CNA FINANCIAL CORP, 10-K filed on 2/21/2012
Annual Report
Document and Entity Information (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Feb. 17, 2012
Jun. 30, 2011
Document Information [Line Items]
 
 
 
Entity Registrant Name
CNA FINANCIAL CORP 
 
 
Entity Central Index Key
0000021175 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2011 
 
 
Document Fiscal Year Focus
2011 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
269,334,584 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 770 
Consolidated Statements of Operations (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Revenues
 
 
 
Net earned premiums
$ 6,603 
$ 6,515 
$ 6,721 
Net investment income
2,054 
2,316 
2,320 
Net realized investment gains (losses), net of participating policyholders’ interests:
 
 
 
Other-than-temporary impairment losses
(175)
(254)
(1,657)
Portion of other-than-temporary impairments recognized in Other comprehensive income (loss)
(41)
22 
305 
Net other-than-temporary impairment losses recognized in earnings
(216)
(232)
(1,352)
Other net realized investment gains (losses)
212 
318 
495 
Net realized investment gains (losses), net of participating policyholders’ interests
(4)
86 
(857)
Other revenues
294 
292 
288 
Total revenues
8,947 
9,209 
8,472 
Claims, Benefits and Expenses
 
 
 
Insurance claims and policyholders’ benefits
5,489 
4,985 
5,290 
Amortization of deferred acquisition costs
1,410 
1,387 
1,417 
Other operating expenses
996 
1,568 
1,097 
Interest
175 
157 
128 
Total claims, benefits and expenses
8,070 
8,097 
7,932 
Income (loss) from continuing operations before income tax
877 
1,112 
540 
Income tax (expense) benefit
(246)
(333)
(57)
Income (loss) from continuing operations, net of tax
631 
779 
483 
Income (loss) from discontinued operations, net of income tax (expense) benefit of $0, $0 and $0
(1)
(21)
(2)
Net income (loss)
630 
758 
481 
Net (income) loss attributable to noncontrolling interests
(16)
(68)
(62)
Net income (loss) attributable to CNA
614 
690 
419 
Income (Loss) Attributable to Common Stockholders
 
 
 
Income (loss) from continuing operations attributable to CNA
615 
711 
421 
Dividends on 2008 Senior Preferred
   
(76)
(122)
Income (loss) from continuing operations attributable to CNA common stockholders
615 
635 
299 
Income (loss) from discontinued operations attributable to CNA common stockholders
(1)
(21)
(2)
Income (loss) attributable to CNA common stockholders
$ 614 
$ 614 
$ 297 
Basic and Diluted Earnings (Loss) Per Share Attributable to CNA Common Stockholders
 
 
 
Income (loss) from continuing operations attributable to CNA common stockholders
$ 2.28 
$ 2.36 
$ 1.11 
Income (loss) from discontinued operations attributable to CNA common stockholders
   
$ (0.08)
$ (0.01)
Basic and diluted earnings (loss) per share attributable to CNA common stockholders
$ 2.28 
$ 2.28 
$ 1.10 
Weighted Average Outstanding Common Stock and Common Stock Equivalents
 
 
 
Basic
269.3 
269.1 
269.0 
Diluted
269.6 
269.5 
269.1 
Consolidated Statements of Operations Parentheticals (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Income tax (expense) benefit on discontinued operations
$ 0 
$ 0 
$ 0 
Consolidated Statements of Comprehensive Income (Loss) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Changes in:
 
 
 
Net unrealized gains (losses) on investments with other-than-temporary impairments
$ 10 
$ 86 
$ (95)
Tax on net unrealized gains (losses) on investments with other-than-temporary impairments
(6)
(47)
52 
Net unrealized gains (losses) on other investments
362 
505 
3,741 
Tax on net unrealized gains (losses) on other investments
(198)
(269)
(2,024)
Net unrealized gains (losses) on investments
372 
591 
3,646 
Tax on net unrealized gains (losses) on investments
204 
316 
1,972 
Net unrealized gains (losses) on discontinued operations and other
(1)
9 
9 
Tax on net unrealized gains (losses) on discontinued operations and other
   
(2)
(2)
Foreign currency translation adjustment
(15)
49 
117 
Pension and postretirement benefits
(208)
35 
15 
Tax on pension and postretirement benefits
111 
(18)
(8)
Allocation to participating policyholders
(7)
(23)
(40)
Other comprehensive income (loss), net of tax
141 
661 
3,747 
Tax on other comprehensive income (loss)
(93)
(336)
(1,982)
Net income (loss)
630 
758 
481 
Comprehensive income (loss)
771 
1,419 
4,228 
Changes in:
 
 
 
Net unrealized (gains) losses on investments attributable to noncontrolling interests
(8)
(10)
(24)
Pension and postretirement benefit attributable to noncontrolling interests
   
(2)
(2)
Other comprehensive (income) loss attributable to noncontrolling interests
(8)
(12)
(26)
Net (income) loss attributable to noncontrolling interests
(16)
(68)
(62)
Comprehensive (income) loss attributable to noncontrolling interests
(24)
(80)
(88)
Total comprehensive income (loss) attributable to CNA
$ 747 
$ 1,339 
$ 4,140 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Assets
 
 
Fixed maturity securities at fair value (amortized cost of $37,345 and $36,427)
$ 39,937 
$ 37,577 
Equity securities at fair value (cost of $288 and $422)
304 
440 
Limited partnership investments
2,245 
2,309 
Other invested assets
12 
27 
Mortgage loans
234 
87 
Short term investments
1,641 
2,215 
Total investments
44,373 
42,655 
Cash
75 
77 
Reinsurance receivables (less allowance for uncollectible receivables of $91 and $125)
6,001 
7,079 
Insurance receivables (less allowance for uncollectible receivables of $112 and $160)
1,614 
1,557 
Accrued investment income
436 
425 
Deferred acquisition costs
658 
1,079 
Deferred income taxes
378 
667 
Property and equipment at cost (less accumulated depreciation of $420 and $543)
309 
333 
Goodwill and other intangible assets
139 
141 
Other assets (includes $130 and $139 due from Loews Corporation)
779 
868 
Separate account business
417 
450 
Total assets
55,179 
55,331 
Liabilities and Equity
 
 
Claim and claim adjustment expenses
24,303 
25,496 
Unearned premiums
3,250 
3,203 
Future policy benefits
9,810 
8,718 
Policyholders’ funds
191 
173 
Participating policyholders’ funds
68 
60 
Short term debt
83 
400 
Long term debt
2,525 
2,251 
Other liabilities
2,975 
3,056 
Separate account business
417 
450 
Total liabilities
43,622 
43,807 
Commitments and contingencies (Notes B, G and K)
   
   
Equity:
 
 
Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 269,274,900 and 269,139,198 shares outstanding)
683 
683 
Additional paid-in capital
2,146 
2,200 
Retained earnings
8,382 
7,876 
Accumulated other comprehensive income (loss)
470 
326 
Treasury stock (3,765,343 and 3,901,045 shares), at cost
(102)
(105)
Notes receivable for the issuance of common stock
(22)
(26)
Total CNA stockholders’ equity
11,557 
10,954 
Noncontrolling interests
   
570 
Total equity
11,557 
11,524 
Total liabilities and equity
$ 55,179 
$ 55,331 
Consolidated Balance Sheet Parentheticals (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Fixed maturity securities at amortized cost
$ 37,345 
$ 36,427 
Equity securities at cost
288 
422 
Allowance for uncollectible reinsurance receivables
91 
125 
Allowance for uncollectible insurance receivables
112 
160 
Accumulated depreciation on property and equipment
420 
543 
Other assets receivable from Loews Corporation
$ 130 
$ 139 
Common stock, par value
$ 2.50 
$ 2.50 
Common stock, shares authorized
500,000,000 
500,000,000 
Common stock, shares issued
273,040,243 
273,040,243 
Common stock, shares outstanding
269,274,900 
269,139,198 
Treasury stock, shares
3,765,343 
3,901,045 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Cash Flows from Operating Activities
 
 
 
Net income (loss)
$ 630 
$ 758 
$ 481 
Adjustments to reconcile net income (loss) to net cash flows provided (used) by operating activities:
 
 
 
(Income) loss from discontinued operations
1 
21 
2 
(Gain) loss on disposal of property and equipment
9 
   
14 
Deferred income tax expense (benefit)
192 
327 
177 
Trading portfolio activity
1 
153 
(164)
Net realized investment (gains) losses, net of participating policyholders' interests
4 
(86)
857 
Equity method investees
97 
(136)
(223)
Amortization of investments
(64)
(117)
(198)
Depreciation
79 
78 
86 
Changes in:
 
 
 
Receivables, net
1,020 
(406)
976 
Accrued investment income
(17)
(15)
(60)
Deferred acquisition costs
(9)
29 
17 
Insurance reserves
(237)
(805)
(612)
Other assets
175 
142 
99 
Other liabilities
(187)
53 
(174)
Other, net
10 
5 
3 
Total adjustments
1,074 
(757)
800 
Net cash flows provided (used) by operating activities-continuing operations
1,704 
1 
1,281 
Net cash flows provided (used) by operating activities-discontinued operations
(2)
(90)
(23)
Net cash flows provided (used) by operating activities-total
1,702 
(89)
1,258 
Cash Flows from Investing Activities
 
 
 
Purchases of fixed maturity securities
(12,168)
(16,704)
(24,189)
Proceeds from fixed maturity securities:
 
 
 
Sales
7,579 
12,514 
19,245 
Maturities, calls and redemptions
3,055 
3,340 
3,448 
Purchases of equity securities
(72)
(99)
(269)
Proceeds from sales of equity securities
178 
341 
901 
Origination of mortgage loans
(149)
(87)
   
Change in short term investments
566 
1,629 
(327)
Change in other investments
(141)
(263)
140 
Purchases of property and equipment
(84)
(53)
(63)
Dispositions
171 
66 
   
Other, net
3 
7 
(2)
Net cash flows provided (used) by investing activities-continuing operations
(1,062)
691 
(1,116)
Net cash flows provided (used) by investing activities-discontinued operations
2 
76 
23 
Net cash flows provided (used) by investing activities-total
(1,060)
767 
(1,093)
Cash Flows from Financing Activities
 
 
 
Acquisition of CNA Surety noncontrolling interest
(475)
   
   
Dividends paid to common stockholders
(108)
   
   
Dividends paid to Loews Corporation for 2008 Senior Preferred
   
(76)
(122)
Payment to redeem 2008 Senior Preferred
   
(1,000)
(250)
Proceeds from the issuance of debt
396 
495 
350 
Repayment of debt
(451)
(150)
(100)
Stock options exercised
2 
11 
1 
Other, net
(8)
(22)
1 
Net cash flows provided (used) by financing activities-continuing operations
(644)
(742)
(120)
Net cash flows provided (used) by financing activities-discontinued operations
   
   
   
Net cash flows provided (used) by financing activities-total
(644)
(742)
(120)
Effect of foreign exchange rate changes on cash-continuing operations
   
1 
10 
Net change in cash
(2)
(63)
55 
Net cash transactions from continuing operations to discontinued operations
   
(14)
   
Net cash transactions to discontinued operations from continuing operations
   
14 
   
Cash, beginning of year
77 
140 
85 
Cash, end of year
75 
77 
140 
Cash-continuing operations
75 
77 
140 
Cash-discontinued operations
   
   
   
Cash
$ 75 
$ 77 
$ 140 
Consolidated Statements of Stockholders' Equity (USD $)
In Millions
Total
Preferred Stock [Member]
Common stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Treasury Stock [Member]
Notes Receivable [Member]
Parent Company [Member]
Noncontrolling Interest [Member]
Balance at Dec. 31, 2008
 
$ 1,250 
$ 683 
$ 2,174 
$ 6,845 
$ (3,924)
$ (109)
$ (42)
 
$ 420 
Net income (loss)
481 
 
 
 
419 
 
 
 
 
62 
Other comprehensive income (loss)
3,747 
 
 
 
 
3,721 
 
 
 
26 
Dividends paid to common stockholders
 
 
 
 
   
 
 
 
 
 
Stock-based compensation
 
 
 
2 
 
 
   
 
 
 
(Increase) Decrease in notes receivable from the issuance of common stock
 
 
 
 
 
 
 
12 
 
 
Other
 
 
 
1 
 
 
 
 
 
(2)
Dividends paid to Loews Corporation for 2008 Senior Preferred
 
 
 
 
(122)
 
 
 
 
 
Redemption of 2008 Senior Preferred
 
(250)
 
 
 
 
 
 
 
 
Cumulative effect adjustment from change in accounting guidance, net of tax (FSP FAS 115-2 and FAS 124-2 [Member])
 
 
 
 
122 
(122)
 
 
 
 
Cumulative effect adjustment from change in accounting guidance, net of tax (Accounting Standards Update 2010-11 [Member])
 
 
 
 
 
   
 
 
 
 
Balance at Dec. 31, 2009
11,166 
1,000 
683 
2,177 
7,264 
(325)
(109)
(30)
10,660 
506 
Net income (loss)
758 
 
 
 
690 
 
 
 
 
68 
Other comprehensive income (loss)
661 
 
 
 
 
649 
 
 
 
12 
Dividends paid to common stockholders
 
 
 
 
   
 
 
 
 
 
Stock-based compensation
 
 
 
1 
 
 
4 
 
 
 
(Increase) Decrease in notes receivable from the issuance of common stock
 
 
 
 
 
 
 
4 
 
 
Other
 
 
 
22 
 
 
 
 
 
(16)
Dividends paid to Loews Corporation for 2008 Senior Preferred
 
 
 
 
(76)
 
 
 
 
 
Redemption of 2008 Senior Preferred
 
(1,000)
 
 
 
 
 
 
 
 
Cumulative effect adjustment from change in accounting guidance, net of tax (FSP FAS 115-2 and FAS 124-2 [Member])
 
 
 
 
 
   
 
 
 
 
Cumulative effect adjustment from change in accounting guidance, net of tax (Accounting Standards Update 2010-11 [Member])
 
 
 
 
(2)
2 
 
 
 
 
Balance at Dec. 31, 2010
11,524 
   
683 
2,200 
7,876 
326 
(105)
(26)
10,954 
570 
Net income (loss)
630 
 
 
 
614 
 
 
 
 
16 
Other comprehensive income (loss)
141 
 
 
 
 
133 
 
 
 
8 
Dividends paid to common stockholders
 
 
 
 
(108)
 
 
 
 
 
Stock-based compensation
 
 
 
4 
 
 
3 
 
 
 
(Increase) Decrease in notes receivable from the issuance of common stock
 
 
 
 
 
 
 
4 
 
 
Other
 
 
 
2 
 
 
 
 
 
(11)
Redemption of 2008 Senior Preferred
 
   
 
 
 
 
 
 
 
 
Cumulative effect adjustment from change in accounting guidance, net of tax (FSP FAS 115-2 and FAS 124-2 [Member])
 
 
 
 
 
   
 
 
 
 
Cumulative effect adjustment from change in accounting guidance, net of tax (Accounting Standards Update 2010-11 [Member])
 
 
 
 
 
   
 
 
 
 
Acquisition of CNA Surety noncontrolling interest
 
 
 
(60)
 
19 
 
 
 
(434)
Disposition of FICOH ownership interest
 
 
 
 
 
(8)
 
 
 
(149)
Balance at Dec. 31, 2011
$ 11,557 
    
$ 683 
$ 2,146 
$ 8,382 
$ 470 
$ (102)
$ (22)
$ 11,557 
    
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Note A. Summary of Significant Accounting Policies
Basis of Presentation
The Consolidated Financial Statements include the accounts of CNA Financial Corporation (CNAF) and its controlled subsidiaries. Collectively, CNAF and its controlled subsidiaries are referred to as CNA or the Company. 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 and Continental Assurance Corporation (CAC). Loews Corporation (Loews) owned approximately 90% of the outstanding common stock of CNAF as of December 31, 2011.
The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). Intercompany amounts have been eliminated. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.
The Company has historically reported certain run-off insurance operations acquired in its merger with The Continental Corporation in 1995 as discontinued operations. Due to the immateriality of the remaining liabilities, effective in the third quarter of 2011, the Company is no longer reporting these run-off operations as discontinued operations.
Business
The Company's core property and casualty insurance operations are reported in two business segments: CNA Specialty and CNA Commercial. The Company's non-core operations are managed in two segments: Life & Group Non-Core and Corporate & Other Non-Core.
The Company serves a wide variety of customers, including small, medium and large businesses; associations; professionals; groups; and individuals with a broad range of insurance and risk management products and services.
Core insurance products include commercial property and casualty coverages, including surety. Non-core insurance products, which primarily have been placed in run-off, include life and accident and health insurance; retirement products and annuities; and property and casualty reinsurance. CNA services include risk management, information services, warranty and claims administration. The Company's products and services are primarily marketed through independent agents, brokers, and managing general underwriters.
CNA Surety Corporation (CNA Surety)
On June 10, 2011, CNA completed the acquisition of the noncontrolling interest of CNA Surety. Previously the Company owned approximately 61% of the outstanding publicly-traded common stock of CNA Surety. CNA Surety is now a wholly-owned subsidiary of CCC, and, effective after the close of the stock market on June 10, 2011, trading in CNA Surety common stock ceased.
The aggregate purchase price was approximately $475 million, based on the offer price of $26.55 per share and inclusive of the retirement of CNA Surety employee stock options. The amount paid to acquire the common stock of CNA Surety not owned by the Company in excess of the closing date noncontrolling interest included in the Company's equity of $434 million was reflected as an adjustment to Additional Paid-in Capital and Accumulated Other Comprehensive Income on the Consolidated Statements of Stockholders' Equity. During 2011, net income attributable to the noncontrolling interest in CNA Surety through the acquisition date of June 10, 2011 was $12 million and is reflected on the Consolidated Statement of Operations. For the years ended December 31, 2010 and 2009, net income attributable to the noncontrolling interest in CNA Surety was $52 million and $46 million.
First Insurance Company of Hawaii (FICOH)
On November 29, 2011, CNA completed the sale of its 50% ownership interest in FICOH to Tokio Marine & Nichido Fire Insurance Co., Ltd., the other 50% shareholder. The sale resulted in a modest after-tax loss inclusive of the increase in income tax expense recorded in the third quarter of 2011 to reflect a higher tax rate applicable to CNA's proportionate share of FICOH's undistributed earnings as a result of the sale.
Insurance Operations
Premiums: Insurance premiums on property and casualty insurance contracts are recognized in proportion to the underlying risk insured which principally are earned ratably over the duration of the policies. Premiums on accident and health insurance contracts are earned ratably over the policy year in which they are due. The reserve for unearned premiums on these contracts represents the portion of premiums written relating to the unexpired terms of coverage.
Insurance receivables include balances due currently or in the future, including amounts due from insureds related to losses under high deductible policies, and are presented at unpaid balances, net of an allowance for uncollectible receivables. Amounts are considered past due based on policy payment terms. That allowance is determined based on periodic evaluations of aged receivables, management's experience and current economic conditions. Insurance receivables and any related allowance are written off after collection efforts are exhausted or a negotiated settlement is reached.
Property and casualty contracts that are retrospectively rated contain provisions that result in an adjustment to the initial policy premium depending on the contract provisions and loss experience of the insured during the experience period. For such contracts, the Company estimates the amount of ultimate premiums that the Company may earn upon completion of the experience period and recognizes either an asset or a liability for the difference between the initial policy premium and the estimated ultimate premium. The Company adjusts such estimated ultimate premium amounts during the course of the experience period based on actual results to date. The resulting adjustment is recorded as either a reduction of or an increase to the earned premiums for the period.
Claim and claim adjustment expense reserves: Claim and claim adjustment expense reserves, except reserves for structured settlements not associated with asbestos and environmental pollution (A&EP), workers' compensation lifetime claims, and accident and health claims, are not discounted and are based on 1) case basis estimates for losses reported on direct business, adjusted in the aggregate for ultimate loss expectations; 2) estimates of incurred but not reported losses; 3) estimates of losses on assumed reinsurance; 4) estimates of future expenses to be incurred in the settlement of claims; 5) estimates of salvage and subrogation recoveries and 6) estimates of amounts due from insureds related to losses under high deductible policies. Management considers current conditions and trends as well as past Company and industry experience in establishing these estimates. The effects of inflation, which can be significant, are implicitly considered in the reserving process and are part of the recorded reserve balance. Ceded claim and claim adjustment expense reserves are reported as a component of Reinsurance receivables on the Consolidated Balance Sheets.
Claim and claim adjustment expense reserves are presented net of anticipated amounts due from insureds related to losses under deductible policies of $1.4 billion as of December 31, 2011 and 2010. A significant portion of these amounts are supported by collateral. The Company also has an allowance for uncollectible deductible amounts, which is presented as a component of the allowance for doubtful accounts included in Insurance receivables on the Consolidated Balance Sheets.
Structured settlements have been negotiated for certain property and casualty insurance claims. Structured settlements are agreements to provide fixed periodic payments to claimants. Certain structured settlements are funded by annuities purchased from CAC for which the related annuity obligations are reported in Future policy benefits reserves. Obligations for structured settlements not funded by annuities are included in claim and claim adjustment expense reserves and carried at present values determined using interest rates ranging from 5.5% to 8.0% at December 31, 2011 and 4.6% to 7.5% at December 31, 2010. At December 31, 2011 and 2010, the discounted reserves for unfunded structured settlements were $632 million and $713 million, net of discount of $1.1 billion in both periods.
Workers' compensation lifetime claim reserves are calculated using mortality assumptions determined through statutory regulation and economic factors. Accident and health claim reserves are calculated using mortality and morbidity assumptions based on Company and industry experience. Workers' compensation lifetime claim reserves and accident and health claim reserves are discounted at interest rates ranging from 3.0% to 6.5% at both December 31, 2011 and 2010. At December 31, 2011 and 2010, such discounted reserves totaled $2.1 billion and $1.9 billion, net of discount of $520 million and $487 million.
Future policy benefits reserves: Reserves for long term care products and payout annuity contracts are computed using the net level premium method, which incorporates actuarial assumptions as to morbidity, mortality, persistency, discount rates, which are impacted by expected investment yields, and expenses. Expense assumptions include the estimated effects of expenses to be incurred beyond the premium paying period. Actuarial assumptions generally vary by plan, age at issue and policy duration. The initial assumptions are determined at issuance, include a margin for adverse deviation, and are locked in throughout the life of the contract unless a premium deficiency develops. If a premium deficiency emerges, the assumptions are unlocked and deferred acquisition costs, if any, and the future policy benefit reserves are adjusted. Interest rates for long-term care products range from 5.0% to 7.5% at December 31, 2011 and from 6.0% to 7.6% at December 31, 2010. Interest rates for payout annuity contracts range from 5.4% to 7.5% at December 31, 2011 and from 2.8% to 10.2% at December 31, 2010. In 2011, the Company unlocked assumptions related to its payout annuity contracts due to anticipated adverse changes in mortality and discount rates, which reflect the current low interest rate environment and our view of expected investment yields, resulting in loss recognition which increased insurance reserves by $166 million.
Policyholders' funds reserves: Policyholders' funds reserves primarily include reserves for investment contracts without life contingencies. For these contracts, policyholder liabilities are generally equal to the accumulated policy account values, which consist of an accumulation of deposit payments plus credited interest, less withdrawals and amounts assessed through the end of the period.
Guaranty fund and other insurance-related assessments: Liabilities for guaranty fund and other insurance-related assessments are accrued when an assessment is probable, when it can be reasonably estimated, and when the event obligating the entity to pay an imposed or probable assessment has occurred. Liabilities for guaranty funds and other insurance-related assessments are not discounted and are included as part of Other liabilities on the Consolidated Balance Sheets. As of December 31, 2011 and 2010, the liability balances were $152 million and $160 million. As of December 31, 2011 and 2010, included in Other assets on the Consolidated Balance Sheets were $2 million and $3 million of related assets for premium tax offsets. This asset is limited to the amount that is able to be offset against premium tax on future premium collections from business written or committed to be written.
Reinsurance: Reinsurance accounting allows for contractual cash flows to be reflected as premiums and losses. To qualify for reinsurance accounting, reinsurance agreements must include risk transfer. To meet risk transfer requirements, a reinsurance contract must include both insurance risk, consisting of underwriting and timing risk, and a reasonable possibility of a significant loss for the assuming entity.
Reinsurance receivables related to paid losses are presented at unpaid balances. Reinsurance receivables related to unpaid losses are estimated in a manner consistent with claim and claim adjustment expense reserves or future policy benefits reserves. Reinsurance receivables are reported net of an allowance for uncollectible amounts on the Consolidated Balance Sheets. The cost of reinsurance is primarily accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies or over the reinsurance contract period. The ceding of insurance does not discharge the primary liability of the Company.
The Company has established an allowance for uncollectible reinsurance receivables which relates to both amounts already billed on ceded paid losses as well as ceded reserves that will be billed when losses are paid in the future. The allowance for uncollectible reinsurance receivables is estimated on the basis of periodic evaluations of balances due from reinsurers, reinsurer solvency, management's experience and current economic conditions. Reinsurer financial strength ratings are updated and reviewed on an annual basis or sooner if the Company becomes aware of significant changes related to a reinsurer. Because billed receivables are generally less than 5% of total reinsurance receivables, the age of the reinsurance receivables related to paid losses is not a significant input into the allowance analysis. Changes in the allowance for uncollectible reinsurance receivables are presented as a component of Insurance claims and policyholders' benefits on the Consolidated Statements of Operations.
Amounts are considered past due based on the reinsurance contract terms. Reinsurance receivables related to paid losses and any related allowance are written off after collection efforts have been exhausted or a negotiated settlement is reached with the reinsurer. Reinsurance receivables related to paid losses from insolvent insurers are written off when the settlement due from the estate can be reasonably estimated. At the time reinsurance receivables related to paid losses are written off, any required adjustment to reinsurance receivables related to unpaid losses is recorded as a component of Insurance claims and policyholders' benefits on the Consolidated Statements of Operations.
Reinsurance contracts that do not effectively transfer the economic risk of loss on the underlying policies are recorded using the deposit method of accounting, which requires that premium paid or received by the ceding company or assuming company be accounted for as a deposit asset or liability. The Company had $18 million and $23 million recorded as deposit assets at December 31, 2011 and 2010, and $123 million and $114 million recorded as deposit liabilities at December 31, 2011 and 2010. Income on reinsurance contracts accounted for under the deposit method is recognized using an effective yield based on the anticipated timing of payments and the remaining life of the contract. When the anticipated timing of payments changes, the effective yield is recalculated to reflect actual payments to date and the estimated timing of future payments. The deposit asset or liability is adjusted to the amount that would have existed had the new effective yield been applied since the inception of the contract.
Participating insurance: Policyholder dividends are accrued using an estimate of the amount to be paid based on underlying contractual obligations under policies and applicable state laws. Limitations exist on the amount of income from participating life insurance contracts that may be distributed to stockholders, and therefore the share of income on these policies that cannot be distributed to stockholders is excluded from Stockholders' equity by a charge to operations and other comprehensive income and the establishment of a corresponding liability.
Deferred acquisition costs: Acquisition costs include commissions, premium taxes and certain underwriting and policy issuance costs which vary with and are related primarily to the acquisition of business. Such costs related to property and casualty business are deferred and amortized ratably over the period the related premiums are earned.
Deferred acquisition costs related to accident and health insurance are amortized over the premium-paying period of the related policies using assumptions consistent with those used for computing future policy benefit reserves for such contracts. Assumptions are made at the date of policy issuance or acquisition and are consistently applied during the lives of the contracts. Deviations from estimated experience are included in results of operations when they occur. For these contracts, the amortization period is typically the estimated life of the policy. At December 31, 2011 and 2010, Deferred acquisition costs were presented net of Shadow Adjustments, as defined later in this note, of $412 million and $0 million.
The Company evaluates deferred acquisition costs for recoverability. Anticipated investment income is considered in the determination of the recoverability of deferred acquisition costs. Adjustments, if necessary, are recorded in current results of operations. Deferred acquisition costs are presented net of ceding commissions and other ceded acquisition costs. Unamortized deferred acquisition costs relating to contracts that have been substantially changed by a modification in benefits, features, rights or coverages that were not anticipated in the original contract are not deferred and are included as a charge to operations in the period during which the contract modification occurred.
Investments in life settlement contracts and related revenue recognition: Prior to 2002, the Company purchased investments in life settlement contracts. A life settlement contract is a contract between the owner of a life insurance policy (the policy owner) and a third-party investor (investor). Under a life settlement contract, the Company obtains the ownership and beneficiary rights of an underlying life insurance policy.
The Company accounts for its investments in life settlement contracts using the fair value method. Under the fair value method, each life settlement contract is carried at its fair value at the end of each reporting period. The change in fair value, life insurance proceeds received and periodic maintenance costs, such as premiums, necessary to keep the underlying policy in force, are recorded in Other revenues on the Consolidated Statements of Operations. The fair value of the Company's investments in life settlement contracts were $117 million and $129 million at December 31, 2011 and 2010, and are included in Other assets on the Consolidated Balance Sheets. The cash receipts and payments related to life settlement contracts are included in Cash flows from operating activities on the Consolidated Statements of Cash Flows.
The following table details the values for life settlement contracts. The determination of fair value is discussed in Note D.
December 31, 2011
Number of Life Settlement Contracts
 
Fair Value of Life Settlement Contracts
(In millions)
 
Face Amount of Life Insurance Policies
(In millions)
Estimated maturity during:
 
 
 
 
 
2012
70

 
$
16

 
$
46

2013
70

 
14

 
42

2014
60

 
12

 
39

2015
60

 
10

 
37

2016
50

 
9

 
33

Thereafter
531

 
56

 
338

Total
841

 
$
117

 
$
535


The Company uses an actuarial model to estimate the aggregate face amount of life insurance that is expected to mature in each future year and the corresponding fair value. This model projects the likelihood of the insured's death for each inforce policy based upon the Company's estimated mortality rates, which may vary due to the relatively small size of the portfolio of life settlement contracts. The number of life settlement contracts presented in the table above is based upon the average face amount of inforce policies estimated to mature in each future year.
The increase in fair value recognized for the years ended December 31, 2011, 2010 and 2009 on contracts still being held was $5 million, $10 million and $10 million. The gains recognized during the years ended December 31, 2011, 2010 and 2009 on contracts that matured were $28 million, $19 million and $24 million.
Separate Account Business: Separate account assets and liabilities represent contract holder funds related to investment and annuity products for which the policyholder assumes substantially all the risk and reward. The assets are segregated into accounts with specific underlying investment objectives and are legally segregated from the Company. All assets of the separate account business are carried at fair value with an equal amount recorded for separate account liabilities. Fee income accruing to the Company related to separate accounts is primarily included within Other revenues on the Consolidated Statements of Operations.
A number of separate account pension deposit contracts guarantee principal and an annual minimum rate of interest. If aggregate contract value in the separate account exceeds the fair value of the related assets, an additional Policyholders' funds liability is established. During 2011, the Company increased this pretax Policyholders' funds liability by $18 million. The Company decreased this pretax Policyholders' funds liability by $24 million and $42 million in 2010 and 2009. Certain of these contracts are subject to a fair value adjustment if terminated by the policyholder.
Investments
Valuation of investments: The Company classifies its fixed maturity securities and its equity securities as either available-for-sale or trading, and as such, they are carried at fair value. Changes in fair value of trading securities are reported within Net investment income on the Consolidated Statements of Operations. Changes in fair value related to available-for-sale securities are reported as a component of Other comprehensive income. The cost of fixed maturity securities classified as available-for-sale is adjusted for amortization of premiums and accretion of discounts to maturity, which are included in Net investment income on the Consolidated Statements of Operations. Losses may be recognized within Net realized investment gains (losses) on the Consolidated Statements of Operations when a decline in value is determined by the Company to be other-than-temporary.
To the extent that unrealized gains on fixed income securities supporting long term care products and payout annuity contracts would result in a premium deficiency if those gains were realized, a related decrease in Deferred acquisition costs and/or increase in Insurance reserves are recorded, net of tax, as a reduction of net unrealized gains through Other comprehensive income (Shadow Adjustments). For the years ended December 31, 2011 and 2010, Shadow Adjustments, net of participating policyholders' interest, of $582 million and $150 million, were recorded, net of tax. At December 31, 2011 and 2010, net unrealized gains on investments included in Accumulated other comprehensive income (AOCI) were correspondingly reduced by $732 million and $150 million.
For asset-backed securities included in fixed maturity securities, the Company recognizes income using an effective yield based on anticipated prepayments and the estimated economic life of the securities. When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. The amortized cost of high credit quality securities is adjusted to the amount that would have existed had the new effective yield been applied since the acquisition of the securities. Such adjustments are reflected in Net investment income on the Consolidated Statements of Operations. Interest income on lower rated securities is determined using the prospective yield method.
The Company's carrying value of investments in limited partnerships is its share of the net asset value of each partnership, as determined by the General Partner. Certain partnerships for which results are not available on a timely basis are reported on a lag, primarily three months or less. Changes in net asset values are accounted for under the equity method and recorded within Net investment income on the Consolidated Statements of Operations.
Mortgage loans are commercial in nature and are carried at unpaid principal balance, net of unamortized fees and any valuation allowance. Mortgage loans are considered to be impaired loans when it is probable that contractual principal and interest payments will not be collected. A valuation allowance is established for impaired loans to the extent that the present value of expected future cash flows discounted at the loan's original effective interest rate is less than the carrying value of the loan. Interest income from mortgage loans is recognized on an accrual basis using the effective yield method. Accrual of income is generally suspended for mortgage loans that are impaired and collection of principal and interest payments is unlikely. Mortgage loans are considered past due when full principal or interest payments have not been received according to contractual terms.
Other invested assets include certain derivative securities and securities containing embedded credit derivatives for which the fair value option was elected.
Short term investments are carried at fair value. Changes in fair value are reported as a component of Other comprehensive income.
Realized investment gains (losses): All securities sold resulting in investment gains and losses are recorded on the trade date, except for bank loan participations which are recorded on the date that the legal agreements are finalized. Realized investment gains and losses are determined on the basis of the cost or amortized cost of the specific securities sold.
Income Taxes
The Company and its eligible subsidiaries (CNA Tax Group) are included in the consolidated federal income tax return of Loews and its eligible subsidiaries. The Company accounts for income taxes under the asset and liability method. Under the asset and liability method, deferred income taxes are recognized for temporary differences between the financial statement and tax return bases of assets and liabilities, based on enacted tax rates and other provisions of the tax law. The effect of a change in tax laws or rates on deferred tax assets and liabilities is recognized in income in the period in which such change is enacted. Future tax benefits are recognized to the extent that realization of such benefits is more likely than not, and a valuation allowance is established for any portion of a deferred tax asset that management believes will not be realized.
Pension and Postretirement Benefits
The Company recognizes the overfunded or underfunded status of its defined benefit plans in Other assets or Other liabilities on the Consolidated Balance Sheets. Changes in funded status related to prior service costs and credits and actuarial gains and losses are recognized in the year in which the changes occur through Other comprehensive income. Annual service cost, interest cost, expected return on plan assets, amortization of prior service costs and credits, and amortization of actuarial gains and losses are recognized on the Consolidated Statements of Operations. Effective January 1, 2009, due to the significant number of inactive participants in the plan, the Company amortizes actuarial gains/losses over the average remaining life expectancy of the inactive participants for the CNA Retirement Plan. Previously, the Company amortized actuarial gains/losses over the average remaining service period of the active participants. This change resulted in an increase to net income of $20 million, net of taxes, for the year ended December 31, 2009.
Stock-Based Compensation
The Company records compensation expense using the fair value method for all awards it grants, modifies, repurchases or cancels primarily on a straight-line basis over the requisite service period, generally four years.
Foreign Currency
Foreign currency translation gains and losses are reflected in Stockholders' equity as a component of Accumulated other comprehensive income. The Company's foreign subsidiaries' balance sheet accounts are translated at the exchange rates in effect at each year end and income statement accounts are either translated at the exchange rate on the date of the transaction or at the average exchange rates. Foreign currency transaction gains (losses) of $4 million, $(19) million and $(14) million were included in determining net income (loss) for the years ended December 31, 2011, 2010 and 2009.
Property and Equipment
Property and equipment are carried at cost less accumulated depreciation. Depreciation is based on the estimated useful lives of the various classes of property and equipment and is determined principally on the straight-line method. Furniture and fixtures are depreciated over seven years. Office equipment is depreciated over five years. The estimated lives for data processing equipment and software range from three to five years. Leasehold improvements are depreciated over the corresponding lease terms. The Company's owned buildings, and related capital improvements, are depreciated over periods not to exceed fifty years.
Goodwill and Other Intangible Assets
Goodwill and other indefinite-lived intangible assets primarily represent the excess of purchase price over the fair value of the net assets of acquired entities and businesses. Goodwill and indefinite-lived intangible assets are tested for impairment annually or when certain triggering events require such tests.
Earnings (Loss) Per Share Data
Earnings (loss) per share attributable to the Company's common stockholders is based on weighted average number of outstanding common shares. Basic earnings (loss) per share excludes the impact of dilutive securities and is computed by dividing net income (loss) attributable to CNA by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.
For the years ended December 31, 2011, 2010, and 2009, approximately 290 thousand, 380 thousand and 120 thousand potential shares attributable to exercises under stock-based employee compensation plans were included in the calculation of diluted earnings per share. For those same periods, approximately 1.1 million, 1.2 million and 1.7 million potential shares attributable to exercises under stock-based employee compensation plans were not included in the calculation of diluted earnings per share because the effect would have been antidilutive.
Supplementary Cash Flow Information
Cash payments made for interest were $175 million, $145 million and $124 million for the years ended December 31, 2011, 2010 and 2009. Cash payments made for income taxes were $61 million for the year ended December 31, 2011. Cash refunds received for income taxes amounted to $175 million and $117 million for the years ended December 31, 2010 and 2009.
Accounting Standards Updates
Accounting standard to be adopted
Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts
In October 2010, the Financial Accounting Standards Board issued updated accounting guidance that limits the capitalization of costs incurred to acquire or renew insurance contracts to those that are incremental direct costs of successful contract acquisitions. The updated accounting guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2011, with prospective or retrospective application allowed. Effective January 1, 2012, the Company will adopt this updated accounting guidance retrospectively and estimates the cumulative effect as of December 31, 2011 will reduce Total CNA stockholders' equity by $70 million, after tax.
Investments
Investments
Note B. Investments
The significant components of net investment income are presented in the following table.
Net Investment Income
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Fixed maturity securities
$
2,011

 
$
2,051

 
$
1,941

Short term investments
8

 
15

 
36

Limited partnership investments
48

 
249

 
315

Equity securities
20

 
32

 
49

Mortgage loans
9

 
2

 
—

Trading portfolio (a)
9

 
13

 
23

Other
7

 
8

 
6

Gross investment income
2,112

 
2,370

 
2,370

Investment expense
(58
)
 
(54
)
 
(50
)
Net investment income
$
2,054

 
$
2,316

 
$
2,320

___________________
(a)
There were no net unrealized gains (losses) related to changes in fair value of trading securities still held included in net investment income for the years ended December 31, 2011 and 2010. Net unrealized losses related to changes in fair value on trading securities still held included in net investment income were $5 million for the year ended December 31, 2009.
As of December 31, 2011, the Company held nine non-income producing fixed maturity securities aggregating $3 million of fair value. As of December 31, 2010, the Company held seven non-income producing fixed maturity securities aggregating $3 million of fair value. As of December 31, 2011 and 2010, no investments in a single issuer exceeded 10% of stockholders' equity, other than investments in securities issued by the U.S. Treasury and obligations of government-sponsored enterprises.
Net realized investment gains (losses) are presented in the following table.
Net Realized Investment Gains (Losses)
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Net realized investment gains (losses):
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
Gross realized gains
$
289

 
$
475

 
$
500

Gross realized losses
(311
)
 
(383
)
 
(1,667
)
Net realized investment gains (losses) on fixed maturity securities
(22
)
 
92

 
(1,167
)
Equity securities:
 
 
 

 
 

Gross realized gains
10

 
50

 
473

Gross realized losses
(11
)
 
(52
)
 
(230
)
Net realized investment gains (losses) on equity securities
(1
)
 
(2
)
 
243

Derivatives
—

 
(1
)
 
51

Short term investments and other (a)
19

 
(3
)
 
16

Net realized investment gains (losses), net of participating policyholders’ interests
$
(4
)
 
$
86

 
$
(857
)
____________________
(a)
Includes net unrealized gains (losses) related to changes in the fair value of securities for which the fair value option has been elected. Net unrealized gains (losses) were $2 million and $(1) million for the years ended December 31, 2011 and 2010.
Net change in unrealized gains (losses) on investments is presented in the following table.
Net Change in Unrealized Gains (Losses)
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Net change in unrealized gains (losses) on investments:
 
 
 
 
 
Fixed maturity securities
$
1,442

 
$
1,140

 
$
5,278

Equity securities
(2
)
 
7

 
156

Other
(3
)
 
(1
)
 
(4
)
Total net change in unrealized gains (losses) on investments
$
1,437

 
$
1,146

 
$
5,430


The components of other-than-temporary impairment (OTTI) losses recognized in earnings by asset type are summarized in the following table.
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Fixed maturity securities available-for-sale:
 
 
 
 
 
Corporate and other bonds
$
95

 
$
68

 
$
357

States, municipalities and political subdivisions
—

 
62

 
79

Asset-backed:
 
 
 
 
 
Residential mortgage-backed
105

 
71

 
461

Commercial mortgage-backed
—

 
3

 
193

Other asset-backed
6

 
3

 
31

Total asset-backed
111

 
77

 
685

Redeemable preferred stock
—

 
—

 
9

Total fixed maturity securities available-for-sale
206

 
207

 
1,130

Equity securities available-for-sale:
 
 
 
 
 
Common stock
8

 
11

 
5

Preferred stock
1

 
14

 
217

Total equity securities available-for-sale
9

 
25

 
222

Short term investments
1

 
—

 
—

Net OTTI losses recognized in earnings
$
216

 
$
232

 
$
1,352


A security is impaired if the fair value of the security is less than its cost adjusted for accretion, amortization and previously recorded OTTI losses, otherwise defined as an unrealized loss. When a security is impaired, the impairment is evaluated to determine whether it is temporary or other-than-temporary.
Significant judgment is required in the determination of whether an OTTI loss has occurred for a security. The Company follows a consistent and systematic process for determining and recording an OTTI loss. The Company has established a committee responsible for the OTTI process. This committee, referred to as the Impairment Committee, is made up of three officers appointed by the Company’s Chief Financial Officer. The Impairment Committee is responsible for evaluating all securities in an unrealized loss position on at least a quarterly basis.
The Impairment Committee’s assessment of whether an OTTI loss has occurred incorporates both quantitative and qualitative information. Fixed maturity securities that the Company intends to sell, or it more likely than not will be required to sell before recovery of amortized cost, are considered to be other-than-temporarily impaired and the entire difference between the amortized cost basis and fair value of the security is recognized as an OTTI loss in earnings. The remaining fixed maturity securities in an unrealized loss position are evaluated to determine if a credit loss exists. The factors considered by the Impairment Committee include (a) the financial condition and near term prospects of the issuer, (b) whether the debtor is current on interest and principal payments, (c) credit ratings of the securities and (d) general market conditions and industry or sector specific outlook. The Company also considers results and analysis of cash flow modeling for asset-backed securities, and when appropriate, other fixed maturity securities. The focus of the analysis for asset-backed securities is on assessing the sufficiency and quality of underlying collateral and timing of cash flows based on scenario tests. If the present value of the modeled expected cash flows equals or exceeds the amortized cost of a security, no credit loss is judged to exist and the asset-backed security is deemed to be temporarily impaired. If the present value of the expected cash flows is less than amortized cost, the security is judged to be other-than-temporarily impaired for credit reasons and that shortfall, referred to as the credit component, is recognized as an OTTI loss in earnings. The difference between the adjusted amortized cost basis and fair value, referred to as the non-credit component, is recognized as OTTI in Other comprehensive income. In subsequent reporting periods, a change in intent to sell or further credit impairment on a security whose fair value has not deteriorated will cause the non-credit component originally recorded as OTTI in Other comprehensive income to be recognized as an OTTI loss in earnings.
The Company performs the discounted cash flow analysis using stressed scenarios to determine future expectations regarding recoverability. For asset-backed securities, significant assumptions enter into these cash flow projections including delinquency rates, probable risk of default, loss severity upon a default, over collateralization and interest coverage triggers, and credit support from lower level tranches.
The Company applies the same impairment model as described above for the majority of non-redeemable preferred stock securities on the basis that these securities possess characteristics similar to debt securities and that the issuers maintain their ability to pay dividends. For all other equity securities, in determining whether the security is other-than-temporarily impaired, the Impairment Committee considers a number of factors including, but not limited to: (a) the length of time and the extent to which the fair value has been less than amortized cost, (b) the financial condition and near term prospects of the issuer, (c) the intent and ability of the Company to retain its investment for a period of time sufficient to allow for an anticipated recovery in value and (d) general market conditions and industry or sector specific outlook.
Prior to the adoption of the updated accounting guidance related to OTTI in the second quarter of 2009 the Company applied the impairment model described in the paragraph above to both fixed maturity and equity securities.
The following tables provide a summary of fixed maturity and equity securities.
Summary of Fixed Maturity and Equity Securities
December 31, 2011
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
Unrealized
OTTI
Losses (Gains)
(In millions)
 
 
 
 
Fixed maturity securities available-for-sale:
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
19,086

 
$
1,946

 
$
154

 
$
20,878

 
$
—

States, municipalities and political subdivisions
9,018

 
900

 
136

 
9,782

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
Residential mortgage-backed
5,786

 
172

 
183

 
5,775

 
99

Commercial mortgage-backed
1,365

 
48

 
59

 
1,354

 
(2
)
Other asset-backed
946

 
13

 
4

 
955

 
—

Total asset-backed
8,097

 
233

 
246

 
8,084

 
97

U.S. Treasury and obligations of government-sponsored enterprises
479

 
14

 
—

 
493

 
—

Foreign government
608

 
28

 
—

 
636

 
—

Redeemable preferred stock
51

 
7

 
—

 
58

 
—

Total fixed maturity securities available-for-sale
37,339

 
3,128

 
536

 
39,931

 
$
97

Total fixed maturity securities trading
6

 
—

 
—

 
6

 
 
Equity securities available-for-sale:
 
 
 
 
 
 
 
 
 
Common stock
30

 
17

 
—

 
47

 
 
Preferred stock
258

 
4

 
5

 
257

 
 
Total equity securities available-for-sale
288

 
21

 
5

 
304

 
 
Total
$
37,633

 
$
3,149

 
$
541

 
$
40,241

 
 

December 31, 2010
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
Unrealized
OTTI
Losses (Gains)
(In millions)
 
 
 
 
Fixed maturity securities available-for-sale:
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
19,492

 
$
1,603

 
$
70

 
$
21,025

 
$
—

States, municipalities and political subdivisions
8,157

 
142

 
410

 
7,889

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
Residential mortgage-backed
6,254

 
101

 
265

 
6,090

 
114

Commercial mortgage-backed
994

 
40

 
41

 
993

 
(2
)
Other asset-backed
753

 
18

 
8

 
763

 
—

Total asset-backed
8,001

 
159

 
314

 
7,846

 
112

U.S. Treasury and obligations of government-sponsored enterprises
122

 
16

 
1

 
137

 
—

Foreign government
602

 
18

 
—

 
620

 
—

Redeemable preferred stock
47

 
7

 
—

 
54

 
—

Total fixed maturity securities available-for-sale
36,421

 
1,945

 
795

 
37,571

 
$
112

Total fixed maturity securities trading
6

 
—

 
—

 
6

 
 
Equity securities available-for-sale:
 
 
 
 
 
 
 
 
 
Common stock
90

 
25

 
—

 
115

 
 
Preferred stock
332

 
2

 
9

 
325

 
 
Total equity securities available-for-sale
422

 
27

 
9

 
440

 
 
Total
$
36,849

 
$
1,972

 
$
804

 
$
38,017

 
 

The following tables summarize the estimated fair value and gross unrealized losses of available-for-sale fixed maturity and equity securities in a gross unrealized loss position by the length of time in which the securities have continuously been in that position.
Securities in a Gross Unrealized Loss Position
 
Less than 12 Months
 
12 Months or Longer
 
Total
December 31, 2011
Estimated
Fair Value
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
(In millions)
 
 
 
 
 
Fixed maturity securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
2,552

 
$
126

 
$
159

 
$
28

 
$
2,711

 
$
154

States, municipalities and political subdivisions
67

 
1

 
721

 
135

 
788

 
136

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed
719

 
36

 
874

 
147

 
1,593

 
183

Commercial mortgage-backed
431

 
39

 
169

 
20

 
600

 
59

Other asset-backed
389

 
4

 
—

 
—

 
389

 
4

Total asset-backed
1,539

 
79

 
1,043

 
167

 
2,582

 
246

Total fixed maturity securities available-for-sale
4,158

 
206

 
1,923

 
330

 
6,081

 
536

Equity securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
117

 
5

 
—

 
—

 
117

 
5

Total equity securities available-for-sale
117

 
5

 
—

 
—

 
117

 
5

Total
$
4,275

 
$
211

 
$
1,923

 
$
330

 
$
6,198

 
$
541


 
Less than 12 Months
 
12 Months or Longer
 
Total
December 31, 2010
Estimated
Fair Value
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
(In millions)
 
 
 
 
 
Fixed maturity securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
1,719

 
$
34

 
$
405

 
$
36

 
$
2,124

 
$
70

States, municipalities and political subdivisions
3,339

 
164

 
745

 
246

 
4,084

 
410

Asset-backed:
 
 
 
 
 
 
 
 
 

 
 

