þ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
Delaware
(State or other jurisdiction of incorporation or organization) |
36-6169860
(I.R.S. Employer Identification No.) |
|
333 S. Wabash
Chicago, Illinois (Address of principal executive offices) |
60604
(Zip Code) |
Title of each class |
Name of each exchange on
which registered |
||
Common Stock
with a par value of $2.50 per share |
New York Stock Exchange
Chicago Stock Exchange NYSE Arca |
Item | Page | |||||||
Number | Number | |||||||
PART I
|
||||||||
1. | 3 | |||||||
|
||||||||
1A. | 8 | |||||||
|
||||||||
1B. | 15 | |||||||
|
||||||||
2. | 15 | |||||||
|
||||||||
3. | 15 | |||||||
|
||||||||
4. | 15 | |||||||
|
||||||||
PART II
|
||||||||
5. | 16 | |||||||
|
||||||||
6. | 17 | |||||||
|
||||||||
7. | 18 | |||||||
|
||||||||
7A. | 60 | |||||||
|
||||||||
8. | 65 | |||||||
|
||||||||
9. | 139 | |||||||
|
||||||||
9A. | 139 | |||||||
|
||||||||
9B. | 139 | |||||||
|
||||||||
PART III
|
||||||||
10. | 140 | |||||||
|
||||||||
11. | 141 | |||||||
|
||||||||
12. | 141 | |||||||
|
||||||||
13. | 141 | |||||||
|
||||||||
14. | 141 | |||||||
|
||||||||
PART IV
|
||||||||
15. | 142 | |||||||
Certificate of Amendment of Certificate of Incorporation | ||||||||
Amendment to Employment Agreement | ||||||||
Significant Subsidiaries | ||||||||
Consent of Independent Registered Public Accounting Firm | ||||||||
Certification | ||||||||
Certification | ||||||||
Certification | ||||||||
Certification |
3
4
5
6
7
8
9
10
11
12
13
14
15
Table of Contents
Table of Contents
Years ended December 31
(In millions, except ratio information)
2006
2005
2004
75.7
%
89.4
%
74.6
%
30.0
31.2
31.5
0.3
0.3
0.2
106.0
%
120.9
%
106.3
%
78.7
%
92.2
%
78.1
%
30.2
30.0
27.2
0.2
0.5
0.6
109.1
%
122.7
%
105.9
%
$
9,866
$
10,711
$
11,566
5,787
9,838
45,079
$
15,653
$
20,549
$
56,645
$
8,137
$
6,940
$
6,998
687
627
1,177
0.9
1.0
1.0
38.9
%
33.1
%
56.0
%
4.4
%
3.5
%
1.4
%
(a)
(b)
(c)
Table of Contents
Percent of Total
Years ended December 31
2006
2005
2004
9.6
%
9.0
%
9.3
%
7.9
7.1
7.1
7.3
7.9
7.9
5.9
5.7
5.4
4.4
3.8
5.3
4.1
4.2
5.1
3.4
4.2
4.7
3.2
2.8
2.3
3.0
2.8
1.4
2.4
3.3
3.2
48.8
49.2
48.3
100.0
%
100.0
%
100.0
%
(a)
Table of Contents
Calendar Year Ended
(In millions)
1996
1997
1998
1999 (a)
2000
2001 (b)
2002 (c)
2003
2004
2005
2006
$
29,559
$
28,731
$
28,506
$
26,850
$
26,510
$
29,649
$
25,719
$
31,284
$
31,204
$
30,694
$
29,459
5,385
5,056
5,182
6,091
7,333
11,703
10,490
13,847
13,682
10,438
8,078
$
24,174
$
23,675
$
23,324
$
20,759
$
19,177
$
17,946
$
15,229
$
17,437
$
17,522
$
20,256
$
21,381
$
5,851
$
5,954
$
7,321
$
6,547
$
7,686
$
5,981
$
5,373
$
4,382
$
2,651
$
3,442
$
9,796
11,394
12,241
11,937
11,992
10,355
8,768
6,104
4,963
13,602
14,423
16,020
15,256
15,291
12,954
9,747
7,780
15,793
17,042
18,271
18,151
17,333
13,244
10,870
17,736
18,568
20,779
19,686
17,775
13,922
18,878
20,723
21,970
20,206
18,970
20,828
21,649
22,564
21,231
21,609
22,077
23,453
21,986
22,800
22,642
$
24,174
$
23,675
$
23,324
$
20,759
$
19,177
$
17,946
$
15,229
$
17,437
$
17,522
$
20,256
$
21,381
23,970
23,904
24,306
21,163
21,502
17,980
17,650
17,671
18,513
20,588
23,610
24,106
24,134
23,217
21,555
20,533
18,248
19,120
19,044
23,735
23,776
26,038
23,081
24,058
21,109
19,814
19,760
23,417
25,067
25,711
25,590
24,587
22,547
20,384
24,499
24,636
27,754
26,000
25,594
22,983
24,120
26,338
28,078
26,625
26,023
25,629
26,537
28,437
27,009
25,813
26,770
28,705
26,072
26,997
26,305
$
(2,131
)
$
(3,322
)
$
(5,381
)
$
(6,250
)
$
(6,846
)
$
(5,037
)
$
(5,155
)
$
(2,323
)
$
(1,522
)
$
(332
)
$
$
26,305
$
26,997
$
28,705
$
27,009
$
26,023
$
22,983
$
20,384
$
19,760
$
19,044
$
20,588
$
7,619
6,953
7,469
9,810
10,541
15,939
15,298
13,722
12,624
10,094
$
33,924
$
33,950
$
36,174
$
36,819
$
36,564
$
38,922
$
35,682
$
33,482
$
31,668
$
30,682
$
$
(2,461
)
$
(2,361
)
$
(2,120
)
$
(1,544
)
$
(1,479
)
$
(707
)
$
(707
)
$
(65
)
$
(11
)
$
$
(807
)
(834
)
(618
)
(722
)
(716
)
(256
)
(263
)
(117
)
(116
)
(63
)
(3,268
)
(3,195
)
(2,738
)
(2,266
)
(2,195
)
(963
)
(970
)
(182
)
(127
)
(63
)
1,137
(127
)
(2,643
)
(3,984
)
(4,651
)
(4,074
)
(4,185
)
(2,141
)
(1,395
)
(269
)
$
(2,131
)
$
(3,322
)
$
(5,381
)
$
(6,250
)
$
(6,846
)
$
(5,037
)
$
(5,155
)
$
(2,323
)
$
(1,522
)
$
(332
)
$
Table of Contents
(a)
(b)
(c)
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Amount (Square Feet) of Building
Owned and Occupied or Leased
Location
and Occupied by CNA
Principal Usage
904,990
Principal executive offices of CNAF
171,406
Property and casualty insurance offices
147,815
Property and casualty insurance offices
110,131
Property and casualty insurance offices
78,655
Property and casualty insurance offices
75,544
Property and casualty insurance offices
74,067
Property and casualty insurance offices
48,696
Property and casualty insurance offices
47,195
Property and casualty insurance offices
37,799
Property and casualty insurance offices
Table of Contents
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
2006
2005
High
Low
High
Low
$
40.32
$
36.19
$
34.91
$
28.52
36.04
33.05
30.46
28.40
33.20
30.90
28.90
26.21
33.60
29.88
29.79
25.84
Company Index
2001
2002
2003
2004
2005
2006
100
87.76
82.62
91.70
112.20
138.22
100
77.90
100.25
111.15
116.61
135.03
100
88.98
112.48
124.20
142.97
161.38
Table of Contents
As of and for the Years Ended
December 31
(In millions, except per share data and ratios)
2006
2005
2004
2003
2002
$
10,376
$
9,862
$
9,924
$
11,715
$
12,293
$
1,137
$
243
$
446
$
(1,419
)
$
263
(29
)
21
(21
)
2
(43
)
(57
)
$
1,108
$
264
$
425
$
(1,417
)
$
163
$
4.17
$
0.68
$
1.49
$
(6.52
)
$
1.18
(0.11
)
0.08
(0.09
)
0.01
(0.20
)
(0.26
)
$
4.06
$
0.76
$
1.40
$
(6.51
)
$
0.72
$
4.16
$
0.68
$
1.49
$
(6.52
)
$
1.18
(0.11
)
0.08
(0.09
)
0.01
(0.20
)
(0.26
)
$
4.05
$
0.76
$
1.40
$
(6.51
)
$
0.72
$
44,096
$
39,695
$
39,231
$
38,100
$
35,293
60,283
59,016
62,496
68,296
61,426
41,080
42,436
43,653
45,494
40,250
2,156
1,690
2,257
1,904
2,292
9,768
8,950
8,974
8,735
9,139
$
36.03
$
31.26
$
31.63
$
30.95
$
37.51
$
8,137
$
6,940
$
6,998
$
6,170
$
6,836
687
627
1,177
707
1,645
(a)
Table of Contents
Page No.
