EXHIBIT 99.2
CNA FINANCIAL CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
MARCH 31, 2005
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CNA FINANCIAL CORPORATION
TABLE OF CONTENTS
MARCH 31, 2005
<Table>
<Caption>
PAGE
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Supplemental Financial Information i
Restatement for Reinsurance and Equity Investee Accounting ii
Statements of Operations 1
Components of Net Income and Per Share Data 2
Selected Balance Sheet Data and Statements of Cash Flows 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 7
Life & Group Non-Core and Corporate & Other Non-Core Segments Results of Operations 8
Property & Casualty Operations and Corporate & Other Non-Core Segment - Catastrophe Losses 9
Analysis of Pretax Net Investment Income 10
Statutory Data - Preliminary 11
Property & Casualty Operations Loss and LAE Ratio Analysis 12
Life & Group Non-Core Segment - GAAP Results of Operations 13
Asbestos Summary by Policyholder Category 14
</Table>
CNA FINANCIAL CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
DEFINITIONS AND PRESENTATION
- -----------------------------
- - P&C OPERATIONS includes Standard Lines and Specialty Lines.
- - LIFE & GROUP NON-CORE segment primarily includes the results of the life and
group lines of business that have been sold or placed in run-off.
- - CORPORATE & OTHER NON-CORE segment 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 APMT claims and interest expense on corporate debt.
- - PROPERTY AND CASUALTY COMPANIES includes Standard Lines, Specialty Lines and
P&C business written in the Life & Group Non-Core and Corporate & Other
Non-Core segments.
- - Underwriting results are net earned premiums less net incurred claims, the
costs incurred to settle claims, acquisition expenses and underwriting
expenses.
- - 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
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. As a
result of the then pending sale, at March 31, 2004, CNA classified the assets
and liabilities of the individual life insurance business as held for sale and
recorded a related impairment loss of $569 million pretax ($406 million
after-tax). The results of the business sold are included in the Statements of
Operations for the three months ended March 31, 2004. As a result of the sale,
income statement results for the first quarter 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.
i
CNA FINANCIAL CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
RESTATEMENT FOR REINSURANCE AND EQUITY INVESTEE ACCOUNTING
Subsequent to the issuance of CNA's (the Company) 2004 Form 10-K, the Company
revised its accounting for several reinsurance contracts, primarily with a
former affiliate, and its equity accounting for that affiliate. The Company will
restate its previously reported financial statements as of 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 provides no capital support to and has 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 has now 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 relate 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 results in a reduction to stockholders'
equity as of December 31, 2004 of $29 million, or 0.3%, and a decrease in net
loss for the three months ended March 31, 2004 of $1 million, or 0.8%. The net
loss adjustment has no impact on loss per share for the three months ended March
31, 2004.
ii
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
STATEMENTS OF OPERATIONS
<Table>
<Caption>
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PERIOD ENDED MARCH 31 THREE MONTHS
FAV /
(UNFAV)
(In millions) 2005 2004 % CHANGE
- ----------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
Revenues:
Net earned premiums $ 1,899 $ 2,168 (12)%
Net investment income 406 475 (15)
Realized investment losses net of
participating policyholders' and minority interests (19) (458) 96
Other revenues 78 82 (5)
---------------- ----------------------
Total revenues 2,364 2,267 4
---------------- ----------------------
Claims, benefits and expenses:
Insurance claims and policyholders' benefits 1,434 1,638 12
Other operating expenses 652 765 15
Interest 37 35 (6)
---------------- ----------------------
Total claims, benefits and expenses 2,123 2,438 13
---------------- ----------------------
Income (loss) before income tax and minority interest 241 (171) N/A
Income tax (expense) benefit (56) 53 N/A
Minority interest (7) (6) (17)
---------------- ----------------------
Net income (loss) $ 178 $ (124) N/A%
================ ======================
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</Table>
1
<Table>
<Caption>
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
COMPONENTS OF NET INCOME AND PER SHARE DATA
- ------------------------------------------------------------------------------------------------------------------------------------
PERIOD ENDED MARCH 31 THREE MONTHS
FAV / (UNFAV)
(In millions, except per share data) 2005 2004 % CHANGE
- ------------------------------------------------------------------------------------------------------------------------------------
COMPONENTS OF NET INCOME
Income before net realized investment losses $ 192 $ 209 (8)%
Net realized investment losses net of
participating policyholders' and minority interests (14) (333) 96
-------- ---------
Net income (loss) $ 178 $ (124) N/A%
======== =========
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
Basic and diluted earnings (loss) per share available to common stockholders (1) $ 0.63 $ (0.55) N/A%
======== =========
Weighted average outstanding common stock and common stock
equivalents (2) 256.0 255.9
======== =========
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</Table>
(1) The three months ended March 31, 2005 and 2004 per share results available
to common stockholders are reduced by $17 million and $16 million, or $0.07
per share and $0.06 per share, of undeclared preferred stock dividends.
