CNA Financial Corporation

02/10/2026 | Press release | Distributed by Public on 02/10/2026 07:13

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
2024 Compared with 2023
This section of this Form 10-K generally discusses 2025 and 2024 results and year-to-year comparisons between 2025 and 2024. A discussion of changes in our results of operations from 2024 to 2023 has been omitted from this Form 10-K, but may be found in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Form 10-K for the year ended December 31, 2024, filed with the SEC on February 11, 2025.
Index to this MD&A
Management's discussion and analysis of financial condition and results of operations is comprised of the following sections:
Page No.
Overview
20
Critical Accounting Estimates
20
Reserves - Estimates and Uncertainties
22
Catastrophes and Related Reinsurance
28
Consolidated Operations
30
Segment Results
31
Specialty
34
Commercial
37
International
39
Life & Group
41
Corporate & Other
42
Investments
43
Net Investment Income
43
Net Investment Gains (Losses)
43
Portfolio Quality
44
Duration
45
Liquidity and Capital Resources
46
Cash Flows
46
Liquidity
46
Common Stock Dividends
47
Commitments, Contingencies and Guarantees
47
Ratings
48
Accounting Standards Updates
49
Recent Legislation
49
Forward-Looking Statements
49
OVERVIEW
The following discussion should be read in conjunction with Part I, Item 1A Risk Factors and Part II, Item 8 Financial Statements and Supplementary Data of this Form 10-K.
CRITICAL ACCOUNTING ESTIMATES
The preparation of Consolidated Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the amount of revenues and expenses reported during the period. Actual results may differ from those estimates.
Our Consolidated Financial Statements and accompanying notes have been prepared in accordance with GAAP applied on a consistent basis. We continually evaluate the accounting policies and estimates used to prepare the Consolidated Financial Statements. In general, our estimates are based on historical experience, evaluation of current trends, information from third-party professionals and various other assumptions that are believed to be reasonable under the known facts and circumstances.
The accounting estimates discussed below are considered by us to be critical to an understanding of our Consolidated Financial Statements as their application places the most significant demands on our judgment. Note A to the Consolidated Financial Statements included under Item 8 should be read in conjunction with this section to assist with obtaining an understanding of the underlying accounting policies related to these estimates. Due to the inherent uncertainties involved with these types of judgments, actual results could differ significantly from our estimates and may have a material adverse impact on our results of operations, financial condition, equity, business, and insurer financial strength and corporate debt ratings.
Insurance Reserves
Insurance reserves are established for both short and long-duration insurance contracts. Short-duration contracts are primarily related to property and casualty insurance policies where the reserving process is based on actuarial estimates of the amount of loss, including amounts for known and unknown claims. Long-duration contracts are primarily related to long-term care policies and the reserves are recorded as Future policy benefits reserves as discussed below. The reserve for unearned premiums represents the portion of premiums written related to the unexpired terms of coverage. If our recorded reserves are insufficient to cover our estimated ultimate unpaid liability, we may need to increase our insurance reserves. The reserving process is discussed in further detail in the Reserves - Estimates and Uncertainties section below.
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 adequacy of the reserves is contingent upon actual experience and our future expectations related to these key assumptions. If actual or expected future experience differs from these assumptions, the reserves may not be adequate, requiring us to increase reserves. The reserves are discounted using upper-medium grade fixed income instrument yields as of each reporting date. The reserving process is discussed in further detail in the Reserves - Estimates and Uncertainties section below.
Valuation of Investments and Impairment of Securities
Our fixed maturity and equity securities are carried at fair value on the balance sheet. Fair value represents the price that would be received in a sale of an asset in an orderly transaction between market participants on the measurement date, the determination of which may require us to make a significant number of assumptions and judgments. Securities with the greatest level of subjectivity around valuation are those that rely on inputs that are significant to the estimated fair value and that are not observable in the market or cannot be derived principally from or corroborated by observable market data. These unobservable inputs are based on assumptions consistent with what we believe other market participants would use to price such securities. Further information on our fair value measurements is in Note C to the Consolidated Financial Statements included under Item 8.
Our fixed maturity securities are subject to market declines below amortized cost that may result in the recognition of impairment losses in earnings. Factors considered in the determination of whether or not an impairment loss is recognized in earnings include a current intention or need to sell the security or an indication that a credit loss exists. Significant judgment is required in the determination of whether a credit loss has occurred for a security. We consider all available evidence when determining whether a security requires a credit allowance to be recorded, including the financial condition and expected near-term and long-term prospects of the issuer, whether the issuer is current with interest and principal payments, credit ratings on the security or changes in ratings over time, general market conditions, industry, sector or other specific factors and whether we expect to receive cash flows sufficient to recover the entire amortized cost basis of the security.
Our mortgage loan portfolio is subject to the expected credit loss model, which requires immediate recognition of estimated credit losses over the life of the asset and the presentation of the asset at the net amount expected to be collected. Significant judgment is required in the determination of estimated credit losses and any changes in our expectation of the net amount to be collected are recognized in earnings.
Further information on our process for evaluating impairments and expected credit losses is in Note A to the Consolidated Financial Statements included under Item 8.
RESERVES - ESTIMATES AND UNCERTAINTIES
The level of reserves we maintain represents our best estimate, as of a particular point in time, of what the ultimate settlement and administration of claims will cost based on our assessment of facts and circumstances known at that time. Reserves are not an exact calculation of liability but instead are complex estimates that we derive, generally utilizing a variety of actuarial reserve estimation techniques, from numerous assumptions and expectations about future events, both internal and external, many of which are highly uncertain. As noted below, we review our reserves for each segment of our business periodically, and any such review could result in the need to increase reserves in amounts which could be material and could adversely affect our results of operations, equity, business and insurer financial strength and corporate debt ratings. Further information on reserves is provided in Note E and F to the Consolidated Financial Statements included under Item 8.
Property and Casualty Claim and Claim Adjustment Expense Reserves
We maintain loss reserves to cover our estimated ultimate unpaid liability for claim and claim adjustment expenses, including the estimated cost of the claims adjudication process, for claims that have been reported but not yet settled (case reserves) and claims that have been incurred but not reported (IBNR). IBNR includes a provision for development on known cases as well as a provision for late reported incurred claims. Claim and claim adjustment expense reserves are reflected as liabilities and are included on the Consolidated Balance Sheets under the heading "Insurance Reserves." Adjustments to prior year reserve estimates, if necessary, are reflected in results of operations in the period that the need for such adjustments is determined. The carried case and IBNR reserves as of each balance sheet date are provided in the Segment Results section of this MD&A and in Note E to the Consolidated Financial Statements included under Item 8.
As discussed in the Risk Factors discussion within Item 1A, there is a risk that our recorded reserves are insufficient to cover our estimated ultimate unpaid liability for claims and claim adjustment expenses. Unforeseen emerging or potential claims and coverage issues are also difficult to predict and could materially adversely affect the adequacy of our claim and claim adjustment expense reserves and could lead to future reserve increases.
In addition, our property and casualty insurance subsidiaries also have actual and potential exposures related to A&EP claims, which could result in material losses. To mitigate the risks posed by our exposure to A&EP claims and claim adjustment expenses, we completed a transaction with NICO under which substantially all of our legacy A&EP liabilities were ceded to NICO effective January 1, 2010. See Note E to the Consolidated Financial Statements included under Item 8 for further discussion about the transaction with NICO, its impact on our results of operations and the deferred retroactive reinsurance gains and the amount of remaining reinsurance limit.