19
22
23
29
30
30
30
30
33
36
37
39
45
45
46
49
53
53
53
54
54
55
55
55
56
57
Table of Contents
Years ended December 31
(In millions, except per share data)
2006
2005
2004
$
7,603
$
7,569
$
8,209
2,412
1,892
1,680
275
411
283
10,290
9,872
10,172
6,025
6,975
6,434
22
24
11
1,534
1,543
1,680
757
829
972
(13
)
(3
)
401
329
326
8,726
9,700
9,420
1,564
172
752
(450
)
105
(126
)
(44
)
(24
)
(27
)
1,070
253
599
86
(10
)
(248
)
(19
)
95
1,137
243
446
(29
)
21
(21
)
$
1,108
$
264
$
425
$
4.17
$
0.68
$
1.49
(0.11
)
0.08
(0.09
)
$
4.06
$
0.76
$
1.40
$
4.16
$
0.68
$
1.49
(0.11
)
0.08
(0.09
)
$
4.05
$
0.76
$
1.40
262.1
256.0
256.0
262.3
256.0
256.0
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Years ended December 31
2006
2005
2004
(In millions)
$
4,433
$
4,382
$
4,582
4,413
4,410
4,917
991
767
496
617
(41
)
220
55
9
139
672
(32
)
359
70.1
%
87.5
%
70.8
%
31.1
32.4
34.6
0.4
0.4
0.2
101.6
%
120.3
%
105.6
%
Table of Contents
Claim and Claim Adjustment Expense Reserves
December 31
2006
2005
(In millions)
$
6,746
$
7,033
8,188
8,051
$
14,934
$
15,084
$
5,234
$
5,165
6,632
6,081
$
11,866
$
11,246
Table of Contents
Table of Contents
Years ended December 31
2006
2005
2004
(In millions)
$
2,596
$
2,463
$
2,391
2,555
2,475
2,277
403
281
246
464
336
324
18
12
54
482
348
378
60.5
%
65.3
%
63.3
%
26.7
26.1
26.1
0.2
0.2
0.2
87.4
%
91.6
%
89.6
%
Table of Contents
Claim and Claim Adjustment Expense Reserves
December 31
2006
2005
(In millions)
$
1,715
$
1,907
3,814
3,298
$
5,529
$
5,205
$
1,350
$
1,442
2,921
2,352
$
4,271
$
3,794
Table of Contents
Years ended December 31
2006
2005
2004
(In millions)
$
641
$
704
$
921
698
593
692
(14
)
(51
)
(29
)
(33
)
(19
)
(385
)
(47
)
(70
)
(414
)
Table of Contents
Years ended December 31
2006
2005
2004
(In millions)
$
320
$
251
$
246
305
311
358
3
9
84
27
(12
)
39
30
(3
)
123
Table of Contents
Claim and Claim Adjustment Expense Reserves
December 31
2006
2005
(In millions)
$
2,511
$
3,297
3,528
4,075
$
6,039
$
7,372
$
1,453
$
1,554
1,999
1,902
$
3,452
$
3,456
Table of Contents
Table of Contents
December 31, 2006
December 31, 2005
Environmental
Environmental
Pollution and
Pollution and
Asbestos
Mass Tort
Asbestos
Mass Tort
(In millions)
$
2,635
$
647
$
2,992
$
680
(1,183
)
(231
)
(1,438
)
(257
)
$
1,452
$
416
$
1,554
$
423
Table of Contents
Net Paid
(Recovered) Losses
Net Asbestos
Percent of
Number of
in 2006
Reserves
Asbestos
December 31, 2006
Policyholders
(In millions)
(In millions)
Net Reserves
15
$
22
$
171
12
%
3
(1
)
14
1
37
(18
)
79
5
1
53
4
56
3
317
22
220
76
254
17
1,080
17
101
7
1,300
93
355
24
6
141
10
639
44
1,356
$
102
$
1,452
100
%
Table of Contents
Net Paid Losses
Net Asbestos
Percent of
Number of
in 2005
Reserves
Asbestos
December 31, 2005
Policyholders
(In millions)
(In millions)
Net Reserves
13
$
30
$
167
11
%
4
2
15
1
34
13
58
4
1
54
3
52
45
294
19
199
68
273
17
1,073
23
135
9
1,272
91
408
26
6
143
9
709
46
1,324
$
142
$
1,554
100
%
Table of Contents
Table of Contents
Net
Environmental
Percent of
Net Paid Losses
Pollution
Environmental
Number of
in 2006
Reserves
Pollution Net
December 31, 2006
Policyholders
(In millions)
(In millions)
Reserve
11
$
16
$
9
3
%
18
5
14
5
29
21
23
8
115
20
58
20
346
9
46
17
461
29
104
37
1
32
11
126
44
490
$
51
$
285
100
%
Net
Environmental
Percent of
Net Paid Losses
Pollution
Environmental
Number of
in 2005
Reserves
Pollution Net
December 31, 2005
Policyholders
(In millions)
(In millions)
Reserve
6
$
10
$
17
5
%
16
10
23
7
22
20
40
12
120
18
63
19
362
15
50
15
482
33
113
34
3
33
10
150
44
504
$
56
$
336
100
%
Table of Contents
Years ended December 31
2006
2005
2004
(In millions)
$
1,842
$
1,608
$
1,571
248
147
56
288
254
212
23
25
14
103
47
110
(68
)
(166
)
(261
)
18
20
18
2,454
1,935
1,720
(42
)
(43
)
(40
)
$
2,412
$
1,892
$
1,680
(a)
There was no change in net unrealized gains (losses) on trading securities included in
net investment income for the year ended December 31, 2006. The change in net unrealized
gains (losses) on trading securities included in net investment income was $(7) million and
$2 million for the years ended December 31, 2005 and 2004.
Table of Contents
Years ended December 31
2006
2005
2004
(In millions)
$
62
$
(33
)
$
10
(98
)
(86
)
123
53
12
42
(9
)
14
53
(3
)
3
19
5
(90
)
247
16
38
202
18
49
(84
)
(5
)
(3
)
53
(10
)
(601
)
87
(13
)
(239
)
(1
)
3
(9
)
(19
)
95
$
67
$
(10
)
$
(153
)
Table of Contents
Years ended December 31
2006
2005
2004
(In millions)
$
382
$
361
$
704
(377
)
(451
)
(457
)
5
(90
)
247
24
73
225
(8
)
(35
)
(23
)
16
38
202
$
21
$
(52
)
$
449
Table of Contents
Fair
Months in
Value at
Unrealized
Date of
Loss
Loss Prior
Issuer Description and Discussion
Sale
On Sale
To Sale (a)
(In millions)
$
4,529
$
18
0-6
289
6
0-12
56
5
0-6
66
5
0-12+
92
5
0-6
$
5,032
$
39
(a)
Represents the range of consecutive months the various positions were in an unrealized
loss prior to sale. 0-12+ means certain positions were less than 12 months, while others
were greater than 12 months.
Table of Contents
December 31,
December 31,
2006
%
2005
%
(In millions)
$
5,138
12
%
$
1,469
4
%
13,677
31
12,859
32
5,146
12
9,209
23
7,132
16
6,165
15
3,642
8
3,044
8
912
2
216
1
1
35,647
81
32,963
83
2
4
55
87
133
1
154
1
14
26
204
1
271
1
452
1
289
1
145
343
1
597
1
632
2
60
49
5,538
13
3,870
9
172
368
1
1,852
4
1,509
4
26
33
$
44,096
100
%
$
39,695
100
%
Table of Contents
Percent of
Percent of
Market
Unrealized
Value
Loss
5
%
3
%
44
50
33
24
18
23
100
%
100
%
Fair Value as a Percentage of Book Value
Gross
Estimated
Unrealized
December 31, 2006
Fair Value
90-99%
80-89%
70-79%
<70%
Loss
(In millions)
$
509
$
2
$
$
$
$
2
87
1
1
2
24
2
$
622
$
3
$
1
$
$
$
4
Fair Value as a Percentage of Book Value
Gross
Estimated
Unrealized
December 31, 2005
Fair Value
90-99%
80-89%
70-79%
<70%
Loss
(In millions)
$
632
$
20
$
8
$
1
$
$
29
118
4
6
10
122
3
3
2
$
874
$
27
$
14
$
1
$
$
42
Table of Contents
December 31
2006
%
2005
%
(In millions)
$
5,285
15
%
$
1,628
5
%
16,311
47
18,233
55
5,222
15
6,046
18
4,933
14
4,499
14
3,188
9
2,612
8
$
34,939
100
%
$
33,018
100
%
December 31
2006
%
2005
%
(In millions)
$
%
$
%
111
26
120
26
242
56
193
41
75
17
142
31
6
1
11
2
$
434
100
%
$
466
100
%
Table of Contents
December 31,
December 31,
2006
2005
(In millions)
$
923
$
1,906
1,093
251
196
294
3,326
1,419
5,538
3,870
43
94
2
64
127
200
10
172
368
$
5,710
$
4,238
Table of Contents
Table of Contents
December 31, 2006
Total
Less than 1 year
1-3 years
3-5 years
More than 5 years
(In millions)
3,364
143
604
636
1,981
234
49
78
56
51
31,398
7,147
9,341
4,810
10,100
10,803
346
348
337
9,772
994
382
454
9
149
15
12
3
$
46,808
$
8,079
$
10,828
$
5,848
$
22,053
(a)
Includes estimated future interest payments, but does not include original issue
discount.
(b)
Claim and claim adjustment expense reserves are not discounted and represent our
estimate of the amount and timing of the ultimate settlement and administration of claims
based on our assessment of facts and circumstances known as of December 31, 2006. See the
Reserves Estimates and Uncertainties section of this MD&A for further information. Claim
and claim adjustment expense reserves of $12 million related to business which has been
100% ceded to unaffiliated parties in connection with the individual life sale are not
included.
(c)
Future policy benefits and policyholder funds reserves are not discounted and represent
our estimate of the ultimate amount and timing of the settlement of benefits based on our
assessment of facts and circumstances known as of December 31, 2006. Future policy benefit
reserves of $891 million and policyholder fund reserves of $47 million related to business
which has been 100% ceded to unaffiliated parties in connection with the individual life
sale are not included. Additional information on future policy benefits and policyholder
funds reserves is included in Note A of the Consolidated Financial Statements included
under Item 8.
(d)
Primarily relating to telecommunications and software services.
Table of Contents
Table of Contents
(a)
A.M. Best, Fitch, Moodys and Standard & Poors outlooks are stable for our debt and
insurance financial strength ratings.
