10q10k10q10k.net

What changed in CNA FINANCIAL CORP's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of CNA FINANCIAL CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+270 added−261 removedSource: 10-K (2024-02-06) vs 10-K (2023-02-07)

Top changes in CNA FINANCIAL CORP's 2023 10-K

270 paragraphs added · 261 removed · 197 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

21 edited+6 added−10 removed22 unchanged
Biggest changeThe DEI Council works closely with internal DEI subject matter experts and with our eight employee resource groups to seek to create and drive strategic DEI initiatives. Critical components of our DEI Vision include: • Skill building. In 2021, we launched a new DEI learning program aimed to build allyship across the global enterprise.
Biggest changeTo act on our DEI Vision, CNA has appointed senior leaders to an executive DEI Council, and our Chairman and CEO serves as the Executive Sponsor. The DEI Council works closely with internal DEI subject matter experts and with our eight employee resource groups to create and drive strategic DEI initiatives.
Discussion of each segment, including the products offered, customers served and distribution channels used, is set forth in the Management's Discussion and Analysis (MD&A) included under Item 7 and in Note O to the Consolidated Financial Statements included under Item 8. Current Regulation The insurance industry is subject to comprehensive and detailed regulation and supervision.
Discussion of each segment, including the products offered, customers served and distribution channels used, is set forth in the Management's Discussion and Analysis (MD&A) included under Item 7 and in Note P to the Consolidated Financial Statements included under Item 8. Current Regulation The insurance industry is subject to comprehensive and detailed regulation and supervision.
We also make available free of charge on or through our internet website at www.cna.com our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. 6 Table of Con tents
We also make available free of charge on or through our internet website at www.cna.com our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. 6 Table of Contents
CNA's property and casualty and remaining life and group insurance operations are primarily conducted by Continental Casualty Company (CCC), The Continental Insurance Company, Western Surety Company, CNA Insurance Company Limited, Hardy Underwriting Bermuda Limited and its subsidiaries (Hardy), and CNA Insurance Company (Europe) S.A. Loews Corporation (Loews) owned approximately 90% of our outstanding common stock as of December 31, 2022.
CNA's property and casualty and remaining life and group insurance operations are primarily conducted by Continental Casualty Company (CCC), The Continental Insurance Company, Western Surety Company, CNA Insurance Company Limited, Hardy Underwriting Bermuda Limited and its subsidiaries (Hardy), and CNA Insurance Company (Europe) S.A. Loews Corporation (Loews) owned approximately 92% of our outstanding common stock as of December 31, 2023.
Although the U.S. federal government does not currently directly regulate the business of insurance, federal legislative and regulatory initiatives can affect the insurance industry. These initiatives and legislation include proposals relating to terrorism and natural catastrophe exposures, cybersecurity risk management, environmental, social and governance (ESG) initiatives, federal financial services reforms and certain tax reforms.
Although the U.S. federal government does not currently directly regulate the business of insurance, federal legislative and regulatory initiatives can affect the insurance industry. These initiatives and legislation include proposals relating to terrorism and natural catastrophe exposures, federal financial services reforms and certain tax reforms.
We provide certain benefits to eligible employees that are geared toward enhancing physical, mental, financial and social health. These include a holistic well-being incentive program with resources for both employees and their families, employee mental health assistance programs, and stress management and resilience programs.
We provide certain benefits to eligible employees that are geared toward enhancing physical, mental, financial and social health. These include a holistic well-being incentive program with resources for both employees and their families, employee mental health assistance programs, and stress management and resilience programs. CNA also offers remote working options and a hybrid-working environment for eligible employees.
Alongside the GCC, the NAIC has also developed the Aggregation Method (AM) approach to assessing group capital as an alternative to the Insurance Capital Standard (ICS) developed by the IAIS. The AM is influenced by the GCC and calculated in a similar manner. By 2024, the IAIS will be assessing whether the AM provides comparable outcomes to the ICS.
Alongside the GCC, the NAIC has also developed the Aggregation Method (AM) approach to assessing group capital as an alternative to the Insurance Capital Standard (ICS) developed by the IAIS. The AM is influenced by the GCC and calculated in a similar manner.
Our operations outside of Property & Casualty Operations are managed and reported in two business segments: Life & Group and Corporate & Other. Each segment is managed separately due to differences in their markets and product mix.
Our operations outside of Property & Casualty Operations are managed and reported in two business segments: Life & Group and Corporate & Other.
Through these partnerships, we uncover new sources of talent, support minority owned businesses, contribute to the development of students from underserved communities and provide opportunities for our employees to volunteer in their local communities. • Policies and benefits . We regularly review our workplace policies and employee benefits and seek to adapt them to the changing needs of our employees.
CNA has established new partnerships, and expanded several existing partnerships, with organizations whose DEI values and objectives align with our own. Through these partnerships, we uncover new sources of talent, support minority owned businesses, contribute to the development of students from underserved communities and provide opportunities for our employees to volunteer in their local communities. • Policies and benefits.
Our DEI Vision is to cultivate an inclusive culture grounded in equity that celebrates individuals’ differences, attracts diverse talent, and fosters an environment that enables employees to do their best work. To act on our DEI Vision, CNA has appointed senior leaders to an executive DEI Council, and our Chairman and CEO serves as the Executive Sponsor.
Diversity, Equity and Inclusion Diversity, Equity and Inclusion (DEI) is a strategic imperative. Our DEI Vision is to cultivate an inclusive culture grounded in equity that celebrates individuals’ differences, attracts diverse talent, and fosters an environment that enables employees to do their best work.
We offer a wide range of learning and development opportunities, including mentorship and reverse mentorship programs, apprenticeship and sponsorship programs, tuition reimbursement, technical training and specialized leadership development programs. CNA leaders engage regularly with our employees on their performance and professional development.
We have implemented programs designed for our employees to grow their technical expertise, collaborate with one another and achieve their career goals. We offer a wide range of learning and development opportunities, including mentorship and reverse mentorship programs, apprenticeship and sponsorship programs, tuition reimbursement, technical training and specialized leadership development programs.
We gather employee feedback through pulse surveys and routine dialogue with our employee resource groups and leaders from across the enterprise. Our annual talent and succession planning process culminates in a review with leadership of key talent retention and promotion, as well as a review of our succession plans.
Our annual talent and succession planning process culminates in a review with leadership of key talent retention and promotion, as well as a review of our succession plans.
Available Information We file annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934 (Exchange Act). The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers, including CNA.
The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers, including CNA. The public can obtain any documents that we file with the SEC at www.sec.gov .
Certain elements of ComFrame are expected to be formally utilized by U.S. state-based regulators beginning in 2023, as a result of such elements being incorporated in regulatory guidelines issued by the National Association of Insurance Commissioners (NAIC). This incorporation is intended to streamline group-wide supervision, further leveraging existing risk and solvency measures and applying them on a group-wide basis.
Certain elements of ComFrame were incorporated into regulatory guidelines issued by the National Association of Insurance Commissioners (NAIC) for application by regulators beginning in 2023. These additions were adopted for the purpose of streamlining group-wide supervision, further leveraging existing risk and solvency measures and applying them on a group-wide basis.
Human Capital As of December 31, 2022, we had approximately 6,100 employees. We seek to create a culture of inclusion that engages our employees and offers them opportunities to learn, grow and achieve their career goals. We believe this will facilitate our ability to continue to attract and retain a highly talented workforce.
We seek to create a culture of inclusion that engages our employees and offers them opportunities to learn, grow and achieve their career goals.
In addition, we offer mentoring and reverse mentoring program opportunities to employees. • Representation. We seek to increase the representation of diverse talent throughout the organization. We monitor our representation of diverse talent and review our trends in relation to the labor market and industry to understand how we can increase it.
We monitor our representation of diverse talent and review our trends in relation to the labor market 5 Table of Contents and industry to understand how we can increase it. We also report this information regularly to our Board of Directors. • Partnerships.
Talent, Recruitment and Development We focus on attracting, developing and retaining top-tier talent to reflect the specialist nature of our business. We aim to continually build on the expertise of our workforce. At entry levels, we have implemented trainee and internship programs and we continue to leverage relationships with colleges to attract new and diverse talent.
We believe this will facilitate our ability to continue to attract and retain a highly talented workforce. 4 Table of Contents Talent, Recruitment and Development We focus on attracting, developing and retaining top-tier talent to reflect the specialist nature of our business. We aim to continually build on the expertise of our workforce.
We seek to promote the development of employees, both to optimize current performance and to develop skills for future career growth. We have implemented programs designed for our employees to grow their technical expertise, collaborate with one another and achieve their career goals.
At entry levels, we have implemented trainee and internship programs and we continue to leverage relationships with colleges to attract new and diverse talent. We seek to promote the development of employees, both to optimize current performance and to develop skills for future career growth.
We also provide additional networking and learning opportunities for leaders to support the critical role they play in creating an inclusive workplace culture. • Talent development. In 2021, we launched a new talent sponsorship program that seeks to accelerate the development of high performing diverse employees, diversify our leadership ranks and broadly build inclusive leadership skills.
CNA requires every people leader and officer to complete inclusive leadership training. We also provide additional networking and learning opportunities for leaders to support the critical role they play in creating an inclusive workplace culture. • Talent development.
We have 3 Table of Con tents invested and continue to invest in the security of our systems and in our technology infrastructure on an enterprise-wide basis. Domestic insurers are also required by state insurance regulators to provide coverage to certain insureds who would not otherwise be considered eligible by the insurers.
Prudential Regulatory Authority and Financial Conduct Authority, the Office of Superintendent of Financial Institutions in Canada, the Luxembourg insurance regulator Commissariat aux Assurances (the CAA) and the Bermuda Monetary Authority. 3 Table of Contents Domestic insurers are also required by state insurance regulators to provide coverage to certain insureds who would not otherwise be considered eligible by the insurers.
We also have a corporate social responsibility strategy with a focus on four core areas: education, environment, inclusion and well-being. Our employees are encouraged to participate in a wide array of volunteer activities and we support their charitable giving by matching employee contributions to qualified nonprofit organizations.
Our employees are encouraged to participate in a wide array of volunteer activities and we support their charitable giving by matching employee contributions to qualified nonprofit organizations. Available Information We file annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934 (Exchange Act).
Removed
Prudential Regulatory Authority and Financial Conduct Authority, the Office of Superintendent of Financial Institutions in Canada, the Luxembourg insurance regulator Commissariat aux Assurances (the CAA) and the Bermuda Monetary Authority. The U.S. and foreign regulatory environment in which we operate is evolving on an ongoing basis and impacts aspects of corporate governance, risk management practices, public disclosures and cyber security.
Added
A decision by the IAIS on whether the AM provides comparable outcomes to the ICS is expected in 2024.
Removed
On September 22, 2017, the U.S. Treasury Department, the U.S. Trade Representative (USTR) and the E.U. announced they had formally signed a covered agreement on Prudential Measures Regarding Insurance and Reinsurance (U.S.-E.U. Covered Agreement). The U.S.-E.U.
Added
In addition, the U.S. and foreign regulatory environment in which we operate is continuously evolving, with both existing and prospective regulations that implicate aspects of our corporate governance, risk management practices, public disclosures, environmental, social and governance (ESG) related issues, artificial intelligence and cybersecurity. Human Capital As of December 31, 2023, we had approximately 6,300 employees.
Removed
Covered Agreement requires U.S. states to prospectively eliminate the requirement that domestic insurance companies must obtain collateral from E.U. 4 Table of Con tents reinsurance companies that are not licensed in their state (alien reinsurers) in order to obtain reserve credit under statutory accounting.
Added
CNA leaders engage regularly with our employees on their performance and professional development. We gather employee feedback through pulse surveys and routine dialogue with our employee resource groups and leaders from across the enterprise.
