Claim and Claim Adjustment Expense Reserves and Future Policy Benefit Reserves

12 Months Ended

Dec. 31, 2022

Insurance [Abstract]

Claim and Claim Adjustment Expense Reserves and Future Policy Benefit Reserves

Claim and Claim Adjustment Expense Reserves and Future Policy Benefit Reserves

Property and casualty insurance claim and claim adjustment expense reserves represent the estimated amounts necessary to resolve all outstanding claims, including incurred but not reported (“IBNR”) claims as of the reporting date. Reserve projections are based primarily on detailed analysis of the facts in each case, experience with similar cases and various historical development patterns. Consideration is given to historical patterns such as claim reserving trends and settlement practices, loss payments, pending levels of unpaid claims and product mix, as well as court decisions and economic conditions including inflation, social inflation and public attitudes. All of these factors can affect the estimation of claim and claim adjustment expense reserves.

Establishing claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves for catastrophic events that have occurred, is an estimation process. Many factors can ultimately affect the final settlement of a claim and, therefore, the necessary reserve. Changes in the law, results of litigation, medical costs, the cost of repair materials and labor rates can affect ultimate claim costs. In addition, time can be a critical part of reserving determinations since the longer the span between the incidence of a loss and the payment or settlement of the claim, the more variable the ultimate settlement amount can be. Accordingly, short-tail claims, such as property damage claims, tend to be more reasonably estimable than long-tail claims, such as long term care, workers’ compensation, general liability and professional liability claims. Adjustments to prior year reserve estimates, if necessary, are reflected in the results of operations in the period that the need for such adjustments is determined. There can be no assurance that the ultimate cost for insurance losses will not exceed current estimates.

CNA’s commercial property and casualty insurance operations (“Property & Casualty Operations”) include its Specialty, Commercial and International lines of business. CNA’s Other Insurance Operations outside of Property & Casualty Operations include its long term care business that is in run-off, certain corporate expenses, including interest on CNA’s corporate debt, and certain property and casualty businesses in run-off, including CNA Re, A&EP, a legacy portfolio of excess workers’ compensation policies and certain legacy mass tort reserves.

Liability for Unpaid Claim and Claim Adjustment Expenses

The table below reconciles the net liability for unpaid claim and claim adjustment expenses to the amount presented on the Consolidated Balance Sheets.

December 31	2022
(In millions)
Net liability for unpaid claim and claim adjustment expenses:
Property & Casualty Operations	$	15,996
Other Insurance Operations (a)	3,912
Total net claim and claim adjustment expenses	19,908
Reinsurance receivables: (b)
Property & Casualty Operations	2,680
Other Insurance Operations (c)	2,511
Total reinsurance receivables	5,191
Total gross liability for unpaid claims and claims adjustment expenses	$	25,099

(a) Other Insurance Operations amounts are primarily related to long term care claim reserves for policyholders on claim, which are long duration insurance contracts, but also include amounts related to unfunded structured settlements arising from short duration insurance contracts.

(b) Reinsurance receivables presented are gross of the allowance for uncollectible reinsurance and do not include reinsurance receivables related to paid losses.

(c) The Other Insurance Operations reinsurance receivables are primarily related to A&EP claims covered under the loss portfolio transfer (“LPT”).

The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves of Other Insurance Operations.

Year Ended December 31	2022		2021		2020
(In millions)
Reserves, beginning of year:
Gross	$	24,174	$	22,706	$	21,720
Ceded	4,969		4,005		3,835
Net reserves, beginning of year	19,205		18,701		17,885
Reduction of net reserves due to the excess workers’ compensation loss portfolio transfer			(632)
Net incurred claim and claim adjustment expenses:
Provision for insured events of current year	6,243		5,970		5,793
Decrease in provision for insured events of prior years	(187)		(104)		(119)
Amortization of discount	170		174		183
Total net incurred (a)	6,226		6,040		5,857
Net payments attributable to:
Current year events	(913)		(1,014)		(948)
Prior year events	(4,348)		(3,830)		(4,216)
Total net payments	(5,261)		(4,844)		(5,164)
Foreign currency translation adjustment and other	(262)		(60)		123
Net reserves, end of year	19,908		19,205		18,701
Ceded reserves, end of year	5,191		4,969		4,005
Gross reserves, end of year	$	25,099	$	24,174	$	22,706

(a) Total net incurred above does not agree to Insurance claims and policyholders’ benefits as reflected on the Consolidated Statements of Operations due to amounts related to retroactive reinsurance deferred gain accounting, the loss on the excess workers’ compensation loss portfolio transfer, uncollectible reinsurance and benefit expenses related to future policy benefits, which are not reflected in the table above.

