CNA Financial Corporation

08/04/2025 | Press release | Distributed by Public on 08/04/2025 04:25

Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis (MD&A) of Financial Conditions and Results of Operations
OVERVIEW
The following discussion highlights significant factors affecting the Company. References to "we," "our," "us" or like terms refer to the business of CNA.
The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements included under Part I, Item 1 of this Form 10-Q, and Item 1A Risk Factors and Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations, which are included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2024.
We utilize the core income (loss) financial measure to monitor our operations. Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses and gains or losses resulting from pension settlement transactions. Net investment gains or losses are excluded from the calculation of core income (loss) because they are generally driven by economic factors that are not necessarily reflective of our primary operations. The calculation of core income (loss) excludes gains or losses resulting from pension settlement transactions as they result from decisions regarding our defined benefit pension plans which are unrelated to our primary operations. Presentation of consolidated core income (loss) is deemed to be a non-GAAP financial measure and management believes some investors may find this measure useful to evaluate our primary operations. See further discussion regarding how we manage our business in Note J to the Condensed Consolidated Financial Statements included under Part I, Item 1. For reconciliations of non-GAAP measures to the most comparable GAAP measures and other information, please refer herein and/or to our most recent Annual Report on Form 10-K on file with the Securities and Exchange Commission.
In evaluating the results of our Specialty, Commercial and International segments, we utilize the loss ratio, the underlying loss ratio, the expense ratio, the dividend ratio, the combined ratio and the underlying combined ratio. These ratios are calculated using GAAP financial results. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The underlying loss ratio excludes the impact of catastrophe losses and development-related items from the loss ratio. Development-related items represents net prior year loss reserve and premium development, and includes the effects of interest accretion and change in allowance for uncollectible reinsurance. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss ratio, the expense ratio and the dividend ratio. The underlying combined ratio is the sum of the underlying loss ratio, the expense ratio and the dividend ratio. The underlying loss ratio and the underlying combined ratio are deemed to be non-GAAP financial measures, and management believes some investors may find these ratios useful to evaluate our underwriting performance since they remove the impact of catastrophe losses which are unpredictable as to timing and amount, and development-related items as they are not indicative of our current year underwriting performance.
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 within this MD&A. These changes can be favorable or unfavorable. Net prior year loss reserve development does not include the effect of any related acquisition expenses. Further information on our reserves is provided in Note E and Note F to the Condensed Consolidated Financial Statements included under Part I, Item 1.
In addition, we also utilize renewal premium change, rate, retention and new business in evaluating operating trends. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes. Rate represents the average change in price on policies that renew excluding exposure change. Exposure represents the measure of risk used in the pricing of the insurance product. The change in exposure represents the change in premium dollars on policies that renew as a result of the change in risk of the policy. Retention represents the percentage of premium dollars renewed, excluding rate and exposure changes, in comparison to the expiring premium dollars from policies available to renew. New business represents premiums from policies written with new customers and additional policies written
with existing customers. Gross written premiums, excluding third-party captives, excludes business which is ceded to third-party captives, including business related to large warranty programs.
We use underwriting gain (loss) and underlying underwriting gain (loss), calculated using GAAP financial results, to monitor our insurance operations. Underwriting gain (loss) is deemed to be a non-GAAP financial measure and is calculated pretax as net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and insurance related administrative expenses. Net income (loss) is the most directly comparable GAAP measure. Management believes some investors may find this measure useful to evaluate the profitability, before tax, derived from our underwriting activities, which are managed separately from our investing activities. Underlying underwriting gain (loss) is also deemed to be a non-GAAP financial measure, and represents pretax underwriting gain (loss) excluding catastrophe losses and development-related items. Management believes some investors may find this measure useful to evaluate the profitability, before tax, derived from our underwriting activities, excluding the impact of catastrophe losses, which are unpredictable as to timing and amount, and development-related items as they are not indicative of our current year underwriting performance.
The following tables present reconciliations of net income to core income, underwriting gain and underlying underwriting gain for our Property & Casualty Operations:
Three months ended June 30, 2025 Specialty Commercial International Property & Casualty
(In millions)
Net income $ 165 $ 199 $ 53 $ 417
Net investment losses, after tax 12 19 - 31
Core income $ 177 $ 218 $ 53 $ 448
Less:
Net investment income 170 206 38 414
Non-insurance warranty revenue (expense) 14 - - 14
Other revenue (expense), including interest expense (11) (5) 10 (6)
Income tax expense on core income (49) (57) (18) (124)
Underwriting gain 53 74 23 150
Effect of catastrophe losses - 57 5 62
Effect of unfavorable development-related items - 1 - 1
Underlying underwriting gain $ 53 $ 132 $ 28 $ 213
Three months ended June 30, 2024 Specialty Commercial International Property & Casualty
(In millions)
Net income $ 164 $ 160 $ 45 $ 369
Net investment losses (gains), after tax 5 7 (1) 11
Core income $ 169 $ 167 $ 44 $ 380
Less:
Net investment income 154 175 32 361
Non-insurance warranty revenue (expense) 16 - - 16
