081 3 158 9 ----- ------ ------ ---- TOTAL OTHER POLICYHOLDERS 1,244 7 576 33 ASSUMED REINSURANCE & POOLS - - 156 9 UNASSIGNED IBNR (1) - - 625 37 ----- ------ ------ ---- TOTAL 1,294 $ 64 $1,712 100% ===== ====== ====== ====
(1) IBNR includes claims that are incurred but not reported. 14 EX-99.3 4 c85006exv99w3.txt FINANCIAL SUPPLEMENT APPENDIX Exhibit 99.3 a CNA FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION APPENDIX FOR YEARS ENDED DECEMBER 31, 2002 AND 2003 CNA FINANCIAL CORPORATION TABLE OF CONTENTS DECEMBER 31, 2002 AND 2003 In the first quarter of 2004, CNA revised its reportable segment structure to reflect changes in how it manages its core operations and makes business decisions. The information provided in this document conforms previous supplemental financial information as if the 2004 segment changes occurred in the first quarter of 2002.
PAGE ---- Supplemental Financial Information i-ii 2002 Historical Results of Operations 1-6 2003 Historical Results of Operations 7-12 2002 Historical Impact of Significant Items* 13-16 2003 Historical Impact of Significant Items* 17-20 2002 Historical Property & Casualty Insurance Claim & Claim Adjustment Expense Reserve Data 21 2003 Historical Property & Casualty Insurance Claim & Claim Adjustment Expense Reserve Data 22
* There were no significant items reported at March 31, 2002 and 2003. CNA FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION DEFINITIONS AND PRESENTATION - - P&C OPERATIONS includes Standard Lines and Specialty Lines. - - LIFE & GROUP NON-CORE segment primarily includes the results of the life and group lines of business that are held for sale, or have been sold or placed in run-off. - - CORPORATE & OTHER NON-CORE segment includes the results of certain property and casualty lines of business placed in run-off, including CNA Re (formerly a stand-alone property and casualty segment). This segment also includes the results related to the centralized adjusting and settlement of APMT claims. - - P&C COMPANIES includes Standard Lines, Specialty Lines and P&C business written in the Life & Group Non-Core and Corporate & Other Non-Core segments. - - Underwriting results are net earned premiums less net incurred claims, the costs incurred to settle claims, acquisition expenses and underwriting expenses. - - The Loss & LAE ratio represents claim and claim adjustment expenses as a percentage of net earned premiums. - - The expense ratio is the percentage of underwriting expenses, acquisition expenses and dividends, including the amortization of deferred acquisition costs, to net earned premiums. - - The dividend ratio is the ratio of dividends incurred to net earned premiums. - - Limited partnerships (LPs) are a relatively small portion of CNA's overall investment portfolio. The majority of the LPs 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. - - All amounts are in millions, except for per share and ratio information. - - Certain immaterial differences are due to rounding. i CNA FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION NON-GAAP FINANCIAL MEASURES This financial supplement appendix 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 (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 appendix 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 2002 HISTORICAL RESULTS OF OPERATIONS CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX RESULTS OF OPERATIONS - STANDARD LINES
2002 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Gross written premiums $ 1,811 $ 1,417 $ 1,442 $ 1,234 $ 5,904 Net written premiums 1,255 1,244 1,216 1,040 4,755 Net earned premiums 1,186 1,196 1,156 1,140 4,678 Claim and claim adjustment expenses 905 922 761 830 3,418 Acquisition expenses 232 224 194 225 875 Underwriting expenses 150 143 156 155 604 Policyholders' dividends 16 15 26 16 73 Restructuring & other related costs - - - (2) (2) ---------- ---------- ---------- ---------- ---------- Underwriting (loss) income (117) (108) 19 (84) (290) ---------- ---------- ---------- ---------- ---------- Net investment income 119 154 86 116 475 Other revenues 112 82 80 81 355 Other expenses 83 69 79 77 308 Non-insurance restructuring & other related costs - - - (6) (6) ---------- ---------- ---------- ---------- ---------- Income before income tax, minority interest and net realized investment gains (losses) 31 59 106 42 238 Income tax expense (5) (15) (36) - (56) Minority interest (2) (1) - (10) (13) ---------- ---------- ---------- ---------- ---------- Income before net realized investment gains (losses) 24 43 70 32 169 Realized investment gains (losses) 8 (33) (37) (57) (119) Income tax (expense) benefit on realized investment gains (losses) (3) 11 13 19 40 ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations 29 21 46 (6) 90 Cumulative effect of a change in accounting principle (43) - - - (43) ---------- ---------- ---------- ---------- ---------- Net (loss) income $ (14) $ 21 $ 46 $ (6) $ 47 ========== ========== ========== ========== ========== FINANCIAL RATIOS Loss & LAE 76.3% 77.0% 65.8% 72.9% 73.1% Acquisition expense 19.5 18.7 16.8 19.7 18.7 Underwriting expense 12.7 12.0 13.5 13.6 12.8 Dividends 1.4 1.3 2.2 1.4 1.6 ---------- ---------- ---------- ---------- ---------- Expense ratio, including dividends 33.6 32.0 32.5 34.7 33.1 ---------- ---------- ---------- ---------- ---------- Combined ratio 109.9% 109.0% 98.3% 107.6% 106.2% ========== ========== ========== ========== ==========
1 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX RESULTS OF OPERATIONS - SPECIALTY LINES
2002 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Gross written premiums $ 461 $ 466 $ 581 $ 558 $ 2,066 Net written premiums 335 376 424 439 1,574 Net earned premiums 326 353 366 406 1,451 Claim and claim adjustment expenses 226 248 311 281 1,066 Acquisition expenses 65 64 74 65 268 Underwriting expenses 37 40 41 40 158 Policyholders' dividends 1 - 1 1 3 Restructuring & other related costs - - - (1) (1) ---------- ---------- ---------- ---------- ---------- Underwriting (loss) income (3) 1 (61) 20 (43) ---------- ---------- ---------- ---------- ---------- Net investment income 42 54 30 46 172 Other revenues 25 31 30 22 108 Other expenses 19 26 28 21 94 Non-insurance restructuring & other related costs - - - - - ---------- ---------- ---------- ---------- ---------- Income (loss) before income tax, minority interest and net realized investment gains (losses) 45 60 (29) 67 143 Income tax (expense) benefit (14) (19) 13 (20) (40) Minority interest (3) (4) (1) (5) (13) ---------- ---------- ---------- ---------- ---------- Income (loss) before net realized investment gains (losses) 28 37 (17) 42 90 Realized investment gains (losses) 2 (16) (11) (14) (39) Income tax (expense) benefit on realized investment gains (losses) (1) 5 4 6 14 ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations 29 26 (24) 34 65 Cumulative effect of a change in accounting principle (5) - - - (5) ---------- ---------- ---------- ---------- ---------- Net income (loss) $ 24 $ 26 $ (24) $ 34 $ 60 ========== ========== ========== ========== ========== FINANCIAL RATIOS Loss & LAE 69.4% 70.2% 84.9% 69.4% 73.5% Acquisition expense 19.9 18.1 20.2 16.1 18.5 Underwriting expense 11.3 11.2 11.5 9.5 10.8 Dividends 0.2 0.2 0.2 0.2 0.2 ---------- ---------- ---------- ---------- ---------- Expense ratio, including dividends 31.4 29.5 31.9 25.8 29.5 ---------- ---------- ---------- ---------- ---------- Combined ratio 100.8% 99.7% 116.8% 95.2% 103.0% ========== ========== ========== ========== ==========
2 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX RESULTS OF OPERATIONS - PROPERTY & CASUALTY OPERATIONS
2002 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Gross written premiums $ 2,272 $ 1,883 $ 2,023 $ 1,792 $ 7,970 Net written premiums 1,590 1,620 1,640 1,479 6,329 Net earned premiums 1,512 1,549 1,522 1,546 6,129 Claim and claim adjustment expenses 1,131 1,170 1,072 1,111 4,484 Acquisition expenses 297 288 268 290 1,143 Underwriting expenses 187 183 197 195 762 Policyholders' dividends 17 15 27 17 76 Restructuring & other related costs - - - (3) (3) ---------- ---------- ---------- ---------- ---------- Underwriting loss (120) (107) (42) (64) (333) ---------- ---------- ---------- ---------- ---------- Net investment income 161 208 116 162 647 Other revenues 137 113 110 103 463 Other expenses 102 95 107 98 402 Non-insurance restructuring & other related costs - - - (6) (6) ---------- ---------- ---------- ---------- ---------- Income before income tax, minority interest and net realized investment gains (losses) 76 119 77 109 381 Income tax expense (19) (34) (23) (20) (96) Minority interest (5) (5) (1) (15) (26) ---------- ---------- ---------- ---------- ---------- Income before net realized investment gains (losses) 52 80 53 74 259 Realized investment gains (losses) 10 (49) (48) (71) (158) Income tax (expense) benefit on realized investment gains (losses) (4) 16 17 25 54 ---------- ---------- ---------- ---------- ---------- Income from continuing operations 58 47 22 28 155 Cumulative effect of a change in accounting principle (48) - - - (48) ---------- ---------- ---------- ---------- ---------- Net income $ 10 $ 47 $ 22 $ 28 $ 107 ========== ========== ========== ========== ========== FINANCIAL RATIOS Loss & LAE 74.8% 75.5% 70.4% 72.0% 73.2% Acquisition expense 19.6 18.6 17.6 18.8 18.7 Underwriting expense 12.4 11.8 13.0 12.4 12.3 Dividends 1.1 1.0 1.7 1.1 1.2 ---------- ---------- ---------- ---------- ---------- Expense ratio, including dividends 33.1 31.4 32.3 32.3 32.2 ---------- ---------- ---------- ---------- ---------- Combined ratio 107.9% 106.9% 102.7% 104.3% 105.4% ========== ========== ========== ========== ==========
