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 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Zip Code) | |||
(Address of principal executive offices) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | Emerging growth company |
Item Number | Page Number | |
1. | ||
2. | ||
3. | ||
4. | ||
PART II | ||
1. | ||
1A. | ||
6. |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions, except per share data) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Revenues | |||||||||||||||
Net earned premiums | $ | $ | $ | $ | |||||||||||
Net investment income | |||||||||||||||
Net investment gains (losses) | ( | ) | ( | ) | |||||||||||
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 | $ | $ | $ | $ | |||||||||||
Weighted Average Outstanding Common Stock and Common Stock Equivalents | |||||||||||||||
Basic | |||||||||||||||
Diluted |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Comprehensive Income | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Other Comprehensive Income, net of tax | |||||||||||||||
Changes in: | |||||||||||||||
Net unrealized gains and losses on investments with an allowance for credit losses | ( | ) | |||||||||||||
Net unrealized gains and losses on other investments | |||||||||||||||
Net unrealized gains and losses on investments | |||||||||||||||
Foreign currency translation adjustment | ( | ) | |||||||||||||
Pension and postretirement benefits | |||||||||||||||
Other comprehensive income, net of tax | |||||||||||||||
Total comprehensive income | $ | $ | $ | $ |
(In millions, except share data) | June 30, 2020 (Unaudited) | December 31, 2019 | |||||
Assets | |||||||
Investments: | |||||||
Fixed maturity securities at fair value (amortized cost of $38,392 and $38,126, less allowance for credit loss of $51 and $-) | $ | $ | |||||
Equity securities at fair value (cost of $889 and $820) | |||||||
Limited partnership investments | |||||||
Other invested assets | |||||||
Mortgage loans (less allowance for uncollectible receivables of $20 and $-) | |||||||
Short term investments | |||||||
Total investments | |||||||
Cash | |||||||
Reinsurance receivables (less allowance for uncollectible receivables of $24 and $25) | |||||||
Insurance receivables (less allowance for uncollectible receivables of $33 and $32) | |||||||
Accrued investment income | |||||||
Deferred acquisition costs | |||||||
Deferred income taxes | |||||||
Property and equipment at cost (less accumulated depreciation of $211 and $215) | |||||||
Goodwill | |||||||
Deferred non-insurance warranty acquisition expense | |||||||
Other assets (includes $- and $21 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 $14 and $21 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; 271,377,196 and 271,412,591 shares outstanding) | |||||||
Additional paid-in capital | |||||||
Retained earnings | |||||||
Accumulated other comprehensive income | |||||||
Treasury stock (1,663,047 and 1,627,652 shares), at cost | ( | ) | ( | ) | |||
Total stockholders’ equity | |||||||
Total liabilities and stockholders' equity | $ | $ |
Six months ended June 30 | |||||||
(In millions) | 2020 | 2019 | |||||
Cash Flows from Operating Activities | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||
Deferred income tax (benefit) expense | ( | ) | |||||
Trading portfolio activity | |||||||
Net investment losses (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 | ( | ) | ( | ) | |||
Proceeds from the issuance of debt | |||||||
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 | $ | $ |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
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, as previously reported | |||||||||||||||
Cumulative effect adjustments from changes in accounting guidance, net of tax | — | — | ( | ) | — | ||||||||||
Balance, beginning of period, as adjusted | |||||||||||||||
Dividends to common stockholders ($0.37, $0.35, $2.74 and $2.70 per share) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net income | |||||||||||||||
Balance, end of period | |||||||||||||||
Accumulated Other Comprehensive Income | |||||||||||||||
Balance, beginning of period | ( | ) | ( | ) | ( | ) | |||||||||
Other comprehensive income | |||||||||||||||
Balance, end of period | |||||||||||||||
Treasury Stock | |||||||||||||||
Balance, beginning of period | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Stock-based compensation | |||||||||||||||
Purchase of treasury stock | — | ( | ) | ( | ) | ( | ) | ||||||||
Balance, end of period | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total stockholders' equity | $ | $ | $ | $ |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Fixed maturity securities | $ | $ | $ | $ | |||||||||||
Equity securities | |||||||||||||||
Limited partnership investments | ( | ) | |||||||||||||
Mortgage loans | |||||||||||||||
Short term investments | |||||||||||||||
Trading portfolio | |||||||||||||||
Other | |||||||||||||||
Gross investment income | |||||||||||||||
Investment expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net investment income | $ | $ | $ | $ |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net investment gains (losses): | |||||||||||||||
Fixed maturity securities: | |||||||||||||||
Gross gains | $ | $ | $ | $ | |||||||||||
Gross losses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net investment gains (losses) on fixed maturity securities | ( | ) | ( | ) | ( | ) | |||||||||
Equity securities | ( | ) | |||||||||||||
Derivatives | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Mortgage loans | ( | ) | |||||||||||||
Short term investments and other | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net investment gains (losses) | $ | $ | ( | ) | $ | ( | ) | $ |
Three months ended June 30 | |||||||||||
(in millions) | Corporate and other bonds | Asset-backed | Total | ||||||||
Allowance for credit losses: | |||||||||||
Beginning balance | $ | $ | $ | ||||||||
Additions to the allowance for credit losses: | |||||||||||
For securities for which credit losses were not previously recorded | |||||||||||
For available-for-sale securities accounted for as PCD assets | |||||||||||
Reductions to the allowance for credit losses: | |||||||||||
Securities sold during the period (realized) | |||||||||||
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis | |||||||||||
Write-offs charged against the allowance | |||||||||||
Recoveries of amounts previously written off | |||||||||||
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period | ( | ) | ( | ) | |||||||
Ending balance as of June 30, 2020 | $ | $ | $ |
Six months ended June 30 | |||||||||||
(in millions) | Corporate and other bonds | Asset-backed | Total | ||||||||
Allowance for credit losses: | |||||||||||
Beginning balance | $ | $ | $ | ||||||||
Additions to the allowance for credit losses: | |||||||||||
Impact of adopting ASC 326 | |||||||||||
For securities for which credit losses were not previously recorded | |||||||||||
For available-for-sale securities accounted for as PCD assets | |||||||||||
Reductions to the allowance for credit losses: | |||||||||||
Securities sold during the period (realized) | |||||||||||
Intent to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis | |||||||||||
Write-offs charged against the allowance | |||||||||||
Recoveries of amounts previously written off | |||||||||||
Additional increases or (decreases) to the allowance for credit losses on securities that had an allowance recorded in a previous period | ( | ) | ( | ) | |||||||
Ending balance as of June 30, 2020 | $ | $ | $ |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Fixed maturity securities available-for-sale: | |||||||||||||||
Corporate and other bonds | $ | ( | ) | $ | $ | $ | |||||||||
Asset-backed | |||||||||||||||
Impairment losses recognized in earnings | $ | $ | $ | $ |
June 30, 2020 | Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Allowance for Credit Losses(1) | Estimated Fair Value | ||||||||||||||
(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, 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 | $ | $ | $ | $ |
Less than 12 Months | 12 Months or Longer | Total | |||||||||||||||||||||
June 30, 2020 | 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, 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 | $ | $ | $ | $ | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||
(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 | $ | $ | $ | $ |
Mortgage Loans Amortized Cost Basis by Origination Year (1) | |||||||||||||||||||||||||||
June 30, 2020 | 2020 | 2019 | 2018 | 2017 | 2016 | Prior | Total | ||||||||||||||||||||
DSCR ≥1.6x | |||||||||||||||||||||||||||
LTV less than 55% | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
LTV 55% to 65% | |||||||||||||||||||||||||||
LTV greater than 65% | |||||||||||||||||||||||||||
DSCR 1.2x - 1.6x | |||||||||||||||||||||||||||
LTV less than 55% | |||||||||||||||||||||||||||
LTV 55% to 65% | |||||||||||||||||||||||||||
LTV greater than 65% | |||||||||||||||||||||||||||
DSCR ≤1.2 | |||||||||||||||||||||||||||
LTV less than 55% | |||||||||||||||||||||||||||
LTV 55% to 65% | |||||||||||||||||||||||||||
LTV greater than 65% | |||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ |
(1) | The values in the table above reflect DSCR on a standardized amortization period and LTV based on the most recent appraised values trended forward using changes in a commercial real estate price index. |
June 30, 2020 | 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, 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 | $ | $ | $ | $ |
Level 3 (In millions) | Corporate bonds and other | Asset-backed | Equity securities | Total | |||||||||||
Balance as of April 1, 2020 | $ | $ | $ | $ | |||||||||||
Total realized and unrealized investment gains (losses): | |||||||||||||||
Reported in Net investment gains (losses) | ( | ) | ( | ) | |||||||||||
Reported in Net investment income | |||||||||||||||
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 June 30, 2020 | $ | $ | $ | $ | |||||||||||
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2020 recognized in Net income (loss) in the period | $ | $ | $ | ( | ) | $ | ( | ) | |||||||
