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

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8-K - FORM 8-K - CNA FINANCIAL CORP	q3138k.htm
EX-99.1 - EX-99.1 - CNA FINANCIAL CORP	q313exhibit991.htm

CNA Financial Corporation

Supplemental Financial Information

September 30, 2013

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.

Table of Contents



	Page
Consolidated Results
Statements of Operations..................................................................................................................................................................................................	1
Components of Income (Loss), Per Share Data and Return on Equity.............................................................................................................................	2
Selected Balance Sheets Data and Statements of Cash Flows Data...............................................................................................................................	3
Property & Casualty - Results of Operations
Property & Casualty...........................................................................................................................................................................................................	4
CNA Specialty....................................................................................................................................................................................................................	5
CNA Commercial...............................................................................................................................................................................................................	6
Hardy.................................................................................................................................................................................................................................	7
Non-Core - Results of Operations
Life & Group Non-Core......................................................................................................................................................................................................	8
Corporate & Other Non-Core.............................................................................................................................................................................................	9
Investment Information
Investment Summary - Consolidated................................................................................................................................................................................	10
Investment Summary - Property & Casualty and Corporate & Other Non-Core...............................................................................................................	11
Investment Summary - Life & Group Non-Core.................................................................................................................................................................	12
Investments - Fixed Maturity Securities by Credit Rating..................................................................................................................................................	13
Components of Pretax Net Investment Income.................................................................................................................................................................	14
Other
Claim & Claim Adjustment Expense Reserve Rollforward................................................................................................................................................	15
Net Carried Life & Group Non-Core Policyholder Reserves..............................................................................................................................................	16
Statutory Data - Preliminary...............................................................................................................................................................................................	17
Definitions and Presentation..............................................................................................................................................................................................	18

Statements of Operations



Periods ended September 30	Three Months									Nine Months
(In millions)	2013			2012			Change			2013			2012			Change
Revenues:
Net earned premiums	$	1,825		$	1,781		2		%	$	5,389		$	5,098		6		%
Net investment income	597			601			(1	)		1,808			1,719			5
Net realized investment gains (losses):
Other-than-temporary impairment (OTTI) losses	(15		)	(62		)				(49		)	(89		)
Portion of OTTI recognized in Other comprehensive income (loss)	(2		)	(2		)				(2		)	(25		)
Net OTTI losses recognized in earnings	(17		)	(64		)				(51		)	(114		)
Other net realized investment gains (losses)	21			72						69			180
Net realized investment gains (losses)	4			8						18			66
Other revenues	78			76						285			230
Total revenues	2,504			2,466			2			7,500			7,113			5
Claims, Benefits and Expenses:
Insurance claims and policyholders' benefits	1,414			1,435						4,364			4,164
Amortization of deferred acquisition costs	341			333						1,004			937
Other operating expenses	332			341						993			976
Interest	42			43						125			128
Total claims, benefits and expenses	2,129			2,152			1			6,486			6,205			(5	)
Income (loss) before income tax	375			314			19			1,014			908			12
Income tax (expense) benefit	(103		)	(93		)				(298		)	(271		)
Net income (loss)	$	272		$	221		23		%	$	716		$	637		12		%

Components of Income (Loss), Per Share Data and Return on Equity



Periods ended September 30	Three Months						Nine Months
(In millions, except per share data)	2013			2012			2013			2012
Components of Income (Loss)
Net operating income (loss)	$	269		$	216		$	704		$	594
Net realized investment gains (losses)	3			5			12			43
Income (loss)	$	272		$	221		$	716		$	637

Diluted Earnings (Loss) Per Common Share
Net operating income (loss)	$	1.00		$	0.80		$	2.61		$	2.20
Net realized investment gains (losses)	0.01			0.02			0.04			0.16
Diluted earnings (loss) per share	$	1.01		$	0.82		$	2.65		$	2.36

Weighted Average Outstanding Common Stock and Common Stock Equivalents
Basic	269.7			269.4			269.6			269.4
Diluted	270.2			269.8			270.1			269.8

Return on Equity
Net income (loss) ⁽¹⁾	9.0		%	7.1		%	7.8		%	7.0		%
Net operating income (loss) ⁽²⁾	9.0			7.5			8.0			7.0

(1) Annualized net income (loss) divided by the average 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) divided by the average 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.

