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

Attached files

file	filename
EX-99.1 - EXHIBIT 99.1 - CNA FINANCIAL CORP	q3-17exhibit991.htm
8-K - 8-K - CNA FINANCIAL CORP	q3178k.htm

CNA Financial Corporation

Supplemental Financial Information

September 30, 2017

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.

Table of Contents



	Page
Consolidated Results
Statements of Operations..................................................................................................................................................................................................	1
Components of Income (Loss), Per Share Data and Return on Equity.............................................................................................................................	2
Selected Balance Sheet Data and Statement 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
Definitions and Presentation..............................................................................................................................................................................................	17

Statements of Operations



Periods ended September 30	Three Months									Nine Months
(In millions)	2017			2016			Change			2017			2016			Change
Revenues:
Net earned premiums	$	1,806		$	1,767		2		%	$	5,185		$	5,196		—		%
Net investment income	509			524			(3	)		1,529			1,461			5
Net realized investment gains (losses):
Other-than-temporary impairment (OTTI) losses	(5		)	(18		)				(9		)	(56		)
Other net realized investment gains (losses)	(19		)	64						71			82
Net realized investment gains (losses)	(24		)	46						62			26
Other revenues	107			96						318			293
Total revenues	2,398			2,433			(1	)		7,094			6,976			2
Claims, Benefits and Expenses:
Insurance claims and policyholders' benefits	1,480			1,202						4,053			3,949
Amortization of deferred acquisition costs	309			314						926			926
Other operating expenses	381			403						1,091			1,162
Interest	41			39						124			119
Total claims, benefits and expenses	2,211			1,958			(13	)		6,194			6,156			(1	)
Income (loss) before income tax	187			475						900			820
Income tax (expense) benefit	(43		)	(132		)				(224		)	(202		)
Net income (loss)	$	144		$	343		(58	)	%	$	676		$	618		9		%

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)	2017				2016			2017			2016
Components of Income (Loss)
Net operating income (loss)	$	159			$	311		$	633		$	603
Net realized investment gains (losses)	(15		)		32			43			15
Net income (loss)	$	144			$	343		$	676		$	618

Diluted Earnings (Loss) Per Common Share
Net operating income (loss)	$	0.58			$	1.15		$	2.33		$	2.22
Net realized investment gains (losses)	(0.05		)		0.11			0.15			0.06
Diluted earnings (loss) per share	$	0.53			$	1.26		$	2.48		$	2.28

Weighted Average Outstanding Common Stock and Common Stock Equivalents
Basic	271.2				270.5			271.1			270.4
Diluted	272.1				271.2			272.0			271.0

Return on Equity
Net income (loss) ⁽¹⁾	4.7			%	11.4		%	7.5		%	6.9		%
Net operating income (loss) ⁽²⁾	5.3				10.5			7.0			6.7

(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 Sheet Data and Statement of Cash Flows Data



(In millions, except per share data)	September 30, 2017		December 31, 2016
Total investments	$	46,747	$	45,420
Reinsurance receivables, net of allowance for uncollectible receivables	4,332		4,416
Total assets	56,582		55,233
Insurance reserves	37,309		36,431
Debt	2,857		2,710
Total liabilities	44,413		43,264
Accumulated other comprehensive income (loss) ⁽¹⁾	107		(173		)
Total stockholders' equity	12,169		11,969

Book value per common share	$	44.88	$	44.25
Book value per common share excluding AOCI	$	44.48	$	44.89

Outstanding shares of common stock (in millions of shares)	271.2		270.5

Statutory capital and surplus - Combined Continental Casualty Companies ⁽²⁾	$	10,805	$	10,748



Three months ended September 30	2017			2016
Net cash flows provided (used) by operating activities	$	379		$	507
Net cash flows provided (used) by investing activities	(329		)	(437		)
Net cash flows provided (used) by financing activities	4			(67		)
Net cash flows provided (used) by operating, investing and financing activities	$	54		$	3

