##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
  FORM 10-K
 Ö
 Commission File Number 1-5823
 CNA FINANCIAL CORPORATION
  Delaware
    
    36-6169860(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)333 S. WabashChicago, Illinois
    
    60604(Address of principal executive offices)
    
    (Zip Code)
 (312) 822-5000
 (Registrants telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredCommon Stock
    
    New York Stock Exchangewith a par value
    
    Chicago Stock Exchangeof $2.50 per share
 Securities registered pursuant to Section 12(g) of the Act:
 Ö
 Ö
 Ö
 Yes... No....
 Ö
  Ö
 Ö
  DOCUMENTS INCORPORATED BY REFERENCE:




---



##### 



Item
    
    
    
    PageNumber
    
    
    
    NumberPART I1.
    
    Business
    
    31A.
    
    Risk Factors
    
    81B.
    
    Unresolved Staff Comments
    
    162.
    
    Properties
    
    163.
    
    Legal Proceedings
    
    164.
    
    Submission of Matters to a Vote of Security Holders
    
    16PART II5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    176.
    
    Selected Financial Data
    
    197.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    207A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    568.
    
    Financial Statements and Supplementary Data
    
    619.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    1449A.
    
    Controls and Procedures
    
    1449B.
    
    Other Information
    
    144PART III10.
    
    Directors, Executive Officers and Corporate Governance
    
    14511.
    
    Executive Compensation
    
    14612.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    14613.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    14614.
    
    Principal Accounting Fees and Services
    
    146PART IV15.
    
    Exhibits, Financial Statement Schedules
    
    147
  
 
 2




---



##### Table of Contents



PART I
 
 ITEM 1. BUSINESS
     Competition
    Regulation
    3




---



##### Table of Contents



Employee Relations
   4




---



##### Table of Contents



Direct Written Premiums
 Percent of TotalYears ended December 31
    
    2009
    
    2008
    
    2007California
    
    
    9.1
    %
    
    
    9.2
    %
    
    
    9.5
    %New York
    
    
    6.8
    
    
    
    6.9
    
    
    
    7.0Texas
    
    
    6.6
    
    
    
    6.2
    
    
    
    6.1Florida
    
    
    6.2
    
    
    
    6.5
    
    
    
    7.5Illinois
    
    
    3.8
    
    
    
    3.8
    
    
    
    3.8New Jersey
    
    
    3.7
    
    
    
    3.8
    
    
    
    3.7Missouri
    
    
    3.6
    
    
    
    3.1
    
    
    
    2.9Pennsylvania
    
    
    3.2
    
    
    
    3.3
    
    
    
    3.4All other states, countries or political subdivisions (a)
    
    
    57.0
    
    
    
    57.2
    
    
    
    56.1Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 (a)
    
    No other individual state, country or political subdivision accounts for more than 3.0% of
direct written premiums.  Property and Casualty Claim and Claim Adjustment Expenses
   5




---



##### Table of Contents



Schedule of Loss Reserve Development
 Calendar Year Ended
    
    1999 (a)
    
    2000
    
    2001 (b)
    
    2002 (c)
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    2008
    
    2009(In millions)Originally reported gross
reserves for unpaid claim
and claim adjustment
expenses
    
    $
    26,850
    
    
    $
    26,510
    
    
    $
    29,649
    
    
    $
    25,719
    
    
    $
    31,284
    
    
    $
    31,204
    
    
    $
    30,694
    
    
    $
    29,459
    
    
    $
    28,415
    
    
    $
    27,475
    
    
    $
    26,712Originally reported ceded
recoverable
    
    
    6,091
    
    
    
    7,333
    
    
    
    11,703
    
    
    
    10,490
    
    
    
    13,847
    
    
    
    13,682
    
    
    
    10,438
    
    
    
    8,078
    
    
    
    6,945
    
    
    
    6,213
    
    
    
    5,524Originally reported net
reserves for unpaid claim
and claim adjustment
expenses
    
    $
    20,759
    
    
    $
    19,177
    
    
    $
    17,946
    
    
    $
    15,229
    
    
    $
    17,437
    
    
    $
    17,522
    
    
    $
    20,256
    
    
    $
    21,381
    
    
    $
    21,470
    
    
    $
    21,262
    
    
    $
    21,188Cumulative net paid as of:One year later
    
    $
    6,547
    
    
    $
    7,686
    
    
    $
    5,981
    
    
    $
    5,373
    
    
    $
    4,382
    
    
    $
    2,651
    
    
    $
    3,442
    
    
    $
    4,436
    
    
    $
    4,308
    
    
    $
    3,930
    
    
    $
    -Two years later
    
    
    11,937
    
    
    
    11,992
    
    
    
    10,355
    
    
    
    8,768
    
    
    
    6,104
    
    
    
    4,963
    
    
    
    7,022
    
    
    
    7,676
    
    
    
    7,127
    
    
    
    -
    
    
    
    -Three years later
    
    
    15,256
    
    
    
    15,291
    
    
    
    12,954
    
    
    
    9,747
    
    
    
    7,780
    
    
    
    7,825
    
    
    
    9,620
    
    
    
    9,822
    
    
    
    -
    
    
    
    -
    
    
    
    -Four years later
    
    
    18,151
    
    
    
    17,333
    
    
    
    13,244
    
    
    
    10,870
    
    
    
    10,085
    
    
    
    9,914
    
    
    
    11,289
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Five years later
    
    
    19,686
    
    
    
    17,775
    
    
    
    13,922
    
    
    
    12,814
    
    
    
    11,834
    
    
    
    11,261
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Six years later
    
    
    20,206
    
    
    
    18,970
    
    
    
    15,493
    
    
    
    14,320
    
    
    
    12,988
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Seven years later
    
    
    21,231
    
    
    
    20,297
    
    
    
    16,769
    
    
    
    15,291
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Eight years later
    
    
    22,373
    
    
    
    21,382
    
    
    
    17,668
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Nine years later
    
    
    23,276
    
    
    
    22,187
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Ten years later
    
    
    23,992
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Net reserves re-estimated
as of:End of initial year
    
    $
    20,759
    
    
    $
    19,177
    
    
    $
    17,946
    
    
    $
    15,229
    
    
    $
    17,437
    
    
    $
    17,522
    
    
    $
    20,256
    
    
    $
    21,381
    
    
    $
    21,470
    
    
    $
    21,262
    
    
    $
    21,188One year later
    
    
    21,163
    
    
    
    21,502
    
    
    
    17,980
    
    
    
    17,650
    
    
    
    17,671
    
    
    
    18,513
    
    
    
    20,588
    
    
    
    21,601
    
    
    
    21,463
    
    
    
    21,021
    
    
    
    -Two years later
    
    
    23,217
    
    
    
    21,555
    
    
    
    20,533
    
    
    
    18,248
    
    
    
    19,120
    
    
    
    19,044
    
    
    
    20,975
    
    
    
    21,706
    
    
    
    21,259
    
    
    
    -
    
    
    
    -Three years later
    
    
    23,081
    
    
    
    24,058
    
    
    
    21,109
    
    
    
    19,814
    
    
    
    19,760
    
    
    
    19,631
    
    
    
    21,408
    
    
    
    21,609
    
    
    
    -
    
    
    
    -
    
    
    
    -Four years later
    
    
    25,590
    
    
    
    24,587
    
    
    
    22,547
    
    
    
    20,384
    
    
    
    20,425
    
    
    
    20,212
    
    
    
    21,432
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Five years later
    
    
    26,000
    
    
    
    25,594
    
    
    
    22,983
    
    
    
    21,076
    
    
    
    21,060
    
    
    
    20,301
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Six years later
    
    
    26,625
    
    
    
    26,023
    
    
    
    23,603
    
    
    
    21,769
    
    
    
    21,217
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Seven years later
    
    
    27,009
    
    
    
    26,585
    
    
    
    24,267
    
    
    
    21,974
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Eight years later
    
    
    27,541
    
    
    
    27,207
    
    
    
    24,548
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Nine years later
    
    
    28,035
    
    
    
    27,510
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Ten years later
    
    
    28,352
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Total net (deficiency)
redundancy
    
    $
    (7,593
    )
    
    $
    (8,333
    )
    
    $
    (6,602
    )
    
    $
    (6,745
    )
    
    $
    (3,780
    )
    
    $
    (2,779
    )
    
    $
    (1,176
    )
    
    $
    (228
    )
    
    $
    211
    
    
    $
    241
    
    
    $
    -Reconciliation to gross
re-estimated reserves:Net reserves re-estimated
    
    $
    28,352
    
    
    $
    27,510
    
    
    $
    24,548
    
    
    $
    21,974
    
    
    $
    21,217
    
    
    $
    20,301
    
    
    $
    21,432
    
    
    $
    21,609
    
    
    $
    21,259
    
    
    $
    21,021
    
    
    $
    -Re-estimated ceded
recoverable
    
    
    10,511
    
    
    
    11,277
    
    
    
    16,756
    
    
    
    16,107
    
    
    
    14,468
    
    
    
    13,349
    
    
    
    10,727
    
    
    
    8,444
    
    
    
    7,113
    
    
    
    6,101
    
    
    
    -Total gross re-estimated
reserves
    
    $
    38,863
    
    
    $
    38,787
    
    
    $
    41,304
    
    
    $
    38,081
    
    
    $
    35,685
    
    
    $
    33,650
    
    
    $
    32,159
    
    
    $
    30,053
    
    
    $
    28,372
    
    
    $
    27,122
    
    
    $
    -Total gross (deficiency)
redundancy
    
    $
    (12,013
    )
    
    $
    (12,277
    )
    
    $
    (11,655
    )
    
    $
    (12,362
    )
    
    $
    (4,401
    )
    
    $
    (2,446
    )
    
    $
    (1,465
    )
    
    $
    (594
    )
    
    $
    43
    
    
    $
    353
    
    
    $
    -Net (deficiency)
redundancy related to:Asbestos claims
    
    $
    (1,655
    )
    
    $
    (1,590
    )
    
    $
    (818
    )
    
    $
    (827
    )
    
    $
    (177
    )
    
    $
    (123
    )
    
    $
    (113
    )
    
    $
    (112
    )
    
    $
    (107
    )
    
    $
    (79
    )
    
    $
    -Environmental claims
    
    
    (691
    )
    
    
    (635
    )
    
    
    (288
    )
    
    
    (282
    )
    
    
    (209
    )
    
    
    (209
    )
    
    
    (159
    )
    
    
    (159
    )
    
    
    (159
    )
    
    
    (76
    )
    
    
    -Total asbestos and
environmental
    
    
    (2,346
    )
    
    
    (2,225
    )
    
    
    (1,106
    )
    
    
    (1,109
    )
    
    
    (386
    )
    
    
    (332
    )
    
    
    (272
    )
    
    
    (271
    )
    
    
    (266
    )
    
    
    (155
    )
    
    
    -Other claims
    
    
    (5,247
    )
    
    
    (6,108
    )
    
    
    (5,496
    )
    
    
    (5,636
    )
    
    
    (3,394
    )
    
    
    (2,447
    )
    
    
    (904
    )
    
    
    43
    
    
    
    477
    
    
    
    396
    
    
    
    -Total net (deficiency)
redundancy
    
    $
    (7,593
    )
    
    $
    (8,333
    )
    
    $
    (6,602
    )
    
    $
    (6,745
    )
    
    $
    (3,780
    )
    
    $
    (2,779
    )
    
    $
    (1,176
    )
    
    $
    (228
    )
    
    $
    211
    
    
    $
    241
    
    
    $
    -
 6




---



##### Table of Contents



(a)
    
    Ceded recoverable includes reserves transferred under retroactive reinsurance agreements of
$784 million as of December 31, 1999.(b)
    
    Effective January 1, 2001, we established a new life insurance company, CNA Group Life
Assurance Company (CNAGLA). Further, on January 1, 2001 $1,055 million of reserves were
transferred from CCC to CNAGLA.(c)
    
    Effective October 31, 2002, we sold CNA Reinsurance Company Limited. As a result of the
sale, net reserves were reduced by $1,316 million.  Investments
  Available Information
 http://www.sec.gov
  7




---



##### Table of Contents



ITEM 1A. RISK FACTORS
  We have incurred and may continue to incur significant realized and unrealized investment losses
and volatility in net investment income arising from the severe disruption in the capital and
credit markets.
  Our underwriting results may continue to suffer as a result of the unfavorable global economic
conditions.
  Our valuation of investments and impairment of securities requires significant judgment.
    8




---



##### Table of Contents



We are unable to predict the impact on us of governmental efforts and policy changes taken and
proposed to be taken in response to the unfavorable economic conditions.
  We are subject to extensive federal, state and local governmental regulations that restrict our
ability to do business and generate revenues.
  
    
    standards of solvency including risk-based capital measurements;
    
    restrictions on the nature, quality and concentration of investments;
    
    restrictions on our ability to withdraw from unprofitable lines of insurance or
unprofitable market areas;
    
    the required use of certain methods of accounting and reporting;
    
    the establishment of reserves for unearned premiums, losses and other purposes;
    
    potential assessments for funds necessary to settle covered claims against impaired,
insolvent or failed private or quasi-governmental insurers;
    
    licensing of insurers and agents;
    
    approval of policy forms;
    
    limitations on the ability of our insurance subsidiaries to pay dividends to us; and
    
    limitations on the ability to non-renew, cancel or change terms and conditions in policies.
   We are subject to capital adequacy requirements and, if we are unable to maintain or raise
sufficient capital to meet these requirements, regulatory agencies may restrict or prohibit us from
operating our business.
  9




---



##### Table of Contents



Rating agencies may downgrade their ratings of us and thereby adversely affect our ability to write
insurance at competitive rates or at all.
    Our insurance subsidiaries, upon whom we depend for dividends in order to fund our working capital
needs, are limited by state regulators in their ability to pay dividends.
  If we determine that our recorded loss reserves are insufficient to cover our estimated ultimate
unpaid liability for claims, we may need to increase our loss reserves.
  10




---



##### Table of Contents




    
    increases in the number and size of claims relating to injuries from various medical
products including pharmaceuticals;
    
    the effects of recessionary economic conditions and financial reporting scandals, which
have resulted in an increase in the number and size of claims, due to corporate failures;
these claims include both directors and officers (D&O) and errors and omissions (E&O)
insurance claims;
    
    class action litigation relating to claims handling and other practices;
    
    construction defect claims, including claims for a broad range of additional insured
endorsements on policies;
    
    clergy abuse claims, including passage of legislation to reopen or extend various statutes
of limitations; and
    
    mass tort claims, including bodily injury claims related to welding rods, benzene, lead,
noise induced hearing loss and various other chemical and radiation exposure claims.
  Loss reserves for asbestos and environmental pollution are especially difficult to estimate and may
result in more frequent and larger additions to these reserves.
  
    
    coverage issues including whether certain costs are covered under the policies and whether
policy limits apply;
    
    inconsistent court decisions and developing legal theories;
    
    continuing aggressive tactics of plaintiffs lawyers;
    
    the risks and lack of predictability inherent in major litigation;
 11




---



##### Table of Contents




    
    changes in the frequency of asbestos and environmental pollution claims;
    
    changes in the severity of claims including bodily injury claims for malignancies arising
out of exposure to asbestos;
    
    the impact of the exhaustion of primary limits and the resulting increase in claims on any
umbrella or excess policies we have issued;
    
    our ability to recover reinsurance for these claims; and
    
    changes in the legal and legislative environment in which we operate.
  Asbestos claims.
 
    
    inconsistency of court decisions and jury attitudes, as well as future court decisions;
    
    interpretation of specific policy provisions;
    
    allocation of liability among insurers and insureds;
    
    missing policies and proof of coverage;
    
    the proliferation of bankruptcy proceedings and attendant uncertainties;
    
    novel theories asserted by policyholders and their legal counsel;
    
    the targeting of a broader range of businesses and entities as defendants;
    
    uncertainties in predicting the number of future claims and which other insureds may be
targeted in the future;
    
    volatility in frequency of claims and severity of settlement demands;
    
    increases in the number of non-impaired claimants and the extent to which they can be
precluded from making claims;
    
    the efforts by insureds to obtain coverage that is not subject to aggregate limits;
    
    the long latency period between asbestos exposure and disease manifestation, as well as the
resulting potential for involvement of multiple policy periods for individual claims;
    
    medical inflation trends;
    
    the mix of asbestos-related diseases presented; and
    
    the ability to recover reinsurance.
  Environmental pollution claims.
 12




---



##### Table of Contents




    
    whether cleanup costs are considered damages under the policies (and accordingly whether we
would be liable for these costs);
    
    the trigger of coverage and the allocation of liability among triggered policies;
    
    the applicability of pollution exclusions and owned property exclusions;
    
    the potential for joint and several liability; and
    
    the definition of an occurrence.
   We may suffer losses from non-routine litigation and arbitration matters which may exceed the
reserves we have established.
   Catastrophe losses are unpredictable.
  Our key assumptions used to determine reserves and deferred acquisition costs for our long term
care product offerings could vary significantly from actual experience.
  13




---



##### Table of Contents



We are unable to predict the impact on us of federal health care reform legislation.
  We continue to face exposure to losses arising from terrorist acts, despite the passage of the
Terrorism Risk Insurance Program Reauthorization Act of 2007.
  Our premium writings and profitability are affected by the availability and cost of reinsurance.
  We may not be able to collect amounts owed to us by reinsurers.
  We face intense competition in our industry and may be adversely affected by the cyclical nature of
the property and casualty business.
  14




---



##### Table of Contents



We are dependent on a small number of key executives and other key personnel to operate our
business successfully.
  15




---



##### Table of Contents



ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  Amount (Square Feet) of BuildingOwned and Occupied or LeasedLocation
    
    and Occupied by CNA
    
    Principal Usage333 S. Wabash Avenue, Chicago, Illinois
    
    
    803,728
    
    
    Principal executive offices of CNAF401 Penn Street, Reading, Pennsylvania
    
    
    171,318
    
    
    Property and casualty insurance offices2405 Lucien Way, Maitland, Florida
    
    
    121,959
    
    
    Property and casualty insurance offices40 Wall Street, New York, New York
    
    
    107,927
    
    
    Property and casualty insurance offices1100 Ward Avenue, Honolulu, Hawaii
    
    
    104,478
    
    
    Property and casualty insurance offices101 S. Phillips Avenue, Sioux Falls, South Dakota
    
    
    83,616
    
    
    Property and casualty insurance offices600 N. Pearl Street, Dallas, Texas
    
    
    70,790
    
    
    Property and casualty insurance offices675 Placentia Avenue, Brea, California
    
    
    63,538
    
    
    Property and casualty insurance offices1249 S. River Road, Cranbury, New Jersey
    
    
    56,100
    
    
    Property and casualty insurance offices4267 Meridian Parkway, Aurora, Illinois
    
    
    46,903
    
    
    Data center
  
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  16




---



##### Table of Contents



PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
      Common Stock Information
 2009
    
    2008Dividends
    
    
    
    
    
    
    
    
    
    DividendsHigh
    
    Low
    
    Declared
    
    High
    
    Low
    
    DeclaredQuarter:First
    
    $
    17.43
    
    
    $
    6.41
    
    
    
    -
    
    
    $
    35.04
    
    
    $
    23.01
    
    
    $
    0.15Second
    
    
    17.59
    
    
    
    8.83
    
    
    
    -
    
    
    
    32.15
    
    
    
    24.34
    
    
    
    0.15Third
    
    
    26.51
    
    
    
    13.63
    
    
    
    -
    
    
    
    30.61
    
    
    
    21.88
    
    
    
    0.15Fourth
    
    
    25.01
    
    
    
    20.48
    
    
    
    -
    
    
    
    26.70
    
    
    
    8.50
    
    
    
    -
 17




---



##### Table of Contents



Stock Price Performance Graph
 Company / Index
    
    
    2004
    
    
    
    2005
    
    
    
    2006
    
    
    
    2007
    
    
    
    2008
    
    
    
    2009CNA Financial Corporation
    
    
    100.00
    
    
    
    122.36
    
    
    
    150.73
    
    
    
    127.14
    
    
    
    62.98
    
    
    
    91.94S&P 500 Index
    
    
    100.00
    
    
    
    104.91
    
    
    
    121.48
    
    
    
    128.16
    
    
    
    80.74
    
    
    
    102.11S&P 500 Property & Casualty Insurance Index
    
    
    100.00
    
    
    
    115.11
    
    
    
    129.93
    
    
    
    111.79
    
    
    
    78.91
    
    
    
    88.65
 
 18




---



##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA
  Selected Financial Data
 As of and for the Years EndedDecember 31
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005(In millions, except per share data)Results of Operations:Revenues
    
    $
    8,472
    
    
    $
    7,799
    
    
    $
    9,885
    
    
    $
    10,376
    
    
    $
    9,862Income (loss) from continuing
operations, net of tax
    
    $
    483
    
    
    $
    (251
    )
    
    $
    905
    
    
    $
    1,181
    
    
    $
    267Income (loss) from discontinued
operations, net of tax
    
    
    (2
    )
    
    
    9
    
    
    
    (6
    )
    
    
    (29
    )
    
    
    21Net income attributable to
noncontrolling interests, net of tax
    
    
    (62
    )
    
    
    (57
    )
    
    
    (48
    )
    
    
    (44
    )
    
    
    (24
    )Net income (loss) attributable to CNA
    
    $
    419
    
    
    $
    (299
    )
    
    $
    851
    
    
    $
    1,108
    
    
    $
    264Basic Earnings (Loss) Per Share
Attributable to CNA Common
Stockholders:Income (loss) from continuing
operations attributable to CNA
common stockholders
    
    $
    1.11
    
    
    $
    (1.21
    )
    
    $
    3.15
    
    
    $
    4.17
    
    
    $
    0.68Income (loss) from discontinued
operations attributable to CNA
common stockholders
    
    
    (0.01
    )
    
    
    0.03
    
    
    
    (0.02
    )
    
    
    (0.11
    )
    
    
    0.08Basic earnings (loss) per share
attributable to CNA common
stockholders
    
    $
    1.10
    
    
    $
    (1.18
    )
    
    $
    3.13
    
    
    $
    4.06
    
    
    $
    0.76Diluted Earnings (Loss) Per Share
Attributable to CNA Common
Stockholders:Income (loss) from continuing
operations attributable to CNA
common stockholders
    
    $
    1.11
    
    
    $
    (1.21
    )
    
    $
    3.15
    
    
    $
    4.16
    
    
    $
    0.68Income (loss) from discontinued
operations attributable to CNA
common stockholders
    
    
    (0.01
    )
    
    
    0.03
    
    
    
    (0.02
    )
    
    
    (0.11
    )
    
    
    0.08Diluted earnings (loss) per share
attributable to CNA common
stockholders
    
    $
    1.10
    
    
    $
    (1.18
    )
    
    $
    3.13
    
    
    $
    4.05
    
    
    $
    0.76Dividends declared per common share
    
    $
    -
    
    
    $
    0.45
    
    
    $
    0.35
    
    
    $
    -
    
    
    $
    -Financial Condition:Total investments
    
    $
    41,996
    
    
    $
    35,003
    
    
    $
    41,789
    
    
    $
    44,096
    
    
    $
    39,695Total assets
    
    
    55,298
    
    
    
    51,688
    
    
    
    56,759
    
    
    
    60,283
    
    
    
    59,016Insurance reserves
    
    
    38,263
    
    
    
    38,771
    
    
    
    40,222
    
    
    
    41,080
    
    
    
    42,436Long and short term debt
    
    
    2,303
    
    
    
    2,058
    
    
    
    2,157
    
    
    
    2,156
    
    
    
    1,690Total CNA stockholders equity
    
    
    10,660
    
    
    
    6,877
    
    
    
    10,150
    
    
    
    9,768
    
    
    
    8,950Book value per common share
    
    $
    35.91
    
    
    $
    20.92
    
    
    $
    37.36
    
    
    $
    36.03
    
    
    $
    31.26Statutory Surplus:Combined Continental Casualty
Companies (a)
    
    $
    9,338
    (b)
    
    $
    7,819
    
    
    $
    8,348
    
    
    $
    8,056
    
    
    $
    6,733Life company
    
    
    448
    (b)
    
    
    487
    
    
    
    471
    
    
    
    687
    
    
    
    627
  (a)
    