3 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX RESULTS OF OPERATIONS - LIFE & GROUP NON-CORE
2002 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Net earned premiums $ 1,178 $ 1,097 $ 568 $ 565 $ 3,408 Insurance claims & policyholders' benefits 1,080 1,034 530 566 3,210 Policyholders' dividends - 3 4 3 10 Insurance related expenses 247 209 166 170 792 Restructuring & other related costs - - - (1) (1) Net investment income 202 206 203 210 821 Other revenues 50 52 53 44 199 Other expenses 26 26 27 24 103 Non-insurance restructuring & other related costs - - - - - ---------- ---------- ---------- ---------- ---------- Income before income tax, minority interest and net realized investment gains (losses) 77 83 97 57 314 Income tax expense (26) (29) (33) (20) (108) Minority interest - - - - - ---------- ---------- ---------- ---------- ---------- Income before net realized investment gains (losses) 51 54 64 37 206 Realized investment gains (losses) 22 (83) (14) (100) (175) Income tax (expense) benefit on realized investment gains (losses) (8) 30 4 34 60 ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations 65 1 54 (29) 91 Loss from discontinued operations (35) - - - (35) Cumulative effect of a change in accounting principle (8) - - - (8) ---------- ---------- ---------- ---------- ---------- Net income (loss) $ 22 $ 1 $ 54 $ (29) $ 48 ========== ========== ========== ========== ==========
P&C COMPANY INFORMATION
2002 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Gross written premiums $ 953 $ 864 $ 343 $ 387 $ 2,547 Net written premiums 740 658 122 162 1,682 Net earned premiums 732 654 121 126 1,633 Underwriting loss (38) (40) (46) (101) (225) FINANCIAL RATIOS Loss & LAE 90.2% 93.3% 118.4% 153.8% 98.4% Acquisition expense 2.5 3.0 6.1 11.6 3.7 Underwriting expense 12.6 9.7 13.8 14.8 11.7 Dividends - - - - - ---------- ---------- ---------- ---------- ---------- Expense ratio, including dividends 15.1 12.7 19.9 26.4 15.4 ---------- ---------- ---------- ---------- ---------- Combined ratio 105.3% 106.0% 138.3% 180.2% 113.8% ========== ========== ========== ========== ==========
4 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX RESULTS OF OPERATIONS - CORPORATE & OTHER NON-CORE
2002 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Net earned premiums $ 147 $ 180 $ 172 $ 177 $ 676 Insurance claims & policyholders' benefits 82 160 217 153 612 Policyholders' dividends - - - - - Insurance related expenses 50 44 60 61 215 Restructuring & other related costs - - - (27) (27) Net investment income 63 88 45 66 262 Other revenues (5) (19) (26) (17) (67) Other expenses 59 47 35 32 173 Non-insurance restructuring & other related costs - - - - - ---------- ---------- ---------- ---------- ---------- Income (loss) before income tax, minority interest and net realized investment (losses) gains 14 (2) (121) 7 (102) Income tax (expense) benefit (7) 4 42 (6) 33 Minority interest - - - - - ---------- ---------- ---------- ---------- ---------- Income (loss) before net realized investment (losses) gains 7 2 (79) 1 (69) Realized investment (losses) gains (31) (30) 86 56 81 Income tax benefit (expense) on realized investment (losses) gains 13 11 (29) (6) (11) ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations (11) (17) (22) 51 1 Loss from discontinued operations - - - - - Cumulative effect of a change in accounting principle (1) - - - (1) ---------- ---------- ---------- ---------- ---------- Net (loss) income $ (12) $ (17) $ (22) $ 51 $ - ========== ========== ========== ========== ==========
P&C COMPANY INFORMATION
2002 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Gross written premiums $ 852 $ 693 $ 703 $ 690 $ 2,938 Net written premiums 203 167 162 110 642 Net earned premiums 153 187 160 176 676 Underwriting loss (21) (53) (140) (41) (255) FINANCIAL RATIOS Loss & LAE 57.2% 89.8% 128.3% 85.5% 90.4% Acquisition expense 28.5 19.8 24.9 30.3 25.7 Underwriting expense 27.8 19.4 33.9 6.0 21.3 Dividends - - - - - ---------- ---------- ---------- ---------- ---------- Expense ratio, including dividends 56.3 39.2 58.8 36.3 47.0 ---------- ---------- ---------- ---------- ---------- Combined ratio 113.5% 129.0% 187.1% 121.8% 137.4% ========== ========== ========== ========== ==========
5 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX RESULTS OF TOTAL OPERATIONS
2002 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Net earned premiums $ 2,837 $ 2,826 $ 2,262 $ 2,288 $ 10,213 Insurance claims & policyholders' benefits 2,293 2,364 1,819 1,830 8,306 Policyholders' dividends 17 18 31 20 86 Insurance related expenses 781 724 691 716 2,912 Restructuring & other related costs - - - (31) (31) Net investment income 426 502 364 438 1,730 Other revenues 182 146 137 130 595 Other expenses 187 168 169 154 678 Non-insurance restructuring & other related costs - - - (6) (6) ---------- ---------- ---------- ---------- ---------- Income before income tax, minority interest and net realized investment gains (losses) 167 200 53 173 593 Income tax expense (52) (59) (14) (46) (171) Minority interest (5) (5) (1) (15) (26) ---------- ---------- ---------- ---------- ---------- Income before net realized investment gains (losses) 110 136 38 112 396 Realized investment gains (losses) 1 (162) 24 (115) (252) Income tax benefit (expense) on realized investment gains (losses) 1 57 (8) 53 103 ---------- ---------- ---------- ---------- ---------- Income from continuing operations 112 31 54 50 247 Loss from discontinued operations (35) - - - (35) Cumulative effect of a change in accounting principle (57) - - - (57) ---------- ---------- ---------- ---------- ---------- Net income $ 20 $ 31 $ 54 $ 50 $ 155 ========== ========== ========== ========== ==========
P&C COMPANY INFORMATION
2002 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Gross written premiums $ 4,077 $ 3,440 $ 3,069 $ 2,869 $ 13,455 Net written premiums 2,533 2,445 1,924 1,751 8,653 Net earned premiums 2,397 2,390 1,803 1,848 8,438 Underwriting loss (179) (200) (228) (206) (813) FINANCIAL RATIOS Loss & LAE 78.4% 81.5% 79.0% 78.8% 79.4% Acquisition expense 15.0 14.4 17.4 19.4 16.3 Underwriting expense 13.4 11.8 14.8 12.0 13.0 Dividends 0.7 0.7 1.4 0.9 0.9 ---------- ---------- ---------- ---------- ---------- Expense ratio, including dividends 29.1 26.9 33.6 32.3 30.2 ---------- ---------- ---------- ---------- ---------- Combined ratio 107.5% 108.4% 112.6% 111.1% 109.6% ========== ========== ========== ========== ==========
6 2003 HISTORICAL RESULTS OF OPERATIONS CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX RESULTS OF OPERATIONS - STANDARD LINES
2003 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Gross written premiums $ 1,634 $ 1,651 $ 1,626 $ 1,575 $ 6,486 Net written premiums 1,273 1,087 1,028 1,173 4,561 Net earned premiums 1,219 1,018 1,001 1,292 4,530 Claim and claim adjustment expenses 893 896 1,726 872 4,387 Acquisition expenses 238 266 554 262 1,320 Underwriting expenses 160 172 180 164 676 Policyholders' dividends 15 11 60 14 100 Restructuring & other related costs - - - - - ---------- ---------- ---------- ---------- ---------- Underwriting loss (87) (327) (1,519) (20) (1,953) ---------- ---------- ---------- ---------- ---------- Net investment income 129 105 55 118 407 Other revenues 71 61 34 33 199 Other expenses 63 60 35 34 192 Non-insurance restructuring & other related costs - - - - - ---------- ---------- ---------- ---------- ---------- Income (loss) before income tax, minority interest and net realized investment gains 50 (221) (1,465) 97 (1,539) Income tax (expense) benefit (5) 85 520 (8) 592 Minority interest (1) 2 (2) (3) (4) ---------- ---------- ---------- ---------- ---------- Income (loss) before net realized investment gains 44 (134) (947) 86 (951) Realized investment gains 7 184 58 112 361 Income tax expense on realized investment gains (4) (62) (22) (39) (127) ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations 47 (12) (911) 159 (717) Cumulative effect of a change in accounting principle - - - - - ---------- ---------- ---------- ---------- ---------- Net income (loss) $ 47 $ (12) $ (911) $ 159 $ (717) ========== ========== ========== ========== ========== FINANCIAL RATIOS Loss & LAE 73.3% 88.0% 172.4% 67.5% 96.8% Acquisition expense 19.5 26.1 55.3 20.3 29.1 Underwriting expense 13.2 16.9 18.0 12.7 15.0 Dividends 1.2 1.1 6.0 1.1 2.2 ---------- ---------- ---------- ---------- ---------- Expense ratio, including dividends 33.9 44.1 79.3 34.1 46.3 ---------- ---------- ---------- ---------- ---------- Combined ratio 107.2% 132.1% 251.7% 101.6% 143.1% ========== ========== ========== ========== ==========
7 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX RESULTS OF OPERATIONS - SPECIALTY LINES
2003 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Gross written premiums $ 628 $ 614 $ 717 $ 670 $ 2,629 Net written premiums 476 487 528 547 2,038 Net earned premiums 428 459 451 502 1,840 Claim and claim adjustment expenses 284 402 547 339 1,572 Acquisition expenses 79 83 169 77 408 Underwriting expenses 43 45 44 44 176 Policyholders' dividends 1 - 1 1 3 Restructuring & other related costs - - - - - ---------- ---------- ---------- ---------- ---------- Underwriting income (loss) 21 (71) (310) 41 (319) ---------- ---------- ---------- ---------- ---------- Net investment income 49 53 47 52 201 Other revenues 17 30 35 33 115 Other expenses 13 25 30 32 100 Non-insurance restructuring & other related costs - - - - - ---------- ---------- ---------- ---------- ---------- Income (loss) before income tax, minority interest and net realized investment gains 74 (13) (258) 94 (103) Income tax (expense) benefit (24) 9 103 (29) 59 Minority interest (2) (3) 15 - 10 ---------- ---------- ---------- ---------- ---------- Income (loss) before net realized investment gains 48 (7) (140) 65 (34) Realized investment gains 3 59 19 33 114 Income tax expense on realized investment gains (1) (21) (7) (11) (40) ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations 50 31 (128) 87 40 Cumulative effect of a change in accounting principle - - - - - ---------- ---------- ---------- ---------- ---------- Net income (loss) $ 50 $ 31 $ (128) $ 87 $ 40 ========== ========== ========== ========== ========== FINANCIAL RATIOS Loss & LAE 66.3% 87.5% 121.2% 67.7% 85.4% Acquisition expense 18.4 18.2 37.4 15.3 22.2 Underwriting expense 10.2 9.7 9.8 8.8 9.6 Dividends 0.1 0.1 0.3 0.2 0.2 ---------- ---------- ---------- ---------- ---------- Expense ratio, including dividends 28.7 28.0 47.5 24.3 32.0 ---------- ---------- ---------- ---------- ---------- Combined ratio 95.0% 115.5% 168.7% 92.0% 117.4% ========== ========== ========== ========== ==========
