[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware (State or other jurisdiction of incorporation or organization) | 36-6169860 (I.R.S. Employer Identification No.) |
151 N. Franklin Chicago, Illinois (Address of principal executive offices) | 60606 (Zip Code) |
Large accelerated filer [x] | Accelerated filer [ ] | Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [ ] | Emerging growth company [ ] |
Class | Outstanding at April 25, 2019 | |
Common Stock, Par value $2.50 |
Item Number | Page Number | |
1. | ||
2. | ||
3. | ||
4. | ||
PART II | ||
1. | ||
2. | ||
6. |
Three months ended March 31 | |||||||
(In millions, except per share data) | 2019 | 2018 | |||||
Revenues | |||||||
Net earned premiums | $ | $ | |||||
Net investment income | |||||||
Net investment gains: | |||||||
Other-than-temporary impairment losses | ( | ) | ( | ) | |||
Other net investment gains | |||||||
Net investment gains | |||||||
Non-insurance warranty revenue | |||||||
Other revenues | |||||||
Total revenues | |||||||
Claims, Benefits and Expenses | |||||||
Insurance claims and policyholders’ benefits | |||||||
Amortization of deferred acquisition costs | |||||||
Non-insurance warranty expense | |||||||
Other operating expenses | |||||||
Interest | |||||||
Total claims, benefits and expenses | |||||||
Income before income tax | |||||||
Income tax expense | ( | ) | ( | ) | |||
Net income | $ | $ | |||||
Basic earnings per share | $ | $ | |||||
Diluted earnings per share | $ | $ | |||||
Dividends declared per share | $ | $ | |||||
Weighted Average Outstanding Common Stock and Common Stock Equivalents | |||||||
Basic | |||||||
Diluted |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Comprehensive Income (Loss) | |||||||
Net income | $ | $ | |||||
Other Comprehensive Income (Loss), Net of Tax | |||||||
Changes in: | |||||||
Net unrealized gains on investments with other-than-temporary impairments | ( | ) | |||||
Net unrealized gains on other investments | ( | ) | |||||
Net unrealized gains on investments | ( | ) | |||||
Foreign currency translation adjustment | |||||||
Pension and postretirement benefits | |||||||
Other comprehensive income (loss), net of tax | ( | ) | |||||
Total comprehensive income (loss) | $ | $ | ( | ) |
(In millions, except share data) | March 31, 2019 (Unaudited) | December 31, 2018 | |||||
Assets | |||||||
Investments: | |||||||
Fixed maturity securities at fair value (amortized cost of $37,940 and $38,085) | $ | $ | |||||
Equity securities at fair value (cost of $812 and $844) | |||||||
Limited partnership investments | |||||||
Other invested assets | |||||||
Mortgage loans | |||||||
Short term investments | |||||||
Total investments | |||||||
Cash | |||||||
Reinsurance receivables (less allowance for uncollectible receivables of $29 and $29) | |||||||
Insurance receivables (less allowance for uncollectible receivables of $41 and $42) | |||||||
Accrued investment income | |||||||
Deferred acquisition costs | |||||||
Deferred income taxes | |||||||
Property and equipment at cost (less accumulated depreciation of $214 and $216) | |||||||
Goodwill | |||||||
Deferred non-insurance warranty acquisition expense | |||||||
Other assets (includes $- and $8 due from Loews Corporation) | |||||||
Total assets | $ | $ | |||||
Liabilities | |||||||
Insurance reserves: | |||||||
Claim and claim adjustment expenses | $ | $ | |||||
Unearned premiums | |||||||
Future policy benefits | |||||||
Long term debt | |||||||
Deferred non-insurance warranty revenue | |||||||
Other liabilities (includes $31 and $23 due to Loews Corporation) | |||||||
Total liabilities | |||||||
Commitments and contingencies (Notes C and F) | |||||||
Stockholders' Equity | |||||||
Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 271,527,510 and 271,456,978 shares outstanding) | |||||||
Additional paid-in capital | |||||||
Retained earnings | |||||||
Accumulated other comprehensive income (loss) | ( | ) | ( | ) | |||
Treasury stock (1,512,733 and 1,583,265 shares), at cost | ( | ) | ( | ) | |||
Total stockholders’ equity | |||||||
Total liabilities and stockholders' equity | $ | $ |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Cash Flows from Operating Activities | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||
Deferred income tax expense | |||||||
Trading portfolio activity | ( | ) | ( | ) | |||
Net investment (gains) | ( | ) | ( | ) | |||
Equity method investees | ( | ) | |||||
Net amortization of investments | ( | ) | ( | ) | |||
Depreciation and amortization | |||||||
Changes in: | |||||||
Receivables, net | ( | ) | |||||
Accrued investment income | ( | ) | ( | ) | |||
Deferred acquisition costs | ( | ) | ( | ) | |||
Insurance reserves | |||||||
Other, net | ( | ) | ( | ) | |||
Net cash flows provided by operating activities | |||||||
Cash Flows from Investing Activities | |||||||
Dispositions: | |||||||
Fixed maturity securities - sales | |||||||
Fixed maturity securities - maturities, calls and redemptions | |||||||
Equity securities | |||||||
Limited partnerships | |||||||
Mortgage loans | |||||||
Purchases: | |||||||
Fixed maturity securities | ( | ) | ( | ) | |||
Equity securities | ( | ) | ( | ) | |||
Limited partnerships | ( | ) | ( | ) | |||
Mortgage loans | ( | ) | ( | ) | |||
Change in other investments | ( | ) | ( | ) | |||
Change in short term investments | ( | ) | |||||
Purchases of property and equipment | ( | ) | ( | ) | |||
Other, net | |||||||
Net cash flows provided by investing activities | |||||||
Cash Flows from Financing Activities | |||||||
Dividends paid to common stockholders | ( | ) | ( | ) | |||
Repayment of debt | ( | ) | |||||
Purchase of treasury stock | ( | ) | |||||
Other, net | ( | ) | ( | ) | |||
Net cash flows used by financing activities | ( | ) | ( | ) | |||
Effect of foreign exchange rate changes on cash | |||||||
Net change in cash | ( | ) | ( | ) | |||
Cash, beginning of year | |||||||
Cash, end of period | $ | $ |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Common Stock | |||||||
Balance, beginning of period | $ | $ | |||||
Balance, end of period | |||||||
Additional Paid-in Capital | |||||||
Balance, beginning of period | |||||||
Stock-based compensation | ( | ) | ( | ) | |||
Balance, end of period | |||||||
Retained Earnings | |||||||
Balance, beginning of period | |||||||
Dividends to common stockholders ($2.35 and $2.30 per share) | ( | ) | ( | ) | |||
Net income | |||||||
Balance, end of period | |||||||
Accumulated Other Comprehensive Income (Loss) | |||||||
Balance, beginning of period | ( | ) | |||||
Other comprehensive income (loss) | ( | ) | |||||
Balance, end of period | ( | ) | ( | ) | |||
Treasury Stock | |||||||
Balance, beginning of period | ( | ) | ( | ) | |||
Stock-based compensation | |||||||
Purchase of treasury stock | ( | ) | |||||
Balance, end of period | ( | ) | ( | ) | |||
Total stockholders' equity | $ | $ |
(In millions) | Balance as of December 31, 2018 | Adjustments Due to Adoption of Topic 842 | Balance as of January 1, 2019 | ||||||||
Property and equipment at cost (less accumulated depreciation) | $ | $ | $ | ||||||||
Other assets | |||||||||||
Other liabilities |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Fixed maturity securities | $ | $ | |||||
Equity securities | |||||||
Limited partnership investments | |||||||
Mortgage loans | |||||||
Short term investments | |||||||
Trading portfolio | |||||||
Other | |||||||
Gross investment income | |||||||
Investment expense | ( | ) | ( | ) | |||
Net investment income | $ | $ |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Net investment gains (losses): | |||||||
Fixed maturity securities: | |||||||
Gross gains | $ | $ | |||||
Gross losses | ( | ) | ( | ) | |||
Net investment gains (losses) on fixed maturity securities | ( | ) | |||||
Equity securities | ( | ) | |||||
Derivatives | ( | ) | |||||
Short term investments and other | |||||||
Net investment gains (losses) | $ | $ |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Fixed maturity securities available-for-sale: | |||||||
Corporate and other bonds | $ | $ | |||||
Asset-backed | |||||||
OTTI losses recognized in earnings | $ | $ |
March 31, 2019 | Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Unrealized OTTI Losses (Gains) | ||||||||||||||
(In millions) | |||||||||||||||||||
Fixed maturity securities available-for-sale: | |||||||||||||||||||
Corporate and other bonds | $ | $ | $ | $ | $ | ||||||||||||||
States, municipalities and political subdivisions | |||||||||||||||||||
Asset-backed: | |||||||||||||||||||
Residential mortgage-backed | ( | ) | |||||||||||||||||
Commercial mortgage-backed | |||||||||||||||||||
Other asset-backed | ( | ) | |||||||||||||||||
Total asset-backed | ( | ) | |||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | |||||||||||||||||||
Foreign government | |||||||||||||||||||
Redeemable preferred stock | |||||||||||||||||||
Total fixed maturity securities available-for-sale | $ | ( | ) | ||||||||||||||||
Total fixed maturity securities trading | — | — | |||||||||||||||||
Total fixed maturity securities | $ | $ | $ | $ |
December 31, 2018 | Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | Unrealized OTTI Losses (Gains) | ||||||||||||||
(In millions) | |||||||||||||||||||
Fixed maturity securities available-for-sale: | |||||||||||||||||||
Corporate and other bonds | $ | $ | $ | $ | $ | ||||||||||||||
States, municipalities and political subdivisions | |||||||||||||||||||
Asset-backed: | |||||||||||||||||||
Residential mortgage-backed | ( | ) | |||||||||||||||||
Commercial mortgage-backed | |||||||||||||||||||
Other asset-backed | |||||||||||||||||||
Total asset-backed | ( | ) | |||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | |||||||||||||||||||
Foreign government | |||||||||||||||||||
Redeemable preferred stock | |||||||||||||||||||
Total fixed maturity securities available-for-sale | $ | ( | ) | ||||||||||||||||
Total fixed maturity securities trading | — | — | |||||||||||||||||
Total fixed maturity securities | $ | $ | $ | $ |
Less than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||
March 31, 2019 | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | |||||||||||||||||
(In millions) | |||||||||||||||||||||||
Fixed maturity securities available-for-sale: | |||||||||||||||||||||||
Corporate and other bonds | $ | $ | $ | $ | $ | $ | |||||||||||||||||
States, municipalities and political subdivisions | — | ||||||||||||||||||||||
Asset-backed: | |||||||||||||||||||||||
Residential mortgage-backed | |||||||||||||||||||||||
Commercial mortgage-backed | |||||||||||||||||||||||
Other asset-backed | |||||||||||||||||||||||
Total asset-backed | |||||||||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | |||||||||||||||||||||||
Foreign government | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
Less than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||
December 31, 2018 | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | |||||||||||||||||
(In millions) | |||||||||||||||||||||||
Fixed maturity securities available-for-sale: | |||||||||||||||||||||||
Corporate and other bonds | $ | $ | $ | $ | $ | $ | |||||||||||||||||
States, municipalities and political subdivisions | |||||||||||||||||||||||
Asset-backed: | |||||||||||||||||||||||
Residential mortgage-backed | |||||||||||||||||||||||
Commercial mortgage-backed | |||||||||||||||||||||||
Other asset-backed | |||||||||||||||||||||||
Total asset-backed | |||||||||||||||||||||||
U.S. Treasury and obligations of government-sponsored enterprises | |||||||||||||||||||||||
Foreign government | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Beginning balance of credit losses on fixed maturity securities | $ | $ | |||||
Reductions for securities sold during the period | ( | ) | ( | ) | |||
Ending balance of credit losses on fixed maturity securities | $ | $ |
March 31, 2019 | December 31, 2018 | ||||||||||||||
(In millions) | Cost or Amortized Cost | Estimated Fair Value | Cost or Amortized Cost | Estimated Fair Value | |||||||||||
Due in one year or less | $ | $ | $ | $ | |||||||||||
Due after one year through five years | |||||||||||||||
Due after five years through ten years | |||||||||||||||
Due after ten years | |||||||||||||||
Total | $ | $ | $ | $ |
March 31, 2019 | Total Assets/Liabilities at Fair Value | ||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets | |||||||||||||||
Fixed maturity securities: | |||||||||||||||
Corporate bonds and other | $ | $ | $ | $ | |||||||||||
States, municipalities and political subdivisions | |||||||||||||||
Asset-backed | |||||||||||||||
Total fixed maturity securities | |||||||||||||||
Equity securities: | |||||||||||||||
Common stock | |||||||||||||||
Non-redeemable preferred stock | |||||||||||||||
Total equity securities | |||||||||||||||
Short term and other | |||||||||||||||
Total assets | $ | $ | $ | $ | |||||||||||
Liabilities | |||||||||||||||
Other liabilities | $ | $ | $ | $ | |||||||||||
Total liabilities | $ | $ | $ | $ |
December 31, 2018 | Total Assets/Liabilities at Fair Value | ||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets | |||||||||||||||
Fixed maturity securities: | |||||||||||||||
Corporate bonds and other | $ | $ | $ | $ | |||||||||||
States, municipalities and political subdivisions | |||||||||||||||
Asset-backed | |||||||||||||||