Removed
In exchange, the E.U. will not impose local presence requirements on U.S. firms operating in the E.U., and effectively must defer to U.S. group capital regulation for these firms. On December 18, 2018, the U.S. Treasury Department, the USTR and the U.K. announced they formally signed the Bilateral Agreement on Prudential Measures Regarding Insurance and Reinsurance (U.S.-U.K. Covered Agreement).
Added
Critical components of our DEI Vision include: • Skill building. CNA offers DEI learning programs to all employees. After expanding our focus on allyship and equity, we refreshed our new hire onboarding, manager training and leadership development programs, and launched interactive workshops designed to provide opportunities to learn and practice new skills. • Leadership training.
Removed
This Agreement has similar terms as the U.S.-E.U. Covered Agreement. Because these covered agreements were not self-executing, U.S. state laws were revised to amend reinsurance collateral requirements to conform to the provisions within each of the agreements.
Added
CNA has a talent sponsorship program that seeks to accelerate the development of high performing diverse employees, diversify our leadership ranks and broadly build inclusive leadership skills. In addition, we offer mentoring and reverse mentoring program opportunities to employees. • Representation. We seek to increase the representation of diverse talent throughout the organization.
Removed
The reinsurance collateral requirements were required to be adopted by the states within five years from the signing of the covered agreements, which was September 1, 2022, or states risked federal preemption in this area. As a result of all relevant jurisdictions adopting these requirements, including Illinois, federal preemption was avoided.
Added
We regularly review our workplace policies and employee benefits and seek to adapt them to the changing needs of our employees. We also have a corporate social responsibility strategy with a focus on four core areas: DEI, protecting the environment, science, technology, engineering and mathematics (STEM) education, and disaster preparedness and recovery.
Removed
In response to the COVID-19 pandemic, CNA has offered remote working options and a hybrid-working environment for eligible employees. 5 Table of Con tents Diversity, Equity and Inclusion Diversity, Equity and Inclusion (DEI) is a strategic imperative.
Removed
It includes various forms of allyship training and education for our employees – providing them with opportunities to learn and practice new skills. • Leadership training. CNA requires every people leader and officer to complete inclusive leadership training.
Removed
We also report this information regularly to our Board of Directors. • Partnerships. CNA has established new and expanded several existing partnerships with organizations whose DEI values align with our own.
Removed
The public can obtain any documents that we file with the SEC at www.sec.gov .

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

45 edited+11 added−6 removed102 unchanged
Biggest changeIn addition, the misuse, or perceived misuse, of sensitive or confidential information regarding our business or policyholders could cause harm to our reputation and result in the loss of business with existing or potential customers, which could adversely impact our business, results of operations and financial condition. 13 Table of Con tents Although we maintain cybersecurity insurance coverage insuring against costs resulting from cyber-attacks (including the March 2021 attack), we do not expect the amount available under our coverage policy to cover all losses from cyber-attacks.
Biggest changeAlthough we maintain cybersecurity insurance coverage insuring against costs resulting from cyber-attacks (including the March 2021 attack), we do not expect the amount available under our coverage policy to cover all losses from cyber-attacks. In addition, potential disputes with our insurers about the availability of insurance coverage could occur.
The extent of our losses from catastrophes is a function of the total amount of our insured exposures in the affected areas, the frequency and severity of the events themselves, the level of reinsurance coverage, reinsurance reinstatement premiums and state residual market assessments, if any.
The extent of our losses from catastrophes is a function of the total amount of our insured exposures in the affected areas, the frequency and severity of the events themselves, the level of our reinsurance coverage, reinsurance reinstatement premiums and state residual market assessments, if any.
If such utilization is more effective than how we use similar data and information, we will be at a competitive disadvantage. There can be no assurance that we will continue to compete effectively with our industry peers due to technological changes; accordingly, this may have a material adverse effect on our business, results of operations and financial condition.
If such utilization is more effective than how we use our data and information, we will be at a competitive disadvantage. There can be no assurance that we will continue to compete effectively with our industry peers due to technological changes; accordingly, this may have a material adverse effect on our business, results of operations and financial condition.
In addition, because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such service exceeds capacity or a third-party system fails or experiences an interruption. If sustained or repeated, such events could result in a deterioration of our ability to perform necessary business functions.
In addition, because our and our vendors' information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such service exceeds capacity or a third-party system fails or experiences an interruption. If sustained or repeated, such events could result in a deterioration of our ability to perform necessary business functions.
We are subject to the uncertain effects of emerging or potential claims and coverage issues that arise as industry practices and legal, judicial, social, economic and other environmental conditions change. Further, the impact of social inflation continues to be significant and the trajectory of its future impact remains uncertain.
We are subject to the uncertain effects of emerging and potential claims and coverage issues that arise as industry practices and legal, judicial, social, economic and other environmental conditions change. Further, the impact of social inflation continues to be significant and the trajectory of its future impact remains uncertain.
We have experienced, and may continue to experience, increased claim submissions and litigation related to denial of claims based on policy coverage or the facts of the claim, in certain lines of business that are implicated by the pandemic and mitigating actions taken by our customers and governmental authorities in response to its spread.
We have experienced, and may continue to experience, increased claim submissions and litigation related to denial of claims based on policy coverage or the facts of the claim, in certain lines of business that are implicated by the COVID-19 pandemic and mitigating actions taken by our customers and governmental authorities in response to its spread.
Ratings reflect the rating agency's opinions of an insurance company's or insurance holding company's financial strength, capital adequacy, enterprise risk management practices, operating performance, strategic position and ability to meet its obligations to policyholders and debt holders, and may also reflect opinions on other areas such as information security and climate risk, as well as ESG matters more broadly.
Ratings reflect the rating agency's opinions of an insurance company's or insurance holding company's 15 Table of Contents financial strength, capital adequacy, enterprise risk management practices, operating performance, strategic position and ability to meet its obligations to policyholders and debt holders, and may also reflect opinions on other areas such as information security and climate risk, as well as ESG matters more broadly.
These laws and regulations 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 cyber security protocols (which continue to evolve in breadth, sophistication and maturity in response to an ever-evolving threat landscape).
These laws and regulations, including regulations related to cybersecurity protocols (which continue to evolve in breadth, sophistication and maturity in response to an ever-evolving threat landscape), 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.
On August 31, 2010, we completed a retroactive reinsurance transaction under which substantially all of our legacy A&EP liabilities were ceded to National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc., subject to an aggregate limit of $4 billion (Loss Portfolio Transfer). The cumulative amount ceded under the Loss Portfolio Transfer as of December 31, 2022 was $3.5 billion.
On August 31, 2010, we completed a retroactive reinsurance transaction under which substantially all of our legacy A&EP liabilities were ceded to National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc., subject to an aggregate limit of $4 billion (Loss Portfolio Transfer). The cumulative amount ceded under the Loss Portfolio Transfer as of December 31, 2023 was $3.6 billion.
If we are unable to obtain sufficient reinsurance at a cost or on terms and conditions we deem acceptable, our risk exposure will not be mitigated or we may forego such increased risk, thereby adversely impacting our underwriting strategies.
If we are unable to obtain sufficient reinsurance at a cost or on terms and conditions we deem acceptable, our risk exposure will not be mitigated to the degree desired or we may forego such increased risk, thereby adversely impacting our underwriting strategies.
In addition, it is possible that a significant lowering of the corporate debt ratings of Loews by certain of the rating agencies could result in an adverse effect on our ratings, independent of any change in our circumstances. 15 Table of Con tents For further discussion of our ratings, see the Ratings subsection within the Liquidity and Capital Resources section of MD&A in Item 7.
In addition, it is possible that a significant lowering of the corporate debt ratings of Loews by certain of the rating agencies could result in an adverse effect on our ratings, independent of any change in our circumstances. For further discussion of our ratings, see the Ratings subsection within the Liquidity and Capital Resources section of MD&A in Item 7.
Loews beneficially owned approximately 90% of our outstanding shares of common stock as of December 31, 2022, and is in a position to control actions that require the consent of stockholders, including the election of directors, amendment of our Restated Certificate of Incorporation and any merger or sale of substantially all of our assets.
Loews beneficially owned approximately 92% of our outstanding shares of common stock as of December 31, 2023, and is in a position to control actions that require the consent of stockholders, including the election of directors, amendment of our Restated Certificate of Incorporation and any merger or sale of substantially all of our assets.
However, such coverage is subject to a mandatory deductible and other limitations. It is also possible that future legislation could change or eliminate the program, which could adversely affect our business by increasing our exposure to terrorism losses, or by lowering our business volume through efforts to avoid that exposure.
However, such coverage is subject to a mandatory deductible and other limitations. It is also possible that future legislation could change 8 Table of Contents or eliminate the program, which could adversely affect our business by increasing our exposure to terrorism losses, or by lowering our business volume through efforts to avoid that exposure.
Such reinsurance-related risks could have a material adverse effect on our business, results of operations and financial condition and adversely affect our underwriting strategies in certain lines of business. 10 Table of Con tents We may be adversely affected by technological changes or disruptions in the insurance marketplace.
Such reinsurance-related risks could have a material adverse effect on our business, results of operations and financial condition and adversely affect our underwriting strategies in certain lines of business. We may be adversely affected by technological changes or disruptions in the insurance marketplace.
Mass tort claim activity, including activity based on such changing judicial interpretations and recent and proposed legislation, could have a material adverse effect on our business, results of operations and financial condition.
Similar and continuing mass tort claim activity, including activity based on changing judicial interpretations and recent and proposed legislation, could have a material adverse effect on our business, results of operations and financial condition.
The breach of confidential information also could give rise to legal liability and regulatory action under data protection and privacy laws, as well as evolving regulation in this regard.
The breach of confidential information also could 13 Table of Contents give rise to legal liability and regulatory action under data protection and privacy laws, as well as evolving regulation in this regard.
The availability and cost of the reinsurance protection we purchase, which affects the volatility and profitability of our business, as well as the level and types of risk we retain, is determined by general economic conditions and conditions in the reinsurance market, such as the occurrence of significant reinsured events or unexpected adverse trends, including those associated with climate change.
The availability and cost of the reinsurance protection we purchase, which affects the volatility and profitability of our business, as well as the level and types of risk we retain, is determined by many factors, including general economic conditions and conditions in the reinsurance market, such as the occurrence of significant reinsured events or 10 Table of Contents unexpected adverse trends, including those associated with climate change.
The effects of unforeseen emerging claim and coverage issues are extremely difficult to predict and may be material.
The effects of unforeseen emerging or potential claim and coverage issues are extremely difficult to predict and may be material.
Evolving 9 Table of Con tents judicial interpretations and new legislation regarding the application of various tort theories and defenses, including application of various theories of joint and several liability, as well as the application of insurance coverage to these claims, give rise to new and potentially more severe claim activity.
Evolving judicial interpretations and new legislation regarding the application of various tort theories and defenses, including application of various theories of joint and several liability, as well as the application of insurance coverage to these claims, give rise to new and potentially more severe claim activity.
Our share of these involuntary risks is mandatory and generally a function of our respective share of the voluntary market by line of insurance in each jurisdiction. 16 Table of Con tents
Our share of these involuntary risks is mandatory and generally a function of our respective share of the voluntary market by line of insurance in each jurisdiction. 16 Table of Contents
We have also licensed certain systems from third parties. We cannot be certain that we will have access to these systems or that our information technology or application systems will continue to operate as intended. These risks could adversely impact our reputation and client relationships and have a material adverse effect on our business, results of operations and financial condition.
We cannot be certain that we will have access to these systems or that our information technology or application systems will continue to operate as intended. These risks could adversely impact our reputation and client relationships and have a material adverse effect on our business, results of operations and financial condition.