Other revenue (expense), including interest expense (14) (3) (1) (18)
Income tax expense on core income (47) (44) (12) (103)
Underwriting gain 60 39 25 124
Effect of catastrophe losses - 76 6 82
Effect of favorable development-related items (3) - (3) (6)
Underlying underwriting gain $ 57 $ 115 $ 28 $ 200
The following tables present reconciliations of net income to core income, underwriting gain and underlying underwriting gain for our Property & Casualty Operations:
Six months ended June 30, 2025 Specialty Commercial International Property & Casualty
(In millions)
Net income $ 314 $ 323 $ 91 $ 728
Net investment losses (gains), after tax 13 19 (1) 31
Core income $ 327 $ 342 $ 90 $ 759
Less:
Net investment income 321 383 72 776
Non-insurance warranty revenue (expense) 26 - - 26
Other revenue (expense), including interest expense (25) (7) 11 (21)
Income tax expense on core income (90) (91) (31) (212)
Underwriting gain 95 57 38 190
Effect of catastrophe losses - 143 16 159
Effect of unfavorable development-related items 10 53 - 63
Underlying underwriting gain $ 105 $ 253 $ 54 $ 412
Six months ended June 30, 2024 Specialty Commercial International Property & Casualty
(In millions)
Net income $ 331 $ 304 $ 82 $ 717
Net investment losses (gains), after tax 15 21 (1) 35
Core income $ 346 $ 325 $ 81 $ 752
Less:
Net investment income 304 351 63 718
Non-insurance warranty revenue (expense) 29 - - 29
Other revenue (expense), including interest expense (28) (7) (3) (38)
Income tax expense on core income (95) (87) (25) (207)
Underwriting gain 136 68 46 250
Effect of catastrophe losses - 158 12 170
Effect of favorable development-related items (8) - (3) (11)
Underlying underwriting gain $ 128 $ 226 $ 55 $ 409
The following table presents a reconciliation of net (loss) income to core income (loss) for our Life & Group segment:
Periods ended June 30 Three Months Six Months
(In millions) 2025 2024 2025 2024
Net (loss) income $ (4) $ 1 $ (5) $ 14
Net investment losses (gains), after tax 5 (2) 12 (10)
Core income (loss) $ 1 $ (1) $ 7 $ 4
The following table present a reconciliation of net loss to core loss for our Corporate & Other segment:
Periods ended June 30 Three Months Six Months
(In millions) 2025 2024 2025 2024
Net loss $ (114) $ (53) $ (150) $ (76)
Net investment losses, after tax - - - 1
Core loss $ (114) $ (53) $ (150) $ (75)
CRITICAL ACCOUNTING ESTIMATES
The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires us 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 amount of revenues and expenses reported during the period. Actual results may differ from those estimates.
Our Condensed Consolidated Financial Statements and accompanying notes have been prepared in accordance with GAAP applied on a consistent basis. We continually evaluate the accounting policies and estimates used to prepare the Condensed Consolidated Financial Statements. In general, our estimates are based on historical experience, evaluation of current trends, information from third-party professionals and various other assumptions that are believed to be reasonable under the known facts and circumstances.
The accounting estimates set forth below are considered by us to be critical to an understanding of our Condensed Consolidated Financial Statements as their application places the most significant demands on our judgment:
•Insurance Reserves
•Long-Term Care Reserves
•Reinsurance and Insurance Receivables
•Valuation of Investments and Impairment of Securities
Due to the inherent uncertainties involved with these types of judgments, actual results could differ significantly from our estimates and may have a material adverse impact on our results of operations, financial condition, equity, business, and insurer financial strength and corporate debt ratings. See the Critical Accounting Estimates section of our Management's Discussion and Analysis of Financial Condition and Results of Operations included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 for further information.
CATASTROPHES AND RELATED REINSURANCE
Various events can cause catastrophe losses. These events can be natural or man-made, including hurricanes, tornadoes, windstorms, earthquakes, hail, severe winter weather, droughts, fires, floods, riots, strikes, civil unrest, cyber-attacks, pandemics and acts of terrorism that produce unusually large aggregate losses.
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. We use various analyses and methods, including using one of the industry standard natural catastrophe models, to estimate hurricane and earthquake losses at various return periods and to inform underwriting and reinsurance decisions designed to manage our exposure to catastrophic events. We also generally seek to manage our exposure through the purchase of catastrophe reinsurance and utilize various reinsurance programs to mitigate catastrophe losses, including excess-of-loss occurrence and aggregate treaties covering property and workers' compensation, a property quota share treaty and the Terrorism Risk Insurance Program Reauthorization Act of 2019 (TRIPRA), as well as individual risk agreements that reinsure from losses from specific classes or lines of business. We regularly review our risk and catastrophe reinsurance coverages and from time to time make changes as we deem appropriate. In the second quarter of 2025, we renewed our excess-of-loss property catastrophe reinsurance as described below:
Group North American Property Treaty
We purchased corporate catastrophe excess-of-loss treaty reinsurance covering our U.S. states and territories and Canadian property exposures underwritten in our North American and European companies. The treaty has a term of June 1, 2025 to June 1, 2026 and provides coverage for the accumulation of covered losses from catastrophe occurrences above our per occurrence retention of $275 million up to $1.4 billion for all losses. Losses stemming from terrorism events are covered unless they are due to a nuclear, biological or chemical attack. All layers of the treaty provide for one full reinstatement.
Group Workers' Compensation Treaty
We also purchased corporate workers' compensation catastrophe excess-of-loss treaty reinsurance for the period January 1, 2025 to January 1, 2026 providing $275 million of coverage for the accumulation of covered losses related to natural catastrophes above our per occurrence retention of $25 million. The treaty also provides $775 million of coverage for the accumulation of covered losses related to terrorism events above our per occurrence retention of $25 million. Of the $775 million in terrorism coverage, $200 million is provided for nuclear, biological, chemical and radiation events. All layers of the treaty provide for one full reinstatement.