Total fixed maturity securities | |||||||||||||||
Equity securities: | |||||||||||||||
Common stock | |||||||||||||||
Non-redeemable preferred stock | |||||||||||||||
Total equity securities | |||||||||||||||
Short term and other | |||||||||||||||
Total assets | $ | $ | $ | $ | |||||||||||
Liabilities | |||||||||||||||
Other liabilities | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
Total liabilities | $ | $ | ( | ) | $ | $ | ( | ) |
Level 3 (In millions) | Corporate bonds and other | States, municipalities and political subdivisions | Asset-backed | Equity securities | Total | ||||||||||||||
Balance as of January 1, 2019 | $ | $ | $ | $ | $ | ||||||||||||||
Total realized and unrealized investment gains (losses): | |||||||||||||||||||
Reported in Net investment gains (losses) | |||||||||||||||||||
Reported in Other comprehensive income (loss) | |||||||||||||||||||
Total realized and unrealized investment gains (losses) | |||||||||||||||||||
Purchases | |||||||||||||||||||
Sales | |||||||||||||||||||
Settlements | ( | ) | ( | ) | ( | ) | |||||||||||||
Transfers into Level 3 | |||||||||||||||||||
Transfers out of Level 3 | ( | ) | ( | ) | ( | ) | |||||||||||||
Balance as of March 31, 2019 | $ | $ | $ | $ | $ | ||||||||||||||
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2019 recognized in Net income (loss) | $ | $ | $ | $ | $ | ||||||||||||||
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2019 recognized in Other comprehensive income (loss) |
Level 3 (In millions) | Corporate bonds and other | States, municipalities and political subdivisions | Asset-backed | Equity securities | Total | ||||||||||||||
Balance as of January 1, 2018 | $ | $ | $ | $ | $ | ||||||||||||||
Total realized and unrealized investment gains (losses): | |||||||||||||||||||
Reported in Net investment gains (losses) | ( | ) | ( | ) | |||||||||||||||
Reported in Other comprehensive income (loss) | ( | ) | ( | ) | |||||||||||||||
Total realized and unrealized investment gains (losses) | ( | ) | ( | ) | ( | ) | |||||||||||||
Purchases | |||||||||||||||||||
Sales | ( | ) | ( | ) | |||||||||||||||
Settlements | ( | ) | ( | ) | ( | ) | |||||||||||||
Transfers into Level 3 | |||||||||||||||||||
Transfers out of Level 3 | ( | ) | ( | ) | |||||||||||||||
Balance as of March 31, 2018 | $ | $ | $ | $ | $ | ||||||||||||||
Unrealized gains (losses) on Level 3 assets and liabilities held as of March 31, 2018 recognized in Net income (loss) | $ | $ | $ | $ | ( | ) | $ | ( | ) |
March 31, 2019 | Estimated Fair Value (In millions) | Valuation Technique(s) | Unobservable Input(s) | Range (Weighted Average) | |||||
Fixed maturity securities | $ | Discounted cash flow | Credit spread | 1% - 5% (3%) |
December 31, 2018 | Estimated Fair Value (In millions) | Valuation Technique(s) | Unobservable Input(s) | Range (Weighted Average) | |||||
Fixed maturity securities | $ | Discounted cash flow | Credit spread | 1% - 12% (3%) |
March 31, 2019 | Carrying Amount | Estimated Fair Value | |||||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Assets | |||||||||||||||||||
Mortgage loans | $ | $ | $ | $ | $ | ||||||||||||||
Note receivable | |||||||||||||||||||
Liabilities | |||||||||||||||||||
Long term debt | $ | $ | $ | $ | $ |
December 31, 2018 | Carrying Amount | Estimated Fair Value | |||||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Assets | |||||||||||||||||||
Mortgage loans | $ | $ | $ | $ | $ | ||||||||||||||
Note receivable | |||||||||||||||||||
Liabilities | |||||||||||||||||||
Long term debt | $ | $ | $ | $ | $ |
For the three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Reserves, beginning of year: | |||||||
Gross | $ | $ | |||||
Ceded | |||||||
Net reserves, beginning of year | |||||||
Net incurred claim and claim adjustment expenses: | |||||||
Provision for insured events of current year | |||||||
Increase (decrease) in provision for insured events of prior years | ( | ) | |||||
Amortization of discount | |||||||
Total net incurred (1) | |||||||
Net payments attributable to: | |||||||
Current year events | ( | ) | ( | ) | |||
Prior year events | ( | ) | ( | ) | |||
Total net payments | ( | ) | ( | ) | |||
Foreign currency translation adjustment and other | ( | ) | |||||
Net reserves, end of period | |||||||
Ceded reserves, end of period | |||||||
Gross reserves, end of period | $ | $ |
(1) |
For the three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Pretax (favorable) unfavorable development: | |||||||
Specialty | $ | ( | ) | $ | ( | ) | |
Commercial | ( | ) | ( | ) | |||
International | |||||||
Corporate & Other | |||||||
Total pretax (favorable) unfavorable development | $ | ( | ) | $ | ( | ) |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Pretax (favorable) unfavorable development: | |||||||
Medical Professional Liability | $ | $ | |||||
Other Professional Liability and Management Liability | ( | ) | ( | ) | |||
Surety | ( | ) | ( | ) | |||
Warranty | |||||||
Other | ( | ) | |||||
Total pretax (favorable) unfavorable development | $ | ( | ) | $ | ( | ) |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Pretax (favorable) unfavorable development: | |||||||
Commercial Auto | $ | ( | ) | $ | ( | ) | |
General Liability | ( | ) | ( | ) | |||
Workers' Compensation | ( | ) | |||||
Property and Other | |||||||
Total pretax (favorable) unfavorable development | $ | ( | ) | $ | ( | ) |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Pretax (favorable) unfavorable development: | |||||||
Casualty | $ | $ | |||||
Property | ( | ) | |||||
Energy and Marine | ( | ) | |||||
Specialty (1) | |||||||
Total pretax (favorable) unfavorable development | $ | $ |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Additional amounts ceded under LPT: | |||||||
Net A&EP adverse development before consideration of LPT | $ | $ | |||||
Provision for uncollectible third-party reinsurance on A&EP | ( | ) | |||||
Total additional amounts ceded under LPT | |||||||
Retroactive reinsurance benefit recognized | ( | ) | ( | ) | |||
Pretax impact of deferred retroactive reinsurance | $ | ( | ) | $ |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Net periodic pension cost (benefit) | |||||||
Service cost | $ | $ | |||||
Non-service cost (benefit): | |||||||
Interest cost on projected benefit obligation | |||||||
Expected return on plan assets | ( | ) | ( | ) | |||
Amortization of net actuarial (gain) loss | |||||||
Settlement loss | |||||||
Total non-service cost (benefit) | ( | ) | ( | ) | |||
Total net periodic pension cost (benefit) | $ | ( | ) | $ | ( | ) |
(In millions) | Net unrealized gains (losses) on investments with OTTI losses | Net unrealized gains (losses) on other investments | Pension and postretirement benefits | Cumulative foreign currency translation adjustment | Total | ||||||||||||||
Balance as of January 1, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||
Other comprehensive income (loss) before reclassifications | ( | ) | |||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $-, $1, $2, $- and $3 | ( | ) | ( | ) | ( | ) | |||||||||||||
Other comprehensive income (loss) net of tax (expense) benefit of $(1), $(141), $(2), $- and $(144) | |||||||||||||||||||
Balance as of March 31, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(In millions) | Net unrealized gains (losses) on investments with OTTI losses | Net unrealized gains (losses) on other investments | Pension and postretirement benefits | Cumulative foreign currency translation adjustment | Total | ||||||||||||||
Balance as of January 1, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||
Other comprehensive income (loss) before reclassifications | ( | ) | ( | ) | ( | ) | |||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $-, $(4), $3, $- and $(1) | ( | ) | ( | ) | |||||||||||||||
Other comprehensive income (loss) net of tax (expense) benefit of $2, $109, $(3), $- and $108 | ( | ) | ( | ) | ( | ) | |||||||||||||
Balance as of March 31, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Component of AOCI | Consolidated Statements of Operations Line Item Affected by Reclassifications | |
Net unrealized gains (losses) on investments with OTTI losses | Net investment gains (losses) | |
Net unrealized gains (losses) on other investments | Net investment gains (losses) | |
Pension and postretirement benefits | Other operating expenses and Insurance claims and policyholders' benefits |
Three months ended March 31, 2019 | Specialty | Commercial | International | Life & Group | Corporate & Other | ||||||||||||||||||||||
(In millions) | Eliminations | Total | |||||||||||||||||||||||||
Operating revenues | |||||||||||||||||||||||||||
Net earned premiums | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
Net investment income | |||||||||||||||||||||||||||
Non-insurance warranty revenue | |||||||||||||||||||||||||||
Other revenues | ( | ) | |||||||||||||||||||||||||
Total operating revenues | ( | ) | |||||||||||||||||||||||||
Claims, benefits and expenses | |||||||||||||||||||||||||||
Net incurred claims and benefits | ( | ) | |||||||||||||||||||||||||
Policyholders’ dividends | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs | |||||||||||||||||||||||||||
Non-insurance warranty expense | |||||||||||||||||||||||||||
Other insurance related expenses | ( | ) | ( | ) | |||||||||||||||||||||||
Other expenses | ( | ) | |||||||||||||||||||||||||
Total claims, benefits and expenses | ( | ) | |||||||||||||||||||||||||
Core income (loss) before income tax | ( | ) | ( | ) | |||||||||||||||||||||||
Income tax (expense) benefit on core income (loss) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
Core income (loss) | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
Net investment gains (losses) | |||||||||||||||||||||||||||
Income tax (expense) benefit on net investment gains (losses) | ( | ) | |||||||||||||||||||||||||
Net investment gains (losses), after tax | |||||||||||||||||||||||||||
Net income | $ |
March 31, 2019 | |||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||
Reinsurance receivables | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
Insurance receivables | |||||||||||||||||||||||||||
Deferred acquisition costs | |||||||||||||||||||||||||||
Goodwill | |||||||||||||||||||||||||||
Deferred non-insurance warranty acquisition expense | |||||||||||||||||||||||||||
Insurance reserves | |||||||||||||||||||||||||||
Claim and claim adjustment expenses | |||||||||||||||||||||||||||
Unearned premiums | ( | ) | |||||||||||||||||||||||||
Future policy benefits | |||||||||||||||||||||||||||
Deferred non-insurance warranty revenue |
Three months ended March 31, 2018 | Specialty | Commercial | International | Life & Group | Corporate & Other | ||||||||||||||||||||||
(In millions) | Eliminations | Total | |||||||||||||||||||||||||
Operating revenues | |||||||||||||||||||||||||||
Net earned premiums | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
Net investment income | |||||||||||||||||||||||||||
Non-insurance warranty revenue | |||||||||||||||||||||||||||
Other revenues | ( | ) | |||||||||||||||||||||||||
Total operating revenues | ( | ) | |||||||||||||||||||||||||
Claims, benefits and expenses | |||||||||||||||||||||||||||
Net incurred claims and benefits | |||||||||||||||||||||||||||
Policyholders’ dividends | |||||||||||||||||||||||||||
Amortization of deferred acquisition costs | |||||||||||||||||||||||||||
Non-insurance warranty expense | |||||||||||||||||||||||||||
Other insurance related expenses | |||||||||||||||||||||||||||
Other expenses | ( | ) | ( | ) | |||||||||||||||||||||||
Total claims, benefits and expenses | ( | ) | |||||||||||||||||||||||||
Core income (loss) before income tax | ( | ) | |||||||||||||||||||||||||
Income tax (expense) benefit on core income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Core income (loss) | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
Net investment gains (losses) | |||||||||||||||||||||||||||
Income tax (expense) benefit on net investment gains (losses) | ( | ) | |||||||||||||||||||||||||
Net investment gains (losses), after tax | |||||||||||||||||||||||||||
Net income | $ |
December 31, 2018 | |||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||
Reinsurance receivables | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
Insurance receivables | ( | ) | |||||||||||||||||||||||||
Deferred acquisition costs | |||||||||||||||||||||||||||
Goodwill | |||||||||||||||||||||||||||
Deferred non-insurance warranty acquisition expense | |||||||||||||||||||||||||||
Insurance reserves | |||||||||||||||||||||||||||
Claim and claim adjustment expenses | |||||||||||||||||||||||||||
Unearned premiums | |||||||||||||||||||||||||||
Future policy benefits | |||||||||||||||||||||||||||
Deferred non-insurance warranty revenue |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Specialty | |||||||
Management & Professional Liability | $ | $ | |||||
Surety | |||||||
Warranty & Alternative Risks | |||||||
Specialty revenues | |||||||
Commercial | |||||||
Middle Market | |||||||
Small Business | |||||||
Other Commercial Insurance | |||||||
Commercial revenues | |||||||
International | |||||||
Canada | |||||||
Europe | |||||||
Hardy | |||||||
International revenues | |||||||
Life & Group revenues | |||||||
Corporate & Other revenues | |||||||
Eliminations | ( | ) | ( | ) | |||
Total operating revenues | |||||||
