UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended March 31, ~~2021~~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)						(I.R.S. Employer Identification No.)


151 N. Franklin		60606
Chicago,	Illinois	(Zip Code)
(Address of principal executive offices)

(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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes ☒ 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

☒

Accelerated filer

☐

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 ☒

As of ~~May 5, 2021, 271,656,848~~April 28, 2022, 271,309,932 shares of common stock were outstanding.


Item Number	Item Number		Page Number	Item Number		Page Number
		PART I			PART I
1.	1.	Condensed Consolidated Financial Statements:	3	1.	Condensed Consolidated Financial Statements:	3
		Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020 (Unaudited)	3		Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 (Unaudited)	3
		Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2021 and 2020 (Unaudited)	4		Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 202 2 and 202 1 (Unaudited)	4
		Condensed Consolidated Balance Sheets as of March 31, 2021 (Unaudited) and December 31, 2020	5		Condensed Consolidated Balance Sheets as of March 31, 2022 (Unaudited) and December 31, 2021	5
		Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (Unaudited)	6		Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 202 2 and 202 1 (Unaudited)	6
		Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2021 and 2020 (Unaudited)	7		Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 202 2 and 202 1 (Unaudited)	7
		Notes to Condensed Consolidated Financial Statements (Unaudited)	8		Notes to Condensed Consolidated Financial Statements (Unaudited)	8
2.	2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	35	2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	36
3.	3.	Quantitative and Qualitative Disclosures About Market Risk	53	3.	Quantitative and Qualitative Disclosures About Market Risk	54
4.	4.	Controls and Procedures	53	4.	Controls and Procedures	54
		PART II			PART II
1.	1.	Legal Proceedings	54	1.	Legal Proceedings	55
1A.		Risk Factors	54
2.	2.	Unregistered Sales of Equity Securities and Use of Proceeds	55	2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
6.	6.	Exhibits	57	6.	Exhibits	55

~~Table of Contents~~T a b l e o f C o n t e n t s

PART I

Item 1. Condensed Consolidated Financial Statements

CNA Financial Corporation

Condensed Consolidated Statements of Operations (Unaudited)


Three months ended March 31	Three months ended March 31					Three months ended March 31
(In millions, except per share data)	(In millions, except per share data)	2021		2020		(In millions, except per share data)	2022		2021
Revenues	Revenues					Revenues
Net earned premiums	Net earned premiums	$	1,962	$	1,869	Net earned premiums	$	2,059	$	1,962
Net investment income	Net investment income	504		329		Net investment income	448		504
Net investment gains (losses)		57		(216)
Net investment (losses) gains						Net investment (losses) gains	(11)		57
Non-insurance warranty revenue	Non-insurance warranty revenue	338		301		Non-insurance warranty revenue	382		338
Other revenues	Other revenues	5		8		Other revenues	7		5
Total revenues	Total revenues	2,866		2,291		Total revenues	2,885		2,866
Claims, Benefits and Expenses	Claims, Benefits and Expenses					Claims, Benefits and Expenses
Insurance claims and policyholders’ benefits	Insurance claims and policyholders’ benefits	1,506		1,425		Insurance claims and policyholders’ benefits	1,455		1,506
Amortization of deferred acquisition costs	Amortization of deferred acquisition costs	359		344		Amortization of deferred acquisition costs	344		359
Non-insurance warranty expense	Non-insurance warranty expense	311		281		Non-insurance warranty expense	354		311
Other operating expenses	Other operating expenses	284		299		Other operating expenses	326		284
Interest	Interest	28		31		Interest	28		28
Total claims, benefits and expenses	Total claims, benefits and expenses	2,488		2,380		Total claims, benefits and expenses	2,507		2,488
Income (loss) before income tax		378		(89)
Income tax (expense) benefit		(66)		28
Net income (loss)		$	312	$	(61)
Income before income tax						Income before income tax	378		378
Income tax expense						Income tax expense	(65)		(66)
Net income						Net income	$	313	$	312

Basic earnings (loss) per share		$	1.15	$	(0.23)
Basic earnings per share						Basic earnings per share	$	1.15	$	1.15

Diluted earnings (loss) per share		$	1.14	$	(0.23)
Diluted earnings per share						Diluted earnings per share	$	1.15	$	1.14

Weighted Average Outstanding Common Stock and Common Stock Equivalents	Weighted Average Outstanding Common Stock and Common Stock Equivalents					Weighted Average Outstanding Common Stock and Common Stock Equivalents
Basic	Basic	271.9		271.5		Basic	271.8		271.9
Diluted	Diluted	272.9		271.5		Diluted	272.9		272.9

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

~~Table of Contents~~T a b l e o f C o n t e n t s

CNA Financial Corporation

Condensed Consolidated Statements of Comprehensive Loss (Unaudited)


Three months ended March 31	Three months ended March 31					Three months ended March 31
(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Comprehensive Loss	Comprehensive Loss					Comprehensive Loss
Net income (loss)		$	312	$	(61)
Net income						Net income	$	313	$	312
Other Comprehensive Loss, net of tax	Other Comprehensive Loss, net of tax					Other Comprehensive Loss, net of tax
Changes in:	Changes in:					Changes in:
Net unrealized gains and losses on investments with an allowance for credit losses	Net unrealized gains and losses on investments with an allowance for credit losses	0		(11)		Net unrealized gains and losses on investments with an allowance for credit losses	(4)		—
Net unrealized gains and losses on other investments	Net unrealized gains and losses on other investments	(627)		(1,044)		Net unrealized gains and losses on other investments	(1,611)		(627)
Net unrealized gains and losses on investments	Net unrealized gains and losses on investments	(627)		(1,055)		Net unrealized gains and losses on investments	(1,615)		(627)
Foreign currency translation adjustment	Foreign currency translation adjustment	2		(77)		Foreign currency translation adjustment	(14)		2
Pension and postretirement benefits	Pension and postretirement benefits	9		11		Pension and postretirement benefits	6		9
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax	(616)		(1,121)		Other comprehensive loss, net of tax	(1,623)		(616)
Total comprehensive loss	Total comprehensive loss	$	(304)	$	(1,182)	Total comprehensive loss	$	(1,310)	$	(304)

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

~~Table of Contents~~T a b l e o f C o n t e n t s

CNA Financial Corporation

Condensed Consolidated Balance Sheets


(In millions, except share data)	(In millions, except share data)	March 31, 2021 (Unaudited)		December 31, 2020		(In millions, except share data)	March 31, 2022 (Unaudited)		December 31, 2021
Assets	Assets					Assets
Investments:	Investments:					Investments:
Fixed maturity securities at fair value (amortized cost of $39,291 and $38,953, less allowance for credit loss of $43 and $40)		$	43,579	$	44,631
Equity securities at fair value (cost of $927 and $941)		984		992
Fixed maturity securities at fair value (amortized cost of $40,928 and $39,952, less allowance for credit loss of $17 and $18)						Fixed maturity securities at fair value (amortized cost of $40,928 and $39,952, less allowance for credit loss of $17 and $18)	$	41,945	$	44,380
Equity securities at fair value (cost of $965 and $964)						Equity securities at fair value (cost of $965 and $964)	981		1,035
Limited partnership investments	Limited partnership investments	1,654		1,619		Limited partnership investments	1,840		1,859
Other invested assets	Other invested assets	77		76		Other invested assets	97		91
Mortgage loans (less allowance for uncollectible receivables of $26 and $26)		1,043		1,068
Mortgage loans (less allowance for uncollectible receivables of $16 and $16)						Mortgage loans (less allowance for uncollectible receivables of $16 and $16)	942		973
Short term investments	Short term investments	1,334		1,907		Short term investments	1,301		1,990
Total investments	Total investments	48,671		50,293		Total investments	47,106		50,328
Cash	Cash	588		419		Cash	361		536
Reinsurance receivables (less allowance for uncollectible receivables of $22 and $21)	Reinsurance receivables (less allowance for uncollectible receivables of $22 and $21)	5,111		4,457		Reinsurance receivables (less allowance for uncollectible receivables of $22 and $21)	5,505		5,463
Insurance receivables (less allowance for uncollectible receivables of $33 and $33)		2,652		2,607
Insurance receivables (less allowance for uncollectible receivables of $28 and $29)						Insurance receivables (less allowance for uncollectible receivables of $28 and $29)	2,892		2,945
Accrued investment income	Accrued investment income	399		380		Accrued investment income	398		377
Deferred acquisition costs	Deferred acquisition costs	741		708		Deferred acquisition costs	766		737
Deferred income taxes	Deferred income taxes	197		66		Deferred income taxes	547		142
Property and equipment at cost (less accumulated depreciation of $243 and $231)		244		252
Property and equipment at cost (less accumulated depreciation of $264 and $255)						Property and equipment at cost (less accumulated depreciation of $264 and $255)	225		226
Goodwill	Goodwill	148		148		Goodwill	147		148
Deferred non-insurance warranty acquisition expense	Deferred non-insurance warranty acquisition expense	3,149		3,068		Deferred non-insurance warranty acquisition expense	3,504		3,476
Other assets	Other assets	1,813		1,628		Other assets	2,341		2,261
Total assets	Total assets	$	63,713	$	64,026	Total assets	$	63,792	$	66,639
Liabilities	Liabilities					Liabilities
Insurance reserves:	Insurance reserves:					Insurance reserves:
Claim and claim adjustment expenses	Claim and claim adjustment expenses	$	23,056	$	22,706	Claim and claim adjustment expenses	$	24,348	$	24,174
Unearned premiums	Unearned premiums	5,319		5,119		Unearned premiums	5,942		5,761
Future policy benefits	Future policy benefits	12,772		13,318		Future policy benefits	11,938		13,236
Long term debt	Long term debt	2,777		2,776		Long term debt	2,779		2,779
Deferred non-insurance warranty revenue	Deferred non-insurance warranty revenue	4,119		4,023		Deferred non-insurance warranty revenue	4,528		4,503
Other liabilities (includes $130 and $89 due to Loews Corporation)		3,581		3,377
Other liabilities (includes $85 and $56 due to Loews Corporation)						Other liabilities (includes $85 and $56 due to Loews Corporation)	3,440		3,377
Total liabilities	Total liabilities	51,624		51,319		Total liabilities	52,975		53,830
Commitments and contingencies (Notes C and F)	Commitments and contingencies (Notes C and F)			0		Commitments and contingencies (Notes C and F)			0
Stockholders' Equity	Stockholders' Equity					Stockholders' Equity
Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 271,644,861 and 271,391,603 shares outstanding)		683		683
Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 271,293,966 and 271,363,999 shares outstanding)						Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 271,293,966 and 271,363,999 shares outstanding)	683		683
Additional paid-in capital	Additional paid-in capital	2,194		2,211		Additional paid-in capital	2,195		2,215
Retained earnings	Retained earnings	9,084		9,081		Retained earnings	9,319		9,663
Accumulated other comprehensive income		187		803
Treasury stock (1,395,382 and 1,648,640 shares), at cost		(59)		(71)
Accumulated other comprehensive (loss) income						Accumulated other comprehensive (loss) income	(1,303)		320
Treasury stock (1,746,277 and 1,676,244 shares), at cost						Treasury stock (1,746,277 and 1,676,244 shares), at cost	(77)		(72)
Total stockholders’ equity	Total stockholders’ equity	12,089		12,707		Total stockholders’ equity	10,817		12,809
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	63,713	$	64,026	Total liabilities and stockholders' equity	$	63,792	$	66,639

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

~~Table of Contents~~T a b l e o f C o n t e n t s

CNA Financial Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)


Three months ended March 31	Three months ended March 31					Three months ended March 31
(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Cash Flows from Operating Activities	Cash Flows from Operating Activities					Cash Flows from Operating Activities
Net income (loss)		$	312	$	(61)
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
Deferred income tax expense (benefit)		30		(37)
Net income						Net income	$	313	$	312
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 expense						Deferred income tax expense	17		30
Trading portfolio activity	Trading portfolio activity	(8)		7		Trading portfolio activity	—		(8)
Net investment (gains) losses		(57)		216
Net investment losses (gains)						Net investment losses (gains)	11		(57)
Equity method investees	Equity method investees	14		98		Equity method investees	152		14
Net amortization of investments	Net amortization of investments	(24)		(15)		Net amortization of investments	(26)		(24)
Depreciation and amortization	Depreciation and amortization	14		16		Depreciation and amortization	13		14
Changes in:	Changes in:					Changes in:
Receivables, net	Receivables, net	(700)		(229)		Receivables, net	(5)		(700)
Accrued investment income	Accrued investment income	(19)		(8)		Accrued investment income	(22)		(19)
Deferred acquisition costs	Deferred acquisition costs	(32)		(27)		Deferred acquisition costs	(31)		(32)
Insurance reserves	Insurance reserves	605		510		Insurance reserves	489		605
Other, net	Other, net	(53)		(258)		Other, net	(266)		(53)
Net cash flows provided by operating activities	Net cash flows provided by operating activities	82		212		Net cash flows provided by operating activities	645		82
Cash Flows from Investing Activities	Cash Flows from Investing Activities					Cash Flows from Investing Activities
Dispositions:	Dispositions:					Dispositions:
Fixed maturity securities - sales	Fixed maturity securities - sales	907		823		Fixed maturity securities - sales	803		907
Fixed maturity securities - maturities, calls and redemptions	Fixed maturity securities - maturities, calls and redemptions	1,084		799		Fixed maturity securities - maturities, calls and redemptions	916		1,084
Equity securities	Equity securities	119		98		Equity securities	77		119
Limited partnerships	Limited partnerships	49		204		Limited partnerships	80		49
Mortgage loans	Mortgage loans	42		15		Mortgage loans	55		42
Purchases:	Purchases:					Purchases:
Fixed maturity securities	Fixed maturity securities	(2,203)		(1,818)		Fixed maturity securities	(2,547)		(2,203)
Equity securities	Equity securities	(81)		(220)		Equity securities	(75)		(81)
Limited partnerships	Limited partnerships	(61)		(32)		Limited partnerships	(85)		(61)
Mortgage loans	Mortgage loans	(16)		(61)		Mortgage loans	(25)		(16)
Change in other investments	Change in other investments	(2)		(6)		Change in other investments	(3)		(2)
Change in short term investments	Change in short term investments	573		1,267		Change in short term investments	687		573
Purchases of property and equipment	Purchases of property and equipment	(3)		(3)		Purchases of property and equipment	(12)		(3)
Other, net		0		21
Net cash flows provided by investing activities		408		1,087