Reserving Methodology

In developing claim and claim adjustment expense (“loss” or “losses”) reserve estimates, CNA’s actuaries perform detailed reserve analyses that are staggered throughout the year. The data is organized at a reserve group level. Every reserve group is reviewed at least once during the year, but most are reviewed more frequently. The analyses generally review losses gross of ceded reinsurance and apply the ceded reinsurance terms to the gross estimates to establish estimates net of reinsurance. Factors considered include, but are not limited to, the historical pattern and volatility of the actuarial indications, the sensitivity of the actuarial indications to changes in paid and incurred loss patterns, the consistency of claims handling processes, the consistency of case reserving practices, changes in CNA’s pricing and underwriting, pricing and underwriting trends in the insurance market and legal, judicial, social and economic trends. In addition to the detailed analyses, CNA reviews actual loss emergence for all products each quarter.

In developing the loss reserve estimates for property and casualty contracts, CNA generally projects ultimate losses using several common actuarial methods as listed below. CNA reviews the various indications from the various methods and applies judgment to select an actuarial point estimate. The carried reserve may differ from the actuarial point estimate as a result of CNA’s consideration of the factors noted above as well as the potential volatility of the projections associated with

the specific product being analyzed and other factors affecting claims costs that may not be quantifiable through traditional actuarial analysis. The indicated required reserve is the difference between the selected ultimate loss and the inception-to-date paid losses. The difference between the selected ultimate loss and the case incurred or reported loss is IBNR. IBNR includes a provision for development on known cases as well as a provision for late reported incurred claims.

The most frequently utilized methods to project ultimate losses include the following:

•Paid development: The paid development method estimates ultimate losses by reviewing paid loss patterns and applying them to accident years with further expected changes in paid losses.

•Incurred development: The incurred development method is similar to the paid development method, but it uses case incurred losses instead of paid losses.

•Loss ratio: The loss ratio method multiplies premiums by an expected loss ratio to produce ultimate loss estimates for each accident year.

•Bornhuetter-Ferguson paid loss: The Bornhuetter-Ferguson paid loss method is a combination of the paid development approach and the loss ratio approach. This method normally determines expected loss ratios similar to the approach used to estimate the expected loss ratio for the loss ratio method.

•Bornhuetter-Ferguson incurred loss: The Bornhuetter-Ferguson incurred loss method is similar to the Bornhuetter-Ferguson using premiums and paid loss method except that it uses case incurred losses.

•Frequency times severity: The frequency times severity method multiplies a projected number of ultimate claims by an estimated ultimate average loss for each accident year to produce ultimate loss estimates.

•Stochastic modeling: The stochastic modeling produces a range of possible outcomes based on varying assumptions related to the particular product being modeled.

For many exposures, especially those that can be considered long-tail, a particular accident or policy year may not have a sufficient volume of paid losses to produce a statistically reliable estimate of ultimate losses. In such a case, CNA’s actuaries typically assign more weight to the incurred development method than to the paid development method. As claims continue to settle and the volume of paid loss increases, the actuaries may assign additional weight to the paid development method. For most of CNA’s products, even the incurred losses for accident or policy years that are early in the claim settlement process will not be of sufficient volume to produce a reliable estimate of ultimate losses. In these cases, CNA may not assign much, if any weight to the paid and incurred development methods. CNA may use the loss ratio, Bornhuetter-Ferguson and/or frequency times severity methods. For short-tail exposures, the paid and incurred development methods can often be relied on sooner, primarily because CNA’s history includes a sufficient number of years to cover the entire period over which paid and incurred losses are expected to change. However, CNA may also use the loss ratio, Bornhuetter-Ferguson and/or frequency times severity methods for short-tail exposures. For other more complex reserve groups where the above methods may not produce reliable indications, CNA uses additional methods tailored to the characteristics of the specific situation.

CNA’s reserving methodologies for mass tort and A&EP are similar as both are based on detailed reviews of large accounts with estimates of ultimate payments based on the facts in each case and CNA’s view of applicable law and coverage litigation.

Gross and Net Carried Reserves

The following tables present the gross and net carried reserves:

December 31, 2022	Property and Casualty Operations		Other Insurance Operations		Total
(In millions)
Gross Case Reserves	$	5,502	$	4,885	$	10,387
Gross IBNR Reserves	13,174		1,538		14,712
Total Gross Carried Claim and Claim Adjustment Expense Reserves	$	18,676	$	6,423	$	25,099
Net Case Reserves	$	4,805	$	3,514	$	8,319
Net IBNR Reserves	11,191		398		11,589
Total Net Carried Claim and Claim Adjustment Expense Reserves	$	15,996	$	3,912	$	19,908
December 31, 2021
Gross Case Reserves	$	5,621	$	4,934	$	10,555
Gross IBNR Reserves	11,982		1,637		13,619
Total Gross Carried Claim and Claim Adjustment Expense Reserves	$	17,603	$	6,571	$	24,174
Net Case Reserves	$	4,932	$	3,437	$	8,369
Net IBNR Reserves	10,338		498		10,836
Total Net Carried Claim and Claim Adjustment Expense Reserves	$	15,270	$	3,935	$	19,205

Net Prior Year Development

Changes in estimates of claim and claim adjustment expense reserves, net of reinsurance, for prior years are defined as net prior year loss reserve development. These changes can be favorable or unfavorable.

