|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
|
36-6169860
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
151 N. Franklin
|
|
60606
|
|
Chicago,
|
Illinois
|
|
(Zip Code)
|
(Address of principal executive offices)
|
|
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Common Stock, Par value $2.50
|
|
"CNA"
|
|
New York Stock Exchange
|
|
|
|
|
Chicago Stock Exchange
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
Emerging growth company
|
☐
|
Item Number
|
|
Page
Number
|
|
|
|
1.
|
||
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||
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||
|
||
|
||
|
||
|
||
2.
|
||
3.
|
||
4.
|
||
|
PART II
|
|
1.
|
||
1A.
|
||
2.
|
||
6.
|
Three months ended March 31
|
|
|
|
||||
(In millions, except per share data)
|
2020
|
|
2019
|
||||
Revenues
|
|
|
|
||||
Net earned premiums
|
$
|
1,869
|
|
|
$
|
1,803
|
|
Net investment income
|
329
|
|
|
571
|
|
||
Net investment (losses) gains
|
(216
|
)
|
|
31
|
|
||
Non-insurance warranty revenue
|
301
|
|
|
281
|
|
||
Other revenues
|
8
|
|
|
9
|
|
||
Total revenues
|
2,291
|
|
|
2,695
|
|
||
Claims, Benefits and Expenses
|
|
|
|
||||
Insurance claims and policyholders’ benefits
|
1,425
|
|
|
1,357
|
|
||
Amortization of deferred acquisition costs
|
344
|
|
|
342
|
|
||
Non-insurance warranty expense
|
281
|
|
|
260
|
|
||
Other operating expenses
|
299
|
|
|
283
|
|
||
Interest
|
31
|
|
|
34
|
|
||
Total claims, benefits and expenses
|
2,380
|
|
|
2,276
|
|
||
(Loss) income before income tax
|
(89
|
)
|
|
419
|
|
||
Income tax benefit (expense)
|
28
|
|
|
(77
|
)
|
||
Net (loss) income
|
$
|
(61
|
)
|
|
$
|
342
|
|
|
|
|
|
||||
Basic (loss) earnings per share
|
$
|
(0.23
|
)
|
|
$
|
1.26
|
|
|
|
|
|
||||
Diluted (loss) earnings per share
|
$
|
(0.23
|
)
|
|
$
|
1.25
|
|
|
|
|
|
||||
Weighted Average Outstanding Common Stock and Common Stock Equivalents
|
|
|
|
||||
Basic
|
271.5
|
|
|
271.6
|
|
||
Diluted
|
271.5
|
|
|
272.6
|
|
Three months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Comprehensive (Loss) Income
|
|
|
|
||||
Net (loss) income
|
$
|
(61
|
)
|
|
$
|
342
|
|
Other Comprehensive (Loss) Income, net of tax
|
|
|
|
||||
Changes in:
|
|
|
|
||||
Net unrealized gains and losses on investments with an allowance for credit losses
|
(11
|
)
|
|
—
|
|
||
Net unrealized gains and losses on other investments
|
(1,044
|
)
|
|
530
|
|
||
Net unrealized gains and losses on investments
|
(1,055
|
)
|
|
530
|
|
||
Foreign currency translation adjustment
|
(77
|
)
|
|
17
|
|
||
Pension and postretirement benefits
|
11
|
|
|
7
|
|
||
Other comprehensive (loss) income, net of tax
|
(1,121
|
)
|
|
554
|
|
||
Total comprehensive (loss) income
|
$
|
(1,182
|
)
|
|
$
|
896
|
|
(In millions, except share data)
|
March 31, 2020 (Unaudited)
|
|
December 31,
2019 |
||||
Assets
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed maturity securities at fair value (amortized cost of $38,034 and $38,126, less allowance for credit loss of $49 and $-)
|
$
|
40,098
|
|
|
$
|
42,207
|
|
Equity securities at fair value (cost of $936 and $820)
|
799
|
|
|
865
|
|
||
Limited partnership investments
|
1,509
|
|
|
1,752
|
|
||
Other invested assets
|
63
|
|
|
65
|
|
||
Mortgage loans (less allowance for uncollectible receivables of $20 and $-)
|
1,021
|
|
|
994
|
|
||
Short term investments
|
596
|
|
|
1,861
|
|
||
Total investments
|
44,086
|
|
|
47,744
|
|
||
Cash
|
857
|
|
|
242
|
|
||
Reinsurance receivables (less allowance for uncollectible receivables of $23 and $25)
|
4,328
|
|
|
4,179
|
|
||
Insurance receivables (less allowance for uncollectible receivables of $30 and $32)
|
2,502
|
|
|
2,449
|
|
||
Accrued investment income
|
402
|
|
|
395
|
|
||
Deferred acquisition costs
|
683
|
|
|
662
|
|
||
Deferred income taxes
|
518
|
|
|
199
|
|
||
Property and equipment at cost (less accumulated depreciation of $224 and $215)
|
271
|
|
|
282
|
|
||
Goodwill
|
145
|
|
|
147
|
|
||
Deferred non-insurance warranty acquisition expense
|
2,905
|
|
|
2,840
|
|
||
Other assets (includes $15 and $21 due from Loews Corporation)
|
1,708
|
|
|
1,473
|
|
||
Total assets
|
$
|
58,405
|
|
|
$
|
60,612
|
|
Liabilities
|
|
|
|
|
|
||
Insurance reserves:
|
|
|
|
|
|||
Claim and claim adjustment expenses
|
$
|
21,872
|
|
|
$
|
21,720
|
|
Unearned premiums
|
4,745
|
|
|
4,583
|
|
||
Future policy benefits
|
11,734
|
|
|
12,311
|
|
||
Long term debt
|
2,680
|
|
|
2,679
|
|
||
Deferred non-insurance warranty revenue
|
3,848
|
|
|
3,779
|
|
||
Other liabilities (includes $7 and $21 due to Loews Corporation)
|
3,164
|
|
|
3,325
|
|
||
Total liabilities
|
48,043
|
|
|
48,397
|
|
||
Commitments and contingencies (Notes C and F)
|
|
|
|
|
|
||
Stockholders' Equity
|
|
|
|
|
|
||
Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 271,370,988 and 271,412,591 shares outstanding)
|
683
|
|
|
683
|
|
||
Additional paid-in capital
|
2,187
|
|
|
2,203
|
|
||
Retained earnings
|
8,634
|
|
|
9,348
|
|
||
Accumulated other comprehensive (loss) income
|
(1,070
|
)
|
|
51
|
|
||
Treasury stock (1,669,255 and 1,627,652 shares), at cost
|
(72
|
)
|
|
(70
|
)
|
||
Total stockholders’ equity
|
10,362
|
|
|
12,215
|
|
||
Total liabilities and stockholders' equity
|
$
|
58,405
|
|
|
$
|
60,612
|
|
Three months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Cash Flows from Operating Activities
|
|
|
|
||||
Net (loss) income
|
$
|
(61
|
)
|
|
$
|
342
|
|
Adjustments to reconcile net (loss) income to net cash flows provided by operating activities:
|
|
|
|
||||
Deferred income tax (benefit) expense
|
(37
|
)
|
|
32
|
|
||
Trading portfolio activity
|
7
|
|
|
(3
|
)
|
||
Net investment losses (gains)
|
216
|
|
|
(31
|
)
|
||
Equity method investees
|
98
|
|
|
14
|
|
||
Net amortization of investments
|
(15
|
)
|
|
(25
|
)
|
||
Depreciation and amortization
|
16
|
|
|
19
|
|
||
Changes in:
|
|
|
|
||||
Receivables, net
|
(229
|
)
|
|
44
|
|
||
Accrued investment income
|
(8
|
)
|
|
(15
|
)
|
||
Deferred acquisition costs
|
(27
|
)
|
|
(30
|
)
|
||
Insurance reserves
|
510
|
|
|
57
|
|
||
Other, net
|
(258
|
)
|
|
(117
|
)
|
||
Net cash flows provided by operating activities
|
212
|
|
|
287
|
|
||
Cash Flows from Investing Activities
|
|
|
|
|
|
||
Dispositions:
|
|
|
|
||||
Fixed maturity securities - sales
|
823
|
|
|
2,259
|
|
||
Fixed maturity securities - maturities, calls and redemptions
|
799
|
|
|
576
|
|
||
Equity securities
|
98
|
|
|
64
|
|
||
Limited partnerships
|
204
|
|
|
186
|
|
||
Mortgage loans
|
15
|
|
|
35
|
|
||
Purchases:
|
|
|
|
||||
Fixed maturity securities
|
(1,818
|
)
|
|
(2,447
|
)
|
||
Equity securities
|
(220
|
)
|
|
(36
|
)
|
||
Limited partnerships
|
(32
|
)
|
|
(114
|
)
|
||
Mortgage loans
|
(61
|
)
|
|
(59
|
)
|
||
Change in other investments
|
(6
|
)
|
|
(6
|
)
|
||
Change in short term investments
|
1,267
|
|
|
(177
|
)
|
||
Purchases of property and equipment
|
(3
|
)
|
|
(8
|
)
|
||
Other, net
|
21
|
|
|
16
|
|
||
Net cash flows provided by investing activities
|
1,087
|
|
|
289
|
|
||
Cash Flows from Financing Activities
|
|
|
|
||||