(2) Included in the weighted average shares of common stock for 2004 are the
effects of additional common stock equivalents related to the November of
2003 sale of shares to Loews Corporation. The effect of the preferred
shares has been included in weighted average shares since issuance. The
preferred shares were converted into 32.3 million shares of CNA common
stock on April 20, 2004.
2
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
SELECTED BALANCE SHEET DATA AND STATEMENTS OF CASH FLOWS DATA
- ------------------------------------------------------------------------------------------------------------------------------------
MARCH 31, 2005 DECEMBER 31, 2004
(In millions, except per share data)
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $ 62,998 $ 62,411
Insurance reserves 43,186 43,653
Debt 2,244 2,257
Total liabilities 53,667 52,958
Minority interest 277 275
Accumulated other comprehensive income 346 650
Total stockholders' equity 9,054 9,178
Book value per common share (1) $ 31.88 $ 32.43
Book value per common share excluding unrealized
gain or loss on fixed maturity securities (1) $ 30.32 $ 29.74
Outstanding shares of common stock (in millions of shares) (2) 256.0 256.0
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31
(In millions) 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash flows provided by operating activities $ 124 $ 37
Net cash flows used by investing activities (115) (441)
Net cash flows provided (used) by financing activities (11) 346
------------------- -------------------
Net cash flows $ (2) $ (58)
=================== ===================
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Book value per common share as of March 31, 2005 and December 31, 2004
excludes $750 million and $750 million of preferred stock (Series H) and
$144 million and $127 million of cumulative preferred dividends.
(2) Included in the outstanding shares of common stock for 2004 are the effects
of additional common stock equivalents related to the November of 2003 sale
of $750 million of convertible preferred shares (Series I) to Loews
Corporation. The effect of the preferred shares has been included in
weighted average shares since issuance. The preferred shares were
Converted into 32.3 million shares of CNA common stock on April 20, 2004.
3
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVE DATA
<Table>
<Caption>
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CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVES
(In millions) STANDARD LINES SPECIALTY LINES P&C OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
As of March 31, 2005
Gross $14,192 $ 4,921 $19,113
Ceded 4,796 1,566 6,362
------- ------- -------
Net 9,396 3,355 12,751
------- ------- -------
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 & OTHER TOTAL OPERATIONS
NON-CORE NON-CORE
(In millions)
- --------------------------------------------------------------------------------------------------------------------------------
As of March 31, 2005
Gross $ 3,665 $ 8,335 $31,113
Ceded 1,839 5,295 13,496
------- ------- -------
Net 1,826 3,040 17,617
------- ------- -------
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
------- ------- -------
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</Table>
4
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVE ROLLFORWARD
- -----------------------------------------------------------------------------------------------------------------
PERIOD ENDED MARCH 31 THREE MONTHS
ENDED
(In millions)
- -------------------------------------------------------------------------------------------------------------------
Claim & claim adjustment expense reserves, beginning of period
Gross $ 31,523
Ceded 13,879
--------
Net 17,644
--------
Net incurred claim & claim adjustment expenses 1,400
Net claim & claim adjustment expense payments (1,427)
--------
Claim & claim adjustment expense reserves, end of period
Net 17,617
Ceded 13,496
--------
Gross $ 31,113
========
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</Table>
5
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
INVESTMENTS BY SEGMENT AGGREGATION
<Table>
<Caption>
