CNA Financial 8K Results of Operations and Financial Condition | CNA 16 Feb 06

Exhibit 99.1

CNA Financial Corporation

Supplemental Financial Information

December 31, 2005

CNA Financial Corporation
Table of Contents
December 31, 2005


	Page
Supplemental Financial Information	i-iii
Statements of Operations		1
Components of Net Income (Loss) and Per Share Data		2
Selected Balance Sheet Data		3
Claim & Claim Adjustment Expense Reserve Data		4
Claim & Claim Adjustment Expense Reserve Rollforward		5
Investments by Segment Aggregation		6
Property & Casualty Results of Operations (Three Months Ended)		7
Life & Group Non-Core and Corporate & Other Non-Core Segments Results of Operations (Three Months Ended)		8
Property & Casualty Results of Operations (Twelve Months Ended)		9
Life & Group Non-Core and Corporate & Other Non-Core Segments Results of Operations (Twelve Months Ended)		10
Property & Casualty Operations and Corporate & Other Non-Core Segment — Catastrophe Losses		11
Analysis of Pretax Net Investment Income		12
Statutory Data — Preliminary		13
Property & Casualty Operations Loss and LAE Ratio Analysis		14
Impact of Significant Items		15-18
Components of Life & Group Non-Core Segment — Results of Operations (Twelve Months Ended)		19
Asbestos Summary by Policyholder Category		20

CNA Financial Corporation

Supplemental Financial Information

DEFINITIONS AND PRESENTATION

•		P&C Operationsincludes Standard Lines and Specialty Lines.

•		Life & Group Non-Coresegment primarily includes the results of the life and group lines of business that have been sold or placed in run-off.

•		Corporate & Other Non-Coresegment includes the results of certain property and casualty lines of business placed in run-off, including CNA Re. This segment also includes the results related to the centralized adjusting and settlement of asbestos, environmental pollution and mass tort (APMT) claims and interest expense on corporate debt.

•		Property and Casualty Companiesincludes Standard Lines, Specialty Lines and P&C business written in the Life & Group Non-Core and Corporate & Other Non-Core segments.

•		Management utilizes the net operating income financial measure to monitor the Company’s operations. Please refer to Note N to the Consolidated Financial Statements within the September 30, 2005 10-Q for further discussion of this measure.

•		In evaluating the results of the Standard Lines and Specialty Lines, management utilizes the combined ratio, the loss ratio, the expense ratio, and the dividend ratio. 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 expense ratio is the percentage of underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios.

•		Limited partnerships (LPs) are a relatively small portion of CNA’s overall investment portfolio. The majority of the LPs invest in a substantial number of securities that are readily marketable. CNA is primarily a passive investor in such partnerships and does not have influence over the partnerships’ management, who are committed to operate them according to established guidelines and strategies. These strategies may include the use of leverage and hedging techniques that potentially introduce more volatility and risk to the partnerships.

•		On April 30, 2004, CNA completed the sale of its individual life insurance business. The business sold included term, universal and permanent life insurance policies and individual annuity products. CNA’s individual long term care and structured settlement businesses were excluded from the sale. Consideration from the sale was approximately $700 million, resulting in an after-tax realized investment loss on the sale of $389 million. The results of the business sold through the sale date are included in the statements of operations for the twelve months ended December 31, 2004. As a result of the sale, income statement results for the twelve months ended December 31, 2005 are not comparable to the corresponding 2004 results.

•		All amounts are in millions, except for per share and ratio information.

•		Certain immaterial differences are due to rounding.

CNA Financial Corporation

Supplemental Financial Information

Restatement for Reinsurance and Equity Investee Accounting

In May of 2005, the Company filed an amendment to its 2004 Annual Report on Form 10-K to correct its accounting for several reinsurance contracts, primarily with a former affiliate, and its equity accounting for that affiliate. The Company restated its previously reported financial statements as of December 31, 2004 and 2003, and for the years ended December 31, 2004, 2003 and 2002 and all related disclosures, as well as its interim financial data for all interim periods of 2004 and 2003, through the filing of a Form 10-K/A.This Financial Supplement reflects the effects of the restatement. The restatement is based upon reconsideration of the Company’s accounting for its former equity interest in Accord Re Ltd. (Accord) and for several reinsurance contracts with Accord, but also includes two reinsurance agreements with unaffiliated parties that are immaterial in the aggregate. A subsidiary of The Continental Corporation (TCC) acquired a 49% ownership interest in Accord, a Bermuda company, in 1989 upon Accord’s formation. TCC also provided capital support to Accord through a guarantee from a TCC subsidiary. TCC was acquired by the Company in 1995.

Reinsurance relationships with Accord involved both property and casualty assumed reinsurance risks that were written by TCC subsidiaries and 100% ceded to Accord or reinsured from other cedents by Accord. Stop-loss protection in relation to those risks was obtained by Accord from a wholly-owned TCC subsidiary.

All of the Company’s reinsurance agreements with Accord relating to property risks were commuted as of year-end 2001, leaving six reinsurance agreements with Accord relating to casualty risks outstanding at that time. As of March 31, 2005 the Company provided no capital support to and had no ownership interest in Accord. During the period of the Company’s minority ownership, Accord also maintained reinsurance relationships with reinsurers unaffiliated with the Company.

As previously reported, the Company continues to respond to various subpoenas, interrogatories and other requests for information received from state and federal regulatory authorities relating to on-going insurance industry investigations of non-traditional insurance products, including finite reinsurance. In the course of complying with these requests the Company conducted a comprehensive review of its finite reinsurance relationships, including contracts with Accord.

The Company accounted for its reinsurance cessions to Accord and related retrocessions from Accord as reinsurance. In connection with the aforementioned review, the Company subsequently concluded that the reinsurance cession and retrocession should be viewed as a single transaction which does not transfer risk. The restatement corrections apply deposit accounting to the Company’s reinsurance cessions to Accord. The restatement corrections also include adjustments to the Company’s historical equity method accounting for its ownership and economic interest in Accord, including the effects of applying deposit accounting to certain of Accord’s reinsurance contracts with parties other than the Company. The remaining restatement corrections related to applying deposit accounting to two small reinsurance treaties unrelated to Accord that were previously accounted for using reinsurance accounting.

The impact of this revised accounting resulted in a reduction to stockholders’ equity as of December 31, 2004 of $29 million, or 0.3%. The impact to net income for the three months and twelve months ended December 31, 2004 was $(1) million and $5 million, or (0.3)% and 1.1%. The net income adjustment for the earnings per share remained flat for the three months ended December 31, 2004, and increased earnings per share for the twelve months ended December 31, 2004 by $0.02 per share.

Restatement for Discontinued Operations

The Company will restate its annual financial statements for the years 2001 through 2004, as well as its interim financial statements through September 30, 2005. The restatement is to correct the accounting for discontinued operations acquired in the Company’s merger with The Continental Corporation in 1995. A current review of discontinued operations identified an overstatement of the net assets of these discontinued operations and errors in accounting for the periodic results of these operations.

This restatement will be reflected in the Company’s 2005 Form 10-K and will reduce stockholders’ equity as of December 31, 2004 by $204 million, or 2.2%. The impact of this restatement on net income and earnings per share for the three and twelve months ended December 31, 2004 is presented on page 2 of this financial supplement.

