CNA FINANCIAL CORP - FORM 8-K - EX-99.2

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8-K - FORM 8-K - CNA FINANCIAL CORP	q3128k.htm
EX-99.1 - EX-99.1 - CNA FINANCIAL CORP	q312exhibit991.htm

CNA Financial Corporation

Supplemental Financial Information

September 30, 2012

This report is for informational purposes only and includes consolidated financial statements and financial exhibits that are unaudited. This report should be read in conjunction with documents filed with the U.S. Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

CNA Financial Corporation

Table of Contents

September 30, 2012



	Page
Definitions and Presentation	i
Statements of Operations	1
Components of Income (Loss) Attributable to CNA Common Stockholders, Per Share Data and Return on Equity	2
Selected Balance Sheets Data and Statements of Cash Flows Data	3
Claim & Claim Adjustment Expense Reserve Rollforward	4
Investment Summary - Consolidated	5
Investment Summary - Property & Casualty and Corporate & Other Non-Core	6
Investment Summary - Life & Group Non-Core	7
Investments - Fixed Maturity Securities by Credit Rating	8
Investments - European Exposure - Fair Value by Country of Risk	9
Investments - European Exposure - Credit Rating by Country of Risk	10
Property & Casualty Results of Operations (Three Months Ended)	11
Life & Group Non-Core and Corporate & Other Non-Core Segments Results of Operations (Three Months Ended)	12
Property & Casualty Results of Operations (Nine Months Ended)	13
Life & Group Non-Core and Corporate & Other Non-Core Segments Results of Operations (Nine Months Ended)	14
Components of Pretax Net Investment Income	15
Statutory Data - Preliminary	16
Property & Casualty Operations Loss & LAE Ratio Analysis	17
Net Carried Life & Group Non-Core Policyholder Reserves	18

CNA Financial Corporation

Definitions and Presentation


•	Collectively, CNA Financial Corporation (CNAF) and its controlled subsidiaries are referred to as CNA or the Company.


•	P&C Operations includes CNA Specialty, CNA Commercial, and Hardy.


•	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 in run-off, including CNA Re and asbestos and environmental pollution. Intersegment eliminations are also included in this segment.


•	Management utilizes the net operating income financial measure to monitor the Company’s operations. Please refer to Note N to the Consolidated Financial Statements within the 2011 Form 10-K for further discussion of this measure.

•

In evaluating the results of CNA Specialty, CNA Commercial, and Hardy, 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. 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. The statutory expense ratio reported on page 16 is the percentage of acquisition and underwriting expenses to net written premiums in accordance with statutory accounting practices.

•

The majority of our limited partnership investments employ hedge fund strategies that generate returns primarily through investing in the fixed income and equity markets. While the Company generally does not invest in highly leveraged partnerships, there are risks which may result in losses due to short-selling, derivatives or other speculative investment practices. The use of leverage in the underlying investment strategies also increases volatility.


•	Certain immaterial differences are due to rounding.


•	N/M = Not Meaningful


•	FY = Full Year

Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts

The Company has adjusted its previously reported financial information to reflect a retrospective change in accounting guidance for deferred acquisition costs. Financial information included herein gives effect to this adjustment. Total CNA stockholders' equity at December 31, 2011 was reduced by $69 million and Book value per common share decreased $0.26. For the three and nine months ended September 30, 2011, the impacts of adopting the new accounting standard were no impact and a $0.02 decrease in earnings per share. There was a 0.1% decrease in Net income (loss) attributable to CNA return on equity for the nine months ended September 30, 2011.

Acquisition of Hardy Underwriting Bermuda Limited (Hardy)

On July 2, 2012, the Company completed the previously announced acquisition of all outstanding shares of Hardy Underwriting Bermuda Limited and its subsidiaries (Hardy), a specialized Lloyd's of London (Lloyd's) underwriter. Through Lloyd's Syndicate 382, Hardy underwrites primarily short-tail exposures in marine and aviation, non-marine property, specialty lines and property treaty reinsurance. The acquisition of Hardy aligns with the Company's specialized underwriting focus and will be a key platform for expanding the Company's global business through the Lloyd's marketplace. The results of Hardy for the period from July 2, 2012 to September 30, 2012 are included in the results of our core property and casualty insurance operations as a separate segment.

CNA FINANCIAL CORPORATION

Financial Supplement

Statements of Operations



PERIODS ENDED SEPTEMBER 30	Three Months						Fav / (Unfav)			Nine Months						Fav / (Unfav)
(In millions)	2012			2011			% Change			2012			2011			% Change
STATEMENTS OF OPERATIONS
Revenues:
Net earned premiums	$	1,781		$	1,732		3		%	$	5,098		$	4,942		3		%
Net investment income	601			394			53			1,719			1,531			12
Net realized investment gains (losses), net of participating policyholders' interests:
Other-than-temporary impairment (OTTI) losses	(62		)	(75		)	17			(89		)	(136		)	35
Portion of OTTI recognized in Other comprehensive income (loss)	(2		)	(2		)	—			(25		)	(44		)	43
Net OTTI losses recognized in earnings	(64		)	(77		)	17			(114		)	(180		)	37
Other net realized investment gains (losses)	72			50			44			180			181			(1	)
Net realized investment gains (losses), net of participating policyholders' interests	8			(27		)	130			66			1			N/M
Other revenues	76			76			—			230			214			7
Total revenues	2,466			2,175			13			7,113			6,688			6
Claims, Benefits and Expenses:
Insurance claims and policyholders' benefits	1,435			1,400			(3	)		4,164			4,131			(1	)
Amortization of deferred acquisition costs	333			297			(12	)		937			880			(6	)
Other operating expenses	341			311			(10	)		976			914			(7	)
Interest	43			43			—			128			132			3
Total claims, benefits and expenses	2,152			2,051			(5	)		6,205			6,057			(2	)
Income (loss) from continuing operations before income tax	314			124			153			908			631			44
Income tax (expense) benefit	(93		)	(48		)	(94	)		(271		)	(196		)	(38	)
Income (loss) from continuing operations, net of tax	221			76			191			637			435			46
Income (loss) from discontinued operations, net of tax	—			—			N/M			—			(1		)	N/M
Net income (loss)	221			76			191			637			434			47
Net (income) loss attributable to noncontrolling interests	—			(1		)	N/M			—			(15		)	N/M
Net income (loss) attributable to CNA	$	221		$	75		195		%	$	637		$	419		52		%

