UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



~~[x]~~	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2022



~~[ ]~~	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

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 incorporation or organization)						~~36-6169860~~ (I.R.S. Employer Identification No.)



~~333 S. Wabash~~ 151 N. Franklin		60606
Chicago,	Illinois	(Zip Code)
(Address of principal executive offices)		~~60604~~ ~~(Zip Code)~~

(312) 822-5000

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, Par value $2.50

"CNA"

New York Stock Exchange

Chicago Stock Exchange

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 period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ~~[x]~~☒ No ~~[ ]~~☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Yes ~~[x]~~☒ No ~~[ ]~~☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

~~filer [x]~~

Accelerated filer ~~[ ]~~

~~Non-accelerated~~☐

~~filer [ ](Do not check if a smaller reporting company)~~

Non-accelerated filer

☐

Smaller reporting company ~~[ ]~~

☐

Emerging growth company ~~[ ]~~

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ~~[ ]~~☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ~~Exchange~~ Act). Yes ~~[ ]~~☐ No ~~[x]~~☒

~~Indicate the number~~As of October 27, 2022, 270,893,378 shares ~~outstanding of each of the issuer's classes~~ of common stock aswere outstanding.


Item Number		Page Number
	PART I
1.	Condensed Consolidated Financial Statements:	3
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (Unaudited)	3
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2022 and 2021 (Unaudited)	4
	Condensed Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (Unaudited)	6
	Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2022 and 2021 (Unaudited)	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	45
3.	Quantitative and Qualitative Disclosures About Market Risk	68
4.	Controls and Procedures	68
	PART II
1.	Legal Proceedings	69
2.	Unregistered Sales of Equity Securities and Use of Proceeds	69
6.	Exhibits	70

Table of ~~the latest practicable date.~~Contents



~~Class~~		~~Outstanding at October 26, 2017~~
~~Common Stock, Par value $2.50~~		~~271,176,870~~

Item Number
Page
Number

PART I. Financial Information

1.
Condensed Consolidated Financial Statements:

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016 (Unaudited)
3

Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016 (Unaudited)
4

Condensed Consolidated Balance Sheets as of September 30, 2017 (Unaudited) and December 31, 2016
5

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016 (Unaudited)
6

Condensed Consolidated Statements of Stockholders' Equity for the nine months ended September 30, 2017 and 2016 (Unaudited)
8

Notes to Condensed Consolidated Financial Statements (Unaudited)
9
2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
45
3.
Quantitative and Qualitative Disclosures About Market Risk
66
4.
Controls and Procedures
66

PART II. Other Information

1.
Legal Proceedings
67
6.
Exhibits
67

PART ~~I. Financial Information~~I

Item 1. Condensed Consolidated Financial Statements

CNA Financial Corporation

Condensed Consolidated Statements of Operations (Unaudited)


Periods ended September 30	Three Months						Nine Months						Periods ended September 30	Three Months				Nine Months
(In millions, except per share data)	2017			2016			2017			2016			(In millions, except per share data)	2022		2021		2022		2021
Revenues													Revenues
Net earned premiums	$	1,806		$	1,767		$	5,185		$	5,196		Net earned premiums	$	2,221	$	2,059	$	6,435	$	6,056
Net investment income	509			524			1,529			1,461			Net investment income	422		513		1,302		1,608
Net realized investment (losses) gains:
Other-than-temporary impairment losses	(5		)	(18		)	(9		)	(56		)
Other net realized investment (losses) gains	(19		)	64			71			82
Net realized investment (losses) gains	(24		)	46			62			26
Net investment (losses) gains													Net investment (losses) gains	(96)		22		(166)		117
Non-insurance warranty revenue													Non-insurance warranty revenue	399		357		1,173		1,054
Other revenues	107			96			318			293			Other revenues	11		8		24		19
Total revenues	2,398			2,433			7,094			6,976			Total revenues	2,957		2,959		8,768		8,854
Claims, Benefits and Expenses													Claims, Benefits and Expenses
Insurance claims and policyholders’ benefits	1,480			1,202			4,053			3,949			Insurance claims and policyholders’ benefits	1,665		1,632		4,703		4,684
Amortization of deferred acquisition costs	309			314			926			926			Amortization of deferred acquisition costs	383		368		1,101		1,084
Non-insurance warranty expense													Non-insurance warranty expense	371		330		1,092		973
Other operating expenses	381			403			1,091			1,162			Other operating expenses	346		287		1,001		874
Interest	41			39			124			119			Interest	28		28		84		85
Total claims, benefits and expenses	2,211			1,958			6,194			6,156			Total claims, benefits and expenses	2,793		2,645		7,981		7,700
Income before income tax	187			475			900			820			Income before income tax	164		314		787		1,154
Income tax expense	(43		)	(132		)	(224		)	(202		)	Income tax expense	(36)		(58)		(141)		(218)
Net income	$	144		$	343		$	676		$	618		Net income	$	128	$	256	$	646	$	936

Basic earnings per share	$	0.53		$	1.27		$	2.49		$	2.28		Basic earnings per share	$	0.47	$	0.94	$	2.38	$	3.44

Diluted earnings per share	$	0.53		$	1.26		$	2.48		$	2.28		Diluted earnings per share	$	0.47	$	0.94	$	2.37	$	3.43

Dividends declared per share	$	0.30		$	0.25		$	2.80		$	2.75

Weighted Average Outstanding Common Stock and Common Stock Equivalents													Weighted Average Outstanding Common Stock and Common Stock Equivalents
Basic	271.2			270.5			271.1			270.4			Basic	271.4		271.7		271.7		271.8
Diluted	272.1			271.2			272.0			271.0			Diluted	272.3		272.7		272.6		272.8

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

CNA Financial Corporation

Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited)

Periods ended September 30 Three Months Nine Months
(In millions) 2017 2016 2017 2016
Comprehensive Income
Net income $ 144
$ 343
$ 676
$ 618
Other Comprehensive Income, Net of Tax
Changes in:
Net unrealized gains on investments with other-than-temporary impairments 1
3
(3 ) 7
Net unrealized gains on other investments 23
42
167
586
Net unrealized gains on investments 24
45
164
593
Foreign currency translation adjustment 41
(24 ) 94
(58 )
Pension and postretirement benefits 10
6
22
17
Other comprehensive income, net of tax 75
27
280
552
Total comprehensive income $ 219
$ 370
$ 956
$ 1,170


Periods ended September 30	Three Months				Nine Months
(In millions)	2022		2021		2022		2021
Comprehensive (Loss) Income
Net income	$	128	$	256	$	646	$	936
Other Comprehensive Loss, net of tax
Changes in:
Net unrealized gains and losses on investments with an allowance for credit losses	(2)		—		(8)		—
Net unrealized gains and losses on other investments	(1,327)		(138)		(4,284)		(465)
Net unrealized gains and losses on investments	(1,329)		(138)		(4,292)		(465)
Foreign currency translation adjustment	(103)		(33)		(185)		(19)
Pension and postretirement benefits	6		8		18		27
Other comprehensive loss, net of tax	(1,426)		(163)		(4,459)		(457)
Total comprehensive (loss) income	$	(1,298)	$	93	$	(3,813)	$	479

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

CNA Financial Corporation

Condensed Consolidated Balance Sheets


(In millions, except share data)	September 30, 2017 (Unaudited)			December 31, 2016			(In millions, except share data)	September 30, 2022 (Unaudited)		December 31, 2021
Assets							Assets
Investments:							Investments:
Fixed maturity securities at fair value (amortized cost of $38,814 and $38,361)	$	42,090		$	40,905
Equity securities at fair value (cost of $118 and $106)	129			110
Fixed maturity securities at fair value (amortized cost of $41,330 and $39,952, less allowance for credit loss of $3 and $18)							Fixed maturity securities at fair value (amortized cost of $41,330 and $39,952, less allowance for credit loss of $3 and $18)	$	37,251	$	44,380
Equity securities at fair value (cost of $989 and $964)							Equity securities at fair value (cost of $989 and $964)	891		1,035
Limited partnership investments	2,311			2,371			Limited partnership investments	1,895		1,859
Other invested assets	42			36			Other invested assets	73		91
Mortgage loans	722			591
Mortgage loans (less allowance for uncollectible receivables of $24 and $16)							Mortgage loans (less allowance for uncollectible receivables of $24 and $16)	953		973
Short term investments	1,453			1,407			Short term investments	1,074		1,990
Total investments	46,747			45,420			Total investments	42,137		50,328
Cash	283			271			Cash	503		536
Reinsurance receivables (less allowance for uncollectible receivables of $37 and $37)	4,332			4,416
Insurance receivables (less allowance for uncollectible receivables of $46 and $46)	2,294			2,209
Reinsurance receivables (less allowance for uncollectible receivables of $21 and $21)							Reinsurance receivables (less allowance for uncollectible receivables of $21 and $21)	5,700		5,463
Insurance receivables (less allowance for uncollectible receivables of $28 and $29)							Insurance receivables (less allowance for uncollectible receivables of $28 and $29)	2,986		2,945
Accrued investment income	436			405			Accrued investment income	411		377
Deferred acquisition costs	643			600			Deferred acquisition costs	787		737
Deferred income taxes	141			379			Deferred income taxes	1,298		142
Property and equipment at cost (less accumulated depreciation of $275 and $254)	325			310
Property and equipment at cost (less accumulated depreciation of $272 and $255)							Property and equipment at cost (less accumulated depreciation of $272 and $255)	229		226
Goodwill	147			145			Goodwill	142		148
Other assets	1,234			1,078
Deferred non-insurance warranty acquisition expense							Deferred non-insurance warranty acquisition expense	3,653		3,476
Other assets (includes $25 and $— due from Loews Corporation)							Other assets (includes $25 and $— due from Loews Corporation)	2,369		2,261
Total assets	$	56,582		$	55,233		Total assets	$	60,215	$	66,639
Liabilities							Liabilities
Insurance reserves:							Insurance reserves:
Claim and claim adjustment expenses	$	22,209		$	22,343		Claim and claim adjustment expenses	$	24,700	$	24,174
Unearned premiums	4,060			3,762			Unearned premiums	6,195		5,761
Future policy benefits	11,040			10,326			Future policy benefits	10,454		13,236
Short term debt	150			—
Long term debt	2,707			2,710			Long term debt	2,780		2,779
Other liabilities (includes $25 and $50 due to Loews Corporation)	4,247			4,123
Deferred non-insurance warranty revenue							Deferred non-insurance warranty revenue	4,706		4,503
Other liabilities (includes $19 and $56 due to Loews Corporation)							Other liabilities (includes $19 and $56 due to Loews Corporation)	3,286		3,377
Total liabilities	44,413			43,264			Total liabilities	52,121		53,830
Commitments and contingencies (Notes C and F)							Commitments and contingencies (Notes C and F)
Stockholders' Equity							Stockholders' Equity
Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 271,176,870 and 270,495,998 shares outstanding)	683			683
Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 270,887,022 and 271,363,999 shares outstanding)							Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 270,887,022 and 271,363,999 shares outstanding)	683		683
Additional paid-in capital	2,167			2,173			Additional paid-in capital	2,211		2,215
Retained earnings	9,273			9,359			Retained earnings	9,433		9,663
Accumulated other comprehensive income (loss)	107			(173		)
Treasury stock (1,863,373 and 2,544,245 shares), at cost	(61		)	(73		)
Accumulated other comprehensive (loss) income							Accumulated other comprehensive (loss) income	(4,139)		320
Treasury stock (2,153,221 and 1,676,244 shares), at cost							Treasury stock (2,153,221 and 1,676,244 shares), at cost	(94)		(72)
Total stockholders’ equity	12,169			11,969			Total stockholders’ equity	8,094		12,809
Total liabilities and stockholders' equity	$	56,582		$	55,233		Total liabilities and stockholders' equity	$	60,215	$	66,639

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

CNA Financial Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)

Nine months ended September 30
(In millions) 2017 2016
Cash Flows from Operating Activities
Net income $ 676
$ 618
Adjustments to reconcile net income to net cash flows provided by operating activities:
Deferred income tax expense 125
112
Trading portfolio activity 8
—
Net realized investment gains (62 ) (26 )
Equity method investees 89
265
Net amortization of investments (30 ) (17 )
Depreciation and amortization 66
57
Changes in:
Receivables, net 18
(311 )
Accrued investment income (31 ) (30 )
Deferred acquisition costs (34 ) (24 )
Insurance reserves 248
464
Other assets (121 ) (96 )
Other liabilities (106 ) 61
Other, net 48
47
Total adjustments 218
502
Net cash flows provided by operating activities
894
1,120
Cash Flows from Investing Activities
Dispositions:
Fixed maturity securities - sales 4,167
4,234
Fixed maturity securities - maturities, calls and redemptions 2,635
2,263
Equity securities 22
79
Limited partnerships 160
200
Mortgage loans 22
137
Purchases:
Fixed maturity securities (6,877 ) (7,472 )
Equity securities (18 ) (1 )
Limited partnerships (85 ) (222 )
Mortgage loans (153 ) (88 )
Change in other investments (2 ) 10
Change in short term investments (29 ) 241
Purchases of property and equipment (80 ) (94 )
Disposals of property and equipment —
107
Other, net 20
2
Net cash flows used by investing activities $ (218 ) $ (604 )


Nine months ended September 30							Nine months ended September 30
(In millions)	2017			2016			(In millions)	2022		2021
Cash Flows from Operating Activities							Cash Flows from Operating Activities
Net income							Net income	$	646	$	936
Adjustments to reconcile net income to net cash flows provided by operating activities:							Adjustments to reconcile net income to net cash flows provided by operating activities:
Deferred income tax (benefit) expense							Deferred income tax (benefit) expense	(18)		46
Trading portfolio activity							Trading portfolio activity	(5)		13
Net investment losses (gains)							Net investment losses (gains)	166		(117)
Equity method investees							Equity method investees	235		(106)
Net amortization of investments							Net amortization of investments	(89)		(58)
Depreciation and amortization							Depreciation and amortization	38		41
Changes in:							Changes in:
Receivables, net							Receivables, net	(390)		(1,076)
Accrued investment income							Accrued investment income	(37)		(17)
Deferred acquisition costs							Deferred acquisition costs	(66)		(15)
Insurance reserves							Insurance reserves	1,743		1,891
Other, net							Other, net	(233)		(184)
Net cash flows provided by operating activities							Net cash flows provided by operating activities	1,990		1,354
Cash Flows from Investing Activities							Cash Flows from Investing Activities
Dispositions:							Dispositions:
Fixed maturity securities - sales							Fixed maturity securities - sales	4,885		2,510
Fixed maturity securities - maturities, calls and redemptions							Fixed maturity securities - maturities, calls and redemptions	2,095		3,360
Equity securities							Equity securities	230		237
Limited partnerships							Limited partnerships	124		178
Mortgage loans							Mortgage loans	101		90
Purchases:							Purchases:
Fixed maturity securities							Fixed maturity securities	(8,768)		(7,127)
Equity securities							Equity securities	(245)		(242)
Limited partnerships							Limited partnerships	(265)		(281)
Mortgage loans							Mortgage loans	(90)		(63)
Change in other investments							Change in other investments	9		3
Change in short term investments							Change in short term investments	903		755
Purchases of property and equipment							Purchases of property and equipment	(41)		(16)
Other, net							Other, net	(10)		(1)
Net cash flows used by investing activities							Net cash flows used by investing activities	(1,072)		(597)
Cash Flows from Financing Activities							Cash Flows from Financing Activities
Dividends paid to common stockholders	$	(761	)	$	(746	)	Dividends paid to common stockholders	(874)		(518)
Proceeds from the issuance of debt	496			498
Repayment of debt	(391		)	(358		)
Purchase of treasury stock							Purchase of treasury stock	(39)		(18)
Other, net	(17		)	1			Other, net	(11)		(9)
Net cash flows used by financing activities	(673		)	(605		)	Net cash flows used by financing activities	(924)		(545)
Effect of foreign exchange rate changes on cash	9			(8		)	Effect of foreign exchange rate changes on cash	(27)		(6)
Net change in cash	12			(97		)	Net change in cash	(33)		206
Cash, beginning of year	271			387			Cash, beginning of year	536		419
Cash, end of period	$	283		$	290		Cash, end of period	$	503	$	625

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

CNA Financial Corporation

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)


Nine months ended September 30
Periods ended September 30							Periods ended September 30	Three Months				Nine Months
(In millions)	2017			2016			(In millions)	2022		2021		2022		2021
Common Stock							Common Stock
Balance, beginning of period	$	683		$	683		Balance, beginning of period	$	683	$	683	$	683	$	683
Balance, end of period	683			683			Balance, end of period	683		683		683		683
Additional Paid-in Capital							Additional Paid-in Capital
Balance, beginning of period	2,173			2,153			Balance, beginning of period	2,203		2,201		2,215		2,211
Stock-based compensation	(6		)	10			Stock-based compensation	8		7		(4)		(3)
Balance, end of period	2,167			2,163			Balance, end of period	2,211		2,208		2,211		2,208
Retained Earnings							Retained Earnings

Balance, beginning of period	9,359			9,313			Balance, beginning of period	9,415		9,348		9,663		9,081
Dividends paid to common stockholders	(762		)	(746		)
Dividends to common stockholders ($0.40, $0.38, $3.20, $1.89 per share)							Dividends to common stockholders ($0.40, $0.38, $3.20, $1.89 per share)	(110)		(104)		(876)		(517)
Net income	676			618			Net income	128		256		646		936
Balance, end of period	9,273			9,185			Balance, end of period	9,433		9,500		9,433		9,500
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive (Loss) Income							Accumulated Other Comprehensive (Loss) Income
Balance, beginning of period	(173		)	(315		)	Balance, beginning of period	(2,713)		509		320		803
Other comprehensive income	280			552

Other comprehensive loss							Other comprehensive loss	(1,426)		(163)		(4,459)		(457)
Balance, end of period	107			237			Balance, end of period	(4,139)		346		(4,139)		346
Treasury Stock							Treasury Stock
Balance, beginning of period	(73		)	(78		)	Balance, beginning of period	(76)		(73)		(72)		(71)
Stock-based compensation	12			5			Stock-based compensation	—		—		17		16
Purchase of treasury stock							Purchase of treasury stock	(18)		—		(39)		(18)
Balance, end of period	(61		)	(73		)	Balance, end of period	(94)		(73)		(94)		(73)
Total stockholders' equity	$	12,169		$	12,195		Total stockholders' equity	$	8,094	$	12,664	$	8,094	$	12,664

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

CNA Financial Corporation

Notes to Condensed Consolidated Financial Statements ~~(Unaudited)~~

Note A. General

Basis of Presentation

The Condensed Consolidated Financial Statements include the accounts of CNA Financial Corporation (CNAF) and its subsidiaries. Collectively, CNAF and its subsidiaries are referred to as CNA or the Company. Loews Corporation (Loews) owned approximately ~~89%~~90% of the outstanding common stock of CNAF as of September 30, ~~2017.~~2022.

The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). Intercompany amounts have been eliminated. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, including certain financial statement notes, is not required for interim reporting purposes and has been condensed or omitted. These statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in CNAF's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, ~~2016,~~2021, including the summary of significant accounting policies in Note A. The preparation of Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

The interim financial data as of September 30, ~~2017~~2022 and for the three and nine months ended September 30, ~~2017~~2022 and ~~2016~~2021 is unaudited. However, in the opinion of management, the interim data includes all adjustments, including normal recurring adjustments, necessary for a fair statement of the Company's results for the interim periods. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

~~Recently Adopted Accounting Standards Updates (ASU)~~

~~In March 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-09,~~ ~~Compensation-Stock Compensation (Topic 718): Improvementsto Employee Share-Based Payment Accounting.~~ The updated accounting guidance simplifies the accounting for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. As of January 1, 2017, the Company adopted the updated accounting guidanceand began recognizing excess tax benefits or deficiencies on vesting or settlement of awards as an income tax benefit or expense within net income, instead of additional paid-in capital as required under previous guidance. The related cash flows are now classified within operating activities. As a result of this change, excess tax benefits are no longer included in assumed proceeds under the treasury stock method of calculating earnings per share. The impact of the accounting change resulted in a decrease of $2 million and $5 million to income tax expense for the three and nine months ended September 30, 2017.

Accounting Standards Pending Adoption

In ~~May 2014,~~August 2018, the FASB issued ASU ~~No. 2014-09,~~ ~~Revenue Recognition~~2018-12, Financial Services-Insurance (Topic ~~606)~~944): ~~Revenue from Contracts with Customers~~. The standard excludes from its scope the accounting for insurance contracts, financial instruments, and certain other agreements that are governed under other GAAP guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in an amount that reflects the consideration the entity is entitled to receive for the transfer of the promised goods or services. The standard is effective for interim and annual reporting periods beginning after December 15, 2017 and may be applied retrospectively or through a cumulative effect adjustment to retained earnings at the date of adoption. While the Company continues to evaluate the impacts of this new guidance on the Consolidated financial statements, including disclosures, the Company expects that revenue on warranty products and services will be recognized more slowly than under the current revenue recognition pattern. For a significant portion of warranty products, the Company also expects Other revenues and Other operating expenses to increase to reflect the gross amount paid by consumersTargeted Improvements to the auto dealer that acts as the Company's agent. The Company expects to adopt this guidance using the modified retrospective approach. While the cumulative effect of adoption using the modified retrospective approach may be significant, the Company does not expect the impact of the new guidance to be material to its results of operations or financial position.

~~In January 2016, the FASB issued ASU No. 2016-01,~~ ~~Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~Accounting for Long-Duration Contracts. The updated accounting guidance requires changes to the ~~reporting model for financial instruments.~~measurement and disclosure of long-duration contracts. For the Company, this includes the long term care and fully-ceded single premium immediate annuity business. Entities will be required to review, and update if there is a change, cash flow assumptions (including morbidity and persistency) at least annually, and to update discount rate assumptions quarterly using an upper-medium grade fixed-income instrument yield. The guidance is effective for interim and annual periods beginning after December 15, 2017. The Company expects the primary change to be the requirement for equity investments (except those accounted for under the equity methodeffect of ~~accounting or those that result in consolidation of the investee) to be measured at fair value with~~ changes in ~~fair value recognized~~cash flow assumptions will be recorded in net income. Upon adoption, the Company will recognize an adjustment for the cumulative amount of unrealized investment gains and losses related to available-for-sale equity securities within the opening balances of Retained earnings and Accumulated other comprehensive income (loss). The Company does not expect the impact of adopting ASU 2016-01 to have a material effect on the Company’s results of operations or financial position.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842): Accounting for Leases.~~ The updated accounting guidance requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by all leases, including those historically accounted for as operating leases. The guidance is effective for interim and annual periods beginning after December 15, 2018. The Company is currently evaluating the effect the updated guidance will have on the Company's financial statements. It is expected that assets and liabilities will increase based on the present value of remaining lease payments for leases in place at the adoption date; however, this is not expected to be material to the Company's results of operations ~~or financial position.~~

~~In June 2016,~~and the ~~FASB issued ASU No. 2016-13,~~ ~~Financial Instruments-Credit Losses (Topic 326): Measurement~~effect of ~~Credit Losses on Financial Instruments.~~ ~~The updated accounting guidance requires~~ changes ~~to the recognition of credit losses on financial instruments not accounted for at fair value through net~~in discount rate assumptions will be recorded in Other comprehensive income. The guidance is effective for interim and annual periods beginning after December 15, ~~2019.~~ 2022, with early adoption permitted, and may be applied using either a modified retrospective transition method or a full retrospective transition method. Financial statements for prior periods presented shall be adjusted to reflect the effects of applying the new accounting guidance.

The Company ~~is currently evaluating~~will adopt the new guidance effective January 1, 2023, using the modified retrospective method applied as of the transition date of January 1, 2021. The Company will use a published spot rate curve constructed from A+, A and A- rated U.S. dollar denominated corporate bonds matched to the duration of the corresponding insurance liabilities, to calculate discount rates. The Company will group its long-duration contracts into calendar year cohorts based on the contract issue date and product line. Long term care contracts will be grouped separately from the Company’s fully-ceded single premium immediate annuity contracts.

The most significant impact at the transition date will be the effect of updating the discount rate assumption to reflect an upper-medium grade fixed-income instrument yield, which will be partially offset by the de-recognition of Shadow Adjustments associated with long-duration contracts. The Company expects the net impact of these changes will be a decrease of approximately $2.3 billion in Accumulated other comprehensive income (AOCI) as of the transition date of January 1, 2021. There is a minimal transition impact expected to retained earnings.

Table of Contents

The requirement to review, and update if there is a change, cash flow assumptions at least annually is expected to change the pattern of earnings being recognized.Adoption will also significantly expand the Company’s disclosures, and will impact systems, processes, and controls.While the requirements of the new guidance represent a material change from existing GAAP, the new guidance will ~~have on~~not impact capital and surplus under statutory accounting practices, cash flows, or the ~~Company's financial statements, but expects the primary changes to be the use~~underlying economics of the ~~expected credit loss model for its mortgage loan portfolio~~business.

The Company continues to make progress in connection with these matters and ~~reinsurance receivables~~is in process of refining key accounting policy decisions, technology solutions and the presentation of credit losses within the available-for-sale fixed maturities portfolio through an allowance method rather than as a direct write-down. The expected credit loss model will require a financial assetupdates to be presented at the net amount expected to be collected. The allowance method for available-for-sale debt securities will allow the Company to record reversals of credit losses if the estimate of credit losses declines.

~~In March 2017, the FASB issued ASU No. 2017-07,~~ ~~Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The updated accounting guidance requires changes to the presentation~~internal controls associated with adoption of the ~~components~~new guidance.These in-progress activities include modifications of ~~net periodic benefit cost on the income statement by requiring service cost to be presented with other employee compensation costs~~actuarial valuation systems, data sourcing, analytical procedures and ~~other components~~reporting processes.

Table of net periodic pension cost to be presented outside of any subtotal of operating income. The ASU also stipulates that only the service cost component of net benefit cost is eligible for capitalization. The guidance is effective for interim and annual periods beginning after December 15, 2017. The Company is currently evaluating the effect the guidance will have on the Company's financial statements.Contents

Note B. Earnings (Loss) Per Share

Earnings (loss) per share is based on ~~the~~ weighted average number of outstanding common shares. Basic earnings (loss) per share excludes the ~~effect~~impact of dilutive securities and is computed by dividing Net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

~~For~~The following table presents the ~~three~~income and ~~nine months ended September 30, 2017, approximately 907 thousand~~share data used in the basic and ~~916 thousand~~diluted earnings per share computations.


