##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ QUARTERLY 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
  Commission File Number 1-5823
 
 CNA FINANCIAL CORPORATION
  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)
 (312) 822-5000
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ
  Class
    
    Outstanding at October 29, 2010Common Stock, Par value $2.50
    
    269,218,836




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##### 



Item
    
    PageNumber
    
    NumberPART I. Financial Information1. Condensed Consolidated Financial Statements (Unaudited):Condensed Consolidated Statements of Operations for the
Three and Nine months ended September 30, 2010 and 2009
    
    
    3Condensed Consolidated Statements of Comprehensive Income
for the Three and Nine months ended September 30, 2010
and 2009
    
    
    5Condensed Consolidated Balance Sheets at September 30,
2010 and December 31, 2009
    
    
    6Condensed Consolidated Statements of Cash Flows for the
Nine months ended September 30, 2010 and 2009
    
    
    7Condensed Consolidated Statements of Equity for the Nine
months ended September 30, 2010 and 2009
    
    
    9Notes to Condensed Consolidated Financial Statements
    
    
    102. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    543. Quantitative and Qualitative Disclosures About Market Risk
    
    
    734. Controls and Procedures
    
    
    74PART II. Other Information1. Legal Proceedings
    
    
    751A. Risk Factors
    
    
    756. Exhibits
    
    
    75EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



CNA Financial Corporation
 
 Part I. Financial Information
 
 Item 1. Condensed Consolidated Financial Statements
 
 Condensed Consolidated Statements of Operations (Unaudited)
 Periods ended September 30
    
Three Months
    
    
    Nine Months(In millions, except per share data)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009RevenuesNet earned premiums
    
    $
    1,645
    
    
    $
    1,707
    
    
    $
    4,868
    
    
    $
    5,035Net investment income
    
    
    581
    
    
    
    660
    
    
    
    1,692
    
    
    
    1,755Net realized investment gains (losses), net of participating
policyholders interests:Other-than-temporary impairment losses
    
    
    (41
    )
    
    
    (232
    )
    
    
    (189
    )
    
    
    (1,330
    )Portion of other-than-temporary impairments recognized in
Other comprehensive income
    
    
    (3
    )
    
    
    84
    
    
    
    28
    
    
    
    173Net other-than-temporary impairment losses recognized in earnings
    
    
    (44
    )
    
    
    (148
    )
    
    
    (161
    )
    
    
    (1,157
    )Other net realized investment gains
    
    
    106
    
    
    
    48
    
    
    
    286
    
    
    
    228Net realized investment gains (losses), net of participating
policyholders interests
    
    
    62
    
    
    
    (100
    )
    
    
    125
    
    
    
    (929
    )Other revenues
    
    
    75
    
    
    
    73
    
    
    
    226
    
    
    
    213Total revenues
    
    
    2,363
    
    
    
    2,340
    
    
    
    6,911
    
    
    
    6,074Claims, Benefits and ExpensesInsurance claims and policyholders benefits
    
    
    1,344
    
    
    
    1,283
    
    
    
    3,799
    
    
    
    3,919Amortization of deferred acquisition costs
    
    
    351
    
    
    
    365
    
    
    
    1,038
    
    
    
    1,063Other operating expenses (Note G)
    
    
    795
    
    
    
    272
    
    
    
    1,325
    
    
    
    814Interest
    
    
    40
    
    
    
    34
    
    
    
    113
    
    
    
    95Total claims, benefits and expenses
    
    
    2,530
    
    
    
    1,954
    
    
    
    6,275
    
    
    
    5,891Income (loss) from continuing operations before income tax
    
    
    (167
    )
    
    
    386
    
    
    
    636
    
    
    
    183Income tax (expense) benefit
    
    
    64
    
    
    
    (108
    )
    
    
    (183
    )
    
    
    30Income (loss) from continuing operations
    
    
    (103
    )
    
    
    278
    
    
    
    453
    
    
    
    213Loss from discontinued operations, net of income tax
(expense) benefit of $0, $0, $0 and $0 (Note G)
    
    
    (22
    )
    
    
    (1
    )
    
    
    (21
    )
    
    
    (2
    )Net income (loss)
    
    
    (125
    )
    
    
    277
    
    
    
    432
    
    
    
    211Net (income) loss attributable to noncontrolling interests
    
    
    (15
    )
    
    
    (14
    )
    
    
    (44
    )
    
    
    (38
    )Net income (loss) attributable to CNA
    
    $
    (140
    )
    
    $
    263
    
    
    $
    388
    
    
    $
    173Income (Loss) Attributable to CNA Common StockholdersIncome (loss) from continuing operations attributable to CNA
    
    $
    (118
    )
    
    $
    264
    
    
    $
    409
    
    
    $
    175Dividends on 2008 Senior Preferred
    
    
    (18
    )
    
    
    (31
    )
    
    
    (68
    )
    
    
    (94
    )Income (loss) from continuing operations attributable to CNA common
stockholders
    
    
    (136
    )
    
    
    233
    
    
    
    341
    
    
    
    81Loss from discontinued operations attributable to CNA common
stockholders
    
    
    (22
    )
    
    
    (1
    )
    
    
    (21
    )
    
    
    (2
    )Income (loss) attributable to CNA common stockholders
    
    $
    (158
    )
    
    $
    232
    
    
    $
    320
    
    
    $
    79
 
 3




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##### Table of Contents



Periods ended September 30
    
    
    Three Months
    
    
    Nine Months(In millions, except per share data)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Basic and Diluted Earnings (Loss) Per Share Attributable to CNA
Common StockholdersIncome (loss) from continuing operations attributable to CNA common
stockholders
    
    $
    (0.51
    )
    
    $
    0.86
    
    
    $
    1.27
    
    
    $
    0.30Loss from discontinued operations attributable to CNA common
stockholders
    
    
    (0.08
    )
    
    
    
    
    
    
    (0.08
    )
    
    
    (0.01
    )Basic and diluted earnings (loss) per share attributable to CNA
common stockholders
    
    $
    (0.59
    )
    
    $
    0.86
    
    
    $
    1.19
    
    
    $
    0.29Weighted Average Outstanding Common Stock and Common Stock
EquivalentsBasic
    
    
    269.2
    
    
    
    269.0
    
    
    
    269.1
    
    
    
    269.0Diluted
    
    
    269.2
    
    
    
    269.2
    
    
    
    269.4
    
    
    
    269.1
 
 4




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##### Table of Contents



CNA Financial Corporation
 
 Condensed Consolidated Statements of Comprehensive Income (Unaudited)
 Periods ended September 30
    
    Three Months
    
    
    Nine Months(In millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Other Comprehensive Income (Loss), Net of TaxChanges in:Net unrealized gains (losses) on investments with other-than-temporary
impairments
    
    $
    39
    
    
    $
    (36
    )
    
    $
    81
    
    
    $
    (70
    )Net unrealized gains on other investments
    
    
    726
    
    
    
    1,906
    
    
    
    1,426
    
    
    
    3,815Net unrealized gains on investments
    
    
    765
    
    
    
    1,870
    
    
    
    1,507
    
    
    
    3,745Net unrealized gains on discontinued operations and other
    
    
    3
    
    
    
    5
    
    
    
    11
    
    
    
    5Foreign currency translation adjustment
    
    
    37
    
    
    
    39
    
    
    
    44
    
    
    
    110Pension and postretirement benefits
    
    
    2
    
    
    
    1
    
    
    
    5
    
    
    
    4Allocation to participating policyholders
    
    
    (9
    )
    
    
    (17
    )
    
    
    (37
    )
    
    
    (36
    )Other comprehensive income, net of tax
    
    
    798
    
    
    
    1,898
    
    
    
    1,530
    
    
    
    3,828Net income (loss)
    
    
    (125
    )
    
    
    277
    
    
    
    432
    
    
    
    211Comprehensive income
    
    
    673
    
    
    
    2,175
    
    
    
    1,962
    
    
    
    4,039Changes in:Net unrealized (gains) losses on investments attributable to noncontrolling
interests
    
    
    (13
    )
    
    
    (18
    )
    
    
    (27
    )
    
    
    (29
    )Pension and postretirement benefits attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    Other comprehensive (income) loss attributable to noncontrolling interests
    
    
    (13
    )
    
    
    (18
    )
    
    
    (30
    )
    
    
    (29
    )Net (income) loss attributable to noncontrolling interests
    
    
    (15
    )
    
    
    (14
    )
    
    
    (44
    )
    
    
    (38
    )Comprehensive (income) loss attributable to noncontrolling interests
    
    
    (28
    )
    
    
    (32
    )
    
    
    (74
    )
    
    
    (67
    )Total comprehensive income attributable to CNA
    
    $
    645
    
    
    $
    2,143
    
    
    $
    1,888
    
    
    $
    3,972
 
 5




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##### Table of Contents



CNA Financial Corporation
 
 Condensed Consolidated Balance Sheets (Unaudited)
 September 30,
    
    
    December 31,(In millions, except share data)
    
    2010
    
    
    2009AssetsInvestments:Fixed maturity securities at fair value (amortized cost of $36,381 and $35,602)
    
    $
    38,646
    
    
    $
    35,612Equity securities at fair value (cost of $465 and $633)
    
    
    531
    
    
    
    644Limited partnership investments
    
    
    2,166
    
    
    
    1,787Other invested assets
    
    
    29
    
    
    
    4Mortgage loans
    
    
    70
    
    
    
    Short term investments
    
    
    2,084
    
    
    
    3,949Total investments
    
    
    43,526
    
    
    
    41,996Cash
    
    
    82
    
    
    
    140Reinsurance receivables (less allowance for uncollectible receivables of $144 and $351)
    
    
    7,333
    
    
    
    6,581Insurance receivables (less allowance for doubtful accounts of $172 and $202)
    
    
    1,606
    
    
    
    1,656Accrued investment income
    
    
    461
    
    
    
    416Deferred acquisition costs
    
    
    1,096
    
    
    
    1,108Deferred income taxes
    
    
    367
    
    
    
    1,333Property and equipment at cost (less accumulated depreciation of $531 and $498)
    
    
    337
    
    
    
    360Goodwill and other intangible assets
    
    
    141
    
    
    
    141Other assets
    
    
    1,470
    
    
    
    1,144Separate account business
    
    
    462
    
    
    
    423Total assets
    
    $
    56,881
    
    
    $
    55,298Liabilities and EquityLiabilities:Insurance reserves:Claim and claim adjustment expenses
    
    $
    25,783
    
    
    $
    26,816Unearned premiums
    
    
    3,265
    
    
    
    3,274Future policy benefits
    
    
    8,372
    
    
    
    7,981Policyholders funds
    
    
    164
    
    
    
    192Participating policyholders funds
    
    
    72
    
    
    
    56Short term debt
    
    
    400
    
    
    
    Long term debt
    
    
    2,251
    
    
    
    2,303Other liabilities
    
    
    3,547
    
    
    
    3,087Separate account business
    
    
    462
    
    
    
    423Total liabilities
    
    
    44,316
    
    
    
    44,132Commitments and contingencies (Notes D, E, H, and J)Equity:Preferred stock (12,500,000 shares authorized)
2008 Senior Preferred (no par value; $100,000 stated value; 5,000 and 10,000 shares
issued and outstanding held by Loews Corporation)
    
    
    500
    
    
    
    1,000Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued;
269,203,836 and 269,026,759 shares outstanding)
    
    
    683
    
    
    
    683Additional paid-in capital
    
    
    2,201
    
    
    
    2,177Retained earnings
    
    
    7,582
    
    
    
    7,264Accumulated other comprehensive income (loss)
    
    
    1,177
    
    
    
    (325
    )Treasury stock (3,836,407 and 4,013,484 shares), at cost
    
    
    (103
    )
    
    
    (109
    )Notes receivable for the issuance of common stock
    
    
    (30
    )
    
    
    (30
    )Total CNA stockholders equity
    
    
    12,010
    
    
    
    10,660Noncontrolling interests
    
    
    555
    
    
    
    506Total equity
    
    
    12,565
    
    
    
    11,166Total liabilities and equity
    
    $
    56,881
    
    
    $
    55,298
 
 6




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##### Table of Contents



CNA Financial Corporation
 
 Condensed Consolidated Statements of Cash Flows (Unaudited)
 Nine months ended September 30(In millions)
    
    2010
    
    
    2009Cash Flows from Operating ActivitiesNet income
    
    $
    432
    
    
    $
    211Adjustments to reconcile net income to net cash flows provided (used) by operating activities:Loss from discontinued operations
    
    
    21
    
    
    
    2(Gain) loss on disposal of property and equipment
    
    
    
    
    
    
    13Deferred income tax expense
    
    
    163
    
    
    
    81Trading portfolio activity
    
    
    125
    
    
    
    (621
    )Net realized investment (gains) losses, net of participating policyholders interests
    
    
    (125
    )
    
    
    929Equity method investees
    
    
    (25
    )
    
    
    (151
    )Amortization of investments
    
    
    (84
    )
    
    
    (169
    )Depreciation
    
    
    60
    
    
    
    63Changes in:Receivables, net
    
    
    (709
    )
    
    
    849Accrued investment income
    
    
    (51
    )
    
    
    (73
    )Deferred acquisition costs
    
    
    12
    
    
    
    (13
    )Insurance reserves
    
    
    (563
    )
    
    
    (488
    )Other assets
    
    
    168
    
    
    
    (192
    )Other liabilities
    
    
    (11
    )
    
    
    (154
    )Other, net
    
    
    3
    
    
    
    4Total adjustments
    
    
    (1,016
    )
    