CNA Financial Corporation

Supplemental Financial Information

NON-GAAP FINANCIAL MEASURES

The results and ratios before the impact of significant commutations and catastrophes, presented on pages 15 through 18 of this financial supplement, are non-GAAP financial measures that are not a full financial presentation in accordance with accounting principles generally accepted in the United States of America (GAAP). To allow the reconciliation of these non-GAAP measures, however, these pages also provide the most comparable GAAP measures (i.e., the results and ratios after the impact of significant commutations and catastrophes).

iii

CNA FINANCIAL CORPORATION
Financial Supplement
Statements of Operations

PERIOD ENDED DECEMBER 31


							Fav /									Fav /
	Three Months						(Unfav)			Twelve Months						(Unfav)
(In millions)	2005			2004			% Change			2005			2004			% Change

STATEMENTS OF OPERATIONS
Revenues:
Net earned premiums	$	1,885		$	1,988			(5	)%	$	7,569		$	8,209			(8	)%
Net investment income		547			464			18			1,892			1,680			13
Realized investment gains (losses), net of participating policyholders’ and minority interests		(84	)		167			(150	)		(10	)		(248	)		96
Other revenues		60			67			(10	)		411			283			45


Total revenues		2,408			2,686			(10	)		9,862			9,924			(1	)


Claims, benefits and expenses:
Insurance claims and policyholders’ benefits		2,113			1,591			(33	)		6,999			6,445			(9	)
Amortization of deferred acquisition costs		375			566			34			1,543			1,680			8
Other operating expenses		268			82			N/A			1,034			1,171			12
Interest		28			30			7			124			124			—


Total claims, benefits and expenses		2,784			2,269			(23	)		9,700			9,420			(3	)


Income (loss) before income tax and minority interest		(376	)		417			(190	)		162			504			(68	)
Income tax (expense) benefit		158			(105	)		N/A			105			(31	)		N/A
Minority interest		(8	)		(8	)		—			(24	)		(27	)		11


Income (loss) from continuing operations		(226	)		304			(174	)		243			446			(46	)
Income (loss) from discontinued operations, net of tax		9			(1	)		N/A			21			(21	)		200


Net income (loss)	$	(217	)	$	303			(172	)%	$	264		$	425			(38	)%

CNA FINANCIAL CORPORATION
Financial Supplement
Components of Net Income (Loss) and Per Share Data

PERIOD ENDED DECEMBER 31


							Fav /									Fav /
	Three Months						(Unfav)			Twelve Months						(Unfav)
(In millions, except per share data)	2005			2004			% Change			2005			2004			% Change

COMPONENTS OF NET INCOME (LOSS)
Net operating income (loss)	$	(172	)	$	200			(186	)%	$	253		$	599			(58	)%
Net realized investment gains (losses), net of participating policyholders’ and minority interests		(54	)		104			(152	)		(10	)		(153	)		93

Income (loss) from continuing operations		(226	)		304			(174	)		243			446			(46	)
Income (loss) from discontinued operations, net of tax		9			(1	)		N/A			21			(21	)		200


Net income (loss)	$	(217	)	$	303			(172	)%	$	264		$	425			(38	)%


BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
Income (loss) from continuing operations	$	(0.95	)	$	1.12			(185	)	$	0.68		$	1.49			(54	)
Income (loss) from discontinued operations, net of tax		0.03			(0.01	)		N/A			0.08			(0.09	)		189

Basic and diluted earnings (loss) per share available to common stockholders (1)	$	(0.92	)	$	1.11			(183	)%	$	0.76		$	1.40			(46	)%


Weighted average outstanding common stock and common stock equivalents		256.0			256.0						256.0			256.0


(1)		The three and twelve months ended December 31, 2005 per share results available to common stockholders are reduced by $18 million and $70 million, or $0.07 per share and $0.27 per share, of undeclared preferred stock dividends. The three and twelve months ended December 31, 2004 per share results available to common stockholders are reduced by $17 million and $65 million, or $0.06 per share and $0.25 per share, of undeclared preferred stock dividends.

CNA FINANCIAL CORPORATION
Financial Supplement
Selected Balance Sheet Data


(In millions, except per share data)	December 31, 2005		December 31, 2004

Total assets	$	58,809	$	62,496
Insurance reserves		42,436		43,653
Debt		1,690		2,257
Total liabilities		49,568		53,247
Minority interest		291		275
Accumulated other comprehensive income		359		661
Total stockholders’ equity		8,950		8,974

Book value per common share (1)	$	31.26	$	31.63
Book value per common share excluding unrealized gain or loss on fixed maturity securities (1)	$	29.69	$	28.94
Outstanding shares of common stock (in millions of shares)		256.0		256.0


(1)		Book value per common share as of December 31, 2005 and December 31, 2004 excludes $750 million of preferred stock (Series H) and $198 million and $127 million of cumulative preferred dividends.

CNA FINANCIAL CORPORATION
Financial Supplement
Claim & Claim Adjustment Expense Reserve Data

CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVES


(In millions)	Standard Lines		Specialty Lines		P&C Operations

As of December 31, 2005
Gross	$	15,084	$	5,205	$	20,289
Ceded		3,838		1,411		5,249

Net	$	11,246	$	3,794	$	15,040


As of December 31, 2004
Gross	$	14,302	$	4,860	$	19,162
Ceded		4,994		1,627		6,621

Net	$	9,308	$	3,233	$	12,541

CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVES


	Life & Group		Corporate &
(In millions)	Non-Core		Other Non-Core		Total Operations

As of December 31, 2005
Gross	$	3,277	$	7,372	$	30,938
Ceded		1,440		3,916		10,605

Net	$	1,837	$	3,456	$	20,333


As of December 31, 2004
Gross	$	3,680	$	8,681	$	31,523
Ceded		1,856		5,402		13,879

Net	$	1,824	$	3,279	$	17,644

CNA FINANCIAL CORPORATION
Financial Supplement
Claim & Claim Adjustment Expense Reserve Rollforward

PERIOD ENDED DECEMBER 31, 2005


	Three Months			Twelve Months
(In millions)	Ended			Ended

Claim & claim adjustment expense reserves, beginning of period
Gross	$	31,435		$	31,523
Ceded		12,842			13,879

Net		18,593			17,644


Net incurred claim & claim adjustment expenses		2,089			6,731

Net claim & claim adjustment expense payments		(349	)		(4,042	)


Claim & claim adjustment expense reserves, end of period
Net		20,333			20,333
Ceded		10,605			10,605

Gross	$	30,938		$	30,938

CNA FINANCIAL CORPORATION
Financial Supplement
Investments by Segment Aggregation


	December 31, 2005					September 30, 2005					December 31, 2004
(In millions)	Book Value			Fair Value		Book Value			Fair Value		Book Value			Fair Value

Property & Casualty and Corporate & Other Non-Core:
Fixed Maturities — Taxable	$	16,988		$	16,972	$	16,087		$	16,084	$	15,072		$	15,346
Fixed Maturities — Tax Exempt		7,579			7,631		7,472			7,508		7,680			7,800
Equities		221			374		217			328		232			351
Short-term Investments		3,715			3,714		6,605			6,604		4,503			4,504
Limited Partnership Investments		1,223			1,223		1,236			1,236		1,195			1,195
Other (e.g., Real Estate)		34			32		32			32		34			26

Total Investments	$	29,760		$	29,946	$	31,649		$	31,792	$	28,716		$	29,222



Net Receivable/(Payable)	$	266				$	(931	)			$	6
Securities Lending Collateral		(742	)				(1,984	)				(904	)


Life & Group Non-Core:
Fixed Maturities — Taxable	$	6,574		$	7,053	$	6,753		$	7,270	$	6,495		$	7,124
Fixed Maturities — Tax Exempt		1,475			1,578		1,473			1,567		1,019			1,057
Equities		290			307		206			221		88			105
Short-term Investments		523			524		549			549		1,359			1,359
Limited Partnership Investments		286			286		382			382		354			354
Other (e.g., Mortgage & Policy Loans)		1			1		2			2		23			10

Total Investments	$	9,149		$	9,749	$	9,365		$	9,991	$	9,338		$	10,009



Net Receivable/(Payable)	$	84				$	(81	)			$	(4	)
Securities Lending Collateral		(25	)				(22	)				(14	)


Total Investments	$	38,909		$	39,695	$	41,014		$	41,783	$	38,054		$	39,231



Total Net Receivable/(Payable)	$	350				$	(1,012	)			$	2
Total Securities Lending Collateral		(767	)				(2,006	)				(918	)

The information above related to net receivable/(payable) and securities lending collateral is provided to facilitate an analysis of significant changes in book value. When compared to the net receivable/(payable) per the Consolidated Balance Sheet, the amounts above exclude $86 million, $107 million and $206 million as of December 31, 2005, September 30, 2005 and December 31, 2004 where the net receivable/(payable) balance does not relate to the change in book value.