Nine months ended September 30	2017			2016
Net cash flows provided (used) by operating activities	$	894		$	1,120
Net cash flows provided (used) by investing activities	(218		)	(604		)
Net cash flows provided (used) by financing activities	(673		)	(605		)
Net cash flows provided (used) by operating, investing and financing activities	$	3		$	(89	)

(1) As of September 30, 2017 and December 31, 2016 the net unrealized gains on investments included in AOCI were net of after-tax Shadow Adjustments of $1,321 million and $1,014 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, an increase in Insurance reserves are recorded, net of tax, as a reduction of net unrealized gains through Other comprehensive income (loss) (Shadow Adjustments).

(2) Statutory capital and surplus as of September 30, 2017 is preliminary.

Property & Casualty - Results of Operations



Periods ended September 30	Three Months											Nine Months
(In millions)	2017				2016				Change			2017				2016				Change
Gross written premiums	$	2,712			$	2,722			—		%	$	8,242			$	8,125			1		%
Net written premiums	1,599				1,624				(2	)		4,933				4,917				—

Net earned premiums	1,670				1,633				2			4,782				4,796				—
Net investment income	308				328							927				883
Other revenues	107				100							316				291
Total operating revenues	2,085				2,061				1			6,025				5,970				1
Insurance claims and policyholders' benefits	1,173				900							3,069				2,864
Amortization of deferred acquisition costs	309				314							926				926
Other insurance related expenses	249				261							702				745
Other expenses	87				88							268				274
Total claims, benefits and expenses	1,818				1,563				(16	)		4,965				4,809				(3	)
Operating income (loss) before income tax	267				498							1,060				1,161
Income tax (expense) benefit on operating income (loss)	(100		)		(169		)					(364		)		(396		)
Net operating income (loss)	$	167			$	329			(49	)	%	$	696			$	765			(9	)	%

Other Performance Metrics
Underwriting gain (loss)	$	(61	)		$	158			(139	)	%	$	85			$	261			(67	)	%

Loss & LAE ratio	69.9			%	54.7			%	(15.2	)	pts	63.9			%	59.4			%	(4.5	)	pts
Acquisition expense ratio	19.5				19.5				—			19.4				19.4				—
Underwriting expense ratio	14.0				15.7				1.7			14.6				15.5				0.9
Expense ratio	33.5				35.2				1.7			34.0				34.9				0.9
Dividend ratio	0.3				0.5				0.2			0.3				0.3				—
Combined ratio	103.7			%	90.4			%	(13.3	)		98.2			%	94.6			%	(3.6	)
Combined ratio excluding catastrophes and development	94.6			%	97.5			%	2.9		pts	95.4			%	97.8			%	2.4		pts

Net accident year catastrophe losses incurred	$	269			$	16						$	342			$	137
Effect on loss & LAE ratio	16.5			%	1.0			%	(15.5	)	pts	7.3			%	2.8			%	(4.5	)	pts

Net prior year development and other: (favorable) / unfavorable	$	(129	)		$	(134	)					$	(215	)		$	(297	)
Effect on loss & LAE ratio	(7.4		)	%	(8.1		)	%	(0.7	)	pts	(4.5		)	%	(6.0		)	%	(1.5	)	pts

Rate	—			%	(1		)	%	1		pts	—			%	(1		)	%	1		pts
Renewal premium change	2				3				(1	)		1				2				(1	)
Retention	85				84				1			86				85				1
New business	$	270			$	268			1		%	$	823			$	799			3		%

Specialty - Results of Operations



Periods ended September 30	Three Months											Nine Months
(In millions)	2017				2016				Change			2017				2016				Change
Gross written premiums	$	1,764			$	1,791			(2	)	%	$	5,188			$	5,120			1		%
Net written premiums	705				733				(4	)		2,100				2,108				—