    
    80Net cash flows provided (used) by operating activities-continuing operations
    
    $
    (584
    )
    
    $
    291Net cash flows used by operating activities-discontinued operations
    
    $
    (89
    )
    
    $
    (16
    )Net cash flows provided (used) by operating activities-total
    
    $
    (673
    )
    
    $
    275Cash Flows from Investing ActivitiesPurchases of fixed maturity securities
    
    $
    (12,981
    )
    
    $
    (18,099
    )Proceeds from fixed maturity securities:Sales
    
    
    9,263
    
    
    
    15,507Maturities, calls and redemptions
    
    
    2,891
    
    
    
    2,568Purchases of equity securities
    
    
    (92
    )
    
    
    (262
    )Proceeds from sales of equity securities
    
    
    215
    
    
    
    510Origination of mortgage loans
    
    
    (70
    )
    
    
    Change in short term investments
    
    
    1,752
    
    
    
    (460
    )Change in other investments
    
    
    (227
    )
    
    
    101Purchases of property and equipment
    
    
    (38
    )
    
    
    (46
    )Dispositions
    
    
    65
    
    
    
    Other, net
    
    
    7
    
    
    
    (3
    )Net cash flows provided (used) by investing activities-continuing operations
    
    $
    785
    
    
    $
    (184
    )Net cash flows provided by investing activities-discontinued operations
    
    $
    75
    
    
    $
    16Net cash flows provided (used) by investing activities-total
    
    $
    860
    
    
    $
    (168
    )
 
 7




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##### Table of Contents



Nine months ended September 30(In millions)
    
    2010
    
    
    2009Cash Flows from Financing ActivitiesDividends paid to Loews Corporation for 2008 Senior Preferred
    
    $
    (68
    )
    
    $
    (94
    )Payment to redeem 2008 Senior Preferred
    
    
    (500
    )
    
    
    Proceeds from the issuance of debt
    
    
    495
    
    
    
    Principal payments on debt
    
    
    (150
    )
    
    
    Policyholders investment contract net deposits (withdrawals)
    
    
    (8
    )
    
    
    (7
    )Stock options exercised
    
    
    4
    
    
    
    1Other, net
    
    
    (18
    )
    
    
    28Net cash flows used by financing activities-continuing operations
    
    $
    (245
    )
    
    $
    (72
    )Net cash flows provided (used) by financing activities-discontinued operations
    
    $
    
    
    
    $
    Net cash flows used by financing activities-total
    
    $
    (245
    )
    
    $
    (72
    )Effect of foreign exchange rate changes on cash-continuing operations
    
    
    
    
    
    
    8Net change in cash
    
    
    (58
    )
    
    
    43Net cash transactions from continuing operations to discontinued operations
    
    
    (14
    )
    
    
    Net cash transactions to discontinued operations from continuing operations
    
    
    14
    
    
    
    Cash, beginning of year
    
    
    140
    
    
    
    85Cash, end of period
    
    $
    82
    
    
    $
    128Cash-continuing operations
    
    $
    82
    
    
    $
    128Cash-discontinued operations
    
    
    
    
    
    
    Cash-total
    
    $
    82
    
    
    $
    128
 
 8




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##### Table of Contents



CNA Financial Corporation
 
 Condensed Consolidated Statements of Equity (Unaudited)
 Nine months ended September 30(In millions)
    
    2010
    
    
    2009Preferred StockBalance, beginning of period
    
    $
    1,000
    
    
    $
    1,250Redemption of 2008 Senior Preferred
    
    
    (500
    )
    
    
    Balance, end of period
    
    
    500
    
    
    
    1,250Common StockBalance, beginning and end of period
    
    
    683
    
    
    
    683Additional Paid-in CapitalBalance, beginning of period
    
    
    2,177
    
    
    
    2,174Stock-based compensation
    
    
    1
    
    
    
    2Other
    
    
    23
    
    
    
    Balance, end of period
    
    
    2,201
    
    
    
    2,176Retained EarningsBalance, beginning of period
    
    
    7,264
    
    
    
    6,845Cumulative effect adjustment from change in other-than-temporary impairment
accounting guidance as of April 1, 2009, net of tax
    
    
    
    
    
    
    122Cumulative effect adjustment from change in credit derivatives accounting guidance
as of July 1, 2010, net of tax
    
    
    (2
    )
    
    
    Dividends paid to Loews Corporation for 2008 Senior Preferred
    
    
    (68
    )
    
    
    (94
    )Net income attributable to CNA
    
    
    388
    
    
    
    173Balance, end of period
    
    
    7,582
    
    
    
    7,046Accumulated Other Comprehensive Income (Loss)Balance, beginning of period
    
    
    (325
    )
    
    
    (3,924
    )Cumulative effect adjustment from change in other-than-temporary impairment
accounting guidance as of April 1, 2009, net of tax
    
    
    
    
    
    
    (122
    )Cumulative effect adjustment from change in credit derivatives accounting guidance
as of July 1, 2010, net of tax
    
    
    2
    
    
    
    Other comprehensive income attributable to CNA
    
    
    1,500
    
    
    
    3,799Balance, end of period
    
    
    1,177
    
    
    
    (247
    )Treasury StockBalance, beginning of period
    
    
    (109
    )
    
    
    (109
    )Stock-based compensation
    
    
    6
    
    
    
    Balance, end of period
    
    
    (103
    )
    
    
    (109
    )Notes Receivable for the Issuance of Common StockBalance, beginning of period
    
    
    (30
    )
    
    
    (42
    )Decrease in notes receivable for the issuance of common stock
    
    
    
    
    
    
    12Balance, end of period
    
    
    (30
    )
    
    
    (30
    )Total CNA Stockholders Equity
    
    
    12,010
    
    
    
    10,769Noncontrolling InterestsBalance, beginning of period
    
    
    506
    
    
    
    420Net income
    
    
    44
    
    
    
    38Other comprehensive income
    
    
    30
    
    
    
    29Other
    
    
    (25
    )
    
    
    (1
    )Balance, end of period
    
    
    555
    
    
    
    486Total Equity
    
    $
    12,565
    
    
    $
    11,255
 
 9




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##### Table of Contents



CNA Financial Corporation
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
 Note A. Basis of Presentation
    Note B. Accounting Standards Updates
 Adopted
 Scope Exception Related To Credit Derivatives
  10




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##### Table of Contents



Recognition and Presentation of Other-Than-Temporary Impairments
    Recently issued accounting standard to be adopted
 Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts
  11




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##### Table of Contents



Note C. Earnings (Loss) Per Share
     12




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##### Table of Contents



Note D. Investments
  Net Investment Income
 Periods ended September 30
    
    Three Months
    
    
    Nine Months(In millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Fixed maturity securities
    
    $
    511
    
    
    $
    496
    
    
    $
    1,540
    
    
    $
    1,458Short term investments
    
    
    2
    
    
    
    7
    
    
    
    13
    
    
    
    28Limited partnerships
    
    
    68
    
    
    
    145
    
    
    
    136
    
    
    
    240Equity securities
    
    
    7
    
    
    
    11
    
    
    
    26
    
    
    
    39Mortgage loans
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    Trading portfolio (a)
    
    
    4
    
    
    
    12
    
    
    
    10
    
    
    
    20Other
    
    
    2
    
    
    
    2
    
    
    
    7
    
    
    
    6Gross investment income
    
    
    595
    
    
    
    673
    
    
    
    1,733
    
    
    
    1,791Investment expense
    
    
    (14
    )
    
    
    (13
    )
    
    
    (41
    )
    
    
    (36
    )Net investment income
    
    $
    581
    
    
    $
    660
    
    
    $
    1,692
    
    
    $
    1,755
 
 (a)
    
    The net unrealized gains related to changes in fair value on trading securities still
held included in net investment income were $1 million for the three and nine months ended
September 30, 2010 and $6 million for the three and nine months ended September 30, 2009.  Net Realized Investment Gains (Losses)
 Periods ended September 30
    
    Three Months
    
    
    Nine Months(In millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net realized investment gains (losses):Fixed maturity securities:Gross realized gains
    
    $
    121
    
    
    $
    148
    
    
    $
    352
    
    
    $
    352Gross realized losses
    
    
    (45
    )
    
    
    (260
    )
    
    
    (183
    )
    
    
    (1,214
    )Net realized investment gains (losses) on fixed maturity securities
    
    
    76
    
    
    
    (112
    )
    
    
    169
    
    
    
    (862
    )Equity securities:Gross realized gains
    
    
    3
    
    
    
    20
    
    
    
    7
    
    
    
    97Gross realized losses
    
    
    (20
    )
    
    
    (1
    )
    
    
    (49
    )
    
    
    (230
    )Net realized investment gains (losses) on equity securities
    
    
    (17
    )
    
    
    19
    
    
    
    (42
    )
    
    
    (133
    )Derivatives
    
    
    (1
    )
    
    
    (13
    )
    
    
    (1
    )
    
    
    51Short term investments and other (a)
    
    
    4
    
    
    
    6
    
    
    
    (1
    )
    
    
    15Net realized investment gains (losses), net of participating
policyholders interests
    
    $
    62
    
    
    $
    (100
    )
    
    $
    125
    
    
    $
    (929
    )
 
 (a)
    
    Includes net unrealized gains related to changes in fair value on securities for
which the fair value option was elected as a result of the adoption of the updated
embedded credit derivative accounting guidance as of July 1, 2010. The net unrealized
gains included for the three and nine months ended September 30, 2010 were $2 million. 13




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##### Table of Contents



Periods ended September 30
    
    Three Months
    
    
    Nine Months(In millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Fixed maturity securities available-for-sale:Asset-backed:Residential mortgage-backed
    
    $
    18
    
    
    $
    108
    
    
    $
    55
    
    
    $
    376Commercial mortgage-backed
    
    
    
    
    
    
    4
    
    
    
    2
    
    
    
    185Other asset-backed
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    31Total asset-backed
    
    
    18
    
    
    
    112
    
    
    
    59
    
    
    
    592States, municipalities and political subdivisions
    
    
    
    
    
    
    12
    
    
    
    20
    
    
    
    27Corporate and other bonds
    
    
    17
    
    
    
    24
    
    
    
    59
    
    
    
    308Redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9Total fixed maturity securities available-for-sale
    
    
    35
    
    
    
    148
    
    
    
    138
    
    
    
    936Equity securities available-for-sale:Common stock
    
    
    5
    
    
    
    
    
    
    
    10
    
    
    
    4Preferred stock
    
    
    4
    
    
    
    
    
    
    
    13
    
    
    
    217Total equity securities available-for-sale
    
    
    9
    
    
    
    
    
    
    
    23
    
    
    
    221Net OTTI losses recognized in earnings
    
    $
    44
    
    
    $
    148
    
    
    $
    161
    
    
    $
    1,157
    14




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##### Table of Contents



Summary of Fixed Maturity and Equity Securities
 Cost or
    
    
    Gross
    
    
    Gross
    
    
    Estimated
    
    
    UnrealizedSeptember 30, 2010
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    OTTI(In millions)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    LossesFixed maturity securities available-for-sale:U.S. Treasury and obligations of government agencies
    
    $
    130
    
    
    $
    18
    
    
    $
    1
    
    
    $
    147
    
    
    $
    Asset-backed:Residential mortgage-backed
    
    
    6,089
    
    
    
    154
    
    
    
    267
    
    
    
    5,976
    
    
    
    214Commercial mortgage-backed
    
    
    1,032
    
    
    
    34
    
    
    
    65
    
    
    
    1,001
    
    
    
    Other asset-backed
    
    
    650
    
    
    
    23
    
    
    
    8
    
    
    
    665
    
    
    
    Total asset-backed
    
    
    7,771
    
    
    
    211
    
    
    
    340
    
    
    
    7,642
    
    
    
    214States, municipalities and political subdivisions
    
    
    7,782
    
    
    
    472
    
    
    
    246
    
    
    
    8,008
    
    
    
    Foreign government
    
    
    590
    
    
    
    25
    
    
    
    
    
    
    
    615
    
    
    
    Corporate and other bonds
    
    
    20,035
    
    
    
    2,189
    
    
    
    69
    
    
    
    22,155
    
    
    
    Redeemable preferred stock
    
    
    47
    
    
    
    6
    
    
    
    
    
    
    
    53
    
    
    
    Total fixed maturity securities available-for-sale
    
    
    36,355
    
    
    
    2,921
    
    
    
    656
    
    
    
    38,620
    
    
    $
    214Total fixed maturity securities trading
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    26Equity securities available-for-sale:Common stock
    
    
    94
    
    
    
    19
    
    
    
    1
    
    
    
    112Preferred stock
    
    
    371
    
    
    
    55
    
    
    
    7
    
    
    
    419Total equity securities available-for-sale
    
    
    465
    
    
    
    74
    
    
    
    8
    
    
    
    531Total
    
    $
    36,846
    
    
    $
    2,995
    
    
    $
    664
    
    
    $
    39,177
 15




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##### Table of Contents



Summary of Fixed Maturity and Equity Securities
 Cost or
    
    
    Gross
    
    
    Gross
    
    
    Estimated
    
    
    UnrealizedDecember 31, 2009
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    OTTI(In millions)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    LossesFixed maturity securities available-for-sale:U.S. Treasury and obligations of government agencies
    
    $
    184
    
    
    $
    16
    
    
    $
    1
    
    
    $
    199
    
    
    $
    Asset-backed:Residential mortgage-backed
    
    
    7,469
    
    
    
    72
    
    
    
    604
    
    
    
    6,937
    
    
    
    246Commercial mortgage-backed
    
    
    709
    
    
    