CNA FINANCIAL CORPORATION		a
Financial Supplement
Property & Casualty Results of Operations

THREE MONTHS ENDED DECEMBER 31


	Standard Lines									Specialty Lines									P&C Operations
							Fav / (Unfav)									Fav / (Unfav)									Fav / (Unfav)
(In millions)	2005			2004			% Change			2005			2004			% Change			2005			2004			% Change

Gross written premiums	$	1,455		$	1,441			1	%	$	728		$	733			(1	)%	$	2,183		$	2,174			—	%
Net written premiums		1,030			1,062			(3	)		625			619			1			1,655			1,681			(2	)

Net earned premiums		1,077			1,161			(7	)		644			605			6			1,721			1,766			(3	)
Net investment income		227			114			99			84			64			31			311			178			75
Other revenues		24			27			(11	)		30			27			11			54			54			—

Total operating revenues		1,328			1,302			2			758			696			9			2,086			1,998			4

Claims, benefits and expenses:
Net incurred claims and benefits		1,107			779			(42	)		459			382			(20	)		1,566			1,161			(35	)
Policyholders’ dividends		3			7			57			1			—			N/A			4			7			43
Amortization of deferred acquisition costs		229			380			40			142			178			20			371			558			34
Other insurance related expenses		126			14			N/A			22			(27	)		(181	)		148			(13	)		N/A
Other operating expenses		28			10			(180	)		27			28			4			55			38			(45	)

Total claims, benefits and expenses		1,493			1,190			(25	)		651			561			(16	)		2,144			1,751			(22	)

Operating income (loss) before income tax and minority interest		(165	)		112			N/A			107			135			(21	)		(58	)		247			(123	)
Income tax (expense) benefit on operating income (loss)		69			(26	)		N/A			(33	)		(43	)		23			36			(69	)		152
Minority interest		(2	)		(4	)		50			(6	)		(4	)		(50	)		(8	)		(8	)		—


Net operating income (loss)		(98	)		82			N/A			68			88			(23	)		(30	)		170			(118	)

Realized investment gains (losses), net of participating policyholders’ and minority interests		(51	)		118			(143	)		(11	)		47			(123	)		(62	)		165			(138	)
Income tax (expense) benefit on realized investment gains (losses)		18			(44	)		141			4			(16	)		125			22			(60	)		137


Net income (loss) from continuing operations	$	(131	)	$	156			(184)	%	$	61		$	119			(49	)%	$	(70	)	$	275			(125)	%


Financial Ratios
Loss & LAE		102.8	%		67.0	%					71.2	%		63.0	%					91.0	%		65.7	%
Acquisition expense		19.1			21.5						19.0			18.3						19.1			20.4
Underwriting expense		13.9			12.5						6.6			7.0						11.0			10.5
Dividends		0.3			0.6						0.1			(0.1	)					0.3			0.4

Expense ratio, including dividends		33.3			34.6						25.7			25.2						30.4			31.3

Combined ratio		136.1	%		101.6	%					96.9	%		88.2	%					121.4	%		97.0	%


CNA FINANCIAL CORPORATION		a
Financial Supplement
Life & Group Non-Core and Corporate & Other Non-Core Segments Results of Operations

THREE MONTHS ENDED DECEMBER 31


							Life & Group Non-Core									Corporate & Other Non-Core										Total Operations
	P&C Operations												Fav / (Unfav)										Fav / (Unfav)									Fav / (Unfav)
(In millions)	2005			2004			2005			2004			% Change				2005			2004			% Change			2005			2004			% Change

Net earned premiums	$	1,721		$	1,766		$	165		$	211			(22)	%		$	(1	)	$	11			(109)	%	$	1,885		$	1,988			(5	)%
Net investment income		311			178			162			235			(31	)			74			51			45			547			464			18
Other revenues		54			54			17			19			(11	)			(11	)		(6	)		(83	)		60			67			(10	)

Total operating revenues		2,086			1,998			344			465			(26	)			62			56			11			2,492			2,519			(1	)

Claims, benefits and expenses:
Net incurred claims and benefits		1,566			1,161			300			391			23				241			34			N/A			2,107			1,586			(33	)
Policyholders’ dividends		4			7			2			(2	)		(200	)			—			—			N/A			6			5			(20	)
Amortization of deferred acquisition costs		371			558			4			6			33				—			2			N/A			375			566			34
Other insurance related expenses		148			(13	)		63			73			14				14			(18	)		(178	)		225			42			N/A
Other operating expenses		55			38			18			18			—				(2	)		14			114			71			70			(1	)

Total claims, benefits and expenses		2,144			1,751			387			486			20				253			32			N/A			2,784			2,269			(23	)

Operating income (loss) before income tax and minority interest		(58	)		247			(43	)		(21	)		(105	)			(191	)		24			N/A			(292	)		250			N/A
Income tax (expense) benefit on operating income (loss)		36			(69	)		21			12			75				71			15			N/A			128			(42	)		N/A
Minority interest		(8	)		(8	)		—			—			N/A				—			—			N/A			(8	)		(8	)		—


Net operating income (loss)		(30	)		170			(22	)		(9	)		(144	)			(120	)		39			N/A			(172	)		200			(186	)

Realized investment gains (losses), net of participating policyholders’ and minority interests		(62	)		165			(22	)		1			N/A				—			1			N/A			(84	)		167			(150	)
Income tax (expense) benefit on realized investment gains (losses)		22			(60	)		8			(1	)		N/A				—			(2	)		N/A			30			(63	)		148


Net income (loss) from continuing operations	$	(70	)	$	275		$	(36	)	$	(9	)		N/A	%		$	(120	)	$	38			N/A	%	$	(226	)		304			(174	)%

Other Financial Data
Property & Casualty Company Information


	P&C Operations						Life & Group Non-Core									Corporate & Other Non-Core									Total Operations
													Fav / (Unfav)									Fav / (Unfav)									Fav / (Unfav)
	2005			2004			2005			2004			% Change			2005			2004			% Change			2005			2004			% Change

Gross written premiums	$	2,183		$	2,174		$	214		$	265			(19)	%	$	76		$	358			(79	)%	$	2,473		$	2,797			(12	)%
Net written premiums		1,655			1,681			159			161			(1	)		(1	)		7			(114	)		1,813			1,849			(2	)
Net earned premiums		1,721			1,766			162			167			(3	)		(2	)		10			(120	)		1,881			1,943			(3	)

Financial Ratios
Loss & LAE		91.0	%		65.7	%		150.3	%		127.7	%					N/M	%		N/M	%					109.0	%		72.3	%
Acquisition expense		19.1			20.4			13.4			14.5						N/M			N/M						18.5			20.0
Underwriting expense		11.0			10.5			24.7			22.8						N/M			N/M						13.1			10.5
Dividends		0.3			0.4			—			—						N/M			N/M						0.2			0.3

Expense ratio, including dividends		30.4			31.3			38.1			37.3						N/M			N/M						31.8			30.8

Combined ratio		121.4	%		97.0	%		188.4	%		165.0	%					N/M	%		N/M	%					140.8	%		103.1	%


		N/M = Not Meaningful


CNA FINANCIAL CORPORATION		a
Financial Supplement
Property & Casualty Results of Operations


TWELVE MONTHS ENDED	Standard Lines									Specialty Lines									P&C Operations
DECEMBER 31							Fav / (Unfav)									Fav / (Unfav)									Fav / (Unfav)
(In millions)	2005			2004			% Change			2005			2004			% Change			2005			2004			% Change

Gross written premiums	$	5,986		$	5,936			1	%	$	2,947		$	2,825			4	%	$	8,933		$	8,761			2	%
Net written premiums		4,382			4,582			(4	)		2,463			2,391			3			6,845			6,973			(2	)

Net earned premiums		4,410			4,917			(10	)		2,475			2,277			9			6,885			7,194			(4	)
Net investment income		767			496			55			281			246			14			1,048			742			41
Other revenues		98			129			(24	)		124			109			14			222			238			(7	)

Total operating revenues		5,275			5,542			(5	)		2,880			2,632			9			8,155			8,174			—

Claims, benefits and expenses:
Net incurred claims and benefits		3,857			3,480			(11	)		1,617			1,441			(12	)		5,474			4,921			(11	)
Policyholders’ dividends		19			9			(111	)		4			5			20			23			14			(64	)
Amortization of deferred acquisition costs		986			1,109			11			532			506			(5	)		1,518			1,615			6
Other insurance related expenses		444			593			25			115			88			(31	)		559			681			18
Other operating expenses		110			94			(17	)		108			101			(7	)		218			195			(12	)