Selected Balance Sheets Data and Statements of Cash Flows Data



(In millions, except per share data)	September 30, 2013		December 31, 2012
Total assets	$	57,187	$	58,522
Insurance reserves	38,590		40,005
Debt	2,559		2,570
Total liabilities	45,034		46,208
Accumulated other comprehensive income (loss) ⁽¹⁾	113		831
Total stockholders' equity	12,153		12,314

Book value per common share	$	45.06	$	45.71
Book value per common share excluding AOCI	$	44.64	$	42.62

Outstanding shares of common stock (in millions of shares)	269.7		269.4



Three months ended September 30	2013			2012
Net cash flows provided (used) by operating activities	$	352		$	375
Net cash flows provided (used) by investing activities	(218		)	(237		)
Net cash flows provided (used) by financing activities	(73		)	(112		)
Net cash flows provided (used) by operating, investing and financing activities	$	61		$	26



Nine months ended September 30	2013			2012
Net cash flows provided (used) by operating activities	$	921		$	993
Net cash flows provided (used) by investing activities	(689		)	(747		)
Net cash flows provided (used) by financing activities	(200		)	(195		)
Net cash flows provided (used) by operating, investing and financing activities	$	32		$	51

(1) At September 30, 2013 and December 31, 2012, the net unrealized gains on investments included in AOCI were net of after-tax Shadow Adjustments of $723 million and $1,511 million. To the extent that unrealized gains on fixed income securities supporting certain products within the Life & Group Non-Core segment would result in a premium deficiency if realized, a related decrease in Deferred acquisition costs and/or increase in Insurance reserves are recorded, net of tax, as a reduction of net unrealized gains through Other comprehensive income (loss) (Shadow Adjustments).

Property & Casualty - Results of Operations



Periods ended September 30	Three Months											Nine Months
(In millions)	2013				2012				Change			2013				2012				Change
Gross written premiums	$	2,278			$	2,162			5		%	$	7,054			$	6,472			9		%
Net written premiums	1,619				1,590				2			5,115				4,805				6
Net earned premiums	1,686				1,642				3			4,972				4,679				6
Net investment income	379				391							1,163				1,094
Other revenues	78				69							276				202
Total operating revenues	2,143				2,102				2			6,411				5,975				7
Insurance claims and policyholders' benefits	1,031				1,076							3,270				3,155
Amortization of deferred acquisition costs	334				327							983				915
Other insurance related expenses	219				232							669				660
Other expenses	67				67							205				184
Total claims, benefits and expenses	1,651				1,702				3			5,127				4,914				(4	)
Operating income (loss) before income tax	492				400				23			1,284				1,061				21
Income tax (expense) benefit on operating income (loss)	(162		)		(136		)					(439		)		(363		)
Net operating income (loss)	$	330			$	264			25		%	$	845			$	698			21		%

Loss & LAE	60.9			%	65.4			%	4.5		pts	65.6			%	67.3			%	1.7		pts
Acquisition expense	19.7				19.6				(0.1	)		19.5				19.1				(0.4	)
Underwriting expense	13.2				14.5				1.3			13.7				14.5				0.8
Expense	32.9				34.1				1.2			33.2				33.6				0.4
Dividend	0.2				0.2				—			0.2				0.2				—
Combined ratio	94.0				99.7				5.7			99.0				101.1				2.1
Combined ratio excluding catastrophes and development	95.9			%	100.7			%	4.8		pts	98.1			%	101.3			%	3.2		pts

Pretax net accident year catastrophe losses incurred	$	42			$	27						$	146			$	123
Impact on loss & LAE ratio	2.5			%	1.6			%	(0.9	)	pts	3.0			%	2.6			%	(0.4	)	pts

Pretax net prior year development and other ⁽¹⁾: (favorable) / unfavorable	$	(71	)		$	(45	)					$	(110	)		$	(152	)
Impact on loss & LAE ratio	(4.4		)	%	(2.6		)	%	1.8		pts	(2.1		)	%	(2.8		)	%	(0.7	)	pts

