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

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8-K - 8-K - CNA FINANCIAL CORP	q4148k.htm
EX-99.1 - EXHIBIT - CNA FINANCIAL CORP	q414exhibit991.htm

CNA Financial Corporation

Supplemental Financial Information

December 31, 2014

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
Specialty....................................................................................................................................................................................................................	5
Commercial...............................................................................................................................................................................................................	6
International.......................................................................................................................................................................................................................	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 Net Investment Income.................................................................................................................................................................	14
Other
Claim & Claim Adjustment Expense Reserve Rollforward................................................................................................................................................	15
Life & Group Non-Core Policyholder Reserves.................................................................................................................................................................	16
Statutory Data - Preliminary...............................................................................................................................................................................................	17
Definitions and Presentation..............................................................................................................................................................................................	18

Segment Realignment

As a result of realigned management responsibilities, CNA revised its property and casualty segments in the fourth quarter of 2014 to Specialty, Commercial and International. Results of CNA Europe and Canada that were previously included in the Specialty and Commercial segments are now included in the International segment. There was no change to the Life & Group Non-Core and Corporate & Other Non-Core segments. Prior period segment disclosures have been conformed to the current year presentation. The new segment structure reflects the way management currently reviews results and makes business decisions.

Statements of Operations



Periods ended December 31	Three Months									Twelve Months
(In millions)	2014			2013			Change			2014			2013			Change
Revenues:
Net earned premiums	$	1,785		$	1,882		(5	)	%	$	7,212		$	7,271		(1	)	%
Net investment income	511			602			(15	)		2,067			2,282			(9	)
Net realized investment gains (losses):
Other-than-temporary impairment (OTTI) losses	(60		)	(25		)				(77		)	(74		)
Portion of OTTI recognized in Other comprehensive income (loss)	—			(1		)				—			(2		)
Net OTTI losses recognized in earnings	(60		)	(26		)				(77		)	(76		)
Other net realized investment gains (losses)	48			36						134			96
Net realized investment gains (losses)	(12		)	10						57			20
Other revenues	94			75						356			359
Total revenues	2,378			2,569			(7	)		9,692			9,932			(2	)
Claims, Benefits and Expenses:
Insurance claims and policyholders' benefits	1,350			1,547						5,591			5,806
Amortization of deferred acquisition costs	321			358						1,317			1,362
Other operating expenses	410			337						1,394			1,322
Interest	45			41						183			166
Total claims, benefits and expenses	2,126			2,283			7			8,485			8,656			2
Income (loss) before income tax	252			286			(12	)		1,207			1,276			(5	)
Income tax (expense) benefit	(54		)	(73		)				(319		)	(361		)
Income (loss) from continuing operations	198			213			(7	)		888			915			(3	)
Income (loss) from discontinued operations, net of tax	—			8						(197		)	22
Net income (loss)	$	198		$	221		(10	)	%	$	691		$	937		(26	)	%

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



Periods ended December 31	Three Months							Twelve Months
(In millions, except per share data)	2014				2013			2014				2013
Components of Income (Loss)
Net operating income (loss)	$	205			$	206		$	849			$	901
Net realized investment gains (losses)	(7		)		7			39				14
Income (loss) from continuing operations	198				213			888				915
Income (loss) from discontinued operations	—				8			(197		)		22
Net income (loss)	$	198			$	221		$	691			$	937

Diluted Earnings (Loss) Per Common Share
Net operating income (loss)	$	0.76			$	0.76		$	3.14			$	3.33
Net realized investment gains (losses)	(0.03		)		0.03			0.14				0.06
Income (loss) from continuing operations	0.73				0.79			3.28				3.39
Income (loss) from discontinued operations	—				0.03			(0.73		)		0.08
Diluted earnings (loss) per share	$	0.73			$	0.82		$	2.55			$	3.47

Weighted Average Outstanding Common Stock and Common Stock Equivalents
Basic	270.0				269.7			269.9				269.7
Diluted	270.7				270.4			270.6				270.2

Return on Equity
Net income (loss) ⁽¹⁾	6.1			%	7.1		%	5.4			%	7.5		%
Net operating income (loss) ⁽²⁾	6.7				6.8			6.9				7.6

