Exhibit 99.3
a
CNA FINANCIAL CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
APPENDIX
FOR YEARS ENDED
DECEMBER 31, 2002 AND 2003
CNA FINANCIAL CORPORATION
TABLE OF CONTENTS
DECEMBER 31, 2002 AND 2003
In the first quarter of 2004, CNA revised its reportable segment structure to
reflect changes in how it manages its core operations and makes business
decisions. The information provided in this document conforms previous
supplemental financial information as if the 2004 segment changes occurred in
the first quarter of 2002.
PAGE
----
Supplemental Financial Information i-ii
2002 Historical Results of Operations 1-6
2003 Historical Results of Operations 7-12
2002 Historical Impact of Significant Items* 13-16
2003 Historical Impact of Significant Items* 17-20
2002 Historical Property & Casualty Insurance
Claim & Claim Adjustment Expense Reserve Data 21
2003 Historical Property & Casualty Insurance
Claim & Claim Adjustment Expense Reserve Data 22
* There were no significant items reported at March 31, 2002 and 2003.
CNA FINANCIAL CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
DEFINITIONS AND PRESENTATION
- - P&C OPERATIONS includes Standard Lines and Specialty Lines.
- - LIFE & GROUP NON-CORE segment primarily includes the results of the
life and group lines of business that are held for sale, or have been
sold or placed in run-off.
- - CORPORATE & OTHER NON-CORE segment includes the results of certain
property and casualty lines of business placed in run-off, including
CNA Re (formerly a stand-alone property and casualty segment). This
segment also includes the results related to the centralized adjusting
and settlement of APMT claims.
- - P&C COMPANIES includes Standard Lines, Specialty Lines and P&C business
written in the Life & Group Non-Core and Corporate & Other Non-Core
segments.
- - Underwriting results are net earned premiums less net incurred claims,
the costs incurred to settle claims, acquisition expenses and
underwriting expenses.
- - The Loss & LAE ratio represents claim and claim adjustment expenses as
a percentage of net earned premiums.
- - The expense ratio is the percentage of underwriting expenses,
acquisition expenses and dividends, including the amortization of
deferred acquisition costs, to net earned premiums.
- - The dividend ratio is the ratio of dividends incurred to net earned
premiums.
- - Limited partnerships (LPs) are a relatively small portion of CNA's
overall investment portfolio. The majority of the LPs invest in a
substantial number of securities that are readily marketable. CNA is 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.
- - All amounts are in millions, except for per share and ratio
information.
- - Certain immaterial differences are due to rounding.
i
CNA FINANCIAL CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
NON-GAAP FINANCIAL MEASURES
This financial supplement appendix 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 (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 appendix 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
2002
HISTORICAL RESULTS OF OPERATIONS
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
RESULTS OF OPERATIONS - STANDARD LINES
2002
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Gross written premiums $ 1,811 $ 1,417 $ 1,442 $ 1,234 $ 5,904
Net written premiums 1,255 1,244 1,216 1,040 4,755
Net earned premiums 1,186 1,196 1,156 1,140 4,678
Claim and claim adjustment expenses 905 922 761 830 3,418
Acquisition expenses 232 224 194 225 875
Underwriting expenses 150 143 156 155 604
Policyholders' dividends 16 15 26 16 73
Restructuring & other related costs - - - (2) (2)
---------- ---------- ---------- ---------- ----------
Underwriting (loss) income (117) (108) 19 (84) (290)
---------- ---------- ---------- ---------- ----------
Net investment income 119 154 86 116 475
Other revenues 112 82 80 81 355
Other expenses 83 69 79 77 308
Non-insurance restructuring & other related costs - - - (6) (6)
---------- ---------- ---------- ---------- ----------
Income before income tax, minority interest
and net realized investment gains (losses) 31 59 106 42 238
Income tax expense (5) (15) (36) - (56)
Minority interest (2) (1) - (10) (13)
---------- ---------- ---------- ---------- ----------
Income before net realized investment gains (losses) 24 43 70 32 169
Realized investment gains (losses) 8 (33) (37) (57) (119)
Income tax (expense) benefit on realized
investment gains (losses) (3) 11 13 19 40
---------- ---------- ---------- ---------- ----------
Income (loss) from continuing operations 29 21 46 (6) 90
Cumulative effect of a change in accounting principle (43) - - - (43)
---------- ---------- ---------- ---------- ----------
Net (loss) income $ (14) $ 21 $ 46 $ (6) $ 47
========== ========== ========== ========== ==========
FINANCIAL RATIOS
Loss & LAE 76.3% 77.0% 65.8% 72.9% 73.1%
Acquisition expense 19.5 18.7 16.8 19.7 18.7
Underwriting expense 12.7 12.0 13.5 13.6 12.8
Dividends 1.4 1.3 2.2 1.4 1.6
---------- ---------- ---------- ---------- ----------
Expense ratio, including dividends 33.6 32.0 32.5 34.7 33.1
---------- ---------- ---------- ---------- ----------
Combined ratio 109.9% 109.0% 98.3% 107.6% 106.2%
========== ========== ========== ========== ==========
1
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
RESULTS OF OPERATIONS - SPECIALTY LINES
2002
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Gross written premiums $ 461 $ 466 $ 581 $ 558 $ 2,066
Net written premiums 335 376 424 439 1,574
Net earned premiums 326 353 366 406 1,451
Claim and claim adjustment expenses 226 248 311 281 1,066
Acquisition expenses 65 64 74 65 268
Underwriting expenses 37 40 41 40 158
Policyholders' dividends 1 - 1 1 3
Restructuring & other related costs - - - (1) (1)
---------- ---------- ---------- ---------- ----------
Underwriting (loss) income (3) 1 (61) 20 (43)
---------- ---------- ---------- ---------- ----------
Net investment income 42 54 30 46 172
Other revenues 25 31 30 22 108
Other expenses 19 26 28 21 94
Non-insurance restructuring & other related costs - - - - -
---------- ---------- ---------- ---------- ----------
Income (loss) before income tax, minority interest
and net realized investment gains (losses) 45 60 (29) 67 143
Income tax (expense) benefit (14) (19) 13 (20) (40)
Minority interest (3) (4) (1) (5) (13)
---------- ---------- ---------- ---------- ----------
Income (loss) before net realized investment gains (losses) 28 37 (17) 42 90
Realized investment gains (losses) 2 (16) (11) (14) (39)
Income tax (expense) benefit on realized
investment gains (losses) (1) 5 4 6 14
---------- ---------- ---------- ---------- ----------
Income (loss) from continuing operations 29 26 (24) 34 65
Cumulative effect of a change in accounting principle (5) - - - (5)
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 24 $ 26 $ (24) $ 34 $ 60
========== ========== ========== ========== ==========
FINANCIAL RATIOS
Loss & LAE 69.4% 70.2% 84.9% 69.4% 73.5%
Acquisition expense 19.9 18.1 20.2 16.1 18.5
Underwriting expense 11.3 11.2 11.5 9.5 10.8
Dividends 0.2 0.2 0.2 0.2 0.2
---------- ---------- ---------- ---------- ----------
Expense ratio, including dividends 31.4 29.5 31.9 25.8 29.5
---------- ---------- ---------- ---------- ----------
Combined ratio 100.8% 99.7% 116.8% 95.2% 103.0%
========== ========== ========== ========== ==========
2
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
RESULTS OF OPERATIONS - PROPERTY & CASUALTY OPERATIONS
2002
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Gross written premiums $ 2,272 $ 1,883 $ 2,023 $ 1,792 $ 7,970
Net written premiums 1,590 1,620 1,640 1,479 6,329
Net earned premiums 1,512 1,549 1,522 1,546 6,129
Claim and claim adjustment expenses 1,131 1,170 1,072 1,111 4,484
Acquisition expenses 297 288 268 290 1,143
Underwriting expenses 187 183 197 195 762
Policyholders' dividends 17 15 27 17 76
Restructuring & other related costs - - - (3) (3)
---------- ---------- ---------- ---------- ----------
Underwriting loss (120) (107) (42) (64) (333)
---------- ---------- ---------- ---------- ----------
Net investment income 161 208 116 162 647
Other revenues 137 113 110 103 463
Other expenses 102 95 107 98 402
Non-insurance restructuring & other related costs - - - (6) (6)
---------- ---------- ---------- ---------- ----------
Income before income tax, minority interest
and net realized investment gains (losses) 76 119 77 109 381
Income tax expense (19) (34) (23) (20) (96)
Minority interest (5) (5) (1) (15) (26)
---------- ---------- ---------- ---------- ----------
Income before net realized investment gains (losses) 52 80 53 74 259
