Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of Operations – CNA Financial – (Continued) interest related to a federal income tax settlement.
See Note 11 of the Notes to Consolidated Financial Statements included under Item 8 for further information.
As previously disclosed, CNA sold its personal insurance business to The Allstate Corporation (“Allstate”) in 1999.
Under the revised terms of this transaction, Allstate purchased an option exercisable during 2005 to purchase 100% of the common stock of five of CNA’s insurance subsidiaries at the fair value as of the exercise date.
Royalty fees earned for the years ended December 31, 2005 and 2004 for personal insurance policies 100% reinsured with Allstate were approximately $22.0 million and $29.0 million.
The royalty fee arrangement terminated on September 30, 2005.
In addition, Allstate exercised its option and purchased the five subsidiaries during the fourth quarter of 2005.
This transaction resulted in a realized gain of $8.0 million.
See Note 14 of the Notes to Consolidated Financial Statements included under Item 8 for further information regarding this transaction.
Net results decreased $112.0 million in 2005 as compared with 2004.
The decrease in net results was due primarily to a $126.9 million after tax and minority interest increase in unfavorable net prior year development related primarily to commutations and reserve strengthening, a $44.6 million decrease in net realized investment results and a decrease in the provision recorded for uncollectible reinsurance.
Net realized investment results for the year ended December 31, 2005 and 2004 included a $20.1 million after tax and minority interest and $32.9 million after tax and minority interest impairment related to a national contractor.
See Note 21 of the Notes to Consolidated Financial Statements included under Item 8 for additional information regarding the national contractor.
Partially offsetting these decreases was a $105.0 million after tax and minority interest increase in net income related to a federal income tax settlement and release of federal income tax reserves.
Unfavorable net prior year development of $306.0 million was recorded during 2005, including $291.0 million of unfavorable net prior year claim and allocated claim adjustment expense reserve development and $15.0 million of unfavorable premium development.
Unfavorable net prior year development of $93.0 million was recorded in 2004, including $84.0 million of unfavorable net prior year claim and allocated claim adjustment expense reserve development and $9.0 million of unfavorable premium development.
Further information on Other Insurance’s Net Prior Year Development for 2005 and 2004 is included in Note 9 of the Notes to Consolidated Financial Statements included under Item 8.
During 2005 and 2004, CNA commuted several significant reinsurance contracts that resulted in unfavorable development of $118.0 million and $39.0 million, which is included in the development above, and which was partially offset by the release in 2004 of a previously established allowance for uncollectible reinsurance.
These commutations resulted in unfavorable impacts of $64.8 million and $4.6 million, after tax and minority interest, in 2005 and 2004.
These contracts contained interest crediting provisions and maintenance charges.
Interest charges associated with the reinsurance contracts commuted were $11.9 million and $10.0 million, after tax and minority interest, in 2005 and 2004.
There will be no further interest crediting charges or other charges related to these commuted contracts in future periods.
The following table summarizes the gross and net carried reserves as of December 31, 2005 and 2004 for the Other Insurance segment.
## Table 0 ##
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources – Contractual Cash Payment Obligations Contractual Cash Payment Obligations Our contractual cash payment obligations are as follows:
## Table 1 ##
(a) Claim and claim adjustment expense reserves are not discounted and represent CNA’s estimate of the amount and timing of the ultimate settlement and administration of claims based on its assessment of facts and circumstances known as of December 31, 2005.
See the Reserves – Estimates and Uncertainties section of this MD&A for further information.
Claim and claim adjustment expense reserves of $15.0 million related to business which has been 100% ceded to unaffiliated parties in connection with the individual life sale are not included.
(b) Future policy benefits and policyholder funds reserves are not discounted and represent CNA’s estimate of the ultimate amount and timing of the settlement of benefits based on its assessment of facts and circumstances known as of December 31, 2005.
Future policy benefit reserves of $968.0 million and policyholder fund reserves of $51.0 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 1 of the Notes to Consolidated Financial Statements included under Item 8.