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MARCH 31, 2005 DECEMBER 31, 2004
(In millions) BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PROPERTY & CASUALTY AND CORPORATE & OTHER NON-CORE:
Fixed Maturities - Taxable $13,369 $13,467 $15,072 $15,346
Fixed Maturities - Tax Exempt 8,225 8,193 7,680 7,800
Equities 184 289 232 351
Short-term 5,569 5,569 3,599 3,600
Limited Partnership Investments 1,255 1,255 1,195 1,195
Mortgage Loans & Other 31 33 34 26
------- ------- ------- -------
Subtotal 28,633 28,806 27,812 28,318
Securities Lending Collateral 1,105 1,105 904 904
------- ------- ------- -------
TOTAL INVESTMENTS $29,738 $29,911 $28,716 $29,222
------- ------- ------- -------
LIFE & GROUP NON-CORE:
Fixed Maturities - Taxable $ 6,686 $ 7,195 $ 6,495 $ 7,124
Fixed Maturities - Tax Exempt 1,221 1,259 1,019 1,057
Equities 61 79 88 105
Short-term 845 845 1,345 1,345
Limited Partnership Investments 378 378 354 354
Mortgage Loans & Other 24 10 23 10
------- ------- ------- -------
Subtotal 9,215 9,766 9,324 9,995
Securities Lending Collateral 6 6 14 14
------- ------- ------- -------
TOTAL INVESTMENTS $ 9,221 $ 9,772 $ 9,338 $10,009
------- ------- ------- -------
TOTAL INVESTMENTS $38,959 $39,683 $38,054 $39,231
======= ======= ======= =======
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</Table>
6
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
PROPERTY & CASUALTY RESULTS OF OPERATIONS
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED STANDARD LINES SPECIALTY LINES
MARCH 31 FAV / (UNFAV) FAV / (UNFAV)
(In millions) 2005 2004 % CHANGE 2005 2004 % CHANGE
- ------------------------------------------------------------------------------------------------------------------------------------
Gross written premiums $ 1,516 $ 1,565 (3)% $ 769 $ 710 8%
Net written premiums 1,171 1,265 (7) 594 581 2
Net earned premiums 1,169 1,258 (7) 573 529 8
Claim and claim adjustment expenses 830 823 (1) 357 334 (7)
Acquisition expenses 246 271 9 115 97 (19)
Underwriting expenses 132 152 13 39 43 9
Policyholders' dividends 4 9 56 1 2 50
-------- -------- ------- ------- ------- -------
Underwriting income (loss) (43) 3 N/A 61 53 15
-------- -------- ------- ------- ------- -------
Net investment income 183 138 33 56 62 (10)
Other revenues 21 40 (48) 31 25 24
Other expenses 26 31 16 28 27 (4)
-------- -------- ------- ------- ------- -------
Income before income tax, minority interest
and net realized investment gains (losses) 135 150 (10) 120 113 6
Income tax expense (32) (34) 6 (36) (34) (6)
Minority interest (2) (2) - (5) (4) (25)
-------- -------- ------- ------- ------- -------
Income before net realized investment gains (losses) 101 114 (11) 79 75 5
Realized investment gains (losses) (5) 57 (109) 1 20 (95)
Income tax (expense) benefit on realized
investment gains (losses) (3) (19) 84 2 (7) 129
-------- -------- ------- ------- ------- -------
Net income $ 93 $ 152 (39)% $ 82 $ 88 (7)%
======== ======== ======= ======= ======= =======
FINANCIAL RATIOS
Loss & LAE 71.0% 65.5% 62.3% 63.1%
Acquisition expense 21.0 21.6 20.1 18.4
Underwriting expense 11.4 11.9 6.8 8.0
Dividends 0.3 0.7 0.2 0.4
-------- -------- ------- -------
Expense ratio, including dividends 32.7 34.2 27.1 26.8
-------- -------- ------- -------
Combined ratio 103.7% 99.7% 89.4% 89.9%
======== ======== ======= =======
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</Table>
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED P&C OPERATIONS
MARCH 31 FAV / (UNFAV)
(In millions) 2005 2004 % CHANGE
- ---------------------------------------------------------------------------------------------------------------------------------
Gross written premiums $ 2,285 $ 2,275 -%
Net written premiums 1,765 1,846 (4)
Net earned premiums 1,742 1,787 (3)
Claim and claim adjustment expenses 1,187 1,157 (3)
Acquisition expenses 361 368 2
Underwriting expenses 171 195 12
Policyholders' dividends 5 11 55
------------- ----------- -----------
Underwriting income (loss) 18 56 (68)
------------- ----------- -----------
Net investment income 239 200 20
Other revenues 52 65 (20)
Other expenses 54 58 7
------------- ----------- -----------
