CNA Financial Corp: Form 10-Q for the period ended Sep 30, 2025

OVERVIEW

The following discussion highlights significant factors affecting the Company. References to “we,” “our,” “us” or like terms refer to the business of CNA.

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements included under Part I, Item 1 of this Form 10-Q, and Item 1A Risk Factors and Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations, which are included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2024.

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 J to the Condensed Consolidated Financial Statements included under Part I, Item 1. For reconciliations of non-GAAP measures to the most comparable GAAP measures and other information, please refer herein and/or to our most recent Annual Report on Form 10-K on file with the Securities and Exchange Commission.

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 Condensed Consolidated Financial Statements included under Part I, Item 1.

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. Gross written premiums, excluding third-party captives, excludes business which is ceded to third-party captives, including business related to large warranty programs.

We use underwriting gain (loss) 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:

(In millions)

(In millions)

46

(In millions)

(In millions)

The following table presents a reconciliation of net (loss) income to core loss for our Life & Group segment:

(In millions)

The following table present a reconciliation of net loss to core loss for our Corporate & Other segment:

(In millions)

47

CRITICAL ACCOUNTING ESTIMATES

The preparation of the Condensed 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 Condensed Consolidated Financial Statements and the amount of revenues and expenses reported during the period. Actual results may differ from those estimates.

Our Condensed 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 Condensed 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 set forth below are considered by us to be critical to an understanding of our Condensed Consolidated Financial Statements as their application places the most significant demands on our judgment:

• Insurance Reserves
• Long-Term Care Reserves
• Reinsurance and Insurance Receivables
• Valuation of Investments and Impairment of Securities

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. See the Critical Accounting Estimates section of our Management's Discussion and Analysis of Financial Condition and Results of Operations included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 for further information.

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.

(In millions)

Three Month Comparison

Core income increased $116 million for the three months ended September 30, 2025 as compared with the same period in 2024. Core income for our Property & Casualty Operations increased $110 million primarily driven by lower catastrophe losses, improved underlying underwriting results and higher net investment income. Core loss for our Life & Group segment increased $13 million, while core loss for our Corporate & Other segment improved $19 million.

Catastrophe losses were $41 million and $143 million for the three months ended September 30, 2025 and 2024 driven by severe weather related events. Catastrophe losses for three months ended September 30, 2024 included $55 million for Hurricane Helene. Favorable net prior year loss reserve development of $1 million was recorded for the three months ended September 30, 2025 compared to unfavorable net prior year loss reserve development of $17 million for the three months ended September 30, 2024 related to our Commercial, International and Corporate & Other segments. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

Core income increased $51 million for the nine months ended September 30, 2025 as compared with the same period in 2024. Core income for our Property & Casualty Operations increased $117 million primarily driven by lower catastrophe losses, higher net investment income and improved underlying underwriting results, partially offset by unfavorable net prior year loss reserve development compared to favorable net prior year loss reserve development in the prior year period. Core loss for our Life & Group segment increased $10 million, while core loss for our Corporate & Other segment increased $56 million.

Catastrophe losses were $200 million and $313 million for the nine months ended September 30, 2025 and 2024 driven by severe weather related events. Catastrophe losses for the nine months ended September 30, 2024 included $55 million for Hurricane Helene. Unfavorable net prior year loss reserve development of $190 million and $33 million was recorded for the nine months ended September 30, 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 Condensed Consolidated Financial Statements included under Part I, Item 1.

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. Our operations outside of Property & Casualty Operations are managed and reported in two segments: Life & Group and Corporate & Other.

Specialty

The following table details the results of operations for Specialty and provides the components to reconcile the combined ratio and loss ratio to the underlying combined ratio and underlying loss ratio.

(In millions, except ratios, rate, renewal premium change and retention)

Three Month Comparison

Gross written premiums, excluding third-party captives, for Specialty increased $27 million for the three months ended September 30, 2025 as compared with the same period in 2024 driven by favorable renewal premium change, inclusive of rate, partially offset by lower retention. Net written premiums for Specialty increased $5 million for the three months ended September 30, 2025 as compared with the same period in 2024. The increase in net earned premiums was consistent with the trend in net written premiums.

Core income increased $5 million for the three months ended September 30, 2025 as compared with the same period in 2024 due to higher net investment income.