An interruption in our system availability occurred in March 2021 as a result of a cybersecurity attack we sustained. Please refer to the 12 Table of Con tents immediately following risk factor for further information regarding this incident.
An interruption in our system availability occurred in March 2021 as a result of a cybersecurity attack we sustained. Please refer to the immediately following risk factor for further information regarding this incident.
A decline in interest rates may reduce the returns earned on new fixed maturity investments, thereby reducing our net investment income, while an increase in interest rates may reduce the value of our existing fixed maturity 11 Table of Con tents investments, which could reduce our net unrealized gains included in Accumulated other comprehensive income (AOCI).
A decline in interest rates may reduce the returns earned on new fixed maturity investments, thereby reducing our net investment income, while an increase in interest rates may reduce the value of our existing fixed maturity investments, which could increase our net unrealized losses or reduce our net unrealized gains included in Accumulated other comprehensive income (AOCI).
We are exposed to, and may face adverse developments related to, mass tort claims that could arise from, among other things, our insureds’ sale or use of potentially harmful products or substances, changes to the social and legal environment, issues related to altered interpretation of coverage and other new and emerging claim theories.
We are exposed to, and may face adverse developments related to, mass tort claims that could arise from, 9 Table of Contents among other things, our insureds’ sale or use of potentially harmful products or substances, changes to the social and legal environment, such as those related to abuse reviver statutes, issues related to altered interpretation of coverage and other new and emerging claim theories.
Our property and casualty insurance subsidiaries have exposures related to A&EP claims. Our experience has been that establishing claim and claim adjustment expense reserves for casualty coverages relating to A&EP claims is subject to uncertainties that are greater than those presented by other claims.
Our experience has been that establishing claim and claim adjustment expense reserves for casualty coverages relating to A&EP claims is subject to uncertainties that are greater than those presented by more traditional property and casualty claims.
It is possible that potential conflicts of interest could arise in the future for our directors who are also officers and/or directors of Loews with respect to a number of areas relating to the past and ongoing relationships of Loews and us, including tax and insurance matters, financial commitments and sales of common stock pursuant to registration rights or otherwise.
It is possible that potential conflicts of interest could arise in the future for our directors who are also officers and/or directors of Loews with respect to a number of areas relating to the past and ongoing relationships of Loews and us, including tax and insurance matters, financial commitments and sales of common stock pursuant to registration rights or otherwise. 11 Table of Contents Financial Risks We may incur significant realized and unrealized investment losses and volatility in net investment income arising from changes in the financial markets.
In addition, the effectiveness of any model can be degraded by operational risks, including the improper use of the model, input errors, data errors and human error. As a result, actual results may differ materially from our modeled results.
Further, climate change may make modeled outcomes less certain or produce new, non-modeled risks. 12 Table of Contents In addition, the effectiveness of any model can be degraded by operational risks, including the improper use of the model, input errors, data errors and human error. As a result, actual results may differ materially from our modeled results.
The modeled outputs and related analyses from both proprietary models and third parties are subject to various assumptions, uncertainties, model design errors and the inherent limitations of any statistical analysis. Further, climate change may make modeled outcomes less certain or produce new, non-modeled risks.
The modeled outputs and related analyses from both proprietary models and third parties are subject to various assumptions, uncertainties, model design errors and the inherent limitations of any statistical analysis.
Our inability to provide for appropriate servicing if a vendor becomes unable to fulfill its contractual obligations to us, either through transitioning to another service provider temporarily or permanently or assuming servicing internally, may have a materially adverse effect on our business, results of operations and financial condition. 14 Table of Con tents We are subject to capital adequacy requirements and, if we are unable to maintain or raise sufficient capital to meet these requirements, regulatory agencies may restrict or prohibit us from operating our business.
Our inability to provide for appropriate servicing if a vendor becomes unable to fulfill its contractual obligations to us, either through transitioning to another service provider temporarily or permanently or assuming servicing internally, may have a materially adverse effect on our business, results of operations and financial condition.
We may also be subject to future cyber incidents that could have a material adverse effect on our business, results of operations or financial condition or may result in operational impairments and financial losses, as well as significant harm to our reputation.
The risks relating to future breaches in our, or our vendors', data security infrastructure, including in connection with cyber incidents, could have a material adverse effect on our business, results of operations or financial condition or may result in operational impairments and financial losses, as well as significant harm to our reputation.
Estimating future experience for long term care policies is highly uncertain because the adequacy of the reserves is 7 Table of Con tents contingent upon actual experience and our future expectations related to these key assumptions. If actual or expected future experience differs from these assumptions, the reserves may not be adequate, requiring us to add reserves.
The adequacy of the reserves is contingent upon actual experience and our future expectations related to these key assumptions. If actual or expected future experience differs from these assumptions, the reserves may not be adequate, requiring us to increase reserves.
Insurance companies such as ours are subject to capital adequacy standards set by regulators to help identify companies that merit further regulatory attention. In the U.S., these standards apply specified risk factors to various asset, premium and reserve components of our legal entity statutory basis of accounting financial statements.
In the U.S., these standards apply specified risk factors to various asset, premium and reserve components of our legal entity statutory basis of accounting financial statements.
Additionally, we rely on certain third-party claims administrators, including the administrator of our long term care claims, to handle policyholder services and perform significant claim administration and claim adjudication functions. Any failure by such administrator to properly perform service functions may result in losses as a result of over-payment of claims, legal claims against us and adverse regulatory enforcement exposure.
Additionally, we rely on certain third-party claims administrators, including the administrator of our long-term care claims, to handle policyholder services and perform significant claim administration and claim adjudication functions.
Increased frequency or severity in any or all of the foregoing lines, or others where the exposure has yet to emerge, may have a material impact on our business, results of operations and financial condition. We have incurred and may continue to incur substantial expenses related to litigation activity in connection with COVID-related legal claims.
Increased frequency or severity in any or all of the foregoing lines, or others where the exposure has yet to emerge, relating to long-term effects of COVID-19, new or emerging variants, or other potential pandemics, and related measures to mitigate the spread of the foregoing, may have a material impact on our business, results of operations and financial condition.
The significance of such litigation, both in substance and volume, and the resultant activities we have initiated, including external counsel engagement, and the costs related thereto, may have a material impact on our business, results of operations and financial condition. We have exposures related to asbestos and environmental pollution (A&EP) claims, which could result in material losses.
The significance of such litigation or any other litigation relating to new or emerging variants of COVID-19 or other potential pandemics and related measures to mitigate the spread of the foregoing, both in substance and volume, and the resultant Company-initiated activities, including external counsel engagement, and the costs related thereto, may have a material impact on our business, results of operations and financial condition.
During periods in which price competition is high, we may lose business to competitors offering competitive insurance products at lower prices. As a result, our premium levels and expense ratio could be materially adversely impacted.
We may lose business to competitors offering competitive insurance products at lower prices. As a result, our premium levels and expense ratio could be materially adversely impacted. We market our insurance products worldwide primarily through independent insurance agents, insurance brokers, and managing general underwriters who also promote and distribute the products of our competitors.
If our recorded reserves are insufficient for any reason, the required increase in reserves would be recorded as a charge against our earnings in the period in which reserves are determined to be insufficient. These charges could be substantial. Our actual experience could vary from the key assumptions used to determine future policy benefit reserves for long term care policies.
These charges have been and in the future could be substantial. 7 Table of Contents Our actual experience could vary from the key assumptions used to determine future policy benefit reserves for long-term care policies.
The COVID-19 pandemic and measures to mitigate the spread of the virus have resulted in increased claims and related litigation risk across our enterprise, which may continue to have adverse impacts on our business, results of operations and financial condition and could be material.
Accordingly, catastrophic events could have a material adverse effect on our business, results of operations, financial condition and liquidity. The COVID-19 pandemic, including new or emerging variants, other potential pandemics and related measures to mitigate the spread of the foregoing may continue to have adverse impacts on our business, results of operations and financial condition and could be material.
Financial Risks We may incur significant realized and unrealized investment losses and volatility in net investment income arising from changes in the financial markets. Our investment portfolio is exposed to various risks, such as interest rate, credit spread, issuer default, equity prices and foreign currency, which are unpredictable.
Our investment portfolio is exposed to various risks, such as interest rate, credit spread, issuer default, equity prices and foreign currency, which are unpredictable. Financial markets are highly sensitive to changes in economic conditions, monetary policies, tax policies, interest rates, domestic and international geopolitical issues and many other factors.
These lines include primarily healthcare professional liability, workers' compensation, commercial property related business interruption coverage, management liability (directors and officers, employment practices and professional liability lines) and trade credit. We recorded significant losses during 2020, the majority of which are classified as incurred but not reported (IBNR) reserves, in these areas and may experience continued losses, which could be material.
We recorded significant losses during 2020, a significant portion of which remain classified as incurred but not reported (IBNR) reserves, in these areas and may experience continued losses, which could be material.
Our future policy benefit reserves for long term care policies are based on our best estimate assumptions as of September 30, 2020, due to a reserve unlocking at that date. Key assumptions include morbidity, persistency (the percentage of policies remaining in force), discount rate and future premium rate increases.
Our future policy benefit reserves for long-term care policies are based on our best estimate actuarial assumptions, which are assessed quarterly and updated at least annually. Key actuarial assumptions include morbidity, persistency (inclusive of mortality), anticipated future premium rate increases and expenses.
A prolonged period during which investment returns remain at levels lower than those anticipated in our reserving discount rate assumptions could result in shortfalls in investment income on assets supporting our obligations under long term care policies, which may require increases to our reserves.
A prolonged period during which investment returns remain at low levels could result in shortfalls in investment income on assets supporting our obligations under long-term care policies. This risk is more significant for our long-term care products because the long potential duration of the policy obligations exceeds the duration of the supporting investment assets.
The required increase in reserves would be recorded as a charge against our earnings in the period in which reserves are determined to be insufficient. These charges could be substantial. See the Life & Group Policyholder Reserves portion of Reserves - Estimates and Uncertainties section of MD&A in Item 7 for more information.
Discount rates are subject to interest rate and market volatility. See the Life & Group Policyholder Reserves portion of Reserves - Estimates and Uncertainties section of MD&A in Item 7 for more information.
As a result of the items discussed above, catastrophe losses are particularly difficult to estimate, could cause us to exhaust our available reinsurance limits and could adversely affect the cost and availability of reinsurance. 8 Table of Con tents Accordingly, catastrophic events could have a material adverse effect on our business, results of operations, financial condition and liquidity.
For a further discussion of TRIPRA, see Part II, Item 7, MD&A - Catastrophes and Related Reinsurance. As a result of the items discussed above, catastrophe losses are particularly difficult to estimate, could cause us to exhaust our available reinsurance limits, could lead to large losses and could adversely affect the cost and availability of reinsurance.
These actions primarily relate to denial of claims submitted as a result of the pandemic and the mitigating actions under commercial property policies for business interruption coverage, including lockdowns and closing of certain businesses.
We have incurred and may continue to incur substantial expenses related to litigation activity in connection with COVID-related legal claims. These actions primarily relate to denial of claims submitted as a result of the pandemic and the mitigating actions taken, including lockdowns and closing of certain businesses.
Removed
This risk is more significant for our long term care products because the long potential duration of the policy obligations exceeds the duration of the supporting investment assets. Further, changes to the Internal Revenue Code may also affect the rate at which we discount our reserves.
Added
In addition, passage 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 molestation and sexual abuse, increase the uncertainty of the frequency of claims.
Removed
For a further discussion of TRIPRA, see Part II, Item 7, MD&A - Catastrophes and Related Reinsurance.
Added
When our recorded reserves are insufficient for any reason, the required increase in reserves is recorded as a charge against our earnings in the period in which reserves are determined to be insufficient.