(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⁽¹⁾



(In millions, except per share data)	December 31, 2014		December 31, 2013
Total assets	$	55,566	$	57,194
Insurance reserves	36,380		38,394
Debt	2,559		2,560
Total liabilities	42,772		44,543
Accumulated other comprehensive income (loss) ⁽²⁾	400		442
Total stockholders' equity	12,794		12,651

Book value per common share	$	47.39	$	46.91
Book value per common share excluding AOCI	$	45.91	$	45.26

Outstanding shares of common stock (in millions of shares)	270.0		269.7



Three months ended December 31	2014			2013
Net cash flows provided (used) by operating activities	$	393		$	283
Net cash flows provided (used) by investing activities	169			(209		)
Net cash flows provided (used) by financing activities	(614		)	(64		)
Net cash flows provided (used) by operating, investing and financing activities	$	(52	)	$	10



Twelve months ended December 31	2014			2013
Net cash flows provided (used) by operating activities	$	1,440		$	1,204
Net cash flows provided (used) by investing activities	(918		)	(898		)
Net cash flows provided (used) by financing activities	(519		)	(264		)
Net cash flows provided (used) by operating, investing and financing activities	$	3		$	42

(1) On August 1, 2014, CNA completed the sale of the common stock of Continental Assurance Company (CAC). CNA elected not to present the assets and liabilities as held for sale in the 2013 balance sheet data and included CAC cash flow data in the periods ended December 31, 2014 and 2013.

(2) At December 31, 2014 and 2013, the net unrealized gains on investments included in AOCI were net of after-tax Shadow Adjustments of $1,288 million and $532 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 December 31	Three Months											Twelve Months
(In millions)	2014				2013				Change			2014				2013				Change
Gross written premiums	$	2,334			$	2,301			1		%	$	9,558			$	9,355			2		%
Net written premiums	1,555				1,684				(8	)		6,536				6,799				(4	)
Net earned premiums	1,646				1,743				(6	)		6,657				6,715				(1	)
Net investment income	326				425							1,344				1,588
Other revenues	87				77							333				353
Total operating revenues	2,059				2,245				(8	)		8,334				8,656				(4	)
Insurance claims and policyholders' benefits	984				1,084							4,316				4,354
Amortization of deferred acquisition costs	315				351							1,289				1,334
Other insurance related expenses	214				219							900				888
Other expenses	77				76							313				281
Total claims, benefits and expenses	1,590				1,730				8			6,818				6,857				1
Operating income (loss) before income tax	469				515				(9	)		1,516				1,799				(16	)
Income tax (expense) benefit on operating income (loss)	(155		)		(175		)					(506		)		(614		)
Net operating income (loss)	$	314			$	340			(8	)	%	$	1,010			$	1,185			(15	)	%

Loss & LAE	59.6			%	62.0			%	2.4		pts	64.6			%	64.6			%	—		pts
Acquisition expense	17.6				18.2				0.6			19.0				19.2				0.2
Underwriting expense	14.4				14.6				0.2			13.9				13.9				—
Expense	32.0				32.8				0.8			32.9				33.1				0.2
Dividend	0.2				0.2				—			0.2				0.2				—
Combined ratio	91.8			%	95.0			%	3.2			97.7			%	97.9			%	0.2
Combined ratio excluding catastrophes and development	93.6			%	94.3			%	0.7		pts	95.9			%	97.1			%	1.2		pts

Pretax net accident year catastrophe losses incurred	$	9			$	23						$	156			$	169
Impact on loss & LAE ratio	0.6			%	1.3			%	0.7		pts	2.3			%	2.6			%	0.3		pts

Pretax net prior year development and other ⁽¹⁾: (favorable) / unfavorable	$	(39	)		$	(20	)					$	(43	)		$	(130	)
Impact on loss & LAE ratio	(2.4		)	%	(0.6		)	%	1.8		pts	(0.5		)	%	(1.8		)	%	(1.3	)	pts