CNA FINANCIAL CORPORATION

Financial Supplement

Components of Income (Loss) Attributable to CNA Common Stockholders, Per Share Data and Return on Equity



PERIODS ENDED SEPTEMBER 30	Three Months							Nine Months
(In millions, except per share data)	2012			2011				2012			2011
COMPONENTS OF INCOME (LOSS) ATTRIBUTABLE TO CNA COMMON STOCKHOLDERS
Net operating income (loss) from continuing operations attributable to CNA common stockholders	$	216		$	91			$	594		$	418
Net realized investment gains (losses) attributable to CNA common stockholders	5			(16		)		43			2
Income (loss) from continuing operations attributable to CNA common stockholders	221			75				637			420
Income (loss) from discontinued operations attributable to CNA common stockholders	—			—				—			(1		)
Income (loss) attributable to CNA common stockholders	$	221		$	75			$	637		$	419

DILUTED EARNINGS (LOSS) PER COMMON SHARE
Net operating income (loss) from continuing operations attributable to CNA common stockholders	$	0.80		$	0.34			$	2.20		$	1.55
Net realized investment gains (losses) attributable to CNA common stockholders	0.02			(0.06		)		0.16			0.01
Income (loss) from continuing operations attributable to CNA common stockholders	0.82			0.28				2.36			1.56
Income (loss) from discontinued operations attributable to CNA common stockholders	—			—				—			—
Diluted earnings (loss) per share attributable to CNA common stockholders	$	0.82		$	0.28			$	2.36		$	1.56

WEIGHTED AVERAGE OUTSTANDING COMMON STOCK AND COMMON STOCK EQUIVALENTS
Basic	269.4			269.3				269.4			269.3
Diluted	269.8			269.6				269.8			269.6

RETURN ON EQUITY
Net income (loss) attributable to CNA ⁽¹⁾	7.1		%	2.6			%	7.0		%	4.9			%
Net operating income (loss) from continuing operations attributable to CNA ⁽²⁾	7.5			3.4				7.0			5.2

(1) Annualized net income (loss) attributable to CNA divided by the average CNA stockholders' equity including accumulated other comprehensive income/loss (AOCI) for the period. Average equity including AOCI is calculated using a simple average of the beginning and ending balances for the period.

(2) Annualized net operating income (loss) from continuing operations attributable to CNA divided by the average CNA stockholders' equity excluding AOCI for the period. Average equity excluding AOCI is calculated using a simple average of the beginning and ending balances for the period.

CNA FINANCIAL CORPORATION

Financial Supplement

Selected Balance Sheets Data and Statements of Cash Flows Data



(In millions, except per share data)	September 30, 2012		December 31, 2011
Total assets	$	58,612	$	55,110
Insurance reserves	39,151		37,554
Debt	2,570		2,608
Total liabilities	45,952		43,622
Accumulated other comprehensive income (loss)	1,130		480
Total CNA stockholders' equity	12,660		11,488

Book value per common share	$	46.99	$	42.66
Book value per common share excluding AOCI	$	42.80	$	40.88

Outstanding shares of common stock (in millions of shares)	269.4		269.3



THREE MONTHS ENDED SEPTEMBER 30 (In millions)	2012			2011
Net cash flows provided (used) by operating activities	$	375		$	401
Net cash flows provided (used) by investing activities	(237		)	(314		)
Net cash flows provided (used) by financing activities	(112		)	(84		)
Net cash flows provided (used) by operating, investing and financing activities	$	26		$	3



NINE MONTHS ENDED SEPTEMBER 30 (In millions)	2012			2011
Net cash flows provided (used) by operating activities	$	993		$	813
Net cash flows provided (used) by investing activities	(747		)	(217		)
Net cash flows provided (used) by financing activities	(195		)	(588		)
Net cash flows provided (used) by operating, investing and financing activities	$	51		$	8

CNA FINANCIAL CORPORATION

Financial Supplement

Claim & Claim Adjustment Expense Reserve Rollforward



THREE MONTHS ENDED SEPTEMBER 30, 2012 (In millions)	CNA Specialty			CNA Commercial			Hardy			P&C Operations			Life & Group Non-Core			Corporate & Other Non-Core			Total Operations
Claim & claim adjustment expense reserves, beginning of period
Gross	$	6,925		$	11,316		$	—		$	18,241		$	2,901		$	2,865		$	24,007
Ceded	819			1,103			—			1,922			512			2,315			4,749
Net	6,106			10,213			—			16,319			2,389			550			19,258

Increase in net reserves due to acquisition of Hardy	—			—			291			291			—			—			291
Net incurred claim & claim adjustment expenses	460			594			21			1,075			186			7			1,268
Net claim & claim adjustment expense payments	(458		)	(679		)	(53		)	(1,190		)	(145		)	(17		)	(1,352		)
Foreign currency translation adjustment and other	14			12			6			32			33			1			66

Claim & claim adjustment expense reserves, end of period
Net	6,122			10,140			265			16,527			2,463			541			19,531
Ceded	731			1,086			201			2,018			493			2,289			4,800
Gross	$	6,853		$	11,226		$	466		$	18,545		$	2,956		$	2,830		$	24,331



