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	q1-20exhibit991.htm
8-K - 8-K - CNA FINANCIAL CORP	a2020q18k.htm

CNA Financial Corporation

Supplemental Financial Information

March 31, 2020

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
Results of Operations
Property & Casualty	4
Specialty	5
Commercial	6
International	7
Life & Group	8
Corporate & Other	9
Investment Information
Investment Summary - Consolidated	10
Investment Summary - Property & Casualty and Corporate & Other	11
Investment Summary - Life & Group	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 Policyholder Reserves	16
Definitions and Presentation	17

Statements of Operations



Three months ended March 31
(In millions)	2020			2019			Change
Revenues:
Net earned premiums	$	1,869		$	1,803		4		%
Net investment income	329			571			(42	)
Net investment gains (losses)	(216		)	31
Non-insurance warranty revenue	301			281
Other revenues	8			9
Total revenues	2,291			2,695			(15	)
Claims, Benefits and Expenses:
Insurance claims and policyholders' benefits	1,425			1,357
Amortization of deferred acquisition costs	344			342
Non-insurance warranty expense	281			260
Other operating expenses	299			283
Interest	31			34
Total claims, benefits and expenses	2,380			2,276			(5	)
Income (loss) before income tax	(89		)	419
Income tax (expense) benefit	28			(77		)
Net income (loss)	$	(61	)	$	342		N/M		%

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



Three months ended March 31
(In millions, except per share data)	2020				2019
Components of Income (Loss)
Core income (loss)	$	108			$	318
Net investment gains (losses)	(169		)		24
Net income (loss)	$	(61	)		$	342

Diluted Earnings (Loss) Per Common Share
Core income (loss)	$	0.40			$	1.17
Net investment gains (losses)	(0.63		)		0.08
Diluted earnings (loss) per share	$	(0.23	)		$	1.25

Weighted Average Outstanding Common Stock and Common Stock Equivalents
Basic	271.5				271.6
Diluted	271.5				272.6

Return on Equity
Net income (loss) ⁽¹⁾	(2.2		)	%	12.1		%
Core income (loss) ⁽²⁾	3.7				10.7

(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 core 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)	March 31, 2020			December 31, 2019
Total investments	$	44,086		$	47,744
Reinsurance receivables, net of allowance for uncollectible receivables	4,328			4,179
Total assets	58,405			60,612
Insurance reserves	38,351			38,614
Debt	2,680			2,679
Total liabilities	48,043			48,397
Accumulated other comprehensive income (loss) ⁽¹⁾	(1,070		)	51
Total stockholders' equity	10,362			12,215

Book value per common share	$	38.18		$	45.00
Book value per common share excluding AOCI	$	42.12		$	44.81

Outstanding shares of common stock (in millions of shares)	271.4			271.4

Statutory capital and surplus - Combined Continental Casualty Companies ⁽²⁾	$	9,565		$	10,787



Three months ended March 31	2020			2019
Net cash flows provided (used) by operating activities	$	212		$	287
Net cash flows provided (used) by investing activities	1,087			289
Net cash flows provided (used) by financing activities	(675		)	(665		)
Net cash flows provided (used) by operating, investing and financing activities	$	624		$	(89	)

(1) As of March 31, 2020 and December 31, 2019, the net unrealized gains on investments included in AOCI were net of after-tax Shadow Adjustments of $1,700 million and $2,198 million. To the extent that unrealized gains on fixed income securities supporting certain products within the Life & Group 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 March 31, 2020 is preliminary.

Property & Casualty - Results of Operations



Three months ended March 31
(In millions)	2020				2019				Change
Gross written premiums	$	3,083			$	2,966			4		%
Gross written premiums ex. 3^rdparty captives	2,107				1,987				6
Net written premiums	1,863				1,806				3

Net earned premiums	1,742				1,674				4
Net investment income	118				360
Non-insurance warranty revenue	301				281
Other revenues	8				8
Total operating revenues	2,169				2,323				(7	)
Insurance claims and policyholders' benefits	1,123				1,070
Amortization of deferred acquisition costs	344				342
Non-insurance warranty expense	281				260
Other insurance related expenses	232				225
Other expenses	32				27
Total claims, benefits and expenses	2,012				1,924				(5	)
Core income (loss) before income tax	157				399
Income tax (expense) benefit on core income (loss)	(35		)		(85		)
Core income (loss)	$	122			$	314			(61	)	%