The following table and discussion present details of the net prior year loss reserve development in Property & Casualty Operations and Other Insurance Operations:

Year Ended December 31	2022		2021		2020
(In millions)
Medical professional liability	$	18	$	23	$	35
Other professional liability and management liability	50		24		(15)
Surety	(83)		(73)		(69)
Commercial auto	49		53		33
General liability	67		15		15
Workers’ compensation	(152)		(82)		(96)
Property and other	(45)		(9)		27
Other insurance operations	64		60		50
Total pretax (favorable) unfavorable development	$	(32)	$	11	$	(20)

Development Tables

For CNA’s Property & Casualty Operations, the following tables present further detail and commentary on the development reflected in the financial statements for each of the periods presented. Also presented are loss reserve development tables that illustrate the change over time of reserves established for claim and allocated claim adjustment expenses arising from short-duration insurance contracts for certain lines of business within CNA’s Property & Casualty Operations. Not all lines of business are presented based on their context to CNA’s overall loss reserves, calendar year reserve development, or calendar year net earned premiums. Insurance contracts are considered to be short-duration contracts when the contracts are not expected to remain in force for an extended period of time.

The Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses tables, reading across, show the cumulative net incurred claim and allocated claim adjustment expenses relating to each accident year at the end of the stated calendar year. Changes in the cumulative amount across time are the result of CNA’s expanded awareness of additional facts and circumstances that pertain to the unsettled claims. The Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses tables, reading across, show the cumulative amount paid for claims in each accident year as of the end of the stated calendar year. The Net Strengthening or (Releases) of Prior Accident Year Reserves tables, reading across, show the net increase or decrease in the cumulative net incurred accident year claim and allocated claim adjustment expenses during each stated calendar year and indicates whether the reserves for that accident year were strengthened or released.

The information in the tables is reported on a net basis after reinsurance and does not include the effects of discounting. The information contained in calendar years 2021 and prior is unaudited. To the extent CNA enters into a commutation, the transaction is reported on a prospective basis. To the extent that CNA enters into a disposition, the effects of the disposition are reported on a retrospective basis by removing the balances associated with it.

The amounts reported for the cumulative number of reported claims include direct and assumed open and closed claims by accident year at the claimant level. The number excludes claim counts for claims within a policy deductible where the insured is responsible for payment of losses in the deductible layer. Claim count data for certain assumed reinsurance contracts is unavailable.

In the loss reserve development tables, IBNR includes reserves for incurred but not reported losses and expected development on case reserves. CNA does not establish case reserves for allocated loss adjusted expenses (“ALAE”), therefore ALAE reserves are also included in the estimate of IBNR.

2022

Unfavorable development in medical professional liability was due to higher than expected large loss activity in multiple accident years.

Unfavorable development in other professional liability and management liability was due to higher than expected claim severity and frequency in CNA’s cyber and professional errors and omissions (“E&O”) businesses in multiple accident years.

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

Unfavorable development in commercial auto and general liability was due to higher than expected claim severity across multiple accident years.

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

Favorable development in property and other was primarily due to lower than expected loss emergence in recent accident years.

Unfavorable development in other insurance operations was largely associated with legacy mass tort abuse claims, including the Diocese of Rochester proposed settlement.

2021

Unfavorable development in medical professional liability was due to higher than expected large loss activity in recent accident years.

Unfavorable development in other professional liability and management liability was due to higher than expected frequency of large losses in multiple accident years and higher than expected claim severity and frequency in CNA’s cyber business in recent accident years.

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

Unfavorable development in commercial auto was due to higher than expected claim severity in CNA’s middle market and construction businesses in multiple accident years.

Unfavorable development in general liability was due to higher than expected claim severity in CNA’s construction and umbrella businesses in multiple accident years.

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

Unfavorable development in other insurance operations was due to legacy mass tort exposures, primarily related to abuse.

2020

Unfavorable development in medical professional liability was primarily due to higher than expected frequency of large losses in recent accident years and unfavorable outcomes on specific claims in older accident years.

Favorable development in other professional liability and management liability was primarily due to lower than expected loss emergence in accident year 2017 and accident years prior to 2010.

Favorable development in surety was due to lower than expected frequency and lack of systemic loss activity for accident years 2019 and prior.

Unfavorable development in commercial auto was due to higher than expected claim severity in CNA’s middle market and construction businesses in recent accident years.

Unfavorable development in general liability was driven by increased bodily injury severities in accident years 2012 through 2016 and higher than expected frequency and severity in CNA’s umbrella business in accident years 2015 through 2019.

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

Unfavorable development in property and other was primarily due to higher than expected large loss activity in accident year 2019 in CNA’s middle market, national accounts and marine business units.

Unfavorable development in other insurance operations was due to legacy mass tort exposures, primarily related to abuse.

