Document/Exhibit Description Pages Size
1: 10-K Annual Report 27 132K
2: EX-10.10 First Amendment to Sale and Purchase Agreement 60 227K
3: EX-12.1 Computation of Ratios 1 6K
4: EX-13.1 Annual Report 108± 450K
5: EX-21.1 Primary Subsidiaries of Cnaf 2 7K
6: EX-23.1 Independent Auditors' Consent 1 6K
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Year Ended December 31, 2000 Commission File Number 1-5823
---------------------
CNA FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-6169860
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
CNA Plaza
Chicago, Illinois 60685
(Address of principal executive offices) (Zip Code)
(312) 822-5000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ----------------
Common Stock New York Stock Exchange
with a par value Chicago Stock Exchange
of $2.50 per share Pacific Exchange
---------------------
Securities registered pursuant to Section 12(g) of the Act:
None
---------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 1, 2001, 183,264,248 shares of common stock were outstanding
and the aggregate market value of the common stock of CNA Financial Corporation
held by non-affiliates was approximately $892 million.
DOCUMENTS INCORPORATED
BY REFERENCE:
Portions of the CNA Financial Corporation 2000 Annual Report to
Shareholders are incorporated by reference into Parts I and II of this Report.
Portions of the CNA Financial Corporation Proxy Statement prepared for the
2001 annual meeting of shareholders, pursuant to Regulation 14A, are
incorporated by reference into Part III of this Report.
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================================================================================
CNA FINANCIAL CORPORATION
ANNUAL REPORT ON FORM 10K
FOR THE YEAR ENDED DECEMBER 31, 2000
--------------------------------------------------------------------------------
Item Page
Number PART I Number
------ ------
1. Business............................................................ 3
2. Properties.......................................................... 10
3. Legal Proceedings................................................... 11
4. Submission of Matters to a Vote of Security Holders................. 11
PART II
5. Market for the Registrant's Common Stock and Related Stockholder
Matters........................................................... 11
6. Selected Financial Data............................................. 11
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................. 11
7A. Quantitative and Qualitative Disclosures about Market Risk.......... 11
8. Financial Statements and Supplementary Data......................... 11
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.............................................. 11
PART III
10. Directors and Executive Officers of the Registrant.................. 12
11. Executive Compensation.............................................. 12
12. Security Ownership of Certain Beneficial Owners and Management...... 12
13. Certain Relationships and Related Transactions...................... 13
PART IV
14. Financial Statements, Schedules, Exhibits and Reports on Form 8-K... 14
PART I
ITEM 1. BUSINESS
CNA Financial Corporation (CNAF or the Company) was incorporated in 1967
and is an insurance holding company whose primary subsidiaries consist of
property-casualty and life insurance companies. Collectively CNAF and its
subsidiaries are referred to as CNA. CNA's property-casualty insurance
operations are conducted by Continental Casualty Company (CCC), incorporated in
1897, and its affiliates, and The Continental Insurance Company (CIC), organized
in 1853, and its affiliates. Life insurance operations are conducted by
Continental Assurance Company (CAC), incorporated in 1911, and its affiliates.
CIC became an affiliate of the Company in 1995 as a result of the acquisition of
The Continental Corporation (Continental). The principal business of Continental
is the ownership of a group of property and casualty insurance companies. CNA
serves a wide variety of customers, including small, medium and large
businesses; associations; professionals; and groups and individuals with a broad
range of insurance and risk management products and services. Insurance products
include property and casualty coverages; life, accident and health insurance;
and retirement products and annuities. CNA services include risk management,
information services, healthcare management, claims administration and employee
leasing/payroll processing. CNA products are marketed through agents, brokers,
managing general agents and direct sales. CNA's principal market is the United
States with a continued focus on expanding globally to serve those with growing
worldwide interests, as well as adding value in international market niches.
CNA conducts its operations through seven operating segments: Agency Market
Operations, Specialty Operations, CNA Re, Global Operations, Risk Management,
Group Operations and Life Operations. These operating segments reflect the way
CNA distributes its products to the marketplace, manages operations and makes
business decisions. In addition to these seven segments, certain other
activities are reported in a Corporate and Other segment. Discussions of each
segment including the products offered, the customers served and the
distribution channels used is set forth in the Management's Discussion and
Analysis section of the 2000 Annual Report to Shareholders, incorporated by
reference in Item 7, herein.
Competition
Due to market pressures, the insurance and reinsurance environment remains
intensely competitive. Excess underwriting capacity continues to depress prices
in the reinsurance market; however, the commercial property-casualty market is
beginning to experience significant rate increases. CNA competes with a large
number of stock and mutual insurance and reinsurance companies and other
entities for both producers and customers, and must continuously allocate
resources to refine and improve its insurance and reinsurance products and
services.
There are approximately 3,320 individual companies that sell
property-casualty insurance in the United States. CNAF's consolidated
property-casualty subsidiaries ranked as the 8th largest property-casualty
insurance organization in the United States based upon 1999 statutory net
written premiums. CNAF's reinsurance operations ranked as the 19th largest
reinsurance organization in the world, based upon 1999 gross written premiums.
There are approximately 1,470 companies selling life insurance in the
United States. CAC is ranked as the 36th largest life insurance organization
based on 1999 consolidated statutory premium volume.
Dividends by Insurance Subsidiaries
The payment of dividends to CNAF by its insurance subsidiaries without
prior approval of the affiliates' domiciliary state insurance commissioners is
limited by formula. This formula varies by state. The formula used by the
majority of the states provides that the greater of 10% of prior year statutory
surplus or prior year statutory net income, less the aggregate of all dividends
paid during the 12 months prior to date of payment, is available to be paid as a
dividend to the parent company. In addition, by agreement with the New Hampshire
3
Insurance Department, as well as certain other state insurance departments,
dividend paying capacity for the Continental Insurance Company Pool is
restricted to internal and external debt service requirements through September
2003 up to a maximum of $85 million annually, without the prior approval of the
New Hampshire Insurance Department. As of December 31, 2000, approximately $881
million of dividend payments would not be subject to insurance department prior
approval. However, all dividends must be reported to the domiciliary insurance
department prior to declaration and payment.
