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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2002    Commission File Number 1-5823

CNA FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	36-6169860
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

CNA Plaza
Chicago, Illinois	60685
(Address of principal executive offices)	(Zip Code)

(312) 822-5000
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [ü ] No [  ]

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at November 1, 2002
Common Stock, Par value $2.50	223,608,868

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CNA FINANCIAL CORPORATION
INDEX

Part I.	Financial Information:
	Item 1.	Condensed Consolidated Financial Statements:
		Condensed Consolidated Balance Sheets at September 30, 2002 (Unaudited) and at December 31, 2001		1
		Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2002 and 2001 (Unaudited)		2
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and 2001 (Unaudited)		3
		Notes to Condensed Consolidated Financial Statements		4
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		38
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk		88
	Item 4.	Controls and Procedures		94
Part II.	Other Information
	Item 1.	Legal Proceedings		95
	Item 5.	Other Information		95
	Item 6.	Exhibits and Reports on Form 8-K		95
	Signatures			96

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ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CNA FINANCIAL CORPORATION

	(Unaudited) September 30, 2002				December 31, 2001
(In millions, except share data)
Assets
Investments:
Fixed maturity securities available-for-sale (amortized cost of $27,793 and $28,970)	$	28,443			$	29,164
Equity securities available-for-sale (cost of $918 and $1,168)		932				1,338
Mortgage loans and real estate (less accumulated depreciation of $54 and $1)		58				35
Policy loans		182				194
Other invested assets		1,380				1,355
Short-term investments		5,185				3,740
Total investments		36,180				35,826
Cash and cash equivalents		259				142
Receivables:
Reinsurance		13,656				13,823
Insurance		3,546				4,006
Less allowance for doubtful accounts		(371	)			(351	)
Accrued investment income		380				385
Receivables for securities sold		776				443
Deferred acquisition costs		2,548				2,424
Prepaid reinsurance premiums		1,417				1,221
Federal income taxes recoverable (includes $0 and $617 due from Loews)		—				611
Deferred income taxes		679				737
Property and equipment at cost (less accumulated depreciation of $761 and $797)		376				444
Intangibles		183				265
Other assets		2,292				2,194
Separate account business		3,147				3,798
Total assets	$	65,068			$	65,968
Liabilities and Stockholders’ Equity
Liabilities:
Insurance reserves:
Claim and claim adjustment expense	$	29,725			$	31,266
Unearned premiums		5,002				4,505
Future policy benefits		7,286				7,306
Policyholders’ funds		567				546
Collateral on loaned securities and derivatives		1,007				923
Payables for securities purchased		836				606
Participating policyholders’ funds		127				118
Debt		2,549				2,567
Reinsurance balances payable		3,032				2,723
Federal income taxes payable (includes $82 and $0 due to Loews)		84				—
Other liabilities		2,773				3,019
Separate account business		3,147				3,798
Total liabilities	$	56,135			$	57,377
Commitments and contingencies (Note D, F, G, H, J and N)
Minority interest		233				224
Stockholders’ equity:
Common stock ($2.50 par value; 500,000,000 shares authorized; 225,850,270 shares issued at September 30, 2002 and December 31, 2001; and 223,608,868 and 223,596,861 shares outstanding at September 30, 2002 and December 31, 2001)		565				565
Additional paid-in capital		1,031				1,031
Retained earnings		6,793				6,683
Accumulated other comprehensive income		451				226
Treasury stock, at cost		(69	)			(70	)
		8,771				8,435
Notes receivable for the issuance of common stock		(71	)			(68	)
Total stockholders’ equity		8,700				8,367
Total liabilities and stockholders’ equity	$	65,068			$	65,968
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).
1

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CNA FINANCIAL CORPORATION

	Three Months								Nine Months
Period ended September 30	2002				2001				2002				2001
(In millions, except per share data)
Revenues
Net earned premiums	$	2,262			$	2,515			$	7,925			$	6,600
Net investment income		364				448				1,292				1,357
Realized investment gains (losses), net of participating policyholders’ and minority interests		24				—				(137	)			938
Other revenues		140				162				476				507
Total revenues		2,790				3,125				9,556				9,402
Claims, Benefits and Expenses
Insurance claims and policyholders’ benefits		1,850				2,420				6,542				8,766
Amortization of deferred acquisition costs		448				423				1,350				1,297
Other operating expenses		377				484				1,261				1,462
Restructuring and other related charges		—				—				—				62
Interest		37				38				112				122
Total claims, benefits and expenses		2,712				3,365				9,265				11,709
Income (loss) from continuing operations before income tax and minority interest		78				(240	)			291				(2,307	)
Income tax (expense) benefit		(23	)			86				(78	)			756
Minority interest		(1	)			(6	)			(11	)			(18	)
Income (loss) from continuing operations		54				(160	)			202				(1,569	)
Income (loss) from discontinued operations, net of tax of $0, $1, $9, and $1		—				5				(35	)			8
Income (loss) before cumulative effects of changes in accounting principles		54				(155	)			167				(1,561	)
Cumulative effects of changes in accounting principles, net of tax of $0, $0, $7, and $33		—				—				(57	)			(61	)
Net income (loss)	$	54			$	(155	)		$	110			$	(1,622	)
Basic and Diluted Earnings (Loss) Per Share
Income (loss) from continuing operations	$	0.24			$	(0.86	)		$	0.91			$	(8.52	)
Income (loss) from discontinued operations, net of tax		—				0.02				(0.16	)			0.04
Income (loss) before cumulative effects of changes in accounting principles		0.24				(0.84	)			0.75				(8.48	)
Cumulative effects of changes in accounting principles, net of tax		—				—				(0.26	)			(0.33	)
Basic and diluted earnings (loss) per share available to common stockholders	$	0.24			$	(0.84	)		$	0.49			$	(8.81	)
Weighted average outstanding common stock and common stock equivalents		223.6				185.5				223.6				184.0
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).
2

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CNA FINANCIAL CORPORATION

Nine months ended September 30	2002				2001
(In millions)
Cash Flows from Operating Activities
Net income (loss)	$	110			$	(1,622	)
Adjustments to reconcile net income (loss) to net cash flows provided (used) by operating activities:
Cumulative effects of changes in accounting principles, net of tax		57				61
Loss on disposals of property and equipment		17				63
Minority interest		11				18
Deferred income tax provision		(33	)			(217	)
Net realized investment losses (gains)		137				(940	)
Realized loss from discontinued operations, net of tax		37				—
Equity method income		24				(52	)
Amortization of intangibles		—				15
Amortization of bond discount		(98	)			(208	)
Depreciation		74				99
Changes in:
Receivables, net		647				(3,017	)
Deferred acquisition costs		(130	)			(54	)
Accrued investment income		2				10
Federal income taxes recoverable/payable		713				(721	)
Prepaid reinsurance premiums		(196	)			95
Reinsurance balances payable		309				1,303
Insurance reserves		(664	)			4,339
Other, net		(210	)			130
Total adjustments		697				924
Net cash flows provided (used) by operating activities		807				(698	)