Property & Casualty Operations – Line of Business Composition

The table below presents the net liability for unpaid claim and claim adjustment expenses, by line of business for Property & Casualty Operations:

December 31	2022
(In millions)
Medical professional liability	$	1,526
Other professional liability and management liability	3,514
Surety	396
Commercial auto	787
General liability	3,206
Workers’ compensation	3,739
Property and other	2,828
Total net liability for unpaid claim and claim adjustment expenses	$	15,996

Medical Professional Liability

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses																					December 31, 2022
December 31	2013 (a)		2014 (a)		2015 (a)		2016 (a)		2017 (a)		2018 (a)		2019 (a)		2020 (a)		2021 (a)		2022		IBNR		Cumulative Number of Claims
(In millions, except reported claims data)
Accident Year
2013	$	462	$	479	$	500	$	513	$	525	$	535	$	545	$	531	$	530	$	530	$	5	19,587
2014			450		489		537		530		535		529		527		524		527		12		19,818
2015					433		499		510		494		488		510		501		498		22		18,203
2016							427		487		485		499		508		510		508		12		16,136
2017									412		449		458		460		455		460		30		15,288
2018											404		429		431		448		470		31		15,163
2019													430		445		458		471		101		14,189
2020															477		476		455		226		10,679
2021																	377		376		259		8,801
2022																			329		290		6,717
																	Total		$	4,624	$	988
Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses
Accident Year
2013	$	17	$	119	$	255	$	355	$	414	$	462	$	495	$	508	$	512	$	517
2014			23		136		258		359		417		472		489		497		504
2015					22		101		230		313		384		420		444		458
2016							18		121		246		339		401		436		460
2017									19		107		235		308		355		388
2018											21		115		211		290		349
2019													17		91		183		280
2020															11		61		139
2021																	11		49
2022																			10
																	Total		$	3,154
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	1,470
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2013																			25
Liability for unallocated claim adjustment expenses for accident years presented																			31
Total net liability for unpaid claim and claim adjustment expenses																			$	1,526
Net Strengthening (Releases) of Prior Accident Year Reserves
Years Ended December 31																					Total
Accident Year
2013			$	17	$	21	$	13	$	12	$	10	$	10	$	(14)	$	(1)	$	—	$	68
2014					39		48		(7)		5		(6)		(2)		(3)		3		77
2015							66		11		(16)		(6)		22		(9)		(3)		65
2016									60		(2)		14		9		2		(2)		81
2017											37		9		2		(5)		5		48
2018													25		2		17		22		66
2019															15		13		13		41
2020																	(1)		(21)		(22)
2021																			(1)		(1)
Total net development for the accident years presented above															34		13		16
Total net development for accident years prior to 2013															1		3		(3)
Total unallocated claim adjustment expense development															—		7		5
Total															$	35	$	23	$	18

(a) Data presented for these calendar years is required supplemental information, which is unaudited.

Other Professional Liability and Management Liability

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses																					December 31, 2022
December 31	2013 (a)		2014 (a)		2015 (a)		2016 (a)		2017 (a)		2018 (a)		2019 (a)		2020 (a)		2021 (a)		2022		IBNR		Cumulative Number of Claims
(In millions, except reported claims data)
Accident Year
2013	$	884	$	894	$	926	$	885	$	866	$	863	$	850	$	846	$	833	$	829	$	21	17,953
2014			878		898		885		831		835		854		845		841		842		29		17,583
2015					888		892		877		832		807		813		836		855		30		17,452
2016							901		900		900		904		907		891		888		57		17,976
2017									847		845		813		791		775		758		107		18,181
2018											850		864		869		906		923		142		19,995
2019													837		845		856		876		173		19,447
2020															930		944		951		408		19,333
2021																	1,037		1,038		706		17,983
2022																			1,120		1,000		15,327
																	Total		$	9,080	$	2,673
Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses
Accident Year
2013	$	54	$	249	$	447	$	618	$	702	$	754	$	771	$	779	$	787	$	791
2014			51		223		392		515		647		707		743		787		802
2015					60		234		404		542		612		677		725		794
2016							64		248		466		625		701		736		784
2017									57		222		394		498		557		596
2018											54		282		473		599		706
2019													64		263		422		567
2020															67		248		400
2021																	58		217
2022																			64
																	Total		$	5,721
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	3,359
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2013																			99
Liability for unallocated claim adjustment expenses for accident years presented																			56
Total net liability for unpaid claim and claim adjustment expenses																			$	3,514
Net Strengthening (Releases) of Prior Accident Year Reserves
Years Ended December 31																					Total
Accident Year
2013			$	10	$	32	$	(41)	$	(19)	$	(3)	$	(13)	$	(4)	$	(13)	$	(4)	$	(55)
2014					20		(13)		(54)		4		19		(9)		(4)		1		(36)
2015							4		(15)		(45)		(25)		6		23		19		(33)
2016									(1)		—		4		3		(16)		(3)		(13)
2017											(2)		(32)		(22)		(16)		(17)		(89)
2018													14		5		37		17		73
2019															8		11		20		39
2020																	14		7		21
2021																			1		1
Total net development for the accident years presented above															(13)		36		41
Total net development for accident years prior to 2013															(2)		(14)		9
Total unallocated claim adjustment expense development															—		2		—
Total															$	(15)	$	24	$	50

(a) Data presented for these calendar years is required supplemental information, which is unaudited.