Regulation
The insurance industry is subject to comprehensive and detailed regulation
and supervision throughout the United States. Each state has established
supervisory agencies with broad administrative powers relative to licensing
insurers and agents, approving policy forms, establishing reserve requirements,
fixing minimum interest rates for accumulation of surrender values and maximum
interest rates of policy loans, prescribing the form and content of statutory
financial reports and regulating solvency and the type and amount of investments
permitted. Such regulatory powers also extend to premium rate regulations, which
require that rates not be excessive, inadequate or unfairly discriminatory. In
addition to regulation of dividends by insurance subsidiaries discussed above,
intercompany transfers of assets may be subject to prior notice or approval by
the state insurance regulator, depending on the size of such transfers and
payments in relation to the financial position of the insurance affiliates
making the transfer.
Insurers are also required by the states to provide coverage to insureds
who would not otherwise be considered eligible by the insurers. Each state
dictates the types of insurance and the level of coverage that must be provided
to such involuntary risks. CNA's share of these involuntary risks is mandatory
and generally a function of its respective share of the voluntary market by line
of insurance in each state.
Reform of the U.S. tort liability system is another issue facing the
insurance industry. Over the last decade, many states have passed some type of
reform, but more recently, a number of state courts have modified or overturned
these reforms. Additionally, new causes of action and theories of damages
continue to be proposed in state court actions or by legislatures. Continued
unpredictability in the law means that insurance underwriting and rating is
expected to be difficult in commercial lines, professional liability and some
specialty coverages.
Although the federal government and its regulatory agencies do not directly
regulate the business of insurance, federal legislative and regulatory
initiatives can impact the insurance business in a variety of ways. These
initiatives and legislation include tort reform proposals; proposals to overhaul
the Superfund hazardous waste removal and liability statute; additional
financial services modernization legislation, which could include provisions to
have an alternate federal system of regulation for insurance companies; and
various tax proposals affecting insurance companies.
The National Association of Insurance Commissioners (NAIC) has adopted risk
based capital (RBC) requirements for both life insurance companies and
property-casualty insurance companies. The requirements are to be utilized by
state insurance departments as a minimum capital requirement identifying
companies that merit further regulatory action. The formulas were not developed
to differentiate adequately capitalized companies that operate with capital
levels higher than the RBC requirements. Therefore, it is inappropriate and
inadvisable to use the formula to rate or rank insurers. At December 31, 2000
and 1999, all of the Company's life and property-casualty companies had adjusted
capital in excess of amounts requiring any regulatory action.
Subsidiaries with insurance operations outside the United States are also
subject to regulation in the countries in which they operate.
4
Reinsurance
Information as to CNA's reinsurance activities is set forth in Note G of
the Consolidated Financial Statements of the 2000 Annual Report to Shareholders,
incorporated by reference in Item 8, herein.
Employee Relations
As of December 31, 2000, CNA had approximately 19,100 full-time equivalent
employees and has experienced satisfactory labor relations. CNA has never had
work stoppages due to labor disputes.
CNA has comprehensive benefit plans for substantially all of its employees,
including retirement plans, savings plans, disability programs, group life
programs and group healthcare programs. See Note I of the Consolidated Financial
Statements of the 2000 Annual Report to Shareholders for further discussion,
incorporated by reference in Item 8, herein.
Government Contracts
CNA's premium revenue includes premiums under contracts involving U.S.
government employees and their dependents. Such premiums were approximately
$2.1 billion, $2.1 billion and $2.0 billion in 2000, 1999 and 1998.
Business Segments
Information as to CNA's business segments is set forth in Note M of the
Consolidated Financial Statements of the 2000 Annual Report to Shareholders,
incorporated by reference in Item 8, herein.
Additional information as to CNA's business segments is set forth in the
Management's Discussion and Analysis section of the 2000 Annual Report to
Shareholders, incorporated by reference in Item 7, herein.
5
Supplementary Insurance Data
The following table sets forth supplementary insurance data:
[Enlarge/Download Table]
Years ended December 31, 2000 1999 1998
---------- ---------- ----------
(In millions, except ratio information)
Trade Ratios - GAAP basis (a)
Loss ratio 81.2% 87.1% 81.8%
Expense ratio 30.3 32.4 33.6
Combined ratio (before policyholder dividends) 111.5 119.5 115.4
Policyholder dividend ratio 0.9 0.3 1.1
Trade Ratios - Statutory basis (a)
Loss ratio 80.4% 87.3% 81.5%
Expense ratio 33.2 33.5 32.8
Combined ratio (before policyholder dividends) 113.6 120.8 114.3
Policyholder dividend ratio 1.2 0.3 1.0
Gross Life Insurance In-force
Life (b) $ 462,799 $ 394,743 $ 317,720
Group 71,982 75,247 76,674
---------- ---------- ----------
$ 534,781 $ 469,990 $ 394,394
========== ========== ==========
Other Data - Statutory basis (c)
Property-casualty capital and surplus* $ 8,387 $ 8,679 $ 7,623
Life capital and surplus 1,274 1,222 1,109
Property-casualty written premiums to surplus ratio 1.0 1.0 1.4
Life capital and surplus-percent of total liabilities 24.5% 21.9% 20.5%
Participating policyholders-percent of gross life insurance in force 0.4% 0.5% 0.5%
* Surplus includes equity of property-casualty companies' ownership in life
insurance subsidiaries.
(a) Trade ratios reflect the results of CNA's property-casualty insurance
subsidiaries. Trade ratios are industry measures of property-casualty
underwriting results. The loss ratio is the percentage of incurred claim
and claim adjustment expenses to premiums earned. The primary difference in
this ratio between statutory accounting practices (SAP) and accounting
principles generally accepted in the United States of America (GAAP) is
related primarily to the treatment of active life reserves (ALR). For GAAP,
ALR are classified as loss reserves whereas for SAP, ALR are classified as
unearned premium reserves. The expense ratio, using amounts determined in
accordance with GAAP, is the percentage of underwriting expenses, including
the amortization of deferred acquisition costs, to premiums earned. The
expense ratio, using amounts determined in accordance with SAP, is the
percentage of underwriting expenses (with no deferral of acquisition costs)
to premiums written. The combined ratio (before policyholder dividends) is
the sum of the loss and expense ratios. The policyholder dividend ratio,
using amounts determined in accordance with GAAP, is the ratio of dividends
incurred to premiums earned. The policyholder dividend ratio, using amounts
determined in accordance with SAP, is the ratio of dividends paid to
premiums earned.
(b) Lapse ratios for individual life insurance, as measured by surrenders and
withdrawals as a percentage of average ordinary life insurance in-force,
were 12.7%, 10.9% and 14.7% in 2000, 1999 and 1998.