Rate	3			%	5			%	(2	)	pts	3			%	7			%	(4	)	pts
Retention	79			%	78			%	1		pts	78			%	79			%	(1	)	pts
New Business	$	192			$	224			(14	)	%	$	915			$	1,081			(15	)	%

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

Specialty - Results of Operations



Periods ended December 31	Three Months											Twelve Months
(In millions)	2014				2013				Change			2014				2013				Change
Gross written premiums	$	1,415			$	1,319			7		%	$	5,608			$	5,134			9		%
Net written premiums	689				708				(3	)		2,839				2,880				(1	)
Net earned premiums	712				712				—			2,838				2,795				2
Net investment income	137				170							560				629
Other revenues	77				67							295				257
Total operating revenues	926				949				(2	)		3,693				3,681				—
Insurance claims and policyholders' benefits	416				347							1,633				1,599
Amortization of deferred acquisition costs	150				149							592				585
Other insurance related expenses	65				66							262				250
Other expenses	63				67							254				237
Total claims, benefits and expenses	694				629				(10	)		2,741				2,671				(3	)
Operating income (loss) before income tax	232				320				(28	)		952				1,010				(6	)
Income tax (expense) benefit on operating income (loss)	(78		)		(109		)					(318		)		(342		)
Net operating income (loss)	$	154			$	211			(27	)	%	$	634			$	668			(5	)	%

Loss & LAE	58.1			%	48.7			%	(9.4	)	pts	57.3			%	57.0			%	(0.3	)	pts
Acquisition expense	19.5				19.5				—			19.7				19.6				(0.1	)
Underwriting expense	10.7				10.7				—			10.4				10.3				(0.1	)
Expense	30.2				30.2				—			30.1				29.9				(0.2	)
Dividend	0.1				0.2				0.1			0.2				0.2				—
Combined ratio	88.4			%	79.1			%	(9.3	)		87.6			%	87.1			%	(0.5	)
Combined ratio excluding catastrophes and development	90.4			%	89.3			%	(1.1	)	pts	92.0			%	93.7			%	1.7		pts

Pretax net accident year catastrophe losses incurred	$	—			$	2						$	21			$	22
Impact on loss & LAE ratio	—			%	0.2			%	0.2		pts	0.7			%	0.7			%	—		pts

Pretax net prior year development and other ⁽¹⁾: (favorable) / unfavorable	$	(14	)		$	(74	)					$	(149	)		$	(210	)
Impact on loss & LAE ratio	(2.0		)	%	(10.4		)	%	(8.4	)	pts	(5.1		)	%	(7.3		)	%	(2.2	)	pts

Rate	3			%	5			%	(2	)	pts	3			%	6			%	(3	)	pts
Retention	85			%	85			%	—		pts	86			%	85			%	1		pts
New Business	$	70			$	77			(9	)	%	$	309			$	342			(10	)	%

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

Commercial - Results of Operations



Periods ended December 31	Three Months											Twelve Months
(In millions)	2014				2013				Change			2014				2013				Change
Gross written premiums	$	714			$	751			(5	)	%	$	2,959			$	3,188			(7	)	%
Net written premiums	684				717				(5	)		2,817				2,960				(5	)
Net earned premiums	718				749				(4	)		2,906				3,004				(3	)
Net investment income	174				239							723				899
Other revenues	10				11							38				96
Total operating revenues	902				999				(10	)		3,667				3,999				(8	)
Insurance claims and policyholders' benefits	462				616							2,195				2,266
Amortization of deferred acquisition costs	122				130							493				526
Other insurance related expenses	111				108							487				498
Other expenses	6				8							31				32
Total claims, benefits and expenses	701				862				19			3,206				3,322				3
Operating income (loss) before income tax	201				137				47			461				677				(32	)
Income tax (expense) benefit on operating income (loss)	(69		)		(46		)					(154		)		(229		)
Net operating income (loss)	$	132			$	91			45		%	$	307			$	448			(31	)	%

