EX-99.1 2 c23199exv99w1.htm FINANCIAL SUPPLEMENT exv99w1
 

EXHIBIT 99.1
(CNA LOGO)
CNA Financial Corporation
Supplemental Financial Information
Segment Financial Results For the Years Ended December 31, 2006 and 2005
and the Nine Months Ended September 30, 2007


 

CNA Financial Corporation
Table of Contents
Segment Financial Results For the Years Ended December 31, 2006 and 2005
and the Nine Months Ended September 30, 2007
CNA’s (the Company) core property and casualty commercial insurance operations are reported in two business segments: Standard Lines and Specialty Lines. As a result of the Company’s realignment of management responsibilities in the fourth quarter of 2007, the Company has revised its property and casualty segments. Standard Lines includes standard property and casualty coverages sold to small businesses and middle market entities and organizations in the U.S. primarily through an independent agency distribution system. In addition, Standard Lines also includes commercial insurance and risk management products sold to large corporations in the U.S. primarily through insurance brokers. Specialty Lines provides a broad array of professional, financial and specialty property and casualty products and services, including excess and surplus lines, primarily through insurance brokers and managing general underwriters. Additionally, Specialty Lines includes insurance coverages sold globally through the Company’s foreign operations (CNA Global). Previously, excess and surplus lines and CNA Global were included in Standard Lines.
Additionally, Standard Lines previously included other revenues and expenses related to claim services provided by CNA ClaimPlus, Inc. to other units within the Standard Lines segment because these revenues and expenses were eliminated at the consolidated level. These amounts are now eliminated within Standard Lines for all periods presented.
This Financial Supplement presents the segment financial results for each of the quarters in and for the nine month period ended September 30, 2007, each of the four quarters in the year ended December 31, 2006 and the twelve month periods ended December 31, 2006 and December 31, 2005 as if the current segment changes occurred as of the beginning of the earliest period presented.
         
    Page
Definitions and Presentation
    i  
Segment results for each of the three quarters in the period ended September 30, 2007 and the nine months ended September 30, 2007
    1-6  
Segment results for each of the four quarters of 2006 and the year ended December 31, 2006
    7-12  
Segment results for the year ended December 31, 2005
    13-14  


 

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 in run-off.
 
    Corporate & Other Non-Core segment primarily includes certain corporate expenses including interest on corporate debt and the results of certain property and casualty business primarily in run-off, including CNA Re. This segment also includes the results related to the centralized adjusting and settlement of asbestos and environmental pollution claims (A&E).
 
    Management utilizes the net operating income financial measure to monitor the Company’s operations. Please refer to Note N of the Consolidated Financial Statements within the 2006 Form 10-K for further discussion of this measure.
 
    In evaluating the results of Standard Lines and Specialty Lines, management utilizes the combined ratio, the loss ratio, the expense ratio, and the dividend ratio. These ratios are calculated using financial results prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). 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 insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders’ dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios.
 
    Certain immaterial differences are due to rounding.
 
    N/M = Not Meaningful

i


 

CNA FINANCIAL CORPORATION
Financial Supplement
Standard Lines
                                 
    2007  
                            Nine months ended  
(In millions)   Q1     Q2     Q3     September 30, 2007  
Gross written premiums
  $ 948     $ 992     $ 856     $ 2,796  
Net written premiums
    867       904       753       2,524  
 
                               
Net earned premiums
    863       842       841       2,546  
Net investment income
    220       235       209       664  
Other revenues
    11       12       9       32  
 
                       
Total operating revenues
    1,094       1,089       1,059       3,242  
 
                               
Claims, benefits and expenses:
                               
Net incurred claims and benefits
    593       581       511       1,685  
Policyholders’ dividends
    3       (4 )     4       3  
Amortization of deferred acquisition costs
    194       191       190       575  
Other insurance related expenses
    65       96       82       243  
Restructuring and other related charges
                       
Other expenses
    10       14       12       36  
 
                       
Total claims, benefits and expenses
    865       878       799       2,542  
 
                               
Operating income before income tax and minority interest
    229       211       260       700  
Income tax expense on operating income
    (75 )     (65 )     (82 )     (222 )
Minority interest
                       
 
                       
 
                               
Net operating income from continuing operations
    154       146       178       478  
 
                               
Realized investment losses, net of participating policyholders’ and minority interests
    (24 )     (63 )     (29 )     (116 )
Income tax benefit on realized investment losses
    9       21       10       40  
 
                       
 
                               
Net income from continuing operations
  $ 139     $ 104     $ 159     $ 402  
 
                       
 