NINE MONTHS ENDED SEPTEMBER 30, 2012 (In millions)	CNA Specialty			CNA Commercial			Hardy			P&C Operations			Life & Group Non-Core			Corporate & Other Non-Core			Total Operations
Claim & claim adjustment expense reserves, beginning of period
Gross	$	6,840		$	11,509		$	—		$	18,349		$	2,825		$	3,129		$	24,303
Ceded	817			1,119			—			1,936			546			2,538			5,020
Net	6,023			10,390			—			16,413			2,279			591			19,283

Increase in net reserves due to acquisition of Hardy	—			—			291			291			—			—			291
Net incurred claim & claim adjustment expenses	1,376			1,753			21			3,150			536			14			3,700
Net claim & claim adjustment expense payments	(1,289		)	(2,016		)	(53		)	(3,358		)	(413		)	(63		)	(3,834		)
Foreign currency translation adjustment and other	12			13			6			31			61			(1		)	91

Claim & claim adjustment expense reserves, end of period
Net	6,122			10,140			265			16,527			2,463			541			19,531
Ceded	731			1,086			201			2,018			493			2,289			4,800
Gross	$	6,853		$	11,226		$	466		$	18,545		$	2,956		$	2,830		$	24,331

CNA FINANCIAL CORPORATION
Financial Supplement
Investment Summary - Consolidated



	September 30, 2012					June 30, 2012					December 31, 2011
(In millions)	Carrying Value			Net Unrealized Gains (Losses)		Carrying Value			Net Unrealized Gains (Losses)		Carrying Value		Net Unrealized Gains (Losses)
Fixed maturity securities:
Corporate and other bonds	$	21,828		$	2,602	$	21,492		$	2,130	$	20,884	$	1,792
States, municipalities and political subdivisions:
Tax-exempt	6,612			706		6,300			524		5,731		277
Taxable	4,200			691		4,116			635		4,051		487
Total states, municipalities and political subdivisions	10,812			1,397		10,416			1,159		9,782		764
Asset-backed:
RMBS	6,090			183		5,891			74		5,775		(11		)
CMBS	1,688			106		1,569			55		1,354		(11		)
Other ABS	966			22		1,065			19		955		9
Total asset-backed	8,744			311		8,525			148		8,084		(13		)
U.S. Treasury and obligations of government-sponsored enterprises	192			10		184			12		493		14
Foreign government	614			26		639			23		636		28
Redeemable preferred stock	115			14		111			10		58		7
Total fixed maturity securities	42,305			4,360		41,367			3,482		39,937		2,592
Equities	260			32		290			38		304		16
Limited partnership investments	2,370			—		2,242			—		2,245		—
Other invested assets	11			—		11			—		12		—
Mortgage loans	358			—		339			—		234		—
Short term investments	2,484			1		1,752			—		1,641		—
Total investments	$	47,788		$	4,393	$	46,001		$	3,520	$	44,373	$	2,608

Net receivable/(payable)	$	(467	)	$	—	$	(72	)	$	—	$	45	$	—

RMBS - Residential mortgage-backed securities

CMBS - Commercial mortgage-backed securities

Other ABS - Other asset-backed securities

CNA FINANCIAL CORPORATION

Financial Supplement

Investment Summary - Property & Casualty and Corporate & Other Non-Core



	September 30, 2012					June 30, 2012					December 31, 2011
(In millions)	Carrying Value			Net Unrealized Gains (Losses)		Carrying Value			Net Unrealized Gains (Losses)		Carrying Value		Net Unrealized Gains (Losses)
Fixed maturity securities:
Corporate and other bonds	$	13,721		$	972	$	13,544		$	803	$	13,190	$	620
States, municipalities and political subdivisions:
Tax-exempt	2,271			163		2,204			142		2,204		116
Taxable	2,306			326		2,444			323		2,445		236
Total states, municipalities and political subdivisions	4,577			489		4,648			465		4,649		352
Asset-backed:
RMBS	5,684			164		5,507			71		5,415		(3		)
CMBS	1,467			86		1,372			43		1,169		(18		)
Other ABS	936			20		1,023			16		913		6
Total asset-backed	8,087			270		7,902			130		7,497		(15		)
U.S. Treasury and obligations of government-sponsored enterprises	168			1		160			4		469		5
Foreign government	609			25		633			21		631		27
Redeemable preferred stock	36			1		36			1		7		1
Total fixed maturity securities	27,198			1,758		26,923			1,424		26,443		990
Equities	101			27		132			34		105		18
Limited partnership investments	2,370			—		2,242			—		2,245		—
Other invested assets	11			—		11			—		12		—
Mortgage loans	338			—		319			—		214		—
Short term investments	2,298			1		1,640			—		1,509		—
Total investments	$	32,316		$	1,786	$	31,267		$	1,458	$	30,528	$	1,008

Net receivable/(payable)	$	(435	)	$	—	$	(62	)	$	—	$	50	$	—

CNA FINANCIAL CORPORATION

Financial Supplement

Investment Summary - Life & Group Non-Core



	September 30, 2012					June 30, 2012					December 31, 2011
(In millions)	Carrying Value			Net Unrealized Gains (Losses)		Carrying Value			Net Unrealized Gains (Losses)		Carrying Value			Net Unrealized Gains (Losses)
Fixed maturity securities:
Corporate and other bonds	$	8,107		$	1,630	$	7,948		$	1,327	$	7,694		$	1,172
States, municipalities and political subdivisions:
Tax-exempt	4,341			543		4,096			382		3,527			161
Taxable	1,894			365		1,672			312		1,606			251
Total states, municipalities and political subdivisions	6,235			908		5,768			694		5,133			412
Asset-backed:
RMBS	406			19		384			3		360			(8		)
CMBS	221			20		197			12		185			7
Other ABS	30			2		42			3		42			3
Total asset-backed	657			41		623			18		587			2
U.S. Treasury and obligations of government-sponsored enterprises	24			9		24			8		24			9
Foreign government	5			1		6			2		5			1
Redeemable preferred stock	79			13		75			9		51			6
Total fixed maturity securities	15,107			2,602		14,444			2,058		13,494			1,602
Equities	159			5		158			4		199			(2		)
Limited partnership investments	—			—		—			—		—			—
Other invested assets	—			—		—			—		—			—
Mortgage loans	20			—		20			—		20			—
Short term investments	186			—		112			—		132			—
Total investments	$	15,472		$	2,607	$	14,734		$	2,062	$	13,845		$	1,600