Realized investment gains (losses) 10 (49) (48) (71) (158)
Income tax (expense) benefit on realized
investment gains (losses) (4) 16 17 25 54
---------- ---------- ---------- ---------- ----------
Income from continuing operations 58 47 22 28 155
Cumulative effect of a change in accounting principle (48) - - - (48)
---------- ---------- ---------- ---------- ----------
Net income $ 10 $ 47 $ 22 $ 28 $ 107
========== ========== ========== ========== ==========
FINANCIAL RATIOS
Loss & LAE 74.8% 75.5% 70.4% 72.0% 73.2%
Acquisition expense 19.6 18.6 17.6 18.8 18.7
Underwriting expense 12.4 11.8 13.0 12.4 12.3
Dividends 1.1 1.0 1.7 1.1 1.2
---------- ---------- ---------- ---------- ----------
Expense ratio, including dividends 33.1 31.4 32.3 32.3 32.2
---------- ---------- ---------- ---------- ----------
Combined ratio 107.9% 106.9% 102.7% 104.3% 105.4%
========== ========== ========== ========== ==========
3
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
RESULTS OF OPERATIONS - LIFE & GROUP NON-CORE
2002
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net earned premiums $ 1,178 $ 1,097 $ 568 $ 565 $ 3,408
Insurance claims & policyholders' benefits 1,080 1,034 530 566 3,210
Policyholders' dividends - 3 4 3 10
Insurance related expenses 247 209 166 170 792
Restructuring & other related costs - - - (1) (1)
Net investment income 202 206 203 210 821
Other revenues 50 52 53 44 199
Other expenses 26 26 27 24 103
Non-insurance restructuring & other related costs - - - - -
---------- ---------- ---------- ---------- ----------
Income before income tax, minority interest
and net realized investment gains (losses) 77 83 97 57 314
Income tax expense (26) (29) (33) (20) (108)
Minority interest - - - - -
---------- ---------- ---------- ---------- ----------
Income before net realized investment gains (losses) 51 54 64 37 206
Realized investment gains (losses) 22 (83) (14) (100) (175)
Income tax (expense) benefit on realized
investment gains (losses) (8) 30 4 34 60
---------- ---------- ---------- ---------- ----------
Income (loss) from continuing operations 65 1 54 (29) 91
Loss from discontinued operations (35) - - - (35)
Cumulative effect of a change in accounting principle (8) - - - (8)
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 22 $ 1 $ 54 $ (29) $ 48
========== ========== ========== ========== ==========
P&C COMPANY INFORMATION
2002
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Gross written premiums $ 953 $ 864 $ 343 $ 387 $ 2,547
Net written premiums 740 658 122 162 1,682
Net earned premiums 732 654 121 126 1,633
Underwriting loss (38) (40) (46) (101) (225)
FINANCIAL RATIOS
Loss & LAE 90.2% 93.3% 118.4% 153.8% 98.4%
Acquisition expense 2.5 3.0 6.1 11.6 3.7
Underwriting expense 12.6 9.7 13.8 14.8 11.7
Dividends - - - - -
---------- ---------- ---------- ---------- ----------
Expense ratio, including dividends 15.1 12.7 19.9 26.4 15.4
---------- ---------- ---------- ---------- ----------
Combined ratio 105.3% 106.0% 138.3% 180.2% 113.8%
========== ========== ========== ========== ==========
4
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
RESULTS OF OPERATIONS - CORPORATE & OTHER NON-CORE
2002
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net earned premiums $ 147 $ 180 $ 172 $ 177 $ 676
Insurance claims & policyholders' benefits 82 160 217 153 612
Policyholders' dividends - - - - -
Insurance related expenses 50 44 60 61 215
Restructuring & other related costs - - - (27) (27)
Net investment income 63 88 45 66 262
Other revenues (5) (19) (26) (17) (67)
Other expenses 59 47 35 32 173
Non-insurance restructuring & other related costs - - - - -
---------- ---------- ---------- ---------- ----------
Income (loss) before income tax, minority interest
and net realized investment (losses) gains 14 (2) (121) 7 (102)
Income tax (expense) benefit (7) 4 42 (6) 33
Minority interest - - - - -
---------- ---------- ---------- ---------- ----------
Income (loss) before net realized investment (losses) gains 7 2 (79) 1 (69)
Realized investment (losses) gains (31) (30) 86 56 81
Income tax benefit (expense) on realized
investment (losses) gains 13 11 (29) (6) (11)
---------- ---------- ---------- ---------- ----------
(Loss) income from continuing operations (11) (17) (22) 51 1
Loss from discontinued operations - - - - -
Cumulative effect of a change in accounting principle (1) - - - (1)
---------- ---------- ---------- ---------- ----------
Net (loss) income $ (12) $ (17) $ (22) $ 51 $ -
========== ========== ========== ========== ==========
P&C COMPANY INFORMATION
2002
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Gross written premiums $ 852 $ 693 $ 703 $ 690 $ 2,938
Net written premiums 203 167 162 110 642
Net earned premiums 153 187 160 176 676
Underwriting loss (21) (53) (140) (41) (255)
FINANCIAL RATIOS
Loss & LAE 57.2% 89.8% 128.3% 85.5% 90.4%
Acquisition expense 28.5 19.8 24.9 30.3 25.7
Underwriting expense 27.8 19.4 33.9 6.0 21.3
Dividends - - - - -
---------- ---------- ---------- ---------- ----------
Expense ratio, including dividends 56.3 39.2 58.8 36.3 47.0
---------- ---------- ---------- ---------- ----------
Combined ratio 113.5% 129.0% 187.1% 121.8% 137.4%
========== ========== ========== ========== ==========
5
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
RESULTS OF TOTAL OPERATIONS
2002
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net earned premiums $ 2,837 $ 2,826 $ 2,262 $ 2,288 $ 10,213
Insurance claims & policyholders' benefits 2,293 2,364 1,819 1,830 8,306
Policyholders' dividends 17 18 31 20 86
Insurance related expenses 781 724 691 716 2,912
Restructuring & other related costs - - - (31) (31)
Net investment income 426 502 364 438 1,730
Other revenues 182 146 137 130 595
Other expenses 187 168 169 154 678
Non-insurance restructuring & other related costs - - - (6) (6)
---------- ---------- ---------- ---------- ----------
Income before income tax, minority interest
and net realized investment gains (losses) 167 200 53 173 593
Income tax expense (52) (59) (14) (46) (171)
Minority interest (5) (5) (1) (15) (26)
---------- ---------- ---------- ---------- ----------
Income before net realized investment gains (losses) 110 136 38 112 396
Realized investment gains (losses) 1 (162) 24 (115) (252)
Income tax benefit (expense) on realized
investment gains (losses) 1 57 (8) 53 103
---------- ---------- ---------- ---------- ----------
Income from continuing operations 112 31 54 50 247
Loss from discontinued operations (35) - - - (35)
Cumulative effect of a change in accounting principle (57) - - - (57)
---------- ---------- ---------- ---------- ----------
Net income $ 20 $ 31 $ 54 $ 50 $ 155
========== ========== ========== ========== ==========
P&C COMPANY INFORMATION
2002
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Gross written premiums $ 4,077 $ 3,440 $ 3,069 $ 2,869 $ 13,455
Net written premiums 2,533 2,445 1,924 1,751 8,653
Net earned premiums 2,397 2,390 1,803 1,848 8,438
Underwriting loss (179) (200) (228) (206) (813)
FINANCIAL RATIOS
Loss & LAE 78.4% 81.5% 79.0% 78.8% 79.4%
Acquisition expense 15.0 14.4 17.4 19.4 16.3
Underwriting expense 13.4 11.8 14.8 12.0 13.0
Dividends 0.7 0.7 1.4 0.9 0.9
---------- ---------- ---------- ---------- ----------
Expense ratio, including dividends 29.1 26.9 33.6 32.3 30.2
---------- ---------- ---------- ---------- ----------
Combined ratio 107.5% 108.4% 112.6% 111.1% 109.6%
========== ========== ========== ========== ==========
6
2003
HISTORICAL RESULTS OF OPERATIONS
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
RESULTS OF OPERATIONS - STANDARD LINES
2003
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Gross written premiums $ 1,634 $ 1,651 $ 1,626 $ 1,575 $ 6,486
Net written premiums 1,273 1,087 1,028 1,173 4,561
Net earned premiums 1,219 1,018 1,001 1,292 4,530
Claim and claim adjustment expenses 893 896 1,726 872 4,387
Acquisition expenses 238 266 554 262 1,320
Underwriting expenses 160 172 180 164 676
Policyholders' dividends 15 11 60 14 100
Restructuring & other related costs - - - - -
---------- ---------- ---------- ---------- ----------
Underwriting loss (87) (327) (1,519) (20) (1,953)
---------- ---------- ---------- ---------- ----------
Net investment income 129 105 55 118 407
Other revenues 71 61 34 33 199
Other expenses 63 60 35 34 192
Non-insurance restructuring & other related costs - - - - -
---------- ---------- ---------- ---------- ----------
Income (loss) before income tax, minority interest
and net realized investment gains 50 (221) (1,465) 97 (1,539)
Income tax (expense) benefit (5) 85 520 (8) 592
Minority interest (1) 2 (2) (3) (4)
---------- ---------- ---------- ---------- ----------