Rate	7			%	6			%	1		pts	7			%	5			%	2		pts
Retention	77			%	80			%	(3	)	pts	78			%	81			%	(3	)	pts
New Business (Specialty and Commercial only)	$	266			$	284			(6	)	%	$	858			$	921			(7	)	%

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

CNA Specialty - Results of Operations



Periods ended September 30	Three Months											Nine Months
(In millions)	2013				2012				Change			2013				2012				Change
Gross written premiums	$	1,368			$	1,211			13		%	$	3,980			$	3,670			8		%
Net written premiums	778				723				8			2,337				2,206				6
Net earned premiums	768				738				4			2,237				2,163				3
Net investment income	159				159							480				446
Other revenues	67				58							190				171
Total operating revenues	994				955				4			2,907				2,780				5
Insurance claims and policyholders' benefits	430				461							1,349				1,376
Amortization of deferred acquisition costs	161				156							467				458
Other insurance related expenses	64				73							200				222
Other expenses	58				53							172				153
Total claims, benefits and expenses	713				743				4			2,188				2,209				1
Operating income (loss) before income tax	281				212				33			719				571				26
Income tax (expense) benefit on operating income (loss)	(94		)		(76		)					(244		)		(197		)
Net operating income (loss)	$	187			$	136			38		%	$	475			$	374			27		%

Loss & LAE	55.6			%	62.5			%	6.9		pts	60.1			%	63.6			%	3.5		pts
Acquisition expense	19.8				20.1				0.3			19.6				20.0				0.4
Underwriting expense	9.6				10.9				1.3			10.2				11.5				1.3
Expense	29.4				31.0				1.6			29.8				31.5				1.7
Dividend	0.3				0.2				(0.1	)		0.2				—				(0.2	)
Combined ratio	85.3				93.7				8.4			90.1				95.1				5.0
Combined ratio excluding catastrophes and development	93.5			%	98.6			%	5.1		pts	95.5			%	98.9			%	3.4		pts

Pretax net accident year catastrophe losses incurred	$	13			$	3						$	20			$	8
Impact on loss & LAE ratio	1.7			%	0.5			%	(1.2	)	pts	0.9			%	0.4			%	(0.5	)	pts

Pretax net prior year development and other ⁽¹⁾: (favorable) / unfavorable	$	(77	)		$	(40	)					$	(146	)		$	(95	)
Impact on loss & LAE ratio	(9.9		)	%	(5.4		)	%	4.5		pts	(6.3		)	%	(4.2		)	%	2.1		pts

Rate	6			%	5			%	1		pts	6			%	4			%	2		pts
Retention	85			%	85			%	—		pts	85			%	86			%	(1	)	pts
New Business	$	105			$	88			19		%	$	304			$	297			2		%

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

CNA Commercial - Results of Operations



Periods ended September 30	Three Months											Nine Months
(In millions)	2013				2012				Change			2013				2012				Change
Gross written premiums	$	805			$	864			(7	)	%	$	2,715			$	2,715			—		%
Net written premiums	760				811				(6	)		2,504				2,543				(2	)
Net earned premiums	832				840				(1	)		2,509				2,452				2
Net investment income	219				230							680				646
Other revenues	10				11							85				31
Total operating revenues	1,061				1,081				(2	)		3,274				3,129				5
Insurance claims and policyholders' benefits	566				594							1,814				1,758
Amortization of deferred acquisition costs	148				151							450				437
Other insurance related expenses	141				146							426				425
Other expenses	7				7							18				24
Total claims, benefits and expenses	862				898				4			2,708				2,644				(2	)
Operating income (loss) before income tax	199				183				9			566				485				17
Income tax (expense) benefit on operating income (loss)	(68		)		(58		)					(198		)		(164		)
Net operating income (loss)	$	131			$	125			5		%	$	368			$	321			15		%