Income before income tax, minority interest
and net realized investment gains (losses) 255 263 (3)
Income tax expense (68) (68) -
Minority interest (7) (6) (17)
------------- ----------- -----------
Income before net realized investment gains (losses) 180 189 (5)
Realized investment gains (losses) (4) 77 (105)
Income tax (expense) benefit on realized
investment gains (losses) (1) (26) 96
------------- ----------- -----------
Net income $ 175 $ 240 (27)%
============= =========== ===========
FINANCIAL RATIOS
Loss & LAE 68.1% 64.8%
Acquisition expense 20.7 20.6
Underwriting expense 9.9 10.8
Dividends 0.3 0.6
------------- -----------
Expense ratio, including dividends 30.9 32.0
------------- -----------
Combined ratio 99.0% 96.8%
============= ===========
- -------------------------------------------------------------------------------------------------------------------------
</Table>
7
<Table>
<Caption>
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
LIFE & GROUP NON-CORE AND CORPORATE & OTHER NON-CORE SEGMENTS RESULTS OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED P&C OPERATIONS LIFE & GROUP NON-CORE
MARCH 31 FAV / (UNFAV)
(In millions) 2005 2004 2005 2004 % CHANGE
- ------------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,742 $ 1,787 $ 166 $ 326 (49)%
Insurance claims & policyholders' benefits 1,187 1,157 234 407 43
Policyholders' dividends 5 11 - 6 N/A
Insurance related expenses 532 563 61 108 44
Net investment income 239 200 106 206 (49)
Other revenues 52 65 33 34 (3)
Other expenses 54 58 14 21 33
------------- ----------- ----------- ----------
Income (loss) before income tax, minority interest
and net realized investment gains (losses) 255 263 (4) 24 (117)
Income tax (expense) benefit (68) (68) 5 (5) 200
Minority interest (7) (6) - - N/A
------------- ----------- ----------- ----------
Income before net realized investment gains (losses) 180 189 1 19 (95)
Realized investment gains (losses) (4) 77 (5) (562) 99
Income tax (expense) benefit on realized
investment gains (losses) (1) (26) 2 161 (99)
------------- ----------- ----------- ----------
Net income (loss) $ 175 $ 240 $ (2) $ (382) 99%
============= =========== =========== ==========
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER FINANCIAL DATA P&C OPERATIONS LIFE & GROUP NON-CORE
PROPERTY & CASUALTY COMPANY INFORMATION FAV / (UNFAV)
% CHANGE
2005 2004 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Gross written premiums $ 2,285 $ 2,275 $ 278 $ 319 (13) %
Net written premiums 1,765 1,846 172 176 (2)
Net earned premiums 1,742 1,787 161 166 (3)
Underwriting gain (loss) 18 56 (113) (101) (12) %
FINANCIAL RATIOS
Loss & LAE 68.1% 64.8% 136.3% 128.5 %
Acquisition expense 20.7 20.6 15.7 17.3
Underwriting expense 9.9 10.8 18.2 15.0
Dividends 0.3 0.6 - -
------------ ------------ ------------ -----------
Expense ratio, including dividends 30.9 32.0 33.9 32.3
------------ ------------ ------------ -----------
Combined ratio 99.0% 96.8% 170.2% 160.8 %
============ ============ ============ ===========
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</Table>
<Table>
<Caption>
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
LIFE & GROUP NON-CORE AND CORPORATE & OTHER NON-CORE SEGMENTS RESULTS OF OPERATIONS
- -----------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED CORPORATE & OTHER NON-CORE
FAV /
MARCH 31 (UNFAV)
(In millions) 2005 2004 % CHANGE
- -----------------------------------------------------------------------------------------------------------------
Net earned premiums $ (9) $ 55 (116)%
Insurance claims & policyholders' benefits 8 56 86
Policyholders' dividends - 1 N/A
Insurance related expenses 11 27 59
Net investment income 61 69 (12)
Other revenues (7) (17) 59
Other expenses 17 23 26
--------- --------
Income (loss) before income tax, minority interest
and net realized investment gains (losses) 9 - N/A
Income tax (expense) benefit 2 1 100
Minority interest - - N/A
--------- --------
Income before net realized investment gains (losses) 11 1 N/A
Realized investment gains (losses) (10) 27 (137)
Income tax (expense) benefit on realized
investment gains (losses) 4 (10) 140