Surety

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses																					December 31, 2022
December 31	2013 (a)		2014 (a)		2015 (a)		2016 (a)		2017 (a)		2018 (a)		2019 (a)		2020 (a)		2021 (a)		2022		IBNR		Cumulative Number of Claims
(In millions, except reported claims data)
Accident Year
2013	$	120	$	121	$	115	$	106	$	91	$	87	$	83	$	82	$	82	$	82	$	2	5,092
2014			123		124		94		69		60		45		45		43		42		3		5,127
2015					131		131		104		79		63		58		53		45		1		5,074
2016							124		124		109		84		67		64		58		5		5,544
2017									120		115		103		84		71		66		4		5,855
2018											114		108		91		62		56		16		6,196
2019													119		112		98		87		21		6,033
2020															128		119		81		51		4,452
2021																	137		129		105		4,168
2022																			155		143		2,772
																	Total		$	801	$	351
Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses
Accident Year
2013	$	16	$	40	$	69	$	78	$	78	$	78	$	77	$	78	$	79	$	79
2014			7		30		38		36		38		38		39		39		38
2015					7		26		38		40		42		44		42		42
2016							5		37		45		45		43		43		41
2017									23		37		41		46		49		62
2018											5		25		34		39		40
2019													12		34		44		59
2020															4		20		28
2021																	5		20
2022																			12
																	Total		$	421
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	380
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2013																			(4)
Liability for unallocated claim adjustment expenses for accident years presented																			20
Total net liability for unpaid claim and claim adjustment expenses																			$	396
Net Strengthening (Releases) of Prior Accident Year Reserves
Years Ended December 31																					Total
Accident Year
2013			$	1	$	(6)	$	(9)	$	(15)	$	(4)	$	(4)	$	(1)	$	—	$	—	$	(38)
2014					1		(30)		(25)		(9)		(15)		—		(2)		(1)		(81)
2015							—		(27)		(25)		(16)		(5)		(5)		(8)		(86)
2016									—		(15)		(25)		(17)		(3)		(6)		(66)
2017											(5)		(12)		(19)		(13)		(5)		(54)
2018													(6)		(17)		(29)		(6)		(58)
2019															(7)		(14)		(11)		(32)
2020																	(9)		(38)		(47)
2021																			(8)		(8)
Total net development for the accident years presented above															(66)		(75)		(83)
Total net development for accident years prior to 2013															(3)		2		—
Total unallocated claim adjustment expense development															—		—		—
Total															$	(69)	$	(73)	$	(83)

(a) Data presented for these calendar years is required supplemental information, which is unaudited.

Commercial Auto

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses																					December 31, 2022
December 31	2013 (a)		2014 (a)		2015 (a)		2016 (a)		2017 (a)		2018 (a)		2019 (a)		2020 (a)		2021 (a)		2022		IBNR		Cumulative Number of Claims
(In millions, except reported claims data)
Accident Year
2013	$	246	$	265	$	265	$	249	$	245	$	245	$	241	$	241	$	241	$	243	$	3	39,431
2014			234		223		212		205		205		201		201		202		201		1		33,631
2015					201		199		190		190		183		181		183		182		3		30,430
2016							198		186		186		186		190		195		200		7		30,452
2017									199		198		200		221		232		239		3		30,947
2018											229		227		227		245		254		5		34,319
2019													257		266		289		323		27		37,237
2020															310		303		304		56		29,070
2021																	397		388		153		32,575
2022																			437		263		30,229
																	Total		$	2,771	$	521
Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses
Accident Year
2013	$	74	$	135	$	168	$	200	$	225	$	234	$	238	$	239	$	239	$	239
2014			64		102		137		166		187		196		198		199		199
2015					52		96		130		153		172		175		178		179
2016							52		93		126		154		175		185		190
2017									58		107		150		178		203		225
2018											66		128		175		212		238
2019													77		147		203		257
2020															71		134		197
2021																	83		168
2022																			112
																	Total		$	2,004
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	767
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2013																			4
Liability for unallocated claim adjustment expenses for accident years presented																			16
Total net liability for unpaid claim and claim adjustment expenses																			$	787
Net Strengthening (Releases) of Prior Accident Year Reserves
Years Ended December 31																					Total
Accident Year
2013			$	19	$	—	$	(16)	$	(4)	$	—	$	(4)	$	—	$	—	$	2	$	(3)
2014					(11)		(11)		(7)		—		(4)		—		1		(1)		(33)
2015							(2)		(9)		—		(7)		(2)		2		(1)		(19)
2016									(12)		—		—		4		5		5		2
2017											(1)		2		21		11		7		40
2018													(2)		—		18		9		25
2019															9		23		34		66
2020																	(7)		1		(6)
2021																			(9)		(9)
Total net development for the accident years presented above															32		53		47
Total net development for accident years prior to 2013															1		—		2
Total unallocated claim adjustment expense development															—		—		—
Total															$	33	$	53	$	49

(a) Data presented for these calendar years is required supplemental information, which is unaudited.