    Represents the combined statutory surplus of CCC and its subsidiaries, including the Life
company, as determined in accordance with statutory accounting practices as further discussed
in Note L of the Consolidated Financial Statements included under Item 8.(b)
    
    Preliminary results. 19




---



##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
  Index to this MD&A
  Page No.Consolidated Operations
    
    
    21Critical Accounting Estimates
    
    
    23Reserves  Estimates and Uncertainties
    
    
    25Segment Results
    
    
    31CNA Specialty
    
    
    32CNA Commercial
    
    
    35Life & Group Non-Core
    
    
    38Corporate & Other Non-Core
    
    
    40Asbestos and Environmental Pollution (A&E) Reserves
    
    
    42Investments
    
    
    44Net Investment Income
    
    
    44Net Realized Investment Gains (Losses)
    
    
    45Duration
    
    
    47Asset-Backed Exposure
    
    
    48Short Term Investments
    
    
    48Separate Accounts
    
    
    49Liquidity and Capital Resources
    
    
    50Cash Flows
    
    
    50Liquidity
    
    
    51Commitments, Contingencies and Guarantees
    
    
    52Ratings
    
    
    52Accounting Standards Update
    
    
    53Forward-Looking Statements
    
    
    54
 20




---



##### Table of Contents



CONSOLIDATED OPERATIONS
 Results of Operations
  Years ended December 31
    
    2009
    
    2008
    
    2007(In millions, except per share data)RevenuesNet earned premiums
    
    $
    6,721
    
    
    $
    7,151
    
    
    $
    7,484Net investment income
    
    
    2,320
    
    
    
    1,619
    
    
    
    2,433Other revenues
    
    
    288
    
    
    
    326
    
    
    
    279Total operating revenues
    
    
    9,329
    
    
    
    9,096
    
    
    
    10,196Claims, Benefits and ExpensesNet incurred claims and benefits
    
    
    5,267
    
    
    
    5,703
    
    
    
    5,995Policyholders dividends
    
    
    23
    
    
    
    20
    
    
    
    14Amortization of deferred acquisition costs
    
    
    1,417
    
    
    
    1,467
    
    
    
    1,520Other insurance related expenses
    
    
    781
    
    
    
    694
    
    
    
    733Other expenses
    
    
    444
    
    
    
    477
    
    
    
    401Total claims, benefits and expenses
    
    
    7,932
    
    
    
    8,361
    
    
    
    8,663Operating income from continuing operations before income tax
    
    
    1,397
    
    
    
    735
    
    
    
    1,533Income tax expense on operating income
    
    
    (353
    )
    
    
    (145
    )
    
    
    (425
    )Net operating income, after-tax, attributable to noncontrolling interests
    
    
    (62
    )
    
    
    (57
    )
    
    
    (48
    )Net operating income from continuing operations attributable to CNA
    
    
    982
    
    
    
    533
    
    
    
    1,060Net realized investment losses, net of participating policyholders interests
    
    
    (857
    )
    
    
    (1,297
    )
    
    
    (311
    )Income tax benefit on net realized investment losses
    
    
    296
    
    
    
    456
    
    
    
    108Net realized investment (gains) losses, after-tax, attributable to
noncontrolling interests
    
    
    -
    
    
    
    -
    
    
    
    -Net realized investment losses attributable to CNA
    
    
    (561
    )
    
    
    (841
    )
    
    
    (203
    )Income (loss) from continuing operations attributable to CNA
    
    
    421
    
    
    
    (308
    )
    
    
    857Income (loss) from discontinued operations attributable to CNA, net of
income tax (expense) benefit of $0, $9 and $0
    
    
    (2
    )
    
    
    9
    
    
    
    (6
    )Net income (loss) attributable to CNA
    
    $
    419
    
    
    $
    (299
    )
    
    $
    851
 2009 Compared with 2008
    21




---



##### Table of Contents



2008 Compared with 2007
       22




---



##### Table of Contents



Critical Accounting Estimates
    Insurance Reserves
  Reinsurance
  Valuation of Investments and Impairment of Securities
   23




---



##### Table of Contents



Long Term Care Products
  Payout Annuity Contracts
  Pension and Postretirement Benefit Obligations
    Legal Proceedings
  Income Taxes
  24




---



##### Table of Contents



Reserves
 Estimates and Uncertainties
    
    
    increases in the number and size of claims relating to injuries from various medical
products including pharmaceuticals;
    
    the effects of recessionary economic conditions and financial reporting scandals, which
have resulted in an increase in the number and size of claims, due to corporate failures;
these claims include both directors and officers (D&O) and errors and omissions (E&O)
insurance claims;
    
    class action litigation relating to claims handling and other practices;
    
    construction defect claims, including claims for a broad range of additional insured
endorsements on policies;
    
    clergy abuse claims, including passage of legislation to reopen or extend various
statutes of limitations; and
    
    mass tort claims, including bodily injury claims related to welding rods, benzene,
lead, noise induced hearing loss and various other chemical and radiation exposure claims.
  
    
    coverage issues, including whether certain costs are covered under the policies and
whether policy limits apply;
    
    inconsistent court decisions and developing legal theories;
    
    continuing aggressive tactics of plaintiffs lawyers;
    
    the risks and lack of predictability inherent in major litigation;
    
    changes in the frequency of A&E claims;
    
    changes in the severity of claims, including bodily injury claims for malignancies
arising out of exposure to asbestos;
    
    the impact of the exhaustion of primary limits and the resulting increase in claims on
any umbrella or excess policies we have issued;
    
    our ability to recover reinsurance for A&E claims; and
 25




---



##### Table of Contents




    
    changes in the legal and legislative environment in which we operate.
    Establishing Reserve Estimates
    26




---



##### Table of Contents




    
    Paid Development,
    
    Incurred Development,
    
    Loss Ratio,
    
    Bornhuetter-Ferguson Using Premiums and Paid Loss,
    
    Bornhuetter-Ferguson Using Premiums and Incurred Loss,
    
    Frequency times Severity, and
    
    Stochastic modeling.
      27




---



##### Table of Contents



Periodic Reserve Reviews
  28




---



##### Table of Contents



29




---



##### Table of Contents



30




---



##### Table of Contents



Segment Results
        31




---



##### Table of Contents



CNA SPECIALTY
 Business Overview
   Professional & Management Liability
  International
 Surety
 Warranty and Alternative Risks
 32




---



##### Table of Contents



Results of Operations
 Years ended December 31
    
    2009
    
    2008
    
    2007(In millions)Net written premiums
    
    $
    2,684
    
    
    $
    2,719
    
    
    $
    2,766Net earned premiums
    
    
    2,697
    
    
    
    2,755
    
    
    
    2,759Net investment income
    
    
    526
    
    
    
    354
    
    
    
    493Net operating income
    
    
    591
    
    
    
    414
    
    
    
    524Net realized investment losses, after-tax
    
    
    (123
    )
    
    
    (167
    )
    
    
    (45
    )Net income
    
    
    468
    
    
    
    247
    
    
    
    479RatiosLoss and loss adjustment expense
    
    
    56.9
    %
    
    
    61.7
    %
    
    
    62.5
    %Expense
    
    
    29.3
    
    
    
    27.3
    
    
    
    25.8Dividend
    
    
    0.3
    
    
    
    0.5
    
    
    
    0.2Combined
    
    
    86.5
    %
    
    
    89.5
    %
    
    
    88.5
    %
 2009 Compared with 2008
       33




---



##### Table of Contents



Gross and Net Carried
Claim and Claim Adjustment Expense Reserves
 December 31
    
    2009
    
    2008(In millions)Gross Case Reserves
    
    $
    2,208
    
    
    $
    2,105Gross IBNR Reserves
    
    
    4,714
    
    
    
    4,616Total Gross Carried Claim and Claim Adjustment Expense Reserves
    
    $
    6,922
    
    
    $
    6,721Net Case Reserves
    
    $
    1,781
    
    
    $
    1,639Net IBNR Reserves
    
    
    4,085
    
    
    
    3,896Total Net Carried Claim and Claim Adjustment Expense Reserves
    
    $
    5,866
    
    
    $
    5,535
 2008 Compared with 2007
        34




---



##### Table of Contents



CNA COMMERCIAL
 Business Overview
  Commercial, Business International
 CNA Select Risk (Select Risk)
  Results of Operations
 Years ended December 31
    
    2009
    
    2008
    
    2007(In millions)Net written premiums
    
    $
    3,448
    
    
    $
    3,770
    
    
    $
    4,007Net earned premiums
    
    
    3,432
    
    
    
    3,787
    
    
    
    4,104Net investment income
    
    
    922
    
    
    
    603
    
    
    
    1,006Net operating income
    
    
    506
    
    
    
    289
    
    
    
    697Net realized investment losses, after-tax
    
    
    (232
    )
    
    
    (335
    )
    
    
    (105
    )Net income (loss)
    
    
    274
    
    
    
    (46
    )
    
    
    592RatiosLoss and loss adjustment expense
    
    
    69.6
    %
    
    
    73.0
    %
    
    
    66.8
    %Expense
    
    
    35.2
    
    
    
    31.2
    
    
    
    32.1Dividend
    
    
    0.3
    
    
    
    -
    
    
    
    0.2Combined
    
    
    105.1
    %
    
    
    104.2
    %
    
    
    99.1
    %
 2009 Compared with 2008
   35




---



##### Table of Contents



Gross and Net Carried
Claim and Claim Adjustment Expense Reserves
 December 31
    
    2009
    
    2008(In millions)Gross Case Reserves
    
    $
    6,510
    
    
    $
    6,772Gross IBNR Reserves
    
    
    6,495
    
    
    
    6,837Total Gross Carried Claim and Claim Adjustment Expense Reserves
    
    $
    13,005
    
    
    $
    13,609Net Case Reserves
    
    $
    5,269
    
    
    $
    5,505Net IBNR Reserves
    
    
    5,580
    
    
    
    5,673Total Net Carried Claim and Claim Adjustment Expense Reserves
    
    $
    10,849
    
    
    $
    11,178
 2008 Compared with 2007
   36




---



##### Table of Contents



37




---



##### Table of Contents



LIFE & GROUP NON-CORE
 Business Overview
   Results of Operations
 Years ended December 31
    
    2009
    
    2008
    
    2007(In millions)Net earned premiums
    
    $
    595
    
    
    $
    612
    
    
    $
    618Net investment income
    
    
    664
    
    
    
    484
    
    
    
    622Net operating loss
    
    
    (16
    )
    
    
    (108
    )
    
    
    (159
    )Net realized investment losses, after-tax
    
    
    (153
    )
    
    
    (236
    )
    
    
    (36
    )Net loss
    
    
    (169
    )
    
    
    (344
    )
    
    
    (195
    )
 2009 Compared with 2008
      2008 Compared with 2007
   38




---



##### Table of Contents



39




---



##### Table of Contents



CORPORATE & OTHER NON-CORE
 Overview
   Results of Operations
 Years ended December 31
    
    2009
    
    2008
    
    2007(In millions)Net investment income
    
    $
    208
    
    
    $
    178
    
    
    $
    312Net operating loss
    
    
    (99
    )
    
    
    (62
    )
    
    
    (2
    )Net realized investment losses, after-tax
    
    
    (53
    )
    
    
    (103
    )
    
    
    (17
    )Net loss
    
    
    (152
    )
    
    
    (165
    )
    
    
    (19
    )
 2009 Compared with 2008
    Gross and Net Carried
Claim and Claim Adjustment Expense Reserves
 December 31
    
    2009
    
    2008(In millions)Gross Case Reserves
    
    $
    1,548
    
    
    $
    1,823Gross IBNR Reserves
    
    
    2,458
    
    
    
    2,578Total Gross Carried Claim and Claim Adjustment Expense Reserves
    
    $
    4,006
    
    
    $
    4,401Net Case Reserves
    
    $
    972
    
    
    $
    1,126Net IBNR Reserves
    
    
    1,515
    
    
    
    1,561Total Net Carried Claim and Claim Adjustment Expense Reserves
    
    $
    2,487
    
    
    $
    2,687
 2008 Compared with 2007
  40




---



##### Table of Contents



41




---



##### Table of Contents



A&E Reserves
  Asbestos
    Environmental Pollution
  42




---



##### Table of Contents



43




---



##### Table of Contents



INVESTMENTS
   Net Investment Income
  Net Investment Income
 Years ended December 31
    
    2009
    
    2008
    
    2007(In millions)Fixed maturity securities
    
    $
    1,941
    
    
    $
    1,984
    
    
    $
    2,047Short term investments
    
    
    36
    
    
    
    115
    
    
    
    186Limited partnerships
    
    
    315
    
    
    
    (379
    )
    
    
    183Equity securities
    
    
    49
    
    
    
    80
    
    
    
    25Trading
portfolio  indexed group annuity
    
    
    -
    
    
    
    (146
    )
    
    
    10Trading
portfolio  other
    
    
    23
    
    
    
    (3
    )
    
    
    -Other
    
    
    6
    
    
    
    19
    
    
    
    35Gross investment income
    
    
    2,370
    
    
    
    1,670
    
    
    
    2,486Investment expenses
    
    
    (50
    )
    
    
    (51
    )
    
    
    (53
    )Net investment income
    
    $
    2,320
    
    
    $
    1,619
    
    
    $
    2,433
  44




---



##### Table of Contents



Net Realized Investment Gains (Losses)
  Net Realized Investment Gains (Losses)
 Years ended December 31
    
    2009
    
    2008
    
    2007(In millions)Fixed maturity securities:U.S. Treasury securities and obligations of government agencies
    
    $
    (53
    )
    
    $
    235
    
    
    $
    86Corporate and other taxable bonds
    
    
    (306
    )
    
    
    (643
    )
    
    
    (183
    )States,
municipalities and political subdivisions  tax-exempt securities
    
    
    (21
    )
    
    
    53
    
    
    
    3Asset-backed securities
    
    
    (778
    )
    
    
    (476
    )
    
    
    (343
    )Redeemable preferred stock
    
    
    (9
    )
    
    
    -
    
    
    
    (41
    )Total fixed maturity securities
    
    
    (1,167
    )
    
    
    (831
    )
    
    
    (478
    )Equity securities
    
    
    243
    
    
    
    (490
    )
    
    
    117Derivative securities
    
    
    51
    
    
    
    (19
    )
    
    
    32Short term investments and other
    
    
    16
    
    
    
    43
    
    
    
    18Realized investment losses, net of participating policyholders interests
    
    
    (857
    )
    
    
    (1,297
    )
    
    
    (311
    )Income tax benefit
    
    
    296
    
    
    
    456
    
    
    
    108Realized investment (gains) losses, after-tax, attributable to noncontrolling interests
    
    
    -
    
    
    
    -
    
    
    
    -Net realized investment gains (losses) attributable to CNA
    
    $
    (561
    )
    
    $
    (841
    )
    
    $
    (203
    )
     45




---



##### Table of Contents



Fixed Maturity Ratings
 December 31
    
    2009
    
    %
    
    2008
    
    %(In millions)U.S. Government and Agencies
    
    $
    3,705
    
    
    
    10
    %
    
    $
    4,611
    
    
    
    16
    %AAA rated
    
    
    5,855
    
    
    
    17
    
    
    
    8,494
    
    
    
    29AA and A rated
    
    
    12,464
    
    
    
    35
    
    
    
    8,166
    
    
    
    29BBB rated
    
    
    10,122
    
    
    
    28
    
    
    
    5,029
    
    
    
    17Non-investment grade
    
    
    3,466
    
    
    
    10
    
    
    
    2,587
    
    
    
    9Total
    
    $
    35,612
    
    
    
    100
    %
    
    $
    28,887
    
    
    
    100
    %
  Non-investment Grade
 December 31
    
    2009
    
    %
    
    2008

    
    %(In millions)BB
    
    $
    1,352
    
    
    
    39
    %
    
    $
    1,585
    
    
    
    61
    %B
    
    
    1,255
    
    
    
    36
    
    
    
    754
    
    
    
    29CCC - C
    
    
    761
    
    
    
    22
    
    
    
    232
    
    
    
    9D
    
    
    98
    
    
    
    3
    
    
    
    16
    
    
    
    1Total
    
    $
    3,466
    
    
    
    100
    %
    
    $
    2,587
    
    
    
    100
    %
    46




---



##### Table of Contents



Maturity Profile
 Percent of
    
    Percent ofFair Value
    
    Unrealized LossDue in one year or less
    
    
    3
    %
    
    
    4
    %Due after one year through five years
    
    
    20
    
    
    
    12Due after five years through ten years
    
    
    36
    
    
    
    36Due after ten years
    
    
    41
    
    
    
    48Total
    
    
    100
    %
    
    
    100
    %
 Duration
    Effective Durations
 December 31, 2009
    
    December 31, 2008Effective Duration
    
    
    
    
    
    Effective DurationFair Value
    
    (In years)
    
    Fair Value
    
    (In years)(In millions)Segregated investments
    
    $
    10,376
    
    
    
    11.2
    
    
    $
    8,168
    
    
    
    9.9Other interest sensitive investments
    
    
    29,665
    
    
    
    4.0
    
    
    
    25,194
    
    
    
    4.5Total
    
    $
    40,041
    
    
    
    5.8
    
    
    $
    33,362
    
    
    
    5.8
  47




---



##### Table of Contents



Asset-Backed Exposure
 Asset-Backed Distribution
 Security TypeDecember 31, 2009
    
    RMBS (a)
    
    CMBS (b)
    
    Other ABS (c)
    
    Total(In millions)U.S. Government Agencies
    
    $
    3,405
    
    
    $
    -
    
    
    $
    -
    
    
    $
    3,405AAA
    
    
    1,644
    
    
    
    345
    
    
    
    626
    
    
    
    2,615AA
    
    
    307
    
    
    
    92
    
    
    
    69
    
    
    
    468A
    
    
    250
    
    
    
    81
    
    
    
    35
    
    
    
    366BBB
    
    
    226
    
    
    
    44
    
    
    
    102
    
    
    
    372Non-investment grade and equity tranches
    
    
    1,105
    
    
    
    22
    
    
    
    -
    
    
    
    1,127Total Fair Value
    
    $
    6,937
    
    
    $
    584
    
    
    $
    832
    
    
    $
    8,353Total Amortized Cost
    
    $
    7,469
    
    
    $
    709
    
    
    $
    858
    
    
    $
    9,036Sub-prime (included above)Fair Value
    
    $
    602
    
    
    $
    -
    
    
    $
    -
    
    
    $
    602Amortized Cost
    
    $
    709
    
    
    $
    -
    
    
    $
    -
    
    
    $
    709Alt-A (included above)Fair Value
    
    $
    650
    
    
    $
    -
    
    
    $
    -
    
    
    $
    650Amortized Cost
    
    $
    775
    
    
    $
    -
    
    
    $
    -
    
    
    $
    775
 (a)
    
    Residential mortgage-backed securities (RMBS)(b)
    
    Commercial mortgage-backed securities (CMBS)(c)
    
    Other asset-backed securities (Other ABS)   Short Term Investments
  Short Term Investments
 December 31,
    
    December 31,2009
    
    2008(In millions)Short term investments available-for-sale:Commercial paper
    
    $
    185
    
    
    $
    563U.S. Treasury securities
    
    
    3,025
    
    
    
    2,258Money market funds
    
    
    179
    
    
    
    329Other
    
    
    560
    
    
    
    384Total short term investments
    
    $
    3,949
    
    
    $
    3,534
  48




---



##### Table of Contents



Separate Accounts
  Separate Account Bond Ratings
 December 31
    
    2009
    
    %
    
    2008
    
    %(In millions)U.S. Government Agencies
    
    $
    67
    
    
    
    18
    %
    
    $
    67
    
    
    
    20
    %AAA rated
    
    
    17
    
    
    
    5
    
    
    
    53
    
    
    
    15AA and A rated
    
    
    176
    
    
    
    46
    
    
    
    148
    
    
    
    43BBB rated
    
    
    93
    
    
    
    24
    
    
    
    74
    
    
    
    22Non-investment grade
    
    
    27
    
    
    
    7
    
    
    
    1
    
    
    
    -Total
    
    $
    380
    
    
    
    100
    %
    
    $
    343
    
    
    
    100
    %
  49




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Cash Flows
        2008 Senior Preferred
  50




---



##### Table of Contents



Liquidity
  
    
    We do not anticipate changes in our core property and casualty commercial insurance
operations which would significantly impact liquidity and we continue to maintain reinsurance
contracts which limit the impact of potential catastrophic events.
    
    We have entered into several settlement agreements and assumed reinsurance contracts that
require collateralization of future payment obligations and assumed reserves if our ratings or
other specific criteria fall below certain thresholds. The ratings triggers are generally
more than one level below our current ratings. A downgrade below our current ratings levels
would also result in additional collateral requirements for derivative contracts for which we
are in a liability position at any given point in time. The maximum potential
collateralization requirements are approximately $70 million.
    