(c) Other data is determined in accordance with SAP. Life statutory capital and
surplus as a percent of total liabilities is determined after excluding
Separate Account liabilities and reclassifying the statutorily required
Asset Valuation Reserve to surplus.
6
The following table displays the distribution of gross written premiums for
CNA's operations:
[Enlarge/Download Table]
Percent of Total
Gross Written Premiums --------------------------------
Years ended December 31, 2000 1999 1998
---------- ---------- ----------
New York 7.3% 7.4% 8.3%
California 6.0 7.1 8.0
Texas 4.7 5.4 5.6
Florida 4.8 4.6 4.5
Pennsylvania 3.8 4.1 4.4
New Jersey 3.4 3.5 4.0
Illinois 9.2 8.6 9.2
Maryland 5.6 4.5 2.1
United Kingdom 5.3 5.8 3.5
All other states, countries or political subdivisions (a) 49.9 49.0 50.4
---------- ---------- ----------
Total 100.0% 100.0% 100.0%
========== ========== ==========
(a) No other individual state, country or political subdivision accounts for
more than 3.0% of gross written premiums.
Approximately 8.2%, 7.6% and 5.0% of CNA's gross written premiums are
derived from outside of the United States for the years ended
December 31, 2000, 1999 and 1998. The increase in foreign premiums are
indicative of CNA's continued expansion overseas, which reflects greater
awareness and working knowledge of international business to seize the
opportunities of international economic growth. Premiums from any individual
foreign country besides those stated in the table above are not significant.
Property-Casualty Claim and Claim Adjustment Expenses
The following loss reserve development table illustrates the change over
time of reserves established for property-casualty claim and claim adjustment
expenses at the end of the preceding eleven calendar years for CNA's
property-casualty operations. The first section shows the reserves as originally
reported at the end of the stated year. The second section, reading down, shows
the cumulative amounts paid as of the end of successive years with respect to
the originally reported reserve liability. The third section, reading down,
shows re-estimates of the originally recorded reserves as of the end of each
successive year, which is the result of the Company's property-casualty
insurance subsidiaries' expanded awareness of additional facts and circumstances
that pertain to the unsettled claims. The last section compares the latest
re-estimated reserves to the reserves originally established, and indicates
whether the original reserves were adequate or inadequate to cover the estimated
costs of unsettled claims.
7
The loss reserve development table for property-casualty companies is
cumulative and, therefore, ending balances should not be added since the amount
at the end of each calendar year includes activity for both the current and
prior years.
[Enlarge/Download Table]
Schedule of Property-Casualty
Loss Reserve Development
Calendar Year Ended 1990(a) 1991(a) 1992(a) 1993(a) 1994(a) 1995(b) 1996
-------- -------- -------- -------- -------- -------- --------
(In millions)
Originally reported gross reserves
for unpaid claims and claim expenses $ 20,812 $ 21,639 $ 31,044 $ 29,357
Originally reported ceded recoverable 2,491 2,705 6,089 5,660
-------- -------- -------- --------
Originally reported net reserves for
unpaid claim and claim expenses $ 13,090 $ 14,415 $ 17,167 $ 18,321 $ 18,934 $ 24,955 $ 23,697
-------- -------- -------- -------- -------- -------- --------
Cumulative net paid as of:
One year later $ 3,285 $ 3,411 $ 3,706 $ 3,629 $ 3,656 $ 6,510 $ 5,851
Two years later 5,623 6,024 6,354 6,143 7,087 10,485 9,796
Three years later 7,490 7,946 8,121 8,764 9,195 13,363 13,602
Four years later 8,845 9,218 10,241 10,318 10,624 16,271 15,793
Five years later 9,726 10,950 11,461 11,378 12,577 17,947 --
Six years later 11,207 11,951 12,308 13,100 13,472 -- --
Seven years later 12,023 12,639 13,974 13,848 -- -- --
Eight years later 12,592 14,271 14,640 -- -- -- --
Nine years later 14,159 14,873 -- -- -- -- --
Ten years later 14,693 -- -- -- -- -- --
Net reserves re-estimated as of:
End of initial year $ 13,090 $ 14,415 $ 17,167 $ 18,321 $ 18,934 $ 24,955 $ 23,697
One year later 12,984 16,032 17,757 18,250 18,922 24,864 23,441
Two years later 14,693 16,810 17,728 18,125 18,500 24,294 23,102
Three years later 15,737 16,944 17,823 17,868 18,008 23,814 23,270
Four years later 15,977 17,376 17,765 17,511 17,354 24,092 22,977
Five years later 16,440 17,329 17,560 17,082 17,506 23,854 --
Six years later 16,430 17,293 17,285 17,176 17,248 -- --
Seven years later 16,551 17,069 17,398 17,017 -- -- --
Eight years later 16,487 17,189 17,354 -- -- -- --
Nine years later 16,592 17,174 -- -- -- -- --
Ten years later 16,586 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total net (deficiency) redundancy $ (3,496) $ (2,759) $ (187) $ 1,304 $ 1,686 $ 1,101 $ 720
======== ======== ======== ======== ======== ======== ========
Reconciliation to gross re-estimated reserves:
Net reserves re-estimated $ 16,586 $ 17,174 $ 17,354 $ 17,017 $ 17,248 $ 23,854 $ 22,977
======== ======== ========
Re-estimated ceded recoverable 1,640 1,956 5,835 5,151
-------- -------- -------- --------
Total gross re-estimated reserves $ 18,657 $ 19,204 $ 29,689 $ 28,128
======== ======== ======== ========
Net (deficiency) redundancy related to:
Asbestos claims $ (3,421) $ (3,378) $ (1,690) $ (1,091) $ (1,057) $ (893) $ (992)
Environmental claims (977) (936) (894) (452) (283) (201) (142)
-------- -------- -------- -------- -------- -------- --------
Total asbestos and environmental (4,398) (4,314) (2,584) (1,543) (1,340) (1,094) (1,134)
Other claims 902 1,555 2,397 2,847 3,026 2,195 1,854
-------- -------- -------- -------- -------- -------- --------
Total net (deficiency) redundancy $ (3,496) $ (2,759) $ (187) $ 1,304 $ 1,686 $ 1,101 $ 720
======== ======== ======== ======== ======== ======== ========
Schedule of Property-Casualty