Other Performance Metrics
Underwriting gain (loss)	$	43			$	37			16		%

Loss & LAE ratio	64.0			%	63.6			%	(0.4	)	pts
Expense ratio	33.1				33.8				0.7
Dividend ratio	0.4				0.4				—
Combined ratio	97.5			%	97.8			%	0.3		pts
Combined ratio excluding catastrophes and development	93.9			%	94.9			%	1.0		pts

Net accident year catastrophe losses incurred	$	75			$	58
Effect on loss & LAE ratio	4.3			%	3.4			%	(0.9	)	pts

Net prior year development and other: (favorable) / unfavorable	$	(11	)		$	(9	)
Effect on loss & LAE ratio	(0.7		)	%	(0.5		)	%	0.2		pts

Rate	8			%	3			%	5		pts
Renewal premium change	9			%	4			%	5		pts
Retention	82			%	83			%	(1	)	pts
New business	$	340			$	329			3		%

Specialty - Results of Operations



Three months ended March 31
(In millions)	2020				2019				Change
Gross written premiums	$	1,714			$	1,701			1		%
Gross written premiums ex. 3^rdparty captives	741				730				2
Net written premiums	694				698				(1	)

Net earned premiums	685				661				4
Net investment income	56				155
Non-insurance warranty revenue	301				281
Other revenues	1				1
Total operating revenues	1,043				1,098				(5	)
Insurance claims and policyholders' benefits	406				393
Amortization of deferred acquisition costs	151				147
Non-insurance warranty expense	281				260
Other insurance related expenses	69				70
Other expenses	13				12
Total claims, benefits and expenses	920				882				(4	)
Core income (loss) before income tax	123				216
Income tax (expense) benefit on core income (loss)	(27		)		(47		)
Core income (loss)	$	96			$	169			(43	)	%

Other Performance Metrics
Underwriting gain (loss)	$	59			$	51			16		%

Loss & LAE ratio	59.1			%	59.3			%	0.2		pts
Expense ratio	32.0				32.8				0.8
Dividend ratio	0.2				0.2				—
Combined ratio	91.3			%	92.3			%	1.0		pts
Combined ratio excluding catastrophes and development	91.7			%	93.5			%	1.8		pts

Net accident year catastrophe losses incurred	$	8			$	12
Effect on loss & LAE ratio	1.1			%	1.8			%	0.7		pts

Net prior year development and other: (favorable) / unfavorable	$	(11	)		$	(20	)
Effect on loss & LAE ratio	(1.5		)	%	(3.0		)	%	(1.5	)	pts

Rate	9			%	3			%	6		pts
Renewal premium change	9			%	6			%	3		pts
Retention	84			%	89			%	(5	)	pts
New business	$	74			$	86			(14	)	%

Commercial - Results of Operations



Three months ended March 31
(In millions)	2020				2019				Change
Gross written premiums	$	1,062			$	941			13		%
Gross written premiums ex. 3^rdparty captives	1,059				932				14
Net written premiums	950				849				12

Net earned premiums	818				763				7
Net investment income	47				190
Other revenues	7				7
Total operating revenues	872				960				(9	)
Insurance claims and policyholders' benefits	563				515
Amortization of deferred acquisition costs	144				127
Other insurance related expenses	127				130
Other expenses	6				11
Total claims, benefits and expenses	840				783				(7	)
Core income (loss) before income tax	32				177
Income tax (expense) benefit on core income (loss)	(8		)		(38		)
Core income (loss)	$	24			$	139			(83	)	%

Other Performance Metrics
Underwriting gain (loss)	$	(16	)		$	(9	)		(78	)	%

Loss & LAE ratio	68.1			%	66.9			%	(1.2	)	pts
Expense ratio	33.2				33.8				0.6
Dividend ratio	0.6				0.6				—
Combined ratio	101.9			%	101.3			%	(0.6	)	pts
Combined ratio excluding catastrophes and development	94.9			%	96.5			%	1.6		pts

Net accident year catastrophe losses incurred	$	57			$	40
Effect on loss & LAE ratio	7.0			%	5.2			%	(1.8	)	pts

Net prior year development and other: (favorable) / unfavorable	$	—			$	(3	)
Effect on loss & LAE ratio	—			%	(0.4		)	%	(0.4	)	pts

Rate	8			%	2			%	6		pts
Renewal premium change	9			%	4			%	5		pts
Retention	85			%	85			%	—		pts
New business	$	198			$	163			21		%

International - Results of Operations



Three months ended March 31
(In millions)	2020				2019				Change
Gross written premiums	$	307			$	324			(5	)	%
Net written premiums	219				259				(15	)

