Claim, Claim Adjustment Expense and Future Policy Benefit Reserves

12 Months Ended

Dec. 31, 2020

Claim, Claim Adjustment Expense and Future Policy Benefit Reserves [Abstract]

Claim, Claim Adjustment Expense and Future Policy Benefit Reserves

Note 8.  Claim, Claim Adjustment Expense and Future Policy Benefit 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. Reserve projections are based primarily on detailed analysis of the facts in each case, 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 ultimate cost for insurance losses will not exceed current estimates.

CNA’s commercial property and casualty insurance operations (“Property & Casualty Operations”) include its Specialty, Commercial and International lines of business. CNA’s Other Insurance Operations outside of Property & Casualty Operations include its long term care business that is in run-off, certain corporate expenses, including interest on CNA’s corporate debt, and certain property and casualty businesses in run-off, including CNA Re and A&EP.

Liability for Unpaid Claim and Claim Adjustment Expenses

The table below reconciles the net liability for unpaid claim and claim adjustment expenses to the amount presented on the Consolidated Balance Sheets.

December 31	2020
(In millions)
Net liability for unpaid claim and claim adjustment expenses:
Property & Casualty Operations	$	14,924
Other Insurance Operations (a)		3,777
Total net claim and claim adjustment expenses		18,701
Reinsurance receivables: (b)
Property & Casualty Operations		1,956
Other Insurance Operations (c)		2,049
Total reinsurance receivables		4,005
Total gross liability for unpaid claims and claims adjustment expenses	$	22,706

(a) Other Insurance Operations amounts are primarily related to long term care claim reserves, which are long duration insurance contracts, but also include amounts related to unfunded structured settlements arising from short duration insurance contracts.

(b) Reinsurance receivables presented are gross of the allowance for uncollectible reinsurance and do not include reinsurance receivables related to paid losses.

(c) The Other Insurance Operations reinsurance receivables are primarily related to A&EP claims covered under the loss portfolio transfer (“LPT”).

The following table presents a reconciliation between beginning and ending claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves of Other Insurance Operations.

Year Ended December 31	2020			2019			2018
(In millions)
Reserves, beginning of year:
Gross	$	21,720		$	21,984		$	22,004
Ceded		3,835			4,019			3,934
Net reserves, beginning of year		17,885			17,965			18,070
Net incurred claim and claim adjustment expenses:
Provision for insured events of current year		5,793			5,356			5,358
Decrease in provision for insured events of prior years		(119	)		(127	)		(179	)
Amortization of discount		183			184			176
Total net incurred (a)		5,857			5,413			5,355
Net payments attributable to:
Current year events		(948	)		(992	)		(1,046	)
Prior year events		(4,216	)		(4,584	)		(4,285	)
Total net payments		(5,164	)		(5,576	)		(5,331	)
Foreign currency translation adjustment and other		123			83			(129	)
Net reserves, end of year		18,701			17,885			17,965
Ceded reserves, end of year		4,005			3,835			4,019
Gross reserves, end of year	$	22,706		$	21,720		$	21,984

(a) Total net incurred above does not agree to Insurance claims and policyholders’ benefits as reflected on the 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.

Reserving Methodology

In developing claim and claim adjustment expense (“loss” or “losses”) reserve estimates, CNA’s actuaries perform detailed reserve analyses that are staggered throughout the year. Every reserve group is reviewed at least once during the year, but most are reviewed more frequently. The analyses generally review losses gross of ceded reinsurance and apply the ceded reinsurance terms to the gross estimates to establish estimates net of reinsurance. Factors considered include, but are not limited to, the historical pattern and volatility of the actuarial indications, the sensitivity of the actuarial indications to changes in paid and incurred loss patterns, the consistency of claims handling processes, the consistency of case reserving practices, changes in CNA’s pricing and underwriting, pricing and underwriting trends in the insurance market and legal, judicial, social and economic trends. In addition to the detailed analyses, CNA reviews actual loss emergence for all products each quarter.

In developing the loss reserve estimates for property and casualty contracts, CNA generally projects ultimate losses using several common actuarial methods as listed below. CNA reviews the various indications from the various methods and applies judgment to select an actuarial point estimate. The carried reserve may differ from the actuarial point estimate as a result of CNA’s consideration of the factors noted above as well as the potential volatility of the projections associated with the specific product being analyzed and other factors affecting claims costs that may not be quantifiable through traditional actuarial analysis. The indicated required reserve is the difference between the selected ultimate loss and the inception-to-date paid losses. The difference between the selected ultimate loss and the case incurred or reported loss is IBNR. IBNR includes a provision for development on known cases as well as a provision for late reported incurred claims. The most frequently utilized methods to project ultimate losses include the following:

• Paid development: The paid development method estimates ultimate losses by reviewing paid loss patterns and applying them to accident years with further expected changes in paid losses.

• Incurred development: The incurred development method is similar to the paid development method, but it uses case incurred losses instead of paid losses.

• Loss ratio: The loss ratio method multiplies premiums by an expected loss ratio to produce ultimate loss estimates for each accident year.

