CNA FINANCIAL CORP

Previous wording

We utilize the core income (loss) financial measure to monitor our operations. Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses and gains or losses resulting from pension settlement transactions. Net investment gains or losses are excluded from the calculation of core income (loss) because they are generally driven by economic factors that are not necessarily reflective of our primary operations. The calculation of core income (loss) excludes gains or losses resulting from pension settlement transactions as they result from decisions regarding our defined benefit pension plans which are unrelated to our primary operations. Presentation of consolidated core income (loss) is deemed to be a non-GAAP financial measure and management believes some investors may find this measure useful to evaluate our primary operations. See further discussion regarding how we manage our business in Note J to the Condensed Consolidated Financial Statements included under Part I, Item 1. For reconciliations of non-GAAP measures to the most comparable GAAP measures and other information, please refer herein and/or to CNA's most recent Annual Report on Form 10-K on file with the Securities and Exchange Commission.

Current wording

We utilize the core income (loss) financial measure to monitor our operations. Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses and gains or losses resulting from pension settlement transactions. Net investment gains or losses are excluded from the calculation of core income (loss) because they are generally driven by economic factors that are not necessarily reflective of our primary operations. The calculation of core income (loss) excludes gains or losses resulting from pension settlement transactions as they result from decisions regarding our defined benefit pension plans which are unrelated to our primary operations. Presentation of consolidated core income (loss) is deemed to be a non-GAAP financial measure and management believes some investors may find this measure useful to evaluate our primary operations. See further discussion regarding how we manage our business in Note J to the Condensed Consolidated Financial Statements included under Part I, Item 1. For reconciliations of non-GAAP measures to the most comparable GAAP measures and other information, please refer herein and/or to our most recent Annual Report on Form 10-K on file with the Securities and Exchange Commission.

Previous wording

In evaluating the results of our Specialty, Commercial and International segments, we utilize the loss ratio, the underlying loss ratio, the expense ratio, the dividend ratio, the combined ratio and the underlying combined ratio. These ratios are calculated using GAAP financial results. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The underlying loss ratio excludes the impact of catastrophe losses and development-related items from the loss ratio. Development-related items represents net prior year loss reserve and premium development, and includes the effects of interest accretion and change in allowance for uncollectible reinsurance and deductible amounts. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss, expense and dividend ratios. The underlying combined ratio is the sum of the underlying loss ratio, the expense ratio and the dividend ratio. The underlying loss ratio and the underlying combined ratio are deemed to be non-GAAP financial measures, and management believes some investors may find these ratios useful to evaluate our underwriting performance since they remove the impact of catastrophe losses which are unpredictable as to timing and amount, and development-related items as they are not indicative of our current year underwriting performance.

Current wording

In evaluating the results of our Specialty, Commercial and International segments, we utilize the loss ratio, the underlying loss ratio, the expense ratio, the dividend ratio, the combined ratio and the underlying combined ratio. These ratios are calculated using GAAP financial results. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The underlying loss ratio excludes the impact of catastrophe losses and development-related items from the loss ratio. Development-related items represents net prior year loss reserve and premium development, and includes the effects of interest accretion and change in allowance for uncollectible reinsurance. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss ratio, the expense ratio and the dividend ratio. The underlying combined ratio is the sum of the underlying loss ratio, the expense ratio and the dividend ratio. The underlying loss ratio and the underlying combined ratio are deemed to be non-GAAP financial measures, and management believes some investors may find these ratios useful to evaluate our underwriting performance since they remove the impact of catastrophe losses which are unpredictable as to timing and amount, and development-related items as they are not indicative of our current year underwriting performance.

Previous wording

Changes in estimates of claim and claim adjustment expense reserves, net of reinsurance, for prior years are defined as net prior year loss reserve development within this MD&A. These changes can be favorable or unfavorable. Net prior year loss reserve development does not include the effect of any related acquisition expenses. Further information on our reserves is provided in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

Current wording

Changes in estimates of claim and claim adjustment expense reserves, net of reinsurance, for prior years are defined as net prior year loss reserve development within this MD&A. These changes can be favorable or unfavorable. Net prior year loss reserve development does not include the effect of any related acquisition expenses. Further information on our reserves is provided in Note E and Note F to the Condensed Consolidated Financial Statements included under Part I, Item 1.