    As of December 31, 2009, our holding company held short term investments of $395 million.
Additionally, we have $100 million available through a revolving credit facility as of
December 31, 2009. Our holding companys ability to meet its debt service and other
obligations is significantly dependent on receipt of dividends from our subsidiaries. The
payment of dividends to us by our insurance subsidiaries without prior approval of the
insurance department of each subsidiarys domiciliary jurisdiction is limited by formula.
Notwithstanding this limitation, we believe that our holding company has sufficient liquidity
to fund our preferred stock dividend and debt service payments through 2010.
  51




---



##### Table of Contents



Commitments, Contingencies, and Guarantees
   Contractual Commitments
 December 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    Less than 1 year
    
    1-3 years
    
    3-5 years
    
    years(In millions)Debt (a)
    
    $
    3,338
    
    
    $
    144
    
    
    $
    884
    
    
    $
    771
    
    
    $
    1,539Lease obligations
    
    
    173
    
    
    
    39
    
    
    
    66
    
    
    
    42
    
    
    
    26Claim and claim expense reserves (b)
    
    
    28,310
    
    
    
    6,042
    
    
    
    7,347
    
    
    
    4,061
    
    
    
    10,860Future policy benefits reserves (c)
    
    
    12,505
    
    
    
    177
    
    
    
    337
    
    
    
    326
    
    
    
    11,665Policyholder funds reserves (c)
    
    
    155
    
    
    
    19
    
    
    
    9
    
    
    
    7
    
    
    
    120Guaranteed payment contracts (d)
    
    
    8
    
    
    
    5
    
    
    
    3
    
    
    
    -
    
    
    
    -Preferred stock dividends (e)
    
    
    500
    
    
    
    100
    
    
    
    200
    
    
    
    200
    
    
    
    -Total (f)
    
    $
    44,989
    
    
    $
    6,526
    
    
    $
    8,846
    
    
    $
    5,407
    
    
    $
    24,210
 (a)
    
    Includes estimated future interest payments.(b)
    
    Claim and claim adjustment expense reserves are not discounted and represent our estimate of
the amount and timing of the ultimate settlement and administration of gross claims based on
our assessment of facts and circumstances known as of December 31, 2009. See the Reserves 
Estimates and Uncertainties section of this MD&A for further information. Claim and claim
adjustment expense reserves of $19 million related to business which has been 100% ceded to
unaffiliated parties in connection with the sale of our individual life business in 2004 are
not included.(c)
    
    Future policy benefits and policyholder funds reserves are not discounted and represent our
estimate of the ultimate amount and timing of the settlement of benefits based on our
assessment of facts and circumstances known as of December 31, 2009. Future policy benefit
reserves of $777 million and policyholder fund reserves of $39 million related to business
which has been 100% ceded to unaffiliated parties in connection with the sale of our
individual life business in 2004 are not included. Additional information on future policy
benefits and policyholder funds reserves is included in Note A of the Consolidated Financial
Statements under Item 8.(d)
    
    Primarily relating to telecommunications and software services.(e)
    
    Our preferred stock has a minimum dividend rate of 10% due quarterly, if declared. We have
reflected the dividend payment in the table above for a period of 5 years, which may be more
or less than the actual period the preferred stock remains outstanding. As long as the amount
of preferred stock outstanding is $1.0 billion, the minimum dividend payment, if declared, is
$100 million a year.(f)
    
    Does not include expected estimated contribution of $73 million to the Companys pension and
postretirement plans in 2010.  Ratings
  52




---



##### Table of Contents



Insurance Financial Strength Ratings
    
    Debt RatingsProperty & Casualty
    
    Life
    
    CNAF
    
    ContinentalCCC Group
    
    CAC
    
    Senior Debt
    
    Senior DebtA.M. Best
    
    A
    
    A-
    
    bbb
    
    Not ratedMoodys
    
    A3
    
    Not rated
    
    Baa3
    
    Baa3S&P
    
    A-
    
    Not rated
    
    BBB-
    
    BBB-
     Accounting Standards Update
  53




---



##### Table of Contents



FORWARD-LOOKING STATEMENTS
  
    
    conditions in the capital and credit markets including severe levels of
volatility, illiquidity, uncertainty and overall disruption, as well as sharply reduced
economic activity, that may impact 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 the mergers and failures of a number of prominent financial
institutions and government sponsored entities, as well as the effects of accounting and
financial reporting scandals and other major failures in internal controls and governance, on
capital and credit markets, as well as on the markets for directors and officers and errors
and omissions coverages;
    
    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;
    
    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 assertion of public nuisance theories of liability, pursuant to which
plaintiffs seek to recover monies spent to administer public health care programs and/or to
abate hazards to public health and safety;
    
    the effectiveness of current initiatives by claims management to reduce loss and
expense ratios through more efficacious claims handling techniques;
    
    the performance of reinsurance companies under reinsurance contracts with us;
    
    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;
 54




---



##### 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;
    
    exposure to liabilities due to claims made by insureds and others relating to
asbestos remediation and health-based asbestos impairments, as well as exposure to liabilities
for environmental pollution, construction defect claims and exposure to liabilities due to
claims made by insureds and others relating to lead-based paint and other mass torts;
    
    the risks and uncertainties associated with our loss reserves, as outlined in the
Critical Accounting Estimates and the Reserves  Estimates and Uncertainties sections of this
MD&A, 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
    
    the actual closing of contemplated transactions and agreements.
  55




---



##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    Sensitivity Analysis
        56




---



##### Table of Contents



Market Risk Scenario 1Increase (Decrease)Market
    
    Interest
    
    Currency
    
    EquityDecember 31, 2009
    
    Value
    
    Rate Risk
    
    Risk
    
    Risk(In millions)General account:Fixed maturity securities available-for-sale:U.S. Treasury securities and obligations of government agencies
    
    $
    199
    
    
    $
    (5
    )
    
    $
    -
    
    
    $
    -Asset-backed securities
    
    
    8,353
    
    
    
    (232
    )
    
    
    (2
    )
    
    
    -States, municipalities and political subdivisions  tax-exempt
securities
    
    
    6,993
    
    
    
    (687
    )
    
    
    -
    
    
    
    -Corporate and other taxable bonds
    
    
    19,839
    
    
    
    (1,155
    )
    
    
    (131
    )
    
    
    -Redeemable preferred stock
    
    
    54
    
    
    
    (3
    )
    
    
    -
    
    
    
    (2
    )Total fixed maturity securities available-for-sale
    
    
    35,438
    
    
    
    (2,082
    )
    
    
    (133
    )
    
    
    (2
    )Fixed maturity securities trading
    
    
    174
    
    
    
    (17
    )
    
    
    -
    
    
    
    -Equity securities available-for-sale
    
    
    644
    
    
    
    -
    
    
    
    -
    
    
    
    (65
    )Short term investments available-for-sale
    
    
    3,949
    
    
    
    (12
    )
    
    
    (32
    )
    
    
    -Limited partnerships
    
    
    1,787
    
    
    
    1
    
    
    
    -
    
    
    
    (59
    )Other invested assets
    
    
    4
    
    
    
    20
    
    
    
    -
    
    
    
    -Total general account
    
    
    41,996
    
    
    
    (2,090
    )
    
    
    (165
    )
    
    
    (126
    )Separate accounts:Fixed maturity securities
    
    
    380
    
    
    
    (15
    )
    
    
    -
    
    
    
    -Equity securities
    
    
    32
    
    
    
    -
    
    
    
    -
    
    
    
    (3
    )Short term investments
    
    
    6
    
    
    
    -
    
    
    
    -
    
    
    
    -Total separate accounts
    
    
    418
    
    
    
    (15
    )
    
    
    -
    
    
    
    (3
    )Derivative financial instruments, included in Other liabilities
    
    
    (11
    )
    
    
    1
    
    
    
    -
    
    
    
    -Total securities
    
    $
    42,403
    
    
    $
    (2,104
    )
    
    $
    (165
    )
    
    $
    (129
    )Debt (carrying value)
    
    $
    2,303
    
    
    $
    (109
    )
    
    $
    -
    
    
    $
    -
 57




---



##### Table of Contents



Market Risk Scenario 1Increase (Decrease)Market
    
    Interest
    
    Currency
    
    EquityDecember 31, 2008
    
    Value
    
    Rate Risk
    
    Risk
    
    Risk(In millions)General account:Fixed maturity securities available-for-sale:U.S. Treasury securities and obligations of government agencies
    
    $
    2,930
    
    
    $
    (148
    )
    
    $
    -
    
    
    $
    -Asset-backed securities
    
    
    7,764
    
    
    
    (542
    )
    
    
    (2
    )
    
    
    -States, municipalities and political subdivisions  tax-exempt
securities
    
    
    7,415
    
    
    
    (630
    )
    
    
    -
    
    
    
    -Corporate and other taxable bonds
    
    
    10,730
    
    
    
    (597
    )
    
    
    (97
    )
    
    
    -Redeemable preferred stock
    
    
    47
    
    
    
    (2
    )
    
    
    -
    
    
    
    (2
    )Total fixed maturity securities available-for-sale
    
    
    28,886
    
    
    
    (1,919
    )
    
    
    (99
    )
    
    
    (2
    )Fixed maturity securities trading
    
    
    1
    
    
    
    -
    
    
    
    -
    
    
    
    -Equity securities available-for-sale
    
    
    871
    
    
    
    -
    
    
    
    (1
    )
    
    
    (87
    )Short term investments available-for-sale
    
    
    3,534
    
    
    
    (17
    )
    
    
    (13
    )
    
    
    -Limited partnerships
    
    
    1,683
    
    
    
    1
    
    
    
    -
    
    
    
    (38
    )Other invested assets
    
    
    28
    
    
    
    -
    
    
    
    -
    
    
    
    -Total general account
    
    
    35,003
    
    
    
    (1,935
    )
    
    
    (113
    )
    
    
    (127
    )Separate accounts:Fixed maturity securities
    
    
    343
    
    
    
    (17
    )
    
    
    -
    
    
    
    -Equity securities
    
    
    27
    
    
    
    -
    
    
    
    -
    
    
    
    (2
    )Short term investments
    
    
    7
    
    
    
    -
    
    
    
    -
    
    
    
    -Total separate accounts
    
    
    377
    
    
    
    (17
    )
    
    
    -
    
    
    
    (2
    )Derivative financial instruments, included in Other liabilities
    
    
    (111
    )
    
    
    90
    
    
    
    -
    
    
    
    -Total securities
    
    $
    35,269
    
    
    $
    (1,862
    )
    
    $
    (113
    )
    
    $
    (129
    )Debt (carrying value)
    
    $
    2,058
    
    
    $
    (102
    )
    
    $
    -
    
    
    $
    -
 58




---



##### Table of Contents



Market Risk Scenario 2Increase (Decrease)Market
    
    Interest
    
    Currency
    
    EquityDecember 31, 2009
    
    Value
    
    Rate Risk
    
    Risk
    
    Risk(In millions)General account:Fixed maturity securities available-for-sale:U.S. Treasury securities and obligations of government agencies
    
    $
    199
    
    
    $
    (7
    )
    
    $
    -
    
    
    $
    -Asset-backed securities
    
    
    8,353
    
    
    
    (318
    )
    
    
    (4
    )
    
    
    -States, municipalities and political subdivisions  tax-exempt
securities
    
    
    6,993
    
    
    
    (994
    )
    
    
    -
    
    
    
    -Corporate and other taxable bonds
    
    
    19,839
    
    
    
    (1,677
    )
    
    
    (261
    )
    
    
    -Redeemable preferred stock
    
    
    54
    
    
    
    (5
    )
    
    
    -
    
    
    
    (5
    )Total fixed maturity securities available-for-sale
    
    
    35,438
    
    
    
    (3,001
    )
    
    
    (265
    )
    
    
    (5
    )Fixed maturity securities trading
    
    
    174
    
    
    
    (19
    )
    
    
    -
    
    
    
    -Equity securities available-for-sale
    
    
    644
    
    
    
    -
    
    
    
    (1
    )
    
    
    (161
    )Short term investments available-for-sale
    
    
    3,949
    
    
    
    (19
    )
    
    
    (64
    )
    
    
    -Limited partnerships
    
    
    1,787
    
    
    
    1
    
    
    
    -
    
    
    
    (148
    )Other invested assets
    
    
    4
    
    
    
    30
    
    
    
    -
    
    
    
    -Total general account
    
    
    41,996
    
    
    
    (3,008
    )
    
    
    (330
    )
    
    
    (314
    )Separate accounts:Fixed maturity securities
    
    
    380
    
    
    
    (22
    )
    
    
    -
    
    
    
    -Equity securities
    
    
    32
    
    
    
    -
    
    
    
    -
    
    
    
    (8
    )Short term investments
    
    
    6
    
    
    
    -
    
    
    
    -
    
    
    
    -Total separate accounts
    
    
    418
    
    
    
    (22
    )
    
    
    -
    
    
    
    (8
    )Derivative financial instruments, included in Other liabilities
    
    
    (11
    )
    
    
    -
    
    
    
    -
    
    
    
    -Total securities
    
    $
    42,403
    
    
    $
    (3,030
    )
    
    $
    (330
    )
    
    $
    (322
    )Debt (carrying value)
    
    $
    2,303
    
    
    $
    (160
    )
    
    $
    -
    
    
    $
    -
 59




---



##### Table of Contents



Market Risk Scenario 2Increase (Decrease)Market
    
    Interest
    
    Currency
    
    EquityDecember 31, 2008
    
    Value
    
    Rate Risk
    
    Risk
    
    Risk(In millions)General account:Fixed maturity securities available-for-sale:U.S. Treasury securities and obligations of government
agencies
    
    $
    2,930
    
    
    $
    (215
    )
    
    $
    -
    
    
    $
    -Asset-backed securities
    
    
    7,764
    
    
    
    (845
    )
    
    
    (3
    )
    
    
    -States, municipalities and political subdivisions 
tax-exempt securities
    
    
    7,415
    
    
    
    (907
    )
    
    
    -
    
    
    
    -Corporate and other taxable bonds
    
    
    10,730
    
    
    
    (865
    )
    
    
    (194
    )
    
    
    -Redeemable preferred stock
    
    
    47
    
    
    
    (2
    )
    
    
    -
    
    
    
    (5
    )Total fixed maturity securities available-for-sale
    
    
    28,886
    
    
    
    (2,834
    )
    
    
    (197
    )
    
    
    (5
    )Fixed maturity securities trading
    
    
    1
    
    
    
    -
    
    
    
    -
    
    
    
    -Equity securities available-for-sale
    
    
    871
    
    
    
    -
    
    
    
    (2
    )
    
    
    (218
    )Short term investments available-for-sale
    
    
    3,534
    
    
    
    (29
    )
    
    
    (26
    )
    
    
    -Limited partnerships
    
    
    1,683
    
    
    
    1
    
    
    
    -
    
    
    
    (94
    )Other invested assets
    
    
    28
    
    
    
    -
    
    
    
    -
    
    
    
    -Total general account
    
    
    35,003
    
    
    
    (2,862
    )
    
    
    (225
    )
    
    
    (317
    )Separate accounts:Fixed maturity securities
    
    
    343
    
    
    
    (25
    )
    
    
    -
    
    
    
    -Equity securities
    
    
    27
    
    
    
    -
    
    
    
    -
    
    
    
    (7
    )Short term investments
    
    
    7
    
    
    
    -
    
    
    
    -
    
    
    
    -Total separate accounts
    
    
    377
    
    
    
    (25
    )
    
    
    -
    
    
    
    (7
    )Derivative financial instruments, included in Other liabilities
    
    
    (111
    )
    
    
    131
    
    
    
    -
    
    
    
    -Total securities
    
    $
    35,269
    
    
    $
    (2,756
    )
    
    $
    (225
    )
    
    $
    (324
    )Debt (carrying value)
    
    $
    2,058
    
    
    $
    (149
    )
    
    $
    -
    
    
    $
    -
 60




---



##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
 CNA Financial Corporation  Consolidated Statements of Operations
 Years ended December 31
    
    2009
    
    2008
    
    2007(In millions, except per share data)RevenuesNet earned premiums
    
    $
    6,721
    
    
    $
    7,151
    
    
    $
    7,484Net investment income
    
    
    2,320
    
    
    
    1,619
    
    
    
    2,433Net realized investment losses, net of participating policyholders interests:Other-than-temporary impairment losses
    
    
    (1,657
    )
    
    
    (1,484
    )
    
    
    (741
    )Portion of other-than-temporary impairment losses recognized in Other
comprehensive income
    
    
    305
    
    
    
    -
    
    
    
    -Net impairment losses recognized in earnings
    
    
    (1,352
    )
    
    
    (1,484
    )
    
    
    (741
    )Other net realized investment gains
    
    
    495
    
    
    
    187
    
    
    
    430Net realized investment losses, net of participating policyholders interests
    
    
    (857
    )
    
    
    (1,297
    )
    
    
    (311
    )Other revenues
    
    
    288
    
    
    
    326
    
    
    
    279Total revenues
    
    
    8,472
    
    
    
    7,799
    
    
    
    9,885Claims, Benefits and ExpensesInsurance claims and policyholders benefits
    
    
    5,290
    
    
    
    5,723
    
    
    
    6,009Amortization of deferred acquisition costs
    
    
    1,417
    
    
    
    1,467
    
    
    
    1,520Other operating expenses
    
    
    1,097
    
    
    
    1,037
    
    
    
    994Interest
    
    
    128
    
    
    
    134
    
    
    
    140Total claims, benefits and expenses
    
    
    7,932
    
    
    
    8,361
    
    
    
    8,663Income (loss) from continuing operations before income tax
    
    
    540
    
    
    
    (562
    )
    
    
    1,222Income tax (expense) benefit
    
    
    (57
    )
    
    
    311
    
    
    
    (317
    )Income (loss) from continuing operations
    
    
    483
    
    
    
    (251
    )
    
    
    905Income (loss) from discontinued operations, net of income tax (expense)
benefit of $0, $9 and $0
    
    
    (2
    )
    
    
    9
    
    
    
    (6
    )Net income (loss)
    
    
    481
    
    
    
    (242
    )
    
    
    899Net income attributable to noncontrolling interests
    
    
    (62
    )
    
    
    (57
    )
    
    
    (48
    )Net income (loss) attributable to CNA
    
    $
    419
    
    
    $
    (299
    )
    
    $
    851Income (Loss) Attributable to CNA Common StockholdersIncome (loss) from continuing operations attributable to CNA
    
    $
    421
    
    
    $
    (308
    )
    
    $
    857Dividends on 2008 Senior Preferred
    
    
    (122
    )
    
    
    (19
    )
    
    
    -Income (loss) from continuing operations attributable to CNA common
stockholders
    
    
    299
    
    
    
    (327
    )
    
    
    857Income (loss) from discontinued operations attributable to CNA common
stockholders
    
    
    (2
    )
    
    
    9
    
    
    
    (6
    )Income (loss) attributable to CNA common stockholders
    
    $
    297
    
    
    $
    (318
    )
    
    $
    851
  61




---



##### Table of Contents



Years ended December 31
    
    2009
    
    2008
    
    2007(In millions, except per share data)Basic and Diluted Earnings (Loss)
Per Share Attributable to CNA
Common StockholdersIncome (loss) from continuing
operations attributable to CNA
common stockholders
    
    $
    1.11
    
    
    $
    (1.21
    )
    
    $
    3.15Income (loss) from discontinued
operations attributable to CNA
common stockholders
    
    
    (0.01
    )
    
    
    0.03
    
    
    
    (0.02
    )Basic and diluted earnings (loss)
per share attributable to CNA
common stockholders
    
    $
    1.10
    
    
    $
    (1.18
    )
    
    $
    3.13Weighted Average Outstanding Common
Stock and Common Stock EquivalentsBasic
    
    
    269.0
    
    
    
    269.4
    
    
    
    271.5Diluted
    
    
    269.1
    
    
    
    269.4
    
    
    
    271.8
  62




---



##### Table of Contents



CNA Financial Corporation
Consolidated Statements of Comprehensive Income (Loss)
 2009
    
    2008
    
    2007Years ended December 31
    
    Tax
    
    After-tax
    
    Tax
    
    After-tax
    
    Tax
    
    After-tax(In millions)Changes in:Net unrealized losses on investments with
other-than-temporary impairments
    
    $
    52
    
    
    $
    (95
    )
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -Net unrealized gains (losses) on other
investments
    
    
    (2,024
    )
    
    
    3,741
    
    
    
    1,926
    
    
    
    (3,553
    )
    
    
    313
    
    
    
    (579
    )Net unrealized gains (losses) on investments
    
    
    (1,972
    )
    
    
    3,646
    
    
    
    1,926
    
    
    
    (3,553
    )
    
    
    313
    
    
    
    (579
    )Net unrealized gains (losses) on discontinued
operations and other
    
    
    (2
    )
    
    
    9
    
    
    
    6
    
    
    
    (6
    )
    
    
    2
    
    
    
    3Net foreign currency translation adjustment
    
    
    -
    
    
    
    117
    
    
    
    -
    
    
    
    (153
    )
    
    
    -
    
    
    
    30Net pension and postretirement benefit plans
    
    
    (8
    )
    
    
    15
    
    
    
    194
    
    
    
    (363
    )
    
    
    (52
    )
    
    
    97Allocation to participating policyholders
    
    
    -
    
    
    
    (40
    )
    
    
    -
    
    
    
    32
    
    
    
    -
    
    
    
    5Other comprehensive income (loss)
    
    $
    (1,982
    )
    
    
    3,747
    
    
    $
    2,126
    
    
    
    (4,043
    )
    
    $
    263
    
    
    
    (444
    )Net income (loss)
    
    
    
    
    
    
    481
    
    
    
    
    
    
    
    (242
    )
    
    
    
    
    
    
    899Comprehensive income (loss)
    
    
    
    
    
    
    4,228
    
    
    
    
    
    
    
    (4,285
    )
    
    
    
    
    
    
    455Changes in:Net unrealized (gains) losses on investments
attributable to noncontrolling interests
    
    
    
    
    
    
    (24
    )
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    -Net pension and postretirement benefit plans
attributable to noncontrolling interests
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    (2
    )Other comprehensive (income) loss attributable to
noncontrolling interests
    
    
    
    
    
    
    (26
    )
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    (2
    )Net income attributable to noncontrolling interests
    
    
    
    
    
    
    (62
    )
    
    
    
    
    
    
    (57
    )
    
    
    
    
    
    
    (48
    )Comprehensive income attributable to
noncontrolling interests
    
    
    
    
    
    
    (88
    )
    
    
    
    
    
    
    (41
    )
    
    
    
    
    
    
    (50
    )Total comprehensive income (loss) attributable
to CNA
    
    
    
    
    
    $
    4,140
    
    
    
    
    
    
    $
    (4,326
    )
    
    
    
    
    
    $
    405
  63




---



##### Table of Contents



CNA Financial Corporation
Consolidated Balance Sheets
 December 31
    
    2009
    
    2008(In millions, except share data)AssetsInvestments:Fixed maturity securities at fair value (amortized cost of $35,602 and $34,155)
    
    $
    35,612
    
    
    $
    28,887Equity securities at fair value (cost of $633 and $1,016)
    
    
    644
    
    
    
    871Limited partnership investments
    
    
    1,787
    
    
    
    1,683Other invested assets
    
    
    4
    
    
    
    28Short term investments
    
    
    3,949
    
    
    
    3,534Total investments
    
    
    41,996
    
    
    
    35,003Cash
    
    
    140
    
    
    
    85Reinsurance receivables (less allowance for uncollectible receivables of $351 and $366)
    
    
    6,581
    
    
    
    7,395Insurance receivables (less allowance for doubtful accounts of $202 and $221)
    
    
    1,656
    
    
    
    1,818Accrued investment income
    
    
    416
    
    
    
    356Receivables for securities sold and collateral
    
    
    154
    
    
    
    402Deferred acquisition costs
    
    
    1,108
    
    
    
    1,125Prepaid reinsurance premiums
    
    
    188
    
    
    
    237Federal income tax recoverable (includes $320 and $299 due from Loews Corporation)
    
    
    297
    
    
    
    294Deferred income taxes
    
    
    1,333
    
    
    
    3,493Property and equipment at cost (less accumulated depreciation of $498 and $641)
    
    
    360
    
    
    
    393Goodwill and other intangible assets
    
    
    141
    
    
    
    141Other assets
    
    
    505
    
    
    
    562Separate account business
    
    
    423
    
    
    
    384Total assets
    
    $
    55,298
    
    
    $
    51,688Liabilities and EquityLiabilities:Insurance reserves:Claim and claim adjustment expenses
    
    $
    26,816
    
    
    $
    27,593Unearned premiums
    
    
    3,274
    
    
    
    3,406Future policy benefits
    
    
    7,981
    
    
    
    7,529Policyholders funds
    
    
    192
    
    
    
    243Payables for securities purchased
    
    
    242
    
    
    
    12Participating policyholders funds
    
    
    56
    
    
    
    20Long term debt
    
    
    2,303
    
    
    
    2,058Reinsurance balances payable
    
    
    281
    
    
    
    316Other liabilities
    
    
    2,564
    
    
    
    2,830Separate account business
    
    
    423
    
    
    
    384Total liabilities
    
    
    44,132
    
    
    
    44,391Commitments and contingencies (Notes B, C, F, G, I , and K)Equity:Preferred stock (12,500,000 shares authorized)
2008 Senior Preferred (no par value; $100,000 stated
value; 10,000 and 12,500 shares issued and
outstanding held by Loews Corporation)
    
    
    1,000
    
    
    
    1,250Common stock ($2.50 par value; 500,000,000 shares
authorized; 273,040,243 shares issued; and 269,026,759
and 269,024,408 shares outstanding)
    
    
    683
    
    
    
    683Additional paid-in capital
    
    
    2,177
    
    
    
    2,174Retained earnings
    
    
    7,264
    
    
    
    6,845Accumulated other comprehensive loss
    
    
    (325
    )
    
    
    (3,924
    )Treasury stock (4,013,484 and 4,015,835 shares), at cost
    
    
    (109
    )
    
    
    (109
    )Notes receivable for the issuance of common stock
    
    
    (30
    )
    
    
    (42
    )Total CNA stockholders equity
    
    
    10,660
    
    
    
    6,877Noncontrolling interests
    
    
    506
    
    
    
    420Total equity
    
    
    11,166
    
    
    
    7,297Total liabilities and equity
    
    $
    55,298
    
    
    $
    51,688
  64




---



##### Table of Contents



CNA Financial Corporation
Consolidated Statements of Cash Flows
 Years ended December 31
    
    2009
    
    2008
    
    2007(In millions)Cash Flows from Operating Activities:Net income (loss)
    
    $
    481
    
    
    $
    (242
    )
    
    $
    899Adjustments to reconcile net income (loss) to net cash flows
provided by operating activities:(Income) loss from discontinued operations
    
    
    2
    
    
    
    (9
    )
    
    
    6Loss on disposal of property and equipment
    
    
    14
    
    
    
    1
    
    
    
    1Deferred income tax expense (benefit)
    
    
    177
    
    
    
    (174
    )
    
    
    (99
    )Trading portfolio activity
    
    
    (164
    )
    
    
    644
    
    
    
    (12
    )Net realized investment losses, net of participating
policyholders interests
    
    
    857
    
    
    
    1,297
    
    
    
    311Undistributed losses (earnings) of equity method investees
    
    
    (223
    )
    
    
    446
    
    
    
    (99
    )Net amortization of investment discount
    
    
    (198
    )
    
    
    (278
    )
    
    
    (252
    )Depreciation
    
    
    86
    
    
    
    78
    
    
    
    64Changes in:Receivables, net
    
    
    976
    
    
    
    987
    
    
    
    1,386Accrued investment income
    
    
    (60
    )
    
    
    (26
    )
    
    
    (17
    )Deferred acquisition costs
    
    
    17
    
    
    
    36
    
    
    