Net earned premiums	703				704				—			2,056				2,088				(2	)
Net investment income	134				140							407				380
Other revenues	99				93							291				269
Total operating revenues	936				937				—			2,754				2,737				1
Insurance claims and policyholders' benefits	358				334							1,144				1,103
Amortization of deferred acquisition costs	153				151							445				443
Other insurance related expenses	68				77							209				225
Other expenses	85				78							248				232
Total claims, benefits and expenses	664				640				(4	)		2,046				2,003				(2	)
Operating income (loss) before income tax	272				297							708				734
Income tax (expense) benefit on operating income (loss)	(92		)		(102		)					(238		)		(248		)
Net operating income (loss)	$	180			$	195			(8	)	%	$	470			$	486			(3	)	%

Other Performance Metrics
Underwriting gain (loss)	$	124			$	142			(13	)	%	$	258			$	317			(19	)	%

Loss & LAE ratio	50.8			%	46.8			%	(4.0	)	pts	55.5			%	52.6			%	(2.9	)	pts
Acquisition expense ratio	20.0				20.0				—			20.0				20.0				—
Underwriting expense ratio	11.3				12.5				1.2			11.8				12.0				0.2
Expense ratio	31.3				32.5				1.2			31.8				32.0				0.2
Dividend ratio	0.2				0.6				0.4			0.1				0.3				0.2
Combined ratio	82.3			%	79.9			%	(2.4	)		87.4			%	84.9			%	(2.5	)
Combined ratio excluding catastrophes and development	92.7			%	95.6			%	2.9		pts	93.4			%	94.8			%	1.4		pts

Net accident year catastrophe losses incurred	$	38			$	1						$	47			$	14
Effect on loss & LAE ratio	5.4			%	0.2			%	(5.2	)	pts	2.3			%	0.7			%	(1.6	)	pts

Net prior year development and other: (favorable) / unfavorable	$	(112	)		$	(112	)					$	(176	)		$	(229	)
Effect on loss & LAE ratio	(15.8		)	%	(15.9		)	%	(0.1	)	pts	(8.3		)	%	(10.6		)	%	(2.3	)	pts

Rate	(1		)	%	—			%	(1	)	pts	—			%	1			%	(1	)	pts
Renewal premium change	—				2				(2	)		2				2				—
Retention	89				88				1			89				88				1
New business	$	64			$	66			(3	)	%	$	187			$	192			(3	)	%

Commercial - Results of Operations



Periods ended September 30	Three Months											Nine Months
(In millions)	2017				2016				Change			2017				2016				Change
Gross written premiums	$	722			$	718			1		%	$	2,321			$	2,301			1		%
Net written premiums	687				684				—			2,169				2,172				—

Net earned premiums	741				719				3			2,097				2,103				—
Net investment income	161				175							482				465
Other revenues	7				7							25				21
Total operating revenues	909				901				1			2,604				2,589				1
Insurance claims and policyholders' benefits	615				449							1,481				1,366
Amortization of deferred acquisition costs	120				118							354				351
Other insurance related expenses	133				151							387				422
Other expenses	6				9							31				25
Total claims, benefits and expenses	874				727				(20	)		2,253				2,164				(4	)
Operating income (loss) before income tax	35				174							351				425
Income tax (expense) benefit on operating income (loss)	(10		)		(60		)					(117		)		(145		)
Net operating income (loss)	$	25			$	114			(78	)	%	$	234			$	280			(16	)	%

Other Performance Metrics
Underwriting gain (loss)	$	(127	)		$	1			N/M		%	$	(125	)		$	(36	)		N/M		%

Loss & LAE ratio	82.4			%	62.2			%	(20.2	)	pts	70.1			%	64.6			%	(5.5	)	pts
Acquisition expense ratio	17.9				18.2				0.3			18.0				18.0				—
Underwriting expense ratio	16.4				18.9				2.5			17.3				18.7				1.4
Expense ratio	34.3				37.1				2.8			35.3				36.7				1.4
Dividend ratio	0.5				0.5				—			0.5				0.4				(0.1	)
Combined ratio	117.2			%	99.8			%	(17.4	)		105.9			%	101.7			%	(4.2	)
Combined ratio excluding catastrophes and development	94.7			%	98.7			%	4.0		pts	96.3			%	98.5			%	2.2		pts