(c) Consists primarily of purchase obligations aggregating approximately $411.0 million relating to Diamond Offshore’s major upgrade of its Ocean Endeavor rig and construction of two new jack-up rigs, the Ocean Scepter and Ocean Shield.
In addition, as previously discussed, Lorillard has entered into the State Settlement Agreements which impose a stream of future payment obligations on Lorillard and the other major U. S.  cigarette manufacturers.
Lorillard’s portion of ongoing adjusted settlement payments, including fees to settling plaintiffs’ attorneys, are based on a number of factors which are described under “Liquidity and Capital Resources – Lorillard,” above.
Lorillard’s cash payment in 2005 amounted to approximately $850.8 million and Lorillard estimates its cash payments in 2006 will be approximately $875.0 million to $925.0 million, primarily based on 2005 estimated industry volume.
Payment obligations are not incurred until the related sales occur and therefore are not reflected in the above table.
The above table also does not reflect commitments Boardwalk Pipeline has made after December 31, 2005 relating to the East Texas and Mississippi pipeline expansion projects.
For information on these projects, please read “Liquidity and Capital Resources – Boardwalk Pipeline” above.
INVESTMENTS Investment activities of non-insurance companies include investments in fixed income securities, equity securities including short sales, derivative instruments and short-term investments, and are carried at fair value.
Equity securities, which are considered part of our trading portfolio, short sales and derivative instruments are marked to market and reported as net investment income in the Consolidated Statements of Operations.
We enter into short sales and invest in certain derivative instruments that are used for asset and liability management activities, income enhancements to our portfolio management strategy and to benefit from anticipated future movements in the underlying markets.
If such movements do not occur as anticipated, then significant losses may occur.
Monitoring procedures include senior management review of daily detailed reports of existing positions and valuation fluctuations to ensure that open positions are consistent with our portfolio strategy.
Credit exposure associated with non-performance by the counterparties to derivative instruments is generally limited to the uncollateralized change in fair value of the derivative instruments recognized in the Consolidated
Notes to Consolidated Financial Statements Note 18.
Reinsurance  (Continued) The impact of reinsurance on life insurance inforce at December 31, 2005, 2004 and 2003 is shown in the following table:
## Table 2 ##
(a) The decline in gross inforce is attributable to the sales of the group benefits and the individual life businesses.
Life premiums are primarily from long duration contracts; property and casualty premiums and accident and health premiums are primarily from short duration contracts.
Reinsurance accounting allows for contractual cash flows to be reflected as premiums and losses, as compared to deposit accounting, which requires cash flows to be reflected as assets and liabilities.
To qualify for reinsurance accounting, reinsurance agreements must include risk transfer.
To meet risk transfer requirements, a reinsurance contract must include both insurance risk, consisting of underwriting and timing risk, and a reasonable possibility of a significant loss for the assuming entity.
Reinsurance contracts that include both significant risk sharing provisions, such as adjustments to premiums or loss coverage based on loss experience, and relatively low policy limits as evidenced by a high proportion of maximum premium assessments to loss limits, may require considerable judgment to determine whether or not risk transfer requirements are met.
For such contracts, often referred to as finite products, CNA assesses risk transfer for each contract generally by developing quantitative analyses at contract inception which measure the present value of reinsurer losses as compared to the present value of the related premium.
Funds Withheld Reinsurance Arrangements CNA’s overall reinsurance program includes certain property and casualty contracts, such as the corporate aggregate reinsurance treaties discussed in more detail below, that are entered into and accounted for on a “funds withheld” basis.
Under the funds withheld basis, CNA records the cash remitted to the reinsurer for the reinsurer’s margin, or cost of the reinsurance contract, as ceded premiums.
The remainder of the premiums ceded under the reinsurance contract not remitted in cash is recorded as funds withheld liabilities.
CNA is required to increase the funds withheld balance at stated interest crediting rates applied to the funds withheld balance or as otherwise specified under the terms of the contract.
The funds withheld liability is reduced by any cumulative claim payments made by CNA in excess of CNA’s retention under the reinsurance contract.