Loss & LAE	67.9			%	70.5			%	2.6		pts	72.1			%	71.3			%	(0.8	)	pts
Acquisition expense	18.9				18.2				(0.7	)		18.7				18.0				(0.7	)
Underwriting expense	15.9				17.0				1.1			16.2				17.2				1.0
Expense	34.8				35.2				0.4			34.9				35.2				0.3
Dividend	0.3				0.3				—			0.2				0.3				0.1
Combined ratio	103.0				106.0				3.0			107.2				106.8				(0.4	)
Combined ratio excluding catastrophes and development	99.3			%	102.9			%	3.6		pts	101.4			%	103.8			%	2.4		pts


Pretax net accident year catastrophe losses incurred	$	24			$	24						$	121			$	115
Impact on loss & LAE ratio	2.9			%	2.8			%	(0.1	)	pts	4.8			%	4.7			%	(0.1	)	pts

Pretax net prior year development and other ⁽¹⁾: (favorable) / unfavorable	$	9			$	1						$	22			$	(51	)
Impact on loss & LAE ratio	0.8			%	0.3			%	(0.5	)	pts	1.0			%	(1.7		)	%	(2.7	)	pts

Rate	8			%	7			%	1		pts	9			%	6			%	3		pts
Retention	71			%	77			%	(6	)	pts	74			%	77			%	(3	)	pts
New Business	$	161			$	196			(18	)	%	$	554			$	624			(11	)	%

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

Hardy - Results of Operations



Periods ended September 30	Three Months											Nine Months
(In millions)	2013				2012				Change			2013				2012 ⁽²⁾				Change
Gross written premiums	$	105			$	87			21		%	$	359			$	87			N/M		%
Net written premiums	81				56				45			274				56				N/M
Net earned premiums	86				64				34			226				64				N/M
Net investment income	1				2							3				2
Other revenues	1				—							1				—
Total operating revenues	88				66				33			230				66				N/M
Insurance claims and policyholders' benefits	35				21							107				21
Amortization of deferred acquisition costs	25				20							66				20
Other insurance related expenses	14				13							43				13
Other expenses	2				7							15				7
Total claims, benefits and expenses	76				61				(25	)		231				61				N/M
Operating income (loss) before income tax	12				5				140			(1		)		5				(120	)
Income tax (expense) benefit on operating income (loss)	—				(2		)					3				(2		)
Net operating income (loss)	$	12			$	3			N/M		%	$	2			$	3			(33	)	%

Loss & LAE	40.5			%	33.3			%	(7.2	)	pts	47.3			%	33.3			%	(14.0	)	pts
Acquisition expense	27.4				32.3				4.9			27.9				32.3				4.4
Underwriting expense	17.2				20.2				3.0			20.2				20.2				—
Expense	44.6				52.5				7.9			48.1				52.5				4.4
Dividend	—				—				—			—				—				—
Combined ratio	85.1				85.8				0.7			95.4				85.8				(9.6	)
Combined ratio excluding catastrophes and development	84.6			%	94.7			%	10.1		pts	89.1			%	94.7			%	5.6		pts

Pretax net accident year catastrophe losses incurred	$	5			$	—						$	5			$	—
Impact on loss & LAE ratio	5.4			%	—			%	(5.4	)	pts	2.0			%	—			%	(2.0	)	pts

Pretax net prior year development and other ⁽¹⁾: (favorable) / unfavorable	$	(3	)		$	(6	)					$	14			$	(6	)
Impact on loss & LAE ratio	(4.9		)	%	(8.9		)	%	(4.0	)	pts	4.3			%	(8.9		)	%	(13.2	)	pts

Rate	(5		)	%	1			%	(6	)	pts	(1		)	%	1			%	(2	)	pts
Retention	75			%	73			%	2		pts	71			%	73			%	(2	)	pts

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

(2) Hardy was acquired on July 2, 2012.