Dividends paid to common stockholders
|
(649
|
)
|
|
(643
|
)
|
||
Purchase of treasury stock
|
(18
|
)
|
|
(14
|
)
|
||
Other, net
|
(8
|
)
|
|
(8
|
)
|
||
Net cash flows used by financing activities
|
(675
|
)
|
|
(665
|
)
|
||
Effect of foreign exchange rate changes on cash
|
(9
|
)
|
|
2
|
|
||
Net change in cash
|
615
|
|
|
(87
|
)
|
||
Cash, beginning of year
|
242
|
|
|
310
|
|
||
Cash, end of period
|
$
|
857
|
|
|
$
|
223
|
|
Three months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Common Stock
|
|
|
|
||||
Balance, beginning of period
|
$
|
683
|
|
|
$
|
683
|
|
Balance, end of period
|
683
|
|
|
683
|
|
||
Additional Paid-in Capital
|
|
|
|
||||
Balance, beginning of period
|
2,203
|
|
|
2,192
|
|
||
Stock-based compensation
|
(16
|
)
|
|
(8
|
)
|
||
Balance, end of period
|
2,187
|
|
|
2,184
|
|
||
Retained Earnings
|
|
|
|
||||
Balance, beginning of period, as previously reported
|
9,348
|
|
|
9,277
|
|
||
Cumulative effect adjustments from changes in accounting guidance, net of tax
|
(5
|
)
|
|
—
|
|
||
Balance, beginning of period, as adjusted
|
9,343
|
|
|
9,277
|
|
||
Dividends to common stockholders ($2.37 and $2.35 per share)
|
(648
|
)
|
|
(643
|
)
|
||
Net (loss) income
|
(61
|
)
|
|
342
|
|
||
Balance, end of period
|
8,634
|
|
|
8,976
|
|
||
Accumulated Other Comprehensive (Loss) Income
|
|
|
|
||||
Balance, beginning of period
|
51
|
|
|
(878
|
)
|
||
Other comprehensive (loss) income
|
(1,121
|
)
|
|
554
|
|
||
Balance, end of period
|
(1,070
|
)
|
|
(324
|
)
|
||
Treasury Stock
|
|
|
|
||||
Balance, beginning of period
|
(70
|
)
|
|
(57
|
)
|
||
Stock-based compensation
|
16
|
|
|
7
|
|
||
Purchase of treasury stock
|
(18
|
)
|
|
(14
|
)
|
||
Balance, end of period
|
(72
|
)
|
|
(64
|
)
|
||
Total stockholders' equity
|
$
|
10,362
|
|
|
$
|
11,455
|
|
Three months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Fixed maturity securities
|
$
|
438
|
|
|
$
|
455
|
|
Equity securities
|
(44
|
)
|
|
30
|
|
||
Limited partnership investments
|
(70
|
)
|
|
76
|
|
||
Mortgage loans
|
14
|
|
|
12
|
|
||
Short term investments
|
7
|
|
|
10
|
|
||
Trading portfolio
|
1
|
|
|
2
|
|
||
Other
|
—
|
|
|
2
|
|
||
Gross investment income
|
346
|
|
|
587
|
|
||
Investment expense
|
(17
|
)
|
|
(16
|
)
|
||
Net investment income
|
$
|
329
|
|
|
$
|
571
|
|
Three months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Net investment gains (losses):
|
|
|
|
||||
Fixed maturity securities:
|
|
|
|
||||
Gross gains
|
$
|
29
|
|
|
$
|
36
|
|
Gross losses
|
(104
|
)
|
|
(42
|
)
|
||
Net investment gains (losses) on fixed maturity securities
|
(75
|
)
|
|
(6
|
)
|
||
Equity securities
|
(133
|
)
|
|
42
|
|
||
Derivatives
|
5
|
|
|
(5
|
)
|
||
Mortgage loans
|
(13
|
)
|
|
—
|
|
||
Short term investments and other
|
—
|
|
|
—
|
|
||
Net investment gains (losses)
|
$
|
(216
|
)
|
|
$
|
31
|
|
Three months ended March 31
|
|
||
(in millions)
|
Corporate and other bonds
|
||
Allowance for credit losses:
|
|
||
Beginning balance
|
$
|
—
|
|
Additions to the allowance for credit losses:
|
|
||
Impact of adopting ASC 326
|
6
|
|
|
For securities for which credit losses were not previously recorded
|
48
|
|
|
For available-for-sale securities accounted for as PCD assets
|
1
|
|
|
|
|
||
Reductions to the allowance for credit losses:
|
|
||
Securities sold during the period (realized)
|
5
|
|
|
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis
|
1
|
|
|
Write-offs charged against the allowance
|
—
|
|
|
Recoveries of amounts previously written off
|
—
|
|
|
|
|
||
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period
|
—
|
|
|
Ending balance as of March 31, 2020
|
$
|
49
|
|
Three Months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Fixed maturity securities available-for-sale:
|
|
|
|
||||
Corporate and other bonds
|
$
|
91
|
|
|
$
|
6
|
|
Asset-backed
|
1
|
|
|
8
|
|
||
Impairment losses recognized in earnings
|
$
|
92
|
|
|
$
|
14
|
|
March 31, 2020
|
Cost or
Amortized Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Allowance for Credit Losses(1)
|
|
Estimated
Fair Value |
||||||||||
(In millions)
|
|
|
|
|
|||||||||||||||
Fixed maturity securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate and other bonds
|
$
|
20,181
|
|
|
$
|
1,419
|
|
|
$
|
817
|
|
|
$
|
49
|
|
|
$
|
20,734
|
|
States, municipalities and political subdivisions
|
8,957
|
|
|
1,536
|
|
|
2
|
|
|
—
|
|
|
10,491
|
|
|||||
Asset-backed:
|
|
|
|
|
|
|
|
|
|
||||||||||
Residential mortgage-backed
|
4,198
|
|
|
207
|
|
|
8
|
|
|
—
|
|
|
4,397
|
|
|||||
Commercial mortgage-backed
|
2,207
|
|
|
36
|
|
|
153
|
|
|
—
|
|
|
2,090
|
|
|||||
Other asset-backed
|
1,868
|
|
|
9
|
|
|
133
|
|
|
—
|
|
|
1,744
|
|
|||||
Total asset-backed
|
8,273
|
|
|
252
|
|
|
294
|
|
|
—
|
|
|
8,231
|
|
|||||
U.S. Treasury and obligations of government-sponsored enterprises
|
147
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
155
|
|
|||||
Foreign government
|
452
|
|
|
15
|
|
|
4
|
|
|
—
|
|
|
463
|
|
|||||
Redeemable preferred stock
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|||||
Total fixed maturity securities available-for-sale
|
38,019
|
|
|
3,230
|
|
|
1,117
|
|
|
49
|
|
|
40,083
|
|
|||||
Total fixed maturity securities trading
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||
Total fixed maturity securities
|
$
|
38,034
|
|
|
$
|
3,230
|
|
|
$
|
1,117
|
|
|
$
|
49
|
|
|
$
|
40,098
|
|
December 31, 2019
|
Cost or
Amortized Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Estimated
Fair Value |
|
Unrealized
OTTI Losses (Gains) |
||||||||||
(In millions)
|
|
|
|
|
|||||||||||||||
Fixed maturity securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate and other bonds
|
$
|
19,789
|
|
|
$
|
2,292
|
|
|
$
|
32
|
|
|
$
|
22,049
|
|
|
$
|
—
|
|
States, municipalities and political subdivisions
|
9,093
|
|
|
1,559
|
|
|
—
|
|
|
10,652
|
|
|
—
|
|
|||||
Asset-backed:
|
|
|
|
|
|
|
|
|
|
||||||||||
Residential mortgage-backed
|
4,387
|
|
|
133
|
|
|
1
|
|
|
4,519
|
|
|
(17
|
)
|
|||||
Commercial mortgage-backed
|
2,265
|
|
|
86
|
|
|
5
|
|
|
2,346
|
|
|
1
|
|
|||||
Other asset-backed
|
1,925
|
|
|
41
|
|
|
4
|
|
|
1,962
|
|
|
(3
|
)
|
|||||
Total asset-backed
|
8,577
|
|
|
260
|
|
|
10
|
|
|
8,827
|
|
|
(19
|
)
|
|||||
U.S. Treasury and obligations of government-sponsored enterprises
|
146
|
|
|
1
|
|
|
2
|
|
|
145
|
|
|
—
|
|
|||||
Foreign government
|
491
|
|
|
14
|
|
|
1
|
|
|
504
|
|
|
—
|
|
|||||
Redeemable preferred stock
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|||||
Total fixed maturity securities available-for-sale
|
38,106
|
|
|
4,126
|
|
|
45
|
|
|
42,187
|
|
|
$
|
(19
|
)
|
||||
Total fixed maturity securities trading
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
|
||||||
Total fixed maturity securities
|
$
|
38,126
|
|
|
$
|
4,126
|
|
|
$
|
45
|
|
|
$
|
42,207
|
|
|
|
|
Less than 12 Months
|
|
12 Months or Longer
|
|
Total
|
||||||||||||||||||
March 31, 2020
|
Estimated
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
(In millions)
|
|
|
|
|
|
||||||||||||||||||