If the funds withheld liability is exhausted, interest crediting will cease and additional claim payments are recoverable from the reinsurer.
The funds withheld liability is recorded in reinsurance balances payable in the Consolidated Balance Sheets.
Interest cost on funds withheld and other deposits is credited during all periods in which a funds withheld liability exists.
Pretax interest cost, which is included in net investment income, was $166.0 million, $261.0 million and $335.0 million in 2005, 2004 and 2003.
The amount subject to interest crediting rates on such contracts was $1,050.0 million and $2,564.0 million at December 31, 2005 and 2004.
Certain funds withheld reinsurance contracts, including the corporate aggregate reinsurance treaties, require interest on additional premiums arising from ceded losses as if those premiums were payable at the inception of the contract.
In addition, on the corporate aggregate reinsurance treaties discussed below, if CNA exceeds certain aggregate loss ratio thresholds, the rate on which interest charges are accrued would increase and be retroactively applied to the inception of the contract or to a specified date.
Any such retroactive interest is accrued in the period the additional premiums arise or the loss ratio thresholds are met.
The amount of retroactive interest was $4.0 million, $45.0 million and $147.0 million in 2005, 2004 and 2003.
The amount subject to interest crediting on these funds withheld contracts will vary over time based on a number of factors, including the timing of loss payments and ultimate gross losses incurred.
CNA expects that it will continue to incur significant interest costs on these contracts for several years.
Altria Group, Inc.  and Subsidiaries Notes to Consolidated Financial Statements may not be obtainable in all cases.
This risk has been substantially reduced given that 47 states and Puerto Rico limit the dollar amount of bonds or require no bond at all.
As discussed below, however, tobacco litigation plaintiffs have challenged the constitutionality of Florida’s bond cap statute in several cases and plaintiffs may challenge state bond cap statutes in other jurisdictions as well.
Such challenges may include the applicability of state bond caps in federal court.
States, including Florida, may also seek to repeal or alter bond cap statutes through legislation.
Although Altria Group, Inc.  cannot predict the outcome of such challenges, it is possible that the consolidated results of operations, cash flows or financial position of Altria Group, Inc. , or one or more of its subsidiaries, could be materially affected in a particular fiscal quarter or fiscal year by an unfavorable outcome of one or more such challenges.
Altria Group, Inc.  and its subsidiaries record provisions in the consolidated financial statements for pending litigation when they determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated.
At the present time, while it is reasonably possible that an unfavorable outcome in a case may occur, except to the extent discussed elsewhere in this Note 19.
Contingencies: (i) management has concluded that it is not probable that a loss has been incurred in any of the pending tobacco-related cases; (ii) management is unable to estimate the possible loss or range of loss that could result from an unfavorable outcome in any of the pending tobacco-related cases; and (iii) accordingly, management has not provided any amounts in the consolidated financial statements for unfavorable outcomes, if any.
Litigation defense costs are expensed as incurred.
Altria Group, Inc.  and its subsidiaries have achieved substantial success in managing litigation.
Nevertheless, litigation is subject to uncertainty and significant challenges remain.
It is possible that the consolidated results of operations, cash flows or financial position of Altria Group, Inc. , or one or more of its subsidiaries, could be materially affected in a particular fiscal quarter or fiscal year by an unfavorable outcome or settlement of certain pending litigation.
Altria Group, Inc.  and each of its subsidiaries named as a defendant believe, and each has been so advised by counsel handling the respective cases, that it has valid defenses to the litigation pending against it, as well as valid bases for appeal of adverse verdicts.
Each of the companies has defended, and will continue to defend, vigorously against litigation challenges.
However, Altria Group, Inc.  and its subsidiaries may enter into settlement discussions in particular cases if they believe it is in the best interests of Altria Group, Inc.  to do so.