--------- --------
Net income (loss) $ 5 $ 18 (72)%
========= ========
- -----------------------------------------------------------------------------------------------------------------
OTHER FINANCIAL DATA CORPORATE & OTHER NON-CORE
PROPERTY & CASUALTY COMPANY INFORMATION
FAV /
(UNFAV)
2005 2004 % CHANGE
- -----------------------------------------------------------------------------------------------------------------
Gross written premiums $ 252 $ 637 (60)%
Net written premiums (20) (16) (25)
Net earned premiums (8) 71 (111)
Underwriting gain (loss) (27) (28) 4%
FINANCIAL RATIOS
Loss & LAE (85.6)% 102.4%
Acquisition expense (29.1) 29.6
Underwriting expense (100.7) 9.3
Dividends - -
---------- --------
Expense ratio, including dividends (129.8) 38.9
---------- --------
Combined ratio (215.4)% 141.3%
========== ========
- -----------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
LIFE & GROUP NON-CORE AND CORPORATE & OTHER NON-CORE SEGMENTS RESULTS OF OPERATIONS
- -----------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED TOTAL OPERATIONS
MARCH 31 FAV / (UNFAV)
(In millions) 2005 2004 % CHANGE
- -----------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,899 $ 2,168 (12)%
Insurance claims & policyholders' benefits 1,429 1,620 12
Policyholders' dividends 5 18 72
Insurance related expenses 604 698 13
Net investment income 406 475 (15)
Other revenues 78 82 (5)
Other expenses 85 102 17
-------- ---------
Income (loss) before income tax, minority interest
and net realized investment gains (losses) 260 287 9
Income tax (expense) benefit (61) (72) 15
Minority interest (7) (6) (17)
-------- ---------
Income before net realized investment gains (losses) 192 209 (8)
Realized investment gains (losses) (19) (458) 96
Income tax (expense) benefit on realized
investment gains (losses) 5 125 (96)
-------- ---------
Net income (loss) $ 178 $ (124) N/A%
-------- ---------
- -----------------------------------------------------------------------------------------------------------
OTHER FINANCIAL DATA TOTAL OPERATIONS
PROPERTY & CASUALTY COMPANY INFORMATION
FAV / (UNFAV)
2005 2004 % CHANGE
- -----------------------------------------------------------------------------------------------------------
Gross written premiums $ 2,815 $ 3,231 (13)%
Net written premiums 1,917 2,006 (4)
Net earned premiums 1,895 2,024 (6)
Underwriting gain (loss) (122) (73) (67)%
FINANCIAL RATIOS
Loss & LAE 74.6 % 71.3 %
Acquisition expense 20.5 20.7
Underwriting expense 11.0 11.0
Dividends 0.3 0.6
-------- ---------
Expense ratio, including dividends 31.8 32.3
-------- ---------
Combined ratio 106.4 % 103.6 %
======== =========
- -------------------------------------------------------------------------------------------------------------
</Table>
8
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
PROPERTY & CASUALTY OPERATIONS AND CORPORATE & OTHER NON-CORE SEGMENT -
CATASTROPHE LOSSES
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------------------
CORPORATE & OTHER
CATASTROPHE LOSSES (PRETAX) STANDARD LINES SPECIALTY LINES P&C OPERATIONS NON-CORE TOTAL
(In millions)
- ------------------------------------------------------------------------------------------------------------------------------------
Three months ended March 31, 2005 $ 1 $ - $ 1 $ - $ 1
Three months ended March 31, 2004 $ 6 $ 2 $ 8 $ - $ 8
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
CATASTROPHE LOSSES (AFTER-TAX) STANDARD LINES SPECIALTY LINES P&C OPERATIONS CORPORATE & OTHER TOTAL
NON-CORE
(In millions)
- ------------------------------------------------------------------------------------------------------------------------------------
Three months ended March 31, 2005 $ 1 $ - $ 1 $ - $ 1
Three months ended March 31, 2004 $ 4 $ 1 $ 5 $ - $ 5
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
9
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
ANALYSIS OF PRETAX NET INVESTMENT INCOME
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------------------
(In millions) STANDARD LINES
- ------------------------------------------------------------------------------------------------------------------------------------
