EXHIBIT 99.3
CNA FINANCIAL CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
DECEMBER 31, 2003
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CNA FINANCIAL CORPORATION
Table of Contents
December 31, 2003
<Table>
<Caption>
PAGE
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Supplemental Financial Information i-ii
Statements of Operations 1
Components of Net Income and Per Share Data 2
Selected Balance Sheet Data and Condensed Consolidated Statements of Cash Flows Data 3
Property & Casualty Insurance Claim & Claim Adjustment Expense Reserve Data 4
Property & Casualty Insurance Claim & Claim Adjustment Expense Reserve Rollforward 5
Investments by Asset Class 6
Operating Results and Other Financial Data by Segment:
Property & Casualty Segments 7-10
Group & Life and Corporate & Other Segments 11-12
Property & Casualty Catastrophe Losses 13
Analysis of Pretax Net Investment Income 14-15
Statutory Data - Preliminary 16
Property & Casualty Segments Loss and LAE Ratio Analysis 17
Impact of Significant Items 18-25
Gross Loss and ALAE Ratios by Segment and Line of Business 26
Net Loss and ALAE Ratios by Segment and Line of Business 27
Group Operations Segment - Historical GAAP Results of Operations 28
Life Operations Segment - Historical GAAP Results of Operations 29
Asbestos Summary by Policyholder Category 30
</Table>
CNA FINANCIAL CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
DEFINITIONS AND PRESENTATION
o P&C OPERATIONS includes Standard Lines and Specialty Lines.
o P&C SEGMENTS includes Standard Lines, Specialty Lines and CNA Re.
o CORPORATE & OTHER is comprised primarily of losses and expenses related
to the centralized adjusting and settlement of asbestos, environmental
pollution and mass tort claims, certain run-off insurance and
non-insurance operations. The Corporate & Other segment results also
include interest expense on corporate borrowings.
o P&C COMPANIES includes Standard Lines, Specialty Lines, CNA Re and P&C
business written in Group Operations, Life Operations and Corporate &
Other.
o The results from discontinued operations relate to CNA Vida, CNA's
Chilean-based life insurer, which was sold in the first quarter of
2002. CNA Vida's results of operations, including the loss on sale, are
reported as discontinued operations in all periods presented as
required by Statement of Financial Accounting Standards No. 144 (SFAS
144).
o Underwriting results are net earned premiums less net incurred claims,
the costs incurred to settle claims, acquisition expenses and
underwriting expenses.
o The Loss & LAE ratio represents claim and claim adjustment expenses as
a percentage of net earned premiums.
o The expense ratio is the percentage of underwriting expenses,
acquisition expenses and dividends, including the amortization of
deferred acquisition costs, to net earned premiums.
o The dividend ratio is the ratio of dividends incurred to net earned
premiums.
o Limited partnerships (LP's) are a relatively small portion of CNA's
overall investment portfolio. The majority of the LP's invest in a
substantial number of securities that are readily marketable. CNA is 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.
o All amounts are in millions, except for per share and ratio
information.
o Certain immaterial differences are due to rounding.
ACCOUNTING PRONOUNCEMENTS
o During the third quarter of 2002, the Company completed its initial
goodwill impairment testing under SFAS 142, Goodwill and Other
Intangible Assets, and recorded a $57 million after-tax impairment
charge. The impairment was recorded as a cumulative effect of a change
in accounting principle as of January 1, 2002, in Specialty Lines, Life
Operations and Corporate & Other.
i
CNA FINANCIAL CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
NON-GAAP FINANCIAL MEASURES
This financial supplement presents certain GAAP and non-GAAP financial measures
to provide information used by management to monitor the Company's operating
performance. Management utilizes various financial measures to monitor the
Company's insurance operations and investment portfolio. Underwriting results,
which are derived from certain income statement amounts, are considered non-GAAP
financial measures and are used by management to monitor performance of the
Company's insurance operations. The Company's investment portfolio is monitored
through analysis of various quantitative and qualitative factors, and certain
decisions related to the sale or impairment of investments produce realized
gains and losses. Net realized investment gains and losses, which are comprised
of after-tax realized investment gains and losses net of participating
policyholders' and minority interest, are a non-GAAP financial measure.
Underwriting results are computed as net earned premiums less net incurred
claims and the cost incurred to settle these claims, acquisition expenses and
underwriting expenses. Management uses underwriting results and operating ratios
to monitor insurance operations' results without the impact of certain factors,
including investment income, other revenues, other expenses, minority interest,
income tax benefit (expense) and net realized investment gains or losses.
Management excludes these factors in order to analyze the direct relationship
between the net earned premiums and the related claims and the cost incurred to
settle these claims, acquisition expenses and underwriting expenses.
Management excludes after-tax net realized investment gains or losses when
analyzing the insurance operations because net realized investment gains or
losses related to the Company's available-for-sale investment portfolio are
largely discretionary, except for losses related to other-than-temporary
impairments, and are generally driven by economic factors that are not
necessarily consistent with key drivers of underwriting performance.
Operating ratios are calculated using insurance results and are used by the
insurance industry and regulators such as state departments of insurance and the
National Association of Insurance Commissioners for financial regulation and as
a basis of comparison among companies. The ratios presented in this financial
supplement are calculated using GAAP financial results and include the loss and
loss adjustment expense ratio (loss ratio) as well as the expense, dividend and
combined ratios. 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.
The Company's investment portfolio is monitored by management through analyses
of various factors including unrealized gains and losses on securities,
portfolio duration and exposure to interest rate, market and credit risk. Based
on such analyses, the Company may impair an investment security in accordance
with its policy, or sell a security. Such activities will produce realized gains
and losses.
While management uses various non-GAAP financial measures to monitor various
aspects of the Company's performance, relying on any measure other than net
income, which is the most directly comparable GAAP measure to underwriting
results and realized gains and losses, is not a complete representation of
financial performance. Management believes that its process of evaluating
performance through the use of these non-GAAP financial measures provides a
basis for understanding the operations and the impact to net income as a whole.
Management also believes that investors find these non-GAAP financial measures
described above useful to help interpret the underlying trends and performance,
as well as to provide visibility into the significant components of net income.
ii
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
STATEMENTS OF OPERATIONS
<Table>
<Caption>
PERIOD ENDED DECEMBER 31 THREE MONTHS TWELVE MONTHS
FAV / FAV /
(UNFAV) (UNFAV)
(In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE
-------- -------- -------- -------- -------- --------
STATEMENTS OF OPERATIONS
Revenues:
Net earned premiums $ 2,510 $ 2,288 10% $ 9,214 $ 10,213 (10)%
Net investment income 436 438 -- 1,647 1,730 (5)
Realized investment (losses) gains, net of
participating policyholders' and
minority interests (6) (115) 95 460 (252) N/A
Other revenues 107 130 (18) 395 595 (34)
-------- -------- -------- --------
Total revenues 3,047 2,741 11 11,716 12,286 (5)
-------- -------- -------- --------
Claims, benefits and expenses:
Insurance claims and policyholders' benefits 1,947 1,850 (5) 9,916 8,392 (18)
Other operating expenses 823 832 1 4,022 3,440 (17)
Restructuring and other related charges -- (37) N/A -- (37) N/A
Interest 30 38 21 130 150 13
-------- -------- -------- --------
Total claims, benefits and expenses 2,800 2,683 (4) 14,068 11,945 (18)
-------- -------- -------- --------
Income (loss) from continuing operations before
income tax and minority interest 247 58 N/A (2,352) 341 N/A
Income tax (expense) benefit (70) 7 N/A 913 (68) N/A
Minority interest (3) (15) 80 6 (26) 123
-------- -------- -------- --------
Income (loss) from continuing operations before
cumulative effect of a change in accounting principle 174 50 N/A (1,433) 247 N/A
Loss from discontinued operations, net of tax -- -- N/A -- (35) N/A
Cumulative effect of a change in accounting
principle, net of tax -- -- N/A -- (57) N/A
-------- -------- -------- --------
Net income (loss) $ 174 $ 50 N/A% $ (1,433) $ 155 N/A%
======== ======== ======== ========
</Table>
1
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
COMPONENTS OF NET INCOME AND PER SHARE DATA
<Table>
<Caption>
PERIOD ENDED DECEMBER 31 THREE MONTHS TWELVE MONTHS
FAV / FAV /
(UNFAV) (UNFAV)
(In millions, except per share data) 2003 2002 % CHANGE 2003 2002 % CHANGE
------- ------- -------- ------- ------- --------
COMPONENTS OF NET INCOME (LOSS)
Income (loss) before net realized
investment (losses) gains $ 194 $ 112 73% $(1,718) $ 396 N/A%
Net realized investment (losses)
gains, net of participating
policyholders' and minority interests (20) (62) 68 285 (149) N/A
------- ------- ------- -------
Income (loss) from continuing operations 174 50 N/A (1,433) 247 N/A
Loss from discontinued operations, net of tax -- -- N/A -- (35) N/A
Cumulative effect of a change in
accounting principle, net of tax -- -- N/A -- (57) N/A
------- ------- ------- -------
Net income (loss) $ 174 $ 50 N/A% $(1,433) $ 155 N/A%
======= ======= ======= =======
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
Income (loss) from continuing operations (1) $ 0.67 $ 0.21 N/A $ (6.58) $ 1.10 N/A
Loss from discontinued operations, net of tax -- -- N/A -- (0.16) N/A
Cumulative effect of a change in accounting
principle, net of tax -- -- N/A -- (0.26) N/A
------- ------- ------- -------
Basic and diluted earnings (loss) per share
available to common stockholders $ 0.67 $ 0.21 N/A% $ (6.58) $ 0.68 N/A%
======= ======= ======= =======
Weighted average outstanding common stock and
common stock equivalents (2) 237.0 223.6 227.0 223.6
</Table>
(1) The three months and year ended December 31, 2003 per share results
available to common stockholders were reduced by $15 million and $60
million, or $0.06 per share and $0.27 per share, of accumulated but
undeclared preferred stock dividends. The three months and year ended
December 31, 2002 per share results available to common stockholders
were both reduced by $2 million, or $0.01 per share, of accumulated but
undeclared preferred stock dividends.
(2) Included in the weighted average number of common shares for the three
months and year ended December 31, 2003 are the effects of additional
common stock equivalents related to the November of 2003 sale of $750
million of convertible preferred shares to Loews Corporation. The
preferred shares are convertible into 32,327,015 shares of CNA common
stock. The conversion is expected to occur in 2004.
2
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
SELECTED BALANCE SHEET DATA AND CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS DATA
<Table>
<Caption>
DECEMBER 31, DECEMBER 31,
(In millions, except per share data) 2003 2002
------- -------
Total assets $68,503 $61,731
Insurance reserves 45,383 40,179
Debt 1,904 2,292
Total liabilities 59,295 52,074
Minority interest 256 256
Accumulated other comprehensive income 841 604
Total stockholders' equity 8,952 9,401
Book value per common share $ 31.80 $ 38.68
Book value per common share excluding unrealized
gain or loss on fixed maturity securities $ 28.98 $ 36.53
Outstanding shares of common stock (in millions of shares) 255.9 223.6
</Table>
THREE MONTHS ENDED
DECEMBER 31
<Table>
<Caption>
(In millions) 2003 2002
----- -----
Net cash flows provided by operating activities $ 297 $ 234
Net cash flows used by investing activities (882) (853)
Net cash flows provided by financing activities 546 486
----- -----
Net cash flows $ (39) $(133)
===== =====
</Table>
TWELVE MONTHS ENDED
DECEMBER 31
<Table>
<Caption>
(In millions) 2003 2002
------- -------
Net cash flows provided by operating activities $ 1,779 $ 1,040
Net cash flows used by investing activities (2,152) (1,488)
Net cash flows provided by financing activities 386 432
------- -------
Net cash flows $ 13 $ (16)
======= =======
</Table>
3
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
PROPERTY & CASUALTY INSURANCE
CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVE DATA
<Table>
<Caption>
CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVES (1) STANDARD SPECIALTY P&C TOTAL P&C
(In millions) LINES LINES OPERATIONS CNA RE SEGMENTS
-------- --------- ---------- ------ ---------
As of December 31, 2003
Gross $12,983 $6,470 $19,453 $2,288 $21,741
Ceded 4,916 2,475 7,391 1,031 8,422
Net 8,067 3,995 12,062 1,257 13,319
As of December 31, 2002
Gross $11,576 $5,874 $17,450 $2,264 $19,714
Ceded 4,314 2,501 6,815 902 7,717
Net 7,262 3,373 10,635 1,362 11,997
</Table>
<Table>
<Caption>
CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVES(1) GROUP LIFE CORPORATE TOTAL
(In millions) OPERATIONS(2) OPERATIONS & OTHER OPERATIONS
------------- ---------- --------- ----------
As of December 31, 2003
Gross $1,404 $1,539 $7,046 $31,730
Ceded 1,301 72 4,421 14,216
Net 103 1,467 2,625 17,514
As of December 31, 2002
Gross $1,400 $1,409 $4,847 $27,370
Ceded 85 80 2,845 10,727
Net 1,315 1,329 2,002 16,643
</Table>
(1) Gross reserves as of December 31, 2003 and December 31, 2002 include
$448 million ($138 million in Group Operations, $133 million in Life
Operations and $177 million in Corporate & Other) and $1,722 million
($1,350 million in Group Operations, $133 million in Life Operations
and $239 million in Corporate & Other) of Life & Group company
reserves, which are primarily related to accident and health business.