    10
    
    
    
    135
    
    
    
    584
    
    
    
    3Other asset-backed
    
    
    858
    
    
    
    14
    
    
    
    40
    
    
    
    832
    
    
    
    Total asset-backed
    
    
    9,036
    
    
    
    96
    
    
    
    779
    
    
    
    8,353
    
    
    
    249States, municipalities and political subdivisions
    
    
    7,280
    
    
    
    203
    
    
    
    359
    
    
    
    7,124
    
    
    
    Foreign government
    
    
    467
    
    
    
    14
    
    
    
    2
    
    
    
    479
    
    
    
    Corporate and other bonds
    
    
    18,410
    
    
    
    1,107
    
    
    
    288
    
    
    
    19,229
    
    
    
    26Redeemable preferred stock
    
    
    51
    
    
    
    4
    
    
    
    1
    
    
    
    54
    
    
    
    Total fixed maturity securities available-for-sale
    
    
    35,428
    
    
    
    1,440
    
    
    
    1,430
    
    
    
    35,438
    
    
    $
    275Total fixed maturity securities trading
    
    
    174
    
    
    
    
    
    
    
    
    
    
    
    174Equity securities available-for-sale:Common stock
    
    
    61
    
    
    
    14
    
    
    
    2
    
    
    
    73Preferred stock
    
    
    572
    
    
    
    40
    
    
    
    41
    
    
    
    571Total equity securities available-for-sale
    
    
    633
    
    
    
    54
    
    
    
    43
    
    
    
    644Total
    
    $
    36,235
    
    
    $
    1,494
    
    
    $
    1,473
    
    
    $
    36,256
 16




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##### Table of Contents



Securities in a Gross Unrealized Loss Position
 Less than 12 Months
    
    
    Greater than 12 Months
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossSeptember 30, 2010
    
    Estimated
    
    
    Unrealized
    
    
    Estimated
    
    
    Unrealized
    
    
    Estimated
    
    
    Unrealized(In millions)
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesFixed maturity securities available-for-sale:U.S. Treasury and obligations of government agencies
    
    $
    
    
    
    $
    
    
    
    $
    10
    
    
    $
    1
    
    
    $
    10
    
    
    $
    1Asset-backed:Residential mortgage-backed
    
    
    636
    
    
    
    10
    
    
    
    2,086
    
    
    
    257
    
    
    
    2,722
    
    
    
    267Commercial mortgage-backed
    
    
    122
    
    
    
    1
    
    
    
    321
    
    
    
    64
    
    
    
    443
    
    
    
    65Other asset-backed
    
    
    24
    
    
    
    
    
    
    
    60
    
    
    
    8
    
    
    
    84
    
    
    
    8Total asset-backed
    
    
    782
    
    
    
    11
    
    
    
    2,467
    
    
    
    329
    
    
    
    3,249
    
    
    
    340States, municipalities and political subdivisions
    
    
    151
    
    
    
    4
    
    
    
    1,344
    
    
    
    242
    
    
    
    1,495
    
    
    
    246Corporate and other bonds
    
    
    472
    
    
    
    9
    
    
    
    745
    
    
    
    60
    
    
    
    1,217
    
    
    
    69Total fixed maturity securities available-for-sale
    
    
    1,405
    
    
    
    24
    
    
    
    4,566
    
    
    
    632
    
    
    
    5,971
    
    
    
    656Equity securities available-for-sale:Common stock
    
    
    13
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    14
    
    
    
    1Preferred stock
    
    
    64
    
    
    
    1
    
    
    
    135
    
    
    
    6
    
    
    
    199
    
    
    
    7Total equity securities available-for-sale
    
    
    77
    
    
    
    2
    
    
    
    136
    
    
    
    6
    
    
    
    213
    
    
    
    8Total
    
    $
    1,482
    
    
    $
    26
    
    
    $
    4,702
    
    
    $
    638
    
    
    $
    6,184
    
    
    $
    664
 17




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##### Table of Contents



Securities in a Gross Unrealized Loss Position
 Less than 12 Months
    
    
    Greater than 12 Months
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossDecember 31, 2009
    

    Estimated
    
    
    Unrealized
    
    

    Estimated
    
    
    Unrealized
    
    

    Estimated
    
    
    Unrealized(In millions)
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesFixed maturity securities available-for-sale:U.S. Treasury and obligations of government agencies
    
    $
    21
    
    
    $
    1
    
    
    $
    
    
    
    $
    
    
    
    $
    21
    
    
    $
    1Asset-backed:Residential mortgage-backed
    
    
    1,945
    
    
    
    43
    
    
    
    3,069
    
    
    
    561
    
    
    
    5,014
    
    
    
    604Commercial mortgage-backed
    
    
    21
    
    
    
    1
    
    
    
    456
    
    
    
    134
    
    
    
    477
    
    
    
    135Other asset-backed
    
    
    170
    
    
    
    1
    
    
    
    119
    
    
    
    39
    
    
    
    289
    
    
    
    40Total asset-backed
    
    
    2,136
    
    
    
    45
    
    
    
    3,644
    
    
    
    734
    
    
    
    5,780
    
    
    
    779States, municipalities and political
subdivisions
    
    
    1,036
    
    
    
    30
    
    
    
    2,086
    
    
    
    329
    
    
    
    3,122
    
    
    
    359Foreign government
    
    
    154
    
    
    
    1
    
    
    
    7
    
    
    
    1
    
    
    
    161
    
    
    
    2Corporate and other bonds
    
    
    2,395
    
    
    
    44
    
    
    
    1,948
    
    
    
    244
    
    
    
    4,343
    
    
    
    288Redeemable preferred stock
    
    
    3
    
    
    
    
    
    
    
    14
    
    
    
    1
    
    
    
    17
    
    
    
    1Total fixed maturity securities available-for-sale
    
    
    5,745
    
    
    
    121
    
    
    
    7,699
    
    
    
    1,309
    
    
    
    13,444
    
    
    
    1,430Equity securities available-for-sale:Common stock
    
    
    8
    
    
    
    1
    
    
    
    12
    
    
    
    1
    
    
    
    20
    
    
    
    2Preferred stock
    
    
    
    
    
    
    
    
    
    
    426
    
    
    
    41
    
    
    
    426
    
    
    
    41Total equity securities available-for-sale
    
    
    8
    
    
    
    1
    
    
    
    438
    
    
    
    42
    
    
    
    446
    
    
    
    43Total
    
    $
    5,753
    
    
    $
    122
    
    
    $
    8,137
    
    
    $
    1,351
    
    
    $
    13,890
    
    
    $
    1,473
   Three Months ended
    
    
    Nine Months ended(In millions)
    
    September 30, 2010
    
    
    September 30, 2010Beginning balance of credit losses on fixed maturity securities
    
    $
    171
    
    
    $
    164Additional credit losses for which an OTTI loss was previously recognized
    
    
    4
    
    
    
    26Credit losses for which an OTTI loss was not previously recognized
    
    
    1
    
    
    
    9Reductions for securities sold during the period
    
    
    (27
    )
    
    
    (50
    )Reductions for securities the Company intends to sell or more likely
than not will be required to sell
    
    
    (8
    )
    
    
    (8
    )Ending balance of credit losses on fixed maturity securities
    
    $
    141
    
    
    $
    141
 18




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##### Table of Contents



Period fromThree Months ended
    
    
    April 1, 2009 to(In millions)
    
    September 30, 2009
    
    
    September 30, 2009Beginning balance of credit losses on fixed maturity securities
    
    $
    212
    
    
    $
    192Additional credit losses for which an OTTI loss was previously recognized
    
    
    57
    
    
    
    78Credit losses for which an OTTI loss was not previously recognized
    
    
    65
    
    
    
    149Reductions for securities sold during the period
    
    
    (114
    )
    
    
    (150
    )Reductions for securities the Company intends to sell or more likely than not
will be required to sell
    
    
    (11
    )
    
    
    (60
    )Ending balance of credit losses on fixed maturity securities
    
    $
    209
    
    
    $
    209
   Asset-Backed Securities
     19




---



##### Table of Contents



Gross Unrealized Losses by Ratings Distribution
 September 30, 2010
    

    Amortized
    
    
    Estimated
    
    
    Gross Unrealized(in millions)
    
    Cost
    
    
    Fair Value
    
    
    LossesU.S. Government Agencies
    
    $
    492
    
    
    $
    486
    
    
    $
    6AAA
    
    
    1,307
    
    
    
    1,217
    
    
    
    90AA
    
    
    235
    
    
    
    204
    
    
    
    31A
    
    
    286
    
    
    
    240
    
    
    
    46BBB
    
    
    243
    
    
    
    210
    
    
    
    33Non-investment grade and equity tranches
    
    
    1,026
    
    
    
    892
    
    
    
    134Total
    
    $
    3,589
    
    
    $
    3,249
    
    
    $
    340
  States, Municipalities and Political Subdivisions Securities
    Gross Unrealized Losses by Ratings Distribution
 September 30, 2010
    

    Amortized
    
    
    Estimated
    
    
    Gross Unrealized(In millions)
    
    Cost
    
    
    Fair Value
    
    
    LossesAAA
    
    $
    632
    
    
    $
    597
    
    
    $
    35AA
    
    
    447
    
    
    
    359
    
    
    
    88A
    
    
    156
    
    
    
    148
    
    
    
    8BBB
    
    
    484
    
    
    
    370
    
    
    
    114Non-investment grade
    
    
    22
    
    
    
    21
    
    
    
    1Total
    
    $
    1,741
    
    
    $
    1,495
    
    
    $
    246
  20




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##### Table of Contents



Contractual Maturity
  Contractual Maturity
 September 30, 2010
    
    
    December 31, 2009Cost or
    
    
    Estimated
    
    
    Cost or
    
    
    EstimatedAmortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair(In millions)
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    ValueDue in one year or less
    
    $
    1,198
    
    
    $
    1,200
    
    
    $
    1,240
    
    
    $
    1,219Due after one year through five years
    
    
    10,948
    
    
    
    11,528
    
    
    
    10,046
    
    
    
    10,244Due after five years through ten years
    
    
    10,233
    
    
    
    10,829
    
    
    
    10,646
    
    
    
    10,538Due after ten years
    
    
    13,976
    
    
    
    15,063
    
    
    
    13,496
    
    
    
    13,437Total
    
    $
    36,355
    
    
    $
    38,620
    
    
    $
    35,428
    
    
    $
    35,438
 Investment Commitments
   Mortgage Loans
   21




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##### Table of Contents



Note E. Derivative Financial Instruments
         22




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##### Table of Contents



Credit Ratings of Underlying Reference Obligations
 Fair Value of
    
    
    Maximum Amount of
    
    
    WeightedSeptember 30, 2010
    
    Credit Default
    
    
    Future Payments under
    
    
    Average Years(In millions)
    
    Swaps
    
    
    Credit Default Swaps
    
    
    to MaturityBB-rated
    
    $
    
    
    
    $
    5
    
    
    
    2.7B-rated
    
    
    
    
    
    
    3
    
    
    
    1.7Total
    
    $
    
    
    
    $
    8
    
    
    
    2.4
 Credit Ratings of Underlying Reference Obligations
 Fair Value of
    
    
    Maximum Amount of
    
    
    WeightedDecember 31, 2009
    
    Credit Default
    
    
    Future Payments under
    
    
    Average Years(In millions)
    
    Swaps
    
    
    Credit Default Swaps
    
    
    to MaturityB-rated
    
    $
    
    
    
    $
    8
    
    
    
    3.1Total
    
    $
    
    
    
    $
    8
    
    
    
    3.1
   23




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##### Table of Contents



Recognized Gains (Losses)Periods ended September 30
    
    Three Months
    
    
    Nine Months(In millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Without hedge designationInterest rate swaps
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    61Credit default swaps  purchased protection
    
    
    (1
    )
    
    
    (11
    )
    
    
    (1
    )
    
    
    (46
    )Credit default swaps  sold protection
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Total return swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Futures sold, not yet purchased
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    21Options written
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15Total without hedge designation
    
    
    (1
    )
    
    
    (13
    )
    
    
    (1
    )
    
    
    51Trading activitiesFutures sold, not yet purchased
    
    
    (4
    )
    
    
    (4
    )
    
    
    (3
    )
    
    
    (5
    )Total
    
    $
    (5
    )
    
    $
    (17
    )
    
    $
    (4
    )
    
    $
    46
  Derivative Financial InstrumentsContractual/September 30, 2010
    
    Notional
    
    
    Estimated Fair Value(In millions)
    
    Amount
    
    
    Asset
    
    
    (Liability)Without hedge designationCredit default swaps  purchased protection
    
    $
    25
    
    
    $
    
    
    
    $
    (3
    )Credit default swaps  sold protection
    
    
    8
    
    
    
    
    
    
    
    Currency forwards
    
    
    5
    
    
    
    
    
    
    
    Equity warrants
    
    
    3
    
    
    
    
    
    
    
    Total without hedge designation
    
    
    41
    
    
    
    
    
    
    
    (3
    )Trading activitiesFutures sold, not yet purchased
    
    
    28
    
    
    
    
    
    
    
    Total
    
    $
    69
    
    
    $
    
    
    
    $
    (3
    )
 24




---



##### Table of Contents



Derivative Financial InstrumentsContractual/December 31, 2009
    
    Notional
    
    
    Estimated Fair Value(In millions)
    
    Amount
    
    
    Asset
    
    
    (Liability)Without hedge designationCredit default swaps  purchased protection
    
    $
    116
    
    
    $
    
    
    