Establishing Property & Casualty Reserve Estimates
In developing claim and claim adjustment expense reserve estimates, our actuaries perform detailed reserve analyses that are staggered throughout the year. The data is organized at a reserve group level. A reserve group typically can be a line of business covering a subset of insureds such as commercial automobile liability for small or middle market customers or it can be a particular type of claim such as construction defect. Every reserve group is reviewed at least once during the year, but most are reviewed more frequently. The analyses generally review losses gross of ceded reinsurance and apply the ceded reinsurance terms to the gross estimates to establish estimates net of reinsurance. In addition to the detailed analyses, we review actual loss emergence for all products each quarter.
Most of our business can be characterized as long-tail. For long-tail business, it will generally be several years between the time the business is written and the time when all claims are settled. Our long-tail exposures include commercial automobile liability, workers' compensation, general liability, medical professional liability, other professional liability and management liability coverages, assumed reinsurance run-off and products liability. Short-tail exposures include property, commercial automobile physical damage, marine, surety and
warranty. Specialty, Commercial and International contain both long-tail and short-tail exposures. Corporate & Other contains run-off long-tail exposures.
Various methods are used to project ultimate losses for both long-tail and short-tail exposures.
The paid development method estimates ultimate losses by reviewing paid loss patterns and applying them to accident or policy years with further expected changes in paid losses. Selection of the paid loss pattern may require consideration of several factors, including the impact of economic, social and medical inflation on claim costs, the rate at which claims professionals make claim payments and close claims, the impact of judicial decisions, the impact of underwriting changes, the impact of large claim payments and other factors. Claim cost inflation itself may require evaluation of changes in the cost of repairing or replacing property, changes in the cost of medical care, changes in the cost of wage replacement, judicial decisions, legislative changes and other factors. Because this method assumes that losses are paid at a consistent rate, changes in any of these factors can affect the results. Since the method does not rely on case reserves, it is not directly influenced by changes in their adequacy.
For many reserve groups, paid loss data for recent periods may be too immature or erratic for accurate predictions. This situation often exists for long-tail exposures. In addition, changes in the factors described above may result in inconsistent payment patterns. Finally, estimating the paid loss pattern subsequent to the most mature point available in the data analyzed often involves considerable uncertainty for long-tail products such as workers' compensation.
The incurred development method is similar to the paid development method, but it uses case incurred losses instead of paid losses. Since the method uses more data (case reserves in addition to paid losses) than the paid development method, the incurred development patterns may be less variable than paid patterns. However, selection of the incurred loss pattern typically requires analysis of all of the same factors described above. In addition, the inclusion of case reserves can lead to distortions if changes in case reserving practices have taken place, and the use of case incurred losses may not eliminate the issues associated with estimating the incurred loss pattern subsequent to the most mature point available.
The loss ratio method multiplies earned premiums by an expected loss ratio to produce ultimate loss estimates for each accident or policy year. This method may be useful for immature accident or policy periods or if loss development patterns are inconsistent, losses emerge very slowly or there is relatively little loss history from which to estimate future losses. The selection of the expected loss ratio typically requires analysis of loss ratios from earlier accident or policy years or pricing studies and analysis of inflationary trends, frequency trends, rate changes, underwriting changes and other applicable factors.
The Bornhuetter-Ferguson method using paid loss is a combination of the paid development method and the loss ratio method. This method normally determines expected loss ratios similar to the approach used to estimate the expected loss ratio for the loss ratio method and typically requires analysis of the same factors described above. This method assumes that future losses will develop at the expected loss ratio level. The percent of paid loss to ultimate loss implied from the paid development method is used to determine what percentage of ultimate loss is yet to be paid. The use of the pattern from the paid development method typically requires consideration of the same factors listed in the description of the paid development method. The estimate of losses yet to be paid is added to current paid losses to estimate the ultimate loss for each year. For long-tail lines, this method will react very slowly if actual ultimate loss ratios are different from expectations due to changes not accounted for by the expected loss ratio calculation.
The Bornhuetter-Ferguson method using incurred loss is similar to the Bornhuetter-Ferguson method using paid loss except that it uses case incurred losses. The use of case incurred losses instead of paid losses can result in development patterns that are less variable than paid patterns. However, the inclusion of case reserves can lead to distortions if changes in case reserving have taken place, and the method typically requires analysis of the same factors that need to be reviewed for the loss ratio and incurred development methods.
The frequency times severity method multiplies a projected number of ultimate claims by an estimated ultimate average loss for each accident or policy year to produce ultimate loss estimates. Since projections of the ultimate number of claims are often less variable than projections of ultimate loss, this method can provide more reliable results for reserve groups where loss development patterns are inconsistent or too variable to be relied on exclusively. In addition, this method can more directly account for changes in coverage that affect the number and size of claims. However, this method can be difficult to apply to situations where very large claims or a substantial number of unusual claims result in volatile average claim sizes. Projecting the ultimate number of claims may require analysis of several factors, including the rate at which policyholders report claims to us, the impact of judicial decisions, the impact of underwriting changes and other factors. Estimating the ultimate average loss may require analysis of the impact of large losses and claim cost trends based on changes in the cost of repairing or replacing property, changes in the cost of medical care, changes in the cost of wage replacement, judicial decisions, legislative changes and other factors.
Stochastic modeling produces a range of possible outcomes based on varying assumptions related to the particular reserve group being modeled. For some reserve groups, we use models which rely on historical development patterns at an aggregate level, while other reserve groups are modeled using individual claim variability assumptions supplied by the claims department. In either case, multiple simulations using varying assumptions are run and the results are analyzed to produce a range of potential outcomes. The results will typically include a mean and percentiles of the possible reserve distribution which aid in the selection of a point estimate.
For many exposures, especially those that can be considered long-tail, a particular accident or policy year may not have a sufficient volume of paid losses to produce a statistically reliable estimate of ultimate losses. In such a case, our actuaries typically assign more weight to the incurred development method than to the paid development method. As claims continue to settle and the volume of paid loss increases, the actuaries may assign additional weight to the paid development method. For most of our products, even the incurred losses for accident or policy years that are early in the claim settlement process will not be of sufficient volume to produce a reliable estimate of ultimate losses. In these cases, we may not assign much, if any, weight to the paid and incurred development methods. We may use the loss ratio, Bornhuetter-Ferguson and/or frequency times severity methods. For short-tail exposures, the paid and incurred development methods can often be relied on sooner, primarily because our history includes a sufficient number of years to cover the entire period over which paid and incurred losses are expected to change. However, we may also use the loss ratio, Bornhuetter-Ferguson and/or frequency times severity methods for short-tail exposures.
For other more complex reserve groups where the above methods may not produce reliable indications, we use additional methods tailored to the characteristics of the specific situation.
Periodic Reserve Reviews
The reserve analyses performed by our actuaries result in point estimates. Each quarter, the results of the detailed reserve reviews are summarized and discussed with senior management to determine the best estimate of reserves. Senior management considers many factors in making this decision. Our recorded reserves reflect our best estimate as of a particular point in time based upon known facts and circumstances, consideration of the factors cited above and our judgment. The carried reserve differs from the actuarial point estimate as discussed further below.
Currently, our recorded reserves are modestly higher than the actuarial point estimate. For Commercial, Specialty and International, the difference between our reserves and the actuarial point estimate is primarily driven by uncertainty with respect to immature accident years, claim cost inflation, changes in claims handling, changes to the tort environment which may adversely affect claim costs and the effects from the economy. For Corporate & Other, the difference between our reserves and the actuarial point estimate is primarily driven by the potential tail volatility of run-off exposures.
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.