Loss Reserve Development
Calander Year Ended 1997(c) 1998(d) 1999(e) 2000(f)
-------- -------- -------- --------
(In millions)
Orginally reported gross reserves
for unpaid claims and claim expenses $ 28,533 $ 28,317 $ 26,631 $ 26,408
Originally reported ceded recoverable 5,326 5,424 6,273 7,568
-------- -------- -------- --------
Originally reported net reserves for
unpaid claim and claim expenses $ 23,207 $ 22,893 $ 20,358 $ 18,840
-------- -------- -------- --------
Cumulative net paid as of:
One year later $ 5,954 $ 7,321 $ 6,546 $ --
Two years later 11,394 12,241 -- --
Three years later 14,423 -- -- --
Four years later -- -- -- --
Five years later -- -- -- --
Six years later -- -- -- --
Seven years later -- -- -- --
Eight years later -- -- -- --
Nine years later -- -- -- --
Ten years later -- -- -- --
Net reserves re-estimated as of:
End of initial year $ 23,207 $ 22,893 $ 20,358 $ 18,840
One year later 23,470 23,920 20,785 --
Two years later 23,717 23,774 -- --
Three years later 23,414 -- -- --
Four years later -- -- -- --
Five years later -- -- -- --
Six years later -- -- -- --
Seven years later -- -- -- --
Eight years later -- -- -- --
Nine years later -- -- -- --
Ten years later -- -- -- --
-------- -------- -------- --------
Total net (deficiency) redundancy $ (207) $ (881) $ (427) $ --
======== ======== ======== ========
Reconciliation to gross re-estimated reserves:
Net reserves re-estimated $ 23,414 $ 23,774 $ 20,785 $ --
Re-estimated ceded recoverable 4,481 4,614 6,530 --
-------- -------- -------- --------
Total gross re-estimated reserves $ 27,895 $ 28,388 $ 27,315 $ --
======== ======== ======== ========
Net (deficiency) redundancy related to:
Asbestos claims $ (888) $ (644) $ (65) $ --
Environmental claims (154) 70 (17) --
-------- -------- -------- --------
Total asbestos and environmental (1,042) (574) (82) --
Other claims 835 (307) (345) --
-------- -------- -------- --------
Total net (deficiency) redundancy $ (207) $ (881) $ (427) $ --
======== ======== ======== ========
(a) Reflects reserves of CNA's property-casualty insurance subsidiaries,
excluding Continental reserves, which were acquired on May 10, 1995 (the
Acquisition Date). Accordingly, the reserve development (net reserves
recorded at the end of the year, as initially estimated, less net reserves
re-estimated as of subsequent years) does not include Continental.
(b) Includes Continental gross reserves of $9,713 million and net reserves of
$6,063 million acquired on the Acquisition Date and subsequent development
thereon.
(c) Includes net and gross reserves of acquired companies of $57 million and
$64 million.
(d) Includes net and gross reserves of acquired companies of $122 million and
$223 million.
(e) Ceded recoverable includes reserves transferred under retroactive
reinsurance agreements of $784 million as of December 31, 1999.
(f) Includes net and gross reserves of acquired companies of $9 million and
$13 million. Ceded recoverable includes reserves transferred under
retroactive reinsurance agreements of $414 million as of December 31, 2000.
8
Additional information as to CNA's property-casualty claim and claim
expense reserves and reserve development is set forth in Notes A and E of the
Consolidated Financial Statements of the 2000 Annual Report to Shareholders,
incorporated by reference in Item 8, herein.
Investments
Information as to the Company's investments is set forth in Notes B and C
of the Consolidated Financial Statements of the 2000 Annual Report to
Shareholders, incorporated by reference in Item 8, herein.
Additional information as to the Company's investments is set forth in the
Management's Discussion and Analysis section of the 2000 Annual Report to
Shareholders, incorporated by reference in Item 7, herein.
9
ITEM 2. PROPERTIES
CNA Plaza, owned by Continental Assurance Company, serves as the home
office for CNAF and its insurance subsidiaries. An adjacent building (located at
55 E. Jackson Blvd.), jointly owned by Continental Casualty Company and
Continental Assurance Company, is partially situated on grounds under leases
expiring in 2058. Approximately 40% of the adjacent building is rented to
non-affiliates. CNAF's subsidiaries lease office space in various cities
throughout the United States and in other countries. The following table sets
forth certain information with respect to the principal office buildings owned
or leased by CNAF's subsidiaries:
----------------------------------------------------------------------------
Amount Of Building
Owned and Occupied or
Leased by CNA or its
Location Subsidiaries Principal Usage
----------------------------------------------------------------------------
CNA Plaza
333 S. Wabash 1,144,378 sq. ft.(1) Principal executive
Chicago, Illinois offices of CNAF
180 Maiden Lane 1,115,100(1)(3) Property-casualty
New York, New York insurance offices
55 E. Jackson Blvd. 440,292(1) Principal executive
Chicago, Illinois offices of CNAF
401 Penn Street 254,589(1) Leased to tenants
Reading, Pennsylvania
100 CNA Drive 251,363(1) Life insurance offices
Nashville, Tennessee
1111 E. Broad St. 225,470(2) Property-casualty
Columbus, Ohio insurance offices
40 Wall Street 199,238(2) Property-casualty
New York, New York insurance offices
1110 Ward Avenue 186,687(1) Property-casualty
Honolulu, Hawaii insurance offices
2405 Lucien Way 178,744(2) Property-casualty
Maitland, Florida insurance offices
3500 Lacey Road 168,793(2) Property-casualty
Downers Grove, Illinois insurance offices
333 Glen Street 164,032(2) Property-casualty
Glens Falls, New York insurance offices
1100 Cornwall Road 147,884(2) Property-casualty
Monmouth Junction, New Jersey insurance offices
600 North Pearl Street 139,151(2) Property-casualty
Dallas, Texas insurance offices
(1) Represents property owned by CNAF or its subsidiaries.
(2) Represents property leased by CNAF or its subsidiaries.
(3) Sold subsequent to December 31, 2000.