Residential mortgage-backed
1,800

 
52

 
1,801

 
213

 
3,601

 
265

Commercial mortgage-backed
164

 
3

 
333

 
38

 
497

 
41

Other asset-backed
122

 
1

 
60

 
7

 
182

 
8

Total asset-backed
2,086

 
56

 
2,194

 
258

 
4,280

 
314

U.S. Treasury and obligations of government-sponsored enterprises
8

 
1

 
—

 
—

 
8

 
1

Total fixed maturity securities available-for-sale
7,152

 
255

 
3,344

 
540

 
10,496

 
795

Equity securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
175

 
5

 
70

 
4

 
245

 
9

Total equity securities available-for-sale
175

 
5

 
70

 
4

 
245

 
9

Total
$
7,327

 
$
260

 
$
3,414

 
$
544

 
$
10,741

 
$
804


The following table summarizes the activity for the years ended December 31, 2011 and 2010 and for the period from April 1, 2009 to December 31, 2009 related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held at December 31, 2011, 2010 and 2009 for which a portion of an OTTI loss was recognized in Other comprehensive income.
(In millions)
Year ended December 31, 2011
 
Year ended December 31, 2010
 
Period from April 1, 2009 to December 31, 2009
Beginning balance of credit losses on fixed maturity securities
$
141

 
$
164

 
$
192

Additional credit losses for securities for which an OTTI loss was previously recognized
39

 
37

 
93

Credit losses for securities for which an OTTI loss was not previously recognized
11

 
11

 
183

Reductions for securities sold during the period
(67
)
 
(62
)
 
(239
)
Reductions for securities the Company intends to sell or more likely than not will be required to sell
(32
)
 
(9
)
 
(65
)
Ending balance of credit losses on fixed maturity securities
$
92

 
$
141

 
$
164


Based on current facts and circumstances, the Company has determined that no additional OTTI losses related to the securities in an unrealized loss position presented in the December 31, 2011 Securities in a Gross Unrealized Loss Position table above are required to be recorded. A discussion of some of the factors reviewed in making that determination is presented below.
The classification between investment grade and non-investment grade presented in the discussion below is based on a ratings methodology that takes into account ratings from two major providers, Standard & Poor's and Moody's Investor Services, Inc. in that order of preference. If a security is not rated by these providers, the Company formulates an internal rating.
Corporate and Other Bonds
The unrealized losses on the Company's investments in this category primarily relate to bonds within the financial industry sector. The financial industry sector holdings in this category include bonds with an aggregate fair value of $1,682 million and an aggregate amortized cost of $1,788 million as of December 31, 2011.
The following table summarizes corporate and other bonds in a gross unrealized loss position by ratings distribution at December 31, 2011.
Gross Unrealized Losses by Ratings Distribution
December 31, 2011
Amortized
Cost
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
(In millions)
 
 
AAA
$
112

 
$
111

 
$
1

AA
97

 
94

 
3

A
895

 
853

 
42

BBB
1,275

 
1,196

 
79

Non-investment grade
486

 
457

 
29

Total
$
2,865

 
$
2,711

 
$
154


The Company has no current intent to sell these securities, nor is it more likely than not that it will be required to sell prior to recovery of amortized cost. Additionally, the Company believes that the unrealized losses on these securities were not due to factors regarding the ultimate collection of principal and interest; accordingly, the Company has determined that there are no additional OTTI losses to be recorded at December 31, 2011.
States, Municipalities and Political Subdivisions
The unrealized losses on the Company's investments in this category are primarily due to market conditions for zero coupon bonds, particularly for those with maturity dates that exceed 20 years. Yields for these securities continue to be higher than historical norms relative to after-tax returns on similar fixed income securities. Securities that comprise 83% of the gross unrealized losses in this category are rated AA or higher.
The largest exposures at December 31, 2011 as measured by gross unrealized losses were several separate issues of Puerto Rico sales tax revenue bonds with gross unrealized losses of $80 million. All of these securities are rated investment grade.
The Company has no current intent to sell these securities, nor is it more likely than not that it will be required to sell prior to recovery of amortized cost. Additionally, the Company believes that the unrealized losses on these securities were not due to factors regarding the ultimate collection of principal and interest; accordingly, the Company has determined that there are no additional OTTI losses to be recorded at December 31, 2011.
Asset-Backed Securities
The fair value of total asset-backed holdings at December 31, 2011 was $8,084 million which was comprised of 2,010 different securities. The fair value of these securities tends to be influenced by the characteristics and projected cash flows of the underlying collateral rather than the credit of the issuer. Each security has deal-specific tranche structures, credit support that results from the unique deal structure, particular collateral characteristics and other distinct security terms. As a result, seemingly common factors such as delinquency rates and collateral performance affect each security differently. Of these securities, 112 had underlying collateral that was either considered sub-prime or Alt-A in nature. The exposure to sub-prime residential mortgage (sub-prime) collateral and Alternative A residential mortgages that have lower than normal standards of loan documentation (Alt-A) collateral is measured by the original deal structure.
The gross unrealized losses on residential mortgage-backed securities included $35 million related to securities guaranteed by a U.S. government agency or sponsored enterprise and $148 million related to non-agency structured securities. Non-agency structured securities included 131 securities that had at least one trade lot in a gross unrealized loss position and the aggregate severity of the gross unrealized loss was approximately 11% of amortized cost.
Commercial mortgage-backed securities included 61 securities that had at least one trade lot in a gross unrealized loss position. The aggregate severity of the gross unrealized loss was approximately 9% of amortized cost.
Other asset-backed securities included 51 securities that had at least one trade lot in a gross unrealized loss position. The aggregate severity of the gross unrealized loss was approximately 1% of amortized cost.
The following table summarizes asset-backed securities in a gross unrealized loss position by ratings distribution at December 31, 2011.
Gross Unrealized Losses by Ratings Distribution
December 31, 2011
Amortized
Cost
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
(In millions)
 
 
U.S. Government, Government Agencies, and Government-Sponsored Enterprises
$
382

 
$
347

 
$
35

AAA
364

 
355

 
9

AA
409

 
388

 
21

A
370

 
357

 
13

BBB
319

 
294

 
25

Non-investment grade
984

 
841

 
143

Total
$
2,828

 
$
2,582

 
$
246


The Company believes the unrealized losses are primarily attributable to broader economic conditions, changes in interest rates, wider than historical bid/ask spreads, and uncertainty with regard to the timing and amount of ultimate collateral realization, but are not indicative of the ultimate collectibility of the current carrying values of the securities. The Company has no current intent to sell these securities, nor is it more likely than not that it will be required to sell prior to recovery of amortized cost; accordingly, the Company has determined that there are no additional OTTI losses to be recorded at December 31, 2011.
Contractual Maturity
The following table summarizes available-for-sale fixed maturity securities by contractual maturity at December 31, 2011 and 2010. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid with or without call or prepayment penalties. Securities not due at a single date are allocated based on weighted average life.
Contractual Maturity
 
December 31, 2011
 
December 31, 2010
(In millions)
Cost or
Amortized
Cost
 
Estimated
Fair
Value
 
Cost or
Amortized
Cost
 
Estimated
Fair
Value
Due in one year or less
$
1,802

 
$
1,812

 
$
1,515

 
$
1,506

Due after one year through five years
13,110

 
13,537

 
11,198

 
11,653

Due after five years through ten years
8,410

 
8,890

 
10,022

 
10,425

Due after ten years
14,017

 
15,692

 
13,686

 
13,987

Total
$
37,339

 
$
39,931

 
$
36,421

 
$
37,571


Limited Partnerships
The carrying value of limited partnerships as of December 31, 2011 and 2010 was $2,245 million and $2,309 million, which includes undistributed earnings of $560 million and $723 million. Limited partnerships comprising 58% of the total carrying value are reported on a current basis through December 31, 2011 with no reporting lag, 25% are reported on a one month lag and the remainder are reported on more than a one month lag. As of December 31, 2011 and 2010, the Company had 79 and 75 active limited partnership investments. The number of limited partnerships held and the strategies employed provide diversification to the limited partnership portfolio and the overall invested asset portfolio.
Of the limited partnerships held, 81% and 85% at December 31, 2011 and 2010 employ hedge fund strategies that generate returns through investing in securities that are marketable while engaging in various management techniques primarily in public fixed income and equity markets. These hedge fund strategies include both long and short positions in fixed income, equity and derivative instruments. The hedge fund strategies may seek to generate gains from mispriced or undervalued securities, price differentials between securities, distressed investments, sector rotation, or various arbitrage disciplines. Within hedge fund strategies, approximately 46% were equity related, 32% pursued a multi-strategy approach, 19% were focused on distressed investments and 3% were fixed income related at December 31, 2011.
Limited partnerships representing 14% and 11% at December 31, 2011 and 2010 were invested in private debt and equity. The remaining were invested in various other partnerships including real estate. The ten largest limited partnership positions held totaled $1,218 million and $1,321 million as of December 31, 2011 and 2010. Based on the most recent information available regarding the Company’s percentage ownership of the individual limited partnerships, the carrying value reflected on the Consolidated Balance Sheets represents approximately 4% of the aggregate partnership equity at December 31, 2011 and 2010, and the related income reflected on the Consolidated Statements of Operations represents approximately 4%, 3%, and 4% of the changes in partnership equity for all limited partnership investments for the years ended December 31, 2011, 2010 and 2009.
While the Company generally does not invest in highly leveraged partnerships, there are risks which may result in losses due to short-selling, derivatives or other speculative investment practices. The use of leverage increases volatility generated by the underlying investment strategies.
The Company’s limited partnership investments contain withdrawal provisions that generally limit liquidity for a period of thirty days up to one year and in some cases do not permit withdrawals until the termination of the partnership. Typically, withdrawals require advanced written notice of up to 90 days.
Commercial Mortgage Loans
Risks related to the recoverability of loan balances include declines in the estimated cash flows from underlying property leases, fair value of collateral and creditworthiness of tenants of credit tenant loan properties, where lease payments directly service the loan. As of December 31, 2011 and 2010, 14% and 40% of the carrying value of mortgage loans related to credit tenant loans. The Company evaluates loans for impairment on a specific loan basis and identifies loans for evaluation of impairment based on the collection experience of each loan and other credit quality indicators such as debt service coverage ratio and the creditworthiness of the borrower or tenants of credit tenant loan properties. As of December 31, 2011 and 2010, there were no loans past due or in non-accrual status, and no valuation allowance was recorded.
Investment Commitments
As of December 31, 2011, the Company had committed approximately $129 million to future capital calls from various third-party limited partnership investments in exchange for an ownership interest in the related partnerships.
The Company invests in various privately placed debt securities, including bank loans, as part of its overall investment strategy and has committed to additional future purchases, sales and funding. The purchase and sale of these investments are recorded on the date that the legal agreements are finalized and cash settlements are made. As of December 31, 2011, the Company had commitments to purchase $95 million and sell $69 million of such investments. The Company has an obligation to fund additional amounts under the terms of current loan participations that may not be recorded until a draw is made. As of December 31, 2011, the Company had obligations on unfunded bank loan participations in the amount of $6 million.
As of December 31, 2011, the Company had mortgage loan commitments of $48 million representing signed loan applications received and accepted. The mortgage loans are recorded once funded.
Investments on Deposit
Securities with carrying values of approximately $3.5 billion and $2.9 billion were deposited by the Company’s insurance subsidiaries under requirements of regulatory authorities as of December 31, 2011 and 2010.
Cash and securities with carrying values of approximately $5 million and $6 million were deposited with financial institutions as collateral for letters of credit as of December 31, 2011 and 2010. In addition, cash and securities were deposited in trusts with financial institutions to secure reinsurance and other obligations with various third parties. The carrying values of these deposits were approximately $288 million and $298 million as of December 31, 2011 and 2010.
Derivative Financial Instruments
Derivative Financial Instruments
Note C. Derivative Financial Instruments
The Company may use derivatives in the normal course of business, primarily in an attempt to reduce its exposure to market risk (principally interest rate risk, credit risk, equity price risk and foreign currency risk) stemming from various assets and liabilities. The Company's principal objective under such strategies is to achieve the desired reduction in economic risk, even if the position does not receive hedge accounting treatment.
The Company enters into interest rate swaps, futures and commitments to purchase securities to manage interest rate risk. Credit derivatives such as credit default swaps (CDS) are entered into to modify the credit risk inherent in certain investments. The Company uses foreign currency forward contracts, primarily British pounds, Euros and Canadian dollars, to manage foreign currency risk.
In addition to the derivatives used for risk management purposes described above, the Company may also use derivatives for purposes of income enhancement. Income enhancement transactions are entered into with the intention of providing additional income or yield to a particular portfolio segment or instrument. Income enhancement transactions are limited in scope and primarily involve the sale of covered options in which the Company receives a premium in exchange for selling a call or put option.
Credit exposure associated with non-performance by the counterparties to derivative instruments is generally limited to the uncollateralized fair value of the asset related to the instruments recognized on the Consolidated Balance Sheets. The Company generally requires that all over-the-counter derivative contracts be governed by an International Swaps and Derivatives Association Master Agreement, and exchanges collateral under the terms of these agreements with its derivative investment counterparties depending on the amount of the exposure and the credit rating of the counterparty. The Company does not offset its net derivative positions against the fair value of the collateral provided. The fair value of cash collateral provided by the Company was $1 million and $2 million at December 31, 2011 and 2010. There was no cash collateral received from counterparties held at December 31, 2011 as compared to $1 million at December 31, 2010.
Derivative securities are recorded at fair value. See Note D for information regarding the fair value of derivative securities. Changes in the fair value of derivatives not associated with the trading portfolio are reported in Net realized investment gains (losses) on the Consolidated Statements of Operations. Changes in the fair value of derivatives associated with the trading portfolio are reported in Net investment income on the Consolidated Statements of Operations.
A summary of the recognized gains (losses) related to derivative financial instruments follows.
Recognized Gains (Losses)
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Without hedge designation
 
 
 
 
 
Interest rate swaps
$
—

 
$
—

 
$
61

Credit default swaps - purchased protection
—

 
(1
)
 
(47
)
Credit default swaps - sold protection
—

 
—

 
3

Total return swaps
—

 
—

 
(2
)
Futures sold, not yet purchased
—

 
—

 
21

Options written
—

 
—

 
15

Total without hedge designation
—

 
(1
)
 
51

Trading activities
 
 
 
 
 
Futures sold, not yet purchased
—

 
(1
)
 
(2
)
Total
$
—

 
$
(2
)
 
$
49


A summary of the aggregate contractual or notional amounts and gross estimated fair values related to derivative financial instruments reported as Other invested assets or Other liabilities on the Consolidated Balance Sheets follows. The contractual or notional amounts for derivatives are used to calculate the exchange of contractual payments under the agreements and may not be representative of the potential for gain or loss on these instruments.
Derivative Financial Instruments
December 31, 2011
Contractual/
Notional
Amount
 
Estimated Fair Value
(In millions)
 
Asset
 
(Liability)
Without hedge designation
 
 
 
 
 
Credit default swaps - purchased protection
$
20

 
$
—

 
$
(1
)
Currency forwards
22

 
1

 
—

Equity warrants
4

 
—

 
—

Total
$
46

 
$
1

 
$
(1
)

December 31, 2010
Contractual/
Notional
Amount
 
Estimated Fair Value
(In millions)
 
Asset
 
(Liability)
Without hedge designation
 
 
 
 
 
Credit default swaps - purchased protection
$
20

 
$
—

 
$
(2
)
Credit default swaps - sold protection
8

 
1

 
—

Currency forwards
18

 
—

 
—

Equity warrants
3

 
—

 
—

Total
$
49

 
$
1

 
$
(2
)

During the year ended December 31, 2011, new derivative transactions entered into totaled $1,073 million in notional value while derivative termination activity totaled $1,076 million. This activity was primarily attributable to interest rate futures, forward commitments for mortgage-backed securities, and foreign currency forwards. During the year ended December 31, 2010, new derivative transactions entered into totaled approximately $2.4 billion in notional value while derivative termination activity totaled approximately $2.6 billion. This activity was primarily attributable to interest rate futures and forward commitments for mortgage-backed securities.
Fair Value
Fair Value
Note D. Fair Value
Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable.
Level 1 - Quoted prices for identical instruments in active markets.
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.
Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are not observable.
Prices may fall within Level 1, 2 or 3 depending upon the methodologies and inputs used to estimate fair value for each specific security. In general the Company seeks to price securities using third-party pricing services. Securities not priced by pricing services are submitted to independent brokers for valuation and, if those are not available, internally developed pricing models are used to value assets using methodologies and inputs the Company believes market participants would use to value the assets.
The Company performs control procedures over information obtained from pricing services and brokers to ensure prices received represent a reasonable estimate of fair value and to confirm representations regarding whether inputs are observable or unobservable. Procedures include i) the review of pricing service or broker pricing methodologies, ii) back-testing, where past fair value estimates are compared to actual transactions executed in the market on similar dates, iii) exception reporting, where changes in price, period-over-period, are reviewed and challenged with the pricing service or broker based on exception criteria, iv) deep dives, where the Company independently validates detailed information regarding inputs and assumptions for individual securities and v) pricing validation, where prices received are compared to prices independently estimated by the Company.
Assets and Liabilities Measured at Fair Value
Assets and liabilities measured at fair value on a recurring basis are summarized below.
December 31, 2011
 
 
 
 
 
 
Total
Assets/(Liabilities)
at Fair Value
(In millions)
Level 1
 
Level 2
 
Level 3
 
Assets
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Corporate and other bonds
$
—

 
$
20,402

 
$
482

 
$
20,884

States, municipalities and political subdivisions
—

 
9,611

 
171

 
9,782

Asset-backed:
 
 
 
 
 
 
 
Residential mortgage-backed
—

 
5,323

 
452

 
5,775

Commercial mortgage-backed
—

 
1,295

 
59

 
1,354

Other asset-backed
—

 
612

 
343

 
955

Total asset-backed
—

 
7,230

 
854

 
8,084

U.S. Treasury and obligations of government-sponsored enterprises
451

 
42

 
—

 
493

Foreign government
92

 
544

 
—

 
636

Redeemable preferred stock
5

 
53

 
—

 
58

Total fixed maturity securities
548

 
37,882

 
1,507

 
39,937

Equity securities
124

 
113

 
67

 
304

Derivative and other financial instruments, included in Other invested assets
—

 
1

 
11

 
12

Short term investments
1,106

 
508

 
27

 
1,641

Life settlement contracts, included in Other assets
—

 
—

 
117

 
117

Separate account business
21

 
373

 
23

 
417

Total assets
$
1,799

 
$
38,877

 
$
1,752

 
$
42,428

Liabilities
 

 
 
 
 

 
 

Derivative financial instruments, included in Other liabilities
$
—

 
$
—

 
$
(1
)
 
$
(1
)
Total liabilities
$
—

 
$
—

 
$
(1
)
 
$
(1
)
December 31, 2010
 
 
 
 
 
 
Total
Assets/(Liabilities)
at Fair Value
(In millions)
Level 1
 
Level 2
 
Level 3
 
Assets
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Corporate and other bonds
$
—

 
$
20,407

 
$
624

 
$
21,031

States, municipalities and political subdivisions
—

 
7,623

 
266

 
7,889

Asset-backed:
 
 
 
 
 
 
 

Residential mortgage-backed
—

 
5,323

 
767

 
6,090

Commercial mortgage-backed
—

 
920

 
73

 
993

Other asset-backed
—

 
404

 
359

 
763

Total asset-backed
—

 
6,647

 
1,199

 
7,846

U.S. Treasury and obligations of government-sponsored enterprises
76

 
61

 
—

 
137

Foreign government
115

 
505

 
—

 
620

Redeemable preferred stock
3

 
48

 
3

 
54

Total fixed maturity securities
194

 
35,291

 
2,092

 
37,577

Equity securities
288

 
126

 
26

 
440

Derivative and other financial instruments, included in Other invested assets
—

 
—

 
27

 
27

Short term investments
1,214

 
974

 
27

 
2,215

Life settlement contracts, included in Other assets
—

 
—

 
129

 
129

Discontinued operations investments, included in Other liabilities
11

 
60

 
—

 
71

Separate account business
28

 
381

 
41

 
450

Total assets
$
1,735

 
$
36,832

 
$
2,342

 
$
40,909

Liabilities
 

 
 

 
 

 
 

Derivative financial instruments, included in Other liabilities
$
—

 
$
—

 
$
(2
)
 
$
(2
)
Total liabilities
$
—

 
$
—

 
$
(2
)
 
$
(2
)
The tables below present a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2011 and 2010.
Level 3
(In millions)
Balance at
January 1,
2011
 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)*
 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
 
Purchases
 
Sales
 
Settlements
 
Transfers into
Level 3
 
Transfers out
of Level 3
 
Balance at
December 31,
2011
 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31, 2011 recognized in net income (loss)*
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
624

 
$
(11
)
 
$
(1
)
 
$
484

 
$
(204
)
 
$
(149
)
 
$
79

 
$
(340
)
 
$
482

 
$
(12
)
States, municipalities and political subdivisions
266

 
—

 
(1
)
 
3

 
—

 
(92
)
 
—

 
(5
)
 
171

 
—

Asset-backed:
 

 
 

 
 

 
 

 
 
 
 
 
 

 
 

 
 

 
 

Residential mortgage-backed
767

 
(16
)
 
(11
)
 
225

 
(290
)
 
(60
)
 
—

 
(163
)
 
452

 
(6
)
Commercial mortgage-backed
73

 
20

 
(7
)
 
81

 
(27
)
 
—

 
—

 
(81
)
 
59

 
—

Other asset-backed
359

 
(9
)
 
5

 
537

 
(341
)
 
(99
)
 
2

 
(111
)
 
343

 
(5
)
Total asset-backed
1,199

 
(5
)
 
(13
)
 
843

 
(658
)
 
(159
)
 
2

 
(355
)
 
854

 
(11
)
Redeemable preferred stock
3

 
3

 
(3
)
 
—

 
(3
)
 
—

 
—

 
—

 
—

 
—

Total fixed maturity securities
2,092

 
(13
)
 
(18
)
 
1,330

 
(865
)
 
(400
)
 
81

 
(700
)
 
1,507

 
(23
)
Equity securities
26

 
(2
)
 
2

 
66

 
(27
)
 
—

 
5

 
(3
)
 
67

 
(3
)
Derivative and other financial instruments, net
25

 
3

 
—

 
1

 
(19
)
 
—

 
—

 
—

 
10

 
2

Short term investments
27

 
—

 
—

 
39

 
—

 
(29
)
 
—

 
(10
)
 
27

 
—

Life settlement contracts
129

 
33

 
—

 
—

 
—

 
(45
)
 
—

 
—

 
117

 
5

Separate account business
41

 
—

 
—

 
—

 
(6
)
 
—

 
—

 
(12
)
 
23

 
—

Total
$
2,340

 
$
21

 
$
(16
)
 
$
1,436

 
$
(917
)
 
$
(474
)
 
$
86

 
$
(725
)
 
$
1,751

 
$
(19
)

Level 3
(In millions)
Balance at
January 1,
2010
 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)*
 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
 
Purchases,
sales,
issuances
and
settlements
 
Transfers into
Level 3
 
Transfers out
of Level 3
 
Balance at
December 31,
2010
 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31, 2010 recognized in net income (loss)*
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
609

 
$
9

 
$
56

 
$
45

 
$
60

 
$
(155
)
 
$
624

 
$
(4
)
States, municipalities and political subdivisions
756

 
—

 
15

 
(507
)
 
2

 
—

 
266

 
—

Asset-backed:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential mortgage-backed
629

 
(10
)
 
15

 
181

 
—

 
(48
)
 
767

 
(13
)
Commercial mortgage-backed
123

 
10

 
13

 
(8
)
 
7

 
(72
)
 
73

 
(2
)
Other asset-backed
348

 
6

 
30

 
30

 
—

 
(55
)
 
359

 
(1
)
Total asset-backed
1,100

 
6

 
58

 
203

 
7

 
(175
)
 
1,199

 
(16
)
Redeemable preferred stock
2

 
6

 
2

 
(7
)
 
—

 
—

 
3

 
—

Total fixed maturity securities
2,467

 
21

 
131

 
(266
)
 
69

 
(330
)
 
2,092

 
(20
)
Equity securities
11

 
(4
)
 
1

 
17

 
8

 
(7
)
 
26

 
(5
)
Derivative and other financial instruments, net
(11
)
 
(1
)
 
—

 
37

 
—

 
—

 
25

 
(1
)
Short term investments
—

 
—

 
—

 
37

 
1

 
(11
)
 
27

 
—

Life settlement contracts
130

 
29

 
—

 
(30
)
 
—

 
—

 
129

 
10

Discontinued operations investments
16

 
—

 
1

 
(2
)
 
—

 
(15
)
 
—

 
—

Separate account business
38

 
—

 
—

 
3

 
—

 
—

 
41

 
—

Total
$
2,651

 
$
45

 
$
133

 
$
(204
)
 
$
78

 
$
(363
)
 
$
2,340

 
$
(16
)
* Net realized and unrealized gains and losses shown above are reported in Net income (loss) as follows:
Major Category of Assets and Liabilities
 
Consolidated Statements of Operations Line Items
Fixed maturity securities available-for-sale
 
Net realized investment gains (losses)
Fixed maturity securities trading
 
Net investment income
Equity securities
 
Net realized investment gains (losses)
Derivative financial instruments held in a trading portfolio
 
Net investment income
Derivative financial instruments not held in a trading portfolio and fair value option financial instruments
 
Net realized investment gains (losses)
Life settlement contracts
 
Other revenues
Securities shown in the Level 3 tables on the previous pages may be transferred in or out of Level 3 based on the availability of observable market information used to determine the fair value of the security. The availability of observable market information varies based on market conditions and trading volume and may cause securities to move in and out of Level 3 from reporting period to reporting period. There were no significant transfers between Level 1 and Level 2 during the years ended December 31, 2011 or 2010. The Company's policy is to recognize transfers between levels at the beginning of quarterly reporting periods.
Valuation Methodologies and Inputs
The following section describes the valuation methodologies and relevant inputs used to measure different financial instruments at fair value, including an indication of the level in the fair value hierarchy in which the instruments are generally classified.
Fixed Maturity Securities
Fixed maturity securities are valued using methodologies that model information generated by market transactions involving identical or comparable assets, as well as discounted cash flow methodologies. Common inputs include: prices from recently executed transactions of similar securities, broker/dealer quotes, benchmark yields, spreads off benchmark yields, interest rates, and U.S. Treasury or swap curves. Specifically for asset-backed securities, key inputs include prepayment and default projections based on past performance of the underlying collateral and current market data.
Level 1 securities include highly liquid U.S. and foreign government bonds, and redeemable preferred stock, valued using quoted market prices. Level 2 securities include most other fixed maturity securities as the significant inputs are observable in the marketplace. Securities are generally assigned to Level 3 in cases where broker/dealer quotes are significant inputs to the valuation and there is a lack of transparency as to whether these quotes are based on information that is observable in the marketplace. Level 3 securities also include tax-exempt and taxable auction rate certificates. Fair value of auction rate securities is determined utilizing a pricing model with three primary inputs. The interest rate and spread inputs are observable from like instruments while the maturity date assumption is unobservable due to the uncertain nature of principal prepayments prior to maturity.
Equity Securities
Level 1 equity securities include publicly traded securities valued using quoted market prices. Level 2 securities are primarily non-redeemable preferred stocks and common stocks valued using pricing for similar securities, recently executed transactions, broker/dealer quotes and other pricing models utilizing market observable inputs. Level 3 securities are priced using internal models with inputs that are not market observable.
Derivative and Other Financial Instruments
Exchange traded derivatives, primarily futures, are valued using quoted market prices and are classified within Level 1 of the fair value hierarchy. Level 2 derivatives primarily include currency forwards valued using observable market forward rates. Over-the-counter derivatives, principally interest rate swaps, total return swaps, credit default swaps, equity warrants and options, are valued using inputs including broker/dealer quotes and are classified within Level 3 of the valuation hierarchy due to a lack of transparency as to whether these quotes are based on information that is observable in the marketplace. Other financial instruments consist of Level 3 securities for which the fair value option has been elected which contain embedded derivatives and are priced using either broker/dealer quotes or internal models with inputs that are not market observable.
Short Term Investments
The valuation of securities that are actively traded or have quoted prices are classified as Level 1. These securities include money market funds and treasury bills. Level 2 primarily includes commercial paper, for which all inputs are market observable. Fixed maturity securities purchased within one year of maturity are classified consistent with fixed maturity securities discussed above.
Life Settlement Contracts
The fair values of life settlement contracts are determined as the present value of the anticipated death benefits less anticipated premium payments based on contract terms that are distinct for each insured, as well as the Company's own assumptions for mortality, premium expense, and the rate of return that a buyer would require on the contracts, as no comparable market pricing data is available.
Separate Account Business
Separate account business includes fixed maturity securities, equities and short term investments. The valuation methodologies and inputs for these asset types have been described above.
Financial Assets and Liabilities Not Measured at Fair Value
The carrying amount and estimated fair value of the Company's financial instrument assets and liabilities which are not measured at fair value on the Consolidated Balance Sheets are listed in the table below.
December 31
2011
 
2010
(In millions)
Carrying
Amount
 
Estimated
Fair Value
 
Carrying
Amount
 
Estimated
Fair Value
Financial assets
 
 
 
 
 
 
 
Notes receivable for the issuance of common stock
$
22

 
$
22

 
$
26

 
$
26

Mortgage loans
234

 
247

 
87

 
86

Financial liabilities
 
 
 
 
 
 
 
Premium deposits and annuity contracts
$
109

 
$
114

 
$
104

 
$
105

Short term debt
83

 
84

 
400

 
411

Long term debt
2,525

 
2,679

 
2,251

 
2,376


The following methods and assumptions were used to estimate the fair value of these financial assets and liabilities.
The fair values of notes receivable for the issuance of common stock were estimated using discounted cash flows utilizing interest rates currently offered for obligations securitized with similar collateral.
The fair values of mortgage loans were based on the present value of the expected future cash flows discounted at the current interest rate for origination of similar quality loans.
Premium deposits and annuity contracts were valued based on cash surrender values, estimated fair values or policyholder liabilities, net of amounts ceded related to sold business.
The Company's senior notes and debentures were valued based on observable market prices. The fair value for other debt was estimated using discounted cash flows based on current incremental borrowing rates for similar borrowing arrangements.
The carrying amounts reported on the Consolidated Balance Sheets for Cash, Accrued investment income and certain other assets and other liabilities approximate fair value due to the short term nature of these items. These assets and liabilities are not listed in the table above.
Income Taxes
Income Taxes
Note E. Income Taxes
The CNA Tax Group is included in the consolidated federal income tax return of Loews and its eligible subsidiaries. Loews and the Company have agreed that for each taxable year, the Company will 1) be paid by Loews the amount, if any, by which the Loews consolidated federal income tax liability is reduced by virtue of the inclusion of the CNA Tax Group in the Loews consolidated federal income tax return, or 2) pay to Loews an amount, if any, equal to the federal income tax that would have been payable by the CNA Tax Group filing a separate consolidated tax return. In the event that Loews should have a net operating loss in the future computed on the basis of filing a separate consolidated tax return without the CNA Tax Group, the Company may be required to repay tax recoveries previously received from Loews. This agreement may be canceled by either party upon 30 days written notice.
For the years ended December 31, 2011, 2010, and 2009 the Company received from Loews $10 million, $298 million, and $196 million related to federal income taxes.
For 2009 through 2011, the IRS invited Loews and the Company to participate in the Compliance Assurance Process (CAP), which is a voluntary program for a limited number of large corporations. Under CAP, the IRS conducts a real-time audit and works contemporaneously with the Company to resolve any issues prior to the filing of the tax return. Loews and the Company agreed to participate. The Company believes that this approach should reduce tax-related uncertainties, if any.
At December 31, 2011 and 2010, there were no unrecognized tax benefits.
The Company recognizes interest accrued related to: 1) unrecognized tax benefits in Interest expense and 2) tax refund claims in Other revenues on the Consolidated Statements of Operations. The Company recognizes penalties (if any) in Income tax (expense) benefit on the Consolidated Statements of Operations. During 2011 and 2010, the Company did not recognize any interest or penalties. During 2009, the Company recognized $2 million of interest income and no penalties. There were no amounts accrued for interest or penalties at December 31, 2011 and 2010.
The following table provides a reconciliation between the Company's federal income tax (expense) benefit at statutory rates and the recorded income tax (expense) benefit, excluding discontinued operations.
Tax Reconciliation
Years ended December 31
 
 
 
 
 
 
(In millions)
 
2011
 
2010
 
2009
Income tax expense at statutory rates
 
$
(307
)
 
$
(389
)
 
$
(189
)
Tax benefit from tax exempt income
 
74

 
84

 
119

Foreign taxes and credits
 
(3
)
 
(25
)
 
19

Taxes related to domestic affiliate
 
(21
)
 
(1
)
 
(2
)
Prior year tax adjustment
 
20

 
—

 
—

Other tax expense
 
(9
)
 
(2
)
 
(4
)
Income tax expense
 
$
(246
)
 
$
(333
)
 
$
(57
)

At December 31, 2011, no deferred taxes are required on the undistributed earnings of subsidiaries subject to tax.
The following table provides the current and deferred components of the Company's income tax (expense) benefit, excluding taxes on discontinued operations.
Current and Deferred Taxes
Years ended December 31
 
 
 
 
 
 
(In millions)
 
2011
 
2010
 
2009
Current tax (expense) benefit
 
$
(54
)
 
$
(6
)
 
$
120

Deferred tax expense
 
(192
)
 
(327
)
 
(177
)
Total income tax expense
 
$
(246
)
 
$
(333
)
 
$
(57
)

Total income tax presented above includes foreign tax expense of approximately $27 million, $50 million and $39 million related to income from continuing foreign operations of approximately $75 million, $91 million and $126 million for the years ended December 31, 2011, 2010 and 2009.
The deferred tax effects of the significant components of the Company's deferred tax assets and liabilities are set forth in the table below.
Components of Net Deferred Tax Asset
December 31
 
 
 
(In millions)
2011
 
2010
Deferred Tax Assets:
 
 
 
Insurance reserves:
 
 
 
Property and casualty claim and claim adjustment expense reserves
$
419

 
$
525

Unearned premium reserves
142

 
127

Receivables
74

 
95

Employee benefits
323

 
258

Life settlement contracts
61

 
64

Investment valuation differences
3

 
70

Net loss and tax credits carried forward
25

 
84

Other assets
159

 
124

Gross deferred tax assets
1,206

 
1,347

Deferred Tax Liabilities:
 
 
 
Deferred acquisition costs
283

 
284

Net unrealized gains
508

 
314

Other liabilities
37

 
82

Gross deferred tax liabilities
828

 
680

Net deferred tax asset
$
378

 
$
667


At December 31, 2011, the CNA Tax Group had loss carryforwards of approximately $19 million which expire in 2014, and tax credit carryforwards of $18 million of which $14 million expire in 2020.
Although realization of deferred tax assets is not assured, management believes it is more likely than not that the recognized net deferred tax asset will be realized through recoupment of ordinary and capital taxes paid in prior carryback years and through future earnings, reversal of existing temporary differences and available tax planning strategies. As a result, no valuation allowance was recorded at December 31, 2011 or 2010.
Claim and Claim Adjustment Expense Reserves
Claim and Claim Adjustment Expense Reserves
Note F. Claim and Claim Adjustment Expense Reserves
The Company's property and casualty insurance claim and claim adjustment expense reserves represent the estimated amounts necessary to resolve all outstanding claims, including IBNR claims as of the reporting date. The Company's reserve projections are based primarily on detailed analysis of the facts in each case, the Company's experience with similar cases and various historical development patterns. Consideration is given to such historical patterns as field reserving trends and claims settlement practices, loss payments, pending levels of unpaid claims and product mix, as well as court decisions, economic conditions including inflation, and public attitudes. All of these factors can affect the estimation of claim and claim adjustment expense reserves.
Establishing claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves for catastrophic events that have occurred, is an estimation process. Many factors can ultimately affect the final settlement of a claim and, therefore, the necessary reserve. Changes in the law, results of litigation, medical costs, the cost of repair materials and labor rates can all affect ultimate claim costs. In addition, time can be a critical part of reserving determinations since the longer the span between the incidence of a loss and the payment or settlement of the claim, the more variable the ultimate settlement amount can be. Accordingly, short-tail claims, such as property damage claims, tend to be more reasonably estimable than long-tail claims, such as workers' compensation, general liability and professional liability claims. Adjustments to prior year reserve estimates, if necessary, are reflected in the results of operations in the period that the need for such adjustments is determined. There can be no assurance that the Company's ultimate cost for insurance losses will not exceed current estimates.
Catastrophes are an inherent risk of the property and casualty insurance business and have contributed to material period-to-period fluctuations in the Company's results of operations and/or equity. The Company reported catastrophe losses, net of reinsurance, of $222 million, $121 million and $89 million for the years ended December 31, 2011, 2010 and 2009. Catastrophe losses in 2011 related primarily to domestic storms, Hurricane Irene and the Japanese event.
The table below provides a reconciliation between beginning and ending claim and claim adjustment expense reserves, including claim and claim adjustment expense reserves of the life company.
Reconciliation of Claim and Claim Adjustment Expense Reserves
As of and for the years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Reserves, beginning of year:
 
 
 
 
 
Gross
$
25,496

 
$
26,816

 
$
27,593

Ceded
6,122

 
5,594

 
6,288

Net reserves, beginning of year
19,374

 
21,222

 
21,305

Reduction of net reserves due to the Loss Portfolio Transfer transaction
—

 
(1,381
)
 
—

Reduction of net reserves due to disposition of subsidiaries
(277
)
 
(98
)
 
—

Net incurred claim and claim adjustment expenses:
 
 
 
 
 
Provision for insured events of current year
4,904

 
4,741

 
4,793

Decrease in provision for insured events of prior years
(429
)
 
(544
)
 
(240
)
Amortization of discount
135

 
123

 
122

Total net incurred (a)
4,610

 
4,320

 
4,675

Net payments attributable to:
 
 
 
 
 
Current year events
(1,029
)
 
(908
)
 
(917
)
Prior year events
(3,473
)
 
(3,776
)
 
(3,939
)
Total net payments
(4,502
)
 
(4,684
)
 
(4,856
)
Foreign currency translation adjustment and other
78

 
(5
)
 
98

Net reserves, end of year
19,283

 
19,374

 
21,222

Ceded reserves, end of year
5,020

 
6,122

 
5,594

Gross reserves, end of year
$
24,303

 
$
25,496

 
$
26,816



(a)
Total net incurred above does not agree to Insurance claims and policyholders' benefits as reflected on the Consolidated Statements of Operations due to amounts related to uncollectible reinsurance and loss deductible receivables, and benefit expenses related to future policy benefits and policyholders' funds, which are not reflected in the table above.
The changes in provision for insured events of prior years (net prior year claim and claim adjustment expense reserve development) were as follows.
Reserve Development
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Core (Non-A&EP)
$
(429
)
 
$
(545
)
 
$
(396
)
A&EP
—

 
—

 
155

Property and casualty reserve development
(429
)
 
(545
)
 
(241
)
Life reserve development in life company
—

 
1

 
1

Total
$
(429
)
 
$
(544
)
 
$
(240
)

The following tables summarize the gross and net carried reserves as of December 31, 2011 and 2010.
Gross and Net Carried Claim and Claim Adjustment Expense Reserves
December 31, 2011
CNA Specialty
 
CNA Commercial
 
Life &
Group Non-Core
 
Corporate
& Other Non-Core
 
Total
(In millions)
 
 
 
 
Gross Case Reserves
$
2,441

 
$
6,266

 
$
2,510

 
$
1,321

 
$
12,538

Gross IBNR Reserves
4,399

 
5,243

 
315

 
1,808

 
11,765

Total Gross Carried Claim and Claim Adjustment Expense Reserves
$
6,840

 
$
11,509

 
$
2,825

 
$
3,129

 
$
24,303

Net Case Reserves
$
2,086

 
$
5,720

 
$
2,025

 
$
347

 
$
10,178

Net IBNR Reserves
3,937

 
4,670

 
254

 
244

 
9,105

Total Net Carried Claim and Claim Adjustment Expense Reserves
$
6,023

 
$
10,390

 
$
2,279

 
$
591

 
$
19,283



December 31, 2010
CNA Specialty
 
CNA Commercial
 
Life &
Group Non-Core
 
Corporate
& Other Non-Core
 
Total
(In millions)
 
 
 
 
Gross Case Reserves
$
2,341

 
$
6,390

 
$
2,403

 
$
1,430

 
$
12,564

Gross IBNR Reserves
4,452

 
6,132

 
336

 
2,012

 
12,932

Total Gross Carried Claim and Claim Adjustment Expense Reserves
$
6,793

 
$
12,522

 
$
2,739

 
$
3,442

 
$
25,496

Net Case Reserves
$
1,992

 
$
5,349

 
$
1,831

 
$
461

 
$
9,633

Net IBNR Reserves
3,926

 
5,292

 
266

 
257

 
9,741

Total Net Carried Claim and Claim Adjustment Expense Reserves
$
5,918

 
$
10,641

 
$
2,097

 
$
718

 
$
19,374


A&EP Reserves
On August 31, 2010, CCC together with several of the Company’s insurance subsidiaries completed a transaction with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc., under which substantially all of the Company’s legacy A&EP liabilities were ceded to NICO (Loss Portfolio Transfer).
Under the terms of the NICO transaction, effective January 1, 2010 the Company ceded approximately $1.6 billion of net A&EP claim and allocated claim adjustment expense reserves to NICO under a retroactive reinsurance agreement with an aggregate limit of $4 billion. Included in the $1.6 billion of net A&EP claim and allocated claim adjustment expense reserves was approximately $90 million of net claim and allocated claim adjustment expense reserves relating to the Company’s discontinued operations. The $1.6 billion of claim and allocated claim adjustment expense reserves ceded to NICO was net of $1.2 billion of ceded claim and allocated claim adjustment expense reserves under existing third party reinsurance contracts. The NICO aggregate reinsurance limit also covers credit risk on the existing third party reinsurance related to these liabilities.
The Company paid NICO a reinsurance premium of $2 billion and transferred to NICO billed third party reinsurance receivables related to A&EP claims with a net book value of $215 million (net of an allowance of $100 million for uncollectible reinsurance receivables on billed third party reinsurance receivables, as discussed further below). As of August 31, 2010, NICO deposited approximately $2.2 billion in a collateral trust account as security for its obligations to the Company. This $2.2 billion will be reduced by the amount of net A&EP claim and allocated claim adjustment expense payments. In addition, Berkshire Hathaway Inc. guaranteed the payment obligations of NICO up to the full aggregate reinsurance limit as well as certain of NICO’s performance obligations under the trust agreement. NICO is responsible for claims handling and billing and collection from third party reinsurers related to the Company’s A&EP claims.
The following table displays the impact of the Loss Portfolio Transfer on the 2010 Consolidated Statement of Operations.
Impact on Consolidated Statement of Operations
Year ended December 31
 
(In millions)
2010
Other operating expenses
$
529

Income tax benefit
185

Loss from continuing operations, included in the Corporate & Other Non-Core segment
(344
)
Loss from discontinued operations
(21
)
Net loss attributable to CNA
$
(365
)

In connection with the transfer of billed third party reinsurance receivables related to A&EP claims and the coverage of credit risk afforded under the terms of the Loss Portfolio Transfer, the Company reduced its allowance for uncollectible reinsurance receivables on billed third party reinsurance receivables and ceded claim and allocated claim adjustment expense reserves by $200 million. This reduction is reflected in Other operating expenses presented above.
The gross A&EP claim and allocated claim adjustment expense reserves ceded under the Loss Portfolio Transfer and other existing third party reinsurance agreements was $2.3 billion and $2.5 billion at December 31, 2011 and 2010. The remaining amount available under the $4 billion aggregate limit of the Loss Portfolio Transfer was $2.3 billion on an incurred basis at December 31, 2011. These amounts include $138 million of adverse prior year development since the contract effective date of January 1, 2010. The net ultimate paid losses ceded under the Loss Portfolio Transfer were $351 million through December 31, 2011.
The Loss Portfolio Transfer is considered a retroactive reinsurance contract. In the event that the cumulative claim and allocated claim adjustment expenses ceded under the Loss Portfolio Transfer exceed the consideration paid, the resulting gain from such excess would be deferred. A cumulative amortization adjustment would be recognized in earnings in the period such excess arises so that the resulting deferred gain would reflect the balance that would have existed if the revised estimate was available at the inception date of the Loss Portfolio Transfer.
Net Prior Year Development
Changes in estimates of claim and allocated claim adjustment expense reserves and premium accruals, net of reinsurance, for prior years are defined as net prior year development. These changes can be favorable or unfavorable. The following tables and discussion include the net prior year development recorded for CNA Specialty, CNA Commercial and Corporate & Other Non-Core segments for the years ended December 31, 2011, 2010 and 2009. The net prior year development presented below includes premium development due to its direct relationship to claim and claim adjustment expense reserve development. The net prior year development presented below also includes the impact of commutations and write-offs, but excludes the impact of increases or decreases in the allowance for uncollectible reinsurance. See Note H for further discussion of the provision for uncollectible reinsurance.
Favorable net prior year development of $29 million, $2 million and $53 million was recorded in the Life & Group Non-Core segment for the years ended December 31, 2011, 2010 and 2009. Included in the 2009 favorable net prior year development is the impact of a settlement reached in 2009 with Willis Limited that resolved litigation related to the placement of personal accident reinsurance between 1997 and 1999. Under this settlement agreement, Willis Limited agreed to pay the Company a total of $130 million, which was reported as a loss recovery of $94 million, net of reinsurance.
Net Prior Year Development
Year ended December 31, 2011
 
 
 
 
 
 
 
(In millions)
CNA
Specialty
 
CNA Commercial
 
Corporate
& Other
Non-Core
 
Total
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development- Core (Non-A&EP)
$
(217
)
 
$
(204
)
 
$
(2
)
 
$
(423
)
Pretax (favorable) unfavorable premium development
(28
)
 
21

 
(1
)
 
(8
)
Total pretax (favorable) unfavorable net prior year development
$
(245
)
 
$
(183
)
 
$
(3
)
 
$
(431
)

Year ended December 31, 2010
 
 
 
 
 
 
 
(In millions)
CNA
Specialty
 
CNA Commercial
 
Corporate
& Other
Non-Core
 
Total
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development- Core (Non-A&EP)
$
(341
)
 
$
(304
)
 
$
8

 
$
(637
)
Pretax (favorable) unfavorable premium development
(3
)
 
48

 
(2
)
 
43

Total pretax (favorable) unfavorable net prior year development
$
(344
)
 
$
(256
)
 
$
6

 
$
(594
)

Year ended December 31, 2009
 
 
 
 
 
 
 
(In millions)
CNA
Specialty
 
CNA Commercial
 
Corporate
& Other
Non-Core
 
Total
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development:
 
 
 
 
 
 
 
Core (Non-A&EP)
$
(218
)
 
$
(230
)
 
$
4

 
$
(444
)
A&EP
—

 
—

 
155

 
155

Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development
(218
)
 
(230
)
 
159

 
(289
)
Pretax (favorable) unfavorable premium development
(6
)
 
87

 
—

 
81

Total pretax (favorable) unfavorable net prior year development
$
(224
)
 
$
(143
)
 
$
159

 
$
(208
)

For the year ended December 31, 2011, favorable premium development was recorded for CNA Specialty primarily due to changes in estimates of exposures in medical professional liability tail coverages. Unfavorable premium development for CNA Commercial was recorded due to a further reduction of ultimate premium estimates relating to retrospectively rated policies, partially offset by premium adjustments on auditable policies due to increased exposures.
For the year ended December 31, 2010, unfavorable premium development for CNA Commercial was recorded due to a change in ultimate premium estimates relating to retrospectively rated policies and return premium on auditable policies due to reduced exposures.
For the year ended December 31, 2009, unfavorable premium development for CNA Commercial was recorded due to changes in ultimate premium estimates relating to retrospectively rated policies, an estimated liability for an assessment related to a reinsurance association driven by large workers' compensation policies, and less premium processing on auditable policies due to reduced exposures.
CNA Specialty
The following table provides further detail of the net prior year claim and allocated claim adjustment expense reserve development (development) recorded for the CNA Specialty segment for the years ended December 31, 2011, 2010 and 2009.
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development:
 
 
 
 
 
Medical Professional Liability
$
(92
)
 
$
(98
)
 
$
(62
)
Other Professional Liability
(78
)
 
(129
)
 
(98
)
Surety
(47
)
 
(103
)
 
(51
)
Warranty
(13
)
 
—

 
—

Other
13

 
(11
)
 
(7
)
Total pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development
$
(217
)
 
$
(341
)
 
$
(218
)

2011
Favorable development for medical professional liability was primarily due to favorable case incurred emergence in nurses, physicians, excess institutions and primary institutions in accident years 2008 and prior.
Favorable development for other professional liability was driven by better than expected loss emergence in the life agents, accountants, and architects & engineers business in accident years 2008 and prior. In addition, favorable development in the Company's European book of business was primarily due to favorable outcomes on several large losses in financial directors and officers (D&O) and errors and omissions (E&O) coverages in accident years 2003 and prior.
Favorable development for surety coverages was primarily due to a decrease in the estimated loss on a large national contractor in accident year 2005 and better than expected loss emergence in accident years 2009 and prior.
Favorable development in warranty was driven by favorable policy year experience on an aggregate stop loss policy covering the Company's non-insurance warranty subsidiary.
Other includes standard property and casualty coverages provided to CNA Specialty customers. Unfavorable development for other coverages was primarily due to increased frequency of large claims in auto and workers' compensation coverages in accident years 2009 and 2010.
2010
Overall, favorable development for medical professional liability was primarily due to lower than expected frequency of large losses, primarily in accident years 2007 and prior. This development amount also included unfavorable development in accident years 2008 and 2009 due to increased frequency of large losses related to medical products.
Overall, favorable development for other professional liability was recorded primarily in accident years 2007 and prior in D&O and E&O coverages due to several factors, including reduced frequency of large claims, and the result of reviews of large claims. This development amount also included unfavorable development in employment practices liability, E&O, and D&O coverages recorded in accident years 2008 and 2009, driven by the economic recession and higher unemployment.
Favorable development for surety coverages was primarily due to a decrease in the estimated loss on a large national contractor in accident year 2005 and lower than expected claim emergence in accident years 2008 and prior.
2009
Favorable development for medical professional liability was primarily due to better than expected frequency and severity in accident years 2005 and prior, including claims closing favorable to expectations and favorable changes on individually reviewed accounts.
Favorable development for other professional liability was primarily in financial institutions, accountants and lawyers, D&O, and life agents coverages. For financial institutions, favorable development was due to favorable experience on a number of large claims in accident years 2003 and prior and decreased frequency of large claims in accident years 2007 and prior. Favorable development in accountants and lawyers was due to better than expected large claim frequency in accident years 2004 through 2006. Favorable development in D&O and life agents coverages was due to lower than expected large claim frequency. Additionally, favorable development in the Company's European book of business was primarily due to favorable emergence relative to expectations in non-financial D&O and E&O coverages.
Favorable development for surety coverages was driven by claim activity substantially below expectations, primarily in accident years 2004 through 2007.
CNA Commercial
The following table provides further detail of the development recorded for the CNA Commercial segment for the years ended December 31, 2011, 2010, and 2009.
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development:
 