Overview of Altria Group, Inc.  and/or PM USA TobaccoRelated Litigation Types and Number of Cases: Claims related to tobacco products generally fall within the following categories: (i) smoking and health cases alleging personal injury brought on behalf of individual plaintiffs; (ii) smoking and health cases primarily alleging personal injury or seeking court-supervised programs for ongoing medical monitoring and purporting to be brought on behalf of a class of individual plaintiffs, including cases in which the aggregated claims of a number of individual plaintiffs are to be tried in a single proceeding; (iii) health care cost recovery cases brought by governmental (both domestic and foreign) plaintiffs seeking reimbursement for health care expenditures allegedly caused by cigarette smoking and/or disgorgement of profits; (iv) class action suits alleging that the uses of the terms “Lights” and “Ultra Lights” constitute deceptive and unfair trade practices, common law or statutory fraud, unjust enrichment, breach of warranty or violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”); and (v) other tobacco-related litigation described below.
Plaintiffs’ theories of recovery and the defenses raised in pending smoking and health, health care cost recovery and “Lights/Ultra Lights” cases are discussed below.
The table below lists the number of certain tobacco-related cases pending in the United States against PM USA(1) and, in some instances, Altria Group, Inc.  as of December 31, 2016, 2015 and 2014:

<table><tr><td>December 31</td><td>2005</td><td>2004</td></tr><tr><td>(In millions)</td><td></td><td></td></tr><tr><td>Gross Case Reserves</td><td>$3,297.0</td><td>$3,806.0</td></tr><tr><td>Gross IBNR Reserves</td><td>4,075.0</td><td>4,875.0</td></tr><tr><td>Total Gross Carried Claim and Claim Adjustment Expense Reserves</td><td>$7,372.0</td><td>$8,681.0</td></tr><tr><td>Net Case Reserves</td><td>$1,554.0</td><td>$1,588.0</td></tr><tr><td>Net IBNR Reserves</td><td>1,902.0</td><td>1,691.0</td></tr><tr><td>Total Net Carried Claim and Claim Adjustment Expense Reserves</td><td>$3,456.0</td><td>$3,279.0</td></tr></table>
<table><tr><td></td><td colspan="5">Payments Due by Period</td></tr><tr><td>December 31, 2005</td><td>Total</td><td>Less than 1 year</td><td>1-3 years</td><td>4-5 years</td><td>More than 5 years</td></tr><tr><td>(In millions)</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Debt</td><td>$5,245.3</td><td>$598.2</td><td>$866.4</td><td>$87.4</td><td>$3,693.3</td></tr><tr><td>Operating leases</td><td>391.7</td><td>71.9</td><td>113.1</td><td>81.8</td><td>124.9</td></tr><tr><td>Claim and claim expense reserves (a)</td><td>32,861.0</td><td>7,522.0</td><td>9,610.0</td><td>4,969.0</td><td>10,760.0</td></tr><tr><td>Future policy benefits reserves (b)</td><td>10,010.0</td><td>200.0</td><td>362.0</td><td>349.0</td><td>9,099.0</td></tr><tr><td>Policyholder funds reserves (b)</td><td>1,489.0</td><td>960.0</td><td>285.0</td><td>95.0</td><td>149.0</td></tr><tr><td>Purchase obligations (c)</td><td>447.6</td><td>294.7</td><td>152.8</td><td>0.1</td><td></td></tr><tr><td>Total</td><td>$50,444.6</td><td>$9,646.8</td><td>$11,389.3</td><td>$5,582.3</td><td>$23,826.2</td></tr></table>
<table><tr><td>December 31</td><td>Direct</td><td>Assumed</td><td>Ceded</td><td>Net</td></tr><tr><td>(In millions)</td><td></td><td></td><td></td><td></td></tr><tr><td>2005</td><td>$20,548.0</td><td>$1.0</td><td>$20,528.0</td><td>$21.0</td></tr><tr><td>2004 (a)</td><td>56,610.0</td><td>35.0</td><td>54,486.0</td><td>2,159.0</td></tr><tr><td>2003</td><td>388,380.0</td><td>588.0</td><td>295,659.0</td><td>93,309.0</td></tr></table>

Question: What is the sum of Total of 1-3 years for Payments Due by Period and Ceded in 2003? (in million)