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

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8-K - FORM 8-K - CNA FINANCIAL CORP	q3158k.htm
EX-99.1 - EXHIBIT - CNA FINANCIAL CORP	q315exhibit991.htm

CNA Financial Corporation

Supplemental Financial Information

September 30, 2015

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 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
Definitions and Presentation..............................................................................................................................................................................................	17

Statements of Operations



Periods ended September 30	Three Months									Nine Months
(In millions)	2015			2014			Change			2015			2014			Change
Revenues:
Net earned premiums	$	1,751		$	1,810		(3	)	%	$	5,173		$	5,427		(5	)	%
Net investment income	354			480			(26	)		1,412			1,556			(9	)
Net realized investment gains (losses):
Other-than-temporary impairment (OTTI) losses	(56		)	(10		)				(99		)	(17		)
Portion of OTTI recognized in Other comprehensive income (loss)	—			—						—			—
Net OTTI losses recognized in earnings	(56		)	(10		)				(99		)	(17		)
Other net realized investment gains (losses)	7			47						60			86
Net realized investment gains (losses)	(49		)	37						(39		)	69
Other revenues	97			84						286			262
Total revenues	2,153			2,411			(11	)		6,832			7,314			(7	)
Claims, Benefits and Expenses:
Insurance claims and policyholders' benefits	1,200			1,354						4,008			4,241
Amortization of deferred acquisition costs	319			332						936			996
Other operating expenses	362			384						1,061			984
Interest	39			48						117			138
Total claims, benefits and expenses	1,920			2,118			9			6,122			6,359			4
Income (loss) before income tax	233			293						710			955
Income tax (expense) benefit	(55		)	(84		)				(161		)	(265		)
Income (loss) from continuing operations	178			209			(15	)		549			690			(20	)
Income (loss) from discontinued operations, net of tax	—			4						—			(197		)
Net income (loss)	$	178		$	213		(16	)	%	$	549		$	493		11		%

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)	2015				2014			2015				2014
Components of Income (Loss)
Net operating income (loss)	$	210			$	182		$	567			$	644
Net realized investment gains (losses), after tax	(32		)		27			(18		)		46
Income (loss) from continuing operations	178				209			549				690
Income (loss) from discontinued operations, net of tax	—				4			—				(197		)
Net income (loss)	$	178			$	213		$	549			$	493

Diluted Earnings (Loss) Per Share
Net operating income (loss)	$	0.77			$	0.68		$	2.09			$	2.38
Net realized investment gains (losses), after tax	(0.11		)		0.09			(0.06		)		0.17
Income (loss) from continuing operations	0.66				0.77			2.03				2.55
Income (loss) from discontinued operations, net of tax	—				0.02			—				(0.73		)
Diluted earnings (loss) per share	$	0.66			$	0.79		$	2.03			$	1.82

Weighted Average Outstanding Common Stock and Common Stock Equivalents
Basic	270.3				269.9			270.2				269.9
Diluted	270.8				270.6			270.7				270.6

Return on Equity
Net income (loss) ⁽¹⁾	5.8			%	6.5		%	5.8			%	5.1			%
Net operating income (loss) ⁽²⁾	6.9				6.0			6.1				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⁽¹⁾



(In millions, except per share data)	September 30, 2015		December 31, 2014
Total investments	$	45,318	$	46,262
Reinsurance receivables, net of allowance for uncollectible receivables	4,491		4,694
Total assets	54,812		55,566
Insurance reserves	36,093		36,380
Debt	2,561		2,559
Total liabilities	42,547		42,772
Accumulated other comprehensive income (loss) ⁽²⁾	60		400
Total stockholders' equity	12,265		12,794

Book value	$	45.38	$	47.39
Book value excluding AOCI	$	45.16	$	45.91

Outstanding shares of common stock	270.3		270.0

Statutory capital and surplus - Combined Continental Casualty Companies ⁽³⁾	$	10,885	$	11,155



Three months ended September 30	2015			2014
Net cash flows provided (used) by operating activities	$	505		$	460
Net cash flows provided (used) by investing activities	(341		)	(353		)
Net cash flows provided (used) by financing activities	(69		)	(68		)
Net cash flows provided (used) by operating, investing and financing activities	$	95		$	39



Nine months ended September 30	2015			2014
Net cash flows provided (used) by operating activities	$	1,045		$	1,047
Net cash flows provided (used) by investing activities	(254		)	(1,087		)
Net cash flows provided (used) by financing activities	(739		)	95
Net cash flows provided (used) by operating, investing and financing activities	$	52		$	55

(1) On August 1, 2014, CNA completed the sale of the common stock of Continental Assurance Company (CAC), CNA's former life insurance subsidiary. CNA elected to include CAC cash flow data in the comparative period.