The combined ratio of 93.3% increased 0.3 points for the three months ended September 30, 2025 as compared with the same period in 2024 due to a 0.5 point increase in the loss ratio partially offset by a 0.2 point improvement in the expense ratio. The increase in the loss ratio was due to an increase in the underlying loss ratio. There were no catastrophe losses for the three months ended September 30, 2025 and 2024. The improvement in the expense ratio was primarily driven by higher net earned premiums.

Gross written premiums, excluding third-party captives, for Specialty increased $106 million for the nine months ended September 30, 2025 as compared with the same period in 2024 driven by favorable renewal premium change, inclusive of rate partially offset by lower retention. Net written premiums for Specialty increased $90 million for the nine months ended September 30, 2025 as compared with the same period in 2024. The increase in net earned premiums was consistent with the trend in net written premiums.

Core income decreased $14 million for the nine months ended September 30, 2025 as compared with the same period in 2024 primarily due to lower underlying underwriting results and unfavorable net prior year loss reserve development in the current year period compared with favorable net prior year loss reserve development in the prior year period, partially offset by higher net investment income.

The combined ratio of 94.0% increased 1.9 points for the nine months ended September 30, 2025 as compared with the same period in 2024 due to a 1.4 point increase in the loss ratio and a 0.5 point increase in the expense ratio. The increase in the loss ratio was due to unfavorable net prior year loss reserve development recorded in the current year period 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 and acquisition costs partially offset by higher net earned premiums. There were no catastrophe losses for the nine months ended September 30, 2025 and 2024.

Unfavorable net prior year loss reserve development of $10 million was recorded for the nine months ended September 30, 2025 as compared with $8 million of favorable net prior year loss reserve development recorded for the nine months ended September 30, 2024. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I Item 1.

The following table summarizes the gross and net carried reserves for Specialty.

(In millions)

53

Commercial

The following table details the results of operations for Commercial and provides the components to reconcile the combined ratio and loss ratio to the underlying combined ratio and underlying loss ratio.

(In millions, except ratios, rate, renewal premium change and retention)

Three Month Comparison

Gross written premiums for Commercial increased $22 million for the three months ended September 30, 2025 as compared with the same period in 2024 driven by favorable renewal premium change, inclusive of rate, partially offset by lower retention and new business. Net written premiums for Commercial increased $30 million for the three months ended September 30, 2025 as compared with the same period in 2024. The increase in net earned premiums was consistent with the trend in net written premiums.

Core income increased $94 million for the three months ended September 30, 2025 as compared with the same period in 2024, primarily driven by lower catastrophe losses, improved underlying underwriting results and higher net investment income.

The combined ratio of 92.7% improved 7.5 points for the three months ended September 30, 2025 as compared with the same period in 2024 due to a 5.9 point improvement in the loss ratio and a 1.6 point improvement in the expense ratio. The improvement in the loss ratio was primarily due to lower catastrophes losses partially offset by an increase in the underlying loss ratio related to social inflation impacted lines. Catastrophe losses were $39 million, or 2.7 points of the loss ratio, for the three months ended September 30, 2025, as compared with $127 million, or 9.6 points of the loss ratio, for the three months ended September 30, 2024. The improvement in the expense ratio was primarily driven by a lower acquisition ratio and higher net earned premiums.

Favorable net prior year loss reserve development of $1 million and $3 million was recorded for the three months ended September 30, 2025 and 2024. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

Gross written premiums for Commercial increased $327 million for the nine months ended September 30, 2025 as compared with the same period in 2024 driven by favorable renewal premium change, inclusive of rate, partially offset by lower retention. Net written premiums for Commercial increased $295 million for the nine months ended September 30, 2025 as compared with the same period in 2024. The increase in net earned premiums was consistent with the trend in net written premiums.

Core income increased $111 million for the nine months ended September 30, 2025 as compared with the same period in 2024, primarily 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 96.1% improved 2.2 points for the nine months ended September 30, 2025 as compared with the same period in 2024 due to a 1.2 point improvement in the expense ratio and a 1.0 point improvement in the loss ratio. The improvement in the expense ratio was driven by higher net earned premiums and a lower acquisition ratio. The improvement in the loss ratio was due to 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 $182 million, or 4.3 points of the loss ratio, for the nine months ended September 30, 2025, as compared with $285 million, or 7.5 points of the loss ratio, for the nine months ended September 30, 2024.