Net cash flows (used) provided by investing activities						Net cash flows (used) provided by investing activities	(129)		408
Cash Flows from Financing Activities	Cash Flows from Financing Activities					Cash Flows from Financing Activities
Dividends paid to common stockholders	Dividends paid to common stockholders	(310)		(649)		Dividends paid to common stockholders	(657)		(310)
Purchase of treasury stock	Purchase of treasury stock	(3)		(18)		Purchase of treasury stock	(21)		(3)
Other, net	Other, net	(8)		(8)		Other, net	(10)		(8)
Net cash flows used by financing activities	Net cash flows used by financing activities	(321)		(675)		Net cash flows used by financing activities	(688)		(321)
Effect of foreign exchange rate changes on cash	Effect of foreign exchange rate changes on cash	0		(9)		Effect of foreign exchange rate changes on cash	(3)		—
Net change in cash	Net change in cash	169		615		Net change in cash	(175)		169
Cash, beginning of year	Cash, beginning of year	419		242		Cash, beginning of year	536		419
Cash, end of period	Cash, end of period	$	588	$	857	Cash, end of period	$	361	$	588

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

~~Table of Contents~~T a b l e o f C o n t e n t s

CNA Financial Corporation

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

Three months ended March 31
(In millions) 2021 2020
Common Stock
Balance, beginning of period $ 683 $ 683
Balance, end of period 683 683
Additional Paid-in Capital
Balance, beginning of period 2,211 2,203
Stock-based compensation (17) (16)
Balance, end of period 2,194 2,187
Retained Earnings
Balance, beginning of period, as previously reported 9,081 9,348
Cumulative effect adjustments from changes in accounting guidance, net of tax 0 (5)
Balance, beginning of period, as adjusted 9,081 9,343
Dividends to common stockholders ($1.13 and $2.37 per share) (309) (648)
Net income (loss) 312 (61)
Balance, end of period 9,084 8,634
Accumulated Other Comprehensive Income (Loss)
Balance, beginning of period 803 51
Other comprehensive loss (616) (1,121)
Balance, end of period 187 (1,070)
Treasury Stock
Balance, beginning of period (71) (70)
Stock-based compensation 15 16
Purchase of treasury stock (3) (18)
Balance, end of period (59) (72)
Total stockholders' equity $ 12,089 $ 10,362


Three months ended March 31
(In millions)	2022		2021
Common Stock
Balance, beginning of year	$	683	$	683
Balance, end of year	683		683
Additional Paid-in Capital
Balance, beginning of year	2,215		2,211
Stock-based compensation	(20)		(17)
Balance, end of year	2,195		2,194
Retained Earnings


Balance, beginning of year	9,663		9,081
Dividends to common stockholders ($2.40 and $1.13 per share)	(657)		(309)
Net income	313		312
Balance, end of year	9,319		9,084
Accumulated Other Comprehensive (Loss) Income
Balance, beginning of year	320		803


Other comprehensive loss	(1,623)		(616)
Balance, end of year	(1,303)		187
Treasury Stock
Balance, beginning of year	(72)		(71)
Stock-based compensation	16		15
Purchase of treasury stock	(21)		(3)
Balance, end of year	(77)		(59)
Total stockholders' equity	$	10,817	$	12,089

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

~~Table of Contents~~T a b l e o f C o n t e n t s

CNA Financial Corporation

Notes to Condensed Consolidated Financial Statements

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 ~~89.5%~~89.6% of the outstanding common stock of CNAF as of March 31, ~~2021.~~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, ~~2020,~~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 March 31, ~~2021~~2022 and for the three months ended March 31, ~~2021~~2022 and ~~2020~~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.

Accounting Standards Pending Adoption

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. ~~The guidance requires entities~~For the Company, this includes the Long term care and fully-ceded single premium immediate annuity business. Entities will be required to ~~annually~~review, and update if there is a change, cash flow assumptions ~~including~~(including morbidity and ~~persistency,~~persistency) at least annually, and to update discount rate assumptions quarterly using an upper-medium grade fixed-income instrument yield. The effect of changes in cash flow assumptions will be recorded in the Company's results of operations and the effect of changes in discount rate assumptions will be recorded in Other comprehensive income. ~~This~~The guidance is effective for interim and annual periods beginning after December 15, 2022, with early adoption ~~permitted. The guidance~~permitted, and may be applied using either a modified retrospective transition method or a full retrospective transition method. ~~The guidance requires restatement of~~Financial statements for prior periods ~~presented.~~ presented shall be adjusted to reflect the effects of applying the new accounting guidance.

The Company ~~plans to~~will adopt on the new guidance effective ~~date,~~January 1, 2023, using the modified retrospective method applied as of the transition ~~method~~date of January 1, 2021. The Company will use a published spot rate curve constructed from A+, A and ~~is currently evaluating~~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 ~~updated guidance~~discount rate assumption to reflect an upper-medium grade fixed-income instrument yield, which will ~~have on its financial statements, including~~be partially offset by the ~~increased disclosure requirements.~~de-recognition of Shadow Adjustments associated with long-duration contracts. The ~~annual updating~~Company expects the net impact of these changes will be a $2.2 billion - $2.5 billion decrease in Accumulated other comprehensive income as of the transition date of January 1, 2021. There is a minimal transition impact expected to retained earnings.

T a b l e o f C o n t e n t s

The requirement to review, and update if there is a change, cash flow assumptions at least annually is expected to ~~increase income statement volatility.~~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 not impact capital and surplus under statutory accounting practices, cash flows, or the underlying economics of the ~~business~~business.

The Company continues to make progress in connection with these matters and ~~related cash flows will be unchanged.~~

is in process of refining key accounting policy decisions, technology solutions and updates to internal controls associated with adoption of the new guidance. These in-progress activities include modifications of actuarial valuation systems, data sourcing, analytical procedures and reporting processes.

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Note B. Earnings (Loss) Per Share

Earnings (loss) per share is based on weighted average number of outstanding common shares. Basic earnings (loss) per share excludes the 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 three months ended March 31, 2022 and 2021, approximately ~~1,020 thousand~~1.1 million and 1.0 million 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 ~~the~~those same ~~period,~~periods, less than 1 thousand and approximately 120 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. For the three months ended March 31, 2020, approximately 1,015 thousand potential shares attributable to exercises or conversions into common stock under stock-based employee compensation plans were excluded from the calculation of diluted loss per share because the effect would have been antidilutive due to the net loss position of the Company.

The Company repurchased ~~66,000~~445,000 and ~~435,376~~66,000 shares of CNAF common stock at an aggregate cost of $3$21 million and ~~$18~~$3 million during the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021.

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Note C. Investments

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


Three months ended March 31	Three months ended March 31					Three months ended March 31
(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Fixed maturity securities	Fixed maturity securities	$	428	$	438	Fixed maturity securities	$	429	$	428
Equity securities	Equity securities	29		(44)		Equity securities	2		29
Limited partnership investments	Limited partnership investments	43		(70)		Limited partnership investments	18		43
Mortgage loans	Mortgage loans	14		14		Mortgage loans	15		14
Short term investments		0		7

Trading portfolio	Trading portfolio	5		1		Trading portfolio	1		5
Other	Other	2		0		Other	—		2
Gross investment income	Gross investment income	521		346		Gross investment income	465		521
Investment expense	Investment expense	(17)		(17)		Investment expense	(17)		(17)
Net investment income	Net investment income	$	504	$	329	Net investment income	$	448	$	504

During the three months ended March 31, ~~2021 and 2020, $13 million~~ 2022 and ~~$(45)~~2021, $(5) million and $13 million of Net investment (loss) income was recognized due to the change in fair value of common stock still held as of March 31, ~~2021~~2022 and ~~2020.~~2021.

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


Three months ended March 31	Three months ended March 31					Three months ended March 31
(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Net investment gains (losses):	Net investment gains (losses):					Net investment gains (losses):
Fixed maturity securities:	Fixed maturity securities:					Fixed maturity securities:
Gross gains	Gross gains	$	58	$	29	Gross gains	$	26	$	58
Gross losses	Gross losses	(20)		(104)		Gross losses	(28)		(20)
Net investment gains (losses) on fixed maturity securities	Net investment gains (losses) on fixed maturity securities	38		(75)		Net investment gains (losses) on fixed maturity securities	(2)		38
Equity securities	Equity securities	2		(133)		Equity securities	(38)		2
Derivatives	Derivatives	17		5		Derivatives	29		17
Mortgage loans		0		(13)

Net investment gains (losses)	Net investment gains (losses)	$	57	$	(216)	Net investment gains (losses)	$	(11)	$	57

During the three months ended March 31, ~~2021~~2022 and ~~2020~~,2021, $38 million of losses and $2 million of gains ~~and~~ ~~$(133) million~~ ~~of losses~~ were recognized in Net investment gains (losses) due to the change in fair value of non-redeemable preferred stock still held as of March 31, ~~2021~~2022 and ~~2020~~.

2021.

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The following tables present the activity related to the allowance on available-for-sale securities with credit impairments and purchased credit-deteriorated (PCD) assets. Accrued interest receivable on available-for-sale fixed maturity securities totaled $389 million, ~~$371~~$369 million, and ~~$390~~$389 million as of March 31, ~~2021,~~ 2022, December 31, ~~2020~~2021 and March 31, ~~2020~~2021 and is excluded from the estimate of expected credit losses and the amortized cost basis in the tables included within this Note.


(In millions)	(In millions)	Corporate and other bonds		Asset-backed		Total		(In millions)	Corporate and other bonds		Asset-backed		Total
Allowance for credit losses:	Allowance for credit losses:							Allowance for credit losses:
Balance as of January 1, 2021		$	23	$	17	$	40
Balance as of January 1, 2022								Balance as of January 1, 2022	$	11	$	7	$	18
Additions to the allowance for credit losses:	Additions to the allowance for credit losses:							Additions to the allowance for credit losses:
Securities for which credit losses were not previously recorded	Securities for which credit losses were not previously recorded	14		0		14		Securities for which credit losses were not previously recorded	—		—		—
Available-for-sale securities accounted for as PCD assets	Available-for-sale securities accounted for as PCD assets	2		0		2		Available-for-sale securities accounted for as PCD assets	—		—		—

Reductions to the allowance for credit losses:	Reductions to the allowance for credit losses:							Reductions to the allowance for credit losses:
Securities sold during the period (realized)	Securities sold during the period (realized)	6		0		6		Securities sold during the period (realized)	—		—		—
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis	Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis	0		0		0		Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis	—		—		—
Write-offs charged against the allowance	Write-offs charged against the allowance	0		0		0		Write-offs charged against the allowance	—		—		—
Recoveries of amounts previously written off	Recoveries of amounts previously written off	0		0		0		Recoveries of amounts previously written off	—		—		—

Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period	Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period	(6)		(1)		(7)		Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period	1		(2)		(1)
Balance as of March 31, 2021		$	27	$	16	$	43
Balance as of March 31, 2022								Balance as of March 31, 2022	$	12	$	5	$	17

(In millions) Corporate and other bonds Asset-backed Total
Allowance for credit losses:
Balance as of January 1, 2020 $ 0 $ 0 $ 0
Additions to the allowance for credit losses:
Impact of adopting ASC 326 6 0 6
Securities for which credit losses were not previously recorded 48 0 48
Available-for-sale securities accounted for as PCD assets 1 0 1
Reductions to the allowance for credit losses:
Securities sold during the period (realized) 5 0 5
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis 1 0 1
Write-offs charged against the allowance 0 0 0
Recoveries of amounts previously written off 0 0 0
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period 0 0 0
Balance as of March 31, 2020 $ 49 $ 0 $ 49



(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	2		—		2

Reductions to the allowance for credit losses:
Securities sold during the period (realized)	6		—		6
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis	—		—		—
Write-offs charged against the allowance	—		—		—
Recoveries of amounts previously written off	—		—		—

Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period	(6)		(1)		(7)
Balance as of March 31, 2021	$	27	$	16	$	43

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


Three months ended March 31	Three months ended March 31					Three months ended March 31
(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Fixed maturity securities available-for-sale:	Fixed maturity securities available-for-sale:					Fixed maturity securities available-for-sale:
Corporate and other bonds	Corporate and other bonds	$	7	$	91	Corporate and other bonds	$	8	$	7
Asset-backed	Asset-backed	(1)		1		Asset-backed	2		(1)
Impairment losses recognized in earnings		$	6	$	92
Impairment (gains) losses recognized in earnings						Impairment (gains) losses recognized in earnings	$	10	$	6

There were 0no losses recognized on mortgage loans during the three months ended March 31, 2022 or 2021. ~~During the three months ended March 31, 2020, the Company recognized $13 million of losses related to mortgage loans due to changes in expected credit losses.~~

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The following tables present a summary of fixed maturity securities.