Periods ended September 30	Three Months				Nine Months
(In millions, except per share data)	2022		2021		2022		2021
Net income (loss)	$	128	$	256	$	646	$	936

Common Stock and Common Stock Equivalents
Basic
Weighted average shares outstanding	271.4		271.7		271.7		271.8
Diluted
Weighted average shares outstanding	271.4		271.7		271.7		271.8
Dilutive effect of stock-based awards under compensation plans	0.9		1.0		0.9		1.0
Total	272.3		272.7		272.6		272.8

Earnings (loss) per share
Basic	$	0.47	$	0.94	$	2.38	$	3.44
Diluted	$	0.47	$	0.94	$	2.37	$	3.43

Excluded from the calculation of diluted earnings (loss) per share is the impact of potential shares attributable to exercises or conversions into common stock under stock-based employee compensation plans were included in the calculation of diluted earnings per share. For those same periods, less than 1 thousand and approximately 4 thousand potential shares attributable to exercises or conversions into common stock under stock-based employee compensation plans were not included in the calculation of diluted earnings per share, because the effectthat would have been ~~antidilutive.~~antidilutive during the respective periods.

~~For~~The Company repurchased 890,000 and 377,615 shares of CNAF common stock at an aggregate cost of $39 million and $18 million during the ~~three and~~ nine months ended September 30, ~~2016, approximately 707 thousand~~2022 and ~~549 thousand potential shares attributable to exercises or conversions into common stock under stock-based employee compensation plans were included in the calculation~~2021.

Table of diluted earnings per share. For those same periods, approximately 175 thousand and 178 thousand potential shares attributable to exercises or conversions into common stock under stock-based employee compensation plans were not included in the calculation of diluted earnings per share, because the effect would have been antidilutive.Contents

Note C.C. Investments

The significant components of Net investment income are presented in the following table.


Periods ended September 30	Three Months						Nine Months						Periods ended September 30	Three Months				Nine Months
(In millions)	2017			2016			2017			2016			(In millions)	2022		2021		2022		2021
Fixed maturity securities	$	455		$	457		$	1,367		$	1,352		Fixed maturity securities	$	454	$	425	$	1,324	$	1,278
Equity securities	1			1			4			8			Equity securities	2		4		(7)		53
Limited partnership investments	51			65			157			97			Limited partnership investments	(35)		85		(11)		274
Mortgage loans	9			8			24			30			Mortgage loans	13		13		40		42
Short term investments	4			2			10			6			Short term investments	4		1		6		1
Trading portfolio	3			1			9			7			Trading portfolio	1		1		2		8
Other	1			4			2			4			Other	1		(1)		1		—
Gross investment income	524			538			1,573			1,504			Gross investment income	440		528		1,355		1,656
Investment expense	(15		)	(14		)	(44		)	(43		)	Investment expense	(18)		(15)		(53)		(48)
Net investment income	$	509		$	524		$	1,529		$	1,461		Net investment income	$	422	$	513	$	1,302	$	1,608
Net investment income (loss) recognized due to the change in fair value of common stock held as of September 30, 2022 and 2021													Net investment income (loss) recognized due to the change in fair value of common stock held as of September 30, 2022 and 2021	$	(18)	$	(7)	$	(38)	$	11

Net ~~realized~~ investment gains (losses) are presented in the following table.

Periods ended September 30 Three Months Nine Months
(In millions) 2017 2016 2017 2016
Net realized investment gains (losses):
Fixed maturity securities:
Gross realized gains $ 34
$ 67
$ 139
$ 152
Gross realized losses (18 ) (20 ) (47 ) (106 )
Net realized investment gains (losses) on fixed maturity securities 16

47

92

46
Equity securities:
Gross realized gains —
1
1
5
Gross realized losses —
(4 ) (1 ) (10 )
Net realized investment gains (losses) on equity securities —

(3 )
—

(5 )
Derivatives (1 ) 1
(3 ) (12 )
Short term investments and other (39 ) 1
(27 ) (3 )
Net realized investment gains (losses) $ (24 )
$ 46

$ 62
$ 26


Periods ended September 30	Three Months				Nine Months
(In millions)	2022		2021		2022		2021
Net investment gains (losses):
Fixed maturity securities:
Gross gains	$	23	$	50	$	94	$	159
Gross losses	(134)		(28)		(222)		(68)
Net investment gains (losses) on fixed maturity securities	(111)		22		(128)		91
Equity securities	(2)		(2)		(111)		17
Derivatives	24		2		79		7
Mortgage loans	(8)		—		(8)		—
Short term investments and other	1		—		2		2
Net investment gains (losses)	$	(96)	$	22	$	(166)	$	117
Net investment gains (losses) recognized due to the change in fair value of non-redeemable preferred stock held as of September 30, 2022 and 2021	$	(2)	$	(2)	$	(109)	$	15

Net ~~realized~~ investment gains (losses) for the three ~~and nine~~ months ended September 30, ~~2017 included~~2022 in the table above include a ~~$42~~$35 million net loss related to the ~~redemption~~expected novation of a coinsurance agreement on the Company’s legacy annuity business, which was transacted on a funds withheld basis and gave rise to an embedded derivative. The net loss of $35 million is comprised of a $59 million loss on the fixed maturity securities supporting the funds withheld liability to recognize unrealized losses which had been included in AOCI since the inception of the ~~Company's $350~~coinsurance agreement, partially offset by a $24 million ~~senior notes due November 2019. Net realized~~gain on the associated embedded derivative. Taken together, this net loss is the final recognition of changes in the valuation of the funds held assets and offsets previously recognized net investment gains ~~(losses) for~~on the ~~nine months ended September 30, 2016 included a $8 million loss related to the first quarter 2016 redemption~~associated embedded derivative.

Table of ~~the Company's $350 million senior notes due August 2016.~~Contents

The components of ~~Other-than-temporary~~available-for-sale impairment ~~(OTTI)~~ losses (gains) recognized in earnings by asset type are presented in the following table. The table includes losses (gains) on securities with an intention to sell and changes in the allowance for credit losses on securities since acquisition date.


Periods ended September 30	Three Months				Nine Months
(In millions)	2022		2021		2022		2021
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	24	$	—	$	53	$	5
Asset-backed	1		11		2		11
Impairment losses (gains) recognized in earnings	$	25	$	11	$	55	$	16

The Company also recognized $8 million of losses on mortgage loans during the three and nine months ended September 30, 2022 primarily due to changes in expected credit losses. There were no losses recognized on mortgage loans during the three and nine months ended September 30, 2021.

Periods ended September 30 Three Months Nine Months
(In millions) 2017 2016 2017 2016
Fixed maturity securities available-for-sale:

Corporate and other bonds $ 4
$ 14
$ 8
$ 43
Asset-backed:
Residential mortgage-backed 1
—
1
1
Other asset-backed —
—
—
3
Total asset-backed 1

—

1
4
Total fixed maturity securities available-for-sale 5

14

9
47
Equity securities available-for-sale -- Common stock —
4
—
9
OTTI losses recognized in earnings $ 5

$ 18

$ 9
$ 56

Table of Contents

The following tables present a summary of fixed maturity ~~and equity~~ securities.


September 30, 2022	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
(In millions)
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	23,082	$	231	$	2,398	$	—	$	20,915
States, municipalities and political subdivisions	9,244		259		1,080		—		8,423
Asset-backed:
Residential mortgage-backed	3,153		6		470		—		2,689
Commercial mortgage-backed	1,921		4		237		—		1,688
Other asset-backed	3,264		2		349		3		2,914
Total asset-backed	8,338		12		1,056		3		7,291
U.S. Treasury and obligations of government-sponsored enterprises	107		3		1		—		109
Foreign government	544		2		48		—		498
Redeemable preferred stock	3		—		—		—		3
Total fixed maturity securities available-for-sale	41,318		507		4,583		3		37,239
Total fixed maturity securities trading	12		—		—		—		12
Total fixed maturity securities	$	41,330	$	507	$	4,583	$	3	$	37,251

September 30, 2017
Cost or
Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Estimated
Fair
Value

Unrealized
OTTI
Losses (Gains)
(In millions)
Fixed maturity securities available-for-sale:
Corporate and other bonds $ 17,965
$ 1,645
$ 26
$ 19,584
$ —
States, municipalities and political subdivisions 12,462
1,501
7
13,956
(14 )
Asset-backed:
Residential mortgage-backed 4,906
127
28
5,005
(28 )
Commercial mortgage-backed 1,858
55
13
1,900
—
Other asset-backed 1,047
18
4
1,061
—
Total asset-backed 7,811
200
45
7,966
(28 )
U.S. Treasury and obligations of government-sponsored enterprises 115
3
3
115
—
Foreign government 439
10
4
445
—
Redeemable preferred stock 18
2
—
20
—
Total fixed maturity securities available-for-sale 38,810
3,361
85
42,086
$ (42 )
Total fixed maturity securities trading 4

4

Equity securities available-for-sale:
Common stock 16
7
1
22

Preferred stock 102
5
—
107

Total equity securities available-for-sale 118
12
1
129

Total $ 38,932
$ 3,373
$ 86
$ 42,219


December 31, 2016	Cost or Amortized Cost		Gross Unrealized Gains			Gross Unrealized Losses				Estimated Fair Value			Unrealized OTTI Losses (Gains)
December 31, 2021					December 31, 2021				Cost or Amortized Cost							Gross Unrealized Gains						Gross Unrealized Losses				Allowance for Credit Losses				Estimated Fair Value
(In millions)	Cost or Amortized Cost				Gross Unrealized Gains							Gross Unrealized Losses							Estimated Fair Value						Unrealized OTTI Losses (Gains)				(In millions)
Fixed maturity securities available-for-sale:								Fixed maturity securities available-for-sale:
Corporate and other bonds	$	17,711	$	1,323		$	76			$	18,958			$	(1	)	Corporate and other bonds			$	21,444					$	2,755				$	56		$	11		$	24,132
States, municipalities and political subdivisions	12,060		1,213			33				13,240			(16		)	States, municipalities and political subdivisions		10,358					1,599					14				—			11,943
Asset-backed:																Asset-backed:
Residential mortgage-backed	5,004		120			51				5,073			(28		)	Residential mortgage-backed		2,893					71					8				—			2,956
Commercial mortgage-backed	2,016		48			24				2,040			—			Commercial mortgage-backed		1,987					63					19				—			2,031
Other asset-backed	1,022		8			5				1,025			—			Other asset-backed		2,561					54					10				7			2,598
Total asset-backed	8,042		176			80				8,138			(28		)	Total asset-backed		7,441					188					37				7			7,585
U.S. Treasury and obligations of government-sponsored enterprises	83		10			—				93			—			U.S. Treasury and obligations of government-sponsored enterprises		132					1					3				—			130
Foreign government	435		13			3				445			—			Foreign government		570					15					2				—			583
Redeemable preferred stock	18		1			—				19			—			Redeemable preferred stock		—					—					—				—			—
Total fixed maturity securities available-for-sale	38,349		2,736			192				40,893			$	(45	)	Total fixed maturity securities available-for-sale		39,945					4,558					112				18			44,373
Total fixed maturity securities trading	12									12						Total fixed maturity securities trading		7					—					—				—			7
Equity securities available-for-sale:
Common stock	13		6			—				19
Preferred stock	93		2			4				91
Total equity securities available-for-sale	106		8			4				110
Total	$	38,467	$	2,744		$	196			$	41,015
Total fixed maturity securities																Total fixed maturity securities		$	39,952				$	4,558				$	112			$	18		$	44,380

The net unrealized gains and losses on investments included in the tables above are recorded as a component of ~~Accumulated other comprehensive income (AOCI).~~AOCI. When presented in AOCI, these amounts are net of tax and any required Shadow Adjustments. To the extent ~~that~~there are unrealized gains on fixed income securities supporting the reserves of certain products within the Life & Group ~~Non-Core~~ segment that would result in a premium deficiency, or would impact the reserve balance if realized, a related increase in Insurance reserves is recorded ~~net of tax,~~ as a reduction of net unrealized gains (losses), net of tax, through Other comprehensive income (loss) (Shadow Adjustments). As of September 30, ~~2017~~2022 and December 31, ~~2016,~~2021, the net unrealized gains and losses on investments included in AOCI were correspondingly reduced by Shadow Adjustments of ~~$1,321~~$46 million and ~~$1,014~~$2,477 million.

Table of Contents

The following tables present the estimated fair value and gross unrealized losses of fixed maturity ~~and equity~~ securities in a gross unrealized loss position for which an allowance for credit loss has not been recorded, by the length of time in which the securities have continuously been in that position.


	Less than 12 Months				12 Months or Longer				Total
September 30, 2022	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
(In millions)
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	16,707	$	2,117	$	914	$	281	$	17,621	$	2,398
States, municipalities and political subdivisions	4,793		1,029		128		51		4,921		1,080
Asset-backed:
Residential mortgage-backed	2,582		462		17		8		2,599		470
Commercial mortgage-backed	1,372		194		233		43		1,605		237
Other asset-backed	2,433		307		233		42		2,666		349
Total asset-backed	6,387		963		483		93		6,870		1,056
U.S. Treasury and obligations of government-sponsored enterprises	61		1		—		—		61		1
Foreign government	446		42		25		6		471		48
Total	$	28,394	$	4,152	$	1,550	$	431	$	29,944	$	4,583


	Less than 12 Months				12 Months or Longer				Total
December 31, 2021	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
(In millions)
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	2,389	$	48	$	136	$	8	$	2,525	$	56
States, municipalities and political subdivisions	730		14		—		—		730		14
Asset-backed:
Residential mortgage-backed	1,043		8		—		—		1,043		8
Commercial mortgage-backed	527		7		167		12		694		19
Other asset-backed	840		10		62		—		902		10
Total asset-backed	2,410		25		229		12		2,639		37
U.S. Treasury and obligations of government-sponsored enterprises	69		3		5		—		74		3
Foreign government	97		2		—		—		97		2
Total	$	5,695	$	92	$	370	$	20	$	6,065	$	112

Table of Contents

Less than 12 Months 12 Months or Longer Total
September 30, 2017
Estimated
Fair Value

Gross
Unrealized
Losses

Estimated
Fair Value

Gross
Unrealized
Losses

Estimated
Fair Value

Gross
Unrealized
Losses
(In millions)
Fixed maturity securities available-for-sale:
Corporate and other bonds $ 1,216
$ 21
$ 91
$ 5
$ 1,307
$ 26
States, municipalities and political subdivisions 583
6
56
1
639
7
Asset-backed:
Residential mortgage-backed 1,522
25
106
3
1,628
28
Commercial mortgage-backed 378
6
138
7
516
13
Other asset-backed 129
4
10
—
139
4
Total asset-backed 2,029
35
254
10
2,283
45
U.S. Treasury and obligations of government-sponsored enterprises 67
3
6
—
73
3
Foreign government 191
4
5
—
196
4
Total fixed maturity securities available-for-sale 4,086
69
412
16
4,498
85
Equity securities available-for-sale:

Common stock 2
1
—
—
2
1
Preferred stock 16
—
—
—
16
—
Total equity securities available-for-sale 18
1
—
—
18
1
Total $ 4,104

$ 70

$ 412

$ 16

$ 4,516

$ 86
The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities in a gross unrealized loss position for which an allowance for credit loss has not been recorded, by ratings distribution.

Less than 12 Months 12 Months or Longer Total
December 31, 2016
Estimated
Fair Value

Gross
Unrealized
Losses

Estimated
Fair Value

Gross
Unrealized
Losses

Estimated
Fair Value

Gross
Unrealized
Losses
(In millions)
Fixed maturity securities available-for-sale:
Corporate and other bonds $ 2,615
$ 61
$ 254
$ 15
$ 2,869
$ 76
States, municipalities and political subdivisions 959
32
23
1
982
33
Asset-backed:
Residential mortgage-backed 2,136
44
201
7
2,337
51
Commercial mortgage-backed 756
22
69
2
825
24
Other asset-backed 398
5
24
—
422
5
Total asset-backed 3,290
71
294
9
3,584
80
U.S. Treasury and obligations of government-sponsored enterprises 5
—
—
—
5
—
Foreign government 108
3
—
—
108
3
Total fixed maturity securities available-for-sale 6,977
167
571
25
7,548
192
Equity securities available-for-sale -- Preferred stock 12
—
13
4
25
4
Total $ 6,989
$ 167
$ 584
$ 29
$ 7,573
$ 196


	September 30, 2022				December 31, 2021
(In millions)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
U.S. Government, Government agencies and Government-sponsored enterprises	$	2,360	$	360	$	898	$	8
AAA	1,566		318		368		6
AA	4,430		917		875		17
A	6,548		838		1,516		23
BBB	13,394		1,902		1,812		42
Non-investment grade	1,646		248		596		16
Total	$	29,944	$	4,583	$	6,065	$	112

Based on current facts and circumstances, the Company believes the unrealized losses presented in the September 30, ~~2017~~2022 securities in a gross unrealized loss position ~~table~~tables above are not indicative of the ultimate collectibility of the current amortized cost of the securities, but rather are primarily attributable to changes in risk-free interest rates and a general market widening of credit spreads. In reaching this determination, the Company considered the recent volatility in risk-free rates and credit spreads ~~and other factors. The~~as well as the fact that its unrealized losses are concentrated in investment grade issuers. Additionally, the Company has no current intent to sell securities with unrealized losses, nor is it more likely than not that it will be required to sell prior to recovery of amortized cost; accordingly, the Company has determined that there are no additional ~~OTTI~~impairment losses to be recorded as of September 30, ~~2017.~~2022.

Table of Contents

The following ~~table presents~~tables present the activity related to the ~~pretax~~allowance on available-for-sale securities with credit ~~loss component reflected in Retained earnings~~impairments and purchased credit-deteriorated (PCD) assets. Accrued interest receivable on available-for-sale fixed maturity securities ~~still held~~totaled $401 million, $369 million and $387 million as of September 30, ~~2017~~2022, December 31, 2021 and ~~2016~~ ~~for which a portion~~September 30, 2021 and is excluded from the estimate of ~~an OTTI loss was recognized~~expected credit losses and the amortized cost basis in ~~Other comprehensive income (loss).~~the tables included within this Note.


(In millions)	Corporate and other bonds		Asset-backed		Total
Allowance for credit losses:
Balance as of July 1, 2022	$	—	$	5	$	5
Additions to the allowance for credit losses:
Securities for which credit losses were not previously recorded	—		—		—
Available-for-sale securities accounted for as PCD assets	—		—		—

Reductions to the allowance for credit losses:
Securities sold during the period (realized)	—		—		—

Write-offs charged against the allowance	—		—		—


Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period	—		(2)		(2)
Balance as of September 30, 2022	$	—	$	3	$	3


(In millions)	Corporate and other bonds		Asset-backed		Total
Allowance for credit losses:
Balance as of July 1, 2021	$	24	$	21	$	45
Additions to the allowance for credit losses:
Securities for which credit losses were not previously recorded	—		—		—
Available-for-sale securities accounted for as PCD assets	2		—		2

Reductions to the allowance for credit losses:
Securities sold during the period (realized)	—		—		—

Write-offs charged against the allowance	16		—		16


Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period	—		—		—
Balance as of September 30, 2021	$	10	$	21	$	31

Table of Contents

Periods ended September 30 Three Months Nine Months
(In millions) 2017 2016 2017 2016
Beginning balance of credit losses on fixed maturity securities $ 30
$ 41
$ 36
$ 53
Reductions for securities sold during the period (2 ) (2 ) (8 ) (14 )
Reductions for securities the Company intends to sell or more likely than not will be required to sell —
(1 ) —
(1 )
Ending balance of credit losses on fixed maturity securities $ 28

$ 38

$ 28
$ 38


(In millions)	Corporate and other bonds		Asset-backed		Total
Allowance for credit losses:
Balance as of January 1, 2022	$	11	$	7	$	18
Additions to the allowance for credit losses:
Securities for which credit losses were not previously recorded	—		—		—
Available-for-sale securities accounted for as PCD assets	—		3		3

Reductions to the allowance for credit losses:
Securities sold during the period (realized)	—		—		—

Write-offs charged against the allowance	12		—		12


Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period	1		(7)		(6)
Balance as of September 30, 2022	$	—	$	3	$	3


(In millions)	Corporate and other bonds		Asset-backed		Total
Allowance for credit losses:
Balance as of January 1, 2021	$	23	$	17	$	40
Additions to the allowance for credit losses:
Securities for which credit losses were not previously recorded	14		—		14
Available-for-sale securities accounted for as PCD assets	4		4		8

Reductions to the allowance for credit losses:
Securities sold during the period (realized)	6		—		6

Write-offs charged against the allowance	16		—		16


Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period	(9)		—		(9)
Balance as of September 30, 2021	$	10	$	21	$	31

Table of Contents

Contractual Maturity

The following table presents available-for-sale fixed maturity securities by contractual maturity.


	September 30, 2017				December 31, 2016					September 30, 2022				December 31, 2021
(In millions)	Cost or Amortized Cost		Estimated Fair Value		Cost or Amortized Cost		Estimated Fair Value		(In millions)	Cost or Amortized Cost		Estimated Fair Value		Cost or Amortized Cost		Estimated Fair Value
Due in one year or less	$	1,374	$	1,404	$	1,779	$	1,828	Due in one year or less	$	952	$	948	$	1,603	$	1,624
Due after one year through five years	7,931		8,293		7,566		7,955		Due after one year through five years	9,487		9,000		10,637		11,229
Due after five years through ten years	15,853		16,574		15,892		16,332		Due after five years through ten years	14,323		12,765		13,294		14,338
Due after ten years	13,652		15,815		13,112		14,778		Due after ten years	16,556		14,526		14,411		17,182
Total	$	38,810	$	42,086	$	38,349	$	40,893	Total	$	41,318	$	37,239	$	39,945	$	44,373

Actual maturities may differ from contractual maturities because certain securities may be called or prepaid. Securities not due at a single date are allocated based on weighted average life.

Derivative Financial Instruments

The Company holds an embedded derivative on a funds withheld liability with a notional value of ~~$170~~$220 million and ~~$174~~$270 million and a fair value of $1 million and $(12) million as of September 30, ~~2017~~2022 and December 31, ~~2016 and a fair value of $(1) million and $3 million as of September 30, 2017 and December 31, 2016.~~2021. The embedded derivative on the funds withheld liability is accounted for separately and reported with the funds withheld liability in Other liabilities on the Condensed Consolidated Balance Sheets.

Investment Commitments

As part of ~~September 30, 2017,~~its overall investment strategy, the Company ~~had committed approximately $405 million to~~invests in various assets which require future purchase, sale or funding commitments. These investments are recorded once funded, and the related commitments may include future capital calls from various third-party limited ~~partnership investments in exchange for an ownership interest in the~~partnerships, signed and accepted mortgage loan applications, and obligations related ~~partnerships.~~

to private placement securities. As of September 30, ~~2017, the Company had mortgage loan commitments of $68 million representing signed loan applications received and accepted.~~

The Company invests in various privately placed debt securities, including bank loans, as part of its overall investment strategy and has committed to additional future purchases, sales and funding. Purchases and sales of privately placed debt securities are recorded once funded. As of September 30, 2017,2022, the Company had commitments to purchase or fund ~~additional amounts of $205~~approximately $1,595 million and sell ~~$185~~approximately $100 million under the terms of ~~such securities.~~these investments.

Table of Contents

Mortgage Loans

The following table presents the amortized cost basis of mortgage loans for each credit quality indicator by year of origination. The primary credit quality indicators utilized are debt service coverage ratios (DSCR) and loan-to-value ratios (LTV).


September 30, 2022	Mortgage Loans Amortized Cost Basis by Origination Year (1)
(In millions)	2022		2021		2020		2019		2018		Prior		Total
DSCR ≥1.6x
LTV less than 55%	$	9	$	13	$	112	$	29	$	54	$	275	$	492
LTV 55% to 65%	—		—		—		—		—		—		—
LTV greater than 65%	18		11		—		—		—		—		29
DSCR 1.2x - 1.6x
LTV less than 55%	5		49		18		56		10		42		180
LTV 55% to 65%	87		—		20		—		—		8		115
LTV greater than 65%	—		—		—		—		—		—		—
DSCR ≤1.2
LTV less than 55%	—		—		—		57		—		—		57
LTV 55% to 65%	—		21		—		44		—		—		65
LTV greater than 65%	10		—		—		22		—		7		39
Total	$	129	$	94	$	150	$	208	$	64	$	332	$	977

(1) The values in the table above reflect DSCR on a standardized amortization period and LTV based on the most recent appraised values trended forward using changes in a commercial real estate price index.

As of September 30, 2022, accrued interest receivable on mortgage loans totaled $3 million and is excluded from the amortized cost basis disclosed in the table above and the estimate of expected credit losses.

Table of Contents

Note D.D. Fair Value

Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable.

Level 1 - Quoted prices for identical instruments in active markets.

Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are not observable.

Prices may fall within Level 1, 2 or 3 depending upon the methodology and inputs used to estimate fair value for each specific security. In general, the Company seeks to price securities using third-party pricing services. Securities not priced by pricing services are submitted to independent brokers for valuation and, if those are not available, internally developed pricing models are used to value assets using a methodology and inputs the Company believes market participants would use to value the assets. Prices obtained from third-party pricing services or brokers are not adjusted by the Company.

The Company performs control procedures over information obtained from pricing services and brokers to ensure prices received represent a reasonable estimate of fair value and to confirm representations regarding whether inputs are observable or unobservable. Procedures may include i) the review of pricing service methodologies or broker pricing qualifications, ii) back-testing, where past fair value estimates are compared to actual transactions executed in the market on similar dates, iii) exception reporting, where period-over-period changes in price are reviewed and challenged with the pricing service or broker based on exception criteria, and iv) deep dives, where the Company performs an independent analysis of the inputs and assumptions used to price individual ~~securities and v) pricing validation, where prices received are compared to prices independently estimated by the Company.~~securities.

Table of Contents

Assets and Liabilities Measured at Fair Value

Assets and liabilities measured at fair value on a recurring basis are presented in the following tables. Corporate bonds and other includes obligations of the U.S. Treasury, government-sponsored enterprises, foreign governments and redeemable preferred stock.