General Liability

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses																					December 31, 2022
December 31	2013 (a)		2014 (a)		2015 (a)		2016 (a)		2017 (a)		2018 (a)		2019 (a)		2020 (a)		2021 (a)		2022		IBNR		Cumulative Number of Claims
(In millions, except reported claims data)
Accident Year
2013	$	650	$	655	$	650	$	655	$	613	$	623	$	620	$	623	$	624	$	629	$	32	33,738
2014			653		658		654		631		635		658		659		659		676		34		28,131
2015					581		576		574		589		600		602		617		625		33		24,200
2016							623		659		667		671		673		683		684		43		24,699
2017									632		632		632		634		630		652		32		22,359
2018											653		644		646		639		650		127		20,242
2019													680		682		682		691		227		19,265
2020															723		722		726		434		13,998
2021																	782		784		527		13,775
2022																			929		835		10,572
																	Total		$	7,046	$	2,324
Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses
Accident Year
2013	$	31	$	128	$	240	$	352	$	450	$	510	$	551	$	572	$	582	$	586
2014			31		119		247		376		481		547		569		607		624
2015					19		110		230		357		446		501		530		561
2016							32		163		279		407		481		524		582
2017									23		118		250		399		471		553
2018											33		107		228		307		428
2019													25		98		181		322
2020															23		99		192
2021																	26		140
2022																			29
																	Total		$	4,017
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	3,029
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2013																			118
Liability for unallocated claim adjustment expenses for accident years presented																			59
Total net liability for unpaid claim and claim adjustment expenses																			$	3,206

Net Strengthening (Releases) of Prior Accident Year Reserves

Years Ended December 31																			Total
Accident Year
2013	$	5	$	(5)	$	5	$	(42)	$	10	$	(3)	$	3	$	1	$	5	$	(21)
2014			5		(4)		(23)		4		23		1		—		17		23
2015					(5)		(2)		15		11		2		15		8		44
2016							36		8		4		2		10		1		61
2017									—		—		2		(4)		22		20
2018											(9)		2		(7)		11		(3)
2019													2		—		9		11
2020															(1)		4		3
2021																	2		2
Total net development for the accident years presented above													14		14		79
Total net development for accident years prior to 2013													1		(1)		(12)
Total unallocated claim adjustment expense development													—		2		—
Total													$	15	$	15	$	67

(a) Data presented for these calendar years is required supplemental information, which is unaudited.

Workers’ Compensation

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses																					December 31, 2022
December 31	2013 (a)		2014 (a)		2015 (a)		2016 (a)		2017 (a)		2018 (a)		2019 (a)		2020 (a)		2021 (a)		2022		IBNR		Cumulative Number of Claims
(In millions, except reported claims data)
Accident Year
2013	$	537	$	572	$	592	$	618	$	593	$	582	$	561	$	552	$	548	$	537	$	82	38,979
2014			467		480		479		452		450		446		439		448		430		76		33,522
2015					422		431		406		408		394		382		372		353		80		31,899
2016							426		405		396		382		366		355		331		77		31,991
2017									440		432		421		400		402		399		81		33,130
2018											450		440		428		415		415		93		34,875
2019													452		449		437		436		105		34,324
2020															477		466		446		182		29,392
2021																	468		454		202		29,886
2022																			497		308		28,753
																	Total		$	4,298	$	1,286

Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses
Accident Year
2013	$	80	$	213	$	300	$	370	$	417	$	419	$	411	$	414	$	417	$	423
2014			61		159		215		258		282		290		297		306		312
2015					51		131		180		212		231		243		251		256
2016							53		129		169		198		219		227		234
2017									63		151		207		243		265		279
2018											68		163		229		259		280
2019													71		169		223		262
2020															65		147		200
2021																	67		164
2022																			79
																	Total		$	2,489
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	1,809
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2013																			1,874
Other (b)																			(20)
Liability for unallocated claim adjustment expenses for accident years presented																			76
Total net liability for unpaid claim and claim adjustment expenses																			$	3,739

Net Strengthening (Releases) of Prior Accident Year Reserves

Years Ended December 31																			Total
Accident Year
2013	$	35	$	20	$	26	$	(25)	$	(11)	$	(21)	$	(9)	$	(4)	$	(11)	$	—
2014			13		(1)		(27)		(2)		(4)		(7)		9		(18)		(37)
2015					9		(25)		2		(14)		(12)		(10)		(19)		(69)
2016							(21)		(9)		(14)		(16)		(11)		(24)		(95)
2017									(8)		(11)		(21)		2		(3)		(41)
2018											(10)		(12)		(13)		—		(35)
2019													(3)		(12)		(1)		(16)
2020															(11)		(20)		(31)
2021																	(14)		(14)
Total net development for the accident years presented above													(80)		(50)		(110)
Adjustment for development on a discounted basis													2		2		(3)
Total net development for accident years prior to 2013													(18)		(34)		(49)
Total unallocated claim adjustment expense development													—		—		10
Total													$	(96)	$	(82)	$	(152)

(a)	Data presented for these calendar years is required supplemental information, which is unaudited.
(b)	Other includes the effect of discounting lifetime claim reserves.