                               
FINANCIAL RATIOS
                               
Loss & LAE
    68.7 %     69.0 %     60.9 %     66.2 %
Acquisition expense
    17.0       20.1       18.6       18.6  
Underwriting expense
    13.0       13.9       13.7       13.5  
 
                       
Expense
    30.0       34.0       32.3       32.1  
Dividend
    0.4       (0.4 )     0.4       0.1  
 
                       
Combined ratio
    99.1 %     102.6 %     93.6 %     98.4 %
 
                       
 
                               
LOSS RATIO IMPACTS
                               
Impact of catastrophe losses
                               
Pretax net accident year catastrophe losses incurred
  $ 30     $ 12     $ 10     $ 52  
Impact on loss & LAE ratio
    3.5 %     1.4 %     1.2 %     2.0 %
 
                               
Impact of development & other
                               
Pretax net development: (favorable) / unfavorable
                               
Prior year loss & LAE reserve development
  $ 13     $ (20 )   $ (67 )   $ (74 )
Prior year premium development
    (26 )     16       (5 )     (15 )
Other (1)
    5       7       8       20  
 
                       
Total development & other
  $ (8 )   $ 3     $ (64 )   $ (69 )
 
                       
 
                               
Impact of development & other on loss & LAE ratio
    %     (0.1 )%     (7.5 )%     (2.6 )%
 
(1)   Other includes the impacts of change in allowance for uncollectible reinsurance and interest accretion.

1


 

CNA FINANCIAL CORPORATION
Financial Supplement
Specialty Lines
                                 
    2007  
                            Nine months ended  
(In millions)   Q1     Q2     Q3     September 30, 2007  
Gross written premiums
  $ 1,412     $ 1,379     $ 1,337     $ 4,128  
Net written premiums
    864       869       886       2,619  
 
                               
Net earned premiums
    845       870       885       2,600  
Net investment income
    149       162       152       463  
Other revenues
    42       47       50       139  
 
                       
Total operating revenues
    1,036       1,079       1,087       3,202  
 
                               
Claims, benefits and expenses:
                               
Net incurred claims and benefits
    543       531       556       1,630  
Policyholders’ dividends
    3       1       1       5  
Amortization of deferred acquisition costs
    182       177       190       549  
Other insurance related expenses
    41       48       45       134  
Restructuring and other related charges
                       
Other expenses
    42       39       44       125  
 
                       
Total claims, benefits and expenses
    811       796       836       2,443  
 
                               
Operating income before income tax and minority interest
    225       283       251       759  
Income tax expense on operating income
    (73 )     (94 )     (82 )     (249 )
Minority interest
    (10 )     (10 )     (16 )     (36 )
 
                       
 
                               
Net operating income from continuing operations
    142       179       153       474  
 
                               
Realized investment losses, net of participating policyholders’ and minority interests
    (14 )     (35 )     (13 )     (62 )
Income tax benefit on realized investment losses
    5       12       4       21  
 
                       
 
                               
Net income from continuing operations
  $ 133     $ 156     $ 144     $ 433  
 
                       
 
                               
FINANCIAL RATIOS
                               
Loss & LAE
    64.2 %     61.1 %     62.8 %     62.7 %
Acquisition expense
    16.9       16.1       17.0       16.6  
Underwriting expense
    9.6       9.6       9.6       9.7  
 
                       
Expense
    26.5       25.7       26.6       26.3  
Dividend
    0.3       0.2       0.2       0.2  
 
                       
Combined ratio
    91.0 %     87.0 %     89.6 %     89.2 %
 
                       
 
                               
LOSS RATIO IMPACTS
                               
Impact of catastrophe losses
                               
Pretax net accident year catastrophe losses incurred
  $ 2     $     $     $ 2  
Impact on loss & LAE ratio
    0.3 %     %     %     0.1 %
 
                               
Impact of development & other
                               
Pretax net development: (favorable) / unfavorable
                               
Prior year loss & LAE reserve development
  $ 7     $ (14 )   $ 3     $ (4 )
Prior year premium development
    (10 )           (3 )     (13 )
Other (1)
                       
 
                       
Total development & other
  $ (3 )   $ (14 )   $     $ (17 )
 
                       
 
                               
Impact of development & other on loss & LAE ratio
    0.1 %     (1.6 )%     0.2 %     (0.4 )%
 
(1)   Other includes the impacts of change in allowance for uncollectible reinsurance and interest accretion.