March 31, 2021		Cost or Amortized Cost			Gross Unrealized Gains				Gross Unrealized Losses					Allowance for Credit Losses					Estimated Fair Value
March 31, 2022											March 31, 2022		Cost or Amortized Cost									Gross Unrealized Gains					Gross Unrealized Losses				Allowance for Credit Losses				Estimated Fair Value
(In millions)	(In millions)			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:	Fixed maturity securities available-for-sale:										Fixed maturity securities available-for-sale:
Corporate and other bonds	Corporate and other bonds	$	21,110				$	2,644			$	71					$	27				$	23,656		Corporate and other bonds	$	22,001			$	1,277			$	486			$	12			$	22,780
States, municipalities and political subdivisions	States, municipalities and political subdivisions	10,041			1,590				31					0						11,600			States, municipalities and political subdivisions		10,516					862				319				—				11,059
Asset-backed:	Asset-backed:																					Asset-backed:
Residential mortgage-backed	Residential mortgage-backed	3,215			108				40					0					3,283			Residential mortgage-backed		2,983				25				160				—				2,848
Commercial mortgage-backed	Commercial mortgage-backed	1,952			76				24					16					1,988			Commercial mortgage-backed		2,008				13				81				—				1,940
Other asset-backed	Other asset-backed	2,281			71				7					0					2,345			Other asset-backed		2,710				11				93				5				2,623
Total asset-backed	Total asset-backed	7,448			255				71					16					7,616			Total asset-backed		7,701				49				334				5				7,411
U.S. Treasury and obligations of government-sponsored enterprises	U.S. Treasury and obligations of government-sponsored enterprises	138			1				7					0					132			U.S. Treasury and obligations of government-sponsored enterprises		125				—				5				—				120
Foreign government	Foreign government	508			23				2					0					529			Foreign government		559				3				13				—				549
Redeemable preferred stock	Redeemable preferred stock	12			0				0					0					12			Redeemable preferred stock		20				—				—				—				20
Total fixed maturity securities available-for-sale	Total fixed maturity securities available-for-sale	39,257			4,513				182					43					43,545			Total fixed maturity securities available-for-sale		40,922				2,191				1,157				17				41,939
Total fixed maturity securities trading	Total fixed maturity securities trading	34			—				—					—					34			Total fixed maturity securities trading		6				—				—				—				6
Total fixed maturity securities	Total fixed maturity securities	$	39,291		$	4,513			$	182				$	43				$	43,579		Total fixed maturity securities		$	40,928			$	2,191			$	1,157			$	17			$	41,945


December 31, 2020		Cost or Amortized Cost			Gross Unrealized Gains				Gross Unrealized Losses					Allowance for Credit Losses					Estimated Fair Value
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)	(In millions)			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:	Fixed maturity securities available-for-sale:										Fixed maturity securities available-for-sale:
Corporate and other bonds	Corporate and other bonds	$	20,792				$	3,578			$	22					$	23				$	24,325		Corporate and other bonds	$	21,444			$	2,755			$	56			$	11			$	24,132
States, municipalities and political subdivisions	States, municipalities and political subdivisions	9,729			1,863				0					0						11,592			States, municipalities and political subdivisions		10,358					1,599				14				—				11,943
Asset-backed:	Asset-backed:																					Asset-backed:
Residential mortgage-backed	Residential mortgage-backed	3,442			146				1					0					3,587			Residential mortgage-backed		2,893				71				8				—				2,956
Commercial mortgage-backed	Commercial mortgage-backed	1,933			93				42					17					1,967			Commercial mortgage-backed		1,987				63				19				—				2,031
Other asset-backed	Other asset-backed	2,179			81				9					0					2,251			Other asset-backed		2,561				54				10				7				2,598
Total asset-backed	Total asset-backed	7,554			320				52					17					7,805			Total asset-backed		7,441				188				37				7				7,585
U.S. Treasury and obligations of government-sponsored enterprises	U.S. Treasury and obligations of government-sponsored enterprises	339			2				3					0					338			U.S. Treasury and obligations of government-sponsored enterprises		132				1				3				—				130
Foreign government	Foreign government	512			32				0					0					544			Foreign government		570				15				2				—				583
Redeemable preferred stock	Redeemable preferred stock	0			0				0					0					0			Redeemable preferred stock		—				—				—				—				—
Total fixed maturity securities available-for-sale	Total fixed maturity securities available-for-sale	38,926			5,795				77					40					44,604			Total fixed maturity securities available-for-sale		39,945				4,558				112				18				44,373
Total fixed maturity securities trading	Total fixed maturity securities trading	27			—				—					—					27			Total fixed maturity securities trading		7				—				—				—				7
Total fixed maturity securities	Total fixed maturity securities	$	38,953		$	5,795			$	77				$	40				$	44,631		Total fixed maturity securities		$	39,952			$	4,558			$	112			$	18			$	44,380

The net unrealized gains on investments included in the tables above are recorded as a component of Accumulated other comprehensive income (AOCI). When presented in AOCI, these amounts are net of tax and any required Shadow Adjustments. To the extent that unrealized gains on fixed income securities supporting certain products within the Life & Group segment 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 through Other comprehensive income (loss) (Shadow Adjustments). As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the net unrealized gains on investments included in AOCI were correspondingly reduced by Shadow Adjustments of ~~$2,301~~$1,394 million and ~~$2,773~~$2,477 million.

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The following tables present 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 the length of time in which the securities have continuously been in that position.


		Less than 12 Months							12 Months or Longer										Total								Less than 12 Months									12 Months or Longer								Total
March 31, 2021		Estimated Fair Value			Gross Unrealized Losses				Estimated Fair Value					Gross Unrealized Losses					Estimated Fair Value				Gross Unrealized Losses
March 31, 2022											March 31, 2022		Estimated Fair Value								Gross Unrealized Losses							Estimated Fair Value						Gross Unrealized Losses			Estimated Fair Value				Gross Unrealized Losses
(In millions)	(In millions)			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:	Fixed maturity securities available-for-sale:													Fixed maturity securities available-for-sale:
Corporate and other bonds	Corporate and other bonds	$	1,868				$	66			$	82				$	5					$			1,950				$	71		Corporate and other bonds		$	7,390		$	441			$	327			$	45		$	7,717	$	486
States, municipalities and political subdivisions	States, municipalities and political subdivisions	866			31				0					0					866				31			States, municipalities and political subdivisions	2,796						314			35				5				2,831			319
Asset-backed:	Asset-backed:																									Asset-backed:
Residential mortgage-backed	Residential mortgage-backed	1,584			40				12					0					1,596				40			Residential mortgage-backed	2,315						160			—				—				2,315			160
Commercial mortgage-backed	Commercial mortgage-backed	320			9				285					15					605				24			Commercial mortgage-backed	1,274						65			151				16				1,425			81
Other asset-backed	Other asset-backed	337			3				97					4					434				7			Other asset-backed	1,717						90			67				3				1,784			93
Total asset-backed	Total asset-backed	2,241			52				394					19					2,635				71			Total asset-backed	5,306						315			218				19				5,524			334
U.S. Treasury and obligations of government-sponsored enterprises	U.S. Treasury and obligations of government-sponsored enterprises	65			7				0					0					65				7			U.S. Treasury and obligations of government-sponsored enterprises	94						5			5				—				99			5
Foreign government	Foreign government	45			2				0					0					45				2			Foreign government	327						11			26				2				353			13
Total	Total	$	5,085		$	158			$	476				$	24				$	5,561			$	182		Total	$	15,913					$	1,086		$	611			$	71			$	16,524		$	1,157


		Less than 12 Months							12 Months or Longer										Total								Less than 12 Months									12 Months or Longer								Total
December 31, 2020		Estimated Fair Value			Gross Unrealized Losses				Estimated Fair Value					Gross Unrealized Losses					Estimated Fair Value				Gross Unrealized Losses
December 31, 2021											December 31, 2021		Estimated Fair Value								Gross Unrealized Losses							Estimated Fair Value						Gross Unrealized Losses			Estimated Fair Value				Gross Unrealized Losses
(In millions)	(In millions)			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:	Fixed maturity securities available-for-sale:													Fixed maturity securities available-for-sale:
Corporate and other bonds	Corporate and other bonds	$	609				$	21			$	12				$	1					$			621				$	22		Corporate and other bonds		$	2,389		$	48			$	136			$	8		$	2,525	$	56
States, municipalities and political subdivisions	States, municipalities and political subdivisions	33			0				0					0					33				—			States, municipalities and political subdivisions	730						14			—				—				730			14
Asset-backed:	Asset-backed:																									Asset-backed:
Residential mortgage-backed	Residential mortgage-backed	71			1				11					0					82				1			Residential mortgage-backed	1,043						8			—				—				1,043			8
Commercial mortgage-backed	Commercial mortgage-backed	533			40				28					2					561				42			Commercial mortgage-backed	527						7			167				12				694			19
Other asset-backed	Other asset-backed	344			9				13					0					357				9			Other asset-backed	840						10			62				—				902			10
Total asset-backed	Total asset-backed	948			50				52					2					1,000				52			Total asset-backed	2,410						25			229				12				2,639			37
U.S. Treasury and obligations of government-sponsored enterprises	U.S. Treasury and obligations of government-sponsored enterprises	63			3				0					0					63				3			U.S. Treasury and obligations of government-sponsored enterprises	69						3			5				—				74			3
Foreign government	Foreign government	13			0				0					0					13				0			Foreign government	97						2			—				—				97			2
Total	Total	$	1,666		$	74			$	64				$	3				$	1,730			$	77		Total	$	5,695					$	92		$	370			$	20			$	6,065		$	112

T a b l e o f C o n t e n t s

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.


	March 31, 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	$	2,095	$	116	$	898	$	8
AAA	993		105		368		6
AA	2,809		269		875		17
A	3,300		205		1,516		23
BBB	6,073		392		1,812		42
Non-investment grade	1,254		70		596		16
Total	$	16,524	$	1,157	$	6,065	$	112

Based on current facts and circumstances, the Company believes the unrealized losses presented in the March 31, ~~2021~~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 to a lesser extent credit spreads. In reaching this determination, the Company considered the recent volatility in risk-free rates and 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 impairment losses to be recorded as of March 31, ~~2021.~~

2022.

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Contractual Maturity

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


		March 31, 2021				December 31, 2020					March 31, 2022				December 31, 2021
(In millions)	(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	Due in one year or less	$	1,468	$	1,473	$	1,456	$	1,458	Due in one year or less	$	1,533	$	1,546	$	1,603	$	1,624
Due after one year through five years	Due after one year through five years	10,837		11,583		12,304		13,098		Due after one year through five years	10,206		10,337		10,637		11,229
Due after five years through ten years	Due after five years through ten years	13,640		14,685		12,319		13,878		Due after five years through ten years	14,040		14,032		13,294		14,338
Due after ten years	Due after ten years	13,312		15,804		12,847		16,170		Due after ten years	15,143		16,024		14,411		17,182
Total	Total	$	39,257	$	43,545	$	38,926	$	44,604	Total	$	40,922	$	41,939	$	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 ~~$256~~$268 million and ~~$190~~$270 million and a fair value of ~~$(2)~~$16 million an~~d $(19)~~and $(12) million as of March 31, ~~2021~~2022 and December 31, ~~2020.~~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 its overall investment strategy, the Company 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 partnerships, signed and accepted mortgage loan applications, and obligations related to private placement securities. As of March 31, ~~2021,~~2022, the Company had commitments to purchase or fund approximately ~~$1,365~~$1,280 million and sell approximately ~~$100~~$65 million under the terms of these investments.

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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).


March 31, 2021		Mortgage Loans Amortized Cost Basis by Origination Year (1)
March 31, 2022																March 31, 2022	Mortgage Loans Amortized Cost Basis by Origination Year (1)
(In millions)	(In millions)	2021		2020		2019		2018		2017		Prior		Total		(In millions)	2022		2021		2020		2019		2018		Prior		Total
DSCR ≥1.6x	DSCR ≥1.6x															DSCR ≥1.6x
LTV less than 55%	LTV less than 55%	$	0	$	75	$	32	$	36	$	114	$	187	$	444	LTV less than 55%	$	—	$	9	$	94	$	21	$	54	$	247	$	425
LTV 55% to 65%	LTV 55% to 65%	0		14		20		14		15		11		74		LTV 55% to 65%	—		5		19		8		—		24		56
LTV greater than 65%	LTV greater than 65%	5		0		5		0		0		24		34		LTV greater than 65%	18		11		—		—		—		—		29
DSCR 1.2x - 1.6x	DSCR 1.2x - 1.6x															DSCR 1.2x - 1.6x
LTV less than 55%	LTV less than 55%	0		0		16		0		5		77		98		LTV less than 55%	—		13		14		95		10		56		188
LTV 55% to 65%	LTV 55% to 65%	0		20		40		53		27		0		140		LTV 55% to 65%	21		36		24		—		—		8		89
LTV greater than 65%	LTV greater than 65%	10		52		44		0		9		12		127		LTV greater than 65%	—		—		—		—		—		—		0
DSCR ≤1.2	DSCR ≤1.2															DSCR ≤1.2
LTV less than 55%	LTV less than 55%	0		0		50		0		8		10		68		LTV less than 55%	—		—		—		52		—		30		82
LTV 55% to 65%	LTV 55% to 65%	0		0		48		0		0		0		48		LTV 55% to 65%	—		—		—		55		—		—		55
LTV greater than 65%	LTV greater than 65%	0		0		29		0		0		7		36		LTV greater than 65%	—		21		—		6		—		7		34
Total	Total	$	15	$	161	$	284	$	103	$	178	$	328	$	1,069	Total	$	39	$	95	$	151	$	237	$	64	$	372	$	958

(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 March 31, ~~2021,~~2022, accrued interest receivable on mortgage loans totaled $4$3 million and is excluded from the amortized cost basis disclosed in the table above and the estimate of expected credit losses.

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Note 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.

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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.