Fixed maturity securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate and other bonds
|
$
|
7,036
|
|
|
$
|
804
|
|
|
$
|
44
|
|
|
$
|
13
|
|
|
$
|
7,080
|
|
|
$
|
817
|
|
States, municipalities and political subdivisions
|
82
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
82
|
|
|
2
|
|
||||||
Asset-backed:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential mortgage-backed
|
166
|
|
|
7
|
|
|
22
|
|
|
1
|
|
|
188
|
|
|
8
|
|
||||||
Commercial mortgage-backed
|
1,185
|
|
|
151
|
|
|
12
|
|
|
2
|
|
|
1,197
|
|
|
153
|
|
||||||
Other asset-backed
|
1,510
|
|
|
131
|
|
|
9
|
|
|
2
|
|
|
1,519
|
|
|
133
|
|
||||||
Total asset-backed
|
2,861
|
|
|
289
|
|
|
43
|
|
|
5
|
|
|
2,904
|
|
|
294
|
|
||||||
U.S. Treasury and obligations of government-sponsored enterprises
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||||
Foreign government
|
76
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
76
|
|
|
4
|
|
||||||
Redeemable preferred stock
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
||||||
Total
|
$
|
10,066
|
|
|
$
|
1,099
|
|
|
$
|
87
|
|
|
$
|
18
|
|
|
$
|
10,153
|
|
|
$
|
1,117
|
|
|
Less than 12 Months
|
|
12 Months or Longer
|
|
Total
|
||||||||||||||||||
December 31, 2019
|
Estimated
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
(In millions)
|
|
|
|
|
|
||||||||||||||||||
Fixed maturity securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate and other bonds
|
$
|
914
|
|
|
$
|
21
|
|
|
$
|
186
|
|
|
$
|
11
|
|
|
$
|
1,100
|
|
|
$
|
32
|
|
States, municipalities and political subdivisions
|
34
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
—
|
|
||||||
Asset-backed:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential mortgage-backed
|
249
|
|
|
1
|
|
|
30
|
|
|
—
|
|
|
279
|
|
|
1
|
|
||||||
Commercial mortgage-backed
|
381
|
|
|
3
|
|
|
20
|
|
|
2
|
|
|
401
|
|
|
5
|
|
||||||
Other asset-backed
|
449
|
|
|
3
|
|
|
33
|
|
|
1
|
|
|
482
|
|
|
4
|
|
||||||
Total asset-backed
|
1,079
|
|
|
7
|
|
|
83
|
|
|
3
|
|
|
1,162
|
|
|
10
|
|
||||||
U.S. Treasury and obligations of government-sponsored enterprises
|
62
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
64
|
|
|
2
|
|
||||||
Foreign government
|
59
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
60
|
|
|
1
|
|
||||||
Total
|
$
|
2,148
|
|
|
$
|
31
|
|
|
$
|
272
|
|
|
$
|
14
|
|
|
$
|
2,420
|
|
|
$
|
45
|
|
March 31, 2020
|
Estimated
Fair Value |
|
Gross
Unrealized Losses |
||||
(In millions)
|
|||||||
Corporate and other bonds:
|
|
|
|
||||
Basic Materials
|
$
|
727
|
|
|
$
|
78
|
|
Communications
|
349
|
|
|
27
|
|
||
Consumer, cyclical - Other
|
390
|
|
|
56
|
|
||
Consumer, non-cyclical - Other
|
401
|
|
|
27
|
|
||
Energy - Oil & Gas
|
575
|
|
|
191
|
|
||
Energy - Pipelines
|
523
|
|
|
112
|
|
||
Entertainment
|
148
|
|
|
23
|
|
||
Financial - Other
|
1,711
|
|
|
89
|
|
||
Financial - Real Estate/REITS
|
599
|
|
|
45
|
|
||
Industrial
|
468
|
|
|
55
|
|
||
Retail
|
150
|
|
|
18
|
|
||
Technology
|
290
|
|
|
30
|
|
||
Transportation
|
73
|
|
|
5
|
|
||
Travel & Related
|
269
|
|
|
37
|
|
||
Utilities
|
407
|
|
|
24
|
|
||
Total Corporate and other bonds
|
$
|
7,080
|
|
|
$
|
817
|
|
March 31, 2020
|
Estimated
Fair Value |
|
Gross
Unrealized Losses |
||||
(In millions)
|
|
||||||
Corporate and other bonds:
|
|
|
|
||||
AAA
|
$
|
8
|
|
|
$
|
—
|
|
AA
|
134
|
|
|
4
|
|
||
A
|
608
|
|
|
17
|
|
||
BBB
|
4,987
|
|
|
516
|
|
||
Below investment grade
|
1,343
|
|
|
280
|
|
||
Total Corporate and other bonds
|
$
|
7,080
|
|
|
$
|
817
|
|
March 31, 2020
|
Estimated
Fair Value |
|
Gross
Unrealized Losses |
||||
(In millions)
|
|
||||||
Commercial mortgage-backed:
|
|
|
|
||||
Conduits (multi property, multi borrower pools)
|
$
|
211
|
|
|
$
|
11
|
|
Single asset, single borrower
|
986
|
|
|
142
|
|
||
Total Commercial mortgage-backed
|
$
|
1,197
|
|
|
$
|
153
|
|
March 31, 2020
|
Estimated
Fair Value |
|
Gross
Unrealized Losses |
||||
(In millions)
|
|
||||||
Commercial mortgage-backed:
|
|
|
|
||||
US Government, Government agencies and Government sponsored enterprises
|
$
|
1
|
|
|
$
|
—
|
|
AAA
|
60
|
|
|
1
|
|
||
AA
|
245
|
|
|
17
|
|
||
A
|
214
|
|
|
22
|
|
||
BBB
|
484
|
|
|
78
|
|
||
Below investment grade
|
193
|
|
|
35
|
|
||
Total Commercial mortgage-backed
|
$
|
1,197
|
|
|
$
|
153
|
|
March 31, 2020
|
Estimated
Fair Value |
|
Gross
Unrealized Losses |
||||
(In millions)
|
|
||||||
Other asset-backed:
|
|
|
|
||||
Auto
|
$
|
290
|
|
|
$
|
6
|
|
Collateralized loan obligations
|
418
|
|
|
60
|
|
||
Franchise
|
414
|
|
|
39
|
|
||
Other
|
397
|
|
|
28
|
|
||
Total Other asset-backed
|
$
|
1,519
|
|
|
$
|
133
|
|
March 31, 2020
|
Estimated
Fair Value |
|
Gross
Unrealized Losses |
||||
(In millions)
|
|
||||||
Other asset-backed:
|
|
|
|
||||
AAA
|
$
|
49
|
|
|
$
|
1
|
|
AA
|
83
|
|
|
2
|
|
||
A
|
821
|
|
|
74
|
|
||
BBB
|
566
|
|
|
56
|
|
||
Below investment grade
|
—
|
|
|
—
|
|
||
Total Other asset-backed
|
$
|
1,519
|
|
|
$
|
133
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
(In millions)
|
Cost or
Amortized
Cost
|
|
Estimated
Fair
Value
|
|
Cost or
Amortized
Cost
|
|
Estimated
Fair
Value
|
||||||||
Due in one year or less
|
$
|
1,331
|
|
|
$
|
1,325
|
|
|
$
|
1,334
|
|
|
$
|
1,356
|
|
Due after one year through five years
|
11,554
|
|
|
11,812
|
|
|
9,746
|
|
|
10,186
|
|
||||
Due after five years through ten years
|
13,078
|
|
|
13,069
|
|
|
14,892
|
|
|
15,931
|
|
||||
Due after ten years
|
12,056
|
|
|
13,877
|
|
|
12,134
|
|
|
14,714
|
|
||||
Total
|
$
|
38,019
|
|
|
$
|
40,083
|
|
|
$
|
38,106
|
|
|
$
|
42,187
|
|
|
Mortgage Loans Amortized Cost Basis by Origination Year (1)
|
||||||||||||||||||||||||||
As of March 31, 2020
|
2020
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
Prior
|
|
Total
|
||||||||||||||
DSCR ≥1.6x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
LTV less than 55%
|
$
|
60
|
|
|
$
|
32
|
|
|
$
|
19
|
|
|
$
|
92
|
|
|
$
|
41
|
|
|
$
|
130
|
|
|
$
|
374
|
|
LTV 55% to 65%
|
—
|
|
|
32
|
|
|
29
|
|
|
55
|
|
|
4
|
|
|
—
|
|
|
120
|
|
|||||||
LTV greater than 65%
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||||
DSCR 1.2x - 1.6x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
LTV less than 55%
|
—
|
|
|
33
|
|
|
10
|
|
|
13
|
|
|
16
|
|
|
126
|
|
|
198
|
|
|||||||
LTV 55% to 65%
|
—
|
|
|
73
|
|
|
32
|
|
|
32
|
|
|
—
|
|
|
—
|
|
|
137
|
|
|||||||
LTV greater than 65%
|
—
|
|
|
85
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
85
|
|
|||||||
DSCR ≤1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
LTV less than 55%
|
—
|
|
|
1
|
|
|
11
|
|
|
27
|
|
|
—
|
|
|
9
|
|
|
48
|
|
|||||||
LTV 55% to 65%
|
—
|
|
|
14
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|||||||
LTV greater than 65%
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
46
|
|
|||||||
Total
|
$
|
60
|
|
|
$
|
297
|
|
|
$
|
115
|
|
|
$
|
219
|
|
|
$
|
85
|
|
|
$
|
265
|
|
|
$
|
1,041
|
|
(1)
|
The values in the table above reflect DSCR on a standardized amortization period and LTV based on the most recent appraised values trended forward using changes in a commercial real estate price index.