• Bornhuetter-Ferguson using premiums and paid loss: The Bornhuetter-Ferguson using premiums and paid loss method is a combination of the paid development approach and the loss ratio approach. This method normally determines expected loss ratios similar to the approach used to estimate the expected loss ratio for the loss ratio method.

• Bornhuetter-Ferguson using premiums and incurred loss: The Bornhuetter-Ferguson using premiums and incurred loss method is similar to the Bornhuetter-Ferguson using premiums and paid loss method except that it uses case incurred losses.

• Frequency times severity: The frequency times severity method multiplies a projected number of ultimate claims by an estimated ultimate average loss for each accident year to produce ultimate loss estimates.

• Stochastic modeling: The stochastic modeling produces a range of possible outcomes based on varying assumptions related to the particular product being modeled.

For many exposures, especially those that are considered long-tail, a particular accident or policy year may not have a sufficient volume of paid losses to produce a statistically reliable estimate of ultimate losses. In such a case, CNA’s actuaries typically assign more weight to the incurred development method than to the paid development method. As claims continue to settle and the volume of paid loss increases, the actuaries may assign additional weight to the paid development method. For most of CNA’s products, even the incurred losses for accident or policy years that are early in the claim settlement process will not be of sufficient volume to produce a reliable estimate of ultimate losses. In these cases, CNA may not assign any weight to the paid and incurred development methods. CNA may use the loss ratio, Bornhuetter-Ferguson and frequency times severity methods. For short-tail exposures, the paid and incurred

development methods can often be relied on sooner, primarily because CNA’s history includes a sufficient number of years to cover the entire period over which paid and incurred losses are expected to change. However, CNA may also use the loss ratio, Bornhuetter-Ferguson and frequency times severity methods for short-tail exposures. For other more complex reserve groups where the above methods may not produce reliable indications, CNA uses additional methods tailored to the characteristics of the specific situation.

CNA’s reserving methodologies for mass tort and A&EP are similar as both are based on detailed reviews of large accounts with estimates of ultimate payments based on the facts in each case and CNA’s view of applicable law and coverage litigation.

Gross and Net Carried Reserves

The following tables present the gross and net carried reserves:

	Property		Other
	and Casualty		Insurance
December 31, 2020	Operations		Operations		Total
(In millions)
Gross Case Reserves	$	6,183	$	4,511	$	10,694
Gross IBNR Reserves		10,697		1,315		12,012
Total Gross Carried Claim and Claim Adjustment Expense Reserves	$	16,880	$	5,826	$	22,706
Net Case Reserves	$	5,544	$	3,386	$	8,930
Net IBNR Reserves		9,380		391		9,771
Total Net Carried Claim and Claim Adjustment Expense Reserves	$	14,924	$	3,777	$	18,701

December 31, 2019
Gross Case Reserves	$	6,276	$	4,713	$	10,989
Gross IBNR Reserves		9,494		1,237		10,731
Total Gross Carried Claim and Claim Adjustment Expense Reserves	$	15,770	$	5,950	$	21,720
Net Case Reserves	$	5,645	$	3,533	$	9,178
Net IBNR Reserves		8,508		199		8,707
Total Net Carried Claim and Claim Adjustment Expense Reserves	$	14,153	$	3,732	$	17,885

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. These changes can be favorable or unfavorable.

The following table and discussion present details of the net prior year loss reserve development in Property & Casualty Operations:

Year Ended December 31	2020			2019			2018
(In millions)
Medical professional liability	$	35		$	75		$	47
Other professional liability and management liability		(15	)		(69	)		(127	)
Surety		(69	)		(92	)		(70	)
Commercial auto		33			(25	)		1
General liability		65			54			32
Workers’ compensation		(96	)		(13	)		(32	)
Property and other		27			(3	)		(32	)
Total pretax favorable development	$	(20	)	$	(73	)	$	(181	)

Development Tables

For CNA’s Property & Casualty Operations, the following tables present further detail and commentary on the development reflected in the financial statements for each of the periods presented. Also presented are loss reserve development tables that illustrate the change over time of reserves established for claim and allocated claim adjustment expenses arising from short-duration insurance contracts for certain lines of business within CNA’s Property & Casualty Operations. Not all lines of business are presented based on their context to CNA’s overall loss reserves, calendar year reserve development, or calendar year net earned premiums. Insurance contracts are considered to be short-duration contracts when the contracts are not expected to remain in force for an extended period of time.

The Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses tables, reading across, show the cumulative net incurred claim and allocated claim adjustment expenses relating to each accident year at the end of the stated calendar year. Changes in the cumulative amount across time are the result of CNA’s expanded awareness of additional facts and circumstances that pertain to the unsettled claims. The Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses tables, reading across, show the cumulative amount paid for claims in each accident year as of the end of the stated calendar year. The Net Strengthening or (Releases) of Prior Accident Year Reserves tables, reading across, show the net increase or decrease in the cumulative net incurred accident year claim and allocated claim adjustment expenses during each stated calendar year and indicates whether the reserves for that accident year were strengthened or released.