Total claims, benefits and expenses		5,416			5,285			(2	)		2,376			2,141			(11	)		7,792			7,426			(5	)

Operating income (loss) before income tax and minority interest		(141	)		257			(155	)		504			491			3			363			748			(51	)
Income tax (expense) benefit on operating income (loss)		110			(27	)		N/A			(154	)		(150	)		(3	)		(44	)		(177	)		75
Minority interest		(10	)		(10	)		—			(14	)		(17	)		18			(24	)		(27	)		11


Net operating income (loss)		(41	)		220			(119	)		336			324			4			295			544			(46	)

Realized investment gains, net of participating policyholders’ and minority interests		20			219			(91	)		14			84			(83	)		34			303			(89	)
Income tax expense on realized investment gains		(11	)		(80	)		86			(2	)		(30	)		93			(13	)		(110	)		88


Net income (loss) from continuing operations	$	(32	)	$	359			(109	)%	$	348		$	378			(8	)%	$	316		$	737			(57	)%


Financial Ratios
Loss & LAE		87.5	%		70.8	%					65.3	%		63.3	%					79.5	%		68.4	%
Acquisition expense		19.8			22.6						19.5			18.8						19.7			21.4
Underwriting expense		12.6			12.0						6.6			7.3						10.5			10.5
Dividends		0.4			0.2						0.2			0.2						0.3			0.2

Expense ratio, including dividends		32.8			34.8						26.3			26.3						30.5			32.1

Combined ratio		120.3	%		105.6	%					91.6	%		89.6	%					110.0	%		100.5	%

CNA FINANCIAL CORPORATION
Financial Supplement
Life & Group Non-Core and Corporate & Other Non-Core Segments Results of Operations

TWELVE MONTHS ENDED
DECEMBER 31


	P&C Operations						Life & Group Non-Core									Corporate & Other Non-Core									Total Operations
													Fav / (Unfav)									Fav / (Unfav)									Fav / (Unfav)
(In millions)	2005			2004			2005			2004			% Change			2005			2004			% Change			2005			2004			% Change

Net earned premiums	$	6,885		$	7,194		$	704		$	921			(24	)%	$	(20	)	$	94			(121	)%	$	7,569		$	8,209			(8	)%
Net investment income		1,048			742			593			692			(14	)		251			246			2			1,892			1,680			13
Other revenues		222			238			95			91			4			94			(46	)		N/A			411			283			45

Total operating revenues		8,155			8,174			1,392			1,704			(18	)		325			294			11			9,872			10,172			(3	)

Claims, benefits and expenses:
Net incurred claims and benefits		5,474			4,921			1,160			1,372			15			341			141			(142	)		6,975			6,434			(8	)
Policyholders’ dividends		23			14			1			(3	)		(133	)		—			—			N/A			24			11			(118	)
Amortization of deferred acquisition costs		1,518			1,615			22			36			39			3			29			90			1,543			1,680			8
Other insurance related expenses		559			681			257			291			12			13			(3	)		N/A			829			969			14
Other operating expenses		218			195			61			76			20			50			55			9			329			326			(1	)

Total claims, benefits and expenses		7,792			7,426			1,501			1,772			15			407			222			(83	)		9,700			9,420			(3	)

Operating income (loss) before income tax and minority interest		363			748			(109	)		(68	)		(60	)		(82	)		72			N/A			172			752			(77	)
Income tax (expense) benefit on operating income (loss)		(44	)		(177	)		58			39			49			91			12			N/A			105			(126	)		183
Minority interest		(24	)		(27	)		—			—			N/A			—			—			N/A			(24	)		(27	)		11


Net operating income (loss)		295			544			(51	)		(29	)		(76	)		9			84			(89	)		253			599			(58	)

Realized investment gains (losses), net of participating policyholders’ and minority interests		34			303			(30	)		(615	)		95			(14	)		64			(122	)		(10	)		(248	)		96
Income tax (expense) benefit on realized investment gains (losses)		(13	)		(110	)		11			230			(95	)		2			(25	)		108			—			95			N/A


Net income (loss) from continuing operations	$	316		$	737		$	(70	)	$	(414	)		83	%	$	(3	)	$	123			(102	)%	$	243			446			(46	)%

Other Financial Data
Property & Casualty Company Information


	P&C Operations						Life & Group Non-Core									Corporate & Other Non-Core									Total Operations
													Fav / (Unfav)									Fav / (Unfav)									Fav / (Unfav)
(In millions)	2005			2004			2005			2004			% Change			2005			2004			% Change			2005			2004			% Change

Gross written premiums	$	8,933		$	8,761		$	916		$	1,102			(17	)%	$	930		$	1,692			(45	)%	$	10,779		$	11,555			(7	)%
Net written premiums		6,845			6,973			694			633			10			(30	)		(12	)		(150	)		7,509			7,594			(1	)
Net earned premiums		6,885			7,194			693			621			12			(20	)		110			(118	)		7,558			7,925			(5	)

Financial Ratios
Loss & LAE		79.5	%		68.4	%		136.0	%		134.4	%					N/M	%		N/M	%					89.4	%		74.6	%
Acquisition expense		19.7			21.4			17.3			10.5						N/M			N/M						19.4			20.6
Underwriting expense		10.5			10.5			20.0			18.2						N/M			N/M						11.8			10.9
Dividends		0.3			0.2			—			—						N/M			N/M						0.3			0.2

Expense ratio, including dividends		30.5			32.1			37.3			28.7						N/M			N/M						31.5			31.7

Combined ratio		110.0	%		100.5	%		173.3	%		163.1	%					N/M	%		N/M	%					120.9	%		106.3	%

N/M = Not Meaningful

CNA FINANCIAL CORPORATION
Financial Supplement
Property & Casualty Operations and Corporate & Other Non-Core Segment — Catastrophe Losses

CATASTROPHE LOSSES (PRETAX)


							Corporate &
(In millions)	Standard Lines		Specialty Lines		P&C Operations		Other Non-Core		Total
Three months ended December 31, 2005 (1)	$	46	$	4	$	50	$	—	$	50
Twelve months ended December 31, 2005 (1)		470		23		493		—		493

Three months ended December 31, 2004 (2)	$	5	$	2	$	7	$	—	$	7
Twelve months ended December 31, 2004 (2)		260		15		275		3		278

CATASTROPHE LOSSES (AFTER-TAX)


							Corporate &
(In millions)	Standard Lines		Specialty Lines		P&C Operations		Other Non-Core		Total
Three months ended December 31, 2005 (1)	$	30	$	3	$	33	$	—	$	33
Twelve months ended December 31, 2005 (1)		305		15		320		—		320

Three months ended December 31, 2004 (2)	$	3	$	1	$	4	$	—	$	4
Twelve months ended December 31, 2004 (2)		169		10		179		2		181


(1)		For the three and twelve months ended December 31, 2005, the above amounts exclude $6 million pretax ($4 million after-tax) and $27 million pretax ($18 million after-tax) of reinstatement premium. For the twelve months ended December 31, 2005, the above amounts exclude $8 million pretax ($6 million after-tax) of insurance bad debt related to the third quarter 2005 hurricanes and a $15 million pretax ($10 million after-tax) reduction of estimated hurricane-related assessments related to the third quarter 2004 hurricanes. For the three and twelve months ended December 31, 2005, the above amounts include losses of $47 million pretax ($31 million after-tax) and $481 million pretax ($313 million after-tax) related to Hurricanes Katrina, Wilma, Rita, Dennis and Ophelia.

(2)		For the three and twelve months ended December 31, 2004, the above amounts exclude $3 million pretax ($2 million after-tax) and $8 million pretax ($5 million after-tax) of reinstatement premium related to the third quarter 2004 hurricanes. For the twelve months ended December 31, 2004, the above amounts exclude $15 million pretax ($10 million after-tax) of estimated assessments related to the third quarter 2004 hurricanes. For the twelve months ended December 31, 2004, the above amounts include losses of $250 million pretax ($163 million after-tax) related to Hurricanes Charley, Frances, Ivan and Jeanne.