September 30, 2022							Total Assets/Liabilities at Fair Value
(In millions)	Level 1		Level 2		Level 3
Assets
Fixed maturity securities:
Corporate bonds and other	$	118	$	20,617	$	802	$	21,537
States, municipalities and political subdivisions	—		8,381		42		8,423
Asset-backed	—		6,575		716		7,291
Total fixed maturity securities	118		35,573		1,560		37,251
Equity securities:
Common stock	180		—		30		210
Non-redeemable preferred stock	56		625		—		681
Total equity securities	236		625		30		891
Short term and other	895		34		—		929
Total assets	$	1,249	$	36,232	$	1,590	$	39,071
Liabilities
Other liabilities	$	—	$	(1)	$	—	$	(1)
Total liabilities	$	—	$	(1)	$	—	$	(1)


December 31, 2021							Total Assets/Liabilities at Fair Value
(In millions)	Level 1		Level 2		Level 3
Assets
Fixed maturity securities:
Corporate bonds and other	$	140	$	23,775	$	937	$	24,852
States, municipalities and political subdivisions	—		11,887		56		11,943
Asset-backed	—		7,029		556		7,585
Total fixed maturity securities	140		42,691		1,549		44,380
Equity securities:
Common stock	220		—		13		233
Non-redeemable preferred stock	65		721		16		802
Total equity securities	285		721		29		1,035
Short term and other	1,798		74		—		1,872
Total assets	$	2,223	$	43,486	$	1,578	$	47,287
Liabilities
Other liabilities	$	—	$	12	$	—	$	12
Total liabilities	$	—	$	12	$	—	$	12

September 30, 2017
Total
Assets/Liabilities
at Fair Value
(In millions) Level 1 Level 2 Level 3
Assets
Fixed maturity securities:
Corporate and other bonds $ —
$ 19,469
$ 119
$ 19,588
States, municipalities and political subdivisions —
13,955
1
13,956
Asset-backed:
Residential mortgage-backed —
4,829
176
5,005
Commercial mortgage-backed —
1,876
24
1,900
Other asset-backed —
915
146
1,061
Total asset-backed —
7,620
346
7,966
U.S. Treasury and obligations of government-sponsored enterprises 115
—
—
115
Foreign government —
445
—
445
Redeemable preferred stock 20
—
—
20
Total fixed maturity securities 135
41,489
466
42,090
Equity securities 110
—
19
129
Other invested assets —
5
—
5
Short term investments 479
876
—
1,355
Total assets $ 724
$ 42,370
$ 485
$ 43,579
Liabilities

Other liabilities $ —
$ 1
$ —
$ 1
Total liabilities $ —
$ 1
$ —
$ 1

Table of Contents

December 31, 2016
Total
Assets/Liabilities
at Fair Value
(In millions) Level 1 Level 2 Level 3
Assets
Fixed maturity securities:
Corporate and other bonds $ —
$ 18,840
$ 130
$ 18,970
States, municipalities and political subdivisions —
13,239
1
13,240
Asset-backed:
Residential mortgage-backed —
4,944
129
5,073
Commercial mortgage-backed —
2,027
13
2,040
Other asset-backed —
968
57
1,025
Total asset-backed —
7,939
199
8,138
U.S. Treasury and obligations of government-sponsored enterprises 93
—
—
93
Foreign government —
445
—
445
Redeemable preferred stock 19
—
—
19
Total fixed maturity securities 112
40,463
330
40,905
Equity securities 91
—
19
110
Other invested assets —
5
—
5
Short term investments 475
853
—
1,328
Life settlement contracts, included in Other assets —
—
58
58
Total assets $ 678
$ 41,321
$ 407
$ 42,406
Liabilities

Other liabilities $ —
$ (3 ) $ —
$ (3 )
Total liabilities $ —
$ (3 ) $ —
$ (3 )

The tables below present a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3).


Level 3 (In millions)	Corporate bonds and other		States, municipalities and political subdivisions		Asset-backed		Equity securities		Total
Balance as of July 1, 2022	$	846	$	46	$	641	$	47	$	1,580
Total realized and unrealized investment gains (losses):
Reported in Net investment gains (losses)	—		—		2		(3)		(1)
Reported in Net investment income	1		—		5		(4)		2
Reported in Other comprehensive income (loss)	(50)		(4)		(38)		—		(92)
Total realized and unrealized investment gains (losses)	(49)		(4)		(31)		(7)		(91)
Purchases	9		—		116		—		125
Sales	—		—		—		—		—
Settlements	(4)		—		(14)		—		(18)
Transfers into Level 3	—		—		47		—		47
Transfers out of Level 3	—		—		(43)		(10)		(53)
Balance as of September 30, 2022	$	802	$	42	$	716	$	30	$	1,590
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2022 recognized in Net income (loss) in the period	$	—	$	—	$	—	$	(7)	$	(7)
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2022 recognized in Other comprehensive income (loss) in the period	(51)		(4)		(38)		—		(93)


Level 3 (In millions)	Corporate bonds and other		States, municipalities and political subdivisions		Asset-backed		Equity securities		Total
Balance as of July 1, 2021	$	883	$	57	$	410	$	25	$	1,375
Total realized and unrealized investment gains (losses):
Reported in Net investment gains (losses)	1		—		—		(3)		(2)
Reported in Net investment income	—		—		1		1		2
Reported in Other comprehensive income (loss)	1		—		1		—		2
Total realized and unrealized investment gains (losses)	2		—		2		(2)		2
Purchases	55		—		83		1		139
Sales	—		—		(9)		(11)		(20)
Settlements	(11)		—		(11)		—		(22)
Transfers into Level 3	—		—		41		11		52
Transfers out of Level 3	(52)		—		(38)		—		(90)
Balance as of September 30, 2021	$	877	$	57	$	478	$	24	$	1,436
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2021 recognized in Net income (loss) in the period	$	—	$	—	$	—	$	(3)	$	(3)
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2021 recognized in Other comprehensive income (loss) in the period	2		—		—		—		2

Table of Contents

Level 3
(In millions)
Balance as of
July 1,
2017
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)* Net change in unrealized appreciation (depreciation) included in Other comprehensive income (loss) Purchases Sales Settlements
Transfers into
Level 3

Transfers out
of Level 3

Balance as of
September 30,
2017
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2017 recognized in Net income (loss)*
Fixed maturity securities:
Corporate and other bonds $ 100
$ 1
$ 1
$ 13
$ —
$ (11 ) $ 15
$ —
$ 119
$ —
States, municipalities and political subdivisions 1
—
—
—
—
—
—
—
1
—
Asset-backed:

Residential mortgage-backed 123
1
1
—
—
(7 ) 58
—
176
—
Commercial mortgage-backed 13
—
(1 ) 12
—
(2 ) 2
—
24
—
Other asset-backed 82
(1 ) 1
27
—
(4 ) 41
—
146
—
Total asset-backed 218
—
1
39
—
(13 ) 101
—
346
—
Total fixed maturity securities 319
1
2
52
—
(24 ) 116
—
466
—
Equity securities 19
—
—
—
—
—
—
—
19
—
Life settlement contracts 1
—
—
—
(1 ) —
—
—
—
—
Total $ 339
$ 1
$ 2
$ 52
$ (1 ) $ (24 ) $ 116
$ —
$ 485
$ —


Level 3 (In millions)	Corporate bonds and other		States, municipalities and political subdivisions		Asset-backed		Equity securities		Total
Balance as of January 1, 2022	$	937	$	56	$	556	$	29	$	1,578
Total realized and unrealized investment gains (losses):
Reported in Net investment gains (losses)	(2)		—		7		(6)		(1)
Reported in Net investment income	1		—		11		(1)		11
Reported in Other comprehensive income (loss)	(203)		(14)		(122)		—		(339)
Total realized and unrealized investment gains (losses)	(204)		(14)		(104)		(7)		(329)
Purchases	127		—		348		12		487
Sales	(5)		—		(2)		(3)		(10)
Settlements	(63)		—		(54)		9		(108)
Transfers into Level 3	10		—		66		—		76
Transfers out of Level 3	—		—		(94)		(10)		(104)
Balance as of September 30, 2022	$	802	$	42	$	716	$	30	$	1,590
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2022 recognized in Net income (loss) in the period	$	—	$	—	$	—	$	(8)	$	(8)
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2022 recognized in Other comprehensive income (loss) in the period	(203)		(14)		(121)		—		(338)

Level 3
(In millions)
Balance as of
July 1,
2016
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)* Net change in unrealized appreciation (depreciation) included in Other comprehensive income (loss) Purchases Sales Settlements
Transfers into
Level 3

Transfers out
of Level 3

Balance as of
September 30,
2016
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2016 recognized in Net income (loss)*
Fixed maturity securities:
Corporate and other bonds $ 242
$ 1
$ 7
$ 16
$ —
$ (5 ) $ —
$ —
$ 261
$ —
States, municipalities and political subdivisions 2
—
—
—
—
(1 ) —
—
1
—
Asset-backed:

Residential mortgage-backed 134
—
(1 ) 5
—
(1 ) —
(58 ) 79
—
Commercial mortgage-backed 11
—
—
23
—
(8 ) —
(2 ) 24
—
Other asset-backed 45
—
—
34
—
—
—
(36 ) 43
—
Total asset-backed 190
—
(1 ) 62
—
(9 ) —
(96 ) 146
—
Total fixed maturity securities 434
1
6
78
—
(15 ) —
(96 ) 408
—
Equity securities 19
(1 ) 1
—
—
—
—
—
19
(2 )
Life settlement contracts 67
—
—
—
—
—
—
—
67
—
Total $ 520
$ —
$ 7
$ 78
$ —
$ (15 ) $ —
$ (96 ) $ 494
$ (2 )

Level 3
(In millions)
Balance as of
January 1,
2017
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)* Net change in unrealized appreciation (depreciation) included in Other comprehensive income (loss) Purchases Sales Settlements
Transfers into
Level 3

Transfers out
of Level 3

Balance as of
September 30,
2017
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2017 recognized in Net income (loss)*
Fixed maturity securities:
Corporate and other bonds $ 130
$ 1
$ 2
$ 18
$ (1 ) $ (36 ) $ 15
$ (10 ) $ 119
$ —
States, municipalities and political subdivisions 1
—
—
—
—
—
—
—
—
1
—
Asset-backed:
Residential mortgage-backed 129
3
4
—
—
—
(18 ) 58
—
176
—
Commercial mortgage-backed 13
—
(1 ) —
12
—
(2 ) 2
—
24
—
Other asset-backed 57
(2 ) 1
—
78
—
(6 ) 93
(75 ) 146
—
Total asset-backed 199
1
4
90
—
(26 ) 153
(75 ) 346
—
Total fixed maturity securities 330
2
6
108
(1 ) (62 ) 168
(85 ) 466
—
Equity securities 19
—
2
—
1
(3 ) —
—
—
19
—
Derivative financial instruments —
1
—
—
—
(1 ) —
—
—
—
—
Life settlement contracts 58
6
—
—
(59 ) (5 ) —
—
—
—
Total $ 407
$ 9
$ 8
$ 109
$ (64 ) $ (67 ) $ 168
$ (85 ) $ 485
$ —

Level 3
(In millions)
Balance as of
January 1,
2016
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)* Net change in unrealized appreciation (depreciation) included in Other comprehensive income (loss) Purchases Sales Settlements
Transfers into
Level 3

Transfers out
of Level 3

Balance as of
September 30,
2016
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2016 recognized in Net income (loss)*
Fixed maturity securities:
Corporate and other bonds $ 168
$ 1
$ 14
$ 163
$ (36 ) $ (15 ) $ —
$ (34 ) $ 261
$ —
States, municipalities and political subdivisions 2
—
—
—
—
(1 ) —
—
1
—
Asset-backed:

Residential mortgage-backed 134
2
(2 ) 15
—
(10 ) —
(60 ) 79
—
Commercial mortgage-backed 22
—
—
32
—
(17 ) 3
(16 ) 24
—
Other asset-backed 53
—
2
69
(25 ) (1 ) 2
(57 ) 43
—
Total asset-backed 209
2
—
116
(25 ) (28 ) 5
(133 ) 146
—
Total fixed maturity securities 379
3
14
279
(61 ) (44 ) 5
(167 ) 408
—
Equity securities 20
(1 ) —
—
—
—
—
—
19
(2 )
Life settlement contracts 74
10
—
—
—
(17 ) —
—
67
2
Total $ 473
$ 12
$ 14
$ 279
$ (61 ) $ (61 ) $ 5
$ (167 ) $ 494
$ —

*Net realized and unrealized gains and losses from Level 3 securities and derivatives are reported in Net income (loss) as follows:



~~Major Category of Assets and Liabilities~~		~~Condensed Consolidated Statements of Operations Line Items~~
~~Fixed maturity securities available-for-sale~~ ⁽¹⁾		~~Net realized investment gains (losses)~~
~~Fixed maturity securities trading~~		~~Net investment income~~
~~Equity securities~~ ⁽¹⁾		~~Net realized investment gains (losses)~~
~~Other invested assets - Derivative financial instruments held in a trading portfolio~~		~~Net investment income~~
~~Other invested assets - Derivative financial instruments not held in a trading portfolio~~		~~Net realized investment gains (losses)~~
~~Life settlement contracts~~		~~Other revenues~~
~~Other liabilities - Derivative financial instruments~~		~~Net realized investment gains (losses)~~

~~(1) Unrealized gains and losses are reported within AOCI.~~


Level 3 (In millions)	Corporate bonds and other		States, municipalities and political subdivisions		Asset-backed		Equity securities		Total
Balance as of January 1, 2021	$	770	$	46	$	308	$	27	$	1,151
Total realized and unrealized investment gains (losses):
Reported in Net investment gains (losses)	(9)		—		—		(2)		(11)
Reported in Net investment income	—		—		4		2		6
Reported in Other comprehensive income (loss)	(23)		—		(4)		—		(27)
Total realized and unrealized investment gains (losses)	(32)		—		—		—		(32)
Purchases	219		12		197		1		429
Sales	(3)		—		(9)		(15)		(27)
Settlements	(35)		(1)		(38)		—		(74)
Transfers into Level 3	10		—		71		11		92
Transfers out of Level 3	(52)		—		(51)		—		(103)
Balance as of September 30, 2021	$	877	$	57	$	478	$	24	$	1,436
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2021 recognized in Net income (loss) in the period	$	—	$	—	$	—	$	(1)	$	(1)
Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2021 recognized in Other comprehensive income (loss) in the period	(22)		—		(5)		—		(27)

Securities may be transferred in or out of levels within the fair value hierarchy based on the availability of observable market information and quoted prices used to determine the fair value of the security. The availability of observable market information and quoted prices varies based on market conditions and trading volume. ~~During the three and nine months ended September 30, 2017 and 2016, there were no transfers between Level 1 and Level 2. The Company's policy is to recognize transfers between levels at the beginning~~

Table of ~~quarterly reporting periods.~~Contents

Valuation Methodologies and Inputs

The following section describes the valuation methodologies and relevant inputs used to measure different financial instruments at fair value, including an indication of the level in the fair value hierarchy in which the instruments are generally classified.

Fixed Maturity Securities

Level 1 securities include highly liquid government securities and exchange traded bonds, ~~and redeemable preferred stock,~~ valued using quoted market prices. Level 2 securities include most other fixed maturity securities as the significant inputs are observable in the marketplace. All classes of Level 2 fixed maturity securities are valued using a methodology based on information generated by market transactions involving identical or comparable assets, a discounted cash flow methodology, or a combination of both when necessary. Common inputs for all classes of fixed maturity securities include prices from recently executed transactions of similar securities, marketplace quotes, benchmark yields, spreads off benchmark yields, interest rates and U.S. Treasury or swap curves. Specifically for asset-backed securities, key inputs include prepayment and default projections based on past performance of the underlying collateral and current market data. Fixed maturity securities are primarily assigned to Level 3 in cases where broker/dealer quotes are significant inputs to the valuation and there is a lack of transparency as to whether these quotes are based on information that is observable in the marketplace. Level 3 securities also include private placement debt securities whose fair value is determined using internal models with some inputs that are not market observable.

Equity Securities

Level 1 equity securities include publicly traded securities valued using quoted market prices. Level 2 securities are primarily ~~non-redeemable preferred stocks and common stocks~~ valued using pricing for similar securities, recently executed transactions and other pricing models utilizing market observable inputs. Level 3 securities are primarily priced using broker/dealer quotes and internal models with some inputs that are not market observable.

Short Term and Other Invested Assets

The fair value of Federal Home Loan Bank of Chicago (FHLBC) stock is equal to par because it can only be redeemed by the FHLBC at par or sold to another member of the FHLBC at par and is classified as Level 2.

As of September 30, 2017 and December 31, 2016, there were approximately $37 million and $31 million respectively of overseas deposits within other invested assets, which can be redeemed at net asset value in 90 days or less. Overseas deposits are excluded from the fair value hierarchy, because their fair value is recorded using the net asset value per share (or equivalent) practical expedient.

~~Short Term Investments~~

Securities that are actively traded or have quoted prices are classified as Level 1. These securities include money market funds and treasury bills. Level 2 primarily includes ~~commercial paper,~~non-U.S. government securities, for which all inputs are market observable. Fixed maturity securities purchased within one year of maturity are classified consistent with fixed maturity securities discussed above. Short term investments as presented in the tables above differ from the amounts presented on the Condensed Consolidated Balance Sheets because certain short term investments, such as time deposits, are not measured at fair value.

~~Life Settlement Contracts~~

~~The Company accounts for its investment~~As of September 30, 2022 and December 31, 2021, there were $65 million and $74 million of overseas deposits within Other invested assets, which can be redeemed at net asset value in ~~life settlement contracts using~~90 days or less. Overseas deposits are excluded from the fair value ~~method. Historically, the~~hierarchy because their fair value ~~of life settlement contracts was determined as~~is recorded using the ~~present~~net asset value of the anticipated death benefits less anticipated premium payments based on contract terms that are distinct for each insured, as well as the Company's own assumptions for mortality, premium expense and the rate of return that a buyer would require on the contracts.

The entire portfolio of life settlement contracts, which is included within the Life and Group Non-Core segment, was determined to be held for sale as of December 31, 2016 as the Company reached an agreement on terms to sell the portfolio. As such, the Company adjusted the fair value to the estimated sales proceeds less cost to sell. The definitive Purchase and Sale Agreement (PSA) related to the portfolio was executed on March 7, 2017 (sale date). In connection therewith, the life settlement contracts and related sale proceeds were placed in escrow until the buyer was recognized as the owner and beneficiary of each individual life settlement contract by the life insurance company that issued the policy. All of the contracts have been released from escrow as of September 30, 2017. The Company derecognized the released contracts and recorded the consideration, including a note receivable, which is payable over three years and is carried at amortized cost less any valuation allowance. The note receivable of $45 million is included within Other assets on the September 30, 2017 Condensed Consolidated Balance Sheet and interest income is accreted to the principal balance of the note.

The fair value of the Company's investments in life settlement contracts were $0 million and $58 million as of September 30, 2017 and December 31, 2016, and are included in Other assets on the Condensed Consolidated Balance Sheets. Despite the sale, the contracts were classified as Level 3 as there is not an active market for life settlement contracts. The cash receipts and payments related to the life settlement contracts prior to the sale date are included in Cash Flows from operating activities on the Condensed Consolidated Statements of Cash Flows. Cash receipts related to the sale of the life settlement contracts, as well as principal payments on the note receivable, are included in Cash Flows from investing activities.per share (or equivalent) practical expedient.

Derivative Financial Investments

~~Level 2 securities primarily include the embedded derivative on the funds withheld liability.~~ The embedded derivative on funds withheld liability is valued ~~using~~based on the ~~change in fair value~~unrealized gain or loss position of the assets supporting the funds withheld liability, which are fixed maturity securities primarily valued with observable inputs.

Table of Contents

Significant Unobservable Inputs

The following tables present quantitative information about the significant unobservable inputs utilized by the Company in the fair value measurements of Level 3 assets. Valuations for assets and liabilities not presented in the tables below are primarily based on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. The quantitative detail of these unobservable inputs is neither provided nor reasonably available to the Company. The ~~valuation of life settlement contracts was~~weighted average rate is calculated based on ~~the terms of the sale of the contracts to a third party; therefore, the contracts are not included in the table below.~~fair value.

September 30, 2022

Estimated Fair Value
(In millions)

Valuation Technique(s)

Unobservable Input(s)

Range
(Weighted Average)

Fixed maturity securities

1,111

Discounted cash flow

Credit spread

1% - 11% (3%)

September 30, 2017
Estimated Fair Value
(In millions)
Valuation Technique(s) Unobservable Input(s)
Range
(Weighted Average)
Fixed maturity securities $ 139
Discounted cash flow Credit spread 1% - 12% (3%)

December 31, 2016 Estimated Fair Value
(In millions) Valuation Technique(s) Unobservable Input(s)
Range
(Weighted Average)
Fixed maturity securities $ 106
Discounted cash flow Credit spread 2% - 40% (4%)

December 31, 2021

Estimated Fair Value
(In millions)

Valuation Technique(s)

Unobservable Input(s)

Range
(Weighted Average)

Fixed maturity securities

1,225

Discounted cash flow

Credit spread

1% - 7% (2%)

For fixed maturity securities, an increase to the credit spread assumptions would result in a lower fair value measurement.

Financial Assets and Liabilities Not Measured at Fair Value

The carrying amount and estimated fair value of the Company's financial assets and liabilities which are not measured at fair value on the Condensed Consolidated Balance Sheets are presented in the following tables.


September 30, 2022	Carrying Amount		Estimated Fair Value
(In millions)			Level 1		Level 2		Level 3		Total
Assets
Mortgage loans	$	953	$	—	$	—	$	880	$	880
Liabilities
Long term debt	$	2,780	$	—	$	2,563	$	—	$	2,563

September 30, 2017
Carrying
Amount
Estimated Fair Value
(In millions) Level 1 Level 2 Level 3 Total
Assets
Mortgage loans $ 722
$ —
$ —
$ 731
$ 731
Note receivable 45
—
—
—
—
46
46
Liabilities
Short term debt $ 150
$ —
$ 152
$ —
$ 152
Long term debt 2,707
—
2,916
—
2,916

December 31, 2016 Carrying
Amount Estimated Fair Value
(In millions) Level 1 Level 2 Level 3 Total
Assets
Mortgage loans $ 591
$ —
$ —
$ 594
$ 594
Liabilities
Long term debt $ 2,710
$ —
$ 2,952
$ —
$ 2,952

~~The following methods and assumptions were used to estimate the fair value of these financial assets and liabilities.~~

The fair values of mortgage loans were based on the present value of the expected future cash flows discounted at the current interest rate for origination of similar quality loans, adjusted for specific loan risk.

The fair value of the note receivable was based on the present value of the expected future cash flows discounted at the current interest rate for origination of similar notes, adjusted for specific credit risk.

The Company's senior notes and debentures were valued based on observable market prices. The fair value for other debt was estimated using discounted cash flows based on current incremental borrowing rates for similar borrowing arrangements.


December 31, 2021	Carrying Amount		Estimated Fair Value
(In millions)			Level 1		Level 2		Level 3		Total
Assets
Mortgage loans	$	973	$	—	$	—	$	1,018	$	1,018

Liabilities
Long term debt	$	2,779	$	—	$	2,978	$	—	$	2,978

The carrying amounts reported on the Condensed Consolidated Balance Sheets for Cash, Short term investments not carried at fair value, Accrued investment income and certain Other assets and Other liabilities approximate fair value due to the short term nature of these items. These assets and liabilities are not listed in the tables above.

Table of Contents

Note E.E. Claim and Claim Adjustment Expense Reserves and Future Policy Benefit Reserves

~~The Company's property~~Property and casualty insurance claim and claim adjustment expense reserves represent the estimated amounts necessary to resolve all outstanding claims, including incurred but not reported (IBNR) claims as of the reporting date. The Company's reserve projections are based primarily on detailed analysis of the facts in each case, the Company's experience with similar cases and various historical development patterns. Consideration is given to ~~such~~ historical patterns such as claim reserving trends and settlement practices, loss payments, pending levels of unpaid claims and product mix, as well as court decisions and economic conditions, including inflation, and public attitudes. All of these factors can affect the estimation of claim and claim adjustment expense reserves.

Establishing claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves for catastrophic events that have occurred, is an estimation process. Many factors can ultimately affect the final settlement of a claim and, therefore, the necessary reserve. Changes in the law, results of litigation, medical costs, the cost of repair materials and labor rates can ~~all~~ affect ultimate claim costs. In addition, time can be a critical part of reserving determinations since the longer the span between the incidence of a loss and the payment or settlement of the claim, the more variable the ultimate settlement amount can be. Accordingly, short-tail claims, such as property damage claims, tend to be more reasonably estimable than long-tail claims, such as workers' compensation, general liability and professional liability claims. Adjustments to prior year reserve estimates, if necessary, are reflected in the results of operations in the period that the need for such adjustments is determined. There can be no assurance that the Company's ultimate cost for insurance losses will not exceed current estimates.

Catastrophes are an inherent risk of the property and casualty insurance business and have contributed to material period-to-period fluctuations in ~~the Company's~~our results of operations and/or equity. The Company reported catastrophe losses, net of reinsurance, of ~~$269~~$114 million and ~~$342~~$171 million for the three and nine months ended September 30, ~~2017. Net catastrophe~~2022 primarily related to severe weather related events. Catastrophe losses for the three and nine months ended September 30, ~~2017~~2022 included ~~$149~~$87 million ~~related to~~for Hurricane ~~Harvey, $95 million related to Hurricane Irma and $20 million related to Hurricane Maria.~~Ian. The ~~remaining~~Company reported catastrophe losses, ~~in 2017 resulted primarily from U.S. weather-related events. Catastrophe-related~~net of reinsurance, ~~reinstatement premium was $6~~of $178 million and $357 million for the three and nine months ended September 30, ~~2017. The Company reported catastrophe~~2021. Catastrophe losses ~~net of reinsurance, of $16 million and $137 million~~ for the three ~~and~~months ended September 30, 2021 included $114 million for Hurricane Ida. Catastrophe losses for the nine months ended September 30, ~~2016. Catastrophe losses in 2016 resulted~~2021 were driven by severe weather related events, primarily ~~from U.S. weather-related events~~Hurricane Ida and ~~the Fort McMurray wildfires.~~Winter Storms Uri and Viola.

Table of Contents

Liability for Unpaid Claim and Claim Adjustment Expenses ~~Rollforward~~

The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves of the Life & Group ~~Non-Core~~ segment.


For the nine months ended September 30
(In millions)	2022		2021
Reserves, beginning of year:
Gross	$	24,174	$	22,706
Ceded	4,969		4,005
Net reserves, beginning of year	19,205		18,701
Reduction of net reserves due to Excess Workers' Compensation Loss Portfolio Transfer	—		(632)
Net incurred claim and claim adjustment expenses:
Provision for insured events of current year	4,638		4,474
Increase (decrease) in provision for insured events of prior years	(144)		(130)
Amortization of discount	131		137
Total net incurred (1)	4,625		4,481
Net payments attributable to:
Current year events	(523)		(629)
Prior year events	(3,371)		(2,874)
Total net payments	(3,894)		(3,503)
Foreign currency translation adjustment and other	(383)		(51)
Net reserves, end of period	19,553		18,996
Ceded reserves, end of period	5,147		4,836
Gross reserves, end of period	$	24,700	$	23,832

For the nine months ended September 30
(In millions) 2017 2016
Reserves, beginning of year:
Gross $ 22,343
$ 22,663
Ceded 4,094
4,087
Net reserves, beginning of year 18,249
18,576
Net incurred claim and claim adjustment expenses:
Provision for insured events of current year 3,949
3,799
Decrease in provision for insured events of prior years (284 ) (332 )
Amortization of discount 138
134
Total net incurred ⁽¹⁾
3,803

3,601
Net payments attributable to:
Current year events (560 ) (591 )
Prior year events (3,401 ) (3,209 )
Total net payments (3,961 )
(3,800 )
Foreign currency translation adjustment and other 110
39
Net reserves, end of period 18,201
18,416
Ceded reserves, end of period 4,008
4,256
Gross reserves, end of period $ 22,209

$ 22,672
(1) Total net incurred above does not agree to Insurance claims and policyholders' benefits as reflected on the Condensed Consolidated Statements of Operations due to amounts related to retroactive reinsurance deferred gain accounting, the loss on the Excess Workers' Compensation Loss Portfolio Transfer, uncollectible reinsurance and benefit expenses related to future policy benefits, which are not reflected in the table above.