Net receivable/(payable)	$	(32	)	$	—	$	(10	)	$	—	$	(5	)	$	—

CNA FINANCIAL CORPORATION
Financial Supplement
Investments - Fixed Maturity Securities by Credit Rating
September 30, 2012



	U.S. Government, Government agencies and Government-sponsored enterprises					AAA					AA						A					BBB						Non-investment grade					Total
(In millions)	Fair Value			Net Unrealized Gains (Losses)		Fair Value			Net Unrealized Gains (Losses)		Fair Value			Net Unrealized Gains (Losses)			Fair Value			Net Unrealized Gains (Losses)		Fair Value			Net Unrealized Gains (Losses)			Fair Value			Net Unrealized Gains (Losses)		Fair Value			Net Unrealized Gains (Losses)
Corporate and other bonds	$	—		$	—	$	319		$	19	$	1,358		$	126		$	7,159		$	994	$	10,968		$	1,317		$	2,024		$	146	$	21,828		$	2,602
States, municipalities and political subdivisions:
Tax-exempt	—			—		1,038			117		3,995			439			1,371			134		203			16			5			—		6,612			706
Taxable	—			—		602			91		2,767			453			779			145		52			2			—			—		4,200			691
Total states, municipalities and political subdivisions	—			—		1,640			208		6,762			892			2,150			279		255			18			5			—		10,812			1,397
Asset-backed:
RMBS	4,461			173		249			2		158			(3		)	193			1		187			(11		)	842			21		6,090			183
CMBS	90			6		426			30		209			19			456			27		260			15			247			9		1,688			106
Other ABS	—			—		406			12		347			5			197			5		16			—			—			—		966			22
Total asset-backed	4,551			179		1,081			44		714			21			846			33		463			4			1,089			30		8,744			311
U.S. Treasury and obligations of government-sponsored enterprises	192			10		—			—		—			—			—			—		—			—			—			—		192			10
Foreign government	—			—		322			14		182			8			103			4		7			—			—			—		614			26
Redeemable preferred stock	—			—		—			—		—			—			—			—		95			13			20			1		115			14
Total fixed maturity securities	$	4,743		$	189	$	3,362		$	285	$	9,016		$	1,047		$	10,258		$	1,310	$	11,788		$	1,352		$	3,138		$	177	$	42,305		$	4,360

Percentage of total fixed maturity securities	11		%			8		%			21		%				24		%			28		%				8		%			100		%

(1) The ratings presented are based on a ratings methodology that takes into account ratings from two major providers, Standard & Poor's and Moody's Investors Services, Inc., in that order of preference. If a security is not rated by these providers, an internal rating is formulated. For securities with credit support from third party guarantees, the rating reflects the greater of the underlying rating of the issuer or the insured rating.

CNA FINANCIAL CORPORATION

Financial Supplement

Investments - European Exposure

Fair Value by Country of Risk*

September 30, 2012



	Corporate				Sovereign		Total
(In millions)	Financial Sector		Other Sectors
European exposure:
United Kingdom	$	747	$	847	$	84	$	1,678
France	216		279		26		521
Netherlands	300		158		18		476
Germany	123		255		5		383
Sweden	157		36		—		193
Belgium	6		170		4		180
Italy	13		124		6		143
Spain	31		100		1		132
Switzerland	82		44		1		127
Luxembourg	—		58		—		58
Norway	2		36		6		44
Russian Federation	—		37		—		37
Greece	—		21		—		21
Finland	—		10		7		17
Ireland	5		10		—		15
Austria	1		4		—		5
Poland	—		—		5		5
Czech Republic	—		4		—		4
Total fair value	$	1,683	$	2,193	$	163	$	4,039
Total amortized cost	$	1,598	$	1,941	$	159	$	3,698

* Country of risk is derived from the issuing entity's management location, country of primary listing, revenue and reporting currency.

CNA FINANCIAL CORPORATION

Financial Supplement

Investments - European Exposure

Credit Rating by Country of Risk*

September 30, 2012



(In millions)	AAA		AA		A		BBB		Non-investment grade		Total
European exposure:
United Kingdom	$	172	$	60	$	857	$	533	$	56	$	1,678
France	48		39		188		230		16		521
Netherlands	73		91		166		100		46		476
Germany	93		11		198		65		16		383
Sweden	—		114		46		33		—		193
Belgium	—		4		93		83		—		180
Italy	—		—		8		130		5		143
Spain	—		—		—		109		23		132
Switzerland	1		37		57		25		7		127
Luxembourg	—		—		4		—		54		58
Norway	8		2		—		29		5		44
Russian Federation	—		—		—		30		7		37
Greece	—		—		—		21		—		21
Finland	7		—		—		—		10		17
Ireland	—		—		—		10		5		15
Austria	—		5		—		—		—		5
Poland	—		—		5		—		—		5
Czech Republic	—		—		4		—		—		4
Total fair value	$	402	$	363	$	1,626	$	1,398	$	250	$	4,039
Total amortized cost	$	391	$	335	$	1,446	$	1,288	$	238	$	3,698

* Country of risk is derived from the issuing entity's management location, country of primary listing, revenue and reporting currency.