8 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX RESULTS OF OPERATIONS - PROPERTY & CASUALTY OPERATIONS
2003 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Gross written premiums $ 2,262 $ 2,265 $ 2,343 $ 2,245 $ 9,115 Net written premiums 1,749 1,574 1,556 1,720 6,599 Net earned premiums 1,647 1,477 1,452 1,794 6,370 Claim and claim adjustment expenses 1,177 1,298 2,273 1,211 5,959 Acquisition expenses 317 349 723 339 1,728 Underwriting expenses 203 217 224 208 852 Policyholders' dividends 16 11 61 15 103 Restructuring & other related costs - - - - - ---------- ---------- ---------- ---------- ---------- Underwriting (loss) income (66) (398) (1,829) 21 (2,272) ---------- ---------- ---------- ---------- ---------- Net investment income 178 158 102 170 608 Other revenues 88 91 69 66 314 Other expenses 76 85 65 66 292 Non-insurance restructuring & other related costs - - - - - ---------- ---------- ---------- ---------- ---------- Income (loss) before income tax, minority interest and net realized investment gains 124 (234) (1,723) 191 (1,642) Income tax (expense) benefit (29) 94 623 (37) 651 Minority interest (3) (1) 13 (3) 6 ---------- ---------- ---------- ---------- ---------- Income (loss) before net realized investment gains 92 (141) (1,087) 151 (985) Realized investment gains 10 243 77 145 475 Income tax expense on realized investment gains (5) (83) (29) (50) (167) ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations 97 19 (1,039) 246 (677) Cumulative effect of a change in accounting principle - - - - - ---------- ---------- ---------- ---------- ---------- Net income (loss) $ 97 $ 19 $ (1,039) $ 246 $ (677) ========== ========== ========== ========== ========== FINANCIAL RATIOS Loss & LAE 71.5% 87.8% 156.5% 67.5% 93.6% Acquisition expense 19.2 23.7 49.7 18.9 27.1 Underwriting expense 12.3 14.6 15.5 11.7 13.4 Dividends 1.0 0.8 4.2 0.8 1.6 ---------- ---------- ---------- ---------- ---------- Expense ratio, including dividends 32.5 39.1 69.4 31.4 42.1 ---------- ---------- ---------- ---------- ---------- Combined ratio 104.0% 126.9% 225.9% 98.9% 135.7% ========== ========== ========== ========== ==========
9 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX RESULTS OF OPERATIONS - LIFE & GROUP NON-CORE
2003 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Net earned premiums $ 586 $ 603 $ 611 $ 576 $ 2,376 Insurance claims & policyholders' benefits 561 580 643 600 2,384 Policyholders' dividends 2 2 3 3 10 Insurance related expenses 200 193 184 177 754 Restructuring & other related costs - - - - - Net investment income 203 211 204 203 821 Other revenues 41 35 34 53 163 Other expenses 24 21 21 - 66 Non-insurance restructuring & other related costs - - - - - ---------- ---------- ---------- ---------- ---------- Income (loss) before income tax, minority interest and net realized investment (losses) gains 43 53 (2) 52 146 Income tax (expense) benefit (14) (15) 11 (15) (33) Minority interest - - - - - ---------- ---------- ---------- ---------- ---------- Income before net realized investment (losses) gains 29 38 9 37 113 Realized investment (losses) gains (104) 53 60 (150) (141) Income tax benefit (expense) on realized investment (losses) gains 36 (18) (21) 36 33 ---------- ---------- ---------- ---------- ---------- (Loss) income from continuing operations (39) 73 48 (77) 5 Loss from discontinued operations - - - - - Cumulative effect of a change in accounting principle - - - - - ---------- ---------- ---------- ---------- ---------- Net (loss) income $ (39) $ 73 $ 48 $ (77) $ 5 ========== ========== ========== ========== ==========
P&C COMPANY INFORMATION
2003 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Gross written premiums $ 351 $ 326 $ 312 $ 307 $ 1,296 Net written premiums 137 132 127 128 524 Net earned premiums 130 132 128 130 520 Underwriting loss (58) (71) (102) (119) (350) FINANCIAL RATIOS Loss & LAE 114.6% 125.4% 150.9% 166.3% 139.3% Acquisition expense 16.2 16.2 20.8 19.1 18.1 Underwriting expense 14.1 12.3 7.8 5.5 9.8 Dividends - - - - - ---------- ---------- ---------- ---------- ---------- Expense ratio, including dividends 30.3 28.5 28.6 24.6 27.9 ---------- ---------- ---------- ---------- ---------- Combined ratio 144.9% 153.9% 179.5% 190.9% 167.2% ========== ========== ========== ========== ==========
10 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX RESULTS OF OPERATIONS - CORPORATE & OTHER NON-CORE
2003 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Net earned premiums $ 148 $ 117 $ 63 $ 140 $ 468 Insurance claims & policyholders' benefits 114 176 1,051 118 1,459 Policyholders' dividends - - 1 - 1 Insurance related expenses 48 86 255 29 418 Restructuring & other related costs - - - - - Net investment income 51 58 46 63 218 Other revenues (21) (29) (20) (12) (82) Other expenses 3 4 1 34 42 Non-insurance restructuring & other related costs - - - - - ---------- ---------- ---------- ---------- ---------- Income (loss) before income tax, minority interest and net realized investment gains (losses) 13 (120) (1,219) 10 (1,316) Income tax (expense) benefit (2) 45 431 (4) 470 Minority interest - (1) 1 - - ---------- ---------- ---------- ---------- ---------- Income (loss) before net realized investment gains (losses) 11 (76) (787) 6 (846) Realized investment gains (losses) 18 82 27 (1) 126 Income tax expense on realized investment gains (losses) (4) (28) (9) - (41) ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations 25 (22) (769) 5 (761) Loss from discontinued operations - - - - - Cumulative effect of a change in accounting principle - - - - - ---------- ---------- ---------- ---------- ---------- Net income (loss) $ 25 $ (22) $ (769) $ 5 $ (761) ========== ========== ========== ========== ==========
P&C COMPANY INFORMATION
2003 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Gross written premiums $ 803 $ 671 $ 647 $ 477 $ 2,598 Net written premiums 214 120 107 39 480 Net earned premiums 171 139 92 163 565 Underwriting loss (12) (147) (1,257) (5) (1,421) FINANCIAL RATIOS Loss & LAE 79.7% 143.2% N/A% 86.3% 275.4% Acquisition expense 24.9 53.2 253.7 24.3 68.4 Underwriting expense 2.5 8.9 42.4 (7.3) 7.6 Dividends - - - - - ---------- ---------- ---------- ---------- ---------- Expense ratio, including dividends 27.4 62.1 296.1 17.0 76.0 ---------- ---------- ---------- ---------- ---------- Combined ratio 107.1% 205.3% N/A% 103.3% 351.4% ========== ========== ========== ========== ==========
11 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX RESULTS OF TOTAL OPERATIONS
2003 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Net earned premiums $ 2,381 $ 2,197 $ 2,126 $ 2,510 $ 9,214 Insurance claims & policyholders' benefits 1,852 2,054 3,967 1,929 9,802 Policyholders' dividends 18 13 65 18 114 Insurance related expenses 768 845 1,386 753 3,752 Restructuring & other related costs - - - - - Net investment income 432 427 352 436 1,647 Other revenues 108 97 83 107 395 Other expenses 103 110 87 100 400 Non-insurance restructuring & other related costs - - - - - ---------- ---------- ---------- ---------- ---------- Income (loss) before income tax, minority interest and net realized investment (losses) gains 180 (301) (2,944) 253 (2,812) Income tax (expense) benefit (45) 124 1,065 (56) 1,088 Minority interest (3) (2) 14 (3) 6 ---------- ---------- ---------- ---------- ---------- Income (loss) before net realized investment (losses) gains 132 (179) (1,865) 194 (1,718) Realized investment (losses) gains (76) 378 164 (6) 460 Income tax benefit (expense) on realized investment (losses) gains 27 (129) (59) (14) (175) ---------- ---------- ---------- ---------- ---------- Income (loss) from continuing operations 83 70 (1,760) 174 (1,433) Loss from discontinued operations - - - - - Cumulative effect of a change in accounting principle - - - - - ---------- ---------- ---------- ---------- ---------- Net income (loss) $ 83 $ 70 $ (1,760) $ 174 $ (1,433) ========== ========== ========== ========== ==========
P&C COMPANY INFORMATION
2003 (In millions) Q1 Q2 Q3 Q4 YTD - ----------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- Gross written premiums $ 3,416 $ 3,262 $ 3,302 $ 3,029 $ 13,009 Net written premiums 2,100 1,826 1,790 1,887 7,603 Net earned premiums 1,948 1,748 1,672 2,087 7,455 Underwriting loss (136) (616) (3,188) (103) (4,043) FINANCIAL RATIOS Loss & LAE 75.1% 95.1% 212.1% 75.2% 110.5% Acquisition expense 19.5 25.5 58.6 19.4 29.6 Underwriting expense 11.6 14.0 16.3 9.7 12.7 Dividends 0.8 0.6 3.7 0.7 1.4 ---------- ---------- ---------- ---------- ---------- Expense ratio, including dividends 31.9 40.1 78.6 29.8 43.7 ---------- ---------- ---------- ---------- ---------- Combined ratio 107.0% 135.2% 290.7% 105.0% 154.2% ========== ========== ========== ========== ==========