Loss & LAE	64.2			%	81.8			%	17.6		pts	75.3			%	75.2			%	(0.1	)	pts
Acquisition expense	15.0				14.6				(0.4	)		17.0				17.5				0.5
Underwriting expense	17.3				17.4				0.1			16.7				16.5				(0.2	)
Expense	32.3				32.0				(0.3	)		33.7				34.0				0.3
Dividend	0.3				0.3				—			0.3				0.3				—
Combined ratio	96.8			%	114.1			%	17.3			109.3			%	109.5			%	0.2
Combined ratio excluding catastrophes and development	95.6			%	97.8			%	2.2		pts	98.6			%	100.4			%	1.8		pts

Pretax net accident year catastrophe losses incurred	$	4			$	19						$	125			$	133
Impact on loss & LAE ratio	0.6			%	2.7			%	2.1		pts	4.4			%	4.4			%	—		pts

Pretax net prior year development and other ⁽¹⁾: (favorable) / unfavorable	$	5			$	102						$	177			$	138
Impact on loss & LAE ratio	0.6			%	13.6			%	13.0		pts	6.3			%	4.7			%	(1.6	)	pts

Rate	4			%	7			%	(3	)	pts	5			%	9			%	(4	)	pts
Retention	77			%	73			%	4		pts	74			%	74			%	—		pts
New Business	$	95			$	120			(21	)	%	$	491			$	622			(21	)	%

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

International - Results of Operations



Periods ended December 31	Three Months											Twelve Months
(In millions)	2014				2013				Change			2014				2013				Change
Gross written premiums	$	205			$	231			(11	)	%	$	991			$	1,033			(4	)	%
Net written premiums	182				259				(30	)		880				959				(8	)
Net earned premiums	216				282				(23	)		913				916				—
Net investment income	15				16							61				60
Other revenues	—				(1		)					—				—
Total operating revenues	231				297				(22	)		974				976				—
Insurance claims and policyholders' benefits	106				121							488				489
Amortization of deferred acquisition costs	43				72							204				223
Other insurance related expenses	38				45							151				140
Other expenses	8				1							28				12
Total claims, benefits and expenses	195				239				18			871				864				(1	)
Operating income (loss) before income tax	36				58				(38	)		103				112				(8	)
Income tax (expense) benefit on operating income (loss)	(8		)		(20		)					(34		)		(43		)
Net operating income (loss)	$	28			$	38			(26	)	%	$	69			$	69			—		%

Loss & LAE	49.2			%	43.0			%	(6.2	)	pts	53.5			%	53.4			%	(0.1	)	pts
Acquisition expense	19.8				24.6				4.8			22.9				23.6				0.7
Underwriting expense	17.9				16.8				(1.1	)		16.0				16.1				0.1
Expense	37.7				41.4				3.7			38.9				39.7				0.8
Dividend	—				—				—			—				—				—
Combined ratio	86.9			%	84.4			%	(2.5	)		92.4			%	93.1			%	0.7
Combined ratio excluding catastrophes and development	98.0			%	96.7			%	(1.3	)	pts	99.2			%	96.9			%	(2.3	)	pts

Pretax net accident year catastrophe losses incurred	$	5			$	2						$	10			$	14
Impact on loss & LAE ratio	2.2			%	0.6			%	(1.6	)	pts	1.0			%	1.5			%	0.5		pts

Pretax net prior year development and other ⁽¹⁾: (favorable) / unfavorable	$	(30	)		$	(48	)					$	(71	)		$	(58	)
Impact on loss & LAE ratio	(13.3		)	%	(12.9		)	%	0.4		pts	(7.8		)	%	(5.3		)	%	2.5		pts

Rate	(1		)	%	—			%	(1	)	pts	(1		)	%	1			%	(2	)	pts
Retention	66			%	80			%	(14	)	pts	74			%	79			%	(5	)	pts
New Business	27				27				—		%	115				117				(2	)	%