Net reserves as of December 31, 2003 and December 31, 2002 include $230
million ($30 million in Group Operations, $64 million in Life
Operations and $136 million in Corporate & Other) and $1,578 million
($1,337 million in Group Operations, $56 million in Life Operations and
$185 million in Corporate & Other) of Life & Group company reserves,
which are primarily related to accident and health business.
(2) On December 31, 2003 CNA completed the sale of its Group Benefits
business to Hartford Life (Hartford). As part of the sale, $1,309
million of claim and claim adjustment expense reserves were ceded to
Hartford.
4
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
PROPERTY & CASUALTY INSURANCE
CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVE ROLLFORWARD(1)
<Table>
<Caption>
PERIOD ENDED DECEMBER 31, 2003 THREE MONTHS TWELVE MONTHS
ENDED ENDED
(In millions)
------------ -------------
Claim & claim adjustment expense reserves, beginning of period
Gross $ 32,264 $ 27,370
Ceded 13,309 10,727
---------- ----------
Net 18,955 16,643
---------- ----------
Net incurred claim & claim adjustment expenses 1,807 9,270
Net claim & claim adjustment expense payments (1,939) (7,090)
Net reserves ceded as part of Group Benefits sale (2) (1,309) (1,309)
Claim & claim adjustment expense reserves, end of period
Net 17,514 17,514
Ceded 14,216 14,216
---------- ----------
Gross $ 31,730 $ 31,730
========== ==========
</Table>
(1) Gross reserves as of December 31, 2003 and December 31, 2002 include
$448 million and $1,722 million of Life & Group company reserves, which
are primarily related to accident and health business. Net reserves as
of December 31, 2003 and December 31, 2002 include $230 million and
$1,578 million of Life & Group company reserves, which are primarily
related to accident and health business.
(2) On December 31, 2003 CNA completed the sale of its Group Benefits
business to Hartford. As part of the sale, $1,309 million of claim and
claim adjustment reserves were ceded to Hartford.
5
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
INVESTMENTS BY ASSET CLASS
<Table>
<Caption>
DECEMBER 31, 2003 DECEMBER 31, 2002
BOOK MARKET BOOK MARKET
(In millions) VALUE VALUE VALUE VALUE
------- ------- ------- -------
PROPERTY & CASUALTY AND OTHER COMPANIES
Investments:
Fixed maturity securities $22,126 $22,857 $17,673 $18,172
Equity securities 246 468 467 614
Short-term investments 6,785 6,784 5,780 5,778
Limited partnership investments 1,113 1,113 1,055 1,055
Mortgage loans and other invested assets 48 58 61 73
------- ------- ------- -------
Subtotal 30,318 31,280 25,036 25,692
Securities lending collateral 307 307 399 399
------- ------- ------- -------
Total investments $30,625 $31,587 $25,435 $26,091
------- ------- ------- -------
LIFE AND GROUP COMPANIES
Investments:
Fixed maturity securities $ 5,438 $ 5,821 $ 7,860 $ 8,103
Equity securities 47 59 52 52
Short-term investments 324 324 686 686
Limited partnership investments 4 4 5 5
Mortgage loans, policy loans and other invested assets 197 182 210 211
------- ------- ------- -------
Subtotal 6,010 6,390 8,813 9,057
Securities lending collateral 123 123 145 145
------- ------- ------- -------
Total investments $ 6,133 $ 6,513 $ 8,958 $ 9,202
------- ------- ------- -------
TOTAL INVESTMENTS $36,758 $38,100 $34,393 $35,293
======= ======= ======= =======
</Table>
6
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
PROPERTY & CASUALTY SEGMENTS - OPERATING RESULTS
<Table>
<Caption>
THREE MONTHS ENDED STANDARD LINES SPECIALTY LINES P&C OPERATIONS
FAV / FAV / FAV /
DECEMBER 31 (UNFAV) (UNFAV) (UNFAV)
(In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE 2003 2002 % CHANGE
------- ------- -------- ----- ----- -------- ------- ------- --------
Gross written premiums $ 1,354 $ 1,010 34% $ 908 $ 875 4% $ 2,262 $ 1,885 20%
Net written premiums 974 848 15 745 643 16 1,719 1,491 15
Net earned premiums 1,079 978 10 718 584 23 1,797 1,562 15
Claim and claim adjustment
expenses 730 701 (4) 486 441 (10) 1,216 1,142 (6)
Acquisition expenses 224 188 (19) 118 103 (15) 342 291 (18)
Underwriting expenses 131 130 (1) 77 69 (12) 208 199 (5)
Policyholders' dividends 14 16 13 1 1 -- 15 17 12
Restructuring & other related
costs -- (2) N/A -- (1) N/A -- (3) N/A
------- ------- ----- ----- ------- -------
Underwriting (loss) income (20) (55) 64 36 (29) N/A 16 (84) 119
------- ------- ----- ----- ------- -------
Net investment income 100 94 6 74 69 7 174 163 7
Other revenues 33 80 (59) 35 26 35 68 106 (36)
Other expenses 26 73 64 39 23 (70) 65 96 32
Non-insurance restructuring &
other related costs -- (6) N/A -- -- N/A -- (6) N/A
------- ------- ----- ----- ------- -------
Income before income tax,
minority interest and
net realized investment
gains (losses) 87 52 67 106 43 147 193 95 103
Income tax expense (17) (10) (70) (22) (9) (144) (39) (19) (105)
Minority interest -- -- N/A (3) (15) 80 (3) (15) 80
------- ------- ----- ----- ------- -------
Income before net realized
investment gains (losses) 70 42 67 81 19 N/A 151 61 148
Realized investment gains (losses) 102 (35) N/A 50 (31) N/A 152 (66) N/A
Income tax (expense) benefit
on realized investment
gains (losses) (36) 12 N/A (16) 11 N/A (52) 23 N/A
------- ------- ----- ----- ------- -------
Income (loss) from continuing
operations 136 19 N/A 115 (1) N/A 251 18 N/A
Cumulative effect of a change
in accounting principle -- -- N/A -- -- N/A -- -- N/A
------- ------- ----- ----- ------- -------
Net income (loss) $ 136 $ 19 N/A% $115 $ (1) N/A% $ 251 $ 18 N/A%
======= ======= ===== ===== ======= =======
FINANCIAL RATIOS
Loss & LAE 67.7% 71.7% 67.7% 75.6% 67.7% 73.1%
Acquisition expense 20.7 19.1 16.5 17.7 19.0 18.6
Underwriting expense 12.1 13.3 10.8 11.5 11.6 12.6
Dividends 1.3 1.6 0.1 0.1 0.8 1.1
------- ------- ----- ----- ------- -------
Expense ratio, including dividends 34.1 34.0 27.4 29.3 31.4 32.3
------- ------- ----- ----- ------- -------
Combined ratio 101.8% 105.7% 95.1% 104.9% 99.1% 105.4%
======= ======= ===== ===== ======= =======
</Table>
7
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
PROPERTY & CASUALTY SEGMENTS - OPERATING RESULTS
<Table>
<Caption>
THREE MONTHS ENDED CNA RE TOTAL P&C SEGMENTS
DECEMBER 31 FAV / FAV /
(UNFAV) (UNFAV)
(In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE
----- ----- -------- ------- ------- --------
Gross written premiums $ 44 $ 154 (71)% $ 2,306 $ 2,039 13%
Net written premiums 41 111 (63) 1,760 1,602 10
Net earned premiums 165 180 (8) 1,962 1,742 13
Claim and claim adjustment expenses 139 128 (9) 1,355 1,270 (7)
Acquisition expenses 17 33 48 359 324 (11)
Underwriting expenses 10 15 33 218 214 (2)
Policyholders' dividends -- -- N/A 15 17 12
Restructuring & other related costs -- -- N/A -- (3) N/A
----- ----- ------- -------
Underwriting (loss) income (1) 4 (125) 15 (80) 119
----- ----- ------- -------
Net investment income 17 35 (51) 191 198 (4)
Other revenues 6 -- N/A 74 106 (30)
Other expenses 1 (1) (200) 66 95 31
Non-insurance restructuring & other related costs -- -- N/A -- (6) N/A
----- ----- ------- -------
Income before income tax, minority interest
and net realized investment gains 21 40 (48) 214 135 59
Income tax expense (5) (14) 64 (44) (33) (33)
Minority interest -- -- N/A (3) (15) 80
----- ----- ------- -------
Income before net realized investment gains 16 26 (38) 167 87 92
Realized investment gains 19 83 (77) 171 17 N/A
Income tax (expense) benefit on realized
investment gains (7) (15) 53 (59) 8 N/A
----- ----- ------- -------
Income from continuing operations 28 94 (70) 279 112 149
Cumulative effect of a change in accounting principle -- -- N/A -- -- N/A
----- ----- ------- -------
Net income $ 28 $ 94 (70)% $ 279 $ 112 149%
===== ===== ======= =======
FINANCIAL RATIOS
Loss & LAE 84.3% 71.1% 69.1% 72.9%
Acquisition expense 9.9 18.3 18.2 18.6
Underwriting expense 6.7 8.4 11.3 12.1
Dividends -- -- 0.7 1.0
----- ----- ------- -------
Expense ratio, including dividends 16.6 26.7 30.2 31.7
----- ----- ------- -------
Combined ratio 100.9% 97.8% 99.3% 104.6%
===== ===== ======= =======
</Table>
8
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
PROPERTY & CASUALTY SEGMENTS - OPERATING RESULTS
<Table>
<Caption>
TWELVE MONTHS ENDED STANDARD LINES SPECIALTY LINES P&C OPERATIONS
DECEMBER 31 FAV / FAV / FAV /
(UNFAV) (UNFAV) (UNFAV)
(In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE 2003 2002 % CHANGE
------- ------- -------- ------- ------- -------- ------- ------- --------
Gross written premiums $ 5,619 $ 5,027 12% $ 3,695 $ 3,359 10% $ 9,314 $ 8,386 11%
Net written premiums 3,802 4,020 (5) 2,809 2,383 18 6,611 6,403 3
Net earned premiums 3,743 4,018 (7) 2,666 2,178 22 6,409 6,196 3
Claim and claim adjustment
expenses 3,835 2,892 (33) 2,262 1,679 (35) 6,097 4,571 (33)
Acquisition expenses 1,142 724 (58) 621 436 (42) 1,763 1,160 (52)
Underwriting expenses 562 509 (10) 292 264 (11) 854 773 (10)
Policyholders' dividends 100 73 (37) 3 3 -- 103 76 (36)
Restructuring & other
related costs -- (2) N/A -- (1) N/A -- (3) N/A
------- ------- ------- ------- ------- -------
Underwriting loss (1,896) (178) N/A (512) (203) (152) (2,408) (381) N/A
------- ------- ------- ------- ------- -------
Net investment income 336 398 (16) 287 253 13 623 651 (4)
Other revenues 198 323 (39) 116 146 (21) 314 469 (33)
Other expenses 181 289 37 111 110 (1) 292 399 27
Non-insurance restructuring &
other related costs -- (6) N/A -- -- N/A -- (6) N/A
------- ------- ------- ------- ------- -------
(Loss) income before income tax,
minority interest and net
realized investment gains (losses) (1,543) 260 N/A (220) 86 N/A (1,763) 346 N/A
Income tax benefit (expense) 587 (63) N/A 103 (32) N/A 690 (95) N/A
Minority interest -- -- N/A 6 (26) 123 6 (26) 123
------- ------- ------- ------- ------- -------
(Loss) income before net
realized investment gains (losses) (956) 197 N/A (111) 28 N/A (1,067) 225 N/A
Realized investment gains (losses) 338 (86) N/A 144 (77) N/A 482 (163) N/A
Income tax (expense) benefit on
realized investment gains (losses) (119) 30 N/A (50) 25 N/A (169) 55 N/A
------- ------- ------- ------- ------- -------
(Loss) income from continuing operations (737) 141 N/A (17) (24) 29 (754) 117 N/A
Cumulative effect of a change in