12 2002 HISTORICAL IMPACT OF SIGNIFICANT ITEMS CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX IMPACT OF SIGNIFICANT ITEMS THREE MONTHS ENDED JUNE 30, 2002
STANDARD LINES 2002 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 1,193 $ 3 $ - $ - $ - $ 1,196 Claim and claim adjustment expenses 884 38 - - - 922 Acquisition expenses 224 - - - - 224 Underwriting expenses 143 - - - - 143 Policyholders' dividends 15 - - - - 15 Restructuring & other related costs - - - - - - ---------- ---------- -------- -------- -------- ---------- Underwriting (loss) income (73) (35) - - - (108) ---------- ---------- -------- -------- -------- ---------- Net investment income 154 - - - - 154 Other revenues 82 - - - - 82 Other expenses 69 - - - - 69 Non-insurance restructuring & other related costs - - - - - - ---------- ---------- -------- -------- -------- ---------- Income (loss) before income tax, minority interest and net realized investment losses 94 (35) - - - 59 Income tax (expense) benefit (27) 12 - - - (15) Minority interest (1) - - - - (1) ---------- ---------- -------- -------- -------- ---------- Income (loss) before net realized investment losses 66 (23) - - - 43 Realized investment losses (33) - - - - (33) Income tax benefit on realized investment losses 11 - - - - 11 ---------- ---------- -------- -------- -------- ---------- Income (loss) from continuing operations 44 (23) - - - 21 Cumulative effect of a change in accounting principle - - - - - - ---------- ---------- -------- -------- -------- ---------- Net income (loss) $ 44 $ (23) $ - $ - $ - $ 21 ========== ========== ======== ======== ======== ========== FINANCIAL RATIOS Loss & LAE 77.0% Acquisition expense 18.7 Underwriting expense 12.0 Dividends 1.3 ---------- Expense ratio, including dividends 32.0 ---------- Combined ratio 109.0% ========== SPECIALTY LINES 2002 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS - -------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 360 $ (7) $ - $ - $ - $ 353 Claim and claim adjustment expenses 255 (7) - - - 248 Acquisition expenses 64 - - - - 64 Underwriting expenses 40 - - - - 40 Policyholders' dividends - - - - - - Restructuring & other related costs - - - - - - ---------- --------- -------- -------- --------- ------- Underwriting (loss) income 1 - - - - 1 ---------- --------- -------- -------- --------- ------- Net investment income 54 - - - - 54 Other revenues 31 - - - - 31 Other expenses 26 - - - - 26 Non-insurance restructuring & other related costs - - - - - - ---------- --------- -------- -------- --------- ------- Income (loss) before income tax, minority interest and net realized investment losses 60 - - - - 60 Income tax (expense) benefit (19) - - - - (19) Minority interest (4) - - - - (4) ---------- --------- -------- -------- --------- ------- Income (loss) before net realized investment losses 37 - - - - 37 Realized investment losses (16) - - - - (16) Income tax benefit on realized investment losses 5 - - - - 5 ---------- --------- -------- -------- --------- ------- Income (loss) from continuing operations 26 - - - - 26 Cumulative effect of a change in accounting principle - - - - - - ---------- --------- -------- -------- --------- ------- Net income (loss) $ 26 $ - $ - $ - $ - $ 26 ========== ========= ======== ======== ========= ======= FINANCIAL RATIOS Loss & LAE 70.2% Acquisition expense 18.1 Underwriting expense 11.2 Dividends 0.2 ------- Expense ratio, including dividends 29.5 ------- Combined ratio 99.7% =======
P&C OPERATIONS 2002 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 1,553 $ (4) $ - $ - $ - $ 1,549 Claim and claim adjustment expenses 1,139 31 - - - 1,170 Acquisition expenses 288 - - - - 288 Underwriting expenses 183 - - - - 183 Policyholders' dividends 15 - - - - 15 Restructuring & other related costs - - - - - - ---------- ---------- -------- -------- -------- ---------- Underwriting loss (72) (35) - - - (107) ---------- ---------- -------- -------- -------- ---------- Net investment income 208 - - - - 208 Other revenues 113 - - - - 113 Other expenses 95 - - - - 95 Non-insurance restructuring & other related costs - - - - - - ---------- ---------- -------- -------- -------- ---------- Income (loss) before income tax, minority interest and net realized investment losses 154 (35) - - - 119 Income tax (expense) benefit (46) 12 - - - (34) Minority interest (5) - - - - (5) ---------- ---------- -------- -------- -------- ---------- Income (loss) before net realized investment losses 103 (23) - - - 80 Realized investment losses (49) - - - - (49) Income tax benefit on realized investment losses 16 - - - - 16 ---------- ---------- -------- -------- -------- ---------- Income (loss) from continuing operations 70 (23) - - - 47 Cumulative effect of a change in accounting principle - - - - - - ---------- ---------- -------- -------- -------- ---------- Net income (loss) $ 70 $ (23) $ - $ - $ - $ 47 ========== ========== ======== ======== ======== ========== FINANCIAL RATIOS Loss & LAE 75.5 % Acquisition expense 18.6 Underwriting expense 11.8 Dividends 1.0 ---------- Expense ratio, including dividends 31.4 ---------- Combined ratio 106.9 % ==========
(1) Includes net prior year development for premiums, claim 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 page 10 of the March 31, 2004 Financial Supplement. 13 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX IMPACT OF SIGNIFICANT ITEMS THREE MONTHS ENDED SEPTEMBER 30, 2002
STANDARD LINES 2002 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 1,202 $ (46) $ - $ - $ - $ 1,156 Claim and claim adjustment expenses 923 (162) - - - 761 Acquisition expenses 194 - - - - 194 Underwriting expenses 156 - - - - 156 Policyholders' dividends 20 6 - - - 26 Restructuring & other related costs - - - - - - ---------- ---------- -------- -------- -------- ---------- Underwriting (loss) income (91) 110 - - - 19 ---------- ---------- -------- -------- -------- ---------- Net investment income 86 - - - - 86 Other revenues 80 - - - - 80 Other expenses 79 - - - - 79 Non-insurance restructuring & other related costs - - - - - - ---------- ---------- -------- -------- -------- ---------- (Loss) income before income tax, minority interest and net realized investment losses (4) 110 - - - 106 Income tax benefit (expense) 4 (40) - - - (36) Minority interest - - - - - - ---------- ---------- -------- -------- -------- ---------- Income (loss) before net realized investment losses - 70 - - - 70 Realized investment losses (37) - - - - (37) Income tax benefit on realized investment losses 13 - - - - 13 ---------- ---------- -------- -------- -------- ---------- (Loss) income from continuing operations (24) 70 - - - 46 Cumulative effect of a change in accounting principle - - - - - - ---------- ---------- -------- -------- -------- ---------- Net (loss) income $ (24) $ 70 $ - $ - $ - $ 46 ========== ========== ======== ======== ======== ========== FINANCIAL RATIOS Loss & LAE 65.8% Acquisition expense 16.8 Underwriting expense 13.5 Dividends 2.2 ---------- Expense ratio, including dividends 32.5 ---------- Combined ratio 98.3% ========== SPECIALTY LINES 2002 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT(1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS - ---------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 396 $ 9 $ (39) $ - $ - $ 366 Claim and claim adjustment expenses 289 77 (55) - - 311 Acquisition expenses 74 - - - - 74 Underwriting expenses 41 - - - - 41 Policyholders' dividends 1 - - - - 1 Restructuring & other related costs - - - - - - ---------- ------- ------- -------- --------- ------- Underwriting (loss) income (9) (68) 16 - - (61) ---------- ------- ------- -------- --------- ------- Net investment income 35 - (5) - - 30 Other revenues 30 - - - - 30 Other expenses 28 - - - - 28 Non-insurance restructuring & other related costs - - - - - - ---------- ------- ------- -------- --------- ------- (Loss) income before income tax, minority interest and net realized investment losses 28 (68) 11 - - (29) Income tax benefit (expense) (7) 24 (4) - - 13 Minority interest (2) 1 - - - (1) ---------- ------- ------- -------- --------- ------- Income (loss) before net realized investment losses 19 (43) 7 - - (17) Realized investment losses (11) - - - - (11) Income tax benefit on realized investment losses 4 - - - - 4 ---------- ------- ------- -------- --------- ------- (Loss) income from continuing operations 12 (43) 7 - - (24) Cumulative effect of a change in accounting principle - - - - - - ---------- ------- ------- -------- --------- ------- Net (loss) income $ 12 $ (43) $ 7 $ - $ - $ (24) ========== ======= ======= ======== ========= ======= FINANCIAL RATIOS Loss & LAE 84.9% Acquisition expense 20.2 Underwriting expense 11.5 Dividends 0.2 ------- Expense ratio, including dividends 31.9 ------- Combined ratio 116.8% =======