Net accident year catastrophe losses incurred	$	173			$	12						$	235			$	95
Effect on loss & LAE ratio	23.9			%	1.6			%	(22.3	)	pts	11.1			%	4.6			%	(6.5	)	pts

Net prior year development and other: (favorable) / unfavorable	$	(13	)		$	(5	)					$	(24	)		$	(32	)
Effect on loss & LAE ratio	(1.4		)	%	(0.5		)	%	0.9		pts	(1.5		)	%	(1.4		)	%	0.1		pts

Rate	—			%	(3		)	%	3		pts	—			%	(2		)	%	2		pts
Renewal premium change	2				5				(3	)		1				4				(3	)
Retention	85				84				1			86				84				2
New business	$	137			$	135			1		%	$	429			$	418			3		%

International - Results of Operations



Periods ended September 30	Three Months											Nine Months
(In millions)	2017				2016				Change			2017				2016				Change
Gross written premiums	$	226			$	213			6		%	$	733			$	704			4		%
Net written premiums	207				207				—			664				637				4

Net earned premiums	226				210				8			629				605				4
Net investment income	13				13							38				38
Other revenues	1				—							—				1
Total operating revenues	240				223				8			667				644				4
Insurance claims and policyholders' benefits	200				117							444				395
Amortization of deferred acquisition costs	36				45							127				132
Other insurance related expenses	48				33							106				98
Other expenses	(4		)		1							(11		)		17
Total claims, benefits and expenses	280				196				(43	)		666				642				(4	)
Operating income (loss) before income tax	(40		)		27							1				2
Income tax (expense) benefit on operating income (loss)	2				(7		)					(9		)		(3		)
Net operating income (loss)	$	(38	)		$	20			N/M		%	$	(8	)		$	(1	)		N/M		%

Other Performance Metrics
Underwriting gain (loss)	$	(58	)		$	15			N/M		%	$	(48	)		$	(20	)		(140	)	%

Loss & LAE ratio	88.4			%	55.4			%	(33.0	)	pts	70.6			%	65.2			%	(5.4	)	pts
Acquisition expense ratio	23.0				22.5				(0.5	)		22.4				21.8				(0.6	)
Underwriting expense ratio	14.5				15.3				0.8			14.8				16.4				1.6
Expense ratio	37.5				37.8				0.3			37.2				38.2				1.0
Dividend ratio	—				—				—			—				—				—
Combined ratio	125.9			%	93.2			%	(32.7	)		107.8			%	103.4			%	(4.4	)
Combined ratio excluding catastrophes and development	99.9			%	99.7			%	(0.2	)	pts	99.2			%	104.7			%	5.5		pts

Net accident year catastrophe losses incurred	$	58			$	3						$	60			$	28
Effect on loss & LAE ratio	27.5			%	1.5			%	(26.0	)	pts	10.3			%	4.7			%	(5.6	)	pts

Net prior year development and other: (favorable) / unfavorable	$	(4	)		$	(17	)					$	(15	)		$	(36	)
Effect on loss & LAE ratio	(1.5		)	%	(8.0		)	%	(6.5	)	pts	(1.7		)	%	(6.0		)	%	(4.3	)	pts

Rate	1			%	(1		)	%	2		pts	—			%	(1		)	%	1		pts
Renewal premium change	4				(1		)		5			1				(1		)		2
Retention	73				74				(1	)		78				78				—
New business	$	69			$	67			3		%	$	207			$	189			10		%