Unfavorable net prior year loss reserve development of $46 million was recorded for the nine months ended September 30, 2025 as compared with $11 million of favorable net prior year loss reserve development recorded for the nine months ended September 30, 2024. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

The following table summarizes the gross and net carried reserves for Commercial.

(In millions)

55

International

The following table details the results of operations for International and provides the components to reconcile the combined ratio and loss ratio to the underlying combined ratio and underlying loss ratio.

(In millions, except ratios, rate, renewal premium change and retention)

Three Month Comparison

Gross written premiums for International increased $17 million for the three months ended September 30, 2025 as compared with the same period in 2024. Excluding the effect of foreign currency exchange rates, gross written premiums increased $9 million driven by higher new business partially offset by lower rate. Net written premiums for International increased $42 million for the three months ended September 30, 2025 as compared with the same period in 2024. Excluding the effect of foreign currency exchange rates, net written premiums increased $33 million for the three months ended September 30, 2025 as compared with the same period in 2024 driven by a true-up due to a reduction in anticipated reinsurance costs for prior treaty terms in the third quarter of 2025. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters.

Core income increased $11 million for the three months ended September 30, 2025 as compared with the same period in 2024 primarily driven by lower catastrophe losses and higher net investment income.

The combined ratio of 91.8% improved 4.3 points for the three months ended September 30, 2025 as compared with the same period in 2024 due to a 3.4 point improvement in the loss ratio and a 0.9 point improvement in the expense ratio. The improvement in the loss ratio was primarily driven by lower catastrophe losses, partially offset by no net prior year loss reserve development recorded in the current year period compared with $2 million of favorable net prior year loss reserve development in the same period in 2024, and an increase in the underlying loss ratio. Catastrophe losses were $2 million, or 0.6 points of the loss ratio, for the three months ended September 30, 2025, as compared with $16 million, or 5.1 points of the loss ratio, for the three months ended September 30, 2024. The improvement in the expense ratio was primarily driven by higher net earned premiums.

Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

Gross written premiums for International increased $36 million for the nine months ended September 30, 2025 as compared with the same period in 2024. Excluding the effect of foreign currency exchange rates, gross written premiums increased $38 million driven by higher new business and retention partially offset by lower rate. Net written premiums for International increased $80 million for the nine months ended September 30, 2025 as compared with the same period in 2024. Excluding the effect of foreign currency exchange rates, net written premiums increased $77 million for the nine months ended September 30, 2025 as compared with the same period in 2024 driven by a true-up due to a reduction in anticipated reinsurance costs for prior treaty terms in the third quarter of 2025. The increase in net earned premiums was consistent with the trend in net written premiums in recent quarters.

Core income increased $20 million for the nine months ended September 30, 2025 as compared with the same period in 2024 primarily driven by higher net investment income, lower catastrophe losses and a favorable impact from changes in foreign currency exchange rates.

The combined ratio of 93.2% improved 0.5 points for the nine months ended September 30, 2025 as compared with the same period in 2024 due to a 0.3 point improvement in the loss ratio and a 0.2 point improvement in the expense ratio. The improvement in the loss ratio was primarily driven by lower catastrophe losses, partially offset by no net prior year loss reserve development recorded in the current year period compared with $5 million of favorable net prior year loss reserve development in the same period in 2024. Catastrophe losses were $18 million, or 1.8 points of the loss ratio, for the nine months ended September 30, 2025, as compared with $28 million, or 3.0 points of the loss ratio, for the nine months ended September 30, 2024. The improvement in the expense ratio was primarily driven by higher net earned premiums.

Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

The following table summarizes the gross and net carried reserves for International.

(In millions)

57

Life & Group

The following table summarizes the results of operations for Life & Group.

(In millions)

Three Month Comparison

Core loss increased $13 million for the three months ended September 30, 2025 as compared with the same period in 2024 primarily due to lower net investment income from limited partnerships. Both periods include assumption updates as a result of the annual reserve reviews.

The cash flow assumption updates from the annual reserve review for the three months ended September 30, 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 the three months ended September 30, 2025 and a reduction in claim reserves of $9 million for the three months ended September 30, 2024.

Nine Month Comparison

Results for the nine months ended September 30, 2025 were generally consistent with the three month summary above.