2


 

CNA FINANCIAL CORPORATION
Financial Supplement
Property & Casualty Operations
                                 
    2007  
                            Nine months ended  
(In millions)   Q1     Q2     Q3     September 30, 2007  
Gross written premiums
  $ 2,360     $ 2,371     $ 2,193     $ 6,924  
Net written premiums
    1,731       1,773       1,639       5,143  
 
                               
Net earned premiums
    1,708       1,712       1,726       5,146  
Net investment income
    369       397       361       1,127  
Other revenues
    53       59       59       171  
 
                       
Total operating revenues
    2,130       2,168       2,146       6,444  
 
                               
Claims, benefits and expenses:
                               
Net incurred claims and benefits
    1,136       1,112       1,067       3,315  
Policyholders’ dividends
    6       (3 )     5       8  
Amortization of deferred acquisition costs
    376       368       380       1,124  
Other insurance related expenses
    106       144       127       377  
Restructuring and other related charges
                       
Other expenses
    52       53       56       161  
 
                       
Total claims, benefits and expenses
    1,676       1,674       1,635       4,985  
 
                               
Operating income before income tax and minority interest
    454       494       511       1,459  
Income tax expense on operating income
    (148 )     (159 )     (164 )     (471 )
Minority interest
    (10 )     (10 )     (16 )     (36 )
 
                       
 
                               
Net operating income from continuing operations
    296       325       331       952  
 
                               
Realized investment losses, net of participating policyholders’ and minority interests
    (38 )     (98 )     (42 )     (178 )
Income tax benefit on realized investment losses
    14       33       14       61  
 
                       
 
                               
Net income from continuing operations
  $ 272     $ 260     $ 303     $ 835  
 
                       
 
                               
FINANCIAL RATIOS
                               
Loss & LAE
    66.5 %     64.9 %     61.9 %     64.4 %
Acquisition expense
    16.9       18.1       17.8       17.6  
Underwriting expense
    11.4       11.8       11.6       11.6  
 
                       
Expense
    28.3       29.9       29.4       29.2  
Dividend
    0.3       (0.1 )     0.3       0.2  
 
                       
Combined ratio
    95.1 %     94.7 %     91.6 %     93.8 %
 
                       
 
                               
LOSS RATIO IMPACTS
                               
Impact of catastrophe losses
                               
Pretax net accident year catastrophe losses incurred
  $ 32     $ 12     $ 10     $ 54  
Impact on loss & LAE ratio
    1.9 %     0.7 %     0.6 %     1.1 %
 
                               
Impact of development & other
                               
Pretax net development: (favorable) / unfavorable
                               
Prior year loss & LAE reserve development
  $ 20     $ (34 )   $ (64 )   $ (78 )
Prior year premium development
    (36 )     16       (8 )     (28 )
Other (1)
    5       7       8       20  
 
                       
Total development & other
  $ (11 )   $ (11 )   $ (64 )   $ (86 )
 
                       
 
                               
Impact of development & other on loss & LAE ratio
    0.1 %     (1.0 )%     (3.5 )%     (1.5 )%
 
(1)   Other includes the impacts of change in allowance for uncollectible reinsurance and interest accretion.

3


 

CNA FINANCIAL CORPORATION
Financial Supplement
Life & Group Non-Core
                                 
    2007  
                            Nine months ended  
(In millions)   Q1     Q2     Q3     September 30, 2007  
Net earned premiums
  $ 156     $ 157     $ 156     $ 469  
Net investment income
    161       188       145       494  
Other revenues
    12       6       16       34  
 
                       
Total operating revenues
    329       351       317       997  
 
                               
Claims, benefits and expenses:
                               
Net incurred claims and benefits
    273       326       463       1,062  
Policyholders’ dividends
    (1 )     1              
Amortization of deferred acquisition costs
    5       4       4       13  
Other insurance related expenses
    51       44       48       143  
Restructuring and other related charges
                       
Other expenses
    9       8       17       34  
 
                       
Total claims, benefits and expenses
    337       383       532       1,252  
 
                               
Operating loss before income tax and minority interest
    (8 )     (32 )     (215 )     (255 )
Income tax benefit on operating loss
    10       19       84       113  
Minority interest
                       
 
                       
 
                               
Net operating income (loss) from continuing operations
    2       (13 )     (131 )     (142 )
 
                               
Realized investment gains (losses), net of participating policyholders’ and minority interests
    1       (18 )     (9 )     (26 )
Income tax benefit on realized investment gains (losses)
          6       3       9  
 
                       
 
                               
Net income (loss) from continuing operations
  $ 3     $ (25 )   $ (137 )   $ (159 )
 
                       

4


 