Life & Group Non-Core - Results of Operations



Periods ended September 30	Three Months									Nine Months
(In millions)	2017			2016			Change			2017			2016			Change
Net earned premiums	$	136		$	134		1		%	$	404		$	401		1	%
Net investment income	195			192						587			567
Other revenues	—			(4		)				1			(1		)
Total operating revenues	331			322			3			992			967			3
Insurance claims and policyholders' benefits	322			313						980			976
Amortization of deferred acquisition costs	—			—						—			—
Other insurance related expenses	32			37						96			101
Other expenses	2			2						5			7
Total claims, benefits and expenses	356			352			(1	)		1,081			1,084			—
Operating income (loss) before income tax	(25		)	(30		)				(89		)	(117		)
Income tax (expense) benefit on operating income (loss)	35			36						108			117
Net operating income (loss)	$	10		$	6		67		%	$	19		$	—		N/M	%

Corporate & Other Non-Core - Results of Operations



Periods ended September 30	Three Months								Nine Months
(In millions)	2017			2016			Change		2017			2016			Change
Net earned premiums	$	—		$	—				$	(1	)	$	(1	)
Net investment income	6			4					15			11
Other revenues	—			—					1			3
Total operating revenues	6			4			50	%	15			13			15	%
Insurance claims and policyholders' benefits	(15		)	(11		)			4			109
Amortization of deferred acquisition costs	—			—					—			—
Other insurance related expenses	—			(3		)			(2		)	(4		)
Other expenses	52			57					146			158
Total claims, benefits and expenses	37			43			14		148			263			44
Operating income (loss) before income tax	(31		)	(39		)			(133		)	(250		)
Income tax (expense) benefit on operating income (loss)	13			15					51			88
Net operating income (loss)	$	(18	)	$	(24	)	25	%	$	(82	)	$	(162	)	49	%

Investment Summary - Consolidated



	September 30, 2017					June 30, 2017					December 31, 2016
(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	$	19,588		$	1,619	$	19,406		$	1,560	$	18,970	$	1,247
States, municipalities and political subdivisions:
Tax-exempt	11,075			1,101		10,972			996		10,430		834
Taxable	2,881			393		2,854			369		2,810		346
Total states, municipalities and political subdivisions	13,956			1,494		13,826			1,365		13,240		1,180
Asset-backed:
RMBS	5,005			99		4,921			86		5,073		69
CMBS	1,900			42		1,952			45		2,040		24
Other ABS	1,061			14		1,061			11		1,025		3
Total asset-backed	7,966			155		7,934			142		8,138		96
U.S. Treasury and obligations of government-sponsored enterprises	115			—		115			2		93		10
Foreign government	445			6		449			11		445		10
Redeemable preferred stock	20			2		19			1		19		1
Total fixed maturity securities	42,090			3,276		41,749			3,081		40,905		2,544
Equities	129			11		118			10		110		4
Limited partnership investments	2,311			—		2,380			—		2,371		—
Other invested assets	42			—		42			—		36		—
Mortgage loans	722			—		646			—		591		—
Short term investments	1,453			1		1,333			—		1,407		1
Total investments	$	46,747		$	3,288	$	46,268		$	3,091	$	45,420	$	2,549

Net receivable/(payable) on investment activity	$	(114	)			$	(194	)			$	81

Effective portfolio duration (in years)	6.0					6.1					6.1
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, 2017						June 30, 2017						December 31, 2016
(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	$	13,410		$	517		$	13,253		$	502		$	13,137	$	408
States, municipalities and political subdivisions:
Tax-exempt	2,840			119			2,892			106			2,883		70
Taxable	1,252			104			1,249			102			1,231		101
Total states, municipalities and political subdivisions	4,092			223			4,141			208			4,114		171
Asset-backed:
RMBS	4,829			93			4,744			79			4,811		63
CMBS	1,777			38			1,822			41			1,894		20
Other ABS	943			10			942			8			909		3
Total asset-backed	7,549			141			7,508			128			7,614		86
U.S. Treasury and obligations of government-sponsored enterprises	86			(2		)	86			(1		)	68		7
Foreign government	445			6			449			11			445		10
Redeemable preferred stock	6			1			5			—			5		—
Total fixed maturity securities	25,588			886			25,442			848			25,383		682
Equities	64			7			64			7			57		3
Limited partnership investments	2,311			—			2,380			—			2,371		—
Other invested assets	42			—			42			—			36		—
Mortgage loans	618			—			570			—			519		—
Short term investments	1,412			1			1,235			—			1,233		1
Total investments	$	30,035		$	894		$	29,733		$	855		$	29,599	$	686