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2020 recognized in Other comprehensive income (loss) in the period |
Level 3 (In millions) | Corporate bonds and other | Asset-backed | Equity securities | Total | |||||||||||
Balance as of April 1, 2019 | $ | $ | $ | $ | |||||||||||
Total realized and unrealized investment gains (losses): | |||||||||||||||
Reported in Net investment gains (losses) | |||||||||||||||
Reported in Net investment income | |||||||||||||||
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 June 30, 2019 | $ | $ | $ | $ | |||||||||||
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2019 recognized in Net income (loss) in the period | $ | $ | $ | $ | |||||||||||
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2019 recognized in Other comprehensive income (loss) in the period |
Level 3 (In millions) | Corporate bonds and other | Asset-backed | Equity securities | Total | |||||||||||
Balance as of January 1, 2020 | $ | $ | $ | $ | |||||||||||
Total realized and unrealized investment gains (losses): | |||||||||||||||
Reported in Net investment gains (losses) | ( | ) | ( | ) | |||||||||||
Reported in Net investment income | ( | ) | ( | ) | |||||||||||
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 June 30, 2020 | $ | $ | $ | $ | |||||||||||
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2020 recognized in Net income (loss) in the period | $ | $ | $ | ( | ) | $ | ( | ) | |||||||
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2020 recognized in Other comprehensive income (loss) in the period | 24 |
Level 3 (In millions) | Corporate bonds and other | 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 Net investment income | |||||||||||||||
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 June 30, 2019 | $ | $ | $ | $ | |||||||||||
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2019 recognized in Net income (loss) in the period | $ | $ | $ | $ | |||||||||||
Unrealized gains (losses) on Level 3 assets and liabilities held as of June 30, 2019 recognized in Other comprehensive income (loss) in the period |
June 30, 2020 | Estimated Fair Value (In millions) | Valuation Technique(s) | Unobservable Input(s) | Range (Weighted Average) | |||||
Fixed maturity securities | $ | Discounted cash flow | Credit spread | 1% - 9% (3%) |
December 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% - 6% (2%) |
June 30, 2020 | Carrying Amount | Estimated Fair Value | |||||||||||||||||
(In millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Assets | |||||||||||||||||||
Mortgage loans | $ | $ | $ | $ | $ | ||||||||||||||
Liabilities | |||||||||||||||||||
Long term debt | $ | $ | $ | $ | $ |
December 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 | $ | $ | $ | $ | $ |
For the six months ended June 30 | |||||||
(In millions) | 2020 | 2019 | |||||
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) | 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 benefit expenses related to future policy benefits, which are not reflected in the table above. |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Pretax (favorable) unfavorable development: | |||||||||||||||
Specialty | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Commercial | ( | ) | ( | ) | |||||||||||
International | ( | ) | ( | ) | ( | ) | |||||||||
Corporate & Other | |||||||||||||||
Total pretax (favorable) unfavorable development | $ | $ | ( | ) | $ | $ | ( | ) |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Pretax (favorable) unfavorable development: | |||||||||||||||
Medical Professional Liability | $ | $ | $ | $ | |||||||||||
Other Professional Liability and Management Liability | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Surety | ( | ) | ( | ) | ( | ) | |||||||||
Warranty | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Other | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total pretax (favorable) unfavorable development | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Pretax (favorable) unfavorable development: | |||||||||||||||
Commercial Auto | $ | $ | ( | ) | $ | $ | ( | ) | |||||||
General Liability | ( | ) | |||||||||||||
Workers' Compensation | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Property and Other | ( | ) | |||||||||||||
Total pretax (favorable) unfavorable development | $ | $ | ( | ) | $ | $ | ( | ) |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Pretax (favorable) unfavorable development: | |||||||||||||||
Casualty | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Property, Energy and Marine(1) | |||||||||||||||
Specialty | ( | ) | ( | ) | |||||||||||
Total pretax (favorable) unfavorable development | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ |
(1) | Effective January 1, 2020 the Property and Energy and Marine lines of business have been combined in the International segment. Prior period information has been conformed to the new line of business presentation. |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net periodic pension cost (benefit) | |||||||||||||||
Interest cost on projected benefit obligation | $ | $ | $ | $ | |||||||||||
Expected return on plan assets | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Amortization of net actuarial (gain) loss | |||||||||||||||
Settlement loss | |||||||||||||||
Total net periodic pension cost (benefit) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) |
(In millions) | Net unrealized gains (losses) on investments with an allowance for credit losses(1) | Net unrealized gains (losses) on other investments(1) | Pension and postretirement benefits | Cumulative foreign currency translation adjustment | Total | ||||||||||||||
Balance as of April 1, 2020 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Other comprehensive income (loss) before reclassifications | ( | ) | ( | ) | |||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $1, $(4), $2, $- and $(1) | ( | ) | ( | ) | |||||||||||||||
Other comprehensive income (loss) net of tax (expense) benefit of $(1), $(317), $(1), $- and $(319) | |||||||||||||||||||
Balance as of June 30, 2020 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ |
(In millions) | Net unrealized gains (losses) on investments with OTTI losses(1) | Net unrealized gains (losses) on other investments(1) | Pension and postretirement benefits | Cumulative foreign currency translation adjustment | Total | ||||||||||||||
Balance as of April 1, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||
Other comprehensive income (loss) before reclassifications | ( | ) | |||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $-, $-, $2, $- and $2 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Other comprehensive income (loss) net of tax (expense) benefit of $(1), $(114), $(2), $- and $(117) | |||||||||||||||||||
Balance as of June 30, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ |
(1) | As of January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The Net unrealized gains (losses) on investments with OTTI losses column that tracked the change in unrealized gains (losses) on investments with OTTI losses has been replaced with the Net unrealized gains (losses) on investments with an allowance for credit losses column. The balances previously reported in the Net unrealized gains (losses) on investments with OTTI losses column are now reported in the Net unrealized gains (losses) on other investments column. |
(In millions) | Net unrealized gains (losses) on investments with an allowance for credit losses(1) | Net unrealized gains (losses) on other investments(1) | Pension and postretirement benefits | Cumulative foreign currency translation adjustment | Total | ||||||||||||||
Balance as of January 1, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||
Other comprehensive income (loss) before reclassifications | ( | ) | ( | ) | ( | ) | |||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) net of tax (expense) benefit of $11, $2, $5, $- and $18 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Other comprehensive income (loss) net of tax (expense) benefit of $2, $(36), $(4), $- and $(38) | ( | ) | ( | ) | |||||||||||||||
Balance as of June 30, 2020 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ |
(In millions) | Net unrealized gains (losses) on investments with OTTI losses(1) | Net unrealized gains (losses) on other investments(1) | 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, $4, $- and $5 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Other comprehensive income (loss) net of tax (expense) benefit of $(2), $(255), $(4), $- and $(261) | |||||||||||||||||||
Balance as of June 30, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ |
(1) | As of January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The Net unrealized gains (losses) on investments with OTTI losses column that tracked the change in unrealized gains (losses) on investments with OTTI losses has been replaced with the Net unrealized gains (losses) on investments with an allowance for credit losses column. The balances previously reported in the Net unrealized gains (losses) on investments with OTTI losses column are now reported in the Net unrealized gains (losses) on other investments column. |
Component of AOCI | Condensed Consolidated Statements of Operations Line Item Affected by Reclassifications | |
Net unrealized gains (losses) on investments with an allowance for credit losses, Net unrealized gains (losses) on investments with OTTI losses and 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 June 30, 2020 | 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 (loss) | $ |
Three months ended June 30, 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 (loss) | $ |
Six months ended June 30, 2020 | 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 (loss) | $ |
June 30, 2020 | |||||||||||||||||||||||||||
(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 |
Six months ended June 30, 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 (loss) | $ |
December 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 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Specialty | |||||||||||||||