CONSOLIDATED OPERATIONS
Results of Operations
The following table includes the consolidated results of our operations including our financial measure, core income (loss). For more detailed components of our business operations and a discussion of the core income (loss) financial measure, see the Segment Results section within this MD&A. For further discussion of Net investment income and Net investment gains or losses, see the Investments section of this MD&A.
Periods ended June 30 Three Months Six Months
(In millions) 2025 2024 2025 2024
Operating Revenues
Net earned premiums $ 2,694 $ 2,498 $ 5,320 $ 4,939
Net investment income 662 618 1,266 1,227
Non-insurance warranty revenue 398 404 795 811
Other revenues 9 9 18 18
Total operating revenues 3,763 3,529 7,399 6,995
Claims, Benefits and Expenses
Net incurred claims and benefits (re-measurement loss of $15, $25, $23 and $40)
2,075 1,874 4,092 3,672
Policyholders' dividends 10 8 20 17
Amortization of deferred acquisition costs 469 435 940 879
Non-insurance warranty expense 384 388 769 782
Insurance related administrative expenses 337 329 658 616
Interest expense 31 34 63 69
Other expenses 31 49 73 99
Total claims, benefits and expenses 3,337 3,117 6,615 6,134
Income tax expense on core income (91) (86) (168) (180)
Core income 335 326 616 681
Net investment losses (46) (10) (55) (32)
Income tax benefit on net investment losses 10 1 12 6
Net investment losses, after tax (36) (9) (43) (26)
Net income $ 299 $ 317 $ 573 $ 655
Three Month Comparison
Core income increased $9 million for the three months ended June 30, 2025 as compared with the same period in 2024. Core income for our Property & Casualty Operations increased $68 million primarily driven by higher net investment income and improved current accident year underwriting results. Core results for our Life & Group segment improved $2 million, while core loss for our Corporate & Other segment increased $61 million.
Catastrophe losses were $62 million and $82 million for the three months ended June 30, 2025 and 2024. Unfavorable net prior year loss reserve development of $108 million and $23 million was recorded for the three months ended June 30, 2025 and 2024 related to our Specialty, Commercial, International and Corporate & Other segments. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Six Month Comparison
Core income decreased $65 million for the six months ended June 30, 2025 as compared with the same period in 2024. Core income for our Property & Casualty Operations increased $7 million primarily driven by higher net investment income and improved current accident year underwriting results partially offset by unfavorable net prior year loss reserve development compared to favorable net prior year loss reserve development in the prior year period. Core income for our Life & Group segment increased $3 million, while core loss for our Corporate & Other segment increased $75 million.
Catastrophe losses were $159 million and $170 million for the six months ended June 30, 2025 and 2024. Unfavorable net prior year loss reserve development of $191 million and $16 million was recorded for the six months ended June 30, 2025 and 2024 related to our Specialty, Commercial, International and Corporate & Other segments. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
SEGMENT RESULTS
The following discusses the results of operations for our business segments. Our property and casualty commercial insurance operations are managed and reported in three business segments: Specialty, Commercial and International, which we refer to collectively as Property & Casualty Operations. Our operations outside of Property & Casualty Operations are managed and reported in two segments: Life & Group and Corporate & Other.
Specialty
The following table details the results of operations for Specialty and provides the components to reconcile the combined ratio and loss ratio to the underlying combined ratio and underlying loss ratio.
Periods ended June 30 Three Months Six Months
(In millions, except ratios, rate, renewal premium change and retention) 2025 2024 2025 2024
Gross written premiums $ 1,692 $ 1,728 $ 3,364 $ 3,410
Gross written premiums excluding third-party captives 1,013 984 1,943 1,864
Net written premiums 892 857 1,734 1,649
Net earned premiums 862 831 1,692 1,645
Underwriting gain 53 60 95 136
Net investment income 170 154 321 304
Core income 177 169 327 346
Other performance metrics:
Loss ratio 60.1 % 59.2 % 60.7 % 58.9 %
Expense ratio 33.2 33.2 33.3 32.5
Dividend ratio 0.3 0.3 0.3 0.3
Combined ratio 93.6 % 92.7 % 94.3 % 91.7 %
Less: Effect of catastrophe impacts - - - -
Less: Effect of (favorable) unfavorable development-related items - (0.4) 0.6 (0.5)
Underlying combined ratio 93.6 % 93.1 % 93.7 % 92.2 %
Underlying loss ratio 60.1 % 59.6 % 60.1 % 59.4 %
Rate 3 % - % 3 % 1 %
Renewal premium change 4 1 4 2
Retention 86 90 88 89
New business $ 122 $ 118 $ 234 $ 212
Three Month Comparison
Gross written premiums, excluding third-party captives, for Specialty increased $29 million for the three months ended June 30, 2025 as compared with the same period in 2024 driven by favorable renewal premium change, inclusive of rate, partially offset by lower retention. Net written premiums for Specialty increased $35 million for the three months ended June 30, 2025 as compared with the same period in 2024. The increase in net earned premiums was consistent with the trend in net written premiums.
Core income increased $8 million for the three months ended June 30, 2025 as compared with the same period in 2024 primarily due to higher net investment income partially offset by lower underlying underwriting results and no net prior year loss reserve development in the current year period compared with favorable net prior year loss reserve development in the prior year period.
The combined ratio of 93.6% increased 0.9 points for the three months ended June 30, 2025 as compared with the same period in 2024 due to a 0.9 point increase in the loss ratio. The increase in the loss ratio was due to an increase in the underlying loss ratio and no net prior year loss reserve development recorded in the current year period compared with $3 million of favorable net prior year loss reserve development in the same period in 2024. The expense ratio was consistent with the same period in 2024. There were no catastrophe losses for the three months ended June 30, 2025 and 2024.
Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I Item 1.
Six Month Comparison
Gross written premiums, excluding third-party captives, for Specialty increased $79 million for the six months ended June 30, 2025 as compared with the same period in 2024 driven by favorable renewal premium change, inclusive of rate, and higher new business partially offset by lower retention. Net written premiums for Specialty increased $85 million for the six months ended June 30, 2025 as compared with the same period in 2024. The increase in net earned premiums was consistent with the trend in net written premiums.
Core income decreased $19 million for the six months ended June 30, 2025 as compared with the same period in 2024 primarily due to lower underlying underwriting results and unfavorable net prior year loss reserve development in the current year period compared with favorable net prior year loss reserve development in the prior year period, partially offset by higher net investment income.
The combined ratio of 94.3% increased 2.6 points for the six months ended June 30, 2025 as compared with the same period in 2024 due to a 1.8 point increase in the loss ratio and a 0.8 point increase in the expense ratio. The increase in the loss ratio was due to unfavorable net prior year loss reserve development recorded in the current year period and an increase in the underlying loss ratio primarily driven by continued pricing pressure in management liability lines. The increase in the expense ratio was driven by higher employee related and acquisition costs partially offset by higher net earned premiums. There were no catastrophe losses for the six months ended June 30, 2025 and 2024.
Unfavorable net prior year loss reserve development of $10 million was recorded for the six months ended June 30, 2025 as compared with $8 million of favorable net prior year loss reserve development recorded for the six months ended June 30, 2024. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I Item 1.
The following table summarizes the gross and net carried reserves for Specialty.
(In millions) June 30, 2025 December 31, 2024
Gross case reserves $ 2,080 $ 2,023
Gross IBNR reserves 5,624 5,403
Total gross carried claim and claim adjustment expense reserves $ 7,704 $ 7,426
Net case reserves $ 1,745 $ 1,697
Net IBNR reserves 4,328 4,282
Total net carried claim and claim adjustment expense reserves $ 6,073 $ 5,979
Commercial
The following table details the results of operations for Commercial and provides the components to reconcile the combined ratio and loss ratio to the underlying combined ratio and underlying loss ratio.
Periods ended June 30 Three Months Six Months
(In millions, except ratios, rate, renewal premium change and retention) 2025 2024 2025 2024
Gross written premiums $ 2,065 $ 1,927 $ 3,918 $ 3,613
Gross written premiums excluding third-party captives 1,903 1,802 3,742 3,484
Net written premiums 1,563 1,458 3,061 2,796
Net earned premiums 1,402 1,247 2,782 2,449
Underwriting gain 74 39 57 68
Net investment income 206 175 383 351
Core income 218 167 342 325
Other performance metrics:
Loss ratio 67.1 % 68.0 % 70.0 % 68.4 %
Expense ratio 27.2 28.5 27.4 28.4
Dividend ratio 0.5 0.5 0.5 0.5
Combined ratio 94.8 % 97.0 % 97.9 % 97.3 %
Less: Effect of catastrophe impacts 4.2 6.1 5.2 6.4
Less: Effect of (favorable) unfavorable development-related items - (0.1) 1.9 -
Underlying combined ratio 90.6 % 91.0 % 90.8 % 90.9 %
Underlying loss ratio 62.9 % 62.0 % 62.9 % 62.0 %
Rate 5 % 7 % 6 % 7 %
Renewal premium change 6 7 7 8
Retention 81 84 83 84
New business $ 420 $ 405 $ 790 $ 772
Three Month Comparison
Gross written premiums for Commercial increased $138 million for the three months ended June 30, 2025 as compared with the same period in 2024 driven by favorable renewal premium change, inclusive of rate, partially offset by lower retention. Net written premiums for Commercial increased $105 million for the three months ended June 30, 2025 as compared with the same period in 2024. The increase in net earned premiums was consistent with the trend in net written premiums.
Core income increased $51 million for the three months ended June 30, 2025 as compared with the same period in 2024, primarily driven by improved current accident year underwriting results and higher net investment income.
The combined ratio of 94.8% improved 2.2 points for the three months ended June 30, 2025 as compared with the same period in 2024 due to a 1.3 point improvement in the expense ratio and a 0.9 point improvement in the loss ratio. The improvement in the expense ratio was primarily driven by higher net earned premiums and a lower acquisition ratio. The improvement in the loss ratio was primarily due to lower catastrophes losses partially offset by an increase in the underlying loss ratio driven by the continuation of elevated loss cost trends in commercial auto. Catastrophe losses were $57 million, or 4.2 points of the loss ratio, for the three months ended June 30, 2025, as compared with $76 million, or 6.1 points of the loss ratio, for the three months ended June 30, 2024.
Favorable net prior year loss reserve development of $4 million and $6 million was recorded for the three months ended June 30, 2025 and 2024. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Six Month Comparison
Gross written premiums for Commercial increased $305 million for the six months ended June 30, 2025 as compared with the same period in 2024 driven by favorable renewal premium change, inclusive of rate, partially offset by lower retention. Net written premiums for Commercial increased $265 million for the six months ended June 30, 2025 as compared with the same period in 2024. The increase in net earned premiums was consistent with the trend in net written premiums.
Core income increased $17 million for the six months ended June 30, 2025 as compared with the same period in 2024, primarily driven by improved current accident year underwriting results and higher net investment income partially offset by unfavorable net prior year loss reserve development.