1Q04 2Q04 3Q04 4Q04 YTD 2004 1Q05
----- ----- ----- ----- --------- -----
Limited partnership income $ 37 $ 13 $ 12 $ 39 $ 101 $ 42
Interest on funds withheld and other deposits (38) (43) (44) (70) (195) (18)
Income from trading securities - - - 1 1 1
Other investment income 139 149 157 144 589 158
-------------------------------------------------------------------------------
Net investment income $ 138 $ 119 $ 125 $ 114 $ 496 $ 183
===============================================================================
-------------------------------------------------------------------------------
SPECIALTY LINES
-------------------------------------------------------------------------------
1Q04 2Q04 3Q04 4Q04 YTD 2004 1Q05
----- ----- ----- ----- --------- -----
Limited partnership income $ 13 $ 5 $ 4 $ 14 $ 36 $ 13
Interest on funds withheld and other deposits (2) (2) (3) (7) (14) (12)
Income from trading securities - - - - - -
Other investment income 51 56 60 57 224 55
-------------------------------------------------------------------------------
Net investment income $ 62 $ 59 $ 61 $ 64 $ 246 $ 56
===============================================================================
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P&C OPERATIONS
-------------------------------------------------------------------------------
1Q04 2Q04 3Q04 4Q04 YTD 2004 1Q05
----- ----- ----- ----- --------- -----
Limited partnership income $ 50 $ 18 $ 16 $ 53 $ 137 $ 55
Interest on funds withheld and other deposits (40) (45) (47) (77) (209) (30)
Income from trading securities - - - 1 1 1
Other investment income 190 205 217 201 813 213
-------------------------------------------------------------------------------
Net investment income $ 200 $ 178 $ 186 $ 178 $ 742 $ 239
===============================================================================
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LIFE & GROUP NON-CORE
-------------------------------------------------------------------------------
1Q04 2Q04 3Q04 4Q04 YTD 2004 1Q05
----- ----- ----- ----- --------- -----
Limited partnership income $ 9 $ 6 $ 3 $ 11 $ 29 $ 9
Interest on funds withheld and other deposits - - - - - -
Income from trading securities 20 13 (20) 96 109 (31)
Other investment income 177 123 126 128 554 128
-------------------------------------------------------------------------------
Net investment income $ 206 $ 142 $ 109 $ 235 $ 692 $ 106
===============================================================================
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CORPORATE & OTHER NON-CORE
-------------------------------------------------------------------------------
1Q04 2Q04 3Q04 4Q04 YTD 2004 1Q05
----- ----- ----- ----- --------- -----
Limited partnership income $ 16 $ 6 $ 6 $ 18 $ 46 $ 15
Interest on funds withheld and other deposits (8) (10) (7) (27) (52) (9)
Income from trading securities - - - - - -
Other investment income 61 65 67 59 252 55
-------------------------------------------------------------------------------
Net investment income $ 69 $ 61 $ 66 $ 50 $ 246 $ 61
===============================================================================
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TOTAL OPERATIONS
-------------------------------------------------------------------------------
1Q04 2Q04 3Q04 4Q04 YTD 2004 1Q05
----- ----- ----- ----- --------- -----
Limited partnership income $ 75 $ 30 $ 25 $ 82 $ 212 $ 79
Interest on funds withheld and other deposits (48) (55) (54) (104) (261) (39)
Income from trading securities 20 13 (20) 97 110 (30)
Other investment income 428 393 410 388 1,619 396
-------------------------------------------------------------------------------
Net investment income $ 475 $ 381 $ 361 $ 463 $1,680 $ 406
===============================================================================
</Table>
10
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
STATUTORY DATA - PRELIMINARY
- --------------------------------------------------------------------------------------------------------------------------------
PERIOD ENDED MARCH 31 THREE MONTHS
INCOME STATEMENT (PRELIMINARY) FAV / (UNFAV)