Management & Professional Liability | $ | $ | $ | $ | |||||||||||
Surety | |||||||||||||||
Warranty & Alternative Risks | |||||||||||||||
Specialty revenues | |||||||||||||||
Commercial | |||||||||||||||
Middle Market | |||||||||||||||
Construction (1) | |||||||||||||||
Small Business | |||||||||||||||
Other Commercial | |||||||||||||||
Commercial revenues | |||||||||||||||
International | |||||||||||||||
Canada | |||||||||||||||
Europe | |||||||||||||||
Hardy | |||||||||||||||
International revenues | |||||||||||||||
Life & Group revenues | |||||||||||||||
Corporate & Other revenues | |||||||||||||||
Eliminations | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total operating revenues | |||||||||||||||
Net investment gains (losses) | ( | ) | ( | ) | |||||||||||
Total revenues | $ | $ | $ | $ |
(1) | Effective January 1, 2020, the Construction line of business is presented separately in the Commercial segment to better align with the Company's underwriting expertise and the manner in which the products are sold. Prior period information has been conformed to the new line of business presentation. |
(In millions) | June 30, 2020 | ||
A- to A++ | $ | ||
B- to B++ | |||
Insolvent | |||
Total voluntary reinsurance outstanding balance(1) | $ |
(1) | Expected credit losses for legacy A&EP receivables are ceded to NICO and the reinsurance limit on the LPT has not been exhausted, therefore no allowance is recorded for these receivables and they are excluded from the table above. Refer to Note E for information regarding the LPT. The Company has also excluded receivables from involuntary pools. |
• | Insurance Reserves |
• | Long Term Care Reserves |
• | Reinsurance and Insurance Receivables |
• | Valuation of Investments and Impairment of Securities |
• | Income Taxes |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Operating Revenues | |||||||||||||||
Net earned premiums | $ | 1,850 | $ | 1,824 | $ | 3,719 | $ | 3,627 | |||||||
Net investment income | 534 | 515 | 863 | 1,086 | |||||||||||
Non-insurance warranty revenue | 308 | 285 | 609 | 566 | |||||||||||
Other revenues | 5 | 4 | 13 | 13 | |||||||||||
Total operating revenues | 2,697 | 2,628 | 5,204 | 5,292 | |||||||||||
Claims, Benefits and Expenses | |||||||||||||||
Net incurred claims and benefits | 1,636 | 1,346 | 3,055 | 2,697 | |||||||||||
Policyholders' dividends | 6 | 6 | 12 | 12 | |||||||||||
Amortization of deferred acquisition costs | 342 | 338 | 686 | 680 | |||||||||||
Non-insurance warranty expense | 285 | 263 | 566 | 523 | |||||||||||
Other insurance related expenses | 260 | 258 | 518 | 509 | |||||||||||
Other expenses | 55 | 57 | 127 | 123 | |||||||||||
Total claims, benefits and expenses | 2,584 | 2,268 | 4,964 | 4,544 | |||||||||||
Core income before income tax | 113 | 360 | 240 | 748 | |||||||||||
Income tax expense on core income | (14 | ) | (66 | ) | (33 | ) | (136 | ) | |||||||
Core income | 99 | 294 | 207 | 612 | |||||||||||
Net investment gains (losses) | 69 | (18 | ) | (147 | ) | 13 | |||||||||
Income tax (expense) benefit on net investment gains (losses) | (17 | ) | 2 | 30 | (5 | ) | |||||||||
Net investment gains (losses), after tax | 52 | (16 | ) | (117 | ) | 8 | |||||||||
Net income | $ | 151 | $ | 278 | $ | 90 | $ | 620 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions, except ratios, rate, renewal premium change and retention) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Gross written premiums | $ | 1,762 | $ | 1,724 | $ | 3,476 | $ | 3,425 | |||||||
Gross written premiums excluding third party captives | 811 | 755 | 1,552 | 1,485 | |||||||||||
Net written premiums | 742 | 713 | 1,436 | 1,411 | |||||||||||
Net earned premiums | 705 | 688 | 1,390 | 1,349 | |||||||||||
Net investment income | 133 | 134 | 189 | 289 | |||||||||||
Core income | 90 | 161 | 186 | 330 | |||||||||||
Other performance metrics: | |||||||||||||||
Loss ratio excluding catastrophes and development | 59.9 | % | 59.9 | % | 59.7 | % | 60.2 | % | |||||||
Effect of catastrophe impacts | 15.0 | 0.1 | 8.2 | 1.0 | |||||||||||
Effect of development-related items | (2.9 | ) | (2.6 | ) | (2.3 | ) | (2.9 | ) | |||||||
Loss ratio | 72.0 | % | 57.4 | % | 65.6 | % | 58.3 | % | |||||||
Expense ratio | 32.0 | 33.1 | 32.1 | 33.0 | |||||||||||
Dividend ratio | 0.2 | 0.2 | 0.2 | 0.2 | |||||||||||
Combined ratio | 104.2 | % | 90.7 | % | 97.9 | % | 91.5 | % | |||||||
Combined ratio excluding catastrophes and development | 92.1 | % | 93.2 | % | 92.0 | % | 93.4 | % | |||||||
Rate | 12 | % | 4 | % | 10 | % | 3 | % | |||||||
Renewal premium change | 11 | 5 | 10 | 6 | |||||||||||
Retention | 85 | 89 | 85 | 89 | |||||||||||
New business | $ | 96 | $ | 97 | $ | 170 | $ | 182 |
(In millions) | June 30, 2020 | December 31, 2019 | |||||
Gross case reserves | $ | 1,569 | $ | 1,481 | |||
Gross IBNR reserves | 4,127 | 3,757 | |||||
Total gross carried claim and claim adjustment expense reserves | $ | 5,696 | $ | 5,238 | |||
Net case reserves | $ | 1,407 | $ | 1,343 | |||
Net IBNR reserves | 3,412 | 3,333 | |||||
Total net carried claim and claim adjustment expense reserves | $ | 4,819 | $ | 4,676 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions, except ratios, rate, renewal premium change and retention) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Gross written premiums | $ | 1,126 | $ | 1,024 | $ | 2,188 | $ | 1,965 | |||||||
Gross written premiums excluding third party captives | 1,044 | 958 | 2,103 | 1,891 | |||||||||||
Net written premiums | 949 | 912 | 1,899 | 1,761 | |||||||||||
Net earned premiums | 795 | 763 | 1,613 | 1,526 | |||||||||||
Net investment income | 177 | 154 | 224 | 344 | |||||||||||
Core income | 20 | 120 | 44 | 259 | |||||||||||
Other performance metrics: | |||||||||||||||
Loss ratio excluding catastrophes and development | 59.0 | % | 61.7 | % | 60.1 | % | 61.9 | % | |||||||
Effect of catastrophe impacts | 19.0 | 4.9 | 12.8 | 5.1 | |||||||||||
Effect of development-related items | 6.0 | (0.1 | ) | 3.0 | (0.3 | ) | |||||||||
Loss ratio | 84.0 | % | 66.5 | % | 75.9 | % | 66.7 | % | |||||||
Expense ratio | 33.9 | 32.6 | 33.6 | 33.2 | |||||||||||
Dividend ratio | 0.6 | 0.6 | 0.6 | 0.6 | |||||||||||
Combined ratio | 118.5 | % | 99.7 | % | 110.1 | % | 100.5 | % | |||||||
Combined ratio excluding catastrophes and development | 93.5 | % | 94.9 | % | 94.3 | % | 95.7 | % | |||||||
Rate | 9 | % | 3 | % | 9 | % | 3 | % | |||||||
Renewal premium change | 8 | 5 | 8 | 5 | |||||||||||
Retention | 83 | 87 | 84 | 86 | |||||||||||
New business | $ | 205 | $ | 186 | $ | 403 | $ | 350 |
(In millions) | June 30, 2020 | December 31, 2019 | |||||
Gross case reserves | $ | 3,782 | $ | 3,937 | |||
Gross IBNR reserves | 5,048 | 4,719 | |||||
Total gross carried claim and claim adjustment expense reserves | $ | 8,830 | $ | 8,656 | |||
Net case reserves | $ | 3,351 | $ | 3,543 | |||
Net IBNR reserves | 4,668 | 4,306 | |||||
Total net carried claim and claim adjustment expense reserves | $ | 8,019 | $ | 7,849 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions, except ratios, rate, renewal premium change and retention) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Gross written premiums | $ | 277 | $ | 287 | $ | 584 | $ | 611 | |||||||
Net written premiums | 239 | 249 | 458 | 508 | |||||||||||
Net earned premiums | 224 | 243 | 463 | 493 | |||||||||||
Net investment income | 14 | 15 | 29 | 30 | |||||||||||
Core (loss) income | (14 | ) | 17 | (12 | ) | 23 | |||||||||
Other performance metrics: | |||||||||||||||
Loss ratio excluding catastrophes and development | 59.9 | % | 60.1 | % | 60.1 | % | 58.5 | % | |||||||
Effect of catastrophe impacts | 19.9 | 0.2 | 11.9 | 1.3 | |||||||||||
Effect of development-related items | (1.2 | ) | (0.1 | ) | (0.7 | ) | 2.7 | ||||||||
Loss ratio | 78.6 | % | 60.2 | % | 71.3 | % | 62.5 | % | |||||||
Expense ratio | 36.7 | 37.3 | 36.1 | 37.2 | |||||||||||
Combined ratio | 115.3 | % | 97.5 | % | 107.4 | % | 99.7 | % | |||||||
Combined ratio excluding catastrophes and development | 96.6 | % | 97.4 | % | 96.2 | % | 95.7 | % | |||||||
Rate | 13 | % | 7 | % | 11 | % | 6 | % | |||||||
Renewal premium change | 11 | 8 | 9 | 4 | |||||||||||
Retention | 74 | 70 | 72 | 69 | |||||||||||
New business | $ | 62 | $ | 75 | $ | 130 | $ | 155 |
(In millions) | June 30, 2020 | December 31, 2019 | |||||
Gross case reserves | $ | 815 | $ | 858 | |||
Gross IBNR reserves | 1,091 | 1,018 | |||||
Total gross carried claim and claim adjustment expense reserves | $ | 1,906 | $ | 1,876 | |||
Net case reserves | $ | 727 | $ | 759 | |||
Net IBNR reserves | 927 | 869 | |||||
Total net carried claim and claim adjustment expense reserves | $ | 1,654 | $ | 1,628 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net earned premiums | $ | 126 | $ | 130 | $ | 253 | $ | 260 | |||||||
Net investment income | 206 | 205 | 414 | 409 | |||||||||||
Core income (loss) before income tax | 3 | (6 | ) | (7 | ) | (9 | ) | ||||||||
Income tax benefit on core income (loss) | 11 | 13 | 25 | 26 | |||||||||||
Core income | 14 | 7 | 18 | 17 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Net investment income | $ | 4 | $ | 7 | $ | 7 | $ | 14 | |||||||
Interest expense | 31 | 34 | 62 | 68 | |||||||||||
Core loss | (11 | ) | (11 | ) | (29 | ) | (17 | ) |
(In millions) | June 30, 2020 | December 31, 2019 | |||||
Gross case reserves | $ | 1,169 | $ | 1,137 | |||
Gross IBNR reserves | 918 | 1,097 | |||||
Total gross carried claim and claim adjustment expense reserves | $ | 2,087 | $ | 2,234 | |||
Net case reserves | $ | 89 | $ | 92 | |||
Net IBNR reserves | 78 | 83 | |||||
Total net carried claim and claim adjustment expense reserves | $ | 167 | $ | 175 |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Fixed income securities: | |||||||||||||||
Taxable fixed income securities | $ | 360 | $ | 385 | $ | 731 | $ | 768 | |||||||
Tax-exempt fixed income securities | 80 | 80 | 158 | 162 | |||||||||||
Total fixed income securities | 440 | 465 | 889 | 930 | |||||||||||
Limited partnership investments | 44 | 37 | (26 | ) | 113 | ||||||||||
Common stock | 40 | 6 | (15 | ) | 26 | ||||||||||
Other, net of investment expense | 10 | 7 | 15 | 17 | |||||||||||
Pretax net investment income | $ | 534 | $ | 515 | $ | 863 | $ | 1,086 | |||||||