CNA FINANCIAL CORPORATION
Financial Supplement
Analysis of Pretax Net Investment Income


	Standard Lines
(In millions)	1Q04			2Q04			3Q04			4Q04			YTD 2004			1Q05			2Q05			3Q05			4Q05			YTD 2005
Limited partnership income	$	37		$	13		$	12		$	39		$	101		$	42		$	22		$	38		$	37		$	139
Interest on funds withheld and other deposits		(38	)		(43	)		(44	)		(70	)		(195	)		(18	)		(34	)		(34	)		(19	)		(105	)
Income from trading securities		—			—			—			1			1			1			—			1			—			2
Other investment income		139			149			157			144			589			158			183			181			209			731

Net investment income	$	138		$	119		$	125		$	114		$	496		$	183		$	171		$	186		$	227		$	767


	Specialty Lines
	1Q04			2Q04			3Q04			4Q04			YTD 2004			1Q05			2Q05			3Q05			4Q05			YTD 2005
Limited partnership income	$	13		$	5		$	4		$	14		$	36		$	13		$	7		$	12		$	13		$	45
Interest on funds withheld and other deposits		(2	)		(2	)		(3	)		(7	)		(14	)		(12	)		(1	)		(2	)		(2	)		(17	)
Income from trading securities		—			—			—			—			—			—			—			—			—			—
Other investment income		51			56			60			57			224			55			61			64			73			253

Net investment income	$	62		$	59		$	61		$	64		$	246		$	56		$	67		$	74		$	84		$	281


	P&C Operations
	1Q04			2Q04			3Q04			4Q04			YTD 2004			1Q05			2Q05			3Q05			4Q05			YTD 2005
Limited partnership income	$	50		$	18		$	16		$	53		$	137		$	55		$	29		$	50		$	50		$	184
Interest on funds withheld and other deposits		(40	)		(45	)		(47	)		(77	)		(209	)		(30	)		(35	)		(36	)		(21	)		(122	)
Income from trading securities		—			—			—			1			1			1			—			1			—			2
Other investment income		190			205			217			201			813			213			244			245			282			984

Net investment income	$	200		$	178		$	186		$	178		$	742		$	239		$	238		$	260		$	311		$	1,048


	Life & Group Non-Core
	1Q04		2Q04		3Q04			4Q04		YTD 2004		1Q05			2Q05		3Q05		4Q05		YTD 2005
Limited partnership income	$	9	$	6	$	3		$	11	$	29	$	9		$	1	$	8	$	4	$	22
Interest on funds withheld and other deposits		—		—		—			—		—		—			—		—		—		—
Income from trading securities		20		14		(21	)		96		109		(31	)		14		40		22		45
Other investment income		177		122		127			128		554		128			131		131		136		526

Net investment income	$	206	$	142	$	109		$	235	$	692	$	106		$	146	$	179	$	162	$	593


	Corporate & Other Non-Core
	1Q04			2Q04			3Q04			4Q04			YTD 2004			1Q05			2Q05			3Q05			4Q05			YTD 2005
Limited partnership income	$	16		$	6		$	7		$	17		$	46		$	15		$	8		$	14		$	11		$	48
Interest on funds withheld and other deposits		(8	)		(10	)		(7	)		(27	)		(52	)		(9	)		(15	)		(14	)		(6	)		(44	)
Income from trading securities		—			—			—			—			—			—			—			—			—			—
Other investment income		61			65			65			61			252			55			62			61			69			247

Net investment income	$	69		$	61		$	65		$	51		$	246		$	61		$	55		$	61		$	74		$	251


	Total Operations
	1Q04			2Q04			3Q04			4Q04			YTD 2004			1Q05			2Q05			3Q05			4Q05			YTD 2005
Limited partnership income	$	75		$	30		$	26		$	81		$	212		$	79		$	38		$	72		$	65		$	254
Interest on funds withheld and other deposits		(48	)		(55	)		(54	)		(104	)		(261	)		(39	)		(50	)		(50	)		(27	)		(166	)
Income from trading securities		20			14			(21	)		97			110			(30	)		14			41			22			47
Other investment income		428			392			409			390			1,619			396			437			437			487			1,757

Net investment income	$	475		$	381		$	360		$	464		$	1,680		$	406		$	439		$	500		$	547		$	1,892


CNA FINANCIAL CORPORATION
Financial Supplement
Statutory Data — Preliminary


PERIOD ENDED DECEMBER 31	Three Months									Twelve Months
Income Statement	(Preliminary)						Fav / (Unfav)			(Preliminary)						Fav / (Unfav)
(In millions)	2005			2004			% Change			2005			2004			% Change
Property & Casualty Companies
Gross written premiums	$	2,184		$	2,735			(20	)%	$	9,649		$	11,247			(14	)%
Net written premiums		1,693			1,749			(3	)		7,069			7,290			(3	)

Net earned premiums		1,608			1,688			(5	)		6,516			6,904			(6	)
Claim and claim adjustment expenses		1,873			1,227			(53	)		6,010			5,298			(13	)
Acquisition expenses		273			262			(4	)		1,199			1,230			3
Underwriting expenses		197			192			(3	)		908			809			(12	)
Policyholders’ dividends		6			12			50			34			46			26

Underwriting loss		(741	)		(5	)		N/A			(1,635	)		(479	)		N/A
Net investment income (1)		567			368			54			2,202			1,345			64
Other revenues/expenses		(82	)		(62	)		(32	)		(108	)		(385	)		72
Income tax (expense) benefit		7			(61	)		111			91			(251	)		136
Net realized gains (losses)		(33	)		174			(119	)		17			464			(96	)

Net income (loss)	$	(282	)	$	414			(168	)%	$	567		$	694			(18	)%


Financial Ratios
Loss and LAE		116.5	%		72.7	%					92.2	%		76.7	%
Acquisition expense		16.1			15.0						17.0			16.9
Underwriting expense		11.6			11.0						13.9			11.1
Policyholders’ dividends		0.4			0.7						0.5			0.7

Expense ratio		28.1			26.7						31.4			28.7

Combined ratio		144.6	%		99.4	%					123.6	%		105.4	%


Life Companies
Earned premium	$	4		$	45					$	11		$	324

SUPPLEMENTAL STATUTORY DATA


	(Preliminary)
(In millions)	December 31, 2005		December 31, 2004

Property & Casualty Companies
Statutory surplus (2)	$	6,975	$	6,998

Life Companies
Statutory surplus	$	627	$	1,177
Gross life insurance inforce		20,549		56,645


(1)		Includes $125 million and $625 million of dividends from CCC’s life subsidiary, Continental Assurance Company, for the three and twelve months ended December 31, 2005.

(2)		Surplus includes the Property & Casualty Companies’ equity ownership of the life insurance subsidiary.


CNA FINANCIAL CORPORATION
Financial Supplement
Property & Casualty Operations
Loss and LAE Ratio Analysis


	Standard Lines
	2005 YTD			2004 FY			2004 FY
	Evaluated at			Evaluated at			Evaluated at
	12/31/05			12/31/04			12/31/05
Gross Accident Year		76.4	%		67.2	%		63.2	%
Impact of Reinsurance		(0.1	)		2.0			1.2

Net Accident Year		76.3			69.2			64.4	%

Impact of Significant Commutations		6.2			(0.1	)
Impact of Corporate Covers		0.7			0.1
Impact of Development & Change in Allowance for Uncollectible Reinsurance		4.3			1.6

Net Calendar Year		87.5	%		70.8	%


	Specialty Lines
	2005 YTD			2004 FY			2004 FY
	Evaluated at			Evaluated at			Evaluated at
	12/31/05			12/31/04			12/31/05
Gross Accident Year		63.7	%		64.1	%		55.7	%
Impact of Reinsurance		(0.3	)		(0.6	)		0.3

Net Accident Year		63.4			63.5			56.0	%

Impact of Significant Commutations		0.9			(1.3	)
Impact of Corporate Covers		(0.3	)		(0.6	)
Impact of Development & Change in Allowance for Uncollectible Reinsurance		1.3			1.7