The information in the tables is reported on a net basis after reinsurance and does not include the effects of discounting. The information contained in calendar years 2019 and prior is unaudited. To the extent CNA enters into a commutation, the transaction is reported on a prospective basis. To the extent that CNA enters into a disposition, the effects of the disposition are reported on a retrospective basis by removing the balances associated with it.

The amounts reported for the cumulative number of reported claims include direct and assumed open and closed claims by accident year at the claimant level. The number excludes claim counts for claims within a policy deductible where the insured is responsible for payment of losses in the deductible layer. Claim count data for certain assumed reinsurance contracts is unavailable.

In the loss reserve development tables, IBNR includes reserves for incurred but not reported losses and expected development on case reserves. CNA does not establish case reserves for allocated loss adjusted expenses (ALAE), therefore ALAE reserves are also included in the estimate of IBNR.

2020

Unfavorable development in medical professional liability was primarily due to higher than expected frequency of large losses in recent accident years and unfavorable outcomes on specific claims in older accident years.

Favorable development in other professional liability and management liability was primarily due to lower than expected loss emergence in accident year 2017 and accident years prior to 2010.

Favorable development in surety was due to lower than expected frequency and lack of systemic loss activity for accident years 2019 and prior.

Unfavorable development in commercial auto was due to higher than expected claim severity in CNA’s middle market and construction business in recent accident years.

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, increased bodily injury severities in accident years 2012 through 2016 and higher than expected frequency and severity in CNA’s umbrella business in accident years 2015 through 2019.

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 CNA’s middle market, national accounts and marine business units.

2019

Unfavorable development in medical professional liability was primarily due to higher than expected severity in accident years 2016 through 2018 in CNA’s aging services business, higher than expected severity in accident year 2013 in the allied healthcare business, unfavorable outcomes on individual claims and higher than expected severity in accident year 2017 in the 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, lower than expected large claim losses in recent accident years in CNA’s public company directors and officers liability business and lower than expected loss adjustment expenses across accident years 2010 through 2018.

Favorable development in surety was due to lower than expected frequency for accident years 2018 and prior.

Favorable development in commercial auto was primarily due to continued lower than expected severity across accident years 2015 and prior and a decline in bodily injury frequency in accident year 2018.

Unfavorable development in general liability was primarily due to higher than expected emergence in mass tort exposures, primarily from accident years 2016, 2015 and prior to 2010.

Favorable development in other coverages was due to lower than expected paid loss emergence on vehicle products in warranty, favorable medical trends driving lower than expected severity in accident years 2012 through 2018 in workers’ compensation, lower than expected claim severity related to catastrophe events in accident years 2017 and 2018 in property and other in Commercial and lower than expected large losses and claim severity in accident years 2018 and prior in Hardy, Europe and Canada in casualty. This was mostly offset by unfavorable development driven by higher than expected claims in Hardy on 2018 accident year Asian catastrophe events in property in International and potential design and construct exposures in professional indemnity within Europe financial lines in accident years 2017 and 2018.

2018

Unfavorable development in medical professional liability was primarily due to higher than expected severity in accident years 2014 and 2017 in CNA’s hospitals business. In addition, there was higher than expected frequency and severity in aging services in accident years 2014 through 2017 combined, partially offset by lower than expected frequency in accident year 2015.

Favorable development in other professional liability and management liability was primarily due to lower than expected claim frequency in recent accident years related to financial institutions and professional liability errors and omissions (“E&O”), favorable severity in accident years 2015 and prior related to professional liability E&O and favorable outcomes on individual claims in financial institutions in accident years 2013 and prior.

Favorable development in surety was due to lower than expected loss emergence for accident years 2017 and prior.

Unfavorable development in general liability was driven by higher than expected claim severity in unsupported umbrella in accident years 2013 through 2016.

Favorable development in workers’ compensation was driven by lower frequency and severity experience and favorable impacts from California reforms.

Favorable development in other coverages was driven by lower than expected claim severity in catastrophes in accident year 2017 for property in Commercial, better than expected frequency in the liability portion of the package business in Canada and general liability in Europe in casualty, and for accident years 2015 and prior in Europe in healthcare and technology for International. This was partially offset by unfavorable development primarily driven by increased loss severity in the accident year 2017 in Europe professional indemnity in specialty for International.

Property & Casualty Operations – Line of Business Composition

The table below presents the net liability for unpaid claim and claim adjustment expenses, by line of business for Property & Casualty Operations:

December 31	2020
(In millions)
Medical professional liability	$	1,520
Other professional liability and management liability		2,850
Surety		385
Commercial auto		502
General liability		3,305
Workers’ compensation		3,872
Property and other		2,490
Total net liability for unpaid claim and claim adjustment expenses	$	14,924