CNA FINANCIAL CORPORATION
Financial Supplement
Corporate & Other Non-Core
                                 
    2007  
                            Nine months ended  
(In millions)   Q1     Q2     Q3     September 30, 2007  
 
Net earned premiums
  $ (1 )   $ 3     $     $ 2  
Net investment income
    78       86       74       238  
Other revenues
    2             4       6  
 
                       
Total operating revenues
    79       89       78       246  
 
                               
Claims, benefits and expenses:
                               
Net incurred claims and benefits
    34       37       40       111  
Policyholders’ dividends
                       
Amortization of deferred acquisition costs
                       
Other insurance related expenses
    3       10             13  
Restructuring and other related charges
                       
Other expenses
    31       36       31       98  
 
                       
Total claims, benefits and expenses
    68       83       71       222  
 
                               
Operating income before income tax and minority interest
    11       6       7       24  
Income tax (expense) benefit on operating income
    (2 )     1       5       4  
Minority interest
          (1 )           (1 )
 
                       
 
                               
Net operating income from continuing operations
    9       6       12       27  
 
                               
Realized investment gains (losses), net of participating policyholders’ and minority interests
    16       (23 )     (6 )     (13 )
Income tax (expense) benefit on realized investment gains (losses)
    (6 )     9       2       5  
 
                       
 
                               
Net income (loss) from continuing operations
  $ 19     $ (8 )   $ 8     $ 19  
 
                       

5


 

CNA FINANCIAL CORPORATION
Financial Supplement
Results of Total Continuing Operations
                                 
    2007  
                            Nine months ended  
(In millions)   Q1     Q2     Q3     September 30, 2007  
 
Net earned premiums
  $ 1,863     $ 1,872     $ 1,882     $ 5,617  
Net investment income
    608       671       580       1,859  
Other revenues
    67       65       79       211  
 
                       
Total operating revenues
    2,538       2,608       2,541       7,687  
 
                               
Claims, benefits and expenses:
                               
Net incurred claims and benefits
    1,443       1,475       1,570       4,488  
Policyholders’ dividends
    5       (2 )     5       8  
Amortization of deferred acquisition costs
    381       372       384       1,137  
Other insurance related expenses
    160       198       175       533  
Restructuring and other related charges
                       
Other expenses
    92       97       104       293  
 
                       
Total claims, benefits and expenses
    2,081       2,140       2,238       6,459  
 
                               
Operating income before income tax and minority interest
    457       468       303       1,228  
Income tax expense on operating income
    (140 )     (139 )     (75 )     (354 )
Minority interest
    (10 )     (11 )     (16 )     (37 )
 
                       
 
                               
Net operating income from continuing operations
    307       318       212       837  
 
                               
Realized investment losses, net of participating policyholders’ and minority interests
    (21 )     (139 )     (57 )     (217 )
Income tax benefit on realized investment losses
    8       48       19       75  
 
                       
 
                               
Net income from continuing operations
  $ 294     $ 227     $ 174     $ 695  
 
                       

6


 

CNA FINANCIAL CORPORATION
Financial Supplement
Standard Lines
                                         
    2006  
                                    Twelve months ended  
(In millions)   Q1     Q2     Q3     Q4     December 31, 2006  
 
Gross written premiums
  $ 988     $ 1,055     $ 1,007     $ 918     $ 3,968  
Net written premiums
    880       972       913       833       3,598  
 
                                       
Net earned premiums
    857       901       914       885       3,557  
Net investment income
    192       201       202       245       840  
Other revenues
    4       3       3       34       44  
 
                             
Total operating revenues
    1,053       1,105       1,119       1,164       4,441  
 
                                       
Claims, benefits and expenses:
                                       
Net incurred claims and benefits
    625       613       642       699       2,579  
Policyholders’ dividends
    4       4       4       6       18  
Amortization of deferred acquisition costs
    195       199       211       200       805  
Other insurance related expenses
    76       88       64       91       319  
Restructuring and other related charges
                             
Other expenses
    5       3       3       55       66  
 
                             
Total claims, benefits and expenses
    905       907       924       1,051       3,787  
 
                                       
Operating income before income tax and minority interest
    148       198       195       113       654  
Income tax expense on operating income
    (44 )     (65 )     (62 )     (37 )     (208 )
Minority interest
                             
 
                             
 
                                       
Net operating income from continuing operations
    104       133       133       76       446  
 
                                       
Realized investment gains (losses), net of participating policyholders’ and minority interests
    10       (32 )     17       77       72  
Income tax (expense) benefit on realized investment gains (losses)
    (3 )     11       (6 )     (26 )     (24 )
 
                             
 
                                       
Net income from continuing operations
  $ 111     $ 112     $ 144     $ 127     $ 494  
 