    $
    (11
    )Credit default swaps  sold protection
    
    
    8
    
    
    
    
    
    
    
    Equity warrants
    
    
    2
    
    
    
    
    
    
    
    Total without hedge designation
    
    
    126
    
    
    
    
    
    
    
    (11
    )Trading activitiesFutures sold, not yet purchased
    
    
    132
    
    
    
    
    
    
    
    Total
    
    $
    258
    
    
    $
    
    
    
    $
    (11
    )
  25




---



##### Table of Contents



Note F. Fair Value
      26




---



##### Table of Contents



Assets and Liabilities Measured at Fair Value
  TotalSeptember 30, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    Assets/(Liabilities)(In millions)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    at Fair ValueAssetsFixed maturity securities:U.S. Treasury and obligations of
government agencies
    
    $
    113
    
    
    $
    60
    
    
    $
    
    
    
    $
    173Asset-backed:Residential mortgage-backed
    
    
    
    
    
    
    5,330
    
    
    
    646
    
    
    
    5,976Commercial mortgage-backed
    
    
    
    
    
    
    923
    
    
    
    78
    
    
    
    1,001Other asset-backed
    
    
    
    
    
    
    419
    
    
    
    246
    
    
    
    665Total asset-backed
    
    
    
    
    
    
    6,672
    
    
    
    970
    
    
    
    7,642States, municipalities and political subdivisions
    
    
    
    
    
    
    7,550
    
    
    
    458
    
    
    
    8,008Foreign government
    
    
    115
    
    
    
    500
    
    
    
    
    
    
    
    615Corporate and other bonds
    
    
    
    
    
    
    21,555
    
    
    
    600
    
    
    
    22,155Redeemable preferred stock
    
    
    3
    
    
    
    49
    
    
    
    1
    
    
    
    53Total fixed maturity securities
    
    
    231
    
    
    
    36,386
    
    
    
    2,029
    
    
    
    38,646Equity securities
    
    
    376
    
    
    
    133
    
    
    
    22
    
    
    
    531Derivative and other financial instruments, included
in Other invested assets
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    28Short term investments
    
    
    1,237
    
    
    
    845
    
    
    
    2
    
    
    
    2,084Life settlement contracts, included in Other assets
    
    
    
    
    
    
    
    
    
    
    136
    
    
    
    136Discontinued operations investments, included in
Other
liabilities
    
    
    7
    
    
    
    66
    
    
    
    
    
    
    
    73Separate account business
    
    
    36
    
    
    
    385
    
    
    
    41
    
    
    
    462Total assets
    
    $
    1,887
    
    
    $
    37,815
    
    
    $
    2,258
    
    
    $
    41,960LiabilitiesDerivative financial instruments, included in Other
liabilities
    
    $
    
    
    
    $
    
    
    
    $
    (3
    )
    
    $
    (3
    )Total liabilities
    
    $
    
    
    
    $
    
    
    
    $
    (3
    )
    
    $
    (3
    )
 27




---



##### Table of Contents



TotalDecember 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    Assets/(Liabilities)(In millions)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    at Fair ValueAssetsFixed maturity securities:U.S. Treasury and obligations of
government agencies
    
    $
    247
    
    
    $
    54
    
    
    $
    
    
    
    $
    301Asset-backed:Residential mortgage-backed
    
    
    
    
    
    
    6,308
    
    
    
    629
    
    
    
    6,937Commercial mortgage-backed
    
    
    
    
    
    
    461
    
    
    
    123
    
    
    
    584Other asset-backed
    
    
    
    
    
    
    484
    
    
    
    348
    
    
    
    832Total asset-backed
    
    
    
    
    
    
    7,253
    
    
    
    1,100
    
    
    
    8,353States, municipalities and political subdivisions
    
    
    
    
    
    
    6,424
    
    
    
    756
    
    
    
    7,180Foreign government
    
    
    139
    
    
    
    340
    
    
    
    
    
    
    
    479Corporate and other bonds
    
    
    
    
    
    
    18,636
    
    
    
    609
    
    
    
    19,245Redeemable preferred stock
    
    
    3
    
    
    
    49
    
    
    
    2
    
    
    
    54Total fixed maturity securities
    
    
    389
    
    
    
    32,756
    
    
    
    2,467
    
    
    
    35,612Equity securities
    
    
    503
    
    
    
    130
    
    
    
    11
    
    
    
    644Short term investments
    
    
    3,552
    
    
    
    397
    
    
    
    
    
    
    
    3,949Life settlement contracts, included in Other assets
    
    
    
    
    
    
    
    
    
    
    130
    
    
    
    130Discontinued operations investments, included in
Other
liabilities
    
    
    19
    
    
    
    106
    
    
    
    16
    
    
    
    141Separate account business
    
    
    43
    
    
    
    342
    
    
    
    38
    
    
    
    423Total assets
    
    $
    4,506
    
    
    $
    33,731
    
    
    $
    2,662
    
    
    $
    40,899LiabilitiesDerivative financial instruments, included in Other
liabilities
    
    $
    
    
    
    $
    
    
    
    $
    (11
    )
    
    $
    (11
    )Total liabilities
    
    $
    
    
    
    $
    
    
    
    $
    (11
    )
    
    $
    (11
    )
 28




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##### Table of Contents



Net realizedinvestmentgains (losses)
    
    
    Net change in
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealized gainsand net
    
    
    unrealized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (losses) onchange in
    
    
    appreciation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Level 3 assetsunrealized
    
    
    (depreciation)
    
    
    Purchases,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    and liabilitiesappreciation
    
    
    included in
    
    
    sales,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    held at(depreciation)
    
    
    other
    
    
    issuances
    
    
    Transfers
    
    
    Transfers
    
    
    Balance at
    
    
    September 30,Balance at
    
    
    included in
    
    
    comprehensive
    
    
    and
    
    
    into
    
    
    out of
    
    
    September 30,
    
    
    2010 recognizedLevel 3
    
    July 1, 2010
    
    
    net loss*
    
    
    income
    
    
    settlements
    
    
    Level 3
    
    
    Level 3
    
    
    2010
    
    
    in net loss*(In millions)Fixed maturity securities:Asset-backed:Residential mortgage-backed
    
    $
    659
    
    
    $
    1
    
    
    $
    (9
    )
    
    $
    (5
    )
    
    $
    
    
    
    $
    
    
    
    $
    646
    
    
    $
    Commercial mortgage-backed
    
    
    95
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    78
    
    
    
    Other asset-backed
    
    
    306
    
    
    
    (1
    )
    
    
    7
    
    
    
    (66
    )
    
    
    
    
    
    
    
    
    
    
    246
    
    
    
    Total asset-backed
    
    
    1,060
    
    
    
    
    
    
    
    1
    
    
    
    (71
    )
    
    
    
    
    
    
    (20
    )
    
    
    970
    
    
    
    States, municipalities and
political subdivisions
    
    
    539
    
    
    
    
    
    
    
    3
    
    
    
    (84
    )
    
    
    
    
    
    
    
    
    
    
    458
    
    
    
    Corporate and other bonds
    
    
    718
    
    
    
    1
    
    
    
    18
    
    
    
    (83
    )
    
    
    
    
    
    
    (54
    )
    
    
    600
    
    
    
    (1
    )Redeemable preferred stock
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Total fixed maturity securities
    
    
    2,318
    
    
    
    1
    
    
    
    22
    
    
    
    (238
    )
    
    
    
    
    
    
    (74
    )
    
    
    2,029
    
    
    
    (1
    )Equity securities
    
    
    4
    
    
    
    (3
    )
    
    
    
    
    
    
    15
    
    
    
    6
    
    
    
    
    
    
    
    22
    
    
    
    (4
    )Derivative and other financial
instruments, net
    
    
    (2
    )
    
    
    2
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    2Short term investments
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    (11
    )
    
    
    2
    
    
    
    Life settlement contracts
    
    
    134
    
    
    
    8
    
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    136
    
    
    
    4Separate account business
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    Total
    
    $
    2,502
    
    
    $
    8
    
    
    $
    22
    
    
    $
    (198
    )
    
    $
    6
    
    
    $
    (85
    )
    
    $
    2,255
    
    
    $
    1
 29




---



##### Table of Contents



Net realizedinvestmentgains (losses)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealizedand net
    
    
    Net change in
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    gains (losses) onchange in
    
    
    unrealized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Level 3 assetsunrealized
    
    
    appreciation
    
    
    Purchases,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    and liabilitiesappreciation
    
    
    (depreciation)
    
    
    sales,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    held at(depreciation)
    
    
    included in other
    
    
    issuances
    
    
    Transfers
    
    
    Transfers
    
    
    Balance at
    
    
    September 30,Balance at
    
    
    included in
    
    
    comprehensive
    
    
    and
    
    
    into
    
    
    out of
    
    
    September 30,
    
    
    2009 recognizedLevel 3
    
    July 1, 2009
    
    
    net income*
    
    
    income
    
    
    settlements
    
    
    Level 3
    
    
    Level 3
    
    
    2009
    
    
    in net income*(In millions)Fixed maturity securities:Asset-backed:Residential mortgage-backed
    
    $
    808
    
    
    $
    1
    
    
    $
    62
    
    
    $
    20
    
    
    $
    
    
    
    $
    (154
    )
    
    $
    737
    
    
    $
    (1
    )Commercial mortgage-backed
    
    
    175
    
    
    
    (3
    )
    
    
    28
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    211
    
    
    
    (3
    )Other asset-backed
    
    
    141
    
    
    
    1
    
    
    
    14
    
    
    
    132
    
    
    
    
    
    
    
    
    
    
    
    288
    
    
    
    Total asset-backed
    
    
    1,124
    
    
    
    (1
    )
    
    
    104
    
    
    
    163
    
    
    
    
    
    
    
    (154
    )
    
    
    1,236
    
    
    
    (4
    )States, municipalities and
political subdivisions
    
    
    785
    
    
    
    
    
    
    
    19
    
    
    
    (34
    )
    
    
    
    
    
    
    
    
    
    
    770
    
    
    
    Corporate and other bonds
    
    
    730
    
    
    
    (10
    )
    
    
    67
    
    
    
    63
    
    
    
    5
    
    
    
    (83
    )
    
    
    772
    
    
    
    (10
    )Redeemable preferred stock
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    Total fixed maturity securities
    
    
    2,640
    
    
    
    (11
    )
    
    
    191
    
    
    
    192
    
    
    
    5
    
    
    
    (237
    )
    
    
    2,780
    
    
    
    (14
    )Equity securities
    
    
    209
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (199
    )
    
    
    10
    
    
    
    Derivative financial instruments, net
    
    
    (10
    )
    
    
    (10
    )
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    (4
    )Short term investments
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    Life settlement contracts
    
    
    126
    
    
    
    8
    
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    129
    
    
    
    5Discontinued operations investments
    
    
    13
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    Separate account business
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    (1
    )
    
    
    40
    
    
    
    Total
    
    $
    3,016
    
    
    $
    (13
    )
    
    $
    195
    
    
    $
    207
    
    
    $
    5
    
    
    $
    (437
    )
    
    $
    2,973
    
    
    $
    (13
    )
 30




---



##### Table of Contents



Net realizedinvestmentgains (losses)
    
    
    Net change in
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealized gainsand net
    
    
    unrealized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (losses) onchange in
    
    
    appreciation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Level 3 assetsunrealized
    
    
    (depreciation)
    
    
    Purchases,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    and liabilitiesappreciation
    
    
    included in
    
    
    sales,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    held atBalance at
    
    
    (depreciation)
    
    
    other
    
    
    issuances
    
    
    Transfers
    
    
    Transfers
    
    
    Balance at
    
    
    September 30,January 1,
    
    
    included in
    
    
    comprehensive
    
    
    and
    
    
    into
    
    
    out of
    
    
    September 30,
    
    
    2010 recognizedLevel 3
    
    2010
    
    
    net loss*
    
    
    income
    
    
    settlements
    
    
    Level 3
    
    
    Level 3
    
    
    2010
    
    
    in
net income*(In millions)Fixed maturity securities:Asset-backed:Residential mortgage-backed
    
    $
    629
    
    
    $
    (7
    )
    
    $
    20
    
    
    $
    50
    
    
    $
    
    
    
    $
    (46
    )
    
    $
    646
    
    
    $
    (10
    )Commercial mortgage-backed
    
    
    123
    
    
    
    (1
    )
    
    
    1
    
    
    
    6
    
    
    
    7
    
    
    
    (58
    )
    
    
    78
    
    
    
    (2
    )Other asset-backed
    
    
    348
    
    
    
    3
    
    
    
    29
    
    
    
    (89
    )
    
    
    
    
    
    
    (45
    )
    
    
    246
    
    
    
    (1
    )Total asset-backed
    
    
    1,100
    
    
    
    (5
    )
    
    
    50
    
    
    
    (33
    )
    
    
    7
    
    
    
    (149
    )
    
    
    970
    
    
    
    (13
    )States, municipalities and political
subdivisions
    
    
    756
    
    
    
    
    
    
    
    9
    
    
    
    (307
    )
    
    
    
    
    
    
    
    
    
    
    458
    
    
    
    Corporate and other bonds
    
    
    609
    
    
    
    10
    
    
    
    56
    
    
    
    29
    
    
    
    23
    
    
    
    (127
    )
    
    
    600
    
    
    
    (2
    )Redeemable preferred stock
    
    
    2
    
    
    
    6
    
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Total fixed maturity securities
    
    
    2,467
    
    
    
    11
    
    
    
    115
    
    
    
    (318
    )
    
    
    30
    
    
    