Net receivable/(payable) on investment activity	$	(151	)				$	(164	)				$	53

Effective portfolio duration (in years)	4.4						4.4						4.6
Weighted average rating of fixed maturity securities	A						A-						A

Investment Summary - Life & Group Non-Core



	September 30, 2017				June 30, 2017					December 31, 2016
(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	$	6,178	$	1,102	$	6,153		$	1,058	$	5,833	$	839
States, municipalities and political subdivisions:
Tax-exempt	8,235		982		8,080			890		7,547		764
Taxable	1,629		289		1,605			267		1,579		245
Total states, municipalities and political subdivisions	9,864		1,271		9,685			1,157		9,126		1,009
Asset-backed:
RMBS	176		6		177			7		262		6
CMBS	123		4		130			4		146		4
Other ABS	118		4		119			3		116		—
Total asset-backed	417		14		426			14		524		10
U.S. Treasury and obligations of government-sponsored enterprises	29		2		29			3		25		3
Foreign government	—		—		—			—		—		—
Redeemable preferred stock	14		1		14			1		14		1
Total fixed maturity securities	16,502		2,390		16,307			2,233		15,522		1,862
Equities	65		4		54			3		53		1
Limited partnership investments	—		—		—			—		—		—
Other invested assets	—		—		—			—		—		—
Mortgage loans	104		—		76			—		72		—
Short term investments	41		—		98			—		174		—
Total investments	$	16,712	$	2,394	$	16,535		$	2,236	$	15,821	$	1,863

Net receivable/(payable) on investment activity	$	37			$	(30	)			$	28

Effective portfolio duration (in years)	8.6				8.7					8.7
Weighted average rating of fixed maturity securities	A				A					A

Investments - Fixed Maturity Securities by Credit Rating



September 30, 2017	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	$	—		$	—	$	59		$	1		$	569		$	50	$	4,364		$	456		$	12,451		$	1,016		$	2,145		$	96	$	19,588		$	1,619
States, municipalities and political subdivisions:
Tax-exempt	—			—		1,019			100			5,795			579		4,074			387			152			20			35			15		11,075			1,101
Taxable	—			—		356			30			1,971			266		528			98			26			(1		)	—			—		2,881			393
Total states, municipalities and political subdivisions	—			—		1,375			130			7,766			845		4,602			485			178			19			35			15		13,956			1,494
Asset-backed:
RMBS	4,222			43		24			1			23			—		77			(1		)	38			1			621			55		5,005			99
CMBS	49			—		308			11			407			13		322			8			561			5			253			5		1,900			42
Other ABS	—			—		32			(3		)	92			1		476			7			461			9			—			—		1,061			14
Total asset-backed	4,271			43		364			9			522			14		875			14			1,060			15			874			60		7,966			155
U.S. Treasury and obligations of government-sponsored enterprises	115			—		—			—			—			—		—			—			—			—			—			—		115			—
Foreign government	—			—		101			3			279			2		35			1			30			—			—			—		445			6
Redeemable preferred stock	—			—		—			—			—			—		—			1			11			1			9			—		20			2
Total fixed maturity securities	$	4,386		$	43	$	1,899		$	143		$	9,136		$	911	$	9,876		$	957		$	13,730		$	1,051		$	3,063		$	171	$	42,090		$	3,276