Net Calendar Year		65.3	%		63.3	%


	P&C Operations
	2005 YTD			2004 FY			2004 FY
	Evaluated at			Evaluated at			Evaluated at
	12/31/05			12/31/04			12/31/05
Gross Accident Year		72.2	%		66.3	%		61.0	%
Impact of Reinsurance		(0.6	)		1.1			0.8

Net Accident Year		71.6			67.4			61.8	%

Impact of Significant Commutations		4.3			(0.5	)
Impact of Corporate Covers		0.4			(0.1	)
Impact of Development & Change in Allowance for Uncollectible Reinsurance		3.2			1.6

Net Calendar Year		79.5	%		68.4	%

CNA FINANCIAL CORPORATION
Financial Supplement
Impact of Significant Items

THREE MONTHS ENDED
DECEMBER 31, 2005


	Standard Lines												Specialty Lines												P&C Operations
	2005 Results												2005 Results												2005 Results
	Before Impact of			Significant									Before Impact of			Significant									Before Impact of			Significant
(In millions)	Significant Items			Commutations			Catastrophes			2005 Results			Significant Items			Commutations			Catastrophes			2005 Results			Significant Items			Commutations			Catastrophes			2005 Results
Net earned premiums	$	1,083		$	—		$	(6	)	$	1,077		$	644		$	—		$	—		$	644		$	1,727		$	—		$	(6	)	$	1,721
Net investment income		227			—			—			227			84			—			—			84			311			—			—			311
Other revenues		24			—			—			24			30			—			—			30			54			—			—			54

Total operating revenues		1,334			—			(6	)		1,328			758			—			—			758			2,092			—			(6	)		2,086

Claims, benefits and expenses:
Net incurred claims and benefits		795			266			46			1,107			432			23			4			459			1,227			289			50			1,566
Policyholders’ dividends		3			—			—			3			1			—			—			1			4			—			—			4
Amortization of deferred acquisition costs		229			—			—			229			142			—			—			142			371			—			—			371
Other insurance related expenses		126			—			—			126			22			—			—			22			148			—			—			148
Other operating expenses		28			—			—			28			27			—			—			27			55			—			—			55

Total claims, benefits and expenses		1,181			266			46			1,493			624			23			4			651			1,805			289			50			2,144

Operating income (loss) before income tax and minority interest		153			(266	)		(52	)		(165	)		134			(23	)		(4	)		107			287			(289	)		(56	)		(58	)
Income tax (expense) benefit on operating income (loss)		(42	)		93			18			69			(42	)		8			1			(33	)		(84	)		101			19			36
Minority interest		(2	)		—			—			(2	)		(6	)		—			—			(6	)		(8	)		—			—			(8	)


Net operating income (loss)		109			(173	)		(34	)		(98	)		86			(15	)		(3	)		68			195			(188	)		(37	)		(30	)

Realized investment losses, net of participating policyholders’ and minority interests		(51	)		—			—			(51	)		(11	)		—			—			(11	)		(62	)		—			—			(62	)
Income tax benefit on realized investment losses		18			—			—			18			4			—			—			4			22			—			—			22


Net income (loss) from continuing operations	$	76		$	(173	)	$	(34	)	$	(131	)	$	79		$	(15	)	$	(3	)	$	61		$	155		$	(188	)	$	(37	)	$	(70	)


Financial Ratios
Loss & LAE		73.4	%								102.8	%		67.1	%								71.2	%		71.1	%								91.0	%
Acquisition expense		19.0									19.1			19.0									19.0			19.0									19.1
Underwriting expense		13.8									13.9			6.6									6.6			11.0									11.0
Dividends		0.3									0.3			0.1									0.1			0.3									0.3

Expense ratio, including dividends		33.1									33.3			25.7									25.7			30.3									30.4

Combined ratio		106.5	%								136.1	%		92.8	%								96.9	%		101.4	%								121.4	%

THREE MONTHS ENDED
DECEMBER 31, 2005


	Corporate & Other Non-Core											Total
	2005 Results											2005 Results
	Before Impact of			Significant								Before Impact of			Significant
(In millions)	Significant Items			Commutations			Catastrophes		2005 Results			Significant Items			Commutations			Catastrophes			2005 Results
Net earned premiums	$	(1	)	$	—		$	—	$	(1	)	$	1,726		$	—		$	(6	)	$	1,720
Net investment income		74			—			—		74			385			—			—			385
Other revenues		(11	)		—			—		(11	)		43			—			—			43

Total operating revenues		62			—			—		62			2,154			—			(6	)		2,148

Claims, benefits and expenses:
Net incurred claims and benefits		178			63			—		241			1,405			352			50			1,807
Policyholders’ dividends		—			—			—		—			4			—			—			4
Amortization of deferred acquisition costs		—			—			—		—			371			—			—			371
Other insurance related expenses		14			—			—		14			162			—			—			162
Other operating expenses		6			(8	)		—		(2	)		61			(8	)		—			53

Total claims, benefits and expenses		198			55			—		253			2,003			344			50			2,397

Operating income (loss) before income tax and minority interest		(136	)		(55	)		—		(191	)		151			(344	)		(56	)		(249	)
Income tax (expense) benefit on operating income (loss)		51			20			—		71			(33	)		121			19			107
Minority interest		—			—			—		—			(8	)		—			—			(8	)


Net operating income (loss)		(85	)		(35	)		—		(120	)		110			(223	)		(37	)		(150	)

Realized investment losses, net of participating policyholders’ and minority interests		—			—			—		—			(62	)		—			—			(62	)
Income tax benefit on realized investment losses		—			—			—		—			22			—			—			22


Net income (loss) from continuing operations	$	(85	)	$	(35	)	$	—	$	(120	)	$	70		$	(223	)	$	(37	)	$	(190	)

CNA FINANCIAL CORPORATION
Financial Supplement
Impact of Significant Items

TWELVE MONTHS ENDED
DECEMBER 31, 2005


	Standard Lines												Specialty Lines													P&C Operations
	2005 Results												2005 Results													2005 Results
	Before Impact of			Significant									Before Impact of			Significant										Before Impact of			Significant
(In millions)	Significant Items			Commutations			Catastrophes			2005 Results			Significant Items			Commutations			Catastrophes				2005 Results			Catastrophes			Commutations			Catastrophes			2005 Results

Net earned premiums	$	4,437		$	—		$	(27	)	$	4,410		$	2,475		$	—		$	—			$	2,475		$	6,912		$	—		$	(27	)	$	6,885
Net investment income		767			—			—			767			281			—			—				281			1,048			—			—			1,048
Other revenues		98			—			—			98			124			—			—				124			222			—			—			222

Total operating revenues		5,302			—			(27	)		5,275			2,880			—			—				2,880			8,182			—			(27	)		8,155

Claims, benefits and expenses:
Net incurred claims and benefits		3,121			266			470			3,857			1,571			23			23				1,617			4,692			289			493			5,474
Policyholders’ dividends		19			—			—			19			4			—			—				4			23			—			—			23
Amortization of deferred acquisition costs		986			—			—			986			532			—			—				532			1,518			—			—			1,518
Other insurance related expenses		453			—			(9	)		444			113			—			2				115			566			—			(7	)		559
Other operating expenses		110			—			—			110			108			—			—				108			218			—			—			218

Total claims, benefits and expenses		4,689			266			461			5,416			2,328			23			25				2,376			7,017			289			486			7,792

Operating income (loss) before income tax and minority interest		613			(266	)		(488	)		(141	)		552			(23	)		(25	)			504			1,165			(289	)		(513	)		363
Income tax (expense) benefit on operating income (loss)		(153	)		93			170			110			(171	)		8			9				(154	)		(324	)		101			179			(44	)
Minority interest		(10	)		—			—			(10	)		(14	)		—			—		��		(14	)		(24	)		—			—			(24	)


Net operating income (loss)		450			(173	)		(318	)		(41	)		367			(15	)		(16	)			336			817			(188	)		(334	)		295

Realized investment gains, net of participating policyholders’ and minority interests		20			—			—			20			14			—			—				14			34			—			—			34
Income tax expense on realized investment gains		(11	)		—			—			(11	)		(2	)		—			—				(2	)		(13	)		—			—			(13	)


Net income (loss) from continuing operations	$	459		$	(173	)	$	(318	)	$	(32	)	$	379		$	(15	)	$	(16	)		$	348		$	838		$	(188	)	$	(334	)	$	316