                             
 
                                       
FINANCIAL RATIOS
                                       
Loss & LAE
    73.0 %     67.9 %     70.3 %     79.0 %     72.5 %
Acquisition expense
    18.6       19.7       17.0       18.7       18.5  
Underwriting expense
    13.1       12.2       13.1       14.1       13.1  
 
                             
Expense
    31.7       31.9       30.1       32.8       31.6  
Dividend
    0.5       0.4       0.5       0.5       0.5  
 
                             
Combined ratio
    105.2 %     100.2 %     100.9 %     112.3 %     104.6 %
 
                             
 
                                       
LOSS RATIO IMPACTS
                                       
Impact of catastrophe losses
                                       
Pretax net accident year catastrophe losses incurred
  $ 12     $ 5     $ 21     $ 16     $ 54  
Impact on loss & LAE ratio
    1.4 %     0.6 %     2.3 %     1.8 %     1.5 %
 
                                       
Impact of development & other
                                       
Pretax net development: (favorable) / unfavorable
                                       
Prior year loss & LAE reserve development
  $ 42     $ 14     $ 16     $ 136     $ 208  
Prior year premium development
    (20 )     (30 )     (15 )     7       (58 )
Other (1)
    15       15       13       (53 )     (10 )
 
                             
Total development & other
  $ 37     $ (1 )   $ 14     $ 90     $ 140  
 
                             
 
                                       
Impact of development & other on loss & LAE ratio
    5.1 %     0.9 %     2.3 %     9.9 %     4.5 %
 
(1)   Other includes the impacts of change in allowance for uncollectible reinsurance and interest accretion.

7


 

CNA FINANCIAL CORPORATION
Financial Supplement
Specialty Lines
                                         
    2006  
                                    Twelve months ended  
(In millions)   Q1     Q2     Q3     Q4     December 31, 2006  
 
Gross written premiums
  $ 1,398     $ 1,233     $ 1,364     $ 1,324     $ 5,319  
Net written premiums
    878       816       883       854       3,431  
 
                                       
Net earned premiums
    857       828       868       858       3,411  
Net investment income
    123       136       138       157       554  
Other revenues
    36       38       39       43       156  
 
                             
Total operating revenues
    1,016       1,002       1,045       1,058       4,121  
 
                                       
Claims, benefits and expenses:
                                       
Net incurred claims and benefits
    527       516       531       486       2,060  
Policyholders’ dividends
    1       1       1       1       4  
Amortization of deferred acquisition costs
    170       170       175       199       714  
Other insurance related expenses
    62       56       56       45       219  
Restructuring and other related charges
                             
Other expenses
    33       39       40       39       151  
 
                             
Total claims, benefits and expenses
    793       782       803       770       3,148  
 
                                       
Operating income before income tax and minority interest
    223       220       242       288       973  
Income tax expense on operating income
    (71 )     (66 )     (80 )     (78 )     (295 )
Minority interest
    (9 )     (10 )     (13 )     (11 )     (43 )
 
                             
 
                                       
Net operating income from continuing operations
    143       144       149       199       635  
 
                                       
Realized investment gains (losses), net of participating policyholders’ and minority interests
    6       (18 )     7       37       32  
Income tax (expense) benefit on realized investment gains (losses)
    (2 )     6       (2 )     (9 )     (7 )
 
                             
 
                                       
Net income from continuing operations
  $ 147     $ 132     $ 154     $ 227     $ 660  
 
                             
 
                                       
FINANCIAL RATIOS
                                       
Loss & LAE
    61.5 %     62.4 %     61.0 %     56.8 %     60.4 %
Acquisition expense
    18.1       18.4       17.3       18.0       17.9  
Underwriting expense
    8.9       8.9       9.4       10.3       9.5  
 
                             
Expense
    27.0       27.3       26.7       28.3       27.4  
Dividend
    0.1       0.1       0.1       0.1       0.1  
 
                             
Combined ratio
    88.6 %     89.8 %     87.8 %     85.2 %     87.9 %
 
                             
 
                                       
LOSS RATIO IMPACTS
                                       
Impact of catastrophe losses
                                       
Pretax net accident year catastrophe losses incurred
  $     $ 1     $ 1     $ 3     $ 5  
Impact on loss & LAE ratio
    %     0.1 %     0.1 %     0.4 %     0.1 %
 
                                       
Impact of development & other
                                       
Pretax net development: (favorable) / unfavorable
                                       
Prior year loss & LAE reserve development
  $ 22     $ (11 )   $ (14 )   $ (58 )   $ (61 )
Prior year premium development
    (37 )     8       2       22       (5 )
Other (1)
    (1 )                       (1 )
 
                             
Total development & other
  $ (16 )   $ (3 )   $ (12 )   $ (36 )   $ (67 )
 
                             
 
                                       
Impact of development & other on loss & LAE ratio
    (0.2 )%     (0.7 )%     (1.6 )%     (5.1 )%     (1.9 )%
 
(1)   Other includes the impacts of change in allowance for uncollectible reinsurance and interest accretion.