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

Life & Group Non-Core - Results of Operations



Periods ended December 31	Three Months									Twelve Months
(In millions)	2014			2013			Change			2014			2013			Change
Net earned premiums	$	139		$	140		(1	)	%	$	556		$	559		(1	)	%
Net investment income	179			170			5			700			662			6
Other revenues	6			(5		)				16			(4		)
Total operating revenues	324			305			6			1,272			1,217			5
Insurance claims and policyholders' benefits	375			278						1,304			1,261
Amortization of deferred acquisition costs	6			7						28			28
Other insurance related expenses	34			33						130			130
Other expenses	(4		)	6						30			13
Total claims, benefits and expenses	411			324			(27	)		1,492			1,432			(4	)
Operating income (loss) before income tax	(87		)	(19		)	N/M			(220		)	(215		)	(2	)
Income tax (expense) benefit on operating income (loss)	53			25						151			141
Net operating income (loss)	$	(34	)	$	6		N/M		%	$	(69	)	$	(74	)	7		%

Corporate & Other Non-Core - Results of Operations



Periods ended December 31	Three Months									Twelve Months
(In millions)	2014			2013			Change			2014			2013			Change
Net earned premiums	$	—		$	(1	)				$	(1	)	$	(3	)
Net investment income	6			7						23			32
Other revenues	1			3						7			10
Total operating revenues	7			9			(22	)	%	29			39			(26	)	%
Insurance claims and policyholders' benefits	(9		)	185						(29		)	191
Amortization of deferred acquisition costs	—			—						—			—
Other insurance related expenses	—			(4		)				(1		)	(5		)
Other expenses	134			48						205			181
Total claims, benefits and expenses	125			229			45			175			367			52
Operating income (loss) before income tax	(118		)	(220		)	46			(146		)	(328		)	55
Income tax (expense) benefit on operating income (loss)	43			80						54			118
Net operating income (loss)	$	(75	)	$	(140	)	46		%	$	(92	)	$	(210	)	56		%

Investment Summary - Consolidated



	December 31, 2014						September 30, 2014					December 31, 2013
(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	$	18,889		$	1,660		$	19,154		$	1,664	$	20,898	$	1,510
States, municipalities and political subdivisions:
Tax-exempt	9,802			988			9,587			835		8,432		41
Taxable	2,938			467			2,882			407		3,125		235
Total states, municipalities and political subdivisions	12,740			1,455			12,469			1,242		11,557		276
Asset-backed:
RMBS	5,233			205			5,146			174		4,971		31
CMBS	2,144			88			2,158			79		2,063		68
Other ABS	1,235			1			1,230			8		955		10
Total asset-backed	8,612			294			8,534			261		7,989		109
U.S. Treasury and obligations of government-sponsored enterprises	31			5			30			5		144		5
Foreign government	454			16			471			15		543		12
Redeemable preferred stock	42			3			42			3		102		10
Total fixed maturity securities	40,768			3,433			40,700			3,190		41,233		1,922
Equities	222			12			211			14		185		6
Limited partnership investments	2,937			—			2,931			—		2,720		—
Other invested assets	41			—			44			—		54		—
Mortgage loans	588			—			556			—		508		—
Short term investments	1,706			(1		)	1,878			—		1,407		(1		)
Total investments	$	46,262		$	3,444		$	46,320		$	3,204	$	46,107	$	1,927

Net receivable/(payable) on investment activity	$	(58	)				$	(31	)			$	135

Effective portfolio duration (in years)	6.3						6.5					6.9
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



	December 31, 2014					September 30, 2014						December 31, 2013
(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	$	13,444	$	542		$	13,738		$	582		$	13,590	$	509
States, municipalities and political subdivisions:
Tax-exempt	2,561		127			2,574			123			3,176		36
Taxable	1,454		169			1,484			158			1,570		89
Total states, municipalities and political subdivisions	4,015		296			4,058			281			4,746		125
Asset-backed:
RMBS	5,101		196			5,080			168			4,641		22
CMBS	1,985		78			2,006			70			1,793		54
Other ABS	1,144		2			1,137			8			853		9
Total asset-backed	8,230		276			8,223			246			7,287		85
U.S. Treasury and obligations of government-sponsored enterprises	7		(1		)	7			(1		)	121		(1		)
Foreign government	449		15			466			14			538		11
Redeemable preferred stock	13		2			13			1			5		—
Total fixed maturity securities	26,158		1,130			26,505			1,123			26,287		729
Equities	87		9			87			11			61		9
Limited partnership investments	2,937		—			2,931			—			2,720		—
Other invested assets	41		—			44			—			54		—
Mortgage loans	531		—			510			—			489		—
Short term investments	1,586		(1		)	1,805			—			1,339		(1		)
Total investments	$	31,340	$	1,138		$	31,882		$	1,134		$	30,950	$	737