Table of Contents
general economic and business conditions, including inflationary pressures on medical care costs, construction
costs and other economic sectors that increase the severity of claims;
changes in financial markets such as fluctuations in interest rates, long term periods of low interest rates,
credit conditions and currency, commodity and stock prices;
the effects of corporate bankruptcies, such as Enron and WorldCom, on capital markets, and on the markets for
D&O and errors and omissions coverages;
Table of Contents
changes in foreign or domestic political, social and economic conditions;
regulatory initiatives and compliance with governmental regulations, judicial decisions, including
interpretation of policy provisions, decisions regarding coverage and theories of liability, trends in litigation
and the outcome of any litigation involving us, and rulings and changes in tax laws and regulations;
effects upon insurance markets and upon industry business practices and relationships of current litigation,
investigations and regulatory activity by the New York State Attorney Generals office and other authorities
concerning contingent commission arrangements with brokers and bid solicitation activities;
legal and regulatory activities with respect to certain non-traditional and finite-risk insurance products,
and possible resulting changes in accounting and financial reporting in relation to such products, including our
restatement of financial results in May of 2005 and our relationship with an affiliate, Accord Re Ltd., as
disclosed in connection with that restatement;
regulatory limitations, impositions and restrictions upon us, including the effects of assessments and other
surcharges for guaranty funds and second-injury funds and other mandatory pooling arrangements;
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 under priced accounts, to achieve premium targets and profitability and to
realize growth and retention estimates;
development of claims and the impact on loss reserves, including changes in claim settlement policies;
the effectiveness of current initiatives by claims management to reduce loss and expense ratios through more
efficacious claims handling techniques;
the performance of reinsurance companies under reinsurance contracts with us;
results of financing efforts, including the availability of bank credit facilities;
changes in our composition of operating segments;
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 weather patterns, greenhouse gases, sea, land and air temperatures, sea levels, rain and snow;
man-made disasters, including the possible occurrence of terrorist attacks and the effect of the absence or
insufficiency of applicable terrorism legislation on coverages;
the unpredictability of the nature, targets, severity or frequency of potential terrorist events, as well as
the uncertainty as to our ability to contain our terrorism exposure effectively, notwithstanding the extension
through December 31, 2007 of the Terrorism Risk Insurance Act of 2002;
the occurrence of epidemics;
exposure to liabilities due to claims made by insureds and others relating to asbestos remediation and
health-based asbestos impairments, as well as exposure to liabilities for environmental pollution, mass tort,
construction defect claims and exposure to liabilities due to claims made by insureds and others relating to
lead-based paint;
whether a national privately financed trust to replace litigation of asbestos claims with payments to
claimants from the trust will be established or approved through federal legislation, or, if established and
approved, whether it will contain funding requirements in excess of our established loss reserves or carried loss
reserves;
the sufficiency of our loss reserves and the possibility of future increases in reserves;
regulatory limitations and restrictions, including limitations upon our ability to receive dividends from our
insurance subsidiaries imposed by state regulatory agencies and minimum risk-based capital standards established by
the National Association of Insurance Commissioners;
Table of Contents
the risks and uncertainties associated with our loss reserves as outlined in the Critical Accounting Estimates
and the Reserves Estimates and Uncertainties sections of this MD&A;
the level of success in integrating acquired businesses and operations, and in consolidating, or selling
existing ones;
the possibility of further 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; and
the actual closing of contemplated transactions and agreements.
Table of Contents
Table of Contents
Increase (Decrease)
Market
Interest
Currency
Equity
December 31, 2006
Value
Rate Risk
Risk
Risk
(In millions)
$
35,647
$
(1,959
)
$
(98
)
$
(91
)
204
(2
)
(2
)
597
(9
)
(60
)
60
(6
)
5,538
(5
)
(32
)
172
1,852
1
(37
)
23
1
190
1
(65
)
2
1
(2
)
44,096
(1,773
)
(141
)
(261
)
434
(21
)
41
(4
)
21
496
(21
)
(4
)
$
44,592
$
(1,794
)
$
(141
)
$
(265
)
$
2,156
$
(122
)
$
$
Table of Contents
Increase (Decrease)
Market
Interest
Currency
Equity
December 31, 2005
Value
Rate Risk
Risk
Risk
(In millions)
$
32,963
$
(1,897
)
$
(89
)
$
(22
)
271
(2
)
(1
)
(2
)
632
(6
)
(63
)
49
(5
)
3,870
(4
)
(37
)
368
1,509
1
(29
)
30
66
2
(102
)
3
3
10
39,695
(1,831
)
(123
)
(223
)
466
(23
)
44
(4
)
36
546
(23
)
(4
)
$
40,241
$
(1,854
)
$
(123
)
$
(227
)
$
1,690
$
(92
)
$
$
Table of Contents
Increase (Decrease)
Market
Interest
Currency
Equity
December 31, 2006
Value
Rate Risk
Risk
Risk
(In millions)
$
35,647
$
(2,925
)
$
(197
)
$
(227
)
204
(3
)
(5
)
597
(18
)
(149
)
60
(15
)
5,538
(7
)
(64
)
172
1,852
1
(93
)
23
1
279
2
(162
)
2
1
(4
)
(1
)
44,096
(2,652
)
(283
)
(652
)
434
(31
)
41
(10
)
21
496
(31
)
(10
)
$
44,592
$
(2,683
)
$
(283
)
$
(662
)
$
2,156
$
(180
)
$
$
Table of Contents
Increase (Decrease)
Market
Interest
Currency
Equity
December 31, 2005
Value
Rate Risk
Risk
Risk
(In millions)
$
32,963
$
(2,827
)
$
(178
)
$
(54
)
271
(4
)
(1
)
(4
)
632
(11
)
(158
)
49
(12
)
3,870
(6
)
(74
)
368
1,509
1
(72
)
30
95
3
(1
)
(255
)
3
5
20
(1
)
39,695
(2,733
)
(245
)
(556
)
466
(34
)
44
(11
)
36
546
(34
)
(11
)
$
40,241
$
(2,767
)
$
(245
)
$
(567
)
$
1,690
$
(135
)
$
$
Table of Contents
Consolidated Statements of Operations
Years ended December 31
2006
2005
2004
(In millions, except per share data)
$
7,603
$
7,569
$
8,209
2,412
1,892
1,680
86
(10
)
(248
)
275
411
283
10,376
9,862
9,924
6,047
6,999
6,445
1,534
1,543
1,680
1,027
1,034
1,174
(13
)
(3
)
131
124
124
8,726
9,700
9,420
1,650
162
504
(469
)
105
(31
)
(44
)
(24
)
(27
)
1,137
243
446
(29
)
21
(21
)
$
1,108
$
264
$
425
$
4.17
$
0.68
$
1.49
(0.11
)
0.08
(0.09
)
$
4.06
$
0.76
$
1.40
$
4.16
$
0.68
$
1.49
(0.11
)
0.08
(0.09
)
$
4.05
$
0.76
$
1.40
262.1
256.0
256.0
262.3
256.0
256.0
Table of Contents
Consolidated Balance Sheets
December 31
2006
2005
(In millions, except share data)
$
35,851
$
33,234
657
681
1,852
1,509
26
33
5,710
4,238
44,096
39,695
84
96
9,478
11,917
2,108
2,096
313
312
303
565
1,190
1,197
342
340
62
855
1,105
277
197
142
146
592
737
503
551
$
60,283
$
59,016
$
29,636
$
30,938
3,784
3,706
6,645
6,297
1,015
1,495
2,851
767
221
129
50
53
252
2,156
1,438
40
539
1,636
2,740
2,513
503
551
50,180
49,775
335
291
750
683
645
2,166
1,701
6,486
5,621
549
359
(58
)
(67
)
9,826
9,009
(58
)
(59
)
9,768
8,950
$
60,283
$
59,016
Table of Contents
Consolidated Statements of Cash Flows
Years ended December 31
2006
2005
2004
(In millions)
$
1,108
$
264
$
425
29
(21
)
21
(1
)
36
44
24
27
173
(220
)
37
374
164
(93
)
(86
)
10
248
(170
)
(45
)
(67
)
(274
)
(153
)
9
48
54
75
2,427
3,531
(545
)
7
71
194
(1
)
(15
)
(12
)
102
(62
)
596
(2
)
788
233
(1,097
)
(1,344
)
(318
)
(771
)
(943
)
1,075
142
(16
)
335
306
55
105
(98
)
75
(397
)
1,153
1,952
1,559
$
2,261
$
2,216
$
1,984
$
(11
)
$
(47
)
$
(16
)
$
2,250
$
2,169
$
1,968
$
(48,757
)
$