    29Prepaid reinsurance premiums
    
    
    49
    
    
    
    33
    
    
    
    72Federal income taxes recoverable/payable
    
    
    (3
    )
    
    
    (287
    )
    
    
    (38
    )Insurance reserves
    
    
    (612
    )
    
    
    (590
    )
    
    
    (830
    )Reinsurance balances payable
    
    
    (35
    )
    
    
    (85
    )
    
    
    (138
    )Other assets
    
    
    53
    
    
    
    13
    
    
    
    42Other liabilities
    
    
    (139
    )
    
    
    (287
    )
    
    
    (80
    )Other, net
    
    
    3
    
    
    
    9
    
    
    
    7Total adjustments
    
    
    800
    
    
    
    1,808
    
    
    
    353Net cash flows provided by operating activities-continuing
operations
    
    $
    1,281
    
    
    $
    1,566
    
    
    $
    1,252Net cash flows used by operating activities-discontinued
operations
    
    $
    (23
    )
    
    $
    (8
    )
    
    $
    (13
    )Net cash flows provided by operating activities-total
    
    $
    1,258
    
    
    $
    1,558
    
    
    $
    1,239Cash Flows from Investing Activities:Purchases of fixed maturity securities
    
    $
    (24,189
    )
    
    $
    (48,404
    )
    
    $
    (73,157
    )Proceeds from fixed maturity securities:Sales
    
    
    19,245
    
    
    
    41,749
    
    
    
    69,012Maturities, calls and redemptions
    
    
    3,448
    
    
    
    4,092
    
    
    
    4,744Purchases of equity securities
    
    
    (269
    )
    
    
    (205
    )
    
    
    (236
    )Proceeds from sales of equity securities
    
    
    901
    
    
    
    220
    
    
    
    340Change in short term investments
    
    
    (327
    )
    
    
    1,032
    
    
    
    1,347Change in collateral on loaned securities and derivatives
    
    
    (5
    )
    
    
    (57
    )
    
    
    (2,788
    )Change in other investments
    
    
    140
    
    
    
    (295
    )
    
    
    (168
    )Purchases of property and equipment
    
    
    (63
    )
    
    
    (104
    )
    
    
    (160
    )Dispositions
    
    
    -
    
    
    
    -
    
    
    
    14Other, net
    
    
    3
    
    
    
    46
    
    
    
    (69
    )Net cash flows used by investing activities-continuing
operations
    
    $
    (1,116
    )
    
    $
    (1,926
    )
    
    $
    (1,121
    )Net cash flows provided by investing activities-discontinued
operations
    
    $
    23
    
    
    $
    18
    
    
    $
    39Net cash flows used by investing activities-total
    
    $
    (1,093
    )
    
    $
    (1,908
    )
    
    $
    (1,082
    )
  65




---



##### Table of Contents



2009
    
    2008
    
    2007Cash Flows from Financing Activities:Dividends paid to Loews for 2008 Senior Preferred
    
    $
    (122
    )
    
    $
    (19
    )
    
    $
    -Dividends paid to common stockholders
    
    
    -
    
    
    
    (122
    )
    
    
    (95
    )Proceeds from the issuance of debt
    
    
    350
    
    
    
    250
    
    
    
    -Principal payments on debt
    
    
    (100
    )
    
    
    (350
    )
    
    
    -Return of investment contract account balances
    
    
    (15
    )
    
    
    (607
    )
    
    
    (122
    )Receipts on investment contract account balances
    
    
    4
    
    
    
    3
    
    
    
    3Payment to redeem 2008 Senior Preferred
    
    
    (250
    )
    
    
    -
    
    
    
    -Proceeds from the issuance of 2008 Senior Preferred
    
    
    -
    
    
    
    1,250
    
    
    
    -Stock options exercised
    
    
    1
    
    
    
    1
    
    
    
    18Purchase of treasury stock
    
    
    -
    
    
    
    (70
    )
    
    
    -Other, net
    
    
    12
    
    
    
    11
    
    
    
    11Net cash flows provided (used) by financing
activities-continuing operations
    
    $
    (120
    )
    
    $
    347
    
    
    $
    (185
    )Net cash flows provided (used) by financing
activities-discontinued operations
    
    $
    -
    
    
    $
    -
    
    
    $
    -Net cash flows provided (used) by financing activities-total
    
    $
    (120
    )
    
    $
    347
    
    
    $
    (185
    )Effect of foreign exchange rate changes on cash-continuing
operations
    
    
    10
    
    
    
    (13
    )
    
    
    5Net change in cash
    
    
    55
    
    
    
    (16
    )
    
    
    (23
    )Net cash transactions from continuing operations to
discontinued operations
    
    
    -
    
    
    
    17
    
    
    
    59Net cash transactions from discontinued operations to
continuing operations
    
    
    -
    
    
    
    (17
    )
    
    
    (59
    )Cash, beginning of year
    
    
    85
    
    
    
    101
    
    
    
    124Cash, end of year
    
    $
    140
    
    
    $
    85
    
    
    $
    101Cash-continuing operations
    
    $
    140
    
    
    $
    85
    
    
    $
    94Cash-discontinued operations
    
    
    -
    
    
    
    -
    
    
    
    7Cash-total
    
    $
    140
    
    
    $
    85
    
    
    $
    101
  66




---



##### Table of Contents



CNA Financial Corporation
Consolidated Statements of Stockholders Equity
 Years ended December 31
    
    2009
    
    2008
    
    2007(In millions)Preferred StockBalance, beginning of period
    
    $
    1,250
    
    
    $
    -
    
    
    $
    -Issuance of 2008 Senior Preferred
    
    
    -
    
    
    
    1,250
    
    
    
    -Redemption of 2008 Senior Preferred
    
    
    (250
    )
    
    
    -
    
    
    
    -Balance, end of period
    
    
    1,000
    
    
    
    1,250
    
    
    
    -Common StockBalance, beginning and end of period
    
    
    683
    
    
    
    683
    
    
    
    683Additional Paid-in CapitalBalance, beginning of period
    
    
    2,174
    
    
    
    2,169
    
    
    
    2,166Stock based compensation and other
    
    
    3
    
    
    
    5
    
    
    
    3Balance, end of period
    
    
    2,177
    
    
    
    2,174
    
    
    
    2,169Retained EarningsBalance, beginning of period
    
    
    6,845
    
    
    
    7,285
    
    
    
    6,529Cumulative effect adjustment from change in
other-than-temporary impairment accounting guidance
    
    
    122
    
    
    
    -
    
    
    
    -Dividends paid to common stockholders
    
    
    -
    
    
    
    (122
    )
    
    
    (95
    )Dividends paid to Loews Corporation for 2008 Senior Preferred
    
    
    (122
    )
    
    
    (19
    )
    
    
    -Net income (loss) attributable to CNA
    
    
    419
    
    
    
    (299
    )
    
    
    851Balance, end of period
    
    
    7,264
    
    
    
    6,845
    
    
    
    7,285Accumulated Other Comprehensive Income (Loss)Balance, beginning of period
    
    
    (3,924
    )
    
    
    103
    
    
    
    549Cumulative effect adjustment from change in
other-than-temporary impairment accounting guidance
    
    
    (122
    )
    
    
    -
    
    
    
    -Other comprehensive income (loss) attributable to CNA
    
    
    3,721
    
    
    
    (4,027
    )
    
    
    (446
    )Balance, end of period
    
    
    (325
    )
    
    
    (3,924
    )
    
    
    103Treasury StockBalance, beginning of period
    
    
    (109
    )
    
    
    (39
    )
    
    
    (58
    )Purchase of treasury stock
    
    
    -
    
    
    
    (70
    )
    
    
    -Stock options exercised
    
    
    -
    
    
    
    -
    
    
    
    19Balance, end of period
    
    
    (109
    )
    
    
    (109
    )
    
    
    (39
    )Notes Receivable for the Issuance of Common StockBalance, beginning of period
    
    
    (42
    )
    
    
    (51
    )
    
    
    (58
    )Decrease in notes receivable for the issuance of common stock
    
    
    12
    
    
    
    9
    
    
    
    7Balance, end of period
    
    
    (30
    )
    
    
    (42
    )
    
    
    (51
    )Total CNA Stockholders Equity
    
    
    10,660
    
    
    
    6,877
    
    
    
    10,150Noncontrolling InterestsBalance, beginning of period
    
    
    420
    
    
    
    385
    
    
    
    335Net income
    
    
    62
    
    
    
    57
    
    
    
    48Other comprehensive income (loss)
    
    
    26
    
    
    
    (16
    )
    
    
    2Other
    
    
    (2
    )
    
    
    (6
    )
    
    
    -Balance, end of period
    
    
    506
    
    
    
    420
    
    
    
    385Total Equity
    
    $
    11,166
    
    
    $
    7,297
    
    
    $
    10,535
  67




---



##### Table of Contents



Notes to Consolidated Financial Statements
 Note A. Summary of Significant Accounting Policies
 Basis of Presentation
   Business
    Insurance Operations
 Premiums:
   68




---



##### Table of Contents



Claim and claim adjustment expense reserves:
    Future policy benefits reserves:
 Policyholders funds reserves:
 69




---



##### Table of Contents



Guaranty fund and other insurance-related assessments:
 Reinsurance:
   Participating insurance:
 Deferred acquisition costs:
   70




---



##### Table of Contents



Investments in life settlement contracts and related revenue recognition:
   December 31, 2009
    
    Number of Life
    
    Fair Value of Life Settlement
    
    Face Amount of Life InsuranceSettlement Contracts
    
    Contracts
    
    Policies(In millions)
    
    (In millions)Estimated maturity during:2010
    
    
    100
    
    
    $
    17
    
    
    $
    532011
    
    
    90
    
    
    
    15
    
    
    
    492012
    
    
    90
    
    
    
    13
    
    
    
    462013
    
    
    80
    
    
    
    11
    
    
    
    442014
    
    
    80
    
    
    
    10
    
    
    
    41Thereafter
    
    
    817
    
    
    
    64
    
    
    
    443Total
    
    
    1,257
    
    
    $
    130
    
    
    $
    676
   Separate Account Business
 71




---



##### Table of Contents



Investments
 Valuation of investments:
     Realized investment gains (losses):
 Securities lending activities:
  72




---



##### Table of Contents



Income Taxes
  Pension and Postretirement Benefits
  Stock-Based Compensation
  Foreign Currency
  Property and Equipment
  Goodwill and Other Intangible Assets
  73




---



##### Table of Contents



Earnings (Loss) Per Share Data
    Supplementary Cash Flow Information
  74




---



##### Table of Contents



Accounting Standards Update
 Adopted
 Noncontrolling Interests in Consolidated Financial Statements
  Effective Date of Fair Value Measurements
  Recognition and Presentation of Other-Than-Temporary Impairments
     75




---



##### Table of Contents



Employers Disclosures about Postretirement Benefit Plan Assets
  Recently issued accounting standards to be adopted
 Variable Interest Entities
  76




---



##### Table of Contents



Note B. Investments
  Net Investment Income
 Years ended December 31
    
    2009

    
    2008

    
    2007(In millions)Fixed maturity securities
    
    $
    1,941
    
    
    $
    1,984
    
    
    $
    2,047Short term investments
    
    
    36
    
    
    
    115
    
    
    
    186Limited partnerships
    
    
    315
    
    
    
    (379
    )
    
    
    183Equity securities
    
    
    49
    
    
    
    80
    
    
    
    25Trading portfolio  indexed group annuity (a)
    
    
    -
    
    
    
    (146
    )
    
    
    10Trading portfolio  other (b)
    
    
    23
    
    
    
    (3
    )
    
    
    -Other
    
    
    6
    
    
    
    19
    
    
    
    35Gross investment income
    
    
    2,370
    
    
    
    1,670
    
    
    
    2,486Investment expenses
    
    
    (50
    )
    
    
    (51
    )
    
    
    (53
    )Net investment income
    
    $
    2,320
    
    
    $
    1,619
    
    
    $
    2,433
     Net Realized Investment Gains (Losses)
 Years ended December 31
    
    2009

    
    2008

    
    2007(In millions)Net realized investment gains (losses):Fixed maturity securities:Gross realized gains
    
    $
    500
    
    
    $
    532
    
    
    $
    486Gross realized losses
    
    
    (1,667
    )
    
    
    (1,363
    )
    
    
    (964
    )Net realized investment losses on fixed maturity securities
    
    
    (1,167
    )
    
    
    (831
    )
    
    
    (478
    )Equity securities:Gross realized gains
    
    
    473
    
    
    
    22
    
    
    
    146Gross realized losses
    
    
    (230
    )
    
    
    (512
    )
    
    
    (29
    )Net realized investment gains (losses) on equity securities
    
    
    243
    
    
    
    (490
    )
    
    
    117Derivatives
    
    
    51
    
    
    
    (19
    )
    
    
    32Short term investments and other
    
    
    16
    
    
    
    43
    
    
    
    18Net realized investment losses, net of participating policyholders interests
    
    $
    (857
    )
    
    $
    (1,297
    )
    
    $
    (311
    )
 77




---



##### Table of Contents



Net Change in Unrealized Gains (Losses)
 Years ended December 31
    
    2009

    
    2008

    
    2007(In millions)Net change in unrealized losses on investments:Fixed maturity securities
    
    $
    5,278
    
    
    $
    (5,137
    )
    
    $
    (847
    )Equity securities
    
    
    156
    
    
    
    (347
    )
    
    
    (47
    )Other
    
    
    (4
    )
    
    
    5
    
    
    
    2Total net change in unrealized gains (losses) on investments
    
    $
    5,430
    
    
    $
    (5,479
    )
    
    $
    (892
    )
  Years ended December 31
    
    2009

    
    2008

    
    2007(In millions)Fixed maturity securities available-for-sale:U.S Treasury securities and obligations of government agencies
    
    $
    -
    
    
    $
    29
    
    
    $
    53Asset-backed securities:Residential mortgage-backed securities
    
    
    461
    
    
    
    222
    
    
    
    209Commercial mortgage-backed securities
    
    
    193
    
    
    
    208
    
    
    
    65Other asset-backed securities
    
    
    31
    
    
    
    35
    
    
    
    37Total asset-backed securities
    
    
    685
    
    
    
    465
    
    
    
    311States, municipalities and political subdivisions  tax-exempt securities
    
    
    79
    
    
    
    1
    
    
    
    50Corporate and other taxable bonds
    
    
    357
    
    
    
    585
    
    
    
    260Redeemable preferred stock
    
    
    9
    
    
    
    1
    
    
    
    42Total fixed maturity securities available-for-sale
    
    
    1,130
    
    
    
    1,081
    
    
    
    716Equity securities available-for-sale:Common stock
    
    
    5
    
    
    
    140
    
    
    
    24Preferred stock
    
    
    217
    
    
    
    263
    
    
    
    1Total equity securities available-for-sale
    
    
    222
    
    
    
    403
    
    
    
    25Net OTTI losses recognized in earnings
    
    $
    1,352
    
    
    $
    1,484
    
    
    $
    741
    78




---



##### Table of Contents



79




---



##### Table of Contents



Summary of Fixed Maturity and Equity Securities
 Cost or
    
    
    Gross
    
    
    Gross Unrealized Losses
    
    
    Estimated
    
    
    UnrealizedAmortized
    
    
    Unrealized
    
    
    Less than
    
    
    12 Months
    
    
    Fair
    
    
    OTTIDecember 31, 2009
    
    Cost

    
    Gains

    
    12 Months

    
    or Greater

    
    Value

    
    Losses(In millions)Fixed maturity securities available-for-sale:U.S. Treasury securities and obligations of
government agencies
    
    $
    184
    
    
    $
    16
    
    
    $
    1
    
    
    $
    -
    
    
    $
    199
    
    
    $
    -Asset-backed securities:Residential mortgage-backed securities
    
    
    7,469
    
    
    
    72
    
    
    
    43
    
    
    
    561
    
    
    
    6,937
    
    
    
    246Commercial mortgage-backed
securities
    
    
    709
    
    
    
    10
    
    
    
    1
    
    
    
    134
    
    
    
    584
    
    
    
    3Other asset-backed securities
    
    
    858
    
    
    
    14
    
    
    
    1
    
    
    
    39
    
    
    
    832
    
    
    
    -Total asset-backed securities
    
    
    9,036
    
    
    
    96
    
    
    
    45
    
    
    
    734
    
    
    
    8,353
    
    
    
    249States, municipalities and political
subdivisions  tax-exempt securities
    
    
    7,142
    
    
    
    201
    
    
    
    25
    
    
    
    325
    
    
    
    6,993
    
    
    
    -Corporate and other taxable bonds
    
    
    19,015
    
    
    
    1,123
    
    
    
    50
    
    
    
    249
    
    
    
    19,839
    
    
    
    26Redeemable preferred stock
    
    
    51
    
    
    
    4
    
    
    
    -
    
    
    
    1
    
    
    
    54
    
    
    
    -Total fixed maturity securities available-for-sale
    
    
    35,428
    
    
    
    1,440
    
    
    
    121
    
    
    
    1,309
    
    
    
    35,438
    
    
    $
    275Total fixed maturity securities trading
    
    
    174
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    174Equity securities available-for-sale:Common stock
    
    
    61
    
    
    
    14
    
    
    
    1
    
    
    
    1
    
    
    
    73Preferred stock
    
    
    572
    
    
    
    40
    
    
    
    -
    
    
    
    41
    
    
    
    571Total equity securities available-for-sale
    
    
    633
    
    
    
    54
    
    
    
    1
    
    
    
    42
    
    
    
    644Total
    
    $
    36,235
    
    
    $
    1,494
    
    
    $
    122
    
    
    $
    1,351
    
    
    $
    36,256
 Summary of Fixed Maturity and Equity Securities
 Cost or
    
    
    Gross
    
    
    Gross Unrealized Losses
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Less than
    
    
    12 Months
    
    
    FairDecember 31, 2008
    
    Cost

    
    Gains

    
    12 Months

    
    or Greater

    
    Value(In millions)Fixed maturity securities available-for-sale:U.S. Treasury securities and obligations of
government agencies
    
    $
    2,862
    
    
    $
    69
    
    
    $
    1
    
    
    $
    -
    
    
    $
    2,930Asset-backed securities
    
    
    9,670
    
    
    
    24
    
    
    
    961
    
    
    
    969
    
    
    
    7,764States, municipalities and political
subdivisions  tax-exempt securities
    
    
    8,557
    
    
    
    90
    
    
    
    609
    
    
    
    623
    
    
    
    7,415Corporate and other taxable bonds
    
    
    12,993
    
    
    
    275
    
    
    
    1,164
    
    
    
    1,374
    
    
    
    10,730Redeemable preferred stock
    
    
    72
    
    
    
    1
    
    
    
    23
    
    
    
    3
    
    
    
    47Total fixed maturity securities
available-for-sale
    
    
    34,154
    
    
    
    459
    
    
    
    2,758
    
    
    
    2,969
    
    
    
    28,886Total fixed maturity securities trading
    
    
    1
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    1Equity securities available-for-sale:Common stock
    
    
    134
    
    
    
    190
    
    
    
    1
    
    
    
    3
    
    
    
    320Preferred stock
    
    
    882
    
    
    
    5
    
    
    
    15
    
    
    
    321
    
    
    
    551Total equity securities available-for-sale
    
    
    1,016
    
    
    
    195
    
    
    
    16
    
    
    
    324
    
    
    
    871Total
    
    $
    35,171
    
    
    $
    654
    
    
    $
    2,774
    
    
    $
    3,293
    
    
    $
    29,758
 80




---



##### Table of Contents



Period from(In millions)
    
    April 1, 2009 toDecember 31, 2009Beginning balance of credit losses on fixed maturity securities
    
    $
    192Additional credit losses for which an OTTI loss was previously recognized
    
    
    93Additional credit losses for which an OTTI loss was not previously recognized
    
    
    183Reductions for securities sold during the period
    
    
    (239
    )Reductions for securities the Company intends to sell or more likely than not will be required to sell
    
    
    (65
    )Ending balance of credit losses on fixed maturity securities
    
    $
    164
    Asset-Backed Securities
      81




---



##### Table of Contents



Gross Unrealized Losses by Ratings Distribution
 December 31, 2009
 GrossAmortized
    
    
    Estimated
    
    
    UnrealizedRating
    
    Cost

    
    Fair Value

    
    LossesU.S. Government Agencies
    
    $
    1,814
    
    
    $
    1,782
    
    
    $
    32AAA
    
    
    2,350
    
    
    
    2,052
    
    
    
    298AA
    
    
    475
    
    
    
    389
    
    
    
    86A
    
    
    391
    
    
    
    325
    
    
    
    66BBB
    
    
    349
    
    
    
    279
    
    
    
    70Non-investment grade and equity tranches
    
    
    1,180
    
    
    
    953
    
    
    
    227Total
    
    $
    6,559
    
    
    $
    5,780
    
    
    $
    779
  States, Municipalities and Political Subdivisions  Tax-Exempt Securities
   82




---



##### Table of Contents



Gross Unrealized Losses by Ratings Distribution
 December 31, 2009
 GrossAmortized
    
    
    Estimated
    
    
    UnrealizedRating
    
    Cost

    
    Fair Value

    
    LossesAAA
    
    $
    1,344
    
    
    $
    1,280
    
    
    $
    64AA
    
    
    985
    
    
    
    849
    
    
    
    136A
    
    
    492
    
    
    
    464
    
    
    
    28BBB
    
    
    519
    
    
    
    399
    
    
    
    120Non-investment grade
    
    
    22
    
    
    
    20
    
    
    
    2Total
    
    $
    3,362
    
    
    $
    3,012
    
    
    $
    350
   83




---



##### Table of Contents



Corporate and Other Taxable Bonds
   
 Estimated

    
    GrossDecember 31, 2009
    
    Amortized Cost

    
    Fair Value

    
    Unrealized Losses(In millions)Communications
    
    $
    333
    
    
    $
    327
    
    
    $
    6Consumer, Cyclical
    
    
    409
    
    
    
    386
    
    
    
    23Consumer, Non-cyclical
    
    
    425
    
    
    
    412
    
    
    
    13Energy
    
    
    271
    
    
    
    259
    
    
    
    12Financial
    
    
    1,918
    
    
    
    1,752
    
    
    
    166Industrial
    
    
    364
    
    
    
    350
    
    
    
    14Utilities
    
    
    654
    
    
    
    614
    
    
    
    40Other
    
    
    539
    
    
    
    514
    
    
    
    25Total
    
    $
    4,913
    
    
    $
    4,614
    
    
    $
    299
 Gross Unrealized Losses by Ratings Distribution
 December 31, 2009
 GrossEstimated

    
    UnrealizedRating
    
    Amortized Cost

    
    Fair Value

    
    LossesAAA
    
    $
    191
    
    
    $
    183
    
    
    $
    8AA
    
    
    344
    
    
    
    339
    
    
    
    5A
    
    
    1,161
    
    
    
    1,103
    
    
    
    58BBB
    
    
    2,287
    
    
    
    2,150
    
    
    
    137Non-investment grade
    
    
    930
    
    
    
    839
    
    
    
    91Total
    
    $
    4,913
    
    
    $
    4,614
    
    
    $
    299
   84




---



##### Table of Contents



Contractual Maturity
  Contractual Maturity
    
    December 31, 2009

    
    December 31, 2008Cost or

    
    Estimated
    
    Cost or
    
    EstimatedAmortized

    
    Fair

    
    Amortized

    
    FairCost

    
    Value

    
    Cost

    
    Value(In millions)Due in one year or less
    
    $
    1,240
    
    
    $
    1,219
    
    
    $
    3,105
    
    
    $
    2,707Due after one year through five years
    
    
    10,046
    
    
    
    10,244
    
    
    
    10,295
    
    
    
    9,210Due after five years through ten years
    
    
    10,646
    
    
    
    10,538
    
    
    
    5,929
    
    
    
    4,822Due after ten years
    
    
    13,496
    
    
    
    13,437
    
    
    
    14,825
    
    
    
    12,147Total
    
    $
    35,428
    
    
    $
    35,438
    
    
    $
    34,154
    
    
    $
    28,886
  Auction Rate Securities
  Limited Partnerships
    85




---



##### Table of Contents



Investment Commitments
   Investments on Deposit
    86




---



##### Table of Contents



Note C. Derivative Financial Instruments
          87




---



##### Table of Contents



Credit Ratings of Underlying Reference Obligations
  December 31, 2009(In millions)
    