(2) As of September 30, 2015 and December 31, 2014, the net unrealized gains on investments included in AOCI were net of after-tax Shadow Adjustments of $1,046 million and $1,288 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).

(3) Statutory capital and surplus as of September 30, 2015 is preliminary.

Property & Casualty - Results of Operations



Periods ended September 30	Three Months											Nine Months
(In millions)	2015				2014				Change			2015				2014				Change
Gross written premiums	$	2,474			$	2,320			7		%	$	7,577			$	7,224			5		%
Net written premiums	1,529				1,560				(2	)		4,836				4,981				(3	)

Net earned premiums	1,614				1,671				(3	)		4,762				5,011				(5	)
Net investment income	171				298							860				1,018
Other revenues	96				86							272				246
Total operating revenues	1,881				2,055				(8	)		5,894				6,275				(6	)
Insurance claims and policyholders' benefits	842				1,053							2,885				3,332
Amortization of deferred acquisition costs	313				325							917				974
Other insurance related expenses	228				227							688				686
Other expenses	92				83							241				236
Total claims, benefits and expenses	1,475				1,688				13			4,731				5,228				10
Operating income (loss) before income tax	406				367							1,163				1,047
Income tax (expense) benefit on operating income (loss)	(143		)		(126		)					(399		)		(351		)
Net operating income (loss)	$	263			$	241			9		%	$	764			$	696			10		%

Other Performance Metrics
Underwriting gain (loss)	$	231			$	66			N/M		%	$	272			$	19			N/M		%

Loss & LAE ratio	52.1			%	62.8			%	10.7		pts	60.4			%	66.3			%	5.9		pts
Acquisition expense ratio	19.1				19.5				0.4			19.1				19.4				0.3
Underwriting expense ratio	14.4				13.6				(0.8	)		14.6				13.8				(0.8	)
Expense ratio	33.5				33.1				(0.4	)		33.7				33.2				(0.5	)
Dividend ratio	0.1				0.2				0.1			0.2				0.2				—
Combined ratio	85.7			%	96.1			%	10.4			94.3			%	99.7			%	5.4
Combined ratio excluding catastrophes and development	95.5			%	96.2			%	0.7		pts	95.9			%	96.6			%	0.7		pts

Net accident year catastrophe losses incurred	$	14			$	17						$	103			$	147
Effect on loss & LAE ratio	0.9			%	1.0			%	0.1		pts	2.1			%	3.0			%	0.9		pts

Net prior year development and other: (favorable) / unfavorable	$	(175	)		$	(19	)					$	(182	)		$	(4	)
Effect on loss & LAE ratio	(10.7		)	%	(1.1		)	%	9.6		pts	(3.7		)	%	0.1			%	3.8		pts

Rate	1			%	3			%	(2	)	pts	1			%	3			%	(2	)	pts
Retention	80			%	79			%	1		pts	80			%	78			%	2		pts
New Business	$	225			$	224			—		%	$	711			$	723			(2	)	%

Specialty - Results of Operations



Periods ended September 30	Three Months											Nine Months
(In millions)	2015				2014				Change			2015				2014				Change
Gross written premiums	$	1,604			$	1,442			11		%	$	4,619			$	4,193			10		%
Net written premiums	707				736				(4	)		2,077				2,150				(3	)