March 31, 2021								Total Assets/Liabilities at Fair Value
March 31, 2022										March 31, 2022							Total Assets/Liabilities at Fair Value
(In millions)	(In millions)	Level 1		Level 2		Level 3		Total Assets/Liabilities at Fair Value		(In millions)	Level 1		Level 2		Level 3
Assets	Assets									Assets
Fixed maturity securities:	Fixed maturity securities:									Fixed maturity securities:
Corporate bonds and other	Corporate bonds and other	$	152	$	23,444	$	767	$	24,363	Corporate bonds and other	$	129	$	22,431	$	915	$	23,475
States, municipalities and political subdivisions	States, municipalities and political subdivisions	0		11,556		44		11,600		States, municipalities and political subdivisions	—		11,008		51		11,059
Asset-backed	Asset-backed	0		7,301		315		7,616		Asset-backed	—		6,807		604		7,411
Total fixed maturity securities	Total fixed maturity securities	152		42,301		1,126		43,579		Total fixed maturity securities	129		40,246		1,570		41,945
Equity securities:	Equity securities:									Equity securities:
Common stock	Common stock	177		0		21		198		Common stock	191		—		29		220
Non-redeemable preferred stock	Non-redeemable preferred stock	67		711		8		786		Non-redeemable preferred stock	63		683		15		761
Total equity securities	Total equity securities	244		711		29		984		Total equity securities	254		683		44		981
Short term and other	Short term and other	1,178		25		0		1,203		Short term and other	1,146		27		—		1,173
Total assets	Total assets	$	1,574	$	43,037	$	1,155	$	45,766	Total assets	$	1,529	$	40,956	$	1,614	$	44,099
Liabilities	Liabilities									Liabilities
Other liabilities	Other liabilities	$	0	$	2	$	0	$	2	Other liabilities	$	—	$	(16)	$	—	$	(16)
Total liabilities	Total liabilities	$	0	$	2	$	0	$	2	Total liabilities	$	—	$	(16)	$	—	$	(16)


December 31, 2020								Total Assets/Liabilities at Fair Value
December 31, 2021										December 31, 2021							Total Assets/Liabilities at Fair Value
(In millions)	(In millions)	Level 1		Level 2		Level 3		Total Assets/Liabilities at Fair Value		(In millions)	Level 1		Level 2		Level 3
Assets	Assets									Assets
Fixed maturity securities:	Fixed maturity securities:									Fixed maturity securities:
Corporate bonds and other	Corporate bonds and other	$	355	$	24,109	$	770	$	25,234	Corporate bonds and other	$	140	$	23,775	$	937	$	24,852
States, municipalities and political subdivisions	States, municipalities and political subdivisions	0		11,546		46		11,592		States, municipalities and political subdivisions	—		11,887		56		11,943
Asset-backed	Asset-backed	0		7,497		308		7,805		Asset-backed	—		7,029		556		7,585
Total fixed maturity securities	Total fixed maturity securities	355		43,152		1,124		44,631		Total fixed maturity securities	140		42,691		1,549		44,380
Equity securities:	Equity securities:									Equity securities:
Common stock	Common stock	175		0		20		195		Common stock	220		—		13		233
Non-redeemable preferred stock	Non-redeemable preferred stock	68		722		7		797		Non-redeemable preferred stock	65		721		16		802
Total equity securities	Total equity securities	243		722		27		992		Total equity securities	285		721		29		1,035
Short term and other	Short term and other	1,761		28		0		1,789		Short term and other	1,798		74		—		1,872
Total assets	Total assets	$	2,359	$	43,902	$	1,151	$	47,412	Total assets	$	2,223	$	43,486	$	1,578	$	47,287
Liabilities	Liabilities									Liabilities
Other liabilities	Other liabilities	$	0	$	19	$	0	$	19	Other liabilities	$	—	$	12	$	—	$	12
Total liabilities	Total liabilities	$	0	$	19	$	0	$	19	Total liabilities	$	—	$	12	$	—	$	12

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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)	Level 3 (In millions)	Corporate bonds and other		States, municipalities and political subdivisions		Asset-backed		Equity securities		Total		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
Balance as of January 1, 2022												Balance as of January 1, 2022	$	937	$	56	$	556	$	29	$	1,578
Total realized and unrealized investment gains (losses):	Total realized and unrealized investment gains (losses):											Total realized and unrealized investment gains (losses):
Reported in Net investment gains (losses)	Reported in Net investment gains (losses)	(13)		0		0		1		(12)		Reported in Net investment gains (losses)	(1)		—		2		(1)		—
Reported in Net investment income	Reported in Net investment income	0		0		2		1		3		Reported in Net investment income	—		—		1		4		5
Reported in Other comprehensive income (loss)	Reported in Other comprehensive income (loss)	(40)		(2)		(9)		0		(51)		Reported in Other comprehensive income (loss)	(71)		(5)		(32)		—		(108)
Total realized and unrealized investment gains (losses)	Total realized and unrealized investment gains (losses)	(53)		(2)		(7)		2		(60)		Total realized and unrealized investment gains (losses)	(72)		(5)		(29)		3		(103)
Purchases	Purchases	42		0		30		0		72		Purchases	67		—		140		12		219
Sales	Sales	0		0		0		0		0		Sales	(5)		—		—		—		(5)
Settlements	Settlements	(2)		0		(17)		0		(19)		Settlements	(22)		—		(17)		—		(39)
Transfers into Level 3	Transfers into Level 3	10		0		9		0		19		Transfers into Level 3	10		—		5		—		15
Transfers out of Level 3	Transfers out of Level 3	0		0		(8)		0		(8)		Transfers out of Level 3	—		—		(51)		—		(51)
Balance as of March 31, 2021		$	767	$	44	$	315	$	29	$	1,155
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2021 recognized in Net income (loss) in the period		$	0	$	0	$	0	$	2	$	2
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2021 recognized in Other comprehensive income (loss) in the period		(40)		(2)		(9)		0		(51)
Balance as of March 31, 2022												Balance as of March 31, 2022	$	915	$	51	$	604	$	44	$	1,614
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2022 recognized in Net income (loss) in the period												Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2022 recognized in Net income (loss) in the period	$	—	$	—	$	—	$	3	$	3
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2022 recognized in Other comprehensive income (loss) in the period												Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2022 recognized in Other comprehensive income (loss) in the period	(72)		(5)		(31)		—		(108)


Level 3 (In millions)	Level 3 (In millions)	Corporate bonds and other		States, municipalities and political subdivisions		Asset-backed		Equity securities		Total		Level 3 (In millions)	Corporate bonds and other		States, municipalities and political subdivisions		Asset-backed		Equity securities		Total
Balance as of January 1, 2020		$	468	$	0	$	165	$	18	$	651
Balance as of January 1, 2021												Balance as of January 1, 2021	$	770	$	46	$	308	$	27	$	1,151
Total realized and unrealized investment gains (losses):	Total realized and unrealized investment gains (losses):											Total realized and unrealized investment gains (losses):
Reported in Net investment gains (losses)	Reported in Net investment gains (losses)	0		0		0		0		0		Reported in Net investment gains (losses)	(13)		—		—		1		(12)
Reported in Net investment income	Reported in Net investment income	0		0		0		(3)		(3)		Reported in Net investment income	—		—		2		1		3
Reported in Other comprehensive income (loss)	Reported in Other comprehensive income (loss)	(37)		0		(9)		0		(46)		Reported in Other comprehensive income (loss)	(40)		(2)		(9)		—		(51)
Total realized and unrealized investment gains (losses)	Total realized and unrealized investment gains (losses)	(37)		0		(9)		(3)		(49)		Total realized and unrealized investment gains (losses)	(53)		(2)		(7)		2		(60)
Purchases	Purchases	67		0		45		0		112		Purchases	42		—		30		—		72
Sales	Sales	0		0		0		0		0		Sales	—		—		—		—		—
Settlements	Settlements	(2)		0		(3)		0		(5)		Settlements	(2)		—		(17)		—		(19)
Transfers into Level 3	Transfers into Level 3	0		0		0		0		0		Transfers into Level 3	10		—		9		—		19
Transfers out of Level 3	Transfers out of Level 3	0		0		(1)		0		(1)		Transfers out of Level 3	—		—		(8)		—		(8)
Balance as of March 31, 2020		$	496	$	0	$	197	$	15	$	708
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2020 recognized in Net income (loss) in the period		$	0	$	0	$	0	$	(3)	$	(3)
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2020 recognized in Other comprehensive income (loss) in the period		(35)		0		(9)		0		(44)
Balance as of March 31, 2021												Balance as of March 31, 2021	$	767	$	44	$	315	$	29	$	1,155
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2021 recognized in Net income (loss) in the period												Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2021 recognized in Net income (loss) in the period	$	—	$	—	$	—	$	2	$	2
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2021 recognized in Other comprehensive income (loss) in the period												Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2021 recognized in Other comprehensive income (loss) in the period	(40)		(2)		(9)		—		(51)

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.

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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, 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 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

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.

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, there were ~~$72~~$79 million and ~~$71~~$74 million 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.

Derivative Financial Investments

The embedded derivative on funds withheld liability is valued using the change in fair value of the assets supporting the funds withheld liability, which are fixed maturity securities primarily valued with observable inputs.

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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 weighted average rate is calculated based on fair value.

March 31, 2022

Estimated Fair Value
(In millions)

Valuation Technique(s)

Unobservable Input(s)

Range
(Weighted Average)

Fixed maturity securities

1,198

Discounted cash flow

Credit spread

1% - 7% (3%)

December 31, 2021

Estimated Fair Value
(In millions)

Valuation Technique(s)

Unobservable Input(s)

Range
(Weighted Average)

Fixed maturity securities

~~936~~1,225

Discounted cash flow

Credit spread

1% - 8%7% (2%)

~~December 31, 2020~~

Estimated Fair Value
(In millions)

~~Valuation Technique(s)~~

~~Unobservable Input(s)~~

Range
(Weighted Average)

~~Fixed maturity securities~~

~~966~~

~~Discounted cash flow~~

~~Credit spread~~

~~1% - 8% (3%~~)

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.


March 31, 2021		Carrying Amount			Estimated Fair Value
March 31, 2022														March 31, 2022		Carrying Amount						Estimated Fair Value
(In millions)	(In millions)			Carrying Amount			Level 1			Level 2			Level 3						Total			(In millions)			Level 1			Level 2			Level 3			Total
Assets	Assets																Assets
Mortgage loans	Mortgage loans	$	1,043		$	0		$	0		$	1,107		$	1,107			Mortgage loans		$	942			$	—		$	—		$	940		$	940
Liabilities	Liabilities																Liabilities
Long term debt	Long term debt	$	2,777		$	0		$	3,016		$	0		$	3,016		Long term debt		$	2,779			$	—		$	2,795		$	—		$	2,795


December 31, 2020		Carrying Amount			Estimated Fair Value
December 31, 2021														December 31, 2021		Carrying Amount						Estimated Fair Value
(In millions)	(In millions)			Carrying Amount			Level 1			Level 2			Level 3						Total			(In millions)			Level 1			Level 2			Level 3			Total
Assets	Assets																Assets
Mortgage loans	Mortgage loans	$	1,068		$	0		$	0		$	1,151		$	1,151			Mortgage loans		$	973			$	—		$	—		$	1,018		$	1,018

Liabilities	Liabilities																Liabilities
Long term debt	Long term debt	$	2,776		$	0		$	3,148		$	0		$	3,148		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.

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Note E. Claim and Claim Adjustment Expense Reserves

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 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 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 our results of operations and/or equity. The Company reported catastrophe losses, net of reinsurance, of ~~$125~~$19 million and ~~$75~~$125 million for the three months ended March 31, ~~2021~~2022 and ~~2020. Net catastrophe~~2021. Catastrophe losses for the three months ended March 31, 2022 were primarily related to severe weather related events. Catastrophe losses for the three months ended March 31, 2021 were primarily driven by Winter Storms Uri and Viola. Net catastrophe losses for the three months ended March 31, 2020 included $13 million related to the COVID-19 pandemic, with the remaining $62 million related primarily to U.S. weather related events.

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Liability for Unpaid Claim and Claim Adjustment Expenses

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 segment.


For the three months ended March 31, 2021
For the three months ended March 31, 2022						For the three months ended March 31, 2022
(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Reserves, beginning of year:	Reserves, beginning of year:					Reserves, beginning of year:
Gross	Gross	$	22,706	$	21,720	Gross	$	24,174	$	22,706
Ceded	Ceded	4,005		3,835		Ceded	4,969		4,005
Net reserves, beginning of year	Net reserves, beginning of year	18,701		17,885		Net reserves, beginning of year	19,205		18,701
Reduction of net reserves due to Excess Workers' Compensation Loss Portfolio Transfer	Reduction of net reserves due to Excess Workers' Compensation Loss Portfolio Transfer	(632)		0		Reduction of net reserves due to Excess Workers' Compensation Loss Portfolio Transfer	—		(632)
Net incurred claim and claim adjustment expenses:	Net incurred claim and claim adjustment expenses:					Net incurred claim and claim adjustment expenses:
Provision for insured events of current year	Provision for insured events of current year	1,474		1,355		Provision for insured events of current year	1,448		1,474
Increase (decrease) in provision for insured events of prior years	Increase (decrease) in provision for insured events of prior years	(54)		(8)		Increase (decrease) in provision for insured events of prior years	(45)		(54)
Amortization of discount	Amortization of discount	50		51		Amortization of discount	47		50
Total net incurred (1)	Total net incurred (1)	1,470		1,398		Total net incurred (1)	1,450		1,470
Net payments attributable to:	Net payments attributable to:					Net payments attributable to:
Current year events	Current year events	(85)		(72)		Current year events	(70)		(85)
Prior year events	Prior year events	(1,067)		(1,218)		Prior year events	(1,147)		(1,067)
Total net payments	Total net payments	(1,152)		(1,290)		Total net payments	(1,217)		(1,152)
Foreign currency translation adjustment and other	Foreign currency translation adjustment and other	(32)		(88)		Foreign currency translation adjustment and other	(92)		(32)
Net reserves, end of period	Net reserves, end of period	18,355		17,905		Net reserves, end of period	19,346		18,355
Ceded reserves, end of period	Ceded reserves, end of period	4,701		3,967		Ceded reserves, end of period	5,002		4,701
Gross reserves, end of period	Gross reserves, end of period	$	23,056	$	21,872	Gross reserves, end of period	$	24,348	$	23,056

(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.

Net Prior Year Development

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

Three months ended March 31
(In millions) 2021 2020
Pretax (favorable) unfavorable development:
Specialty $ (15) $ (11)
Commercial 0 (4)
International 0 0
Corporate & Other 0 0
Total pretax (favorable) unfavorable development $ (15) $ (15)


Three months ended March 31
(In millions)	2022		2021
Pretax (favorable) unfavorable development:
Specialty	$	(10)	$	(15)
Commercial	(2)		—
International	—		—
Corporate & Other	—		—
Total pretax (favorable) unfavorable development	$	(12)	$	(15)

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Specialty

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


Three months ended March 31	Three months ended March 31					Three months ended March 31
(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Pretax (favorable) unfavorable development:	Pretax (favorable) unfavorable development:					Pretax (favorable) unfavorable development:
Medical Professional Liability	Medical Professional Liability	$	8	$	10	Medical Professional Liability	$	8	$	8
Other Professional Liability and Management Liability	Other Professional Liability and Management Liability	0		3		Other Professional Liability and Management Liability	—		—
Surety	Surety	(15)		(30)		Surety	(9)		(15)
Warranty	Warranty	(8)		0		Warranty	(9)		(8)
Other	Other	0		6		Other	—		—
Total pretax (favorable) unfavorable development	Total pretax (favorable) unfavorable development	$	(15)	$	(11)	Total pretax (favorable) unfavorable development	$	(10)	$	(15)

2021

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

~~2020~~

~~Unfavorable development in medical professional liability was primarily due to unfavorable outcomes on specific claims in accident years 2015 and 2016 in the Company's aging services business.~~

~~Favorable development in surety was primarily due to lower than expected frequency for accident years 2017 and prior.~~

Commercial

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

Three months ended March 31
(In millions) 2021 2020
Pretax (favorable) unfavorable development:
Commercial Auto $ 0 $ 9
General Liability 0 0
Workers' Compensation 0 (13)
Property and Other 0 0
Total pretax (favorable) unfavorable development $ 0 $ (4)

~~2020~~

~~Favorable development in workers’ compensation was due to favorable medical trends driving lower than expected severity in accident years 2016 through 2018.~~


Three months ended March 31
(In millions)	2022		2021
Pretax (favorable) unfavorable development:
Commercial Auto	$	—	$	—
General Liability	—		—
Workers' Compensation	(2)		—
Property and Other	—		—
Total pretax (favorable) unfavorable development	$	(2)	$	—

International

There was no development recorded in the International segment for the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021.