Net earned premiums	239				250				(4	)
Net investment income	15				15
Other revenues	—				—
Total operating revenues	254				265				(4	)
Insurance claims and policyholders' benefits	154				162
Amortization of deferred acquisition costs	49				68
Other insurance related expenses	36				25
Other expenses	13				4
Total claims, benefits and expenses	252				259				3
Core income (loss) before income tax	2				6
Income tax (expense) benefit on core income (loss)	—				—
Core income (loss)	$	2			$	6			(67	)	%

Other Performance Metrics
Underwriting gain (loss)	$	—			$	(5	)		N/M		%

Loss & LAE ratio	64.5			%	64.8			%	0.3		pts
Expense ratio	35.4				37.1				1.7
Dividend ratio	—				—				—
Combined ratio	99.9			%	101.9			%	2.0		pts
Combined ratio excluding catastrophes and development	95.7			%	94.1			%	(1.6	)	pts

Net accident year catastrophe losses incurred	$	10			$	6
Effect on loss & LAE ratio	4.3			%	2.3			%	(2.0	)	pts

Net prior year development and other: (favorable) / unfavorable	$	—			$	14
Effect on loss & LAE ratio	(0.1		)	%	5.5			%	5.6		pts

Rate	8			%	5			%	3		pts
Renewal premium change	8			%	2			%	6		pts
Retention	72			%	69			%	3		pts
New business	$	68			$	80			(15	)	%

Life & Group - Results of Operations



Three months ended March 31
(In millions)	2020			2019
Net earned premiums	$	127		$	130
Net investment income	208			204
Other revenues	—			1
Total operating revenues	335			335
Insurance claims and policyholders' benefits	316			308
Other insurance related expenses	26			28
Other expenses	3			2
Total claims, benefits and expenses	345			338
Core income (loss) before income tax	(10		)	(3		)
Income tax (expense) benefit on core income (loss)	14			13
Core income (loss)	$	4		$	10

Corporate & Other - Results of Operations



Three months ended March 31
(In millions)	2020			2019
Net earned premiums	$	—		$	(1	)
Net investment income	3			7
Other revenues	—			—
Total operating revenues	3			6
Insurance claims and policyholders' benefits	(14		)	(21		)
Other insurance related expenses	—			(2		)
Other expenses	37			37
Total claims, benefits and expenses	23			14
Core income (loss) before income tax	(20		)	(8		)
Income tax (expense) benefit on core income (loss)	2			2
Core income (loss)	$	(18	)	$	(6	)

Investment Summary - Consolidated



	March 31, 2020					December 31, 2019
(In millions)	Carrying Value		Net Unrealized Gains (Losses)			Carrying Value		Net Unrealized Gains (Losses)
Fixed maturity securities:
Corporate and other bonds	$	20,749	$	602		$	22,069	$	2,260
States, municipalities and political subdivisions:
Tax-exempt	7,839		1,113			7,804		1,155
Taxable	2,652		421			2,848		404
Total states, municipalities and political subdivisions	10,491		1,534			10,652		1,559
Asset-backed:
RMBS	4,397		199			4,519		132
CMBS	2,090		(117		)	2,346		81
Other ABS	1,744		(124		)	1,962		37
Total asset-backed	8,231		(42		)	8,827		250
U.S. Treasury and obligations of government-sponsored enterprises	155		8			145		(1		)
Foreign government	463		11			504		13
Redeemable preferred stock	9		—			10		—
Total fixed maturity securities	40,098		2,113			42,207		4,081
Equities:
Common stock	191		—			142		—
Non-redeemable preferred stock	608		—			723		—
Total equities	799		—			865		—
Limited partnership investments	1,509		—			1,752		—
Other invested assets	63		—			65		—
Mortgage loans	1,021		—			994		—
Short term investments	596		(2		)	1,861		—
Total investments	$	44,086	$	2,111		$	47,744	$	4,081

Net receivable/(payable) on investment activity	$	136				$	37

Effective duration (in years)	6.0					6.0
Weighted average rating	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