P&C OPERATIONS 2002 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD ITEMS DEVELOPMENT(1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS - ---------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,598 $ (37) $ (39) $ - $ - $ 1,522 Claim and claim adjustment expenses 1,212 (85) (55) - - 1,072 Acquisition expenses 268 - - - - 268 Underwriting expenses 197 - - - - 197 Policyholders' dividends 21 6 - - - 27 Restructuring & other related costs - - - - - - ---------- ---------- --------- ------------ ------------- ---------- Underwriting (loss) income (100) 42 16 - - (42) ---------- ---------- --------- ------------ ------------- ---------- Net investment income 121 - (5) - - 116 Other revenues 110 - - - - 110 Other expenses 107 - - - - 107 Non-insurance restructuring & other related costs - - - - - - ---------- ---------- --------- ------------ ------------- ---------- Income before income tax, minority interest and net realized investment losses 24 42 11 - - 77 Income tax expense (3) (16) (4) - - (23) Minority interest (2) 1 - - - (1) ---------- ---------- --------- ------------ ------------- ---------- Income before net realized investment losses 19 27 7 - - 53 Realized investment losses (48) - - - - (48) Income tax benefit on realized investment losses 17 - - - - 17 ---------- ---------- --------- ------------ ------------- ---------- (Loss) income from continuing operations (12) 27 7 - - 22 Cumulative effect of a change in accounting principle - - - - - - ---------- ---------- --------- ------------ ------------- ---------- Net (loss) income $ (12) $ 27 $ 7 $ - $ - $ 22 ========== ========== ========= ============ ============= ========== FINANCIAL RATIOS Loss & LAE 70.4% Acquisition expense 17.6 Underwriting expense 13.0 Dividends 1.7 ---------- Expense ratio, including dividends 32.3 ---------- Combined ratio 102.7% ==========
(1) Includes net prior year development for premiums, claim 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 page 10 of the March 31, 2004 Financial Supplement. 14 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX IMPACT OF SIGNIFICANT ITEMS
THREE MONTHS ENDED STANDARD LINES DECEMBER 31, 2002 2002 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS - ----------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,179 $ (38) $ (1) $ - $ - $ 1,140 Claim and claim adjustment expenses 889 (59) - - - 830 Acquisition expenses 225 - - - - 225 Underwriting expenses 155 - - - - 155 Policyholders' dividends 18 (2) - - - 16 Restructuring & other related costs (2) - - - - (2) ----------- -------------- --------- -------- --------- ----------- Underwriting (loss) income (106) 23 (1) - - (84) ----------- -------------- --------- -------- --------- ----------- Net investment income 116 - - - - 116 Other revenues 81 - - - - 81 Other expenses 77 - - - - 77 Non-insurance restructuring & other related costs (6) - - - - (6) ----------- -------------- --------- -------- --------- ----------- Income (loss) before income tax, minority interest and net realized investment losses 20 23 (1) - - 42 Income tax benefit (expense) 11 (11) - - - - Minority interest (8) (2) - - - (10) ----------- -------------- --------- -------- --------- ----------- Income (loss) before net realized investment losses 23 10 (1) - - 32 Realized investment losses (57) - - - - (57) Income tax benefit on realized investment losses 19 - - - - 19 ----------- -------------- --------- -------- --------- ----------- (Loss) income from continuing operations (15) 10 (1) - - (6) Cumulative effect of a change in accounting principle - - - - - - ----------- -------------- --------- -------- --------- ----------- Net (loss) income $ (15) $ 10 $ (1) $ - $ - $ (6) =========== ============== ========= ======== ========= =========== FINANCIAL RATIOS Loss & LAE 72.9% Acquisition expense 19.7 Underwriting expense 13.6 Dividends 1.4 ----------- Expense ratio, including dividends 34.7 ----------- Combined ratio 107.6% =========== THREE MONTHS ENDED SPECIALTY LINES DECEMBER 31, 2002 2002 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS - ----------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 409 $ (3) $ - $ - $ - $ 406 Claim and claim adjustment expenses 275 6 - - - 281 Acquisition expenses 65 - - - - 65 Underwriting expenses 40 - - - - 40 Policyholders' dividends 1 - - - - 1 Restructuring & other related costs (1) - - - - (1) ----------- -------------- ---------- ----------- ------------ ----------- Underwriting (loss) income 29 (9) - - - 20 ----------- -------------- ---------- ----------- ------------ ----------- Net investment income 46 - - - - 46 Other revenues 22 - - - - 22 Other expenses 21 - - - - 21 Non-insurance restructuring & other related costs - - - - - - ----------- -------------- ---------- ----------- ------------ ----------- Income (loss) before income tax, minority interest and net realized investment losses 76 (9) - - - 67 Income tax benefit (expense) (23) 3 - - - (20) Minority interest (5) - - - - (5) ----------- -------------- ---------- ----------- ------------ ----------- Income (loss) before net realized investment losses 48 (6) - - - 42 Realized investment losses (14) - - - - (14) Income tax benefit on realized investment losses 6 - - - - 6 ----------- -------------- ---------- ----------- ------------ ----------- (Loss) income from continuing operations 40 (6) - - - 34 Cumulative effect of a change in accounting principle - - - - - - ----------- -------------- ---------- ----------- ------------ ----------- Net (loss) income $ 40 $ (6) $ - $ - $ - $ 34 =========== ============== ========== =========== ============ =========== FINANCIAL RATIOS Loss & LAE 69.4% Acquisition expense 16.1 Underwriting expense 9.5 Dividends 0.2 ----------- Expense ratio, including dividends 25.8 ----------- Combined ratio 95.2% ===========
P&C OPERATIONS 2002 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS - ----------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,588 $ (41) $ (1) $ - $ - $ 1,546 Claim and claim adjustment expenses 1,164 (53) - - - 1,111 Acquisition expenses 290 - - - - 290 Underwriting expenses 195 - - - - 195 Policyholders' dividends 19 (2) - - - 17 Restructuring & other related costs (3) - - - - (3) ----------- -------------- --------- --------- ------------ ----------- Underwriting (loss) income (77) 14 (1) - - (64) ----------- -------------- --------- --------- ------------ ----------- Net investment income 162 - - - - 162 Other revenues 103 - - - - 103 Other expenses 98 - - - - 98 Non-insurance restructuring & other related costs (6) - - - - (6) ----------- -------------- --------- --------- ------------ ----------- Income (loss) before income tax, minority interest and net realized investment losses 96 14 (1) - - 109 Income tax expense (12) (8) - - - (20) Minority interest (13) (2) - - - (15) ----------- -------------- --------- --------- ------------ ----------- Income (loss) before net realized investment losses 71 4 (1) - - 74 Realized investment losses (71) - - - - (71) Income tax benefit on realized investment losses 25 - - - - 25 ----------- -------------- --------- --------- ------------ ----------- Income (loss) from continuing operations 25 4 (1) - - 28 Cumulative effect of a change in accounting principle - - - - - - ----------- -------------- --------- --------- ------------ ----------- Net income (loss) $ 25 $ 4 $ (1) $ - $ - $ 28 =========== ============== ========= ========= ============ =========== FINANCIAL RATIOS Loss & LAE 72.0% Acquisition expense 18.8 Underwriting expense 12.4 Dividends 1.1 ----------- Expense ratio, including dividends 32.3 ----------- Combined ratio 104.3% ===========
(1) Includes net prior year development for premiums, claim 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 page 10 of the March 31, 2004 Financial Supplement. CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX IMPACT OF SIGNIFICANT ITEMS
STANDARD LINES 2002 RESULTS TWELVE MONTHS ENDED BEFORE CORPORATE REINSURANCE INSURANCE DECEMBER 31, 2002 SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002 (In millions) ITEMS DEVELOPMENT (1) COVERS(2) PROVISION PROVISION RESULTS - ------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 4,760 $ (81) $ (1) $ - $ - $ 4,678 Claim and claim adjustment expenses 3,621 (203) - - - 3,418 Acquisition expenses 875 - - - - 875 Underwriting expenses 604 - - - - 604 Policyholders' dividends 69 4 - - - 73 Restructuring & other related costs (2) - - - - (2) ----------- --------- -------- ---------- ---------- ------- Underwriting (loss) income (407) 118 (1) - - (290) ----------- --------- -------- ---------- ---------- ------- Net investment income 475 - - - - 475 Other revenues 355 - - - - 355 Other expenses 308 - - - - 308 Non-insurance restructuring & other related costs (6) - - - - (6) ----------- --------- -------- ---------- ---------- ------- Income (loss) before income tax, minority interest and net realized investment losses 121 118 (1) - - 238 Income tax (expense) benefit (9) (47) - - - (56) Minority interest (11) (2) - - - (13) ----------- --------- -------- ---------- ---------- ------- Income (loss) before net realized investment losses 101 69 (1) - - 169 Realized investment losses (119) - - - - (119) Income tax benefit on realized investment losses 40 - - - - 40 ----------- --------- -------- ---------- ---------- ------- Income (loss) from continuing operations 22 69 (1) - - 90 Cumulative effect of a change in accounting principle (43) - - - - (43) ----------- --------- -------- ---------- ---------- ------- Net (loss) income $ (21) $ 69 $ (1) $ - $ - $ 47 =========== ========= ======== ========== ========== ======= FINANCIAL RATIOS Loss & LAE 73.1 % Acquisition expense 18.7 Underwriting expense 12.8 Dividends 1.6 ------- Expense ratio, including dividends 33.1 ------- Combined ratio 106.2 % ======= SPECIALTY LINES 2002 RESULTS TWELVE MONTHS ENDED BEFORE CORPORATE REINSURANCE INSURANCE DECEMBER 31, 2002 SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002 (In millions) ITEMS DEVELOPMENT (1) COVERS(2) PROVISION PROVISION RESULTS - ------------------------------------------------------------------------------------------------------------------------------------ Net earned premiums $ 1,504 $ (14) $ (39) $ - $ - $ 1,451 Claim and claim adjustment expenses 1,063 58 (55) - - 1,066 Acquisition expenses 268 - - - - 268 Underwriting expenses 158 - - - - 158 Policyholders' dividends 3 - - - - 3 Restructuring & other related costs (1) - - - - (1) --------- ---------- --------- ----------- --------- -------- Underwriting (loss) income 13 (72) 16 - - (43) --------- ---------- --------- ----------- --------- -------- Net investment income 177 - (5) - - 172 Other revenues 108 - - - - 108 Other expenses 94 - - - - 94 Non-insurance restructuring & other related costs - - - - - - --------- ---------- --------- ----------- --------- -------- Income (loss) before income tax, minority interest and net realized investment losses 204 (72) 11 - - 143 Income tax (expense) benefit (61) 25 (4) - - (40) Minority interest (14) 1 - - - (13) --------- ---------- --------- ----------- --------- -------- Income (loss) before net realized investment losses 129 (46) 7 - - 90 Realized investment losses (39) - - - - (39) Income tax benefit on realized investment losses 14 - - - - 14 --------- ---------- --------- ----------- --------- -------- Income (loss) from continuing operations 104 (46) 7 - - 65 Cumulative effect of a change in accounting principle (5) - - - - (5) --------- ---------- --------- ----------- --------- -------- Net (loss) income $ 99 $ (46) $ 7 $ - $ - $ 60 ========= ========== ========= =========== ========= ======== FINANCIAL RATIOS Loss & LAE 73.5 % Acquisition expense 18.5 Underwriting expense 10.8 Dividends 0.2 -------- Expense ratio, including dividends 29.5 -------- Combined ratio 103.0% ========