accounting principle -- -- N/A -- (48) N/A -- (48) N/A
------- ------- ------- ------- ------- -------
Net (loss) income $ (737) $ 141 N/A% $ (17) $ (72) 76% $ (754) $ 69 N/A%
======= ======= ======= ======= ======= =======
FINANCIAL RATIOS
Loss & LAE 102.5% 72.0% 84.9% 77.1% 95.1% 73.9%
Acquisition expense 30.5 18.0 23.3 20.0 27.5 18.7
Underwriting expense 15.0 12.6 10.9 12.1 13.4 12.3
Dividends 2.7 1.8 0.1 0.1 1.6 1.2
------- ------- ------- ------- ------- -------
Expense ratio, including dividends 48.2 32.4 34.3 32.2 42.5 32.2
------- ------- ------- ------- ------- -------
Combined ratio 150.7% 104.4% 119.2% 109.3% 137.6% 106.1%
======= ======= ======= ======= ======= =======
</Table>
9
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
PROPERTY & CASUALTY SEGMENTS - OPERATING RESULTS
<Table>
<Caption>
TWELVE MONTHS ENDED CNA RE TOTAL P&C SEGMENTS
DECEMBER 31 FAV / FAV /
(UNFAV) (UNFAV)
(In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE
------- ------- -------- ------- ------- --------
Gross written premiums $ 572 $ 732 (22)% $ 9,886 $ 9,118 8%
Net written premiums 478 605 (21) 7,089 7,008 1
Net earned premiums 536 642 (17) 6,945 6,838 2
Claim and claim adjustment expenses 510 503 (1) 6,607 5,074 (30)
Acquisition expenses 104 136 24 1,867 1,296 (44)
Underwriting expenses 54 61 11 908 834 (9)
Policyholders' dividends -- -- N/A 103 76 (36)
Restructuring & other related costs -- -- N/A -- (3) N/A
------- ------- ------- -------
Underwriting loss (132) (58) (128) (2,540) (439) N/A
------- ------- ------- -------
Net investment income 72 144 (50) 695 795 (13)
Other revenues 7 2 N/A 321 471 (32)
Other expenses 1 1 -- 293 400 27
Non-insurance restructuring & other related costs -- -- N/A -- (6) N/A
------- ------- ------- -------
(Loss) income before income tax, minority interest
and net realized investment gains (losses) (54) 87 (162) (1,817) 433 N/A
Income tax benefit (expense) 27 (22) N/A 717 (117) N/A
Minority interest -- -- N/A 6 (26) 123
------- ------- ------- -------
(Loss) income before net realized investment gains (losses) (27) 65 (142) (1,094) 290 N/A
Realized investment gains (losses) 73 81 (10) 555 (82) N/A
Income tax (expense) benefit on realized
investment gains (losses) (23) (10) (130) (192) 45 N/A
------- ------- ------- -------
Income (loss) from continuing operations 23 136 (83) (731) 253 N/A
Cumulative effect of a change in accounting principle -- -- N/A -- (48) N/A
------- ------- ------- -------
Net income (loss) $ 23 $ 136 (83)% $ (731) $ 205 N/A%
======= ======= ======= =======
FINANCIAL RATIOS
Loss & LAE 95.2% 78.4% 95.2% 74.2%
Acquisition expense 19.4 21.3 26.9 19.0
Underwriting expense 10.1 9.4 13.0 12.1
Dividends -- -- 1.5 1.1
------- ------- ------- -------
Expense ratio, including dividends 29.5 30.7 41.4 32.2
------- ------- ------- -------
Combined ratio 124.7% 109.1% 136.6% 106.4%
======= ======= ======= =======
</Table>
10
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
GROUP & LIFE AND CORPORATE & OTHER SEGMENTS - OPERATING RESULTS
<Table>
<Caption>
THREE MONTHS ENDED TOTAL P&C SEGMENTS GROUP OPERATIONS LIFE OPERATIONS CORPORATE & OTHER TOTAL OPERATIONS
DECEMBER 31
(In millions) 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002
------- ------- ----- ----- ----- ----- ----- ----- ------- -------
Net earned premiums $ 1,962 $ 1,742 $ 330 $ 310 $ 246 $ 220 $ (28) $ 16 $ 2,510 $ 2,288
Insurance claims &
policyholders' benefits 1,355 1,270 245 234 345 294 (16) 32 1,929 1,830
Policyholders' dividends 15 17 -- 1 3 4 -- (2) 18 20
Insurance related expenses 577 538 112 113 66 51 (2) 14 753 716
Restructuring & other
related costs -- (3) -- -- -- (1) -- (27) -- (31)
Net investment income 191 198 63 64 131 138 51 38 436 438
Other revenues 74 106 14 26 39 17 (20) (19) 107 130
Other expenses 66 95 5 5 (7) 18 36 36 100 154
Non-insurance restructuring
& other related costs -- (6) -- -- -- -- -- -- -- (6)
------- ------- ----- ----- ----- ----- ----- ----- ------- -------
Income (loss) before income
tax, minority interest
and net realized investment
gains (losses) 214 135 45 47 9 9 (15) (18) 253 173
Income tax (expense) benefit (44) (33) (15) (16) (1) (4) 4 7 (56) (46)
Minority interest (3) (15) -- -- -- -- -- -- (3) (15)
------- ------- ----- ----- ----- ----- ----- ----- ------- -------
Income (loss) before net
realized investment gains (losses) 167 87 30 31 8 5 (11) (11) 194 112
Realized investment gains (losses) 171 17 (170) (48) 26 (49) (33) (35) (6) (115)
Income tax (expense) benefit
on realized investment
gains (losses) (59) 8 43 17 (9) 16 11 12 (14) 53
------- ------- ----- ----- ----- ----- ----- ----- ------- -------
Income (loss) from continuing
operations 279 112 (97) -- 25 (28) (33) (34) 174 50
Loss from discontinued operations -- -- -- -- -- -- -- -- -- --
Cumulative effect of a change
in accounting principle -- -- -- -- -- -- -- -- -- --
------- ------- ----- ----- ----- ----- ----- ----- ------- -------
Net income (loss) $ 279 $ 112 $ (97) $ -- $ 25 $ (28) $ (33) $ (34) $ 174 $ 50
======= ======= ===== ===== ===== ===== ===== ===== ======= =======
</Table>
<Table>
<Caption>
OTHER FINANCIAL DATA TOTAL P&C GROUP LIFE CORPORATE TOTAL
Property & Casualty Company SEGMENTS OPERATIONS(1) OPERATIONS & OTHER OPERATIONS(1)
Information
2003 2002 2003 2002 2003 2002 2003 2002 2003 2002
------- ------- ----- ----- ----- ----- ----- ----- ------- -------
Gross written premiums $ 2,306 $ 2,039 $ 179 $ 229 $ 124 $ 126 $ 420 $ 475 $ 3,029 $ 2,869
Net written premiums 1,760 1,602 1 -- 125 126 1 23 1,887 1,751
Net earned premiums 1,962 1,742 -- -- 127 125 (2) (19) 2,087 1,848
Underwriting income (loss) 15 (80) (6) (2) (107) (94) (5) (30) (103) (206)
FINANCIAL RATIOS
Loss & LAE 69.1% 72.9% N/A% N/A% 160.3% 153.7% N/A% N/A% 75.2% 78.8%
Acquisition expense 18.2 18.6 N/A N/A 17.5 11.8 N/A N/A 19.4 19.4
Underwriting expense 11.3 12.1 N/A N/A 6.4 9.8 N/A N/A 9.7 12.0
Dividends 0.7 1.0 N/A N/A -- -- N/A N/A 0.7 0.9
------- ------- ----- ----- ----- ----- ----- ----- ------- -------
Expense ratio, including
dividends 30.2 31.7 N/A N/A 23.9 21.6 N/A N/A 29.8 32.3
------- ------- ----- ----- ----- ----- ----- ----- ------- -------
Combined ratio 99.3% 104.6% N/A% N/A% 184.2% 175.3% N/A% N/A% 105.0% 111.1%
======= ======= ===== ===== ===== ===== ===== ===== ======= =======
</Table>
(1) The P&C Companies ratios exclude the impact of commutation transactions
between CNA's property and casualty and life and group companies.
11
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
GROUP & LIFE AND CORPORATE & OTHER SEGMENTS - OPERATING RESULTS
<Table>
<Caption>
TWELVE MONTHS ENDED TOTAL P&C SEGMENTS GROUP LIFE OPERATIONS CORPORATE & OTHER TOTAL
DECEMBER 31 OPERATIONS (1) OPERATIONS (1)
(In millions) 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002
------- ------- ------- -------- ------- ------- ------- ------ ------- -------
Net earned premiums $ 6,945 $6,838 $ 1,312 $ 2,327 $1,029 $ 930 $ (72) $ 118 $ 9,214 $10,213
Insurance claims & policyholders'
benefits 6,607 5,074 1,005 1,955 1,256 1,104 934 173 9,802 8,306
Policyholders' dividends 103 76 1 1 17 14 (7) (5) 114 86
Insurance related expenses 2,775 2,130 454 529 287 239 236 14 3,752 2,912
Restructuring & other related costs -- (3) -- -- -- (1) -- (27) -- (31)
Net investment income 695 795 263 252 524 540 165 143 1,647 1,730
Other revenues 321 471 60 92 103 106 (89) (74) 395 595
Other expenses 293 400 27 29 37 74 43 175 400 678
Non-insurance restructuring &
other related costs -- (6) -- -- -- -- -- -- -- (6)
------- ------ ------- ------- ------ ------- ----- ----- ------- -------
(Loss) income before income tax,
minority interest
and net realized investment
gains (losses) (1,817) 433 148 157 59 146 (1,202) (143) (2,812) 593
Income tax benefit (expense) 717 (117) (48) (53) (14) (52) 433 51 1,088 (171)
Minority interest 6 (26) -- -- -- -- -- -- 6 (26)
------- ------ ------- ------- ------ ------- ------ ------ ------- -------
(Loss) income before net realized
investment gains (losses) (1,094) 290 100 104 45 94 (769) (92) (1,718) 396
Realized investment gains (losses) 555 (82) (177) (60) 36 (111) 46 1 460 (252)
Income tax (expense) benefit on
realized investment gains (losses) (192) 45 46 21 (13) 37 (16) -- (175) 103
------- ------ ------- ------- ------ ------- ------- ----- ------- -------
(Loss) income from continuing operations (731) 253 (31) 65 68 20 (739) (91) (1,433) 247
Loss from discontinued operations -- -- -- -- -- (35) -- -- -- (35)
Cumulative effect of a change in
accounting principle -- (48) -- -- -- (8) -- (1) -- (57)
------- ------ ------- ------- ------ ------- ------ ----- ------- -------
Net (loss) income $ (731) $ 205 $ (31) $ 65 $ 68 $ (23) $ (739) $ (92) $(1,433) $ 155
======= ====== ======= ======= ====== ======= ====== ===== ======= =======
</Table>
<Table>
<Caption>
OTHER FINANCIAL DATA TOTAL P&C GROUP LIFE CORPORATE TOTAL
Property & Casualty Company Information SEGMENTS OPERATIONS(1)(2) OPERATIONS & OTHER OPERATIONS(1)(2)
2003 2002 2003 2002 2003 2002 2003 2002 2003 2002
------- ------- ------- ------- ------ ------ ------- ------ ------- -------
Gross written premiums $ 9,886 $ 9,118 $ 768 $2,016 $ 519 $ 497 $ 1,836 $1,824 $13,009 $13,455
Net written premiums 7,089 7,008 1 1,149 519 496 (6) -- 7,603 8,653
Net earned premiums 6,945 6,838 -- 1,151 516 481 (6) (32) 7,455 8,438
Underwriting (loss) income (2,540) (439) (2) 13 (288) (223) (1,213) (164) (4,043) (813)
FINANCIAL RATIOS
Loss & LAE 95.2% 74.2% N/A% 87.3% 129.9% 122.8% N/A% N/A% 110.5% 79.4%
Acquisition expense 26.9 19.0 N/A (0.5) 16.6 13.8 N/A N/A 29.6 16.3
Underwriting expense 13.0 12.1 N/A 12.1 9.3 9.8 N/A N/A 12.7 13.0
Dividends 1.5 1.1 N/A -- -- -- N/A N/A 1.4 0.9
------- ------- ----- ------ ------ ------ ------- ------ ------- -------
Expense ratio, including dividends 41.4 32.2 N/A 11.6 25.9 23.6 N/A N/A 43.7 30.2
------- ------- ----- ------ ------ ------ ------- ------ ------- -------
Combined ratio 136.6% 106.4% N/A% 98.9% 155.8% 146.4% N/A% N/A% 154.2% 109.6%
======= ======= ===== ====== ====== ====== ======= ====== ======= =======
</Table>
(1) Included in gross written, net written and earned premiums for 2002 is
$1,151 million related to the National Postal Mail Handlers Union
contract, which was transferred on July 1, 2002.