Previous wording

We use underwriting gain (loss), calculated using GAAP financial results, to monitor our insurance operations. Underwriting gain (loss) is deemed to be a non-GAAP measure and is calculated pretax as net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and other insurance related expenses. Net income (loss) is the most directly comparable GAAP measure. Management believes some investors may find this measure useful to evaluate the profitability, before tax, derived from our underwriting activities which are managed separately from our investing activities. Underlying underwriting gain (loss) is deemed to be a non-GAAP measure that represents pretax underwriting gain (loss) excluding catastrophe losses and development-related items. Management believes some investors may find this measure useful to evaluate profitability, before tax, of our underwriting activities, excluding the impact of catastrophe losses which are unpredictable as to timing and amount, and development-related items as they are not indicative of our current year underwriting performance.

Current wording

We use underwriting gain (loss) and underlying underwriting gain (loss), calculated using GAAP financial results, to monitor our insurance operations. Underwriting gain (loss) is deemed to be a non-GAAP financial measure and is calculated pretax as net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and insurance related administrative expenses. Net income (loss) is the most directly comparable GAAP measure. Management believes some investors may find this measure useful to evaluate the profitability, before tax, derived from our underwriting activities, which are managed separately from our investing activities. Underlying underwriting gain (loss) is also deemed to be a non-GAAP financial measure, and represents pretax underwriting gain (loss) excluding catastrophe losses and development-related items. Management believes some investors may find this measure useful to evaluate the profitability, before tax, derived from our underwriting activities, excluding the impact of catastrophe losses, which are unpredictable as to timing and amount, and development-related items as they are not indicative of our current year underwriting performance.

Previous wording

Core income increased $52 million for the nine months ended September 30, 2024 as compared with the same period in 2023. Core income for our Property & Casualty Operations increased $27 million primarily driven by higher net investment income partially offset by higher catastrophe losses. Core loss for our Life & Group segment improved $47 million, while core loss for our Corporate & Other segment increased $22 million.

Current wording

Core income decreased $74 million for the three months ended March 31, 2025 as compared with the same period in 2024. Core income for our Property & Casualty Operations decreased $61 million primarily driven by lower underwriting results partially offset by higher net investment income. Core income for our Life & Group segment increased $1 million, while core loss for our Corporate & Other segment increased $14 million.

Previous wording

Catastrophe losses were $143 million and $94 million for the three months ended September 30, 2024 and 2023, primarily related to severe weather related events. Catastrophe losses for the three months ended September 30, 2024 included $55 million for Hurricane Helene. Unfavorable net prior year loss reserve development of $17 million and $13 million was recorded for the three months ended September 30, 2024 and 2023 related to our Specialty, Commercial, International and Corporate & Other segments. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

Current wording

Catastrophe losses were $97 million and $88 million for the three months ended March 31, 2025 and 2024, primarily driven by severe weather related events, including $53 million for the California wildfires in 2025. Unfavorable net prior year loss reserve development of $83 million was recorded for the three months ended March 31, 2025 as compared with favorable net prior year loss reserve development of $7 million recorded for the three months ended March 31, 2024 related to our Specialty, Commercial and Corporate & Other segments. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

Previous wording

Gross written premiums, excluding third-party captives, for Specialty increased $33 million for the three months ended September 30, 2024 as compared with the same period in 2023 driven by retention and higher new business. Net written premiums for Specialty increased $37 million for the three months ended September 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.

Current wording

Gross written premiums, excluding third-party captives, for Specialty increased $50 million for the three months ended March 31, 2025 as compared with the same period in 2024 driven by higher new business and favorable renewal premium change, inclusive of rate. Net written premiums for Specialty increased $50 million for the three months ended March 31, 2025 as compared with the same period in 2024. The increase in net earned premiums was consistent with the trend in net written premiums.

Previous wording

Core income increased $15 million for the nine months ended September 30, 2024 as compared with the same period in 2023 driven by higher net investment income and favorable net prior year loss reserve development in the current year period compared with unfavorable development in the prior year period, partially offset by lower underlying underwriting results. Favorable net prior year loss reserve development of $5 million was recorded for the nine months ended September 30, 2024 compared to unfavorable net prior year loss reserve development of $15 million for the nine months ended September 30, 2023.

Current wording

Core income decreased $27 million for the three months ended March 31, 2025 as compared with the same period in 2024 primarily due to lower underlying underwriting results and unfavorable net prior year loss reserve development in the current year period compared with favorable net prior year loss reserve development in the prior year period.

Previous wording

The combined ratio of 92.1% increased 1.8 points for the nine months ended September 30, 2024 as compared with the same period in 2023 primarily due to a 1.1 point increase in the loss ratio and a 0.6 point increase in the expense ratio. The increase in the loss ratio was due to an increase in the underlying loss ratio primarily driven by continued pricing pressure in management liability lines over the last several quarters. The increase in the expense ratio was driven by higher acquisition costs. There were no catastrophe losses for nine months ended September 30, 2024 and 2023.