~~(1)~~	Total net incurred above does not agree to Insurance claims and policyholders' benefits as reflected on the Condensed Consolidated Statements of Operations due to amounts related to retroactive reinsurance deferred gain accounting, uncollectible reinsurance and loss deductible receivables, and benefit expenses related to future policy benefits, which are not reflected in the table above.

Net Prior Year Development

Changes in estimates of claim and ~~allocated~~ claim adjustment expense reserves, ~~and premium accruals,~~ net of reinsurance, for prior years are defined as net prior year ~~development.~~loss reserve development (development). These changes can be favorable or unfavorable. The following ~~tables and discussion present the net prior year~~table presents development recorded for the Specialty, Commercial, International and Corporate & Other ~~Non-Core~~ segments.

Three months ended September 30, 2017
(In millions)

Specialty
Commercial International
Corporate
& Other
Non-Core
Total
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development $ (109 ) $ (7 ) $ 1
$ —
$ (115 )
Pretax (favorable) unfavorable premium development (3 ) (11 ) (5 ) —
(19 )
Total pretax (favorable) unfavorable net prior year development $ (112 ) $ (18 ) $ (4 ) $ —
$ (134 )

Three months ended September 30, 2016
(In millions)

Specialty
Commercial International
Corporate
& Other
Non-Core
Total
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development $ (112 ) $ (5 ) $ (15 ) $ —
$ (132 )
Pretax (favorable) unfavorable premium development —
(3 ) (2 ) —
(5 )
Total pretax (favorable) unfavorable net prior year development $ (112 ) $ (8 ) $ (17 ) $ —
$ (137 )

Nine months ended September 30, 2017
(In millions)

Specialty
Commercial International
Corporate
& Other
Non-Core
Total
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development $ (163 ) $ (65 ) $ 1
$ —
$ (227 )
Pretax (favorable) unfavorable premium development (13 ) 27
(16 ) —
(2 )
Total pretax (favorable) unfavorable net prior year development $ (176 ) $ (38 ) $ (15 ) $ —
$ (229 )

Nine months ended September 30, 2016
(In millions)

Specialty
Commercial International
Corporate
& Other
Non-Core
Total
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development $ (211 ) $ (37 ) $ (34 ) $ —
$ (282 )
Pretax (favorable) unfavorable premium development (18 ) (7 ) (2 ) —
(27 )
Total pretax (favorable) unfavorable net prior year development $ (229 ) $ (44 ) $ (36 ) $ —
$ (309 )

~~Premium~~


Periods ended September 30	Three Months				Nine Months
(In millions)	2022		2021		2022		2021
Pretax (favorable) unfavorable development:
Specialty	$	(15)	$	(15)	$	(35)	$	(40)
Commercial	(2)		2		(26)		2
International	—		3		(5)		2
Corporate & Other	—		—		64		40
Total pretax (favorable) unfavorable development	$	(17)	$	(10)	$	(2)	$	4

Unfavorable development ~~can occur in~~of $64 million was recorded within the property and casualty business when there is a change in exposure on auditable policies or when premium accruals differ from processed premium. Audits on policies usually occur in a period after the expiration date of the policy. See further information on the premium development in the CommercialCorporate & Other segment for the ~~three and~~ nine months ended September 30, ~~2017~~2022 largely associated with legacy mass tort abuse claims, including the recent Diocese of Rochester proposed settlement. Unfavorable development of $40 million was recorded within the ~~Small Business discussion in Note F.~~Corporate & Other segment for the nine months ended September 30, 2021 due to legacy mass tort exposures, primarily related to abuse.

Table of Contents

Specialty

The following table presents further detail of the ~~net prior year claim and allocated claim adjustment expense reserve~~ development ~~(development)~~ recorded for the Specialty segment.


Periods ended September 30	Three Months						Nine Months						Periods ended September 30	Three Months				Nine Months
(In millions)	2017			2016			2017			2016			(In millions)	2022		2021		2022		2021
Pretax (favorable) unfavorable development:													Pretax (favorable) unfavorable development:
Medical Professional Liability	$	1		$	13		$	5		$	(17	)	Medical Professional Liability	$	8	$	8	$	17	$	16
Other Professional Liability and Management Liability	(27		)	(48		)	(96		)	(98		)	Other Professional Liability and Management Liability	9		—		22		10
Surety	(82		)	(63		)	(82		)	(63		)	Surety	(20)		(15)		(48)		(53)
Warranty	(1		)	2			5			7			Warranty	(13)		(6)		(22)		(14)
Other	—			(16		)	5			(40		)	Other	1		(2)		(4)		1
Total pretax (favorable) unfavorable development	$	(109	)	$	(112	)	$	(163	)	$	(211	)	Total pretax (favorable) unfavorable development	$	(15)	$	(15)	$	(35)	$	(40)

Three Months

~~2017~~2022

Favorable development in surety was primarily due to lower than expected frequency and lack of systemic activity in recent accident years.

Favorable development in warranty was due to lower than expected loss emergence in a recent accident year.

2021

Favorable development in surety was primarily due to lower than expected frequency and lack of systemic activity in recent accident years.

Nine Months

2022

Unfavorable development in medical professional liability was due to higher than expected large loss activity in recent accident years.

Unfavorable development in other professional liability and management liability was ~~primarily~~ due to ~~lower~~higher than expected claim severity and frequency in the Company’s cyber and professional errors and omissions businesses in multiple accident ~~years 2012 through 2015, primarily for professional liability products.~~years.

Favorable development in surety ~~coverages~~ was primarily due to lower than expected frequency and lack of ~~large losses~~systemic activity in recent accident ~~years 2015 and prior.~~years.

~~2016~~Favorable development in warranty was due to lower than expected loss emergence in a recent accident year.

2021

Unfavorable development ~~for~~in medical professional liability was ~~largely~~ due to higher than expected frequency of large losses in recent accident years 2014 and 2015 in aging services. Increased claims on a specific hospital policy in accident years 2014 and 2015 was also an unfavorable contributor although more than offset by favorable development relative to expectations in accident years 2013 and prior.years.

~~Favorable~~Unfavorable development in other professional liability and management liability was ~~primarily related~~due to ~~lower~~higher than expected claim severity and frequency ~~of claims and favorable outcomes on specific claims for~~in the Company’s cyber business in recent accident ~~years 2010 through 2014.~~years.

Favorable development in surety ~~coverages~~ was primarily due to lower than expected frequency and lack of ~~large losses~~systemic activity in recent accident ~~years 2014 and prior.~~

~~Favorable development for other coverages was due to better than expected claim frequency in commercial lines coverages provided to Specialty customers in accident years 2010 through 2015.~~

~~Nine Months~~

~~2017~~years.

Favorable development in ~~other professional liability and management liability~~warranty was primarily due to favorable settlements on closed claims and a lower frequency of large losses for accident years 2011 through 2016 for professional and management liability, lower than expected claim frequency in accident years 2012 through 2015 for professional liability and lower than expected severity in accident years 2014 through 2016 for professional liability.

~~Favorable development in surety coverages was primarily~~ due to lower than expected ~~frequency of large losses in accident years 2015 and prior.~~

~~2016~~

Favorable development for medical professional liability was primarily due to lower than expected severities for individual healthcare professionals, allied facilities and hospitals in accident years 2011 and prior. This was partially offset by unfavorable development in accident years 2012 and 2013 related to higher than expected large loss emergence in ~~hospitals and higher than expected frequency and severity in~~a recent accident ~~years 2014 and 2015 in our aging services business.~~year.

Favorable development in other professional liability and management liability was primarily related to favorable settlements on closed claims in accident years 2011 through 2013 in professional services. Additional favorable development related to lower than expected frequency

Table of claims and favorable outcomes on specific claims in accident years 2010 through 2014 in professional services. This was partially offset by unfavorable development related to a specific financial institutions claim in accident year 2014, higher severities in accident year 2015, and deterioration on credit crises-related claims in accident year 2009.Contents

~~Favorable development in surety coverages was primarily due to lower than expected frequency of large losses in accident years 2014 and prior.~~

Favorable development for other coverages provided to Specialty customers was due to better than expected claim frequency in property coverages in accident year 2015 and commercial lines coverages in accident years 2010 through 2015.

Commercial

The following table presents further detail of the development recorded for the Commercial segment.


Periods ended September 30	Three Months						Nine Months						Periods ended September 30	Three Months				Nine Months
(In millions)	2017			2016			2017			2016			(In millions)	2022		2021		2022		2021
Pretax (favorable) unfavorable development:													Pretax (favorable) unfavorable development:
Commercial Auto	$	(14	)	$	(12	)	$	(40	)	$	(47	)	Commercial Auto	$	—	$	—	$	21	$	30
General Liability	7			14			6			(38		)	General Liability	—		—		41		—
Workers' Compensation	7			(6		)	(39		)	48			Workers' Compensation	(2)		2		(86)		(40)
Property and Other	(7		)	(1		)	8			—			Property and Other	—		—		(2)		12
Total pretax (favorable) unfavorable development	$	(7	)	$	(5	)	$	(65	)	$	(37	)	Total pretax (favorable) unfavorable development	$	(2)	$	2	$	(26)	$	2

~~Three~~Nine Months

~~2017~~2022

Unfavorable development in commercial auto was due to higher than expected claim severity in the Company’s construction business in multiple accident years.

Unfavorable development in general liability was due to higher than expected claim severity in construction, middle market and small business across multiple accident years.

Favorable development ~~for commercial auto~~in workers’ compensation was ~~primarily~~ due to favorable medical trends driving lower than expected severity in multiple accident ~~years 2015 and 2016, as well as a large favorable recovery on a claim in accident year 2012.~~years.

2021

Unfavorable development in ~~workers' compensation reflects~~commercial auto was due to higher than expected claim severity in the ~~recognition of loss estimates related to favorable premium development as well as an adverse arbitration ruling related to reinsurance recoverables from older~~Company’s construction and middle market businesses in recent accident years.

~~2016~~

Favorable development ~~for commercial auto~~in workers’ compensation was ~~primarily~~ due to ~~lower than expected severities in accident years 2012 through 2015.~~

Unfavorable development for general liability was primarily due to an increase in reported claims prior to the closing of the three year window set forth by the Minnesota Child Victims Act in accident years 2006 and prior.

Favorable development for workers' compensation was primarily driven by lower than expected frequencies in accident years 2009 through 2014, partially offset by the estimated impact of recent Florida court rulings in accident years 2008 through 2015.

~~Nine Months~~

~~2017~~

~~Favorable development for commercial auto was primarily due to~~favorable medical trends driving lower than expected severity in multiple accident ~~years 2013 through 2016, as well as a large favorable recovery on a claim in accident year 2012.~~

Favorable development for workers’ compensation was primarily related to decreases in frequency and severity in recent accident years, partially attributable to California reforms related to decreases in medical costs. This was partially offset by unfavorable development related to an adverse arbitration ruling on reinsurance recoverables from older accident years as well as the recognition of loss estimates associated with favorable premium development.years.

Unfavorable development ~~for~~in property and other was primarily due to higher than expected ~~severity~~large loss activity in the Company’s marine business in multiple accident ~~year 2016.~~years.

~~2016~~

Favorable development for commercial auto was primarily due to favorable settlements on claims in accident years 2010 through 2014 and lower than expected severities in accident years 2012 through 2015.

Favorable development for general liability was primarily due to better than expected claim settlements in accident years 2012 through 2014 and better than expected severity on umbrella claims in accident years 2010 through 2013. This was partially offset by unfavorable development related to an increase in reported claims prior to the closing

Table of ~~the three year window set forth by the Minnesota Child Victims Act in accident years 2006 and prior.~~Contents

Unfavorable development for workers' compensation was primarily due to higher than expected severity for Defense Base Act contractors and the estimated impact of recent Florida court rulings in accident years 2008 through 2015. This was partially offset by favorable development related to lower than expected frequencies related to accident years 2009 through 2014.

Unfavorable development for property and other was primarily due to higher than expected severity from a 2015 catastrophe event. This was offset by favorable development primarily due to better than expected loss frequency in accident years 2013 through 2015.

International

The following table presents further detail of the development recorded for the International segment.


Periods ended September 30	Three Months				Nine Months
(In millions)	2022		2021 (1)		2022		2021 (1)
Pretax (favorable) unfavorable development:
Commercial	$	—	$	(21)	$	(4)	$	(24)
Specialty	—		23		(1)		25
Other	—		1		—		1
Total pretax (favorable) unfavorable development	$	—	$	3	$	(5)	$	2

Periods ended September 30 Three Months Nine Months
(In millions) 2017 2016 2017 2016
Pretax (favorable) unfavorable development:
Medical Professional Liability $ 4
$ (2 ) $ (1 ) $ (3 )
Other Professional Liability (8 ) (1 ) 1
16
Liability 4
(2 ) (1 ) (21 )
Property & Marine (4 ) (9 ) (15 ) (16 )
Other 5
(1 ) 17
(10 )
Total pretax (favorable) unfavorable development $ 1
$ (15 ) $ 1
$ (34 )
(1) Effective December 31, 2021 the International lines of business were consolidated to align with domestic operations. Prior period information has been conformed to the new line of business presentation.

Three Months

~~2017~~2021

Favorable development in ~~other professional liability was primarily due to better than expected emergence in the Canadian run-off business in accident years 2014 and prior.~~

~~2016~~

Favorable development for other professional liability was primarily due to favorable settlements on claims in accident years 2013 and prior. This was largely offset by higher than expected unfavorable large loss emergence in accident years 2014 and 2015.

~~Favorable development for property and marine was primarily due to favorable emergence of expected losses on a specific claim relating to the December 2015 United Kingdom (UK) floods.~~

~~Nine Months~~

~~2017~~

Favorable development for other professional liability was primarily due to better than expected emergence in the Canadian run-off business in accident years 2014 and prior, as well as several favorable settlements relating to large claims in the Europe Professional Indemnity portfolio. This was partially offset by higher than expected severity in accident year 2015 arising from the management liability business.

~~Favorable development for property and marine~~commercial was due to ~~better~~lower than expected ~~frequency in~~loss emergence across multiple accident ~~years 2014 through 2016.~~years.

Unfavorable development ~~for other coverages~~in specialty was ~~primarily due to adverse large claims experience in the Hardy Political Risks portfolio, relating largely to accident year 2016.~~

~~2016~~

~~Unfavorable development for other professional liability was primarily~~ due to higher than expected ~~large loss emergence~~claim severity in ~~accident years 2011 through 2015, partially offset by favorable settlements on claims in accident years 2013 and prior.~~the Company’s medical treatment business.

Nine Months

2021

Favorable development ~~for liability~~in commercial was ~~primarily~~ due to ~~better~~lower than expected loss emergence across multiple accident years.

Unfavorable development in specialty was due to higher than expected claim severity in ~~accident years 2013 and prior.~~the Company’s medical treatment business.

~~Favorable development for property and marine was primarily due to favorable emergence~~

Table of ~~expected losses on a specific claim relating to the December 2015 UK floods.~~Contents

~~Favorable development for other coverages was primarily due to better than expected severity in auto liability in accident years 2011 through 2015.~~

Asbestos ~~and~~& Environmental Pollution (A&EP) Reserves

In 2010, Continental Casualty Company (CCC) together with several of the Company’s insurance subsidiaries completed a transaction with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc., under which substantially all of the Company’s legacy A&EP liabilities were ceded to NICO through a Loss Portfolio Transfer (LPT). At the effective date of the transaction, the Company ceded approximately $1.6 billion of net A&EP claim and allocated claim adjustment expense reserves to NICO under a retroactive reinsurance agreement with an aggregate limit of $4 billion. The $1.6 billion of claim and allocated claim adjustment expense reserves ceded to NICO was net of $1.2 billion of ceded claim and allocated claim adjustment expense reserves under existing third-party reinsurance contracts. The NICO LPT aggregate reinsurance limit also covers credit risk on the existing third-party reinsurance related to these liabilities. The Company paid NICO a reinsurance premium of $2 billion and transferred to NICO billed third-party reinsurance receivables related to A&EP claims with a net book value of $215 million, resulting in total consideration of $2.2 billion.

~~Subsequent~~In years subsequent to the effective date of the LPT, the Company recognized adverse prior year development on its A&EP reserves ~~which resulted~~resulting in additional amounts ceded under the LPT. As a result, the cumulative amounts ceded under the LPT have exceeded the $2.2 billion consideration paid, resulting in the NICO LPT moving into a gain position, requiring retroactive reinsurance accounting. Under retroactive reinsurance accounting, this gain is deferred and only recognized in earnings in proportion to actual paid recoveries under the LPT. Over the life of the contract, there is no economic impact as long as any additional losses incurred are within the limit of the LPT. In a period in which the Company recognizes a change in the estimate of A&EP reserves that increases or decreases the amounts ceded under the LPT, the proportion of actual paid recoveries to total ceded losses is ~~impacted~~affected and the change in the deferred gain is recognized in earnings as if the revised estimate of ceded losses was available at the effective date of the LPT. The effect of the deferred retroactive reinsurance benefit is recorded in Insurance claims and policyholders' benefits ~~in the Condensed Consolidated Statement of Operations.~~

~~The following table presents the impact of the Loss Portfolio Transfer~~ on the Condensed Consolidated Statements of Operations.

Periods ended September 30 Three Months Nine Months
(In millions) 2017 2016 2017 2016
Net A&EP adverse development before consideration of LPT $ —
$ —
$ 60
$ 200
Retroactive reinsurance benefit recognized (17 ) (12 ) (60 ) (94 )
Pretax impact of A&EP reserve development and the LPT $ (17 ) $ (12 ) $ —
$ 106

~~Based upon~~The impact of the ~~Company's annual A&EP reserve review, net unfavorable prior year development~~LPT on the Condensed Consolidated Statements of ~~$60~~Operations was the recognition of a retroactive reinsurance benefit of $17 million and ~~$200~~$8 million ~~was recognized before consideration of cessions to~~for the ~~LPT~~three months ended September 30, 2022 and 2021 and $40 million and $30 million for the nine months ended September 30, ~~2017~~2022 and 2016. The 2017 unfavorable development was driven by modestly higher anticipated payouts on claims from known sources of asbestos exposure. The 2016 unfavorable development was driven by an increase in anticipated future expenses associated with determination of coverage, higher anticipated payouts associated with a limited number of historical accounts having significant asbestos exposures and higher than expected severity on pollution claims. While this unfavorable development was ceded to NICO under the LPT, the Company’s Net income in both periods was negatively affected due to the application of retroactive reinsurance accounting.

2021. As of September 30, ~~2017~~2022 and December 31, ~~2016,~~2021, the cumulative amounts ceded under the LPT were ~~$2.9 billion and $2.8~~$3.4 billion. The unrecognized deferred retroactive reinsurance benefit was ~~$334~~$389 million and $429 million as of September 30, ~~2017~~2022 and December 31, ~~2016.~~2021 and is included within Other liabilities on the Condensed Consolidated Balance Sheets.

NICO established a collateral trust account as security for its obligations to the Company. The fair value of the collateral trust account was ~~$2.9 billion and $2.8~~$2.3 billion as of September 30, ~~2017 and December 31, 2016.~~2022. In addition, Berkshire Hathaway Inc. guaranteed the payment obligations of NICO up to the aggregate reinsurance limit as well as certain of NICO’s performance obligations under the trust agreement. NICO is responsible for claims handling and billing and collection from third-party reinsurers related to the majority of the Company’s A&EP claims.

~~Note F~~. ~~Legal Proceedings and Guarantees~~Credit Risk for Ceded Reserves

~~CNA 401(k) Plus Plan Litigation~~

~~In September 2016, a class action lawsuit was filed against CCC, Continental Assurance Company (CAC) (a former subsidiary of CCC), CNAF, the Investment Committee~~The majority of the ~~CNA 401(k) Plus Plan (Plan),~~ Company’s outstanding voluntary reinsurance receivables are due from reinsurers with financial strength ratings of A- or higher. Receivables due from reinsurers with lower financial strength ratings are primarily due from captive reinsurers and are backed by collateral arrangements.

Table of Contents

Life & Group Policyholder Reserves

The ~~Northern Trust~~Company’s Life & Group segment includes its run-off long term care business as well as structured settlement obligations not funded by annuities related to certain property and casualty claimants. Long term care policies provide benefits for nursing homes, assisted living facilities and home health care subject to various daily and lifetime caps. Generally, policyholders must continue to make periodic premium payments to keep the policy in force and the Company has the ability to increase policy premiums, subject to state regulatory approval.

The Company maintains both claim and ~~John Does 1-10 (collectively Defendants)~~claim adjustment expense reserves as well as future policy benefit reserves for policyholder benefits for the Life & Group segment. Claim and claim adjustment expense reserves consist of estimated reserves for long term care policyholders that are currently receiving benefits, including claims that have been incurred but are not yet reported. In developing the claim and claim adjustment expense reserve estimates for long term care policies, the Company’s actuaries perform a detailed claim reserve review on an annual basis. The review analyzes the sufficiency of existing reserves for policyholders currently on claim and includes an evaluation of expected benefit utilization and claim duration. In addition, claim and claim adjustment expense reserves are also maintained for the structured settlement obligations. In developing the claim and claim adjustment expense reserve estimates for structured settlement obligations, the Company's actuaries review mortality experience on an annual basis. The Company’s recorded claim and claim adjustment expense reserves reflect management's best estimate after incorporating the results of the most recent reviews.

The Company's most recent annual claim reserve reviews were completed in the third quarter of 2022. The long term care claim reserve review resulted in a $25 million pretax reduction in reserves driven by a $107 million favorable impact from the release of all remaining IBNR reserves established during 2020 and 2021 in response to the COVID-19 pandemic partially offset by an $82 million unfavorable impact from higher claim severity, including utilization and cost of care inflation, than anticipated in the reserve estimates. The structured settlement claim reserve review resulted in a $5 million pretax reduction in reserves due to discount rate assumption changes. The Company's 2021 annual claim reserve reviews were completed in the third quarter of 2021 resulting in a $40 million pretax reduction in long term care reserves primarily due to lower claim severity than anticipated in the reserve estimates and a $2 million pretax increase in the structured settlement claim reserves primarily due to lower discount rate assumptions and mortality assumption changes.

Future policy benefit reserves consist of active life reserves related to the ~~Plan.~~Company’s long term care policies for policyholders that are not currently receiving benefits and represent the present value of expected future benefit payments and expenses less expected future premium. The ~~complaint alleges~~determination of these reserves requires management to make estimates and assumptions about expected investment and policyholder experience over the life of the contract. Since many of these contracts may be in force for several decades, these assumptions are subject to significant estimation risk.

The actuarial assumptions that ~~Defendants breached fiduciary duties~~management believes are subject to the ~~Plan~~most variability are morbidity, persistency, discount rates and ~~caused prohibited transactions~~anticipated future premium rate increases. Morbidity is the frequency and severity of injury, illness, sickness and diseases contracted. Persistency is the percentage of policies remaining in ~~violation~~force and can be affected by policy lapses, benefit reductions and death. Discount rates are influenced by the investment yield on assets supporting long term care reserves which is subject to interest rate and market volatility and may also be affected by changes to the Internal Revenue Code. Future premium rate increases are generally subject to regulatory approval, and therefore the exact timing and size of the ~~Employee Retirement Income Security Act~~approved rate increases are unknown. As a result of ~~1974 when~~this variability, the ~~Plan's Fixed Income Fund’s annuity contract with CAC was canceled. The plaintiff alleges he and a proposed class of Plan participants who had invested~~Company’s long term care reserves may be subject to material increases if actual experience develops adversely to the Company’s expectations.

Annually, in the ~~Fixed Income Fund suffered lower returns in their Plan investments~~third quarter, management assesses the adequacy of its long term care future policy benefit reserves by performing a gross premium valuation (GPV) to determine if there is a premium deficiency. Under the GPV, management estimates required reserves using best estimate assumptions as ~~a consequence of these alleged violations and seeks relief on behalf~~ of the putative class. CCC and the other defendants are contesting the case, and no class has been certified. The Plan trustees have provided notice to their fiduciary coverage insurance carriers. Progress on the litigation has been limited as the parties are currently in mediation.

~~Based on information currently available and our assessment~~date of the ~~mediation, management has~~assessment without provisions for adverse deviation. The GPV required reserves are then compared to the existing recorded ~~its best estimate of probable loss; however, it~~reserves. If the GPV required reserves are greater than the existing recorded reserves, the existing assumptions are unlocked and future policy benefit reserves are increased to the greater amount. Any such increase is ~~reasonably possible that the ultimate liability may differ from that amount given the inherent uncertainty involved~~reflected in ~~this matter. After consideration of available insurance coverage, management does not believe that the ultimate resolution of this matter will have a material impact on~~ the Company’s results of operations ~~or financial position though~~in the ~~timing~~period in which the need for such

Table of ~~recognition of any additional loss, if any,~~Contents

adjustment is determined. If the GPV required reserves are less than the existing recorded reserves, assumptions remain locked in and ~~insurance recovery, if any, may differ.~~no adjustment is made.

~~Small Business Premium Rate Adjustment~~

In prior quarters, the Company identified rating errors related to its multi-peril package product and workers' compensation policies within its Small Business unit, and the Company determined that it would voluntarily issue premium refunds along with interest on affected policies. After the rating errors were identified, written and earned premium have been reported net of any impact from the premium rate adjustments. There was no premium development impactThe GPV for the ~~three months ended September 30, 2017~~long term care future policy benefit reserves, performed in the third quarters of 2022 and ~~$37 million~~2021, indicated recorded reserves included a pretax margin of ~~adverse premium development was recognized as a result of the rating errors for the nine months ended September 30, 2017. Pretax operating income was reduced by $1~~approximately $125 million and $7$72 million ~~for the three and nine months ended September 30, 2017 for interest due to policyholders on the premium rate adjustments.~~

~~The policyholder refunds for the multi-package product were issued in the current quarter. The estimated refund liability for the workers' compensation policies~~ as of September 30, ~~2017 was $61 million including interest. Any fines or penalties related to the foregoing are reasonably possible, but are not expected to be material to the Company's results~~2022 and 2021.

Table of ~~operations or financial position.~~Contents

~~Other Litigation~~Note F. Legal Proceedings, Contingencies and Guarantees

The Company is a party to ~~other routine~~various claims and litigation incidental to its business, which, based on the facts and circumstances currently known, isare not material to the Company's results of operations or financial position.