Income (loss) before net realized investment gains 44 (134) (947) 86 (951)
Realized investment gains 7 184 58 112 361
Income tax expense on realized
investment gains (4) (62) (22) (39) (127)
---------- ---------- ---------- ---------- ----------
Income (loss) from continuing operations 47 (12) (911) 159 (717)
Cumulative effect of a change in accounting principle - - - - -
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 47 $ (12) $ (911) $ 159 $ (717)
========== ========== ========== ========== ==========
FINANCIAL RATIOS
Loss & LAE 73.3% 88.0% 172.4% 67.5% 96.8%
Acquisition expense 19.5 26.1 55.3 20.3 29.1
Underwriting expense 13.2 16.9 18.0 12.7 15.0
Dividends 1.2 1.1 6.0 1.1 2.2
---------- ---------- ---------- ---------- ----------
Expense ratio, including dividends 33.9 44.1 79.3 34.1 46.3
---------- ---------- ---------- ---------- ----------
Combined ratio 107.2% 132.1% 251.7% 101.6% 143.1%
========== ========== ========== ========== ==========
7
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
RESULTS OF OPERATIONS - SPECIALTY LINES
2003
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Gross written premiums $ 628 $ 614 $ 717 $ 670 $ 2,629
Net written premiums 476 487 528 547 2,038
Net earned premiums 428 459 451 502 1,840
Claim and claim adjustment expenses 284 402 547 339 1,572
Acquisition expenses 79 83 169 77 408
Underwriting expenses 43 45 44 44 176
Policyholders' dividends 1 - 1 1 3
Restructuring & other related costs - - - - -
---------- ---------- ---------- ---------- ----------
Underwriting income (loss) 21 (71) (310) 41 (319)
---------- ---------- ---------- ---------- ----------
Net investment income 49 53 47 52 201
Other revenues 17 30 35 33 115
Other expenses 13 25 30 32 100
Non-insurance restructuring & other related costs - - - - -
---------- ---------- ---------- ---------- ----------
Income (loss) before income tax, minority interest
and net realized investment gains 74 (13) (258) 94 (103)
Income tax (expense) benefit (24) 9 103 (29) 59
Minority interest (2) (3) 15 - 10
---------- ---------- ---------- ---------- ----------
Income (loss) before net realized investment gains 48 (7) (140) 65 (34)
Realized investment gains 3 59 19 33 114
Income tax expense on realized
investment gains (1) (21) (7) (11) (40)
---------- ---------- ---------- ---------- ----------
Income (loss) from continuing operations 50 31 (128) 87 40
Cumulative effect of a change in accounting principle - - - - -
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 50 $ 31 $ (128) $ 87 $ 40
========== ========== ========== ========== ==========
FINANCIAL RATIOS
Loss & LAE 66.3% 87.5% 121.2% 67.7% 85.4%
Acquisition expense 18.4 18.2 37.4 15.3 22.2
Underwriting expense 10.2 9.7 9.8 8.8 9.6
Dividends 0.1 0.1 0.3 0.2 0.2
---------- ---------- ---------- ---------- ----------
Expense ratio, including dividends 28.7 28.0 47.5 24.3 32.0
---------- ---------- ---------- ---------- ----------
Combined ratio 95.0% 115.5% 168.7% 92.0% 117.4%
========== ========== ========== ========== ==========
8
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
RESULTS OF OPERATIONS - PROPERTY & CASUALTY OPERATIONS
2003
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Gross written premiums $ 2,262 $ 2,265 $ 2,343 $ 2,245 $ 9,115
Net written premiums 1,749 1,574 1,556 1,720 6,599
Net earned premiums 1,647 1,477 1,452 1,794 6,370
Claim and claim adjustment expenses 1,177 1,298 2,273 1,211 5,959
Acquisition expenses 317 349 723 339 1,728
Underwriting expenses 203 217 224 208 852
Policyholders' dividends 16 11 61 15 103
Restructuring & other related costs - - - - -
---------- ---------- ---------- ---------- ----------
Underwriting (loss) income (66) (398) (1,829) 21 (2,272)
---------- ---------- ---------- ---------- ----------
Net investment income 178 158 102 170 608
Other revenues 88 91 69 66 314
Other expenses 76 85 65 66 292
Non-insurance restructuring & other related costs - - - - -
---------- ---------- ---------- ---------- ----------
Income (loss) before income tax, minority interest
and net realized investment gains 124 (234) (1,723) 191 (1,642)
Income tax (expense) benefit (29) 94 623 (37) 651
Minority interest (3) (1) 13 (3) 6
---------- ---------- ---------- ---------- ----------
Income (loss) before net realized investment gains 92 (141) (1,087) 151 (985)
Realized investment gains 10 243 77 145 475
Income tax expense on realized
investment gains (5) (83) (29) (50) (167)
---------- ---------- ---------- ---------- ----------
Income (loss) from continuing operations 97 19 (1,039) 246 (677)
Cumulative effect of a change in accounting principle - - - - -
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 97 $ 19 $ (1,039) $ 246 $ (677)
========== ========== ========== ========== ==========
FINANCIAL RATIOS
Loss & LAE 71.5% 87.8% 156.5% 67.5% 93.6%
Acquisition expense 19.2 23.7 49.7 18.9 27.1
Underwriting expense 12.3 14.6 15.5 11.7 13.4
Dividends 1.0 0.8 4.2 0.8 1.6
---------- ---------- ---------- ---------- ----------
Expense ratio, including dividends 32.5 39.1 69.4 31.4 42.1
---------- ---------- ---------- ---------- ----------
Combined ratio 104.0% 126.9% 225.9% 98.9% 135.7%
========== ========== ========== ========== ==========
9
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
RESULTS OF OPERATIONS - LIFE & GROUP NON-CORE
2003
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net earned premiums $ 586 $ 603 $ 611 $ 576 $ 2,376
Insurance claims & policyholders' benefits 561 580 643 600 2,384
Policyholders' dividends 2 2 3 3 10
Insurance related expenses 200 193 184 177 754
Restructuring & other related costs - - - - -
Net investment income 203 211 204 203 821
Other revenues 41 35 34 53 163
Other expenses 24 21 21 - 66
Non-insurance restructuring & other related costs - - - - -
---------- ---------- ---------- ---------- ----------
Income (loss) before income tax, minority interest
and net realized investment (losses) gains 43 53 (2) 52 146
Income tax (expense) benefit (14) (15) 11 (15) (33)
Minority interest - - - - -
---------- ---------- ---------- ---------- ----------
Income before net realized investment (losses) gains 29 38 9 37 113
Realized investment (losses) gains (104) 53 60 (150) (141)
Income tax benefit (expense) on realized
investment (losses) gains 36 (18) (21) 36 33
---------- ---------- ---------- ---------- ----------
(Loss) income from continuing operations (39) 73 48 (77) 5
Loss from discontinued operations - - - - -
Cumulative effect of a change in accounting principle - - - - -
---------- ---------- ---------- ---------- ----------
Net (loss) income $ (39) $ 73 $ 48 $ (77) $ 5
========== ========== ========== ========== ==========
P&C COMPANY INFORMATION
2003
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Gross written premiums $ 351 $ 326 $ 312 $ 307 $ 1,296
Net written premiums 137 132 127 128 524
Net earned premiums 130 132 128 130 520
Underwriting loss (58) (71) (102) (119) (350)
FINANCIAL RATIOS
Loss & LAE 114.6% 125.4% 150.9% 166.3% 139.3%
Acquisition expense 16.2 16.2 20.8 19.1 18.1
Underwriting expense 14.1 12.3 7.8 5.5 9.8
Dividends - - - - -
---------- ---------- ---------- ---------- ----------
Expense ratio, including dividends 30.3 28.5 28.6 24.6 27.9
---------- ---------- ---------- ---------- ----------
Combined ratio 144.9% 153.9% 179.5% 190.9% 167.2%
========== ========== ========== ========== ==========
10
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
RESULTS OF OPERATIONS - CORPORATE & OTHER NON-CORE
2003
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net earned premiums $ 148 $ 117 $ 63 $ 140 $ 468
Insurance claims & policyholders' benefits 114 176 1,051 118 1,459
Policyholders' dividends - - 1 - 1
Insurance related expenses 48 86 255 29 418
Restructuring & other related costs - - - - -
Net investment income 51 58 46 63 218
Other revenues (21) (29) (20) (12) (82)
Other expenses 3 4 1 34 42
Non-insurance restructuring & other related costs - - - - -
---------- ---------- ---------- ---------- ----------
Income (loss) before income tax, minority interest
and net realized investment gains (losses) 13 (120) (1,219) 10 (1,316)
Income tax (expense) benefit (2) 45 431 (4) 470
Minority interest - (1) 1 - -
---------- ---------- ---------- ---------- ----------
Income (loss) before net realized investment gains (losses) 11 (76) (787) 6 (846)
Realized investment gains (losses) 18 82 27 (1) 126
Income tax expense on realized
investment gains (losses) (4) (28) (9) - (41)
---------- ---------- ---------- ---------- ----------
Income (loss) from continuing operations 25 (22) (769) 5 (761)
Loss from discontinued operations - - - - -
Cumulative effect of a change in accounting principle - - - - -