Life & Group Non-Core - Results of Operations



Periods ended September 30	Three Months									Nine Months
(In millions)	2013			2012			Change			2013			2012			Change
Net earned premiums	$	140		$	141		(1	)	%	$	419		$	421		—		%
Net investment income	209			201			4			620			600			3
Other revenues	(3		)	1						2			15
Total operating revenues	346			343			1			1,041			1,036			—
Insurance claims and policyholders' benefits	379			351						1,088			1,014
Amortization of deferred acquisition costs	7			6						21			22
Other insurance related expenses	34			35						100			106
Other expenses	5			8						12			18
Total claims, benefits and expenses	425			400			(6	)		1,221			1,160			(5	)
Operating income (loss) before income tax	(79		)	(57		)	(39	)		(180		)	(124		)	(45	)
Income tax (expense) benefit on operating income (loss)	44			35						109			86
Net operating income (loss)	$	(35	)	$	(22	)	(59	)	%	$	(71	)	$	(38	)	(87	)	%

Corporate & Other Non-Core - Results of Operations



Periods ended September 30	Three Months									Nine Months
(In millions)	2013			2012			Change			2013			2012			Change
Net earned premiums	$	(1	)	$	(2	)				$	(2	)	$	(2	)
Net investment income	9			9						25			25
Other revenues	3			6						7			13
Total operating revenues	11			13			(15	)	%	30			36			(17	)	%
Insurance claims and policyholders' benefits	4			8						6			(5		)
Amortization of deferred acquisition costs	—			—						—			—
Other insurance related expenses	—			1						(1		)	—
Other expenses	49			41						133			136
Total claims, benefits and expenses	53			50			(6	)		138			131			(5	)
Operating income (loss) before income tax	(42		)	(37		)	(14	)		(108		)	(95		)	(14	)
Income tax (expense) benefit on operating income (loss)	16			11						38			29
Net operating income (loss)	$	(26	)	$	(26	)	—		%	$	(70	)	$	(66	)	(6	)	%

Investment Summary - Consolidated



	September 30, 2013						June 30, 2013						December 31, 2012
(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	$	21,183		$	1,544		$	21,788		$	1,679		$	22,236		$	2,677
States, municipalities and political subdivisions:
Tax-exempt	7,903			118			6,871			211			6,605			720
Taxable	3,556			321			3,868			430			4,178			691
Total states, municipalities and political subdivisions	11,459			439			10,739			641			10,783			1,411
Asset-backed:
RMBS	4,819			40			5,096			65			5,920			175
CMBS	2,017			75			2,009			68			1,822			130
Other ABS	956			14			947			14			952			23
Total asset-backed	7,792			129			8,052			147			8,694			328
U.S. Treasury and obligations of government-sponsored enterprises	173			7			176			9			182			10
Foreign government	561			14			544			16			613			25
Redeemable preferred stock	106			12			132			11			125			12
Total fixed maturity securities	41,274			2,145			41,431			2,503			42,633			4,463
Equities	199			10			199			14			249			21
Limited partnership investments	2,790			—			2,665			—			2,462			—
Other invested assets	55			—			36			—			59			—
Mortgage loans	440			—			437			—			401			—
Short term investments	1,475			(1		)	1,531			(1		)	1,832			(1		)
Total investments	$	46,233		$	2,154		$	46,299		$	2,516		$	47,636		$	4,483

Net receivable/(payable) on investment activity	$	(106	)	$	—		$	(186	)	$	—		$	(22	)	$	—

Effective portfolio duration (in years)	6.8						6.7						6.5
Weighted average rating of fixed maturity securities	A						A						A

RMBS - Residential mortgage-backed securities

CMBS - Commercial mortgage-backed securities

Other ABS - Other asset-backed securities

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



	September 30, 2013						June 30, 2013					December 31, 2012
(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	$	13,767		$	545		$	14,025		$	583	$	13,959		$	977
States, municipalities and political subdivisions:
Tax-exempt	3,123			64			2,355			55		2,117			143
Taxable	1,797			142			2,038			189		2,233			316
Total states, municipalities and political subdivisions	4,920			206			4,393			244		4,350			459
Asset-backed:
RMBS	4,489			27			4,754			51		5,515			155
CMBS	1,741			58			1,737			50		1,572			105
Other ABS	851			14			836			14		915			21
Total asset-backed	7,081			99			7,327			115		8,002			281
U.S. Treasury and obligations of government-sponsored enterprises	150			—			153			2		159			2
Foreign government	556			13			539			15		608			23
Redeemable preferred stock	8			1			34			—		35			1
Total fixed maturity securities	26,482			864			26,471			959		27,113			1,743
Equities	76			13			73			11		90			17
Limited partnership investments	2,790			—			2,665			—		2,462			—
Other invested assets	55			—			36			—		59			—
Mortgage loans	421			—			418			—		382			—
Short term investments	1,416			(1		)	1,430			—		1,762			(1		)
Total investments	$	31,240		$	876		$	31,093		$	970	$	31,868		$	1,759