Medical Professional Liability

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses

																					December 31, 2020
																							Cumulative
December 31	2011 (a)		2012 (a)		2013 (a)		2014 (a)		2015 (a)		2016 (a)		2017 (a)		2018 (a)		2019 (a)		2020		IBNR		Number of Claims
(In millions, except reported claims data)
Accident Year
2011	$	429	$	437	$	443	$	468	$	439	$	434	$	437	$	437	$	439	$	439	$	4	$	16,537
2012				464		469		508		498		493		484		493		499		497		5		17,739
2013						462		479		500		513		525		535		545		531		11		19,537
2014								450		489		537		530		535		529		527		11		19,770
2015										433		499		510		494		488		510		29		18,122
2016												427		487		485		499		508		27		15,998
2017														412		449		458		460		62		15,008
2018																404		429		431		98		14,531
2019																		430		445		232		13,045
2020	_																			477		426		7,787
	_																Total		$	4,825	$	905

Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses

Accident Year
2011	$	17	$	109	$	208	$	295	$	347	$	375	$	398	$	409	$	414	$	432	-	-
2012				14		117		221		323		388		427		457		479		482	-	-
2013						17		119		255		355		414		462		495		508	-	-
2014								23		136		258		359		417		472		489	-	-
2015										22		101		230		313		384		420	-	-
2016												18		121		246		339		401
2017														19		107		235		308	-	-
2018																21		115		211	-	-
2019																		17		91	-	-
2020	_		_		_		__		_		_		_		_					11	-	-
																	Total		$	3,353	-	-
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	1,472	-	-
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2011																				19	-	-
Liability for unallocated claim adjustment expenses for accident years presented																				29	-	-
Total net liability for unpaid claim and claim adjustment expenses																			$	1,520	-	-

Net Strengthening (Releases) of Prior Accident Year Reserves

Years Ended																													_
December 31																											Total
Accident Year
2011		-	$	8	$	6	$	25	$	(29	)	$	(5	)	$	3		$	-		$	2		$	-		$	10		-
2012						5		39		(10	)		(5	)		(9	)		9			6			(2	)		33
2013								17		21			13			12			10			10			(14	)		69
2014										39			48			(7	)		5			(6	)		(2	)		77
2015													66			11			(16	)		(6	)		22			77
2016																60			(2	)		14			9			81
2017																			37			9			2			48
2018																						25			2			27
2019	_		_		_		_		_			_			_										15			15
Total net development for the accident years presented above																			43			54			32
Total net development for accident years prior to 2011																			5			19			3
Total unallocated claim adjustment expense development																			(1	)		2			-
Total																		$	47		$	75		$	35

(a) Data presented for these calendar years is required supplemental information, which is unaudited.

Other Professional Liability and Management Liability

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses

																					December 31, 2020
																							Cumulative
December 31	2011 (a)		2012 (a)		2013 (a)		2014 (a)		2015 (a)		2016 (a)		2017 (a)		2018 (a)		2019 (a)		2020		IBNR		Number of Claims
(In millions, except reported claims data)
Accident Year
2011	$	880	$	908	$	934	$	949	$	944	$	911	$	899	$	888	$	885	$	883	$	17	$	18,745
2012				923		909		887		878		840		846		833		831		850		25		18,504
2013						884		894		926		885		866		863		850		846		36		17,939
2014								878		898		885		831		835		854		845		57		17,568
2015										888		892		877		832		807		813		74		17,417
2016												901		900		900		904		907		120		17,946
2017														847		845		813		791		220		18,118
2018																850		864		869		276		19,789
2019																		837		845		447		19,157
2020	_																			930		777		16,557
	_																Total		$	8,579	$	2,049

Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses

Accident Year
2011	$	71	$	314	$	503	$	605	$	683	$	726	$	781	$	796	$	828	$	851	-	-
2012				56		248		400		573		651		711		755		792		812	-	-
2013						54		249		447		618		702		754		771		779	-	-
2014								51		223		392		515		647		707		743	-	-
2015										60		234		404		542		612		677	-	-
2016												64		248		466		625		701
2017														57		222		394		498	-	-
2018																54		282		473	-	-
2019																		64		263	-	-
2020	_		_		_		__		_		_		_		_					67	-	-
																	Total		$	5,864	-	-
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	2,715	-	-
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2011																				79	-	-
Liability for unallocated claim adjustment expenses for accident years presented																				56	-	-
Total net liability for unpaid claim and claim adjustment expenses																			$	2,850	-	-

Net Strengthening (Releases) of Prior Accident Year Reserves

Years Ended																																_
December 31																													Total
Accident Year
2011		-	$	28	$	26		$	15		$	(5	)	$	(33	)	$	(12	)	$	(11	)	$	(3	)	$	(2	)	$	3			-
2012						(14	)		(22	)		(9	)		(38	)		6			(13	)		(2	)		19			(73	)
2013									10			32			(41	)		(19	)		(3	)		(13	)		(4	)		(38	)
2014												20			(13	)		(54	)		4			19			(9	)		(33	)
2015															4			(15	)		(45	)		(25	)		6			(75	)
2016																		(1	)		-			4			3			6
2017																					(2	)		(32	)		(22	)		(56	)
2018																								14			5			19
2019	_		_		_			_			_			_			_			_							8			8
Total net development for the accident years presented above																					(70	)		(38	)		4
Total net development for accident years prior to 2011																					(50	)		(17	)		(19	)
Total unallocated claim adjustment expense development																					(7	)		(14	)		-
Total																				$	(127	)	$	(69	)	$	(15	)

(a) Data presented for these calendar years is required supplemental information, which is unaudited.