Current wording

The combined ratio of 95.1% increased 4.4 points for the three months ended March 31, 2025 as compared with the same period in 2024 due to a 2.8 point increase in the loss ratio and a 1.6 point increase in the expense ratio. The increase in the loss ratio was due to unfavorable net prior year loss reserve development recorded in the current year period, driven by auto warranty in accident year 2024, and an increase in the underlying loss ratio primarily driven by continued pricing pressure in management liability lines. The increase in the expense ratio was primarily driven by higher acquisition costs and employee related costs. There were no catastrophe losses for the three months ended March 31, 2025 and 2024.

Previous wording

Gross written premiums for Commercial increased $204 million for the three months ended September 30, 2024 as compared with the same period in 2023 driven by favorable renewal premium change and higher new business. Net written premiums for Commercial increased $150 million for the three months ended September 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums.

Current wording

Gross written premiums for Commercial increased $167 million for the three months ended March 31, 2025 as compared with the same period in 2024 driven by favorable renewal premium change, inclusive of rate. Net written premiums for Commercial increased $160 million for the three months ended March 31, 2025 as compared with the same period in 2024. The increase in net earned premiums was consistent with the trend in net written premiums.

Previous wording

The combined ratio of 100.2% increased 1.3 points for the three months ended September 30, 2024 as compared with the same period in 2023 due to a 3.1 point increase in the loss ratio partially offset by a 1.8 point improvement in the expense ratio. The increase in the loss ratio was driven by higher catastrophe losses and an increase in the underlying loss ratio driven by continuation of elevated loss cost trends in commercial auto and mix of business. Catastrophe losses were $127 million, or 9.6 points of the loss ratio, for the three months ended September 30, 2024, as compared with $87 million, or 7.4 points of the loss ratio, for the three months ended September 30, 2023. The improvement in the expense ratio was primarily driven by higher net earned premiums.

Current wording

The combined ratio of 101.1% increased 3.5 points for the three months ended March 31, 2025 as compared with the same period in 2024 primarily due to a 4.2 point increase in the loss ratio partially offset by a 0.6 point improvement in the expense ratio. The increase in the loss ratio was due to unfavorable net prior year loss reserve development driven by commercial auto in accident year 2024, and an increase in the underlying loss ratio driven by the continuation of elevated loss cost trends in commercial auto. Catastrophe losses were $86 million, or 6.3 points of the loss ratio, for the three months ended March 31, 2025, as compared with $82 million, or 6.8 points of the loss ratio, for the three months ended March 31, 2024. The improvement in the expense ratio was primarily driven by higher net earned premiums.

Previous wording

Gross written premiums for International decreased $29 million for the nine months ended September 30, 2024 as compared with the same period in 2023. Excluding the effect of foreign currency exchange rates, gross written premiums decreased $37 million driven by lower new business. Net written premiums for International decreased $16 million for the nine months ended September 30, 2024 as compared with the same period in 2023. Excluding the effect of foreign currency exchange rates, net written premiums decreased $20 million for the nine months ended September 30, 2024 as compared with the same period in 2023. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters.

Current wording

Gross written premiums for International decreased $1 million for the three months ended March 31, 2025 as compared with the same period in 2024. Excluding the effect of foreign currency exchange rates, gross written premiums increased $14 million driven by higher new business. Net written premiums for International increased $6 million for the three months ended March 31, 2025 as compared with the same period in 2024. Excluding the effect of foreign currency exchange rates, net written premiums increased $19 million for the three months ended March 31, 2025 as compared with the same period in 2024. The decrease in net earned premiums was consistent with the trend in net written premiums in recent quarters.

Previous wording

The combined ratio of 93.0% increased 2.9 points for the three months ended September 30, 2024 as compared with the same period in 2023 primarily due to a 2.1 point increase in the loss ratio and a 0.9 point increase in the expense ratio. The increase in the loss ratio was primarily due to an increase in the underlying loss ratio primarily driven by continued pricing pressure in management liability lines over the last several quarters. There was no net prior year loss reserve development recorded for three months ended September 30, 2024 compared to favorable net prior year loss reserve development of $5 million for the three months ended September 30, 2023. The increase in the expense ratio was primarily driven by higher employee related costs. There were no catastrophe losses for three months ended September 30, 2024 and 2023.