Removed
We market our insurance products worldwide primarily through independent insurance agents, insurance brokers, and managing general underwriters who also promote and distribute the products of our competitors.
Added
The required increase in reserves is recorded as a charge against our earnings in the period in which reserves are determined to be insufficient. These charges have been and in the future could be substantial. The reserves are discounted using upper-medium grade fixed income instrument yields as of each reporting date.
Removed
Financial markets are highly sensitive to changes in economic conditions, monetary policies, tax policies, domestic and international geopolitical issues and many other factors.
Added
These lines include primarily healthcare professional liability, workers' compensation, commercial property related business interruption coverage, management liability (directors and officers, employment practices and professional liability lines) and trade credit.
Removed
During the third quarter of 2021, we were notified of a breach of certain systems of a third-party administrator, which resulted in breach notifications sent by such administrator to potentially impacted persons, including a limited number of our claimants.
Added
We have exposures related to asbestos and environmental pollution (A&EP) claims, which could result in material losses. Our property and casualty insurance subsidiaries have exposures related to A&EP claims.
Removed
In addition, potential disputes with our insurers about the availability of insurance coverage could occur. Further, as a result of the March 2021 attack, we incurred higher costs for the replenishment of our current policy through the end of the term, and we believe we will incur higher costs for future cybersecurity insurance coverage beyond the current term.
Added
For example, we have recorded, and may continue to record, increases in our mass tort reserves, driven substantially by abuse reviver statutes that have resulted in increased claims.
Added
During the second quarter of 2023, we were notified of a breach in the file transfer software, MOVEit Transfer, used by a vendor of one of our third-party administrators. This incident resulted in required breach notifications to the Company's long-term care policyholders, with such notifications made by the subject vendor.
Added
In addition, the misuse, or perceived misuse, of sensitive or confidential information regarding our business or policyholders could cause harm to our reputation and result in the loss of business with existing or potential customers, which could adversely impact our business, results of operations and financial condition.
Added
Further, should we experience future cyber incidents, or should industry trends drive rate increases resulting from growth in volume and significance of cyber incidents broadly, we may incur higher costs for cybersecurity insurance coverage.
Added
Any failure by such administrator to properly perform service functions may result in losses as a result of over-payment of claims, legal claims against us and adverse regulatory enforcement exposure. 14 Table of Contents We have also licensed certain systems from third parties.
Added
We are subject to capital adequacy requirements and, if we are unable to maintain or raise sufficient capital to meet these requirements, regulatory agencies may restrict or prohibit us from operating our business. Insurance companies such as ours are subject to capital adequacy standards set by regulators to help identify companies that merit further regulatory attention.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+1 added−1 removed2 unchanged
Biggest changeAs of February 3, 2023, we had 270,901,829 shares of common stock outstanding and approximately 90% of our outstanding common stock was owned by Loews. We had 788 stockholders of record as of February 3, 2023 according to the records maintained by our transfer agent.
Biggest changeAs of February 2, 2024, we had 270,896,945 shares of common stock outstanding and approximately 92% of our outstanding common stock was owned by Loews. We had 756 stockholders of record as of February 2, 2024 according to the records maintained by our transfer agent.
Our Board of Directors has approved an authorization to purchase, in the open market or through privately negotiated transactions, our outstanding common stock, as our management deems appropriate. No repurchases of our common stock were made in the three months ended December 31, 2022.
Our Board of Directors has approved an authorization to purchase, in the open market or through privately negotiated transactions, our outstanding common stock, as our management deems appropriate. No repurchases of our common stock were made in the three months ended December 31, 2023.
The graph assumes that the value of the investment in our common stock and each index was $100 at the base period, January 1, 2018, and that dividends, if any, were reinvested in the stock or index.
The graph assumes that the value of the investment in our common stock and each index was $100 at the base period, January 1, 2019, and that dividends, if any, were reinvested in the stock or index.
Removed
Company / Index Base Period 2018 2019 2020 2021 2022 CNA Financial Corporation $ 100.00 $ 88.84 $ 97.26 $ 92.02 $ 109.50 $ 113.66 S&P 500 Index 100.00 95.62 125.72 148.85 191.58 156.88 S&P 500 Property & Casualty Insurance Index 100.00 95.31 119.96 128.31 153.05 181.93 18 Table of Con tents
Added
Company / Index Base Period 2019 2020 2021 2022 2023 CNA Financial Corporation $ 100.00 $ 109.48 $ 103.58 $ 123.26 $ 127.94 $ 137.05 S&P 500 Index 100.00 131.49 155.68 200.37 164.08 207.21 S&P 500 Property & Casualty Insurance Index 100.00 125.87 134.63 160.58 190.89 211.53 19 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

119 edited+52 added−46 removed106 unchanged
Biggest changeThese risks and uncertainties are addressed in Part I, Item IA Risk Factors and include, but are not limited to, the following: Company-Specific Factors • the risks and uncertainties associated with our insurance reserves, as outlined in the Critical Accounting Estimates and the Reserves - Estimates and Uncertainties sections of this report, including the sufficiency of the reserves and the possibility for future increases, which would be reflected in the results of operations in the period that the need for such adjustment is determined; • the risk that the other parties to the transactions in which, subject to certain limitations, we ceded our legacy A&EP and 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; • the performance of reinsurance companies under reinsurance contracts with us; and • the risks and uncertainties associated with potential acquisitions and divestitures, including the consummation of such transactions, the successful integration of acquired operations and the potential for subsequent impairment of goodwill or intangible assets. 50 Table of Con tents Industry and General Market Factors • the COVID-19 pandemic and measures to mitigate the spread of the virus may continue to result in increased claims and related litigation risk across our enterprise; • 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; • general economic and business conditions, including recessionary conditions that may decrease the size and number of our insurance customers and create losses to our lines of business and inflationary pressures on medical care costs, construction costs and other economic sectors, as well as social inflation, that increase the severity of claims; • conditions in the capital and credit markets, including uncertainty and instability in these markets, as well as the overall economy, and their impact on the returns, types, liquidity and valuation of our investments; • conditions in the capital and credit markets that may limit our ability to raise significant amounts of capital on favorable terms; and • the possibility of changes in our ratings by ratings agencies, including the inability to access certain markets or distribution channels and the required collateralization of future payment obligations as a result of such changes, and changes in rating agency policies and practices.
Biggest changeMaterial risks and uncertainties are addressed in Part I, Item IA Risk Factors and include, but are not limited to, the following: Company-Specific Factors • the risks and uncertainties associated with our insurance reserves, as outlined in the Critical Accounting Estimates and the Reserves - Estimates and Uncertainties sections of this report, including the sufficiency of the reserves and the possibility for future increases, which would be reflected in the results of operations in the period that the need for such adjustment is determined; • the risk that the other parties to the transactions in which, subject to certain limitations, we ceded our legacy A&EP and 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. 54 Table of Contents Industry and General Market Factors • general economic and business conditions, including recessionary conditions that may decrease the size and number of our insurance customers and create losses to our lines of business and inflationary pressures on medical care costs, construction costs and other economic sectors; • the effects of social inflation, including frequency of nuclear verdicts and increased litigation activity, on the severity of claims; • the effects 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 molestation and sexual abuse, on the frequency of claims; • 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, including new or emerging variants, 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; 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.
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, to inform underwriting and reinsurance decisions designed to manage our exposure to catastrophic events.
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.
Life & Group Policyholder Reserves Our Life & Group segment includes our 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.
Life & Group Policyholder Reserves Our Life & Group segment includes our 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 may provide benefits for nursing homes, assisted living facilities and home health care subject to various daily and lifetime caps.
Hardy operates through Lloyd’s Syndicate 382 underwriting energy, marine, property, casualty and specialty lines with risks located in many countries around the world. The capacity of, and results from the syndicate, are 100% attributable to CNA. The following table details the results of operations for International.
Hardy operates through Lloyd’s Syndicate 382 underwriting energy, marine, property, casualty and specialty lines with risks located in many countries around the world. The capacity and results of the syndicate are 100% attributable to CNA. The following table details the results of operations for International.
Unforeseen emerging or potential claims and coverage issues are also difficult to predict and could materially adversely affect the adequacy of our claim and claim adjustment expense reserves and could lead to future reserve additions. In addition, our property and casualty insurance subsidiaries also have actual and potential exposures related to A&EP claims, which could result in material losses.
Unforeseen emerging or potential claims and coverage issues are also difficult to predict and could materially adversely affect the adequacy of our claim and claim adjustment expense reserves and could lead to future reserve increases. In addition, our property and casualty insurance subsidiaries also have actual and potential exposures related to A&EP claims, which could result in material losses.
Further information on our dividends from subsidiaries is provided in Note M to the Consolidated Financial Statements included under Item 8. Commitments, Contingencies and Guarantees We have various commitments, contingencies and guarantees which arose in the ordinary course of business. The impact of these commitments, contingencies and guarantees should be considered when evaluating our liquidity and capital resources.
Further information on our dividends from subsidiaries is provided in Note N to the Consolidated Financial Statements included under Item 8. Commitments, Contingencies and Guarantees We have various commitments, contingencies and guarantees which arose in the ordinary course of business. The impact of these commitments, contingencies and guarantees should be considered when evaluating our liquidity and capital resources.
See the Reserves - Estimates and Uncertainties section of this MD&A for further information. (5) Does not include investment commitments of approximately $1,455 million related to future capital calls from various third-party limited partnerships, signed and accepted mortgage loan applications, and obligations related to private placement securities.
See the Reserves - Estimates and Uncertainties section of this MD&A for further information. (5) Does not include investment commitments of approximately $1,555 million related to future capital calls from various third-party limited partnerships, signed and accepted mortgage loan applications, and obligations related to private placement securities.
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. Our ability to pay dividends and other credit obligations is significantly dependent on receipt of dividends from our subsidiaries.
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. Our ability to pay dividends and satisfy our credit obligations is significantly dependent on receipt of dividends from our subsidiaries.
However, the inclusion of case reserves can lead to distortions if changes in case reserving have taken place, and the method typically requires analysis of the same factors that need to be reviewed for the loss ratio and incurred development methods. 24 Table of Con tents The frequency times severity method multiplies a projected number of ultimate claims by an estimated ultimate average loss for each accident or policy year to produce ultimate loss estimates.
However, the inclusion of case reserves can lead to distortions if changes in case reserving have taken place, and the method typically requires analysis of the same factors that need to be reviewed for the loss ratio and incurred development methods. 24 Table of Contents The frequency times severity method multiplies a projected number of ultimate claims by an estimated ultimate average loss for each accident or policy year to produce ultimate loss estimates.
Group Workers' Compensation Treaty We also purchased corporate Workers' Compensation catastrophe excess-of-loss treaty reinsurance for the period January 1, 2023 to January 1, 2024 providing $275 million of coverage for the accumulation of covered losses related to natural catastrophes above our per occurrence retention of $25 million.
Group Workers' Compensation Treaty We also purchased corporate Workers' Compensation catastrophe excess-of-loss treaty reinsurance for the period January 1, 2024 to January 1, 2025 providing $275 million of coverage for the accumulation of covered losses related to natural catastrophes above our per occurrence retention of $25 million.
The table below reflects the Insurer Financial Strength Ratings of CNA's insurance company subsidiaries issued by A.M. Best, Moody's, S&P and Fitch. The table also includes the ratings for CNAF's senior debt. December 31, 2022 Insurer Financial Strength Ratings Senior Debt Ratings A.M. Best A bbb+ Moody's A2 Baa2 S&P A+ A- Fitch A+ BBB+ A.M.