Net earned premiums	706				725				(3	)		2,075				2,126				(2	)
Net investment income	76				126							365				423
Other revenues	86				76							245				218
Total operating revenues	868				927				(6	)		2,685				2,767				(3	)
Insurance claims and policyholders' benefits	308				369							1,155				1,217
Amortization of deferred acquisition costs	150				151							440				442
Other insurance related expenses	67				65							202				197
Other expenses	73				65							209				191
Total claims, benefits and expenses	598				650				8			2,006				2,047				2
Operating income (loss) before income tax	270				277							679				720
Income tax (expense) benefit on operating income (loss)	(91		)		(93		)					(228		)		(240		)
Net operating income (loss)	$	179			$	184			(3	)	%	$	451			$	480			(6	)	%

Other Performance Metrics
Underwriting gain (loss)	$	181			$	140			29		%	$	278			$	270			3		%

Loss & LAE ratio	43.5			%	50.7			%	7.2		pts	55.5			%	57.1			%	1.6		pts
Acquisition expense ratio	19.6				19.7				0.1			19.7				19.8				0.1
Underwriting expense ratio	11.2				10.1				(1.1	)		11.2				10.3				(0.9	)
Expense ratio	30.8				29.8				(1.0	)		30.9				30.1				(0.8	)
Dividend ratio	0.1				0.3				0.2			0.2				0.2				—
Combined ratio	74.4			%	80.8			%	6.4			86.6			%	87.4			%	0.8
Combined ratio excluding catastrophes and development	92.5			%	91.3			%	(1.2	)	pts	93.0			%	92.5			%	(0.5	)	pts

Net accident year catastrophe losses incurred	$	3			$	5						$	15			$	21
Effect on loss & LAE ratio	0.5			%	0.7			%	0.2		pts	0.7			%	1.0			%	0.3		pts

Net prior year development and other: (favorable) / unfavorable	$	(132	)		$	(83	)					$	(151	)		$	(135	)
Effect on loss & LAE ratio	(18.6		)	%	(11.2		)	%	7.4		pts	(7.1		)	%	(6.1		)	%	1.0		pts

Rate	—			%	3			%	(3	)	pts	1			%	3			%	(2	)	pts
Retention	86			%	87			%	(1	)	pts	86			%	87			%	(1	)	pts
New Business	$	67			$	87			(23	)	%	$	206			$	239			(14	)	%

Commercial - Results of Operations



Periods ended September 30	Three Months											Nine Months
(In millions)	2015				2014				Change			2015				2014				Change
Gross written premiums	$	674			$	672			—		%	$	2,241			$	2,245			—		%
Net written premiums	642				634				1			2,118				2,133				(1	)

Net earned premiums	705				721				(2	)		2,086				2,188				(5	)
Net investment income	82				157							455				549
Other revenues	9				10							27				28
Total operating revenues	796				888				(10	)		2,568				2,765				(7	)
Insurance claims and policyholders' benefits	428				550							1,394				1,733
Amortization of deferred acquisition costs	118				122							352				371
Other insurance related expenses	128				125							385				376
Other expenses	10				10							23				25
Total claims, benefits and expenses	684				807				15			2,154				2,505				14
Operating income (loss) before income tax	112				81							414				260
Income tax (expense) benefit on operating income (loss)	(37		)		(29		)					(141		)		(85		)
Net operating income (loss)	$	75			$	52			44		%	$	273			$	175			56		%

Other Performance Metrics
Underwriting gain (loss)	$	31			$	(76	)		141		%	$	(45	)		$	(292	)		85		%

Loss & LAE ratio	60.6			%	75.9			%	15.3		pts	66.5			%	78.9			%	12.4		pts
Acquisition expense ratio	17.6				17.6				—			17.7				17.6				(0.1	)
Underwriting expense ratio	17.6				17.0				(0.6	)		17.7				16.6				(1.1	)
Expense ratio	35.2				34.6				(0.6	)		35.4				34.2				(1.2	)
Dividend ratio	—				0.2				0.2			0.2				0.3				0.1
Combined ratio	95.8			%	110.7			%	14.9			102.1			%	113.4			%	11.3
Combined ratio excluding catastrophes and development	95.6			%	98.1			%	2.5		pts	97.9			%	99.6			%	1.7		pts

Net accident year catastrophe losses incurred	$	10			$	14						$	83			$	121
Effect on loss & LAE ratio	1.4			%	2.0			%	0.6		pts	4.0			%	5.6			%	1.6		pts