The table below presents information about average historical claims duration as of December 31, 2022 and is presented as required supplementary information, which is unaudited.

Average Annual Percentage Payout of Ultimate Net Incurred Claim and Allocated Claim Adjustment Expenses in Year:
	1		2		3		4		5		6		7		8		9		10
Medical professional liability	3.6	%	17.0	%	23.0	%	18.0	%	11.9	%	8.2	%	4.7	%	2.3	%	1.0	%	0.9	%
Other professional liability and management liability	6.6		21.0		20.7		16.2		10.3		6.0		4.3		4.8		1.4		0.5
Surety (a)	19.0		40.5		20.2		3.6		2.1		4.8		(1.7)		0.4		(0.6)		—
Commercial auto	26.1		22.0		17.6		13.9		10.4		4.8		1.7		0.5		—		—
General liability	3.9		13.7		17.1		18.8		14.3		9.4		5.7		4.6		2.1		0.6
Workers’ compensation	15.3		22.3		13.7		9.4		6.1		2.3		1.1		1.4		1.0		1.1

(a)Due to the nature of the Surety business, average annual percentage payout of ultimate net incurred claim and allocated claim adjustment expenses has been calculated using only the payouts of mature accident years presented in the loss reserve development tables.

A&EP Reserves

In 2010, Continental Casualty Company (“CCC”) together with several insurance subsidiaries completed a transaction with National Indemnity Company (“NICO”), a subsidiary of Berkshire Hathaway Inc., under which substantially all of their legacy A&EP liabilities were ceded to NICO through a loss portfolio transfer (“LPT”). At the effective date of the transaction, approximately $1.6 billion of net A&EP claim and allocated claim adjustment expense reserves were ceded to NICO under a retroactive reinsurance agreement with an aggregate limit of $4.0 billion. The $1.6 billion of claim and allocated claim adjustment expense reserves ceded to NICO was net of $1.2 billion of ceded claim and allocated claim adjustment expense reserves under existing third party reinsurance contracts. The NICO LPT aggregate reinsurance limit also covers credit risk on the existing third party reinsurance related to these liabilities. NICO was paid a reinsurance premium of $2.0 billion and billed third party reinsurance receivables related to A&EP claims with a net book value of $215 million were transferred to NICO, resulting in total consideration of $2.2 billion.

In years subsequent to the effective date of the LPT, adverse prior year development on A&EP reserves was recognized resulting in additional amounts ceded under the LPT. As a result, the cumulative amounts ceded under the LPT have exceeded the $2.2 billion consideration paid, resulting in the NICO LPT moving into a gain position, requiring retroactive reinsurance accounting. Under retroactive reinsurance accounting, this gain is deferred and only recognized in earnings in proportion to actual paid recoveries under the LPT. Over the life of the contract, there is no economic impact as long as any additional losses incurred are within the limit of the LPT. In a period in which a change in the estimate of A&EP reserves is recognized that increases or decreases the amounts ceded under the LPT, the proportion of actual paid recoveries to total ceded losses is affected and the change in the deferred gain is recognized in earnings as if the revised estimate of ceded losses was available at the effective date of the LPT. The effect of the deferred retroactive reinsurance benefit is recorded in Insurance claims and policyholders’ benefits on the Consolidated Statements of Operations.

The following table presents the impact of the Loss Portfolio Transfer on the Consolidated Statements of Operations.

Year Ended December 31	2022		2021		2020
(In millions)
Additional amounts ceded under LPT:
Net A&EP adverse development before consideration of LPT	$	92	$	143	$	125
Provision for uncollectible third-party reinsurance on A&EP	(5)		(5)		(25)
Total additional amounts ceded under LPT	87		138		100
Retroactive reinsurance benefit recognized	(91)		(107)		(94)
Pretax impact of deferred retroactive reinsurance	$	(4)	$	31	$	6

Net unfavorable prior year development of $92 million, $143 million and $125 million was recognized before consideration of cessions to the LPT for the years ended December 31, 2022, 2021 and 2020. The unfavorable development in 2022, 2021 and 2020 was primarily driven by higher than anticipated defense and indemnity costs on known direct asbestos and environmental accounts and a reduction in estimated reinsurance recoverable. Additionally, in 2022, 2021 and 2020, $5 million, $5 million and $25 million of the provision for uncollectible third-party reinsurance was released.

As of December 31, 2022 and 2021, the cumulative amounts ceded under the LPT were $3.5 billion and $3.4 billion. The unrecognized deferred retroactive reinsurance benefit was $425 million and $429 million as of December 31, 2022 and 2021 and is included within Other liabilities on the Consolidated Balance Sheets.

NICO established a collateral trust account as security for its obligations under the LPT. The fair value of the collateral trust account was $2.4 billion as of December 31, 2022. In addition, Berkshire Hathaway Inc. guaranteed the payment obligations of NICO up to the aggregate reinsurance limit as well as certain of NICO’s performance obligations under the trust agreement. NICO is responsible for claims handling and billing and collection from third-party reinsurers related to A&EP claims.