P&C OPERATIONS 2002 RESULTS TWELVE MONTHS ENDED BEFORE CORPORATE REINSURANCE INSURANCE DECEMBER 31, 2002 SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002 (In millions) ITEMS DEVELOPMENT (1) COVERS(2) PROVISION PROVISION RESULTS - -------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 6,264 $ (95) $ (40) $ - $ - $6,129 Claim and claim adjustment expenses 4,684 (145) (55) - - 4,484 Acquisition expenses 1,143 - - - - 1,143 Underwriting expenses 762 - - - - 762 Policyholders' dividends 72 4 - - - 76 Restructuring & other related costs (3) - - - - (3) --------- ------------- -------- -------- ----- ------ Underwriting (loss) income (394) 46 15 - - (333) --------- ------------- -------- -------- ----- ------ Net investment income 652 - (5) - - 647 Other revenues 463 - - - - 463 Other expenses 402 - - - - 402 Non-insurance restructuring & other related costs (6) - - - - (6) --------- ------------- -------- -------- ----- ------ Income before income tax, minority interest and net realized investment losses 325 46 10 - - 381 Income tax expense (70) (22) (4) - - (96) Minority interest (25) (1) - - - (26) --------- ------------- -------- -------- ----- ------ Income before net realized investment losses 230 23 6 - - 259 Realized investment losses (158) - - - - (158) Income tax benefit on realized investment losses 54 - - - - 54 --------- ------------- -------- -------- ----- ------ Income from continuing operations 126 23 6 - - 155 Cumulative effect of a change in accounting principle (48) - - - - (48) --------- ------------- -------- -------- ----- ------ Net income $ 78 $ 23 $ 6 $ - $ - $ 107 ========= ============= ======== ======== ===== ====== FINANCIAL RATIOS Loss & LAE 73.2% Acquisition expense 18.7 Underwriting expense 12.3 Dividends 1.2 ------ Expense ratio, including dividends 32.2 ------ Combined ratio 105.4% ======
(1) Includes net prior year development for premiums, claim 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 page 10 of the March 31, 2004 Financial Supplement. 16 2003 HISTORICAL IMPACT OF SIGNIFICANT ITEMS CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX IMPACT OF SIGNIFICANT ITEMS
THREE MONTHS ENDED STANDARD LINES JUNE 30, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS - ----------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,239 $ (116) $ (105) $ - $ - $ 1,018 Claim and claim adjustment expenses 830 246 (180) - - 896 Acquisition expenses 266 - - - - 266 Underwriting expenses 172 - - - - 172 Policyholders' dividends 11 - - - - 11 Restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Underwriting (loss) income (40) (362) 75 - - (327) -------- -------- -------- -------- -------- -------- Net investment income 129 - (24) - - 105 Other revenues 61 - - - - 61 Other expenses 60 - - - - 60 Non-insurance restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Income (loss) before income tax, minority interest and net realized investment gains 90 (362) 51 - - (221) Income tax (expense) benefit (24) 127 (18) - - 85 Minority interest 2 - - - - 2 -------- -------- -------- -------- -------- -------- Income (loss) before net realized investment gains 68 (235) 33 - - (134) Realized investment gains 184 - - - - 184 Income tax expense on realized investment gains (62) - - - - (62) -------- -------- -------- -------- -------- -------- Income (loss) from continuing operations 190 (235) 33 - - (12) Cumulative effect of a change in accounting principle - - - - - - -------- -------- -------- -------- -------- -------- Net income (loss) $ 190 $ (235) $ 33 $ - $ - $ (12) ======== ======== ======== ======== ======== ======== FINANCIAL RATIOS Loss & LAE 88.0% Acquisition expense 26.1 Underwriting expense 16.9 Dividends 1.1 -------- Expense ratio, including dividends 44.1 -------- Combined ratio 132.1% ========
THREE MONTHS ENDED SPECIALTY LINES JUNE 30, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS - ----------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 462 $ (3) $ - $ - $ - $ 459 Claim and claim adjustment expenses 301 101 - - - 402 Acquisition expenses 83 - - - - 83 Underwriting expenses 45 - - - - 45 Policyholders' dividends - - - - - - Restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Underwriting (loss) income 33 (104) - - - (71) -------- -------- -------- -------- -------- -------- Net investment income 53 - - - - 53 Other revenues 30 - - - - 30 Other expenses 25 - - - - 25 Non-insurance restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Income (loss) before income tax, minority interest and net realized investment gains 91 (104) - - - (13) Income tax (expense) benefit (27) 36 - - - 9 Minority interest (3) - - - - (3) -------- -------- -------- -------- -------- -------- Income (loss) before net realized investment gains 61 (68) - - - (7) Realized investment gains 59 - - - - 59 Income tax expense on realized investment gains (21) - - - - (21) -------- -------- -------- -------- -------- -------- Income (loss) from continuing operations 99 (68) - - - 31 Cumulative effect of a change in accounting principle - - - - - - -------- -------- -------- -------- -------- -------- Net income (loss) $ 99 $ (68) $ - $ - $ - $ 31 ======== ======== ======== ======== ======== ======== FINANCIAL RATIOS Loss & LAE 87.5% Acquisition expense 18.2 Underwriting expense 9.7 Dividends 0.1 -------- Expense ratio, including dividends 28.0 -------- Combined ratio 115.5% ========
THREE MONTHS ENDED P&C OPERATIONS JUNE 30, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS - ----------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,701 $ (119) $ (105) $ - $ - $ 1,477 Claim and claim adjustment expenses 1,131 347 (180) - - 1,298 Acquisition expenses 349 - - - - 349 Underwriting expenses 217 - - - - 217 Policyholders' dividends 11 - - - - 11 Restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Underwriting (loss) income (7) (466) 75 - - (398) -------- -------- -------- -------- -------- -------- Net investment income 182 - (24) - - 158 Other revenues 91 - - - - 91 Other expenses 85 - - - - 85 Non-insurance restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Income (loss) before income tax, minority interest and net realized investment gains 181 (466) 51 - - (234) Income tax (expense) benefit (51) 163 (18) - - 94 Minority interest (1) - - - - (1) -------- -------- -------- -------- -------- -------- Income (loss) before net realized investment gains 129 (303) 33 - - (141) Realized investment gains 243 - - - - 243 Income tax expense on realized investment gains (83) - - - - (83) -------- -------- -------- -------- -------- -------- Income (loss) from continuing operations 289 (303) 33 - - 19 Cumulative effect of a change in accounting principle - - - - - - -------- -------- -------- -------- -------- -------- Net income (loss) $ 289 $ (303) $ 33 $ - $ - $ 19 ======== ======== ======== ======== ======== ======== FINANCIAL RATIOS Loss & LAE 87.8% Acquisition expense 23.7 Underwriting expense 14.6 Dividends 0.8 -------- Expense ratio, including dividends 39.1 -------- Combined ratio 126.9% ========
(1) Includes net prior year development for premiums, claim 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 page 10 of the March 31, 2004 Financial Supplement. 17 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX IMPACT OF SIGNIFICANT ITEMS
THREE MONTHS ENDED STANDARD LINES SEPTEMBER 30, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS - ----------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,289 $ (128) $ (160) $ - $ - $ 1,001 Claim and claim adjustment expenses 891 1,135 (300) - - 1,726 Acquisition expenses 296 - - 55 203 554 Underwriting expenses 180 - - - - 180 Policyholders' dividends 14 46 - - - 60 Restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Underwriting (loss) income (92) (1,309) 140 (55) (203) (1,519) -------- -------- -------- -------- -------- -------- Net investment income 108 - (53) - - 55 Other revenues 34 - - - - 34 Other expenses 35 - - - - 35 Non-insurance restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Income (loss) before income tax, minority interest and net realized investment gains 15 (1,309) 87 (55) (203) (1,465) Income tax benefit (expense) 3 457 (30) 19 71 520 Minority interest (1) (1) - - - (2) -------- -------- -------- -------- -------- -------- Income (loss) before net realized investment gains 17 (853) 57 (36) (132) (947) Realized investment gains 58 - - - - 58 Income tax expense on realized investment gains (22) - - - - (22) -------- -------- -------- -------- -------- -------- Income (loss) from continuing operations 53 (853) 57 (36) (132) (911) Cumulative effect of a change in accounting principle - - - - - - -------- -------- -------- -------- -------- -------- Net income (loss) $ 53 $ (853) $ 57 $ (36) $ (132) $ (911) ======== ======== ======== ======== ======== ======== FINANCIAL RATIOS Loss & LAE 172.4% Acquisition expense 55.3 Underwriting expense 18.0 Dividends 6.0 -------- Expense ratio, including dividends 79.3 -------- Combined ratio 251.7% ========