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 25 $ (22) $ (769) $ 5 $ (761)
========== ========== ========== ========== ==========
P&C COMPANY INFORMATION
2003
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Gross written premiums $ 803 $ 671 $ 647 $ 477 $ 2,598
Net written premiums 214 120 107 39 480
Net earned premiums 171 139 92 163 565
Underwriting loss (12) (147) (1,257) (5) (1,421)
FINANCIAL RATIOS
Loss & LAE 79.7% 143.2% N/A% 86.3% 275.4%
Acquisition expense 24.9 53.2 253.7 24.3 68.4
Underwriting expense 2.5 8.9 42.4 (7.3) 7.6
Dividends - - - - -
---------- ---------- ---------- ---------- ----------
Expense ratio, including dividends 27.4 62.1 296.1 17.0 76.0
---------- ---------- ---------- ---------- ----------
Combined ratio 107.1% 205.3% N/A% 103.3% 351.4%
========== ========== ========== ========== ==========
11
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
RESULTS OF TOTAL OPERATIONS
2003
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Net earned premiums $ 2,381 $ 2,197 $ 2,126 $ 2,510 $ 9,214
Insurance claims & policyholders' benefits 1,852 2,054 3,967 1,929 9,802
Policyholders' dividends 18 13 65 18 114
Insurance related expenses 768 845 1,386 753 3,752
Restructuring & other related costs - - - - -
Net investment income 432 427 352 436 1,647
Other revenues 108 97 83 107 395
Other expenses 103 110 87 100 400
Non-insurance restructuring & other related costs - - - - -
---------- ---------- ---------- ---------- ----------
Income (loss) before income tax, minority interest
and net realized investment (losses) gains 180 (301) (2,944) 253 (2,812)
Income tax (expense) benefit (45) 124 1,065 (56) 1,088
Minority interest (3) (2) 14 (3) 6
---------- ---------- ---------- ---------- ----------
Income (loss) before net realized investment (losses) gains 132 (179) (1,865) 194 (1,718)
Realized investment (losses) gains (76) 378 164 (6) 460
Income tax benefit (expense) on realized
investment (losses) gains 27 (129) (59) (14) (175)
---------- ---------- ---------- ---------- ----------
Income (loss) from continuing operations 83 70 (1,760) 174 (1,433)
Loss from discontinued operations - - - - -
Cumulative effect of a change in accounting principle - - - - -
---------- ---------- ---------- ---------- ----------
Net income (loss) $ 83 $ 70 $ (1,760) $ 174 $ (1,433)
========== ========== ========== ========== ==========
P&C COMPANY INFORMATION
2003
(In millions) Q1 Q2 Q3 Q4 YTD
- ----------------------------------------------------------- ---------- ---------- ---------- ---------- ----------
Gross written premiums $ 3,416 $ 3,262 $ 3,302 $ 3,029 $ 13,009
Net written premiums 2,100 1,826 1,790 1,887 7,603
Net earned premiums 1,948 1,748 1,672 2,087 7,455
Underwriting loss (136) (616) (3,188) (103) (4,043)
FINANCIAL RATIOS
Loss & LAE 75.1% 95.1% 212.1% 75.2% 110.5%
Acquisition expense 19.5 25.5 58.6 19.4 29.6
Underwriting expense 11.6 14.0 16.3 9.7 12.7
Dividends 0.8 0.6 3.7 0.7 1.4
---------- ---------- ---------- ---------- ----------
Expense ratio, including dividends 31.9 40.1 78.6 29.8 43.7
---------- ---------- ---------- ---------- ----------
Combined ratio 107.0% 135.2% 290.7% 105.0% 154.2%
========== ========== ========== ========== ==========
12
2002
HISTORICAL IMPACT OF SIGNIFICANT ITEMS
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
IMPACT OF SIGNIFICANT ITEMS
THREE MONTHS ENDED
JUNE 30, 2002
STANDARD LINES
2002 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS
- ------------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,193 $ 3 $ - $ - $ - $ 1,196
Claim and claim adjustment expenses 884 38 - - - 922
Acquisition expenses 224 - - - - 224
Underwriting expenses 143 - - - - 143
Policyholders' dividends 15 - - - - 15
Restructuring & other related costs - - - - - -
---------- ---------- -------- -------- -------- ----------
Underwriting (loss) income (73) (35) - - - (108)
---------- ---------- -------- -------- -------- ----------
Net investment income 154 - - - - 154
Other revenues 82 - - - - 82
Other expenses 69 - - - - 69
Non-insurance restructuring & other
related costs - - - - - -
---------- ---------- -------- -------- -------- ----------
Income (loss) before income tax,
minority interest and net realized
investment losses 94 (35) - - - 59
Income tax (expense) benefit (27) 12 - - - (15)
Minority interest (1) - - - - (1)
---------- ---------- -------- -------- -------- ----------
Income (loss) before net realized
investment losses 66 (23) - - - 43
Realized investment losses (33) - - - - (33)
Income tax benefit on realized
investment losses 11 - - - - 11
---------- ---------- -------- -------- -------- ----------
Income (loss) from continuing operations 44 (23) - - - 21
Cumulative effect of a change in
accounting principle - - - - - -
---------- ---------- -------- -------- -------- ----------
Net income (loss) $ 44 $ (23) $ - $ - $ - $ 21
========== ========== ======== ======== ======== ==========
FINANCIAL RATIOS
Loss & LAE 77.0%
Acquisition expense 18.7
Underwriting expense 12.0
Dividends 1.3
----------
Expense ratio, including dividends 32.0
----------
Combined ratio 109.0%
==========
SPECIALTY LINES
2002 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS
- --------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 360 $ (7) $ - $ - $ - $ 353
Claim and claim adjustment expenses 255 (7) - - - 248
Acquisition expenses 64 - - - - 64
Underwriting expenses 40 - - - - 40
Policyholders' dividends - - - - - -
Restructuring & other related costs - - - - - -
---------- --------- -------- -------- --------- -------
Underwriting (loss) income 1 - - - - 1
---------- --------- -------- -------- --------- -------
Net investment income 54 - - - - 54
Other revenues 31 - - - - 31
Other expenses 26 - - - - 26
Non-insurance restructuring & other
related costs - - - - - -
---------- --------- -------- -------- --------- -------
Income (loss) before income tax,
minority interest and net realized
investment losses 60 - - - - 60
Income tax (expense) benefit (19) - - - - (19)
Minority interest (4) - - - - (4)
---------- --------- -------- -------- --------- -------
Income (loss) before net realized
investment losses 37 - - - - 37
Realized investment losses (16) - - - - (16)
Income tax benefit on realized
investment losses 5 - - - - 5
---------- --------- -------- -------- --------- -------
Income (loss) from continuing operations 26 - - - - 26
Cumulative effect of a change in
accounting principle - - - - - -
---------- --------- -------- -------- --------- -------
Net income (loss) $ 26 $ - $ - $ - $ - $ 26
========== ========= ======== ======== ========= =======
FINANCIAL RATIOS
Loss & LAE 70.2%
Acquisition expense 18.1
Underwriting expense 11.2
Dividends 0.2
-------
Expense ratio, including dividends 29.5
-------
Combined ratio 99.7%
=======
P&C OPERATIONS
2002 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS
- ------------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,553 $ (4) $ - $ - $ - $ 1,549
Claim and claim adjustment expenses 1,139 31 - - - 1,170
Acquisition expenses 288 - - - - 288
Underwriting expenses 183 - - - - 183
Policyholders' dividends 15 - - - - 15
Restructuring & other related costs - - - - - -
---------- ---------- -------- -------- -------- ----------
Underwriting loss (72) (35) - - - (107)
---------- ---------- -------- -------- -------- ----------
Net investment income 208 - - - - 208
Other revenues 113 - - - - 113
Other expenses 95 - - - - 95
Non-insurance restructuring & other
related costs - - - - - -
---------- ---------- -------- -------- -------- ----------
Income (loss) before income tax,
minority interest and net realized
investment losses 154 (35) - - - 119
Income tax (expense) benefit (46) 12 - - - (34)
Minority interest (5) - - - - (5)
---------- ---------- -------- -------- -------- ----------
Income (loss) before net realized
investment losses 103 (23) - - - 80
Realized investment losses (49) - - - - (49)
Income tax benefit on realized
investment losses 16 - - - - 16
---------- ---------- -------- -------- -------- ----------
Income (loss) from continuing operations 70 (23) - - - 47
Cumulative effect of a change in
accounting principle - - - - - -
---------- ---------- -------- -------- -------- ----------
Net income (loss) $ 70 $ (23) $ - $ - $ - $ 47
========== ========== ======== ======== ======== ==========
FINANCIAL RATIOS
Loss & LAE 75.5 %
Acquisition expense 18.6
Underwriting expense 11.8
Dividends 1.0
----------
Expense ratio, including dividends 31.4
----------
Combined ratio 106.9 %
==========
(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 page 10 of the March 31, 2004 Financial
Supplement.