Net receivable/(payable) on investment activity	$	4				$	(24	)				$	140

Effective portfolio duration (in years)	4.0					4.1						4.4
Weighted average rating of fixed maturity securities	A					A						A

Investment Summary - Life & Group Non-Core



	December 31, 2014						September 30, 2014					December 31, 2013
(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	$	5,445		$	1,118		$	5,416		$	1,082	$	7,308		$	1,001
States, municipalities and political subdivisions:
Tax-exempt	7,241			861			7,013			712		5,256			5
Taxable	1,484			298			1,398			249		1,555			146
Total states, municipalities and political subdivisions	8,725			1,159			8,411			961		6,811			151
Asset-backed:
RMBS	132			9			66			6		330			9
CMBS	159			10			152			9		270			14
Other ABS	91			(1		)	93			—		102			1
Total asset-backed	382			18			311			15		702			24
U.S. Treasury and obligations of government-sponsored enterprises	24			6			23			6		23			6
Foreign government	5			1			5			1		5			1
Redeemable preferred stock	29			1			29			2		97			10
Total fixed maturity securities	14,610			2,303			14,195			2,067		14,946			1,193
Equities	135			3			124			3		124			(3		)
Limited partnership investments	—			—			—			—		—			—
Other invested assets	—			—			—			—		—			—
Mortgage loans	57			—			46			—		19			—
Short term investments	120			—			73			—		68			—
Total investments	$	14,922		$	2,306		$	14,438		$	2,070	$	15,157		$	1,190

Net receivable/(payable) on investment activity	$	(62	)				$	(7	)			$	(5	)

Effective portfolio duration (in years)	10.5						11.1					11.3
Weighted average rating of fixed maturity securities	A+						A					A

Investments - Fixed Maturity Securities by Credit Rating



December 31, 2014	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	$	—		$	—	$	223		$	9	$	1,125		$	83	$	5,621		$	665		$	10,194		$	863	$	1,726		$	40	$	18,889		$	1,660
States, municipalities and political subdivisions:
Tax-exempt	—			—		1,108			116		5,275			571		3,199			293			183			6		37			2		9,802			988
Taxable	—			—		397			50		2,113			331		428			86			—			—		—			—		2,938			467
Total states, municipalities and political subdivisions	—			—		1,505			166		7,388			902		3,627			379			183			6		37			2		12,740			1,455
Asset-backed:
RMBS	3,776			138		159			1		80			—		153			—			89			2		976			64		5,233			205
CMBS	75			1		540			18		478			25		407			18			462			16		182			10		2,144			88
Other ABS	—			—		298			3		169			1		621			(3		)	147			—		—			—		1,235			1
Total asset-backed	3,851			139		997			22		727			26		1,181			15			698			18		1,158			74		8,612			294
U.S. Treasury and obligations of government-sponsored enterprises	31			5		—			—		—			—		—			—			—			—		—			—		31			5
Foreign government	—			—		125			6		164			5		165			5			—			—		—			—		454			16
Redeemable preferred stock	—			—		—			—		—			—		—			—			18			2		24			1		42			3
Total fixed maturity securities	$	3,882		$	144	$	2,850		$	203	$	9,404		$	1,016	$	10,594		$	1,064		$	11,093		$	889	$	2,945		$	117	$	40,768		$	3,433

Percentage of total fixed maturity securities	10		%			7		%			23		%			26		%				27		%			7		%			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 Net Investment Income



	Consolidated
Periods ended December 31	Three Months							Twelve Months
(In millions)	2014			2013				2014			2013
Taxable fixed maturities	$	345		$	361			$	1,399		$	1,510
Tax-exempt fixed maturities	102			94				404			317
Total fixed maturity securities	447			455				1,803			1,827
Limited partnership investments	64			148				263			451
Other, net of investment expense	—			(1		)		1			4
Pretax net investment income	$	511		$	602			$	2,067		$	2,282