THREE MONTHS ENDED SPECIALTY LINES SEPTEMBER 30, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS - ----------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 482 $ 1 $ (32) $ - $ - $ 451 Claim and claim adjustment expenses 362 244 (59) - - 547 Acquisition expenses 93 - - 76 - 169 Underwriting expenses 44 - - - - 44 Policyholders' dividends 1 - - - - 1 Restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Underwriting (loss) income (18) (243) 27 (76) - (310) -------- -------- -------- -------- -------- -------- Net investment income 57 - (10) - - 47 Other revenues 35 - - - - 35 Other expenses 30 - - - - 30 Non-insurance restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Income (loss) before income tax, minority interest and net realized investment gains 44 (243) 17 (76) - (258) Income tax benefit (expense) (3) 85 (6) 27 - 103 Minority interest 4 11 - - - 15 -------- -------- -------- -------- -------- -------- Income (loss) before net realized investment gains 45 (147) 11 (49) - (140) Realized investment gains 19 - - - - 19 Income tax expense on realized investment gains (7) - - - - (7) -------- -------- -------- -------- -------- -------- Income (loss) from continuing operations 57 (147) 11 (49) - (128) Cumulative effect of a change in accounting principle - - - - - - -------- -------- -------- -------- -------- -------- Net income (loss) $ 57 $ (147) $ 11 $ (49) $ - $ (128) ======== ======== ======== ======== ======== ======== FINANCIAL RATIOS Loss & LAE 121.2% Acquisition expense 37.4 Underwriting expense 9.8 Dividends 0.3 -------- Expense ratio, including dividends 47.5 -------- Combined ratio 168.7% ========
THREE MONTHS ENDED P&C OPERATIONS SEPTEMBER 30, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS - ----------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,771 $ (127) $ (192) $ - $ - $ 1,452 Claim and claim adjustment expenses 1,253 1,379 (359) - - 2,273 Acquisition expenses 389 - - 131 203 723 Underwriting expenses 224 - - - - 224 Policyholders' dividends 15 46 - - - 61 Restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Underwriting (loss) income (110) (1,552) 167 (131) (203) (1,829) -------- -------- -------- -------- -------- -------- Net investment income 165 - (63) - - 102 Other revenues 69 - - - - 69 Other expenses 65 - - - - 65 Non-insurance restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Income (loss) before income tax, minority interest and net realized investment gains 59 (1,552) 104 (131) (203) (1,723) Income tax benefit (expense) - 542 (36) 46 71 623 Minority interest 3 10 - - - 13 -------- -------- -------- -------- -------- -------- Income (loss) before net realized investment gains 62 (1,000) 68 (85) (132) (1,087) Realized investment gains 77 - - - - 77 Income tax expense on realized investment gains (29) - - - - (29) -------- -------- -------- -------- -------- -------- Income (loss) from continuing operations 110 (1,000) 68 (85) (132) (1,039) Cumulative effect of a change in accounting principle - - - - - - -------- -------- -------- -------- -------- -------- Net income (loss) $ 110 $ (1,000) $ 68 $ (85) $ (132) $ (1,039) ======== ======== ======== ======== ======== ======== FINANCIAL RATIOS Loss & LAE 156.5% Acquisition expense 49.7 Underwriting expense 15.5 Dividends 4.2 -------- Expense ratio, including dividends 69.4 -------- Combined ratio 225.9% ========
(1) Includes net prior year development for premiums, claim 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 page 10 of the March 31, 2004 Financial Supplement. 18 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX IMPACT OF SIGNIFICANT ITEMS
THREE MONTHS ENDED STANDARD LINES DECEMBER 31, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS - ----------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,304 $ (8) $ (4) $ - $ - $ 1,292 Claim and claim adjustment expenses 890 (13) (5) - - 872 Acquisition expenses 262 - - - - 262 Underwriting expenses 164 - - - - 164 Policyholders' dividends 14 - - - - 14 Restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Underwriting (loss) income (26) 5 1 - - (20) -------- -------- -------- -------- -------- -------- Net investment income 118 - - - - 118 Other revenues 33 - - - - 33 Other expenses 34 - - - - 34 Non-insurance restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Income (loss) before income tax, minority interest and net realized investment gains 91 5 1 - - 97 Income tax (expense) benefit (6) (2) - - - (8) Minority interest (3) - - - - (3) -------- -------- -------- -------- -------- -------- Income (loss) before net realized investment gains 82 3 1 - - 86 Realized investment gains 112 - - - - 112 Income tax expense on realized investment gains (39) - - - - (39) -------- -------- -------- -------- -------- -------- Income (loss) from continuing operations 155 3 1 - - 159 Cumulative effect of a change in accounting principle - - - - - - -------- -------- -------- -------- -------- -------- Net income (loss) $ 155 $ 3 $ 1 $ - $ - $ 159 ======== ======== ======== ======== ======== ======== FINANCIAL RATIOS Loss & LAE 67.5% Acquisition expense 20.3 Underwriting expense 12.7 Dividends 1.1 -------- Expense ratio, including dividends 34.1 -------- Combined ratio 101.6% ========
THREE MONTHS ENDED SPECIALTY LINES DECEMBER 31, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS - ----------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 515 $ (14) $ 1 $ - $ - $ 502 Claim and claim adjustment expenses 345 (9) 3 - - 339 Acquisition expenses 77 - - - - 77 Underwriting expenses 44 - - - - 44 Policyholders' dividends 1 - - - - 1 Restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Underwriting (loss) income 48 (5) (2) - - 41 -------- -------- -------- -------- -------- -------- Net investment income 52 - - - - 52 Other revenues 33 - - - - 33 Other expenses 32 - - - - 32 Non-insurance restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Income (loss) before income tax, minority interest and net realized investment gains 101 (5) (2) - - 94 Income tax (expense) benefit (32) 2 1 - - (29) Minority interest - - - - - - -------- -------- -------- -------- -------- -------- Income (loss) before net realized investment gains 69 (3) (1) - - 65 Realized investment gains 33 - - - - 33 Income tax expense on realized investment gains (11) - - - - (11) -------- -------- -------- -------- -------- -------- Income (loss) from continuing operations 91 (3) (1) - - 87 Cumulative effect of a change in accounting principle - - - - - - -------- -------- -------- -------- -------- -------- Net income (loss) $ 91 $ (3) $ (1) $ - $ - $ 87 ======== ======== ======== ======== ======== ======== FINANCIAL RATIOS Loss & LAE 67.7% Acquisition expense 15.3 Underwriting expense 8.8 Dividends 0.2 -------- Expense ratio, including dividends 24.3 -------- Combined ratio 92.0% ========
THREE MONTHS ENDED P&C OPERATIONS DECEMBER 31, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS - ----------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,819 $ (22) $ (3) $ - $ - $ 1,794 Claim and claim adjustment expenses 1,235 (22) (2) - - 1,211 Acquisition expenses 339 - - - - 339 Underwriting expenses 208 - - - - 208 Policyholders' dividends 15 - - - - 15 Restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Underwriting income (loss) 22 - (1) - - 21 -------- -------- -------- -------- -------- -------- Net investment income 170 - - - - 170 Other revenues 66 - - - - 66 Other expenses 66 - - - - 66 Non-insurance restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Income (loss) before income tax, minority interest and net realized investment gains 192 - (1) - - 191 Income tax expense (38) - 1 - - (37) Minority interest (3) - - - - (3) -------- -------- -------- -------- -------- -------- Income (loss) before net realized investment gains 151 - - - - 151 Realized investment gains 145 - - - - 145 Income tax expense on realized investment gains (50) - - - - (50) -------- -------- -------- -------- -------- -------- Income (loss) from continuing operations 246 - - - - 246 Cumulative effect of a change in accounting principle - - - - - - -------- -------- -------- -------- -------- -------- Net income (loss) $ 246 $ - $ - $ - $ - $ 246 ======== ======== ======== ======== ======== ======== FINANCIAL RATIOS Loss & LAE 67.5% Acquisition expense 18.9 Underwriting expense 11.7 Dividends 0.8 -------- Expense ratio, including dividends 31.4 -------- Combined ratio 98.9% ========
(1) Includes net prior year development for premiums, claim 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 page 10 of the March 31, 2004 Financial Supplement. 19 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX IMPACT OF SIGNIFICANT ITEMS