	March 31, 2020					December 31, 2019
(In millions)	Carrying Value		Net Unrealized Gains (Losses)			Carrying Value		Net Unrealized Gains (Losses)
Fixed maturity securities:
Corporate and other bonds	$	13,243	$	(203	)	$	13,925	$	738
States, municipalities and political subdivisions:
Tax-exempt	683		33			646		37
Taxable	912		74			1,077		71
Total states, municipalities and political subdivisions	1,595		107			1,723		108
Asset-backed:
RMBS	4,312		196			4,441		128
CMBS	2,005		(116		)	2,264		77
Other ABS	1,612		(122		)	1,842		29
Total asset-backed	7,929		(42		)	8,547		234
U.S. Treasury and obligations of government-sponsored enterprises	145		8			143		(1		)
Foreign government	458		11			498		12
Redeemable preferred stock	4		—			5		—
Total fixed maturity securities	23,374		(119		)	24,841		1,091
Equities:
Common stock	191		—			142		—
Non-redeemable preferred stock	156		—			181		—
Total equities	347		—			323		—
Limited partnership investments	1,509		—			1,752		—
Other invested assets	63		—			65		—
Mortgage loans	749		—			715		—
Short term investments	583		(2		)	1,774		—
Total investments	$	26,625	$	(121	)	$	29,470	$	1,091

Net receivable/(payable) on investment activity	$	124				$	17

Effective duration (in years)	4.1					4.1
Weighted average rating	A-					A-

Investment Summary - Life & Group



	March 31, 2020					December 31, 2019
(In millions)	Carrying Value		Net Unrealized Gains (Losses)			Carrying Value		Net Unrealized Gains (Losses)
Fixed maturity securities:
Corporate and other bonds	$	7,506	$	805		$	8,144	$	1,522
States, municipalities and political subdivisions:
Tax-exempt	7,156		1,080			7,158		1,118
Taxable	1,740		347			1,771		333
Total states, municipalities and political subdivisions	8,896		1,427			8,929		1,451
Asset-backed:
RMBS	85		3			78		4
CMBS	85		(1		)	82		4
Other ABS	132		(2		)	120		8
Total asset-backed	302		—			280		16
U.S. Treasury and obligations of government-sponsored enterprises	10		—			2		—
Foreign government	5		—			6		1
Redeemable preferred stock	5		—			5		—
Total fixed maturity securities	16,724		2,232			17,366		2,990
Equities:
Common stock	—		—			—		—
Non-redeemable preferred stock	452		—			542		—
Total equities	452		—			542		—
Limited partnership investments	—		—			—		—
Other invested assets	—		—			—		—
Mortgage loans	272		—			279		—
Short term investments	13		—			87		—
Total investments	$	17,461	$	2,232		$	18,274	$	2,990

Net receivable/(payable) on investment activity	$	12				$	20

Effective duration (in years)	8.7					8.9
Weighted average rating	A					A

Investments - Fixed Maturity Securities by Credit Rating



March 31, 2020	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	$	—		$	—	$	45		$	—		$	551		$	37		$	4,767		$	516		$	13,722		$	314		$	1,664		$	(265	)	$	20,749		$	602
States, municipalities and political subdivisions:
Tax-exempt	—			—		2,348			330			3,140			463			1,971			247			364			72			16			1			7,839			1,113
Taxable	—			—		425			35			1,527			238			671			146			29			2			—			—			2,652			421
Total states, municipalities and political subdivisions	—			—		2,773			365			4,667			701			2,642			393			393			74			16			1			10,491			1,534
Asset-backed:
RMBS	3,890			190		197			2			21			(1		)	47			(2		)	9			—			233			10			4,397			199
CMBS	28			—		317			12			760			3			260			(20		)	520			(77		)	205			(35		)	2,090			(117		)
Other ABS	—			—		65			(2		)	100			(2		)	958			(67		)	606			(55		)	15			2			1,744			(124		)
Total asset-backed	3,918			190		579			12			881			—			1,265			(89		)	1,135			(132		)	453			(23		)	8,231			(42		)
U.S. Treasury and obligations of government-sponsored enterprises	155			8		—			—			—			—			—			—			—			—			—			—			155			8
Foreign government	—			—		132			4			229			9			77			(1		)	25			(1		)	—			—			463			11
Redeemable preferred stock	—			—		—			—			—			—			—			—			9			—			—			—			9			—
Total fixed maturity securities	$	4,073		$	198	$	3,529		$	381		$	6,328		$	747		$	8,751		$	819		$	15,284		$	255		$	2,133		$	(287	)	$	40,098		$	2,113

Percentage of total fixed maturity securities	10		%			9		%				16		%				22		%				38		%				5		%				100		%

Components of Net Investment Income



Three months ended March 31	Consolidated
(In millions)	2020				2019
Taxable fixed income securities	$	371			$	383
Tax-exempt fixed income securities	78				82
Total fixed income securities	449				465
Limited partnership and common stock investments	(125		)		96
Other, net of investment expense	5				10
Pretax net investment income	$	329			$	571
Fixed income securities, after tax	$	367			$	380
Net investment income, after tax	279				465