Surety

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses

																					December 31, 2020
																							Cumulative
December 31	2011 (a)		2012 (a)		2013 (a)		2014 (a)		2015 (a)		2016 (a)		2017 (a)		2018 (a)		2019 (a)		2020		IBNR		Number of Claims
(In millions, except reported claims data)
Accident Year
2011	$	120	$	121	$	116	$	87	$	75	$	70	$	66	$	62	$	62	$	62	$	1	$	5,828
2012				120		122		98		70		52		45		39		38		37		1		5,577
2013						120		121		115		106		91		87		83		82		1		5,078
2014								123		124		94		69		60		45		45		1		5,102
2015										131		131		104		79		63		58		6		5,026
2016												124		124		109		84		67		12		5,469
2017														120		115		103		84		31		5,706
2018																114		108		91		48		5,920
2019																		119		112		67		5,344
2020	_																			128		122		2,527
	_																Total		$	766	$	290

Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses

Accident Year
2011	$	19	$	42	$	55	$	58	$	60	$	60	$	56	$	57	$	57	$	57	-	-
2012				5		32		34		35		35		36		37		37		36	-	-
2013						16		40		69		78		78		78		77		78	-	-
2014								7		30		38		36		38		38		39	-	-
2015										7		26		38		40		42		44	-	-
2016												5		37		45		45		43
2017														23		37		41		46	-	-
2018																5		25		34	-	-
2019																		12		34	-	-
2020	_		_		_		__		_		_		_		_					4	-	-
																	Total		$	415	-	-
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	351	-	-
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2011																				14	-	-
Liability for unallocated claim adjustment expenses for accident years presented																				20	-	-
Total net liability for unpaid claim and claim adjustment expense																			$	385	-	-

Net Strengthening (Releases) of Prior Accident Year Reserves

Years Ended																																_
December 31																													Total
Accident Year
2011		-	$	1	$	(5	)	$	(29	)	$	(12	)	$	(5	)	$	(4	)	$	(4	)	$	-		$	-		$	(58	)		-
2012						2			(24	)		(28	)		(18	)		(7	)		(6	)		(1	)		(1	)		(83	)
2013									1			(6	)		(9	)		(15	)		(4	)		(4	)		(1	)		(38	)
2014												1			(30	)		(25	)		(9	)		(15	)		-			(78	)
2015															-			(27	)		(25	)		(16	)		(5	)		(73	)
2016																		-			(15	)		(25	)		(17	)		(57	)
2017																					(5	)		(12	)		(19	)		(36	)
2018																								(6	)		(17	)		(23	)
2019	_		_		_			_			_			_			_										(7	)		(7	)
Total net development for the accident years presented above																					(68	)		(79	)		(67	)
Total net development for accident years prior to 2011																					(2	)		(3	)		(2	)
Total unallocated claim adjustment expense development																					-			(10	)		-
Total																				$	(70	)	$	(92	)	$	(69	)

(a) Data presented for these calendar years is required supplemental information, which is unaudited.

Commercial Auto

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses

																					December 31, 2020
																							Cumulative
December 31	2011 (a)		2012 (a)		2013 (a)		2014 (a)		2015 (a)		2016 (a)		2017 (a)		2018 (a)		2019 (a)		2020		IBNR		Number of Claims
(In millions, except reported claims data)
Accident Year
2011	$	268	$	281	$	288	$	302	$	300	$	294	$	294	$	294	$	291	$	292	$	-	$	47,907
2012				275		289		299		303		307		299		299		297		296		2		46,288
2013						246		265		265		249		245		245		241		241		2		39,429
2014								234		223		212		205		205		201		201		1		33,625
2015										201		199		190		190		183		181		3		30,426
2016												198		186		186		186		190		2		30,430
2017														199		198		200		221		7		30,913
2018																229		227		227		10		34,225
2019																		257		266		48		36,779
2020	_																			310		187		24,427
	_																Total		$	2,425	$	262

Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses

Accident Year
2011	$	79	$	145	$	199	$	248	$	274	$	284	$	287	$	289	$	289	$	290	-	-
2012				78		160		220		259		282		285		290		291		291	-	-
2013						74		135		168		200		225		234		238		239	-	-
2014								64		102		137		166		187		196		198	-	-
2015										52		96		130		153		172		175	-	-
2016												52		93		126		154		175	-	-
2017														58		107		150		178	-	-
2018																66		128		175	-	-
2019																		77		147	-	-
2020	_		_		_		__		_		_		_		_					71	-	-
																	Total		$	1,939	-	-
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	486	-	-
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2011																				2	-	-
Liability for unallocated claim adjustment expenses for accident years presented																				14	-	-
Total net liability for unpaid claim and claim adjustment expenses																			$	502	-	-