    Fair Value of

    
    Maximum Amount of

    
    WeightedCredit Default

    
    Future Payments under

    
    Average YearsSwaps

    
    Credit Default Swaps

    
    to MaturityB
    
    $
    -
    
    
    $
    8
    
    
    
    3.1Total
    
    $
    -
    
    
    $
    8
    
    
    
    3.1
  Credit Ratings of Underlying Reference Obligations
  December 31, 2008(In millions)
    
    Fair Value of

    
    Maximum Amount of

    
    WeightedCredit Default

    
    Future Payments under

    
    Average YearsSwaps

    
    Credit Default Swaps

    
    to MaturityAAA/AA/A
    
    $
    (8
    )
    
    $
    40
    
    
    
    12.3BBB
    
    
    (4
    )
    
    
    55
    
    
    
    3.1B
    
    
    (2
    )
    
    
    8
    
    
    
    4.1CCC and lower
    
    
    (29
    )
    
    
    45
    
    
    
    4.5Total
    
    $
    (43
    )
    
    $
    148
    
    
    
    6.1
   88




---



##### Table of Contents



Recognized Gains (Losses)
 Years ended December 31
    
    2009

    
    2008

    
    2007(In millions)Without hedge designationInterest rate swaps
    
    $
    61
    
    
    $
    (59
    )
    
    $
    11Credit default swaps  purchased protection
    
    
    (47
    )
    
    
    86
    
    
    
    95Credit default swaps  sold protection
    
    
    3
    
    
    
    (35
    )
    
    
    (40
    )Total return swaps
    
    
    (2
    )
    
    
    -
    
    
    
    -Futures purchased
    
    
    -
    
    
    
    -
    
    
    
    7Futures sold, not yet purchased
    
    
    21
    
    
    
    (11
    )
    
    
    (38
    )Currency forwards
    
    
    -
    
    
    
    2
    
    
    
    (4
    )Options embedded in convertible debt securities
    
    
    -
    
    
    
    1
    
    
    
    1Equity warrants
    
    
    -
    
    
    
    (2
    )
    
    
    -Options written
    
    
    15
    
    
    
    -
    
    
    
    -Trading activitiesFutures purchased
    
    
    -
    
    
    
    (131
    )
    
    
    -Futures sold, not yet purchased
    
    
    (2
    )
    
    
    1
    
    
    
    -Total
    
    $
    49
    
    
    $
    (148
    )
    
    $
    32
  89




---



##### Table of Contents



Derivative Financial Instruments
 Contractual/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
    
    
    
    -
    
    
    
    -Trading activitiesFutures sold, not yet purchased
    
    
    132
    
    
    
    -
    
    
    
    -Total
    
    $
    258
    
    
    $
    -
    
    
    $
    (11
    )
 Derivative Financial Instruments
 Contractual/December 31, 2008
    
    Notional

    
    Estimated Fair Value(In millions)
    
    Amount

    
    Asset

    
    (Liability)Without hedge designationInterest rate swaps
    
    $
    900
    
    
    $
    -
    
    
    $
    (66
    )Credit default swaps  purchased protection
    
    
    405
    
    
    
    24
    
    
    
    (2
    )Credit default swaps  sold protection
    
    
    148
    
    
    
    -
    
    
    
    (43
    )Equity warrants
    
    
    4
    
    
    
    -
    
    
    
    -Total
    
    $
    1,457
    
    
    $
    24
    
    
    $
    (111
    )
  90




---



##### Table of Contents



Note D. Fair Value
      91




---



##### Table of Contents



Assets and Liabilities Measured at Fair Value
   Totalassets/(liabilities)December 31, 2009
    
    Level 1

    
    Level 2

    
    Level 3

    
    at fair value(in millions)AssetsFixed maturity securities:U.S. Treasury securities and obligations of
government agencies
    
    $
    247
    
    
    $
    54
    
    
    $
    -
    
    
    $
    301Asset-backed securities:Residential mortgage-backed securities
    
    
    -
    
    
    
    6,308
    
    
    
    629
    
    
    
    6,937Commercial mortgage-backed securities
    
    
    -
    
    
    
    461
    
    
    
    123
    
    
    
    584Other asset-backed securities
    
    
    -
    
    
    
    484
    
    
    
    348
    
    
    
    832Total asset-backed securities
    
    
    -
    
    
    
    7,253
    
    
    
    1,100
    
    
    
    8,353States, municipalities and political subdivisions -
tax-exempt securities
    
    
    -
    
    
    
    6,273
    
    
    
    756
    
    
    
    7,029Corporate and other taxable bonds
    
    
    139
    
    
    
    19,127
    
    
    
    609
    
    
    
    19,875Redeemable 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
    )
 92




---



##### Table of Contents



Totalassets/(liabilities)December 31, 2008
    
    Level 1

    
    Level 2

    
    Level 3

    
    at fair value(in millions)AssetsFixed maturity securities
    
    $
    2,028
    
    
    $
    24,367
    
    
    $
    2,492
    
    
    $
    28,887Equity securities
    
    
    567
    
    
    
    94
    
    
    
    210
    
    
    
    871Derivative financial instruments, included in Other
invested assets
    
    
    -
    
    
    
    -
    
    
    
    24
    
    
    
    24Short term investments
    
    
    2,926
    
    
    
    608
    
    
    
    -
    
    
    
    3,534Life settlement contracts, included in Other assets
    
    
    -
    
    
    
    -
    
    
    
    129
    
    
    
    129Discontinued operations investments, included in
Other
liabilities
    
    
    83
    
    
    
    59
    
    
    
    15
    
    
    
    157Separate account business
    
    
    40
    
    
    
    306
    
    
    
    38
    
    
    
    384Total assets
    
    $
    5,644
    
    
    $
    25,434
    
    
    $
    2,908
    
    
    $
    33,986LiabilitiesDerivative financial instruments, included in Other
liabilities
    
    $
    -
    
    
    $
    -
    
    
    $
    (111
    )
    
    $
    (111
    )Total liabilities
    
    $
    -
    
    
    $
    -
    
    
    $
    (111
    )
    
    $
    (111
    )
 93




---



##### Table of Contents



Net realizedNet realized

    
    investment gainsinvestment

    
    (losses) and netgains (losses)

    
    change in

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net unrealizedand net

    
    unrealized

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    gains (losses) onchange in

    
    appreciation

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Level 3 assetsunrealized

    
    (depreciation)

    
    Purchases,

    
    
    
    
    
    
    
    
    
    
    
    
    
    and liabilitiesappreciation

    
    recognized in

    
    sales,

    
    
    
    
    
    
    
    
    
    
    
    
    
    held at(depreciation)

    
    other

    
    issuances

    
    Transfers

    
    Transfers

    
    Balance at

    
    December 31,Balance at

    
    recognized in

    
    comprehensive

    
    and

    
    into

    
    out of

    
    December 31,

    
    2009 recognizedLevel 3
    
    January 1, 2009

    
    net income*

    
    income

    
    settlements

    
    Level 3

    
    Level 3

    
    2009

    
    in net income*(in millions)Fixed maturity securities:Asset-backed securities:Residential mortgage-backed
securities
    
    $
    782
    
    
    $
    (32
    )
    
    $
    117
    
    
    $
    (52
    )
    
    $
    71
    
    
    $
    (257
    )
    
    $
    629
    
    
    $
    (12
    )Commercial mortgage-backed
securities
    
    
    186
    
    
    
    (170
    )
    
    
    185
    
    
    
    (24
    )
    
    
    28
    
    
    
    (82
    )
    
    
    123
    
    
    
    (175
    )Other asset-backed securities
    
    
    139
    
    
    
    (26
    )
    
    
    56
    
    
    
    180
    
    
    
    153
    
    
    
    (154
    )
    
    
    348
    
    
    
    -Total asset-backed securities
    
    
    1,107
    
    
    
    (228
    )
    
    
    358
    
    
    
    104
    
    
    
    252
    
    
    
    (493
    )
    
    
    1,100
    
    
    
    (187
    )States, municipalities and
political
subdivisions - tax-exempt
securities
    
    
    750
    
    
    
    -
    
    
    
    72
    
    
    
    (66
    )
    
    
    -
    
    
    
    -
    
    
    
    756
    
    
    
    -Corporate and other taxable bonds
    
    
    622
    
    
    
    (10
    )
    
    
    126
    
    
    
    75
    
    
    
    23
    
    
    
    (227
    )
    
    
    609
    
    
    
    (11
    )Redeemable preferred stock
    
    
    13
    
    
    
    (9
    )
    
    
    9
    
    
    
    7
    
    
    
    -
    
    
    
    (18
    )
    
    
    2
    
    
    
    (9
    )Total fixed maturity securities
    
    
    2,492
    
    
    
    (247
    )
    
    
    565
    
    
    
    120
    
    
    
    275
    
    
    
    (738
    )
    
    
    2,467
    
    
    
    (207
    )Equity securities
    
    
    210
    
    
    
    -
    
    
    
    (1
    )
    
    
    5
    
    
    
    -
    
    
    
    (203
    )
    
    
    11
    
    
    
    -Derivative financial instruments, net
    
    
    (87
    )
    
    
    14
    
    
    
    -
    
    
    
    62
    
    
    
    -
    
    
    
    -
    
    
    
    (11
    )
    
    
    (10
    )Short term investments
    
    
    -
    
    
    
    -
    
    
    
    1
    
    
    
    7
    
    
    
    -
    
    
    
    (8
    )
    
    
    -
    
    
    
    -Life settlement contracts
    
    
    129
    
    
    
    34
    
    
    
    -
    
    
    
    (33
    )
    
    
    -
    
    
    
    -
    
    
    
    130
    
    
    
    10Discontinued operations investments
    
    
    15
    
    
    
    (4
    )
    
    
    7
    
    
    
    (2
    )
    
    
    -
    
    
    
    -
    
    
    
    16
    
    
    
    -Separate account business
    
    
    38
    
    
    
    (1
    )
    
    
    5
    
    
    
    (1
    )
    
    
    -
    
    
    
    (3
    )
    
    
    38
    
    
    
    -Total
    
    $
    2,797
    
    
    $
    (204
    )
    
    $
    577
    
    
    $
    158
    
    
    $
    275
    
    
    $
    (952
    )
    
    $
    2,651
    
    
    $
    (207
    )
 94




---



##### Table of Contents



Net realizedNet realized

    
    investment gainsinvestment

    
    (losses) and netgains (losses)

    
    change in

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net unrealizedand net

    
    unrealized

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    gains (losses) onchange in

    
    appreciation

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Level 3 assetsunrealized

    
    (depreciation)

    
    Purchases,

    
    
    
    
    
    
    
    
    
    
    
    
    
    and liabilitiesappreciation

    
    recognized in

    
    sales,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    held atBalance at

    
    (depreciation)

    
    other

    
    issuances

    
    Transfers

    
    Transfers

    
    Balance at

    
    December 31,January 1,

    
    recognized in

    
    comprehensive

    
    and

    
    into

    
    out of

    
    December 31,

    
    2008 recognizedLevel 3
    
    2008

    
    net loss*

    
    loss

    
    settlements

    
    Level 3

    
    Level 3

    
    2008

    
    in net loss*(in millions)Fixed maturity securities
    
    $
    2,684
    
    
    $
    (379
    )
    
    $
    (505
    )
    
    $
    (178
    )
    
    $
    1,475
    
    
    $
    (605
    )
    
    $
    2,492
    
    
    $
    (378
    )Equity securities
    
    
    196
    
    
    
    (16
    )
    
    
    6
    
    
    
    25
    
    
    
    22
    
    
    
    (23
    )
    
    
    210
    
    
    
    (4
    )Derivative financial instruments, net
    
    
    2
    
    
    
    (10
    )
    
    
    -
    
    
    
    (79
    )
    
    
    -
    
    
    
    -
    
    
    
    (87
    )
    
    
    (89
    )Short term investments
    
    
    85
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (85
    )
    
    
    -
    
    
    
    -Life settlement contracts
    
    
    115
    
    
    
    48
    
    
    
    -
    
    
    
    (34
    )
    
    
    -
    
    
    
    -
    
    
    
    129
    
    
    
    17Discontinued operations investments
    
    
    42
    
    
    
    (1
    )
    
    
    (5
    )
    
    
    (4
    )
    
    
    -
    
    
    
    (17
    )
    
    
    15
    
    
    
    -Separate account business
    
    
    30
    
    
    
    -
    
    
    
    -
    
    
    
    (18
    )
    
    
    26
    
    
    
    -
    
    
    
    38
    
    
    
    -Total
    
    $
    3,154
    
    
    $
    (358
    )
    
    $
    (504
    )
    
    $
    (288
    )
    
    $
    1,523
    
    
    $
    (730
    )
    
    $
    2,797
    
    
    $
    (454
    )
 95




---



##### Table of Contents



*Net realized and unrealized gains and losses shown above are recognized in Net income (loss) as
follows:
 
 Major Category of Assets and Liabilities
    
    Consolidated Statement 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, other
    
    Net realized investment gains (losses)Life settlement contracts
    
    Other revenues
   Fixed Maturity Securities
  Equity Securities
  Derivative Financial Instruments
  96




---



##### Table of Contents



Short Term Investments
  Life Settlement Contracts
  Discontinued Operations Investments
  Separate Account Business
  97




---



##### Table of Contents



Financial Assets and Liabilities Not Measured at Fair Value
  Financial Assets and Liabilities
 December 31
    
    2009
    
    2008(In millions)
    
    Carrying
    
    Estimated
    
    Carrying
    
    EstimatedAmount
    
    Fair Value
    
    Amount
    
    Fair ValueFinancial assetsNotes receivable for the issuance of common stock
    
    $
    30
    
    
    $
    29
    
    
    $
    42
    
    
    $
    42Financial liabilitiesPremium deposits and annuity contracts
    
    $
    105
    
    
    $
    106
    
    
    $
    111
    
    
    $
    113Long term debt
    
    
    2,303
    
    
    
    2,290
    
    
    
    2,058
    
    
    
    1,585
      98




---



##### Table of Contents



Note E. Income Taxes
       Tax Reconciliation
 Years ended December 31
    
    2009
    
    2008
    
    2007(In millions)Income tax (expense) benefit at statutory rates
    
    $
    (189
    )
    
    $
    198
    
    
    $
    (428
    )Tax benefit from tax exempt income
    
    
    119
    
    
    
    118
    
    
    
    100Foreign taxes and credits
    
    
    19
    
    
    
    (2
    )
    
    
    (3
    )Other tax (expense) benefit, including IRS settlements
    
    
    (6
    )
    
    
    (3
    )
    
    
    14Effective income tax (expense) benefit
    
    $
    (57
    )
    
    $
    311
    
    
    $
    (317
    )
  99




---



##### Table of Contents



Current and Deferred Taxes
 Years ended December 31
    
    2009
    
    2008
    
    2007(In millions)Current tax (expense) benefit
    
    $
    120
    
    
    $
    137
    
    
    $
    (418
    )Tax benefit recognized for uncertainties in the income statement
    
    
    -
    
    
    
    -
    
    
    
    2Deferred tax (expense) benefit
    
    
    (177
    )
    
    
    174
    
    
    
    99Total income tax (expense) benefit
    
    $
    (57
    )
    
    $
    311
    
    
    $
    (317
    )
   Components of Net Deferred Tax Asset
 December 31
    
    2009
    
    2008(In millions)Deferred Tax Assets:Insurance reserves:Property and casualty claim and claim adjustment expense reserves
    
    $
    606
    
    
    $
    694Unearned premium reserves
    
    
    111
    
    
    
    90Receivables
    
    
    185
    
    
    
    199Employee benefits
    
    
    279
    
    
    
    306Life settlement contracts
    
    
    72
    
    
    
    73Investment valuation differences
    
    
    316
    
    
    
    496Net unrealized losses
    
    
    -
    
    
    
    1,905Net loss and tax credits carried forward
    
    
    56
    
    
    
    24Other assets
    
    
    153
    
    
    
    163Gross deferred tax assets
    
    
    1,778
    
    
    
    3,950Deferred Tax Liabilities:Deferred acquisition costs
    
    
    297
    
    
    
    301Net unrealized gains
    
    
    5
    
    
    
    -Other liabilities
    
    
    143
    
    
    
    156Gross deferred tax liabilities
    
    
    445
    
    
    
    457Net deferred tax asset
    
    $
    1,333
    
    
    $
    3,493
  100




---



##### Table of Contents



Note F. Claim and Claim Adjustment Expense Reserves
    101




---



##### Table of Contents



Reconciliation of Claim and Claim Adjustment Expense Reserves
 As of and for the years ended December 31
    
    2009
    
    2008
    
    2007(In millions)Reserves, beginning of year:Gross
    
    $
    27,593
    
    
    $
    28,588
    
    
    $
    29,636Ceded
    
    
    6,288
    
    
    
    7,056
    
    
    
    8,191Net reserves, beginning of year
    
    
    21,305
    
    
    
    21,532
    
    
    
    21,445Net incurred claim and claim adjustment expenses:Provision for insured events of current year
    
    
    4,793
    
    
    
    5,193
    
    
    
    4,939(Decrease) increase in provision for insured events of prior years
    
    
    (240
    )
    
    
    (5
    )
    
    
    231Amortization of discount
    
    
    122
    
    
    
    123
    
    
    
    120Total net incurred (a)
    
    
    4,675
    
    
    
    5,311
    
    
    
    5,290Net payments attributable to:Current year events
    
    
    917
    
    
    
    1,034
    
    
    
    867Prior year events
    
    
    3,942
    
    
    
    4,328
    
    
    
    4,447Reinsurance recoverable against net reserve transferred under
retroactive reinsurance agreements
    
    
    (3
    )
    
    
    (10
    )
    
    
    (17
    )Total net payments
    
    
    4,856
    
    
    
    5,352
    
    
    
    5,297Foreign currency translation adjustment
    
    
    98
    
    
    
    (186
    )
    
    
    94Net reserves, end of year
    
    
    21,222
    
    
    
    21,305
    
    
    
    21,532Ceded reserves, end of year
    
    
    5,594
    
    
    
    6,288
    
    
    
    7,056Gross reserves, end of year
    
    $
    26,816
    
    
    $
    27,593
    
    
    $
    28,588
 (a)
    
    Total net incurred above does not agree to Insurance claims and policyholders benefits as
reflected on the Consolidated Statements of Operations due to expenses incurred related to
uncollectible reinsurance and loss deductible receivables, and benefit expenses related to
future policy benefits and policyholders funds, which are not reflected in the table above.
  Reserve Development
 Years ended December 31
    
    2009
    
    2008
    
    2007(In millions)Asbestos and environmental pollution
    
    $
    155
    
    
    $
    110
    
    
    $
    7Other
    
    
    (396
    )
    
    
    (117
    )
    
    
    213Property and casualty reserve development
    
    
    (241
    )
    
    
    (7
    )
    
    
    220Life reserve development in life company
    
    
    1
    
    
    
    2
    
    
    
    11Total
    
    $
    (240
    )
    
    $
    (5
    )
    
    $
    231
 102




---



##### Table of Contents



December 31, 2009
 Gross and Net CarriedClaim and Claim Adjustment Expense Reserves
    
    
    
    
    
    
    
    
    
    Life &
    
    CorporateCNA
    
    CNA
    
    Group
    
    & Other(In millions)
    
    Specialty
    
    Commercial
    
    Non-Core
    
    Non-Core
    
    TotalGross Case Reserves
    
    $
    2,208
    
    
    $
    6,510
    
    
    $
    2,502
    
    
    $
    1,548
    
    
    $
    12,768Gross IBNR Reserves
    
    
    4,714
    
    
    
    6,495
    
    
    
    381
    
    
    
    2,458
    
    
    
    14,048Total Gross Carried Claim and Claim
Adjustment Expense Reserves
    
    $
    6,922
    
    
    $
    13,005
    
    
    $
    2,883
    
    
    $
    4,006
    
    
    $
    26,816Net Case Reserves
    
    $
    1,781
    
    
    $
    5,269
    
    
    $
    1,765
    
    
    $
    972
    
    
    $
    9,787Net IBNR Reserves
    
    
    4,085
    
    
    
    5,580
    
    
    
    255
    
    
    
    1,515
    
    
    
    11,435Total Net Carried Claim and Claim
Adjustment Expense Reserves
    
    $
    5,866
    
    
    $
    10,849
    
    
    $
    2,020
    
    
    $
    2,487
    
    
    $
    21,222December 31, 2008Gross and Net CarriedClaim and Claim Adjustment Expense Reserves
    
    
    
    
    
    
    
    
    
    Life &
    
    CorporateCNA
    
    CNA
    
    Group
    
    & Other(In millions)
    
    Specialty
    
    Commercial
    
    Non-Core
    
    Non-Core
    
    TotalGross Case Reserves
    
    $
    2,105
    
    
    $
    6,772
    
    
    $
    2,473
    
    
    $
    1,823
    
    
    $
    13,173Gross IBNR Reserves
    
    
    4,616
    
    
    
    6,837
    
    
    
    389
    
    
    
    2,578
    
    
    
    14,420Total Gross Carried Claim and Claim
Adjustment Expense Reserves
    
    $
    6,721
    
    
    $
    13,609
    
    
    $
    2,862
    
    
    $
    4,401
    
    
    $
    27,593Net Case Reserves
    
    $
    1,639
    
    
    $
    5,505
    
    
    $
    1,656
    
    
    $
    1,126
    
    
    $
    9,926Net IBNR Reserves
    
    
    3,896
    
    
    
    5,673
    
    
    
    249
    
    
    
    1,561
    
    
    
    11,379Total Net Carried Claim and Claim
Adjustment Expense Reserves
    
    $
    5,535
    
    
    $
    11,178
    
    
    $
    1,905
    
    
    $
    2,687
    
    
    $
    21,305
  A&E Reserves
    103




---



##### Table of Contents



A&E Reserves
 December 31, 2009
    
    December 31, 2008Environmental
    
    
    
    
    
    EnvironmentalAsbestos
    
    Pollution
    
    Asbestos
    
    Pollution(In millions)Gross reserves
    
    $
    2,046
    
    
    $
    482
    
    
    $
    2,112
    
    
    $
    392Ceded reserves
    
    
    (909
    )
    
    
    (196
    )
    
    
    (910
    )
    
    
    (130
    )Net reserves
    
    $
    1,137
    
    
    $
    286
    
    
    $
    1,202
    
    
    $
    262
 Asbestos
   104




---



##### Table of Contents



Asbestos Reserves
 December 31
    
    2009
    
    2008
    
    2007(In millions)Beginning net reserves
    
    $
    1,202
    
    
    $
    1,322
    
    
    $
    1,452Unfavorable net prior year claim and
claim adjustment expense reserve
development
    
    
    79
    
    
    
    27
    
    
    
    6Paid claims, net of reinsurance recoveries
    
    
    (144
    )
    
    
    (147
    )
    
    
    (136
    )Ending net reserves
    
    $
    1,137
    
    
    $
    1,202
    
    
    $
    1,322
    A.P. Green:
 Direct
Action Case  Montana: Pennock, et al. v. Maryland Casualty, et al.
 105




---



##### Table of Contents



Environmental Pollution
   Environmental Pollution Reserves
 December 31
    
    2009
    
    2008
    
    2007(In millions)Beginning net reserves
    
    $
    262
    
    
    $
    242
    
    
    $
    285Unfavorable net prior year claim and
claim adjustment expense reserve
development
    
    
    76
    
    
    
    83
    
    
    
    1Paid claims, net of reinsurance recoveries
    
    
    (52
    )
    
    
    (63
    )
    
    
    (44
    )Ending net reserves
    
    $
    286
    
    
    $
    262
    
    
    $
    242
 Net Prior Year Development
  106




---



##### Table of Contents



2009 Net Prior Year Development
 Corporate(In millions)
    
    CNA
    
    CNA
    
    & Other Non-Specialty
    
    Commercial
    
    Core
    
    TotalPretax (favorable) unfavorable net prior year
claim and allocated claim adjustment expense
reserve development:Core (Non-A&E)
    
    $
    (218
    )
    
    $
    (255
    )
    
    $
    29
    
    
    $
    (444
    )A&E
    
    
    -
    
    
    
    -
    
    
    
    155
    
    
    
    155Pretax (favorable) unfavorable net prior year
development before impact of premium development
    
