CNA

CNA FINANCIAL CORP

NYSE · FINANCIALS · FIRE, MARINE & CASUALTY INSURANCE

48.47

+0.07 +0.14%

USD · close Oct 26

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MKT CAP $13.1BP/E 10.7DIV YIELD 8.00%FCF YIELD 17.19%REV TTM $15.2B +3.4%NET INCOME $1.2B +41.0%NET DEBT $2.6B52W 41.90 – 55.31SEC XBRL · TTM TO Invalid Date

How CNA rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

48%

of sentences unchanged

Added

455

new sentences

Dropped

521

sentences removed

Length

−2,626

words, now 53,125

New in FY2025

Long-Term Care Reserves Future policy benefits reserves for our long-term care policies are based on certain actuarial assumptions, including morbidity, persistency, premium rate actions and expenses.
The key assumptions fundamental to the reserving process often vary for different reserve groups and accident or policy years.
Some of these assumptions are explicit and required by specific methods, while most are implicit and cannot be precisely quantified.
An example of an explicit assumption is the pattern used in the paid or incurred development method.
However, this pattern is based on several implicit assumptions, such as the impact of inflation on claim costs and the rate at which claim professionals make claim payments and close claims.
Consequently, the effect of changes in assumptions on reserve estimates typically cannot be specifically quantified, and these changes cannot be tracked over time.
To indicate the variability associated with our recorded reserves, the following discussion provides a sensitivity analysis showing the approximate estimated impact of variations in significant factors affecting our reserve estimates for particular types of business.
These significant factors are those we believe could most likely materially affect the reserves.
This discussion covers the major types of business for which we believe a material deviation in our reserves is reasonably possible.
There can be no assurance that actual experience will be consistent with the current assumptions or with the variation indicated in the discussion.
Additionally, there can be no assurance that other factors and assumptions will not have a material impact on our reserves.
The areas for which we believe a significant deviation to our recorded reserves is reasonably possible are (i) medical professional liability; (ii) other professional liability and management liability; (iii) general liability; (iv) workers' compensation, and (v) commercial automobile liability.
Medical professional liability, other professional liability and management liability, and general liability all have long development patterns with relatively immature paid data.
This requires considerable judgment regarding development to ultimate losses and inherent risks due to economic, social and medical inflation, as well as legal fees, judicial decisions, legislative changes and other factors.
The following table reflects the impact on our recorded reserves (which could be favorable or unfavorable) of changing the ultimate losses by one percentage point in the long-tail development: As of December 31, 2025 Impact Recorded Reserve (In billions) Amount (+/-) (In millions) Percent (+/-) Medical Professional Liability $ 1.5 $ 120 8.0 % Other Professional Liability and Management Liability 4.1 240 6.0 General Liability 4.8 280 6.0 Workers' compensation also requires considerable judgment given its long development pattern and the impacts of medical inflation, the cost of wage replacement, expected claimant lifetimes, judicial decisions, legislative changes and other factors.
Adjusting the ultimate losses by one percentage point change in the long-tail development would increase or decrease the recorded reserve of $3.5 billion as of December 31, 2025 by approximately $240 million, or 7% of the recorded reserves.
Commercial automobile liability is also considered long-tail; however, the frequency of claims and severity of loss assumptions for the latest few accident years are significantly influenced by social and economic inflation, driving habits and attorney involvement.
If these trends accelerate beyond expectations, there may be significant deviation in our recorded reserves.
Our recorded reserves for commercial automobile liability were $1.6 billion as of December 31, 2025.
The following table reflects the impact on our recorded reserves of increasing the frequency and severity assumptions in the ultimate commercial automobile liability losses on the three most recent accident years: (In millions, except frequency and severity assumptions) Severity Frequency 2.5% 5.0% 7.5% —% $ 50 $ 90 $ 140 1.0% 70 110 160 2.0% 90 130 180 Given the factors described above, it is not possible to quantify precisely the ultimate exposure represented by claims and related litigation.
During the annual review, historical policyholder morbidity, persistency, premium rate actions and expense experience is reviewed and compared to the current best estimate actuarial assumption set for potential revision.