Net receivable/(payable) on investment activity	$	(95	)	$	—		$	(111	)	$	—	$	(22	)	$	—

Effective portfolio duration (in years)	4.4						4.3					3.9
Weighted average rating of fixed maturity securities	A						A					A

Investment Summary - Life & Group Non-Core



	September 30, 2013						June 30, 2013						December 31, 2012
(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	$	7,416		$	999		$	7,763		$	1,096		$	8,277	$	1,700
States, municipalities and political subdivisions:
Tax-exempt	4,780			54			4,516			156			4,488		577
Taxable	1,759			179			1,830			241			1,945		375
Total states, municipalities and political subdivisions	6,539			233			6,346			397			6,433		952
Asset-backed:
RMBS	330			13			342			14			405		20
CMBS	276			17			272			18			250		25
Other ABS	105			—			111			—			37		2
Total asset-backed	711			30			725			32			692		47
U.S. Treasury and obligations of government-sponsored enterprises	23			7			23			7			23		8
Foreign government	5			1			5			1			5		2
Redeemable preferred stock	98			11			98			11			90		11
Total fixed maturity securities	14,792			1,281			14,960			1,544			15,520		2,720
Equities	123			(3		)	126			3			159		4
Limited partnership investments	—			—			—			—			—		—
Other invested assets	—			—			—			—			—		—
Mortgage loans	19			—			19			—			19		—
Short term investments	59			—			101			(1		)	70		—
Total investments	$	14,993		$	1,278		$	15,206		$	1,546		$	15,768	$	2,724

Net receivable/(payable) on investment activity	$	(11	)	$	—		$	(75	)	$	—		$	—	$	—

Effective portfolio duration (in years)	11.4						11.2						11.3
Weighted average rating of fixed maturity securities	A						A						A

Investments - Fixed Maturity Securities by Credit Rating



September 30, 2013	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	$	—		$	—	$	307		$	12		$	1,325		$	77		$	6,940		$	690	$	10,670		$	690		$	1,941		$	75		$	21,183		$	1,544
States, municipalities and political subdivisions:
Tax-exempt	—			—		1,078			43			4,489			71			2,274			8		29			(2		)	33			(2		)	7,903			118
Taxable	—			—		466			40			2,365			211			725			70		—			—			—			—			3,556			321
Total states, municipalities and political subdivisions	—			—		1,544			83			6,854			282			2,999			78		29			(2		)	33			(2		)	11,459			439
Asset-backed:
RMBS	3,253			5		96			(2		)	143			(1		)	173			—		130			(5		)	1,024			43			4,819			40
CMBS	80			2		475			18			445			18			371			10		298			13			348			14			2,017			75
Other ABS	—			—		280			6			258			4			356			4		62			—			—			—			956			14
Total asset-backed	3,333			7		851			22			846			21			900			14		490			8			1,372			57			7,792			129
U.S. Treasury and obligations of government-sponsored enterprises	173			7		—			—			—			—			—			—		—			—			—			—			173			7
Foreign government	—			—		213			7			254			5			94			2		—			—			—			—			561			14
Redeemable preferred stock	—			—		—			—			—			—			—			—		64			12			42			—			106			12
Total fixed maturity securities	$	3,506		$	14	$	2,915		$	124		$	9,279		$	385		$	10,933		$	784	$	11,253		$	708		$	3,388		$	130		$	41,274		$	2,145

Percentage of total fixed maturity securities	9		%			7		%				23		%				26		%			27		%				8		%				100		%

The ratings presented are based on a ratings methodology that takes into account ratings from Standard & Poor's and Moody's Investors Services, Inc. in that order of preference. If a security is not rated by these rating agencies, 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.