The combined ratio of 97.9% increased 0.6 points for the six months ended June 30, 2025 as compared with the same period in 2024 due to a 1.6 point increase in the loss ratio partially offset by a 1.0 point improvement in the expense ratio. The increase in the loss ratio was due to unfavorable net prior year loss reserve development and an increase in the underlying loss ratio driven by the continuation of elevated loss cost trends in commercial auto, partially offset by lower catastrophe losses. Catastrophe losses were $143 million, or 5.2 points of the loss ratio, for the six months ended June 30, 2025, as compared with $158 million, or 6.4 points of the loss ratio, for the six months ended June 30, 2024. The improvement in the expense ratio was driven by higher net earned premiums.
Unfavorable net prior year loss reserve development of $47 million was recorded for the six months ended June 30, 2025 as compared with $8 million of favorable net prior year loss reserve development recorded for the six months ended June 30, 2024. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
The following table summarizes the gross and net carried reserves for Commercial.
(In millions) June 30, 2025 December 31, 2024
Gross case reserves $ 3,882 $ 3,690
Gross IBNR reserves 8,006 7,646
Total gross carried claim and claim adjustment expense reserves $ 11,888 $ 11,336
Net case reserves $ 3,300 $ 3,135
Net IBNR reserves 7,098 6,804
Total net carried claim and claim adjustment expense reserves $ 10,398 $ 9,939
International
The following table details the results of operations for International and provides the components to reconcile the combined ratio and loss ratio to the underlying combined ratio and underlying loss ratio.
Periods ended June 30 Three Months Six Months
(In millions, except ratios, rate, renewal premium change and retention) 2025 2024 2025 2024
Gross written premiums $ 437 $ 417 $ 810 $ 791
Net written premiums 391 359 657 619
Net earned premiums 324 311 634 626
Underwriting gain 23 25 38 46
Net investment income 38 32 72 63
Core income 53 44 90 81
Other performance metrics:
Loss ratio 59.9 % 59.1 % 61.0 % 59.6 %
Expense ratio 32.9 32.8 33.0 33.0
Combined ratio 92.8 % 91.9 % 94.0 % 92.6 %
Less: Effect of catastrophe impacts 1.4 2.0 2.5 2.0
Less: Effect of (favorable) unfavorable development-related items - (1.0) - (0.5)
Underlying combined ratio 91.4 % 90.9 % 91.5 % 91.1 %
Underlying loss ratio 58.5 % 58.1 % 58.5 % 58.1 %
Rate (4) % 0 % (3) % 0 %
Renewal premium change (1) 2 - 3
Retention 86 80 85 81
New business $ 103 $ 72 $ 186 $ 140
Three Month Comparison
Gross written premiums for International increased $20 million for the three months ended June 30, 2025 as compared with the same period in 2024. Excluding the effect of foreign currency exchange rates, gross written premiums increased $14 million driven by higher new business and retention partially offset by lower rate. Net written premiums for International increased $32 million for the three months ended June 30, 2025 as compared with the same period in 2024. Excluding the effect of foreign currency exchange rates, net written premiums increased $26 million for the three months ended June 30, 2025 as compared with the same period in 2024. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters.
Core income increased $9 million for the three months ended June 30, 2025 as compared with the same period in 2024 primarily driven by a favorable impact from changes in foreign currency exchange rates and higher net investment income.
The combined ratio of 92.8% increased 0.9 points for the three months ended June 30, 2025 as compared with the same period in 2024 largely due to a 0.8 point increase in the loss ratio. The increase in the loss ratio was primarily driven by no net prior year loss reserve development recorded in the current year period compared with $3 million of favorable net prior year loss reserve development in the same period in 2024 and an increase in the underlying loss ratio, partially offset by lower catastrophe losses. Catastrophe losses were $5 million, or 1.4 points of the loss ratio, for the three months ended June 30, 2025, as compared with $6 million, or 2.0 points of the loss ratio, for the three months ended June 30, 2024. The expense ratio was generally consistent with the same period in 2024.
Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Six Month Comparison
Gross written premiums for International increased $19 million for the six months ended June 30, 2025 as compared with the same period in 2024. Excluding the effect of foreign currency exchange rates, gross written premiums increased $28 million driven by higher new business and retention partially offset by lower rate. Net written premiums for International increased $38 million for the six months ended June 30, 2025 as compared with the same period in 2024. Excluding the effect of foreign currency exchange rates, net written premiums increased $45 million for the six months ended June 30, 2025 as compared with the same period in 2024. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters.
Core income increased $9 million for the six months ended June 30, 2025 as compared with the same period in 2024 primarily driven by a favorable impact from changes in foreign currency exchange rates and higher net investment income.
The combined ratio of 94.0% increased 1.4 points for the six months ended June 30, 2025 as compared with the same period in 2024 due to a 1.4 point increase in the loss ratio. The increase in the loss ratio was primarily driven by higher catastrophe losses and no net prior year loss reserve development recorded in the current year period compared with $3 million of favorable net prior year loss reserve development in the same period in 2024. Catastrophe losses were $16 million, or 2.5 points of the loss ratio, for the six months ended June 30, 2025, as compared with $12 million, or 2.0 points of the loss ratio, for the six months ended June 30, 2024. The expense ratio was consistent with the same period in 2024.
Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
The following table summarizes the gross and net carried reserves for International.
(In millions) June 30, 2025 December 31, 2024
Gross case reserves $ 968 $ 876
Gross IBNR reserves 2,288 2,044
Total gross carried claim and claim adjustment expense reserves $ 3,256 $ 2,920
Net case reserves $ 834 $ 741
Net IBNR reserves 1,932 1,675
Total net carried claim and claim adjustment expense reserves $ 2,766 $ 2,416
Life & Group
The following table summarizes the results of operations for Life & Group.