Net investment gains (losses) | |||||||
Total revenues | $ | $ |
(In millions) | March 31, 2019 | ||
Operating lease ROU assets | $ | ||
Operating lease liabilities |
(In millions) | Operating Leases | ||
2019 (Excluding the three months ended March 31, 2019) | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total lease payments | |||
Less: Discount | ( | ) | |
Total operating lease liabilities | $ |
Three months ended March 31 | 2019 | |
Weighted average remaining lease term | 11.0 years | |
Weighted average discount rate | % |
(In millions) | Future Minimum Lease Payments | ||
2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total | $ |
• | Insurance Reserves |
• | Reinsurance and Insurance Receivables |
• | Valuation of Investments and Impairment of Securities |
• | Long Term Care Policies |
• | Income Taxes |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Operating Revenues | |||||||
Net earned premiums | $ | 1,803 | $ | 1,785 | |||
Net investment income | 571 | 490 | |||||
Non-insurance warranty revenue | 281 | 238 | |||||
Other revenues | 9 | 10 | |||||
Total operating revenues | 2,664 | 2,523 | |||||
Claims, Benefits and Expenses | |||||||
Net incurred claims and benefits | 1,351 | 1,333 | |||||
Policyholders' dividends | 6 | 6 | |||||
Amortization of deferred acquisition costs | 342 | 296 | |||||
Other insurance related expenses | 251 | 277 | |||||
Non-insurance warranty expense | 260 | 216 | |||||
Other expenses | 66 | 61 | |||||
Total claims, benefits and expenses | 2,276 | 2,189 | |||||
Core income before income tax | 388 | 334 | |||||
Income tax expense on core income | (70 | ) | (53 | ) | |||
Core income | 318 | 281 | |||||
Net investment gains | 31 | 12 | |||||
Income tax (expense) on net investment gains | (7 | ) | (2 | ) | |||
Net investment gains, after tax | 24 | 10 | |||||
Net income | $ | 342 | $ | 291 |
Three months ended March 31 | |||||||
(In millions, except ratios, rate, renewal premium change and retention) | 2019 | 2018 | |||||
Net written premiums | $ | 698 | $ | 686 | |||
Net earned premiums | 661 | 672 | |||||
Net investment income | 155 | 122 | |||||
Core income | 169 | 171 | |||||
Other performance metrics: | |||||||
Loss and loss adjustment expense ratio | 59.3 | % | 56.3 | % | |||
Expense ratio | 32.8 | 31.0 | |||||
Dividend ratio | 0.2 | 0.2 | |||||
Combined ratio | 92.3 | % | 87.5 | % | |||
Rate | 3 | % | 2 | % | |||
Renewal premium change | 4 | 4 | |||||
Retention | 89 | 85 | |||||
New business | $ | 86 | $ | 80 |
(In millions) | March 31, 2019 | December 31, 2018 | |||||
Gross case reserves | $ | 1,562 | $ | 1,623 | |||
Gross IBNR reserves | 3,908 | 3,842 | |||||
Total gross carried claim and claim adjustment expense reserves | $ | 5,470 | $ | 5,465 | |||
Net case reserves | $ | 1,408 | $ | 1,483 | |||
Net IBNR reserves | 3,403 | 3,348 | |||||
Total net carried claim and claim adjustment expense reserves | $ | 4,811 | $ | 4,831 |
Three months ended March 31 | |||||||
(In millions, except ratios, rate, renewal premium change and retention) | 2019 | 2018 | |||||
Net written premiums | $ | 849 | $ | 832 | |||
Net earned premiums | 763 | 743 | |||||
Net investment income | 190 | 149 | |||||
Core income | 139 | 133 | |||||
Other performance metrics: | |||||||
Loss and loss adjustment expense ratio | 66.9 | % | 63.0 | % | |||
Expense ratio | 33.8 | 33.5 | |||||
Dividend ratio | 0.6 | 0.6 | |||||
Combined ratio | 101.3 | % | 97.1 | % | |||
Rate | 2 | % | 1 | % | |||
Renewal premium change | 3 | 5 | |||||
Retention | 85 | 85 | |||||
New business | $ | 164 | $ | 182 |
(In millions) | March 31, 2019 | December 31, 2018 | |||||
Gross case reserves | $ | 4,087 | $ | 4,181 | |||
Gross IBNR reserves | 4,536 | 4,562 | |||||
Total gross carried claim and claim adjustment expense reserves | $ | 8,623 | $ | 8,743 | |||
Net case reserves | $ | 3,757 | $ | 3,831 | |||
Net IBNR reserves | 4,156 | 4,167 | |||||
Total net carried claim and claim adjustment expense reserves | $ | 7,913 | $ | 7,998 |
Three months ended March 31 | |||||||
(In millions, except ratios, rate, renewal premium change and retention) | 2019 | 2018 | |||||
Net written premiums | $ | 259 | $ | 295 | |||
Net earned premiums | 250 | 236 | |||||
Net investment income | 15 | 14 | |||||
Core income | 6 | 23 | |||||
Other performance metrics: | |||||||
Loss and loss adjustment expense ratio | 64.8 | % | 60.4 | % | |||
Expense ratio | 37.1 | 36.2 | |||||
Combined ratio | 101.9 | % | 96.6 | % | |||
Rate | 5 | % | 3 | % | |||
Renewal premium change | 1 | 8 | |||||
Retention | 71 | 83 | |||||
New business | $ | 80 | $ | 93 |
(In millions) | March 31, 2019 | December 31, 2018 | |||||
Gross case reserves | $ | 861 | $ | 867 | |||
Gross IBNR reserves | 926 | 883 | |||||
Total gross carried claim and claim adjustment expense reserves | $ | 1,787 | $ | 1,750 | |||
Net case reserves | $ | 744 | $ | 749 | |||
Net IBNR reserves | 813 | 775 | |||||
Total net carried claim and claim adjustment expense reserves | $ | 1,557 | $ | 1,524 |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Net earned premiums | $ | 130 | $ | 134 | |||
Net investment income | 204 | 200 | |||||
Core loss before income tax | (3 | ) | — | ||||
Income tax benefit on core loss | 13 | 14 | |||||
Core income | 10 | 14 |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Net investment income | $ | 7 | $ | 5 | |||
Interest expense | 34 | 34 | |||||
Core loss | (6 | ) | (60 | ) |
(In millions) | March 31, 2019 | December 31, 2018 | |||||
Gross case reserves | $ | 1,141 | $ | 1,208 | |||
Gross IBNR reserves | 1,170 | 1,217 | |||||
Total gross carried claim and claim adjustment expense reserves | $ | 2,311 | $ | 2,425 | |||
Net case reserves | $ | 94 | $ | 96 | |||
Net IBNR reserves | 94 | 96 | |||||
Total net carried claim and claim adjustment expense reserves | $ | 188 | $ | 192 |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Fixed income securities: | |||||||
Taxable fixed income securities | $ | 383 | $ | 350 | |||
Tax-exempt fixed income securities | 82 | 105 | |||||
Total fixed income securities | 465 | 455 | |||||
Limited partnership and common stock investments | 96 | 31 | |||||
Other, net of investment expense | 10 | 4 | |||||
Pretax net investment income | $ | 571 | $ | 490 | |||
Fixed income securities, after tax | $ | 380 | $ | 377 | |||
Net investment income, after tax | 465 | 405 | |||||
Effective income yield for the fixed income securities portfolio, pretax | 4.8 | % | 4.7 | % | |||
Effective income yield for the fixed income securities portfolio, after tax | 3.9 | % | 3.9 | % | |||
Limited partnership and common stock return | 4.5 | % | 1.3 | % |
Three months ended March 31 | |||||||
(In millions) | 2019 | 2018 | |||||
Fixed maturity securities: | |||||||
Corporate and other bonds | $ | — | $ | 19 | |||
States, municipalities and political subdivisions | 8 | 20 | |||||
Asset-backed | (14 | ) | (21 | ) | |||
Total fixed maturity securities | (6 | ) | 18 | ||||
Non-redeemable preferred stock | 42 | (15 | ) | ||||
Short term and other | (5 | ) | 9 | ||||
Net investment gains (losses) | 31 | 12 | |||||
Income tax (expense) benefit on net investment gains (losses) | (7 | ) | (2 | ) | |||
Net investment gains (losses), after tax | $ | 24 | $ | 10 |
March 31, 2019 | December 31, 2018 | ||||||||||||||
(In millions) | Estimated Fair Value | Net Unrealized Gains (Losses) | Estimated Fair Value | Net Unrealized Gains (Losses) | |||||||||||
U.S. Government, Government agencies and Government-sponsored enterprises | $ | 4,378 | $ | 32 | $ | 4,334 | $ | (24 | ) | ||||||
AAA | 2,973 | 295 | 3,027 | 245 | |||||||||||
AA | 6,538 | 641 | 6,510 | 512 | |||||||||||
A | 8,888 | 765 | 8,768 | 527 | |||||||||||
BBB | 14,892 | 836 | 14,205 | 274 | |||||||||||
Non-investment grade | 2,884 | 44 | 2,702 | (73 | ) | ||||||||||
Total | $ | 40,553 | $ | 2,613 | $ | 39,546 | $ | 1,461 |
March 31, 2019 | |||||||
(In millions) | Estimated Fair Value | Gross Unrealized Losses | |||||
U.S. Government, Government agencies and Government-sponsored enterprises | $ | 1,562 | $ | 19 | |||
AAA | 119 | 2 | |||||
AA | 192 | 3 | |||||
A | 910 | 17 | |||||
BBB | 2,204 | 54 | |||||
Non-investment grade | 1,103 | 45 | |||||
Total | $ | 6,090 | $ | 140 |
March 31, 2019 | |||||||
(In millions) | Estimated Fair Value | Gross Unrealized Losses | |||||
Due in one year or less | $ | 96 | $ | 1 | |||
Due after one year through five years | 926 | 19 | |||||
Due after five years through ten years | 4,411 | 95 | |||||
Due after ten years | 657 | 25 | |||||
Total | $ | 6,090 | $ | 140 |
March 31, 2019 | December 31, 2018 | ||||||||||||
(In millions) | Estimated Fair Value | Effective Duration (In years) | Estimated Fair Value | Effective Duration (In years) | |||||||||
Investments supporting Life & Group | $ | 16,968 | 8.7 | $ | 16,212 | 8.4 | |||||||
Other investments | 25,726 | 4.2 | 25,428 | 4.4 | |||||||||
Total | $ | 42,694 | 6.0 | $ | 41,640 | 6.0 |
(In millions) | March 31, 2019 | December 31, 2018 | |||||
Short term investments: | |||||||
Commercial paper | $ | 1,069 | $ | 705 | |||
U.S. Treasury securities | 212 | 185 | |||||
Other | 193 | 396 | |||||
Total short term investments | $ | 1,474 | $ | 1,286 |
• | the risks and uncertainties associated with our insurance reserves, as outlined in the Critical Accounting Estimates and the Reserves - Estimates and Uncertainties sections of our Annual Report on Form 10-K, including the sufficiency of the reserves and the possibility for future increases, which would be reflected in the results of operations in the period that the need for such adjustment is determined; |
• | the risk that the other parties to the transaction in which, subject to certain limitations, we ceded our legacy A&EP liabilities will not fully perform their obligations to CNA, the uncertainty in estimating loss reserves for A&EP liabilities and the possible continued exposure of CNA to liabilities for A&EP claims that are not covered under the terms of the transaction; |
• | the performance of reinsurance companies under reinsurance contracts with us; and |
• | the risks and uncertainties associated with potential acquisitions and divestitures, including the consummation of such transactions, the successful integration of acquired operations and the potential for subsequent impairment of goodwill or intangible assets. |
• | the impact of competitive products, policies and pricing and the competitive environment in which we operate, including changes in our book of business; |
• | product and policy availability and demand and market responses, including the level of ability to obtain rate increases and decline or non-renew underpriced accounts, to achieve premium targets and profitability and to realize growth and retention estimates; |
• | general economic and business conditions, including recessionary conditions that may decrease the size and number of our insurance customers and create additional losses to our lines of business, especially those that provide management and professional liability insurance, as well as surety bonds, to businesses engaged in real estate, financial services and professional services and inflationary pressures on medical care costs, construction costs and other economic sectors that increase the severity of claims; |
• | conditions in the capital and credit markets, including uncertainty and instability in these markets, as well as the overall economy, and their impact on the returns, types, liquidity and valuation of our investments; |
• | conditions in the capital and credit markets that may limit our ability to raise significant amounts of capital on favorable terms; and |
• | the possibility of changes in our ratings by ratings agencies, including the inability to access certain markets or distribution channels and the required collateralization of future payment obligations as a result of such changes, and changes in rating agency policies and practices. |
• | regulatory and legal initiatives and compliance with governmental regulations and other legal requirements, including with respect to cyber security protocols, legal inquiries by state authorities, judicial interpretations within the regulatory framework, including interpretation of policy provisions, decisions regarding coverage and theories of liability, legislative actions that increase claimant activity, including those revising applicability of statutes of limitations, trends in litigation and the outcome of any litigation involving us and rulings and changes in tax laws and regulations; |
• | regulatory limitations, impositions and restrictions upon us, including with respect to our ability to increase premium rates, and the effects of assessments and other surcharges for guaranty funds and second-injury funds, other mandatory pooling arrangements and future assessments levied on insurance companies; and |
• | regulatory limitations and restrictions, including limitations upon our ability to receive dividends from our insurance subsidiaries, imposed by regulatory authorities, including regulatory capital adequacy standards. |
• | weather and other natural physical events, including the severity and frequency of storms, hail, snowfall and other winter conditions, natural disasters such as hurricanes and earthquakes, as well as climate change, including effects on global weather patterns, greenhouse gases, sea, land and air temperatures, sea levels, rain, hail and snow; |