Our recorded reserves are management's best estimate. 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. As a result, we regularly review the adequacy of our reserves and reassess our reserve estimates as historical loss experience develops, additional claims are reported and settled and additional information becomes available in subsequent periods. In reviewing our reserve estimates, we make adjustments in the period that the need for such adjustments is determined. These reviews have resulted in our identification of information and trends that have caused us to change our reserves in prior periods and could lead to our identification of a need for additional material increases or decreases in claim and claim adjustment expense reserves, which could materially affect our results of operations, equity, business and insurer financial strength and corporate debt ratings positively or negatively. See discussion within Note E to the Consolidated Financial Statements included under Item 8 for additional information about reserve development and the Ratings section of this MD&A for further information regarding our financial strength and corporate debt ratings.
Life & Group Policyholder Reserves
Our Life & Group segment includes our run-off long-term care business as well as structured settlement obligations not funded by annuities related to certain property and casualty claimants. Long-term care policies may provide benefits for nursing homes, assisted living facilities and home health care subject to various daily and lifetime caps. Generally, policyholders must continue to make periodic premium payments to keep the policy in force and we have the ability to increase policy premiums, subject to state regulatory approval.
We maintain future policy benefit reserves for our long-term care policies. Future policy benefit reserves for long-term care policies relate to policyholders that are currently receiving benefits, including claims that have been incurred but are not yet reported, as well as policyholders that are not yet receiving benefits. In developing the future policy benefit reserves, our actuaries perform a reserve review on an annual basis. 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. On a quarterly basis, our actuaries perform experience studies that monitor the appropriateness of best estimate actuarial assumptions against emerging experience to assess whether any updates to those assumptions are warranted. The determination of these reserves requires management to make estimates and assumptions about expected policyholder experience over the remaining life of the policies. Since policies may be in force for several decades, these assumptions are subject to significant estimation risk. Future policy benefit reserves are discounted as discussed in Note A to the Consolidated Financial Statements included under Item 8.
In addition, claim and claim adjustment expense reserves are maintained for our structured settlement obligations. In developing the claim and claim adjustment expense reserve estimates for our structured settlement obligations, our actuaries monitor mortality and expense experience on an annual basis. Our recorded claim and claim adjustment expense reserves reflect management's best estimate after incorporating the results of the most recent reviews. Claim and claim adjustment expense reserves for structured settlement obligations are discounted as discussed in Note A to the Consolidated Financial Statements included under Item 8.
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. Morbidity is the frequency and severity of injury, illness, sickness and diseases contracted. Persistency is the percentage of policies remaining in force and can be affected by policy lapses, benefit reductions and death. Premium rate actions are generally subject to regulatory approval, and therefore the exact timing and size of the approved rate increases are unknown. As a result of this variability, our long-term care reserves may be subject to material increases if actual experience develops adversely to our expectations.
The table below summarizes the estimated pretax impact on our results of operations from various hypothetical revisions to our liability for future policyholder benefits (LFPB) reserve assumptions. We have assumed that revisions to such assumptions would occur in each policy type, age and duration within each long-term care product. 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. Although such hypothetical revisions are not currently required or anticipated, we believe they could occur based on past variances in experience and our expectations of the ranges of future experience that could reasonably occur. Any actual adjustment would be dependent on the specific policies affected and, therefore, may differ from the estimates summarized below. The estimated impacts to results of operations in the table below are after consideration of any net premium ratio impacts.
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. Statutory margin is the excess of carried reserves over best estimate reserves. As of September 30, 2025, statutory long-term care margin increased to $1.5 billion from $1.4 billion.
CATASTROPHES AND RELATED REINSURANCE
Various events can cause catastrophe losses. These events can be natural or man-made, including hurricanes, tornadoes, windstorms, earthquakes, hail, severe winter weather, fires, floods, riots, strikes, civil unrest, cyber-attacks, pandemics and acts of terrorism that produce unusually large aggregate losses. In most, but not all cases, our catastrophe losses from these events in the United States of America (U.S.) are defined consistent with the definition of the Property Claims Service (PCS). PCS defines a catastrophe as an event that causes damage of $25 million or more in direct insured losses to property and affects a significant number of policyholders and insurers. For events outside of the U.S., we define a catastrophe as an industry recognized event that generates an accumulation of claims amounting to more than $1 million for the International segment.
Catastrophes are an inherent risk of the property and casualty insurance business and have contributed to material period-to-period fluctuations in our results of operations and/or equity. We 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.
We use various analyses and methods, including using one of the industry standard natural catastrophe models, to estimate hurricane and earthquake losses at various return periods and to inform underwriting and reinsurance decisions designed to manage our exposure to catastrophic events. We generally seek to manage our exposure through the purchase of catastrophe reinsurance and utilize various reinsurance programs to mitigate catastrophe losses, including excess-of-loss occurrence and aggregate treaties covering property and workers' compensation, a property quota share treaty and the Terrorism Risk Insurance Program Reauthorization Act of 2019 (TRIPRA), as well as individual risk agreements that reinsure from losses from specific classes or lines of business. We conduct an ongoing review of our risk and catastrophe reinsurance coverages and from time to time make changes as we deem appropriate.
The following discussion summarizes our most significant catastrophe reinsurance coverage at January 1, 2026.
Group North American Property Treaty
We purchased corporate catastrophe excess-of-loss treaty reinsurance covering our U.S. states and territories and Canadian property exposures underwritten in our North American and European companies. The treaty has a term of June 1, 2025 to June 1, 2026 and provides coverage for the accumulation of covered losses from catastrophe occurrences above our per occurrence retention of $275 million up to $1.4 billion for all losses. Losses stemming from terrorism events are covered unless they are due to a nuclear, biological, chemical or radiation event. All layers of the treaty provide for one full reinstatement.
Group Workers' Compensation Treaty
We also purchased corporate workers' compensation catastrophe excess-of-loss treaty reinsurance for the period January 1, 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. The treaty also provides $775 million of coverage for the accumulation of covered losses related to terrorism events above our per occurrence retention of $25 million. Of the $775 million in terrorism coverage, $200 million is provided for nuclear, biological, chemical and radiation events. All layers of the treaty provide for one full reinstatement.
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. Our deductible is based on eligible commercial property and casualty earned premiums for the preceding calendar year. Based on 2025 earned premiums, our estimated deductible under the program is
$1.4 billion for 2026. If an act of terrorism or acts of terrorism result in covered losses exceeding the $100 billion annual industry aggregate limit, Congress would be responsible for determining how additional losses in excess of $100 billion will be paid.
CONSOLIDATED OPERATIONS
Results of Operations
The following table includes the consolidated results of our operations including our financial measure, core income (loss). For more detailed components of our business operations and a discussion of the core income (loss) financial measure, see the Segment Results section within this MD&A. For further discussion of Net investment income and Net investment gains or losses, see the Investments section of this MD&A.
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. Pension settlement transactions are further discussed in Note J to the Consolidated Financial Statements included under Item 8. 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. Core loss for our Life & Group segment increased $21 million, while core loss for our Corporate & Other segment increased $68 million.
Catastrophe losses were $240 million and $358 million for 2025 and 2024. Catastrophe losses for 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. Unfavorable net prior year loss reserve development of $185 million and $48 million was recorded in 2025 and 2024 related to our Specialty, Commercial, International and Corporate & Other segments. Further information on net prior year loss reserve development is in Note E to the Consolidated Financial Statements included under Item 8.
SEGMENT RESULTS
The following discusses the results of operations for our business segments.
Our property and casualty commercial insurance operations are managed and reported in three business segments: Specialty, Commercial and International, which we refer to collectively as Property & Casualty Operations. Specialty provides management and professional liability and other coverages through property and casualty products and services using a network of retail and wholesale brokers, independent agents and managing general underwriters. Commercial works with a network of retail and wholesale brokers and independent agents to market a broad range of property and casualty insurance products to all types of insureds targeting small business, construction, middle market and other commercial customers. The International segment underwrites property and casualty coverages on a global basis through a branch operation in Canada, a European business consisting of insurance companies based in the U.K. and Luxembourg and Hardy, our Lloyd's syndicate.