(62,990
)
$
(58,379
)
42,433
55,611
48,427
4,310
4,579
4,800
(340
)
(482
)
(351
)
221
316
522
(1,331
)
1,627
2,021
2,084
(151
)
476
(195
)
86
(30
)
(131
)
(45
)
(41
)
8
57
647
16
56
(194
)
$
(1,682
)
$
(1,336
)
$
(2,102
)
$
36
$
20
$
18
$
(1,646
)
$
(1,316
)
$
(2,084
)
Table of Contents
2006
2005
2004
$
759
$
$
972
(294
)
(568
)
(618
)
(589
)
(281
)
(479
)
4
7
181
(993
)
499
10
2
(1
)
3
5
$
(605
)
$
(837
)
$
61
$
$
$
$
(605
)
$
(837
)
$
61
(1
)
16
(55
)
14
(42
)
13
(14
)
42
(13
)
125
109
164
$
124
$
125
$
109
$
84
$
96
$
95
40
29
14
$
124
$
125
$
109
Table of Contents
Consolidated Statements of Stockholders Equity
Accumulated
Notes
Additional
Other
Receivable for
Total
Preferred
Common
Paid-in
Retained
Comprehensive
Treasury
the Issuance of
Stockholders
(In millions)
Stock
Stock
Capital
Earnings
Income (Loss)
Stock
Common Stock
Equity
$
1,500
$
565
$
1,031
$
4,932
$
852
$
(69
)
$
(76
)
$
8,735
425
425
(191
)
(191
)
234
(750
)
80
670
5
5
750
645
1,701
5,357
661
(69
)
(71
)
8,974
264
264
(302
)
(302
)
(38
)
2
2
12
12
750
645
1,701
5,621
359
(67
)
(59
)
8,950
1,108
1,108
236
236
1,344
(243
)
(243
)
(750
)
(750
)
38
461
499
(46
)
(46
)
1
9
10
1
1
3
3
$
$
683
$
2,166
$
6,486
$
549
$
(58
)
$
(58
)
$
9,768
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Nature of Hedge Designation
Derivatives Change in Fair Value Reflected In:
Realized investment gains or losses
Realized investment gains or losses, along
with the change in fair value of the hedged
asset or liability that is attributable to the
hedged risk
Other comprehensive income, with subsequent
reclassification to earnings when the hedged
transaction, asset or liability impacts
earnings
Consistent with fair value or cash flow above,
depending on the nature of the hedging
relationship
Table of Contents
Table of Contents
Table of Contents
Years ended December 31
2006
2005
2004
(In millions, except per share amounts)
$
1,137
$
243
$
446
(46
)
(70
)
(65
)
$
1,091
$
173
$
381
262.1
256.0
256.0
0.2
262.3
256.0
256.0
$
4.17
$
0.68
$
1.49
$
4.16
$
0.68
$
1.49
Years ended December 31
2005
2004
(In millions, except per share amounts)
$
243
$
446
(70
)
(65
)
173
381
21
(21
)
194
360
(2
)
(2
)
$
192
$
358
$
0.76
$
1.40
$
0.75
$
1.39
Table of Contents
Table of Contents
Table of Contents
Years ended December 31
2006
2005
2004
(In millions)
$
1,842
$
1,608
$
1,571
248
147
56
288
254
212
23
25
14
103
47
110
(68
)
(166
)
(261
)
18
20
18
2,454
1,935
1,720
(42
)
(43
)
(40
)
$
2,412
$
1,892
$
1,680
(a)
Table of Contents
Years ended December 31
2006
2005
2004
(In millions)
$
382
$
361
$
704
(377
)
(451
)
(457
)
5
(90
)
247
24
73
225
(8
)
(35
)
(23
)
16
38
202
66
39
(688
)
87
(13
)
(239
)
(1
)
3
(9
)
86
(10
)
(248
)
98
(443
)
(53
)
78
34
(98
)
2
(1
)
178
(410
)
(151
)
(10
)
(12
)
(70
)
4
18
19
(58
)
158
55
114
(246
)
(147
)
$
200
$
(256
)
$
(395
)
Table of Contents
Cost or
Gross
Gross Unrealized Losses
Estimated
Amortized
Unrealized
Less than
Greater than
Fair
December 31, 2006
Cost
Gains
12 Months
12 Months
Value
(In millions)
$
5,056
$
86
$
3
$
1
$
5,138
13,821
28
20
152
13,677
4,915
237
1
5
5,146
6,811
338
8
9
7,132
3,443
207
7
1
3,642
885
28
1
912
34,931
924
40
168
35,647
204
204
214
239
1
452
134
11
145
348
250
1
597
60
60
$
35,543
$
1,174
$
41
$
168
$
36,508
Table of Contents
Cost or
Gross
Gross Unrealized Losses
Estimated
Amortized
Unrealized
Less than
Greater than
Fair
December 31, 2005
Cost
Gains
12 Months
12 Months
Value
(In millions)
$
1,355
$
119
$
4
$
1
$
1,469
12,986
43
137
33
12,859
9,054
193
31
7
9,209
5,906
322
52
11
6,165
2,830
234
18
2
3,044
213
4
1
216
1
1
32,345
915
242
55
32,963
271
271
140
150
1
289
322
22
1
343
462
172
2
632
49
49
$
33,127
$
1,087
$
244
$
55
$
33,915
Table of Contents
December 31, 2006
December 31, 2005
Gross
Gross
Estimated
Unrealized
Estimated
Unrealized
Fair Value
Loss
Fair Value
Loss
(In millions)
$
9,829
$
24
$
9,976
$
142
1,267
12
2,739
61
5,248
127
1,400
45
1,022
41
219
7
17,366
204
14,334
255
509
2
632
29
87
2
118
10
24
122
3
2
2
622
4
874
42
17,988
208
15,208
297
10
1
49
2
1
1
3
3
14
1
53
2
$
18,002
$
209
$
15,261
$
299
Table of Contents
Table of Contents
December 31, 2006
December 31, 2005
Cost or
Estimated
Cost or
Estimated
Amortized
Fair
Amortized
Fair
Cost
Value
Cost
Value
(In millions)
$
1,599
$
1,602
$
953
$
955
13,024
13,039
11,375
11,320
9,555
9,619
6,176
6,280
10,753
11,387
13,841
14,408
$
34,931
$
35,647
$
32,345
$
32,963
Table of Contents
Contractual/
Estimated
Estimated
Net
Notional
Fair Value
Fair Value
Recognized
As of and for the year ended December 31, 2006
Amount
Asset
(Liability)
Gains
(In millions)
$
4,795
$
$
(30
)
$
14
4
8
6
2
9
722
(3
)
65
79
25
$
5,644
$
2
$
(33
)
$
83
$
1
$
$
$
$
1
$
$
$
Table of Contents
Net
Contractual/
Estimated
Estimated
Recognized
Notional
Fair Value
Fair Value
Gains
As of and for the year ended December 31, 2005
Amount
Asset
(Liability)
(Losses)
(In millions)
$
265
$
$
(1
)
$
(1
)
756
(8
)
46
2
15
2
6
2
12
1
(33
)
1,058
(4
)
18
166
2
59
(1
)
(1
)
21
20
(2
)
21
2
$
2,399
$
3
$
(14
)
$
35
$
7
$
$
$
$
7
$
$
$
Table of Contents
Table of Contents
2006
2005
Estimated
Estimated
Carrying
Fair
Carrying
Fair
December 31
Amount
Value
Amount
Value
(In millions)
$
35,851
$
35,851
$
33,234
$
33,234
657
657
681
681
1,852
1,852
1,509
1,509
12
12
3
3
434
434
466
466
41
41
44
44
58
56
59
59
$
898
$
899
$
1,363
$
1,359
2,156
2,240
1,438
1,507
252
252
52
52
53
53
448
448
491
491
Table of Contents
Years ended December 31
2006
2005
2004
(In millions)
$
(577
)
$
(57
)
$
(176
)
75
116
111
33
46
34
$
(469
)
$
105
$
(31
)
Years ended December 31
2006
2005
2004
(In millions)
$
(296
)
$
(115
)
$
6
(173
)
220
(37
)
$
(469
)
$
105
$
(31
)
Table of Contents
December 31
(In millions)
2006
2005
$
775
$
807
245
232
132
187
26
24
248
292
187
214
102
102
93
130
23
38
171
194
2,002
2,220
(30
)
2,002
2,190
648
651
340
274
11
15
148
145
1,147
1,085
$
855
$
1,105
Table of Contents
As of and for the years ended December 31
(In millions)
2006
2005
2004
$
30,938
$
31,523
$
31,732
10,605
13,879
14,066
20,333
17,644
17,666
(42
)
4,840
5,516
6,062
361
1,100
240
121
115
135
5,322
6,731
6,437
784
1,341
1,936
3,439
2,711
4,522
(13
)
(10
)
(41
)
4,210
4,042
6,417
21,445
20,333
17,644
8,191
10,605
13,879
$
29,636
$
30,938
$
31,523
(a)
(b)
(c)
Table of Contents
Years ended December 31
(In millions)
2006
2005
2004
$
63
$
53
$
1
10
54
269
1,044
179
332
1,107
234
29
(7
)
6
$
361
$
1,100
$
240
Life and
Corporate
Standard
Specialty
Group
and Other
(In millions)
Lines
Lines
Non-Core
Non-Core
Total
$
6,746
$
1,715
$
2,366
$
2,511
$
13,338
8,188
3,814
768
3,528
16,298
$
14,934
$
5,529
$
3,134
$
6,039
$
29,636
$
5,234
$
1,350
$
1,496
$
1,453
$
9,533
6,632
2,921
360
1,999
11,912
$
11,866
$
4,271
$
1,856
$
3,452
$
21,445
Claim and Claim Adjustment Expense Reserves
Life and
Corporate
Standard
Specialty
Group
and Other
(In millions)
Lines
Lines
Non-Core
Non-Core
Total
$
7,033
$
1,907
$
2,542
$
3,297
$
14,779
8,051
3,298
735
4,075
16,159
$
15,084
$
5,205
$
3,277
$
7,372
$
30,938
$
5,165
$
1,442
$
1,456
$
1,554
$
9,617
6,081
2,352
381
1,902
10,716
$
11,246
$
3,794
$
1,837
$
3,456
$
20,333
Table of Contents
December 31, 2006
December 31, 2005
Environmental
Environmental
Pollution and
Pollution and
(In millions)
Asbestos
Mass Tort
Asbestos
Mass Tort
$
2,635
$
647
$
2,992
$
680
(1,183
)
(231
)
(1,438
)
(257
)
$
1,452
$
416
$
1,554
$
423
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Corporate
Standard
Specialty
and Other
(In millions)
Lines
Lines
Non-Core
Total
$
157
$
(10
)
$
23
$
170
63
63
157
(10
)
86
233
(88
)
25
2
(61
)
$
69
$
15
$
88
$
172
Table of Contents
Corporate
Standard
Specialty
and Other
(In millions)
Lines
Lines
Non-Core
Total
$
376
$
42
$
171
$
589
63
63
376
42
234
652
183
5
57
245
559
47
291
897
(101
)
(12
)
11
(102
)
(6
)
19
4
17
(107
)
7
15
(85
)
$
452
$
54
$
306
$
812
Corporate
Standard
Specialty
and Other