13
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
IMPACT OF SIGNIFICANT ITEMS
THREE MONTHS ENDED
SEPTEMBER 30, 2002
STANDARD LINES
2002 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS
- ------------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,202 $ (46) $ - $ - $ - $ 1,156
Claim and claim adjustment expenses 923 (162) - - - 761
Acquisition expenses 194 - - - - 194
Underwriting expenses 156 - - - - 156
Policyholders' dividends 20 6 - - - 26
Restructuring & other related costs - - - - - -
---------- ---------- -------- -------- -------- ----------
Underwriting (loss) income (91) 110 - - - 19
---------- ---------- -------- -------- -------- ----------
Net investment income 86 - - - - 86
Other revenues 80 - - - - 80
Other expenses 79 - - - - 79
Non-insurance restructuring & other
related costs - - - - - -
---------- ---------- -------- -------- -------- ----------
(Loss) income before income tax,
minority interest and net realized
investment losses (4) 110 - - - 106
Income tax benefit (expense) 4 (40) - - - (36)
Minority interest - - - - - -
---------- ---------- -------- -------- -------- ----------
Income (loss) before net realized
investment losses - 70 - - - 70
Realized investment losses (37) - - - - (37)
Income tax benefit on realized
investment losses 13 - - - - 13
---------- ---------- -------- -------- -------- ----------
(Loss) income from continuing operations (24) 70 - - - 46
Cumulative effect of a change in
accounting principle - - - - - -
---------- ---------- -------- -------- -------- ----------
Net (loss) income $ (24) $ 70 $ - $ - $ - $ 46
========== ========== ======== ======== ======== ==========
FINANCIAL RATIOS
Loss & LAE 65.8%
Acquisition expense 16.8
Underwriting expense 13.5
Dividends 2.2
----------
Expense ratio, including dividends 32.5
----------
Combined ratio 98.3%
==========
SPECIALTY LINES
2002 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT(1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS
- ----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 396 $ 9 $ (39) $ - $ - $ 366
Claim and claim adjustment expenses 289 77 (55) - - 311
Acquisition expenses 74 - - - - 74
Underwriting expenses 41 - - - - 41
Policyholders' dividends 1 - - - - 1
Restructuring & other related costs - - - - - -
---------- ------- ------- -------- --------- -------
Underwriting (loss) income (9) (68) 16 - - (61)
---------- ------- ------- -------- --------- -------
Net investment income 35 - (5) - - 30
Other revenues 30 - - - - 30
Other expenses 28 - - - - 28
Non-insurance restructuring & other
related costs - - - - - -
---------- ------- ------- -------- --------- -------
(Loss) income before income tax,
minority interest and net realized
investment losses 28 (68) 11 - - (29)
Income tax benefit (expense) (7) 24 (4) - - 13
Minority interest (2) 1 - - - (1)
---------- ------- ------- -------- --------- -------
Income (loss) before net realized
investment losses 19 (43) 7 - - (17)
Realized investment losses (11) - - - - (11)
Income tax benefit on realized
investment losses 4 - - - - 4
---------- ------- ------- -------- --------- -------
(Loss) income from continuing operations 12 (43) 7 - - (24)
Cumulative effect of a change in
accounting principle - - - - - -
---------- ------- ------- -------- --------- -------
Net (loss) income $ 12 $ (43) $ 7 $ - $ - $ (24)
========== ======= ======= ======== ========= =======
FINANCIAL RATIOS
Loss & LAE 84.9%
Acquisition expense 20.2
Underwriting expense 11.5
Dividends 0.2
-------
Expense ratio, including dividends 31.9
-------
Combined ratio 116.8%
=======
P&C OPERATIONS
2002 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
ITEMS DEVELOPMENT(1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS
- ----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,598 $ (37) $ (39) $ - $ - $ 1,522
Claim and claim adjustment expenses 1,212 (85) (55) - - 1,072
Acquisition expenses 268 - - - - 268
Underwriting expenses 197 - - - - 197
Policyholders' dividends 21 6 - - - 27
Restructuring & other related costs - - - - - -
---------- ---------- --------- ------------ ------------- ----------
Underwriting (loss) income (100) 42 16 - - (42)
---------- ---------- --------- ------------ ------------- ----------
Net investment income 121 - (5) - - 116
Other revenues 110 - - - - 110
Other expenses 107 - - - - 107
Non-insurance restructuring & other
related costs - - - - - -
---------- ---------- --------- ------------ ------------- ----------
Income before income tax, minority
interest and net
realized investment losses 24 42 11 - - 77
Income tax expense (3) (16) (4) - - (23)
Minority interest (2) 1 - - - (1)
---------- ---------- --------- ------------ ------------- ----------
Income before net realized investment
losses 19 27 7 - - 53
Realized investment losses (48) - - - - (48)
Income tax benefit on realized
investment losses 17 - - - - 17
---------- ---------- --------- ------------ ------------- ----------
(Loss) income from continuing operations (12) 27 7 - - 22
Cumulative effect of a change in
accounting principle - - - - - -
---------- ---------- --------- ------------ ------------- ----------
Net (loss) income $ (12) $ 27 $ 7 $ - $ - $ 22
========== ========== ========= ============ ============= ==========
FINANCIAL RATIOS
Loss & LAE 70.4%
Acquisition expense 17.6
Underwriting expense 13.0
Dividends 1.7
----------
Expense ratio, including dividends 32.3
----------
Combined ratio 102.7%
==========
(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 page 10 of
the March 31, 2004 Financial Supplement.
14
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
IMPACT OF SIGNIFICANT ITEMS
THREE MONTHS ENDED STANDARD LINES
DECEMBER 31, 2002
2002 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,179 $ (38) $ (1) $ - $ - $ 1,140
Claim and claim adjustment expenses 889 (59) - - - 830
Acquisition expenses 225 - - - - 225
Underwriting expenses 155 - - - - 155
Policyholders' dividends 18 (2) - - - 16
Restructuring & other related costs (2) - - - - (2)
----------- -------------- --------- -------- --------- -----------
Underwriting (loss) income (106) 23 (1) - - (84)
----------- -------------- --------- -------- --------- -----------
Net investment income 116 - - - - 116
Other revenues 81 - - - - 81
Other expenses 77 - - - - 77
Non-insurance restructuring & other related
costs (6) - - - - (6)
----------- -------------- --------- -------- --------- -----------
Income (loss) before income tax, minority
interest and net realized investment losses 20 23 (1) - - 42
Income tax benefit (expense) 11 (11) - - - -
Minority interest (8) (2) - - - (10)
----------- -------------- --------- -------- --------- -----------
Income (loss) before net realized investment
losses 23 10 (1) - - 32
Realized investment losses (57) - - - - (57)
Income tax benefit on realized
investment losses 19 - - - - 19
----------- -------------- --------- -------- --------- -----------
(Loss) income from continuing operations (15) 10 (1) - - (6)
Cumulative effect of a change in accounting
principle - - - - - -
----------- -------------- --------- -------- --------- -----------
Net (loss) income $ (15) $ 10 $ (1) $ - $ - $ (6)
=========== ============== ========= ======== ========= ===========
FINANCIAL RATIOS
Loss & LAE 72.9%
Acquisition expense 19.7
Underwriting expense 13.6
Dividends 1.4
-----------
Expense ratio, including dividends 34.7
-----------
Combined ratio 107.6%
===========
THREE MONTHS ENDED SPECIALTY LINES
DECEMBER 31, 2002
2002 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 409 $ (3) $ - $ - $ - $ 406
Claim and claim adjustment expenses 275 6 - - - 281
Acquisition expenses 65 - - - - 65
Underwriting expenses 40 - - - - 40
Policyholders' dividends 1 - - - - 1
Restructuring & other related costs (1) - - - - (1)
----------- -------------- ---------- ----------- ------------ -----------
Underwriting (loss) income 29 (9) - - - 20
----------- -------------- ---------- ----------- ------------ -----------
Net investment income 46 - - - - 46
Other revenues 22 - - - - 22
Other expenses 21 - - - - 21
Non-insurance restructuring & other related
costs - - - - - -
----------- -------------- ---------- ----------- ------------ -----------
Income (loss) before income tax, minority
interest and net realized investment losses 76 (9) - - - 67
Income tax benefit (expense) (23) 3 - - - (20)
Minority interest (5) - - - - (5)
----------- -------------- ---------- ----------- ------------ -----------
Income (loss) before net realized investment
losses 48 (6) - - - 42
Realized investment losses (14) - - - - (14)
Income tax benefit on realized
investment losses 6 - - - - 6
----------- -------------- ---------- ----------- ------------ -----------
(Loss) income from continuing operations 40 (6) - - - 34
Cumulative effect of a change in accounting
principle - - - - - -
----------- -------------- ---------- ----------- ------------ -----------
Net (loss) income $ 40 $ (6) $ - $ - $ - $ 34
=========== ============== ========== =========== ============ ===========
FINANCIAL RATIOS
Loss & LAE 69.4%
Acquisition expense 16.1
Underwriting expense 9.5
Dividends 0.2
-----------
Expense ratio, including dividends 25.8
-----------
Combined ratio 95.2%
===========
P&C OPERATIONS
2002 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2002 RESULTS
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,588 $ (41) $ (1) $ - $ - $ 1,546
Claim and claim adjustment expenses 1,164 (53) - - - 1,111
Acquisition expenses 290 - - - - 290
Underwriting expenses 195 - - - - 195
Policyholders' dividends 19 (2) - - - 17
Restructuring & other related costs (3) - - - - (3)
----------- -------------- --------- --------- ------------ -----------
Underwriting (loss) income (77) 14 (1) - - (64)
----------- -------------- --------- --------- ------------ -----------
Net investment income 162 - - - - 162
Other revenues 103 - - - - 103
Other expenses 98 - - - - 98
Non-insurance restructuring & other related
costs (6) - - - - (6)
----------- -------------- --------- --------- ------------ -----------
Income (loss) before income tax, minority
interest and net realized investment losses 96 14 (1) - - 109
Income tax expense (12) (8) - - - (20)
Minority interest (13) (2) - - - (15)
----------- -------------- --------- --------- ------------ -----------
Income (loss) before net realized investment
losses 71 4 (1) - - 74
Realized investment losses (71) - - - - (71)
Income tax benefit on realized investment
losses 25 - - - - 25
----------- -------------- --------- --------- ------------ -----------
Income (loss) from continuing operations 25 4 (1) - - 28
Cumulative effect of a change in accounting
principle - - - - - -
----------- -------------- --------- --------- ------------ -----------
Net income (loss) $ 25 $ 4 $ (1) $ - $ - $ 28
=========== ============== ========= ========= ============ ===========
FINANCIAL RATIOS
Loss & LAE 72.0%
Acquisition expense 18.8
Underwriting expense 12.4
Dividends 1.1
-----------
Expense ratio, including dividends 32.3
-----------
Combined ratio 104.3%
===========
(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 page 10 of the March 31, 2004
Financial Supplement.