Our operations outside of Property & Casualty Operations are managed and reported in two segments: Life & Group and Corporate & Other. Life & Group primarily includes the results of our long-term care business that is in run-off. Corporate & Other primarily includes certain corporate expenses, including interest on corporate debt, and the results of certain property and casualty businesses in run-off, including A&EP, a legacy portfolio of excess workers' compensation (EWC) policies and certain legacy mass tort reserves. Intersegment eliminations are also included in this segment.
We utilize the core income (loss) financial measure to monitor our operations. Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses and gains or losses resulting from pension settlement transactions. Net investment gains or losses are excluded from the calculation of core income (loss) because they are generally driven by economic factors that are not necessarily reflective of our primary operations. The calculation of core income (loss) excludes gains or losses resulting from pension settlement transactions as they result from decisions regarding our defined benefit pension plans which are unrelated to our primary operations. Presentation of consolidated core income (loss) is deemed to be a non-GAAP financial measure and management believes some investors may find this measure useful to evaluate our primary operations. See further discussion regarding how we manage our business in Note N to the Consolidated Financial Statements included under Item 8. For reconciliations of non-GAAP measures to the most comparable GAAP measures and other information, please see below and in Note N to the Consolidated Financial Statements included under Item 8.
In evaluating the results of our Specialty, Commercial and International segments, we utilize the loss ratio, the underlying loss ratio, the expense ratio, the dividend ratio, the combined ratio and the underlying combined ratio. These ratios are calculated using GAAP financial results. The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums. The underlying loss ratio excludes the impact of catastrophe losses and development-related items from the loss ratio. Development-related items represents net prior year loss reserve and premium development, and includes the effects of interest accretion and change in allowance for uncollectible reinsurance. The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums. The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums. The combined ratio is the sum of the loss ratio, the expense ratio and the dividend ratio. The underlying combined ratio is the sum of the underlying loss ratio, the expense ratio and the dividend ratio. The underlying loss ratio and the underlying combined ratio are deemed to be non-GAAP financial measures, and management believes some investors may find these ratios useful to evaluate our underwriting performance since they remove the impact of catastrophe losses which are unpredictable as to timing and amount, and development-related items as they are not indicative of our current year underwriting performance.
Changes in estimates of claim and claim adjustment expense reserves, net of reinsurance, for prior years are defined as net prior year loss reserve development within this MD&A. These changes can be favorable or unfavorable. Net prior year loss reserve development does not include the effect of any related acquisition expenses. Further information on our reserves is provided in Note E and Note F to the Consolidated Financial Statements included under Item 8.
In addition, we also utilize renewal premium change, rate, retention and new business in evaluating operating trends. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes. Rate represents the average change in price on policies that renew
excluding exposure change. Exposure represents the measure of risk used in the pricing of the insurance product. The change in exposure represents the change in premium dollars on policies that renew as a result of the change in risk of the policy. Retention represents the percentage of premium dollars renewed, excluding rate and exposure changes, in comparison to the expiring premium dollars from policies available to renew. New business represents premiums from policies written with new customers and additional policies written with existing customers.
We use underwriting gain (loss) and underlying underwriting gain (loss), calculated using GAAP financial results, to monitor our insurance operations. Underwriting gain (loss) is deemed to be a non-GAAP financial measure and is calculated pretax as net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and insurance related administrative expenses. Net income (loss) is the most directly comparable GAAP measure. Management believes some investors may find this measure useful to evaluate the profitability, before tax, derived from our underwriting activities, which are managed separately from our investing activities. Underlying underwriting gain (loss) is also deemed to be a non-GAAP financial measure, and represents pretax underwriting gain (loss) excluding catastrophe losses and development-related items. Management believes some investors may find this measure useful to evaluate the profitability, before tax, derived from our underwriting activities, excluding the impact of catastrophe losses, which are unpredictable as to timing and amount, and development-related items as they are not indicative of our current year underwriting performance.
The following tables present reconciliations of net income to core income, underwriting gain and underlying underwriting gain for our Property & Casualty Operations:
Year ended December 31, 2025 Specialty Commercial International Property & Casualty
(In millions)
Net income $ 615 $ 788 $ 205 $ 1,608
Net investment losses, after tax 22 32 2 56
Core income $ 637 $ 820 $ 207 $ 1,664
Less:
Net investment income 650 775 156 1,581
Non-insurance warranty revenue (expense) 51 - - 51
Other revenue (expense), including interest expense (55) (12) 13 (54)
Income tax expense on core income (173) (215) (77) (465)
Underwriting gain 164 272 115 551
Effect of catastrophe losses - 217 23 240
Effect of unfavorable (favorable) development-related items 37 52 (25) 64
Underlying underwriting gain $ 201 $ 541 $ 113 $ 855
Year ended December 31, 2024 Specialty Commercial International Property & Casualty
(In millions)
Net income $ 663 $ 658 $ 153 $ 1,474
Net investment losses, after tax 31 44 - 75
Core income $ 694 $ 702 $ 153 $ 1,549
Less:
Net investment income 626 733 131 1,490
Non-insurance warranty revenue (expense) 62 - - 62
Other revenue (expense), including interest expense (53) (14) (10) (77)
Income tax expense on core income (190) (188) (44) (422)
Underwriting gain 249 171 76 496
Effect of catastrophe losses - 318 40 358
Effect of favorable development-related items (8) - (6) (14)
Underlying underwriting gain $ 241 $ 489 $ 110 $ 840
The following table presents a reconciliation of net loss to core loss for our Life & Group segment:
Years ended December 31
(In millions) 2025 2024
Net loss $ (51) $ (10)
Net investment losses (gains), after tax 7 (13)
Core loss $ (44) $ (23)
The following table presents a reconciliation of net loss to core loss for our Corporate & Other segment:
Years ended December 31
(In millions) 2025 2024
Net loss $ (279) $ (505)
Net investment losses, after tax 1 2
Pension settlement transaction losses, after tax - 293
Core loss $ (278) $ (210)
Specialty
Specialty provides management and professional liability and other property and casualty coverages, products and services using a network of retail and wholesale brokers, independent agencies and managing general underwriters. Specialty includes the following business groups:
Management & Professional Liabilityconsists of the following coverages and products:
•Professional liability coverages and risk management services to various professional firms, including architects, real estate agents, accounting firms and law firms.
•Directors and officers (D&O), errors and omissions (E&O), employment practices, fiduciary, fidelity and cyber coverages. Specific areas of focus include small and mid-size firms, public as well as privately held firms and not-for-profit organizations.
•Insurance products to serve the healthcare industry, including professional and general liability as well as associated casualty coverages. Key customer groups include aging services, allied medical facilities, dentists, physicians, nurses and other medical practitioners.
Suretyoffers small, medium and large contract and commercial surety bonds. Surety provides surety and fidelity bonds in all 50 states.
Warranty and Alternative Risks provides extended service contracts and related insurance products covering mechanical breakdown and similar losses for vehicles, portable electronics and other consumer goods. These service contracts are primarily distributed through independent representatives and sold by automobile dealerships and retailers in North America. Revenue and expenses for these service contracts are reported as Non-insurance warranty revenue and expense. Our insurance subsidiaries may issue contractual liability, inland marine, or guaranteed asset protection policies supporting these contracts, a significant portion of which are reinsured through third-party captive programs. The net retained results of these insurance products are reflected within the underwriting gain (loss) and combined ratio of our insurance operations.
The following table details the results of operations for Specialty.