 
 
 
 
Commercial Auto
$
(98
)
 
$
(88
)
 
$
(9
)
General Liability
(39
)
 
(59
)
 
(100
)
Workers' Compensation
36

 
47

 
69

Property and Other
(103
)
 
(204
)
 
(190
)
Total pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development
$
(204
)
 
$
(304
)
 
$
(230
)

2011
Favorable development for commercial auto coverages was due to lower than expected severity on bodily injury claims and favorable claim emergence on umbrella policies in accident years 2006 and prior.
Favorable development in the general liability coverages was primarily due to favorable claim emergence in accident years 2007 and prior related to both primary and umbrella liability coverages.
Unfavorable development for workers' compensation was related to increased medical severity in accident year 2010.
Overall, favorable development for property and other coverages was due to decreased frequency of large losses in commercial multi-peril coverages primarily in accident year 2010, favorable loss emergence related to catastrophe claims in accident year 2008 and favorable loss emergence related to non-catastrophe claims in accident years 2010 and prior. This development amount also included unfavorable development related to unallocated claim adjustment expenses.
2010
Favorable development for commercial auto coverages was primarily due to lower than expected frequency and severity trends in accident years 2009 and prior.
Overall, favorable development for general liability and umbrella coverages was primarily due to better than expected loss emergence in accident years 2006 and prior. This development amount also included unfavorable development, primarily driven by increased claim frequency in accident years 2004 and prior for excess workers' compensation and in accident years 2008 and 2009 for a portion of the Company's primary casualty surplus lines book. Unfavorable development was also recorded for accident years prior to 2001 related to mass tort claims, primarily as a result of increased defense costs on specific mass tort accounts, including amounts related to unallocated claim adjustment expenses.
Unfavorable development in workers' compensation was related to increased severity of indemnity losses relative to expectations on claims related to Defense Base Act contractors, primarily in accident years 2008 and prior.
Favorable development was recorded for property and marine coverages. Favorable development on catastrophe claims was due to lower than expected incurred loss emergence, primarily in accident years 2008 and 2009. Favorable non-catastrophe development was due to lower than expected severity in accident years 2009 and prior. Favorable development in marine business was primarily due to decreased claim frequency and favorable cargo salvage recoveries in recent accident years as well as lower than expected severity for excess liability in accident years 2005 and prior. Favorable property and marine development in the Company's European operation was due to lower than expected frequency of large claims primarily in accident year 2009.
2009
Favorable development was recorded in auto coverages, primarily driven by decreased frequency in the Company's Hawaiian book of business.
Overall, favorable development was recorded for general liability coverages. Favorable development in construction defect exposures was due to decreased frequency and severity trends in accident years 2003 and prior. Favorable development in non-construction defect exposures was primarily due to claims closing favorable to expectations in accident years 2006 and prior. Favorable development in our Canadian casualty programs was primarily driven by severity emerging favorable to prior expectations. This development amount also included unfavorable development recorded due to higher than anticipated litigation costs related to mass tort exposures, primarily in accident years 1997 and prior.
Unfavorable workers' compensation development was due to increased paid and incurred severity primarily in the small and middle markets businesses in accident years 2004, 2007 and 2008. Unfavorable development was recorded related to increased severity of indemnity losses relative to expectations on workers' compensation claims related to Defense Base Act contractors primarily in accident years 2004 through 2008.
Favorable development was recorded for property coverages. Favorable catastrophe development was driven by the favorable settlement of several claims primarily in accident years 2005 and 2007, and better than expected frequency and severity on claims in accident year 2008. Favorable non-catastrophe development primarily related to large property and marine coverages in accident years 2007 and 2008. Favorable development was recorded in the Company's European property, cargo, and personal accident and travel businesses driven by both frequency and severity emerging favorably to prior expectations, particularly in accident years 2007 and 2008.
Corporate & Other Non-Core
2009
Unfavorable development was recorded related to asbestos. The Company noted adverse development in various asbestos accounts due to increases in average claim severity and defense expense arising from increased trial activity. Additionally, the Company had not seen a decline in the overall emergence of new accounts.
Unfavorable development was recorded related to environmental pollution. The Company noted adverse development in various pollution accounts due to changes in the liabilities attributed to our policyholders and adverse changes in case law impacting insurers' coverage obligations. These changes in turn increased the Company's account estimates on certain accounts. In addition, the frequency of environmental pollution claims did not decline at the rate previously anticipated.
Legal Proceedings and Contingent Liabilities
Legal Proceedings and Contingent Liabilities
Note G. Legal Proceedings and Contingent Liabilities
Insurance Brokerage Antitrust Litigation
In August 2005, CNAF and certain insurance subsidiaries were joined as defendants, along with other insurers and brokers, in multidistrict litigation pending in the United States District Court for the District of New Jersey, In re Insurance Brokerage Antitrust Litigation, Civil No. 04-5184 (GEB). The plaintiffs' consolidated class action complaint alleged bid rigging and improprieties in the payment of contingent commissions in connection with the sale of insurance. After various motions and preliminary court rulings providing for further proceedings, all parties executed final settlement documents and the plaintiffs filed a motion for preliminary approval of the settlement in May 2011. In June 2011, the Court entered an order preliminarily approving the settlement. A fairness hearing was held in September 2011 to determine final approval of the settlement. The Court took the matter under advisement and will issue a ruling in due course. As currently structured, the settlement will not have a material impact on the Company's results of operations. In addition, the Company does not believe it has any material ongoing exposure relating to this matter.
Other Litigation
The Company is also a party to routine litigation incidental to its business, which, based on the facts and circumstances currently known, is not material to the business or financial condition of the Company.
Reinsurance
Reinsurance
Note H. Reinsurance
The Company cedes insurance to reinsurers to limit its maximum loss, provide greater diversification of risk, minimize exposures on larger risks and to exit certain lines of business. The ceding of insurance does not discharge the primary liability of the Company. A credit exposure exists with respect to property and casualty and life reinsurance ceded to the extent that any reinsurer is unable to meet its obligations or to the extent that the reinsurer disputes the liabilities assumed under reinsurance agreements. Property and casualty reinsurance coverages are tailored to the specific risk characteristics of each product line and the Company's retained amount varies by type of coverage. Reinsurance contracts are purchased to protect specific lines of business such as property and workers' compensation. Corporate catastrophe reinsurance is also purchased for property and workers' compensation exposure. Currently, most reinsurance contracts are purchased on an excess of loss basis. The Company also utilizes facultative reinsurance in certain lines. In addition, the Company assumes reinsurance as a member of various reinsurance pools and associations.
The following table summarizes the amounts receivable from reinsurers at December 31, 2011 and 2010.
Components of Reinsurance Receivables
December 31
 
 
 
(In millions)
2011
 
2010
Reinsurance receivables related to insurance reserves:
 
 
 
Ceded claim and claim adjustment expenses
$
5,020

 
$
6,122

Ceded future policy benefits
792

 
822

Ceded policyholders' funds
36

 
37

Reinsurance receivables related to paid losses
244

 
223

Reinsurance receivables
6,092

 
7,204

Allowance for uncollectible reinsurance
(91
)
 
(125
)
Reinsurance receivables, net of allowance for uncollectible reinsurance
$
6,001

 
$
7,079


The Company has established an allowance for uncollectible reinsurance receivables. In 2011, the Company reduced its allowance for uncollectible reinsurance receivables by $15 million due to a change in estimate. The additional reduction in the allowance primarily related to write-offs of reinsurance receivable balances.
The Company attempts to mitigate its credit risk related to reinsurance by entering into reinsurance arrangements with reinsurers that have credit ratings above certain levels, and by obtaining collateral. On a limited basis, the Company may enter into reinsurance agreements with reinsurers that are not rated, primarily captive reinsurers. The primary methods of obtaining collateral are through reinsurance trusts, letters of credit and funds withheld balances. Such collateral was approximately $3.6 billion and $4.0 billion at December 31, 2011 and 2010.
The Company's largest recoverables from a single reinsurer at December 31, 2011, including prepaid reinsurance premiums, were approximately $2.5 billion from subsidiaries of Berkshire Hathaway Group, $1.0 billion from subsidiaries of Swiss Re Group, and $400 million from subsidiaries of the Hartford Insurance Group. The recoverable from the Berkshire Hathaway Group includes amounts related to third party reinsurance for which a subsidiary of Berkshire Hathaway has assumed the credit risk under the terms of the Loss Portfolio Transfer as discussed in Note F.
The effects of reinsurance on earned premiums and written premiums for the years ended December 31, 2011, 2010 and 2009 are shown in the following tables.
Components of Earned Premiums
(In millions)
Direct
 
Assumed
 
Ceded
 
Net
 
Assumed/
Net %
2011 Earned Premiums
 
 
 
 
 
 
 
 
 
Property and casualty
$
7,858

 
$
95

 
$
1,919

 
$
6,034

 
1.6
%
Accident and health
521

 
50

 
2

 
569

 
8.8
%
Life
55

 
—

 
55

 
—

 
—

Total earned premiums
$
8,434

 
$
145

 
$
1,976

 
$
6,603

 
2.2
%
 
 
 
 
 
 
 
 
 
 
2010 Earned Premiums
 
 
 
 
 
 
 
 
 
Property and casualty
$
7,716

 
$
66

 
$
1,849

 
$
5,933

 
1.1
%
Accident and health
534

 
49

 
2

 
581

 
8.4
%
Life
60

 
—

 
59

 
1

 
—

Total earned premiums
$
8,310

 
$
115

 
$
1,910

 
$
6,515

 
1.8
%
 
 
 
 
 
 
 
 
 
 
2009 Earned Premiums
 
 
 
 
 
 
 
 
 
Property and casualty
$
8,028

 
$
67

 
$
1,968

 
$
6,127

 
1.1
%
Accident and health
550

 
51

 
7

 
594

 
8.6
%
Life
84

 
—

 
84

 
—

 
—

Total earned premiums
$
8,662

 
$
118

 
$
2,059

 
$
6,721

 
1.8
%
Components of Written Premiums
(In millions)
Direct
 
Assumed
 
Ceded
 
Net
 
Assumed/
Net %
2011 Written Premiums
 
 
 
 
 
 
 
 
 
Property and casualty
$
7,976

 
$
102

 
$
1,857

 
$
6,221

 
1.6
%
Accident and health
529

 
50

 
2

 
577

 
8.7
%
Life
55

 
—

 
55

 
—

 
—

Total written premiums
$
8,560

 
$
152

 
$
1,914

 
$
6,798

 
2.2
%
 
 
 
 
 
 
 
 
 
 
2010 Written Premiums
 
 
 
 
 
 
 
 
 
Property and casualty
$
7,673

 
$
77

 
$
1,853

 
$
5,897

 
1.3
%
Accident and health
527

 
48

 
2

 
573

 
8.4
%
Life
60

 
—

 
59

 
1

 
—

Total written premiums
$
8,260

 
$
125

 
$
1,914

 
$
6,471

 
1.9
%
 
 
 
 
 
 
 
 
 
 
2009 Written Premiums
 
 
 
 
 
 
 
 
 
Property and casualty
$
7,981

 
$
66

 
$
1,916

 
$
6,131

 
1.1
%
Accident and health
539

 
50

 
6

 
583

 
8.6
%
Life
83

 
—

 
83

 
—

 
—

Total written premiums
$
8,603

 
$
116

 
$
2,005

 
$
6,714

 
1.7
%

Included in the direct and ceded earned premiums for the years ended December 31, 2011, 2010 and 2009 are $1,500 million, $1,383 million and $1,385 million related to business that is 100% reinsured as a result of a significant captive program.
Life and accident and health premiums are primarily from long duration contracts; property and casualty premiums are primarily from short duration contracts.
Insurance claims and policyholders' benefits reported on the Consolidated Statements of Operations are net of reinsurance recoveries of $1,285 million, $1,121 million and $1,297 million for the years ended December 31, 2011, 2010 and 2009, including $790 million, $735 million and $897 million related to the significant captive program discussed above.
The impact of reinsurance on life insurance inforce at December 31, 2011, 2010 and 2009 is shown in the following table.
Components of Life Insurance Inforce
(In millions)
Direct
 
Assumed
 
Ceded
 
Net
2011
$
6,528

 
$
—

 
$
6,515

 
$
13

2010
8,015

 
—

 
8,001

 
14

2009
9,159

 
—

 
9,144

 
15


As of December 31, 2011 and 2010, the Company has ceded $1,211 million and $1,301 million of claim and claim adjustment expense reserves, future policy benefits and policyholders' funds as a result of business operations sold in prior years. Subject to certain exceptions, the purchasers assumed the third party reinsurance credit risk of the sold business.
Debt
Debt
Note I. Debt
Debt is composed of the following obligations.
Debt
December 31
 
 
 
(In millions)
2011
 
2010
Short term debt:
 
 
 
Senior notes:
 
 
 
6.000%, face amount of $400, due August 15, 2011
$
—

 
$
399

8.375%, face amount of $70, due August 15, 2012
70

 
—

Other debt
13

 
1

Total short term debt
83

 
400

 
 
 
 
Long term debt:
 
 
 
Variable rate debt:
 
 
 
Debenture - CNA Surety, face amount of $31, due April 29, 2034
—

 
31

Senior notes:
 
 
 
8.375%, face amount of $70, due August 15, 2012
—

 
69

5.850%, face amount of $549, due December 15, 2014
548

 
548

6.500%, face amount of $350, due August 15, 2016
348

 
347

6.950%, face amount of $150, due January 15, 2018
149

 
149

7.350%, face amount of $350, due November 15, 2019
348

 
348

5.875%, face amount of $500, due August 15, 2020
495

 
495

5.750%, face amount of $400, due August 15, 2021
396

 
—

Debenture, 7.250%, face amount of $243, due November 15, 2023
241

 
241

Other debt
—

 
23

Total long term debt
2,525

 
2,251

Total debt
$
2,608

 
$
2,651


In February of 2011, the Company issued $400 million of 5.750% senior notes due August 15, 2021 in a public offering. The Company used the net proceeds of the offering, together with cash on hand, to redeem the outstanding $400 million aggregate principal amount of 6.000% senior notes due August 15, 2011, plus accrued and unpaid interest thereon, along with a call premium.
In November of 2011, the Company redeemed the outstanding $31 million of the CNA Surety debenture originally due April 29, 2034, plus accrued and unpaid interest thereon.
On August 1, 2007, the Company entered into a five-year credit agreement with a syndicate of banks and other lenders. The credit agreement established a $250 million senior unsecured revolving credit facility which is intended to be used for general corporate purposes. Borrowings under the revolving credit facility bear interest at the London Interbank Offered Rate (LIBOR) plus the Company's credit risk spread. Under the credit agreement, the Company is required to pay certain fees, including a facility fee and a utilization fee, both of which would adjust automatically in the event of a change in the Company's financial ratings. The credit agreement includes covenants regarding maintenance of a minimum consolidated net worth and a specified ratio of consolidated indebtedness to consolidated total capitalization. The full limit of $250 million is available as of December 31, 2011.
The Company's remaining debt obligations contain customary covenants for investment grade insurers. The Company is in compliance with all covenants as of and for the year ended December 31, 2011.
The combined aggregate maturities for debt at December 31, 2011 are presented in the following table.
Maturity of Debt
(In millions)
 
2012
$
83

2013
—

2014
549

2015
—

2016
350

Thereafter
1,643

Less discount
(17
)
Total
$
2,608

Benefit Plans
Benefit Plans
Note J. Benefit Plans
Pension and Postretirement Health Care and Life Insurance Benefit Plans
CNA sponsors noncontributory pension plans, primarily through the CNA Retirement Plan, typically covering full-time employees age 21 and over that have completed at least one year or 1,000 hours of service.
Effective January 1, 2000, the CNA Retirement Plan was closed to new participants. Existing participants at that time were given a choice to either continue to accrue benefits under the CNA Retirement Plan or to cease accruals at December 31, 1999. Employees who chose to continue to accrue benefits under the plan will receive a benefit based on their years of credited service and highest 60 months of compensation at termination. Compensation is defined as regular salary, eligible bonuses and overtime. Employees who elected to cease accruals at December 31, 1999 received the present value of their accrued benefit in an accrued pension account that is credited with interest based on the annual rate of interest on 30-year Treasury securities. These employees also receive certain enhanced employer contributions in the CNA Savings and Capital Accumulation Plan.
CNA's funding policy for defined benefit pension plans is to make contributions in accordance with applicable governmental regulatory requirements with consideration of the funded status of the plans.
CNA provides certain health care benefits to eligible retired employees, their covered dependents and their beneficiaries primarily through the CNA Health and Group Benefits Program. The funding for these plans is generally to pay covered expenses as they are incurred.
In November 2010, CNA announced a change in its postretirement benefits. The plan previously offered a maximum $10,000 non-contributory retiree life insurance benefit to participants who met certain eligibility requirements. The change eliminated this benefit for all active employees effective January 1, 2011, and for all retirees effective January 1, 2012. The change was treated as a negative plan amendment and the effect of this change was a reduction to the accumulated postretirement benefit obligation of $60 million at December 31, 2010.
The following table provides a reconciliation of benefit obligations and plan assets for the years ended December 31, 2011 and 2010.
Funded Status
 
Pension Benefits
 
Postretirement Benefits
(In millions)
2011
 
2010
 
2011
 
2010
Benefit obligation at January 1
$
2,798

 
$
2,702

 
$
95

 
$
155

Changes in benefit obligation:
 
 
 
 
 
 
 
Service cost
13

 
16

 
1

 
1

Interest cost
146

 
149

 
3

 
7

Participants' contributions
—

 
—

 
6

 
6

Plan amendments
—

 
—

 
(12
)
 
(60
)
Actuarial (gain) loss
263

 
89

 
(18
)
 
(2
)
Benefits paid
(163
)
 
(157
)
 
(13
)
 
(13
)
Foreign currency translation and other
—

 
(1
)
 
—

 
1

Reduction of benefit obligations due to disposition of subsidiary
(54
)
 
—

 
(13
)
 
—

Benefit obligations at December 31
3,003

 
2,798


49


95

Fair value of plan assets at January 1
2,258

 
2,117

 
—

 
—

Change in plan assets:
 
 
 
 
 
 
 
Actual return on plan assets
82

 
234

 
—

 
—

Company contributions
89

 
65

 
7

 
7

Participants' contributions
—

 
—

 
6

 
6

Benefits paid
(163
)
 
(157
)
 
(13
)
 
(13
)
Foreign currency translation and other
—

 
(1
)
 
—

 
—

Reduction of plan assets due to disposition of subsidiary
(54
)
 
—

 
—

 
—

Fair value of plan assets at December 31
2,212

 
2,258

 
—

 
—

Funded status
$
(791
)
 
$
(540
)
 
$
(49
)
 
$
(95
)
Amounts recognized on the Consolidated Balance Sheets at December 31:
 
 
 
 
 
 
 
Other assets
$
1

 
$
7

 
$
—

 
$
—

Other liabilities
(792
)
 
(547
)
 
(49
)
 
(95
)
Net amount recognized
$
(791
)
 
$
(540
)
 
$
(49
)
 
$
(95
)
Amounts recognized in Accumulated other comprehensive income, not yet recognized in net periodic cost (benefit):
 
 
 
 
 
 
 
Prior service credit
$
—

 
$
—

 
$
(134
)
 
$
(141
)
Net actuarial loss
1,060

 
741

 
9

 
29

Net amount recognized
$
1,060

 
$
741

 
$
(125
)
 
$
(112
)

The accumulated benefit obligation for all defined benefit pension plans was $2,932 million and $2,715 million at December 31, 2011 and 2010.
The components of net periodic cost (benefit) are presented in the following table.
Net Periodic Cost (Benefit)
Years ended December 31
 
 
 
 
 
 
(In millions)
 
2011
 
2010
 
2009
Pension cost
 
 
 
 
 
 
Service cost
 
$
13

 
$
16

 
$
17

Interest cost on projected benefit obligation
 
146

 
149

 
153

Expected return on plan assets
 
(172
)
 
(162
)
 
(145
)
Amortization of net actuarial loss
 
25

 
24

 
25

Net periodic pension cost
 
$
12

 
$
27

 
$
50

 
 
 
 
 
 
 
Postretirement benefit
 
 
 
 
 
 
Service cost
 
$
1

 
$
1

 
$
1

Interest cost on projected benefit obligation
 
3

 
7

 
9

Amortization of prior service credit
 
(19
)
 
(16
)
 
(16
)
Amortization of net actuarial loss
 
—

 
1

 
1

Net periodic postretirement benefit
 
$
(15
)
 
$
(7
)
 
$
(5
)

The amounts recognized in Other comprehensive income are presented in the following table.
Years ended December 31
 
 
 
 
 
 
(In millions)
 
2011
 
2010
 
2009
Pension and postretirement benefits
 
 
 
 
 
 
Amounts arising during the period
 
$
(325
)
 
$
44

 
$
13

Reclassification adjustment relating to prior service credit
 
(19
)
 
(16
)
 
(16
)
Reclassification adjustment relating to actuarial loss
 
25

 
25

 
26

Total increase (decrease) in Other comprehensive income
 
$
(319
)
 
$
53

 
$
23


The table below presents the estimated amounts to be recognized from Accumulated other comprehensive income into net periodic cost (benefit) during 2012.
(In millions)
 
Pension
Benefits
 
Postretirement Benefits
Amortization of prior service credit
 
$
—

 
$
(18
)
Amortization of net actuarial loss
 
39

 
1

Total estimated amounts to be recognized
 
$
39

 
$
(17
)

Actuarial assumptions used for the CNA Retirement Plan and CNA Health and Group Benefits Program to determine benefit obligations are set forth in the following table.
Actuarial Assumptions for Benefit Obligations
December 31
 
2011
 
2010
Pension benefits
 
 
 
 
Discount rate
 
4.600
%
 
5.375
%
Expected long term rate of return
 
8.000

 
8.000

Rate of compensation increases
 
4.125

 
5.030

Postretirement benefits
 
 
 
 
Discount rate
 
3.750
%
 
4.375
%
Actuarial assumptions used for the CNA Retirement Plan and CNA Health and Group Benefits Program to determine net cost or benefit are set forth in the following table.
Actuarial Assumptions for Net Cost or Benefit
Years ended December 31
 
2011
 
2010
 
2009
Pension benefits
 
 
 
 
 
 
Discount rate
 
5.375
%
 
5.700
%
 
6.300
%
Expected long term rate of return
 
8.000

 
8.000

 
8.000

Rate of compensation increases
 
5.030

 
5.030

 
5.830

Postretirement benefits
 
 
 
 
 
 
Discount rate
 
4.375
%
 
4.875 / 5.500%

 
6.300
%

In determining the expected long term rate of return on plan assets assumption for the CNA Retirement Plan, CNA considered the historical performance of the benefit plan investment portfolio as well as long term market return expectations based on the investment mix of the portfolio.
The CNA Health and Group Benefits Program has limited its share of the health care trend rate to a cost-of-living adjustment of 4% per year. For all participants, the employer subsidy on health care costs will not increase by more than 4% per year. As a result, the assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation for the CNA Health and Group Benefits Program was 4% per year in 2011, 2010 and 2009.
The health care cost trend rate assumption has a significant effect on the amount of the benefit obligation and periodic cost reported. An increase in the assumed health care cost trend rate of 1% in each year would have no significant impact on the Company's accumulated postretirement benefit obligation as of December 31, 2011 and would have no significant impact on the Company's aggregate net periodic postretirement benefit for 2011. A decrease in the assumed health care cost trend rate of 1% in each year would decrease the Company's accumulated postretirement benefit obligation as of December 31, 2011 by $3 million and would have no significant impact on the Company's aggregate net periodic postretirement benefit for 2011.
CNA employs a total return approach whereby a mix of equity and fixed maturity securities are used to maximize the long term return of plan assets for a prudent level of risk and to manage cash flows according to plan requirements. The intent of this strategy is to minimize plan expenses by outperforming plan liabilities over the long run. Risk tolerance is established after careful consideration of the plan liabilities, plan funded status and corporate financial conditions. The investment portfolio contains a diversified blend of fixed maturity, equity and short term securities. Alternative investments, including limited partnerships, are used to enhance risk adjusted long term returns while improving portfolio diversification. At December 31, 2011 the plan had committed approximately $27 million to future capital calls from various third-party limited partnership investments in exchange for an ownership interest in the related partnerships. Derivatives may be used to gain market exposure in an efficient and timely manner. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies and quarterly investment portfolio reviews.
Pension plan assets measured at fair value on a recurring basis are summarized below.
December 31, 2011
 
 
 
 
 
 
 
 
(In millions)
 
Level 1
 
Level 2
 
Level 3
 
Total assets
at fair value
Assets
 
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
 
Corporate and other bonds
 
$
—

 
$
377

 
$
10

 
$
387

States, municipalities and political subdivisions
 
—

 
104

 
—

 
104

Asset-backed:
 
 
 
 
 
 
 
 
Residential mortgage-backed
 
—

 
198

 
—

 
198

Commercial mortgage-backed
 
—

 
68

 
—

 
68

Other asset-backed
 
—

 
10

 
—

 
10

Total asset-backed
 
—

 
276

 
—

 
276

Total fixed maturity securities
 
—

 
757

 
10

 
767

Equity securities
 
353

 
75

 
5

 
433

Short term investments
 
63

 
35

 
—

 
98

Limited partnerships:
 
 
 
 
 
 
 
 
Hedge funds
 
—

 
488

 
330

 
818

Private equity
 
—

 
—

 
65

 
65

Total limited partnerships
 
—

 
488

 
395

 
883

Other assets
 
—

 
21

 
—

 
21

Investment contracts with insurance company
 
—

 
—

 
10

 
10

Total assets
 
$
416

 
$
1,376

 
$
420

 
$
2,212


December 31, 2010
 
 
 
 
 
 
 
 
(In millions)
 
Level 1
 
Level 2
 
Level 3
 
Total assets
at fair value
Assets
 
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
 
Corporate and other bonds
 
$
—

 
$
305

 
$
10

 
$
315

States, municipalities and political subdivisions
 
—

 
92

 
—

 
92

Asset-backed:
 
 
 
 
 
 
 
 
Residential mortgage-backed
 
—

 
179

 
—

 
179

Commercial mortgage-backed
 
—

 
40

 
9

 
49

Other asset-backed
 
—

 
9

 
1

 
10

Total asset-backed
 
—

 
228

 
10

 
238

Total fixed maturity securities
 
—

 
625

 
20

 
645

Equity securities
 
421

 
77

 
6

 
504

Short term investments
 
106

 
7

 
—

 
113

Limited partnerships:
 
 
 
 
 
 
 
 
Hedge funds
 
—

 
518

 
394

 
912

Private equity
 
—

 
—

 
59

 
59

Total limited partnerships
 
—

 
518

 
453

 
971

Derivatives
 
1

 
—

 
—

 
1

Other assets
 
—

 
15

 
—

 
15

Investment contracts with insurance company
 
—

 
—

 
9

 
9

Total assets
 
$
528

 
$
1,242

 
$
488

 
$
2,258


The limited partnership investments are recorded at fair value, which represents the plan's share of net asset value of each partnership, as determined by the General Partner. Level 2 includes limited partnership investments which can be redeemed at net asset value in 90 days or less. Level 3 includes limited partnership investments with withdrawal provisions greater than 90 days, or for which withdrawals are not permitted until the termination of the partnership. Within hedge fund strategies, approximately 53% are equity related, 36% pursue a multi-strategy approach, 10% are focused on distressed investments and 1% are fixed income related at December 31, 2011.
The fair value of the guaranteed investment contracts is an estimate of the amount that would be received in an orderly sale to a market participant at the measurement date. The amount the plan would receive from the contract holder if the contracts were terminated is the primary input and is unobservable. The guaranteed investment contracts are therefore classified as Level 3 investments.
For a discussion of the fair value levels and the valuation methodologies used to measure fixed maturity securities, equities, derivatives and short term investments, see Note D.
The tables below present a reconciliation for all pension plan assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2011 and 2010.
Level 3
(In millions)
Balance at January 1, 2011
 
Actual return on assets still held at December 31, 2011
 
Actual return on assets sold during the year ended December 31, 2011
 
Purchases, sales, and settlements
 
Net transfers into (out of) Level 3
 
Balance at December 31, 2011
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
10

 
$
—

 
$
—

 
$
—

 
$
—

 
$
10

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
Commercial mortgage-backed
9

 
—

 
—

 
(9
)
 
—

 
—

Other asset-backed
1

 
—

 
—

 
(1
)
 
—

 
—

Total asset-backed
10

 
—

 
—

 
(10
)
 
—

 
—

Total fixed maturity securities
20

 
—

 
—

 
(10
)
 
—

 
10

Equity securities
6

 
(1
)
 
—

 
—

 
—

 
5

Limited partnerships:
 
 
 
 
 
 
 
 
 
 
 
Hedge funds
394

 
5

 
5

 
(74
)
 
—

 
330

Private equity
59

 
9

 
—

 
(3
)
 
—

 
65

Total limited partnerships
453

 
14

 
5

 
(77
)
 
—

 
395

Investment contracts with insurance company
9

 
1

 
—

 
—

 
—

 
10

Total
$
488

 
$
14

 
$
5

 
$
(87
)
 
$
—

 
$
420


Level 3
(In millions)
Balance at January 1, 2010
 
Actual return on assets still held at December 31, 2010
 
Actual return on assets sold during the year ended December 31, 2010
 
Purchases, sales, and settlements
 
Net transfers into (out of) Level 3
 
Balance at December 31, 2010
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
—

 
$
—

 
$
—

 
$
10

 
$
—

 
$
10

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed
52

 
—

 
6

 
(58
)
 
—

 
—

Commercial mortgage-backed
—

 
—

 
—

 
9

 
—

 
9

Other asset-backed
5

 
—

 
—

 
(4
)
 
—

 
1

Total asset-backed
57

 
—

 
6

 
(53
)
 
—

 
10

Total fixed maturity securities
57

 
—

 
6

 
(43
)
 
—

 
20

Equity securities
5

 
1

 
—

 
—

 
—

 
6

Limited partnerships:
 
 
 
 
 
 
 
 
 
 
 
Hedge funds
339

 
64

 
—

 
(9
)
 
—

 
394

Private equity
57

 
6

 
—

 
(4
)
 
—

 
59

Total limited partnerships
396

 
70

 
—

 
(13
)
 
—

 
453

Investment contracts with insurance company
9

 
—

 
—

 
—

 
—

 
9

Total
$
467

 
$
71

 
$
6

 
$
(56
)
 
$
—

 
$
488

The table below presents the estimated future minimum benefit payments to participants at December 31, 2011.
Estimated Future Minimum Benefit Payments to Participants
(In millions)
Pension Benefits
 
Postretirement Benefits
2012
$
176

 
$
6

2013
181

 
6

2014
184

 
5

2015
188

 
5

2016
191

 
5

2017-2021
1,002

 
18


In 2012, CNA expects to contribute $86 million to its pension plans and $6 million to its postretirement health care benefit plans.
Savings Plans
CNA sponsors savings plans, which are generally contributory plans that allow most employees to contribute a maximum of 20% of their eligible compensation, subject to certain limitations prescribed by the IRS. The Company contributes matching amounts to participants, amounting to 70% of the first 6% (35% of the first 6% in the first year of employment) of eligible compensation contributed by the employee. Employees vest in these contributions ratably over five years.
The CNA Savings and Capital Accumulation Plan allows employees to make contributions to an investment fund that is supported in part by an investment contract purchased from CAC. CAC will not accept any further deposits under this contract. The liability to the CNA Savings and Capital Accumulation Plan is included in Separate account liabilities and Policyholders' funds on the Consolidated Balance Sheets, and was $381 million and $363 million at December 31, 2011 and 2010.
As noted above, during 2000, CCC employees were required to make a choice regarding their continued participation in CNA's defined benefit pension plan. Employees who elected to forgo earning additional benefits in the defined benefit pension plan and all employees hired by CCC on or after January 1, 2000 receive a Company contribution of 3% or 5% of their eligible compensation, depending on their age. In addition, these employees are eligible to receive additional discretionary contributions of up to 2% of eligible compensation and an additional Company match of up to 80% of the first 6% of eligible compensation contributed by the employee. These additional contributions are made at the discretion of management and are contributed to participant accounts in the first quarter of the year following management's determination of the discretionary amounts. Employees vest in these contributions ratably over five years.
Benefit expense for the Company's savings plans was $60 million, $61 million and $59 million for the years ended December 31, 2011, 2010 and 2009.
Stock-Based Compensation
The CNAF Incentive Compensation Plan (the Plan), as amended and restated on January 1, 2010, authorizes the grant of stock-based compensation to certain management personnel for up to 6 million shares of CNAF's common stock. The Plan currently provides for awards of stock options, stock appreciation rights (SARs), restricted shares, performance-based restricted share units (RSUs) and performance share units. The number of shares available for the granting of stock-based compensation under the Plan as of December 31, 2011 was approximately 2.4 million.
The Company recorded stock-based compensation expense related to the Plan of $6 million, $5 million and $3 million for the years ended December 31, 2011, 2010 and 2009. The related income tax benefit recognized was $2 million, $2 million and $1 million. The compensation cost related to nonvested awards not yet recognized was $10 million, and the weighted average period over which it is expected to be recognized is 1.83 years at December 31, 2011.
Equity based compensation that is not fully vested prior to termination is generally forfeited upon termination, except as otherwise provided by contractual obligations. In addition, any such compensation that vested prior to termination is generally canceled immediately, except in cases of retirement, death or disability, and as otherwise provided by contractual obligations.
Stock Options and SARs
The exercise price of all stock options and SARs granted is based on the market value of the Company's common stock as of the date of grant. Stock options and SARs generally vest ratably over a four-year service period following date of grant and have a maximum term of ten years.
The fair value of granted stock options and SARs was estimated at the grant date using the Black-Scholes option-pricing model. The Black-Scholes model incorporates a risk free rate of return and various assumptions regarding the underlying common stock and the expected life of the securities granted. Different interest rates and assumptions were used for each grant, as appropriate based on date of grant.
The following table presents the significant assumptions used to estimate the fair value of granted stock options and SARs for the years ended December 31, 2011, 2010 and 2009.
Years ended December 31
 
2011
 
2010
 
2009
Weighted average expected life of the securities granted (in years)
 
5.61

 
5.61

 
4.84

Estimate of the underlying common stock's volatility
 
39.88
%
 
39.58
%
 
39.95
%
Expected dividend yield
 
1.5
%
 
—
%
 
—
%
Risk free interest rate
 
2.2
%
 
2.6
%
 
2.0
%

The following table presents activity for stock options and SARs under the Plan in 2011.
 
 
Number of Awards
 
Weighted-Average Exercise Price per Award
 
Aggregate Intrinsic Value
 
Weighted-Average Remaining Contractual Term (in years)
Outstanding at January 1, 2011
 
1,625,175

 
$
27.42

 
 
 
 
Awards granted
 
125,000

 
27.12

 
 
 
 
Awards exercised
 
(166,375
)
 
27.13

 
 
 
 
Awards forfeited, canceled or expired
 
(264,450
)
 
34.51

 
 
 
 
Outstanding at December 31, 2011
 
1,319,350

 
$
26.01

 
$
5
 million
 
5.80
Outstanding, fully vested and expected to vest
 
1,260,045

 
$
26.14

 
$
5
 million
 
5.69
Outstanding, exercisable
 
872,600

 
$
28.04

 
$
2
 million
 
4.79

The following table presents weighted-average grant date fair value for awards granted, total intrinsic value for awards exercised and total fair value for awards vested for the years ended December 31, 2011, 2010 and 2009.
Years ended December 31
 
2011
 
2010
 
2009
Weighted-average grant date fair value
 
$
9.38

 
$
10.49

 
$
4.69

Total intrinsic value of awards exercised
 
$
481
 thousand
 
$
350
 thousand
 
$
—

Fair value of awards vested
 
$
2
 million
 
$
2
 million
 
$
4
 million

Share Awards
The fair value of share awards is based on the market value of the Company's common stock as of the date of grant. Share awards currently granted under the Plan include restricted shares, performance-based RSUs, and performance share units. Generally, restricted shares vest ratably over a four-year service period following the date of grant. Performance-based RSUs generally become payable within a range of 0% to 100% of the number of shares initially granted based upon the attainment of specific annual performance goals and vest ratably over a four-year service period following the date of grant. Performance share units become payable within a range of 0% to 200% of the number of shares initially granted based upon the attainment of specific performance goals achieved over a three year period.
The following table presents activity for restricted shares, performance-based RSUs and performance share units under the Plan in 2011.
 
Number of Awards
 
Weighted-Average Grant Date Fair Value
Balance at January 1, 2011
493,507

 
$
20.30

Awards granted
274,333

 
27.23

Awards vested
(114,130
)
 
17.95

Awards forfeited, canceled or expired
(6,880
)
 
26.24

Performance-based adjustment
(7,408
)
 
27.11

Balance at December 31, 2011
639,422

 
$
23.55

Operating Leases, Commitments and Contingencies, and Guarantees
Operating Leases, Commitments and Contingencies, and Guarantees
Note K. Operating Leases, Commitments and Contingencies, and Guarantees
Operating Leases
The Company occupies office facilities under lease agreements that expire at various dates. In addition, data processing, office and transportation equipment is leased under agreements that expire at various dates. Most leases contain renewal options that provide for rent increases based on prevailing market conditions. Lease expense for the years ended December 31, 2011, 2010 and 2009 was $50 million, $52 million and $51 million. Sublease revenues for the years ended December 31, 2011, 2010 and 2009 were $2 million, $3 million and $4 million.
The table below presents the future minimum lease payments to be made under non-cancelable operating leases along with future minimum sublease receipts to be received on owned and leased properties at December 31, 2011.
Future Minimum Lease Payments and Sublease Receipts
(In millions)
Future Minimum Lease Payments
 
Future Minimum Sublease Receipts
2012
$
37

 
$
2

2013
37

 
2

2014
31

 
—

2015
24

 
—

2016
21

 
—

Thereafter
72

 
—

Total
$
222

 
$
4


Commitments and Contingencies
The Company holds an investment in a real estate joint venture. In the normal course of business, the Company, on a joint and several basis with other unrelated insurance company shareholders, has committed to continue funding the operating deficits of this joint venture. Additionally, the Company and the other unrelated shareholders, on a joint and several basis, have guaranteed an operating lease for an office building, which expires in 2016. The guarantee of the operating lease is a parallel guarantee to the commitment to fund operating deficits; consequently, the separate guarantee to the lessor is not expected to be triggered as long as the joint venture continues to be funded by its shareholders which provide liquidity to make its annual lease payments.
In the event that the other parties to the joint venture are unable to meet their commitments in funding the operations of this joint venture, the Company would be required to assume the obligation for the entire office building operating lease. The Company does not believe it is likely that it will be required to do so.  However, the maximum potential future lease payments and other related costs at December 31, 2011 that the Company could be required to pay under this guarantee, in excess of amounts already recorded, were approximately $134 million. If the Company were required to assume the entire lease obligation, the Company would have the right to pursue reimbursement from the other shareholders and the right to all sublease revenues.
The Company has entered into a limited number of contracts with minimum payments, primarily related to outsourced services and software. Estimated future minimum payments under these contracts, which amounted to approximately $13 million at December 31, 2011, were $4 million in 2012, $4 million in 2013, and $5 million thereafter.
Guarantees
In the course of selling business entities and assets to third parties, the Company has agreed to indemnify purchasers for losses arising out of breaches of representation and warranties with respect to the business entities or assets being sold, including, in certain cases, losses arising from undisclosed liabilities or certain named litigation. Such indemnification provisions generally survive for periods ranging from nine months following the applicable closing date to the expiration of the relevant statutes of limitation. As of December 31, 2011, the aggregate amount of quantifiable indemnification agreements in effect for sales of business entities, assets and third party loans was $764 million.
In addition, the Company has agreed to provide indemnification to third party purchasers for certain losses associated with sold business entities or assets that are not limited by a contractual monetary amount. As of December 31, 2011, the Company had outstanding unlimited indemnifications in connection with the sales of certain of its business entities or assets that included tax liabilities arising prior to a purchaser's ownership of an entity or asset, defects in title at the time of sale, employee claims arising prior to closing and in some cases losses arising from certain litigation and undisclosed liabilities. These indemnification agreements survive until the applicable statutes of limitation expire, or until the agreed upon contract terms expire.
As of December 31, 2011 and 2010, the Company had recorded liabilities of approximately $15 million and $16 million related to indemnification agreements and management believes that it is not likely that any future indemnity claims will be significantly greater than the amounts recorded.
Stockholders' Equity and Statutory Accounting Practices
Stockholders' Equity And Statutory Accounting Practices
Note L. Stockholders’ Equity and Statutory Accounting Practices
2008 Senior Preferred
In 2008, the Company issued, and Loews purchased, $1.25 billion of CNAF non-voting cumulative senior preferred stock, which was approved by a special review committee of independent members of CNAF's Board of Directors. As of December 31, 2010, the preferred stock was redeemed in full.
CNAF used the majority of the proceeds from the 2008 Senior Preferred to increase the statutory surplus of its principal insurance subsidiary, CCC, through the purchase of a $1.0 billion surplus note of CCC. Surplus notes are financial instruments with a stated maturity date and scheduled interest payments, issued by insurance enterprises with the approval of the insurer’s domiciliary state. Surplus notes are treated as capital under statutory accounting. All payments of interest and principal on this note are subject to the prior approval of the Illinois Department of Insurance (the Department). The surplus note of CCC has a term of 30 years and accrues interest at a rate of 10% per year. Interest on the note is payable quarterly. In 2011 and 2010, the Company received regulatory approval from the Department for CCC to repay $250 million and $500 million of the $1.0 billion surplus note to CNAF, leaving an outstanding balance of $250 million as of December 31, 2011.
Common Stock Dividends
Dividends of $0.40 per share on CNA's common stock were declared and paid in 2011. No common stock dividends were declared or paid in 2010 or 2009.
Statutory Accounting Practices (Unaudited)
CNAF’s domestic insurance subsidiaries maintain their accounts in conformity with accounting practices prescribed or permitted by insurance regulatory authorities, which vary in certain respects from GAAP. In converting from statutory accounting principles to GAAP, the more significant adjustments include deferral of policy acquisition costs and the inclusion of net unrealized holding gains or losses in stockholders’ equity relating to certain fixed maturity securities.
CNAF’s insurance subsidiaries are domiciled in various jurisdictions. These subsidiaries prepare statutory financial statements in accordance with accounting practices prescribed or permitted by the respective jurisdictions’ insurance regulators. Domestic prescribed statutory accounting practices are set forth in a variety of publications of the National Association of Insurance Commissioners (NAIC) as well as state laws, regulations and general administrative rules.
CNAF’s ability to pay dividends and other credit obligations is significantly dependent on receipt of dividends from its subsidiaries. The payment of dividends to CNAF by its insurance subsidiaries without prior approval of the insurance department of each subsidiary’s domiciliary jurisdiction is limited by formula. Dividends in excess of these amounts are subject to prior approval by the respective state insurance departments.
Dividends from CCC are subject to the insurance holding company laws of the State of Illinois, the domiciliary state of CCC. Under these laws, ordinary dividends, or dividends that do not require prior approval by the Department, may be paid only from earned surplus, which is calculated by removing unrealized gains from unassigned surplus. As of December 31, 2011, CCC is in a positive earned surplus position, enabling CCC to pay approximately $990 million of dividend payments during 2012 that would not be subject to the Department’s prior approval. The actual level of dividends paid in any year is determined after an assessment of available dividend capacity, holding company liquidity and cash needs as well as the impact the dividends will have on the statutory surplus of the applicable insurance company.
CNAF’s domestic insurance subsidiaries are subject to risk-based capital requirements. Risk-based capital is a method developed by the NAIC to determine the minimum amount of statutory capital appropriate for an insurance company to support its overall business operations in consideration of its size and risk profile. The formula for determining the amount of risk-based capital specifies various factors, weighted based on the perceived degree of risk, which are applied to certain financial balances and financial activity. The adequacy of a company's actual capital is evaluated by a comparison to the risk-based capital results, as determined by the formula. Companies below minimum risk-based capital requirements are classified within certain levels, each of which requires specified corrective action. As of December 31, 2011 and 2010, all of CNAF’s domestic insurance subsidiaries exceeded the minimum risk-based capital requirements.
Subsidiaries with insurance operations outside the United States are also subject to insurance regulation in the countries in which they operate. The Company has legal entity and branch operations in other countries, primarily the United Kingdom, Canada and Bermuda. CNAF’s foreign legal entities and branch met or exceeded regulatory capital requirements.
Combined statutory capital and surplus and net income (loss), determined in accordance with accounting practices prescribed or permitted by insurance regulatory authorities for the Combined Continental Casualty Companies and the life company, were as follows.
Statutory Information
 
Statutory Capital and Surplus
 
Statutory Net Income (Loss)
 
December 31
 
Years ended December 31
(In millions)
2011 (b)
 
2010
 
2011 (b)
 
2010
 
2009
Combined Continental Casualty Companies (a)
$
9,888

 
$
9,821

 
$
954

 
$
258

 
$
17

Life company
519

 
498

 
29

 
86

 
(65
)
________________
(a)
Represents the combined statutory surplus of CCC and its subsidiaries, including the Life company.
(b)
Preliminary.
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)
Note M. Accumulated Other Comprehensive Income (Loss)
The following table displays the components of AOCI included on the Consolidated Balance Sheets.
Accumulated Other Comprehensive Income (Loss)
December 31
2011
 
2010
(In millions)
Tax
 
After-tax
 
Tax
 
After-tax
Cumulative foreign currency translation adjustment
$
—

 
$
121

 
$
—

 
$
136

Pension and postretirement benefits
326

 
(609
)
 
220

 
(409
)
Net unrealized gains (losses) on investments with OTTI losses
33

 
(64
)
 
39

 
(73
)
Net unrealized gains (losses) on other investments
(533
)
 
1,022

 
(348
)
 
691

Accumulated other comprehensive loss attributable to noncontrolling interests
—

 
—

 
—

 
(19
)
Accumulated other comprehensive income (loss)
$
(174
)
 
$
470

 
$
(89
)
 
$
326


The amount of pretax net unrealized gains (losses) on available-for-sale securities with OTTI losses reclassified out of AOCI and recognized in earnings was $(83) million, $(42) million and $(146) million for the years ended December 31, 2011, 2010 and 2009, with related tax benefit of $29 million, $15 million and $51 million. The amount of pretax net unrealized gains (losses) on other available-for-sale securities reclassified out of AOCI and recognized in earnings was $60 million, $137 million and $(768) million for the years ended December 31, 2011, 2010 and 2009, with related tax (expense) benefit of $(21) million, $(48) million and $269 million.
Business Segments
Business Segments
Note N. Business Segments
The Company's core property and casualty commercial insurance operations are reported in two business segments: CNA Specialty and CNA Commercial. CNA Specialty provides a broad array of professional, financial and specialty property and casualty products and services, primarily through insurance brokers and managing general underwriters. CNA Commercial includes property and casualty coverages sold to small businesses and middle market entities and organizations primarily through an independent agency distribution system. CNA Commercial also includes commercial insurance and risk management products sold to large corporations primarily through insurance brokers.
The Company's non-core operations are managed in two segments: Life & Group Non-Core and Corporate & Other Non-Core. Life & Group Non-Core primarily includes the results of the life and group lines of business that are in run-off. Corporate & Other Non-Core primarily includes certain corporate expenses, including interest on corporate debt, and the results of certain property and casualty business in run-off, including CNA Re and A&EP.
The accounting policies of the segments are the same as those described in Note A. The Company manages most of its assets on a legal entity basis, while segment operations are conducted across legal entities. As such, only insurance and reinsurance receivables, insurance reserves and deferred acquisition costs are readily identifiable by individual segment. Distinct investment portfolios are not maintained for each individual segment; accordingly, allocation of assets to each segment is not performed. Therefore, net investment income and realized investment gains or losses are allocated primarily based on each segment's net carried insurance reserves, as adjusted. All significant intrasegment income and expense has been eliminated. Income taxes have been allocated on the basis of the taxable income of the segments.
Approximately 8.8%, 6.9% and 7.0% of the Company's direct written premiums were derived from outside the United States for the years ended December 31, 2011, 2010 and 2009.
In the following tables, certain financial measures are presented to provide information used by management to monitor the Company's operating performance. Management utilizes these financial measures to monitor the Company's insurance operations and investment portfolio. Net operating income, which is derived from certain income statement amounts, is used by management to monitor performance of the Company's insurance operations. The Company's investment portfolio is monitored by management through analysis of various factors including unrealized gains and losses on securities, portfolio duration and exposure to market and credit risk. Based on such analyses, the Company may recognize an OTTI loss on an investment security in accordance with its policy, or sell a security, which may produce realized gains and losses.
Net operating income (loss) is calculated by excluding from net income (loss) attributable to CNA the after-tax effects of 1) net realized investment gains or losses, 2) income or loss from discontinued operations and 3) any cumulative effects of changes in accounting guidance. The calculation of net operating income excludes net realized investment gains or losses because net realized investment gains or losses are largely discretionary, except for some losses related to OTTI, and are generally driven by economic factors that are not necessarily consistent with key drivers of underwriting performance, and are therefore not considered an indication of trends in insurance operations.
The significant components of the Company's continuing operations and selected balance sheet items are presented in the following tables.