Financial Ratios
Loss & LAE		70.3	%								87.5	%		63.5	%									65.3	%		67.9	%								79.5	%
Acquisition expense		19.9									19.8			19.4										19.5			19.7									19.7
Underwriting expense		12.6									12.6			6.6										6.6			10.5									10.5
Dividends		0.4									0.4			0.2										0.2			0.3									0.3

Expense ratio, including dividends		32.9									32.8			26.2										26.3			30.5									30.5

Combined ratio		103.2	%								120.3	%		89.7	%									91.6	%		98.4	%								110.0	%

TWELVE MONTHS ENDED
DECEMBER 31, 2005


	Corporate & Other Non-Core											Total
	2005 Results											2005 Results
	Before Impact of			Significant								Before Impact of			Significant
(In millions)	Catastrophes			Commutations			Catastrophes		2005 Results			Catastrophes			Commutations			Catastrophes			2005 Results

Net earned premiums	$	(20	)	$	—		$	—	$	(20	)	$	6,892		$	—		$	(27	)	$	6,865
Net investment income		251			—			—		251			1,299			—			—			1,299
Other revenues		94			—			—		94			316			—			—			316

Total operating revenues		325			—			—		325			8,507			—			(27	)		8,480

Claims, benefits and expenses:
Net incurred claims and benefits		222			119			—		341			4,914			408			493			5,815
Policyholders’ dividends		—			—			—		—			23			—			—			23
Amortization of deferred acquisition costs		3			—			—		3			1,521			—			—			1,521
Other insurance related expenses		13			—			—		13			579			—			(7	)		572
Other operating expenses		58			(8	)		—		50			276			(8	)		—			268

Total claims, benefits and expenses		296			111			—		407			7,313			400			486			8,199

Operating income (loss) before income tax and minority interest		29			(111	)		—		(82	)		1,194			(400	)		(513	)		281
Income tax (expense) benefit on operating income (loss)		51			40			—		91			(273	)		141			179			47
Minority interest		—			—			—		—			(24	)		—			—			(24	)


Net operating income (loss)		80			(71	)		—		9			897			(259	)		(334	)		304

Realized investment gains (losses), net of participating policyholders’ and minority interests		(14	)		—			—		(14	)		20			—			—			20
Income tax (expense) benefit on realized investment gains (losses)		2			—			—		2			(11	)		—			—			(11	)


Net income (loss) from continuing operations	$	68		$	(71	)	$	—	$	(3	)	$	906		$	(259	)	$	(334	)	$	313

CNA FINANCIAL CORPORATION
Financial Supplement
Impact of Significant Items

THREE MONTHS ENDED
DECEMBER 31, 2004


	Standard Lines											Specialty Lines											P&C Operations
	2004 Results											2004 Results											2004 Results
	Before Impact of			Significant								Before Impact of			Significant								Before Impact of			Significant
(In millions)	Significant Items			Commutations		Catastrophes			2004 Results			Significant Items			Commutations		Catastrophes			2004 Results			Significant Items			Commutations		Catastrophes			2004 Results

Net earned premiums	$	1,164		$	—	$	(3	)	$	1,161		$	605		$	—	$	—		$	605		$	1,769		$	—	$	(3	)	$	1,766
Net investment income		114			—		—			114			64			—		—			64			178			—		—			178
Other revenues		27			—		—			27			27			—		—			27			54			—		—			54

Total operating revenues		1,305			—		(3	)		1,302			696			—		—			696			2,001			—		(3	)		1,998

Claims, benefits and expenses:
Net incurred claims and benefits		774			—		5			779			380			—		2			382			1,154			—		7			1,161
Policyholders’ dividends		7			—		—			7			—			—		—			—			7			—		—			7
Amortization of deferred acquisition costs		380			—		—			380			178			—		—			178			558			—		—			558
Other insurance related expenses		14			—		—			14			(27	)		—		—			(27	)		(13	)		—		—			(13	)
Other operating expenses		10			—		—			10			28			—		—			28			38			—		—			38

Total claims, benefits and expenses		1,185			—		5			1,190			559			—		2			561			1,744			—		7			1,751

Operating income (loss) before income tax and minority interest		120			—		(8	)		112			137			—		(2	)		135			257			—		(10	)		247
Income tax (expense) benefit on operating income (loss)		(29	)		—		3			(26	)		(44	)		—		1			(43	)		(73	)		—		4			(69	)
Minority interest		(4	)		—		—			(4	)		(4	)		—		—			(4	)		(8	)		—		—			(8	)


Net operating income (loss)		87			—		(5	)		82			89			—		(1	)		88			176			—		(6	)		170

Realized investment gains, net of participating policyholders’ and minority interests		118			—		—			118			47			—		—			47			165			—		—			165
Income tax expense on realized investment gains		(44	)		—		—			(44	)		(16	)		—		—			(16	)		(60	)		—		—			(60	)


Net income (loss) from continuing operations	$	161		$	—	$	(5	)	$	156		$	120		$	—	$	(1	)	$	119		$	281		$	—	$	(6	)	$	275


Financial Ratios
Loss & LAE		66.5	%							67.0	%		62.6	%							63.0	%		65.2	%							65.7	%
Acquisition expense		21.5								21.5			18.3								18.3			20.4								20.4
Underwriting expense		12.4								12.5			7.0								7.0			10.5								10.5
Dividends		0.6								0.6			(0.1	)							(0.1	)		0.4								0.4

Expense ratio, including dividends		34.5								34.6			25.2								25.2			31.3								31.3

Combined ratio		101.0	%							101.6	%		87.8	%							88.2	%		96.5	%							97.0	%

THREE MONTHS ENDED
DECEMBER 31, 2004


	Corporate & Other Non-Core										Total
	2004 Results										2004 Results
	Before Impact of			Significant							Before Impact of			Significant
(In millions)	Significant Items			Commutations		Catastrophes		2004 Results			Significant Items			Commutations		Catastrophes			2004 Results

Net earned premiums	$	11		$	—	$	—	$	11		$	1,780		$	—	$	(3	)	$	1,777
Net investment income		51			—		—		51			229			—		—			229
Other revenues		(6	)		—		—		(6	)		48			—		—			48

Total operating revenues		56			—		—		56			2,057			—		(3	)		2,054

Claims, benefits and expenses:
Net incurred claims and benefits		34			—		—		34			1,188			—		7			1,195
Policyholders’ dividends		—			—		—		—			7			—		—			7
Amortization of deferred acquisition costs		2			—		—		2			560			—		—			560
Other insurance related expenses		(18	)		—		—		(18	)		(31	)		—		—			(31	)
Other operating expenses		14			—		—		14			52			—		—			52

Total claims, benefits and expenses		32			—		—		32			1,776			—		7			1,783

Operating income (loss) before income tax and minority interest		24			—		—		24			281			—		(10	)		271
Income tax (expense) benefit on operating income (loss)		15			—		—		15			(58	)		—		4			(54	)
Minority interest		—			—		—		—			(8	)		—		—			(8	)


Net operating income (loss)		39			—		—		39			215			—		(6	)		209

Realized investment gains, net of participating policyholders’ and minority interests		1			—		—		1			166			—		—			166
Income tax expense on realized investment gains		(2	)		—		—		(2	)		(62	)		—		—			(62	)


Net income (loss) from continuing operations	$	38		$	—	$	—	$	38		$	319		$	—	$	(6	)	$	313


CNA FINANCIAL CORPORATION
Financial Supplement
Impact of Significant Items		a

TWELVE MONTHS ENDED
DECEMBER 31, 2004


	Standard Lines												Specialty Lines												P&C Operations
	2004 Results												2004 Results												2004 Results
	Before Impact of			Significant									Before Impact of			Significant									Before Impact of			Significant
(In millions)	Significant Items			Commutations			Catastrophes			2004 Results			Significant Items			Commutations			Catastrophes			2004 Results			Significant Items			Commutations			Catastrophes			2004 Results

Net earned premiums	$	4,925		$	—		$	(8	)	$	4,917		$	2,277		$	—		$	—		$	2,277		$	7,202		$	—		$	(8	)	$	7,194
Net investment income		496			—			—			496			246			—			—			246			742			—			—			742
Other revenues		129			—			—			129			109			—			—			109			238			—			—			238