Percentage of total fixed maturity securities	10		%			5		%				22		%			23		%				33		%				7		%			100		%

Components of Net Investment Income



	Consolidated
Periods ended September 30	Three Months						Nine Months
(In millions)	2017			2016			2017			2016
Taxable fixed maturities	$	349		$	354		$	1,047		$	1,048
Tax-exempt fixed maturities	106			103			320			304
Total fixed maturity securities	455			457			1,367			1,352
Limited partnership investments	51			65			157			97
Other, net of investment expense	3			2			5			12
Net investment income	$	509		$	524		$	1,529		$	1,461
Fixed maturity securities, after tax	$	328		$	326		$	987		$	973
Net investment income, after tax	363			371			1,096			1,048

Effective income yield for the fixed maturity securities portfolio, pretax	4.7		%	4.8		%	4.7		%	4.8		%
Effective income yield for the fixed maturity securities portfolio, after tax	3.4			3.4			3.4			3.4



	Property & Casualty and Corporate & Other Non-Core
Periods ended September 30	Three Months						Nine Months
(In millions)	2017			2016			2017			2016
Taxable fixed maturities	$	237		$	242		$	706		$	722
Tax-exempt fixed maturities	21			21			67			58
Total fixed maturity securities	258			263			773			780
Limited partnership investments	51			65			157			97
Other, net of investment expense	5			4			12			17
Net investment income	$	314		$	332		$	942		$	894
Fixed maturity securities, after tax	$	174		$	177		$	526		$	529
Net investment income, after tax	211			223			637			605

Effective income yield for the fixed maturity securities portfolio, pretax	4.2		%	4.3		%	4.2		%	4.3		%
Effective income yield for the fixed maturity securities portfolio, after tax	2.8			2.9			2.9			2.9



	Life & Group Non-Core
Periods ended September 30	Three Months								Nine Months
(In millions)	2017				2016				2017				2016
Taxable fixed maturities	$	112			$	112			$	341			$	326
Tax-exempt fixed maturities	85				82				253				246
Total fixed maturity securities	197				194				594				572
Limited partnership investments	—				—				—				—
Other, net of investment expense	(2		)		(2		)		(7		)		(5		)
Net investment income	$	195			$	192			$	587			$	567
Fixed maturity securities, after tax	$	154			$	149			$	461			$	444
Net investment income, after tax	152				148				459				443

Effective income yield for the fixed maturity securities portfolio, pretax	5.6			%	5.7			%	5.7			%	5.7			%
Effective income yield for the fixed maturity securities portfolio, after tax	4.4				4.4				4.4				4.4

Claim & Claim Adjustment Expense Reserve Rollforward



Three months ended September 30, 2017 (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	$	6,229		$	8,586		$	1,442		$	16,257		$	3,417		$	2,505		$	22,179
Ceded	869			558			142			1,569			230			2,281			4,080
Net	5,360			8,028			1,300			14,688			3,187			224			18,099

Net incurred claim & claim adjustment expenses	357			611			200			1,168			256			2			1,426
Net claim & claim adjustment expense payments	(465		)	(580		)	(113		)	(1,158		)	(200		)	(6		)	(1,364		)
Foreign currency translation adjustment and other	—			—			37			37			3			—			40

Claim & claim adjustment expense reserves, end of period
Net	5,252			8,059			1,424			14,735			3,246			220			18,201
Ceded	811			571			216			1,598			222			2,188			4,008
Gross	$	6,063		$	8,630		$	1,640		$	16,333		$	3,468		$	2,408		$	22,209



Nine months ended September 30, 2017 (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	$	6,149		$	8,894		$	1,328		$	16,371		$	3,358		$	2,614		$	22,343
Ceded	745			589			127			1,461			249			2,384			4,094
Net	5,404			8,305			1,201			14,910			3,109			230			18,249