|
March 31, 2020
|
|
|
|
|
|
|
Total
Assets/Liabilities
at Fair Value
|
||||||||
(In millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds and other
|
$
|
175
|
|
|
$
|
20,705
|
|
|
$
|
496
|
|
|
$
|
21,376
|
|
States, municipalities and political subdivisions
|
—
|
|
|
10,491
|
|
|
—
|
|
|
10,491
|
|
||||
Asset-backed
|
—
|
|
|
8,034
|
|
|
197
|
|
|
8,231
|
|
||||
Total fixed maturity securities
|
175
|
|
|
39,230
|
|
|
693
|
|
|
40,098
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Common stock
|
187
|
|
|
—
|
|
|
4
|
|
|
191
|
|
||||
Non-redeemable preferred stock
|
59
|
|
|
538
|
|
|
11
|
|
|
608
|
|
||||
Total equity securities
|
246
|
|
|
538
|
|
|
15
|
|
|
799
|
|
||||
Short term and other
|
135
|
|
|
365
|
|
|
—
|
|
|
500
|
|
||||
Total assets
|
$
|
556
|
|
|
$
|
40,133
|
|
|
$
|
708
|
|
|
$
|
41,397
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||
Other liabilities
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
December 31, 2019
|
|
|
|
|
|
|
Total
Assets/Liabilities
at Fair Value
|
||||||||
(In millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds and other
|
$
|
175
|
|
|
$
|
22,085
|
|
|
$
|
468
|
|
|
$
|
22,728
|
|
States, municipalities and political subdivisions
|
—
|
|
|
10,652
|
|
|
—
|
|
|
10,652
|
|
||||
Asset-backed
|
—
|
|
|
8,662
|
|
|
165
|
|
|
8,827
|
|
||||
Total fixed maturity securities
|
175
|
|
|
41,399
|
|
|
633
|
|
|
42,207
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Common stock
|
135
|
|
|
—
|
|
|
7
|
|
|
142
|
|
||||
Non-redeemable preferred stock
|
54
|
|
|
658
|
|
|
11
|
|
|
723
|
|
||||
Total equity securities
|
189
|
|
|
658
|
|
|
18
|
|
|
865
|
|
||||
Short term and other
|
397
|
|
|
1,344
|
|
|
—
|
|
|
1,741
|
|
||||
Total assets
|
$
|
761
|
|
|
$
|
43,401
|
|
|
$
|
651
|
|
|
$
|
44,813
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||
Other liabilities
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
7
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
7
|
|
Level 3
(In millions)
|
Corporate bonds and other
|
|
States, municipalities and political subdivisions
|
|
Asset-backed
|
|
Equity securities
|
|
Total
|
||||||||||
Balance as of January 1, 2020
|
$
|
468
|
|
|
$
|
—
|
|
|
$
|
165
|
|
|
$
|
18
|
|
|
$
|
651
|
|
Total realized and unrealized investment gains (losses):
|
|
|
|
|
|
|
|
|
|
||||||||||
Reported in Net investment gains (losses)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Reported in Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|||||
Reported in Other comprehensive income (loss)
|
(37
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(46
|
)
|
|||||
Total realized and unrealized investment gains (losses)
|
(37
|
)
|
|
—
|
|
|
(9
|
)
|
|
(3
|
)
|
|
(49
|
)
|
|||||
Purchases
|
67
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
112
|
|
|||||
Sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Settlements
|
(2
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(5
|
)
|
|||||
Transfers into Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Balance as of March 31, 2020
|
$
|
496
|
|
|
$
|
—
|
|
|
$
|
197
|
|
|
$
|
15
|
|
|
$
|
708
|
|
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2020 recognized in Net income (loss) in the period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
(3
|
)
|
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2020 recognized in Other comprehensive income (loss) in the period
|
(35
|
)
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(44
|
)
|
Level 3
(In millions)
|
Corporate bonds and other
|
|
States, municipalities and political subdivisions
|
|
Asset-backed
|
|
Equity securities
|
|
Total
|
||||||||||
Balance as of January 1, 2019
|
$
|
222
|
|
|
$
|
—
|
|
|
$
|
197
|
|
|
$
|
18
|
|
|
$
|
437
|
|
Total realized and unrealized investment gains (losses):
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Reported in Net investment gains (losses)
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|||||
Reported in Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Reported in Other comprehensive income (loss)
|
8
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
11
|
|
|||||
Total realized and unrealized investment gains (losses)
|
8
|
|
|
—
|
|
|
3
|
|
|
2
|
|
|
13
|
|
|||||
Purchases
|
56
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
76
|
|
|||||
Sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Settlements
|
(2
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(6
|
)
|
|||||
Transfers into Level 3
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||
Transfers out of Level 3
|
(31
|
)
|
|
—
|
|
|
(37
|
)
|
|
—
|
|
|
(68
|
)
|
|||||
Balance as of March 31, 2019
|
$
|
253
|
|
|
$
|
—
|
|
|
$
|
184
|
|
|
$
|
20
|
|
|
$
|
457
|
|
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2019 recognized in Net income (loss) in the period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2019 recognized in Other comprehensive income (loss) in the period
|
7
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
10
|
|
March 31, 2020
|
Estimated Fair Value
(In millions)
|
|
Valuation Technique(s)
|
|
Unobservable Input(s)
|
|
Range
(Weighted Average)
|
||
Fixed maturity securities
|
$
|
583
|
|
|
Discounted cash flow
|
|
Credit spread
|
|
1% - 10% (4%)
|
December 31, 2019
|
Estimated Fair Value
(In millions) |
|
Valuation Technique(s)
|
|
Unobservable Input(s)
|
|
Range
(Weighted Average)
|
||
Fixed maturity securities
|
$
|
525
|
|
|
Discounted cash flow
|
|
Credit spread
|
|
1% - 6% (2%)
|
March 31, 2020
|
Carrying
Amount
|
|
Estimated Fair Value
|
||||||||||||||||
(In millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage loans
|
$
|
1,021
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,036
|
|
|
$
|
1,036
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Long term debt
|
$
|
2,680
|
|
|
$
|
—
|
|
|
$
|
2,730
|
|
|
$
|
—
|
|
|
$
|
2,730
|
|
December 31, 2019
|
Carrying
Amount |
|
Estimated Fair Value
|
||||||||||||||||
(In millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage loans
|
$
|
994
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,025
|
|
|
$
|
1,025
|
|
Note receivable
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
21
|
|
|||||
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Long term debt
|
$
|
2,679
|
|
|
$
|
—
|
|
|
$
|
2,906
|
|
|
$
|
—
|
|
|
$
|
2,906
|
|
For the three months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Reserves, beginning of year:
|
|
|
|
||||
Gross
|
$
|
21,720
|
|
|
$
|
21,984
|
|
Ceded
|
3,835
|
|
|
4,019
|
|
||
Net reserves, beginning of year
|
17,885
|
|
|
17,965
|
|
||
Net incurred claim and claim adjustment expenses:
|
|
|
|
||||
Provision for insured events of current year
|
1,355
|
|
|
1,309
|
|
||
Increase (decrease) in provision for insured events of prior years
|
(8
|
)
|
|
8
|
|
||
Amortization of discount
|
51
|
|
|
50
|
|
||
Total net incurred (1)
|
1,398
|
|
|
1,367
|
|
||
Net payments attributable to:
|
|
|
|
||||
Current year events
|
(72
|
)
|
|
(100
|
)
|
||
Prior year events
|
(1,218
|
)
|
|
(1,309
|
)
|
||
Total net payments
|
(1,290
|
)
|
|
(1,409
|
)
|
||
Foreign currency translation adjustment and other
|
(88
|
)
|
|
13
|
|
||
Net reserves, end of period
|
17,905
|
|
|
17,936
|
|
||
Ceded reserves, end of period
|
3,967
|
|
|
3,900
|
|
||
Gross reserves, end of period
|
$
|
21,872
|
|
|
$
|
21,836
|
|
(1)
|
Total net incurred above does not agree to Insurance claims and policyholders' benefits as reflected on the Condensed Consolidated Statements of Operations due to amounts related to retroactive reinsurance deferred gain accounting, uncollectible reinsurance and benefit expenses related to future policy benefits, which are not reflected in the table above.
|
Three months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Pretax (favorable) unfavorable development:
|
|
|
|
||||
Specialty
|
$
|
(11
|
)
|
|
$
|
(20
|
)
|
Commercial
|
(4
|
)
|
|
(8
|
)
|
||
International
|
—
|
|
|
14
|
|
||
Corporate & Other
|
—
|
|
|
—
|
|
||
Total pretax (favorable) unfavorable development
|
$
|
(15
|
)
|
|
$
|
(14
|
)
|
Three months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Pretax (favorable) unfavorable development:
|
|
|
|
||||
Medical Professional Liability
|
$
|
10
|
|
|
$
|
15
|
|
Other Professional Liability and Management Liability
|
3
|
|
|
(12
|
)
|
||
Surety
|
(30
|
)
|
|
(25
|
)
|
||
Warranty
|
—
|
|
|
—
|
|
||
Other
|
6
|
|
|
2
|
|
||
Total pretax (favorable) unfavorable development
|
$
|
(11
|
)
|
|
$
|
(20
|
)
|
Three months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Pretax (favorable) unfavorable development:
|
|
|
|
||||
Commercial Auto
|
$
|
9
|
|
|
$
|
(5
|
)
|
General Liability
|
—
|
|
|
(20
|
)
|
||
Workers' Compensation
|
(13
|
)
|
|
2
|
|
||
Property and Other
|
—
|
|
|
15
|
|
||
Total pretax (favorable) unfavorable development
|
$
|
(4
|
)
|
|
$
|
(8
|
)
|
Three months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Pretax (favorable) unfavorable development:
|
|
|
|
||||
Casualty
|
$
|
—
|
|
|
$
|
—
|
|
Property, Energy and Marine(1)
|
—
|
|
|
14
|
|
||
Specialty
|
—
|
|
|
—
|
|
||
Total pretax (favorable) unfavorable development
|
$
|
—
|
|
|
$
|
14
|
|
(1)
|
Effective January 1, 2020 the Property and Energy and Marine lines of business have been combined in the International segment. Prior period information has been conformed to the new line of business presentation.