Net prior year development and other: (favorable) / unfavorable	$	(11	)		$	76						$	(1	)		$	172
Effect on loss & LAE ratio	(1.2		)	%	10.6			%	11.8		pts	0.2			%	8.2			%	8.0		pts

Rate	2			%	4			%	(2	)	pts	2			%	5			%	(3	)	pts
Retention	76			%	74			%	2		pts	77			%	72			%	5		pts
New Business	$	135			$	116			16		%	$	422			$	396			7		%

International - Results of Operations



Periods ended September 30	Three Months											Nine Months
(In millions)	2015				2014				Change			2015				2014				Change
Gross written premiums	$	196			$	206			(5	)	%	$	717			$	786			(9	)	%
Net written premiums	180				190				(5	)		641				698				(8	)

Net earned premiums	203				225				(10	)		601				697				(14	)
Net investment income	13				15							40				46
Other revenues	1				—							—				—
Total operating revenues	217				240				(10	)		641				743				(14	)
Insurance claims and policyholders' benefits	106				134							336				382
Amortization of deferred acquisition costs	45				52							125				161
Other insurance related expenses	33				37							101				113
Other expenses	9				8							9				20
Total claims, benefits and expenses	193				231				16			571				676				16
Operating income (loss) before income tax	24				9							70				67
Income tax (expense) benefit on operating income (loss)	(15		)		(4		)					(30		)		(26		)
Net operating income (loss)	$	9			$	5			80		%	$	40			$	41			(2	)	%

Other Performance Metrics
Underwriting gain (loss)	$	19			$	2			N/M		%	$	39			$	41			(5	)	%

Loss & LAE ratio	52.4			%	59.7			%	7.3		pts	55.9			%	54.8			%	(1.1	)	pts
Acquisition expense ratio	22.8				24.5				1.7			22.0				23.8				1.8
Underwriting expense ratio	15.2				14.8				(0.4	)		15.6				15.5				(0.1	)
Expense ratio	38.0				39.3				1.3			37.6				39.3				1.7
Dividend ratio	—				—				—			—				—				—
Combined ratio	90.4			%	99.0			%	8.6			93.5			%	94.1			%	0.6
Combined ratio excluding catastrophes and development	106.0			%	106.3			%	0.3		pts	98.7			%	99.6			%	0.9		pts

Net accident year catastrophe losses incurred	$	1			$	(2	)					$	5			$	5
Effect on loss & LAE ratio	0.3			%	(1.0		)	%	(1.3	)	pts	0.8			%	0.7			%	(0.1	)	pts

Net prior year development and other: (favorable) / unfavorable	$	(32	)		$	(12	)					$	(30	)		$	(41	)
Effect on loss & LAE ratio	(15.9		)	%	(6.3		)	%	9.6		pts	(6.0		)	%	(6.2		)	%	(0.2	)	pts

Rate	(1		)	%	(1		)	%	—		pts	(1		)	%	(1		)	%	—		pts
Retention	73			%	72			%	1		pts	76			%	77			%	(1	)	pts
New Business	$	23			$	21			10		%	$	83			$	88			(6	)	%

Life & Group Non-Core - Results of Operations



Periods ended September 30	Three Months									Nine Months
(In millions)	2015			2014			Change			2015			2014			Change
Net earned premiums	$	137		$	139		(1	)	%	$	412		$	417		(1	)	%
Net investment income	182			177						540			521
Other revenues	(1		)	(3		)				8			10
Total operating revenues	318			313			2			960			948			1
Insurance claims and policyholders' benefits	361			319						1,045			929
Amortization of deferred acquisition costs	6			7						19			22
Other insurance related expenses	35			33						104			96
Other expenses	1			36						10			34
Total claims, benefits and expenses	403			395			(2	)		1,178			1,081			(9	)
Operating income (loss) before income tax	(85		)	(82		)				(218		)	(133		)
Income tax (expense) benefit on operating income (loss)	55			40						147			98
Net operating income (loss)	$	(30	)	$	(42	)	29		%	$	(71	)	$	(35	)	(103	)	%