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Asbestos & 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.

In years subsequent to the effective date of the LPT, the Company recognized adverse prior year development on its A&EP reserves 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 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 on the Condensed Consolidated Statements of Operations.

The impact of the LPT on the Condensed Consolidated Statements of Operations was the recognition of a retroactive reinsurance benefit of ~~$10~~$12 million and ~~$14~~$10 million for the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the cumulative amounts ceded under the LPT were ~~$3.3~~$3.4 billion. The unrecognized deferred retroactive reinsurance benefit was ~~$388~~$417 million and ~~$398~~$429 million as of March 31, ~~2021~~2022 and December 31, ~~2020~~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 ~~$4.6 billion and $4.2~~$3.1 billion as of March 31, ~~2021 and December 31, 2020.~~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.

~~Table of Contents~~

~~Excess Workers' Compensation LPT~~

On February 5, 2021, CCC completed a transaction with Cavello Bay Reinsurance Limited (Cavello), a subsidiary of Enstar Group Limited, under which certain legacy excess workers’ compensation (EWC) liabilities were ceded to Cavello. Under the terms of the transaction, based on reserves in place as of January 1, 2020, the Company ceded approximately $690 million of net EWC claim and allocated claim adjustment expense reserves to Cavello under an LPT with an aggregate limit of $1 billion. The Company paid Cavello a reinsurance premium of $697 million, less claims paid between January 1, 2020 and the closing date of the agreement of $64 million. After transaction costs, the Company recognized an after-tax loss of approximately $12 million in the Corporate & Other segment for the three months ended March 31, 2021 related to the EWC LPT.

Cavello established a collateral trust account as security for its obligations to the Company, which will be maintained at 105% of outstanding reserves. As of March 31, 2021, the remaining amount available under the $1 billion aggregate limit of the EWC LPT was $310 million on an incurred basis.

Credit Risk for Ceded Reserves

The majority of the 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.

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Note F. Legal Proceedings, Contingencies and Guarantees

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

Guarantees

As of March 31, 2021 and December 31, 2020, the Company had recorded liabilities of approximately $5 million related to guarantee and indemnification agreements. Management does not believe that any future indemnity claims will be significantly greater than the amounts recorded.

The Company has provided guarantees, if the primary obligor fails to perform, to holders of structured settlement annuities issued by a previously owned subsidiary. As of March 31, ~~2021,~~2022, the potential amount of future payments the Company could be required to pay under these guarantees was approximately $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.

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Note G. Benefit Plans

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


Three months ended March 31	Three months ended March 31					Three months ended March 31
(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Net periodic pension cost (benefit)	Net periodic pension cost (benefit)					Net periodic pension cost (benefit)
Interest cost on projected benefit obligation	Interest cost on projected benefit obligation	$	15	$	20	Interest cost on projected benefit obligation	$	17	$	15
Expected return on plan assets	Expected return on plan assets	(38)		(39)		Expected return on plan assets	(38)		(38)
Amortization of net actuarial (gain) loss	Amortization of net actuarial (gain) loss	12		11		Amortization of net actuarial (gain) loss	7		12
Settlement loss		0		1

Total net periodic pension cost (benefit)	Total net periodic pension cost (benefit)	$	(11)	$	(7)	Total net periodic pension cost (benefit)	$	(14)	$	(11)

~~For~~The following table indicates the ~~three months ended March 31, 2021,~~line items in which the ~~Company recognized $3 million~~non-service cost (benefit) is presented in the Condensed Consolidated Statements of non-service benefit in Insurance claims and policyholders' benefits and $8 million of non-service benefit in Other operating expenses related to net periodic pension benefit. For the three months ended March 31, 2020, the Company recognized $2 million of non-service benefit in Insurance claims and policyholders' benefits and $5 million of non-service benefit in Other operating expenses related to net periodic pension benefit.Operations.


Three months ended March 31
(In millions)	2022		2021
Non-Service Cost (Benefit):
Insurance claims and policyholder's benefits	$	(4)	$	(3)
Other operating expenses	(10)		(8)
Total net periodic pension cost (benefit)	$	(14)	$	(11)

~~Table of Contents~~T a b l e o f C o n t e n t s

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 January 1, 2021 $ 0 $ 1,745 $ (848) $ (94) $ 803
Other comprehensive income (loss) before reclassifications (3) (593) 0 2 (594)
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $1, $(8), $2, $0 and $(5) (3) 34 (9) 0 22
Other comprehensive income (loss) net of tax (expense) benefit of $0, $162, $(2), $0 and $160 0 (627) 9 2 (616)
Balance as of March 31, 2021 $ 0 $ 1,118 $ (839) $ (92) $ 187


(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	(4)		(1,612)		—		(14)		(1,630)
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $—, $1, $2, $— and $3	—		(1)		(6)		—		(7)
Other comprehensive income (loss) net of tax (expense) benefit of $1, $424, $(2), $— and $423	(4)		(1,611)		6		(14)		(1,623)
Balance as of March 31, 2022	$	(6)	$	(572)	$	(598)	$	(127)	$	(1,303)

(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, 2020 $ 0 $ 1,025 $ (833) $ (141) $ 51
Other comprehensive income (loss) before reclassifications (48) (1,066) 1 (77) (1,190)
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $10, $6, $3, $0 and $19 (37) (22) (10) 0 (69)
Other comprehensive income (loss) net of tax (expense) benefit of $3, $281, $(3), $0 and $281 (11) (1,044) 11 (77) (1,121)
Balance as of March 31, 2020 $ (11) $ (19) $ (822) $ (218) $ (1,070)


(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	(3)		(593)		—		2		(594)
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $1, $(8), $2, $— and $(5)	(3)		34		(9)		—		22
Other comprehensive income (loss) net of tax (expense) benefit of $—, $162, $(2), $— and $160	—		(627)		9		2		(616)
Balance as of March 31, 2021	$	—	$	1,118	$	(839)	$	(92)	$	187

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 an allowance for credit losses and Net unrealized gains (losses) on other investments						Net investment gains (losses)
Pension and postretirement benefits						Other operating expenses and Insurance claims and policyholders' benefits

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Note I. Business Segments

The Company's property and casualty commercial insurance operations are managed and reported in 3 business segments: Specialty, Commercial and International. These 3 segments are collectively referred to as Property & Casualty Operations. The Company's operations outside of Property & Casualty Operations are managed and reported in ~~two~~2 segments: Life & Group and Corporate & Other.

Effective January 1, 2021, and in connection with the ceding of certain legacy reserves under a retroactive reinsurance agreement executed in February 2021, management changed the segment presentation of a legacy portfolio of excess workers’ compensation policies relating to business written in 2007 and prior. This business, which was previously reported as part of the Commercial business segment, is now reported as part of the Corporate & Other business segment. Further information on this retroactive reinsurance agreement is provided in Note E. In addition, a determination was made to change the segment presentation of certain legacy mass tort reserves. Similar to the aforementioned excess workers’ compensation legacy business, these legacy mass tort reserves were previously reported in the Commercial business segment and are now reported as part of the Corporate & Other business segment. These changes were made to better reflect the manner in which the Company is organized for purposes of making operating decisions and assessing performance. Prior period information has been conformed to the new segment presentation.

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, ~~2020.~~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 Deferred non-insurance warranty acquisition expense and revenue are readily identifiable for 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 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 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.

The performance of the Company's insurance operations is monitored by management through core income (loss), which is derived from certain income statement 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.

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

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


Three months ended March 31, 2021		Specialty			Commercial				International				Life & Group				Corporate & Other
Three months ended March 31, 2022																			Three months ended March 31, 2022		Specialty					Commercial					International						Life & Group				Corporate & Other
(In millions)	(In millions)			Specialty							Commercial						International							Life & Group										Corporate & Other									Eliminations					Total			(In millions)											Eliminations	Total
Operating revenues	Operating revenues																					Operating revenues
Net earned premiums	Net earned premiums	$	735				$	855			$	252			$	120			$	0					$	0				$	1,962		Net earned premiums		$	772			$	904				$	264				$	120			$	(1)			$	—			$	2,059
Net investment income	Net investment income	117			148				14				219				6					0					504		Net investment income		103						118				14					212					1				—				448
Non-insurance warranty revenue	Non-insurance warranty revenue	338			0				0				0				0					0					338		Non-insurance warranty revenue		382						—				—					—					—				—				382
Other revenues	Other revenues	0			5				0				1				1					(2)					5		Other revenues		1						8				(1)					(1)					2				(2)				7
Total operating revenues	Total operating revenues	1,190			1,008				266				340				7					(2)					2,809		Total operating revenues		1,258						1,030				277					331					2				(2)				2,896
Claims, benefits and expenses	Claims, benefits and expenses																												Claims, benefits and expenses
Net incurred claims and benefits	Net incurred claims and benefits	427			639				155				281				(2)					0					1,500		Net incurred claims and benefits		445						573				158					281					(8)				—				1,449
Policyholders’ dividends	Policyholders’ dividends	1			5				0				0				0					0					6		Policyholders’ dividends		1						5				—					—					—				—				6
Amortization of deferred acquisition costs	Amortization of deferred acquisition costs	154			153				52				0				0					0					359		Amortization of deferred acquisition costs		157						148				39					—					—				—				344
Non-insurance warranty expense	Non-insurance warranty expense	311			0				0				0				0					0					311		Non-insurance warranty expense		354						—				—					—					—				—				354
Other insurance related expenses	Other insurance related expenses	70			115				35				25				10					0					255		Other insurance related expenses		81						130				47					31					2				—				291
Other expenses	Other expenses	11			9				(5)				2				42					(2)					57		Other expenses		13						7				1					3					41				(2)				63
Total claims, benefits and expenses	Total claims, benefits and expenses	974			921				237				308				50					(2)					2,488		Total claims, benefits and expenses		1,051						863				245					315					35				(2)				2,507
Core income (loss) before income tax	Core income (loss) before income tax	216			87				29				32				(43)					0					321		Core income (loss) before income tax		207						167				32					16					(33)				—				389
Income tax (expense) benefit on core income (loss)	Income tax (expense) benefit on core income (loss)	(46)			(18)				(5)				4				7					0					(58)		Income tax (expense) benefit on core income (loss)		(44)						(35)				(6)					7					5				—				(73)
Core income (loss)	Core income (loss)	$	170		$	69			$	24			$	36			$	(36)				$	0				263		Core income (loss)		$	163					$	132			$	26				$	23				$	(28)			$	—			316
Net investment gains (losses)	Net investment gains (losses)																										57		Net investment gains (losses)																														(11)
Income tax (expense) benefit on net investment gains (losses)	Income tax (expense) benefit on net investment gains (losses)																										(8)		Income tax (expense) benefit on net investment gains (losses)																														8
Net investment gains (losses), after tax	Net investment gains (losses), after tax																										49		Net investment gains (losses), after tax																														(3)
Net income (loss)	Net income (loss)																										$	312	Net income (loss)																														$	313


March 31, 2021
March 31, 2022																March 31, 2022
(In millions)	(In millions)															(In millions)
Reinsurance receivables	Reinsurance receivables	$	957	$	859	$	300	$	389	$	2,628	$	0	$	5,133	Reinsurance receivables	$	1,291	$	947	$	360	$	399	$	2,530	$	—	$	5,527
Insurance receivables	Insurance receivables	1,004		1,322		357		2		0		0		2,685		Insurance receivables	1,055		1,503		359		4		(1)		—		2,920
Deferred acquisition costs	Deferred acquisition costs	340		299		102		0		0		0		741		Deferred acquisition costs	370		294		102		—		—		—		766
Goodwill	Goodwill	117		0		31		0		0		0		148		Goodwill	117		—		30		—		—		—		147
Deferred non-insurance warranty acquisition expense	Deferred non-insurance warranty acquisition expense	3,149		0		0		0		0		0		3,149		Deferred non-insurance warranty acquisition expense	3,504		—		—		—		—		—		3,504
Insurance reserves	Insurance reserves															Insurance reserves
Claim and claim adjustment expenses	Claim and claim adjustment expenses	5,916		8,449		2,142		3,726		2,823		0		23,056		Claim and claim adjustment expenses	6,623		8,934		2,316		3,712		2,763		—		24,348
Unearned premiums	Unearned premiums	2,666		1,930		588		135		0		0		5,319		Unearned premiums	3,029		2,161		624		128		—		—		5,942
Future policy benefits	Future policy benefits	0		0		0		12,772		0		0		12,772		Future policy benefits	—		—		—		11,938		—		—		11,938
Deferred non-insurance warranty revenue	Deferred non-insurance warranty revenue	4,119		0		0		0		0		0		4,119		Deferred non-insurance warranty revenue	4,528		—		—		—		—		—		4,528