Net Strengthening (Releases) of Prior Accident Year Reserves

Years Ended																														_
December 31																											Total
Accident Year
2011		-	$	13	$	7	$	14	$	(2	)	$	(6	)	$	-		$	-		$	(3	)	$	1		$	24			-
2012						14		10		4			4			(8	)		-			(2	)		(1	)		21
2013								19		-			(16	)		(4	)		-			(4	)		-			(5	)
2014										(11	)		(11	)		(7	)		-			(4	)		-			(33	)
2015													(2	)		(9	)		-			(7	)		(2	)		(20	)
2016																(12	)		-			-			4			(8	)
2017																			(1	)		2			21			22
2018																						(2	)		-			(2	)
2019	_		_		_		_		_			_			_										9			9
Total net development for the accident years presented above																			(1	)		(20	)		32
Total net development for accident years prior to 2011																			1			(4	)		1
Total unallocated claim adjustment expense development																			1			(1	)		-
Total																		$	1		$	(25	)	$	33

(a) Data presented for these calendar years is required supplemental information, which is unaudited.

General Liability

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses

																					December 31, 2020
																							Cumulative
December 31	2011 (a)		2012 (a)		2013 (a)		2014 (a)		2015 (a)		2016 (a)		2017 (a)		2018 (a)		2019 (a)		2020		IBNR		Number of Claims
(In millions, except reported claims data)
Accident Year
2011	$	591	$	589	$	631	$	677	$	676	$	681	$	670	$	669	$	667	$	667	$	21	$	39,405
2012				587		611		639		636		619		635		635		630		632		24		35,276
2013						650		655		650		655		613		623		620		623		27		33,649
2014								653		658		654		631		635		658		659		44		27,972
2015										581		576		574		589		600		602		38		24,005
2016												623		659		667		671		673		104		24,215
2017														632		632		632		634		136		21,781
2018																653		644		646		302		19,234
2019																		680		682		453		17,294
2020	_																			723		640		9,593
	_																Total		$	6,541	$	1,789

Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses

Accident Year
2011	$	28	$	148	$	273	$	411	$	517	$	568	$	602	$	622	$	638	$	640	-	-
2012				28		132		247		374		454		510		559		579		597	-	-
2013						31		128		240		352		450		510		551		572	-	-
2014								31		119		247		376		481		547		569	-	-
2015										19		110		230		357		446		501	-	-
2016												32		163		279		407		481	-	-
2017														23		118		250		399	-	-
2018																33		107		228	-	-
2019																		25		98	-	-
2020	_		_		_		__		_		_		_		_					23	-	-
																	Total		$	4,108	-	-
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	2,433	-	-
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2011																				812	-	-
Liability for unallocated claim adjustment expenses for accident years presented																				60	-	-
Total net liability for unpaid claim and claim adjustment expenses																			$	3,305	-	-

Net Strengthening (Releases) of Prior Accident Year Reserves

Years Ended																														_
December 31																											Total
Accident Year
2011		-	$	(2	)	$	42	$	46	$	(1	)	$	5		$	(11	)	$	(1	)	$	(2	)	$	-	$	76			-
2012							24		28		(3	)		(17	)		16			-			(5	)		2		45
2013									5		(5	)		5			(42	)		10			(3	)		3		(27	)
2014											5			(4	)		(23	)		4			23			1		6
2015														(5	)		(2	)		15			11			2		21
2016																	36			8			4			2		50
2017																				-			-			2		2
2018																							(9	)		2		(7	)
2019	_		_			_		_		_			_			_										2		2
Total net development for the accident years presented above																				36			19			16
Total net development for accident years prior to 2011																				-			28			49
Total unallocated claim adjustment expense development																				(4	)		7			-
Total																			$	32		$	54		$	65

(a) Data presented for these calendar years is required supplemental information, which is unaudited.

Workers’ Compensation

Cumulative Net Incurred Claim and Allocated Claim Adjustment Expenses

																					December 31, 2020
																							Cumulative
December 31	2011 (a)		2012 (a)		2013 (a)		2014 (a)		2015 (a)		2016 (a)		2017 (a)		2018 (a)		2019 (a)		2020		IBNR		Number of Claims
(In millions, except reported claims data)
Accident Year
2011	$	607	$	641	$	647	$	659	$	651	$	676	$	676	$	674	$	688	$	698	$	42	$	46,443
2012				601		627		659		669		678		673		671		668		663		62		42,685
2013						537		572		592		618		593		582		561		552		92		38,758
2014								467		480		479		452		450		446		439		97		33,488
2015										422		431		406		408		394		382		116		31,876
2016												426		405		396		382		366		121		31,967
2017														440		432		421		400		97		33,094
2018																450		440		428		129		34,800
2019																		452		449		181		34,020
2020	_																			477		312		24,980
	_																Total		$	4,854	$	1,249