(2) The P&C Companies ratios exclude the impact of commutation transactions
between CNA's property and casualty and life and group companies.
12
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
PROPERTY & CASUALTY SEGMENTS - CATASTROPHE LOSSES
<Table>
<Caption>
CATASTROPHE LOSSES (PRETAX) TOTAL P&C
(In millions) STANDARD LINES SPECIALTY LINES P&C OPERATIONS CNA RE SEGMENTS
-------------- --------------- -------------- ---------- ----------
Three months ended December 31, 2003 $ 1 $ 2 $ 3 $ 8 $ 11
Twelve months ended December 31, 2003 96 18 114 29 143
Three months ended December 31, 2002 $ 9 $ -- $ 9 $ -- $ 9
Twelve months ended December 31, 2002 23 19 42 17 59
</Table>
<Table>
<Caption>
CATASTROPHE LOSSES (AFTER-TAX) TOTAL P&C
(In millions) STANDARD LINES SPECIALTY LINES P&C OPERATIONS CNA RE SEGMENTS
-------------- --------------- -------------- ---------- ----------
Three months ended December 31, 2003 $ 1 $ 1 $ 2 $ 5 $ 7
Twelve months ended December 31, 2003 62 12 74 19 93
Three months ended December 31, 2002 $ 6 $ -- $ 6 $ -- $ 6
Twelve months ended December 31, 2002 15 12 27 11 38
</Table>
13
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
ANALYSIS OF PRETAX NET INVESTMENT INCOME
<Table>
<Caption>
(In millions) STANDARD LINES
-------------------------------------------------------------------------------------------------
1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003
------ ------ ------ ------ -------- ------ ------ ------ ------ --------
Limited partnership income $ 3 $ 20 $ (39) $ (2) $ (18) $ 13 $ 40 $ 33 $ 33 $ 119
Interest on funds withheld
and other deposits (38) (44) (36) (56) (174) (34) (76) (114) (43) (267)
Other investment income 138 158 142 152 590 131 120 123 110 484
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment income $ 103 $ 134 $ 67 $ 94 $ 398 $ 110 $ 84 $ 42 $ 100 $ 336
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
<Caption>
SPECIALTY LINES
-------------------------------------------------------------------------------------------------
1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003
------ ------ ------ ------ -------- ------ ------ ------ ------ --------
Limited partnership income $ 1 $ 8 $ (14) $ (1) $ (6) $ 5 $ 17 $ 13 $ 14 $ 49
Interest on funds withheld
and other deposits (9) (7) (11) (7) (34) (6) (7) (12) (3) (28)
Other investment income 68 74 74 77 293 71 69 63 63 266
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment income $ 60 $ 75 $ 49 $ 69 $ 253 $ 70 $ 79 $ 64 $ 74 $ 287
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
<Caption>
P&C OPERATIONS
-------------------------------------------------------------------------------------------------
1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003
------ ------ ------ ------ -------- ------ ------ ------ ------ --------
Limited partnership income $ 4 $ 28 $ (53) $ (3) $ (24) $ 18 $ 57 $ 46 $ 47 $ 168
Interest on funds withheld
and other deposits (47) (51) (47) (63) (208) (40) (83) (126) (46) (295)
Other investment income 206 232 216 229 883 202 189 186 173 750
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment income $ 163 $ 209 $ 116 $ 163 $ 651 $ 180 $ 163 $ 106 $ 174 $ 623
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
<Caption>
CNA RE
-------------------------------------------------------------------------------------------------
1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003
------ ------ ------ ------ -------- ------ ------ ------ ------ --------
Limited partnership income $ 1 $ 5 $ (9) $ (1) $ (4) $ 2 $ 8 $ 7 $ 6 $ 23
Interest on funds withheld
and other deposits (11) (6) (6) (6) (29) (6) (10) (22) (10) (48)
Other investment income 43 49 43 42 177 28 24 24 21 97
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment income $ 33 $ 48 $ 28 $ 35 $ 144 $ 24 $ 22 $ 9 $ 17 $ 72
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
<Caption>
TOTAL P&C SEGMENTS
-------------------------------------------------------------------------------------------------
1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003
------ ------ ------ ------ -------- ------ ------ ------ ------ --------
Limited partnership income $ 5 $ 33 $ (62) $ (4) $ (28) $ 20 $ 65 $ 53 $ 53 $ 191
Interest on funds withheld
and other deposits (58) (57) (53) (69) (237) (46) (93) (148) (56) (343)
Other investment income 249 281 259 271 1,060 230 213 210 194 847
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment income $ 196 $ 257 $ 144 $ 198 $ 795 $ 204 $ 185 $ 115 $ 191 $ 695
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</Table>
14
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
ANALYSIS OF PRETAX NET INVESTMENT INCOME
<Table>
<Caption>
(In millions) TOTAL P&C SEGMENTS
-------------------------------------------------------------------------------------------------
1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003
------ ------ ------ ------ -------- ------ ------ ------ ------ --------
Limited partnership income $ 5 $ 33 $ (62) $ (4) $ (28) $ 20 $ 65 $ 53 $ 53 $ 191
Interest on funds withheld
and other deposits (58) (57) (53) (69) (237) (46) (93) (148) (56) (343)
Other investment income 249 281 259 271 1,060 230 213 210 194 847
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net investment income $ 196 $ 257 $ 144 $ 198 $ 795 $ 204 $ 185 $ 115 $ 191 $ 695
====== ====== ====== ====== ====== ====== ====== ====== ====== =======
<Caption>
GROUP OPERATIONS
-------------------------------------------------------------------------------------------------
1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003
------ ------ ------ ------ -------- ------ ------ ------ ------ --------
Limited partnership income $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Interest on funds withheld
and other deposits -- -- -- -- -- -- -- -- -- --
Other investment income 61 62 65 64 252 63 70 67 63 263
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net investment income $ 61 $ 62 $ 65 $ 64 $ 252 $ 63 $ 70 $ 67 $ 63 $ 263
====== ====== ====== ====== ====== ====== ====== ====== ====== =======
<Caption>
LIFE OPERATIONS
-------------------------------------------------------------------------------------------------
1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003
------ ------ ------ ------ -------- ------ ------ ------ ------ --------
Limited partnership income $ -- $ -- $ (1) $ (1) $ (2) $ -- $ -- $ 1 $ -- $ 1
Interest on funds withheld
and other deposits -- -- -- -- -- -- -- -- -- --
Other investment income 134 137 132 139 542 131 133 128 131 523
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net investment income $ 134 $ 137 $ 131 $ 138 $ 540 $ 131 $ 133 $ 129 $ 131 $ 524
====== ====== ====== ====== ====== ====== ====== ====== ====== =======
<Caption>
CORPORATE & OTHER
-------------------------------------------------------------------------------------------------
1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003
------ ------ ------ ------ -------- ------ ------ ------ ------ --------
Limited partnership income $ 2 $ 5 $ (10) $ (1) $ (4) $ 3 $ 10 $ 7 $ 9 $ 29
Interest on funds withheld
and other deposits -- -- -- (2) (2) (1) -- -- -- (1)
Other investment income 33 41 34 41 149 32 29 34 42 137
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net investment income $ 35 $ 46 $ 24 $ 38 $ 143 $ 34 $ 39 $ 41 $ 51 $ 165
====== ====== ====== ====== ====== ====== ====== ====== ====== =======
<Caption>
TOTAL OPERATIONS
-------------------------------------------------------------------------------------------------
1Q02 2Q02 3Q02 4Q02 YTD 2002 1Q03 2Q03 3Q03 4Q03 YTD 2003
------ ------ ------ ------ -------- ------ ------ ------ ------ --------
Limited partnership income $ 7 $ 38 $ (73) $ (6) $ (34) $ 23 $ 75 $ 61 $ 62 $ 221
Interest on funds withheld
and other deposits (58) (57) (53) (71) (239) (47) (93) (148) (56) (344)
Other investment income 477 521 490 515 2,003 456 445 439 430 1,770
------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net investment income $ 426 $ 502 $ 364 $ 438 $1,730 $ 432 $ 427 $ 352 $ 436 $ 1,647
====== ====== ====== ====== ====== ====== ====== ====== ====== =======
</Table>
15
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
STATUTORY DATA - PRELIMINARY
<Table>
<Caption>
PERIOD ENDED DECEMBER 31 THREE MONTHS TWELVE MONTHS
Income Statement (PRELIMINARY) FAV / (UNFAV) (PRELIMINARY) FAV / (UNFAV)
(In millions) 2003 2002 % CHANGE 2003 2002 % CHANGE
------------- -------- ------------- ------------- -------- -------------
PROPERTY & CASUALTY COMPANIES
Gross written premiums $ 2,595 $ 3,011 (14)% $ 13,175 $ 13,930 (5)%
Net written premiums 1,796 1,688 6 7,067 8,103 (13)
Net earned premiums 1,298 1,696 (23) 5,979 7,650 (22)
Claim and claim adjustment expenses 880 1,242 29 7,030 6,120 (15)
Acquisition expenses 234 331 29 1,299 1,331 2
Underwriting expenses 192 164 (17) 886 969 9
Policyholders' dividends 18 20 10 68 80 15
Restructuring and other related costs -- -- N/A -- -- N/A
-------- -------- -------- --------
Underwriting loss (26) (61) 57 (3,304) (850) N/A
Net investment income 865 864 -- 1,717 1,826 (6)
Other (expense) revenue (6) (65) 91 (634) (212) (199)
Income tax (expense) benefit (45) 81 (156) 666 28 N/A
Net realized (losses) gains (401) 51 N/A 51 (21) N/A
-------- -------- -------- --------
Net income (loss) $ 387 $ 870 (56)% $ (1,504) $ 771 N/A %
======== ======== ======== ========
FINANCIAL RATIOS
Loss and LAE 67.8 % 73.2 % 117.6 % 80.0 %
Acquisition expense 13.0 19.6 18.4 16.4
Underwriting expense 10.8 9.7 12.5 12.0
Policyholders' dividends 1.3 1.2 1.1 1.0
-------- -------- -------- --------
Expense ratio 25.1 30.5 32.0 29.4
-------- -------- -------- --------
Combined ratio 92.9 % 103.7 % 149.6 % 109.4 %
======== ======== ======== ========
LIFE COMPANIES
Premium income $ 440 $ 469 $ 1,916 $ 1,884
</Table>
<Table>
<Caption>
SUPPLEMENTAL STATUTORY DATA (PRELIMINARY)
DECEMBER 31, DECEMBER 31,
(In millions) 2003 2002
------------ ------------
PROPERTY & CASUALTY COMPANIES
Statutory surplus (1) $ 6,548 $ 6,705
LIFE COMPANIES
Statutory surplus $ 705 $ 1,645
Gross life insurance in force 388,968 437,409
</Table>
(1) Surplus includes the Property & Casualty Companies' equity ownership of the
life insurance subsidiaries.