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Three months ended March 31, 2020		Specialty			Commercial				International				Life & Group					Corporate & Other
Three months ended March 31, 2021															Three months ended March 31, 2021		Specialty						Commercial				International					Life & Group				Corporate & Other
(In millions)	(In millions)			Specialty											Commercial							International												Life & Group					Corporate & Other			Eliminations			Total	(In millions)								Eliminations	Total
Operating revenues	Operating revenues																	Operating revenues
Net earned premiums	Net earned premiums	$	685				$	818			$	239			$	127				$	0				$	0			$	1,869		Net earned premiums	$		735		$	855		$	252		$	120			$	—		$	—		$	1,962
Net investment income	Net investment income	56			42				15				208					8					0				329		Net investment income		117				148			14			219			6				—			504
Non-insurance warranty revenue	Non-insurance warranty revenue	301			0				0				0					0					0				301		Non-insurance warranty revenue		338				—			—			—			—				—			338
Other revenues	Other revenues	1			8				0				0					1					(2)				8		Other revenues		—				5			—			1			1				(2)			5
Total operating revenues	Total operating revenues	1,043			868				254				335					9					(2)				2,507		Total operating revenues		1,190				1,008			266			340			7				(2)			2,809
Claims, benefits and expenses	Claims, benefits and expenses																												Claims, benefits and expenses
Net incurred claims and benefits	Net incurred claims and benefits	405			555				154				316					(11)					0				1,419		Net incurred claims and benefits		427				639			155			281			(2)				—			1,500
Policyholders’ dividends	Policyholders’ dividends	1			5				0				0					0					0				6		Policyholders’ dividends		1				5			—			—			—				—			6
Amortization of deferred acquisition costs	Amortization of deferred acquisition costs	151			144				49				0					0					0				344		Amortization of deferred acquisition costs		154				153			52			—			—				—			359
Non-insurance warranty expense	Non-insurance warranty expense	281			0				0				0					0					0				281		Non-insurance warranty expense		311				—			—			—			—				—			311
Other insurance related expenses	Other insurance related expenses	69			127				36				26					0					0				258		Other insurance related expenses		70				115			35			25			10				—			255
Other expenses	Other expenses	13			6				13				3					39					(2)				72		Other expenses		11				9			(5)			2			42				(2)			57
Total claims, benefits and expenses	Total claims, benefits and expenses	920			837				252				345					28					(2)				2,380		Total claims, benefits and expenses		974				921			237			308			50				(2)			2,488
Core income (loss) before income tax	Core income (loss) before income tax	123			31				2				(10)					(19)					0				127		Core income (loss) before income tax		216				87			29			32			(43)				—			321
Income tax (expense) benefit on core income (loss)	Income tax (expense) benefit on core income (loss)	(27)			(8)				0				14					2					0				(19)		Income tax (expense) benefit on core income (loss)		(46)				(18)			(5)			4			7				—			(58)
Core income (loss)	Core income (loss)	$	96		$	23			$	2			$	4				$	(17)				$	0			108		Core income (loss)		$	170			$	69		$	24		$	36		$	(36)			$	—		263
Net investment gains (losses)	Net investment gains (losses)																										(216)		Net investment gains (losses)																						57
Income tax (expense) benefit on net investment gains (losses)	Income tax (expense) benefit on net investment gains (losses)																										47		Income tax (expense) benefit on net investment gains (losses)																						(8)
Net investment gains (losses), after tax	Net investment gains (losses), after tax																										(169)		Net investment gains (losses), after tax																						49
Net income (loss)	Net income (loss)																										$	(61)	Net income (loss)																						$	312

December 31, 2020
(In millions)
Reinsurance receivables $ 886 $ 848 $ 302 $ 390 $ 2,052 $ 0 $ 4,478
Insurance receivables 1,052 1,254 328 4 2 0 2,640
Deferred acquisition costs 330 281 97 0 0 0 708
Goodwill 117 0 31 0 0 0 148
Deferred non-insurance warranty acquisition expense 3,068 0 0 0 0 0 3,068
Insurance reserves
Claim and claim adjustment expenses 5,748 8,250 2,091 3,743 2,874 0 22,706
Unearned premiums 2,635 1,824 546 114 0 0 5,119
Future policy benefits 0 0 0 13,318 0 0 13,318
Deferred non-insurance warranty revenue 4,023 0 0 0 0 0 4,023


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

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


Three months ended March 31	Three months ended March 31					Three months ended March 31
(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Specialty	Specialty					Specialty
Management & Professional Liability	Management & Professional Liability	$	667	$	568	Management & Professional Liability	$	673	$	667
Surety	Surety	142		138		Surety	148		142
Warranty & Alternative Risks	Warranty & Alternative Risks	381		337		Warranty & Alternative Risks	437		381
Specialty revenues	Specialty revenues	1,190		1,043		Specialty revenues	1,258		1,190
Commercial	Commercial					Commercial
Middle Market	Middle Market	375		335		Middle Market	362		375
Construction	Construction	309		250		Construction	324		309
Small Business	Small Business	126		112		Small Business	138		126
Other Commercial	Other Commercial	198		171		Other Commercial	206		198
Commercial revenues	Commercial revenues	1,008		868		Commercial revenues	1,030		1,008
International	International					International
Canada	Canada	79		73		Canada	88		79
Europe	Europe	111		92		Europe	120		111
Hardy	Hardy	76		89		Hardy	69		76
International revenues	International revenues	266		254		International revenues	277		266
Life & Group revenues	Life & Group revenues	340		335		Life & Group revenues	331		340
Corporate & Other revenues	Corporate & Other revenues	7		9		Corporate & Other revenues	2		7
Eliminations	Eliminations	(2)		(2)		Eliminations	(2)		(2)
Total operating revenues	Total operating revenues	2,809		2,507		Total operating revenues	2,896		2,809
Net investment gains (losses)	Net investment gains (losses)	57		(216)		Net investment gains (losses)	(11)		57
Total revenues	Total revenues	$	2,866	$	2,291	Total revenues	$	2,885	$	2,866

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Note J. Non-Insurance Revenues from Contracts with Customers

The Company had deferred non-insurance warranty revenue balances of ~~$4.1 billion and $4.0~~$4.5 billion reported in Deferred non-insurance warranty revenue as of March 31, ~~2021~~2022 and December 31, ~~2020.~~2021. For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company recognized $0.4 billion and $0.3 billion of revenues that were included in the deferred revenue balance as of January 1, ~~2021~~2022 and ~~2020.~~2021. For the three months ended March 31, ~~2021~~2022 and ~~2020,~~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 ~~$0.9~~$1.0 billion of the deferred revenue in the remainder of ~~2021, $1.0 billion in~~ 2022, ~~$0.8~~$1.1 billion in 2023, $0.9 billion in 2024 and ~~$1.3~~$1.5 billion thereafter.

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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.

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 ~~as well as the updates~~ and ~~additions to our Risk Factors disclosed under Part II, Item 1A of this Form 10-Q. The following discussion should also be read in conjunction with~~ 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, ~~2020.~~2021.

We utilize the core income (loss) financial measure to monitor our operations. Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses and any cumulative effects of changes in accounting guidance. The calculation of core income (loss) excludes net investment gains or losses because net investment gains or losses are generally driven by economic factors that are not necessarily reflective of our primary operations. Management monitors core income (loss) for each business segment to assess segment performance. Presentation of consolidated core income (loss) is deemed to be a non-GAAP financial measure. 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 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 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 ~~net~~ 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 in comparison to the expiring premium dollars from policies available to renew. Renewal premium change, rate and retention presented for the prior year are 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 claim adjustment expense reserves, 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 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

•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, ~~2020~~2021 for further information.

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CONSOLIDATED OPERATIONS

Results of Operations

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

Three months ended March 31
(In millions) 2021 2020
Operating Revenues
Net earned premiums $ 1,962 $ 1,869
Net investment income 504 329
Non-insurance warranty revenue 338 301
Other revenues 5 8
Total operating revenues 2,809 2,507
Claims, Benefits and Expenses
Net incurred claims and benefits 1,500 1,419
Policyholders' dividends 6 6
Amortization of deferred acquisition costs 359 344
Non-insurance warranty expense 311 281
Other insurance related expenses 255 258
Other expenses 57 72
Total claims, benefits and expenses 2,488 2,380
Core income before income tax 321 127
Income tax expense on core income (58) (19)
Core income 263 108
Net investment gains (losses) 57 (216)
Income tax (expense) benefit on net investment gains (losses) (8) 47
Net investment gains (losses), after tax 49 (169)
Net income (loss) $ 312 $ (61)


Three months ended March 31
(In millions)	2022		2021
Operating Revenues
Net earned premiums	$	2,059	$	1,962
Net investment income	448		504
Non-insurance warranty revenue	382		338
Other revenues	7		5
Total operating revenues	2,896		2,809
Claims, Benefits and Expenses
Net incurred claims and benefits	1,449		1,500
Policyholders' dividends	6		6
Amortization of deferred acquisition costs	344		359
Non-insurance warranty expense	354		311
Other insurance related expenses	291		255
Other expenses	63		57
Total claims, benefits and expenses	2,507		2,488
Core income before income tax	389		321
Income tax expense on core income	(73)		(58)
Core income	316		263
Net investment (losses) gains	(11)		57
Income tax benefit (expense) on net investment (losses) gains	8		(8)
Net investment (losses) gains, after tax	(3)		49
Net income	$	313	$	312

Core income increased ~~$155~~$53 million for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020.~~2021. Core income for our Property & Casualty Operations increased ~~$142~~$58 million ~~primarily~~ due to ~~higher~~lower catastrophe losses and improved non-catastrophe current accident year underwriting results partially offset by lower net investment income driven by limited partnership and common stock ~~returns and improved non-catastrophe current accident year underwriting results. These results were partially offset by higher net catastrophe losses.~~returns. Core income for our Life & Group segment ~~increased $32~~decreased $13 million while core loss for our Corporate & Other segment ~~increased $19~~improved $8 million.

~~Net catastrophe~~Catastrophe losses were ~~$125~~$19 million and ~~$75~~$125 million for the three months ended March 31, 2022 and 2021. Catastrophe losses for the three months ended March 31, 2022 were primarily related to severe weather related events. Catastrophe losses for the three months ended March 31, 2021 were primarily driven by Winter Storms Uri and ~~2020.~~Viola. Favorable net prior year loss reserve development of $12 million and $15 million was recorded in the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 related to our Specialty ~~Commercial, International~~ and ~~Corporate & Other~~Commercial 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 business segments. Our property and casualty commercial insurance operations are managed and reported in three business segments: Specialty, Commercial and International, which we refer to collectively as Property & Casualty Operations. Our operations outside of Property & Casualty Operations are managed and reported in two segments: Life & Group and Corporate & Other.

Effective January 1, 2021, we changed the segment presentation of a legacy portfolio of excess workers’ compensation policies and certain legacy mass tort reserves. These businesses were previously reported in the Commercial business segment and are now reported as part of the Corporate & Other business segment. Prior period information has been conformed to the new segment presentation. See Note I to the Condensed Consolidated Financial Statements included under Part I, Item 1 for more information on the changes to our business segments.

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Specialty

The following table details the results of operations for Specialty.


Three months ended March 31	Three months ended March 31							Three months ended March 31
(In millions, except ratios, rate, renewal premium change and retention)	(In millions, except ratios, rate, renewal premium change and retention)	2021			2020			(In millions, except ratios, rate, renewal premium change and retention)	2022			2021
Gross written premiums	Gross written premiums	$	1,794		$	1,714		Gross written premiums	$	1,846		$	1,794
Gross written premiums excluding third party captives		816			741
Gross written premiums excluding third-party captives								Gross written premiums excluding third-party captives	885			816
Net written premiums	Net written premiums	742			694			Net written premiums	771			742
Net earned premiums	Net earned premiums	735			685			Net earned premiums	772			735
Net investment income	Net investment income	117			56			Net investment income	103			117
Core income	Core income	170			96			Core income	163			170

Other performance metrics:	Other performance metrics:							Other performance metrics:
Loss ratio excluding catastrophes and development	Loss ratio excluding catastrophes and development	59.4		%	59.5		%	Loss ratio excluding catastrophes and development	58.9		%	59.4		%
Effect of catastrophe impacts	Effect of catastrophe impacts	0.7			1.1			Effect of catastrophe impacts	—			0.7
Effect of development-related items	Effect of development-related items	(2.1)			(1.5)			Effect of development-related items	(1.3)			(2.1)
Loss ratio	Loss ratio	58.0			59.1			Loss ratio	57.6			58.0
Expense ratio	Expense ratio	30.6			32.0			Expense ratio	30.9			30.6
Dividend ratio	Dividend ratio	0.2			0.2			Dividend ratio	0.2			0.2
Combined ratio	Combined ratio	88.8		%	91.3		%	Combined ratio	88.7		%	88.8		%
Combined ratio excluding catastrophes and development	Combined ratio excluding catastrophes and development	90.2		%	91.7		%	Combined ratio excluding catastrophes and development	90.0		%	90.2		%

Rate	Rate	10		%	10		%	Rate	9		%	11		%
Renewal premium change	Renewal premium change	9			11			Renewal premium change	10			12
Retention	Retention	86			83			Retention	85			86
New business	New business	$	103		$	74		New business	$	145		$	103

Gross written premiums, excluding ~~third party~~third-party captives, for Specialty increased ~~$75~~$69 million for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020~~2021 driven by higher new business and ~~strong~~ rate. Net written premiums for Specialty increased ~~$48~~$29 million for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020.~~2021. The increase in net earned premiums was consistent with the trend in net written premiums.

Core income ~~increased $74~~decreased $7 million for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020~~2021 primarily due to ~~higher~~lower net investment income driven by limited partnership and common stock returns ~~and~~partially offset by improved current accident year underwriting results.

The combined ratio of ~~88.8%~~88.7% improved ~~2.5 points~~0.1 point for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020~~2021 due to a ~~1.4~~0.4 point improvement in the ~~expense~~loss ratio ~~and~~largely offset by a ~~1.1~~0.3 point ~~improvement~~increase in the ~~loss~~expense ratio. The improvement in the loss ratio was primarily ~~due to higher~~driven by improved current accident year underwriting results partially offset by lower favorable net prior year loss reserve ~~development and lower net catastrophe losses. Net~~development. There were no catastrophe losses ~~were~~for the three months ended March 31, 2022, as compared with $5 million, or 0.7 points of the loss ratio, for the three months ended March 31, ~~2021, as compared with $8 million, or 1.1 points of the loss ratio, for the three months ended March 31, 2020.~~2021. The ~~improvement~~increase in the expense ratio was driven by higher underwriting expenses partially offset by higher net earned premiums.

Favorable net prior year loss reserve development of ~~$15~~$10 million and ~~$11~~$15 million was recorded for the three months ended March 31, ~~2021~~2022 and ~~2020.~~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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The following table summarizes the gross and net carried reserves for Specialty.


(In millions)	(In millions)	March 31, 2021		December 31, 2020		(In millions)	March 31, 2022		December 31, 2021
Gross case reserves	Gross case reserves	$	1,575	$	1,567	Gross case reserves	$	1,570	$	1,578
Gross IBNR reserves	Gross IBNR reserves	4,341		4,181		Gross IBNR reserves	5,053		4,855
Total gross carried claim and claim adjustment expense reserves	Total gross carried claim and claim adjustment expense reserves	$	5,916	$	5,748	Total gross carried claim and claim adjustment expense reserves	$	6,623	$	6,433
Net case reserves	Net case reserves	$	1,418	$	1,410	Net case reserves	$	1,348	$	1,338
Net IBNR reserves	Net IBNR reserves	3,577		3,488		Net IBNR reserves	4,035		3,927
Total net carried claim and claim adjustment expense reserves	Total net carried claim and claim adjustment expense reserves	$	4,995	$	4,898	Total net carried claim and claim adjustment expense reserves	$	5,383	$	5,265

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Commercial

The following table details the results of operations for Commercial.