Years ended December 31
(In millions, except ratios, rate, renewal premium change and retention) 2025 2024
Net written premiums $ 3,515 $ 3,445
Net earned premiums 3,472 3,361
Underwriting gain 164 249
Net investment income 650 626
Core income 637 694
Other performance metrics:
Loss ratio 61.5 % 59.5 %
Expense ratio 33.5 32.8
Dividend ratio 0.3 0.3
Combined ratio 95.3 % 92.6 %
Less: Effect of catastrophe impacts - -
Less: Effect of unfavorable (favorable) development-related items 1.1 (0.3)
Underlying combined ratio 94.2 % 92.9 %
Underlying loss ratio 60.4 % 59.8 %
Rate 3 % 1 %
Renewal premium change 4 2
Retention 86 89
New business $ 487 $ 462
2025 Compared with 2024
Net written premiums for Specialty increased $70 million in 2025 as compared with 2024 driven by rate partially offset by lower retention. The increase in net earned premiums was consistent with the trend in net written premiums.
Core income decreased $57 million in 2025 as compared with 2024 primarily due to unfavorable net prior year loss reserve development in 2025 compared with favorable net prior year loss reserve development in 2024 and lower underlying underwriting results partially offset by higher net investment income.
The combined ratio of 95.3% increased 2.7 points in 2025 as compared with 2024 due to a 2.0 point increase in the loss ratio and a 0.7 point increase in the expense ratio. The increase in the loss ratio was due to unfavorable net prior year loss reserve development recorded in 2025 and an increase in the underlying loss ratio, primarily driven by continued pricing pressure in management liability lines. The increase in the expense ratio was driven by higher employee related costs and a non-recurring technology charge partially offset by higher net earned premiums. There were no catastrophe losses for 2025 or 2024.
Unfavorable net prior year loss reserve development of $37 million was recorded in 2025 compared with $9 million of favorable net prior year loss reserve development recorded in 2024. Further information on net prior year loss reserve development is in Note E to the Consolidated Financial Statements included under Item 8.
The following table summarizes the gross and net carried reserves for Specialty.
December 31
(In millions) 2025 2024
Gross case reserves $ 2,166 $ 2,023
Gross IBNR reserves 5,618 5,403
Total gross carried claim and claim adjustment expense reserves $ 7,784 $ 7,426
Net case reserves $ 1,801 $ 1,697
Net IBNR reserves 4,387 4,282
Total net carried claim and claim adjustment expense reserves $ 6,188 $ 5,979
Commercial
Commercial works with a network of retail and wholesale brokers and independent agents to market a broad range of property and casualty insurance products to all types of insureds targeting small business, construction, middle market and other commercial customers. Property products include standard and excess property, marine and boiler and machinery coverages. Casualty products include standard casualty insurance products such as workers' compensation, general and product liability, commercial auto, umbrella, and excess and surplus coverages. Most insurance programs are provided on a guaranteed cost basis; however, we also offer specialized loss-sensitive insurance programs and total risk management services relating to claim and information services to the large commercial insurance marketplace.
The following table details the results of operations for Commercial.
Years ended December 31
(In millions, except ratios, rate, renewal premium change and retention) 2025 2024
Net written premiums $ 5,821 $ 5,469
Net earned premiums 5,695 5,158
Underwriting gain 272 171
Net investment income 775 733
Core income 820 702
Other performance metrics:
Loss ratio 67.9 % 68.3 %
Expense ratio 26.8 27.9
Dividend ratio 0.5 0.5
Combined ratio 95.2 % 96.7 %
Less: Effect of catastrophe impacts 3.8 6.2
Less: Effect of unfavorable (favorable) development-related items 0.9 (0.1)
Underlying combined ratio 90.5 % 90.6 %
Underlying loss ratio 63.2 % 62.2 %
Rate 5 % 6 %
Renewal premium change 6 7
Retention 82 84
New business $ 1,491 $ 1,512
2025 Compared with 2024
Net written premiums for Commercial increased $352 million in 2025 as compared with 2024 driven by favorable renewal premium change, inclusive of rate, partially offset by lower retention. The increase in net earned premiums was consistent with the trend in net written premiums.
Core income increased $118 million in 2025 as compared with 2024, driven by lower catastrophe losses, improved underlying underwriting results and higher net investment income partially offset by unfavorable net prior year loss reserve development.
The combined ratio of 95.2% improved 1.5 points in 2025 as compared with 2024 due to a 1.1 point improvement in the expense ratio and a 0.4 point improvement in the loss ratio. The improvement in the expense ratio was primarily driven by higher net earned premiums and a lower acquisition ratio. The improvement in the loss ratio was driven by lower catastrophe losses partially offset by unfavorable net prior year loss reserve development and an increase in the underlying loss ratio related to social inflation impacted lines. Catastrophe losses were $217 million, or 3.8 points of the loss ratio, for 2025, as compared with $318 million, or 6.2 points of the loss ratio, for 2024.
Unfavorable net prior year loss reserve development of $39 million was recorded in 2025 compared with $16 million of favorable net prior year loss reserve development recorded in 2024. Further information on net prior year loss reserve development is in Note E to the Consolidated Financial Statements included under Item 8.
The following table summarizes the gross and net carried reserves for Commercial.
December 31
(In millions) 2025 2024
Gross case reserves $ 4,093 $ 3,690
Gross IBNR reserves 8,156 7,646
Total gross carried claim and claim adjustment expense reserves $ 12,249 $ 11,336
Net case reserves $ 3,508 $ 3,135
Net IBNR reserves 7,188 6,804
Total net carried claim and claim adjustment expense reserves $ 10,696 $ 9,939
International
The International segment underwrites property and casualty coverages on a global basis through a branch operation in Canada, a European business consisting of insurance companies based in the U.K. and Luxembourg and Hardy, our Lloyd's syndicate.
Canadaoffers a wide range of specialty and commercial insurance products, including property, casualty, auto, marine, management liability, professional liability and cyber. Its focus is on providing risk transfer solutions for midsize and large companies headquartered in Canada, across various sectors, with domestic, cross-border and international operations.
Europeprovides a diverse range of specialty and commercial insurance products with a focus on specific areas including the middle market, marine, healthcare, financial and professional services sectors in the U.K. and Continental Europe on both a domestic and cross-border basis.
Hardy operates through Lloyd's Syndicate 382 underwriting energy, marine, property, casualty and specialty lines with risks located in many countries around the world. The capacity and results of the syndicate are 100% attributable to CNA.
The following table details the results of operations for International.
Years ended December 31
(In millions, except ratios, rate, renewal premium change and retention) 2025 2024
Net written premiums $ 1,347 $ 1,262
Net earned premiums 1,311 1,256
Underwriting gain 115 76
Net investment income 156 131
Core income 207 153
Other performance metrics:
Loss ratio 58.4 % 60.9 %
Expense ratio 32.8 33.1
Combined ratio 91.2 % 94.0 %
Less: Effect of catastrophe impacts 1.8 3.2
Less: Effect of favorable development-related items (1.9) (0.4)
Underlying combined ratio 91.3 % 91.2 %
Underlying loss ratio 58.5 % 58.1 %
Rate (4) % (1) %
Renewal premium change (1) -
Retention 86 82
New business $ 370 $ 288
2025 Compared with 2024
Net written premiums for International increased $85 million in 2025 as compared with 2024. Excluding the effect of foreign currency exchange rates, net written premiums increased $76 million as compared with 2024 driven by higher new business partially offset by lower rate. The increase in net earned premiums was consistent with the trend in net written premiums.
Core income increased $54 million in 2025 as compared with 2024 driven by higher net investment income, a favorable impact from changes in foreign currency exchange rates, higher favorable net prior year loss reserve development and lower catastrophe losses.