16
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
PROPERTY & CASUALTY SEGMENTS
LOSS AND LAE RATIO ANALYSIS
<Table>
<Caption>
STANDARD LINES CNA RE
-------------------------------------------- --------------------------------------------
2003 YTD 2002 FY 2002 FY 2003 YTD 2002 FY 2002 FY
EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT
12/31/03 12/31/02 12/31/03 12/31/03 12/31/02 12/31/03
------------ ------------ ------------ ------------ ------------ ------------
Gross Accident Year 65.8 % 74.6 % 67.5 % 64.3 % 64.2 % 61.4 %
Impact of Finite Reinsurance -- (0.1) -- -- 0.2 0.2
Impact of Other Reinsurance 2.5 0.8 4.0 4.9 5.0 0.9
------------ ------------ ------------ ------------ ------------ ------------
Net Accident Year 68.3 75.3 71.5 % 69.2 69.4 62.5 %
============ ============
Impact of Corporate Covers (7.6) -- (12.3) (6.4)
Impact of Development 41.8 (3.3) 38.3 15.4
------------ ------------ ------------ ------------
Net Calendar Year 102.5% 72.0 % 95.2 % 78.4 %
============ ============ ============ ============
</Table>
<Table>
<Caption>
SPECIALTY LINES P&C SEGMENTS
-------------------------------------------- --------------------------------------------
2003 YTD 2002 FY 2002 FY 2003 YTD 2002 FY 2002 FY
EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT EVALUATED AT
12/31/03 12/31/02 12/31/03 12/31/03 12/31/02 12/31/03
------------ ------------ ------------ ------------ ------------ ------------
Gross Accident Year 64.4 % 68.1 % 70.0 % 65.2 % 71.5 % 67.9 %
Impact of Finite Reinsurance -- -- -- -- -- --
Impact of Other Reinsurance 3.7 3.6 2.8 3.1 2.2 3.3
------------ ------------ ------------ ------------ ------------ ------------
Net Accident Year 68.1 71.7 72.8 % 68.3 73.7 71.2 %
============ ============
Impact of Corporate Covers (1.3) (1.2) (5.6) (1.1)
Impact of Development 18.1 6.6 32.5 1.6
------------ ------------ ------------ ------------
Net Calendar Year 84.9% 77.1 % 95.2 % 74.2 %
============ ============ ============ ============
</Table>
<Table>
<Caption>
P&C OPERATIONS
--------------------------------------------
2003 YTD 2002 FY 2002 FY
EVALUATED AT EVALUATED AT EVALUATED AT
12/31/03 12/31/02 12/31/03
------------ ------------ ------------
Gross Accident Year 65.2 % 72.1 % 68.5 %
Impact of Finite Reinsurance -- -- --
Impact of Other Reinsurance 3.0 2.0 3.5
------------ ------------ ------------
Net Accident Year 68.2 74.1 72.0 %
============
Impact of Corporate Covers (5.1) (0.4)
Impact of Development 32.0 0.2
------------ ------------
Net Calendar Year 95.1 % 73.9 %
============ ============
</Table>
17
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
IMPACT OF SIGNIFICANT ITEMS
<Table>
<Caption>
THREE MONTHS ENDED STANDARD LINES
DECEMBER 31, 2003
2003 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ ------------- ---------- ----------- --------- -------
Net earned premiums $ 1,092 $ (9) $ (4) $ -- $ -- $ 1,079
Claim and claim adjustment expenses 753 (18) (5) -- -- 730
Acquisition expenses 224 -- -- -- -- 224
Underwriting expenses 131 -- -- -- -- 131
Policyholders' dividends 14 -- -- -- -- 14
Restructuring & other related costs -- -- -- -- -- --
------------ ------------- ---------- ----------- --------- -------
Underwriting (loss) income (30) 9 1 -- -- (20)
------------ ------------- ---------- ----------- --------- -------
Net investment income 100 -- -- -- -- 100
Other revenues 33 -- -- -- -- 33
Other expenses 26 -- -- -- -- 26
Non-insurance restructuring & other related costs -- -- -- -- -- --
------------ ------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment gains 77 9 1 -- -- 87
Income tax (expense) benefit (14) (3) -- -- -- (17)
Minority interest -- -- -- -- -- --
------------ ------------- ---------- ----------- --------- -------
Income (loss) before net realized investment gains 63 6 1 -- -- 70
Realized investment gains 102 -- -- -- -- 102
Income tax expense on realized
investment gains (36) -- -- -- -- (36)
------------ ------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 129 6 1 -- -- 136
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ ------------- ---------- ----------- --------- -------
Net income (loss) $ 129 $ 6 $ 1 $ -- $ -- $ 136
============ ============= ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 67.7 %
Acquisition expense 20.7
Underwriting expense 12.1
Dividends 1.3
-------
Expense ratio, including dividends 34.1
-------
Combined ratio 101.8 %
=======
<Caption>
THREE MONTHS ENDED SPECIALTY LINES
DECEMBER 31, 2003
2003 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 733 $ (15) $ -- $ -- $ -- $ 718
Claim and claim adjustment expenses 488 (5) 3 -- -- 486
Acquisition expenses 118 -- -- -- -- 118
Underwriting expenses 77 -- -- -- -- 77
Policyholders' dividends 1 -- -- -- -- 1
Restructuring & other related costs -- -- -- -- -- --
------------ ------------- ---------- ----------- --------- -------
Underwriting (loss) income 49 (10) (3) -- -- 36
------------ ------------- ---------- ----------- --------- -------
Net investment income 74 -- -- -- -- 74
Other revenues 35 -- -- -- -- 35
Other expenses 39 -- -- -- -- 39
Non-insurance restructuring & other related costs -- -- -- -- -- --
------------ ------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment gains 119 (10) (3) -- -- 106
Income tax (expense) benefit (26) 3 1 -- -- (22)
Minority interest (3) -- -- -- -- (3)
------------ ------------- ---------- ----------- --------- -------
Income (loss) before net realized investment gains 90 (7) (2) -- -- 81
Realized investment gains 50 -- -- -- -- 50
Income tax expense on realized
investment gains (16) -- -- -- -- (16)
------------ ------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 124 (7) (2) -- -- 115
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ ------------- ---------- ----------- --------- -------
Net income (loss) $ 124 $ (7) $ (2) $ -- $ -- $ 115
============ ============= ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 67.7 %
Acquisition expense 16.5
Underwriting expense 10.8
Dividends 0.1
-------
Expense ratio, including dividends 27.4
-------
Combined ratio 95.1 %
=======
<Caption>
P&C OPERATIONS
2003 RESULTS
THREE MONTHS ENDED BEFORE CORPORATE REINSURANCE INSURANCE
DECEMBER 31, 2003 SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ ------------- ---------- ----------- --------- -------
Net earned premiums $ 1,825 $ (24) $ (4) $ -- $ -- $ 1,797
Claim and claim adjustment expenses 1,241 (23) (2) -- -- 1,216
Acquisition expenses 342 -- -- -- -- 342
Underwriting expenses 208 -- -- -- -- 208
Policyholders' dividends 15 -- -- -- -- 15
Restructuring & other related costs -- -- -- -- -- --
------------ ------------- ---------- ----------- --------- -------
Underwriting income (loss) 19 (1) (2) -- -- 16
------------ ------------- ---------- ----------- --------- -------
Net investment income 174 -- -- -- -- 174
Other revenues 68 -- -- -- -- 68
Other expenses 65 -- -- -- -- 65
Non-insurance restructuring & other related costs -- -- -- -- -- --
------------ ------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment gains 196 (1) (2) -- -- 193
Income tax (expense) benefit (40) -- 1 -- -- (39)
Minority interest (3) -- -- -- -- (3)
------------ ------------- ---------- ----------- --------- -------
Income (loss) before net realized investment gains 153 (1) (1) -- -- 151
Realized investment gains 152 -- -- -- -- 152
Income tax expense on realized
investment gains (52) -- -- -- -- (52)
------------ ------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 253 (1) (1) -- -- 251
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ ------------- ---------- ----------- --------- -------
Net income (loss) $ 253 $ (1) $ (1) $ -- $ -- $ 251
============ ============= ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 67.7 %
Acquisition expense 19.0
Underwriting expense 11.6
Dividends 0.8
-------
Expense ratio, including dividends 31.4
-------
Combined ratio 99.1 %
=======
</Table>
(1) Includes net prior year development for premiums, claim and allocated
claim adjustment expense reserves, dividends, and change in reserves for
unallocated claim adjustment expenses.
(2) Pretax benefit of Aggregate Corporate Covers represents the current period
ceded premiums and losses and associated interest expense. Interest
expense on the funds withheld related to prior cessions to the Corporate
Aggregate Covers is not presented on this schedule, but is included in the
Analysis of Pretax Net Investment Income on pages 14 and 15.
18
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
IMPACT OF SIGNIFICANT ITEMS
<Table>
<Caption>
THREE MONTHS ENDED CNA RE
DECEMBER 31, 2003
2003 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 157 $ 8 $ -- $ -- $ -- $ 165
Claim and claim adjustment expenses 130 7 2 -- -- 139
Acquisition expenses 17 -- -- -- -- 17
Underwriting expenses 10 -- -- -- -- 10
Policyholders' dividends -- -- -- -- -- --
Restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Underwriting income (loss) -- 1 (2) -- -- (1)
------------ -------------- ---------- ----------- --------- -------
Net investment income 17 -- -- -- -- 17
Other revenues 6 -- -- -- -- 6
Other expenses 1 -- -- -- -- 1
Non-insurance restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment gains 22 1 (2) -- -- 21
Income tax (expense) benefit (5) (1) 1 -- -- (5)
Minority interest -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment gains 17 -- (1) -- -- 16
Realized investment gains 19 -- -- -- -- 19
Income tax expense on realized
investment gains (7) -- -- -- -- (7)
------------ -------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 29 -- (1) -- -- 28
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Net income (loss) $ 29 $ -- $ (1) $ -- $ -- $ 28
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 84.3 %
Acquisition expense 9.9
Underwriting expense 6.7
Dividends --
-------
Expense ratio, including dividends 16.6
-------
Combined ratio 100.9 %
=======
<Caption>
THREE MONTHS ENDED TOTAL P&C SEGMENTS
DECEMBER 31, 2003
2003 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 1,982 $ (16) $ (4) $ -- $ -- $ 1,962
Claim and claim adjustment expenses 1,371 (16) -- -- -- 1,355
Acquisition expenses 359 -- -- -- -- 359
Underwriting expenses 218 -- -- -- -- 218
Policyholders' dividends 15 -- -- -- -- 15
Restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Underwriting income (loss) 19 -- (4) -- -- 15
------------ -------------- ---------- ----------- --------- -------
Net investment income 191 -- -- -- -- 191
Other revenues 74 -- -- -- -- 74
Other expenses 66 -- -- -- -- 66
Non-insurance restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment gains 218 -- (4) -- -- 214
Income tax (expense) benefit (45) (1) 2 -- -- (44)
Minority interest (3) -- -- -- -- (3)
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment gains 170 (1) (2) -- -- 167
Realized investment gains 171 -- -- -- -- 171
Income tax expense on realized
investment gains (59) -- -- -- -- (59)
------------ -------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 282 (1) (2) -- -- 279
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Net income (loss) $ 282 $ (1) $ (2) $ -- $ -- $ 279
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 69.1 %
Acquisition expense 18.2
Underwriting expense 11.3
Dividends 0.7
-------
Expense ratio, including dividends 30.2
-------
Combined ratio 99.3 %
=======
</Table>
(1) Includes net prior year development for premiums, claim and allocated
claim adjustment expense reserves, dividends, and change in reserves for
unallocated claim adjustment expenses.
