Investments

6 Months Ended

Jun. 30, 2014

Investments Debt And Equity Securities [Abstract]

Investments

3.  Investments

Net investment income is as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
(In millions)
Fixed maturity securities	$	451	$	454	$	903	$	911
Short term investments		1		1		2		3
Limited partnership investments		116		84		203		230
Equity securities		3		3		5		6
Income (loss) from trading portfolio (a)		30		1		70		(2)
Other		10		6		18		12
Total investment income		611		549		1,201		1,160
Investment expenses		(14)		(14)		(27)		(26)
Net investment income	$	597	$	535	$	1,174	$	1,134

(a) Includes net unrealized gains (losses) related to changes in fair value on trading securities still held of $40, $(30), $60 and $(43) for the three and six months ended June 30, 2014 and 2013.

Investment gains (losses) are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
(In millions)
Fixed maturity securities	$	(19)	$	(7)	$	19	$	20
Equity securities				(2)		5		(15)
Derivative instruments		1		(5)		1		(3)
Short term investments and other		4				3		3
Investment gains (losses) (a)	$	(14)	$	(14)	$	28	$	5

(a) Includes gross realized gains of $20, $38, $78 and $79 and gross realized losses of $39, $47, $54 and $74 on available-for-sale securities for the three and six months ended June 30, 2014 and 2013.

The components of other-than-temporary impairment (“OTTI”) losses recognized in earnings by asset type are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
(In millions)
Fixed maturity securities available-for-sale:
Corporate and other bonds	$	2	$	5	$	3	$	8
Asset-backed:
Residential mortgage-backed		1		3		2		3
Other asset-backed		1		1		1		1
Total asset-backed		2		4		3		4
Total fixed maturities available-for-sale		4		9		6		12
Equity securities available-for-sale:
Common stock		1		2		1		2
Preferred stock				5				20
Total equity securities available-for-sale		1		7		1		22
Net OTTI losses recognized in earnings	$	5	$	16	$	7	$	34

The amortized cost and fair values of securities are as follows:

June 30, 2014	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Unrealized OTTI Losses (Gains)
(In millions)
Fixed maturity securities:
Corporate and other bonds	$	17,276		$ 1,852	$	30		$19,098
States, municipalities and political subdivisions		11,215		1,178		70		12,323
Asset-backed:
Residential mortgage-backed		4,882		202		14		5,070	$	(51)
Commercial mortgage-backed		1,999		107		7		2,099		(3)
Other asset-backed		1,172		16		3		1,185
Total asset-backed		8,053		325		24		8,354		(54)
U.S. Treasury and obligations of government-sponsored enterprises		61		6		1		66
Foreign government		533		18		1		550
Redeemable preferred stock		39		3				42
Fixed maturities available-for-sale		37,177		3,382		126		40,433		(54)
Fixed maturities, trading		169				17		152
Total fixed maturities		37,346		3,382		143		40,585		(54)
Equity securities:
Common stock		46		14				60
Preferred stock		129		5				134
Equity securities available-for-sale		175		19		-		194		-
Equity securities, trading		650		119		99		670
Total equity securities		825		138		99		864		-
Total	$	38,171		$ 3,520	$	242		$41,449	$	(54)

December 31, 2013	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Unrealized   OTTI Losses   (Gains)
(In millions)
Fixed maturity securities:
Corporate and other bonds	$	19,352	$	1,645	$	135	$	20,862
States, municipalities and political subdivisions		11,281		548		272		11,557
Asset-backed:
Residential mortgage-backed		4,940		123		92		4,971	$	(37)
Commercial mortgage-backed		1,995		90		22		2,063		(3)
Other asset-backed		945		13		3		955
Total asset-backed		7,880		226		117		7,989		(40)
U.S. Treasury and obligations of government-sponsored enterprises		139		6		1		144
Foreign government		531		15		3		543
Redeemable preferred stock		92		10				102
Fixed maturities available-for-sale		39,275		2,450		528		41,197		(40)
Fixed maturities, trading		151				28		123
Total fixed maturities		39,426		2,450		556		41,320		(40)
Equity securities:
Common stock		36		9				45
Preferred stock		143		1		4		140
Equity securities available-for-sale		179		10		4		185		-
Equity securities, trading		702		119		135		686
Total equity securities		881		129		139		871		-
Total	$	40,307	$	2,579	$	695	$	42,191	$	(40)

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 noncontrolling interests and any required Shadow Adjustments. At June 30, 2014 and December 31, 2013, the net unrealized gains on investments included in AOCI were net of Shadow Adjustments of $841 million and $478 million. To the extent that unrealized gains on fixed income securities supporting certain products within CNA’s Life & Group Non-Core segment would result in a premium deficiency if realized, a related decrease in Deferred acquisition costs, and/or increase in Insurance reserves is recorded, net of tax and noncontrolling interests, as a reduction of net unrealized gains through Other comprehensive income (loss) (Shadow Adjustments).