Effective income yield for fixed income securities, pretax	4.6			%	4.8		%
Effective income yield for fixed income securities, after tax	3.8				3.9
Limited partnership and common stock return	(7.0		)		4.5



	Property & Casualty and Corporate & Other
Three months ended March 31	Property & Casualty and Corporate & Other
(In millions)	2020				2019
Taxable fixed income securities	$	234			$	253
Tax-exempt fixed income securities	5				6
Total fixed income securities	239				259
Limited partnership and common stock investments	(125		)		96
Other, net of investment expense	7				12
Pretax net investment income	$	121			$	367
Fixed income securities, after tax	$	189			$	205
Net investment income, after tax	103				291

Effective income yield for fixed income securities, pretax	4.0			%	4.3		%
Effective income yield for fixed income securities, after tax	3.2				3.4



Three months ended March 31	Life & Group
(In millions)	2020				2019
Taxable fixed income securities	$	137			$	130
Tax-exempt fixed income securities	73				76
Total fixed income securities	210				206
Limited partnership and common stock investments	—				—
Other, net of investment expense	(2		)		(2		)
Pretax net investment income	$	208			$	204
Fixed income securities, after tax	$	178			$	175
Net investment income, after tax	176				174

Effective income yield for fixed income securities, pretax	5.6			%	5.6			%
Effective income yield for fixed income securities, after tax	4.8				4.8

Claim & Claim Adjustment Expense Reserve Rollforward



Three months ended March 31, 2020 (In millions)	Specialty			Commercial			International			P&C Operations			Life & Group			Corporate & Other			Total Operations
Claim & claim adjustment expense reserves, beginning of period
Gross	$	5,238		$	8,656		$	1,876		$	15,770		$	3,716		$	2,234		$	21,720
Ceded	562			807			248			1,617			159			2,059			3,835
Net	4,676			7,849			1,628			14,153			3,557			175			17,885

Net incurred claim & claim adjustment expenses	405			558			154			1,117			280			1			1,398
Net claim & claim adjustment expense payments	(387		)	(515		)	(132		)	(1,034		)	(251		)	(5		)	(1,290		)
Foreign currency translation adjustment and other	1			(1		)	(67		)	(67		)	(20		)	(1		)	(88		)

Claim & claim adjustment expense reserves, end of period
Net	4,695			7,891			1,583			14,169			3,566			170			17,905
Ceded	777			813			235			1,825			146			1,996			3,967
Gross	$	5,472		$	8,704		$	1,818		$	15,994		$	3,712		$	2,166		$	21,872

Life & Group Policyholder Reserves



March 31, 2020
(In millions)	Claim and claim adjustment expenses		Future policy benefits		Total
Long term care	$	2,897	$	9,506	$	12,403
Structured settlement annuities	510		—		510
Other	12		—		12
Total	3,419		9,506		12,925
Shadow adjustments	147		2,005		2,152
Ceded reserves	146		223		369
Total gross reserves	$	3,712	$	11,734	$	15,446



December 31, 2019
(In millions)	Claim and claim adjustment expenses		Future policy benefits		Total
Long term care	$	2,863	$	9,470	$	12,333
Structured settlement annuities	515		—		515
Other	12		—		12
Total	3,390		9,470		12,860
Shadow adjustments	167		2,615		2,782
Ceded reserves	159		226		385
Total gross reserves	$	3,716	$	12,311	$	16,027

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 segment primarily includes the results of long term care businesses that are in run-off.


•	Corporate & Other 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 core income (loss) financial measure to monitor the Company’s operations. Please refer to Note I to the Consolidated Financial Statements within the December 31, 2019 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. For certain products within Small Business, where quantifiable, rate includes the influence of new business as well. 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. Core 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.

•

Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses and any cumulative effects of changes in accounting guidance. The calculation of core income (loss) excludes net investment gains or losses because net investment gains or losses are generally driven by economic factors that are not necessarily reflective of our primary operations. Management monitors core income (loss) for each business segment to assess segment performance. Presentation of consolidated core 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.


•	Gross written premiums ex. 3^rd party captives represents gross written premiums excluding business which is mostly ceded to third party captives, including business related to large warranty programs.


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


•	Net investment income from fixed income securities, as presented, includes both fixed maturity securities and non-redeemable preferred stock.


•	Certain immaterial differences are due to rounding.


•	N/M = Not Meaningful

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