|
Three months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Net periodic pension cost (benefit)
|
|
|
|
||||
Interest cost on projected benefit obligation
|
$
|
20
|
|
|
$
|
25
|
|
Expected return on plan assets
|
(39
|
)
|
|
(36
|
)
|
||
Amortization of net actuarial (gain) loss
|
11
|
|
|
10
|
|
||
Settlement loss
|
1
|
|
|
—
|
|
||
Total net periodic pension cost (benefit)
|
$
|
(7
|
)
|
|
$
|
(1
|
)
|
(In millions)
|
Net unrealized gains (losses) on investments with an allowance for credit losses(1)
|
|
Net unrealized gains (losses) on other investments(1)
|
|
Pension and postretirement benefits
|
|
Cumulative foreign currency translation adjustment
|
|
Total
|
||||||||||
Balance as of January 1, 2020
|
$
|
—
|
|
|
$
|
1,025
|
|
|
$
|
(833
|
)
|
|
$
|
(141
|
)
|
|
$
|
51
|
|
Other comprehensive income (loss) before reclassifications
|
(48
|
)
|
|
(1,066
|
)
|
|
1
|
|
|
(77
|
)
|
|
(1,190
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $10, $6, $3, $- and $19
|
(37
|
)
|
|
(22
|
)
|
|
(10
|
)
|
|
—
|
|
|
(69
|
)
|
|||||
Other comprehensive income (loss) net of tax (expense) benefit of $3, $281, $(3), $- and $281
|
(11
|
)
|
|
(1,044
|
)
|
|
11
|
|
|
(77
|
)
|
|
(1,121
|
)
|
|||||
Balance as of March 31, 2020
|
$
|
(11
|
)
|
|
$
|
(19
|
)
|
|
$
|
(822
|
)
|
|
$
|
(218
|
)
|
|
$
|
(1,070
|
)
|
(1)
|
As of January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The Net unrealized gains (losses) on investments with OTTI losses column that tracked the change in unrealized gains (losses) on investments with OTTI losses has been replaced with the Net unrealized gains (losses) on investments with an allowance for credit losses column. The balance as of January 1, 2020 in the Net unrealized gains (losses) on investments with OTTI losses column is now reported in the Net unrealized gains (losses) on other investments column.
|
(In millions)
|
Net unrealized gains (losses) on investments with OTTI losses
|
|
Net unrealized gains (losses) on other investments
|
|
Pension and postretirement benefits
|
|
Cumulative foreign currency translation adjustment
|
|
Total
|
||||||||||
Balance as of January 1, 2019
|
$
|
16
|
|
|
$
|
61
|
|
|
$
|
(775
|
)
|
|
$
|
(180
|
)
|
|
$
|
(878
|
)
|
Other comprehensive income (loss) before reclassifications
|
4
|
|
|
521
|
|
|
(1
|
)
|
|
17
|
|
|
541
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $-, $1, $2, $- and $3
|
—
|
|
|
(5
|
)
|
|
(8
|
)
|
|
—
|
|
|
(13
|
)
|
|||||
Other comprehensive income (loss) net of tax (expense) benefit of $(1), $(141), $(2), $- and $(144)
|
4
|
|
|
526
|
|
|
7
|
|
|
17
|
|
|
554
|
|
|||||
Balance as of March 31, 2019
|
$
|
20
|
|
|
$
|
587
|
|
|
$
|
(768
|
)
|
|
$
|
(163
|
)
|
|
$
|
(324
|
)
|
Component of AOCI
|
|
Condensed Consolidated Statements of Operations Line Item Affected by Reclassifications
|
Net unrealized gains (losses) on investments with an allowance for credit losses, Net unrealized gains (losses) on investments with OTTI losses and Net unrealized gains (losses) on other investments
|
|
Net investment gains (losses)
|
Pension and postretirement benefits
|
|
Other operating expenses and Insurance claims and policyholders' benefits
|
Three months ended March 31, 2020
|
Specialty
|
|
Commercial
|
|
International
|
|
Life &
Group
|
|
Corporate
& Other
|
|
|
|
|
||||||||||||||
(In millions)
|
|
|
|
|
|
Eliminations
|
|
Total
|
|||||||||||||||||||
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net earned premiums
|
$
|
685
|
|
|
$
|
818
|
|
|
$
|
239
|
|
|
$
|
127
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,869
|
|
Net investment income
|
56
|
|
|
47
|
|
|
15
|
|
|
208
|
|
|
3
|
|
|
—
|
|
|
329
|
|
|||||||
Non-insurance warranty revenue
|
301
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
301
|
|
|||||||
Other revenues
|
1
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
(2
|
)
|
|
8
|
|
|||||||
Total operating revenues
|
1,043
|
|
|
872
|
|
|
254
|
|
|
335
|
|
|
5
|
|
|
(2
|
)
|
|
2,507
|
|
|||||||
Claims, benefits and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net incurred claims and benefits
|
405
|
|
|
558
|
|
|
154
|
|
|
316
|
|
|
(14
|
)
|
|
—
|
|
|
1,419
|
|
|||||||
Policyholders’ dividends
|
1
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|||||||
Amortization of deferred acquisition costs
|
151
|
|
|
144
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
344
|
|
|||||||
Non-insurance warranty expense
|
281
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
281
|
|
|||||||
Other insurance related expenses
|
69
|
|
|
127
|
|
|
36
|
|
|
26
|
|
|
—
|
|
|
—
|
|
|
258
|
|
|||||||
Other expenses
|
13
|
|
|
6
|
|
|
13
|
|
|
3
|
|
|
39
|
|
|
(2
|
)
|
|
72
|
|
|||||||
Total claims, benefits and expenses
|
920
|
|
|
840
|
|
|
252
|
|
|
345
|
|
|
25
|
|
|
(2
|
)
|
|
2,380
|
|
|||||||
Core income (loss) before income tax
|
123
|
|
|
32
|
|
|
2
|
|
|
(10
|
)
|
|
(20
|
)
|
|
—
|
|
|
127
|
|
|||||||
Income tax (expense) benefit on core income (loss)
|
(27
|
)
|
|
(8
|
)
|
|
—
|
|
|
14
|
|
|
2
|
|
|
—
|
|
|
(19
|
)
|
|||||||
Core income (loss)
|
$
|
96
|
|
|
$
|
24
|
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
(18
|
)
|
|
$
|
—
|
|
|
108
|
|
|
Net investment gains (losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
(216
|
)
|
|||||||||||||
Income tax (expense) benefit on net investment gains (losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
47
|
|
|||||||||||||
Net investment gains (losses), after tax
|
|
|
|
|
|
|
|
|
|
|
|
|
(169
|
)
|
|||||||||||||
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(61
|
)
|
March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Reinsurance receivables
|
$
|
793
|
|
|
$
|
883
|
|
|
$
|
233
|
|
|
$
|
370
|
|
|
$
|
2,072
|
|
|
$
|
—
|
|
|
$
|
4,351
|
|
Insurance receivables
|
953
|
|
|
1,267
|
|
|
302
|
|
|
8
|
|
|
2
|
|
|
—
|
|
|
2,532
|
|
|||||||
Deferred acquisition costs
|
316
|
|
|
277
|
|
|
90
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
683
|
|
|||||||
Goodwill
|
117
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
145
|
|
|||||||
Deferred non-insurance warranty acquisition expense
|
2,905
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,905
|
|
|||||||
Insurance reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Claim and claim adjustment expenses
|
5,472
|
|
|
8,704
|
|
|
1,818
|
|
|
3,712
|
|
|
2,166
|
|
|
—
|
|
|
21,872
|
|
|||||||
Unearned premiums
|
2,363
|
|
|
1,751
|
|
|
495
|
|
|
137
|
|
|
—
|
|
|
(1
|
)
|
|
4,745
|
|
|||||||
Future policy benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
11,734
|
|
|
—
|
|
|
—
|
|
|
11,734
|
|
|||||||
Deferred non-insurance warranty revenue
|
3,848
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,848
|
|
Three months ended March 31, 2019
|
Specialty
|
|
Commercial
|
|
International
|
|
Life &
Group
|
|
Corporate
& Other
|
|
|
|
|
||||||||||||||
(In millions)
|
|
|
|
|
Eliminations
|
|
Total
|
||||||||||||||||||||
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net earned premiums
|
$
|
661
|
|
|
$
|
763
|
|
|
$
|
250
|
|
|
$
|
130
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
1,803
|
|
Net investment income
|
155
|
|
|
190
|
|
|
15
|
|
|
204
|
|
|
7
|
|
|
—
|
|
|
571
|
|
|||||||
Non-insurance warranty revenue
|
281
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
281
|
|
|||||||
Other revenues
|
1
|
|
|
7
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|
(2
|
)
|
|
9
|
|
|||||||
Total operating revenues
|
1,098
|
|
|
960
|
|
|
265
|
|
|
335
|
|
|
9
|
|
|
(3
|
)
|
|
2,664
|
|
|||||||
Claims, benefits and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net incurred claims and benefits
|
392
|
|
|
510
|
|
|
162
|
|
|
308
|
|
|
(21
|
)
|
|
—
|
|
|
1,351
|
|
|||||||
Policyholders’ dividends
|
1
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|||||||
Amortization of deferred acquisition costs
|
147
|
|
|
127
|
|
|
68
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