Current wording

There was no net prior year loss reserve development recorded for the three months ended March 31, 2025 or 2024. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

Previous wording

Core loss increased $11 million for the three months ended September 30, 2024 as compared with the same period in 2023 primarily driven by $3 million after-tax lower amortization of the deferred gain related to the asbestos and environmental pollution (A&EP) Loss Portfolio Transfer (LPT) and a $3 million after-tax charge related to office consolidation. The current and prior year quarters include a $17 million and $16 million after-tax charge related to unfavorable prior year loss reserve development largely associated with legacy mass tort abuse claims. Further information on the A&EP LPT and net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

Current wording

Core loss increased $14 million for three months ended March 31, 2025 as compared with the same period in 2024 primarily due to a $17 million after-tax charge related to unfavorable net prior year loss reserve development associated with legacy mass tort abuse claims. Our annual comprehensive review of legacy mass tort exposures is undertaken in the second quarter of each year, consistent with the recent historical timing of such review. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

Previous wording

Net investment income increased $73 million and $200 million for the three and nine months ended September 30, 2024 as compared with the same periods in 2023 driven by favorable limited partnership and common stock returns, as well as higher income from fixed income securities as a result of favorable reinvestment rates and a larger invested asset base.

Current wording

Net investment income decreased $5 million for the three months ended March 31, 2025 as compared with the same period in 2024 reflecting the largely offsetting impacts of lower common stock returns and higher income from fixed income securities.

Previous wording

Pretax net investment losses decreased $63 million for the nine months ended September 30, 2024 as compared with the same period in 2023 driven by the favorable change in fair value of non-redeemable preferred stock, lower impairment losses and lower net losses on disposals of fixed maturity securities.

Current wording

Pretax net investment losses decreased $13 million for the three months ended March 31, 2025 as compared with the same period in 2024 driven by lower net losses on disposals of fixed maturity securities and lower impairment losses, partially offset by the favorable change in fair value of non-redeemable preferred stock in the prior year quarter.

Previous wording

For the nine months ended September 30, 2024, net cash used by investing activities was $762 million as compared with $1,537 million for the same period in 2023. Net cash used or provided by investing activities is primarily driven by cash available from operations and by other factors, such as financing activities.

Current wording

For the three months ended March 31, 2025, net cash provided by investing activities was $88 million as compared with net cash used by investing activities of $249 million for the same period in 2024. Net cash provided or used by investing activities is primarily driven by cash available from operations and by other factors, such as financing activities.

Previous wording

For the nine months ended September 30, 2024, net cash used by financing activities was $998 million as compared with $218 million for the same period in 2023. Financing activities for the periods presented include:

Current wording

For the three months ended March 31, 2025, net cash used by financing activities was $722 million as compared with $189 million for the same period in 2024. Financing activities for the periods presented include:

Previous wording

•During the nine months ended September 30, 2023, we paid dividends of $673 million and repurchased 550,000 shares of our common stock at an aggregate cost of $24 million.

Current wording

•In the first quarter of 2025, we paid dividends of $673 million and repurchased 700,000 shares of our common stock at an aggregate cost of $34 million.

Previous wording

•During the nine months ended September 30, 2024, we paid dividends of $906 million and repurchased 450,000 shares of common stock at an aggregate cost of $20 million.

Current wording

•In the first quarter of 2024, we paid dividends of $667 million.

Previous wording

Cash dividends of $3.32 per share on our common stock, including a special cash dividend of $2.00 per share, were declared and paid during the nine months ended September 30, 2024. On November 1, 2024, our Board of Directors declared a quarterly cash dividend of $0.44 per share, payable December 5, 2024 to stockholders of record on November 18, 2024. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend on many factors, including our earnings, financial condition, business needs and regulatory constraints.

Current wording

Cash dividends of $2.46 per share on our common stock, including a special cash dividend of $2.00 per share, were declared and paid during the three months ended March 31, 2025. On May 2, 2025, our Board of Directors declared a quarterly cash dividend of $0.46 per share, payable June 5, 2025 to stockholders of record on May 19, 2025. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend on many factors, including our earnings, financial condition, business needs and regulatory constraints.

Previous wording

Dividends from Continental Casualty Company (CCC) are subject to the insurance holding company laws of the State of Illinois, the domiciliary state of CCC. Under these laws, ordinary dividends, or dividends that do not require prior approval by the Illinois Department of Insurance, are determined based on the greater of the prior year's statutory net income or 10% of statutory surplus as of the end of the prior year, as well as timing and amount of dividends paid in the preceding twelve months. Additionally, ordinary dividends may only be paid from earned surplus, which is calculated by removing unrealized gains from unassigned surplus. As of September 30, 2024 CCC was in a positive earned surplus position. CCC paid dividends of $635 million and $770 million to CNAF during the nine months ended September 30, 2024 and 2023. The actual level of dividends paid in any year is determined after an assessment of available dividend capacity, holding company liquidity and cash needs as well as the impact the dividends will have on the statutory surplus of the applicable insurance company.