Future Policy Benefit Reserves

Annually in the third quarter, an actuarial analysis is performed on policyholder morbidity, persistency, premium rate actions and expense experience. This analysis, combined with judgment, informs the setting of updated cash flow assumptions used to estimate the liability for future policyholder benefits (LFPB). See Note A to the Consolidated Financial Statements within CNAF's Annual Report on Form 10-K for the year ended December 31, 2024 for further information on the long-term care reserving process.

The table below summarizes the estimated pretax impact on our results of operations from various hypothetical revisions to our 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 future premium rate increases. 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.

The following table summarizes policyholder reserves for Life & Group.

(In millions)

(In millions)

As part of the annual reserve review, 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.

Corporate & Other

The following table summarizes the results of operations for the Corporate & Other segment, including intersegment eliminations.

(In millions)

Three Month Comparison

Core loss improved $19 million for the three months ended September 30, 2025 as compared with the same period in 2024. The improvement was primarily due to no net prior year loss reserve development in the current year as compared with a $17 million after-tax charge in the prior year period related to unfavorable prior year loss reserve development largely associated with legacy mass tort abuse reserves. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

Core loss increased $56 million for the nine months ended September 30, 2025 as compared with the same period in 2024 primarily due to a $106 million after-tax charge related to unfavorable net prior year loss reserve development associated with legacy mass tort abuse reserves as compared with a $45 million after-tax charge in the prior year period. Further information on net prior year loss reserve development is in Note E to the Condensed Consolidated Financial Statements included under Part I, Item 1.

The following table summarizes the gross and net carried reserves for Corporate & Other.

(In millions)

60

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.

(In millions)

Net investment income increased $12 million and $51 million for the three and nine months ended September 30, 2025 as compared with the same periods in 2024 driven by higher income from fixed income securities as a result of a larger invested asset base and favorable reinvestment rates.

Net Investment (Losses) Gains

The components of Net investment (losses) gains are presented in the following table.

(In millions)

Pretax net investment losses improved $3 million for the three months ended September 30, 2025 as compared with the same period in 2024.

Pretax net investment losses increased $20 million for the nine months ended September 30, 2025 as compared with the same period in 2024 driven by a lower favorable change in the fair value of non-redeemable preferred stock and higher net losses on disposals of fixed maturity securities, partially offset by lower impairment losses.

Further information on our investment gains and losses is set forth in Note C to the Condensed Consolidated Financial Statements included under Part I, Item 1.

Portfolio Quality

The following table presents the estimated fair value and net unrealized gains (losses) of our fixed maturity securities by rating distribution.

(In millions)

As of September 30, 2025 and December 31, 2024, 1% of our fixed maturity portfolio was rated internally. Additionally, as of September 30, 2025 and December 31, 2024, we assigned a AAA rating to $653 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.

(In millions)

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.

(In millions)

62

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.

(In millions)

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 of our Annual Report on Form 10-K for the year ended December 31, 2024.

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 the nine months ended September 30, 2025, net cash provided by operating activities was $1,920 million as compared with $1,868 million for the same period in 2024. The increase in cash provided by operating activities was driven by an increase in premiums collected and higher cash from investment earnings, partially offset by an increase in net claim payments and higher operating expenses.

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 the nine months ended September 30, 2025, net cash used by investing activities was $1,446 million as compared with $762 million for the same period in 2024. Net cash provided or used 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 the nine months ended September 30, 2025, net cash used by financing activities was $478 million as compared with $998 million for the same period in 2024. Financing activities for the periods presented include:

• During the nine months ended September 30, 2025, we paid dividends of $922 million and repurchased 700,000 shares of our common stock at an aggregate cost of $34 million.
• In the third quarter of 2025, we issued $500 million of 5.20% notes due August 15, 2035.
• During the nine months ended September 30, 2024, we paid dividends of $906 million and repurchased 450,000 shares of common stock at an aggregate cost of $20 million.
• In the second quarter of 2024, we repaid the $550 million outstanding aggregate principal balance of our 3.95% senior notes which came due May 15, 2024.
• In the first quarter of 2024, we issued $500 million of 5.125% notes due February 15, 2034.