(In millions)
Lines
Lines
Non-Core
Total
$
107
$
75
$
20
$
202
55
55
107
75
75
257
8
(17
)
9
115
58
84
257
(96
)
(33
)
12
(117
)
(1
)
5
(3
)
1
(97
)
(28
)
9
(116
)
$
18
$
30
$
93
$
141
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Components of reinsurance receivables
(In millions)
December 31, 2006
December 31, 2005
$
8,191
$
10,605
1,050
1,193
48
56
658
582
9,947
12,436
(469
)
(519
)
$
9,478
$
11,917
Table of Contents
Assumed/
(In millions)
Direct
Assumed
Ceded
Net
Net %
$
9,125
$
120
$
2,283
$
6,962
1.7
%
718
59
138
639
9.2
100
98
2
$
9,943
$
179
$
2,519
$
7,603
2.4
%
$
10,354
$
186
$
3,675
$
6,865
2.7
%
1,040
60
400
700
8.6
140
136
4
$
11,534
$
246
$
4,211
$
7,569
3.3
%
$
10,739
$
199
$
3,634
$
7,304
2.7
%
1,228
63
507
784
8.0
419
298
121
$
12,386
$
262
$
4,439
$
8,209
3.2
%
Table of Contents
Assumed/
(In millions)
Direct
Assumed
Ceded
Net
Net %
$
9,193
$
111
$
2,282
$
7,022
1.6
%
719
59
139
639
9.2
86
84
2
$
9,998
$
170
$
2,505
$
7,663
2.2
%
$
9,546
$
203
$
2,934
$
6,815
3.0
%
1,037
58
395
700
8.3
136
132
4
$
10,719
$
261
$
3,461
$
7,519
3.5
%
$
10,289
$
48
$
3,375
$
6,962
0.7
%
1,241
62
508
795
7.8
427
305
122
$
11,957
$
110
$
4,188
$
7,879
1.4
%
(In millions)
Direct
Assumed
Ceded
Net
$
15,652
$
1
$
15,633
$
20
20,548
1
20,528
21
56,610
35
54,486
2,159
Table of Contents
Table of Contents
Years ended December 31
(In millions)
Aggregate Cover
CCC Cover
All Other
Total
$
$
$
(11
)
$
(11
)
(113
)
(113
)
(40
)
(19
)
(59
)
$
$
(40
)
$
(143
)
$
(183
)
$
(17
)
$
$
48
$
31
(244
)
(154
)
(398
)
(27
)
(27
)
(57
)
(66
)
(34
)
(157
)
$
(318
)
$
(66
)
$
(167
)
$
(551
)
$
(1
)
$
$
(19
)
$
(20
)
15
15
2
2
(82
)
(91
)
(72
)
(245
)
$
(83
)
$
(91
)
$
(74
)
$
(248
)
Years ended December 31
(In millions)
2006
2005
2004
$
(155
)
$
(399
)
$
(185
)
(4
)
(41
)
(1
)
(24
)
(111
)
(62
)
$
(183
)
$
(551
)
$
(248
)
Table of Contents
December 31
(In millions)
2006
2005
$
$
20
31
31
250
150
149
200
199
398
69
69
546
546
348
149
149
241
241
24
36
$
2,156
$
1,690
$
$
252
2,156
1,438
$
2,156
$
1,690
(In millions)
$
350
400
1,418
(12
)
$
2,156
Table of Contents
Table of Contents
Pension Benefits
Postretirement Benefits
(In millions)
2006
2005
2006
2005
$
2,636
$
2,527
$
210
$
180
26
27
2
3
142
145
10
10
7
8
1
(60
)
87
(34
)
21
(152
)
(146
)
(19
)
(12
)
2
8
(5
)
1
2,602
2,636
177
210
2,107
2,029
226
161
79
67
12
4
7
8
(152
)
(146
)
(19
)
(12
)
(2
)
(4
)
2,258
2,107
(344
)
(529
)
(177
)
(210
)
528
94
(1
)
9
(174
)
$
7
$
(290
)
20
(372
)
(290
)
9
350
$
7
$
(290
)
(344
)
(177
)
$
(344
)
$
(177
)
(1
)
6
(146
)
381
55
$
386
$
(91
)
Table of Contents
Years ended December 31
2006
2005
2004
(In millions)
$
26
$
27
$
31
142
145
145
(162
)
(156
)
(152
)
2
2
2
25
21
13
5
$
33
$
39
$
44
$
2
$
3
$
4
10
10
17
(28
)
(28
)
(20
)
4
4
3
$
(12
)
$
(11
)
$
4
$
(124
)
$
51
$
101
71
$
(53
)
$
51
$
101
Table of Contents
December 31, 2006
Before Application of
After Application of
(In millions)
SFAS 158
Adjustments
SFAS 158
$
830
$
25
$
855
614
(22
)
592
60,280
3
60,283
2,691
49
2,740
50,131
49
50,180
337
(2
)
335
593
(44
)
549
9,812
(44
)
9,768
December 31
2006
2005
5.750
%
5.625
%
8.00
8.00
5.83
5.83
5.625
%
5.500
%
December 31
2006
2005
2004
5.625
%
5.875
%
6.22
%
8.00
8.00
8.00
5.83
5.83
5.83
5.500
%
5.875
%
6.190
%
(In millions)
Pension Benefits
Postretirement Benefits
$
13
$
2
1
(18
)
$
14
$
(16
)
Table of Contents
Percentage of Plan Assets
December 31,
2006
2005
48
%
24
%
26
25
22
15
2
33
2
3
100
%
100
%
Table of Contents
Pension
Postretirement
Benefits
Benefits
(In millions)
150
12
148
12
149
13
150
13
153
14
826
71
Table of Contents
2006
2005
2004
Weighted-
Weighted-
Weighted-
Average
Average
Average
Option
Option
Option
Number
Price per
Number
Price per
Number
Price per
of Awards
Award
of Awards
Award
of Awards
Award
1,628,600
$
28.71
1,474,000
$
29.17
1,434,800
$
29.97
327,000
30.98
328,800
27.27
350,400
26.30
(236,500
)
30.71
(42,050
)
28.60
(2,900
)
26.28
(24,200
)
29.05
(132,150
)
30.38
(308,300
)
29.63
1,694,900
$
28.86
1,628,600
$
28.71
1,474,000
$
29.17
965,400
$
29.13
963,650
$
30.17
827,450
$
31.16
$
10.73
$
7.48
$
7.74
Table of Contents
Future
Future
Minimum
Minimum
Lease
Sublease
Payments
Receipts
(In millions)
$
49
$
7
43
6
35
5
31
5
25
4
51
5
$
234
$
32
Table of Contents
Table of Contents
Statutory Capital and Surplus
Statutory Net Income
December 31
Years Ended December 31
2006
2005
2006
2005
2004
(In millions)
$
8,137
$
6,940
$
721
$
550
$
694
687
627
67
65
334
(a)
Surplus includes the property and casualty companies equity ownership of the life companys
capital and surplus.
Table of Contents
Years ended December 31
2006
2005
2004
(In millions)
$
1,108
$
264
$
425
127
(136
)
316
(11
)
(131
)
(414
)
116
(267
)
(98
)
(6
)
4
(68
)
42
(24
)
24
(3
)
80
(33
)
(65
)
4
18
19
236
(302
)
(191
)
$
1,344
$
(38
)
$
234
December 31
2006
2005
(In millions)
$
93
$
51
(147
)
(227
)
(46
)
649
535
$
549
$
359
Table of Contents
Table of Contents
Corporate
Standard
Specialty
Life and Group
and Other
Year ended December 31, 2006
Lines
Lines
Non-Core
Non-Core
Eliminations
Total
(In millions)
$
4,413
$
2,555
$
641
$
(1
)
$
(5
)
$
7,603
991
403
698
320
2,412
96
154
66
9
(50
)
275
5,500
3,112
1,405
328
(55
)
10,290
3,093
1,546
1,195
190
1
6,025
18
4
22
981
538
14
1
1,534
393
145
201
24
(6
)
757
(13
)
(13
)
128
139
58
126
(50
)
401
4,613
2,372
1,468
328
(55
)
8,726
887
740
(63
)
1,564
(258
)
(245
)
49
4
(450
)
(12
)
(31
)
(1
)
(44
)
617
464
(14
)
3
1,070
76
28
(50
)
32
86
(21
)
(10
)
17
(5
)
(19
)
$
672
$
482
$
(47
)
$
30
$
$
1,137
$
3,260
$
1,296
$
2,378
$
3,013
$
$
9,947
$
2,053
$
424
$
52
$
(53
)
$
$
2,476
$
14,934
$
5,529
$
3,134
$
6,039
$
$
29,636
2,007
1,599
173
5
3,784
6,645
6,645
35
980
1,015
$
407
$
283
$
500
$
$
$
1,190
Table of Contents
Corporate
Standard
Specialty
Life and Group
and Other
Year ended December 31, 2005
Lines
Lines
Non-Core
Non-Core
Eliminations
Total
(In millions)
$
4,410
$
2,475
$
704
$
(8
)
$
(12
)
$
7,569
767
281
593
251
1,892
98
124
95
159
(65
)
411
5,275
2,880
1,392
402
(77
)
9,872
3,857
1,617
1,160
343
(2
)
6,975
19
4
1
24
986
532
22
3
1,543
444
115
257
23
(10
)
829
110
108
61
115
(65
)
329
5,416
2,376
1,501
484
(77
)
9,700
(141
)
504
(109
)
(82
)
172
110
(154
)
58
91
105
(10
)
(14
)
(24
)
(41
)
336
(51
)
9
253
20
14
(30
)
(14
)
(10
)
(11
)
(2
)
11
2
$
(32
)
$
348
$
(70
)
$
(3
)
$
$
243
$
3,968
$
1,493
$
2,707
$
4,268
$
$
12,436
$
2,056
$
375
$
105
$
5
$
$
2,541
$
15,084
$
5,205
$
3,277
$
7,372
$
$
30,938
1,952
1,577
168
9
3,706
6,297
6,297
30
1,465
1,495
$
408
$
274
$
515
$
$
$
1,197
Table of Contents
Corporate
Standard
Specialty
Life and Group
and Other
Year ended December 31, 2004
Lines
Lines
Non-Core
Non-Core
Eliminations
Total
(In millions)
$
4,917
$
2,277
$
921
$
128
$
(34
)
$
8,209
496
246
692
246
1,680
129
109
91
40
(86
)
283
5,542
2,632
1,704
414
(120
)
10,172
3,480
1,441
1,372
162
(21
)
6,434
9
5
(3
)
11
1,109
506
36
29
1,680
593
88
291
13
(13
)
972
(3
)
(3
)
94
101
76
141
(86
)
326
5,285
2,141
1,772
342
(120
)
9,420
257
491
(68
)
72
752
(27
)
(150
)
39
12
(126
)
(10
)
(17
)
(27
)
220
324
(29
)
84
599
219
84
(615
)
64
(248
)
(80
)
(30
)
230
(25
)
95
$
359
$
378
$
(414
)
$
123
$
$
446
Table of Contents
Years ended December 31
2006
2005
2004
(In millions)
$
1,249
$
1,108
$
1,180
3,576
3,532
3,938
751
655
643
5,576
5,295
5,761
2,417
2,205
2,053
436
393
361
287
296
302
3,140
2,894
2,716
384
311
435
889
900
1,025
82
151
(371
)
1,355
1,362
1,089
129
71
225
231
317
253
360
388
478
(55
)
(77
)
(120
)
$
10,376
$
9,862
$
9,924
Table of Contents
Years ended December 31
2006
2005
2004
(In millions)
$
17
$
15
$
17
(2
)
7
(7
)
15
22
10
(51
)
1
(30
)
(36
)
23
(20
)
7
(2
)
(1
)
$
(29
)
$
21
$
(21
)
Table of Contents
December 31
2006
2005
(In millions)
$
317
$
358
33
78
40
29
3
5
393
470
308
338
17
19
325
357
$
68
$
113
Table of Contents
Quarterly Financial Data
Full
First
Second
Third
Fourth
Year
(In millions, except per share data)