    (276
    )
    
    
    2,029
    
    
    
    (15
    )Equity securities
    
    
    11
    
    
    
    (4
    )
    
    
    
    
    
    
    14
    
    
    
    8
    
    
    
    (7
    )
    
    
    22
    
    
    
    (5
    )Derivative and other financial
instruments, net
    
    
    (11
    )
    
    
    1
    
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    2Short term investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    1
    
    
    
    (11
    )
    
    
    2
    
    
    
    Life settlement contracts
    
    
    130
    
    
    
    25
    
    
    
    
    
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    136
    
    
    
    11Discontinued operations investments
    
    
    16
    
    
    
    
    
    
    
    1
    
    
    
    (2
    )
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    Separate account business
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    Total
    
    $
    2,651
    
    
    $
    33
    
    
    $
    116
    
    
    $
    (275
    )
    
    $
    39
    
    
    $
    (309
    )
    
    $
    2,255
    
    
    $
    (7
    )
 31




---



##### Table of Contents



Net realizedinvestmentgains (losses)
    
    
    Net change in
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealized gainsand net
    
    
    unrealized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (losses) onchange in
    
    
    appreciation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Level 3 assetsunrealized
    
    
    (depreciation)
    
    
    Purchases,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    and liabilitiesappreciation
    
    
    included in
    
    
    sales,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    held atBalance at
    
    
    (depreciation)
    
    
    other
    
    
    issuances
    
    
    Transfers
    
    
    Transfers
    
    
    Balance at
    
    
    September 30,January 1,
    
    
    included in
    
    
    comprehensive
    
    
    and
    
    
    into
    
    
    out of
    
    
    September 30,
    
    
    2009 recognizedLevel 3
    
    2009
    
    
    net income*
    
    
    income
    
    
    settlements
    
    
    Level 3
    
    
    Level 3
    
    
    2009
    
    
    in
net income*(In millions)Fixed maturity securities:Asset-backed:Residential mortgage-backed
    
    $
    782
    
    
    $
    (22
    )
    
    $
    98
    
    
    $
    (28
    )
    
    $
    71
    
    
    $
    (164
    )
    
    $
    737
    
    
    $
    (13
    )Commercial mortgage-backed
    
    
    186
    
    
    
    (168
    )
    
    
    170
    
    
    
    (3
    )
    
    
    26
    
    
    
    
    
    
    
    211
    
    
    
    (166
    )Other asset-backed
    
    
    139
    
    
    
    (29
    )
    
    
    54
    
    
    
    90
    
    
    
    153
    
    
    
    (119
    )
    
    
    288
    
    
    
    (31
    )Total asset-backed
    
    
    1,107
    
    
    
    (219
    )
    
    
    322
    
    
    
    59
    
    
    
    250
    
    
    
    (283
    )
    
    
    1,236
    
    
    
    (210
    )States, municipalities and
political subdivisions
    
    
    750
    
    
    
    
    
    
    
    74
    
    
    
    (54
    )
    
    
    
    
    
    
    
    
    
    
    770
    
    
    
    Foreign government
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    Corporate and other bonds
    
    
    616
    
    
    
    (15
    )
    
    
    113
    
    
    
    130
    
    
    
    23
    
    
    
    (95
    )
    
    
    772
    
    
    
    (15
    )Redeemable preferred stock
    
    
    13
    
    
    
    (9
    )
    
    
    9
    
    
    
    7
    
    
    
    
    
    
    
    (18
    )
    
    
    2
    
    
    
    (9
    )Total fixed maturity securities
    
    
    2,492
    
    
    
    (243
    )
    
    
    518
    
    
    
    142
    
    
    
    273
    
    
    
    (402
    )
    
    
    2,780
    
    
    
    (234
    )Equity securities
    
    
    210
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (199
    )
    
    
    10
    
    
    
    Derivative financial instruments, net
    
    
    (87
    )
    
    
    15
    
    
    
    
    
    
    
    62
    
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    (11
    )Short term investments
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    Life settlement contracts
    
    
    129
    
    
    
    24
    
    
    
    
    
    
    
    (24
    )
    
    
    
    
    
    
    
    
    
    
    129
    
    
    
    7Discontinued operations investments
    
    
    15
    
    
    
    
    
    
    
    3
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    Separate account business
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    (1
    )
    
    
    40
    
    
    
    Total
    
    $
    2,797
    
    
    $
    (204
    )
    
    $
    521
    
    
    $
    188
    
    
    $
    273
    
    
    $
    (602
    )
    
    $
    2,973
    
    
    $
    (238
    )
 32




---



##### Table of Contents



*        Net realized and unrealized gains and losses shown above are reported in Net income (loss) as
follows:
 Major Category of Assets and Liabilities
    
    Condensed Consolidated Statements of Operations Line ItemsFixed maturity securities available-for-sale
    
    Net realized investment gains (losses)Fixed maturity securities trading
    
    Net investment incomeEquity securities
    
    Net realized investment gains (losses)Derivative financial instruments held in a 
trading portfolio
    
    Net investment incomeDerivative financial instruments not held
in a trading portfolio and fair value
option financial instruments
    
    Net realized investment gains (losses)Life settlement contracts
    
    Other revenues
   Fixed Maturity Securities
  Equity Securities
  Derivative and Other Financial Instruments
  33




---



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Short Term Investments
  Life Settlement Contracts
  Discontinued Operations Investments
  Separate Account Business
  Financial Assets and Liabilities Not Measured at Fair Value
  September 30, 2010
    
    
    December 31, 2009Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    Estimated(In millions)
    
    Amount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial assetsNotes receivable for the issuance of
common stock
    
    $
    30
    
    
    $
    29
    
    
    $
    30
    
    
    $
    29Mortgage loans
    
    
    70
    
    
    
    71
    
    
    
    
    
    
    
    Financial liabilitiesPremium deposits and annuity contracts
    
    $
    100
    
    
    $
    105
    
    
    $
    105
    
    
    $
    106Short term debt
    
    
    400
    
    
    
    415
    
    
    
    
    
    
    
    Long term debt
    
    
    2,251
    
    
    
    2,426
    
    
    
    2,303
    
    
    
    2,290
      34




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35




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##### Table of Contents



Note G. Claim and Claim Adjustment Expense Reserves
    36




---



##### Table of Contents



A&EP Reserves
     Impact on Condensed Consolidated Statement of Operations
 (In millions)
    
    2010Other operating expenses
    
    $
    529Income tax benefit
    
    
    185Loss from continuing operations, included in the Corporate & Other Non-Core segment
    
    
    (344
    )Loss from discontinued operations
    
    
    (21
    )Net loss attributable to CNA
    
    $
    (365
    )
    37




---



##### Table of Contents



Net Prior Year Development
  Three Month Comparison
 Net Prior Year Development

Three months ended September 30, 2010
 CNA
    
    
    CNA
    
    
    Corporate & Other(In millions)
    
    Specialty
    
    
    Commercial
    
    
    Non-Core
    
    
    TotalPretax (favorable) unfavorable net prior year claim and
allocated claim adjustment expense reserve development:Core (Non-A&EP)
    
    $
    (65
    )
    
    $
    (26
    )
    
    $
    2
    
    
    $
    (89
    )A&EP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pretax (favorable) unfavorable net prior year development before
impact of premium development
    
    
    (65
    )
    
    
    (26
    )
    
    
    2
    
    
    
    (89
    )Pretax (favorable) unfavorable premium development
    
    
    (2
    )
    
    
    (2
    )
    
    
    
    
    
    
    (4
    )Total pretax (favorable) unfavorable net prior year
development
    
    $
    (67
    )
    
    $
    (28
    )
    
    $
    2
    
    
    $
    (93
    )
 Net Prior Year Development

Three months ended September 30, 2009
 CNA
    
    
    CNA
    
    
    Corporate & Other(In millions)
    
    Specialty
    
    
    Commercial
    
    
    Non-Core
    
    
    TotalPretax (favorable) unfavorable net prior year claim and
allocated claim adjustment expense reserve development:Core (Non-A&EP)
    
    $
    (39
    )
    
    $
    (21
    )
    
    $
    1
    
    
    $
    (59
    )A&EP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pretax (favorable) unfavorable net prior year development before
impact of premium development
    
    
    (39
    )
    
    
    (21
    )
    
    
    1
    
    
    
    (59
    )Pretax (favorable) unfavorable premium development
    
    
    3
    
    
    
    9
    
    
    
    
    
    
    
    12Total pretax (favorable) unfavorable net prior year
development
    
    $
    (36
    )
    
    $
    (12
    )
    
    $
    1
    
    
    $
    (47
    )
 38




---



##### Table of Contents



2010 Net Prior Year Development
 CNA Specialty
      CNA Commercial
       39




---



##### Table of Contents



2009 Net Prior Year Development
 CNA Specialty
   CNA Commercial
    40




---



##### Table of Contents



Nine Month Comparison
 Net Prior Year Development
Nine months ended September 30, 2010
 CNA
    
    
CNA
  
    
    Corporate & Other(In millions)
    
    Specialty
    
    
    Commercial
    
    
    Non-Core
    
    
    TotalPretax (favorable) unfavorable net prior year claim and
allocated claim adjustment expense reserve development:Core (Non-A&EP)
    
    $
    (215
    )
    
    $
    (229
    )
    
    $
    5
    
    
    $
    (439
    )A&EP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pretax (favorable) unfavorable net prior year development before
impact of premium development
    
    
    (215
    )
    
    
    (229
    )
    
    
    5
    
    
    
    (439
    )Pretax (favorable) unfavorable premium development
    
    
    (5
    )
    
    
    54
    
    
    
    (3
    )
    
    
    46Total pretax (favorable) unfavorable net prior year
development
    
    $
    (220
    )
    
    $
    (175
    )
    
    $
    2
    
    
    $
    (393
    )Net Prior Year Development
Nine months ended September 30, 2009CNA
    
    
 CNA
  
    
    Corporate & Other(In millions)
    
    Specialty
    
    
    Commercial
    
    
    Non-Core
    
    
    TotalPretax (favorable) unfavorable net prior year claim and
allocated claim adjustment expense reserve development:Core (Non-A&EP)
    
    $
    (103
    )
    
    $
    (148
    )
    
    $
    6
    
    
    $
    (245
    )A&EP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pretax (favorable) unfavorable net prior year development before
impact of premium development
    
    
    (103
    )
    
    
    (148
    )
    
    
    6
    
    
    
    (245
    )Pretax (favorable) unfavorable premium development
    
    
    
    
    
    
    85
    
    
    
    (3
    )
    
    
    82Total pretax (favorable) unfavorable net prior year
development
    
    $
    (103
    )
    
    $
    (63
    )
    
    $
    3
    
    
    $
    (163
    )
 41




---



##### Table of Contents



2010 Net Prior Year Development
 CNA Specialty
      CNA Commercial
        42




---



##### Table of Contents



43




---



##### Table of Contents



2009 Net Prior Year Development
 CNA Specialty
   CNA Commercial
     44




---



##### Table of Contents



Note H Legal Proceedings and Contingent Liabilities
 Insurance Brokerage Antitrust Litigation
 In re Insurance Brokerage Antitrust Litigation
  Other Litigation
  Note I. Benefit Plans
  Net Periodic Cost (Benefit)
 Periods ended September 30
    
    Three Months
    
    
    Nine Months(In millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Pension costService cost
    
    $
    5
    
    
    $
    4
    
    
    $
    13
    
    
    $
    12Interest cost on projected benefit obligation
    
    
    38
    
    
    
    38
    
    
    
    112
    
    
    
    115Expected return on plan assets
    
    
    (41
    )
    
    
    (37
    )
    
    
    (122
    )
    
    
    (109
    )Amortization of net actuarial loss
    
    
    6
    
    
    
    7
    
    
    
    18
    
    
    
    19Net periodic pension cost
    
    $
    8
    
    
    $
    12
    
    
    $
    21
    
    
    $
    37Postretirement benefitService cost
    
    $
    
    
    
    $
    
    
    
    $
    1
    
    
    $
    1Interest cost on projected benefit obligation
    
    
    2
    
    
    
    3
    
    
    
    6
    
    
    
    7Amortization of prior service cost
    
    
    (4
    )
    
    
    (4
    )
    
    
    (12
    )
    
    
    (12
    )Amortization of net actuarial loss
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Net periodic postretirement benefit
    
    $
    (2
    )
    
    $
    (1
    )
    
    $
    (4
    )
    
    $
    (4
    )
 45




---



##### Table of Contents



Note J. Commitments, Contingencies, and Guarantees
 Commitments and Contingencies
    Guarantees
    46




---



##### Table of Contents



Note K. Business Segments
       47




---



##### Table of Contents



Three months ended
    
    CNA
    
    
    CNA
    
    
    Life & Group
    
    
    Corporate & OtherSeptember 30, 2010
    
    Specialty
    
    
    Commercial
    
    
    Non-Core
    
    
    Non-Core
    
    
    Eliminations
    
    
    Total(In millions)RevenuesNet earned premiums
    
    $
    679
    
    
    $
    819
    
    
    $
    145
    
    
    $
    3
    
    
    $
    (1
    )
    
    $
    1,645Net investment income
    
    
    148
    
    
    
    214
    
    
    
    182
    
    
    
    37
    
    
    
    
    
    
    
    581Other revenues
    
    
    57
    
    
    
    15
    
    
    
    4
    
    
    
    (1
    )
    
    
    
    
    
    
    75Total operating revenues
    
    
    884
    
    
    
    1,048
    
    
    
    331
    
    
    
    39
    
    
    
    (1
    )
    