Corporate & Other Non-Core - Results of Operations



Periods ended September 30	Three Months									Nine Months
(In millions)	2015			2014			Change			2015			2014			Change
Net earned premiums	$	—		$	—					$	(1	)	$	(1	)
Net investment income	1			5						12			17
Other revenues	2			1						6			6
Total operating revenues	3			6			(50	)	%	17			22			(23	)	%
Insurance claims and policyholders' benefits	(3		)	(18		)				78			(20		)
Amortization of deferred acquisition costs	—			—						—			—
Other insurance related expenses	—			—						(2		)	(1		)
Other expenses	45			53						137			71
Total claims, benefits and expenses	42			35			(20	)		213			50			N/M
Operating income (loss) before income tax	(39		)	(29		)				(196		)	(28		)
Income tax (expense) benefit on operating income (loss)	16			12						70			11
Net operating income (loss)	$	(23	)	$	(17	)	(35	)	%	$	(126	)	$	(17	)	N/M		%

Investment Summary - Consolidated



	September 30, 2015					June 30, 2015					December 31, 2014
(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	$	18,188		$	1,030	$	18,127		$	1,249	$	18,889		$	1,660
States, municipalities and political subdivisions:
Tax-exempt	10,203			911		9,837			765		9,802			988
Taxable	3,094			408		3,016			381		2,938			467
Total states, municipalities and political subdivisions	13,297			1,319		12,853			1,146		12,740			1,455
Asset-backed:
RMBS	5,041			191		5,100			160		5,233			205
CMBS	2,251			68		2,251			65		2,144			88
Other ABS	1,016			7		1,055			11		1,235			1
Total asset-backed	8,308			266		8,406			236		8,612			294
U.S. Treasury and obligations of government-sponsored enterprises	29			5		29			5		31			5
Foreign government	344			11		399			12		454			16
Redeemable preferred stock	35			2		35			2		42			3
Total fixed maturity securities	40,201			2,633		39,849			2,650		40,768			3,433
Equities	212			5		216			8		222			12
Limited partnership investments	2,738			—		2,930			—		2,937			—
Other invested assets	45			—		43			—		41			—
Mortgage loans	640			—		622			—		588			—
Short term investments	1,482			—		1,672			—		1,706			(1		)
Total investments	$	45,318		$	2,638	$	45,332		$	2,658	$	46,262		$	3,444

Net receivable/(payable) on investment activity	$	(92	)			$	(75	)			$	(58	)

Effective portfolio duration (in years)	6.5					6.6					6.3
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, 2015					June 30, 2015						December 31, 2014
(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	$	12,926		$	276	$	12,796		$	400		$	13,444	$	542
States, municipalities and political subdivisions:
Tax-exempt	2,663			112		2,589			82			2,561		127
Taxable	1,647			156		1,587			142			1,454		169
Total states, municipalities and political subdivisions	4,310			268		4,176			224			4,015		296
Asset-backed:
RMBS	4,921			183		4,974			151			5,101		196
CMBS	2,079			60		2,081			57			1,985		78
Other ABS	931			7		971			11			1,144		2
Total asset-backed	7,931			250		8,026			219			8,230		276
U.S. Treasury and obligations of government-sponsored enterprises	4			—		4			—			7		(1		)
Foreign government	344			11		397			12			449		15
Redeemable preferred stock	13			1		13			1			13		2
Total fixed maturity securities	25,528			806		25,412			856			26,158		1,130
Equities	104			2		99			5			87		9
Limited partnership investments	2,738			—		2,930			—			2,937		—
Other invested assets	45			—		43			—			41		—
Mortgage loans	584			—		566			—			531		—
Short term investments	1,390			—		1,561			(1		)	1,586		(1		)
Total investments	$	30,389		$	808	$	30,611		$	860		$	31,340	$	1,138