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
IMPACT OF SIGNIFICANT ITEMS
STANDARD LINES
2002 RESULTS
TWELVE MONTHS ENDED BEFORE CORPORATE REINSURANCE INSURANCE
DECEMBER 31, 2002 SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002
(In millions) ITEMS DEVELOPMENT (1) COVERS(2) PROVISION PROVISION RESULTS
- -------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 4,760 $ (81) $ (1) $ - $ - $ 4,678
Claim and claim adjustment expenses 3,621 (203) - - - 3,418
Acquisition expenses 875 - - - - 875
Underwriting expenses 604 - - - - 604
Policyholders' dividends 69 4 - - - 73
Restructuring & other related costs (2) - - - - (2)
----------- --------- -------- ---------- ---------- -------
Underwriting (loss) income (407) 118 (1) - - (290)
----------- --------- -------- ---------- ---------- -------
Net investment income 475 - - - - 475
Other revenues 355 - - - - 355
Other expenses 308 - - - - 308
Non-insurance restructuring & other related costs (6) - - - - (6)
----------- --------- -------- ---------- ---------- -------
Income (loss) before income tax, minority interest
and net realized investment losses 121 118 (1) - - 238
Income tax (expense) benefit (9) (47) - - - (56)
Minority interest (11) (2) - - - (13)
----------- --------- -------- ---------- ---------- -------
Income (loss) before net realized investment losses 101 69 (1) - - 169
Realized investment losses (119) - - - - (119)
Income tax benefit on realized
investment losses 40 - - - - 40
----------- --------- -------- ---------- ---------- -------
Income (loss) from continuing operations 22 69 (1) - - 90
Cumulative effect of a change in accounting principle (43) - - - - (43)
----------- --------- -------- ---------- ---------- -------
Net (loss) income $ (21) $ 69 $ (1) $ - $ - $ 47
=========== ========= ======== ========== ========== =======
FINANCIAL RATIOS
Loss & LAE 73.1 %
Acquisition expense 18.7
Underwriting expense 12.8
Dividends 1.6
-------
Expense ratio, including dividends 33.1
-------
Combined ratio 106.2 %
=======
SPECIALTY LINES
2002 RESULTS
TWELVE MONTHS ENDED BEFORE CORPORATE REINSURANCE INSURANCE
DECEMBER 31, 2002 SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002
(In millions) ITEMS DEVELOPMENT (1) COVERS(2) PROVISION PROVISION RESULTS
- ------------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,504 $ (14) $ (39) $ - $ - $ 1,451
Claim and claim adjustment expenses 1,063 58 (55) - - 1,066
Acquisition expenses 268 - - - - 268
Underwriting expenses 158 - - - - 158
Policyholders' dividends 3 - - - - 3
Restructuring & other related costs (1) - - - - (1)
--------- ---------- --------- ----------- --------- --------
Underwriting (loss) income 13 (72) 16 - - (43)
--------- ---------- --------- ----------- --------- --------
Net investment income 177 - (5) - - 172
Other revenues 108 - - - - 108
Other expenses 94 - - - - 94
Non-insurance restructuring & other related costs - - - - - -
--------- ---------- --------- ----------- --------- --------
Income (loss) before income tax, minority interest
and net realized investment losses 204 (72) 11 - - 143
Income tax (expense) benefit (61) 25 (4) - - (40)
Minority interest (14) 1 - - - (13)
--------- ---------- --------- ----------- --------- --------
Income (loss) before net realized investment losses 129 (46) 7 - - 90
Realized investment losses (39) - - - - (39)
Income tax benefit on realized
investment losses 14 - - - - 14
--------- ---------- --------- ----------- --------- --------
Income (loss) from continuing operations 104 (46) 7 - - 65
Cumulative effect of a change in accounting principle (5) - - - - (5)
--------- ---------- --------- ----------- --------- --------
Net (loss) income $ 99 $ (46) $ 7 $ - $ - $ 60
========= ========== ========= =========== ========= ========
FINANCIAL RATIOS
Loss & LAE 73.5 %
Acquisition expense 18.5
Underwriting expense 10.8
Dividends 0.2
--------
Expense ratio, including dividends 29.5
--------
Combined ratio 103.0%
========
P&C OPERATIONS
2002 RESULTS
TWELVE MONTHS ENDED BEFORE CORPORATE REINSURANCE INSURANCE
DECEMBER 31, 2002 SIGNIFICANT AGGREGATE BAD DEBT BAD DEBT 2002
(In millions) ITEMS DEVELOPMENT (1) COVERS(2) PROVISION PROVISION RESULTS
- --------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 6,264 $ (95) $ (40) $ - $ - $6,129
Claim and claim adjustment expenses 4,684 (145) (55) - - 4,484
Acquisition expenses 1,143 - - - - 1,143
Underwriting expenses 762 - - - - 762
Policyholders' dividends 72 4 - - - 76
Restructuring & other related costs (3) - - - - (3)
--------- ------------- -------- -------- ----- ------
Underwriting (loss) income (394) 46 15 - - (333)
--------- ------------- -------- -------- ----- ------
Net investment income 652 - (5) - - 647
Other revenues 463 - - - - 463
Other expenses 402 - - - - 402
Non-insurance restructuring & other related costs (6) - - - - (6)
--------- ------------- -------- -------- ----- ------
Income before income tax, minority interest
and net realized investment losses 325 46 10 - - 381
Income tax expense (70) (22) (4) - - (96)
Minority interest (25) (1) - - - (26)
--------- ------------- -------- -------- ----- ------
Income before net realized investment losses 230 23 6 - - 259
Realized investment losses (158) - - - - (158)
Income tax benefit on realized
investment losses 54 - - - - 54
--------- ------------- -------- -------- ----- ------
Income from continuing operations 126 23 6 - - 155
Cumulative effect of a change in accounting principle (48) - - - - (48)
--------- ------------- -------- -------- ----- ------
Net income $ 78 $ 23 $ 6 $ - $ - $ 107
========= ============= ======== ======== ===== ======
FINANCIAL RATIOS
Loss & LAE 73.2%
Acquisition expense 18.7
Underwriting expense 12.3
Dividends 1.2
------
Expense ratio, including dividends 32.2
------
Combined ratio 105.4%
======
(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 page 10 of
the March 31, 2004 Financial Supplement.
16
2003
HISTORICAL IMPACT OF SIGNIFICANT ITEMS
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
IMPACT OF SIGNIFICANT ITEMS
THREE MONTHS ENDED STANDARD LINES
JUNE 30, 2003 2003 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,239 $ (116) $ (105) $ - $ - $ 1,018
Claim and claim adjustment expenses 830 246 (180) - - 896
Acquisition expenses 266 - - - - 266
Underwriting expenses 172 - - - - 172
Policyholders' dividends 11 - - - - 11
Restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Underwriting (loss) income (40) (362) 75 - - (327)
-------- -------- -------- -------- -------- --------
Net investment income 129 - (24) - - 105
Other revenues 61 - - - - 61
Other expenses 60 - - - - 60
Non-insurance restructuring & other
related costs - - - - - -
-------- -------- -------- -------- -------- --------
Income (loss) before income tax, minority
interest and net realized investment gains 90 (362) 51 - - (221)
Income tax (expense) benefit (24) 127 (18) - - 85
Minority interest 2 - - - - 2
-------- -------- -------- -------- -------- --------
Income (loss) before net realized investment
gains 68 (235) 33 - - (134)
Realized investment gains 184 - - - - 184
Income tax expense on realized
investment gains (62) - - - - (62)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations 190 (235) 33 - - (12)
Cumulative effect of a change in accounting
principle - - - - - -
-------- -------- -------- -------- -------- --------
Net income (loss) $ 190 $ (235) $ 33 $ - $ - $ (12)
======== ======== ======== ======== ======== ========
FINANCIAL RATIOS
Loss & LAE 88.0%
Acquisition expense 26.1
Underwriting expense 16.9
Dividends 1.1
--------
Expense ratio, including dividends 44.1
--------
Combined ratio 132.1%
========
THREE MONTHS ENDED SPECIALTY LINES
JUNE 30, 2003 2003 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 462 $ (3) $ - $ - $ - $ 459
Claim and claim adjustment expenses 301 101 - - - 402
Acquisition expenses 83 - - - - 83
Underwriting expenses 45 - - - - 45
Policyholders' dividends - - - - - -
Restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Underwriting (loss) income 33 (104) - - - (71)
-------- -------- -------- -------- -------- --------
Net investment income 53 - - - - 53
Other revenues 30 - - - - 30
Other expenses 25 - - - - 25
Non-insurance restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Income (loss) before income tax, minority interest
and net realized investment gains 91 (104) - - - (13)
Income tax (expense) benefit (27) 36 - - - 9
Minority interest (3) - - - - (3)
-------- -------- -------- -------- -------- --------
Income (loss) before net realized investment gains 61 (68) - - - (7)
Realized investment gains 59 - - - - 59
Income tax expense on realized
investment gains (21) - - - - (21)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations 99 (68) - - - 31
Cumulative effect of a change in accounting
principle - - - - - -
-------- -------- -------- -------- -------- --------
Net income (loss) $ 99 $ (68) $ - $ - $ - $ 31
======== ======== ======== ======== ======== ========
FINANCIAL RATIOS
Loss & LAE 87.5%
Acquisition expense 18.2
Underwriting expense 9.7
Dividends 0.1
--------
Expense ratio, including dividends 28.0
--------
Combined ratio 115.5%
========
THREE MONTHS ENDED P&C OPERATIONS
JUNE 30, 2003 2003 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,701 $ (119) $ (105) $ - $ - $ 1,477
Claim and claim adjustment expenses 1,131 347 (180) - - 1,298
Acquisition expenses 349 - - - - 349
Underwriting expenses 217 - - - - 217
Policyholders' dividends 11 - - - - 11
Restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Underwriting (loss) income (7) (466) 75 - - (398)
-------- -------- -------- -------- -------- --------
Net investment income 182 - (24) - - 158
Other revenues 91 - - - - 91
Other expenses 85 - - - - 85
Non-insurance restructuring & other
related costs - - - - - -
-------- -------- -------- -------- -------- --------
Income (loss) before income tax, minority
interest and net realized investment gains 181 (466) 51 - - (234)
Income tax (expense) benefit (51) 163 (18) - - 94
Minority interest (1) - - - - (1)
-------- -------- -------- -------- -------- --------
Income (loss) before net realized investment
gains 129 (303) 33 - - (141)
Realized investment gains 243 - - - - 243
Income tax expense on realized
investment gains (83) - - - - (83)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations 289 (303) 33 - - 19
Cumulative effect of a change in accounting
principle - - - - - -
-------- -------- -------- -------- -------- --------
Net income (loss) $ 289 $ (303) $ 33 $ - $ - $ 19
======== ======== ======== ======== ======== ========
FINANCIAL RATIOS
Loss & LAE 87.8%
Acquisition expense 23.7
Underwriting expense 14.6
Dividends 0.8
--------
Expense ratio, including dividends 39.1
--------
Combined ratio 126.9%
========
(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 page 10 of the March 31, 2004 Financial
Supplement.