After-tax fixed maturity securities	$	322		$	324			$	1,298		$	1,282
After-tax net investment income	$	365		$	419			$	1,473		$	1,578

Effective income yield for the fixed maturity securities portfolio, pretax ⁽¹⁾	4.8		%	4.9			%	4.8		%	5.0		%
Effective income yield for the fixed maturity securities portfolio, after tax ⁽¹⁾	3.4		%	3.5			%	3.5		%	3.5		%



	Property & Casualty and Corporate & Other Non-Core
Periods ended December 31	Three Months							Twelve Months
(In millions)	2014			2013				2014			2013
Taxable fixed maturities	$	244		$	253			$	992		$	1,065
Tax-exempt fixed maturities	23			32				107			99
Total fixed maturity securities	267			285				1,099			1,164
Limited partnership investments	64			148				263			450
Other, net of investment expense	1			(1		)		5			6
Pretax net investment income	$	332		$	432			$	1,367		$	1,620

After-tax fixed maturity securities	$	181		$	195			$	751		$	786
After-tax net investment income	$	224		$	290			$	926		$	1,083

Effective income yield for the fixed maturity securities portfolio, pretax ⁽¹⁾	4.2		%	4.5			%	4.3		%	4.6		%
Effective income yield for the fixed maturity securities portfolio, after tax ⁽¹⁾	2.8		%	3.1			%	3.0		%	3.1		%



	Life & Group Non-Core
Periods ended December 31	Three Months							Twelve Months
(In millions)	2014				2013			2014				2013
Taxable fixed maturities	$	101			$	108		$	407			$	445
Tax-exempt fixed maturities	79				62			297				218
Total fixed maturity securities	180				170			704				663
Limited partnership investments	—				—			—				1
Other, net of investment expense	(1		)		—			(4		)		(2		)
Pretax net investment income	$	179			$	170		$	700			$	662

After-tax fixed maturity securities	$	141			$	129		$	547			$	496
After-tax net investment income	$	141			$	129		$	547			$	495

Effective income yield for the fixed maturity securities portfolio, pretax ⁽¹⁾	5.9			%	6.0		%	5.9			%	6.0			%
Effective income yield for the fixed maturity securities portfolio, after tax ⁽¹⁾	4.6			%	4.6		%	4.6			%	4.5			%

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

Claim & Claim Adjustment Expense Reserve Rollforward



Three months ended December 31, 2014 (In millions)	Specialty			Commercial			International			P&C Operations			Life & Group Non-Core			Corporate & Other Non-Core			Total Operations
Claim & claim adjustment expense reserves, beginning of period
Gross	$	6,245		$	9,604		$	1,548		$	17,397		$	3,113		$	2,965		$	23,475
Ceded	586			598			214			1,398			364			2,637			4,399
Net	5,659			9,006			1,334			15,999			2,749			328			19,076

Net incurred claim & claim adjustment expenses	414			462			106			982			257			(5		)	1,234
Net claim & claim adjustment expense payments	(418		)	(615		)	(136		)	(1,169		)	(173		)	(8		)	(1,350		)
Foreign currency translation adjustment and other	—			—			(43		)	(43		)	10			—			(33		)

Claim & claim adjustment expense reserves, end of period
Net	5,655			8,853			1,261			15,769			2,843			315			18,927
Ceded	574			661			180			1,415			340			2,589			4,344
Gross	$	6,229		$	9,514		$	1,441		$	17,184		$	3,183		$	2,904		$	23,271



Twelve months ended December 31, 2014 (In millions)	Specialty			Commercial			International			P&C Operations			Life & Group Non-Core			Corporate & Other Non-Core			Total Operations
Claim & claim adjustment expense reserves, beginning of period
Gross	$	6,058		$	10,091		$	1,575		$	17,724		$	3,058		$	3,307		$	24,089
Ceded	476			980			241			1,697			435			2,840			4,972
Net	5,582			9,111			1,334			16,027			2,623			467			19,117