10
ITEM 3. LEGAL PROCEEDINGS
Information as to CNA's legal proceedings is set forth in Note F of the
Consolidated Financial Statements of the 2000 Annual Report to Shareholders,
incorporated by reference in Item 8, herein.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Incorporated herein by reference from page 74 of the 2000 Annual Report to
Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated herein by reference from page 1 of the 2000 Annual Report to
Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Incorporated herein by reference from pages 21 through 40 of the 2000
Annual Report to Shareholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Incorporated herein by reference from pages 34 through 38 of the 2000
Annual Report to Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements of Operations - Years Ended December 3l, 2000, 1999
and 1998
Consolidated Balance Sheets - December 31, 2000 and 1999
Consolidated Statements of Cash Flows - Years Ended December 31, 2000, 1999
and 1998
Consolidated Statements of Stockholders' Equity - December 31, 2000, 1999
and 1998
Notes to Consolidated Financial Statements
Independent Auditors' Report
The above Consolidated Financial Statements, the related Notes to the
Consolidated Financial Statements and the Independent Auditors' Report are
incorporated herein by reference from pages 41 through 72 of the 2000 Annual
Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
11
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
[Enlarge/Download Table]
EXECUTIVE OFFICERS OF THE REGISTRANT
POSITION AND
OFFICES HELD FIRST BECAME
NAME WITH REGISTRANT AGE OFFICER OF CNA PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
---------------------------------------------------------------------------------------------------------------------------------
Laurence A. Tisch Chief Executive 78 1974 Co-Chairman of the Board of Loews Corporation since
Officer, CNA January 1999. Chief Executive Officer of CNA and Director
Financial of Automatic Data Processing, Inc. and Bulova Corporation.
Corporation Prior to 1999, Mr. Tisch had been Co-Chairman of the Board
and Co-Chief Executive Officer of Loews since 1994.
Executive Officer of the Registrant since 1974.
Bernard L. Hengesbaugh Chairman of the 54 1980 Chairman of the Board and Chief Executive Officer of CNA
Board and Chief insurance companies since February 1999. Executive Vice
Executive President and Chief Operating Officer of CNA insurance
Officer, CNA companies from February 1998 until February 1999. Senior
insurance Vice President of CNA insurance companies since November 1990.
companies Executive Officer of the Registrant since 1996.
Robert V. Deutsch Senior Vice 41 1999 Senior Vice President and Chief Financial Officer of CNA
President and Financial Corporation and subsidiaries since August 1999.
Chief Financial From June 1987 until August 1999, Mr. Deutsch was Executive
Officer, CNA Vice President, Chief Financial Officer, Chief Actuary and
Financial Assistant Secretary of Executive Risk, Inc. Executive
Corporation Officer of the Registrant since 1999.
Jonathan D. Kantor Senior Vice 45 1994 Senior Vice President, General Counsel and Secretary of the
President, Registrant since 1998. Senior Vice President, General
General Counsel Counsel and Secretary of CNA insurance companies since 1997.
and Secretary, Prior thereto, Group Vice President of CNA insurance
CNA Financial companies since 1994. Executive Officer of the Registrant
Corporation since 1997.
Thomas Pontarelli Senior Vice 51 1998 Senior Vice President of the Registrant since March 2000.
President, CNA From January 1998 to March 2000, Mr. Pontarelli was Group
Financial Vice President. Prior to that time, he was Chairman of the
Corporation Board, Chief Executive and President of Washington National
Insurance Company, Director of the Registrant since March
2000.
Officers are elected and hold office until their successors are elected and
qualified, and are subject to removal by the Board of Directors.
Additional information required in Item 10, Part III has been omitted as the
Registrant intends to file a definitive proxy statement pursuant to Regulation
14A with the Securities and Exchange Commission not later than 120 days after
the close of its fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
Information required in Item 11, Part III has been omitted as the
Registrant intends to file a definitive proxy statement pursuant to Regulation
14A with the Securities and Exchange Commission not later than 120 days after
the close of its fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required in Item 12, Part III has been omitted as the
Registrant intends to file a definitive proxy statement pursuant to Regulation
14A with the Securities and Exchange Commission not later than 120 days after
the close of its fiscal year.
12
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required in Item, 13, Part III has been omitted as the
Registrant intends to file a definitive proxy statement pursuant to Regulation
14A with the Securities and Exchange Commission not later than 120 days after
the close of its fiscal year.
13
PART IV
ITEM 14. FINANCIAL STATEMENTS, SCHEDULES, EXHIBITS AND REPORTS ON FORM 8-K
Page
(a) 1. FINANCIAL STATEMENTS: Number
------
A separate index to the Consolidated Financial Statements
is presented in Part II, Item 8...................................11
(a) 2. FINANCIAL STATEMENT SCHEDULES:
Schedule I Summary of Investments..............................17
Schedule II Condensed Financial Information (Parent Company)....18
Schedule III Supplementary Insurance Information.................23
Schedule IV Reinsurance.........................................24
Schedule V Valuation and Qualifying Accounts...................24
Schedule VI Supplementary Information Concerning
Property-Casualty Insurance Operations............24
Independent Auditors' Report......................................25
(a) 3. EXHIBITS:
Exhibit
Description of Exhibit Number
---------------------- ------
(3) Articles of incorporation and by-laws:
Certificate of Incorporation of CNA Financial Corporation,
as amended May 20, 1999 (Exhibit 3.1 to 1999 Form 10-K
incorporated herein by reference.)...............................3.1
By-Laws of CNA Financial Corporation, as amended
February 10, 1999 (Exhibit 3.2 to 1998 Form 10-K
incorporated herein by reference.)...............................3.2
(4) Instruments defining the rights of security holders,
including indentures: CNA Financial Corporation hereby agrees
to furnish to the Commission upon request copies of
instruments with respect to long-term debt, pursuant to
Item 601(b)(4)(iii) of Regulation S-K............................4.1
(10) Material contracts:
Federal Income Tax Allocation Agreement dated
February 29, 1980 between CNA Financial Corporation and
Loews Corporation (Exhibit 10.2 to 1987 Form 10-K
incorporated herein by reference.)..............................10.1
14
Exhibit
Description of Exhibit Number
---------------------- ------
(10) Material contracts (continued):
Continuing Services Agreement between CNA Financial
Corporation and Edward J. Noha, dated February 27, 1991
(Exhibit 6.0 to 1991 Form 8-K, filed March 18, 1991,
incorporated herein by reference.)............................10.2
CNA Employees' Supplemental Savings Plan, as amended
through January 1, 1994 (Exhibit 10.3 to 1999 Form 10-K
incorporated herein by reference.)............................10.3
CNA Employees' Retirement Benefit Equalization Plan, as
amended through January 1, 1994 (Exhibit 10.4 to 1999
Form 10-K incorporated herein by reference.)..................10.4
Continental Casualty Company "CNA" Annual Incentive Bonus
Plan Provisions (Exhibit 10.1 to 1994 Form 10K incorporated
herein by reference.).........................................10.5
Continuing Services Agreement between CNA Financial
Corporation and Dennis H. Chookaszian, dated
February 9, 1999 (Exhibit 10.2 to 1998 Form 10-K
incorporated herein by reference.)............................10.6
Employment Agreement between CNA Financial Corporation
and Bernard Hengesbaugh, dated November 2, 2000 (Exhibit 10
to September 30, 2000 Form 10-Q incorporated herein by
reference.)...................................................10.7
CNA Financial Corporation 2000 Long-Term Incentive Plan,
dated August 4, 1999 (Exhibit 4.1 to 1999 Form S-8 filed
August 4, 1999, incorporated herein by reference.)............10.8
Employment Agreement between CNA Financial Corporation
and Robert V. Deutsch, dated August 16, 1999 (Exhibit 10
to September 30, 1999 Form 10-Q incorporated herein by
reference.)...................................................10.9
Employment Agreement between CNA Financial Corporation
and Thomas F. Taylor dated November 2, 1999 (Exhibit
10.14 to 1999 Form 10-K incorporated herein by
reference.)...................................................10.10
Sale and Purchase Agreement between CNA Financial
Corporation and PGI-WvF 180, L.P. dated October 13, 2000
for the sale of real property commonly known as
180 Maiden Lane...............................................10.11*
(12) Computation of Ratio of Earnings to Fixed Charges.............12.1*
(13) 2000 Annual Report............................................13.1*
(21) Primary Subsidiaries of CNAF..................................21.1*
15
Exhibit
Description of Exhibit Number
---------------------- ------
(23) Independent Auditors' Consent.................................23.1*
*Filed herewith
(b) Reports on Form 8-K:
None.