8


 

CNA FINANCIAL CORPORATION
Financial Supplement
Property & Casualty Operations
                                         
    2006  
                                    Twelve months ended  
(In millions)   Q1     Q2     Q3     Q4     December 31, 2006  
 
Gross written premiums
  $ 2,386     $ 2,288     $ 2,371     $ 2,242     $ 9,287  
Net written premiums
    1,758       1,788       1,796       1,687       7,029  
 
                                       
Net earned premiums
    1,714       1,729       1,782       1,743       6,968  
Net investment income
    315       337       340       402       1,394  
Other revenues
    40       41       42       77       200  
 
                             
Total operating revenues
    2,069       2,107       2,164       2,222       8,562  
 
                                       
Claims, benefits and expenses:
                                       
Net incurred claims and benefits
    1,152       1,129       1,173       1,185       4,639  
Policyholders’ dividends
    5       5       5       7       22  
Amortization of deferred acquisition costs
    365       369       386       399       1,519  
Other insurance related expenses
    138       144       120       136       538  
Restructuring and other related charges
                             
Other expenses
    38       42       43       94       217  
 
                             
Total claims, benefits and expenses
    1,698       1,689       1,727       1,821       6,935  
 
                                       
Operating income before income tax and minority interest
    371       418       437       401       1,627  
Income tax expense on operating income
    (115 )     (131 )     (142 )     (115 )     (503 )
Minority interest
    (9 )     (10 )     (13 )     (11 )     (43 )
 
                                       
 
                             
Net operating income from continuing operations
    247       277       282       275       1,081  
 
Realized investment gains (losses), net of participating policyholders’ and minority interests
    16       (50 )     24       114       104  
Income tax (expense) benefit on realized investment gains (losses)
    (5 )     17       (8 )     (35 )     (31 )
 
                             
 
                                       
Net income from continuing operations
  $ 258     $ 244     $ 298     $ 354     $ 1,154  
 
                             
 
                                       
FINANCIAL RATIOS
                                       
Loss & LAE
    67.2 %     65.3 %     65.8 %     68.0 %     66.6 %
Acquisition expense
    18.3       19.1       17.1       18.3       18.2  
Underwriting expense
    11.1       10.5       11.3       12.4       11.3  
 
                             
Expense
    29.4       29.6       28.4       30.7       29.5  
Dividend
    0.3       0.3       0.3       0.3       0.3  
 
                             
Combined ratio
    96.9 %     95.2 %     94.5 %     99.0 %     96.4 %
 
                             
 
                                       
LOSS RATIO IMPACTS
                                       
Impact of catastrophe losses
                                       
Pretax net accident year catastrophe losses incurred
  $ 12     $ 6     $ 22     $ 19     $ 59  
Impact on loss & LAE ratio
    0.7 %     0.3 %     1.3 %     1.1 %     0.9 %
 
                                       
Impact of development & other
                                       
Pretax net development: (favorable) / unfavorable
                                       
Prior year loss & LAE reserve development
  $ 64     $ 3     $ 2     $ 78     $ 147  
Prior year premium development
    (57 )     (22 )     (13 )     29       (63 )
Other (1)
    14       15       13       (53 )     (11 )
 
                             
Total development & other
  $ 21     $ (4 )   $ 2     $ 54     $ 73  
 
                             
 
                                       
Impact of development & other on loss & LAE ratio
    2.4 %     0.2 %     0.4 %     2.5 %     1.4 %
 
(1)   Other includes the impacts of change in allowance for uncollectible reinsurance and interest accretion.