    
    2,301Claims, Benefits and ExpensesNet incurred claims and benefits
    
    
    393
    
    
    
    576
    
    
    
    354
    
    
    
    14
    
    
    
    
    
    
    
    1,337Policyholders dividends
    
    
    2
    
    
    
    4
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    7Amortization of deferred acquisition costs
    
    
    162
    
    
    
    183
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    351Other insurance related expenses
    
    
    45
    
    
    
    104
    
    
    
    41
    
    
    
    9
    
    
    
    (1
    )
    
    
    198Other expenses
    
    
    47
    
    
    
    14
    
    
    
    7
    
    
    
    569
    
    
    
    
    
    
    
    637Total claims, benefits and expenses
    
    
    649
    
    
    
    881
    
    
    
    409
    
    
    
    592
    
    
    
    (1
    )
    
    
    2,530Operating income (loss) from continuing operations before income tax
    
    
    235
    
    
    
    167
    
    
    
    (78
    )
    
    
    (553
    )
    
    
    
    
    
    
    (229
    )Income tax (expense) benefit on operating income (loss)
    
    
    (80
    )
    
    
    (54
    )
    
    
    23
    
    
    
    198
    
    
    
    
    
    
    
    87Net operating (income) loss, after-tax, attributable to noncontrolling interests
    
    
    (11
    )
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16
    )Net operating income (loss) from continuing operations attributable to CNA
    
    
    144
    
    
    
    108
    
    
    
    (55
    )
    
    
    (355
    )
    
    
    
    
    
    
    (158
    )Net realized investment gains, net of participating policyholders interests
    
    
    15
    
    
    
    21
    
    
    
    20
    
    
    
    6
    
    
    
    
    
    
    
    62Income tax expense on net realized investment gains
    
    
    (6
    )
    
    
    (8
    )
    
    
    (7
    )
    
    
    (2
    )
    
    
    
    
    
    
    (23
    )Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Net realized investment gains attributable to CNA
    
    
    9
    
    
    
    14
    
    
    
    13
    
    
    
    4
    
    
    
    
    
    
    
    40Net income (loss) from continuing operations attributable to CNA
    
    $
    153
    
    
    $
    122
    
    
    $
    (42
    )
    
    $
    (351
    )
    
    $
    
    
    
    $
    (118
    )
 48




---



##### Table of Contents



Three months ended
    
    CNA
    
    
    CNA
    
    
    Life & Group
    
    
    Corporate & OtherSeptember 30, 2009
    
    Specialty
    
    
    Commercial
    
    
    Non-Core
    
    
    Non-Core
    
    
    Eliminations
    
    
    Total(In millions)RevenuesNet earned premiums
    
    $
    687
    
    
    $
    874
    
    
    $
    149
    
    
    $
    (3
    )
    
    $
    
    
    
    $
    1,707Net investment income
    
    
    154
    
    
    
    276
    
    
    
    169
    
    
    
    61
    
    
    
    
    
    
    
    660Other revenues
    
    
    53
    
    
    
    13
    
    
    
    2
    
    
    
    5
    
    
    
    
    
    
    
    73Total operating revenues
    
    
    894
    
    
    
    1,163
    
    
    
    320
    
    
    
    63
    
    
    
    
    
    
    
    2,440Claims, Benefits and ExpensesNet incurred claims and benefits
    
    
    410
    
    
    
    642
    
    
    
    199
    
    
    
    25
    
    
    
    
    
    
    
    1,276Policyholders dividends
    
    
    1
    
    
    
    4
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    7Amortization of deferred acquisition costs
    
    
    157
    
    
    
    203
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    365Other insurance related expenses
    
    
    40
    
    
    
    118
    
    
    
    45
    
    
    
    1
    
    
    
    
    
    
    
    204Other expenses
    
    
    45
    
    
    
    23
    
    
    
    7
    
    
    
    27
    
    
    
    
    
    
    
    102Total claims, benefits and expenses
    
    
    653
    
    
    
    990
    
    
    
    258
    
    
    
    53
    
    
    
    
    
    
    
    1,954Operating income from continuing operations before income tax
    
    
    241
    
    
    
    173
    
    
    
    62
    
    
    
    10
    
    
    
    
    
    
    
    486Income tax expense on operating income
    
    
    (78
    )
    
    
    (52
    )
    
    
    (11
    )
    
    
    (1
    )
    
    
    
    
    
    
    (142
    )Net operating (income) loss, after-tax, attributable to noncontrolling interests
    
    
    (10
    )
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13
    )Net operating income from continuing operations attributable to CNA
    
    
    153
    
    
    
    118
    
    
    
    51
    
    
    
    9
    
    
    
    
    
    
    
    331Net realized investment gains (losses), net of participating policyholders interests
    
    
    (35
    )
    
    
    (69
    )
    
    
    21
    
    
    
    (17
    )
    
    
    
    
    
    
    (100
    )Income tax (expense) benefit on net realized investment gains (losses)
    
    
    11
    
    
    
    24
    
    
    
    (7
    )
    
    
    6
    
    
    
    
    
    
    
    34Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )Net realized investment gains (losses) attributable to CNA
    
    
    (24
    )
    
    
    (46
    )
    
    
    14
    
    
    
    (11
    )
    
    
    
    
    
    
    (67
    )Net income (loss) from continuing operations attributable to CNA
    
    $
    129
    
    
    $
    72
    
    
    $
    65
    
    
    $
    (2
    )
    
    $
    
    
    
    $
    264
 49




---



##### Table of Contents



Nine months ended
    
    CNA
    
    
    CNA
    
    
    Life & Group
    
    
    Corporate & OtherSeptember 30, 2010
    
    Specialty
    
    
    Commercial
    
    
    Non-Core
    
    
    Non-Core
    
    
    Eliminations
    
    
    Total(In millions)RevenuesNet earned premiums
    
    $
    1,998
    
    
    $
    2,432
    
    
    $
    436
    
    
    $
    5
    
    
    $
    (3
    )
    
    $
    4,868Net investment income
    
    
    420
    
    
    
    613
    
    
    
    531
    
    
    
    128
    
    
    
    
    
    
    
    1,692Other revenues
    
    
    162
    
    
    
    49
    
    
    
    10
    
    
    
    5
    
    
    
    
    
    
    
    226Total operating revenues
    
    
    2,580
    
    
    
    3,094
    
    
    
    977
    
    
    
    138
    
    
    
    (3
    )
    
    
    6,786Claims, Benefits and ExpensesNet incurred claims and benefits
    
    
    1,115
    
    
    
    1,662
    
    
    
    949
    
    
    
    54
    
    
    
    
    
    
    
    3,780Policyholders dividends
    
    
    6
    
    
    
    11
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    19Amortization of deferred acquisition costs
    
    
    471
    
    
    
    552
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    1,038Other insurance related expenses
    
    
    139
    
    
    
    318
    
    
    
    137
    
    
    
    10
    
    
    
    (3
    )
    
    
    601Other expenses
    
    
    141
    
    
    
    42
    
    
    
    13
    
    
    
    641
    
    
    
    
    
    
    
    837Total claims, benefits and expenses
    
    
    1,872
    
    
    
    2,585
    
    
    
    1,116
    
    
    
    705
    
    
    
    (3
    )
    
    
    6,275Operating income (loss) from continuing operations before income tax
    
    
    708
    
    
    
    509
    
    
    
    (139
    )
    
    
    (567
    )
    
    
    
    
    
    
    511Income tax (expense) benefit on operating income (loss)
    
    
    (238
    )
    
    
    (165
    )
    
    
    67
    
    
    
    204
    
    
    
    
    
    
    
    (132
    )Net operating (income) loss, after-tax, attributable to noncontrolling interests
    
    
    (30
    )
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45
    )Net operating income (loss) from continuing operations attributable to CNA
    
    
    440
    
    
    
    329
    
    
    
    (72
    )
    
    
    (363
    )
    
    
    
    
    
    
    334Net realized investment gains, net of participating policyholders interests
    
    
    60
    
    
    
    29
    
    
    
    15
    
    
    
    21
    
    
    
    
    
    
    
    125Income tax expense on net realized investment gains
    
    
    (21
    )
    
    
    (16
    )
    
    
    (7
    )
    
    
    (7
    )
    
    
    
    
    
    
    (51
    )Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Net realized investment gains attributable to CNA
    
    
    39
    
    
    
    14
    
    
    
    8
    
    
    
    14
    
    
    
    
    
    
    
    75Net income (loss) from continuing operations attributable to CNA
    
    $
    479
    
    
    $
    343
    
    
    $
    (64
    )
    
    $
    (349
    )
    
    $
    
    
    
    $
    409September 30, 2010
(In millions)Reinsurance receivables
    
    $
    976
    
    
    $
    2,131
    
    
    $
    1,546
    
    
    $
    2,824
    
    
    $
    
    
    
    $
    7,477Insurance receivables
    
    $
    641
    
    
    $
    1,122
    
    
    $
    8
    
    
    $
    7
    
    
    $
    
    
    
    $
    1,778Deferred acquisition costs
    
    $
    329
    
    
    $
    328
    
    
    $
    439
    
    
    $
    
    
    
    $
    
    
    
    $
    1,096Insurance reservesClaim and claim adjustment expenses
    
    $
    6,913
    
    
    $
    12,535
    
    
    $
    2,744
    
    
    $
    3,591
    
    
    $
    
    
    
    $
    25,783Unearned premiums
    
    
    1,550
    
    
    
    1,577
    
    
    
    137
    
    
    
    2
    
    
    
    (1
    )
    
    
    3,265Future policy benefits
    
    
    
    
    
    
    
    
    
    
    8,372
    
    
    
    
    
    
    
    
    
    
    
    8,372Policyholders funds
    
    
    13
    
    
    
    13
    
    
    
    138
    
    
    
    
    
    
    
    
    
    
    
    164
 50




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##### Table of Contents



Nine months ended
    
    CNA
    
    
    CNA
    
    
    Life & Group
    
    
    Corporate & OtherSeptember 30, 2009
    
    Specialty
    
    
    Commercial
    
    
    Non-Core
    
    
    Non-Core
    
    
    Eliminations
    
    
    Total(In millions)RevenuesNet earned premiums
    
    $
    2,014
    
    
    $
    2,574
    
    
    $
    447
    
    
    $
    2
    
    
    $
    (2
    )
    
    $
    5,035Net investment income
    
    
    396
    
    
    
    702
    
    
    
    496
    
    
    
    161
    
    
    
    
    
    
    
    1,755Other revenues
    
    
    153
    
    
    
    47
    
    
    
    7
    
    
    
    6
    
    
    
    
    
    
    
    213Total operating revenues
    
    
    2,563
    
    
    
    3,323
    
    
    
    950
    
    
    
    169
    
    
    
    (2
    )
    
    
    7,003Claims, Benefits and ExpensesNet incurred claims and benefits
    
    
    1,209
    
    
    
    1,852
    
    
    
    773
    
    
    
    69
    
    
    
    
    
    
    
    3,903Policyholders dividends
    
    
    7
    
    
    
    6
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    16Amortization of deferred acquisition costs
    
    
    457
    
    
    
    591
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    1,063Other insurance related expenses
    
    
    123
    
    
    
    301
    
    
    
    138
    
    
    
    3
    
    
    
    (2
    )
    
    
    563Other expenses
    
    
    133
    
    
    
    62
    
    
    
    64
    
    
    
    87
    
    
    
    
    
    
    
    346Total claims, benefits and expenses
    
    
    1,929
    
    
    
    2,812
    
    
    
    993
    
    
    
    159
    
    
    
    (2
    )
    
    
    5,891Operating income (loss) from continuing operations before income tax
    
    
    634
    
    
    
    511
    
    
    
    (43
    )
    
    
    10
    
    
    
    
    
    
    
    1,112Income tax (expense) benefit on operating income (loss)
    
    
    (195
    )
    
    
    (143
    )
    
    
    46
    
    
    
    3
    
    
    
    
    
    
    
    (289
    )Net operating (income) loss, after-tax, attributable to noncontrolling interests
    
    
    (26
    )
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38
    )Net operating income from continuing operations attributable to CNA
    
    
    413
    
    
    
    356
    
    
    
    3
    
    
    
    13
    
    
    
    
    
    
    
    785Net realized investment losses, net of participating policyholders interests
    
    
    (227
    )
    
    
    (438
    )
    
    
    (156
    )
    
    
    (108
    )
    
    
    
    
    
    
    (929
    )Income tax benefit on net realized investment losses
    
    
    76
    
    
    
    150
    
    
    
    55
    
    
    
    38
    
    
    
    
    
    
    
    319Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net realized investment losses attributable to CNA
    
    
    (151
    )
    
    
    (288
    )
    
    
    (101
    )
    
    
    (70
    )
    
    
    
    
    
    
    (610
    )Net income (loss) from continuing operations attributable to CNA
    
    $
    262
    
    
    $
    68
    
    
    $
    (98
    )
    
    $
    (57
    )
    
    $
    
    
    
    $
    175
 December 31, 2009(In millions)Reinsurance receivables
    
    $
    1,077
    
    
    $
    2,234
    
    
    $
    1,744
    
    
    $
    1,877
    
    
    $
    
    
    
    $
    6,932Insurance receivables
    
    $
    613
    
    
    $
    1,234
    
    
    $
    9
    
    
    $
    2
    
    
    $
    
    
    
    $
    1,858Deferred acquisition costs
    
    $
    318
    
    
    $
    336
    
    
    $
    454
    
    
    $
    
    
    
    $
    
    
    