The table below reflects the Insurer Financial Strength Ratings of CNA's insurance company subsidiaries issued by A.M. Best, Moody's, S&P and Fitch. The table also includes the ratings for CNAF's senior debt. December 31, 2023 Insurer Financial Strength Ratings Senior Debt Ratings A.M. Best A bbb+ Moody's A2 Baa2 S&P A+ A- Fitch A+ BBB+ A.M.
If estimated workers' compensation claim cost inflation increases by 100 basis points for the entire period over which claim payments will be made, we estimate that our net reserves would increase by approximately $350 million.
If estimated workers' compensation claim cost inflation increases by 100 basis points for the entire period over which claim payments will be made, we estimate that our net reserves would increase by approximately $250 million.
Core income for our Property & Casualty Operations increased $56 million primarily due to improved underwriting results and higher net investment income from fixed income securities partially offset by lower investment income from limited partnership and common stock results.
Core income for our Property & Casualty Operations increased $56 million primarily due to improved underwriting results and higher net investment income from fixed income securities partially offset by lower investment income from limited partnerships and common stock.
See further discussion regarding how we manage our business and reconciliations of non-GAAP measures to the most comparable GAAP measures and other information in Note O to the Consolidated Financial Statements included under Item 8.
See further discussion regarding how we manage our business and reconciliations of non-GAAP measures to the most comparable GAAP measures and other information in Note P to the Consolidated Financial Statements included under Item 8.
If an act of terrorism or acts of terrorism result in covered losses exceeding the $100 billion annual industry aggregate limit, Congress would be responsible for determining how additional losses in excess of $100 billion will be paid. 30 Table of Con tents CONSOLIDATED OPERATIONS Results of Operations The following table includes the consolidated results of our operations including our financial measure, core income (loss).
If an act of terrorism or acts of terrorism result in covered losses exceeding the $100 billion annual industry aggregate limit, Congress would be responsible for determining how additional losses in excess of $100 billion will be paid. 30 Table of Contents CONSOLIDATED OPERATIONS Results of Operations The following table includes the consolidated results of our operations including our financial measure, core income (loss).
For Corporate & Other, the difference between our reserves and the actuarial point estimate is primarily driven by the potential tail volatility of run-off exposures. 25 Table of Con tents The key assumptions fundamental to the reserving process are often different for various reserve groups and accident or policy years.
For Corporate & Other, the difference between our reserves and the actuarial point estimate is primarily driven by the potential tail volatility of run-off exposures. 25 Table of Contents The key assumptions fundamental to the reserving process are often different for various reserve groups and accident or policy years.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2021 Compared with 2020 This section of this Form 10-K generally discusses 2022 and 2021 results and year-to-year comparisons between 2022 and 2021.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2022 Compared with 2021 This section of this Form 10-K generally discusses 2023 and 2022 results and year-to-year comparisons between 2023 and 2022.
Short-tail exposures include property, commercial automobile physical damage, marine, surety and 23 Table of Con tents warranty. Specialty, Commercial and International contain both long-tail and short-tail exposures. Corporate & Other contains run-off long-tail exposures. Various methods are used to project ultimate losses for both long-tail and short-tail exposures.
Short-tail exposures include property, commercial automobile physical damage, marine, surety and 23 Table of Contents warranty. Specialty, Commercial and International contain both long-tail and short-tail exposures. Corporate & Other contains run-off long-tail exposures. Various methods are used to project ultimate losses for both long-tail and short-tail exposures.
An allowance for uncollectible insurance receivables is recorded on the basis of periodic evaluations of balances due from insureds, currently as well as in the future, historical business default data, management's experience and current and forecast economic conditions.
An allowance for uncollectible insurance receivables is recorded on the basis of periodic 21 Table of Contents evaluations of balances due from insureds, currently as well as in the future, historical business default data, management's experience and current and forecast economic conditions.
If the estimated claim severity increases by 9%, we estimate that net reserves would increase by approximately $500 million. If the estimated claim severity decreases by 3%, we estimate that net reserves would decrease by approximately $150 million. Our net reserves for these products were approximately $5.3 billion as of December 31, 2022.
If the estimated claim severity increases by 9%, we estimate that net reserves would increase by approximately $500 million. If the estimated claim severity decreases by 3%, we estimate that net reserves would decrease by approximately $150 million. Our net reserves for these products were approximately $5.7 billion as of December 31, 2023.
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 51 Table of Con tents • mass tort claims, including those related to exposure to potentially harmful products or substances such as glyphosate, lead paint, PFAS and opioids; and claims arising from changes that repeal or weaken tort reforms, such as those related to abuse reviver statutes.
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 55 Table of Contents 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.
Regulatory and Legal 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 cyber security protocols (which continue to evolve in breadth, sophistication and maturity in response to an ever-evolving threat landscape), 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; and • regulatory and legal implications relating to the sophisticated cyber incident sustained by the Company in March 2021 that may arise.
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), 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 that may arise.
Establishing Property & Casualty Reserve Estimates In developing claim and claim adjustment expense (loss or losses) reserve estimates, our actuaries perform detailed reserve analyses that are staggered throughout the year. The data is organized at a reserve group level.
Establishing Property & Casualty Reserve Estimates In developing claim and claim adjustment expense reserve estimates, our actuaries perform detailed reserve analyses that are staggered throughout the year. The data is organized at a reserve group level.
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 2022, net cash used by investing activities was $1,512 million as compared with $1,228 million for 2021.
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 2023, net cash used by investing activities was $1,843 million as compared with $1,512 million for 2022.
Further information on reserves is provided in Note E to the Consolidated Financial Statements included under Item 8.
Further information on reserves is provided in Note E and F to the Consolidated Financial Statements included under Item 8.
Further information on our investment gains and losses as well as on our derivative financial instruments is set forth in Notes A and B to the Consolidated Financial Statements included under Item 8. 44 Table of Con tents Portfolio Quality The following table presents the estimated fair value and net unrealized gains (losses) of our fixed maturity securities by rating distribution.
Further information on our investment gains and losses as well as on our derivative financial instruments is set forth in Notes A and B to the Consolidated Financial Statements included under Item 8. 45 Table of Contents Portfolio Quality The following table presents the estimated fair value and net unrealized gains (losses) of our fixed maturity securities by rating distribution.
Core results for our Life & Group segment decreased $135 million, while core loss for our Corporate & Other segment improved $21 million. Catastrophe losses were $247 million in 2022 as compared with $397 million in 2021.
Core results for our Life & Group segment decreased $329 million, while core loss for our Corporate & Other segment decreased $21 million. Catastrophe losses were $247 million in 2022 as compared with $397 million in 2021.
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 32 Table of Con tents expenses.
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 33 Table of Contents unfavorable. Net prior year loss reserve development does not include the effect of any related acquisition expenses.
AAA rated securities included $0.3 billion and $1.7 billion of prefunded municipal bonds as of December 31, 2022 and 2021. The following table presents available-for-sale fixed maturity securities in a gross unrealized loss position by ratings distribution. December 31, 2022 (In millions) Estimated Fair Value Gross Unrealized Losses U.S.
AAA rated securities included $0.2 billion and $0.3 billion of prefunded municipal bonds as of December 31, 2023 and 2022. The following table presents available-for-sale fixed maturity securities in a gross unrealized loss position by ratings distribution. December 31, 2023 (In millions) Estimated Fair Value Gross Unrealized Losses U.S.
Under the current provisions of the program, in 2023, the federal government will reimburse 80% of our covered losses in excess of our applicable deductible up to a total industry program cap of $100 billion. Our deductible is based on eligible commercial property and casualty earned premiums for the preceding calendar year.
Under the current provisions of the program, in 2024, the federal government will reimburse 80% of our covered losses in excess of our applicable deductible up to a total industry program cap of $100 billion. Our deductible is based 29 Table of Contents on eligible commercial property and casualty earned premiums for the preceding calendar year.
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 2022, net cash provided by operating activities was $2,502 million as compared with $1,997 million for 2021.
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 2023, net cash provided by operating activities was $2,285 million as compared with $2,502 million for 2022.
Our forward-looking statements speak only as of the date of the filing of this Annual Report on Form 10-K 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 filing of this Annual Report on Form 10-K, even if our expectations or any related events or circumstances change. 52 Table of Con tents
Our forward-looking statements speak only as of the date of the filing of this Annual Report on Form 10-K 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 filing of this Annual Report on Form 10-K, even if our expectations or any related events or circumstances change. 56 Table of Contents
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. 46 Table of Con tents LIQUIDITY AND CAPITAL RESOURCES Cash Flows Our primary operating cash flow sources are premiums and investment income.
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. 50 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Cash Flows Our primary operating cash flow sources are premiums and investment income.
Based on 2022 earned premiums, our estimated deductible under the program is $1 billion for 2023.
Based on 2023 earned premiums, our estimated deductible under the program is $1.1 billion for 2024.
Further information on our reserves is provided in Note E to the Consolidated Financial Statements included under Item 8. 33 Table of Con tents Specialty Specialty provides management and professional liability and other coverages through property and casualty products and services using a network of brokers, independent agencies and managing general underwriters.
Further information on our reserves is provided in Note E and Note F to the Consolidated Financial Statements included under Item 8. 34 Table of Contents Specialty Specialty provides management and professional liability and other coverages through property and casualty products and services using a network of brokers, independent agencies and managing general underwriters.
An allowance for uncollectible reinsurance is recorded on the basis of periodic evaluations of balances due from reinsurers, reinsurer financial strength rating and solvency, industry 20 Table of Con tents experience and current and forecast economic conditions. Further information on our reinsurance receivables is in Note G to the Consolidated Financial Statements included under Item 8.
An allowance for uncollectible reinsurance is recorded on the basis of periodic evaluations of balances due from reinsurers, reinsurer financial strength rating and solvency, industry experience and current and forecast economic conditions. Further information on our reinsurance receivables is in Note H to the Consolidated Financial Statements included under Item 8.
Additionally, our insurance companies may issue contractual liability insurance policies or guaranteed asset protection reimbursement insurance policies to cover the liabilities of these service contracts issued by affiliated entities or third parties. 34 Table of Con tents The following table details the results of operations for Specialty.
Additionally, our insurance companies may issue contractual liability insurance policies or guaranteed asset protection reimbursement insurance policies to cover the liabilities of these service contracts issued by affiliated entities or third parties. 35 Table of Contents The following table details the results of operations for Specialty.
December 31 2022 2021 (In millions) Estimated Fair Value Net Unrealized Gains (Losses) Estimated Fair Value Net Unrealized Gains (Losses) U.S.
December 31 2023 2022 (In millions) Estimated Fair Value Net Unrealized Gains ( Losses) Estimated Fair Value Net Unrealized Gains ( Losses) U.S.
Further information on net prior year loss reserve development is in Note E to the Consolidated Financial Statements included under Item 8. 31 Table of Con tents SEGMENT RESULTS The following discusses the results of operations for our business segments.
Further information on net prior year loss reserve development is in Note E to the Consolidated Financial Statements included under Item 8. 32 Table of Contents SEGMENT RESULTS The following discusses the results of operations for our business segments.
If estimated workers' compensation claim cost inflation decreases by 100 basis points for the entire period over which claim payments will be made, we estimate that our net reserves would decrease by approximately $300 million. Our net reserves for workers' compensation were approximately $3.7 billion as of December 31, 2022.
If estimated workers' compensation claim cost inflation decreases by 100 basis points for the entire period over which claim payments will be made, we estimate that our net reserves would decrease by approximately $250 million. Our net reserves for workers' compensation were approximately $3.6 billion as of December 31, 2023.
TRIPRA provides a U.S. government backstop for insurance-related losses resulting from any “act of 29 Table of Con tents terrorism,” which is certified by the Secretary of Treasury in consultation with the Secretary of Homeland Security for losses that exceed a threshold of $200 million industry-wide for the calendar year 2023.