The combined ratio of 91.2% improved 2.8 points in 2025 as compared with 2024 due to a 2.5 point improvement in the loss ratio and a 0.3 point improvement in the expense ratio. The improvement in the loss ratio was primarily driven by higher favorable net prior year loss reserve development and lower catastrophe
losses. Catastrophe losses were $23 million, or 1.8 points of the loss ratio, for 2025, as compared with $40 million, or 3.2 points of the loss ratio, for 2024. The improvement in the expense ratio was primarily driven by higher net earned premiums.
Favorable net prior year loss reserve development of $25 million and $6 million was recorded in 2025 and 2024. Further information on net prior year loss reserve development is in Note E to the Consolidated Financial Statements included under Item 8.
The following table summarizes the gross and net carried reserves for International.
December 31
(In millions) 2025 2024
Gross case reserves $ 1,052 $ 876
Gross IBNR reserves 2,324 2,044
Total gross carried claim and claim adjustment expense reserves $ 3,376 $ 2,920
Net case reserves $ 880 $ 741
Net IBNR reserves 1,961 1,675
Total net carried claim and claim adjustment expense reserves $ 2,841 $ 2,416
Life & Group
The Life & Group segment includes our run-off long-term care business as well as structured settlement obligations not funded by annuities related to certain property and casualty claimants. Long-term care policies were sold on both an individual and group basis.
The following table summarizes the results of operations for Life & Group.
Years ended December 31
(In millions) 2025 2024
Net earned premiums $ 423 $ 437
Claims, benefits and expenses 1,415 1,429
Net investment income 914 940
Core loss (44) (23)
2025 Compared with 2024
Core loss increased $21 million in 2025 as compared with 2024 primarily due to lower net investment income from limited partnerships. Both years are inclusive of assumption updates as a result of the annual reserve review completed in the third quarter of each year.
The cash flow assumption updates from the annual reserve review for 2025 and 2024 resulted in a pretax increase in long-term care reserves of $7 million and $15 million.
The annual structured settlement reserve review resulted in a pretax increase in claim reserves of $2 million for 2025 and a reduction in claim reserves of $9 million for 2024.
The following tables summarize policyholder reserves for Life & Group.
December 31, 2025
(In millions) Claim and claim adjustment expenses Future policy benefits Total
Long-term care $ - $ 13,448 $ 13,448
Structured settlement and other 535 - 535
Total 535 13,448 13,983
Ceded reserves 56 - 56
Total gross reserves $ 591 $ 13,448 $ 14,039
December 31, 2024
(In millions) Claim and claim adjustment expenses Future policy benefits Total
Long-term care $ - $ 13,158 $ 13,158
Structured settlement and other 541 - 541
Total 541 13,158 13,699
Ceded reserves 81 - 81
Total gross reserves $ 622 $ 13,158 $ 13,780
Corporate & Other
Corporate & Other primarily includes certain corporate expenses, including interest on corporate debt, and the results of certain property and casualty business in run-off, including A&EP, a legacy portfolio of EWC policies and certain legacy mass tort reserves.
The following table summarizes the results of operations for the Corporate & Other segment, including intersegment eliminations.
Years ended December 31
(In millions) 2025 2024
Net investment income $ 62 $ 67
Insurance claims and policyholders' benefits 201 106
Interest expense 135 133
Core loss (278) (210)
2025 Compared with 2024
Core loss increased $68 million for 2025 as compared with 2024. 2025 includes a $106 million after-tax charge related to unfavorable net prior year loss reserve development largely associated with legacy mass tort abuse reserves compared with a $62 million after-tax charge in 2024. The current year also includes an unfavorable non-economic impact related to the A&EP LPT. The prior year included $16 million of after-tax charges related to office consolidation.
The application of retroactive reinsurance accounting to additional cessions to the A&EP LPT resulted in an after-tax charge of $36 million and $6 million in 2025 and 2024, both of which have no economic impact.
The net prior year loss reserve development and A&EP LPT are further discussed in Note E to the Consolidated Financial Statements included under Item 8.
The following table summarizes the gross and net carried reserves for Corporate & Other.
December 31
(In millions) 2025 2024
Gross case reserves $ 1,196 $ 1,241
Gross IBNR reserves 1,403 1,431
Total gross carried claim and claim adjustment expense reserves $ 2,599 $ 2,672
Net case reserves $ 119 $ 120
Net IBNR reserves 238 268
Total net carried claim and claim adjustment expense reserves $ 357 $ 388
INVESTMENTS
Net Investment Income
The significant components of Net investment income are presented in the following table. Fixed income securities, as presented, include both fixed maturity securities and non-redeemable preferred stock.
Years ended December 31
(In millions) 2025 2024
Fixed income securities:
Taxable fixed income securities $ 2,012 $ 1,940
Tax-exempt fixed income securities 165 144
Total fixed income securities 2,177 2,084
Limited partnership and common stock investments 302 320
Other, net of investment expense 78 93
Net investment income $ 2,557 $ 2,497
Effective income yield for the fixed income securities portfolio 4.9 % 4.8 %
Limited partnership and common stock return for the year 11.1 % 13.3 %
Net investment income increased $60 million in 2025 as compared with 2024 driven by higher income from fixed income securities as a result of a larger invested asset base and favorable reinvestment rates partially offset by lower common stock returns.
Net Investment (Losses) Gains
The components of Net investment (losses) gains are presented in the following table.
Years ended December 31
(In millions) 2025 2024
Fixed maturity securities:
Corporate bonds and other $ (64) $ (57)
States, municipalities and political subdivisions (1) 1
Asset-backed (18) (46)
Total fixed maturity securities (83) (102)
Non-redeemable preferred stock 7 21
Derivatives, short-term and other - -
Mortgage loans (5) -
Net investment losses (81) (81)
Income tax benefit on net investment losses 17 17
Net investment losses, after tax $ (64) $ (64)
Pretax net investment losses for 2025 were consistent with 2024 as lower impairment losses were offset by a lower favorable change in the fair value of non-redeemable preferred stock and higher net losses on disposals of fixed maturity securities.
Further information on our investment gains and losses is set forth in Notes A and B to the Consolidated Financial Statements included under Item 8.
Portfolio Quality
The following table presents the estimated fair value and net unrealized gains (losses) of our fixed maturity securities by rating distribution.
December 31 2025 2024

(In millions) 		Estimated Fair Value Net Unrealized Gains (Losses) Estimated Fair Value Net Unrealized Gains (Losses)
U.S. Government, Government agencies and Government-sponsored enterprises $ 3,274 $ (228) $ 2,936 $ (369)
AAA 3,997 (136) 3,010 (217)
AA 7,001 (428) 6,369 (567)
A 11,167 (140) 10,260 (379)
BBB 16,249 (223) 16,757 (729)
Non-investment grade 1,714 (42) 1,779 (64)
Total $ 43,402 $ (1,197) $ 41,111 $ (2,325)
As of December 31, 2025 and 2024, 1% of our fixed maturity portfolio was rated internally. Additionally, as of December 31, 2025 and 2024, we assigned a AAA rating to $661 million and $199 million of municipal bonds that were either pre-refunded or backed by mortgage loans guaranteed by a U.S. government agency or sponsored enterprise.
The following table presents available-for-sale fixed maturity securities in a gross unrealized loss position by ratings distribution.
December 31, 2025
(In millions) Estimated Fair Value Gross Unrealized Losses
U.S. Government, Government agencies and Government-sponsored enterprises $ 1,980 $ 267
AAA 1,376 243
AA 3,827 623
A 5,025 440
BBB 7,758 639
Non-investment grade 678 74
Total $ 20,644 $ 2,286
The following table presents the maturity profile for these available-for-sale fixed maturity securities. Securities not due to mature on a single date are allocated based on weighted average life.