Net incurred claim & claim adjustment expenses	1,627			2,189			502			4,318			852			(2		)	5,168
Net claim & claim adjustment expense payments	(1,554		)	(2,447		)	(471		)	(4,472		)	(678		)	(150		)	(5,300		)
Foreign currency translation adjustment and other	—			—			(104		)	(104		)	46			—			(58		)

Claim & claim adjustment expense reserves, end of period
Net	5,655			8,853			1,261			15,769			2,843			315			18,927
Ceded	574			661			180			1,415			340			2,589			4,344
Gross	$	6,229		$	9,514		$	1,441		$	17,184		$	3,183		$	2,904		$	23,271

Life & Group Non-Core Policyholder Reserves



December 31, 2014
(In millions)	Claim and claim adjustment expenses		Future policy benefits		Total
Long term care	$	2,064	$	7,782	$	9,846
Structured settlement annuities	606		—		606
Other	28		1		29
Total	2,698		7,783		10,481
Shadow adjustments ⁽¹⁾	145		1,522		1,667
Ceded reserves	340		185		525
Total gross reserves	$	3,183	$	9,490	$	12,673



December 31, 2013
(In millions)	Claim and claim adjustment expenses		Future policy benefits		Policyholders' funds		Separate account business		Total
Long term care	$	1,889	$	7,329	$	—	$	—	$	9,218
Annuities, including structured settlements	613		1,990		—		—		2,603
Institutional markets	1		9		57		181		248
Other	37		4		—		—		41
Total	2,540		9,332		57		181		12,110
Shadow adjustments ⁽¹⁾	83		406		—		—		489
Ceded reserves	435		733		35		—		1,203
Total gross reserves	$	3,058	$	10,471	$	92	$	181	$	13,802

(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 $314 million and $342 million related to Deferred acquisition costs at December 31, 2014 and 2013.

Statutory Data - Preliminary



Periods Ended December 31	Three Months											Twelve Months
Income Statements	(Preliminary) 2014								Change			(Preliminary) 2014								Change
(In millions)	(Preliminary) 2014				2013				Change			(Preliminary) 2014				2013				Change
Combined Continental Casualty Companies
Gross written premiums	$	2,219			$	2,175			2		%	$	8,914			$	8,732			2		%
Net written premiums	1,464				1,534				(5	)		6,007				6,247				(4	)

Net earned premiums	1,393				1,482				(6	)		5,598				5,692				(2	)
Claim and claim adjustment expenses	1,136				1,541							4,767				5,196
Acquisition expenses	240				234							1,027				1,059
Underwriting expenses	211				229							827				854
Policyholders' dividends	3				3							8				9
Underwriting income (loss)	(197		)		(525		)		62			(1,031		)		(1,426		)		28
Net investment income	482				614							2,015				1,943
Other income (loss)	(72		)		549							—				637
Income tax (expense) benefit	(47		)		(85		)					(102		)		(118		)
Net realized gains (losses)	(72		)		(27		)					32				(123		)
Net income (loss)	$	94			$	526			(82	)	%	$	914			$	913			—		%

Financial Ratios
Loss and LAE	81.6			%	104.0			%				85.2			%	91.3			%
Acquisition expense	16.4				15.3							17.1				17.0
Underwriting expense	14.4				14.9							13.8				13.7
Expense	30.8				30.2							30.9				30.7
Dividend	0.2				0.2							0.1				0.2
Combined ratio	112.6			%	134.4			%				116.2			%	122.2			%



SUPPLEMENTAL STATUTORY DATA	(Preliminary) December 31, 2014		December 31, 2013
(In billions)	(Preliminary) December 31, 2014		December 31, 2013
Statutory surplus	$	11.2	$	11.1

Definitions and Presentation


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


•	P&C Operations includes Specialty, Commercial and International.


•	Life & Group Non-Core segment primarily includes the results of long term care businesses 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 K to the Condensed Consolidated Financial Statements within the September 30, 2014 Form 10-Q for further discussion of this measure.

•

In the evaluation of the results of Specialty, Commercial and International, 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 marketable securities in the public 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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