Fixed income securities, after tax | $ | 361 | $ | 382 | $ | 728 | $ | 762 | |||||||
Net investment income, after tax | 436 | 420 | 709 | 885 | |||||||||||
Effective income yield for the fixed income securities portfolio, pretax | 4.6 | % | 4.8 | % | 4.6 | % | 4.8 | % | |||||||
Effective income yield for the fixed income securities portfolio, after tax | 3.8 | % | 3.9 | % | 3.8 | % | 3.9 | % | |||||||
Limited partnership and common stock return | 5.0 | % | 2.1 | % | (2.3 | )% | 6.8 | % |
Periods ended June 30 | Three Months | Six Months | |||||||||||||
(In millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Fixed maturity securities: | |||||||||||||||
Corporate and other bonds | $ | (40 | ) | $ | (7 | ) | $ | (119 | ) | $ | (7 | ) | |||
States, municipalities and political subdivisions | 33 | 4 | 33 | 12 | |||||||||||
Asset-backed | 24 | — | 28 | (14 | ) | ||||||||||
Total fixed maturity securities | 17 | (3 | ) | (58 | ) | (9 | ) | ||||||||
Non-redeemable preferred stock | 63 | 11 | (70 | ) | 53 | ||||||||||
Short term and other | (11 | ) | (26 | ) | (6 | ) | (31 | ) | |||||||
Mortgage loans | — | — | (13 | ) | — | ||||||||||
Net investment gains (losses) | 69 | (18 | ) | (147 | ) | 13 | |||||||||
Income tax (expense) benefit on net investment gains (losses) | (17 | ) | 2 | 30 | (5 | ) | |||||||||
Net investment gains (losses), after tax | $ | 52 | $ | (16 | ) | $ | (117 | ) | $ | 8 |
June 30, 2020 | December 31, 2019 | ||||||||||||||
(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 | $ | 3,997 | $ | 149 | $ | 4,136 | $ | 95 | |||||||
AAA | 3,599 | 443 | 3,254 | 349 | |||||||||||
AA | 6,717 | 920 | 6,663 | 801 | |||||||||||
A | 9,257 | 1,218 | 9,062 | 1,051 | |||||||||||
BBB | 16,867 | 1,742 | 16,839 | 1,684 | |||||||||||
Non-investment grade | 2,338 | (38 | ) | 2,253 | 101 | ||||||||||
Total | $ | 42,775 | $ | 4,434 | $ | 42,207 | $ | 4,081 |
June 30, 2020 | |||||||
(In millions) | Estimated Fair Value | Gross Unrealized Losses | |||||
U.S. Government, Government agencies and Government-sponsored enterprises | $ | 7 | $ | — | |||
AAA | 40 | 1 | |||||
AA | 238 | 9 | |||||
A | 919 | 35 | |||||
BBB | 1,729 | 111 | |||||
Non-investment grade | 1,139 | 116 | |||||
Total | $ | 4,072 | $ | 272 |
June 30, 2020 | |||||||
(In millions) | Estimated Fair Value | Gross Unrealized Losses | |||||
Due in one year or less | $ | 158 | $ | 16 | |||
Due after one year through five years | 1,154 | 73 | |||||
Due after five years through ten years | 2,168 | 136 | |||||
Due after ten years | 592 | 47 | |||||
Total | $ | 4,072 | $ | 272 |
June 30, 2020 | December 31, 2019 | ||||||||||||
(In millions) | Estimated Fair Value | Effective Duration (In years) | Estimated Fair Value | Effective Duration (In years) | |||||||||
Investments supporting Life & Group | $ | 18,370 | 8.8 | $ | 18,015 | 8.9 | |||||||
Other investments | 26,165 | 4.1 | 26,813 | 4.1 | |||||||||
Total | $ | 44,535 | 6.0 | $ | 44,828 | 6.0 |
(In millions) | June 30, 2020 | December 31, 2019 | |||||
Short term investments: | |||||||
Commercial paper | $ | — | $ | 1,181 | |||
U.S. Treasury securities | 1,251 | 364 | |||||
Other | 207 | 316 | |||||
Total short term investments | $ | 1,458 | $ | 1,861 |
• | During the six months ended June 30, 2020, we paid dividends of $750 million and repurchased 435,376 shares of our common stock at an aggregate cost of $18 million. |
• | During the six months ended June 30, 2019, we paid dividends of $738 million and repurchased 365,695 shares of our common stock at an aggregate cost of $16 million. |
• | In the second quarter of 2019, we issued $500 million of 3.90% senior notes due May 1, 2029 and redeemed the $500 million outstanding aggregate principal balances of our 5.875% senior notes due August 15, 2020. |
• | 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 2019 Annual Report on Form 10-K and this report, 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 COVID-19 pandemic, and actions seeking to mitigate the spread of the virus, have resulted in significant risk across our enterprise, as economic uncertainty and depressed business conditions brought on by the crisis may materially and adversely impact our business, driving significant decreases in our premium volume and resulting in significant losses in our investment portfolio, increased claim and litigation activity and unfavorable regulatory outcomes. |
• | 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; |
• | the occurrence of epidemics and pandemics; and |
• | mass tort claims, including those related to exposure to potentially harmful products or substances such as glyphosate, lead paint and opioids; and claims arising from changes that repeal or weaken tort reforms, such as those related to abuse reviver statutes. |
• | in 2016, the U.K. approved an exit from the E.U., commonly referred to as "Brexit.” While the withdrawal of the U.K. from the E.U. was official as of January 31, 2020, until the transition period ends, there remains a lack of specificity and detail regarding the long term relationship between the two sides and how businesses operating in both jurisdictions may be affected. In any event, effective January 1, 2019, our E.U. business is no longer handled out of our U.K.-domiciled subsidiary, but through our European subsidiary in Luxembourg, which was established specifically to address the departure of the U.K. from the E.U. and to seek to ensure the Company’s ability to operate effectively throughout the E.U. 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. |
CNA Financial Corporation | ||
Dated: August 3, 2020 | By | /s/ Albert J. Miralles |
Albert J. Miralles Executive Vice President and Chief Financial Officer (Duly authorized officer and principal financial and accounting officer) |
Description of Exhibit | Exhibit Number | |
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 | |
Inline XBRL Taxonomy Extension Schema | 101.SCH | |
Inline XBRL Taxonomy Extension Calculation Linkbase | 101.CAL | |
Inline XBRL Taxonomy Extension Definition Linkbase | 101.DEF | |
Inline XBRL Taxonomy Label Linkbase | 101.LAB | |
Inline XBRL Taxonomy Extension Presentation Linkbase | 101.PRE | |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | 104.1 |
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: | August 3, 2020 | 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: | August 3, 2020 | By | /s/ Albert J. Miralles | |
Albert J. Miralles | ||||
Chief Financial Officer |
• | the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 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: | August 3, 2020 | By | /s/ Dino E. Robusto | |
Dino E. Robusto | ||||
Chief Executive Officer |
• | the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 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: | August 3, 2020 | By | /s/ Albert J. Miralles | |
Albert J. Miralles | ||||
Chief Financial Officer |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Revenues | ||||
Net earned premiums | $ 1,850 | $ 1,824 | $ 3,719 | $ 3,627 |
Net investment income | 534 | 515 | 863 | 1,086 |
Net investment gains (losses) | 69 | (18) | (147) | 13 |
Non-insurance warranty revenue | 308 | 285 | 609 | 566 |
Other revenues | 5 | 4 | 13 | 13 |
Total revenues | 2,766 | 2,610 | 5,057 | 5,305 |
Claims, Benefits and Expenses | ||||
Insurance claims and policyholders’ benefits | 1,642 | 1,352 | 3,067 | 2,709 |
Amortization of deferred acquisition costs | 342 | 338 | 686 | 680 |
Non-insurance warranty expense | 285 | 263 | 566 | 523 |
Other operating expenses | 284 | 281 | 583 | 564 |
Interest | 31 | 34 | 62 | 68 |
Total claims, benefits and expenses | 2,584 | 2,268 | 4,964 | 4,544 |
Income before income tax | 182 | 342 | 93 | 761 |
Income tax expense | (31) | (64) | (3) | (141) |
Net income | $ 151 | $ 278 | $ 90 | $ 620 |
Basic earnings per share (in usd per share) | $ 0.56 | $ 1.03 | $ 0.33 | $ 2.28 |
Diluted earnings per share (in usd per share) | $ 0.55 | $ 1.02 | $ 0.33 | $ 2.28 |
Weighted Average Outstanding Common Stock and Common Stock Equivalents | ||||
Basic (in shares) | 271.5 | 271.6 | 271.5 | 271.6 |
Diluted (in shares) | 272.0 | 272.4 | 272.3 | 272.5 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Net income | $ 151 | $ 278 | $ 90 | $ 620 |
Other Comprehensive Income, net of tax | ||||
Net unrealized gains and losses on investments | 1,193 | 436 | 138 | 966 |
Foreign currency translation adjustment | 24 | 0 | (53) | 17 |
Pension and postretirement benefits | 7 | 8 | 18 | 15 |
Other comprehensive income, net of tax | 1,224 | 444 | 103 | 998 |
Total comprehensive income | 1,375 | 722 | 193 | 1,618 |
Net unrealized gains and losses on investments with an allowance for credit losses | ||||
Other Comprehensive Income, net of tax | ||||
Net unrealized gains and losses on investments | 2 | 0 | (9) | 0 |
Net unrealized gains and losses on other investments | ||||
Other Comprehensive Income, net of tax | ||||
Net unrealized gains and losses on investments | $ 1,191 | $ 436 | $ 147 | $ 966 |
Condensed Consolidated Balance Sheets - (Parenthetical) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Fixed maturities securities at amortized cost | $ 38,392 | $ 38,126 |
Marketable securities, fixed maturities, amortized cost | 51 | 0 |
Equity securities at cost | 889 | 820 |
Mortgage loans on real estate, commercial and consumer, allowance for credit loss | 20 | 0 |
Allowance for uncollectible reinsurance | 24 | 25 |
Allowance for uncollectible insurance receivables | 33 | 32 |
Accumulated depreciation on property and equipment | 211 | 215 |
Due to related parties | 14 | 21 |
Due from related parties | $ 0 | $ 21 |
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) | 271,377,196 | 271,412,591 |
Treasury stock, shares (in shares) | 1,663,047 | 1,627,652 |
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Statement of Stockholders' Equity [Abstract] | ||||
Dividends declared per share (usd per share) | $ 0.37 | $ 0.35 | $ 2.74 | $ 2.70 |
General |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