• | regulatory requirements imposed by coastal state regulators in the wake of hurricanes or other natural disasters, including limitations on the ability to exit markets or to non-renew, cancel or change terms and conditions in policies, as well as mandatory assessments to fund any shortfalls arising from the inability of quasi-governmental insurers to pay claims; |
• | man-made disasters, including the possible occurrence of terrorist attacks, the unpredictability of the nature, targets, severity or frequency of such events, and the effect of the absence or insufficiency of applicable terrorism legislation on coverages; and |
• | the occurrence of epidemics. |
• | in 2016, the U.K. approved an exit from the E.U., commonly referred to as "Brexit.” Brexit remains scheduled to be completed in 2019, although the formal exit has been delayed twice. Effective January 1, 2019, we write business in the E.U. through our recently established European subsidiary in Luxembourg and not through our U.K.-domiciled subsidiary. As a result, the complexity and cost of regulatory compliance of our European business has increased and will likely continue to result in elevated expenses. |
Period | (a) Total number of shares purchased | (b) Average price paid per share | (c) Total number of shares purchased as part of publicly announced plans or programs | (d) Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (in millions) | |||||||
February 1, 2019 - February 28, 2019 | 133,138 | $ | 43.93 | N/A | N/A | ||||||
March 1, 2019 - March 31, 2019 | 184,370 | 43.02 | N/A | N/A | |||||||
Total | 317,508 | 43.40 | N/A | N/A |
CNA Financial Corporation | ||
Dated: April 29, 2019 | By | /s/ James M. Anderson |
James M. Anderson Executive Vice President and Chief Financial Officer (Duly authorized officer and principal financial officer) |
Description of Exhibit | Exhibit Number |
10.1 | |
31.1 | |
31.2 | |
32.1 | |
32.2 | |
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | 101.INS |
XBRL Taxonomy Extension Schema | 101.SCH |
XBRL Taxonomy Extension Calculation Linkbase | 101.CAL |
XBRL Taxonomy Extension Definition Linkbase | 101.DEF |
XBRL Taxonomy Label Linkbase | 101.LAB |
XBRL Taxonomy Extension Presentation Linkbase | 101.PRE |
1. | Restricted Stock Units. Upon execution of this Agreement by both parties, Executive shall effective upon March 18, 2019 (the “Grant Date”) be granted rights as set forth herein to units of common stock of CNA Financial Corporation (“CNAF”) which shall bear a restricted transfer legend (the "Restricted Stock Units"), subject to the provisions as to the Vesting Period set forth herein below pursuant to the CNAF Incentive Compensation Plan (the “Plan”). The number of Restricted Stock Units Executive shall receive shall be determined by Company, in its sole discretion, as follows: the number Three Million ($3,000,000) shall be divided by the Fair Market Value (as that term is defined in the Plan, based on the average of CNAF high and low stock price) on the Grant Date of a single share of CNAF’s common stock, and the quotient shall be the number of Restricted Stock Units. |
2. | Vesting Period. With respect to all Restricted Stock Units which are the subject of the rights described in the provisions set forth above, the Vesting Period shall begin on the Grant Date. The Vesting Period with respect to the installment shown on the schedule shall end on the Vesting Date applicable to such installment, so long as Executive is employed by the Company or an affiliate on such a date: |
INSTALLMENT | VESTING DATE APPLICABLE TO INSTALLMENT |
One hundred percent of total Restricted Stock Units determined as indicated in paragraph 1. | 12/31/2019 |
3. | Effective Date. Notwithstanding any term or provision contained in this Agreement to the contrary, the terms and provisions of this Agreement and all rights granted herein shall be subject to the provisions of the Plan and to the prior review and approval of the Compensation Committee of CNAF’s Board of Directors. |
CNA FINANCIAL CORPORATION | Dino E. Robusto | ||
By: | /s/ James Anderson | /s/ Dino Robusto | |
Date: | March 18, 2019 | ||
Title: | EVP, Chief Financial Officer |
1. | I have reviewed this quarterly report on Form 10-Q of CNA Financial Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: | April 29, 2019 | By | /s/ Dino E. Robusto | |
Dino E. Robusto | ||||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of CNA Financial Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: | April 29, 2019 | By | /s/ James M. Anderson | |
James M. Anderson | ||||
Chief Financial Officer |
• | the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2019 filed on the date hereof with the Securities and Exchange Commission (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | April 29, 2019 | By | /s/ Dino E. Robusto | |
Dino E. Robusto | ||||
Chief Executive Officer |
• | the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2019 filed on the date hereof with the Securities and Exchange Commission (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | April 29, 2019 | By | /s/ James M. Anderson | |
James M. Anderson | ||||
Chief Financial Officer |
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Document and Entity Information Document - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Apr. 25, 2019 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CNA FINANCIAL CORP | |
Entity Central Index Key | 0000021175 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding (in shares) | 271,539,570 |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Net income | $ 342 | $ 291 |
Other Comprehensive Income (Loss), Net of Tax | ||
Net unrealized gains on investments | (530) | 438 |
Foreign currency translation adjustment | 17 | 12 |
Pension and postretirement benefits | 7 | 10 |
Other comprehensive income (loss), net of tax | 554 | (416) |
Total comprehensive income (loss) | 896 | (125) |
Net unrealized gains on investments with other-than-temporary impairments | ||
Other Comprehensive Income (Loss), Net of Tax | ||
Net unrealized gains on investments | 4 | (9) |
Net unrealized gains on other investments | ||
Other Comprehensive Income (Loss), Net of Tax | ||
Net unrealized gains on investments | $ (526) | $ 429 |
Condensed Consolidated Balance Sheets - (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Fixed maturities securities at amortized cost | $ 37,940 | $ 38,085 |
Equity securities at cost | 812 | 844 |
Allowance for uncollectible reinsurance | 29 | 29 |
Allowance for uncollectible insurance receivables | 41 | 42 |
Accumulated depreciation on property and equipment | 214 | 216 |
Due to related parties | 31 | 23 |
Due from related parties | $ 0 | $ 8 |
Common stock, par value (in usd per share) | $ 2.50 | $ 2.50 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 273,040,243 | 273,040,243 |
Common stock, shares outstanding (in shares) | 271,527,510 | 271,456,978 |
Treasury stock, shares (in shares) | 1,512,733 | 1,583,265 |
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) |
Total |
Common Stock |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Treasury Stock |
---|---|---|---|---|---|---|
Total stockholder's equity at beginning of period at Dec. 31, 2017 | $ 683,000,000 | $ 2,175,000,000 | $ 9,364,000,000 | $ 16,000,000 | $ (60,000,000) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | (2,000,000) | 1,000,000 | ||||
Dividends to common stockholders ($2.35 and $2.30 per share) | (627,000,000) | |||||
Net income | $ 291,000,000 | 291,000,000 | ||||
Other comprehensive income (loss) | (416,000,000) | (416,000,000) | ||||
Purchase of treasury stock | 0 | |||||
Total stockholder's equity at end of period at Mar. 31, 2018 | 11,425,000,000 | 683,000,000 | 2,173,000,000 | 9,028,000,000 | (400,000,000) | (59,000,000) |
Total stockholder's equity at beginning of period at Dec. 31, 2017 | 683,000,000 | 2,175,000,000 | 9,364,000,000 | 16,000,000 | (60,000,000) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Purchase of treasury stock | 0 | |||||
Total stockholder's equity at end of period at Dec. 31, 2018 | 11,217,000,000 | 683,000,000 | 2,192,000,000 | 9,277,000,000 | (878,000,000) | (57,000,000) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | (8,000,000) | 7,000,000 | ||||
Dividends to common stockholders ($2.35 and $2.30 per share) | (643,000,000) | |||||
Net income | 342,000,000 | 342,000,000 | ||||
Other comprehensive income (loss) | 554,000,000 | 554,000,000 | ||||
Purchase of treasury stock | (14,000,000) | (14,000,000) | ||||
Total stockholder's equity at end of period at Mar. 31, 2019 | $ 11,455,000,000 | $ 683,000,000 | $ 2,184,000,000 | $ 8,976,000,000 | $ (324,000,000) | $ (64,000,000) |
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement of Stockholders' Equity [Abstract] | ||
Dividends declared per share (usd per share) | $ 2.35 | $ 2.30 |
General |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General | General Basis of Presentation The Condensed Consolidated Financial Statements include the accounts of CNA Financial Corporation (CNAF) and its subsidiaries. Collectively, CNAF and its subsidiaries are referred to as CNA or the Company. Loews Corporation (Loews) owned approximately 89% of the outstanding common stock of CNAF as of March 31, 2019. The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). Intercompany amounts have been eliminated. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, including certain financial statement notes, is not required for interim reporting purposes and has been condensed or omitted. These statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in CNAF's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2018, including the summary of significant accounting policies in Note A. The preparation of Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. The interim financial data as of March 31, 2019 and for the three months ended March 31, 2019 and 2018 is unaudited. However, in the opinion of management, the interim data includes all adjustments, including normal recurring adjustments, necessary for a fair statement of the Company's results for the interim periods. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Recently Adopted Accounting Standards Updates (ASU) ASU 2016-02: In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases (Topic 842): Accounting for Leases. The updated accounting guidance requires lessees to recognize on the balance sheet assets and liabilities for the rights and obligations created by the majority of leases, including those historically accounted for as operating leases. On January 1, 2019, the Company adopted the updated guidance using a modified retrospective method. Prior period amounts have not been adjusted and continue to be reported in accordance with the previous accounting guidance. The Company utilized the package of practical expedients allowing the Company to not reassess whether a contract is or contains a lease, lease classification and initial direct costs. The Company also utilized the practical expedient to not separate lease and non-lease components for all leases. Adoption of the updated guidance resulted in the following changes to the Condensed Consolidated Balance Sheet on January 1, 2019:
Operating lease right-of-use (ROU) assets, included within Other assets, were reduced by accrued rent and lease incentives of $75 million previously classified as Other liabilities. The updated guidance did not impact the Condensed Consolidated Statements of Operations. See Note K to the Condensed Consolidated Financial Statements for additional information regarding leases. Accounting Standards Pending Adoption In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The updated accounting guidance requires changes to the recognition of credit losses on financial instruments not accounted for at fair value through net income. The guidance is effective for interim and annual periods beginning after December 15, 2019. The guidance will be applied using a modified retrospective approach with the cumulative effect recognized as an adjustment to retained earnings. A prospective transition approach is required for debt securities that have recognized an other-than-temporary impairment prior to the effective date. The Company is currently evaluating the effect the guidance will have on the Company's financial statements, but expects the primary changes to be the use of the expected credit loss model for its mortgage loan portfolio, reinsurance and insurance receivables and other financing receivables and the use of the allowance method rather than the write-down method for credit losses within the available-for-sale fixed maturities portfolio. The expected credit loss model will require a financial asset to be presented at the net amount expected to be collected. The allowance method for available-for-sale debt securities will allow the Company to record reversals of credit losses if the estimate of credit losses declines. In August 2018, the FASB issued ASU 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The updated accounting guidance requires changes to the measurement and disclosure of long-duration contracts. The guidance requires entities to annually update cash flow assumptions, including morbidity and persistency, and update discount rate assumptions quarterly using an upper-medium grade fixed-income instrument yield. The effect of changes in cash flow assumptions will be recorded in Net income and the effect of changes in discount rate assumptions will be recorded in Other comprehensive income. This guidance is effective for interim and annual periods beginning after December 15, 2020, and requires restatement of the prior periods presented. Early adoption is permitted. The Company is currently evaluating the method and timing of adoption and the effect the updated guidance will have on its financial statements. The annual updating of cash flow assumptions is expected to increase income statement volatility. The quarterly change in discount rate is expected to increase volatility in the Company’s stockholders' equity, but that will be somewhat mitigated because Shadow Adjustments are eliminated under the new guidance. While the requirements of the new guidance represent a material change from existing GAAP, the underlying economics of the business and related cash flows are unchanged.