Year ended December 31, 2011
CNA
Specialty
 
CNA
Commercial
 
Life &
Group
Non-Core
 
Corporate
& Other
Non-Core
 
 
 
 
(In millions)
 
 
 
 
Eliminations
 
Total
Net written premiums (a)
$
2,872

 
$
3,350

 
$
577

 
$
2

 
$
(3
)
 
$
6,798

Operating revenues
 

 
 

 
 

 
 

 
 

 
 

Net earned premiums
$
2,796

 
$
3,240

 
$
569

 
$
1

 
$
(3
)
 
$
6,603

Net investment income
500

 
763

 
759

 
32

 
—

 
2,054

Other revenues
221

 
54

 
13

 
6

 
—

 
294

Total operating revenues
3,517

 
4,057

 
1,341

 
39

 
(3
)
 
8,951

Claims, Benefits and Expenses
 

 
 

 
 

 
 

 
 

 
 

Net incurred claims and benefits
1,657

 
2,296

 
1,526

 
(3
)
 
—

 
5,476

Policyholders’ dividends
(3
)
 
8

 
8

 
—

 
—

 
13

Amortization of deferred acquisition costs
663

 
725

 
22

 
—

 
—

 
1,410

Other insurance related expenses
197

 
395

 
143

 
6

 
(3
)
 
738

Other expenses
191

 
53

 
19

 
170

 
—

 
433

Total claims, benefits and expenses
2,705

 
3,477

 
1,718

 
173

 
(3
)
 
8,070

Operating income (loss) from continuing operations before income tax
812

 
580

 
(377
)
 
(134
)
 
—

 
881

Income tax (expense) benefit on operating income (loss)
(281
)
 
(207
)
 
169

 
68

 
—

 
(251
)
Net operating (income) loss, after-tax, attributable to noncontrolling interests
(12
)
 
(4
)
 
—

 
—

 
—

 
(16
)
Net operating income (loss) from continuing operations attributable to CNA
519

 
369

 
(208
)
 
(66
)
 
—

 
614

Net realized investment gains (losses), net of participating policyholders’ interests
(5
)
 
14

 
(7
)
 
(6
)
 
—

 
(4
)
Income tax (expense) benefit on net realized investment gains (losses)
2

 
(2
)
 
2

 
3

 
—

 
5

Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

Net realized investment gains (losses) attributable to CNA
(3
)
 
12

 
(5
)
 
(3
)
 
—

 
1

Net income (loss) from continuing operations attributable to CNA
$
516

 
$
381

 
$
(213
)
 
$
(69
)
 
$
—

 
$
615


(a) Related to business in property and casualty companies only.

December 31, 2011
 
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
Reinsurance receivables
$
852

 
$
1,188

 
$
1,375

 
$
2,677

 
$
—

 
$
6,092

Insurance receivables
$
670

 
$
1,047

 
$
8

 
$
1

 
$
—

 
$
1,726

Deferred acquisition costs
$
347

 
$
311

 
$
—

 
$
—

 
$
—

 
$
658

Insurance reserves
 
 
 
 
 
 
 
 
 
 
 

Claim and claim adjustment expenses
$
6,840

 
$
11,509

 
$
2,825

 
$
3,129

 
$
—

 
$
24,303

Unearned premiums
1,629

 
1,480

 
141

 
—

 
—

 
3,250

Future policy benefits
—

 
—

 
9,810

 
—

 
—

 
9,810

Policyholders’ funds
15

 
10

 
166

 
—

 
—

 
191

Year ended December 31, 2010
CNA
Specialty
 
CNA
Commercial
 
Life &
Group
Non-Core
 
Corporate
& Other
Non-Core
 
 
 
 
(In millions)
 
 
 
 
Eliminations
 
Total
Net written premiums (a)
$
2,691

 
$
3,208

 
$
573

 
$
2

 
$
(3
)
 
$
6,471

Operating revenues
 

 
 

 
 

 
 

 
 

 
 

Net earned premiums
$
2,679

 
$
3,256

 
$
582

 
$
1

 
$
(3
)
 
$
6,515

Net investment income
591

 
873

 
715

 
137

 
—

 
2,316

Other revenues
216

 
61

 
7

 
8

 
—

 
292

Total operating revenues
3,486

 
4,190

 
1,304

 
146

 
(3
)
 
9,123

Claims, Benefits and Expenses
 

 
 
 
 

 
 

 
 

 
 

Net incurred claims and benefits
1,447

 
2,175

 
1,275

 
58

 
—

 
4,955

Policyholders’ dividends
12

 
14

 
4

 
—

 
—

 
30

Amortization of deferred acquisition costs
631

 
736

 
20

 
—

 
—

 
1,387

Other insurance related expenses
186

 
424

 
180

 
10

 
(3
)
 
797

Other expenses
190

 
55

 
2

 
681

 
—

 
928

Total claims, benefits and expenses
2,466

 
3,404

 
1,481

 
749

 
(3
)
 
8,097

Operating income (loss) from continuing operations before income tax
1,020

 
786

 
(177
)
 
(603
)
 
—

 
1,026

Income tax (expense) benefit on operating income (loss)
(343
)
 
(260
)
 
90

 
216

 
—

 
(297
)
Net operating (income) loss, after-tax, attributable to noncontrolling interests
(52
)
 
(17
)
 
—

 
—

 
—

 
(69
)
Net operating income (loss) from continuing operations attributable to CNA
625

 
509

 
(87
)
 
(387
)
 
—

 
660

Net realized investment gains (losses), net of participating policyholders’ interests
30

 
(15
)
 
53

 
18

 
—

 
86

Income tax (expense) benefit on net realized investment gains (losses)
(10
)
 
(1
)
 
(20
)
 
(5
)
 
—

 
(36
)
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
—

 
1

 
—

 
—

 
—

 
1

Net realized investment gains (losses) attributable to CNA
20

 
(15
)
 
33

 
13

 
—

 
51

Net income (loss) from continuing operations attributable to CNA
$
645

 
$
494

 
$
(54
)
 
$
(374
)
 
$
—

 
$
711


(a) Related to business in property and casualty companies only.

December 31, 2010
 
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
Reinsurance receivables
$
906

 
$
1,973

 
$
1,502

 
$
2,823

 
$
—

 
$
7,204

Insurance receivables
$
654

 
$
1,050

 
$
9

 
$
4

 
$
—

 
$
1,717

Deferred acquisition costs
$
330

 
$
315

 
$
434

 
$
—

 
$
—

 
$
1,079

Insurance reserves


 


 


 


 


 
 

Claim and claim adjustment expenses
$
6,793

 
$
12,522

 
$
2,739

 
$
3,442

 
$
—

 
$
25,496

Unearned premiums
1,543

 
1,526

 
132

 
2

 
—

 
3,203

Future policy benefits
—

 
—

 
8,718

 
—

 
—

 
8,718

Policyholders’ funds
16

 
13

 
144

 
—

 
—

 
173

Year ended December 31, 2009
CNA
Specialty
 
CNA
Commercial
 
Life &
Group
Non-Core
 
Corporate
& Other
Non-Core
 
 
 
 
(In millions)
 
 
 
 
Eliminations
 
Total
Net written premiums (a)
$
2,684

 
$
3,448

 
$
583

 
$
1

 
$
(3
)
 
$
6,713

Operating revenues
 

 
 

 
 

 
 

 
 

 
 

Net earned premiums
$
2,697

 
$
3,432

 
$
595

 
$
—

 
$
(3
)
 
$
6,721

Net investment income
526

 
935

 
664

 
195

 
—

 
2,320

Other revenues
206

 
61

 
11

 
10

 
—

 
288

Total operating revenues
3,429

 
4,428

 
1,270

 
205

 
(3
)
 
9,329

Claims, Benefits and Expenses
 

 
 
 
 

 
 

 
 

 
 

Net incurred claims and benefits
1,536

 
2,420

 
1,084

 
227

 
—

 
5,267

Policyholders’ dividends
9

 
9

 
5

 
—

 
—

 
23

Amortization of deferred acquisition costs
624

 
775

 
18

 
—

 
—

 
1,417

Other insurance related expenses
163

 
435

 
183

 
3

 
(3
)
 
781

Other expenses
179

 
77

 
69

 
119

 
—

 
444

Total claims, benefits and expenses
2,511

 
3,716

 
1,359

 
349

 
(3
)
 
7,932

Operating income (loss) from continuing operations before income tax
918

 
712

 
(89
)
 
(144
)
 
—

 
1,397

Income tax (expense) benefit on operating income (loss)
(282
)
 
(201
)
 
73

 
57

 
—

 
(353
)
Net operating (income) loss, after-tax, attributable to noncontrolling interests
(45
)
 
(17
)
 
—

 
—

 
—

 
(62
)
Net operating income (loss) from continuing operations attributable to CNA
591

 
494

 
(16
)
 
(87
)
 
—

 
982

Net realized investment gains (losses), net of participating policyholders’ interests
(186
)
 
(360
)
 
(235
)
 
(76
)
 
—

 
(857
)
Income tax (expense) benefit on net realized investment gains (losses)
64

 
123

 
82

 
27

 
—

 
296

Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
(1
)
 
1

 
—

 
—

 
—

 
—

Net realized investment gains (losses) attributable to CNA
(123
)
 
(236
)
 
(153
)
 
(49
)
 
—

 
(561
)
Net income (loss) from continuing operations attributable to CNA
$
468

 
$
258

 
$
(169
)
 
$
(136
)
 
$
—

 
$
421


(a) Related to business in property and casualty companies only.
The following table provides revenue by line of business for each reportable segment. Revenues are comprised of operating revenues and net realized investment gains and losses, net of participating policyholders’ interests.
Revenues by Line of Business
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
CNA Specialty
 
 
 
 
 
International
$
210

 
$
199

 
$
171

Professional & Management Liability
2,541

 
2,551

 
2,339

Surety
472

 
475

 
474

Warranty & Alternative Risks
289

 
291

 
259

CNA Specialty revenues
3,512

 
3,516

 
3,243

CNA Commercial
 

 
 

 
 
CNA Select Risk
272

 
261

 
210

Commercial Insurance
2,681

 
2,851

 
2,692

International
537

 
499

 
617

Small Business
581

 
564

 
549

CNA Commercial revenues
4,071

 
4,175

 
4,068

Life & Group Non-Core
 

 
 

 
 
Health
1,093

 
1,100

 
811

Life & Annuity
229

 
249

 
211

Other
12

 
8

 
13

Life & Group Non-Core revenues
1,334

 
1,357

 
1,035

Corporate & Other Non-Core revenues
33

 
164

 
129

Eliminations
(3
)
 
(3
)
 
(3
)
Total revenues
$
8,947

 
$
9,209

 
$
8,472

IT Transformation
IT Transformation
Note O. IT Transformation
In 2010, the Company commenced a program to significantly transform its IT organization and delivery model. A key initiative was moving to a managed services model which involved outsourcing the Company's infrastructure and application development functions to selected vendors that possess proven skills and scale. Total costs of the program were $37 million, of which $36 million were incurred in 2010. The costs by reportable segment for the year ended December 31, 2010 were as follows.
IT Transformation Costs by Segment
Year ended December 31
 
(In millions)
2010
CNA Specialty
$
8

CNA Commercial
15

Life & Group Non-Core
10

Corporate & Other Non-Core
3

Total IT Transformation Costs
$
36

Quarterly Financial Data (Unaudited)
Quarterly Financial Data (Unaudited)
Note P. Quarterly Financial Data (Unaudited)
The following tables set forth unaudited quarterly financial data for the years ended December 31, 2011 and 2010.
Quarterly Financial Data
2011
 
 
 
 
 
 
 
 
 
(In millions, except per share data)
First
 
Second
 
Third
 
Fourth
 
Full Year
Revenues
$
2,315

 
$
2,198

 
$
2,175

 
$
2,259

 
$
8,947

Income from continuing operations
233

 
132

 
75

 
191

 
631

Income (loss) from discontinued operations, net of income tax (expense) benefit
(1
)
 
—

 
—

 
—

 
(1
)
Net (income) loss attributable to noncontrolling interests
(9
)
 
(6
)
 
—

 
(1
)
 
(16
)
Net income attributable to CNA
$
223

 
$
126

 
$
75

 
$
190

 
$
614

Basic and Diluted Earnings (Loss) Per Share
 
 
 
 
 
 
 
 
 
Income from continuing operations attributable to CNA common stockholders
$
0.83

 
$
0.47

 
$
0.28

 
$
0.70

 
$
2.28

Income (loss) from discontinued operations attributable to CNA common stockholders
—

 
—

 
—

 
—

 
—

Basic and diluted earnings per share attributable to CNA common stockholders
$
0.83

 
$
0.47

 
$
0.28

 
$
0.70

 
$
2.28


2010
 
 
 
 
 
 
 
 
 
(In millions, except per share data)
First
 
Second
 
Third
 
Fourth
 
Full Year
Revenues
$
2,315

 
$
2,233

 
$
2,363

 
$
2,298

 
$
9,209

Income (loss) from continuing operations
255

 
301

 
(103
)
 
326

 
779

Income (loss) from discontinued operations, net of income tax (expense) benefit
—

 
1

 
(22
)
 
—

 
(21
)
Net (income) loss attributable to noncontrolling interests
(10
)
 
(19
)
 
(15
)
 
(24
)
 
(68
)
Net income (loss) attributable to CNA
$
245

 
$
283

 
$
(140
)
 
$
302

 
$
690

Basic and Diluted Earnings (Loss) Per Share
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to CNA common stockholders
$
0.82

 
$
0.96

 
$
(0.51
)
 
$
1.09

 
$
2.36

Income (loss) from discontinued operations attributable to CNA common stockholders
—

 
—

 
(0.08
)
 
—

 
(0.08
)
Basic and diluted earnings (loss) per share attributable to CNA common stockholders
$
0.82

 
$
0.96

 
$
(0.59
)
 
$
1.09

 
$
2.28


During the fourth quarter of 2011, the Company unlocked assumptions related to its payout annuity contracts, as further discussed in Note A, resulting in a loss recognition of $115 million after-tax.
Related Party Transactions
Related Party Transactions
Note Q. Related Party Transactions
The Company reimburses Loews, or pays directly, for management fees, travel and related expenses, software fees, and expenses of investment facilities and services provided to the Company. The amounts reimbursed or paid by the Company were $38 million, $38 million and $33 million for the years ended December 31, 2011, 2010 and 2009. The CNA Tax Group is included in the consolidated federal income tax return of Loews and its eligible subsidiaries. See Note E for a detailed description of the income tax agreement with Loews. In addition, the Company writes, at standard rates, a limited amount of insurance for Loews and its subsidiaries. The earned premiums for the years ended December 31, 2011, 2010 and 2009 were $2 million, $2 million and $2 million.
CNA previously sponsored a stock ownership plan whereby the Company financed the purchase of Company common stock by certain former officers, including executive officers. Interest charged on the principal amount of these outstanding stock purchase loans is generally equivalent to the long term applicable federal rate, compounded semi-annually, in effect on the disbursement date of the loan. Loans made pursuant to the plan are generally full recourse and are secured by the stock purchased. The loans were originally issued with a ten-year maturity date, and the majority of the remaining loans have been extended with terms maturing through October 2014. The carrying value of the loans as of December 31, 2011 approximates the fair value of the related common stock collateral.
Schedule I. Summary of Investments - Other Than Investments in Related Parties
Schedule I. Summary of Investments - Other than Investments in Related Parties
SCHEDULE I. SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES
Incorporated herein by reference to Note B to the Consolidated Financial Statements included under Item 8.
Schedule II. Condensed Financial Information of Registrant (Parent Company)
Schedule II. Condensed Financial Information of Registrant (Parent Company)
SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
CNA Financial Corporation
Statements of Operations
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Revenues
 
 
 
 
 
Net investment income
$
1

 
$
4

 
$
3

Net realized investment gains (losses)
(9
)
 
(1
)
 
8

Other income
40

 
96

 
101

Total revenues
32

 
99

 
112

Expenses
 
 
 
 
 
Administrative and general
3

 
5

 
2

Interest
167

 
148

 
116

Total expenses
170

 
153

 
118

Loss from operations before income taxes and equity in net income of subsidiaries
(138
)
 
(54
)
 
(6
)
Income tax benefit
46

 
19

 
2

Loss before equity in net income of subsidiaries
(92
)
 
(35
)
 
(4
)
Equity in net income of subsidiaries
706

 
725

 
423

Net income
$
614

 
$
690

 
$
419


See accompanying Notes to Condensed Financial Information as well as the Consolidated Financial Statements and accompanying Notes.
CNA Financial Corporation
Balance Sheets
December 31
 
 
 
(In millions, except share data)
2011
 
2010
Assets
 
 
 
Investment in subsidiaries
$
13,564

 
$
12,780

Fixed maturity securities available-for-sale, at fair value (amortized cost of $2 and $3)
2

 
3

Short term investments
292

 
215

Amounts due from subsidiaries
—

 
11

Surplus note due from subsidiary
250

 
500

Other assets
18

 
16

Total assets
$
14,126

 
$
13,525

Liabilities and equity
 
 
 
Liabilities:
 
 
 
Short term debt
$
3

 
$
399

Long term debt
2,525

 
2,131

Other liabilities
41

 
41

Total liabilities
2,569

 
2,571

Equity:
 
 
 
Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 269,274,900 and 269,139,198 shares outstanding)
683

 
683

Additional paid-in capital
2,146

 
2,200

Retained earnings
8,382

 
7,876

Accumulated other comprehensive income
470

 
326

Treasury stock (3,765,343 and 3,901,045 shares), at cost
(102
)
 
(105
)
Notes receivable for the issuance of common stock
(22
)
 
(26
)
Total equity
11,557

 
10,954

Total liabilities and equity
$
14,126

 
$
13,525


See accompanying Notes to Condensed Financial Information as well as the Consolidated Financial Statements and accompanying Notes.
CNA Financial Corporation
Statements of Cash Flows
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Cash Flows from Operating Activities
 
 
 
 
 
Net income
$
614

 
$
690

 
$
419

Adjustments to reconcile net income to net cash flows provided (used) by operating activities:
 
 
 
 
 
Equity in net income of subsidiaries
(706
)
 
(725
)
 
(423
)
Dividends received from subsidiaries
—

 
1

 
—

Net realized investment (gains) losses
9

 
1

 
(8
)
Other, net
55

 
85

 
(21
)
Total adjustments
(642
)
 
(638
)
 
(452
)
Net cash flows provided (used) by operating activities
$
(28
)
 
$
52

 
$
(33
)
Cash Flows from Investing Activities
 
 
 
 
 
Proceeds from fixed maturity securities
$
1

 
$
(2
)
 
$
12

Change in short term investments
(77
)
 
181

 
145

Capital contributions to subsidiaries
(38
)
 
(6
)
 
(3
)
Return of capital from subsidiaries
6

 
—

 
—

Repayment of surplus note by subsidiary
250

 
500

 
—

Other, net
1

 
—

 
(12
)
Net cash flows provided by investing activities
$
143

 
$
673

 
$
142

Cash Flows from Financing Activities
 
 
 
 
 
Dividends paid to common stockholders
$
(108
)
 
$
—

 
$
—

Dividends paid to Loews for 2008 Senior Preferred
—

 
(76
)
 
(122
)
Payment to redeem 2008 Senior Preferred
—

 
(1,000
)
 
(250
)
Proceeds from the issuance of debt
396

 
495

 
350

Repayment of debt
(409
)
 
(150
)
 
(100
)
Stock options exercised
5

 
3

 
1

Other, net
1

 
3

 
12

Net cash flows used by financing activities
$
(115
)
 
$
(725
)
 
$
(109
)
Net change in cash
$
—

 
$
—

 
$
—

Cash, beginning of year
—

 
—

 
—

Cash, end of year
$
—

 
$
—

 
$
—


See accompanying Notes to Condensed Financial Information as well as the Consolidated Financial Statements and accompanying Notes.
Notes to Condensed Financial Information
A. Basis of Presentation
The condensed financial information of CNA Financial Corporation (CNAF or the Parent Company) should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8 of this Form 10-K. CNAF’s subsidiaries are accounted for using the equity method of accounting. Equity in net income of these subsidiaries is presented on the Condensed Statements of Operations as Equity in net income of subsidiaries. Loews owned approximately 90% of the outstanding common stock of CNAF as of December 31, 2011.
B. Debt
Debt is composed of the following obligations.
Debt
December 31
 
 
 
(In millions)
2011
 
2010
Short term debt:
 
 
 
Senior notes:
 
 
 
6.000%, face amount of $400, due August 15, 2011
$
—

 
$
399

Other debt
3

 
—

Total short-term debt
3

 
399

Long term debt:
 
 
 
Senior notes:
 
 
 
5.850%, face amount of $549, due December 15, 2014
548

 
548

6.500%, face amount of $350, due August 15, 2016
348

 
347

6.950%, face amount of $150, due January 15, 2018
149

 
149

7.350%, face amount of $350, due November 15, 2019
348

 
348

5.875%, face amount of $500, due August 15, 2020
495

 
495

5.750%, face amount of $400, due August 15, 2021
396

 
—

Debenture, 7.250%, face amount of $243, due November 15, 2023
241

 
241

Other debt
—

 
3

Total long term debt
2,525

 
2,131

Total debt
$
2,528

 
$
2,530


In February of 2011, CNAF issued $400 million of 5.750% senior notes due August 15, 2021 in a public offering. CNAF used the net proceeds of the offering, together with cash on hand, to redeem the outstanding $400 million aggregate principal amount of 6.000% senior notes due August 15, 2011, plus accrued and unpaid interest thereon, along with a call premium.
On August 1, 2007, CNAF entered into a five-year credit agreement with a syndicate of banks and other lenders. The credit agreement established a $250 million senior unsecured revolving credit facility which is intended to be used for general corporate purposes. Borrowings under the revolving credit facility bear interest at the London Interbank Offered Rate (LIBOR) plus CNAF’s credit risk spread. Under the credit agreement, CNAF is required to pay certain fees, including a facility fee and a utilization fee, both of which would adjust automatically in the event of a change in CNAF’s financial ratings. The credit agreement includes covenants regarding maintenance of a minimum consolidated net worth and a specified ratio of consolidated indebtedness to consolidated total capitalization. The full limit of $250 million is available as of December 31, 2011.
CNAF's remaining debt obligations contain customary covenants for investment grade insurers. CNAF is in compliance with all covenants as of and for the year ended December 31, 2011.
C. Commitments, Contingencies and Guarantees
In the normal course of business, CNAF guarantees the indebtedness of certain of its subsidiaries to the debt maturity or payoff, whichever comes first. These guarantees arise in the normal course of business and are given to induce a lender to enter into an agreement with CNAF’s subsidiaries. CNAF would be required to remit prompt and complete payment when due, should the primary obligor default. The maximum potential amount of future payments that CNAF could be required to pay under these guarantees are approximately $10 million at December 31, 2011. The Parent Company does not believe that a payable is likely under these guarantees.
In the course of selling business entities and assets to third parties, CNAF has agreed to indemnify purchasers for losses arising out of breaches of representation and warranties with respect to the business entities or assets being sold, including, in certain cases, losses arising from undisclosed liabilities or certain named litigation. Such indemnification provisions generally survive for periods ranging from nine months following the applicable closing date to the expiration of the relevant statutes of limitation. As of December 31, 2011, the aggregate amount of quantifiable indemnification agreements in effect for sales of business entities and assets was $258 million.
In addition, CNAF has agreed to provide indemnification to third party purchasers for certain losses associated with sold business entities or assets that are not limited by a contractual monetary amount. As of December 31, 2011, CNAF had outstanding unlimited indemnifications in connection with the sales of certain of its business entities or assets that included tax liabilities arising prior to a purchaser’s ownership of an entity or asset, defects in title at the time of sale, employee claims arising prior to closing and in some cases losses arising from certain litigation and undisclosed liabilities. These indemnification agreements survive until the applicable statutes of limitation expire, or until the agreed upon contract terms expire.
As of December 31, 2011 and 2010, CNAF has recorded liabilities of approximately $8 million and $9 million related to indemnification agreements and management believes that it is not likely that any future indemnity claims will be significantly greater than the amounts recorded.
In the normal course of business, CNAF has provided guarantees to holders of structured settlement annuities (SSA) provided by certain of its subsidiaries, which expire through 2120. CNAF would be required to remit SSA payments due to claimants if the primary obligor failed to perform on these contracts. The maximum potential amount of future payments that CNAF could be required to pay under these guarantees are approximately $1.9 billion at December 31, 2011. The Parent Company does not believe that a payable is likely under these guarantees.
Schedule III. Supplementary Insurance Information
Schedule III. Supplementary Insurance Information
SCHEDULE III. SUPPLEMENTARY INSURANCE INFORMATION
Incorporated herein by reference to Note N to the Consolidated Financial Statements included under Item 8.
Schedule IV. Reinsurance
Schedule IV. Reinsurance
SCHEDULE IV. REINSURANCE
Incorporated herein by reference to Note H to the Consolidated Financial Statements included under Item 8.
Schedule V. Valuation and Qualifying Accounts
Schedule V. Valuation and Qualifying Accounts
SCHEDULE V. VALUATION AND QUALIFYING ACCOUNTS
(In millions)
Balance at Beginning of Period
 
Charged to Costs and Expenses
 
Charged to Other Accounts (a)
 
Deductions
 
Balance at End of Period
Year ended December 31, 2011
 
 
 
 
 
 
 
 
 
Deducted from assets:
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts:
 
 
 
 
 
 
 
 
 
Insurance and reinsurance receivables
$
285

 
$
(55
)
 
$
—

 
$
(27
)
 
$
203

Year ended December 31, 2010
 
 
 
 
 
 
 
 
 
Deducted from assets:
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts:
 
 
 
 
 
 
 
 
 
Insurance and reinsurance receivables
$
553

 
$
(232
)
 
$
(1
)
 
$
(35
)
 
$
285

Year ended December 31, 2009
 
 
 
 
 
 
 
 
 
Deducted from assets:
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts:
 
 
 
 
 
 
 
 
 
Insurance and reinsurance receivables
$
587

 
$
4

 
$
(1
)
 
$
(37
)
 
$
553


(a)    Amount includes effects of foreign currency translation.
Schedule VI. Supplemental Information Concerning Property and Casualty Insurance Operations
Schedule VI. Supplemental Information Concerning Property and Casualty Insurance Operations
SCHEDULE VI. SUPPLEMENTAL INFORMATION CONCERNING PROPERTY AND CASUALTY INSURANCE OPERATIONS
As of and for the years ended December 31
Consolidated Property and Casualty Operations
(In millions)
2011
 
2010
 
2009
Deferred acquisition costs
$
658

 
$
1,079

 


Reserves for unpaid claim and claim adjustment expenses
24,228

 
25,412

 


Discount deducted from claim and claim adjustment expense reserves above (based on interest rates ranging from 3.0% to 8.0%)
1,569

 
1,552

 


Unearned premiums
3,250

 
3,203

 


Net written premiums
6,798

 
6,471

 
$
6,713

Net earned premiums
6,603

 
6,514

 
6,720

Net investment income
1,845

 
2,097

 
2,110

Incurred claim and claim adjustment expenses related to current year
4,901

 
4,737

 
4,788

Incurred claim and claim adjustment expenses related to prior years
(429
)
 
(545
)
 
(241
)
Amortization of deferred acquisition costs
1,410

 
1,387

 
1,417

Paid claim and claim adjustment expenses
4,499

 
4,667

 
4,841

Summary of Significant Accounting Policies (Policies)
Consolidation 
The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). Intercompany amounts have been eliminated.
Use of Estimates 
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.
Discontinued Operations 
The Company has historically reported certain run-off insurance operations acquired in its merger with The Continental Corporation in 1995 as discontinued operations. Due to the immateriality of the remaining liabilities, effective in the third quarter of 2011, the Company is no longer reporting these run-off operations as discontinued operations.
Premiums 
Premiums: Insurance premiums on property and casualty insurance contracts are recognized in proportion to the underlying risk insured which principally are earned ratably over the duration of the policies. Premiums on accident and health insurance contracts are earned ratably over the policy year in which they are due. The reserve for unearned premiums on these contracts represents the portion of premiums written relating to the unexpired terms of coverage.
Insurance receivables include balances due currently or in the future, including amounts due from insureds related to losses under high deductible policies, and are presented at unpaid balances, net of an allowance for uncollectible receivables. Amounts are considered past due based on policy payment terms. That allowance is determined based on periodic evaluations of aged receivables, management's experience and current economic conditions. Insurance receivables and any related allowance are written off after collection efforts are exhausted or a negotiated settlement is reached.
Property and casualty contracts that are retrospectively rated contain provisions that result in an adjustment to the initial policy premium depending on the contract provisions and loss experience of the insured during the experience period. For such contracts, the Company estimates the amount of ultimate premiums that the Company may earn upon completion of the experience period and recognizes either an asset or a liability for the difference between the initial policy premium and the estimated ultimate premium. The Company adjusts such estimated ultimate premium amounts during the course of the experience period based on actual results to date. The resulting adjustment is recorded as either a reduction of or an increase to the earned premiums for the period.
Claim and claim adjustment expense reserves 
Claim and claim adjustment expense reserves: Claim and claim adjustment expense reserves, except reserves for structured settlements not associated with asbestos and environmental pollution (A&EP), workers' compensation lifetime claims, and accident and health claims, are not discounted and are based on 1) case basis estimates for losses reported on direct business, adjusted in the aggregate for ultimate loss expectations; 2) estimates of incurred but not reported losses; 3) estimates of losses on assumed reinsurance; 4) estimates of future expenses to be incurred in the settlement of claims; 5) estimates of salvage and subrogation recoveries and 6) estimates of amounts due from insureds related to losses under high deductible policies. Management considers current conditions and trends as well as past Company and industry experience in establishing these estimates. The effects of inflation, which can be significant, are implicitly considered in the reserving process and are part of the recorded reserve balance. Ceded claim and claim adjustment expense reserves are reported as a component of Reinsurance receivables on the Consolidated Balance Sheets.
Claim and claim adjustment expense reserves are presented net of anticipated amounts due from insureds related to losses under deductible policies of $1.4 billion as of December 31, 2011 and 2010. A significant portion of these amounts are supported by collateral. The Company also has an allowance for uncollectible deductible amounts, which is presented as a component of the allowance for doubtful accounts included in Insurance receivables on the Consolidated Balance Sheets.
Structured settlements have been negotiated for certain property and casualty insurance claims. Structured settlements are agreements to provide fixed periodic payments to claimants. Certain structured settlements are funded by annuities purchased from CAC for which the related annuity obligations are reported in Future policy benefits reserves. Obligations for structured settlements not funded by annuities are included in claim and claim adjustment expense reserves and carried at present values determined using interest rates ranging from 5.5% to 8.0% at December 31, 2011 and 4.6% to 7.5% at December 31, 2010. At December 31, 2011 and 2010, the discounted reserves for unfunded structured settlements were $632 million and $713 million, net of discount of $1.1 billion in both periods.
Workers' compensation lifetime claim reserves are calculated using mortality assumptions determined through statutory regulation and economic factors. Accident and health claim reserves are calculated using mortality and morbidity assumptions based on Company and industry experience. Workers' compensation lifetime claim reserves and accident and health claim reserves are discounted at interest rates ranging from 3.0% to 6.5% at both December 31, 2011 and 2010. At December 31, 2011 and 2010, such discounted reserves totaled $2.1 billion and $1.9 billion, net of discount of $520 million and $487 million.
Future policy benefits reserves 
Future policy benefits reserves: Reserves for long term care products and payout annuity contracts are computed using the net level premium method, which incorporates actuarial assumptions as to morbidity, mortality, persistency, discount rates, which are impacted by expected investment yields, and expenses. Expense assumptions include the estimated effects of expenses to be incurred beyond the premium paying period. Actuarial assumptions generally vary by plan, age at issue and policy duration. The initial assumptions are determined at issuance, include a margin for adverse deviation, and are locked in throughout the life of the contract unless a premium deficiency develops. If a premium deficiency emerges, the assumptions are unlocked and deferred acquisition costs, if any, and the future policy benefit reserves are adjusted. Interest rates for long-term care products range from 5.0% to 7.5% at December 31, 2011 and from 6.0% to 7.6% at December 31, 2010. Interest rates for payout annuity contracts range from 5.4% to 7.5% at December 31, 2011 and from 2.8% to 10.2% at December 31, 2010. In 2011, the Company unlocked assumptions related to its payout annuity contracts due to anticipated adverse changes in mortality and discount rates, which reflect the current low interest rate environment and our view of expected investment yields, resulting in loss recognition which increased insurance reserves by $166 million.
Policyholders' funds reserves 
Policyholders' funds reserves: Policyholders' funds reserves primarily include reserves for investment contracts without life contingencies. For these contracts, policyholder liabilities are generally equal to the accumulated policy account values, which consist of an accumulation of deposit payments plus credited interest, less withdrawals and amounts assessed through the end of the period.
Guaranty fund and other insurance-related assessments 
Guaranty fund and other insurance-related assessments: Liabilities for guaranty fund and other insurance-related assessments are accrued when an assessment is probable, when it can be reasonably estimated, and when the event obligating the entity to pay an imposed or probable assessment has occurred. Liabilities for guaranty funds and other insurance-related assessments are not discounted and are included as part of Other liabilities on the Consolidated Balance Sheets. As of December 31, 2011 and 2010, the liability balances were $152 million and $160 million. As of December 31, 2011 and 2010, included in Other assets on the Consolidated Balance Sheets were $2 million and $3 million of related assets for premium tax offsets. This asset is limited to the amount that is able to be offset against premium tax on future premium collections from business written or committed to be written.
Reinsurance 
Reinsurance: Reinsurance accounting allows for contractual cash flows to be reflected as premiums and losses. To qualify for reinsurance accounting, reinsurance agreements must include risk transfer. To meet risk transfer requirements, a reinsurance contract must include both insurance risk, consisting of underwriting and timing risk, and a reasonable possibility of a significant loss for the assuming entity.
Reinsurance receivables related to paid losses are presented at unpaid balances. Reinsurance receivables related to unpaid losses are estimated in a manner consistent with claim and claim adjustment expense reserves or future policy benefits reserves. Reinsurance receivables are reported net of an allowance for uncollectible amounts on the Consolidated Balance Sheets. The cost of reinsurance is primarily accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies or over the reinsurance contract period. The ceding of insurance does not discharge the primary liability of the Company.
The Company has established an allowance for uncollectible reinsurance receivables which relates to both amounts already billed on ceded paid losses as well as ceded reserves that will be billed when losses are paid in the future. The allowance for uncollectible reinsurance receivables is estimated on the basis of periodic evaluations of balances due from reinsurers, reinsurer solvency, management's experience and current economic conditions. Reinsurer financial strength ratings are updated and reviewed on an annual basis or sooner if the Company becomes aware of significant changes related to a reinsurer. Because billed receivables are generally less than 5% of total reinsurance receivables, the age of the reinsurance receivables related to paid losses is not a significant input into the allowance analysis. Changes in the allowance for uncollectible reinsurance receivables are presented as a component of Insurance claims and policyholders' benefits on the Consolidated Statements of Operations.
Amounts are considered past due based on the reinsurance contract terms. Reinsurance receivables related to paid losses and any related allowance are written off after collection efforts have been exhausted or a negotiated settlement is reached with the reinsurer. Reinsurance receivables related to paid losses from insolvent insurers are written off when the settlement due from the estate can be reasonably estimated. At the time reinsurance receivables related to paid losses are written off, any required adjustment to reinsurance receivables related to unpaid losses is recorded as a component of Insurance claims and policyholders' benefits on the Consolidated Statements of Operations.
Reinsurance contracts that do not effectively transfer the economic risk of loss on the underlying policies are recorded using the deposit method of accounting, which requires that premium paid or received by the ceding company or assuming company be accounted for as a deposit asset or liability. The Company had $18 million and $23 million recorded as deposit assets at December 31, 2011 and 2010, and $123 million and $114 million recorded as deposit liabilities at December 31, 2011 and 2010. Income on reinsurance contracts accounted for under the deposit method is recognized using an effective yield based on the anticipated timing of payments and the remaining life of the contract. When the anticipated timing of payments changes, the effective yield is recalculated to reflect actual payments to date and the estimated timing of future payments. The deposit asset or liability is adjusted to the amount that would have existed had the new effective yield been applied since the inception of the contract.
Participating insurance 
Participating insurance: Policyholder dividends are accrued using an estimate of the amount to be paid based on underlying contractual obligations under policies and applicable state laws. Limitations exist on the amount of income from participating life insurance contracts that may be distributed to stockholders, and therefore the share of income on these policies that cannot be distributed to stockholders is excluded from Stockholders' equity by a charge to operations and other comprehensive income and the establishment of a corresponding liability.
Deferred acquisition costs 
Deferred acquisition costs: Acquisition costs include commissions, premium taxes and certain underwriting and policy issuance costs which vary with and are related primarily to the acquisition of business. Such costs related to property and casualty business are deferred and amortized ratably over the period the related premiums are earned.
Deferred acquisition costs related to accident and health insurance are amortized over the premium-paying period of the related policies using assumptions consistent with those used for computing future policy benefit reserves for such contracts. Assumptions are made at the date of policy issuance or acquisition and are consistently applied during the lives of the contracts. Deviations from estimated experience are included in results of operations when they occur. For these contracts, the amortization period is typically the estimated life of the policy. At December 31, 2011 and 2010, Deferred acquisition costs were presented net of Shadow Adjustments, as defined later in this note, of $412 million and $0 million.
The Company evaluates deferred acquisition costs for recoverability. Anticipated investment income is considered in the determination of the recoverability of deferred acquisition costs. Adjustments, if necessary, are recorded in current results of operations. Deferred acquisition costs are presented net of ceding commissions and other ceded acquisition costs. Unamortized deferred acquisition costs relating to contracts that have been substantially changed by a modification in benefits, features, rights or coverages that were not anticipated in the original contract are not deferred and are included as a charge to operations in the period during which the contract modification occurred.
Investments in life settlement contracts and related revenue recognition 
Investments in life settlement contracts and related revenue recognition: Prior to 2002, the Company purchased investments in life settlement contracts. A life settlement contract is a contract between the owner of a life insurance policy (the policy owner) and a third-party investor (investor). Under a life settlement contract, the Company obtains the ownership and beneficiary rights of an underlying life insurance policy.
The Company accounts for its investments in life settlement contracts using the fair value method. Under the fair value method, each life settlement contract is carried at its fair value at the end of each reporting period. The change in fair value, life insurance proceeds received and periodic maintenance costs, such as premiums, necessary to keep the underlying policy in force, are recorded in Other revenues on the Consolidated Statements of Operations. The fair value of the Company's investments in life settlement contracts were $117 million and $129 million at December 31, 2011 and 2010, and are included in Other assets on the Consolidated Balance Sheets. The cash receipts and payments related to life settlement contracts are included in Cash flows from operating activities on the Consolidated Statements of Cash Flows.
The following table details the values for life settlement contracts. The determination of fair value is discussed in Note D.
December 31, 2011
Number of Life Settlement Contracts
 
Fair Value of Life Settlement Contracts
(In millions)
 
Face Amount of Life Insurance Policies
(In millions)
Estimated maturity during:
 
 
 
 
 
2012
70

 
$
16

 
$
46

2013
70

 
14

 
42

2014
60

 
12

 
39

2015
60

 
10

 
37

2016
50

 
9

 
33

Thereafter
531

 
56

 
338

Total
841

 
$
117

 
$
535


The Company uses an actuarial model to estimate the aggregate face amount of life insurance that is expected to mature in each future year and the corresponding fair value. This model projects the likelihood of the insured's death for each inforce policy based upon the Company's estimated mortality rates, which may vary due to the relatively small size of the portfolio of life settlement contracts. The number of life settlement contracts presented in the table above is based upon the average face amount of inforce policies estimated to mature in each future year.
The increase in fair value recognized for the years ended December 31, 2011, 2010 and 2009 on contracts still being held was $5 million, $10 million and $10 million. The gains recognized during the years ended December 31, 2011, 2010 and 2009 on contracts that matured were $28 million, $19 million and $24 million.
Separate Account Business 
Separate Account Business: Separate account assets and liabilities represent contract holder funds related to investment and annuity products for which the policyholder assumes substantially all the risk and reward. The assets are segregated into accounts with specific underlying investment objectives and are legally segregated from the Company. All assets of the separate account business are carried at fair value with an equal amount recorded for separate account liabilities. Fee income accruing to the Company related to separate accounts is primarily included within Other revenues on the Consolidated Statements of Operations.
A number of separate account pension deposit contracts guarantee principal and an annual minimum rate of interest. If aggregate contract value in the separate account exceeds the fair value of the related assets, an additional Policyholders' funds liability is established. During 2011, the Company increased this pretax Policyholders' funds liability by $18 million. The Company decreased this pretax Policyholders' funds liability by $24 million and $42 million in 2010 and 2009. Certain of these contracts are subject to a fair value adjustment if terminated by the policyholder.
Investments 
Investments
Valuation of investments: The Company classifies its fixed maturity securities and its equity securities as either available-for-sale or trading, and as such, they are carried at fair value. Changes in fair value of trading securities are reported within Net investment income on the Consolidated Statements of Operations. Changes in fair value related to available-for-sale securities are reported as a component of Other comprehensive income. The cost of fixed maturity securities classified as available-for-sale is adjusted for amortization of premiums and accretion of discounts to maturity, which are included in Net investment income on the Consolidated Statements of Operations. Losses may be recognized within Net realized investment gains (losses) on the Consolidated Statements of Operations when a decline in value is determined by the Company to be other-than-temporary.
To the extent that unrealized gains on fixed income securities supporting long term care products and payout annuity contracts would result in a premium deficiency if those gains were realized, a related decrease in Deferred acquisition costs and/or increase in Insurance reserves are recorded, net of tax, as a reduction of net unrealized gains through Other comprehensive income (Shadow Adjustments). For the years ended December 31, 2011 and 2010, Shadow Adjustments, net of participating policyholders' interest, of $582 million and $150 million, were recorded, net of tax. At December 31, 2011 and 2010, net unrealized gains on investments included in Accumulated other comprehensive income (AOCI) were correspondingly reduced by $732 million and $150 million.
For asset-backed securities included in fixed maturity securities, the Company recognizes income using an effective yield based on anticipated prepayments and the estimated economic life of the securities. When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. The amortized cost of high credit quality securities is adjusted to the amount that would have existed had the new effective yield been applied since the acquisition of the securities. Such adjustments are reflected in Net investment income on the Consolidated Statements of Operations. Interest income on lower rated securities is determined using the prospective yield method.
The Company's carrying value of investments in limited partnerships is its share of the net asset value of each partnership, as determined by the General Partner. Certain partnerships for which results are not available on a timely basis are reported on a lag, primarily three months or less. Changes in net asset values are accounted for under the equity method and recorded within Net investment income on the Consolidated Statements of Operations.
Mortgage loans are commercial in nature and are carried at unpaid principal balance, net of unamortized fees and any valuation allowance. Mortgage loans are considered to be impaired loans when it is probable that contractual principal and interest payments will not be collected. A valuation allowance is established for impaired loans to the extent that the present value of expected future cash flows discounted at the loan's original effective interest rate is less than the carrying value of the loan. Interest income from mortgage loans is recognized on an accrual basis using the effective yield method. Accrual of income is generally suspended for mortgage loans that are impaired and collection of principal and interest payments is unlikely. Mortgage loans are considered past due when full principal or interest payments have not been received according to contractual terms.
Other invested assets include certain derivative securities and securities containing embedded credit derivatives for which the fair value option was elected.
Short term investments are carried at fair value. Changes in fair value are reported as a component of Other comprehensive income.
Realized investment gains (losses): All securities sold resulting in investment gains and losses are recorded on the trade date, except for bank loan participations which are recorded on the date that the legal agreements are finalized. Realized investment gains and losses are determined on the basis of the cost or amortized cost of the specific securities sold.
Income Taxes 
Income Taxes
The Company and its eligible subsidiaries (CNA Tax Group) are included in the consolidated federal income tax return of Loews and its eligible subsidiaries. The Company accounts for income taxes under the asset and liability method. Under the asset and liability method, deferred income taxes are recognized for temporary differences between the financial statement and tax return bases of assets and liabilities, based on enacted tax rates and other provisions of the tax law. The effect of a change in tax laws or rates on deferred tax assets and liabilities is recognized in income in the period in which such change is enacted. Future tax benefits are recognized to the extent that realization of such benefits is more likely than not, and a valuation allowance is established for any portion of a deferred tax asset that management believes will not be realized.
Pension and Postretirement Benefits 
Pension and Postretirement Benefits
The Company recognizes the overfunded or underfunded status of its defined benefit plans in Other assets or Other liabilities on the Consolidated Balance Sheets. Changes in funded status related to prior service costs and credits and actuarial gains and losses are recognized in the year in which the changes occur through Other comprehensive income. Annual service cost, interest cost, expected return on plan assets, amortization of prior service costs and credits, and amortization of actuarial gains and losses are recognized on the Consolidated Statements of Operations. Effective January 1, 2009, due to the significant number of inactive participants in the plan, the Company amortizes actuarial gains/losses over the average remaining life expectancy of the inactive participants for the CNA Retirement Plan. Previously, the Company amortized actuarial gains/losses over the average remaining service period of the active participants. This change resulted in an increase to net income of $20 million, net of taxes, for the year ended December 31, 2009.
Stock-Based Compensation 
Stock-Based Compensation
The Company records compensation expense using the fair value method for all awards it grants, modifies, repurchases or cancels primarily on a straight-line basis over the requisite service period, generally four years.
Foreign Currency 
Foreign Currency
Foreign currency translation gains and losses are reflected in Stockholders' equity as a component of Accumulated other comprehensive income. The Company's foreign subsidiaries' balance sheet accounts are translated at the exchange rates in effect at each year end and income statement accounts are either translated at the exchange rate on the date of the transaction or at the average exchange rates. Foreign currency transaction gains (losses) of $4 million, $(19) million and $(14) million were included in determining net income (loss) for the years ended December 31, 2011, 2010 and 2009.
Property and Equipment 
Property and Equipment
Property and equipment are carried at cost less accumulated depreciation. Depreciation is based on the estimated useful lives of the various classes of property and equipment and is determined principally on the straight-line method. Furniture and fixtures are depreciated over seven years. Office equipment is depreciated over five years. The estimated lives for data processing equipment and software range from three to five years. Leasehold improvements are depreciated over the corresponding lease terms. The Company's owned buildings, and related capital improvements, are depreciated over periods not to exceed fifty years.
Goodwill and Other Intangible Assets 
Goodwill and Other Intangible Assets
Goodwill and other indefinite-lived intangible assets primarily represent the excess of purchase price over the fair value of the net assets of acquired entities and businesses. Goodwill and indefinite-lived intangible assets are tested for impairment annually or when certain triggering events require such tests.
Earnings (Loss) Per Share Data 
Earnings (Loss) Per Share Data
Earnings (loss) per share attributable to the Company's common stockholders is based on weighted average number of outstanding common shares. Basic earnings (loss) per share excludes the impact of dilutive securities and is computed by dividing net income (loss) attributable to CNA by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.
For the years ended December 31, 2011, 2010, and 2009, approximately 290 thousand, 380 thousand and 120 thousand potential shares attributable to exercises under stock-based employee compensation plans were included in the calculation of diluted earnings per share. For those same periods, approximately 1.1 million, 1.2 million and 1.7 million potential shares attributable to exercises under stock-based employee compensation plans were not included in the calculation of diluted earnings per share because the effect would have been antidilutive.
Accounting Standards Updates 
Accounting Standards Updates
Accounting standard to be adopted
Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts
In October 2010, the Financial Accounting Standards Board issued updated accounting guidance that limits the capitalization of costs incurred to acquire or renew insurance contracts to those that are incremental direct costs of successful contract acquisitions. The updated accounting guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2011, with prospective or retrospective application allowed. Effective January 1, 2012, the Company will adopt this updated accounting guidance retrospectively and estimates the cumulative effect as of December 31, 2011 will reduce Total CNA stockholders' equity by $70 million, after tax.
Derivative Securities 
Derivative securities are recorded at fair value. See Note D for information regarding the fair value of derivative securities. Changes in the fair value of derivatives not associated with the trading portfolio are reported in Net realized investment gains (losses) on the Consolidated Statements of Operations. Changes in the fair value of derivatives associated with the trading portfolio are reported in Net investment income on the Consolidated Statements of Operations.
Summary of Significant Accounting Policies (Life Settlement Contracts) (Tables)
Life settlement contracts
December 31, 2011
Number of Life Settlement Contracts
 
Fair Value of Life Settlement Contracts
(In millions)
 
Face Amount of Life Insurance Policies
(In millions)
Estimated maturity during:
 
 
 
 
 
2012
70

 
$
16

 
$
46

2013
70

 
14

 
42

2014
60

 
12

 
39

2015
60

 
10

 
37

2016
50

 
9

 
33

Thereafter
531

 
56

 
338

Total
841

 
$
117

 
$
535

Investments (Tables)
Net investment income 
Net Investment Income
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Fixed maturity securities
$
2,011

 
$
2,051

 
$
1,941

Short term investments
8

 
15

 
36

Limited partnership investments
48

 
249

 
315

Equity securities
20

 
32

 
49

Mortgage loans
9

 
2

 
—

Trading portfolio (a)
9

 
13

 
23

Other
7

 
8

 
6

Gross investment income
2,112

 
2,370

 
2,370

Investment expense
(58
)
 
(54
)
 
(50
)
Net investment income
$
2,054

 
$
2,316

 
$
2,320

___________________
(a)
There were no net unrealized gains (losses) related to changes in fair value of trading securities still held included in net investment income for the years ended December 31, 2011 and 2010. Net unrealized losses related to changes in fair value on trading securities still held included in net investment income were $5 million for the year ended December 31, 2009.
Net realized investment gains (losses) 
Net Realized Investment Gains (Losses)
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Net realized investment gains (losses):
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
Gross realized gains
$
289

 
$
475

 
$
500

Gross realized losses
(311
)
 
(383
)
 
(1,667
)
Net realized investment gains (losses) on fixed maturity securities
(22
)
 
92

 
(1,167
)
Equity securities:
 