(c) Exhibits:
None.
(d) Condensed Financial Information of Unconsolidated Subsidiaries:
None.
16
SCHEDULE I CNA FINANCIAL CORPORATION SUMMARY OF INVESTMENTS
[Enlarge/Download Table]
December 31, 2000
---------------------------------------
(In millions) Cost or
Amortized Fair Carrying
Cost Value Value
------- ------- -------
Fixed maturity securities available-for-sale:
Bonds:
United States Government and government
agencies and authorities - taxable $ 8,807 $ 9,051 $ 9,051
States, municipalities and political
subdivisions - tax exempt 3,279 3,349 3,349
Foreign governments and political
subdivisions 2,306 2,250 2,250
Public utilities 680 662 662
Convertibles and bonds with
warrants attached 209 199 199
All other corporate bonds 11,244 11,087 11,087
Redeemable preferred stocks 54 54 54
------- ------- -------
Total fixed maturity securities available-for-sale 26,579 26,652 26,652
------- ======= -------
Equity securities available-for-sale:
Common stocks:
Banks, trusts and insurance companies 23 29 29
Public utilities 17 20 20
Industrial and other 928 2,167 2,167
Non-redeemable preferred stocks 207 196 196
------- ------- -------
Total equity securities available-for-sale 1,175 $ 2,412 2,412
------- ======= -------
Mortgage loans 22 22
Real estate 4 4
Policy loans 193 193
Other invested assets 1,119 1,116
Short-term investments 4,723 4,723
------- -------
Total investments $33,815 $35,122
======= =======
17
SCHEDULE II CNA FINANCIAL CORPORATION (PARENT COMPANY) CONDENSED FINANCIAL
INFORMATION
[Download Table]
Financial Position
December 31, 2000 1999
------- -------
(In millions)
Assets:
Cash $ -- $ 4
Investment in subsidiaries 11,284 10,490
Amounts due from subsidiaries 262 409
Notes receivable from affiliates 454 534
Short-term investments -- 3
Other 6 19
------- -------
Total assets $12,006 $11,459
======= =======
Liabilities:
Debt $ 2,355 $ 2,492
Other 4 29
------- -------
Total liabilities 2,359 2,521
------- -------
Stockholders' equity:
Other comprehensive income 873 1,188
Other stockholders' equity 8,774 7,750
------- -------
Total stockholders' equity 9,647 8,938
------- -------
Total liabilities and stockholders' equity $12,006 $11,459
======= =======
See accompanying Notes to Condensed Financial Information.
18
[Enlarge/Download Table]
Results of Operations
Years ended December 31, 2000 1999 1998
------- ----- -----
(In millions)
Revenues:
Net investment income $ 11 $ 8 $ 13
Realized investment (losses) gains (4) 8 (2)
Other income 38 25 25
------- ----- -----
Total revenues 45 41 36
------- ----- -----
Expenses:
Administrative and general 208 206 189
Interest 175 160 148
------- ----- -----
Total expenses 383 366 337
------- ----- -----
Loss from operations before income taxes, equity in net income of
subsidiaries and the cumulative effect of a change in accounting principle (338) (325) (301)
Income tax benefit 118 114 105
------- ----- -----
Loss before equity in net income of subsidiaries and the cumulative
effect of a change in accounting principle (220) (211) (196)
Equity in net income of subsidiaries 1,434 258 478
Cumulative effect of a change in accounting principle, net of tax of $95 -- (177) --
------- ----- -----
Net income (loss) $ 1,214 $(130) $ 282
======= ===== =====
See accompanying Notes to Condensed Financial Information.
19
[Enlarge/Download Table]
Cash Flows
Years ended December 31, 2000 1999 1998
------- ------- -------
(In millions)
Cash flows from operating activities:
Net income (loss) $ 1,214 $ (130) $ 282
Adjustments to reconcile net income (loss) to net cash flows
from operating activities:
(Undistributed earnings) distributions in excess of earnings of affiliates (1,005) 350 (55)
Cumulative effect of change in accounting principle, net of tax -- 177 --
Realized losses (gains) 4 (8) 2
Changes in:
Amounts due from affiliates 147 (59) (53)
Other, net 36 88 (64)
------- ------- -------
Total adjustments (818) 548 (170)
------- ------- -------
Net cash flows from operating activities 396 418 112
------- ------- -------
Cash flows from investing activities:
Change in short-term investments 3 -- 171
Capital contributions to subsidiaries, net (165) (198) (260)
Purchase of preferred stock of subsidiaries -- -- (305)
Loans to subsidiaries 80 (20) (309)
Other, net 9 -- (3)
------- ------- -------
Net cash flows used by investing activities (73) (218) (706)
------- ------- -------
Cash flows from financing activities:
Dividends paid to preferred shareholders (1) (13) (7)
Proceeds from issuance of long-term debt -- 175 993
Principal payments on long-term debt (137) (158) (490)
Issuance (redemption) of cumulative exchangeable preferred stock (150) (200) 200
Purchase of treasury stock (35) -- (102)
Other, net (4) -- --
------- ------- -------
Net cash flows (used by) from financing activities (327) (196) 594
------- ------- -------
Net change in cash and cash equivalents (4) 4 --
Cash and cash equivalents, beginning of year 4 -- --
------- ------- -------
Cash and cash equivalents, end of year $ -- $ 4 $ --
======= ======= =======
Supplemental disclosures of cash flow information:
Cash paid (received):
Interest $ 168 $ 169 $ 129
Federal income taxes (154) (279) 143
Non-cash transactions:
Notes receivable for the issuance of common stock 4 19 44
See accompanying Notes to Condensed Financial Information.