Periods ended June 30 Three Months Six Months
(In millions) 2025 2024 2025 2024
Net earned premiums $ 106 $ 109 $ 212 $ 219
Claims, benefits and expenses 345 355 675 696
Net investment income 235 239 461 470
Core income (loss) 1 (1) 7 4
Three Month Comparison
Results for the three months ended June 30, 2025 was generally consistent with the same period in 2024, reflecting favorable persistency, partially offset by lower net investment income.
Six Month Comparison
Results for the six months ended June 30, 2025 were generally consistent with the three month summary above.
Corporate & Other
The following table summarizes the results of operations for the Corporate & Other segment, including intersegment eliminations.
Periods ended June 30 Three Months Six Months
(In millions) 2025 2024 2025 2024
Net investment income $ 13 $ 18 $ 29 $ 39
Insurance claims and policyholders' benefits 108 27 117 19
Interest expense 31 35 63 69
Core loss (114) (53) (150) (75)
Three Month Comparison
Core loss increased $61 million for three months ended June 30, 2025 as compared with the same period in 2024. The increase was primarily due to an $88 million after-tax charge related to unfavorable net prior year loss reserve development associated with legacy mass tort abuse reserves as compared with a $28 million after-tax charge in the prior year period, as a result of our annual comprehensive review of legacy mass tort exposures undertaken in the second quarter of each year. The current quarter development charge included certain amounts in anticipation of the agreement in principle with regards to the Diocese of Rochester. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Six Month Comparison
Core loss increased $75 million for six months ended June 30, 2025 as compared with the same period in 2024 primarily due to a $106 million after-tax charge related to unfavorable net prior year loss reserve development associated with legacy mass tort abuse reserves as compared with a $28 million after-tax charge in the prior year period. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.
The following table summarizes the gross and net carried reserves for Corporate & Other.
(In millions) June 30, 2025 December 31, 2024
Gross case reserves $ 1,264 $ 1,241
Gross IBNR reserves 1,480 1,431
Total gross carried claim and claim adjustment expense reserves $ 2,744 $ 2,672
Net case reserves $ 123 $ 120
Net IBNR reserves 381 268
Total net carried claim and claim adjustment expense reserves $ 504 $ 388
INVESTMENTS
Net Investment Income
The significant components of Net investment income are presented in the following table. Fixed income securities, as presented, include both fixed maturity securities and non-redeemable preferred stock.
Periods ended June 30 Three Months Six Months
(In millions) 2025 2024 2025 2024
Fixed income securities:
Taxable fixed income securities $ 508 $ 484 $ 1,004 $ 956
Tax-exempt fixed income securities 36 36 70 74
Total fixed income securities 544 520 1,074 1,030
Limited partnership and common stock investments 100 78 154 146
Other, net of investment expense 18 20 38 51
Net investment income $ 662 $ 618 $ 1,266 $ 1,227
Effective income yield for the fixed income securities portfolio 4.9 % 4.8 % 4.8 % 4.8 %
Limited partnership and common stock return 3.6 % 3.1 % 5.7 % 6.1 %
Net investment income increased $44 million and $39 million for the three and six months ended June 30, 2025 as compared with the same periods in 2024 driven by higher income from fixed income securities as a result of a larger invested asset base and favorable reinvestment rates, as well as favorable limited partnership and common stock returns.
Net Investment (Losses) Gains
The components of Net investment (losses) gains are presented in the following table.
Periods ended June 30 Three Months Six Months
(In millions) 2025 2024 2025 2024
Fixed maturity securities:
Corporate bonds and other $ (40) $ (4) $ (49) $ (21)
States, municipalities and political subdivisions - (2) (1) (2)
Asset-backed (8) (6) (7) (21)
Total fixed maturity securities (48) (12) (57) (44)
Non-redeemable preferred stock 6 1 6 12
Derivatives, short-term and other 1 1 1 -
Mortgage loans (5) - (5) -
Net investment losses (46) (10) (55) (32)
Income tax benefit on net investment losses 10 1 12 6
Net investment losses, after tax $ (36) $ (9) $ (43) $ (26)
Pretax net investment losses increased $36 million for the three months ended June 30, 2025 as compared with the same period in 2024 driven by higher net losses on disposals of fixed maturity securities and higher impairment losses, partially offset by the favorable change in fair value of non-redeemable preferred stock.
Pretax net investment losses increased $23 million for the six months ended June 30, 2025 as compared with the same period in 2024 driven by higher net losses on disposals of fixed maturity securities and a lower favorable change in the fair value of non-redeemable preferred stock.
Further information on our investment gains and losses is set forth in Note C to the Condensed Consolidated Financial Statements included under Part I, Item 1.
Portfolio Quality
The following table presents the estimated fair value and net unrealized gains (losses) of our fixed maturity securities by rating distribution.
June 30, 2025 December 31, 2024

(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 $ 3,124 $ (306) $ 2,936 $ (369)
AAA 3,410 (206) 3,010 (217)
AA 6,698 (585) 6,369 (567)
A 10,873 (266) 10,260 (379)
BBB 16,992 (452) 16,757 (729)
Non-investment grade 1,702 (61) 1,779 (64)
Total $ 42,799 $ (1,876) $ 41,111 $ (2,325)
As of June 30, 2025 and December 31, 2024, 1% of our fixed maturity portfolio was rated internally. Additionally, as of June 30, 2025 and December 31, 2024, we assigned a AAA rating to $287 million and $199 million of municipal bonds that were either pre-refunded or backed by mortgage loans guaranteed by a U.S. government agency or sponsored enterprise.