 
 

 
 

Gross realized gains
10

 
50

 
473

Gross realized losses
(11
)
 
(52
)
 
(230
)
Net realized investment gains (losses) on equity securities
(1
)
 
(2
)
 
243

Derivatives
—

 
(1
)
 
51

Short term investments and other (a)
19

 
(3
)
 
16

Net realized investment gains (losses), net of participating policyholders’ interests
$
(4
)
 
$
86

 
$
(857
)
____________________
(a)
Includes net unrealized gains (losses) related to changes in the fair value of securities for which the fair value option has been elected. Net unrealized gains (losses) were $2 million and $(1) million for the years ended December 31, 2011 and 2010.
Net change in unrealized gains (losses) on investments 
Net Change in Unrealized Gains (Losses)
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Net change in unrealized gains (losses) on investments:
 
 
 
 
 
Fixed maturity securities
$
1,442

 
$
1,140

 
$
5,278

Equity securities
(2
)
 
7

 
156

Other
(3
)
 
(1
)
 
(4
)
Total net change in unrealized gains (losses) on investments
$
1,437

 
$
1,146

 
$
5,430

Components of other-than-temporary impairment losses recognized in earnings 
The components of other-than-temporary impairment (OTTI) losses recognized in earnings by asset type are summarized in the following table.
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Fixed maturity securities available-for-sale:
 
 
 
 
 
Corporate and other bonds
$
95

 
$
68

 
$
357

States, municipalities and political subdivisions
—

 
62

 
79

Asset-backed:
 
 
 
 
 
Residential mortgage-backed
105

 
71

 
461

Commercial mortgage-backed
—

 
3

 
193

Other asset-backed
6

 
3

 
31

Total asset-backed
111

 
77

 
685

Redeemable preferred stock
—

 
—

 
9

Total fixed maturity securities available-for-sale
206

 
207

 
1,130

Equity securities available-for-sale:
 
 
 
 
 
Common stock
8

 
11

 
5

Preferred stock
1

 
14

 
217

Total equity securities available-for-sale
9

 
25

 
222

Short term investments
1

 
—

 
—

Net OTTI losses recognized in earnings
$
216

 
$
232

 
$
1,352

Summary of fixed maturity and equity securities 
Summary of Fixed Maturity and Equity Securities
December 31, 2011
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
Unrealized
OTTI
Losses (Gains)
(In millions)
 
 
 
 
Fixed maturity securities available-for-sale:
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
19,086

 
$
1,946

 
$
154

 
$
20,878

 
$
—

States, municipalities and political subdivisions
9,018

 
900

 
136

 
9,782

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
Residential mortgage-backed
5,786

 
172

 
183

 
5,775

 
99

Commercial mortgage-backed
1,365

 
48

 
59

 
1,354

 
(2
)
Other asset-backed
946

 
13

 
4

 
955

 
—

Total asset-backed
8,097

 
233

 
246

 
8,084

 
97

U.S. Treasury and obligations of government-sponsored enterprises
479

 
14

 
—

 
493

 
—

Foreign government
608

 
28

 
—

 
636

 
—

Redeemable preferred stock
51

 
7

 
—

 
58

 
—

Total fixed maturity securities available-for-sale
37,339

 
3,128

 
536

 
39,931

 
$
97

Total fixed maturity securities trading
6

 
—

 
—

 
6

 
 
Equity securities available-for-sale:
 
 
 
 
 
 
 
 
 
Common stock
30

 
17

 
—

 
47

 
 
Preferred stock
258

 
4

 
5

 
257

 
 
Total equity securities available-for-sale
288

 
21

 
5

 
304

 
 
Total
$
37,633

 
$
3,149

 
$
541

 
$
40,241

 
 

December 31, 2010
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
Unrealized
OTTI
Losses (Gains)
(In millions)
 
 
 
 
Fixed maturity securities available-for-sale:
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
19,492

 
$
1,603

 
$
70

 
$
21,025

 
$
—

States, municipalities and political subdivisions
8,157

 
142

 
410

 
7,889

 
—

Asset-backed:
 
 
 
 
 
 
 
 
 
Residential mortgage-backed
6,254

 
101

 
265

 
6,090

 
114

Commercial mortgage-backed
994

 
40

 
41

 
993

 
(2
)
Other asset-backed
753

 
18

 
8

 
763

 
—

Total asset-backed
8,001

 
159

 
314

 
7,846

 
112

U.S. Treasury and obligations of government-sponsored enterprises
122

 
16

 
1

 
137

 
—

Foreign government
602

 
18

 
—

 
620

 
—

Redeemable preferred stock
47

 
7

 
—

 
54

 
—

Total fixed maturity securities available-for-sale
36,421

 
1,945

 
795

 
37,571

 
$
112

Total fixed maturity securities trading
6

 
—

 
—

 
6

 
 
Equity securities available-for-sale:
 
 
 
 
 
 
 
 
 
Common stock
90

 
25

 
—

 
115

 
 
Preferred stock
332

 
2

 
9

 
325

 
 
Total equity securities available-for-sale
422

 
27

 
9

 
440

 
 
Total
$
36,849

 
$
1,972

 
$
804

 
$
38,017

 
 
Securities in a gross unrealized loss position 
Securities in a Gross Unrealized Loss Position
 
Less than 12 Months
 
12 Months or Longer
 
Total
December 31, 2011
Estimated
Fair Value
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
(In millions)
 
 
 
 
 
Fixed maturity securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
2,552

 
$
126

 
$
159

 
$
28

 
$
2,711

 
$
154

States, municipalities and political subdivisions
67

 
1

 
721

 
135

 
788

 
136

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed
719

 
36

 
874

 
147

 
1,593

 
183

Commercial mortgage-backed
431

 
39

 
169

 
20

 
600

 
59

Other asset-backed
389

 
4

 
—

 
—

 
389

 
4

Total asset-backed
1,539

 
79

 
1,043

 
167

 
2,582

 
246

Total fixed maturity securities available-for-sale
4,158

 
206

 
1,923

 
330

 
6,081

 
536

Equity securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
117

 
5

 
—

 
—

 
117

 
5

Total equity securities available-for-sale
117

 
5

 
—

 
—

 
117

 
5

Total
$
4,275

 
$
211

 
$
1,923

 
$
330

 
$
6,198

 
$
541


 
Less than 12 Months
 
12 Months or Longer
 
Total
December 31, 2010
Estimated
Fair Value
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
(In millions)
 
 
 
 
 
Fixed maturity securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
1,719

 
$
34

 
$
405

 
$
36

 
$
2,124

 
$
70

States, municipalities and political subdivisions
3,339

 
164

 
745

 
246

 
4,084

 
410

Asset-backed:
 
 
 
 
 
 
 
 
 

 
 

Residential mortgage-backed
1,800

 
52

 
1,801

 
213

 
3,601

 
265

Commercial mortgage-backed
164

 
3

 
333

 
38

 
497

 
41

Other asset-backed
122

 
1

 
60

 
7

 
182

 
8

Total asset-backed
2,086

 
56

 
2,194

 
258

 
4,280

 
314

U.S. Treasury and obligations of government-sponsored enterprises
8

 
1

 
—

 
—

 
8

 
1

Total fixed maturity securities available-for-sale
7,152

 
255

 
3,344

 
540

 
10,496

 
795

Equity securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
175

 
5

 
70

 
4

 
245

 
9

Total equity securities available-for-sale
175

 
5

 
70

 
4

 
245

 
9

Total
$
7,327

 
$
260

 
$
3,414

 
$
544

 
$
10,741

 
$
804

Activity related to the pretax fixed maturity credit loss component reflected within retained earnings for securities still held 
The following table summarizes the activity for the years ended December 31, 2011 and 2010 and for the period from April 1, 2009 to December 31, 2009 related to the pretax credit loss component reflected in Retained earnings on fixed maturity securities still held at December 31, 2011, 2010 and 2009 for which a portion of an OTTI loss was recognized in Other comprehensive income.
(In millions)
Year ended December 31, 2011
 
Year ended December 31, 2010
 
Period from April 1, 2009 to December 31, 2009
Beginning balance of credit losses on fixed maturity securities
$
141

 
$
164

 
$
192

Additional credit losses for securities for which an OTTI loss was previously recognized
39

 
37

 
93

Credit losses for securities for which an OTTI loss was not previously recognized
11

 
11

 
183

Reductions for securities sold during the period
(67
)
 
(62
)
 
(239
)
Reductions for securities the Company intends to sell or more likely than not will be required to sell
(32
)
 
(9
)
 
(65
)
Ending balance of credit losses on fixed maturity securities
$
92

 
$
141

 
$
164

Ratings distribution of corporate and other bonds in a gross unrealized loss position 
Gross Unrealized Losses by Ratings Distribution
December 31, 2011
Amortized
Cost
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
(In millions)
 
 
AAA
$
112

 
$
111

 
$
1

AA
97

 
94

 
3

A
895

 
853

 
42

BBB
1,275

 
1,196

 
79

Non-investment grade
486

 
457

 
29

Total
$
2,865

 
$
2,711

 
$
154

Ratings distribution of asset-backed securities in a gross unrealized loss position 
Gross Unrealized Losses by Ratings Distribution
December 31, 2011
Amortized
Cost
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
(In millions)
 
 
U.S. Government, Government Agencies, and Government-Sponsored Enterprises
$
382

 
$
347

 
$
35

AAA
364

 
355

 
9

AA
409

 
388

 
21

A
370

 
357

 
13

BBB
319

 
294

 
25

Non-investment grade
984

 
841

 
143

Total
$
2,828

 
$
2,582

 
$
246

Contractual maturity 
Contractual Maturity
 
December 31, 2011
 
December 31, 2010
(In millions)
Cost or
Amortized
Cost
 
Estimated
Fair
Value
 
Cost or
Amortized
Cost
 
Estimated
Fair
Value
Due in one year or less
$
1,802

 
$
1,812

 
$
1,515

 
$
1,506

Due after one year through five years
13,110

 
13,537

 
11,198

 
11,653

Due after five years through ten years
8,410

 
8,890

 
10,022

 
10,425

Due after ten years
14,017

 
15,692

 
13,686

 
13,987

Total
$
37,339

 
$
39,931

 
$
36,421

 
$
37,571

Derivative Financial Instruments (Tables)
Summary of recognized gains (losses) related to derivative financial instruments 
Recognized Gains (Losses)
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Without hedge designation
 
 
 
 
 
Interest rate swaps
$
—

 
$
—

 
$
61

Credit default swaps - purchased protection
—

 
(1
)
 
(47
)
Credit default swaps - sold protection
—

 
—

 
3

Total return swaps
—

 
—

 
(2
)
Futures sold, not yet purchased
—

 
—

 
21

Options written
—

 
—

 
15

Total without hedge designation
—

 
(1
)
 
51

Trading activities
 
 
 
 
 
Futures sold, not yet purchased
—

 
(1
)
 
(2
)
Total
$
—

 
$
(2
)
 
$
49

Summary of aggregate contractual or notional amounts and gross estimated fair values related to derivative financial instruments 
Derivative Financial Instruments
December 31, 2011
Contractual/
Notional
Amount
 
Estimated Fair Value
(In millions)
 
Asset
 
(Liability)
Without hedge designation
 
 
 
 
 
Credit default swaps - purchased protection
$
20

 
$
—

 
$
(1
)
Currency forwards
22

 
1

 
—

Equity warrants
4

 
—

 
—

Total
$
46

 
$
1

 
$
(1
)

December 31, 2010
Contractual/
Notional
Amount
 
Estimated Fair Value
(In millions)
 
Asset
 
(Liability)
Without hedge designation
 
 
 
 
 
Credit default swaps - purchased protection
$
20

 
$
—

 
$
(2
)
Credit default swaps - sold protection
8

 
1

 
—

Currency forwards
18

 
—

 
—

Equity warrants
3

 
—

 
—

Total
$
49

 
$
1

 
$
(2
)
Fair Value (Tables)
Assets and liabilities measured at fair value on a recurring basis 
Assets and liabilities measured at fair value on a recurring basis are summarized below.
December 31, 2011
 
 
 
 
 
 
Total
Assets/(Liabilities)
at Fair Value
(In millions)
Level 1
 
Level 2
 
Level 3
 
Assets
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Corporate and other bonds
$
—

 
$
20,402

 
$
482

 
$
20,884

States, municipalities and political subdivisions
—

 
9,611

 
171

 
9,782

Asset-backed:
 
 
 
 
 
 
 
Residential mortgage-backed
—

 
5,323

 
452

 
5,775

Commercial mortgage-backed
—

 
1,295

 
59

 
1,354

Other asset-backed
—

 
612

 
343

 
955

Total asset-backed
—

 
7,230

 
854

 
8,084

U.S. Treasury and obligations of government-sponsored enterprises
451

 
42

 
—

 
493

Foreign government
92

 
544

 
—

 
636

Redeemable preferred stock
5

 
53

 
—

 
58

Total fixed maturity securities
548

 
37,882

 
1,507

 
39,937

Equity securities
124

 
113

 
67

 
304

Derivative and other financial instruments, included in Other invested assets
—

 
1

 
11

 
12

Short term investments
1,106

 
508

 
27

 
1,641

Life settlement contracts, included in Other assets
—

 
—

 
117

 
117

Separate account business
21

 
373

 
23

 
417

Total assets
$
1,799

 
$
38,877

 
$
1,752

 
$
42,428

Liabilities
 

 
 
 
 

 
 

Derivative financial instruments, included in Other liabilities
$
—

 
$
—

 
$
(1
)
 
$
(1
)
Total liabilities
$
—

 
$
—

 
$
(1
)
 
$
(1
)
December 31, 2010
 
 
 
 
 
 
Total
Assets/(Liabilities)
at Fair Value
(In millions)
Level 1
 
Level 2
 
Level 3
 
Assets
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Corporate and other bonds
$
—

 
$
20,407

 
$
624

 
$
21,031

States, municipalities and political subdivisions
—

 
7,623

 
266

 
7,889

Asset-backed:
 
 
 
 
 
 
 

Residential mortgage-backed
—

 
5,323

 
767

 
6,090

Commercial mortgage-backed
—

 
920

 
73

 
993

Other asset-backed
—

 
404

 
359

 
763

Total asset-backed
—

 
6,647

 
1,199

 
7,846

U.S. Treasury and obligations of government-sponsored enterprises
76

 
61

 
—

 
137

Foreign government
115

 
505

 
—

 
620

Redeemable preferred stock
3

 
48

 
3

 
54

Total fixed maturity securities
194

 
35,291

 
2,092

 
37,577

Equity securities
288

 
126

 
26

 
440

Derivative and other financial instruments, included in Other invested assets
—

 
—

 
27

 
27

Short term investments
1,214

 
974

 
27

 
2,215

Life settlement contracts, included in Other assets
—

 
—

 
129

 
129

Discontinued operations investments, included in Other liabilities
11

 
60

 
—

 
71

Separate account business
28

 
381

 
41

 
450

Total assets
$
1,735

 
$
36,832

 
$
2,342

 
$
40,909

Liabilities
 

 
 

 
 

 
 

Derivative financial instruments, included in Other liabilities
$
—

 
$
—

 
$
(2
)
 
$
(2
)
Total liabilities
$
—

 
$
—

 
$
(2
)
 
$
(2
)
Table of reconciliation for assets and liablities measured at fair value on a recurring basis using significant unobservable inputs 
The tables below present a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2011 and 2010.
Level 3
(In millions)
Balance at
January 1,
2011
 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)*
 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
 
Purchases
 
Sales
 
Settlements
 
Transfers into
Level 3
 
Transfers out
of Level 3
 
Balance at
December 31,
2011
 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31, 2011 recognized in net income (loss)*
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
624

 
$
(11
)
 
$
(1
)
 
$
484

 
$
(204
)
 
$
(149
)
 
$
79

 
$
(340
)
 
$
482

 
$
(12
)
States, municipalities and political subdivisions
266

 
—

 
(1
)
 
3

 
—

 
(92
)
 
—

 
(5
)
 
171

 
—

Asset-backed:
 

 
 

 
 

 
 

 
 
 
 
 
 

 
 

 
 

 
 

Residential mortgage-backed
767

 
(16
)
 
(11
)
 
225

 
(290
)
 
(60
)
 
—

 
(163
)
 
452

 
(6
)
Commercial mortgage-backed
73

 
20

 
(7
)
 
81

 
(27
)
 
—

 
—

 
(81
)
 
59

 
—

Other asset-backed
359

 
(9
)
 
5

 
537

 
(341
)
 
(99
)
 
2

 
(111
)
 
343

 
(5
)
Total asset-backed
1,199

 
(5
)
 
(13
)
 
843

 
(658
)
 
(159
)
 
2

 
(355
)
 
854

 
(11
)
Redeemable preferred stock
3

 
3

 
(3
)
 
—

 
(3
)
 
—

 
—

 
—

 
—

 
—

Total fixed maturity securities
2,092

 
(13
)
 
(18
)
 
1,330

 
(865
)
 
(400
)
 
81

 
(700
)
 
1,507

 
(23
)
Equity securities
26

 
(2
)
 
2

 
66

 
(27
)
 
—

 
5

 
(3
)
 
67

 
(3
)
Derivative and other financial instruments, net
25

 
3

 
—

 
1

 
(19
)
 
—

 
—

 
—

 
10

 
2

Short term investments
27

 
—

 
—

 
39

 
—

 
(29
)
 
—

 
(10
)
 
27

 
—

Life settlement contracts
129

 
33

 
—

 
—

 
—

 
(45
)
 
—

 
—

 
117

 
5

Separate account business
41

 
—

 
—

 
—

 
(6
)
 
—

 
—

 
(12
)
 
23

 
—

Total
$
2,340

 
$
21

 
$
(16
)
 
$
1,436

 
$
(917
)
 
$
(474
)
 
$
86

 
$
(725
)
 
$
1,751

 
$
(19
)

Level 3
(In millions)
Balance at
January 1,
2010
 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)*
 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
 
Purchases,
sales,
issuances
and
settlements
 
Transfers into
Level 3
 
Transfers out
of Level 3
 
Balance at
December 31,
2010
 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31, 2010 recognized in net income (loss)*
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
609

 
$
9

 
$
56

 
$
45

 
$
60

 
$
(155
)
 
$
624

 
$
(4
)
States, municipalities and political subdivisions
756

 
—

 
15

 
(507
)
 
2

 
—

 
266

 
—

Asset-backed:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Residential mortgage-backed
629

 
(10
)
 
15

 
181

 
—

 
(48
)
 
767

 
(13
)
Commercial mortgage-backed
123

 
10

 
13

 
(8
)
 
7

 
(72
)
 
73

 
(2
)
Other asset-backed
348

 
6

 
30

 
30

 
—

 
(55
)
 
359

 
(1
)
Total asset-backed
1,100

 
6

 
58

 
203

 
7

 
(175
)
 
1,199

 
(16
)
Redeemable preferred stock
2

 
6

 
2

 
(7
)
 
—

 
—

 
3

 
—

Total fixed maturity securities
2,467

 
21

 
131

 
(266
)
 
69

 
(330
)
 
2,092

 
(20
)
Equity securities
11

 
(4
)
 
1

 
17

 
8

 
(7
)
 
26

 
(5
)
Derivative and other financial instruments, net
(11
)
 
(1
)
 
—

 
37

 
—

 
—

 
25

 
(1
)
Short term investments
—

 
—

 
—

 
37

 
1

 
(11
)
 
27

 
—

Life settlement contracts
130

 
29

 
—

 
(30
)
 
—

 
—

 
129

 
10

Discontinued operations investments
16

 
—

 
1

 
(2
)
 
—

 
(15
)
 
—

 
—

Separate account business
38

 
—

 
—

 
3

 
—

 
—

 
41

 
—

Total
$
2,651

 
$
45

 
$
133

 
$
(204
)
 
$
78

 
$
(363
)
 
$
2,340

 
$
(16
)
Carrying amount and estimated fair value of financial instrument assets and liabilities not measured at fair value 
The carrying amount and estimated fair value of the Company's financial instrument assets and liabilities which are not measured at fair value on the Consolidated Balance Sheets are listed in the table below.
December 31
2011
 
2010
(In millions)
Carrying
Amount
 
Estimated
Fair Value
 
Carrying
Amount
 
Estimated
Fair Value
Financial assets
 
 
 
 
 
 
 
Notes receivable for the issuance of common stock
$
22

 
$
22

 
$
26

 
$
26

Mortgage loans
234

 
247

 
87

 
86

Financial liabilities
 
 
 
 
 
 
 
Premium deposits and annuity contracts
$
109

 
$
114

 
$
104

 
$
105

Short term debt
83

 
84

 
400

 
411

Long term debt
2,525

 
2,679

 
2,251

 
2,376

Income Taxes (Tables)
Reconcilliation between the Company's federal income tax (expense) benefit at statutory rates and the recorded income tax (expense) benefit, excluding taxes on discontinued operations 
Tax Reconciliation
Years ended December 31
 
 
 
 
 
 
(In millions)
 
2011
 
2010
 
2009
Income tax expense at statutory rates
 
$
(307
)
 
$
(389
)
 
$
(189
)
Tax benefit from tax exempt income
 
74

 
84

 
119

Foreign taxes and credits
 
(3
)
 
(25
)
 
19

Taxes related to domestic affiliate
 
(21
)
 
(1
)
 
(2
)
Prior year tax adjustment
 
20

 
—

 
—

Other tax expense
 
(9
)
 
(2
)
 
(4
)
Income tax expense
 
$
(246
)
 
$
(333
)
 
$
(57
)
Current and deferred components of the Company's income tax (expense) benefit, excluding taxes on discontinued operations 
Current and Deferred Taxes
Years ended December 31
 
 
 
 
 
 
(In millions)
 
2011
 
2010
 
2009
Current tax (expense) benefit
 
$
(54
)
 
$
(6
)
 
$
120

Deferred tax expense
 
(192
)
 
(327
)
 
(177
)
Total income tax expense
 
$
(246
)
 
$
(333
)
 
$
(57
)
Significant components of the Company's deferred tax assets and liabilities 
Components of Net Deferred Tax Asset
December 31
 
 
 
(In millions)
2011
 
2010
Deferred Tax Assets:
 
 
 
Insurance reserves:
 
 
 
Property and casualty claim and claim adjustment expense reserves
$
419

 
$
525

Unearned premium reserves
142

 
127

Receivables
74

 
95

Employee benefits
323

 
258

Life settlement contracts
61

 
64

Investment valuation differences
3

 
70

Net loss and tax credits carried forward
25

 
84

Other assets
159

 
124

Gross deferred tax assets
1,206

 
1,347

Deferred Tax Liabilities:
 
 
 
Deferred acquisition costs
283

 
284

Net unrealized gains
508

 
314

Other liabilities
37

 
82

Gross deferred tax liabilities
828

 
680

Net deferred tax asset
$
378

 
$
667

Claim and Claim Adjustment Expense Reserves (Tables)
Reconciliation of claim and claim adjustment expense reserves 
Reconciliation of Claim and Claim Adjustment Expense Reserves
As of and for the years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Reserves, beginning of year:
 
 
 
 
 
Gross
$
25,496

 
$
26,816

 
$
27,593

Ceded
6,122

 
5,594

 
6,288

Net reserves, beginning of year
19,374

 
21,222

 
21,305

Reduction of net reserves due to the Loss Portfolio Transfer transaction
—

 
(1,381
)
 
—

Reduction of net reserves due to disposition of subsidiaries
(277
)
 
(98
)
 
—

Net incurred claim and claim adjustment expenses:
 
 
 
 
 
Provision for insured events of current year
4,904

 
4,741

 
4,793

Decrease in provision for insured events of prior years
(429
)
 
(544
)
 
(240
)
Amortization of discount
135

 
123

 
122

Total net incurred (a)
4,610

 
4,320

 
4,675

Net payments attributable to:
 
 
 
 
 
Current year events
(1,029
)
 
(908
)
 
(917
)
Prior year events
(3,473
)
 
(3,776
)
 
(3,939
)
Total net payments
(4,502
)
 
(4,684
)
 
(4,856
)
Foreign currency translation adjustment and other
78

 
(5
)
 
98

Net reserves, end of year
19,283

 
19,374

 
21,222

Ceded reserves, end of year
5,020

 
6,122

 
5,594

Gross reserves, end of year
$
24,303

 
$
25,496

 
$
26,816



(a)
Total net incurred above does not agree to Insurance claims and policyholders' benefits as reflected on the Consolidated Statements of Operations due to amounts related to uncollectible reinsurance and loss deductible receivables, and benefit expenses related to future policy benefits and policyholders' funds, which are not reflected in the table above.
Net prior year claim and claim adjustment expense reserve development 
Reserve Development
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Core (Non-A&EP)
$
(429
)
 
$
(545
)
 
$
(396
)
A&EP
—

 
—

 
155

Property and casualty reserve development
(429
)
 
(545
)
 
(241
)
Life reserve development in life company
—

 
1

 
1

Total
$
(429
)
 
$
(544
)
 
$
(240
)
Gross and net carried claim and claim adjustment expense reserves 
Gross and Net Carried Claim and Claim Adjustment Expense Reserves
December 31, 2011
CNA Specialty
 
CNA Commercial
 
Life &
Group Non-Core
 
Corporate
& Other Non-Core
 
Total
(In millions)
 
 
 
 
Gross Case Reserves
$
2,441

 
$
6,266

 
$
2,510

 
$
1,321

 
$
12,538

Gross IBNR Reserves
4,399

 
5,243

 
315

 
1,808

 
11,765

Total Gross Carried Claim and Claim Adjustment Expense Reserves
$
6,840

 
$
11,509

 
$
2,825

 
$
3,129

 
$
24,303

Net Case Reserves
$
2,086

 
$
5,720

 
$
2,025

 
$
347

 
$
10,178

Net IBNR Reserves
3,937

 
4,670

 
254

 
244

 
9,105

Total Net Carried Claim and Claim Adjustment Expense Reserves
$
6,023

 
$
10,390

 
$
2,279

 
$
591

 
$
19,283



December 31, 2010
CNA Specialty
 
CNA Commercial
 
Life &
Group Non-Core
 
Corporate
& Other Non-Core
 
Total
(In millions)
 
 
 
 
Gross Case Reserves
$
2,341

 
$
6,390

 
$
2,403

 
$
1,430

 
$
12,564

Gross IBNR Reserves
4,452

 
6,132

 
336

 
2,012

 
12,932

Total Gross Carried Claim and Claim Adjustment Expense Reserves
$
6,793

 
$
12,522

 
$
2,739

 
$
3,442

 
$
25,496

Net Case Reserves
$
1,992

 
$
5,349

 
$
1,831

 
$
461

 
$
9,633

Net IBNR Reserves
3,926

 
5,292

 
266

 
257

 
9,741

Total Net Carried Claim and Claim Adjustment Expense Reserves
$
5,918

 
$
10,641

 
$
2,097

 
$
718

 
$
19,374

Impact of loss portfolio transfer on the 2010 consolidated condensed statement of income 
Impact on Consolidated Statement of Operations
Year ended December 31
 
(In millions)
2010
Other operating expenses
$
529

Income tax benefit
185

Loss from continuing operations, included in the Corporate & Other Non-Core segment
(344
)
Loss from discontinued operations
(21
)
Net loss attributable to CNA
$
(365
)
Net prior year development 
Net Prior Year Development
Year ended December 31, 2011
 
 
 
 
 
 
 
(In millions)
CNA
Specialty
 
CNA Commercial
 
Corporate
& Other
Non-Core
 
Total
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development- Core (Non-A&EP)
$
(217
)
 
$
(204
)
 
$
(2
)
 
$
(423
)
Pretax (favorable) unfavorable premium development
(28
)
 
21

 
(1
)
 
(8
)
Total pretax (favorable) unfavorable net prior year development
$
(245
)
 
$
(183
)
 
$
(3
)
 
$
(431
)

Year ended December 31, 2010
 
 
 
 
 
 
 
(In millions)
CNA
Specialty
 
CNA Commercial
 
Corporate
& Other
Non-Core
 
Total
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development- Core (Non-A&EP)
$
(341
)
 
$
(304
)
 
$
8

 
$
(637
)
Pretax (favorable) unfavorable premium development
(3
)
 
48

 
(2
)
 
43

Total pretax (favorable) unfavorable net prior year development
$
(344
)
 
$
(256
)
 
$
6

 
$
(594
)

Year ended December 31, 2009
 
 
 
 
 
 
 
(In millions)
CNA
Specialty
 
CNA Commercial
 
Corporate
& Other
Non-Core
 
Total
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development:
 
 
 
 
 
 
 
Core (Non-A&EP)
$
(218
)
 
$
(230
)
 
$
4

 
$
(444
)
A&EP
—

 
—

 
155

 
155

Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development
(218
)
 
(230
)
 
159

 
(289
)
Pretax (favorable) unfavorable premium development
(6
)
 
87

 
—

 
81

Total pretax (favorable) unfavorable net prior year development
$
(224
)
 
$
(143
)
 
$
159

 
$
(208
)

Net prior year claim and allocated claim adjustment expense reserve development for CNA specialty segment 
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development:
 
 
 
 
 
Medical Professional Liability
$
(92
)
 
$
(98
)
 
$
(62
)
Other Professional Liability
(78
)
 
(129
)
 
(98
)
Surety
(47
)
 
(103
)
 
(51
)
Warranty
(13
)
 
—

 
—

Other
13

 
(11
)
 
(7
)
Total pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development
$
(217
)
 
$
(341
)
 
$
(218
)
Net prior year claim and allocated claim adjustment expense reserve development for CNA commercial segment 
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development:
 
 
 
 
 
Commercial Auto
$
(98
)
 
$
(88
)
 
$
(9
)
General Liability
(39
)
 
(59
)
 
(100
)
Workers' Compensation
36

 
47

 
69

Property and Other
(103
)
 
(204
)
 
(190
)
Total pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development
$
(204
)
 
$
(304
)
 
$
(230
)
Reinsurance (Tables)
Components of Reinsurance Receivables 
Components of Reinsurance Receivables
December 31
 
 
 
(In millions)
2011
 
2010
Reinsurance receivables related to insurance reserves:
 
 
 
Ceded claim and claim adjustment expenses
$
5,020

 
$
6,122

Ceded future policy benefits
792

 
822

Ceded policyholders' funds
36

 
37

Reinsurance receivables related to paid losses
244

 
223

Reinsurance receivables
6,092

 
7,204

Allowance for uncollectible reinsurance
(91
)
 
(125
)
Reinsurance receivables, net of allowance for uncollectible reinsurance
$
6,001

 
$
7,079

Components of Earned and Written Premiums 
The effects of reinsurance on earned premiums and written premiums for the years ended December 31, 2011, 2010 and 2009 are shown in the following tables.
Components of Earned Premiums
(In millions)
Direct
 
Assumed
 
Ceded
 
Net
 
Assumed/
Net %
2011 Earned Premiums
 
 
 
 
 
 
 
 
 
Property and casualty
$
7,858

 
$
95

 
$
1,919

 
$
6,034

 
1.6
%
Accident and health
521

 
50

 
2

 
569

 
8.8
%
Life
55

 
—

 
55

 
—

 
—

Total earned premiums
$
8,434

 
$
145

 
$
1,976

 
$
6,603

 
2.2
%
 
 
 
 
 
 
 
 
 
 
2010 Earned Premiums
 
 
 
 
 
 
 
 
 
Property and casualty
$
7,716

 
$
66

 
$
1,849

 
$
5,933

 
1.1
%
Accident and health
534

 
49

 
2

 
581

 
8.4
%
Life
60

 
—

 
59

 
1

 
—

Total earned premiums
$
8,310

 
$
115

 
$
1,910

 
$
6,515

 
1.8
%
 
 
 
 
 
 
 
 
 
 
2009 Earned Premiums
 
 
 
 
 
 
 
 
 
Property and casualty
$
8,028

 
$
67

 
$
1,968

 
$
6,127

 
1.1
%
Accident and health
550

 
51

 
7

 
594

 
8.6
%
Life
84

 
—

 
84

 
—

 
—

Total earned premiums
$
8,662

 
$
118

 
$
2,059

 
$
6,721

 
1.8
%
Components of Written Premiums
(In millions)
Direct
 
Assumed
 
Ceded
 
Net
 
Assumed/
Net %
2011 Written Premiums
 
 
 
 
 
 
 
 
 
Property and casualty
$
7,976

 
$
102

 
$
1,857

 
$
6,221

 
1.6
%
Accident and health
529

 
50

 
2

 
577

 
8.7
%
Life
55

 
—

 
55

 
—

 
—

Total written premiums
$
8,560

 
$
152

 
$
1,914

 
$
6,798

 
2.2
%
 
 
 
 
 
 
 
 
 
 
2010 Written Premiums
 
 
 
 
 
 
 
 
 
Property and casualty
$
7,673

 
$
77

 
$
1,853

 
$
5,897

 
1.3
%
Accident and health
527

 
48

 
2

 
573

 
8.4
%
Life
60

 
—

 
59

 
1

 
—

Total written premiums
$
8,260

 
$
125

 
$
1,914

 
$
6,471

 
1.9
%
 
 
 
 
 
 
 
 
 
 
2009 Written Premiums
 
 
 
 
 
 
 
 
 
Property and casualty
$
7,981

 
$
66

 
$
1,916

 
$
6,131

 
1.1
%
Accident and health
539

 
50

 
6

 
583

 
8.6
%
Life
83

 
—

 
83

 
—

 
—

Total written premiums
$
8,603

 
$
116

 
$
2,005

 
$
6,714

 
1.7
%
Components of Life Insurance Inforce 
Components of Life Insurance Inforce
(In millions)
Direct
 
Assumed
 
Ceded
 
Net
2011
$
6,528

 
$
—

 
$
6,515

 
$
13

2010
8,015

 
—

 
8,001

 
14

2009
9,159

 
—

 
9,144

 
15


Debt (Tables)
Schedule of debt instruments 
Debt
December 31
 
 
 
(In millions)
2011
 
2010
Short term debt:
 
 
 
Senior notes:
 
 
 
6.000%, face amount of $400, due August 15, 2011
$
—

 
$
399

8.375%, face amount of $70, due August 15, 2012
70

 
—

Other debt
13

 
1

Total short term debt
83

 
400

 
 
 
 
Long term debt:
 
 
 
Variable rate debt:
 
 
 
Debenture - CNA Surety, face amount of $31, due April 29, 2034
—

 
31

Senior notes:
 
 
 
8.375%, face amount of $70, due August 15, 2012
—

 
69

5.850%, face amount of $549, due December 15, 2014
548

 
548

6.500%, face amount of $350, due August 15, 2016
348

 
347

6.950%, face amount of $150, due January 15, 2018
149

 
149

7.350%, face amount of $350, due November 15, 2019
348

 
348

5.875%, face amount of $500, due August 15, 2020
495

 
495

5.750%, face amount of $400, due August 15, 2021
396

 
—

Debenture, 7.250%, face amount of $243, due November 15, 2023
241

 
241

Other debt
—

 
23

Total long term debt
2,525

 
2,251

Total debt
$
2,608

 
$
2,651

Maturity of debt 
Maturity of Debt
(In millions)
 
2012
$
83

2013
—

2014
549

2015
—

2016
350

Thereafter
1,643

Less discount
(17
)
Total
$
2,608

Benefit Plans (Tables)
Funded status 
The following table provides a reconciliation of benefit obligations and plan assets for the years ended December 31, 2011 and 2010.
Funded Status
 
Pension Benefits
 
Postretirement Benefits
(In millions)
2011
 
2010
 
2011
 
2010
Benefit obligation at January 1
$
2,798

 
$
2,702

 
$
95

 
$
155

Changes in benefit obligation:
 
 
 
 
 
 
 
Service cost
13

 
16

 
1

 
1

Interest cost
146

 
149

 
3

 
7

Participants' contributions
—

 
—

 
6

 
6

Plan amendments
—

 
—

 
(12
)
 
(60
)
Actuarial (gain) loss
263

 
89

 
(18
)
 
(2
)
Benefits paid
(163
)
 
(157
)
 
(13
)
 
(13
)
Foreign currency translation and other
—

 
(1
)
 
—

 
1

Reduction of benefit obligations due to disposition of subsidiary
(54
)
 
—

 
(13
)
 
—

Benefit obligations at December 31
3,003

 
2,798


49


95

Fair value of plan assets at January 1
2,258

 
2,117

 
—

 
—

Change in plan assets:
 
 
 
 
 
 
 
Actual return on plan assets
82

 
234

 
—

 
—

Company contributions
89

 
65

 
7

 
7

Participants' contributions
—

 
—

 
6

 
6

Benefits paid
(163
)
 
(157
)
 
(13
)
 
(13
)
Foreign currency translation and other
—

 
(1
)
 
—

 
—

Reduction of plan assets due to disposition of subsidiary
(54
)
 
—

 
—

 
—

Fair value of plan assets at December 31
2,212

 
2,258

 
—

 
—

Funded status
$
(791
)
 
$
(540
)
 
$
(49
)
 
$
(95
)
Amounts recognized on the Consolidated Balance Sheets at December 31:
 
 
 
 
 
 
 
Other assets
$
1

 
$
7

 
$
—

 
$
—

Other liabilities
(792
)
 
(547
)
 
(49
)
 
(95
)
Net amount recognized
$
(791
)
 
$
(540
)
 
$
(49
)
 
$
(95
)
Amounts recognized in Accumulated other comprehensive income, not yet recognized in net periodic cost (benefit):
 
 
 
 
 
 
 
Prior service credit
$
—

 
$
—

 
$
(134
)
 
$
(141
)
Net actuarial loss
1,060

 
741

 
9

 
29

Net amount recognized
$
1,060

 
$
741

 
$
(125
)
 
$
(112
)
Components of net periodic cost (benefit) 
Net Periodic Cost (Benefit)
Years ended December 31
 
 
 
 
 
 
(In millions)
 
2011
 
2010
 
2009
Pension cost
 
 
 
 
 
 
Service cost
 
$
13

 
$
16

 
$
17

Interest cost on projected benefit obligation
 
146

 
149

 
153

Expected return on plan assets
 
(172
)
 
(162
)
 
(145
)
Amortization of net actuarial loss
 
25

 
24

 
25

Net periodic pension cost
 
$
12

 
$
27

 
$
50

 
 
 
 
 
 
 
Postretirement benefit
 
 
 
 
 
 
Service cost
 
$
1

 
$
1

 
$
1

Interest cost on projected benefit obligation
 
3

 
7

 
9

Amortization of prior service credit
 
(19
)
 
(16
)
 
(16
)
Amortization of net actuarial loss
 
—

 
1

 
1

Net periodic postretirement benefit
 
$
(15
)
 
$
(7
)
 
$
(5
)
Schedule of amounts recognized in Other comprehensive income 
The amounts recognized in Other comprehensive income are presented in the following table.
Years ended December 31
 
 
 
 
 
 
(In millions)
 
2011
 
2010
 
2009
Pension and postretirement benefits
 
 
 
 
 
 
Amounts arising during the period
 
$
(325
)
 
$
44

 
$
13

Reclassification adjustment relating to prior service credit
 
(19
)
 
(16
)
 
(16
)
Reclassification adjustment relating to actuarial loss
 
25

 
25

 
26

Total increase (decrease) in Other comprehensive income
 
$
(319
)
 
$
53

 
$
23

Schedule of estimated amounts to be recognized from Accumulated other comprehensive income into net periodic cost (benefit) during 2012 
The table below presents the estimated amounts to be recognized from Accumulated other comprehensive income into net periodic cost (benefit) during 2012.
(In millions)
 
Pension
Benefits
 
Postretirement Benefits
Amortization of prior service credit
 
$
—

 
$
(18
)
Amortization of net actuarial loss
 
39

 
1

Total estimated amounts to be recognized
 
$
39

 
$
(17
)
Actuarial assumptions for benefit obligations and for net cost or benefit 
Actuarial assumptions used for the CNA Retirement Plan and CNA Health and Group Benefits Program to determine benefit obligations are set forth in the following table.
Actuarial Assumptions for Benefit Obligations
December 31
 
2011
 
2010
Pension benefits
 
 
 
 
Discount rate
 
4.600
%
 
5.375
%
Expected long term rate of return
 
8.000

 
8.000

Rate of compensation increases
 
4.125

 
5.030

Postretirement benefits
 
 
 
 
Discount rate
 
3.750
%
 
4.375
%
Actuarial assumptions used for the CNA Retirement Plan and CNA Health and Group Benefits Program to determine net cost or benefit are set forth in the following table.
Actuarial Assumptions for Net Cost or Benefit
Years ended December 31
 
2011
 
2010
 
2009
Pension benefits
 
 
 
 
 
 
Discount rate
 
5.375
%
 
5.700
%
 
6.300
%
Expected long term rate of return
 
8.000

 
8.000

 
8.000

Rate of compensation increases
 
5.030

 
5.030

 
5.830

Postretirement benefits
 
 
 
 
 
 
Discount rate
 
4.375
%
 
4.875 / 5.500%

 
6.300
%
Fair value of plan assets measured on a recurring basis 
Pension plan assets measured at fair value on a recurring basis are summarized below.
December 31, 2011
 
 
 
 
 
 
 
 
(In millions)
 
Level 1
 
Level 2
 
Level 3
 
Total assets
at fair value
Assets
 
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
 
Corporate and other bonds
 
$
—

 
$
377

 
$
10

 
$
387

States, municipalities and political subdivisions
 
—

 
104

 
—

 
104

Asset-backed:
 
 
 
 
 
 
 
 
Residential mortgage-backed
 
—

 
198

 
—

 
198

Commercial mortgage-backed
 
—

 
68

 
—

 
68

Other asset-backed
 
—

 
10

 
—

 
10

Total asset-backed
 
—

 
276

 
—

 
276

Total fixed maturity securities
 
—

 
757

 
10

 
767

Equity securities
 
353

 
75

 
5

 
433

Short term investments
 
63

 
35

 
—

 
98

Limited partnerships:
 
 
 
 
 
 
 
 
Hedge funds
 
—

 
488

 
330

 
818

Private equity
 
—

 
—

 
65

 
65

Total limited partnerships
 
—

 
488

 
395

 
883

Other assets
 
—

 
21

 
—

 
21

Investment contracts with insurance company
 
—

 
—

 
10

 
10

Total assets
 
$
416

 
$
1,376

 
$
420

 
$
2,212


December 31, 2010
 
 
 
 
 
 
 
 
(In millions)
 
Level 1
 
Level 2
 
Level 3
 
Total assets
at fair value
Assets
 
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
 
Corporate and other bonds
 
$
—

 
$
305

 
$
10

 
$
315

States, municipalities and political subdivisions
 
—

 
92

 
—

 
92

Asset-backed:
 
 
 
 
 
 
 
 
Residential mortgage-backed
 
—

 
179

 
—

 
179

Commercial mortgage-backed
 
—

 
40

 
9

 
49

Other asset-backed
 
—

 
9

 
1

 
10

Total asset-backed
 
—

 
228

 
10

 
238

Total fixed maturity securities
 
—

 
625

 
20

 
645

Equity securities
 
421

 
77

 
6

 
504

Short term investments
 
106

 
7

 
—

 
113

Limited partnerships:
 
 
 
 
 
 
 
 
Hedge funds
 
—

 
518

 
394

 
912

Private equity
 
—

 
—

 
59

 
59

Total limited partnerships
 
—

 
518

 
453

 
971

Derivatives
 
1

 
—

 
—

 
1

Other assets
 
—

 
15

 
—

 
15

Investment contracts with insurance company
 
—

 
—

 
9

 
9

Total assets
 
$
528

 
$
1,242

 
$
488

 
$
2,258

Reconciliation of level 3 plan assets 
The tables below present a reconciliation for all pension plan assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2011 and 2010.
Level 3
(In millions)
Balance at January 1, 2011
 
Actual return on assets still held at December 31, 2011
 
Actual return on assets sold during the year ended December 31, 2011
 
Purchases, sales, and settlements
 
Net transfers into (out of) Level 3
 
Balance at December 31, 2011
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
10

 
$
—

 
$
—

 
$
—

 
$
—

 
$
10

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
Commercial mortgage-backed
9

 
—

 
—

 
(9
)
 
—

 
—

Other asset-backed
1

 
—

 
—

 
(1
)
 
—

 
—

Total asset-backed
10

 
—

 
—

 
(10
)
 
—

 
—

Total fixed maturity securities
20

 
—

 
—

 
(10
)
 
—

 
10

Equity securities
6

 
(1
)
 
—

 
—

 
—

 
5

Limited partnerships:
 
 
 
 
 
 
 
 
 
 
 
Hedge funds
394

 
5

 
5

 
(74
)
 
—

 
330

Private equity
59

 
9

 
—

 
(3
)
 
—

 
65

Total limited partnerships
453

 
14

 
5

 
(77
)
 
—

 
395

Investment contracts with insurance company
9

 
1

 
—

 
—

 
—

 
10

Total
$
488

 
$
14

 
$
5

 
$
(87
)
 
$
—

 
$
420


Level 3
(In millions)
Balance at January 1, 2010
 
Actual return on assets still held at December 31, 2010
 
Actual return on assets sold during the year ended December 31, 2010
 
Purchases, sales, and settlements
 
Net transfers into (out of) Level 3
 
Balance at December 31, 2010
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
Corporate and other bonds
$
—

 
$
—

 
$
—

 
$
10

 
$
—

 
$
10

Asset-backed:
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed
52

 
—

 
6

 
(58
)
 
—

 
—

Commercial mortgage-backed
—

 
—

 
—

 
9

 
—

 
9

Other asset-backed
5

 
—

 
—

 
(4
)
 
—

 
1

Total asset-backed
57

 
—

 
6

 
(53
)
 
—

 
10

Total fixed maturity securities
57

 
—

 
6

 
(43
)
 
—

 
20

Equity securities
5

 
1

 
—

 
—

 
—

 
6

Limited partnerships:
 
 
 
 
 
 
 
 
 
 
 
Hedge funds
339

 
64

 
—

 
(9
)
 
—

 
394

Private equity
57

 
6

 
—

 
(4
)
 
—

 
59

Total limited partnerships
396

 
70

 
—

 
(13
)
 
—

 
453

Investment contracts with insurance company
9

 
—

 
—

 
—

 
—

 
9

Total
$
467

 
$
71

 
$
6

 
$
(56
)
 
$
—

 
$
488

Estimated future minimum benefit payments to participants 
Estimated Future Minimum Benefit Payments to Participants
(In millions)
Pension Benefits
 
Postretirement Benefits
2012
$
176

 
$
6

2013
181

 
6

2014
184

 
5

2015
188

 
5

2016
191

 
5

2017-2021
1,002

 
18

Significant assumptions used to estimate fair value of stock options and SARS 
The following table presents the significant assumptions used to estimate the fair value of granted stock options and SARs for the years ended December 31, 2011, 2010 and 2009.
Years ended December 31
 
2011
 
2010
 
2009
Weighted average expected life of the securities granted (in years)
 
5.61

 
5.61

 
4.84

Estimate of the underlying common stock's volatility
 
39.88
%
 
39.58
%
 
39.95
%
Expected dividend yield
 
1.5
%
 
—
%
 
—
%
Risk free interest rate
 
2.2
%
 
2.6
%
 
2.0
%
Stock option and SARS activity 
The following table presents activity for stock options and SARs under the Plan in 2011.
 
 
Number of Awards
 
Weighted-Average Exercise Price per Award
 
Aggregate Intrinsic Value
 
Weighted-Average Remaining Contractual Term (in years)
Outstanding at January 1, 2011
 
1,625,175

 
$
27.42

 
 
 
 
Awards granted
 
125,000

 
27.12

 
 
 
 
Awards exercised
 
(166,375
)
 
27.13

 
 
 
 
Awards forfeited, canceled or expired
 
(264,450
)
 
34.51

 
 
 
 
Outstanding at December 31, 2011
 
1,319,350

 
$
26.01

 
$
5
 million
 
5.80
Outstanding, fully vested and expected to vest
 
1,260,045

 
$
26.14

 
$
5
 million
 
5.69
Outstanding, exercisable
 
872,600

 
$
28.04

 
$
2
 million
 
4.79
Weighted-average grant date fair value for awards granted, total intrinsic value for awards exercised and total fair value for awards vested 
The following table presents weighted-average grant date fair value for awards granted, total intrinsic value for awards exercised and total fair value for awards vested for the years ended December 31, 2011, 2010 and 2009.
Years ended December 31
 
2011
 
2010
 
2009
Weighted-average grant date fair value
 
$
9.38

 
$
10.49

 
$
4.69

Total intrinsic value of awards exercised
 
$
481
 thousand
 
$
350
 thousand
 
$
—

Fair value of awards vested
 
$
2
 million
 
$
2
 million
 
$
4
 million
Restricted shares, performance-based restricted stock units and performance share unit activity 
The following table presents activity for restricted shares, performance-based RSUs and performance share units under the Plan in 2011.
 