(In millions) 2005 2004 % CHANGE
- --------------------------------------------------------------------------------------------------------------------------------
PROPERTY & CASUALTY COMPANIES
Gross written premiums $ 2,527 $ 2,910 (13)%
Net written premiums 1,802 1,868 (4)
Net earned premiums 1,631 1,750 7
Claim and claim adjustment expenses 1,256 1,285 2
Acquisition expenses 334 348 4
Underwriting expenses 237 230 (3)
Policyholders' dividends 5 13 62
------------------------ ----------------------
Underwriting loss (201) (126) (60)
Net investment income (1) 833 308 170
Other revenues/expenses (37) (52) 29
Income tax expense (43) (113) 62
Net realized gains 22 166 (87)
------------------------ ----------------------
Net income $ 574 $ 183 N/A %
======================== ======================
FINANCIAL RATIOS
Loss and LAE 77.0 % 73.4 %
Acquisition expense 18.5 18.6
Underwriting expense 13.2 12.4
Policyholders' dividends 0.3 0.7
------------------------ ----------------------
Expense ratio 32.0 31.7
------------------------ ----------------------
Combined ratio 109.0 % 105.1 %
======================== ======================
LIFE COMPANIES
Earned premium $ 4 $ 455
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL STATUTORY DATA
(PRELIMINARY) DECEMBER 31, 2004
(In millions) MARCH 31, 2005
- --------------------------------------------------------------------------------------------------------------------------------
PROPERTY & CASUALTY COMPANIES
Statutory surplus (2) $ 7,117 $ 6,999
LIFE COMPANIES
Statutory surplus $ 717 $ 1,177
Gross life insurance in force 56,421 56,645
- --------------------------------------------------------------------------------------------------------------------------------
(1) Includes $500 million of dividends from CCC's life subsidiary, Continental
Assurance Company.
(2) Surplus includes the Property & Casualty Companies' equity ownership of the
life insurance subsidiary.
11
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
PROPERTY & CASUALTY OPERATIONS
LOSS AND LAE RATIO ANALYSIS
---------------------------------------------------------------------------
STANDARD LINES
---------------------------------------------------------------------------
2005 YTD 2004 FY 2004 YTD
EVALUATED AT EVALUATED AT EVALUATED AT
03/31 12/31/04 03/31/05
---------------------------------------------------------------------------
Gross Accident Year 63.0 % 67.2 % 65.5 %
Impact of Reinsurance 1.4 2.0 2.6
---------------------- ----------------------- ------------------
Net Accident Year 64.4 69.2 68.1 %
==================
Impact of Corporate Covers 1.1 (0.2)
Impact of Development & Change
in Allowance for Uncollectible Reinsurance 5.5 1.7
---------------------- -----------------------
Net Calendar Year 71.0 % 70.7 %
====================== =======================
--------------------------------------------------------------------------
SPECIALTY LINES
--------------------------------------------------------------------------
2005 YTD 2004 FY 2004 YTD
EVALUATED AT EVALUATED AT EVALUATED AT
03/31 12/31/04 03/31/05
--------------------------------------------------------------------------
Gross Accident Year 59.9 % 64.1 % 59.6 %
Impact of Reinsurance (0.9) (0.6) 0.1
---------------------- ----------------------- ------------------
Net Accident Year 59.0 63.5 59.7 %
==================
Impact of Corporate Covers (2.2) 0.9
Impact of Development & Change
in Allowance for Uncollectible Reinsurance 5.5 (1.1)
---------------------- -----------------------
Net Calendar Year 62.3 % 63.3 %
====================== =======================
--------------------------------------------------------------------------
--------------------------------------------------------------------------
P&C OPERATIONS
--------------------------------------------------------------------------
2005 YTD 2004 FY 2004 YTD
EVALUATED AT EVALUATED AT EVALUATED AT
03/31 12/31/04 03/31/05
--------------------------------------------------------------------------
Gross Accident Year 62.0 % 66.3 % 63.7 %
Impact of Reinsurance 0.5 1.1 1.7
---------------------- ----------------------- ------------------