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 89.6% of the outstanding common stock of CNAF as of June 30, 2020. 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, 2019, 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 June 30, 2020 and for the three and six months ended June 30, 2020 and 2019 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 2016-13: In June 2016 the Financial Accounting Standards Board (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 the Company’s results of operations. For financial assets measured at cost, the expected credit loss model requires immediate recognition of estimated credit losses over the life of the asset and presentation of the asset at the net amount expected to be collected. This new guidance applies to mortgage loan investments, reinsurance and insurance receivables and other financing receivables. For available-for-sale fixed maturity securities carried at fair value, estimated credit losses will continue to be measured at the present value of expected cash flows, however, the other than temporary impairment (OTTI) concept has been eliminated. Under the previous guidance, estimated credit impairments resulted in a write-down of amortized cost. Under the new guidance, estimated credit losses are recognized through an allowance and reversals of the allowance are permitted if the estimate of credit losses declines. For available-for-sale fixed maturity securities where the Company has an intent to sell, impairment will continue to result in a write-down of amortized cost. On January 1, 2020, the Company adopted the updated guidance using a modified retrospective method with a cumulative effect adjustment recorded to beginning Retained earnings. Prior period amounts have not been adjusted and continue to be reported in accordance with the previous accounting guidance. A prospective transition approach is required for available-for-sale fixed maturity securities that were purchased with credit deterioration (PCD assets) or have recognized an OTTI write-down prior to the effective date. The cumulative effect of the accounting change resulted in a $5 million decrease in Retained earnings, with a corresponding $7 million allowance for credit losses recorded for Mortgage loans partially offset by a $2 million tax impact. The allowance for uncollectible insurance and reinsurance receivables was unchanged as a result of adopting the new guidance. At adoption, an allowance for credit losses of $6 million was established for available-for-sale fixed maturity securities that were PCD assets, with a corresponding increase to amortized cost, resulting in no adjustment to the carrying value of the securities. Below is a summary of the significant accounting policies impacted by the adoption of ASU 2016-13. The allowance for credit losses is a valuation account that is reported as a reduction of a financial asset’s cost basis and is measured on a pool basis when similar risk characteristics exist. Management estimates the allowance using relevant available information from both internal and external sources. Historical credit loss experience provides the basis for the estimation of expected credit losses and adjustments may be made to reflect current conditions and reasonable and supportable forecasts. Adjustments to historical loss information are made for any additional factors that come to the Company’s attention. This could include significant shifts in counterparty financial strength ratings, aging of past due receivables, amounts sent to collection agencies, or other underlying portfolio changes. Amounts are considered past due when payments have not been received according to contractual terms. The Company also considers current and forecast economic conditions, using a variety of economic metrics and forecast indices. The sensitivity of expected credit losses relative to changes to these forecast economic conditions can vary by financial asset class. The Company considers a reasonable and supportable forecast period to be up to 24 months from the balance sheet date. After the forecast period, the Company reverts to historical credit experience. The Company uses collateral arrangements such as letters of credit and amounts held in beneficiary trusts to mitigate credit risk, which are considered in the estimate of net amount expected to be collected. The Company has made a policy election to present accrued interest balances separately from the amortized cost basis of assets and has elected the practical expedient to exclude the accrued interest from the tabular disclosures for mortgage loans and available-for-sale securities. The Company has elected not to estimate an allowance for credit losses on accrued interest receivable. The accrual of interest income is discontinued and the asset is placed on nonaccrual status within 90 days of the interest becoming delinquent. Interest accrued but not received for assets on nonaccrual status is reversed through investment income. Interest received for assets that are on nonaccrual status is recognized as payment is received. The asset is returned to accrual status when the principal and interest amounts contractually due are brought current and future payments are expected. Interest receivable is presented as a component of accrued investment income on the Condensed Consolidated Balance Sheet. See Note C and Note K to the Condensed Consolidated Financial Statements for additional information regarding credit losses. Accounting Standards Pending Adoption 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 the Company's results of operations 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, 2021, however the FASB has proposed a one year deferral of the effective date. Early adoption is permitted. The Company may elect to apply the guidance using either a modified retrospective transition method or a full retrospective transition method. The guidance requires restatement of prior periods presented. The Company plans to adopt using the modified retrospective transition method and is currently evaluating the effect the updated guidance will have on its financial statements, including the increased disclosure requirements. The annual updating of cash flow assumptions is expected to increase income statement volatility. While the requirements of the new guidance represent a material change from existing GAAP, the underlying economics of the business and related cash flows will be unchanged.
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Earnings (Loss) Per Share |
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Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Earnings (loss) per share is based on 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 and six months ended June 30, 2020, approximately 445 thousand and 778 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 those same periods, 915 thousand and 13 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 and six months ended June 30, 2019, approximately 776 thousand and 872 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 those same periods, less than 1 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. The Company repurchased 435,376 and 365,695 shares of CNAF common stock at an aggregate cost of $18 million and $16 million during the six months ended June 30, 2020 and 2019.
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Investments |
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Investments | Investments The significant components of Net investment income are presented in the following table.
During the three and six months ended June 30, 2020, $23 million and $10 million of Net investment income was recognized due to the change in fair value of common stock still held as of June 30, 2020. During the three and six months ended June 30, 2019, $4 million and $21 million of Net investment income was recognized due to the change in fair value of common stock still held as of June 30, 2019. Net investment gains (losses) are presented in the following table.
During the three and six months ended June 30, 2020, $63 million of gains and $(70) million of losses were recognized in Net investment gains (losses) due to the change in fair value of non-redeemable preferred stock still held as of June 30, 2020. During the three and six months ended June 30, 2019, $11 million and $53 million of gains were recognized in Net investment gains (losses) due to the change in fair value of non-redeemable preferred stock still held as of June 30, 2019. Net investment gains (losses) for the three and six months ended June 30, 2019 included a $21 million loss related to the second quarter 2019 redemption of the Company's $500 million senior notes due August 2020. For available-for-sale fixed maturity securities, a credit loss exists if the present value of cash flows expected to be collected is less than the amortized cost basis. The allowance for credit loss related to available-for-sale fixed maturity securities is the difference between present value of cash flows expected to be collected and the amortized cost basis, limited by the amount that the fair value is less than the amortized cost basis. The Company considers all available evidence when determining whether an investment requires a credit loss write-down or allowance to be recorded. Examples of such evidence may include the financial condition and near term prospects of the issuer, whether the issuer is current with interest and principal payments, credit ratings on the security or changes in ratings over time, general market conditions and industry, sector or other specific factors and whether it is likely that the Company will recover its amortized cost through the collection of cash flows. Changes in the allowance since acquisition are presented as a component of Net investment gains (losses) on the Condensed Consolidated Statements of Operations. The following tables present the activity related to the allowance on available-for-sale securities with credit impairments and PCD assets. Accrued interest receivable on available-for-sale fixed maturity securities totaled $373 million and is excluded from the estimate of expected credit losses and the amortized cost basis in the tables included within this Note.