Guarantees

As of September 30, 2017 and December 31, 2016, the Company had recorded liabilities of approximately $5 million related to guarantee and indemnification agreements. Management believes that it is not likely that any future indemnity claims will be significantly greater than the amounts recorded.

In the course of selling business entities and assets to third parties, the Company agreed to guarantee the performance of certain obligations of previously owned subsidiaries and to indemnify purchasers for losses arising out of breaches of representations and warranties with respect to the business entities or assets sold, including, in certain cases, losses arising from undisclosed liabilities or certain named litigation. Such guarantee and indemnification agreements in effect for sales of business entities, assets and third-party loans may include provisions that survive indefinitely. As of September 30, 2017, the aggregate amount related to quantifiable guarantees was $375 million and the aggregate amount related to quantifiable indemnification agreements was $254 million. In certain cases, should the Company be required to make payments under any such guarantee, it would have the right to seek reimbursement from an affiliate of a previously owned subsidiary.

In addition, the Company has agreed to provide indemnification to third-party purchasers for certain losses associated with sold business entities or assets that are not limited by a contractual monetary amount. As of September 30, 2017, the Company had outstanding unlimited indemnifications in connection with the sales of certain of its business entities or assets that included tax liabilities arising prior to a purchaser's ownership of an entity or asset, defects in title at the time of sale, employee claims arising prior to closing and in some cases losses arising from certain litigation and undisclosed liabilities. Certain provisions of the indemnification agreements survive indefinitely, while others survive until the applicable statutes of limitation expire, or until the agreed-upon contract terms expire.

The Company ~~also~~has provided guarantees, if the primary obligor fails to perform, to holders of structured settlement annuities ~~provided~~issued by a previously owned subsidiary. As of September 30, ~~2017,~~2022, the potential amount of future payments the Company could be required to pay under these guarantees was approximately ~~$1.8~~$1.6 billion, which will be paid over the lifetime of the annuitants. The Company does not believe any payment is likely under these guarantees, as the Company is the beneficiary of a trust that must be maintained at a level that approximates the discounted reserves for these annuities.

Table of Contents

Note G.G. Benefit Plans

The components of net periodic pension cost (benefit) are presented in the following table.


Periods ended September 30	Three Months						Nine Months						Periods ended September 30	Three Months				Nine Months
(In millions)	2017			2016			2017			2016			(In millions)	2022		2021		2022		2021
Pension cost (benefit)
Net periodic pension cost (benefit)													Net periodic pension cost (benefit)
Interest cost on projected benefit obligation	$	25		$	29		$	77		$	85		Interest cost on projected benefit obligation	$	17	$	15	$	50	$	46
Expected return on plan assets	(38		)	(41		)	(116		)	(121		)	Expected return on plan assets	(38)		(38)		(114)		(115)
Amortization of net actuarial loss	9			9			27			28
Amortization of net actuarial (gain) loss													Amortization of net actuarial (gain) loss	8		12		23		35
Settlement loss	6			—			8			—			Settlement loss	—		—		—		1
Net periodic pension cost (benefit)	$	2		$	(3	)	$	(4	)	$	(8	)
Total net periodic pension cost (benefit)													Total net periodic pension cost (benefit)	$	(13)	$	(11)	$	(41)	$	(33)

The ~~Company contributed $26 million to its pension plans for~~following table indicates the ~~nine months ended September 30, 2017 and expects to contribute an additional $2 million to its pension plans before December 31, 2017.~~line items in which the non-service cost (benefit) is presented in the Condensed Consolidated Statements of Operations.


Periods ended September 30	Three Months				Nine Months
(In millions)	2022		2021		2022		2021
Non-Service Cost (Benefit):
Insurance claims and policyholders' benefits	$	(3)	$	(3)	$	(11)	$	(9)
Other operating expenses	(10)		(8)		(30)		(24)
Total net periodic pension cost (benefit)	$	(13)	$	(11)	$	(41)	$	(33)

Table of Contents

Note H. Accumulated Other Comprehensive Income (Loss) by Component

The tables below display the changes in Accumulated other comprehensive income (loss) by component.


(In millions)	Net unrealized gains (losses) on investments with an allowance for credit losses		Net unrealized gains (losses) on other investments		Pension and postretirement benefits		Cumulative foreign currency translation adjustment		Total
Balance as of July 1, 2022	$	(8)	$	(1,918)	$	(592)	$	(195)	$	(2,713)
Other comprehensive income (loss) before reclassifications	—		(1,429)		—		(103)		(1,532)
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $—, $11, $2, $— and $13	2		(102)		(6)		—		(106)
Other comprehensive income (loss) net of tax (expense) benefit of $1, $370, $(2), $— and $369	(2)		(1,327)		6		(103)		(1,426)
Balance as of September 30, 2022	$	(10)	$	(3,245)	$	(586)	$	(298)	$	(4,139)


(In millions)	Net unrealized gains (losses) on investments with an allowance for credit losses		Net unrealized gains (losses) on other investments		Pension and postretirement benefits		Cumulative foreign currency translation adjustment		Total
Balance as of July 1, 2021	$	—	$	1,418	$	(829)	$	(80)	$	509
Other comprehensive income (loss) before reclassifications	—		(121)		(1)		(33)		(155)
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $—, $(5), $2, $— and $(3)	—		17		(9)		—		8
Other comprehensive income (loss) net of tax (expense) benefit of $—, $37, $(2), $— and $35	—		(138)		8		(33)		(163)
Balance as of September 30, 2021	$	—	$	1,280	$	(821)	$	(113)	$	346

Table of Contents

(In millions) Net unrealized gains (losses) on investments with OTTI losses Net unrealized gains (losses) on other investments Pension and postretirement benefits Cumulative foreign currency translation adjustment Total
Balance as of July 1, 2017 $ 26
$ 786
$ (635 ) $ (145 ) $ 32
Other comprehensive income (loss) before reclassifications 1
35
—
41
77
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $-, $(4), $5, $- and $1 —
12
(10 ) —
2
Other comprehensive income (loss) net of tax (expense) benefit of $-, $(16), $(5), $- and $(21) 1
23
10
41
75
Balance as of September 30, 2017 $ 27
$ 809
$ (625 ) $ (104 ) $ 107


(In millions)	Net unrealized gains (losses) on investments with an allowance for credit losses		Net unrealized gains (losses) on other investments		Pension and postretirement benefits		Cumulative foreign currency translation adjustment		Total
Balance as of January 1, 2022	$	(2)	$	1,039	$	(604)	$	(113)	$	320
Other comprehensive income (loss) before reclassifications	(5)		(4,401)		—		(185)		(4,591)
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $(1), $15, $5, $— and $19	3		(117)		(18)		—		(132)
Other comprehensive income (loss) net of tax (expense) benefit of $2, $1,150, $(5), $— and $1,147	(8)		(4,284)		18		(185)		(4,459)
Balance as of September 30, 2022	$	(10)	$	(3,245)	$	(586)	$	(298)	$	(4,139)


(In millions)	Net unrealized gains (losses) on investments with an allowance for credit losses		Net unrealized gains (losses) on other investments		Pension and postretirement benefits		Cumulative foreign currency translation adjustment		Total
Balance as of January 1, 2021	$	—	$	1,745	$	(848)	$	(94)	$	803
Other comprehensive income (loss) before reclassifications	(2)		(391)		(1)		(19)		(413)
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $1, $(20), $7, $— and $(12)	(2)		74		(28)		—		44
Other comprehensive income (loss) net of tax (expense) benefit of $—, $124, $(7), $— and $117	—		(465)		27		(19)		(457)
Balance as of September 30, 2021	$	—	$	1,280	$	(821)	$	(113)	$	346

(In millions) Net unrealized gains (losses) on investments with OTTI losses Net unrealized gains (losses) on other investments Pension and postretirement benefits Cumulative foreign currency translation adjustment Total
Balance as of July 1, 2016 $ 31
$ 934
$ (637 ) $ (118 ) $ 210
Other comprehensive income (loss) before reclassifications 7
69
—
(24 ) 52
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $(2), $(13), $3, $- and $(12) 4
27
(6 ) —
25
Other comprehensive income (loss) net of tax (expense) benefit of $(2), $(19), $(3), $- and $(24) 3
42
6
(24 ) 27
Balance as of September 30, 2016 $ 34
$ 976
$ (631 ) $ (142 ) $ 237

(In millions) Net unrealized gains (losses) on investments with OTTI losses Net unrealized gains (losses) on other investments Pension and postretirement benefits Cumulative foreign currency translation adjustment Total
Balance as of January 1, 2017 $ 30
$ 642
$ (647 ) $ (198 ) $ (173 )
Other comprehensive income (loss) before reclassifications —
228
—
94
322
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $(1), $(28), $12, $- and $(17) 3
61
(22 ) —
42
Other comprehensive income (loss) net of tax (expense) benefit of $1, $(102), $(12), $- and $(113) (3 ) 167
22
94
280
Balance as of September 30, 2017 $ 27
$ 809
$ (625 ) $ (104 ) $ 107

(In millions) Net unrealized gains (losses) on investments with OTTI losses Net unrealized gains (losses) on other investments Pension and postretirement benefits Cumulative foreign currency translation adjustment Total
Balance as of January 1, 2016 $ 27
$ 390
$ (648 ) $ (84 ) $ (315 )
Other comprehensive income (loss) before reclassifications 9
615
—
(58 ) 566
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $(1), $(12), $9, $- and $(4) 2
29
(17 ) —
14
Other comprehensive income (loss) net of tax (expense) benefit of $(4), $(292), $(9), $- and $(305) 7
586
17
(58 ) 552
Balance as of September 30, 2016 $ 34
$ 976
$ (631 ) $ (142 ) $ 237

Amounts reclassified from Accumulated other comprehensive income (loss) shown above are reported in Net income (loss) as follows:



Component of AOCI		Condensed Consolidated Statements of Operations Line Item Affected by Reclassifications
Net unrealized gains (losses) on investments with ~~OTTI~~an allowance for credit losses	~~Net realized investment gains (losses)~~
and Net unrealized gains (losses) on other investments	Net ~~realized~~ investment gains (losses)
Pension and postretirement benefits		Other operating expenses and Insurance claims and policyholders' benefits

Table of Contents

Note I.I. Business Segments

The Company's ~~core~~ property and casualty commercial insurance operations are managed and reported in three business segments: Specialty, Commercial and International. These three segments are collectively referred to as Property & Casualty Operations. The Company's ~~non-core~~ operations outside of Property & Casualty Operations are managed and reported in two segments: Life & Group ~~Non-Core~~ and Corporate & ~~Other Non-Core.~~Other.

The accounting policies of the segments are the same as those described in Note A to the Consolidated Financial Statements within CNAF's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021. The Company manages most of its assets on a legal entity basis, while segment operations are generally conducted across legal entities. As such, only Insurance and Reinsurance receivables, Insurance reserves, Deferred acquisition costs, Goodwill and ~~Goodwill~~Deferred non-insurance warranty acquisition expense and revenue are readily identifiable for ~~all~~ individual segments. Distinct investment portfolios are not maintained for every individual segment; accordingly, allocation of assets to each segment is not performed. Therefore, a significant portion of Net investment income and ~~Realized~~Net investment gains or losses are allocated primarily based on each segment's net carried insurance reserves, as adjusted. All significant intersegment income and expense ~~has~~have been eliminated. Income taxes have been allocated on the basis of the taxable income of the segments.

In the following tables, certain financial measures are presented to provide information used by management to monitor the Company's operating performance. Management utilizes these financial measures to monitor the Company's insurance operations and investment portfolio. ~~Net operating~~

The performance of the Company's insurance operations is monitored by management through core income (loss), which is derived from certain income statement ~~amounts, is used by management to monitor performance of the Company's insurance operations.~~amounts. 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 OTTI loss on an investment security in accordance with its policy, or sell a security, which may produce realized gains and losses.~~

~~Net operating~~Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of i) net ~~realized~~ investment gains ~~(losses) ii) income~~ or ~~loss from discontinued operations~~losses and ~~iii)~~ any cumulative effects of changes in accounting guidance. The calculation of ~~net operating~~core income (loss) excludes net ~~realized~~ investment gains ~~(losses)~~or losses because net ~~realized~~ investment gains ~~(losses) are largely discretionary, except for some~~or losses ~~related to OTTI, and~~ are generally driven by economic factors that are not necessarily ~~consistent with key drivers~~reflective of ~~underwriting performance, and are therefore not considered an indication~~our primary operations.

Table of ~~trends in insurance operations.~~Contents

The Company's results of operations and selected balance sheet items by segment are presented in the following tables.


Three months ended September 30, 2022	Specialty		Commercial		International		Life & Group		Corporate & Other
(In millions)											Eliminations		Total
Operating revenues
Net earned premiums	$	810	$	1,023	$	270	$	118	$	—	$	—	$	2,221
Net investment income	102		112		16		187		5		—		422
Non-insurance warranty revenue	399		—		—		—		—		—		399
Other revenues	(1)		13		—		—		1		(2)		11
Total operating revenues	1,310		1,148		286		305		6		(2)		3,053
Claims, benefits and expenses
Net incurred claims and benefits	459		733		169		310		(13)		—		1,658
Policyholders’ dividends	2		5		—		—		—		—		7
Amortization of deferred acquisition costs	169		163		51		—		—		—		383
Non-insurance warranty expense	371		—		—		—		—		—		371
Other insurance related expenses	88		145		35		29		1		(1)		297
Other expenses	15		3		11		2		47		(1)		77
Total claims, benefits and expenses	1,104		1,049		266		341		35		(2)		2,793
Core income (loss) before income tax	206		99		20		(36)		(29)		—		260
Income tax (expense) benefit on core income (loss)	(45)		(19)		(1)		14		4		—		(47)
Core income (loss)	$	161	$	80	$	19	$	(22)	$	(25)	$	—	213
Net investment gains (losses)													(96)
Income tax (expense) benefit on net investment gains (losses)													11
Net investment gains (losses), after tax													(85)
Net income (loss)													$	128

Table of Contents


Three months ended September 30, 2017	Specialty			Commercial				International			Life & Group Non-Core				Corporate & Other Non-Core
Three months ended September 30, 2021														Three months ended September 30, 2021				Specialty					Commercial						International					Life & Group			Corporate & Other
(In millions)	Specialty						Commercial							International							Life & Group Non-Core											Corporate & Other Non-Core			Eliminations			Total			(In millions)							Eliminations				Total
Operating revenues																		Operating revenues
Net earned premiums	$	703		$	741				$	226		$	136				$	—				$	—			$	1,806		Net earned premiums	$	773				$	893			$	271			$	123		$	—			$	(1)		$	2,059
Net investment income	134			161				13			195				6				—			509			Net investment income		116					141			14			240				2			—				513
Non-insurance warranty revenue																									Non-insurance warranty revenue		357					—			—			—				—			—				357
Other revenues	99			7				1			—				—				—			107			Other revenues		1					7			—			(1)				2			(1)				8
Total operating revenues	936			909				240			331				6				—			2,422			Total operating revenues		1,247					1,041			285			362				4			(2)				2,937
Claims, Benefits and Expenses
Claims, benefits and expenses																									Claims, benefits and expenses
Net incurred claims and benefits	357			611				200			322				(15		)		—			1,475			Net incurred claims and benefits		446					720			171			296				(6)			—				1,627
Policyholders’ dividends	1			4				—			—				—				—			5			Policyholders’ dividends		—					5			—			—				—			—				5
Amortization of deferred acquisition costs	153			120				36			—				—				—			309			Amortization of deferred acquisition costs		165					148			55			—				—			—				368
Non-insurance warranty expense																									Non-insurance warranty expense		330					—			—			—				—			—				330
Other insurance related expenses	68			133				48			32				—				—			281			Other insurance related expenses		71					125			32			27				(1)			(1)				253
Other expenses	85			6				(4		)	2				52				—			141			Other expenses		13					8			4			1				37			(1)				62
Total claims, benefits and expenses	664			874				280			356				37				—			2,211			Total claims, benefits and expenses		1,025					1,006			262			324				30			(2)				2,645
Operating income (loss) before income tax	272			35				(40		)	(25		)		(31		)		—			211
Income tax (expense) benefit on operating income (loss)	(92		)	(10		)		2			35				13				—			(52		)
Net operating income (loss)	180			25				(38		)	10				(18		)		—			159
Net realized investment gains (losses)	4			6				4			3				(41		)		—			(24		)
Income tax (expense) benefit on net realized investment gains (losses)	(1		)	(3		)		(1		)	(1		)		15				—			9
Net realized investment gains (losses), after tax	3			3				3			2				(26		)		—			(15		)
Core income (loss) before income tax																									Core income (loss) before income tax		222					35			23			38				(26)			—				292
Income tax (expense) benefit on core income (loss)																									Income tax (expense) benefit on core income (loss)		(49)					(8)			(6)			3				5			—				(55)
Core income (loss)																									Core income (loss)		$	173				$	27		$	17		$	41			$	(21)		$	—			237
Net investment gains (losses)																									Net investment gains (losses)																								22
Income tax (expense) benefit on net investment gains (losses)																									Income tax (expense) benefit on net investment gains (losses)																								(3)
Net investment gains (losses), after tax																									Net investment gains (losses), after tax																								19
Net income (loss)	$	183		$	28			$	(35	)	$	12			$	(44	)		$	—		$	144		Net income (loss)																								$	256

Table of Contents


Three months ended September 30, 2016	Specialty			Commercial				International			Life & Group Non-Core				Corporate & Other Non-Core
Nine months ended September 30, 2022														Nine months ended September 30, 2022				Specialty					Commercial						International				Life & Group			Corporate & Other
(In millions)	Specialty						Commercial							International							Life & Group Non-Core						Corporate & Other Non-Core				Eliminations			Total				(In millions)													Eliminations					Total
Operating revenues																		Operating revenues
Net earned premiums	$	704		$	719				$	210		$	134				$	—				$	—			$			1,767	Net earned premiums	$	2,376			$		2,901				$	803			$	356			$	(1)				$	—		$	6,435
Net investment income	140			175				13			192				4				—			524			Net investment income		305				343			44					600				10				—					1,302
Non-insurance warranty revenue																									Non-insurance warranty revenue		1,173				—			—					—				—				—					1,173
Other revenues	93			7				—			(4		)		—				—			96			Other revenues		—				25			—					—				4				(5)					24
Total operating revenues	937			901				223			322				4				—			2,387			Total operating revenues		3,854				3,269			847					956				13				(5)					8,934
Claims, Benefits and Expenses
Claims, benefits and expenses																									Claims, benefits and expenses
Net incurred claims and benefits	330			446				117			313				(11		)		—			1,195			Net incurred claims and benefits		1,360				1,916			487					884				36				—					4,683
Policyholders’ dividends	4			3				—			—				—				—			7			Policyholders’ dividends		5				15			—					—				—				—					20
Amortization of deferred acquisition costs	151			118				45			—				—				—			314			Amortization of deferred acquisition costs		488				467			146					—				—				—					1,101
Non-insurance warranty expense																									Non-insurance warranty expense		1,092				—			—					—				—				—					1,092
Other insurance related expenses	77			151				33			37				(3		)		—			295			Other insurance related expenses		250				409			112					89				4				(1)					863
Other expenses	78			9				1			2				57				—			147			Other expenses		40				21			25					7				133				(4)					222
Total claims, benefits and expenses	640			727				196			352				43				—			1,958			Total claims, benefits and expenses		3,235				2,828			770					980				173				(5)					7,981
Operating income (loss) before income tax	297			174				27			(30		)		(39		)		—			429
Income tax (expense) benefit on operating income (loss)	(102		)	(60		)		(7		)	36				15				—			(118		)
Net operating income (loss)	195			114				20			6				(24		)		—			311
Net realized investment gains (losses)	9			12				6			17				2				—			46
Income tax (expense) benefit on net realized investment gains (losses)	(3		)	(3		)		(1		)	(6		)		(1		)		—			(14		)
Net realized investment gains (losses), after tax	6			9				5			11				1				—			32
Core income (loss) before income tax																									Core income (loss) before income tax		619				441			77					(24)				(160)				—					953
Income tax (expense) benefit on core income (loss)																									Income tax (expense) benefit on core income (loss)		(134)				(91)			(14)					31				29				—					(179)
Core income (loss)																									Core income (loss)		$	485			$	350		$	63				$	7			$	(131)			$	—				774
Net investment gains (losses)																									Net investment gains (losses)																											(166)
Income tax (expense) benefit on net investment gains (losses)																									Income tax (expense) benefit on net investment gains (losses)																											38
Net investment gains (losses), after tax																									Net investment gains (losses), after tax																											(128)
Net income (loss)	$	201		$	123			$	25		$	17			$	(23	)		$	—		$	343		Net income (loss)																											$	646


September 30, 2022
(In millions)
Reinsurance receivables	$	1,511	$	952	$	385	$	453	$	2,420	$	—	$	5,721
Insurance receivables	1,061		1,640		309		4		—		—		3,014
Deferred acquisition costs	379		315		93		—		—		—		787
Goodwill	117		—		25		—		—		—		142
Deferred non-insurance warranty acquisition expense	3,653		—		—		—		—		—		3,653
Insurance reserves
Claim and claim adjustment expenses	6,925		9,172		2,262		3,645		2,696		—		24,700
Unearned premiums	3,144		2,364		576		111		—		—		6,195
Future policy benefits	—		—		—		10,454		—		—		10,454
Deferred non-insurance warranty revenue	4,706		—		—		—		—		—		4,706

Table of Contents


Nine months ended September 30, 2017	Specialty			Commercial			International				Life & Group Non-Core				Corporate & Other Non-Core
Nine months ended September 30, 2021														Nine months ended September 30, 2021				Specialty						Commercial						International			Life & Group				Corporate & Other
(In millions)	Specialty									Commercial				International							Life & Group Non-Core										Corporate & Other Non-Core				Eliminations					Total		(In millions)										Eliminations					Total
Operating revenues																				Operating revenues
Net earned premiums	$	2,056		$	2,097		$	629			$	404			$	—			$	(1		)		$	5,185		Net earned premiums		$	2,270			$	2,629				$	789			$	369			$	—			$	(1)				$	6,056
Net investment income	407			482			38				587				15				—				1,529			Net investment income		367				463				42					724				12				—					1,608
Non-insurance warranty revenue																										Non-insurance warranty revenue		1,054			—				—					—				—				—					1,054
Other revenues	291			25			—				1				1				—				318			Other revenues		1			17				1					(1)				5				(4)					19
Total operating revenues	2,754			2,604			667				992				16				(1		)		7,032			Total operating revenues		3,692			3,109				832					1,092				17				(5)					8,737
Claims, Benefits and Expenses
Claims, benefits and expenses																										Claims, benefits and expenses
Net incurred claims and benefits	1,141			1,470			444				980				4				—				4,039			Net incurred claims and benefits		1,312			1,947				485					899				23				—					4,666
Policyholders’ dividends	3			11			—				—				—				—				14			Policyholders’ dividends		2			16				—					—				—				—					18
Amortization of deferred acquisition costs	445			354			127				—				—				—				926			Amortization of deferred acquisition costs		478			449				157					—				—				—					1,084
Non-insurance warranty expense																										Non-insurance warranty expense		973			—				—					—				—				—					973
Other insurance related expenses	209			387			106				96				(1		)		(1		)		796			Other insurance related expenses		212			376				106					77				9				(1)					779
Other expenses	248			31			(11		)		5				146				—				419			Other expenses		36			28				(4)					5				119				(4)					180
Total claims, benefits and expenses	2,046			2,253			666				1,081				149				(1		)		6,194			Total claims, benefits and expenses		3,013			2,816				744					981				151				(5)					7,700
Operating income (loss) before income tax	708			351			1				(89		)		(133		)		—				838
Income tax (expense) benefit on operating income (loss)	(238		)	(117		)	(9		)		108				51				—				(205		)
Net operating income (loss)	470			234			(8		)		19				(82		)		—				633
Net realized investment gains (losses)	25			36			17				20				(36		)		—				62
Income tax (expense) benefit on net realized investment gains (losses)	(9		)	(12		)	(3		)		(8		)		13				—				(19		)
Net realized investment gains (losses), after tax	16			24			14				12				(23		)		—				43
Core income (loss) before income tax																										Core income (loss) before income tax		679			293				88					111				(134)				—					1,037
Income tax (expense) benefit on core income (loss)																										Income tax (expense) benefit on core income (loss)		(148)			(60)				(21)					9				24				—					(196)
Core income (loss)																										Core income (loss)		$	531		$	233			$	67				$	120			$	(110)			$	—				841
Net investment gains (losses)																										Net investment gains (losses)																											117
Income tax (expense) benefit on net investment gains (losses)																										Income tax (expense) benefit on net investment gains (losses)																											(22)
Net investment gains (losses), after tax																										Net investment gains (losses), after tax																											95
Net income (loss)	$	486		$	258		$	6			$	31			$	(105	)		$	—			$	676		Net income (loss)																											$	936


December 31, 2021
(In millions)
Reinsurance receivables	$	1,200	$	923	$	381	$	401	$	2,579	$	—	$	5,484
Insurance receivables	1,136		1,488		340		6		4		—		2,974
Deferred acquisition costs	363		278		96		—		—		—		737
Goodwill	117		—		31		—		—		—		148
Deferred non-insurance warranty acquisition expense	3,476		—		—		—		—		—		3,476
Insurance reserves
Claim and claim adjustment expenses	6,433		8,890		2,280		3,754		2,817		—		24,174
Unearned premiums	3,001		2,066		585		109		—		—		5,761
Future policy benefits	—		—		—		13,236		—		—		13,236
Deferred non-insurance warranty revenue	4,503		—		—		—		—		—		4,503

September 30, 2017
(In millions)
Reinsurance receivables $ 819
$ 590
$ 227
$ 453
$ 2,280
$ —
$ 4,369
Insurance receivables 984
1,087
256
11
2
—
2,340
Deferred acquisition costs 318
230
95
—
—
—
643
Goodwill 117
—
30
—
—
—
147
Insurance reserves
Claim and claim adjustment expenses 6,063
8,630
1,640
3,468
2,408
—
22,209
Unearned premiums 2,010
1,426
490
134
—
—
4,060
Future policy benefits —
—
—
11,040
—
—
11,040

Table of Contents

Nine months ended September 30, 2016

Specialty

Commercial
International
Life &
Group
Non-Core

Corporate
& Other
Non-Core

(In millions) Eliminations Total
Operating revenues

Net earned premiums $ 2,088
$ 2,103
$ 605
$ 401
$ —
$ (1 ) $ 5,196
Net investment income 380
465
38
567
11
—
1,461
Other revenues 269
21
1
(1 ) 3
—
�� 293
Total operating revenues 2,737
2,589
644
967
14
(1 ) 6,950
Claims, Benefits and Expenses

Net incurred claims and benefits 1,097
1,357
395
976
109
—
3,934
Policyholders’ dividends 6
9
—
—
—
—
15
Amortization of deferred acquisition costs 443
351
132
—
—
—
926
Other insurance related expenses 225
422
98
101
(3 ) (1 ) 842
Other expenses 232
25
17
7
158
—
439
Total claims, benefits and expenses 2,003
2,164
642
1,084
264
(1 ) 6,156
Operating income (loss) before income tax 734
425
2
(117 ) (250 ) —
794
Income tax (expense) benefit on operating income (loss) (248 ) (145 ) (3 ) 117
88
—
(191 )
Net operating income (loss) 486
280
(1 ) —
(162 ) —
603
Net realized investment gains (losses) 2
2
14
12
(4 ) —
26
Income tax (expense) benefit on net realized investment gains (losses) (1 ) —
(3 ) (9 ) 2
—
(11 )
Net realized investment gains (losses), after tax 1
2
11
3
(2 ) —
15
Net income (loss) $ 487
$ 282
$ 10
$ 3
$ (164 ) $ —
$ 618

December 31, 2016
(In millions)
Reinsurance receivables $ 760
$ 621
$ 131
$ 462
$ 2,479
$ —
$ 4,453
Insurance receivables 982
1,021
233
17
2
—
2,255
Deferred acquisition costs 310
214
76
—
—
—
600
Goodwill 117
—
28
—
—
—
145
Insurance reserves
Claim and claim adjustment expenses 6,149
8,894
1,328
3,358
2,614
—
22,343
Unearned premiums 1,911
1,323
396
132
—
—
3,762
Future policy benefits —
—
—
10,326
—
—
10,326

The following table presents ~~revenue~~operating revenues by line of business for each reportable segment.