Three months ended March 31	Three months ended March 31							Three months ended March 31
(In millions, except ratios, rate, renewal premium change and retention)	(In millions, except ratios, rate, renewal premium change and retention)	2021			2020			(In millions, except ratios, rate, renewal premium change and retention)	2022			2021
Gross written premiums	Gross written premiums	$	1,113		$	1,062		Gross written premiums	$	1,208		$	1,113
Gross written premiums excluding third party captives		1,111			1,059
Gross written premiums excluding third-party captives								Gross written premiums excluding third-party captives	1,206			1,111
Net written premiums	Net written premiums	960			950			Net written premiums	1,001			960
Net earned premiums	Net earned premiums	855			818			Net earned premiums	904			855
Net investment income	Net investment income	148			42			Net investment income	118			148
Core income	Core income	69			23			Core income	132			69

Other performance metrics:	Other performance metrics:							Other performance metrics:
Loss ratio excluding catastrophes and development	Loss ratio excluding catastrophes and development	60.8		%	60.8		%	Loss ratio excluding catastrophes and development	61.5		%	60.8		%
Effect of catastrophe impacts	Effect of catastrophe impacts	13.4			7.0			Effect of catastrophe impacts	1.8			13.4
Effect of development-related items	Effect of development-related items	0.5			—			Effect of development-related items	—			0.5
Loss ratio	Loss ratio	74.7			67.8			Loss ratio	63.3			74.7
Expense ratio	Expense ratio	31.4			33.2			Expense ratio	30.7			31.4
Dividend ratio	Dividend ratio	0.6			0.6			Dividend ratio	0.5			0.6
Combined ratio	Combined ratio	106.7		%	101.6		%	Combined ratio	94.5		%	106.7		%
Combined ratio excluding catastrophes and development	Combined ratio excluding catastrophes and development	92.8		%	94.6		%	Combined ratio excluding catastrophes and development	92.7		%	92.8		%

Rate	Rate	10		%	8		%	Rate	5		%	10		%
Renewal premium change	Renewal premium change	8			9			Renewal premium change	8			11
Retention	Retention	84			86			Retention	85			83
New business	New business	$	211		$	198		New business	$	228		$	211

Gross written premiums for Commercial increased ~~$51~~$95 million for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020~~2021 driven by ~~higher new business~~rate and ~~strong rate.~~retention. Net written premiums for Commercial increased ~~$10~~$41 million for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020.~~2021. The increase in net earned premiums was consistent with the trend in net written ~~premiums in recent quarters.~~premiums.

Core income increased ~~$46~~$63 million for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020~~2021, primarily due to ~~higher~~lower catastrophe losses partially offset by lower net investment income driven by limited partnership and common stock ~~returns partially offset by higher net catastrophe losses.~~returns.

The combined ratio of ~~106.7% increased 5.1~~94.5% improved 12.2 points for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020~~2021 primarily due to a ~~6.9~~11.4 point ~~increase~~improvement in the loss ratio ~~partially offset by~~and a ~~1.8~~0.7 point improvement in the expense ratio. The ~~increase~~improvement in the loss ratio was primarily due to ~~higher net~~lower catastrophe losses. ~~Net catastrophe~~Catastrophe losses were $16 million, or 1.8 points of the loss ratio, for the three months ended March 31, 2022, as compared with $115 million, or 13.4 points of the loss ratio, for the three months ended March 31, ~~2021, as compared with $57 million, or 7.0 points of the loss~~2021. The combined ratio excluding catastrophes and development improved 0.1 point for the three months ended March 31, ~~2020.~~2022 as compared with the same period in 2021. The improvement in the expense ratio of 0.7 points was driven by ~~favorable acquisition expenses and~~ higher net earned premiums and lower acquisition costs partially offset by an increase in underwriting expenses. The loss ratio excluding catastrophes and development increased 0.7 points due to a shift in mix of business associated with the property quota share treaty we purchased during the second quarter 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.

~~There~~ On a mix adjusted basis, there was no change in the underlying loss ratio.

Favorable net prior year loss reserve development of $2 million was recorded for the three months ended March 31, ~~2021~~2022 as compared with ~~favorable~~no net prior year loss reserve development ~~of $4 million~~ for the three months ended March 31, ~~2020.~~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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The following table summarizes the gross and net carried reserves for Commercial.


(In millions)	(In millions)	March 31, 2021		December 31, 2020		(In millions)	March 31, 2022		December 31, 2021
Gross case reserves	Gross case reserves	$	3,238	$	3,215	Gross case reserves	$	3,102	$	3,184
Gross IBNR reserves	Gross IBNR reserves	5,211		5,035		Gross IBNR reserves	5,832		5,706
Total gross carried claim and claim adjustment expense reserves	Total gross carried claim and claim adjustment expense reserves	$	8,449	$	8,250	Total gross carried claim and claim adjustment expense reserves	$	8,934	$	8,890
Net case reserves	Net case reserves	$	2,925	$	2,885	Net case reserves	$	2,796	$	2,850
Net IBNR reserves	Net IBNR reserves	4,732		4,590		Net IBNR reserves	5,315		5,215
Total net carried claim and claim adjustment expense reserves	Total net carried claim and claim adjustment expense reserves	$	7,657	$	7,475	Total net carried claim and claim adjustment expense reserves	$	8,111	$	8,065

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International

The following table details the results of operations for International.


Three months ended March 31	Three months ended March 31							Three months ended March 31
(In millions, except ratios, rate, renewal premium change and retention)	(In millions, except ratios, rate, renewal premium change and retention)	2021			2020			(In millions, except ratios, rate, renewal premium change and retention)	2022			2021
Gross written premiums	Gross written premiums	$	343		$	307		Gross written premiums	$	363		$	343
Net written premiums	Net written premiums	235			219			Net written premiums	251			235
Net earned premiums	Net earned premiums	252			239			Net earned premiums	264			252
Net investment income	Net investment income	14			15			Net investment income	14			14
Core income	Core income	24			2			Core income	26			24

Other performance metrics:	Other performance metrics:							Other performance metrics:
Loss ratio excluding catastrophes and development	Loss ratio excluding catastrophes and development	59.6		%	60.3		%	Loss ratio excluding catastrophes and development	58.6		%	59.6		%
Effect of catastrophe impacts	Effect of catastrophe impacts	2.0			4.3			Effect of catastrophe impacts	1.2			2.0
Effect of development-related items	Effect of development-related items	(0.1)			(0.1)			Effect of development-related items	—			(0.1)
Loss ratio	Loss ratio	61.5			64.5			Loss ratio	59.8			61.5
Expense ratio	Expense ratio	34.4			35.4			Expense ratio	32.6			34.4
Combined ratio	Combined ratio	95.9		%	99.9		%	Combined ratio	92.4		%	95.9		%
Combined ratio excluding catastrophes and development	Combined ratio excluding catastrophes and development	94.0		%	95.7		%	Combined ratio excluding catastrophes and development	91.2		%	94.0		%

Rate	Rate	14		%	9		%	Rate	9		%	14		%
Renewal premium change	Renewal premium change	11			9			Renewal premium change	10			12
Retention	Retention	74			70			Retention	73			75
New business	New business	$	80		$	68		New business	$	78		$	80

Gross written premiums for International increased ~~$36~~$20 million for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020.~~2021. Excluding the effect of foreign currency exchange rates, gross written premiums increased ~~$19~~$30 million driven by ~~growth in Europe and Canada.~~rate. Net written premiums for International increased $16 million for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020.~~2021. Excluding the ~~effects~~effect of foreign currency exchange rates, net written premiums increased $3$26 million for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020.~~2021. The increase in net earned premiums was consistent with the trend in net written premiums.

Core income increased ~~$22~~$2 million for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020~~2021 driven by improved current accident year underwriting results.

The combined ratio of ~~95.9%~~92.4% improved ~~4.0~~3.5 points for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020~~2021 due to a ~~3.0~~1.8 point improvement in the expense ratio and a 1.7 point improvement in the loss ~~ratio and a 1.0 point~~ratio. The improvement in the expense ~~ratio.~~ratio was driven by lower acquisition costs and higher net earned premiums. The improvement in the loss ratio was driven by improved current accident year underwriting results. ~~Net catastrophe~~Catastrophe losses were $3 million, or 1.2 points of the loss ratio, for 2022, as compared with $5 million, or 2.0 points of the loss ratio, for the three months ended March 31, 2021, as compared with $10 million, or 4.3 points of the loss ratio, for the three months ended March 31, 2020. The improvement in the expense ratio was driven by favorable commission rates and higher net earned premiums.2021.

There was no net prior year loss reserve development ~~recorded~~ for the three months ended March 31, ~~2021 and 2020. 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.~~2022 or 2021.

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


(In millions)	(In millions)	March 31, 2021		December 31, 2020		(In millions)	March 31, 2022		December 31, 2021
Gross case reserves	Gross case reserves	$	861	$	892	Gross case reserves	$	829	$	859
Gross IBNR reserves	Gross IBNR reserves	1,281		1,199		Gross IBNR reserves	1,487		1,421
Total gross carried claim and claim adjustment expense reserves	Total gross carried claim and claim adjustment expense reserves	$	2,142	$	2,091	Total gross carried claim and claim adjustment expense reserves	$	2,316	$	2,280
Net case reserves	Net case reserves	$	740	$	777	Net case reserves	$	718	$	744
Net IBNR reserves	Net IBNR reserves	1,112		1,045		Net IBNR reserves	1,251		1,196
Total net carried claim and claim adjustment expense reserves	Total net carried claim and claim adjustment expense reserves	$	1,852	$	1,822	Total net carried claim and claim adjustment expense reserves	$	1,969	$	1,940

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Life & Group

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


Three months ended March 31	Three months ended March 31					Three months ended March 31
(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Net earned premiums	Net earned premiums	$	120	$	127	Net earned premiums	$	120	$	120
Net investment income	Net investment income	219		208		Net investment income	212		219
Core income (loss) before income tax		32		(10)
Income tax benefit on core loss		4		14
Core income before income tax						Core income before income tax	16		32
Income tax benefit on core income						Income tax benefit on core income	7		4
Core income	Core income	36		4		Core income	23		36

Core income ~~improved $32~~decreased $13 million for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020 driven by better than expected morbidity in the long term care business and higher net investment income. The increase in~~2021 primarily due to lower net investment income ~~was driven by returns in the limited partnership portfolio. Further, during the first quarter of 2021, relative to expectations, we experienced lower new claim frequency,~~and higher claim terminations and more favorable claim severity in the long term care business amid the effects of COVID-19. Given the uncertainty of these trends, we increased our IBNR reserves in anticipation of increased claim activity as the COVID-19 pandemic abates.expenses.

Corporate & Other

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


Three months ended March 31	Three months ended March 31					Three months ended March 31
(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Net investment income	Net investment income	$	6	$	8	Net investment income	$	1	$	6
Interest expense	Interest expense	28		31		Interest expense	28		28
Core loss	Core loss	(36)		(17)		Core loss	(28)		(36)

Core loss ~~increased $19~~improved $8 million for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020 driven by~~2021. The prior period included the recognition of a $12 million after-tax loss resulting from the legacy ~~excess workers' compensation~~Excess Workers' Compensation (EWC) Loss Portfolio Transfer (LPT). ~~The EWC LPT is further discussed 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 Corporate & Other.


(In millions)	(In millions)	March 31, 2021		December 31, 2020		(In millions)	March 31, 2022		December 31, 2021
Gross case reserves	Gross case reserves	$	1,626	$	1,614	Gross case reserves	$	1,580	$	1,551
Gross IBNR reserves	Gross IBNR reserves	1,197		1,260		Gross IBNR reserves	1,183		1,266
Total gross carried claim and claim adjustment expense reserves	Total gross carried claim and claim adjustment expense reserves	$	2,823	$	2,874	Total gross carried claim and claim adjustment expense reserves	$	2,763	$	2,817
Net case reserves	Net case reserves	$	123	$	560	Net case reserves	$	139	$	146
Net IBNR reserves	Net IBNR reserves	130		331		Net IBNR reserves	144		148
Total net carried claim and claim adjustment expense reserves	Total net carried claim and claim adjustment expense reserves	$	253	$	891	Total net carried claim and claim adjustment expense reserves	$	283	$	294

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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.


Three months ended March 31	Three months ended March 31							Three months ended March 31
(In millions)	(In millions)	2021			2020			(In millions)	2022			2021
Fixed income securities:	Fixed income securities:							Fixed income securities:
Taxable fixed income securities	Taxable fixed income securities	$	359		$	371		Taxable fixed income securities	$	368		$	359
Tax-exempt fixed income securities	Tax-exempt fixed income securities	80			78			Tax-exempt fixed income securities	73			80
Total fixed income securities	Total fixed income securities	439			449			Total fixed income securities	441			439
Limited partnership investments		43			(70)
Common stock		18			(55)
Limited partnership and common stock investments								Limited partnership and common stock investments	8			61
Other, net of investment expense	Other, net of investment expense	4			5			Other, net of investment expense	(1)			4
Net investment income	Net investment income	$	504		$	329		Net investment income	$	448		$	504

Effective income yield for the fixed income securities portfolio	Effective income yield for the fixed income securities portfolio	4.4		%	4.6		%	Effective income yield for the fixed income securities portfolio	4.3		%	4.4		%
Limited partnership and common stock return	Limited partnership and common stock return	3.4		%	(7.0)		%	Limited partnership and common stock return	0.4		%	3.4		%

Net investment income ~~increased $175~~decreased $56 million for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020~~2021 driven by lower limited partnership and common stock returns.