The components of available-for-sale impairment losses recognized in earnings by asset type are presented in the following table. The table includes losses on securities with an intention to sell and changes in the allowance for credit losses on securities since acquisition date.
The following tables present a summary of fixed maturity securities.
(1) As of January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The Unrealized OTTI Losses (Gains) column that tracked subsequent valuation changes on securities for which a credit loss had previously been recorded has been replaced with the Allowance for Credit Losses column.
The net unrealized gains on investments included in the tables above are recorded as a component of Accumulated other comprehensive income (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 June 30, 2020 and December 31, 2019, the net unrealized gains on investments included in AOCI were correspondingly reduced by Shadow Adjustments of $2,342 million and $2,198 million. The following tables present the estimated fair value and gross unrealized losses of fixed maturity securities in a gross unrealized loss position for which an allowance for credit loss has not been recorded, 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 June 30, 2020 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 impairment losses to be recorded as of June 30, 2020. 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 $197 million and $182 million as of June 30, 2020 and December 31, 2019 and a fair value of $(12) million and $(7) million as of June 30, 2020 and December 31, 2019. 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 part of its overall investment strategy, the Company invests in various assets which require future purchase, sale or funding commitments. These investments are recorded once funded, and the related commitments may include future capital calls from various third-party limited partnerships, signed and accepted mortgage loan applications, and obligations related to privately placed debt securities. As of June 30, 2020, the Company had commitments to purchase or fund approximately $1,205 million and sell approximately $50 million under the terms of these investments. Mortgage Loans The allowance for expected credit losses is developed by assessing the credit quality of pools of mortgage loans in good standing using debt service coverage ratios (DSCR) and loan-to-value ratios (LTV). The DSCR compares a property’s net operating income to its debt service payments, including principal and interest. The LTV ratio compares the current unpaid principal balance of the loan to the estimated fair value of the underlying property collateralizing the loan. The pools developed to measure the credit loss allowance use increments of DSCR and LTV to draw distinctions between risk levels. Changes in the allowance for mortgage loans are presented as a component of Net investment gains (losses) on the Condensed Consolidated Statements of Operations. The following table presents the amortized cost basis of mortgage loans for each credit quality indicator by year of origination.
As of June 30, 2020, accrued interest receivable on mortgage loans totaled $4 million and is excluded from the amortized cost basis disclosed in the table above and the estimate of expected credit losses. The Company had loans with an amortized cost of $22 million that were less than 90 days past due as of June 30, 2020, none of which were placed on nonaccrual status. No interest income was written off for the period ended June 30, 2020.
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value Fair 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, and iv) deep dives, where the Company performs an independent analysis of the inputs and assumptions used to price individual securities. 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 tables below present a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3).
Valuation Methodologies and Inputs 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 government securities and exchange traded bonds, 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 some 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 some 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 Condensed Consolidated Balance Sheets because certain short term investments, such as time deposits, are not measured at fair value. As of June 30, 2020 and December 31, 2019, there were $60 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 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 primarily 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.
In the first quarter of 2020, the note receivable was repaid in full. As of December 31, 2019, the note receivable was included within Other assets on the Condensed Consolidated Balance Sheets. 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 $301 million and $376 million for the three and six months ended June 30, 2020. Net catastrophe losses for the three months ended June 30, 2020 included $182 million related to the COVID-19 pandemic, $61 million related to civil unrest and $58 million related primarily to severe weather related events. Net catastrophe losses for the six months ended June 30, 2020 included $195 million related to the COVID-19 pandemic, $61 million related to civil unrest and $120 million related primarily to severe weather related events. The Company reported catastrophe losses, net of reinsurance, of $38 million and $96 million for the three and six months ended June 30, 2019 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.
Specialty The following table presents further detail of the development recorded for the Specialty segment.
Three Months 2019 Unfavorable development in medical professional liability was primarily due to unfavorable outcomes on individual claims and higher than expected severity emergence in accident year 2017 in the Company's dentists business. Favorable development in surety was due to lower than expected frequency for accident years 2015 and 2016. Six Months 2020 Unfavorable development in medical professional liability was primarily due to unfavorable outcomes on specific claims in accident years 2015 and 2016 in the Company's aging services business. Favorable development in surety was primarily due to lower than expected frequency for accident years 2017 and prior. 2019 Unfavorable development in medical professional liability was primarily due to higher than expected severity in accident year 2013 in the Company's allied healthcare business, unfavorable outcomes on individual claims and higher than expected severity emergence in accident year 2017 in the Company's dentists 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. Favorable development in surety was due to lower than expected frequency for accident years 2016 and prior. Commercial The following table presents further detail of the development recorded for the Commercial segment.
Three Months 2020 Unfavorable development in commercial auto was due to unfavorable claim severity in the Company's middle market and construction business in accident years 2017 through 2019. Unfavorable development in general liability was driven by higher than expected emergence in mass tort exposures, primarily due to New York reviver statute-related claims from accident years prior to 2010. Favorable development in workers’ compensation was due to favorable medical trends driving lower than expected severity in multiple accident years. Unfavorable development in property and other was primarily due to higher than expected large loss activity in accident year 2019 in the Company's middle market, national accounts, and marine business units. 2019 Unfavorable development in general liability was primarily due to higher than expected large loss experience in the Company's excess and umbrella business in accident year 2017. Favorable development in property and other was primarily due to continued lower than expected claim severity from catastrophes in accident year 2017. Six Months 2020 Unfavorable development in commercial auto was due to unfavorable claim severity in the Company's middle market and construction business in accident years 2017 through 2019. Unfavorable development in general liability was driven by higher than expected emergence in mass tort exposures, primarily due to New York reviver statute-related claims from accident years prior to 2010. Favorable development in workers’ compensation was due to favorable medical trends driving lower than expected severity in multiple accident years. Unfavorable development in property and other was primarily due to higher than expected large loss activity in accident year 2019 in the Company's middle market, national accounts, and marine business units. International The following table presents further detail of the development recorded for the International segment.
Six Months 2019 Unfavorable development in property, energy and marine was driven by higher than expected claims in Hardy on 2018 accident year catastrophes. Asbestos and Environmental Pollution (A&EP) Reserves In 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 impact of the LPT on the Condensed Consolidated Statements of Operations was the recognition of a retroactive reinsurance benefit of $20 million and $14 million for the three months ended June 30, 2020 and 2019 and $34 million and $36 million for the six months ended June 30, 2020 and 2019. As of June 30, 2020 and December 31, 2019, the cumulative amounts ceded under the LPT were $3.2 billion. The unrecognized deferred retroactive reinsurance benefit was $358 million and $392 million as of June 30, 2020 and December 31, 2019 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 $3.3 billion and $3.7 billion as of June 30, 2020 and December 31, 2019. 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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Jun. 30, 2020 | |
Legal Proceedings, Commitments and Contingencies, and Guarantees [Abstract] | |
Legal Proceedings, Contingencies and Guarantees | Legal Proceedings, Contingencies and Guarantees The Company is a party to various claims and litigation incidental to its business, which, based on the facts and circumstances currently known, are not material to the Company's results of operations or financial position. Guarantees As of June 30, 2020 and December 31, 2019, the Company had recorded liabilities of approximately $5 million related to guarantee and indemnification agreements. Management does not believe that any future indemnity claims will be significantly greater than the amounts recorded. The Company has provided guarantees, if the primary obligor fails to perform, to holders of structured settlement annuities issued by a previously owned subsidiary. As of June 30, 2020, 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.
For the three and six months ended June 30, 2020, the Company recognized $2 million and $4 million of non-service benefit in Insurance claims and policyholders' benefits and $5 million and $10 million of non-service benefit in Other operating expenses. For the three and six months ended June 30, 2019, the Company recognized less than $1 million of non-service benefit in Insurance claims and policyholders' benefits and less than $1 million and $1 million of non-service benefit in Other operating expenses.
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Accumulated Other Comprehensive Income (Loss) by Component |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | Business Segments The 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, 2019. 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 net investment gains or losses and any cumulative effects of changes in accounting guidance. 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 reflective of our primary operations.
The following table presents operating revenue by line of business for each reportable segment.
(1) Effective January 1, 2020, the Construction line of business is presented separately in the Commercial segment to better align with the Company's underwriting expertise and the manner in which the products are sold. Prior period information has been conformed to the new line of business presentation.
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Non-Insurance Revenues from Contracts with Customers |
6 Months Ended |
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Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Non-Insurance Revenues from Contracts with Customers | Non-Insurance Revenues from Contracts with Customers The Company reported $3.9 billion of Deferred non-insurance warranty revenue as of June 30, 2020 and $3.8 billion as of December 31, 2019. For the three and six months ended June 30, 2020, the Company recognized $278 million and $564 million of revenues that were included in the deferred revenue balance as of January 1, 2020. For the three and six months ended June 30, 2019, the Company recognized $246 million and $511 million of revenues that were included in the deferred revenue balance as of January 1, 2019. For the three and six months ended June 30, 2020 and 2019, 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 $0.6 billion of the deferred revenue in the remainder of 2020, $1.0 billion in 2021, $0.8 billion in 2022 and $1.5 billion thereafter.