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Earnings (Loss) Per Share |
3 Months Ended |
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Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Earnings (loss) per share is based on the weighted average number of outstanding common shares. Basic earnings (loss) per share excludes the impact of dilutive securities and is computed by dividing Net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the three months ended March 31, 2019 and 2018, approximately 971 thousand and 1,009 thousand potential shares attributable to exercises or conversions into common stock under stock-based employee compensation plans were included in the calculation of diluted earnings per share. For the three months ended March 31, 2018 approximately 9 thousand potential shares attributable to exercises or conversions into common stock under stock-based employee compensation plans were not included in the calculation of diluted earnings per share, because the effect would have been antidilutive. For the three months ended March 31, 2019 there were no antidilutive shares. The Company repurchased 317,508 shares of CNA Financial Corporation common stock at an aggregate cost of $14 million during the three months ended March 31, 2019. No repurchases were made during 2018.
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Investments |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments The significant components of Net investment income are presented in the following table.
During the three months ended March 31, 2019 and 2018, $17 million and less than $1 million of Net investment income was recognized due to the change in fair value of common stock still held as of March 31, 2019 and 2018. Net investment gains (losses) are presented in the following table.
During the three months ended March 31, 2019 and 2018, $42 million of Net investment gains and $15 million of Net investment losses were recognized due to the change in fair value of non-redeemable preferred stock still held as of March 31, 2019 and 2018. The components of Other-than-temporary impairment (OTTI) losses recognized in earnings by asset type are presented in the following table.
The following tables present a summary of fixed maturity securities.
The net unrealized gains on investments included in the tables above are recorded as a component of AOCI. When presented in AOCI, these amounts are net of tax and any required Shadow Adjustments. To the extent that unrealized gains on fixed income securities supporting certain products within the Life & Group segment would result in a premium deficiency if realized, a related increase in Insurance reserves is recorded, net of tax, as a reduction of net unrealized gains through Other comprehensive income (loss) (Shadow Adjustments). As of March 31, 2019 and December 31, 2018, the net unrealized gains on investments included in AOCI were correspondingly reduced by Shadow Adjustments of $1,458 million and $1,078 million. The following tables present the estimated fair value and gross unrealized losses of fixed maturity securities in a gross unrealized loss position by the length of time in which the securities have continuously been in that position.
Based on current facts and circumstances, the Company believes the unrealized losses presented in the March 31, 2019 securities in a gross unrealized loss position table above are not indicative of the ultimate collectibility of the current amortized cost of the securities, but rather are attributable to changes in interest rates, credit spreads and other factors. The Company has no current intent to sell securities with unrealized losses, nor is it more likely than not that it will be required to sell prior to recovery of amortized cost; accordingly, the Company has determined that there are no additional OTTI losses to be recorded as of March 31, 2019. The following table presents the activity related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held as of March 31, 2019 and 2018 for which a portion of an OTTI loss was recognized in Other comprehensive income (loss).
Contractual Maturity The following table presents available-for-sale fixed maturity securities by contractual maturity.
Actual maturities may differ from contractual maturities because certain securities may be called or prepaid. Securities not due at a single date are allocated based on weighted average life. Derivative Financial Instruments The Company holds an embedded derivative on a funds withheld liability with a notional value of $174 million and $172 million as of March 31, 2019 and December 31, 2018 and a fair value of $(2) million and $4 million as of March 31, 2019 and December 31, 2018. The embedded derivative on the funds withheld liability is accounted for separately and reported with the funds withheld liability in Other liabilities on the Condensed Consolidated Balance Sheets. Investment Commitments As of March 31, 2019, the Company had committed approximately $597 million to future capital calls from various third-party limited partnership investments in exchange for an ownership interest in the related partnerships. As of March 31, 2019, the Company had mortgage loan commitments of $9 million representing signed loan applications received and accepted. The Company invests in various privately placed debt securities, including bank loans, as part of its overall investment strategy and has committed to additional future purchases, sales and funding. Purchases and sales of privately placed debt securities are recorded once funded. As of March 31, 2019, the Company had commitments to purchase or fund additional amounts of $283 million and sell $150 million under the terms of such securities.
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair ValueFair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable. Level 1 - Quoted prices for identical instruments in active markets. Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets. Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are not observable. Prices may fall within Level 1, 2 or 3 depending upon the methodology and inputs used to estimate fair value for each specific security. In general, the Company seeks to price securities using third-party pricing services. Securities not priced by pricing services are submitted to independent brokers for valuation and, if those are not available, internally developed pricing models are used to value assets using a methodology and inputs the Company believes market participants would use to value the assets. Prices obtained from third-party pricing services or brokers are not adjusted by the Company. The Company performs control procedures over information obtained from pricing services and brokers to ensure prices received represent a reasonable estimate of fair value and to confirm representations regarding whether inputs are observable or unobservable. Procedures may include i) the review of pricing service methodologies or broker pricing qualifications, ii) back-testing, where past fair value estimates are compared to actual transactions executed in the market on similar dates, iii) exception reporting, where period-over-period changes in price are reviewed and challenged with the pricing service or broker based on exception criteria, iv) deep dives, where the Company performs an independent analysis of the inputs and assumptions used to price individual securities and v) pricing validation, where prices received are compared to prices independently estimated by the Company. Assets and Liabilities Measured at Fair Value Assets and liabilities measured at fair value on a recurring basis are presented in the following tables. Corporate bonds and other includes obligations of the U.S. Treasury, government-sponsored enterprises, foreign governments and redeemable preferred stock.
The following section describes the valuation methodologies and relevant inputs used to measure different financial instruments at fair value, including an indication of the level in the fair value hierarchy in which the instruments are generally classified. Fixed Maturity Securities Level 1 securities include highly liquid and exchange traded bonds and redeemable preferred stock, valued using quoted market prices. Level 2 securities include most other fixed maturity securities as the significant inputs are observable in the marketplace. All classes of Level 2 fixed maturity securities are valued using a methodology based on information generated by market transactions involving identical or comparable assets, a discounted cash flow methodology, or a combination of both when necessary. Common inputs for all classes of fixed maturity securities include prices from recently executed transactions of similar securities, marketplace quotes, benchmark yields, spreads off benchmark yields, interest rates and U.S. Treasury or swap curves. Specifically for asset-backed securities, key inputs include prepayment and default projections based on past performance of the underlying collateral and current market data. Fixed maturity securities are primarily assigned to Level 3 in cases where broker/dealer quotes are significant inputs to the valuation and there is a lack of transparency as to whether these quotes are based on information that is observable in the marketplace. Level 3 securities also include private placement debt securities whose fair value is determined using internal models with inputs that are not market observable. Equity Securities Level 1 equity securities include publicly traded securities valued using quoted market prices. Level 2 securities are primarily valued using pricing for similar securities, recently executed transactions and other pricing models utilizing market observable inputs. Level 3 securities are primarily priced using broker/dealer quotes and internal models with inputs that are not market observable. Short Term and Other Invested Assets Securities that are actively traded or have quoted prices are classified as Level 1. These securities include money market funds and treasury bills. Level 2 primarily includes commercial paper, for which all inputs are market observable. Fixed maturity securities purchased within one year of maturity are classified consistent with fixed maturity securities discussed above. Short term investments as presented in the tables above differ from the amounts presented on the Consolidated Balance Sheets because certain short term investments, such as time deposits, are not measured at fair value. As of March 31, 2019 and December 31, 2018, there were approximately $54 million and $48 million of overseas deposits within other invested assets, which can be redeemed at net asset value in 90 days or less. Overseas deposits are excluded from the fair value hierarchy because their fair value is recorded using the net asset value per share (or equivalent) practical expedient. Derivative Financial Investments Level 2 investments primarily include the embedded derivative on the funds withheld liability. The embedded derivative on funds withheld liability is valued using the change in fair value of the assets supporting the funds withheld liability, which are fixed maturity securities valued with observable inputs. Significant Unobservable Inputs The following tables present quantitative information about the significant unobservable inputs utilized by the Company in the fair value measurements of Level 3 assets. Valuations for assets and liabilities not presented in the tables below are primarily based on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. The quantitative detail of these unobservable inputs is neither provided nor reasonably available to the Company. The weighted average rate is calculated based on fair value.
For fixed maturity securities, an increase to the credit spread assumptions would result in a lower fair value measurement. Financial Assets and Liabilities Not Measured at Fair Value The carrying amount and estimated fair value of the Company's financial assets and liabilities which are not measured at fair value on the Condensed Consolidated Balance Sheets are presented in the following tables.