    $
    1,108Insurance reservesClaim and claim adjustment expenses
    
    $
    6,922
    
    
    $
    13,005
    
    
    $
    2,883
    
    
    $
    4,006
    
    
    $
    
    
    
    $
    26,816Unearned premiums
    
    
    1,528
    
    
    
    1,603
    
    
    
    140
    
    
    
    3
    
    
    
    
    
    
    
    3,274Future policy benefits
    
    
    
    
    
    
    
    
    
    
    7,981
    
    
    
    
    
    
    
    
    
    
    
    7,981Policyholders funds
    
    
    11
    
    
    
    11
    
    
    
    170
    
    
    
    
    
    
    
    
    
    
    
    192
 51




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##### Table of Contents



Revenues by Line of BusinessThree Months
    
    
    Nine MonthsPeriods ended September 30
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009(In millions)CNA SpecialtyProfessional & Management Liability
    
    $
    650
    
    
    $
    619
    
    
    $
    1,915
    
    
    $
    1,673International
    
    
    51
    
    
    
    46
    
    
    
    150
    
    
    
    116Surety
    
    
    124
    
    
    
    123
    
    
    
    357
    
    
    
    355Warranty & Alternative Risks
    
    
    74
    
    
    
    71
    
    
    
    218
    
    
    
    192CNA Specialty revenues
    
    
    899
    
    
    
    859
    
    
    
    2,640
    
    
    
    2,336CNA CommercialCommercial Insurance
    
    
    735
    
    
    
    722
    
    
    
    2,138
    
    
    
    1,895Business Insurance
    
    
    142
    
    
    
    150
    
    
    
    423
    
    
    
    393International
    
    
    123
    
    
    
    160
    
    
    
    367
    
    
    
    453CNA Select Risk
    
    
    69
    
    
    
    62
    
    
    
    195
    
    
    
    144CNA Commercial revenues
    
    
    1,069
    
    
    
    1,094
    
    
    
    3,123
    
    
    
    2,885Life & Group Non-CoreLife & Annuity
    
    
    69
    
    
    
    80
    
    
    
    185
    
    
    
    167Health
    
    
    276
    
    
    
    257
    
    
    
    796
    
    
    
    620Other
    
    
    6
    
    
    
    4
    
    
    
    11
    
    
    
    7Life & Group Non-Core revenues
    
    
    351
    
    
    
    341
    
    
    
    992
    
    
    
    794Corporate & Other Non-Core revenues
    
    
    45
    
    
    
    46
    
    
    
    159
    
    
    
    61Eliminations
    
    
    (1
    )
    
    
    
    
    
    
    (3
    )
    
    
    (2
    )Total revenues
    
    $
    2,363
    
    
    $
    2,340
    
    
    $
    6,911
    
    
    $
    6,074
 52




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##### Table of Contents



Note L. IT Transformation
   IT Transformation Costs by SegmentNine months ended September 30(In millions)
    

    2010CNA Specialty
    
    $
    7CNA Commercial
    
    
    15Life & Group Non-Core
    
    
    9Corporate & Other Non-Core
    
    
    3Total IT Transformation Costs
    
    $
    34
 Note
M. Subsequent Event
  53




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##### Table of Contents



CNA Financial Corporation
 
 Item 2. Managements Discussion and Analysis (MD&A) of Financial Condition and Results of
Operations
 Overview
 th
    Agreement to Cede Asbestos and Environmental Pollution (A&EP) Liabilities to National
Indemnity Company (NICO)
  54




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##### Table of Contents



CONSOLIDATED OPERATIONS
 Results of Operations
  Periods ended September 30
    
    Three Months
    
    
    Nine Months(In millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009RevenuesNet earned premiums
    
    $
    1,645
    
    
    $
    1,707
    
    
    $
    4,868
    
    
    $
    5,035Net investment income
    
    
    581
    
    
    
    660
    
    
    
    1,692
    
    
    
    1,755Other revenues
    
    
    75
    
    
    
    73
    
    
    
    226
    
    
    
    213Total operating revenues
    
    
    2,301
    
    
    
    2,440
    
    
    
    6,786
    
    
    
    7,003Claims, Benefits and ExpensesNet incurred claims and benefits
    
    
    1,337
    
    
    
    1,276
    
    
    
    3,780
    
    
    
    3,903Policyholders dividends
    
    
    7
    
    
    
    7
    
    
    
    19
    
    
    
    16Amortization of deferred acquisition costs
    
    
    351
    
    
    
    365
    
    
    
    1,038
    
    
    
    1,063Other insurance related expenses
    
    
    198
    
    
    
    204
    
    
    
    601
    
    
    
    563Other expenses
    
    
    637
    
    
    
    102
    
    
    
    837
    
    
    
    346Total claims, benefits and expenses
    
    
    2,530
    
    
    
    1,954
    
    
    
    6,275
    
    
    
    5,891Operating income (loss) from continuing operations
before income tax
    
    
    (229
    )
    
    
    486
    
    
    
    511
    
    
    
    1,112Income tax (expense) benefit on operating income (loss)
    
    
    87
    
    
    
    (142
    )
    
    
    (132
    )
    
    
    (289
    )Net operating (income) loss, after-tax, attributable
to noncontrolling interests
    
    
    (16
    )
    
    
    (13
    )
    
    
    (45
    )
    
    
    (38
    )Net operating income (loss) from continuing operations
attributable to CNA
    
    
    (158
    )
    
    
    331
    
    
    
    334
    
    
    
    785Net realized investment gains (losses), net of
participating policyholders interests
    
    
    62
    
    
    
    (100
    )
    
    
    125
    
    
    
    (929
    )Income tax (expense) benefit on net realized
investment gains (losses)
    
    
    (23
    )
    
    
    34
    
    
    
    (51
    )
    
    
    319Net realized investment (gains) losses, after-tax,
attributable to noncontrolling interests
    
    
    1
    
    
    
    (1
    )
    
    
    1
    
    
    
    Net realized investment gains (losses) attributable to
CNA
    
    
    40
    
    
    
    (67
    )
    
    
    75
    
    
    
    (610
    )Income (loss) from continuing operations attributable
to CNA
    
    
    (118
    )
    
    
    264
    
    
    
    409
    
    
    
    175Loss from discontinued operations attributable to CNA,
net of income tax (expense) benefit of $0, $0, $0 and
$0
    
    
    (22
    )
    
    
    (1
    )
    
    
    (21
    )
    
    
    (2
    )Net income (loss) attributable to CNA
    
    $
    (140
    )
    
    $
    263
    
    
    $
    388
    
    
    $
    173
 Three Month Comparison
  55




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##### Table of Contents



Nine Month Comparison
      56




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##### Table of Contents



Critical Accounting Estimates
    
    
    Insurance Reserves
 
    
    Reinsurance
 
    
    Valuation of Investments and Impairment of Securities
 
    
    Long Term Care Products
 
    
    Payout Annuity Contracts
 
    
    Pension and Postretirement Benefit Obligations
 
    
    Legal Proceedings
 
    
    Income Taxes
  57




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##### Table of Contents



SEGMENT RESULTS
  CNA SPECIALTY
  Results of OperationsPeriods ended September 30
    
    Three Months
    
    
    Nine Months(In millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net written premiums
    
    $
    706
    
    
    $
    690
    
    
    $
    2,009
    
    
    $
    2,017Net earned premiums
    
    
    679
    
    
    
    687
    
    
    
    1,998
    
    
    
    2,014Net investment income
    
    
    148
    
    
    
    154
    
    
    
    420
    
    
    
    396Net operating income
    
    
    144
    
    
    
    153
    
    
    
    440
    
    
    
    413Net realized investment gains (losses), after-tax
    
    
    9
    
    
    
    (24
    )
    
    
    39
    
    
    
    (151
    )Net income
    
    
    153
    
    
    
    129
    
    
    
    479
    
    
    
    262RatiosLoss and loss adjustment expense
    
    
    57.8
    %
    
    
    59.8
    %
    
    
    55.8
    %
    
    
    60.1
    %Expense
    
    
    30.4
    
    
    
    28.8
    
    
    
    30.5
    
    
    
    28.7Dividend
    
    
    0.3
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.4Combined
    
    
    88.5
    %
    
    
    88.8
    %
    
    
    86.6
    %
    
    
    89.2
    %
 Three Month Comparison
       58




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##### Table of Contents



Nine Month Comparison
        Gross and Net Carried 
Claim and Claim Adjustment Expense ReservesSeptember 30,
    
    
    December 31,(In millions)
    
    2010
    
    
    2009Gross Case Reserves
    
    $
    2,329
    
    
    $
    2,208Gross IBNR Reserves
    
    
    4,584
    
    
    
    4,714Total Gross Carried Claim and Claim Adjustment Expense Reserves
    
    $
    6,913
    
    
    $
    6,922Net Case Reserves
    
    $
    1,941
    
    
    $
    1,781Net IBNR Reserves
    
    
    4,024
    
    
    
    4,085Total Net Carried Claim and Claim Adjustment Expense Reserves
    
    $
    5,965
    
    
    $
    5,866
 59




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##### Table of Contents



CNA COMMERCIAL
  Results of OperationsPeriods ended September 30
    
    Three Months
    
    
    Nine Months(In millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net written premiums
    
    $
    763
    
    
    $
    787
    
    
    $
    2,430
    
    
    $
    2,647Net earned premiums
    
    
    819
    
    
    
    874
    
    
    
    2,432
    
    
    
    2,574Net investment income
    
    
    214
    
    
    
    276
    
    
    
    613
    
    
    
    702Net operating income
    
    
    108
    
    
    
    118
    
    
    
    329
    
    
    
    356Net realized investment gains (losses), after-tax
    
    
    14
    
    
    
    (46
    )
    
    
    14
    
    
    
    (288
    )Net income
    
    
    122
    
    
    
    72
    
    
    
    343
    
    
    
    68RatiosLoss and loss adjustment expense
    
    
    70.2
    %
    
    
    73.4
    %
    
    
    68.3
    %
    
    
    71.9
    %Expense
    
    
    35.1
    
    
    
    36.8
    
    
    
    35.8
    
    
    
    34.7Dividend
    
    
    0.4
    
    
    
    0.4
    
    
    
    0.4
    
    
    
    0.2Combined
    
    
    105.7
    %
    
    
    110.6
    %
    
    
    104.5
    %
    
    
    106.8
    %
 Three Month Comparison
        60




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##### Table of Contents



Nine Month Comparison
         Gross and Net CarriedClaim and Claim Adjustment Expense ReservesSeptember 30,
    
    
    December 31,(In millions)
    
    2010
    
    
    2009Gross Case Reserves
    
    $
    6,443
    
    
    $
    6,510Gross IBNR Reserves
    
    
    6,092
    
    
    
    6,495Total Gross Carried Claim and Claim Adjustment Expense Reserves
    
    $
    12,535
    
    
    $
    13,005Net Case Reserves
    
    $
    5,270
    
    
    $
    5,269Net IBNR Reserves
    
    
    5,218
    
    
    
    5,580Total Net Carried Claim and Claim Adjustment Expense Reserves
    
    $
    10,488
    
    
    $
    10,849
 61




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##### Table of Contents



LIFE & GROUP NON-CORE
  Results of OperationsPeriods ended September 30
    
    Three Months
    
    
    Nine Months(In millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net earned premiums
    
    $
    145
    
    
    $
    149
    
    
    $
    436
    
    
    $
    447Net investment income
    
    
    182
    
    
    
    169
    
    
    
    531
    
    
    
    496Net operating income (loss)
    
    
    (55
    )
    
    
    51
    
    
    
    (72
    )
    
    
    3Net realized investment gains (losses), after-tax
    
    
    13
    
    
    
    14
    
    
    
    8
    
    
    
    (101
    )Net income (loss)
    
    
    (42
    )
    
    
    65
    
    
    
    (64
    )
    
    
    (98
    )
 Three Month Comparison
    Nine Month Comparison
   62




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##### Table of Contents



CORPORATE & OTHER NON-CORE
  Results of Operations
 Periods ended September 30
    
    Three Months
    
    
    Nine Months(In millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net investment income
    
    $
    37
    
    
    $
    61
    
    
    $
    128
    
    
    $
    161Net operating income (loss)
    
    
    (355
    )
    
    
    9
    
    
    
    (363
    )
    
    
    13Net realized investment gains (losses), after-tax
    
    
    4
    
    
    
    (11
    )
    
    
    14
    
    
    
    (70
    )Net loss
    
    
    (351
    )
    
    
    (2
    )
    
    
    (349
    )
    
    
    (57
    )
 Three Month Comparison
   Nine Month Comparison
    Gross and Net Carried  Claim and Claim Adjustment Expense Reserves
 September 30,
    
    
    December 31,(In millions)
    
    2010
    
    
    2009Gross Case Reserves
    
    $
    1,497
    
    
    $
    1,548Gross IBNR Reserves
    
    
    2,094
    
    
    
    2,458Total Gross Carried Claim and Claim Adjustment Expense Reserves
    
    $
    3,591
    
    
    $
    4,006Net Case Reserves
    
    $
    504
    
    
    $
    972Net IBNR Reserves
    
    
    365
    
    
    
    1,515Total Net Carried Claim and Claim Adjustment Expense Reserves
    
    $
    869
    
    
    $
    2,487
  63




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##### Table of Contents



INVESTMENTS
 Net Investment Income
  Net Investment Income
 Periods ended September 30
    
    Three Months
    
    
    Nine Months(In millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Fixed maturity securities
    
    $
    511
    
    
    $
    496
    
    
    $
    1,540
    
    
    $
    1,458Short term investments
    
    
    2
    
    
    