TRIPRA provides a U.S. government backstop for insurance-related losses resulting from any “act of terrorism,” which is certified by the Secretary of Treasury in consultation with the Secretary of Homeland Security for losses that exceed a threshold of $200 million industry-wide for the calendar year 2024.
If the estimated claim severity for general liability increases by 6%, we estimate that our net reserves would increase by approximately $200 million. If the estimated claim severity for general liability decreases by 3%, we estimate that our net reserves would decrease by approximately $100 million.
If the estimated claim severity for general liability increases by 6%, we estimate that our net reserves would increase by approximately $250 million. If the estimated claim severity for general liability decreases by 3%, we estimate that our net reserves would decrease by approximately $150 million.
Intersegment eliminations are also included in this segment. 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 any cumulative effects of changes in accounting guidance.
Intersegment eliminations are also included in this segment. 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.
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) to monitor our insurance operations.
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), calculated using GAAP financial results, to monitor our insurance operations.
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.
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.
The treaty has a term of June 1, 2022 to June 1, 2023 and provides coverage for the accumulation of covered losses from catastrophe occurrences above our per occurrence retention of $190 million up to $900 million for all losses other than earthquakes. Earthquakes are covered up to $1.0 billion.
The treaty has a term of June 1, 2023 to June 1, 2024 and provides coverage for the accumulation of covered losses from catastrophe occurrences above our per occurrence retention of $235 million up to $1.1 billion for all losses other than earthquakes. Earthquakes are covered up to $1.2 billion.
Net written premiums for Specialty increased $81 million in 2022 as compared with 2021. The increase in net earned premiums was consistent with the trend in net written premiums.
Net written premiums for Specialty increased $23 million in 2023 as compared with 2022. The increase in net earned premiums was consistent with the trend in net written premiums.
Additionally, Derivatives, short term and other for 2022 includes an $18 million non-economic net gain related to the coinsurance agreement on our legacy annuity business in our Life & Group segment and the associated funds withheld embedded derivative, which was novated in 2022.
Additionally, Derivatives, short term and other for 2022 included an $18 million non-economic net gain related to the novation of a coinsurance agreement on our legacy annuity business in our Life & Group segment and the associated funds withheld embedded derivative. The coinsurance agreement was novated in the fourth quarter of 2022.
Our net reserves for general liability were approximately $3.6 billion as of December 31, 2022. 26 Table of Con tents Given the factors described above, it is not possible to quantify precisely the ultimate exposure represented by claims and related litigation.
Our net reserves for general liability were approximately $4.2 billion as of December 31, 2023. 26 Table of Contents Given the factors described above, it is not possible to quantify precisely the ultimate exposure represented by claims and related litigation.
We reported catastrophe losses, net of reinsurance, of $247 million and $397 million for the years ended December 31, 2022 and 2021. Catastrophe losses for the years ended December 31, 2022 and 2021 were driven by severe weather related events, primarily Winter Storm Elliott and Hurricane Ian for 2022 and Hurricane Ida and Winter Storms Uri and Viola for 2021.
We reported catastrophe losses, net of reinsurance, of $236 million and $247 million for the years ended December 31, 2023 and 2022. Catastrophe losses for the years ended December 31, 2023 and 2022 were driven by severe weather related events, primarily Winter Storm Elliott and Hurricane Ian for 2022.
For 2022, net cash used by financing activities was $1,032 million as compared with $648 million for 2021.
For 2023, net cash used by financing activities was $577 million as compared with $1,032 million for 2022.
Further information on our commitments, contingencies and guarantees is provided in Notes A, B, E, F, H and L to the Consolidated Financial Statements included under Item 8. 48 Table of Con tents Ratings Ratings are an important factor in establishing the competitive position of insurance companies.
Further information on our commitments, contingencies and guarantees is provided in Notes A, B, E, F, G, I and M to the Consolidated Financial Statements included under Item 8. 52 Table of Contents Ratings Ratings are an important factor in establishing the competitive position of insurance companies.
Further information on our income taxes is in Note D to the Consolidated Financial Statements included under Item 8. 22 Table of Con tents RESERVES - ESTIMATES AND UNCERTAINTIES The level of reserves we maintain represents our best estimate, as of a particular point in time, of what the ultimate settlement and administration of claims will cost based on our assessment of facts and circumstances known at that time.
Further information on our process for evaluating impairments and expected credit losses is in Note A to the Consolidated Financial Statements included under Item 8. 22 Table of Contents RESERVES - ESTIMATES AND UNCERTAINTIES The level of reserves we maintain represents our best estimate, as of a particular point in time, of what the ultimate settlement and administration of claims will cost based on our assessment of facts and circumstances known at that time.
Years ended December 31 (In millions, except ratios, rate, renewal premium change and retention) 2022 2021 Gross written premiums $ 1,394 $ 1,297 Net written premiums 1,164 1,101 Net earned premiums 1,070 1,057 Underwriting gain 87 55 Net investment income 63 57 Core income 106 86 Other performance metrics: Loss ratio excluding catastrophes and development 58.5 % 59.0 % Effect of catastrophe impacts 2.2 2.6 Effect of development-related items (1.2) 0.1 Loss ratio 59.5 61.7 Expense ratio 32.3 33.1 Combined ratio 91.8 % 94.8 % Combined ratio excluding catastrophes and development 90.8 % 92.1 % Rate 6 % 13 % Renewal premium change 11 13 Retention 81 78 New business $ 319 $ 274 2022 Compared with 2021 Gross written premiums for International increased $97 million in 2022 as compared with 2021.
Years ended December 31 (In millions, except ratios, rate, renewal premium change and retention) 2023 2022 Gross written premiums $ 1,485 $ 1,394 Net written premiums 1,237 1,164 Net earned premiums 1,176 1,070 Underwriting gain 86 87 Net investment income 103 63 Core income 145 106 Other performance metrics: Loss ratio excluding catastrophes and development 57.8 % 58.5 % Effect of catastrophe impacts 2.5 2.2 Effect of development-related items 1.1 (1.2) Loss ratio 61.4 59.5 Expense ratio 31.2 32.3 Combined ratio 92.6 % 91.8 % Combined ratio excluding catastrophes and development 89.0 % 90.8 % Rate 3 % 6 % Renewal premium change 6 11 Retention 83 81 New business $ 302 $ 319 2023 Compared with 2022 Gross written premiums for International increased $91 million in 2023 as compared with 2022.
Underwriting gain (loss) is pretax and is calculated as net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and other insurance related expenses.
Underwriting gain (loss) is pretax and is calculated as net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and other insurance related expenses. Underlying underwriting gain (loss) represents underwriting results excluding catastrophe losses and development-related items.
We have an effective automatic 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. 47 Table of Con tents Common Stock Dividends Cash dividends of $3.60 per share on our common stock, including a special cash dividend of $2.00 per share, were declared and paid in 2022.
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. 51 Table of Contents Common Stock Dividends Cash dividends of $2.88 per share on our common stock, including a special cash dividend of $1.20 per share, were declared and paid in 2023.
The following discussion summarizes our most significant catastrophe reinsurance coverage at January 1, 2023. 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. Exposures underwritten through Hardy are excluded and covered under a separate treaty.
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. Exposures underwritten through Hardy are excluded and covered under a separate treaty.
Reinsurance and Insurance Receivables Exposure exists with respect to the collectibility of ceded property and casualty and life reinsurance to the extent that any reinsurer is unable to meet its obligations or disputes the liabilities we have ceded under reinsurance agreements.
The reserving process is discussed in further detail in the Reserves - Estimates and Uncertainties section below. Reinsurance and Insurance Receivables Exposure exists with respect to the collectibility of ceded property and casualty and life reinsurance to the extent that any reinsurer is unable to meet its obligations or disputes the liabilities we have ceded under reinsurance agreements.
December 31 (In millions) 2022 2021 Gross case reserves $ 3,156 $ 3,184 Gross IBNR reserves 6,239 5,706 Total gross carried claim and claim adjustment expense reserves $ 9,395 $ 8,890 Net case reserves $ 2,809 $ 2,850 Net IBNR reserves 5,621 5,215 Total net carried claim and claim adjustment expense reserves $ 8,430 $ 8,065 38 Table of Con tents International The International segment underwrites property and casualty coverages on a global basis through a branch operation in Canada, a European business consisting of insurance companies based in the U.K. and Luxembourg and Hardy, our Lloyd's syndicate.
December 31 (In millions) 2023 2022 Gross case reserves $ 3,291 $ 3,156 Gross IBNR reserves 6,812 6,239 Total gross carried claim and claim adjustment expense reserves $ 10,103 $ 9,395 Net case reserves $ 2,878 $ 2,809 Net IBNR reserves 6,143 5,621 Total net carried claim and claim adjustment expense reserves $ 9,021 $ 8,430 39 Table of Contents International The International segment underwrites property and casualty coverages on a global basis through a branch operation in Canada, a European business consisting of insurance companies based in the U.K. and Luxembourg and Hardy, our Lloyd's syndicate.
December 31 (In millions) 2022 2021 Gross case reserves $ 817 $ 859 Gross IBNR reserves 1,586 1,421 Total gross carried claim and claim adjustment expense reserves $ 2,403 $ 2,280 Net case reserves $ 686 $ 744 Net IBNR reserves 1,317 1,196 Total net carried claim and claim adjustment expense reserves $ 2,003 $ 1,940 40 Table of Con tents Life & Group The Life & Group segment includes our run-off long term care business as well as structured settlement obligations not funded by annuities related to certain property and casualty claimants.
December 31 (In millions) 2023 2022 Gross case reserves $ 864 $ 817 Gross IBNR reserves 1,845 1,586 Total gross carried claim and claim adjustment expense reserves $ 2,709 $ 2,403 Net case reserves $ 708 $ 686 Net IBNR reserves 1,568 1,317 Total net carried claim and claim adjustment expense reserves $ 2,276 $ 2,003 41 Table of Contents Life & Group The Life & Group segment includes our run-off long-term care business as well as structured settlement obligations not funded by annuities related to certain property and casualty claimants.
Short-duration contracts are primarily related to property and casualty insurance policies where the reserving process is based on actuarial estimates of the amount of loss, including amounts for known and unknown claims.
Short-duration contracts are primarily related to property and casualty insurance policies where the reserving process is based on actuarial estimates of the amount of loss, including amounts for known and unknown claims. Long-duration contracts are primarily related to long-term care policies and the reserves are recorded as Future policy benefits reserves as discussed below.
Best, Moody’s, S&P and Fitch maintain stable outlooks across the Company’s Financial Strength and Senior Debt Ratings. CNA Insurance Company Limited and CNA Insurance Company (Europe) S.A. are included within S&P’s Insurer Financial Strength Rating for the Company. Syndicate 382 benefits from the Financial Strength Rating of Lloyd’s, which is rated A+ by S&P and A by A.M.
Best, Moody’s, S&P and Fitch maintain stable outlooks across the Company’s Financial Strength and Senior Debt Ratings. CNA Insurance Company Limited and CNA Insurance Company (Europe) S.A. are included within S&P’s Insurer Financial Strength Rating for the Company.
Years ended December 31 (In millions, except ratios, rate, renewal premium change and retention) 2022 2021 Gross written premiums $ 5,170 $ 4,445 Gross written premiums excluding third-party captives 5,056 4,334 Net written premiums 4,193 3,595 Net earned premiums 3,923 3,552 Underwriting gain (loss) 106 (112) Net investment income 488 624 Core income 466 394 Other performance metrics: Loss ratio excluding catastrophes and development 61.5 % 61.0 % Effect of catastrophe impacts 5.6 10.0 Effect of development-related items (0.7) 0.5 Loss ratio 66.4 71.5 Expense ratio 30.4 31.1 Dividend ratio 0.5 0.5 Combined ratio 97.3 % 103.1 % Combined ratio excluding catastrophes and development 92.4 % 92.6 % Rate 5 % 7 % Renewal premium change 8 11 Retention 86 82 New business $ 1,009 $ 843 2022 Compared with 2021 Gross written premiums for Commercial increased $725 million in 2022 as compared with 2021 driven by higher new business and retention.