The following methods and assumptions were used to estimate the fair value of these financial assets and liabilities. The fair values of mortgage loans were based on the present value of the expected future cash flows discounted at the current interest rate for origination of similar quality loans, adjusted for specific loan risk. The fair value of the note receivable was based on the present value of the expected future cash flows discounted at the current interest rate for origination of similar notes, adjusted for specific credit risk. The note receivable is included within Other assets on the Condensed Consolidated Balance Sheets. The Company's senior notes and debentures were valued based on observable market prices. The fair value for other debt was estimated using discounted cash flows based on current incremental borrowing rates for similar borrowing arrangements. The carrying amounts reported on the Condensed Consolidated Balance Sheets for Cash, Short term investments not carried at fair value, Accrued investment income and certain Other assets and Other liabilities approximate fair value due to the short term nature of these items. These assets and liabilities are not listed in the tables above.
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Claim and Claim Adjustment Expense Reserves |
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Liability for Claims and Claims Adjustment Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Claim and Claim Adjustment Expense Reserves | Claim and Claim Adjustment Expense Reserves Property and casualty insurance claim and claim adjustment expense reserves represent the estimated amounts necessary to resolve all outstanding claims, including incurred but not reported (IBNR) claims as of the reporting date. The Company's reserve projections are based primarily on detailed analysis of the facts in each case, the Company's experience with similar cases and various historical development patterns. Consideration is given to historical patterns such as claim reserving trends and settlement practices, loss payments, pending levels of unpaid claims and product mix, as well as court decisions and economic conditions, including inflation, and public attitudes. All of these factors can affect the estimation of claim and claim adjustment expense reserves. Establishing claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves for catastrophic events that have occurred, is an estimation process. Many factors can ultimately affect the final settlement of a claim and, therefore, the necessary reserve. Changes in the law, results of litigation, medical costs, the cost of repair materials and labor rates can affect ultimate claim costs. In addition, time can be a critical part of reserving determinations since the longer the span between the incidence of a loss and the payment or settlement of the claim, the more variable the ultimate settlement amount can be. Accordingly, short-tail claims, such as property damage claims, tend to be more reasonably estimable than long-tail claims, such as workers' compensation, general liability and professional liability claims. Adjustments to prior year reserve estimates, if necessary, are reflected in the results of operations in the period that the need for such adjustments is determined. There can be no assurance that the Company's ultimate cost for insurance losses will not exceed current estimates. Catastrophes are an inherent risk of the property and casualty insurance business and have contributed to material period-to-period fluctuations in our results of operations and/or equity. The Company reported catastrophe losses, net of reinsurance, of $58 million and $34 million for the three months ended March 31, 2019 and 2018. Net catastrophe losses in the first quarter of 2019 and 2018 related primarily to U.S. weather related events. Liability for Unpaid Claim and Claim Adjustment Expenses The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves of the Life & Group segment.
Net Prior Year Development Changes in estimates of claim and claim adjustment expense reserves, net of reinsurance, for prior years are defined as net prior year loss reserve development (development). These changes can be favorable or unfavorable. The following table presents development recorded for the Specialty, Commercial, International and Corporate & Other segments.
The following table presents further detail of the development recorded for the Specialty segment.
2019 Unfavorable development in medical professional liability was primarily due to higher than expected severity in accident year 2013 in our allied healthcare business. Favorable development in other professional liability and management liability was primarily due to lower than expected claim frequency and favorable outcomes on individual claims in accident years 2017 and prior related to financial institutions. This was partially offset by unfavorable development in management liability in accident year 2014 due to large claim activity. Favorable development in surety was due to lower than expected frequency for accident years 2016 and prior. 2018 Unfavorable development in medical professional liability was primarily due to higher than expected severity in accident years 2014 and 2017 in our hospitals business. Favorable development in other professional liability and management liability was primarily due to lower than expected claim frequency in accident years 2013 through 2015 related to financial institutions. Favorable development in surety was due to lower than expected loss emergence for accident years 2015 and prior.CommercialThe following table presents further detail of the development recorded for the Commercial segment.
2019 Favorable development in general liability was primarily due to lower than expected frequency on latent construction defect claims in multiple accident years. Unfavorable development in property and other was primarily due to higher than expected frequency and large loss activity in accident year 2018 in our marine business. 2018 Favorable development in general liability was primarily due to lower than expected frequency and severity in accident years 2015 and prior for our middle market construction business.InternationalThe following table presents further detail of the development recorded for the International segment.
(1) Effective January 1, 2019 the Healthcare and Technology line of business has been absorbed within the Specialty line of business in the International segment. Prior period information has been conformed to the new line of business presentation. 2019 Unfavorable development in property was driven by higher than expected claims in Hardy on 2018 accident year catastrophes.Asbestos and Environmental Pollution (A&EP) ReservesIn 2010, Continental Casualty Company (CCC) together with several of the Company’s insurance subsidiaries completed a transaction with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc., under which substantially all of the Company’s legacy A&EP liabilities were ceded to NICO through a Loss Portfolio Transfer (LPT). At the effective date of the transaction, the Company ceded approximately $1.6 billion of net A&EP claim and allocated claim adjustment expense reserves to NICO under a retroactive reinsurance agreement with an aggregate limit of $4 billion. The $1.6 billion of claim and allocated claim adjustment expense reserves ceded to NICO was net of $1.2 billion of ceded claim and allocated claim adjustment expense reserves under existing third-party reinsurance contracts. The NICO LPT aggregate reinsurance limit also covers credit risk on the existing third-party reinsurance related to these liabilities. The Company paid NICO a reinsurance premium of $2 billion and transferred to NICO billed third-party reinsurance receivables related to A&EP claims with a net book value of $215 million, resulting in total consideration of $2.2 billion. In years subsequent to the effective date of the LPT, the Company recognized adverse prior year development on its A&EP reserves resulting in additional amounts ceded under the LPT. As a result, the cumulative amounts ceded under the LPT have exceeded the $2.2 billion consideration paid, resulting in the NICO LPT moving into a gain position, requiring retroactive reinsurance accounting. Under retroactive reinsurance accounting, this gain is deferred and only recognized in earnings in proportion to actual paid recoveries under the LPT. Over the life of the contract, there is no economic impact as long as any additional losses incurred are within the limit of the LPT. In a period in which the Company recognizes a change in the estimate of A&EP reserves that increases or decreases the amounts ceded under the LPT, the proportion of actual paid recoveries to total ceded losses is affected and the change in the deferred gain is recognized in earnings as if the revised estimate of ceded losses was available at the effective date of the LPT. The effect of the deferred retroactive reinsurance benefit is recorded in Insurance claims and policyholders' benefits in the Condensed Consolidated Statements of Operations. The following table presents the impact of the Loss Portfolio Transfer on the Condensed Consolidated Statements of Operations.
The Company intends to complete its annual A&EP reserve review in the fourth quarter of 2019 and maintain this timing for all future annual A&EP reserve reviews. The Company completed A&EP reserve reviews in both the first and fourth quarters of 2018. Based upon the Company's 2018 first quarter A&EP reserve review, net unfavorable prior year development of $113 million was recognized before consideration of cessions to the LPT for the three months ended March 31, 2018. The 2018 unfavorable development was driven by higher than anticipated defense costs on direct asbestos and environmental accounts and paid losses on assumed reinsurance exposures. Additionally, in 2018, the Company released a portion of its provision for uncollectible third-party reinsurance. As of March 31, 2019 and December 31, 2018, the cumulative amounts ceded under the LPT were $3.1 billion. The unrecognized deferred retroactive reinsurance benefit was $352 million and $374 million as of March 31, 2019 and December 31, 2018 and is included within Other liabilities on the Condensed Consolidated Balance Sheets. NICO established a collateral trust account as security for its obligations to the Company. The fair value of the collateral trust account was $3.0 billion and $2.7 billion as of March 31, 2019 and December 31, 2018. In addition, Berkshire Hathaway Inc. guaranteed the payment obligations of NICO up to the aggregate reinsurance limit as well as certain of NICO’s performance obligations under the trust agreement. NICO is responsible for claims handling and billing and collection from third-party reinsurers related to the majority of the Company’s A&EP claims.
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Legal Proceedings, Contingencies and Guarantees |
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Mar. 31, 2019 | |
Legal Proceedings, Commitments and Contingencies, and Guarantees [Abstract] | |
Legal Proceedings, Contingencies and Guarantees | Legal Proceedings, Contingencies and Guarantees The Company is a party to routine litigation incidental to its business, which, based on the facts and circumstances currently known, is not material to the Company's results of operations or financial position. Guarantees As of March 31, 2019 and December 31, 2018, the Company had recorded liabilities of approximately $5 million related to guarantee and indemnification agreements and management does not believe that any future indemnity claims will be significantly greater than the amounts recorded. In the course of selling business entities and assets to third parties, the Company agreed to guarantee the performance of certain obligations of previously owned subsidiaries and to indemnify purchasers for losses arising out of breaches of representations and warranties with respect to the business entities or assets sold, including, in certain cases, losses arising from undisclosed liabilities or certain named litigation. Such guarantee and indemnification agreements in effect for sales of business entities, assets and third-party loans may include provisions that survive indefinitely. As of March 31, 2019, the aggregate amount related to quantifiable guarantees was $375 million and the aggregate amount related to quantifiable indemnification agreements was $252 million. In certain cases, should the Company be required to make payments under any such guarantee, it would have the right to seek reimbursement from an affiliate of a previously owned subsidiary. In addition, the Company has agreed to provide indemnification to third-party purchasers for certain losses associated with sold business entities or assets that are not limited by a contractual monetary amount. As of March 31, 2019, the Company had outstanding unlimited indemnifications in connection with the sales of certain of its business entities or assets that included tax liabilities arising prior to a purchaser's ownership of an entity or asset, defects in title at the time of sale, employee claims arising prior to closing and in some cases losses arising from certain litigation and undisclosed liabilities. Certain provisions of the indemnification agreements survive indefinitely, while others survive until the applicable statutes of limitation expire, or until the agreed-upon contract terms expire. The Company also provided guarantees, if the primary obligor fails to perform, to holders of structured settlement annuities provided by a previously owned subsidiary. As of March 31, 2019, the potential amount of future payments the Company could be required to pay under these guarantees was approximately $1.7 billion, which will be paid over the lifetime of the annuitants. The Company does not believe any payment is likely under these guarantees, as the Company is the beneficiary of a trust that must be maintained at a level that approximates the discounted reserves for these annuities.
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Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Benefit Plans | Benefit Plans The components of net periodic pension cost (benefit) are presented in the following table.
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Accumulated Other Comprehensive Income (Loss) by Component |
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Accumulated Other Comprehensive Income (Loss) by Component | Accumulated Other Comprehensive Income (Loss) by Component The tables below display the changes in Accumulated other comprehensive income (loss) by component.
Amounts reclassified from Accumulated other comprehensive income (loss) shown above are reported in Net income (loss) as follows:
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Business Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | Business SegmentsThe Company's property and casualty commercial insurance operations are managed and reported in three business segments: Specialty, Commercial and International. These three segments are collectively referred to as Property & Casualty Operations. The Company's operations outside of Property & Casualty Operations are managed and reported in two segments: Life & Group and Corporate & Other. The accounting policies of the segments are the same as those described in Note A to the Consolidated Financial Statements within CNAF's Annual Report on Form 10-K for the year ended December 31, 2018. The Company manages most of its assets on a legal entity basis, while segment operations are generally conducted across legal entities. As such, only Insurance and Reinsurance receivables, Insurance reserves, Deferred acquisition costs, Goodwill and Deferred non-insurance warranty acquisition expense and revenue are readily identifiable for individual segments. Distinct investment portfolios are not maintained for every individual segment; accordingly, allocation of assets to each segment is not performed. Therefore, a significant portion of Net investment income and Net investment gains or losses are allocated primarily based on each segment's net carried insurance reserves, as adjusted. All significant intersegment income and expense have been eliminated. Income taxes have been allocated on the basis of the taxable income of the segments. In the following tables, certain financial measures are presented to provide information used by management to monitor the Company's operating performance. Management utilizes these financial measures to monitor the Company's insurance operations and investment portfolio. The performance of the Company's insurance operations is monitored by management through core income (loss), which is derived from certain income statement amounts. The Company's investment portfolio is monitored by management through analysis of various factors including unrealized gains and losses on securities, portfolio duration and exposure to market and credit risk. Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of i) net investment gains (losses), ii) income or loss from discontinued operations, iii) any cumulative effects of changes in accounting guidance and iv) deferred tax asset and liability remeasurement as a result of an enacted U.S. Federal tax rate change. The calculation of core income (loss) excludes net investment gains or losses because net investment gains or losses are generally driven by economic factors that are not necessarily consistent with key drivers of underwriting performance, and are therefore not considered an indication of trends in insurance operations.The Company's results of operations and selected balance sheet items by segment are presented in the following tables.