Number of Awards
 
Weighted-Average Grant Date Fair Value
Balance at January 1, 2011
493,507

 
$
20.30

Awards granted
274,333

 
27.23

Awards vested
(114,130
)
 
17.95

Awards forfeited, canceled or expired
(6,880
)
 
26.24

Performance-based adjustment
(7,408
)
 
27.11

Balance at December 31, 2011
639,422

 
$
23.55

Operating Leases, Commitments and Contingencies, and Guarantees (Tables)
Future minimum lease payments and sublease receipts
Future Minimum Lease Payments and Sublease Receipts
(In millions)
Future Minimum Lease Payments
 
Future Minimum Sublease Receipts
2012
$
37

 
$
2

2013
37

 
2

2014
31

 
—

2015
24

 
—

2016
21

 
—

Thereafter
72

 
—

Total
$
222

 
$
4

Stockholders' Equity and Statutory Accounting Practices (Tables)
Combined statutory capital and surplus and net income (loss)
Statutory Information
 
Statutory Capital and Surplus
 
Statutory Net Income (Loss)
 
December 31
 
Years ended December 31
(In millions)
2011 (b)
 
2010
 
2011 (b)
 
2010
 
2009
Combined Continental Casualty Companies (a)
$
9,888

 
$
9,821

 
$
954

 
$
258

 
$
17

Life company
519

 
498

 
29

 
86

 
(65
)
________________
(a)
Represents the combined statutory surplus of CCC and its subsidiaries, including the Life company.
(b)
Preliminary.
Accumulated Other Comprehensive Income (Loss) (Tables)
Schedule of accumulated other comprehensive income (loss)
Accumulated Other Comprehensive Income (Loss)
December 31
2011
 
2010
(In millions)
Tax
 
After-tax
 
Tax
 
After-tax
Cumulative foreign currency translation adjustment
$
—

 
$
121

 
$
—

 
$
136

Pension and postretirement benefits
326

 
(609
)
 
220

 
(409
)
Net unrealized gains (losses) on investments with OTTI losses
33

 
(64
)
 
39

 
(73
)
Net unrealized gains (losses) on other investments
(533
)
 
1,022

 
(348
)
 
691

Accumulated other comprehensive loss attributable to noncontrolling interests
—

 
—

 
—

 
(19
)
Accumulated other comprehensive income (loss)
$
(174
)
 
$
470

 
$
(89
)
 
$
326

Business Segments (Tables)
Significant components of the Company's continuing operations and selected balance sheet items 
Year ended December 31, 2011
CNA
Specialty
 
CNA
Commercial
 
Life &
Group
Non-Core
 
Corporate
& Other
Non-Core
 
 
 
 
(In millions)
 
 
 
 
Eliminations
 
Total
Net written premiums (a)
$
2,872

 
$
3,350

 
$
577

 
$
2

 
$
(3
)
 
$
6,798

Operating revenues
 

 
 

 
 

 
 

 
 

 
 

Net earned premiums
$
2,796

 
$
3,240

 
$
569

 
$
1

 
$
(3
)
 
$
6,603

Net investment income
500

 
763

 
759

 
32

 
—

 
2,054

Other revenues
221

 
54

 
13

 
6

 
—

 
294

Total operating revenues
3,517

 
4,057

 
1,341

 
39

 
(3
)
 
8,951

Claims, Benefits and Expenses
 

 
 

 
 

 
 

 
 

 
 

Net incurred claims and benefits
1,657

 
2,296

 
1,526

 
(3
)
 
—

 
5,476

Policyholders’ dividends
(3
)
 
8

 
8

 
—

 
—

 
13

Amortization of deferred acquisition costs
663

 
725

 
22

 
—

 
—

 
1,410

Other insurance related expenses
197

 
395

 
143

 
6

 
(3
)
 
738

Other expenses
191

 
53

 
19

 
170

 
—

 
433

Total claims, benefits and expenses
2,705

 
3,477

 
1,718

 
173

 
(3
)
 
8,070

Operating income (loss) from continuing operations before income tax
812

 
580

 
(377
)
 
(134
)
 
—

 
881

Income tax (expense) benefit on operating income (loss)
(281
)
 
(207
)
 
169

 
68

 
—

 
(251
)
Net operating (income) loss, after-tax, attributable to noncontrolling interests
(12
)
 
(4
)
 
—

 
—

 
—

 
(16
)
Net operating income (loss) from continuing operations attributable to CNA
519

 
369

 
(208
)
 
(66
)
 
—

 
614

Net realized investment gains (losses), net of participating policyholders’ interests
(5
)
 
14

 
(7
)
 
(6
)
 
—

 
(4
)
Income tax (expense) benefit on net realized investment gains (losses)
2

 
(2
)
 
2

 
3

 
—

 
5

Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

Net realized investment gains (losses) attributable to CNA
(3
)
 
12

 
(5
)
 
(3
)
 
—

 
1

Net income (loss) from continuing operations attributable to CNA
$
516

 
$
381

 
$
(213
)
 
$
(69
)
 
$
—

 
$
615


(a) Related to business in property and casualty companies only.

December 31, 2011
 
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
Reinsurance receivables
$
852

 
$
1,188

 
$
1,375

 
$
2,677

 
$
—

 
$
6,092

Insurance receivables
$
670

 
$
1,047

 
$
8

 
$
1

 
$
—

 
$
1,726

Deferred acquisition costs
$
347

 
$
311

 
$
—

 
$
—

 
$
—

 
$
658

Insurance reserves
 
 
 
 
 
 
 
 
 
 
 

Claim and claim adjustment expenses
$
6,840

 
$
11,509

 
$
2,825

 
$
3,129

 
$
—

 
$
24,303

Unearned premiums
1,629

 
1,480

 
141

 
—

 
—

 
3,250

Future policy benefits
—

 
—

 
9,810

 
—

 
—

 
9,810

Policyholders’ funds
15

 
10

 
166

 
—

 
—

 
191

Year ended December 31, 2010
CNA
Specialty
 
CNA
Commercial
 
Life &
Group
Non-Core
 
Corporate
& Other
Non-Core
 
 
 
 
(In millions)
 
 
 
 
Eliminations
 
Total
Net written premiums (a)
$
2,691

 
$
3,208

 
$
573

 
$
2

 
$
(3
)
 
$
6,471

Operating revenues
 

 
 

 
 

 
 

 
 

 
 

Net earned premiums
$
2,679

 
$
3,256

 
$
582

 
$
1

 
$
(3
)
 
$
6,515

Net investment income
591

 
873

 
715

 
137

 
—

 
2,316

Other revenues
216

 
61

 
7

 
8

 
—

 
292

Total operating revenues
3,486

 
4,190

 
1,304

 
146

 
(3
)
 
9,123

Claims, Benefits and Expenses
 

 
 
 
 

 
 

 
 

 
 

Net incurred claims and benefits
1,447

 
2,175

 
1,275

 
58

 
—

 
4,955

Policyholders’ dividends
12

 
14

 
4

 
—

 
—

 
30

Amortization of deferred acquisition costs
631

 
736

 
20

 
—

 
—

 
1,387

Other insurance related expenses
186

 
424

 
180

 
10

 
(3
)
 
797

Other expenses
190

 
55

 
2

 
681

 
—

 
928

Total claims, benefits and expenses
2,466

 
3,404

 
1,481

 
749

 
(3
)
 
8,097

Operating income (loss) from continuing operations before income tax
1,020

 
786

 
(177
)
 
(603
)
 
—

 
1,026

Income tax (expense) benefit on operating income (loss)
(343
)
 
(260
)
 
90

 
216

 
—

 
(297
)
Net operating (income) loss, after-tax, attributable to noncontrolling interests
(52
)
 
(17
)
 
—

 
—

 
—

 
(69
)
Net operating income (loss) from continuing operations attributable to CNA
625

 
509

 
(87
)
 
(387
)
 
—

 
660

Net realized investment gains (losses), net of participating policyholders’ interests
30

 
(15
)
 
53

 
18

 
—

 
86

Income tax (expense) benefit on net realized investment gains (losses)
(10
)
 
(1
)
 
(20
)
 
(5
)
 
—

 
(36
)
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
—

 
1

 
—

 
—

 
—

 
1

Net realized investment gains (losses) attributable to CNA
20

 
(15
)
 
33

 
13

 
—

 
51

Net income (loss) from continuing operations attributable to CNA
$
645

 
$
494

 
$
(54
)
 
$
(374
)
 
$
—

 
$
711


(a) Related to business in property and casualty companies only.

December 31, 2010
 
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
Reinsurance receivables
$
906

 
$
1,973

 
$
1,502

 
$
2,823

 
$
—

 
$
7,204

Insurance receivables
$
654

 
$
1,050

 
$
9

 
$
4

 
$
—

 
$
1,717

Deferred acquisition costs
$
330

 
$
315

 
$
434

 
$
—

 
$
—

 
$
1,079

Insurance reserves


 


 


 


 


 
 

Claim and claim adjustment expenses
$
6,793

 
$
12,522

 
$
2,739

 
$
3,442

 
$
—

 
$
25,496

Unearned premiums
1,543

 
1,526

 
132

 
2

 
—

 
3,203

Future policy benefits
—

 
—

 
8,718

 
—

 
—

 
8,718

Policyholders’ funds
16

 
13

 
144

 
—

 
—

 
173

Year ended December 31, 2009
CNA
Specialty
 
CNA
Commercial
 
Life &
Group
Non-Core
 
Corporate
& Other
Non-Core
 
 
 
 
(In millions)
 
 
 
 
Eliminations
 
Total
Net written premiums (a)
$
2,684

 
$
3,448

 
$
583

 
$
1

 
$
(3
)
 
$
6,713

Operating revenues
 

 
 

 
 

 
 

 
 

 
 

Net earned premiums
$
2,697

 
$
3,432

 
$
595

 
$
—

 
$
(3
)
 
$
6,721

Net investment income
526

 
935

 
664

 
195

 
—

 
2,320

Other revenues
206

 
61

 
11

 
10

 
—

 
288

Total operating revenues
3,429

 
4,428

 
1,270

 
205

 
(3
)
 
9,329

Claims, Benefits and Expenses
 

 
 
 
 

 
 

 
 

 
 

Net incurred claims and benefits
1,536

 
2,420

 
1,084

 
227

 
—

 
5,267

Policyholders’ dividends
9

 
9

 
5

 
—

 
—

 
23

Amortization of deferred acquisition costs
624

 
775

 
18

 
—

 
—

 
1,417

Other insurance related expenses
163

 
435

 
183

 
3

 
(3
)
 
781

Other expenses
179

 
77

 
69

 
119

 
—

 
444

Total claims, benefits and expenses
2,511

 
3,716

 
1,359

 
349

 
(3
)
 
7,932

Operating income (loss) from continuing operations before income tax
918

 
712

 
(89
)
 
(144
)
 
—

 
1,397

Income tax (expense) benefit on operating income (loss)
(282
)
 
(201
)
 
73

 
57

 
—

 
(353
)
Net operating (income) loss, after-tax, attributable to noncontrolling interests
(45
)
 
(17
)
 
—

 
—

 
—

 
(62
)
Net operating income (loss) from continuing operations attributable to CNA
591

 
494

 
(16
)
 
(87
)
 
—

 
982

Net realized investment gains (losses), net of participating policyholders’ interests
(186
)
 
(360
)
 
(235
)
 
(76
)
 
—

 
(857
)
Income tax (expense) benefit on net realized investment gains (losses)
64

 
123

 
82

 
27

 
—

 
296

Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
(1
)
 
1

 
—

 
—

 
—

 
—

Net realized investment gains (losses) attributable to CNA
(123
)
 
(236
)
 
(153
)
 
(49
)
 
—

 
(561
)
Net income (loss) from continuing operations attributable to CNA
$
468

 
$
258

 
$
(169
)
 
$
(136
)
 
$
—

 
$
421


(a) Related to business in property and casualty companies only.
Revenues by line of business 
Revenues by Line of Business
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
CNA Specialty
 
 
 
 
 
International
$
210

 
$
199

 
$
171

Professional & Management Liability
2,541

 
2,551

 
2,339

Surety
472

 
475

 
474

Warranty & Alternative Risks
289

 
291

 
259

CNA Specialty revenues
3,512

 
3,516

 
3,243

CNA Commercial
 

 
 

 
 
CNA Select Risk
272

 
261

 
210

Commercial Insurance
2,681

 
2,851

 
2,692

International
537

 
499

 
617

Small Business
581

 
564

 
549

CNA Commercial revenues
4,071

 
4,175

 
4,068

Life & Group Non-Core
 

 
 

 
 
Health
1,093

 
1,100

 
811

Life & Annuity
229

 
249

 
211

Other
12

 
8

 
13

Life & Group Non-Core revenues
1,334

 
1,357

 
1,035

Corporate & Other Non-Core revenues
33

 
164

 
129

Eliminations
(3
)
 
(3
)
 
(3
)
Total revenues
$
8,947

 
$
9,209

 
$
8,472

IT Transformation Costs by Segment (Tables)
IT transformation costs by segment
IT Transformation Costs by Segment
Year ended December 31
 
(In millions)
2010
CNA Specialty
$
8

CNA Commercial
15

Life & Group Non-Core
10

Corporate & Other Non-Core
3

Total IT Transformation Costs
$
36

Quarterly Financial Data (Unaudited) (Tables)
Schedule of quarterly financial information
Quarterly Financial Data
2011
 
 
 
 
 
 
 
 
 
(In millions, except per share data)
First
 
Second
 
Third
 
Fourth
 
Full Year
Revenues
$
2,315

 
$
2,198

 
$
2,175

 
$
2,259

 
$
8,947

Income from continuing operations
233

 
132

 
75

 
191

 
631

Income (loss) from discontinued operations, net of income tax (expense) benefit
(1
)
 
—

 
—

 
—

 
(1
)
Net (income) loss attributable to noncontrolling interests
(9
)
 
(6
)
 
—

 
(1
)
 
(16
)
Net income attributable to CNA
$
223

 
$
126

 
$
75

 
$
190

 
$
614

Basic and Diluted Earnings (Loss) Per Share
 
 
 
 
 
 
 
 
 
Income from continuing operations attributable to CNA common stockholders
$
0.83

 
$
0.47

 
$
0.28

 
$
0.70

 
$
2.28

Income (loss) from discontinued operations attributable to CNA common stockholders
—

 
—

 
—

 
—

 
—

Basic and diluted earnings per share attributable to CNA common stockholders
$
0.83

 
$
0.47

 
$
0.28

 
$
0.70

 
$
2.28


2010
 
 
 
 
 
 
 
 
 
(In millions, except per share data)
First
 
Second
 
Third
 
Fourth
 
Full Year
Revenues
$
2,315

 
$
2,233

 
$
2,363

 
$
2,298

 
$
9,209

Income (loss) from continuing operations
255

 
301

 
(103
)
 
326

 
779

Income (loss) from discontinued operations, net of income tax (expense) benefit
—

 
1

 
(22
)
 
—

 
(21
)
Net (income) loss attributable to noncontrolling interests
(10
)
 
(19
)
 
(15
)
 
(24
)
 
(68
)
Net income (loss) attributable to CNA
$
245

 
$
283

 
$
(140
)
 
$
302

 
$
690

Basic and Diluted Earnings (Loss) Per Share
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to CNA common stockholders
$
0.82

 
$
0.96

 
$
(0.51
)
 
$
1.09

 
$
2.36

Income (loss) from discontinued operations attributable to CNA common stockholders
—

 
—

 
(0.08
)
 
—

 
(0.08
)
Basic and diluted earnings (loss) per share attributable to CNA common stockholders
$
0.82

 
$
0.96

 
$
(0.59
)
 
$
1.09

 
$
2.28

Schedule II. Condensed Financial Information of Registrant (Parent Company) (Tables)
Schedule of Condensed Financial Information of Registrant, Statements of Operations 
Statements of Operations
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Revenues
 
 
 
 
 
Net investment income
$
1

 
$
4

 
$
3

Net realized investment gains (losses)
(9
)
 
(1
)
 
8

Other income
40

 
96

 
101

Total revenues
32

 
99

 
112

Expenses
 
 
 
 
 
Administrative and general
3

 
5

 
2

Interest
167

 
148

 
116

Total expenses
170

 
153

 
118

Loss from operations before income taxes and equity in net income of subsidiaries
(138
)
 
(54
)
 
(6
)
Income tax benefit
46

 
19

 
2

Loss before equity in net income of subsidiaries
(92
)
 
(35
)
 
(4
)
Equity in net income of subsidiaries
706

 
725

 
423

Net income
$
614

 
$
690

 
$
419

Schedule of Condensed Financial Information of Registrant, Balance Sheets 
Balance Sheets
December 31
 
 
 
(In millions, except share data)
2011
 
2010
Assets
 
 
 
Investment in subsidiaries
$
13,564

 
$
12,780

Fixed maturity securities available-for-sale, at fair value (amortized cost of $2 and $3)
2

 
3

Short term investments
292

 
215

Amounts due from subsidiaries
—

 
11

Surplus note due from subsidiary
250

 
500

Other assets
18

 
16

Total assets
$
14,126

 
$
13,525

Liabilities and equity
 
 
 
Liabilities:
 
 
 
Short term debt
$
3

 
$
399

Long term debt
2,525

 
2,131

Other liabilities
41

 
41

Total liabilities
2,569

 
2,571

Equity:
 
 
 
Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 269,274,900 and 269,139,198 shares outstanding)
683

 
683

Additional paid-in capital
2,146

 
2,200

Retained earnings
8,382

 
7,876

Accumulated other comprehensive income
470

 
326

Treasury stock (3,765,343 and 3,901,045 shares), at cost
(102
)
 
(105
)
Notes receivable for the issuance of common stock
(22
)
 
(26
)
Total equity
11,557

 
10,954

Total liabilities and equity
$
14,126

 
$
13,525

Schedule of Condensed Financial Information of Registrant, Statements of Cash Flows 
Statements of Cash Flows
Years ended December 31
 
 
 
 
 
(In millions)
2011
 
2010
 
2009
Cash Flows from Operating Activities
 
 
 
 
 
Net income
$
614

 
$
690

 
$
419

Adjustments to reconcile net income to net cash flows provided (used) by operating activities:
 
 
 
 
 
Equity in net income of subsidiaries
(706
)
 
(725
)
 
(423
)
Dividends received from subsidiaries
—

 
1

 
—

Net realized investment (gains) losses
9

 
1

 
(8
)
Other, net
55

 
85

 
(21
)
Total adjustments
(642
)
 
(638
)
 
(452
)
Net cash flows provided (used) by operating activities
$
(28
)
 
$
52

 
$
(33
)
Cash Flows from Investing Activities
 
 
 
 
 
Proceeds from fixed maturity securities
$
1

 
$
(2
)
 
$
12

Change in short term investments
(77
)
 
181

 
145

Capital contributions to subsidiaries
(38
)
 
(6
)
 
(3
)
Return of capital from subsidiaries
6

 
—

 
—

Repayment of surplus note by subsidiary
250

 
500

 
—

Other, net
1

 
—

 
(12
)
Net cash flows provided by investing activities
$
143

 
$
673

 
$
142

Cash Flows from Financing Activities
 
 
 
 
 
Dividends paid to common stockholders
$
(108
)
 
$
—

 
$
—

Dividends paid to Loews for 2008 Senior Preferred
—

 
(76
)
 
(122
)
Payment to redeem 2008 Senior Preferred
—

 
(1,000
)
 
(250
)
Proceeds from the issuance of debt
396

 
495

 
350

Repayment of debt
(409
)
 
(150
)
 
(100
)
Stock options exercised
5

 
3

 
1

Other, net
1

 
3

 
12

Net cash flows used by financing activities
$
(115
)
 
$
(725
)
 
$
(109
)
Net change in cash
$
—

 
$
—

 
$
—

Cash, beginning of year
—

 
—

 
—

Cash, end of year
$
—

 
$
—

 
$
—

Schedule of Long Term Debt of Registrant 
Debt
December 31
 
 
 
(In millions)
2011
 
2010
Short term debt:
 
 
 
Senior notes:
 
 
 
6.000%, face amount of $400, due August 15, 2011
$
—

 
$
399

Other debt
3

 
—

Total short-term debt
3

 
399

Long term debt:
 
 
 
Senior notes:
 
 
 
5.850%, face amount of $549, due December 15, 2014
548

 
548

6.500%, face amount of $350, due August 15, 2016
348

 
347

6.950%, face amount of $150, due January 15, 2018
149

 
149

7.350%, face amount of $350, due November 15, 2019
348

 
348

5.875%, face amount of $500, due August 15, 2020
495

 
495

5.750%, face amount of $400, due August 15, 2021
396

 
—

Debenture, 7.250%, face amount of $243, due November 15, 2023
241

 
241

Other debt
—

 
3

Total long term debt
2,525

 
2,131

Total debt
$
2,528

 
$
2,530

Schedule V. Valuation and Qualifying Accounts (Tables)
Schedule of valuation and qualifying accounts
SCHEDULE V. VALUATION AND QUALIFYING ACCOUNTS
(In millions)
Balance at Beginning of Period
 
Charged to Costs and Expenses
 
Charged to Other Accounts (a)
 
Deductions
 
Balance at End of Period
Year ended December 31, 2011
 
 
 
 
 
 
 
 
 
Deducted from assets:
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts:
 
 
 
 
 
 
 
 
 
Insurance and reinsurance receivables
$
285

 
$
(55
)
 
$
—

 
$
(27
)
 
$
203

Year ended December 31, 2010
 
 
 
 
 
 
 
 
 
Deducted from assets:
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts:
 
 
 
 
 
 
 
 
 
Insurance and reinsurance receivables
$
553

 
$
(232
)
 
$
(1
)
 
$
(35
)
 
$
285

Year ended December 31, 2009
 
 
 
 
 
 
 
 
 
Deducted from assets:
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts:
 
 
 
 
 
 
 
 
 
Insurance and reinsurance receivables
$
587

 
$
4

 
$
(1
)
 
$
(37
)
 
$
553


(a)    Amount includes effects of foreign currency translation.
Schedule VI. Supplemental Information Concerning Property and Casualty Insurance Operations (Tables)
Supplemental information concerning property and casualty insurance operations
SCHEDULE VI. SUPPLEMENTAL INFORMATION CONCERNING PROPERTY AND CASUALTY INSURANCE OPERATIONS
As of and for the years ended December 31
Consolidated Property and Casualty Operations
(In millions)
2011
 
2010
 
2009
Deferred acquisition costs
$
658

 
$
1,079

 


Reserves for unpaid claim and claim adjustment expenses
24,228

 
25,412

 


Discount deducted from claim and claim adjustment expense reserves above (based on interest rates ranging from 3.0% to 8.0%)
1,569

 
1,552

 


Unearned premiums
3,250

 
3,203

 


Net written premiums
6,798

 
6,471

 
$
6,713

Net earned premiums
6,603

 
6,514

 
6,720

Net investment income
1,845

 
2,097

 
2,110

Incurred claim and claim adjustment expenses related to current year
4,901

 
4,737

 
4,788

Incurred claim and claim adjustment expenses related to prior years
(429
)
 
(545
)
 
(241
)
Amortization of deferred acquisition costs
1,410

 
1,387

 
1,417

Paid claim and claim adjustment expenses
4,499

 
4,667

 
4,841

Summary of Significant Accounting Policies (Narrative) (Details) (USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Jun. 30, 2011
Payments to acquire additional interest in subsidiaries
$ 475,000,000 
    
    
 
Investments in life settlement contracts
117,000,000 
 
 
 
Basis of Presentation [Member]
 
 
 
 
Noncontrolling interest, ownership percentage by parent
90.00% 
 
 
 
CNA Surety [Member]
 
 
 
 
Previous ownership of outstanding publicly-traded stock of CNA Surety
 
 
 
61.00% 
Payments to acquire additional interest in subsidiaries
475,000,000 
 
 
 
Offer price per share for CNA Surety
$ 26.55 
 
 
 
Noncontrolling interest, decrease from redemptions or purchase of interests
434,000,000 
 
 
 
Net income attributable to the noncontrolling interest in CNA Surety
12,000,000 
52,000,000 
46,000,000 
 
First Insurance Company of Hawaii (FICOH) [Member]
 
 
 
 
Sale of CNA ownership percentage of FICOH
50.00% 
 
 
 
Claim and claim adjustment expense reserves [Member]
 
 
 
 
Anticipated amounts due from insureds related to losses under deductible policies
1,400,000,000 
1,400,000,000 
 
 
Minimum interest rate used in determining present value of obligations of structured settlements not funded by annuities
5.50% 
4.60% 
 
 
Maximum interest rate used in determining present value of obligations of structured settlements not funded by annuities
8.00% 
7.50% 
 
 
Discounted reserves for unfunded structured settlements
632,000,000 
713,000,000 
 
 
Discounted reserves for unfunded structure settlements, discount amount
1,100,000,000 
1,100,000,000 
 
 
Minimum interest rate used to discount workers' compensation lifetime claim reserves and accident and health claim reserves
3.00% 
3.00% 
 
 
Maximum interest rate used to discount workers' compensation lifetime claim reserves and accident and health claim reserves
6.50% 
6.50% 
 
 
Discounted reserves for worker's compensation lifetime claim reserves and accident and health claim reserves
2,100,000,000 
1,900,000,000 
 
 
Discounted reserves for worker's compensation lifetime claim reserves and accident and health claim reserves, discount amount
520,000,000 
487,000,000 
 
 
Future policy benefits reserves [Member]
 
 
 
 
Minimum interest rate used to calculate reserves for long term care products
5.00% 
6.00% 
 
 
Maximum interest rate used to calculate reserves for long term care products
7.50% 
7.60% 
 
 
Minimum interest rate used to calculate reserves for payout annuity contracts
5.40% 
2.80% 
 
 
Maximum interest rate used to calculate reserves for payout annuity contracts
7.50% 
10.20% 
 
 
Increase in insurance reserves due to unlocking actuarial assumptions related to payout annuity contracts
166,000,000 
 
 
 
Guaranty fund and other insurance-related assessments [Member]
 
 
 
 
Liability balance for guaranty fund
152,000,000 
160,000,000 
 
 
Related assets for premium tax offsets included in other assets
2,000,000 
3,000,000 
 
 
Reinsurance [Member]
 
 
 
 
Percentage of billed receivables compared to total reinsurance receivables
less than 5% 
 
 
 
Deposit assets
18,000,000 
23,000,000 
 
 
Deposit liabilities
123,000,000 
114,000,000 
 
 
Deferred acquistion costs [Member]
 
 
 
 
Deferred acquistion costs, shadow adjustment
412,000,000 
   
 
 
Investments in life settlement contracts and related revenue recognition [Member]
 
 
 
 
Investments in life settlement contracts
117,000,000 
129,000,000 
 
 
Increase in fair value recognized on life settlement contracts
5,000,000 
10,000,000 
10,000,000 
 
Gain recognized on matured life settlement contracts
28,000,000 
19,000,000 
24,000,000 
 
Seperate account business [Member]
 
 
 
 
Increase (decrease) in policyholders' funds, pension deposit guarantee liability
18,000,000 
(24,000,000)
(42,000,000)
 
Valuation of investments [Member]
 
 
 
 
Shadow adjustment, net of participating policyholders' interest and tax
582,000,000 
150,000,000 
 
 
Reduction of net unrealized gains on investments included in AOCI due to shadow adjustments
732,000,000 
150,000,000 
 
 
Pension and Postretirement Benefits [Member]
 
 
 
 
New accounting estimate, effect of change on net income
 
 
20,000,000 
 
Stock-Based Compensation [Member]
 
 
 
 
Requisite service period for stock-based compensation expense
four 
 
 
 
Foreign Currency [Member]
 
 
 
 
Foreign currency transaction gain (loss), before tax
4,000,000 
(19,000,000)
(14,000,000)
 
Property and Equipment [Member]
 
 
 
 
Useful life of furniture and fixtures
seven 
 
 
 
Useful life for office equipment
five 
 
 
 
Useful life for data processing equipment and software minimum
three 
 
 
 
Useful life for data processing equipment and software maximum
five 
 
 
 
Useful life of company owned buildings
fifty 
 
 
 
Earnings (Loss) Per Share Data [Member]
 
 
 
 
Weighted average number diluted shares outstanding adjustment
290,000 
380,000 
120,000 
 
Antidilutive securities excluded from computation of earnings per share, amount
1,100,000 
1,200,000 
1,700,000 
 
Supplementary Cash Flow Information [Member]
 
 
 
 
Interest paid, net
175,000,000 
145,000,000 
124,000,000 
 
Income taxes paid
61,000,000 
 
 
 
Proceeds from income tax refunds
 
175,000,000 
117,000,000 
 
Accounting standards update [Member]
 
 
 
 
Reduction of stockholders' equity due to adoption of updated accounting guidance for costs associated with acquiring or renewing insurance contracts
$ 70,000,000 
 
 
 
Summary of Significant Accounting Policies (Life Settlement Contracts) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Number of life settlement contracts
841 
Fair value of life settlement contracts
$ 117 
Face amount of life insurance policies
535 
One Year from Balance Sheet Date [Member]
 
Number of life settlement contracts
70 
Fair value of life settlement contracts
16 
Face amount of life insurance policies
46 
More than One and within Two Years from Balance Sheet Date [Member]
 
Number of life settlement contracts
70 
Fair value of life settlement contracts
14 
Face amount of life insurance policies
42 
More than Two and within Three Years from Balance Sheet Date [Member]
 
Number of life settlement contracts
60 
Fair value of life settlement contracts
12 
Face amount of life insurance policies
39 
More than Three and within Four Years from Balance Sheet Date [Member]
 
Number of life settlement contracts
60 
Fair value of life settlement contracts
10 
Face amount of life insurance policies
37 
More than Four and within Five Years from Balance Sheet Date [Member]
 
Number of life settlement contracts
50 
Fair value of life settlement contracts
9 
Face amount of life insurance policies
33 
More than Five Years from Balance Sheet Date and Thereafter [Member]
 
Number of life settlement contracts
531 
Fair value of life settlement contracts
56 
Face amount of life insurance policies
$ 338 
Investments (Narrative) (Details) (USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Fair value
$ 40,241,000,000 
$ 38,017,000,000 
 
Cost or Amortized Cost
37,633,000,000 
36,849,000,000 
 
Gross Unrealized Losses
541,000,000 
804,000,000 
 
Net unrealized gains (losses) related to changes in fair value of trading securities still held included in net investment income
   
   
(5,000,000)
Number of non-income producing fixed maturity securities
9 
7 
 
Fair value of non income fixed maturity security
3,000,000 
3,000,000 
 
Number of investments that exceed ten percent of stockholders' equity
   
   
 
Net unrealized gains (losses) related to changes in the fair value of securities for which the fair value option has been elected
2,000,000 
(1,000,000)
 
Limited partnership investments
2,245,000,000 
2,309,000,000 
 
Undistributed earnings of limited partnership investments
560,000,000 
723,000,000 
 
Percentage of limited partnerships reported on a current basis
58.00% 
 
 
Percentage of limited partnerships reported on a one month lag
25.00% 
 
 
Number of active limited partnership investments held
79 
75 
 
Percentage of limited partnerships employing hedge fund strategies focused on fixed income and equity investments
81.00% 
85.00% 
 
Percentage of equity related limited partnership hedge fund strategies
46.00% 
 
 
Percentage of multistrategy approach limited partnership hedge fund strategies
32.00% 
 
 
Percentage of distressed investments limited partnership hedge fund strategies
19.00% 
 
 
Percentage of fixed income limited partnership hedge fund strategies
3.00% 
 
 
Limited partnerships invested in private equity
14.00% 
11.00% 
 
Carrying value of ten largest limited partnerships
1,218,000,000 
1,321,000,000 
 
Carrying value of limited partnerships as percentage of aggregate partnership equity
4.00% 
 
 
Income as percentage of change in partnership equity for all limited partnerships
4.00% 
3.00% 
4.00% 
Commitments to purchase various privately placed debt securities
95,000,000 
 
 
Commitments to sell various privately placed debt securities
69,000,000 
 
 
Obligations on Unfunded Bank Loan Participations
6,000,000 
 
 
Mortgage loan commitments
48,000,000 
 
 
Carrying value of securities deposited under requirements of regulatory authorities
3,500,000,000 
2,900,000,000 
 
Cash and securities deposited as collateral for letters of credit
5,000,000 
6,000,000 
 
Carrying value of assets deposited to secure reinsurance and third party obligations
288,000,000 
298,000,000 
 
Corporate and other bonds, financial industry sector [Member]
 
 
 
Fair value
1,682,000,000 
 
 
Cost or Amortized Cost
1,788,000,000 
 
 
States, municipalities and political subdivisions [Member]
 
 
 
Fair value
9,782,000,000 
7,889,000,000 
 
Cost or Amortized Cost
9,018,000,000 
8,157,000,000 
 
Gross Unrealized Losses
136,000,000 
410,000,000 
 
Percentage of gross unrealized losses by AA or higher securities
83.00% 
 
 
Gross unrealized losses of largest exposure, Puerto Rico sales tax revenue bonds
80,000,000 
 
 
Asset-backed [Member]
 
 
 
Fair value
8,084,000,000 
7,846,000,000 
 
Cost or Amortized Cost
8,097,000,000 
8,001,000,000 
 
Gross Unrealized Losses
246,000,000 
314,000,000 
 
Number of different asset backed securities comprising total fair value of asset backed securities
2,010 
 
 
Number of securities with sub-prime and alt-a exposure
112 
 
 
Mortgage backed securities, issued by U.S. Government sponsored enterprises [Member]
 
 
 
Gross Unrealized Losses
35,000,000 
 
 
Non-agency structured residential mortgage backed securities [Member]
 
 
 
Gross Unrealized Losses
148,000,000 
 
 
Number of securities with at least one trade lot in a gross unrealized loss position
131 
 
 
Severity of gross unrealized loss as percentage of amortized cost
11.00% 
 
 
Commercial mortgage-backed [Member]
 
 
 
Fair value
1,354,000,000 
993,000,000 
 
Cost or Amortized Cost
1,365,000,000 
994,000,000 
 
Gross Unrealized Losses
59,000,000 
41,000,000 
 
Number of securities with at least one trade lot in a gross unrealized loss position
61 
 
 
Severity of gross unrealized loss as percentage of amortized cost
9.00% 
 
 
Other asset-backed [Member]
 
 
 
Fair value
955,000,000 
763,000,000 
 
Cost or Amortized Cost
946,000,000 
753,000,000 
 
Gross Unrealized Losses
4,000,000 
8,000,000 
 
Number of securities with at least one trade lot in a gross unrealized loss position
51 
 
 
Severity of gross unrealized loss as percentage of amortized cost
1.00% 
 
 
Mortgage loans [Member]
 
 
 
Percentage of the carrying value of commercial mortgage loans related to credit tenant loans
14.00% 
40.00% 
 
Commercial mortgage loans past due or in non-accrual status
   
   
 
Valuation allowances recorded on commercial mortgage loans
   
   
 
Investment commitment [Member]
 
 
 
Future capital call commitments
$ 129,000,000 
 
 
Investments (Net investment income) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Net Investment Income
 
 
 
Gross investment income
$ 2,112 
$ 2,370 
$ 2,370 
Investment expense
(58)
(54)
(50)
Net investment income
2,054 
2,316 
2,320 
Fixed maturity securities [Member]
 
 
 
Net Investment Income
 
 
 
Gross investment income
2,011 
2,051 
1,941 
Short term investments [Member]
 
 
 
Net Investment Income
 
 
 
Gross investment income
8 
15 
36 
Limited partnership investments [Member]
 
 
 
Net Investment Income
 
 
 
Gross investment income
48 
249 
315 
Equity securities [Member]
 
 
 
Net Investment Income
 
 
 
Gross investment income
20 
32 
49 
Mortgage loans [Member]
 
 
 
Net Investment Income
 
 
 
Gross investment income
9 
2 
   
Trading portfolio [Member]
 
 
 
Net Investment Income
 
 
 
Gross investment income
9 1
13 1
23 1
Other [Member]
 
 
 
Net Investment Income
 
 
 
Gross investment income
$ 7 
$ 8 
$ 6 
Investments (Net realized investment gains (losses)) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Gain (Loss) on Investments
 
 
 
Net realized investment gains (losses), net of participating policyholders’ interests
$ (4)
$ 86 
$ (857)
Fixed maturity securities [Member]
 
 
 
Gain (Loss) on Investments
 
 
 
Gross realized gains
289 
475 
500 
Gross realized losses
(311)
(383)
(1,667)
Net realized investment gains (losses), net of participating policyholders’ interests
(22)
92 
(1,167)
Equity securities [Member]
 
 
 
Gain (Loss) on Investments
 
 
 
Gross realized gains
10 
50 
473 
Gross realized losses
(11)
(52)
(230)
Net realized investment gains (losses), net of participating policyholders’ interests
(1)
(2)
243 
Derivatives [Member]
 
 
 
Gain (Loss) on Investments
 
 
 
Net realized investment gains (losses), net of participating policyholders’ interests
   
(1)
51 
Short term investments and other [Member]
 
 
 
Gain (Loss) on Investments
 
 
 
Net realized investment gains (losses), net of participating policyholders’ interests
$ 19 1
$ (3)1
$ 16 1
Investments (Net change in unrealized gains (losses) on investments) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Net Change In Unrealized Pretax Gains (Losses)
 
 
 
Net change in unrealized gains (losses) on investments
$ 1,437 
$ 1,146 
$ 5,430 
Fixed maturity securities [Member]
 
 
 
Net Change In Unrealized Pretax Gains (Losses)
 
 
 
Net change in unrealized gains (losses) on investments
1,442 
1,140 
5,278 
Equity securities [Member]
 
 
 
Net Change In Unrealized Pretax Gains (Losses)
 
 
 
Net change in unrealized gains (losses) on investments
(2)
7 
156 
Other [Member]
 
 
 
Net Change In Unrealized Pretax Gains (Losses)
 
 
 
Net change in unrealized gains (losses) on investments
$ (3)
$ (1)
$ (4)
Investments (Components of other-than-temporary impairment losses recognized in earnings) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Net OTTI Losses
 
 
 
Net other-than-temporary impairment losses recognized in earnings
$ 216 
$ 232 
$ 1,352 
Corporate and other bonds [Member]
 
 
 
Net OTTI Losses
 
 
 
Net other-than-temporary impairment losses recognized in earnings
95 
68 
357 
States, municipalities and political subdivisions [Member]
 
 
 
Net OTTI Losses
 
 
 
Net other-than-temporary impairment losses recognized in earnings
   
62 
79 
Residential mortgage-backed [Member]
 
 
 
Net OTTI Losses
 
 
 
Net other-than-temporary impairment losses recognized in earnings
105 
71 
461 
Commercial mortgage-backed [Member]
 
 
 
Net OTTI Losses
 
 
 
Net other-than-temporary impairment losses recognized in earnings
   
3 
193 
Other asset-backed [Member]
 
 
 
Net OTTI Losses
 
 
 
Net other-than-temporary impairment losses recognized in earnings
6 
3 
31 
Total asset-backed [Member]
 
 
 
Net OTTI Losses
 
 
 
Net other-than-temporary impairment losses recognized in earnings
111 
77 
685 
Redeemable preferred stock [Member]
 
 
 
Net OTTI Losses
 
 
 
Net other-than-temporary impairment losses recognized in earnings
   
   
9 
Total fixed maturity securities available-for-sale [Member]
 
 
 
Net OTTI Losses
 
 
 
Net other-than-temporary impairment losses recognized in earnings
206 
207 
1,130 
Common stock [Member]
 
 
 
Net OTTI Losses
 
 
 
Net other-than-temporary impairment losses recognized in earnings
8 
11 
5 
Preferred stock [Member]
 
 
 
Net OTTI Losses
 
 
 
Net other-than-temporary impairment losses recognized in earnings
1 
14 
217 
Total equity securities available-for-sale [Member]
 
 
 
Net OTTI Losses
 
 
 
Net other-than-temporary impairment losses recognized in earnings
9 
25 
222 
Short term investments [Member]
 
 
 
Net OTTI Losses
 
 
 
Net other-than-temporary impairment losses recognized in earnings
$ 1 
    
    
Investments (Summary of fixed maturity and equity securities) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Fixed Maturity and Equity Securities
 
 
Cost or Amortized Cost
$ 37,633 
$ 36,849 
Gross Unrealized Gains
3,149 
1,972 
Gross Unrealized Losses
541 
804 
Estimated Fair Value
40,241 
38,017 
Corporate and other bonds [Member]
 
 
Fixed Maturity and Equity Securities
 
 
Cost or Amortized Cost
19,086 
19,492 
Gross Unrealized Gains
1,946 
1,603 
Gross Unrealized Losses
154 
70 
Estimated Fair Value
20,878 
21,025 
Unrealized OTTI Losses (Gains)
   
   
States, municipalities and political subdivisions [Member]
 
 
Fixed Maturity and Equity Securities
 
 
Cost or Amortized Cost
9,018 
8,157 
Gross Unrealized Gains
900 
142 
Gross Unrealized Losses
136 
410 
Estimated Fair Value
9,782 
7,889 
Unrealized OTTI Losses (Gains)
   
   
Residential mortgage-backed [Member]
 
 
Fixed Maturity and Equity Securities
 
 
Cost or Amortized Cost
5,786 
6,254 
Gross Unrealized Gains
172 
101 
Gross Unrealized Losses
183 
265 
Estimated Fair Value
5,775 
6,090 
Unrealized OTTI Losses (Gains)
99 
114 
Commercial mortgage-backed [Member]
 
 
Fixed Maturity and Equity Securities
 
 
Cost or Amortized Cost
1,365 
994 
Gross Unrealized Gains
48 
40 
Gross Unrealized Losses
59 
41 
Estimated Fair Value
1,354 
993 
Unrealized OTTI Losses (Gains)
(2)
(2)
Other asset-backed [Member]
 
 
Fixed Maturity and Equity Securities
 
 
Cost or Amortized Cost
946 
753 
Gross Unrealized Gains
13 
18 
Gross Unrealized Losses
4 
8 
Estimated Fair Value
955 
763 
Unrealized OTTI Losses (Gains)
   
   
Total asset-backed [Member]
 
 
Fixed Maturity and Equity Securities
 
 
Cost or Amortized Cost
8,097 
8,001 
Gross Unrealized Gains
233 
159 
Gross Unrealized Losses
246 
314 
Estimated Fair Value
8,084 
7,846 
Unrealized OTTI Losses (Gains)
97 
112 
U.S. Treasury and obligations of government-sponsored enterprises [Member]
 
 
Fixed Maturity and Equity Securities
 
 
Cost or Amortized Cost
479 
122 
Gross Unrealized Gains
14 
16 
Gross Unrealized Losses
   
1 
Estimated Fair Value
493 
137 
Unrealized OTTI Losses (Gains)
   
   
Foreign government [Member]
 
 
Fixed Maturity and Equity Securities
 
 
Cost or Amortized Cost
608 
602 
Gross Unrealized Gains
28 
18 
Gross Unrealized Losses
   
   
Estimated Fair Value
636 
620 
Unrealized OTTI Losses (Gains)
   
   
Redeemable preferred stock [Member]
 
 
Fixed Maturity and Equity Securities
 
 
Cost or Amortized Cost
51 
47 
Gross Unrealized Gains
7 
7 
Gross Unrealized Losses
   
   
Estimated Fair Value
58 
54 
Unrealized OTTI Losses (Gains)
   
   
Total fixed maturity securities available-for-sale [Member]
 
 
Fixed Maturity and Equity Securities
 
 
Cost or Amortized Cost
37,339 
36,421 
Gross Unrealized Gains
3,128 
1,945 
Gross Unrealized Losses
536 
795 
Estimated Fair Value
39,931 
37,571 
Unrealized OTTI Losses (Gains)
97 
112 
Total fixed maturity securities trading [Member]
 
 
Fixed Maturity and Equity Securities
 
 
Cost or Amortized Cost, Trading Securities
6 
6 
Gross Unrealized Gains, Trading Securities
   
   
Gross Unrealized Losses, Trading Securities
   
   
Estimated Fair Value, Trading Securities
6 
6 
Common stock [Member]
 
 
Fixed Maturity and Equity Securities
 
 
Cost or Amortized Cost
30 
90 
Gross Unrealized Gains
17 
25 
Gross Unrealized Losses
   
   
Estimated Fair Value
47 
115 
Preferred stock [Member]
 
 
Fixed Maturity and Equity Securities
 
 
Cost or Amortized Cost
258 
332 
Gross Unrealized Gains
4 
2 
Gross Unrealized Losses
5 
9 
Estimated Fair Value
257 
325 
Total equity securities available-for-sale [Member]
 
 
Fixed Maturity and Equity Securities
 
 
Cost or Amortized Cost
288 
422 
Gross Unrealized Gains
21 
27 
Gross Unrealized Losses
5 
9 
Estimated Fair Value
$ 304 
$ 440 
Investments (Securities in a gross unrealized loss position) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Total available-for-sale securities [Member]
 
 
Available-for-sale Securities, Continuous Unrealized Loss Position
 
 
Estimated Fair Value, Less than 12 Months
$ 4,275 
$ 7,327 
Gross Unrealized Losses, Less than 12 Months
211 
260 
Estimated Fair Value, 12 Months or Longer
1,923 
3,414 
Gross Unrealized Losses, 12 Months or Longer
330 
544 
Estimated Fair Value, Total
6,198 
10,741 
Gross Unrealized Losses, Total
541 
804 
Corporate and other bonds [Member]
 
 
Available-for-sale Securities, Continuous Unrealized Loss Position
 
 
Estimated Fair Value, Less than 12 Months
2,552 
1,719 
Gross Unrealized Losses, Less than 12 Months
126 
34 
Estimated Fair Value, 12 Months or Longer
159 
405 
Gross Unrealized Losses, 12 Months or Longer
28 
36 
Estimated Fair Value, Total
2,711 
2,124 
Gross Unrealized Losses, Total
154 
70 
States, municipalities and political subdivisions [Member]
 
 
Available-for-sale Securities, Continuous Unrealized Loss Position
 
 
Estimated Fair Value, Less than 12 Months
67 
3,339 
Gross Unrealized Losses, Less than 12 Months
1 
164 
Estimated Fair Value, 12 Months or Longer
721 
745 
Gross Unrealized Losses, 12 Months or Longer
135 
246 
Estimated Fair Value, Total
788 
4,084 
Gross Unrealized Losses, Total
136 
410 
Residential mortgage-backed [Member]
 
 
Available-for-sale Securities, Continuous Unrealized Loss Position
 
 
Estimated Fair Value, Less than 12 Months
719 
1,800 
Gross Unrealized Losses, Less than 12 Months
36 
52 
Estimated Fair Value, 12 Months or Longer
874 
1,801 
Gross Unrealized Losses, 12 Months or Longer
147 
213 
Estimated Fair Value, Total
1,593 
3,601 
Gross Unrealized Losses, Total
183 
265 
Commercial mortgage-backed [Member]
 
 
Available-for-sale Securities, Continuous Unrealized Loss Position
 
 
Estimated Fair Value, Less than 12 Months
431 
164 
Gross Unrealized Losses, Less than 12 Months
39 
3 
Estimated Fair Value, 12 Months or Longer
169 
333 
Gross Unrealized Losses, 12 Months or Longer
20 
38 
Estimated Fair Value, Total
600 
497 
Gross Unrealized Losses, Total
59 
41 
Other asset-backed [Member]
 
 
Available-for-sale Securities, Continuous Unrealized Loss Position
 
 
Estimated Fair Value, Less than 12 Months
389 
122 
Gross Unrealized Losses, Less than 12 Months
4 
1 
Estimated Fair Value, 12 Months or Longer
   
60 
Gross Unrealized Losses, 12 Months or Longer
   
7 
Estimated Fair Value, Total
389 
182 
Gross Unrealized Losses, Total
4 
8 
Total asset-backed [Member]
 
 
Available-for-sale Securities, Continuous Unrealized Loss Position
 
 
Estimated Fair Value, Less than 12 Months
1,539 
2,086 
Gross Unrealized Losses, Less than 12 Months
79 
56 
Estimated Fair Value, 12 Months or Longer
1,043 
2,194 
Gross Unrealized Losses, 12 Months or Longer
167 
258 
Estimated Fair Value, Total
2,582 
4,280 
Gross Unrealized Losses, Total
246 
314 
US Treasury and Government [Member]
 
 
Available-for-sale Securities, Continuous Unrealized Loss Position
 
 
Estimated Fair Value, Less than 12 Months
 
8 
Gross Unrealized Losses, Less than 12 Months
 
1 
Estimated Fair Value, 12 Months or Longer
 
   
Gross Unrealized Losses, 12 Months or Longer
 
   
Estimated Fair Value, Total
 
8 
Gross Unrealized Losses, Total
 
1 
Total fixed maturity securities available-for-sale [Member]
 
 
Available-for-sale Securities, Continuous Unrealized Loss Position
 
 
Estimated Fair Value, Less than 12 Months
4,158 
7,152 
Gross Unrealized Losses, Less than 12 Months
206 
255 
Estimated Fair Value, 12 Months or Longer
1,923 
3,344 
Gross Unrealized Losses, 12 Months or Longer
330 
540 
Estimated Fair Value, Total
6,081 
10,496 
Gross Unrealized Losses, Total
536 
795 
Preferred stock [Member]
 
 
Available-for-sale Securities, Continuous Unrealized Loss Position
 
 
Estimated Fair Value, Less than 12 Months
117 
175 
Gross Unrealized Losses, Less than 12 Months
5 
5 
Estimated Fair Value, 12 Months or Longer
   
70 
Gross Unrealized Losses, 12 Months or Longer
   
4 
Estimated Fair Value, Total
117 
245 
Gross Unrealized Losses, Total
5 
9 
Total equity securities available-for-sale [Member]
 
 
Available-for-sale Securities, Continuous Unrealized Loss Position
 
 
Estimated Fair Value, Less than 12 Months
117 
175 
Gross Unrealized Losses, Less than 12 Months
5 
5 
Estimated Fair Value, 12 Months or Longer
   
70 
Gross Unrealized Losses, 12 Months or Longer
   
4 
Estimated Fair Value, Total
117 
245 
Gross Unrealized Losses, Total
$ 5 
$ 9 
Investments (Activity related to the pretax fixed maturity credit loss component reflected within retained earnings for securities still held) (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended 12 Months Ended
Dec. 31, 2009
Dec. 31, 2011
Dec. 31, 2010
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
 
 
 
Beginning balance of credit losses on fixed maturity securities
$ 192 
$ 141 
$ 164 
Additional credit losses for securities for which an OTTI loss was previously recognized
93 
39 
37 
Credit losses for securities for which an OTTI loss was not previously recognized
183 
11 
11 
Reductions for securities sold during the period
(239)
(67)
(62)
Reductions for securities the Company intends to sell or more likely than not will be required to sell
(65)
(32)
(9)
Ending balance of credit losses on fixed maturity securities
$ 164 
$ 92 
$ 141 
Investments (Ratings distribution of corporate and other bonds in a gross unrealized loss position) (Details) (Corporate and other bonds [Member], USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Corporate and Other Bonds
 
 
Amortized Cost
$ 2,865 
 
Estimated Fair Value
2,711 
2,124 
Gross Unrealized Losses
154 
70 
AAA [Member]
 
 
Corporate and Other Bonds
 
 
Amortized Cost
112 
 
Estimated Fair Value
111 
 
Gross Unrealized Losses
1 
 
AA [Member]
 