$
2,501
$
2,412
$
2,620
$
2,843
$
10,376
$
343
$
341
$
436
$
486
$
1,606
(108
)
(100
)
(131
)
(130
)
(469
)
235
241
305
356
1,137
(6
)
(2
)
6
(27
)
(29
)
$
229
$
239
$
311
$
329
$
1,108
$
0.84
$
0.87
$
1.13
$
1.33
$
4.17
(0.02
)
(0.01
)
0.02
(0.10
)
(0.11
)
$
0.82
$
0.86
$
1.15
$
1.23
$
4.06
$
0.84
$
0.87
$
1.13
$
1.32
$
4.16
(0.02
)
(0.01
)
0.02
(0.10
)
(0.11
)
$
0.82
$
0.86
$
1.15
$
1.22
$
4.05
Quarterly Financial Data
Full
First
Second
Third
Fourth
Year
(In millions, except per share data)
$
2,364
$
2,570
$
2,520
$
2,408
$
9,862
$
234
$
336
$
(48
)
$
(384
)
$
138
(56
)
(48
)
51
158
105
178
288
3
(226
)
243
7
2
3
9
21
$
185
$
290
$
6
$
(217
)
$
264
$
0.63
$
1.06
$
(0.06
)
$
(0.95
)
$
0.68
0.03
0.02
0.03
0.08
$
0.66
$
1.06
$
(0.04
)
$
(0.92
)
$
0.76
Table of Contents
Table of Contents
Table of Contents
CNA Financial Corporation
Chicago, Illinois
February 22, 2007
Table of Contents
Chicago, Illinois
February 22, 2007
Table of Contents
CNA Financial Corporation
Chicago, Illinois
Table of Contents
February 22, 2007
Table of Contents
Table of Contents
140
141
FIRST
POSITION AND
BECAME
OFFICES
EXECUTIVE
HELD WITH
OFFICER OF
NAME
REGISTRANT
AGE
CNA
PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
Officer, CNA
Financial
Corporation
56
2001
President, Chief
Actuary, CNA
insurance companies
58
2004
51
1997
57
2002
President & Chief
Financial Officer
55
2004
Table of Contents
Number of securities
Number of securities to
remaining available for
be issued upon
Weighted average exercise
future issuance under
exercise of outstanding
price of outstanding
equity compensation plans
options, warrants and
options, warrants and
(excluding securities
rights
rights
reflected in column (a))
(a)
(b)
(c)
1,694,900
$
28.86
2,011,725
1,694,900
$
28.86
2,011,725
Table of Contents
142
143
144
145
Exhibit
Description
of Exhibit
Number
(3
)
Articles of incorporation and by-laws:
Certificate of Incorporation of CNA Financial Corporation, as amended May 6, 1987 (Exhibit 3.1 to 1987 Form 10-K incorporated herein by
reference)
3.1
Certificate of Amendment of Certificate of Incorporation, dated May 14, 1998
3.1a
Certificate of Amendment of Certificate of Incorporation, dated May 10, 1999 (Exhibit 3.1 to 1999 Form 10-K incorporated herein by reference)
3.1b
By-Laws of CNA Financial Corporation, as amended April 28, 2004 (Exhibit 3.2 to 2004 Form 10-K incorporated herein by reference)
3.2
(4
)
Instruments defining the rights of security holders, including indentures:
CNA Financial Corporation hereby agrees to furnish to the Commission upon request copies of instruments with respect to long term debt,
pursuant to Item 601(b) (4) (iii) of Regulation S-K
4.1
(10
)
Material contracts:
Table of Contents
Exhibit
Description of Exhibit
Number
Federal Income Tax Allocation Agreement, dated February 29, 1980 between CNA Financial Corporation and Loews Corporation (Exhibit 10.2 to
1987 Form 10-K incorporated herein by reference)
10.1
CNA Supplemental Executive Retirement Plan, restated as of January 1, 2003 (Exhibit 99.2 to Form 8-K filed January 6, 2005 incorporated
herein by reference)
10.2
First Amendment to the CNA Supplemental Executive Retirement Plan, dated February 27, 2004 (Exhibit 99.3 to Form 8-K filed January 6, 2005
incorporated herein by reference)
10.3
Second Amendment to the CNA Supplemental Executive Retirement Plan, dated March 23, 2004 (Exhibit 99.4 to Form 8-K filed January 6, 2005
incorporated herein by reference)
10.4
Third Amendment to the CNA Supplemental Executive Retirement Plan, dated December 31, 2004 (Exhibit 99.1 to Form 8-K filed January 6, 2005
incorporated herein by reference)
10.5
CNA Financial Corporation 2000 Long Term Incentive Plan, dated August 4, 1999 (Exhibit 4.1 to 1999 Form S-8 filed August 4, 1999,
incorporated herein by reference)
10.6
CNA Financial Corporation 2000 Incentive Compensation Plan, as amended and restated, effective as of February 9, 2005 (Exhibit A to Form DEF
14A, filed March 31, 2005, incorporated herein by reference (as indicated in Form 8-K, filed May 2, 2005, CNAF shareholders voted to approve
this plan on April 27, 2005))
10.7
Share Purchase Agreement between CNA and TAWA UK Limited,
dated July 15, 2002 for the entire issued share capital of CNA Re
Management Company Limited (Exhibit 2.1 to September 30, 2002
Form 10-Q incorporated herein by reference)
10.8
Employment Agreement between CNA Financial Corporation
and Stephen W. Lilienthal, dated October 26, 2005 (Exhibit 10.22 to
September 30, 2005 Form 10-Q incorporated herein by reference)
10.9
Employment Agreement between Continental Casualty Company
and James R. Lewis, dated October 26, 2005 (Exhibit 10.21 to
September 30, 2005 Form 10-Q incorporated herein by reference)
10.10
Employment Agreement between Continental Casualty Company
and Jonathan D. Kantor, dated March 16, 2005 (Exhibit 99.1 to June 13,
2005 Form 8-K incorporated herein by reference)
10.11
Capital Support Agreement among CNA Financial Corporation, Loews
Corporation and Continental Casualty Company, dated November 12, 2003 (Exhibit
10.15 to 2003 Form 10-K incorporated herein by reference)
10.12
Employment Agreement between Continental Casualty Company
and D. Craig Mense, dated December 2, 2004 (Exhibit 99.1 to December 8,
2004 Form 8-K incorporated herein by reference)
10.13
Table of Contents
Exhibit
Description of Exhibit
Number
Addendum to Employment Agreement between Continental Casualty Company
and D. Craig Mense, dated December 2, 2004 (Exhibit 99.2 to December 8,
2004 Form 8-K incorporated herein by reference)
10.14
Employment Agreement between Continental Casualty Company
and Michael Fusco, dated April 1, 2004 (Exhibit 10.16 to 2004 Form
10-K incorporated herein by reference)
10.15
CNA Supplemental Executive Savings and Capital Accumulation Plan, dated
July 1, 2003 (Exhibit 10.17 to 2004 Form 10-K incorporated herein by reference)
10.16
First Amendment to the CNA Supplemental Executive Savings and Capital
Accumulation Plan, dated February 27, 2004 (Exhibit 10.18 to 2004 Form 10-K
incorporated herein by reference)
10.17
Second Amendment to the CNA Supplemental Executive Savings and Capital
Accumulation Plan, dated March 23, 2004 (Exhibit 10.19 to 2004 Form 10-K
incorporated herein by reference)
10.18
Form of Award Letter for Long-Term Incentive Cash Award to Executive
Officers for the Performance Period Beginning January 1, 2006 and Ending
December 31, 2008, Delivered on April 14, 2006 (Exhibit 99.1 to April 19, 2006
Form 8-K incorporated herein by reference)
10.19
Form of Award Terms for Long-Term Incentive Cash Award to Executive Officers
for the Performance Period Beginning January 1, 2006 and Ending December 31, 2008,
Delivered on April 14, 2006 (Exhibit 99.2 to April 19, 2006 Form 8-K incorporated
herein by reference)
10.20
Registration Rights Agreement, dated August 8, 2006, between CNA Financial
Corporation and Loews Corporation (Exhibit 10.1 to August 8, 2006 Form 8-K
incorporated herein by reference)
10.21
Amendment to Employment Agreement
between Continental Casualty Company and Michael Fusco, dated
February 7, 2007
10.22
(21
)
Significant Subsidiaries of CNAF
21.1
(23
)
Consent of Independent Registered Public Accounting Firm
23.1
(31
)
Certification of Chief Executive Officer
31.1
Certification of Chief Financial Officer
31.2
(32
)
Written Statement of the Chief Executive Officer of CNA Financial Corporation Pursuant
to 18 U.S.C Section 1350 (As adopted by Section 906 of the Sarbanes-Oxley Act of 2002)
32.1
Written Statement of the Chief Financial Officer of CNA Financial Corporation Pursuant
to 18 U.S.C Section 1350 (As adopted by Section 906 of the Sarbanes-Oxley Act of 2002)
32.2
Exhibits:
None.
Condensed Financial Information of Unconsolidated Subsidiaries:
None.
on file with the Securities and Exchange Commission.