Net incurred claim & claim adjustment expenses	1,141			1,470			444			3,055			744			4			3,803
Net claim & claim adjustment expense payments	(1,293		)	(1,717		)	(317		)	(3,327		)	(619		)	(15		)	(3,961		)
Foreign currency translation adjustment and other	—			1			96			97			12			1			110

Claim & claim adjustment expense reserves, end of period
Net	5,252			8,059			1,424			14,735			3,246			220			18,201
Ceded	811			571			216			1,598			222			2,188			4,008
Gross	$	6,063		$	8,630		$	1,640		$	16,333		$	3,468		$	2,408		$	22,209

Life & Group Non-Core Policyholder Reserves



September 30, 2017
(In millions)	Claim and claim adjustment expenses		Future policy benefits		Total
Long term care	$	2,566	$	8,891	$	11,457
Structured settlement annuities	550		—		550
Other	16		—		16
Total	3,132		8,891		12,023
Shadow adjustments	114		1,919		2,033
Ceded reserves	222		230		452
Total gross reserves	$	3,468	$	11,040	$	14,508



December 31, 2016
(In millions)	Claim and claim adjustment expenses		Future policy benefits		Total
Long term care	$	2,426	$	8,654	$	11,080
Structured settlement annuities	565		—		565
Other	17		—		17
Total	3,008		8,654		11,662
Shadow adjustments	101		1,459		1,560
Ceded reserves	249		213		462
Total gross reserves	$	3,358	$	10,326	$	13,684

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 uses the net operating income (loss) financial measure to monitor the Company’s operations. Please refer to Note O to the Consolidated Financial Statements within the December 31, 2016 Form 10-K for further discussion of this non-GAAP financial measure.


•	Management uses underwriting results to monitor insurance operations. Underwriting results are pretax and are calculated as net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and other insurance related expenses.

•

In the evaluation of the results of Specialty, Commercial and International, management uses 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. In addition, management also utilizes renewal premium change, rate, retention and new business in evaluating operating trends. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes. Rate represents the average change in price on policies that renew excluding exposure change. Exposure represents the measure of risk used in the pricing of the insurance product. Retention represents the percentage of premium dollars renewed in comparison to the expiring premium dollars from policies available to renew. Rate, renewal premium change and retention presented for the prior year is updated to reflect subsequent activity on policies written in the period. New business represents premiums from policies written with new customers and additional policies written with existing customers.

•

This financial supplement may also reference or contain financial measures that are not in accordance with GAAP. Management utilizes these financial measures to monitor the Company's insurance operations and investment portfolio. Net operating income, which is derived from certain income statement amounts, is used by management to monitor performance of the Company's insurance operations. The Company's investment portfolio is monitored by management through analysis of various factors including unrealized gains and losses on securities, portfolio duration and exposure to market and credit risk. Based on such analyses, the Company may recognize an other-than-temporary impairment (OTTI) loss on an investment security in accordance with its policy, or sell a security, which may produce realized gains and losses.

•

Net operating income (loss) is calculated by excluding from net income (loss) the after-tax effects of i) net realized investment gains or losses, ii) income or loss from discontinued operations and iii) any cumulative effects of changes in accounting guidance. The calculation of net operating income excludes net realized investment gains or losses because net realized investment gains or losses are largely discretionary, except for some losses related to OTTI, and are generally driven by economic factors that are not necessarily consistent with key drivers of underwriting performance, and are therefore not considered an indication of trends in insurance operations. Management monitors net operating income (loss) for each business segment to assess segment performance. Presentation of consolidated net operating income (loss) is deemed to be a non-GAAP financial measure. For reconciliations of non-GAAP measures to the most comparable GAAP measures and other information, please refer herein and/or to CNA's most recent 10-K on file with the Securities and Exchange Commission, as well as the press release, available at www.cna.com.


•	Pretax net prior year development and other includes the effects of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts.

•

The majority of our limited partnership investments employ hedge fund strategies. While the Company generally does not invest in highly leveraged partnerships, there are risks inherent in limited partnership investments 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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