 
Corporate and Other Bonds
 
 
Amortized Cost
97 
 
Estimated Fair Value
94 
 
Gross Unrealized Losses
3 
 
A [Member]
 
 
Corporate and Other Bonds
 
 
Amortized Cost
895 
 
Estimated Fair Value
853 
 
Gross Unrealized Losses
42 
 
BBB [Member]
 
 
Corporate and Other Bonds
 
 
Amortized Cost
1,275 
 
Estimated Fair Value
1,196 
 
Gross Unrealized Losses
79 
 
Non-investment grade [Member]
 
 
Corporate and Other Bonds
 
 
Amortized Cost
486 
 
Estimated Fair Value
457 
 
Gross Unrealized Losses
$ 29 
 
Investments (Ratings distribution of asset-backed securities in a gross unrealized loss position) (Details) (Asset-backed Securities [Member], USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Asset-Backed Securities
 
 
Amortized Cost
$ 2,828 
 
Estimated Fair Value
2,582 
4,280 
Gross Unrealized Losses
246 
314 
US Government, Government Agencies, and Government-Sponsored Enterprises [Member]
 
 
Asset-Backed Securities
 
 
Amortized Cost
382 
 
Estimated Fair Value
347 
 
Gross Unrealized Losses
35 
 
AAA [Member]
 
 
Asset-Backed Securities
 
 
Amortized Cost
364 
 
Estimated Fair Value
355 
 
Gross Unrealized Losses
9 
 
AA [Member]
 
 
Asset-Backed Securities
 
 
Amortized Cost
409 
 
Estimated Fair Value
388 
 
Gross Unrealized Losses
21 
 
A [Member]
 
 
Asset-Backed Securities
 
 
Amortized Cost
370 
 
Estimated Fair Value
357 
 
Gross Unrealized Losses
13 
 
BBB [Member]
 
 
Asset-Backed Securities
 
 
Amortized Cost
319 
 
Estimated Fair Value
294 
 
Gross Unrealized Losses
25 
 
Non-investment grade [Member]
 
 
Asset-Backed Securities
 
 
Amortized Cost
984 
 
Estimated Fair Value
841 
 
Gross Unrealized Losses
$ 143 
 
Investments (Contractual maturity) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Cost or Amortized Cost
 
 
Due in one year or less, cost or amortized cost
$ 1,802 
$ 1,515 
Due after one year through five years, cost or amortized cost
13,110 
11,198 
Due after five years through ten years, cost or amortized cost
8,410 
10,022 
Due after ten years, cost or amortized cost
14,017 
13,686 
Total Amortized Cost Basis
37,339 
36,421 
Estimated Fair Value
 
 
Due in one year or less, estimated fair value
1,812 
1,506 
Due after one year through five years, estimated fair value
13,537 
11,653 
Due after five years through ten years, estimated fair value
8,890 
10,425 
Due after ten years, estimated fair value
15,692 
13,987 
Total Estimated Fair Value
$ 39,931 
$ 37,571 
Derivative Financial Instruments (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Fair value of collateral provided by the Company
$ 1 
$ 2 
Fair value of cash collateral received from counterparties
   
1 
Derivative transactions entered into
1,073 
2,400 
Derivative transactions terminated
$ 1,076 
$ 2,600 
Derivative Financial Instruments (Summary of recognized gains (losses) related to derivative financial instruments) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Recognized Gains (Losses)
 
 
 
Derivative instruments not designated as hedging instruments, gain (loss), net
    
$ (1)
$ 51 
Derivative instruments, gain (loss) recognized in income, net
   
(2)
49 
Interest rate swaps [Member]
 
 
 
Recognized Gains (Losses)
 
 
 
Derivative instruments not designated as hedging instruments, gain (loss), net
   
   
61 
Credit default swap - purchased protection [Member]
 
 
 
Recognized Gains (Losses)
 
 
 
Derivative instruments not designated as hedging instruments, gain (loss), net
   
(1)
(47)
Credit default swap - sold protection [Member]
 
 
 
Recognized Gains (Losses)
 
 
 
Derivative instruments not designated as hedging instruments, gain (loss), net
   
   
3 
Total return swaps [Member]
 
 
 
Recognized Gains (Losses)
 
 
 
Derivative instruments not designated as hedging instruments, gain (loss), net
   
   
(2)
Futures sold, not yet purchased [Member]
 
 
 
Recognized Gains (Losses)
 
 
 
Derivative instruments not designated as hedging instruments, gain (loss), net
   
   
21 
Gain (loss) on derivative instruments held for trading purposes, net
   
(1)
(2)
Options written [Member]
 
 
 
Recognized Gains (Losses)
 
 
 
Derivative instruments not designated as hedging instruments, gain (loss), net
    
    
$ 15 
Derivative Financial Instruments (Summary of aggregate contractual or notional amounts and gross estimated fair values related to derivative financial instruments) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Summary of Derivative Instruments Without Hedge Designation
 
 
Contractual/notional amount
$ 46 
$ 49 
Estimated fair value asset
1 
1 
Estimated fair value (liability)
(1)
(2)
Credit default swap - purchased protection [Member]
 
 
Summary of Derivative Instruments Without Hedge Designation
 
 
Contractual/notional amount
20 
20 
Estimated fair value asset
   
   
Estimated fair value (liability)
(1)
(2)
Credit default swap - sold protection [Member]
 
 
Summary of Derivative Instruments Without Hedge Designation
 
 
Contractual/notional amount
 
8 
Estimated fair value asset
 
1 
Estimated fair value (liability)
 
   
Currency forwards [Member]
 
 
Summary of Derivative Instruments Without Hedge Designation
 
 
Contractual/notional amount
22 
18 
Estimated fair value asset
1 
   
Estimated fair value (liability)
   
   
Equity warrants [Member]
 
 
Summary of Derivative Instruments Without Hedge Designation
 
 
Contractual/notional amount
4 
3 
Estimated fair value asset
   
   
Estimated fair value (liability)
   
   
Fair Value (Assets and liabilities measured at fair value on a recurring basis) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Total fixed maturity securities
$ 39,937 
$ 37,577 
Equity securities
304 
440 
Short term investments
1,641 
2,215 
Separate account business
417 
450 
Fair Value, Measurements, Recurring [Member]
 
 
Total fixed maturity securities
39,937 
37,577 
Equity securities
304 
440 
Derivative and other financial instruments, included in Other invested assets
12 
27 
Short term investments
1,641 
2,215 
Life settlement contracts, included in Other assets
117 
129 
Discontinued operations investments, included in Other liabilities
 
71 
Separate account business
417 
450 
Total assets
42,428 
40,909 
Derivative financial instruments, included in Other liabilities
(1)
(2)
Total liabilities
(1)
(2)
Fair Value, Measurements, Recurring [Member] |
Corporate and other bonds [Member]
 
 
Total fixed maturity securities
20,884 
21,031 
Fair Value, Measurements, Recurring [Member] |
States, municipalities and political subdivisions [Member]
 
 
Total fixed maturity securities
9,782 
7,889 
Fair Value, Measurements, Recurring [Member] |
Total asset-backed [Member]
 
 
Total fixed maturity securities
8,084 
7,846 
Fair Value, Measurements, Recurring [Member] |
Residential mortgage-backed [Member]
 
 
Total fixed maturity securities
5,775 
6,090 
Fair Value, Measurements, Recurring [Member] |
Commercial mortgage-backed [Member]
 
 
Total fixed maturity securities
1,354 
993 
Fair Value, Measurements, Recurring [Member] |
Other asset-backed [Member]
 
 
Total fixed maturity securities
955 
763 
Fair Value, Measurements, Recurring [Member] |
U.S. Treasury and obligations of government-sponsored enterprises [Member]
 
 
Total fixed maturity securities
493 
137 
Fair Value, Measurements, Recurring [Member] |
Foreign government [Member]
 
 
Total fixed maturity securities
636 
620 
Fair Value, Measurements, Recurring [Member] |
Redeemable preferred stock [Member]
 
 
Total fixed maturity securities
58 
54 
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member]
 
 
Total fixed maturity securities
548 
194 
Equity securities
124 
288 
Derivative and other financial instruments, included in Other invested assets
   
   
Short term investments
1,106 
1,214 
Life settlement contracts, included in Other assets
   
   
Discontinued operations investments, included in Other liabilities
 
11 
Separate account business
21 
28 
Total assets
1,799 
1,735 
Derivative financial instruments, included in Other liabilities
   
   
Total liabilities
   
   
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
Corporate and other bonds [Member]
 
 
Total fixed maturity securities
   
   
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
States, municipalities and political subdivisions [Member]
 
 
Total fixed maturity securities
   
   
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
Total asset-backed [Member]
 
 
Total fixed maturity securities
   
   
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
Residential mortgage-backed [Member]
 
 
Total fixed maturity securities
   
   
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
Commercial mortgage-backed [Member]
 
 
Total fixed maturity securities
   
   
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
Other asset-backed [Member]
 
 
Total fixed maturity securities
   
   
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
U.S. Treasury and obligations of government-sponsored enterprises [Member]
 
 
Total fixed maturity securities
451 
76 
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
Foreign government [Member]
 
 
Total fixed maturity securities
92 
115 
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
Redeemable preferred stock [Member]
 
 
Total fixed maturity securities
5 
3 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member]
 
 
Total fixed maturity securities
37,882 
35,291 
Equity securities
113 
126 
Derivative and other financial instruments, included in Other invested assets
1 
   
Short term investments
508 
974 
Life settlement contracts, included in Other assets
   
   
Discontinued operations investments, included in Other liabilities
 
60 
Separate account business
373 
381 
Total assets
38,877 
36,832 
Derivative financial instruments, included in Other liabilities
   
   
Total liabilities
   
   
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Corporate and other bonds [Member]
 
 
Total fixed maturity securities
20,402 
20,407 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
States, municipalities and political subdivisions [Member]
 
 
Total fixed maturity securities
9,611 
7,623 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Total asset-backed [Member]
 
 
Total fixed maturity securities
7,230 
6,647 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Residential mortgage-backed [Member]
 
 
Total fixed maturity securities
5,323 
5,323 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Commercial mortgage-backed [Member]
 
 
Total fixed maturity securities
1,295 
920 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Other asset-backed [Member]
 
 
Total fixed maturity securities
612 
404 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
U.S. Treasury and obligations of government-sponsored enterprises [Member]
 
 
Total fixed maturity securities
42 
61 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Foreign government [Member]
 
 
Total fixed maturity securities
544 
505 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Redeemable preferred stock [Member]
 
 
Total fixed maturity securities
53 
48 
Fair Value, Measurements, Recurring [Member] |
Level 3 [Member]
 
 
Total fixed maturity securities
1,507 
2,092 
Equity securities
67 
26 
Derivative and other financial instruments, included in Other invested assets
11 
27 
Short term investments
27 
27 
Life settlement contracts, included in Other assets
117 
129 
Discontinued operations investments, included in Other liabilities
 
   
Separate account business
23 
41 
Total assets
1,752 
2,342 
Derivative financial instruments, included in Other liabilities
(1)
(2)
Total liabilities
(1)
(2)
Fair Value, Measurements, Recurring [Member] |
Level 3 [Member] |
Corporate and other bonds [Member]
 
 
Total fixed maturity securities
482 
624 
Fair Value, Measurements, Recurring [Member] |
Level 3 [Member] |
States, municipalities and political subdivisions [Member]
 
 
Total fixed maturity securities
171 
266 
Fair Value, Measurements, Recurring [Member] |
Level 3 [Member] |
Total asset-backed [Member]
 
 
Total fixed maturity securities
854 
1,199 
Fair Value, Measurements, Recurring [Member] |
Level 3 [Member] |
Residential mortgage-backed [Member]
 
 
Total fixed maturity securities
452 
767 
Fair Value, Measurements, Recurring [Member] |
Level 3 [Member] |
Commercial mortgage-backed [Member]
 
 
Total fixed maturity securities
59 
73 
Fair Value, Measurements, Recurring [Member] |
Level 3 [Member] |
Other asset-backed [Member]
 
 
Total fixed maturity securities
343 
359 
Fair Value, Measurements, Recurring [Member] |
Level 3 [Member] |
U.S. Treasury and obligations of government-sponsored enterprises [Member]
 
 
Total fixed maturity securities
   
   
Fair Value, Measurements, Recurring [Member] |
Level 3 [Member] |
Foreign government [Member]
 
 
Total fixed maturity securities
   
   
Fair Value, Measurements, Recurring [Member] |
Level 3 [Member] |
Redeemable preferred stock [Member]
 
 
Total fixed maturity securities
    
$ 3 
Fair Value (Table of reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, Beginning, Assets
$ 2,340 
$ 2,651 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)
21 
45 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
(16)
133 
Purchases
1,436 
 
Sales
(917)
 
Settlements
(474)
 
Purchases, sales, issuances and settlements
 
(204)
Transfers into Level 3
86 
78 
Transfers out of Level 3
(725)
(363)
Balance, Ending, Assets
1,751 
2,340 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31 recognized in net income (loss)
(19)
(16)
Fixed maturity securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, Beginning, Assets
2,092 
2,467 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)
(13)
21 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
(18)
131 
Purchases
1,330 
 
Sales
(865)
 
Settlements
(400)
 
Purchases, sales, issuances and settlements
 
(266)
Transfers into Level 3
81 
69 
Transfers out of Level 3
(700)
(330)
Balance, Ending, Assets
1,507 
2,092 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31 recognized in net income (loss)
(23)
(20)
Corporate and other bonds [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, Beginning, Assets
624 
609 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)
(11)
9 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
(1)
56 
Purchases
484 
 
Sales
(204)
 
Settlements
(149)
 
Purchases, sales, issuances and settlements
 
45 
Transfers into Level 3
79 
60 
Transfers out of Level 3
(340)
(155)
Balance, Ending, Assets
482 
624 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31 recognized in net income (loss)
(12)
(4)
States, municipalities and political subdivisions [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, Beginning, Assets
266 
756 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)
   
   
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
(1)
15 
Purchases
3 
 
Sales
   
 
Settlements
(92)
 
Purchases, sales, issuances and settlements
 
(507)
Transfers into Level 3
   
2 
Transfers out of Level 3
(5)
   
Balance, Ending, Assets
171 
266 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31 recognized in net income (loss)
   
   
Asset-backed Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, Beginning, Assets
1,199 
1,100 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)
(5)
6 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
(13)
58 
Purchases
843 
 
Sales
(658)
 
Settlements
(159)
 
Purchases, sales, issuances and settlements
 
203 
Transfers into Level 3
2 
7 
Transfers out of Level 3
(355)
(175)
Balance, Ending, Assets
854 
1,199 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31 recognized in net income (loss)
(11)
(16)
Residential Mortgage Backed Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, Beginning, Assets
767 
629 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)
(16)
(10)
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
(11)
15 
Purchases
225 
 
Sales
(290)
 
Settlements
(60)
 
Purchases, sales, issuances and settlements
 
181 
Transfers into Level 3
   
   
Transfers out of Level 3
(163)
(48)
Balance, Ending, Assets
452 
767 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31 recognized in net income (loss)
(6)
(13)
Commercial Mortgage Backed Securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, Beginning, Assets
73 
123 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)
20 
10 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
(7)
13 
Purchases
81 
 
Sales
(27)
 
Settlements
   
 
Purchases, sales, issuances and settlements
 
(8)
Transfers into Level 3
   
7 
Transfers out of Level 3
(81)
(72)
Balance, Ending, Assets
59 
73 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31 recognized in net income (loss)
   
(2)
Other asset-backed [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, Beginning, Assets
359 
348 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)
(9)
6 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
5 
30 
Purchases
537 
 
Sales
(341)
 
Settlements
(99)
 
Purchases, sales, issuances and settlements
 
30 
Transfers into Level 3
2 
   
Transfers out of Level 3
(111)
(55)
Balance, Ending, Assets
343 
359 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31 recognized in net income (loss)
(5)
(1)
Redeemable Preferred Stock [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, Beginning, Assets
3 
2 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)
3 
6 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
(3)
2 
Purchases
   
 
Sales
(3)
 
Settlements
   
 
Purchases, sales, issuances and settlements
 
(7)
Transfers into Level 3
   
   
Transfers out of Level 3
   
   
Balance, Ending, Assets
   
3 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31 recognized in net income (loss)
   
   
Equity securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, Beginning, Assets
26 
11 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)
(2)
(4)
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
2 
1 
Purchases
66 
 
Sales
(27)
 
Settlements
   
 
Purchases, sales, issuances and settlements
 
17 
Transfers into Level 3
5 
8 
Transfers out of Level 3
(3)
(7)
Balance, Ending, Assets
67 
26 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31 recognized in net income (loss)
(3)
(5)
Derivative and other financial instruments, net [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, Beginning, Assets
25 
(11)
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)
3 
(1)
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
   
   
Purchases
1 
 
Sales
(19)
 
Settlements
   
 
Purchases, sales, issuances and settlements
 
37 
Transfers into Level 3
   
   
Transfers out of Level 3
   
   
Balance, Ending, Assets
10 
25 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31 recognized in net income (loss)
2 
(1)
Short-term Investments [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, Beginning, Assets
27 
   
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)
   
   
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
   
   
Purchases
39 
 
Sales
   
 
Settlements
(29)
 
Purchases, sales, issuances and settlements
 
37 
Transfers into Level 3
   
1 
Transfers out of Level 3
(10)
(11)
Balance, Ending, Assets
27 
27 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31 recognized in net income (loss)
   
   
Life settlement contracts [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, Beginning, Assets
129 
130 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)
33 
29 
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
   
   
Purchases
   
 
Sales
   
 
Settlements
(45)
 
Purchases, sales, issuances and settlements
 
(30)
Transfers into Level 3
   
   
Transfers out of Level 3
   
   
Balance, Ending, Assets
117 
129 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31 recognized in net income (loss)
5 
10 
Discontinued operations investments [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, Beginning, Assets
 
16 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)
 
   
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
 
1 
Purchases, sales, issuances and settlements
 
(2)
Transfers into Level 3
 
   
Transfers out of Level 3
 
(15)
Balance, Ending, Assets
 
   
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31 recognized in net income (loss)
 
   
Seperate account business [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Balance, Beginning, Assets
41 
38 
Net realized investment gains (losses) and net change in unrealized appreciation (depreciation) included in net income (loss)
   
   
Net change in unrealized appreciation (depreciation) included in other comprehensive income (loss)
   
   
Purchases
   
 
Sales
(6)
 
Settlements
   
 
Purchases, sales, issuances and settlements
 
3 
Transfers into Level 3
   
   
Transfers out of Level 3
(12)
   
Balance, Ending, Assets
23 
41 
Unrealized gains (losses) on Level 3 assets and liabilities held at December 31 recognized in net income (loss)
   
   
Fair Value (Carrying amount and estimated fair value of financial instrument assets and liabilities which are not measured at fair value) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Financial Assets [Abstract]
 
 
Notes receivable for the issuance of common stock
$ 22 
$ 26 
Mortgage loans
234 
87 
Financial Liabilities [Abstract]
 
 
Short term debt
83 
400 
Long term debt
2,525 
2,251 
Carrying Amount [Member]
 
 
Financial Assets [Abstract]
 
 
Notes receivable for the issuance of common stock
22 
26 
Mortgage loans
234 
87 
Financial Liabilities [Abstract]
 
 
Premium deposits and annuity contracts
109 
104 
Short term debt
83 
400 
Long term debt
2,525 
2,251 
Estimate Fair Value [Member]
 
 
Financial Assets [Abstract]
 
 
Notes receivable for the issuance of common stock
22 
26 
Mortgage loans
247 
86 
Financial Liabilities [Abstract]
 
 
Premium deposits and annuity contracts
114 
105 
Short term debt
84 
411 
Long term debt
$ 2,679 
$ 2,376 
Income Taxes (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Federal income taxes received from (paid to) Loews
$ 10 
$ 298 
$ 196 
Unrecognized tax benefits
   
   
 
Interest income (expense)
   
   
2 
Penalties recognized
   
   
   
Accrued interest and penalties
   
   
 
Deferred tax liabilities, undistributed earnings
   
 
 
Foreign tax expense (benefit) on income from continuing operations
27 
50 
39 
Income (loss) from continuing foreign operations
75 
91 
126 
Operating loss carryforwards
19 
 
 
Operating loss carryforwards, expiration dates
2014 
 
 
Tax credit carryforward, amount
18 
 
 
Tax credit carryforwards expiring
14 
 
 
Tax credit carryforward, expiration dates
2020 
 
 
Valuation allowance
   
   
 
Income Taxes (Reconciliation between the Company's federal income tax (expense) benefit at statutory rates and the recorded income tax (expense) benefit, excluding taxes on discontinued operations) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Income tax (expense) benefit at statutory rates
$ (307)
$ (389)
$ (189)
Tax benefit from tax exempt income
74 
84 
119 
Foreign taxes and credits
(3)
(25)
19 
Taxes related to domestic affiliate
(21)
(1)
(2)
Prior year tax adjustment
20 
   
   
Other tax expense
(9)
(2)
(4)
Income tax (expense) benefit
$ (246)
$ (333)
$ (57)
Income Taxes (Current and deferred components of the Company's income tax (expense) benefit, excluding taxes on discontinued operations) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Current tax (expense) benefit
$ (54)
$ (6)
$ 120 
Deferred tax (expense) benefit
(192)
(327)
(177)
Income tax (expense) benefit
$ (246)
$ (333)
$ (57)
Income Taxes (Significant components of the Company's deferred tax assets and liabilities) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Deferred Tax Assets:
 
 
Property and casualty claim and claim adjustment expense reserves
$ 419 
$ 525 
Unearned premium reserves
142 
127 
Receivables
74 
95 
Employee benefits
323 
258 
Life settlement contracts
61 
64 
Investment valuation differences
3 
70 
Net loss and tax credits carried forward
25 
84 
Other assets
159 
124 
Gross deferred tax assets
1,206 
1,347 
Deferred Tax Liabilities:
 
 
Deferred acquisition costs
283 
284 
Net unrealized gains
508 
314 
Other liabilities
37 
82 
Gross deferred tax liabilities
828 
680 
Net deferred tax asset (liability)
$ 378 
$ 667 
Claim and Claim Adjustment Expense Reserves (Narrative) (Details) (USD $)
12 Months Ended 12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2011
Loss Portfolio Transfer [Member]
Dec. 31, 2010
Loss Portfolio Transfer [Member]
Aug. 31, 2010
Loss Portfolio Transfer [Member]
Dec. 31, 2009
Loss Portfolio Transfer [Member]
Dec. 31, 2009
Willis Limited [Member]
Catastrophe losses net of reinsurance
$ 222,000,000 
$ 121,000,000 
$ 89,000,000 
 
 
 
 
 
Net A&EP claim and allocated claim adjustment expense reserves ceded to NICO
 
 
 
 
 
 
1,600,000,000 
 
Aggregate limit under A&EP Loss Portfolio Transfer
 
 
 
4,000,000,000 
 
 
 
 
Net claim and allocated claim adjustment expense reserves in discontinued operations ceded to NICO under A&EP Loss Portfolio Transfer
 
 
 
 
 
 
90,000,000 
 
A&EP claim and allocated claim adjustment expense reserves ceded under existing third party reinsurance contracts transferred to NICO under A&EP Loss Portfolio Transfer
 
 
 
 
 
 
1,200,000,000 
 
Reinsurance premium paid to NICO under A&EP Loss Portfolio Transfer
 
 
 
 
 
2,000,000,000 
 
 
Net reinsurance receivables transferrred to NICO under A&EP Loss Portfolio Transfer
 
 
 
 
 
 
215,000,000 
 
Allowance for doubtful accounts related to reinsurance receivables transferred to NICO under A&EP Loss Portfolio Transfer
 
 
 
 
 
 
100,000,000 
 
Collateral trust established by NICO under A&EP Loss Portfolio Transfer
 
 
 
 
 
2,200,000,000 
 
 
Reduction of allowance for uncollectible reinsurance receivables
 
 
 
 
200,000,000 
 
 
 
Gross A&EP claim and allocated claim adjustment expense reserves ceded under the Loss Portfolio Transfer and other existing third party reinsurance agreements
 
 
 
2,300,000,000 
2,500,000,000 
 
 
 
Remaining amount available under aggregate limit of the Loss Portfolio Transfer on an incurred basis
 
 
 
2,300,000,000 
 
 
 
 
Net ultimate paid losses ceded under the Loss Portfolio Transfer
 
 
 
351,000,000 
 
 
 
 
(Unfavorable) favorable net prior year development, Life & Group
29,000,000 
2,000,000 
53,000,000 
 
 
 
 
 
(Unfavorable) favorable net prior year development, P&C
423,000,000 
637,000,000 
289,000,000 
(138,000,000)
 
 
 
 
Settlement agreement, amount
 
 
 
 
 
 
 
130,000,000 
Loss recovery, net of reinsurance
 
 
 
 
 
 
 
$ 94,000,000 
Claim and Claim Adjustment Expense Reserves (Reconcilliation of claim and claim adjustment expense reserves) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Reserves, beginning of year:
 
 
 
Gross
$ 25,496 
$ 26,816 
$ 27,593 
Ceded
6,122 
5,594 
6,288 
Net reserves, beginning of year
19,374 
21,222 
21,305 
Reduction of net reserves due to the Loss Portfolio Transfer transaction
   
(1,381)
   
Reduction of net reserves due to disposition of subsidiaries
(277)
(98)
   
Net incurred claim and claim adjustment expenses:
 
 
 
Provision for insured events of current year
4,904 
4,741 
4,793 
Increase (decrease) in provision for insured events of prior years
(429)
(544)
(240)
Amortization of discount
135 
123 
122 
Total net incurred (a)
4,610 1
4,320 1
4,675 1
Net payments attributable to:
 
 
 
Current year events
(1,029)
(908)
(917)
Prior year events
(3,473)
(3,776)
(3,939)
Total net payments
(4,502)
(4,684)
(4,856)
Foreign currency translation adjustment and other
78 
(5)
98 
Net reserves, end of year
19,283 
19,374 
21,222 
Ceded reserves, end of year
5,020 
6,122 
5,594 
Gross reserves, end of year
$ 24,303 
$ 25,496 
$ 26,816 
Claim and Claim Adjustment Expense Reserves (Net prior year claim and claim adjustment expense reserve development) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Increase (decrease) in provision for insured events of prior years
$ (429)
$ (544)
$ (240)
Core (Non-A&EP) [Member]
 
 
 
Increase (decrease) in provision for insured events of prior years
(429)
(545)
(396)
A&EP [Member]
 
 
 
Increase (decrease) in provision for insured events of prior years
   
   
155 
Property and casualty reserve development [Member]
 
 
 
Increase (decrease) in provision for insured events of prior years
(429)
(545)
(241)
Life reserve development in life company [Member]
 
 
 
Increase (decrease) in provision for insured events of prior years
    
$ 1 
$ 1 
Claim and Claim Adjustment Expense Reserves (Gross and net carried claim and claim adjustment expense reserves) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Gross Case Reserves
$ 12,538 
$ 12,564 
 
 
Gross IBNR Reserves
11,765 
12,932 
 
 
Total Gross Carried Claim and Claim Adjustment Expense Reserves
24,303 
25,496 
26,816 
27,593 
Net Case Reserves
10,178 
9,633 
 
 
Net IBNR Reserves
9,105 
9,741 
 
 
Total Net Carried Claim and Claim Adjustment Expense Reserves
19,283 
19,374 
21,222 
21,305 
CNA Specialty [Member]
 
 
 
 
Gross Case Reserves
2,441 
2,341 
 
 
Gross IBNR Reserves
4,399 
4,452 
 
 
Total Gross Carried Claim and Claim Adjustment Expense Reserves
6,840 
6,793 
 
 
Net Case Reserves
2,086 
1,992 
 
 
Net IBNR Reserves
3,937 
3,926 
 
 
Total Net Carried Claim and Claim Adjustment Expense Reserves
6,023 
5,918 
 
 
CNA Commercial [Member]
 
 
 
 
Gross Case Reserves
6,266 
6,390 
 
 
Gross IBNR Reserves
5,243 
6,132 
 
 
Total Gross Carried Claim and Claim Adjustment Expense Reserves
11,509 
12,522 
 
 
Net Case Reserves
5,720 
5,349 
 
 
Net IBNR Reserves
4,670 
5,292 
 
 
Total Net Carried Claim and Claim Adjustment Expense Reserves
10,390 
10,641 
 
 
Life and Group Non-Core [Member]
 
 
 
 
Gross Case Reserves
2,510 
2,403 
 
 
Gross IBNR Reserves
315 
336 
 
 
Total Gross Carried Claim and Claim Adjustment Expense Reserves
2,825 
2,739 
 
 
Net Case Reserves
2,025 
1,831 
 
 
Net IBNR Reserves
254 
266 
 
 
Total Net Carried Claim and Claim Adjustment Expense Reserves
2,279 
2,097 
 
 
Corporate and Other Non-Core [Member]
 
 
 
 
Gross Case Reserves
1,321 
1,430 
 
 
Gross IBNR Reserves
1,808 
2,012 
 
 
Total Gross Carried Claim and Claim Adjustment Expense Reserves
3,129 
3,442 
 
 
Net Case Reserves
347 
461 
 
 
Net IBNR Reserves
244 
257 
 
 
Total Net Carried Claim and Claim Adjustment Expense Reserves
$ 591 
$ 718 
 
 
Claim and Claim Adjustment Expense Reserves (Impact of Loss Portfolio Transfer on the 2010 Consolidated Statement of Operations) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Other operating expenses
 
 
 
 
 
 
 
 
$ 996 
$ 1,568 
$ 1,097 
Income tax (expense) benefit
 
 
 
 
 
 
 
 
(246)
(333)
(57)
Income (loss) from continuing operations, net of tax
191 
75 
132 
233 
326 
(103)
301 
255 
631 
779 
483 
Income (loss) from discontinued operations
   
   
   
(1)
   
(22)
1 
   
(1)
(21)
(2)
Net income (loss) attributable to CNA
190 
75 
126 
223 
302 
(140)
283 
245 
614 
690 
419 
Loss Portfolio Transfer [Member]
 
 
 
 
 
 
 
 
 
 
 
Other operating expenses
 
 
 
 
 
 
 
 
 
529 
 
Income tax (expense) benefit
 
 
 
 
 
 
 
 
 
185 
 
Income (loss) from continuing operations, net of tax
 
 
 
 
 
 
 
 
 
(344)
 
Income (loss) from discontinued operations
 
 
 
 
 
 
 
 
 
(21)
 
Net income (loss) attributable to CNA
 
 
 
 
 
 
 
 
 
$ (365)
 
Claim and Claim Adjustment Expense Reserves (Net prior year development) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development:
 
 
 
Core (Non-A&EP)
 
 
$ (444)
A&EP
 
 
155 
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development, P&C
(423)
(637)
(289)
Pretax (favorable) unfavorable premium development
(8)
43 
81 
Total pretax (favorable) unfavorable net prior year development
(431)
(594)
(208)
CNA Specialty [Member]
 
 
 
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development:
 
 
 
Core (Non-A&EP)
 
 
(218)
A&EP
 
 
   
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development, P&C
(217)
(341)
(218)
Pretax (favorable) unfavorable premium development
(28)
(3)
(6)
Total pretax (favorable) unfavorable net prior year development
(245)
(344)
(224)
CNA Commercial [Member]
 
 
 
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development:
 
 
 
Core (Non-A&EP)
 
 
(230)
A&EP
 
 
   
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development, P&C
(204)
(304)
(230)
Pretax (favorable) unfavorable premium development
21 
48 
87 
Total pretax (favorable) unfavorable net prior year development
(183)
(256)
(143)
Corporate and Other Non-Core [Member]
 
 
 
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development:
 
 
 
Core (Non-A&EP)
 
 
4 
A&EP
 
 
155 
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development, P&C
(2)
8 
159 
Pretax (favorable) unfavorable premium development
(1)
(2)
   
Total pretax (favorable) unfavorable net prior year development
$ (3)
$ 6 
$ 159 
Claim and Claim Adjustment Expense Reserves (Net prior year claim and allocated claim adjustment expense reserve development for CNA specialty segment) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development:
 
 
 
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development, P&C
$ (423)
$ (637)
$ (289)
CNA Specialty [Member]
 
 
 
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development:
 
 
 
Medical Professional Liability
(92)
(98)
(62)
Other Professional Liability
(78)
(129)
(98)
Surety
(47)
(103)
(51)
Warranty
(13)
   
   
Other
13 
(11)
(7)
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development, P&C
$ (217)
$ (341)
$ (218)
Claim and Claim Adjustment Expense Reserves (Net prior year claim and allocated claim adjustment expense reserve development for CNA commercial segment) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development:
 
 
 
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development, P&C
$ (423)
$ (637)
$ (289)
CNA Commercial [Member]
 
 
 
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development:
 
 
 
Commercial Auto
(98)
(88)
(9)
General Liability
(39)
(59)
(100)
Workers' Compensation
36 
47 
69 
Property and Other
(103)
(204)
(190)
Pretax (favorable) unfavorable net prior year claim and allocated claim adjustment expense reserve development, P&C
$ (204)
$ (304)
$ (230)
Reinsurance (Narrative) (Details) (USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Change in allowance for uncollectible reinsurance receivables
$ (15,000,000)
 
 
Funds held under reinsurance agreements, liability
3,600,000,000 
4,000,000,000 
 
Reinsurance recoveries reported in insurance claims and policyholders' benefits reported on the Consolidated Statement of Operations
1,285,000,000 
1,121,000,000 
1,297,000,000 
Ceded claim and claim adjustment expense reserves, future policy benefits and policyholder funds as the result of business operations sold in prior years
1,211,000,000 
1,301,000,000 
 
Subsidiaries of Berkshire Hathaway Group [Member]
 
 
 
Ceded Credit Risk, Claims Receivable
2,500,000,000 
 
 
Subsidiaries of Swiss Re Group [Member]
 
 
 
Ceded Credit Risk, Claims Receivable
1,000,000,000 
 
 
Subsidiaries of Hartford Insurance Group [Member]
 
 
 
Ceded Credit Risk, Claims Receivable
400,000,000 
 
 
Significant Captive Program [Member]
 
 
 
Direct and ceded earned premiums
1,500,000,000 
1,383,000,000 
1,385,000,000 
Reinsurance recoveries reported in insurance claims and policyholders' benefits reported on the Consolidated Statement of Operations
$ 790,000,000 
$ 735,000,000 
$ 897,000,000 
Reinsurance (Components of Reinsurance Receivables) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Reinsurance receivables related to insurance reserves
 
 
 
 
Ceded claim and claim adjustment expenses
$ 5,020 
$ 6,122 
$ 5,594 
$ 6,288 
Ceded future policy benefits
792 
822 
 
 
Ceded policyholders' funds
36 
37 
 
 
Reinsurance receivables related to paid losses
244 
223 
 
 
Reinsurance receivables
6,092 
7,204 
 
 
Allowance for uncollectible reinsurance
(91)
(125)
 
 
Reinsurance receivables, net of allowance for uncollectible reinsurance
$ 6,001 
$ 7,079 
 
 
Reinsurance (Components of Earned Premiums) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Direct Premiums Earned, Property and Casualty
$ 7,858 
$ 7,716 
$ 8,028 
Assumed Premiums Earned, Property and Casualty
95 
66 
67 
Ceded Premiums Earned, Property and Casualty
1,919 
1,849 
1,968 
Premiums Earned, Net, Property and Casualty
6,034 
5,933 
6,127 
Direct Premiums Earned, Accident and Health
521 
534 
550 
Assumed Premiums Earned, Accident and Health
50 
49 
51 
Ceded Premiums Earned, Accident and Health
2 
2 
7 
Premiums Earned, Net, Accident and Health
569 
581 
594 
Direct Premiums Earned, Life
55 
60 
84 
Assumed Premiums Earned, Life
   
   
   
Ceded Premiums Earned, Life
55 
59 
84 
Premiums Earned, Net, Life
   
1 
   
Direct Premiums Earned
8,434 
8,310 
8,662 
Assumed Premiums Earned
145 
115 
118 
Ceded Premiums Earned
1,976 
1,910 
2,059 
Net earned premiums
$ 6,603 
$ 6,515 
$ 6,721 
Percentage of assumed premiums earned to net premiums earned [Member]
 
 
 
Percentage of Assumed Premium Earned to Premium Earned Net
2.20% 
1.80% 
1.80% 
Percentage of assumed premiums earned to net premiums earned [Member] |
Property and Casualty Insurance [Member]
 
 
 
Percentage of Assumed Premium Earned to Premium Earned Net
1.60% 
1.10% 
1.10% 
Percentage of assumed premiums earned to net premiums earned [Member] |
Accident and Health Insurance [Member]
 
 
 
Percentage of Assumed Premium Earned to Premium Earned Net
8.80% 
8.40% 
8.60% 
Percentage of assumed premiums earned to net premiums earned [Member] |
Life Insurance [Member]
 
 
 
Percentage of Assumed Premium Earned to Premium Earned Net
   
   
   
Reinsurance (Components of Written Premiums) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Direct Premiums Written, Property and Casualty
$ 7,976 
$ 7,673 
$ 7,981 
Assumed Premiums Written, Property and Casualty
102 
77 
66 
Ceded Premiums Written, Property and Casualty
1,857 
1,853 
1,916 
Premiums Written, Net, Property and Casualty
6,221 
5,897 
6,131 
Direct Premiums Written, Accident and Health
529 
527 
539 
Assumed Premiums Written, Accident and Health
50 
48 
50 
Ceded Premiums Written, Accident and Health
2 
2 
6 
Premiums Written, Net, Accident and Health
577 
573 
583 
Direct Premiums Written, Life
55 
60 
83 
Assumed Premiums Written, Life
   
   
   
Ceded Premiums Written, Life
55 
59 
83 
Premiums Written, Net, Life
   
1 
   
Direct Premiums Written
8,560 
8,260 
8,603 
Assumed Premiums Written
152 
125 
116 
Ceded Premiums Written
1,914 
1,914 
2,005 
Premiums Written, Net
$ 6,798 
$ 6,471 
$ 6,714 
Percentage of assumed premiums written to net premiums written [Member]
 
 
 
Percentage of Assumed Premium Written to Premium Written Net
2.20% 
1.90% 
1.70% 
Percentage of assumed premiums written to net premiums written [Member] |
Property and Casualty Insurance [Member]
 
 
 
Percentage of Assumed Premium Written to Premium Written Net
1.60% 
1.30% 
1.10% 
Percentage of assumed premiums written to net premiums written [Member] |
Accident and Health Insurance [Member]
 
 
 
Percentage of Assumed Premium Written to Premium Written Net
8.70% 
8.40% 
8.60% 
Percentage of assumed premiums written to net premiums written [Member] |
Life Insurance [Member]
 
 
 
Percentage of Assumed Premium Written to Premium Written Net
   
   
   
Reinsurance (Components of Life Insurance Inforce) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Life Insurance Inforce, Direct
$ 6,528 
$ 8,015 
$ 9,159 
Life Insurance Inforce, Assumed
   
   
   
Life Insurance Inforce, Ceded
6,515 
8,001 
9,144 
Life Insurance Inforce, Net
$ 13 
$ 14 
$ 15 
Debt (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 11 Months Ended 2 Months Ended
Dec. 31, 2011
Feb. 1, 2011
Senior notes 5.750%, face amount $400, due August 15, 2021 [Member]
Dec. 31, 2011
Extinguished senior notes, due August 15, 2011 [Member]
Feb. 1, 2011
Extinguished senior notes, due August 15, 2011 [Member]
Dec. 31, 2011
Extinguished variable rate debt, Debenture - CNA Surety, due April 29, 2034 [Member]
Senior notes issued
 
$ 400 
 
 
 
Stated interest rate on senior notes
 
5.75% 
 
6.00% 
 
Redemption of debt
 
 
400 
 
31 
Line of credit facility, initiation date
August 1, 2007 
 
 
 
 
Line of credit facility, expiration date
August 1, 2012 
 
 
 
 
Maximum borrowing capacity under revolving credit facilities
250 
 
 
 
 
Debt instrument, description of variable rate basis
London Interbank Offered Rate (LIBOR) plus the Company's credit risk spread 
 
 
 
 
Limit available for credit agreement
$ 250 
 
 
 
 
Debt (Schedule of debt instruments) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Short term debt:
 
 
Other debt
$ 13 
$ 1 
Total short term debt
83 
400 
Long term debt:
 
 
Debenture, 7.250%, face amount $243, due November 15, 2023
241 
241 
Other long-term debt
   
23 
Total long term debt
2,525 
2,251 
Total
2,608 
2,651 
Senior notes 6.000%, face amount of $400, due August 15, 2011 [Member]
 
 
Short term debt:
 
 
Senior notes, current
   
399 
Senior notes 8.375%, face amount of $70, due August 15, 2012 [Member]
 
 
Short term debt:
 
 
Senior notes, current
70 
   
Long term debt:
 
 
Senior notes, noncurrent
   
69 
Debenture - CNA Surety, face amount of $31, due April 29, 2034 [Member]
 
 
Long term debt:
 
 
Variable rate debt, noncurrent
   
31 
Senior notes 5.850%, face amount $549, due December 15, 2014 [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
548 
548 
Senior notes 6.500%, face amount of $350, due August 15, 2016 [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
348 
347 
Senior notes 6.950%, face amount $150, due January 15, 2018 [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
149 
149 
Senior notes 7.350%, face amount $350, due November 15, 2019 [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
348 
348 
Senior notes 5.875%, face amount $500, due August 15, 2020 [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
495 
495 
Senior notes 5.750%, face amount $400, due August 15, 2021 [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
$ 396 
    
Debt (Maturity of debt) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Repayments of principal in the next twelve months
$ 83 
 
Repayments of principal in year two
   
 
Repayments of principal in year three
549 
 
Repayments of principal in year four
   
 
Repayments of principal in year five
350 
 
Repayments of principal after year five
1,643 
 
Less discount
(17)
 
Total
$ 2,608 
$ 2,651 
Benefit Plans Part 1 (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended
Dec. 31, 2011
Dec. 31, 2000
Dec. 31, 2011
Pension Plans, Defined Benefit [Member]
Dec. 31, 2010
Pension Plans, Defined Benefit [Member]
Dec. 31, 2011
Other Postretirement Benefit Plans, Defined Benefit [Member]
Dec. 31, 2010
Other Postretirement Benefit Plans, Defined Benefit [Member]
Dec. 31, 2009
Other Postretirement Benefit Plans, Defined Benefit [Member]
Dec. 31, 2011
Investment Contracts with Insurance Company [Member]
Dec. 31, 2010
Investment Contracts with Insurance Company [Member]
Dec. 31, 2011
Partnership Interest [Member]
Pension Plans, Defined Benefit [Member]
Defined benefit plan, description of plan amendment
 
 
 
 
 
In November 2010, CNA announced a change in its postretirement benefits. The plan previously offered a maximum $10,000 non-contributory retiree life insurance benefit to participants who met certain eligibility requirements. The change eliminated this benefit for all active employees effective January 1, 2011, and for all retirees effective January 1, 2012. 
 
 
 
 
Defined benefit plan, effect of plan amendment on accumulated benefit obligation
 
 
 
 
 
$ 60 
 
 
 
 
Defined benefit plan, accumulated benefit obligation
 
 
2,932 
2,715 
 
 
 
 
 
 
Assumptions used in calculating assumed health care cost trend rate
 
 
 
 
The CNA Health and Group Benefits Program has limited its share of the health care trend rate to a cost-of-living adjustment of 4% per year. For all participants, the employer subsidy on health care costs will not increase by more than 4% per year. 
 
 
 
 
 
Defined benefit plan, health care cost trend rate assumed for next fiscal year
 
 
 
 
4.00% 
4.00% 
4.00% 
 
 
 
Defined benefit plan, effect of one percentage point increase in the assumed health care cost trend rate on accumulated postretirement benefit obligation
 
 
 
 
   
 
 
 
 
 
Defined benefit plan, effect of one percentage point decrease in the assumed health care cost trend rate on accumulated postretirement benefit obligation
 
 
 
 
3 
 
 
 
 
 
Defined benefit plan, effect of one percentage point increase in the assumed health care cost trend rate on service and interest cost components
 
 
 
 
   
 
 
 
 
 
Defined benefit plan, effect of one percentage point decrease in the assumed health care cost trend rate on service and interest cost components
 
 
 
 
   
 
 
 
 
 
Future capital call commitments
 
 
 
 
 
 
 
 
 
27 
Limited partnership equity related hedge fund strategy plan assets
 
 
53.00% 
 
 
 
 
 
 
 
Limited partnership hedge fund multi strategy plan assets
 
 
36.00% 
 
 
 
 
 
 
 
Limited partnership hedge fund strategy distressed investments plan assets
 
 
10.00% 
 
 
 
 
 
 
 
Limited partnership hedge fund strategies fixed income
 
 
1.00% 
 
 
 
 
 
 
 
Defined benefit plan, estimated future employer contributions in next fiscal year
 
 
86 
 
6 
 
 
 
 
 
Description of CNA Savings Plan
CNA sponsors savings plans, which are generally contributory plans that allow most employees to contribute a maximum of 20% of their eligible compensation, subject to certain limitations prescribed by the IRS. The Company contributes matching amounts to participants, amounting to 70% of the first 6% (35% of the first 6% in the first year of employment) of eligible compensation contributed by the employee. Employees vest in these contributions ratably over five years. 
 
 
 
 
 
 
 
 
 
Contract value of investment contract, liability to benefit plan
 
 
 
 
 
 
 
381 
363 
 
Description of transition from CNA pension plan to postretirement plan
 
As noted above, during 2000, CCC employees were required to make a choice regarding their continued participation in CNA's defined benefit pension plan. Employees who elected to forgo earning additional benefits in the defined benefit pension plan and all employees hired by CCC on or after January 1, 2000 receive a Company contribution of 3% or 5% of their eligible compensation, depending on their age. In addition, these employees are eligible to receive additional discretionary contributions of up to 2% of eligible compensation and an additional Company match of up to 80% of the first 6% of eligible compensation contributed by the employee. These additional contributions are made at the discretion of management and are contributed to participant accounts in the first quarter of the year following management's determination of the discretionary amounts. Employees vest in these contributions ratably over five years. 
 
 
 
 
 
 
 
 
Pension and other postretirement benefit expense
 
 
 
 
$ 60 
$ 61 
$ 59 
 
 
 
Benefit Plans Part 2 (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Stock Compensation Plan [Member]
 
 
 
Share-based compensation arrangement by share-based payment award, number of shares authorized
6 
 
 
Share-based compensation arrangement by share-based payment award, number of shares available for grant
2.4 
 
 
Allocated share-based compensation expense
$ 6 
$ 5 
$ 3 
Employee service share-based compensation, tax benefit from compensation expense
2 
2 
1 
Employee service share-based compensation, nonvested awards, total compensation cost not yet recognized
$ 10 
 
 
Employee service share-based compensation, nonvested awards, total compensation cost not yet recognized, period for recognition
1.83 
 
 
Share Awards [Member]
 
 
 
Share awards plan agreement
Share awards currently granted under the Plan include restricted shares, performance-based RSUs, and performance share units. Generally, restricted shares vest ratably over a four-year service period following the date of grant. Performance-based RSUs generally become payable within a range of 0% to 100% of the number of shares initially granted based upon the attainment of specific annual performance goals and vest ratably over a four-year service period following the date of grant. Performance share units become payable within a range of 0% to 200% of the number of shares initially granted based upon the attainment of specific performance goals achieved over a three year period. 
 