Net receivable/(payable) on investment activity	$	(41	)			$	(67	)				$	4

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

Investment Summary - Life & Group Non-Core



	September 30, 2015					June 30, 2015					December 31, 2014
(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	$	5,262		$	754	$	5,331		$	849	$	5,445		$	1,118
States, municipalities and political subdivisions:
Tax-exempt	7,540			799		7,248			683		7,241			861
Taxable	1,447			252		1,429			239		1,484			298
Total states, municipalities and political subdivisions	8,987			1,051		8,677			922		8,725			1,159
Asset-backed:
RMBS	120			8		126			9		132			9
CMBS	172			8		170			8		159			10
Other ABS	85			—		84			—		91			(1		)
Total asset-backed	377			16		380			17		382			18
U.S. Treasury and obligations of government-sponsored enterprises	25			5		25			5		24			6
Foreign government	—			—		2			—		5			1
Redeemable preferred stock	22			1		22			1		29			1
Total fixed maturity securities	14,673			1,827		14,437			1,794		14,610			2,303
Equities	108			3		117			3		135			3
Limited partnership investments	—			—		—			—		—			—
Other invested assets	—			—		—			—		—			—
Mortgage loans	56			—		56			—		57			—
Short term investments	92			—		111			1		120			—
Total investments	$	14,929		$	1,830	$	14,721		$	1,798	$	14,922		$	2,306

Net receivable/(payable) on investment activity	$	(51	)			$	(8	)			$	(62	)

Effective portfolio duration (in years)	10.3					10.5					10.5
Weighted average rating of fixed maturity securities	A+					A+					A+

Investments - Fixed Maturity Securities by Credit Rating



September 30, 2015	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	$	—		$	—	$	166		$	6	$	961		$	58	$	4,992		$	501		$	10,285		$	476	$	1,784		$	(11	)	$	18,188		$	1,030
States, municipalities and political subdivisions:
Tax-exempt	—			—		1,017			81		5,920			576		3,061			245			113			2		92			7			10,203			911
Taxable	—			—		426			47		2,180			291		488			70			—			—		—			—			3,094			408
Total states, municipalities and political subdivisions	—			—		1,443			128		8,100			867		3,549			315			113			2		92			7			13,297			1,319
Asset-backed:
RMBS	3,621			134		115			1		60			—		176			(1		)	107			1		962			56			5,041			191
CMBS	68			1		490			14		455			22		356			14			613			13		269			4			2,251			68
Other ABS	—			—		216			4		36			—		530			1			234			2		—			—			1,016			7
Total asset-backed	3,689			135		821			19		551			22		1,062			14			954			16		1,231			60			8,308			266
U.S. Treasury and obligations of government-sponsored enterprises	29			5		—			—		—			—		—			—			—			—		—			—			29			5
Foreign government	—			—		101			4		97			1		146			6			—			—		—			—			344			11
Redeemable preferred stock	—			—		—			—		—			—		—			—			11			1		24			1			35			2
Total fixed maturity securities	$	3,718		$	140	$	2,531		$	157	$	9,709		$	948	$	9,749		$	836		$	11,363		$	495	$	3,131		$	57		$	40,201		$	2,633

Percentage of total fixed maturity securities	9		%			6		%			24		%			25		%				28		%			8		%				100		%

Components of Net Investment Income



	Consolidated
Periods ended September 30	Three Months								Nine Months
(In millions)	2015				2014				2015				2014
Taxable fixed maturities	$	346			$	352			$	1,040			$	1,054
Tax-exempt fixed maturities	103				101				304				302
Total fixed maturity securities	449				453				1,344				1,356
Limited partnership investments	(93		)		29				69				199
Other, net of investment expense	(2		)		(2		)		(1		)		1
Pretax net investment income	$	354			$	480			$	1,412			$	1,556

After-tax fixed maturity securities	$	326			$	327			$	968			$	976
After-tax net investment income	265				346				1,015				1,108

Effective income yield for the fixed maturity securities portfolio, pretax	4.8			%	4.8			%	4.8			%	4.9		%
Effective income yield for the fixed maturity securities portfolio, after tax	3.5				3.5				3.5				3.5



	Property & Casualty and Corporate & Other Non-Core
Periods ended September 30	Three Months								Nine Months
(In millions)	2015				2014				2015			2014
Taxable fixed maturities	$	242			$	252			$	733		$	748
Tax-exempt fixed maturities	23				23				66			84
Total fixed maturity securities	265				275				799			832
Limited partnership investments	(93		)		29				69			199
Other, net of investment expense	—				(1		)		4			4
Pretax net investment income	$	172			$	303			$	872		$	1,035