(2) Pretax benefit of Aggregate Corporate Covers represents the current period
ceded premiums and losses and associated interest expense. Interest
expense on the funds withheld related to prior cessions to the Corporate
Aggregate Covers is not presented on this schedule, but is included in the
Analysis of Pretax Net Investment Income on pages 14 and 15.
19
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
IMPACT OF SIGNIFICANT ITEMS
<Table>
<Caption>
TWELVE MONTHS ENDED STANDARD LINES
DECEMBER 31, 2003
2003 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 4,230 $ (218) $ (269) $ -- $ -- $ 3,743
Claim and claim adjustment expenses 2,925 1,395 (485) -- -- 3,835
Acquisition expenses 845 -- -- 55 242 1,142
Underwriting expenses 562 -- -- -- -- 562
Policyholders' dividends 54 46 -- -- -- 100
Restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Underwriting (loss) income (156) (1,659) 216 (55) (242) (1,896)
------------ -------------- ---------- ----------- --------- -------
Net investment income (loss) 413 -- (77) -- -- 336
Other revenues 198 -- -- -- -- 198
Other expenses 181 -- -- -- -- 181
Non-insurance restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment gains 274 (1,659) 139 (55) (242) (1,543)
Income tax (expense) benefit (49) 581 (49) 19 85 587
Minority interest -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment gains 225 (1,078) 90 (36) (157) (956)
Realized investment gains 338 -- -- -- -- 338
Income tax expense on realized
investment gains (119) -- -- -- -- (119)
------------ -------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 444 (1,078) 90 (36) (157) (737)
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Net income (loss) $ 444 $ (1,078) $ 90 $ (36) $ (157) $ (737)
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 102.5%
Acquisition expense 30.5
Underwriting expense 15.0
Dividends 2.7
-------
Expense ratio, including dividends 48.2
-------
Combined ratio 150.7%
=======
<Caption>
TWELVE MONTHS ENDED SPECIALTY LINES
DECEMBER 31, 2003
2003 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 2,697 $ -- $ (31) $ -- $ -- $ 2,666
Claim and claim adjustment expenses 1,836 482 (56) -- -- 2,262
Acquisition expenses 542 -- -- 79 -- 621
Underwriting expenses 292 -- -- -- -- 292
Policyholders' dividends 3 -- -- -- -- 3
Restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Underwriting (loss) income 24 (482) 25 (79) -- (512)
------------ -------------- ---------- ----------- --------- -------
Net investment income (loss) 297 -- (10) -- -- 287
Other revenues 116 -- -- -- -- 116
Other expenses 111 -- -- -- -- 111
Non-insurance restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment gains 326 (482) 15 (79) -- (220)
Income tax (expense) benefit (88) 168 (5) 28 -- 103
Minority interest (4) 10 -- -- -- 6
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment gains 234 (304) 10 (51) -- (111)
Realized investment gains 144 -- -- -- -- 144
Income tax expense on realized
investment gains (50) -- -- -- -- (50)
------------ -------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 328 (304) 10 (51) -- (17)
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Net income (loss) $ 328 $ (304) $ 10 $ (51) $ -- $ (17)
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 84.9%
Acquisition expense 23.3
Underwriting expense 10.9
Dividends 0.1
-------
Expense ratio, including dividends 34.3
-------
Combined ratio 119.2%
=======
<Caption>
TWELVE MONTHS ENDED P&C OPERATIONS
DECEMBER 31, 2003
2003 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 6,927 $ (218) $ (300) $ -- $ -- $ 6,409
Claim and claim adjustment expenses 4,761 1,877 (541) -- -- 6,097
Acquisition expenses 1,387 -- -- 134 242 1,763
Underwriting expenses 854 -- -- -- -- 854
Policyholders' dividends 57 46 -- -- -- 103
Restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Underwriting (loss) income (132) (2,141) 241 (134) (242) (2,408)
------------ -------------- ---------- ----------- --------- -------
Net investment income (loss) 710 -- (87) -- -- 623
Other revenues 314 -- -- -- -- 314
Other expenses 292 -- -- -- -- 292
Non-insurance restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment gains 600 (2,141) 154 (134) (242) (1,763)
Income tax (expense) benefit (137) 749 (54) 47 85 690
Minority interest (4) 10 -- -- -- 6
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment gains 459 (1,382) 100 (87) (157) (1,067)
Realized investment gains 482 -- -- -- -- 482
Income tax expense on realized
investment gains (169) -- -- -- -- (169)
------------ -------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 772 (1,382) 100 (87) (157) (754)
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Net income (loss) $ 772 $ (1,382) $ 100 $ (87) $ (157) $ (754)
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 95.1%
Acquisition expense 27.5
Underwriting expense 13.4
Dividends 1.6
-------
Expense ratio, including dividends 42.5
-------
Combined ratio 137.6%
=======
</Table>
(1) Includes net prior year development for premiums, claim and allocated
claim adjustment expense reserves, dividends, and change in reserves for
unallocated claim adjustment expenses.
(2) Pretax benefit of Aggregate Corporate Covers represents the current period
ceded premiums and losses and associated interest expense. Interest
expense on the funds withheld related to prior cessions to the Corporate
Aggregate Covers is not presented on this schedule, but is included in the
Analysis of Pretax Net Investment Income on pages 14 and 15.
20
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
IMPACT OF SIGNIFICANT ITEMS
<Table>
<Caption>
TWELVE MONTHS ENDED CNA RE
DECEMBER 31, 2003
2003 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 567 $ 26 $ (57) $ -- $ -- $ 536
Claim and claim adjustment expenses 392 220 (102) -- -- 510
Acquisition expenses 102 -- -- 2 -- 104
Underwriting expenses 54 -- -- -- -- 54
Policyholders' dividends -- -- -- -- -- --
Restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Underwriting income (loss) 19 (194) 45 (2) -- (132)
------------ -------------- ---------- ----------- --------- -------
Net investment income (loss) 89 -- (17) -- -- 72
Other revenues 7 -- -- -- -- 7
Other expenses 1 -- -- -- -- 1
Non-insurance restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment gains 114 (194) 28 (2) -- (54)
Income tax (expense) benefit (32) 68 (10) 1 -- 27
Minority interest -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment gains 82 (126) 18 (1) -- (27)
Realized investment gains 73 -- -- -- -- 73
Income tax expense on realized
investment gains (23) -- -- -- -- (23)
------------ -------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 132 (126) 18 (1) -- 23
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Net income (loss) $ 132 $ (126) $ 18 $ (1) $ -- $ 23
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 95.2%
Acquisition expense 19.4
Underwriting expense 10.1
Dividends --
-------
Expense ratio, including dividends 29.5
-------
Combined ratio 124.7%
=======
<Caption>
TWELVE MONTHS ENDED TOTAL P&C SEGMENTS
DECEMBER 31, 2003
2003 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2003
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 7,494 $ (192) $ (357) $ -- $ -- $ 6,945
Claim and claim adjustment expenses 5,153 2,097 (643) -- -- 6,607
Acquisition expenses 1,489 -- -- 136 242 1,867
Underwriting expenses 908 -- -- -- -- 908
Policyholders' dividends 57 46 -- -- -- 103
Restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Underwriting income (loss) (113) (2,335) 286 (136) (242) (2,540)
------------ -------------- ---------- ----------- --------- -------
Net investment income (loss) 799 -- (104) -- -- 695
Other revenues 321 -- -- -- -- 321
Other expenses 293 -- -- -- -- 293
Non-insurance restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment gains 714 (2,335) 182 (136) (242) (1,817)
Income tax (expense) benefit (169) 817 (64) 48 85 717
Minority interest (4) 10 -- -- -- 6
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment gains 541 (1,508) 118 (88) (157) (1,094)
Realized investment gains 555 -- -- -- -- 555
Income tax expense on realized
investment gains (192) -- -- -- -- (192)
------------ -------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 904 (1,508) 118 (88) (157) (731)
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Net income (loss) $ 904 $ (1,508) $ 118 $ (88) $ (157) $ (731)
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 95.2%
Acquisition expense 26.9
Underwriting expense 13.0
Dividends 1.5
-------
Expense ratio, including dividends 41.4
-------
Combined ratio 136.6%
=======
</Table>
(1) Includes net prior year development for premiums, claim and allocated
claim adjustment expense reserves, dividends, and change in reserves for
unallocated claim adjustment expenses.
(2) Pretax benefit of Aggregate Corporate Covers represents the current period
ceded premiums and losses and associated interest expense. Interest
expense on the funds withheld related to prior cessions to the Corporate
Aggregate Covers is not presented on this schedule, but is included in the
Analysis of Pretax Net Investment Income on pages 14 and 15.
21
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
IMPACT OF SIGNIFICANT ITEMS
<Table>
<Caption>
THREE MONTHS ENDED STANDARD LINES
DECEMBER 31, 2002
2002 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 1,001 $ (22) $ (1) $ -- $ -- $ 978
Claim and claim adjustment expenses 773 (72) -- -- -- 701
Acquisition expenses 188 -- -- -- -- 188
Underwriting expenses 130 -- -- -- -- 130
Policyholders' dividends 18 (2) -- -- -- 16
Restructuring & other related costs (2) -- -- -- -- (2)
------------ -------------- ---------- ----------- --------- -------
Underwriting (loss) income (106) 52 (1) -- -- (55)
------------ -------------- ---------- ----------- --------- -------
Net investment income 94 -- -- -- -- 94
Other revenues 80 -- -- -- -- 80
Other expenses 73 -- -- -- -- 73
Non-insurance restructuring & other related costs (6) -- -- -- -- (6)
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment losses 1 52 (1) -- -- 52
Income tax benefit (expense) 8 (18) -- -- -- (10)
Minority interest -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment losses 9 34 (1) -- -- 42
Realized investment losses (35) -- -- -- -- (35)
Income tax benefit on realized
investment losses 12 -- -- -- -- 12
------------ -------------- ---------- ----------- --------- -------
(Loss) income from continuing operations (14) 34 (1) -- -- 19
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Net (loss) income $ (14) $ 34 $ (1) $ -- $ -- $ 19
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 71.7%
Acquisition expense 19.1
Underwriting expense 13.3
Dividends 1.6
-------
Expense ratio, including dividends 34.0
-------
Combined ratio 105.7%
=======
<Caption>
THREE MONTHS ENDED SPECIALTY LINES
DECEMBER 31, 2002
2002 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 607 $ (23) $ -- $ -- $ -- $ 584
Claim and claim adjustment expenses 413 28 -- -- -- 441
Acquisition expenses 103 -- -- -- -- 103
Underwriting expenses 69 -- -- -- -- 69
Policyholders' dividends 1 -- -- -- -- 1
------------ -------------- ---------- ----------- --------- -------
Restructuring & other related costs (1) -- -- -- -- (1)
------------ -------------- ---------- ----------- --------- -------
Underwriting (loss) income 22 (51) -- -- -- (29)
Net investment income 69 -- -- -- -- 69
Other revenues 26 -- -- -- -- 26
Other expenses 23 -- -- -- -- 23
Non-insurance restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment losses 94 (51) -- -- -- 43
Income tax benefit (expense) (27) 18 -- -- -- (9)
Minority interest (13) (2) -- -- -- (15)
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment losses 54 (35) -- -- -- 19
Realized investment losses (31) -- -- -- -- (31)
Income tax benefit on realized
investment losses 11 -- -- -- -- 11
------------ -------------- ---------- ----------- --------- -------
(Loss) income from continuing operations 34 (35) -- -- -- (1)
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Net (loss) income $ 34 $ (35) $ -- $ -- $ -- $ (1)
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 75.6%
Acquisition expense 17.7
Underwriting expense 11.5
Dividends 0.1
-------
Expense ratio, including dividends 29.3
-------
Combined ratio 104.9%
=======
<Caption>
THREE MONTHS ENDED P&C OPERATIONS
DECEMBER 31, 2002
2002 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 1,608 $ (45) $ (1) $ -- $ -- $ 1,562
Claim and claim adjustment expenses 1,186 (44) -- -- -- 1,142
Acquisition expenses 291 -- -- -- -- 291
Underwriting expenses 199 -- -- -- -- 199
Policyholders' dividends 19 (2) -- -- -- 17
Restructuring & other related costs (3) -- -- -- -- (3)
------------ -------------- ---------- ----------- --------- -------
Underwriting (loss) income (84) 1 (1) -- -- (84)
------------ -------------- ---------- ----------- --------- -------
Net investment income 163 -- -- -- -- 163
Other revenues 106 -- -- -- -- 106
Other expenses 96 -- -- -- -- 96
Non-insurance restructuring & other related costs (6) -- -- -- -- (6)
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment losses 95 1 (1) -- -- 95
Income tax (expense) (19) -- -- -- -- (19)
Minority interest (13) (2) -- -- -- (15)
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment losses 63 (1) (1) -- -- 61
Realized investment losses (66) -- -- -- -- (66)
Income tax benefit on realized
investment losses 23 -- -- -- -- 23
------------ -------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 20 (1) (1) -- -- 18
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Net income (loss) $ 20 $ (1) $ (1) $ -- $ -- $ 18
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 73.1%
Acquisition expense 18.6
Underwriting expense 12.6
Dividends 1.1
-------
Expense ratio, including dividends 32.3
-------
Combined ratio 105.4%
=======
</Table>
(1) Includes net prior year development for premiums, claim and allocated
claim adjustment expense reserves, dividends, and change in reserves for
unallocated claim adjustment expenses.