    
    (218
    )
    
    
    (255
    )
    
    
    184
    
    
    
    (289
    )Pretax (favorable) unfavorable premium development
    
    
    (6
    )
    
    
    87
    
    
    
    -
    
    
    
    81Total pretax (favorable) unfavorable net prior
year development
    
    $
    (224
    )
    
    $
    (168
    )
    
    $
    184
    
    
    $
    (208
    )2008 Net Prior Year DevelopmentCorporate(In millions)
    
    CNA
    
    CNA
    
    & Other Non-Specialty
    
    Commercial
    
    Core
    
    TotalPretax (favorable) unfavorable net prior year claim and
allocated claim adjustment expense reserve development:Core (Non-A&E)
    
    $
    (97
    )
    
    $
    (101
    )
    
    $
    13
    
    
    $
    (185
    )A&E
    
    
    -
    
    
    
    -
    
    
    
    110
    
    
    
    110Pretax (favorable) unfavorable net prior year development
before impact of premium development
    
    
    (97
    )
    
    
    (101
    )
    
    
    123
    
    
    
    (75
    )Pretax (favorable) unfavorable premium development
    
    
    (9
    )
    
    
    5
    
    
    
    (1
    )
    
    
    (5
    )Total pretax (favorable) unfavorable net prior year development
    
    $
    (106
    )
    
    $
    (96
    )
    
    $
    122
    
    
    $
    (80
    )
 107




---



##### Table of Contents



2007 Net Prior Year Development
 Corporate(In millions)
    
    CNA
    
    CNA
    
    & Other Non-Specialty
    
    Commercial
    
    Core
    
    TotalPretax (favorable) unfavorable net prior year claim and
allocated claim adjustment expense reserve development:Core (Non-A&E)
    
    $
    35
    
    
    $
    (164
    )
    
    $
    84
    
    
    $
    (45
    )A&E
    
    
    -
    
    
    
    -
    
    
    
    7
    
    
    
    7Pretax (favorable) unfavorable net prior year development
before impact of premium development
    
    
    35
    
    
    
    (164
    )
    
    
    91
    
    
    
    (38
    )Pretax favorable premium development
    
    
    (11
    )
    
    
    (19
    )
    
    
    (5
    )
    
    
    (35
    )Total pretax (favorable) unfavorable net prior year development
    
    $
    24
    
    
    $
    (183
    )
    
    $
    86
    
    
    $
    (73
    )
 108




---



##### Table of Contents



2009 Net Prior Year Development
 CNA Specialty
       CNA Commercial
     109




---



##### Table of Contents



Corporate & Other Non-Core
  2008 Net Prior Year Development
 CNA Specialty
    110




---



##### Table of Contents



CNA Commercial
     Corporate & Other Non-Core
   111




---



##### Table of Contents



2007 Net Prior Year Development
 CNA Specialty
       CNA Commercial
      112




---



##### Table of Contents



Corporate & Other Non-Core
   Note G. Legal Proceedings and Contingent Liabilities
 Insurance Brokerage Antitrust Litigation
 In re Insurance Brokerage Antitrust Litigation
  Asbestos and Environmental Pollution (A&E) Reserves
  Other Litigation
  113




---



##### Table of Contents



Note H. Reinsurance
    Components of Reinsurance Receivables
 December 31
    
    2009
    
    2008(In millions)Reinsurance receivables related to insurance reserves:Ceded claim and claim adjustment expenses
    
    $
    5,594
    
    
    $
    6,288Ceded future policy benefits
    
    
    859
    
    
    
    903Ceded policyholders funds
    
    
    39
    
    
    
    39Reinsurance receivables related to paid losses
    
    
    440
    
    
    
    531Reinsurance receivables
    
    
    6,932
    
    
    
    7,761Allowance for uncollectible reinsurance
    
    
    (351
    )
    
    
    (366
    )Reinsurance receivables, net of allowance for uncollectible reinsurance
    
    $
    6,581
    
    
    $
    7,395
    114




---



##### Table of Contents



Components of Earned Premiums
 Assumed/Direct
    
    Assumed
    
    Ceded
    
    Net
    
    Net %(In millions)2009 Earned PremiumsProperty and casualty
    
    $
    8,028
    
    
    $
    67
    
    
    $
    1,968
    
    
    $
    6,127
    
    
    
    1.1
    %Accident and health
    
    
    550
    
    
    
    51
    
    
    
    7
    
    
    
    594
    
    
    
    8.6Life
    
    
    84
    
    
    
    -
    
    
    
    84
    
    
    
    -
    
    
    
    -Total earned premiums
    
    $
    8,662
    
    
    $
    118
    
    
    $
    2,059
    
    
    $
    6,721
    
    
    
    1.8
    %2008 Earned PremiumsProperty and casualty
    
    $
    8,496
    
    
    $
    164
    
    
    $
    2,121
    
    
    $
    6,539
    
    
    
    2.5
    %Accident and health
    
    
    593
    
    
    
    46
    
    
    
    28
    
    
    
    611
    
    
    
    7.5Life
    
    
    99
    
    
    
    -
    
    
    
    98
    
    
    
    1
    
    
    
    -Total earned premiums
    
    $
    9,188
    
    
    $
    210
    
    
    $
    2,247
    
    
    $
    7,151
    
    
    
    2.9
    %2007 Earned PremiumsProperty and casualty
    
    $
    9,097
    
    
    $
    118
    
    
    $
    2,349
    
    
    $
    6,866
    
    
    
    1.7
    %Accident and health
    
    
    660
    
    
    
    76
    
    
    
    119
    
    
    
    617
    
    
    
    12.3Life
    
    
    76
    
    
    
    -
    
    
    
    75
    
    
    
    1
    
    
    
    -Total earned premiums
    
    $
    9,833
    
    
    $
    194
    
    
    $
    2,543
    
    
    $
    7,484
    
    
    
    2.6
    %Included in the direct and ceded earned premiums for the years ended December 31, 2009, 2008
and 2007 are $1,385 million, $1,326 million and $1,429 million related to business that is 100%
reinsured as a result of a significant captive program.Components of Written PremiumsAssumed/Direct
    
    Assumed
    
    Ceded
    
    Net
    
    Net %(In millions)2009 Written PremiumsProperty and casualty
    
    $
    7,981
    
    
    $
    66
    
    
    $
    1,916
    
    
    $
    6,131
    
    
    
    1.1
    %Accident and health
    
    
    539
    
    
    
    50
    
    
    
    6
    
    
    
    583
    
    
    
    8.6Life
    
    
    83
    
    
    
    -
    
    
    
    83
    
    
    
    -
    
    
    
    -Total written premiums
    
    $
    8,603
    
    
    $
    116
    
    
    $
    2,005
    
    
    $
    6,714
    
    
    
    1.7
    %2008 Written PremiumsProperty and casualty
    
    $
    8,413
    
    
    $
    182
    
    
    $
    2,109
    
    
    $
    6,486
    
    
    
    2.8
    %Accident and health
    
    
    572
    
    
    
    51
    
    
    
    18
    
    
    
    605
    
    
    
    8.4Life
    
    
    70
    
    
    
    -
    
    
    
    69
    
    
    
    1
    
    
    
    -Total written premiums
    
    $
    9,055
    
    
    $
    233
    
    
    $
    2,196
    
    
    $
    7,092
    
    
    
    3.3
    %2007 Written PremiumsProperty and casualty
    
    $
    8,925
    
    
    $
    123
    
    
    $
    2,272
    
    
    $
    6,776
    
    
    
    1.8
    %Accident and health
    
    
    646
    
    
    
    75
    
    
    
    113
    
    
    
    608
    
    
    
    12.3Life
    
    
    81
    
    
    
    -
    
    
    
    80
    
    
    
    1
    
    
    
    -Total written premiums
    
    $
    9,652
    
    
    $
    198
    
    
    $
    2,465
    
    
    $
    7,385
    
    
    
    2.7
    %
 115




---



##### Table of Contents



Components of Life Insurance Inforce
 Direct
    
    Assumed
    
    Ceded
    
    Net(In millions)2009
    
    $
    9,159
    
    
    $
    -
    
    
    $
    9,144
    
    
    $
    152008
    
    $
    10,805
    
    
    $
    -
    
    
    $
    10,790
    
    
    $
    152007
    
    $
    14,089
    
    
    $
    1
    
    
    $
    14,071
    
    
    $
    19
  116




---



##### Table of Contents



Note I. Debt
  DebtDecember 31
    
    2009
    
    2008(In millions)Variable rate debt:Credit Facility  variable rate and term, due August 1, 2012
    
    $
    150
    
    
    $
    250Debenture  CNA Surety, face amount of $31, due April 29, 2034
    
    
    31
    
    
    
    31Senior notes:6.000%, face amount of $400, due August 15, 2011
    
    
    399
    
    
    
    3998.375%, face amount of $70, due August 15, 2012
    
    
    69
    
    
    
    695.850%, face amount of $549, due December 15, 2014
    
    
    547
    
    
    
    5476.500%, face amount of $350, due August 15, 2016
    
    
    347
    
    
    
    3486.950%, face amount of $150, due January 15, 2018
    
    
    149
    
    
    
    1497.350%, face amount of $350, due November 15, 2019
    
    
    347
    
    
    
    -Debenture, 7.250%, face amount of $243, due November 15, 2023
    
    
    241
    
    
    
    241Other debt, 1.000%-6.530%, due through 2019
    
    
    23
    
    
    
    24Total debt
    
    $
    2,303
    
    
    $
    2,058
      Maturity of Debt(In millions)2010
    
    $
    -2011
    
    
    4002012
    
    
    2202013
    
    
    -2014
    
    
    549Thereafter
    
    
    1,147Less discount
    
    
    (13
    )Total
    
    $
    2,303
 117




---



##### Table of Contents



Note J. Benefit Plans
 Pension and Postretirement Healthcare and Life Insurance Benefit Plans
     118




---



##### Table of Contents



Benefit Obligations and Accrued Benefit CostsPension Benefits
    
    Postretirement Benefits2009
    
    2008
    
    2009
    
    2008(In millions)Benefit obligation at January 1
    
    $
    2,529
    
    
    $
    2,503
    
    
    $
    150
    
    
    $
    162Changes in benefit obligation:Service cost
    
    
    17
    
    
    
    20
    
    
    
    1
    
    
    
    1Interest cost
    
    
    153
    
    
    
    147
    
    
    
    9
    
    
    
    9Participants contributions
    
    
    -
    
    
    
    -
    
    
    
    7
    
    
    
    7Plan amendments
    
    
    -
    
    
    
    2
    
    
    
    -
    
    
    
    -Actuarial (gain) loss
    
    
    153
    
    
    
    27
    
    
    
    5
    
    
    
    (10
    )Benefits paid
    
    
    (156
    )
    
    
    (149
    )
    
    
    (18
    )
    
    
    (19
    )Foreign currency translation and other
    
    
    6
    
    
    
    (21
    )
    
    
    1
    
    
    
    -Benefit obligations at December 31
    
    
    2,702
    
    
    
    2,529
    
    
    
    155
    
    
    
    150Fair value of plan assets at January 1
    
    
    1,884
    
    
    
    2,331
    
    
    
    -
    
    
    
    -Change in plan assets:Actual return on plan assets
    
    
    316
    
    
    
    (347
    )
    
    
    -
    
    
    
    -Company contributions
    
    
    67
    
    
    
    71
    
    
    
    11
    
    
    
    12Participants contributions
    
    
    -
    
    
    
    -
    
    
    
    7
    
    
    
    7Benefits paid
    
    
    (156
    )
    
    
    (149
    )
    
    
    (18
    )
    
    
    (19
    )Foreign currency translation and other
    
    
    6
    
    
    
    (22
    )
    
    
    -
    
    
    
    -Fair value of plan assets at December 31
    
    
    2,117
    
    
    
    1,884
    
    
    
    -
    
    
    
    -Funded status
    
    $
    (585
    )
    
    $
    (645
    )
    
    $
    (155
    )
    
    $
    (150
    )Amounts recognized on the Consolidated Balance
Sheets at December 31:Other assets
    
    $
    2
    
    
    $
    2
    
    
    $
    -
    
    
    $
    -Other liabilities
    
    
    (587
    )
    
    
    (647
    )
    
    
    (155
    )
    
    
    (150
    )Net amount recognized
    
    $
    (585
    )
    
    $
    (645
    )
    
    $
    (155
    )
    
    $
    (150
    )Amounts recognized in Accumulated other
comprehensive income,
not yet recognized in net periodic cost (benefit):Prior service credit
    
    $
    (1
    )
    
    $
    (1
    )
    
    $
    (97
    )
    
    $
    (113
    )Net actuarial loss
    
    
    748
    
    
    
    792
    
    
    
    32
    
    
    
    27Net amount recognized
    
    $
    747
    
    
    $
    791
    
    
    $
    (65
    )
    
    $
    (86
    )
  119




---



##### Table of Contents



Pension and Postretirement Plans with Accumulated Benefit Obligation in Excess of Plan Assets
  Pension Benefits
    
    Postretirement BenefitsDecember 31
    
    2009
    
    2008
    
    2009
    
    2008Accumulated benefit obligation
    
    $
    2,506
    
    
    $
    2,324
    
    
    $
    155
    
    
    $
    150Fair value of plan assets
    
    
    1,999
    
    
    
    1,793
    
    
    
    -
    
    
    
    -
  Years ended December 31
    
    2009
    
    2008
    
    2007(In millions)Pension benefitsService cost
    
    $
    17
    
    
    $
    20
    
    
    $
    23Interest cost on projected benefit obligation
    
    
    153
    
    
    
    147
    
    
    
    145Expected return on plan assets
    
    
    (145
    )
    
    
    (180
    )
    
    
    (174
    )Prior service cost amortization
    
    
    -
    
    
    
    -
    
    
    
    2Actuarial loss amortization
    
    
    25
    
    
    
    4
    
    
    
    11Net periodic pension cost (benefit)
    
    $
    50
    
    
    $
    (9
    )
    
    $
    7Postretirement benefitsService cost
    
    $
    1
    
    
    $
    1
    
    
    $
    2Interest cost on projected benefit obligation
    
    
    9
    
    
    
    9
    
    
    
    9Prior service cost amortization
    
    
    (16
    )
    
    
    (16
    )
    
    
    (18
    )Actuarial loss amortization
    
    
    1
    
    
    
    1
    
    
    
    3Net periodic postretirement benefit
    
    $
    (5
    )
    
    $
    (5
    )
    
    $
    (4
    )
  Years ended December 31
    
    2009
    
    2008
    
    2007(In millions)Pension and postretirement benefitsAmounts arising during the period
    
    $
    13
    
    
    $
    (546
    )
    
    $
    151Reclassification adjustment relating to prior service cost
    
    
    (16
    )
    
    
    (16
    )
    
    
    (16
    )Reclassification adjustment relating to actuarial loss
    
    
    26
    
    
    
    5
    
    
    
    14Total increase (decrease) in Other comprehensive income
    
    $
    23
    
    
    $
    (557
    )
    
    $
    149
  Pension
    
    Postretirement(In millions)
    
    Benefits
    
    BenefitsAmortization of prior service cost
    
    $
    -
    
    
    $
    (15
    )Amortization of actuarial loss
    
    
    23
    
    
    
    1Total estimated amounts to be recognized
    
    $
    23
    
    
    $
    (14
    )
 120




---



##### Table of Contents



Actuarial Assumptions for Benefit Obligations
 December 31
    
    2009
    
    2008Pension benefitsDiscount rate
    
    
    5.700
    %
    
    
    6.300
    %Expected long term rate of return
    
    
    8.000
    
    
    
    8.000Rate of compensation increases
    
    
    5.030
    
    
    
    5.830Postretirement benefitsDiscount rate
    
    
    5.500
    %
    
    
    6.300
    %
  Actuarial Assumptions for Net Cost or Benefit
 Years ended December 31
    
    2009
    
    2008
    
    2007Pension benefitsDiscount rate
    
    
    6.300
    %
    
    
    6.000
    %
    
    
    5.750
    %Expected long term rate of return
    
    
    8.000
    
    
    
    8.000
    
    
    
    8.000Rate of compensation increases
    
    
    5.830
    
    
    
    5.830
    
    
    
    5.830Postretirement benefitsDiscount rate
    
    
    6.300
    %
    
    
    5.875
    %
    
    
    5.625
    %
     121




---



##### Table of Contents



Total assets at fairDecember 31, 2009
    
    Level 1

    
    Level 2

    
    Level 3

    
    value(In millions)AssetsFixed maturity securities:Asset-backed securities
    
    $
    -
    
    
    $
    208
    
    
    $
    57
    
    
    $
    265Corporate and other taxable bonds
    
    
    17
    
    
    
    352
    
    
    
    -
    
    
    
    369States, municipalities and political
subdivisions  tax-exempt securities
    
    
    -
    
    
    
    10
    
    
    
    -
    
    
    
    10Total fixed maturity securities
    
    
    17
    
    
    
    570
    
    
    
    57
    
    
    
    644Equities
    
    
    339
    
    
    
    54
    
    
    
    5
    
    
    
    398Short term investments
    
    
    202
    
    
    
    -
    
    
    
    -
    
    
    
    202Limited partnerships
    
    
    -
    
    
    
    466
    
    
    
    396
    
    
    
    862Derivatives
    
    
    2
    
    
    
    -
    
    
    
    -
    
    
    
    2Investment contracts with insurance
company
    
    
    -
    
    
    
    -
    
    
    
    9
    
    
    
    9Total assets
    
    $
    560
    
    
    $
    1,090
    
    
    $
    467
    
    
    $
    2,117
    122




---



##### Table of Contents



Actual returnActual return
    
    on assets soldon assets still
    
    during theBalance at
    
    held at
    
    year ended
    
    Purchases,
    
    
    
    
    
    Balance atJanuary 1,
    
    December 31,
    
    December 31,
    
    sales, and
    
    Net transfers in
    
    December 31,Level 3
    
    2009
    
    2009
    
    2009
    
    settlements
    
    (out) of level 3
    
    2009(In millions)Fixed maturity securities:Asset-backed securities
    
    $
    54
    
    
    $
    -
    
    
    $
    9
    
    
    $
    (6
    )
    
    $
    -
    
    
    $
    57Equities
    
    
    2
    
    
    
    -
    
    
    
    -
    
    
    
    5
    
    
    
    (2
    )
    
    
    5Limited partnerships
    
    
    628
    
    
    
    169
    
    
    
    -
    
    
    
    65
    
    
    
    (466
    )
    
    
    396Investment contracts with
insurance company
    
    
    8
    
    
    
    1
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    9Total
    
    $
    692
    
    
    $
    170
    
    
    $
    9
    
    
    $
    64
    
    
    $
    (468
    )
    
    $
    467
  Estimated Future Minimum Benefit Payments to Participants
 Pension
    
    PostretirementBenefits
    
    Benefits(In millions)2010
    
    $
    170
    
    
    $
    112011
    
    
    174
    
    
    
    122012
    
    
    176
    
    
    
    122013
    
    
    181
    
    
    
    122014
    
    
    185
    
    
    
    122015-2019
    
    
    983
    
    
    
    61
  Savings Plans
     123




---



##### Table of Contents



Stock-Based Compensation
     Options and SARs Plan Activity
 2009Number
    
    Weight-Averageof Awards
    
    Option Price per AwardBalance at January 1
    
    
    1,763,550
    
    
    $
    31.43Awards granted
    
    
    526,100
    
    
    
    16.31Awards exercised
    
    
    -
    
    
    
    -Awards forfeited, cancelled or expired
    
    
    (386,950
    )
    
    
    28.95Balance at December 31
    
    
    1,902,700
    
    
    $
    27.76
  Options and SARs Plan Activity
 December 31, 2009
    
    Awards
    
    Awardsoutstanding
    
    exercisableNumber of shares
    
    
    1,796,268
    
    
    
    1,254,300Weighted-average exercise prices
    
    
    $ 28.33
    
    
    
    $ 30.63Aggregated intrinsic value
    
    
    $ 3 million
    
    
    $  -Weighted-average remaining contractual term
    
    
    4.64 years
    
    
    3.37 years
  Options and SARs Plan Activity
 Years ended December 31
    
    2009
    
    2008
    
    2007Weighted-average grant-date fair value
    
    $
    4.69
    
    
    $
    5.45
    
    
    $
    13.83Total intrinsic value of awards exercised
    
    $
    -
    
    
    $
    10 thousand
    
    
    $
    7 millionFair value of awards vested
    
    $
    4 million
    
    
    $
    3 million
    
    
    $
    2 million
  124




---



##### Table of Contents



Options and SARs Plan Activity
 Years ended December 31
    
    2009
    
    2008
    
    2007Weighted average expected life of the securities granted
    
    4.84 years
    
    
    4.54 years
    
    
    6.25 yearsEstimates of the underlying common stocks volatility
    
    
    39.95%
    
    
    
    24.82%
    
    
    
    20.75%Expected dividend yield
    
    
    0.0%
    
    
    
    1.4%
    
    
    
    0.0%Risk free interest rate
    
    
    2.0%
    
    
    
    2.8%
    
    
    
    4.7%
  Restricted Stock Activity
 2009Weighted-AverageNumber
    
    Grant-dateof Awards
    
    Fair valueBalance at January 1
    
    
    6,665
    
    
    $
    33.76Awards granted
    
    
    338,624
    
    
    
    13.43Awards vested
    
    
    (3,332
    )
    
    
    33.76Awards forfeited, cancelled or expired
    
    
    -
    
    
    
    -Balance at December 31
    
    
    341,957
    
    
    $
    13.63
 125




---



##### Table of Contents



Note K. Operating Leases, Commitments and Contingencies, and Guarantees
 Operating Leases
   Future Minimum Lease Payments and Sublease Receipts
 Future
    
    FutureMinimum
    
    MinimumLease
    
    SubleasePayments
    
    Receipts(In millions)2010
    
    $
    39
    
    
    $
    32011
    
    
    35
    
    
    
    32012
    
    
    31
    
    
    
    32013
    
    
    27
    
    
    
    22014
    
    
    15
    
    
    
    -Thereafter
    
    
    26
    
    
    
    -Total
    
    $
    173
    
    
    $
    11
 Commitments and Contingencies
    Guarantees
  126




---



##### Table of Contents



127




---



##### Table of Contents



Note L. Stockholders Equity and Statutory Accounting Practices
 2008 Senior Preferred
   
    
    The 2008 Senior Preferred is perpetual and is senior to CNAFs common stock and any
future preferred stock as to the payment of dividends and amounts payable upon any
liquidation, dissolution or winding up.
    
    No dividends may be declared on CNAFs common stock or any future preferred stock until
the 2008 Senior Preferred has been paid in full. Accordingly, the Company suspended
common stock dividend payments.
    
    The 2008 Senior Preferred is not convertible into any other securities and may only be
redeemed upon the mutual agreement of the Company and Loews.
    
    The 2008 Senior Preferred accrues cumulative dividends at an initial rate of 10% per
year. On the fifth anniversary of the issuance and every five years thereafter, the
dividend rate will reset to the higher of 10% or the then current 10-year U.S. Treasury
yield plus 700 basis points.
    