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Expected Credit Losses - Uncollectible Reinsurance and Insurance Receivables |
6 Months Ended | ||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||
Credit Loss [Abstract] | |||||||||||||||||||||||||||||||||
Expected Credit Losses - Uncollectible Reinsurance and Insurance Receivables | Expected Credit Losses - Uncollectible Reinsurance and Insurance Receivables The Company has established an allowance for uncollectible reinsurance receivables which relates to both amounts already billed on ceded paid losses as well as ceded reserves that will be billed when losses are paid in the future. For assessing expected credit losses, the Company separates reinsurance receivables into two pools: voluntary reinsurance receivables and involuntary reinsurance exposures to mandatory pools. The Company has not recorded an allowance for involuntary pools as there is no perceived credit risk. The principal credit quality indicator used in the valuation of the allowance on voluntary reinsurance receivables is the financial strength rating of the reinsurer sourced from major rating agencies. If the reinsurer is unrated, an internal financial strength rating is assigned based on the Company’s historical loss experience and the Company’s assessment of reinsurance counterparty risk profile, which generally corresponds with a B rating. Changes in the allowance are presented as a component of Insurance claims and policyholders' benefits on the Condensed Consolidated Statements of Operations. The following table summarizes the outstanding amount of voluntary reinsurance receivables, gross of any collateral arrangements, by financial strength rating.
Voluntary reinsurance receivables within the B- to B++ rating distribution are primarily due from captive reinsurers and backed by collateral arrangements. The Company has established an allowance for uncollectible insurance receivables. A loss rate methodology is used to determine expected credit losses for premium receivables. This methodology uses the Company’s historical annual credit losses relative to gross premium written to develop a range of credit loss rates for each dollar of gross written premium underwritten. The expected credit loss for loss sensitive business in good standing is calculated on a pool basis, using historical default rate data obtained from major rating agencies. Changes in the allowance are presented as a component of Other operating expenses on the Condensed Consolidated Statements of Operations.
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General (Policies) |
6 Months Ended |
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Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
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 89.6% of the outstanding common stock of CNAF as of June 30, 2020. 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.
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Recently Adopted Accounting Standards Updates (ASUs) and Accounting Standards Pending Adoption | Recently Adopted Accounting Standards Updates (ASU) ASU 2016-13: In June 2016 the Financial Accounting Standards Board (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 the Company’s results of operations. For financial assets measured at cost, the expected credit loss model requires immediate recognition of estimated credit losses over the life of the asset and presentation of the asset at the net amount expected to be collected. This new guidance applies to mortgage loan investments, reinsurance and insurance receivables and other financing receivables. For available-for-sale fixed maturity securities carried at fair value, estimated credit losses will continue to be measured at the present value of expected cash flows, however, the other than temporary impairment (OTTI) concept has been eliminated. Under the previous guidance, estimated credit impairments resulted in a write-down of amortized cost. Under the new guidance, estimated credit losses are recognized through an allowance and reversals of the allowance are permitted if the estimate of credit losses declines. For available-for-sale fixed maturity securities where the Company has an intent to sell, impairment will continue to result in a write-down of amortized cost. On January 1, 2020, the Company adopted the updated guidance using a modified retrospective method with a cumulative effect adjustment recorded to beginning Retained earnings. Prior period amounts have not been adjusted and continue to be reported in accordance with the previous accounting guidance. A prospective transition approach is required for available-for-sale fixed maturity securities that were purchased with credit deterioration (PCD assets) or have recognized an OTTI write-down prior to the effective date. The cumulative effect of the accounting change resulted in a $5 million decrease in Retained earnings, with a corresponding $7 million allowance for credit losses recorded for Mortgage loans partially offset by a $2 million tax impact. The allowance for uncollectible insurance and reinsurance receivables was unchanged as a result of adopting the new guidance. At adoption, an allowance for credit losses of $6 million was established for available-for-sale fixed maturity securities that were PCD assets, with a corresponding increase to amortized cost, resulting in no adjustment to the carrying value of the securities. Below is a summary of the significant accounting policies impacted by the adoption of ASU 2016-13. The allowance for credit losses is a valuation account that is reported as a reduction of a financial asset’s cost basis and is measured on a pool basis when similar risk characteristics exist. Management estimates the allowance using relevant available information from both internal and external sources. Historical credit loss experience provides the basis for the estimation of expected credit losses and adjustments may be made to reflect current conditions and reasonable and supportable forecasts. Adjustments to historical loss information are made for any additional factors that come to the Company’s attention. This could include significant shifts in counterparty financial strength ratings, aging of past due receivables, amounts sent to collection agencies, or other underlying portfolio changes. Amounts are considered past due when payments have not been received according to contractual terms. The Company also considers current and forecast economic conditions, using a variety of economic metrics and forecast indices. The sensitivity of expected credit losses relative to changes to these forecast economic conditions can vary by financial asset class. The Company considers a reasonable and supportable forecast period to be up to 24 months from the balance sheet date. After the forecast period, the Company reverts to historical credit experience. The Company uses collateral arrangements such as letters of credit and amounts held in beneficiary trusts to mitigate credit risk, which are considered in the estimate of net amount expected to be collected. The Company has made a policy election to present accrued interest balances separately from the amortized cost basis of assets and has elected the practical expedient to exclude the accrued interest from the tabular disclosures for mortgage loans and available-for-sale securities. The Company has elected not to estimate an allowance for credit losses on accrued interest receivable. The accrual of interest income is discontinued and the asset is placed on nonaccrual status within 90 days of the interest becoming delinquent. Interest accrued but not received for assets on nonaccrual status is reversed through investment income. Interest received for assets that are on nonaccrual status is recognized as payment is received. The asset is returned to accrual status when the principal and interest amounts contractually due are brought current and future payments are expected. Interest receivable is presented as a component of accrued investment income on the Condensed Consolidated Balance Sheet. See Note C and Note K to the Condensed Consolidated Financial Statements for additional information regarding credit losses. Accounting Standards Pending Adoption 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 the Company's results of operations 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, 2021, however the FASB has proposed a one year deferral of the effective date. Early adoption is permitted. The Company may elect to apply the guidance using either a modified retrospective transition method or a full retrospective transition method. The guidance requires restatement of prior periods presented. The Company plans to adopt using the modified retrospective transition method and is currently evaluating the effect the updated guidance will have on its financial statements, including the increased disclosure requirements. The annual updating of cash flow assumptions is expected to increase income statement volatility. While the requirements of the new guidance represent a material change from existing GAAP, the underlying economics of the business and related cash flows will be unchanged.
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Earnings per share | Earnings (loss) per share is based on 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.
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Investments (Tables) |
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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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Debt securities, available-for-sale, allowance for credit loss | Accrued interest receivable on available-for-sale fixed maturity securities totaled $373 million and is excluded from the estimate of expected credit losses and the amortized cost basis in the tables included within this Note.
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Components of net other than temporary impairment losses recognized in earnings by asset type | The table includes losses on securities with an intention to sell and changes in the allowance for credit losses on securities since acquisition date.
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Summary of fixed maturity and equity securities | The following tables present a summary of fixed maturity securities.
(1) As of January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The Unrealized OTTI Losses (Gains) column that tracked subsequent valuation changes on securities for which a credit loss had previously been recorded has been replaced with the Allowance for Credit Losses column.
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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 for which an allowance for credit loss has not been recorded, by the length of time in which the securities have continuously been in that position.
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Contractual maturity | The following table presents available-for-sale fixed maturity securities by contractual maturity.
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Financing receivable credit quality indicators | The following table presents the amortized cost basis of mortgage loans for each credit quality indicator by year of origination.
(1) The values in the table above reflect DSCR on a standardized amortization period and LTV based on the most recent appraised values trended forward using changes in a commercial real estate price index.
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Fair Value (Tables) |
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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 liabilities 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) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 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, 2020 the Property and Energy and Marine lines of business have been combined in the International segment. Prior period information has been conformed to the new line of business presentation.
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Benefit Plans (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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.
(1) As of January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The Net unrealized gains (losses) on investments with OTTI losses column that tracked the change in unrealized gains (losses) on investments with OTTI losses has been replaced with the Net unrealized gains (losses) on investments with an allowance for credit losses column. The balances previously reported in the Net unrealized gains (losses) on investments with OTTI losses column are now reported in the Net unrealized gains (losses) on other investments column.
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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) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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.
(1) Effective January 1, 2020, the Construction line of business is presented separately in the Commercial segment to better align with the Company's underwriting expertise and the manner in which the products are sold. Prior period information has been conformed to the new line of business presentation.
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Expected Credit Losses - Uncollectible Reinsurance and Insurance Receivables (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||
Credit Loss [Abstract] | |||||||||||||||||||||||||||||
Reinsurance Recoverable, Credit Quality Indicator [Table Text Block] | The following table summarizes the outstanding amount of voluntary reinsurance receivables, gross of any collateral arrangements, by financial strength rating.
(1) Expected credit losses for legacy A&EP receivables are ceded to NICO and the reinsurance limit on the LPT has not been exhausted, therefore no allowance is recorded for these receivables and they are excluded from the table above. Refer to Note E for information regarding the LPT. The Company has also excluded receivables from involuntary pools.