Total operating revenues		5,550			—			(8	)		5,542			2,632			—			—			2,632			8,182			—			(8	)		8,174

Claims, benefits and expenses:
Net incurred claims and benefits		3,226			(6	)		260			3,480			1,455			(29	)		15			1,441			4,681			(35	)		275			4,921
Policyholders’ dividends		9			—			—			9			5			—			—			5			14			—			—			14
Amortization of deferred acquisition costs		1,109			—			—			1,109			506			—			—			506			1,615			—			—			1,615
Other insurance related expenses		579			—			14			593			87			—			1			88			666			—			15			681
Other operating expenses		94			—			—			94			101			—			—			101			195			—			—			195

Total claims, benefits and expenses		5,017			(6	)		274			5,285			2,154			(29	)		16			2,141			7,171			(35	)		290			7,426

Operating income (loss) before income tax and minority interest		533			6			(282	)		257			478			29			(16	)		491			1,011			35			(298	)		748
Income tax (expense) benefit on operating income (loss)		(124	)		(2	)		99			(27	)		(145	)		(10	)		5			(150	)		(269	)		(12	)		104			(177	)
Minority interest		(10	)		—			—			(10	)		(17	)		—			—			(17	)		(27	)		—			—			(27	)


Net operating income (loss)		399			4			(183	)		220			316			19			(11	)		324			715			23			(194	)		544

Realized investment gains, net of participating policyholders’ and minority interests		219			—			—			219			84			—			—			84			303			—			—			303
Income tax expense on realized investment gains		(80	)		—			—			(80	)		(30	)		—			—			(30	)		(110	)		—			—			(110	)


Net income (loss) from continuing operations	$	538		$	4		$	(183	)	$	359		$	370		$	19 $			(11	)	$	378		$	908		$	23		$	(194	)	$	737


Financial Ratios
Loss & LAE		65.5	%								70.8	%		63.9	%								63.3	%		65.0	%								68.4	%
Acquisition expense		22.2									22.6			18.8									18.8			21.2									21.4
Underwriting expense		12.1									12.0			7.3									7.3			10.5									10.5
Dividends		0.2									0.2			0.2									0.2			0.2									0.2

Expense ratio, including dividends		34.5									34.8			26.3									26.3			31.9									32.1

Combined ratio		100.0	%								105.6	%		90.2	%								89.6	%		96.9	%								100.5	%

TWELVE MONTHS ENDED
DECEMBER 31, 2004


	Corporate & Other Non-Core												Total
	2004 Results												2004 Results
	Before Impact of			Significant									Before Impact of			Significant
(In millions)	Significant Items			Commutations			Catastrophes			2004 Results			Significant Items			Commutations			Catastrophes			2004 Results

Net earned premiums	$	101		$	(7	)	$	—		$	94		$	7,303		$	(7	)	$	(8	)	$	7,288
Net investment income		246			—			—			246			988			—			—			988
Other revenues		(46	)		—			—			(46	)		192			—			—			192

Total operating revenues		301			(7	)		—			294			8,483			(7	)		(8	)		8,468

Claims, benefits and expenses:
Net incurred claims and benefits		138			—			3			141			4,819			(35	)		278			5,062
Policyholders’ dividends		—			—			—			—			14			—			—			14
Amortization of deferred acquisition costs		29			—			—			29			1,644			—			—			1,644
Other insurance related expenses		(3	)		—			—			(3	)		663			—			15			678
Other operating expenses		55			—			—			55			250			—			—			250

Total claims, benefits and expenses		219			—			3			222			7,390			(35	)		293			7,648

Operating income (loss) before income tax and minority interest		82			(7	)		(3	)		72			1,093			28			(301	)		820
Income tax (expense) benefit on operating income (loss)		9			2			1			12			(260	)		(10	)		105			(165	)
Minority interest		—			—			—			—			(27	)		—			—			(27	)


Net operating income (loss)		91			(5	)		(2	)		84			806			18			(196	)		628

Realized investment gains, net of participating policyholders’ and minority interests		64			—			—			64			367			—			—			367
Income tax expense on realized investment gains		(25	)		—			—			(25	)		(135	)		—			—			(135	)


Net income (loss) from continuing operations	$	130		$	(5	)	$	(2	)	$	123		$	1,038		$	18		$	(196	)	$	860


CNA FINANCIAL CORPORATION
Financial Supplement
Components of Life & Group Non-Core Segment — Results of Operations

TWELVE MONTHS ENDED
DECEMBER 31, 2005


	Life & Group Non-Core
	excluding businesses			Life & Group Non-Core			Total Life & Group
(In millions)	sold (1)			businesses sold (2)			Non-Core as reported
Net earned premiums	$	698		$	6		$	704
Net investment income		584			9			593
Other revenues		62			33			95

Total operating revenues		1,344			48			1,392

Claims, benefits and expenses:
Net incurred claims and benefits		1,138			22			1,160
Policyholders’ dividends		(5	)		6			1
Amortization of deferred acquisition costs		21			1			22
Other insurance related expenses		133			124			257
Other operating expenses		62			(1	)		61

Total claims, benefits and expenses		1,349			152			1,501

Operating loss before income tax		(5	)		(104	)		(109	)
Income tax benefit on operating loss		23			35			58


Net operating income (loss)		18			(69	)		(51	)

Realized investment losses, net of participating policyholders’ interests		(30	)		—			(30	)
Income tax benefit on realized investment losses		11			—			11

Net loss	$	(1	)	$	(69	)	$	(70	)

TWELVE MONTHS ENDED
DECEMBER 31, 2004


	Life & Group Non-Core
	excluding businesses			Life & Group Non-Core			Total Life & Group
(In millions)	sold (1)			businesses sold (2) (3)			Non-Core as reported
Net earned premiums	$	641		$	280		$	921
Net investment income		637			55			692
Other revenues		59			32			91

Total operating revenues		1,337			367			1,704

Claims, benefits and expenses:
Net incurred claims and benefits		1,165			207			1,372
Policyholders’ dividends		(7	)		4			(3	)
Amortization of deferred acquisition costs		22			14			36
Other insurance related expenses		112			179			291
Other operating expenses		54			22			76

Total claims, benefits and expenses		1,346			426			1,772

Operating loss before income tax		(9	)		(59	)		(68	)
Income tax benefit on operating income (loss)		18			21			39


Net operating income (loss)		9			(38	)		(29	)

Realized investment gains (losses), net of participating policyholders’ interests		3			(618	)		(615	)
Income tax (expense) benefit on realized investment gains (losses)		(1	)		231			230

Net income (loss)	$	11		$	(425	)	$	(414	)


(1)		Retained life and group businesses principally include group and individual long term care, structured settlements and institutional markets.

(2)		Life and group businesses sold include group, individual life, CNA Trust, and specialty medical. Included in this column are the effects of shared corporate overhead expenses which continue to be allocated to the sold businesses.

(3)		For the twelve months ended December 31, 2004, net realized investment losses for Life & Group Non-Core businesses sold include a pretax loss of $622 million ($389 million after-tax), related to the individual life business.


CNA FINANCIAL CORPORATION
Financial Supplement
Asbestos Summary by Policyholder Category

DECEMBER 31, 2005


			Net Paid		Net Asbestos		Percent of
	Number of		Losses in 2005		Reserves		Asbestos Net
	Policyholders		(In millions)		(In millions)		Reserves

Policyholders with Settlement Agreements
Structured Settlements		13	$	30	$	167		11	%
Wellington		4		2		15		1
Coverage in Place		34		13		58		4
Fibreboard		1		—		54		3

Total with Settlement Agreements		52		45		294		19

Other Policyholders with Active Accounts
Large Asbestos Accounts		199		68		273		17
Small Asbestos Accounts		1,073		23		135		9

Total Other Policyholders		1,272		91		408		26

Assumed Reinsurance & Pools				6		143		9

Unassigned IBNR (1)						709		46


Total		1,324	$	142	$	1,554		100	%


(1)		IBNR includes claims that are incurred but not reported.

CNA Financial (CNA) 8-KResults of Operations and Financial Condition