The following table presents available-for-sale fixed maturity securities in a gross unrealized loss position by ratings distribution.
June 30, 2025
(In millions) Estimated Fair Value Gross Unrealized Losses
U.S. Government, Government agencies and Government-sponsored enterprises $ 2,086 $ 322
AAA 1,608 280
AA 4,234 735
A 5,901 523
BBB 9,531 787
Non-investment grade 677 92
Total $ 24,037 $ 2,739
The following table presents the maturity profile for these available-for-sale fixed maturity securities. Securities not due to mature on a single date are allocated based on weighted average life.
June 30, 2025
(In millions) Estimated Fair Value Gross Unrealized Losses
Due in one year or less $ 1,198 $ 22
Due after one year through five years 6,796 346
Due after five years through ten years 5,990 683
Due after ten years 10,053 1,688
Total $ 24,037 $ 2,739
Duration
A primary objective in the management of the investment portfolio is to optimize return relative to the corresponding liabilities and respective liquidity needs. Our views on the current interest rate environment, tax regulations, asset class valuations, specific security issuer and broader industry segment conditions as well as domestic and global economic conditions, are some of the factors that enter into an investment decision. We also continually monitor exposure to issuers of securities held and broader industry sector exposures and may from time to time adjust such exposures based on our views of a specific issuer or industry sector.
A further consideration in the management of the investment portfolio is the characteristics of the corresponding liabilities and the ability to align the duration of the portfolio to those liabilities and to meet future liquidity needs, minimize interest rate risk and maintain a level of income sufficient to support the underlying insurance liabilities. For portfolios where future liability cash flows are determinable and typically long term in nature, we segregate investments for asset/liability management purposes. The segregated investments support the long-term care and structured settlement liabilities in the Life & Group segment.
The effective durations of fixed income securities and short-term investments are presented in the following table. Amounts presented are net of payable and receivable amounts for securities purchased and sold, but not yet settled.
June 30, 2025 December 31, 2024
(In millions) Estimated Fair Value Effective
Duration
(In years) 		Estimated Fair Value Effective
Duration
(In years)
Life & Group $ 15,338 9.8 $ 14,915 9.8
Property & Casualty and Corporate & Other 29,472 4.5 28,779 4.3
Total $ 44,810 6.3 $ 43,694 6.2
The investment portfolio is periodically analyzed for changes in duration and related price risk. Certain securities have duration characteristics that are variable based on market interest rates, credit spreads and other factors that may drive variability in the amount and timing of cash flows. Additionally, we periodically review the sensitivity of the portfolio to the level of foreign exchange rates and other factors that contribute to market price changes. A summary of these risks and specific analysis on changes is included in the Quantitative and Qualitative Disclosures About Market Risk included under Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2024.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Our primary operating cash flow sources are premiums and investment income. Our primary operating cash flow uses are payments for claims, policy benefits and operating expenses, including interest expense on corporate debt. Additionally, cash may be paid or received for income taxes.
For the six months ended June 30, 2025, net cash provided by operating activities was $1,200 million as compared with $1,120 million for the same period in 2024. The increase in cash provided by operating activities was driven by an increase in premiums collected and higher cash from investment earnings, partially offset by an increase in net claim payments.
Cash flows from investing activities include the purchase and disposition of financial instruments, excluding those held as trading, and may include the purchase and sale of businesses, equipment and other assets not generally held for resale.
For the six months ended June 30, 2025, net cash used by investing activities was $471 million as compared $209 million for the same period in 2024. Net cash provided or used by investing activities is primarily driven by cash available from operations and by other factors, such as financing activities.
Cash flows from financing activities may include proceeds from the issuance of debt and equity securities, and outflows for stockholder dividends, repayment of debt and purchases of our common stock.
For the six months ended June 30, 2025, net cash used by financing activities was $847 million as compared with $878 million for the same period in 2024. Financing activities for the periods presented include:
•During the six months ended June 30, 2025, we paid dividends of $798 million and repurchased 700,000 shares of our common stock at an aggregate cost of $34 million.
•During the six months ended June 30, 2024, we paid dividends of $786 million and repurchased 450,000 shares of common stock at an aggregate cost of $20 million.
•In the second quarter of 2024, we repaid the $550 million outstanding aggregate principal balance of our 3.95% senior notes which came due May 15, 2024.
•In the first quarter of 2024, we issued $500 million of 5.125% notes due February 15, 2034.
Common Stock Dividends
Cash dividends of $2.92 per share on our common stock, including a special cash dividend of $2.00 per share, were declared and paid during the six months ended June 30, 2025. On August 1, 2025, our Board of Directors declared a quarterly cash dividend of $0.46 per share, payable September 4, 2025 to stockholders of record on August 18, 2025. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend on many factors, including our earnings, financial condition, business needs and regulatory constraints.
Liquidity
We believe that our present cash flows from operating, investing and financing activities are sufficient to fund our current and expected working capital and debt obligation needs and we do not expect this to change in the near term. There are currently no amounts outstanding under our $250 million senior unsecured revolving credit facility and no borrowings outstanding through our membership in the Federal Home Loan Bank of Chicago (FHLBC).