Cumulative Net Paid Claim and Allocated Claim Adjustment Expenses

Accident Year
2011	$	99	$	249	$	358	$	438	$	478	$	522	$	564	$	571	$	581	$	583		-	-
2012				87		232		342		416		470		509		524		536		538		-	-
2013						80		213		300		370		417		419		411		414		-	-
2014								61		159		215		258		282		290		297		-	-
2015										51		131		180		212		231		243		-	-
2016												53		129		169		198		219		-	-
2017														63		151		207		243		-	-
2018																68		163		229		-	-
2019																		71		169		-	-
2020	_		_		_		__		_		_		_		_					65		-	-
																	Total		$	3,000		-	-
Net liability for unpaid claim and allocated claim adjustment expenses for the accident years presented																			$	1,854		-	-
Net liability for unpaid claim and claim adjustment expenses for accident years prior to 2011																				1,984		-	-
Other (b)																				(15	)	-	-
Liability for unallocated claim adjustment expenses for accident years presented																				49
Total net liability for unpaid claim and claim adjustment expenses																			$	3,872		-	-

Net Strengthening (Releases) of Prior Accident Year Reserves

Years Ended																														_
December 31																											Total
Accident Year
2011		-	$	34	$	6	$	12	$	(8	)	$	25		$	-		$	(2	)	$	14		$	10		$	91			-
2012						26		32		10			9			(5	)		(2	)		(3	)		(5	)		62
2013								35		20			26			(25	)		(11	)		(21	)		(9	)		15
2014										13			(1	)		(27	)		(2	)		(4	)		(7	)		(28	)
2015													9			(25	)		2			(14	)		(12	)		(40	)
2016																(21	)		(9	)		(14	)		(16	)		(60	)
2017																			(8	)		(11	)		(21	)		(40	)
2018																						(10	)		(12	)		(22	)
2019	_		_		_		_		_			_			_										(3	)		(3	)
Total net development for the accident years presented above																			(32	)		(63	)		(75	)
Adjustment for development on a discounted basis																			-			3			2
Total net development for accident years prior to 2011																			7			24			(23	)
Total unallocated claim adjustment expense development																			(7	)		23			-
Total																		$	(32	)	$	(13	)	$	(96	)

(a) Data presented for these calendar years is required supplemental information, which is unaudited.

(b) Other includes the effect of discounting lifetime claim reserves.

The table below presents information about average historical claims duration as of December 31, 2020 and is presented as required supplementary information, which is unaudited.

Average Annual Percentage Payout of Ultimate Net Incurred Claim and Allocated Claim Adjustment Expenses in Year:

	1		2		3		4		5		6		7		8		9		10
Medical professional liability	3.7	%	19.5	%	24.0	%	18.4	%	12.2	%	8.2	%	5.2	%	3.1	%	0.9	%	4.1	%
Other professional liability and management liability	7.0		22.9		21.4		16.3		10.1		6.6		4.4		2.3		3.0		2.6
Surety (a)	18.3		44.6		20.0		3.5		2.2		1.2		(0.7	)	0.9		(1.4	)
Commercial auto	27.9		24.0		18.3		14.0		9.8		2.9		1.3		0.5				0.3
General liability	4.2		15.0		18.9		20.3		14.3		9.1		5.7		3.2		2.6		0.3
Workers’ compensation	14.5		21.9		14.2		10.1		6.4		3.5		2.1		1.1		0.9		0.3

(a) Due to the nature of the Surety business, average annual percentage payout of ultimate net incurred claim and allocated claim adjustment expenses has been calculated using only the payouts of mature accident years presented in the loss reserve development tables.

A&EP Reserves

In 2010, Continental Casualty Company (“CCC”) together with several insurance subsidiaries completed a transaction with National Indemnity Company (“NICO”), a subsidiary of Berkshire Hathaway Inc., under which substantially all of their legacy A&EP liabilities were ceded to NICO through a loss portfolio transfer (“loss portfolio transfer” or “LPT”). At the effective date of the transaction, approximately $1.6 billion of net A&EP claim and allocated claim adjustment expense reserves were ceded to NICO under a retroactive reinsurance agreement with an aggregate limit of $4.0 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. NICO was paid a reinsurance premium of $2.0 billion and billed third party reinsurance receivables related to A&EP claims with a net book value of $215 million were transferred to NICO, resulting in total consideration of $2.2 billion.

In years subsequent to the effective date of the LPT, adverse prior year development on A&EP reserves was recognized 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 a change in the estimate of A&EP reserves is recognized 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 on the Consolidated Statements of Operations.

The following table presents the impact of the loss portfolio transfer on the Consolidated Statements of Operations.

Year Ended December 31	2020			2019			2018
(In millions)
Additional amounts ceded under LPT:
Net A&EP adverse development before consideration of LPT	$	125		$	150		$	178
Provision for uncollectible third-party reinsurance on A&EP		(25	)		(25	)		(16	)
Total additional amounts ceded under LPT		100			125			162
Retroactive reinsurance benefit recognized		(94	)		(107	)		(114	)
Pretax impact of deferred retroactive reinsurance	$	6		$	18		$	48

Net unfavorable prior year development of $125 million, $150 million and $178 million was recognized before consideration of cessions to the LPT for the years ended December 31, 2020, 2019 and 2018.

The unfavorable development in 2020 and 2019 was driven by higher than anticipated defense and indemnity costs on known direct asbestos and environmental accounts and a reduction in estimated reinsurance recoverable. The unfavorable development in 2018 was driven by higher than anticipated defense and indemnity costs on known direct asbestos and environmental accounts and by paid losses on assumed reinsurance exposures. Additionally, in 2020, 2019 and 2018, $25 million, $25 million and $16 million of the provision for uncollectible third-party reinsurance was released.