The actuarial assumptions related to future policy benefit reserves for long-term care policies that management believes are subject to the most variability are morbidity, persistency and premium rate actions.
Premium rate actions are generally subject to regulatory approval, and therefore the exact timing and size of the approved rate increases are unknown.
The impact of each sensitivity is discrete and does not reflect the impact one factor may have on another or the mitigating impact from management actions, which may include additional premium rate actions.
Estimated reduction to pretax income Hypothetical revisions (In millions) Morbidity: 2.5% increase in morbidity $ 300 5% increase in morbidity 620 Persistency: 5% decrease in active life mortality and lapse $ 180 10% decrease in active life mortality and lapse 350 Premium Rate Actions: 25% decrease in anticipated future premium rate increases $ 30 50% decrease in anticipated future premium rate increases 50 As part of the annual reserve review completed in the third quarter of each year, statutory long-term care reserve adequacy is evaluated via premium deficiency testing, by comparing carried statutory reserves with our best estimate reserves, which incorporates best estimate discount rate and liability assumptions in its determination.
As of September 30, 2025, statutory long-term care margin increased to $1.5 billion from $1.4 billion.
We reported catastrophe losses, net of reinsurance, of $240 million and $358 million for the years ended December 31, 2025 and 2024.
Catastrophe losses for the years ended December 31, 2025 and 2024 were driven by severe weather related events, including $64 million for the California wildfires in 2025 and $71 million for Hurricane Helene and $33 million for Hurricane Milton in 2024.
The following discussion summarizes our most significant catastrophe reinsurance coverage at January 1, 2026.
The treaty has a term of June 1, 2025 to June 1, 2026 and provides coverage for the accumulation of covered losses from catastrophe occurrences above our per occurrence retention of $275 million up to $1.4 billion for all losses.
Losses stemming from terrorism events are covered unless they are due to a nuclear, biological, chemical or radiation event.
Group Workers' Compensation Treaty We also purchased corporate workers' compensation catastrophe excess-of-loss treaty reinsurance for the period January 1, 2026 to January 1, 2027 providing $275 million of coverage for the accumulation of covered losses related to natural catastrophes above our per occurrence retention of $25 million.
Terrorism Risk Insurance Program Reauthorization Act of 2019 Our principal reinsurance protection against large-scale terrorist attacks, including nuclear, biological, chemical or radiation events, is the coverage currently provided through TRIPRA which runs through the end of 2027.
TRIPRA provides a U.S. government backstop for insurance-related losses resulting from any “act of terrorism,” which is certified by the Secretary of Treasury in consultation with the Secretary of Homeland Security and the U.S.
Attorney General for losses that exceed a threshold of $200 million industry-wide for the calendar year 2026.
Under the current provisions of the program, in 2026, the federal government will reimburse 80% of our covered losses in excess of our applicable deductible up to a total industry program cap of $100 billion.
Based on 2025 earned premiums, our estimated deductible under the program is $1.4 billion for 2026.
Years ended December 31 (In millions) 2025 2024 Operating Revenues Net earned premiums $ 10,900 $ 10,211 Net investment income 2,557 2,497 Non-insurance warranty revenue 1,577 1,609 Other revenues 36 34 Total operating revenues 15,070 14,351 Claims, Benefits and Expenses Net incurred claims and benefits (re-measurement loss of $104 and $125) 8,258 7,704 Policyholders' dividends 36 34 Amortization of deferred acquisition costs 1,898 1,798 Non-insurance warranty expense 1,526 1,547 Insurance related administrative expenses 1,349 1,275 Interest expense 135 133 Other expenses 167 197 Total claims, benefits and expenses 13,369 12,688 Income tax expense on core income (359) (347) Core income 1,342 1,316 Net investment losses (81) (81) Income tax benefit on net investment losses 17 17 Net investment losses, after tax (64) (64) Pension settlement transaction losses — (371) Income tax benefit on pension settlement transaction losses — 78 Pension settlement transaction losses, after tax — (293) Net income $ 1,278 $ 959 2025 Compared with 2024 Net income was $1,278 million for 2025 as compared with $959 million for 2024, which included a $293 million after-tax loss from pension settlement transactions.
Core income increased $26 million in 2025 as compared with 2024.
Core income for our Property & Casualty Operations increased $115 million driven by improved current accident year underwriting results and higher net investment income partially offset by unfavorable net prior period development.