(2) Pretax benefit of Aggregate Corporate Covers represents the current period
ceded premiums and losses and associated interest expense. Interest
expense on the funds withheld related to prior cessions to the Corporate
Aggregate Covers is not presented on this schedule, but is included in the
Analysis of Pretax Net Investment Income on pages 14 and 15.
22
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
IMPACT OF SIGNIFICANT ITEMS
<Table>
<Caption>
THREE MONTHS ENDED CNA RE
DECEMBER 31, 2002
2002 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 179 $ 1 $ -- $ -- $ -- $ 180
Claim and claim adjustment expenses 126 2 -- -- -- 128
Acquisition expenses 33 -- -- -- -- 33
Underwriting expenses 15 -- -- -- -- 15
Policyholders' dividends -- -- -- -- -- --
Restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Underwriting income (loss) 5 (1) -- -- -- 4
------------ -------------- ---------- ----------- --------- -------
Net investment income 35 -- -- -- -- 35
Other revenues -- -- -- -- -- --
Other expenses (1) -- -- -- -- (1)
Non-insurance restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment gains 41 (1) -- -- -- 40
Income tax (expense) (14) -- -- -- -- (14)
Minority interest -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment gains 27 (1) -- -- -- 26
Realized investment gains 83 -- -- -- -- 83
Income tax (expense) benefit on realized
investment gains (15) -- -- -- -- (15)
------------ -------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 95 (1) -- -- -- 94
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Net income (loss) $ 95 $ (1) $ -- $ -- $ -- $ 94
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 71.1%
Acquisition expense 18.3
Underwriting expense 8.4
Dividends --
-------
Expense ratio, including dividends 26.7
-------
Combined ratio 97.8%
=======
<Caption>
THREE MONTHS ENDED TOTAL P&C SEGMENTS
DECEMBER 31, 2002
2002 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 1,787 $ (44) $ (1) $ -- $ -- $ 1,742
Claim and claim adjustment expenses 1,312 (42) -- -- -- 1,270
Acquisition expenses 324 -- -- -- -- 324
Underwriting expenses 214 -- -- -- -- 214
Policyholders' dividends 19 (2) -- -- -- 17
Restructuring & other related costs (3) -- -- -- -- (3)
------------ -------------- ---------- ----------- --------- -------
Underwriting income (loss) (79) -- (1) -- -- (80)
------------ -------------- ---------- ----------- --------- -------
Net investment income 198 -- -- -- -- 198
Other revenues 106 -- -- -- -- 106
Other expenses 95 -- -- -- -- 95
Non-insurance restructuring & other related costs (6) -- -- -- -- (6)
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment gains 136 -- (1) -- -- 135
Income tax (expense) (33) -- -- -- -- (33)
Minority interest (13) (2) -- -- -- (15)
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment gains 90 (2) (1) -- -- 87
Realized investment gains 17 -- -- -- -- 17
Income tax (expense) benefit on realized
investment gains 8 -- -- -- -- 8
------------ -------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 115 (2) (1) -- -- 112
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Net income (loss) $ 115 $ (2) $ (1) $ -- $ -- $ 112
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 72.9%
Acquisition expense 18.6
Underwriting expense 12.1
Dividends 1.0
-------
Expense ratio, including dividends 31.7
-------
Combined ratio 104.6%
=======
</Table>
(1) Includes net prior year development for premiums, claim and allocated
claim adjustment expense reserves, dividends, and change in reserves for
unallocated claim adjustment expenses.
(2) Pretax benefit of Aggregate Corporate Covers represents the current period
ceded premiums and losses and associated interest expense. Interest
expense on the funds withheld related to prior cessions to the Corporate
Aggregate Covers is not presented on this schedule, but is included in the
Analysis of Pretax Net Investment Income on pages 14 and 15.
23
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
IMPACT OF SIGNIFICANT ITEMS
<Table>
<Caption>
TWELVE MONTHS ENDED STANDARD LINES
DECEMBER 31, 2002
2002 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 4,085 $ (66) $ (1) $ -- $ -- $ 4,018
Claim and claim adjustment expenses 3,113 (221) -- -- -- 2,892
Acquisition expenses 724 -- -- -- -- 724
Underwriting expenses 509 -- -- -- -- 509
Policyholders' dividends 69 4 -- -- -- 73
Restructuring & other related costs (2) -- -- -- -- (2)
------------ -------------- ---------- ----------- --------- -------
Underwriting (loss) income (328) 151 (1) -- -- (178)
------------ -------------- ---------- ----------- --------- -------
Net investment income (loss) 398 -- -- -- -- 398
Other revenues 323 -- -- -- -- 323
Other expenses 289 -- -- -- -- 289
Non-insurance & other related costs (6) -- -- -- -- (6)
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment losses 110 151 (1) -- -- 260
Income tax (expense) benefit (10) (53) -- -- -- (63)
Minority interest -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment losses 100 98 (1) -- -- 197
Realized investment losses (86) -- -- -- -- (86)
Income tax benefit on realized
investment losses 30 -- -- -- -- 30
------------ -------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 44 98 (1) -- -- 141
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Net income (loss) $ 44 $ 98 $ (1) $ -- $ -- $ 141
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 72.0%
Acquisition expense 18.0
Underwriting expense 12.6
Dividends 1.8
------
Expense ratio, including dividends 32.4
------
Combined ratio 104.4%
======
<Caption>
TWELVE MONTHS ENDED SPECIALTY LINES
DECEMBER 31, 2002
2002 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 2,247 $ (30) $ (39) $ -- $ -- $ 2,178
Claim and claim adjustment expenses 1,611 123 (55) -- -- 1,679
Acquisition expenses 436 -- -- -- -- 436
Underwriting expenses 264 -- -- -- -- 264
Policyholders' dividends 3 -- -- -- -- 3
Restructuring & other related costs (1) -- -- -- -- (1)
------------ -------------- ---------- ----------- --------- -------
Underwriting (loss) income (66) (153) 16 -- -- (203)
------------ -------------- ---------- ----------- --------- -------
Net investment income (loss) 258 -- (5) -- -- 253
Other revenues 146 -- -- -- -- 146
Other expenses 110 -- -- -- -- 110
Non-insurance & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment losses 228 (153) 11 -- -- 86
Income tax (expense) benefit (82) 54 (4) -- -- (32)
Minority interest (25) (1) -- -- -- (26)
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment losses 121 (100) 7 -- -- 28
Realized investment losses (77) -- -- -- -- (77)
Income tax benefit on realized
investment losses 25 -- -- -- -- 25
------------ -------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 69 (100) 7 -- -- (24)
Cumulative effect of a change in accounting principle (48) -- -- -- -- (48)
------------ -------------- ---------- ----------- --------- -------
Net income (loss) $ 21 $ (100) $ 7 $ -- $ -- $ (72)
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 77.1%
Acquisition expense 20.0
Underwriting expense 12.1
Dividends 0.1
------
Expense ratio, including dividends 32.2
------
Combined ratio 109.3%
======
<Caption>
TWELVE MONTHS ENDED P&C OPERATIONS
DECEMBER 31, 2002
2002 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 6,332 $ (96) $ (40) $ -- $ -- $ 6,196
Claim and claim adjustment expenses 4,724 (98) (55) -- -- 4,571
Acquisition expenses 1,160 -- -- -- -- 1,160
Underwriting expenses 773 -- -- -- -- 773
Policyholders' dividends 72 4 -- -- -- 76
Restructuring & other related costs (3) -- -- -- -- (3)
------------ -------------- ---------- ----------- --------- -------
Underwriting (loss) income (394) (2) 15 -- -- (381)
------------ -------------- ---------- ----------- --------- -------
Net investment income (loss) 656 -- (5) -- -- 651
Other revenues 469 -- -- -- -- 469
Other expenses 399 -- -- -- -- 399
Non-insurance restructuring & other related costs (6) -- -- -- -- (6)
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment losses 338 (2) 10 -- -- 346
Income tax expense (92) 1 (4) -- -- (95)
Minority interest (25) (1) -- -- -- (26)
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment losses 221 (2) 6 -- -- 225
Realized investment losses (163) -- -- -- -- (163)
Income tax benefit on realized
investment losses 55 -- -- -- -- 55
------------ -------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 113 (2) 6 -- -- 117
Cumulative effect of a change in accounting principle (48) -- -- -- -- (48)
------------ -------------- ---------- ----------- --------- -------
Net income (loss) $ 65 $ (2) $ 6 $ -- $ -- $ 69
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 73.9%
Acquisition expense 18.7
Underwriting expense 12.3
Dividends 1.2
-------
Expense ratio, including dividends 32.2
-------
Combined ratio 106.1%
=======
</Table>
(1) Includes net prior year development for premiums, claim and allocated
claim adjustment expense reserves, dividends, and change in reserves for
unallocated claim adjustment expenses.
(2) Pretax benefit of Aggregate Corporate Covers represents the current period
ceded premiums and losses and associated interest expense. Interest
expense on the funds withheld related to prior cessions to the Corporate
Aggregate Covers is not presented on this schedule, but is included in the
Analysis of Pretax Net Investment Income on pages 14 and 15.