Common Stock Dividends

Cash dividends of $3.38 per share on our common stock, including a special cash dividend of $2.00 per share, were declared and paid during the nine months ended September 30, 2025. On October 31, 2025, our Board of Directors declared a quarterly cash dividend of $0.46 per share, payable December 4, 2025 to stockholders of record on November 17, 2025. 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.

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).

Dividends from Continental Casualty Company (CCC) are subject to the insurance holding company laws of the State of Illinois, the domiciliary state of CCC. Under these laws, ordinary dividends, or dividends that do not require prior approval by the Illinois Department of Insurance, are determined based on the greater of the prior year's statutory net income or 10% of statutory surplus as of the end of the prior year, as well as timing and amount of dividends paid in the preceding twelve months. Additionally, ordinary dividends may only be paid from earned surplus, which is calculated by removing unrealized gains from unassigned surplus. As of September 30, 2025 CCC was in a positive earned surplus position. CCC paid dividends of $755 million and $635 million to CNAF during the nine months ended September 30, 2025 and 2024. The actual level of dividends paid in any year is determined after an assessment of available dividend capacity, holding company liquidity and cash needs as well as the impact the dividends will have on the statutory surplus of the applicable insurance company.

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.

ACCOUNTING STANDARDS UPDATE

For a discussion of Accounting Standards, see Note A to the Condensed Consolidated Financial Statements included under Part I, Item 1.

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. These risks and uncertainties include, but are not limited to, the following as well as those risks contained in the Risk Factors section of our 2024 Annual Report on Form 10-K:

Company-Specific Factors

• the risks and uncertainties associated with our insurance reserves, as outlined in the Critical Accounting Estimates sections of our 2024 Annual Report on Form 10-K and this report, and the Reserves - Estimates and Uncertainties section of our 2024 Annual Report on Form 10-K, 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 excess workers' compensation (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 changes in tariffs, as well as significant uncertainty surrounding U.S. tariff policy generally, may adversely impact the economic environment, inflation expectations and certain loss costs (that would increase the cost of claims) and may result in decreases in the size and number of our insurance customers, in addition to potentially adversely affecting the performance of our investments;
• 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;
• the COVID-19 pandemic, other potential pandemics and related measures to mitigate the spread of the foregoing may continue to result in increased claims and related litigation risk across our enterprise;
• conditions in the capital and credit markets, including uncertainty and instability in these markets, as well as the overall economy, and their impact on the returns, types, liquidity and valuation of our investments;
• conditions in the capital and credit markets that may limit our ability to raise significant amounts of capital on favorable terms 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, legal inquiries by state authorities, judicial interpretations within the regulatory framework, including interpretation of policy provisions, decisions regarding coverage and theories of liability, legislative actions that increase claimant activity, including those revising applicability of statutes of limitations, trends in litigation and the outcome of any litigation involving us and rulings and changes in tax laws and regulations;
• regulatory limitations, impositions and restrictions upon us, including with respect to our ability to increase premium rates, and the effects of assessments and other surcharges for guaranty funds and second-injury funds, other mandatory pooling arrangements and future assessments levied on insurance companies;
• regulatory limitations and restrictions, including limitations upon our ability to receive dividends from our insurance subsidiaries, imposed by regulatory authorities, including regulatory capital adequacy standards;
• breaches of our or our vendors' data security infrastructure resulting in unauthorized access to systems and information, and/or interruption of operations; and
• regulatory and legal implications relating to the sophisticated cyber incident sustained by the Company in March 2021, or any future cyber incidents, that may arise.

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 that repeal or weaken tort reforms.

Our forward-looking statements speak only as of the date of the filing of this Quarterly Report on Form 10-Q 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 statement, even if our expectations or any related events or circumstances change.

There were no material changes in our market risk components for the three months ended September 30, 2025. See the Quantitative and Qualitative Disclosures About Market Risk included in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2024 for further information. Additional information related to portfolio duration is discussed in the Investments section of our Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part I, Item 2.

The Company maintains a system of disclosure controls and procedures which are designed to ensure that information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including this report, is recorded, processed, summarized and reported on a timely basis. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed under the Exchange Act is accumulated and communicated to the Company's management on a timely basis to allow decisions regarding required disclosure.

As of September 30, 2025, the Company's management, including the Company's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, the CEO and CFO have concluded that the Company's disclosure controls and procedures are effective as of September 30, 2025.

There has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15 (f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.