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Gone since FY2024

Long-Term Care Reserves Future policy benefits reserves for our long-term care policies are based on certain actuarial assumptions, including morbidity, persistency, anticipated future premium rate increases and expenses.
In addition, we may not receive regulatory approval for the level of premium rate increases we request.
Reinsurance and Insurance Receivables Exposure exists with respect to the collectibility of ceded property and casualty and life reinsurance to the extent that any reinsurer is unable to meet its obligations or disputes the liabilities we have ceded under reinsurance agreements.
An allowance for uncollectible reinsurance is recorded on the basis of periodic evaluations of balances due from reinsurers, reinsurer financial strength rating and solvency, industry experience and current and forecast economic conditions.
Further information on our reinsurance receivables is in Note H to the Consolidated Financial Statements included under Item 8.
Additionally, exposure exists with respect to the collectibility of amounts due from policyholders related to insurance contracts, including amounts due from insureds under high deductible policies and retrospectively rated policies.
An allowance for uncollectible insurance receivables is recorded on the basis of periodic evaluations of balances due from insureds, currently as well as in the future, historical business default data, management's experience and current and forecast economic conditions.
If actual experience differs from the estimates made by management in determining the allowances for uncollectible reinsurance and insurance receivables, net receivables as reflected on our Consolidated Balance Sheets may not be collected.
Further information on our process for determining the allowances for uncollectible reinsurance and insurance receivables is in Note A to the Consolidated Financial Statements included under Item 8.
The key assumptions fundamental to the reserving process are often different for various reserve groups and accident or policy years.
Some of these assumptions are explicit assumptions that are required of a particular method, but most of the assumptions are implicit and cannot be precisely quantified.
An example of an explicit assumption is the pattern employed in the paid development method.
However, the assumed pattern is itself based on several implicit assumptions such as the impact of inflation on medical costs and the rate at which claim professionals close claims.
As a result, the effect on reserve estimates of a particular change in assumptions typically cannot be specifically quantified, and changes in these assumptions cannot be tracked over time.
In order to provide an indication of the variability associated with our net reserves, the following discussion provides a sensitivity analysis that shows the approximate estimated impact of variations in significant factors affecting our reserve estimates for particular types of business.
These significant factors are the ones that we believe could most likely materially affect the reserves.
This discussion covers the major types of business for which we believe a material deviation to our reserves is reasonably possible.
There can be no assurance that actual experience will be consistent with the current assumptions or with the variation indicated by the discussion.
In addition, there can be no assurance that other factors and assumptions will not have a material impact on our reserves.
The areas for which we believe a significant deviation to our net reserves is reasonably possible are (i) professional liability, management liability (including medical professional liability) and surety products; (ii) workers' compensation; (iii) general liability, and (iv) commercial auto liability.
Professional liability, management liability and surety products include US professional liability coverages provided to various professional firms, including architects, real estate agents, small and mid-sized accounting firms, law firms and other professional firms.
They also include directors and officers (D&O), errors and omissions (E&O), employment practices, fiduciary, fidelity, cyber and surety coverages, and medical liability.
The most significant factor affecting reserve estimates for these liability coverages is claim severity.
Claim severity is driven by the cost of medical care, the cost of wage replacement, legal fees, judicial decisions, legislative changes and other factors.
Underwriting and claim handling decisions, such as the classes of business written and individual claim settlement decisions, can also affect claim severity.
If the estimated claim severity increases by 9%, we estimate that net reserves would increase by approximately $500 million.
If the estimated claim severity decreases by 3%, we estimate that net reserves would decrease by approximately $150 million.
Our net reserves for these products were approximately $5.8 billion as of December 31, 2024.
For workers' compensation, since many years will pass from the time the business is written until all claim payments have been made, the most significant factor affecting workers' compensation reserve estimates is claim cost inflation on claim payments.
Workers' compensation claim cost inflation is driven by the cost of medical care, the cost of wage replacement, expected claimant lifetimes, judicial decisions, legislative changes and other factors.
If estimated workers' compensation claim cost inflation increases by 100 basis points for the entire period over which claim payments will be made, we estimate that our net reserves would increase by approximately $250 million.
If estimated workers' compensation claim cost inflation decreases by 100 basis points for the entire period over which claim payments will be made, we estimate that our net reserves would decrease by approximately $250 million.
Our net reserves for workers' compensation were approximately $3.5 billion as of December 31, 2024.
For general liability, the most significant factor affecting reserve estimates is claim severity.
Claim severity is driven by changes in the cost of repairing or replacing property, the cost of medical care, the cost of wage replacement, judicial decisions, legislation and other factors.
If the estimated claim severity for general liability increases by 6%, we estimate that our net reserves would increase by approximately $300 million.
If the estimated claim severity for general liability decreases by 3%, we estimate that our net reserves would decrease by approximately $150 million.
Our net reserves for general liability were approximately $4.9 billion as of December 31, 2024.
Commercial auto liability is also considered long-tail; however, both the frequency of claims and severity of loss assumptions for the latest few accident years are significantly influenced by social inflation, economic inflation, driving habits and attorney involvement.
If these trends accelerate beyond expectations, there may be significant deviation in our net reserves.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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