Years ended December 31 (In millions, except ratios, rate, renewal premium change and retention) 2023 2022 Gross written premiums $ 6,120 $ 5,170 Gross written premiums excluding third-party captives 5,994 5,056 Net written premiums 4,880 4,193 Net earned premiums 4,547 3,923 Underwriting gain 182 106 Net investment income 645 488 Core income 652 466 Other performance metrics: Loss ratio excluding catastrophes and development 61.5 % 61.5 % Effect of catastrophe impacts 4.5 5.6 Effect of development-related items (0.1) (0.7) Loss ratio 65.9 66.4 Expense ratio 29.6 30.4 Dividend ratio 0.5 0.5 Combined ratio 96.0 % 97.3 % Combined ratio excluding catastrophes and development 91.6 % 92.4 % Rate 7 % 5 % Renewal premium change 10 8 Retention 84 86 New business $ 1,297 $ 1,009 2023 Compared with 2022 Gross written premiums for Commercial increased $950 million in 2023 as compared with 2022 driven by higher new business and rate.
December 31 (In millions) 2022 2021 Gross case reserves $ 1,529 $ 1,578 Gross IBNR reserves 5,349 4,855 Total gross carried claim and claim adjustment expense reserves $ 6,878 $ 6,433 Net case reserves $ 1,310 $ 1,338 Net IBNR reserves 4,253 3,927 Total net carried claim and claim adjustment expense reserves $ 5,563 $ 5,265 36 Table of Con tents Commercial Commercial works with a network of brokers and independent agents to market a broad range of property and casualty insurance products to all types of insureds targeting small business, construction, middle markets and other commercial customers.
December 31 (In millions) 2023 2022 Gross case reserves $ 1,604 $ 1,529 Gross IBNR reserves 5,527 5,349 Total gross carried claim and claim adjustment expense reserves $ 7,131 $ 6,878 Net case reserves $ 1,392 $ 1,310 Net IBNR reserves 4,524 4,253 Total net carried claim and claim adjustment expense reserves $ 5,916 $ 5,563 37 Table of Contents Commercial Commercial works with a network of brokers and independent agents to market a broad range of property and casualty insurance products to all types of insureds targeting small business, construction, middle markets and other commercial customers.
Terrorism Risk Insurance Program Reauthorization Act of 2019 (TRIPRA) Our principal reinsurance protection against large-scale terrorist attacks, including nuclear, biological, chemical or radiological attacks, is the coverage currently provided through TRIPRA which runs through the end of 2027.
One full reinstatement is available for the first $275 million above the retention, regardless of the covered peril. Terrorism Risk Insurance Program Reauthorization Act of 2019 Our principal reinsurance protection against large-scale terrorist attacks, including nuclear, biological, chemical or radiological attacks, is the coverage currently provided through TRIPRA which runs through the end of 2027.
Overview 20 Critical Accounting Estimates 20 Reserves - Estimates and Uncertainties 23 Catastrophes and Related Reinsurance 29 Consolidated Operations 31 Segment Results 32 Specialty 34 Commercial 37 International 39 Life & Group 41 Corporate & Other 43 Pension Plan Impact on 2023 Results 43 Investments 44 Net Investment Income 44 Net Investment Gains (Losses) 44 Portfolio Quality 45 Duration 46 Liquidity and Capital Resources 47 Cash Flows 47 Liquidity 47 Common Stock Dividends 48 Commitments, Contingencies and Guarantees 48 Ratings 49 Accounting Standards Updates 50 Forward-Looking Statements 50 19 Table of Con tents OVERVIEW The following discussion should be read in conjunction with Part I, Item 1A Risk Factors and Part II, Item 8 Financial Statements and Supplementary Data of this Form 10-K.
Overview 21 Critical Accounting Estimates 21 Reserves - Estimates and Uncertainties 23 Catastrophes and Related Reinsurance 29 Consolidated Operations 31 Segment Results 33 Specialty 35 Commercial 38 International 40 Life & Group 42 Corporate & Other 44 Investments 45 Net Investment Income 45 Net Investment Gains (Losses) 45 Portfolio Quality 46 Duration 50 Liquidity and Capital Resources 51 Cash Flows 51 Liquidity 51 Common Stock Dividends 52 Commitments, Contingencies and Guarantees 52 Ratings 53 Accounting Standards Updates 54 Recent Tax Legislation 54 Forward-Looking Statements 54 20 Table of Contents OVERVIEW The following discussion should be read in conjunction with Part I, Item 1A Risk Factors and Part II, Item 8 Financial Statements and Supplementary Data of this Form 10-K.
If actual experience differs from the estimates made by management in determining the allowances for uncollectible reinsurance and insurance receivables, net receivables as reflected on our Consolidated Balance Sheets may not be collected. Therefore, our results of operations, financial condition or equity could be materially adversely affected.
If actual experience differs from the estimates made by management in determining the allowances for uncollectible reinsurance and insurance receivables, net receivables as reflected on our Consolidated Balance Sheets may not be collected.
Favorable net prior year loss reserve development of $40 million and $45 million was recorded in 2022 and 2021. Further information on net prior year loss reserve development is in Note E to the Consolidated Financial Statements included under Item 8. 35 Table of Con tents The following table summarizes the gross and net carried reserves for Specialty.
Further information on net prior year loss reserve development is in Note E to the Consolidated Financial Statements included under Item 8. 36 Table of Contents The following table summarizes the gross and net carried reserves for Specialty.
The combined ratio is the sum of the loss, expense and dividend ratios. The underlying combined ratio is the sum of the underlying loss ratio, the expense ratio and the dividend ratio. In addition, we also utilize renewal premium change, rate, retention and new business in evaluating operating trends.
The underlying combined ratio is the sum of the underlying loss ratio, the expense ratio and the dividend ratio. 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.
Years ended December 31 (In millions, except ratios, rate, renewal premium change and retention) 2022 2021 Gross written premiums $ 7,514 $ 7,665 Gross written premiums excluding third-party captives 3,814 3,672 Net written premiums 3,306 3,225 Net earned premiums 3,203 3,076 Underwriting gain 366 347 Net investment income 431 497 Core income 668 704 Other performance metrics: Loss ratio excluding catastrophes and development 58.6 % 59.1 % Effect of catastrophe impacts 0.1 0.4 Effect of development-related items (1.3) (1.4) Loss ratio 57.4 58.1 Expense ratio 31.0 30.5 Dividend ratio 0.2 0.1 Combined ratio 88.6 % 88.7 % Combined ratio excluding catastrophes and development 89.8 % 89.7 % Rate 6 % 11 % Renewal premium change 7 12 Retention 86 83 New business $ 548 $ 551 2022 Compared with 2021 Gross written premiums, excluding third-party captives, for Specialty increased $142 million in 2022 as compared with 2021 driven by retention and rate.
Years ended December 31 (In millions, except ratios, rate, renewal premium change and retention) 2023 2022 Gross written premiums $ 7,113 $ 7,514 Gross written premiums excluding third-party captives 3,800 3,814 Net written premiums 3,329 3,306 Net earned premiums 3,307 3,203 Underwriting gain 317 366 Net investment income 558 431 Core income 708 668 Other performance metrics: Loss ratio excluding catastrophes and development 58.5 % 58.6 % Effect of catastrophe impacts — 0.1 Effect of development-related items (0.3) (1.3) Loss ratio 58.2 57.4 Expense ratio 32.0 31.0 Dividend ratio 0.2 0.2 Combined ratio 90.4 % 88.6 % Combined ratio excluding catastrophes and development 90.7 % 89.8 % Rate — % 6 % Renewal premium change 1 7 Retention 88 86 New business $ 481 $ 548 2023 Compared with 2022 Gross written premiums, excluding third-party captives, for Specialty decreased $14 million in 2023 as compared with 2022 driven by lower new business partially offset by strong retention.
Favorable net prior year loss reserve development of $13 million was recorded in 2022 as compared with unfavorable net prior year loss reserve development of $2 million in 2021. Further information on net prior year loss reserve development is in Note E to the Consolidated Financial Statements included under Item 8.
Further information on net prior year loss reserve development is in Note E to the Consolidated Financial Statements included under Item 8. 31 Table of Contents 2022 Compared with 2021 Core income decreased $252 million in 2022 as compared with 2021.
See the Reserves - Estimates and Uncertainties section of this MD&A for further information. (4) The Future policy benefit reserves reflected above are not discounted and represent our estimate of the ultimate amount and timing of the settlement of benefits net of expected premiums, and are based on our assessment of facts and circumstances known as of December 31, 2022.
(4) The Future policy benefit reserves reflected above are not discounted, include maintenance costs, represent our estimate of the ultimate amount and timing of the settlement of benefits net of expected premiums, and are based on our assessment of facts and circumstances known as of December 31, 2023.
The treaty also provides $600 million of coverage for the accumulation of covered losses related to terrorism events above our retention of $25 million. Of this $600 million in Terrorism coverage, $200 million is provided for nuclear, biological chemical and radiation events. One full reinstatement is available for the first $275 million above the retention, regardless of the covered peril.
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.
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.
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.
(2) The lease obligations reflected above are not discounted. (3) The Claim and claim adjustment expense reserves reflected above are not discounted and represent our estimate of the amount and timing of the ultimate settlement and administration of gross claims based on our assessment of facts and circumstances known as of December 31, 2022.
(3) The Claim and claim adjustment expense reserves reflected above are not discounted and represent our estimate of the amount and timing of the ultimate settlement and administration of gross claims based on our assessment of facts and circumstances known as of December 31, 2023. See the Reserves - Estimates and Uncertainties section of this MD&A for further information.
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 our long term care policies, our actuaries perform a detailed claim reserve review on an annual basis.
Future policy benefit reserves for long-term care policies relate to policyholders that are currently receiving benefits, including claims that have been incurred but are not yet reported, as well as policyholders that are not yet receiving benefits. In developing the future policy benefit reserves, our actuaries perform a reserve review on an annual basis.
Generally, policyholders must continue to make periodic premium payments to keep the policy in force and we have the ability to increase policy premiums, subject to state regulatory approval. We maintain both claim and claim adjustment expense reserves as well as future policy benefit reserves for policyholder benefits for our Life & Group segment.
Generally, policyholders must continue to make periodic premium payments to keep the policy in force and we have the ability to increase policy premiums, subject to state regulatory approval. We maintain future policy benefit reserves for our long-term care policies.
On February 3, 2023, our Board of Directors declared a quarterly cash dividend of $0.42 per share and a special cash dividend of $1.20 per share, payable March 9, 2023 to stockholders of record on February 21, 2023.
On February 2, 2024, our Board of Directors declared a quarterly cash dividend of $0.44 per share and a special cash dividend of $2.00 per share, payable March 7, 2024 to stockholders of record on February 20, 2024.
Although such hypothetical revisions are not currently required or anticipated, we believe they could occur based on past variances in experience and our expectations of the ranges of future experience that could reasonably occur.
Although such hypothetical revisions are not currently required or anticipated, we believe they could occur based on past variances in experience and our expectations of the ranges of future experience that could reasonably occur. Any actual adjustment would be dependent on the specific policies affected and, therefore, may differ from the estimates summarized below.
The impact of each sensitivity is discrete and does not reflect the impact one factor may have on another or the mitigating impact from management actions, which may include additional future premium rate increases.
We have assumed that revisions to such assumptions would occur in each policy type, age and duration within each policy group. The impact of each sensitivity is discrete and does not reflect the impact one factor may have on another or the mitigating impact from management actions, which may include additional future premium rate increases.