24
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
IMPACT OF SIGNIFICANT ITEMS
<Table>
<Caption>
TWELVE MONTHS ENDED CNA RE
DECEMBER 31, 2002
2002 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 599 $ 104 $ (61) $ -- $ -- $ 642
Claim and claim adjustment expenses 417 179 (93) -- -- 503
Acquisition expenses 136 -- -- -- -- 136
Underwriting expenses 61 -- -- -- -- 61
Policyholders' dividends -- -- -- -- -- --
Restructuring & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Underwriting (loss) income (15) (75) 32 -- -- (58)
------------ -------------- ---------- ----------- --------- -------
Net investment income (loss) 149 -- (5) -- -- 144
Other revenues 2 -- -- -- -- 2
Other expenses 1 -- -- -- -- 1
Non-insurance & other related costs -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment gains (losses) 135 (75) 27 -- -- 87
Income tax (expense) benefit (39) 26 (9) -- -- (22)
Minority interest -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment gains
(losses) 96 (49) 18 -- -- 65
Realized investment gains (losses) 81 -- -- -- -- 81
Income tax (expense) benefit on realized
investment gains (losses) (10) -- -- -- -- (10)
------------ -------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 167 (49) 18 -- -- 136
Cumulative effect of a change in accounting principle -- -- -- -- -- --
------------ -------------- ---------- ----------- --------- -------
Net income (loss) $ 167 $ (49) $ 18 $ -- $ -- $ 136
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 78.4%
Acquisition expense 21.3
Underwriting expense 9.4
Dividends --
-------
Expense ratio, including dividends 30.7
-------
Combined ratio 109.1%
=======
<Caption>
TWELVE MONTHS ENDED TOTAL P&C SEGMENTS
DECEMBER 31, 2002
2002 RESULTS
BEFORE CORPORATE REINSURANCE INSURANCE
SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002
(In millions) ITEMS DEVELOPMENT(1) COVERS(2) PROVISION PROVISION RESULTS
------------ -------------- ---------- ----------- --------- -------
Net earned premiums $ 6,931 $ 8 $ (101) $ -- $ -- $ 6,838
Claim and claim adjustment expenses 5,141 81 (148) -- -- 5,074
Acquisition expenses 1,296 -- -- -- -- 1,296
Underwriting expenses 834 -- -- -- -- 834
Policyholders' dividends 72 4 -- -- -- 76
Restructuring & other related costs (3) -- -- -- -- (3)
------------ -------------- ---------- ----------- --------- -------
Underwriting (loss) income (409) (77) 47 -- -- (439)
------------ -------------- ---------- ----------- --------- -------
Net investment income (loss) 805 -- (10) -- -- 795
Other revenues 471 -- -- -- -- 471
Other expenses 400 -- -- -- -- 400
Non-insurance & other related costs (6) -- -- -- -- (6)
------------ -------------- ---------- ----------- --------- -------
Income (loss) before income tax, minority interest
and net realized investment gains (losses) 473 (77) 37 -- -- 433
Income tax (expense) benefit (131) 27 (13) -- -- (117)
Minority interest (25) (1) -- -- -- (26)
------------ -------------- ---------- ----------- --------- -------
Income (loss) before net realized investment gains
(losses) 317 (51) 24 -- -- 290
Realized investment gains (losses) (82) -- -- -- -- (82)
Income tax (expense) benefit on realized
investment gains (losses) 45 -- -- -- -- 45
------------ -------------- ---------- ----------- --------- -------
Income (loss) from continuing operations 280 (51) 24 -- -- 253
Cumulative effect of a change in accounting principle (48) -- -- -- -- (48)
------------ -------------- ---------- ----------- --------- -------
Net income (loss) $ 232 $ (51) $ 24 $ -- $ -- $ 205
============ ============== ========== =========== ========= =======
FINANCIAL RATIOS
Loss & LAE 74.2%
Acquisition expense 19.0
Underwriting expense 12.1
Dividends 1.1
-------
Expense ratio, including dividends 32.2
-------
Combined ratio 106.4%
=======
</Table>
(1) Includes net prior year development for premiums, claim and allocated
claim adjustment expense reserves, dividends, and change in reserves for
unallocated claim adjustment expenses.
(2) Pretax benefit of Aggregate Corporate Covers represents the current period
ceded premiums and losses and associated interest expense. Interest
expense on the funds withheld related to prior cessions to the Corporate
Aggregate Covers is not presented on this schedule, but is included in the
Analysis of Pretax Net Investment Income on pages 14 and 15.
25
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
GROSS LOSS AND ALAE RATIOS
BY SEGMENT AND LINE OF BUSINESS
CCC, CIC AND GALWAY
<Table>
<Caption>
DECEMBER 31, 2003 ACCIDENT YEAR
2003 2002 2001 2000 1999 1998 1997 1996
--------- --------- --------- --------- --------- --------- --------- ---------
BY SEGMENT
Standard Lines 61% 62% 88% 98% 110% 95% 81% 74%
Specialty Lines 62 70 117 104 100 88 86 71
CNA Re 65 61 173 93 120 124 90 84
P&C Segments 61 64 103 99 108 96 83 74
Corporate & Other 69 67 67 83 73 80 58 72
Total 63% 65% 94% 96% 101% 92% 77% 73%
BY LINE OF BUSINESS
Commercial Automobile Liability 64% 67% 91% 102% 103% 97% 90% 74%
Workers Compensation 64 67 81 96 105 95 76 65
Commercial Multiple-Peril 60 62 80 95 110 93 80 83
Medical Malpractice 63 78 119 128 131 113 132 118
Special Liability 53 54 162 94 98 72 77 75
Other Liability 66 72 98 112 134 125 90 72
Special Property 60 51 85 60 65 75 59 76
Auto Physical Damage 65 54 64 74 69 67 62 65
Reinsurance A, B and C 63 64 234 100 125 110 72 75
Other 63 72 80 95 76 69 63 67
Total 63% 65% 94% 96% 101% 92% 78% 74%
</Table>
26
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
NET LOSS AND ALAE RATIOS
BY SEGMENT AND LINE OF BUSINESS
CCC, CIC AND GALWAY
<Table>
<Caption>
DECEMBER 31, 2003 ACCIDENT YEAR
2003 2002 2001 2000 1999 1998 1997 1996
------ ------ ------ ------ ------ ------ ------ ------
BY SEGMENT
Standard Lines 62% 65% 59% 80% 94% 95% 81% 76%
Specialty Lines 66 74 91 104 108 96 84 78
CNA Re 70 60 106 89 118 128 96 90
P&C Segments 64 67 70 87 100 98 83 77
Corporate & Other (1) N/A N/A N/A N/A 76 79 67 71
Total 64% 67% 70% 86% 96% 94% 79% 76%
BY LINE OF BUSINESS
Commercial Automobile Liability 66% 68% 78% 87% 99% 100% 93% 80%
Workers Compensation 65 70 30 76 91 97 76 65
Commercial Multiple-Peril 62 64 68 81 103 96 86 85
Medical Malpractice 62 85 128 135 143 123 138 121
Special Liability 57 57 70 94 82 71 75 62
Other Liability 68 76 77 89 112 115 88 77
Special Property 53 36 75 62 59 74 64 81
Auto Physical Damage 51 51 65 70 70 73 64 66
Reinsurance A, B and C 70 62 199 100 130 115 79 84
Other 57 72 113 129 85 74 62 71
Total 64% 67% 70% 86% 96% 94% 79% 76%
</Table>
(1) Ratios subsequent to 1999 are not meaningful.
27
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
GROUP OPERATIONS SEGMENT - HISTORICAL GAAP RESULTS OF OPERATIONS (1)
THREE MONTHS ENDED DECEMBER 31, 2003
<Table>
<Caption>
GROUP GROUP
OPERATIONS OPERATIONS
EXCLUDING BUSINESSES TOTAL GROUP
BUSINESSES INCLUDED OPERATIONS
IN SALE (2) IN SALE AS REPORTED
------------------ ------------------ ------------------
(In millions)
Net earned premiums $ 60 $ 270 $ 330
Insurance claims & policyholders' benefits 64 181 245
Policyholders' dividends -- -- --
Insurance related expenses 22 90 112
Net investment income 34 29 63
Other revenues 14 -- 14
Other expenses 4 1 5
------------------ ------------------ ------------------
Income before income tax and net realized investment losses 18 27 45
Income tax expense (4) (11) (15)
------------------ ------------------ ------------------
Income before net realized investment losses 14 16 30
Realized investment losses (3) (4) (166) (170)
Income tax benefit on realized investment losses (3) 1 42 43
------------------ ------------------ ------------------
Net income (loss) $ 11 $ (108) $ (97)
================== ================== ==================
</Table>
TWELVE MONTHS ENDED DECEMBER 31, 2003
<Table>
<Caption>
GROUP GROUP
OPERATIONS OPERATIONS
EXCLUDING BUSINESSES TOTAL GROUP
BUSINESSES INCLUDED OPERATIONS
IN SALE (2) IN SALE AS REPORTED
------------------ ------------------ ------------------
(In millions)
Net earned premiums $ 238 $ 1,074 $ 1,312
Insurance claims & policyholders' benefits 228 777 1,005
Policyholders' dividends 1 -- 1
Insurance related expenses 93 361 454
Net investment income 137 126 263
Other revenues 60 -- 60
Other expenses 26 1 27
------------------ ------------------ ------------------
Income before income tax and net realized investment losses 87 61 148
Income tax expense (27) (21) (48)
------------------ ------------------ ------------------
Income before net realized investment losses 60 40 100
Realized investment losses (3) (19) (158) (177)
Income tax benefit on realized investment losses (3) 7 39 46
------------------ ------------------ ------------------
Net income (loss) $ 48 $ (79) $ (31)
================== ================== ==================
</Table>
(1) The historical results do not reflect any possible effects on CNA's
operating results, including but not limited to the potential impact of
unabsorbed overhead or other expenses.
(2) Excluded businesses principally include group long term care, institutional
markets and specialty medical.
(3) Realized investment losses include a $176 million pretax ($130 million
after-tax) loss related to the sale of the Group Benefits businesses.
28
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
LIFE OPERATIONS SEGMENT - HISTORICAL GAAP RESULTS OF OPERATIONS (1)
THREE MONTHS ENDED DECEMBER 31, 2003
<Table>
<Caption>
LIFE LIFE
OPERATIONS OPERATIONS
EXCLUDING BUSINESSES TOTAL LIFE
BUSINESSES INCLUDED OPERATIONS
IN SALE (2) IN SALE AS REPORTED
------------------ ------------------ ------------------
(In millions)
Net earned premiums $ 163 $ 83 $ 246
Insurance claims & policyholders' benefits 255 90 345
Policyholders' dividends -- 3 3
Insurance related expenses 32 34 66
Net investment income 79 52 131
Other revenues 34 5 39
Other expenses (8) 1 (7)
------------------ ------------------ ------------------
(Loss) income before income tax and net realized investment gains (3) 12 9
Income tax benefit (expense) 4 (5) (1)
------------------ ------------------ ------------------
Income before net realized investment gains 1 7 8
Realized investment gains 16 10 26
Income tax expense on realized investment gains (5) (4) (9)
------------------ ------------------ ------------------
Net income $ 12 $ 13 $ 25
================== ================== ==================
</Table>
TWELVE MONTHS ENDED DECEMBER 31, 2003
<Table>
<Caption>
LIFE LIFE
OPERATIONS OPERATIONS
EXCLUDING BUSINESSES TOTAL LIFE
BUSINESSES INCLUDED OPERATIONS
IN SALE (2) IN SALE AS REPORTED
------------------ ------------------ ------------------
(In millions)
Net earned premiums $ 648 $ 381 $ 1,029
Insurance claims & policyholders' benefits 864 392 1,256
Policyholders' dividends (1) 18 17
Insurance related expenses 141 146 287
Net investment income 315 209 524
Other revenues 81 22 103
Other expenses 35 2 37
------------------ ------------------ ------------------
Income before income tax and net realized investment gains 5 54 59
Income tax benefit (expense) 5 (19) (14)
------------------ ------------------ ------------------
Income before net realized investment gains 10 35 45
Realized investment gains 23 13 36
Income tax expense on realized investment gains (8) (5) (13)
------------------ ------------------ ------------------
Net income $ 25 $ 43 $ 68
================== ================== ==================
</Table>
(1) The historical results do not reflect any possible effects on CNA's
operating results of the proposed sale, including but not limited to the
potential impact of unabsorbed overhead or other expenses.
(2) Excluded businesses principally include individual long term care,
structured settlement and life settlement contracts.
29
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT
ASBESTOS SUMMARY BY POLICYHOLDER CATEGORY
DECEMBER 31, 2003
<Table>
<Caption>
ASBESTOS
RESERVES PERCENT OF
NUMBER OF 2003 PAID 12/31/2003 ASBESTOS
POLICYHOLDERS (NET) (NET) RESERVES
--------------- --------------- --------------- ---------------
(In millions)
POLICYHOLDERS WITH SETTLEMENT AGREEMENTS
Structured Settlements 9 $ 20 $ 188 11%
Wellington 5 2 23 1
Coverage in Place 32 40 109 6
Fibreboard 1 1 54 3
--------------- --------------- --------------- ---------------
TOTAL WITH SETTLEMENT AGREEMENTS 47 63 374 21
OTHER POLICYHOLDERS WITH ACTIVE ACCOUNTS
Large Asbestos Accounts 160 35 405 23
Small Asbestos Accounts 1,065 16 147 8
--------------- --------------- --------------- ---------------
TOTAL OTHER POLICYHOLDERS 1,225 51 552 31
ASSUMED REINSURANCE & POOLS -- 7 157 9
UNASSIGNED IBNR -- -- 684 39
--------------- --------------- --------------- ---------------
TOTAL 1,272 $ 121 $ 1,767 100%
=============== =============== =============== ===============
</Table>
30