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General (Narrative) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Jan. 01, 2020 |
Dec. 31, 2019 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Retained earnings | $ 8,683 | $ 9,348 | |
Mortgage loans | 1,042 | 994 | |
Deferred income taxes | $ 195 | $ 199 | |
CNAF Consolidated | Loews | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Noncontrolling interest, ownership percentage by parent | 89.60% | ||
Accounting Standards Update 2016-13 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Retained earnings | $ 5 | ||
Mortgage loans | 7 | ||
Deferred income taxes | 2 | ||
Accounts receivable, allowance for credit loss | $ 6 |
Earnings (Loss) Per Share (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Earnings Per Share [Abstract] | ||||
Incremental common shares attributable to dilutive effect of share-based payment arrangements (in shares) | 445,000 | 776,000 | 778,000 | 872,000 |
Antidilutive securities excluded from computation of earnings (in shares) | 915,000 | 1,000 | 13,000 | |
Treasury stock, shares, acquired (in shares) | 435,376 | 365,695 | ||
Purchase of treasury stock | $ 18 | $ 16 |
Investments (Net investment income) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Net Investment Income [Line Items] | ||||
Gross investment income | $ 549 | $ 531 | $ 895 | $ 1,118 |
Investment expense | (15) | (16) | (32) | (32) |
Net investment income | 534 | 515 | 863 | 1,086 |
Fixed maturity securities | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | 430 | 455 | 868 | 910 |
Equity securities | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | 50 | 16 | 6 | 46 |
Limited partnership investments | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | 44 | 37 | (26) | 113 |
Mortgage loans | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | 14 | 12 | 28 | 24 |
Short term investments | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | 1 | 9 | 8 | 19 |
Trading portfolio | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | 8 | 2 | 9 | 4 |
Other | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | $ 2 | $ 0 | $ 2 | $ 2 |
Investments (Net realized investment gains (losses)) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Fixed maturity securities: | ||||
Gross gains | $ 102 | $ 28 | $ 131 | $ 64 |
Gross losses | (85) | (31) | (189) | (73) |
Net investment gains (losses) on fixed maturity securities | 17 | (3) | (58) | (9) |
Equity securities | 63 | 11 | (70) | 53 |
Derivatives | (10) | (6) | (5) | (11) |
Mortgage loans | 0 | 0 | (13) | 0 |
Short term investments and other | (1) | (20) | (1) | (20) |
Net investment gains (losses) | $ 69 | $ (18) | $ (147) | $ 13 |
Investments (Components of other-than-temporary impairment losses recognized in earnings) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Debt Securities, Available-for-sale [Line Items] | ||||
Total fixed maturity securities available-for-sale | $ 11 | $ 6 | $ 103 | $ 20 |
Corporate and other bonds | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Total fixed maturity securities available-for-sale | (1) | 6 | 90 | 12 |
Asset-backed | ||||
Debt Securities, Available-for-sale [Line Items] | ||||
Total fixed maturity securities available-for-sale | $ 12 | $ 0 | $ 13 | $ 8 |
Investments (Contractual maturity) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Investments [Abstract] | ||
Due in one year or less, cost or amortized cost | $ 1,472 | $ 1,334 |
Due after one year through five years, cost or amortized cost | 11,040 | 9,746 |
Due after five years through ten years, cost or amortized cost | 13,335 | 14,892 |
Due after ten years, cost or amortized cost | 12,540 | 12,134 |
Cost or Amortized Cost | 38,387 | 38,106 |
Due in one year or less, estimated fair value | 1,469 | 1,356 |
Due after one year through five years, estimated fair value | 11,622 | 10,186 |
Due after five years through ten years, estimated fair value | 14,414 | 15,931 |
Due after ten years, estimated fair value | 15,265 | 14,714 |
Total Estimated Fair Value | $ 42,770 | $ 42,187 |
Fair Value (Narrative) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Other invested assets overseas deposit | $ 60 | $ 60 |
Claim and Claim Adjustment Expense Reserves (Reconciliation of Claim and Claim Adjustment Expense Reserves) (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Reserves, beginning of year: [Abstract] | ||
Gross | $ 21,720 | $ 21,984 |
Ceded | 3,835 | 4,019 |
Net reserves, beginning of year | 17,885 | 17,965 |
Net incurred claim and claim adjustment expenses: | ||
Provision for insured events of current year | 2,899 | 2,615 |
Increase (decrease) in provision for insured events of prior years | 19 | (36) |
Amortization of discount | 98 | 98 |
Total net incurred | 3,016 | 2,677 |
Net payments attributable to: | ||
Current year events | (256) | (315) |
Prior year events | (2,342) | (2,519) |
Total net payments | (2,598) | (2,834) |
Foreign currency translation adjustment and other | (35) | 55 |
Net reserves, end of period | 18,268 | 17,863 |
Ceded reserves, end of period | 4,002 | 3,866 |
Gross reserves, end of period | $ 22,270 | $ 21,729 |
Claim and Claim Adjustment Expense Reserves (Net Prior Year Development) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Segment Reporting Information [Line Items] | ||||
Pretax (favorable) unfavorable premium development, excluding Life & Group | $ 22 | $ (31) | $ 7 | $ (45) |
Specialty | ||||
Segment Reporting Information [Line Items] | ||||
Pretax (favorable) unfavorable premium development, excluding Life & Group | (20) | (18) | (31) | (38) |
Commercial | ||||
Segment Reporting Information [Line Items] | ||||
Pretax (favorable) unfavorable premium development, excluding Life & Group | 45 | (12) | 41 | (20) |
International | ||||
Segment Reporting Information [Line Items] | ||||
Pretax (favorable) unfavorable premium development, excluding Life & Group | (3) | (1) | (3) | 13 |
Corporate & Other | ||||
Segment Reporting Information [Line Items] | ||||
Pretax (favorable) unfavorable premium development, excluding Life & Group | $ 0 | $ 0 | $ 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 | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Medical Professional Liability | $ 0 | $ 15 | $ 10 | $ 30 |
Other Professional Liability and Management Liability | (9) | (7) | (6) | (19) |
Surety | 0 | (15) | (30) | (40) |
Warranty | (3) | (7) | (3) | (7) |
Other | (8) | (4) | (2) | (2) |
Total pretax (favorable) unfavorable development | $ (20) | $ (18) | $ (31) | $ (38) |
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 | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Commercial Auto | $ 15 | $ (3) | $ 24 | $ (8) |
General Liability | 50 | 13 | 50 | (7) |
Workers' Compensation | (61) | (7) | (74) | (5) |
Property and Other | 41 | (15) | 41 | 0 |
Total pretax (favorable) unfavorable development | $ 45 | $ (12) | $ 41 | $ (20) |
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 | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||
Casualty | $ (6) | $ (5) | $ (6) | $ (5) |
Property, Energy and Marine | 1 | 5 | 1 | 19 |
Specialty | 2 | (1) | 2 | (1) |
Total pretax (favorable) unfavorable development | $ (3) | $ (1) | $ (3) | $ 13 |
Legal Proceedings, Contingencies and Guarantees (Narrative) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Guarantee Obligations | ||
Legal Proceedings, Commitments and Contingencies, and Guarantees [Line Items] | ||
Guarantor obligations, maximum exposure, undiscounted | $ 1,700 | |
Guarantee and Indemnification | ||
Legal Proceedings, Commitments and Contingencies, and Guarantees [Line Items] | ||
Guarantor obligations, current carrying value | $ 5 | $ 5 |
Benefit Plans (Components of net periodic cost (benefit)) (Details) - Pension Benefits - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Defined Benefit Plan Disclosure [Line Items] | ||||
Interest cost on projected benefit obligation | $ 20 | $ 25 | $ 40 | $ 50 |
Expected return on plan assets | (39) | (35) | (78) | (71) |
Amortization of net actuarial (gain) loss | 11 | 10 | 22 | 20 |
Settlement loss | 1 | 0 | 2 | 0 |
Total net periodic pension cost (benefit) | $ (7) | $ 0 | $ (14) | $ (1) |
Benefit Plans (Narrative) (Details) - Pension Benefits - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Insurance Claims and Policyholder's Benefits, Including Policyholder's Dividends | ||||
Total non-service cost (benefit) | $ 2 | $ 1 | $ 4 | $ 1 |
Other Expense | ||||
Total non-service cost (benefit) | $ 5 | $ 1 | $ 10 | $ 1 |
Business Segments (Narrative) (Details) |
6 Months Ended |
---|---|
Jun. 30, 2020
segment
| |
Core Segments - Specialty, Commercial and International | |
Segment Reporting Information [Line Items] | |
Number of operating segments | 3 |
Non-Core Segments - Life & Group and Corporate & Other | |
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 | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Revenue from Contract with Customer [Abstract] | |||||
Deferred non-insurance warranty revenue | $ 3,852 | $ 3,852 | $ 3,779 | ||
Contract with customer, liability, revenue recognized | $ 278 | $ 246 | $ 564 | $ 511 |
Expected Credit Losses - Uncollectible Reinsurance and Insurance Receivables (Summary of Outstanding Amount of Voluntary Reinsurance Receivables) (Details) $ in Millions |
Jun. 30, 2020
USD ($)
|
---|---|
Financing Receivable, Credit Quality Indicator [Line Items] | |
Reinsurance receivables | $ 3,647 |
A- to A | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
Reinsurance receivables | 2,717 |
B- to B | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
Reinsurance receivables | 926 |
Insolvent | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
Reinsurance receivables | $ 4 |
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