CNA FINANCIAL CORPORATION

Financial Supplement

Property & Casualty Results of Operations



	CNA Specialty											CNA Commercial											Hardy				P&C Operations
THREE MONTHS ENDED SEPTEMBER 30 (In millions)	2012				2011				Fav / (Unfav) % Change			2012				2011				Fav / (Unfav) % Change			2012				2012				2011				Fav / (Unfav) % Change
Gross written premiums	$	1,211			$	1,139			6		%	$	864			$	882			(2	)	%	$	87			$	2,162			$	2,021			7		%
Net written premiums ⁽¹⁾	723				750				(4	)		811				836				(3	)		56				1,590				1,586				—
Operating revenues:
Net earned premiums	738				741				—			840				848				(1	)		64				1,642				1,589				3
Net investment income	159				85				87			230				115				100			2				391				200				96
Other revenues	58				56				4			11				14				(21	)		—				69				70				(1	)
Total operating revenues	955				882				8			1,081				977				11			66				2,102				1,859				13
Claims, Benefits and Expenses:
Net incurred claims and benefits	460				485				5			591				583				(1	)		21				1,072				1,068				—
Policyholders' dividends	1				(4		)		(125	)		3				3				—			—				4				(1		)		N/M
Amortization of deferred acquisition costs	156				147				(6	)		151				145				(4	)		20				327				292				(12	)
Other insurance related expenses	73				75				3			146				141				(4	)		13				232				216				(7	)
Other expenses	53				48				(10	)		7				10				30			7				67				58				(16	)
Total claims, benefits and expenses	743				751				1			898				882				(2	)		61				1,702				1,633				(4	)
Operating income (loss) from continuing operations before income tax	212				131				62			183				95				93			5				400				226				77
Income tax (expense) benefit on operating income (loss)	(76		)		(48		)		(58	)		(58		)		(46		)		(26	)		(2		)		(136		)		(94		)		(45	)
Net operating (income) loss, after-tax, attributable to noncontrolling interests	—				—				N/M			—				(2		)		N/M			—				—				(2		)		N/M
Net operating income (loss) from continuing operations attributable to CNA	136				83				64			125				47				166			3				264				130				103
Net realized investment gains (losses), net of participating policyholders' interests	2				(8		)		125			10				(15		)		167			(1		)		11				(23		)		148
Income tax (expense) benefit on net realized investment gains (losses)	(2		)		3				(167	)		(3		)		5				(160	)		—				(5		)		8				(163	)
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests	—				—				N/M			—				1				N/M			—				—				1				N/M
Net realized investment gains (losses) attributable to CNA	—				(5		)		N/M			7				(9		)		178			(1		)		6				(14		)		143
Net income (loss) from continuing operations attributable to CNA	$	136			$	78			74		%	$	132			$	38			N/M		%	$	2			$	270			$	116			133		%

FINANCIAL RATIOS
Loss & LAE	62.5			%	65.5			%				70.5			%	68.7			%				33.3			%	65.4			%	67.2			%
Acquisition expense	20.1				19.6							18.2				17.6							32.3				19.6				18.6
Underwriting expense	10.9				10.2							17.0				16.2							20.2				14.5				13.3
Expense	31.0				29.8							35.2				33.8							52.5				34.1				31.9
Dividend	0.2				(0.6		)					0.3				0.4							—				0.2				—
Combined ratio	93.7			%	94.7			%				106.0			%	102.9			%				85.8			%	99.7			%	99.1			%

RATIO IMPACTS
Impact of catastrophes
Pretax net accident year catastrophe losses incurred	$	3			$	4						$	24			$	46						$	—			$	27			$	50
Impact on loss & LAE ratio	0.5			%	0.5			%				2.8			%	5.5			%				—			%	1.6			%	3.1			%

Impact of development & other
Pretax net prior year development: (favorable) / unfavorable
Prior year loss & ALAE reserve development	$	(39	)		$	(5	)					$	2			$	(42	)					$	(6	)		$	(43	)		$	(47	)
Prior year premium development	(1		)		(26		)					(5		)		(11		)					—				(6		)		(37		)
Other ⁽²⁾	—				—							4				(6		)					—				4				(6		)
Total development & other	$	(40	)		$	(31	)					$	1			$	(59	)					$	(6	)		$	(45	)		$	(90	)
Impact of development & other on loss & LAE ratio	(5.4		)	%	(3.1		)	%				0.3			%	(6.6		)	%				(8.9		)	%	(2.6		)	%	(5.0		)	%

(1) Excluding the impact of First Insurance Company of Hawaii (FICOH), net written premiums for CNA Commercial and P&C Operations increased 2% and 3%. The Company sold its 50% ownership interest in FICOH in the fourth quarter of 2011.

(2) Other includes the impacts of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts.

CNA FINANCIAL CORPORATION

Financial Supplement

Life & Group Non-Core and Corporate & Other Non-Core Segments Results of Operations



	P&C Operations						Life & Group Non-Core									Corporate & Other Non-Core									Total Operations
THREE MONTHS ENDED SEPTEMBER 30 (In millions)	2012			2011			2012			2011			Fav / (Unfav) % Change			2012			2011			Fav / (Unfav) % Change			2012			2011			Fav / (Unfav) % Change
Operating revenue:
Net earned premiums	$	1,642		$	1,589		$	141		$	142		(1	)	%	$	(2	)	$	1		N/M		%	$	1,781		$	1,732		3		%
Net investment income	391			200			201			190			6			9			4			125			601			394			53
Other revenues	69			70			1			6			(83	)		6			—			N/M			76			76			—
Total operating revenues	2,102			1,859			343			338			1			13			5			160			2,458			2,202			12
Claims, Benefits and Expenses:
Net incurred claims and benefits	1,072			1,068			350			332			(5	)		8			(1		)	N/M			1,430			1,399			(2	)
Policyholders' dividends	4			(1		)	1			2			50			—			—			N/M			5			1			N/M
Amortization of deferred acquisition costs	327			292			6			5			(20	)		—			—			N/M			333			297			(12	)
Other insurance related expenses	232			216			35			36			3			1			—			N/M			268			252			(6	)
Other expenses	67			58			8			2			N/M			41			42			2			116			102			(14	)
Total claims, benefits and expenses	1,702			1,633			400			377			(6	)		50			41			(22	)		2,152			2,051			(5	)
Operating income (loss) from continuing operations before income tax	400			226			(57		)	(39		)	(46	)		(37		)	(36		)	(3	)		306			151			103
Income tax (expense) benefit on operating income (loss)	(136		)	(94		)	35			25			40			11			11			—			(90		)	(58		)	(55	)
Net operating (income) loss, after-tax, attributable to noncontrolling interests	—			(2		)	—			—			N/M			—			—			N/M			—			(2		)	N/M
Net operating income (loss) from continuing operations attributable to CNA	264			130			(22		)	(14		)	(57	)		(26		)	(25		)	(4	)		216			91			137
Net realized investment gains (losses), net of participating policyholders' interests	11			(23		)	(3		)	(4		)	25			—			—			N/M			8			(27		)	130
Income tax (expense) benefit on net realized investment gains (losses)	(5		)	8			1			1			—			1			1			—			(3		)	10			(130	)
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests	—			1			—			—			N/M			—			—			N/M			—			1			N/M
Net realized investment gains (losses) attributable to CNA	6			(14		)	(2		)	(3		)	33			1			1			—			5			(16		)	131
Net income (loss) from continuing operations attributable to CNA	$	270		$	116		$	(24	)	$	(17	)	(41	)	%	$	(25	)	$	(24	)	(4	)	%	$	221		$	75		195		%