Components of Pretax Net Investment Income



	Consolidated
Periods ended September 30	Three Months						Nine Months
(In millions)	2013			2012			2013			2012
Fixed maturity securities	$	504		$	507		$	1,501		$	1,528
Limited partnership investments	93			89			303			184
Other	—			5			4			7
Net investment income	$	597		$	601		$	1,808		$	1,719
Average amortized cost of fixed maturity securities portfolio	$	39,001		$	37,912		$	38,658		$	37,800
Effective income yield for the fixed maturity securities portfolio, pretax ⁽¹⁾	5.2		%	5.3		%	5.2		%	5.4		%
Effective income yield for the fixed maturity securities portfolio, after tax ⁽¹⁾	3.6		%	3.7		%	3.6		%	3.7		%



	Property & Casualty and Corporate and Other Non-Core
Periods ended September 30	Three Months						Nine Months
(In millions)	2013			2012			2013			2012
Fixed maturity securities	$	294		$	306		$	879		$	927
Limited partnership investments	93			89			302			184
Other	1			5			7			8
Net investment income	$	388		$	400		$	1,188		$	1,119
Average amortized cost of fixed maturity securities portfolio	$	25,532		$	25,516		$	25,452		$	25,597
Effective income yield for the fixed maturity securities portfolio, pretax ⁽¹⁾	4.6		%	4.8		%	4.6		%	4.8		%
Effective income yield for the fixed maturity securities portfolio, after tax ⁽¹⁾	3.1		%	3.2		%	3.1		%	3.2		%



	Life & Group Non-Core
Periods ended September 30	Three Months							Nine Months
(In millions)	2013				2012			2013				2012
Fixed maturity securities	$	210			$	201		$	622			$	601
Limited partnership investments	—				—			1				—
Other	(1		)		—			(3		)		(1		)
Net investment income	$	209			$	201		$	620			$	600
Average amortized cost of fixed maturity securities portfolio	$	13,469			$	12,396		$	13,206			$	12,203
Effective income yield for the fixed maturity securities portfolio, pretax ⁽¹⁾	6.2			%	6.5		%	6.3			%	6.6			%
Effective income yield for the fixed maturity securities portfolio, after tax ⁽¹⁾	4.5			%	4.7		%	4.5			%	4.7			%

(1) Annualized yields based on the average amortized cost of the fixed maturity securities portfolio.

Claim & Claim Adjustment Expense Reserve Rollforward



Three months ended September 30, 2013 (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	$	6,877		$	10,973		$	447		$	18,297		$	3,031		$	3,011		$	24,339
Ceded	686			1,100			197			1,983			477			2,524			4,984
Net	6,191			9,873			250			16,314			2,554			487			19,355

Net incurred claim & claim adjustment expenses	427			566			33			1,026			219			4			1,249
Net claim & claim adjustment expense payments	(391		)	(745		)	(42		)	(1,178		)	(156		)	(11		)	(1,345		)
Foreign currency translation adjustment and other	21			13			7			41			(19		)	1			23

Claim & claim adjustment expense reserves, end of period
Net	6,248			9,707			248			16,203			2,598			481			19,282
Ceded	598			1,056			184			1,838			452			2,390			4,680
Gross	$	6,846		$	10,763		$	432		$	18,041		$	3,050		$	2,871		$	23,962



Nine months ended September 30, 2013 (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	$	6,748		$	11,326		$	521		$	18,595		$	3,006		$	3,162		$	24,763
Ceded	636			1,115			247			1,998			478			2,650			5,126
Net	6,112			10,211			274			16,597			2,528			512			19,637

Net incurred claim & claim adjustment expenses	1,344			1,810			105			3,259			614			6			3,879
Net claim & claim adjustment expense payments	(1,205		)	(2,301		)	(126		)	(3,632		)	(474		)	(37		)	(4,143		)
Foreign currency translation adjustment and other	(3		)	(13		)	(5		)	(21		)	(70		)	—			(91		)

Claim & claim adjustment expense reserves, end of period
Net	6,248			9,707			248			16,203			2,598			481			19,282
Ceded	598			1,056			184			1,838			452			2,390			4,680
Gross	$	6,846		$	10,763		$	432		$	18,041		$	3,050		$	2,871		$	23,962