After-tax fixed maturity securities	$	180			$	188			$	542		$	570
After-tax net investment income	119				207				590			702

Effective income yield for the fixed maturity securities portfolio, pretax	4.3			%	4.3			%	4.3		%	4.4		%
Effective income yield for the fixed maturity securities portfolio, after tax	2.9				3.0				2.9			3.0



	Life & Group Non-Core
Periods ended September 30	Three Months								Nine Months
(In millions)	2015				2014				2015				2014
Taxable fixed maturities	$	104			$	100			$	307			$	306
Tax-exempt fixed maturities	80				78				238				218
Total fixed maturity securities	184				178				545				524
Limited partnership investments	—				—				—				—
Other, net of investment expense	(2		)		(1		)		(5		)		(3		)
Pretax net investment income	$	182			$	177			$	540			$	521

After-tax fixed maturity securities	$	146			$	139			$	426			$	406
After-tax net investment income	146				139				425				406

Effective income yield for the fixed maturity securities portfolio, pretax	5.8			%	5.9			%	5.8			%	5.9			%
Effective income yield for the fixed maturity securities portfolio, after tax	4.6				4.6				4.5				4.6

Claim & Claim Adjustment Expense Reserve Rollforward



Three months ended September 30, 2015 (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	$	6,365		$	9,391		$	1,401		$	17,157		$	3,248		$	2,788		$	23,193
Ceded	687			635			154			1,476			324			2,484			4,284
Net	5,678			8,756			1,247			15,681			2,924			304			18,909

Net incurred claim & claim adjustment expenses	307			428			107			842			245			1			1,088
Net claim & claim adjustment expense payments	(397		)	(535		)	(104		)	(1,036		)	(189		)	(5		)	(1,230		)
Foreign currency translation adjustment and other	—			—			(36		)	(36		)	(4		)	(2		)	(42		)

Claim & claim adjustment expense reserves, end of period
Net	5,588			8,649			1,214			15,451			2,976			298			18,725
Ceded	611			634			151			1,396			310			2,436			4,142
Gross	$	6,199		$	9,283		$	1,365		$	16,847		$	3,286		$	2,734		$	22,867



Nine months ended September 30, 2015 (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		$	9,514		$	1,441		$	17,184		$	3,183		$	2,904		$	23,271
Ceded	574			661			180			1,415			340			2,589			4,344
Net	5,655			8,853			1,261			15,769			2,843			315			18,927

Net incurred claim & claim adjustment expenses	1,152			1,389			336			2,877			710			3			3,590
Net claim & claim adjustment expense payments	(1,219		)	(1,593		)	(293		)	(3,105		)	(550		)	(17		)	(3,672		)
Foreign currency translation adjustment and other	—			—			(90		)	(90		)	(27		)	(3		)	(120		)

Claim & claim adjustment expense reserves, end of period
Net	5,588			8,649			1,214			15,451			2,976			298			18,725
Ceded	611			634			151			1,396			310			2,436			4,142
Gross	$	6,199		$	9,283		$	1,365		$	16,847		$	3,286		$	2,734		$	22,867

Life & Group Non-Core Policyholder Reserves



September 30, 2015
(In millions)	Claim and claim adjustment expenses		Future policy benefits		Total
Long term care	$	2,251	$	8,116	$	10,367
Structured settlement annuities	586		—		586
Other	21		—		21
Total	2,858		8,116		10,974
Shadow adjustments ⁽¹⁾	118		1,196		1,314
Ceded reserves	310		208		518
Total gross reserves	$	3,286	$	9,520	$	12,806



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

(1) The Shadow adjustments presented above do not include $294 million and $314 million related to Deferred acquisition costs as of September 30, 2015 and December 31, 2014.

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 P to the Condensed Consolidated Financial Statements within the December 31, 2014 Form 10-K for further discussion of this 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. Rate represents the average change in price on policies that renew excluding exposure change. Retention represents the expiring premium dollars renewed in comparison to the renewal premium dollars available to renew.


•	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 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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