Net Accident Year 62.5 67.4 65.4 %
==================
Impact of Corporate Covers - 0.2
Impact of Development & Change
in Allowance for Uncollectible Reinsurance 5.6 0.8
---------------------- -----------------------
Net Calendar Year 68.1 % 68.4 %
====================== =======================
--------------------------------------------------------------------------
12
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
LIFE & GROUP NON-CORE SEGMENT - GAAP RESULTS OF OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31, 2005
LIFE & GROUP NON-CORE
EXCLUDING BUSINESSES LIFE & GROUP NON-CORE TOTAL LIFE & GROUP NON-
(In millions) SOLD (1) BUSINESSES SOLD (2) CORE AS REPORTED
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 163 $ 3 $ 166
Insurance claims & policyholders' benefits 233 1 234
Policyholders' dividends (1) 1 -
Insurance related expenses 31 30 61
Net investment income 104 2 106
Other revenues 23 10 33
Other expenses 15 (1) 14
---------------------- ---------------------- ---------------
Income (loss) before income tax and net realized
investment losses 12 (16) (4)
Income tax benefit - 5 5
---------------------- ---------------------- ---------------
Income (loss) before net realized investment losses 12 (11) 1
Realized investment losses (5) - (5)
Income tax benefit on realized investment losses 2 - 2
---------------------- ---------------------- ---------------
Net income (loss) $ 9 $ (11) $ (2)
====================== ====================== ===============
- -----------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31, 2004
LIFE & GROUP NON-CORE
EXCLUDING BUSINESSES LIFE & GROUP NON-CORE TOTAL LIFE & GROUP NON-
(In millions) SOLD (1) BUSINESSES SOLD (2)(3) CORE AS REPORTED
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 187 $ 139 $ 326
Insurance claims & policyholders' benefits 284 123 407
Policyholders' dividends - 6 6
Insurance related expenses 45 63 108
Net investment income 154 52 206
Other revenues 16 18 34
Other expenses 14 7 21
---------------------- ---------------------- ---------------
Income before income tax and net realized
investment gains (losses) 14 10 24
Income tax expense (2) (3) (5)
---------------------- ---------------------- ---------------
Income before net realized investment gains (losses) 12 7 19
Realized investment gains (losses) 5 (567) (562)
Income tax (expense) benefit on realized investment
gains (losses) (1) 162 161
---------------------- ---------------------- ---------------
Net income (loss) $ 16 $ (398) $ (382)
====================== ====================== ===============
- -----------------------------------------------------------------------------------------------------------------------------------
(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 three months ended March 31, 2004, net realized investment
losses for Life & Group Non-Core businesses sold include a pretax
impairment loss of $569 million ($406 million after-tax) related to the
individual life business.
13
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
ASBESTOS SUMMARY BY POLICYHOLDER CATEGORY
- ---------------------------------------------------------------------------------------------------------------------------------
MARCH 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 $ 18 $ 158 10 %
Wellington 4 1 17 1
Coverage in Place 33 5 71 4
Fibreboard 1 - 54 3
------------------- ----------------- ---------------- -------------------
TOTAL WITH SETTLEMENT AGREEMENTS 51 24 300 18
OTHER POLICYHOLDERS WITH ACTIVE ACCOUNTS
Large Asbestos Accounts 184 20 360 22
Small Asbestos Accounts 1,084 8 132 8
------------------- ----------------- ---------------- -------------------
TOTAL OTHER POLICYHOLDERS 1,268 28 492 30
ASSUMED REINSURANCE & POOLS 1 147 9
UNASSIGNED IBNR (1) 696 43
------------------- ----------------- ---------------- -------------------
TOTAL 1,319 $ 53 $ 1,635 100 %
=================== ================= ================ ===================
- ---------------------------------------------------------------------------------------------------------------------------------
(1) IBNR includes claims that are incurred but not reported.
14