17
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
IMPACT OF SIGNIFICANT ITEMS
THREE MONTHS ENDED STANDARD LINES
SEPTEMBER 30, 2003 2003 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,289 $ (128) $ (160) $ - $ - $ 1,001
Claim and claim adjustment expenses 891 1,135 (300) - - 1,726
Acquisition expenses 296 - - 55 203 554
Underwriting expenses 180 - - - - 180
Policyholders' dividends 14 46 - - - 60
Restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Underwriting (loss) income (92) (1,309) 140 (55) (203) (1,519)
-------- -------- -------- -------- -------- --------
Net investment income 108 - (53) - - 55
Other revenues 34 - - - - 34
Other expenses 35 - - - - 35
Non-insurance restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Income (loss) before income tax, minority interest
and net realized investment gains 15 (1,309) 87 (55) (203) (1,465)
Income tax benefit (expense) 3 457 (30) 19 71 520
Minority interest (1) (1) - - - (2)
-------- -------- -------- -------- -------- --------
Income (loss) before net realized investment gains 17 (853) 57 (36) (132) (947)
Realized investment gains 58 - - - - 58
Income tax expense on realized
investment gains (22) - - - - (22)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations 53 (853) 57 (36) (132) (911)
Cumulative effect of a change in accounting
principle - - - - - -
-------- -------- -------- -------- -------- --------
Net income (loss) $ 53 $ (853) $ 57 $ (36) $ (132) $ (911)
======== ======== ======== ======== ======== ========
FINANCIAL RATIOS
Loss & LAE 172.4%
Acquisition expense 55.3
Underwriting expense 18.0
Dividends 6.0
--------
Expense ratio, including dividends 79.3
--------
Combined ratio 251.7%
========
THREE MONTHS ENDED SPECIALTY LINES
SEPTEMBER 30, 2003 2003 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 482 $ 1 $ (32) $ - $ - $ 451
Claim and claim adjustment expenses 362 244 (59) - - 547
Acquisition expenses 93 - - 76 - 169
Underwriting expenses 44 - - - - 44
Policyholders' dividends 1 - - - - 1
Restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Underwriting (loss) income (18) (243) 27 (76) - (310)
-------- -------- -------- -------- -------- --------
Net investment income 57 - (10) - - 47
Other revenues 35 - - - - 35
Other expenses 30 - - - - 30
Non-insurance restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Income (loss) before income tax, minority interest
and net realized investment gains 44 (243) 17 (76) - (258)
Income tax benefit (expense) (3) 85 (6) 27 - 103
Minority interest 4 11 - - - 15
-------- -------- -------- -------- -------- --------
Income (loss) before net realized investment gains 45 (147) 11 (49) - (140)
Realized investment gains 19 - - - - 19
Income tax expense on realized
investment gains (7) - - - - (7)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations 57 (147) 11 (49) - (128)
Cumulative effect of a change in accounting
principle - - - - - -
-------- -------- -------- -------- -------- --------
Net income (loss) $ 57 $ (147) $ 11 $ (49) $ - $ (128)
======== ======== ======== ======== ======== ========
FINANCIAL RATIOS
Loss & LAE 121.2%
Acquisition expense 37.4
Underwriting expense 9.8
Dividends 0.3
--------
Expense ratio, including dividends 47.5
--------
Combined ratio 168.7%
========
THREE MONTHS ENDED P&C OPERATIONS
SEPTEMBER 30, 2003 2003 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,771 $ (127) $ (192) $ - $ - $ 1,452
Claim and claim adjustment expenses 1,253 1,379 (359) - - 2,273
Acquisition expenses 389 - - 131 203 723
Underwriting expenses 224 - - - - 224
Policyholders' dividends 15 46 - - - 61
Restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Underwriting (loss) income (110) (1,552) 167 (131) (203) (1,829)
-------- -------- -------- -------- -------- --------
Net investment income 165 - (63) - - 102
Other revenues 69 - - - - 69
Other expenses 65 - - - - 65
Non-insurance restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Income (loss) before income tax, minority interest
and net realized investment gains 59 (1,552) 104 (131) (203) (1,723)
Income tax benefit (expense) - 542 (36) 46 71 623
Minority interest 3 10 - - - 13
-------- -------- -------- -------- -------- --------
Income (loss) before net realized investment gains 62 (1,000) 68 (85) (132) (1,087)
Realized investment gains 77 - - - - 77
Income tax expense on realized
investment gains (29) - - - - (29)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations 110 (1,000) 68 (85) (132) (1,039)
Cumulative effect of a change in accounting
principle - - - - - -
-------- -------- -------- -------- -------- --------
Net income (loss) $ 110 $ (1,000) $ 68 $ (85) $ (132) $ (1,039)
======== ======== ======== ======== ======== ========
FINANCIAL RATIOS
Loss & LAE 156.5%
Acquisition expense 49.7
Underwriting expense 15.5
Dividends 4.2
--------
Expense ratio, including dividends 69.4
--------
Combined ratio 225.9%
========
(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 page 10 of the March 31, 2004 Financial
Supplement.
18
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
IMPACT OF SIGNIFICANT ITEMS
THREE MONTHS ENDED STANDARD LINES
DECEMBER 31, 2003 2003 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,304 $ (8) $ (4) $ - $ - $ 1,292
Claim and claim adjustment expenses 890 (13) (5) - - 872
Acquisition expenses 262 - - - - 262
Underwriting expenses 164 - - - - 164
Policyholders' dividends 14 - - - - 14
Restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Underwriting (loss) income (26) 5 1 - - (20)
-------- -------- -------- -------- -------- --------
Net investment income 118 - - - - 118
Other revenues 33 - - - - 33
Other expenses 34 - - - - 34
Non-insurance restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Income (loss) before income tax, minority interest
and net realized investment gains 91 5 1 - - 97
Income tax (expense) benefit (6) (2) - - - (8)
Minority interest (3) - - - - (3)
-------- -------- -------- -------- -------- --------
Income (loss) before net realized investment gains 82 3 1 - - 86
Realized investment gains 112 - - - - 112
Income tax expense on realized
investment gains (39) - - - - (39)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations 155 3 1 - - 159
Cumulative effect of a change in accounting
principle - - - - - -
-------- -------- -------- -------- -------- --------
Net income (loss) $ 155 $ 3 $ 1 $ - $ - $ 159
======== ======== ======== ======== ======== ========
FINANCIAL RATIOS
Loss & LAE 67.5%
Acquisition expense 20.3
Underwriting expense 12.7
Dividends 1.1
--------
Expense ratio, including dividends 34.1
--------
Combined ratio 101.6%
========
THREE MONTHS ENDED SPECIALTY LINES
DECEMBER 31, 2003 2003 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 515 $ (14) $ 1 $ - $ - $ 502
Claim and claim adjustment expenses 345 (9) 3 - - 339
Acquisition expenses 77 - - - - 77
Underwriting expenses 44 - - - - 44
Policyholders' dividends 1 - - - - 1
Restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Underwriting (loss) income 48 (5) (2) - - 41
-------- -------- -------- -------- -------- --------
Net investment income 52 - - - - 52
Other revenues 33 - - - - 33
Other expenses 32 - - - - 32
Non-insurance restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Income (loss) before income tax, minority interest
and net realized investment gains 101 (5) (2) - - 94
Income tax (expense) benefit (32) 2 1 - - (29)
Minority interest - - - - - -
-------- -------- -------- -------- -------- --------
Income (loss) before net realized investment gains 69 (3) (1) - - 65
Realized investment gains 33 - - - - 33
Income tax expense on realized
investment gains (11) - - - - (11)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations 91 (3) (1) - - 87
Cumulative effect of a change in accounting
principle - - - - - -
-------- -------- -------- -------- -------- --------
Net income (loss) $ 91 $ (3) $ (1) $ - $ - $ 87
======== ======== ======== ======== ======== ========
FINANCIAL RATIOS
Loss & LAE 67.7%
Acquisition expense 15.3
Underwriting expense 8.8
Dividends 0.2
--------
Expense ratio, including dividends 24.3
--------
Combined ratio 92.0%
========
THREE MONTHS ENDED P&C OPERATIONS
DECEMBER 31, 2003 2003 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,819 $ (22) $ (3) $ - $ - $ 1,794
Claim and claim adjustment expenses 1,235 (22) (2) - - 1,211
Acquisition expenses 339 - - - - 339
Underwriting expenses 208 - - - - 208
Policyholders' dividends 15 - - - - 15
Restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Underwriting income (loss) 22 - (1) - - 21
-------- -------- -------- -------- -------- --------
Net investment income 170 - - - - 170
Other revenues 66 - - - - 66
Other expenses 66 - - - - 66
Non-insurance restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Income (loss) before income tax, minority interest
and net realized investment gains 192 - (1) - - 191
Income tax expense (38) - 1 - - (37)
Minority interest (3) - - - - (3)
-------- -------- -------- -------- -------- --------
Income (loss) before net realized investment gains 151 - - - - 151
Realized investment gains 145 - - - - 145
Income tax expense on realized
investment gains (50) - - - - (50)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations 246 - - - - 246
Cumulative effect of a change in accounting
principle - - - - - -
-------- -------- -------- -------- -------- --------
Net income (loss) $ 246 $ - $ - $ - $ - $ 246
======== ======== ======== ======== ======== ========
FINANCIAL RATIOS
Loss & LAE 67.5%
Acquisition expense 18.9
Underwriting expense 11.7
Dividends 0.8
--------
Expense ratio, including dividends 31.4
--------
Combined ratio 98.9%
========
(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 page 10 of the March 31, 2004 Financial
Supplement.