Net Carried Life & Group Non-Core Policyholder Reserves



September 30, 2013
(In millions)	Claim and claim adjustment expenses		Future policy benefits		Policyholders' funds		Separate account business		Total
Long term care	$	1,847	$	7,247	$	—	$	—	$	9,094
Payout annuities	620		1,993		—		—		2,613
Institutional markets	1		11		68		213		293
Other	39		4		—		—		43
Total net reserves	2,507		9,255		68		213		12,043
Shadow adjustments ⁽¹⁾	90		686		—		—		776
Ceded reserves	453		740		34		—		1,227
Total gross reserves	$	3,050	$	10,681	$	102	$	213	$	14,046



December 31, 2012
(In millions)	Claim and claim adjustment expenses		Future policy benefits		Policyholders' funds		Separate account business		Total
Long term care	$	1,683	$	6,879	$	—	$	—	$	8,562
Payout annuities	637		2,008		—		—		2,645
Institutional markets	1		12		100		312		425
Other	45		4		—		—		49
Total net reserves	2,366		8,903		100		312		11,681
Shadow adjustments ⁽¹⁾	162		1,812		—		—		1,974
Ceded reserves	478		760		34		—		1,272
Total gross reserves	$	3,006	$	11,475	$	134	$	312	$	14,927

(1) 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 are recorded, net of tax, as a reduction of net unrealized gains through Other comprehensive income (loss) (Shadow Adjustments). The Shadow adjustments presented above do not include $348 million and $369 million related to Deferred acquisition costs at September 30, 2013 and December 31, 2012.

Statutory Data - Preliminary



Periods Ended September 30	Three Months										Nine Months
Income Statements	(Preliminary) 2013								Change		(Preliminary) 2013								Change
(In millions)	(Preliminary) 2013				2012				Change		(Preliminary) 2013				2012				Change
Combined Continental Casualty Companies
Gross written premiums	$	2,148			$	2,048			5	%	$	6,557			$	6,269			5		%
Net written premiums	1,518				1,514				—		4,713				4,648				1

Net earned premiums	1,421				1,394				2		4,210				4,071				3
Claim and claim adjustment expenses	1,212				1,228						3,655				3,502
Acquisition expenses	270				275						825				810
Underwriting expenses	208				227						625				661
Policyholders' dividends	2				2						6				5
Underwriting income (loss)	(271		)		(338		)		20		(901		)		(907		)		1
Net investment income	434				436						1,329				1,351
Other income (loss)	3				3						88				11
Income tax (expense) benefit	(18		)		10						(33		)		(38		)
Net realized gains (losses)	(61		)		(36		)				(96		)		16
Net income (loss)	$	87			$	75			16	%	$	387			$	433			(11	)	%

Financial Ratios
Loss and LAE	85.3			%	88.1			%			86.8			%	86.0			%
Acquisition expense	17.8				18.2						17.5				17.4
Underwriting expense	13.7				14.9						13.3				14.2
Expense	31.5				33.1						30.8				31.6
Dividend	0.1				0.2						0.1				0.1
Combined ratio	116.9			%	121.4			%			117.7			%	117.7			%



SUPPLEMENTAL STATUTORY DATA	(Preliminary) September 30, 2013		December 31, 2012
(In millions)	(Preliminary) September 30, 2013		December 31, 2012
Combined Continental Casualty Companies
Statutory surplus ⁽¹⁾	$	10,370	$	9,998
Life Company
Statutory surplus	$	588	$	556

(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.

Definitions and Presentation


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


•	P&C Operations includes CNA Specialty, CNA Commercial and Hardy. Hardy was acquired on July 2, 2012.


•	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 O to the Consolidated Financial Statements within the 2012 Form 10-K for further discussion of this measure.

•

In the evaluation of the results of CNA Specialty, CNA Commercial and Hardy, management utilizes the loss ratio, the expense ratio, the dividend ratio and the combined 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 17 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 increases volatility generated by the underlying investment strategies.


•	Certain immaterial differences are due to rounding.


•	N/M = Not Meaningful

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