December 31, 2025
(In millions) Estimated Fair Value Gross Unrealized Losses
Due in one year or less $ 821 $ 11
Due after one year through five years 5,277 224
Due after five years through ten years 5,752 607
Due after ten years 8,794 1,444
Total $ 20,644 $ 2,286
Duration
A primary objective in the management of the investment portfolio is to optimize return relative to the corresponding liabilities and respective liquidity needs. Our views on the current interest rate environment, tax regulations, asset class valuations, specific security issuer and broader industry segment conditions as well as domestic and global economic conditions, are some of the factors that enter into an investment decision. We also continually monitor exposure to issuers of securities held and broader industry sector exposures and may from time to time adjust such exposures based on our views of a specific issuer or industry sector.
A further consideration in the management of the investment portfolio is the characteristics of the corresponding liabilities and the ability to align the duration of the portfolio to those liabilities and to meet future liquidity needs, minimize interest rate risk and maintain a level of income sufficient to support the underlying insurance liabilities. For portfolios where future liability cash flows are determinable and typically long term in nature, we segregate investments for asset/liability management purposes. The segregated investments support the long-term care and structured settlement liabilities in the Life & Group segment.
The effective durations of fixed income securities and short-term investments are presented in the following table. Amounts presented are net of payable and receivable amounts for securities purchased and sold, but not yet settled.
December 31 2025 2024
(In millions) Estimated Fair Value Effective
Duration
(In years) 		Estimated Fair Value Effective
Duration
(In years)
Life & Group $ 15,584 9.7 $ 14,915 9.8
Property & Casualty and Corporate & Other 30,716 4.5 28,779 4.3
Total $ 46,300 6.3 $ 43,694 6.2
The investment portfolio is periodically analyzed for changes in duration and related price risk. Certain securities have duration characteristics that are variable based on market interest rates, credit spreads and other factors that may drive variability in the amount and timing of cash flows. Additionally, we periodically review the sensitivity of the portfolio to the level of foreign exchange rates and other factors that contribute to market price changes. A summary of these risks and specific analysis on changes is included in the Quantitative and Qualitative Disclosures About Market Risk included under Item 7A.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Our primary operating cash flow sources are premiums and investment income. Our primary operating cash flow uses are payments for claims, policy benefits and operating expenses, including interest expense on corporate debt. Additionally, cash may be paid or received for income taxes.
For 2025, net cash provided by operating activities was $2,490 million as compared with $2,571 million for 2024. The decrease in cash provided by operating activities was driven by an increase in net claim payments and higher operating expenses, partially offset by an increase in premiums collected and higher cash from investment earnings.
Cash flows from investing activities include the purchase and disposition of financial instruments, excluding those held as trading, and may include the purchase and sale of businesses, equipment and other assets not generally held for resale.
For 2025, net cash used by investing activities was $1,449 million as compared with $1,317 million for 2024. Net cash used or provided by investing activities is primarily driven by cash available from operations and by other factors, such as financing activities.
Cash flows from financing activities may include proceeds from the issuance of debt and equity securities, and outflows for stockholder dividends, repayment of debt and purchases of our common stock.
For 2025, net cash used by financing activities was $1,104 million as compared with $1,117 million for 2024. Financing activities for the periods presented include:
•In 2025, we issued $500 million of 5.20% notes due August 15, 2035 and repaid at par the $500 million outstanding aggregate principal balance of our 4.50% senior notes in advance of their March 1, 2026 maturity date.
•In 2025, we paid dividends of $1,047 million and repurchased 700,000 shares of common stock at an aggregate cost of $34 million.
•In 2024, we issued $500 million of 5.125% notes due February 15, 2034 and repaid the $550 million outstanding aggregate principal balance of our 3.95% senior notes which came due May 15, 2024.
•In 2024, we paid dividends of $1,025 million and repurchased 450,000 shares of our common stock at an aggregate cost of $20 million.
Liquidity
We believe that our present cash flows from operating, investing and financing activities are sufficient to fund our current and expected working capital and debt obligation needs and we do not expect this to change in the near term. There are currently no amounts outstanding under our $250 million senior unsecured revolving credit facility and no borrowings outstanding through our membership in the Federal Home Loan Bank of Chicago (FHLBC).
CCC paid dividends of $1,115 million and $995 million to CNAF during 2025 and 2024.
We have an effective shelf registration statement on file with the Securities and Exchange Commission under which we may publicly issue an unspecified amount of debt, equity or hybrid securities from time to time.
Common Stock Dividends
Cash dividends of $3.84 per share on our common stock, including a special cash dividend of $2.00 per share, were declared and paid in 2025. On February 6, 2026, our Board of Directors declared a quarterly cash dividend of $0.48 per share and a special cash dividend of $2.00 per share, payable March 12, 2026 to stockholders of record on February 23, 2026. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend on many factors, including our earnings, financial condition, business needs and regulatory constraints.
Our ability to pay dividends and satisfy our credit obligations is significantly dependent on receipt of dividends from our subsidiaries. The payment of dividends to us by our 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.
Further information on our dividends from subsidiaries is provided in Note M to the Consolidated Financial Statements included under Item 8.
Commitments, Contingencies and Guarantees
We have various commitments, contingencies and guarantees which arose in the ordinary course of business. The impact of these commitments, contingencies and guarantees should be considered when evaluating our liquidity and capital resources.
A summary of our commitments is presented in the following table.
December 31, 2025
(In millions) Total Less than 1 year 1-3 years 3-5 years More than 5 years
Debt (1)
$ 3,838 $ 126 $ 735 $ 1,189 $ 1,788
Lease obligations (2)
261 34 66 57 104
Claim and claim adjustment expense reserves (3)
27,111 5,983 7,362 4,145 9,621
Future policy benefit reserves(4)
26,880 862 1,633 1,793 22,592
Total (5)
$ 58,090 $ 7,005 $ 9,796 $ 7,184 $ 34,105
(1) Includes estimated future interest payments.
(2) The lease obligations reflected above are not discounted.
(3) The Claim and claim adjustment expense reserves reflected above are not discounted and represent our estimate of the amount and timing of the ultimate settlement and administration of gross claims based on our assessment of facts and circumstances known as of December 31, 2025. See the Reserves - Estimates and Uncertainties section of this MD&A for further information.
(4) The Future policy benefit reserves reflected above are not discounted, include maintenance costs, represent our estimate of the ultimate amount and timing of the settlement of benefits net of expected premiums, and are based on our assessment of facts and circumstances known as of December 31, 2025. See the Reserves - Estimates and Uncertainties section of this MD&A for further information.
(5) Does not include investment commitments of approximately $1,770 million related to future capital calls from various third-party limited partnerships, signed and accepted mortgage loan applications, and obligations related to private placement securities.
Further information on our commitments, contingencies and guarantees is provided in Notes A, B, E, F, G, I and L to the Consolidated Financial Statements included under Item 8.
Ratings
Ratings are an important factor in establishing the competitive position of insurance companies. Our insurance company subsidiaries are rated by major rating agencies and these ratings reflect the rating agency's opinion of the insurance company's financial strength, operating performance, strategic position and ability to meet its obligations to policyholders. Agency ratings are not a recommendation to buy, sell or hold any security and may be revised or withdrawn at any time by the issuing organization. Each agency's rating should be evaluated independently of any other agency's rating. One or more of these agencies could take action in the future to change the ratings of our insurance subsidiaries.
The table below reflects the Insurer Financial Strength Ratings of CNA's insurance company subsidiaries issued by A.M. Best, Moody's, S&P and Fitch. The table also includes the ratings for CNAF's senior debt.