    Dividends are payable quarterly and any dividends not paid when due will be compounded
quarterly.
   Common Stock Dividends
  Share Repurchases
  Statutory Accounting Practices (Unaudited)
  128




---



##### Table of Contents



129




---



##### Table of Contents



Statutory Information
 Statutory Capital and Surplus
    
    Statutory Net Income (Loss)December 31
    
    Years Ended December 312009 (b)
    
    2008
    
    2009 (b)
    
    2008
    
    2007(In millions)Combined Continental
Casualty Companies (a)
    
    $
    9,338
    
    
    $
    7,819
    
    
    $
    17
    
    
    $
    (172
    )
    
    $
    485Life company
    
    
    448
    
    
    
    487
    
    
    
    (65
    )
    
    
    (51
    )
    
    
    27
 
 (a)
    
    Represents the combined statutory surplus of CCC and its subsidiaries, including the Life
company.(b)
    
    Preliminary. 130




---



##### Table of Contents



Note M. Accumulated Other Comprehensive Income (Loss)
  Accumulated Other Comprehensive Income (Loss)
 December 31
    
    2009
    
    2008(In millions)Tax
    
    After-Tax
    
    Tax
    
    After-TaxCumulative foreign currency translation adjustment
    
    $
    -
    
    
    $
    87
    
    
    $
    -
    
    
    $
    (30
    )Net pension and postretirement benefit plans
    
    
    238
    
    
    
    (444
    )
    
    
    246
    
    
    
    (459
    )Net
unrealized gains (losses) on investments with OTTI losses
    
    
    86
    
    
    
    (159
    )
    
    
    -
    
    
    
    -Net unrealized gains (losses) on other investments
    
    
    (76
    )
    
    
    198
    
    
    
    1,918
    
    
    
    (3,454
    )Accumulated other comprehensive (income) loss
attributable to noncontrolling interests
    
    
    -
    
    
    
    (7
    )
    
    
    -
    
    
    
    19Accumulated other comprehensive loss
    
    $
    248
    
    
    $
    (325
    )
    
    $
    2,164
    
    
    $
    (3,924
    )
  131




---



##### Table of Contents



Note N. Business Segments
         132




---



##### Table of Contents



133




---



##### Table of Contents



CNA
    
    CNA
    
    Life & Group
    
    Corporate & OtherYear ended December 31, 2009
    
    Specialty
    
    Commercial
    
    Non-Core
    
    Non-Core
    
    Eliminations
    
    Total(In millions)Net written premiums (a)
    
    $
    2,684
    
    
    $
    3,448
    
    
    $
    583
    
    
    $
    1
    
    
    $
    (3
    )
    
    $
    6,713RevenuesNet earned premiums
    
    $
    2,697
    
    
    $
    3,432
    
    
    $
    595
    
    
    $
    -
    
    
    $
    (3
    )
    
    $
    6,721Net investment income
    
    
    526
    
    
    
    922
    
    
    
    664
    
    
    
    208
    
    
    
    -
    
    
    
    2,320Other revenues
    
    
    206
    
    
    
    61
    
    
    
    11
    
    
    
    10
    
    
    
    -
    
    
    
    288Total operating revenues
    
    
    3,429
    
    
    
    4,415
    
    
    
    1,270
    
    
    
    218
    
    
    
    (3
    )
    
    
    9,329Claims, benefits and expensesNet incurred claims and benefits
    
    
    1,536
    
    
    
    2,388
    
    
    
    1,084
    
    
    
    259
    
    
    
    -
    
    
    
    5,267Policyholders dividends
    
    
    9
    
    
    
    9
    
    
    
    5
    
    
    
    -
    
    
    
    -
    
    
    
    23Amortization of deferred acquisition costs
    
    
    624
    
    
    
    775
    
    
    
    18
    
    
    
    -
    
    
    
    -
    
    
    
    1,417Other insurance related expenses
    
    
    163
    
    
    
    435
    
    
    
    183
    
    
    
    3
    
    
    
    (3
    )
    
    
    781Other expenses
    
    
    179
    
    
    
    77
    
    
    
    69
    
    
    
    119
    
    
    
    -
    
    
    
    444Total claims, benefits and expenses
    
    
    2,511
    
    
    
    3,684
    
    
    
    1,359
    
    
    
    381
    
    
    
    (3
    )
    
    
    7,932Operating income (loss) from continuing operations
before income tax
    
    
    918
    
    
    
    731
    
    
    
    (89
    )
    
    
    (163
    )
    
    
    -
    
    
    
    1,397Income tax (expense) benefit on operating income (loss)
    
    
    (282
    )
    
    
    (208
    )
    
    
    73
    
    
    
    64
    
    
    
    -
    
    
    
    (353
    )Net operating income, after-tax, attributable to
noncontrolling interests
    
    
    (45
    )
    
    
    (17
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (62
    )Net operating income (loss) from continuing operations
attributable to CNA
    
    
    591
    
    
    
    506
    
    
    
    (16
    )
    
    
    (99
    )
    
    
    -
    
    
    
    982Net realized investment losses, net of participating
policyholders interests
    
    
    (186
    )
    
    
    (354
    )
    
    
    (235
    )
    
    
    (82
    )
    
    
    -
    
    
    
    (857
    )Income tax benefit on net realized investment losses
    
    
    64
    
    
    
    121
    
    
    
    82
    
    
    
    29
    
    
    
    -
    
    
    
    296Net realized investment (gains) losses, after-tax,
attributable to noncontrolling interests
    
    
    (1
    )
    
    
    1
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Net realized investment losses attributable to CNA
    
    
    (123
    )
    
    
    (232
    )
    
    
    (153
    )
    
    
    (53
    )
    
    
    -
    
    
    
    (561
    )Net income (loss) from continuing operations
attributable to CNA
    
    $
    468
    
    
    $
    274
    
    
    $
    (169
    )
    
    $
    (152
    )
    
    $
    -
    
    
    $
    421(a) Net written premiums relate to
business in property and casualty
companies only.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
 134




---



##### Table of Contents



CNA
    
    CNA
    
    Life & Group
    
    Corporate & OtherYear ended December 31, 2008
    
    Specialty
    
    Commercial
    
    Non-Core
    
    Non-Core
    
    Eliminations
    
    Total(In millions)Net written premiums (a)
    
    $
    2,719
    
    
    $
    3,770
    
    
    $
    604
    
    
    $
    1
    
    
    $
    (4
    )
    
    $
    7,090RevenuesNet earned premiums
    
    $
    2,755
    
    
    $
    3,787
    
    
    $
    612
    
    
    $
    1
    
    
    $
    (4
    )
    
    $
    7,151Net investment income
    
    
    354
    
    
    
    603
    
    
    
    484
    
    
    
    178
    
    
    
    -
    
    
    
    1,619Other revenues
    
    
    219
    
    
    
    65
    
    
    
    28
    
    
    
    14
    
    
    
    -
    
    
    
    326Total operating revenues
    
    
    3,328
    
    
    
    4,455
    
    
    
    1,124
    
    
    
    193
    
    
    
    (4
    )
    
    
    9,096Claims, benefits and expensesNet incurred claims and benefits
    
    
    1,700
    
    
    
    2,766
    
    
    
    1,104
    
    
    
    133
    
    
    
    -
    
    
    
    5,703Policyholders dividends
    
    
    13
    
    
    
    1
    
    
    
    6
    
    
    
    -
    
    
    
    -
    
    
    
    20Amortization of deferred acquisition costs
    
    
    618
    
    
    
    836
    
    
    
    13
    
    
    
    -
    
    
    
    -
    
    
    
    1,467Other insurance related expenses
    
    
    137
    
    
    
    343
    
    
    
    201
    
    
    
    17
    
    
    
    (4
    )
    
    
    694Other expenses
    
    
    198
    
    
    
    105
    
    
    
    24
    
    
    
    150
    
    
    
    -
    
    
    
    477Total claims, benefits and expenses
    
    
    2,666
    
    
    
    4,051
    
    
    
    1,348
    
    
    
    300
    
    
    
    (4
    )
    
    
    8,361Operating income (loss) from continuing operations
before income tax
    
    
    662
    
    
    
    404
    
    
    
    (224
    )
    
    
    (107
    )
    
    
    -
    
    
    
    735Income tax (expense) benefit on operating income (loss)
    
    
    (205
    )
    
    
    (101
    )
    
    
    116
    
    
    
    45
    
    
    
    -
    
    
    
    (145
    )Net operating income, after-tax, attributable to
noncontrolling interests
    
    
    (43
    )
    
    
    (14
    )
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (57
    )Net operating income (loss) from continuing operations
attributable to CNA
    
    
    414
    
    
    
    289
    
    
    
    (108
    )
    
    
    (62
    )
    
    
    -
    
    
    
    533Net realized investment losses, net of participating
policyholders interests
    
    
    (257
    )
    
    
    (518
    )
    
    
    (363
    )
    
    
    (159
    )
    
    
    -
    
    
    
    (1,297
    )Income tax benefit on net realized investment losses
    
    
    90
    
    
    
    183
    
    
    
    127
    
    
    
    56
    
    
    
    -
    
    
    
    456Net realized investment (gains) losses, after-tax,
attributable to noncontrolling interests
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Net realized investment losses attributable to CNA
    
    
    (167
    )
    
    
    (335
    )
    
    
    (236
    )
    
    
    (103
    )
    
    
    -
    
    
    
    (841
    )Net income (loss) from continuing operations
attributable to CNA
    
    $
    247
    
    
    $
    (46
    )
    
    $
    (344
    )
    
    $
    (165
    )
    
    $
    -
    
    
    $
    (308
    )(a) Net written premiums relate to
business in property and casualty
companies only.December 31, 2008(In millions)Reinsurance receivables
    
    $
    1,234
    
    
    $
    2,528
    
    
    $
    1,907
    
    
    $
    2,092
    
    
    $
    -
    
    
    $
    7,761Insurance receivables
    
    $
    603
    
    
    $
    1,426
    
    
    $
    6
    
    
    $
    4
    
    
    $
    -
    
    
    $
    2,039Deferred acquisition costs
    
    $
    308
    
    
    $
    345
    
    
    $
    472
    
    
    $
    -
    
    
    $
    -
    
    
    $
    1,125Insurance reservesClaim and claim adjustment expenses
    
    $
    6,721
    
    
    $
    13,609
    
    
    $
    2,862
    
    
    $
    4,401
    
    
    $
    -
    
    
    $
    27,593Unearned premiums
    
    
    1,552
    
    
    
    1,697
    
    
    
    152
    
    
    
    5
    
    
    
    -
    
    
    
    3,406Future policy benefits
    
    
    -
    
    
    
    -
    
    
    
    7,529
    
    
    
    -
    
    
    
    -
    
    
    
    7,529Policyholders funds
    
    
    9
    
    
    
    15
    
    
    
    219
    
    
    
    -
    
    
    
    -
    
    
    
    243
 135




---



##### Table of Contents



CNA
    
    CNA
    
    Life & Group
    
    Corporate & OtherYear ended December 31, 2007
    
    Specialty
    
    Commercial
    
    Non-Core
    
    Non-Core
    
    Eliminations
    
    Total(In millions)Net written premiums (a)
    
    $
    2,766
    
    
    $
    4,007
    
    
    $
    607
    
    
    $
    6
    
    
    $
    (4
    )
    
    $
    7,382RevenuesNet earned premiums
    
    $
    2,759
    
    
    $
    4,104
    
    
    $
    618
    
    
    $
    7
    
    
    $
    (4
    )
    
    $
    7,484Net investment income
    
    
    493
    
    
    
    1,006
    
    
    
    622
    
    
    
    312
    
    
    
    -
    
    
    
    2,433Other revenues
    
    
    186
    
    
    
    49
    
    
    
    36
    
    
    
    8
    
    
    
    -
    
    
    
    279Total operating revenues
    
    
    3,438
    
    
    
    5,159
    
    
    
    1,276
    
    
    
    327
    
    
    
    (4
    )
    
    
    10,196Claims, benefits and expensesNet incurred claims and benefits
    
    
    1,725
    
    
    
    2,741
    
    
    
    1,312
    
    
    
    217
    
    
    
    -
    
    
    
    5,995Policyholders dividends
    
    
    6
    
    
    
    7
    
    
    
    1
    
    
    
    -
    
    
    
    -
    
    
    
    14Amortization of deferred acquisition costs
    
    
    600
    
    
    
    905
    
    
    
    15
    
    
    
    -
    
    
    
    -
    
    
    
    1,520Other insurance related expenses
    
    
    112
    
    
    
    413
    
    
    
    199
    
    
    
    13
    
    
    
    (4
    )
    
    
    733Other expenses
    
    
    168
    
    
    
    60
    
    
    
    43
    
    
    
    130
    
    
    
    -
    
    
    
    401Total claims, benefits and expenses
    
    
    2,611
    
    
    
    4,126
    
    
    
    1,570
    
    
    
    360
    
    
    
    (4
    )
    
    
    8,663Operating income (loss) from continuing operations
before income tax
    
    
    827
    
    
    
    1,033
    
    
    
    (294
    )
    
    
    (33
    )
    
    
    -
    
    
    
    1,533Income tax (expense) benefit on operating income (loss)
    
    
    (268
    )
    
    
    (324
    )
    
    
    135
    
    
    
    32
    
    
    
    -
    
    
    
    (425
    )Net operating income, after-tax, attributable to
noncontrolling interests
    
    
    (35
    )
    
    
    (12
    )
    
    
    -
    
    
    
    (1
    )
    
    
    -
    
    
    
    (48
    )Net operating income (loss) from continuing operations
attributable to CNA
    
    
    524
    
    
    
    697
    
    
    
    (159
    )
    
    
    (2
    )
    
    
    -
    
    
    
    1,060Net realized investment losses, net of participating
policyholders interests
    
    
    (70
    )
    
    
    (160
    )
    
    
    (56
    )
    
    
    (25
    )
    
    
    -
    
    
    
    (311
    )Income tax benefit on net realized investment losses
    
    
    25
    
    
    
    55
    
    
    
    20
    
    
    
    8
    
    
    
    -
    
    
    
    108Net realized investment (gains) losses, after-tax,
attributable to noncontrolling interests
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Net realized investment losses attributable to CNA
    
    
    (45
    )
    
    
    (105
    )
    
    
    (36
    )
    
    
    (17
    )
    
    
    -
    
    
    
    (203
    )Net income (loss) from continuing operations
attributable to CNA
    
    $
    479
    
    
    $
    592
    
    
    $
    (195
    )
    
    $
    (19
    )
    
    $
    -
    
    
    $
    857
 
 (a)
    
    Net written premiums relate to business in property and casualty companies only. 136




---



##### Table of Contents



Revenues by Line of BusinessYears ended December 31
    
    2009
    
    2008
    
    2007(In millions)CNA SpecialtyProfessional & Management Liability
    
    $
    2,339
    
    
    $
    2,140
    
    
    $
    2,462International
    
    
    171
    
    
    
    163
    
    
    
    145Surety
    
    
    474
    
    
    
    479
    
    
    
    468Warranty and Alternative Risks
    
    
    259
    
    
    
    289
    
    
    
    293CNA Specialty revenues
    
    
    3,243
    
    
    
    3,071
    
    
    
    3,368CNA CommercialCommercial Insurance
    
    
    2,685
    
    
    
    2,520
    
    
    
    3,464Business Insurance
    
    
    549
    
    
    
    573
    
    
    
    628International
    
    
    617
    
    
    
    665
    
    
    
    637CNA Select Risk
    
    
    210
    
    
    
    179
    
    
    
    270CNA Commercial revenues
    
    
    4,061
    
    
    
    3,937
    
    
    
    4,999Life & Group Non-CoreLife & Annuity
    
    
    211
    
    
    
    40
    
    
    
    257Health
    
    
    811
    
    
    
    688
    
    
    
    911Other
    
    
    13
    
    
    
    33
    
    
    
    52Life & Group Non-Core revenues
    
    
    1,035
    
    
    
    761
    
    
    
    1,220Corporate & Other Non-CoreCNA Re
    
    
    39
    
    
    
    14
    
    
    
    119Other
    
    
    97
    
    
    
    20
    
    
    
    183Corporate & Other Non-Core revenues
    
    
    136
    
    
    
    34
    
    
    
    302Eliminations
    
    
    (3
    )
    
    
    (4
    )
    
    
    (4
    )Total revenues
    
    $
    8,472
    
    
    $
    7,799
    
    
    $
    9,885
 137




---



##### Table of Contents



Note O. Discontinued Operations
   Discontinued OperationsYears ended December 31
    
    2009
    
    2008
    
    2007(In millions)Revenues:Net investment income
    
    $
    6
    
    
    $
    8
    
    
    $
    13Realized investment gains (losses) and other
    
    
    -
    
    
    
    2
    
    
    
    6Total revenues
    
    
    6
    
    
    
    10
    
    
    
    19Insurance related expenses
    
    
    8
    
    
    
    10
    
    
    
    25Income (loss) before income taxes
    
    
    (2
    )
    
    
    -
    
    
    
    (6
    )Income tax (expense) benefit
    
    
    -
    
    
    
    9
    
    
    
    -Income (loss) from discontinued operations, net of tax
    
    $
    (2
    )
    
    $
    9
    
    
    $
    (6
    )
   Discontinued OperationsDecember 31
    
    2009
    
    2008(In millions)Assets:Investments
    
    $
    141
    
    
    $
    157Reinsurance receivables
    
    
    4
    
    
    
    6Cash
    
    
    -
    
    
    
    -Other assets
    
    
    2
    
    
    
    1Total assets
    
    
    147
    
    
    
    164Liabilities:Insurance reserves
    
    
    140
    
    
    
    162Other liabilities
    
    
    8
    
    
    
    8Total liabilities
    
    
    148
    
    
    
    170Net liabilities of discontinued operations
    
    $
    (1
    )
    
    $
    (6
    )
  138




---



##### Table of Contents



Note P. Quarterly Financial Data (Unaudited)
  Quarterly Financial Data
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    FullFirst
    
    Second
    
    Third
    
    Fourth
    
    Year(In millions, except per share data)2009Revenues
    
    $
    1,638
    
    
    $
    2,096
    
    
    $
    2,340
    
    
    $
    2,398
    
    
    $
    8,472Income (loss) from continuing operations,
net of tax
    
    
    (185
    )
    
    
    120
    
    
    
    278
    
    
    
    270
    
    
    
    483Loss from discontinued operations, net of tax
    
    
    -
    
    
    
    (1
    )
    
    
    (1
    )
    
    
    -
    
    
    
    (2
    )Net income attributable to noncontrolling
interests, net of tax
    
    
    (10
    )
    
    
    (14
    )
    
    
    (14
    )
    
    
    (24
    )
    
    
    (62
    )Net income (loss) attributable to CNA
    
    $
    (195
    )
    
    $
    105
    
    
    $
    263
    
    
    $
    246
    
    
    $
    419Basic and Diluted Earnings (Loss) Per ShareIncome (loss) from continuing operations
attributable to CNA common stockholders
    
    $
    (0.84
    )
    
    $
    0.28
    
    
    $
    0.86
    
    
    $
    0.81
    
    
    $
    1.11Loss from discontinued operations
attributable to CNA common stockholders
    
    
    -
    
    
    
    (0.01
    )
    
    
    -
    
    
    
    -
    
    
    
    (0.01
    )Basic and diluted earnings (loss) per share
attributable to CNA common stockholders
    
    $
    (0.84
    )
    
    $
    0.27
    
    
    $
    0.86
    
    
    $
    0.81
    
    
    $
    1.10
 Quarterly Financial Data
    
    
    
    
    
    
    
    
    
    
    
    
    
    FullFirst
    
    Second
    
    Third
    
    Fourth
    
    Year(In millions, except per share data)2008Revenues
    
    $
    2,282
    
    
    $
    2,321
    
    
    $
    1,659
    
    
    $
    1,537
    
    
    $
    7,799Income (loss) from continuing
operations, net of tax
    
    
    200
    
    
    
    191
    
    
    
    (324
    )
    
    
    (318
    )
    
    
    (251
    )Income (loss) from discontinued
operations, net of tax
    
    
    (1
    )
    
    
    2
    
    
    
    9
    
    
    
    (1
    )
    
    
    9Net income attributable to
noncontrolling interests, net of tax
    
    
    (12
    )
    
    
    (12
    )
    
    
    (16
    )
    
    
    (17
    )
    
    
    (57
    )Net income (loss) attributable to CNA
    
    $
    187
    
    
    $
    181
    
    
    $
    (331
    )
    
    $
    (336
    )
    
    $
    (299
    )Basic and Diluted Earnings (Loss) Per
ShareIncome (loss) from continuing
operations attributable to CNA common
stockholders
    
    $
    0.70
    
    
    $
    0.66
    
    
    $
    (1.26
    )
    
    $
    (1.31
    )
    
    $
    (1.21
    )Income (loss) from discontinued
operations attributable to CNA common
stockholders
    
    
    (0.01
    )
    
    
    0.01
    
    
    
    0.03
    
    
    
    -
    
    
    
    0.03Basic and diluted earnings (loss) per
share attributable to CNA common
stockholders
    
    $
    0.69
    
    
    $
    0.67
    
    
    $
    (1.23
    )
    
    $
    (1.31
    )
    
    $
    (1.18
    )
  139




---



##### Table of Contents



Note Q. Related Party Transactions
    140




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal Control - Integrated Framework
     141




---



##### Table of Contents



Internal Control - Integrated Framework
  
 142




---



##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
     
 143




---



##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
    
 ITEM 9B. OTHER INFORMATION
  144




---



##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  FIRSTBECAMEPOSITION AND
    
    
    
    EXECUTIVEOFFICES HELD WITH
    
    
    
    OFFICER OF
    
    PRINCIPAL OCCUPATION DURING PAST FIVENAME
    
    REGISTRANT
    
    AGE
    
    CNA
    
    YEARSThomas F. Motamed
    
    Chief Executive Officer, CNA Financial Corporation
    
    61
    
    2009
    
    Chief Executive Officer of CNA Financial Corporation since January 1, 2009. From December 2002 to June 2008, Vice Chairman and Chief Operating Officer of The Chubb Corporation and President and Chief Operating Officer of Chubb & Son.D. Craig Mense
    
    Executive Vice President & Chief Financial Officer, CNA Financial Corporation
    
    58
    
    2004
    
    Executive Vice President and Chief Financial Officer of CNA Financial Corporation.George R. Fay
    
    Executive Vice President, Worldwide Property & Casualty Claim of the CNA insurance companies
    
    61
    
    2010
    
    Executive Vice President, Worldwide Property & Casualty Claim of the CNA insurance companies since July 2006. From July 1974 to July 2006, held various positions at The Chubb Corporation including Chief Services Officer.Larry A. Haefner
    
    Executive Vice President & Chief Actuary of the CNA insurance companies
    
    53
    
    2008
    
    Executive Vice President & Chief Actuary of the CNA insurance companies since April 2008. From October 2004 to April 2008, Vice President & Chief Actuary, Middle Market Business of The Travelers Insurance Companies.Jonathan D. Kantor
    
    Executive Vice President, General Counsel and Secretary, CNA Financial Corporation
    
    54
    
    1997
    
    Executive Vice President, General Counsel and Secretary of CNA Financial Corporation.Robert A. Lindemann
    
    President and Chief Operating Officer, CNA Commercial of the CNA insurance companies
    
    56
    
    2010
    
    President and Chief Operating Officer, CNA Commercial of the CNA insurance companies since August 2009. From September 2004 to August 2009, Chief Operating Officer, Commercial Markets and President, Middle Markets of Zurich Financial Services North America.Thomas Pontarelli
    
    Executive Vice President & Chief Administration Officer of the CNA insurance companies
    
    60
    
    2009
    
    Executive Vice President & Chief Administration Officer of the CNA insurance companies.Timothy J. Szerlong
    
    President, Worldwide Field Operations of the CNA insurance companies
    
    57
    
    2010
    
    President, Worldwide Field Operations of the CNA insurance companies since September 2009. From June 1974 to August 2009, held various positions at The Chubb Corporation including Senior Vice President and Eastern U.S. Field Operations Officer.Peter W. Wilson
    
    President and Chief Operating Officer, CNA Specialty of the CNA insurance companies
    
    50
    
    2009
    
    President and Chief Operating Officer, CNA Specialty of the CNA insurance companies since April 2009. From March 2002 to April 2009, Executive Vice President, Global Specialty Lines of the CNA insurance companies.
  145




---



##### Table of Contents



ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
 Equity Compensation Plan
  Executive Compensation Information
 December 31, 2009
 Number of securitiesNumber of securities to
    
    
    
    
    
    remaining available forbe issued upon
    
    Weighted average exercise
    
    future issuance underexercise of outstanding
    
    price of outstanding
    
    equity compensation plansoptions, warrants and
    
    options, warrants and
    
    (excluding securitiesrights
    
    rights
    
    reflected in column (a))(a)
    
    (b)
    
    (c)Plan CategoryEquity compensation plans approved by security holders
    
    
    2,244,657
    
    
    $
    25.61
    
    
    
    841,594Equity compensation plans not approved by security holders
    
    
    -
    
    
    
    -
    
    
    
    -Total
    
    
    2,244,657
    
    
    $
    25.61
    
    
    
    841,594
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  146




---



##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 Page(a)
    
    1
    
    FINANCIAL STATEMENTS:

    
    NumberStatements of Operations  Years Ended December 31, 2009, 2008, and 2007
    
    
    61Statements of Comprehensive Income (Loss)  Years Ended December 31, 2009, 2008 and 2007
    