Table of Contents
December 31, 2006
Cost or
Estimated
Amortized
Fair
Carrying
Cost
Value
Value
(In millions)
$
5,368
$
5,445
$
5,445
4,915
5,146
5,146
2,679
2,779
2,779
753
850
850
20,331
20,515
20,515
885
912
912
34,931
35,647
35,647
2
2
2
14
14
14
188
188
188
204
204
204
3
5
5
211
447
447
134
145
145
348
597
597
60
60
60
60
$
60
60
1,852
1,852
26
26
5,537
5,538
172
172
$
43,130
$
44,096
Table of Contents
Years ended December 31 | 2006 | 2005 | 2004 | |||||||||
(In millions) | ||||||||||||
Revenues:
|
||||||||||||
Net investment income
|
$ | 21 | $ | 18 | $ | 14 | ||||||
Realized investment losses
|
(7 | ) | (29 | ) | (62 | ) | ||||||
Other income
|
1 | | 5 | |||||||||
|
||||||||||||
|
||||||||||||
Total revenues
|
15 | (11 | ) | (43 | ) | |||||||
|
||||||||||||
|
||||||||||||
Expenses:
|
||||||||||||
Administrative and general
|
2 | 9 | 5 | |||||||||
Interest
|
118 | 110 | 104 | |||||||||
|
||||||||||||
|
||||||||||||
Total expenses
|
120 | 119 | 109 | |||||||||
|
||||||||||||
|
||||||||||||
Loss from operations before income taxes and
equity in net income of subsidiaries
|
(105 | ) | (130 | ) | (152 | ) | ||||||
Income tax benefit
|
37 | 46 | 53 | |||||||||
|
||||||||||||
|
||||||||||||
Loss before equity in net income of subsidiaries
|
(68 | ) | (84 | ) | (99 | ) | ||||||
Equity in net income of subsidiaries
|
1,176 | 348 | 524 | |||||||||
|
||||||||||||
|
||||||||||||
Net income
|
$ | 1,108 | $ | 264 | $ | 425 | ||||||
|
146
December 31 | 2006 | 2005 | ||||||
(In millions) | ||||||||
Assets:
|
||||||||
Investment in subsidiaries
|
$ | 11,512 | $ | 10,263 | ||||
Fixed maturity securities available-for-sale, at fair value (amortized
cost of $9 and $1)
|
9 | 1 | ||||||
Equity securities available-for-sale, at fair value (cost of $1 and $1)
|
1 | 1 | ||||||
Short term investments
|
280 | 198 | ||||||
Receivables for securities sold
|
1 | 10 | ||||||
Amounts due from affiliates
|
37 | 44 | ||||||
Other assets
|
7 | | ||||||
|
||||||||
|
||||||||
Total assets
|
$ | 11,847 | $ | 10,517 | ||||
|
||||||||
|
||||||||
Liabilities and Stockholders Equity:
|
||||||||
Liabilities:
|
||||||||
Short term debt
|
| 250 | ||||||
Long term debt
|
2,035 | 1,287 | ||||||
Other
|
44 | 30 | ||||||
|
||||||||
|
||||||||
Total liabilities
|
2,079 | 1,567 | ||||||
|
||||||||
|
||||||||
Stockholders equity:
|
||||||||
Preferred
stock (12,500,000 shares authorized)
Series H Issue (no par value; $100,000 stated value; no shares and 7,500 shares issued; held by Loews Corporation) |
| 750 | ||||||
Common stock ($2.50 par value; 500,000,000 shares authorized;
273,040,543 and 258,177,285 shares issued; and 271,108,780 and
256,001,968 shares outstanding)
|
683 | 645 | ||||||
Additional paid-in capital
|
2,166 | 1,701 | ||||||
Retained earnings
|
6,486 | 5,621 | ||||||
Accumulated other comprehensive income
|
549 | 359 | ||||||
Treasury stock (1,931,763 and 2,175,317 shares), at cost
|
(58 | ) | (67 | ) | ||||
|
||||||||
|
||||||||
|
9,826 | 9,009 | ||||||
Notes receivable for the issuance of common stock
|
(58 | ) | (59 | ) | ||||
|
||||||||
|
||||||||
Total stockholders equity
|
9,768 | 8,950 | ||||||
|
||||||||
|
||||||||
Total liabilities and stockholders equity
|
$ | 11,847 | $ | 10,517 | ||||
|
147
Years ended December 31 | 2006 | 2005 | 2004 | |||||||||
(In millions) | ||||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$ | 1,108 | $ | 264 | $ | 425 | ||||||
Adjustments to reconcile net income to net cash flows from operating activities:
|
||||||||||||
Income of subsidiaries
|
(1,176 | ) | (348 | ) | (524 | ) | ||||||
Dividends received from subsidiaries
|
91 | 127 | 307 | |||||||||
Realized investment losses
|
7 | 29 | 62 | |||||||||
Other, net
|
7 | (59 | ) | 233 | ||||||||
|
||||||||||||
|
||||||||||||
Total adjustments
|
(1,071 | ) | (251 | ) | 78 | |||||||
|
||||||||||||
|
||||||||||||
Net cash flows provided by operating activities
|
37 | 13 | 503 | |||||||||
|
||||||||||||
|
||||||||||||
Cash flows from investing activities:
|
||||||||||||
Sales of fixed maturity securities
|
1 | 8 | 85 | |||||||||
Purchases of fixed maturity securities
|
| | (27 | ) | ||||||||
Change in short term investments
|
(60 | ) | 563 | (710 | ) | |||||||
Capital contributions to subsidiaries
|
(3 | ) | (41 | ) | (156 | ) | ||||||
Return of capital from subsidiaries
|
19 | | 18 | |||||||||
Other, net
|
(7 | ) | (64 | ) | (14 | ) | ||||||
|
||||||||||||
|
||||||||||||
Net cash flows provided (used) by investing activities
|
(50 | ) | 466 | (804 | ) | |||||||
|
||||||||||||
|
||||||||||||
Cash flows from financing activities:
|
||||||||||||
Proceeds from the issuance of long-term debt
|
746 | | 546 | |||||||||
Principal payments on debt
|
(250 | ) | (493 | ) | (250 | ) | ||||||
Payment to repurchase Series H issue preferred stock
|
(993 | ) | | | ||||||||
Proceeds from the issuance of common stock
|
499 | | | |||||||||
Stock options exercised
|
10 | 2 | | |||||||||
Other, net
|
1 | 12 | 5 | |||||||||
|
||||||||||||
|
||||||||||||
Net cash flows provided (used) by financing activities
|
13 | (479 | ) | 301 | ||||||||
|
||||||||||||
|
||||||||||||
Net change in cash
|
| | | |||||||||
Cash, beginning of year
|
| | | |||||||||
|
||||||||||||
|
||||||||||||
Cash, end of year
|
$ | | $ | | $ | | ||||||
|
148
December 31 | 2006 | 2005 | ||||||
(In millions) | ||||||||
Senior notes:
|
||||||||
6.750%, face amount of $250, due November 15, 2006
|
$ | | $ | 250 | ||||
6.450%, face amount of $150, due January 15, 2008
|
150 | 149 | ||||||
6.600%, face amount of $200, due December 15, 2008
|
200 | 199 | ||||||
6.000%, face amount of $400, due August 15, 2011
|
398 | | ||||||
5.850%, face amount of $549, due December 15, 2014
|
546 | 546 | ||||||
6.500%, face amount of $350, due August 15, 2016
|
348 | | ||||||
6.950%, face amount of $150, due January 15, 2018
|
149 | 149 | ||||||
Debenture, 7.250%, face amount of $243, due November 15, 2023
|
241 | 241 | ||||||
Urban Development Action Grant, 1.00%, due May 7, 2019
|
3 | 3 | ||||||
|
||||||||
|
||||||||
Total
|
$ | 2,035 | $ | 1,537 | ||||
|
||||||||
|
||||||||
Short term debt
|
$ | | $ | 250 | ||||
Long term debt
|
2,035 | 1,287 | ||||||
|
||||||||
|
||||||||
Total
|
$ | 2,035 | $ | 1,537 | ||||
|
149
150
Gross Insurance Reserves | Insurance | Amortiz- | ||||||||||||||||||||||||||||||||||||||||||
Claim | Claims and | ation | ||||||||||||||||||||||||||||||||||||||||||
Deferred | And Claim | Future | Policy- | Net | Policy- | of Deferred | Other | Net | ||||||||||||||||||||||||||||||||||||
Acquisition | Adjustment | Policy | Unearned | holders | Net Earned | Investment | holders | Acquisition | Operating | Written Pre- | ||||||||||||||||||||||||||||||||||
Costs | Expense | Benefits | Premium | Funds | Premiums | Income (a) | Benefits | Cost | Expenses | miums (b) | ||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||
December 31, 2006
|
||||||||||||||||||||||||||||||||||||||||||||
Standard Lines
|
$ | 407 | $ | 14,934 | $ | | $ | 2,007 | $ | 35 | $ | 4,413 | $ | 991 | $ | 3,111 | $ | 981 | $ | 521 | $ | 4,433 | ||||||||||||||||||||||
Specialty Lines
|
283 | 5,529 | | 1,599 | | 2,555 | 403 | 1,550 | 538 | 284 | 2,596 | |||||||||||||||||||||||||||||||||
Life and Group Non-Core
|
500 | 3,134 | 6,645 | 173 | 980 | 641 | 698 | 1,195 | 14 | 259 | 633 | |||||||||||||||||||||||||||||||||
Corporate and Other Non-Core
|
| 6,039 | | 5 | | (1 | ) | 320 | 190 | 1 | 137 | (2 | ) | |||||||||||||||||||||||||||||||
Eliminations
|
| | | | | (5 | ) | | 1 | | (56 | ) | (5 | ) | ||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
Consolidated Operations
|
$ | 1,190 | $ | 29,636 | $ | 6,645 | $ | 3,784 | $ | 1,015 | $ | 7,603 | $ | 2,412 | $ | 6,047 | $ | 1,534 | $ | 1,145 | $ | 7,655 | ||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
December 31, 2005
|
||||||||||||||||||||||||||||||||||||||||||||
Standard Lines
|
$ | 408 | $ | 15,084 | $ | | $ | 1,952 | $ | 30 | $ | 4,410 | $ | 767 | $ | 3,876 | $ | 986 | $ | 554 | $ | 4,382 | ||||||||||||||||||||||
Specialty Lines
|
274 | 5,205 | | 1,577 | | 2,475 | 281 | 1,621 | 532 | 223 | 2,463 | |||||||||||||||||||||||||||||||||
Life and Group Non-Core
|
515 | 3,277 | 6,297 | 168 | 1,465 | 704 | 593 | 1,161 | 22 | 318 | 694 | |||||||||||||||||||||||||||||||||
Corporate and Other Non-Core
|
| 7,372 | | 9 | | (8 | ) | 251 | 343 | 3 | 138 | (19 | ) | |||||||||||||||||||||||||||||||
Eliminations
|
| | | | | (12 | ) | | (2 | ) | | (75 | ) | (12 | ) | |||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
Consolidated Operations
|
$ | 1,197 | $ | 30,938 | $ | 6,297 | $ | 3,706 | $ | 1,495 | $ | 7,569 | $ | 1,892 | $ | 6,999 | $ | 1,543 | $ | 1,158 | $ | 7,508 | ||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
December 31, 2004
|
||||||||||||||||||||||||||||||||||||||||||||
Standard Lines
|
$ | 4,917 | $ | 496 | $ | 3,489 | $ | 1,109 | $ | 687 | $ | 4,582 | ||||||||||||||||||||||||||||||||
Specialty Lines
|
2,277 | 246 | 1,446 | 506 | 189 | 2,391 | ||||||||||||||||||||||||||||||||||||||
Life and Group Non-Core
|
921 | 692 | 1,369 | 36 | 367 | 633 | ||||||||||||||||||||||||||||||||||||||
Corporate and Other Non-Core
|
128 | 246 | 162 | 29 | 151 | 5 | ||||||||||||||||||||||||||||||||||||||
Eliminations
|
(34 | ) | | (21 | ) | | (99 | ) | (17 | ) | ||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
Consolidated Operations
|
$ | 8,209 | $ | 1,680 | $ | 6,445 | $ | 1,680 | $ | 1,295 | $ | 7,594 | ||||||||||||||||||||||||||||||||
|
(a) | Investment income is allocated based on each segments net carried insurance reserves as adjusted. | |
(b) | Net written premiums relate to business in property and casualty companies only. |
151
Balance at | Charged to | Charged to | ||||||||||||||||||
Beginning | Costs and | Other | Balance at | |||||||||||||||||
of Period | Expenses | Accounts (a) | Deductions | End of Period | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Year ended December 31, 2006