 
Benefit Plans (Funded Status) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Pension Plans, Defined Benefit [Member]
 
 
Defined Benefit Plan, Funded Status of Plan
 
 
Funded status
$ (791)
$ (540)
Other Postretirement Benefit Plans, Defined Benefit [Member]
 
 
Defined Benefit Plan, Funded Status of Plan
 
 
Funded status
(49)
(95)
Change in Benefit Obligation [Member] |
Pension Plans, Defined Benefit [Member]
 
 
Defined Benefit Plan, Funded Status of Plan
 
 
Benefit obligation at January 1
2,798 
2,702 
Service cost
13 
16 
Interest cost
146 
149 
Participants' contributions
   
   
Plan amendments
   
   
Actuarial (gain) loss
263 
89 
Benefits paid
(163)
(157)
Foreign currency translation and other on benefit obligation
   
(1)
Reduction of benefit obligation due to disposition of subsidiary
(54)
   
Benefit obligation at December 31
3,003 
2,798 
Change in Benefit Obligation [Member] |
Other Postretirement Benefit Plans, Defined Benefit [Member]
 
 
Defined Benefit Plan, Funded Status of Plan
 
 
Benefit obligation at January 1
95 
155 
Service cost
1 
1 
Interest cost
3 
7 
Participants' contributions
6 
6 
Plan amendments
(12)
(60)
Actuarial (gain) loss
(18)
(2)
Benefits paid
(13)
(13)
Foreign currency translation and other on benefit obligation
   
1 
Reduction of benefit obligation due to disposition of subsidiary
(13)
   
Benefit obligation at December 31
49 
95 
Change in plan assets [Member] |
Pension Plans, Defined Benefit [Member]
 
 
Defined Benefit Plan, Funded Status of Plan
 
 
Fair value of plan assets at January 1
2,258 
2,117 
Actual return on plan assets
82 
234 
Company contributions
89 
65 
Participants' contributions
   
   
Benefits paid
163 
157 
Foreign currency translation and other on plan assets
   
(1)
Reduction of plan assets due to disposition of subsidiary
(54)
   
Fair value of plan assets at December 31
2,212 
2,258 
Change in plan assets [Member] |
Other Postretirement Benefit Plans, Defined Benefit [Member]
 
 
Defined Benefit Plan, Funded Status of Plan
 
 
Fair value of plan assets at January 1
   
   
Actual return on plan assets
   
   
Company contributions
7 
7 
Participants' contributions
(6)
(6)
Benefits paid
13 
13 
Foreign currency translation and other on plan assets
   
   
Reduction of plan assets due to disposition of subsidiary
   
   
Fair value of plan assets at December 31
   
   
Amounts Recognized on the Consolidated Balance Sheets [Member] |
Pension Plans, Defined Benefit [Member]
 
 
Defined Benefit Plan, Funded Status of Plan
 
 
Other assets
1 
7 
Other liabilities
(792)
(547)
Net amount recognized on balance sheets
(791)
(540)
Amounts Recognized on the Consolidated Balance Sheets [Member] |
Other Postretirement Benefit Plans, Defined Benefit [Member]
 
 
Defined Benefit Plan, Funded Status of Plan
 
 
Other assets
   
   
Other liabilities
(49)
(95)
Net amount recognized on balance sheets
(49)
(95)
Amounts Recognized in Accumulated Other Comprehensive Income [Member] |
Pension Plans, Defined Benefit [Member]
 
 
Defined Benefit Plan, Funded Status of Plan
 
 
Prior service cost (credit)
   
   
Net actuarial (gain) loss
1,060 
741 
Net amount recognized in Accumulated other comprehensive income
1,060 
741 
Amounts Recognized in Accumulated Other Comprehensive Income [Member] |
Other Postretirement Benefit Plans, Defined Benefit [Member]
 
 
Defined Benefit Plan, Funded Status of Plan
 
 
Prior service cost (credit)
(134)
(141)
Net actuarial (gain) loss
9 
29 
Net amount recognized in Accumulated other comprehensive income
$ (125)
$ (112)
Benefit Plans (Components of net periodic cost (benefit)) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Pension Cost [Member]
 
 
 
Defined Benefit Plan, Net Periodic Benefit Cost
 
 
 
Service cost
$ 13 
$ 16 
$ 17 
Interest cost on projected benefit obligation
146 
149 
153 
Expected return on plan assets
(172)
(162)
(145)
Amortization of net actuarial (gain) loss
25 
24 
25 
Net periodic (benefit) cost
12 
27 
50 
Postretirement Benefit Costs [Member]
 
 
 
Defined Benefit Plan, Net Periodic Benefit Cost
 
 
 
Service cost
1 
1 
1 
Interest cost on projected benefit obligation
3 
7 
9 
Amortization of prior service cost (credit)
(19)
(16)
(16)
Amortization of net actuarial (gain) loss
   
1 
1 
Net periodic (benefit) cost
$ (15)
$ (7)
$ (5)
Benefit Plans (Schedule of amounts recognized in Other comprehensive income) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Adjustment, before Tax
 
 
 
Amounts arising during the period
$ (325)
$ 44 
$ 13 
Reclassification adjustment relating to prior service cost (credit)
(19)
(16)
(16)
Reclassification adjustment relating to actuarial (gain) loss
25 
25 
26 
Total increase (decrease) in Other comprehensive income
$ (319)
$ 53 
$ 23 
Benefit Plans (Schedule of estimated amounts to be recognized from Accumulated other comprehensive income into net periodic cost (benefit) during 2012) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Pension Plans, Defined Benefit [Member]
 
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year
 
Amortization of prior service cost (credit)
   
Amortization of net actuarial (gain) loss
39 
Total estimated amounts to be recognized
39 
Other Postretirement Benefit Plans, Defined Benefit [Member]
 
Pension and Other Postretirement Benefit Plans, Amounts that Will be Amortized from Accumulated Other Comprehensive Income (Loss) in Next Fiscal Year
 
Amortization of prior service cost (credit)
(18)
Amortization of net actuarial (gain) loss
1 
Total estimated amounts to be recognized
$ (17)
Benefit Plans (Actuarial Assumptions for Benefit Obligations) (Details)
Dec. 31, 2011
Dec. 31, 2010
Pension Plans, Defined Benefit [Member]
 
 
Defined Benefit Plan, Assumptions Used in Calculations
 
 
Discount rate
4.60% 
5.375% 
Expected long term rate of return
8.00% 
8.00% 
Rate of compensation increases
4.125% 
5.03% 
Other Postretirement Benefit Plans, Defined Benefit [Member]
 
 
Defined Benefit Plan, Assumptions Used in Calculations
 
 
Discount rate
3.75% 
4.375% 
Benefit Plans (Actuarial Assumptions for Net Cost or Benefit) (Details)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Pension Plans, Defined Benefit [Member]
 
 
 
Discount rate
5.375% 
5.70% 
6.30% 
Expected long term rate of return
8.00% 
8.00% 
8.00% 
Rate of compensation increases
5.03% 
5.03% 
5.83% 
Other Postretirement Benefit Plans, Defined Benefit [Member]
 
 
 
Discount rate
4.375% 
 
6.30% 
Discount rate
 
4.875 / 5.500% 
 
Benefit Plans (Fair Value of Plan Assets Measured on a Recurring Basis) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Corporate and other bonds [Member]
 
 
Fair value of plan assets
$ 387 
$ 315 
Corporate and other bonds [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
   
   
Corporate and other bonds [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
377 
305 
Corporate and other bonds [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
10 
10 
States, municipalities and political subdivisions [Member]
 
 
Fair value of plan assets
104 
92 
States, municipalities and political subdivisions [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
   
   
States, municipalities and political subdivisions [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
104 
92 
States, municipalities and political subdivisions [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
   
   
Residential Mortgage Backed Securities [Member]
 
 
Fair value of plan assets
198 
179 
Residential Mortgage Backed Securities [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
   
   
Residential Mortgage Backed Securities [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
198 
179 
Residential Mortgage Backed Securities [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
   
   
Commercial Mortgage Backed Securities [Member]
 
 
Fair value of plan assets
68 
49 
Commercial Mortgage Backed Securities [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
   
   
Commercial Mortgage Backed Securities [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
68 
40 
Commercial Mortgage Backed Securities [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
   
9 
Other asset-backed [Member]
 
 
Fair value of plan assets
10 
10 
Other asset-backed [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
   
   
Other asset-backed [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
10 
9 
Other asset-backed [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
   
1 
Total asset-backed [Member]
 
 
Fair value of plan assets
276 
238 
Total asset-backed [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
   
   
Total asset-backed [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
276 
228 
Total asset-backed [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
   
10 
Fixed Maturities [Member]
 
 
Fair value of plan assets
767 
645 
Fixed Maturities [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
   
   
Fixed Maturities [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
757 
625 
Fixed Maturities [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
10 
20 
Equity securities [Member]
 
 
Fair value of plan assets
433 
504 
Equity securities [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
353 
421 
Equity securities [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
75 
77 
Equity securities [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
5 
6 
Short-term Investments [Member]
 
 
Fair value of plan assets
98 
113 
Short-term Investments [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
63 
106 
Short-term Investments [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
35 
7 
Short-term Investments [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
   
   
Hedge Funds [Member]
 
 
Fair value of plan assets
818 
912 
Hedge Funds [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
   
   
Hedge Funds [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
488 
518 
Hedge Funds [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
330 
394 
Private Equity Funds [Member]
 
 
Fair value of plan assets
65 
59 
Private Equity Funds [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
   
   
Private Equity Funds [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
   
   
Private Equity Funds [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
65 
59 
Total limited partnerships [Member]
 
 
Fair value of plan assets
883 
971 
Total limited partnerships [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
   
   
Total limited partnerships [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
488 
518 
Total limited partnerships [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
395 
453 
Derivative [Member]
 
 
Fair value of plan assets
 
1 
Derivative [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
 
1 
Derivative [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
 
   
Derivative [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
 
   
Other Assets [Member]
 
 
Fair value of plan assets
21 
15 
Other Assets [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
   
   
Other Assets [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
21 
15 
Other Assets [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
   
   
Investment Contracts with Insurance Company [Member]
 
 
Fair value of plan assets
10 
9 
Investment Contracts with Insurance Company [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
   
   
Investment Contracts with Insurance Company [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
   
   
Investment Contracts with Insurance Company [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
10 
9 
Total assets [Member]
 
 
Fair value of plan assets
2,212 
2,258 
Total assets [Member] |
Fair Value, Inputs, Level 1 [Member]
 
 
Fair value of plan assets
416 
528 
Total assets [Member] |
Fair Value, Inputs, Level 2 [Member]
 
 
Fair value of plan assets
1,376 
1,242 
Total assets [Member] |
Fair Value, Inputs, Level 3 [Member]
 
 
Fair value of plan assets
$ 420 
$ 488 
Benefit Plans (Reconciliation of Level 3 Plan Assets) (Details) (Fair Value, Inputs, Level 3 [Member], USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Corporate and other bonds [Member]
 
 
Fair value of plan assets at January 1
$ 10 
    
Defined Benefit Plan, Actual Return on Plan Assets Still Held
   
   
Defined Benefit Plan, Actual Return on Plan Assets Sold During Period
   
   
Defined Benefit Plan, Purchases, Sales, and Settlements
   
10 
Defined Benefit Plan, Transfers Between Measurement Levels
   
   
Fair value of plan assets at December 31
10 
10 
Residential Mortgage Backed Securities [Member]
 
 
Fair value of plan assets at January 1
 
52 
Defined Benefit Plan, Actual Return on Plan Assets Still Held
 
   
Defined Benefit Plan, Actual Return on Plan Assets Sold During Period
 
6 
Defined Benefit Plan, Purchases, Sales, and Settlements
 
(58)
Defined Benefit Plan, Transfers Between Measurement Levels
 
   
Fair value of plan assets at December 31
 
   
Commercial Mortgage Backed Securities [Member]
 
 
Fair value of plan assets at January 1
9 
   
Defined Benefit Plan, Actual Return on Plan Assets Still Held
   
   
Defined Benefit Plan, Actual Return on Plan Assets Sold During Period
   
   
Defined Benefit Plan, Purchases, Sales, and Settlements
(9)
9 
Defined Benefit Plan, Transfers Between Measurement Levels
   
   
Fair value of plan assets at December 31
   
9 
Other asset-backed [Member]
 
 
Fair value of plan assets at January 1
1 
5 
Defined Benefit Plan, Actual Return on Plan Assets Still Held
   
   
Defined Benefit Plan, Actual Return on Plan Assets Sold During Period
   
   
Defined Benefit Plan, Purchases, Sales, and Settlements
(1)
(4)
Defined Benefit Plan, Transfers Between Measurement Levels
   
   
Fair value of plan assets at December 31
   
1 
Total asset-backed [Member]
 
 
Fair value of plan assets at January 1
10 
57 
Defined Benefit Plan, Actual Return on Plan Assets Still Held
   
   
Defined Benefit Plan, Actual Return on Plan Assets Sold During Period
   
6 
Defined Benefit Plan, Purchases, Sales, and Settlements
(10)
(53)
Defined Benefit Plan, Transfers Between Measurement Levels
   
   
Fair value of plan assets at December 31
   
10 
Fixed Maturities [Member]
 
 
Fair value of plan assets at January 1
20 
57 
Defined Benefit Plan, Actual Return on Plan Assets Still Held
   
   
Defined Benefit Plan, Actual Return on Plan Assets Sold During Period
   
6 
Defined Benefit Plan, Purchases, Sales, and Settlements
(10)
(43)
Defined Benefit Plan, Transfers Between Measurement Levels
   
   
Fair value of plan assets at December 31
10 
20 
Equity securities [Member]
 
 
Fair value of plan assets at January 1
6 
5 
Defined Benefit Plan, Actual Return on Plan Assets Still Held
(1)
1 
Defined Benefit Plan, Actual Return on Plan Assets Sold During Period
   
   
Defined Benefit Plan, Purchases, Sales, and Settlements
   
   
Defined Benefit Plan, Transfers Between Measurement Levels
   
   
Fair value of plan assets at December 31
5 
6 
Hedge Funds [Member]
 
 
Fair value of plan assets at January 1
394 
339 
Defined Benefit Plan, Actual Return on Plan Assets Still Held
5 
64 
Defined Benefit Plan, Actual Return on Plan Assets Sold During Period
5 
   
Defined Benefit Plan, Purchases, Sales, and Settlements
(74)
(9)
Defined Benefit Plan, Transfers Between Measurement Levels
   
   
Fair value of plan assets at December 31
330 
394 
Private Equity Funds [Member]
 
 
Fair value of plan assets at January 1
59 
57 
Defined Benefit Plan, Actual Return on Plan Assets Still Held
9 
6 
Defined Benefit Plan, Actual Return on Plan Assets Sold During Period
   
   
Defined Benefit Plan, Purchases, Sales, and Settlements
(3)
(4)
Defined Benefit Plan, Transfers Between Measurement Levels
   
   
Fair value of plan assets at December 31
65 
59 
Total limited partnerships [Member]
 
 
Fair value of plan assets at January 1
453 
396 
Defined Benefit Plan, Actual Return on Plan Assets Still Held
14 
70 
Defined Benefit Plan, Actual Return on Plan Assets Sold During Period
5 
   
Defined Benefit Plan, Purchases, Sales, and Settlements
(77)
(13)
Defined Benefit Plan, Transfers Between Measurement Levels
   
   
Fair value of plan assets at December 31
395 
453 
Investment Contracts with Insurance Company [Member]
 
 
Fair value of plan assets at January 1
9 
9 
Defined Benefit Plan, Actual Return on Plan Assets Still Held
1 
   
Defined Benefit Plan, Actual Return on Plan Assets Sold During Period
   
   
Defined Benefit Plan, Purchases, Sales, and Settlements
   
   
Defined Benefit Plan, Transfers Between Measurement Levels
   
   
Fair value of plan assets at December 31
10 
9 
Total assets [Member]
 
 
Fair value of plan assets at January 1
488 
467 
Defined Benefit Plan, Actual Return on Plan Assets Still Held
14 
71 
Defined Benefit Plan, Actual Return on Plan Assets Sold During Period
5 
6 
Defined Benefit Plan, Purchases, Sales, and Settlements
(87)
(56)
Defined Benefit Plan, Transfers Between Measurement Levels
   
   
Fair value of plan assets at December 31
$ 420 
$ 488 
Benefit Plans (Estimated Future Minimum Benefit Payments to Participants) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Pension Plans, Defined Benefit [Member]
 
Defined Benefit Plan, Expected Future Benefit Payments in Year One
$ 176 
Defined Benefit Plan, Expected Future Benefit Payments in Year Two
181 
Defined Benefit Plan, Expected Future Benefit Payments in Year Three
184 
Defined Benefit Plan, Expected Future Benefit Payments in Year Four
188 
Defined Benefit Plan, Expected Future Benefit Payments in Year Five
191 
Defined Benefit Plan, Expected Future Benefit Payments in Five Fiscal Years Thereafter
1,002 
Other Postretirement Benefit Plans, Defined Benefit [Member]
 
Defined Benefit Plan, Expected Future Benefit Payments in Year One
6 
Defined Benefit Plan, Expected Future Benefit Payments in Year Two
6 
Defined Benefit Plan, Expected Future Benefit Payments in Year Three
5 
Defined Benefit Plan, Expected Future Benefit Payments in Year Four
5 
Defined Benefit Plan, Expected Future Benefit Payments in Year Five
5 
Defined Benefit Plan, Expected Future Benefit Payments in Five Fiscal Years Thereafter
$ 18 
Benefit Plans (Significant Assumptions Used to Estimate Fair Value of Stock Options and SARS) (Details)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Weighted average expected life of the securities granted (in years)
5.61 
5.61 
4.84 
Estimate of the underlying common stock's volatility
39.88% 
39.58% 
39.95% 
Expected dividend yield
1.50% 
   
   
Risk free interest rate
2.20% 
2.60% 
2.00% 
Benefit Plans (Stock Option and SARs Activity) (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Stock options and Stock appreciation rights awards outstanding at January 1
1,625,175 
Weighted-average exercise price per award outstanding at January 1
$ 27.42 
Number of awards granted
125,000 
Weighted-average exercise price on awards granted
$ 27.12 
Number of awards exercised
(166,375)
Weighted-average exercise price on awards exercised
$ 27.13 
Number of awards forfeited, canceled or expired
(264,450)
Weighted-average exercise price on awards forfeited, canceled or expired
$ 34.51 
Stock options and Stock appreciation rights awards outstanding at December 31
1,319,350 
Weighted-average exercise price per award outstanding at December 31
$ 26.01 
Aggregate intrinsic value on awards outstanding
$ 5 
Weighted-average remaining contractual term on awards outstanding
5.80 
Number of awards outstanding, fully vested and expected to vest
1,260,045 
Weighted-average exercise price per award outstanding, fully vested and expected to vest
$ 26.14 
Aggregate intrinsic value on awards outstanding, fully vested and expected to vest
5 
Weighted-average remaining contractual term on awards outstanding, fully vested and expected to vest
5.69 
Number of awards outstanding, exercisable
872,600 
Weighted-average exercise price, awards outstanding, exercisable
$ 28.04 
Aggregate intrinsic value, awards outstanding, exercisable
$ 2 
Weighted-average remaining contractual term, awards outstanding, exercisable
4.79 
Benefit Plans (Weighted-average grant date fair value for awards granted, total intrinsic value for awards exercised and total fair value for awards vested) (Details) (USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Weighted-average grant date fair value
$ 9.38 
$ 10.49 
$ 4.69 
Total intrinsic value of awards exercised
$ 481,000 
$ 350,000 
   
Fair value of awards vested
$ 2,000,000 
$ 2,000,000 
$ 4,000,000 
Benefit Plans (Restricted Shares, Performance-Based Restricted Stock Units and Performance Share Unit Activity) (Details) (USD $)
12 Months Ended
Dec. 31, 2011
Number of nonvested awards at January 1
493,507 
Number of awards granted
274,333 
Number of awards vested
(114,130)
Number of awards forfeited, canceled or expired
(6,880)
Performance-based adjustment
(7,408)
Number of nonvested awards at December 31
639,422 
Weighted-average grant date fair value [Member]
 
Weighted average grant date fair value of nonvested awards at January 1
$ 20.30 
Weighted average grant date fair value of awards granted
$ 27.23 
Weighted average grant date fair value of awards vested
$ 17.95 
Weighted average grant date fair value of awards forfeited, canceled or expired
$ 26.24 
Weighted average grant date fair value of performance-based adjustment
$ 27.11 
Weighted average grant date fair value of nonvested awards at December 31
$ 23.55 
Operating Leases, Commitments and Contingencies, and Guarantees (Narrative) (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Operating leases, rent expense
$ 50 
$ 52 
$ 51 
Operating leases, sublease revenue
2 
3 
4 
Maximum potential future lease payments and other related costs under guarantee on a real estate joint venture
134 
 
 
Long term purchase committment, future minimum payments, total
13 
 
 
Long term purchase committment, future minimum payments, current
4 
 
 
Long term purchase committment, future minimum payments, due in two years
4 
 
 
Long term purchase committment, future minimum payments, due thereafter
5 
 
 
Aggregate amount of quantifiable indemnification agreements in effect for sales of business entities, assets and third party loans
764 
 
 
Recorded liabilities related to indemnification agreements
$ 15 
$ 16 
 
Operating Leases, Commitments and Contingencies, and Guarantees (Future Minimum Lease Payments and Sublease Receipts) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Operating lease, future minimum payments, current
$ 37 
Operating lease, future minimum payments, due in two years
37 
Operating lease, future minimum payments, due in three years
31 
Operating lease, future minimum payments, due in four years
24 
Operating lease, future minimum payments, due in five years
21 
Operating lease, future minimum payments, thereafter
72 
Operating lease, future minimum payments, total
222 
Operating lease, future minimum receipts, current
2 
Operating lease, future minimum receipts, in two years
2 
Operating lease, future minimum receipts, in three years
   
Operating lease, future minimum receipts, in four years
   
Operating lease, future minimum receipts, in five years
   
Operating lease, future minimum receipts, thereafter
   
Operating lease, future minimum receipts, total
$ 4 
Stockholders' Equity and Statutory Accounting Practices (Narrative) (Details) (USD $)
12 Months Ended 12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Loews [Member]
Dec. 31, 2011
Continental Casualty Company [Member]
Dec. 31, 2010
Continental Casualty Company [Member]
Dec. 31, 2008
Continental Casualty Company [Member]
Purchase price for preferred stock
 
 
 
$ 1,250,000,000 
 
 
 
Purchase price of surplus note of CCC
 
 
 
 
 
 
1,000,000,000 
Term of CCC surplus note
 
 
 
 
 
 
The surplus note of CCC has a term of 30 years and accrues interest at a rate of 10% per year. Interest on the note is payable quarterly. 
Interest accrual rate for CCC surplus note
 
 
 
 
 
 
10.00% 
Repayment on surplus note of CCC
 
 
 
 
250,000,000 
500,000,000 
 
Outstanding balance of surplus note of CCC
 
 
 
 
250,000,000 
 
 
Common stock dividends declared, per share
$ 0.40 
   
   
 
 
 
 
Common stock dividends paid, per share
$ 0.40 
   
   
 
 
 
 
Dividends payable without prior supervisory approval
$ 990,000,000,000 
 
 
 
 
 
 
Stockholders' Equity and Statutory Accounting Practices (Combined statutory capital and surplus and net income (loss)) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Combined Continental Casualty Companies [Member]
 
 
 
Statutory Accounting
 
 
 
Statutory capital and surplus
$ 9,888 1 2
$ 9,821 1
 
Statutory net income (loss)
954 1 2
258 1
17 1
Life Company [Member]
 
 
 
Statutory Accounting
 
 
 
Statutory capital and surplus
519 2
498 
 
Statutory net income (loss)
$ 29 2
$ 86 
$ (65)
Accumulated Other Comprehensive Income (Loss) Narrative (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Pretax net unrealized gains (losses) on available-for-sale securities with OTTI losses reclassified out of AOCI and recognized in earnings
$ (83)
$ (42)
$ (146)
Tax (expense) benefit on pretax net unrealized gains (losses) on available-for-sale securities with OTTI losses reclassified out of AOCI and recognized in earnings
29 
15 
51 
Pretax net unrealized gains (losses) on other available-for-sale securities reclassified out of AOCI and recognized in earnings
60 
137 
(768)
Tax (expense) benefit on pretax net unrealized gains (losses) on other available-for-sale securities reclassified out of AOCI and recognized in earnings
$ (21)
$ (48)
$ 269 
Accumulated Other Comprehensive Income (Loss) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Cumulative foreign currency translation adjustment
$ 121 
$ 136 
Pension and postretirement benefits
(609)
(409)
Tax on pension and postretirement benefits
326 
220 
Net unrealized gains (losses) on investments with OTTI losses
(64)
(73)
Tax on net unrealized gains (losses) on investments with OTTI losses
33 
39 
Net unrealized gains (losses) on other investments
1,022 
691 
Tax on net unrealized gains (losses) on other investments
(533)
(348)
Accumulated other comprehensive (income) loss attributable to noncontrolling interests
   
(19)
Accumulated other comprehensive income (loss)
470 
326 
Tax on accumulated other comprehensive income (loss)
$ (174)
$ (89)
Business Segments (Narrative) (Details)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Percentage of written premiums foreign
8.80% 
6.90% 
7.00% 
Business Segments (Income Statement Information) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Net written premiums
$ 6,798 1
$ 6,471 1
$ 6,713 1
Operating Revenues
 
 
 
Net earned premiums
6,603 
6,515 
6,721 
Net investment income
2,054 
2,316 
2,320 
Other revenues
294 
292 
288 
Total operating revenues
8,951 
9,123 
9,329 
Claims, Benefits and Expenses
 
 
 
Net incurred claims and benefits
5,476 
4,955 
5,267 
Policyholders' dividends
13 
30 
23 
Amortization of deferred acquisition costs
1,410 
1,387 
1,417 
Other insurance related expenses
738 
797 
781 
Other expenses
433 
928 
444 
Total claims, benefits and expenses
8,070 
8,097 
7,932 
Operating income (loss) from continuing operations before income tax
881 
1,026 
1,397 
Income tax (expense) benefit on operating income (loss)
(251)
(297)
(353)
Net operating (income) loss, after-tax, attributable to noncontrolling interests
(16)
(69)
(62)
Net operating income (loss) from continuing operations attributable to CNA
614 
660 
982 
Net realized investment gains (losses), net of participating policyholders’ interests
(4)
86 
(857)
Income tax (expense) benefit on net realized investment gains (losses)
5 
(36)
296 
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
   
1 
   
Net realized investment gains (losses) attributable to CNA
1 
51 
(561)
Net income (loss) from continuing operations attributable to CNA
615 
711 
421 
CNA Specialty [Member]
 
 
 
Net written premiums
2,872 1
2,691 1
2,684 1
Operating Revenues
 
 
 
Net earned premiums
2,796 
2,679 
2,697 
Net investment income
500 
591 
526 
Other revenues
221 
216 
206 
Total operating revenues
3,517 
3,486 
3,429 
Claims, Benefits and Expenses
 
 
 
Net incurred claims and benefits
1,657 
1,447 
1,536 
Policyholders' dividends
(3)
12 
9 
Amortization of deferred acquisition costs
663 
631 
624 
Other insurance related expenses
197 
186 
163 
Other expenses
191 
190 
179 
Total claims, benefits and expenses
2,705 
2,466 
2,511 
Operating income (loss) from continuing operations before income tax
812 
1,020 
918 
Income tax (expense) benefit on operating income (loss)
(281)
(343)
(282)
Net operating (income) loss, after-tax, attributable to noncontrolling interests
(12)
(52)
(45)
Net operating income (loss) from continuing operations attributable to CNA
519 
625 
591 
Net realized investment gains (losses), net of participating policyholders’ interests
(5)
30 
(186)
Income tax (expense) benefit on net realized investment gains (losses)
2 
(10)
64 
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
   
   
(1)
Net realized investment gains (losses) attributable to CNA
(3)
20 
(123)
Net income (loss) from continuing operations attributable to CNA
516 
645 
468 
CNA Commercial [Member]
 
 
 
Net written premiums
3,350 1
3,208 1
3,448 1
Operating Revenues
 
 
 
Net earned premiums
3,240 
3,256 
3,432 
Net investment income
763 
873 
935 
Other revenues
54 
61 
61 
Total operating revenues
4,057 
4,190 
4,428 
Claims, Benefits and Expenses
 
 
 
Net incurred claims and benefits
2,296 
2,175 
2,420 
Policyholders' dividends
8 
14 
9 
Amortization of deferred acquisition costs
725 
736 
775 
Other insurance related expenses
395 
424 
435 
Other expenses
53 
55 
77 
Total claims, benefits and expenses
3,477 
3,404 
3,716 
Operating income (loss) from continuing operations before income tax
580 
786 
712 
Income tax (expense) benefit on operating income (loss)
(207)
(260)
(201)
Net operating (income) loss, after-tax, attributable to noncontrolling interests
(4)
(17)
(17)
Net operating income (loss) from continuing operations attributable to CNA
369 
509 
494 
Net realized investment gains (losses), net of participating policyholders’ interests
14 
(15)
(360)
Income tax (expense) benefit on net realized investment gains (losses)
(2)
(1)
123 
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
   
1 
1 
Net realized investment gains (losses) attributable to CNA
12 
(15)
(236)
Net income (loss) from continuing operations attributable to CNA
381 
494 
258 
Life and Group Non-Core [Member]
 
 
 
Net written premiums
577 1
573 1
583 1
Operating Revenues
 
 
 
Net earned premiums
569 
582 
595 
Net investment income
759 
715 
664 
Other revenues
13 
7 
11 
Total operating revenues
1,341 
1,304 
1,270 
Claims, Benefits and Expenses
 
 
 
Net incurred claims and benefits
1,526 
1,275 
1,084 
Policyholders' dividends
8 
4 
5 
Amortization of deferred acquisition costs
22 
20 
18 
Other insurance related expenses
143 
180 
183 
Other expenses
19 
2 
69 
Total claims, benefits and expenses
1,718 
1,481 
1,359 
Operating income (loss) from continuing operations before income tax
(377)
(177)
(89)
Income tax (expense) benefit on operating income (loss)
169 
90 
73 
Net operating (income) loss, after-tax, attributable to noncontrolling interests
   
   
   
Net operating income (loss) from continuing operations attributable to CNA
(208)
(87)
(16)
Net realized investment gains (losses), net of participating policyholders’ interests
(7)
53 
(235)
Income tax (expense) benefit on net realized investment gains (losses)
2 
(20)
82 
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
   
   
   
Net realized investment gains (losses) attributable to CNA
(5)
33 
(153)
Net income (loss) from continuing operations attributable to CNA
(213)
(54)
(169)
Corporate and Other Non-Core [Member]
 
 
 
Net written premiums
2 1
2 1
1 1
Operating Revenues
 
 
 
Net earned premiums
1 
1 
   
Net investment income
32 
137 
195 
Other revenues
6 
8 
10 
Total operating revenues
39 
146 
205 
Claims, Benefits and Expenses
 
 
 
Net incurred claims and benefits
(3)
58 
227 
Policyholders' dividends
   
   
   
Amortization of deferred acquisition costs
   
   
   
Other insurance related expenses
6 
10 
3 
Other expenses
170 
681 
119 
Total claims, benefits and expenses
173 
749 
349 
Operating income (loss) from continuing operations before income tax
(134)
(603)
(144)
Income tax (expense) benefit on operating income (loss)
68 
216 
57 
Net operating (income) loss, after-tax, attributable to noncontrolling interests
   
   
   
Net operating income (loss) from continuing operations attributable to CNA
(66)
(387)
(87)
Net realized investment gains (losses), net of participating policyholders’ interests
(6)
18 
(76)
Income tax (expense) benefit on net realized investment gains (losses)
3 
(5)
27 
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
   
   
   
Net realized investment gains (losses) attributable to CNA
(3)
13 
(49)
Net income (loss) from continuing operations attributable to CNA
(69)
(374)
(136)
Eliminations [Member]
 
 
 
Net written premiums
(3)1
(3)1
(3)1
Operating Revenues
 
 
 
Net earned premiums
(3)
(3)
(3)
Net investment income
   
   
   
Other revenues
   
   
   
Total operating revenues
(3)
(3)
(3)
Claims, Benefits and Expenses
 
 
 
Net incurred claims and benefits
   
   
   
Policyholders' dividends
   
   
   
Amortization of deferred acquisition costs
   
   
   
Other insurance related expenses
(3)
(3)
(3)
Other expenses
   
   
   
Total claims, benefits and expenses
(3)
(3)
(3)
Operating income (loss) from continuing operations before income tax
   
   
   
Income tax (expense) benefit on operating income (loss)
   
   
   
Net operating (income) loss, after-tax, attributable to noncontrolling interests
   
   
   
Net operating income (loss) from continuing operations attributable to CNA
   
   
   
Net realized investment gains (losses), net of participating policyholders’ interests
   
   
   
Income tax (expense) benefit on net realized investment gains (losses)
   
   
   
Net realized investment (gains) losses, after-tax, attributable to noncontrolling interests
   
   
   
Net realized investment gains (losses) attributable to CNA
   
   
   
Net income (loss) from continuing operations attributable to CNA
   
   
   
Business Segments (Balance Sheet Information) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Reinsurance receivables
$ 6,092 
$ 7,204 
Insurance receivables
1,726 
1,717 
Deferred acquisition costs
658 
1,079 
Insurance reserves
 
 
Claim and claim adjustment expenses
24,303 
25,496 
Unearned premiums
3,250 
3,203 
Future policy benefits
9,810 
8,718 
Policyholders’ funds
191 
173 
CNA Specialty [Member]
 
 
Reinsurance receivables
852 
906 
Insurance receivables
670 
654 
Deferred acquisition costs
347 
330 
Insurance reserves
 
 
Claim and claim adjustment expenses
6,840 
6,793 
Unearned premiums
1,629 
1,543 
Future policy benefits
   
   
Policyholders’ funds
15 
16 
CNA Commercial [Member]
 
 
Reinsurance receivables
1,188 
1,973 
Insurance receivables
1,047 
1,050 
Deferred acquisition costs
311 
315 
Insurance reserves
 
 
Claim and claim adjustment expenses
11,509 
12,522 
Unearned premiums
1,480 
1,526 
Future policy benefits
   
   
Policyholders’ funds
10 
13 
Life and Group Non-Core [Member]
 
 
Reinsurance receivables
1,375 
1,502 
Insurance receivables
8 
9 
Deferred acquisition costs
   
434 
Insurance reserves
 
 
Claim and claim adjustment expenses
2,825 
2,739 
Unearned premiums
141 
132 
Future policy benefits
9,810 
8,718 
Policyholders’ funds
166 
144 
Corporate and Other Non-Core [Member]
 
 
Reinsurance receivables
2,677 
2,823 
Insurance receivables
1 
4 
Deferred acquisition costs
   
   
Insurance reserves
 
 
Claim and claim adjustment expenses
3,129 
3,442 
Unearned premiums
   
2 
Future policy benefits
   
   
Policyholders’ funds
   
   
Eliminations [Member]
 
 
Reinsurance receivables
   
   
Insurance receivables
   
   
Deferred acquisition costs
   
   
Insurance reserves
 
 
Claim and claim adjustment expenses
   
   
Unearned premiums
   
   
Future policy benefits
   
   
Policyholders’ funds
   
   
Business Segments (Revenues by Line of Business) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Revenues
$ 2,259 
$ 2,175 
$ 2,198 
$ 2,315 
$ 2,298 
$ 2,363 
$ 2,233 
$ 2,315 
$ 8,947 
$ 9,209 
$ 8,472 
CNA Specialty [Domain]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
3,512 
3,516 
3,243 
International - Specialty [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
210 
199 
171 
Professional & Management Liability [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
2,541 
2,551 
2,339 
Surety [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
472 
475 
474 
Warranty & Alternative Risks [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
289 
291 
259 
CNA Commercial [Domain]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
4,071 
4,175 
4,068 
CNA Select Risk [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
272 
261 
210 
Commercial Insurance [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
2,681 
2,851 
2,692 
International - Commercial [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
537 
499 
617 
Small Business [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
581 
564 
549 
Life & Group Non-Core [Domain]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
1,334 
1,357 
1,035 
Health [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
1,093 
1,100 
811 
Life & Annuity [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
229 
249 
211 
Other - Life & Group [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
12 
8 
13 
Corporate and Other Non-Core [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
33 
164 
129 
Eliminations [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
$ (3)
$ (3)
$ (3)
IT Transformation Costs by Segment (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2010
IT transformation cost
$ 36 
CNA Specialty [Member]
 
IT transformation cost
8 
CNA Commercial [Member]
 
IT transformation cost
15 
Life and Group Non-Core [Member]
 
IT transformation cost
10 
Corporate and Other Non-Core [Member]
 
IT transformation cost
$ 3 
IT Transformation Costs by Segment Narrative (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2010
Total expected costs of the program
$ 37 
Total costs of the program incurred in 2010
$ 36 
Quarterly Financial Data (Unaudited) (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Dec. 31, 2011
Loss recognition on unlocking actuarial assumptions related to payout annuity contracts
$ 115 
Quarterly Financial Data (Unaudited) (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Revenues
$ 2,259 
$ 2,175 
$ 2,198 
$ 2,315 
$ 2,298 
$ 2,363 
$ 2,233 
$ 2,315 
$ 8,947 
$ 9,209 
$ 8,472 
Income (loss) from continuing operations
191 
75 
132 
233 
326 
(103)
301 
255 
631 
779 
483 
Income (loss) from discontinued operations
   
   
   
(1)
   
(22)
1 
   
(1)
(21)
(2)
Net (income) loss attributable to noncontrolling interests
(1)
   
(6)
(9)
(24)
(15)
(19)
(10)
(16)
(68)
(62)
Net income (loss) attributable to CNA
$ 190 
$ 75 
$ 126 
$ 223 
$ 302 
$ (140)
$ 283 
$ 245 
$ 614 
$ 690 
$ 419 
Basic and Diluted Earnings (Loss) Per Share
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to CNA common stockholders
$ 0.70 
$ 0.28 
$ 0.47 
$ 0.83 
$ 1.09 
$ (0.51)
$ 0.96 
$ 0.82 
$ 2.28 
$ 2.36 
$ 1.11 
Income (loss) from discontinued operations attributable to CNA common stockholders
   
   
   
   
   
$ (0.08)
   
   
   
$ (0.08)
$ (0.01)
Basic and diluted earnings (loss) per share attributable to CNA common stockholders
$ 0.70 
$ 0.28 
$ 0.47 
$ 0.83 
$ 1.09 
$ (0.59)
$ 0.96 
$ 0.82 
$ 2.28 
$ 2.28 
$ 1.10 
Related Party Transactions Narrative (Details) (Loews [Member], USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Loews [Member]
 
 
 
Amounts reimbursed to Loews for services provided to the Company
$ 38 
$ 38 
$ 33 
Amounts earned from Loews for insurance premiums
$ 2 
$ 2 
$ 2 
Schedule II. Condensed Financial Information of Registrant (Parent Company) (Schedule of Condensed Financial Information of Registrant, Statements of Operations) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Revenues
 
 
 
 
 
 
 
 
 
 
 
Other revenues
 
 
 
 
 
 
 
 
$ 294 
$ 292 
$ 288 
Total revenues
2,259 
2,175 
2,198 
2,315 
2,298 
2,363 
2,233 
2,315 
8,947 
9,209 
8,472 
Expenses
 
 
 
 
 
 
 
 
 
 
 
Interest
 
 
 
 
 
 
 
 
175 
157 
128 
Income tax (expense) benefit
 
 
 
 
 
 
 
 
(246)
(333)
(57)
Net income (loss)
190 
75 
126 
223 
302 
(140)
283 
245 
614 
690 
419 
Parent Company [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
Net Investment Income
 
 
 
 
 
 
 
 
1 
4 
3 
Net realized investment gains (losses)
 
 
 
 
 
 
 
 
(9)
(1)
8 
Other revenues
 
 
 
 
 
 
 
 
40 
96 
101 
Total revenues
 
 
 
 
 
 
 
 
32 
99 
112 
Expenses
 
 
 
 
 
 
 
 
 
 
 
Administrative and general
 
 
 
 
 
 
 
 
3 
5 
2 
Interest
 
 
 
 
 
 
 
 
167 
148 
116 
Total expenses
 
 
 
 
 
 
 
 
170 
153 
118 
Gain (loss) from operations before income taxes and equity in net income (loss) of subsidiaries
 
 
 
 
 
 
 
 
(138)
(54)
(6)
Income tax (expense) benefit
 
 
 
 
 
 
 
 
46 
19 
2 
Gain (loss) before equity in net income (loss) of subsidiaries
 
 
 
 
 
 
 
 
(92)
(35)
(4)
Equity in net income (loss) of subsidiaries
 
 
 
 
 
 
 
 
706 
725 
423 
Net income (loss)
 
 
 
 
 
 
 
 
$ 614 
$ 690 
$ 419 
Schedule II. Condensed Financial Information of Registrant (Parent Company) (Schedule of Condensed Financial Information of Registrant, Balance Sheets) (Details) (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Assets
 
 
Fixed maturity securities available-for-sale, at fair value
$ 39,931 
$ 37,571 
Short term investments
1,641 
2,215 
Other assets
779 
868 
Total assets
55,179 
55,331 
Liabilities
 
 
Short term debt
83 
400 
Long term debt
2,525 
2,251 
Other liabilities
2,975 
3,056 
Total liabilities
43,622 
43,807 
Equity
 
 
Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 269,274,900 and 269,139,198 shares outstanding)
683 
683 
Additional paid-in capital
2,146 
2,200 
Retained earnings
8,382 
7,876 
Accumulated other comprehensive income (loss)
470 
326 
Treasury stock (3,765,343 and 3,901,045 shares), at cost
(102)
(105)
Notes receivable for the issuance of common stock
(22)
(26)
Total equity
11,557 
10,954 
Balance Sheet Parenthetical
 
 
Common stock, par value
$ 2.50 
$ 2.50 
Common stock, shares authorized
500,000,000 
500,000,000 
Common stock, shares issued
273,040,243 
273,040,243 
Common stock, shares outstanding
269,274,900 
269,139,198 
Treasury stock, shares
3,765,343 
3,901,045 
Parent Company [Member]
 
 
Assets
 
 
Investment in subsidiaries
13,564 
12,780 
Fixed maturity securities available-for-sale, at fair value
2 
3 
Short term investments
292 
215 
Amounts due from subsidiaries
   
11 
Surplus note due from subsidiary
250 
500 
Other assets
18 
16 
Total assets
14,126 
13,525 
Liabilities
 
 
Short term debt
3 
399 
Long term debt
2,525 
2,131 
Other liabilities
41 
41 
Total liabilities
2,569 
2,571 
Equity
 
 
Common stock ($2.50 par value; 500,000,000 shares authorized; 273,040,243 shares issued; 269,274,900 and 269,139,198 shares outstanding)
683 
683 
Additional paid-in capital
2,146 
2,200 
Retained earnings
8,382 
7,876 
Accumulated other comprehensive income (loss)
470 
326 
Treasury stock (3,765,343 and 3,901,045 shares), at cost
(102)
(105)
Notes receivable for the issuance of common stock
(22)
(26)
Total equity
11,557 
10,954 
Total liabilities and equity
14,126 
13,525 
Balance Sheet Parenthetical
 
 
Marketable securities fixed maturities available-for-sale at amortized cost basis
$ 2 
$ 3 
Common stock, par value
$ 2.50 
$ 2.50 
Common stock, shares authorized
500,000,000 
500,000,000 
Common stock, shares issued
273,040,243 
273,040,243 
Common stock, shares outstanding
269,274,900 
269,139,198 
Treasury stock, shares
3,765,343 
3,901,045 
Schedule II. Condensed Financial Information of Registrant (Parent Company) (Schedule of Condensed Financial Information of Registrant, Statements of Cash Flows) (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Net Cash Provided by (Used in) Operating Activities [Abstract]
 
 
 
Net income (loss)
$ 614 
$ 690 
$ 419 
Adjustments to reconcile net income (loss) to net cash flows provided (used) by operating activities:
 
 
 
Other, net
10 
5 
3 
Total adjustments
1,074 
(757)
800 
Net cash flows provided (used) by operating activities-total
1,702 
(89)
1,258 
Cash Flows from Investing Activities
 
 
 
Change in short term investments
566 
1,629 
(327)
Other, net
3 
7 
(2)
Net cash flows provided (used) by investing activities-total
(1,060)
767 
(1,093)
Cash Flows from Financing Activities
 
 
 
Dividends paid to common stockholders
(108)
   
   
Dividends paid to Loews Corporation for 2008 Senior Preferred
   
(76)
(122)
Payment to redeem 2008 Senior Preferred
   
(1,000)
(250)
Proceeds from the issuance of debt
396 
495 
350 
Repayment of debt
(451)
(150)
(100)
Stock options exercised
2 
11 
1 
Other, net
(8)
(22)
1 
Net cash flows provided (used) by financing activities-total
(644)
(742)
(120)
Net change in cash
(2)
(63)
55 
Cash, beginning of year
77 
140 
85 
Cash, end of year
75 
77 
140 
Parent Company [Member]
 
 
 
Net Cash Provided by (Used in) Operating Activities [Abstract]
 
 
 
Net income (loss)
614 
690 
419 
Adjustments to reconcile net income (loss) to net cash flows provided (used) by operating activities:
 
 
 
Equity in net (income) loss of subsidiaries
(706)
(725)
(423)
Dividends received from subsidiaries
   
1 
   
Net realized investment (gains) losses
9 
1 
(8)
Other, net
55 
85 
(21)
Total adjustments
(642)
(638)
(452)
Net cash flows provided (used) by operating activities-total
(28)
52 
(33)
Cash Flows from Investing Activities
 
 
 
Proceeds from fixed maturity securities
1 
(2)
12 
Change in short term investments
(77)
181 
145 
Capital contributions to subsidiaries
(38)
(6)
(3)
Return of capital from subsidiaries
6 
   
   
Repayment of surplus note by subsidiary
250 
500 
   
Other, net
1 
   
(12)
Net cash flows provided (used) by investing activities-total
143 
673 
142 
Cash Flows from Financing Activities
 
 
 
Dividends paid to common stockholders
(108)
   
   
Dividends paid to Loews Corporation for 2008 Senior Preferred
   
(76)
(122)
Payment to redeem 2008 Senior Preferred
   
(1,000)
(250)
Proceeds from the issuance of debt
396 
495 
350 
Repayment of debt
(409)
(150)
(100)
Stock options exercised
5 
3 
1 
Other, net
1 
3 
12 
Net cash flows provided (used) by financing activities-total
(115)
(725)
(109)
Net change in cash
   
   
   
Cash, beginning of year
   
   
   
Cash, end of year
   
   
   
Schedule II. Condensed Financial Information of Registrant (Parent Company) (Schedule II. Condensed Financial Information of Registrant (Narrative)) (Details) (USD $)
12 Months Ended 12 Months Ended 11 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Parent Company [Member]
Dec. 31, 2010
Parent Company [Member]
Feb. 1, 2011
Senior notes 5.750%, face amount $400, due August 15, 2021 [Member]
Dec. 31, 2011
Extinguished senior notes, due August 15, 2011 [Member]
Feb. 1, 2011
Extinguished senior notes, due August 15, 2011 [Member]
Percentage of CNAF common stock outstanding currently held by Loews
 
 
90.00% 
 
 
 
 
Senior notes issued
 
 
 
 
$ 400,000,000 
 
 
Stated interest rate on senior notes
 
 
 
 
5.75% 
 
6.00% 
Redemption of debt
 
 
 
 
 
400,000,000 
 
Line of credit facility, initiation date
August 1, 2007 
 
 
 
 
 
 
Line of credit facility, expiration date
August 1, 2012 
 
 
 
 
 
 
Maximum borrowing capacity under revolving credit facilities
250,000,000 
 
 
 
 
 
 
Debt instrument, description of variable rate basis
London Interbank Offered Rate (LIBOR) plus the Company's credit risk spread 
 
London Interbank Offered Rate (LIBOR) plus CNAF’s credit risk spread 
 
 
 
 
Limit available for credit agreement
250,000,000 
 
 
 
 
 
 
Maximum exposure indebtedness of subsidiaries
 
 
10,000,000 
 
 
 
 
Aggregate amount of quantifiable indemnification agreements in effect for sales of business entities, assets and third party loans
764,000,000 
 
258,000,000 
 
 
 
 
Recorded liabilities related to indemnification agreements
15,000,000 
16,000,000 
8,000,000 
9,000,000 
 
 
 
Maximum exposure SSAs
 
 
$ 1,900,000,000 
 
 
 
 
Schedule II. Condensed Financial Information of Registrant (Parent Company) (Schedule of Long Term Debt of Registrant) (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Short term debt:
 
 
Other debt
$ 13 
$ 1 
Total short term debt
83 
400 
Long term debt:
 
 
Debenture, 7.250%, face amount $243, due November 15, 2023
241 
241 
Other long-term debt
   
23 
Total long term debt
2,525 
2,251 
Total
2,608 
2,651 
Parent Company [Member]
 
 
Short term debt:
 
 
Other debt
3 
   
Total short term debt
3 
399 
Long term debt:
 
 
Debenture, 7.250%, face amount $243, due November 15, 2023
241 
241 
Other long-term debt
   
3 
Total long term debt
2,525 
2,131 
Total
2,528 
2,530 
Senior notes 6.000%, face amount of $400, due August 15, 2011 [Member]
 
 
Short term debt:
 
 
Senior notes, current
   
399 
Senior notes 6.000%, face amount of $400, due August 15, 2011 [Member] |
Parent Company [Member]
 
 
Short term debt:
 
 
Senior notes, current
   
399 
Senior notes 5.850%, face amount $549, due December 15, 2014 [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
548 
548 
Senior notes 5.850%, face amount $549, due December 15, 2014 [Member] |
Parent Company [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
548 
548 
Senior notes 6.500%, face amount of $350, due August 15, 2016 [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
348 
347 
Senior notes 6.500%, face amount of $350, due August 15, 2016 [Member] |
Parent Company [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
348 
347 
Senior notes 6.950%, face amount $150, due January 15, 2018 [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
149 
149 
Senior notes 6.950%, face amount $150, due January 15, 2018 [Member] |
Parent Company [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
149 
149 
Senior notes 7.350%, face amount $350, due November 15, 2019 [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
348 
348 
Senior notes 7.350%, face amount $350, due November 15, 2019 [Member] |
Parent Company [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
348 
348 
Senior notes 5.875%, face amount $500, due August 15, 2020 [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
495 
495 
Senior notes 5.875%, face amount $500, due August 15, 2020 [Member] |
Parent Company [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
495 
495 
Senior notes 5.750%, face amount $400, due August 15, 2021 [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
396 
   
Senior notes 5.750%, face amount $400, due August 15, 2021 [Member] |
Parent Company [Member]
 
 
Long term debt:
 
 
Senior notes, noncurrent
$ 396 
    
Schedule V. Valuation and Qualifying Accounts (Schedule of valuation and qualifying accounts) (Details) (Allowance for doubtful accounts, insurance and reinsurance receivables [Member], USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Allowance for doubtful accounts, insurance and reinsurance receivables [Member]
 
 
 
Movement in valuation allowances and reserves [Roll Forward]
 
 
 
Balance at beginning of period
$ 285 
$ 553 
$ 587 
Charged to costs and expenses
(55)
(232)
4 
Charged to other accounts
   1
(1)1
(1)1
Deductions
(27)
(35)
(37)
Balance at end of period
$ 203 
$ 285 
$ 553 
Schedule VI. Supplemental Information Concerning Property and Casualty Insurance Operations (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Incurred claim and claim adjustment expenses related to current year
$ 4,904 
$ 4,741 
$ 4,793 
Incurred claim and claim adjustment expenses related to prior years
(429)
(544)
(240)
Consolidated Property and Casualty Insurance Entity [Member]
 
 
 
Deferred acquisition costs
658 
1,079 
 
Reserves for unpaid claim and claim adjustment expenses
24,228 
25,412 
 
Discount deducted from claim and claim adjustment expense reserves above (based on interest rates ranging from 3.0% to 8.0%)
1,569 
1,552 
 
Unearned Premiums
3,250 
3,203 
 
Net written premiums
6,798 
6,471 
6,713 
Net earned premiums
6,603 
6,514 
6,720 
Net investment income
1,845 
2,097 
2,110 
Incurred claim and claim adjustment expenses related to current year
4,901 
4,737 
4,788 
Incurred claim and claim adjustment expenses related to prior years
(429)
(545)
(241)
Amortization of deferred acquisition costs
1,410 
1,387 
1,417 
Paid claim and claim adjustment expenses
$ 4,499 
$ 4,667 
$ 4,841 
Minimum interest rate in discount range
3.00% 
 
 
Maximum interest rate in discount range
8.00%