    7
    
    
    
    13
    
    
    
    28Limited partnerships
    
    
    68
    
    
    
    145
    
    
    
    136
    
    
    
    240Equity securities
    
    
    7
    
    
    
    11
    
    
    
    26
    
    
    
    39Mortgage loans
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    Trading portfolio
    
    
    4
    
    
    
    12
    
    
    
    10
    
    
    
    20Other
    
    
    2
    
    
    
    2
    
    
    
    7
    
    
    
    6Gross investment income
    
    
    595
    
    
    
    673
    
    
    
    1,733
    
    
    
    1,791Investment expense
    
    
    (14
    )
    
    
    (13
    )
    
    
    (41
    )
    
    
    (36
    )Net investment income
    
    $
    581
    
    
    $
    660
    
    
    $
    1,692
    
    
    $
    1,755
    64




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##### Table of Contents



Net Realized Investment Gains (Losses)
  Net Realized Investment Gains (Losses)
 Periods ended September 30
    
    Three Months
    
    
    Nine Months(In millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Fixed maturity securities:U.S. Treasury and obligations of government agencies
    
    $
    
    
    
    $
    (34
    )
    
    $
    4
    
    
    $
    (61
    )Asset-backed
    
    
    22
    
    
    
    (104
    )
    
    
    32
    
    
    
    (603
    )States, municipalities and political subdivisions
    
    
    7
    
    
    
    17
    
    
    
    15
    
    
    
    72Foreign government
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    27Corporate and other bonds
    
    
    47
    
    
    
    8
    
    
    
    110
    
    
    
    (288
    )Redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    (9
    )Total fixed maturity securities
    
    
    76
    
    
    
    (112
    )
    
    
    169
    
    
    
    (862
    )Equity securities
    
    
    (17
    )
    
    
    19
    
    
    
    (42
    )
    
    
    (133
    )Derivative securities
    
    
    (1
    )
    
    
    (13
    )
    
    
    (1
    )
    
    
    51Short term investments and other
    
    
    4
    
    
    
    6
    
    
    
    (1
    )
    
    
    15Net realized investment gains (losses), net of
participating policyholders interests
    
    
    62
    
    
    
    (100
    )
    
    
    125
    
    
    
    (929
    )Income tax (expense) benefit on net realized investment
gains (losses)
    
    
    (23
    )
    
    
    34
    
    
    
    (51
    )
    
    
    319Net realized investment (gains) losses, after-tax,
attributable to noncontrolling interests
    
    
    1
    
    
    
    (1
    )
    
    
    1
    
    
    
    Net realized investment gains (losses) attributable to CNA
    
    $
    40
    
    
    $
    (67
    )
    
    $
    75
    
    
    $
    (610
    )
    Fixed
Maturity RatingsSeptember 30,
    
    
    
    
    
    
    December 31,(In millions)
    
    2010
    
    
    %
    
    
    2009
    
    
    %U.S. Government and Agencies
    
    $
    3,152
    
    
    
    8
    %
    
    $
    3,705
    
    
    
    10
    %AAA rated
    
    
    5,229
    
    
    
    14
    
    
    
    5,855
    
    
    
    17AA and A rated
    
    
    15,217
    
    
    
    39
    
    
    
    12,464
    
    
    
    35BBB rated
    
    
    11,336
    
    
    
    29
    
    
    
    10,122
    
    
    
    28Non-investment grade
    
    
    3,712
    
    
    
    10
    
    
    
    3,466
    
    
    
    10Total
    
    $
    38,646
    
    
    
    100
    %
    
    $
    35,612
    
    
    
    100
    %
 65




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##### Table of Contents



Non-investment Grade
 September 30,(In millions)
    
    2010
    
    
    %
    
    
    December 31, 2009
    
    
    %BB
    
    $
    1,425
    
    
    
    39
    %
    
    $
    1,352
    
    
    
    39
    %B
    
    
    1,157
    
    
    
    31
    
    
    
    1,255
    
    
    
    36CCC  C
    
    
    1,013
    
    
    
    27
    
    
    
    761
    
    
    
    22D
    
    
    117
    
    
    
    3
    
    
    
    98
    
    
    
    3Total
    
    $
    3,712
    
    
    
    100
    %
    
    $
    3,466
    
    
    
    100
    %
     Percent of
    
    
    Percent ofMaturity Profile
    
    Fair Value
    
    
    Unrealized LossDue in one year or less
    
    
    5
    %
    
    
    3
    %Due after one year through five years
    
    
    15
    
    
    
    15Due after five years through ten years
    
    
    39
    
    
    
    33Due after ten years
    
    
    41
    
    
    
    49Total
    
    
    100
    %
    
    
    100
    %
 Duration
   66




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Effective
Durations
 September 30, 2010
    
    
    December 31, 2009Effective Duration
    
    
    
    
    
    
    Effective Duration(In millions)
    
    Fair Value
    
    
    (In years)
    
    
    Fair Value
    
    
    (In years)Segregated investments
    
    $
    11,968
    
    
    
    11.2
    
    
    $
    10,376
    
    
    
    11.2Other interest sensitive investments
    
    
    29,077
    
    
    
    4.6
    
    
    
    29,665
    
    
    
    4.0Total Fair Value
    
    $
    41,045
    
    
    
    6.6
    
    
    $
    40,041
    
    
    
    5.8
  Asset-Backed Exposure
 Asset-Backed Distribution
 September 30, 2010
    
    Security Type(In millions)
    
    RMBS (a)
    
    
    CMBS (b)
    
    
    Other ABS (c)
    
    
    TotalU.S. Government Agencies
    
    $
    2,946
    
    
    $
    32
    
    
    $
    
    
    
    $
    2,978AAA
    
    
    1,167
    
    
    
    382
    
    
    
    486
    
    
    
    2,035AA
    
    
    224
    
    
    
    173
    
    
    
    65
    
    
    
    462A
    
    
    197
    
    
    
    261
    
    
    
    66
    
    
    
    524BBB
    
    
    247
    
    
    
    113
    
    
    
    24
    
    
    
    384Non-investment grade and equity tranches
    
    
    1,195
    
    
    
    40
    
    
    
    24
    
    
    
    1,259Total Fair Value
    
    $
    5,976
    
    
    $
    1,001
    
    
    $
    665
    
    
    $
    7,642Total Amortized Cost
    
    $
    6,089
    
    
    $
    1,032
    
    
    $
    650
    
    
    $
    7,771Sub-prime (included above)Fair Value
    
    $
    555
    
    
    $
    
    
    
    $
    
    
    
    $
    555Amortized Cost
    
    $
    596
    
    
    $
    
    
    
    $
    
    
    
    $
    596Alt-A (included above)Fair Value
    
    $
    680
    
    
    $
    
    
    
    $
    
    
    
    $
    680Amortized Cost
    
    $
    720
    
    
    $
    
    
    
    $
    
    
    
    $
    720
 
 (a)
    
    Residential mortgage-backed securities (RMBS)(b)
    
    Commercial mortgage-backed securities (CMBS)(c)
    
    Other asset-backed securities (Other ABS)  67




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Short Term Investments
  Short Term Investments
    
    September 30,
    
    
    December 31,(In millions)
    
    2010
    
    
    2009Short term investments available-for-sale:Commercial paper
    
    $
    670
    
    
    $
    185U.S. Treasury securities
    
    
    884
    
    
    
    3,025Money market funds
    
    
    126
    
    
    
    179Other
    
    
    404
    
    
    
    560Total short term investments
    
    $
    2,084
    
    
    $
    3,949
  68




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Cash Flows
        Liquidity
      69




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Accounting Standards Updates
  70




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FORWARD-LOOKING STATEMENTS
  
    
    conditions in the capital and credit markets, including continuing uncertainty and
instability in these markets, as well as the overall economy, and their impact on the returns,
types, liquidity and valuation of our investments;
    
    general economic and business conditions, including recessionary conditions that
may decrease the size and number of our insurance customers and create additional losses to
our lines of business, especially those that provide management and professional liability
insurance, as well as surety bonds, to businesses engaged in real estate, financial services
and professional services, and inflationary pressures on medical care costs, construction
costs and other economic sectors that increase the severity of claims;
    
    the effects of failures in the financial services industry, as well as
irregularities in financial reporting and other corporate governance matters, on the markets
for directors & officers and errors & omissions coverages, as well as on capital and credit
markets;
    
    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;
    
    regulatory limitations, impositions and restrictions upon us, including the
effects of assessments and other surcharges for guaranty funds and second-injury funds, other
mandatory pooling arrangements and future assessments levied on insurance companies and other
financial industry participants under the Emergency Economic Stabilization Act of 2008
recoupment provisions, as well as the new federal financial regulatory reform of the insurance
industry established by the Dodd-Frank Wall Street Reform and Consumer Protection Act;
    
    increased operating costs and underwriting losses arising from the Patient
Protection and Affordable Care Act and the related amendments in the Health Care and Education
Reconciliation Act, as well as health care reform proposals at the state level;
    
    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 performance of reinsurance companies under reinsurance contracts with us;
    
    conditions in the capital and credit markets that may limit our ability to raise
significant amounts of capital on favorable terms, as well as restrictions on the ability or
willingness of Loews to provide additional capital support to us;
 71




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##### Table of Contents




    
    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;
    
    regulatory requirements imposed by coastal state regulators in the wake of
hurricanes or other natural disasters, including limitations on the ability to exit markets or
to non-renew, cancel or change terms and conditions in policies, as well as mandatory
assessments to fund any shortfalls arising from the inability of quasi-governmental insurers
to pay claims;
    
    man-made disasters, including the possible occurrence of terrorist attacks 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, 2014 of the Terrorism
Risk Insurance Act of 2002;
    
    the occurrence of epidemics;
    
    mass tort claims, including bodily injury claims related to welding rods, benzene,
lead and noise induced hearing loss claims, as well as claims relating to various medical
products including pharmaceuticals;
    
    the risks and uncertainties associated with our loss reserves, as outlined in the
Critical Accounting Estimates and the Reserves  Estimates and Uncertainties sections under
Item 7 of our Annual Report on Form 10-K, including the sufficiency of the reserves and the
possibility for future increases;
    
    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;
    
    the possibility of changes in our ratings by ratings agencies, including the
inability to access certain markets or distribution channels and the required
collateralization of future payment obligations as a result of such changes, and changes in
rating agency policies and practices; and
    
    with respect to the transaction in which we ceded A&EP liabilities referenced in
this document, whether the other parties to the transaction will fully perform their
obligations to CNA, the uncertainty in estimating loss reserves for A&EP liabilities and the
possible continued exposure of CNA to liabilities for A&EP claims.
  72




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CNA Financial Corporation
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  73




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CNA Financial Corporation
 
 Item 4. Controls and Procedures
    74




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##### Table of Contents



CNA Financial Corporation
 
 Part II. Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  We may face increased operating costs and underwriting losses arising from the federal health care
reform legislation, as well as health care reform proposals at the state level.
  We are unable to predict the impact on us of the new federal financial regulatory reform.
  
 Item 6. Exhibits
  75




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##### Table of Contents



CNA Financial Corporation
 Part II. Other Information
 SIGNATURES
  CNA Financial CorporationDated:  November 2, 2010
    By

    /s/ D. Craig MenseD. Craig MenseExecutive Vice President and

Chief Financial Officer 76




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##### Table of Contents



EXHIBIT INDEX
 Description of Exhibit
    

Exhibit NumberAdministrative Services Agreement, dated August 31, 2010, among Continental Casualty
Company, The Continental Insurance Company, Continental Reinsurance Corporation
International, Ltd., CNA Insurance Company Limited and National Indemnity Company (Exhibit
10.1 to September 1, 2010 Form 8-K incorporated herein by reference)
    
    
    10.1Collateral Trust Agreement, dated August 31, 2010, among Continental Casualty Company, The
Continental Insurance Company, Continental Reinsurance Corporation International, Ltd.,
CNA Insurance Company Limited, National Indemnity Company and Wells Fargo Bank, National
Association (Exhibit 10.2 to September 1, 2010 Form 8-K incorporated herein by reference)
    
    
    10.2Loss Portfolio Transfer Reinsurance Agreement, dated August 31, 2010, among Continental
Casualty Company, The Continental Insurance Company, Continental Reinsurance Corporation
International, Ltd., CNA Insurance Company Limited and National Indemnity Company (Exhibit
10.3 to September 1, 2010 Form 8-K incorporated herein by reference)
    
    
    10.3Amendment No. 1 to the Master Transaction Agreement, dated August 31, 2010, among
Continental Casualty Company, The Continental Insurance Company, Continental Reinsurance
Corporation International, Ltd., CNA Insurance Company Limited and National Indemnity
Company (Exhibit 10.4 to September 1, 2010 Form 8-K incorporated herein by reference)
    
    
    10.4Parental Guarantee Agreement, dated August 31, 2010, made by Berkshire Hathaway Inc. in
favor of Continental Casualty Company, The Continental Insurance Company, Continental
Reinsurance Corporation International, Ltd. and CNA Insurance Company Limited (Exhibit
10.5 to September 1, 2010 Form 8-K incorporated herein by reference)
    
    
    10.52008 Senior Preferred Stock Redemption Agreement, dated August 5, 2010, by and between CNA
Financial Corporation and Loews Corporation. (Exhibit 10.1 to August 6, 2010 Form 8-K
incorporated herein by reference)
    
    
    10.6Certification of Chief Executive Officer
    
    
    31.1Certification of Chief Financial Officer
    
    
    31.2Written 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)
    
    
    32.1Written 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