Dividends from Continental Casualty Company (CCC) are subject to the insurance holding company laws of the State of Illinois, the domiciliary state of CCC. Under these laws, ordinary dividends, or dividends that do not require prior approval by the Illinois Department of Insurance, are determined based on the greater of the prior year's statutory net income or 10% of statutory surplus as of the end of the prior year, as well as timing and amount of dividends paid in the preceding twelve months. Additionally, ordinary dividends may only be paid from earned surplus, which is calculated by removing unrealized gains from unassigned surplus. As of June 30, 2025 CCC was in a positive earned surplus position. CCC paid dividends of $610 million and $490 million to CNAF during the six months ended June 30, 2025 and 2024. The actual level of dividends paid in any year is determined after an assessment of available dividend capacity, holding company liquidity and cash needs as well as the impact the dividends will have on the statutory surplus of the applicable insurance company.
We have an effective shelf registration statement on file with the Securities and Exchange Commission under which we may publicly issue an unspecified amount of debt, equity or hybrid securities from time to time.
ACCOUNTING STANDARDS UPDATE
For a discussion of Accounting Standards, see Note A to the Condensed Consolidated Financial Statements included under Part I, Item 1.
RECENT LEGISLATION
On July 4, 2025, H.R. 1, "An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14," commonly referred to as the One Big Beautiful Bill Act (OBBBA), was enacted. The OBBBA includes significant federal tax law changes which, among other impacts, modify and make permanent certain business tax provisions originally enacted in the 2017 Tax Cuts and Jobs Act. The OBBBA is subject to further clarification from the issuance of future technical guidance by the U.S. Department of Treasury. We are currently evaluating the impacts of the OBBBA but do not expect it to have a material impact on our results of operations or financial condition.
FORWARD-LOOKING STATEMENTS
This report contains a number of forward-looking statements which relate to anticipated future events rather than actual present conditions or historical events. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as "believes," "expects," "intends," "anticipates," "estimates" and similar expressions. Forward-looking statements in this report include any and all statements regarding expected developments in our insurance business, including losses and loss reserves (note that loss reserves for long-term care, A&EP and other mass tort claims are more uncertain, and therefore more difficult to estimate than loss reserves respecting traditional property and casualty exposures); the impact of routine ongoing insurance reserve reviews we conduct; our expectations concerning our revenues, earnings, expenses and investment activities; volatility in investment returns; and our proposed actions in response to trends in our business. Forward-looking statements, by their nature, are subject to a variety of inherent risks and uncertainties that could cause actual results to differ materially from the results projected in the forward-looking statements. We cannot control many of these risks and uncertainties. These risks and uncertainties include, but are not limited to, the following as well as those risks contained in the Risk Factors section of our 2024 Annual Report on Form 10-K:
Company-Specific Factors
•the risks and uncertainties associated with our insurance reserves, as outlined in the Critical Accounting Estimates sections of our 2024 Annual Report on Form 10-K and this report, and the Reserves - Estimates and Uncertainties section of our 2024 Annual Report on Form 10-K, including the sufficiency of the reserves and the possibility of 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 transactions in which, subject to certain limitations, we ceded our legacy A&EP and excess workers' compensation (EWC) liabilities, respectively, will not fully perform their respective obligations to CNA, the uncertainty in estimating loss reserves for A&EP and EWC liabilities and the possible continued exposure of CNA to liabilities for A&EP and EWC claims that are not covered under the terms of the respective transactions; and
•the performance of reinsurance companies under reinsurance contracts with us.
Industry and General Market Factors
•general economic and business conditions, including potential recessionary conditions that may decrease the size and number of our insurance customers and create losses in our lines of business, and inflationary pressures on medical care costs, construction costs and other economic sectors;
•the effect of changes in tariffs, as well as significant uncertainty surrounding U.S. tariff policy generally, may adversely impact the economic environment, inflation expectations and certain loss costs (that would increase the cost of claims) and may result in decreases in the size and number of our insurance customers, in addition to potentially adversely affecting the performance of our investments;
•the effects of social inflation, including frequency of nuclear verdicts and increased litigation activity, on the severity of claims;
•the effects on the frequency of claims of reviver statutes that extend, or eliminate, the statute of limitations for the reporting of claims, including statutes passed in certain states with respect to sexual abuse;
•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;
•the COVID-19 pandemic, other potential pandemics and related measures to mitigate the spread of the foregoing may continue to result in increased claims and related litigation risk across our enterprise;
•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 or at all; 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, Legal and Operational Factors
•regulatory and legal initiatives and compliance with governmental regulations and other legal requirements, which are increasing in complexity and number, change frequently, sometimes conflict, and could expose us to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more jurisdictions, including regulations related to cybersecurity protocols (which continue to evolve in breadth, sophistication and maturity in response to an ever-evolving threat landscape) or utilization of artificial intelligence, 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;
•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;
•breaches of our or our vendors' data security infrastructure resulting in unauthorized access to systems and information, and/or interruption of operations; and
•regulatory and legal implications relating to the sophisticated cyber incident sustained by the Company in March 2021, or any future cyber incidents, that may arise.
Impact of Natural and Man-Made Disasters and Mass Tort Claims
•weather and other natural physical events, including the severity and frequency of storms, hail, snowfall and other winter conditions, natural disasters such as hurricanes, tornados and earthquakes, as well as climate change, including effects on global weather patterns, greenhouse gases, sea, land and air temperatures, sea levels, wildfires, 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, per- and polyfluoroalkyl substances (PFAS) and opioids, sexual abuse and molestation claims and claims arising from changes that repeal or weaken tort reforms.
Our forward-looking statements speak only as of the date of the filing of this Quarterly Report on Form 10-Q and we do not undertake any obligation to update or revise any forward-looking statement to reflect events or circumstances after the date of the statement, even if our expectations or any related events or circumstances change.
CNA Financial Corporation published this content on August 04, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on August 04, 2025 at 10:26 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]