Excess Workers’ Compensation LPT

On February 5, 2021, CNA completed a transaction with Cavello Bay Reinsurance Limited (“Cavello”), a subsidiary of Enstar Group Limited, under which certain legacy excess workers’ compensation (“EWC”) liabilities were ceded to Cavello. Under the terms of the transaction, based on reserves in place as of January 1, 2020, approximately $690 million of net EWC claim and allocated claim adjustment expense reserves were ceded to Cavello under a loss portfolio transfer (“EWC LPT”) with an aggregate limit of $1.0 billion. Cavello was paid a reinsurance premium of $697 million, less claims paid between January 1, 2020 and the closing date of the agreement of $64 million. After transaction costs, a loss of approximately $11 million (after tax and noncontrolling interest) was recognized in Other Insurance Operations in the first quarter of 2021 related to the EWC LPT.

As of December 31, 2022, the cumulative amount ceded under the EWC LPT was $690 million.

Cavello established a collateral trust as security for its obligations. The fair value of the collateral trust was $608 million as of December 31, 2022.

Life & Group Policyholder Reserves

CNA’s Life & Group business includes its run-off long term care business as well as structured settlement obligations not funded by annuities related to certain property and casualty claimants. Long term care policies provide benefits for nursing homes, assisted living facilities and home health care subject to various daily and lifetime caps. Generally, policyholders must continue to make periodic premium payments to keep the policy in force and CNA has the ability to increase policy premiums, subject to state regulatory approval.

CNA maintains both claim and claim adjustment expense reserves as well as future policy benefit reserves for policyholder benefits for its Life & Group business. Claim and claim adjustment expense reserves consist of estimated reserves for long term care policyholders that are currently receiving benefits, including claims that have been incurred but are not yet reported. In developing the claim and claim adjustment expense reserve estimates for long term care policies, CNA’s actuaries perform a detailed claim reserve review on an annual basis. The review analyzes the sufficiency of existing reserves for policyholders currently on claim and includes an evaluation of expected benefit utilization and claim duration. In addition, claim and claim adjustment expense reserves are also maintained for the structured settlement obligations. In developing the claim and claim adjustment expense reserve estimates for structured settlement obligations, CNA’s actuaries review mortality experience on an annual basis. CNA’s recorded claim and claim adjustment expense reserves reflect management’s best estimate after incorporating the results of the most recent reviews.

CNA’s most recent annual claim reserve reviews were completed in the third quarter of 2022. The long term care claim reserve review resulted in a $25 million pretax reduction in reserves driven by a $107 million favorable impact from the release of all remaining IBNR reserves established during 2020 and 2021 in response to the COVID-19 pandemic partially offset by an $82 million unfavorable impact from higher claim severity, including utilization and cost of care inflation, than anticipated in the reserve estimates. The structured settlement claim reserve review resulted in a $5 million pretax reduction in reserves due to discount rate assumption changes. CNA’s 2021 annual claim reserve reviews were completed in the third quarter of 2021 resulting in a $40 million pretax reduction in long term care reserves primarily due to lower claim severity than anticipated in the reserve estimates and a $2 million pretax increase in the structured settlement claim reserves primarily due to lower discount rate assumptions and mortality assumption changes.

Future policy benefit reserves consist of active life reserves related to CNA’s long term care policies for policyholders that are not currently receiving benefits and represent the present value of expected future benefit payments and expenses less expected future premium. The determination of these reserves requires management to make estimates and assumptions about expected investment and policyholder experience over the life of the contract. Since many of these contracts may be in force for several decades, these assumptions are subject to significant estimation risk.

The actuarial assumptions that CNA believes are subject to the most variability are morbidity, persistency, discount rates and anticipated future premium rate increases. Morbidity is the frequency and severity of injury, illness, sickness and diseases contracted. Persistency is the percentage of policies remaining in force and can be affected by policy lapses, benefit reductions and death. Discount rates are influenced by the investment yield on assets supporting long term care reserves which is subject to interest rate and market volatility and may also be affected by changes to the Internal Revenue Code. Future premium rate increases are generally subject to regulatory approval, and therefore the exact timing and size of the approved rate increases are unknown. As a result of this variability, CNA’s long term care reserves may be subject to material increases if actual experience develops adversely to CNA’s expectations.

Annually, in the third quarter, CNA assesses the adequacy of its long term care future policy benefit reserves by performing a gross premium valuation (“GPV”) to determine if there is a premium deficiency. Under the GPV, management estimates required reserves using best estimate assumptions as of the date of the assessment without provisions for adverse deviation. The GPV required reserves are then compared to the existing recorded reserves. If the GPV required reserves are greater than the existing recorded reserves, the existing assumptions are unlocked and future policy benefit reserves are increased to the greater amount. Any such increase is reflected in the Company’s results of operations in the period in which the need for such adjustment is determined. If the GPV required reserves are less than the existing recorded reserves, assumptions remain locked in and no adjustment is made.

The GPV for the long term care future policy benefit reserves, performed in the third quarters of 2022 and 2021, indicated recorded reserves included a pretax margin of approximately $125 million and $72 million as of September 30, 2022 and 2021.