TWELVE MONTHS ENDED STANDARD LINES DECEMBER 31, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS - ----------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 5,010 $ (211) $ (269) $ - $ - $ 4,530 Claim and claim adjustment expenses 3,436 1,436 (485) - - 4,387 Acquisition expenses 1,023 - - 55 242 1,320 Underwriting expenses 676 - - - - 676 Policyholders' dividends 54 46 - - - 100 Restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Underwriting (loss) income (179) (1,693) 216 (55) (242) (1,953) -------- -------- -------- -------- -------- -------- Net investment income 484 - (77) - - 407 Other revenues 199 - - - - 199 Other expenses 192 - - - - 192 Non-insurance restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Income (loss) before income tax, minority interest and net realized investment gains 312 (1,693) 139 (55) (242) (1,539) Income tax (expense) benefit (57) 594 (49) 19 85 592 Minority interest (3) (1) - - - (4) -------- -------- -------- -------- -------- -------- Income (loss) before net realized investment gains 252 (1,100) 90 (36) (157) (951) Realized investment gains 361 - - - - 361 Income tax expense on realized investment gains (127) - - - - (127) -------- -------- -------- -------- -------- -------- Income (loss) from continuing operations 486 (1,100) 90 (36) (157) (717) Cumulative effect of a change in accounting principle - - - - - - -------- -------- -------- -------- -------- -------- Net income (loss) $ 486 $ (1,100) $ 90 $ (36) $ (157) $ (717) ======== ======== ======== ======== ======== ======== FINANCIAL RATIOS Loss & LAE 96.8% Acquisition expense 29.1 Underwriting expense 15.0 Dividends 2.2 -------- Expense ratio, including dividends 46.3 -------- Combined ratio 143.1% ========
TWELVE MONTHS ENDED SPECIALTY LINES DECEMBER 31, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS - ----------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 1,877 $ (6) $ (31) $ - $ - $ 1,840 Claim and claim adjustment expenses 1,294 334 (56) - - 1,572 Acquisition expenses 332 - - 76 - 408 Underwriting expenses 176 - - - - 176 Policyholders' dividends 3 - - - - 3 Restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Underwriting (loss) income 72 (340) 25 (76) - (319) -------- -------- -------- -------- -------- -------- Net investment income 211 - (10) - - 201 Other revenues 115 - - - - 115 Other expenses 100 - - - - 100 Non-insurance restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Income (loss) before income tax, minority interest and net realized investment gains 298 (340) 15 (76) - (103) Income tax (expense) benefit (82) 119 (5) 27 - 59 Minority interest (1) 11 - - - 10 -------- -------- -------- -------- -------- -------- Income (loss) before net realized investment gains 215 (210) 10 (49) - (34) Realized investment gains 114 - - - - 114 Income tax expense on realized investment gains (40) - - - - (40) -------- -------- -------- -------- -------- -------- Income (loss) from continuing operations 289 (210) 10 (49) - 40 Cumulative effect of a change in accounting principle - - - - - - -------- -------- -------- -------- -------- -------- Net income (loss) $ 289 $ (210) $ 10 $ (49) $ - $ 40 ======== ======== ======== ======== ======== ======== FINANCIAL RATIOS Loss & LAE 85.4% Acquisition expense 22.2 Underwriting expense 9.6 Dividends 0.2 -------- Expense ratio, including dividends 32.0 -------- Combined ratio 117.4% ========
TWELVE MONTHS ENDED P&C OPERATIONS DECEMBER 31, 2003 2003 RESULTS BEFORE CORPORATE REINSURANCE SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD (In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS - ----------------------------------------------------------------------------------------------------------------------------------- Net earned premiums $ 6,887 $ (217) $ (300) $ - $ - $ 6,370 Claim and claim adjustment expenses 4,730 1,770 (541) - - 5,959 Acquisition expenses 1,355 - - 131 242 1,728 Underwriting expenses 852 - - - - 852 Policyholders' dividends 57 46 - - - 103 Restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Underwriting (loss) income (107) (2,033) 241 (131) (242) (2,272) -------- -------- -------- -------- -------- -------- Net investment income 695 - (87) - - 608 Other revenues 314 - - - - 314 Other expenses 292 - - - - 292 Non-insurance restructuring & other related costs - - - - - - -------- -------- -------- -------- -------- -------- Income (loss) before income tax, minority interest and net realized investment gains 610 (2,033) 154 (131) (242) (1,642) Income tax (expense) benefit (139) 713 (54) 46 85 651 Minority interest (4) 10 - - - 6 -------- -------- -------- -------- -------- -------- Income (loss) before net realized investment gains 467 (1,310) 100 (85) (157) (985) Realized investment gains 475 - - - - 475 Income tax expense on realized investment gains (167) - - - - (167) -------- -------- -------- -------- -------- -------- Income (loss) from continuing operations 775 (1,310) 100 (85) (157) (677) Cumulative effect of a change in accounting principle - - - - - - -------- -------- -------- -------- -------- -------- Net income (loss) $ 775 $ (1,310) $ 100 $ (85) $ (157) $ (677) ======== ======== ======== ======== ======== ======== FINANCIAL RATIOS Loss & LAE 93.6% Acquisition expense 27.1 Underwriting expense 13.4 Dividends 1.6 -------- Expense ratio, including dividends 42.1 -------- Combined ratio 135.7% ========
(1) Includes net prior year development for premiums, claim 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 page 10 of the March 31, 2004 Financial Supplement. 20 2002 & 2003 HISTORICAL PROPERTY & CASUALTY INSURANCE CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVE DATA CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX PROPERTY & CASUALTY INSURANCE CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVE DATA
CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVES LIFE & GROUP CORPORATE & OTHER (In millions) STANDARD LINES SPECIALTY LINES P&C OPERATIONS NON-CORE NON-CORE TOTAL OPERATIONS - ----------------------------------------------------------------------------------------------------------------------------------- As of March 31, 2002 Gross $ 13,663 $ 3,480 $ 17,143 $ 3,541 $ 10,196 $ 30,880 Ceded 5,262 963 6,225 401 5,435 12,061 Net 8,401 2,517 10,918 3,140 4,761 18,819 As of June 30, 2002 Gross $ 13,313 $ 3,500 $ 16,813 $ 3,484 $ 10,089 $ 30,386 Ceded 4,981 1,036 6,017 368 5,393 11,778 Net 8,332 2,464 10,796 3,116 4,696 18,608 As of September 30, 2002 Gross $ 13,019 $ 3,650 $ 16,669 $ 3,206 $ 9,850 $ 29,725 Ceded 4,896 1,167 6,063 351 5,215 11,629 Net 8,123 2,483 10,606 2,855 4,635 18,096 As of December 31, 2002 Gross $ 12,779 $ 3,629 $ 16,408 $ 3,456 $ 7,506 $ 27,370 Ceded 4,731 1,210 5,941 472 4,314 10,727 Net 8,048 2,419 10,467 2,984 3,192 16,643 - -------------------------------------------------------------------------------------------------------------------------------
21 CNA FINANCIAL CORPORATION FINANCIAL SUPPLEMENT APPENDIX PROPERTY & CASUALTY INSURANCE CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVE DATA
CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVES LIFE & GROUP CORPORATE & OTHER (In millions) STANDARD LINES SPECIALTY LINES P&C OPERATIONS NON-CORE NON-CORE TOTAL OPERATIONS - ----------------------------------------------------------------------------------------------------------------------------------- As of March 31, 2003 Gross $ 12,626 $ 3,555 $ 16,181 $ 3,504 $ 7,761 $ 27,446 Ceded 4,663 1,367 6,030 520 4,667 11,217 Net 7,963 2,188 10,151 2,984 3,094 16,229 As of June 30, 2003 Gross $ 12,997 $ 3,745 $ 16,742 $ 3,561 $ 7,641 $ 27,944 Ceded 5,091 1,231 6,322 491 4,672 11,485 Net 7,906 2,514 10,420 3,070 2,969 16,459 As of September 30, 2003 Gross $ 14,431 $ 4,115 $ 18,546 $ 3,644 $ 10,074 $ 32,264 Ceded 5,419 1,185 6,604 488 6,217 13,309 Net 9,012 2,930 11,942 3,156 3,857 18,955 As of December 31, 2003 Gross $ 14,282 $ 4,200 $ 18,482 $ 3,576 $ 9,672 $ 31,730 Ceded 5,315 1,281 6,596 1,685 5,935 14,216 Net 8,967 2,919 11,886 1,891 3,737 17,514 - -------------------------------------------------------------------------------------------------------------------------------
22 EX-99.4 5 c85006exv99w4.txt PRESS RELEASE EXHIBIT 99.4 [CNA LOGO] FOR IMMEDIATE RELEASE - -------------------------------------------------------------------------------- CONTACT: MEDIA: ANALYSTS: Charles M. Boesel, 312/822-2592 Dawn M. Jaffray, 312/822-7757 Katrina W. Parker, 312/822-5167 ROBERT V. DEUTSCH, CFO, TO LEAVE CNA CHICAGO, APRIL 29, 2004 -- CNA Financial Corporation (NYSE: CNA) announced today that Robert V. Deutsch would be stepping down as Chief Financial Officer as soon as a search for a new CFO has been completed. Mr. Deutsch joined CNA in August 1999, after having served as CFO for 10 years at Executive Risk Inc. Mr. Deutsch commented as follows: "It has been a privilege to serve CNA over the past four and one-half years, and I feel satisfied with the contributions I was able to make as CFO and as a member of the executive management team. I believe CNA's balance sheet is sound and that the company has a good operating plan which it is executing well. I regret that I won't be part of CNA's future. At the same time, I know that over the past several years, my family life has suffered under the demands of my job, especially since I commute between my home in Hartford and my office in Chicago." CNA CEO Steve Lilienthal commented: "Bob Deutsch by any measure is an outstanding CFO and he will be missed. His professionalism, industry knowledge, commitment and work ethic are legendary at CNA, and he will leave with nothing but good wishes and respect from everyone in the organization." A search for Mr. Deutsch's successor is currently underway. CNA is the country's fourth largest commercial insurance writer and the 11th largest property and casualty company. CNA's insurance products include standard commercial lines, specialty lines, surety, marine and other property and casualty coverages. CNA services include risk management, information services, underwriting, risk control and claims administration. For more information, please visit CNA at www.cna.com. CNA is a registered service mark, trade name and domain name of CNA Financial Corporation. # # # -----END PRIVACY-ENHANCED MESSAGE-----