Periods ended September 30	Three Months				Nine Months
(In millions)	2022		2021		2022		2021
Specialty
Management & Professional Liability	$	688	$	684	$	2,041	$	2,044
Surety	171		157		481		454
Warranty & Alternative Risks	451		406		1,332		1,194
Specialty revenues	1,310		1,247		3,854		3,692
Commercial
Middle Market	397		363		1,133		1,119
Construction	372		345		1,046		978
Small Business	149		144		430		413
Other Commercial	230		189		660		599
Commercial revenues	1,148		1,041		3,269		3,109
International
Canada	93		87		272		253
Europe	112		123		350		349
Hardy	81		75		225		230
International revenues	286		285		847		832
Life & Group revenues	305		362		956		1,092
Corporate & Other revenues	6		4		13		17
Eliminations	(2)		(2)		(5)		(5)
Total operating revenues	3,053		2,937		8,934		8,737
Net investment gains (losses)	(96)		22		(166)		117
Total revenues	$	2,957	$	2,959	$	8,768	$	8,854

Table of Contents

Note J. Non-Insurance Revenues ~~are comprised~~from Contracts with Customers

The Company had deferred non-insurance warranty revenue balances of ~~operating~~$4.7 billion and $4.5 billion reported in Deferred non-insurance warranty revenue as of September 30, 2022 and December 31, 2021. For the three and nine months ended September 30, 2022, the Company recognized $0.3 billion and $1.0 billion of revenues that were included in the deferred revenue balance as of January 1, 2022. For the three and ~~net realized investment gains~~nine months ended September 30, 2021, the Company recognized $0.3 billion and ~~losses.~~$0.9 billion of revenues that were included in the deferred revenue balance as of January 1, 2021. For the three and nine months ended September 30, 2022 and 2021, Non-insurance warranty revenue recognized from performance obligations related to prior periods due to a change in estimate was not material. The Company expects to recognize approximately $0.5 billion of the deferred revenue in the remainder of 2022, $1.5 billion in 2023, $1.2 billion in 2024 and $1.5 billion thereafter.

Periods ended September 30 Three Months Nine Months
(In millions) 2017 2016 2017 2016
Specialty
Management & Professional Liability $ 656
$ 677
$ 1,963
$ 1,954
Surety 144
139
404
399
Warranty & Alternative Risks 140
130
412
386
Specialty revenues 940
946

2,779

2,739
Commercial

Middle Market 501
463
1,421
1,298
Small Business 131
154
357
448
Other Commercial Insurance 283
296
862
845
Commercial revenues 915
913

2,640

2,591
International

Canada 60
51
164
152
CNA Europe 87
82
239
241
Hardy 97
96
281
265
International revenues 244
229

684

658
Life & Group Non-Core revenues 334
339
1,012
979
Corporate & Other Non-Core revenues (35 ) 6
(20 ) 10
Eliminations —
—
(1 ) (1 )
Total revenues $ 2,398
$ 2,433

$ 7,094

$ 6,976

Table of Contents

Item 2. Management's Discussion and Analysis (MD&A) of Financial Condition and Results of Operations

OVERVIEW

The following discussion highlights significant factors affecting the Company. References to “we,” “our,” “us” or like terms refer to the business of CNA. ~~Based on 2016 statutory net written premiums, we are the eighth largest commercial insurer in the United States of America.~~

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements included under Part I, Item 1 of this Form 10-Q and Item 1A Risk Factors and Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations, which are included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, ~~2016.~~2021.

We utilize the ~~net operating~~core income (loss) financial measure to monitor our operations. ~~Net operating~~Core 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~~core income (loss) 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~~reflective of ~~underwriting performance, and are therefore not considered an indication of trends in insurance~~our primary operations. Management monitors ~~net operating~~core income (loss) for each business segment to assess segment performance. Presentation of consolidated ~~net operating~~core income (loss) is deemed to be a non-GAAP financial ~~measure.~~measure and management believes some investors may find this measure useful to evaluate our primary operations. See further discussion regarding how we manage our business in Note I to the Condensed Consolidated Financial Statements included under Part I, Item 1. 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 Annual Report on Form 10-K on file with the Securities and Exchange Commission.

In evaluating the results of our ~~core~~ Specialty, Commercial and International segments, we utilize the loss ratio, the loss ratio excluding catastrophes and development, the expense ratio, the dividend ratio, the combined ratio and the combined ~~ratio.~~ratio excluding catastrophes and development. These ratios are calculated using GAAP financial results. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The loss ratio excluding catastrophes and development excludes catastrophes losses and changes in estimates of claim and claim adjustment expense reserves, net of reinsurance, for prior years from the loss ratio. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios. The combined ratio excluding catastrophes and development is the sum of the loss ratio excluding catastrophes and development, the expense ratio and the dividend ratio. In addition we also utilize 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, excluding rate and exposure changes, in comparison to the expiring premium dollars from policies available to renew. ~~Rate, renewal~~Renewal premium change, rate and retention presented for the prior year isare 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. Gross written premiums, excluding third party captives, excludes business which is ceded to third party captives, including business related to large warranty programs.

Changes in estimates of claim and ~~allocated~~ claim adjustment expense reserves, ~~and premium accruals,~~ net of reinsurance, for prior years are defined as net prior year loss reserve development within this MD&A. These changes can be favorable or unfavorable. Net prior year loss reserve development does not include the effect of any related acquisition expenses. Further information on our reserves is provided in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

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CRITICAL ACCOUNTING ESTIMATES

The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the ~~amounts~~amount of revenues and expenses reported during the period. Actual results may differ from those estimates.

Our Condensed Consolidated Financial Statements and accompanying notes have been prepared in accordance with GAAP applied on a consistent basis. We continually evaluate the accounting policies and estimates used to prepare the Condensed Consolidated Financial Statements. In general, our estimates are based on historical experience, evaluation of current trends, information from third-party professionals and various other assumptions that are believed to be reasonable under the known facts and circumstances.

The accounting estimates discussed below are considered by us to be critical to an understanding of our Condensed Consolidated Financial Statements as their application places the most significant demands on our judgment:

•Insurance Reserves

•Long Term Care Reserves

•Reinsurance and Insurance Receivables

•Valuation of Investments and Impairment of Securities

~~Long Term Care Policies~~

~~Pension and Postretirement Benefit Obligations~~

•Income Taxes

Due to the inherent uncertainties involved with these types of judgments, actual results could differ significantly from our estimates and may have a material adverse impact on our results of operations, financial condition, equity, business, and insurer financial strength and corporate debt ratings. See the Critical Accounting Estimates section of our Management's Discussion and Analysis of Financial Condition and Results of Operations included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021 for further information.

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CONSOLIDATED OPERATIONS

Results of Operations

The following table includes the consolidated results of our ~~operations.~~operations including our financial measure, core income (loss). For more detailed components of our business operations and a discussion of the ~~net operating~~core income (loss) financial measure, see the ~~segment discussions~~Segment Results section within this MD&A. For further discussion of Net investment income and Net ~~realized~~ investment ~~results,~~gains or losses, see the Investments section of this MD&A.


Periods ended September 30	Three Months						Nine Months						Periods ended September 30	Three Months				Nine Months
(In millions)	2017			2016			2017			2016			(In millions)	2022		2021		2022		2021
Operating Revenues													Operating Revenues
Net earned premiums	$	1,806		$	1,767		$	5,185		$	5,196		Net earned premiums	$	2,221	$	2,059	$	6,435	$	6,056
Net investment income	509			524			1,529			1,461			Net investment income	422		513		1,302		1,608
Non-insurance warranty revenue													Non-insurance warranty revenue	399		357		1,173		1,054
Other revenues	107			96			318			293			Other revenues	11		8		24		19
Total operating revenues	2,422			2,387			7,032			6,950			Total operating revenues	3,053		2,937		8,934		8,737
Claims, Benefits and Expenses													Claims, Benefits and Expenses
Net incurred claims and benefits	1,475			1,195			4,039			3,934			Net incurred claims and benefits	1,658		1,627		4,683		4,666
Policyholders' dividends	5			7			14			15			Policyholders' dividends	7		5		20		18
Amortization of deferred acquisition costs	309			314			926			926			Amortization of deferred acquisition costs	383		368		1,101		1,084
Non-insurance warranty expense													Non-insurance warranty expense	371		330		1,092		973
Other insurance related expenses	281			295			796			842			Other insurance related expenses	297		253		863		779
Other expenses	141			147			419			439			Other expenses	77		62		222		180
Total claims, benefits and expenses	2,211			1,958			6,194			6,156			Total claims, benefits and expenses	2,793		2,645		7,981		7,700
Operating income before income tax	211			429			838			794
Income tax expense on operating income	(52		)	(118		)	(205		)	(191		)
Net operating income	159			311			633			603
Net realized investment (losses) gains	(24		)	46			62			26
Income tax benefit (expense) on net realized investment (losses) gains	9			(14		)	(19		)	(11		)
Net realized investment (losses) gains, after tax	(15		)	32			43			15
Core income before income tax													Core income before income tax	260		292		953		1,037
Income tax expense on core income													Income tax expense on core income	(47)		(55)		(179)		(196)
Core income													Core income	213		237		774		841
Net investment (losses) gains													Net investment (losses) gains	(96)		22		(166)		117
Income tax benefit (expense) on net investment (losses) gains													Income tax benefit (expense) on net investment (losses) gains	11		(3)		38		(22)
Net investment (losses) gains, after tax													Net investment (losses) gains, after tax	(85)		19		(128)		95
Net income	$	144		$	343		$	676		$	618		Net income	$	128	$	256	$	646	$	936

Three Month Comparison

~~Net operating~~Core income decreased ~~$152~~$24 million for the three months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016. Net operating~~2021. Core income ~~decreased $162 million~~ for our ~~core segments driven by significantly~~Property & Casualty Operations increased $43 million primarily due to improved underwriting results and higher net ~~catastrophe losses in the current year period~~investment income from fixed income securities partially offset by ~~improved non-catastrophe current accident year underwriting~~lower net investment income from limited partnerships and common stock results. ~~Net operating~~Core results ~~improved $10 million~~ for our ~~non-core segments. The after-tax impact of catastrophes was $191~~Life & Group segment decreased $63 million ~~including~~while core loss for our Corporate & Other segment increased $4 million.

Catastrophe losses were $114 million ~~for reinsurance reinstatement premium,~~and $178 million for the three months ended September 30, ~~2017 as compared to $11 million~~2022 and 2021. Catastrophe losses for ~~the same period in 2016.~~

~~Favorable net prior year development of $134 million and $137 million was recorded in~~ the three months ended September 30, ~~2017~~2022 were related to severe weather related events, including $87 million for Hurricane Ian. Catastrophe losses for the three months ended September 30, 2021 included $114 million for Hurricane Ida. Favorable net prior year loss reserve development of $17 million and ~~2016~~$10 million was recorded for the three months ended September 30, 2022 and 2021 related to our Specialty, Commercial and International segments. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

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Nine Month Comparison

~~Net operating~~Core income ~~increased $30~~decreased $67 million for the nine months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016. Net operating~~2021. Core income ~~decreased $69 million~~ for our ~~core segments~~Property & Casualty Operations increased $67 million primarily due to ~~significantly higher net catastrophe losses in the current year period and lower favorable net prior year loss reserve development partially offset by~~ improved ~~non-catastrophe current accident year~~ underwriting results and higher net investment ~~income. Net operating results improved $99 million~~income from fixed income securities partially offset by lower net investment income from limited partnerships and common stock results. Core income for our non-core segments primarily driven by lower adverse prior year reserve development recorded in the nine months ended September 30, 2017 as compared to the same period in 2016 under the A&EP Loss Portfolio Transfer. The after-tax impact of catastrophes was $239Life & Group segment decreased $113 million ~~including $4~~while core loss for our Corporate & Other segment increased $21 million.

Catastrophe losses were $171 million ~~from reinsurance reinstatement premium,~~and $357 million for the nine months ended September 30, ~~2017 as compared to $93 million~~2022 and 2021. Catastrophe losses for ~~the same period in 2016.~~

~~Favorable net prior year development of $229 million and $309 million was recorded in~~ the nine months ended September 30, ~~2017~~2022 were primarily related to severe weather related events, including $87 million for Hurricane Ian. Catastrophe losses for the nine months ended September 30, 2021 were driven by severe weather related events, primarily Hurricane Ida and ~~2016~~Winter Storms Uri and Viola. Favorable net prior year loss reserve development of $2 million was recorded for the nine months ended September 30, 2022 as compared with unfavorable net prior year loss reserve development of $4 million for the nine months ended September 30, 2021 related to our Specialty, Commercial, International and ~~International~~Corporate & Other segments. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

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SEGMENT RESULTS

The following discusses the results of operations for our ~~reporting~~business segments. Our ~~core~~ property and casualty commercial insurance operations are managed and reported in three business segments: Specialty, Commercial and ~~International.~~International, which we refer to collectively as Property & Casualty Operations. Our ~~non-core~~ operations outside of Property & Casualty Operations are managed and reported in two segments: Life & Group ~~Non-Core~~ and Corporate & ~~Other Non-Core.~~Other.

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Specialty

The following table ~~presents~~details the results of ~~operations.~~operations for Specialty.


Periods ended September 30	Three Months						Nine Months						Periods ended September 30	Three Months						Nine Months
(In millions, except ratios, rate and retention)	2017			2016			2017			2016
(In millions, except ratios, rate, renewal premium change and retention)													(In millions, except ratios, rate, renewal premium change and retention)	2022			2021			2022			2021
Gross written premiums													Gross written premiums	$	1,890		$	1,953		$	5,640		$	5,650
Gross written premiums excluding third-party captives													Gross written premiums excluding third-party captives	958			943			2,816			2,656
Net written premiums	$	705		$	733		$	2,100		$	2,108		Net written premiums	840			822			2,443			2,350
Net earned premiums	703			704			2,056			2,088			Net earned premiums	810			773			2,376			2,270
Net investment income	134			140			407			380			Net investment income	102			116			305			367
Net operating income	180			195			470			486
Net realized investment gains, after tax	3			6			16			1
Net income	183			201			486			487
Core income													Core income	161			173			485			531

Other performance metrics:													Other performance metrics:
Loss and loss adjustment expense ratio	50.8		%	46.8		%	55.5		%	52.6		%
Loss ratio excluding catastrophes and development													Loss ratio excluding catastrophes and development	58.4		%	59.1		%	58.6		%	59.1		%
Effect of catastrophe impacts													Effect of catastrophe impacts	0.2			0.4			0.1			0.4
Effect of development-related items													Effect of development-related items	(1.9)			(1.8)			(1.4)			(1.7)
Loss ratio													Loss ratio	56.7			57.7			57.3			57.8
Expense ratio	31.3			32.5			31.8			32.0			Expense ratio	31.7			30.6			31.0			30.4
Dividend ratio	0.2			0.6			0.1			0.3			Dividend ratio	0.3			(0.1)			0.2			0.1
Combined ratio	82.3		%	79.9		%	87.4		%	84.9		%	Combined ratio	88.7		%	88.2		%	88.5		%	88.3		%
Combined ratio excluding catastrophes and development													Combined ratio excluding catastrophes and development	90.4		%	89.6		%	89.8		%	89.6		%

Rate	(1		)%	0		%	0		%	1		%	Rate	5		%	10		%	7		%	11		%
Renewal premium change	0			2			2			2			Renewal premium change	6			11			8			12
Retention	89			88			89			88			Retention	87			80			86			84
New business	$	64		$	66		$	187		$	192		New business	$	130		$	147		$	407		$	370

Three Month Comparison

~~Net~~Gross written premiums, excluding third-party captives, for Specialty ~~decreased $28~~increased $15 million for the three months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016 largely~~2021 driven by retention and rate. Net written premiums for Specialty increased $18 million for the ~~timing of certain renewals. Renewal premium change was flat. Retention remained strong at 89% and new business was at relatively consistent levels.~~three months ended September 30, 2022 as compared with the same period in 2021. The ~~decrease~~increase in net earned premiums was consistent with the trend in net written premiums.

~~Net operating~~Core income decreased ~~$15~~$12 million for the three months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016,~~2021 primarily due to ~~higher~~lower net ~~catastrophe losses partially offset~~investment income driven by ~~improved non-catastrophe current accident year underwriting~~limited partnership and common stock results.

The combined ratio of 88.7% increased ~~2.4~~0.5 points for the three months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016.~~2021 primarily due to a 1.1 point increase in the expense ratio largely offset by a 1.0 point improvement in the loss ratio. The ~~loss~~increase in the expense ratio ~~increased 4.0 points~~was largely due to higher underwriting expenses driven by ~~higher net catastrophe losses which were $38 million, or 5.4 points of~~investments in technology and talent. The improvement in the loss ratio ~~for the three months ended September 30, 2017 as compared to~~was primarily driven by improved current accident year underwriting results. Catastrophe losses were $1 million, or 0.2 points of the loss ratio, for the three months ended September 30, ~~2016. The~~2022, as compared with $3 million, or 0.4 points of the loss ratio, ~~excluding catastrophes and development improved 1.3 points. The expense ratio improved 1.2 points~~ for the three months ended September 30, ~~2017 as compared with the same period in 2016 reflecting both our ongoing efforts to improve productivity and the actions undertaken in last year's third and fourth quarters to reduce expenses.~~2021.

Favorable net prior year loss reserve development of ~~$112~~$15 million was recorded infor each of the three months ended September 30, ~~2017~~2022 and ~~2016.~~2021. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

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Nine Month Comparison

~~Net~~Gross written premiums, excluding third-party captives, for Specialty ~~decreased $8~~increased $160 million for the nine months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016~~2021 driven by ~~lower~~retention and higher new business. Net written premiums for Specialty increased $93 million for the nine months ended September 30, 2022 as compared with the same period in 2021. The ~~decrease~~increase in net earned premiums was consistent with the trend in net written premiums.

~~Net operating~~Core income decreased ~~$16~~$46 million for the nine months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016~~2021 primarily due to lower ~~favorable net prior year loss reserve development and higher net catastrophe losses partially offset by higher~~ net investment ~~income.~~income driven by limited partnership and common stock results.

The combined ratio of 88.5% increased ~~2.5~~0.2 points for the nine months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016. The loss ratio increased 2.9 points,~~2021 primarily due to ~~lower favorable net prior~~a 0.6 point increase in the expense ratio largely offset by a 0.5 point improvement in the loss ratio. The increase in the expense ratio was largely due to higher underwriting expenses driven by investments in technology and talent. The improvement in the loss ratio was primarily driven by improved current accident year ~~loss reserve development and higher net catastrophe losses. Net catastrophe~~underwriting results. Catastrophe losses were ~~$47~~$2 million, or ~~2.3~~0.1 point of the loss ratio, for the nine months ended September 30, 2022, as compared with $9 million, or 0.4 points of the loss ratio, for the nine months ended September 30, ~~2017 as compared to $14~~2021.

Favorable net prior year loss reserve development of $35 million ~~or 0.7 points of the loss ratio,~~and $40 million was recorded for the nine months ended September 30, ~~2016. The loss ratio excluding catastrophes~~2022 and ~~development improved 1.0 point. The expense ratio improved 0.2 points for the nine months ended September 30, 2017 as compared with the same period in 2016.~~

~~Favorable net prior year development of $176 million and $229 million was recorded in the nine months ended September 30, 2017 and 2016.~~2021. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

The following table ~~presents~~summarizes the gross and net carried ~~reserves.~~reserves for Specialty.



(In millions)	September 30, 2022		December 31, 2021
Gross case reserves	$	1,482	$	1,578
Gross IBNR reserves	5,443		4,855
Total gross carried claim and claim adjustment expense reserves	$	6,925	$	6,433
Net case reserves	$	1,268	$	1,338
Net IBNR reserves	4,217		3,927
Total net carried claim and claim adjustment expense reserves	$	5,485	$	5,265

(In millions) September 30, 2017 December 31, 2016
Gross case reserves $ 1,808
$ 1,871
Gross IBNR reserves 4,255
4,278
Total gross carried claim and claim adjustment expense reserves $ 6,063
$ 6,149
Net case reserves $ 1,645
$ 1,681
Net IBNR reserves 3,607
3,723
Total net carried claim and claim adjustment expense reserves $ 5,252
$ 5,404

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Commercial

The following table ~~presents~~details the results of ~~operations.~~operations for Commercial.


Periods ended September 30	Three Months						Nine Months						Periods ended September 30	Three Months						Nine Months
(In millions, except ratios, rate and retention)	2017			2016			2017			2016
(In millions, except ratios, rate, renewal premium change and retention)													(In millions, except ratios, rate, renewal premium change and retention)	2022			2021			2022			2021
Gross written premiums													Gross written premiums	$	1,187		$	1,010		$	3,824		$	3,284
Gross written premiums excluding third-party captives													Gross written premiums excluding third-party captives	1,184			1,005			3,711			3,176
Net written premiums	$	687		$	684		$	2,169		$	2,172		Net written premiums	962			831			3,097			2,622
Net earned premiums	741			719			2,097			2,103			Net earned premiums	1,023			893			2,901			2,629
Net investment income	161			175			482			465			Net investment income	112			141			343			463
Net operating income	25			114			234			280
Net realized investment gains, after tax	3			9			24			2
Net income	28			123			258			282
Core income													Core income	80			27			350			233

Other performance metrics:													Other performance metrics:
Loss and loss adjustment expense ratio	82.4		%	62.2		%	70.1		%	64.6		%
Loss ratio excluding catastrophes and development													Loss ratio excluding catastrophes and development	61.5		%	61.5		%	61.5		%	60.8		%
Effect of catastrophe impacts													Effect of catastrophe impacts	10.0			18.6			5.0			12.6
Effect of development-related items													Effect of development-related items	—			0.5			(0.5)			0.6
Loss ratio													Loss ratio	71.5			80.6			66.0			74.0
Expense ratio	34.3			37.1			35.3			36.7			Expense ratio	29.9			30.4			30.1			31.4
Dividend ratio	0.5			0.5			0.5			0.4			Dividend ratio	0.5			0.6			0.5			0.6
Combined ratio	117.2		%	99.8		%	105.9		%	101.7		%	Combined ratio	101.9		%	111.6		%	96.6		%	106.0		%
Combined ratio excluding catastrophes and development													Combined ratio excluding catastrophes and development	91.9		%	92.5		%	92.1		%	92.8		%

Rate	0		%	(3		)%	0		%	(2		)%	Rate	4		%	6		%	5		%	8		%
Renewal premium change	2			5			1			4			Renewal premium change	8			9			8			11
Retention	85			84			86			84			Retention	84			83			86			82
New business	$	137		$	135		$	429		$	418		New business	$	246		$	204		$	754		$	615

Three Month Comparison

~~Net~~Gross written premiums for Commercial increased $3$177 million for the three months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016. The increase was~~2021 driven by higher new business ~~within Middle Markets,~~and rate. Net written premiums for Commercial increased $131 million for the three months ended September 30, 2022 as ~~well as strong retention and positive renewal premium change.~~compared with the same period in 2021. The increase in net earned premiums was consistent with the trend in net written premiums.

~~Net operating~~Core income ~~decreased $89~~increased $53 million for the three months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016~~2021, driven by ~~higher~~lower catastrophe losses and improved non-catastrophe current accident year underwriting results partially offset by lower net ~~catastrophe losses.~~investment income driven by limited partnership and common stock results.

The combined ratio ~~increased 17.4~~of 101.9% improved 9.7 points for the three months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016. The~~2021 primarily due to a 9.1 point improvement in the loss ratio ~~increased 20.2 points~~and a 0.5 point improvement in the expense ratio. The improvement in the loss ratio was primarily driven by ~~higher net~~lower catastrophe ~~losses partially offset by improved non-catastrophe current accident year underwriting results. Net catastrophe~~losses. Catastrophe losses were ~~$173~~$103 million, or ~~23.9~~10.0 points of the loss ratio, for the three months ended September 30, ~~2017,~~2022, as compared ~~to $12~~with $166 million, or ~~1.6~~18.6 points of the loss ratio, for the three months ended September 30, ~~2016. Catastrophe-related reinsurance reinstatement premium was $1 million for~~2021. The improvement in the ~~three months ended September 30, 2017. The loss ratio excluding catastrophes and development improved 1.2 points. The~~ expense ratio ~~improved 2.8~~of 0.5 points for the three months ended September 30, 2017 as compared with the same period in 2016 reflecting both our ongoing efforts to improve productivity and the actions undertaken in last year's third and fourth quarters to reduce expenses.

~~Favorable net prior year development of $18 million and $8 million~~ was ~~recorded in the three months ended September 30, 2017 and 2016. Further information on net prior year development is in Note~~ E ~~to the Condensed Consolidated Financial Statements included under Part I, Item 1.~~

~~Nine Month Comparison~~

Net written premiums for Commercial decreased $3 million for the nine months ended September 30, 2017 as compared with the same period in 2016 due to unfavorable premium development driven by a premium rate adjustment within Small Business that is more fully discussed in Note F to the Condensed Consolidated Financial Statements under Part I, Item 1. This was partially offset by higher new business within Middle Markets, strong retention and positive renewal premium change. The decrease in net earned premiums was consistent with the trend in net written premiums.