9


 

CNA FINANCIAL CORPORATION
Financial Supplement
Life & Group Non-Core
                                         
    2006  
                                    Twelve months ended  
(In millions)   Q1     Q2     Q3     Q4     December 31, 2006  
 
Net earned premiums
  $ 163     $ 159     $ 160     $ 159     $ 641  
Net investment income
    187       138       179       194       698  
Other revenues
    12       24       8       22       66  
 
                             
Total operating revenues
    362       321       347       375       1,405  
 
                                       
Claims, benefits and expenses:
                                       
Net incurred claims and benefits
    306       266       314       309       1,195  
Policyholders’ dividends
          1       (1 )            
Amortization of deferred acquisition costs
    4       4       4       2       14  
Other insurance related expenses
    53       40       48       60       201  
Restructuring and other related charges
                             
Other expenses
    13       13       14       18       58  
 
                             
Total claims, benefits and expenses
    376       324       379       389       1,468  
 
                                       
Operating loss before income tax and minority interest
    (14 )     (3 )     (32 )     (14 )     (63 )
Income tax benefit on operating loss
    11       8       17       13       49  
Minority interest
                             
 
                             
 
                                       
Net operating income (loss) from continuing operations
    (3 )     5       (15 )     (1 )     (14 )
 
                                       
Realized investment gains (losses), net of participating policyholders’ and minority interests
    (12 )     (34 )     (10 )     6       (50 )
Income tax (expense) benefit on realized investment gains (losses)
    5       11       3       (2 )     17  
 
                             
 
                                       
Net income (loss) from continuing operations
  $ (10 )   $ (18 )   $ (22 )   $ 3     $ (47 )
 
                             

10


 

CNA FINANCIAL CORPORATION
Financial Supplement
Corporate & Other Non-Core
                                         
    2006  
                                    Twelve months ended  
(In millions)   Q1     Q2     Q3     Q4     December 31, 2006  
 
Net earned premiums
  $ (8 )   $ 4     $ 1     $ (3 )   $ (6 )
Net investment income
    68       77       81       94       320  
Other revenues
    1       1       6       1       9  
 
                             
Total operating revenues
    61       82       88       92       323  
 
                                       
Claims, benefits and expenses:
                                       
Net incurred claims and benefits
    29       31       31       100       191  
Policyholders’ dividends
                             
Amortization of deferred acquisition costs
    1       (1 )           1       1  
Other insurance related expenses
    15       (2 )     7       (2 )     18  
Restructuring and other related charges
          (13 )                 (13 )
Other expenses
    30       33       27       36       126  
 
                             
Total claims, benefits and expenses
    75       48       65       135       323  
 
                                       
Operating income (loss) before income tax and minority interest
    (14 )     34       23       (43 )      
Income tax (expense) benefit on operating income (loss)
    4       (11 )     (7 )     18       4  
Minority interest
                      (1 )     (1 )
 
                             
 
                                       
Net operating income (loss) from continuing operations
    (10 )     23       16       (26 )     3  
 
                                       
Realized investment gains (losses), net of participating policyholders’ and minority interests
    5       (14 )     7       34       32  
Income tax (expense) benefit on realized investment gains (losses)
    (8 )     6       6       (9 )     (5 )
 
                             
 
                                       
Net income (loss) from continuing operations
  $ (13 )   $ 15     $ 29     $ (1 )   $ 30  
 
                             

11


 

CNA FINANCIAL CORPORATION
Financial Supplement
Results of Total Continuing Operations
                                         
    2006  
                                    Twelve months ended  
(In millions)     Q1      Q2      Q3      Q4     December 31, 2006  
 
Net earned premiums
  $ 1,869     $ 1,892     $ 1,943     $ 1,899     $ 7,603  
Net investment income
    570       552       600       690       2,412  
Other revenues
    53       66       56       100       275  
 
                             
Total operating revenues
    2,492       2,510       2,599       2,689       10,290  
 
                                       
Claims, benefits and expenses:
                                       
Net incurred claims and benefits
    1,487       1,426       1,518       1,594       6,025  
Policyholders’ dividends
    5       6       4       7       22  
Amortization of deferred acquisition costs
    370       372       390       402       1,534  
Other insurance related expenses
    206       182       175       194       757  
Restructuring and other related charges
          (13 )                 (13 )
Other expenses
    81       88       84       148       401  
 
                             
Total claims, benefits and expenses
    2,149       2,061       2,171       2,345       8,726  
 
                                       
Operating income before income tax and minority interest
    343       449       428       344       1,564  
Income tax expense on operating income
    (100 )     (134 )     (132 )     (84 )     (450 )
Minority interest
    (9 )     (10 )     (13 )     (12 )     (44 )
 
                             
 
                                       
Net operating income from continuing operations
    234       305       283       248       1,070  
 
                                       
Realized investment gains (losses), net of participating policyholders’ and minority interests
    9       (98 )     21       154       86  
Income tax (expense) benefit on realized investment gains (losses)
    (8 )     34       1       (46 )     (19 )
 
                             
 
                                       
Net income from continuing operations
  $ 235     $ 241     $ 305     $ 356     $ 1,137  
 