19
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
IMPACT OF SIGNIFICANT ITEMS
TWELVE MONTHS ENDED STANDARD LINES
DECEMBER 31, 2003 2003 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 5,010 $ (211) $ (269) $ - $ - $ 4,530
Claim and claim adjustment expenses 3,436 1,436 (485) - - 4,387
Acquisition expenses 1,023 - - 55 242 1,320
Underwriting expenses 676 - - - - 676
Policyholders' dividends 54 46 - - - 100
Restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Underwriting (loss) income (179) (1,693) 216 (55) (242) (1,953)
-------- -------- -------- -------- -------- --------
Net investment income 484 - (77) - - 407
Other revenues 199 - - - - 199
Other expenses 192 - - - - 192
Non-insurance restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Income (loss) before income tax, minority interest
and net realized investment gains 312 (1,693) 139 (55) (242) (1,539)
Income tax (expense) benefit (57) 594 (49) 19 85 592
Minority interest (3) (1) - - - (4)
-------- -------- -------- -------- -------- --------
Income (loss) before net realized investment gains 252 (1,100) 90 (36) (157) (951)
Realized investment gains 361 - - - - 361
Income tax expense on realized investment gains (127) - - - - (127)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations 486 (1,100) 90 (36) (157) (717)
Cumulative effect of a change in accounting
principle - - - - - -
-------- -------- -------- -------- -------- --------
Net income (loss) $ 486 $ (1,100) $ 90 $ (36) $ (157) $ (717)
======== ======== ======== ======== ======== ========
FINANCIAL RATIOS
Loss & LAE 96.8%
Acquisition expense 29.1
Underwriting expense 15.0
Dividends 2.2
--------
Expense ratio, including dividends 46.3
--------
Combined ratio 143.1%
========
TWELVE MONTHS ENDED SPECIALTY LINES
DECEMBER 31, 2003 2003 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 1,877 $ (6) $ (31) $ - $ - $ 1,840
Claim and claim adjustment expenses 1,294 334 (56) - - 1,572
Acquisition expenses 332 - - 76 - 408
Underwriting expenses 176 - - - - 176
Policyholders' dividends 3 - - - - 3
Restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Underwriting (loss) income 72 (340) 25 (76) - (319)
-------- -------- -------- -------- -------- --------
Net investment income 211 - (10) - - 201
Other revenues 115 - - - - 115
Other expenses 100 - - - - 100
Non-insurance restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Income (loss) before income tax, minority interest
and net realized investment gains 298 (340) 15 (76) - (103)
Income tax (expense) benefit (82) 119 (5) 27 - 59
Minority interest (1) 11 - - - 10
-------- -------- -------- -------- -------- --------
Income (loss) before net realized investment gains 215 (210) 10 (49) - (34)
Realized investment gains 114 - - - - 114
Income tax expense on realized investment gains (40) - - - - (40)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations 289 (210) 10 (49) - 40
Cumulative effect of a change in accounting
principle - - - - - -
-------- -------- -------- -------- -------- --------
Net income (loss) $ 289 $ (210) $ 10 $ (49) $ - $ 40
======== ======== ======== ======== ======== ========
FINANCIAL RATIOS
Loss & LAE 85.4%
Acquisition expense 22.2
Underwriting expense 9.6
Dividends 0.2
--------
Expense ratio, including dividends 32.0
--------
Combined ratio 117.4%
========
TWELVE MONTHS ENDED P&C OPERATIONS
DECEMBER 31, 2003 2003 RESULTS
BEFORE CORPORATE REINSURANCE
SIGNIFICANT AGGREGATE BAD DEBT INSURANCE BAD
(In millions) ITEMS DEVELOPMENT (1) COVERS (2) PROVISION DEBT PROVISION 2003 RESULTS
- -----------------------------------------------------------------------------------------------------------------------------------
Net earned premiums $ 6,887 $ (217) $ (300) $ - $ - $ 6,370
Claim and claim adjustment expenses 4,730 1,770 (541) - - 5,959
Acquisition expenses 1,355 - - 131 242 1,728
Underwriting expenses 852 - - - - 852
Policyholders' dividends 57 46 - - - 103
Restructuring & other related costs - - - - - -
-------- -------- -------- -------- -------- --------
Underwriting (loss) income (107) (2,033) 241 (131) (242) (2,272)
-------- -------- -------- -------- -------- --------
Net investment income 695 - (87) - - 608
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 610 (2,033) 154 (131) (242) (1,642)
Income tax (expense) benefit (139) 713 (54) 46 85 651
Minority interest (4) 10 - - - 6
-------- -------- -------- -------- -------- --------
Income (loss) before net realized investment gains 467 (1,310) 100 (85) (157) (985)
Realized investment gains 475 - - - - 475
Income tax expense on realized investment gains (167) - - - - (167)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations 775 (1,310) 100 (85) (157) (677)
Cumulative effect of a change in accounting
principle - - - - - -
-------- -------- -------- -------- -------- --------
Net income (loss) $ 775 $ (1,310) $ 100 $ (85) $ (157) $ (677)
======== ======== ======== ======== ======== ========
FINANCIAL RATIOS
Loss & LAE 93.6%
Acquisition expense 27.1
Underwriting expense 13.4
Dividends 1.6
--------
Expense ratio, including dividends 42.1
--------
Combined ratio 135.7%
========
(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 page 10 of the March 31, 2004 Financial
Supplement.
20
2002 & 2003
HISTORICAL PROPERTY & CASUALTY INSURANCE
CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVE DATA
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
PROPERTY & CASUALTY INSURANCE
CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVE DATA
CLAIM & CLAIM ADJUSTMENT
EXPENSE RESERVES LIFE & GROUP CORPORATE & OTHER
(In millions) STANDARD LINES SPECIALTY LINES P&C OPERATIONS NON-CORE NON-CORE TOTAL OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
As of March 31, 2002
Gross $ 13,663 $ 3,480 $ 17,143 $ 3,541 $ 10,196 $ 30,880
Ceded 5,262 963 6,225 401 5,435 12,061
Net 8,401 2,517 10,918 3,140 4,761 18,819
As of June 30, 2002
Gross $ 13,313 $ 3,500 $ 16,813 $ 3,484 $ 10,089 $ 30,386
Ceded 4,981 1,036 6,017 368 5,393 11,778
Net 8,332 2,464 10,796 3,116 4,696 18,608
As of September 30, 2002
Gross $ 13,019 $ 3,650 $ 16,669 $ 3,206 $ 9,850 $ 29,725
Ceded 4,896 1,167 6,063 351 5,215 11,629
Net 8,123 2,483 10,606 2,855 4,635 18,096
As of December 31, 2002
Gross $ 12,779 $ 3,629 $ 16,408 $ 3,456 $ 7,506 $ 27,370
Ceded 4,731 1,210 5,941 472 4,314 10,727
Net 8,048 2,419 10,467 2,984 3,192 16,643
- -------------------------------------------------------------------------------------------------------------------------------
21
CNA FINANCIAL CORPORATION
FINANCIAL SUPPLEMENT APPENDIX
PROPERTY & CASUALTY INSURANCE
CLAIM & CLAIM ADJUSTMENT EXPENSE RESERVE DATA
CLAIM & CLAIM ADJUSTMENT
EXPENSE RESERVES LIFE & GROUP CORPORATE & OTHER
(In millions) STANDARD LINES SPECIALTY LINES P&C OPERATIONS NON-CORE NON-CORE TOTAL OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
As of March 31, 2003
Gross $ 12,626 $ 3,555 $ 16,181 $ 3,504 $ 7,761 $ 27,446
Ceded 4,663 1,367 6,030 520 4,667 11,217
Net 7,963 2,188 10,151 2,984 3,094 16,229
As of June 30, 2003
Gross $ 12,997 $ 3,745 $ 16,742 $ 3,561 $ 7,641 $ 27,944
Ceded 5,091 1,231 6,322 491 4,672 11,485
Net 7,906 2,514 10,420 3,070 2,969 16,459
As of September 30, 2003
Gross $ 14,431 $ 4,115 $ 18,546 $ 3,644 $ 10,074 $ 32,264
Ceded 5,419 1,185 6,604 488 6,217 13,309
Net 9,012 2,930 11,942 3,156 3,857 18,955
As of December 31, 2003
Gross $ 14,282 $ 4,200 $ 18,482 $ 3,576 $ 9,672 $ 31,730
Ceded 5,315 1,281 6,596 1,685 5,935 14,216
Net 8,967 2,919 11,886 1,891 3,737 17,514
- -------------------------------------------------------------------------------------------------------------------------------
22