20
Notes to Condensed Financial Information
a. Basis of presentation
The condensed financial information of CNA Financial Corporation (Parent
Company) should be read in conjunction with the Consolidated Financial
Statements and Notes thereto included in the CNA Financial Corporation 2000
Annual Report to Shareholders. Investments in subsidiaries are accounted for
using the equity method of accounting.
Certain amounts applicable to prior years have been reclassified to conform to
classifications followed in 2000.
b. Debt
[Download Table]
December 31, 2000 1999
------ ------
(In millions)
Variable rate debt:
Commercial paper $ 627 $ 675
Credit facility -- 77
Senior notes:
6.25%, due November 15, 2003 249 249
6.50%, due April 15, 2005 491 497
6.75%, due November 15, 2006 249 248
6.45%, due January 15, 2008 149 149
6.60%, due December 15, 2008 199 199
6.95%, due January 15, 2018 148 148
7.25% Debenture, due November 15, 2023 240 247
1.00% Urban Development Action Grant, due May 7, 2019 3 3
------ ------
Total $2,355 $2,492
====== ======
The Parent Company has a $750 million revolving credit facility (the Facility)
that expires in May 2001. The amount available under the Facility is reduced by
the Parent Company's outstanding commercial paper borrowings. As of
December 31, 2000, there was $123 million of unused borrowing capacity under the
Facility. The interest rate on the Facility is equal to the London Interbank
Offered Rate (LIBOR), plus 27.5 basis points. Additionally, there is an annual
facility fee of 12.5 basis points on the entire Facility. There were no
borrowings under the Facility at December 31, 2000. The average interest rate on
the borrowings under the Facility, excluding facility fees, for the year ended
December 31, 1999 was 6.66%.
The weighted average interest rate on commercial paper was 7.24%, 6.50% and
5.89% at December 31, 2000, 1999 and 1998. At December 31, 2000, the commercial
paper program had a weighted average maturity of 22 days.
To offset the variable rate characteristics of the Facility and the interest
rate risk associated with periodically reissuing commercial paper and
variable-rate bank loans, the Parent Company was party to interest rate swap
agreements with several banks. The last of these agreements expired on
December 14, 2000. These agreements required the Parent Company to pay interest
at a fixed rate in exchange for the receipt of three-month LIBOR. The effect of
the interest rate swap agreements was to decrease interest expense by
approximately $2 million for the year ended December 31, 2000 and increase
interest expense by approximately $4 million and $2 million for the years ended
December 31, 1999 and 1998.
The combined weighted average cost of Facility borrowings, and commercial paper
borrowings, including Facility fees and interest rate swaps, was 7.36%, 6.47%
and 6.36% at December 31, 2000, 1999 and 1998.
21
On February 15, 2000, Standard & Poor's lowered the Parent Company's senior debt
rating from A- to BBB and lowered the Parent Company's preferred stock rating
from BBB to BB+. As a result of these actions the facility fee payable on the
aggregate amount of the Facility was increased to 12.5 basis points per annum
and the interest rate on the Facility was increased to LIBOR plus 27.5 basis
points from their previous levels of 9 basis points per annum and LIBOR plus
16 basis points.
c. Management and administrative expenses
The Parent Company has reimbursed, or will reimburse, its subsidiaries for the
net of general management and administrative expenses, certain extra contractual
obligations and investment expenses of $200 million, $203 million and
$189 million in 2000, 1999 and 1998, respectively.
d. Capital transactions
In 2000, 1999 and 1998, the Parent Company contributed approximately
$171 million, $207 million and $260 million to the capital of its subsidiaries.
In 2000 and 1999, CNA subsidiaries returned capital to the Parent Company of
approximately $6 million and $9 million. There were no returns of capital in
1998.
e. Dividends from subsidiaries and affiliates
In 2000, 1999 and 1998, the Parent Company received approximately $429 million,
$608 million and $423 million in dividends from subsidiaries included in its
consolidated financial statements.