Net operating income decreased $46 million for the nine months ended September 30, 2017 as compared with the same period in 2016 due to higher net catastrophe losses partially offset by improved non-catastrophe current accident year underwriting results.

~~The combined ratio increased 4.2 points for the nine months ended September 30, 2017 as compared with the same period in 2016. The loss ratio increased 5.5 points~~ driven by higher net catastrophe losses which were $235 million, or 11.1 points of the loss ratio, for the nine months ended September 30, 2017, as compared to $95 million, or 4.6 points of the loss ratio, for the nine months ended September 30, 2016. Catastrophe-related reinsurance reinstatement premium was $1 million for the nine months ended September 30, 2017. The loss ratio excluding catastrophesearned premiums and development improved 0.9 points. Excluding the impact of the Small Business premium rate adjustment, the expense ratio improved 2.6 points reflecting both our ongoing efforts to improve productivity and the actions undertakenlower acquisition costs partially offset by an increase in ~~last year's third and fourth quarters to reduce~~underwriting expenses.

Favorable net prior year loss reserve development of $65 million and unfavorable premium development of $27 million was recorded for the nine months ended September 30, 2017 as compared with favorable net prior year loss reserve development of $37 million and favorable premium development of $7 million for the nine months ended September 30, 2016. Further information on net prior year development is in Note E ~~to the Condensed Consolidated Financial Statements included under Part I, Item 1.~~

~~The following table presents the gross and net carried reserves.~~

(In millions) September 30, 2017 December 31, 2016
Gross case reserves $ 4,307
$ 4,661
Gross IBNR reserves 4,323
4,233
Total gross carried claim and claim adjustment expense reserves $ 8,630
$ 8,894
Net case reserves $ 4,029
$ 4,353
Net IBNR reserves 4,030
3,952
Total net carried claim and claim adjustment expense reserves $ 8,059
$ 8,305

~~International~~

~~The following table presents the results of operations.~~

Periods ended September 30 Three Months
Nine Months
(In millions, except ratios, rate and retention) 2017
2016
2017
2016
Net written premiums $ 207
$ 207
$ 664
$ 637
Net earned premiums 226
210
629
605
Net investment income 13
13
38
38
Net operating (loss) income (38 ) 20
(8 ) (1 )
Net realized investment gains, after tax 3
5
14
11
Net (loss) income (35 ) 25
6
10

Other performance metrics:
Loss and loss adjustment expense ratio 88.4 % 55.4 % 70.6 % 65.2 %
Expense ratio 37.5
37.8
37.2
38.2
Combined ratio 125.9 % 93.2 % 107.8 % 103.4 %

Rate 1 % (1 )% 0 % (1 )%
Renewal premium change 4
(1 ) 1
(1 )
Retention 73
74
78
78
New business $ 69
$ 67
$ 207
$ 189

~~Three Month Comparison~~

Net written premiums for International for the three months ended September 30, 2017 were consistent with the same period in 2016. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters.

Net operating results decreased $58 million for the three months ended September 30, 2017 as compared with the same period in 2016 driven by higher net catastrophe losses and lower favorable net prior year loss reserve development.

The combined ratio increased 32.7 points for the three months ended September 30, 2017 as compared with the same period in 2016. The loss ratio increased 33.0 points driven by higher net catastrophe losses and lower favorable net prior year loss reserve development. Net catastrophe losses were $58 million, or 27.5 points of the loss ratio for the three months ended September 30, 2017 as compared to $3 million, or 1.5 points of the loss ratio, for the three months ended September 30, 2016. Catastrophe-related reinsurance reinstatement premium was $5 million for the three months ended September 30, 2017. The loss ratio excluding catastrophes and development was 0.5 points higher than the prior year period. The expense ratio improved 0.3 points for the three months ended September 30, 2017 as compared with the same period in 2016.

~~Favorable net prior year development of $4 million and $17~~$2 million was recorded for the three months ended September 30, ~~2017 and 2016.~~2022 as compared with unfavorable net prior year loss reserve development of $2 million for the three months ended September 30, 2021. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

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Nine Month Comparison

~~Net~~Gross written premiums for ~~International~~Commercial increased ~~$27~~$540 million for the nine months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016 due to~~2021 driven by higher new business and ~~positive renewal~~retention. Net written premiums for Commercial increased $475 million for the nine months ended September 30, 2022 as compared with the same period in 2021. The prior period included a one-time written premium ~~change.~~catch-up resulting from the addition of a quota share treaty to our property reinsurance program. Excluding the impact of the prior period written premium catch-up, net written premiums increased $363 million for the nine months ended September 30, 2022 as compared with the same period in 2021. The increase in net earned premiums was consistent with the trend in net written premiums.

~~Net operating results decreased $7~~Core income increased $117 million for the nine months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016~~2021 driven by lower ~~favorable net prior year loss reserve development~~catastrophe losses and ~~higher net catastrophe losses~~improved non-catastrophe underwriting results partially offset by ~~favorable period over period foreign currency exchange~~lower net investment income driven by limited partnership and common stock results.

The combined ratio ~~increased 4.4~~of 96.6% improved 9.4 points for the nine months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016. The loss ratio increased 5.4 points,~~2021 primarily due to a 8.0 point improvement in the loss ratio and a 1.3 point improvement in the expense ratio. The improvement in the loss ratio was driven by lower catastrophe losses and favorable net prior year loss reserve ~~development and higher net catastrophe losses. Net catastrophe~~development. Catastrophe losses were ~~$60~~$148 million, or ~~10.3~~5.0 points of the loss ratio, for the nine months ended September 30, ~~2017~~2022, as compared ~~to $28~~with $332 million, or ~~4.7~~12.6 points of the loss ratio, for the nine months ended September 30, ~~2016. Catastrophe-related reinsurance reinstatement premium was $5 million~~2021. The combined ratio excluding catastrophes and development improved 0.7 points for the nine months ended September 30, ~~2017.~~2022 as compared with the same period in 2021. The improvement in the expense ratio of 1.3 points was driven by higher net earned premiums and lower acquisition costs partially offset by an increase in underwriting expenses. The loss ratio excluding catastrophes and development ~~improved 4.5 points. The expense ratio improved 1.0 point for the nine months ended September 30, 2017 as compared~~increased 0.7 points primarily driven by a shift in mix of business associated with the ~~same period in 2016, primarily due to higher~~property quota share treaty purchased during June of 2021. Our property coverages, which have a lower underlying loss ratio than most other commercial coverages, now represent a smaller proportion of net earned premiums.

Favorable net prior year loss reserve development of ~~$15 million and $36~~$26 million was recorded for the nine months ended September 30, ~~2017 and 2016.~~2022 as compared with unfavorable net prior year loss reserve development of $2 million for the nine months ended September 30, 2021. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

The following table ~~presents~~summarizes the gross and net carried ~~reserves.~~reserves for Commercial.



(In millions)	September 30, 2022		December 31, 2021
Gross case reserves	$	3,074	$	3,184
Gross IBNR reserves	6,098		5,706
Total gross carried claim and claim adjustment expense reserves	$	9,172	$	8,890
Net case reserves	$	2,748	$	2,850
Net IBNR reserves	5,557		5,215
Total net carried claim and claim adjustment expense reserves	$	8,305	$	8,065

(In millions) September 30, 2017 December 31, 2016
Gross case reserves $ 716
$ 632
Gross IBNR reserves 924
696
Total gross carried claim and claim adjustment expense reserves $ 1,640
$ 1,328
Net case reserves $ 617
$ 548
Net IBNR reserves 807
653
Total net carried claim and claim adjustment expense reserves $ 1,424
$ 1,201

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~~Life & Group Non-Core~~International

The following table ~~presents~~details the results of ~~operations.~~operations for International.

Periods ended September 30 Three Months
Nine Months
(In millions) 2017
2016
2017
2016
Net earned premiums $ 136
$ 134
$ 404
$ 401
Net investment income 195
192
587
567
Net operating income 10
6
19
—
Net realized investment gains, after tax 2
11
12
3
Net income 12
17
31
3


Periods ended September 30	Three Months						Nine Months
(In millions, except ratios, rate, renewal premium change and retention)	2022			2021			2022			2021
Gross written premiums	$	288		$	276		$	1,033		$	958
Net written premiums	258			256			839			783
Net earned premiums	270			271			803			789
Net investment income	16			14			44			42
Core income	19			17			63			67

Other performance metrics:
Loss ratio excluding catastrophes and development	58.6		%	58.9		%	58.6		%	59.2		%
Effect of catastrophe impacts	4.1			3.4			2.7			2.0
Effect of development-related items	—			1.1			(0.6)			0.3
Loss ratio	62.7			63.4			60.7			61.5
Expense ratio	31.7			32.1			32.1			33.3
Combined ratio	94.4		%	95.5		%	92.8		%	94.8		%
Combined ratio excluding catastrophes and development	90.3		%	91.0		%	90.7		%	92.5		%

Rate	6		%	13		%	7		%	14		%
Renewal premium change	12			13			11			13
Retention	82			79			79			77
New business	$	79		$	54		$	245		$	204

Three Month Comparison

Gross written premiums for International increased $12 million for the three months ended September 30, 2022 as compared with the same period in 2021. Excluding the effect of foreign currency exchange rates, gross written premiums increased $31 million driven by higher new business and rate. Net ~~operating~~written premiums for International increased $2 million for the three months ended September 30, 2022 as compared with the same period in 2021. Excluding the effect of foreign currency exchange rates, net written premiums increased $19 million for the three months ended September 30, 2022 as compared with the same period in 2021. Net earned premiums were consistent with the same period in 2021.

Core income improved $2 million for the three months ended September 30, 2022 as compared with the same period in 2021 driven by improved underwriting results partially offset by an unfavorable impact from changes in foreign currency exchange rates.

The combined ratio of 94.4% improved 1.1 points for the three months ended September 30, 2022 as compared with the same period in 2021 due to a 0.7 point improvement in the loss ratio and a 0.4 point improvement in the expense ratio. The improvement in the loss ratio was primarily due to improved non-catastrophe underwriting results. Catastrophe losses were $10 million, or 4.1 points of the loss ratio, for the three months ended September 30, 2022, as compared with $9 million, or 3.4 points of the loss ratio, for the three months ended September 30, 2021. The improvement in the expense ratio of 0.4 points was primarily driven by lower acquisition costs partially offset by an increase in underwriting expenses.

There was no net prior year loss reserve development recorded for the three months ended September 30, 2022 as compared with unfavorable net prior year loss reserve development of $3 million for the three months ended September 30, 2021. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

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Nine Month Comparison

Gross written premiums for International increased $75 million for the nine months ended September 30, 2022 as compared with the same period in 2021. Excluding the effect of foreign currency exchange rates, gross written premiums increased $121 million driven by higher new business and retention. Net written premiums for International increased $56 million for the nine months ended September 30, 2022 as compared with the same period in 2021. Excluding the effect of foreign currency exchange rates, net written premiums increased $97 million for the nine months ended September 30, 2022 as compared with the same period in 2021. The increase in net earned premiums was consistent with the trend in net written premiums.

Core income decreased $4 million for the nine months ended September 30, 2022 as compared with the same period in 2021 driven by an unfavorable impact from changes in foreign currency exchange rates partially offset by improved underwriting results.

The combined ratio of 92.8% improved 2.0 points for the nine months ended September 30, 2022 as compared with the same period in 2021 due to a 1.2 point improvement in the expense ratio and a 0.8 point improvement in the loss ratio. The improvement in the expense ratio was primarily driven by lower acquisition costs. The improvement in the loss ratio was driven by improved non-catastrophe underwriting results partially offset by higher net catastrophe losses. Catastrophe losses were $21 million, or 2.7 points of the loss ratio, for the nine months ended September 30, 2022, as compared with $16 million, or 2.0 points of the loss ratio, for the nine months ended September 30, 2021.

Favorable net prior year loss reserve development of $5 million was recorded for the nine months ended September 30, 2022 as compared with unfavorable net prior year loss reserve development of $2 million for the nine months ended September 30, 2021. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

The following table summarizes the gross and net carried reserves for International.



(In millions)	September 30, 2022		December 31, 2021
Gross case reserves	$	802	$	859
Gross IBNR reserves	1,460		1,421
Total gross carried claim and claim adjustment expense reserves	$	2,262	$	2,280
Net case reserves	$	692	$	744
Net IBNR reserves	1,192		1,196
Total net carried claim and claim adjustment expense reserves	$	1,884	$	1,940

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Life & Group

The following table summarizes the results of operations for Life & Group.


Periods ended September 30	Three Months				Nine Months
(In millions)	2022		2021		2022		2021
Net earned premiums	$	118	$	123	$	356	$	369
Net investment income	187		240		600		724
Core (loss) income before income tax	(36)		38		(24)		111
Income tax benefit on core income	14		3		31		9
Core (loss) income	(22)		41		7		120

Three Month Comparison

Core results decreased $63 million for the three months ended September 30, 2022 as compared with the same period in 2021 primarily due to a $54 million pretax decline in net investment income from limited partnerships.

Life & Group results for the three months ended September 30, 2022 and 2021 included no unlocking event for future policy benefit reserves as a result of the gross premium valuation (GPV). Core loss for the three months ended September 30, 2022 included a $25 million pretax favorable impact from the reduction in long term care claim reserves resulting from the annual claim reserve review in the third quarter of 2022. The favorable impact was driven by a $107 million release of all remaining incurred but not reported (IBNR) reserves established during 2020 and 2021 in response to the COVID-19 pandemic partially offset by an $82 million unfavorable impact from higher claim severity, including utilization and cost of care inflation, than anticipated in the reserve estimates. The annual structured settlement claim reserve review resulted in a $5 million pretax favorable impact from the reduction in reserves due to discount rate assumption changes. Core income for the three months ended September 30, 2021 included a $40 million pretax favorable impact from the reduction in long term care claim reserves resulting from the annual claim reserve reviews in the third quarter of 2021.

Nine Month Comparison

Results for the nine months ended September 30, 2022 were generally consistent with the three month summary above.

Life & Group Policyholder Reserves

Annually, in the third quarter, management assesses the adequacy of its long term care future policy benefit reserves by performing a GPV to determine if there is a premium deficiency. See Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1 for further information on the reserving process.

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The September 30, 2022 GPV indicated that our recorded reserves included a margin of approximately $125 million. A summary of the changes in the estimated reserve margin is presented in the table below:


Long Term Care Active Life Reserve - Change in estimated reserve margin (In millions)
September 30, 2021 Estimated Margin	$	72
Changes in underlying economic assumptions (1)	(130)
Changes in underlying morbidity assumptions	(30)
Changes in underlying persistency assumptions	40
Changes in underlying premium rate action assumptions	190
Changes in underlying expense and other assumptions	(17)
September 30, 2022 Estimated Margin	$	125

(1) Economic assumptions include the impact of interest rates and cost of care inflation

The increase in the margin in 2022 was primarily driven by changes in discount rate assumptions due to higher near-term expected reinvestment rates and higher than previously estimated rate increases on active rate increase programs. These favorable drivers were partially offset by changes in cost of care inflation assumptions.

The Company has determined that additional future policy benefit reserves for profits followed by losses are not currently required based on the most recent projection.

The table below summarizes the estimated pretax impact on our results of operations from various hypothetical revisions to our future policy benefit reserve assumptions. The annual GPV process involves updating all assumptions to management's then current best estimate, and historically all significant assumptions have been revised each year. In the table below, we have assumed that revisions to such assumptions would occur in each policy type, age and duration within each policy group. The impact of each sensitivity is discrete and does not reflect the impact one factor may have on another or the mitigating impact from management actions, which may include additional future premium rate increases. Although such hypothetical revisions are not currently required or anticipated, we believe they could occur based on past variances in experience and our expectations of the ranges of future experience that could reasonably occur. Any required increase in the recorded reserves resulting from a hypothetical revision in the table below would first reduce the margin in our carried reserves before it would affect results from operations. Any actual adjustment would be dependent on the specific policies affected and, therefore, may differ from the estimates summarized below. The estimated impacts to results of operations in the table below are after consideration of the existing margin.


September 30, 2022
	Estimated reduction to pretax income
Hypothetical revisions (In millions)
Morbidity:(1)
2.5% increase in morbidity	$	200
5% increase in morbidity	500
Persistency:
5% decrease in active life mortality and lapse	$	100
10% decrease in active life mortality and lapse	300
Discount Rates:
25 basis point decline in new money interest rates	$	—
50 basis point decline in new money interest rates	100

(1) Represents a sensitivity in future paid claims.

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The following table summarizes policyholder reserves for Life & Group.


September 30, 2022
(In millions)	Claim and claim adjustment expenses		Future policy benefits		Total
Long term care	$	2,959	$	10,109	$	13,068
Structured settlement annuities	512		—		512
Other	9		—		9
Total	3,480		10,109		13,589
Shadow adjustments (1)	59		—		59
Ceded reserves (2)	106		346		452
Total gross reserves	$	3,645	$	10,455	$	14,100


December 31, 2021
(In millions)	Claim and claim adjustment expenses		Future policy benefits		Total
Long term care	$	2,905	$	10,012	$	12,917
Structured settlement annuities	526		—		526
Other	10		—		10
Total	3,441		10,012		13,453
Shadow adjustments (1)	200		2,936		3,136
Ceded reserves (2)	113		288		401
Total gross reserves	$	3,754	$	13,236	$	16,990

(1) To the extent there are unrealized gains on fixed income securities supporting the reserves of certain products within the Life & Group segment that would result in a premium deficiency, or would impact the reserve balance, if realized, a related increase in Insurance reserves is recorded as a reduction of net unrealized gains (losses), net of tax, through Other comprehensive income (loss) (Shadow Adjustments).

(2) Ceded reserves relate to claim or policy reserves fully reinsured in connection with a sale or exit from the underlying business.

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Corporate & Other

The following table summarizes the results of operations for the Corporate & Other segment, including intersegment eliminations.


Periods ended September 30	Three Months				Nine Months
(In millions)	2022		2021		2022		2021
Net investment income	$	5	$	2	$	10	$	12
Insurance claims and policyholders' benefits	(13)		(6)		36		23
Interest expense	28		28		84		84
Core loss	(25)		(21)		(131)		(110)

Three Month Comparison

Core loss increased $4 million for the three months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016. Our long term care business continued to produce results generally in line with our 2015 reset assumptions.~~2021.

Nine Month Comparison

~~Net operating income improved $19~~Core loss increased $21 million for the nine months ended September 30, ~~2017~~2022 as compared with the same

period in ~~2016. The improvement was~~2021 driven by ~~favorable morbidity~~higher net prior year loss reserve development associated with legacy mass tort abuse claims and an increase in expenses as a result of continued investments in technology infrastructure and security. These results were partially offset by ~~unfavorable persistency~~the prior period recognition of a $12 million after-tax loss resulting from the legacy Excess Workers' Compensation (EWC) Loss Portfolio Transfer (LPT). Net prior year loss reserve development is further discussed in Note E to the ~~long term care business.~~

~~Corporate & Other Non-Core~~Condensed Consolidated Financial Statements included under Part I, Item I.

The following table ~~presents the results of operations.~~

Periods ended September 30 Three Months Nine Months
(In millions) 2017 2016 2017 2016
Net investment income $ 6
$ 4
$ 15
$ 11
Interest expense 39
39
116
119
Net operating loss (18 ) (24 ) (82 ) (162 )
Net realized investment (losses) gains, after tax (26 ) 1
(23 ) (2 )
Net loss (44 ) (23 ) (105 ) (164 )

~~Three Month Comparison~~

Net operating loss improved $6 million for the three months ended September 30, 2017 as compared with the same period in 2016. The after-tax net realized investment loss in the current period included a $27 million loss on the early redemption of the Company's $350 million senior notes.

~~Nine Month Comparison~~

Net operating loss improved $80 million for the nine months ended September 30, 2017, as compared with the same period in 2016, driven by lower adverse prior year reserve development recorded in 2017 for A&EP under the Loss Portfolio Transfer. The after-tax net realized investment loss in the current period included a $27 million loss on the early redemption of the Company's $350 million senior notes.

~~The following table presents~~summarizes the gross and net carried ~~reserves.~~reserves for Corporate & Other.



(In millions)	September 30, 2022		December 31, 2021
Gross case reserves	$	1,479	$	1,551
Gross IBNR reserves	1,217		1,266
Total gross carried claim and claim adjustment expense reserves	$	2,696	$	2,817
Net case reserves	$	139	$	146
Net IBNR reserves	201		148
Total net carried claim and claim adjustment expense reserves	$	340	$	294

(In millions) September 30, 2017 December 31, 2016
Gross case reserves $ 1,397
$ 1,524
Gross IBNR reserves 1,011
1,090
Total gross carried claim and claim adjustment expense reserves $ 2,408
$ 2,614
Net case reserves $ 97
$ 94
Net IBNR reserves 123
136
Total net carried claim and claim adjustment expense reserves $ 220
$ 230

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INVESTMENTS

Net Investment Income

The significant components of Net investment income are presented in the following table. Fixed income securities, as presented, include both fixed maturity securities and non-redeemable preferred stock.

Periods ended September 30 Three Months
Nine Months
(In millions) 2017
2016
2017
2016
Fixed maturity securities:
Taxable $ 349
$ 354
$ 1,047
$ 1,048
Tax-Exempt 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
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 %


Periods ended September 30	Three Months						Nine Months
(In millions)	2022			2021			2022			2021
Fixed income securities:
Taxable fixed income securities	$	410		$	360		$	1,163		$	1,075
Tax-exempt fixed income securities	55			77			194			236
Total fixed income securities	465			437			1,357			1,311



Limited partnership and common stock investments	(44)			77			(51)			294
Other, net of investment expense	1			(1)			(4)			3
Net investment income	$	422		$	513		$	1,302		$	1,608

Effective income yield for the fixed income securities portfolio	4.4		%	4.3		%	4.3		%	4.3		%
Limited partnership and common stock return	(2.1)		%	3.8		%	(2.4)		%	16.4		%

Net investment income ~~after tax,~~decreased $91 million and $306 million for the three and nine months ended September 30, ~~2017 decreased $8 million~~2022 as compared with the same ~~period~~periods in ~~2016. The decrease was~~2021 driven by unfavorable limited partnership ~~investments, which returned 2.2% in 2017 as compared with 2.6% in the prior year period. Income~~and common stock results partially offset by higher income from fixed ~~maturity securities, after tax, for the three months ended September 30, 2017 increased $2 million as compared with the same period in 2016, primarily due to an increase in the invested asset base.~~income securities.

Net investment income, after tax, for the nine months ended September 30, 2017 increased $48 million as compared with the same period in 2016. The increase was driven by limited partnership investments, which returned 6.8% in 2017 as compared with 3.8% in the prior year period. Income from fixed maturity securities, after tax, for the nine months ended September 30, 2017 increased $14 million as compared with the same period in 2016, primarily due to an increase in the invested asset base.

~~Net Realized~~ Investment Gains (Losses)

The components of Net ~~realized~~ investment ~~results~~gains (losses) are presented in the following table.


Periods ended September 30	Three Months				Nine Months
(In millions)	2022		2021		2022		2021
Fixed maturity securities: (1)
Corporate and other bonds	$	(41)	$	36	$	(68)	$	115
States, municipalities and political subdivisions	6		1		28		—
Asset-backed	(17)		(15)		(29)		(24)
Total fixed maturity securities	(52)		22		(69)		91
Non-redeemable preferred stock	(2)		(2)		(111)		17
Derivatives, short term and other	(34)		2		22		9
Mortgage loans	(8)		—		(8)		—
Net investment (losses) gains	(96)		22		(166)		117
Income tax benefit (expense) on net investment (losses) gains	11		(3)		38		(22)
Net investment (losses) gains, after tax	$	(85)	$	19	$	(128)	$	95

Periods ended September 30 Three Months Nine Months
(In millions) 2017 2016 2017 2016
Fixed maturity securities:
Corporate and other bonds $ 13
$ 18
$ 81
$ 10
States, municipalities and political subdivisions 4
20
14
23
Asset-backed (2 ) 5
(7 ) 5
U.S. Treasury and obligations of government-sponsored enterprises —
3
3
5
Foreign government 1
1
1
3
Total fixed maturity securities 16

47

92

46
Equity securities —
(3 ) —
(5 )
Derivative financial securities (1 ) 1
(3 ) (12 )
Short term investments and other (39 ) 1
(27 ) (3 )
Net realized investment (losses) gains (24 )
46

62
26
Income tax benefit (expense) on net realized investment (losses) gains 9
(14 ) (19 ) (11 )
Net realized investment (losses) gains, after tax $ (15 )
$ 32

$ 43
$ 15
(1) Excludes the loss in the third quarter of 2022 on the assets supporting the funds withheld liability, which is reflected in the Derivatives, short term and other line.

~~Net realized~~Pretax net investment results ~~after tax,~~ decreased ~~$47~~$118 million for the three months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016~~2021. The decrease was driven by ~~lower~~ net ~~realized~~losses on fixed maturity securities in the three months ended September 30, 2022 as compared to net gains ~~on sales of securities partially offset by lower OTTI losses recognized~~ in ~~earnings.~~ the same period in 2021.

Additionally, Derivatives, short term and other for the ~~current period Net realized investment losses include~~three months ended September 30, 2022 includes a ~~loss of $27~~$35 million ~~after tax~~non-economic net loss related to the ~~redemption~~expected novation of a coinsurance agreement on our ~~$350 million senior notes due November 2019.~~legacy annuity business in our Life & Group segment and the associated funds withheld embedded derivative.

~~Net realized~~Pretax net investment ~~gains, after tax, improved $28~~results decreased $283 million for the nine months ended September 30, ~~2017~~2022 as compared with the same period in ~~2016~~2021. The decrease was driven by ~~lower OTTI~~the unfavorable change in fair value of

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non-redeemable preferred stock and net losses ~~recognized~~on fixed maturity securities in ~~earnings. Additionally,~~ the ~~current~~nine months ended September 30, 2022 as compared to net gains in the same period ~~Net realized investment gains include a loss of $27 million after tax related to the redemption of our $350 million senior notes due November 2019.~~in 2021.

Further information on our ~~realized~~investment gains and losses ~~including~~as well as on our ~~OTTI losses,~~derivative financial instruments is set forth in Note C to the Condensed Consolidated Financial Statements included under Part I, Item 1.

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Portfolio Quality

The following table presents the estimated fair value and net unrealized gains (losses) of our fixed maturity securities by rating distribution.