|
||||||||||||||||||||
Deducted from assets:
|
||||||||||||||||||||
Allowance for doubtful accounts:
|
||||||||||||||||||||
Insurance and reinsurance
receivables
|
$ | 964 | $ | 48 | $ | 3 | $ | 178 | $ | 837 | ||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Valuation allowance:
|
||||||||||||||||||||
Deferred income taxes
|
$ | 30 | $ | | $ | | $ | 30 | $ | | ||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Year ended December 31, 2005
|
||||||||||||||||||||
Deducted from assets:
|
||||||||||||||||||||
Allowance for doubtful accounts:
|
||||||||||||||||||||
Insurance and reinsurance
receivables
|
$ | 1,048 | $ | 111 | $ | 3 | $ | 198 | $ | 964 | ||||||||||
|
||||||||||||||||||||
Valuation allowance:
|
||||||||||||||||||||
Deferred income taxes
|
$ | 33 | $ | (3 | ) | $ | | $ | | $ | 30 | |||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Year ended December 31, 2004
|
||||||||||||||||||||
Deducted from assets:
|
||||||||||||||||||||
Allowance for doubtful accounts:
|
||||||||||||||||||||
Insurance and reinsurance
receivables
|
$ | 948 | $ | 312 | $ | 5 | $ | 217 | $ | 1,048 | ||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Valuation allowance:
|
||||||||||||||||||||
Deferred income taxes
|
$ | | $ | 33 | $ | | $ | | $ | 33 | ||||||||||
|
(a) | Amount includes effects of foreign currency translation. |
Consolidated Property and Casualty Operations | ||||||||||||
As of and for the years ended December 31 | 2006 | 2005 | 2004 | |||||||||
(In millions) | ||||||||||||
Deferred acquisition costs
|
$ | 1,190 | $ | 1,197 | ||||||||
|
||||||||||||
Reserves for unpaid claim and claim adjustment expenses
|
29,459 | 30,694 | ||||||||||
|
||||||||||||
Discount deducted from claim and claim adjustment expense reserves
above (based on interest rates ranging from 3.5% to 7.5%)
|
1,648 | 1,739 | ||||||||||
|
||||||||||||
Unearned premiums
|
3,784 | 3,706 | ||||||||||
|
||||||||||||
Net written premiums
|
7,655 | 7,509 | $ | 7,594 | ||||||||
|
||||||||||||
Net earned premiums
|
7,595 | 7,558 | 7,925 | |||||||||
|
||||||||||||
Net investment income
|
2,035 | 1,595 | 1,266 | |||||||||
|
||||||||||||
Incurred claim and claim adjustment expenses related to current year
|
4,837 | 5,054 | 5,118 | |||||||||
|
||||||||||||
Incurred claim and claim adjustment expenses related to prior years
|
332 | 1,107 | 234 | |||||||||
|
||||||||||||
Amortization of deferred acquisition costs
|
1,534 | 1,541 | 1,641 | |||||||||
|
||||||||||||
Paid claim and claim adjustment expenses
|
4,165 | 3,541 | 5,401 |
152
153
154
CNA Financial Corporation
By
/s/ Stephen W. Lilienthal
Stephen W. Lilienthal
Chief Executive Officer
(Principal Executive Officer)
By
/s/ D. Craig Mense
D. Craig Mense
Executive Vice President and
Chief Financial Officer
By
/s/ Brenda J. Gaines
(Brenda J. Gaines, Director)
By
/s/ Stephen W. Lilienthal
(Stephen W. Lilienthal, Chief Executive Officer and Director)
By
/s/ Paul J. Liska
(Paul J. Liska, Director)
By
/s/ Jose Montemayor
(Jose Montemayor, Director)
By
/s/ Don M. Randel
(Don M. Randel, Director)
Table of Contents
By
/s/ Joseph Rosenberg
(Joseph Rosenberg, Director)
By
/s/ Andrew Tisch
(Andrew Tisch, Director)
By
/s/ James S. Tisch
(James S. Tisch, Director)
By
/s/ Marvin Zonis
(Marvin Zonis, Director)
|
CNA FINANCIAL CORPORATION | |||
|
||||
ATTEST:
|
||||
|
||||
/s/ Mary A. Ribikawskis
|
/s/ Jonathan D. Kantor
|
|||
Assistant Secretary
|
Senior Vice President, Secretary and General Counsel |
1. | Section 1 of the Employment Agreement is hereby amended to read as follows: | ||
Employment Term . The Company and Executive agree that the Company shall employ Executive to perform the duties of an Executive Vice President, Chief Actuary and Chief Risk Officer of the CNA insurance companies for the period commencing on the Effective Date and ending on March 31, 2009, or such earlier date as of which Executives employment is terminated in accordance with Section 6 hereof (the Term). The covenants set forth in Sections 7, 8, 9, 10, 11, 12, 13, and 14 shall survive the employment term of this Agreement. | |||
2. | Subsection 6.3(a) of the Employment Agreement is hereby amended to read as follows: | ||
(a) Subject to the approval of the Committee, the Company shall pay to Executive severance consisting of an amount equal to the sum of the Executives Base Compensation and Bonus at target, prorated based on the total number of months from the date of termination through March 31, 2009; however, in no event shall the period of time for which severance is calculated be less than 12 months. The severance shall be paid in equal monthly installments following such termination. The Company shall also pay the Executive (i) within 30 days of his termination, his unpaid base salary, prorated to the date of termination; (ii) at the time of the scheduled March payout date, any previous years Bonus and CNA long-term incentive cash award based upon actual or discretionary payouts, if any; (iii) at the time of the scheduled March payout date, current years Bonus and CNA long-term incentive cash award based upon actual or discretionary payouts, if any, prorated to the date of termination; (iv) within 30 days of his termination, unpaid cash entitlements earned and accrued pursuant to the terms of the applicable Company plan or program prior to the date of the date of termination (which unpaid cash entitlements under this Section 6.3(a)(iv) shall not include any unpaid Bonus or any unpaid long-term incentive cash award or other award under the Incentive Compensation Plan); and (v) any unpaid Sign-on Bonus installment. Executive agrees to be bound by the covenants set forth herein as of the termination date. In addition, Executive shall continue to participate, at the active employee rates, in such health benefits plans in which he is enrolled throughout the term of the payments set forth in this Section 6.3(a), up to a maximum of 12 months, with said period of participation to run concurrently with any period of COBRA coverage to which Executive may be entitled. The Company shall have no further obligations under this Agreement. | |||
3. | Section 6.5 of the Employment Agreement is hereby amended to read as follows: | ||
(a) Following March 31, 2009, if the Company and Executive have not mutually agreed to the terms of, and entered into a new agreement, Executives employment shall be one of employment at will, which may be terminated by either the Company or Executive at any time. Such continued employment after March 31, 2009 shall be subject to the Companys normal policies and procedures in effect during said period of continued employment. (b) Notwithstanding any term or provision in subsection (a) of this Section 6.5 to the contrary, the Company shall pay Executive |
severance upon termination of Executives employment at will as provided for in this Section 6.5 in an amount equal to the sum of 12 months of the Executives Base Compensation at the time of such termination and Bonus at target unless and until (1) the Companys normal policies and procedures no longer provide for severance to be paid to personnel at Executives level in accordance with the severance as provided for in this Section 6.5 and (2) Executive has received sixty (60) days prior notice of such change in the Companys normal policies and procedures, in which case Executive shall be given severance in accordance with such change in the Companys normal policies and procedures. (c) Notwithstanding any term or provision in subsections (a) and (b) of this Section 6.5 to the contrary, if (1) the Company and Executive have not entered into a new agreement by March 31, 2009, and (2) Executives employment at will with the Company terminates between April 1, 2009 and May 31, 2009, Executive shall be entitled to receive severance from the Company in an amount not less than the sum of 12 months of Executives Base Compensation and Bonus at target, irrespective of any such changes in the Companys normal policies and procedures. |
4. | Except as otherwise expressly provided in this Amendment, all terms and provisions of the Employment Agreement remain in full force and effect. |
CONTINENTAL CASUALTY COMPANY | ||||
|
||||
By:
|
/s/ Lori S. Komstadius
|
|||
Title:
|
Executive Vice President Human Resources
|
|||
|
||||
/s/ Michael Fusco | ||||
MICHAEL FUSCO |
Name of Subsidiary | Organized Under Laws of | Business Names | ||||||
|
||||||||
The Continental Corporation
|
New York | ) | CNA | |||||
|
||||||||
Continental Casualty Company
|
Illinois | ) | ||||||
|
1. | I have reviewed this annual report on Form 10-K 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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants 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 registrants 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 registrants internal control over financial reporting. |
Dated: February 22, 2007
|
By | /s/ Stephen W. Lilienthal | ||||
|
||||||
|
Stephen W. Lilienthal | |||||
|
Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K 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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants 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 registrants 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 registrants internal control over financial reporting. |
Dated: February 22, 2007
|
By | /s/ D. Craig Mense | ||||
|
||||||
|
D. Craig Mense | |||||
|
Chief Financial Officer |
| the Companys Annual Report on Form 10-K for the year ended December 31, 2006 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. |
/s/ Stephen W. Lilienthal | ||||
Stephen W. Lilienthal | ||||
Chief Executive Officer | ||||
| the Companys Annual Report on Form 10-K for the year ended December 31, 2006 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. |
/s/ D. Craig Mense | ||||
D. Craig Mense | ||||
Chief Financial Officer | ||||