342
|
|
|||||||
Non-insurance warranty expense
|
260
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
260
|
|
|||||||
Other insurance related expenses
|
70
|
|
|
130
|
|
|
25
|
|
|
28
|
|
|
(1
|
)
|
|
(1
|
)
|
|
251
|
|
|||||||
Other expenses
|
12
|
|
|
11
|
|
|
4
|
|
|
2
|
|
|
39
|
|
|
(2
|
)
|
|
66
|
|
|||||||
Total claims, benefits and expenses
|
882
|
|
|
783
|
|
|
259
|
|
|
338
|
|
|
17
|
|
|
(3
|
)
|
|
2,276
|
|
|||||||
Core income (loss) before income tax
|
216
|
|
|
177
|
|
|
6
|
|
|
(3
|
)
|
|
(8
|
)
|
|
—
|
|
|
388
|
|
|||||||
Income tax (expense) benefit on core income (loss)
|
(47
|
)
|
|
(38
|
)
|
|
—
|
|
|
13
|
|
|
2
|
|
|
—
|
|
|
(70
|
)
|
|||||||
Core income (loss)
|
$
|
169
|
|
|
$
|
139
|
|
|
$
|
6
|
|
|
$
|
10
|
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
318
|
|
|
Net investment gains (losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
31
|
|
|||||||||||||
Income tax (expense) benefit on net investment gains (losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
(7
|
)
|
|||||||||||||
Net investment gains (losses), after tax
|
|
|
|
|
|
|
|
|
|
|
|
|
24
|
|
|||||||||||||
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
342
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Reinsurance receivables
|
$
|
575
|
|
|
$
|
855
|
|
|
$
|
247
|
|
|
$
|
385
|
|
|
$
|
2,142
|
|
|
$
|
—
|
|
|
$
|
4,204
|
|
Insurance receivables
|
971
|
|
|
1,210
|
|
|
284
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
2,481
|
|
|||||||
Deferred acquisition costs
|
311
|
|
|
257
|
|
|
94
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
662
|
|
|||||||
Goodwill
|
117
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
147
|
|
|||||||
Deferred non-insurance warranty acquisition expense
|
2,840
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,840
|
|
|||||||
Insurance reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Claim and claim adjustment expenses
|
5,238
|
|
|
8,656
|
|
|
1,876
|
|
|
3,716
|
|
|
2,234
|
|
|
—
|
|
|
21,720
|
|
|||||||
Unearned premiums
|
2,337
|
|
|
1,626
|
|
|
495
|
|
|
125
|
|
|
—
|
|
|
—
|
|
|
4,583
|
|
|||||||
Future policy benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
12,311
|
|
|
—
|
|
|
—
|
|
|
12,311
|
|
|||||||
Deferred non-insurance warranty revenue
|
3,779
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,779
|
|
Three months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Specialty
|
|
|
|
||||
Management & Professional Liability
|
$
|
568
|
|
|
$
|
636
|
|
Surety
|
138
|
|
|
139
|
|
||
Warranty & Alternative Risks
|
337
|
|
|
323
|
|
||
Specialty revenues
|
1,043
|
|
|
1,098
|
|
||
Commercial
|
|
|
|
|
|||
Middle Market
|
335
|
|
|
357
|
|
||
Construction (1)
|
250
|
|
|
248
|
|
||
Small Business
|
112
|
|
|
131
|
|
||
Other Commercial
|
175
|
|
|
224
|
|
||
Commercial revenues
|
872
|
|
|
960
|
|
||
International
|
|
|
|
|
|
||
Canada
|
73
|
|
|
66
|
|
||
Europe
|
92
|
|
|
91
|
|
||
Hardy
|
89
|
|
|
108
|
|
||
International revenues
|
254
|
|
|
265
|
|
||
Life & Group revenues
|
335
|
|
|
335
|
|
||
Corporate & Other revenues
|
5
|
|
|
9
|
|
||
Eliminations
|
(2
|
)
|
|
(3
|
)
|
||
Total operating revenues
|
2,507
|
|
|
2,664
|
|
||
Net investment gains (losses)
|
(216
|
)
|
|
31
|
|
||
Total revenues
|
$
|
2,291
|
|
|
$
|
2,695
|
|
(1)
|
Effective January 1, 2020, the Construction line of business is presented separately in the Commercial segment to better align with our underwriting expertise and the manner in which the products are sold. Prior period information has been conformed to the new line of business presentation.
|
(In millions)
|
March 31, 2020
|
||
A- to A++
|
$
|
2,662
|
|
B- to B++
|
859
|
|
|
Insolvent
|
4
|
|
|
Total voluntary reinsurance outstanding balance(1)
|
$
|
3,525
|
|
(1)
|
Expected credit losses for legacy A&EP receivables are ceded to NICO and the reinsurance limit on the LPT has not been exhausted, therefore no allowance is recorded for these receivables and they are excluded from the table above. Refer to Note E for information regarding the LPT. The Company has also excluded receivables from involuntary pools.
|
•
|
Insurance Reserves
|
•
|
Long Term Care Reserves
|
•
|
Reinsurance and Insurance Receivables
|
•
|
Valuation of Investments and Impairment of Securities
|
•
|
Income Taxes
|
Three months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Operating Revenues
|
|
|
|
||||
Net earned premiums
|
$
|
1,869
|
|
|
$
|
1,803
|
|
Net investment income
|
329
|
|
|
571
|
|
||
Non-insurance warranty revenue
|
301
|
|
|
281
|
|
||
Other revenues
|
8
|
|
|
9
|
|
||
Total operating revenues
|
2,507
|
|
|
2,664
|
|
||
Claims, Benefits and Expenses
|
|
|
|
||||
Net incurred claims and benefits
|
1,419
|
|
|
1,351
|
|
||
Policyholders' dividends
|
6
|
|
|
6
|
|
||
Amortization of deferred acquisition costs
|
344
|
|
|
342
|
|
||
Non-insurance warranty expense
|
281
|
|
|
260
|
|
||
Other insurance related expenses
|
258
|
|
|
251
|
|
||
Other expenses
|
72
|
|
|
66
|
|
||
Total claims, benefits and expenses
|
2,380
|
|
|
2,276
|
|
||
Core income before income tax
|
127
|
|
|
388
|
|
||
Income tax expense on core income
|
(19
|
)
|
|
(70
|
)
|
||
Core income
|
108
|
|
|
318
|
|
||
Net investment (losses) gains
|
(216
|
)
|
|
31
|
|
||
Income tax benefit (expense) on net investment (losses) gains
|
47
|
|
|
(7
|
)
|
||
Net investment (losses) gains, after tax
|
(169
|
)
|
|
24
|
|
||
Net (loss) income
|
$
|
(61
|
)
|
|
$
|
342
|
|
Three months ended March 31
|
|
|
|
||||
(In millions, except ratios, rate, renewal premium change and retention)
|
2020
|
|
2019
|
||||
Gross written premiums
|
$
|
1,714
|
|
|
$
|
1,701
|
|
Gross written premiums excluding third party captives
|
741
|
|
|
730
|
|
||
Net written premiums
|
694
|
|
|
698
|
|
||
Net earned premiums
|
685
|
|
|
661
|
|
||
Net investment income
|
56
|
|
|
155
|
|
||
Core income
|
96
|
|
|
169
|
|
||
|
|
|
|
||||
Other performance metrics:
|
|
|
|
||||
Loss and loss adjustment expense ratio
|
59.1
|
%
|
|
59.3
|
%
|
||
Expense ratio
|
32.0
|
|
|
32.8
|
|
||
Dividend ratio
|
0.2
|
|
|
0.2
|
|
||
Combined ratio
|
91.3
|
%
|
|
92.3
|
%
|
||
|
|
|
|
||||
Rate
|
9
|
%
|
|
3
|
%
|
||
Renewal premium change
|
9
|
|
|
6
|
|
||
Retention
|
84
|
|
|
89
|
|
||
New business
|
$
|
74
|
|
|
$
|
86
|
|
(In millions)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Gross case reserves
|
$
|
1,527
|
|
|
$
|
1,481
|
|
Gross IBNR reserves
|
3,945
|
|
|
3,757
|
|
||
Total gross carried claim and claim adjustment expense reserves
|
$
|
5,472
|
|
|
$
|
5,238
|
|
Net case reserves
|
$
|
1,385
|
|
|
$
|
1,343
|
|
Net IBNR reserves
|
3,310
|
|
|
3,333
|
|
||
Total net carried claim and claim adjustment expense reserves
|
$
|
4,695
|
|
|
$
|
4,676
|
|
Three months ended March 31
|
|
|
|
||||
(In millions, except ratios, rate, renewal premium change and retention)
|
2020
|
|
2019
|
||||
Gross written premiums
|
$
|
1,062
|
|
|
$
|
941
|
|
Gross written premiums excluding third party captives
|
1,059
|
|
|
932
|
|
||
Net written premiums
|
950
|
|
|
849
|
|
||
Net earned premiums
|
818
|
|
|
763
|
|
||
Net investment income
|
47
|
|
|
190
|
|
||
Core income
|
24
|
|
|
139
|
|
||
|
|
|
|
||||
Other performance metrics:
|
|
|
|
||||
Loss and loss adjustment expense ratio
|
68.1
|
%
|
|
66.9
|
%
|
||
Expense ratio
|
33.2
|
|
|
33.8
|
|
||
Dividend ratio
|
0.6
|
|
|
0.6
|
|
||
Combined ratio
|
101.9
|
%
|
|
101.3
|
%
|
||
|
|
|
|
||||
Rate
|
8
|
%
|
|
2
|
%
|
||
Renewal premium change
|
9
|
|
|
4
|
|
||
Retention
|
85
|
|
|
85
|
|
||
New business
|
$
|
198
|
|
|
$
|
163
|
|
(In millions)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Gross case reserves
|
$
|
3,914
|
|
|
$
|
3,937
|
|
Gross IBNR reserves
|
4,790
|
|
|
4,719
|
|
||
Total gross carried claim and claim adjustment expense reserves
|
$
|
8,704
|
|
|
$
|
8,656
|
|
Net case reserves
|
$
|
3,477
|
|
|
$
|
3,543