CNA FINANCIAL CORPORATION

Financial Supplement

Property & Casualty Results of Operations



	CNA Specialty											CNA Commercial											Hardy				P&C Operations
NINE MONTHS ENDED SEPTEMBER 30 (In millions)	2012				2011				Fav / (Unfav) % Change			2012				2011				Fav / (Unfav) % Change			2012				2012				2011				Fav / (Unfav) % Change
Gross written premiums	$	3,670			$	3,348			10		%	$	2,715			$	2,740			(1	)	%	$	87			$	6,472			$	6,088			6		%
Net written premiums ⁽¹⁾	2,206				2,172				2			2,543				2,544				—			56				4,805				4,716				2
Operating revenues:
Net earned premiums	2,163				2,098				3			2,452				2,418				1			64				4,679				4,516				4
Net investment income	446				371				20			646				569				14			2				1,094				940				16
Other revenues	171				164				4			31				40				(23	)		—				202				204				(1	)
Total operating revenues	2,780				2,633				6			3,129				3,027				3			66				5,975				5,660				6
Claims, Benefits and Expenses:
Net incurred claims and benefits	1,376				1,333				(3	)		1,749				1,807				3			21				3,146				3,140				—
Policyholders' dividends	—				(4		)		N/M			9				5				(80	)		—				9				1				N/M
Amortization of deferred acquisition costs	458				428				(7	)		437				435				—			20				915				863				(6	)
Other insurance related expenses	222				216				(3	)		425				400				(6	)		13				660				616				(7	)
Other expenses	153				140				(9	)		24				37				35			7				184				177				(4	)
Total claims, benefits and expenses	2,209				2,113				(5	)		2,644				2,684				1			61				4,914				4,797				(2	)
Operating income (loss) from continuing operations before income tax	571				520				10			485				343				41			5				1,061				863				23
Income tax (expense) benefit on operating income (loss)	(197		)		(182		)		(8	)		(164		)		(127		)		(29	)		(2		)		(363		)		(309		)		(17	)
Net operating (income) loss, after-tax, attributable to noncontrolling interests	—				(12		)		N/M			—				(3		)		N/M			—				—				(15		)		N/M
Net operating income (loss) from continuing operations attributable to CNA	374				326				15			321				213				51			3				698				539				29
Net realized investment gains (losses), net of participating policyholders' interests	18				7				157			34				13				162			(1		)		51				20				155
Income tax (expense) benefit on net realized investment gains (losses)	(6		)		(2		)		N/M			(12		)		(4		)		N/M			—				(18		)		(6		)		N/M
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests	—				—				N/M			—				—				N/M			—				—				—				N/M
Net realized investment gains (losses) attributable to CNA	12				5				140			22				9				144			(1		)		33				14				136
Net income (loss) from continuing operations attributable to CNA	$	386			$	331			17		%	$	343			$	222			55		%	$	2			$	731			$	553			32		%

FINANCIAL RATIOS
Loss & LAE	63.6			%	63.6			%				71.3			%	74.7			%				33.3			%	67.3			%	69.5			%
Acquisition expense	20.0				19.7							18.0				17.4							32.3				19.1				18.5
Underwriting expense	11.5				10.9							17.2				17.2							20.2				14.5				14.3
Expense	31.5				30.6							35.2				34.6							52.5				33.6				32.8
Dividend	—				(0.2		)					0.3				0.2							—				0.2				—
Combined ratio	95.1			%	94.0			%				106.8			%	109.5			%				85.8			%	101.1			%	102.3			%

RATIO IMPACTS
Impact of catastrophes
Pretax net accident year catastrophe losses incurred	$	8			$	10						$	115			$	195						$	—			$	123			$	205
Impact on loss & LAE ratio	0.4			%	0.5			%				4.7			%	8.1			%				—			%	2.6			%	4.5			%

Impact of development & other
Pretax net prior year development: (favorable) / unfavorable
Prior year loss & ALAE reserve development	$	(80	)		$	(72	)					$	(25	)		$	(99	)					$	(6	)		$	(111	)		$	(171	)
Prior year premium development	(15		)		(34		)					(41		)		21							—				(56		)		(13		)
Other ⁽²⁾	—				—							15				1							—				15				1
Total development & other	$	(95	)		$	(106	)					$	(51	)		$	(77	)					$	(6	)		$	(152	)		$	(183	)
Impact of development & other on loss & LAE ratio	(4.2		)	%	(4.5		)	%				(1.7		)	%	(3.4		)	%				(8.9		)	%	(2.8		)	%	(4.0		)	%

(1) Excluding the impact of First Insurance Company of Hawaii (FICOH), net written premiums for CNA Commercial and P&C Operations increased 4%. The Company sold its 50% ownership interest in FICOH in the fourth quarter of 2011.