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Non-Insurance Revenues from Contracts with Customers |
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Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Non-Insurance Revenues from Contracts with Customers | Non-Insurance Revenues from Contracts with CustomersThe Company had deferred non-insurance warranty revenue balances of $3.5 billion and $3.4 billion reported in Deferred non-insurance warranty revenue as of March 31, 2019 and December 31, 2018. For the three months ended March 31, 2019, the Company recognized $265 million of revenues that were included in the deferred revenue balance as of January 1, 2019. For the three months ended March 31, 2018, the Company recognized $222 million of revenues that were included in the deferred revenue balance as of January 1, 2018. For the three months ended March 31, 2019 and 2018, Non-insurance warranty revenue recognized from performance obligations related to prior periods due to a change in estimate was not material. The Company expects to recognize approximately $754 million of the deferred revenue in the remainder of 2019, $852 million in 2020, $673 million in 2021 and $1.2 billion thereafter. |
Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases A lease provides the lessee the right to control the use of an identified asset for a period of time in exchange for consideration. Operating lease ROU assets and lease liabilities are included in Other assets and Other liabilities on the Company's Condensed Consolidated Balance Sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and operating lease liabilities represent the Company's obligation to make lease payments arising from the lease. The Company determines if an arrangement is a lease at inception. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Most operating leases contain renewal options that provide for rent increases based on prevailing market conditions. Certain leases contain options to terminate before maturity. The lease term used to calculate the ROU asset includes any renewal options or lease termination that the Company expects to exercise. The discount rate used to determine the commencement date present value of lease payments is the interest rate implicit in the lease, or when that is not readily determinable, the Company utilizes its secured borrowing rate. ROU assets include any lease payments required to be made prior to commencement and exclude lease incentives. Both ROU assets and lease liabilities exclude variable payments not based on an index or rate, which are treated as period costs. The Company's lease agreements do not contain significant residual value guarantees, restrictions or covenants. The Company occupies office facilities under lease agreements that expire at various dates. In addition, data processing, office and transportation equipment is leased under agreements that expire at various dates. The Company’s leases generally include lease and non-lease components, which the Company has elected to account for as a single lease component. Variable lease costs not based on an index or rate consist of non-lease components, which are being accounted for as lease components, and represent charges for services provided by the landlord and our reimbursement for the landlord’s costs, including real estate taxes and insurance. The Company does not have any significant finance leases. Operating lease cost was $10 million and variable lease cost was $4 million for the three months ended March 31, 2019. Cash paid for amounts included in operating lease liabilities was $8 million for the three months ended March 31, 2019. The table below presents operating lease ROU assets and lease liabilities as of March 31, 2019:
The table below presents the maturities of operating lease liabilities as of March 31, 2019:
The table below presents the weighted average remaining lease term for operating leases and weighted average discount rate used in calculating operating lease right-of-use assets:
The table below presents the expected future minimum lease payments to be made under non-cancelable operating leases as of December 31, 2018:
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General (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidation | The Condensed Consolidated Financial Statements include the accounts of CNA Financial Corporation (CNAF) and its subsidiaries. Collectively, CNAF and its subsidiaries are referred to as CNA or the Company. Loews Corporation (Loews) owned approximately 89% of the outstanding common stock of CNAF as of March 31, 2019. The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). Intercompany amounts have been eliminated. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, including certain financial statement notes, is not required for interim reporting purposes and has been condensed or omitted. These statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in CNAF's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2018, including the summary of significant accounting policies in Note A. The preparation of Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. The interim financial data as of March 31, 2019 and for the three months ended March 31, 2019 and 2018 is unaudited. However, in the opinion of management, the interim data includes all adjustments, including normal recurring adjustments, necessary for a fair statement of the Company's results for the interim periods. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.
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Recently Adopted Accounting Standards Updates and Accounting Standards Pending Adoption | Recently Adopted Accounting Standards Updates (ASU) ASU 2016-02: In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases (Topic 842): Accounting for Leases. The updated accounting guidance requires lessees to recognize on the balance sheet assets and liabilities for the rights and obligations created by the majority of leases, including those historically accounted for as operating leases. On January 1, 2019, the Company adopted the updated guidance using a modified retrospective method. Prior period amounts have not been adjusted and continue to be reported in accordance with the previous accounting guidance. The Company utilized the package of practical expedients allowing the Company to not reassess whether a contract is or contains a lease, lease classification and initial direct costs. The Company also utilized the practical expedient to not separate lease and non-lease components for all leases. Adoption of the updated guidance resulted in the following changes to the Condensed Consolidated Balance Sheet on January 1, 2019:
Operating lease right-of-use (ROU) assets, included within Other assets, were reduced by accrued rent and lease incentives of $75 million previously classified as Other liabilities. The updated guidance did not impact the Condensed Consolidated Statements of Operations. See Note K to the Condensed Consolidated Financial Statements for additional information regarding leases. Accounting Standards Pending Adoption In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The updated accounting guidance requires changes to the recognition of credit losses on financial instruments not accounted for at fair value through net income. The guidance is effective for interim and annual periods beginning after December 15, 2019. The guidance will be applied using a modified retrospective approach with the cumulative effect recognized as an adjustment to retained earnings. A prospective transition approach is required for debt securities that have recognized an other-than-temporary impairment prior to the effective date. The Company is currently evaluating the effect the guidance will have on the Company's financial statements, but expects the primary changes to be the use of the expected credit loss model for its mortgage loan portfolio, reinsurance and insurance receivables and other financing receivables and the use of the allowance method rather than the write-down method for credit losses within the available-for-sale fixed maturities portfolio. The expected credit loss model will require a financial asset to be presented at the net amount expected to be collected. The allowance method for available-for-sale debt securities will allow the Company to record reversals of credit losses if the estimate of credit losses declines. In August 2018, the FASB issued ASU 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The updated accounting guidance requires changes to the measurement and disclosure of long-duration contracts. The guidance requires entities to annually update cash flow assumptions, including morbidity and persistency, and update discount rate assumptions quarterly using an upper-medium grade fixed-income instrument yield. The effect of changes in cash flow assumptions will be recorded in Net income and the effect of changes in discount rate assumptions will be recorded in Other comprehensive income. This guidance is effective for interim and annual periods beginning after December 15, 2020, and requires restatement of the prior periods presented. Early adoption is permitted. The Company is currently evaluating the method and timing of adoption and the effect the updated guidance will have on its financial statements. The annual updating of cash flow assumptions is expected to increase income statement volatility. The quarterly change in discount rate is expected to increase volatility in the Company’s stockholders' equity, but that will be somewhat mitigated because Shadow Adjustments are eliminated under the new guidance. While the requirements of the new guidance represent a material change from existing GAAP, the underlying economics of the business and related cash flows are unchanged.
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General General (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | Adoption of the updated guidance resulted in the following changes to the Condensed Consolidated Balance Sheet on January 1, 2019:
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Investments (Tables) |
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | The significant components of Net investment income are presented in the following table.
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Net realized investment gains (losses) | Net investment gains (losses) are presented in the following table.
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Components of net other than temporary impairment losses recognized in earnings by asset type | The components of Other-than-temporary impairment (OTTI) losses recognized in earnings by asset type are presented in the following table.
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Summary of fixed maturity and equity securities | The following tables present a summary of fixed maturity securities.
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Securities in a gross unrealized loss position | The following tables present the estimated fair value and gross unrealized losses of fixed maturity securities in a gross unrealized loss position by the length of time in which the securities have continuously been in that position.
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Activity related to the pretax fixed maturity credit loss component reflected within retained earnings for securities still held for which a portion of an OTTI loss was recognized in OCI | The following table presents the activity related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held as of March 31, 2019 and 2018 for which a portion of an OTTI loss was recognized in Other comprehensive income (loss).
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Contractual maturity | The following table presents available-for-sale fixed maturity securities by contractual maturity.
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Fair Value (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis | Assets and liabilities measured at fair value on a recurring basis are presented in the following tables. Corporate bonds and other includes obligations of the U.S. Treasury, government-sponsored enterprises, foreign governments and redeemable preferred stock.
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Table of reconciliation for assets and liablities measured at fair value on a recurring basis using significant unobservable inputs | The tables below present a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3).
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Quantitative information about significant unobservable inputs in the fair value measurement of level 3 assets | The following tables present quantitative information about the significant unobservable inputs utilized by the Company in the fair value measurements of Level 3 assets. Valuations for assets and liabilities not presented in the tables below are primarily based on broker/dealer quotes for which there is a lack of transparency as to inputs used to develop the valuations. The quantitative detail of these unobservable inputs is neither provided nor reasonably available to the Company. The weighted average rate is calculated based on fair value.
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Carrying amount and estimated fair value of financial instrument assets and liabilities not measured at fair value | The carrying amount and estimated fair value of the Company's financial assets and liabilities which are not measured at fair value on the Condensed Consolidated Balance Sheets are presented in the following tables.
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Claim and Claim Adjustment Expense Reserves (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Incurred Claim and Claim Adjustment Expense [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of liability for unpaid claims and claims adjustment expense | The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves of the Life & Group segment.
(1) Total net incurred above does not agree to Insurance claims and policyholders' benefits as reflected on the Condensed Consolidated Statements of Operations due to amounts related to retroactive reinsurance deferred gain accounting, uncollectible reinsurance and loss deductible receivables, and benefit expenses related to future policy benefits, which are not reflected in the table above.
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Net prior year development | The following table presents development recorded for the Specialty, Commercial, International and Corporate & Other segments.
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Specialty | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Incurred Claim and Claim Adjustment Expense [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net prior year claim and allocated claim adjustment expense reserve development | The following table presents further detail of the development recorded for the Specialty segment.
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Commercial | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Incurred Claim and Claim Adjustment Expense [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net prior year claim and allocated claim adjustment expense reserve development | The following table presents further detail of the development recorded for the Commercial segment.
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International | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Incurred Claim and Claim Adjustment Expense [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net prior year claim and allocated claim adjustment expense reserve development | The following table presents further detail of the development recorded for the International segment.
(1) Effective January 1, 2019 the Healthcare and Technology line of business has been absorbed within the Specialty line of business in the International segment. Prior period information has been conformed to the new line of business presentation. |
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CNAF Consolidated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Incurred Claim and Claim Adjustment Expense [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impact of loss portfolio transfer on the consolidated statement of operations | The following table presents the impact of the Loss Portfolio Transfer on the Condensed Consolidated Statements of Operations.
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Benefit Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net periodic cost (benefit) | The components of net periodic pension cost (benefit) are presented in the following table.
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Accumulated Other Comprehensive Income (Loss) by Component (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) by Component | The tables below display the changes in Accumulated other comprehensive income (loss) by component.
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Reclassification out of Accumulated Other Comprehensive Income | Amounts reclassified from Accumulated other comprehensive income (loss) shown above are reported in Net income (loss) as follows:
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Business Segments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant components of the Company's continuing operations and selected balance sheet items | The Company's results of operations and selected balance sheet items by segment are presented in the following tables.
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Revenues by line of business | The following table presents operating revenue by line of business for each reportable segment.