Current wording

Dividends from Continental Casualty Company (CCC) are subject to the insurance holding company laws of the State of Illinois, the domiciliary state of CCC. Under these laws, ordinary dividends, or dividends that do not require prior approval by the Illinois Department of Insurance, are determined based on the greater of the prior year's statutory net income or 10% of statutory surplus as of the end of the prior year, as well as timing and amount of dividends paid in the preceding twelve months. Additionally, ordinary dividends may only be paid from earned surplus, which is calculated by removing unrealized gains from unassigned surplus. As of March 31, 2025 CCC was in a positive earned surplus position. CCC paid dividends of $440 million and $300 million to CNAF during the three months ended March 31, 2025 and 2024. The actual level of dividends paid in any year is determined after an assessment of available dividend capacity, holding company liquidity and cash needs as well as the impact the dividends will have on the statutory surplus of the applicable insurance company.

Previous wording

•the risks and uncertainties associated with our insurance reserves, as outlined in the Critical Accounting Estimates sections of our 2023 Annual Report on Form 10-K and this report, and the Reserves - Estimates and Uncertainties section of our 2023 Annual Report on Form 10-K, including the sufficiency of the reserves and the possibility for future increases, which would be reflected in the results of operations in the period that the need for such adjustment is determined;

Current wording

•the risks and uncertainties associated with our insurance reserves, as outlined in the Critical Accounting Estimates sections of our 2024 Annual Report on Form 10-K and this report, and the Reserves - Estimates and Uncertainties section of our 2024 Annual Report on Form 10-K, including the sufficiency of the reserves and the possibility of future increases, which would be reflected in the results of operations in the period that the need for such adjustment is determined;

Previous wording

•general economic and business conditions, including recessionary conditions that may decrease the size and number of our insurance customers and create losses to our lines of business and inflationary pressures on medical care costs, construction costs and other economic sectors;

Current wording

•general economic and business conditions, including potential recessionary conditions that may decrease the size and number of our insurance customers and create losses in our lines of business, and inflationary pressures on medical care costs, construction costs and other economic sectors;

Previous wording

•the effects on the frequency of claims of reviver statutes that extend, or eliminate, the statute of limitations for the reporting of claims, including statutes passed in certain states with respect to sexual molestation and sexual abuse;

Current wording

•the effects on the frequency of claims of reviver statutes that extend, or eliminate, the statute of limitations for the reporting of claims, including statutes passed in certain states with respect to sexual abuse;

Previous wording

•the COVID-19 pandemic, including new or emerging variants, other potential pandemics and related measures to mitigate the spread of the foregoing may continue to result in increased claims and related litigation risk across our enterprise;

Current wording

•the COVID-19 pandemic, other potential pandemics and related measures to mitigate the spread of the foregoing may continue to result in increased claims and related litigation risk across our enterprise;

Previous wording

•conditions in the capital and credit markets that may limit our ability to raise significant amounts of capital on favorable terms; and

Current wording

•conditions in the capital and credit markets that may limit our ability to raise significant amounts of capital on favorable terms or at all; and

Previous wording

•regulatory and legal initiatives and compliance with governmental regulations and other legal requirements, which are increasing in complexity and number, change frequently, sometimes conflict, and could expose us to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more jurisdictions, including regulations related to cybersecurity protocols (which continue to evolve in breadth, sophistication and maturity in response to an ever-evolving threat landscape), legal inquiries by state authorities, judicial interpretations within the regulatory framework, including interpretation of policy provisions, decisions regarding coverage and theories of liability, legislative actions that increase claimant activity, including those revising applicability of statutes of limitations, trends in litigation and the outcome of any litigation involving us and rulings and changes in tax laws and regulations;

Current wording

•regulatory and legal initiatives and compliance with governmental regulations and other legal requirements, which are increasing in complexity and number, change frequently, sometimes conflict, and could expose us to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more jurisdictions, including regulations related to cybersecurity protocols (which continue to evolve in breadth, sophistication and maturity in response to an ever-evolving threat landscape) or utilization of artificial intelligence, legal inquiries by state authorities, judicial interpretations within the regulatory framework, including interpretation of policy provisions, decisions regarding coverage and theories of liability, legislative actions that increase claimant activity, including those revising applicability of statutes of limitations, trends in litigation and the outcome of any litigation involving us and rulings and changes in tax laws and regulations;

Previous wording

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

Current wording

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