Net Investment Gains (Losses)

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


Three months ended March 31	Three months ended March 31					Three months ended March 31
(In millions)	(In millions)	2021		2020		(In millions)	2022		2021
Fixed maturity securities:	Fixed maturity securities:					Fixed maturity securities:
Corporate and other bonds	Corporate and other bonds	$	36	$	(79)	Corporate and other bonds	$	3	$	36
States, municipalities and political subdivisions	States, municipalities and political subdivisions	(1)		—		States, municipalities and political subdivisions	3		(1)
Asset-backed	Asset-backed	3		4		Asset-backed	(8)		3
Total fixed maturity securities	Total fixed maturity securities	38		(75)		Total fixed maturity securities	(2)		38
Non-redeemable preferred stock	Non-redeemable preferred stock	2		(133)		Non-redeemable preferred stock	(38)		2
Short term and other	Short term and other	17		5		Short term and other	29		17
Mortgage loans		—		(13)
Net investment gains (losses)		57		(216)
Income tax (expense) benefit on net investment gains (losses)		(8)		47
Net investment gains (losses), after tax		$	49	$	(169)

Net investment (losses) gains						Net investment (losses) gains	(11)		57
Income tax benefit (expense) on net investment (losses) gains						Income tax benefit (expense) on net investment (losses) gains	8		(8)
Net investment (losses) gains, after tax						Net investment (losses) gains, after tax	$	(3)	$	49

Net investment ~~gains (losses) increased $273~~results decreased $68 million for the three months ended March 31, ~~2021~~2022 as compared with the same period in ~~2020~~2021 driven by the ~~favorable relative~~unfavorable change in fair value of non-redeemable preferred stock and lower ~~impairment losses.~~net investment gains on disposals of fixed maturity securities.

Further information on ourour investment gains and losses is set forth in Note C to the Condensed Consolidated Financial Statements included under Part 1,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.


		March 31, 2021				December 31, 2020					March 31, 2022				December 31, 2021
(In millions)	(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	U.S. Government, Government agencies and Government-sponsored enterprises	$	3,149	$	36	$	3,672	$	117	U.S. Government, Government agencies and Government-sponsored enterprises	$	2,497	$	(107)	$	2,600	$	42
AAA	AAA	3,589		385		3,627		454		AAA	3,513		97		3,784		360
AA	AA	7,221		802		7,159		1,012		AA	7,243		160		7,665		823
A	A	9,380		1,057		9,543		1,390		A	9,062		366		9,511		1,087
BBB	BBB	17,692		1,920		18,007		2,596		BBB	17,497		552		18,458		2,043
Non-investment grade	Non-investment grade	2,548		131		2,623		149		Non-investment grade	2,133		(34)		2,362		91
Total	Total	$	43,579	$	4,331	$	44,631	$	5,718	Total	$	41,945	$	1,034	$	44,380	$	4,446

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, 1% of our fixed maturity portfolio was rated internally. AAA rated securities included ~~$1.9~~$1.5 billion and ~~$1.8~~$1.7 billion of pre-refunded municipal bonds as of March 31, ~~2021~~2022 and December 31, ~~2020.~~2021.

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


		March 31, 2021					March 31, 2022
(In millions)	(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	U.S. Government, Government agencies and Government-sponsored enterprises	$	1,631	$	47	U.S. Government, Government agencies and Government-sponsored enterprises	$	2,095	$	116
AAA	AAA	202		9		AAA	993		105
AA	AA	896		29		AA	2,809		269
A	A	1,096		33		A	3,300		205
BBB	BBB	1,372		47		BBB	6,073		392
Non-investment grade	Non-investment grade	364		17		Non-investment grade	1,254		70
Total	Total	$	5,561	$	182	Total	$	16,524	$	1,157

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.


		March 31, 2021					March 31, 2022
(In millions)	(In millions)	Estimated Fair Value		Gross Unrealized Losses		(In millions)	Estimated Fair Value		Gross Unrealized Losses
Due in one year or less	Due in one year or less	$	135	$	5	Due in one year or less	238		4
Due after one year through five years	Due after one year through five years	672		21		Due after one year through five years	3,081		97
Due after five years through ten years	Due after five years through ten years	3,090		82		Due after five years through ten years	7,754		465
Due after ten years	Due after ten years	1,664		74		Due after ten years	5,451		591
Total	Total	$	5,561	$	182	Total	$	16,524	$	1,157

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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 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 segment.

The effective durations of fixed 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.


		March 31, 2021			December 31, 2020				March 31, 2022			December 31, 2021
(In millions)	(In millions)	Estimated Fair Value		Effective Duration (In years)	Estimated Fair Value		Effective Duration (In years)	(In millions)	Estimated Fair Value		Effective Duration (In years)	Estimated Fair Value		Effective Duration (In years)
Investments supporting Life & Group	Investments supporting Life & Group	$	17,952	9.1	$	18,518	9.2	Investments supporting Life & Group	$	16,868	8.9	$	18,458	9.2
Other investments	Other investments	27,666		4.9	28,839		4.5	Other investments	27,045		5.0	28,915		4.9
Total	Total	$	45,618	6.5	$	47,357	6.3	Total	$	43,913	6.5	$	47,373	6.6

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, ~~2020.~~

~~Short Term Investments~~

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

(In millions) March 31, 2021 December 31, 2020
Short term investments:
U.S. Treasury securities $ 1,109 $ 1,702
Other 225 205
Total short term investments $ 1,334 $ 1,907

2021.

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LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Our primary operating cash flow sources are premiums and investment 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 three months ended March 31, ~~2021,~~2022, net cash provided by operating activities was ~~$82~~$645 million as compared with ~~$212~~$82 million for the same period in ~~2020.~~2021. The ~~decrease~~increase in cash provided by operating activities was driven by the prior year payment of the EWC LPT premium partially offset by lower net claim payments and an increase in premiums collected. The EWC LPT is further discussed in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.premium.

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

Net cash ~~provided~~used by investing activities was ~~$408~~$129 million for the three months ended March 31, ~~2021,~~2022, as compared with ~~$1,087~~net cash provided of $408 million for the same period in ~~2020.~~2021. Net cash used or provided by investing activities is primarily driven by cash available from operations and by other factors, such as financing activities.

Cash flows from financing activities may include proceeds from the issuance of debt and equity securities, and outflows for stockholder dividends, repayment of debt and purchases of treasury stock.

For the three months ended March 31, ~~2021,~~2022, net cash used by financing activities was ~~$321~~$688 million as compared with ~~$675~~$321 million for the same period in ~~2020.~~2021. In the first quarter of 2022, we paid dividends of $657 million and repurchased 445,000 shares of common stock at an aggregate cost of $21 million. In the first quarter of 2021, we paid dividends of $310 million and repurchased 66,000 shares of our common stock at an aggregate cost of $3 million. ~~In the first quarter of 2020, we paid dividends of $649 million and repurchased 435,376 shares of our common stock at an aggregate cost of $18 million.~~

Common Stock Dividends

~~A quarterly cash dividend~~Cash dividends of ~~$0.38 per share and a special cash dividend of $0.75~~$2.40 per share on our common stock, including a special cash dividend of $2.00 per share, were declared and paid induring the ~~first quarter of 2021.~~three months ended March 31, 2022. On April ~~30, 2021,~~29, 2022, our Board of Directors declared a quarterly cash dividend of ~~$0.38~~$0.40 per share, payable June ~~3, 2021~~2, 2022 to stockholders of record on May ~~17, 2021.~~16, 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 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 March 31, ~~2021,~~2022, CCC was in a positive earned surplus position. CCC paid dividends of ~~$330~~$535 million and ~~$670~~$330 million during the three months ended March 31, ~~2021~~2022 and ~~2020.~~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 debt, equity or hybrid securities from time to time.

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ACCOUNTING STANDARDS UPDATE

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 $2.2 billion - $2.5 billion decrease 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 March 31, 2022 in its calculation, the transition impact would have been a $1.0 billion - $1.3 billion decrease in Accumulated other comprehensive income.

For a discussion of Accounting Standards Updates, see Note A to the Condensed Consolidated Financial Statements included under Part 1,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 are more uncertain, and therefore more difficult to estimate than loss reserves respecting traditional property and casualty 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; 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 as well as those risks contained in the Risk Factors section of our ~~2020~~2021 Annual Report on Form ~~10-K and this report:~~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 ~~2020~~2021 Annual Report on Form 10-K, ~~and this report,~~ 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.

Industry and General Market Factors

•the COVID-19 pandemic and ~~actions seeking~~measures to mitigate the spread of the virus ~~have resulted~~may continue to result in ~~significant~~increased claims and related litigation or regulatory risk across our enterprise; economic uncertainty and depressed business conditions brought on by the crisis may materially and adversely impact our business operations and may lead to increased claim and litigation activity and unfavorable regulatory outcomes.

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

T a b l e o f C o n t e n t s

•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 losses to our lines of business 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 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

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•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, ~~(which may be enhanced following completion of work relating to the sophisticated cyber incident sustained by the Company in March 2021 as discussed in Risk Factors, Part II, Item 1A of this report),~~ 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;

•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; and

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

Impact of Natural and 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;

•the occurrence of epidemics and pandemics; and

•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 changes that repeal or weaken tort reforms, such as those related to 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 three months ended March 31, ~~2021.~~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, ~~2020~~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 March 31, ~~2021,~~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~~ March 31, ~~2021.~~2022.

There has been no change in the Company’s internal control over financial reporting (as defined in Rules ~~13a-15(f)~~13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, ~~2021~~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 1A. Risk Factors~~

Our Annual Report on Form 10-K for the year ended December 31, 2020, includes a detailed discussion of certain material risk factors facing us. The information presented below describes updates and additions to such risk factors and should be read in conjunction with the risk factors and information disclosed in our Form 10-K.

~~Any significant interruption in the operation of our business functions, facilities and systems or our vendors' facilities and systems could result in a materially adverse effect on our operations.~~

Our business is highly dependent upon our ability to perform, in an efficient and uninterrupted manner, through our employees or vendor relationships, necessary business functions, such as internet support and 24-hour call centers, processing new and renewal business and processing and paying claims and other obligations.

Our or our vendors' facilities and systems could become unavailable, inoperable, or otherwise impaired from a variety of causes, including natural events, such as hurricanes, tornadoes, windstorms, earthquakes, severe winter weather and fires, or other events, such as explosions, terrorist attacks, computer security breaches or cyber attacks, riots, hazardous material releases, medical epidemics or pandemics, utility outages, interruptions of our data processing and storage systems or the systems of third-party vendors, or unavailability of communications facilities. An interruption of our system availability occurred in March 2021 as a result of a cybersecurity attack sustained by the Company. Please refer to following risk factor for further information regarding this incident. Likewise, we could experience a significant failure, interruption or corruption of one or more of our or our vendors’ information technology, telecommunications, or other systems for various reasons, including significant failures or interruptions that might occur as existing systems are replaced or upgraded. The shut-down or unavailability of one or more of our or our vendors' systems or facilities for these and other reasons could significantly impair our ability to perform critical business functions on a timely basis.

In addition, because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such service exceeds capacity or a third-party system fails or experiences an interruption. If sustained or repeated, such events could result in a deterioration of our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner, or perform other necessary business functions, including the ability to issue financial statements in a timely manner.

The foregoing risks could also expose us to monetary and reputational damages. Potential exposures resulting from the March 2021 cybersecurity attack, described in the following risk factor, as well as any future incidents may include substantially increased compliance costs and required computer system upgrades and security-related investments. If our business continuity plans or system security do not sufficiently address these risks, they could have a material adverse effect on our business, results of operations and financial condition.

Based on the information currently known, we do not believe that the March 2021 cybersecurity attack will have a material impact on our business, results of operations or financial condition. However, no assurances can be given, and we may be subject to future incidents that could have a material adverse effect or result in operational impairments and financial losses as well as significant harm to our reputation.

Any significant breach in our data security infrastructure could disrupt business, cause financial losses and damage our reputation, and insurance coverage may not be available for claims related to a breach.

A significant breach of our data security infrastructure may result from actions by our employees, vendors, third-party administrators, or unknown third parties or through cyber attacks. The risk of a breach can exist whether software services are in our data centers or we use cloud-based software services.

Such a breach could affect our data framework or cause a failure to protect the personal information of our customers, claimants or employees, or sensitive and confidential information regarding our business and may

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result in operational impairments and financial losses, as well as significant harm to our reputation. The breach of confidential information also could give rise to legal liability and regulatory action under data protection and privacy laws, as well as evolving regulation in this regard. Any such breach of our data security infrastructure could have a material adverse effect on our business, results of operations and financial condition.

We sustained a sophisticated cybersecurity attack in March 2021 involving ransomware that caused a network disruption and impacted certain of our systems. Promptly upon detection, we undertook steps to address the incident, including engaging a team of third-party forensic experts and notifying law enforcement and key regulators. As of the date of this report, we have restored network systems and resumed normal operations. We are continuing to assess the full extent of the impact from the incident, as well as determining any additional actions we may take to improve our existing systems. Although the investigation is ongoing, should we determine that personal information was impacted, it is possible that notification to individuals, other parties and/or regulators may be required based on applicable law. As a result or otherwise related to the incident, we may be subject to subsequent investigations, claims or actions in addition to other costs, fines, penalties, or other obligations.

Although we maintain cybersecurity insurance coverage insuring against costs resulting from cyber attacks (including the attack described above), it is possible losses may exceed the amount available under our coverage and our coverage policy may not cover all losses. Further, future cybersecurity insurance coverage may be difficult to obtain or may only be available at significantly higher costs to us.

Based on the information currently known, we do not believe that the March 2021 cybersecurity attack will have a material impact on our business, results of operations or financial condition. However, no assurances can be given, and we may be subject to future incidents that could have such a material adverse effect or may result in operational impairments and financial losses, as well as significant harm to our reputation.

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

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

(c) The table below details the repurchases of our common stock made during the three months ended March 31, ~~2021.~~2022.

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)

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)

March 1, 2021 - March 31, 2021

66,000

46.32

N/A

February 1, 2022 - February 28, 2022

50,679

45.85

N/A

March 1, 2022 - March 31, 2022

394,321

46.57

N/A

Total

66,000

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: May ~~7, 2021~~2, 2022	By	/s/ ~~Albert J. Miralles~~Scott R. Lindquist
		~~Albert J. Miralles~~Scott R. Lindquist Executive Vice President and Chief Financial Officer (Duly authorized officer and principal financial ~~and accounting~~ officer)

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EXHIBIT INDEX


Description of Exhibit			Exhibit Number
General Release and Separation Agreement, dated March 14, 2022, between CNA Financial Corporation and Kevin Smith			10.1

General Release and Separation Agreement, dated April 4, 2022, between CNA Financial Corporation and Kevin Leidwinger			10.2

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

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