|
|
Net IBNR reserves
|
4,414
|
|
|
4,306
|
|
||
Total net carried claim and claim adjustment expense reserves
|
$
|
7,891
|
|
|
$
|
7,849
|
|
Three months ended March 31
|
|
|
|
||||
(In millions, except ratios, rate, renewal premium change and retention)
|
2020
|
|
2019
|
||||
Gross written premiums
|
$
|
307
|
|
|
$
|
324
|
|
Net written premiums
|
219
|
|
|
259
|
|
||
Net earned premiums
|
239
|
|
|
250
|
|
||
Net investment income
|
15
|
|
|
15
|
|
||
Core income
|
2
|
|
|
6
|
|
||
|
|
|
|
||||
Other performance metrics:
|
|
|
|
||||
Loss and loss adjustment expense ratio
|
64.5
|
%
|
|
64.8
|
%
|
||
Expense ratio
|
35.4
|
|
|
37.1
|
|
||
Combined ratio
|
99.9
|
%
|
|
101.9
|
%
|
||
|
|
|
|
||||
Rate
|
8
|
%
|
|
5
|
%
|
||
Renewal premium change
|
8
|
|
|
2
|
|
||
Retention
|
72
|
|
|
69
|
|
||
New business
|
$
|
68
|
|
|
$
|
80
|
|
(In millions)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Gross case reserves
|
$
|
807
|
|
|
$
|
858
|
|
Gross IBNR reserves
|
1,011
|
|
|
1,018
|
|
||
Total gross carried claim and claim adjustment expense reserves
|
$
|
1,818
|
|
|
$
|
1,876
|
|
Net case reserves
|
$
|
719
|
|
|
$
|
759
|
|
Net IBNR reserves
|
864
|
|
|
869
|
|
||
Total net carried claim and claim adjustment expense reserves
|
$
|
1,583
|
|
|
$
|
1,628
|
|
Three months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Net earned premiums
|
$
|
127
|
|
|
$
|
130
|
|
Net investment income
|
208
|
|
|
204
|
|
||
Core loss before income tax
|
(10
|
)
|
|
(3
|
)
|
||
Income tax benefit on core loss
|
14
|
|
|
13
|
|
||
Core income
|
4
|
|
|
10
|
|
(In millions)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Gross case reserves
|
$
|
1,185
|
|
|
$
|
1,137
|
|
Gross IBNR reserves
|
981
|
|
|
1,097
|
|
||
Total gross carried claim and claim adjustment expense reserves
|
$
|
2,166
|
|
|
$
|
2,234
|
|
Net case reserves
|
$
|
92
|
|
|
$
|
92
|
|
Net IBNR reserves
|
78
|
|
|
83
|
|
||
Total net carried claim and claim adjustment expense reserves
|
$
|
170
|
|
|
$
|
175
|
|
Three months ended March 31
|
|
|
|
||||
(In millions)
|
2020
|
|
2019
|
||||
Fixed maturity securities:
|
|
|
|
||||
Corporate and other bonds
|
$
|
(79
|
)
|
|
$
|
—
|
|
States, municipalities and political subdivisions
|
—
|
|
|
8
|
|
||
Asset-backed
|
4
|
|
|
(14
|
)
|
||
Total fixed maturity securities
|
(75
|
)
|
|
(6
|
)
|
||
Non-redeemable preferred stock
|
(133
|
)
|
|
42
|
|
||
Short term and other
|
5
|
|
|
(5
|
)
|
||
Mortgage loans
|
(13
|
)
|
|
—
|
|
||
Net investment (losses) gains
|
(216
|
)
|
|
31
|
|
||
Income tax benefit (expense) on net investment (losses) gains
|
47
|
|
|
(7
|
)
|
||
Net investment (losses) gains, after tax
|
$
|
(169
|
)
|
|
$
|
24
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
(In millions)
|
Estimated Fair Value
|
|
Net Unrealized Gains (Losses)
|
|
Estimated Fair Value
|
|
Net Unrealized Gains (Losses)
|
||||||||
U.S. Government, Government agencies and Government-sponsored enterprises
|
$
|
4,073
|
|
|
$
|
198
|
|
|
$
|
4,136
|
|
|
$
|
95
|
|
AAA
|
3,529
|
|
|
381
|
|
|
3,254
|
|
|
349
|
|
||||
AA
|
6,328
|
|
|
747
|
|
|
6,663
|
|
|
801
|
|
||||
A
|
8,751
|
|
|
819
|
|
|
9,062
|
|
|
1,051
|
|
||||
BBB
|
15,284
|
|
|
255
|
|
|
16,839
|
|
|
1,684
|
|
||||
Non-investment grade
|
2,133
|
|
|
(287
|
)
|
|
2,253
|
|
|
101
|
|
||||
Total
|
$
|
40,098
|
|
|
$
|
2,113
|
|
|
$
|
42,207
|
|
|
$
|
4,081
|
|
|
March 31, 2020
|
||||||
(In millions)
|
Estimated Fair Value
|
|
Gross Unrealized Losses
|
||||
U.S. Government, Government agencies and Government-sponsored enterprises
|
$
|
6
|
|
|
$
|
—
|
|
AAA
|
196
|
|
|
4
|
|
||
AA
|
481
|
|
|
25
|
|
||
A
|
1,762
|
|
|
117
|
|
||
BBB
|
6,102
|
|
|
652
|
|
||
Non-investment grade
|
1,606
|
|
|
319
|
|
||
Total
|
$
|
10,153
|
|
|
$
|
1,117
|
|
|
March 31, 2020
|
||||||
(In millions)
|
Estimated Fair Value
|
|
Gross Unrealized Losses
|
||||
Due in one year or less
|
$
|
321
|
|
|
$
|
26
|
|
Due after one year through five years
|
2,780
|
|
|
199
|
|
||
Due after five years through ten years
|
5,418
|
|
|
632
|
|
||
Due after ten years
|
1,634
|
|
|
260
|
|
||
Total
|
$
|
10,153
|
|
|
$
|
1,117
|
|
March 31, 2020
|
Cost or
Amortized Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Allowance for Credit Losses
|
|
Estimated
Fair Value |
||||||||||
(In millions)
|
|
|
|
|
|||||||||||||||
Corporate and other bonds:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic Materials
|
$
|
1,615
|
|
|
$
|
95
|
|
|
$
|
78
|
|
|
$
|
—
|
|
|
$
|
1,632
|
|
Communications
|
1,429
|
|
|
193
|
|
|
27
|
|
|
—
|
|
|
1,595
|
|
|||||
Consumer, cyclical - Other
|
605
|
|
|
16
|
|
|
56
|
|
|
—
|
|
|
565
|
|
|||||
Consumer, non-cyclical - Other
|
1,641
|
|
|
195
|
|
|
27
|
|
|
—
|
|
|
1,809
|
|
|||||
Energy - Oil & Gas
|
1,170
|
|
|
40
|
|
|
191
|
|
|
37
|
|
|
982
|
|
|||||
Energy - Other
|
23
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|||||
Energy - Pipelines
|
1,056
|
|
|
43
|
|
|
112
|
|
|
11
|
|
|
976
|
|
|||||
Entertainment
|
177
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
154
|
|
|||||
Financial - Other
|
5,748
|
|
|
308
|
|
|
89
|
|
|
—
|
|
|
5,967
|
|
|||||
Financial - Real Estate/REITS
|
1,455
|
|
|
30
|
|
|
45
|
|
|
—
|
|
|
1,440
|
|
|||||
Industrial
|
1,481
|
|
|
135
|
|
|
55
|
|
|
—
|
|
|
1,561
|
|
|||||
Retail
|
527
|
|
|
67
|
|
|
18
|
|
|
—
|
|
|
576
|
|
|||||
Technology
|
853
|
|
|
38
|
|
|
30
|
|
|
1
|
|
|
860
|
|
|||||
Transportation
|
331
|
|
|
35
|
|
|
5
|
|
|
—
|
|
|
361
|
|
|||||
Travel & Related
|
490
|
|
|
26
|
|
|
37
|
|
|
—
|
|
|
479
|
|
|||||
Utilities
|
1,580
|
|
|
191
|
|
|
24
|
|
|
—
|
|
|
1,747
|
|
|||||
Total Corporate and other bonds
|
$
|
20,181
|
|
|
$
|
1,419
|
|
|
$
|
817
|
|
|
$
|
49
|
|
|
$
|
20,734
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||
(In millions)
|
Estimated Fair Value
|
|
Effective
Duration
(In years)
|
|
Estimated Fair Value
|
|
Effective
Duration
(In years)
|
||||||
Investments supporting Life & Group
|
$
|
17,201
|
|
|
8.7
|
|
|
$
|
18,015
|
|
|
8.9
|
|
Other investments
|
24,237
|
|
|
4.1
|
|
|
26,813
|
|
|
4.1
|
|
||
Total
|
$
|
41,438
|
|
|
6.0
|
|
|
$
|
44,828
|
|
|
6.0
|
|
(In millions)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Short term investments:
|
|
|
|
||||
Commercial paper
|
$
|
326
|
|
|
$
|
1,181
|
|
U.S. Treasury securities
|
103
|
|
|
364
|
|
||
Other
|
167
|
|
|
316
|
|
||
Total short term investments
|
$
|
596
|
|
|
$
|
1,861
|
|
•
|
the risks and uncertainties associated with our insurance reserves, as outlined in the Critical Accounting Estimates and the Reserves - Estimates and Uncertainties sections of our 2019 Annual Report on Form 10-K and this report, 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;
|
•
|
the risk that the other parties to the transaction in which, subject to certain limitations, we ceded our legacy A&EP liabilities will not fully perform their obligations to CNA, the uncertainty in estimating loss reserves for A&EP liabilities and the possible continued exposure of CNA to liabilities for A&EP claims that are not covered under the terms of the transaction;
|
•
|
the performance of reinsurance companies under reinsurance contracts with us; and
|
•
|
the risks and uncertainties associated with potential acquisitions and divestitures, including the consummation of such transactions, the successful integration of acquired operations and the potential for subsequent impairment of goodwill or intangible assets.
|
•
|
the COVID-19 pandemic, and actions seeking to mitigate the spread of the virus, have resulted in significant risk across our enterprise, as economic uncertainty and depressed business conditions brought on by the crisis may materially and adversely impact our business, driving significant decreases in our premium volume and resulting in significant losses in our investment portfolio, increased claim and litigation activity, and unfavorable regulatory outcomes.