December 31, 2025 Insurer Financial Strength Ratings Senior Debt Ratings
A.M. Best A+ a-
Moody's A2 Baa2
S&P A+ A-
Fitch A+ BBB+
A.M. Best upgraded the Company's Insurer Financial Strength and Senior Debt Ratings and revised the outlook on the ratings to stable from positive in December 2025. Moody's maintains a positive outlook on the Company's ratings after revising it to positive from stable in November 2024. S&P and Fitch maintain stable outlooks across the Company's Insurer Financial Strength and Senior Debt Ratings.
CNA Insurance Company Limited and CNA Insurance Company (Europe) S.A. are included within S&P's Insurer Financial Strength Rating for the Company. Syndicate 382 benefits from the Insurer Financial Strength Rating of Lloyd's, which is rated AA- by S&P with a stable outlook and A+ by A.M. Best with a stable outlook.
ACCOUNTING STANDARDS UPDATE
For a discussion of Accounting Standards, see Note A to the Consolidated Financial Statements included under Item 8.
RECENT LEGISLATION
On July 4, 2025, H.R. 1, "An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14," commonly referred to as the One Big Beautiful Bill Act (OBBBA), was enacted. The OBBBA includes significant federal tax law changes which, among other impacts, modify and make permanent certain business tax provisions originally enacted in the 2017 Tax Cuts and Jobs Act. The provisions of the OBBBA have not had a material impact on our results of operations or financial condition. The OBBBA is subject to further clarification from the issuance of future technical guidance by the U.S. Department of Treasury.
FORWARD-LOOKING STATEMENTS
This report contains a number of forward-looking statements which relate to anticipated future events rather than actual present conditions or historical events. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as "believes," "expects," "intends," "anticipates," "estimates" and similar expressions. Forward-looking statements in this report include any and all statements regarding expected developments in our insurance business, including losses and loss reserves (note that loss reserves for long-term care, A&EP and other mass tort claims are more uncertain, and therefore more difficult to estimate than loss reserves respecting traditional property and casualty exposures); the impact of routine ongoing insurance reserve reviews we conduct; our expectations concerning our revenues, earnings, expenses and investment activities; volatility in investment returns; and our proposed actions in response to trends in our business. Forward-looking statements, by their nature, are subject to a variety of inherent risks and uncertainties that could cause actual results to differ materially from the results projected in the forward-looking statements. We cannot control many of these risks and uncertainties. Material risks and uncertainties are addressed in Part I, Item IA Risk Factors and include, but are not limited to, the following:
Company-Specific Factors
•the risks and uncertainties associated with our insurance reserves, as outlined in the Critical Accounting Estimates and the Reserves - Estimates and Uncertainties sections of this report, including the sufficiency of the reserves and the possibility of future increases, which would be reflected in the results of operations in the period that the need for such adjustment is determined;
•the risk that the other parties to the transactions in which, subject to certain limitations, we ceded our legacy A&EP and EWC liabilities, respectively, will not fully perform their respective obligations to CNA, the uncertainty in estimating loss reserves for A&EP and EWC liabilities and the possible continued exposure of CNA to liabilities for A&EP and EWC claims that are not covered under the terms of the respective transactions; and
•the performance of reinsurance companies under reinsurance contracts with us.
Industry and General Market Factors
•general economic and business conditions, including potential recessionary conditions that may decrease the size and number of our insurance customers and create losses in our lines of business, and inflationary pressures on medical care costs, construction costs and other economic sectors;
•the effect of new tariffs and changes in tariffs, as well as significant uncertainty surrounding U.S. tariff policy generally, and any retaliatory tariffs, may adversely impact the economic environment, inflation expectations and certain loss costs, and may result in decreases in the size and number of our insurance customers;
•the effects of social inflation, including frequency of nuclear verdicts and increased litigation activity, on the severity of claims;
•the effects on the frequency of claims of reviver statutes that extend, or eliminate, the statute of limitations for the reporting of claims, including statutes passed in certain states with respect to sexual abuse;
•the impact of competitive products, policies and pricing and the competitive environment in which we operate, including changes in our book of business;
•product and policy availability and demand and market responses, including the level of ability to obtain rate increases;
•conditions in the capital and credit markets, including uncertainty and instability in these markets, as well as the overall economy, and their impact on the returns, types, liquidity and valuation of our investments;
•conditions in the capital and credit markets that may limit our ability to raise significant amounts of capital on favorable terms or at all; and
•the possibility of changes in our ratings by ratings agencies, including the inability to access certain markets or distribution channels and the required collateralization of future payment obligations as a result of such changes, and changes in rating agency policies and practices.
Regulatory, Legal and Operational Factors
•regulatory and legal initiatives and compliance with governmental regulations and other legal requirements, which are increasing in complexity and number, change frequently, sometimes conflict, and could expose us to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more jurisdictions, including regulations related to cybersecurity protocols (which continue to evolve in breadth, sophistication and maturity in response to an ever-evolving threat landscape) or utilization of artificial intelligence (AI), legal inquiries by state authorities, judicial interpretations within the regulatory framework, including interpretation of policy provisions, decisions regarding coverage and theories of liability, legislative actions that increase claimant activity, including those revising applicability of statutes of limitations, trends in litigation and the outcome of any litigation involving us and rulings and changes in tax laws and regulations;
•regulatory limitations, impositions and restrictions upon us, including with respect to our ability to increase premium rates, and the effects of assessments and other surcharges for guaranty funds and second-injury funds, other mandatory pooling arrangements and future assessments levied on insurance companies;
•regulatory limitations and restrictions, including limitations upon our ability to receive dividends from our insurance subsidiaries, imposed by regulatory authorities, including regulatory capital adequacy standards;
•additional complexities and greater risk to the effectiveness of controls with the incorporation of AI into our and our third-party service providers' operations, including the possibility of inaccurate or biased outputs, degradation in model performance, unauthorized use or disclosure of data used to train AI models, and the potential for AI to be misused to perpetrate fraud or evade monitoring controls; and
•breaches of our or our vendors' data security infrastructure resulting in unauthorized access to systems and information, and/or interruption of operations.
Impact of Natural and Man-Made Disasters and Mass Tort Claims
•weather and other natural physical events, including the severity and frequency of storms, hail, snowfall and other winter conditions, natural disasters such as hurricanes, tornados and earthquakes, as well as climate change, including effects on global weather patterns, greenhouse gases, sea, land and air temperatures, sea levels, wildfires, rain, hail and snow;
•regulatory requirements imposed by coastal state regulators in the wake of hurricanes or other natural disasters, including limitations on the ability to exit markets or to non-renew, cancel or change terms and conditions in policies, as well as mandatory assessments to fund any shortfalls arising from the inability of quasi-governmental insurers to pay claims;
•man-made disasters, including the possible occurrence of terrorist attacks, the unpredictability of the nature, targets, severity or frequency of such events, and the effect of the absence or insufficiency of applicable terrorism legislation on coverages;
•the occurrence of epidemics and pandemics; and
•mass tort claims, including those related to exposure to potentially harmful products or substances such as glyphosate, lead paint, per- and polyfluoroalkyl substances (PFAS) and opioids, sexual abuse and molestation claims and claims arising from changes in statutes of limitation and other changes that repeal or weaken tort reforms.
Our forward-looking statements speak only as of the date of the filing of this Annual Report on Form 10-K and we do not undertake any obligation to update or revise any forward-looking statement to reflect events or circumstances after the date of the filing of this Annual Report on Form 10-K, even if our expectations or any related events or circumstances change.
CNA Financial Corporation published this content on February 10, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 10, 2026 at 13:13 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]