… 137 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+3 added−1 removed10 unchanged
Biggest changeMarket Risk Scenario 2 December 31, 2022 Increase (Decrease) (In millions) Estimated Fair Value Interest Rate Risk Foreign Currency Risk Equity Price Risk Assets: Fixed maturity securities (1) $ 37,627 $ (3,902) $ (532) $ — Equity securities 674 (26) — (46) Limited partnership investments 1,926 — — (193) Other invested assets 78 — (14) — Mortgage loans (2) 973 (57) — — Short term investments 1,832 (3) (41) — Total assets 43,110 (3,988) (587) (239) Derivative financial instruments, included in Other liabilities (1) — 2 — Total $ 43,109 $ (3,988) $ (585) $ (239) Short term debt (3) $ 248 $ (3) $ — $ — Long term debt (3) 2,349 (138) — — Total debt $ 2,597 $ (141) $ — $ — December 31, 2021 Increase (Decrease) (In millions) Estimated Fair Value Interest Rate Risk Foreign Currency Risk Equity Price Risk Assets: Fixed maturity securities (1) $ 44,380 $ (4,590) $ (530) $ — Equity securities 1,035 (42) (1) (66) Limited partnership investments 1,859 — — (186) Other invested assets 91 — (17) — Mortgage loans (2) 1,018 (65) — — Short term investments 1,990 (4) (37) — Total assets 50,373 (4,701) (585) (252) Derivative financial instruments, included in Other liabilities (12) 53 — — Total $ 50,361 $ (4,648) $ (585) $ (252) Short term debt (3) $ — $ — $ — $ — Long term debt (3) 2,978 (202) — — Total debt $ 2,978 $ (202) $ — $ — (1) Shadow Adjustments related to Life & Group reserves would reduce the impact of the decrease in fixed maturity securities.
Biggest changeMarket Risk Scenario 2 December 31, 2023 Increase (Decrease) (In millions) Estimated Fair Value Interest Rate Risk Foreign Currency Risk Equity Price Risk Assets: Fixed maturity securities $ 40,425 $ (4,166) $ (638) $ — Equity securities 683 (22) — (48) Limited partnership investments 2,174 — (1) (217) Other invested assets 80 — (15) — Mortgage loans (1) 997 (51) — — Short-term investments 2,165 (4) (38) — Total assets 46,524 (4,243) (692) (265) Derivative financial instruments, included in Other liabilities (1) — 3 — Total $ 46,523 $ (4,243) $ (689) $ (265) Short-term debt (2) $ 546 $ (3) $ — $ — Long-term debt (2) 2,385 (165) — — Total debt $ 2,931 $ (168) $ — $ — December 31, 2022 Increase (Decrease) (In millions) Estimated Fair Value Interest Rate Risk Foreign Currency Risk Equity Price Risk Assets: Fixed maturity securities $ 37,627 $ (3,902) $ (532) $ — Equity securities 674 (26) — (46) Limited partnership investments 1,926 — — (193) Other invested assets 78 — (14) — Mortgage loans (1) 973 (57) — — Short-term investments 1,832 (3) (41) — Total assets 43,110 (3,988) (587) (239) Derivative financial instruments, included in Other liabilities (1) — 2 — Total $ 43,109 $ (3,988) $ (585) $ (239) Short-term debt (2) $ 248 $ (3) $ — $ — Long-term debt (2) 2,349 (138) — — Total debt $ 2,597 $ (141) $ — $ — (1) Reported at amortized value, less allowance for credit loss, in the Consolidated Balance Sheets included under Item 8 and not adjusted for fair value changes.
Equity price risk was measured assuming an instantaneous 10% and 25% decline in the S&P 500 from its level as of December 31, 2022 and 2021, with all other variables held constant. Our common stock holdings, which are included in equity securities, were assumed to be highly and positively correlated with the S&P 500 index.
Equity price risk was measured assuming an instantaneous 10% and 25% decline in the S&P 500 from its level as of December 31, 2023 and 2022, with all other variables held constant. Our common stock holdings, which are included in equity securities, were assumed to be highly and positively correlated with the S&P 500 index.
The sensitivity analysis estimates the decline in the fair value of our interest sensitive assets and liabilities that were held as of December 31, 2022 and 2021 due to an instantaneous change in the yield of the security at the end of the period of 100 and 150 basis points, with all other variables held constant.
The sensitivity analysis estimates the decline in the fair value of our interest sensitive assets and liabilities that were held as of December 31, 2023 and 2022 due to an instantaneous change in the yield of the security at the end of the period of 100 and 150 basis points, with all other variables held constant.
The sensitivity analysis also assumes an instantaneous 10% and 20% decline in the foreign currency exchange rates versus the United States dollar from their levels as of December 31, 2022 and 2021, with all other variables held constant.
The sensitivity analysis also assumes an instantaneous 10% and 20% decline in the foreign currency exchange rates versus the United States dollar from their levels as of December 31, 2023 and 2022, with all other variables held constant.
Sensitivity Analysis We monitor our sensitivity to interest rate changes by revaluing financial assets and liabilities using a variety of different interest rates. The Company uses duration and convexity at the security level to estimate the change in fair value that would result from a change in each security's yield.
Sensitivity Analysis We monitor our sensitivity to interest rate changes by revaluing financial assets and liabilities using a variety of different interest rates. We use duration and convexity at the security level to estimate the change in fair value that would result from a change in each security's yield.
For our limited partnership holdings, the estimated change in value was largely derived from a beta analysis calculation of historical experience of our portfolio and indices with similar strategies relative to the S&P 500. 53 Table of Con tents The following tables present the estimated effects on the fair value of our financial instruments as of December 31, 2022 and 2021 due to an increase in yield rates of 100 basis points, a 10% decline in foreign currency exchange rates and a 10% decline in the S&P 500, with all other variables held constant.
For our limited partnership holdings, the estimated change in value was largely derived from a beta analysis calculation of historical experience of our portfolio and indices with similar strategies relative to the S&P 500. 57 Table of Contents The following tables present the estimated effects on the fair value of our financial instruments as of December 31, 2023 and 2022 due to an increase in yield rates of 100 basis points, a 10% decline in foreign currency exchange rates and a 10% decline in the S&P 500, with all other variables held constant.
(3) Reported at amortized value in the Consolidated Balance Sheets included under Item 8 and not adjusted for fair value changes. 54 Table of Con tents The following tables present the estimated effects on the fair value of our financial instruments as of December 31, 2022 and 2021 due to an increase in yield rates of 150 basis points, a 20% decline in foreign currency exchange rates and a 25% decline in the S&P 500, with all other variables held constant.
(2) Reported at amortized value in the Consolidated Balance Sheets included under Item 8 and not adjusted for fair value changes. 58 Table of Contents The following tables present the estimated effects on the fair value of our financial instruments as of December 31, 2023 and 2022 due to an increase in yield rates of 150 basis points, a 20% decline in foreign currency exchange rates and a 25% decline in the S&P 500, with all other variables held constant.
Market Risk Scenario 1 December 31, 2022 Increase (Decrease) (In millions) Estimated Fair Value Interest Rate Risk Foreign Currency Risk Equity Price Risk Assets: Fixed maturity securities (1) $ 37,627 $ (2,603) $ (266) $ — Equity securities 674 (18) — (18) Limited partnership investments 1,926 — — (77) Other invested assets 78 — (7) — Mortgage loans (2) 973 (38) — — Short term investments 1,832 (2) (21) — Total assets 43,110 (2,661) (294) (95) Derivative financial instruments, included in Other liabilities (1) — 1 — Total $ 43,109 $ (2,661) $ (293) $ (95) Short term debt (3) $ 248 $ (2) $ — $ — Long term debt (3) 2,349 (92) — — Total debt $ 2,597 $ (94) $ — $ — December 31, 2021 Increase (Decrease) (In millions) Estimated Fair Value Interest Rate Risk Foreign Currency Risk Equity Price Risk Assets: Fixed maturity securities (1) $ 44,380 $ (3,061) $ (265) $ — Equity securities 1,035 (28) (1) (27) Limited partnership investments 1,859 — — (74) Other invested assets 91 — (8) — Mortgage loans (2) 1,018 (44) — — Short term investments 1,990 (3) (19) — Total assets 50,373 (3,136) (293) (101) Derivative financial instruments, included in Other liabilities (12) 35 — — Total $ 50,361 $ (3,101) $ (293) $ (101) Short term debt (3) $ — $ — $ — $ — Long term debt (3) 2,978 (134) — — Total debt $ 2,978 $ (134) $ — $ — (1) Shadow Adjustments related to Life & Group reserves would reduce the impact of the decrease in fixed maturity securities.
Market Risk Scenario 1 December 31, 2023 Increase (Decrease) (In millions) Estimated Fair Value Interest Rate Risk Foreign Currency Risk Equity Price Risk Assets: Fixed maturity securities $ 40,425 $ (2,779) $ (319) $ — Equity securities 683 (14) — (19) Limited partnership investments 2,174 — (1) (87) Other invested assets 80 — (7) — Mortgage loans (1) 997 (34) — — Short-term investments 2,165 (2) (19) — Total assets 46,524 (2,829) (346) (106) Derivative financial instruments, included in Other liabilities (1) — 1 — Total $ 46,523 $ (2,829) $ (345) $ (106) Short-term debt (2) $ 546 $ (2) $ — $ — Long-term debt (2) 2,385 (110) — — Total debt $ 2,931 $ (112) $ — $ — December 31, 2022 Increase (Decrease) (In millions) Estimated Fair Value Interest Rate Risk Foreign Currency Risk Equity Price Risk Assets: Fixed maturity securities $ 37,627 $ (2,603) $ (266) $ — Equity securities 674 (18) — (18) Limited partnership investments 1,926 — — (77) Other invested assets 78 — (7) — Mortgage loans (1) 973 (38) — — Short-term investments 1,832 (2) (21) — Total assets 43,110 (2,661) (294) (95) Derivative financial instruments, included in Other liabilities (1) — 1 — Total $ 43,109 $ (2,661) $ (293) $ (95) Short-term debt (2) $ 248 $ (2) $ — $ — Long-term debt (2) 2,349 (92) — — Total debt $ 2,597 $ (94) $ — $ — (1) Reported at amortized value, less allowance for credit loss, in the Consolidated Balance Sheets included under Item 8 and not adjusted for fair value changes.
(2) Reported at amortized value, less allowance for uncollectible receivables, in the Consolidated Balance Sheets included under Item 8 and not adjusted for fair value changes.
(2) Reported at amortized value in the Consolidated Balance Sheets included under Item 8 and not adjusted for fair value changes. Changes in discount rates used to measure our liability for future policyholder benefits (LFPB) would reduce the impact of the decrease in Fixed maturity securities within Other comprehensive income.
Removed
(2) Reported at amortized value, less allowance for uncollectible receivables, in the Consolidated Balance Sheets included under Item 8 and not adjusted for fair value changes. (3) Reported at amortized value in the Consolidated Balance Sheets included under Item 8 and not adjusted for fair value changes. 55 Table of Con tents
Added
The carrying value of the LFPB was $14.0 billion and $13.5 billion as of December 31, 2023 and 2022. The estimated decrease in the carrying value of the LFPB as of December 31, 2023 and 2022 due to an increase in yield rates of 100 basis points was $1.5 billion.
Added
The estimated decrease in the carrying value of the LFPB as of December 31, 2023 and 2022 due to an increase in yield rates of 150 basis points was $2.1 billion.
Added
We have estimated the change in the carrying value of the LFPB due to interest rate changes by discounting the expected future cash flows using different interest rate scenarios. 59 Table of Contents

Other CNA 10-K year-over-year comparisons