(2) Other includes the impacts of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts.

CNA FINANCIAL CORPORATION

Financial Supplement

Life & Group Non-Core and Corporate & Other Non-Core Segments Results of Operations



	P&C Operations						Life & Group Non-Core									Corporate & Other Non-Core									Total Operations
NINE MONTHS ENDED SEPTEMBER 30 (In millions)	2012			2011			2012			2011			Fav / (Unfav) % Change			2012			2011			Fav / (Unfav) % Change			2012			2011			Fav / (Unfav) % Change
Operating revenue:
Net earned premiums	$	4,679		$	4,516		$	421		$	427		(1	)	%	$	(2	)	$	(1	)	(100	)	%	$	5,098		$	4,942		3		%
Net investment income	1,094			940			600			567			6			25			24			4			1,719			1,531			12
Other revenues	202			204			15			6			150			13			4			N/M			230			214			7
Total operating revenues	5,975			5,660			1,036			1,000			4			36			27			33			7,047			6,687			5
Claims, Benefits and Expenses:
Net incurred claims and benefits	3,146			3,140			1,009			985			(2	)		(5		)	—			N/M			4,150			4,125			(1	)
Policyholders' dividends	9			1			5			5			—			—			—			N/M			14			6			(133	)
Amortization of deferred acquisition costs	915			863			22			17			(29	)		—			—			N/M			937			880			(6	)
Other insurance related expenses	660			616			106			108			2			—			2			N/M			766			726			(6	)
Other expenses	184			177			18			14			(29	)		136			129			(5	)		338			320			(6	)
Total claims, benefits and expenses	4,914			4,797			1,160			1,129			(3	)		131			131			—			6,205			6,057			(2	)
Operating income (loss) from continuing operations before income tax	1,061			863			(124		)	(129		)	4			(95		)	(104		)	9			842			630			34
Income tax (expense) benefit on operating income (loss)	(363		)	(309		)	86			78			10			29			34			(15	)		(248		)	(197		)	(26	)
Net operating (income) loss, after-tax, attributable to noncontrolling interests	—			(15		)	—			—			N/M			—			—			N/M			—			(15		)	N/M
Net operating income (loss) from continuing operations attributable to CNA	698			539			(38		)	(51		)	25			(66		)	(70		)	6			594			418			42
Net realized investment gains (losses), net of participating policyholders' interests	51			20			14			(7		)	N/M			1			(12		)	108			66			1			N/M
Income tax (expense) benefit on net realized investment gains (losses)	(18		)	(6		)	(5		)	2			N/M			—			5			N/M			(23		)	1			N/M
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests	—			—			—			—			N/M			—			—			N/M			—			—			N/M
Net realized investment gains (losses) attributable to CNA	33			14			9			(5		)	N/M			1			(7		)	114			43			2			N/M
Net income (loss) from continuing operations attributable to CNA	$	731		$	553		$	(29	)	$	(56	)	48		%	$	(65	)	$	(77	)	16		%	$	637		$	420		52		%

CNA FINANCIAL CORPORATION

Financial Supplement

Components of Pretax Net Investment Income

(In millions)



	CNA Specialty
	1Q11		2Q11		3Q11			4Q11		1Q12		2Q12			3Q12
Income (loss) from limited partnerships	$	38	$	4	$	(32	)	$	5	$	46	$	(13	)	$	32
Income (loss) from trading portfolio	1		1		—			1		3		2			3
Other investment income	121		121		117			123		126		123			124
Net investment income	$	160	$	126	$	85		$	129	$	175	$	112		$	159

	CNA Commercial
	1Q11		2Q11		3Q11			4Q11		1Q12		2Q12			3Q12
Income (loss) from limited partnerships	$	73	$	6	$	(59	)	$	11	$	81	$	(21	)	$	55
Income (loss) from trading portfolio	2		2		(1		)	2		4		2			4
Other investment income	186		185		175			181		180		170			171
Net investment income	$	261	$	193	$	115		$	194	$	265	$	151		$	230

	Hardy
															3Q12
Income (loss) from limited partnerships															$	—
Income (loss) from trading portfolio															—
Other investment income															2
Net investment income															$	2

	P&C Operations
	1Q11		2Q11		3Q11			4Q11		1Q12		2Q12			3Q12
Income (loss) from limited partnerships	$	111	$	10	$	(91	)	$	16	$	127	$	(34	)	$	87
Income (loss) from trading portfolio	3		3		(1		)	3		7		4			7
Other investment income	307		306		292			304		306		293			297
Net investment income	$	421	$	319	$	200		$	323	$	440	$	263		$	391

	Life & Group Non-Core
	1Q11		2Q11		3Q11			4Q11		1Q12		2Q12			3Q12
Income (loss) from limited partnerships	$	—	$	—	$	—		$	—	$	—	$	—		$	—
Income (loss) from trading portfolio	—		—		—			—		—		—			—
Other investment income	188		189		190			192		198		201			201
Net investment income	$	188	$	189	$	190		$	192	$	198	$	201		$	201

	Corporate & Other Non-Core
	1Q11		2Q11		3Q11			4Q11		1Q12		2Q12			3Q12
Income (loss) from limited partnerships	$	3	$	1	$	(2	)	$	—	$	3	$	(1	)	$	2
Income (loss) from trading portfolio	—		—		—			1		—		—			—
Other investment income	8		8		6			7		7		7			7
Net investment income	$	11	$	9	$	4		$	8	$	10	$	6		$	9

	Total Operations
	1Q11		2Q11		3Q11			4Q11		1Q12		2Q12			3Q12
Income (loss) from limited partnerships	$	114	$	11	$	(93	)	$	16	$	130	$	(35	)	$	89
Income (loss) from trading portfolio	3		3		(1		)	4		7		4			7
Other investment income	503		503		488			503		511		501			505
Net investment income	$	620	$	517	$	394		$	523	$	648	$	470		$	601