    
    63Balance Sheets  December 31, 2009 and 2008
    
    
    64Statements of Cash Flows  Years Ended December 31, 2009, 2008 and 2007
    
    
    65Statements of Stockholders Equity  Years Ended December 31, 2009, 2008 and 2007
    
    
    67Notes to Consolidated Financial Statements
    
    
    68Report of Independent Registered Public Accounting Firm
    
    
    141(a)
    
    2
    
    FINANCIAL STATEMENT SCHEDULES:Schedule I
    
    Summary of Investments
    
    
    152Schedule II
    
    Condensed Financial Information of Registrant (Parent Company)
    
    
    153Schedule III
    
    Supplementary Insurance Information
    
    
    158Schedule IV
    
    Reinsurance
    
    
    159Schedule V
    
    Valuation and Qualifying Accounts
    
    
    159Schedule VI
    
    Supplemental Information Concerning Property and Casualty Insurance Operations
    
    
    159(a)
    
    3
    
    EXHIBITS:
 ExhibitDescription of Exhibit
    
    Number(3)
    
    Articles of incorporation and by-laws:Certificate of Incorporation of CNA Financial Corporation, as amended May 6, 1987 (Exhibit 3.1 to Form S-8 filed October 9, 1998 incorporated herein by reference)
    
    3.1Certificate of Amendment of Certificate of Incorporation, dated May 14, 1998 (Exhibit 3.1a to 2006 Form 10-K incorporated herein by reference)
    
    3.1.1Certificate of Amendment of Certificate of Incorporation, dated May 10, 1999 (Exhibit 3.1 to 1999 Form 10-K incorporated herein by reference)
    
    3.1.2By-Laws of CNA Financial Corporation, as amended October 24, 2007 (Exhibit 3ii.1 to Form 8-K filed October 29, 2007 incorporated herein by reference)
    
    3.2(4)
    
    Instruments defining the rights of security holders, including indentures:*Certificate of Designation, as filed with the Secretary of State of the State of Delaware on November 7, 2008, relating to the 2008 Senior Preferred Stock, no par value, of CNA Financial Corporation (Exhibit 3.1 to Form 8-K filed November 12, 2008 incorporated herein by reference)
    
    4.1Registration Rights Agreement, dated August 8, 2006, between CNA Financial Corporation and Loews Corporation (Exhibit 10.1 to August 8, 2006 Form 8-K incorporated herein by reference)
    
    4.2
 147




---



##### Table of Contents



(10)
    
    Material contracts:Credit Agreement among CNA Financial Corporation, J.P. Morgan Securities Inc., Citibank N.A., Bank of America, N.A., JPMorgan Chase Bank N.A., Wachovia Bank, N.A. and other lenders named therein, dated August 1, 2007 (Exhibit 99.1 to August 1, 2007 Form 8-K incorporated herein by reference)
    
    10.1Federal Income Tax Allocation Agreement, dated February 29, 1980 between CNA Financial Corporation and Loews Corporation (Exhibit 10.2 to 1987 Form 10-K incorporated herein by reference)
    
    10.2Investment Facilities and Services Agreement, dated January 1, 2006, by and among Loews/CNA Holdings, Inc., CNA Financial Corporation and the Participating Subsidiaries (Exhibit 10.3 to 2007 Form 10-K incorporated herein by reference)
    
    10.3Amendment to Investment Facilities and Services Agreement, dated January 1, 2007, by and among Loews/CNA Holdings, Inc. and CNA Financial Corporation (Exhibit 10.3.1 to 2007 Form 10-K incorporated herein by reference)
    
    10.3.1Acknowledgement to Investment Facilities and Services Agreement, dated January 1, 2006, by and among Loews/CNA Holdings, Inc., CNA Financial Corporation, and American Casualty Company of Reading, Pennsylvania (Exhibit 10.3.2 to 2007 Form 10-K incorporated herein by reference)
    
    10.3.2Acknowledgement to Investment Facilities and Services Agreement, dated January 1, 2006, by and among Loews/CNA Holdings, Inc., CNA Financial Corporation, and Columbia Casualty Company (Exhibit 10.3.3 to 2007 Form 10-K incorporated herein by reference)
    
    10.3.3Acknowledgement to Investment Facilities and Services Agreement, dated January 1, 2006, by and among Loews/CNA Holdings, Inc., CNA Financial Corporation, and Continental Assurance Company (Exhibit 10.3.4 to 2007 Form 10-K incorporated herein by reference)
    
    10.3.4Acknowledgement to Investment Facilities and Services Agreement, dated January 1, 2006, by and among Loews/CNA Holdings, Inc., CNA Financial Corporation, and Continental Casualty Company (Exhibit 10.3.5 to 2007 Form 10-K incorporated herein by reference)
    
    10.3.5Acknowledgement to Investment Facilities and Services Agreement, dated January 1, 2006, by and among Loews/CNA Holdings, Inc., CNA Financial Corporation, and National Fire Insurance Company of Hartford (Exhibit 10.3.6 to 2007 Form 10-K incorporated herein by reference)
    
    10.3.6Acknowledgement to Investment Facilities and Services Agreement, dated January 1, 2006, by and among Loews/CNA Holdings, Inc., CNA Financial Corporation, and The Continental Insurance Company (Exhibit 10.3.7 to 2007 Form 10-K incorporated herein by reference)
    
    10.3.7Acknowledgement to Investment Facilities and Services Agreement, dated January 1, 2006, by and among Loews/CNA Holdings, Inc., CNA Financial Corporation, and The Continental Insurance Company of New Jersey (Exhibit 10.3.8 to 2007 Form 10-K incorporated herein by reference)
    
    10.3.8
 148




---



##### Table of Contents



Acknowledgement to Investment Facilities and Services Agreement, dated January 1, 2006, by and among Loews/CNA Holdings, Inc., CNA Financial Corporation, and Transportation Insurance Company (Exhibit 10.3.9 to 2007 Form 10-K incorporated herein by reference)
    
    10.3.9Acknowledgement to Investment Facilities and Services Agreement, dated January 1, 2006, by and among Loews/CNA Holdings, Inc., CNA Financial Corporation, and Valley Forge Insurance Company (Exhibit 10.3.10 to 2007 Form 10-K incorporated herein by reference)
    
    10.3.10Acknowledgment to Investment Facilities and Services Agreement, dated January 1, 2008, by and among Loews/CNA Holdings, Inc., CNA Financial Corporation, and Continental Reinsurance Corporation International Limited (Exhibit 10.5 to March 31, 2008 Form 10-Q incorporated herein by reference)
    
    10.3.11Acknowledgment to Investment Facilities and Services Agreement, dated January 1, 2008, by and among Loews/CNA Holdings, Inc., CNA Financial Corporation, and North Rock Insurance Company Limited (Exhibit 10.6 to March 31, 2008 Form 10-Q incorporated herein by reference)
    
    10.3.12Acknowledgment to Investment Facilities and Services Agreement, dated January 1, 2008, by and among Loews/CNA Holdings, Inc., CNA Financial Corporation, and CNA National Warranty Corporation (Exhibit 10.7 to March 31, 2008 Form 10-Q incorporated herein by reference)
    
    10.3.13Amended and Restated Surplus Note, dated as of December 11, 2008, from Continental Casualty Company to CNA Financial Corporation (Exhibit 10.4 to 2008 Form 10-K incorporated herein by reference)
    
    10.42008 Senior Preferred Stock Redemption Agreement, dated November 10, 2009, by and between CNA Financial Corporation and Loews Corporation (Exhibit 10.2 to Form 8-K filed November 13, 2009 incorporated herein by reference)
    
    10.5CNA Financial Corporation 2000 Incentive Compensation Plan, as amended and restated, effective as of February 9, 2005 (Exhibit A to Form DEF 14A, filed March 31, 2005, incorporated herein by reference (as indicated in Form 8-K, filed May 2, 2005, CNAF shareholders voted to approve this plan on April 27, 2005))
    
    10.6CNA Financial Corporation 2000 Long Term Incentive Plan, dated August 4, 1999 (Exhibit 4.1 to Form S-8 filed August 4, 1999, incorporated herein by reference)
    
    10.7CNA Supplemental Executive Retirement Plan, restated as of January 1, 2009 (Exhibit 10.7 to 2008 Form 10-K incorporated herein by reference)
    
    10.8First Amendment to the CNA Supplemental Executive Retirement Plan, dated December 23, 2009
    
    10.8.1CNA Supplemental Executive Savings and Capital Accumulation Plan, restated as of January 1, 2009 (Exhibit 10.8 to 2008 Form 10-K incorporated herein by reference)
    
    10.9
 149




---



##### Table of Contents



2009 Incentive Compensation Awards to Executive Officers (Exhibit 10.9 to 2008 Form 10-K incorporated herein by reference)
    
    10.10Award Letter and Award Terms to Thomas F. Motamed for Stock Appreciation Rights and Restricted Stock Units (Exhibit 10.10 to 2008 Form 10-K incorporated herein by reference)
    
    10.112008 Incentive Compensation Awards to Executive Officers (Exhibit 10.9 to 2007 Form 10-K incorporated herein by reference)
    
    10.12Form of Award Letter to Executive Officers for the Long-Term Incentive Cash Plan for the 2005-2007 Long-Term Incentive Cash Plan Cycle (Exhibit 10.1 to March 31, 2008 Form 10-Q incorporated herein by reference)
    
    10.12.1Form of Award Letter to Executive Officers, along with Form of Award Terms, for the Long-Term Incentive Cash Plan for the 2008-2010 Long-Term Incentive Cash Plan Cycle (Exhibit 10.2 to March 31, 2008 Form 10-Q incorporated herein by reference)
    
    10.12.22007 Incentive Compensation Awards to Executive Officers (Exhibit 10.23 to March 31, 2007 Form 10-Q incorporated herein by reference)
    
    10.13Form of Award Letter for Long-Term Incentive Cash Award to Executive Officers for the Performance Period Beginning January 1, 2006 and Ending December 31, 2008, Delivered on April 14, 2006 (Exhibit 99.1 to April 19, 2006 Form 8-K incorporated herein by reference)
    
    10.13.1Form of Award Terms for Long-Term Incentive Cash Award to Executive Officers for the Performance Period Beginning January 1, 2006 and Ending December 31, 2008, Delivered on April 14, 2006 (Exhibit 99.2 to April 19, 2006 Form 8-K incorporated herein by reference)
    
    10.13.2Employment Agreement, dated May 22, 2008, by and between CNA Financial Corporation and Thomas F. Motamed (Exhibit 10.1 to June 30, 2008 Form 10-Q incorporated herein by reference)
    
    10.14First Amendment to Employment Agreement, dated October 24, 2008, by and between CNA Financial Corporation and Thomas F. Motamed (Exhibit 10.6 to September 30, 2008 Form 10-Q incorporated herein by reference)
    
    10.14.1Employment Agreement between Continental Casualty Company and D. Craig Mense, dated August 1, 2007 (Exhibit 10.1 to September 30, 2007 Form 10-Q incorporated herein by reference)
    
    10.15Amendment to Employment Agreement, dated July 1, 2008, by and between Continental Casualty Company and D. Craig Mense (Exhibit 10.4 to September 30, 2008 Form 10-Q incorporated herein by reference)
    
    10.15.1Employment Agreement, dated April 1, 2008, by and between Continental Casualty Company and Jonathan D. Kantor (Exhibit 10.2 to September 30, 2008 Form 10-Q incorporated herein by reference)
    
    10.16
 150




---



##### Table of Contents



Letter Agreement, dated June 18, 2007, by and between Continental Casualty Company and Thomas Pontarelli
    
    10.17Letter Agreement, dated August 8, 2008, by and between Continental Casualty Company and Thomas Pontarelli
    
    10.17.1Letter Agreement, dated December 9, 2009, by and between Continental Casualty Company and Thomas Pontarelli
    
    10.17.2Employment Agreement, dated August 24, 2006, by and between Continental Casualty Company and Peter W. Wilson
    
    10.18Amendment to Employment Agreement, dated September 19, 2008, by and between Continental Casualty Company and Peter W. Wilson
    
    10.18.1Subsidiaries of the Registrant
    
    21.1Consent of Independent Registered Public Accounting Firm
    
    23.1Certification 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*CNA Financial Corporation hereby agrees to furnish to the Commission upon request copies of instruments with respect to long term debt, pursuant to Item 601(b)(4) (iii) of Regulation S-K.(b)
    
    
    
    Exhibits:None.(c)
    
    
    
    Condensed Financial Information of Unconsolidated Subsidiaries:None.
  151




---



##### Table of Contents



SCHEDULE I. SUMMARY OF INVESTMENTS  OTHER THAN INVESTMENTS IN RELATED PARTIES
  152




---



##### Table of Contents



SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
 CNA Financial Corporation  Statements of Operations
 Years ended December 31
    
    2009
    
    
    2008
    
    
    2007(In millions)RevenuesNet investment income
    
    $
    3
    
    
    $
    16
    
    
    $
    20Realized investment gains (losses)
    
    
    8
    
    
    
    (19
    )
    
    
    (6
    )Other income
    
    
    101
    
    
    
    15
    
    
    
    -Total revenues
    
    
    112
    
    
    
    12
    
    
    
    14ExpensesAdministrative and general
    
    
    2
    
    
    
    9
    
    
    
    3Interest
    
    
    116
    
    
    
    123
    
    
    
    131Total expenses
    
    
    118
    
    
    
    132
    
    
    
    134Loss from operations before income taxes and equity in
net income (loss) of subsidiaries
    
    
    (6
    )
    
    
    (120
    )
    
    
    (120
    )Income tax benefit
    
    
    2
    
    
    
    42
    
    
    
    42Loss before equity in net income (loss) of subsidiaries
    
    
    (4
    )
    
    
    (78
    )
    
    
    (78
    )Equity in net income (loss) of subsidiaries
    
    
    423
    
    
    
    (221
    )
    
    
    929Net income (loss)
    
    $
    419
    
    
    $
    (299
    )
    
    $
    851
  153




---



##### Table of Contents



CNA Financial Corporation
Balance Sheets
 December 31
    
    2009
    
    
    2008(In millions, except share data)AssetsInvestment in subsidiaries
    
    $
    11,433
    
    
    $
    7,282Fixed maturity securities available-for-sale, at fair value (amortized cost of $4 and $5)
    
    
    4
    
    
    
    5Equity securities available-for-sale, at fair value (cost of $1 and $1)
    
    
    1
    
    
    
    1Other invested assets, including derivative financial instruments of $0 and $3
    
    
    -
    
    
    
    3Short term investments
    
    
    395
    
    
    
    539Receivables for securities sold and collateral
    
    
    -
    
    
    
    16Federal income taxes recoverable
    
    
    24
    
    
    
    6Amounts due from affiliates
    
    
    10
    
    
    
    6Surplus note due from affiliate
    
    
    1,000
    
    
    
    1,000Other assets
    
    
    9
    
    
    
    14Total assets
    
    $
    12,876
    
    
    $
    8,872Liabilities and equityLiabilities:Long term debt
    
    
    2,183
    
    
    
    1,937Other liabilities, including derivative financial instruments of $0 and $31
    
    
    33
    
    
    
    58Total liabilities
    
    
    2,216
    
    
    
    1,995Equity:Preferred stock (12,500,000 shares authorized) 

2008 Senior Preferred (no par value; $100,000 stated value; 10,000 and 12,500
shares issued and outstanding held by Loews Corporation)
    
    
    1,000
    
    
    
    1,250Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares
issued; and 269,026,759 and 269,024,408 shares outstanding)
    
    
    683
    
    
    
    683Additional paid-in capital
    
    
    2,177
    
    
    
    2,174Retained earnings
    
    
    7,264
    
    
    
    6,845Accumulated other comprehensive loss
    
    
    (325
    )
    
    
    (3,924
    )Treasury stock (4,013,484 and 4,015,835 shares), at cost
    
    
    (109
    )
    
    
    (109
    )Notes receivable for the issuance of common stock
    
    
    (30
    )
    
    
    (42
    )Total equity
    
    
    10,660
    
    
    
    6,877Total liabilities and equity
    
    $
    12,876
    
    
    $
    8,872
  154




---



##### Table of Contents



CNA Financial Corporation
Statements of Cash Flows
 Years ended December 31
    
    2009
    
    
    2008
    
    
    2007(In millions)Cash Flows from Operating Activities:Net income (loss)
    
    $
    419
    
    
    $
    (299
    )
    
    $
    851Adjustments to reconcile net income (loss) to net cash flows provided (used) by
operating activities:(Income) loss of subsidiaries
    
    
    (423
    )
    
    
    221
    
    
    
    (929
    )Dividends received from subsidiaries
    
    
    -
    
    
    
    697
    
    
    
    270Realized investment (gains) losses
    
    
    (8
    )
    
    
    19
    
    
    
    6Other, net
    
    
    (21
    )
    
    
    81
    
    
    
    (54
    )Total adjustments
    
    
    (452
    )
    
    
    1,018
    
    
    
    (707
    )Net cash flows provided (used) by operating activities
    
    
    (33
    )
    
    
    719
    
    
    
    144Cash Flows from Investing Activities:Proceeds from fixed maturity securities
    
    
    12
    
    
    
    1
    
    
    
    3Change in short term investments
    
    
    145
    
    
    
    (666
    )
    
    
    (63
    )Capital contributions to subsidiaries
    
    
    (3
    )
    
    
    (2
    )
    
    
    (1
    )Return of capital from subsidiaries
    
    
    -
    
    
    
    -
    
    
    
    1Purchase of surplus note from affiliate
    
    
    -
    
    
    
    (1,000
    )
    
    
    -Other, net
    
    
    (12
    )
    
    
    (3
    )
    
    
    (18
    )Net cash flows provided (used) by investing activities
    
    
    142
    
    
    
    (1,670
    )
    
    
    (78
    )Cash Flows from Financing Activities:Dividends paid to Loews for 2008 Senior Preferred
    
    
    (122
    )
    
    
    (19
    )
    
    
    -Dividends paid to common stockholders
    
    
    -
    
    
    
    (122
    )
    
    
    (95
    )Proceeds from the issuance of long term debt
    
    
    350
    
    
    
    250
    
    
    
    -Principal payments on debt
    
    
    (100
    )
    
    
    (350
    )
    
    
    -Payment to redeem 2008 Senior Preferred
    
    
    (250
    )
    
    
    -
    
    
    
    -Proceeds from issuance of 2008 Senior Preferred
    
    
    -
    
    
    
    1,250
    
    
    
    -Stock options exercised
    
    
    1
    
    
    
    1
    
    
    
    18Purchase of treasury stock
    
    
    -
    
    
    
    (70
    )
    
    
    -Other, net
    
    
    12
    
    
    
    11
    
    
    
    11Net cash flows provided (used) by financing activities
    
    
    (109
    )
    
    
    951
    
    
    
    (66
    )Net change in cash
    
    
    -
    
    
    
    -
    
    
    
    -Cash, beginning of year
    
    
    -
    
    
    
    -
    
    
    
    -Cash, end of year
    
    $
    -
    
    
    $
    -
    
    
    $
    -
  155




---



##### Table of Contents



Notes to Condensed Financial Information
 A. Basis of Presentation
  B. Debt
  Debt
 December 31
    
    2009
    
    
    2008(In millions)Variable rate debt:Credit Facility  variable rate and term, due August 1, 2012
    
    $
    150
    
    
    $
    250Senior notes:6.000%, face amount of $400, due August 15, 2011
    
    
    399
    
    
    
    3995.850%, face amount of $549, due December 15, 2014
    
    
    547
    
    
    
    5476.500%, face amount of $350, due August 15, 2016
    
    
    347
    
    
    
    3486.950%, face amount of $150, due January 15, 2018
    
    
    149
    
    
    
    1497.350%, face amount of $350, due November 15, 2019
    
    
    347
    
    
    
    -Debenture, 7.250%, face amount of $243, due November 15, 2023
    
    
    241
    
    
    
    241Urban Development Action Grant, 1.00%, due May 7, 2019
    
    
    3
    
    
    
    3Total
    
    $
    2,183
    
    
    $
    1,937
     C. Commitments, Contingencies and Guarantees
  156




---



##### Table of Contents



157




---



##### Table of Contents



SCHEDULE III. SUPPLEMENTARY INSURANCE INFORMATION
  158




---



##### Table of Contents



SCHEDULE IV. REINSURANCE
  
 SCHEDULE V. VALUATION AND QUALIFYING ACCOUNTS
 Balance at
    
    
    Charged to
    
    
    Charged toBeginning
    
    
    Costs and
    
    
    Other
    
    
    
    
    
    
    Balance atof Period
    
    
    Expenses
    
    
    Accounts (a)
    
    
    Deductions
    
    
    End of Period(In millions)Year ended December 31, 2009Deducted from assets:Allowance for doubtful accounts:Insurance and reinsurance
receivables
    
    $
    587
    
    
    $
    4
    
    
    $
    (1
    )
    
    $
    (37
    )
    
    $
    553Valuation allowance:Deferred income taxes
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -Year ended December 31, 2008Deducted from assets:Allowance for doubtful accounts:Insurance and reinsurance
receivables
    
    $
    773
    
    
    $
    (37
    )
    
    $
    (4
    )
    
    $
    (145
    )
    
    $
    587Valuation allowance:Deferred income taxes
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -Year ended December 31, 2007Deducted from assets:Allowance for doubtful accounts:Insurance and reinsurance
receivables
    
    $
    837
    
    
    $
    12
    
    
    $
    2
    
    
    $
    (78
    )
    
    $
    773Valuation allowance:Deferred income taxes
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -
 (a)
    
    Amount includes effects of foreign currency translation.
 
 SCHEDULE VI. SUPPLEMENTAL INFORMATION CONCERNING PROPERTY AND CASUALTY
INSURANCE OPERATIONS
 Consolidated Property and Casualty OperationsAs of and for the years ended December 31
    
    2009
    
    
    2008
    
    
    2007(In millions)Deferred acquisition costs
    
    $
    1,108
    
    
    $
    1,125Reserves for unpaid claim and claim adjustment expenses
    
    
    26,712
    
    
    
    27,475Discount deducted from claim and claim adjustment expense reserves
above 
(based on interest rates ranging from 3.0% to 7.5%)
    
    
    1,595
    
    
    
    1,620Unearned premiums
    
    
    3,274
    
    
    
    3,406Net written premiums
    
    
    6,713
    
    
    
    7,090
    
    
    
    7,382Net earned premiums
    
    
    6,720
    
    
    
    7,149
    
    
    
    7,481Net investment income
    
    
    2,110
    
    
    
    1,547
    
    
    
    2,180Incurred claim and claim adjustment expenses related to current year
    
    
    4,788
    
    
    
    5,189
    
    
    
    4,937Incurred claim and claim adjustment expenses related to prior years
    
    
    (241
    )
    
    
    (7
    )
    
    
    220Amortization of deferred acquisition costs
    
    
    1,417
    
    
    
    1,467
    
    
    
    1,520Paid claim and claim adjustment expenses
    
    
    4,841
    
    
    
    5,327
    
    
    
    5,282
 159




---



##### Table of Contents



SIGNATURES
  CNA Financial CorporationDated: February 23, 2010
    
    By
    
    /s/ Thomas F. MotamedThomas F. MotamedChief Executive Officer(Principal Executive Officer)By
    
    /s/ D. Craig MenseD. Craig MenseExecutive Vice President andChief Financial Officer(Principal Financial & Accounting Officer)
  Dated: February 23, 2010
    
    By
    
    /s/ Thomas F. Motamed(Thomas F. Motamed, Chief Executive Officerand Chairman of the Board of Directors)Dated: February 23, 2010
    
    By
    
    /s/ Paul J. Liska(Paul J. Liska, Director)Dated: February 23, 2010
    
    By
    
    /s/ Jose O. Montemayor(Jose O. Montemayor, Director)Dated: February 23, 2010
    
    By
    
    /s/ Don M. Randel(Don M. Randel, Director)Dated: February 23, 2010
    
    By
    
    /s/ Joseph Rosenberg(Joseph Rosenberg, Director)Dated: February 23, 2010
    
    By
    
    /s/ Andrew H. Tisch(Andrew H. Tisch, Director)Dated: February 23, 2010
    
    By
    
    /s/ James S. Tisch(James S. Tisch, Director)Dated: February 23, 2010
    
    By
    
    /s/ Marvin Zonis(Marvin Zonis, Director)
 160