As of December 31, 2020 and 2019, the cumulative amounts ceded under the LPT were $3.3 billion and $3.2 billion. The unrecognized deferred retroactive reinsurance benefit was $398 million and $392 million as of December 31, 2020 and 2019 and is included within Other liabilities on the Consolidated Balance Sheets.

NICO established a collateral trust account as security for its obligations under the LPT. The fair value of the collateral trust account was $4.2 billion and $3.7 billion as of December 31, 2020 and 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 A&EP claims.

Life & Group Policyholder Reserves

CNA’s Life & Group business includes its run-off long term care business as well as structured settlement obligations not funded by annuities related to certain property and casualty claimants. Long term care policies provide benefits for nursing homes, assisted living facilities and home health care subject to various daily and lifetime caps. Generally, policyholders must continue to make periodic premium payments to keep the policy in force and CNA has the ability to increase policy premiums, subject to state regulatory approval.

CNA maintains both claim and claim adjustment expense reserves as well as future policy benefit reserves for policyholder benefits for its Life & Group business. Claim and claim adjustment expense reserves consist of estimated reserves for long term care policyholders that are currently receiving benefits, including claims that have been incurred but are not yet reported. In developing the claim and claim adjustment expense reserve estimates for long term care policies, CNA’s actuaries perform a detailed claim reserve review on an annual basis. The review analyzes the sufficiency of existing reserves for policyholders currently on claim and includes an evaluation of expected benefit utilization and claim duration. In addition, claim and claim adjustment expense reserves are also maintained for the structured settlement obligations. In developing the claim and claim adjustment expense reserve estimates for structured settlement obligations, CNA’s actuaries monitor mortality experience on an annual basis. CNA’s recorded claim and claim adjustment expense reserves reflect management's best estimate after incorporating the results of the most recent reviews. Claim and claim adjustment expense reserves for long term care policies and structured settlement obligations are discounted as discussed in Note 1.

CNA completed its annual claim reserve reviews in the third quarters of 2020, 2019 and 2018. CNA’s 2020 claim reserve reviews resulted in a $46 million pretax increase in claim and claim adjustment expense reserve estimates for structured settlement obligations primarily due to lower discount rate assumptions and mortality assumption changes and a $37 million pretax reduction in claim and claim adjustment expense reserves for long term care policies primarily due to lower claim severity than anticipated in the reserve estimates. CNA’s 2019 and 2018 claim reserve reviews resulted in $56 million and $31 million pretax reductions in claim and claim adjustment expense reserves for long term care policies primarily due to lower claim severity than anticipated in the reserve estimates.

Future policy benefit reserves consist of the active life reserves related to CNA’s long term care policies for policyholders that are not currently receiving benefits and represent the present value of expected future benefit payments and expenses less expected future premium. The determination of these reserves requires management to make estimates and assumptions about expected investment and policyholder experience over the life of the contract. Since many of these contracts may be in force for several decades, these assumptions are subject to significant estimation risk.

The actuarial assumptions that management believes are subject to the most variability are morbidity, persistency, discount rates and anticipated future premium rate increases. Morbidity is the frequency and severity of injury, illness, sickness and diseases contracted. Persistency is the percentage of policies remaining in force and can be affected by

policy lapses, benefit reductions and death. Discount rates are influenced by the investment yield on assets supporting long term care reserves which is subject to interest rate and market volatility and may also be affected by changes to the Internal Revenue Code. Future premium rate increases are generally subject to regulatory approval, and therefore the exact timing and size of the approved rate increases are unknown. As a result of this variability, CNA’s long term care reserves may be subject to material increases if actual experience develops adversely to CNA’s expectations.

Annually, in the third quarter, management assesses the adequacy of its long term care future policy benefit reserves by performing a GPV to determine if there is a premium deficiency. Under the GPV, management estimates required reserves using best estimate assumptions as of the date of the assessment without provisions for adverse deviation. The GPV required reserves are then compared to the existing recorded reserves. If the GPV required reserves are greater than the existing recorded reserves, the existing assumptions are unlocked and future policy benefit reserves are increased to the greater amount. Any such increase is reflected in the Company’s results of operations in the period in which the need for such adjustment is determined. If the GPV required reserves are less than the existing recorded reserves, assumptions remain locked in and no adjustment is required.

Periodically, management engages independent third parties to assess the appropriateness of its best estimate assumptions. The most recent third party assessment, performed in 2019, validated the assumption setting process and confirmed the best estimate assumptions appropriately reflected the experience data at that time.

The GPV for the long term care future policy benefit reserves performed in the third quarters of 2020 and 2019 indicated a premium deficiency primarily driven by lower discount rate assumptions. Recognition of the premium deficiencies resulted in $74 million and $216 million pretax increases in policyholders’ benefits reflected in the Company’s results of operations for the years ended December 31, 2020 and 2019. CNA’s 2018 GPV for the long term care future policy benefit reserves indicated the reserves were not deficient and no adjustment was required.