                             

12


 

CNA FINANCIAL CORPORATION
Financial Supplement
Property & Casualty Results of Operations
                         
Year ended December 31, 2005                  
(In millions)   Standard Lines     Specialty Lines     P&C Operations  
 
Gross written premiums
  $ 3,962     $ 4,971     $ 8,933  
Net written premiums
    3,473       3,372       6,845  
 
                       
Net earned premiums
    3,518       3,367       6,885  
Net investment income
    632       416       1,048  
Other revenues
    17       140       157  
 
                 
Total operating revenues
    4,167       3,923       8,090  
 
                       
Claims, benefits and expenses:
                       
Net incurred claims and benefits
    3,176       2,298       5,474  
Policyholders’ dividends
    19       4       23  
Amortization of deferred acquisition costs
    816       702       1,518  
Other insurance related expenses
    338       221       559  
Restructuring and other related charges
                 
Other expenses
    23       130       153  
 
                 
Total claims, benefits and expenses
    4,372       3,355       7,727  
 
                       
Operating income (loss) before income tax and minority interest
    (205 )     568       363  
Income tax (expense) benefit on operating income (loss)
    118       (162 )     (44 )
Minority interest
          (24 )     (24 )
 
                 
 
                       
Net operating income (loss) from continuing operations
    (87 )     382       295  
 
                       
Realized investment gains, net of participating policyholders’ and minority interests
    30       4       34  
Income tax expense on realized investment gains
    (11 )     (2 )     (13 )
 
                 
 
                       
Net income (loss) from continuing operations
  $ (68 )   $ 384     $ 316  
 
                 
 
                       
FINANCIAL RATIOS
                       
Loss & LAE
    90.3 %     68.3 %     79.5 %
Acquisition expense
    20.3       19.1       19.7  
Underwriting expense
    12.4       8.3       10.5  
 
                 
Expense
    32.7       27.4       30.2  
Dividend
    0.6       0.1       0.3  
 
                 
Combined ratio
    123.6 %     95.8 %     110.0 %
 
                 
 
                       
 
LOSS RATIO IMPACTS
                       
Impact of catastrophe losses
                       
Pretax net accident year catastrophe losses incurred
  $ 470     $ 23     $ 493  
Impact on loss & LAE ratio
    13.9 %     0.7 %     7.4 %
 
                       
Impact of development & other
                       
Pretax net development: (favorable) / unfavorable
                       
Prior year loss & LAE reserve development
  $ 433     $ 173     $ 606  
Prior year premium development
    (30 )     (70 )     (100 )
Other (1)
    34       (24 )     10  
 
                 
Total development & other
  $ 437     $ 79     $ 516  
 
                 
 
                       
Impact of development & other on loss & LAE ratio
    12.7 %     3.2 %     7.9 %
 
(1)   Other includes the impacts of change in allowance for uncollectible reinsurance and interest accretion.

13


 

CNA FINANCIAL CORPORATION
Financial Supplement
Life & Group Non-Core and Corporate & Other Non-Core Segments and Total Continuing Operations Results
                                 
Year ended December 31, 2005                        
(In millions)   P&C Operations     Life & Group Non-Core     Corporate & Other Non-Core     Total Continuing Operations  
 
Net earned premiums
  $ 6,885     $ 704     $ (20 )   $ 7,569  
Net investment income
    1,048       593       251       1,892  
Other revenues
    157       95       159       411  
 
                       
Total operating revenues
    8,090       1,392       390       9,872  
 
                               
Claims, benefits and expenses:
                               
Net incurred claims and benefits
    5,474       1,160       341       6,975  
Policyholders’ dividends
    23       1             24  
Amortization of deferred acquisition costs
    1,518       22       3       1,543  
Other insurance related expenses
    559       257       13       829  
Restructuring and other related charges
                       
Other expenses
    153       61       115       329  
 
                       
Total claims, benefits and expenses
    7,727       1,501       472       9,700  
 
                               
Operating income (loss) before income tax and minority interest
    363       (109 )     (82 )     172  
Income tax benefit on operating income (loss)
    (44 )     58       91       105  
Minority interest
    (24 )                 (24 )
 
                       
 
                               
Net operating income (loss) from continuing operations
    295       (51 )     9       253  
 
                               
Realized investment losses, net of participating policyholders’ and minority interests
    34       (30 )     (14 )     (10 )
Income tax benefit on realized investment losses
    (13 )     11       2        
 
                       
 
                               
Net income (loss) from continuing operations
  $ 316     $ (70 )   $ (3 )   $ 243  
 
                       

14