22
SCHEDULE III CNA FINANCIAL CORPORATION SUPPLEMENTARY INSURANCE INFORMATION
[Enlarge/Download Table]
Gross Insurance Reserves
----------------------------------------- Insurance Amortiz-
Claim Claims and ation
Deferred and Future Policy- Net Net Policy- of Deferred
Acquisition Claim Policy Unearned holders' Premium Investment holders' Acquisition
(In millions) Costs Expense Benefits Premium Funds Revenue Income Benefits Costs
-------- -------- -------- -------- -------- -------- -------- -------- --------
December 31, 2000
Agency Market Operations $ 3,331 $ 604 $ 2,778 $ 880
Specialty Operations 799 216 603 161
CNA Re 1,089 195 888 263
Global Operations 1,089 136 657 305
Risk Management 637 163 610 86
Group Operations 3,675 142 3,068 17
Life Operations 876 601 1,104 168
Corporate and Other 24 23 169 --
Eliminations (46) -- (46) --
Consolidated Operations $ 2,418 $ 26,962 $ 6,669 $ 4,821 $ 602 -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
$ 2,418 $ 26,962 $ 6,669 $ 4,821 $ 602 $ 11,474 $ 2,080 $ 9,831 $ 1,880
======== ======== ======== ======== ======== ======== ======== ======== ========
December 31, 1999
Agency Market Operations $ 4,799 $ 686 $ 4,339 $ 1,182
Specialty Operations 1,001 235 907 187
CNA Re 1,176 161 998 290
Global Operations 1,010 132 578 231
Risk Management 801 154 755 71
Group Operations 3,571 130 3,053 2
Life Operations 936 556 1,122 180
Corporate and Other 35 47 185 --
Eliminations (47) -- (47) --
Consolidated Operations $ 2,436 $ 27,356 $ 6,102 $ 5,103 $ 710 -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
$ 2,436 $ 27,356 $ 6,102 $ 5,103 $ 710 $ 13,282 $ 2,101 $ 11,890 $ 2,143
======== ======== ======== ======== ======== ======== ======== ======== ========
December 31, 1998
Agency Market Operations $ 5,247 $ 744 $ 4,436 $ 1,239
Specialty Operations 1,092 245 949 175
CNA Re 944 163 707 252
Global Operations 941 110 589 224
Risk Management 823 144 765 98
Group Operations 3,733 133 3,171 5
Life Operations 823 525 997 178
Corporate and Other (26) 82 128 9
Eliminations (41) -- (41) --
Consolidated Operations -- -- -- --
-------- -------- -------- --------
$ 13,536 $ 2,146 $ 11,701 $ 2,180
======== ======== ======== ========
Other Net
Operating Premiums
(In millions) Expenses Written*
-------- --------
December 31, 2000
Agency Market Operations $ 299 $ 3,230
Specialty Operations 85 805
CNA Re 48 951
Global Operations 279 1,160
Risk Management 388 633
Group Operations 731 1,497
Life Operations 143 388
Corporate and Other 49 22
Eliminations (135) --
Consolidated Operations -- --
-------- --------
$ 1,887 $ 8,686
======== ========
December 31, 1999
Agency Market Operations $ 347 $ 3,667
Specialty Operations 102 948
CNA Re 76 1,275
Global Operations 315 1,080
Risk Management 417 839
Group Operations 697 804
Life Operations 94 337
Corporate and Other 236 37
Eliminations (188) --
Consolidated Operations -- --
-------- --------
$ 2,096 $ 8,987
======== ========
December 31, 1998
Agency Market Operations $ 427 $ 5,461
Specialty Operations 171 1,023
CNA Re 57 908
Global Operations 247 985
Risk Management 378 889
Group Operations 758 1,008
Life Operations 104 295
Corporate and Other 312 --
Eliminations 13 --
Consolidated Operations -- --
-------- --------
$ 2,467 $ 10,569
======== ========
* Premiums written relate to property-casualty companies only.
23
SCHEDULE IV CNA FINANCIAL CORPORATION REINSURANCE
Incorporated herein by reference from Note G on page 60 of the 2000 Annual
Report to Shareholders.
SCHEDULE V CNA FINANCIAL CORPORATION VALUATION AND QUALIFYING ACCOUNTS
[Enlarge/Download Table]
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
(In millions) of Period Expenses Accounts Deductions Period
------- ------- ------- ------- -------
Year ended December 31, 2000
Deducted from assets:
Allowance for doubtful accounts:
Receivables $ 310 $ 16 $ -- $ 5 $ 321
======= ======= ======= ======= =======
Year ended December 31, 1999
Deducted from assets:
Allowance for doubtful accounts:
Receivables $ 328 $ (6) $ -- $ 12 $ 310
======= ======= ======= ======= =======
SCHEDULE VI CNA FINANCIAL CORPORATION SUPPLEMENTARY INFORMATION CONCERNING
PROPERTY-CASUALTY INSURANCE OPERATIONS
[Enlarge/Download Table]
Consolidated Property-Casualty Entities
---------------------------------------
As of and for the years ended December 31, 2000 1999 1998
-------- -------- --------
(In millions)
Deferred acquisition costs $ 1,121 $ 1,126
Reserves for unpaid claim and claim adjustment expenses 26,408 26,631
Discount deducted from claim and claim adjustment expense reserves above
(based on interest rates ranging from 3.5% to 7.5%) 2,413 2,376
Unearned premiums 4,821 5,103
Net earned premiums 8,893 10,010 $ 10,281
Net investment income 1,540 1,632 1,741
Incurred claim and claim adjustment expenses related to current year 6,331 7,287 7,903
Incurred claim and claim adjustment expenses related to prior years 427 1,027 263
Amortization of deferred acquisition costs 1,729 2,005 2,042
Paid claim and claim adjustment expenses 8,434 9,964 8,745
Net written premiums 8,686 8,987 10,569
24
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
CNA Financial Corporation
We have audited the consolidated financial statements of CNA Financial
Corporation (an affiliate of Loews Corporation) and subsidiaries as of
December 31, 2000 and 1999, and for each of the three years in the period ended
December 31, 2000, and have issued our report thereon dated February 14, 2001,
which report includes an explanatory paragraph as to a certain accounting
change; such consolidated financial statements and report are included in the
Company's 2000 Annual Report to Shareholders and are incorporated herein by
reference. Our audits also included the financial statement schedules of CNA
Financial Corporation and subsidiaries listed in Item 14. These financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
Deloitte & Touche LLP
Chicago, Illinois
February 14, 2001
25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CNA Financial Corporation
By /s/ Laurence A. Tisch
-----------------------------------
Laurence A. Tisch
Chief Executive Officer
(Principal Executive Officer)
By /s/ Robert V. Deutsch
-----------------------------------
Robert V. Deutsch
Senior Vice President and
Chief Financial Officer
(Principal Accounting Officer)
Date: March 16, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title
/s/ Antoinette Cook Bush Director
------------------------------------
Antoinette Cook Bush
/s/ Dennis H. Chookaszian Director
------------------------------------
Dennis H. Chookaszian
/s/ Ronald L. Gallatin Director Dated
------------------------------------
Ronald L. Gallatin March 16, 2001
/s/ Robert P. Gwinn Director
------------------------------------
Robert P. Gwinn
/s/ Walter L. Harris Director
------------------------------------
Walter L. Harris
/s/ Bernard L. Hengesbaugh Director
------------------------------------
Bernard L. Hengesbaugh
26
Signature Title
/s/ Walter F. Mondale Director
------------------------------------
Walter F. Mondale
/s/ Edward J. Noha Chairman of the Board
------------------------------------ and Director
Edward J. Noha
/s/ Joseph Rosenberg Director
------------------------------------
Joseph Rosenberg
/s/ James S. Tisch Director Dated
------------------------------------
James S. Tisch March 16, 2001
/s/ Laurence A. Tisch Chief Executive Officer
------------------------------------ and Director
Laurence A. Tisch
/s/ Preston R. Tisch Director
------------------------------------
Preston R. Tisch
/s/ Marvin Zonis Director
------------------------------------
Marvin Zonis
27
Dates Referenced Herein and Documents Incorporated by Reference
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