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Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities, Lessee | The table below presents operating lease ROU assets and lease liabilities as of March 31, 2019:
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Maturities of Operating Lease Liabilities | The table below presents the maturities of operating lease liabilities as of March 31, 2019:
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Lease Terms And Discount Rates | The table below presents the weighted average remaining lease term for operating leases and weighted average discount rate used in calculating operating lease right-of-use assets:
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Schedule of Future Minimum Rental Payments for Operating Leases | The table below presents the expected future minimum lease payments to be made under non-cancelable operating leases as of December 31, 2018:
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General (Narrative) (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Other assets | $ (1,579) | $ (1,445) | $ (1,208) |
CNAF Consolidated | Loews | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Noncontrolling interest, ownership percentage by parent | 89.00% | ||
Adjustments Due to Adoption of Topic 842 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Other assets | $ 75 | $ (237) |
General (Adoption of Updated Guidance) (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Property and equipment at cost (less accumulated depreciation) | $ 314 | $ 326 | $ 324 |
Other Assets | 1,579 | 1,445 | 1,208 |
Other liabilities | 3,533 | 3,328 | $ 3,089 |
Adjustments Due to Adoption of Topic 842 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Property and equipment at cost (less accumulated depreciation) | 2 | ||
Other Assets | $ (75) | 237 | |
Other liabilities | $ 239 |
Earnings (Loss) Per Share (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Earnings Per Share [Abstract] | |||
Incremental common shares attributable to Dilutive effect of share-based payment arrangements (in shares) | 971,000 | 1,009,000 | |
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 0 | 9,000 | |
Number of repurchased shares (in shares) | 317,508 | ||
Cost of repurchased stock | $ 14,000,000 | $ 0 |
Investments (Net investment income) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Net Investment Income [Line Items] | ||
Gross investment income | $ 587 | $ 505 |
Investment expense | (16) | (15) |
Net investment income | 571 | 490 |
Fixed maturity securities | ||
Net Investment Income [Line Items] | ||
Gross investment income | 455 | 446 |
Equity securities | ||
Net Investment Income [Line Items] | ||
Gross investment income | 30 | 10 |
Limited partnership investments | ||
Net Investment Income [Line Items] | ||
Gross investment income | 76 | 30 |
Mortgage loans | ||
Net Investment Income [Line Items] | ||
Gross investment income | 12 | 11 |
Short term investments | ||
Net Investment Income [Line Items] | ||
Gross investment income | 10 | 6 |
Trading portfolio | ||
Net Investment Income [Line Items] | ||
Gross investment income | 2 | 2 |
Other | ||
Net Investment Income [Line Items] | ||
Gross investment income | $ 2 | $ 0 |
Investments (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Gain (Loss) on Securities [Line Items] | |||
Reduction of net unrealized gains on investments included in AOCI due to shadow adjustments | $ 1,458 | $ 1,078 | |
Derivative, notional amount | 174 | 172 | |
Derivative liability | (2) | ||
Derivative asset, fair value, gross asset | $ 4 | ||
Future capital call commitments for limited partnership investments | 597 | ||
Mortgage loan commitments | 9 | ||
Commitments to purchase or fund privately placed debt securities | 283 | ||
Commitments to sell various privately placed debt securities | 150 | ||
Common Stock | |||
Gain (Loss) on Securities [Line Items] | |||
Equity securities, FV-NI, gain (loss) | 17 | $ 1 | |
Preferred stock | |||
Gain (Loss) on Securities [Line Items] | |||
Equity securities, FV-NI, gain (loss) | $ 42 | $ (15) |
Investments (Net realized investment gains (losses)) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Fixed maturity securities: | ||
Gross gains | $ 36 | $ 69 |
Gross losses | (42) | (51) |
Net investment gains (losses) on fixed maturity securities | (6) | 18 |
Equity securities | 42 | (15) |
Derivatives | (5) | 5 |
Short term investments and other | 0 | 4 |
Net investment gains | $ 31 | $ 12 |
Investments (Components of other-than-temporary impairment losses recognized in earnings) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Debt Securities, Available-for-sale [Line Items] | ||
Total fixed maturity securities available-for-sale | $ 14 | $ 6 |
Corporate and other bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total fixed maturity securities available-for-sale | 6 | 5 |
Asset-backed | ||
Debt Securities, Available-for-sale [Line Items] | ||
Total fixed maturity securities available-for-sale | $ 8 | $ 1 |
Investments (Activity related to the pretax fixed maturity credit loss component reflected within retained earnings for securities still held for which a portion of an OTTI loss was recognized in OCI) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward] | ||
Balance beginning of period | $ 18 | $ 27 |
Reductions for securities sold during the period | (1) | (2) |
Balance end of period | $ 17 | $ 25 |
Investments (Contractual maturity) (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Investments [Abstract] | ||
Due in one year or less, cost or amortized cost | $ 1,144 | $ 1,350 |
Due after one year through five years, cost or amortized cost | 7,718 | 7,979 |
Due after five years through ten years, cost or amortized cost | 16,874 | 16,859 |
Due after ten years, cost or amortized cost | 12,176 | 11,893 |
Cost or Amortized Cost | 37,912 | 38,081 |
Due in one year or less, estimated fair value | 1,155 | 1,359 |
Due after one year through five years, estimated fair value | 7,992 | 8,139 |
Due after five years through ten years, estimated fair value | 17,374 | 16,870 |
Due after ten years, estimated fair value | 14,004 | 13,174 |
Total Estimated Fair Value | $ 40,525 | $ 39,542 |
Fair Value (Narrative) (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Other invested assets overseas deposit | $ 54 | $ 48 |
Claim and Claim Adjustment Expense Reserves (Reconciliation of claim and claim adjustment expense reserves) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Reserves, beginning of year: [Abstract] | ||
Gross | $ 21,984 | $ 22,004 |
Ceded | 4,019 | 3,934 |
Net reserves, beginning of year | 17,965 | 18,070 |
Net incurred claim and claim adjustment expenses: | ||
Provision for insured events of current year | 1,309 | 1,246 |
Increase (decrease) in provision for insured events of prior years | 8 | (34) |
Amortization of discount | 50 | 47 |
Total net incurred | 1,367 | 1,259 |
Net payments attributable to: | ||
Current year events | (100) | (91) |
Prior year events | (1,309) | (1,219) |
Total net payments | (1,409) | (1,310) |
Foreign currency translation adjustment and other | 13 | (9) |
Net reserves, end of period | 17,936 | 18,010 |
Ceded reserves, end of period | 3,900 | 4,057 |
Gross reserves, end of period | $ 21,836 | $ 22,067 |
Claim and Claim Adjustment Expense Reserves (Net prior year development) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Segment Reporting Information [Line Items] | ||
Pretax (favorable) unfavorable premium development, excluding Life & Group | $ (14) | $ (39) |
Specialty | ||
Segment Reporting Information [Line Items] | ||
Pretax (favorable) unfavorable premium development, excluding Life & Group | (20) | (30) |
Commercial | ||
Segment Reporting Information [Line Items] | ||
Pretax (favorable) unfavorable premium development, excluding Life & Group | (8) | (9) |
International | ||
Segment Reporting Information [Line Items] | ||
Pretax (favorable) unfavorable premium development, excluding Life & Group | 14 | 0 |
Corporate & Other | ||
Segment Reporting Information [Line Items] | ||
Pretax (favorable) unfavorable premium development, excluding Life & Group | $ 0 | $ 0 |
Claim and Claim Adjustment Expense Reserves (Specialty - Net prior year claim and allocated claim adjustment expense reserve development) (Details) - Specialty - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Medical Professional Liability | $ 15 | $ 20 |
Other Professional Liability and Management Liability | (12) | (34) |
Surety | (25) | (15) |
Warranty | 0 | 0 |
Other | 2 | (1) |
Total pretax (favorable) unfavorable development | $ (20) | $ (30) |
Claim and Claim Adjustment Expense Reserves (Commercial - Net prior year claim and allocated claim adjustment expense reserve development) (Details) - Commercial - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Commercial Auto | $ (5) | $ (1) |
General Liability | (20) | (8) |
Workers' Compensation | 2 | (6) |
Property and Other | 15 | 6 |
Total pretax (favorable) unfavorable development | $ (8) | $ (9) |
Claim and Claim Adjustment Expense Reserves (International - Net prior year claim and allocated claim adjustment expense reserve development) (Details) - International - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Casualty | $ 0 | $ 0 |
Property | 15 | (1) |
Energy and Marine | (1) | 0 |
Specialty | 0 | 1 |
Total pretax (favorable) unfavorable development | $ 14 | $ 0 |
Claim and Claim Adjustment Expense Reserves (Impact of Loss Portfolio Transfer on the Consolidated Statement of Operations) (Details) - Asbestos and Environmental Reserves - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Net A&EP adverse development before consideration of LPT | $ 0 | $ 113 |
Provision for uncollectible third-party reinsurance on A&EP | 0 | (16) |
Total additional amounts ceded under LPT | 0 | 97 |
Retroactive reinsurance benefit recognized | (22) | (57) |
Pretax impact of deferred retroactive reinsurance | $ (22) | $ 40 |
Legal Proceedings, Contingencies and Guarantees (Narrative) (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Guarantee Obligations | ||
Legal Proceedings, Commitments and Contingencies, and Guarantees [Line Items] | ||
Guarantor obligations, maximum exposure, undiscounted | $ 1,700 | |
Indemnification Agreement | ||
Legal Proceedings, Commitments and Contingencies, and Guarantees [Line Items] | ||
Guarantor obligations, maximum exposure, undiscounted | 252 | |
Guarantee agreement | ||
Legal Proceedings, Commitments and Contingencies, and Guarantees [Line Items] | ||
Guarantor obligations, maximum exposure, undiscounted | 375 | |
Guarantee and Indemnification | ||
Legal Proceedings, Commitments and Contingencies, and Guarantees [Line Items] | ||
Guarantor obligations, current carrying calue | $ 5 | $ 5 |
Benefit Plans (Narrative) (Details) - Pension Benefits - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Total non-service cost (benefit) (less than) | $ (1) | $ (4) |
Insurance Claims and Policyholder's Benefits, Including Policyholder's Dividends | ||
Total non-service cost (benefit) (less than) | (1) | (1) |
Other Expense | ||
Total non-service cost (benefit) (less than) | $ (1) | $ (3) |
Benefit Plans (Components of net periodic cost (benefit)) (Details) - Pension Benefits - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | $ 0 | $ 0 |
Interest cost on projected benefit obligation | 25 | 23 |
Expected return on plan assets | (36) | (40) |
Amortization of net actuarial (gain) loss | 10 | 9 |
Settlement loss | 0 | 4 |
Total non-service cost (benefit) | (1) | (4) |
Total net periodic pension cost (benefit) | $ (1) | $ (4) |
Business Segments (Narrative) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019
segments
| |
Core Segments - Specialty, Commercial and International | |
Segment Reporting Information [Line Items] | |
Number of operating segments | 3 |
Non-Core Segments, Life & Group Non-Core and Corporate and Other Non-Core | |
Segment Reporting Information [Line Items] | |
Number of operating segments | 2 |
Non-Insurance Revenues from Contracts with Customers (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Revenue from Contract with Customer [Abstract] | |||
Deferred non-insurance warranty revenue | $ 3,472 | $ 3,402 | |
Contract with customer, liability, revenue recognized | $ 265 | $ 222 |
Leases (Narrative) (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Leases [Abstract] | |
Operating lease cost | $ 10 |
Variable lease cost | 4 |
Operating lease payments | $ 8 |
Leases (Assets and Liabilities) (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Operating lease ROU assets | $ 233 |
Operating lease liabilities | $ 308 |
Leases (Maturities of Operating Lease Liabilities) (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
2019 (Excluding the three months ended March 31, 2019) | $ 24 |
2020 | 40 |
2021 | 42 |
2022 | 39 |
2023 | 33 |
Thereafter | 202 |
Total lease payments | 380 |
Less: Discount | (72) |
Total operating lease liabilities | $ 308 |
Leases (Lease Terms and Discont Rates) (Details) |
Mar. 31, 2019 |
---|---|
Leases [Abstract] | |
Weighted average remaining lease term | 3.40% |
Weighted average discount rate | 11 years |
Leases (Minimum Lease Payments) (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Leases [Abstract] | |
2019 | $ 35 |
2020 | 39 |
2021 | 41 |
2022 | 38 |
2023 | 32 |
Thereafter | 200 |
Total | $ 385 |
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