|
•
|
the impact of competitive products, policies and pricing and the competitive environment in which we operate, including changes in our book of business;
|
•
|
product and policy availability and demand and market responses, including the level of ability to obtain rate increases and decline or non-renew underpriced accounts, to achieve premium targets and profitability and to realize growth and retention estimates;
|
•
|
general economic and business conditions, including recessionary conditions that may decrease the size and number of our insurance customers and create additional losses to our lines of business, especially those that provide management and professional liability insurance, as well as surety bonds, to businesses engaged in real estate, financial services and professional services and inflationary pressures on medical care costs, construction costs and other economic sectors that increase the severity of claims;
|
•
|
conditions in the capital and credit markets, including uncertainty and instability in these markets, as well as the overall economy, and their impact on the returns, types, liquidity and valuation of our investments;
|
•
|
conditions in the capital and credit markets that may limit our ability to raise significant amounts of capital on favorable terms; and
|
•
|
the possibility of changes in our ratings by ratings agencies, including the inability to access certain markets or distribution channels and the required collateralization of future payment obligations as a result of such changes, and changes in rating agency policies and practices.
|
•
|
regulatory and legal initiatives and compliance with governmental regulations and other legal requirements, including with respect to cyber security protocols, 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;
|
•
|
regulatory limitations, impositions and restrictions upon us, including with respect to our ability to increase premium rates, and the effects of assessments and other surcharges for guaranty funds and second-injury funds, other mandatory pooling arrangements and future assessments levied on insurance companies; and
|
•
|
regulatory limitations and restrictions, including limitations upon our ability to receive dividends from our insurance subsidiaries, imposed by regulatory authorities, including regulatory capital adequacy standards.
|
•
|
weather and other natural physical events, including the severity and frequency of storms, hail, snowfall and other winter conditions, natural disasters such as hurricanes and earthquakes, as well as climate change, including effects on global weather patterns, greenhouse gases, sea, land and air temperatures, sea levels, rain, hail and snow;
|
•
|
regulatory requirements imposed by coastal state regulators in the wake of hurricanes or other natural disasters, including limitations on the ability to exit markets or to non-renew, cancel or change terms and conditions in policies, as well as mandatory assessments to fund any shortfalls arising from the inability of quasi-governmental insurers to pay claims;
|
•
|
man-made disasters, including the possible occurrence of terrorist attacks, the unpredictability of the nature, targets, severity or frequency of such events, and the effect of the absence or insufficiency of applicable terrorism legislation on coverages;
|
•
|
the occurrence of epidemics and pandemics; and
|
•
|
mass tort claims, including those related to exposure to potentially harmful products or substances such as glyphosate, lead paint and opioids; and claims arising from changes that repeal or weaken tort reforms, such as those related to abuse reviver statutes.
|
•
|
in 2016, the U.K. approved an exit from the E.U., commonly referred to as "Brexit.” While the withdrawal of the U.K. from the E.U. was official as of January 31, 2020, until the transition period ends, there remains a lack of specificity and detail regarding the long term relationship between the two sides and how businesses operating in both jurisdictions may be affected. In any event, effective January 1, 2019, our E.U. business is no longer handled out of our U.K.-domiciled subsidiary, but through our European subsidiary in Luxembourg, which was established specifically to address the departure of the U.K. from the E.U. and to seek to ensure the Company’s ability to operate effectively throughout the E.U. As a result, the complexity and cost of regulatory compliance of our European business has increased and will likely continue to result in elevated expenses.
|
Period
|
|
(a) Total number of shares purchased
|
|
(b) Average price paid per share
|
|
(c) Total number of shares purchased as part of publicly announced plans or programs
|
|
(d) Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (in millions)
|
|||
February 1, 2020 - February 29, 2020
|
|
88,848
|
|
|
$
|
45.24
|
|
|
N/A
|
|
N/A
|
March 1, 2020 - March 31, 2020
|
|
346,528
|
|
|
40.74
|
|
|
N/A
|
|
N/A
|
|
Total
|
|
435,376
|
|
|
|
|
|
N/A
|
|
N/A
|
|
|
CNA Financial Corporation
|
|
|
|
Dated: May 4, 2020
|
By
|
/s/ Albert J. Miralles
|
|
|
Albert J. Miralles
Executive Vice President and
Chief Financial Officer
(Duly authorized officer and principal financial and accounting officer)
|
Description of Exhibit
|
Exhibit Number
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
101.INS
|
|
|
|
|
Inline XBRL Taxonomy Extension Schema
|
101.SCH
|
|
|
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase
|
101.CAL
|
|
|
|
|
Inline XBRL Taxonomy Extension Definition Linkbase
|
101.DEF
|
|
|
|
|
Inline XBRL Taxonomy Label Linkbase
|
101.LAB
|
|
|
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase
|
101.PRE
|
|
|
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
104.1
|
|
•
|
any pay/compensation/benefits (whether under the federal Fair Labor Standards Act or otherwise) including backpay, front pay, bonuses, commissions, equity, expenses, incentives, insurance, paid/unpaid leave/time off, profit sharing, salary, or separation pay/benefits;
|
•
|
compensatory/emotional/distress damages; punitive or liquidated damages, attorneys' fees, costs, interest or penalties;
|
•
|
any violation of express or implied employment contracts, covenants, promises or duties, intellectual property or other proprietary rights;
|
•
|
unlawful or tortious conduct such as assault or battery; background check violations; defamation; detrimental reliance; fiduciary breach; fraud; indemnification; intentional or negligent infliction of emotional distress; interference with contractual or other legal rights; invasion of privacy; loss of consortium; misrepresentation; negligence (including negligent hiring, retention or supervision); personal injury; promissory estoppel; public policy violation; retaliatory discharge; safety violations; posting or records-related violations; wrongful discharge; or other federal, state or local statutory or common law matters;
|
•
|
any violation of any city, local, state, or federal laws, statutes, ordinances, executive orders, regulations, or constitutions, including but not limited to discrimination or harassment based on age (including Age Discrimination in Employment Act or "ADEA'' claims), ancestry, benefit entitlement, citizenship, color, concerted activity, disability, ethnicity, gender, gender identity, genetic information, harassment, immigration status, income source, jury duty, leave rights, marital status, military status, national origin, parental status, political affiliation, protected off duty conduct, race, religion, retaliation, sexual orientation, union activity, veteran status, whistleblower activity,
|
•
|
any violation of any city, local, state, or federal laws, statutes, ordinances, executive orders, regulations, or constitutions, including but not limited to ADEA, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq., the Civil Rights Act of 1866, 42 U.S.C. § 1981 , the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq., the Americans with Disabilities Act of 1990, as amended, 42 U.S.C. § 12101 et seq., the Equal Pay Act of 1963, as amended, 29 U.S.C. § 206(d), the Family and Medical Leave Act of 1993, as amended, 29 U.S.C. § 2601 et seq.; Illinois Human Rights Act, as amended; Illinois Whistleblower Act; Illinois Arrest History Discrimination Law; Illinois Employment Contract Act; Illinois Labor Dispute Act; the Illinois Constitution; Illinois common law, as well as any and all other applicable federal, state, county or local law, statute, ordinance or regulation; and;
|
•
|
any participation in any class, collective, or representative action against the Company.
|
1.
|
THIS GENERAL RELEASE AND SETTLEMENT AGREEMENT IS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS, INCLUDING CLAIMS OF AGE DISCRIMINATION. IT DOES NOT WAIVE CLAIMS WHICH MAY ARISE AFTER THE DATE IT IS SIGNED OR CLAIMS SPECIFICALLY EXCLUDED;
|
2.
|
EMPLOYEE IS WAIVING CLAIMS IN EXCHNAGE FOR MONEY AND/OR BENEFITS TO WHICH HE IS NOT ALREADY ENTITLED;
|
3.
|
EMPLOYEE IS ADVISED TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS GENERAL RELEASE AND SETTLEMENT AGREEMENT;
|
4.
|
EMPLOYEE HAS 21 DAYS TO DECIDE WHETHER TO SIGN THIS GENERAL RELEASE AND SETTLEMENT AGREEMENT; AND
|
5.
|
WITHIN SEVEN (7) DAYS AFTER SIGNING THIS GENERAL RELEASE AND SETTLEMENT AGREEMENT, EMPLOYEE MAY CHANGE HIS MIND AND REVOKE THIS GENERAL RELEASE AND SETTLEMENT AGREEMENT BY GIVING WRITTEN NOTICE TO THE COMPANY. THIS GENERAL RELEASE AND SETTLEMENT AGREEMENT SHALL NOT BECOME ENFORCEABLE UNTIL THIS SEVEN-DAY PERIOD HAS EXPIRED.
|
/s/ James Anderson
|
|
March 6, 2020
|
James Anderson, Employee
|
|
Date
|
|
|
|
/s/ Jose Gonzalez
|
By
|
March 6, 2020
|
Jose Gonzalez
Executive Vice President and
General Counsel for CNA Financial Corporation
|
|
Date
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of CNA Financial Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated:
|
May 4, 2020
|
By
|
/s/ Dino E. Robusto
|
|
|
|
|
Dino E. Robusto
|
|
|
|
|
Chief Executive Officer
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of CNA Financial Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated:
|
May 4, 2020
|
By
|
/s/ Albert J. Miralles
|
|
|
|
|
Albert J. Miralles
|
|
|
|
|
Chief Financial Officer
|
|
•
|
the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed on the date hereof with the Securities and Exchange Commission (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated:
|
May 4, 2020
|
By
|
/s/ Dino E. Robusto
|
|
|
|
|
Dino E. Robusto
|
|
|
|
|
Chief Executive Officer
|
|
•
|
the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed on the date hereof with the Securities and Exchange Commission (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated:
|
May 4, 2020
|
By
|
/s/ Albert J. Miralles
|
|
|
|
|
Albert J. Miralles
|
|
|
|
|
Chief Financial Officer
|
|