CNA FINANCIAL CORPORATION

Financial Supplement

Statutory Data - Preliminary



PERIODS ENDED SEPTEMBER 30	Three Months											Nine Months
Income Statements	(Preliminary) 2012								Fav / (Unfav) % Change			(Preliminary) 2012								Fav / (Unfav) % Change
(In millions)	(Preliminary) 2012				2011				Fav / (Unfav) % Change			(Preliminary) 2012				2011				Fav / (Unfav) % Change
Combined Continental Casualty Companies
Gross written premiums	$	2,048			$	2,044			—		%	$	6,269			$	5,954			5		%
Net written premiums	1,514				1,615				(6	)		4,648				4,608				1

Net earned premiums	1,394				1,359				3			4,071				3,851				6
Claim and claim adjustment expenses	1,228				1,207				(2	)		3,502				3,420				(2	)
Acquisition expenses	275				276				—			810				788				(3	)
Underwriting expenses	227				201				(13	)		657				592				(11	)
Policyholders' dividends	2				4				50			5				9				44
Underwriting income (loss)	(338		)		(329		)		(3	)		(903		)		(958		)		6
Net investment income	436				490				(11	)		1,351				1,380				(2	)
Other income (loss)	4				85				(95	)		7				116				(94	)
Income tax (expense) benefit	10				(11		)		191			(38		)		(36		)		(6	)
Net realized gains (losses)	(37		)		(57		)		35			16				7				129
Net income (loss)	$	75			$	178			(58	)	%	$	433			$	509			(15	)	%

Financial Ratios
Loss and LAE	88.1			%	88.9			%				86.0			%	88.8			%
Acquisition expense	18.2				17.1							17.5				17.1
Underwriting expense	14.9				12.4							14.1				12.9
Expense	33.1				29.5							31.6				30.0
Dividend	0.2				0.3							0.1				0.2
Combined ratio	121.4			%	118.7			%				117.7			%	119.0			%



SUPPLEMENTAL STATUTORY DATA	(Preliminary) September 30, 2012		December 31, 2011
(In millions)	(Preliminary) September 30, 2012		December 31, 2011
Combined Continental Casualty Companies
Statutory surplus ⁽¹⁾	$	10,110	$	9,888
Life Company
Statutory surplus	$	551	$	519

(1) Represents the combined statutory surplus of Continental Casualty Company and its subsidiaries, including the Life Company, as determined in accordance with statutory accounting practices.

CNA FINANCIAL CORPORATION

Financial Supplement

Property & Casualty Operations Loss & LAE Ratio Analysis



	CNA Specialty
	2012 YTD Evaluated at 9/30/12			2011 FY Evaluated at 12/31/11			2011 FY Evaluated at 9/30/12
Gross Accident Year	60.5		%	62.8		%	63.1	%
Impact of Reinsurance	7.3			4.9			5.3
Net Accident Year	67.8			67.7			68.4	%
Impact of Development and Other ⁽¹⁾	(4.2	)		(8.4	)
Net Calendar Year	63.6		%	59.3		%



	CNA Commercial
	2012 YTD Evaluated at 9/30/12			2011 FY Evaluated at 12/31/11			2011 FY Evaluated at 9/30/12
Gross Accident Year	70.5		%	72.9		%	73.6	%
Impact of Reinsurance	2.5			3.7			3.6
Net Accident Year	73.0			76.6			77.2	%
Impact of Development and Other⁽¹⁾	(1.7	)		(5.7	)
Net Calendar Year	71.3		%	70.9		%



	Hardy
	2012 YTD Evaluated at 9/30/12
Gross Accident Year	44.7		%
Impact of Reinsurance	(2.5	)
Net Accident Year	42.2
Impact of Development and Other⁽¹⁾	(8.9	)
Net Calendar Year	33.3		%



	P&C Operations
	2012 YTD Evaluated at 9/30/12			2011 FY Evaluated at 12/31/11			2011 FY Evaluated at 9/30/12
Gross Accident Year	64.3		%	67.3		%	67.8	%
Impact of Reinsurance	5.8			5.2			5.4
Net Accident Year	70.1			72.5			73.2	%
Impact of Development and Other ⁽¹⁾	(2.8	)		(7.0	)
Net Calendar Year	67.3		%	65.5		%

(1) Other includes the impacts of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts.

CNA FINANCIAL CORPORATION

Financial Supplement

Net Carried Life & Group Non-Core Policyholder Reserves



September 30, 2012
(In millions)	Claim and claim adjustment expenses		Future policy benefits		Policyholders' funds		Separate account business
Long term care	$	1,614	$	6,756	$	—	$	—
Payout annuities	646		1,984		—		—
Institutional markets	1		13		103		345
Other	46		4		—		—
Total	$	2,307	$	8,757	$	103	$	345

The reserve amounts above are net of $1,296 million of ceded reserves and exclude $156 million of claim and claim adjustment expenses and $1,450 million of future policy benefits relating to Shadow Adjustments. To the extent that unrealized gains on fixed income securities supporting long term care products and payout annuity contracts would result in a premium deficiency if those gains were realized, a related decrease in Deferred acquisition costs and/or increase in Insurance reserves is recorded, net of tax, as a reduction of net unrealized gains through Other comprehensive income (Shadow Adjustments).



December 31, 2011
(In millions)	Claim and claim adjustment expenses		Future policy benefits		Policyholders' funds		Separate account business
Long term care	$	1,470	$	6,374	$	—	$	—
Payout annuities	660		1,997		—		—
Institutional markets	1		15		129		417
Other	53		5		—		—
Total	$	2,184	$	8,391	$	129	$	417

The reserve amounts above are net of $1,375 million of ceded reserves and exclude $95 million of claim and claim adjustment expenses and $627 million of future policy benefits relating to Shadow Adjustments.

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