The available-for-sale securities in a gross unrealized loss position are as follows:

	Less than 12 Months				12 Months or Longer				Total
June 30, 2014	Estimated   Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross   Unrealized   Losses
(In millions)
Fixed maturity securities:
Corporate and other bonds	$	813	$	12	$	548	$	18	$	1,361	$	30
States, municipalities and political subdivisions		316		2		587		68		903		70
Asset-backed:
Residential mortgage-backed		125		1		332		13		457		14
Commercial mortgage-backed		205		2		171		5		376		7
Other asset-backed		269		3		12				281		3
Total asset-backed		599		6		515		18		1,114		24
U.S. Treasury and obligations of government-sponsored enterprises		2		1		4				6		1
Foreign government		39		1		9				48		1
Total fixed maturity securities		1,769		22		1,663		104		3,432		126
Preferred stock		10				2				12
Total	$	1,779	$	22	$	1,665	$	104	$	3,444	$	126

	Less than 12 Months				12 Months or Longer				Total
December 31, 2013	Estimated   Fair Value		Gross Unrealized Losses		Estimated   Fair Value		Gross Unrealized Losses		Estimated   Fair Value		Gross   Unrealized   Losses
(In millions)
Fixed maturity securities:
Corporate and other bonds	$	3,592	$	129	$	72	$	6	$	3,664	$	135
States, municipalities and political subdivisions		3,251		197		129		75		3,380		272
Asset-backed:
Residential mortgage-backed		1,293		29		343		63		1,636		92
Commercial mortgage-backed		640		22						640		22
Other asset-backed		269		3						269		3
Total asset-backed		2,202		54		343		63		2,545		117
U.S. Treasury and obligations of government-sponsored enterprises		13		1						13		1
Foreign government		111		3						111		3
Total fixed maturity securities		9,169		384		544		144		9,713		528
Preferred stock		87		4						87		4
Total	$	9,256	$	388	$	544	$	144	$	9,800	$	532

Based on current facts and circumstances, the Company believes the unrealized losses presented in the table above are primarily attributable to broader economic conditions, changes in interest rates and credit spreads, market illiquidity and other market factors, but are not indicative of the ultimate collectibility of the current amortized cost of the securities. The Company has no current intent to sell securities with unrealized losses, nor is it more likely than not that it will be required to sell prior to recovery of amortized cost; accordingly, the Company has determined that there are no additional OTTI losses to be recorded at June 30, 2014.

The following table summarizes the activity for the three and six months ended June 30, 2014 and 2013 related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held at June 30, 2014 and 2013 for which a portion of an OTTI loss was recognized in Other comprehensive income (loss).

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2014		2013		2014		2013
(In millions)
Beginning balance of credit losses on fixed maturity securities	$	69	$	92	$	74	$	95
Additional credit losses for securities for which an OTTI loss was previously recognized				1				1
Reductions for securities sold during the period		(3)		(4)		(5)		(7)
Reductions for securities the Company intends to sell or more likely than not will be required to sell						(3)
Ending balance of credit losses on fixed maturity securities	$	66	$	89	$	66	$	89

Contractual Maturity

The following table summarizes available-for-sale fixed maturity securities by contractual maturity at June 30, 2014 and December 31, 2013. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid with or without call or prepayment penalties. Securities not due at a single date are allocated based on weighted average life.

	June 30, 2014				December 31, 2013
	Cost or   Amortized   Cost		Estimated    Fair    Value		Cost or    Amortized    Cost		Estimated       Fair       Value
(In millions)
Due in one year or less	$	2,832	$	2,883	$	2,420	$	2,455
Due after one year through five years		9,251		9,893		9,496		10,068
Due after five years through ten years		11,206		11,792		11,667		11,954
Due after ten years		13,888		15,865		15,692		16,720
Total	$	37,177	$	40,433	$	39,275	$	41,197

Investment Commitments

As of June 30, 2014, the Company had committed approximately $348 million to future capital calls from various third-party limited partnership investments in exchange for an ownership interest in the related partnerships.

The Company invests in various privately placed debt securities, including bank loans, as part of its overall investment strategy and has committed to additional future purchases, sales and funding. As of June 30, 2014, the Company had commitments to purchase or fund additional amounts of $244 million and sell $158 million under the terms of such securities.