	September 30, 2017				December 31, 2016					September 30, 2022				December 31, 2021
(In millions)	Estimated Fair Value		Net Unrealized Gains (Losses)		Estimated Fair Value		Net Unrealized Gains (Losses)		(In millions)	Estimated Fair Value		Net Unrealized Gains (Losses)		Estimated Fair Value		Net Unrealized Gains (Losses)
U.S. Government, Government agencies and Government-sponsored enterprises	$	4,386	$	43	$	4,212	$	32	U.S. Government, Government agencies and Government-sponsored enterprises	$	2,452	$	(357)	$	2,600	$	42
AAA	1,899		143		1,881		110		AAA	2,374		(250)		3,784		360
AA	9,136		911		8,911		750		AA	6,387		(792)		7,665		823
A	9,876		957		9,866		832		A	8,739		(667)		9,511		1,087
BBB	13,730		1,051		12,802		664		BBB	15,267		(1,776)		18,458		2,043
Non-investment grade	3,063		171		3,233		156		Non-investment grade	2,032		(234)		2,362		91
Total	$	42,090	$	3,276	$	40,905	$	2,544	Total	$	37,251	$	(4,076)	$	44,380	$	4,446

As of September 30, ~~2017~~2022 and December 31, ~~2016, only 2%~~2021, 1% of our fixed maturity portfolio was rated internally. AAA rated securities included $0.4 billion and $1.7 billion of pre-refunded municipal bonds as of September 30, 2022 and December 31, 2021.

The following table presents available-for-sale fixed maturity securities in a gross unrealized loss position by ratings distribution.


	September 30, 2017					September 30, 2022
(In millions)	Estimated Fair Value		Gross Unrealized Losses		(In millions)	Estimated Fair Value		Gross Unrealized Losses
U.S. Government, Government agencies and Government-sponsored enterprises	$	1,531	$	27	U.S. Government, Government agencies and Government-sponsored enterprises	$	2,360	$	360
AAA	277		7		AAA	1,566		318
AA	665		10		AA	4,430		917
A	562		10		A	6,548		838
BBB	1,015		21		BBB	13,394		1,902
Non-investment grade	448		10		Non-investment grade	1,646		248
Total	$	4,498	$	85	Total	$	29,944	$	4,583

The following table presents the maturity profile for these available-for-sale fixed maturity securities. Securities not due to mature on a single date are allocated based on weighted average life.


	September 30, 2022
(In millions)	Estimated Fair Value		Gross Unrealized Losses
Due in one year or less	$	699	$	11
Due after one year through five years	7,492		541
Due after five years through ten years	10,701		1,705
Due after ten years	11,052		2,326
Total	$	29,944	$	4,583

September 30, 2017
(In millions) Estimated Fair Value Gross Unrealized Losses
Due in one year or less $ 53
$ 2
Due after one year through five years 742
16
Due after five years through ten years 2,812
53
Due after ten years 891
14
Total $ 4,498
$ 85

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Duration

A primary objective in the management of the investment portfolio is to optimize return relative to the corresponding liabilities and respective liquidity needs. Our views on the current interest rate environment, tax regulations, asset class valuations, specific security issuer and broader industry segment conditions ~~and~~as well as domestic and global economic conditions, are some of the factors that enter into an investment decision. We also continually monitor exposure to issuers of securities held and broader industry sector exposures and may from time to time adjust such exposures based on our views of a specific issuer or industry sector.

A further consideration in the management of the investment portfolio is the characteristics of the corresponding liabilities and the ability to align the duration of the portfolio to those liabilities and to meet future liquidity needs, minimize interest rate risk and maintain a level of income sufficient to support the underlying insurance liabilities. For portfolios where future liability cash flows are determinable and typically long term in nature, we segregate investments for asset/liability management purposes. The segregated investments support the long term care and structured settlement liabilities in the Life & Group ~~Non-Core~~ segment.

The effective durations of fixed ~~maturity~~income securities and short term investments are presented in the following table. Amounts presented are net of payable and receivable amounts for securities purchased and sold, but not yet settled.


	September 30, 2022			December 31, 2021
(In millions)	Estimated Fair Value		Effective Duration (In years)	Estimated Fair Value		Effective Duration (In years)
Investments supporting Life & Group	$	14,253	9.8	$	18,458	9.2
Other investments	24,739		4.8	28,915		4.9
Total	$	38,992	6.7	$	47,373	6.6

September 30, 2017 December 31, 2016
(In millions) Estimated Fair Value
Effective
Duration
(In years)
Estimated Fair Value
Effective
Duration
(In years)
Investments supporting Life & Group Non-Core $ 16,580
8.6
$ 15,724
8.7
Other interest sensitive investments 26,849
4.4
26,669
4.6
Total $ 43,429
6.0
$ 42,393
6.1
The effective duration of Investments supporting Life & Group liabilities at September 30, 2022 lengthened as compared with December 31, 2021, reflecting strategic repositioning to capitalize on higher rates and reduce reinvestment risk.

The investment portfolio is periodically analyzed for changes in duration and related price risk. Certain securities have duration characteristics that are variable based on market interest rates, credit spreads and other factors that may drive variability in the amount and timing of cash flows. Additionally, we periodically review the sensitivity of the portfolio to the level of foreign exchange rates and other factors that contribute to market price changes. A summary of these risks and specific analysis on changes is included in the Quantitative and Qualitative Disclosures About Market Risk included under Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

~~Short Term Investments~~

~~The carrying value of the components of the Short term investments are presented in the following table.~~2021.

(In millions) September 30, 2017 December 31, 2016
Short term investments:
Commercial paper $ 658
$ 733
U.S. Treasury securities 436
433
Money market funds 44
44
Other 315
197
Total short term investments $ 1,453
$ 1,407

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LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Our primary operating cash flow sources are premiums and investment ~~income from our insurance subsidiaries.~~income. Our primary operating cash flow uses are payments for claims, policy benefits and operating expenses, including interest expense on corporate debt. Additionally, cash may be paid or received for income taxes.

For the nine months ended September 30, ~~2017,~~2022, net cash provided by operating activities was ~~$894~~$1,990 million as compared with ~~$1,120~~$1,354 million for the same period in ~~2016. Cash~~2021. The increase in cash provided by operating activities ~~reflected higher net claim payments and a lower level~~was driven by the prior year payment of ~~distributions on limited partnerships partially offset by an increase in premiums collected and lower salaries and related expenses paid.~~the EWC LPT premium.

Cash flows from investing activities include the purchase and disposition of ~~available-for-sale~~ financial instruments, excluding those held as trading, and may include the purchase and sale of businesses, ~~land, buildings,~~ equipment and other assets not generally held for resale.

~~Net~~For the nine months ended September 30, 2022, net cash used by investing activities was ~~$218~~$1,072 million ~~for the nine months ended September 30, 2017~~ as compared with ~~net cash used of $604~~$597 million for the same period in ~~2016. The~~2021. Net cash ~~flow from~~used or provided by investing activities is ~~affected~~primarily driven by ~~various~~cash available from operations and by other factors, such as ~~the anticipated payment of claims,~~ financing activity, asset/liability management and individual security buy and sell decisions made in the normal course of portfolio management. In the first quarter of 2016, we sold the principal executive offices of CNAF for $107 million.activities.

Cash flows from financing activities may include proceeds from the issuance of debt and equity securities, and outflows for stockholder dividends, or repayment of debt and ~~outlays to reacquire equity securities.~~purchases of our common stock.

For the nine months ended September 30, ~~2017,~~2022, net cash used by financing activities was ~~$673~~$924 million as compared with ~~$605~~$545 million for the same period in ~~2016.~~ In2021. Financing activities for the ~~third quarter~~periods presented include:

•During the nine months ended September 30, 2022, we paid dividends of ~~2017,~~$874 million and repurchased 890,000 shares of common stock at an aggregate cost of $39 million.

•During the nine months ended September 30, 2021, we ~~issued $500~~paid dividends of $518 million ~~of 3.45% senior notes due August 15, 2027~~ and ~~redeemed the $350 million outstanding aggregate principal balances~~repurchased 377,615 shares of our ~~7.35% senior notes due November 15, 2019. In the first quarter~~common stock at an aggregate cost of ~~2016, we issued $500 million of 4.50% senior notes due March 1, 2026 and redeemed the $350 million outstanding aggregate principal balance of our 6.50% senior notes due August 15, 2016.~~$18 million.

Common Stock Dividends

~~Dividends~~Cash dividends of ~~$2.80~~$3.20 per share on our common stock, including a special cash dividend of $2.00 per share, were declared and paid during the nine months ended September 30, ~~2017.~~2022. On October ~~27, 2017,~~28, 2022, our Board of Directors declared a quarterly cash dividend of ~~$0.30~~$0.40 per share, ~~on our common stock,~~ payable ~~November 29, 2017~~December 1, 2022 to stockholders of record on November ~~13, 2017.~~15, 2022. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend on many factors, including our earnings, financial condition, business needs and regulatory constraints.

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Liquidity

We believe that our present cash flows from operating, investing and financing activities are sufficient to fund our current and expected working capital and debt obligation needs and we do not expect this to change in the near term. There are currently no amounts outstanding under our $250 million senior unsecured revolving credit facility and no borrowings outstanding through our membership in the Federal Home Loan Bank of Chicago (FHLBC).

Dividends from ~~CCC~~Continental Casualty Company (CCC) are subject to the insurance holding company laws of the State of Illinois, the domiciliary state of CCC. Under these laws, ordinary dividends, or dividends that do not require prior approval by the Illinois Department of Insurance (the Department), are determined based on the greater of the prior year's statutory net income or 10% of statutory surplus as of the end of the prior year, as well as timing and amount of dividends paid in the preceding twelve months. Additionally, ordinary dividends may only be paid from earned surplus, which is calculated by removing unrealized gains from unassigned surplus. As of September 30, ~~2017~~2022, CCC was in a positive earned surplus position. The maximum allowable dividend CCC could pay during 2017 that would not be subject to the Department's prior approval is $1,075 million, less dividends paid during the preceding twelve months measured at that point in time. CCC paid dividends of ~~$100~~$845 million ~~during the three months ended December 31, 2016~~ and ~~$855~~$600 million during the nine months ended September 30, ~~2017. As of September 30, 2017 CCC is able to pay approximately $120 million of dividends that would not be subject to prior approval of the Department.~~2022 and 2021. The actual level of dividends paid in any year is determined after an assessment of available dividend capacity, holding company liquidity and cash needs as well as the impact the dividends will have on the statutory surplus of the applicable insurance company.

We have an effective automatic shelf registration statement on file with the Securities and Exchange Commission under which we may publicly issue an unspecified amount of debt, equity or hybrid securities from time to time.

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ACCOUNTING STANDARDS UPDATE

In August 2018, the FASB issued ASU 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The updated accounting guidance requires changes to the measurement and disclosure of long-duration contracts. For the Company, this includes the long term care and fully-ceded single premium immediate annuity business.

The most significant impact will be the effect of updating the discount rate assumption quarterly to reflect an upper-medium grade fixed-income instrument yield, rather than CNA’s expected investment portfolio yield. This will be partially offset by the de-recognition of Shadow Adjustments associated with long-duration contracts. The Company expects the net impact of these changes will be a decrease of approximately $2.3 billion in Accumulated other comprehensive income as of the transition date of January 1, 2021. To illustrate the sensitivity of this adjustment, had the Company used interest rates in effect as of September 30, 2022 in its calculation, the transition impact to Accumulated other comprehensive income would have been approximately zero.

The requirement to review, and update if there is a change, cash flow assumptions at least annually is expected to change the pattern of earnings being recognized. Under current accounting guidance, the Company’s third quarter 2022 gross premium valuation assessment indicated a pretax reserve margin of $125 million, with no unlocking event. However under the new guidance, the effect of changes in cash flow assumptions from the Company’s assessment would be recorded in the Company’s results of operations (except for discount rate changes which would be recorded quarterly through AOCI).

For a discussion of Accounting Standards Updates, ~~adopted as of January 1, 2017 and that will be adopted in the future,~~ see Note A to the Condensed Consolidated Financial Statements included under Part I, Item 1.

FORWARD-LOOKING STATEMENTS

This report contains a number of forward-looking statements which relate to anticipated future events rather than actual present conditions or historical events. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as “believes,” “expects,” “intends,” “anticipates,” “estimates” and similar expressions. Forward-looking statements in this report include any and all statements regarding expected developments in our insurance business, including losses and loss reserves (note that loss reserves for long term care, A&EP and other mass tort claims ~~which~~ are more uncertain, and therefore more difficult to estimate than loss reserves respecting traditional property and casualty ~~exposures;~~exposures); the impact of routine ongoing insurance reserve reviews we are conducting; our expectations concerning our revenues, earnings, expenses and investment activities; volatility in investment returns; ~~expected cost savings and other results from our expense reduction activities;~~ and our proposed actions in response to trends in our business. Forward-looking statements, by their nature, are subject to a variety of inherent risks and uncertainties that could cause actual results to differ materially from the results projected in the forward-looking statement. We cannot control many of these risks and uncertainties. These risks and uncertainties include, but are not limited to, the ~~following:~~following as well as those risks contained in the Risk Factors section of our 2021 Annual Report on Form 10-K:

Company-Specific Factors

•the risks and uncertainties associated with our insurance reserves, as outlined in the Critical Accounting Estimates and the Reserves - Estimates and Uncertainties sections of our 2021 Annual Report on Form 10-K, including the sufficiency of the reserves and the possibility for future increases, which would be reflected in the results of operations in the period that the need for such adjustment is determined;

•the risk that the other parties to the ~~transaction~~transactions in which, subject to certain limitations, we ceded our legacy A&EP and EWC liabilities, respectively, will not fully perform their respective obligations to CNA, the uncertainty in estimating loss reserves for A&EP and EWC liabilities and the possible continued exposure of CNA to liabilities for A&EP and EWC claims that are not covered under the terms of the ~~transaction;~~respective transactions;

•the performance of reinsurance companies under reinsurance contracts with us; and

•the risks and uncertainties associated with potential acquisitions and divestitures, including the consummation of such transactions, the successful integration of acquired operations and the potential for subsequent impairment of goodwill or intangible assets.

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Industry and General Market Factors

•the COVID-19 pandemic and measures to mitigate the spread of the virus may continue to result in increased claims and related litigation or regulatory risk across our enterprise;

•the impact of competitive products, policies and pricing and the competitive environment in which we operate, including changes in our book of business;

•product and policy availability and demand and market responses, including the level of ability to obtain rate increases and decline or non-renew underpriced accounts, to achieve premium targets and profitability and to realize growth and retention estimates;

•general economic and business conditions, including recessionary conditions that may decrease the size and number of our insurance customers and create ~~additional~~ losses to our lines of business ~~especially those that provide management and professional liability insurance, as well as surety bonds, to businesses engaged in real estate, financial services and professional services~~ and inflationary pressures on medical care costs, construction costs and other economic sectors that increase the severity of claims;

•conditions in the capital and credit markets, including ~~continuing~~ uncertainty and instability in these markets, as well as the overall economy, and their impact on the returns, types, liquidity and valuation of our investments;

•conditions in the capital and credit markets that may limit our ability to raise significant amounts of capital on favorable terms; and

•the possibility of changes in our ratings by ratings agencies, including the inability to access certain markets or distribution channels and the required collateralization of future payment obligations as a result of such changes, and changes in rating agency policies and practices.

Regulatory and Legal Factors

•regulatory and legal initiatives and compliance with governmental regulations and other legal requirements, including with respect to cyber security protocols, legal inquiries by state authorities, judicial interpretations within the regulatory framework, including interpretation of policy provisions, decisions regarding coverage and theories of liability, legislative actions that increase claimant activity, including those revising applicability of statutes of limitations, trends in litigation and the outcome of any litigation involving us and rulings and changes in tax laws and regulations;

•regulatory limitations, impositions and restrictions upon us, including with respect to our ability to increase premium rates, and the effects of assessments and other surcharges for guaranty funds and second-injury funds, other mandatory pooling arrangements and future assessments levied on insurance ~~companies; and~~companies

•regulatory limitations and restrictions, including limitations upon our ability to receive dividends from our insurance subsidiaries, imposed by regulatory authorities, including regulatory capital ~~adequacy standards.~~adequacy; and

•regulatory and legal implications relating to the sophisticated cyber incident sustained by the Company in March 2021 that may arise.

Impact of ~~Catastrophic Events~~Natural and ~~Related Developments~~Man-Made Disasters and Mass Tort Claims

•weather and other natural physical events, including the severity and frequency of storms, hail, snowfall and other winter conditions, natural disasters such as hurricanes and earthquakes, as well as climate change, including effects on global weather patterns, greenhouse gases, sea, land and air temperatures, sea levels, wildfires, rain, hail and snow;

•regulatory requirements imposed by coastal state regulators in the wake of hurricanes or other natural disasters, including limitations on the ability to exit markets or to non-renew, cancel or change terms and conditions in policies, as well as mandatory assessments to fund any shortfalls arising from the inability of quasi-governmental insurers to pay claims;

•man-made disasters, including the possible occurrence of terrorist attacks, the unpredictability of the nature, targets, severity or frequency of such events, and the effect of the absence or insufficiency of applicable terrorism legislation on coverages; ~~and~~

•the occurrence of ~~epidemics.~~epidemics and pandemics; and

~~Referendum on the United Kingdom's Membership in the European Union~~

~~in 2016, the United Kingdom (U.K.) held a referendum in which voters approved an exit~~•mass tort claims, including those related to exposure to potentially harmful products or substances such as glyphosate, lead paint and opioids; and claims arising from ~~the European Union (E.U.), commonly referred~~changes that repeal or weaken tort reforms, such as those related to as "Brexit." As a result of the referendum, in 2017 the British government formally commenced the process to leave the E.U. and began negotiating the terms of treaties that will govern the U.K.'s future relationship with the E.U. Although the terms of any future treaties are unknown, we believe changes in our international operating platform will be required to allow us to continue to write business in the E.U. after the completion of Brexit, therefore we have begun the process of establishing a new European subsidiary in Luxembourg. As a result of these changes, the complexity and cost of regulatory compliance of our European business is likely to increase.abuse reviver statutes.

Our forward-looking statements speak only as of the date of the filing of this Quarterly Report on Form 10-Q and we do not undertake any obligation to update or revise any forward-looking statement to reflect events or circumstances after the date of the statement, even if our expectations or any related events or circumstances change.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There were no material changes in our market risk components for the ~~nine~~three months ended September 30, ~~2017.~~2022. See the Quantitative and Qualitative Disclosures About Market Risk included in Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021 for further information. Additional information related to portfolio duration is discussed in the Investments section of our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part I, Item 2.

Item 4. Controls and Procedures

The Company maintains a system of disclosure controls and procedures which are designed to ensure that information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including this report, is recorded, processed, summarized and reported on a timely basis. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed under the Exchange Act is accumulated and communicated to the Company's management on a timely basis to allow decisions regarding required disclosure.

As of September 30, ~~2017,~~2022, the Company's management, including the Company's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on this evaluation, the CEO and CFO have concluded that the Company's disclosure controls and procedures are effective as of September 30, ~~2017.~~2022.

There has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, ~~2017~~2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. Other Information

Item 1. Legal Proceedings

Information on our legal proceedings is set forth in Note F to the Condensed Consolidated Financial Statements included under Part I, Item 1.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Items 2 (a) and (b) are not applicable.

Period

(a) Total number of shares purchased

(b) Average price paid per share

(d) Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (in millions)

August 1, 2022 - August 31, 2022

445,000

41.03

N/A

Total

445,000

N/A

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Item 6. Exhibits

See Exhibit Index.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


				CNA Financial Corporation

Dated: October 31, 2022			By	~~CNA Financial Corporation~~/s/ Scott R. Lindquist

~~Dated: October 30, 2017~~	By	~~/s/ D. Craig Mense~~
		~~D. Craig Mense~~ Scott R. Lindquist Executive Vice President and Chief Financial Officer (Duly authorized officer and principal financial officer)

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EXHIBIT INDEX



Description of Exhibit			Exhibit Number

Certification of Chief Executive Officer			31.1

Certification of Chief Financial Officer			31.2

Written Statement of the Chief Executive Officer of CNA Financial Corporation Pursuant to 18 U.S.C. Section 1350 (As adopted by Section 906 of the Sarbanes-Oxley Act of 2002)			32.1

Written Statement of the Chief Financial Officer of CNA Financial Corporation Pursuant to 18 U.S.C. Section 1350 (As adopted by Section 906 of the Sarbanes-Oxley Act of 2002)			32.2

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document			101.INS

Inline XBRL Taxonomy Extension Schema			101.SCH

Inline XBRL Taxonomy Extension Calculation Linkbase			101.CAL

Inline XBRL Taxonomy Extension Definition Linkbase			101.DEF

Inline XBRL Taxonomy Label Linkbase			101.LAB

Inline XBRL Taxonomy Extension Presentation Linkbase			101.PRE

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)			104.1

6972



Item Number		Page Number
	PART I. Financial Information
1.	Condensed Consolidated Financial Statements:
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016 (Unaudited)	3
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016 (Unaudited)	4
	Condensed Consolidated Balance Sheets as of September 30, 2017 (Unaudited) and December 31, 2016	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016 (Unaudited)	6
	Condensed Consolidated Statements of Stockholders' Equity for the nine months ended September 30, 2017 and 2016 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	45
3.	Quantitative and Qualitative Disclosures About Market Risk	66
4.	Controls and Procedures	66
	PART II. Other Information
1.	Legal Proceedings	67
6.	Exhibits	67



Level 3 (In millions)	Balance as of July 1, 2017		Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)*			Net change in unrealized appreciation (depreciation) included in Other comprehensive income (loss)			Purchases		Sales			Settlements			Transfers into Level 3		Transfers out of Level 3		Balance as of September 30, 2017		Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2017 recognized in Net income (loss)*
Fixed maturity securities:
Corporate and other bonds	$	100	$	1		$	1		$	13	$	—		$	(11	)	$	15	$	—	$	119	$	—
States, municipalities and political subdivisions	1		—			—			—		—			—			—		—		1		—
Asset-backed:
Residential mortgage-backed	123		1			1			—		—			(7		)	58		—		176		—
Commercial mortgage-backed	13		—			(1		)	12		—			(2		)	2		—		24		—
Other asset-backed	82		(1		)	1			27		—			(4		)	41		—		146		—
Total asset-backed	218		—			1			39		—			(13		)	101		—		346		—
Total fixed maturity securities	319		1			2			52		—			(24		)	116		—		466		—
Equity securities	19		—			—			—		—			—			—		—		19		—
Life settlement contracts	1		—			—			—		(1		)	—			—		—		—		—
Total	$	339	$	1		$	2		$	52	$	(1	)	$	(24	)	$	116	$	—	$	485	$	—



Level 3 (In millions)	Balance as of July 1, 2016		Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)*			Net change in unrealized appreciation (depreciation) included in Other comprehensive income (loss)			Purchases		Sales		Settlements			Transfers into Level 3		Transfers out of Level 3			Balance as of September 30, 2016		Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2016 recognized in Net income (loss)*
Fixed maturity securities:
Corporate and other bonds	$	242	$	1		$	7		$	16	$	—	$	(5	)	$	—	$	—		$	261	$	—
States, municipalities and political subdivisions	2		—			—			—		—		(1		)	—		—			1		—
Asset-backed:
Residential mortgage-backed	134		—			(1		)	5		—		(1		)	—		(58		)	79		—
Commercial mortgage-backed	11		—			—			23		—		(8		)	—		(2		)	24		—
Other asset-backed	45		—			—			34		—		—			—		(36		)	43		—
Total asset-backed	190		—			(1		)	62		—		(9		)	—		(96		)	146		—
Total fixed maturity securities	434		1			6			78		—		(15		)	—		(96		)	408		—
Equity securities	19		(1		)	1			—		—		—			—		—			19		(2		)
Life settlement contracts	67		—			—			—		—		—			—		—			67		—
Total	$	520	$	—		$	7		$	78	$	—	$	(15	)	$	—	$	(96	)	$	494	$	(2	)



Level 3 (In millions)	Balance as of January 1, 2017		Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)*			Net change in unrealized appreciation (depreciation) included in Other comprehensive income (loss)				Purchases		Sales			Settlements			Transfers into Level 3		Transfers out of Level 3			Balance as of September 30, 2017		Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2017 recognized in Net income (loss)*
Fixed maturity securities:
Corporate and other bonds	$	130	$	1		$	2			$	18	$	(1	)	$	(36	)	$	15	$	(10	)	$	119	$	—
States, municipalities and political subdivisions	1		—			—			—	—		—			—			—		—			1		—
Asset-backed:
Residential mortgage-backed	129		3			4			—	—		—			(18		)	58		—			176		—
Commercial mortgage-backed	13		—			(1		)	—	12		—			(2		)	2		—			24		—
Other asset-backed	57		(2		)	1			—	78		—			(6		)	93		(75		)	146		—
Total asset-backed	199		1			4				90		—			(26		)	153		(75		)	346		—
Total fixed maturity securities	330		2			6				108		(1		)	(62		)	168		(85		)	466		—
Equity securities	19		—			2			—	1		(3		)	—			—		—			19		—
Derivative financial instruments	—		1			—			—	—		(1		)	—			—		—			—		—
Life settlement contracts	58		6			—				—		(59		)	(5		)	—		—			—		—
Total	$	407	$	9		$	8			$	109	$	(64	)	$	(67	)	$	168	$	(85	)	$	485	$	—



Level 3 (In millions)	Balance as of January 1, 2016		Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)*			Net change in unrealized appreciation (depreciation) included in Other comprehensive income (loss)			Purchases		Sales			Settlements			Transfers into Level 3		Transfers out of Level 3			Balance as of September 30, 2016		Unrealized gains (losses) on Level 3 assets and liabilities held as of September 30, 2016 recognized in Net income (loss)*
Fixed maturity securities:
Corporate and other bonds	$	168	$	1		$	14		$	163	$	(36	)	$	(15	)	$	—	$	(34	)	$	261	$	—
States, municipalities and political subdivisions	2		—			—			—		—			(1		)	—		—			1		—
Asset-backed:
Residential mortgage-backed	134		2			(2		)	15		—			(10		)	—		(60		)	79		—
Commercial mortgage-backed	22		—			—			32		—			(17		)	3		(16		)	24		—
Other asset-backed	53		—			2			69		(25		)	(1		)	2		(57		)	43		—
Total asset-backed	209		2			—			116		(25		)	(28		)	5		(133		)	146		—
Total fixed maturity securities	379		3			14			279		(61		)	(44		)	5		(167		)	408		—
Equity securities	20		(1		)	—			—		—			—			—		—			19		(2		)
Life settlement contracts	74		10			—			—		—			(17		)	—		—			67		2
Total	$	473	$	12		$	14		$	279	$	(61	)	$	(61	)	$	5	$	(167	)	$	494	$	—



Nine months ended September 30, 2016
(In millions)	Specialty			Commercial			International			Corporate & Other Non-Core		Total
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development	$	(211	)	$	(37	)	$	(34	)	$	—	$	(282	)
Pretax (favorable) unfavorable premium development	(18		)	(7		)	(2		)	—		(27		)
Total pretax (favorable) unfavorable net prior year development	$	(229	)	$	(44	)	$	(36	)	$	—	$	(309	)